/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090312.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, March 12, 2009, Vol. 13, No. 70 Headlines 1330 MEZZ I: Sale of Interest in NY Office Bldg. Set for April 22 26-01 ASTORIA: U.S. Trustee Asks Court to Dismiss or Convert Case AF EVANS: Wants to Hire Kornfield Nyberg as Bankruptcy Counsel AHM HOSPITALITY: Voluntary Chapter 11 Case Summary ALBUQUERQUE CAR: Voluntary Chapter 11 Case Summary ALERIS INT'L: Loans Valued at 8 Cents in Swaps Auction ALERIS INT'L: Interested Parties Balk at $1.075 Billion DIP Loan ALERIS INT'L: Hearing on DIP Financing Rescheduled to March 16 ALERIS INT'L: Seeks Court Approval of Alvares & Marsal Engagement ALERIS INT'L: Seeks Sept. 10 Extension of Lease Decision Period ALERIS INT'L: Utilities Balk at Adequate Assurance Proposal ALERIS INT'L: Won't Ship Aluminum Ingots to General Motors ALESCO FINANCIAL: Faces Delisting of Shares From NYSE ALLISON TRANSMISSION: S&P Cuts Corporate Credit Rating to 'B' ALTRA INDUSTRIAL: Moody's Affirms Ratings, Gives Negative Outlook AMERICAN ACHIEVEMENT: Moody's Downgrades Default Rating to 'Caa3' AMERICAN INT'L: Says Failure May Cripple Banks, Money Funds AMERICAN INTERNATIONAL: Sells 100,000 Shares for $500,000 ARTISTDIRECT INC: Issues Convertible Note to Frederick Field ASPEN EXECUTIVE: Implements Terms of Liquidation Plan ATHOL MANUFACTURING: Butner NC Property Auction on April 8 ATLANTIC RADIO: Voluntary Chapter 11 Case Summary AUTOBACS STRAUSS: Lists $50.2-Mil. in Assets, $63.1-Mil. in Debts BANK OF AMERICA: Top Merrill Banker Subpoenaed for Bonuses BANK OF NT: Fitch Raises Support Rating Floor from 'BB-' BERNARD L. MADOFF: Expected to Plea Guilty Today in Fraud Suit BERNARD L. MADOFF: Used London Unit in Alleged Fraud, Says Gov't BOSTON SCIENTIFIC: Moody's Affirms 'Ba1' Corporate Family Rating BOWNETREE LLC: Sends Plan for Voting; Ballots Due March 24 BUILDING MATERIALS: Posts $104 Million Net Loss in Q4 2008 BUILDING MATERIALS: Wins Waiver From Lenders on Potential Default CABLEVISION SYSTEMS: Discloses Results of Cash Tender Offers CANADIAN SUPERIOR ENERGY: NYSE Halt Trading; Status Quo at TSX CANADIAN TRUST: Restructuring Legal Costs Reach $200 Million CARR MARITIME: Voluntary Chapter 11 Case Summary CB RICHARD: S&P Downgrades Counterparty Credit Rating to 'BB' CELL THERAPEUTICS: Has Until April 6 to Comply NASDAQ Standards CELL THERAPEUTICS: Reduces Workforce After JV Sale to Spectrum CEMEX SAB: S&P Downgrades Global Corporate Credit Rating to 'B-' CHEMTURA CORP: Amends Compensation Schedule for Non-Insiders CIRCUIT CITY: Bankruptcy to Be Examined By Congress Panel Today CITADEL BROADCASTING: Likely Pact Breach Cues S&P's Junk Rating DELPHI CORP: Court Issues Bench Ruling on OPEB Dispute EL PASO CHILE: Second Amended Plan Confirmed on February 24 ECLIPSE AVIATION: Fuji Widens Loss Estimate on Ch. 7 Liquidation ENRON CORP: Judge Tosses Claims Against Banks in Investor Suit FAWN RIDGE: Voluntary Chapter 11 Case Summary FLEETWOOD ENTERPRISES: Chapter 11 Filing Cues Moody's 'D' Rating FOAMEX INT'L: U.S. Trustee Balks at Bonus Plan for 14 Executives FORD MOTOR: Hurt by Bondholders' Credit-Default Swaps FREDDIE MAC: 2008 Net Loss Balloons to $50BB; Seeks $30BB Funding FREDDIE MAC: Appoints Koskinen as Interim CEO, Glauber as Chairman FREDDIE MAC: Enters Into Indemnification Agreements With Execs FREESCALE SEMICONDUCTOR: Reports Results of Note Invitations G.I. JOE'S: Court Grants Additional 15 Days for Schedules Filing G.I. JOE'S: Wants to Hire BMC Group as Notice and Claims Agent G.I. JOE'S: Can Sell Substantially All Assets at March 30 Auction GENERAL MOTORS: Amends JPMorgan Loan Amid Going Concern Doubt GENERAL MOTORS: Aleris Seeks to Cancel Shipment Contract GENERAL MOTORS: SAAB Unit Draws Interest from Rivals GENERAL MOTORS: Scania Has Veto Power on SAAB Sale GENERAL MOTORS: Private-Equity Firms Not Interested in Opel GOODY'S LLC: Court Approves Settlement on First Bankruptcy Case GOODYEAR TIRE: S&P Gives Negative Outlook; Affirms 'BB-' Rating GOTTSCHALKS INC: Seeks Buyer for Biz; Lead Bid is for GOB Sales GREEKTOWN CASINO: Says Market Share Rose Almost 1% in Past Month GREENBRIER COMPANIES: Moody's Cuts Corporate Family Rating to B3 GREENBRIER COS: S&P Corrects Previous Rating Press Release GREENSHIFT CORP: Terminates Equity Capital Contribution Agreement GREENSHIFT CORP: Issues 55.2 Million Shares to 3 Investors HAWAIIAN TELCOM: Court Okays Klehr Harrison as Co-Counsel HAWAIIAN TELCOM: Gets Court OK to Tap Deloitte as Auditors HAWAIIAN TELCOM: Lenders Agree to Continued Cash Collateral Use HEARST CORP: Post-Intelligencer to Become Online-Only Publication HERBST GAMING: Reach Agreement with Lenders for Ch. 11 Plan HOST HOTELS: Moody's Affirms 'Ba1' Senior Unsecured Debt Rating INVESTMENT EQUITY: Proposes Owners' Backing; Plan Hearing April 14 ION GEOPHYSICAL: S&P Downgrades Corporate Credit Rating to 'B' ISOTONER CORP: S&P Downgrades Corporate Credit Rating to 'B-' J CREW: Posts $13.5 Million Loss in Fourth Quarter 2008 JAMES BALLOON: Voluntary Chapter 11 Case Summary JAY HOSTETTER: Creditors Must File Proofs of Claim by August 25 JOHN STOKES: Files for Chapter 11 Bankruptcy Protection JOHNSON CONTROLS: S&P Puts 'BB+' Rating on Proposed Debt Issues JOSEPH WILLIAMS: Voluntary Chapter 11 Case Summary JOURNAL REGISTER: U.S. Trustee Forms Three-Member Creditors Panel KEPLER HOLDINGS: Moody's Withdraws 'Ba2' Rating on Bank Loan KERYX BIOPHARMACEUTICALS: To Appeal Nasdaq Delisting Notice KIMBALL HILL: Court Confirms Chapter 11 Plan of Liquidation LAS VEGAS SANDS: Moody's Downgrades Default Rating to 'B3' LEE ENTERPRISES: Says Growth of Print, Online Audiences Continues LEHMAN BROTHERS: Has Paid A&M $32.7MM; Boosts Cash to $6.8 Billion LEHMAN BROTHERS: Bank Unit Defaults on Eagle Rock Financing Deal LEHMAN BROTHERS: Banks Bid for Property Bonds Swap Business LEUCADIA NATIONAL: Fitch Affirms 'BB+' Issuer Default Rating LOCKE CAPITAL: Sued by SEC for Concocting $1.2-Bil. Client LYONDELL CHEMICAL: Unsecured Creditors Want to Probe Basell Merger LYONDELL CHEMICAL: Asks Court to Bar California Paint Suits M&P GRADING: Voluntary Chapter 11 Case Summary MAGNA ENTERTAINMENT: Starts Process to Sell Tracks to Shareholder MAGNA ENTERTAINMENT: Pimlico Racing Schedule Cut by 11 Days MAGNA ENTERTAINMENT: Receives Notice Of Delisting From Nasdaq MANASSEH BUILDING: Files for Chapter 11 in Woodland Hills MARGARET BLESSING: Selling 3.14-Acre Tract in Worth for $55,000 MASONITE INT'L: Reports 19.8% Decline in 2008 Sales MASONITE INT'L: Presents Financial Projections for 2009-2013 MERISANT WORLDWIDE: S&P Withdraws 'D' Rating MERUELOMADDUX: May Default on $266MM in Loans, Mulls Bankruptcy MGM MIRAGE: Moody's Cuts Probability of Default Rating to 'Caa2' MILACRON INC: Chapter 11 Filing Prompts S&P's Rating Cut to 'D' METROMEDIA STEAKHOUSES: Affiliate Agrees to Loan Extension MICHAEL VICK: Appearance at Bankruptcy Hearing Opposed MILACRON INC: Wants to Access $135 Million GE-DDJ DIP Facility MILACRON INC: Wants to Employ Dinsmore & Shohl as Counsel MILACRON INC: Wants Schedules Deadline Moved to May 11 MIRABILIS VENTURES: Can Employ Shutts & Bowen as Special Counsel MONACO COACH: Can Access Cash Collateral on Interim Basis MONACO COACH: Lenders May Raise Interest Rates on Credit Lines MONACO COACH: Submits Budget Proposal to Bankruptcy Court MORGAN HAUGH: Voluntary Chapter 11 Case Summary MPF CORP: Seeks June 30 Extension of Plan Filing Deadline NEXSTAR BROADCASTING: Exchange Offer Cues S&P's Junk Rating NORTHEAST BIOFUELS: Ethanol Plant Marked for April 14 Auction OSHKOSH CORP: S&P Affirms 'B' Long-Term Corporate Credit Rating PACIFIC ENERGY: Proposes to Employ Pachulski as Bankr. Counsel PARADOCKS TWO: Voluntary Chapter 11 Case Summary PATRICK CANNON: Voluntary Chapter 11 Case Summary PEREGRINE SYSTEMS: Former Counsel E. Deller Goes to Trial PEREGRINE SYSTEMS: Ex-Finance Chief Order to Pay $2.09-Mil. PETTERS GROUP: Ritchie Capital Counters Polaroid Suit PETTERS GROUP: Sun Country Repays Debtor-In-Possession Loan PHILADELPHIA NEWSPAPERS: Hearing on DIP Loan Moved to March 17 PHOENIX COMPANIES: Moody's Downgrades Senior Debt Rating to 'Ba2' PHOENIX COS: S&P Downgrades Counterparty Credit Rating to 'BB-' PLANET ORGANIC: In Talks With Lenders for Covenant Relief POLAROID CORP: Court Sets March 30 Auction for All Assets POLAROID CORP: Ritchie Capital Calls Suit 'Baseless, Malicious' PRECISION PARTS: No Rival Bids for Cerion's $18.5MM Offer PROPEX INC: Court Sets March 23 Auction for All Assets QIMONDA NA: U.S. Trustee Form Seven-Member Creditor Committee QUIGLEY CO: Allowed to Use Cash Collateral Until Plan Hearing RESERVE PRIMARY FUND: Sued by Deutsche for Repayment of $72.2-Mil. RITZ CAMERA: Auction for Boater's On; 400 Camera Stores Next RITCHIE CAPITAL: Polaroid Suit 'Baseless' and 'Malicious' ROCK OF AGES: Obtains Covenant Waiver From CIT Group ROUSE COMPANY: Fitch Keeps Negative Watch on 'C' Issuer Rating RTL GRADING: Voluntary Chapter 11 Case Summary SAKS INC: Market Turmoil Cues S&P's Rating Downgrades to 'B-' SEMGROUP LP: To Seek Approval of Energy Partners Deal Today SEMGROUP LP: Eagle Rock Has $10.7 Million Write-off on Bankruptcy SERAFINO HOLDINGS: Accused of Ponzi Scam Tied to Cosmo Fraud SIX FLAGS: Hurt by Bondholders' Credit-Default Swaps SPECTRUM BRANDS: Equity Panel Named; Shareholder Recovery Raised ST. MARY'S HOSPITAL: Files Chapter 11 in Newark STANFORD GROUP: Receiver Sues N.Y. Landlord for Ending Lease STANFORD GROUP: Court Unfreezes Investor Accounts STAR TRIBUNE: Committee Can Hire Lowenstein Sandler as Counsel STERLING BANCSHARES: Fitch Affirms Preferred Rating at 'BB' STONE ENERGY: Monetization of Hedges Won't Change Moody's B3 SUNSET AVIATION: Files Chapter 7 Petition in Wilmington SUNWEST MANAGEMENT: Lenders Want Judge Disqualified in Fraud Case SUPERIOR ENERGY: BG Group to Maintain Funding for Trinidad Venture TAHERA DIAMOND: Canadian Court Extends CCAA Stay Until May 29 TAHERA DIAMOND: Obtains $500,000 Loan From Potential Asset Buyer TARRAGON CORP: May Obtain $6.25 Million DIP Loan from ARKOMD LLC TELEPLUS WORLD: Wants Arnstein & Lehr as Bankruptcy Counsel TRIBUNE CO: Talks Ongoing for Sale of Cubs to Rickets Family TRINITY INNOVATIVE: Voluntary Chapter 11 Case Summary UAL CORP: Files Full Year 2008 Financial Report with SEC UAL CORP: Settles Claims, Various Disputes wit LAX UAL CORP: 7th Cir. Affirms Lower Court Ruling on ALPA Dispute UAL CORP: Status Hearing in Chapter 11 Case on March 31 UAL CORP: FMR Reports 15% Equity Stake; BofA Holds 13% of Shares USA DATANET: Court Approves Sale of Wholesale & Hosted VoIP Assets VALLEJO CITY: $12MM Deficit May Lead to Salary & Services Cut VANDERBILT UNIVERSITY: Moody's Assigns Rating on $330 Mil. Bonds VERSO TECH: Files Disclosure Statement In Support of Joint Plan VISTEON CORP: Makes Payment on Outstanding Bonds W.R. GRACE: Court Okays Voting Procedures; Ballots Due May 20 WILLIAM DOUGHTY: Voluntary Chapter 11 Case Summary WL HOMES: DIP Financing Hearing Moved to March 23 * Moody's Has 283 Cos. W/ High Default Risk in Bottom Rung Report * Fed Reserve Chair Defends Bail-Out for Financial Institutions * Stinging Economy Surges Demand for Law Firms in Calgary * U.S. Auto Suppliers Facing Reduced Payments This Month * FDIC May Get $500 Billion to Guarantee Bank Deposits * U.S. Gov't Mulls Financial Assistance for Small Businesses * SEC Beefs Up Account Inspections due to Recent Frauds * Nadler to Propose Lifting of BAPCPA's 210-Day Limit for Leases * David Hawthorne Joins Focus Management * Law Firm Group Pushes for Worldwide Financial Court * Moelis Taps Mark Hootnick to Boost Restructuring Group * Richard Fries, Todd Marcus & Scott Stern Join Bingham McCutchen * White & Case to Fire 400 Staff, Staff; 3 Other Firms Make Cuts * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 ********* 1330 MEZZ I: Sale of Interest in NY Office Bldg. Set for April 22 ----------------------------------------------------------------- 1330 Otera Capital LLC, as secured party and assignee of German American Capital Corporation, the original lender, discloses that 100% of the memberships interests of 1330 Mezz I LLC, a Delaware limited liability company, in 1330 Acquisition Co. LLC will be offered for sale at a public auction and sold to the highest qualified bidder on April 22, 2009, at 1:00 p.m. at the law offices of Allen & Overy LLP, 1221 Avenue of the Americas, 21st Floor, New York, NY 10020. The principal asset of 1330 Acquisition Co. is an office building located at 1330 Avenue of the Americas, New York, NY. The sale is held to enforce the rights of the secured party under that certain first mezzanine loan and security agreement dated as of December 28, 20006, executed by 1330 Mezz I LLC. The secured party reserves the right to reject all bids and terminate or adjourn the sale to another time, without further publication. Interested parties who would like additional information regarding the collateral, the requirements to be a "qualified bidder" or the terms of the sale should visit the Web site www.eastdilsecured.com/notices/1330AoA.pdf or contact Adam Spies of Eastdil Secured, LLC at (212) 315-7200 or at 40 West 57th Street, 22nd Floor, New York, NY 10019. 26-01 ASTORIA: U.S. Trustee Asks Court to Dismiss or Convert Case ----------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, wants the U.S. Bankruptcy Court to dismiss 26-01 Astoria Development, LLC's bankruptcy case, or in the alternative, convert the Debtor's Chapter 11 case to a case under Chapter 7. The U.S. Trustee informed the Court that the Debtor has been unable to rehabilitate its business or form a reorganization plan and has failed to file monthly operating reports and pay the U.S. Trustee fees. As reported in the Troubled Company Reporter on October 6, 2008, the Debtor filed a Chapter 11 plan. But the Court later denied approval of the explanatory disclosure statement "without prejudice on grounds of prematurity". Obtaining approval of the disclosure statement is necessary before the debtor could begin soliciting support on, and subsequently seek confirmation of, the plan. The plan, as submitted, contemplated the sale of the company's assets and funding of distributions to creditors from the sale proceeds. Based in Astoria, New York, 26-01 Astoria Development LLC is involved in real estate development. The company filed for Chapter 11 protection on June 19, 2008 (Bankr. E.D. N.Y. Case No. 08-43900). Robert R. Leinwand, Esq., and Arnold Mitchell Greene, Esq., at Robinson Brog Leinward Greene Genovese & Gluck PC, represent the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $15,250,000 and total debts of $9,979,439. AF EVANS: Wants to Hire Kornfield Nyberg as Bankruptcy Counsel ---------------------------------------------------------------- A.F. Evans Company, Inc., seeks authority from the U.S. Bankruptcy Court for the Northern District of California to employ Kornfield, Nyberg, Bendes & Kuhner, P.C., as counsel. Kornfield Nyberg will: a) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued operation of its business and management of its property; b) prepare on behalf of the Debtor the necessary applications, answers, orders, reports and other legal papers; c) perform all other legal services for the debtor which may be necessary in this case. Kornfield Nyberg's hourly rates are: Eric A. Nyberg $350 Charles N. Bendes $350 Chris D. Kuhner $335 Nancy Nyberg (Bookkeeping and Accounting) $80 Paralegal Assistant $40 Eric A. Nyberg tells the Court that Kornfield Nyberg has received an original retainer of $90,000, of which $63,709 remains as of the petition date. Mr. Nyberg assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Nyberg can be reached at: Kornfield, Nyberg, Bendes & Kuhner, P.C. 1999 Harrison Street, Suite 2675 Oakland, CA 94612 Tel: (510) 763-1000 Fax: (510) 273-8669 About A.F. Evans Headquartered in Oakland, California, A.F. Evans Company, Inc. -- http://www.afevans.com/-- is a property developer. The Debtor filed for Chapter 11 protection on March 5, 2009, (Bank. N.D. Calif. Case No.: 09-41727) Eric A. Nyberg, Esq. at Kornfield, Nyberg, Bendes and Kuhner represents the Debtor in its restructuring efforts. The Debtor listed estimated assets of less than $50,000 and estimated debts of $100 million to $500 million. AHM HOSPITALITY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: AMH Hospitality, LLC dba Inn at the Falls 200 Winstone Drive, Apt. 1103 Cliffside Park, NJ 07010 Bankruptcy Case No.: 09-35505 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Southern District of New York (Poughkeepsie) Judge: Cecelia G. Morris Debtor's Counsel: Thomas Genova, Esq. Genova & Malin Hampton Business Center 1136 Route 9 Wappingers Falls, NY 12590 Tel: (845) 298-1600 Fax: (845) 298-1265 Email: genmallaw@optonline.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/nysb09-35505.pdf The petition was signed by Meghna Mehta, managing member of the company. ALBUQUERQUE CAR: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Albuquerque Car Crushers, Inc. 5711 Broadway SE Albuquerque, NM 87105 Bankruptcy Case No.: 09-10904 Chapter 11 Petition Date: March 5, 2009 Court: United States Bankruptcy Court New Mexico (Albuquerque) Judge: James S. Starzynski Debtor's Counsel: Albert W. Schimmel, III, Esq. Schimmel Law Office Post Office Box 8 320 Gold Avenue, SW, Suite 900 Albuquerque, NM 87103-0008 Tel: (505) 837-4400 Fax: (505) 837-2528 Email: spike@nm.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/nmb09-10904.pdf The petition was signed by Vences Trujillo, president of the company. ALERIS INT'L: Loans Valued at 8 Cents in Swaps Auction ------------------------------------------------------ Credit-default swaps traders set a value of 8 cents on the dollar for loans of Aleris International Inc. to settle credit-default swaps guaranteeing the debt of the company, Bloomberg's Shannon D. Harrington reported. The price, Bloomber relates, means sellers of credit-default swaps protecting against a default by Aleris will pay 92 cents on the dollar to settle the derivatives. According to creditfixings.com, on March 9, 2009, 10 dealers submitted inside markets, physical settlement requests and limit orders to the Aleris auction administered by Creditex Group Inc. and Markit Group Ltd. to settle trades across the market referencing Aleris. Meanwhile, creditfixings.com said that an auction to settle the credit derivative trades for Station Casinos, Inc. is to be held at a date yet to be determined. 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: Interested Parties Balk at $1.075 Billion DIP Loan ---------------------------------------------------------------- Babson Capital Management LLC, J. Aron & Company, and TPG Partners V, L.P. expressed their opposition to the request of Aleris International Inc. and its debtor affiliates for final approval of a $1.075 billion postpetition financing facility from Deutsche Bank AG New York Branch, Oaktree Capital Management, L.P., Apollo ALS Holdings, L.P., and other lenders. (1) Babson Capital Management LLC Babson Capital Management LLC notes that the Debtors seek to prime existing secured lenders by at least $1.585 billion, while citing the precipitous decline in the value of their assets as a primary basis for filing bankruptcy petitions. Babson is a prepetition term loan lender of the Debtors who holds at least $71,646,128 in secured claims. Michael R. Lastowski, Esq., at Duane Morris LLP, in Wilmington, Delaware, contends that the alleged excess in size of the term facility over the Debtors' projected liquidity needs suggests that the size of the DIP Facilities, including the corresponding roll-up, are simply a disguised effort to improve the positions of the prepetition ABL Lenders and the backstop lenders by paying off or rolling up a larger proportion of their prepetition debt than they would otherwise have been eligible to do. He also argues that the DIP Facilities impermissibly impair the rights of the Prepetition Term Creditors that do not participate in the New Money Term Facility, and whose liens in the Prepetition Term Collateral would be pushed down the Debtors' capital structure without adequate protection simply because they declined to lend new money to the Debtors. Babson, accordingly, asks the U.S. Bankruptcy Court for the District of Delaware to deny the Debtors' postpetition financing request. Should the Court be inclined to grant certain of the Debtors' request, Babson, at a minimum, urges the Court to require the Debtors to substantiate their need for the amounts sought under the DIP Facilities, but deny the Debtors authority to enter into the Roll-Up Term Facility. The Roll-Up Term Facility, Mr. Lastowski says, benefits only the related lenders rather than the Debtors' estates. (2) J. Aron & Company J. Aron & Company, a party to certain hedge agreements required under the Debtors' prepetition term loan agreement, complains that the proposed roll-up of the Prepetition Term Loan obligations under the proposed DIP facility does not include a full roll-up of the Debtor' secured hedging obligations to J. Aron, pursuant to a certain intercreditor agreement. William Bowden, Esq., at Ashby & Geddes, P.A., in Wilmington, Delaware, asserts that the Debtors and the proposed DIP lenders are seeking to violate the Intercreditor Agreement, notwithstanding the express and unambiguous language in that Agreement, by impermissibly subordinating J. Aron's secured obligations, aggregating $61.4 million, to a fourth priority lien position that is junior to the $500 million in new money term loan DIP financing and up to $500 million of prepetition term loan obligations that the Debtors are seeking to roll up into a second priority lien position. Mr. Bowden argues that the Debtors propose to violate J. Aron's statutory rights, as a Section 507(b) administrative claim holder entitled to full cash payment of its claim, by seeking an order that will permit two-thirds of the holders of Section 507(b) claims to bind all holders of those claims to different treatment. To the extent provisions in the proposed DIP Facility seeks to impair J. Aron's rights as a Section 507(b) administrative expense claim holder, J. Aron wants those provisions struck from the Proposed Final DIP Order. (3) TPG Partners V, L.P. Representing TPG Partners V, L.P, a holder of substantially all of the equity of Debtor Aleris International, Inc., Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Delaware, emphasizes that the Debtors' Intercreditor Agreement requires the express consent of TPG before changes can be made to the priority of liens securing TPG's hedging obligations in relation to the liens securing the obligations of other secured parties. Mr. Abbot tells the Court that the proposed financing motion, in its present form, which does not include TPG's express consent, will compromise the security underlying TPG's secured claim of approximately $26 million. TPG, accordingly, asks the Court to deny the Debtors' request to the extent it violates the Intercreditor Agreement. As reported by the Troubled Company Reporter, the Court has authorized the Debtors, on an interim basis, to: -- obtain or guaranty obligations in respect of postpetition financing and borrowings up to $1,075,000,000, with $150,000,000 available on an interim basis; -- grant superpriority claims, equal liens, and priority liens to the Debtors' postpetition lenders; -- roll up certain prepetition secured debt into postpetition secured debt; and -- enter into certain terms and conditions relating to Prepetition Credit Facility Amendments and pay the amendment fee. 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: Hearing on DIP Financing Rescheduled to March 16 -------------------------------------------------------------- Aleris International, Inc. said the U.S. Bankruptcy Court for the District of Delaware has authorized the company to pay and continue to honor certain remaining employee benefits that had not been previously approved. It also granted final approval of the company's first day motions for authority to pay certain vendor claims and procedures for addressing utility issues. In addition, to allow the Unsecured Creditors' Committee time to complete its work in connection with the Company's debtor-in- possession credit facility, the company has agreed to reschedule the hearing on the DIP for March 16, 2009. The $1.075 million DIP credit facility, which includes a new $500 million term loan and a $575 million revolving credit facility, will be used for the company's normal operating and working capital requirements during its reorganization process. The company previously received interim approval of the DIP financing facility from the Court on February 13, 2008. 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 Court Approval of Alvares & Marsal Engagement ----------------------------------------------------------------- Aleris International, Inc., and its affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware to employ Alvarez & Marsal North America, LLC, as their restructuring advisors, nunc pro tunc to the Petition Date. The Debtors relate that they recognize A&M's wealth of experience in providing advisory services in restructurings and reorganizations. The Debtors acknowledge that A&M enjoys an excellent reputation for services it has rendered in large and complex Chapter 11 cases on behalf of debtors and creditors throughout the United States. Jeffery J. Stegenga, the managing director of A&M, will be leading the assignment of the Debtors' cases. He has served in the restructuring of Vertis Holding, Inc., SIRVA, Inc., Tower Automotive, Meridian Automotive, The Babcock & Wilcox Company, Hamischfeger Industries, Sleepmaster, Inc., and Federal Mogul Corporation. The Debtors also tell the Court that Mr. Stegenga and other A&M employees, prior to the Petition Date, have devoted substantial time and effort to support their financial department in managing their liquidity resources, and in assisting them in their contingency planning efforts and as well as helping them to obtain a debtor-in-possession financing facility. The Debtors aver that A&M professional are invaluable to, and have played an instrumental role in, their restructuring efforts. As the Debtors' restructuring advisors, A&M will: (a) assist the Debtors in preparing financial-related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; (b) assist the Debtors with information and analyses required pursuant to the Debtors' debtor-in-possession financing; (c) assist the Debtors with the identification and implementation of short-term cash management procedures; (d) assist the Debtors with the identification of executory contracts and leases and performance of cost/benefit evaluations with respect to related assumption or rejection; (e) assist the Debtors' management team and counsel focus on the coordination of resources related to the ongoing reorganization effort; (f) assist the Debtors in preparing financial information for distribution to creditors and others, including cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; (g) attend meetings and assist in discussions with potential investors, banks and other secured lenders, the Official Committee of Unsecured Creditors, the United States Trustee, other parties-in-interest and professionals hired by the U.S. Trustee, as requested; (h) provide analysis of creditor claims, including assistance with development of databases to track the claims; and (j) provide general business consulting or other assistance as the Debtors' management or counsel may deem necessary that are consistent with the role of a restructuring advisor and which services are not duplicative of those provided by the Debtors' other professionals. The Debtors will pay for A&M's services based on the firm's customary hourly rates: Professional Hourly Rate ------------ ------------ Managing Directors $625 to $850 Directors $450 to $625 Associates $300 to $450 Analysts $225 to $300 The Debtors will also reimburse A&M for reasonable and necessary expenses the firm incurred or will incur. In an affidavit submitted to the Court, Mr. Stegenga asserted that A&M does not hold any interest adverse to the Debtors' estates and is a "disinterested person" as the term is defined by Section 101(14) of the Bankruptcy Code. Mr. Stegenga also disclosed that during the 90 days before the Petition Date, A&M received about $3.6 million from the Debtors for professional services performed and expenses incurred. He said A&M has received unapplied advance payments from the Debtors in excess of prepetition billings, totaling $500,000. The Debtors and A&M have agreed that any portion of the advance payments not used to pay for A&M's prepetition services and expenses will be held and applied against the firm's final postpetition billing and will not be placed in a separate account. The Debtors do not owe A&M amounts for prepetition fees and expenses, Mr. Stegenga confirmed. Mr. Stegenga reported that: -- certain A&M employees maintain relationships as advisors to, or interim officers of, Lehman Brothers Holdings Inc. and certain of its affiliates, as debtors and debtors in possession. Lehman is a participant in the Debtors' secured lending facilities; and -- Alvarez & Marsal Canada ULC, an affiliate of Alvarez & Marsal North America, is currently engaged as chief restructuring officer of Burlington Technologies, Inc., who filed for protection under Canada's Companies Creditors' Arrangement Act. One of the Debtors' non-debtor Canadian affiliates was a significant creditor of BTI at the time of CCAA filing. Mr. Stegenga assured the Court that A&M will recuse itself in the Lehman cases, as well as from directly assisting or advising BTI with respect to the negotiation, settlement, remediation and adjudication of any matters, claims or disputes between the Debtors and BTI. Alvarez & Marsal Europe LLP, an affiliate of Alvarez & Marsal North America, will also continue to serve the Debtors' non-debtor affiliates in Europe pursuant to the terms of the Engagement Letter, he added, noting that the performance of the support will be consistent with that provided to the Debtors. A full-text copy of the Engagement Letter between Aleris and Marsal Europe is available for free at: http://bankrupt.com/misc/Aleris_AlvarezLetter.pdf The Court will hear the Debtors' request on March 25, 2009. Objections must be filed no later than March 18, at 4:00 p.m. Eastern Time. 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 Sept. 10 Extension of Lease Decision Period --------------------------------------------------------------- Aleris International Inc. and its affiliates are parties to several unexpired non-residential real property leases. Under Section 365(d)(4) of the Bankruptcy Code, the Debtors have until June 12, 2009, to decide whether to assume or reject those Leases. Section 365(d)(4) provides that an unexpired non-residential real property lease under which a debtor is the lessee will be deemed rejected if the trustee does not assume or reject the unexpired lease by the earlier of 120 days after the date the debtor filed for bankruptcy, or the date of the entry of an order confirming the Chapter 11 plan. The Court though may extend the lease decision period for 90 days on motion of the trustee or lessor for cause. In this regard, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to extend the period within which they must decide to assume or reject, as lessors, their Unexpired Leases, through and including September 10, 2009. The Debtors say they need more time to decide on the Leases, emphasizing that careful evaluation of those Leases is crucial to the conduct of their businesses. They also point out that the determination of which facility to continue using is important to a successful reorganization. The Debtors add that they need decide on the assumption or rejection of each Lease in the context of a long-term business plan to formulate a reorganization plan. The Debtors assure the Court that they are current, and intend to remain current, on all undisputed postpetition obligations under the Leases so that their continued occupation of the leased premises will not damage any lessor. The Court is set to consider the Debtors' request on March 25, 2009. Formal written objections are due no later than March 18. 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: Utilities Balk at Adequate Assurance Proposal ----------------------------------------------------------- Several companies providing utility services to Aleris International Inc. and its debtor-affiliates filed objections to the Debtors' request for authority to issue one or more letters of credit or establish an escrow account, as adequate assurance of payment to ensure continued service by Utilities: * American Electric Power * Allegheny Power * Carolina Power & Light Company dba Progress Energy Carolinas * Virginia Electric and Power Company dba Dominion Virginia Power * The East Ohio Gas Company, dba Dominion East Ohio * Dominion Hope * The Cleveland Electric Illuminating Company * Commonwealth Edison Company * Alabama Power Company * Duke Energy Indiana, Inc. * Alabama Gas Corporation * South Jersey Gas Company * South Jersey Energy Co., Inc. * Constellation NewEnergy-Gas Division, LLC * Constellation NewEnergy Inc. * Atmos Energy Marketing, LLC The Debtors have sought and obtained an interim order from the U.S. Bankruptcy Court for the District of Delaware prohibiting the Utility Companies from: -- altering, refusing or discontinuing Utility Services to the Debtors on account of any unpaid prepetition charges; -- discriminating against the Debtors; or -- requiring payment of a deposit or receipt or any other security for continued service as a result of the Debtors' bankruptcy filings or any outstanding prepetition invoices except as provided for the Debtors' proposed adequate assurance deposit. The Debtors are concerned that Utility Company would refuse, discontinue or alter services as a result of their bankruptcy filing, thereby disrupting their business operations. Section 366(c)(2) of the Bankruptcy Code provides that a Utility Provider may discontinue its services if the debtor has not furnished adequate assurance of payment within 30 days after the Petition date. Representing American Electric, et al., John D. Demmy, Esq., at Stevens & Lee, P.C., in Wilmington, Delaware, says the Utilities are seeking adequate assurance of payment in the form of cash deposits paid directly to them, as opposed to the Debtors' proposed form of payment assurance. Mr. Demmy further contends that the Debtors have failed to identify (i) who would hold the escrow account, (ii) how the Utilities would access the escrow account, or (iii) what would happen to the amounts in the escrow account in the event the Debtors default under their postpetition financing. To provide adequate assurance of payment to Utility Companies pursuant to Sections 366(b) and (c) of the Bankruptcy Code, the Debtors have proposed either to issue one or more letters of credit or deposit into a segregated account, an amount equal to two weeks of utility services, unless a Utility Company agrees to a lesser amount, and unless that Utility Company already holds a letter of credit securing the Debtors' performance. The Adequate Assurance Deposit or Utility Letter of Credit will be maintained until the earlier of: (i) entry of an order authorizing the return of the Adequate Assurance Deposit to the Debtors or the cancellation of all outstanding Utility Letters of Credit; and (ii) the effective date of a plan of reorganization for the Debtors. Representing Alabama Power, Eric T. Ray, Esq., at Balch & Bingham, in Birmingham, Alabama, asserts that the Utilities Motion disregards the significant changes made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to Section 366 of the Bankruptcy Code. The Motion, he argues, contradicts both the letter and intent of the new Section 366, citing the improper shift of the burden to the utilities through the need for an advance determination of whether or not the proposed payment assurance is satisfactory, as opposed to the provision where burden rests on the Debtors to timely deliver a payment assurance satisfactory to the utility. He points out that Alabama Power will not have received payment, nor will it have control over the escrow account. Duke Energy, who seeks $97,040 as deposit for the Debtors' two months' electricity usage, joins in the arguments of the Utilities. The Objectors, accordingly, ask the Court to deny the Utilities Motion on grounds that it does not address their deposit requests. Alabama Gas Corporation, for its part, complains that the proposed utility procedures are burdensome and do not satisfy Section 366. South Jersey Gas Company and South Jersey Energy Co., Inc., complain that the Debtors failed to give them adequate notice and opportunity to respond. Christopher P. Simon, Esq., at Cross & Simon, LLC, in Wilmington, Delaware, relates to the Court that South Jersey only knew of the Debtors' bankruptcy cases through a chance internet search for a meeting request by the Debtors' officers to discuss the Debtors' ongoing need for natural gas at their Clayton, New Jersey plant. The Utilities Motion, Mr. Simon says, must be denied because it does not meet the "notice and opportunity to be heard" requirements of the Bankruptcy Code. The South Jersey Objectors seek payment of at least $33,972 to assure service to the Debtors. On the other hand, South Jersey Gas contends that it is not a utility as defined under Section 366, but a forward contract merchant, and therefore should not be bound by the Utilities Motion. Constellation NewEnergy-Gas Division, LLC, and Constellation NewEnergy Inc., who are parties to a Master Gas Sale and Transportation Contract under which Constellation physically and financially settles natural gas transactions with the Debtors, also contend that they are not subject to Section 366 being third party natural gas sellers. Atmos Energy Marketing, LLC, also tells the Court, in a separate filing, that it is not a "utility" as contemplated under Section 366 and should not be bound by the Utilities Motion. Constellation seeks to removed from the utility service list, or in the alternative, ask the Court deny the Utilities Motion in so far as it applies to CNEG and CNE. 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: Won't Ship Aluminum Ingots to General Motors ---------------------------------------------------------- Aleris International, Inc., and its affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware, pursuant to Section 365 of the Bankruptcy Code, to reject four purchase contracts they entered into with General Motors Corporation through Debtor Alchem Aluminum, Inc. Three of the contracts call for Alchem to ship aluminum sow/ingot, and the fourth contract requires Alchem to ship silicon, to GM. Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, the Debtors proposed co-counsel, notes that with GM's public pronouncements about the current state of its finances, the Debtors are very concerned about the extended terms of the Contracts that will not be due until the second day of the second month after a shipment is made. The Debtors add that they have to purchase the silicon and other raw materials and to incur refining costs to prepare the aluminum sow/ingot required under the GM Contracts, in order to fulfill their obligations under the Contracts. 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) 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. 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. ALESCO FINANCIAL: Faces Delisting of Shares From NYSE ----------------------------------------------------- Alesco Financial Inc. disclosed that on October 10, 2008, it was notified by the New York Stock Exchange that it was not in compliance with an NYSE continued listing standard applicable to its common stock. The standard requires that the average closing price of any listed security not fall below $1.00 per share for any consecutive 30 trading-day period. On October 15, 2008, the company notified the NYSE of its intent to cure this deficiency. Under the NYSE rules, the company has six months from the date of the NYSE notice to comply with the NYSE minimum share price standard. If it is not compliant by that date, its common stock will be subject to suspension and delisting by the NYSE. After exploring different alternatives for curing the deficiency and restoring compliance with the continued listing standards, Alesco currently expects to effectuate a 1 for 10 reverse split of its common stock. Its common stock remains listed on the NYSE under the symbol "AFN." The NYSE's continued listing standards also require that its average market capitalization be at least $25 million over any 30 consecutive trading day period and that it maintains its REIT status. The company also said that on February 26, 2009, the NYSE submitted to the Securities and Exchange Commission an immediately effective rule filing which suspends the NYSE's $1 minimum price requirement on a temporary basis, initially through June 30, 2009. The NYSE filing also extends until the same date the NYSE's current easing of the average global market capitalization standard from $25 million to $15 million. In addition to being delisted due to the company's failure to comply with any of these continued listing standards, the company will also likely be delisted if it fails to meet any of the NYSE's other listing standards. Last week, Alesco announced financial results for the three-months and 12-months ended December 31, 2008. Alesco reported a GAAP net loss for the three-months ended December 31, 2008 of $212.5 million as compared to a net loss of $729.3 million for the three- months ended December 31, 2007. Alesco's net loss for the three- month period ended December 31, 2008, included a loss of $137.4 million due to interest rate hedging activities, net of minority interest, and an impairment charge of $101.0 million on leveraged loans included in an on-balance sheet warehouse credit facility, partially offset by a gain of $14.1 million due to the repurchase and retirement of a portion of the company's convertible debt. The company reported a GAAP net loss for the 12-months ended December 31, 2008, of $144.7 million as compared to a net loss of $1.3 billion for the 12-months ended December 31, 2007. The company's net loss for the 12-month period ended December 31, 2008, included a loss of $197.1 million due to interest rate hedging activities, net of minority interest, including charges of $48.6 million due to the reclassification into the income statement of MBS related cash-flow hedging losses that were previously included in accumulated other comprehensive loss, partially offset by a gain of $58.0 million due to the repurchase and retirement of a portion of the Company's convertible debt. As of December 31, 2008, Alesco's consolidated financial statements include $86.0 million of available, unrestricted cash and cash equivalents. Management has evaluated the company's current and forecasted liquidity and continues to monitor evolving market conditions. Future investment alternatives and operating activities will continue to be evaluated against anticipated current and longer term liquidity demands. The realized tax losses that Alesco has experienced during 2008, including those resulting from the failure of IndyMac Bancorp and losses on MBS in the Kleros Real Estate portfolio eliminated Alesco's taxable income for the year ending December 31, 2008. Management will continue to consider projections regarding Alesco's taxable income and liquidity position and decisions regarding future dividends are subject to the review and approval of its board of directors. Common Stock Repurchase During the three-month and 12-month period ended December 31, 2008, Alesco repurchased 112,800 and 742,396 shares of common stock for $100,000 and $700,000, at a weighted-average price of $1.02 and $1.00 per share, respectively. Merger Agreement On February 20, 2009, Aleso and Cohen Brothers, LLC -- which does business as Cohen & Company -- entered into a definitive merger agreement. Alesco's Board of Directors and Cohen & Company's Board of Managers each unanimously approved the transaction. Cohen & Company will merge with a subsidiary of Alesco and will survive the merger as a subsidiary of Alesco. In the merger, members of Cohen & Company will have the option to exchange each of their membership units in Cohen & Company for either 0.57372 shares of Alesco common stock, or 0.57372 replacement units of membership interest in Cohen & Company which may be exchanged into shares of Alesco in the future. Holders of common stock of Alesco will continue to hold their shares of Alesco. Subsequent to the merger, Alesco will continue to be a publicly traded entity and is expected to operate as a C-Corp for tax purposes. Pursuant to the merger agreement, Alesco will complete a 1 for 10 reverse split of its common stock. It is currently expected that former shareholders of Alesco will own 62.4% of the shares of Alesco's common stock immediately after the merger and former unit holders of Cohen & Company will hold the balance; however, the actual percentages will not be known until members of Cohen & Company have made their elections to receive either Alesco common stock or replacement units of Cohen & Company. If all Cohen & Company membership interests were to be converted into Alesco shares in the future, current Alesco shareholders would own 38.5%, and former Cohen & Company members would own 61.5%, of the combined company. Cohen & Company will be treated as the acquirer for accounting purposes. The transaction, which is expected to close during the second half of 2009, is subject to a number of closing conditions, including the receipt of third party consents and other conditions set forth in the definitive merger agreement. In addition, the transaction is subject to approval by the affirmative vote of a majority of the votes cast by holders of Alesco common stock, provided that the number of votes cast on the matter is over 50% of the votes entitled to be cast on the proposal. A meeting of Alesco stockholders to consider and vote on the transaction is expected to be held in the second half of 2009. About Alesco Financial Alesco Financial Inc. -- http://www.alescofinancial.com/-- is a specialty finance REIT headquartered in Philadelphia, Pennsylvania. Alesco is externally managed by Cohen & Company Management, LLC, a subsidiary of Cohen & Company, an alternative investment management firm, which, since 2001, has provided financing to small and mid-sized companies in financial services, real estate and other sectors. ALLISON TRANSMISSION: S&P Cuts Corporate Credit Rating to 'B' ------------------------------------------------------------- Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Allison Transmission Inc. to 'B' from 'B+'. At the same time, S&P lowered its issue-level ratings on the company's debt, reflecting the downgrade of the corporate credit rating as well as revised recovery expectations. The outlook is negative. "The downgrades reflect our concern about Allison's high leverage, which S&P believes will increase during 2009 because of very weak industry demand for commercial vehicles in the company's core North American markets," said Standard & Poor's credit analyst Gregg Lemos Stein. The company provides automatic transmissions for commercial, off-highway, and military vehicles. Allison has maintained good margins amid the current downturn, and S&P expects this to remain the case as recent cost-cutting actions offset some of the effect of lower vehicle production in 2009. Nevertheless, S&P believes the decline in revenues from industry factors will translate into lower EBITDA and free operating cash flow compared to those in 2008, reducing the company's wherewithal to lower debt beyond its term loan amortization and 2008 cash sweep requirements, unless it taps existing cash balances. Allison recently forecast a 20% year-over-year industry decline for on-highway commercial vehicle segments in North America in 2009 and a 40% decline in production of wheeled military vehicles. However, S&P believes there is some risk of even larger declines because of the ongoing weak economy and the tight credit markets, which make financing of new truck purchases more difficult. Net orders for class 5 through 7 medium-duty trucks in North America totaled 6,010 units in January and about 6,700 in February, according to preliminary data from ACT Research Co. By comparison, net orders for these classes averaged more than 21,500 per month in the first two months of 2008 and about 12,500 per month for all of last year. S&P expects demand to remain very weak for commercial truck manufacturers and suppliers for much, if not all, of 2009. Demand might improve late in the year ahead of a new engine-emissions change that will make new engines more expensive beginning in 2010, but this improvement could be short-lived. S&P also expects wheeled military vehicle production to decline later in 2009 following the rapid ramp-up of production of armored vehicles for use in Iraq, and production of lighter armored trucks to be used in Afghanistan. The ratings on Indianapolis-based Allison reflect the company's highly leveraged financial risk profile, which more than offsets the company's still good profitability and strong market shares as the leading U.S. supplier of automatic transmissions for commercial vehicles. S&P considers Allison's business risk profile to be weak, reflecting primarily the cyclicality of the North American commercial vehicle supplier business. Downward pressure on revenue, and accordingly cash flow rather than profit margin, is the key near-term concern for Allison. EBITDA margin remains very strong compared with those of other rated commercial vehicle component suppliers and has declined only moderately since the company separated from former parent General Motors Corp. in August 2007. S&P expects margins to decline only slightly in the next few quarters, enabling the company to continue generating free operating cash flow before debt payments. Allison's highly leveraged balance sheet is the result of its leveraged buyout from GM. The company's pension liability is negligible because GM retained all pension liabilities for retired Allison workers and all accumulated service costs for existing workers up to the closing of the sale. However, Allison had approximately $170 million in unfunded other postretirement employee benefit liabilities as of Dec. 31, 2008. This is partly offset by a $128 million receivable from GM, although given the financial problems facing GM, S&P does not reduce the OPEB liability by the GM receivable amount. S&P expects cash outlays for Allison's OPEB liability to be modest because they will be spread out over multiple years. S&P expects leverage to rise above 9x, including S&P's adjustments, by the end of 2009, based on S&P's projection of an approximate 20% decline in EBITDA. For the rating, S&P expects the company to improve leverage in 2010 by reversing the downward trend in EBITDA, leading to leverage of 7.5x or lower within the next two years. Liquidity is adequate and, in S&P's view, a relative strong point for the financial risk analysis. S&P expects free operating cash flow to remain positive, but at lower levels than in 2008 because of the year-over-year decline in commercial and military vehicle production. Capital expenditures increased in the fourth quarter of 2008, and S&P expects outlays to remain elevated in 2009 and part of 2010 as the company builds a new manufacturing facility in India to support international growth. The outlook is negative. The rating reflects S&P's expectation for lower revenues and EBITDA in 2009 resulting from challenging industry conditions. S&P could downgrade the company if further industry production declines or margin deterioration lead to negative free cash flow in 2009, or if total liquidity including cash and revolving credit availability declines below $350 million. According to S&P's projections, Allison's free operating cash flow could turn negative if company revenues fall more than 20% year over year and EBITDA margins decline by more than 300 basis points. S&P could revise the outlook to stable if Allison continues to generate free operating cash flow and if cost-saving actions and other measures enable total debt to EBITDA including S&P's adjustments to decline below 7.5x. In S&P's view, this is not likely to occur until demand improves for commercial vehicles in North America. S&P consider prospects for an upgrade limited for now because of Allison's high leverage, but S&P could take such an action if EBITDA improves and the company reduces debt permanently, leading to leverage of 6x or better including S&P's adjustments. ALTRA INDUSTRIAL: Moody's Affirms Ratings, Gives Negative Outlook ----------------------------------------------------------------- Moody's Investors Service has affirmed all of the ratings of Altra Industrial Motion, Inc. and revised the rating outlook to negative from stable. The change in outlook reflects the risk that deteriorating global economic conditions will result in a meaningful reduction in Altra's earnings during 2009 and weaken the existing credit profile. The negative outlook incorporates the rapid deterioration of order volumes witnessed across the majority of end-markets served by Altra and the continued lack of visibility into future demand prospects. Moody's estimates that EBITDA could decline by 40% to 50% in 2009 which would likely result in leverage approaching 5.0x. In Moody's view, Altra enters this cyclical downturn well positioned in the rating category and capable of managing a short term elevation in leverage driven by a decline in earnings. However, the duration and severity of current economic conditions remains uncertain and could lead to a ratings downgrade if earnings stabilization does not occur over the next twelve months or earnings deterioration is sharper than currently anticipated. The ratings affirmation reflects Moody's view that Altra's record performance in 2008, improved credit metrics and solid liquidity profile position the company to maintain the B1 rating through this cyclical downturn. Moody's views the company's high cash balances, revolver availability and positive cash flow as key factors that mitigate the expected decline in earnings and overall profitability. However, a meaningful deterioration of Altra's liquidity profile would likely exacerbate the negative ratings sentinement driven by declining sales volumes, earnings deterioration and increasing leverage. These ratings were affirmed: -- Corporate Family Rating at B1; -- Probability of Default Rating at B1; -- Senior Secured Notes due 2011 at B1 (LGD assessment revised to LGD4/54% from LGD4/53%); -- Senior Unsecured Notes due 2013 at B3 (LGD6/94%); and -- Speculative Grade Liquidity Rating at SGL-2 The last rating action was on April 9, 2008 when the corporate family rating was upgraded to B1 from B2. Headquartered in Quincy, Massachusetts, Altra is a manufacturer of mechanical power transmission products with net revenues of approximately $635 million in fiscal 2008. AMERICAN ACHIEVEMENT: Moody's Downgrades Default Rating to 'Caa3' ----------------------------------------------------------------- Moody's Investors Service lowered American Achievement Group Holding Corp.'s probability of default rating to Caa3/LD and its Senior PIK Note rating to C following the company's agreement to exchange approximately $104 million of notes for an aggregate purchase price of $24 million. The probability of default rating was lowered to Caa3/LD to reflect that, in Moody's view, this transaction constituted a distressed exchange, which is an event of default under Moody's definition of default. In approximately 3 days, Moody's expects the remaining portion of the Senior PIK notes to be rated Ca per the LGD framework and the LD (limited default) will be removed from the PDR. Moody's affirmed AAC's Caa2 corporate family given Moody's ongoing view that debt impairment is likely. Moody's lowered the AAC Group Holdings senior discount notes to Caa3 (LGD-3, 49%) from Caa2 (LGD-4, 59%) and affirmed American Achievement Corporation's senior subordinated notes at B3 (LGD-2, 20%) and senior secured bank debt at B1 (LGD-1, 3%, adjusted), based on changes to the capital structure following the distressed exchange and per the Loss Given Default methodology. The rating outlook is stable. These ratings were lowered: American Achievement Group Holding Corp. -- Probability-of-default rating at to Caa3/LD from Caa2 -- $102 million (current value) Senior PIK notes due 2012 to C from Caa3 AAC Group Holding Corp. -- $132 million (current value) Senior discount notes due 2012 to Caa3 (LGD-3, 49%) from Caa2 (LGD-4, 59%) These ratings were affirmed American Achievement Holding Corp. -- Corporate Family Rating Caa2 American Achievement Corporation -- $150 million senior subordinated notes due 2012 to B3 (LGD-2, 20%, adjusted) American Achievement Corporation -- $40 million senior secured revolving credit facility due 2010 to B1 (LGD-1, 3%, adjusted) -- $70 million senior secured term loan due 2011 to B1 (LGD-1, 3%, adjusted) The rating outlook is stable. AAC's Caa2 corporate rating continues to be driven by its still very high leverage, inadequate coverage of interest expense, small scale, narrow product focus on yearbooks and class rings, and some regional concentration in the Southern U.S. The rating also incorporates concerns regarding liquidity given the revolver maturity in 2010 and covenant compliance step downs. Notwithstanding these risks, the rating is supported by AAC's substantial market shares in each of its niche product segments, its high customer retention rates, good operating margins, and its highly efficient manufacturing footprint. The rating is further supported by AAC's large network of exclusive independent sales representatives and its ability to meet the high requirements of its customers under narrow production and delivery timeframes that serves as a competitive advantage. Moody's also note operational improvements following some plant rationalization and capital investment in new presses. Importantly, Moody's recognizes the steps AAC has taken to de- leverage, including the repurchase of the senior notes. As a consequence, leverage has been reduced to between 8 and 9 times debt-to-EBITDA. However, in Moody's view, ongoing debt reduction will be difficult given the challenging economic environment and the ongoing accretion of some of ACC's debt. Moody's last rating action was on Dec. 10, 2008 when Moody's lowered AAC's corporate family and probability of default rating to Caa2 from B3 and changed the rating outlook to stable. Headquartered in Austin, Texas, American Achievement Corporation is a leading provider of school-related affinity products and services. The company holds strong market shares in each of its product segments -- yearbooks, class rings, and graduation products. Revenues for the last 12 months ended November 29, 2008 were $311 million. AMERICAN INT'L: Says Failure May Cripple Banks, Money Funds ----------------------------------------------------------- American International Group Inc. tried to convince the U.S. government for another bailout by telling regulators the company's collapse could cripple money-market funds, force European banks to raise capital, cause competing life insurers to fail and wipe out the taxpayers' stake in the firm, Bloomberg News said. AIG needed immediate help from the Federal Reserve and Treasury to prevent a "catastrophic" collapse that would be worse for markets than the demise last year of Lehman Brothers Holdings Inc., the Bloomberg report added, citing a 21-page draft AIG presentation dated Feb. 26, labeled as "strictly confidential" and circulated among federal and state regulators. "What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means," said the presentation by AIG. "Insurance is the oxygen of the free enterprise system. Without the promise of protection against life's adversities, the fundamentals of capitalism are undermined." According to Bloomberg, regulators recently revised AIG's bailout to ease loan terms and extend $30 billion in fresh capital after the firm posted a $61.7 billion fourth-quarter loss, the worst in U.S. corporate history. Lawmakers, the report adds, are reluctant to give more support beyond the package already in place, worth about $160 billion, because they say regulators haven't given enough detail about how the funds are being used or when the bailouts will end. Meanwhile, The Wall Street Journal said that Goldman Sachs Group Inc. and Deutsche Bank AG were among at least two dozen financial institutions that were paid $50 billion from the bailout funds received by AIG. The Journal, citing a confidential document, said that Goldman and Deutsche got about $6 billion each between September and December. About American International Based in New York, American International Group, Inc. (AIG), is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76 on Sept. 