/raid1/www/Hosts/bankrupt/TCR_Public/090226.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, February 26, 2009, Vol. 13, No. 56
Headlines
130 LOMITA: Voluntary Chapter 11 Case Summary
4TH PLACE: Case Summary & 20 Largest Unsecured Creditors
ACUSPHERE INC: Enters Into Amendments With GE & BSP Agreements
ALERIS INT'L: U.S. Trustee Sets Sec. 341 Meeting for March 27
ALERIS INT'L: Asks Court to Approve Weil Gotshal Engagement
ALERIS INT'L: Seeks to Hire Richards Layton as Delaware Counsel
ALERIS INT'L: Seeks to Honor Prepetiton Employee Charges
ALERIS INT'L: Has Until May 12 to File Schedules and Statements
ALERIS INT'L: Gets Court Okay to Pay Foreign Suppliers, Creditors
AMF BOWLING: Moody's Downgrades Corporate Family Rating to 'B3'
ARINC INC: Weak Operating Results Cue Moody's Junk Rating
ASHTON WOODS: Private Debt Exchange Offer Expires
BANKATLANTIC BANCORP: Fitch Cuts Issuer Default Rating to 'B-'
BARRINGTON BROADCASTING: Moody's Cuts Default Rating to 'Caa2'
BAYONNE MEDICAL: Headed for April 7 Plan Confirmation
BERNARD L. MADOFF: Investors' Plea to Move Claims Deadline Denied
BERNARD L. MADOFF: Court Decision on Claims from Avoidance Actions
BOYD GAMING: Moody's Reviews Rating for Downgrade on Casino Deal
BOYD GAMING: Stations Casinos Deal Won't Affect Fitch's Ratings
BOYD GAMING: Station Casinos Interest Won't Move S&P's BB- Rating
CARDINAL COMM: Plan Confirmation Hearing Set on March 24
CAROL L. SCHECKWITZ: Voluntary Chapter 11 Case Summary
CELL THERAPEUTICS: Sells Interest in Zevalin to Spectrum
CELL THERAPEUTICS: Gives More Information at CONSOB's Request
CENTENNIAL COMMUNICATIONS: Stockholders Approve Merger With AT&T
CHRYSLER LLC: Meets With Task Force to Discuss $5BB in New Loans
CITIGROUP INC: Could Reach Pact for Add'l Shares to Govt. Today
CITY OF STOCKTON: Discusses Bankruptcy; Takes Cuts to Avert Filing
CLEAR CHANNEL: Cut to 'B-' by S&P on Concerns of Meeting Covenants
CONSTAR INT'L: Panel May Retain Goodwin Procter as Counsel
CRYSTAL PEAK: Voluntary Chapter 11 Case Summary
DANKA BUSINESS: Shareholders OK Entry Into Voluntary Liquidation
DELPHI CORP: Gets April 2 Extension to File Plan Amendments
DELPHI CORP: Wins Court OK to Cancel Benefits of 15,000 Workers
DOLLAR THRIFTY: Lenders Waive Minimum Leverage Ratio
DYNOGEN PHARMACEUTICALS: Files for Chapter 7 Bankruptcy
DOUBLEDOWN MEDIA: Files for Chapter 7 Bankruptcy After Closure
ECLIPSE AVIATION: Noteholders Seek Conversion to Ch. 7 Liquidation
ENERGY FUTURE: Moody's Reviews 'B2' Rating on Gas Price Drop
EURONET WORLDWIDE: Will Have Liquidity in Near Term, Says Moody's
FEDERAL-MOGUL: Posts $468 Million Net Loss for Full Year 2008
FLINT TELECOM: December 31 Balance Sheet Upside-Down by $7 Mln.
FLUID ROUTING: Court OKs FRS as Lead Bidder, Auction on March 24
GANNETT CO: Cuts Quarterly Dividend by 90% to Boost Balance Sheet
GENERAL MOTORS: Will Meet With Auto Industry Task Force Today
GEORGIA GULF: Dec. 31 Balance Sheet Upside Down by $139,928
GLOBAL 8: Dec. Balance Sheet Upside-Down; Substantial Doubt Raised
GREATER ATLANTIC: Discloses $7.7MM Deficit; $1.8M Q4 Net Loss
GREATER ATLANTIC: Unit Gets OTS Notice & Must File Plan by March
GREEN GOBLIN: Voluntary Chapter 11 Case Summary
HARTMARX CORP.: Gets Court Nod to Borrow $160 Million
HERTZ CORPORATION: Fitch Affirms 'BB' Issuer Default Rating
INDYMAC BANCORP: Chapter 7 Trustee Sues FDIC to Recover Assets
INTEGRATED BIOPHARMA: Posts $11MM Net Loss in the Last Six Months
INTEGRATED FINANCE: Case Summary & Six Largest Unsec. Creditors
JACUZZI BRANDS: S&P Junks Corporate Credit Rating from 'B-'
JAMES CARR: Voluntary Chapter 11 Case Summary
KAAS & JANTJE: Voluntary Chapter 11 Case Summary
KEY PLASTICS: Completes Reorganization, Emerges From Chapter 11
KING WILLIAM: Case Summary & Largest Unsecured Creditor
LBL-SUNCAL NORTHLAKE: D.E. Shaw to Buy Projects for $200 Million
LEVITT & SONS: Obtains Confirmation of Chapter 11 Plan
LOU WAIT: Voluntary Chapter 11 Case Summary
LYONDELL CHEMICAL: $8-Billion Loan May Give Control to Lenders
LYONDELL CHEMICAL: ABN Amro May Withdraw From $8 Billion Loan
LYONDELL CHEMICAL: Seeks to Enter Into Trading Contracts
LYONDELL CHEMICAL: To Cut Workforce at Chocolate Bayou Plant
LYONDELL CHEMICAL: To Reject Glycol Sales Pacts, Aircraft Leases
LYONDELL CHEMICAL: Asks Court to Approve McShea Engagement as CRO
MAGNA ENTERTAINMENT: On the Verge of Bankruptcy, Says Report
MEDIEVAL GLASS: Files for Chapter 11 Bankruptcy Protection
MEDIEVAL GLASS: Voluntary Chapter 11 Case Summary
MERGE TECHNOLOGIES: Exercises Redemption Call Right
MIDWAY GAMES: U.S. Trustee Forms Five-Member Creditors Committee
MIDWAY GAMES: Proposes $4-Mil. Incentive Bonuses
MXENERGY HOLDINGS: Dec. 31 Balance Sheet Upside Down by $54MM
NATCHEZ REGIONAL: Files Ch. 9 Petition; Objections Due March 13
NATIONAL GAS: 4th Cir. Says Delivery May, May Not Be Forward Pact
NEW DAY PHARMACY: Voluntary Chapter 11 Case Summary
NORTEL NETWORKS: To Fire 3,200 Worldwide, Scraps Bonuses
NOVA CHEMICALS: Int'l Petroleum Deal Affects Fitch's Low-B Ratings
NOW HEAR THIS: Will Close by March 31; Denies Bankruptcy
OSI RESTAURANT: Makes Deep Discount Tender Offer; Post Losses
PACIFICA HOSPITAL: Files for Chapter 11, Has $3.8MM State Funding
PETTERS GROUP: Polaroid Group Gets Court Okay to Start Auction
PHILADELPHIA NEWSPAPERS: Creditors Oppose $25MM DIP Financing
PHOENIX FOOTWEAR: Names R. Hall as President & D. Nelson as CFO
PLIANT CORP: U.S. Trustee Forms Five-Member Creditors Committee
PRECISION DRILLING: Moody's Withdraws 'B1' Senior Unsecured Rating
PRECISION PARTS: Has Stalking Horse Bidder for $18.5 Million
PRIMEDIA INC: NYSE Accepts Continued Listing Plan
REDDY ICE: NYSE Accepts Continued Listing Plan
RTM FRAMINGHAM: Real Estate to be Auctioned Off March 13
RUSSELL RAYMOND: Voluntary Chapter 11 Case Summary
SABERTOOTH LLC: Voluntary Chapter 11 Case Summary
SAKS INC: CEO Sadove Brushes Away Bankruptcy Speculations
SECURITY BENEFIT: S&P Downgrades Counterparty Ratings to 'BB'
SEMGROUP LP: Court to Consider SemMaterials Sale Today
SEMGROUP LP: Sues Catsimatidis for Breach of Confidentiality Deal
SEMGROUP LP: SemGas Sues Targa Liquids for Breach of Purchase Deal
SEMGROUP LP: SemMaterials Sues High Sierra for Release of Asphalt
SHEARIN FAMILY: Has April 6 Confirmation Hearing
SOUTH PARK APTS: Voluntary Chapter 11 Case Summary
SIMMONS COMPANY: Unit Confirms Effectiveness of Forbearance Pact
SPANISH BROADCASTING: Moody's Cuts to 'Caa3' on Radio Revenue Drop
SPANSION INC: J. Kispert Enters Into Employment Offer Letter
SPECIALIZED TECHNOLOGY: Moody's Affirms 'B1' Credit Ratings
STONEBROOK ESTATES: Voluntary Chapter 11 Case Summary
STANDARD PACIFIC: Enters Into Amendments to Credit Agreements
STANDARD PACIFIC: Posts $396.6 Million 4th Quarter Net Loss
STANFORD INT'L BANK: Linked to Unfinished Florida Resort Project
STANFORD INT'L BANK: Biden-Run Fund Ends Relationship With SFG
SUNCOAST SPINAL: Voluntary Chapter 11 Case Summary
TARRAGON CORP: Sells Remaining 71 Condo Units for $18.1-Mil.
TARRAGON CORP: Can Hire C&W as Exclusive Real Estate Broker
TARRAGON CORP: Court Approves Cole Schotz as Bankruptcy Counsel
TARRAGON CORPORATION: Can Hire BDO Seidman as Financial Advisors
TARRAGON CORPORATION: Court Approves Jones Day as Special Counsel
TROPICANA INN: Marshall Investments Asks Court to Terminate Stay
UPTOWN PARTNERS: Case Summary & Three Largest Unsecured Creditors
VELOCITY EXPRESS: Posts $9.6MM Net Loss for Qtr. Ended Dec. 28
VELOCITY EXPRESS: Receives Notice of Compliance From NASDAQ
VOLU-SOL REAGENTS: Lack of Funding Raises Going Concern Doubt
WADLEY REGIONAL: Authorized to Sell Hospital to Brim
WASHINGTON MUTUAL: Court Extends Plan Filing Period to April 24
WASHINGTON MUTUAL: Court Denies IRS Bid to Set Off $55MM Debt
WASHINGTON MUTUAL: Court Sets March 31 as Claims Bar Date
WASHINGTON MUTUAL: Lease Decision Period Extended to March 10
WATER STREET: Case Summary & Six Largest Unsecured Creditors
W.B. CARE: Voluntary Chapter 11 Case Summary
W.R. GRACE: Libby Criminal Trial in Full Swing
W.R. GRACE: Court to Consider Disclosure Statement on March 9
WILLIAMS COMPANIES: Fitch Affirms 'BB' Rating on Junior Debentures
WL HOMES: Gets Initial OK to Access $5.28 Mil. Emaar DIP Facility
WYNN RESORTS: Posts $159.6 Million Fourth Quarter Net Loss
* Consumer Confidence Falls to Lowest on Record
* Consumer Prices Flat on Year; Last Year's Jumbo Loans
* Fitch Says 24% of U.S. Corporate Bonds Hit by Downgrades in 2008
* S&P Discusses Revised Assumptions for U.S. Cigarette Sales
* Ex-Alvarez & Marsal Directors Join Protiviti's Houston Office
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
*********
130 LOMITA: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: 130 Lomita Avenue LLC
532 Colorado Avenue
Santa Monica, CA 90401
Bankruptcy Case No.: 09-14011
Chapter 11 Petition Date: February 24, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Alan M. Ahart
Debtor's Counsel: Linda M Blank, Esq.
1925 Century Park East #2000
Los Angeles, CA 90067
Tel: (310) 277-2236
Fax: (310) 526-6503
Email: linda@lmblank.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/cacb09-14011.pdf
The petition was signed by Gerry Leonard, managing member of the
Company.
4TH PLACE: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: 4th Place Development, Inc.
108 W. El Portal
San Clemente, CA 92672
Bankruptcy Case No.: 09-11517
Chapter 11 Petition Date: February 24, 2009
Court: Central District of California (Santa Ana)
Judge: Robert N. Kwan
Debtor's Counsel: Dennis E. Mcgoldrick, Esq.
dmcgoldricklaw@yahoo.com
McGoldrick
350 S. Crenshaw Blvd., Ste. A207B
Torrance, CA 90503
Tel: (310) 328-1001
Estimated Assets: $10 million to $50 million
Estimated Debts: $1 million to $10 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
DRI Commercial Trade debt $34,378
17182 Armstrong Avenue
Irvine, CA 92614
John Parsons
Tel: (949) 266-1900
Allegience Direct Bank Bank loan $25,084
PO Box 1750
Cedar City, UT 84721
Tel: (800) 280-0235
Anacal Engineering Co., Inc. Trade debt $17,153
1900 E. La Palma Ave. Ste 202
Anaheim, CA 92805
David Queyrel
Tel: (714) 744-1763
Ficcadenti & Waggoner Inc. Trade debt $12,059
G.A. Mundia, Inc. Trade debt $10,000
Greg Riley, P.E. Trade debt $8,500
John Kelenc Trade debt $6,953
DGW Budget Preparation Trade debt $6,500
Structural Engineering Trade debt $5,000
Consultants, Inc.
Samuels, Green & Steel, LLP Trade debt $4,735
Dan Reising Trade debt $3,960
Michael Luna & Associates Inc. Trade debt $3,875
OMB Electrical Engineers, Inc. Trade debt $3,800
Carmel Stuart Corp. Trade debt $3,577
RPA Landscape Architecture Trade debt $3,200
Inc.
Terra-Petra Incorporated Trade debt $2,360
Greenleaf Demolition & Trade debt $2,324
Grading
Plumbing Solutions Mechanical Trade debt $1,884
Inc.
Jaycocal Engineering Inc. Trade debt $1,750
Earth Support Systems, Inc. $1,040
The petition was signed by Chad Carney, president of the Company.
ACUSPHERE INC: Enters Into Amendments With GE & BSP Agreements
--------------------------------------------------------------
On February 11, 2009, Acusphere, Inc., entered into an amendment
to a License Agreement with GE Healthcare AS dated as of June 1,
2006, and as amended on May 11, 2007 and May 20, 2008.
Under the Second GE Amendment, the Company was due to make a
series of payments due -- $5.5 million due on June 1, 2007,
payable in two installments commencing on June 1, 2008, the first
installment of $916,667 is due and payable on June 1, 2008, and
the remaining installment is due and payable on October 1, 2009,
in an amount consisting of:
(i) the amount of $4,583,333 in principal plus
(ii) interest accruing on such principal amount from July 1,
2008 at the rate of 6% per annum until paid in full.
Notwithstanding these payments, upon receipt of regulatory
approval by the U.S. Food and Drug Administration to market AI-700
in the United States, or the approval of a Marketing Authorization
Application to market AI-700 in Europe, prior to September 1,
2010, any then remaining balance of the $4,583,333, plus interest
accrued, payable would have been immediately due and payable in
full.
The Third GE Amendment provides that, in lieu of these payments,
the Company will make a series of payments:
(i) $250,000 due on February 11, 2009,
(ii) $250,000 due upon the closing of an equity or debt
investment in the Company or credit facility made
available to the Company in an amount of at least
$5 million, and
(iii) $4,271,333 due on February 15, 2009, and payable with
accrued interest at a rate of 6% on December 31, 2013;
provided, that, within 60 days after the first commercial sale of
AI-700 in the United States or Europe, prior to December 31, 2013,
any then remaining balance of the $4,271,333, plus interest
accrued, shall be immediately due and payable in full. The terms
of the license agreement with GE are otherwise unchanged.
On February 12, 2009, the Company entered into a third amendment
to a Patent Transfer Agreement with Bayer Schering Pharma AG dated
as of May 11, 2005, as amended on April 27, 2007, and as further
amended on May 15, 2008. Under the Second BSP Amendment, the
Company was due to make a series of payments due -- $200,000 on or
before fifteen days following execution of the Second BSP
Amendment and $1.8 million on or before fifteen days after May 11,
2009.
The Third BSP Amendment provides that, in lieu of the $1.8 million
payment due on or before 15 days after May 11, 2009, the Company
shall instead pay BSP a total of $1.8 million:
(i) $100,000 on or before 15 days after the execution of the
Third BSP Amendment;
(ii) $100,000 on or before 15 days after the earlier of (a) the
closing by Acusphere of an equity financing in excess of
$10 million or (b) May 11, 2013; and
(iii) $1.6 million on or before 15 days after May 11, 2013.
The terms of the patent transfer agreement with BSP are otherwise
unchanged.
On February 17, 2009, the Company disclosed (i) that it has
submitted an amendment to its New Drug Application for Imagify(TM)
(Perflubutane Polymer Microspheres) for Injectable Suspension to
the U.S. Food & Drug Administration and (ii) that it had completed
the renegotiation of payment terms under certain intellectual
property agreements.
About Acusphere
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) -- http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
Company is focused on developing proprietary drugs that can offer
significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
Going Concern Doubt
Deloitte & Touche LLP in Boston raised substantial doubt about the
ability of Acusphere to continue as a going concern after it
audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor cited the Company's recurring losses
from operations, negative cash flows from operations, and the
projected funding needed to sustain its operations.
Acusphere's balance sheet at Sept. 30, 2008, showed total assets
of $22.8 million and total liabilities of $33.1 million, resulting
in a stockholders' deficit of $10.3 million.
Net loss of three months ended Sept. 30, 2008, was $10.2 million
compared with a net loss of $14.0 million for the same period in
the previous year. For nine months ended Sept. 30, 2008, the
Company reported a net loss of $34.8 million compared with a net
loss of $41.1 million for the same period in the previous year.
ALERIS INT'L: U.S. Trustee Sets Sec. 341 Meeting for March 27
-------------------------------------------------------------
Roberta A. DeAngelis, acting United States Trustee for Region 3,
will convene a meeting of creditors of Aleris International, Inc.,
and its 42 debtor-affiliates, on March 27, 2009 at 10:00 a.m., at
J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, in
Wilmington, Delaware.
The meeting will be the first meeting of creditors required under
Section 341(a) of the Bankruptcy Code in the Debtor's bankruptcy
cases.
Attendance of a debtor's creditors at Section 341 meeting is,
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 Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Asks Court to Approve Weil Gotshal Engagement
-----------------------------------------------------------
Aleris International, Inc., and its affiliates seek permission
from the U.S. Bankruptcy Court for the District of Delaware to
employ Weil, Gotshal & Manges LLP, as lead counsel in their
Chapter 11 cases, nunc pro tunc to the Petition Date.
Sean M. Stack, the Debtors' vice president for Corporate
Development and Strategy, relates that before the Petition Date,
the Debtors have engaged Weil Gotshal in connection with
evaluating potential financial obligation restructuring
alternatives. Weil Gotshal is thus become familiar with the
Debtors' business, financial affairs and capital structure.
Weil Gotshal has been actively involved in major Chapter 11
cases, including those of Pilgrim's Pride Corporation, Washington
Mutual, Inc., Lehman Brothers Holdings, Inc., and SemCrude, L.P.
The Debtors have selected the firm because of its general
experience and knowledge in the field of debtor protection and
business reorganizations under Chapter 11 of the Bankruptcy Code,
and its knowledge of the Debtors' business and financial affairs,
in particular, Mr. Stack tells the Court.
As the lead counsel to the Debtors, Weil Gotshal will:
(a) take all necessary actions to protect and preserve the
Debtors' estates, including the prosecution of actions on
the Debtors' behalf, the defense of any actions against
the Debtors, the negotiation of disputes in which the
Debtors are involved and the preparation of objections to
claims filed against the Debtors' estates;
(b) prepare, on the Debtors' behalf, all necessary motions,
applications, answers, orders, reports, and other papers
in connection with the administration of the Debtors'
estates;
(c) take all necessary actions in connection with a plan or
plans of reorganization and related disclosure statement
and related documents, and further actions as may be
required; and
(d) perform all other necessary legal services in connection
with the prosecution of these Debtors' cases.
The Debtors will pay Weil Gotshal for the Firm's contemplated
services based on these hourly rates:
Professional Hourly Rate
------------ -----------
Members and Counsel $650 - $950
Associates $355 - $640
Paraprofessionals $150 - $290
The Debtors will also reimburse the Firm for actual and necessary
expenses incurred in connection with its representation of the
Debtors.
Debra A. Dandeneau, Esq., a member at Weil, Gotshal & Manges LLP,
in New York, disclosed in an affidavit filed in Court that her
Firm has received payments and retainers, aggregating $2,674,452,
including advances against expenses. The Firm has also used
advanced retainers and payments, totaling $2,216,073, to credit
the Debtors' account for its actual and estimated charges through
the Petition Date, she said.
As of the Petition Date, Weil Gotshal has a remaining credit
balance in favor of the Debtors for $458,379 for future services
to be performed and expenses to be incurred, Ms. Dandeneau
stated.
Ms. Dandeneau further disclosed that her Firm's representation of
Mackay Shields, AIG, Citigroup, General Electric, General Motors
Corporation and Lehman Brothers -- all parties-in-interest in the
Debtors' cases -- constitute more than 1% of the Firm's annual
revenue over the past 12 months.
Nevertheless, Ms. Dandeneau assures the Court that her Firm does
not hold or represent an interest adverse to the Debtors' estate,
and is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000).
ALERIS INT'L: Seeks to Hire Richards Layton as Delaware Counsel
---------------------------------------------------------------
Aleris International, Inc., and its affiliates, pursuant to
Section 327(a) of the Bankruptcy Code, seek authority from the
U.S. Bankruptcy Court in Wilmington, Delaware, to employ Richards,
Layton & Finger, P.A., as their co-counsel, nunc pro tunc to the
Petition Date.
The Debtors relate that they have selected Richards Layton as
their co-counsel because of the firm's extensive experience and
knowledge in the field of debtors' and creditors' rights,
business reorganizations and liquidations under Chapter 11 of the
Bankruptcy Code.
As co-counsel to the Debtors, Richards Layton will:
(a) advise the Debtors of their rights, powers and duties as
debtors and debtors-in-possession;
(b) take all necessary action to protect and preserve the
Debtors' estates, including the prosecution of actions on
the Debtors' behalf, the defense of any actions commenced
against the Debtors, the negotiation of disputes in which
the Debtors are involved, and the preparation of
objections to claims filed against the Debtors' estates;
(c) prepare on behalf of the Debtors all necessary motions,
applications, answers, orders, reports and papers in
connection with the administration of the Debtors'
estates; and
(d) perform all other necessary legal services in connection
with the bankruptcy cases.
Sean M. Stack, president of Aleris International, Inc., says that
given the extensive nature of the services that the Firm will
provided the Debtors, it is necessary that the Debtors employ
Richards Layton under an evergreen retainer. Prior to the
Petition Date, the Debtors have paid Richards Layton a $150,000
retainer in connection with and in contemplation of their Chapter
11 filing.
The Debtors will pay for Richards Layton's services in accordance
with these hourly rates:
Professional Rate/Hour
------------ ---------
Paul N. Heath $475
Katherine L. Good $275
Andrew Irgens $230
Travis A. McRoberts $230
Ann Jerominski $185
The Debtors will also reimburse Richards Layton for all necessary
and actual expenses incurred by the Firm in connection with its
representation of the Debtors.
Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, assures the Court that his Firm does not
hold or represent any interest adverse to the Debtors or their
estates in the matters upon which it is to be employed. He
maintains that Richards Layton is a "disinterested person" as
that term is defined in Section 101(14) of the Bankruptcy Code,
as modified by Section 1107(b) of the Bankruptcy Code.
Mr. Heath apprised the Court of his Firm's current and former
clients, a list of which is available for free at:
http://bankrupt.com/misc/Aleris_RichardsClients.pdf
A list of payments received by Richards Layton within 90 days
before the Petition Date is available for free at:
http://bankrupt.com/misc/Aleris_RichardsPayment.pdf
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Seeks to Honor Prepetiton Employee Charges
--------------------------------------------------------
Aleris International, Inc., and its affiliates have about 3,300
employees, consisting of 830 salaried employees, 1,940 wage
employees, and 530 employees who have been laid off but are not
formally terminated.
In the ordinary course of their business, the Debtors incur
payroll and provide other benefits to their employees. They
spend an average of $2.9 million per pay period for semi-monthly
payments to salaried employees and $1.5 million per week to wage
employees. As of the Petition Date, the Debtors estimate
$2.5 million in outstanding semi-monthly wages and salaries and
$1.1 million in outstanding weekly wages.
On occasion, the Debtors also issue off-cycle checks for certain
adjustments for late or incorrect time entries of their
employees. On the average, the Debtors pay $120,000 in wage
adjustments monthly.
To facilitate the payment of their compensation obligations, the
Debtors engage the services of ADP. The Debtors pay ADP $50,000
monthly and estimate $20,000 in outstanding payroll fees to ADP
as of the Petition Date.
The Debtors also provide benefits to about 390 former employees
and 490 retired employees.
The Debtors' employee benefit plans and programs are:
A. Alumitech Sales Incentive Program
The Debtors offer an incentive program for sales employees
at their Alumitech facility. Eleven employees participate
in the program. The Debtors paid $287,000 in sales
commission in 2008.
B. Withholding Taxes, Medicare, Social Security, Garnishments
The Debtors, on average, owe $2 million for withholding
taxes per pay period. Since ADP withholds taxes and
accordingly remits the amount to taxing authorities, the
Debtors do not owe any withholding taxes as of the Petition
Date. They also do not owe any amount for garnishments on
account of tax levies, child support and other garnishments
under court order on employees' salaries.
Moreover, the Debtors owe about $535,000 per pay cycle on
payroll taxes.
C. Reimbursements
D. Non-employee Compensation and Obligations
The Debtors engage temporary "employees", independent
contractors, and third-party sales brokers hired through
third-party agencies.
E. Management Incentive Program and Employee Incentive Program
About 300 employees are eligible under the Management
Incentive Program, pursuant to which the employees receive
a bonus when the Debtors achieve certain fiscal goals. No
MIP bonuses were earned in 2008. With first quarterly
bonuses for 2009 due in June 2009, the Debtors clarify that
the amount of potential MIP bonuses is not included in the
estimated cap on payment of prepetition employee
obligations.
The Employee Incentive Program pays bonuses to eligible
employees based on the overall performance of the
employees' business unit and the Debtors' operation as a
whole.
G. Gains Sharing Program
Eligible employees receive bonuses for achieving certain
performance metrics on safety, productivity, quality and
efficiency, among others. In 2008, the Debtor paid about
$4.8 million for 2007 gain sharing bonuses. Some 1,375
union and non-union employees participate in the program.
H. Paid-time off for vacation, holidays, jury duty,
bereavement and military leave
I. Expatriate Program
The Debtors paid $1.5 million in 2008 for benefits to four
of their employees working abroad.
J. Relocation Program
K. Tuition Reimbursement Program
L. Automobile Program
M. Retention Programs
As part of the consolidation of their global headquarters
to Beachwood, Ohio, the Debtors offered retention payments
to certain critical employees in their Louisville, Kentucky
facility.
As of the Petition Date, the Debtors owe $120,000 for
outstanding retention payments if the three eligible
employees remain until completion of the headquarter
consolidation.
N. Severance Payments
O. Health Plans and Related Health Programs
The Debtors also engage ADP to help in the administration
of their employee health plans and benefits. As of the
Petition Date, they owe ADP $20,000 as for those services.
The Debtors also maintain certain excess insurance, or the
stop-loss insurance, which insures against claims in excess
of $275,000.
P. Retirement Plans
The Debtors maintain 401(k) retirement plans for union and
non-union members.
They also anticipate filing an application with the
Internal Revenue Service to implement a voluntary
compliance program of Aleris International, Inc., 401(k)
plans with respect to:
* United Steelworkers of America Local 7993 (Ashville);
* International Association of Machinists & Aerospace
Workers Lodge 10 (Richmond); and
* Sheet Metal Workers International Association, Local
Union 5, AFL-CIO (Roxboro).
Due to systems errors, calculations and eligible
compensation deferrals for these 401(k) Plans were not
updated. This failure, the Debtors disclosed, could result
to possible shortage or coverage in the funds, where in the
case of an unfunded shortage, the VCP 401(k) Plans may lose
their deferred status. As a result, employees may incur
tax liability and the Debtors could lose tax deductions for
unvested amounts.
Accordingly, the Debtors asked the Court to authorize
contributions for potential shortfalls of up to $100,000.
They will seek further Court authority for shortfall in
excess of that amount.
The Debtors report that as of the Petition Date, they owe these
amounts under the Benefit Programs:
Employee Program Amount Owed
----------------- -----------
Alumitech Sales Incentive Program $160,000
Employer Payroll Taxes 450,000
Employee Reimbursements 350,000
Non-Employee Obligations
Temporary Employees 145,000
Independent Contractors 125,000
Third-party sales brokers 35,000
Gain Sharing Program 4,900,000
Accrued, Unused or Unpaid Vacation 7,500,000
Expatriate Benefits 195,000
Relocation Benefits 400,000
Tuition Reimbursement 110,000
Automobile Costs 14,000
Severance Programs 880,000
Medical Programs payable
Expatriate Employees 14,000
Vision Benefits 88,600
Ins. Payables for Health-Related Programs
Anthem Blue Cross Blue Shield 2,900,000
Aetna, Inc. 600,000
Delta Dental Plan of Ohio 205,000
CIGNA Dental Preferred 48,000
HRI Dental Plan 32,000
Aetna, Inc. -- dental 11,000
Flexible Spending Accounts 75,000
Health Savings Accounts 6,000
Health Risk Assessment Reimbursement 6,000
Wellness and Gym Reimbursements 1,500
Life and Dismemberment Insurance
Basic Life 55,000
Voluntary Personal Life 20,500
Voluntary Personal Accidental Death 3,800
Self-insured Short-term Disability 33,500
Fully-insured Short-term 49,000
Long-term disability 18,000
Special Accident 13,000
Ayco Survivor Support Fin'l Counseling Servs 4,000
Teamster Health and Welfare Plan 23,500
MIRA Insurance Fund 168,000
Non-Union 401(k) Plans
Matching Contribution 140,000
Retirement Contribution 2,400,000
Make-up Contributions 390,000
Union 401(k) Matching Contributions 42,000
Third Party Administered Union or
Multi-employee Sponsored Plans 76,450
Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP, in New
York, maintained that the Debtors provide for the Employee
Programs in the ordinary course of their businesses. The
Debtors' employees and personnel could suffer undue hardship and
serious financial difficulties, she averred. The Debtors, Ms.
Dandeneau clarified, are not seeking authority at this time to
honor any severance payable to any of the Debtors' insiders.
The Debtors thus seek the Court's authority to honor, pay and
continue their Employee Obligations. They also asked the Court
to direct their banks to receive, honor, process and pay all
checks and wire transfers drawn on their accounts in payment of
those Employee Obligations.
Accordingly, the Debtors sought and obtained the Court's
permission, in an interim basis, to honor and pay their Employee
Obligations in an amount not to exceed $12,300,000.
Judge Shannon also authorized the payment of incidental costs and
expenses. Banks and financial institutions are authorized to
process and honor all checks drawn from the Debtors' accounts in
connection with the payment of the Employee Obligations.
Judge Shannon clarified that the Debtors are not permitted to (i)
make any cash payments for any Prepetition Employee Obligations
exceeding $10,950 per employee on account of salaries, wages and
commissions or any unused prepetition vacation days; and (ii) pay
any Prepetition Employee Obligations on account of incentive
plans, retention plans, severance payments, VCP shortfalls, non-
union 401K, retirement contributions and tuition reimbursements.
The Court will convene a hearing on March 11, 2009 at 1:00 p.m.
(Eastern Time), for the final approval of the Debtors' request.
Aleris Set to Lay Off 60 Lewisport Plant Workers
Aleris informed, on February 17, 2009, about 60 of its employees
at the company's plant in Lewisport, Hancock County, that they
will among those affected by the company's decision to layoff some
workers, Messenger-Inquirer reports. The lay offs are effective
March 2, Beth Wilberding of Messenger-Inquirer relates.
The company has made known the lay offs are temporary, but has
not set the time when the employees might be recalled, the
newspaper adds.
Aleris Human Resources Director Melissa Olmstead told the
newspaper that the company's decision for lay offs are in
response to the general economic crisis. The Lewisport plant
employ more than 800 workers.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Has Until May 12 to File Schedules and Statements
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware, at the
behest of Aleris International, Inc., and its affiliates, gave the
Debtors until May 12, 2009, to file their schedules of assets and
liabilities and statements of financial affairs.
Pursuant to Section 521 of the Bankruptcy Code and Rule 1007(b)
and (c) of the Federal Rules of Bankruptcy Procedure, a chapter
11 debtor must file with its voluntary petition or within 15 days
thereafter, its schedules of assets and liabilities, schedules of
executory contracts and unexpired leases, lists of equity
holders, schedules of current income and expenditures, and
statement of financial affairs.
Rule 1007-1(b) of the Local Rules of the U.S. Bankruptcy Court
for the District of Delaware, however, provides that if that a
debtor's total number of creditors exceeds 200, the deadline for
filing the Schedules and Statements is extended automatically for
an additional 15 days if the petition is accompanied by a
creditors list.
Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, the Debtors' proposed local counsel,
disclosed that the Debtors have approximately 21,000 creditors.
Moreover, given the urgency with which the Debtors sought
protection under Chapter 11 and the numerous critical operational
matters that their accounting staff must address in the early
days of their bankruptcy cases, the Debtors will not be able to
complete the Schedules and Statements as required, he said.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000)
ALERIS INT'L: Gets Court Okay to Pay Foreign Suppliers, Creditors
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave Aleris
International, Inc., and its affiliates authority, on an interim
basis, to make payments not exceeding $3,500,000 to foreign
creditors for the delivery of certain goods necessary for the
Debtors' businesses.
The Debtors maintain that the satisfaction of obligations owed to
the Foreign Creditors in the ordinary course of business is
critical to the preservation and protection of their estates, and
ultimately, to maximize value.
The Debtors operate 27 production facilities in the United
States, with eight production facilities that provide rolled and
extruded aluminum products and 19 recycling production plants.
In addition, the Debtors operate certain non-debtor domestic
operations, and through non-debtor international subsidiaries,
facilities in Canada, Brazil, Mexico, Europe, and Asia, with
state-of-the-art facilities in Belgium and Germany.
As part of the Debtors' worldwide operations, they incur
obligations to numerous foreign creditors who, among other
things, provide prime aluminum, scrap, chemicals, hardeners,
flux, and other products needed for the Debtors' aluminum
production processes, Paul N. Heath, Esq., at Richards, Layton &
Finger, P.A., in Wilmington, Delaware, proposed attorneys for the
Debtors, relates.
Mr. Heath says the Debtors make payments to the Foreign Creditors
on a regular basis to maintain both their domestic and foreign
operations. In the event of non-payment, the Debtors are
concerned that certain Foreign Creditors may cease providing
goods and services to them, terminate supply contracts and cause
other potential interruptions.
Mr. Heath clarifies that nothing in the Debtors' Motion
constitutes a rejection or assumption of any executory contract
or unexpired lease of the Debtors' relating to Foreign Creditors.
The Court will convene a final hearing on the Debtors' request on
March 11, 2009.
About Aleris International
Aleris International, Inc. produces and sells aluminum rolled and
extruded products. Aleris operates primarily through two
reportable business segments: (i) global rolled and extruded
products and (ii) global recycling. Headquartered in Beachwood,
Ohio, a suburb of Cleveland, the Company operates over 40
production facilities in North America, Europe, South America and
Asia, and employs approximately 8,400 employees. Aleris operates
27 production facilities in the United States with eight
production facilities that provided rolled and extruded aluminum
products and 19 recycling production plants.
Aleris International, Inc., aka IMCO Recycling Inc., and various
affiliates filed for bankruptcy on February 12, 2009 (Bankr. D.
Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon
presides over the cases. Stephen Karotkin, Esq., and Debra A.
Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve
as lead counsel for the Debtors. L. Katherine Good, Esq., and
Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In
Wilmington, Delaware, serves as local counsel. Moelis & Company
LLC, acts as financial advisors; Alvarez & Marsal LLC a as
restructuring advisors, and Kurtzman Carson Consultants LLC as
claims and noticing agent for the Debtors. As of Dec. 31, 2008,
the Debtors had total assets of $4,168,700,000; and total debts of
$3,978,699,000.
Bankruptcy Creditors' Service, Inc., publishes Aleris
International Bankruptcy News. The newsletter tracks the chapter
11 proceeding undertaken by Aleris International, Inc. and its
various affiliates. (http://bankrupt.com/newsstand/or 215/945-
7000).
AMF BOWLING: Moody's Downgrades Corporate Family Rating to 'B3'
---------------------------------------------------------------
Moody's Investors Service downgraded AMF Bowling Worldwide, Inc.'s
corporate family rating to B3 from B2 and the second lien term
loan rating to Caa2 from Caa1. Moody's also affirmed the B1
rating on the first lien senior secured credit facilities. The
ratings outlook was revised to stable from negative. The
downgrade reflects a meaningful decline in operating performance
for the six months ended December 28, 2008 that has led to a
deterioration in credit metrics. The company has experienced a
modest decline in sales as customer traffic at its traditional
bowling centers softened while operating costs have generally
increased. Additionally, free cash flow remains negative due to
significant discretionary capital spending. Notwithstanding these
risks, Moody's recognizes the potential benefit associated with
AMF's recently implemented cost reduction activities, its ongoing
efforts to close/sell unprofitable locations, and the fact that
recent sales declines have only been modest despite a challenging
economic environment.
These ratings were downgraded:
-- Corporate Family Rating to B3 from B2;
-- Probability-of-Default Rating to B3 from B2;
-- $80 million second lien term loan due 2013 to Caa2 (LGD5,
80%) from Caa1 (LGD5, 81%).
These ratings were affirmed:
-- $40 million first lien revolver due 2012 at B1 (LGD3, 31%).
Point estimate revised from (LGD3, 32%);
-- $245 million first lien term loan due 2013 at B1 (LGD3, 31%).
Point estimate revised from (LGD3, 32%).
The stable outlook reflects Moody's expectation that AMF will
continue to experience only a modest deterioration in sales, that
recently implemented cost reduction activities will support
earnings stabilization, and that it will continue to maintain
adequate liquidity.
The last rating action was on March 6, 2008 when Moody's affirmed
AMF's B2 corporate family rating, but revised its ratings outlook
to negative from stable.
Headquartered in Richmond, Virginia, AMF Bowling Worldwide, Inc.
is the largest operator of bowling centers in the world with
approximately 322 centers in operation, including nine centers
outside the US. AMF had revenues of $453 million for the twelve
months ended December 28, 2008.
ARINC INC: Weak Operating Results Cue Moody's Junk Rating
---------------------------------------------------------
Moody's Investors Service lowered the debt ratings of Arinc Inc. -
Corporate Family and Probability of Default ratings to Caa1 from
B3, the first lien bank facilities to B3 from B2 and the second-
lien bank facilities to Caa3 from Caa2. The rating outlook is
stable.
These rating actions reflect the expectation that weakening
operating results, given Arinc's high debt burden, will produce
credit metrics more consistent with the Caa1 rating category.
Further, cash flows are likely to be volatile in the near term.
Operating profits are lower than anticipated at the time of
Arinc's acquisition by the Carlyle Group.
The majority of Arinc's profits are derived from commercial and
business aviation communications, primarily its GLOBALink service.
These profits have been below Moody's expectations due to
aggressive capacity reductions taken by the commercial airlines in
the wake of meaningfully weaker passenger traffic. As well,
operating expenses were higher than anticipated. With weaker
market conditions facing Arinc's commercial business, near term
improvement in operating results is unlikely. This will further
pressure Arinc's credit metrics. Moody's notes, however, that
Arinc is shifting its business focus towards the more stable
defense contracting sector (mainly systems engineering and
maintenance).
Arinc has generated positive free cash flow, largely because of
the cash flow from the defense operation. However, cash flow
could be volatile going forward because of the large working
capital component; working capital is a source of cash because of
the advance payments from customers. Also, Arinc is committed to
higher capital spending in the near term which is also likely to
limit free cash flow. Liquidity is supported by the full amount
available under its revolving credit facility (about $70 million),
and Arinc is expected to remain well in compliance with its debt
covenants under its bank facilities. Substantially all of the
company's assets are encumbered, which limits alternate borrowing.
Taken together, the company's liquidity is adequate.
The stable outlook reflects the expectation that operating
performance is unlikely to deteriorate to levels consistent with a
lower rating category given the defense backlog and strong market
position in the air-to-ground aviation communications. Although
the rating is unlikely to be raised in the near term, the rating
or outlook could be raised with margin improvement resulting in
EBIT/interest in excess of 1.5 times, and retained cash flow to
debt exceeding 10% with sustained positive FCF. However, negative
free cash flow or unanticipated reliance on revolver drawings
could place downward pressure on Arinc's ratings or outlook, or if
the EBITDA margin is less than 10% or, debt/EBITDA is above 7.0
times.
The last rating action on Arinc was on November 9, 2007, when
Moody's assigned a B2 rating to Arinc's proposed first lien credit
facilities.
Downgrades:
Issuer: Arinc Incorporated
-- Corporate Family Rating, Downgraded to Caa1 from B3
-- Probability of Default Rating, Downgraded to Caa1 from B3
-- Senior Secured 1st Lien Bank Credit Facility, Downgraded to
B3 from B2
-- Senior Secured 2nd Lien Bank Credit Facility, Downgraded to
Caa3 from Caa2
Other Changes:
Issuer: Arinc Incorporated
-- Senior Secured 1st Lien Bank Credit Facility, Changed to
LGD3, 36% from LGD3, 37%
-- Senior secured 2nd Lien Bank Credit Facility, Changed to
LGD5, 86% from LGD5, 87%
Arinc Inc., headquartered in Annapolis, Maryland, is a provider of
communications information technology products and services and
engineering services to the commercial aviation industry as well
as government agencies.
ASHTON WOODS: Private Debt Exchange Offer Expires
-------------------------------------------------
On February 13, 2009, Ashton Woods USA, L.L.C., disclosed the
expiration and preliminary results of its previously announced
private exchange offer and consent solicitation to exchange any
and all of its 9.5% Senior Subordinated Notes due 2015 for new
11.0% Senior Subordinated Notes due 2015, related guarantees and
Class B membership interests in the Company. The Exchange Offer
expired February 13 at 5:00 p.m. (New York City time).
Based on information provided by U.S. Bank National Association,
the exchange agent for the Exchange Offer, at the expiration of
the Exchange Offer, $123,300,000 aggregate principal amount of the
Old Notes, representing 98.64% of the outstanding principal amount
of the Old Notes, were validly tendered for exchange. All of the
Old Notes that were properly tendered and not withdrawn will be
accepted for exchange.
The final results of the Exchange Offer will be announced on the
settlement date.
Moelis & Company acted as financial advisor to the Company in
connection with the Company's proposed restructuring, of which the
Exchange Offer is a part.
Headquartered in Atlanta, Georgia, Ashton Woods USA LLC is a
homebuilder with operations in Atlanta, Dallas, Houston, Orlando,
Phoenix, Denver and Tampa.
* * *
The Troubled Company Reporter reported on October 7, 2008, that
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Ashton Woods USA LLC and its subsidiary, Ashton Woods
Finance Co., to 'D' from 'CCC' and downgraded Ashton Woods'
$125 million 9.5% senior subordinated notes due 2015 to 'D' from
'CC' after the Company failed to make its Oct. 1, 2008, interest
payment on this obligation. The recovery rating on the senior
subordinated notes remains a '6'. The ratings were on CreditWatch
negative before being lowered, where they were placed on Aug. 6,
2008.
The TCR reported on Feb. 19, 2009 that Standard & Poor's Ratings
Services withdrew its 'D' corporate credit ratings assigned to
Ashton Woods USA LLC and its subsidiary, Ashton Woods Finance Co.
S&P also withdrew its 'D' issue-level rating and S&P's '6'
recovery rating on the company's senior subordinated notes due
2015.
BANKATLANTIC BANCORP: Fitch Cuts Issuer Default Rating to 'B-'
--------------------------------------------------------------
As a result of declining financial flexibility, Fitch Ratings has
downgraded the Long-Term Issuer Default Ratings of BankAtlantic
Bancorp. and its primary operating subsidiary, BankAtlantic FSB.
The Rating Outlook is Negative.
As the economy continues to weaken and the Florida real estate
market remains extremely soft, BBX's financial flexibility
continues to contract. On Feb. 20, 2009, BBX's management
announced its decision to defer interest expense on its pooled
trust preferred securities (totaled $294 million at Dec. 31,
2008), saving approximately $20 million cash annually. The
holding company's liquidity position has eroded over the last year
as evidenced by a reduction in cash and securities to $40 million
at Dec. 31, 2008 compared to $195 million at Dec. 31, 2007. This
reduction was driven by support provided to the bank through
capital contributions in 2008 and net purchases of non-accrual
loans. The deferral of interest payments should help preserve
liquidity and, because these are deferrable instruments, the
company is not in default. There is no other debt outstanding at
the parent company; however, the parent bears other non-interest
expenses including costs related to its asset work-out subsidiary,
which totaled about $3.1 million for 2008.
BankAtlantic FSB's current capital levels remain in excess of
regulatory well-capitalized thresholds. However, the strain at
the parent company suggests that it will not be in a position to
fortify the bank's capital further, should it become necessary.
Early in 2008, the bank sold $102 million of its problem assets to
an asset work-out subsidiary of the parent company. Further,
during 2008, the parent company contributed $65 million to bolster
the bank's capital. In Fitch's view, the likelihood of additional
and/or any material support that can be expected from the holding
company has now significantly diminished.
For fourth-quarter 2008, BBX reported a net loss of $156.6 million
driven mainly by $81.3 million of deferred tax asset write-downs
and $48.3 million of goodwill write-downs. During the quarter,
BBX also experienced further significant credit quality
deterioration. Non-performing assets jumped to $287.4 million at
year end, compared to $171.8 million at Sept. 30, 2008, due to a
$105 million rise in commercial real estate problem loans.
Annualized net charge-offs for 2008 rose to 2.17% from 0.44% in
2007. Fitch believes that further significant provisions may be
required, which would likely pressure earnings and capital.
Positively, low-cost core deposits remain stable, representing
approximately two thirds of total deposits. Another positive was
the improvement in pre-tax core operating earnings for 2008,
representing an improvement of about 30% compared to 2007.
Fitch has taken these rating actions for BankAtlantic Bancorp.:
-- Long-term IDR downgraded to 'B-' from 'BB'; Outlook Negative;
-- Individual Rating downgraded to 'D/E' from 'C/D'; Outlook
Negative;
-- Short-term IDR affirmed at 'B'; Outlook Negative;
-- Support Rating at '5';
-- Support Floor at 'NF'.
Fitch takes these rating actions for BankAtlantic FSB:
-- Long-term deposits downgraded to 'BB-' from 'BB+'; Outlook
Negative;
-- Long-term IDR downgraded to 'B+' from 'BB'; Outlook Negative;
-- Individual downgraded to 'D' from 'C/D'; Outlook Negative
-- Short-term IDR affirmed at 'B';
-- Short-term deposits affirmed at 'B'.
-- Support Rating affirmed at '5';
-- Support Floor affirmed at 'NF'.
BARRINGTON BROADCASTING: Moody's Cuts Default Rating to 'Caa2'
--------------------------------------------------------------
Moody's Investors Service lowered the probability of default
rating for Barrington Broadcasting Group LLC to Caa2 from Caa1
based on the approval of a bank amendment which permits the
company to buy back bonds in the open market at a discount.
Moody's would likely consider this bond buyback a distressed
exchange due to expectations for a significant loss for
bondholders based on the discount. A distressed exchange
constitutes a default for ratings purposes (though not for legal
purposes), and the downgrade of the PDR reflects elevated default
risk.
Notwithstanding the potential for improvement in Barrington's
credit profile over the longer term from the bond buyback, Moody's
affirmed the Caa1 corporate family rating. The Caa1 CFR continues
to reflect Moody's opinion that the current capital structure is
unsustainable, particularly given expectations for protracted
weakness in broadcast industry and revenue declines toward the
high end of Moody's previously established 15-20% range in 2009.
Sustaining the Caa1 CFR absent some bond buyback would be
challenging, in Moody's opinion.
Moody's also affirmed the SGL-4 speculative grade liquidity rating
based on expectations that compliance with the maximum leverage
covenant when it tightens in December 2009 will likely be
challenging absent a meaningful reduction in debt or better than
expected performance. Furthermore, the amendment increased
pricing on the bank credit facility, resulting in an estimated $3
million increase in annual interest expense that will strain the
company's already limited liquidity. Barrington does expect to
receive cash from its equity sponsor, improving short term
liquidity and preventing the breach of the maximum leverage
covenant of the bank agreement which could have occurred with the
reporting of December 2008 results if the sponsor did not exercise
its cure rights. Should the company create a better cushion of
compliance under financial covenants through bond buyback, which
could also reduce annual interest expense, Moody's would revisit
the SGL rating.
The outlook remains negative, incorporating concern that a steeper
or more protracted downturn in advertising revenue would further
weaken credit metrics as well as some uncertainty regarding the
execution of the bond buyback.
Barrington Broadcasting Group LLC
-- Probability of Default Rating, Downgraded to Caa2 from Caa1
-- Affirmed Caa1 Corporate Family Rating
-- Affirmed Caa3 rating on Senior Subordinated Bonds, LGD5, 72%
-- Affirmed B2 rating on Senior Secured Bank Credit Facility,
LGD2, 19%
-- Affirmed SGL-4 Speculative Grade Liquidity Rating
-- Outlook, Negative
The last rating action occurred October 23, 2008, when Moody's
lowered Barrington's corporate family and probability of default
ratings to Caa1 from B2.
Barrington Broadcasting Group, LLC, headquartered in Hoffman
Estates, Illinois, owns or programs 23 network television stations
in 15 markets. Its revenue for the twelve months ended September
30, 2008, was $117 million.
BAYONNE MEDICAL: Headed for April 7 Plan Confirmation
-----------------------------------------------------
Bayonne Medical Center will seek confirmation from the U.S.
Bankruptcy Court for the District of New Jersey of its liquidating
Chapter 11 plan on April 7, Bloomberg's Bill Rochelle said.
Bayonne filed a liquidation plan, which is being co-sponsored by
the official committee of unsecured creditors, after sold its 278-
bed nonprofit acute-care hospital in Bayonne. The hospital was
sold a year ago for $41.5 million, consisting of $100,000 cash,
plus the assumption of $7 million owing to one of the secured
creditors and the remainder by taking on various pre- and post-
bankruptcy obligations.
The Plan was made possible through a settlement with the
secured creditor, Mr. Rochelle adds. The terms of the Plan,
according to the report, are:
-- After costs of the Chapter 11 case and priority claims are
paid, unsecured creditors will split up the first
$3 million.
-- The secured lender, on account of its deficiency claim of
$46.7 million, will take the next $1 million.
-- Unsecured creditors and the lender will split the remainder
50/50.
About Bayonne Medical Center
Based in Bayonne, New Jersey, Bayonne Medical Center --
http://www.bayonnemedicalcenter.org/-- provides healthcare
services and operates a medical center. The company operates a
278-bed fully accredited, acute-care hospital located in Hudson
County. The company filed for Chapter 11 protection on April 16,
2007 (Bankr. D. N.J. Case No. 07-15195). Lawrence C. Gottlieb,
Esq., Adam C. Rogoff, Esq., and Eric J. Haber, Esq., at Cooley
Godward Kronish LLP, represent the Debtor in its restructuring
efforts. Stephen V. Falanga, Esq., at Connell Foley LLP, is the
Debtor's local counsel. Kurtzman Carson Consultants LLC is the
Debtor's claims and noticing agent. Andrew H. Sherman, Esq., and
Boris I. Mankovetskiy, Esq., at Sills Cummis Epstein & Gross PC,
represent the Official Committee of Unsecured Creditors. When
the Debtor filed for protection from its creditors, it listed
estimated assets and debts of $1 million to $100 million. The
Debtor's exclusive period to file a plan expired Nov. 12, 2007.
BERNARD L. MADOFF: Investors' Plea to Move Claims Deadline Denied
-----------------------------------------------------------------
Thom Weidlich at Bloomberg News reports that the Hon. Burton
Lifland of the U.S. Bankruptcy Court in New York has denied the
request of the investors who may have to return cash they withdrew
from Bernard L. Madoff Investment Securities LLC before it failed
to be exempted from a July 2 deadline for filing claims.
According to Bloomberg, court-appointed trustee Irving Picard may
seek a "clawback" of the money withdrawn from Bernard L. Madoff
Investment if he believes there was a preferential payment or
fraudulent transfer. The report says that Mr. Picard hasn't told
investors how clawbacks would be handled. The investors,
Bloomberg states, may be forced to file documents before the July
deadline to preserve their claims, losing the right to a jury
trial if Mr. Picard sues them for return of the money.
Bloomberg relates that the investors had said that they may have a
claim against Bernard L. Madoff Investment if they're forced to
return the funds. The investors told Judge Lifland that they need
an extension for the filing of claims because they may not know if
they have a claim by the July deadline, says Bloomberg. The
report states that The Lucerne Foundation, Collingwood
Enterprises, and Douglas Rimsky filed a motion for the extension
of the deadline.
Bloomberg reports that Philip Kaufman, the attorney for three
investors, said, "These investors who redeemed investments and who
received more in cash than they invested are investors who do not
now have any claims. If we file purely protective claims, we will
likely have waived a right to a jury in an avoidance case."
Mr. Picard said in court documents that Judge Lifland should deny
the investors' request because they haven't suffered any loss, and
thus don't have a right to sue.
Bloomberg quoted Judge Lifland as saying, "The movants admit they
do not have claims against the debtor. You have plenty of time to
cogitate and decide whether you want to file a protective claim."
The court ruling may affect "at least hundreds and possibly
thousands of other people," Bloomberg states, citing Mr. Kaufman.
Mr. Picard posted on his Web site that creditors of Bernard L.
Madoff Investment may file claims until July 2, but they should
submit their forms before March 4 to be paid "out of customer
property."
According to Bloomberg, Judge Lifland also approved Mr. Picard's
request to dismiss a lawsuit by Rosenman Family LLC, a New York
company seeking the return of money it gave to Bernard L. Madoff
Investment shortly before Mr. Madoff was arrested. Bloomberg says
that Rosenman Family gave Mr. Madoff about $10 million. The
report states that Bernard L. Madoff Investment claimed that
Mr. Madoff never obtained legal title to the funds and so they
should be returned.
Martin Rosenman, who runs Rosenman Family, said that Mr. Madoff
told him that his money wouldn't be invested until January 2009,
when his fund would reopen to new investors, Bloomberg says.
Bloomberg quoted Judge Lifland as saying, "It does appear that the
principal purpose of the deposit was for the purpose of
securities. The timing was not all that relevant."
Bloomberg reports that Judge Lifland rejected Mr. Picard's motion
to dismiss a similar lawsuit by Hadleigh Holdings LLC, which also
gave Mr. Madoff about $1 million in December 2008. Hadleigh said
in court documents that because it filed an amended complaint
after Mr. Picard moved to dismiss the original one, the dismissal
request was moot. Mr. Picard, according to Bloomberg, must file a
new motion to dismiss the amended complaint.