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw- Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On Sept. 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At Sept. 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since Sept. 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to Sept. 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the US Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. AMERICAN INTERNATIONAL: Sells 100,000 Shares for $500,000 --------------------------------------------------------- On March 4, 2009, American International Group, Inc., issued and sold to the AIG Credit Facility Trust, a trust established for the sole benefit of the United States Treasury, 100,000 shares of AIG's Series C Perpetual, Convertible, Participating Preferred Stock, par value $5.00 per share and an initial liquidation preference of $5.00 per share, for an aggregate purchase price of $500,000, with an understanding that additional and independently sufficient consideration was also furnished to AIG by the Federal Reserve Bank of New York in the form of its lending commitment under the Credit Agreement, dated as of September 22, 2008, between AIG and the FRBNY. The issuance and sale of the Series C Preferred Stock was exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) of the Securities Act of 1933. The holders of the Series C Preferred Stock have preferential liquidation rights over the holders of AIG's common stock, par value $2.50 per share, and, to the extent permitted by law, vote with AIG's common stock on all matters submitted to AIG's shareholders. The holders of the Series C Preferred Stock have approximately 77.9 percent of the aggregate voting power of AIG's common stock and are entitled to approximately 77.9 percent of all dividends paid on AIG's common stock, in each case treating the Series C Preferred Stock as if converted. The Series C Preferred Stock will remain outstanding even if the Credit Facility is repaid in full or otherwise terminates. The Series C Perpetual, Convertible, Participating Preferred Stock Purchase Agreement, dated as of March 1, 2009, between AIG and the Trust restricts AIG's ability to issue or grant capital stock without the consent of the Trust, with certain limited exclusions. As a result of the Transaction, a change in control of AIG has occurred. Pursuant to the Purchase Agreement, AIG and AIG's Board of Directors are obligated to work in good faith with the Trust to ensure corporate governance arrangements satisfactory to the Trust. On March 4, 2009, AIG filed the Certificate of Designations of the Series C Preferred Stock with the Secretary of State of the State of Delaware. U.S. Government Provides Support For Continued Restructuring of AIG On March 2, 2009, AIG disclosed a broad set of actions, taken in cooperation with the U.S. Department of the Treasury and the Federal Reserve, to improve AIG's capital structure, protect and enhance the value of its key businesses, and position these franchises for the future as more independently run, transparent companies. These actions will reduce the debt AIG owes the government, strengthen AIG's capital base, and allow AIG time to execute its plan and benefit from future improvements in market and industry conditions. AIG's liquidity needs have been stabilized since last November. Now, AIG has access to additional financial backstops should conditions change that will facilitate certain types of structured divestiture or recapitalization activities for AIG subsidiaries. The key actions are: * Improved terms of existing U.S. Treasury preferred investment: The terms of the U.S. Treasury's preferred stock investment in AIG will be modified to make these preferred securities more closely resemble common equity and improve AIG's financial leverage. * New standby equity capital facility: The U.S. Treasury will provide AIG with a new five-year equity capital facility, which will allow AIG to raise up to $30 billion of capital by issuing non-cumulative preferred stock to the U.S. Treasury from time to time as needed. * Repayment of the FRBNY credit facility: AIG will transfer to the Federal Reserve Bank of New York preferred interests in American Life Insurance Company and American International Assurance Company, Ltd., in return for a reduction in the outstanding balance of up to $26 billion of the FRBNY senior secured credit facility. AIG also expects to transfer to the FRBNY securitization notes of up to $8.5 billion representing embedded value of certain of its U.S. life insurance businesses in return for a further reduction in its outstanding FRBNY credit facility balance. Securitization is a capital management strategy and will not affect the day-to-day operations, sales activities, or customers of these businesses. * Reduced cost of FRBNY credit facility: The FRBNY will remove the LIBOR floor on the senior secured credit facility. This will save AIG an estimated $1 billion in interest costs per year, based on the current level of LIBOR and the current facility balance. * Maintain availability of FRBNY credit facility: AIG will continue to have access to the FRBNY credit facility. Following the repayment of the outstanding amount on the facility with the preferred interests and securitization notes, the total amount available to AIG under the facility will remain at least $25 billion. "AIG is executing one of the most extensive corporate restructuring programs in history at a time when the global economy and capital markets are in turmoil," said Edward M. Liddy, Chairman and Chief Executive Officer, AIG. "While we have made meaningful progress, we have concluded, along with Treasury and the Federal Reserve, that additional tools are needed to enable success. The measures announced today provide the necessary U.S. government support for a plan to establish separate capital structures, including outside ownership, for certain AIG companies. "AIG's underlying businesses remain strong, well-capitalized, and competitive. Moreover, policy holders, regulators, agents and business partners around the globe can be confident that policies written by any AIG company are sound," Mr. Liddy said. The U.S. Treasury and the Federal Reserve stated in a press release that: "Orderly restructuring is essential to AIG's repayment of the support it has received from U.S. taxpayers and to preserving financial stability. The U.S. Government is committed to continuing to work with AIG to maintain its ability to meet its obligations as they come due." Since September 2008, when the Federal Reserve first extended emergency assistance to AIG and Mr. Liddy was appointed CEO, AIG has made progress in its restructuring by: reducing the excessive risk from exposure to certain financial products, derivatives trading activities, and securities lending; rationalizing AIG's cost structure; selling easily separable assets; and stabilizing the company's liquidity. However, global economic conditions have continued to deteriorate significantly, posing challenges to AIG's ability to divest assets at acceptable values. "The very same global forces that we face have greatly diminished the ability of qualified buyers to raise the capital necessary to buy AIG's businesses right now," said Paula Rosput Reynolds, AIG Vice Chairman and Head of Restructuring. "As a result, AIG is redirecting the divestiture process away from relying solely on immediate sales for cash and will use a greater variety of tools to maximize the value of the individual businesses. The U.S. Treasury, the Federal Reserve, and AIG have taken actions that will allow AIG to achieve a complete restructuring over the next several years through a process that protects policyholders, continues to reduce risk, and produces strong, focused franchises that can operate as independent entities," Ms. Reynolds said. AIG is working closely with the management of each of its major operating businesses to establish the appropriate governance and capital structures for those businesses. Certain businesses that are already positioned for sale will continue on this track; some will be held for later divestiture; and some businesses, such as AIA and ALICO, will continue to review their divestiture options, which ultimately may include a public offering of shares, depending on market conditions. AIG intends to contribute the equity of AIA and ALICO into special purpose vehicles in exchange for preferred and common interests in the SPVs. This will enable the FRBNY to receive preferred interests in repayment of a portion of the FRBNY facility. The amount of the preferred interests will be a percentage of the fair market value of AIA and ALICO based on valuations acceptable to the FRBNY. AIG will continue to hold the common interests in the SPVs. These transactions will reduce AIG's debt and interest carrying costs, while allowing AIG to continue to benefit from its ongoing common interests in the SPVs. "Given the importance of AIA and ALICO to repaying our obligation to the U.S. government, we think this structure is the optimal solution to maintain the value of these businesses and best position them to enhance their franchises," Mr. Liddy said. In addition, to protect and enhance the value of AIG's global property and casualty subsidiaries for all stakeholders, AIG intends to form a General Insurance holding company, including its Commercial Insurance Group, Foreign General unit, and other property and casualty operations, to be called AIU Holdings, Inc., with a board of directors, management team, and brand distinct from AIG. The establishment of AIU Holdings, Inc., will assist AIG in preparing for the potential sale of a minority stake in the business, which ultimately may include a public offering of shares, depending on market conditions. AIG also announced that it is considering combining its domestic life and retirement businesses to enhance market competitiveness. With combined assets of $246.8 billion, 17 million customers, and nearly 300,000 licensed financial professionals, the combined companies would be operating from a position of significant strength and business diversification. "The ultimate success of our restructuring plan centers on ensuring that the unique businesses that make up AIG can thrive on their own. While this process may take up to several years to complete, we will ultimately create stronger, sounder businesses worthy of investor, customer, and regulatory confidence. We greatly appreciate the continued cooperation and support of our customers, business partners, the U.S. government and regulators around the world," Mr. Liddy said. Blackstone Advisory Services is acting as financial advisor to AIG. Restructuring Package -- Additional Details: * Improved terms of existing preferred investment: Increasing the equity content of the Treasury's preferred stake and reducing the annual cost of servicing dividends by more than $4 billion per year. -- Existing Series D to be exchanged for Series E preferred. -- Dividends on Series E preferred payable quarterly in cash at a rate of 10% per year, on a non-cumulative basis, only if declared by AIG. -- Right to elect two directors/20% of the Board of Directors upon non-payment of dividends for four dividend periods. -- Replacement capital covenant and statement of intent. * New equity capital commitment: Up to $30 billion equity capital commitment from the U.S. government. -- New Series F non-voting preferred to be issued as needed by AIG. -- Capital commitment facility has 5-year term. -- Terms of Series F substantially similar to new Series E non-voting preferred. * Repayment of FRBNY credit facility with subsidiary preferred interests and securitization notes: Allow AIG to tap the value of certain life insurance units, including AIA, ALICO, and certain of its U.S. life insurance companies, to repay a portion of the outstanding balance on the FRB credit facility. -- AIG will contribute the equity of each of ALICO and AIA to SPVs in exchange for preferred and common interests in the SPVs. The FRBNY will then accept preferred interests in the SPVs in repayment of a portion of the outstanding balances. AIG will retain the common interests in the SPVs, and will consolidate these entities for accounting purposes. -- Certain of AIG's U.S. life insurance businesses will create SPVs that will issue embedded value securitization notes to the FRBNY in repayment of a portion of the outstanding balance under the FRBNY credit facility. These notes will be backed by net cash flows from the designated blocks of existing life insurance policies held by these companies. -- Specific amounts and terms for the subsidiary preferred interests and the securitization notes to be accepted in repayment will be determined between AIG and the FRBNY. * Reduced cost of current FRBNY credit facility: Interest rate on the FRBNY credit facility, which is three-month LIBOR plus 300 basis points, will be modified by removing the existing floor of 3.5% on the LIBOR rate. * Maintain current FRBNY credit facility: Continued access to the FRBNY credit facility of at least $25 billion following the repayment of the outstanding amount on the facility with the preferred interests and securitization notes. About American International Based in New York, American International Group, Inc. (AIG), is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on Sept. 8, 2008, to $4.76 on Sept. 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw- Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These and other events severely limited AIG's access to debt and equity markets. On Sept. 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and, pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At Sept. 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since Sept. 30, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. In addition, subsequent to Sept. 30, 2008, certain of AIG's domestic life insurance subsidiaries entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On Nov. 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At Sept. 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the US Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. ARTISTDIRECT INC: Issues Convertible Note to Frederick Field ------------------------------------------------------------ On March 3, 2009, ARTISTdirect Inc. issued a convertible note to Frederick W. Field, a director of the Company. The Note is in the principal amount of $200,000 with the principal amount and accrued interest at the rate of 5% per annum automatically convertible into shares of the Company's Common Stock at a price of $0.03 per share at such time as the Company has sufficient authorized shares. The issuance of the Note was exempt from registration under the Securities Act of 1933, pursuant of Section 4(2) of that Act as a transaction not involving a public offering. The Note contains a restricted legend. Headquartered in Santa Monica, California, ARTISTdirect Inc. (OTC.BB: ARTD) -- http://artistdirect.com/-- is a digital media entertainment company that is home to an online music network and, through its MediaDefender subsidiary, is a provider of anti-piracy solutions in the Internet-piracy-protection industry. * * * At Sept. 30, 2008, the company's balance sheet showed total assets of $9.3 million and total liabilities of $48.3 million, resulting in a stockholders' deficit of $39.0 million. For three months ended Sept. 30, 2008, the company reported net loss of $9.2 million compared with net loss of $183,000 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted net loss of $43.9 million compared with net loss of $134,000 for the same period in the previous year. At Sept. 30, 2008, the company had a working capital deficiency of $41.0 million, because of the classification of senior secured notes payable and subordinated convertible notes payable as current liabilities, the accrual of default interest on the subordinated convertible notes payable of $5.5 million, and liquidated damages payable under registration rights agreements of $1.9 million at the date. ASPEN EXECUTIVE: Implements Terms of Liquidation Plan ----------------------------------------------------- Aspen Executive Air LLC has implemented its Chapter 11 plan about two months after the U.S. Bankruptcy Court for the District of Delaware confirmed its Chapter 11 plan on January 9. The Plan, which was declared effective March 6, provides for an estimated 37% recovery for unsecured creditors with $2 million in claims, Bloomberg's Bill Rochelle said. According to Bloomberg, the assets of Aspen Executive were sold early last year to an insider named John P. Calamos, who was to invest in Pinnacle Air LLC, become Pinnacle's controlling shareholder, and have Pinnacle buy Aspen's assets. Based in Basalt, Colorado, Aspen Executive Air, L.L.C., aka AEXJet -- http://www.aexjet.com/-- was a private jet travel company. The company filed for chapter 11 protection on Sept. 14, 2007 (Bankr. D. Del. Case No. 07-11341). Laura Davis Jones, Esq., Bruce Grohsgal, Esq., and Curtis A. Hehn, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Debtor. The Debtors have selected Administar Services Group LLC as claims, noticing and balloting agent. Donald J. Bowman, Jr., Esq., and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection form its creditors, it listed assets between $1 million and $100 million. The Debtor's list of 20 largest unsecured creditors showed claims of more than $20 million. ATHOL MANUFACTURING: Butner NC Property Auction on April 8 ---------------------------------------------------------- Tranzon, Metroline has disclosed that Athol Manufacturing Corp.'s facility on 3 parcels consisting of two industrial buildings and vacant land on approximately 21.1 acres located at 100 22nd and 106 20th Street, Butner, North Carolina, will be offered for sale an at auction to be held on April 8, 2009, at 11:00 a.m., at 100 22nd Street, Butner, North Carolina. Parcel 1 contains approximately 12.77 acres of industrial zoned land and one building totaling approximately 206,828 square feet. Parcel 2 contains approximately 8.33 acres and one building totaling approximately 42,274 square feet. Parcel 3 is vacant land that is zoned for industrial use. Headquartered in Butner, North Carolina, Athol Manufacturing Corp. is a manufacturer/exporter of vinyl coated fabrics. The company filed for Chapter 11 relief on November 8, 2006 (Bankr. N.D. Ohio Case No. 06-33228). Debtor-affiliates SAI Holdings Ltd. (Bankr. N.D. Ohio Case No. 06-33227) and Sandusky, Ltd. (Bankr. N.D. Ohio Case No. 06-33229) filed separate petitions for Chapter 11 protection on the same day. Cases were jointly administed under Case No. 06-33227. The Court confirmed the Debtors' plan on November 8, 2007. For more information, please contact Joe Jackson at (704) 979-3333 Ext 202. ATLANTIC RADIO: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Atlantic Radio Telephone, Inc. 2495 N.W. 35th Avenue Miami, FL 33142 Bankruptcy Case No.: 09-13896 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Southern District of Florida (Miami) Judge: A. Jay Cristol Debtor's Counsel: Michael D. Seese, Esq. 201 S. Biscayne Blvd 17th Fl Miami, FL 33131 Tel: (305) 379-9000 Email: mseese@kpkb.com Estimated Assets: $500,001 to $1,000,000 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/flsb09-13896.pdf The petition was signed by Conrad J. Webber, Director of the company. AUTOBACS STRAUSS: Lists $50.2-Mil. in Assets, $63.1-Mil. in Debts ----------------------------------------------------------------- Autobacs Strauss Inc., doing business as Strauss Discount Auto, filed its schedules of assets and debt showing property with a value of $50.2 million against liabilities of $63.1 million, including only $1.2 million in secured claims, Bloomberg's Bill Rochelle said. He notes that in its Chapter 11 petition, the company listed assets of $75 million against debt totaling some $72 million. Strauss Discount Auto is closing 12 of its 86 stores. Headquartered in South River, New Jersey, Autobacs Strauss Inc. -- http://www.straussauto.com/-- sells after-market automotive parts and accessories, and operate automotive service centers located in New York, New Jersey, Philadelphia, Bethlehem and Pennsylvania. The Debtor operate 86 retail store locations and has about 1,450 employees. The Debtor filed for Chapter 11 protection on February 4, 2009, (Bankr. D. Del. Case No.: 09-10358). Edward J. Kosmowski, Esq. at Young Conaway Stargatt & Taylor, LLP represents the Debtor in its restructuring efforts. As of January 3, 2009, the Debtor had total assets of $75,000,000 and total debts of $72,000,000. BANK OF AMERICA: Top Merrill Banker Subpoenaed for Bonuses ---------------------------------------------------------- New York State Attorney General Andrew Cuomo has subpoenaed Andrea Orcel, Merrill Lynch's top investment banker, in connection with the bonuses paid by the company promptly before it was bought by Bank of America Corp., Bloomberg News said. Merrill Lynch has been under fire for paying $3.6 billion in bonuses to 700 employees just before the merger, despite net losses of $27 billion for the company in 2008. Mr. Orcel reported $33.8 million in compensation for 2008. "Nobody can get paid $34 million in this environment," said Charles Geisst, author of "Wall Street: A History" and a finance professor at Manhattan College in New York. "We are at a crucial juncture, where that sort of thing goes out the window." About Bank of America Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk- management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and award-winning online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 40 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. The bank needed the government's financial help in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). BANK OF NT: Fitch Raises Support Rating Floor from 'BB-' -------------------------------------------------------- Fitch Ratings downgrades the Bank of N.T. Butterfield & Son Limited's long-term Issuer Default Rating to 'A-' from 'A' and assigns a Stable Rating Outlook. Fitch also revises BNTB's support ratings to '1' from '3' and raises the Support Floor to 'A-' from 'BB-'. On March 6, 2009, the Bermudian government announced its commitment to guarantee the principal and dividend payments for BNTB's anticipated capital raise of $200 million in preferred stock. Additionally, the government has committed to purchase any unsold shares outstanding at June 30, 2009. These government actions allow BNTB to tap the guaranteed market given that the capital markets for unguaranteed preferred remain effectively closed. Fitch rates Bermuda's sovereign ratings: long-term foreign currency IDR 'AA+'; long-term local currency IDR 'AAA'. In exchange for the government's committed guarantee, BNTB will issue the Bermudian Government 10-year warrants to purchase four million shares, or some 4% of issued shares, at an exercise price of $7.01 and pay a guarantee fee of 1% per annum. Given the steps taken by the Bermudian government to preserve the financial stability of its largest local institution and sustain confidence of its banking sector, Fitch has upgraded BNTB's Support rating to '1' from '3'. A Support rating of '1' denotes a bank for which there is an extremely high probability of external support. The potential provider of support is very highly rated in its own right and is clearly demonstrating its willingness to provide support to BNTB. Fitch's downgrade of BNTB's IDR brings the rating to its support floor of 'A-'. During 4Q'08, BNTB announced a sizeable other- than-temporary impairment charge of $121.2 million due mainly to the volatility in market prices for U.S. mortgage backed securities in its held to maturity investment portfolio. While this is an accounting charge and does not impact cash, it adversely pressures capital and earnings. In addition, BNTB has an unrealized loss of $161.7 million against other HTM investments related to U.S. MBS holdings. Under HTM accounting, this has not impacted capital or earnings, although it could in the future if determined by OTTI. Subsequently, BNTB announced the $200 million equity offering discussed above and reduced its common dividend by 75%, which will save approximately $47 million annually. Fitch takes various actions on BNTB's ratings: -- Long-term IDR downgraded to 'A-' from 'A'; -- Subordinated debt downgraded to 'BBB+' from 'A-'; -- Individual rating downgraded to 'C' from 'B'; -- Support rating upgraded to '1' from '3'; -- Support Floor revised to 'A-' from 'BB-' Fitch affirms this rating with a Stable Outlook: -- Short-term IDR at 'F1'. BERNARD L. MADOFF: Expected to Plea Guilty Today in Fraud Suit -------------------------------------------------------------- Bernard L. Madoff, who has been accused of running a $50 billion Ponzi scheme, is to plead guilty today to securities fraud, perjury and other crimes, knowing that he could face up to 150 years in prison for one of the largest frauds in history, The Associated Press reports. According to the report, the revelation came as prosecutors unveiled an 11-count charging document against Mr. Madoff, and as his lawyer, Ira Sorkin, told a judge that Mr. Madoff planned to plead guilty this week without a plea deal. Bloomberg had earlier reported that Mr. Madoff may be nearing a guilty plea after federal prosecutors filed a notice that they intend to bring new criminal charges against the New York money manager. According to Bloomberg's Elizabeth Amon, Assistant U.S. Attorney Marc Litt filed a one-page document in Manhattan federal court on March 6 indicating the government will file an "information," or charging document, after Mr. Madoff agrees to waive a grand jury indictment. The report says that defendants who agree to plead guilty to an information often first waive indictment. Hearings on whether Mr. Sorkin, whose father invested with Mr. Madoff, has a conflict of interest in the case have begun. Prosecutors have said that Mr. Sorkin invested $18,860 with his client in the early 1990s. Meanwhile, Annette Bongiorno, an aide to Mr. Madoff, told employees to create trading tickets that are now believed to be false, The Wall Street Journal reported, citing information the employees gave to government investigators. Bloomberg News previously reported, citing a former co-worker of Ms. Bongiorno, reported that the Madoff aide also recruited investors from the neighborhood in Queens, New York, where she grew up next door to Mr. Madoff's future finance chief, Frank DiPascali. Separately, Ruth Madoff, the wife of Mr. Madoff, plans to hire her own attorney in two civil actions filed against her, Bloomberg News reported, citing a lawyer at the firm that represents the couple. The Madoffs have been represented by Mr. Sorkin and Dan Horwitz at Dickstein Shapiro LLP in New York. Mr. Horwitz said in an interview earlier this week that Ms. Madoff will hire her own lawyer. Ms. Madoff hasn't been charged, but there have been questions whether some of her assets may have been linked to the fraud. 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: Used London Unit in Alleged Fraud, Says Gov't ---------------------------------------------------------------- Tom Lauricella, Cassell Bryan-Low, and Jeanne Whalen at The Wall Street Journal report that the U.S. government alleged that Bernard Madoff used his London operation, Madoff Securities International Ltd., to launder client money. Citing authorities, WSJ relates that Mr. Madoff carried out the alleged fraud by transferring client money to Madoff Securities from his investment-advisory business in New York, and then back to the U.S. to support the U.S. trading operation of Bernard L. Madoff Investment Securities LLC. According to WSJ, the authorities claimed that starting as early as 2002, Mr. Madoff "caused more than $250 million" of advisory client money to be directed through wire transfers to accounts held by the London operation. The authorities, says WSJ, alleged that Mr. Madoff also used the money for his personal benefit and for family members and associates. The government said that the transactions gave the appearance that Mr. Madoff was trading in Europe for his clients, a claim he often made when questioned about his stock trading, WSJ states. WSJ notes that Madoff Securities had been a little-known outpost of his New York trading group for years. WSJ relates that Madoff Securities started operations in 1983 as a separate legal entity from Mr. Madoff's U.S. operation. It was located in a townhouse in the tony Mayfair district, which is home to offices of many private banks and asset managers, according to WSJ. The London operation's directors and shareholders included family members and associates of Mr. Madoff, the report states, citing the government. According to public documents, little trading appeared to be taking place in Madoff Securities until the end of the 1990s. WSJ relates that Mr. Madoff then started to add staff, hire traders, and expand the operation. Public documents say that Mr. Madoff lent the business $62.5 million in November 2000. In 2002, Mr. Madoff added a camera in the firm's London office so he could watch from his office computer whether the workers in the London office were taking long lunches, WSJ relates, citing former Madoff technology worker Nader Ibrahim. According to WSJ, former workers said that a dozen traders or so were on the first floor of the townhouse before Mr. Madoff's alleged scheme collapsed last year. WSJ states that nonfamily members with shares in Madoff Securities include: -- Maurice J. Cohn -- who, along with Mr. Madoff, was a shareholder in Cohmad Securities, which played a role in directing investors to Mr. Madoff's advisory business; and -- Paul Konigsberg, a New York City accountant and a friend of the Madoffs who audited the Madoff Family Foundation tax returns. Charles Stillman, Mr. Konigsberg's lawyer, said that his client received the nonvoting shares when he did work for the London operation 25 years ago when it was first opening, didn't have any "meaningful business role" in the London operation, and didn't receive dividends or compensation. According to WSJ, Madoff Securities' directors include: -- Mr. Madoff; -- Mr. Madoff's son, Mark; -- Mr. Madoff's son, Andrew; -- Peter Madoff; and -- five others. WSJ quoted Martin Flumenbaum, an attorney representing Mark and Andrew Madoff, as saying, "Mark and Andrew Madoff were not involved in the financial operations of Madoff Securities International, which was a legitimate proprietary trading business. They were outside directors with de minimis ownership interests. They had no knowledge that their father committed any fraud, including allegedly laundering fraudulently obtained funds through the London entity." WSJ says that the directors received in 1998 payments totaling GBP688,570, while the operation reported profits of about GBP1.03 million. WSJ notes that in 2007, the directors received payments of GBP1.09 million, with the highest-paid director getting GBP301,437. WSJ reports that Madoff Securities' primary business was trading stocks using its own capital. Citing a former Madoff Securities employee, WSJ states that the amounts managed by each trader were relatively modest, in the tens of millions of dollars. The traders said that there was only minimal contact with the U.S. trading operation, according to the report. No one in Mr. Madoff's family or associates has been charged with wrongdoing, and there is no allegation that people involved in the London operation were aware of any illicit dealings, WSJ relates. According to WSJ, authorities in the U.K. said that they are looking for evidence of money laundering involving Madoff Securities, as they seek to build a case against Mr. Madoff. 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. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BOSTON SCIENTIFIC: Moody's Affirms 'Ba1' Corporate Family Rating ---------------------------------------------------------------- Moody's revised Boston Scientific Corporation's rating outlook to stable from negative and changed its Speculative Grade Liquidity Rating to SGL-2 from SGL-3. At the same time, the company's Corporate Family Rating was affirmed at Ba1. In addition, its senior unsecured note and senior shelf ratings were upgraded to Ba1 from Ba2 in accordance with Moody's Loss Given Default methodology because of changes to the company's capital structure. The outlook change reflects: (1) improved covenant cushions provided by recent amendments to its bank facility; (2) generally steady market share for key DES and CRM products; and (3) ongoing debt repayment and cost-savings initiatives. "Boston Scientific has demonstrated solid financial discipline, highlighted by a focus on debt repayment and cost-cutting measures," commented Diana Lee, a Senior Credit Officer at Moody's. The company has been able to retain market share in the DES arena while re-building its CRM presence with new product launches. "Combined with relieving potential liquidity constraints through an amended bank facility, steady positioning in these key markets helps support a stable outlook," said Ms. Lee. A more stable fundamental business profile and improved flexibility under its bank facility are key factors supporting the company's Speculative Grade Liquidity Rating of SGL-2. While litigation remains a long-term concern, over the next 12 months, the company should be able to fund payouts including its Advanced Bionics milestone payment and J&J litigation settlement with internal sources of cash. The Ba1 CFR reflects relatively high leverage despite debt reduction as well as uncertainty associated with outstanding litigation. Going forward, further resolution of litigation matters as well as the company's plans for longer term growth and a sustainable capital structure will be important in determining future credit quality. The US senior unsecured notes held at Boston Scientific Corporation are structurally subordinated to the (unrated) non-US term bank debt held at the foreign subsidiary. However, since a significant portion of this term debt has been repaid, under Moody's LGD methodology, the senior unsecured notes are now notched at the CFR level. Ratings changed: Boston Scientific Corporation: -- Speculative Grade Liquidity rating to SGL-2 from SGL-3 -- Senior unsecured notes to Ba1, LGD4, 62% from Ba2, LGD5, 75% -- Senior shelf to (P)Ba1 from (P)Ba2 Ratings affirmed with a stable outlook: -- Boston Scientific Corporation: -- Ba1 Corporate Family Rating -- Ba1 PDR -- (P)Ba2 Subordinated shelf -- (P)Ba2 Preferred stock shelf The last rating action on Boston Scientific was taken on July 24, 2007, when Moody's downgraded the company's senior unsecured debt rating to Ba2 from Baa3 and assigned a Ba1 Corporate Family Rating with a negative outlook. Boston Scientific Corporation, headquartered in Natick, Massachusetts, is a worldwide developer, manufacturer and marketer of medical devices, specializing in a broad range of interventional and cardiac rhythm management devices. BOWNETREE LLC: Sends Plan for Voting; Ballots Due March 24 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York approved on March 5, 2009, Bownetree LLC's Fourth Amended Disclosure Statement, dated as of March 4, 2009, with respect to the Debtor's Plan of Reorganization, as containing "adequate information" pursuant to Sec. 1125 of the Bankruptcy Code. Ballots soliciting acceptances of the Plan, together with a copy of the Plan, may now be sent to holders of impaired classes of claims against interests in the Debtor. All Ballots must be received by the Debtor's attorneys on or before 4:00 p.m. New York City Time on March 24, 2009, to be counted. The Court initially set the confirmation hearing for March 31, 2009, at 10:00 a.m. Objections to confirmation of the Plan, if any, must be filed with the Court and served served so as to be received by: (i) the Office of the U.S. Trustee, 271 Cadman Plaza East, Room 4529, Brooklyn, NY 11201, Attn. Jacqueline Frome, Esq.; and (ii) Law offices of Stephen B. Kass, Esq., on or before 4:00 p.m. (New York, Eastern Standard Time) on March 24, 2009. Classification of Claims The Plan divides the various claims and interests into four classes: Class Description Treatment 1 Kennedy Funding, Inc. Unimpaired Secured, 1st Mortgage Claim 2 36-20 Bowne, LLC Impaired Secured, 2nd Mortgage 3 General Unsecured Claims Impaired 4 Equity Interests Impaired Classes 2, 3 and 4 are impaired, and, thus, entitled to vote to accept or reject the Plan. General Unsecured claims will be paid 15% of their respective claims from the proceeds of the sale of the Debtor's properties. The exact percentage is estimated to be between 10 to 20% and will be based on the balance of the $300,000 amount 36-20 Bowne has agreed to pay, less Debtor's administrative expenses. Equity holders have undertaken to fund the administrative expenses. Equity interests will not receive any property under the Plan as after confirmation, the company will liquidate. Kennedy Fund, Inc.'s 1st Mortgage Claim will be paid in full from the proceeds of the sale of the Debtor's real estate properties, unless the real property is sold to 36-20 Bowne, LLC, the 2nd mortgage holder, in which case the sale will be contingent upon the terms of the agreement between Kennedy and 36-20 Bowne regarding the terms of the assumption, by 36-20 Bowne, of Kennedy's first mortgage lien on the real property or (2) the entry of an order approving the sale. Pursuant to the Plan, 36-20 Bowne will purchase all of the Debtor's real estate for the purchase price equal to (a) the Debtor's outstanding indebtedness to 36-20 Bowne as of the Closing Date, (b) the assumption of the Debtor's outstanding indebtedness to Kennedy Funding, (c) at least fifteen (15%) of all costs and expenses owed by the Debtor to unsecured creditors, and (d) all bankruptcy related legal fees and administrative costs of the Seller, provided that the aggregate amount under subsections (c) and (d) do not exceed $300,000. "Cramdown" Provisions At the confirmation hearing, the Debtor will invoke the "cramdown" provisions under Sec. 1129(b) of the Bankruptcy Code which provides that notwithstanding the failure of an impaired class to accept a plan of reorganization, a plan may still be confirmed, so long as the plan does not "discriminate unfairly" and is "fair and equitable" with respect to each class of claims or interests that is impaired under and has not accepted the plan. A full-text copy of Bownetree, LLC's Fourth Amended Disclousure Statement, dated as of March 4, 2009, in respect of the Debtor's Plan of Reorganization, is available at: http://bankrupt.com/misc/BownetreeLLC.4thAmendedDS.pdf Headquartered in New York City, Bownetree LLC is engaged in the business of real estate development, sales, and construction. The company filed for Chapter 11 protection on Sept. 4, 2008 (Bankr. E.D. N.Y. 08-45854). The Debtor's schedules showed assets of $17,301,277 and liabilities of $10,940,615. Alina N. Solodchikova, Esq. and Stephen B. Kass, Esq., at the Law Offices of Stephen B. Kass, in New York City, represent the Debtor as counsel. BUILDING MATERIALS: Posts $104 Million Net Loss in Q4 2008 ---------------------------------------------------------- Building Materials Holding Corporation on Tuesday announced preliminary financial results for the fourth quarter and fiscal year 2008. Sales for the fourth quarter of 2008 decreased 42% to $233 million from $403 million in the same quarter a year ago. For the year, sales decreased 39% to $1.3 billion from $2.2 billion for 2007. Net loss for the fourth quarter of 2008 was approximately $104 million or $4 per share compared to a net loss of $331 million or $11 per share for the same quarter a year ago. For the year, net loss was approximately $215 million or $7 per share compared to a net loss of $313 million or $11 per share for 2007. Loss from continuing operations for 2008 was approximately $193 million compared to $266 million for 2007. Operating results for continuing operations in the fourth quarter included roughly $41 million for the impairments of certain customer relationships and covenants not to compete, goodwill, certain property and equipment held for sale and certain leasehold improvements and approximately $13 million of non-recurring expenses to close and consolidate underperforming business units. Already under contraction, the company noted, single-family housing starts declined further in the fourth quarter as home foreclosures increased, lending standards tightened and rising unemployment sapped consumer confidence. The company also noted that, according to the U.S. Census Bureau, in November 2008 single-family starts in the company's markets fell to an annualized rate of 141,000. For the United States as a whole, recent data on single-family starts reflected a decline to a seasonally-adjusted annual rate of 347,000 in January of 2009 and suggests this year will be more challenging than 2008. By contrast, single-family housing starts for the United States averaged 1.1 million per year since 1990, excluding the boom years of 2003 through 2006. BMHC has implemented significant changes to its operations during 2008 to mitigate the impact of this downturn, including closure of 42 and consolidation of 15 business units deemed as underperforming; centralization of administrative functions including information systems, accounts payable, payroll and human resources to its existing administrative support center; and employee headcount reductions of 42% in operations and 12% in administration. "The significant and ongoing correction in the homebuilding industry as well as costs associated with closing underperforming business units have continued to negatively affect our operating performance," stated Robert E. Mellor, Chairman and Chief Executive Officer. "As a result, we continue to assess the performance of our business units and relentlessly drive improvements in cost efficiencies. We also continue to believe that our employees' efforts to maintain our preferred supplier status with customers, as well as our longstanding strong relationships with our vendors, will allow us to weather this unprecedented downturn in demand for the basic necessity of housing. BMHC will issue a press release announcing the date for reporting full results for the fourth quarter and fiscal year 2008 once the date is finalized. Building Materials Holding Corporation (BLGM) -- http://www.bmhc.com/-- is one of the largest providers of building materials and residential construction services in the United States. The company serves the homebuilding industry through two recognized brands: as BMC West, the company distributes building materials and manufacture building components for professional builders and contractors in the western and southern states; as SelectBuild, it provides construction services to high-volume production homebuilders in key markets across the country. BUILDING MATERIALS: Wins Waiver From Lenders on Potential Default ----------------------------------------------------------------- Building Materials Holding Corporation obtained a temporary waiver of certain conditions to borrowing under its credit agreement, which allows the company to borrow up to $20 million, through April 15, 2009, while it works to finalize a permanent amendment to the credit agreement. BMHC requested the temporary waiver from its lenders following a preliminary evaluation of financial information for the month ended February 28, 2009, during which it determined that it may be out of compliance with the financial covenant contained in the company's credit agreement relating to minimum earnings before interest, taxes, depreciation and amortization. The Company is negotiating with its lenders an amendment to the credit agreement to better reflect current and anticipated market conditions. While there is no assurance that these negotiations will result in an amendment acceptable to the Company and the lenders, BMHC currently expects that it will reach agreement with its lenders on the amendment in a timely manner and that its business operations will not be affected. As of February 28, 2009, there were no outstanding borrowings on the revolver and the outstanding balance on the term note was $320 million. "We remain focused on our goal of realigning our business to fit the current environment. While we met the financial covenants for our credit agreement at the end of the fourth quarter, we believe the agreement will need to be amended to better reflect current and anticipated market conditions," Robert E. Mellor, Chairman and Chief Executive Officer, said. Building Materials Holding Corporation (BLGM) -- http://www.bmhc.com/-- is one of the largest providers of building materials and residential construction services in the United States. The company serves the homebuilding industry through two recognized brands: as BMC West, the company distributes building materials and manufacture building components for professional builders and contractors in the western and southern states; as SelectBuild, it provides construction services to high-volume production homebuilders in key markets across the country. CABLEVISION SYSTEMS: Discloses Results of Cash Tender Offers ------------------------------------------------------------ On March 2, Cablevision Systems Corporation (NYSE: CVC) and its subsidiary, CSC Holdings, Inc., disclosed the results to date of their cash tender offers commenced February 13 for these outstanding debt securities: Issuer Title of Security CUSIP Nos. ------ ----------------- ---------- Cablevision Systems Floating Rate Senior Notes (CUSIP Nos. - Corporation due April 1, 2009 12686CAU3, 12686CAT6) CSC Holdings, Inc. 8.125% Senior Notes (CUSIP Nos. - due July 15, 2009 126304AM6) CSC Holdings, Inc. 8.125% Senior Debentures (CUSIP Nos. - due August 15, 2009 126304AD6) The Early Tender Premium Deadline for the cash tender offers was 11:59 p.m., New York Time, on Friday, February 27, 2009, with holders of approximately $196.3 million aggregate principal amount of the April notes, $448.8 million aggregate principal amount of the July notes and $306.7 million aggregate principal amount of the August notes having validly tendered their notes. This represents approximately 39.3%, 89.8% and 76.7% of the outstanding principal amount of the April notes, July notes and August notes, respectively. In accordance with the terms of the tender offers, notes that are tendered after the Early Tender Premium Deadline may not be withdrawn. Cablevision will accept for payment all of the April notes that were validly tendered by the Early Tender Premium Deadline. Cablevision will pay $1,002.50 for each $1,000 principal amount of April notes tendered, which includes an early tender premium of $2.50 per $1,000 principal amount of notes. CSC Holdings will accept for payment all of the July and August notes that were validly tendered and not withdrawn by the Early Tender Premium Deadline. CSC Holdings will pay $1,022.84 for each $1,000 principal amount of July notes tendered, which includes an early tender premium of $22.84 per $1,000 principal amount of notes, and $1,027.63 for each $1,000 principal amount of August notes tendered, which includes an early tender premium of $27.63 for each $1,000 principal amount of notes. Subject to the satisfaction of the conditions to the tender offers, the early settlement date for notes validly tendered was March 2, 2009. The tender offers are scheduled to expire at 11:59 p.m., New York City time, on Friday, March 13, 2009, unless extended or earlier terminated. Holders of April notes who validly tender their April notes after the Early Tender Premium Deadline but at or prior to the expiration of the applicable tender offer will be entitled to receive $997.50 per $1,000 principal amount tendered and accepted for purchase. Holders of July notes or August notes who validly tender their July notes or August notes, as the case may be, after the Early Tender Premium Deadline but at or prior to the expiration of the applicable tender offer, will be entitled to receive $1,000 per $1,000 principal amount tendered and accepted for purchase. Cablevision and CSC Holdings will make payment for notes that are validly tendered after the Early Tender Premium Deadline but at or prior to the expiration of the applicable tender offer promptly after its acceptance of those notes for payment. Payments for notes purchased will include accrued and unpaid interest from and including the last interest payment date applicable to the relevant series of notes to, but excluding, the applicable settlement date. All notes purchased in the tender offers will be retired upon consummation of the tender offers. Cablevision and CSC Holdings have retained J.P.Morgan to serve as dealer manager for the tender offers. The Bank of New York Mellon has been retained to serve as the depositary and MacKenzie Partners has been retained to serve as information agent. About Cablevision Systems Corp. Headquartered in Bethpage, New York, Cablevision Systems Corp. (NYSE: CVC) -- is a cable operator in the United States that operates cable programming networks, entertainment businesses and telecommunications companies. Through its wholly owned subsidiary, Rainbow Media Holdings LLC, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies. Through Cablevision Lightpath Inc., its wholly owned subsidiary, the company provides telephone services and Internet access to the business market. As of December 31, 2008, the company's balance sheet showed total assets of $9,383,208,000 and total liabilities of $14,745,455,000, resulting in total stockholders' deficit of $5,362,247,000. * * * As reported by the Troubled Company Reporter on February 11, 2009, Standard & Poor's Ratings Services said it assigned its 'BB' issue-level and '3' recovery ratings to CSC Holdings Inc.'s proposed $500 million senior notes due 2019. The '3' recovery rating indicates the expectation for meaningful (50%-70%) recovery of principal in the event of payment default. At the same time, S&P placed the 'BB+' rating on $650 million of senior secured debt of majority-owned Newsday LLC on CreditWatch with negative implications. The 'BB' corporate credit rating on parent Cablevision Systems Corp. remains unchanged. Bethpage, New York- based Cablevision is a major cable operator in the New York metropolitan area. CANADIAN SUPERIOR ENERGY: NYSE Halt Trading; Status Quo at TSX -------------------------------------------------------------- Canadian Superior Energy Inc. confirms that NYSE Alternext US LLC has halted trading in its common shares on March 5, 2009. The NYSE Alternext US has advised the company, in a letter dated March 6, 2009, that the Exchange intends to file a delisting application with the Securities and Exchange Commission due to determinations by the Exchange staff that the company has continuing listing deficiencies. Specifically, the events that led to the company filing for protection under the Companies' Creditors Arrangement Act (Canada) on March 5, 2009, have resulted in the determination that the company is not in compliance with the Exchange's listing requirements. The company has the right to appeal this determination. The company's shares continue to trade on the TSX Exchange at this time. The Company's application to the Court of Queen's Bench of Alberta for an Order under the Companies' Creditors Arrangement Act (Canada) was successful, allowing the Company to prepare a plan of arrangement for its creditors, and staying all claims and actions against the Company and its assets. The Order was made under section 11 of the CCAA and it is in effect until March 25, 2009, at which time the matter will be reviewed by the court. Canadian Superior Energy Inc. (TSX: SNG)(NYSE Alternext US: SNG) -- http://www.cansup.com/-- is a Calgary, Alberta, Canada-based diversified global energy company engaged in the exploration and production of oil and natural gas, and liquefied natural gas projects, with operations offshore Trinidad and Tobago, offshore Nova Scotia, Canada, in Western Canada, in the United States and in North Africa. Canadian Superior has approximately 20,000 shareholders worldwide, including some of the top institutional shareholders in North America. CANADIAN TRUST: Restructuring Legal Costs Reach $200 Million ------------------------------------------------------------ According to FP Legal Post, lawyers and advisors have charged an additional C$70 million for the asset-backed commercial paper restructuring in Canada, to bring the total costs of the restructuring to "around the $200-million mark." The costs, Legal Post relates, far surpasses the $150-million in fees earned in the insolvency of steelmaker Stelco Inc., formerly Canada's most expensive restructuring. Legal Post notes that as of March 6, 2009, the implementation trust accounts set up to manage the conversion of the toxic paper into long-term notes -- which has been completed -- had $1.09- billion left in them as of February 6, the date of the last monitor's report. As reported by the TRCR on February 2, 2009, The Bank of New York Mellon, through its subsidiary BNY Trust Company of Canada, has been appointed trustee, paying agent and registrar for the C$32 billion restructuring of Canada's non-bank sponsored asset-backed commercial paper market. The complex restructuring, which involves issuing new long-term notes to investors in exchange for their short-term paper, was developed by a group of major banks and investors with the backing of the Canadian government. In its role, the Bank will service the debt issues and process principal and interest payments for investors. The Bank will also serve as collateral agent and accounting agent on three separate pools of assets, in which the company will monitor collateral, prepare financial statements and assist with reporting requirements. About Canadian Trust Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately C$33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting C$32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CARR MARITIME: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Carr Maritime Company, Inc. 14357 Van Luven Pl Anacortes, WA 98221 Bankruptcy Case No.: 09-12098 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Western District of Washington (Seattle) Judge: Thomas T. Glover Debtor's Counsel: Mary Jo Heston, Esq. Lane Powell PC 1420 5th Ave. Ste 4100 Seattle, WA 98101 Tel: (206) 223-7000 Email: hestonm@lanepowell.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/wawb09-12098.pdf The petition was signed by Steven W. Carr, President of the company. CB RICHARD: S&P Downgrades Counterparty Credit Rating to 'BB' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on CB Richard Ellis Services Inc., including the long-term counterparty and senior secured credit ratings, to 'BB' from 'BB+'. S&P also assigned a recovery rating of '3' to CBRE's senior secured obligations, reflecting S&P's expectation that lenders would realize meaningful (50% to 70%) recovery of principal in the event of a payment default. The outlook is negative. "The downgrade reflects the weakening of CBRE's debt service capacity given the mounting cyclical downturn in the global commercial real estate markets," said Standard & Poor's credit analyst Rian Pressman. Debt service, as measured by EBITDA coverage of interest expense, deteriorated in 2008, indicating the sensitivity of the company's financial performance and debt service to the volume of highly cyclical CRE sales and leasing transactions. Similarly, leverage, as measured by debt to EBITDA, increased. CBRE is the main operating subsidiary of CB Richard Ellis Group Inc. (not rated), which leads the CRE sales and services industry with revenue of more than $5 billion in 2008. CELL THERAPEUTICS: Has Until April 6 to Comply NASDAQ Standards --------------------------------------------------------------- Cell Therapeutics Inc. disclosed in a regulatory filing that on March 6, 2009, the Company was notified by The NASDAQ Stock Market LLC that the NASDAQ Listing Qualifications Panel had determined to continue the listing of the Company's common stock on The NASDAQ Capital Market, notwithstanding the Company's prior non-compliance with the shareholder approval and listing of additional shares requirements set forth in Marketplace Rules 4350(i) and 4310(c)(17), which were remedied prior to receipt of the notice of non-compliance from NASDAQ. Notwithstanding the Panel's decision to continue the Company's listing on The NASDAQ Capital Market, the Panel issued a public reprimand to the Company for its non- compliance with those requirements. On March 6, 2009, the Company was notified by NASDAQ that the NASDAQ Listing Qualifications Panel had determined to continue the listing of the Company's common stock on The NASDAQ Capital Market, subject to the condition that, on or before April 6, 2009, the Company demonstrate compliance with all applicable standards for continued listing on The NASDAQ Capital Market, including the $35 million market value of listed securities requirement or one of its alternatives. 