Rosenman and Hadleigh should be treated like other Bernard L.
Madoff Investment clients and be paid back their portion of what
is recovered, Bloomberg relates.
On Feb. 4, Mr. Picard said that he has recovered $946.4 million in
cash and securities for clients.
Investors May Trade Claims
Emily Chasan at Reuters reports that Barry Silbert -- CEO of
SecondMarket, an online trading platform which specializes in
illiquid assets -- is considering letting Madoff investors to
trade their claims on its marketplace. The report quoted him as
saying, "We always get calls when companies or firms file for
bankruptcy and we have to kind of take the creditor through the
process and it takes some time for buyers to want to get
involved."
According to Reuters, SecondMarket attended the first meeting of
Bernard L. Madoff Investment creditors last week to see if
investors were interested in trading their claims.
Reuters relates that SecondMarket charges a fee derived from a
percentage of the consummated transaction to the buyer and the
seller for the service. Mr. Silbert, according to Reuters, said,
"In the case of Madoff, people are still uncertain about what
their claim actually is. We're starting to see more buy-side
interest come in, but the sellers are still saying, 'You know I
don't know what I own or what I'm owed, and I don't know what to
sell it for."
Reuters reports that Mr. Silbert said that Madoff investors have
to find out how much their claim is actually worth, considering:
-- when they first gave money to Madoff,
-- how much they invested at later dates, and
-- how much they took out.
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 allegedly 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: Court Decision on Claims from Avoidance Actions
------------------------------------------------------------------
Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern
District of New York has denied a request by Lucerne Foundation,
Collingwood Enterprises and Douglas Rimsky, for changes to an
order setting the bar date for proofs of claim against Bernard L.
Madoff Investment securities LLC.
Lucerne, et al., former investors who have received distributions
from Madoff, wants a ruling that any claim arising in the future
as a result of the liquidation trustee's successful pursuit of an
avoidance action is excepted from the Bar Date and need not be
filed until 30 days after the judgment giving rise to the claim
becomes final.
The Securities Investor Protection Corporation; Irving Picard, as
the trustee appointed pursuant to the Securities Investor
Protection Act; and an Unofficial Committee of (unofficial) Claim
Holders strenuously oppose the motion.
Section 78fff-2(a)(3) of SIPA contains a six-month time limit for
filing customer claims:
Time limitations-No claim of a customer or other creditor of
the debtor which is received by the Trustee after the
expiration of the six-month period beginning on the date of
publication of notice. . . . shall be allowed, except that the
court may, upon application within such period and for cause
shown, grant a reasonable, fixed extension of time for the
filing of a claim by the United States, by a State or political
subdivision thereof, or by an infant or incompetent person
without a guardian.
Thus, it is clear from the face of the statute that the six-month
time limit for filing is subject to extension at the discretion of
the court in only three specified instances, none of which are
applicable in the present case, Judge Lifland points out.
While Lucerne, et al., is actually seeking a declaration that the
Bar Date Order will not affect the ability to file claims arising
from future avoidance judgments pursuant to Section 502(h) of the
Bankruptcy Code, this request, according to Judge Lifland, would
"constitute an impermissible advisory opinion," since no avoidance
claims have been asserted.
A court may not exercise subject matter jurisdiction absent
compliance with Article III of the Constitution which limits
judicial authority to "cases" and "controversies." According to
Iron Arrow Honor Society v. Heckler, 464 U.S. 555, 560-61 (1992),
"To satisfy the Article III case or controversy requirement, a
litigant must have suffered some actual injury that can be
redressed by a favorable judicial decision." Judge Lifland notes
that Lucerne et al., fail to demonstrate that they have suffered
or imminently will suffer, any real or substantial injury.
Judge Lifland said that in the meantime, and if so inclined,
Lucerne, et al., can file protective proofs of claim. Bar dates
apply to creditors who have reason to believe they have a claim,
even if the claim has not yet accrued.
The filing or non-filing of a claim is an act of volition employed
by individual parties as a tactical decision, Judge Lifland avers.
He says that here, Lucerne, et al., have until July 2, 2009, to
evaluate their individual circumstances.
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 allegedly 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.
BOYD GAMING: Moody's Reviews Rating for Downgrade on Casino Deal
----------------------------------------------------------------
Moody's Investors Service placed the ratings of Boyd Gaming
Corporation on review for possible downgrade after the company
announced it had submitted a non-binding preliminary indication of
interest to acquire all or a portion of Station Casinos, Inc.
Boyd is interested in exploring an acquisition of 100% of
Station's assets other than the assets that secure Station's CMBS
mortgage loan and related mezzanine financings and the assets that
secure Stations $250 million delay-draw term loan.
The review for possible downgrade will focus on: 1) Boyd's capital
structure should an acquisition of Station occur; 2) the company's
acquisition appetite for other opportunities if a deal for Station
is not consummated; and 3) Boyd's operating results --
particularly in the Las Vegas locals market that accounts for over
50% of wholly-owned property level EBITDA. The Las Vegas locals
gaming market has experienced substantial comparable month
declines in gaming revenue through December 2008 that has placed
downward pressure on the company's ratings.
These ratings were placed on review for possible downgrade:
-- Corporate family rating at Ba3
-- Probability of default rating at Ba3
-- $250 million senior subordinated notes 2016 at B2
-- $269 million senior subordinated notes due 2012 at B2
-- $350 million senior subordinated notes due 2014 at B2
Boyd's SGL-2 speculative grade liquidity rating remains unchanged.
The last rating action for Boyd was on October 14, 2008 when
Moody's lowered the company's corporate family rating to Ba3 and
senior subordinated notes to B2 and assigned a negative rating
outlook.
Boyd Gaming Corporation wholly-owns and operates gaming and
entertainment facilities located in Nevada, Mississippi, Illinois,
Louisiana, and Indiana. The company is also 50% partner in a
joint venture that owns and operates the Borgata Hotel Casino in
Atlantic City, New Jersey. The company generates about $2 billion
of annual net revenue.
BOYD GAMING: Stations Casinos Deal Won't Affect Fitch's Ratings
---------------------------------------------------------------
Boyd Gaming Corp.'s ratings are unaffected by the announcement
that the company is interested in exploring an acquisition of
certain assets of Station Casinos, Inc., according to Fitch
Ratings. Station offered a prepackaged bankruptcy plan to
bondholders on Feb. 3, 2009 after bondholders rejected the
proposed terms of Station's debt exchange offer in December 2008.
Boyd announced yesterday that it is interested in pursing a
transaction as either a 'stalking horse bidder,' or as a co-
sponsor or plan proponent. The announcement was a preliminary
indication of interest, so there is no binding agreement at this
time. As a result, Fitch's ratings are unaffected by the
announcement. If details of the terms regarding a formal
transaction materialize, Fitch will consider the impact on Boyd's
ratings at that time.
Boyd plans to report earnings on Thursday, Feb. 26, 2009 and Fitch
expects to consider Boyd's ratings and Rating Outlook at that
time. Boyd's current ratings are:
-- Issuer Default Rating at 'BB-';
-- Senior credit facility at 'BB';
-- Senior subordinate debt at 'B+'.
BOYD GAMING: Station Casinos Interest Won't Move S&P's BB- Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that its rating on Las
Vegas-based Boyd Gaming Corp. (BB-/Negative/--) is currently
unaffected by the company's announcement that it delivered a
nonbinding preliminary indication of interest to the board of
directors of Station Casinos Inc.
Boyd's press release indicated interest in Station's "OpCo
assets," which it defined as all of Station's assets other than
(1) the assets that secure the CMBS mortgage loan and related
mezzanine financing due Nov. 21, 2009 and (2) the assets that
secure Station's $250 million delay-draw term loan due Feb. 7,
2011. In addition, Boyd indicated that it would consider an
acquisition that includes the PropCo assets (Red Rock, Palace
Station, Boulder Station, and Sunset Station) as well. Boyd
management has estimated the enterprise value of the OpCo Assets
is approximately $950 million based on public information, subject
to completion of a due diligence review. As of Dec. 31, 2008,
Boyd had approximately $2 billion in availability under its
revolving credit facility.
This transaction could drive a deleveraging of Boyd's financial
profile and improve its ability to remain in compliance with its
bank covenants over the near term, as well as substantially
bolster its position in the Las Vegas locals market. Still, the
$950 million figure is nonbinding and subject to evaluation by
Station management. Moreover, the key issue affecting Boyd's
rating over the near term is the operating performance of its
existing portfolio. As of Sept. 30, 2008, operating lease-
adjusted debt leverage (excluding earnings from Borgata) and
EBITDA interest coverage were 6.5x and 2.6x, respectively. These
measures were both weak for the rating and will likely deteriorate
meaningfully over the next several quarters.
S&P expects to update its expectations for 2009 and beyond and
reassess its current rating on Boyd following the company's
fourth-quarter earnings announcement.
CARDINAL COMM: Plan Confirmation Hearing Set on March 24
--------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
notifies creditors and parties in interest of Cardinal
Communications, Inc. f/k/a Usurf America, Inc. that the hearing on
the Debtor's Plan of Reorganization will be held on March 24,
2009, at 2:00 p.m.
Ballots accepting or rejecting the Plan will be served on counsel
for the Debtor, to arrive on or before March 23, 2009, at 4:00
p.m. Central Time.
Written objections, if any, to the Plan shall be filed with the
Clerk of the Bankruptcy Court, with a copy served on the Debtor's
counsel, at their respective addresses. Objections must be
electronically filed, or physically filed in the office of the
Bankruptcy Clerk, on or before the time and date specified.
Filing of an objection is not considered complete upon mailing;
the objection must be actually filed with the clerk of the Court
on or before March 23, 2009, at 4:00 p.m. Central time.
The mailing and street address of the counsel for the Debtor are
as shown below:
A) Mailing Adress B) Street Address
Underwood Law Firm Underwood Law Firm
Attn: Roger S. Cox, Esq. Attn: Roger S. Cox, Esq.
P.O. Box 9158 500 S. Taylor
Amarillo, Texas 79105-9158 Suite 1200, LB 233
Amarillo, Texas 79101
Tel: (806) 349-9485
The address of the Bankruptcy Clerk is 624 S. Polk, Suite 100,
Amarillo, Texas 79101.
A full-text copy of the Debtor's Plan of Reorganization, dated as
of Jan. 19, 2009, is available at:
http://bankrupt.com/misc/CardinalComms.PlanofReorganization.pdf
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 debts of between
$1,000,000 and $100,000,000. The Debtor did not file a list of
its 20 largest unsecured creditors.
CAROL L. SCHECKWITZ: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Carol L. Scheckwitz
26644 Brooken Ave.
Canyon Country, CA 91387
Bankruptcy Case No.: 09-11924
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Central District of California (San Fernando Valley)
Judge: Kathleen Thompson
Debtor's Counsel: M. Jonathan Hayes, Esq.
21800 Oxnard St Ste 840
Woodland Hills, CA 91367
Tel: (818) 710-3656
Fax: (818) 710-3659
Email: jhayes@polarisnet.net
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/cacb09-11924.pdf
The petition was signed by Carol L. Scheckwitz.
CELL THERAPEUTICS: Sells Interest in Zevalin to Spectrum
--------------------------------------------------------
Cell Therapeutics, Inc. (CTI) (NASDAQ and MTA: CTIC) has disclosed
that it exercised its option to sell its 50% ownership interest in
the Zevalin joint venture to Spectrum Pharmaceuticals, Inc., for
$18 million. CTI and Spectrum established a joint venture in
December 2008 to develop and commercialize Zevalin. At that time
CTI contributed all of the Zevalin related assets to the joint
venture and sold to Spectrum a 50% membership interest in the
joint venture for $15 million, plus certain milestone payments.
The Company will focus its resources on the approval of pixantrone
for relapsed aggressive non-Hodgkin's lymphoma (NHL) and OPAXIO
for non-small cell lung and ovarian cancer. CTI estimates that as
a result of the sale of the Zevalin interest it will reduce
expenses by approximately $15 million annually from activities
previously associated with Zevalin while providing CTI with non-
dilutive source of operating capital.
"CTI continues to believe in the value of Zevalin as a
commercially attractive product and effective form of cancer
therapy; however, with the impressive clinical trial results for
pixantrone and given the company's need for operating capital, we
are compelled to exercise our option and focus our resources on
pixantrone," noted James Bianco, MD, CEO of CTI. "CTI has been
proud to have provided Zevalin to patients since we acquired it in
December, 2007 and having the foresight to bring the first line
consolidation for indolent NHL data to the FDA for potential label
expansion in the front line consolidation setting. With the
progress we made in removing many of the barriers that prevent its
more widespread use, we are confident Spectrum will be able to
ultimately make Zevalin a commercially attractive product."
At the closing of the sale of CTI's 50% membership interest in the
joint venture to Spectrum, CTI will receive $6 million, with the
remainder of the $18 million to be paid within 90 days following
such closing. The closing of the sale option transaction is
contingent upon the satisfaction of certain closing conditions,
including the delivery of a legal opinion from counsel to CTI, as
specified in the operating agreement for the Zevalin joint
venture. CTI believes that it will be in a position to promptly
satisfy all of the closing conditions.
About Zevalin(R)
Zevalin(R) (Ibritumomab Tiuxetan) is a form of cancer therapy
called radioimmunotherapy and is indicated as part of the Zevalin
therapeutic regimen for treatment of relapsed or refractory, low-
grade or follicular B-cell non-Hodgkin's lymphoma, including
patients with rituximab refractory follicular NHL. Zevalin is
also indicated, under accelerated approval, for the treatment of
relapsed or refractory, rituximab-na‹ve, low-grade and follicular
NHL based on studies using a surrogate endpoint of overall
response rate. It was approved by the FDA in February of 2002 as
the first radioimmunotherapeutic agent for the treatment of NHL.
Rare deaths associated with an infusion reaction symptom complex
have occurred within 24 hours of rituximab (Rituxan(R)) infusions.
Yttrium-90 Zevalin administration results in severe and prolonged
cytopenias in most patients. Severe cutaneous and mucocutaneous
reactions have been reported. The most serious adverse reactions
of the Zevalin therapeutic regimen were primarily hematologic,
including neutropenia, thrombocytopenia and anemia. Infusion-
related toxicities were associated with pre-administration of
rituximab. The risk of hematologic toxicity correlated with the
degree of bone marrow involvement prior to Zevalin therapy.
Myelodysplasia or acute myelogenous leukemia was observed in 2
percent of patients (8 to 34 months after treatment). Zevalin
should only be used by health care professionals qualified by
training and experience in the safe use of radionuclides.
About Non-Hodgkin's Lymphoma
Non-Hodgkin's lymphoma (NHL) is caused by the abnormal
proliferation of white blood cells and normally spreads through
the lymphatic system, a system of vessels that drains fluid from
the body. NHL can be broadly classified into two main forms --
aggressive NHL, a rapidly spreading acute form of the disease, and
indolent NHL, which progresses more slowly. According to the
National Cancer Institute's SEER database there were nearly
400,000 people in the U.S. with NHL in 2004. The American Cancer
Society estimates that in the United States 66,120 people are
expected to be diagnosed with NHL in 2008. Additionally,
approximately 19,160 are expected to die from this disease in
2008.
About Cell Therapeutics
Headquartered in Seattle, Cell Therapeutics Inc. --
http://www.CellTherapeutics.com/-- is a biopharmaceutical company
committed to developing an integrated portfolio of oncology
products aimed at making cancer more treatable.
Going Concern Doubt
Stonefield Josephson Inc. in Los Angeles, California, expressed
substantial doubt about Cell Therapeutics' ability to continue as
a going concern after auditing company's financial statements for
the year ended Dec. 31, 2007. The auditing firm reported that the
Company has substantial monetary liabilities in excess of monetary
assets as of Dec. 31, 2007, including approximately $19.8 million
of convertible subordinated notes and senior subordinated notes
which mature in June 2008.
The Troubled Company Reporter reported on Nov. 26, 2008, Cell
Therapeutics' balance sheet as of Sept. 30, 2008, showed total
assets of $93,746,000 and total liabilities of $218,723,000,
resulting in total shareholders' deficit of $133,380,000.
For the three months ended September 30, 2008, the Company posted
a net loss of $45,589,000 on revenues of $2,600,000, compared with
a net loss of $48,471,000 on revenues of $20,000 for the same
period a year earlier.
James A. Bianco, M.D., the Company's chief executive officer,
relates that Cell Therapeutics has incurred losses since inception
and it expects to generate losses from operations for at least the
next year primarily due to research and development costs for
Zevalin, OPAXIO (paclitaxel poliglumex), pixantrone and
brostallicin.
"Our available cash and cash equivalents, securities available-
for-sale and interest receivable are approximately $11.7 million
as of Sept. 30, 2008. In addition, in October 2008 we issued
$24.7 million of 9.66% convertible senior notes, or 9.66% notes,
for net proceeds, before fees and expenses, of $7.5 million after
taking into account $7.2 million placed in escrow to fund make-
whole payments and interest payments on the notes, our repurchase
of $18.2 million of our 15% notes as well as $8.2 million in cash
released from escrow related to the repurchased notes. Even with
this additional financing, we will not have sufficient cash to
fund our planned operations through the end of the fourth quarter,
which raises substantial doubt about our ability to continue as a
going concern," Dr. Bianco says. "Accordingly, we have
implemented cost saving initiatives to reduce operating expenses
and we continue to seek additional areas for cost reductions.
However, we will also need to raise additional funds and are
currently exploring alternative sources of equity or debt
financing.
CELL THERAPEUTICS: Gives More Information at CONSOB's Request
-------------------------------------------------------------
Cell Therapeutics, Inc. (NASDAQ and MTA: CTIC) made disclosures
with the Securities and Exchange Commission at the request of the
Italian securities regulatory authority, CONSOB, pursuant to
Article 114, Section 5 of the Unified Financial Act. The Company
has also directed its Italian shareholders to the Italian language
section of its Web site at www.celltherapeutics.com/italiano,
where more complete information about the Company and its products
and operations, including press releases issued by the Company, as
well as the Company's SEC filings and the Listing Prospectus
authorized to be published by CONSOB, can be found.
Among others, the Company provided this information:
A) On-going management
The Company is making substantial progress in the advancement of
its product development business. No commercial agreement for the
marketing of its products other than what has already been
disclosed to the market has been entered into by the Company,
although the Company is actively seeking potential partners for
marketing its products going forward and will promptly disclose
the relevant information, if any, according to the applicable laws
and regulations.
With respect to the operating performance of the Company
(Consolidated), Estimated Net Sales of the Company for the year
ended December 31, 2008 were approximately $11.4 million. Revenue
related to the sale of Zevalin for the period January 1, 2008
through December 15, 2008 was recorded on the Company's books.
For the period December 16, 2008, through December 31, 2008,
revenue related to the sales of Zevalin was included in the
Company's share of the loss in the joint venture. As a result of
the formation of RIT Oncology, LLC on December 15, 2008 -- a joint
venture entered into with Spectrum Pharmaceuticals -- the Company
no longer records sales related to Zevalin. Accordingly, sales
related to Zevalin and related commercial and development expenses
are recorded by RIT Oncology, LLC of which the Company has a 50%
interest. CTI's financial statements for the year ended December
31, 2008 will, therefore, include the Zevalin's revenues until
December 14, 2008, but not the revenues between December 15 and
December 31, 2008.
B) Financial situation of the Company and means of financing to
support the management
1) Net financial indebtedness
The total estimated net financial position of the Company as of
December 31, 2008 is a negative $128,727,000. The Company's net
financial debt as it relates to just convertible senior
subordinated and convertible senior notes that include embedded
derivatives totaled $23.6 million.
No portions of the Convertible Senior Subordinated and Convertible
Senior Notes come due within the next twelve months.
2) Outstanding notes of the Company
As of January 31, 2009, the overall face value of the outstanding
notes of the Company amounted to US$127,193,000.
The convertible notes have been issued in the US. Once the
convertible debt security has been executed, the Company has no
knowledge of subsequent distribution. Upon confirmation of
conversion of a debt security to common stock, shares are issued
to the holder. The Company has no knowledge of the subsequent
distribution.
Management believes that the use of coupon make-whole convertible
notes was the only viable source of funding for CTI in 2008 given
the global credit and capital market crisis.
The interest-make-whole provisions entitle the holders of the
notes to receive all interest payable through scheduled maturity,
less any interest paid before conversion. The whole amount of
such interest is held in escrow until conversion of the notes.
While these convertible notes came at an expensive price 30% to
45% coupon make whole provision, the ultimate cost to the
shareholder was inferior than the alternatives the Company was
facing.
The Company believes that the alternative to the issuance of the
notes was filing for insolvency under Chapter 11 which would have
had a more deleterious impact on shareholder equity.
3) Company burn rate
The current Company average burn-rate $4.5 million on a monthly
basis. Nevertheless, CTI is reviewing all alternative options to
reduce such burn rate.
C) Reverse stock split
Given the moratorium on the NASDAQ $1.00 minimum bid requirement
through April 2009 the Company doesn't have immediate plans to
effect a reverse split.
D) Possible delisting from NASDAQ
The Company has recently provided the NASDAQ listing
qualifications panel with an update on its plan to re-gain
compliance with the NASDAQ market value of listed securities
requirement. In doing so, the Company requested an extension
through February 27, 2009, as opposed to the granted exemption
date of February 12, 2009, but the relevant resolution has not
been communicated yet.
F) Shareholders' meeting
The shareholders' meeting is scheduled for February 27.
A full-text copy of the Company's disclosure is available for free
at: http://researcharchives.com/t/s?39d4
About Cell Therapeutics
Headquartered in Seattle, Cell Therapeutics Inc. --
http://www.CellTherapeutics.com/-- is a biopharmaceutical company
committed to developing an integrated portfolio of oncology
products aimed at making cancer more treatable.
Going Concern Doubt
Stonefield Josephson Inc. in Los Angeles, California, expressed
substantial doubt about Cell Therapeutics' ability to continue as
a going concern after auditing company's financial statements for
the year ended Dec. 31, 2007. The auditing firm reported that the
Company has substantial monetary liabilities in excess of monetary
assets as of Dec. 31, 2007, including approximately $19.8 million
of convertible subordinated notes and senior subordinated notes
which mature in June 2008.
The Troubled Company Reporter reported on Nov. 26, 2008, Cell
Therapeutics' balance sheet as of Sept. 30, 2008, showed total
assets of $93,746,000 and total liabilities of $218,723,000,
resulting in total shareholders' deficit of $133,380,000.
For the three months ended September 30, 2008, the Company posted
a net loss of $45,589,000 on revenues of $2,600,000, compared with
a net loss of $48,471,000 on revenues of $20,000 for the same
period a year earlier.
James A. Bianco, M.D., the company's chief executive officer,
relates that Cell Therapeutics has incurred losses since inception
and it expects to generate losses from operations for at least the
next year primarily due to research and development costs for
Zevalin, OPAXIO (paclitaxel poliglumex), pixantrone and
brostallicin.
"Our available cash and cash equivalents, securities available-
for-sale and interest receivable are approximately $11.7 million
as of Sept. 30, 2008. In addition, in October 2008 we issued
$24.7 million of 9.66% convertible senior notes, or 9.66% notes,
for net proceeds, before fees and expenses, of $7.5 million after
taking into account $7.2 million placed in escrow to fund make-
whole payments and interest payments on the notes, our repurchase
of $18.2 million of our 15% notes as well as $8.2 million in cash
released from escrow related to the repurchased notes. Even with
this additional financing, we will not have sufficient cash to
fund our planned operations through the end of the fourth quarter,
which raises substantial doubt about our ability to continue as a
going concern," Dr. Bianco says. "Accordingly, we have
implemented cost saving initiatives to reduce operating expenses
and we continue to seek additional areas for cost reductions.
However, we will also need to raise additional funds and are
currently exploring alternative sources of equity or debt
financing.
CENTENNIAL COMMUNICATIONS: Stockholders Approve Merger With AT&T
----------------------------------------------------------------
Centennial Communications Corp. said its stockholders approved the
adoption of the Agreement and Plan of Merger, dated
November 7, 2008, providing for the acquisition of Centennial by
AT&T Inc. Of the shares voted at the special meeting, over 99%
were cast in favor of adoption of the Merger Agreement,
representing approximately 88% of the total shares outstanding and
entitled to vote.
Under the terms of the Merger Agreement, Centennial stockholders
will receive $8.50 per share in cash for a total equity price of
$944 million. Including net debt, the total enterprise value is
approximately $2.8 billion. Completion of the Merger is not
subject to a financing condition, but remains subject to (i)
conditions relating to approval by the Federal Communications
Commission, (ii) expiration or termination of applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and (iii) other customary conditions to closing.
The Company anticipates that the Merger will be completed by the
end of the second quarter of calendar year 2009, assuming
satisfaction or waiver of all of the conditions to the Merger.
About AT&T
AT&T Inc. is a premier communications holding company. Its
subsidiaries and affiliates, AT&T operating companies, are the
providers of AT&T services in the United States and around the
world. Among their offerings are the world's most advanced
Internet protocol-based business communications services and the
nation's leading wireless, high speed Internet access and voice
services. In domestic markets, AT&T is known for the directory
publishing and advertising sales leadership of its Yellow Pages
and YELLOWPAGES.COM organizations, and the AT&T brand is licensed
to innovators in such fields as communications equipment.
About Centennial Communications
Based in Wall, New Jersey, Centennial Communications Corp.
(Nasdaq: CYCL) - http://www.centennialwireless.com/--
provides regional wireless and integrated communications
services in the United States and the Puerto Rico with
approximately 1.1 million wireless subscribers and 582,200 access
lines and equivalents. The US business owns and operates wireless
networks in the Midwest and Southeast covering parts of six
states. Centennial's Puerto Rico business owns and operates
wireless networks in Puerto Rico and the U.S. Virgin Islands and
provides facilities-based integrated voice, data and Internet
solutions. Welsh, Carson, Anderson & Stowe is a significant
shareholder of Centennial.
* * *
As reported by the Troubled company Reporter on Nov. 13, 2008,
Fitch Ratings has placed the ratings for Centennial Communications
Corp. -- IDR 'B'; and Senior unsecured notes 'CCC+/RR6' -- and
Centennial Cellular Operating Co. -- IDR 'B'; Senior secured
credit facility to 'BB/RR1'; Senior unsecured notes to 'BB/RR1' --
on Rating Watch Positive.
On November 12, TCR said Standard & Poor's Ratings Services placed
selected ratings on Centennial on CreditWatch with positive
implications, including the 'B' corporate credit rating and issue
ratings on all unsecured debt, but excluding the 'BB-' rating on
subsidiary Centennial Cellular Operating Co. LLC's credit
facility. S&P said the CreditWatch excludes Centennial's secured
bank facility since it contains mandatory change of control
provisions which will be triggered at closing and therefore
require repayment at that time. Centennial has about $1.9 billion
in outstanding debt, of which about $1.4 billion are affected by
the CreditWatch action.
Moody's Investors Service placed the debt of Centennial --
Corporate Family Rating, currently B2; and Senior Unsecured
Regular Bond/Debenture, currently Caa1 -- and Centennial
Communications -- Senior Secured Bank Credit Facility, currently
Ba2; and Senior Unsecured Regular Bond/Debenture, currently B2 --
on review for possible upgrade.
CHRYSLER LLC: Meets With Task Force to Discuss $5BB in New Loans
----------------------------------------------------------------
John D. Stoll and Alex P. Kellogg at The Wall Street Journal
report that Chrysler LLC met with the auto industry task force on
Wednesday.
Citing people familiar with the matter, Keith Naughton and Jeff
Green at Bloomberg News relates that Chrysler met with the task
force to discuss its request for $5 billion in new loans to keep
the company afloat. According to WSJ, a Chrysler spokesperson
declined to comment on the meeting.
Bloomberg, citing CSM Worldwide Inc. analyst Michael Robinet,
states that the meeting would give automakers a chance to show how
sales have worsened since the first installment of
$17.4 billion in bailout funds in December 2008. Bloomberg says
that the task force can force GM and Chrysler to file for
bankruptcy protection. Bloomberg quoted Mr. Robinet as saying,
"The automakers have too much inventory for this sales rate, and
they need to bleed off that inventory before they can start
producing again."
WSJ states that Chrysler received $4 billion in federal loans in
December 2008 from the Treasury Department and was told to submit
a viability plan to Treasury officials by February 17. In that
plan, according to the report, Chrysler asked for an additional $5
billion in financial assistance that the company said it needs to
avert bankruptcy. The report says that Chrysler executives told
Treasury officials that the firm's best option is a tie-up with
Fiat SpA, which is seeking to take at least a 35% stake in
Chrysler and provide the company with technology for small cars.
WSJ relates that the task force will mainly focus on evaluating
the best restructuring paths for Chrysler and General Motors Corp.
Citing a person familiar with the matter, WSJ says that the group
is considering whether continuing to financially assist the
automakers could further the government's energy policy. The
source said that the task force is pushing the automakers to
commit to building vehicles that get better fuel efficiency,
including plug-in vehicles, the report states.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital Management
LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles
and products. The company has dealers worldwide, including
Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil,
Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Dec. 3, 2008,
Dominion Bond Rating Service downgraded the ratings of Chrysler
LLC, including Chrysler's Issuer Rating to CC from CCC (high).
Chrysler's First Lien Secured Credit Facility and Second Lien
Secured Credit Facility have also been downgraded to CCC and CC
(low) respectively. All trends are Negative. The ratings action
reflects Chrysler's challenge to maintain sufficient liquidity
balances amid severe industry conditions that have deteriorated
alarmingly over the past few months and are not expected to
improve in the near term. With this ratings action, Chrysler is
removed from Under Review with Negative Implications, where it was
placed on Nov. 7, 2008.
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
CITIGROUP INC: Could Reach Pact for Add'l Shares to Govt. Today
---------------------------------------------------------------
David Enrich, Heidi N. Moore, and Joann S. Lublin at The Wall
Street Journal report that Citigroup Inc. could reach on Thursday
a deal to increase the government's stake in the firm to as much
as 40%.
As reported by the Troubled Company Reporter on February 24, 2009,
Citigroup is talking with government officials on the possible
further acquisition of Citigroup stock. Citigroup has proposed
the plan to its regulators. Citigroup executives hope the stake
will be closer to 25%. A substantial chunk of the
$45 billion in preferred shares that the government obtained last
year by injecting capital into Citigroup would convert into common
stock. The government's move to take a big stake could backfire
and could spur investors to flee other banks.
WSJ relates that a Mexican law prevents any institution that is
more than 10%-owned by a foreign government from running a bank in
Mexico. WSJ states that some Citigroup executives are worried
that an increased U.S. stake might subject the bank to pressure to
give up some or all of its ownership of Grupo Financiero Banamex.
Citing people familiar with the matter, WSJ says that expecting
conflict over Banamex, a group led by two top Banamex officials
has talked with investment bankers about helping to lay the
groundwork for a possible bid to buy the Citigroup unit.
WSJ notes that Citigroup would fight any outside effort to sell
Banamex. Citigroup CEO Vikram Pandit considers Banamex as the
heart of the firm's global operations, the report says. People
familiar with the matter said that Citigroup executives have
considered a sale of Banamex, but said that it is a last-ditch
option if the firm's financial condition worsens, according to the
report. The report states that Citigroup has denied any plans of
selling Banamex.
Monica Langley and David Enrich WSJ report that Mr. Pandit pleaded
with a senior government official not to push out top management.
According to WSJ, Federal Reserve officials informed Citigroup
executives that they have "observer rights" that entitle them to
participate in the bank's board meetings, causing some Citigroup
executives to complain privately that the government now has
"unlimited power" over the bank. "It has always been the case that
when regulators ask to make a presentation to our board, we
accommodate them," WSJ quoted a Citigroup spokesperson as saying.
Citigroup Sell Stake in Redecard Through Public Offering
Citigroup said in will sell its stake in Brazilian credit card
processor Redecard SA through a public offering.
Redecard said in a filing with the Brazilian securities regulator
that Citigroup registered with the securities regulator to sell
shares of Redecard, without setting a price for the offering.
According to Fabiola Moura at Bloomberg News, Citigroup owns a 17%
stake in Redecard, valued at $1.24 billion on Wednesday's closing
price.
Bloomberg relates that Citigroup CEO Vikram Pandit is selling
Citigroup's businesses to free up capital after the bank posted a
$18.7 billion loss last year. According to Bloomberg, Mr. Pandit
said in January that he planned to sell Citigroup's CitiFinancial
consumer-finance and Primerica life-insurance units as soon as the
market permits, and struck a deal to sell majority control of
Citigroup's Smith Barney brokerage to Morgan Stanley. Mr. Pandit,
the report states, said that the units he's selling are non-core,
and that Citigroup will emerge as a global bank focused on its
retail branches, securities trading, investment-banking and
payment processing.
Bloomberg quoted Equity research firm Proxycon Assessoria
Financeira's director Reginaldo Alexandre as saying, "There's
pressure to generate cash that's building" for Citigroup. "The
offer will likely be a bit below market price. Investors who want
to increase holdings will likely wait until the offering to buy,
and that could create pressure" on Redecard shares, the report
says, citing Mr. Alexandre.
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. Citigroup had $2.0 trillion in total assets on $1.9
trillion in total liabilities as of Sept. 30, 2008.
As reported in the Troubled Company Reporter on Nov. 25, 2008, the
U.S. government entered into an agreement with Citigroup to
provide a package of guarantees, liquidity access, and capital.
As part of the agreement, the U.S. Treasury and the Federal
Deposit Insurance Corporation will provide protection against the
possibility of unusually large losses on an asset pool of
approximately $306 billion of loans and securities backed by
residential and commercial real estate and other such assets,
which will remain on Citigroup's balance sheet. As a fee for this
arrangement, Citigroup will issue preferred shares to the Treasury
and FDIC. In addition and if necessary, the Federal Reserve will
backstop residual risk in the asset pool through a non-recourse
loan.
CITY OF STOCKTON: Discusses Bankruptcy; Takes Cuts to Avert Filing
------------------------------------------------------------------
Ayesha Thomas at News10.net reports that leaders at the city of
Stockton in California discussed on Monday the possibility of
filing for bankruptcy.
According to News10.net, Stockton has a budget deficit of almost
$30 million through the 2008-2009 fiscal year. It could run out
of cash this year, says News10.net. "If we don't get our expenses
under control, our resources could run out," News10.net quoted
Stockton Budget Committee Chairperson Dale Fritchen as saying.
News10.net relates that the budget committee asked all departments
to look at cutting their budgets. The report says that the police
department already laid off 29 officers this month.
News10.net quoted Stockton Assistant Police Chief Blair Ulring as
saying, "We may be asked to trim another $10 million from our
budget, which could mean losing more officers, something we can't
afford."
News10.net reports that the Stockton budget committee will hold
another meeting in a few weeks after a budget report from the city
manager is released. The report says that city leaders want to
avoid having to file for bankruptcy.
CLEAR CHANNEL: Cut to 'B-' by S&P on Concerns of Meeting Covenants
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and issue-level ratings on San Antonio, Texas-based CC Media
Holdings Inc. and its operating subsidiary, Clear Channel
Communications Inc., by one notch. The corporate credit rating
was lowered to 'B-' from 'B'. These ratings remain on CreditWatch
with negative implications, where they were placed Feb. 13, 2009,
reflecting our concerns over financial covenant compliance.
"The ratings downgrade and continued CreditWatch listing reflects
our deepening concerns about the company's ability to maintain
compliance with financial covenants amid the worsening recession,
especially in light of extremely weak recent results reported by
peer radio and outdoor companies," explained Standard & Poor's
credit analyst Michael Altberg.
S&P said that under its baseline scenario, including assumptions
regarding possible covenant add-backs under Clear Channel's credit
agreement, it estimates that the Company could violate covenants
in the second half of 2009, or sooner if EBITDA declines are
greater than our expectations. This scenario contemplates
EBITDA declines in the 40% area over the next several quarters,
with declines moderating toward the second half of the year. Our
downside scenario contemplates EBITDA declines in the 40% to 50%
range over the near term. Under S&P's baseline scenario, EBITDA
coverage of net interest could decline to less than 1x. For this
reason, if the Company were able to obtain an amendment from
bank lenders, S&P believes it would need to use cash balances to
meet any potential upfront fees and increases in interest rate
spreads.
For the third quarter of 2008, revenue and EBITDA (excluding
noncash stock compensation) dropped 4% and 16%, respectively.
Declines in the outdoor segment were primarily led by decreases in
higher-margin U.S. billboard revenue. S&P expects fourth-quarter
results to be materially worse than the third quarter, due to
continued softening at the outdoor segment and further pressure on
key advertising categories such as automotive, retail, and
financial services, as well as unfavorable foreign currency trends
at its European outdoor business. For the first half of 2009, the
Company faces more difficult year-over-year comparisons at its
outdoor business, as this segment didn't show the same level of
comparable weakness in local advertising as other media until the
third quarter of 2008. Due to the longer-term nature of contracts,
S&P believes the outdoor business could show a slight lag in
recovery as well, even after economic conditions improve. In
addition, S&P is concerned that negative secular trends facing the
radio industry could limit a rebound in 2010.
Pro forma for the Company's subpar tender offer completed on
Dec. 23, 2008, balance sheet debt to EBITDA was very high, in our
view, at about 9.6x as of Sept. 30, 2008, up from 9.4x at June 30,
2008. S&P's calculation of lease-adjusted total debt
(capitalizing both operating leases and minimum franchise payments
associated with outdoor, and including third-party debt,
guaranteed letters of credit, and acquisition-related earn-out
payments) to EBITDA was still higher, at 10.6x. Pro forma for the
company's full drawdown of its $2 billion revolving credit
facility, fully adjusted leverage climbs to a steep 11.4x. For
the 12 months ended Sept. 30, 2008, the conversion of EBITDA to
discretionary cash flow was still good, in S&P's view, at 48%.
For 2009, S&P believes that discretionary cash flow could turn
modestly negative, eating into cash balances.
CONSTAR INT'L: Panel May Retain Goodwin Procter as Counsel
----------------------------------------------------------
The official committee of unsecured creditors of Constar
International, Inc., et al, obtained permission from the U.S.
Bankruptcy Court for the District of Delaware to retain Goodwin
Procter LLP as counsel to Jan. 14, 2009.
Goodwin Procter will, among other things, advise the Committee
with respect to its rights, duties and powers under the Bankruptcy
Code, and assist the Committee in its consultations with the
Debtors relative to the administration of their bankruptcy cases.
Allan S. Brilliant, Esq., a partner at Goodwin Procter, assured
the Court that, except as otherwise disclosed, the firm does not
have any interest materially adverse to the interests of the
Debtors' estates or of any class of creditor or equity security
holders of the Debtors, and that the firm is a "disinterested
person" within the meaning of Sec. 101(14) of the Bankruptcy Code.
Mr. Brilliant informed the Court that in October 2008, prior to
the Debtors' bankruptcy filing, Goodwin Procter was retained as
counsel by the ad hoc Committee composed of certain unaffiliated
holders of 11% senior subordinated notes due 2012 issued by
Constar. The Ad Hoc Committee has since been dissolved. In
connection with said engagement, the firm received payment from
Constar in the amount of $515,000.
Mr. Brilliant also disclosed that in the past the firm represented
the Debtor in connection with intellectual property and litigation
matters wholly unrelated to the Debtors' bankruptcy cases.
Mr. Brilliant said that the firm's professionals currently bill:
Hourly Rate
-----------
Allan S. Brilliant, Esq. $900
Craig P. Druehl, Esq. $675
Katherine R. Trotter, Esq. $520
The standard hourly rates for other Goodwin Procter attorneys and
legal assistants are:
Partners $550 to $935
Counsel $325 to $825
Associates $315 to $620
Paralegals $160 to $325
About Constar International
Headquartered in Philadelphia, Pennsylvania, Constar International
Inc. (NASDAQ: CNST) -- http://www.constar.net-- produces
polyethylene terephthalate plastic containers for food, soft
drinks and water. The Company provides full-service packaging
services.
The Company and five of its affiliates filed for Chapter 11
protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case No. 08-
13432). Wilmer Cutler Pickering Hale and Dorr LLP
represents the Debtors as their bankruptcy counsel. The Debtors
proposed Bayard, P.A., as local counsel; Pricewaterhouse Coopers
as auditors and accountants; Greenhill & Co. LLC as financial
advisor; and Epiq Systems Inc. Claims and Balloting Agent.
CRYSTAL PEAK: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Crystal Peak Development, LLC
P.O. Box 99
Verdi, NV 89439
Bankruptcy Case No.: 09-50452
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Stephen R. Harris, Esq.
Belding, Harris & Petroni, Ltd.
417 W. Plumb LN
Reno, NV 89509
Tel: (775) 786-7600
Fax: (775) 786-7764
Email: steve@renolaw.biz
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor does not have any unsecured creditors who are not
insiders.
The petition was signed by Stephen Downing, managing member of the
Company.
DANKA BUSINESS: Shareholders OK Entry Into Voluntary Liquidation
----------------------------------------------------------------
Danka Business Systems PLC (OTC BB: DANKY.OB) said that its
shareholders voted to approve the Company's entry into a Members'
Voluntary Liquidation at an Extraordinary General Meeting of Danka
shareholders held February 19, 2009, in London.
As a result, the Company has entered into the Members' Voluntary
Liquidation, and Jeremy Spratt and Finbarr O'Connell of KPMG LLP
have been appointed joint liquidators for the purposes of the
voluntary winding up of the Company. The liquidators will begin
the process of inquiring into the existence and value of any
creditors' claims against the Company, settling any liabilities
and returning any surplus assets to Danka shareholders as soon as
practicable.
Pursuant to the terms of a deed of undertaking entered into by the
Company and the holders of its convertible participating shares,
the Participating Shareholders have agreed to instruct the
liquidators to pay to all persons who hold Danka ordinary shares
and American Depositary Shares a cash amount equal to $0.03 per
ordinary share, or $0.12 per ADS, as soon as practicable. Any
remaining cash balance after such payment to the holders of
ordinary shares and ADSs will be distributed over time to the
Participating Shareholders.
As previously disclosed in the proxy statement filed with the SEC
on January 20, 2009, in connection with the Extraordinary General
Meeting, and mailed to holders of ADSs on or about that date,
February 19, 2009, will serve as the final record date for
determining the holders of ordinary shares and ADSs entitled to
receive the distribution described above in the Members' Voluntary
Liquidation. Accordingly, The Bank New York Mellon, as depositary
for the Company's ADSs, will close its transfer books as of
February 19, 2009, with respect to the Company's ADSs.
On February 17, 2009, the Company filed its Form 10-Q for the
three months ended December 31, 2008. The Company posted a net
loss of $892,000. As of December 31, 2008, the Company's balance
sheet showed total assets of $74,371,000, total liabilities of
$10,045,000 and 6.5% senior convertible participating shares of
$388,191,000, resulting in total shareholders' deficit of
$323,865,000. A full-text copy of the Company's quarterly report
is available for free at: http://researcharchives.com/t/s?39d2
About Danka Business Systems
Headquartered in St. Petersburg, Florida, Danka Business Systems
PLC (LON: DNK) -- http://www.danka.com/-- offers document
solutions including office imaging equipment: digital and color
copiers, digital and color multifunction peripherals printers,
facsimile machines, and software in the United States. It also
provides a range of contract services, including professional and
consulting services, maintenance, supplies, leasing arrangements,
technical support and training, collectively referred to as Danka
Document Services.
The Company's revenue is generated from two primary sources: new
retail equipment, supplies and related sales, and service
contracts. Danka sells Canon products, as well as Kodak, Toshiba
and Hewlett-Packard.
On Aug. 31, 2006, the Company sold subsidiary Danka Australasia
PTY Limited to Onesource Group Limited. In January 2007, the
Company disposed of its European businesses to Ricoh Europe B.V.
Going Concern Doubt
As reported in the Troubled Company Reporter on July 24, 2008,
Ernst & Young LLP in Tampa, Fla., raised substantial doubt about
Danka Business Systems' ability to continue as a going concern
after auditing the company's financial statements for the year
ended March 31, 2008. The auditing firm stated that the Company
has incurred recurring operating losses, has a working capital
deficit and has not complied with certain covenants of loan
agreements with a bank. In addition, on June 27, 2008, the
Company sold its remaining operations to Konica Minolta Business
Solutions U.S.A., Inc.
DELPHI CORP: Gets April 2 Extension to File Plan Amendments
-----------------------------------------------------------
On behalf of Delphi Corp. and its affiliates, John Wm. Butler,
Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in
Chicago, Illinois, served the U.S. Bankruptcy Court for the
Southern District of New York on February 23, 2009, supplemental
amendment to an accommodation agreement the Debtors entered into
to with JPMorgan Chase Bank, N.A., as administrative agent, and
the requisite lenders from Tranche A and Tranche B of the Debtors'
$4.35 billion DIP credit facility.
According to Mr. Butler, certain DIP Lenders to the DIP
Accommodation Agreement have agreed to modify certain of the
milestone dates in the DIP Accommodation Agreement.
On February 4, 2009, the Debtors sought Court approval of an
amendment to the DIP Accommodation Agreement, which (x) makes
available a new cash collateral basket of up to $117 million to be
included in the Debtors' borrowing base during the Accommodation
Period that may be released subject to certain conditions, (y)
resets the EBITDAR covenant to take into account the current
global economic and automotive environment, and (z) if certain
conditions are met, provides for a reduction of the minimum
liquidity covenant from $100 million to $50 million.
The DIP Accommodation Amendment required the Debtors to submit
certain reports containing information set forth in the Agreement
by February 17 and 20, 2009, which reports the Debtors timely
submitted, according to Mr. Butler. Consistent with the DIP
Accommodation Amendment, the Debtors are required to (x) file a
plan of reorganization or modifications to their First Amended
Chapter 11 Plan acceptable to the Required Lenders and the
Required Participant Lenders by February 27, 2009; and (y) obtain
Court's approval of a disclosure statement for the proposed plan
modifications by March 31, 2009, so that the DIP Accommodation
Period would end on June 30, 2009, rather than be shortened to
May 5, 2009. If the Debtors fail to achieve the February 27
Milestone, they would be required to use the $117 million
Accommodation Amendment Cash Collateral to repay the Tranche A
and Tranche B loans.
Mr. Butler discloses that although the Debtors have been in
negotiations with General Motors Corporation and other parties
and have made progress on the development of an emergence plan,
the negotiations are not sufficiently advanced to formulate
comprehensive modifications to the Confirmed Plan and file those
proposed modifications before the Court by February 27, 2009.
Accordingly, to allow those complex negotiations to progress, the
Debtors negotiated with the DIP Lenders for a supplemental
amendment to the DIP Accommodation Agreement.
The Accommodation Amendment Supplement provides for these terms:
(1) The Debtors are required to submit reports to the DIP
Agent each on March 4 and 24, 2009.
If the Debtors fail to provide the March 4 Report or if
the requisite lenders subsequently determine that the
March 4 Report is not satisfactory, those requisite
lenders may direct the Debtors to apply 20% of the
Accommodation Amendment Cash Collateral toward repayment
of the Tranche A and Tranche B loans.
If the Debtors fail to provide the March 24 Report or if
the requisite lenders subsequently determine that the
March 24 Report is not satisfactory, those requisite
lenders may direct the Debtors to apply 100% of the
Accommodation Amendment Cash Collateral toward the
repayment of the Tranche A and Tranche B loans.
(2) The Debtors are required to file a new reorganization plan
or modifications to the Confirmed Plan acceptable to the
Required Lenders and the Required Participant Lenders no
later than April 2, 2009.
The Debtors are required to obtain Court approval of the
disclosure statement to the proposed modifications to the
Confirmed Plan or new plan no later than May 2, 2009.
If the Debtors have not filed modifications to the
Confirmed Plan or a new plan of reorganization by April 2,
or if the Required Participant Lenders notify the DIP
Agent that the plan is not satisfactory within the
timeline permitted in the DIP Accommodation Amendment, in
addition to the shortened Accommodation Period, the
Debtors will be required to apply the Accommodation Cash
Collateral toward the repayment of the Tranche A and
Tranche B loans.
(3) The Debtors are required to provide disclosures to DIP
Lenders' representatives with respect to the Debtors'
material negotiations with third parties regarding their
emergence capital structure. The Debtors will need the
flexibility to negotiate without the presence of a DIP
Lender representative. The involvement of a DIP Lender
representative in the negotiations to the extent permitted
by the applicable third parties is subject to the
Debtors' business judgment.
(4) The Supplement Participant Lenders will be entitled to
a 10 basis points amendment fee. Other fee provisions
with respect to the Accommodation Amendment Supplement are
contained in separate fee letters which the parties have
agreed will be kept confidential.
A full-text copy of the Accommodation Amendment Supplement is
available for free at:
http://bankrupt.com/misc/Delphi_AccomAmndmntSupplmnt.pdf
Mr. Butler notes that the termination date of the DIP
Accommodation Period remains on June 30, 2009, or May 5, 2009,
should the Debtors not meet either of the modified milestones.
Mr. Butler discloses that Court approval is a condition to the
effectiveness of the Accommodation Amendment Supplement. A
hearing on the Accommodation Amendment Supplement is currently
scheduled for February 24, 2009.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DELPHI CORP: Wins Court OK to Cancel Benefits of 15,000 Workers
---------------------------------------------------------------
Delphi Corp. won approval from Judge Robert Drain of the U.S.
Bankruptcy Court for the Southern District of New York to cancel
health-care benefits for 15,000 current and former salaried
workers, saving $1.1 billion as it tries to emerge from bankruptcy
protection.
Judge Drain issued the ruling after witnesses for General Motors
Corp.'s former unit testified the cuts were vital to its survival
because its lenders demanded them.
About 1,600 objections were filed by workers. The salaried
retirees contend that their retirement was the Debtors' decision
and they had little time to prepare for retirement. The Medical
and Insurance Benefits have been reduced and the Debtors'
obligations under those programs modified over the years, thus any
further modification of the Medical and Insurance Benefits should
be denied, the Salaried Retirees assert. The Salaried Retirees
stress that with the current state of the economy, they have lost
almost 40% of their savings under the Stock Savings Plan and the
cost of living has increased significantly in the last two years.
In response to the objections, however, the official committee of
unsecured creditors said that it agrees with the Debtors' view
that their reasonable business judgment no longer permits them to
maintain discretionary benefit programs like the Salaried Other
Post-Employment Benefits that would cost hundreds of millions of
dollars. The Committee, however, pointed out that the affected
employees should be entitled to file proofs of claim against the
Debtors within a period after an order granting the OPEB
Termination Motion is entered, solely for asserting whatever
claims arising from the termination of the Salaried OPEB.
A summary of the Debtors' Omnibus Reply to the OPEB Termination
Objections is available for free at:
http://bankrupt.com/misc/Delphi_OPEBObjSummary.pdf
Delphi's counsel, John Wm. Butler, Esq., at Skadden, Arps, Slate,
Meagher & Flom LLP, in Chicago, Illinois, has said that Delphi
will save $70 million a year if the identified employee programs
are eliminated. He added that $1.1 billion in balance sheet
liability would be eliminated from the Debtors' reorganization
balance sheet if insurance and medical benefits were eliminated.
Assuming an April 1, 2009 effective date, it is anticipated that
upon effectiveness of the proposed terminations there will be cash
savings to the Debtors of $200,000,000 from 2009 through 2011 as
well as the elimination of balance sheet liabilities exceeding
$1.1 billion, he notes.
In Delphi's request for approval of the termination of the
employee programs, Mr. Butler informed the Court that the total
enterprise value of the company now "may be equivalent to, or even
less than, the amount of the debtor's post-petition obligations
including" bank loans.
Delphi Corp., in May 2008, sued Appaloosa and other parties in
light of their refusal to comply with their prior agreement to
provide US$2,550,000,000 in equity exit financing to Delphi.
Appaloosa's termination of their Equity Purchase and Commitment
Agreement stalled the consummation of Delphi's Plan of
Reorganization, which was confirmed by the Court January 25,
2008, and kept Delphi in Chapter 11. Delphi, on October 3, filed
modifications to their Plan of Reorganization, which would allow
Delphi to exit Chapter 11 regardless of the outcome of their
lawsuit for specific performance by the Plan Investors. The
Modified Plan does not require equity exit financing from the Plan
Investors, and only contemplates a US$3.75 billion of funded
emergence capital through a combination of term bank debt and
rights to purchase equity in Reorganized Delphi. The Modified
Plan also requires more funding by General Motors Corp.
However, according to Mr. Butler, Delphi is engaged in discussions
with their stakeholders to formulate further plan modifications
consistent with the timetable agreed in the accommodation
agreement -- although its $4.35 billion DIP facility has expired,
the accommodation agreement allowed Delphi to retain the proceeds
of drawn amounts under the DIP facility until June 30, 2009,
subject to various conditions.
The Debtors are making further revisions to their business plan
consistent with the extremely low volume production environment in
the global automotive industry and depressed global capital and
equity markets. "Although no formal valuation of the revised
business plan has been completed, it is anticipated that the total
business enterprise value associate with the revised business plan
will be substantially below the valuation range contained in the
Plan Modification Motion and may be equivalent to or even less
than, the amount of the Debtors' postpetition obligations
including the Debtors' DIP credit facility."
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is the single supplier of vehicle
electronics, transportation components, integrated systems and
modules, and other electronic technology. The company's
technology and products are present in more than 75 million
vehicles on the road worldwide. Delphi has regional
headquarters in Japan, Brazil and France.
The company filed for Chapter 11 protection on Oct. 8, 2005
(Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr.,
Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden,
Arps, Slate, Meagher & Flom LLP, represent the Debtors in their
restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A.
Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP,
represent the Official Committee of Unsecured Creditors. As of
June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000
in total assets and US$23,742,000,000 in total debts.
The Court approved Delphi's First Amended Joint Disclosure
Statement and related solicitation procedures for the
solicitation of votes on the First Amended Plan on Dec. 20,
2007. The Court confirmed the Debtors' First Amended Plan on
Jan. 25, 2008. The Plan has not been consummated after a group
led by Appaloosa Management, L.P., backed out from their
proposal to provide US$2,550,000,000 in equity financing to
Delphi.
(Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
DOLLAR THRIFTY: Lenders Waive Minimum Leverage Ratio
----------------------------------------------------
Dollar Thrifty Automotive Group, Inc., entered into amendments to
its senior secured credit facility dated as of June 15, 2007,
which is comprised of a revolving credit facility and a term loan
with various financial institutions that are party to the Credit
Agreement, and Deutsche Bank Trust Company Americas, as
administrative agent for the Lenders, and also amended two fleet
financing agreements with Chrysler Financial and another bank
group.
Under the Credit Agreement, DTAG will no longer be required to
maintain a minimum leverage ratio, but must maintain a minimum
adjusted tangible net worth of $150 million and a minimum of
$100 million of unrestricted cash and cash equivalents.
Moreover, the Company covenants with the Lenders to limit Capital
Expenditures:
Maximum Amount of
Fiscal Year Capital Expenditures
----------- --------------------
2009 $35,000,000
2010 $45,000,000
2011 $50,000,000
2012 $50,000,000
Any Fiscal Year thereafter $50,000,000
DTAG, however, may make Capital Expenditures for the acquisition
of Vehicles, and other Capital Expenditures so long as spending
doesn't exceed the limit.
In connection with the amendment of the Credit Agreement, DTAG
prepaid $20 million of its term loan and permanently reduced the
total revolving credit facility commitments to $231.3 million. In
addition, the amendment provides that revolving credit facility
commitments will be restricted to issuances of letters of credit
in future periods. The amendments provide for a 50 basis point
increase in the interest rate borne by outstanding debt under all
three financing agreements, including letters of credit. The
Company also paid one-time amendment fees of 50 basis points,
based on outstanding commitments or loans. The Company used
roughly $24 million of unrestricted cash for the term loan
payment, fees and expenses associated with the amendments.