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. CELL THERAPEUTICS: Reduces Workforce After JV Sale to Spectrum -------------------------------------------------------------- The Troubled Company Reporter reported on February 26, 2009, that Cell Therapeutics, Inc., exercised its option to sell its 50% ownership interest in the 50/50 owned joint venture with Spectrum Pharmaceuticals, Inc., to commercialize and develop Zevalin(R) in the United States to Spectrum for $18 million, as may be adjusted for amounts owed between the Company and the joint venture as of the closing, pursuant to the term of the operating agreement for the joint venture, dated December 15, 2008. The Company and Spectrum established the joint venture, RIT Oncology, LLC, in December 2008, pursuant to the Purchase and Formation Agreement dated November 26, 2008, at which time the Company 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. On March 2, 2009, the Company received from Spectrum $6.5 million of the Purchase Price, less certain fees and expenses. The reminder of the Purchase Price is due to be paid within 90 days of closing pursuant to the LLC Agreement. On March 6, 2009, the Company announced an immediate reduction in force of 20 employees in connection with the sale of its 50% ownership interest in RIT to Spectrum. An additional 14 employees will be reduced following the termination of services to RIT. These positions are directly and indirectly involved in the sales and marketing, and medical affairs and other operations of Zevalin. Estimated costs to be recorded for severance-related expenses resulting from the reduction in work force will be within a range of $125,000 to $190,000 for the first 20 employees subject to the immediate reduction in force, and estimated costs to be recorded for severance-related expense resulting from the reduction in force will be within a range of $125,000 to $290,000 for the remaining 14 employees to be subsequently terminate. These estimated costs will be paid within 30 days of the termination of the relevant employees. Such costs are associated with the severance benefits to be provided by the Company to each terminated employee. 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. CEMEX SAB: S&P Downgrades Global Corporate Credit Rating to 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Cemex S.A.B de C.V. and its key operating subsidiaries (Cemex Espana S.A., Cemex Mexico S.A. de C.V., and Cemex Inc.), including lowering the long-term global scale corporate credit ratings on Cemex and Cemex Mexico to 'B-' from 'BB+'. The ratings remain on CreditWatch, where they were placed with negative implications on Jan. 21, 2009. S&P also lowered the long-term Mexican national scale corporate credit ratings on the companies, to 'mxBB' and 'mxB' from 'mxAA-' and 'mxA-1'. At the same time, S&P lowered its rating on Cemex's fixed-to- floating callable perpetual debentures to 'CCC' from 'BB'. "The rating action followed the announcement yesterday that the issuer has indefinitely postponed its previously announced capital markets debt financing," said Standard & Poor's credit analyst Juan Pablo Becerra. "It also reflects our concerns about timely refinancing of its bank loan maturities in 2009." Standard & Poor's estimates that Cemex needs to meet a cash flow shortfall this year of about $1.8 billion to $2.0 billion, net of estimated free cash flow. The company announced that it has initiated discussions with its core banks to renegotiate the majority of its outstanding debt. However, S&P remain concerned that depressed asset prices and the near-freeze in global credit markets may hamper refinancing efforts and asset sales, causing access to resources to take longer or be lower than S&P originally expected. The company is continuing in its effort to cover its 2009 maturities shortfall, and S&P expects that it will be able to refinance or extend these debt maturities. Nonetheless, terms and conditions are now much more uncertain. As a result of these developments, S&P also believes that the risk of payment deferral on the company's perpetual notes has increased significantly; this is reflected in the widening of the gap between the perpetual debentures and the corporate and senior unsecured rating. Under S&P's criteria, payment deferral on the perpetual notes would lead us to adjust the rating on the notes to 'C'. To resolve the CreditWatch, S&P intends to follow any further developments in Cemex's progress in refinancing its maturities due in 2009 and 2010. It is likely that S&P will lower the rating if the company is unable to accomplish an asset sale or a refinancing in the next few months as it has announced. CHEMTURA CORP: Amends Compensation Schedule for Non-Insiders ------------------------------------------------------------ On March 5, 2009, the Board of Directors of Chemtura Corporation amended the compensation schedule for non-employee members of the Board of Directors, previously adopted on October 28, 2009. The annual stock grant of restricted stock units, of a value at grant of $90,000, provided as part of the compensation schedule for non-employee directors, to be settled upon each director's retirement from the Board of Directors, be and the same hereby is ended as of December 31, 2008, and, effective January 1, 2009, is replaced with a cash disbursement in the same amount of $90,000, to be distributed in equal quarterly installments, the timing of such payments being commensurate with quarterly distributions of annual retainer and meeting fees made under the previously adopted compensation schedule. Effective March 5, 2009, the Organization, Compensation and Governance Committee of the Board of Directors of Chemtura Corporation approved the adoption of the 2009 Chemtura Corporation Management Incentive Program. The 2009 MIP will provide a bonus payout in 2010 based upon Chemtura Corporation's financial performance during the 2009 fiscal year. The 2009 MIP provides for payments based on achieving certain financial goals. The 2009 MIP also provides for a threshold level of performance below which no MIP award will be paid. Participation in the 2009 MIP is limited to various key management personnel. On March 5, 2009, Stephen C. Forsyth was appointed a director of Chemtura Corporation. Mr. Forsyth will serve as a director until the Annual Meeting of Stockholders in 2009. Mr. Forsyth, age 53, has served as Executive Vice President and Chief Financial Officer of Chemtura Corporation since April 2007. On March 5, 2009, Roger Headrick was appointed lead director of Chemtura Corporation and will serve as lead director until the Annual Meeting of Stockholders in 2009. On March 6, 2009, Nigel D.T. Andrews was appointed to serve as a member of the Audit Committee of the Board of Directors of Chemtura Corporation, effective February 27, 2009, and will serve in such capacity until the Annual Meeting of Stockholders in 2009. Effective as of February 25, 2009, C.A. (Lance) Piccolo resigned from his position as a member of the Board of Directors of the Company. Mr. Piccolo did not resign from the Board of Directors as a result of a disagreement with the Company on any matter relating to the company's operations, policies or practices. Mr. Piccolo served on the Audit Committee and Organization, Compensation and Governance Committee of the Board of Directors Effective as of February 27, 2009, Robert A. Fox resigned from his position as a member of the Board of Directors of the Company. Mr. Fox did not resign from the Board of Directors as a result of a disagreement with the Company on any matter relating to the company's operations, policies or practices. Mr. Fox served on the Audit Committee and served as Chairman of the Environmental, Health & Safety Committee of the Board of Directors. On December 17, 2008, the Board of Directors of Chemtura Corporation determined that, pursuant to Article II, Section 2.1 of the By-Laws of Chemtura Corporation, the 2009 Annual Meeting of Stockholders will be held at 11:15 a.m. (Eastern Daylight Time), Wednesday, May 13, 2009. On March 5, 2009, the Board of Directors of Chemtura Corporation determined that: (a) the Annual Meeting of Stockholders of the Corporation for the year 2009 be held at Doral Arrowwood, 975 Anderson Hill Road, Rye Brook, New York, and (b) that the close of business on Tuesday, March 31, 2009, be the date of record for determination of stockholders having the right to vote at the Annual Meeting of Stockholders on May 13, 2009. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. * * * As reported by the Troubled Company Reporter on January 21, 2009, Bloomberg News had said Chemtura Corp., and industry peers Ineos Group Holdings, Georgia Gulf Corp. are crashing on a mountain of takeover debt and may follow Lyondell Chemical Co. into bankruptcy, based on the trading in their bonds. As to Ineos, Georgia Gulf and Chemtura, Bloomberg said the combination of $11.7 billion in debt, frozen credit markets and the global recession are forcing the companies to negotiate with creditors to loosen terms of their loans. A glut in supplies that drove prices of polypropylene down by half since October will make it even harder for plastics makers to meet debt payments, just as manufacturers in the Middle East add millions of tons of new supplies. The TCR said February 9 that Moody's Investors Service lowered Chemtura's Corporate Family Rating to B3 from B2, its PDR to Caa1 from B2 and lowered the company's outstanding debt ratings to B3. The ratings of Chemtura remain under review for possible downgrade. Despite the recent signing of $150 million three year U.S. accounts receivable facility, Moody's remain concerned over Chemtura's tight liquidity as evidenced by the maturity of the waiver on the revolving credit facility on March 30, 2009 and upcoming $370 million debt maturity due in early July 2009. The TCR said February 17 that Standard & Poor's Ratings Services revised its ratings on Chemtura's senior unsecured notes following an update to S&P's recovery analysis which incorporates the company's $150 million reduction in its revolving credit facility in January 2009 and following the company's Feb. 4, 2009, press release regarding the subsidiary guarantee status for each of its three senior unsecured note issuances. Standard & Poor's affirmed its 'CCC' (same as the corporate credit rating) issue-level rating on Chemtura's 6.875% senior notes due 2016. The recovery rating on this issue was revised to '3' from '4', indicating S&P's expectation for meaningful (50%-70%) recovery in the event of a payment default. CIRCUIT CITY: Bankruptcy to Be Examined By Congress Panel Today --------------------------------------------------------------- American Bankruptcy Institute Reports that the House Judiciary Subcommittee on Commercial and Administrative Law will be holding a hearing today at 2 p.m. ET titled, "Circuit City Unplugged: Why Did Chapter 11 Fail to Save 34,000 Jobs?" According to Bankruptcy Law360, as Congress looks for answers regarding the death of Circuit City and others, some bankruptcy experts are laying blame at the feet of the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005 for why the electronics giant was unable to survive Chapter 11. As reported by the Troubled Company Reporter, in January 2009, the U.S. Bankruptcy Court for the Eastern District of Virginia authorized the Debtors to conduct going out of business sales at their remaining 567 stores pursuant to an agency agreement between the Debtors and a joint venture, as agent. The Agency Agreement provides that the Agent will pay occupancy expenses for the Closing Locations, including base rent, utilities, common area maintenance, real estate and use taxes, merchant's association dues and expenses, and building insurance due under the Leases on a per diem basis while the GOB Sales are conducted. According to Bloomberg, the Bankruptcy Court approved the hiring of Liquid Asset Partners LLC as agent to sell the furniture, fixtures, and equipment in the stores. The agent will receive a 3% fee. The Agent had indicated that it planned to complete the GOB Sales for certain of the Closing Locations by February 16, 2009, and the remaining Closing Locations at various dates throughout March, but in all cases by no later than March 31, 2009. Headquartered in Richmond, Virginia, Circuit City Stores Inc. (NYSE: CC) -- http://www.circuitcity.com/-- is a specialty retailer of consumer electronics, home office products, entertainment software and related services. The company has two segments -- domestic and international. Circuit City Stores, Inc. (NYSE: CC) together with 17 affiliates filed a voluntary petition for reorganization relief under Chapter 11 of the Bankruptcy Code on November 10 (Bankr. E.D. Va. Lead Case No. 08-35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian operations, also sought protection under the Companies' Creditors Arrangement Act in Canada. Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, are the Debtors' general restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley, Esq., at McGuireWoods LLP, are the Debtors' local counsel. The Debtors also tapped Kirkland & Ellis LLP as special financing counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special securities counsel; and FTI Consulting, Inc., and Rotschild Inc. as financial advisors. The Debtors' Canadian general restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman Carson Consultants LLC is the Debtors' claims and voting agent. The Debtors disclosed total assets of $3,400,080,000 and debts of $2,323,328,000 as of Aug. 31, 2008. Circuit City has opted to liquidate its 721 stores. It has obtained the Court's approval to pursue going-out-of-business sales, and sell its store leases. Bankruptcy Creditors' Service, Inc., publishes Circuit City Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Circuit City Stores Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CITADEL BROADCASTING: Likely Pact Breach Cues S&P's Junk Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Las Vegas, Nevada-based Citadel Broadcasting Corp. to 'CCC+' from 'B+'. The outlook is negative. At the same time, S&P lowered its issue-level rating on Citadel's senior secured credit facilities to 'CCC+', which is at the same level as the corporate credit rating, from 'B+'. In addition, S&P revised the recovery rating on this debt to '4', indicating S&P's expectation of average (30%-50%) recovery in a payment default, from '3'. "The ratings downgrade reflects our concern that Citadel could violate its 8.5x leverage covenant as early as first-quarter 2009, due to the deepening recession and deterioration in radio advertising demand," said Standard & Poor's credit analyst Michael Altberg. "The downgrade also incorporates our view that Citadel may not be able to absorb a potentially significant increase in interest rates, which could accompany an amendment in the current credit environment," he continued. Under S&P's baseline scenario, S&P expects that the company could report a revenue decline in the midteens for fourth-quarter 2008, and that first-quarter 2009 could see revenue declines in the 20%-25% range. The negative outlook reflects S&P's expectation that Citadel could violate financial covenants in the first half of 2009, and could face challenges to absorb a potential increase in interest rates that S&P believes would accompany an amendment in the current credit environment. S&P could lower ratings if the company cannot obtain a credit amendment, or if S&P become convinced that potential increases in interest rates would cause EBITDA interest coverage to drop below 1x. Conversely, an outlook revision to positive would require the company to obtain an amendment that would accommodate meaningful EBITDA declines in 2009, which S&P feel could be in the 30%-40% range, and at interest rates that would not fully consume the company's discretionary cash flow. DELPHI CORP: Court Issues Bench Ruling on OPEB Dispute ------------------------------------------------------ Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York issued an opinion giving reasons why he ruled in favor of Delphi Corp. in February when he favored Delphi's contentions that it was entitled to terminate "OPEB", or welfare plans, including health and insurance plans for salaried retirees. Noting that 15,000 present and former employees of Delphi would be affected, "many of whom would clearly be affected in very dire ways," Judge Drain said in a 23-page modified bench ruling that "[Delphi's] interpretation of Section 1114 of the Bankruptcy Code is the correct one, and that, if, in fact, the debtors have the unilateral right to modify a health or welfare plan, that modifiable plan is the plan that is to be maintained under Section 1114(e), with the debtors' pre-bankruptcy rights not being abrogated by the requirements of Section 1114." Delphi and its affiliates take the position that notwithstanding that the subject matter of these plans involves reimbursing or providing for the reimbursement of "payments for retired employees and their spouses and dependants, for medical, surgical or hospital care benefits, or benefits in the event of sickness, accident, disability or death," that their request need not, and in fact should not, be governed by Section 1114 of the Bankruptcy Code. Approximately 1,600 individuals objected to Delphi's contentions, asserting that: (i) Delphi must go through the process set forth in Section 1114 -- which provides that either: (a) the retirees have consented to proposed modifications or (b) the debtor has met the requirements, including submission of a proposal to employees, a finding that the modifications are necessary for reorganization, and treat all affected parties fairly, and (ii) the Debtors do not have the right to modify these benefits unilaterally under applicable non-bankruptcy law. According to a report by Bloomberg's Bill Rochelle, Judge Drain said he agreed with scholarly commentators who interpret an ambiguous provision in bankruptcy law to mean that workers without vested benefits may have them canceled by a bankrupt company without going through the cumbersome mechanism required for ending collective-bargaining agreements. The report added that Judge Drain, looking at the facts, aid Delphi had "very clearly made the showing that they have the right to modify the plans at will." Judge Drain was scheduled to hold a hearing on March 11 to listen to evidence showing that some of the retirees have vested healthcare benefits. Otherwise, Judge Drain's ruling, according to Mr. Rochelle, refuted and disagreed with a lengthy legal brief the retirees' lawyer filed late last week explaining their view of the law. So as to provide adequately representation for the salaried retirees, the Court has ordered the appointment of a committee of retirees to represent them in Delphi's Chapter 11 case. Judge Drain provided the committee a budget of $200,000. A copy of Judge Drain's Revised Bench Ruling is available for free at http://bankrupt.com/misc/Delphi_OPEBruling.pdf * * * Pursuant to the deadline agreed upon with lenders under its $4.35 billion debtor-in-possession financing facility, and General Motors Corp., Delphi is scheduled to seek approval of disclosure materials in connection with a revised Chapter 11 plan on April 23. 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) EL PASO CHILE: Second Amended Plan Confirmed on February 24 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas confirmed on Feb. 24, 2009, the reorganization plan, as twice amended, filed by El Paso Chile Co., Inc., and Desert Pepper Tading Co. The Debtor is authorized to immediately execute any and all documents or instruments and to take any and all actions necessary or appropriate to implement the Plan. On the Plan's effective date, all assets of the Debtor will be transferred to and be vested in the Debtor, free and clear of any liens, security interests, encumbrances, claims or interest. The Debtor will also be discharged and forever released from any debt that arose prior to this order and from any debt of a kind specified in Sec. 502(g) of the Bankruptcy Code. Based in El Paso, Texas, El Paso Chile Company Inc. -- http://www.elpasochile.com/-- is a salsa, chile and margarita mix distributor. Dessert Pepper Trading Company specializes in the grocery side of the business. El Paso Chile and Desert Pepper Trading filed for Chapter 11 protection on June 25, 2008 (Bankr. W.D. Tex. Lead Case No. 08-30949). Bernard R. Given, II, Esq., at Beck & Given, P.C., represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed assets of $1 million to $100 million, and debts of $1 million to $100 million. ECLIPSE AVIATION: Fuji Widens Loss Estimate on Ch. 7 Liquidation ---------------------------------------------------------------- Fuji Heavy Industries Ltd., said that in light of recent developments in the Chapter 11 case of its trading partner, Eclipse Aviation Corporation, it has raised its estimated losses by JPY$4 billion. Fuji Heavy Industries said that as a result of more writedowns, net loss may total JPY23 billion ($233 million) for the year ending March 31, compared with a previous estimate of JPY19 billion. FHI, in its release, said that in light of the conversion of Eclipse's bankruptcy case to Chapter 7 liquidation on February 24, and the selection of a trustee on March 5, it has revised its net income projection as the damage to assets is possible and calculate the forecasted provision of loss based on the inventories amount of JPY6,584 million which was released on November 27, 2008, in "Notice Regarding the Possible Uncollectibility or Delayed Collection of Receivables and the Damage to Assets." Regarding the other possible loss (Accounts receivable and Investment in Capital) amounted JPY3,161 million was already incurred at the end of December 31, 2008 (Consolidated financial results dated for the third quarter of the Fiscal Year Ending March 2009, dated on February 4, 2009). Senior noteholders pushed for the case conversion. The noteholders want "effective control" of Eclipse's assets. The Noteholders sought the conversion following the Company's failure to complete its planned $188 million sale to EclipseJet Aviation International Inc., an affiliate of ETIRC Aviation. 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. The Court has issued an order converting the case to Chapter 7 liquidation. ENRON CORP: Judge Tosses Claims Against Banks in Investor Suit -------------------------------------------------------------- Judge Melinda Harmon of the U.S. District Court for the Southern District of Texas (Houston) dismissed shareholder claims against three banks named as defendants in litigation over the 2001 collapse of Enron Corp., Elizabeth Amon of Bloomberg News said. Judge Harmon dismissed the claims against Merrill Lynch & Co., Barclays Plc and Credit Suisse Group AG, citing that the banks can't be sued for failing to disclose the Enron fraud. According to Bloomberg, the investors had argued that the banks owed such a duty as issuers of underwriting documents and analyst reports on Enron, and claimed they had engaged in deception on behalf of the company. "The financial institution defendants owed no duty to Enron investors or the market at large" to disclose their transactions or market activity, Judge Harmon wrote, according to the report. About Enron Corp. Based in Houston, Texas, Enron Corporation filed for chapter 11 protection on Dec. 2, 2001 (Bankr. S.D. N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Albert Togut, Esq., at Togut Segal & Segal LLP, Brian S. Rosen, Esq., Martin Soslan, Esq., Melanie Gray, Esq., Michael P. Kessler, Esq., Sylvia Ann Mayer, Esq., at Weil, Gotshal & Manges LLP, Frederick W.H. Carter, Esq., Michael Schatzow, Esq., Robert L. Wilkins, Esq., at Venable, Baetjer and Howard, LLP, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft, LLP, represented the Debtors. Jeffrey K. Milton, Esq., Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy LLP represented the Official Committee of Unsecured Creditors. The Debtors filed their Chapter Plan and Disclosure Statement on July 11, 2003. On Jan. 9, 2004, they filed their fifth Amended Plan and on the same day the Court approved the adequacy of the Disclosure Statement. On July 15, 2004, the Court confirmed the Debtors' Modified Fifth Amended Plan and that plan was declared effective on Nov. 17, 2004. After the approval of the Plan, the new board of directors decided to change the name of Enron Corp. to Enron Creditors Recovery Corp. to reflect the current corporate purpose. ECRC's sole mission is to reorganize and liquidate certain of the operations and assets of the "pre-bankruptcy" Enron for the benefit of creditors. (Enron Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FAWN RIDGE: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Fawn Ridge Partners, LP 9606 Santa Monica Blvd., Third Floor Beverly Hills, CA 90210 Bankruptcy Case No.: 09-15088 Chapter 11 Petition Date: March 5, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Debtor's Counsel: Steven M. Spector, Esq. Buchalter Nemer, APC 1000 Wilshire Bl Ste 1500 Los Angeles, CA 90017 Tel: (213) 891-0700 Fax: 213-896-0400 Email: sspector@buchalter.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/cacb09-15088.pdf The petition was signed by Richard L. Darling, Authorized Representative of the company. FLEETWOOD ENTERPRISES: Chapter 11 Filing Cues Moody's 'D' Rating ---------------------------------------------------------------- Moody's Investors Service downgraded the probability of default rating of Fleetwood Enterprises, Inc. to D from Caa3. The downgrade follows the March 10, 2009 announcement that Fleetwood and certain of its operating subsidiaries in the US have filed voluntary Chapter 11 petitions in the Southern Bankruptcy Court for the Central District of California in Riverside. Subsequent to the actions, all ratings will be withdrawn. For more information, please refer to Moody's Withdrawal Policy on Moodys.com. This rating was changed: -- Lowered Probability of Default Rating to D from Caa3 These ratings will be withdrawn: -- Corporate Family Rating, Caa3 -- Preferred Stock Rating, Ca (LGD 5, 85%) -- Probability of Default Rating, D The last rating action was on August 19, 2008 when all ratings were lowered including the corporate family rating which was downgraded to Caa3 from Caa1. Fleetwood Enterprises Inc. is a producer of recreational vehicles and manufactured housing in North America. Revenues over the twelve months ending on October 26, 2008, were approximately $1.2 billion. FOAMEX INT'L: U.S. Trustee Balks at Bonus Plan for 14 Executives ---------------------------------------------------------------- The U.S. Trustee is opposing Foamex International Inc.'s request to implement a bonus program that would pay top 14 executives up to $1.8 million, including $775,000 for its chief executive officer, Bloomberg's Bill Rochelle reported in his daily column. According to the report, the U.S. Trustee, an arm of the Justice Department, says the proposal violates bankruptcy law because no special duties are required from the executives and they become eligible simply by remaining with the company until the vesting date. A hearing on the proposed bonus program is scheduled for March 16. About Foamex International Foamex International Inc. (FMXL) -- http://www.foamex.com/-- headquartered in Media, PA, produces polyurethane foam-based solutions and specialty comfort products. The company services the bedding, furniture, carpet cushion and automotive markets and also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The company and eight affiliates first filed for chapter 11 protection on September 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). On February 2, 2007, the U.S. Bankruptcy Court for the District of Delaware confirmed the Debtors' Second Amended Joint Plan of Reorganization. The Plan became effective and the company emerged from chapter 11 bankruptcy on February 12, 2007. Foamex missed $7.3 million in interest payments due at the end of the Jan. 21 grace periods on the Company's $325 million first-lien term loan and the $47 million second-lien term loan. On February 18, 2009, Foamex International Inc. and seven affiliates filed separate voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq., and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer in New York; and Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at Cozen O'Connor, in Wilmington, Delaware, serve as bankruptcy counsel. Investment Banker is Houlihan Lokey; accountant is McGladrey & Pullen LLP, and claims and noticing agent is Epiq Bankruptcy Solutions LLC. As of September 28, 2008, the Debtors had $363,821,000 in total assets, and $379,710,000 in total debts. FORD MOTOR: Hurt by Bondholders' Credit-Default Swaps ----------------------------------------------------- Caroline Salas and Shannon D. Harrington of Bloomberg News report that Six Flags Inc. and automaker Ford Motor Co. may be pushed toward bankruptcy by bondholders trying to profit from credit- default swaps that protect against losses on their high-yield debt. The report pointed out that by employing a so-called negative- basis trade, investors could buy Six Flags bonds at 20.5 cents on the dollar and credit-default swaps at 71 cents. If the New York- based amusement-park operator defaults, the creditors would receive the face value of the debt, minus costs. In a Feb. 27 note, Citigroup Inc.'s high yield strategists put that profit at 6 percentage points, or $600,000 on a $10 million purchase. The source relates that Six Flags debt is rated Caa3 by Moody's and CCC+ by Standard & Poor's, three and five levels above default. Both rankings were put on "negative outlook" last year. Ford, the only one of the so-called Big Three U.S. automakers to avoid taking federal bailout funds, may run up against basis traders as it seeks to restructure its debt. The car company plans to offer cash and shares to retire as much as $10.4 billion in debt, according to a U.S. regulatory filing yesterday. It may be "difficult" for Ford to do an exchange, in part because of investors with basis trades, said Rod Lache, an analyst at Deutsche Bank in New York, commenting before the restructuring was announced, according to the report. The parent and its Ford Motor Credit finance arm had a net $8.1 billion credit-default swaps outstanding, versus about $54 billion in bonds, according to data compiled by Bloomberg and the Depository Trust & Clearing Corp., which runs a central credit derivatives registry, the report added. Bloomberg added that investors who bet on the collapse of a company are pitting themselves against traditional debt holders at a time when Moody's Investors Service projects defaults will more than triple this year and exceed the level during the Great Depression. The clash may stall restructuring efforts to prevent bankruptcies, as basis traders may be less inclined to participate in distressed debt exchanges, said Matthew Eagan, an investment manager at Boston-based Loomis Sayles & Co., with $7 billion in high-yield assets. And he added, "Before, you really had to worry mostly about where you were in the company's capital structure. Now, you have to consider the possibility that you might have this large holder of CDS incentivized to see it go into bankruptcy. It's something that's going to come up more and more." According to the report, following a meltdown last year in the relationship between prices on bonds and credit swaps after the Lehman Brothers Holdings Inc. bankruptcy, basis traders often stand to make the most money if companies default. They can also profit by holding the trade until the debt matures or unwinding the position after the market value gap between the bonds and derivatives closes. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * As reported by the Troubled Company Reporter on March 6, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Ford Motor Co. to 'CC' from 'CCC+'. S&P also lowered the issue-level ratings on the company's senior secured term loan, senior unsecured debt, and subordinated debt, while leaving the issue-level rating on Ford's senior secured revolving credit facility unchanged. In addition, the counterparty credit ratings and issue-level ratings on Ford Motor Credit Co. (Ford Credit) and FCE Bank PLC remain unchanged. The outlooks on Ford and Ford Credit are negative. Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring in order to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently- approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. About Six Flags Six Flags, Inc. is engaged in operating regional theme parks. During the year ended December 31, 2007, the Company operated 20 parks. In April 2007, the Company sold seven parks. The theme parks offer thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and retail outlets. In 2007, the theme parks offered more than 840 rides, including over 130 roller coasters. On July 31, 2007, the Company acquired the minority interests in Six Flags Discovery Kingdom. On June 18, 2007, it acquired a 40% interest in a venture that owns dick clark productions, inc. (DCP). As reported by the Troubled Company Reporter on March 3, 2009, Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries' Issuer Default Rating to 'CC' from 'CCC'. FREDDIE MAC: 2008 Net Loss Balloons to $50BB; Seeks $30BB Funding ----------------------------------------------------------------- Freddie Mac disclosed that pursuant to the U.S. Treasury's funding commitment under the parties' purchase agreement, the Director of the Federal Housing Finance Agency has submitted a request to Treasury for Freddie Mac funding in the amount of $30.8 billion. Freddie Mac expects to receive the funds in March 2009. Freddie Mac said that, as a result of the fourth quarter 2008 net loss and mark-to-market effects on its accumulated other comprehensive income (loss) related to unrealized losses on available-for-sale securities, the company's stockholders' deficit totaled $30.7 billion at December 31, 2008. "Freddie Mac is working hard to serve our expanded mission in this historic crisis, by doing all we can to help stabilize the financial markets and hasten the recovery in housing," said David Moffett, Freddie Mac's chief executive officer. "We absorbed heavy financial losses last year, driven primarily by mark-to-market items and credit-related expenses. But we also provided vital liquidity to the strapped housing market -- injecting more than $460 billion in mortgage funding in 2008." Freddie Mac Chairman John Koskinen said, "Going forward, Freddie Mac has an essential role to play in ensuring the Administration's new Making Home Affordable program is a success. We are committed to taking a leadership role in this important initiative and to doing everything we can to keep millions of families in their homes." On Wednesday, Freddie Mac reported a net loss of $23.9 billion for the quarter ended December 31, 2008, compared to a net loss of $25.3 billion for the quarter ended September 30, 2008. For the full-year 2008, the company reported a net loss of $50.1 billion, compared to a net loss of $3.1 billion for the full-year 2007. Fourth quarter 2008 results were driven primarily by net mark-to- market losses of $13.3 billion on the company's derivative portfolio, guarantee asset and trading securities due to the impacts of spread widening and declines in interest rates. In addition, the company recorded $7.2 billion in credit-related expenses related to the continued deterioration in economic conditions during the fourth quarter, including a rapid deterioration in labor markets, steeper declines in home prices, and a drop in consumer confidence to record lows. Results were also impacted by security impairments on the company's available- for-sale securities of $7.5 billion primarily due to sustained deterioration in the performance of the underlying collateral on the company's non-agency mortgage-related securities. In the fourth quarter of 2008, the company recognized an additional valuation allowance of $8.3 billion against its net deferred tax assets. On November 25, 2008, the Federal Reserve announced that it would purchase up to $100 billion in direct obligations of Freddie Mac, Fannie Mae and the FHLBs and up to $500 billion of mortgage- related securities issued by Freddie Mac, Fannie Mae and Ginnie Mae by the end of the second quarter of 2009. In November 2008, Freddie Mac received $13.8 billion from Treasury under the Purchase Agreement. As a result of the draw from Treasury, Freddie Mac said the aggregate liquidation preference of the company's senior preferred stock will increase to $45.6 billion, and Treasury, the holder of the senior preferred stock, will be entitled to annual cash dividends of roughly $4.6 billion. An initial cash dividend on the senior preferred stock was paid on December 31, 2008, for the period September 8, 2008 through December 31, 2008, in the aggregate amount of $172 million. On February 18, 2009, Treasury Secretary Tim Geithner issued a statement outlining further efforts by Treasury to strengthen its commitment to Freddie Mac by increasing the funding available from Treasury under the Purchase Agreement from $100 billion to $200 billion, affirming Treasury's plans to continue purchasing Freddie Mac mortgage-related securities and increasing the size limit on the company's mortgage-related investments portfolio at December 31, 2009, by $50 billion to $900 billion with a corresponding increase in the amount of allowable debt outstanding. A full-text copy of Freddie Mac's 2008 annual report is available at no charge at: http://researcharchives.com/t/s?3a34 About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At December 31, 2008, the company's balance sheet showed total assets of $850.9 billion and total liabilities of $881.6 billion, resulting in a stockholders' deficit of $30.7 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. Being under Conservatorship, Freddie Mac said it is dependent upon the continued support of Treasury and FHFA to continue operating its business. FREDDIE MAC: Appoints Koskinen as Interim CEO, Glauber as Chairman ------------------------------------------------------------------ Freddie Mac's board of directors has named John A. Koskinen as the company's interim chief executive officer and Robert R. Glauber as its interim non-executive chairman. Both appointments will be effective upon the resignation of current CEO David M. Moffett, who had previously announced that he would resign from his position as chief executive officer and as a member of the board no later than March 13, 2009. Mr. Koskinen had served as non-executive chairman of Freddie Mac since September 2008. Previously he was president of the United States Soccer Foundation for four years, deputy mayor and city administrator of Washington, DC from 2000 to 2003, assistant to the president and chair of the President's Council on Year 2000 Conversion from 1998 to 2000 and deputy director for management of the Office of Management and Budget from 1994 to 1997. Prior to his government service, Mr. Koskinen worked as a senior executive of The Palmieri Company, including serving as president and CEO, participating in the restructuring of a range of large, troubled enterprises including the Penn Central, the Teamsters Pension Fund, Levitt and Sons, Inc. and Mutual Benefit. Mr. Koskinen also serves on the boards of The AES Corporation, American Capital, Ltd., and the non-profit D.C. Education Compact. Mr. Glauber initially joined the Freddie Mac board of directors in 2006. He is a lecturer at Harvard's Kennedy School of Government and a visiting professor at the Harvard Law School. Prior to that, he served as chairman and CEO of the National Association of Securities Dealers from 2001 to 2006, after first serving as its CEO and president and a member of its board. Over the years, he has been a lecturer at the Kennedy School, undersecretary of the Treasury for Finance and a professor of finance at the Harvard Business School. Mr. Glauber also served as executive director of the task force appointed by President Reagan to report on the 1987 stock market break. He has served on the board of the Federal Reserve Bank of Boston, a number of Dreyfus mutual funds, the Investment Company Institute, and as president of the Boston Economic Club. He also is a director of Moody's Corporation; a trustee of the International Accounting Standards Committee Foundation; and lead director of XL Capital Ltd. Mr. Glauber has been a senior advisor at Peter J. Solomon Co., an investment bank, since November 2006. Freddie Mac's board of directors is working with the company's conservator, the Federal Housing Finance Agency, to appoint a permanent chief executive officer. Following such appointment, the board of directors expects that Mr. Koskinen will return to the position of non-executive chairman. About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At Sept. 30, 2008, the company's balance sheet showed total assets of $804,390 billion and total liabilities of $818,185 billion, resulting in a stockholders' deficit of $13,795 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. Being under Conservatorship, Freddie Mac said it is dependent upon the continued support of Treasury and FHFA to continue operating its business. FREDDIE MAC: Enters Into Indemnification Agreements With Execs -------------------------------------------------------------- On March 2, 2009, Freddie Mac, formally known as the Federal Home Loan Mortgage Corporation, entered into indemnification agreements with its executive officers, including: * Michael Perlman, Executive Vice President of Operations & Technology, * David B. Kellermann, Acting Chief Financial Officer, and * Michael C. May, Senior Vice President of Multifamily. The indemnification agreements are effective as of September 6, 2008. The principal terms of the indemnification agreements are: The indemnification agreements provide that Freddie Mac will indemnify the indemnitee to the fullest extent permitted by Freddie Mac's Bylaws and Virginia law. This obligation includes, subject to certain terms and conditions, indemnification against all liabilities and expenses, including attorneys' fees, actually and reasonably incurred by the indemnitee in connection with any threatened or pending action, suit or proceeding, except such liabilities and expenses as are incurred because of the indemnitee's willful misconduct or knowing violation of the criminal law. The indemnification agreements provide that Freddie Mac will advance expenses, if requested by the indemnitee, subject to repayment by the indemnitee of any funds advanced if it is ultimately determined that the indemnitee is not entitled to indemnification. The rights to indemnification under the indemnification agreements are not exclusive of any other right the indemnitee may have under any statute, agreement or otherwise. Freddie Mac's obligations under the indemnification agreements will continue after the indemnitee is no longer a director or officer of the company with respect to any possible claims based on the fact that the indemnitee was a director or officer, and the indemnification agreements will remain in effect in the event the conservatorship is terminated. The indemnification agreements also provide that indemnification for actions instituted by the Federal Housing Finance Agency, or FHFA, will be governed by the standards set forth in FHFA's Notice of Proposed Rulemaking published in the Federal Register on November 14, 2008, proposing an amendment to FHFA's interim final Golden Parachute Payments regulation to address prohibited and permissible indemnification payments. About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At Sept. 30, 2008, the company's balance sheet showed total assets of $804,390 billion and total liabilities of $818,185 billion, resulting in a stockholders' deficit of $13,795 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. FREESCALE SEMICONDUCTOR: Reports Results of Note Invitations ------------------------------------------------------------ Freescale Semiconductor on Wednesday announced the termination and final results of its note invitations to eligible holders of its Senior Floating Rate Notes due 2014; 8.875% Senior Fixed Rate Notes due 2014; and 10.125% Senior Subordinated Notes due 2016, and the extension of the termination date of its note invitation to eligible holders of its 9.125%/9.875% Senior PIK-Election Notes due 2014 to participate as a lender in its new incremental term loans under its senior secured credit facility. In addition, the company has waived the $250,000,000 limitation with respect to the maximum acceptance amount of principal amount of Senior Toggle Notes in the note invitation for such existing notes. The waiver of the Senior Toggle Notes limit will not affect the maximum aggregate principal amount of other existing notes accepted in the other note invitations. Validly delivered Senior Floating Rate Notes and Senior Fixed Rate Notes will not be subject to proration. As a result of the maximum acceptance amount for the Senior Subordinated Notes, all validly delivered Senior Subordinated Notes will be subject to pro-ration. As reported by the Troubled Company Reporter on March 3, 2009, Freescale Semiconductor, which was taken private in 2006, received commitments from investors holding $2.95 billion of bonds to swap the debt at a discount for a new term loan. Based on its preliminary calculations, the company believes that the proration factor for the Senior Subordinated Notes will be approximately 0.779. As a result of the waiver of the Senior Toggle Notes Limit, the company will now accept commitments with respect to the Senior Toggle Notes up to the aggregate amount of Senior Toggle Notes that would result in the incurrence by the company of new incremental term loans in an amount that, together with the new incremental term loans incurred in respect of the Senior Subordinated Notes, the Senior Floating Rate Notes and the Senior Fixed Rate Notes and new incremental term loans payable as compensation, would be equal to the limit of $1,000,000,000 of new incremental term loans. If the aggregate amount of Senior Toggle Notes in respect of which commitments are received would cause this limit to be exceeded, validly tendered Senior Toggle Notes will be subject to proration. The company has extended the termination date of the note invitation with respect to the Senior Toggle Notes to midnight, New York City time, on March 24, 2009, unless further extended by the company. As of midnight, New York City time, on March 10, 2009, the Company had received commitments with respect to roughly $3.03 billion aggregate principal amount of the existing notes. Based on the amount of commitments delivered and giving effect to the waiver of the Senior Toggle Notes limit, the company would incur about $897 million aggregate principal amount of new incremental term loans, subject to consummation of the note invitations. Maximum Acceptance Amount of Principal Principal Amount of Title of Outstanding Amount of Each Issue Existing Principal Existing of Existing Notes to Amount Acceptance Note Notes be Delivered ($MM) Priority ($MM) Delivered ------------ ----------- ---------- ----------- ------ ------ Senior Toggle Notes $1,500.000 1 N/A* $941,301,000 Sr. Subordinated $1,510.554 2 $746.268 $958,078,000 Notes Senior Floating $475.000 3 N/A $281,215,000 Rate Notes Senior Fixed $2,287.064 4 N/A $844,575,000 Rate Notes * The Senior Toggle Notes limit has been waived by the Company. The Company anticipates that the closing date for the note invitations with respect to the Senior Subordinated Notes, the Senior Floating Rate Notes and the Senior Fixed Rate Notes will be March 17, 2009. About Freescale Semiconductor Freescale Semiconductor - http://www.freescale.com/-- is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. The privately held company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations around the world. As reported by the Troubled Company Reporter on February 23, Moody's Investors Service affirmed the corporate family, long-term debt and speculative grade liquidity ratings of Freescale. Simultaneously, Moody's downgraded the probability of default rating to Ca from Caa1. The rating outlook remains negative. The downgrade of the PDR to Ca reflects Moody's view that Freescale's recent debt exchange offer is a distressed exchange. It also reflects the very high likelihood of the transaction closing. While no payment default has occurred and there are no debt maturities until 2012, in Moody's opinion the successful closing of the transaction, which is designed to reduce debt and interest expense, would represent the occurrence of a deemed default. G.I. JOE'S: Court Grants Additional 15 Days for Schedules Filing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended for an additional 15 days, the deadline within which G.I. Joe's Holding Corporation and G.I. Joe's Inc. must file their schedule of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, statement of financial affairs, and additional list required pursuant to the Local Rules of Bankruptcy Practice and Procedure of the U.S. Bankruptcy Court. The Debtors required extra time to prepare and file their schedule and statements. Given the size and complexity of the Debtors' business operations, the number of creditors, and the facts that certain prepetition invoices have not yet been received or entered into the Debtors' financial accounting systems, the Debtors have begun, but not yet finished compiling the information that will be required in order to complete the schedules and statements. Creditors and other parties in interest, the Debtors related, will not be significantly harmed by the extension of the filing deadline. About G.I. Joe's Holding Corporation Headquartered Wilmington, Delaware, G.I. Joe's Holding Corporation -- http://www.joessports.com-- owns and operates retail stores selling sports apparel, and camping equipment and accessories. G.I Joe has more than 30 locations in Idaho, Oregon, and Washington. The G.I. Joe's Holding Corporation and G.I. Joe's Inc. filed for Chapter 11 protection on March 4, 2009 (Bankr. D. Del. Case Nos.: 09-10713 and 09-10714. Proskauer Rose LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, as their Delaware counsel and Patrick J. O'Malley, at Development Specialist Inc., chief restructuring officer. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million. G.I. JOE'S: Wants to Hire BMC Group as Notice and Claims Agent -------------------------------------------------------------- G.I. Joe's Holding Corporation and G.I. Joe's Inc. ask the U.S. Bankruptcy Court for the District of Delaware for authority to employ BMC Group, Inc. as notice and claims agent. BMC will perform notice and claims services for the Debtors. In addition, BMC will provide other noticing, claims processing and related administrative services, and technology support as the Debtors or Clerk's Office may request from time to time. BMC will provide services on an a la carte basis, only charging the Debtors for necessary or requested services. Bard Daniel, director of Restructuring Services of BMC, tells the Court that BMC will be paid an initial advance payment retainer of $50,000. In addition, the retainer will be applied to BMC's final bill for services and expenses rendered. After application to the final bill, the unapplied portion of the retainer will be promptly refunded to the Debtor. Mr. Daniel assures the Court that BMC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About G.I. Joe's Holding Corporation Headquartered Wilmington, Delaware, G.I. Joe's Holding Corporation -- http://www.joessports.com-- owns and operates retail stores selling sports apparel, and camping equipment and accessories. G.I Joe has more than 30 locations in Idaho, Oregon, and Washington. The G.I. Joe's Holding Corporation and G.I. Joe's Inc. filed for Chapter 11 protection on March 4, 2009 (Bankr. D. Del. Case Nos.: 09-10713 and 09-10714. Proskauer Rose LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, as their Delaware counsel and Patrick J. O'Malley, at Development Specialist Inc., chief restructuring officer. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million. G.I. JOE'S: Can Sell Substantially All Assets at March 30 Auction ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized G.I. Joe's Holding Corporation and G.I. Joe's Inc. to sell substantially all assets free and clear of liens, claims, encumbrances, and other interests at an auction and to assume and assign certain executory contracts and unexpired leases related. In this connection, the Debtors employed Financo, Inc., as investment banker to market the business as a going concern. The Debtors related that the sale will subject to consultation with Wells Fargo Retail Finance, LLC, and Crystal Capital Fund Management, L.P., as administrative and collateral agents in the Debtors' loan and security agreements. The Court has also approved the: a) bid procedures for the sale of substantially all their assets; b) auction to be held at the offices of Potter Anderson Corroon LLP, 1313 Market Street, 6th Floor, Wilmington, Delaware on March 30, 2009, beginning at 11:00 a.m. or at a later time or other place as the Debtors will notify; c) sale hearing on April 2, 2009; d) assumption and assignment procedures related to the sale; and e) form of the sale notice. The sale of the purchased assets will be on an "as is, where is" basis and without representation or warranties of any kind, nature or description by the Debtors, their agents or estate. The Debtors also related that the sale will maximize the value of the Debtors' estates for the benefit of all of the Debtors' stakeholders and, accordingly, is in the best interests of the debtors, their creditors, and their other economic stakeholders. About G.I. Joe's Holding Corporation Headquartered Wilmington, Delaware, G.I. Joe's Holding Corporation -- http://www.joessports.com-- owns and operates retail stores selling sports apparel, and camping equipment and accessories. G.I Joe has more than 30 locations in Idaho, Oregon, and Washington. The G.I. Joe's Holding Corporation and G.I. Joe's Inc. filed for Chapter 11 protection on March 4, 2009 (Bankr. D. Del. Case Nos.: 09-10713 and 09-10714. Proskauer Rose LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, as their Delaware counsel and Patrick J. O'Malley, at Development Specialist Inc., chief restructuring officer. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million. GENERAL MOTORS: Amends JPMorgan Loan Amid Going Concern Doubt ------------------------------------------------------------- General Motors Corporation on March 4, 2009, entered into a First Amendment to the Term Loan Agreement, dated as of November 29, 2006, among GM, Saturn Corporation, JPMorgan Chase Bank, N.A., as administrative agent, and the several financial institutions from time to time parties thereto as lenders. GM entered into the Amendment to modify the requirement in the Loan Agreement that GM deliver annual consolidated financial statements accompanied by a report of its independent public accountants that does not include a "going concern" or similar qualification. Under the Amendment, GM agreed to add certain provisions to the Loan Agreement relating to the terms of the Loan and Security Agreement dated as of December 31, 2008, between the U.S. Treasury and GM and certain of its U.S. subsidiaries and related agreements, any other credit facility provided by a U.S. government authority, or any debt agreement refinancing the UST Loan Agreement or the Additional US Government Debt. Under the Amendment, if (a) the interest rate applicable to any tranche of any Additional US Government Debt or the Permitted Refinancing, at a time when more than 50% of the principal of such tranche is held by lenders other than U.S. governmental authorities, is higher than the highest rate applicable to any tranche of debt under the UST Loan Agreement immediately prior to the incurrence of such tranche of Additional US Government Debt or Permitted Refinancing or (b) the UST Loan Agreement is modified, at a time when more than 50% of a tranche of debt issued under the UST Loan Agreement is held by Non-US Government Lenders, to increase the interest rate applicable to such tranche, and if at least $1 billion of the Subject Debt is affected, the interest rate under the Loan Agreement will be automatically increased to the extent necessary (if at all) to a rate equal to the weighted average interest rate applicable to all tranches of the Subject Debt having interest rates greater than the interest rate under the UST Loan Agreement effective on March 4, 2009. Any optional prepayment of any tranche of the Subject Debt -- other than a reduction in the amount outstanding under a revolving credit facility that does not terminate or permanently reduce the amount of the commitment under such facility -- at the time that a majority of the principal under such tranche are held by Non-US Government Lenders will require a pro rata prepayment under the Loan Agreement. Other significant provisions of the Amendment related to collateral include an increase in the ratio of the value of the Collateral to total exposure under the Loan Agreement from 2.50 to 1.00 to a new ratio of 3.25 to 1.00. The Amendment provides that any event of default under the UST Loan Agreement, Additional US Government Debt, or Permitted Refinancing that continues for 20 business days would be a additional event of default under the Loan Agreement. The requirement in the Loan Agreement to deliver consolidated annual financial statements without a "going concern" paragraph or similar qualification in the accompanying opinion was modified by the Amendment to provide that such requirement was not applicable to the opinion provided with the annual consolidated financial statements for the fiscal year ended December 31, 2008. The Amendment also added a covenant providing that GM may pay cash dividends to its stockholders or make cash payments for the purchase or redemption of any capital stock or related interests only if such payment is permitted or consented to under the agreements governing the Subject Debt. Finally under the Amendment the parties agreed to a minimum LIBOR rate and an increase in the interest and default rates, all consistent with the terms of the Treasury Loan, and GM agreed to pay certain fees to the administrative agent and to the Lenders that consented to the Amendment. A full-text copy of the First Amendment dated as of March 4, 2009, to the Term Loan Agreement, dated as of November 29, 2006, among General Motors Corporation, Saturn Corporation, JPMorgan Chase Bank, N.A, as Administrative Agent, and the several financial institutions from time to time party thereto as Lenders, is available at no charge at: http://researcharchives.com/t/s?3a39 Going Concern Doubt As reported by the Troubled Company Reporter on March 6, 2009, Deloitte & Touche LLP, which General Motors Corp.'s Audit Committee retained to audit the company's consolidated financial statements and the effectiveness of internal controls, as of and for the year ended December 31, 2008, said that there is substantial doubt about the company's ability to continue as a going concern. Deloitte said the company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the company's obligations and sustain the its operations raise substantial doubt about the its ability to continue as a going concern. For the year ended December 31, 2008, GM posted a net loss of $30,860,000,000. As of December 31, 2008, GM reported $91,047,000,000 in total assets, $176,387,000,000 in total liabilities, and $86,154,000,000 in stockholders' deficit. 