Under the Amendment, in addition to any other mandatory
repayments:
(i) on the last Business Day of each fiscal quarter of the
Borrower ending on March 31, June 30, September 30 and
December 31, commencing with the fiscal quarter ending
March 31, 2010, and ending with the last fiscal quarter
ending prior to the Term Loan Maturity Date, the Borrower
will be required to repay a principal amount of Term Loans
in an amount equal to $2,500,000, and
(ii) on the Term Loan Maturity Date, the Borrower will be
required to repay the entire remaining balance of the Term
Loans.
As of December 31, 2008, the Company had roughly $215 million of
adjusted tangible net worth and roughly $230 million of
unrestricted cash and cash equivalents. DTAG said the amendments
are intended to provide a long-term resolution of the financial
covenant compliance issue that had been addressed with short-term
amendments over the last five months.
The amendments became effective on February 25.
"Dollar Thrifty is very pleased to announce the successful
completion of these amendments in an incredibly difficult credit
market. We greatly appreciate the ongoing support of our bank
groups and Chrysler Financial during these challenging times. The
amendments provide us with the financial flexibility needed to
continue to execute our plans, and they remove the uncertainty
associated with short-term amendments, all at a reasonable cost
and on terms we feel are equitable. With these amendments now
completed, we can dedicate all of our efforts to our top
priorities -- operational improvements, customer service, and
maximizing cash flow and liquidity," said Scott L. Thompson,
President and Chief Executive Officer.
A full-text copy of the Fifth Amendment to Credit Agreement dated,
as of February 25, 2009, among Dollar Thrifty Automotive Group,
Inc., as borrower, Deutsche Bank Trust Company Americas, as
administrative agent, and various financial institutions as are
party thereto, is available at no charge at:
http://ResearchArchives.com/t/s?39e1
The members of the lending syndicate and their revolving loan
commitment are:
Lender Loan Commitment
------ ---------------
Bank of America, N.A. $29,077,714.31
Deutsche Bank Trust Company Americas $19,825,714.28
The Bank of Nova Scotia $19,825,714.28
Credit Suisse, Cayman Island Branch $15,199,714.28
Bank of Oklahoma, N.A. $13,217,142.86
JP Morgan Chase Bank, N.A. $13,217,142.86
Morgan Stanley Bank $11,234,571.43
Bank of Tokyo - Mitsubishi UFJ
Trust Company $10,573,714.28
BMO Capital Markets Financing, Inc. $10,573,714.28
Wells Fargo Bank, N.A. $10,573,714.28
Fortis Capital Corp. $9,252,000.00
International Bank of Commerce $9,252,000.00
Raymond James Bank, FSB $7,930,285.72
Sumitomo Mitsui Banking Corporation $7,930,285.72
Bayerische Hypo-und Vereinsbank,
AG New York Branch $7,269,428.57
MidFirst Bank $7,269,428.57
Arvest Bank $7,269,428.57
BNP Paribas $5,947,714.28
Amegy Bank National Association $5,947,714.28
National City Bank of Cleveland $5,286,857.15
M&I Marshall & Ilsley Bank $4,626,000.00
---------------
TOTAL $231,300,000.00
"The Company's aggressive actions over the past several months to
reduce costs, improve revenue and right-size operations were
fundamental to achieving the resolution reflected in these
amendments. Those actions, taken together with the amendments to
our financing arrangements and our recently announced
$490 million prepayment of our liquidity and conduit facilities,
position us to manage our liquidity to meet our operating
objectives in today's challenging environment," said Mr. Thompson.
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.
DYNOGEN PHARMACEUTICALS: Files for Chapter 7 Bankruptcy
-------------------------------------------------------
Todd Wallack at The Boston Globe reports that Dynogen
Pharmaceuticals Inc., has filed for Chapter 7 bankruptcy
protection.
According to The Boston Globe, Dynogen Pharmaceuticals used up at
least $67 million in venture capital and other funding. Dynogen
Pharmaceuticals said in court documents that it owed $10 million
to $50 million to more than 100 creditors, while it had no more
than $50,000 in assets.
The Boston Globe states that Dynogen Pharmaceuticals said in 2008
that it would merge with Apex Bioventures Corp., but the firms
called off the $98 million deal two months later due to "current
market conditions."
Dynogen Pharmaceuticals Inc. -- http://www.dynogen.com/-- is a
privately held neuroscience-based pharmaceutical company focused
on developing more effective therapies for GU and GI disorders.
Dynogen Pharmaceuticals had been trying to develop drugs for
irritable bowel syndrome, overactive bladder disorder, and
nocturnal gastroesophageal reflux disease.
DOUBLEDOWN MEDIA: Files for Chapter 7 Bankruptcy After Closure
--------------------------------------------------------------
Jonathan Stempel at Reuters reports that Doubledown Media LLC has
filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for
the Southern District of New York after the company stopped
operations.
Court documents say that Doubledown Media has $10 million to
$50 million in assets and $10 million to $50 million in
liabilities.
Robert MacMillan at Reuters reports that Doubledown Media
President Randall Lane said in a memo earlier this month that the
Company immediately closed after a chief backer pulled it lost its
credit line from a bank affiliate of HSBC. "These are
unprecedented times: the combination of the media depression, the
Wall Street implosion and the credit slowdown were collectively
too much for our [C]ompany -- probably any company in our shoes --
to overcome." Reuters quoted Mr. Lane as saying. Citing Mr. Lane,
Reuters states that advertisers and business partners owe
Doubledown Media a "substantial seven-figure sum, but as with
everyone else, payments to us have slowed precipitously, which in
turn has crippled our ability to pay our bills on time."
According to Reuters, Mr. Lane said that a dozen organizations
expressed interest in acquiring some or all of Doubledown Media's
assets.
Mr. Lane said that Doubledown Media's failure was due to a
"depression" for media companies, Wall Street upheaval, and
tighter credit, Reuters relates.
Folio reported before Doubledown Media's closure that the Company
laid off more than a third of its staff, and reduced salaries for
others. According to Reuters, a Doubledown Media worker said that
some ad staff stopped receiving salary checks in 2008 and were
only getting sales commissions. Reuters states that ad sales then
dried up, along with the money.
Doubledown Media said last year that its chairperson and top
investor Jim Dunning -- who, Folio said had invested more than
$3.5 million in the second half of 2008, for a total of $8 million
-- gave it a $300,000 loan to cover operating expenses, Reuters
relates.
Doubledown Media LLC is a New York-based publisher of Trader
Monthly, Dealmaker, Private Air, Corporate Leader, and the Cigar
Report.
ECLIPSE AVIATION: Noteholders Seek Conversion to Ch. 7 Liquidation
------------------------------------------------------------------
New Mexico Business Weekly reports that Eclipse Aviation Corp.
President and General Manager Mike McConnell has confirmed that
the firm's senior note holders have sought to convert the firm's
Chapter 11 reorganization case to Chapter 7 liquidation.
Bloggers on the Internet site Eclipse Aviation Critic NG say that
the noteholders want "effective control" of Eclipse's assets.
Tim Korte at The Associated Press states that the noteholders'
decision shows that Eclipse Aviation has failed to complete its
planned $188 million sale to EclipseJet Aviation International
Inc., an affiliate of ETIRC Aviation.
As reported in the Troubled Company Reporter on Jan. 16, 2009, the
Court approved the sale of the Debtors' assets to ETIRC Aviation
affiliate EclipseJet Aviation International, Inc., which was the
only bidder for the assets, for a combination of cash, equity, and
debt. ETIRC offered to acquire the Company for $28 million in
cash, $160 million in newly issued notes, and an offer of 15%
equity in the newly formed company to senior secured note holders.
ETIRC Aviation is Eclipse Aviation's largest shareholder.
The Ad Hoc Committee of Noteholders of the Company said that the
asset purchase agreement required the ETIRC affiliate to close the
transaction within five business days after satisfaction of all
conditions to closing. The Debtors satisfied all closing
conditions by Jan. 23, 2009, but the ETIRC affiliate failed to
obtain the necessary financing and thus, was unable to close the
sale.
The Ad Hoc Committee adds that the Debtors' are of cash, and on
Feb. 18, 2009, furloughed virtually all employees without pay.
Furthermore, given EclipseJet's failure to close the sale,
"rehabilitation is impossible and reorganization is no longer
realistic."
The Ad Hoc Committee says the Debtors are administratively
insolvent, and recommends that the cases be immediately converted
to cases under Chapter 7 to conserve the Debtors' assets.
Continuation of the Debtors cases in Chapter 11 would only entail
fees and expenses that will not be incurred in Chapter 7, and
offers no benefits over those found in a Chapter 7 liquidation.
Eclipse Aviation furloughed last week its remaining 800
Albuquerque workers as talks over the firm's sale were taking
longer than expected, the report states.
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.
ENERGY FUTURE: Moody's Reviews 'B2' Rating on Gas Price Drop
------------------------------------------------------------
Moody's Investors Service placed the ratings for Energy Future
Holdings Corp on review for possible downgrade, including the B2
Corporate Family Rating, B3 senior (guaranteed) unsecured and Caa1
senior unsecured ratings. In addition, the ratings for EFH's
primary operating subsidiary, Texas Competitive Electric Holdings
were also placed on review for possible downgrade, including the
Ba3 senior secured first lien, B3 senior (guaranteed) unsecured
and Caa1 senior unsecured ratings.
EFH's speculative grade liquidity rating remains SGL-3, indicating
an adequate liquidity profile over the near-term.
EFH's transmission and distribution utility subsidiary, Oncor
Electric Delivery Company LLC's Baa3 senior secured rating and
stable rating outlook were affirmed, primarily due to Moody's
interpretation of the ring-fence type provisions associated with
that entity.
The review for possible downgrade primarily reflects the material
decline in natural gas commodity prices, market heat rates and
declining hedge effectiveness due to increased basis risk over the
past several months, which in Moody's opinion, are negatively
impacting the cash flow generating ability of TCEH, and
ultimately, EFH. The current material degradation in macro
economic factors combined with the declining fundamentals
associated with weaker commodity prices, increases the risks
associated with servicing over $40 billion of debt.
"We believe the current environment with respect to the economy
and Texas market fundamentals were not anticipated by EFH's
sponsors when they originally structured their leveraged buyout
transaction," said Jim Hempstead, Senior Vice President. "With
over $40 billion of total consolidated debt outstanding, Moody's
continue to incorporate a view that EFH does not have a lot of
cushion or financial flexibility to meet unexpected challenges."
The review for possible downgrade will focus on an examination of
EFH's disclosure in its pending 10K filing; the operating
performance of its base load coal and nuclear generation fleet and
the expectations for maintaining those operating levels over the
near to intermediate term horizon; the weaknesses in a sizeable
hedging program associated with market heat rates in North Texas
and widening basis differential risks between the NYMEX natural
gas price index and local natural gas hubs, both of which
represent un-hedged risks; the construction status and likelihood
for the timely start-up and operation of approximately 2 GW's of
new lignite fired plants in Texas; and the implications associated
with materially lower recovery prospects given the general
estimated valuation declines experienced in the market (and most
recently evidenced by EFH's $9 billion goodwill impairment
charge).
"The severity of any rating downgrade will depend on a review of
EFH's long term solvency and debt servicing prospects as a going
concern" Hempstead added. "While a payment default may appear
remote at this time given EFH's over-all current liquidity
profile, Moody's believe the likelihood of a distressed exchange
has materially increased."
Moody's last rating action for EFH occurred on November 3, 2008,
when the rating outlook was changed to negative from stable.
EFH's ratings were assigned by evaluating factors believed to be
relevant to its credit profile, such as i) the business risk and
competitive position of EFH versus others within its industry or
sector, ii) the capital structure and financial risk of EFH, iii)
the projected performance of EFH over the near to intermediate
term, and iv) EFH's history of achieving consistent operating
performance and meeting financial plan goals. These attributes
were compared against other issuers both within and outside of
EFH's core peer group and EFH's ratings are believed to be
comparable to ratings assigned to other issuers of similar credit
risk.
EFH is a large merchant generation company and retail electric
provider operating in Texas. EFH is headquartered in Dallas,
Texas.
On Review for Possible Downgrade:
Issuer: Brazos River Authority, TX
-- Revenue Bonds, Placed on Review for Possible Downgrade,
currently Caa1
-- Senior Unsecured Revenue Bonds, Placed on Review for Possible
Downgrade, currently a range of Caa1, LGD5, 86%
Issuer: Energy Future Holdings Corp.
-- Probability of Default Rating, Placed on Review for Possible
Downgrade, currently B2
-- Corporate Family Rating, Placed on Review for Possible
Downgrade, currently B2
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently a range of B3, LGD4, 69%
Issuer: Sabine River Authority, TX
-- Senior Unsecured Revenue Bonds, Placed on Review for Possible
Downgrade, currently a range of Caa1, LGD5, 86%
Issuer: TXU Corp. (Old)
-- Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review
for Possible Downgrade, currently a range of Caa1, LGD6, 95%
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently a range of Caa1, LGD6, 95%
Issuer: TXU US Holdings Company
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently a range of Caa1, LGD6, 91%
Issuer: Texas Competitive Electric Holdings Co LLC
-- Senior Secured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently a range of Ba3, LGD2, 29%
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently a range of B3, LGD5, 76%
-- Senior Unsecured Sec. Lease Oblig. Bond, Placed on Review for
Possible Downgrade, currently a range of Caa1, LGD6, 91%
Issuer: Trinity River Authority, TX
-- Senior Unsecured Revenue Bonds, Placed on Review for Possible
Downgrade, currently a range of Caa1, LGD5, 86%
Outlook Actions:
Issuer: Energy Future Holdings Corp.
-- Outlook, Changed To Rating Under Review From Negative
Issuer: Texas Competitive Electric Holdings Co LLC
-- Outlook, Changed To Rating Under Review From Negative
EURONET WORLDWIDE: Will Have Liquidity in Near Term, Says Moody's
----------------------------------------------------------------
Moody's Investors Service commented on the liquidity position of
Euronet Worldwide Inc. In Moody's opinion, Euronet (B1 CFR,
Stable outlook) should continue to have good liquidity over the
near-term, as reflected in its SGL-2 speculative grade liquidity
rating, even though the recently announced amendment to its credit
agreement allows Euronet to repurchase the remaining amount of the
1.625% Convertible Debentures due 2024 ($70 million outstanding as
of December 31, 2008).
The previous rating action occurred on March 12, 2007 when Moody's
assigned Euronet first-time rating of B1 corporate family rating
with a stable outlook.
Euronet Worldwide, headquartered in Leawood, Kansas, is a
financial transaction processor. The company offers outsourcing
and consulting services, integrated electronic funds transfer
software, network gateways, electronic prepaid top-up services to
financial institutions, mobile operators and retailers, as well as
electronic consumer money transfer and bill payment services.
Revenues for the fiscal year ended December 31, 2008 were $1.05
billion.
FEDERAL-MOGUL: Posts $468 Million Net Loss for Full Year 2008
-------------------------------------------------------------
Federal-Mogul Corp. has reported full year 2008 sales of
$6.9 billion, in line with 2007, despite a drop in sales of
$430 million in the fourth quarter of 2008 versus the prior year
due to an unprecedented decline in the automotive market. The
company implemented aggressive global restructuring and cost
reductions which helped offset the impact of the sales decline in
the fourth quarter.
"Federal-Mogul's sales and operating performance in the first
three quarters of the year, combined with actions to manage the
impact of the global market downturn resulted in solid sales,
annual gross margin and operational EBITDA, coupled with strong
cash flow in the fourth quarter and for the full year," said Jose
Maria Alapont**, Federal-Mogul's President and CEO.
Financial Summary
-----------------
(in $millions)
-------------- Three Months Ended 12 Months Ended
------------------- ---------------
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
Net sales $1,319 $1,749 $6,866 $6,914
Gross margin 183 275 1,124 1,185
Adjusted gross
margin 183 275 1,192 1,185
Selling, general
and administrative
expenses 161 201 774 828
Impairment charges 451 54 451 61
Restructuring charges 118 9 132 48
Bankruptcy emergence
gains 0 1,717 0 1,717
Net (loss)/income (530) 1,390 (468) 1,413
Adjusted net (loss)/
income (24) 11 113 75
Operational EBITDA 114 186 754 763
Cash flow 180 (193) 321 (228)
Federal-Mogul recorded year-over-year cumulative sales growth of 7
percent in the first three quarters of 2008 versus the same period
in 2007. Federal-Mogul experienced the impact of a significant
drop in sales during the fourth quarter and finished the year with
sales of $6.9 billion, as in 2007. The company's diverse customer
and geographic base resulted in over 60 percent of sales from
outside the United States, with no single customer accounting for
more than 6 percent of total sales. Federal-Mogul recorded sales
in FOURTH QUARTER 2008 of $1.3 billion, a 25 percent reduction
versus $1.7 billion for the same quarter of 2007.
"We have experienced an unprecedented global automotive market
decline. Federal-Mogul is facing the challenge of crossing the
desert of this downturn with efficient action plans, urgency,
strength and relentless execution," said Mr. Alapont.
"Federal-Mogul implemented numerous measures to reduce both
variable and fixed costs in order to offset the anticipated sales
decline during the fourth quarter. We have implemented a variable
cost company strategy where our global sites have eliminated
premium shifts, modified shift patterns, established short
workweek schedules and reduced headcount. These measures drove a
23 percent reduction in total operating costs during the quarter.
This global effort to make Federal-Mogul's cost base vary in line
with sales fluctuations limited the impact of this major downturn
and helped the company to report solid sales, financial
performance and cash generation in 2008. We are facing the
challenge of the difficult market downturn and we expect to become
leaner, stronger and more competitive after successfully crossing
the desert," Mr. Federal-Mogul continued.
Federal-Mogul during the second half of 2008 announced
restructuring actions designed to adjust global capacity and
company infrastructure in line with reductions in current market
demand. The restructuring will include the closure of
manufacturing plants and distribution centers, flexing global
capacity, along with several actions to streamline support staffs
and is expected to reduce company headcount by approximately 26
percent in comparison to the July 31, 2008 level.
Gross margin for 2008 was $1.12 billion, or 16.4 percent of sales,
as compared to $1.18 billion, or 17.1 percent of sales, for 2007.
Adjusting for the first quarter fresh start reporting inventory
adjustment of $68 million, gross margin rose slightly. The
rapidly implemented cost reduction initiatives in the fourth
quarter allowed Federal-Mogul to report a gross margin of
$183 million or 13.9 percent of sales, compared to $275 million or
15.7 percent of sales in 2007.
SG&A expenses were reduced to 11.3 percent of sales, or
$774 million, for 2008, compared to 12 percent of sales, or
$828 million in 2007, demonstrating the company's ongoing efforts
to streamline global support activities. The company realized a
reduction in SG&A expense of $40 million in the fourth quarter due
to its global restructuring plan and other cost reduction
initiatives.
Operational EBITDA was $754 million or 11.0 percent of sales in
2008, compared to $763 million, also 11.0 percent of sales in
2007. Operational EBITDA in FOURTH QUARTER 2008 was $114 million,
or
8.7 percent of sales, compared to $186 million, or 10.5 percent of
sales during the same period in 2007.
The company reported for the full year a net loss of $468 million
compared to net income of $1.4 billion in 2007. However net
income during both periods contains significant one-time items
that are not indicative of the ongoing results of the company.
During 2008, the company recorded a restructuring charge of
$132 million relating to severance payments and other
restructuring actions as part of previously announced global
restructuring plans. The company recorded impairment charges
during the fourth quarter of $451 million, primarily on intangible
assets, associated with the market downturn. These non-cash
impairment charges negatively impact 2008 net income, but does not
impact the ongoing operating results of the business. The $1.7
billion bankruptcy emergence gains recognized in 2007 are due to a
favorable one-time gain on settlement of liabilities and fresh
start reporting adjustments required as a result of the company's
emergence from Chapter 11.
When adjusting net income, the company realized an adjusted net
income of $113 million in 2008 versus an adjusted net income of
$75 million in 2007 on consistent sales levels. The company in
FOURTH QUARTER, 2008 realized an adjusted net loss of
$24 million, compared to an adjusted net income of $11 million in
2007.
The company reported positive cash flow of $321 million for 2008,
which compares favorably to negative cash flow of $228 million for
2007. The company recorded positive cash flow of
$180 million in the fourth quarter of 2008, which compares
favorably to a negative cash flow of $193 million during the same
period in 2007.
Federal-Mogul is also consolidating the company's business unit
segments in 2009. The move is designed to better align the
company's business structure with customers and markets served and
will further reduce overhead and balance the company's support
staffs to current revenue expectations. The product lines in the
Automotive Products unit will be integrated into the company's
other business segments. Federal-Mogul will report in 2009
company operating results of four business segments: Powertrain
Energy, Powertrain Sealing and Bearings, Vehicle Safety &
Protection and Global Aftermarket.
"Federal-Mogul continues its drive for sustainable global
profitable growth. We are focused on the long-term and expect
that the current downturn will result in consolidation
opportunities. Our more than $1.3 billion of available liquidity
and the flexible terms of our long-term debt will provide the
resources to make acquisitions to enhance our original equipment
and aftermarket businesses," said Mr. Alapont.
Mr. Alapont stated, "We have a globally diverse, industry leading
OE activity and a strong aftermarket business with widely
recognized brands and a strong global distribution network.
Current financial and automotive market dynamics are increasing
the average age of vehicles on the road and increasing repair
activity. We believe Federal-Mogul is well positioned to take
advantage of these market trends. Federal-Mogul is adapting to
successfully compete in difficult market conditions. We believe
our proactive restructuring and consistent implementation of our
plans will allow us to prepare the company for growth as consumers
regain confidence and vehicle demand increases. We are ready to
support OE and aftermarket customer requirements; developing
leading technology and innovation to facilitate improved fuel
economy, reduced emissions, the migration to alternative energies
and the requirement for safer vehicle performance. Finally, we
continue to expand our presence with customers in the industrial,
energy and transport markets which today account for about 10
percent of sales. We believe there is further opportunity to
apply our technologies to capitalize on growth with these
important customers.
"Federal-Mogul's 2008 results demonstrate our strong foundation
and ability to respond to the difficult environment in the
automotive industry. We remain committed to our Sustainable
Global Profitable Growth strategy and have reinforced it with
proactive restructuring to adapt to the current market downturn to
gain market share through leading technology and innovation," said
Mr. Alapont.
About Federal-Mogul Corporation
Federal-Mogul Corporation -- http://www.federal-mogul.com/--
(OTCBB: FDMLQ) is a global supplier, serving the world's foremost
original equipment manufacturers of automotive, light commercial,
heavy-duty, agricultural, marine, rail, off-road and industrial
vehicles, as well as the worldwide aftermarket. Founded in
Detroit in 1899, the company is headquartered in Southfield,
Michigan, and employs 45,000 people in 35 countries. Aside from
the U.S., Federal-Mogul also has operations in other locations
which includes, among others, Mexico, Malaysia, Australia, China,
India, Japan, Korea, and Thailand.
The Company filed for chapter 11 protection on Oct. 1, 2001
(Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F.
Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown &
Wood, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl &
Jones, P.C., represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $10.15 billion in assets and $8.86 billion in liabilities.
Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at
Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein
Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer,
Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the
Official Committee of Unsecured Creditors.
On March 7, 2003, the Debtors filed their Joint Chapter 11 Plan.
They submitted a Disclosure Statement explaining that plan on
April 21, 2003. They submitted several amendments and on June 6,
2004, the Bankruptcy Court approved the Third Amended Disclosure
Statement for their Third Amended Plan. On July 28, 2004, the
District Court approved the Disclosure Statement. The estimation
hearing began on June 14, 2005. The Debtors submitted a Fourth
Amended Plan and Disclosure Statement on Nov. 21, 2006, and the
Bankruptcy Court approved that Disclosure Statement on Feb. 6,
2007. The Fourth Amended Plan was confirmed by the Bankruptcy
Court on Nov. 8, 2007, and affirmed by the District Court on
Nov. 14. Federal-Mogul emerged from chapter 11 on Dec. 27,
2007.
(Federal-Mogul Bankruptcy News, No. 178; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the Troubled Company Reporter on Jan. 14, 2008,
Standard & Poor's Ratings Services affirmed the ratings on
Federal-Mogul Corp., including the 'BB-' corporate credit rating,
and removed them from CreditWatch, where they had been placed with
negative implications on Nov. 13, 2008. The outlook is negative.
The ratings reflect Federal-Mogul's weak business risk profile, as
a major participant in the highly competitive global auto industry
and its aggressive financial risk profile. The company
manufactures powertrain components, sealing products, bearings,
brake friction materials, and vehicle safety products for the
global automotive market. Its customers are original equipment
manufacturers and aftermarket participants operating in
automotive, heavy-duty, and industrial markets.
FLINT TELECOM: December 31 Balance Sheet Upside-Down by $7 Mln.
---------------------------------------------------------------
Flint Telecom Group, Inc., formerly known as Semotus Solutions,
Inc., disclosed, in a regulatory filing, financial results for
three and six months ended Dec. 31, 2008.
At Dec. 31, 2008, the Company's balance sheet showed total assets
of $2,959,867 and total liabilities of $10,184,826, resulting in a
stockholders' deficit of $7,224,959.
For three months ended Dec. 31, 2008, the Company posted a net
loss of $8,548,598 compared with a net loss of $526,113 for the
same period in the previous year.
For six months ended Dec. 31, 2008, the Company posted a net loss
of $9,694,544 compared with a net loss of $1,072,860 for the same
period in the previous year.
Liquidity and Capital Resources
Overall cash decreased by $638,392 for the six months ended
Dec. 31, 2008, due to a continued loss from operations, purchases
of equipment for the wholesale call platform, and the reverse
merger with Semotus. The Company was able to cover some of the
cash loss through proceeds from convertible and promissory note
issuances. Cash increased $246,001 for the six months ended
Dec. 31, 2007, due mainly to financing from Flint Telecom Ltd.
which offset the operating losses.
As of Dec. 31, 2008, the Company has cash and cash equivalents of
$848,629, a decrease of $638,392 from the balance at June 30,
2008, which was $1,487,021. The Company's working capital deficit
increased as of Dec. 31, 2008 to $8,395,627 as compared to a
working capital deficit of $2,814,281 at June 30, 2008. The
company has not yet generated sufficient revenues to cover the
costs of continued product and service development and support,
sales and marketing efforts and general and administrative
expenses.
The Company is still largely dependent on financing in order to
generate cash to maintain its operations. The Company is
investigating the capital markets for additional financing.
However, there is no assurance that any additional capital will be
raised. The Company monitors its cash position and its operating
costs in order to maintain an adequate level of cash.
The Company has a capital lease for its telecom equipment for
which future minimum lease payments are $225,302 in fiscal 2009
and $450,605 in fiscal 2010. The Company has an operating lease
for its facility in New York City for which the future minimum
lease payments are $55,800 in fiscal 2009 and $93,000 in fiscal
2010. There are no material commitments for capital expenditures
at Dec. 31, 2008.
Going Concern Doubt
The Company said its net loss, negative cash flow and
stockholders' deficit raise substantial doubt about its ability to
continue as a going concern. Flint had a net loss of $8,548,598
and $9,694,544 for the three and six months ended Dec. 31, 2008,
negative cash flow from operating activities of $2,228,501 for the
six months ended Dec. 31, 2008, an accumulated stockholder's
deficit of $7,224,959 and a working capital deficit of $8,369,226
as of Dec. 31, 2008. Also, as of Dec. 31, 2008, the Company had
limited liquid and capital resources. The Company is largely
dependent upon obtaining sufficient short and long term financing
in order to continue running its operations.
A full-text copy of the Form 10-Q is available for free at:
http://ResearchArchives.com/t/s?39c8
About Flint Telecom Group, Inc.
Headquartered in Los Gatos, California, Flint Telecom Group, Inc.
(OTC:FLTT) -- http://www.semotus.com/-- f/k/a Semotus Solutions,
Inc., is a provider of enterprise application software connecting
employees wirelessly to business systems, information, and
processes. The Company's wireless software products and services
consist of its HipLink family of software. These software
solutions provide real time, event driven alerting, mobile access
and control of business-critical software applications, databases,
networks and servers. Clickmarks, Inc. is its wholly owned
subsidiary. On May 9, 2007, it consummated the sale of the Global
Market Pro family of products and services, its financial data
wireless distribution technology and related intellectual property
to Stockgroup Systems Ltd. It entered into a definitive
Contribution Agreement, on April 23, 2008, with Flint Telecom,
Inc., and Flint Telecom Limited. In October 2008, the Company
acquired Flint Telecom, Inc. As part of the transaction, Semotus
changed its name to Flint Telecom Group, Inc.
FLUID ROUTING: Court OKs FRS as Lead Bidder, Auction on March 24
----------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware on
February 19, 2009, gave its go signal for the bidding process for
Fluid Routing Solutions Intermediate Holding Corp. and its debtor-
affiliates' fuel systems business.
Under the Court-approved protocol, FRS Holding Corp. will be the
stalking horse bidder. The Debtors will sell the fuel systems
business to FRS Holding, absent higher and better bids at an
auction. Pursuant to an asset purchase agreement dated as of
February 6, 2009, FRS Holding has offered to pay $11,000,000,
subject to adjustments.
FRS Holding as stalking horse bidder will be entitled to expense
reimbursement of up to $75,000. Any expense reimbursement that
becomes payable under the APA will constitute a superpriority
claim with priority over any and all administrative expenses of
the kind specified in Sections 503(b) and 507(b) of the Bankruptcy
Code.
To the extent permitted under Sec. 363(k) of the Bankruptcy Code,
FRS Holding and its affiliates are authorized to make one or more
credit bids at the auction equal to (i) the Expense Reimbursement
plus (ii) any or all of its claims and outstanding obligations
under the debtor-in-possession credit agreement and a prepetition
second lien note.
Parties interested to bid against FRS Holding must submit their
offers not later than 12:00 p.m. Eastern Time on March 20, 2009.
In the case of multiple bids, the Debtors will conduct an auction
on March 23, 2009, at 9:00 a.m. prevailing Eastern Time at the
offices of Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York,
NY 10178.
The Court will convene a hearing to consider the sale on March 24,
2009, at 11:30 a.m. prevailing Eastern Time. Objections to the
sale are due March 20.
As reported in the Troubled Company Reporter on Feb. 10, 2009,
Fluid Routing arranged a $12 million debtor-in-possession loan
with Sun Fluid Routing Finance LLC, to finance its Chapter 11
proceedings. The loan matures in 120 days, and requires the
Debtors to obtain approval from the Court for the sale of their
assets within 35 days or by March 13. The lender, Sun FR, which
is also owed $10 million for a senior subordinated secured
promissory note, is an affiliate of Sun Capital Partners, Inc.,
the parent of the Debtors.
A full-text copy of the Approved Bid Procedures is available at:
http://bankrupt.com/misc/FluidRouting.ApprovedBidProcedures.pdf
A full-text copy of the Asset Purchase Agreement with FRS Holding
is available at:
http://bankrupt.com/misc/FluidRouting.FRSHoldingAPA.pdf
About Fluid Routing
Headquartered in Rochester Hills, Michigan, Fluid Routing
Solutions Inc. -- http://www.markivauto.com-- makes automobile
parts and accessories. The company has manufacturing facilities
located in Lexington, Tennessee; Big Rapids, Michigan; Oscala,
Florida; and Easley, South Carolina. The Company's Detroit
facility closed in 2008. The company had 1,039 employees before
it filed for bankruptcy.
Fluid Routing Solutions, Inc., and three affiliates filed for
Chapter 11 on Feb. 6 (Bank. D. Del., Lead Case No. (09-10384).
Judge Christopher Sonchi handles the case.
Michael R. Nestor, Esq., and Kenneth J. Enos, Esq., at Young
Conaway Stargatt & Taylor LLP, and Neil E. Herman, Esq., at
Morgan Lewis & Bockuis LLP, are the Debtors' counsel. Mesirow
Financial Interim Management, LLC, is the Debtors' financial
advisors. Fluid Routing in its bankruptcy petition estimated
assets of $10 million to $50 million and debts of $50 million to
$100 million.
GANNETT CO: Cuts Quarterly Dividend by 90% to Boost Balance Sheet
-----------------------------------------------------------------
Lauren Pollock at The Wall Street Journal reports that Gannett Co.
has cut its quarterly dividend to strengthen its balance sheet.
Gannett's Board of Directors declared on February 25 a quarterly
dividend of four cents per share, payable on April 1, 2009, to
shareholders of record as of the close of business March 6, 2009.
This is a reduction from the first quarter dividend rate of 40
cents per share.
"Today's [February 25] action by the Board is another prudent
response to the full-fledged recessions in the U.S. and UK and the
continuing difficulties in the credit markets," said Craig A.
Dubow, Gannett's chairperson, president, and chief executive
officer. "The reallocation of more than $325 million of free cash
flow annually to pay down debt will further strengthen our balance
sheet, provide us with even more financial flexibility and
position us well to continue to seize opportunities for growth.
This dividend represents the 163rd consecutive dividend paid by
the company since 1967," he added.
About Gannett Co. Inc.
Headquartered in McLean, Virginia, Gannett Co. Inc. (NYSE:GCI) --
http://www.gannett.com/-- is an international news and
information company. In the United States, the company publishes
85 daily newspapers, including USA TODAY, and nearly 900 non-daily
publications. Along with each of its daily newspapers, the
company operates Websites offering news, information and
advertising that is customized for the market served and
integrated with its publishing operations. Newspaper publishing
operations in the United Kingdom, operating as Newsquest, include
17 paid-for daily newspapers, almost 300 non-daily publications,
locally integrated Websites and classified business Websites with
national reach. The company has two segments: newspaper
publishing and broadcasting.
As reported by the Troubled Company Reporter on January 19, 2009,
Gannett reported that it is offering to sell certain assets of the
Tucson (AZ) Citizen. If a sale is not completed by March 21,
2009, Gannett said it will have to close the newspaper.
According to the TCR on January 15, 2009, Gannett said that it
asked U.S. non-unionized workers to take a week of unpaid leave
the first quarter. Gannett CEO and Chairperson Craig Dubow said
that the company needs to preserve its operations and continue to
deliver for its customers while confronting the issues raised by
some of the most difficult economic conditions that the company
has ever experienced. Mr. Gannett said that employees in unions
will also be asked to participate in the furlough.
The TCR reported on October 2, 2008, that Gannett drew on a
revolving credit line to ensure it has funds to repay its
commercial paper. The action was taken in response to credit-
market disruption. The company said it has significant credit
available under a $3.9 billion revolving credit line, in excess of
its $2 billion in commercial paper outstanding.
GENERAL MOTORS: Will Meet With Auto Industry Task Force Today
-------------------------------------------------------------
John D. Stoll and Alex P. Kellogg at The Wall Street Journal
report that General Motors Corp. executives would meet with the
auto industry task force on Thursday.
WSJ relates that the task force will mainly focus on evaluating
the best restructuring paths for General Motors Corp. and Chrysler
LLC. Citing a person familiar with the matter, WSJ says that the
group is considering whether continuing to financially assist the
automakers could further the government's energy policy. The
source said that the task force is pushing the automakers to
commit to building vehicles that get better fuel efficiency,
including plug-in vehicles, the report states.
American Bankruptcy Institute says a General Motors Corp.
bankruptcy could potentially yield $1.2 billion in fees for
bankers, accountants and lawyers, surpassing record fees being
made by advisers on the collapse of Lehman Brothers Holdings Inc.
According to Bloomberg, General Motors Corp., already surviving on
$13.4 billion in U.S. aid, will probably report a fourth straight
annual loss tomorrow as Chief Executive Officer Rick Wagoner asks
the Treasury for more cash to finish the year.
According to WSJ, GM said that by 2014 it will have 26 hybrid or
electric cars. GM will build at least three versions of its
Chevrolet Volt plug-in vehicle, says WSJ. GM said in its
viability plan that it will increase the average fuel economy of
its cars by 25% between 2010 and 2015, and its trucks by 15%, WSJ
relates. WSJ notes that the average fuel economy of GM's trucks
is expected to drop until 2013, when it launches new models.
GM will also release its fourth-quarter earnings results on
Thursday, WSJ relates. WSJ quoted Buckingham Research analyst
Joesph Amaturo as saying, "We believe all of GM's automotive
regions will post meaningful year-over-year sales and pretax
profit declines, with the largest declines in U.S. and Europe."
According to the report, Mr. Amaturo estimated that GM consumed
about $12 billion in cash in the fourth quarter 2008. GM, which
is also seeking for about $6 billion from governments outside the
U.S., said that it could run out of money by March without more
government aid, WSJ states. WSJ says that GM seeking as much as
$30 billion in funding from the U.S. government.
Keith Naughton and Jeff Green at Bloomberg News, citing CSM
Worldwide Inc. analyst Michael Robinet, states that the meeting
would give automakers a chance to show how sales have worsened
since the first installment of $17.4 billion in bailout funds in
December 2008. Bloomberg says that the task force can force GM
and Chrysler to file for bankruptcy protection. Bloomberg quoted
Mr. Robinet as saying, "The automakers have too much inventory for
this sales rate, and they need to bleed off that inventory before
they can start producing again."
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.
GEORGIA GULF: Dec. 31 Balance Sheet Upside Down by $139,928
-----------------------------------------------------------
On February 17, 2009, Georgia Gulf Corporation (NYSE: GGC)
disclosed financial results for its fourth quarter and year ended
December 31, 2008.
Georgia Gulf reported net sales of $535.6 million for the fourth
quarter of 2008 compared with net sales of $776.4 million for the
fourth quarter of 2007. The Company said that the decrease is
primarily due to lower prices and volumes driven by extremely
difficult North American housing and construction market
conditions, partially offset by higher Electrochemical Unit (ECU)
values.
Georgia Gulf reported a net loss of $198.7 million or $5.76 per
diluted share for the fourth quarter of 2008, compared with a net
loss of $227.3 million, or $6.62 per diluted share during the same
quarter in the previous year. During the fourth quarter of 2008,
the Company recorded charges of $170.5 million consisting of cash
restructuring charges of approximately $13.2 million and non-cash
charges of $157.3 million related to impairment of goodwill and
intangibles and the closure of the Sarnia PVC resin plant.
Excluding the after-tax impact of these charges, the Company
recorded a net loss of $36.3 million, or $1.06 per diluted share,
in the fourth quarter of 2008. The net loss for the fourth
quarter of 2007 was $21.4 million, or $0.62 per diluted share,
excluding the after tax impact of non-cash charges and a valuation
allowance against deferred tax assets in Canada of $205.9 million,
or $6.00 per diluted share.
"Georgia Gulf's fourth quarter operational performance was
impacted by the dramatic slowdown in sales during the final months
of the year as well as inventory holding losses in Aromatics
driven by benzene and propylene price declines," said Paul
Carrico, Georgia Gulf's President and CEO. "Despite one of the
most challenging environments our industry has experienced in
decades, we generated strong cash flows from operating activities
of $56 million during the fourth quarter and increased our
liquidity position to $233 million," Mr. Carrico added.
For the year ended December 31, 2008, Georgia Gulf's sales were
$2.9 billion, compared to $3.2 billion during 2007. The decrease
in sales was attributed to lower volumes in all segments partially
offset by higher ECU values. In 2008, Georgia Gulf recorded a net
loss of $257.6 million, or $7.48 per diluted share, compared to a
net loss of $266.0 million or $7.75 per diluted share in the prior
year. During 2008, the Company recorded charges of $197.9 million
consisting of cash restructuring charges of approximately $22.0
million and non-cash charges of $176.0 million related to
impairment of goodwill, intangibles and other long-lived assets in
the fourth quarter. Excluding the after-tax impact of these
charges, the Company recorded a net loss of $75.8 million or $2.20
per diluted share in 2008. Excluding the non-cash charges and a
valuation allowance against deferred tax assets in Canada, the
Company recorded a net loss of $56.3 million or $1.64 per diluted
share in 2007.
In 2008, Georgia Gulf took these actions in response to market
conditions:
* Permanently closed two PVC resin plants representing about
25 percent of Georgia Gulf's capacity
* Reduced cost structure by consolidating production and
closing 4 other manufacturing facilities
* Reduced SG&A expenses by 25 percent, approximately
$57 million
* Reduced headcount by 15 percent
* Sold the outdoor storage business for $13 million
* Sold underutilized assets for $67 million, including land in
Pasadena, Texas
"In 2008, we responded aggressively to deteriorating market
conditions throughout the year," said Paul Carrico, Georgia Gulf's
President and CEO. "In 2009, we will realize the full benefit of
those actions. We have taken additional steps in January and
February to align our operations to the level of demand in the
market. If conditions deteriorate further than we expect, we are
prepared to take additional actions," Mr. Carrico added.
Chlorovinyls
In the Chlorovinyls segment, fourth quarter 2008 sales decreased
to $271.5 million from $356.4 million during the fourth quarter of
2007 driven by lower volumes. The segment posted an operating loss
of $4.5 million compared to an operating loss of
$31.9 million during the same quarter in the prior year. During
the fourth quarter of 2008, charges of $54.0 million consisting of
cash restructuring charges of approximately $8.3 million and non-
cash impairment of long-lived asset charges of $45.7 million
primarily related to the closure of the Sarnia PVC resin plant
were recorded in the Chlorovinyls segment. During the fourth
quarter of 2007, non-cash charges of $55.5 million for impairment
of goodwill and intangibles were recorded in the Chlorovinyls
segment. Adjusted operating income was $49.5 million in the
fourth quarter of 2008 compared to $23.5 million in the fourth
quarter of 2007. The increase in adjusted operating income was
primarily due to higher ECU values and lower raw material costs,
partially offset by lower sales volumes.
Window & Door Profiles and Mouldings
In the Window & Door Profiles and Mouldings segment, sales were
$80.8 million for the fourth quarter of 2008, compared to
$126.1 million during the same quarter in the prior year. Sales on
a constant currency basis declined 30 percent. The decline in
sales reflects extremely difficult conditions in the North
American housing and construction markets, particularly related to
new home construction. The segment's operating loss was
$121.5 million for the fourth quarter of 2008, compared to an
operating loss of $60.0 million during the same quarter in the
prior year. During the fourth quarter of 2008, non-cash charges
of $111.0 million primarily related to impairment of goodwill and
intangibles were recorded in the Window & Door Profiles and
Mouldings segment. During the fourth quarter of 2007, non-cash
charges of $61.8 million primarily for the impairment of goodwill,
intangibles, and other long-lived assets and a loss on sale of
assets of $0.8 million were recorded in this segment. Adjusted
operating loss was $10.5 million in the fourth quarter of 2008
compared to adjusted operating income of $2.5 million in the
fourth quarter of 2007. The increase in adjusted operating losses
is primarily the result of lower sales volume, partially offset by
cost reductions.
Outdoor Building Products
In the Outdoor Building Products segment, sales were
$80.6 million for the fourth quarter of 2008, compared to $118.8
million during the same quarter in the prior year. Sales on a
constant currency basis declined about 22 percent compared to the
same period in 2007. The decrease in sales reflects the extremely
difficult conditions in the North American housing and
construction markets and the lost sales associated with the sale
of the outdoor storage business. The segment reported an
operating loss of $12.6 million for the fourth quarter of 2008,
compared to an operating loss of $53.6 million during the same
quarter in the prior year. During the fourth quarter of 2008,
charges of $4.4 million, consisting of cash restructuring charges
of approximately $3.7 million and non-cash impairment charges of
$0.7 million were recorded in the Outdoor Building Products
segment. In the fourth quarter of 2007, non-cash charges of $39.4
million primarily for impairment of goodwill, intangibles, and
other long-lived assets and cash restructuring charges of $0.7
million were recorded in this segment. Adjusted operating loss
was $8.2 million in the fourth quarter of 2008 compared to an
adjusted operating loss of $13.5 million in the same period in
2007. The decrease in adjusted operating loss is primarily
related to the sale of the outdoor storage business.
Aromatics
In the Aromatics segment, sales decreased to $102.7 million for
the fourth quarter of 2008 from $175.1 million during the fourth
quarter of 2007. Sales decreased due to lower volumes and prices.
During the fourth quarter of 2008, the segment recorded an
operating loss of $27.6 million, compared to operating income of
$3.5 million during the same quarter in 2007. The decrease in
operating income was due to inventory holding losses of
$24.8 million caused by the rapid decline in feedstock and product
prices during the quarter.
Liquidity and Debt Reduction
As of December 31, 2008, the Company had $90 million of cash on
hand as well as $143 million of borrowing capacity available under
its revolving credit facility. The Company reduced net debt by
$83 million during 2008 and was in compliance with its debt
covenants for the quarter ended December 31, 2008.
As of December 31, 2008, the Company's balance sheet showed total
assets of $1,610,401 and total liabilities of $1,750,329,
resulting in total stockholders' deficit of $139,928.
A full-text copy of the Company's press release and selected
financial data is available for free at:
http://researcharchives.com/t/s?39d3
About Georgia Gulf
Georgia Gulf Corporation is a manufacturer and international
marketer of two integrated chemical product lines, chlorovinyls
and aromatics. The Company's primary chlorovinyls products are
chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl resins
and vinyl compounds. Its aromatics products are cumene, phenol
and acetone. The Company has four business segments: chlorovinyls;
window and door profiles, and moldings products; outdoor building
products, and aromatics.
The Troubled Company Reporter reported on Feb. 24, 2009, that
Moody's Investors Service downgraded the ratings of Georgia Gulf
Corporation. Moody's lowered GGC's Corporate Family Rating to
Caa2 from B3, senior secured revolver and term loan to B3 from
Ba3, senior unsecured notes to Caa3 from Caa1 and senior
subordinated notes to Ca from Caa2. These actions follow the
company weak fourth quarter performance, the potential for a
weaker and longer downturn in the company's primary end-markets
and difficult credit environment, which will reduce the company's
flexibility in refinancing or amending its senior secured
facilities prior to the filing of financial statements for the
second quarter of 2009. The rating outlook is negative.
GLOBAL 8: Dec. Balance Sheet Upside-Down; Substantial Doubt Raised
------------------------------------------------------------------
Global 8 Environmental Technologies, Inc.'s financial results for
three months ended Dec. 31, 2008, that it submitted to the
Securities and Exchange Commission showed a shareholders' deficit.
At Dec. 31, 2008, the Company's balance sheet showed total assets
of $1,042,249 and total liabilities of $2,060,283, resulting in a
shareholders' deficit of $1,018,034.
For three months ended Dec. 31, 2008, the Company posted a net
loss of $880,077 compared with a net loss $1,086,896 for the same
period in the previous year.
Liquidity and Capital Resources
The Company's principal capital requirements during the fiscal
2008 are to fund the internal operations and acquire profitable
growth oriented businesses. The Company plans to continue to
raise necessary funds by selling its own common shares to selected
accredited investors and bringing in business partners whose
contributions include the necessary cash. In view of low
borrowing interest rates, the Company continues to actively pursue
additional credit facilities with accredited investors and
financial institutions as a means to obtain new funding. The
Company's management estimates that it currently does not have the
necessary funds to operate for the next 12 months without raising
additional capital.
The Company's current liabilities exceeded its current assets by
$1,802,062 at Dec. 31, 2008. These factors and the Company's
inability to meet its debt obligations from current operations,
and the need to raise additional funds to accomplish its
objectives, create a substantial doubt about the Company's ability
to continue as a going concern. Furthermore, the Company's
independent auditors have issued a going concern opinion on the
Company's audited financial statements for the fiscal year ended
Sept. 30, 2008, as the Company did not have sufficient funds
available to operate for the next twelve months.
Further, due to the Company's substantial working capital deficit
and its current inability to generate revenues, there is no
assurance that the Company will be able to continue as a going
concern or achieve material revenues or profitable operations.
A full-text copy of the 10-Q is available at:
http://ResearchArchives.com/t/s?39c7
About Global 8 Environmental Technologies Inc.
Headquartered in Orangeville, Ontario, Global 8 Environmental
Technologies, Inc., (OTC:GBLE) -- http://www.g8et.com/-- fka
Organic Recycling Technologies, Inc., is engaged in waste
management and recycling technologies. The Company has 10 wholly
owned subsidiaries: Global 8 Environmental Technologies, Inc.,
Global 8 Environmental Management Inc., Global 8 BioOrganics,
Inc., Global 8 BioEnergy, Inc., Global 8 AirFlow, Inc., Global 8
WaterFlow, Inc., Organic Recycling Management, Inc., Organic
Recycling Technologies, Inc., New York, EAPI Center, Inc., and
Duro Enzyme Solutions, Inc. The Company is partnering with
technology developers to utilize and apply waste management and
recycling technologies and bring these technologies to the market
place.
GREATER ATLANTIC: Discloses $7.7MM Deficit; $1.8M Q4 Net Loss
-------------------------------------------------------------
Greater Atlantic Financial Corp. and its wholly owned subsidiary,
Greater Atlantic Bank delivered to the Securities and Exchange
Commission its Form 10-Q for the quarter ended December 31, 2008.
For the three months ended December 31, 2008, the Company had a
net loss of $1.8 million or $0.59 per diluted share, compared with
a net loss of $844,000 or $0.28 per diluted share for the three
months ended December 31, 2007. The increase was primarily the
result of an increase in the provision for loan losses and
decreases in net interest income and non-interest income and was
offset by a decrease in non-interest expense.
The ongoing net losses from operations remain a consistent problem
for management because the loan production needed to maintain the
retail branch network has not been attained, and the limitations
in the Cease and Desist Order restricting the bank's lending in
the commercial business, commercial real estate and construction
areas adversely affect the ability of the bank to become
profitable. Further, the bank has been managing its assets and
liabilities to maintain the capitalized status required to effect
the sale of the bank. The company believes that the OTS
recognized that approach by modifying the Cease and Desist Order
to extend compliance with the 6% and 12% capital requirements to
December 31, 2008. Processing of the Summit application to
acquire the Company and the bank continued under the new
definitive merger agreement until that agreement was terminated by
mutual consent of the parties on December 15, 2008.
Because of the bank's loans to one borrower limit, and the loan
limitations contained in the Cease and Desist Order, the bank is
unable to expand its commercial loan portfolio and maintain a
consistent level of outstanding loans to larger customers. Those
factors have caused and will continue to cause earning assets to
decline, adversely impacting earnings. Further, margin pressure
from the yield curve also presents a challenging environment which
limits the bank's ability to increase the company's net interest
margin. However, the company will continue to reduce its
borrowing costs and reduce any operating cost which can be removed
without negatively affecting the bank's ability to conduct
business with its current customer base. In order to further
reduce costs, branch sales are a possible avenue that can be
pursued in the event that a capital infusion is obtained.
As of December 31, 2008, the Company's balance sheet showed total
assets of $215,151,000 and total liabilities of $222,905,000,
resulting in total stockholders' deficit of $7,754,000.
A full-text copy of the Company's quarterly report is available
for free at: http://researcharchives.com/t/s?39d5
About Greater Atlantic
Greater Atlantic Financial Corp. is a bank holding company whose
principal activity is the ownership and management of Greater
Atlantic Bank. The bank originates commercial, mortgage and
consumer loans and receives deposits from customers located
primarily in Virginia, Washington, D.C. and Maryland. The bank
operates under a federal bank charter and provides full banking
services.
Going Concern Doubt
The Troubled Company Reporter reported on Jan. 21, 2009, that BDO
Seidman, LLP, in Richmond, Virginia, in a letter dated
January 12, 2009, to the Board of Directors and Stockholders of
Greater Atlantic Financial Corp. expressed substantial doubt about
the company's ability to continue as a going concern. The firm
audited the consolidated statements of financial condition of
Greater Atlantic Financial Corp. and its subsidiaries as of
September 30, 2008 and 2007 and the related consolidated
statements of operations, stockholders' equity (deficit),
comprehensive income (loss) and cash flows for each of the two
years in the period ended September 30, 2008.
GREATER ATLANTIC: Unit Gets OTS Notice & Must File Plan by March
----------------------------------------------------------------
On February 10, 2009, Greater Atlantic Bank, the wholly owned
subsidiary of Greater Atlantic Financial Corp., received written
notification from the Office of Thrift Supervision that the Bank
is deemed to have notice as of January 30, 2009, that the Bank is
"undercapitalized" under Part 565 of the OTS Rules and Regulations
based on the regulatory capital ratios the Bank reported in its
Thrift Financial Report for the period ended December 31, 2008.
Accordingly, the Bank is now subject to the restrictions on asset
growth, dividends, other capital distributions and management fees
set forth in Section 38(d) of the Federal Deposit Insurance Act
and Section 565.6 of the OTS Rules and Regulations.
The Notice also requires the Bank to file a written capital
restoration plan, including all of the required information set
forth in Section 38(e)(2)(B) of the FDIA, with the Regional
Director of the OTS in Atlanta, Georgia, with copies to the FDIC
Regional Director, no later than March 16, 2009.
The Notice specifically provides that the FDIA supplements but
does not replace the existing supervisory and enforcement
authority of the OTS to deal with capital deficiencies and other
supervisory problems. Accordingly, the previously disclosed Cease
and Desist Order that the Bank entered into with the OTS on
April 25, 2008, as amended, remains in effect. In addition, the
Notice states that the OTS retains the ability to impose
additional restrictions under its Prompt Corrective Action
authority and that the Bank should expect that the OTS will
probably issue a PCA Directive in the near future. The
Bank is also required to monitor its compliance with the
requirements of Section 38(e) of the FDIA and applicable
regulations and to notify the OTS at least 30 days prior to adding
a director or hiring a senior executive officer, changing the
responsibilities of a senior executive officer or engaging in any
transactions with affiliates.
As an undercapitalized institution, the Bank may not: (1) make or
pay any capital distributions without the prior approval of the
OTS; (2) pay any management fees to any person having control of
the Bank or (3) accept, renew or roll over any brokered deposit.
Further, unless the OTS has accepted the Bank's capital
restoration plan, the Bank may not permit its total average assets
during any calendar quarter to exceed its total average assets
during the preceding calendar quarter unless the increase in
assets is consistent with the capital restoration plan and the
Bank increases its ratio of tangible equity in the quarter at a
rate sufficient to enable the Bank to become adequately
capitalized in a reasonable amount of time.
In addition, the Bank may not acquire any interest in any company
or insured depository institution, acquire any additional branch
office, or engage in a new line of business unless: (1) the OTS
has accepted the Bank's capital restoration plan, the Bank is in
compliance with the plan and the OTS determines that the action is
consistent with and will further achievement of the plan, or
(2) the Board of Directors of the FDIC approves the action.
About Greater Atlantic
Greater Atlantic Financial Corp. is a bank holding company whose
principal activity is the ownership and management of Greater
Atlantic Bank. The bank originates commercial, mortgage and
consumer loans and receives deposits from customers located
primarily in Virginia, Washington, D.C. and Maryland. The bank
operates under a federal bank charter and provides full banking
services.
Going Concern Doubt
The Troubled Company Reporter reported on Jan. 21, 2009, that BDO
Seidman, LLP, in Richmond, Virginia, in a letter dated
January 12, 2009, to the Board of Directors and Stockholders of
Greater Atlantic Financial Corp. expressed substantial doubt about
the company's ability to continue as a going concern. The firm
audited the consolidated statements of financial condition of
Greater Atlantic Financial Corp. and its subsidiaries as of
September 30, 2008, and 2007 and the related consolidated
statements of operations, stockholders' equity (deficit),
comprehensive income (loss) and cash flows for each of the two
years in the period ended September 30, 2008.
As of December 31, 2008, the Company's balance sheet showed total
assets of $215,151,000 and total liabilities of $222,905,000,
resulting in total stockholders' deficit of $7,754,000.
GREEN GOBLIN: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: Green Goblin, Inc.,
431 West Valley Forge Road
King of Prussia, PA 19406
Bankruptcy Case No.: 09-11239
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Venom Inc. dba Gold's Gym 09-10445
Chapter 11 Petition Date: Fbruary 23, 2009
Court: United States Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Debtor's Counsel: Robert Mark Bovarnik, Esq.
Law Offices of Robert M. Bovarnick
Two Penn Center Plaza
1500 JFK Blvd., Suite 1310
Philadelphia, PA 19102
Tel: (215) 568-4480
Email: rmb@rbovarnick.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/paeb09-11239.pdf
The petition was signed by John DePrince, Secretary/Treasurer of
the Company.
HARTMARX CORP.: Gets Court Nod to Borrow $160 Million
-----------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Illinois, Eastern Division, gave Hartmarx Corp. final authority to
obtain $160 million in secured borrowing, Bloomberg's Bill
Rochelle said.
Based in Chicago, Illinois, Hartmarx Corporation (HTMXQ) --
http://www.hartmarx.com-- produces and markets business, casual
and golf apparel under its own brands, including Hart Schaffner
Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester
Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the
West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace,
Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In
addition, the company has certain exclusive rights under licensing
agreements to market selected products under a number of premier
brands such as Austin Reed, Burberry men's tailored clothing, Ted
Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle
& Scott, Golden Bear, Jag and Dr. Martens. The Company's broad
range of distribution channels includes fine specialty and leading
department stores, value-oriented retailers and direct mail
catalogs.
The Company and its affiliated debtors filed for bankruptcy
protection on January 23, 2009 (Bankr. N.D. Ill. Lead Case No. 09-
02046). George N. Panagakis, Esq., Felicia Gerber Perlman, Esq.,
and Eric J. Howe, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, represent the Debtors in their restructuring efforts. When
the Debtors filed for bankruptcy, they listed $483,108,000 in
total assets and $261,220,000 in total debts as of August 31,
2008.
HERTZ CORPORATION: Fitch Affirms 'BB' Issuer Default Rating
-----------------------------------------------------------
Due to the adverse impact of recessionary global economic
conditions and tight credit markets on The Hertz Corporation's
recent and expected near-term operating performance and free cash
flow, Fitch Ratings has revised Hertz's Rating Outlook to Negative
from Stable. Approximately $4.6 billion of debt is affected by
this action.
Fitch is anticipating that Hertz's ability to sustain current
operating cashflow levels will be pressured as near-term demand
for rental cars and rental equipment may weaken further; however,
it will likely remain positive for all of 2009. Also, further
weakening of used car prices would also generate further downward
pressure on operating results as exposure to at-risk vehicles in
Hertz's rental fleet has grown substantially over the past two
years. Fitch recognizes that the summer travel season represents
a peak period of rental activity, and weaker than expected
performance through this period may have negative rating
implications.
Fitch currently believes that Hertz has sufficient headroom under
existing debt covenants, which include maintaining consolidated
leverage (debt to EBITDA) of less 5.25 times (x) and minimum
interest coverage of 2.0x at Dec. 31, 2008. Leverage and interest
coverage equaled 3.71x and 2.94x respectively. A significant
deterioration in either of these measures would likely result in a
rating downgrade.
Although recognition of the $1.2 billion impairment (before-tax)
to goodwill and intangibles, which includes the Hertz trademark,
did not have any covenant-related implications, the value of the
Hertz trademark is a factor in Fitch's overall assessment of
collateral adequacy. Despite the impairment of the trademark
value, Fitch continues to believe that overall collateral coverage
remains adequate and continues to support full repayment of all
debt classes, assuming an orderly liquidation. Moreover, based on
periodic assessments of the relative adequacy of collateral to
support repayment of debt, Fitch may revise the current notching
of security specific ratings from their current levels relative to
Hertz's Issuer Default Rating, including equating the senior
unsecured debt rating with the IDR.
Fitch believes current liquidity remains sufficient to support
funding and maturing debt requirements through 2009. However, debt
maturities in 2010 are sizeable and total approximately $5 billon.
Consequently, Fitch believes that Hertz's ongoing efforts to
develop cost-effective funding alternatives to asset
securitization represent a meaningful near-term challenge and
significant rating concern. Although near-term debt maturities
are sizeable, Fitch recognizes that Hertz does have some
flexibility and a number of options in meeting this requirement
including further downsizing of the rental fleet and the ability
to access other forms of secured funding.
Fitch has affirmed and assigned a Negative Outlook to Hertz's
ratings:
-- IDR at 'BB';
-- Senior secured revolving facility at 'BBB';
-- Secured term facility at 'BBB-';
-- Letter of credit facility at 'BBB-';
-- Senior unsecured debt at 'BB-';
-- Subordinated Debt at 'B+';
INDYMAC BANCORP: Chapter 7 Trustee Sues FDIC to Recover Assets
--------------------------------------------------------------
The Chapter 7 trustee for IndyMac Bancorp Inc. sued the Federal
Deposit Insurance Corp. to recover assets seized by the FDIC.
According to Bloomberg's Bill Rochelel, the Chapter 7 trustee is
asking the U.S. Bankruptcy Court for the Central District of
California to decide whether some of the assets the FDIC is
selling in reality belong to the bankrupt estate of the holding
company and not to the bank under the regulator's control.
The trustee wants proceeds from the disputed assets set aside
pending hearings on the issue.
About IndyMac Bancorp
Based in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) --
http://www.indymacbank.com/-- is the holding company for IndyMac
Bank, FSB, a hybrid thrift/mortgage bank that originated mortgages
in all 50 states of the United States. Through its hybrid thrift-
mortgage bank business model, IndyMac designed, manufactured, and
distributing cost-efficient financing for the acquisition,
development, and improvement of single-family homes. IndyMac also
provided financing secured by single-family homes to facilitate
consumers' personal financial goals and strategically invests in
single-family mortgage-related assets.
Indymac Bancorp filed for Chapter 7 bankruptcy protection on
July 31, 2008 (Bankr. C.D. Calif., Case No. 08-21752).
Representing the Debtor are Dean G. Rallis, Jr., Esq., and
John C. Weitnauer, Esq. Bloomberg noted that Indymac had $32.01
billion in assets as of July 11, 2008. In court documents,
IndyMac disclosed estimated assets of $50 million
to $100 million and estimated debts of $100 million to
$500 million.
All of Indymac's business is conducted, and assets are held,
within IndyMac Bank, F.S.B. On July 11, 2008, the Office of
Thrift Supervision closed IndyMac Bank and appointed FDIC as the
bank's receiver. Thacher Proffitt & Wood LLP was engaged as
counsel to the FDIC.
INTEGRATED BIOPHARMA: Posts $11MM Net Loss in the Last Six Months
-----------------------------------------------------------------
Integrated Biopharma, Inc. disclosed a net loss in its financial
results for three and six months ended Dec. 31, 2008, that it
submitted to the Securities and Exchange Commission.
At Dec. 31, 2008, the Company's balance sheet showed total assets
of $22,647,000, total liabilities of $18,487,000 and stockholders'
equity of $4,160,000.
For three months ended Dec. 31, 2008, the Company posted a net
loss $8,120,000 compared with a net loss of $3,647,000 for the
same period in the previous year.
For six months ended Dec. 31, 2008, the Company posted a net loss
of $11,169,000 compared with a net loss of $4,448,000 for the same
period in the previous year.
Liquidity
As of Dec. 31, 2008, the Company has working capital deficit of
$342 caused by the Notes Payable outstanding in the amount of
$7,016 with a principal amount of $7,805 due Nov. 15, 2009, being
classified as a current liability. The Company's expected return
to profitability in the latter months of fiscal year 2009, which
cannot be assured, could provide a portion of cash needs over the
ensuing twelve-month period to meet capital expenditure needs and
daily operational needs. In addition, in February 2009 the
Company obtained a Working Capital Bridge Loan from a related
party, major shareholder and director, and the Company may sell or
otherwise dispose of substantially all of the net assets of the
Pharmaceutical segment to further fund its cash needs. Even with
the expected return to profitability, the Working Capital Bridge
Loan and the potential to sell or otherwise dispose of Company
assets, the Company's current cash flows will not be able to repay
the Notes Payable without refinancing, or obtaining additional
debt or capital from other sources. There can be no assurance
that the Company will be successful in these efforts, which raises
substantial doubt as to the Company's ability to continue as a
going concern.
A full-text copy of the 10-Q is available at:
http://ResearchArchives.com/t/s?39c6
About Integrated BioPharma, Inc.
Headquartered in Hillside, New Jersey, Integrated BioPharma, Inc.
(NASDAQ: INBP) -- http://www.inb-biotechnologies.com/-- is
engaged in manufacturing, distributing, marketing and sales of
vitamins, nutritional supplements and herbal products the
manufacture and distribution of Paclitaxel, which is the primary
chemotherapeutic agent in the treatment of breast cancer,
Pharmaceutical technical services through its contract research
organization; and the biotechnology business that uses its
patented plant-based technology to produce vaccines and
therapeutic antibodies. The Company operates in three business
segments: Nutraceuticals, Pharmaceuticals and Biotechnologies INBP
continues to do business as Chem International, Inc. with its
customers and certain vendors.
INTEGRATED FINANCE: Case Summary & Six Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: Integrated Finance Limited, LLC
245 Park Avenue
New York, NY 10167
Bankruptcy Case No.: 09-10847
Type of Business: The Debtor provides financing services.
Chapter 11 Petition Date: February 24, 2009
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtor's Counsel: Gerard R. Luckman, Esq.
filings@spallp.com
Silverman Acampora, LLP
100 Jericho Quadrangle, Suite 300
Jericho, NY 11753
Tel: (516) 479-6300
Fax: (516) 479-6301
Estimated Assets: $1,162,108
Estimated Debts: $15,845,472
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
M&I Marshall & Isley Bank $20
770 N. Water Street
Milwaukee WI 53202
Deleware State Notice purposes Unknown
P.O. Box 11728 only
Newark NJ 07101-4728
Internal Revenue Service Notice purposes Unknown
Holtsville. NY 00501 only
NYC Dept. of Finance Notice purposes Unknown
only
NYS Corporation Tax Notice purposes Unknown
only
US Attorney - SONY Notice purposes Unknown
only
The petition was signed by James McTaggart, chief executive
officer.
JACUZZI BRANDS: S&P Junks Corporate Credit Rating from 'B-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
ratings on Jacuzzi Brands Corp., including its corporate credit
rating to 'CCC+' from 'B-'. The outlook is negative.
At the same time, S&P lowered the ratings on the company's
$170 million first-lien term loan and $15 million synthetic letter
of credit facility to 'CCC-' from 'CCC+' and revised the recovery
ratings to '6' from '5'. The ratings indicate S&P's expectation
for negligible (0% to 10%) recovery in the event of a payment
default. S&P also lowered the issue rating on the company's $150
million second-lien term loan to 'CCC-' from 'CCC', with a
recovery rating of '6', indicating that lenders can expect
negligible (0% to 10%) recovery of principal and unpaid interest
in the event of a default.
"The lower ratings reflect our assessment that, because of the
ongoing challenging operating conditions owing to the weak U.S.
economy and continued housing downturn, demand for the company's
discretionary bath and spa products will continue to decline in
2009," said Standard & Poor's credit analyst Thomas Nadramia. "As
a result, operating performance will likely be weaker-than-
expected, and credit metrics will likely deteriorate to a level
that S&P would consider weak for the prior rating."
While the company's near-term liquidity position seems adequate at
the current time, given current availability under its lines of
credit, S&P is concerned that liquidity could become constrained
by 2010 unless operating results improve prior to that time.
The ratings on Jacuzzi reflect very competitive industry
conditions, overall industry cyclicality, the relatively narrow
focus of the company's principal product lines, weak operating
margins, and very aggressive financial leverage. The ratings also
reflect the benefits of strong brand names, including Jacuzzi and
Sundance, and geographic diversity with significant sales both
inside and outside of the U.S.
JAMES CARR: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: James Michael Carr
Rt. 3, Box 1950
Fire Tower Road
Hawkinsville, GA 31036
Bankruptcy Case No.: 09-50557
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Alfred Franklin Carr Walker 09-50558
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Middle District of Georgia (Macon)
Judge: James D. Walker Jr.
Debtor's Counsel: James P. Smith, Esq.
Jerome L. Kaplan, 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/gamb09-50557.pdf
The petition was signed by James Michael Carr.
KAAS & JANTJE: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Kaas & Jantje Bosma Van Gosliga
dba Vango Dairy, A Partnership
1775 CR 2408
Pickton, TX 75471
Tel: (903)
Bankruptcy Case No.: 09-40494
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Eastern District of Texas (Sherman)
Judge: Brenda T. Rhoades
Debtor's Counsel: William L. Needler, Esq.
William L. Needler & Associates, Ltd.
555 Skokie Blvd., Suite 500
Northbrook, IL 60062
Tel: (847) 559-8330
Fax: (847) 559-8331
Email: williamlneedler@aol.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/txeb09-40494.pdf
The petition was signed by Klaas van Gosliga, a Partner at the
company.
KEY PLASTICS: Completes Reorganization, Emerges From Chapter 11
---------------------------------------------------------------
Plastemart.com reports that Key Plastics LLC has completed its
reorganization and has exited Chapter 11 protection.
Key Plastics, according Plastemart.com, said that it converted
$115 million of senior secured debt into equity.
Key Plastics has closed an additional $20 million equity
investment, Plastemart.com relates. The report says that Wayzata
Investment Partners LLC, which became the Company's controlling
shareholder, led the additional investment. Key Plastics, states
the report, also secured a new $25 million credit facility.
"Our goal was to position ourselves to be one of the beneficiaries
of our customers' supplier consolidation strategies as the supply
base contracts at a greater pace in 2009. We have achieved that
goal, with Key Plastics now being largely debt free and
maintaining very high levels of quality and delivery,"
Plastemart.com quoted Ralph Ralston, President and Chief Operating
Officer of the company's North American operations, as saying.
Headquartered in Northville, Michigan, Key Plastics LLC --
http://www.keyplastics.com/-- supplies plastic components to the
automotive industry. The company has 24 manufacturing facilities
located in the United States, Canada, Mexico, Germany, Portugal,
Spain, the Czech Republic, France, Slovakia, Italy and China.
According to Bloomberg News, the company filed for bankruptcy in
March 23, 2000, in Detroit and emerged a year later under the
ownership of private-equity firm Carlyle.
The Company and Key Plastics Finance Corp. filed separate
petitions for Chapter 11 relief on Dec. 15, 2008 (Bankr. D. Del.
Case Lead Case No. 08-13324). Mark D. Collins, Esq., at Richards
Layton & Finger PA; and Stephen A. Youngman, Esq., and Martin A.
Sosland, Esq., at Weil, Gotschall & Manges LLP, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed assets and debts
between $100 million and $500 million each.
As reported in the Troubled Company Reporter on Feb 10, 2009, the
Court confirmed on Jan. 29, 2009, the Debtors' prepackaged plan,
concluding the Key Plastics' second trek through Chapter 11.
KING WILLIAM: Case Summary & Largest Unsecured Creditor
-------------------------------------------------------
Debtor: King William Sand & Gravel Mattaponi, Inc.
1566 McKendree Lane
Aylett, VA 23093
Bankruptcy Case No.: 09-31205
Chapter 11 Petition Date: February 24, 2009
Court: Eastern District of Virginia (Richmond)
Debtor's Counsel: David I. Swan, Esq.
dswan@mcguirewoods.com
McGuire Woods LLP
1750 Tysons Blvd. Suite 1800
McLean, VA 22102
Tel: (703) 712-5365
Estimated Assets: Less than $50 million
Estimated Debts: $50 million to $100 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Hays Farm Limited royalties $114,869
Partnership
677 McKendree lane
Attn: John D. Fulks
Aylett, VA 23009
The petition was signed by Mark Elliott, president.
LBL-SUNCAL NORTHLAKE: D.E. Shaw to Buy Projects for $200 Million
----------------------------------------------------------------
The Chapter 11 trustee for nine projects owned by affiliates of
SunCal Cos. is seeking approval from the U.S. Bankruptcy Court for
the Central District of California to sell the projects and others
assets for as much as $200 million to D.E. Shaw & Co., subject to
higher and better offers at an auction.
D.E. Shaw's offer is $175 million cash and up to another
$25 million to cure defaults on contracts, Bloomberg's Bill
Rochelle said.
The Court will convene a hearing to consider approval of the
proposed auction procedures on March 10.
According to Bloomberg, the companies in bankruptcy are jointly
owned by affiliates of SunCal Cos. and Lehman Brothers Holdings
Inc. The entities filed for bankruptcy in November after Lehman's
insolvency shut off funding for the projects.
The case is In re LBL-SunCal Northlake LLC, 08-17408, U.S.
Bankruptcy Court, Central District California (Santa Ana).
Statistics
LEVITT & SONS: Obtains Confirmation of Chapter 11 Plan
------------------------------------------------------
Judge Raymond B. Ray of the U.S. Bankruptcy Court for the Southern
District of Florida has confirmed Levitt & Sons LLC' and its
affiliates' the Second Amended Joint Liquidating Chapter 11 Plan,
as amended, dated December 18, 2008.
The Plan was co-sponsored by Levitt's official committee of
unsecured creditors.
According to Bloomberg's Bill Rochelle, unsecured creditors of
Levitt & Sons are projected to recover between 2.75 percent and
13.7% while creditors of the Tennessee debtors could see 38.4% to
55.2%. Creditors with claims on deposits are slated for a dividend
between 2.75% and 23.2%.
In the process of approving the Plan, Judge Ray approved related
settlements, namely a settlement with parent company Woodbridge
Holdings Corp., and a settlement by and among the LAS Debtors and
the Tennessee Debtors.
The objection filed by the United States Trustee, to the extent
not resolved or withdrawn, is overruled. The objection filed by
Bank of America, N.A., has been withdrawn in connection with the
settlement with the Plan Proponents, which was approved by the
Court on February 17, 2009.
As of the Effective Date, James S. Feltman is appointed as the
Plan Administrator, and Soneet R. Kapila is appointed as the
Wachovia Collateral Administrator in respect of the Post-
Confirmation Wachovia Debtors and the Wachovia Collateral. As
Wachovia Collateral Administrator, Mr. Kapila will retain the
powers and duties he has as Chief Administrator of the Wachovia
Debtors and Wachovia Collateral in accordance with the Wachovia
DIP Loan Documents and the Plan.
The Court will conduct a post-confirmation status conference on
April 1, 2009, to determine whether the Debtors and the Plan
Administrator have complied with the provisions of the
Confirmation Order.
A copy of the Confirmation Order is available at no charge at
http://researcharchives.com/t/s?39e0
The Plan Proponents delivered to the Court on January 2, 2009,
final blacklined version of their Second Amended Disclosure
Statement, as revised, a full-text copy of which is available for
free at:
http://ResearchArchives.com/t/s?375b
The Plan Proponents delivered to the Court on January 2, 2009,
final blacklined version of their Second Amended Chapter 11
Liquidating Plan, as revised, a full-text copy of which is
available for free at:
http://ResearchArchives.com/t/s?375c
The Plan Proponents also filed a corrected version of their
Liquidation Analysis, a full-text copy of which can be accessed
for free at:
http://ResearchArchives.com/t/s?3759
About Levitt and Sons
Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represented the Debtors in their
bankruptcy cases. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, was not included in the bankruptcy filing.
(Levitt and Sons Bankruptcy News; Bankruptcy Creditors' Service
Inc.; http://bankrupt.com/newsstand/or 215/945-7000 ).
LOU WAIT: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: Lou G. Wait
532 Colorado Avenue
Santa Monica, CA 90401
Bankruptcy Case No.: 09-13997
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Vincent P. Zurzolo
Debtor's Counsel: Linda M. Blank, Esq.
1925 Century Park East #2000
Los Angeles, CA 90067
Tel: (310) 277-2236
Fax: (310) 526-6503
Email: linda@lmblank.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/cacb09-13997.pdf
The petition was signed by Lou G. Wait.
LYONDELL CHEMICAL: $8-Billion Loan May Give Control to Lenders
--------------------------------------------------------------
Lyondell Chemical Co. is seeking final approval of its proposed
$8 billion debtor-in-possession financing, despite objections by a
number of creditors.
Parties who have filed objections include ABN AMRO Bank N.V., The
Bank of New York Mellon, Greif, Inc., Law Debenture Trust Company
of New York, lienholders, and the official committee of unsecured
creditors.
According to Bloomberg, Chief Executive Officer Alan Bigman
testified at a hearing on February 25 that the giant DIP loan may
give control of Lyondell to lenders under certain conditions.
These conditions include a mid-August deadline to file a
reorganization plan. Lyondell Chemical has insisted that the loan
benefits the estates as it allows the Company to continue
operations while it pursues its restructuring.
Judge Robert Gerber will continue the hearing today to allow
creditors to continue examining witnesses.
Objections to Loan
ABN AMRO Bank N.V. and its affiliates hold approximately $3.4
billion in outstanding claims against the Debtors and their
affiliates, including approximately $1.4 billion in loans ABN
extended under the Senior Facility Pre-Petition Credit Agreement.
Pursuant to the Interim DIP Order and the DIP Term Sheet, ABN is
both a Term DIP Lender and an ABL DIP Lender and has extended
$153.4 million in New Money Loans and approximately $129 million
in ABL Loans since the Petition Date.
ABN, which committed to fund up to approximately $326 million of
the ABL DIP Financing, has no objection to the proposed ABL DIP
Credit Agreement which is substantially consistent with the DIP
Term Sheet. However, the draft Term DIP Credit Agreement filed
with the Court, together with an amendment to the Senior Facility
Pre-Petition Credit Agreement that has not been filed with the
Court, have been drafted with provisions that were not
contemplated by the DIP Term Sheet and which, if approved, would
unnecessarily interfere with substantial rights of other lenders,
says Ana Alfonso, Esq., at Kaye Scholer LLP, in New York.
"The Term DIP Credit Agreement as currently drafted, along with
the Proposed Pre-Petition Amendment, could jeopardize the Roll Up
DIP Lenders' existing lien rights in collateral outside the
United States," says Ms. Alfonso. "Even worse, the Proposed Pre-
Petition Amendment compounds this problem by adversely and
disproportionately impacting the rights and potential remedies of
the holders of 'non-rolled up' claims under the Senior Facility
Pre-Petition Credit Agreement." Other novel features of the Term
DIP Documentation render it unacceptable to ABN, which as a
member of the Instructing Group, must be satisfied with the DIP
Documentation's form and substance, she adds.
BoNY asserts that the DIP Motion seeks to subordinate its liens
under indentures between Lyondell Chemical Company and Equistar
Chemicals, LP by as much as $8.5 billion, $3.25 billion of which
does not even comprise new money, but rather the roll-up of
prepetition loans with which the Lyondell Notes and the Equistar
Notes were previously pari passu. Counsel for BoNY Mellon, Glenn
E. Siegel, Esq., at Dechert LLP, in New York, stresses that given
that BoNY has an equal and ratable prepetition security interest
with the Senior Facility Prepetition Agent and Secured Lenders in
the Debtors' collateral, the Debtors' adequate protection
proposed for the Secured Lenders is much better since it includes
everything offered to BoNY plus catch-up and future current
interest payments, among others. This disparity violates every
tenet of equality of treatment provided to creditors under the
Bankruptcy Code and disregards the much greater burden placed on
the Arco Notes and Equistar Notes, he argues. Regardless of the
Debtors' need for financing, the security interests of the
Noteholders cannot be primed without the Debtors meeting their
burden to show adequate protection, he adds. Accordingly, BoNY
asks the Court to deny the DIP Motion unless the Final Order is
modified to provide, among others: (i) separate and several
liability of the DIP obligations incurred by the Lyondell,
Equistar, Millennium Chemicals Inc. and Houston Refining LP
limiting their liabilities to the funding they actually obtain by
meeting their borrowing needs; (ii) separate accounting of each
entity's draws under the DIP Facility so as to track its
liability; (iii) prepayment and refinancing of any separate
amounts owed by each Debtor; and(iv) adequate protection for the
Lyondell Notes and Equistar Notes. Richard NeJame, managing
director of Broadpoint Capital Inc., and Andrew L. Buck, Esq., at
Dechert LLP, filed declarations in support of BoNY's objection.
Greif, Inc., a lien holder, asks the Court to deny the DIP Motion
because (i) the Debtors have not met their burden of establishing
the elements of priming liens under Section 364(d) of the
Bankruptcy Code; and (ii) the term sheet of the DIP Motion
appears to authorize a priming lien under Section 364(d) where
the proposed order to the DIP Motion has not. Grief asks the
Court to modify the Term Sheet to conform to the proposed order.
Law Debenture acts on behalf of holders of certain notes
aggregating $241 million issued by Millennium America, Inc. under
an indenture. Millennium America agreed to protect the interests
of the noteholders from additional secured loans by either
providing those noteholders with pari passu treatment or limiting
its aggregate secured debt and that of its subsidiaries.
Accordingly, Law Debenture objects because the DIP Financing
violates the Indenture. If the DIP Financing is approved,
Millennium America, as borrower under the Indenture, will be
permitted to incur additional secured debt without providing
holders of the notes with an equal and ratable security interest
required under the Indenture or adhering to the limitations on
secured debt under the Indenture, Law Debenture explains. Thus,
Law Debenture asks the Court to modify the DIP Financing to
conform to the Indenture.
The Committee, for its part, argues that the DIP Facility's
December 15, 2009, maturity date and Chapter 11 milestones are
not justified on any economic, credit, risk or other basis, are
precipitously early and devoid of any realistic mechanisms to
seek and effect any necessary extensions and would require the
Debtors to develop and implement a business and reorganization
plan while their enterprise value remains artificially deflated,
all to the benefit of the secured lenders and to the detriment of
the Debtors, the unsecured creditors and their estates.
The Committee's proposed counsel, Edward S. Weisfelner, Esq., at
Brown Rudnick LLP, in New York, relates that the DIP Facility
contemplates a number of financial covenants which could turn out
to be more like tripwires for early events of default that will
result in a turnover of control to the DIP Lenders and hasten a
premature end to the Debtors' reorganization effort. Given the
significant impact of even small fluctuations in commodity prices
on valuation and financial performance, the Committee is
concerned about the Debtors' ability to comply with the
covenants, Mr. Weisfelner notes. Moreover, the Debtors have
agreed to roll-up $3.25 billion of the prepetition Senior Credit
Facility and to continue to make current cash payments of
interest on the debt. These payments, however, will result in a
$13 to 14% per annum negative arbitrage since the Debtors will
have to borrow at 20% to pay interest accruing at less than 7% on
the Roll Up. Borrowing money at an exorbitant 20% all-in cost to
pay interest on the Roll Up makes no economic sense, he contends.
Payment of interest on the remaining portion of the Senior
Secured Credit Facility to the DIP Lenders should also not be
permitted. The DIP Lenders are attempting to use the DIP
Facility as a shield to inquire into and to ensure that they will
be insulated from liability on claims for their prepetition
conduct including, potential fraudulent transfer liability
arising from the December 2007 merger, he adds.
The proposed order and other DIP Facility documentation provided
a host of provisions that courts have generally found improper
and that will work to give the DIP Lenders an unfair leverage at
this early stages of the Debtors' cases and to pre-ordain their
end-results -- the usurpation of the value of the Debtors by the
DIP Lenders for their exclusive benefits, Mr. Weisfelner
contends. For these reasons, the Committee asks the Court deny
the DIP Motion.
The Committee sought and obtained the Court's approval to
partially file under seal a copy of its DIP Objection papers and
permit access to the DIP Objection only to the Debtors' counsel,
the United States Trustee for Region 2 and parties to the
stipulation.
In separate filings, Shrieve Chemical Company and Texas Sampling,
Inc. object to the extent that the DIP Motion seeks to prime
their liens and reclamation rights. The Lienholders argue that
pursuant to Section 364(c) and (d) of the Bankruptcy Code, the
DIP Lenders are not entitled to receive priming liens over
property that is already subject to a lien without providing
adequate protection to the lien holder To the extent the DIP
Motion would have the effect of priming the Lienholders' liens,
the Motion should be denied, they assert.
* * *
Two identical copies of revised proposed final DIP orders were
filed on February 22 and 23, 2009, with the Court reflecting
various changes based on input from and accommodations the Debtors
reached with various parties-in-interest. A full-text copy of the
Revised Proposed Final DIP Order is available for free at:
http://bankrupt.com/misc/Lyondell_RevProposed_FDIP_Ord.pdf
George A. Davis, Jr., Esq., at Cadwalader, Wickersham & Taft LLP,
in New York, filed with the Court on February 20, 2009:
* the proposed DIP Term Loan Agreement, a full-text copy of
which is available for free at:
http://bankrupt.com/misc/Lyondell_DIPTermLoanAgr.pdf
* the proposed DIP ABL Revolving Credit Agreement, a full-text
copy of which is available for free at:
http://bankrupt.com/misc/Lyondell_DIPABLRevolvingAgr.pdf
About LyondellBassell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries AF SCA --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: ABN Amro May Withdraw From $8 Billion Loan
-------------------------------------------------------------
Tiffany Kary at Bloomberg News reports that ABN Amro Bank has
threatened to withdraw a $8 billion bankruptcy loan to Lyondell
Chemical Co. due to a dispute with the other 13 lenders over liens
on collateral outside the U.S.
ABN Amro has a $3.4 billion in claims against Lyondell Chemical
and affiliates, Bloomberg states. ABN Amro said in court
documents that the debtor-in-possession loan's structure
inappropriately puts at risk liens on non-U.S. collateral. Citing
Lyondell Chemical, Bloomberg says that ABN Amro still remains
legally obligated to fund any shortfall in the loan. "The debtors
will enforce those obligations against ABN Amro, should it become
necessary," Bloomberg quoted Lyondell Chemical as saying.
Bloomberg relates that Lyondell Chemical said that its $8 billion
bankruptcy loan meets legal standards and should be approved over
objections from creditors and ABN Amro. Lyondell Chemical said in
court documents that other lenders agreed to fully fund the loan
if ABN Amro pulls out.
Citing Lyondell Chemical, Bloomberg states that the financing
terms may return as much as 20% in fees to some lenders and are
the best and only terms available, Lyondell said. According to
the report, the company said that a proposed "roll-up," which
would let pre-bankruptcy lenders convert old debt to new debt with
a priority for repayment, is "permissible."
Bloomberg quoted Lyondell Chemical as saying, "There can be no
doubt that the debtors fought as hard as they could to obtain the
best terms that they could, under very difficult circumstances."
Lyondell Chemical's committee of unsecured creditors said in court
documents that the DIP loan, designed to fund operations while the
company reorganizes, wasn't made in good faith. The loan's
December maturity date is too early, while the other financial
covenants are "tripwires" for defaults that would hand control of
the company to the lenders, Bloomberg relates, citing Lyondell
Chemical.
U.S. Bankruptcy Judge Robert Gerber, according to Bloomberg, is
also seeking an injunction to stop creditors from collecting debts
from non-bankrupt overseas affiliates. Citing Lyondell Chemical,
Bloomberg relates that allowing the collections might push its
parent company, LyondellBasell Industries AF SCA, into bankruptcy,
leading to a default on the DIP loan that would end the
reorganization.
Bloomberg reports that Lyondell Chemical seeks a ban on legal
action by holders of $615 million in bonds due 2015 and business
creditors seeking as much as $131 million.
Lenders are trying to use the DIP loan to "stymie inquiry" into
what may have been a fraudulent transfer involving some of the
lenders, Bloomberg states, citing unsecured creditors. Bloomberg
relates that the creditors said that of $20 billion in loans
Lyondell Chemical secured in 2007 to fund a merger with Len
Blavatnik's Basell AF, more than $12.3 billion went to former
shareholders, leaving the firm without enough liquidity to fund
its debt and manage volatility in commodity prices.
About LyondellBassell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: Seeks to Enter Into Trading Contracts
--------------------------------------------------------
Lyondell Chemical Company and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Southern District of New
York to (i) enter into certain postpetition commodity, forward,
swap, supply and similar contracts in the ordinary course of their
businesses, and (ii) take all actions necessary or appropriate to
implement, execute and perform those transactions, including
posting up to $50 million of collateral related to the Trading
Contracts.
Before the Petition Date, the Debtors entered into numerous
trading contracts, including the purchase and sale of physical
fuel and chemical products in the spot and term markets, interest
rate swaps, currency swaps, and similar transactions. The
Debtors engaged in those transactions to hedge physical
operations, to obtain physical products needed for operations, to
sell output and as part of proprietary trading businesses. Those
contracts, which are sensitive to day-to-day changes in market
prices, commonly are backed by either credit or collateral. The
Debtors relied on both on their credit of certain affiliates and
the posting of collateral.
The Debtors' proposed counsel, Mark C. Ellenberg, Esq., at
Cadwalader, Wickersham & Taft LLP, in New York, relates that
although the Debtors believe that entering into the Trading
Contracts is within the ordinary course of their postpetition
business, counterparties may be unwilling to do business with
them without specific authorization from the Court for those
transactions. To continue executing beneficial Trading
Contracts, the Debtors must be able to enter into those trades
quickly and be able to keep the specifics of the Trading
Contracts confidential. Given the confidential and real time
nature of those transactions, it is impracticable and
counterproductive to require the Debtors to seek separate
approval of each Trading Contract when counterparties ask for
authorization, he notes. The Debtors' DIP Lenders have agreed to
provide a $50 million basket for those transactions, and the
Debtors intend to stay within the limits of the DIP Financing
agreements.
Mr. Ellenberg explains that while the Debtors have entered into
postpetition Trading Contracts and, under Section 363(c) of the
Bankruptcy Code, the Trading Contracts do not require Court
authorization, in an abundance of caution, the Debtors seek
specific Court authorization. He says that the Court's
authorization will satisfy any counterparties that are unwilling
to take any "risk" in entering into the Trading Contracts without
express Court authorization. He further relates that without
granting liens on the Collateral, the Debtors will not be able to
continue to enter into the Trading Contracts on commercially
acceptable terms. Thus the Debtors seek the Court's authority to
grant first priority liens in and post the Collateral in
connection with the Trading Contracts.
Mr. Ellenberg says that upon evaluation of their business
operations, the Debtors determined that the Trading Contracts are
of significant benefit to the Debtors' businesses and that
continuing to enter into the Trading Contracts is in the best
interests of the Debtors' creditors and estates. A failure to
permit those actions will impair the value of the Debtors'
estates and hinder reorganization, he relates.
The Debtors further seek the Court's authority, on an interim
basis, to post $10 million of the $50 million in collateral,
pending hearing of their request on February 25, 2009.
Mr. Ellenberg says that the Debtors have posted collateral in the
spot hydrocarbon market to permit them to enter into trades on
the New York Mercantile Exchange associated with crude and
refined oil transactions while waiting for the physical exchange
of products with counterparties. Through this mechanism, the
Debtors sell the products of their refinery for future delivery,
while protecting themselves against market fluctuations between
the time the products are sold and physical transfer of the
products consummated. Mr. Ellenberg notes that the Debtors are
concerned that if they are unable to post the $10 million in
collateral and enter into the NYMEX trades, pending the Trade
Contracts Motion hearing on February 25, 2009, counterparties
will be deterred from engaging in any purchase transactions with
them. Thus, to avoid potential negative consequences, the
Debtors need to be able to enhance the pledged funds that can be
posted as margin in order to avoid immediate and irreparable
injury, he tells the Court.
Interim Court Order
Judge Robert Gerber authorizes the Debtors, on an interim basis,
to post $10 million in collateral in connection with the trading
contracts.
About LyondellBassell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: To Cut Workforce at Chocolate Bayou Plant
------------------------------------------------------------
Lyondell Chemical Company and its debtor-affiliates seek authority
from the U.S. Bankruptcy Court for the Southern District of New
York to (i) long-term idle the chemical production facility in
Brazoria County, Texas or Chocolate Bayou; (ii) reduce the
workforce at the Facility; and (iii) reject certain executory
contracts and unexpired leases related to the Chocolate Bayou
Plant.
Solutia Inc. owns and operates a chemical manufacturing plant in
Chocolate Bayou and Debtor Equistar Chemicals, LP, operates a
chemical production facility at Chocolate Bayou. On December 18,
2008, Equistar temporarily idled the Facility due to declining
market and economic conditions. Since the idling of the
Facility, the Facility workforce has been engaged in cleanup and
maintenance activities to preserve the Facility in anticipation
of a potential restart.
Debtors' proposed counsel, Andrew M. Troop, Esq., at Cadwalader,
Wickersham & Taft LLP, in New York, notes that the Debtors, in an
ordinary course decision, have idled the Facility. However,
because Equistar is a debtor and the majority of the personnel
that will be released are Equistar employees, the Debtors are
taking the precaution of filing a formal request to the Court
pursuant to Section 363(b).
Mr. Troop explains that market conditions, particularly customer
demand for the product produced at the Facility, have steadily
continued to worsen and the Debtors' Chapter 11 filing has forced
further assessment of the viability of the Facility. Indeed,
upon analysis of the Debtors' manufacturing needs, the projected
demand of product and production costs, the Debtors have taken
steps to reduce costs and conform their plants to their projected
operating needs. He cites that the Facility is more expensive
for the Debtors to maintain than other facilities operated by the
Debtors. He discloses that the expected annual fixed costs
associated with running the Facility is $100 million, which will
be saved if the Facility is idled. Moreover, in order to match
the labor requirements of the Facility, the Debtors have to
reduce the Facility workforce from 350 Equistar employees to 30
to 40 employees. The reduced workforce will remain at the
Facility to support an orderly long-term idling of the Facility,
he says.
In addition, the Debtors seek to (i) reject nine agreements as of
Court approval of the Motion. The Debtors also seek to reject
four agreements before August 4, 2009, or the date that the
Debtors provided notice to Solutia that they have wrapped up
operations at the Facility:
(i) a prepetition Sublease Agreement between Solutia's
predecessor-in-interest, E.I. du Pont de Nemours and
Company, and Equistar's predecessor-in-interest, Cain
Chemical Inc;
(ii) a prepetition Utilities and Services Agreement between
Solutia's predecessor-in-interest, E.I. du Pont, and
Equistar's predecessor-in-interest, Monsanto Company;
(iii) a prepetition Services Agreement between Solutia's
successor-in-interest, Monsanto Company and Equistar's
predecessor-in-interest, E.I. du Pont; and
(iv) a Lease agreement of Solutia's successor-in-interest,
Monsanto Company.
Mr. Troop says that given the idling of the Facility, the
Agreements for immediate rejection are no longer integral to the
Debtors' on-going business and would only add burden to the
estates. With respect to the Solutia Agreements, they are
necessary for the Debtors to effectuate an orderly exit from the
Facility. Given the property and equipment and other operations,
including the Debtors' pipeline control center and Gulf Coast
Research and Development Center found at the Facility, the
Debtors expect to complete orderly liquidation or transfer of
those assets from the Facility by August 4, 2009. He further
cites that since the Debtors are only seeking an extension of the
time within which the rejection of the Sublease will be
effectuated, Solutia will not be left in limbo and will not be
potentially harmed.
Huntsman Objects
Huntsman Petrochemical Corporation points out that the Motion
fails to mention or address the arrangements with Equistar and
Solutia under which Huntsman is being supplied with benzene.
Huntsman is concerned that the rejection of its supply agreement
could impact its continued use of Equistar's storage tank and
pipeline system that are vital to the operations at the Huntsman
facility. Out of an abundance of caution, Huntsman seeks
clarification or a resolution of those matters with the Debtors
in order to minimize Huntsman's damages resulting from the
proposed rejection of the Supply Agreement.
About LyondellBassell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
LYONDELL CHEMICAL: To Reject Glycol Sales Pacts, Aircraft Leases
----------------------------------------------------------------
Lyondell Chemical Company and its affiliates seek authority from
the U.S. Bankruptcy Court for the Southern District of New York to
reject certain sales agreements for glycol products pursuant to
Section 365 of the Bankruptcy Code.
Lyondell Chemical Company and Equistar Chemicals, LP are in the
business of the production and sale of monoethylene glycol and
other petrochemical products. The Debtors are party to three
sales agreements:
(1) a sales agreement between Marubeni Corporation and Equistar;
(2) a sales agreement between Mitsubishi International
Corporation and Equistar; and
(3) a sales agreements between Prestone Products Corporation and
Lyondell Chemical Company.
The Debtors obtain the monoethylene glycol they sell from two
facilities, one wholly-owned Equistar facility in Bayport, Texas,
and one facility owned by Equistar's non-debtor affiliate, PD
Glycol, LP in Beaumont Texas. Due to damages caused by Hurricane
Ike to the Beaumont Facility and the resulting effect on the
Beaumont's Facility production capability led the Debtors to
invoke the force majeure provisions in their Sales Agreements to
allocate the amount of monoethylene glycol received from the
Bayport Facility among their customers, resulting in an ability
to satisfy fully all of their customers' demand.
Moreover, each of the Sales Agreements specifies the quantities
of products that the customers are required to purchase from
Lyondell and Equistar. Two of the Sales Agreements extend
through 2011 and the third continues through 2009. Due to the
damage sustained at the Beaumont Facility, the Debtors are no
longer able to provide the contracted-for amounts required under
the Sales Agreements. The production from the Bayport Facility
is insufficient to meet Lyondell and Equistar's supply
obligations to their customers. Although, they are at the
initial stage of reviewing contracts, the Debtors note that
rejection of the Sales Agreements will enhance their efforts to
reorganize successfully by strengthening their relationships with
the remaining customers with sales agreements.
If any of the Debtors have deposited amounts with a counterparty
to a Sales Agreement as a security deposit, or if a counterparty
to a Sales Agreement owes any of the Debtors any amount pursuant
to the applicable agreement or other agreement between the same
parties, the Debtors further ask the Court to prohibit the
counterparty to set off or use the amounts from the deposit or
other amount owed to the Debtors, without the prior Court order.
Debtors Reject 3 Aircraft Lease Pacts
The Debtors also seek the Court's authority to reject three lease
agreements pursuant to Section 365 of the Bankruptcy Code:
* an Aircraft Lease Agreement entered with CFS Air, LLC;
* an Aircraft Management Lease entered with Executive Jet
Management, Inc.; and
* a Broker Agreement with JBA Aviation, Inc.
Under the Aircraft Lease Agreement and its related Management
Agreement, the Debtors have a right to exclusive use and
operation of a Dassault Falcon, Model 2000 aircraft through July
1, 2016. The average annual cost for the Aircraft is
substantial. Given that the damage claims resulting from
terminating the Aircraft Agreements could be significant, the
Debtors grounded the Aircraft since May 2008 and engaged JBA
Aviation as broker to market the Aircraft under the Broker
Agreement. The Debtors' efforts to sell the Aircraft, however,
have not unsuccessful and the market for the Aircraft has
deteriorated since the Debtors' sales efforts began.
Pursuant to an initial review of the contracts, the Debtors
determined that the Aircraft Agreements are not necessary to
their ongoing business operations or reorganization efforts.
Maintaining each Aircraft Agreement is no longer integral to the
ongoing business and is not beneficial to the estates, the
Debtors conclude.
Consistent with Section 362 of the Bankruptcy Code, to the extent
that any of the Debtors have deposited amounts with a
counterparty to the Aircraft Agreements as a security deposit or
if a counterparty to the Aircraft Agreements owes any of the
Debtors amount under the Aircraft Agreements, the Debtors further
ask the Court to prohibit the counterparty from offsetting or
using the amounts from a deposit, or other amount owed by the
Debtors without further Court order.
About LyondellBassell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000).
LYONDELL CHEMICAL: Asks Court to Approve McShea Engagement as CRO
-----------------------------------------------------------------
Lyondell Chemical Company and its affiliates seek authority from
the U.S. Bankruptcy Court for the Southern District of New York to
(i) employ AP Services, LLC as crisis mangers to the Debtors nunc
pro tunc to January 6, 2009, to provide interim management and
restructuring services, and (ii) designate Kevin McShea as chief
restructuring officer.
Mr. McShea is a managing director of AlixPartners, LLP, which is
affiliated with APS.
As the Debtors' CRO, Mr. McShea and his staff will:
* coordinate the Debtors' communication with all key
constituents, including: all lenders, suppliers, creditors
and other investors, employees and, the Bankruptcy Court and
bankruptcy-related professionals;
* identify and assist with implementation of cost reduction
actions targeted at improving the Debtors' performance in
the short and intermediate term;
* assist the North American and European operations with the
development and monitoring of financial projections,
including; monthly income statement, balance sheet and cash
flow projections and a detailed 13-week cash flow forecast;
* lead the discussions regarding obtaining and subsequently
monitoring the use of the Debtors' DIP Financing;
* assist with the preparation for a potential Chapter 11
bankruptcy filing, including coordination of the
administrative support surrounding a filing and the timely
filing of schedules of financial affairs;
* develop the operational assessment team that will assist the
Debtors with identifying achievable operational efficiencies
and cost reductions in the Debtors' global operations;
* assist in the development of a Chapter 11 plan of
reorganization that will enable the Debtors to emerge from
Chapter 11; and
* assist with other matters as may be requested by the Debtors
that fall within APS' expertise and that are mutually
agreeable.
The Debtors will pay APS' professionals according to their
customary hourly rates:
Rate per Hour
-------------
Germany/
Title U.S. UK France/Italy
----- ---- -- ---------
Managing Director $685 to $995 GBP525 to 620 EUR680 to 800
Director $510 to $685 GBP420 to 500 EUR525 to 630
Vice President $350 to $500 GBP290 to 380 EUR420 to 535
Associate $260 to $360 GBP210 to 295 EUR315 to 420
Analyst $235 to $260 GBP140 to 155 EUR275
Paraprofesional $180 to $210 GBP 125 EUR210
Specifically, the Debtors will pay Mr. McShea and his temporary
staff according to their customary hourly rates:
Name Title Rate per Hour
---- ----- -------------
Kevin McShea Chief Restructuring Officer $730
Jan Kantowsky Restructuring Executive $870
Peter Fitzsimmons Restructuring Executive $835
Meade Monger Director, Bankruptcy Admin. $835
Stephen Taylor Restructuring Executive $836
Becky Roof Restructuring Executive $790
Jamie Lisac V.P., Restructuring Planning $595
Michelle Campbell Director, Communications $595
Bryan Gaston Director, Cash Management $555
Mark Christiansen Cash Management $638
Alban-Claudio Baker Cash Management $567
Duke Best Cash Management $450
Carianne Basler Director, Bankruptcy Admin. $650
and Vendor Management
Robb McWilliams Director, Bankruptcy Admin. $510
Chris Rollo Bankruptcy Admin. $395
Andersen Price Bankruptcy Admin. $295
Amanda Knudsen Bankruptcy Admin. $295
Reid Cumings Bankruptcy Admin. $260
Chris Coleman Director, Financial Planning $555
Clifford Chen Financial Planning $365
Eric Hillenbrand Director, Operational Assessment $790
Bob Sullivan Operational Assessment $595
Wolfgang Falter Operational Assessment $1060
David Hutchinson Operational Assessment $828
Neil McBride Operational Assessment $737
Cecilia Mattson Operational Assessment $441
Jacob Prinsloo Operational Assessment $391
Mark Moon Operational Assessment $595
Albert Sang Operational Assessment $500
Darren Morrison Operational Assessment $500
Justin Cooper Data Analyzer $638
John Creighton Bankruptcy Administrator $450
Krisnan Ramachandran Bankruptcy Administrator $260
Michael Han Database Designer $595
Marcus Kinlay Database Developer $472
Wenche Mittet Cash Manager $638
Jonas Cunningham Cash Manager $547
Andy Baker Financial Planner $395
Wim Overeynder Operational Assessor $737
The Debtors will pay the work outside of North America performed
by certain APS consultants by standard APS local rates converted
to U.S. dollars. The Debtors will reimburse APS for expenses
incurred. The Debtors will also pay APS a success fee of
$7,000,000 upon completion of restructuring through either
confirmation of a successful Chapter 11 plan of reorganization or
sale of substantially all of the Debtors' assets as a going
concern. APS will file with the Court interim fee applications.
The Debtors paid APS $972,994 for services performed and expenses
incurred 90 days before the Petition Date. In addition, the
Debtors paid APS an advanced retainer for professional services
for $2,300,000 comprising of (i) $550,000 paid on December 23,
2008, and (ii) $1,750,000 paid on January 2, 2009. APS will
reconcile any estimated fees and expenses and apply the retainer
to any unpaid fees and expenses. APS will continue to hold any
remaining retainer to be applied to APS' final invoice.
Mr. McShea discloses that AlixPartners and APS have conducted a
conflict search regarding the two firms' relationship with
parties-in-interest in the Debtors' Chapter 11 cases. A full-
text copy of the disclosure is available for free at:
http://bankrupt.com/misc/Lyondell_APSClientsRelatnship.pdf
Mr. McShea assures the Court that AlixPartners and APS are
"disinterested" as the term is defined under Section 101(14) of
the Bankruptcy Code.
About LyondellBassell
Basell AF and Lyondell Chemical Company merged operations
in 2007 to form LyondellBasell Industries --
http://www.lyondellbasell.com/-- the world's third largest
independent chemical company. Lyondellbasell produces
polypropylene and advanced polyolefins products, is a leading
supplier of polyethylene, and a global leader in the development
and licensing of polypropylene and polyethylene processes and
related catalyst sales.
LyondellBasell became saddled with debt as part of the
US$12.7 billion merger. About a year after completing the merger,
LyondellBasell Industries' U.S. operations and one of its European
holding companies -- Basell Germany Holdings GmbH -- filed
voluntary petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code on January 6, 2009, to facilitate a restructuring
of the company's debts. The case is In re Lyondell Chemical
Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023).
Seventy-nine Lyondell entities, including Equistar Chemicals, LP,
Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt
Industries, Inc., filed for Chapter 11. LyondellBasell is not
part of the bankruptcy filing. LyondellBasell's non-U.S.
operating entities are also not included in the Chapter 11 filing.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities.
Lyondell Chemical estimated that consolidated assets total
US$27.12 billion and debts total US$19.34 billion as of the
bankruptcy filing date.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
MAGNA ENTERTAINMENT: On the Verge of Bankruptcy, Says Report
------------------------------------------------------------
Ray Poirier at Gamingtoday.com reports that Magna Entertainment
Corp. is on the verge of bankruptcy.
According to Gamingtoday.com, a proposal by Magna Entertainment's
Canadian parent company, MI Developments, to reorganize the firm
has been canceled, mainly due to opposition from some of its
shareholders. The report says that the plan would have provided
Magna Entertainment with an infusion of about $50 million in cash
for its operations and another $75 million to fund the firm's
plans for a racino in Maryland. The racino project, according to
the report, was disrupted when Magna Entertainment subsidiary
Laurel Park filed a racino application without the necessary $28.5
million license fee. The report states that Maryland officials
rejected the racino application.
Hedge fund Greenlight Capital's chief David Einhorn sent a letter
to Magna Developments opposing the plan, Gamingtoday.com relates.
The report quoted Mr. Einhorn as saying, "The majority of
shareholders of MID do not support the use of MID's valuable cash
flows to fund Magna Entertainment Corp. The plan is just one more
egregious attempt to further erode MID's value."
Gamingtoday.com says that since Frank Stronach formed Magna
Entertainment seven years ago, the firm hasn't made a profit and
has continued its operations by selling real estate and borrowing
cash from Magna Developments. Gamingtoday.com notes that loans
due on March 20 are:
-- a $126 million bridge loan Magna Entertainment secured
from a subsidiary of MDI,
-- $100 million in financing for the Gulfstream Park
Reconstruction, and
-- a $48.5 million loan taken out in December 2008.
According to Gamingtoday.com, some analysts already predicted
defaults on the loans unless Magna Entertainment is able to
renegotiate loan agreements or can sell off more real estate.
About Magna Entertainment
Based in Aurora, Ontario, Magna Entertainment Corp. (MECA) is
North America's largest owner and operator of horse racetracks,
based on revenue. The Company develops, owns and operates horse
racetracks and related pari-mutuel wagering operations, including
off-track betting facilities. MEC also develops, owns and
operates casinos in conjunction with its racetracks where
permitted by law.
MEC owns and operates AmTote International, Inc., a provider of
totalisator services to the pari-mutuel industry, XpressBet(R), a
national Internet and telephone account wagering system, as well
as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC
has a fifty percent interest in HorseRacing TV(R), a 24-hour horse
racing television network, and TrackNet Media Group LLC, a content
management company formed for distribution of the full breadth of
MEC's horse racing content.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $1.1 billion, total liabilities of $891.0 million and
shareholders' equity of $272.7 million.
* * *
As reported in the Troubled Company Reporter on March 20, 2008,
Ernst & Young LLP in Toronto, Canada, expressed substantial doubt
about Magna Entertainment Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006. The auditing
firm pointed to the company's recurring operating losses and
working capital deficiency.
The TCR said on February 19, 2009, that MI Developments Inc., the
Company's controlling shareholder, has determined not to proceed
with its reorganization proposal, which includes the spin-off of
MEC to MID's existing shareholders.
In accordance with the terms of certain of MEC's loan agreements,
the maturity date of the first tranche of the new loan that a
subsidiary of MID made available to MEC on December 1, 2008, in
connection with the reorganization proposal, the maturity date of
the bridge loan from MID Lender and the deadline for repayment of
US$100 million under the Gulfstream project financing facility
from MID Lender has been accelerated to March 20, 2009. The
maturity date of the second tranche of the New Loan has
already been accelerated to May 13, 2009.
As of February 18, 2009, there is roughly US$48.5 million
outstanding under the first tranche of the New Loan, roughly
US$0.7 million outstanding under the second tranche of the New
Loan and roughly US$126.2 million outstanding under the bridge
loan.
In accordance with its terms, the maturity date of MEC's
US$40 million credit facility with a Canadian chartered bank will
also accelerate to March 5, 2009.
If MEC is unable to repay its obligations when due or satisfy
required covenants in its loan agreements, substantially all of
its other current and long-term debt will also become due on
demand as a result of cross-default provisions within loan
agreements, unless MEC is able to obtain waivers, modifications or
extensions. In the event MEC is unsuccessful in its efforts to
raise additional funds, through an alternative transaction with
MID, assets sales, by taking on additional debt or by some other
means, MEC will not be able to meet such obligations.
MEDIEVAL GLASS: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------------
Medieval Glass Industries (Iowa), Inc. has filed for Chapter 11.
Michael Tidemann at Estherville Daily News reports that Medieval
Glass Industries said that it will file for Chapter 11 bankruptcy
protection due to a downturn in construction and actions taken by
its lender.
Estherville Daily quoted Medieval Glass' general manager Bill
Oates as saying, "The past year in the building components
industry it has been a difficult one faced with many challenges
both on the construction side as well as the continuing negative
issue the banking industry is experiencing. We at Medieval Glass
have as well fallen subject to such turmoil and due to actions
that have been taken by our banking partner we have had to make
some important decisions as how to manage our go-forward process
and build upon our 12 years of success. They've forced our
hand.... The Chapter 11 Bankruptcy Code provides Medieval Glass
Iowa the latitude to continue daily operations providing jobs,
with no interruption in sales or production."
According to Estherville Daily, Mr. Oates expects that the
Estherville plant could have 65 workers this year. "That is our
goal. Actually there's no downsizing," the report quoted Mr.
Oates as saying.
Iowa-based Medieval Glass Industries --
http://www.medievalglass.com/-- provides custom designed
decorative glass.
MEDIEVAL GLASS: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Medieval Glass Industries (Iowa), Inc.
2421 7th Avenue South
P.O. Box 516
Estherville, IA 51334
Bankruptcy Case No.: 09-00327
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Northern District of Iowa (Sioux City)
Judge: William L. Edmonds
Debtor's Counsel: Jeana L. Goosmann, Esq.
1128 Historic Fourth Street
P.O. Box 3086
Sioux City, IA 51102-3086
Tel: (712) 255-8838
Fax: (712) 258-6714
Email: Jeana.Goosmann@Heidmanlaw.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/ianb09-00327.pdf
The petition was signed by Frank Racanelli, CEO of the Company.
MERGE TECHNOLOGIES: Exercises Redemption Call Right
---------------------------------------------------
On February 13, 2009, Merge Cedara ExchangeCo Limited (TSX: MRG),
a subsidiary of Merge Technologies Holdings Co. and an indirect
subsidiary of Merge Healthcare Incorporated (NASDAQ: MRGE),
disclosed that its board of directors has set April 15, 2009 as
the redemption date for Merge Cedara ExchangeCo Limited's
outstanding exchangeable shares. Merge Technologies Holdings Co.
has exercised its overriding redemption call right and will
acquire all of the outstanding exchangeable shares on April 15,
2009.
The exchangeable shares were issued in conjunction with the
acquisition of Cedara Software Corp. by Merge Healthcare
Incorporated in June 2005, on terms which permit their redemption
on a date, no earlier than April 30, 2010, unless certain
conditions are met in which case an earlier redemption date may be
established by the board of directors of Merge Cedara ExchangeCo
Limited. These conditions have been met.
Holders of exchangeable shares on April 15, 2009, will be entitled
to receive one common share of Merge Healthcare Incorporated for
each exchangeable share held. On and after April 15, 2009, former
holders of exchangeable shares will no longer have any rights as
holders of exchangeable shares other than the entitlement to
common shares of Merge Healthcare Incorporated.
About Merge Healthcare Incorporated
Based in Milwaukee, Wisconsin, Merge Healthcare Incorporated
(Nasdaq: MRGE; TSX: MRG) -- http://www.mergehealthcare.com/-- is
a developer of medical imaging and clinical software applications
and developmental tools. The company develops medical imaging
software solutions that support end-to-end business and clinical
workflow for radiology department and specialty practices, imaging
centers and hospitals.
As reported by the Troubled Company Reporter on November 5, 2008,
Merge Healthcare Incorporated's balance sheet at Sept. 30, 2008,
showed total assets of $53,533,000, total liabilities of
$46,674,000 and shareholders' equity of $6,859,000.
Going Concern Doubt
KPMG LLP in Chicago expressed substantial doubt about Merge
Healthcare Incorporated's ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Dec. 31, 2007. The auditing firm pointed to the
company's recurring losses from operations and negative cash
flows. The company said it generated losses from operations over
the past nine consecutive quarters and the company currently has
no credit facility. As a result, the company is currently
completely dependent on available cash and operating cash flow to
meet its capital needs.
MIDWAY GAMES: U.S. Trustee Forms Five-Member Creditors Committee
----------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3,
appointed five creditors to serve on an official committee of
unsecured creditors of Midway Games Inc. and its debtor-
affiliates.
The members of the Committee are:
1) Wells Fargo Bank, N.A.
Attn: James R. Lewis
45 Broadway, 17th Floor
New York, NY 10006
Tel: (212) 515-5258
Fax: (866) 524-4681
2) Highbridge International LLC
Attn: Adam J. Chill
c/o Highbridge Capital Management LLC
9 West 57th St., 27th Floor
New York, NY 10019
Tel: (212) 287-4720
Fax: (212)751-0755
3) NBA Properties, Inc.
Attn: Harvey E. Benjamin
645 Fifth Avenue
New York, NY 10502
Tel: (212) 407-8000
Fax: (212) 888-7931
4) Farsight Technologies, Inc.
Attn: Jay Phillip Obernolte
611 Spruce Rd.
Big Bear Lake, CA 92315-2895
Tel: (909) 866-0501
Fax: (909) 866-0539
5) Multi Packaging Solutions, Inc.
Attn: William H. Hogan
150 East 52nd St.
New York, NY 10022
Tel: (646) 885-0147
Fax: (866) 647-4698
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell 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.
MIDWAY GAMES: Proposes $4-Mil. Incentive Bonuses
------------------------------------------------
Midway Games Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Delaware to pay up to $3,755,000 in a bonus
program for 29 unidentified employees.
According to report, the terms of the program are:
-- the workers will have earned $500,000 in bonuses if a
publishing agreement is signed by March 1 for a new game
called Wheelman.
-- the employees will be entitled to another $1.3 million when
a contract is signed to sell Mortal Kombat.
-- the final amount of approximately $1.3 million would be due
when a sale of Mortal Kombat is completed.
The list of the participants to the program was kept from the
public.
A hearing for approval of the bonus program is set for March 10.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell 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.
MXENERGY HOLDINGS: Dec. 31 Balance Sheet Upside Down by $54MM
-------------------------------------------------------------
MXenergy Holdings Inc.'s December 31, 2008, balance sheet showed
total assets of $362,036,000 and total liabilities of
$364,397,000, resulting in total stockholders' deficit of
$54,067,000.
The Company posted a net loss of $20,168,000 for the three months
ended December 31, 2008, on net revenues of $11,574,000, compared
with a net income of $2,672,000 for the same period in 2007 on
revenues of $39,984,000.
A full-text copy of the Company's quarterly report is available
for free at: http://researcharchives.com/t/s?39d7
On February 19, 2009, MXenergy Holdings Inc. held a conference
call to discuss the financial results of the Company for its
fiscal quarter ended December 31, 2008.
A full-text copy of the transcript of the Earnings Call is
available for free at: http://researcharchives.com/t/s?39d6
The Transcript has been selectively edited to facilitate the
understanding of the information communicated during the
conference call.
MXenergy is a retail natural gas and electricity supplier in North
America, serving approximately 500,000 customers in 39 utility
territories in the United States and Canada. Founded in 1999 to
provide natural gas and electricity to consumers in deregulated
energy markets, MXenergy helps residential customers and small
business owners control their energy bills by providing both fixed
and variable rate plans.
As reported by the Troubled Company Reporter on Dec. 22, 2008,
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on natural gas retail marketer MXEnergy Holdings
Inc.'s to 'CC' from 'CCC+'. The rating remains on CreditWatch
with negative implications.
The TCR reported on Dec. 19, 2008, that Moody's Investors Service
maintained MXenergy Holdings Inc.'s Corporate Family Rating and
Probability of Default Rating of Caa3 and the Ca rating on its
floating rate senior notes due 2011 following the company's
announcement that it intends to commence a cash tender offer to
purchase its outstanding 2011 series notes. The ratings remain
under review for possible downgrade.
NATCHEZ REGIONAL: Files Ch. 9 Petition; Objections Due March 13
---------------------------------------------------------------
Natchez Regional Medical Center commenced a case under Chapter 9
of the Bankruptcy Code in the U.S. Bankruptcy Court for the
Southern District of Mississippi on Feb. 12, 2009.
Objections to the petition must be filed by parties in interest
not later than March 13, 2009. Objections shall be filed, by
registered user through ECF, and by any non-registered user either
in person or by mail with the office of the Clerk of the Court,
Post Office Box 2448, Jackson, Mississippi 39225-2448. A copy of
the objection shall be mailed to the attorney for the Debtor,
Eileen N. Shaffer, Post Office Box 1177, Jackson, Mississippi
39215-1177.
All objections shall state the facts and legal authorities in
support of such objections. If any timely objections are filed
with the Court, a hearing will be held on March 18, 2009, at 1:30
p.m. in the U.S. Bankruptcy Court, located at 100 E. Capitol
Street, Room No. 106, Jackson, Mississippi.
The Debtor has filed a list of claims. Any creditor holding a
listed claim which is not disputed, contingent, or unliquidated as
to amount, may, but need not, file a proof of claim. Creditors
whose claims are not listed or whose claims are listed as
disputed, contingent, or unliquidted as to amount and who desire
to participate in the cases or share in ay distribution must file
their poofs of claims on or before May 11, 2009.
All proofs of claim shall be filed, by registered user through
ECF, and by any non-registered user, either in person or mail,
with the office of the Clerk of the U.S. Bankruptcy Court.
About Chapter 9 of the Bankruptcy Code
Chapter 9 is the chapter of the Bankruptcy Code providing for
reorganization of municipalities.
Although similar to other chapters in some respects, Chapter 9 is
significantly different in that there is no provision in the law
for liquidation of the assets of the municipality and distribution
of the proceeds to creditors. Due to the severe limitations
placed upon the power of the bankruptcy court in Chapter 9 cases,
the Bankruptcy Court generally is not as active in managing a
municipal bankruptcy case as it is in corporate reorganizations
under Chapter 11. The functions of the bankruptcy court in
chapter 9 cases are generally limited to approving the petition
(if the debtor is eligible), confirming a plan of debt adjustment,
and ensuring implementation of the plan.
Based in Natchez, Mississippi, Natchez Regional Medical Center is
a full-service hospital offering comprehensive diagnostic and
treatment services for acute, subacute and ambulatory care.
Natchez Regional serves as a referral center for the five
Mississippi counties and two Louisiana parishes it serves, known
locally as the Miss-Lou. The hospital is owned by Adams County.
The Debtor filed a petition for Chapter 9 on Feb. 12, 2009 (Bankr.
S.D. Miss. Case No. 09-00477). Eileen N. Shaffer, Esq.,
represents the Debtor as counsel. The Debtor listed total assets
of between $10 million and $50 million, and total debts of between
$10 million and $50 million.
NATIONAL GAS: 4th Cir. Says Delivery May, May Not Be Forward Pact
-----------------------------------------------------------------
In the case Hutson v. E.I DuPont De Nemours & Co., 07-2105,
(In re National Gas Distributors LLC), the 4th U.S. Circuit Court
of Appeals tackled the issue regarding whether contracts calling
for physical delivery of natural gas in the future at specified
prices fall within the definition of swap agreements or forward
contracts.
According to Bloomberg's Bill Rochelle, the Circuit Court gave a
partial answer to the issue, saying that a contract contemplating
physical delivery of a commodity for that reason alone isn't
exempt from protection as a forward contract. Similarly, the
Court said that the fact that the contract isn't traded in a
market or on an exchange doesn't by itself exclude the transaction
from being considered a forward contract.
Mr. Rochelle adds that in the case before it, the 4th Circuit
didn't rule whether or not the contracts to sell and deliver
natural gas were or weren't protected as forward contracts. The
court in its opinion on Feb. 11 only held that physical delivery
or not being traded in a market didn't automatically make the
contracts subject to various bankruptcy powers such as the
automatic stay.
Mr. Rochelle notes that Congress exempted certain types of
commodities contracts and swaps from the bankruptcy power, so that
the non-bankrupt party can close out the contracts despite a
bankruptcy filing by the other party. The protection afforded
forward contracts and swaps also prohibits bankruptcy judges from
setting them aside as fraudulent transfers or preferences.
The case is Hutson v. E.I DuPont De Nemours & Co., 07-2105,
(In re National Gas Distributors LLC).
NEW DAY PHARMACY: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: New Day Pharmacy Corporation
5215 Linbar Drive
Nashville, TN 37211
Bankruptcy Case No.: 09-01947
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Middle District of Tennessee (Nashville)
Judge: George C. Paine II
Debtor's Counsel: Austin Lenoy McMullen, Esq.
Boult, Cummings, Connors & Berry
PO Box 340025
1600 Division Street, Suite 700
Nashville, TN 37203
Tel: (615) 252-2307
Fax: (615) 252-6307
Email: amcmullen@ba-boult.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/tnmb09-01947.pdf
The petition was signed by Richard John Wager, CEO of the Company.
NORTEL NETWORKS: To Fire 3,200 Worldwide, Scraps Bonuses
--------------------------------------------------------
Nortel Networks Corporation intends to reduce its workforce by an
additional net 3,200 positions worldwide. The Company expects to
carry out these reductions over the next several months, in
accordance with local country legal requirements. These new
reductions are incremental to the 1,800 remaining reductions from
previously announced plans that require completion.
MarketWatch's Jeffry Bartash says the latest job reductions would
put Nortel's workforce under 30,000 -- and falling.
"There is nothing more difficult than notifying employees, and
Nortel is extremely conscious of the personal financial burden
this will cause affected employees and their families," said Mike
Zafirovski, Nortel president and chief executive officer. "Nortel
is a company driven by people and innovation. But with the
unprecedented economic environment and resultant impacts on
revenues, significant changes are required to regain our financial
footing. Tough decisions are being made to restructure the
company and work towards a successful emergence from creditor
protection."
Nortel is in the process of preparing a comprehensive business and
financial restructuring plan with the goal of emerging from the
creditor protection process as a more focused and competitive
company. The Company is working with several parties, including
its creditors, to define the best plan forward to present to the
courts. Nortel is taking the initial steps in a disciplined
fashion to ensure it has appropriate resources to fully serve its
customers with leading solutions and innovations.
"We remain deeply committed to our customers and are staffed to
meet their needs as we take the necessary actions to strengthen
the Company," said Mr. Zafirovski. "Throughout the process, we
are committed to maintaining current high service levels and
appropriate innovation investment levels to ensure best in class
technology continues to be available to Nortel's global customer
base."
Employee Compensation Program Changes
The Board of Directors has approved changes to Nortel compensation
programs consistent with best practices for companies working
through restructuring in order to maximize stakeholder value and
emerge as a more focused and competitive company.
The Board has approved management's recommendation to not pay any
bonuses under the Nortel Annual Incentive Plan for 2008. In
addition, Nortel is seeking Canadian court approval to terminate
its equity based compensation plans, including all outstanding
equity under the plans (including stock options, restricted stock
units and performance stock units), whether vested or unvested,
and no further equity will be awarded in 2009.
Nortel will continue its AIP in 2009 for all eligible full and
part-time employees. The plan is being modified to permit
quarterly rather than annual award determinations and payouts.
This will provide a more immediate incentive for employees upon
the achievement of critical shorter-term corporate performance
objectives, including specific operational metrics in support of
customer service levels as the Company works through its business
and financial restructuring. The Company will seek to implement,
and request court approval where required, retention and incentive
compensation for certain key eligible employees deemed essential
to the business while under court protection.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NOVA CHEMICALS: Int'l Petroleum Deal Affects Fitch's Low-B Ratings
------------------------------------------------------------------
International Petroleum Investment Company's planned acquisition
of NOVA Chemicals Corporation, if completed, contains several
potentially positive credit implications for the company's
ratings, according to Fitch Ratings. Fitch has placed NOVA on
Rating Watch Positive following the announcement, as well as news
that NOVA has made significant progress in meeting $200 million in
financing requirements needed to maintain current covenant relief.
IPIC agreed to acquire the common shares of NOVA for cash
consideration of US$6 per share, a premium of 348% over the Feb.
20, 2009 closing price of the shares on the NYSE. IPIC is a 100%
state-owned fund of Abu Dhabi (Long-term IDR rated 'AA' with a
Stable Outlook by Fitch) with significant strategic ties to the
sovereign. The arrangement is subject to a two-thirds shareholder
approval, as well as other court and regulatory approvals.
Independent of the acquisition, NOVA has made substantial progress
in meeting its US$200 million in staged financing requirements
over the first half of the year. On Feb. 23, 2009 NOVA announced
that it had signed US$150 million in new financing which has been
supplied by the Export Development Corporation of Canada, as well
as key Canadian banks within NOVA's existing revolver group. This
development exceeds the first US$100 million financing requirement
due Feb. 28, 2009 and thereby locks covenant relief in place at
least until June, when the next US$100 million is due.
Assuming the transaction closes, the deal has several potentially
positive credit implications for NOVA's ratings. First as a
condition of the acquisition, the acquirer has agreed to provide
direct credit support to NOVA in the form of a US$250 million
credit backstop facility. Fitch notes that the facility can be
drawn in advance of shareholder approval and the close of the
transaction. The acquisition of NOVA by a highly rated entity
would also be a credit positive if the acquirer were to formally
guarantee NOVA's debt or provide it with other direct or indirect
credit support in the future. While uncertainties exist as to
NOVA's ultimate capital structure following the acquisition, it
also seems likely that the acquirer would seek to enhance NOVA's
credit quality from its current distressed levels in order to
preserve the value of its investment in NOVA.
At this point, downsides for the rating center mostly on execution
risk of the deal falling through, which would remove the potential
support of IPIC as a financial sponsor, and could result in the
need to find an additional US$50 million in new financing from
lenders to reach its US$200 million financing requirement by June
1. Under a scenario where the deal were to fall through and NOVA
were unable to procure an additional US$50 million in financing by
June 1, NOVA would be vulnerable to lingering weakness in
polyethylene demand in the second half of the year, as covenant
waivers will expire, leaving NOVA dependent upon a recovery in
chemical markets to avoid future covenant trips. While either of
these scenarios remain a distinct possibility, Fitch believes that
recent events have pushed the balance of risks from the downside
to the upside, resulting in Fitch's current revision from Ratings
Watch Negative to Ratings Watch Positive.
Fitch has placed these ratings on Rating Watch Positive:
-- IDR at 'B-';
-- Senior secured revolving credit facility at 'BB-/RR1';
-- Senior unsecured notes and revolving credit facilities at
'BB-/RR1';
-- Preferred shares at 'BB-/RR1'.
NOVA's IDR was downgraded to 'B-' on Feb. 2, 2009 on the news that
its bank group had imposed a requirement that NOVA must secure
US$200 million in new financing as a condition to achieve waivers
on key covenants over the first half of the year. These covenants
apply to two of NOVA's revolvers, as well as its US$300 million
A/R Securitization Facilities and total return swap. This
financing requirement was publicly announced at the end of last
month, with the first financing hurdle of US$100 million due Feb.
28, 2009.
NOVA has significant maturities due in 2009. Current liquidity
remains strong, with total availability across all of NOVA's
facilities on Dec. 31, 2008 of US$573 million, at the top end of
NOVA's preferred liquidity range, versus US$376 million in
maturities due this year, including US$250 million of 7.4% notes
due in April and US$126 million in preferreds due in October.
To date, NOVA has retired US$125 million of 7.25% 2028 notes
putable by bondholders in August 2008 and rolled over US$126
million in preferreds (net of restricted cash) to October 2009. On
Dec. 31, 2008, NOVA had a total of five separate revolvers
totaling US$683 million and a US$300 million A/R securitization
facility. Its largest secured revolver (US$350 million) matures
in June 2010. Maturities across other revolvers vary but
generally range from 2010-2013.
NOVA is a multinational producer of commodity chemicals including
styrene, polystyrene, ethylene and polyethylene with approximately
3,300 full-time employees. A majority of its assets are located
in Canada and the U.S. In North America, NOVA is the leading
producer of styrene and expandable polystyrene and the fifth-
largest ethylene producer. NOVA reports three business segments;
olefins/polyolefins, performance styrenics, and the INEOS-NOVA
Joint Venture. In 2007, the United States accounted for 43% of
sales, Canada accounted for 35%, Europe and rest of the world
accounted for 22%. Polyethylene and styrenic polymers are used in
rigid and flexible packaging, containers, plastic bags, plastic
pipe, electronic appliances, housing and automotive components and
consumer goods. Exports to Asia are enabled in part by low-cost
back-haul shipping economics from Western Canada.
NOW HEAR THIS: Will Close by March 31; Denies Bankruptcy
--------------------------------------------------------
Jason Unger at Cepro.com reports that NHT (Now Hear This) Audio's
co-founder Chris Byrne said that the company will close by
March 31, 2009, but denied that it is going bankrupt.
Mr. Byrne said in a letter sent on Tuesday that over the next 60
days the Company will sell the remaining professional and consumer
inventory through its existing dealers and distributors, pay its
bills, and then spend time rethinking the future of NHT. "One
thing that is for sure is that this is not about our love for or
commitment to the brand. It isn't about the audio business,
either. It's all about the realities of the world and how
consumer attitudes are changing, and how we as a brand and an
industry can best respond to the need for real invention. We're
anxious to get moving. When we do, it will be in the right
direction.... We believe March 31, 2009, is to be the last day of
"regular" business, at least for now. We intend to offer customer
service and repair services for both in and out of warranty,
available ongoing. Keep an eye on our website (nhthifi.com) for
more details and the occasional update."
NHT (Now Hear This) Audio is a speaker and audio manufacturer.
OSI RESTAURANT: Makes Deep Discount Tender Offer; Post Losses
-------------------------------------------------------------
OSI Restaurant Partners LLC announced February 18 a tender offer
for some of its $550 million in 10% senior notes. Noteholders
will receive as little as 22.5% in a Dutch auction where OSI will
spend up to $73 million, excluding accrued interest.
On February 23, OSI Restaurant reported that its net loss for the
three months ended December 31, 2008 was $506,410,000 compared
with $23,511,000 for the same period in 2007. For the year ended
December 31, 2008, its net loss was $739,409,000 compared with
$22,594,000 for the same period in 2007.
Net loss includes the aggregate goodwill and intangible asset
impairment charges of $482,403,000 and $650,491,000 for the three
months and year ended December 31, 2008, respectively. Revenues
for the quarter decreased by 10.2% to $928,332,000 compared with
$1,033,954,000 during the same quarter last year. For the year,
revenues decreased by 4.9% to $3,962,857,000 compared with
$4,166,661,000 for the same period in 2007.
OSI Restaurant said, when it announced the tender offer, "As a
result of poor overall economic conditions, declining sales at
Company-owned restaurants, reductions in the Company's projected
results for future periods and a challenging environment for the
restaurant industry, the Company assessed the recoverability of
its goodwill and other indefinite-lived intangible assets and
expects to record an aggregate impairment charge of $480,000,000
to $540,000,000 for its domestic and international Outback
Steakhouse, Carrabba's Italian Grill, Bonefish Grill, and
Fleming's Prime Steakhouse and Wine Bar concepts for the quarter
ended December 31, 2008."
During the second quarter of 2008, in connection with the
Company's annual assessment for impairment of goodwill and other
indefinite-lived intangible assets, the Company recorded an
aggregate goodwill impairment loss of $161,589,000 for the
international Outback Steakhouse, Bonefish Grill and Fleming's
Prime Steakhouse and Wine Bar concepts. The Company also recorded
impairment charges of $3,037,000 for the Carrabba's Italian Grill
trade name and $3,462,000 for the Blue Coral Seafood and Spirits
trademark.
Tender Offer
The Company currently has $488.2 million aggregate principal
amount of the Notes outstanding. The Tender Cap is based upon the
maximum amount of Company funds OSI is permitted to use (as of
February 18, 2009, and assuming the receipt of the Contribution
under the Company's senior secured credit facility for the
purchase of outstanding Notes.
The Offer is being conducted as a modified "Dutch auction" with an
acceptable bid price range of $225.00 to $275.00 per $1,0000
principal amount of the Notes. The total consideration payable
for Notes accepted in the Offer will be established 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. New York City time, March 3, 2009), plus a
"clearing premium" not to exceed $50.00. Holders whose Notes are
accepted for purchase pursuant to the Offer will also receive
accrued and unpaid interest from the last interest payment date
to, but not including, the Payment Date.
In order to be eligible to receive the total consideration, which
includes the Early Tender Payment, Holders must validly tender
their Notes at or prior to 5:00 p.m., New York City time, on
Tuesday, March 3, 2009 (the "Early Tender Time"). Holders validly
tendering their Notes after the Early Tender Time will be eligible
to receive only an amount equal to the total consideration less
the Early Tender Payment.
The purpose of the Offer is to reduce the principal amount of debt
outstanding, the related debt service obligations and to improve
the Company's financial covenant position under its senior credit
facilities. The Company is funding the Offer with (i) cash on hand
and (ii) the proceeds of the anticipated contribution of at least
$47 million from the Company's parent, OSI HoldCo, Inc. The
Contribution is expected to be funded through distributions to OSI
HoldCo by one of its subsidiaries that owns approximately 360
restaurant properties that are sub-leased to the Company. The
Offer is conditioned upon receipt of such Contribution and there
can be no assurance that the Contribution will occur. The
shareholders of OSI HoldCo have informed the Company that they do
not intend to contribute any new equity to OSI HoldCo as part of
the proposed transaction.
The Offer will expire at 12:00 a.m., New York City time, on
Wednesday, March 18, 2009, unless extended by the Company in its
sole discretion, subject to the absolute right of the Company, in
its sole discretion (subject to applicable law), to terminate,
withdraw, or amend the Offer at any time. Notes validly tendered
may be validly withdrawn at any time on or prior to 5:00 p.m.,
Tuesday, March 3, 2009. Any Notes validly tendered and not
validly withdrawn on or prior to the Withdrawal Deadline may not
be validly withdrawn thereafter, and any Notes validly tendered
after the Withdrawal Deadline and prior to the Expiration Date may
not be validly withdrawn unless the Company extends the Withdrawal
Deadline under certain circumstances or is otherwise required by
law to permit withdrawal. If the Company extends the Withdrawal
Deadline for any reason, it expects to publicly announce so by
press release following such extension.
About OSI Restaurant
OSI Restaurant Partners is the #3 operator of casual-dining spots
(behind Darden Restaurants and Brinker International), with more
than 1,400 locations in the US and 20 other countries. Its
flagship Outback Steakhouse chain boasts more than 950 locations
that serve steak, chicken, and seafood in Australian-themed
surroundings. OSI also operates the Carrabba's Italian Grill
chain, with about 240 locations. Other concepts include Bonefish
Grill, Fleming's Prime Steakhouse, and Cheeseburger In Paradise.
Most of the restaurants are company owned. A group led by chairman
Chris Sullivan took the company private in 2007.
* * *
As reported by the Troubled Company Reporter on Feb. 24, 2009,
Moody's Investors Service downgraded OSI Restaurant's Probability
of Default rating to Ca from Caa1 and lowered the rating on its
$550 million 10% senior unsecured notes to C from Caa3. Moody's
also placed OSI's Corporate Family and senior secured ratings on
review for possible downgrade.
The review was prompted by the recent announcement that OSI
continues to experience a substantial decline in earnings and
store traffic to levels worse than Moody's previously expected.
The company also announced that it will likely need to take an
impairment charge of between $480 and $540 million for goodwill
due to a reduction in its projected results for future periods as
a result of poor overall economic conditions.
PACIFICA HOSPITAL: Files for Chapter 11, Has $3.8MM State Funding
-----------------------------------------------------------------
Pacifica Hospital of the Valley Corp. filed a Chapter 11 petition
on Feb. 17 before the U.S. Bankruptcy Court for the Central
District of California.
According to Bloomberg's Bill Rochelle, Pacifica intends to fund
the reorganization in part with $3.8 million in what it called
distressed hospital funding provided by the state. Pacifica also
intends to continue an accounts receivable factoring agreement
with Sun Capital Healthcare Inc.
Bloomberg said that at filing, $24.6 million was owing on the
factoring agreement. The hospital owes another $6.4 million on
the mortgage covering the facility. The two largest unsecured
creditors are taxing authorities owed around $3 million.
Mr. Rochelle notes that Pacifica is owned by Envision Hospital
Corp. from Scottsdale, Arizona, the owner of Michael Reese Medical
Center Corp. in Chicago. Although the Michael Reese facility
filed under Chapter 11 in September, Envision is not in
bankruptcy.
About Pacifica Hospital
Pacifica Hospital of the Valley Corp. is a 231-bed acute care
hospital in Sun Valley, California. Pacifica Hospital filed for
Chapter 11 on Feb. 17 (Bankr. C.D. Calif., Case No. 09-011678).
The petition said assets are less than $50 million while debt
exceeds $50 million.
PETTERS GROUP: Polaroid Group Gets Court Okay to Start Auction
--------------------------------------------------------------
Star Tribune reports that The Hon. Gregory Kishel of the U.S.
Bankruptcy Court for the District of Minnesota has approved the
auction for Petters Group Worldwide's Polaroid Group.
According to Picturebusinessmag.com, bids will start at
$42 million for Petters group. The report says that two Petters
Group creditors had opposed the move. The report says that PHC
Acquisitions submitted the stalking horse bid of $42 million.
Based in Minnetonka, Minn., Petters Group Worldwide LLC is named
for founder and chairman Tom Petters. The group is a collection
of some 20 companies, most of which make and market consumer
products. It also works with existing brands through licensing
agreements to further extend those brands into new product lines
and markets. Holdings include Fingerhut (consumer products via
its catalog and Web site), SoniqCast (maker of portable, WiFi MP3
devices), leading instant film and camera company Polaroid
(purchased for $426 million in 2005), Sun Country Airlines
(acquired in 2006), and Enable Holdings (online marketplace and
auction for consumers and manufacturers' overstock inventory).
Petters formed the company in 1988.
Petters Company, Inc. is the financing and capital-raising unit of
Petters Group Worldwide, LLC. Petters Company, Inc. and Petters
Group Worldwide, LLC, filed separate petitions for Chapter 11
relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and 08-
45258, respectively). James A. Lodoen, Esq., at Lindquist &
Vennum P.L.L.P., represents the Debtors as counsel. In its
petition, Petters Company, Inc. listed debts of between
$500 million and $1 billion, while its parent, Petters Group
Worldwide, LLC listed debts of not more than $50,000.
As reported in the Troubled Company Reporter on Oct. 7, 2008,
Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing
business as Sun Country Airlines, Inc., and MN Airline Holdings,
Inc., filed for Chapter 11 bankruptcy protection with the U.S.
Bankruptcy Court for the District of Minnesota on Oct. 6, 2008
(Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned
unit of Thomas Petters Inc. and owner of MN Airline Holdings,
Inc., Sun Country's parent company.
Polaroid Corp., which was owned by Petters since 2005, filed its
second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr.
D. Minn., Lead Case No. 08-46617).
PHILADELPHIA NEWSPAPERS: Creditors Oppose $25MM DIP Financing
-------------------------------------------------------------
Creditors of Philadelphia Newspapers LLC object to certain terms
of the proposed $25 million postpetition financing being offered
by affiliates of the current owners, Bloomberg News said.
According to Bloomberg's Bill Rochelle, the objectors oppose a
provision that would declare default of the $25 million DIP loan
if Chief Executive Officer Brian Tierney is removed from his post.
Mr. Tierney led a group of investors that acquired the newspapers
in June 2006 from McClatchy Co. for $562 million. Company
investors including Bruce Toll will provide the $25 million to
fund operations while in bankruptcy.
Richard R. Thayer, executive vice president for finance of
Philadelphia Newspapers, said that in connection with the
bankruptcy filing, two parties, one of whom was the prepetition
agent, offered contrasting proposals for DIP financing. The
prepetition agent offered $20 million, maturing in six months,
while the other offered $25 million, with a nine-month maturity
date. The second offer also allowed for the conversion of the DIP
facility to an exit facility. The Debtors determined that the
facility offered by the proposed DIP agent provided greater
liquidity at a significantly lower cost, and better terms.
"The Debtors intend to use cash collateral and DIP financing to
operate their business while they pursue various restructuring
alternatives," Mr. Thayer relates.
Existing Lenders Surprised by Selection
Peg Brickley and Shira Ovide at The Wall Street Journal report
that banks that hold a more than $317 million claim against
Philadelphia Newspapers, LLC, have objected the debtor's request
for a new loan.
WSJ relates that the banks argued on Tuesday against the terms of
a loan that Philadelphia Newspapers is seeking to use on its
operations while it is under bankruptcy protection. According to
court documents, the banks said that they were surprised that
Philadelphia Newspapers withdrew from a preliminary agreement to
borrow from the existing lending group.
WSJ states that the lenders' lawyers said in court that they want
Philadelphia Newspapers to emerge quickly from bankruptcy and that
they don't trust the company's team, which is lead by Brian
Tierney. The lenders, led by led by Royal Bank of Scotland Group
PLC unit Citizens Bank, claimed that Mr. Tierney's team
continuously missed financial projections, the report says.
According to the report, Philadelphia Newspapers spokesperson Jay
Devine denied mismanagement by Mr. Tierney's team.
The lenders, WSJ reports, challenged a plan that Philadelphia
Newspapers proposed to pay its way through bankruptcy with a loan
from Bruce Toll, the chairperson of the company's parent company.
Fred Hodara, the attorney for the company's senior lenders, said
that the terms of the deal allow Mr. Toll to "shut off the money"
if Mr. Tierney is replaced as CEO, WSJ says.
Mr. Toll's loan is a better deal than the financing that the
lenders offered, WSJ relates, citing Mr. Devine. Mr. Tierney has
told workers since Philadelphia Newspapers' bankruptcy filing that
he's trying to stop lenders from forcing him to cut payroll and
possibly close the Daily News. The papers are sustainable if
Philadelphia Newspapers can cut its debt obligations, WSJ reports,
citing Mr. Tierney.
About Philadelphia Newspapers
Philadelphia Newspapers, LLC -- http://www.philly.com/-- owns and
operate numerous print and online publications in the Philadelphia
market, including the Philadelphia Inquirer, the Philadelphia
Daily News, several community newspapers, the region's number one
local Web site, philly.com, and a number of related online
products. The Company's flagship publications are the Inquirer,
the third oldest newspaper in the country and the winner of
numerous Pulitzer Prizes and other journalistic recognitions, and
the Daily News.
Philadelphia Newspapers and its debtor-affiliates filed for
Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D.
Pa. Case No. 09-11204). Proskauer Rose LLP is the debtors'
Counsel, while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP
is the debtors' local counsel. Garden City Group, Inc., is the
debtors' notice, claims and solicitation agent. The debtors'
financial advisor is Jefferies & Company Inc. The debtors listed
$100 million to $500 million in assets and $100 million to
$500 million in debts.
PHOENIX FOOTWEAR: Names R. Hall as President & D. Nelson as CFO
---------------------------------------------------------------
On February 16, 2009, Phoenix Footwear Group, Inc. (NYSE Alternext
US: PXG), disclosed that as previously announced, the Company has
been conducting a review of its strategic alternatives with the
assistance of BB&T Capital Markets, a division of Scott &
Stringfellow, Inc. As a result of these efforts, the Company is
presently engaged in discussions, meetings and negotiations with
various parties -- including its CEO, Cathy Taylor -- which may
result in the Company divesting or exiting certain operations. To
date no definitive agreements have been reached for such
transactions, nor can any assurances be given that any such
transactions will be approved or consummated.
Concurrent with these discussions, Cathy Taylor and Doug Ford have
stepped down from their positions as CEO and Director, and CFO,
respectively. The Company has also restructured its operations,
eliminating 17 positions for an annual cost savings of
approximately $2.5 million. These reductions are effective today
and will result in a charge for severance during the first quarter
of 2009.
In the wake of these changes Russell Hall has been named President
and Chief Executive Officer of Phoenix Footwear Group while Dennis
Nelson has been named the Company's Chief Financial Officer. Mr.
Hall has been with the Company since 2000 and most recently has
been responsible for its Trotters, SoftWalk and Chambers
divisions. Dennis Nelson has been the Company's controller since
June of 2008, prior to which he was Director of Finance for
TaylorMade-Adidas Golf Company.
The Company expects to be reporting year end results in late
March; however it does not intend to provide ongoing disclosure
with respect to its strategic efforts until a definitive agreement
is approved unless disclosure is otherwise appropriate.
Headquartered in Carlsbad, California, Phoenix Footwear Group,
Inc. (AMEX: PXG) -- http://www.phoenixfootwear.com/-- designs,
develops and markets a diversified selection of men's and women's
dress and casual footwear, belts, and other accessories. The
company's moderate-to-premium priced brands and licenses include
the Tommy Bahama Footwear(R), Trotters(R), SoftWalk(R), Strol(R),
H.S. Trask(R), and Altama(R) footwear lines, Chambers Belts(R)and
Wrangler(R).
Going Concern Doubt
As reported in Troubled company's Reporter on April 29, 2008,
Grant Thornton LLP, in Irvine, California, expressed substantial
doubt about Phoenix Footwear Group Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 29, 2007.
As of December 29, 2007, the Company was not in compliance with
the financial covenants under its credit agreement. The Company
did not request a waiver for the respective defaults as it was in
the process of replacing the existing facility with a new lender.
In June 2008, the Company entered into a Credit and Security
Agreement with Wells Fargo Bank, N.A., for a three year revolving
line of credit and letters of credit collateralized by all of the
Company's assets and those of its subsidiaries. Under the
facility, the Company can borrow up to $17.0 million, which,
subject to the satisfaction of certain conditions, may be
increased to $20.0 million. The credit facility also includes a
$7.5 million letter of credit sub facility. As of September 27,
2008, the Company was not in compliance with the financial
covenant for income before taxes under its Credit and Security
Agreement with Wells Fargo.
PLIANT CORP: U.S. Trustee Forms Five-Member Creditors Committee
---------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3,
appointed five creditors to serve on an Official Committee of
Unsecured Creditors of Pliant Corporation and its debtor-
affiliates.
The members of the Committee are:
1) The Bank of New York Mellon Trust Company, N.A.
Attn: Donna J. Parisi
6525 West Campus Oval, Suite 200
New Albany, OH 43054
Tel: (614) 775-5279
Fax: (614) 775-5636
2) Total Petrochemicals USA, Inc.
Attn: Joel Anderson
1201 Louisiana Street, Suite 1800
Houston, TX 77002
Tel: (713) 483-5271
Fax: (713) 483-5759
3) Ampacet Corporation
Attn: George Spagnoli
660 White Plains Road
Tarrytown, NY 10591,
Tel: (914) 631-6600
Fax: (914) 631-7197
4) Sonoco Products Company
Attn: George Goudelock
North Second Street
Hartsville, SC 29550
Tel: (843) 383-7459
Fax: (843) 383-7920
5) Univar USA Inc.
Attn: John Canini
PO Box 34325
Seattle, WA 98124
Tel: (425) 889-3617
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's business and financial
affairs. Importantly, official committees serve as fiduciaries to
the general population of creditors they represent. Those
committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Pliant Corp.
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.
Pliant Corp. and its affiliates again filed for Chapter 11 after
reaching terms of a pre-packaged restructuring plan. The
voluntary petitions were filed Feb. 11, 2009 (Bank. D. Del. Case
Nos. 09-10443 through 09-10451). The Hon. Mary F. Walrath
presides over the cases. Jessica C.K. Boelter, Esq., at Sidley
Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, provide bankruptcy counsel to the Debtors.
Epiq Bankruptcy Solutions LLC acts as claims and noticing agent.
As of September 30, 2008, the Debtors had $688,611,000 in total
assets and $1,032,631,000 in total debts.
PRECISION DRILLING: Moody's Withdraws 'B1' Senior Unsecured Rating
------------------------------------------------------------------
Moody's Investors Service has withdrawn the B1 (LGD-5, 89%) senior
unsecured rating on Precision Drilling Corporation's proposed
notes issue. The withdrawal follows the postponement of the
offering of $250 million principal amount of senior unsecured
notes due 2015. Precision Drilling's other ratings are not
impacted by this withdrawal. Precision Drilling Corporation is a
subsidiary of Precision Drilling Trust (collectively Precision).
Withdrawals:
Issuer: Precision Drilling Corporation
-- Senior Unsecured Regular Bond/Debenture, Withdrawn,
previously rated B1, LGD5, 89%
Moody's last rating action on Precision was February 10, 2009 when
Moody's rated the then proposed notes B1 (LGD-5, 89%) and affirmed
the B1 (LGD-5, 89%) senior unsecured rating on the 3.75%
convertible notes issued by Grey Wolf, Inc. At that time Moody's
also: affirmed Precision Drilling's Ba2 Corporate Family Rating,
Ba2 Probability of Default Rating and Ba1 (LGD-3, 39%) senior
secured ratings; maintained the negative outlook, and lowered the
Speculative Grade Liquidity rating to SGL-3 from SGL-2.
Precision Drilling Corporation and Grey Wolf, Inc are subsidiaries
of Precision Drilling Trust, a Calgary, Alberta-based income trust
engaged in the provision of energy services to the oil and gas
industry in North America.
PRECISION PARTS: Has Stalking Horse Bidder for $18.5 Million
------------------------------------------------------------
Precision Parts International Services Corp., and its debtor-
affiliates inform the U.S. Bankruptcy Court for the District of
Delaware that Cerion LLC has offered to pay $18,500,000 for their
assets, payable as follows:
i) $500,000 earnest money deposit to be paid upon execution of
the agreement by the Sellers, which deposit shall be
deposited into escrow pursuant to the Escrow Agreement; plus
ii) $18,000,000 to be paid at closing.
The Debtors, accordingly, ask the Court to allow it to pay a
$500,000 break-up fee, in the event it selects another bidder at
an auction for their assets.
The Debtors tell the Court that the Stalking Horse APA, including
the Break-up Fee, is the most favorable offer for substantially
all of the Debtors' assets that the Debtors have received to date.
The Debtors were advised that the Break-up Fee is a critical
element of that offer, and that the Stalking Horse Bidder's
willingness to serve in that capacity is premised on the Court's
approval of the Break-up Fee. Furthermore, the Debtors relate
that the Debtors' principal secured creditors have given their
approval to the Break-up Fee.
The Debtors also request the Court to move: (a) the deadline for
the submission of bids from Feb. 20, 2009, to March 5, 2009, at
4:00 p.m.; (b) the date of the Auction from Feb. 23, 2009, to
March 9, 2009, at 1:00 pm.; and (c) the hearing to consider the
Sale Motion from Feb. 25, 2009, to March 10, 2009. The Debtors
inform the Court that they have been advised that the Prepetition
Agent and DIP Agent support these date changes.
As reported in the Troubled Company on Jan. 14, 2009, the Debtors'
informed the Court that without an immediate sale, under
current economic conditions, the Debtors will be unable to
continue to operate their business and will be forced to close,
causing economic harm to all creditors and resulting in a
significant loss of jobs.
The assets to be sold, together or separately, to one or more
bidders, are substantially all of the assets of the Debtors,
including without limitation, each of the Debtors' owned
facilities, all inventories, all of the Debtors' tangible assets
used in the business, all of the Debtors' rights in and to assumed
executed contracts and unexpired leases, all of the Debtors'
interest in intellectual property used in the business, all of the
Debtors' other intangible property, excluding, however, any causes
of action arising under Chapter 5 of the Bankruptcy Code, and all
Business Records.
A full-text copy of the Stalking Horse APA between Cerion, LLC and
the Debtors dated Feb. 20, 2009, is available at:
http://bankrupt.com/misc/PrecisionParts.StalkingHorseAPA.pdf
About Precision Parts
Headquartered in Rochester Hills, Michigan, Precision Parts
International Services Corp. -- http://www.precisionparts.com/ --
sells products to major north American automotive and non-
automotive original equipment manufacturers and Tier 1 and 2
suppliers. The Debtors operate six manufacturing facilities
throughout north America, including a facility in Mexico operated
on the Debtors' behalf by Intermex Manufactura de Chihuahua under
a shelter and logistics agreement.
The Debtors' operations consist of two distinct lines of business:
MPI, which performs fineblanking work and conventional metal
stamping, as well as a range of value-added finishing operations,
and Skill which performs conventional metal stamping, as well as a
range of assembly and value-added finishing operations.
Four of the Debtors are holding companies that have no employees
and are not involved in the Debtors' day-to-day operations: PPI
Holdings, Inc.; PPI Sub-Holdings, Inc.; MPI International
Holdings, Inc.; and Skill Tool & Die Holdings Corp.
The company and eight of its affiliates filed for Chapter 11
protection on Dec. 12, 2008 (Bankr. D. Del. Lead Case No.
08-13289). David M. Fournier, Esq., at Pepper Hamilton LLP; and
Robert S. Hertzberg, Esq., and Deborah Kovsky-Apap, Esq., at
Pepper Hamilton LLP, represent the Debtors in their restructuring
efforts. The Debtors proposed Alvarez & Marsal North America LLC
as financial advisor and Kurtzman Carson Consultants LLC as
notice, claims and balloting agent. When the Debtors filed for
protection from their creditors, they listed assets of between
$100 million to $500 million each.
PRIMEDIA INC: NYSE Accepts Continued Listing Plan
-------------------------------------------------
On February 17, 2009, PRIMEDIA Inc. disclosed that the New York
Stock Exchange has notified the Company that it has accepted the
Company's proposed plan for continued listing on the NYSE.
As a result of the acceptance, the Company's common stock will
continue to be listed on the NYSE pending quarterly reviews by the
NYSE's Listing and Compliance Committee to ensure progress against
the plan. The Company previously announced on
November 24, 2008 that the NYSE had notified the Company that it
was considered "below criteria" specifically because the Company's
average total market capitalization was less than
$75 million over a consecutive 30 trading-day period. This
required the Company to submit a plan that demonstrated its
ability to achieve compliance with the continued listing standards
within 18 months of receipt of the notice. PRIMEDIA Inc. enables
millions of consumers nationwide to find a place to live through
its innovative print, Internet and mobile solutions. From
publishing its flagship advertising-supported Apartment Guide
since 1975 to launching industry-leading online real estate
destinations such as ApartmentGuide.com, Rentals.com and
NewHomeGuide.com, PRIMEDIA continues to simplify the consumer home
search and drive leads that result in occupancy for property
managers, landlords and real estate professionals.
Headquartered in Atlanta, PRIMEDIA Inc.(NYSE: PRM) --
http://www.primedia.com/-- through its Consumer Source Inc.
operation, is a provider of advertising-supported consumer guides
for the apartment and new home industries. Consumer Source
publishes and distributes more than 38 million guides such as
Apartment Guide and New Home Guide to approximately 60,000 U.S.
locations each year through its proprietary distribution network,
DistribuTech. The company also distributes category-specific
content on its leading websites, including ApartmentGuide.com,
NewHomeGuide.com and Rentals.com, a comprehensive single unit real
estate rental site.
At September 30, 2008, the company's consolidated balance sheet
showed $269,706,000 in total assets and $393,656,000 in total
liabilities, resulting in $123,950,000 total stockholders'
deficit.
The Troubled Company Reporter reported on Jan. 28, 2009, that
Moody's Investors Service affirmed all ratings of PRIMEDIA
Inc., including its Ba3 Corporate Family rating while changing the
rating outlook to negative. Details of the rating action are:
Ratings affirmed:
* Corporate Family rating -- Ba3
* Probability of Default rating -- B1
* $100 million senior secured revolving credit facility due
2013 -- Ba3, LGD3, 35%
* $248 million senior secured term loan B due 2014 -- Ba3,
LGD3, 35%
* Speculative Grade Liquidity rating -- SGL-2
The rating outlook is changed to negative from stable.
The TCR reported on Dec. 16, 2008, that Standard & Poor's Ratings
Services lowered its issue-level rating on Norcross, Georgia-based
PRIMEDIA Inc.'s $350 million secured credit facility to 'BB-' (at
the same level as the 'BB-' corporate credit rating on the
company) from 'BB'. In addition, S&P revised the recovery rating
on this debt to '3', indicating S&P's expectation of meaningful
(50%-70%) recovery in the event of a payment default, from '2'.
The credit facilities consist of a $250 million term loan B due
2014 and a $100 million revolving credit facility due 2013.
REDDY ICE: NYSE Accepts Continued Listing Plan
----------------------------------------------
On February 13, 2009, Reddy Ice Holdings, Inc. (NYSE:FRZ)
disclosed receipt of notice that the New York Stock Exchange
accepted the Company's plan for continued listing.
As a result, the Company's stock will continue to be listed on the
NYSE, subject to quarterly reviews by the NYSE's Listing and
Compliance Committee to ensure the Company's progress toward its
plan to restore compliance with continued listing standards. On
November 18, 2008, the Company announced that it was below
continued listing criteria because its average global market
capitalization over a consecutive 30 trading-day period and total
stockholders' equity were each less than $75 million.
Based in Dallas, Texas, Reddy Ice Holdings, Inc., and its wholly-
owned subsidiary, Reddy Ice Corporation, manufacture and
distribute packaged ice products. The Company is the largest
manufacturer of packaged ice products in the United States and
serves roughly 82,000 customer locations in 31 states and the
District of Columbia.
The Company entered into an Agreement and Plan of Merger, dated as
of July 2, 2007, with certain affiliates of GSO Capital Partners
LP. The Merger Agreement provided for the acquisition of the
Company's outstanding common stock for a cash purchase price of
$31.25 per share. The Company's stockholders approved the
transaction at a special stockholder meeting on October 12, 2007.
On January 31, 2008, the Company reached an agreement with
affiliates of GSO to terminate the Merger Agreement. A settlement
agreement was entered into which released all parties from any
claims related to the contemplated acquisition and provided for a
$21 million termination fee to be paid by GSO. The Company agreed
to pay up to $4 million of fees and expenses incurred by GSO and
its third-party consultants in connection with the transaction.
The Company received a net payment of
$17 million on February 5, 2008. During the nine months ended
September 30, 2008, the Company incurred $900,000 of other
expenses in connection with the transaction and the related
stockholder litigation. No expenses were incurred during the
three months ended September 30, 2008.
As of September 30, 2008, Reddy Ice had $472.3 million in total
assets, and $39.1 million in current liabilities, $389.2 million
in long-term obligations, and $30.5 million in commitments and
other contingencies. As of September 30, 2008, Reddy Ice had
$209.1 million in accumulated deficit and $780,000 in accumulated
other comprehensive losses. The company reported a net loss of
$112.9 million during the three months ended September 30.
* * *
In March 2008, the Company was served by the Office of the
Attorney General of the State of Florida with an antitrust civil
investigative demand requesting the production of documents and
information relating to an investigation of agreements in
restraint of trade or price-fixing with respect to the pricing or
market allocation of packaged ice. In June 2008, the Company
received a civil investigative demand from the Office of the
Attorney General of the State of Arizona. The Company has been
advised that the Florida CID and the Arizona CID were issued as
part of a multi-state antitrust investigation of the packaged ice
industry and that the Attorneys General of 19 states and the
District of Columbia are participating in the multi-state
investigation. The Company believes the states' investigation is
related to the ongoing investigation of the packaged ice industry
by the Antitrust Division of the Department of Justice. The
Company is cooperating with the authorities in these
investigations and expects to continue to make available documents
and other information in response to the subpoena and the civil
investigative demands. At this time the Company is unable to
predict the outcome of these investigations or any potential
effect they may have on the Company, its employees or operations.
In March 2008, the Company's Board of Directors formed a special
committee of independent directors to conduct an internal
investigation of these matters. In October 2008, Reddy Ice
received notice that the Securities and Exchange Commission has
initiated an informal inquiry into matters that are the subject of
the ongoing investigation by the special committee. The Company
has said it intends to cooperate with the SEC's informal inquiry.
As reported in the Troubled Company Reporter on Aug. 20, 2008,
Moody's Investors Service downgraded the Corporate Family Rating
and Probability of Default Rating of Reddy Ice Holdings, Inc. to
B2 from B1 and assigned an SGL-3 speculative grade liquidity
rating. Moody's concurrently lowered the ratings on the
$300 million senior secured credit facility and senior discount
notes by one notch. Moody's said the rating outlook is negative.
As reported in the Troubled Company Reporter on Aug. 20, 2008,
Standard & Poor's Ratings Services revised its outlook on Dallas,
Texas-based Reddy Ice Holdings Inc. and its wholly owned operating
subsidiary, Reddy Ice Corp. (Reddy Ice) to negative from stable.
At the same time, S&P affirmed all of its ratings on the company,
including the 'B+' corporate credit rating. As of June 30, 2008,
Reddy Ice had about $438 million in adjusted debt.
RTM FRAMINGHAM: Real Estate to be Auctioned Off March 13
--------------------------------------------------------
Dan McDonald at The MetroWest Daily News reports that RTM
Famingham, LLC's 133-acre real estate in the northeast part of
town at the former New England Sand and Gravel site will be
auctioned for the second time on March 13, 2009, at 1:00 p.m.
Paul E. Saperstein Co. Inc. is planning to put on the foreclosure
auction block the 131 acres in Framingham and the two acres in
Wayland, says The MetroWest.
According to The MetroWest, the property was supposed to be turned
into a sprawling tract of homes to be called Danforth Green. It
was commonly referred to as a planned unit development, says the
report.
The MetroWest relates that last year, the property was scheduled
to be auctioned due to a mortgage foreclosure, but RTM was placed
under an involuntary Chapter 11 bankruptcy protection in October
2008 in the U.S. Bankruptcy Court for the District of
Massachusetts, blocking the sale. BRS Partners, LLC, filed the
bankruptcy petition against RTM, claiming business debt and a
$15,000 contract between two entities in Vienna, Virginia,
according to The MetroWest.
The MetroWest says that the bankruptcy court allowed RTM's
creditor, CSE Mortgage, LLC, to proceed with the foreclosure in
January and by the end of that month, the Chapter 11 bankruptcy
case was dismissed because RTM failed to submit legal and
financial documents on time.
The MetroWest says that Jeffrey Mann, a representative of the
auctioneer, didn't rule out that the auction might be postponed
again.
The MetroWest reports that RTM will go before the Planning Board
on March 5, 2009. According to the report, the Planning Board
recommended in October 2008 that selectmen consider purchasing
part or all of the property. The board, says the report, wanted
the town to consider acquiring the land around the Birch Road
wells to protect the aquifer, preserve the habitat, and tap into
the area's recreational potential.
Developer RTM Framingham, LLC, is also known as Danforth Green,
Sudbury Landing, Villages at Danforth Farm, and Danforth Green.
RUSSELL RAYMOND: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Russell Raymond Necaise, Jr.
7306 Camellia Court
Pass Christian, MS 39571
Bankruptcy Case No.: 09-50322
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Southern District of Mississippi
(Gulfport Divisional Office)
Judge: Neil P. Olack
Debtor's Counsel: William J. Little, Jr., Esq.
Lentz & Little, P.A.
PO Box 927
Gulfport, MS 39502
Tel: (228) 867-6050
Fax: (228) 867-6077
Email: littlewj@bellsouth.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 available
for free at:
http://bankrupt.com/misc/mssb09-50322.pdf
The petition was signed by Russell Raymond Necaise, Jr.
SABERTOOTH LLC: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Sabertooth, LLC,
341 West Valley Forge Road
King of Prussia, PA 19406
Bankruptcy Case No.: 09-11237
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Venom Inc. dba Gold's Gym 09-10445
Type of Business: The company is a single asset real estate
debtor.
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Debtor's Counsel: Robert Mark Bovarnick, Esq.
Law Offices of Robert M. Bovarnick
Two Penn Center Plaza
1500 JFK Blvd., Suite 1310
Philadelphia, PA 19102
Tel: (215) 568-4480
Email: rmb@rbovarnick.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 John DePrince, Secretary/Treasurer of
the company.
SAKS INC: CEO Sadove Brushes Away Bankruptcy Speculations
---------------------------------------------------------
Andria Cheng at MarketWatch reports that Saks Inc. shares jumped
after Chief Executive Steve Sadove dispelled rumors about the
possibility of the company filing for bankruptcy protection and
said that Saks could take a look at possible ways to take
advantage of its majority-owned real estate portfolio.
Ms. Cheng says Saks shares jumped 7.6% following the remarks
despite it posting a greater-than-expected fourth-quarter loss
earlier Wednesday.
On February 25, Saks posted a net loss of $98.8 million for the
fourth quarter ended January 31, 2009. For the prior year fourth
quarter ended February 2, 2008, the Company recorded net income
of $39.5 million. For the fiscal year ended January 31, 2009,
Saks recorded a net loss of $154.9 million. For the prior fiscal
year ended February 2, 2008, the Company recorded net income of
$47.5 million.
Saks had $2.16 billion in total assets and $1.19 billion in total
liabilities as of January 31, 2009.
The Company's comparable store sales declined 15.3% in the fourth
quarter, which compares to a 9.0% comparable store sales gain
reported in the same period last year. Mr. Sadove commented,
"During the quarter, the Company experienced continued weakness
across all geographies, merchandise categories, and channels of
distribution. Soft performance in the Company's New York City
flagship store which began in the third quarter persisted into the
fourth. Women's apparel continued to be the most challenging
merchandise category."
Consolidated inventories at January 31, 2009 totaled $728.8
million, a 15.0% decrease over the prior year. Inventories
decreased 14.6% on a comparable stores basis. Mr. Sadove stated,
"[W]e made substantial progress in reducing our inventory levels
during the fourth quarter, and we are continuing to work
diligently to more closely align our inventories with consumption
trends."
At quarter end, the Company had approximately $10.3 million of
cash on hand and $156.7 million of direct outstanding borrowings
on its revolving credit facility. Funded debt (including
capitalized leases and borrowings on the revolving credit
facility) at January 31, 2009 totaled approximately
$640.1 million, and debt-to-capitalization was 39.9% (without
giving effect to cash on hand).
Mr. Sadove commented, "We are fortunate to have flexibility under
our existing debt facilities, with no short-term maturities of
senior debt." The Company's revolving credit facility terminates
in September 2011 and is subject to no covenants unless the
availability falls below $60 million. At that time, the Company
is subject to a fixed charge coverage ratio of at least 1:1.
Based on the Company's operating plans and targeted cash flow
management, the Company expects to have ample availability on its
revolving credit facility during 2009 and does not expect to be
subject to the fixed charge coverage ratio at any time during the
year.
The Company's senior notes total $192.3 million and mature as
follows:
-- $45.9 million in December 2010,
-- $141.6 million in October 2011,
-- $2.9 million in December 2013, and
-- $1.9 million in February 2019.
The Company also has a 2% $230 million convertible debenture which
matures in 2024.
The Company did not repurchase any shares of common stock in the
fourth quarter. During the fiscal year ended January 31, 2009,
the Company repurchased approximately 2.9 million shares at an
average price of $11.83. The Company has remaining availability
of approximately 32.7 million shares under its existing share
repurchase authorization programs.
Net capital spending for the fiscal year ended January 31, 2009
totaled approximately $129 million.
Saks discontinued the operations of its Club Libby Lu specialty
store business in January 2009.
Based in New York, Saks Incorporated (NYSE: SKS) operates 53 Saks
Fifth Avenue stores, 51 OFF 5TH stores, and saks.com.
SECURITY BENEFIT: S&P Downgrades Counterparty Ratings to 'BB'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its
counterparty credit and financial strength ratings on Security
Benefit Life Insurance Co. and its affiliate, First Security
Benefit Life Insurance and Annuity Co. of New York, to 'BB' from
'BBB+'. S&P also lowered its debt rating on SBLIC's subordinated
notes to 'B+' from 'BBB-'. The outlook on both of these companies
is negative.
"The downgrade reflects our expectation that SBLIC's realized
investment losses in 2008 will be significant relative to the
company's capital and that the company likely will be forced to
realize additional losses in its general account portfolio over
the next 24 months," said Standard & Poor's credit analyst Adrian
Pask.
"Complicating SBLIC's weakened capital position is a weakened
competitive position in its bank channels general account fixed-
annuity business. S&P believes the company's weakened competitive
position will result in negative net flows in its general account
over the next 24 months," said Mr. Pask. If negative net flows
occur, SBLIC will be forced to sell liquid, high-quality assets,
which currently constitute 60% of the general account. The
remaining 40% of the general account comprises less-liquid assets
such as collateralized debt obligations backed by residential
mortgage-backed securities; preferred stock of European financial
institutions, which has come under pressure in 2009; and
affiliated investments, which SBLIC used to finance the RYDEX
transaction.
SEMGROUP LP: Court to Consider SemMaterials Sale Today
------------------------------------------------------
Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the
District of Delaware will convene a hearing today on the auction
of SemGroup L.P.'s asphalt unit, SemMaterials, L.P.
SemGroup is seeking to sell its asphalt unit. Rod Walton at Tulsa
World reports that an auction took place Monday at SemGroup's
bankruptcy attorneys, Weil, Gotshal & Manges LLP 767 Fifth Avenue,
in New York, but company officials had no comment.
SemMaterials, L.P., a debtor subsidiary of SemGroup, L.P., is
engaged in purchasing, producing, storing, and distributing
liquid asphalt cement products, emulsions, and residual fuel
throughout the United States. SemMaterials is also engaged in
research and development and has approximately 560 employees.
On January 14, 2008, SemMaterials entered into a purchase and
sale agreement with SemGroup Energy Partners, L.P., pursuant to
which SemMaterials sold domestically-owned liquid asphalt cement
assets, having a $145,000,000 net book value. Those assets were
sold for $378,800,000, and the sale closed on February 20, 2008.
SemMaterials and SGLP also entered into a terminalling and
storage agreement under which SGLP provides terminalling and
storage services to SemMaterials for $5,000,000 monthly.
According to Mark D. Collins, Esq., at Richards, Layton & Finger,
P.A., in Wilmington, Delaware, the agreements between
SemMaterials and SGLP creates a complex relationship between the
parties, where physical assets are intertwined and employees
regularly split duties between both entities.
Mr. Collins said that since the Debtors' bankruptcy, SemMaterials'
business has been curtailed. Working capital requirements to fund
inventory purchases have been substantial, he says, and fixed
costs have become burdensome, including the $5,000,000 monthly
payments to SGLP under the Terminalling Agreement. SemMaterials'
business is highly seasonal, Mr. Collins said, and cash
expenditures exceed expected cash revenues during certain months
in a year. Moreover, since the Petition Date, SemMaterials has
been unable to obtain financing to purchase inventory for its
seasonal build, in accordance with normal industry practices.
The Debtors believe that continuing to own SemMaterials' Assets is
not in the best interests of the Debtors' estates. The Debtors
evaluated restructuring methods designed to maximize the value of
SemMaterials, including discussions with SGLP to amend the
Terminalling Agreement and jointly market the asphalt assets, Mr.
Collins said. However, no agreement with SGLP has been reached.
If the auction process is unsuccessful, the Debtors seek to reject
the Terminalling Agreement and liquidate the business.
The Debtors have not named a stalking horse bidder. The Debtors
have noted that SemMaterials' carrying costs and cash burn total
$15,000,000 per month. Hence, the Debtors have determined that
they need to sell SemMaterials to avoid further cash drain.
The Debtors believe that an expedited auction is necessary, given
the significant challenges confronting SemMaterials. The Debtors
have been marketing the business since August 26, 2008, but have
not been able to enter into a satisfactory sale agreement.
Mr. Collins said Blackstone Advisory Services, L.P., as the
Debtors' financial advisors, contacted more than 130 potential
buyers and parties to promote interest in SemMaterials sale
process. On October 6, 2008, Blackstone received six qualified
bids, which were allowed to conduct comprehensive due diligence.
Following management presentations, five parties withdrew in the
marking process, due to high fixed costs under the Terminalling
Agreement, working capital needs and seasonal cash flow, and the
failure to secure products ahead for the 2009 season. The
remaining potential buyer remains in the process; however, it
remains unclear whether that party can obtain the financing
required to complete the sale.
If the Auction is unsuccessful, the Debtors seek to reject the
Terminalling Agreement on February 26, 2009. Rejecting the
Terminalling Agreement allows the Debtors to avoid approximately
$50,000,000 of future payments for 2009, Mr. Collins explained.
Winding-down the businesses of SemMaterials minimizes expenses
and maximizes the Debtors' recovery, and enables the Debtors to
receive $100,000,000 for its current inventory and other liquid
assets, he said.
Sale Objections
Tulsa World says the end of SemMaterials could signal a turning
point in SemGroup's seven-month-long bankruptcy case. According
to Tulsa Word, company officials had planned to sell off assets to
pay creditors, but New York billionaire John Catsimatidis said he
wants to reorganize SemGroup and keep it intact.
According to Tulsa World, Mr. Catsimatidis said the Debtors' plan
to sell or liquidate SemMaterials was a "surprise" to him,
although he controls five of the nine seats on SemGroup's
management committee.
Roberta A. DeAngelis, Acting U.S. Trustee for Region 3, also
complained that copies of the proposed asset purchase agreement
and proposed order approving SemMaterials' sale were not filed
with the sale motion as required under Rule 6004-1 of the Local
Rules for the U.S. Bankruptcy Court for the District of Delaware.
As the proposed purchaser has not yet been identified, the Acting
U.S. Trustee said the Debtors also failed to highlight in the sale
motion any agreements with management entered into with the
proposed purchaser or any information regarding whether any
insiders are involved in the sale.
To the extent that the lacking information will be provided prior
to the sale or through testimony provided at the proposed Sale
Hearing, the Acting U.S. Trustee reserves her rights to object to
Sale and the Sale Procedures on any grounds, if and when the
information becomes available.
Furthermore, the Acting U.S. Trustee wants the Debtors to confirm
that no "personally identifiable information" is being transferred
as part of the proposed Sale.
Silver Point Capital, L.P., in a separate filing, said the affects
of the relief requested in the sale motion and the Debtors'
continued use of the collateral securing the Debtors' prepetition
indebtedness, are unclear.
Silver Point reserves its rights with respect to the application
of the proceeds from the sale to satisfy the Debtors' obligations
under the DIP Credit Agreement, the allocation of those proceeds
to a reduction in the Prepetition Collateral, the extent to which
the proceeds from the sale results in the diminution in the
Collateral, and the extent to which that diminution in value
leaves Silver Point inadequately protected in the Debtors'
bankruptcy cases.
BP Products North America, Inc., points out that the sale motion
is silent as to the disposition of the Debtors' outstanding
executory contracts, including the Thru-Put Agreement with BP
Products. BP Products said it does not object to the sale but
asks that any order approving the sale require the Debtors to:
(a) immediately identify the contracts proposed to be
assumed and assigned and the proposed cure amounts; and
(b) establish expedited procedures and deadlines for (i)
executory contracts to be assumed and assigned and (ii)
for counter-parties like BP to resolve any disputes
regarding the proposed cure amount and the proposed
assumption and assignment.
If SemMaterials liquidates, BP asks that any order approving the
liquidation require the Debtor to reject the Thru-Put Agreement
along with the Terminalling Agreement, or that the automatic stay
be lifted to allow BP to terminate the agreement, and (c) that
the Debtor be required to return the high shear mixer to BP in
good condition and repair.
SemGroup Energy Partners, L.P., sought the Court's permission to
file under seal its objection to the Debtors' requests to avoid
the unnecessary disclosure of confidential information to the
Debtors' competitors.
According to Laura Davis Jones, Esq., at Pachulski Stang Ziehl &
Jones, LLP, in Wilmington, Delaware, SGLP's objection contains
material information like volume levels, contract rates and
expected sales relating to the asphalt, which remains subject to
a confidentiality agreement.
According to Tulsa World, SemGroup Energy Partners paid
SemMaterials about $378 million Sunday for 46 terminal and storage
facilities for liquid asphalt cement and residual fuel oil. The
deal is under investigation by the Securities and Exchange
Commission, the FBI and the bankruptcy case's U.S. Trustee, and it
is the subject of lawsuits filed by shareholders. Tulsa World,
citing various reports, says some shareholders allege that those
"insider transactions" were designed to generate cash flow to
cover margin losses.
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)
SEMGROUP LP: Sues Catsimatidis for Breach of Confidentiality Deal
-----------------------------------------------------------------
SemGroup, L.P., and its debtor affiliates filed a complaint with
the U.S. Bankruptcy Court for the District of Delaware against
John A. Catsimatidis, Matthew F. Coughlin III, Martin R. Bring, J.
Nelson Happy, Myron L. Turfitt, and United Refining Energy Corp.,
seeking a judgment:
(i) finding that the Catsimatidis Group breached a certain
confidentiality agreement with the Debtors;
(ii) declaring that the terms of that confidentiality
agreement preclude the Catsimatidis Group from serving
as members of the Debtors' management committee;
(iii) finding that the Catsimatidis Group breached their
fiduciary duties to SemGroup GP, LLC, and the Debtors;
(iv) granting a preliminary and permanent injunction
precluding further violations of the confidentiality
agreement;
(v) finding that the Catsimatidis Group violated the
automatic stay;
(vi) awarding the Debtors all damages they are entitled, in
an amount to be determined by the Court, as well as
attorneys' fees; and
(vii) other further relief.
Mr. Catsimatidis owns Gristedes' Supermarkets and URC, and is
seeking to acquire the Debtors, the Debtors allege. According to
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, Mr. Catsimatidis is attempting to undertake
the acquisition by seizing control of the Debtors' management
committee to force his proposal, instead of through the Debtors'
well-established bidding process.
The Management Committee of SGGP -- the Debtors' general partner
-- is collectively authorized to make a variety of specific
management decisions relating to SemGroup and its subsidiaries.
The Management Committee has nine seats, which were divided
equally:
(a) three seats controlled by Thomas L. Kivisto, former chief
executive officer of SemGroup;
(b) three seats controlled by A.R. Thane Ritchie, a hedge
fund investor; and
(c) three seats controlled by The Carlyle Group and
Riverstone Holdings LLC.
Mr. Collins relates that on September 26, 2008, Mr. Coughlin, Mr.
Catsimatidis' associate and business partner, contacted Terrence
Ronan, chief executive officer of SemGroup, indicating that Mr.
Catsimatidis was interested in acquiring the Debtors. Mr.
Catsimatidis sought to do so without involving the Debtors'
financial advisor, The Blackstone Group, Mr. Collins adds.
However, Mr. Ronan advised that Blackstone was responsible for
running the marketing process, and a transparent bidding process
would be necessary to obtain the highest value for the Debtors.
In October 2008, Mr. Catsimatidis requested access to the
Debtors' confidential, non-public records in order to evaluate
the Debtors' assets, which the Debtors allowed but pursuant to a
confidentiality agreement, dated November 5, 2008. The
Confidentiality Agreement imposes strict and unambiguous
requirements, and compels Mr. Catsimatidis to conform to the
bidding process established by the Debtors.
The Debtors complain that Mr. Catsimatidis has directly violated
the terms of the Confidentiality Agreement, in order to gain
access to the Debtors' confidential business information. Mr.
Catsimatidis persisted in his efforts to circumvent Blackstone,
and requested an immediate meeting with Mr. Ronan and the
Debtors' business unit leaders, in order to discuss the purchase
of the Debtors in detail.
Mr. Collins alleges that Mr. Catsimatidis used direct appeals to
the Debtors' employees, secret meetings with selected management,
misleading press releases, and an unauthorized Web site, in an
attempt to control the management's reorganization efforts by
publicly proclaiming that he himself will reorganize the Debtors.
Additionally, Mr. Catsimatidis has attempted to drive off current
and prospective bidders have thwarted the Debtors' efforts to
maximize their estates through a competitive bidding process, Mr.
Collins maintains. He and four of his business associates have
become fiduciaries for the Debtors, despite being active bidders
and having potential conflicts of interest.
On the Debtors' behalf, Mr. Collins asserts that Mr. Catsimatidis
is an acquisition-minded outsider masquerading as a fiduciary to
the detriment of the Debtors and integrity of the Chapter 11
cases.
Mr. Collins states that the Debtors are pleased that Mr.
Catsimatidis has expressed a strong interest in acquiring the
Debtors; however, he has not complied with the established
bidding process o the terms of the Confidentiality Agreement with
the Debtors.
The Debtors are committed to maximizing the value of their
estates, Mr. Collins asserts, for the benefit of their creditors,
whether through reorganization or the sale of business units. In
order to preserve the integrity of their reorganization and the
value of their estates, the Debtors are compelled to seek relief
from the Court.
The Debtors ask that the Court order Mr. Catsimatidis and the
Defendants to:
* cease and desist from further violations of the
Confidentiality Agreement;
* withdraw from their positions on the Management Committee;
* refrain from continuing to obstruct the bankruptcy process;
and
* comply with the established bidding process.
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)
SEMGROUP LP: SemGas Sues Targa Liquids for Breach of Purchase Deal
------------------------------------------------------------------
During the months of June and July 2008, Targa Liquids Marketing
and Trade accepted delivery of about $4.6 million in natural gas
products from Debtor SemGas, L.P.'s plant in Sherman, Texas.
Under the terms of a purchase agreement between the parties,
Targa is obligated to purchase all of those products from the
Sherman plant through the end of 2014.
SemGas tells the U.S. Bankruptcy Court for the District of
Delaware that Targa has refused to pay for the June and July
deliveries. Moreover, Targa has informed SemGas that it is
unilaterally terminating the Purchase Agreement despite having no
contractual right to do so, and will set the amount off with the
$3.4 million it purportedly incurred as damages arising out of its
own improper termination of the agreement against amounts due to
SemGas, Ian Connor Bifferato, Esq., at Bifferato Gentilloti LLC,
in Wilmington, Delaware, relates.
Mr. Bifferato asserts that Targa's actions violates the automatic
stay, are a blatant breach of the Purchase Agreement, and have
caused SemGas to incur damages.
Mr. Bifferato further asserts that the funds owed to SemGas by
Targa are property of the Debtors' estates and are subject to
turnover. He adds that the Purchase Agreement does not provide
Targa a contractual right to terminate the agreement upon SemGas'
filing of a voluntary petition for bankruptcy protection.
Accordingly, SemGas asks the Court to declare that:
(a) Targa does not have the contractual right to terminate the
Purchase Agreement;
(b) Targa does not have the right under the Purchase Agreement
to set off and net obligations resulting from its
unilateral termination of the Purchase Agreement;
(c) the Bankruptcy Code does not provide Targa with the right
to liquidate and terminate the Purchase Agreement; and
(d) the Bankruptcy Code does not provide Targa with the right
to set off obligations upon unilateral termination under
the Purchase Agreement.
SemGas also asks the Court to direct Targa to pay the damages
relating to its breach of the Purchase Agreement.
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)
SEMGROUP LP: SemMaterials Sues High Sierra for Release of Asphalt
-----------------------------------------------------------------
Debtor SemMaterials, L.P., tells the U.S. Bankruptcy Court for the
District of Delaware that High Sierra Terminalling, LLC, and
Sierra Asphalt Roofing Company are holding hostage more than
$10 million worth of the Debtor's asphalt to, HST and SARCO claim,
protect less than $300,000 in prepetition storage fees and
expenses.
The Debtor and HST and SARCO are parties to a terminalling
agreement under which the Debtor will store its asphalt inventory
in HST and SARCO's warehouses in Fort Lauderdale and Lake City,
Florida.
HST and SARCO have refused to release any amount of the asphalt,
causing SemMaterials to miss valuable opportunities to sell the
asphalt at a time when the market rate for the material was at a
record high, Katherin Good, Esq., at Richards, Layton & Finger,
P.A., in Wilmington, Delaware, complains.
Ms. Good relates that HST and SARCO claim to hold "warehouseman's
liens" on the Debtor's stored asphalt. Citing this lien as
authority, HST and SARCO have refused to release any of the
Debtor's asphalt. Ms. Good asserts that the asphalt stored in
HST and SARCO's terminals is property of the Debtor's estate and
is subject to turnover. Ms. Good further asserts that by
refusing to turnover the asphalt, HST and SARCO have breached the
terminalling agreements and have violated the automatic stay.
Accordingly, the Debtor asks the Court to declare that the
asserted warehouseman's lien does not give HST and SARCO the
right to withhold and refuse to deliver the Debtor's store
asphalt; and direct HST and SARCO to turn over the asphalt.
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)
SHEARIN FAMILY: Has April 6 Confirmation Hearing
------------------------------------------------
Shearin Family Investments LLC received from the U.S. Bankruptcy
Court for the Eastern District of North Carolina conditional
approval of the disclosure statement explaining its reorganization
plan, Bloomberg's Bill Rochelle said.
The Court will convene hearings to consider confirmation of the
Plan on April 6.
As reported by the Troubled Company Reporter on February 17,
Shearin filed a Plan that contemplates its reorganization and the
satisfaction of creditor claims from income.
Construction of the Company's main asset, the Nautical Club
project, will be financed with postpetition financing in the
amount of $8,000,000 from RBC Real Estate Finance. This loan will
be secured by a first priority deed of trust on the Nautical Club
property, and a junior deed of trust on the Debtor's remaining
real property.
General unsecured claims total $11,550,876. The Debtor proposes
to pay the unsecured creditors 5% of the net proceeds, after the
payment of closing costs and RBC's release prices, from the sale
of Nautical Club condominium payments, up to a maximum of
$100,000. Payments shall be distributed pro rata to holders of
allowed general unsecured claims.
The Debtor will treat the claims of RBC, Wachovia, ECB, Southern
Bank, John Hamad, and Samer and Sumer Hamad as fully secured, with
payments to be made from proceeds of the sale of the Debtor's
property.
A portion of the claims of Centurion Construction will be paid
from RBC's post-petition financing, and the remainder will be
treated as a general unsecured claim.
The Debtor will pay the administrative costs in full within 10
days of the Plan's Effective Date or upon other mutually
acceptable terms as the parties may agree. The claims remaining
unpaid 10 days following the Effective Date will accrue interest
at a rate of 8% p.a.
All ad valorem taxes will be paid over a period of five years, in
monthly installments, with interest at an annual rate of 5%,
beginning on the fifteenth days of the first full month following
the Plan's Effective Date.
Any and all priority taxes due and owing to the Internal Revenue
Service, N.C. Department of Revenue, or any other county or city
taxing authority shall be paid over a period of five years in
monthly installments with interest at an annual rate equal to the
statutory rate as of the Plan's Effective Date, currently five
percent (5%), beginning on the fifteenth day of the first full
month following the Effective Date.
The Debtor has assumed the executory contract with Summer Winds
Condominiums, Inc., for the construction of a joint wastewater
treatment plant.
The Debtors will also investigate and pursue avoidance actions
pursuant to Sections 547 and 548 of the Bankruptcy Code. Any
funds collected through such actions will be distributed in
accordance with the priorities established by the Bankruptcy Code
and Orders of the Court.
Classification and Treatment of Claims
The Plan segregates claims against the Debtor and treatment for
each class of claims into 11 classes:
Class Description Treatment
----- ----------- ---------
1 Administrative Costs Impaired
2 Ad Valorem Taxes Impaired
3 Tax Claims Impaired
4 RBC Real Estate Finance ("RBC") Impaired
5 East Carolina Bank ("ECB") Impaired
6 Southern Bank & Trust Company Impaired
7 Wachovia Bank Impaired
8 Samer Hamad Impaired
9 John Hamad Impaired
10 Centurion Impaired
11 General Unsecured Claims Impaired
All creditors holding allowed claims are entitled to vote to
accept or reject the Plan of Reorganization. In the event that
any class of creditors rejects the Plan, the Debtor intends to
seek confirmation under the "cramdown" provisions under
Sec. 1129(b) of the Bankruptcy Code.
A full-text copy of the Debtor's Chapter 11 Plan of
Reorganization, dated Feb. 11, 2009, is available at:
http://bankrupt.com/misc/ShearinFamilyChapter11Plan.pdf
A full-text copy of the Debtor's Disclosure Statement, dated
Feb. 11, 2009, in support of its Chapter 11 Plan of Reorganization
is available at:
http://bankrupt.com/misc/ShearinFamilyDisclosureStatement.pdf
Based in Rocky Mount, North Carolina, Shearin Family Investments,
LLC owns and operates a condominium resort in Carteret County, in
North Carolina. The company filed for Chapter 11 relief on
Oct. 13, 2008 (Bankr. E.D. N.C. Case No. 08-07082). Amy M. Faber,
Esq., at Stubbs & Perdue, P.A., and Trawick H. Stubbs, Jr., Esq.,
at Stubbs & Perdue, P.A., represent the Debtor as counsel. When
the Debtor filed for protection from its creditors, it listed
assets of $46,327,546 and debts of $49,260,007.
SOUTH PARK APTS: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: South Park Apts., LLC
P.O. Box 689
Rancho Santa Fe, CA 92067
Bankruptcy Case No.: 09-01756
Type of Business: The company is a single asset real estate
debtor.
Chapter 11 Petition Date: February 13, 2009
Court: United States Bankruptcy Court
Southern District of California (San Diego)
Judge: Laura S. Taylor
Debtor's Counsel: Gregory W. Koehler, Esq.
937 South Coast Hwy., Suite 208
Encinitas, CA 92024
Tel: (760) 633-1803
Total Assets: $6,516,500
Total Debts: $5,163,994
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Craig F. White, Managing Member of the
company.
SIMMONS COMPANY: Unit Confirms Effectiveness of Forbearance Pact
----------------------------------------------------------------
As previously disclosed on February 5, 2009, the ad hoc committee
of holders of Simmons Bedding Company's $200 million 7.785% senior
subordinated notes approved a forbearance agreement with the
Company, pursuant to which the members of that committee have
agreed to refrain from enforcing their respective rights and
remedies under the Notes and the related indenture for the
duration of the forbearance period, which runs through March 31,
2009. The Company and the committee have agreed not to seek
approval from any additional Note holders but instead to make the
agreement effective immediately.
The committee has the obligation under the forbearance agreement
to take any actions that are necessary to prevent an acceleration
of the Notes during the forbearance period.
Moreover, because the committee's holdings represent more than a
majority of the Notes, the committee has the power under the
indenture to rescind any acceleration of the Notes by either the
trustee or the minority holders of the Notes, allowing the
forbearance period to run through March 31, 2009, and providing
time for the Company to pursue an organized financial
restructuring.
"Our restructuring is progressing as planned and we look forward
to its completion," said Stephen G. Fendrich, Simmons Bedding's
President and Chief Operating Officer. "We thank the ad hoc
committee of the Notes for their support."
About Simmons Company
Headquartered in Atlanta, Georgia, Simmons Company --
http://www.simmons.com/-- is a mattress manufacturer and marketer
of a range of products through its indirect subsidiary Simmons
Bedding Company. Products includes Beautyrest(R), Beautyrest
Black(TM), ComforPedic by Simmons(TM), Natural Care(TM),
BackCare(R), Beautyrest Beginnings(TM) and Deep Sleep(R). Simmons
Bedding Company operates 21 conventional bedding manufacturing
facilities and two juvenile bedding manufacturing facilities
across the United States, Canada and Puerto Rico. Simmons also
serves as a key supplier of bedding to hotel groups and resort
properties.
The Troubled Company Reporter reported on January 23, 2009, that
Standard & Poor' Ratings Services said that it lowered its
corporate credit rating on Atlanta, Georgia-based Simmons Co. to
'SD' from 'CCC'. S&P also lowered the ratings on wholly-owned
subsidiary Simmons Bedding Co.'s 7.875% subordinated notes due
2014 to 'D' from 'CCC'. The recovery rating for these notes
remains '3'. In addition, S&P lowered the ratings on Simmons
Bedding's senior secured bank facility to 'CC' from 'B-', and the
recovery rating remains a '1'. Standard & Poor's also lowered the
ratings for both Simmons Co.'s unsecured notes and holding company
Simmons Holdco Inc.'s unsecured notes to 'C' from 'CC'. The
recovery ratings for these remain a '6'. S&P also removed the
ratings from CreditWatch with developing implications, where S&P
originally placed them with negative implications on Aug. 12,
2008, following the company's drawdown of its revolving credit
facility. S&P subsequently lowered the ratings to the current
levels following two separate rating actions on Oct. 22, 2008 and
Nov. 14, 2008. On the latter date, S&P revised the CreditWatch
listing to developing from negative.
As of Sept. 27, 2008, Simmons Co. had close to $1.3 billion in
total debt, including debt at Simmons Holdco.
SPANISH BROADCASTING: Moody's Cuts to 'Caa3' on Radio Revenue Drop
------------------------------------------------------------------
Moody's Investors Service downgraded the corporate family and
probability of default ratings for Spanish Broadcasting System,
Inc. to Caa3 from Caa1. The downgrades reflect Moody's concern
that continued deterioration in radio revenue will challenge the
company's ability to sustain its current capital structure,
notwithstanding cost-cutting efforts. Furthermore, perceived
erosion of asset value in the broadcast sector will likely
negatively impact lender recovery in a restructuring scenario, in
Moody's opinion. The company's short term liquidity benefits from
the cash balance and the absence of financial maintenance
covenants under its credit facility, which somewhat reduces near-
term default risk, but the revolver maturity in June 2010 poses
refinancing risk.
This action concludes the review for downgrade commenced on
October 14, 2008. The rating outlook is negative, incorporating
the lack of visibility regarding the company's plans for its still
unprofitable television initiative and the potential for an
advertising downturn lasting beyond 2009 or one deeper than
anticipated, which could result in a more rapid erosion of cash,
as well as incremental refinancing risk.
Spanish Broadcasting System, Inc.
-- Corporate Family Rating, Downgraded to Caa3 from Caa1
-- Probability of Default Rating, Downgraded to Caa3 from Caa1
-- Senior Secured Bank Credit Facility, Downgraded to Caa3,
LGD3, 49% from Caa1
-- Preferred Stock, Downgraded to C, LGD6, 99% from Caa3
-- Outlook, Changed To Negative From Rating Under Review
Moody's anticipates the company's radio revenue will continue to
deteriorate sharply throughout 2009, and that cost cutting actions
will be insufficient to reduce leverage from the 16.1 times debt-
to-EBITDA level recorded (as per Moody's standard adjustments) for
the trailing twelve months ended September 30, 2008. Further
investment in the still unprofitable start-up television business
will continue to pressure EBITDA margins and negatively impact
free cash flow, in Moody's opinion. Moody's estimates the company
will continue to consume cash for 2008 and 2009, after negative
free cash flow of approximately $26 million for the trailing
twelve months ended September 30, 2008.
Spanish Broadcasting derives the majority of its revenue from
cyclical advertising, and the Caa3 corporate family rating
reflects the resultant pressure on its cash flow from this
cyclicality amid very weak economic conditions, which, combined
with losses from its start-up television stations, have
contributed to a capital structure which Moody's considers
unsustainable over the medium-to-long run. Moody's anticipate
debt-to-EBITDA will remain in the mid- to high-teens for 2009.
The rating also incorporates secular pressure on the company's
core radio business, as well as significant revenue concentration
in the New York, Los Angeles, and Miami markets and the lack of
scale. The EBITDA margin remains well below peers and execution
risk remains high as the company strives to achieve positive
EBITDA from its TV initiative (MEGA TV), and Moody's believe
current economic conditions could delay profitability for this
venture. Spanish Broadcasting's large market presence and
favorable longer-term growth rates for the Hispanic media market
and positive Hispanic demographic trends lend support to the
revised rating.
The last rating action for Spanish Broadcasting occurred October
14, 2008, when Moody's downgraded the corporate family rating to
Caa1 from B3.
Spanish Broadcasting System, Inc., headquartered in Coconut Grove,
Florida, owns and operates 21 radio stations and two television
stations targeting the Hispanic audience. Its revenue for the
twelve months ended September 30, 2008, was approximately
$169 million.
SPANSION INC: J. Kispert Enters Into Employment Offer Letter
------------------------------------------------------------
On February 12, 2009, John H. Kispert entered into an employment
offer letter with Spansion Inc., pursuant to which he is entitled
to compensation of $75,000 per month. The Company will pay Mr.
Kispert a nonrefundable advance of four months salary. In
addition, Mr. Kispert is entitled to a bonus of $1.75 million upon
the first to occur of either of these transactions:
(i) A merger or consolidation of the Company with any other
corporation which constitutes a change in ownership of the
securities of the Company representing more than fifty
percent of the total voting power represented by the
Company's then outstanding securities, other than a merger
or consolidation which would result in holders of pre-
transaction debts of the Company generally holding at
least fifty percent of the total voting power represented
by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or
consolidation; or
(ii) The sale, lease or other disposition by the Company of all
or substantially all the Company's assets, which occurs on
the date that any one person, or more than one person
acting as a group, acquires -- or has acquired during the
12-month period ending on the date of the most recent
acquisition by such person or persons -- assets from the
Company that have a total gross fair market value equal to
or more than eighty-five percent (85%) of the total fair
market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions;
provided, however, that the payment of such bonus is subject to
certain additional conditions as set forth in the Offer Letter.
Mr. Kispert may also (i) receive comprehensive benefits and
executive perquisites, including medical, dental, life and
disability coverage; and (ii) participate in the Company's 401(k)
retirement savings plan and executive investment account plan for
deferring a certain portion of his salary, to the extent such
benefits and plans are offered to other executives and employees.
A full-text copy of the Employment Offer Letter for John H.
Kispert dated February 12, 2009, is available for free at:
http://researcharchives.com/t/s?39d0
About Spansion
Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com-- is a
Flash memory solutions provider, dedicated to enabling, storing
and protecting digital content in wireless, automotive, networking
and consumer electronics applications. Spansion, previously a
joint venture of AMD and Fujitsu, is the largest company in the
world dedicated exclusively to designing, developing,
manufacturing, marketing, selling and licensing Flash memory
solutions.
* * *
Spansion let a 30-day grace period elapse without making the
interest payment it missed in January on the $250 million 11.25%
senior notes of 2016.
The Troubled Company Reporter said February 20, 2009, that
Spansion Japan Limited, an indirect subsidiary of Spansion Inc.,
entered into a proceeding under the Corporate Reorganization Law
(Kaisha Kosei Ho) of Japan to obtain protection from Spansion
Japan's creditors while it continues restructuring efforts. The
Spansion Japan Proceeding constitutes an event of default causing
automatic acceleration of the outstanding obligations without
further action under various debt instruments of Spansion LLC and
Spansion Japan.
Spansion is in active discussions with an ad hoc committee
representing holders of its US$625 million Senior Secured Floating
Rate Notes due 2013 about restructuring the company's balance
sheet as well as potential strategic transactions.
The TCR reported on Feb. 24, 2009, that Spansion Inc. is reducing
its global work force by roughly 3,000 employees, or 35%. The
majority of the positions affected are at Spansion's global
manufacturing sites, as the company resizes the organization due
to current market conditions. This action is taken in an effort
to further reduce costs as Spansion continues its restructuring
efforts and explores various strategic alternatives.
As reported by the TCR on Jan. 19, 2009, Fitch Ratings downgraded
these ratings for Spansion Inc.:
-- Issuer Default Rating to 'C' from 'CCC';
-- US$175 million senior secured revolving credit facility
(RCF) due 2010 to 'CC/RR3' from 'CCC+/RR3';
-- US$625 million senior secured floating rating notes due 2013
to 'CC/RR3' from 'CCC+/RR3';
-- US$225 million of 11.25% senior unsecured notes due 2016 to
'C/RR6' from 'CC/RR6';
-- US$207 million of 2.25% convertible senior subordinated
debentures due 2016 to 'C/RR6' from 'CC/RR6'.
Moody's Investors Service downgraded Spansion's corporate family
rating and probability of default rating to Ca from Caa2, senior
secured floating rate notes to Caa2 from B3 and senior unsecured
notes to Ca from Caa3. Standard & Poor's Ratings Services lowered
its corporate credit rating on Spansion Inc. to 'D' from 'CCC',
and the issue-level rating on Spansion LLC's 11.25% senior
unsecured notes due 2016 to 'D' from 'CC'.
SPECIALIZED TECHNOLOGY: Moody's Affirms 'B1' Credit Ratings
-----------------------------------------------------------
Moody's Investors Service affirmed all the credit ratings of
Specialized Technology Resources, Inc. while changing the ratings
outlook to positive from stable. The positive outlook reflects
impressive organic revenue and earnings growth (considerably above
expectations) that has led to significant improvement in the
company's financial leverage and interest coverage metrics. In
the nine months ended September 30, 2008, STR's Quality Assurance
revenues grew 15% while Solar revenues more than doubled, as the
solar encapsulant business benefited from legislation and consumer
sentiment supporting the use of renewable energy products.
Nonetheless, the current difficulties in the global credit markets
could lead to cyclical softness in encapsulant volumes at the same
time the average selling price is expected to decline. Despite
these risks, STR is well-positioned in the B2 rating category and
the long-term demand drivers for the solar industry are positive.
If STR maintains revenue and liquidity near its current levels
during the macroeconomic downturn, the ratings could be upgraded.
For further information, please refer to the credit opinion
located on moodys.com.
Moody's affirmed these ratings:
-- $20 million first lien revolver due 2012, B1 (LGD3, 37%)
-- $183 million first lien term loan due 2014, B1 (LGD3, 37%)
-- $75 million second lien term loan due 2014, Caa1 (LGD5, 88%)
-- Corporate Family Rating, B2
-- Probability of Default Rating, B2
The previous rating action for STR occurred on June 11, 2007 when
Moody's changed the rating on the proposed first lien senior
secured credit facility following a modification in the capital
structure; all other credit ratings were affirmed.
Specialized Technology Resources, Inc., based in Enfield,
Connecticut, operates in two distinct businesses: (i) the
manufacturing of encapsulants for photovoltaic solar modules, and
(ii) multinational testing and quality assurance services. STR
reported revenues of approximately $266 million for the twelve
months ended September 30, 2008.
STONEBROOK ESTATES: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Stonebrook Estates 65, LLC
10721 Treena Street, Suite 200
San Diego, CA 92131
Bankruptcy Case No.: 09-01991
Type of Business: The company is a single asset real estate
debtor.
Chapter 11 Petition Date: February 20, 2009
Court: United States Bankruptcy Court
Southern District of California (San Diego)
Judge: Peter W. Bowie
Debtor's Counsel: Victor A. Vilaplana, Esq.
Foley & Lardner
402 West Broadway, Suite 2100
San Diego, CA 92101
Tel: (619) 234-6655
Fax: (619) 234-3510
Email: vavilaplana@foley.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/casb09-01991.pdf
The petition was signed by R. Geoffrey McComic, Vice President &
Secretary of the company.
STANDARD PACIFIC: Enters Into Amendments to Credit Agreements
-------------------------------------------------------------
On February 13, 2009, Standard Pacific Corp. entered into a
Seventh Amendment to Revolving Credit Agreement and Sixth
Amendment to Term Loan A Credit Agreement, by and among the
Company, Bank of America, N.A., as Administrative Agent for the
Revolving Lenders and as Administrative Agent for the Term A
Lenders, and the Revolving Lenders and the Term A Lenders
signatory thereto. The Amendment amended (i) the Revolving Credit
Agreement, dated as of August 31, 2005, among the Company, Bank of
America, as Administrative Agent, and the lenders party thereto
and (ii) the Term Loan A Credit Agreement, dated as of May 5,
2006, among the Company, Bank of America, as Administrative Agent,
and the lenders party thereto.
The Amendment enables the Company to voluntarily repurchase its 5-
1/8% Senior Notes due 2009, 6-1/2% Senior Notes due 2010 and 6-
7/8% Senior Notes due 2011 so long as:
(i) the Company has made prepayments and a corresponding
reduction of the revolving commitments under the Revolving
Credit Agreement of at least $14,629,656.90 prior to such
repurchase,
(ii) the Company has made prepayments under the Term Loan A
Credit Agreement of at least $10,370,343.10 prior to such
repurchase,
(iii) within one business day after any such repurchase of the
2009 Notes, the Company makes an aggregate prepayment
under the Revolving Credit Agreement and the Term Loan A
Credit Agreement totaling an amount equal to 125% of the
discount to par paid by the Company in the repurchase of
such 2009 Notes,
(iv) within one business day after any such repurchase of the
2010 Notes, the Company makes an aggregate prepayment
under the Revolving Credit Agreement and the Term Loan A
Credit Agreement totaling an amount equal to 50% of the
amount of such repurchase, and
(v) within one business day after any such repurchase of the
2011 Notes, the Company makes an aggregate prepayment
under the Revolving Credit Agreement and the Term Loan A
Credit Agreement totaling an amount equal to 100% of the
amount of such repurchase.
The prepayments required under clauses (iii), (iv) and (v) shall
be allocated approximately 58.52% to the Revolving Credit
Agreement and 41.48% to the Term Loan A Credit Agreement. The
$25,000,000 of prepayments required under clauses (i) and (ii), as
well as other proportional prepayments of the Revolving Credit
Agreement -- accompanied by a corresponding reduction of the
revolving commitments -- and the Term Loan A Credit Agreement made
after the effective date of the Amendment shall be credited
towards any prepayments required under clauses (iii), (iv) and
(v). Approximately $12,500,000 of the prepayments required under
clauses (i) and (ii) was paid on the effective date of the
Amendment.
The Amendment also makes certain other technical amendments to the
Revolving Credit Agreement and the Term Loan A Credit Agreement.
As a result of the Amendment and pursuant to the Term Loan B
Credit Agreement, dated as of May 5, 2006, among the Company, Bank
of America, as Administrative Agent, and the lenders party
thereto, the Term Loan B Credit Agreement has automatically been
amended to (a) allow for the voluntary repurchase of the 2009
Notes, the 2010 Notes and the 2011 Notes, provided that no Default
or Event of Default exists and $25,000,000 of prepayments under
the Revolving Credit Agreement and the Term Loan A Credit
Agreement have been made, and (b) make other technical amendments
to the covenants of the Term Loan B Credit Agreement that
correspond to such amendments to the covenants under the Revolving
Credit Agreement and the Term Loan A Credit Agreement made under
the Amendment.
A full-text copy of the Amendments is available for free at:
http://researcharchives.com/t/s?39d1
About Standard Pacific Corp.
Headquartered in Irvine, California, Standard Pacific Corp. (NYSE:
SPF) -- http://www.standardpacifichomes.com/-- operates in many
of the largest housing markets in the country with operations in
major metropolitan areas in California, Florida, Arizona, the
Carolinas, Texas, Colorado and Nevada. The company also provides
mortgage financing and title services to its homebuyers through
its subsidiaries and joint ventures, Standard Pacific Mortgage
Inc., SPH Home Mortgage and SPH Title.
* * *
As reported in the Troubled Company Reporter on Aug. 27, 2008,
Fitch Ratings affirmed and removed Standard Pacific Corp.'s
Issuer Default and outstanding debt ratings from Rating Watch
Negative as: (i) IDR at 'B-'; (ii) secured borrowings under bank
revolving credit facility at 'BB-/RR1'; (iii) unsecured borrowings
under bank revolving credit facility at 'B-/RR4'; (iv) senior
unsecured at 'B-/RR4'; and (v) senior subordinated debt at
'CCC/RR6'. Standard Pacific's outlook is stable.
STANDARD PACIFIC: Posts $396.6 Million 4th Quarter Net Loss
-----------------------------------------------------------
Standard Pacific Corp. (NYSE:SPF) released its unaudited 2008
fourth quarter operating results:
* Homebuilding cash of $626 million;
* Homebuilding debt reduction of $73.8 million during the
quarter;
* Cash flows generated from operating activities of
$65.2 million;
* Homebuilding segment pretax loss from continuing operations
of $444.2 million compared to $385.3 million last year;
* Consolidated net loss per diluted share of $1.65 vs. net
loss per diluted share of $6.10 last year;
* Consolidated net loss of $396.6 million compared to a net
loss of $440.9 million last year;
* $443.6 million of pretax charges related to inventory, joint
venture and goodwill impairments and land deposit write-offs
coupled with recording an additional $124.9 million net
deferred tax asset valuation allowance during the quarter;
and
* Net loss of approximately $148,000, or $0.00 per diluted
share, excluding aggregate charges totaling $1.65 per
diluted share** related to after-tax impairment and tax
valuation allowance charges.
Comparing with results from 2007, the Company released these
figures:
* Homebuilding revenues of $376.4 million vs. $933.6 million
last year;
* New home deliveries of 1,146*, down 47% from 2,150 last
year;
* 539* net new home orders, down 46% from 1,002 last year;
* Cancellation rate of 33%, down from 37% in the prior year
period and up from 26% for the 2008 third quarter; and
* Quarter-end backlog of 642 homes, valued at $193 million
compared to 1,279 homes valued at $443 million a year ago.
The net loss for the quarter ended December 31, 2008 was
$396.6 million, or $1.65 per diluted share, compared to a net loss
of $440.9 million, or $6.10 per diluted share, in the year earlier
period. Homebuilding revenues from continuing operations for the
2008 fourth quarter were $376.4 million versus
$933.6 million last year. The Company's results for the 2008
fourth quarter included pretax impairment charges of
$443.6 million. The impairment charges consisted of:
$350.3 million related to ongoing consolidated real estate
inventories; $26.6 million related to land sold or held for sale;
$22.7 million related to the Company's share of joint venture
impairment charges; $8.5 million related to land deposit and
capitalized pre-acquisition cost write-offs for abandoned
projects; and $35.5 million related to goodwill impairment charges
leaving no goodwill remaining on the Company's balance sheet. In
addition, the 2008 fourth quarter operating results also included
a non-cash charge related to a net increase in the Company's
deferred tax asset valuation allowance of
$124.9 million, or $0.52 per diluted share. Excluding these
charges, the Company generated a loss of approximately $148,000,
or $0.00 per diluted share.
Ken Campbell, CEO of Standard Pacific Corp. said, "The well
publicized economic and housing downturn has had a profound impact
on the Company's operating results. We saw our sales absorption
rates, our cancellation rate and general traffic levels
deteriorate beyond normal seasonal changes in the fourth quarter.
These trends, combined with an expectation of further new home
price declines, led to the high level of impairments during the
quarter."
"On a positive note," Mr. Campbell continued, "We generated
$65 million in cash from operating activities, reduced our
homebuilding debt by nearly $74 million, net of $74 million of
joint venture and other debt assumed during the fourth quarter,
and ended the year with $626 million of cash on our balance sheet.
In addition, the Company continued to make aggressive reductions
in its headcount and overhead to better align its cost structure
with the realities of today's housing market. And while we have
made much progress to date in this area, we are vigorously
pursuing additional cost cutting initiatives based on our
expectation that 2009 will be an extremely challenging year for
our Company and the industry."
Mr. Campbell concluded, "With our year end cash balance of over
$600 million, an expected tax refund of over $110 million in early
2009 and our cost reductions to date and in process, we believe we
have a strong liquidity position."
Cash Generation and Debt Reduction Results
Standard Pacific ended the year with more than $626 million of
homebuilding cash while repaying the remaining $103.5 million of
its 6 «% senior notes due October 1, 2008, reducing the balance
outstanding under the Company's revolving credit facility during
the 2008 fourth quarter by $5 million to $47.5 million, and paying
down its Term Loan A by $5 million to $57.5 million. As a result
of Standard Pacific's net operating loss carrybacks for federal
income taxes, the Company expects to receive a tax refund of
approximately $114 million during the 2009 first quarter.
Inventory Reduction
As a result of the continued focus on inventory reduction
initiatives, Standard Pacific's owned or controlled lot position
stood at approximately 24,000 lots (including discontinued
operations) at December 31, 2008, a 31% reduction from the year
ago level and a 68% decrease from the peak lot count at
December 31, 2005.
Joint Venture Update
The Company unwound two Southern California joint ventures during
the 2008 fourth quarter resulting in the assumption of
approximately $67.6 million of joint venture debt. The Company
also made an $8.7 million loan remargin payment related to one of
these Southern California joint ventures during the 2008 fourth
quarter prior to the unwind. The Company's unconsolidated joint
ventures reduced their borrowings by approximately $90 million
during the 2008 fourth quarter and by $349 million since the end
of 2007. As of December 31, 2008, the Company's unconsolidated
joint ventures had borrowings outstanding of approximately
$422 million, of which $248 million was non-recourse debt (two
joint ventures) and $174 million of which was subject to loan-to-
value maintenance agreements (seven joint ventures) which the
Company was either solely or jointly and severally liable. The
Company continues to evaluate its homebuilding joint ventures and
may exit additional joint ventures in the future, which may be
accomplished by acquiring its partner's interest, disposing of its
interest or other means.
Debt Compliance Update
The bank credit facilities contain a liquidity test requiring the
Company to maintain either a minimum ratio of cash flow from
operations (excluding cash flows from certain excluded
subsidiaries) to consolidated home building interest incurred or a
minimum liquidity reserve. Since we were unable to meet the
minimum cash flow coverage ratio at December 31, 2008, we will set
aside approximately $120 million in an interest reserve account.
The cash flow coverage ratio was adversely impacted over the past
four quarters by the number and magnitude of joint venture
unwinds. In addition, in the near term, the Company expects its
interest expense will generally decrease as it continues to reduce
its debt levels.
In addition, based on the Company's leverage at December 31, 2008,
pursuant to its public notes, the Company will be limited in its
ability to incur additional indebtedness subject to carve outs for
additional borrowings of up to $550 million under bank facilities
and an unlimited amount for purchase money non-recourse
indebtedness. In addition, the Company will be prohibited from
making restricted payments from funds other than those residing in
unrestricted subsidiaries. As of December 31, 2008, the Company
had in excess of $500 million of liquidity in those unrestricted
subsidiaries to cover its joint venture capital and other
restricted payment needs.
Restructuring Charges
The Company's 2008 fourth quarter results included approximately
$16.4 million in restructuring charges related to division
consolidations and related headcount and facilities reductions, of
which approximately $13.8 million was included in the Company's
selling, general and administrative (SG&A) expenses, $1.2 million
in cost of sales and $1.4 million in other expense. The charges
were incurred in an effort to better align the Company's
operations and costs with the lower delivery volume levels as a
result of weaker economic and housing conditions. The Company's
2008 fourth quarter SG&A rate would have been 14.9%** excluding
these restructuring charges. In addition, the Company incurred
$3.0 million of G&A related costs in connection with the potential
TOUSA acquisition. Excluding these costs and the restructuring
related costs the Company's SG&A rate would have been 14.2%**.
The Company generated a homebuilding pretax loss from continuing
operations for the 2008 fourth quarter of $444.2 million compared
to a pretax loss of $385.3 million in the year earlier period.
The increase in pretax loss was primarily the result of a
$50.7 million, or 13%, increase in impairment charges, a 60%
decrease in homebuilding revenues to $376.4 million, and an
increase in interest expense of approximately $10.3 million.
These changes were partially offset by a $39.2 million decrease in
the Company's absolute level of SG&A expenses, which included
approximately $13.8 million in restructuring charges related to
division closures and consolidations, and a $49.6 million decrease
in joint venture loss (to a loss of $21.4 million). The Company's
homebuilding operations for the 2008 fourth quarter included
$443.6 million of pretax impairment charges. The inventory
impairment charges were included in cost of sales, the joint
venture charges were included in income (loss) from unconsolidated
joint ventures and the land deposit and capitalized preacquisition
cost write-offs and goodwill impairment charges were included in
other income (expense).
Homebuilding Gross Margin Percentage
The Company's 2008 fourth quarter homebuilding gross margin
percentage from continuing operations (including land sales) was
down year-over-year to a negative 78.2% from a negative 17.0% in
the prior year period. The 2008 fourth quarter gross margin
reflected a $376.9 million pretax inventory impairment charge
related to 97 projects, of which $350.3 million related to current
and future projects and $26.6 million related to land or lots that
are intended to be sold. These impairments related primarily to
projects located in California, Nevada and Florida, and to a
lesser degree, in Arizona, Colorado, the Carolinas and Texas.
Excluding the housing inventory impairment charges from continuing
operations, the Company's 2008 fourth quarter gross margin
percentage from home sales would have been 21.9% versus 14.1% in
2007.** The 780 basis point increase in the year-over-year as
adjusted gross margin percentage was driven primarily by the close
out of certain projects in California and the resulting decrease
in cost of sales and a $9.4 million reduction in the Company's
warranty accrual due to a decrease in warranty expenditure trends.
The impact of these adjustments on the Company's gross margin
percentage was magnified by the 54% decrease in home sale revenues
from the prior year period. Until market conditions stabilize,
the Company may continue to incur additional inventory impairment
charges.
Income Taxes
As a result of the continued downturn in the housing market and
the uncertainty as to its magnitude and length, the Company
recorded a non-cash valuation allowance of $124.9 million, net of
the reversal of a portion of the deferred tax asset valuation
allowance discussed below, during the three months ended
December 31, 2008 against the Company's net deferred tax assets in
accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," resulting in a total valuation
allowance of $654.1 million at December 31, 2008. To the extent
that the Company generates eligible taxable income in the future
to utilize the tax benefits of the related deferred tax assets, it
will be able to reduce its effective tax rate by reducing the
valuation allowance.
As a result of the closing of the first phase of the
MatlinPatterson transaction, the Company believes that an
ownership change under Internal Revenue Code Section 382 occurred
during the 2008 second quarter. Accordingly, the Company may be
limited to its use of certain tax attributes that relate to tax
periods prior to the ownership change, however, after further
review the Company believes it has generated sufficient net
operating losses that are not subject to the Section 382
limitation such that its 2008 NOL carryback will not be limited.
As such, the Company recognized an income tax benefit during the
three months ended December 31, 2008 by reversing $47.5 million of
its previously recorded deferred tax valuation allowance.
About Standard Pacific Corp.
Headquartered in Irvine, California, Standard Pacific Corp. (NYSE:
SPF) -- http://www.standardpacifichomes.com/-- operates in many
of the largest housing markets in the country with operations in
major metropolitan areas in California, Florida, Arizona, the
Carolinas, Texas, Colorado and Nevada. The company also provides
mortgage financing and title services to its homebuyers through
its subsidiaries and joint ventures, Standard Pacific Mortgage
Inc., SPH Home Mortgage and SPH Title.
* * *
As reported in the Troubled Company Reporter on Aug. 27, 2008,
Fitch Ratings affirmed and removed Standard Pacific Corp.'s
Issuer Default and outstanding debt ratings from Rating Watch
Negative as: (i) IDR at 'B-'; (ii) secured borrowings under bank
revolving credit facility at 'BB-/RR1'; (iii) unsecured borrowings
under bank revolving credit facility at 'B-/RR4'; (iv) senior
unsecured at 'B-/RR4'; and (v) senior subordinated debt at
'CCC/RR6'. Standard Pacific's outlook is stable.
STANFORD INT'L BANK: Linked to Unfinished Florida Resort Project
----------------------------------------------------------------
A resort project called Tierra Del Sol in Orlando, Fla., being
built by a developer backed by Robert Allen Stanford, is facing at
least 10 lawsuits filed in U.S. federal or state courts by
investors who paid deposits for their unfinished homes,
Cassell Bryan-Low at The Wall Street Journal reports.
The Journal says many of the suits were filed by British or Irish
residents, to whom the properties were heavily marketed.
As reported in the Troubled Company Reporter-Latin America, the
U.S. Securities and Exchange Commission, on Feb. 17, charged Mr.
Stanford and three of his companies for orchestrating a
fraudulent, multi-billion dollar investment scheme centering on an
US$8 billion Certificate of Deposit program.
American Leisure Group Ltd., the company developing the Florida
resort, last year received a US$17.5 million loan from one of Mr.
Stanford's companies, Stanford International Bank Ltd ("SIBL"),
after saying in public statements it was struggling with a lack of
financing, the Journal relates.
The Journal discloses despite the lifeline, the developer
continued to face difficulties, and its shares were delisted last
month.
According to the Journal, based on the developer's company
filings, the 48-hectare vacation-home resort project described
plans for 972 luxury houses and condominiums complete with a water
park and wave pool, restaurants, spa and a clubhouse "with
romantic porticos and rich d‚cor."
The developer, incorporated in the British Virgin Islands, was
formed by a merger between American Leisure Holdings and another
property company, the Journal says.
SIBL was a significant shareholder and creditor to American
Leisure Holdings, the Journal notes citing filings by American
Leisure Group.
Stanford Financial Group, also controlled by Mr. Stanford, served
as an investment banker to American Leisure Group, the Journal
adds.
About SIBL
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under management
or advisement. Stanford Private Wealth Management serves more
than 70,000 clients in 140 countries.
STANFORD INT'L BANK: Biden-Run Fund Ends Relationship With SFG
--------------------------------------------------------------
The Wall Street Journal reports a fund of hedge funds run by two
members of Vice President Joe Biden's family terminated its
relationship with Robert Allen Stanford's companies following
fraud charges filed against them.
According to the Journal, the US$50 million fund was jointly
branded between the Bidens' Paradigm Global Advisors LLC and a
Stanford Financial Group ("SFG") entity and was known as the
Paradigm Stanford Capital Management Core Alternative Fund.
As reported in the Troubled Company Reporter-Latin America, the
U.S. Securities and Exchange Commission, on Feb. 17, charged Mr.
Stanford and three of his companies for orchestrating a
fraudulent, multi-billion dollar investment scheme centering on an
US$8 billion Certificate of Deposit program.
The SEC also charged Stanford International Bank Ltd chief
financial officer James Davis as well as Laura Pendergest- Holt,
chief investment officer of SFG in the enforcement action.
The Journal discloses Paradigm Global Advisors is owned through a
holding company by the vice president's son, Hunter, and Joe
Biden's brother, James.
Stanford-related companies marketed the fund to investors and also
invested about US$2.7 million of their own money in the fund, the
Journal states citing a lawyer for Paradigm. SEC records obtained
by the Journal show the fund, which was launched in June 2007, had
104 investors as of Nov. 10, 2008, with assets of US$49.8 million.
Paradigm's attorney, Marc X. LoPresti, as cited by the Journal,
said the fund offered to turn over the US$2.7 million investment
it received from Mr. Stanford's firm in 2007 to a court-appointed
receiver.
About SIBL
Domiciled in Antigua, Stanford International Bank Limited --
http://www.stanfordinternationalbank.com/-- is a member of
Stanford Private Wealth Management, a global financial services
network with US$51 billion in deposits and assets under management
or advisement. Stanford Private Wealth Management serves more
than 70,000 clients in 140 countries.
SUNCOAST SPINAL: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: Suncoast Spinal Centers I, Inc.
24945 U.S. Highway 19 North
Clearwater, FL 33763
Bankruptcy Case No.: 09-03059
Type of Business: The Debtor is in the health care industry.
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Judge: K. Rodney May
Debtor's Counsel: Marshall G. Reissman, Esq.
Law Offices of Marshall G. Reissman
5150 Central Ave.
St. Petersburg, FL 33707
Tel: (727) 322-1999
Fax: (727) 327-7999
marshall@reissmanlaw.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/flmb09-03059.pdf
The petition was signed by Brian Wolstein, President of the
company.
TARRAGON CORP: Sells Remaining 71 Condo Units for $18.1-Mil.
------------------------------------------------------------
Tarragon Corp. received no higher bids and was authorized by the
U.S. Bankruptcy Court for the District of New Jersey to sell the
remaining 71 units in a 140-unit condominium project in Palisades
Park, New Jersey, for $18.1 million, Bloomberg's Bill Rochelle
said.
The project was under foreclosure by the holder of a $16 million
mortgage. The hearing for approval of $6.25 million in secured
financing from an affiliate of Arko Holdings Inc. from Israel was
pushed back to March 5, Mr. Rochelle added, citing the court
docket.
New York-based Tarragon Corporation (NasdaqGS:TARR) --
http://www.tarragoncorp.com/-- is a leading developer of
multifamily housing for rent and for sale. Tarragon's operations
are concentrated in the Northeast, Florida, Texas, and Tennessee.
Tarragon and its affiliates filed for Chapter 11 protection on
January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon.
Donald H. Steckroth presides over the case.
Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R.
Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represent the Debtors as bankruptcy counsel. Daniel A. Lowenthal,
Esq., at Patterson Belknap Webb & Tyler, LLP, is the proposed
counsel to the Official Committee of Unsecured Creditors.
Kurztman Carson Consultants LLC serves as notice and claims agent.
As of September 30, 2008, the Debtors had $840,688,000 in total
assets and $1,035,582,000 in total debts.
TARRAGON CORP: Can Hire C&W as Exclusive Real Estate Broker
-----------------------------------------------------------
Tarragon Corporation and its debtor-affiliates obtained authority
from the U.S. Bankruptcy Court for the District of New Jersey to
employ Cushman & Wakefield, Inc. as exclusive real estate broker.
The Debtors' occupies the entire 12th floor at 423 West 55th
Street, New York, New York as their corporate headquarters. The
Debtors agreed to lease the premises from West 55th Street
Building LLC until March 31, 2018.
C&W is expected to market for sublease or assignment its
commercial office space in New York City.
Mark Mandell, executive director of Cushman & Wakefield, Inc.,
told the Court that C&W will be paid a commission as:
a) 1 full commission computed and payable on an aggregate
rental basis for the remaining unexpired term should C&W be
the procuring broker; or
b) 1-1/2 full commission computed and payable on an aggregate
rental basis for the remaining unexpired term if a licensed
real estate broker other than C&W be the procuring broker.
i) on the 1st year or any fraction thereof 5%
ii) on the 2nd year or any fraction thereof 4%
iii) on the 3rd year up to and including 5th year 3-1/2%
iv) on the 6th year up to and including 10th year 2-1/2%
v) on the 11th year up to and including 21st year 2%
vi) on the 22nd year and thereafter 1%
The listing contract provided that C&W's commission is payable
upon the date of execution and delivery of the sublease by and
between the sublandlord and the subtenant, or upon the date of the
delivery of the fully executed assignment, surrender,
cancellation, or sale of lease agreement.
Mr. Mandell assured the Court that C&W is a "disinterested person"
as that term is defined in Section 101(14) of Bankruptcy Code.
About Tarragon Corporation
Based in New York City, Tarragon Corporation (NasdaqGS:TARR) --
http://www.tarragoncorp.com/-- is a leading developer of
multifamily housing for rent and for sale. Tarragon's operations
are concentrated in the Northeast, Florida, Texas, and Tennessee.
Tarragon and its affiliates filed for Chapter 11 protection on
January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon.
Donald H. Steckroth presides over the case.
Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R.
Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represent the Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent. As of
Sept. 30, 2008, the Debtors had $840,688,000 in total assets
and $1,035,582,000 in total debts.
TARRAGON CORP: Court Approves Cole Schotz as Bankruptcy Counsel
---------------------------------------------------------------
Tarragon Corporation and its debtor-affiliates obtained authority
from the U.S. Bankruptcy Court for the District of New Jersey to
employ Cole, Schotz, Meisel, Forman & Leonard, P.A., as their
bankruptcy counsel:
Cole Schotz is expected to:
(a) advise the Debtors of their rights, powers and duties as
debtors-in-possession in continuing to operate and manage
their businesses and assets;
(b) prepare theadministrative and procedural applications
and motions as may be required for the sound conduct of
the cases, including, but not limited to, the Debtors'
schedules and statement of financial affairs;
(c) review and object to claims;
(d) advise the Debtors concerning, and assisting in the
negotiation and documentation of, debtor-in-possession
financing, debt restructuring and related transactions;
(e) review the nature and validity of agreements relating to
the Debtors' businesses and properties and advise the
Debtors in connection therewith;
(f) review the nature and validity of liens asserted against
the Debtors and advise as to the enforceability of the
liens;
(g) advise the Debtors concerning the actions they might take
to collect and recover property for the benefit of their
estates;
(h) prepare on the Debtors' behalf all necessary and
appropriate applications, motions, pleadings, orders,
notices, petitions, schedules, and other documents, and
review all financial and other reports to be filed in
the Debtors' Chapter 11 cases;
(i) advise the Debtors concerning, and preparing responses
to, applications, motions, pleadings, notices and other
papers which may be filed in the Debtors' Chapter 11
cases;
(j) counsel the Debtors in connection with the formulation,
negotiation and promulgation of a plan of reorganization
and related documents;
(k) represent the Debtors in their appeal to the Bergen
County Board of Taxation of added and omitted assessments
for the 2007 tax year imposed on roughly 100 to 150 units
in One Hudson Park, a condominium located in Edgewater,
New Jersey, for the period of time that one of the
Debtors, Tarragon Edgewater Associates, LLC, owned those
units; and
(l) perform all other legal services for and on behalf of the
Debtors which may be necessary or appropriate in the
administration of their Chapter 11 cases and fulfillment
of their duties as debtors-in-possession.
Michael D. Sirota, Esq., co-managing shareholder of the firm and
co-chair of the firm's Bankruptcy & Corporate Restructuring
Department, told the Court that Cole Schotz' professionals' hourly
rates are:
Members $350 - $675
Associates $240 - $385
Paralegals $135 - $220
During the 90-day period before the Petition Date, Cole Schotz
received $1,355,287 from the Debtors for contemporaneous services
rendered and disbursements and other charges incurred, all in
accordance with the terms and conditions of the Debtors' pre-
petition engagement agreement with the Firm. As a result of those
payments, Cole Schotz does not hold any claim against the Debtors
for pre-petition services rendered.
Before the Petition Date, the Debtors provided Cole Schotz with a
$448,901.19 retainer.
Mr. Sirota assured the Court that Cole Schotz is a "disinterested
person" as that term is defined in Section 101 (14) of the
Bankruptcy Code.
Mr. Sirota can be reached at:
Cole, Schotz, Meisel, Forman & Leonard, P.A.,
Court Plaza North, 25 Main Street
Hackensack, NJ 07601
Tel: 201-489-3000
Fax: 201-489-1536
About Tarragon Corporation
Based in New York City, Tarragon Corporation (NasdaqGS:TARR) --
http://www.tarragoncorp.com/-- is a leading developer of
multifamily housing for rent and for sale. Tarragon's operations
are concentrated in the Northeast, Florida, Texas, and Tennessee.
Tarragon and its affiliates filed for Chapter 11 protection on
January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon.
Donald H. Steckroth presides over the case.
Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R.
Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represent the Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent. As of
Sept. 30, 2008, the Debtors had $840,688,000 in total assets
and $1,035,582,000 in total debts.
TARRAGON CORPORATION: Can Hire BDO Seidman as Financial Advisors
----------------------------------------------------------------
Tarragon Corporation and its debtor-affiliates obtained final
approval from the U.S. Bankruptcy Court for the District of New
Jersey to employ BDO Seidman LLP as financial advisors.
BDO Seidman is expected to:
a) develop, in conjunction with the Debtors' financial
department, a 13-week cash flow forecast and assisting in
the monitoring of a weekly budget to actual comparison;
b) develop a revised business plan reflecting changed business
and operating conditions, if any, resulting from a Chapter
11 filing, including asset sales, occupancy statistics,
rental rates, etc. on a project-by-project basis;
c) assist the Debtors with all operational, strategic,
financial and other issues during the Chapter 11
proceedings including, but not limited to, the preparation
of schedules, statements of financial affairs and monthly
operating reports, and assist in the development of a
plan of reorganization, including, if required, negotiation
with other parties, testimony and preparation of a
comprehensive liquidation analysis;
d) evaluate the potential sales of assets and/or lines of
business;
e) assist the Debtors in addressing issues with their lenders,
creditors and other stakeholders for the purpose of
maintaining their support and developing a plan of
reorganization;
f) analyze and reconcile creditors' claims;
g) provide valuation services if requested;
h) evaluate the tax implications of possible plans of
reorganization, related debt modifications and other tax
issues that might arise during these cases; and
i) provide such other services as may be requested by the
Debtors in the administration of their bankruptcy cases and
fulfillment of their duties as debtors-in-possession.
William K. Lenhart, Esq., a partner at BDO Seidman, told the Court
that the firm's professionals' hourly rates are:
Partners/Managing Directors $500 - $800
Directors/Senior Managers $300 - $600
Managers $250 - $375
Seniors $175 - $275
Staff $125 - $200
Mr. Lenhart added that during the 90-day period before the Filing
Date, BDO received the approximate sum of $409,243 from the
Debtors for contemporaneous services rendered and disbursements
and other charges incurred, all in accordance with the terms and
conditions of the Debtors' pre-petition engagement letter with
BDO. As a result of those payments, BDO does not hold any claim
against the Debtors for pre-petition services rendered.
Before the Filing Date, the Debtors provided BDO with a retainer
of $135,513.
Mr. Lenhart assured the Court that BDO Seidman is a "disinterested
person" as that term is defined in Section 101(14) of Bankruptcy
Code.
About Tarragon Corporation
Based in New York City, Tarragon Corporation (NasdaqGS:TARR) --
http://www.tarragoncorp.com/-- is a leading developer of
multifamily housing for rent and for sale. Tarragon's operations
are concentrated in the Northeast, Florida, Texas, and Tennessee.
Tarragon and its affiliates filed for Chapter 11 protection on
January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon.
Donald H. Steckroth presides over the case.
Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R.
Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represent the Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent. As of
Sept. 30, 2008, the Debtors had $840,688,000 in total assets
and $1,035,582,000 in total debts.
TARRAGON CORPORATION: Court Approves Jones Day as Special Counsel
-----------------------------------------------------------------
Tarragon Corporation and its debtor-affiliates obtained authority
from the U.S. Bankruptcy Court for the District of New Jersey to
employ Jones Day as special corporate, securities and
transactional counsel.
Before the Petition Date, Jones Day actively represented Tarragon
on various types of corporate, securities and transactional
matters including, but not limited to, capital raising activities;
disclosure and other issues arising under federal securities laws;
acquisitions; dispositions; joint ventures; and corporate
governance and other general corporate advice, including certain
contingency planning activities. Over the course of its
representation, Jones Day has become familiar with Tarragon's
complex corporate structure, legal positions and business
operations.
The Debtors anticipate that they will require the continued
services of Jones Day.
The Firm's hourly rates are:
-- Partners
James E. O'Bannon $700
Edward B. Winslow $600
Stephen E. Hall $625
-- Associates
Joey T. May $475
Jacob C. Tiedt $400
Edward B. Winslow, Esq., a partner at Jones Day, attested that
Jones Day does not hold or represent any interest adverse to the
Debtors, their creditors or any other parties in interest herein
with respect to the matters on which Jones Day is to be employed.
During the 90-day period before the Petition Date, Jones Day
received $491,855.17 from the Debtors for services rendered and
disbursements and other charges incurred. Jones Day does not have
a claim against the Debtors as of the Petition Date. The Debtors
have not provided Jones Day with any retainer in connection with
their representation of the Debtors during these Chapter 11 cases.
Mr. Winslow can be reached at:
Jones Day
77 West Wacker
Chicago, Illinois 60601-1692
Tel: 1-312-782-3939
Fax: 1-312-782-8585
About Tarragon Corporation
Based in New York City, Tarragon Corporation (NasdaqGS:TARR) --
http://www.tarragoncorp.com/-- is a leading developer of
multifamily housing for rent and for sale. Tarragon's operations
are concentrated in the Northeast, Florida, Texas, and Tennessee.
Tarragon and its affiliates filed for Chapter 11 protection on
January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon.
Donald H. Steckroth presides over the case.
Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R.
Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A.,
represent the Debtor as bankruptcy counsel. Kurztman Carson
Consultants LLC serves as notice and claims agent. As of
Sept. 30, 2008, the Debtors had $840,688,000 in total assets
and $1,035,582,000 in total debts.
TROPICANA INN: Marshall Investments Asks Court to Terminate Stay
----------------------------------------------------------------
Marshall Investments Corporation, a secured creditor of Tropicana
Inn Investors, LLC, asks the U.S. Bankruptcy Court for the
District of Nevada to terminate the stay for the Debtor's primary
asset consisting of The Onyx Condominiums, a 63 unit luxury
condominium complex on a 1.98 parcel located at 5150 Duke
Ellington Way in Las Vegas, Nevada. In the alternative, Marshall
Investments asks the Court to convert the Debtor's bankrupty case,
on the basis that the Debtor's bankruptcy serves no legitimate
purpose.
Marshall Investments tells the Court that as of Feb. 11, 2009, it
is owed in excess of $37 million by the Debtor. Marshall
Investments says the proposals made to it by the Debtor and the
contractor, Summit Builders of Nevada fall far short of paying the
Marshall indebtedness and provide for no distribution to any other
creditors, or parties-in-interest, including unsecured creditors.
In addition, Marshall Investments discloses that the Debtor's
postpetition financier, Equity Capital Partners, has ceased all
involvement in the Debtors's bankruptcy. The Debtor, according to
Marshall Investments, has been unable to secure other financing to
fund its plan of reorganization.
Marxhall Investments presents these grounds in support of its
request for termination of the stay:
-- the Debtor has not made any adequate protection payments to
it;
-- the Debtor has no equity in the Property and therefore no
chance for reorganization; and
-- the property is a singe real estate and reorganization is
not likely within a reasonable time because of the Debtor's
recent withdrawal of its disclosure statement and proposed
plan.
About Tropicana Inn Investors
Las Vegas, Nevada-based Tropicana Inn Investors, LLC is the
developer of Onyx, a 63-unit luxury condominium project in Las
Vegas, Nevada. The $28 million mid-rise project was announced in
2005 as an affordable alternative to the high rises that were
being constructed near the Strip. Units at Onyx ranged from 740
square feet to 2,300 square feet and were priced from $400,000 to
more than $900,000.
On Aug. 4, 2008, seven (7) creditors filed an involuntary petition
for Chapter 11 relief against the Debtor (Bankr. D. Nev. Case No.
08-18719). David E. Doxey, Esq., and David J. Winterton, Esq., at
David J. Winterton & Assoc., Ltd. represent the Debtor as counsel.
UPTOWN PARTNERS: Case Summary & Three Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Uptown Partners, LLC
44 West 106th Street, PH
New York, NY 10025
Bankruptcy Case No.: 09-10845
Type of Business: The Debtor operates a residential construction
company.
Chapter 11 Petition Date: February 24, 2009
Court: Southern District of New York (Manhattan)
Judge: Robert D. Drain
Debtor's Counsel: Arnold Mitchell Greene, Esq.
amg@robinsonbrog.com
Robinson Brog Leinwand Greene
Genovese & Gluck, P.C.
1345 Avenue of the Americas, 31st Floor
New York, NY 10105
Tel: (212) 586-4050
Fax: (212) 956-2164
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
------ --------------- ------------
Jay Furman $860,224
C/o RD Management LLC
810 Seventh Avenue
New York, NY 10019
Capital One Bank $152,000
PO Box 152405
Irving. TX 75015ú2405
Commerce Bank, as assignee $5,200
for fischbein badillo
C/o Platzer Swergold
1065 Ave. of the Americas
New York, NY 10018
The petition was signed by Starla Caldwell, vice president.
VELOCITY EXPRESS: Posts $9.6MM Net Loss for Qtr. Ended Dec. 28
--------------------------------------------------------------
Velocity Express Corporation reported in its Form 10-Q filed with
the Securities and Exchange Commission that revenue for the
quarter ended December 27, 2008, decreased $20.4 million or 23.6%
to $65.7 million from $86.1 million for the quarter ended
December 29, 2007. "The decrease in revenue was the result of our
planned exit from uneconomic customer contracts acquired with the
CD&L merger ($10.4 million), other customer service stops ($7.5
million) the continued migration of banking customers to the Check
21 scanning technology ($2.3 million), volume declines with
continuing customers related to the slowing U.S. economy ($8.5
million), and the loss of a significant bank customer in the
second quarter of 2008 ($0.8 million). These negative changes
were partly offset by new revenue from customer start-ups of $8.7
million and $0.6 million of volume growth by other continuing
customers that are less affected by the slowing U.S. economy,"
Chief Executive Officer Vincent A. Wasik and Chief Financial
Officer Edward W. Stone disclosed.
"Cost of services for the quarter ended December 27, 2008 was
$47.3 million, a decrease of $18.2 million or 27.8% from
$65.5 million for the quarter ended December 29, 2007. The
decrease in volume accounted for a decrease of $13.2 million in
driver pay and purchased transportation and $0.2 million in
vehicle expense. Correcting a number of specific, predominantly
legacy CD&L routes, where our average driver settlement exceeded
competitive market norms for the work performed accounted for $2.9
million. Direct labor declined by $0.7 million, but increased as
a percentage of revenue from 7.0% of revenue to 8.1% of revenue as
the revenue mix shifted to more deliveries requiring sorting in
our warehouses. Insurance expense declined $0.9 million primarily
related to the decrease in claims experience and estimated
development reserves related to reserves for workers' compensation
and auto liability; and cargo claims declined $0.6 million,
partially due to improved reimbursements from responsible drivers.
Offsetting these improvements was increased purchased
transportation as a percentage of revenue of $0.2 million due to
the revenue mix shift toward retail replenishment, and
depreciation of $0.2 million on the V-Trac 5.0 scanners acquired
and deployed to the field, and the related capitalized software
development. As a result, gross margin increased from 23.6% in
the prior year quarter to 27.4% for the quarter ended December 27,
2008."
"Occupancy expense for the quarter ended December 27, 2008, was
$3.8 million, a decrease of $0.6 million from the quarter ended
December 29, 2007, primarily reflecting a $0.4 million recovery
from New York City related to the condemnation of one of our
leased facilities."
"Selling, general and administrative expenses for the quarter
ended December 27, 2008, were $13.4 million or 20.4% of revenue, a
decrease of $4.6 million or 25.7% as compared with
$18.1 million or 21.0% of revenue for the quarter ended
December 29, 2007. The decrease in SG&A for the quarter resulted
primarily from a reduction in compensation, benefits, and travel
expenses resulting from the two restructuring actions implemented
during 2008 in response to the previously announced loss of the
Company's largest financial services customer and continued
customer attrition ($3.3 million), a favorable settlement and
reduction of the corresponding reserve of approximately
$0.4 million, a decline in communication costs of approximately
$0.3 million and a decrease in supplies of $0.2 million."
"Restructuring charges for the quarter ended December 27, 2008,
were $0.1 million, a decrease of $0.1 million as compared to
$0.2 million for the quarter ended December 29, 2007. The
decrease is comprised of revising the Company's estimates of
previously recoded lease termination costs associated with prior
period restructurings to a lesser degree in the current quarter as
compared to the comparable quarter in the prior year."
"Depreciation and amortization for the quarter ended December 27,
2008 was $0.8 million or 1.2% of revenue, a decrease of
$0.7 million or 48.8% as compared with $1.5 million or 1.7% of
revenue for the quarter ended December 29, 2007, of which
$0.5 million pertains to a decrease in depreciation as equipment
becoming fully depreciated exceeded depreciation on newly acquired
fixed assets, and $0.2 million pertains to a decrease in
amortization expense, as the non-compete intangible assets became
fully amortized."
"Net interest expense for the quarter ended December 27, 2008,
increased $4.6 million to $9.6 million from $4.9 million for the
quarter ended December 29, 2007 resulting from a 6% higher
interest rate on the Modified Senior Notes, an additional
$7.8 million face value of Modified Senior Notes issued as
consideration for the modification to the indenture governing the
Original Senior Notes in May 2008 earning 18% interest, and an
additional $5.3 million face value of Modified Senior Notes issued
as settlement in-kind of interest accrued on the Senior Notes also
earning 18% interest."
"As a result, the Company had a net loss of $9.6 million for the
quarter ended December 28, 2008, compared to a net loss of
$8.9 million in the quarter ended December 29, 2007."
As of December 27, 2008, the company's balance sheet showed total
assets of $92,779,000 and total liabilities of $115,907,000,
resulting in total shareholders' deficit of $23,128,000. For the
three months ended Dec. 27, 2008, the company posted a net loss of
$9,597,000.
A full-text copy of the Company's quarterly report is available
for free at: http://researcharchives.com/t/s?39da
About Velocity Express
Headquartered in Westport, Connecticut, Velocity Express
Corporation (NASDAQ:VEXP) -- http://www.velocityexp.com/--
together with its subsidiaries, is engaged in the business of
providing time definite ground package delivery services. The
company operates in the United States with limited operations in
Canada. Its customers comprised of multi-location, blue chip
customers with operations in the healthcare, commercial and office
products, financial, transportation and logistics, technology and
energy sectors.
* * *
As reported in the Troubled Company Reporter on December 5, 2008,
Ted Stone, Velocity's Chief Financial Officer stated in a
regulatory filing with the Securities and Exchange Commission,
that the company reported significant recurring losses from
operations over the past several years including in 2008 a loss of
approximately $56.1 million, which includes a goodwill impairment
charge of $46.7 million and a $13.9 million non-cash gain on the
extinguishment of debt. "The company also used cash in operating
activities over the past several years, including $11.3 million in
2008. However, for the three months ended
Sept. 27, 2008, the company generated $600,000 in cash from
operating activities.
VELOCITY EXPRESS: Receives Notice of Compliance From NASDAQ
-----------------------------------------------------------
On February 13, 2009, Velocity Express Corporation (NASDAQ: VEXP),
the nation's largest provider of time definite regional delivery
solutions, received a letter of determination from NASDAQ's
Listing Qualifications Department that the Company had regained
compliance with NASDAQ's voting rights rule, as provided under
Marketplace Rules 4351.
On September 15, 2008, NASDAQ notified the Company that it was not
in compliance with NASDAQ's voting rights rule due to the
appointment of two representatives to the Company's Board of
Directors by senior lenders to the Company. On October 10, 2008,
the two lender representatives resigned from the Board and the
Company thereafter confirmed that it would take no further action
regarding the lenders' director representation rights.
Accordingly, NASDAQ advised the Company in its February 13, 2009
letter that the Company had regained compliance with Rule 4351 and
that the matter is now closed.
The Troubled Company Reporter reported on Feb. 11, 2009, that
Velocity Express Corporation received on February 4, 2009, a
letter from the Listing Qualifications Staff of The NASDAQ Stock
Market indicating that, based upon the Company's non-compliance
with the $2.5 million stockholders' equity requirement for
continued listing on The NASDAQ Capital Market, as set forth in
NASDAQ Marketplace Rule 4310(c)(3), the Company's securities were
subject to delisting from NASDAQ unless the Company requested a
hearing before the NASDAQ Listing Qualifications Panel. The Staff
Determination followed earlier correspondence from NASDAQ, which
was announced by the Company on October 17, 2008.
About Velocity Express
Headquartered in Westport, Connecticut, Velocity Express
Corporation (NASDAQ:VEXP) -- http://www.velocityexp.com/--
together with its subsidiaries, is engaged in the business of
providing time definite ground package delivery services. The
company operates in the United States with limited operations in
Canada. Its customers comprised of multi-location, blue chip
customers with operations in the healthcare, commercial and office
products, financial, transportation and logistics, technology and
energy sectors.
* * *
As of December 27, 2008, the company's balance sheet showed total
assets of $92,779,000 and total liabilities of $115,907,000,
resulting in total shareholders' deficit of $23,128,000. For the
three months ended Dec. 27, 2008, the company posted a net loss of
$9,597,000.
As reported in the Troubled Company Reporter on December 5, 2008,
Ted Stone, Velocity's Chief Financial Officer stated in a
regulatory filing with the Securities and Exchange Commission,
that the company reported significant recurring losses from
operations over the past several years including in 2008 a loss of
approximately $56.1 million, which includes a goodwill impairment
charge of $46.7 million and a $13.9 million non-cash gain on the
extinguishment of debt. "The company also used cash in operating
activities over the past several years, including $11.3 million in
2008. However, for the three months ended
Sept. 27, 2008, the company generated $600,000 in cash from
operating activities.
VOLU-SOL REAGENTS: Lack of Funding Raises Going Concern Doubt
-------------------------------------------------------------
Volu-Sol Reagents Corporation disclosed in a regulatory filing
with the Securities and Exchange Commission its financial results
for three months ended Dec. 31, 2008.
At Dec. 31, 2008, the Company's balance sheet showed total assets
of $1,059,361, total liabilities of $348,308 and stockholders'
equity of $711,053.
For three months ended Dec. 31, 2008, the company posted net loss
of $346,909 compared with net loss of $280,232 for the same period
in the previous year.
Liquidity and Capital Resources
The Company has not historically financed operations entirely from
cash flows from operating activities. During the year ended
Sept. 30, 2008, the Company supplemented cash flows with funding
from the sale of equity securities.
At Dec. 31, 2008, the Company had unrestricted cash of $330,559,
compared to cash of $474,146 at Sept. 30, 2008. At Sept. 30,
2008, the Company had working capital of $406,794, compared to
working capital of $137,286 at Dec. 31, 2008.
During the quarter ended Dec. 31, 2008, the Company's operating
activities used cash of $218,152.
Investing activities for the quarter ended Dec. 31, 2008 used cash
of $4,436.
Financing activities for the quarter ended Dec. 31, 2008, provided
$79,001 of net cash.
During quarter ended Dec. 31, 2008, the Company had negative cash
flows from operating activities totaling $218,152, compared to
negative cash flows from operating activities of $1,247,092 for
the year ended Sept. 30, 2008. As of Sept. 30, 2008, the
Company's working capital was $406,794 compared to working capital
of $137,286 at Dec. 31, 2008. As of Dec. 31, 2008; the Company
had an accumulated deficit of $2,987,697 compared to $2,640,788 at
Sept. 30, 2008, and total stockholders' equity at Dec. 31, 2008,
was $711,053 compared to $1,057,962 at Sept. 30, 2008.
Going Concern
The Company has recurring net losses, negative cash flows from
operating activities, and an accumulated deficit. These factors
raise substantial doubt about the Company's ability to continue as
a going concern. In order for the Company to remove substantial
doubt about its ability to continue as a going concern, the
Company must generate positive cash flows from operations and
obtain the necessary funding to meet its projected capital
investment requirements. Management's plans with respect to this
uncertainty include raising additional capital from the sale of
the Company's common stock.
There can be no assurance that revenues will increase rapidly
enough to offset operating losses and repay debts. If the Company
is unable to increase revenues or obtain additional financing, it
will be unable to continue the development of its products and may
have to cease operations.
A full-text copy of the 10-Q filing is available for free at:
http://ResearchArchives.com/t/s?39ca
About Volu-Sol Reagents Corporation
Based in West Valley City, Utah, Volu-Sol Reagents Corporation --
http://www.volusol.com/-- deals in two very different areas of
the health care industry. The Company manufactures diagnostic
products for use by clinical laboratories; it also plans to
provide personal emergency response products and services for
consumers. The Company's diagnostic business develops and
manufactures chemical reagents, stains, and related equipment used
by laboratories to detect certain properties in biological samples
in fields such as hematology and microbiology. Volu-Sol's yet to
be launched Insight Care services employ biosensors, cell phone,
and GPS technology to remotely monitor a client's vital signs and
provide assistance. Parent RemoteMDx is spinning off Volu-Sol to
shareholders.
WADLEY REGIONAL: Authorized to Sell Hospital to Brim
----------------------------------------------------
Wadley Regional Medical Center was authorized by the U.S.
Bankruptcy Court for the Eastern District of Texas to sell the
facility to Brim Healthcare of Texas LLC for $7.91 million cash
and the assumption of around $10 million in debt, Bloomberg's Bill
Rochelle said.
Wadley Regional sought bankruptcy protection to sell its assets
after failing to find new financing.
According to a January 20 report by the Troubled Company Reporter,
which cited Bloomberg News, Wadley signed a deal to sell all its
assets to Brim for $5 million, subject to higher and better
offers. The deal also provided that Brim would assume as much as
$9.8 million of Wadley's debt. Brim agreed to lease the hospital
for $250,000 a year for at least five years under the sale
agreement. The parties have agreed to a March 6 deadline to
complete the sale.
Wadley previously said it would seek the Bankruptcy Court's
permission to borrow up to $3.5 million from Brim to fund its
chapter 11 case.
About Wadley Regional
Wadley Regional Medical Center -- http://www.wadleyhealth.com/--
is a nonprofit owner of a 372-bed hospital in Texarkana, Texas.
Wadley and three affiliates, including the Wadley Health System,
filed for Chapter 11 protection from creditors on Jan. 14, 2009
(Bankr. E.D. Tex., Case No. 09-50006). Bruce H. White, Esq., at
Greenberg Traurig LLP, has been tapped as counsel. Grant Thornton
LLP and Cain Brother & Company LLC have also been tapped as
financial advisor and investment banker, respectively. In its
bankruptcy petition, Wadley estimated assets of $50 million to
$100 million and debts of $10 million to $50 million.
WASHINGTON MUTUAL: Court Extends Plan Filing Period to April 24
---------------------------------------------------------------
Judge Mary F. Walrath of the United States Bankruptcy Court for
the District of Delaware extended the period within which
Washington Mutual, Inc., and WMI Investment Corp. may file a plan
of reorganization through April 24, 2009, and within which they
may solicit acceptances of that plan through June 23, 2009.
The Debtors reasoned out that their Exclusive Periods warrant an
extension because their Chapter 11 cases are both large and
complex. Specifically, given outstanding debt obligations
totaling more than $7 billion, the Debtors averred that their
cases constitute the largest bank failure in history.
The Debtors further pointed out the seizure of all of Washington
Mutual Bank's assets by the Federal Deposit Insurance
Corporation, as well as the subsequent sale of all those assets
to JPMorgan Chase, as factors that "significantly complicated
[an] otherwise straightforward restructuring or liquidation."
The Debtors also noted that the Bank Seizure and Sale caused
uncertainty about the legal status of some of their most
significant assets, including billions of dollars originally on
deposit with WMB and WMBfsb.
In this regard, the Debtors averred that the Extension of the
Exclusive Periods would allow them to address a number of
significant legal and economic issues affecting their assets and
potential liabilities, which resolution is essential for the
formulation of their Chapter 11 plan.
Prior to the entry of the Exclusive Period Extension Order, Mark
D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, confirmed that no objections or responses
were filed with respect to the Debtors' request.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: Court Denies IRS Bid to Set Off $55MM Debt
-------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware denied, without prejudice, the request of the
United States of America, through the Internal Revenue Service,
for a modification of the automatic stay imposed under Section
362(d) of the Bankruptcy Code to allow set off of a $55,028,000
payment to Washington Mutual, Inc., against IRS' Claim No. 8 for
$2,326,611,411.
The $55 million payment was authorized by Senior Judge Loren A.
Smith of the U.S. Court of Federal Claims on December 19, 2008,
in the federal action captioned American Savings Bank, F.A., et
al. v. United States, No. 98-872 C.
The IRS Claim accounts for WaMu's corporate income taxes for tax
years 1994 to 1995, 1998 to 2007, and 2009. The Debtors, along
with the Official Committee of Unsecured Creditors and the
Washington Mutual, Inc. Noteholders Group, previously contended
that the IRS Claim is based on taxes that "are yet to be
assessed" and therefore, holds no merit.
Consistent with an oral ruling at a January 29, 2009 hearing,
Judge Walrath signed a written order directing the United States
to deposit the $55 million funds into the registry of the
Bankruptcy Court. The Funds will be invested "in a money market
account or . . . other investment as may be directed or permitted
[by the] Bankruptcy Court."
In addition, at the January 29 hearing, JPMorgan Chase & Co., as
acquirer of Washington Mutual Bank and Washington Mutual Bank
fsb, asserted that because it bought WaMu's bank and other assets
for $1.9 billion in 2008, it owns "at least part of the
$55 million." Judge Walrath directed JPMorgan to file a claim,
outlining the amount that WaMu owes it, by March 31, 2009.
The Court's Written Order states that the Funds will be held in
Bankruptcy Court Registry until the earlier of the entry of a
Bankruptcy Court Order:
(a) with respect to the Debtors' objection to the claims filed
by the IRS in the Debtors' Chapter 11 cases; or
(b) with respect to the Funds.
The Bankruptcy Court Order will not prejudice or otherwise limit
the rights of the Debtors to pursue other recoveries in
connection with the Federal Action, or the motion for contempt
against the United States in connection with the payment of the
$55 million Funds, Judge Walrath ruled.
The setoff rights of the United States under common law with
respect to the Funds are preserved, without prejudice to the
rights of the Debtors or any party-in-interest to contest the
U.S. Government's assertion of its Rights.
However, the debt owed by the United States by virtue of the
Federal Action is not extinguished for purposes of setoff as a
result of the United States' deposit of the Funds into the
Bankruptcy Court's registry, Judge Walrath clarified.
Any party, other than the Debtors, that asserts an ownership
interest in the Funds must bring its claim before the Bankruptcy
Court through an adversary proceeding in accordance with Rule
7001 of the Federal Rules of Bankruptcy Procedure. Any claim
with respect to the Funds will be subject to the rights and
defenses of the Debtors, including res judicata of any prior
determination by the Claims Court.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: Court Sets March 31 as Claims Bar Date
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware established
March 31, 2009, as the deadline for parties-in-interest, including
persons, entities and governmental units, as defined under Section
101(27) of the Bankruptcy Code, to file claims in Washington
Mutual, Inc.'s bankruptcy cases.
All claims must substantially conform to Official Form No. 10,
accessible at: http://www.uscourts.gov./bkforms/index.html/
Proofs of Claim must be actually received on or before the Bar
Date by Kurtzman Carson Consultants LLC, the Debtors' official
claims agent.
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in New
York, related that for reasons stated at the hearing held on
January 29, 2009, the Debtors submitted to the Court a revised
proposed order, which Judge Walrath approved on January 30.
Among other things, the Revised Order reflects that claimants
asserting repayment for outstanding principal or interest arising
under, or with respect to, the Debtors' unsecured notes will not
be required to file claims. The Unsecured Notes include:
Principal Amt.
as of Date Description Due
of Issuance CUSIP of Notes Date
-------------- ----- ----------- ----
$1,000,000,000 939322AL7 4.00% Fixed Rate 2009
$500,000,000 939322AW3 Floating Rate 2009
$600,000,000 939322AP8 4.2% Fixed Rate 2010
$250,000,000 939322AQ6 Floating Rate 2010
$500,000,000 939322AE3 8.250% Subordinated 2010
$400,000,000 939322AX1 5.50% Fixed Rate 2011
$400,000,000 939322AT0 5.0 Fixed Rate Notes 2012
$450,000,000 939322AS2 Floating Rate 2012
$500,000,000 939322AU7 Floating Rate 2012
$750,000,000 939322AN3 4.625% Subordinated 2014
$750,000,000 939322AV5 5.25% Fixed Rate 2017
$500,000,000 939322AY9 7.250% Subordinated 2017
$1,150,000,000 93933U08/ 5.75% Junior 2014
939322848/ Subordinated
93933U407/ Deferrable Interest
939322111 Debentures/Trust PIERS
Trust PIERS refers to the Trust Preferred Income Equity
Redeemable Securities Units issued by Washington Mutual Capital
Trust 2001.
Any party to an executory contract or unexpired lease with the
Debtors that asserts claims for charges accrued and outstanding
as of September 26, 2008, should file Claims on or before the
Claims Bar Date.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WASHINGTON MUTUAL: Lease Decision Period Extended to March 10
-------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware extended the period within which Washington
Mutual and WMI Investment Corp. may assume or reject unexpired
non-residential real property leases and executory contracts,
through and including March 10, 2009.
The Debtors have averred that they needed more time to evaluate,
and to determine the terms of any contemplated assumption and
assignment to JPMorgan Chase, as the proposed assignee, with
respect to these leases:
Lease
Landlord Lease Expiration
-------- ----- ----------
BMR International II L.L.C. CA office space lease 02/28/2011
Washington Mutual Bank, FA NY office space lease 09/30/2012
Second and Union, LLC WA office space lease 08/31/2016
Batac Corporation FL office space lease 08/31/2012
PGA Plaza Associates, Ltd. 20 Parking spaces 12/31/2011
The Debtors certified that no objections or responses to their
request were filed with the Court.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
(Washington Mutual Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000)
WATER STREET: Case Summary & Six Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Water Street Realty Group, LLC
848 Faile Street
Bronx, NY 10457
Bankruptcy Case No.: 09-10832
Chapter 11 Petition Date: February 24, 2009
Court: Southern District of New York (Manhattan)
Judge: James M. Peck
Debtor's Counsel: Avrum J. Rosen, Esq.
ajrlaw@aol.com
The Law Offices of Avrum J. Rosen, PLLC
38 New Street
Huntington, NY 11743
Tel: (631) 423-8527
Fax: (631) 423-4536
Total Assets: $20,013,000
Total Debts: $30,350,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
General Electric Capital bank loan; $22,350,000
Corporation collateral:
c/o Bingham McCutchen LLP $20,000,000;
399 Park Avenue unsecured:
New York, NY 10022-4689 $2,350,000
Broadway Bank collateral: $8,000,000
5960 N Broadway $20,000,000;
Chicago, IL 60660 unsecured:
$8,000,000
Island Bay Window & Curtain trade debt $0
Wall
10 East Main Street
Suite 190
East Islip, NY 11730
Creative Floor Mainetenace trade debt $0
Inc
Samuel Feldman Lumber Co. Inc. trade debt $0
Starlite Plumbing & Heating trade debt $0
Corp.
W.B. CARE: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: W.B. Care Center LLC
d/b/a West Broward Care Center
7751 W Broward Blvd.
Fort Lauderdale, FL 33324
Bankruptcy Case No.: 09-12957
Type of Business: The Debtor is in the health care industry.
Chapter 11 Petition Date: February 23, 2009
Court: United States Bankruptcy Court
Southern District of Florida (Fort Lauderdale)
Judge: John K. Olson
Debtor's Counsel: Thomas L. Abrams, Esq.
1776 N. Pine Island Rd #309
Plantation, FL 33322
Tel: (954) 523-0900
Email: tabrams@tabramslaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $100,001 to $500,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flsb09-12957.pdf
The petition was signed by Tim Reardon, Manager of the company.
W.R. GRACE: Libby Criminal Trial in Full Swing
----------------------------------------------
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, is in full swing before Hon. Donald W. Molloy, Chief
Judge of the U.S. District Court for the District of Montana.
Day 1 -- Feb. 23
The trial began Monday with opening statements from the government
and from the Debtors.
"This case is about a company that mined and manufactured a
hazardous product and individual executives that chose profits at
the expense of people's health and chose avoiding liability over
disclosing the health hazards to the government," Assistant U.S.
Attorney Kris McLean told the Court, according to Bloomberg News.
"The secret of this case, the secret the defendants kept
from the government, is that their product, even when it
contains a small amount of asbestos, released hazardous levels
of asbestos into the air when disturbed," Mr. McLean said,
according to Bloomberg. "That is the secret that the defendants
knew but the government did not."
Bloomberg notes that Grace lawyer David Bernick said the company
understands that miners and their families in Libby have suffered
tragic losses that "cast a dark shadow over Grace, over Libby and
over this courtroom." According to Bloomberg, Mr. Bernick told
jurors the criminal charges are related to claims that Grace
exposed Libby residents, not workers, to asbestos.
Bloomberg also notes that the prosecution has generated interest
throughout western Montana. Bloomberg's By Bob Van Voris and Amy
Linn relate that Molloy's courtroom was remodeled to accommodate
the more than two dozen lawyers and defendants. They relate that
the one bankruptcy courtroom in the federal courthouse was set up
with a video feed for spectators who can't fit into Molloy's
courtroom.
Day 2 -- Feb. 24
On the first day of testimony, federal prosecutors presented to
the jury four men who played baseball in the 1970s on fields that
were said to be contaminated with asbestos-tainted vermiculite,
Bloomberg relates. The four men were all born after Grace bought
the Libby vermiculite mine in 1963, Bloomberg says. They said
they played on two Libby baseball fields amid piles of
vermiculite, a mineral used in fireproofing, insulation and
potting soil, according to the report. The men said they have
diseases caused by asbestos exposure.
The jury is composed of seven men and five women.
The Prosecutors also presented to the jury other current and
former Libby residents, who contracted diseases brought about by
purported exposure to asbestos.
According to Bloomberg, prosecutors claim that about 200 people in
and around Libby have died from asbestos exposure and 1,200 were
injured.
Day 3 -- Feb. 25
Paul Peronard, the Environmental Protect Agency's on-scene
coordinator in Libby, took the witness stand Wednesday, according
to Bloomberg.
Mr. Peronard described to the jury his visit to a former Grace
facility in 1999. The facility had been transformed into a plant
nursery by owners Mel and Lerah Parker.
According to Bloomberg, Mr. Peronard said "the grounds were six
inches thick with vermiculite in some places."
"The Parkers' youngest granddaughter was actually out playing with
the decorative rocks, taking a rock and busting it to make explode
off."
Bloomberg says District Judge Molloy ruled earlier in the day that
Mr. Peronard couldn't offer expert testimony about whether
asbestos exposures in Libby endangered the health of residents.
Judge Molloy limited Mr. Peronard to talking generally about what
he saw and did during the EPA's investigation and cleanup efforts.
"It was all very dusty," Mr. Peronard told the jury, according to
Bloomberg, and said he found several mounds of vermiculite. He
said asbestos-filled dust hung from the rafters in a large, open-
sided shed where the Parkers stored vehicles and other items,
Bloomberg adds.
2005 Indictment
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.
At the trial, the Government intends to 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
To counter the Government, 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 will point out that 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
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.
Grace has said in its financial report for the quarter ended
September 30, 2008, that the trial could last three to five
months. Judge Molloy has said the trial may take as long as five
months, according to Bloomberg.
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: Court to Consider Disclosure Statement on March 9
-------------------------------------------------------------
Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the
District of Delaware will hold a hearing on March 9 and 10, 2009,
to consider approval of the disclosure statement explaining W.R.
Grace & Co. and its affiliates' latest bankruptcy plan.
On January 29, 2009, Judge Fitzgerald approved the second amended
case management order governing the hearing of the First Amended
Joint Plan of Reorganization and the Disclosure Statement
explaining that Plan filed by W.R. Grace & Co., and debtor-
affiliates.
The CMO has been amended several times since mid December 2008
mostly because of objections filed by insurers, the prepetition
Lenders, and the personal injury claimants related to the
Company's former Libby, Montana operations.
Phase I of the two-phase confirmation hearing is set for June 22
to 25 while Phase II begins on September 8 through 11. A pre-
trial conference for Phase II issues will take place on July 20
and 21.
The Court-approved CMO revised several deadlines to:
April 6, 2009 -- Rebuttal Expert Reports except on
Feasibility for Phase II relating to Libby
issues will be concluded
May 15, 2009 -- Rebuttal Expert Reports, except on
Feasibility, with respect to other Phase II
issues
May 20, 2009 -- Sur-rebuttal Expert Reports in Phase II on
Libby issues are due
-- Deadline for Final Plan Objections in Phase
II, except on Feasibility
A full-text copy of the Court-approved CMO is available for free
at http://bankrupt.com/misc/Grace_Final2ndAmnddCMO.pdf
First Amended Plan & Disclosure Statement
W.R. Grace & Co., its debtor-affiliates, the Official Committee
of Asbestos Personal Injury Claimants, the Asbestos PI Future
Claimants' Representative and the Official Committee of Equity
Security Holders file with the Court a final First Amended Joint
Chapter 11 Plan of Reorganization and the Disclosure Statement
explaining that Plan, on February 3, 2009.
The Amended Plan incorporates provisions for the resolution of
U.S. and Canadian Zonolite Attic Insulation Claims, whereby all
allowed Asbestos PD Claims, other than US ZAI PD Claims and CDN
ZAI PD Claims will be paid in full by the Asbestos PD Trust.
The US ZAI PD Claims will also be paid pursuant to the ZAI
Trust Distribution Procedures, consistent with the class
settlement agreement.
The Debtors, the Equity Committee, special counsel to the ZAI
Claimants, and the Asbestos PD FCR entered into a class settlement
agreement on November 21, 2008, which the Court preliminarily
approved on January 16, 2009.
Pursuant to the Settlement Agreement, the Asbestos PD Trust will
be funded an initial $30 million for the benefit of US ZAI PD
Claims, plus interest from April 1, 2009 to the Effective Date.
Moreover, a deferred payment of $30 million will be paid three
years after the Effective Date and thereafter, a series of up to
10 contingent payments of $8 million each over the next 20 years,
provided that the Asbestos PD Trust assets fall below $10
million, among other conditions.
With respect to the CDN ZAI PD Claims, the Debtors, certain non-
Debtor parties, the CCAA Representative Counsel for the CDN ZAI
PD Claimants and the CDN ZAI PI Claimants entered into, on
September 2, 2008, a settlement pursuant to which the Debtors
will to pay about C$6.5 million to the CDN ZAI PD Claims Fund to
pay all valid CDN ZAI PD Claims on the Effective Date. All CDN
ZAI PI Claims are channeled to the Asbestos PI Trust on that
date.
The Plan increased the estimated allowable amount of Class 7A
asbestos PD Claims from $109 million to $112, which amount
consists of 93 million in Court-approved PD Settlement Agreements
and $19 million in preliminary PD Settlement Agreements as of
February 3, 2009. Class7A Claims will be paid in full by the
Asbestos PD Trust without deduction, set off or discount.
The Plan also provides for Class 7B US ZAI PD Claims for an
unspecified amount that will be paid by the Asbestos PD Trust
from duly designated Asbestos PD Trust Assets pursuant to the
terms of the Asbestos PD Trust Agreement and the ZAI TDP.
Funding of the Asbestos PD Trust will come from the Asbestos PD
Trust Assets from payments under:
(a) the Class 7A Asbestos PD Deferred Payment Agreement;
(b) the Class 7B Asbestos PD Deferred Payment Agreement;
(c) the Asbestos PD Initial Payment, consisting of:
* the Class 7A Initial Payment;
* an amount agreed to by the Parent, Sealed Air
Corporation, Cryovac, Inc., Fresenius, and the Asbestos
PD FCR, to be transferred equally by Cryovac, Inc. and
Fresenius to the Asbestos PD Trust on the Effective
Date, provided that Cryovac, Inc.'s transfer to the
Asbestos PD Trust when aggregated with Cryovac, Inc.'s
transfer to the Asbestos PD Trust as part of the Class
7B Initial Payment does not exceed 50% of the Cash
component of the Cryovac Payment and provided, further
that the Fresenius transfer to the Asbestos PD Trust
when aggregated with Fresenius' transfer does not exceed
65% of the Fresenius Payment;
* the Class 7B Initial Payment of $30 million plus
interest from April 1, 2009 to the Effective Date to be
transferred equally by Cryovac, Inc. and Fresenius
directly to the Asbestos PD Trust, provided that
Cryovac, Inc.'s transfer to the Asbestos PD Trust as
part of the Class 7B Initial Payment when aggregated
with Cryovac, Inc.'s transfer to the Asbestos PD Trust
as part of the Class 7A Initial Payment do not exceed
50% of the cash component of the Cryovac Payment; and
provided further, that the Fresenius transfer to the
Asbestos PD Trust as part of the Class 7B Initial
Payment when aggregated with Fresenius' transfer as part
of the Class 7A Initial Payment will not exceed 65% of
the Fresenius Payment;
(d) the Grace PD Guarantee Agreement for Class 7A;
(e) the Grace PD Guarantee Agreement for Class 7B; and
(f) the Asbestos PD Trust Causes of Action.
The Asbestos PD Trust Agreement will be deemed to have assumed
the obligations of the PD Settlement Agreements under the Plan.
Notwithstanding anything to the contrary, after payment of the
Cryovac Payment to the Asbestos PI Trust:
-- no entity may enforce provisions of the Plan relating
to the Cryovac Payment or the payment against any of the
Sealed Air Indemnified Parties or any property or interest
in property of the Sealed Air Indemnified Parties; and
-- the sole recourse of an Asbestos PI Claimant against
the Sealed Air Indemnified Parties or a Successor Claim
will be to the Asbestos PI Trust, and that Holder will
have no right to assert its Asbestos PI Claim or Successor
Claim against the Sealed Air Indemnified Parties, any
property or interest in property of the Sealed Air
Indemnified Parties.
Notwithstanding anything contrary in the Plan, after the transfer
to the Asbestos PI Trust of the Fresenius Payment:
-- no Entity may enforce any provision of the Plan relating
to the Fresenius Payment or its payment against any of the
Fresenius Indemnified Parties or any property or interest
in property of any of the Fresenius Indemnified Parties;
and
-- the sole recourse of an Asbestos PI Claimant against any
of the Fresenius Indemnified Parties or Successor Claim,
will be to the Asbestos PI Trust, and that Holder cannot
assert its Asbestos PI Claim or Successor Claim against
any of the Fresenius Indemnified Parties
Reorganized Debtors' Indemnification
On and after the Effective Date, the Asbestos PD Trust will hold
harmless each of the Reorganized Debtors and their
Representatives against:
(a) all Asbestos PD Claims or Successor Claims arising out an
Asbestos PD Claim to the extent they are subject to the
Asbestos PD Channeling Injunction, together with any
related Damages;
(b) all Damages relating to Asbestos PD Claims or Successor
Claims purported to be covered by the Asbestos PD
Channeling Injunction, to the extent that the Asbestos PD
Claims or Successor Claims are brought in jurisdictions
outside of the United States of America (other than
Canada) or are not otherwise subject to the Asbestos PD
Channeling Injunction; and
(c) all claims or Damages from Asbestos PD Claims, to the
extent the Claims or Damages are brought by the Asbestos
PD Trust on account of the Asbestos PD Trust Assets;
None of the Reorganized Debtors and their Representatives,
however, will be protected or held harmless from any criminal
proceeding or any claims or Damages resulting from the criminal
proceeding, United States v. W. R. Grace & Co., et al. or any
similar or related proceeding or any related settlement.
The Asbestos PD Trust will maintain sufficient assets to fund any
payments with respect to pending indemnification claims against
it. The Reorganized Debtors will prompt the Asbestos PD Trust
upon becoming aware of the basis for any indemnification claim
under the Plan.
Stock Trading Restriction
The Plan further provides that claims for equity interests in
parent W.R. Grace & Co. will be retained subject the Stock
Trading Restriction Term Sheet. The Stock Trading Restriction
Term Sheet provides that after the Effective Date, the Board of
Directors of the Reorganized Parent may, in certain instances,
impose trading restrictions on Parent Common Stock to limit the
possibility that a 50 percentage point ownership change would
occur within the meaning of the Internal Revenue Code. The
Reorganized Debtors' use of their net operating loss and certain
other tax losses would be limited if an ownership change were to
occur.
The Reorganized Parent BOD may implement these restrictions only
if 25 percentage points of ownership change have occurred, except
on Parent Common Stock acquisition or sale by the Asbestos PI
Trust or the Asbestos PD Trust or on any person acquiring all of
the Parent Common Stock from the Asbestos PI Trust or the
Asbestos PD Trust to the extent the Parent Common Stock is
acquired by the Asbestos PI Trust or the Asbestos PD Trust from
Grace.
A Zonolite Attic Insulation Trust Advisory Committee of three
members will be established pursuant to the Asbestos PD Trust
Agreement. The ZTAC will be deemed dissolved and the ZTAC
will be released from all authority and obligations relating to
the Debtors' cases upon termination of the Asbestos PD Trust.
Moreover, nothing will affect the right of the plaintiffs in
Sheldon H. Solow v. W. R. Grace & Co., to execute on and recover
against any entity that issued a surety bond to secure payment of
the judgment, or any successor to that entity.
In addition, on the Effective Date, the Reorganized Parent's BOD
may authorize stock incentive awards to the management of the
Reorganized Debtors and to other key employees, and to the Board
of Directors of the Reorganized Debtors pursuant to the Stock
Incentive Plan.
Litigation Updates
In the Plan, the Debtors provided updates on unresolved claims,
litigations, and other disputed matters in their bankruptcy
cases:
(a) As of February 2, 2009, 90 active, non-settled Asbestos PD
Claims remain active, 55 of which for buildings located in
Canada and 35 for buildings located in the United States.
(b) On December 12, 2008, Anderson Memorial Hospital filed a
Notice of Appeal to the Third Circuit U.S. Court of
Appeals, who, on December 20, 2008, issued an order
directing Grace and Anderson Memorial Hospital to file
statements addressing the issue of the Third Circuit's
authority to hear the appeal. The parties filed these
statements on January 13, 2009.
(c) Kaneb Pipe Line Operating Partnership L.P., will be
precluded from pursuing any claim against the Debtors for
damages or cost recovery in the Texas litigation or
otherwise.
The Debtors sued Kaneb and Support Terminal Services,
Inc. in the Texas District Court to, among others,
determine ownership of the abandoned jet fuel pipeline in
Cape Cod, Massachusetts, which allegedly has leaks, and
for which the U.S. Department of Justice and the
Massachusetts Department of Environment Protection made
cleanup demands.
Kaneb and STS Inc., on January 16, 2009, asked the
Bankruptcy Court to lift the automatic stay so that they
could proceed with their appeal in the Texas Litigation.
The Debtors have until February 10, 2009 to respond to the
motion prior to the hearing on February 23, 2009.
(d) On January 22, 2009, Massachusetts Department of
Environmental Protection filed an amended proof of claim
against the Debtors for environmental liabilities in
connection with the Sutton Brook Superfund Site in
Tewksbury, Massachusetts. MADEP contends that the Debtors
were a potentially responsible party at the site, an
allegation which the Debtors deny.
(e) Pursuant to the Asbestos PI Channeling Injunction, the
Scotts' Company LLC will be permanently enjoined from
pursuing claims against Settled Asbestos Insurance
Companies for insurance coverage under any policy listed
in Exhibit 5 of Book Exhibit, which can be accessed at no
charge at:
http://bankrupt.com/misc/Grace_InsurerExh5_Blackline.pdf
Scotts has sued the Debtors and certain of their insurers
for declaratory relief with respect to its purported
entitlement under the Debtors' liability insurance
policies.
(f) The Joint Committee on Taxation and the Bankruptcy Court
approved an R&E Settlement Agreement relating to the
Debtors' income tax controversy on research credits and
research experimentation expenditures. The Agreement
resulted in a tax refund of $6.3 million, plus interest,
to the Debtors.
The Bankruptcy Court, on October 21, 2008, also authorized the
appointment of Judge Alexander M. Sanders, Jr. as the legal
representative for the future asbestos property damage claimants.
Judge Sanders sought and obtained Court approval to employ
Alan B. Rich as counsel and Karl Hill as Delaware counsel.
Indirect PI Trust Claims
Under the Plan, certain Claims defined as Indirect PI Trust
Claims are included in the definition of Asbestos PI Claims and
consequently receive the same treatment as Asbestos PI Claims.
Indirect PI Trust Claims include, among others, claims for
reimbursement, indemnification, and subrogation on account of
damages a Claimant has paid or may pay to plaintiffs on account
of claims that would constitute Asbestos PI Claims against the
Debtors.
The Plan, as amended, provides that these claims will be
reviewed, processed and if entitled to payment, paid by the
Asbestos PI Trust in accordance with the Asbestos PI TDP:
-- claims of Scotts, BNSF and any other entity against any
Settled Asbestos Insurance Company seeking insurance
coverage under an Asbestos Insurance Policy that is subject
to the Asbestos Insurance Settlement Agreement channeled to
the Asbestos PI Trust; and
-- any Asbestos PI Claim for indemnification of a Settled
Asbestos Insurance Company set out in an Asbestos Insurance
Settlement Agreement that is channeled to the Asbestos PI
Trust.
The Debtors disclose that they are currently preparing their
final financial reports for fiscal year 2008. Upon completion of
their year-end financial reports, the data on estimated allowed
claims will be updated as of December 31, 2008.
The updated financial information will be provided in the final
Disclosure Statement and related exhibits to be filed on February
27, 2009.
Black-lined copies of the proposed Plan and Disclosure Statement,
as amended, are available for free at:
http://bankrupt.com/misc/Grace_1stAmnddPlan_Blackline.pdf
http://bankrupt.com/misc/Grace_AmnddDS_Blackline.pdf
Classification and Treatment of Claims
The First Amended Joint Plan provides the same treatment of claims
provided under the Plan filed on September 19, 2008, except for
Class 7 Asbestos Claims.
Under the Amended Plan, Class 7 Asbestos Claims is subdivided
into Class 7A Asbestos Property Damage Claims other than the U.S.
ZAI Claims and Class 7B U.S. ZAI PD Claims.
Class Description Recovery Under the Plan
----- ----------- -----------------------
N/A Administrative Estimated Claim Amount: $33,800,000
Expense Claims Estimated Percentage Recovery: 100%
N/A Priority Tax Estimated Claim Amount: $33,400,000
Claims Estimated Percentage Recovery: 100%
1 Priority Claims Estimated Claim Amount: $709,873
Estimated Percentage Recovery: 100%
2 Secured Claims Estimated Claim Amount: $5,754,496
Estimated Percentage Recovery: 100%
3 Employee Benefit Estimated Claim Amount: $165,300,000
Estimated Percentage Recovery: 100%
4 Workers' Allowed Claims have already been paid
Compensation pursuant to first day orders and
Claims continue to be paid in the ordinary
course as they become due.
Estimated Percentage Recovery: 100%
5 Intercompany For pro forma cash flow purposes all
Claims Claims will have no impact on the
Plan as payments under the Plan are
based on the Debtors and Non-Debtor
Affiliates as consolidated.
Estimated Percentage Recovery: 100%
6 Asbestos PI Estimated Claim Amount: N/A
Claims Estimated Percentage Recovery:
Unknown
7 Class 7A: Asbestos Estimated Claim Amount: $112,000,000
PD Claims other
than US ZAI PD Estimated Percentage Recovery: 100%
Claims
Class 7B: ZAI Estimated Claim Amount: $[ ]
PD Claims
8 CDN ZAI PD Estimated Claim Amount: $6.5 million
Claims Estimated Percentage Recovery:
Unknown
9 General Estimated Claim Amount:
Unsecured $826.3 million
Claims Estimated Percentage Recovery: 100%
10 Equity Interests Estimated Claim Amount: N/A
in the Parent Estimated Percentage Recovery: 100%
11 Equity Interests Estimated Claim Amount: N/A
in Debtors other Estimated Percentage Recovery: 100%
than the Parent
Class 7A Claims are unimpaired while Class 7B Claims are
impaired. The Debtors will not solicit any votes from holders of
Class 7A Claims for purposes of Section 524(g) of the Bankruptcy
Code.
Each Holder of an Asbestos PD Claim in Class 7A that is Allowed
as of the Effective Date pursuant to a PD Settlement Agreement,
or other stipulation, order or agreement, will be paid the
Allowed Amount of its Allowed Asbestos PD Claim in Cash in full
by the Asbestos PD Trust as and when due, without any deduction,
proration, reduction, setoff or discount.
Class 7A Claims that are unresolved prior to the Effective Date
will be paid pursuant to these procedures:
(a) in connection with confirmation of the Plan, the Court
will enter the PD Case Management Order Class 7A CMO
setting forth procedures for determining the allowance or
disallowance of the Unresolved Asbestos PD Claims; and
(b) Allowed Unresolved Asbestos PD Claims will be paid in
full, in Cash, by the Asbestos PD Trust pursuant to the
terms of the Asbestos PD Trust Agreement.
All Allowed Asbestos PD Claims in Class 7A will be paid in full
by the Asbestos PD Trust solely from the Asbestos PD Trust Assets
that are designated for Class 7A Claims.
All Asbestos PD Claims in Class 7B will be resolved in accordance
with the terms of the Asbestos PD Trust Agreement and the ZAI
TDP. All Asbestos PD Claims in Class 7B will be paid by the
Asbestos PD Trust solely from the Asbestos PD Trust Assets that
are designated for Class 7B Claims under the Asbestos PD Trust
Agreement and as provided in the ZAI TDP. Asbestos PD Claims in
Class 7B will not be deemed Allowed or Disallowed but rather will
be resolved by the Asbestos PD Trust pursuant to the terms of the
ZAI TDP.
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)
WILLIAMS COMPANIES: Fitch Affirms 'BB' Rating on Junior Debentures
------------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings and
outstanding debt ratings for The Williams Companies, Inc. and its
two debt issuing pipeline company subsidiaries Transcontinental
Gas Pipe Line Corp. and Northwest Pipeline GP. In addition, the
ratings are removed from Rating Watch Evolving where they were
placed on Nov. 6, 2008 following the announcement that WMB would
be considering a change in strategic direction.
The Rating Outlooks are Stable. Approximately $6.73 billion of
outstanding long-term debt is affected. Current ratings for WMB,
TGPL and NWP being affirmed are:
The Williams Companies, Inc.
-- IDR at 'BBB-';
-- Senior unsecured at 'BBB-';
-- Junior subordinated convertible debentures at 'BB'.
Transcontinental Gas Pipe Line Corp.
-- IDR at 'BBB';
-- Senior unsecured at 'BBB'.
Northwest Pipeline GP
-- IDR at 'BBB';
-- Senior unsecured at 'BBB'.
Fitch's rating action follows the announcement made on Feb. 19,
2009, that WMB's management and board of directors had completed
its review of potential structural changes in the company and
determined to leave the company's structure unchanged. WMB also
reported its 2008 fourth-quarter and full-year 2008 financial
results and provided profit and capital spending guidance for
2009.
The rating affirmation and Stable Outlook reflect Fitch's
expectation that WMB will generate near-term and intermediate-term
credit measures which are consistent with its 'BBB-' rating and
that its liquidity position will remain adequate. WMB's
consolidated results for 2008 were considerably stronger than in
2007, with its exploration and production and midstream segments
benefiting from robust average commodity prices. However, the
sharp decline in energy commodity prices in the second half of the
year had a negative effect on financial results for the last
quarter of 2008.
Given expectations in 2009 for a lower commodity price
environment, a slower economy and difficult financial markets, WMB
lowered its profit and capital spending guidance. Assuming
current profit and spending estimates, WMB's 2009 consolidated
Debt/EBITDA should approximate 3 times (x), and its year-end
liquidity, including unrestricted cash and capacity under its
credit facilities, should approximate $2 billion. While 2009
credit measures are not expected to match those for 2008, Fitch
believes current estimates for the year remain in the range for a
'BBB-' company with WMB's risk profile. However, an extended
weakness in commodity prices and a deepening recession could put
further pressure on profits and contribute to negative rating
actions.
TGPL's and NWP's ratings reflect their strong individual operating
and financial profiles, offset by the structural and functional
ties between these entities and their ultimate parent WMB. Fitch
does not expect the weak commodity price environment and
recessionary economy to have any material negative effect on the
standalone credit profiles of either TGPL or NWP.
WL HOMES: Gets Initial OK to Access $5.28 Mil. Emaar DIP Facility
-----------------------------------------------------------------
The Hon. Brendan Shannon of the United States Bankruptcy Court for
the District of Delaware authorized WL Homes LLC and its debtor-
affiliates to access, on an interim basis, $5,287,000 in debtor-
in-possession financing under the credit agreement dated Feb. 18,
2009, with Emaar America Corporation as lender.
Emaar America's parent Dubai-based Emaar Properties PJSC acquired
WL in 2006 for $1.05 billion cash, according to Bloomberg's Bill
Rochelle.
Emaar America agreed to provide as much as $30,884,000 in
financing to the Debtors on a final basis. The DIP facility will
incur interest at Prime Rate plus 1% per annum. In addition, the
facility has a maximum duration of 12 months, subject to certain
early termination provisions, such as for defaults and the
Debtors' termination of the commitment. In particular, the
commitment will terminate if the final order is not entered by
March 9, 2009, or the Debtors fail to confirm a plan of
reorganization by Sept. 30, 2009.
The Debtor told the Court that the proceeds of the DIP facility
will be used for:
i) working capital and general purposes;
ii) payment of costs of administration of the Chapter 11
cases;
iii) payment of interest and fees under the DIP credit
agreement;
iv) repayment of the prepetition secured obligations upon
entry of a final order; and
v) repayment of the costs and expenses of the DIP lender in
connection wit the Chapter 11 cases.
To secure the Debtors' obligation, the DIP lender will be granted
superpriority administrative expense claim status with priority
over all administrative expense claims and unsecured claims
against the Debtors.
The DIP facility is subject to carve-outs to pay fees and expenses
of professionals of the Debtors or any statutory committee.
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLC
in Wilmington, Delaware, said the Debtors have an immediate and
critical need to obtain the postpetition Financing in order to
continue their operations, pay their employees, suppliers and
service providers and other accounts payable, continue the
development of certain real estate projects, preserve the going
concern value of their business and conduct an orderly sale of
certain assets.
The Debtor will present on March 9, 2009, at 10:00 a.m., the DIP
request before Judge Shannon for final approval. Objections, if
any, are due March 4, 2009.
Prepetition Indebtedness
The Debtors' prepetition secured loans are comprised primarily
of:
-- secured revolving credit facilities with Bank of America,
Wachovia Bank, RFC Construction Funding LLC, and Guaranty
Bank;
-- secured term loans with RFC; and
-- individual project secured loans with Wells Fargo Bank,
Housing Capital Company, First Bank of Oak Park, Indy Mac
Bank, and Key Bank.
The Debtors' aggregate liability for purportedly secured debt
as of Feb. 10, 2009, on a consolidated basis, is $350.6 million
excluding penalties, interest and fees. The Debtors owe
$283.3 million to three lenders:
A: Bank of America
The Debtors estimate that they owe $140.8 million to BofA
comprised of:
-- $131.64 million under the revolving credit facility
agreement dated Oct. 24, 2005, among WL Homes and BofA as
administrative agent and the other financial institutions
Party.
-- $9.2 million under the construction loan agreement dated
April 21, 2006, as amended from time to time, between BofA
and WL Homes, purportedly secured by the individual project
entitled Sentinels at Del Sur.
BofA has declared WL Homes to be in default under both facilities.
B. RFC
The Debtors estimate that they $57.7 million to RFC comprised of:
-- $27.7 million under the amended and restated loan
agreement dated Aug. 15, 2003, as amended from time to
time, which is purportedly secured by a master deed of
trust and various project-specific supplemental deeds of
trust covering 4 of the Debtors' projects; and
-- $30.0 million under the second amended and restated loan
agreement dated as of Nov. 14, 2005, which is purportedly
secured by the same collateral as the immediately above
facility.
RFC has declared a default under these facilities and has recently
filed suit in Virginia state court for recovery of amounts due to
it under these facilities. The Debtors have also issued one
separate repayment guaranty in favor of RFC with respect to an
individual project loan for their non-debtor affiliate joint
venture totaling $19.658 million. RFC has declared a default
under this individual project loan as well.
C. Wachovia
The Debtors estimate that they $84.8 million to Wachovia comprised
of
-- $74.82 million under the revolving credit agreement dated
March 15, 2006, between WL Homes LLC and Wachovia Bank, as
amended from time to time, which is purportedly secured by
a master deed of trust and various project-specific
supplemental deeds of trust secured by 21 of the Debtors'
projects. Wachovia declared a default on the revolving
credit facility and has also placed an administrative
freeze on two of the Debtors' bank accounts, which the
Debtors contest; and
-- $10.0 million under the line of credit loan agreement dated
Oct. 1, 2007, by and between WL Homes and Wachovia Bank, as
amended from time to time, which is purportedly secured by
funds in two of the Debtors' bank accounts and a bank
account of a non-Debtor affiliate. WL Homes has also
issued two separate repayment guaranties in favor of
Wachovia with respect to two separate individual project
loans for three of their non-debtor affiliate joint
ventures -- Sugarfield Partners II, LTD. and Orem Partners
I, LTD. -- totaling $2.88 million. Wachovia has declared a
default under both of these individual project loans.
A full-text copy of the Debtors' credit agreement is available for
free at: http://ResearchArchives.com/t/s?39d8
A full-text copy of the DIP facility budget is available for free
at: http://ResearchArchives.com/t/s?39d9
Headquartered in Irvine, California, WL Homes LLC dba John Laing
Homes -- sells and builds houses. The Debtor and five of its
affiliates filed for Chapter 11 protection on February 19, 2009
(Bankr. D. Del. Lead Case No. 09-10571). Laura Davis Jones, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP,
represent the Debtors' in their restructuring efforts. When the
Debtors sought protection from their creditors, they listed assets
of More than $1 billion, and debts between
$500 million to $1 billion.
WYNN RESORTS: Posts $159.6 Million Fourth Quarter Net Loss
----------------------------------------------------------
Wynn Resorts, Limited, reported financial results for the fourth
quarter and year ended December 31, 2008.
Net revenues for 2008 were $3.0 billion, an 11.2% increase over
2007, primarily due to 35.6% higher revenues from Wynn Macau,
which were partially offset by a 15.1% decrease in revenues from
the company's Las Vegas properties. Encore at Wynn Las Vegas,
which opened on December 22, 2008, did not significantly impact
the company's results of operations for the year ended
December 31, 2008.
Net revenues for the fourth quarter of 2008 were $614.3 million,
compared to $711.3 million in the fourth quarter of 2007. The
revenue drop was driven primarily by a decline in gaming volumes,
significantly lower hold percentage and an overall reduction in
non-gaming revenues in Las Vegas. Wynn Macau revenues in the
quarter were up 1.2% from the fourth quarter of 2007.
Adjusted property EBITDA (1) for 2008 was $738.7 million, a 5.4%
decrease compared to 2007. Adjusted property EBITDA was
$127.5 million for the fourth quarter of 2008, compared to
$196.9 million in the fourth quarter of 2007.
On a US GAAP (Generally Accepted Accounting Principles) basis, net
income for the year was $210.2 million, or $1.92 per diluted
share, compared to $258.1 million, or $2.34 per diluted share in
2007. Net income for 2008 was positively influenced by a
$60.9 million income tax benefit primarily due to foreign tax
credits and the company's 2008 domestic operating loss. Adjusted
net income for 2008 was $274.4 million, or $2.51 per diluted share
(adjusted EPS)(2) compared to an adjusted net income of $329.4
million, or $2.97 per diluted share in 2007.
On a US GAAP basis, net loss for the fourth quarter of 2008 was
$159.6 million, or ($1.49) per diluted share, compared to a net
income of $65.5 million, or $0.57 per diluted share in the fourth
quarter of 2007. The net loss was significantly impacted by a
$98.8 million tax expense for the quarter. This non-cash
provision was required to reduce the company's deferred tax asset
to the amount the company believes is more likely than not
realizable as discussed later in this release. Adjusted net
income in the fourth quarter of 2008 was $7.6 million, or $0.07
per diluted share (adjusted EPS)(2) compared to an adjusted net
income of $82.6 million, or $0.72 per diluted share in the fourth
quarter of 2007.
Encore at Wynn Las Vegas Opening
Encore, located immediately adjacent to and connected with Wynn
Las Vegas, opened on December 22, 2008, featuring a 2,034 room
all-suite hotel, an approximately 72,000 square foot casino with
approximately 95 table games, a baccarat salon, private VIP gaming
rooms and approximately 835 slot machines. Encore's 12 food and
beverage outlets include five restaurants, many of which feature
award winning chefs. Encore also offers a night club, a spa and
salon, approximately 60,000 square feet of meeting space and
approximately 27,000 square feet of upscale retail outlets
featuring boutiques from Hermes, Chanel and Rock & Republic. The
Encore Theater, featuring Danny Gans, opened February 10, 2009.
As of December 31, 2008, there were $202 million in outstanding
construction payables associated with the $2.3 billion Encore
project budget.
Wynn Las Vegas and Encore Full Year 2008 Operating Results
For the full year 2008, the company's Las Vegas properties
generated adjusted property EBITDA of $252.9 million, 39.4% lower
than in 2007, primarily due to poor table games hold percentage
and a decrease in gaming volumes coupled with general softness in
all non-gaming segments.
Net casino revenues for the year were $479.7 million, a 25.3%
decline from 2007. For the year ended December 31, 2008, the
company experienced a 7.1% decrease in drop and the company's
average table games win percentage (before discounts) of 20.0% was
below the expected range of 21% to 24% and the 25.3% hold
percentage the company experienced in 2007. Slot handle decreased
12.9% during the year ended December 31, 2008, as compared to
2007, and the company's slot win percentage for the years ended
December 31, 2008 and 2007 was within the expected range of 4.5%
and 5.5%.
Gross non-casino revenues for 2008 were $776.3 million, a 3.7%
decline from 2007. Hotel revenues were down 6.0% to
$268.5 million, versus $285.7 million in 2007. Average Daily Rate
(ADR) was $288 for the year, compared to $300 in 2007 and
occupancy was 91.8% compared to 96.0% during the prior year,
generating revenue per available room (REVPAR) of $265 in 2008
(8.0% lower than in 2007).
Food and beverage revenues decreased 1.7% to $305.7 million in
2008, compared to $311.0 million in 2007. Retail revenues were
$86.1 million, compared to $94.8 million in 2007, a 9.2% decline,
and entertainment revenues were approximately $66.2 million,
compared to $64.5 million in 2007.
Wynn Las Vegas and Encore Fourth Quarter Results
For the quarter ended December 31, 2008, the company's Las Vegas
properties generated adjusted property EBITDA of $32.6 million,
compared to $97.3 million in the fourth quarter of 2007, a 66.5%
decline due primarily to the decline in casino revenue as well as
weaker performance from the Hotel, Food and Beverage, Retail and
Entertainment segments. Starting in October, the company
experienced a dramatic deceleration in business from the casino
and non-gaming departments. The Thanksgiving to Christmas period
has traditionally been one of the weakest times of the year in Las
Vegas but the fourth quarter of 2008 was substantially worse than
during the prior year as consumers chose to stay at home and
significantly reduced their leisure budgets. In addition, the
15.3% table games hold was the lowest experienced by the company's
Las Vegas properties since Wynn Las Vegas' opening in April 2005.
Net casino revenues in the fourth quarter of 2008 were
$90.7 million, compared to net casino revenues of $160.0 million
for the fourth quarter of 2007. Table games drop was
$498.3 million, with win per table per day (before discounts) of
$5,629, compared to drop of $624.7 million and win per table per
day of $11,293 in the fourth quarter of 2007. Table games win
percentage of 15.3% was significantly below the property's
expected range of 21% to 24% and the 23.5% for the fourth quarter
of 2007. Table games win percentage in the fourth quarter of 2008
was accountable for approximately 50% of the reduction in total
table win as compared to 2007. Slot machine handle of $829.7
million was 22.7%, lower than the comparable period of 2007 and
win per unit per day was $203, compared to a win per unit per day
of $241 in the fourth quarter of 2007.
Gross non-casino revenues for the quarter were $171.9 million, a
16.9% decline from the fourth quarter of 2007. Hotel revenues
were down 14.0% to $60.5 million during the quarter, versus
$70.3 million in the fourth quarter of 2007. Average Daily Rate
(ADR) was $281 for the quarter, compared to $298 in the fourth
quarter of 2007 and occupancy was 79.7% compared to 94.3% during
the prior year period, generating revenue per available room
(REVPAR) of $224 in the 2008 period (20.3% lower than in 2007).
Food and beverage revenues decreased 11.6% to $69.6 million in the
quarter, compared to $78.8 million in the fourth quarter of 2007.
Retail revenues were $18.4 million in the quarter, compared to
$26.7 million in the fourth quarter of 2007, a decrease of 31.0%.
Entertainment revenues were approximately $12.1 million, compared
to $17.8 in the fourth quarter of 2007 as the company closed the
Spamalot theater in July 2008.
As a result of the current economic conditions, the company has
increasingly focused on efficiency initiatives that the company
began implementing at the company's Las Vegas properties in early
2009. These initiatives include reductions in pay for salaried
employees, reduced work weeks for full-time hourly employees, the
substantial reduction of 2009 bonus accruals and a suspension of
the employer match to the 401(k) contributions. The company
expect that these initiatives, along with other operational
efficiencies, will save approximately $75-$100 million annually.
Wynn Macau Full Year 2008 Operating Results
For the full year 2008, net revenues were $1.9 billion, 35.6%
above 2007. Wynn Macau generated adjusted property EBITDA of
$485.9 million, a 33.4% increase over the previous year.
Casino revenues increased $474.7 million during the year ended
December 31, 2008, compared to the prior year. The increase in
casino revenues is a result of growth during the first nine months
of the year in the Macau market as well as the company's casino
expansion which opened in December 2007.
Table games results are segregated into two distinct reporting
categories, the VIP segment and the mass market segment.
Table games turnover in the VIP segment of $55.4 billion was 47.4%
higher than in 2007 and VIP table games win as a percentage of
turnover (calculated before discounts and commissions) was 3.0%,
within the expected range of 2.7% to 3.0% and lower than the 3.1%
generated in 2007.
Table games drop in the mass market category increased 14.2% to
$2.3 billion, and mass market table games win percentage
(calculated before discounts) of 19.6% was within the expected
range of 18% to 20% and higher than the 19% generated in 2007.
Slot machine handle of $3.0 billion was 79.5% higher than the $1.7
billion generated in 2007. Slot machine win per unit per day was
$346, a 26.4% decline from 2007 due to the increase in the average
number of slot machines from 521 to 1,243 slots.
Wynn Macau achieved an Average Daily Rate (ADR) of $275 for the
year, compared to $251 in 2007. The property's occupancy was
87.3%, compared to 88.8% during the prior year period, generating
revenue per available room (REVPAR) of $240 in the 2008 period,
7.6% above 2007 levels.
Wynn Macau has also been impacted by the slowing global economy
and visa restrictions implemented in September 2008 that limit the
frequency of visits that certain citizens of mainland China may
make to Macau.
Wynn Macau Fourth Quarter Results
In the fourth quarter of 2008 net revenues were $392.2 million
compared $387.4 million in the fourth quarter of 2007. Wynn Macau
generated adjusted property EBITDA of $95.0 million compared to
$99.6 million in the fourth quarter of 2007.
Table games turnover in the VIP segment was $11.0 billion for the
period, compared to $11.2 billion for the fourth quarter of 2007.
VIP table games win as a percentage of turnover (calculated before
discounts and commissions) for the fourth quarter of both 2008 and
2007 was within the expected range of 2.7% to 3.0%.
Table games drop in the mass market category was approximately
$487.2 million during the period, a 4.0% decrease from
$507.6 million in the fourth quarter of 2007. Mass market table
games win percentage (calculated before discounts) of 19.5% was
in-line with the company's expected range of 18% to 20% and
slightly higher than the 19.1% in the fourth quarter of 2007.
Slot machine win increased 33.9% compared to the fourth quarter of
2007. Win per unit per day was $348, a 23.7% decline from the
fourth quarter of 2007 due to the increase in the average number
of slot machines from 708 to 1,241 slots.
Wynn Macau achieved an Average Daily Rate (ADR) of $273 for the
quarter in 2008, compared to $256 in the fourth quarter of 2007.
The property's occupancy was 86.8%, compared to 92.4% during the
prior year period, generating revenue per available room (REVPAR)
of $237 in the 2008 period, flat with 2007 levels.
Other Factors Affecting Earnings
Interest expense, net of $26.0 million in capitalized interest,
was $46.2 million for the fourth quarter of 2008. For the full
year 2008, interest expense, net of capitalized interest of
$87.4 million, was $172.7 million compared to $143.8 million, net
of capitalized interest of $44.6 million, for the year ended
December 31, 2007. Depreciation and amortization expenses were
$70.8 million during the quarter. For the full year, depreciation
and amortization expenses were $262.8 million and pre-opening
expenses were $72.4 million. Corporate expense and other was $9.3
million in the fourth quarter 2008 (including
$6.3 million in stock based compensation), a $6.0 million
reduction from last year's quarter primarily due to a reversal of
bonus accruals in the 2008 quarter. Corporate expense and other
was $57.1 million for the full year 2008, including $20.3 million
in stock based compensation.
Income Taxes
The company recorded a tax benefit for the year of $60.9 million
primarily attributable to the company's 2008 domestic operating
loss and foreign tax credits. The company's fourth quarter 2008
tax expense of $98.7 million reflects additional reserves against
deferred tax assets which are not directly related to the
company's fourth quarter operating results. Because of the
deteriorating economic environment the company reviewed the
company's ability to realize the US income tax benefit in the
future associated with the company's foreign tax credit
carryforward. As a result of the review, the company reduced the
deferred tax asset to the amount the company believes is more
likely than not realizable which resulted in increasing the
company's fourth quarter income tax expense.
Balance Sheet and Capital Expenditures
The company's total cash balances on December 31, 2008 were
$1.1 billion. Total debt outstanding at the end of 2008, was
$4.3 billion, including approximately $2.8 billion of Wynn Las
Vegas debt, $1.1 billion of Wynn Macau debt and $375 million
outstanding under the Wynn Resorts Term Loan Facility.
Total cash balances pro-forma for the Wynn Macau $500 million
revolver draw on February 4, 2009, were $1.6 billion including
$662 million at the parent company, $828 million at Wynn Macau and
the remaining $123 million at Wynn Las Vegas. Total debt
increased to $4.8 billion from $4.3 billion.
Capital expenditures during the fourth quarter of 2008, net of
changes in construction payables and retention, totaled
approximately $385 million primarily related to the completion of
Encore at Wynn Las Vegas.
In November 2008, the company purchased $625 million principal
amount of loans under the $1 billion Wynn Resorts Term Loan
Facility at a discounted price of 95.375%. This resulted in the
retirement of $625 million of principal at a cost of
$596.1 million. In connection with this transaction, the company
recorded a gain of $22.3 million on early retirement of debt, net
of the write-off of unamortized debt issue costs and fees.
On November 18, 2008, Wynn Resorts completed a secondary common
stock offering of 8 million shares with net proceeds of
$344.3 million.
About Wynn Resorts
Headquartered in Las Vegas, Wynn Resorts Limited (Nasdaq: WYNN) --
http://www.wynnresorts.com/-- owns and operates Wynn Las Vegas
and Wynn Macau.
* * *
As reported by the Troubled Company Reporter on November 18, 2008,
Standard & Poor's Ratings Services said that its 'BB' corporate
credit rating and stable outlook on Las Vegas-based Wynn Resorts
Ltd. and its wholly owned subsidiary, Wynn Las Vegas LLC (jointly
Wynn), would not be affected by the amendment to its $1 billion
senior unsecured term loan (issued by Wynn Resorts Ltd.) announced
on Nov. 13, 2008. The amendment permitted the repurchase of up to
$650 million principal value of its term loan. In addition, the
company's plans to issue up to
9.2 million shares of common stock at a price of $43.50 per share,
the proceeds of which could be applied toward the repurchase of
the term loan debt.
According to the TCR on July 22, 2008, Moody's Investors Service
changed the rating outlook of Wynn Resorts, Limited to negative.
Wynn Resorts' Ba3 Corporate Family Rating and long-term debt
ratings were affirmed, as were the long-term debt ratings of Wynn
Las Vegas, LLC.
* Consumer Confidence Falls to Lowest on Record
-----------------------------------------------
The Conference Board said that consumer confidence decreased
moderately in January, declined in February, reaching yet another
all-time low. The Index now stands at 25.0 (1985=100), down from
37.4 in January. The Present Situation Index declined to 21.2
from 29.7 last month. The Expectations Index decreased to 27.5
from 42.5 in January.
The Consumer Confidence Survey is based on a representative sample
of 5,000 U.S. households.
The reported confidence level was lower than every prediction
among all 72 economists surveyed by Bloomberg News, Bill Rochelle
said.
Says Lynn Franco, Director of The Conference Board Consumer
Research Center: "The Consumer Confidence IndexT, which was
relatively flat in January, reached yet another all-time low in
February (Index began in 1967). The decline in the Present
Situation Index, driven by worsening business conditions and a
rapidly deteriorating job market, suggests that overall economic
conditions have weakened even further this quarter."
* Consumer Prices Flat on Year; Last Year's Jumbo Loans
-------------------------------------------------------
For the first time since 1955, consumer prices didn't rise in the
last year, Bloomberg's Bill Rochelle said, citing a Feb. 23 report
by the U.S. Labor Department.
Mr. Rochelle adds that among Americans who took out jumbo loans in
2008, 2.7 percent are already delinquent by 60 days or more. Jumbo
loans made in 2007 required nearly twice as long to reach the
same delinquency level.
CPI-U Flat for from January 2008 Levels
According to the Bureau of Labor Statistics of the DOL, there was
a 0.0% change in the Consumer Price Index for All Urban Consumers
on an unadjusted basis for the 12 months ended January 2009 from
last year's.
The Consumer Price Index for All Urban Consumers (CPI-U) increased
0.4% in January, before seasonal adjustment, according to the
Bureau of Labor Statistics of the DOL. The January 2009 level of
211.143 (1982-84=100) was virtually unchanged from January 2008.
The energy index climbed 1.7% in January, its first increase in
six months, but it was still 31.4 percent below its July 2008 peak
level. Within energy, the gasoline index rose 6.0% in January
after a 19.3 percent decline in December. However, some energy
components continued to decline; the fuel oil index fell 3.7% in
January and the index for natural gas declined 3.6%. The food
index, which rose sharply during the summer and moderated through
the fall, increased 0.1% in January after being virtually
unchanged in December. The food index has risen 5.3% over the
past year.
* Fitch Says 24% of U.S. Corporate Bonds Hit by Downgrades in 2008
------------------------------------------------------------------
A new Fitch Ratings study finds that downgrades affected
$891.9 billion in U.S. corporate bonds in 2008, or 24% of U.S.
bond market volume, narrowly topping the previous high of 23.4%
recorded in 2002 (on $558.1 billion in downgrades).
'Downgrades, not surprisingly, accelerated significantly in the
second half of the year,' said Eric Rosenthal, Senior Director of
Fitch Credit Market Research. 'In the fourth quarter alone
downgrades totalled $391.5 billion or 10.6% of market volume.'
Overall, downgrades affected 9.3% ($279.5 billion) of investment
grade volume in the fourth quarter while upgrades affected 1.5%
($45.3 billion). On the speculative grade front, the effects of
negative and positive changes were 16.8% ($112 billion) and 1.2%
($8.2 billion), respectively.
For the full year, downgrades and upgrades affected 21.7% ($667.5
billion) and 4.0% ($121.8 billion) of investment grade bonds,
respectively, and 34.2% ($224.4 billion) and 11.4% ($74.4 billion)
of speculative grade bonds.
With both financial and industrial issuers derailed by the most
difficult funding conditions in decades, issuance in the second
half of 2008 fell 65.9% compared with the first half of the year,
and 2008 ended down 30.4% relative to 2007.
Fitch finds that $502 billion in U.S. corporate bonds is scheduled
to mature in 2009, representing 13% of U.S. bond market volume.
Financials make up the bulk of maturing bonds at $389.1 billion.
Speculative grade bond maturities total $30.6 billion in 2009 and
$107.3 billion through 2011.
'Refinancing risk continues to be an acute concern overall but
especially so at the speculative grade level,' said Mariarosa
Verde, Managing Director of Fitch Credit Market Research.
'Mounting pressure on the U.S. high yield default rate suggests
that there will be little relief on this front in 2009.'
The U.S. high yield default rate ended 2008 at 8.5%, up from 0.5%
at the end of 2007, according to Fitch's U.S. High Yield Par
Default Index. As of the date of this release, the default rate
on a trailing 12-month basis had reached 10%. Fitch expects the
default rate will end 2009 in a range of 15% to 18%.
Fitch finds that over the course of 2008, the share of the U.S.
corporate bond market rated 'AAA' or 'AA' contracted to 23.1% from
31.4% at the end of 2007. In addition, the share of the market
rated 'CCC' or lower grew from 3.7% at the end of 2007 to 6.1%,
topping the share of bonds rated 'AAA' for the first time.
Fitch's new report, titled 'U.S. Corporate Bond Market: A Review
of Fourth-Quarter and 2008 Rating and Issuance Activity,' offers
additional details on issuance patterns, rating activity by broad
market sector and industry, and bonds coming due.
* S&P Discusses Revised Assumptions for U.S. Cigarette Sales
------------------------------------------------------------
Standard & Poor's Ratings Services recently revised its base case
('B' rating case) and stress case volume decline assumptions for
U.S. cigarette sales, as well as its stress case market share
assumptions for domestic cigarette manufacturers. S&P uses these
two assumptions, among others, in S&P's methodology for rating
tobacco settlement-backed securities.
Tobacco settlement-backed securities are backed by payments made
by the participating tobacco manufacturers under the master
settlement agreement, which went into effect in 1998 and settled
various lawsuits filed by 46 U.S. states, the District of
Columbia, and several U.S. territories against the major cigarette
manufacturing companies. S&P decided to review its 'B' rating
case and stress case volume decline assumptions following the
recent passage of federal legislation that will raise the federal
excise tax on each pack of cigarettes sold in the U.S. by 62 cents
per-pack tax to $1.01 from 39 cents.
"Our decision reflects our belief that there is a strong
relationship between increases in cigarette taxes and declines in
the volume of domestic cigarettes sold," said credit analyst Aaron
Jones. "Our revised stress case market share assumptions for
ratings higher than 'B' reflect our views regarding the overall
impact that these price increases will have on consumer behavior."
In general, cigarette sales in the U.S. have decreased when taxes
have increased. Federal excise taxes were raised to 34 cents from
24 cents in 2000 and to 39 cents in 2002, and cigarette sales
declined 5.65% from year-end 1999 to year-end 2002. Standard &
Poor's believes the recently announced 62-cent tax increase per
pack may have a significant adverse effect on the number of
cigarettes sold in the next 18-24 months. Given the current
recession, S&P also expect the tax increase to have an effect for
18-24 months following the April 1, 2009, effective date of the
new tax.
* Ex-Alvarez & Marsal Directors Join Protiviti's Houston Office
---------------------------------------------------------------
The Houston office of Protiviti Inc., a global business consulting
and internal audit firm, said Michael Thompson and Wayne Wilson
have joined the company as managing directors in the Litigation,
Restructuring and Investigative Services practice. In their new
roles, Messrs. Thompson and Wilson will help Protiviti meet
increasing client requests -- both in Houston and across the
country - for services such as forensics, electronic discovery,
litigation consulting, merger and acquisition due diligence, fraud
risk management, financial investigations and international
arbitration.
Michael Thompson has more than 20 years of accounting and
forensics experience in financial and engineering services.
Serving clients throughout the world, he has provided fraud
investigation, crisis management accounting, claims consulting,
and expert testimonial services with a focus in accounting and
finance.
Mr. Thompson joins Protiviti from Gordius Consulting, a boutique
consulting firm in Houston that he co-founded and that specialized
in litigation and investigation services for the energy and
financial services industries. Prior to Gordius, he was a
managing director with Alvarez & Marsal, a turnaround and
bankruptcy consulting firm, where he performed a variety of
forensic accounting services. Mr. Thompson also served as
president and CEO of Engineering and Fire Investigations, a
forensic engineering and environmental services firm. Mr.
Thompson began his forensics career with Crawford & Company, where
he performed forensic accounting services such as insurance
claims, vendor compliance and fraud investigations in the United
States, Europe and Africa.
Mr. Thompson received a bachelor's of business administration
degree in accounting from Georgia Southwestern University. He is a
CPA and holds the Accreditation in Business Valuation designation
from the American Institute of Certified Public Accountants. Mr.
Thompson is also a Certified Fraud Examiner and a member of The
Institute of Internal Auditors, the Georgia Society of Certified
Public Accountants, and the AICPA.
Wayne Wilson has more than 16 years of experience in public
accounting, consulting and finance. He has served a broad array
of organizations, providing international consulting services and
expert testimony with a focus in accounting and finance within the
energy industry. Mr. Wilson's expertise includes damages
calculations, valuations, lost profits analyses, SEC and fraud
investigations, and other regulatory and internal inquiries.
Before joining Protiviti, Mr. Wilson was also a co-founder of
Gordius Consulting and a managing director with Alvarez & Marsal.
Prior to that, he was a director at Navigant Consulting, where he
helped build its Houston operation. Previously, Mr. Wilson worked
at a Big Four firm.
Mr. Wilson earned a master of science degree in accounting from
the University of Illinois and a bachelor's degree in accounting
from Cameron University. He is a CPA and a member of the Houston
World Affairs Council, the Institute for Transnational
Arbitration, Transnational Dispute Management, the American
Society of International Law, and the Institute for Energy Law.
Three other staff members of Gordius Consulting have also joined
Protiviti's Litigation, Restructuring and Investigative Services
practice. Casey Ballard comes aboard as an associate director and
Sandra Weisbrod and Meredith Alfred join as a senior manager and a
senior consultant, respectively.
About Protiviti
Protiviti Inc. - http://www.protiviti.com/-- is a global business
consulting and internal audit firm composed of experts
specializing in risk, advisory and transaction services. The firm
helps solve problems in finance and transactions, operations,
technology, litigation, governance, risk, and compliance.
Protiviti has more than 60 locations worldwide and is a wholly
owned subsidiary of Robert Half International Inc. Founded in
1948, Robert Half International is a member of the S&P 500 index.
Protiviti is not licensed or registered as a public accounting
firm and does not issue opinions on financial statements or offer
attestation services.
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
---------------------------------------------------------------
In Re Marshall Reddick Realty, Inc.
Bankr. C.D. Calif. Case No. 09-11254
Chapter 11 Petition filed February 17, 2009
See http://bankrupt.com/misc/cacb09-11254.pdf
In Re Marshall Reddick Seminars, Inc.
Bankr. C.D. Calif. Case No. 09-11255
Chapter 11 Petition filed February 17, 2009
See http://bankrupt.com/misc/cacb09-11255.pdf
In Re Coalt Properties & Investments Inc.
Bankr. M.D. Fla. Case No. 09-01744
Chapter 11 Petition filed February 17, 2009
Filed as Pro Se
In Re DTHC, Inc.
Bankr. N.D. Ga. Case No. 09-64011
Chapter 11 Petition filed February 17, 2009
See http://bankrupt.com/misc/ganb09-64011.pdf
In Re Lynch, Ichida, Thompson & Hirota, ALC
aka Lynch, Ichida, Thompson, Kim & Hirota, ALC
aka Lynch, Ichida, Thompson & Kim, ALC
Bankr. D. Hawaii Case No. 09-00311
Chapter 11 Petition filed February 17, 2009
Filed as Pro Se
In Re Northwest Investment Alliance Corporation
Bankr. D. Idaho Case No. 09-09-00335
Chapter 11 Petition filed February 17, 2009
Filed as Pro Se
In Re McInerney Holdings, Inc.,
dba Geeks on Call
Bankr. D. Md. Case No. 09-12505
Chapter 11 Petition filed February 17, 2009
Filed as Pro Se
In Re Howard & Blum Fine Jewelers, LLC
Bankr. D. Ariz. Case No. 09-02693
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/azb09-02693.pdf
In Re KOLOA 5, LLC
Bankr. D. Ariz. Case No. 09-02729
Chapter 11 Petition filed February 18, 2009
Filed as Pro Se
In Re Mark One, LLC
aka Mark One Insulation
aka Mark One Insulation and Firestop
Bankr. D. Colo. Case No. 09-12287
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/cob09-12287p.pdf
See http://bankrupt.com/misc/cob09-12287c.pdf
In Re Main Properties Management, Inc.
Bankr. M.D. Fla. Case No. 09-01024
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/flmb09-01024.pdf
In Re Richard J. Darling Electric, Inc.
Bankr. M.D. Fla. Case No. 09-02767
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/flmb09-02767.pdf
In Re Say What Screenprinting & Embroidery, Inc.
dba Make Your Mark Promo.Com
dba Performance Athletic Apparel
fka Dan's Cuisine, Inc.
Bankr. M.D. Fla. Case No. 09-02808
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/flmb09-02808.pdf
In Re Antoniou, Konstantinos D.
aka Gus Antoniou
Bankr. N.D. Ill. Case No. 09-05136
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/ilnb09-05136.pdf
In Re Smith, Maura
Bankr. D. Md. Case No. 09-12567
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/mdb09-12567.pdf
In Re Maktabi Investments Inc.
dba In the Loop Satellites
Bankr. E.D. Mich. Case No. 09-44328
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/mieb09-44328p.pdf
See http://bankrupt.com/misc/mieb09-44328c.pdf
In Re Christie, Juneil O.
Bankr. E.D. N.Y. Case No. 09-41199
Chapter 11 Petition filed February 18, 2009
Filed as Pro Se
In Re Eclisse Restaurant Inc.
c/o Forchelli, Curto, Crowe, Deegan, etc.
Bankr. E.D. N.Y. Case No. 09-70956
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/nyeb09-70956.pdf
In Re Serenata Kaffe Corporation
Bankr. E.D. N.Y. Case No. 09-70938
Chapter 11 Petition filed February 18, 2009
Filed as Pro Se
In Re Miller, Robert K.
Bankr. E.D. Tex. Case No. 09-20037
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/txeb09-20037p.pdf
See http://bankrupt.com/misc/txeb09-20037c.pdf
In Re Naomi Designs Incorporated
Bankr. N.D. Tex. Case No. 09-30991
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/txnb09-30991.pdf
In Re School for Allied Health Professions, Ltd.
aka School for Allied Health Professions
Bankr. N.D. Tex. Case No. 09-40950
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/txnb09-40950.pdf
In Re Emerald Hearth Home and Spas LLC
Bankr. W.D. Wash. Case No. 09-11352
Chapter 11 Petition filed February 18, 2009
See http://bankrupt.com/misc/wawb09-11352.pdf
In Re Mack Properties LLC
Bankr. D. Ariz. Case No. 09-02838
Chapter 11 Petition filed February 19, 2009
Filed as Pro Se
In Re Arkansas Wholesale Auto Salvage
Bankr. E.D. Ark. Case No. 09-11149
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/areb09-11149.pdf
In Re Miller, Joel Simon
Bankr. C.D. Calif. Case No. 09-11808
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/cacb09-11808.pdf
In Re Stojakovic, Danny Benz
Bankr. C.D. Calif. Case No. 09-13745
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/cacb09-13745.pdf
In Re Top Source One Security, Inc.
aka Rudy Solis
Bankr. C.D. Calif. Case No. 09-13715
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/cacb09-13715.pdf
In Re Moreland Aircraft, L.L.C.
Bankr. E.D. Calif. Case No. 09-11330
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/caeb09-11330.pdf
In Re Mobedshahi Hotel Group
Bankr. N.D. Calif. Case No. 09-51073
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/canb09-51073.pdf
In Re LaPresti, Mark Geoffrey
LaPresti, Lisa Marie
Bankr. M.D. Fla. Case No. 09-02987
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/flmb09-02987.pdf
In Re Peterson, Michelle A.
Bankr. N.D. Ill. Case No. 09-70499
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/ilnb09-70499.pdf
In Re Levea, Stella Mae
Bankr. D. Neb. Case No. 09-40393
Chapter 11 Petition filed February 19, 2009
See http://bankrupt.com/misc/neb09-40393p.pdf
See http://bankrupt.com/misc/neb09-40393c.pdf
In Re AH Collections, LTD.
Bankr. S.D. N.Y. Case No. 09-10730
Chapter 11 Petition filed February 19, 2009
Filed as Pro Se
In Re Ocean Atlantic Development Corporation
Bankr. E.D. Va. Case No. 09-11214
Chapter 11 Petition filed February 19, 2009
Filed as Pro Se
In Re Sundance Art Corporation
Bankr. D. Ariz. Case No. 09-02933
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/azb09-02933.pdf
In Re Vehbi Kocer Salgut
aka Koch Salgut
aka Koch V. Salgut
fdba Ararat Mediterranean Bar & Tapas
fdba Ti Piacera Restaurant
Bankr. N.D. Calif. Case No. 09-30421
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/canb09-30421.pdf
In Re Whalley Avenue Funding, LLC
Bankr. D. Conn. Case No. 09-30388
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/ctb09-30388.pdf
In Re Rydan Group, Inc.
dba Dunkin Donuts
Bankr. M.D. Fla. Case No. 09-01912
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/flmb09-01912.pdf
In Re Carl Carmelo Vitaliti
aka Carl C. Vitaliti
dba Vitality Enterprises
Bankr. D. Md. Case No. 09-12728
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/mdb09-12728.pdf
In Re Fulghem, Jarkis Teryule
Bankr. W.D. Mo. Case No. 09-40688
Chapter 11 Petition filed February 20, 2009
Filed as Pro Se
In Re Zyon Int'l Inc.
Bankr. D. Nev. Case No. 09-12192
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/nvb09-12192.pdf
In Re Don's What A Bagel, Inc.
Bankr. D. N.J. Case No. 09-14058
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/njb09-14058.pdf
In Re Thomas R. Inge Enterprises, Inc.
Bankr. D. N.J. Case No. 09-14108
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/njb09-14108.pdf
In Re Williams, Steven James
Bankr. E.D. N.C. Case No. 09-01356
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/nceb09-01356p.pdf
See http://bankrupt.com/misc/nceb09-01356c.pdf
In Re Urban Assault, Inc.
Bankr. W.D. Pa. Case No. 09-21062
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/pawb09-21062.pdf
In Re EduComputer De Puerto Rico
Bankr. D. P.R. Case No. 09-01181
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/prb09-01181.pdf
In Re Barbara Allen Chadwick
dba M&B Construction
Bankr. E.D. Tenn. Case No. 09-11047
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/tneb09-11047p.pdf
See http://bankrupt.com/misc/tneb09-11047c.pdf
In Re Battlecreek Milling and Supply Company Inc.
Bankr. E.D. Tenn. Case No. 09-11041
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/tneb09-11041.pdf
In Re King Maggie, Inc.
Bankr. S.D. Tex. Case No. 09-31153
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/txsb09-31153.pdf
In Re Universal Drilling Services of Texas, LLC
Bankr. S.D. Tex. Case No. 09-31143
Chapter 11 Petition filed February 20, 2009
See http://bankrupt.com/misc/txsb09-31143.pdf
In Re Bazille Spine Centre LLC
Bankr. S.D. Tex. Case No. 09-31163
Chapter 11 Petition filed February 21, 2009
See http://bankrupt.com/misc/txsb09-31163.pdf
In Re Dent, Jerry D.
Dent, Mary Margaret
Bankr. S.D. Tex. Case No. 09-31164
Chapter 11 Petition filed February 21, 2009
See http://bankrupt.com/misc/txsb09-31164.pdf
In Re Roberton, William L.
aka Bill Roberton
Bankr. S.D. Tex. Case No. 09-31165
Chapter 11 Petition filed February 21, 2009
See http://bankrupt.com/misc/txsb09-31165.pdf
In Re Auto, Quality
aka Quality Auto
Bankr. D. N.J. Case No. 09-14182
Chapter 11 Petition filed February 22, 2009
See http://bankrupt.com/misc/njb09-14182.pdf
In Re Tuscaloosa ZX2, LLC
Bankr. N.D. Ala. Case No. 09-70435
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/alnb09-70435p.pdf
See http://bankrupt.com/misc/alnb09-70435c.pdf
In Re Playa Properties, LLC
Bankr. C.D. Calif. Case No. 09-13920
Chapter 11 Petition filed February 23, 2009
Filed as Pro Se
In Re Castro, Donald
Bankr. C.D. Calif. Case No. 09-11442
Chapter 11 Petition filed February 23, 2009
Filed as Pro Se
In Re Silvera's Steakhouse and Lounge LLC
Bankr. C.D. Calif. Case No. 09-11454
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/cacb09-11454.pdf
In Re SJP Real, LLC
Bankr. D. Conn. Case No. 09-50312
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/ctb09-50312.pdf
In Re Robert Charles Nestor, Jr.
Bankr. N.D. Ga. Case No. 09-64493
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/ganb09-64493.pdf
In Re West Georgia Dental of LaGrange, P.C.
Bankr. N.D. Ga. Case No. 09-10607
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/ganb09-10607.pdf
In Re Kumar, Pallathe Rejesh
Bankr. D. Md. Case No. 09-12874
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/mdb09-12874.pdf
In Re All Seasons Bistro, L.L.C.
Bankr. W.D. Mich. Case No. 09-01794
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/miwb09-01794p.pdf
See http://bankrupt.com/misc/miwb09-01794c.pdf
In Re Easy Street Cafe Inc.
Bankr. E.D. N.Y. Case No. 09-71067
Chapter 11 Petition filed February 23, 2009
Filed as Pro Se
In Re Centre Ave Tower, Inc.
Bankr. S.D. N.Y. Case No. 09-22245
Chapter 11 Petition filed February 23, 2009
Filed as Pro Se
In Re Escape Away Spa
Bankr. E.D. Pa. Case No. 09-11246
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/paeb09-11246.pdf
In Re Dependable Staffing Agency Ltd.
Bankr. W.D. Wash. Case No. 09-11545
Chapter 11 Petition filed February 23, 2009
See http://bankrupt.com/misc/wawb09-11545.pdf
In Re Adobe Holdings, Inc.
dba Brougham Investments
Bankr. C.D. Calif. Case No. 09-13235
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re Rodriguez, Altagracias Beltran
dba Rodriguez Realty
Bankr. C.D. Calif. Case No. 09-14073
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/cacb09-14073.pdf
In Re East Bay Pain Care, An Acupuncture Corporation
Bankr. N.D. Calif. Case No. 09-41367
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re Telegraph Group
Bankr. N.D. Calif. Case No. 09-41364
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re Connecticut Amusements Inc.
Bankr. D. Conn. Case No. 09-50321
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re Greater Limits Inc.
Bankr. M.D. Fla. Case No. 09-02064
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re M. Davis Management, Inc.
dba Proximed
aka CPAPSupply.com
aka Proximed.com
Bankr. M.D. Fla. Case No. 09-02071
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/flmb09-02071.pdf
In Re Hardee, Benjamin O.
Bankr. N.D. Ga. Case No. 09-64619
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re Jimmy Don Crane
dba Crane Grading & Construction Company
Bankr. N.D. Ga. Case No. 09-40751
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/ganb09-40751.pdf
In Re Premiere Millworks, Inc.
Bankr. N.D. Ga. Case No. 09-40724
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/ganb09-40724.pdf
In Re Bonanno, Anthony Marcel
Bankr. D. Hawaii Case No. 09-00365
Chapter 11 Petition filed February 24, 2009
Filed as Pro Se
In Re Integrated Catastrophe Services Inc.
Bankr. S.D. Ind. Case No. 09-01902
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/insb09-01902.pdf
In Re Martino's, Inc.
dba Cicero Lawn and Garden
Bankr. S.D. Ind. Case No. 09-01909
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/insb09-01909.pdf
In Re Blessed Celebrity Catering, Inc.
dba The Celebrity Delly
Bankr. D. Md. Case No. 09-13004
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/mdb09-13004.pdf
In Re Ham Heung, Inc.
dba Doo Rae Myun Ok
dba Doo Rae Myun Ok
Bankr. D. N.J. Case No. 09-14396
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/njb09-14396.pdf
In Re Printers Bindery Inc.
Bankr. D. N.J. Case No. 09-14395
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/njb09-14395.pdf
In Re Cannon, James E.
dba International Marketing Consultants
Bankr. W.D. Pa. Case No. 09-21165
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/pawb09-21165.pdf
In Re Observatory Hill Early Learning Child Development Center
Bankr. W.D. Pa. Case No. 09-21146
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/pawb09-21146p.pdf
See http://bankrupt.com/misc/pawb09-21146c.pdf
In Re Walker Car Care Center, Inc.
dba Goodyear
Bankr. M.D. Tenn. Case No. 09-02007
Chapter 11 Petition filed February 24, 2009
See http://bankrupt.com/misc/tnmb09-02007.pdf
*********
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 ***