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. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. To 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the Company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. And General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: Aleris Seeks to Cancel Shipment Contract -------------------------------------------------------- Aleris International, Inc., and its affiliates seek permission from the U.S. Bankruptcy Court for the District of Delaware, pursuant to Section 365 of the Bankruptcy Code, to reject four purchase contracts they entered into with General Motors Corporation through Debtor Alchem Aluminum, Inc. Three of the contracts call for Alchem to ship aluminum sow/ingot, and the fourth contract requires Alchem to ship silicon, to GM. Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, the Debtors proposed co-counsel, notes that with GM's public pronouncements about the current state of its finances, the Debtors are very concerned about the extended terms of the Contracts that will not be due until the second day of the second month after a shipment is made. The Debtors add that they have to purchase the silicon and other raw materials and to incur refining costs to prepare the aluminum sow/ingot required under the GM Contracts, in order to fulfill their obligations under the Contracts. 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. 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. 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) GENERAL MOTORS: SAAB Unit Draws Interest from Rivals ---------------------------------------------------- Saab Automobile, the Swedish carmaker that filed for bankruptcy protection last month, said it has drawn interest from rivals as well as investment companies as it seeks a new owner, Andreas Cremer of Bloomberg reports. Chief Executive Officer Jan-Aake Jonsson, as cited by the report, said in an interview, "We're now very actively searching. The key for us is to find someone who is financially strong. We're talking about a long-term ownership and commitment". Bloomberg's Benedikt Kammel relates that Saab sought court protection on Feb. 20 after General Motors Corp. said it will cut ties with SAAB following years of losses. Saab has retained Deutsche Bank AG as adviser and is also talking to the Swedish government to get financial aid and may extend a court-supervised reorganization beyond the initial three months at the end of May, CEO Jonsson said. "I really can't see anybody coming up with a reason to pump money into Saab. GM couldn't turn it round during the best of times, and now we're in the worst automotive crisis since World War II", said Peter Schmidt, managing director at Warwick, England-based consulting firm Automotive Industry Data. The source relates that GM bought half of Saab almost two decades ago and took full control in 2000. Saab has racked up losses almost every year since and predicts a 3 billion-kronor ($326 million) deficit for 2009. Saab sold fewer than 100,000 cars last year and registrations in its home market fell 53 percent last month. Philippe Houchois, a London-based analyst with UBS, said it's highly unlikely that another automaker could make a business case for buying the Swedish company. According to Bloomberg, Mr. Houchois is quoted saying, "Saab has half-a-percent market share in Europe, which is absolutely pointless. The volume isn't there, you have a brand that's not very attractive and there are significant investment costs if you want to extract synergies. The market would take it very, very negatively". He added that it's more likely that a private-equity firm will try to buy Saab for nothing, along with government aid, and then hold on to the company until the auto-market picks up before attempting to sell the business. CEO Jonsson, as cited by the report, said Saab hadn't struggled to attract enquiries, while declining to identify any interested parties and added, "Those companies approached us, we weren't out there soliciting. It's too early to say exactly how this whole process is going to turn out or what's more likely and what's less likely." About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. General Motors Latin America, Africa and Middle East, with headquarters in Miramar, Florida, is one of GM's four regional business units. GM LAAM employs approximately 37,000 people in 18 countries and has manufacturing facilities in Argentina, Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and Venezuela. GM LAAM markets vehicles under the Buick, Cadillac, Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands. GM's common stock was considered the stock market's bellwether for many years, hence the saying "What's good for GM is good for America." Going Concern Doubt As reported by the Troubled Company Reporter on March 6, 2009, Deloitte & Touche LLP, which General Motors Corp.'s Audit Committee retained to audit the company's consolidated financial statements and the effectiveness of internal controls, as of and for the year ended December 31, 2008, said that there is substantial doubt about the company's ability to continue as a going concern. Deloitte said the company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the company's obligations and sustain the its operations raise substantial doubt about the its ability to continue as a going concern. For the year ended December 31, 2008, GM posted a net loss of $30,860,000,000. As of December 31, 2008, GM reported $91,047,000,000 in total assets, $176,387,000,000 in total liabilities, and $86,154,000,000 in stockholders' deficit. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. To 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the Company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. And General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: Scania Has Veto Power on SAAB Sale -------------------------------------------------- Jakob Lindstroem of Bloomberg reports that Saab AB and Scania AB have the power to veto the sale of the Saab brand if Saab Automobile is sold according to a contract signed in 1996, Dagens Industri reported, citing Anders Blom, head of brand management at Saab AB. Saab AB owns General Motors Corp.'s Saab brand together with Scania, Sweden's second-biggest truckmaker, and GM. The Saab brand is valued at 10 billion kronor ($1.1 billion), the Stockholm-based newspaper reported, quoting Christian Ihre at brand consultant Lynxeye. Linkoeping, Sweden-based Saab AB, the builder of the Gripen fighter plane, is a separate company from GM's Saab Automobile, which filed for bankruptcy protection last month. Meanwhile, Bloomberg's Andreas Cremer relates that Saab Automobile Chief Executive Officer Jan-Aake Jonsson in an interview at the Geneva Car Show said the Swedish carmaker may seek to extend a reorganization period beyond the initial three months and will aim to establish a "clear direction" for the company by the end of May. 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." Going Concern Doubt As reported by the Troubled Company Reporter on March 6, 2009, Deloitte & Touche LLP, which General Motors Corp.'s Audit Committee retained to audit the company's consolidated financial statements and the effectiveness of internal controls, as of and for the year ended December 31, 2008, said that there is substantial doubt about the company's ability to continue as a going concern. Deloitte said the company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the company's obligations and sustain the its operations raise substantial doubt about the its ability to continue as a going concern. For the year ended December 31, 2008, GM posted a net loss of $30,860,000,000. As of December 31, 2008, GM reported $91,047,000,000 in total assets, $176,387,000,000 in total liabilities, and $86,154,000,000 in stockholders' deficit. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. To 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the Company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. And General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: Private-Equity Firms Not Interested in Opel ----------------------------------------------------------- International private-equity companies are not interested in buying carmaker Adam Opel GmbH, Bloomberg said, citing a report by newspaper Die Welt. According to Die Welt, Cerberus Capital Management LP, which Chrysler Corp., has no interest in acquiring General Motors Corp.'s Germany based unit. Die Welt cited unidentified officials from several large buyout firms in its report. Amidst the worst financial crisis since the 1930s, some private equity firms are focusing keeping their buyouts afloat. According to Blomberg, after spending a record $1.2 trillion on acquisitions during 2006 and 2007, LBO firms are now focused on deal-saving, not dealmaking. Bloomberg said that Bain Capital LLC, which has made more than $100 billion of investments since its founding in 1984, has hired restructuring specialists AlixPartners LLP and Miller Buckfire & Co. to help salvage its $3.2 billion 2007 takeover of Tampa, Florida-based OSI Restaurant Partners Inc, which is struggling with declining revenue and a 30-fold increase in losses. Apollo Management LP and Blackstone Group LP are employing an arsenal of tools, including debt exchanges and equity infusions, to rescue leveraged buyouts, such as Freescale Semiconductor Inc. and Realogy Corp. Germany Support for Opel Meanwhile, German Chancellor Angela Merkel intends to make financial support for Opel dependent on decisions by its U.S. parent, Bloomberg said, citing newspaper Bild Zeitung. Mr. Merkel, according to Bild Zeitung, said that in order to grant any aid, it is necessary to know plans for GM, how independently Opel will be allowed to operate and the future of Opel's patents. Mr. Merkel, the newspaper reported, said the country would support Opel and other struggling companies, only if a bailout would secure a future and wouldn't be wasted by a company's failure in the markets. 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." Going Concern Doubt As reported by the Troubled Company Reporter on March 6, 2009, Deloitte & Touche LLP, which General Motors Corp.'s Audit Committee retained to audit the company's consolidated financial statements and the effectiveness of internal controls, as of and for the year ended December 31, 2008, said that there is substantial doubt about the company's ability to continue as a going concern. Deloitte said the company's recurring losses from operations, stockholders' deficit and failure to generate sufficient cash flow to meet the company's obligations and sustain the its operations raise substantial doubt about the its ability to continue as a going concern. For the year ended December 31, 2008, GM posted a net loss of $30,860,000,000. As of December 31, 2008, GM reported $91,047,000,000 in total assets, $176,387,000,000 in total liabilities, and $86,154,000,000 in stockholders' deficit. * * * 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. GOODY'S LLC: Court Approves Settlement on First Bankruptcy Case --------------------------------------------------------------- Goody's LLC and its affiliates, which filed for Chapter 11 about three months after their predecessor Goody's Family Clothing emerged from bankruptcy, were authorized by the U.S. Bankruptcy Court for the District of Delaware to settle with the creditors' representative from their first bankruptcy case, Bloomberg's Bill Rochelle stated. The Court approved the settlement notwithstanding objections by the U.S. Trustee. As reported by the TCR on March 4, an ad hoc committee of trade creditors -- consisting of 11 trade vendors -- sought dismissal of the Goody's II cases. The group claimed that the liquidation of the Debtors' assets should occur "outside of bankruptcy or under the jurisdiction of this Court in Goody's I. Thereafter, the proceeds of such disposition should appropriately be administered in furtherance of substantial consummation of the Goody's I plan including, inter alia, replenishment of the woefully deficient administrative claim reserves and otherwise to satisfy the remaining obligations of the Reorganized Debtors under the Goody's I plan." The Goody's I Plan of Reorganization -- which provided for the mechanism for paying allowed claims against Goody's Family -- was confirmed by the Court on October 7, 2008, and declared effective 13 days later. The Goody's I Plan provided for (i) a reserve of approximately $2 million for allowed administrative claims and provided that such claims would be paid in full or as agreed to by the claimant as the claims were allowed, (ii) general unsecured creditors (Class 8 of the Goody's I Plan) receiving (i) $2 million to fund a limited liability company's prosecution of certain avoidance actions and other claims on their behalf and (ii) a $15 million note. The Goody's I Plan provided for the continuation of the debtors' business under new corporate entities, Goody's LLC and its affiliates. Goody's LLC is now in bankruptcy with the intent of paying off claims from the proceeds of its liquidation. According to the U.S. Trustee, Goody's II debt structure, in order of priority, is as: Debt Creditor Status ---- -------- ------- Revolver (roughly $550,000 GECC Revolver paid, plus $15 million in LOCs cash outstanding letters of collateralized credit) Term loan (roughly GB Merchant Paid $11 million) Partners Tranche C (at least Prentice $20 million) (PGDYS Lending) $15 million note for benefit of Goody's I Class 8 (general unsecured) creditors Tranche D (at least Prentice (PGDYS $15 million) Lending) In addition to the obligations, the Goody's II estates also are subject to claims for administrative claims arising in the Goody's II cases, unpaid administrative obligations from Goody's I in the range of $10 million, and general unsecured claims arising after the Effective Date. Terms of Settlement with Trade Creditors On January 21, 2009, the ad hoc committee announced that, subject to documentation, it had reached agreement with the Goody's II debtors, the Plan Administrator for Goody's I, Prentice Capital Management, LP, PGDYS LLC and PGDYS Lending LLC and the Official Committee of Unsecured Creditors in Goody's II. Goody's II has filed a motion seeking approval of the Settlement. According to the U.S. Trustee, the key terms of the Settlement are: a. Increase the Administrative Reserve Under Goody's I Plan: The Prentice Entities have agreed to allow the Goody's II Debtors to use their cash collateral to provide an Additional $5 million to the Plan Administrator to satisfy accrued and unpaid administrative obligations under the Goody's I Plan. In addition, the Goody's II Debtors and the Prentice Entities have agreed to transfer certain Litigation Rights and Permitted Preference Actions (as defined in the Goody's I Plan) to the Plan Administrator, the proceeds of which will also be available to satisfy accrued and unpaid administrative obligations under the Goody's I Plan. The cash portion of the Administrative Reserve Increase would be paid in full before the Prentice Entities receive payment in full on account of their Tranche C obligations. b. Satisfy Obligation to Allowed Class 8 Claims Under Goody's I Plan: The Goody's I Plan provided that a $15 million instrument payable to Allowed Class 8 Claims (general unsecured creditors) of the Goody's I case was entitled to receive payment senior in priority to any payment made to the secured Tranche D obligations to the PGDYS Lending, except in the event of a subsequent liquidation or sale of substantially all of the company's assets under Section 363 of the Bankruptcy Code. In this alternative liquidation scenario, the Goody's I Plan requires that 1/3rd of proceeds available after satisfaction of the Tranche C obligations be paid to the Plan Administrator on account of the Allowed Class 8 Claims under the Goody's I Plan and 2/3rds of the proceeds be paid to PGDYS Lending on account of the Tranche D obligations, until such time as the Tranche D obligations have been paid in full. The Settlement follows the dictates of the Goody's I Plan, as required by the Confirmation Order, and provides that after satisfaction in full of the Tranche C obligations, 1/3rd of the remaining proceeds available from the liquidation will be paid to the Plan Administrator in further satisfaction of Allowed Class 8 Claims and 2/3rd of the proceeds will be paid to PGDYS Lending on account of their Tranche D obligations. c. Avoidance Actions in the Goody's II Case Will be Transferred to the Goody's II Committee: During the tumultuous period between the two bankruptcy cases, the Reorganized Debtors quickly became unable to pay their unsecured debts as they matured. In light of the capital structure of the Goody's II Debtors, a meaningful distribution to general unsecured creditors is unlikely. The Parties have recognized that fact and agreed to transfer sole and exclusive authority to pursue (or not pursue) any and all causes of action pursuant to chapter 5 of the Bankruptcy Code to the Goody's II Committee, to ensure that unsecured creditors who were not paid for goods and services provided to the Reorganized Debtors -- despite believing they were transacting with a company that had just emerged from bankruptcy -- would not add insult to injury by being sued for a preference in order to fund administrative claims in the Goody's II cases. d. Payment of Goody's II Administrative Claims: The Prentice Entities will permit the Goody's II estates to use the Prentice Entities' cash collateral to pay in full the Allowed administrative expense claims in the Goody's II case in accordance with, and subject to, the wind-down budget attached to the Settlement as "Annex 1." e. Provision of Funds to Enable Plan Administrator and Post Effective Date Committee in Goody's I to Perform Goody's I Plan Obligations: The Plan Administrator will be provided up to $250,000, inclusive of the $100,000 advance provided to the Plan Administrator on January 9, 2009, from the cash collateral of Goody's II, along with the right to use 1/3rd of the net proceeds from the Litigation Rights and Permitted Preference Actions, in furtherance of performing its fiduciary obligations under the Goody's I Plan. Further, the Post Effective Date Committee will be provided up to $15,000 to perform its oversight functions under the Goody's I Plan. f. Allowance of Prentice Claims in Goody's II Cases: All obligations under the Tranche C exit facility ($20 million) and Tranche D exit facility ($15 million) will deemed to be allowed secured claims, plus all accrued interest, fees, costs, expenses, and all other Obligations as defined in the credit documents for all purposes in these Cases; provided, however, that all parties' rights have been reserved with respect to the determination, allowance, or payment of any early termination fee under the Tranche C and Tranche D exit facilities. Allowance of such claims enables the Parties to effectuate the above-summarized distribution of proceeds in a more equitable manner than would have otherwise occurred absent litigation or agreement between the Parties. g. Prentice's Waiver of Rights in Goody's II Chapter 5 Actions: The Prentice Entities agree to waive any right or claim to receive any proceeds from Avoidance Actions arising from the filing of the Goody's II bankruptcy cases. h. Establish Supplemental Administrative Claim Bar Date in Goody's I Cases: To ensure that the Administrative Reserve Increase will be equitably distributed amongst all creditors in the Goody's I cases who hold an accrued and unpaid administrative claim, the Plan Administrator will be permitted to set a new administrative claim bar date of ________________, 2009, applicable to those entities with claims for (i) goods and/or services provided after the Petition Date (as defined in the Plan) but before the Effective Date (as defined in the Plan) for which the entity supplying such goods and/or services has not received payment and (ii) unpaid cure costs associated with any and all contracts assumed and assigned under the Plan. i. Releases of the Prentice Entities and the Plan Administrator: The Settlement provides for the waiver and release of any and all claims against the Plan Administrator and the Prentice Entities, arising out of, in connection with, or related to the conduct of the business of the Goody's I Debtors, the Goody's I cases, Reorganized Debtors or the Goody's I Plan. To the extent permissible by law, such releases would be applicable to the Goody's I Debtors, Goody's II Debtors, Ad Hoc Committee, Committee and all parties in interest receiving notice of the Settlement and an opportunity to object. j. Reimbursement of Fees and Expenses of Ad Hoc Committee: The Goody's II Debtors and Prentice Entities have agreed to support the allowance of an administrative claim pursuant to Section 503(b) of the Bankruptcy Code for counsel and local counsel to the Ad Hoc Committee in an amount equal to the actual, reasonable fees and expenses incurred in connection with (i) their participation in pre-petition efforts to organize vendors of Goody's I and Goody's II in an effort to reach a consensual out-of-court solution, (ii) their participation in the pre-petition sale process, including the auction of substantially all of the Debtors' assets and (iii) filing, litigating, prosecuting, negotiating and settling the Motion to Dismiss. U.S. Trustee's Objection Roberta A. DeAngelis, Acting United States Trustee for Region 3, asserts that the Settlement should be denied for four reasons. (1) 11 U.S.C. Sec. 1127 prohibits modification of a confirmed plan after the plan has been "substantially consummated." The Motion seeks to modify the confirmed, substantially- consummated joint plan of reorganization in Goody's I. The U.S. Trustee asserts, among other things, the $5 million "plus" increase in the administrative claims reserve for the exclusive benefit of administrative claimants in Goody's I constitutes a material modification of the Plan. At the time of confirmation, the $5 million "plus" increase in the administrative claims reserve would have reduced the Debtors' available cash and/or required additional financing to subsidize the Debtors' continuing operations. The Plan, the U.S. Trustee asserts, cannot be modified because it has been consummated. (2) Through the Motion, the Debtors seek approval of a sub rosa plan of liquidation. According to the U.S. Trustee, there are two key elements of the Settlement that would not pass muster under 11 U.S.C. Section 1129: (i) certain claims of general unsecured creditors in Goody's II are unfairly discriminated against in favor of other general unsecured claims -- specifically, those general unsecured creditors whose claims are based upon unpaid administrative obligations in Goody's I, and (ii) the "carve-out" issued by Prentice in favor of unpaid administrative claimants in Goody's I is a class-skipping gift prohibited under the Third Circuit's decision in Armstrong. The U.S. Trustee asserts that the Settlement unfairly discriminates by providing favorable treatment for certain general unsecured creditors in Goody's II -- namely, unpaid Goody's I administrative claims -- by providing such creditors with an additional $5 million "plus" of security. All other unsecured claims, including claims which arose after the Effective Date of the Goody's I plan, are not getting similar consideration under the Settlement. (3) The Settlement is not in the best interests of the Debtors' estates and should be denied. Citing the criteria set in In Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir. 1996), the U.S. Trustee asserts that the Court is obligated to reject settlements which favor one creditor constituency at the expense of another creditor group. (4) The settlement parties seek approval of nonconsensual, third-party releases which do not comport with applicable law. The U.S. Trustee notes that the law does not permit for non-consensual, third-party releases absent (a) consent or (b) specific findings that the releases are (i) fair, (ii) supported by consideration and (iii) that the failure to grant the releases will unravel a complex reorganization (e.g., one with mass tort issues). About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC, successor to Goody's Family Clothing Inc., operates a chain of clothing stores. Goody's LLC and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09- 10124). Young, Conaway, Stargatt & Taylor, LLP, and Bass Berry & Sims PLC represent the Debtors as counsel. Skadden, Arps, Slate Meagher & Flom, LLP is the Debtors' special counsel; FTI Consulting Inc. is the Debtors' financial advisor. Goody's Family Clothing Inc., as of May 31, 2008, operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. Goody's Family and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Company emerged from bankruptcy Oct. 20, 2008, after closing more than 70 stores. The reorganized entity was named Goody's LLC. GOODYEAR TIRE: S&P Gives Negative Outlook; Affirms 'BB-' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said it has revised its outlook on The Goodyear Tire & Rubber Co. to negative from stable and affirmed its 'BB-' corporate credit rating. At the same time, S&P lowered its issue-level ratings on the company's unsecured debt to reflect revised post-default recovery expectations. "The outlook revision reflects our view that tire demand will continue to decline as economic conditions deteriorate worldwide," said Standard & Poor's credit analyst Lawrence Orlowski. In the fourth quarter, Goodyear's sales fell about 20% from those of a year earlier, caused primarily by decreased auto production volumes. Double-digit sales declines occurred in all four geographic segments; the Europe, Middle East, and Africa region showed the largest decline, falling 26% year over year. In light of the sharp fall-off in tire demand in the fourth quarter, which shows no signs of quickly reversing, S&P believes 2009 revenue will decrease by more than 10% and margins to compress further in 2009. Although less than 20% of Goodyear's sales are tied to the original equipment market, S&P believes production volume declines, particularly at the U.S. automakers, are having a disproportionate effect on the company. Industry volumes for the consumer OE segment were off 33% in North America and 23% in EMEA in the fourth quarter, and S&P expects continued sharp declines in 2009. And although demand in the replacement market typically provides stability to the company's sales, S&P believes the ongoing economic decline is influencing consumers to delay routine tire purchases. Consumer replacement volumes were off 13% in North America and 10% in EMEA. Furthermore, freight shipments have fallen off, adversely affecting truck demand. Consequently, commercial OE volumes were down 20% in North America and 35% in EMEA. Commercial replacement volumes were down 23% in North America and 27% in EMEA. The company has responded to the economic downturn by cutting production, seeking manufacturing efficiencies, and controlling spending. Nevertheless, S&P expects North American and European operations to generate weak segment operating margins unless replacement demand rebounds solidly. Akron, Ohio-based Goodyear has an aggressive financial risk profile, characterized by weak earnings in North America and a highly leveraged capital structure. However, S&P currently expect some improvement in tire replacement demand in 2010, which, coupled with cost savings, would lead to substantial improvement in credit measures. The company has a weak business risk profile, which reflects tough global tire industry conditions and the company's high fixed-cost structure. These factors more than offset the company's business strengths, including its position as one of the three largest tire manufacturers in the world, good geographic diversity, strong distribution channels, and a well-recognized brand name. The tire industry is characterized by excess production capacity, leading to intense competition from large, diversified global players and more focused regional competitors. Fixed-capital and R&D requirements are high, and raw material prices are volatile. Goodyear's management continues to strengthen the company's business model despite these issues by focusing on high-value- added products, reducing exposure to low-margin segments, tapping growth in emerging markets, reducing structural costs, and improving both the balance sheet and liquidity. During 2009, the company is expected to make global pension contributions of $350 million to $400 million. Given the dramatic decline in the financial markets during the year, underfunded pension obligations at year-end and pension expenses have risen; however, the company does not expect to increase cash contributions for its pensions substantially until 2010. Total pension and other unfunded postretirement obligations add about $3.3 billion to debt. This amount did not decline significantly from that in 2007 because the rise in unfunded pension obligation more than offset the funding of the Voluntary Employees' Beneficiary Assn. account in 2008 that reduced the other postretirement employee benefit liability by $1.1 billion. Still, postretirement health care payments are expected to fall below $70 million in 2009, compared to $216 million paid out in 2008. The negative outlook reflects S&P's expectation that Goodyear's credit measures will worsen during the next year as economic conditions continue to deteriorate, thereby reducing global tire demand. Under its cost-savings program, the company expects to reduce its cost structure by an additional $700 million in 2009 by improving labor productivity, rationalizing production, and sourcing raw materials in low-cost countries. However, S&P believes such improvements may prove insufficient to counteract declining consumer and commercial tire demand. Furthermore, S&P is concerned that, as raw materials prices fall, the company's flexibility to maintain or raise prices might be impeded by industry overcapacity and competitors' pricing actions in light of weak demand. In addition, if the stock market continues to decline, unfunded pension liabilities could climb, requiring the company to make higher contributions in 2010 and beyond. S&P could lower the rating during this year if, for example, S&P believed Goodyear's revenues were on track to fall more than 15% for all of 2009, gross margins were to move below 16%, and prospects for demand recovery in 2010 appeared minimal. S&P could also lower the company's corporate credit rating if S&P believed that, longer term, adjusted debt to EBITDA would not improve to about 4x or FFO to debt would not rise to 15% or higher on a sustained basis. These scenarios would most likely be caused by declines in revenues of more than 15% in most of Goodyear's markets this year, lower margins, and no prospects for recovery in 2010. S&P could revise the outlook back to stable or to positive if demand and profitability in North America and demand in Europe begin to rebound and credit measures start to reflect this, although this seems unlikely during 2009. S&P could ultimately raise the ratings if the company sustained FFO to debt at or above 25% and adjusted debt to EBITDA of less than 3.5x. A gross margin of 22.5% and a 15% rise in revenue versus 2008 levels could result in FFO to debt above 25%. GOTTSCHALKS INC: Seeks Buyer for Biz; Lead Bid is for GOB Sales --------------------------------------------------------------- Gottschalks Inc., has obtained approval from the U.S. Bankruptcy Court for the District of Delaware to auction off its assets of business on March 30. According to Bloomberg's Bill Rochelle, the company hopes that a bidder offers a going concern transaction, i.e., a proposal to keep the business intact. However, according to the report, a group of liquidators have made the first bid. Steven Church of Bloomberg reported on March 10 that Gottschalks have signed a deal with liquidators who have guaranteed an 85% return on the cost of the inventory, but the deal is still subject to higher and better offers. Judge Kevin Carey said the bidding process was designed to encourage a going concern sale. Gottschalks, however, will push through with the liquidation if no buyer emerges by March 30. Bankruptcy Law360 reports that Liberty Mutual Insurance Co. has objected to the proposed asset sale of Gottschalks. Liberty Mutual, according to the report, argues that the sale includes the transfer of a property insurance policy without Liberty's permission. About Gottschalks Inc. Headquartered in Fresno, California, Gottschalks Inc. (Pink Sheets: GOTTQ.PK) -- http://www.gottschalks.com-- is a regional department store chain, currently operating 58 department stores and three specialty apparel stores in six western states. Gottschalks offers better to moderate brand-name fashion apparel, cosmetics, shoes, accessories and home merchandise. The Company filed for Chapter 11 protection on January 14, 2009 (Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP represents the Debtor in its Chapter 11 case. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., will serve as the Debtors' co-counsel. The Debtors selected Kurtzman Carson Consultants LLC as its claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $288,438,000 in total assets and $197,072,000 in total debts as of Jan. 3, 2009. GREEKTOWN CASINO: Says Market Share Rose Almost 1% in Past Month ---------------------------------------------------------------- Greektown Casino-Hotel officials reported that market share increased from January 2009 to February 2009 by nearly one% and represents the first market share increase for the property since September 2008. Greektown Casino also showed positive year-over- year February revenue numbers, with an increase of 1.89%, in relation to February 2008. February 2009 revenue is the highest for the Company since it filed for bankruptcy in May 2008. In addition, the company is also exceeding internal financial projections and expected hotel occupancy rates. "Our numbers are positive compared to last year and that represents a great new beginning for Greektown. The market share increase from last month to this month indicates signs of a positive trend. The Fine Point Group was selected to turn this property around, and while we are a long way from being out of the woods, we are excited about the new momentum and are looking forward to continued progress," said Randall A. Fine, Managing Director of The Fine Point Group and soon to be Chief Executive Officer of Greektown Casino-Hotel pending regulatory approvals. In recent weeks, Greektown Casino-Hotel embarked on a new marketing program including hotel incentives for players, a starting room rate of just $99, several casino promotions with chances to win a "life changing" amount of money such as "Spin to Win $1 Million" and "Sure Win Hot Seat." "While the revenue numbers look great, anyone can grow the topline if they lose focus on profitability. At Greektown, we are also exceeding all of our internal profitability projections and goals -- by 30% in January and 80% in February. The new hotel tower is doing great as well, with 60% weekday and 80 to 100% occupancy on weekends. We're pushing an aggressive marketing campaign and we've begun to see positive numbers as a result. We are going to show the people of Detroit that no one will work harder for their business," said Mr. Fine. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operates world- class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREENBRIER COMPANIES: Moody's Cuts Corporate Family Rating to B3 ---------------------------------------------------------------- Moody's Investors Service has lowered the debt ratings of The Greenbrier Companies; the corporate family rating was downgraded to B3 from B1. Greenbrier's Speculative Grade Liquidity Rating was also changed to SGL-4 from SGL-3. The ratings outlook is negative. The lower ratings primarily reflect a weakening in Greenbrier's credit metrics, as rapid industry-wide deterioration in rail car demand is expected to negatively impact the company's financial performance, its rail car manufacturing segment in particular. In addition, Moody's is concerned that the visibility of Greenbrier's revenues, which has typically been a supporting factor to the rating, may substantially deteriorate with any potential cancellations or delays on deliveries relating to an important tank car contract with General Electric Railcar Services Corporation. Because of these developments, Moody's believes that the weaker operating results that are likely to ensue could place pressure on the company's ability to meet financial covenants prescribed under its bank credit facilities. However, ratings are supported by longer-term benefits provided by the company's sizeable cash-generative rail car lease segment, a rail car repair business that has been less impacted by weak demand conditions in the railroad sector, as well as by contributions from its marine barge manufacturing business. Greenbrier's Speculative Grade Liquidity Rating of SGL-4 reflects Moody's assessment of a weak current liquidity profile. The company carries only modest cash balances, and is projected to generate only moderately-positive free cash flow levels over the near term, as sales levels decline with lower demand for rail cars. If the recessionary economic environment affecting Greenbrier's customers deepens in 2009, Moody's believes that free cash flow could diminish or become negative as rail car deliveries are further reduced. The company is highly reliant on its credit facilities to cover volatile quarterly working capital requirements, and the cushion to financial covenants is estimated to be tight over the near term. The negative outlook reflects Moody's expectations that operating margins, manufacturing in particular, will remain weak through the industry downcycle. This will likely constrain the company from improving credit metrics materially over the near term, and will limit the degree to which the company can repay debt over this time, while compliance with financial covenants will remain a concern. Moody's expects that railcar demand will remain soft through 2009, reflecting the depth and duration of the current economic downturn in North America. The ratings could be downgraded if it becomes apparent that the company is likely to breach financial covenant limits prescribed in it credit facilities, especially as such covenant ratios tighten in 2009. In addition, the rating could be pressured down if Greenbrier's backlog is significantly reduced due to the cancellation or restructuring of contracts with key customers. If EBIT to Interest falls below 1.0 time, or if the company generates negative free cash flow with diminishing access to liquidity sources during the current cyclical downturn the rating could also be pressured downward. The outlook could be stabilized if Greenbrier demonstrates ample cushion to financial covenants over the near term. Moreover, sustained EBIT to Interest above 1.3 times range and demonstration of modestly positive free cash flow generation throughout the industry downturn would also be important factors to stabilizing the outlook. Downgrades: Issuer: Greenbrier Companies, Inc. (The) -- Corporate Family Rating, Downgraded to B3 from B1 -- Probability of Default Rating, Downgraded to B3 from B1 -- Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Caa1 from B3 The last rating action was on December 12, 2008 when the ratings outlook was changed to negative from stable. The Greenbrier Companies manufacture railroad freight cars, with particular strength as the leading producer of intermodal flat cars, and also repairs railroad freight cars and provide wheels and various car parts. Greenbrier owns a portfolio of 9,000 railcars, which it leases to third parties, and provides a range of management services for approximately 137,000 other railcars. GREENBRIER COS: S&P Corrects Previous Rating Press Release ---------------------------------------------------------- Standard & Poor's Ratings Services' headline on The Greenbrier Cos. Inc. release published on March 9, 2009, included an incorrect rating. This has been corrected. S&P lowered its ratings on The Greenbrier Cos. Inc., including the long-term corporate credit rating to 'B-' from 'B+'. The outlook is negative. "The downgrade reflects S&P's concerns regarding the railcar manufacturer's upcoming operating performance due to deteriorating conditions in the new railcar market," said Standard & Poor's credit analyst Robyn Shapiro. S&P expects new railcar production to decline significantly in 2009 compared to 2008 and, as a result, Greenbrier's credit metrics are likely to worsen to levels outside S&P's expectations for the 'B+' rating. Given the company's thin margin of financial covenant compliance and approaching covenant step-downs, weakening operating performance could pressure covenants in the near term. The ratings on Lake Oswego, Oregon-based Greenbrier reflect the company's weak business risk profile stemming from the cyclicality of the freight car manufacturing industry; the dramatic decline in demand for new railcars as a result of slower economic growth and weaker carloadings; and limited customer diversity. The company also has a highly leveraged financial risk profile, marked by increased debt balances as a result of recent acquisitions. With sales of more than $1 billion, Greenbrier is organized in three segments: manufacturing (about 50% of sales), refurbishment and parts (about 40%), and leasing and services (8%). These businesses are focused largely on the manufacturing of intermodal and conventional railcars and marine vessels, as well as the repair, refurbishment, maintenance, and leasing of railcars. Greenbrier is the leading domestic intermodal railcar manufacturer, commanding a roughly 60% market share. The company also has good market positions in boxcars and flat cars, and has begun to branch out into other car types, such as tank cars and covered hoppers. Greenbrier benefits from its relatively more stable refurbishment and parts business, which the company has increased through several recent acquisitions. The leasing of Greenbrier's relatively small fleet of about 9,000 railcars helps diversify the company's operations, as does providing management services for about 146,000 railcars. The repair and refurbishment, marine, and leasing and services businesses are more stable and provide higher margins than the railcar manufacturing unit. Overall profitability is weak, with a consolidated operating margin (before depreciation and amortization) of roughly 9% as of Nov. 30, 2008, down from 13% in 2006. The outlook is negative, reflecting the company's thin margin of financial covenant compliance. S&P could lower the ratings further if the company violates or appears likely to violate its financial covenants and seems unlikely to obtain satisfactory relief. S&P could revise the outlook to stable if the company establishes a track record of free cash flow generation and maintains at least 15% headroom under financial covenants. GREENSHIFT CORP: Terminates Equity Capital Contribution Agreement ----------------------------------------------------------------- Greenshift Corporation Chief Executive Officer Kevin Kreisler disclosed in a regulatory filing dated March 6, 2009, that although the Company is otherwise in compliance with the ECCA Agreement, the ECCA Agreement is terminated. The Troubled Company Reporter reported on February 6, 2009, that Effective January 30, 2009, GreenShift Corporation entered into a First Amendment to Membership Interest Purchase and Equity Capital Contribution Agreement. The other parties to the ECCA Agreement include: -- GS COES (Adrian I), LLC, a newly formed GreenShift subsidiary; -- Biofuel Industries Group, LLC, a Michigan limited liability company that was purchased by GreenShift in 2008; -- GS (NextDiesel I), LLC, a newly formed GreenShift subsidiary; and, -- CleanBioenergy Partners, LLC, a Delaware limited liability company, a newly formed joint venture company owned by two members: one is a subsidiary of GE Energy Financial Services, a unit of General Electric Company, and the other member is a subsidiary of YA Global Investments, L.P., a private investment firm managed by Yorkville Advisors, LLC. The ECCA Agreement was signed on December 11, 2008. Under the terms of the ECCA Agreement, CleanBioenergy agreed to invest up to $38 million in GS NextDiesel to help deploy 12 corn oil extraction facilities and to double the capacity of GreenShift's 10 million gallon per year Michigan-based NextDiesel biodiesel refinery to 20 million gallons per year. The ECCA Agreement provides that 70% of the membership units in GS NextDiesel will be issued to CleanBioenergy, and that the remaining 30% of the membership units will be issued to GS Adrian. At the time of the initial contribution of cash by CleanBioenergy, GreenShift will contribute to GS NextDiesel all of its existing COES Facilities and its membership interest in BIG. Thereafter, CleanBioenergy will continue to make cash contributions as additional COES Facilities reach specified production thresholds. The ECCA Agreement originally provided that CleanBioenergy could terminate the ECCA Agreement if the Initial Equity Contribution Date had not occurred by January 30, 2009. The Amendment extended that date to March 2, 2009. About GreenShift Corporation Headquartered in New York, GreenShift Corporation (OTC BB: GERS) -- http://www.greenshift.com/-- develops and commercializes clean technologies that facilitate the efficient use of natural resources. The company accomplishes this by developing and integrating new technologies into existing agricultural production facilities, by selling equipment and services based on those technologies, and by using those technologies to directly produce and sell biomass-derived oils and fuels. The company currently owns and operates five production facilities -- three corn oil extraction facilities based on its patented and patent- pending corn oil extraction technologies, one biodiesel production facility based on its patent-pending biodiesel production technologies, and one vegetable oilseed crushing facility based on conventional process technology. * * * "The company had a working capital deficit of $56,299,852 at September 30, 2008, which includes $3,979,437 in purchase obligations, $9,004,018 in amounts due to the prior owners of our oilseed crush facility, $11,977,824 in convertible debt, and $1,572,068 in related party debt. These matters raise substantial doubt about the Company's ability to continue as a going concern," Kevin Kreisler, chief executive officer, and Edward R. Carroll, chief financial and accounting officer, disclosed in a regulatory filing dated November 19, 2008. As of September 30, 2008, the company's balance sheet showed total assets of $71.1 million, total liabilities of $97.3 million, and minority interest of $1.1 million, resulting in total stockholders' deficit of $27.3 million. GREENSHIFT CORP: Issues 55.2 Million Shares to 3 Investors ---------------------------------------------------------- Greenshift Corporation Chief Executive Officer Kevin Kreisler disclosed in a regulatory filing dated March 6, 2009, that during the period from January 2009 through March 5, 2009, GreenShift issued 55,211,905 shares of its common stock. There are now 150,356,886 shares of common stock outstanding. According to Mr. Kreisler, the 55,211,905 shares were issued in separate transactions with three investors, each of whom exercised its right to convert derivative securities issued by GreenShift in prior periods. The issuances were exempt from registration under Section 5 of the Securities Act by reason of Section 4(2) of said Act, as the investors were sophisticated, were given access to information about GreenShift, and had taken the securities for investment. There were no underwriters. Headquartered in New York, GreenShift Corporation (OTC BB: GERS) -- http://www.greenshift.com/-- develops and commercializes clean technologies that facilitate the efficient use of natural resources. The company accomplishes this by developing and integrating new technologies into existing agricultural production facilities, by selling equipment and services based on those technologies, and by using those technologies to directly produce and sell biomass-derived oils and fuels. The company currently owns and operates five production facilities -- three corn oil extraction facilities based on its patented and patent- pending corn oil extraction technologies, one biodiesel production facility based on its patent-pending biodiesel production technologies, and one vegetable oilseed crushing facility based on conventional process technology. * * * "The company had a working capital deficit of $56,299,852 at September 30, 2008, which includes $3,979,437 in purchase obligations, $9,004,018 in amounts due to the prior owners of our oilseed crush facility, $11,977,824 in convertible debt, and $1,572,068 in related party debt. These matters raise substantial doubt about the Company's ability to continue as a going concern," Kevin Kreisler, chief executive officer, and Edward R. Carroll, chief financial and accounting officer, disclosed in a regulatory filing dated November 19, 2008. As of September 30, 2008, the company's balance sheet showed total assets of $71.1 million, total liabilities of $97.3 million, and minority interest of $1.1 million, resulting in total stockholders' deficit of $27.3 million. HAWAIIAN TELCOM: Court Okays Klehr Harrison as Co-Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii has authorized Hawaiian Telcom, Inc., and its debtor affiliates to employ Klehr, Harrison, Harvey, Branzburg & Ellers LLP, as their co-counsel, nunc pro tunc to the Petition Date. No objections were asserted against the Debtors' application. Robert F. Reich, the Debtors' senior vice president, chief financial officer, and treasurer, has told the Court that the Debtors have selected Klehr Harrison because of the firm's extensive experience and knowledge of debtors' and creditors' rights, business reorganizations and liquidations under Chapter 11. The Firm's services, he maintains, are necessary to enable the Debtors to execute faithfully their duties as debtors-in- possession. As co-counsel to the Debtors, Klehr Harrison 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 the Debtors' behalf 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 Chapter 11 cases. Klehr Harrison will bill the Debtors according to the firm's customary hourly rates. The Firm will also be reimbursed for its actual and necessary expenses. The Firm reserves the right to adjust the billing rates from time to time, in the ordinary course of its representation of the Debtors. Mr. Reich has disclosed that Klehr Harrison holds a $150,000 retainer, which secures payment of the Debtors' obligations during their Chapter 11 cases. The Debtors have proposed that the Retainer be treated as an evergreen retainer, to be held by Klehr Harrison as security throughout the Chapter 11 cases, until its fees and expenses are awarded by a final Court order. On November 30, 2008, Klehr Harrison applied for $64,250 of the Retainer. That amount represents a good faith estimate of the prepetition fees and expenses, including those already recorded and those not yet recorded in the firm's billing system. Domenic E. Pacitti, Esq., a partner at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, attests that his firm is a "disinterested person," as the term is defined under Section 101(14) of the Bankruptcy Code. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAWAIIAN TELCOM: Gets Court OK to Tap Deloitte as Auditors ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Hawaii has authorized Hawaiian Telcom, Inc., and its debtor affiliates to employ Deloitte & Touche LLP, as their independent auditors, nunc pro tunc to January 8, 2009. As reported by the Troubled Company Reporter on March 3, 2009, as independent auditors, Deloitte will perform financial statement audits in accordance with the standards of the Public Company Accounting Oversight Board. Deloitte is expected to express an opinion on the fairness of the presentation of the Debtors' financial statements for the year ended December 31, 2008, in conformity with the accounting principles generally accepted in the United States of America. Deloitte professionals may render additional related services appropriate and necessary for the Debtors' benefit, in order to maximize the value of their estates. The services of the Deloitte professionals will be paid in accordance with the firm's hourly rates: Title Hourly Rate ----- ----------- Partner/Director $375 - $450 Senior Manager $300 - $375 Manager $250 - $300 Senior $200 - $250 Staff $150 - $200 The firm will also be reimbursed for actual and necessary expenses it incurs or has incurred for the Debtors' benefit. Paul Higo, a partner at Deloitte & Touche, attests his firm does not hold or represent an interest adverse to the Debtors' estates, and is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Tiffany Carroll, the Acting United States Trustee for Region 15, tried to block approval of the request, arguing that the Deloitte Retention Application includes a restriction against the award of punitive or exemplary damages under any circumstances. She said a limitation on damages is outside the bounds of public policy, thus the request must be denied. The U.S. Trustee also sought additional details regarding Deloitte's disclosed relationships, and reserves her right to object until the receipt of the requested information. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAWAIIAN TELCOM: Lenders Agree to Continued Cash Collateral Use --------------------------------------------------------------- Hawaiian Telcom, Inc., and its debtor affiliates have cut a deal with its prepetition secured lenders regarding the Debtors' continued use of the lenders' cash collateral. At a February 26, 2009 hearing, Judge Lloyd B. King of the U.S. Bankruptcy Court for the District of Hawaii directed the counsel of the Prepetition Lenders to confer with the Debtors on a modified provision of the Final Cash Collateral Order to address the concerns of the Court regarding the automatic stay. The Parties subsequently agreed to an extension of the Debtors' use of the cash collateral beyond February 28, 2009, with the same adequate protection currently provided to apply to the Prepetition Lenders, provided that the terms of adequate protection no longer include cash payments equal to postpetition interest. The Parties' agreement was noted in the minutes of a February 27 hearing in the court dockets. The Debtors then submitted to the Court on February 27 a proposed first extension order with respect to the Final Cash Collateral Order. The Proposed First Extension Order reflects modifications to the terms of the adequate protection payments and the automatic stay, among other things: A. Adequate Protection Payments. The Debtors will pay to the Prepetition Agent on an ongoing basis: (i) The current cash payment of interest at the non- default rates at the times provided for in the Prepetition Credit Agreement; provided, however, that during the period from March 1, 2009, up to and including April 30, 2009 or First Extension Period, those obligations will be satisfied by: -- payment of cash interest calculated at the non- default rates with respect to $300 million of the outstanding Senior Secured Debt; and -- the deemed payment of interest with respect to the balance of the outstanding Senior Secured Debt, with the amount being included in the Senior Secured Debt. Each payment is without prejudice to the Prepetition Secured Parties' rights to assert entitlement to payment or accrual of interest at the default rates of interest as provided for in the prepetition financing documents during the First Extension Period or any subsequent period up to and including the extended date on the Prepetition Loan; (ii) Upon entry of the First Extension Order, cash payments equal to all accrued and unpaid non-default rate interest, fees and expenses then owing with respect to the Prepetition Loans or provide for in the Prepetition Financing Documents; and (iii) From time to time after the Petition Date, the current cash payment of documented fees and expenses as and when due and payable under the Prepetition Financing Documents, including the documented fees and expenses of legal counsel and other professionals retained by the Prepetition Secured Parties. All the amounts will be paid regardless of whether those amounts accrued before or after the Petition Date and will be paid without further motion, fee application or order of the Court, provided, however, that the Debtors, the U.S. Trustee for Region 15, the Official Committee of Unsecured Creditors and the Noteholders will have the right to object to the payment of any amounts. The Adequate Protection Payments will be subject to any parties' rights to seek recharacterization of those payments as payments in satisfaction of principal amounts due under the Prepetition Financing Documents; provided, moreover, that the Prepetition Agent will distribute those amounts to the Prepetition Secured Parties, including the other secured parties, in accordance with the Prepetition DIP Financing Documents. B. Modification of the Automatic Stay. Upon the occurrence and during the continuation of a Termination Event and upon motion of the Prepetition Secured Parties pursuant to Section 362 of the Bankruptcy Code, and upon three-day notice to (i) the Debtors; (ii) the Prepetition Agent; (iii) the Committee; (iv) the Noteholders; (v) the Other Secured Parties; (vi) the Special Deputy Attorney General, on behalf of (x) State of Hawaii, Department of the Attorney General, (y) State of Hawaii Consumer Advocate, Department of Commerce and Consumer Affairs, and (z) the Hawaii Public Utilities Commission; and (viii) the United States Department of Justice, the Court will conduct a hearing to consider the request of the Prepetition Secured Parties to: (i) set off and apply immediately any and all amounts in accounts maintained by the Debtors with any Prepetition Secured Parties against the Adequate Protection Payments and enforce rights against the Collateral in the possession of any of the Prepetition Secured Parties for application towards the Adequate Protection Payments; and (ii) take any other actions or exercise any other rights or remedies permitted under the First Extension Order or applicable law to effect the repayment and satisfaction of the Adequate Protection Payments, with the Prepetition Secured Parties being deemed to have satisfied the burden of proof; provided, however, that, the Prepetition Secured Parties will be entitled to declare all Adequate Protection Payments to be immediately due and payable. The rights and remedies of the Prepetition Secured Parties are cumulative and not exclusive of any rights or remedies that they may otherwise have. C. Bridge Use of Cash Collateral. The Debtors will have use of Cash Collateral for a three-day period after notice of a Termination Event is served to them. A full-text copy of the Proposed First Extension Order is available for free at: http://bankrupt.com/misc/HawTel_Prop1stExtCashCollOrd.pdf The Court has yet to sign a final order, approving the parties' agreement with respect to the use of cash collateral. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The company and seven of its affiliates filed for Chapter 11 protection on Dec. 1, 2008 (Bankr. D. Del. Lead Case No. 08- 13086). As reported by the Troubled Company Reporter on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed in the case. The committee is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of Sept. 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc. and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HEARST CORP: Post-Intelligencer to Become Online-Only Publication ----------------------------------------------------------------- Shira Ovide at The Wall Street Journal reports that Hearst Corp.'s Seattle Post-Intelligencer newspaper will become an online-only publication. According to WSJ, Hearst said on January 9, 2009, that the company would take 60 days to decide whether to sell Post-Intelligencer, convert it into a Web site, or close it down. Some journalists in Post-Intelligencer have been offered in recent days about working for an online-only publication, the report says, citing newspaper employees. WSJ relates that staffers said that many of those offered to work for the online-only newspaper are young and have experience blogging and covering breaking news. WSJ relates that Hearst said it lost about $14 million on Post- Intelligencer in 2008. Newspapers, according to WSJ, make 90% of their revenue from selling print advertisements. The report states that staff sizes would likely have to be cut steeply to match the expected revenue falloff. WSJ says that Hearst hasn't disclosed when it would stop the Post- Intelligencer print edition, but reporters working on stories about the paper's history for a possible final version of the newspaper have been told to submit stories by the end of the week. About Hearst Corporation Hearst Corporation -- http://www.hearst.com/-- is a diversified communications company. Its major interests include 16 daily and 49 weekly newspapers, including the Houston Chronicle, San Francisco Chronicle and Albany Times Union; as well as interests in an additional 43 daily and 72 non-daily newspapers owned by MediaNews Group, which include the Denver Post and Salt Lake Tribune; nearly 200 magazines around the world, including Cosmopolitan and O, The Oprah Magazine; 28 television stations through Hearst-Argyle Television which reach a combined 18% of U.S. viewers; ownership in leading cable networks, including Lifetime Television, A&E Television Networks, The History Channel and ESPN; as well as business publishing, Internet businesses, television production, newspaper features distribution and real estate. HERBST GAMING: Reach Agreement with Lenders for Ch. 11 Plan ----------------------------------------------------------- Liz Benston at Las Vegas Sun reports that Herbst Gaming said that it has reached an agreement with lenders to file for Chapter 11 bankruptcy protection and split the Company in two. Herbst Gaming has reached agreement with lenders holding approximately 68% of the loans under its Senior Credit Facility on a financial restructuring plan. Under the proposed restructuring plan, all operations of the company will continue under current management on a "business as usual" basis throughout the restructuring process. The proposed restructuring plan allows for continued timely payments to vendors under normal trade terms, as currently being made, without interruption. "All of our casinos and the route business are generating positive EBITDA, even in the current challenging economic environment," said Troy Herbst, Chief Executive Officer of Herbst Gaming. "Our problem is a balance sheet issue; we have more debt than our operations can support. This agreement with our bank lenders is designed to resolve our balance sheet problem by restructuring our debt." Given the size and complexity of the company and its debt structure, the company and its financial advisors have determined that the most effective means to implement the plan will be through pre-arranged Chapter 11 filings by the company and certain of its subsidiaries, which are expected to take place shortly. The company expects that the Chapter 11 cases will move through the bankruptcy court system expeditiously. "To ensure that all of our operations continue to operate normally throughout this process, the proposed restructuring plan provides that all vendors would be paid on the same current terms on which they presently are being paid for all goods and services provided to Herbst Gaming, including goods and services provided immediately prior to the contemplated Chapter 11 filing," Mr. Herbst said. Under the terms of the proposed restructuring plan, the company's casino and slot route business will be separated into two holding companies. The plan provides that the Herbst family will receive 90% of the new equity in the new slot route company in exchange for the contribution of a new gaming device license agreement. The restructuring plan also provides for conversion of all the company's outstanding obligations under its Senior Credit Facility (currently approximately $847 million plus accrued and unpaid interest) into debt and equity of the reorganized companies, with the bank lenders receiving 100% of the new equity of the reorganized casino company and the reorganized casino company owning 10% of the new equity in the new slot route business. Additionally, the plan provides for termination of all outstanding obligations under the company's 8.125% Senior Subordinated Notes and 7% Senior Subordinated Notes ($330 million, plus accrued and unpaid interest), as well as the cancellation of all existing equity in the company. Consummation of the proposed restructuring plan is subject to, among other things, the confirmation of a Chapter 11 plan of reorganization by the U.S. Bankruptcy Court and approval by gaming regulators in Nevada, Missouri and Iowa. "My brothers and I want to say how pleased we are that we are able to resolve the company's financial issues in a way that helps to protect the jobs of our valued employees, ensures that all our loyal vendors will be paid fully, and that all our casinos and route operations will continue to function on a 'business as usual' basis throughout the restructuring process. Neither our customers or vendors should experience any impact from our planned financial restructuring and change of ownership of the casino businesses," Mr. Herbst concluded. Herbst's route business owns and operates more than 6,800 gaming machines located in grocery stores, drug stores, convenience stores, bars and restaurants throughout the state of Nevada. The casino business owns and operates 12 casinos in Nevada, two in Missouri, and one in Iowa, employing a total of 5,400 people. About Herbst Gaming Headquartered in Las Vegas, Nevada, Herbst Gaming Inc. -- http://www.herbstgaming.com/-- is an established casino and slot route operator that operates casinos located in Nevada, Missouri and Iowa. The company owns and operates approximately 6,800 slot machines in its slot route business and is a slot machine operator in Nevada. At Sept. 30, 2008, the company's balance sheet showed total assets of $1,021,956 and total liabilities of $1,241,937, resulting in a stockholders' deficit of $219,981. For three months ended Sept. 30, 2008, the company posted net loss of $22,399 compared with net loss of $28,897 for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted net loss of $101,252 compared with net loss of $34,115 for the same period in the previous year. At Sept. 30, 2008, the company has $110.4 million in cash and cash equivalents. The company has fully drawn its revolving line of credit, and the commitments of its lenders have been terminated under the amended Credit Agreement. As a result of the Notice of Acceleration, the company is prohibited from making interest or other payments related to its Subordinated Notes, including the interest payments that are past due and that are due in November and December 2008. HOST HOTELS: Moody's Affirms 'Ba1' Senior Unsecured Debt Rating --------------------------------------------------------------- Moody's Investors Service affirmed Host Hotels & Resorts' Ba1 senior unsecured debt rating. The outlook remains stable. The Ba1 senior unsecured debt rating reflects the REIT's strong asset quality, strengthened operator diversification, a large unencumbered asset pool and current moderate leverage (4.1X at 12/31/08, defined as net debt to EBITDA). These positive aspects are offset by the cyclicality and high fixed costs associated with the lodging industry, and the resulting cash flow and profit volatility. Moody's expects Host Hotels EBITDA to decline significantly during 2009 as a result of difficulties in the broader economy. However, Moody's noted that the REIT's current rating and stable outlook are supported by Host Hotels' balance sheet which should enable it to adequately absorb the expected operating pressures. In addition, Host Hotels also has adequate liquidity to meet its near-term debt obligations. Moody's indicated that a rating upgrade, which would be unlikely in the current economic environment, would be predicated upon sustained fixed charge coverage closer to 2.5X (inclusive of cap ex), sustained net debt to recurring EBITDA (excluding restricted cash) below 4.0X, secured debt below 10% of gross assets, and maintaining top operator concentration closer to 40%. The ratings would experience negative pressure should fixed charge coverage slip below 1.5X and net debt to recurring EBITDA exceed 6.0X on a sustained basis. Moody's last rating action with respect to Host Hotels & Resorts, Inc. was on October 16, 2006, when Moody's upgraded the ratings of Host Hotels & Resorts, Inc. and Host Marriott, L.P. (senior debt to Ba1), with a stable outlook. These ratings were affirmed: * Host Hotels and Resorts, Inc. -- senior unsecured debt at Ba1, with these rated bonds being obligations of Host Marriott, L.P.; industrial revenue bonds at Ba1, with these bonds being obligations of Host Marriott, L.P.; preferred stock at Ba2; preferred stock shelf at (P)Ba2. * Host Marriott, L.P. -- senior unsecured debt at Ba1; senior unsecured shelf at (P)Ba1. Host Hotels and Resorts, Inc. is a REIT headquartered in Bethesda, Maryland, USA, that owns upscale and luxury full-service hotels and resorts operated primarily under premium brands, such as Marriott, Starwood, Ritz-Carlton and Hyatt. The REIT, the largest in the lodging REIT sector, owns or holds controlling interest in approximately 127 lodging properties. INVESTMENT EQUITY: Proposes Owners' Backing; Plan Hearing April 14 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona has approved Investment Equity Holdings, LLC's disclosure statement explaining its First Plan of Reorganization. The Debtor may now proceed to the confirmation process for the Plan. The hearing to consider the confirmation of the Plan will be held at the Bankruptcy Court, 230 N. First Ave. Room 703, Phoenix Arizona, on April 14, 2009, at 9:00 a.m. Objections to the Plan are due five business days prior to the confirmation hearing. Terms of the Plan As reported in the Troubled Company Reporter on December 12, 2009, the Debtor has retained Technical Solutions to complete the re- zoning of its undeveloped 30-acre Glendale, Arizona property from PAD to C-2. The Debtor also has had discussions with the City of Glendale who has shown interest in the project. Potential investors have been invited to acquire a percentage of interest or a percentage thereof, in the reorganized debtor. These proceeds, in conjunction with the Property's revenues will provide the necessary funds to Debtor to pay creditors under the Plan. Pursuant to the Plan, the reorganized Debtor will continue to be managed by Dale Dowers and David Inman. The Plan provides that holders of unsecured claims, classified under Class 8, will be paid in an amount equal to 100% of their allowed claims within 180 days of the completion of the re-zoning of the Property. Holders of claims of higher priority in Classes 1 to 7 will also recover 100 cents on the dollar for their claims. Holders of priority tax claims -- which excludes ad valorem taxes -- and secured claimant Home National Bank will be paid within 30 days of completion of the re-zoning of the property. Ad valorem real property tax claimant Maricopa County, and secured claimant Investment Equity Development of Arizona will be paid within 60 days of completion of the re-zoning. Equity holders, classified under Class 9, will retain their current percentage of interest or a portion thereof by becoming participating investors. They will be allowed to contribute to the substantial capital required to fund the Plan or make capital improvements for the Debtor as allowed by the Debtor's Board of Directors. Class 10, which consist of claims of all contingent, unliquidated and disputed claims, will receive no distribution under the Plan. Class 11, which consists of the claims of participating investors, may be required to contribute substantial capital to fund the Plan or make capital improvement to the subject property. A full-text copy of the First Plan of Reorganization is available for free at: http://researcharchives.com/t/s?360b A full-text copy of the First Disclosure Statement is available for free at: http://researcharchives.com/t/s?360c About Investment Equity Headquartered in Las Vegas, Nevada, Investment Equity Holdings, LLC operates a real estate business. The company filed for Chapter 11 protection on Sept. 9, 2008 (Bankr. D. Ariz. Case No. 08-11956). Eric Slocum Sparks, Esq., at Eric Slocum Sparks PC, reresents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of $13,000,000, and total debts of $9,561,514. ION GEOPHYSICAL: S&P Downgrades Corporate Credit Rating to 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on ION Geophysical Corp. to 'B' from 'BB-'. The outlook is negative. Following the recent drawdown of its revolver in February 2009, ION has $348 million of debt, adjusted for operating leases and product warranties. "The rating action reflects our concerns regarding ION's current liquidity position and limited cushion under its covenants," said Standard & Poor's credit analyst Aniki Saha-Yannopoulus. "As of Feb. 27, 2009, ION has approximately $50 million in cash, which S&P expects to decline and consider insufficient for the rating." At the same time, the company's calculation under its debt to EBITDA ratio was 1.97x for 2008 versus a maximum ratio of 2.25x, thereby providing very little headroom under the covenants. Given further deterioration in end markets, S&P expects the cushion to tighten. ION reported poor fourth-quarter revenues due to weak North American and Russian land seismic markets resulting in 2008 revenues being almost 20% lower than anticipated. As ION continues to face a weakening seismic market given the decline in commodity prices and as exploration and production companies cut back on their capital budget, S&P expects its operations to weaken. The rating on ION reflects a vulnerable business risk profile, which is based on its exposure to volatile and cyclical seismic data acquisition end markets and its small scale compared with direct competitors, limited liquidity, and a stringent covenant package associated with its bank facilities. These weaknesses are somewhat offset by low debt leverage and limited capital requirements. ION provides seismic data recording equipment, processing software, and data collection and interpretation services. Customers are primarily seismic data acquisition companies and oil and gas exploration and production companies, both of which markets have pulled back dramatically in the weak commodity cycle. Standard & Poor's Ratings Services views the equipment business as somewhat less volatile than the data acquisition sector, but it is nonetheless unpredictable. The negative outlook is based on S&P's expectation that the seismic market will continue to weaken through 2009 as E&P companies cut back their spending. This would likely decrease ION's liquidity and tighten the covenant cushion. S&P could consider a downgrade if there is a significant deterioration in the seismic market from current conditions. Tightening liquidity or tight headroom under the total debt to EBITDA covenant of 2.25x, would also pressure he ratings. An outlook revision to stable would be considered if the sector recovers and the company continues to generate strong EBITDA on a sustained basis, therefore increasing liquidity and increasing headroom under covenant requirements. ISOTONER CORP: S&P Downgrades Corporate Credit Rating to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on Cincinnati-based, totes Isotoner Corp. by one notch, including the corporate credit rating, which S&P lowered to 'B-' from 'B'. The company is a marketer and distributor of umbrellas, gloves, rainwear, and other weather-related accessories. S&P removed all ratings from CreditWatch, where they were placed with negative implications on Dec. 9, 2008, following totes' weaker-than- expected operating performance for the quarter ended Oct. 31, 2008, and the resulting tighter covenant cushion levels. The outlook is negative. Total adjusted debt outstanding at Jan. 31, 2009, was about $248 million. S&P also lowered the bank loan rating on the company's $135 million first-lien term loan to 'B-' (the same level as the corporate credit rating) from 'B', and S&P revised the recovery rating on the loan to '4', from '3'. The '4' recovery rating indicates the expectation of average (30%-50%) recovery in the event of a payment default. Concurrently, S&P lowered the bank loan rating on the $55 million second-lien term loan to 'CCC' from 'CCC+', while the recovery rating on the loan remains unchanged at '6', indicating the expectation of negligible (0-10%) recovery in the event of a payment default. "The downgrade reflects the company's weakening credit protection measures,' said Standard & Poor's credit analyst Bea Chiem, "and S&P's concern about its ability to maintain adequate cushion on its financial covenants for the remainder of the fiscal year ending July 31, 2009." During the six months ended Jan. 31, 2009, totes' revenues declined slightly, yet were 7% lower than planned. Pro forma latest-12-month EBITDA for the 12 months ended Jan. 31, 2009, declined by about 20% as compared with the year ended July 31, 2008, primarily because of lower sales volumes in wholesale classic and retail primarily in North America and increases in operating expenses. As a result of weaker operating performance, leverage increased to 7.2x for the 12 months ended Jan. 31, 2009, from 5.4x in 2008 and covenant cushion levels continued to tighten. S&P expects totes' first-lien leverage covenant to step down to 6.5x from 6.75x and second-lien leverage steps down to 7x from 7.25x during the fourth quarter ending July 31, 2009. "S&P believes that totes may continue to experience weak operating performance amid the soft retail environment in North America and Europe," said Ms. Chiem, "which could affect its ability to improve its highly leveraged financial profile and meet its financial covenants." J CREW: Posts $13.5 Million Loss in Fourth Quarter 2008 ------------------------------------------------------- J. Crew Group, Inc., has released financial results for the three months (fourth quarter) and fiscal year ended January 31, 2009 (fiscal 2008). Fourth Quarter Revenues decreased 3% to $388.0 million. Store sales (Retail and Factory) decreased 3% to $252.0 million, with comparable store sales decreasing 13%. Comparable store sales increased 4% in the fourth quarter of fiscal 2007. Direct sales (Internet and Phone) decreased 2% to $123.0 million. Direct sales increased 11% in the fourth quarter of fiscal 2007. Gross margin decreased to 27.6% of revenues from 41.3% of revenues in the fourth quarter of fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities. Operating income (loss) decreased to ($20.4 million), or (5.3%) of revenues, compared with $43.3 million, or 10.8% of revenues, in the fourth quarter of fiscal 2007. Operating loss in the fourth quarter of fiscal 2008 includes non-cash asset impairment charges of approximately$2.1 million related to under performing stores. Net income (loss) in the fourth quarter of fiscal 2008 was ($13.5 million), or ($0.22) per share, and includes the impact of non-cash asset impairment charges of approximately $0.02 per share related to under performing stores. Net income was $25.0 million, or $0.39 per diluted share, in the fourth quarter of fiscal 2007. Millard Drexler, J. Crew's Chairperson and CEO said, "We are disappointed with our fourth quarter operating results. Our mission, day after day, is to adjust to this new, not fun, retail reality, while not compromising our long term strategy and integrity. We believe the actions we are taking, our focus on quality products and customer service, along with our strong balance sheet, will position us well for when the environment eventually improves." Fiscal 2008 Revenues increased 7% to $1,428.0 million. Store sales (Retail and Factory) increased 7% to $974.3 million, with comparable store sales decreasing 4%. Comparable store sales increased 6% in fiscal 2007. Direct sales (Internet and Phone) increased 8% to $408.9 million. Direct sales increased 22% in fiscal 2007. Gross margin decreased to 38.9% of revenues from 44.1% of revenues in fiscal 2007. The decrease in gross margin is primarily due to increased markdowns and promotional selling activities in the fourth quarter. Operating income decreased 44% to $96.7 million, or 6.8% of revenues, compared to $172.5 million, or 12.9% of revenues, in fiscal 2007. Operating income in fiscal 2008 includes non-cash asset impairment charges of approximately $2.7 million related to under performing stores. Net income for fiscal 2008 was $54.1 million, or $0.85 per diluted share, and includes the impact of non-cash asset impairment charges of approximately $0.03 per share related to under performing stores. Net income was $97.1 million, or $1.52 per diluted share in fiscal 2007. Balance Sheet as of January 31, 2009: Cash and cash equivalents were $146.4 million at the end of the fourth quarter and include the impact of voluntary principal payments of debt of $25.0 million made during fiscal 2008. Cash and cash equivalents were $131.5 million at the end of fiscal 2007. Inventories at the end of the fourth quarter were $187.0 million, reflecting the impact of 40 net stores opened since the end of fiscal 2007. Inventory per square foot increased 7% at the end of fiscal 2008 compared to the end of fiscal 2007. Guidance As the economy has continued to weaken and become more unpredictable, it has become more difficult to accurately predict results. Given the uncertainty surrounding the economic environment, the Company will suspend providing annual guidance. The Company will continue to provide guidance on a quarter to quarter basis. The Company currently expects first quarter fiscal 2009 diluted earnings per share in the range of $0.07 to $0.12. The guidance for the first quarter excludes severance and other one time items. About J.Crew Group Headquartered in New York City, J.Crew Group Inc. (NYSE: JCG) -- http://www.jcrew.com/-- is a multi-channel retailer of women's and men's apparel, shoes and accessories. As of Nov. 24, 2007, the company operated 198 retail stores (including four crewcuts and six Madewell stores), the J.Crew catalog business, jcrew.com, and 61 factory outlet stores. * * * As reported by the Troubled Company Reporter on October 17, 2008, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on New York City-based J. Crew Group Inc. S&P said that the outlook is positive. At the same time, S&P raised the issue-level rating on subsidiary J. Crew Operating Corp.'s $285 million secured term loan to 'BB+' from 'BB.' S&P also revised the recovery rating on the loan to '1' from '2', indicating an expectation of very high recovery of principal in the event of payment default. JAMES BALLOON: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: James A. Balloon 259 Spruce Street Chelsea, MA 02150 Bankruptcy Case No.: 09-11851 Chapter 11 Petition Date: March 7, 2009 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Henry J. Boroff Debtor's Counsel: William T. Stevens, Esq. 98 North Washington Street, Suite 305 Boston, MA 02114 Tel: (617) 720-0991 Email: wtstevens@rcn.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors together with its petition. The petition was signed by James A. Balloon. JAY HOSTETTER: Creditors Must File Proofs of Claim by August 25 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of New York has set August 25, 2009, as the last day for creditors in Jay Hostetter's Chapter 11 case to file proofs of claim. Headquartered in Albany, New York, Jay Hostetter dba Jay's Mobil filed for Chapter 11 protection on February 26, 2009, (Bankr. N.D. NY Case No.: 09-10557) Francis J. Brennan, Esq. at Nolan & Heller, LLP represents the Debtor in its restructuring efforts. The Debtor has estimated assets of $1,000,001 to $10,000,000 and estimated debts of $1,000,001 to $10,000,000. JOHN STOKES: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------- The Associated Press reports that John Stokes has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Montana. According to The AP, Mr. Stokes' bankruptcy filing includes his two unregistered corporations, Z-600 Inc. and Skyline Broadcasting. The AP relates that Mr. Stokes filed for bankruptcy after a jury ordered him to pay $3.8 million in a defamation case. The AP states that in September 2008, a District Court jury in Flathead County found that Mr. Stokes made malicious statements over the air against businessmen Davar and Todd Gardner, and ordered him to pay $1.8 million in actual damages and $2 million in punitive damages to the Gardners. According to the report, Mr. Stokes is appealing the defamation award to the Montana Supreme Court. John Stokes owns a Kalispell radio station. JOHNSON CONTROLS: S&P Puts 'BB+' Rating on Proposed Debt Issues --------------------------------------------------------------- Standard & Poor's Ratings Services said it has assigned its ratings to Johnson Controls Inc.'s proposed debt issuances and its preliminary ratings to the company's new universal shelf registration of an unspecified amount of securities. At the same time, S&P affirmed its 'BBB' long-term and 'A-2' short-term corporate credit ratings on the Milwaukee, Wisconsin-based company. The outlook is stable. S&P assigned its 'BB+' rating to JCI's proposed $400 million of subordinated notes due 2042 (or as early as 2012, upon a successful remarketing) to be issued as part of $400 million of equity units. At the same time, S&P assigned its 'BBB' rating to JCI's proposed $100 million senior unsecured convertible notes due Sept. 30, 2012. Each issue has an overallotment provision to issue up to an additional 15% of equity units and 15% of convertible notes. S&P expects proceeds of the equity units to be used to repay short-term debt originally incurred for meeting the company's increased working capital needs. S&P expects the proceeds from the remarketing of the mandatory convertible debt in 2012 to be used to repay existing debt outstanding. The rating on the subordinated notes applies to the company's obligation to service the debt component, as well as its obligation to issue common shares under the forward contract that is linked to these bonds. S&P is incorporating an element of equity risk in the rating on these notes because they are being pledged as collateral for the investors' promise to purchase a variable number of common shares of JCI's common stock on March 31, 2012. As a result, the holders of these units bear the risk of a lower stock price in the future. The rating does not fully address the safety of principal, which will depend on the future market value of the company's common stock. The equity units and associated debt will be given high equity content for purposes of S&P's analysis and ratio calculations. The company will have $4.1 billion in long-term balance sheet debt, pro forma as of Dec. 31, 2008, at the close of the two transactions. The corporate credit ratings on JCI reflect its global market position as a supplier of auto components and building-control systems,, its good business diversity, and its intermediate financial risk profile, including consistent free cash flow generation. JCI is one of the world's largest providers of automotive interior components (48% of fiscal 2008 revenue); building-control systems and heating, ventilation, and air conditioning equipment (37%); and automotive batteries (15%). JCI generates most of its automotive interiors revenue from the original equipment sector, where business conditions are getting worse because of weak North American auto production volumes, weak European auto sales, high raw material prices, and automakers' product mix shifts. Only somewhat offsetting these auto industry risks are JCI's good geographic and customer diversity, strong engineering capabilities, and solid position in the auto interiors market segment. JCI's building-efficiency unit is a market leader in providing building control, energy management, and facility management systems and services for nonresidential facilities, as well as HVAC equipment for residential markets. In the near term, the building-efficiency segment is being pressured by the U.S. and European recessions. Longer term, this segment will likely expand as demand for energy-efficient solutions in the educational and institutional building markets increases, over time, at a rate higher than that for the company's auto products and batteries. JCI is the largest automotive battery manufacturer in North America and Europe; most aftermarket sales and demand should be more stable than those in JCI's other segments. JCI has sustained its margins despite high commodity costs for lead by successfully implementing aftermarket price increases. The battery market remains challenged by improved battery life, which extends the replacement cycle, and the need to develop new battery technologies such as batteries for hybrid vehicles. S&P believes continuing global economic challenges for each of JCI's business segments will lead to a significant decline in the company's revenues, earnings, and cash flow for fiscal 2009 and into 2010. S&P's opinion is based on the rapidly deteriorating outlook for light-vehicle production in Europe, where S&P expects auto sales to decline materially in 2009 from the already weak levels of 2008 and the continuing recession in North America. S&P estimates that light-vehicle sales in the U.S. will fall 22% in 2009, year over year, to 10.3 million units. Also, S&P expects JCI's building-efficiency business to experience financial pressure in 2009 and 2010 because of economic weakness in the U.S. and Europe. S&P expects JCI's credit measures to be considerably weaker during fiscal 2009 (ended Sept. 30) compared to historical measures because of these worsening market fundamentals. S&P believes the company's fiscal 2010 financial performance should begin to improve because of restructuring initiatives and S&P's expectations for some upward turn in market fundamentals. At the 'BBB' rating, S&P expects funds from operations to total debt of about 35% and total adjusted debt to EBITDA of about 2.5x or better, both within the next two years. For the 12 months ended Dec. 31, 2008, these ratios were 30% and 2.5x, respectively, but S&P expects the ratios to weaken in fiscal 2009 before recovering in 2010. The 'A-2' short-term rating reflects JCI's good liquidity and financial flexibility. JCI had $202 million in cash on the balance sheet at Dec. 31, 2008, and generates free cash flow. Operating liquidity is supported by the commercial paper market that is backed by an unsecured $2 billion, five-year revolving credit facility that expires in December 2011. Borrowings under this facility should be minimal. S&P expects JCI's free cash flow to be positive, albeit lower in the next two years compared with that in 2008 because of reduced revenues, restructuring cash expenditures, and pension funding. Business additions, the stable battery market, decent expansion prospects in building-efficiency control systems, and ongoing cost reductions will contribute to cash generation. Future debt maturities are balanced and spread out over several years. Material share repurchases are unlikely. The stable outlook reflects S&P's expectation that, despite global industry profitability problems, JCI will maintain discretionary cash flow generation in fiscals 2009 and 2010 and that credit measures will recover in fiscal 2010. S&P believes the company can achieve credit measures appropriate for the rating by fiscal 2010 and begin to demonstrate a clear path to sustaining these measures sooner. S&P believes JCI's defensible market positions, new business opportunities, and credible cost discipline should allow it to partially mitigate the effect of the economic weakness in the U.S. and Europe. Still, S&P could revise the outlook to negative or lower the rating, even during 2009, if auto industry and building-efficiency segment conditions erode much further, leading us to believe that the company would not be able to maintain FFO to total debt of about 35% and achieve total debt to EBITDA of 2.5x within the next two years. This could occur if S&P believed that JCI's EBITDA would decline by more than 25% in fiscal 2010 from the $2.74 billion reported for fiscal 2008. S&P currently expects a greater than 25% decline in fiscal 2009 EBITDA driven by a 22% decline in U.S. light-vehicle sales, as well as auto sales declines in other markets and weak building-efficiency markets. S&P could also revise the outlook to negative or lower the rating if the company makes a sizable debt-financed acquisition, which S&P considers less likely to occur. On the other hand, S&P could revise the outlook to positive if JCI's EBITDA returns to the 2008 level of $2.7 billion, leading to substantial free cash flow, and debt does not rise from the current level. S&P considers this to be unlikely in 2009 or 2010, given the challenging economic environment. In addition, if the proceeds from the equity units issuance are used for other than short-term debt reduction, S&P would review its equity content treatment for the equity units and review the ratings on JCI for a possible outlook change. JOSEPH WILLIAMS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Joseph L. Williams 32 Innisbrook Avenue Las Vegas, NV 89113 aka WMS Enterprises, Ltd. aka Joseph L. Williams, M.D., P.C. aka J.L.W., Inc., A Nevada Corporation Bankruptcy Case No.: 09-13016 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Edward S. Coleman, Esq. 9708 South Gilespie Street, Suite A-106 Las Vegas, NV 89183 Tel: (702) 699-9000 Fax: (702) 699-9006 Email: mail@coleman4law.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/nvb09-13016.pdf The petition was signed by Joseph L. Williams. JOURNAL REGISTER: U.S. Trustee Forms Three-Member Creditors Panel ----------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, appointed three creditors to serve on an Official Committee of Unsecured Creditors of Journal Register Company and its affiliated debtors. The members of the Committee are: 1) The Newspapers Guild/Communication Workers of America Attn: Bernard J. Lunzer, President 501 3rd Street, NW, 6th Floor Washington, D.C. 20001-2797 2) Central States, Southeast and Southwest Areas Health and Welfare and Pensions Funds Attn: Brad R. Berliner, Esq. 93377 West Higgins Road Rosemont, Illinois 60018 3) RR Donnelley & Sons Company Attn: Dan Pevonka, Director Credit Services 3075 Highland Parkway Downers Grove, Illinois 60515 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 Journal Register Yardley, Pennsylvania-based Journal Register Company (PINKSHEETS: JRCO) -- http://www.JournalRegister.com-- owns 20 daily newspapers, more than 180 non-daily publications and operates over 200 individual Web sites that are affiliated with the Company's daily newspapers, non-daily publications and its network of employment Web sites. All of the Company's operations are strategically clustered in six geographic areas: Greater Philadelphia; Michigan; Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson regions of New York. The Company also owns JobsInTheUS, a network of 20 employment Web sites. The company, along with its affiliates, filed for Chapter 11 bankruptcy protection on February 21, 2009 (Bankr. S.D. N.Y. Case No. 09-10769). Marc Abrams, Esq., Rachel C. Strickland, Esq., Shaunna D. Jones, Esq., and Jennifer J. Hardy, Esq., at Willkie Farr & Gallagher LLP, assist the company in its restructuring effort. The company's financial advisor is Lazard Freres & Co.. Its restructuring advisor is Conway, Del Genio, Gries & Co., LLC. Robert P. Conway is the Company's chief restructuring officer. The Company listed $100 million to $500 million in total assets and $500 million to $1 billion in total debts. KEPLER HOLDINGS: Moody's Withdraws 'Ba2' Rating on Bank Loan ------------------------------------------------------------ Moody's Investors Service has withdrawn its Ba2 rating on the bank loan of Kepler Holdings Limited after the loan was prepaid in full as of February 27, 2009. The lenders did not suffer any loss of interest or principal during the life of the transaction. Kepler issued the $200 million bank loan in March 2007 as a way for lenders to provide catastrophe excess-of-loss reinsurance to Hannover Re. The loan was scheduled to mature in June 2009. This rating has been withdrawn because the loan was repaid in full: * Kepler Holdings Limited -- $200 million senior secured term loan facility at Ba2. The last rating action on Kepler occurred on April 3, 2007 when Moody's assigned a definitive rating to the bank loan. KERYX BIOPHARMACEUTICALS: To Appeal Nasdaq Delisting Notice ----------------------------------------------------------- Keryx Biopharmaceuticals, Inc., has requested a hearing to appeal to a Listings Qualification Panel the determination of The Nasdaq Stock Market to delist the company's common stock from The Nasdaq Capital Market due to noncompliance with Nasdaq Marketplace Rule 4310(c)(3), which requires the company to have a minimum of $2,500,000 in stockholders' equity, or $35,000,000 market value of listed securities, or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years, for continued listing on The Nasdaq Capital Market. A hearing request by the company automatically postpones the delisting of the company's securities pending issuance of the Panel's decision. The company expects to have a hearing date scheduled in the next 45 days. The Staff of The Nasdaq Stock Market previously granted the company a 105-day extension to regain compliance with Marketplace Rule 4310(c)(3). In an appeal, the company will be asking that the Panel provide additional time to regain compliance with Nasdaq Marketplace Rule 4310(c)(3). There can be no assurance that such a request will be granted or that the Panel will permit the company to continue to list its common stock on The Nasdaq Capital Market. If the company is delisted from The Nasdaq Capital Market, its common stock may be traded over-the-counter on the OTC Bulletin Board or in the "pink sheets." These alternative markets, however, are generally considered to be less efficient than the Nasdaq Capital Market. Many over-the-counter stocks trade less frequently and in smaller volumes than securities traded on the Nasdaq markets, which would likely have a material adverse effect on the liquidity and value of the company's common stock. About Keryx Biopharmaceuticals Keryx Biopharmaceuticals, Inc. (KERX), is focused on the acquisition, development and commercialization of medically important, novel pharmaceutical products for the treatment of life-threatening diseases, including renal disease and cancer. Keryx is headquartered in New York City. KIMBALL HILL: Court Confirms Chapter 11 Plan of Liquidation ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois has confirmed the Chapter 11 liquidation plan of Kimball Hill Inc. Andrew M. Harris of Bloomberg reports that Judge Susan Pierson Sonderby approved the plan to liquidate and distribute to creditors as much as $225 million. Ray Schrock, Esq., a partner at Kirkland & Ellis, told the Court at the hearing that there were no objections to the Plan. "The company did everything it could to survive," Mr. Schrock told the judge, explaining the company's decision to liquidate rather than reorganize. "It is unfortunate that the economy is such that we were unable to effectuate a reorganization," Mr. Sonderby told lawyers, the builder and its creditors at the hearing's end. "I commend you for all your hard work." Bloomberg states that two post-bankruptcy trusts will be created: -- a trust to distribute proceeds from the asset sale to holders of almost $304 million in senior credit agreement claims; and -- a liquidation trust to distribute remaining assets to those claimants and other unsecured creditors. Court documents say that senior credit agreement claimants would recover 37% to 48% of their claims. About Kimball Hill Headquartered in Rolling Meadow, Illinois, Kimball Hill Inc. -- http://www.kimballhillhomes.com/-- is one of the largest privately-owned homebuilders and one of the 30 largest homebuilders in the United States, as measured by home deliveries and revenues. The company designs, builds and markets single- family detached, single-family attached and multi-family homes. The company currently operate within 12 markets, including, among others, Chicago, Dallas, Fort Worth, Houston, Las Vegas, Sacramento and Tampa, in five regions: Florida, the Midwest, Nevada, the Pacific Coast and Texas. Kimball Hill, Inc. and 29 of its affiliates filed for Chapter 11 protection on April 23, 2008 (Bankr. N.D. Ill. Lead Case No. 08- 10095). Ray C. Schrock, Esq., at Kirkland & Ellis LLP, represents the Debtors in their restructuring efforts. The Debtors' consolidated financial condition as of Dec. 31, 2007, reflected total assets of $795,473,000 and total debts $631,867,000. Kimball Hill filed a chapter 11 plan of liquidation on December 2, 2008, which provides for the winding down of the Debtors' business. The Plan has the support of the official committee of unsecured creditors and the company's senior lenders. Bankruptcy Creditors' Service, Inc., publishes Kimball Hill Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Kimball Hill, Inc. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LAS VEGAS SANDS: Moody's Downgrades Default Rating to 'B3' ---------------------------------------------------------- Moody's Investors Service lowered the Probability of Default and Corporate Family Ratings of Las Vegas Sands, Corp. to B3 from B2. Moody's also lowered various ratings of Las Vegas Sands' subsidiaries, including Venetian Casino Resort, LLC (and its co- issuer Las Vegas Sands, LLC) and Venetian Macao Limited. The rating outlook is negative. Moody's also affirmed Las Vegas Sands' SGL-3 Speculative Grade Liquidity rating. This rating action concludes the review process that was initiated on November 12, 2008. "The downgrade is based on Moody's expectation that Las Vegas Sands' leverage will remain high despite the company's successful November 2008 capital issuance, cost cutting initiatives, and reduction in capital expenditure plans", stated Keith Foley, Senior Vice President. Debt/EBITDA (incorporating Moody's standard adjustments) for the fiscal year ended December 2008 was about 11.6 times, or about 9 times on a net debt basis. This very high leverage is largely the result of aggressive and substantial debt-financed development activity and earnings pressure from slowing consumer spending trends that began in fiscal 2008. The downgrade also acknowledges the recent change in the President and Chief Operating Officer position at a time when the company is under considerable financial and operating pressure. The negative outlook considers that, despite the reduction in planned capital expenditures, Las Vegas Sands still has significant capital expenditures in 2009 related to its Pennsylvania and Singapore developments. The negative outlook also recognizes the uncertainty regarding the ramp-up of these projects as well as the success of the company's sale of non-core assets. The opening of the Pennsylvania and Singapore developments on-time and on-budget are key factors with respect to Las Vegas Sands' ability to reduce leverage in 2010, as well as the company's long-term viability. Las Vegas Sands' SGL-3 Speculative Grade Liquidity rating indicates adequate liquidity. This considers the successful capital issuance that occurred in November 2008 which alleviated near-term covenant compliance challenges and possibly going concern issues. At that time, the company issued approximately $1.1 billion in common equity and $1.2 billion in preferred stock. Additionally, the capital issuance provided the cash needed to complete the company's current development projects. However, the SGL-3 also acknowledges that while near-term covenant compliance has improved greatly, longer-term covenant compliance is still highly reliant on the opening and ramp-up of the Singapore and Pennsylvania development projects. Ratings lowered and LGD rates adjusted: Las Vegas Sands, Corp.: -- Corporate Family Rating to B3 from B2 -- Probability of Default Rating to B3 from B2 -- $250 million 6.375% senior notes due 2015 to B3 (LGD4, 50%) from B2 (LGD3, 48%) Venetian Casino Resort, LLC (and its co-issuer Las Vegas Sands, LLC): -- $1 billion revolver expiring 2012 to B3 (LGD4, 50%) from B2 (LGD3, 48%) -- $3 billion term loan due 2014 to B3 (LGD4, 50%) from B2 (LGD3, 48%) -- $600 million delay draw term loan due 2014 to B3 (LGD4, 50%) from B2 (LGD3, 48%) -- $400 million delay draw term loan due 2013 to B3 (LGD4, 50%) from B2 (LGD3, 48%) Venetian Macao Limited: -- $700 million revolver expiring 2011 to B3 (LGD4, 50%) from B2 (LGD3, 34%) -- $1.8 billion term loan due 2013 to B3 (LGD4, 50%) from B2 (LGD3, 33%) -- $100 million term loan due 2011 to B3 (LGD4, 50%) from B2 (LGD3, 34%) -- $700 million delay draw term loan due 2012 to B3 (LGD4, 50%) from B2 (LGD3, 34%) The last rating action for Las Vegas Sands was on November 12, 2008 when the company's Corporate Family Rating was lowered to B2 from Ba3 and placed on review for further possible downgrade. Las Vegas Sands, Corp. owns and operates gaming and entertainment facilities in Las Vegas, Nevada and in Macao, China. The company is also developing gaming facilities in Pennsylvania and Singapore. The company generates consolidated annual net revenues of about $4.4 billion. LEE ENTERPRISES: Says Growth of Print, Online Audiences Continues ----------------------------------------------------------------- Lee Enterprises, Incorporated, reported at its annual meeting of stockholders on March 10, 2009, that the market reach of both its newspapers and online sites continue to grow across all age groups. Mary Junck, chairman and chief executive officer, said research for 2008 shows that 70 percent of the adults in Lee's 12 largest markets read the newspaper or visit the newspaper's online site over the course of a week, compared with 67 percent the previous year. The Lee Enterprises Audience Report for 2008 vs. 2007 was conducted by Wilkerson & Associates and carries an overall margin of error of 0.8 percentage points. Among the statistics: -- The reach of the newspapers averages 63 percent of all adults in the local markets, up from 62 percent the previous year. -- The newspaper online sites attract 23 percent of all adults, compared with 18 percent a year earlier. -- The reach of both the newspapers and the online sites has continued to grow in every age category. The combined reach for people 18-29 climbed from 56 to 62. It increased from 64 to 66 percent among those 30-39; from 70 to 72 percent among those 40-59, and from 72 to 73 percent for people 60 and older. -- Among people who seek local news online, 44 percent rely on the newspaper site, compared with 18 percent who visit all local TV sites combined. Details of the audience report are available at http://www.lee.net/audience Ms. Junck said the earnings outlook for 2009 remains weak but that Lee is positioned to weather the recession. She cited Lee's strong presence in local markets, superior coverage of local news, aggressive sales initiatives, deep cost reductions, continued substantial cash flow and recently completed financing arrangements. Carl Schmidt, vice president, chief financial officer and treasurer, said Lee now expects to reduce 2009 cash costs 12-13 percent below 2008, or by more than $100 million. The text of their presentation with illustrations is available at: http://www.lee.net/ Also at the annual meeting, stockholders re-elected three directors and granted discretionary authority to the board to implement a reverse stock split. Re-elected to three-year terms are: * William E. Mayer, a director since 1998 and founding partner of Park Avenue Equity Partners, L.P.; * Mark B. Vittert, a director since 1986 and a private investor; and * Gregory P. Schermer, a director since 1999 and Lee vice president for interactive media. Other directors continuing in office on the 10-member board are: * Richard R. Cole, a director since 2006 and dean emeritus and John Thomas Kerr Jr. Distinguished Professor at the School of Journalism and Mass Communication, University of North Carolina at Chapel Hill; * Nancy S. Donovan, a director since 2003 and founding partner of Circle Financial Group, LLC, and Oakmont Partners, LLC; * Leonard J. Elmore, a director since 2008 and attorney; * Herbert W. Moloney III, a director since 2001 and president and chief operating officer of Western Colorprint, Inc.; * Andrew E. Newman, a director since 1991 and private investor; * Gordon D. Prichett, a director since 1998 and founder and partner of Cairnwood Cooperative, and professor of mathematics, statistics and information systems at Babson College; and * Ms. Junck, a director since 1999. All except Mr. Schermer and Ms. Junck are independent directors. About Lee Enterprises Based in Davenport, Iowa, Lee Enterprises -- http://www.lee.net/ -- is a premier provider of local news, information and advertising in primarily midsize markets, with 49 daily newspapers and a joint interest in four others, online sites and more than 300 weekly newspapers and specialty publications in 23 states. Lee's markets include St. Louis, Mo.; Lincoln, Neb.; Madison, Wis.; Davenport, Iowa; Billings, Mont.; Bloomington, Ill.; and Tucson, Ariz. Lee stock is traded on the New York Stock Exchange under the symbol LEE. * * * As reported by the Troubled Company Reporter on February 9, 2009, Lee Enterprises received an extension of a waiver of covenant conditions related to the $306 million Pulitzer Notes debt of its subsidiary St. Louis Post-Dispatch LLC. The waiver has been extended until Feb. 13, 2009, while financing discussions continue. The Pulitzer Notes mature in April 2009. As reported by the TCR on February 20, 2009, Lee Enterprises concluded agreements with existing lenders to refinance the Pulitzer Notes and restructure future payments under its $1.1 billion bank financing arrangements. Lee also has redeemed the 5% interest of its minority partner in St. Louis. LEHMAN BROTHERS: Has Paid A&M $32.7MM; Boosts Cash to $6.8 Billion ------------------------------------------------------------------ Lehman Brothers Holdings Inc. has filed before the U.S. Bankruptcy Court for the Southern District of New York and served creditors a document saying that it had $6,765,000,000 cash at January 31, an increase from $5,176,000,000 at December 31. Receipts totaled $1.79 billion and disbursements totaled $787 million. The operating report included a table listing fees paid to attorneys and advisors since filing for bankruptcy on September 15, 2008 until January 2009: FTI Consulting Inc $1,415,355 Hoolihan Lokey Howard &. Zukin Capital Inc. 640,846 Milbank Tweed Hadley & McCloy LLP 4,218,840 Quinn Emanuel Urquhart Oliver &: Hedges LLP 1,072,582 Alvarez & Marsal LLC 32,776,327 Bortstein Legal LLC - Curtis, Mallet-Prevost, Colt &: Mosle LLP 934,573 Epiq Bankruptcy Solutions LLC 102,000 Ernst &. Young LLP - Jones Day - Kelly Matthew Wright - Lazard Freres & Co. - McKee Nelson LLP 621,710 McKenna Long & Aldridge LLP - Natixis Capital Markets Inc. - Reilly Pozner LLP - Simpson Thacher & Bartlett LLP 935,888 Well, Gotshal & Manges LLP - Duff & Phelps LLC - Jenner & Block LLP - ----------- Total Non-OCP Professionals $42,718,113 Ordinary Course Professionals 625,471 US Trustee Quarterly Fees 30,650 ----------- Total Professional and UST Fees $43,374,234 =========== Alvarez & Marsal was tapped by Lehman as chief restructuring officers to oversee Lehman's liquidation. Bryan Marsal, Alvarez & Marsal's managing director, replaced Lehman's Richard Fuld as chief executive officer in January. Based on the list, Weil Gotshal & Manges LLP, the lead bankruptcy counsel, hasn't received money during the first four months of the Chapter 11 case. Weil Gotshal charges $650 to $950 an hour for members and counsel. The interim compensation procedures approved by the U.S. Bankruptcy Court for the Southern District of New York allowed LBHI to pay counsel 80% of the fees and 100% of the expenses, absent objections to its firms' fee applications. The operating report was signed by William J. Fox, senior vice president of LBHI. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On Sept. 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on Sept. 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Bank Unit Defaults on Eagle Rock Financing Deal ---------------------------------------------------------------- Eagle Rock Energy Partners, L.P., disclosed that its net income for the year ended December 31, 2008, included a net unrealized commodity and interest rate derivative gain totaling $180.1 million, the non-recurring write-off of $10.7 million in bad-debt provisions related to SemCrude's bankruptcy, and a $174.9 million non-cash asset impairment charge. On Tuesday, Eagle Rock reported financial results for the three months and year ended December 31, 2008. Eagle Rock said net income increased to $87.5 million for the year ended December 31, 2008, compared to the net loss of $145.6 million for the year ended December 31, 2007. Eagle Rock also disclosed that on September 29, 2008, it requested a $181.0 million funding under its senior secured revolving credit facility to finance the acquisition of Millennium Midstream. Eagle Rock said Lehman Brothers Commercial Bank, a lender under its credit facility, defaulted on its portion of the borrowing request, resulting in an actual funding of $176.4 million. As a result of the Lehman default, Eagle Rock believes the availability under its credit facility has been effectively reduced by approximately $9.1 million. As of December 31, 2008, Eagle Rock had $171.5 million in capacity available under its credit facility, after giving effect to the Lehman default. Eagle Rock said it is within its financial covenants and has no maturities under its credit facility until December 2012. Eagle Rock, based in Houston, Texas, is a master limited partnership engaged in three businesses: a) midstream, which includes (i) gathering, compressing, treating, processing and transporting natural gas; (ii) fractionating and transporting natural gas liquids; and (iii) marketing natural gas, condensate and NGLs; b) upstream, which includes acquiring, exploiting, developing, and producing interests in oil and natural gas properties; and c) minerals, which includes acquiring and managing fee mineral and royalty interests, either through direct ownership or through investment in other partnerships in properties located in multiple producing trends across the United States. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On Sept. 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on Sept. 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Banks Bid for Property Bonds Swap Business ----------------------------------------------------------- Neil Unmack of Bloomberg reports that more than 10 financial institutions are competing to replace Lehman Brothers Holdings Inc. as a swap counterparty on five European commercial property- backed bonds. The financial institutions, Bloomberg relates, are bidding for roles on Windermere transactions 7, 8, 10, 11 and 14, according to statements sent by the five companies that issued the bonds. Lehman created the companies to repackage commercial property loans before it filed for bankruptcy protection in September 2008. Swaps, according to Bloomberg, hedge interest-rate or currency mismatches between loans backing bonds and the securities issued. Lehman Brothers' Collapse Founded in 1850, Lehman Brothers Holdings Inc. -- http://www.lehman.com-- was the fourth largest investment bank in the United States, offering a full array of financial services in equity and fixed income sales, trading and research, investment banking, asset management, private investment management and private equity. Its worldwide headquarters in New York and regional headquarters in London and Tokyo are complemented by a network of offices in North America, Europe, the Middle East, Latin America and the Asia Pacific region. Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555) after Barclays PLC and Bank of America Corp. backed out of a deal to acquire the company, and the U.S. Treasury refused to provide financial support that would have eased out a sale. Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several affiliates filed bankruptcy petitions thereafter. On Sept. 19, 2008, Lehman Brothers, Inc., was placed in liquidation pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119). James W. Giddens was appointed trustee for the SIPA liquidation of the business of LBI. Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed a petition under Chapter 15 of the U.S. Bankruptcy Code on February 10, 2009. Lehman Brothers Finance, a subsidiary of Lehman Brothers Inc., estimated both its assets and liabilities at more than $1 billion. LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, has been placed into administration, together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to wind down the business of LBI (Europe) on Sept. 15, 2008. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on Sept. 16. The two units have combined liabilities of JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. Lehman Brothers Asia Limited, Lehman Brothers Securities Asia Limited and Lehman Brothers Futures Asia Limited suspended operations upon the bankruptcy filing of their U.S. counterparts. Asset Sales Barclays Bank Plc has acquired Lehman's North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, on Sept. 22 reached an agreement to purchased Lehman Brothers Holdings, Inc.'s operations in Europe and the Middle East less than 24 hours after it reached a deal to buy Lehman's operations in the Asia Pacific for US$225 million. Nomura paid only US$2 dollars for Lehman's investment banking and equities businesses in Europe, but agreed to retain most of Lehman's employees. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEUCADIA NATIONAL: Fitch Affirms 'BB+' Issuer Default Rating ------------------------------------------------------------ Fitch Ratings has affirmed Leucadia National Corp.'s Issuer Default Rating at 'BB+' and revised the Rating Outlook to Negative from Positive. Approximately $1.8 billion of debt is affected by this action. The Outlook revision reflects recognition of a net loss of $2.5 billion for fiscal year 2008 resulting from a substantial overall decline in Leucadia's investment portfolio value over the last six months. Largest components of the net loss included a $400 million loss from continuing operations, a $500 million loss from associated companies, and a write-off of a $1.6 billion deferred tax asset. Additionally, Leucadia's investment in Fortescue Metals Group, an iron ore mining concern located in Australia, fell by $900 million (after-tax) to $400 million. Because the Fortescue investment is accounted for as an available for sale security, the decline was recognized in shareholder's equity. Leucadia also incurred sizeable unrealized losses on its investments in Jefferies Group Inc. and AmeriCredit Corp. In Fitch's view, recognition of these losses has significantly weakened Leucadia's underlying liquidity and capitalization. Furthermore, cushions on Leucadia's tangible net worth and leverage covenant requirements under the company's $100 million bank facility have also significantly declined. Fitch notes that the magnitude of further losses on investment assets remains a critical near-term rating factor, and, given recessionary economic conditions, underlying portfolio assets and concentration risk, Fitch believes that further near-term deterioration in capitalization and liquidity is highly likely. Recognition of losses that either materially weakens existing covenant cushions or that requires the company to pursue covenant relief would likely result in a rating downgrade. Under such a scenario, depending on Fitch's assessment of cashflow adequacy and portfolio assets to repay all classes of debt, the downgrade could exceed more than one notch and may include widening the existing notching between senior and subordinated debt. Fitch recognizes that Leucadia is currently not under pressure to sell investment assets to reduce leverage or generate liquidity. As of Dec. 31, 2008, the company potentially had $1 billion of overall liquidity, which includes cash and current held for sale investment assets of $600 million and non-current, unpledged publicly traded investment assets of $500 million. Moreover, the $100 million committed bank facility remains undrawn and Leucadia has current debt maturities totaling $250 million. Fitch has affirmed these ratings of Leucadia National Corp.: -- IDR at 'BB+'; -- Senior debt at 'BB+'; -- Senior subordinated debt at 'BB'; -- Junior subordinated debt to at 'BB-'. LOCKE CAPITAL: Sued by SEC for Concocting $1.2-Bil. Client ---------------------------------------------------------- The Securities and Exchange Commission on March 9, 2009, charged a money manager with offices in New York and Rhode Island for falsely creating a billion-dollar client in order to gain credibility and attract legitimate investors. In its complaint, the SEC charged Leila Jenkins and her firm, Locke Capital Management Inc., with making up the supposedly massive client and then repeatedly lying about its existence to land real clients. The SEC alleges that Jenkins lied to the SEC staff about the existence of the invented client and furnished the SEC staff with bogus documents in 2008, including fake account statements that she created. "[The] enforcement action demonstrates that investment advisers who lure clients with false claims will be held accountable for their actions," said George Curtis, Deputy Director of the SEC's Division of Enforcement. "In this case, the conduct was particularly egregious because Jenkins lied to the SEC staff to try to escape detection." The SEC's complaint alleges that Jenkins made up so-called "confidential" client accounts, purportedly based in Switzerland, and repeatedly claimed the accounts contained more than $1 billion in assets that she managed. From at least 2003 to 2009, falsehoods concerning the confidential accounts were communicated in brochures, meetings, submissions to online databases that prospective clients used to select money managers, and in SEC filings. Even as Locke began to take on clients in late 2006, the assets under management of its real clients never amounted to more than a very small portion of the billion-plus dollars that Jenkins claimed to manage. "This brazen web of lies to investors constituted a serious breach of fiduciary duty," said David Bergers, Director of the SEC's Boston Regional Office. Besides the invented client and assets under management, the SEC's complaint alleges several other lies Jenkins and her firm told to investors. These include misrepresenting Locke's performance for years in which Locke had no clients and deceiving clients about the makeup of the firm, including the number, identity, and role of its employees. According to the SEC's complaint, Jenkins maintains residences in Newport, R.I., and Palm Beach, Fla. In its enforcement action, the Commission alleges violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 204, 204A, 206(1), 206(2), 206(4), and 207 of the Investment Advisers Act of 1940 and Rules 204-2(a), 204A-1, and 206(4)-1(a)(5) thereunder, and is seeking a monetary penalty, disgorgement of ill-gotten gains, and a permanent injunction against future violations of the antifraud and other provisions of the securities laws. The SEC acknowledges the assistance of the U.K. Financial Services Authority, Jersey Financial Services Commission, Swiss Financial Market Supervisory Authority, and Spain's Comision Nacional Del Mercado De Valores. The SEC's investigation is continuing. LYONDELL CHEMICAL: Unsecured Creditors Want to Probe Basell Merger ------------------------------------------------------------------ The official committee of unsecured creditors of Lyondell Chemical Co. and affiliate Equistar Chemicals LP is seeking to probe whether the $20.9 billion merger between Lyondell Chemical and Basell AF S.C.A. in December 2007 was a fraudulent transfer or gave rise to other potential liability. The purchase of Basell of Lyondell's outsanding comon stock and other equity instruments, assumption of debt and related transaction costs resulted in a total purchase price of $20.873 billion, consisting of $12.371 billion from borrowed sources, $7.506 billion in retained and refinanced debt and $996 million in other costs. The merger formed LyondellBasell Industries AFSCA, a non-debtor holding company, and parent of the Debtors. Al Petrochemicals LLC is the sole shareholder of LBI and is a member of the Access Group of companies. The Access Group received $100 million as management fees in connection with the merger. The Creditors Committee notes that at the time of Basell's unsolicited offer, Lyondell was a financially strong and viable company with annual sales of $30 billion -- it was not in financial distress or seeking to sell assets or otherwise raise capital. Basell, on the other hand, was an established, financially stable industry leader, albeit smaller than Lyondell, with $16 billion in annual revenues in 2006. The Committee noted that pre-merger, Lyondell had $4.8 billion of funded debt, unit Millennium Chemicals Inc. had unsecured debt of $391 million, and Equistar had funded debt of $1.6 billion. "All of this changed dramatically through the merger as Lyondell, Millennium and Equistar became principally or secondarily liable for approximately $20 billion in secured debt," the Committee points out. "Given the pre-merger financial condition of Lyondell and Basell, the considerable debt incurred in connection with the merger, the amount paid out to shareholders in the merger, and the almost immediate liquidity crisis the Debtors encountered in the wake ofe the merger, the transaction and surrounding circumstances must and should be scrutinized for fraudulent transfer and other potential liability." The Creditors Committee, accordingly, has filed before the U.S. Bankruptcy Court for the Southern District of New York a motion, pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure to, seek discovery in the form of document requests and depositions from, among others (i) the lenders and administrative agents that provided underwriting, arranging, syndication and similar services under loans used to finance the merger, (ii) certain former shareholders of Lyondell; (iii) any counsel to Basell and Lyondell, and (iv) any third-party consultants who provided services in connection with the merger. The lenders named in the proposed Rule 2004 examination include Citibank N.A., as administrative agent under (i) a secured credit facility, pursuant to which $12.2 billion is outstanding, and (ii) under a senior secured inventory-based credit facility, of which $1.03 billion is outstanding. The shareholders named in the probe (limited to holders of more than 5% of the shares outstanding prior to the merger) are Barrow, Hanley, Mewhinney & Strauss, Inc., several Barclay entities, and Harbinger entities. Counsel named in the proposed discovery are Skadden, Arps, Slate, Meagher & Flom LLP and Baker Botts LLP, counsel to Basell and Lyondell, respectively. Advisors named were Deutsche Bank Securities, Inc., and Duff & Phelps, Inc. The Committee wants the Court to "compel" these parties to produce documents and designate persons most knowledgeable for depositions. According to Bloomberg's Bill Rochelle, the Creditors Committee needs to commence the investigation because the $8 billion financing for the reorganization requires mounting a challenge to secured creditors' claims by June 1. The Court will convene a hearing to consider approval of the Rule 2004 Examination on March 20. Objections are due one hour before the 1 p.m. (EDT) hearing. The Committee is represented by: Edward S. Weisfelner, Esq. Brown Rudnick LLP Seven Times Square New York, NY 10036 Tel: (212) 209-4800 Meanwhile, Lyondell Chemical has filed a motion asking for authority to continue defense of personal injury claims and certain types of pending government lawsuits. The company, according to Mr. Rochelle, says it has had "extraordinary success" in defending the suits and hasn't paid a judgment or made a settlement in 20 years. The company also approval from the Bankruptcy Court to use insurance proceeds to pay defense costs. This proposal is scheduled for hearing on April 16. About Lyondell Chemical 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 Bar California Paint Suits ----------------------------------------------------------- Lyondell Chemical Co. has asked the U.S. Bankruptcy Court for the Southern District of New York to stay or enjoin lawsuits from the city of Los Angeles and several California counties in connection with lead paint claims. According to Tiffany Kary of Bloomberg, the California cities and counties seek money for property damages resulting from the unit's manufacture of lead pigment used in paint made from 1924 to 1958 by a former unit, Glidden Co. Lyondell Chemical said the Rhode Island Supreme Court rejected a similar case in 2008 brought by the state against Millennium Holdings LLC, which sought about $2.4 billion to pay for removal of lead pigment from homes and other buildings. About Lyondell Chemical 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) M&P GRADING: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: M & P Grading Contractors, Inc. 1100 Industrial Drive Watkinsville, GA 30677 Bankruptcy Case No.: 09-30355 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Middle District of Georgia (Athens) Debtor's Counsel: Ernest V. Harris, Esq . P.O. Box 1586 Athens, GA 30603 Tel: (706) 613-1953 Fax: (706) 613-0053 Email: ehlaw@bellsouth.net Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors together with its petition. The petition was signed by Michael Maxey, chief executive officer of the company. MAGNA ENTERTAINMENT: Starts Process to Sell Tracks to Shareholder ----------------------------------------------------------------- Magna Entertainment Corp. has filed documents before the U.S. Bankruptcy Court for the District of Delaware to formally seek approval of a sale process for three of its seven horseracing tracks. Magna Entertainment has signed a contract to sell the tracks to MI Developments Inc., its controlling shareholder and creditor, for $44.17 million cash and an exchange of $135.63 million in debt. Bloomberg's Bill Rochelle notes that the assets in the package include (i) the three tracks, Gulfstream Park near Miami, Golden Gate Fields outside Oakland, California, and Lone Star Park west of Dallas, (ii) a residential and entertainment development at Gulfstream and horse training facilities, and (iii) the stock of AmTote International Inc., the provider of computerized-betting services to 40% of the horse-racing industry. Magna, however, will still accept other proposals for the assets. According to the bid procedures, Magna proposes: -- a July 8 deadline for competing bids, which must offer consideration that exceeds MID's by $1 million, and must be accompanied by a deposit of 10% of the proposed purchase price. -- to select "qualified bids" by July 14. -- a July 16 auction will be held at the offices of Weil, Gotshal,& Manges LLP, in New York, if one or more qualified bids, in addition to MID's, are received. -- an August 4 court hearing to consider approval of the sale to MID or the winning bidder. The Debtors have also agreed to pay MID cash in "an amount equal to Its reasonable and documented external fees incurred in connection with the negotiation and documentation of their asset purchase agreement and efforts undertaken by MID to evaluate and consummate the transaction." The Debtors say that they are not paying a "break-up" fee, but rather, they are only reimbursing MID for out-of-pocket expenses. The Court is scheduled to consider approval of the bid procedures on April 3. Objections are due March 27. An affiliate of MID, MID Lender sf., has agreed to provide Magna up to $62.5 million of debtor in possession financing that matures in six months. A copy of the MID Asset Purchase Agreement is available for free at http://bankrupt.com/misc/Magna_MID_APA.pdf About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. 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. As of December 31, 2008, the Company had total assets of $1,049,387,000 and total debts of $958,591,000. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del., Lead Case No. 09-10720). Marcia L. Goldstein, Esq., Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. MAGNA ENTERTAINMENT: Pimlico Racing Schedule Cut by 11 Days ----------------------------------------------------------- Ryan Sharrow at Baltimore Business Journal reports that Magna Entertainment Corp.'s Maryland Jockey Club said that it has cut Pimlico Race Course's upcoming racing schedule by 11 days to 20 days. According to Business Journal, the spring meet at Pimlico starts on April 18. It was reduced from 31 days to maintain a $160,000 daily purse structure, says the report. Business Journal relates that the Pimlico spring schedule includes the middle jewel of racing's Triple Crown, the Preakness Stakes, scheduled for May 16. The decision to cut the amount of dates at Pimlico doesn't have a connection to Magna Entertainment's Chapter 11 bankruptcy filing, Jockey Club President Tom Chuckas said in a statement. The Jockey Club said in a statement that it faces an almost $2 million purse deficit during the current Laurel Park winter meet. Business Journal quoted Mr. Chuckas as saying, "We felt it was best to address the situation sooner rather than later in the year." About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. 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. As of December 31, 2008, the Company had total assets of $1,049,387,000 and total debts of $958,591,000. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del., Lead Case No. 09-10720). Marcia L. Goldstein, Esq., Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. MAGNA ENTERTAINMENT: Receives Notice Of Delisting From Nasdaq ------------------------------------------------------------- Magna Entertainment Corp. received notification from The Nasdaq Stock Market indicating that Nasdaq staff had determined, in accordance with Marketplace Rules 4300, 4450(f) and IM-4300, that the company's securities will be delisted from Nasdaq as a result of, among other things, MEC's announcement that it filed a voluntary petition for relief under Chapter 11 in the United States. MEC does not intend to appeal Nasdaq's delisting decision and, accordingly, the trading of MEC's Class A Subordinate Voting Stock will be suspended at the opening of business on March 16, 2009. Based in Aurora, Ontario, Magna Entertainment Corp. 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. MEC and 24 affiliates filed Chapter 11 petitions on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10720). Judge Mary F. Walrath presides over the cases. Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York; and L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, serve as the Debtors' bankruptcy counsel. Miller Buckfire & Co. LLC acts as the Debtors' financial advisors and Kurtzman Carson Consultants LLC acts as the Debtors' noticing and claims agent. As of December 31, 2008, the Debtors had $1,049,387,000 in total assets and $958,591,000 in total debts. MANASSEH BUILDING: Files for Chapter 11 in Woodland Hills --------------------------------------------------------- Manasseh Building Group Inc., filed a Chapter 11 petition on March 9 in the U.S. Bankruptcy Court for the Central District of California. Manasseh says that its three rental apartment buildings are worth $23.8 million while debt totals $20.5 million, including $19.5 million in secured claims. According to Bloomberg's Bill Rochelle, Manasseh said it filed for bankruptcy to prevent the lender from foreclosing two of the properties on March 10. Manasseh contends the properties are worth more than the debt. The company, Bloomberg relates, originally intended to sell the units as condominiums. About Manasseh Building Manasseh Building Group Inc. owns of three rental apartment buildings in West Hills, Woodland Hills, and Winnetka, California. Manasseh Building Group, Inc., aka MBG, aka Pacific Planning and Design, filed for Chapter 11 on March 9, 2009 (Bankr. C.D. Calif, Case No. 09-12507). Joseph A. Eisenberg, Esq., at Jeffer, Mangels, Butler & Marmaro LLP, has been tapped as counsel. In its bankruptcy petition, it estimated assets and debts of $10 million to $50 million. MARGARET BLESSING: Selling 3.14-Acre Tract in Worth for $55,000 --------------------------------------------------------------- Subject to higher and better offers, Margaret Blessing dba Margaret's Creative Concrete asks the U.S. Bankruptcy Court for the Western District of Pennsylvania for permission to sell a 3.14 acre tract of land located in Worth Township, Pennsylvania, for $55,000, free and clear of all liens, interests and other encumbrances. The Bankruptcy Court has scheduled a hearing at 10:00 a.m. on March 24, 2009, to consider the request and entertain any higher or better offers. Objections, if any, must be filed by March 17, 2009, and served on the Debtor's lawyer: Robert O. Lampl, Esq. 960 Penn Avenue, Suite 1200 Pittsburgh, PA 15222 Telephone (412) 392-0330 Fax (412) 392-0335 Margaret Blessing dba Margaret's Creative Concrete filed a chapter 11 petition (Bankr. W.D. Pa. Case No. 06-22232) on May 19, 2006. A copy of that petition is available at no charge at http://bankrupt.com/misc/pawb06-22232.pdf MASONITE INT'L: Reports 19.8% Decline in 2008 Sales --------------------------------------------------- Masonite International Inc. announced on Monday unaudited financial information for the fourth quarter and full year 2008. Masonite said 2008 sales were $390.3 million, a decline of 19.8% compared to sales of $486.8 million in the fourth quarter of 2007. Operating EBITDA decreased 66.5% to $13.2 million from $39.4 million in the fourth quarter of 2007. Operating EBITDA in the fourth quarter of 2008 decreased to $13.2 million from $39.4 million in the prior year primarily due to lower sales volumes and higher levels of materials cost inflation that were not fully offset by price increases and a reduction in selling, general and administration expenses of $11.3 million versus the prior year. In the fourth quarter of 2008, cash decreased $14.0 million as cash flow was negatively impacted by the contraction of trade payable terms of approximately $37.1 million, and $7.0 million relating to professional advisor fees associated with pursuing a resolution to the company's capital structure. Fourth quarter cash flow was also impacted by the non-payment of accrued interest in the amount of $42.9 million related to the payment blockage on the senior subordinated notes. The company also entered into a new Accounts Receivables Securitization program which generated approximately $12.5 million of cash flow. For the 12 months ended December 31, 2008, the company reported consolidated sales of $1.8 billion, a decline of 16.5% compared to sales of $2.2 billion in the 12 months of 2007. Operating EBITDA decreased 49.3% to $138.1 million from $272.4 million in the 12 months of 2007. Operating EBITDA decreased by 49.3%, or $134.3 million in 2008, primarily due to significantly lower volumes caused by declining housing starts and repair, renovation and remodeling activity, as well as the loss of the Home Depot regions. Additionally, inflation on materials and other costs were not fully passed onto customers due to competitive dynamics aggravated by the weak market conditions. Significant productivity in manufacturing and selling, general administrative costs partially offset the decline in EBITDA from lower volumes and higher inflation. In 2008, cash increased by $152.5 million, influenced significantly by the draw on the company's revolving credit facility of $336 million offset by approximately $55.8 million of trade payables terms contraction, $39.6 million repaid as a result of changes in the company's accounts receivable securitization programs, $42.4 million paid for contractually required acquisitions and distributions to minority interest shareholders, $28.7 million related to operational restructuring and $13.7 million related to forbearance and professional fees related to the company's Capital Restructuring activities. Cash flow benefited from the non-payment of accrued interest in the amount of $42.9 million related to the payment blockage on the senior subordinated notes in October 2008. The company was not in compliance with the financial covenants contained under its senior secured credit agreement as at December 31, 2008. Restructuring Plan As reported by the Troubled Company Reporter, the company said March 3, 2009, that it has reached an agreement in principle with members of a steering committee representing its senior secured lenders and representatives of an ad-hoc committee representing holders of its senior subordinated notes due 2015 on the terms of a restructuring plan that will enable the company to significantly reduce its outstanding debt and create an appropriate capital structure to support the company's long-term strategic plan and business objectives. Support for the plan is currently being solicited by the company from its broader lender and bondholder constituencies. If approved by the requisite percentages of the lender and bondholder groups and implemented as proposed, the restructuring plan will enable Masonite to reduce its total funded debt by nearly $2 billion, from $2.2 billion to up to $300 million upon consummation of the plan. The debt reduction would reduce annual cash interest costs by approximately $145 million and provide Masonite with greater liquidity and financial flexibility as it continues to take aggressive action to address challenges created by the downturn in the global housing and credit markets. Under terms of the agreement in principle, Masonite's existing Senior Secured Obligations would be converted on a pro rata basis, subject to the election of each existing holder of Senior Secured Obligations, into: (i) a new senior secured term loan of up to $200 million, (ii) a new second-lien PIK Loan of up to $100 million, and/or (iii) 97.5% of the common equity of a reorganized Masonite subject to dilution for warrants issued to the Senior Subordinated Noteholders and management equity or options. Senior Subordinated Notes would be converted to 2.5% of the common equity in Masonite plus warrants for 17.5% of the common stock of the company, subject to dilution for management equity or options. It is anticipated that the restructuring would be implemented by means of a "pre-negotiated" Plan of Reorganization filed in conjunction with voluntary Chapter 11 proceedings in the United States and similar proceedings under the Companies' Creditors Arrangement Act (CCAA) in Canada. The legal proceedings would be initiated upon receipt of approvals for the restructuring plan from the requisite percentages of the lender and bondholder constituencies. Masonite noted that pre-negotiated restructuring plans typically require only 90 to 120 days to effectuate. The implementation of the agreement in principle is subject to closing conditions. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The company provides these products to its customers in more than 70 countries around the world. The company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. * * * As reported in the Troubled Company Reporter on Sept. 1, 2008, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Masonite International Inc. (Masonite) and its subsidiaries, Masonite International Corp. and Masonite US Corp., to 'CCC+' from 'B-'. S&P also lowered the senior secured debt rating on Masonite to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed April 18, 2008. As reported by the Troubled Company Reporter, Masonite entered into a further extension, to February 9, 2009, of its forbearance agreements with its bank lenders and with holders of a majority of the senior subordinated notes due 2015 issued by two of the Company's subsidiaries. MASONITE INT'L: Presents Financial Projections for 2009-2013 ------------------------------------------------------------ In connection with the negotiations between Masonite International Inc. and a steering committee representing its senior secured lenders and an ad-hoc committee representing holders of its senior subordinated notes due 2015 relating to the restructuring transaction, the company provided the senior secured lending steering committee and subordinated note holders' committee with certain non-public financial information under confidentiality agreements by and between the company and such senior secured lenders and senior subordinated note holders. The confidentiality agreements require that the company disclose certain of the non- public information provided to them. The information provided by the company included projections of the company's operations and financial conditions from 2009 through 2013, prepared as of February 2009. The company does not, as a matter of course, publicly disclose projections. The projections were not prepared with the view to public disclosure and are included in this current report only because such information was made available to the senior secured lenders steering committee and senior subordinated note holders committee. Accordingly, the company does not intend to, and disclaims any obligation to (a) furnish updated projections, (b) include such updated information in any documents which the company may file with the Securities and Exchange Commission or (c) otherwise make such updated information publicly available. The financial information presented relating to the 12 months ended December 31, 2008 has been provided for indicative purposes only, is preliminary and remains subject to change, including potential adjustments in connection with the audit procedures being performed by the company's independent public accountants. The projections are based on a variety of estimates and assumptions which may not be realized and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the company's control. In particular, the projections are based on these key assumptions: -- the company's ability to maintain sufficient working capital to self-fund operations or access to financing sources to fund any deficiencies, including the company's ability to complete the proposed restructuring transaction and gain consent from its lenders to decrease the size of the company's outstanding debt obligation, the existence of stable foreign exchange and capital markets, and the continuing support of trade creditors and the ability to obtain enhanced trade credit support. -- current and projected market conditions in each of the company's respective markets, including assumptions regarding stabilization of the market for raw materials and the company's ability to pass along any increases in raw material costs to its customers if increases occur. -- an estimate of the company's ability to maintain and grow its existing product lines and customer relationships in 2009 and beyond, including the timing of such growth in both its North American and Rest of World segments based on the pace of global economic recovery. -- cost savings opportunities at its manufacturing operations, including the ability to rationalize and exit certain low margin products, the ability to optimize its manufacturing footprint through rationalizing excess capacity in certain of its operations, and the ability to achieve cost savings related to manufacturing and purchasing efficiencies. Some of the assumptions may not materialize, and events and circumstances occurring subsequent to the date on which these projections were prepared may be different from those assumed or may be unanticipated, and thus may affect financial and operating results in a material manner. In addition, the projections do not contemplate outcomes where the company is unable to complete the proposed restructuring transaction and pursues alternative options such as a prolonged Chapter 11 filing or a partial or full break- up and sale of its various operations. Accordingly, it is expected that there will be differences between actual and projected results, and actual results may be materially different from those set forth. The projections were not prepared with a view to compliance with the published guidelines of the Commission regarding projections, nor were they prepared in accordance with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial projections. Moreover, the company's accountants have not examined or applied any procedures to the projections in accordance with standards established by the American Institute of Certified Public Accountants and express no opinion or assurance on their reasonableness, accuracy or achievability. The projections do not include adjustments that may be required to the company's financials statements as a result of the adoption of "fresh start" accounting. As reported by the Troubled Company Reporter, the company reached an agreement in principle with members of a steering committee representing its senior secured lenders and representatives of an ad-hoc committee representing holders of its senior subordinated notes due 2015 on the terms of a restructuring plan that will enable the company to significantly reduce its outstanding debt and create an appropriate capital structure to support the company's long-term strategic plan and business objectives. Support for the plan is currently being solicited by the company from its broader lender and bondholder constituencies. If approved by the requisite percentages of the lender and bondholder groups and implemented as proposed, the restructuring plan will enable Masonite to reduce its total funded debt by nearly $2 billion, from $2.2 billion to up to $300 million upon consummation of the plan. The debt reduction would reduce annual cash interest costs by approximately $145 million and provide Masonite with greater liquidity and financial flexibility as it continues to take aggressive action to address challenges created by the downturn in the global housing and credit markets. Under terms of the agreement in principle, Masonite's existing Senior Secured Obligations would be converted on a pro rata basis, subject to the election of each existing holder of Senior Secured Obligations, into: (i) a new senior secured term loan of up to $200 million, (ii) a new second-lien PIK Loan of up to $100 million, and/or (iii) 97.5% of the common equity of a reorganized Masonite subject to dilution for warrants issued to the Senior Subordinated Noteholders and management equity or options. Senior Subordinated Notes would be converted to 2.5% of the common equity in Masonite plus warrants for 17.5% of the common stock of the company, subject to dilution for management equity or options. It is anticipated that the restructuring would be implemented by means of a "pre-negotiated" Plan of Reorganization filed in conjunction with voluntary Chapter 11 proceedings in the United States and similar proceedings under the Companies' Creditors Arrangement Act (CCAA) in Canada. The legal proceedings would be initiated upon receipt of approvals for the restructuring plan from the requisite percentages of the lender and bondholder constituencies. Masonite noted that pre-negotiated restructuring plans typically require only 90 to 120 days to effectuate. The implementation of the agreement in principle is subject to closing conditions. About Masonite International Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The company provides these products to its customers in more than 70 countries around the world. The company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. * * * As reported in the Troubled Company Reporter on Sept. 1, 2008, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on Masonite International Inc. (Masonite) and its subsidiaries, Masonite International Corp. and Masonite US Corp., to 'CCC+' from 'B-'. S&P also lowered the senior secured debt rating on Masonite to 'B' from 'B+'. The ratings remain on CreditWatch with negative implications, where they were placed April 18, 2008. As reported by the Troubled Company Reporter, Masonite entered into a further extension, to February 9, 2009, of its forbearance agreements with its bank lenders and with holders of a majority of the senior subordinated notes due 2015 issued by two of the Company's subsidiaries. MERISANT WORLDWIDE: S&P Withdraws 'D' Rating -------------------------------------------- Standard & Poor's Ratings Services said that it withdrew its 'D' rating on Merisant Worldwide Inc. and operating company Merisant Co. S&P also withdrew its '2' recovery rating on the senior secured bank loan, '5' recovery rating on the senior subordinated notes, and '6' recovery rating on the senior subordinated discount notes. MERUELOMADDUX: May Default on $266MM in Loans, Mulls Bankruptcy --------------------------------------------------------------- MerueloMaddux Properties disclosed that it is experiencing significant, recurring cash shortfalls from (i) operating activities, (ii) recurring investment activities such as carrying costs for interest payments, real estate taxes and unfunded development expenditures and (iii) capital expenditures on existing rental properties. MerueloMaddux said it would need to generate an additional $28.0 million annually to cover cash shortfalls. To meet the company's intentions and resolve liquidity issues, in addition to seeking loan workouts, MerueloMaddux has reduced its employee base and suspended all substantial development efforts, except for the funded development activity at its 717 W. Ninth St. project. MerueloMaddux is also examining all feasible strategic alternatives. The company said potential strategic alternatives include a voluntary bankruptcy filing under Chapter 11 of the U.S. Bankruptcy code. MerueloMaddux said it is actively marketing many of its projects. However, selling properties in this environment is difficult. MerueloMaddux began 2009 with $4.5 million in unrestricted cash. The company requires roughly $1.8 million in cash to satisfy monthly principal and interest payments on 26 out of 30 of its loans that have an aggregate principal balance of $266.0 million. This unrestricted cash balance would cover roughly 2.5 months of these payments absent any funds generated from asset sales. Although MerueloMaddux has certain properties currently in escrow to be sold, it has not yet closed on any asset sales in 2009. MerueloMaddux has stopped making interest and principal payments on, and therefore is likely in default under, the 26 loans totaling $266.0 million. "We continue to make interest payments on our construction loan for our 717 W. Ninth Street project and on three other loans that have interest reserves. As of March 11, 2009, we owe approximately $2.8 million in accrued interest and another $0.8 million in principal reduction repayments and reserve funds. In addition, on December 15, 2008, we did not make a $4.0 million principal repayment on a $17.0 million land loan. The lender subsequently agreed to defer such principal repayment. On March 15, 2009, we will owe another $5.0 million in principal on this land loan. Additionally, we have paid or not been able to extend or refinance three other loans totaling $86.9 million that recently matured," MerueloMaddux said Wednesday in a new statement. "As such, we are currently seeking loan workout agreements with four depository lenders on loans that total approximately $177.8 million. We are unsure as to what results will be derived from such efforts and are exploring various restructuring options." MerueloMaddux expects to receive a "going concern" opinion from its independent auditors with respect to its financials included in its annual report on Form 10-K for the year ended December 31, 2008. "Under the current circumstances, there may be substantial doubt about our ability to continue as a going concern because of cash shortfalls from rental and development operations, a possible need for loan restructurings and the related difficulties in obtaining loan extensions and the timing and magnitude of non-core asset sales. We intend to improve cash flows from operations, reduce our carrying costs, cure possible loan defaults, refinance or extend existing loans and generate net cash proceeds from the sale of non-core properties. There can be no assurances that such efforts will prove successful," MerueloMaddux said. For the three months ended December 31, 2008, MerueloMaddux said total revenue increased 3.7% to $6.0 million compared to $5.8 million in the same period in 2007. The increase was primarily due to higher rental income attributable to rental operations at projects acquired or placed in service during 2007 and 2008, which had partial or no operations in the prior period. MerueloMaddux said net loss was $85.8 million for the three months ended December 31, 2008, compared to a net loss of $2.6 million for the same period in 2007. For the year ended December 31, 2008, MerueloMaddux said total revenue decreased $1.2 million, or 4.6%, to $24.2 million compared to $25.4 million in the same period in 2007. The decrease was primarily due to a $2.2 million reduction in interest income as a result of a lower cash balance throughout the year ended December 31, 2008 than in the same period in 2007. This is partially offset by higher rental income attributable to rental operations at projects acquired or placed in service during 2007 and 2008, which had partial or no operations in the prior period. MerueloMaddux said net loss was $96.0 million for the year ended December 31, 2008, compared to a net loss of $11.9 million for period January 30, 2007 through December 31, 2007. As of December, 2008, the company owns 28 rental projects and 19 development projects -- one was subject to a lease with an option to purchase and was terminated in the first quarter of 2009 -- that are primarily located in or around the downtown area of Los Angeles. All of the projects in the portfolio are in Southern California. As part of the ongoing financing strategy, the company reduced its notes payable balance during the fourth quarter by $20.6 million from $348.8 million to $328.2 million. MerueloMaddux said the Federal Reserve's actions in lowering its rates also helped to lower some of the Company's prime and LIBOR based notes. MerueloMaddux said it extended five existing loans during the fourth quarter: -- The two loans secured by its Alameda Square and Alameda Produce Market projects, which have a combined balance of $58.8 million, were extended for an additional four months to March 2009. -- The Meruelo Wall Street loan of $21.0 million was extended for three years. -- A $5.4 million loan secured by its 620 Gladys Avenue project was extended for one year. -- A $7.0 million loan secured by our Center Village project was extended for one year. Also during the fourth quarter, the company repaid two loans with proceeds from the sales of its projects at Overland Terminal and 801 E. 7th Street for $15.0 million and $4.4 million, respectively. In addition, the company repaid the $1.0 million loan secured by 2415 E. Washington Boulevard, which matured on November 15, 2008. Subsequent to year end, another lender agreed to extend a $2.0 million loan secured by the project at 905 8th Street for an additional year to January 15, 2010. The company also received the second tranche of $42.0 million from its construction loan at 717 W. 9th Street. As of December 31, 2008, using the company's notes payable secured by real estate and its total assets from the consolidated balance sheet, the company's debt-to-total assets ratio is 48.1%. The company's weighted average interest rate decreased 0.73% from 7.87% as of December 31, 2007 to 7.14% as of December 31, 2008. A conference call with simultaneous webcast to discuss MerueloMaddux's 2008 fourth quarter results will be held today, March 12, 2009 at 1:00 p.m. Eastern / 10:00 a.m. Pacific. Interested participants and investors may access the conference call by dialing 866-249-5225 (domestic) or 303-228-2960 (international). There will also be a live webcast of the call on the Investor Relations section of MerueloMaddux's web site at under Investor Relations: Webcasts and Presentations. Web participants are encouraged to go to the web site at least 15 minutes prior to the start of the call to register, download and install any necessary audio software. MerueloMaddux's management team will discuss the Company's financial results, business highlights and industry outlook. After the live webcast, a replay will remain available in the Investor Relations section of MerueloMaddux's web site. A replay of the teleconference will be available at 800-405-2236 (domestic) or 303-590-3000 (international) through March 19, 2009; the conference ID is 11127860. About MerueloMaddux Properties MerueloMaddux Properties is a self-managed, full-service real estate company that develops, redevelops and owns commercial and residential properties in downtown Los Angeles and other densely populated urban areas in California that are undergoing demographic or economic changes. MerueloMaddux Properties is committed to socially responsible investment. Through its predecessor business, MerueloMaddux Properties has been investing in urban real estate since 1972. MGM MIRAGE: Moody's Cuts Probability of Default Rating to 'Caa2' ---------------------------------------------------------------- Moody's Investors Service downgraded MGM Mirage's Probability of Default rating to Caa2 from Caa1 and its Corporate Family Rating to Caa1 from B3. "The downgrade reflects a rising probability of default given Moody's expectation that visitation to Las Vegas will remain soft and gaming revenues will decline thereby further eroding the company's already troubled liquidity profile," said Moody's Senior Analyst Peggy Holloway. The Nevada Gaming Control Board reported that in the month of January 2009 gaming win was down 14.77% on the Las Vegas Strip. MGM needs covenant relief from its bank lenders to avoid being in technical default and must raise new funds to meet its capital spending needs and scheduled debt maturities over the next 24 months. Although MGM may have a reasonable chance of raising additional financing by offering collateral (assuming existing lien restrictions are relaxed), the company may need to reduce its existing debt load as part of such negotiations. This could include an offer to exchange existing debt for an amount below, an event that Moody's would likely consider a default. Moody's affirmed MGM's SGL-4 Speculative Grade Liquidity rating, indicating weak liquidity. Moody's estimates that internally generated cash, net proceeds from the pending sale of Treasure Island together with revolver drawings and cash on hand will be barely sufficient to fund the company's operations. Such cash needs include its obligations to help fund ongoing construction at its CityCenter joint venture project, and required bond maturities through year-end 2009. MGM faces bond maturities of approximately $300 million and $800 million in the second and third quarters of 2010, respectively. Additionally, the inability of the MGM and its joint venture partner, Dubai World, to raise the remaining $1.2 billion of the targeted $3.0 billion debt requirements for CityCenter has complicated MGM's liquidity situation. Given the company's strong market share and solid fundamental franchise within the gaming industry, Moody's used a fundamental evaluation approach to estimate loss-given-default rather than the mean family-level LGD estimate. Based on this approach, the company's recovery estimate is 65%. The lower loss estimate resulted in the probability-of-default rating (Caa2) deviating from the Corporate Family Rating (Caa1) by one notch. The rating outlook is negative reflecting the challenges MGM faces to improve its liquidity profile in the near term to avoid an eventual default. Ratings downgraded or confirmed; assessments updated MGM MIRAGE -- Corporate Family Rating to Caa1 from B3 -- Probability of default rating to Caa2 from Caa1 -- Senior unsecured notes to Caa1 (LGD 3, 33%) from B3 (LGD 3, 43%) -- Senior subordinated notes confirmed at Caa3 (LGD 5, 85%) from Caa3 (LGD 6, 93%) -- Senior secured notes to B1 (LGD 2, 12%) from Ba3 Mirage Resorts -- Senior unsecured notes to Caa1 (LGD 3, 33%) from B3 (LGD 3, 43%) Mandalay Resort Group -- Senior unsecured notes to Caa1 (LGD 3, 33%) from B3 (LGD 3, 43%) -- Senior subordinated notes confirmed at Caa3 (LGD 5, 85%) from Caa3 (LGD 6, 93%) Rating affirmed: MGM MIRAGE -- Speculative Grade Liquidity Rating at SGL-4 Moody's latest rating action was on February 27, 2009, when the MGM MIRAGE's corporate family rating and probability of default rating were each downgraded to B3 and Caa1, respectively. Headquartered in Las Vegas, Nevada, MGM MIRAGE owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM MIRAGE has a 50% interest in CityCenter Holdings, Inc., a mixed-use project on the Las Vegas Strip and a 50% interest in MGM Grand Macau, a hotel-casino resort in Macau S.A.R. MILACRON INC: Chapter 11 Filing Prompts S&P's Rating Cut to 'D' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Milacron Inc., including the long-term corporate credit rating to 'D' from 'CCC+'. "The downgrade follows the company's Chapter 11 bankruptcy filing," said Standard & Poor's credit analyst Gregoire Buet. S&P also lowered the issue-level rating on the company's 11.5% senior notes due 2011 to 'D' from 'CCC-'. The company also announced that, pending court approval, it has received commitments from two major bondholders and its revolving credit facility lender for debtor-in-possession financing to fund continuing operations. Pending further information from the bankruptcy proceedings, S&P's recovery rating on this debt remains '6' indicating S&P's expectation that senior notes lenders could expect negligible recovery (0%-10%) in the reorganization process. Batavia, Ohio-based Milacron is a manufacturer of plastic machinery equipment and industrial fluids. METROMEDIA STEAKHOUSES: Affiliate Agrees to Loan Extension ---------------------------------------------------------- Metromedia Steakhouses Co. reached an agreement from affiliate Metromedia Co. to increase financing to $3.77 million from $3.06 million and extend the maturity August 18, Bloomberg's Bill Rochelle said. Both companies are controlled by John Kluge. Bloomberg notes that the creditors' committee of Metromedia Steakhouses in February sued Mr. Kluge, a trust Kluge created and two of his companies, including Metromedia Co., to recharacterize $225 million in debt as equity or making Mr. Kluge's claim subordinate to the claims of creditors. Plano, Texas-based Metromedia Steakhouses Company, L.P. owned, operated and franchised family-focused restaurants operating under the Ponderosa Steakhouse and Bonanza Steakhouse brands Metromedia and three affiliates filed Chapter 11 petitions on Oct. 22, 2008 (Bankr. D. Del. Lead Case No. 08-12490). Judge Mary Walrath handles the case. Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young & Jones LLP, represent the Debtors in their chapter 11 cases. In its bankruptcy petition, Metromedia estimated assets of $1 million to $10 million and debts of $100 million to $500 million. MICHAEL VICK: Appearance at Bankruptcy Hearing Opposed ------------------------------------------------------ Larry O'Dell at The Associated Press reports that the U.S. attorney's office in Alexandria has filed an objection to taking Michael Vick out of a Kansas prison to testify at his bankruptcy hearing in Virginia. The AP relates that U.S. Bankruptcy Judge Frank Santoro said in February that Mr. Vick must appear at a hearing in Norfolk on April 2 or be denied of confirmation of his bankruptcy plan. The U.S. attorney's office said that Mr. Vick can be made available to testify by video from the federal prison, The AP states. About Michael Vick Michael Dwayne Vick, born June 26, 1980 in Newport News, Virginia, is a suspended National Football League quarterback under contract with the Atlanta Falcons team. In 2007, a U.S. federal district court convicted him and several co-defendants of criminal conspiracy resulting from felonious dog fighting and sentenced him to serve a 23 months in prison. He is being held in the United States Penitentiary at Leavenworth, Kansas. Mr. Vick is also under indictment for two related Virginia state felony charges for his role in the dogfighting ring and related gambling activity. His state trial has been delayed until he is released from federal prison. He faces a maximum 10-year state prison term if convicted on both counts. Mr. Vick filed a chapter 11 petition on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the Debtor in his restructuring efforts. Mr. Vick listed assets of $10 million to $50 million and debts of $10 million to $50 million. MILACRON INC: Wants to Access $135 Million GE-DDJ DIP Facility -------------------------------------------------------------- Milacron Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Ohio for authority to borrow: a) $55 million inclusive of a $15 million sublimit for letters of credit from General Electric Capital Corporation, as administrative agent and lender, and GE Capital Financial, as issuing bank, under the debtor-in-possession revolving agreement. b) $80 million in term loan facility from DDJ Capital Management LLC, as administrative and DIP revolver agent under the DIP term loan facility agreement. The proceeds of the loans will be used to (i) fund, among other things, ongoing working capital, general corporate, letters of credit and other financing needs of the Debtors; (ii) pay certain transaction fees, and other costs and expenses of administration of the cases; (iii) provide the revolver agent, revolver lenders, indenture trustee, and senior secured noteholders adequate protection; and (vi) pay fees and expenses including, without limitation, reasonable attorneys' fees and expenses owed to the DIP facility agents and lenders. In addition, the Debtors also ask the Court to authority to use cash collateral securing repayment of secured loans to the lenders. Salient terms of the DIP agreements are: DIP Revolving DIP Term Loan Facility Facility ------------- ------------- The Borrowers: Milacron Inc., Cimcool Milacron Inc. Industrial Products Inc., Milacron Marketing Company, Milacron Plastics Technologies Group Inc., and D-M-E Company Inc. The Guarantors: Milacron Canada Ltd. and Cimcool Industrial Milacron Capital Holdings Products Inc., B.V. Milacron Marketing Company, Milacron Plastics Technologies Group Inc., D-M-E Company, Inc., Milacron Canada Ltd. and Milacron Capital Holdings B.V. The Lenders: General Electric Capital DDJ Capital Corporation and GE Capital Management LLC and Financial Inc. Avenue Investments L.P. Interest Rate: At the DIP Revolver At the Debtors' Borrowers' option, Base option, (i) Base Rate ate or LIBOR plus 6.0%. of the greater of where: a) Base Rate means, (A) 5.0% of (B) 0.5% for any day, a floating in excess of the rate equal to the highest federal funds of (i) the rate publicly rate, plus 15.0%, quoted from time to time or LIBOR plus 15.0%, by The Wall Street Journal where: "LIBOR means, as the "prime rate", (ii) for any day, the the Federal Funds rate greater of (i) the plus 300 basis points per London Interbank Rate annum, and (iii) the and (ii) 4.0%. The one-month LIBOR rate; and Default Interest Rate (b) "LIBOR" means, for any during the day, the greater of (i) the continuance of an rate at which Eurocurrency "Event of Default," deposits in U.S. dollars will be at an for one month, which is additional 2.0% published by the British per annum. Bankers' Association Interest Settlement Rate on Telerate page 3750 or any successor page thereto and (ii) 3.00%. The Default Interest Rate during the continuance of an "Event of Default," will be at an additional 2.0% per annum. Maturity Date: The DIP Revolving Facility and DIP Term Loan Facility terminate on the earliest event to occur from the enumerated list which includes, without limitation, 180 days after the Commencement Date, the effective date of any confirmed plan of reorganization or liquidation, the consummation of a sale of substantially all of the assets of the Debtors, the date on which the DIP Revolving Facility or DIP Term Loan Facility terminates, as applicable, the date on which a conversion of any of the Debtors' cases to proceedings under chapter 7 occurs, and various defaults. To secure the Debtors' obligations, the lenders will granted superpriority administrative expense claim status having priority over and any and all administrative expenses. The DIP agreements each contain customary and appropriate events of defaults. A full-text copy of the debtor-in-possession credit agreement with General Electric Capital Corporation is available for free at: http://ResearchArchives.com/t/s?3a32 A full-text copy of the debtor-in-possession credit agreement with DDJ Capital Management LLC is available for free at: http://ResearchArchives.com/t/s?3a31 Headquartered in Batavia, Ohio, Milacron Inc. supplies plastics- processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron is also manufactures synthetic water-based industrial fluids used in metalworking applications. The company and six of its affiliates filed for protection on March 10, 2009 (Bankr. S.D. Ohio Lead case No. 09-11235). Kim Martin Lewis, Esq., and Patrick Burns, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Torys LLP as counsel to the CCAA proceeding; Conway Del Genio Gries & Co. LLC as restructuring and financial advisor; Rothschild Inc. as banker and financial advisor; Kurtzman Carson Consultants LLC as claims agent; and RSM Richter Inc. as CCAA monitor. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million to $1 billion. MILACRON INC: Wants to Employ Dinsmore & Shohl as Counsel --------------------------------------------------------- Milacron Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Ohio for permission to employ Dinsmore & Shohl LLP as their counsel. The firm is expected to: a) advise the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties in interest; c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any action commenced against the Debtors, negotiations concerning all litigation in which the Debtors are involved, and objections to claims filed against the estates; d) prepare on behalf of the Debtors certain motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; e) promote the plan of reorganization, disclosure statement, and all related agreements and documents filed contemporaneously herewith or hereafter, and take any necessary action on behalf of the Debtors to obtain confirmation of such plan, as necessary; f) represent the Debtors in connection with obtaining post petition financing and exit financing, as necessary; g) advise the Debtors in connection with any potential sales of assets; h) appear before this court, any appellate courts, and the United States Trustee and protect the interests of the Debtors' estates before such Courts and the United States Trustee; i) consult with the Debtors regarding tax matters; and j) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these chapter 11 cases. The firm's professionals will charge at these rates: Professional Hourly Rate ------------ ----------- Partners $230-$575 Counsel $130-$475 Associates $160-$330 Paralegals $105-$190 Kim Martin Lewis, Esq., a partner of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Batavia, Ohio, Milacron Inc. -- http://www.milacron.com-- supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron is also manufactures synthetic water-based industrial fluids used in metalworking applications. The company and six of its affiliates filed for Chapter 11 protection on March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). The Debtors proposed Conway, Del Genio, Gries & Co. LLC as their restructuring and financial advisor; Rothschild Inc. as banker and financial advisor; Kurtzman Carson Consultants LLC as claims agent; and RSM Richter Inc. as CCAA monitor. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million and $1 billion each. MILACRON INC: Wants Schedules Deadline Moved to May 11 ------------------------------------------------------ Milacron Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of Ohio to extend until May 11, 2009, their time to file their schedules of assets and liabilities, and statement of financial affairs. The Debtors tell the Court that an extension is warranted because of (a) the substantial size and scope of their businesses; (b) the complexity of their financial affairs; and (c) the limited staffing available to perform the required internal review of their accounts and affairs, among other things. The Debtors say the additional time will enable them to collect, review and assemble the information necessary to complete the schedules and statements. Headquartered in Batavia, Ohio, Milacron Inc. -- http://www.milacron.com-- supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron is also manufactures synthetic water-based industrial fluids used in metalworking applications. The company and six of its affiliates filed for Chapter 11 protection on March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). The Debtors proposed Conway, Del Genio, Gries & Co. LLC as their restructuring and financial advisor; Rothschild Inc. as banker and financial advisor; Kurtzman Carson Consultants LLC as claims agent; and RSM Richter Inc. as CCAA monitor. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million and $1 billion each. MIRABILIS VENTURES: Can Employ Shutts & Bowen as Special Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida has granted Mirabilis Ventures, Inc. authority to retain Eric S. Adams and the law firm of Shutts & Bowen, LLP, as special counsel, nunc pro tunc to May 27, 2008. Shutts & Brown will assist the Debtor with respect to the Chapter 11 cases: a. William P. Gregory, P.A. v. Floyd Road, LLC and Mirabilis Ventures, Inc., Case Number 07-CA-010780, Hillsborough County Circuit Court -- commercial litigation regarding real estate deposit; b. Premier Servicing, LLC v. Mirabilis Ventures, Inc. and Sherwood Construction, Inc., Case Number 07-013936CI-013, Pinellas County Circuit Court -- commercial litigation regarding deferred compensation in business acquisition; c. Mirabilis Ventures, Inc.; AEM, Inc.; and Paradyme, Inc. v. 02HR, LLC (not yet filed) - commercial litigation regarding the collection of promissory notes; and d. Other litigation matters as the Debtor deems necessary. The Debtor disclosed that Shutts & Bowen has not received an advance fee or retainer from the Debtor's estate, and that Shutts & Bowen has previously waived any prepetition fees and expenses owed to it by the Debtor. The Debtor informed the Court that the terms of employment with Shutts & Bowen are that services will be billed at the standard hourly rates of Shutts & Bowen, which information was not provided in the motion. Eric S. Adams, Esq., a partner at Shutts & Bowen, LLP, assured the Court that the firm has no connection with the U.S. Trustee's office or any person employed at the U.S. Trustee's office, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. About Mirabilis Ventures Orlando, Florida-based Mirabilis Ventures Inc. is a private equity firm. The company filed for Chapter 11 protection on May 27, 2008 (Bankr. M.D. Fla. Case No. 08-04327). Elizabeth A. Green, Esq., and Jimmy D. Parrish, Esq., at Latham Shuker Eden & Beaudine LLP; and Richard Lee Barrett at Barrett, Chapman & Ruta, P.A., represent the Debtor as counsel. When the Debtor sought bankruptcy protection, it listed assets and debts of between $50 million and $100 million each. MONACO COACH: Can Access Cash Collateral on Interim Basis --------------------------------------------------------- The Hon. Kevin J. Carey of the United States Bankruptcy Court for the District of Delaware authorized Monaco Coach Corporation and its debtor-affiliates to access, on the interim, cash collateral securing repayment of secured loans to their prepetition secured lenders including Bank of America N.A. and Ableco Finance LLC. A hearing is set for March 25, 2009, at 4:00 p.m., to consider final approval of the cash collateral use. Objections, if any, are due March 19, 2009. Proceeds of the cash collateral will only be used to pay expenses when due in accordance to the proposed budget. BofA says all operating revenues, cash on hand, and proceeds from the sale or other disposition of the priority collateral constitutes cash collateral. According to the Troubled Company Reporter on March 10, 2009, the Debtors and the secured lenders are parties to credit agreements dated November 6, 2008. The Debtors owe $35,662,000 to BofA and $36,987,000 to Ableco Finance as of March 4, 2009. BofA and Ableco are parties to an intercreditor agreement dated November 6, 2008, wherein BofA has a first priority security interest in certain of the collateral and a second priority security interest in the other collateral, while Ableco has a first priority interest in certain of the term loan collateral and a second priority security interest in the other term loan collateral. The secured lenders will be granted replacement security interest and liens in all of the Debtors' postpetition assets as adequate protection. The replacement liens will be deemed valid and perfected by operation of law immediately upon entry of the interim order. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, told the Court the secured lenders and the Debtors were unable to negotiate the final terms of either the debtor-in-possession financing or the use of cash collateral. However, the parties were able to iron out the terms of the interim order to prevent the immediate and irreparable harm that would occur if the Debtors failed to obtain cash. A full-text copy of the Debtors' cash collateral budget is available for free at: http://ResearchArchives.com/t/s?3a29 Headquartered in Coburg, Oregon, Monaco Coach Corporation -- http://www.monacocoach.com-- makes recreational vehicles including Monaco, Holiday Rambler, Beaver, Safari and R-Vision brands. The company and 11 of its affiliates filed for Chapter 11 protection on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10750). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Debtors in their restructuring efforts. The Debtors have $442,115,000 in total assets and $208,822,000 in total debts as of Sept. 27, 2008. MONACO COACH: Lenders May Raise Interest Rates on Credit Lines -------------------------------------------------------------- Monaco Coach Corporation disclosed with the Securities and Exchange Commission that the filing of its Chapter 11 case on March 5 constituted an event of default under -- the loan and security agreement with certain financial institutions as lenders and Bank of America, N.A., a national banking association, as agent for the lenders, which provides with an $80.0 million secured revolving loan facility, and -- the financing agreement with certain financial institutions as lenders and Ableco Finance LLC, a Delaware limited liability company, as collateral agent and administrative agent for the lenders, which provides the Company and certain of the Debtors with a $39.3 million secured term loan. As of March 6, 2009, the principal amount outstanding under the Working Capital Loan Agreement was $28,583,719, and the principal amount outstanding under the Term Loan Agreement was $36,062,183. The occurrence of the event of default under the Working Capital Loan Agreement and the Term Loan Agreement purports to cause all obligations under each of those agreements to become immediately due and payable, including applicable prepayment premiums. The company added that the event of default also purports to give the lenders under the Working Capital Agreement the right to increase the interest rate on outstanding obligations by 2.0%, and to give the lenders under the Term Loan Agreement the right to increase the interest rate on outstanding obligations by 3.0%. The Company, in a March 5 statement on its bankruptcy filing, said it plans to continue operating the business as a debtor-in- possession in preparation for one or more sale transactions involving parts or all of the business. Imperial Capital, LLC, the company's lead investment bank, is actively assisting the Company in working toward a transaction that will allow operations to resume. Monaco also said it is negotiating with its lenders for two debtor-in-possession (DIP) financings to supplement its working capital. The company expects continuation of the line of credit on a cash collateral basis prior to the execution of the DIP financing. About Monaco Coach Monaco Coach Corporation (PINKSHEETS: MCOA), a leading national manufacturer of motorized and towable recreational vehicles, is ranked as the number one producer of diesel-powered motorhomes. Dedicated to quality and service, Monaco Coach is a leader in innovative RVs designed to meet the needs of a broad range of customers with varied interests and offers products that appeal to RVers across generations. Headquartered in Coburg, Oregon, with manufacturing facilities in Oregon and Indiana, the Company offers a variety of RVs, from entry-level priced towables to custom-made luxury models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names. The Company operates motorhome-only resorts in California, Florida, Nevada and Michigan. As of September 27, 2008, the Company had $442.1 million in total assets and $208.8 million in total liabilities. Monaco Coach Corporation and its affiliates filed for Chapter 11 on March 5 (Bankr. D. Del., Lead Case No. 09-10750). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, was tapped as counsel. MONACO COACH: Submits Budget Proposal to Bankruptcy Court --------------------------------------------------------- Tim Christie at The Register-Guard reports that Monaco Coach Corporation has submitted to the U.S. Bankruptcy Court for the District of Delaware a budget proposal outlining what the company needs to spend in the short term to continue operating and maintain the value of its assets while it tries to sell all or part of its business. According to court documents, Monaco laid out a tentative budget for the next 12 weeks, in which it estimates it will spend about $20.4 million and collect $65.4 million. Court documents say that to get through the next three months, Monaco asked the Court to: -- Let it re-establish an incentive program for dealers and their sales representatives so they can sell Monaco's existing inventory. Monaco chief financial officer Martin Daley estimates that the Company owes sales personnel about $130,000, and estimates it will need to spend about $65,000 a week going forward. Dealers would receive an incentive payment against warranty claims that have accrued, limited to 5% of the price of a coach. Mr. Daley said the incentive program would make it easier to sell existing inventory and encourage dealers to buy new coaches. -- Authorize, but not require, Monaco to continue paying employee wages and benefits while the Company is in bankruptcy. Mr. Daley said the Company has 220 employees on payroll. He estimated back wages and benefits total about $450,000, and the Company's total weekly payroll is $300,000. Mr. Daley asked the court to let Monaco to continue paying reimbursable business expenses, life insurance and other benefits. -- Allow it to hire certain professionals like lawyers, Accountants, and consultants, as needed, in connection with Monaco's ongoing business operations. -- Prohibit utilities, including telephone, gas, electricity, Web providers and others, from stopping service to the company. Monaco said that it spends $461,000 a month on utilities, and it proposed making a "utility deposit" equal to about half that amount. -- Authorize it to pay sales and use taxes, totaling $100,000, and regulatory fees, estimated at $30,000. -- Authorize the Company to use cash collected from the sales of assets like RVs while it is in bankruptcy to keep the it operating. Monaco would provide protection to lenders who also have an interest in this cash collateral. Mr. Daley explained in court documents the company's current financial state, how it got there, and what it needs to operate the business with "minimal disruption." According to court documents, Mr. Daley listed assets that include: -- $7 million federal tax refund, which the Company received the same day it filed for bankruptcy; -- $108.9 million worth of inventory; and -- $6.7 million in accounts receivable, from sales that have been made but not yet paid. According to The Register-Guard, Monaco owes $36.8 million on a revolving loan fund and $36 million on a fixed-term loan, both of which were obtained in November 2008. The report states that a big potential liability is represented by the value of coaches that Monaco shipped to dealers, and which the Company could be required to repurchase if a dealer went out of business or defaulted on a loan. Monaco estimated the value of the repurchase obligations at $394.7 million, the report says. The Register-Guard relates that Monaco said it had negotiated "forbearance agreements" with lenders, who agreed to withdraw repurchasing demands and stop making new ones until April 6. About Monaco Coach Monaco Coach Corporation (PINKSHEETS: MCOA), a leading national manufacturer of motorized and towable recreational vehicles, is ranked as the number one producer of diesel-powered motorhomes. Dedicated to quality and service, Monaco Coach is a leader in innovative RVs designed to meet the needs of a broad range of customers with varied interests and offers products that appeal to RVers across generations. Headquartered in Coburg, Oregon, with manufacturing facilities in Oregon and Indiana, the Company offers a variety of RVs, from entry-level priced towables to custom-made luxury models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie, and R-Vision brand names. The Company operates motor- home-only resorts in California, Florida, Nevada and Michigan. As of September 27, 2008, the Company had $442.1 million in total assets and $208.8 million in total liabilities. Monaco Coach Corporation and its affiliates filed for Chapter 11 on March 5 (Bankr. D. Del., Lead Case No. 09-10750). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, was tapped as counsel. MORGAN HAUGH: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Morgan Haugh Medical Group, P.S.C. 1111 Medical Center Drive Mayfield, KY 42066 Bankruptcy Case No.: 09-50240 Type of Business: The Debtor is in the health care business. Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Western District of Kentucky (Paducah) Judge: Thomas H. Fulton Debtor's Counsel: Alan C. Stout, Esq. Stout Law Office 111 W. Bellville P.O. Box 81 Marion, KY 42064 Tel: (270) 965-4600 Fax: 270-965-4848 Email: counsel@stoutlaw.com and Todd A. Farmer, Esq. Stout, Farmer & King, PLLC 329 N. 5th Street PO Box 7766 Paducah, KY 42002-7766 Tel: (270) 443-4431 Fax: (270) 443-4631 Email: todd@sfk-law.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/kywb09-50240.pdf The petition was signed by Marty Braaksma, corporate representative of the company. MPF CORP: Seeks June 30 Extension of Plan Filing Deadline --------------------------------------------------------- MPF Holding US Corp. and its affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas to extend, for the second time, its exclusive period to file a Chapter 11 plan. MPF wants the deadline extended to June 30, saying that it's still in the process of negotiating with buyers and can't yet file a Chapter 11 plan, Bloomberg's Bill Rochelle reported. According to Bloomberg, the company's collapse resulted from cost overruns on a vessel known as a multipurpose floater designed for work in deep water. The company has parallel bankruptcy proceedings in Bermuda. About MPF Corp. Headquartered in Bermuda, MPF Corp. Ltd. -- http://www.mpf- corp.com/ -- engages in deep water oil and gas exploration. The company was established on April 25, 2006. The company and debtor-affiliate MPF Holding US LLC filed separate petitions for Chapter 11 relief on Sept. 24, 2008 (Bankr. S.D. Tex. Case Nos. 08-36086 and 08-36084). MPF-01 followed on Sept. 25, 2008. D. Bobbitt Noel, Jr., Esq. at Vinson & Elkins LLP, represents the Debtors as counsel. When the Debtors filed for protection from creditors, they listed assets of $100 million to $500 million, and the same range of debts. The Bermuda Proceedings and the Chapter 11 cases in the U.S. run as parallel proceedings, which is coordinated to effectuate the Debtors' goal of providing for a restructuring of their businesses or sale of assets as may be in the best interests of their estates and creditors. The Debtors are in possession of their properties and continue to operate and manage their businesses as debtors-in-possession. Due to the size and complexity of the Debtors' businesses, and their prepetition focus on restructuring their financial affairs to avoid Chapter 11 filings, the Debtors failed to complete the drafting of the Schedules and Statements, and do not anticipate having the Schedules and Statements ready for filing within the 15-day period. NEXSTAR BROADCASTING: Exchange Offer Cues S&P's Junk Rating ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Irving, Texas-based Nexstar Broadcasting Group Inc. and related entities to 'CC' from 'B-', reflecting the company's announced debt exchange offer. The rating outlook is negative. At the same time, S&P lowered its issue-level rating on Nexstar's 7% senior subordinated notes due 2014 to 'C' from 'CCC'. S&P placed all other issue-level ratings on Nexstar's secured and unsecured debt on CreditWatch with negative implications. The CreditWatch listing reflects S&P's view that without the consummation of the proposed debt exchange and the flexibility benefit of lower cash interest expense, the company will face a high possibility of violating its bank covenants within the next quarter or two. The rating actions reflect the company's announcement that it is commencing an offer to exchange between $114.9 million and $143.6 million principal of its 7% senior subordinated notes due 2014 for a similar amount of 7% senior subordinated pay-in-kind notes due 2014 and cash. S&P believes that the exchange offer significantly diverges from the original terms of the obligation. Nexstar is seeking to exchange the cash-paying notes with PIK notes for $93.10 per $1,000. Note holders who tender on or before an early participation date will receive an early participation payment of $30.00 per $1,000. From the date of issuance of the PIK notes through Jan. 15, 2011, interest will accrue in kind on the PIK notes at an annual rate of 0.5%, such that the principal amount of the notes as of Jan. 15, 2011 will equal $1,000. The exchange offer, if successful, will enable the company to significantly improve its headroom under its total leverage covenant at a time when TV broadcasters' revenues are declining steeply in a non-election year and recession. During the PIK- paying period, the PIK notes will be excluded from Nexstar's total leverage calculation under its senior secured credit facility, but they will be added back to the total leverage calculation when the company starts paying cash interest in January 2011. In the absence of this transaction, S&P believes that Nexstar would probably violate its total leverage covenant in the first or second quarter of 2009. S&P therefore views this transaction as a distressed exchange. "Upon consummation of the transaction, S&P expects to lower the corporate credit rating to 'SD' (selective default) and the issue- level rating on the 7% senior subordinated notes due 2014 to 'D'," said Standard & Poor's credit analyst Deborah Kinzer. "As soon as possible thereafter, S&P will reassess the company's business outlook and assign new ratings. If the transaction does not go through, the company would probably require a covenant waiver or an expensive amendment to its credit agreement." NORTHEAST BIOFUELS: Ethanol Plant Marked for April 14 Auction ------------------------------------------------------------- Northeast Biofuels LP, gave up plans of seeking financing to reorganize for its almost-completed ethanol plant in Fulton, New York, and instead filed papers on March 9 to hold an auction on April 14 for the 100 million gallon- a-year facility, Bloomberg's Bill Rochelle said. The proposed auction procedures, according to Bloomberg, provide for this time-line: -- bids would be due April 9 -- an auction will be held April 14. -- the sale hearing will be held April 17. The proposed procedures also allow secured lenders to submit credit bids for the assets. The Bloomberg report relates the company blamed the contractor Lurgi Inc. for construction flaws that resulted in the failure of the plant to reach anticipated production levels. Lurgi, on the other hand, says problems with the plant were the result of improper operation by the owner. Lurgi, the report adds, has filed a lawsuit attempting to stop Northeast Biofuels from drawing down an $8.1 million letter of credit to cover the owner's alleged damages. Lurgi contends the company didn't follow required procedures before attempting to draw on the letter of credit. Citigroup Venture Capital International Biofuel LP and BMC LP own 85 percent of the equity in the ocmpany.. T About Northeast Biofuels Headquartered in Fulton, New York, Northeast Biofuels LP aka Northeast Biofuels LLC -- http://www.northeastbiofuels.com-- Operate as ethanol plants. The company and two of its affiliates filed for Chapter 11 protection on January 14, 2009 (Bankr. N.D. N.Y. Lead Case No. 09-30057). Jeffrey A. Dove, Esq., at Menter, Rudin & Trivelpiece, P.C., represents the Debtors in their restructuring efforts. Blank Rome LLP will serve as the Debtors' counsel. The Debtors proposed FTI Consulting Inc. as their financial advisor. When the Debtors filed for protection from their creditors, they listed assets and debt between $100 million to $500 million each. OSHKOSH CORP: S&P Affirms 'B' Long-Term Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'B' long-term corporate credit rating, on Oshkosh Corp., and removed the ratings from CreditWatch, where they had been placed with negative implications on Jan. 29, 2009. The outlook is negative. "The affirmation follows the company's announcement that it has completed an amendment to its credit agreement which resets financial covenant levels," said Standard & Poor's credit analyst Dan Picciotto. The amendment resulted in higher interest rates, which will reduce free cash flow generation. In addition, end markets remain challenged as the global economic downturn has resulted in softer demand. If the downturn is prolonged, revised covenant levels could again come under pressure. The ratings reflect the Oshkosh, Wisconsin-based company's highly leveraged financial profile, which more than offsets its leading business positions in key segments of the specialty vehicle market and good product and end-market diversity. Oshkosh is a leading designer, manufacturer, and marketer of a broad range of specialty commercial, fire and emergency, and military vehicles. The company maintains leadership positions in heavy-duty rescue vehicles, severe-duty tactical trucks, custom and commercial pumpers, severe-duty plow and snow removal vehicles, concrete mixers, refuse truck bodies, and tow trucks. It is also the world's largest aerial work platform manufacturer. As a result of the JLG acquisition in late 2006, Oshkosh expanded its product, end-market, and geographic diversity. The company generated revenue by segment as follows through in fiscal 2008: access equipment (43%), defense (26%), fire and emergency (17%), and commercial (14%). Oshkosh's operating margin (before depreciation and amortization) is less than 10% and likely to deteriorate further due to lower sales volumes in fiscal 2009. The weaker global economic environment has had a pronounced effect on the company's access equipment segment, where sales decreased 40% in the fiscal first quarter. The defense segment may provide some offset to this weakness but S&P expects overall results to be meaningfully lower. Standard & Poor's views Oshkosh's financial risk profile as highly leveraged. Oshkosh's debt (adjusted for operating leases and postretirement benefit obligations) to EBITDA was about 4.2x and funds from operations to adjusted debt was about 13% at Dec. 31, 2008. However, S&P expects these measures to deteriorate in the coming year as worsening operating performance is not likely to be fully offset by debt repayments. A negative rating action could occur if headroom under financial covenants becomes limited. For instance, S&P could lower the ratings if headroom appears likely to decline to less than 10%. S&P could take a positive rating action if the company's operating performance stabilizes and the company appears able to maintain good headroom under its covenants of more than 10%. PACIFIC ENERGY: Proposes to Employ Pachulski as Bankr. Counsel -------------------------------------------------------------- Pacific Energy Resources Ltd. and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for permission to employ Pachulski Stang Ziehl & Jones LLP as their counsel. The firm will: a) provide legal advice with respect to the Debtors' powers and duties as debtors in possession in the continued operation of their businesses and management of their property; b) prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports, and other legal papers; c) appear in Court on behalf of the Debtors and in order to protect the interests of the Debtors before the Court; d) prepare and pursue confirmation of a plan and approval of a disclosure statement; and e) perform all other legal services for the Debtors that may be necessary and proper in these proceedings. The firm's professionals and their standard hourly rates as of Jan. 1,2009, are: Professional Hourly Rate ------------ ----------- Laura Davis Jones, Esq. $795 Ira D. Kharasch, Esq. $750 Maxim B. Litvak, Esq. $550 Scotta E. McFarland, Esq. $525 Robert M. Saunders, Esq. $495 Werner Disse, Esq. $495 Shawn Quinlivan, Esq. $225 Ira D. Kharasch, Esq., a partner of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Long Beach, California, Pacific Energy Resources Ltd. -- http://www.pacenergy.com-- engage in the acquisition and development of oil and gas properties, primarily in the United States. The company and seven of its affiliates filed for Chapter 11 protection on March 8, 2009 (Bankr. D. Del. Lead Case No. 09- 10785). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Rutan & Tucker LLP as their corporate counsel; Schully, Roberts, Slattery & Marino as special oil and gas counsel; Devlin Jensen as Canadian counsel; Zolfo Cooper as financial advisor; Lazard Freres & Co. LLC and Albrecht & Associates Inc. as investment bankers; and Omni Management Group LLC as noticing and claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million and $500 million each. PARADOCKS TWO: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Paradocks Two, LLC a/k/a Paradocks II 1244 Executive Boulevard Building C, Suite 100 Chesapeake, VA 23320 Bankruptcy Case No.: 09-70904 Chapter 11 Petition Date: March 7, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Norfolk) Judge: Frank J. Santoro Debtor's Counsel: Dale V. Berning, Esq. Berning Law 817 Virginia Beach Blvd., #101 Virginia Beach, VA 23451 Tel: (757) 961-1281 Fax: (757) 490-1044 Email: dalevberning@cox.net Estimated Assets: $100,001 to $500,000 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/vaeb09-70904.pdf The petition was signed by Ken Newman, manager of the company. PATRICK CANNON: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Patrick M. Cannon 6700 Ferstel Road Newburgh, IN 47630 Bankruptcy Case No.: 09-70281 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Southern District of Indiana (Evansville) Judge: Basil H. Lorch III Debtor's Counsel: John Goodridge, Esq. 915 Main Street, Suite 208 Evansville, IN 47708 Tel: (812) 426-0482 Fax: (812) 426-2211 Email: jgoodridge@jaglo.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/insb09-70281.pdf The petition was signed by Patrick M. Cannon. PEREGRINE SYSTEMS: Former Counsel E. Deller Goes to Trial --------------------------------------------------------- A former Peregrine Systems Inc. general counsel, Eric Deller, filed false regulatory documents to contribute to the fraud that destroyed the software company, a prosecutor said at the start of his criminal trial. Bloomberg reports that Mr. Deller is charged with bank fraud, wire fraud, securities fraud and conspiracy to commit bank fraud. Deller "helped conceal negative information from banks and investors," the prosecutor said. "The evidence will show he and other executives were involved in" filing false reports "to the Securities and Exchange Commission and issued false legal opinions signed by the defendant and issued to banks in order to borrow money," Assistant U.S. Attorney Eric Beste told jurors in federal court in San Diego, said Bloomberg. According to Bloomberg, Mr. Deller is the only remaining Peregrine defendant whose case is unresolved. Prosecutors charged 18 people in the multimillion-dollar accounting scam that falsely inflated profits to boost Peregrine's stock. The conspiracy sent the company into bankruptcy in 2002. Fourteen people pleaded guilty, including former Chief Executive Officer Stephen Gardner, former President Gary Lenz and ex-Chief Financial Officer Matt Gless. Charges against three others were dropped, Bill Callahan and Thom Weidlich of Bloomberg reported. Melinda Haag, one of Mr. Deller's lawyers, of San Francisco-based Orrick, Herrington & Sutcliffe LLP, as cited by the report said in her opening statement to the jury, "The evidence will show he is an innocent man. He had no idea the CEO of Peregrine, the treasurer of Peregrine and the head of the sales department at Peregrine were up to their eyeballs in falsifying figures." The report points out that according to Ms Haag, the prosecutors' case against Mr. Deller is flawed, and added, "The government is stitching together a handful of e-mails and a few documents and the testimony of people who have the powerful incentive to lie". About Peregrine Systems Headquartered in San Diego, Calif., Peregrine Systems, Inc. -- http://www.peregrine.com/-- was a global provider of enterprise software to enable leading companies to optimally manage the IT infrastructure. The Company's flagship product suites -- ServiceCenter(R) and AssetCenter(R) -- create a foundation for IT asset and service management solutions based on industry best practices, including ITIL (IT Infrastructure Library). In addition, customers used Peregrine's Configuration Services suite to gain an accurate, consolidated view of their IT assets. Peregrine recently introduced a new vision -- Optimal IT -- to deliver predictive analytics and decision modeling to optimize IT performance. The Company conducted business from offices in the Americas, Europe and Asia Pacific. The Company filed a voluntary Chapter 11 petition on Sept. 22, 2002. On Aug. 7, 2003, Peregrine became the first public enterprise software company to successfully restructure under Chapter 11 protection. In September 2005, Hewlett-Packard Co. (NYSE:HPQ; Nasdaq:HPQ) and Peregrine Systems signed a definitive agreement pursuant to which HP will acquire Peregrine in a cash merger for $26.08 per share representing an aggregate equity value of $425 million. That same year, Peregrine settled with the U.S. Securities and Exchange Commission after restating $509 million in revenue. PEREGRINE SYSTEMS: Ex-Finance Chief Order to Pay $2.09-Mil. ----------------------------------------------------------- Matthew Gless, former chief financial officer of Peregrine Systems Inc., was ordered to pay $2.09 million in restitution for his role in the fraud that destroyed the software company once valued at $4.72 billion, Bloomberg News reported. According to the report, Mr. Gless, who in December was sentenced to five years and three months in prison, was ordered to repay the money by U.S. District Judge Thomas Whelan in San Diego. Bloomberg earlier reported that former Peregrine vice president, Douglas Powanda, was ordered to pay $11.2 million in restitution for his role in the fraud. He was ordered to pay another $5.74 million on top of the $5.5 million he paid to settle civil suits. Mr. Powanda had pleaded guilty. According to the report, prosecutors charged 18 people in a multimillion-dollar accounting scam to falsely inflate profits and boost Peregrine's stock. The conspiracy sent the company, once valued at $4.72 billion, into bankruptcy in 2002. Fourteen pleaded guilty, including ex-Chief Executive Officer Stephen Gardner, former President Gary Lenz and ex-Chief Financial Officer Matt Gless. Bloomberg relates that in December, Judge Whelan sentenced Mr. Powanda to six-and-a-half years in prison after he pleaded guilty to securities fraud and conspiracy and also directed ex-Peregrine Controller Berdj Rassam to pay $129,308 in restitution. Mr. Rassam, who pleaded guilty to securities fraud, was sentenced in December to two years in prison. While Mr. Gardner would pay "about $3 million" in restitution, depending on how the proceeds from the sale of two Gardner properties are tabulated. Mr. Gardner was sentenced in December to eight years and one month in prison after pleading guilty in March 2007. Bloomberg states that the restitution paid by former Peregrine executives involved in the fraud will go to a fund that will be disbursed to about 15,000 former shareholders who are part of a class-action lawsuit filed in the wake of the company's collapse. The final defendant in the case, former General Counsel Eric Deller, was slated for trial March 3. He has pleaded not guilty. Prosecutors dropped charges against two other former Peregrine executives and a partner at now-defunct accounting firm Arthur Andersen, Peregrine's outside auditor, after trials ended with deadlocked juries. About Peregrine Systems Headquartered in San Diego, Calif., Peregrine Systems, Inc. -- http://www.peregrine.com/-- was a global provider of enterprise software to enable leading companies to optimally manage the IT infrastructure. The Company's flagship product suites -- ServiceCenter(R) and AssetCenter(R) -- create a foundation for IT asset and service management solutions based on industry best practices, including ITIL (IT Infrastructure Library). In addition, customers used Peregrine's Configuration Services suite to gain an accurate, consolidated view of their IT assets. Peregrine recently introduced a new vision -- Optimal IT -- to deliver predictive analytics and decision modeling to optimize IT performance. The Company conducted business from offices in the Americas, Europe and Asia Pacific. The Company filed a voluntary Chapter 11 petition on Sept. 22, 2002. On Aug. 7, 2003, Peregrine became the first public enterprise software company to successfully restructure under Chapter 11 protection, shedding about $537 million of debt. In September 2005, Hewlett-Packard Co. (NYSE:HPQ; Nasdaq:HPQ) and Peregrine Systems signed a definitive agreement pursuant to which HP would acquire Peregrine in a cash merger for $26.08 per share representing an aggregate equity value of $425 million. That same year, Peregrine settled with the U.S. Securities and Exchange Commission after restating $509 million in revenue. PETTERS GROUP: Ritchie Capital Counters Polaroid Suit ----------------------------------------------------- Ritchie Capital Management, L.L.C. and related companies filed a counterclaim against Polaroid Corporation asking the bankruptcy court to declare that Ritchie's security interests in certain Polaroid trademarks and in certain pledged promissory notes are legitimate, valid, and enforceable. The counterclaim asserts that Ritchie has a valid agreement with Polaroid that granted security interests in Polaroid's trademarks in Brazil, China and India. Polaroid had filed a lawsuit disputing the validity of Ritchie's claims. Polaroid is owned by Petters Group Worldwide, which is owned by Thomas Petters, who has been charged with fraud and related crimes. In its counterclaim, Ritchie says that the Polaroid lawsuit "irresponsibly suggest(s), among other things, that Ritchie was aware of the fraudulent scheme perpetrated by Petters and tried to salvage its own loans at the expense of other creditors." Indeed, Polaroid's complaint "is rife with groundless allegations that irresponsibly insinuate that Ritchie had knowledge of, or worse, involvement in, the fraud perpetrated by Petters," the Ritchie counterclaim asserts, citing numerous portions of the Polaroid complaint. "These outrageous allegations are baseless, irresponsible and malicious. Polaroid does not, because it cannot, directly allege that Ritchie was complicit in the fraud committed by Petters. Polaroid also does not, because it cannot, allege that Ritchie was aware of the fraud committed by Petters - or even suggest any means by which Ritchie could have been made aware of a fraud," the counterclaim says. The implication that Ritchie was aware of the fraudulent scheme "is irresponsible and disingenuous for a number of reasons, but most notably because Mary Jeffries, PGW's President at the time and Polaroid's current CEO, actively participated in the negotiations that led to the transactions Polaroid now seeks to avoid, and she knows better," the Ritchie counterclaim states. "Such suggestions and implications are not merely false, they are a malicious attempt to damage Ritchie's reputation," the counterclaim says. Furthermore, Ritchie's counterclaim indicates that Ritchie has "grave concerns" that the "Polaroid Complaint is representative of the manner in which this proceeding (and . . . the related bankruptcy proceedings) will be conducted." In a separate statement, the company said it has grave concerns because the Polaroid complaint "needlessly consumes not only the time and resources of the Bankruptcy Court, Polaroid and Ritchie, but also the resources of the estate, and thus will ultimately reduce the amounts recovered by all creditors." "Ritchie's concerns extend further," the company continued. "In particular, the Polaroid complaint appears to be a weapon used by Douglas Kelley, receiver for Polaroid, in his efforts to silence and to retaliate and seek retribution against Ritchie for Ritchie's good faith challenges to the legitimacy of Kelley's receiverships and his installation as trustee in the bankruptcies of several of the Petters entities. These efforts by Kelley not only unfairly hinder Ritchie's efforts to protect the interests of the investors in its managed funds, but also serve to perpetuate the receiverships." "There is a strong motivation to perpetuate the receiverships -- they are enormously lucrative not only for the receiver, but also for the army of attorneys representing the receiver and the bankrupt estates of PGW, PCI, Polaroid and the other Petters debtors," the company said. "Those benefits, however, come at a great detriment and a huge cost to the victims of the Ponzi scheme and the creditors of all of the Petters entities - Kelley's efforts are likely to greatly diminish the prospects for meaningful recovery by the creditors of legitimate businesses owned by Petters and the victims of Petters' alleged Ponzi scheme." "Based on the approximately $2.6 million of legal and other professional fees that appear to have been charged to the debtors for work performed through the end of January 2009, Ritchie estimates that the administration of the receivership and the bankruptcy cases is likely to cost between $75 million and $100 million in professional fees alone during the course of the several years that Kelley has predicted it will take to resolve all of the cases," the company continued. "If Kelley continues to manage the receiverships in the way in which they have been managed thus far, the combination of high legal and professional expenses for the estates and the inability or unwillingness of Kelley to undertake necessary and appropriate actions as receiver will result in little or no recovery by creditors of legitimate Petters companies. In this regard, accurate projections of future expenses of the cases are made more difficult by the stark contrast between most Chapter 11 cases, which are characterized by a high degree of transparency, and the opacity of Kelley's handling of the current cases. For example, Kelley has never disclosed the rates he is charging for his professional services as receiver, even though various interested parties (including Ritchie) have requested such disclosure," the company added. "Ritchie strongly believes that its security interests are valid and enforceable and that it is entitled to the full benefit of such security interests in the Polaroid bankruptcy proceedings," the company concluded. As reported by the Troubled Company Reporter on February 17, 2009, Polaroid sued U.S. hedge funds Acorn Capital Group LLC and Ritchie Capital over claims they fraudulently acquired liens against Polaroid's assets before it went bankrupt. According to Erik Larson at Bloomberg News, Polaroid sought Chapter 11 protection in December after Thomas Petters, the founder of Polaroid owner Petters Group Worldwide LLC, was charged with running a $3 billion Ponzi scheme. Acorn had loaned Petters at least $281 million, while Ritchie invested more than $189 million, court records show. On November 1, 2004, Acorn entered into a Credit Agreement with Petters Group affiliate, PAC Funding, LLC, pursuant to which it agreed to loan PAC $200 million. The Credit Agreement was subsequently modified on several occasions, ultimately increasing the loan commitment to $300 million. PAC in turn used a portion of the funds advanced by Acorn to make at least two loans to Polaroid for a total of $25 million for Polaroid to use in its business operations. To secure the amounts due under the Credit Agreement, Polaroid executed and delivered to Acorn a Security Agreement pursuant to which Polaroid granted Acorn a security interest in its inventory, accounts and U.S., Mexican and Canadian trademarks. The Security Agreement secures repayment of all amounts advanced to PAC under the Credit Agreement, which currently exceeds $276 million. However, according to Polaroid, Acorn discovered early last year that electronics and other assets securing its loans to Petters may not have existed and arranged instead to secure them with Polaroid's assets, according to an adversary proceeding filed in the U.S. Bankruptcy Court for the District of Minnesota. Polaroid, Bloomberg said, alleges that Petters and Acorn "orchestrated a plan targeted at securing the value of Polaroid in an attempt to shore up, conceal and cover millions of dollars in losses," Similar claims were made against Ritchie, which last year issued Petters securities in the form of promissory notes, Polaroid claims, Bloomberg said. Ritchie said the outstanding balance on the notes as of October is more than $260 million, according to the complaint. "At no time when the loans were advanced, and the liens to secure such loans granted, did the Ritchie entities have any knowledge that Petters and any related corporations were engaged in any fraudulent conduct," Ritchie spokesman Justin Meise said in an e-mailed statement to Bloiomberg. About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. About Ritchie Capital Ritchie Capital is a diversified alternative asset management firm established in 1997 with interests in hedge funds, private equity, venture capital, insurance, energy and real estate and with offices in Lisle, Illinois; New York; and Menlo Park, California. PETTERS GROUP: Sun Country Repays Debtor-In-Possession Loan ----------------------------------------------------------- Joshua Freed at The Associated Press reports that Sun Country Airlines said that it has repaid its debtor-in-possession loan. According to The AP, Sun Country had worked out a $5 million line of credit with Elite Landings, which is also a creditor of the Company. Elite Landings, states the report, said that it had drawn about $1 million of the line of credit. The AP relates that Sun Country spokesperson Wendy Blackshaw said that the Company repaid the loan out of its operating revenue. The report quoted her as saying, "Basically it's because we had a good season. We're becoming a lot more financially solvent." Sun Country hopes to emerge from bankruptcy within the next couple of months, The AP reports, citing Ms. Blackshaw. About Petters Group Worldwide Based in Minnetonka, Minn., Petters Group Worldwide LLC is named for founder and chairman Tom Petters. The group is a collection of some 20 companies, most of which make and market consumer products. It also works with existing brands through licensing agreements to further extend those brands into new product lines and markets. Holdings include Fingerhut (consumer products via its catalog and Web site), SoniqCast (maker of portable, WiFi MP3 devices), leading instant film and camera company Polaroid (purchased for $426 million in 2005), Sun Country Airlines (acquired in 2006), and Enable Holdings (online marketplace and auction for consumers and manufacturers' overstock inventory). Petters formed the company in 1988. Petters Company, Inc. is the financing and capital-raising unit of Petters Group Worldwide, LLC. Petters Company, Inc. and Petters Group Worldwide, LLC, filed separate petitions for Chapter 11 relief on Oct. 11, 2008 (Bankr. D. Minn. Case No. 08-45257 and 08- 45258, respectively). James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P., represents the Debtors as counsel. In its petition, Petters Company, Inc. listed debts of between $500 million and $1 billion, while its parent, Petters Group Worldwide, LLC listed debts of not more than $50,000. As reported in the Troubled Company Reporter on Oct. 7, 2008, Petters Aviation, LLC,, and affiliates MN Airlines, LLC, doing business as Sun Country Airlines, Inc., and MN Airline Holdings, Inc., filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the District of Minnesota on Oct. 6, 2008 (Lead Case No. 08-45136). Petters Aviation, LLC is a wholly owned unit of Thomas Petters Inc. and owner of MN Airline Holdings, Inc., Sun Country's parent company. Polaroid Corp., which was owned by Petters since 2005, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). PHILADELPHIA NEWSPAPERS: Hearing on DIP Loan Moved to March 17 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District Pennsylvania in Philadelphia has postponed until March 17 the hearing on Philadelphia Newspapers LLC's request to access $25 million in financing from affiliates of its owners. Objections have been filed against the terms of the DIP Loan. According to Bloomberg's Bill Rochelle, creditors contended the financing is to maintain the job of Chief Executive Brian Tierney who led a group of investors that acquired the newspapers in June 2006 from McClatchy Co. for $562 million. The existing lenders are making a competing proposal of $20 million in financing. According to The Philadelphia Inquirer, the Debtor and the senior lenders have agreed to the postponement of the hearing and are "negotiating on financing". The Philadelphia Inquirer also that the Debtor has agreed to the lenders' request that it withdraw a motion to hire a law firm to investigate an alleged unauthorized recording of a meeting that happened before the bankruptcy filing Feb. 22. 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' bankruptcy counsel, while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP is the local counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Debtors listed assets and debts of $100 million to $500 million. PHOENIX COMPANIES: Moody's Downgrades Senior Debt Rating to 'Ba2' ----------------------------------------------------------------- Moody's Investors Service has downgraded the senior debt rating of Phoenix Companies, Inc. to Ba2 from Ba1, and the insurance financial strength rating of the company's life insurance subsidiaries, led by Phoenix Life Insurance Company, to Baa2 from Baa1. The outlook on all the ratings is negative. The rating action concludes the review for possible downgrade that was effected on February 19, 2009. Moody's said the rating downgrade is based primarily on the suspension of sales of Phoenix's products by the company's primary distribution partner, a major property and casualty writer with an extensive nationwide distribution system, as well as the rating agency's expectation that additional distributors may well follow suit. In addition, Phoenix has also announced that a second major distribution partner is also suspending sales of Phoenix's annuity products. The primary distributor suspending sales of Phoenix's products accounted for 27% of the company's life sales, and more than half of all of its annuity sales. Moody's commented that the actions of these two distributors, plus potential similar actions of other Phoenix distributors, means that Phoenix's new sales of both life and annuity products are very likely to substantially decline in 2009 from 2008 levels, and remain at a much lower level for the foreseeable future. Moody's also stated that Phoenix's financial flexibility will be constrained by having only one source of funds available to the holding company, its primary operating company, Phoenix Life. Phoenix Life's capitalization will also be pressured by continuing investment losses in the most challenging investment environment experienced in decades, which will further diminish the financial flexibility of the group. In addition, the company's future earnings will be driven primarily by the runoff of its existing inforce business, and it will need to carefully manage its expenses in the face of reduced future sales. Based on the composition of its investment portfolio, Phoenix is likely to experience near term higher levels of economic losses on its real-estate and structured securities, including RMBS (jumbo- Prime, Alt-A and subprime securities) and CMBS investments given the rating agency's revised losses for these asset classes, as well as rising corporate default rates as a result of the recession. In addition, ongoing rating migration in the investment portfolio will increase required regulatory capital, further depressing the risk-based capital level of Phoenix Life. Moody's stated that the negative outlook reflects the challenges the company will face in reorienting its business strategy in terms of future sales, especially in a difficult business environment. Phoenix will be attempting to implement business strategies for which it may have relatively limited expertise, and for which there are few successful examples. It is also very important for the company's long-term success that it be able to maintain existing client relationships, especially with clients that have relationships that are of substantial size. Somewhat offsetting these negatives, the rating agency said, are Phoenix's significant existing block of permanent life insurance to affluent individuals and businesses, the very long term maturities of its debt obligations, and modest cash needs at the holding company. Moody's stated that given the negative outlook on Phoenix's ratings, it is unlikely that the company's ratings would experience upward rating pressure, but the outlook could return to stable if: 1) Phoenix Life's capital levels are successfully stabilized at approximately current levels, 2) Phoenix Life has a large enough statutory net gain from operations in 2009 to be able to adequately support holding company obligations, 3) persistency rates on the company's existing policies remain consistent with current levels, and 4) gross investment losses in 2009 are less than $125 million. Conversely, the ratings could be downgraded further if: 1) the NAIC RBC level declines and remains below 300%, 2) persistency rates on the company's existing policies substantially decline, or 3) the company's gross investment losses exceed $250 million. These ratings have been downgraded with a negative outlook: * Phoenix Companies, Inc. -- senior unsecured debt rating to Ba2 from Ba1; * Phoenix Life Insurance Company -- insurance financial strength to Baa2 from Baa1, surplus notes to Ba1 from Baa3; * PHL Variable Insurance Company -- insurance financial strength to Baa2 from Baa1. Phoenix is an insurance organization headquartered in Hartford, Connecticut. As of December 31, 2008, Phoenix reported total assets of about $26 billion and shareholder's equity of approximately $865 million. The last rating action on Phoenix occurred on February 19, 2009 when Moody's downgraded Phoenix's ratings and left then on review for possible further downgrade. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to punctually pay senior policyholder claims and obligations. PHOENIX COS: S&P Downgrades Counterparty Credit Rating to 'BB-' --------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its counterparty credit rating on Phoenix Cos. Inc. to 'BB-' from 'BB'. At the same time, S&P lowered its counterparty credit and financial strength ratings on Phoenix Cos. Inc.'s operating subsidiaries -- Phoenix Life Insurance Co., PHL Variable Insurance Co., and AGL Life Assurance Co. to 'BBB-' from 'BBB'. The outlook is negative. "S&P lowered the ratings following Phoenix's announcement that its distribution relationships with State Farm Mutual Automobile Insurance Co. and National Life Group have been suspended pending a review," said Standard & Poor's credit analyst Adrian Pask. "These distribution relationships accounted for more than two- thirds of annuity sales and one-third of annualized life insurance sales in 2008." "The suspension of sales from these key distribution relationships likely will further weaken the companies' competitive position," said Mr. Pask. Although Phoenix has plans to enter into private labeling partnerships, execution risks are inherent in this strategy and in the financial arrangement, with regards to how income is earned and the overall level of income. S&P believes that private labeling partnerships likely will not replace the suspended distribution relationships. Following the distribution announcements, Standard & Poor's expects that surrender activity may increase in 2009, particularly on Phoenix's annuity products. The reduction in sales likely will reduce the strain associated with writing new business and likely will boost both statutory earnings and organic capital generation in 2009. PLANET ORGANIC: In Talks With Lenders for Covenant Relief --------------------------------------------------------- Planet Organic Health Corp. disclosed that pursuant to a Term Loan Agreement dated November 30, 2007, it has breached a debt ratio covenant for the quarter ended December 31, 2008. Planet is in continuing discussions with its lenders with respect to the renegotiation of its debt covenants and anticipates that any events of default will be waived by the lenders, although there is no certainty of this and the revised terms of any new debt covenants are unknown at this time. Planet said it is current with all short term and long term debt obligations to its lenders. Last week, Planet announced financial results for the second quarter ended December 31, 2008. Sales for the quarter were $32.1 million compared to $27.5 million in 2007, an increase of 16.8%. EBITDASX was $1.3 million compared to $1.8 million in 2007, a decrease of $500,000, and cash flow from operations before non- cash working capital adjustments decreased by only $200,000 from 2007. Summary of Q2 Fiscal 2009 Financial Results Fiscal 2009 Fiscal 2008 ----------- ----------- Sales $32,139,724 $27,505,473 Cost of goods sold $19,630,528 $16,344,749 Gross profit $12,803,138 $11,381,766 Operating expenses $15,632,164 $11,110,086 EBITDASX $1,331,640 $1,842,030 (Loss) income before tax ($2,829,026) $271,680 Tax (recovery) ($12,700) $170,000 Net (loss) income ($2,816,326) $101,680 Cash flow from operations (before non-cash working capital adjustments) $1,029,536 $1,236,898 "I am pleased with our EBITDASX under the current extreme economic environment. Pre-tax losses were primarily driven by foreign exchange loss ($2,388,677) on conversion of our U.S. denominated debt, which is a non-cash item. Our largest divisions, Planet Organic Market and Mrs Green's both continue to show positive same store sales growth, which is extraordinary in this environment" reports Darren Krissie, CFO. Based in Edmonton, Planet Organic Health Corp. (CA:POH) -- http://www.planetorganichealthcorp.com/-- is a natural products industry company, comprising manufacturing, distribution and retail. Planet Organic is listed on the TSX Venture Exchange as a Tier One company. Planet Organic operates 10 natural food supermarkets throughout Canada under the Planet Organic Market banner and eleven natural food supermarkets in the U.S. under the Mrs Green's Natural Markets banner. The company also operates 43 natural health outlets under the Sangster's Health Centre banner and eight natural health outlets under the Healthy's and Planet Organic Living banners. Another Planet Organic division, Trophic Canada, is the country's leading manufacturer of natural supplements. The company has a total of 61 stores throughout Canada and eleven in the U.S. and has more than 650 employees. POLAROID CORP: Court Sets March 30 Auction for All Assets --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota has approved the auction and bidding procedures for the sale of all the properties, assets and rights of Polaroid Corp., et al., to PHC Acquisitions, LLC, the proposed purchaser, subject to higher or better offers. PHC will be buying all of Polaroid's intellectual property rights and the "Polaroid" name and brand, and other assets related to the Polaroid business. Pursuant to an Asset Purchase Agreement by and among the Debtors and the proposed purchaser, dated as of January 24, 2009, PHC Acquisitions, LLC has offered to purchase the Debtor's assets for $42,000,000 in cash and the assumption of certain liabilities, free and clear of all liens, claims, and encumbrances. PHC Acquisitions is an affiliate of Genii Capital, S.A., a Luxembourg based private equity firm. The Court also approved the payment of a break-up fee of $1,200,000, an expense reimbursement of up to $500,000 and other Protections to the PHC, as stalking horse bidder. In the case of multiple bids, the Court has scheduled an auction for March 30, 2009, at 9:00 a.m. (prevailing Central Time) at the offices of Lindquist & Vennum PLLP in Minneapolis, Minnesota. The deadline for the submission of competing bids will be March 26, 2009, at 5:00 p.m. (prevailing Central Time). The Sale Hearing will be held on March 31, 2009, at 1:30 p.m. (prevailing Central Time). Objections, if any, to the sale, must be in writing and filed with the clerk of the Bankruptcy Court on or before 1:30 p.m. (prevailing Central Time) and served by delivery not later than March 26, 2009, or filed and served by mail not later than March 23, 2009, and served upon the Notice Parties. Bids for the Acquired Assets or substantially all of the assets of Polaroid must be for a minimum bid equal to or greater than the sum of (i) the purchase price set forth in the Purchase Agreement, (ii) the Expense Reimbursement, (iii) the Break-Up Fee; and (iv) $150,000. A good faith deposit equal to 10% of the Initial Incremental Bid Amount will be submitted, which deposit will be held in escrow until the selection of the Successful Bidder(s) and the Back-Up Bidder(s), as to all other bidders, or as to the Back-Up Bidder(s), 48 hours after the Back-Up Bidder(s) is terminated. A full-text copy of the Court's order approving the auction and bidding procedures is available at: http://bankrupt.com/misc/PolaroidCorp.BiddingProceduresOrder.pdf About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. POLAROID CORP: Ritchie Capital Calls Suit 'Baseless, Malicious' --------------------------------------------------------------- Ritchie Capital Management, L.L.C. and related companies filed a counterclaim against Polaroid Corporation asking the bankruptcy court to declare that Ritchie's security interests in certain Polaroid trademarks and in certain pledged promissory notes are legitimate, valid, and enforceable. The counterclaim asserts that Ritchie has a valid agreement with Polaroid that granted security interests in Polaroid's trademarks in Brazil, China and India. Polaroid had filed a lawsuit disputing the validity of Ritchie's claims. Polaroid is owned by Petters Group Worldwide, which is owned by Thomas Petters, who has been charged with fraud and related crimes. In its counterclaim, Ritchie says that the Polaroid lawsuit "irresponsibly suggest(s), among other things, that Ritchie was aware of the fraudulent scheme perpetrated by Petters and tried to salvage its own loans at the expense of other creditors." Indeed, Polaroid's complaint "is rife with groundless allegations that irresponsibly insinuate that Ritchie had knowledge of, or worse, involvement in, the fraud perpetrated by Petters," the Ritchie counterclaim asserts, citing numerous portions of the Polaroid complaint. "These outrageous allegations are baseless, irresponsible and malicious. Polaroid does not, because it cannot, directly allege that Ritchie was complicit in the fraud committed by Petters. Polaroid also does not, because it cannot, allege that Ritchie was aware of the fraud committed by Petters - or even suggest any means by which Ritchie could have been made aware of a fraud," the counterclaim says. The implication that Ritchie was aware of the fraudulent scheme "is irresponsible and disingenuous for a number of reasons, but most notably because Mary Jeffries, PGW's President at the time and Polaroid's current CEO, actively participated in the negotiations that led to the transactions Polaroid now seeks to avoid, and she knows better," the Ritchie counterclaim states. "Such suggestions and implications are not merely false, they are a malicious attempt to damage Ritchie's reputation," the counterclaim says. Furthermore, Ritchie's counterclaim indicates that Ritchie has "grave concerns" that the "Polaroid Complaint is representative of the manner in which this proceeding (and . . . the related bankruptcy proceedings) will be conducted." In a separate statement, the company said it has grave concerns because the Polaroid complaint "needlessly consumes not only the time and resources of the Bankruptcy Court, Polaroid and Ritchie, but also the resources of the estate, and thus will ultimately reduce the amounts recovered by all creditors." "Ritchie's concerns extend further," the company continued. "In particular, the Polaroid complaint appears to be a weapon used by Douglas Kelley, receiver for Polaroid, in his efforts to silence and to retaliate and seek retribution against Ritchie for Ritchie's good faith challenges to the legitimacy of Kelley's receiverships and his installation as trustee in the bankruptcies of several of the Petters entities. These efforts by Kelley not only unfairly hinder Ritchie's efforts to protect the interests of the investors in its managed funds, but also serve to perpetuate the receiverships." "There is a strong motivation to perpetuate the receiverships -- they are enormously lucrative not only for the receiver, but also for the army of attorneys representing the receiver and the bankrupt estates of PGW, PCI, Polaroid and the other Petters debtors," the company said. "Those benefits, however, come at a great detriment and a huge cost to the victims of the Ponzi scheme and the creditors of all of the Petters entities - Kelley's efforts are likely to greatly diminish the prospects for meaningful recovery by the creditors of legitimate businesses owned by Petters and the victims of Petters' alleged Ponzi scheme." "Based on the approximately $2.6 million of legal and other professional fees that appear to have been charged to the debtors for work performed through the end of January 2009, Ritchie estimates that the administration of the receivership and the bankruptcy cases is likely to cost between $75 million and $100 million in professional fees alone during the course of the several years that Kelley has predicted it will take to resolve all of the cases," the company continued. "If Kelley continues to manage the receiverships in the way in which they have been managed thus far, the combination of high legal and professional expenses for the estates and the inability or unwillingness of Kelley to undertake necessary and appropriate actions as receiver will result in little or no recovery by creditors of legitimate Petters companies. In this regard, accurate projections of future expenses of the cases are made more difficult by the stark contrast between most Chapter 11 cases, which are characterized by a high degree of transparency, and the opacity of Kelley's handling of the current cases. For example, Kelley has never disclosed the rates he is charging for his professional services as receiver, even though various interested parties (including Ritchie) have requested such disclosure," the company added. "Ritchie strongly believes that its security interests are valid and enforceable and that it is entitled to the full benefit of such security interests in the Polaroid bankruptcy proceedings," the company concluded. As reported by the Troubled Company Reporter on February 17, 2009, Polaroid sued U.S. hedge funds Acorn Capital Group LLC and Ritchie Capital over claims they fraudulently acquired liens against Polaroid's assets before it went bankrupt. According to Erik Larson at Bloomberg News, Polaroid sought Chapter 11 protection in December after Thomas Petters, the founder of Polaroid owner Petters Group Worldwide LLC, was charged with running a $3 billion Ponzi scheme. Acorn had loaned Petters at least $281 million, while Ritchie invested more than $189 million, court records show. On November 1, 2004, Acorn entered into a Credit Agreement with Petters Group affiliate, PAC Funding, LLC, pursuant to which it agreed to loan PAC $200 million. The Credit Agreement was subsequently modified on several occasions, ultimately increasing the loan commitment to $300 million. PAC in turn used a portion of the funds advanced by Acorn to make at least two loans to Polaroid for a total of $25 million for Polaroid to use in its business operations. To secure the amounts due under the Credit Agreement, Polaroid executed and delivered to Acorn a Security Agreement pursuant to which Polaroid granted Acorn a security interest in its inventory, accounts and U.S., Mexican and Canadian trademarks. The Security Agreement secures repayment of all amounts advanced to PAC under the Credit Agreement, which currently exceeds $276 million. However, according to Polaroid, Acorn discovered early last year that electronics and other assets securing its loans to Petters may not have existed and arranged instead to secure them with Polaroid's assets, according to an adversary proceeding filed in the U.S. Bankruptcy Court for the District of Minnesota. Polaroid, Bloomberg said, alleges that Petters and Acorn "orchestrated a plan targeted at securing the value of Polaroid in an attempt to shore up, conceal and cover millions of dollars in losses," Similar claims were made against Ritchie, which last year issued Petters securities in the form of promissory notes, Polaroid claims, Bloomberg said. Ritchie said the outstanding balance on the notes as of October is more than $260 million, according to the complaint. "At no time when the loans were advanced, and the liens to secure such loans granted, did the Ritchie entities have any knowledge that Petters and any related corporations were engaged in any fraudulent conduct," Ritchie spokesman Justin Meise said in an e-mailed statement to Bloiomberg. About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. About Ritchie Capital Ritchie Capital is a diversified alternative asset management firm established in 1997 with interests in hedge funds, private equity, venture capital, insurance, energy and real estate and with offices in Lisle, Illinois; New York; and Menlo Park, California. PRECISION PARTS: No Rival Bids for Cerion's $18.5MM Offer --------------------------------------------------------- Precision Parts International Services Corp. has asked the U.S. Bankruptcy Court for the District of Delaware to approve the sale of its business to Cerion LLC for $18.5 million, Bloomberg's Bill Rochelle said. Precision Parts, after it signed a deal with Cerion, entertained competing bids for its business, pursuant to the Court-0approved bid procedures. However, no bids were received and thus the scheduled auction was cancelled. 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. PROPEX INC: Court Sets March 23 Auction for All Assets ------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District Tennessee in Chattanooga approved procedures for a March 23 auction for substantially all assets of Propex Inc. Propex has signed a pact to sell its business to an affiliate of Wayzata Investment Partners LLC for $61.56 million in cash, absent higher and better bids at the auction. Wayzata, also the DIP lender, has provided a $65 debtor-in-possession loan for Propex. The bid procedures contemplate this schedule: -- competing bids will be due March 18. -- an auction will be held March 23 if competing bids are received. -- a hearing to consider the sale will be held on March 24. According to Bloomberg's Bill Rochelle, the procedures were modified at a hearing last week in light of objection from BNP Paribas, the agent for secured lenders. Propex, Bloomberg relates, must confer with BNP on whether to accept a bid unless the bank decides to participate in the auction as a bidder. The official committee of unsecured creditors of Propex sued BNP in September, hoping to knock out a security interest covering $230 million in debt when the reorganization began in January 2008. BNP had said that while a sale of Propex should be completed, it said that the procedures, as originally proposed, chills bidding. BNP opposed these provisions: (a) the prohibition on credit bidding, (b) the inclusion of an unnecessary break-up fee, (c) the prohibition on bids for less than all of the Debtors' assets, (d) the cross-default provisions with respect to the DIP Facility, and (e) the reliance upon a stalking horse asset purchase agreement that does not provide potential bidders with certainty as to the purchase price they are bidding against or clarity as to which assets and liabilities are being taken so as to allow them to reasonably determine such purchase price themselves- do not serve either of these purposes. Aside from the auction schedule, the approval of a break-up fee for the Wayzata affiliate, the Court's order approving the Bid Procedures provides: -- The Debtors will have the right to reject any and all Bids that they believe in their reasonable discretion, and after consultation with BNP and the Creditors' Committee, , do not comply with the Bid Procedures. However, in the event BNP, as agent, becomes a Potential Bidder or Qualified Bidder, the Debtors shall no longer include BNP in any consultations as set forth in the Bid Procedures. -- The Proposed Purchaser (Xerxes, Wayzata's affiliate) is authorized to make one or more overbids at the auction. Pursuant to Sec. 363(k) of the Bankruptcy Code, no other credit bid by any party will be permitted, unless otherwise ordered by the Court after notice and hearing The Bid Procedures also provide that the Debtors and their advisors, after consultation with BNP and the Creditors Committee, will, in their sole discretion: (a) select the qualified bidders; (b) coordinate the efforts of bidders in conducting their due diligence investigations; (c) receive offers from qualified bidders; and (d) negotiate any offers made to purchase the Assets. A copy of the Bid Procedures is available for free at: http://bankrupt.com/misc/Propex_Bid_Protocol.pdf Wayzata APA Propex Inc. has signed a deal to sell substantially all of their assets to Xerxes Operating Company, LLC and Xerxes Foreign Holdings Corp. for $61,560,000, free and clear of all liens, claims and encumbrances, and subject to higher and better bids. Xerxes Operating and Xerxes Foreign Holdings are entities majority-owned by Wayzata Opportunities Fund II LP, an affiliate of the DIP Agent, Wayzata Investment Partners LLC. The salient terms of the parties' Asset Purchase Agreement dated February 17, 2009 are: (1) The Assets to be sold by the Debtors to Xerxes include all of their cash, accounts receivable, inventory, real property, facility leases, tangible real property, equipment leases, intellectual property, rights under contracts and benefit plans, books and records, permits and licenses, tax refunds and rebates. (2) Xerxes will also acquire all equity securities of every foreign subsidiary of the Debtors, and all obligations of every foreign subsidiary to the Debtors. (3) The aggregate purchase price for the Assets to be sold is $61,560,000, subject to certain adjustments. The estimated net asset value refers to the Debtors' good faith estimate of the Net Asset Value as of the Closing Date. If the Estimated Net Asset Value is less than the Baseline Net Asset Value, the Purchase Price will be reduced by an amount equal to the amount by which the Estimated Net Asset Value is less than the Baseline Net Asset Value. If the Estimated Net Asset Value is greater than the Baseline Net Asset Value, the Purchase Price will be increased by an amount equal to the amount by which the Estimated Net Asset Value is greater than the Baseline Net Asset Value. (4) The sale of the Assets will be on an "as is, where is" basis and without representations or warranties of any kind. (5) The Debtors' assets that are excluded in the proposed sale are: -- the Carve Out Cash Amount, which refers to the $4,200,000 to be drawn by the Debtors from the DIP Facility; -- Avoidance claims or causes of action arising under the Bankruptcy Code or applicable state law; -- certain real property, facility leases, equipment leases, contracts; and -- equity securities of the Debtors (6) Xerxes will assume certain of the Debtors' contracts and all obligations under those contracts, including any cure amount on those contracts. Xerxes will also assume: -- all unpaid postpetition trade payable incurred in the ordinary course of business; -- all obligations due to the Debtors' employees, including wages, bonuses, commissions, unused vacation and sick leaves; -- all warranty claims of the Debtors' customers; and -- unpaid real property taxes of up to $2,500,000. (7) The proposed sale is subject to higher and better bids. (8) The Debtors will pay Xerxes a $1,846,800 break-up fee if they consummate a sale with a party or entity other than Xerxes. A copy of the executed Xerxes APA is available for free at: http://bankrupt.com/misc/Propex_Xerxes_APA.pdf About Propex Inc. Headquartered in Chattanooga, Tennessee, Propex Inc. -- http://www.propexinc.com/-- produces geosynthetic, concrete, furnishing, and industrial fabrics and fiber. It also produces primary and secondary carpet backing. Propex operates in North America, Europe, and Brazil. The company and its debtor-affiliates filed for Chapter 11 protection on Jan. 18, 2008 (Bankr. E.D. Tenn. Case No. 08-10249). The Debtors have selected Edward L. Ripley, Esq., Henry J. Kaim, Esq., and Mark W. Wege, Esq. at King & Spalding, in Houston, Texas, to represent them. The Official Committee of Unsecured Creditors have tapped Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld, LLP, in New York, to be its counsel. Propex Inc., and its affiliates delivered to the Court a Joint Plan of Reorganization and Disclosure Statement on October 29, 2008. Propex's exclusive period to solicit acceptances of the Plan expires Dec. 29, 2008. As of June 29, 2008, the Debtors' balance sheet showed total assets of US$562,700,000, and total debts of US$551,700,000. The Debtors have filed their Disclosure Statement and Plan of Reorganization on October 29, 2008. Bankruptcy Creditors' Service, Inc., publishes Propex Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by Propex Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) QIMONDA NA: U.S. Trustee Form Seven-Member Creditor Committee ------------------------------------------------------------- Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors of Qimonda North America Corp. and Qimonda Richmond LLC. The members of the Committee are: 1) Applied Materials, Inc. Attn: Brad Novak Laura Lee 3050 Bowers Avenue Mailstop 2062 Santa Clara, CA 95051 Tel: (804) 236-5551 Fax: (804) 236-5934 2) Sumco USA Sales Corporation Attn: Mark T. Dobbins 19801 N. Tatum Blvd. Phoenix, AZ 85050 Tel: (480) 473-6031 Fax: (480) 473-6045 3) Tokyo Electron Limited Attn: Zoltan A. Papp Ausuka Biz Tower 3-1 Ausuka Schume Minato-Ku, Tokyo, Japan, 107-6325 Tel: (512) 656-8561 Fax: (512) 424-1534 4) Siltronic Corporation Attn: Frank Reinhardt 7200 NW Front Avenue Portland, OR 97210 Tel: (503) 219-7516 Fax: (503) 219-7596 5) Bonnie Lee Wright 5440 Ridgewood Drive New Kent, VA 23124 Tel: (804) 932-5192 6) JSR Micro, Inc. Attn: Mark Dennen 1280 N. Mathilda Ave. Sunnyvale, CA 94089 Tel: (408) 543-8800 Fax: (408) 543-8964 7) Air Products and Chemicals, Inc. Attn: Lynne A. Richardson 7201 Hamilton Blvd. Allentown, PA 18195 Tel: (610) 481-3077 Fax: (610) 706-5869 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 Qimonda AG Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG, filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond LLC, filed for Chapter 11 before the Delaware bankruptcy court on February 20 (Bankr. D. Del., Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton & Finger PA, has been tapped as counsel. In its bankruptcy petition, Qimonda estimated assets and debts of more than S$1 billion. QUIGLEY CO: Allowed to Use Cash Collateral Until Plan Hearing ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has authorized Quigley Co. to continue using cash until a hearing after June 5 for the confirmation of its Chapter 11 plan. According to Bloomberg, citing the Court-approved disclosure statement, the Plan provides for the creation of trusts to take over responsibility of asbestos claim. The Plan would shield New York-based Pfizer from asbestos liabilities related to its non- operating subsidiary. Through the plan, including contributions from Pfizer, $757 million would be distributed. The Plan has been accepted by 86% of creditors. Among those who are not supportive of the Plan are certain asbestos claimants. An ad hoc committee of asbestos claimants contends Pfizer is improperly using Quigley's bankruptcy to avoid its own liability, Bloomberg's Bill Rochelle said. The committee, however, lost a motion they filed in U.S. District Court asking to have the district judge and the bankruptcy judge hold a joint hearing on confirmation of the plan. About Quigley Company Quigley Company, Inc., a division of Pfizer Inc., sold asbestos- containing insulation products until the early 1970s. Quigley filed for protection under chapter 11 on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) in order to implement a proposed global resolution of all pending and future asbestos-related personal injury liabilities. Asbestos victims and Pfizer have been negotiating a settlement deal which calls for Pfizer to pay $430 million to 80% of existing plaintiffs. It will also place an additional $535 million into an asbestos settlement trust that will compensate future plaintiffs as well as the remaining 20% of current plaintiffs with claims against Pfizer and Quigley. The compensation deal is worth $965 million all up. Of that $535 million, $405 million is in a 40-year note from Pfizer, while $100 million will come from insurance policies. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. RESERVE PRIMARY FUND: Sued by Deutsche for Repayment of $72.2-Mil. ------------------------------------------------------------------ Deutsche Bank AG has sued Reserve Primary Fund in the New York State Supreme Court in Manhattan for failing to repay $72.2 million of a $500 million redemption on September 15, the day Lehman Brothers Holdings Inc. filed for bankruptcy, Carla Main of Bloomberg reported. According to the report, Deutsche Bank alleged that it made two separate redemptions totaling $500 million on the morning of Sept. 15 which were confirmed that day orally by the fund's staff. Reserve Fund announced at the close of business trading that day that the fund was "not negatively impacted" by what it claimed was a "small exposure to Lehman Brothers," Deutsche Bank said in the complaint. The following day, the fund said its exposure to Lehman was far greater because of losses on debt issued by bankrupt Lehman, and its stock fell below $1 a share. Deutsche Bank said under terms of statements from the fund that it was entitled to a price of $1 a share. Deutsche is asserting, among other claims, breach of contract, citing that it is entitled to payment of redemption proceeds. About the Primary Fund The Primary Fund is a large money market fund whose parent helped invent that investment. It is operated by, the Reserve Fund and Reserve Management Co. The Reserve is a partner committed to helping both businesses and individual investors. The Reserve has been a leading innovator in cash and cash-related products for the brokerage, banking and retail direct marketplace for nearly four decades. In addition to creating the industry's first FDIC-insured sweep program, it offers retail direct investors up to $2.5 million in FDIC insurance in a single account. RITZ CAMERA: Auction for Boater's On; 400 Camera Stores Next ------------------------------------------------------------ Ritz Camera Centers Inc., received authorization from the U.S. Bankruptcy Court for the District of Delaware to hold a March 17 auction for the assets of the 130-store Boater's World Marine Centers. The Court will seek approval of the results of the auction on March 19. According to Bloomberg's Bill Rochelle, the company told the judge at the hearing on the Boaters World auction that it also intends to close 400 of its 800 stores. If the judge agrees at a March 19 hearing, the auction where liquidators can bid for the right to conduct going-out-of-business sales will be held April 1, Bloomberg said. About Ritz Camera Centers Inc Headquartered in Beltsville, Maryland, Ritz Camera Centers Inc. -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. The company filed for Chapter 11 protection on February 22, 2009 (Bankr. D. Del. Case No. 09-10617). Karen M. McKinley, Esq., and Norman L. Pernick, Esq., at Cole Scholtz Meisel Forman Leonard, P.A., represent the Debtor in its restructuring efforts. The Debtor proposed Thomas & Libowitz PA as corporate counsel; FTI Consulting Inc. t/a FTI Palladium Partners as financial advisor; and Kurtzman Carson Consultants LLC as claims agent. When the Debtor filed for protection from its creditors, it listed assets and debts between $100 million and $500 million. RITCHIE CAPITAL: Polaroid Suit 'Baseless' and 'Malicious' --------------------------------------------------------- Ritchie Capital Management, L.L.C. and related companies filed a counterclaim against Polaroid Corporation asking the bankruptcy court to declare that Ritchie's security interests in certain Polaroid trademarks and in certain pledged promissory notes are legitimate, valid, and enforceable. The counterclaim asserts that Ritchie has a valid agreement with Polaroid that granted security interests in Polaroid's trademarks in Brazil, China and India. Polaroid had filed a lawsuit disputing the validity of Ritchie's claims. Polaroid is owned by Petters Group Worldwide, which is owned by Thomas Petters, who has been charged with fraud and related crimes. In its counterclaim, Ritchie says that the Polaroid lawsuit "irresponsibly suggest(s), among other things, that Ritchie was aware of the fraudulent scheme perpetrated by Petters and tried to salvage its own loans at the expense of other creditors." Indeed, Polaroid's complaint "is rife with groundless allegations that irresponsibly insinuate that Ritchie had knowledge of, or worse, involvement in, the fraud perpetrated by Petters," the Ritchie counterclaim asserts, citing numerous portions of the Polaroid complaint. "These outrageous allegations are baseless, irresponsible and malicious. Polaroid does not, because it cannot, directly allege that Ritchie was complicit in the fraud committed by Petters. Polaroid also does not, because it cannot, allege that Ritchie was aware of the fraud committed by Petters - or even suggest any means by which Ritchie could have been made aware of a fraud," the counterclaim says. The implication that Ritchie was aware of the fraudulent scheme "is irresponsible and disingenuous for a number of reasons, but most notably because Mary Jeffries, PGW's President at the time and Polaroid's current CEO, actively participated in the negotiations that led to the transactions Polaroid now seeks to avoid, and she knows better," the Ritchie counterclaim states. "Such suggestions and implications are not merely false, they are a malicious attempt to damage Ritchie's reputation," the counterclaim says. Furthermore, Ritchie's counterclaim indicates that Ritchie has "grave concerns" that the "Polaroid Complaint is representative of the manner in which this proceeding (and . . . the related bankruptcy proceedings) will be conducted." In a separate statement, the company said it has grave concerns because the Polaroid complaint "needlessly consumes not only the time and resources of the Bankruptcy Court, Polaroid and Ritchie, but also the resources of the estate, and thus will ultimately reduce the amounts recovered by all creditors." "Ritchie's concerns extend further," the company continued. "In particular, the Polaroid complaint appears to be a weapon used by Douglas Kelley, receiver for Polaroid, in his efforts to silence and to retaliate and seek retribution against Ritchie for Ritchie's good faith challenges to the legitimacy of Kelley's receiverships and his installation as trustee in the bankruptcies of several of the Petters entities. These efforts by Kelley not only unfairly hinder Ritchie's efforts to protect the interests of the investors in its managed funds, but also serve to perpetuate the receiverships." "There is a strong motivation to perpetuate the receiverships -- they are enormously lucrative not only for the receiver, but also for the army of attorneys representing the receiver and the bankrupt estates of PGW, PCI, Polaroid and the other Petters debtors," the company said. "Those benefits, however, come at a great detriment and a huge cost to the victims of the Ponzi scheme and the creditors of all of the Petters entities - Kelley's efforts are likely to greatly diminish the prospects for meaningful recovery by the creditors of legitimate businesses owned by Petters and the victims of Petters' alleged Ponzi scheme." "Based on the approximately $2.6 million of legal and other professional fees that appear to have been charged to the debtors for work performed through the end of January 2009, Ritchie estimates that the administration of the receivership and the bankruptcy cases is likely to cost between $75 million and $100 million in professional fees alone during the course of the several years that Kelley has predicted it will take to resolve all of the cases," the company continued. "If Kelley continues to manage the receiverships in the way in which they have been managed thus far, the combination of high legal and professional expenses for the estates and the inability or unwillingness of Kelley to undertake necessary and appropriate actions as receiver will result in little or no recovery by creditors of legitimate Petters companies. In this regard, accurate projections of future expenses of the cases are made more difficult by the stark contrast between most Chapter 11 cases, which are characterized by a high degree of transparency, and the opacity of Kelley's handling of the current cases. For example, Kelley has never disclosed the rates he is charging for his professional services as receiver, even though various interested parties (including Ritchie) have requested such disclosure," the company added. "Ritchie strongly believes that its security interests are valid and enforceable and that it is entitled to the full benefit of such security interests in the Polaroid bankruptcy proceedings," the company concluded. As reported by the Troubled Company Reporter on February 17, 2009, Polaroid sued U.S. hedge funds Acorn Capital Group LLC and Ritchie Capital over claims they fraudulently acquired liens against Polaroid's assets before it went bankrupt. According to Erik Larson at Bloomberg News, Polaroid sought Chapter 11 protection in December after Thomas Petters, the founder of Polaroid owner Petters Group Worldwide LLC, was charged with running a $3 billion Ponzi scheme. Acorn had loaned Petters at least $281 million, while Ritchie invested more than $189 million, court records show. On November 1, 2004, Acorn entered into a Credit Agreement with Petters Group affiliate, PAC Funding, LLC, pursuant to which it agreed to loan PAC $200 million. The Credit Agreement was subsequently modified on several occasions, ultimately increasing the loan commitment to $300 million. PAC in turn used a portion of the funds advanced by Acorn to make at least two loans to Polaroid for a total of $25 million for Polaroid to use in its business operations. To secure the amounts due under the Credit Agreement, Polaroid executed and delivered to Acorn a Security Agreement pursuant to which Polaroid granted Acorn a security interest in its inventory, accounts and U.S., Mexican and Canadian trademarks. The Security Agreement secures repayment of all amounts advanced to PAC under the Credit Agreement, which currently exceeds $276 million. However, according to Polaroid, Acorn discovered early last year that electronics and other assets securing its loans to Petters may not have existed and arranged instead to secure them with Polaroid's assets, according to an adversary proceeding filed in the U.S. Bankruptcy Court for the District of Minnesota. Polaroid, Bloomberg said, alleges that Petters and Acorn "orchestrated a plan targeted at securing the value of Polaroid in an attempt to shore up, conceal and cover millions of dollars in losses," Similar claims were made against Ritchie, which last year issued Petters securities in the form of promissory notes, Polaroid claims, Bloomberg said. Ritchie said the outstanding balance on the notes as of October is more than $260 million, according to the complaint. "At no time when the loans were advanced, and the liens to secure such loans granted, did the Ritchie entities have any knowledge that Petters and any related corporations were engaged in any fraudulent conduct," Ritchie spokesman Justin Meise said in an e-mailed statement to Bloiomberg. About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com-- makes and sells films, cameras, and other imaging products. The company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Dealware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on Dec. 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. James A. Lodoen, Esq., at Lindquist & Vennum P.L.L.P, is the Debtors' counsel. According to the company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. The founder of Petters Group and certain associates are currently under investigation for alleged acts of fraud that have compromised the financial condition of Polaroid and other entities owned by Petters Group. The company and its leadership team are not subjects of the ongoing investigation involving Petters Group. About Ritchie Capital Ritchie Capital is a diversified alternative asset management firm established in 1997 with interests in hedge funds, private equity, venture capital, insurance, energy and real estate and with offices in Lisle, Illinois; New York; and Menlo Park, California. ROCK OF AGES: Obtains Covenant Waiver From CIT Group ---------------------------------------------------- Rock of Ages Corporation reports that, as a result of non-cash charges, at December 31, 2008, it was not in compliance with certain covenants of its lending agreement with The CIT Group. The company has obtained a waiver from CIT. In connection with the wavier, the company's interest rate structure has been changed. The prime election of the revolver and term loans of the credit agreement increased by 3% and 3.25%, respectively, and the Libor elections are increasing by 2% on the revolver and 2.25% on the term, with a Libor floor of 2%. On Tuesday, Rock of Ages reported a net loss from continuing operations for 2008 of $2,054,000, which included a $3,930,000 charge for the write-off of second-grade granite block inventory at its three export quarries, the result of increased ocean and inland freight rates and changing economic conditions, and a $1,348,000 write-down of the company's former headquarters building that was taken out of service when the company consolidated its offices in Barre, Vermont. The company said revenue for 2008 was $55,869,000 compared to revenue of $55,545,000 for 2007. Chief Executive Officer Donald Labonte said that no additional inventory write-downs related to second-grade granite block inventory at its export quarries or the company's former headquarters building are anticipated in the future. For the fourth quarter of 2008, the loss from continuing operations was $2,677,000. Revenue for the fourth quarter of 2008 was $16,560,000 compared to revenue of $17,791,000 for the fourth quarter of 2007. Rock of Ages generated approximately $2.2 million of cash from operations in 2008, and reduced its total debt by about $8 million during the year to $21.8 million at December 31, 2008 compared to $29.8 million at December 31, 2007. "We achieved our primary operating goals for 2008," said CEO Labonte. "Despite a $3 million decrease in sales of higher-margin mausoleums in 2008 versus 2007 due to the recession (partially offset by sales of $2.5 million to formerly owned retail outlets), we delivered an 11% increase in divisional operating earnings (net of the inventory write-down), lowered unallocated corporate overhead by 30%, and reduced total interest expense by 45% compared to 2007. "Looking forward, we remain focused on reducing operating costs and improving productivity in both our quarrying and manufacturing operations. Planned capital spending this year will be below depreciation expense. While the recession makes it difficult to project 2009 revenue, we expect meaningful additional debt reduction in 2009," CEO Labonte said. The decrease in shareholders' equity at December 31, 2008, compared to December 31, 2007, primarily reflected the decrease in the market value of pension assets during the year and the resulting increase in the unfunded pension liability of approximately $5.7 million. Based in Barre, Vermont, Rock of Ages Corporation -- http://www.RockofAges.com-- is the largest integrated granite quarrier and manufacturer of finished granite memorials and granite blocks for memorial use in North America. ROUSE COMPANY: Fitch Keeps Negative Watch on 'C' Issuer Rating -------------------------------------------------------------- Rouse Company LP bondholders are likely to see term reductions due to the nonpayment of principal at maturity on two series of notes maturing in the coming months, according to Fitch Ratings, which has maintained the Rating Watch Negative status on Rouse's 'C' Issuer Default Rating and downgraded the IDR and outstanding debt ratings of General Growth Properties to 'RD' from 'C'. Fitch has also removed GGP from Rating Watch Negative. An 'RD' rating denotes 'Restricted Default' status. The downgrade of GGP is consistent with Fitch's updated definitions for its rating scales for entities at different stages of distress. The rating downgrade follows General Growth Properties' entry into multiple forbearance agreements upon a payment default with its syndicates of lenders for its revolving credit facility and term loan entered into in 2006 and its secured mortgage loan facility entered into in 2008. 'RD' ratings indicate an issuer that has experienced an uncured payment default on a material financial obligation but has otherwise not entered into bankruptcy filings, administration, receivership, liquidation or other formal winding- up procedures. The downgrade in GGP's rated obligations to 'C/RR5' from 'CC/RR5' is consistent with Fitch's revised Recovery Ratings matrix for IDRs in the low speculative category. Fitch has maintained Rouse's 'C' IDR on Rating Watch Negative based on GGP's announcement yesterday that Rouse launched a consent solicitation to holders of Rouse's unsecured notes to forbear from exercising remedies with respect to various payment and other defaults under the unsecured notes through Dec. 31, 2009. Fitch views this consent solicitation as a coercive debt exchange, as it would result in a material reduction in terms to bondholders due to the nonpayment of principal at maturity with regard to notes maturing in April and May 2009, and nonpayment of cash interest on all of Rouse's unsecured notes until at least Dec. 31, 2009. Absent the consent solicitation, there is a high probability of a Rouse bankruptcy or insolvency over the near term, resulting in the consent solicitation being coercive (de facto necessary even if voluntary). The downgrade in Rouse's rated obligations to 'C/RR5' from 'CC/RR5' is consistent with Fitch's revised RRs matrix for IDRs in the low speculative category. GGP is a Chicago-based real estate investment trust engaged in acquiring, developing, renovating and managing regional malls in major and middle markets throughout the United States. GGP also has investments in commercial office buildings and community development projects purchased in connection with the Rouse acquisition in 2004. As of Dec. 31, 2008, GGP owned interests in over 200 million square feet of properties and had $33.8 billion in total undepreciated book assets. Fitch has taken these rating actions: General Growth Properties, Inc. -- IDR to 'RD' from 'C'. GGP Limited Partnership -- IDR to 'RD' from 'C'; -- Revolving credit facility to 'C/RR5' from 'CC/RR5'; -- Term loan to 'C/RR5' from 'CC/RR5'; -- Exchangeable senior notes to 'C/RR5' from 'CC/RR5'; The indicative rating on GGP Limited Partnership's perpetual preferred stock remains at 'C/RR6' The Rouse Company LP -- IDR maintained at 'C'; -- Senior unsecured notes to 'C/RR5' from 'CC/RR5'. The Rouse Company LP IDR remains on Rating Watch Negative pending resolution of the consent solicitation, which expires on March 16, 2009. RTL GRADING: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: RTL Grading Co., Inc. P. O. Box 955 Blythewood, SC 29016 Bankruptcy Case No.: 09-01712 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court District of South Carolina (Columbia) Judge: Helen E. Burris Debtor's Counsel: Robert Frank Anderson, Esq. P.O. Box 76 Columbia, SC 29202-0076 Tel: (803) 252-8600 Fax: (803)256-0950 Email: firm@andersonlawfirm.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/scb09-01712.pdf The petition was signed by T. Gregory Douglas, President of the company. SAKS INC: Market Turmoil Cues S&P's Rating Downgrades to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its ratings on New York City-based luxury department store operator Saks Inc. to 'B-' from 'B'. The outlook is negative. "The rating change reflects our belief that the company will be more challenged than previously expected by the current recession in the U.S. and the turmoil in the financial markets," said Standard & Poor's credit analyst Diane Shand. Credit metrics deteriorated significantly in the fourth quarter of 2008 and S&P expects they will worsen at least through the first half of 2009. The company generated an EBITDA loss of $65 million in the fourth quarter of 2008 compared with a positive $93.5 million in the year-ago period as a result of steep declines in same-store sales and heavy markdowns of goods. Moreover, leverage jumped to more than 18.0x in 2008 from 3.3x in 2007 and EBITDA coverage of interest fell below 1.0x in 2008. "We expect Saks to plan inventories, expenses, and store growth much more conservatively in 2009 in an effort to protect margins," said Ms. Shand. Nevertheless, its margins are unlikely to materially improve in 2009 as a result of weak consumer demand, lack of sales leverage, and promotional activity. "We expect Saks' credit metrics to recover slightly in 2009 as a result of modest profit improvement due to cost cutting," she added. SEMGROUP LP: To Seek Approval of Energy Partners Deal Today ----------------------------------------------------------- SemGroup L.P. told the U.S. Bankruptcy Court for the District of Delaware that it has reached an agreement in principle with publicly traded affiliate SemGroup Energy Partners L.P. SemGroup has asked the Court to convene a hearing, on shortened notice, on the settlement. Judge Brendan L. Shannon agreed to convene a hearing on March 12, but did not set a March 10 objection deadline. The Court said it would consider objections at the hearing. According to Bloomberg's Bill Rochelle, since SemGroup L.P. was unable to find a buyer for its liquid asphalt business, it will be turned over to SemGroup Energy along with 355,000 barrels of crude. He added that in return, the public company will transfer crude oil storage assets in Kansas to SemGroup LP. In total, SemGroup Energy and an affiliate will have $55 million in unsecured claims against SemGroup LP. Each party will release claims against one another. Tulsa World reported that SemGroup LP CEO Terry Ronan told employees March 9 that the company could emerge from bankruptcy later this year as a publicly traded entity focused on its crude oil storage and distribution unit. SemGroup, according to the report, said it plans to separate its assets and operations now connected to the public subsidiary SGLP and continue the sell-off of assets that began with the SemMaterials asphalt unit. As reported by the TCR on March 2, SemMaterials, L.P. sought approval from the U.S. Bankruptcy Court for the District of Delaware of (i) a February 23 auction and sale of all or substantially all of its assets, or in the alternative, (ii) a winding-down of SemMaterials and the rejection of a terminalling agreement with non-debtor affiliate SemGroup Energy Partners, L.P. Bloomberg reported that lawyers of SemGroup and New York investor John A. Catsimatidis confirmed that Mr. Catsimatidis submitted a bid for the asphalt products business, but failed to arrange financing on time. Mr. Catsimatidis owns five of nine seats on SemGroup's management committee, but has feuded with SemGroup's managers and lawyers over his effort to take charge of the company's restructuring. Relationship with SGLP SemGroup and its affiliates said that prior to their bankruptcy filing, they entered into four complex transactions with SemGroup Energy Partners ("SGLP") whereby the Debtors sold various assets to SGLP and certain of its affiliates. In connection with these asset sales, the parties also entered into several services agreements. These transactions culminated in a situation where operations of the physical assets of the Debtors and SGLP became inextricably intertwined. Since the bankruptcy filing, several disputes have arisen with respect to the asset sales and the services agreements, including, but not limited to, the ownership of various assets, the amounts of prepetition claims owed under the services agreements, and the amounts of potential rejection damages associated with the services agreements. In addition, these issues have hampered the Debtors' efforts to sell their assets, including the SemMaterials assets, which SGLP filed an objection to. In an effort to resolve the disputes between the parties -- including SGLP's objection to sell SemMaterials or, absent a buyer, terminate their terminalling agreement -- the parties engaged in arms' length negotiations and reached the compromise and settlement A copy of the Term Sheet reached by the parties is available for free at: http://bankrupt.com/misc/SemGroup_SGLP_TermSheet.pdf 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: Eagle Rock Has $10.7 Million Write-off on Bankruptcy ----------------------------------------------------------------- Eagle Rock Energy Partners, L.P., disclosed that its net income for the year ended December 31, 2008, included a net unrealized commodity and interest rate derivative gain totaling $180.1 million, the non-recurring write-off of $10.7 million in bad-debt provisions related to SemCrude's bankruptcy, and a $174.9 million non-cash asset impairment charge. On Tuesday, Eagle Rock reported financial results for the three months and year ended December 31, 2008. Eagle Rock said net income increased to $87.5 million for the year ended December 31, 2008, compared to the net loss of $145.6 million for the year ended December 31, 2007. Eagle Rock also disclosed that on September 29, 2008, it requested a $181.0 million funding under its senior secured revolving credit facility to finance the acquisition of Millennium Midstream. Eagle Rock said Lehman Brothers Commercial Bank, a lender under its credit facility, defaulted on its portion of the borrowing request, resulting in an actual funding of $176.4 million. As a result of the Lehman default, Eagle Rock believes the availability under its credit facility has been effectively reduced by approximately $9.1 million. As of December 31, 2008, Eagle Rock had $171.5 million in capacity available under its credit facility, after giving effect to the Lehman default. Eagle Rock said it is within its financial covenants and has no maturities under its credit facility until December 2012. Eagle Rock, based in Houston, Texas, is a master limited partnership engaged in three businesses: a) midstream, which includes (i) gathering, compressing, treating, processing and transporting natural gas; (ii) fractionating and transporting natural gas liquids; and (iii) marketing natural gas, condensate and NGLs; b) upstream, which includes acquiring, exploiting, developing, and producing interests in oil and natural gas properties; and c) minerals, which includes acquiring and managing fee mineral and royalty interests, either through direct ownership or through investment in other partnerships in properties located in multiple producing trends across the United States. 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) SERAFINO HOLDINGS: Accused of Ponzi Scam Tied to Cosmo Fraud ------------------------------------------------------------ New Jersey investment company Serafino Holdings LLC and its owner Anthony Lucchetto Jr. were accused in a complaint by New Jersey Attorney General Anne Milgram of operating a $15 million Ponzi scheme linked to the alleged fraud of Nicholas Cosmo, a report by Lisa Brennan of Bloomberg said. According to the report, Milgram claimed Serafino and Mr. Lucchetto with selling unregistered securities invested in construction loans, according to a March 4 complaint in state court in Elizabeth, New Jersey. Serafino told investors it would put their money in "completely safe" certificates of deposit with a "capital protection program," according to the complaint. The report, citing the complaint, adds that Serafino told investors on Jan. 27 that it had put their funds into Agape World Inc., a company run by Mr. Cosmo, who was arrested a day earlier and accused by federal authorities of operating a five-year, $370 million Ponzi scheme. Mr. Lucchetto, who lives in Plainfield, New Jersey, was a registered agent and investment adviser for MetLife Securities Inc. until his licenses expired April 30, according to the complaint. He held himself out to investors as a certified financial planner, according to the complaint. Serafino's customers allegedly included a family that invested funds from their pizzeria business, custodial accounts for their five children, and an IRA account. Attorney William Hood III said Mr. Luchetto is innocent and was not aware that Mr. Cosmo was running a Ponzi scheme. Mr. Cosmo is being held without bail after his arrest on a criminal complaint by the U.S. Postal Inspection Service. The Federal Bureau of Investigation also is probing Mr. Cosmo and Agape. SIX FLAGS: Hurt by Bondholders' Credit-Default Swaps ---------------------------------------------------- Caroline Salas and Shannon D. Harrington of Bloomberg News report that Six Flags Inc. and automaker Ford Motor Co. may be pushed toward bankruptcy by bondholders trying to profit from credit- default swaps that protect against losses on their high-yield debt. The report pointed out that by employing a so-called negative- basis trade, investors could buy Six Flags bonds at 20.5 cents on the dollar and credit-default swaps at 71 cents. If the New York- based amusement-park operator defaults, the creditors would receive the face value of the debt, minus costs. In a Feb. 27 note, Citigroup Inc.'s high yield strategists put that profit at 6 percentage points, or $600,000 on a $10 million purchase. The source relates that Six Flags debt is rated Caa3 by Moody's and CCC+ by Standard & Poor's, three and five levels above default. Both rankings were put on "negative outlook" last year. Ford, the only one of the so-called Big Three U.S. automakers to avoid taking federal bailout funds, may run up against basis traders as it seeks to restructure its debt. The car company plans to offer cash and shares to retire as much as $10.4 billion in debt, according to a U.S. regulatory filing yesterday. It may be "difficult" for Ford to do an exchange, in part because of investors with basis trades, said Rod Lache, an analyst at Deutsche Bank in New York, commenting before the restructuring was announced, according to the report. The parent and its Ford Motor Credit finance arm had a net $8.1 billion credit-default swaps outstanding, versus about $54 billion in bonds, according to data compiled by Bloomberg and the Depository Trust & Clearing Corp., which runs a central credit derivatives registry, the report added. Bloomberg added that investors who bet on the collapse of a company are pitting themselves against traditional debt holders at a time when Moody's Investors Service projects defaults will more than triple this year and exceed the level during the Great Depression. The clash may stall restructuring efforts to prevent bankruptcies, as basis traders may be less inclined to participate in distressed debt exchanges, said Matthew Eagan, an investment manager at Boston-based Loomis Sayles & Co., with $7 billion in high-yield assets. And he added, "Before, you really had to worry mostly about where you were in the company's capital structure. Now, you have to consider the possibility that you might have this large holder of CDS incentivized to see it go into bankruptcy. It's something that's going to come up more and more." According to the report, following a meltdown last year in the relationship between prices on bonds and credit swaps after the Lehman Brothers Holdings Inc. bankruptcy, basis traders often stand to make the most money if companies default. They can also profit by holding the trade until the debt matures or unwinding the position after the market value gap between the bonds and derivatives closes. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region. In Europe, the company maintains a presence in Sweden, and the United Kingdom. The company also distributes its brands in various Latin-American regions, including Argentina and Brazil. * * * As reported by the Troubled Company Reporter on March 6, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Ford Motor Co. to 'CC' from 'CCC+'. S&P also lowered the issue-level ratings on the company's senior secured term loan, senior unsecured debt, and subordinated debt, while leaving the issue-level rating on Ford's senior secured revolving credit facility unchanged. In addition, the counterparty credit ratings and issue-level ratings on Ford Motor Credit Co. (Ford Credit) and FCE Bank PLC remain unchanged. The outlooks on Ford and Ford Credit are negative. Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring in order to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently- approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. About Six Flags Six Flags, Inc. is engaged in operating regional theme parks. During the year ended December 31, 2007, the Company operated 20 parks. In April 2007, the Company sold seven parks. The theme parks offer thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues and retail outlets. In 2007, the theme parks offered more than 840 rides, including over 130 roller coasters. On July 31, 2007, the Company acquired the minority interests in Six Flags Discovery Kingdom. On June 18, 2007, it acquired a 40% interest in a venture that owns dick clark productions, inc. (DCP). As reported by the Troubled Company Reporter on March 3, 2009, Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries' Issuer Default Rating to 'CC' from 'CCC'. SPECTRUM BRANDS: Equity Panel Named; Shareholder Recovery Raised ---------------------------------------------------------------- The United States Trustee for the Western District of Texas on March 6, 2009, appointed an Official Committee of Equity Security Holders to represent the interests of Spectrum Brands' common shareholders in its ongoing chapter 11 bankruptcy proceedings. The Official Equity Committee consists of: * Christopher P. Mittleman (Committee Chairman), Managing Partner, Mittleman Brothers, LLC * Matthew Mooney, Williams Trading, LLC, representing Cookie Jar LLC * Ralston H. Coffin, former President of Playtex International, Inc., former President of CBS/Fox International and former President of International Standard Brands * Peter Locke, President, Peter Locke Productions "We are very pleased that the U.S. Trustee has granted our request to establish an official shareholder committee to protect the interests of Spectrum Brands' existing common shareholders," said Christopher Mittleman, Committee Chairman. "We firmly believe that substantial equity value remains for Spectrum Brands' existing shareholders, and we intend to pursue all means at our disposal to maximize that value." On February 20, 2009, in its capacity as a shareholder of Spectrum Brands, Mittleman Brothers sent a letter dated February 23, 2009 to the Debtors' Board of Directors expressing concerns over the current management of the Debtors in connection with the Debtors' First Proposed Joint Plan of Reorganization filed on February 3, 2009. Particularly, the February 23rd Letter outlines Mittleman Brothers' belief that the Debtors' management and board of directors have engaged in, and are continuing to pursue, courses of action that are in breach of their fiduciary duties to the Debtors' shareholders, and that have resulted in, and are continuing to inflict, material harm to the shareholders. Mittleman Brothers demanded the immediate withdrawal of the Plan. Mittleman Brothers also has demanded that the Debtors fully support the appointment of an official committee of equity security holders that would negotiate a new, fair and equitable plan of reorganization that adequately compensates existing shareholders. Among other things, Mittleman Brothers noted in its letter that the Plan proposes that existing senior subordinated noteholders will exchange $1.09 billion face value in notes, and receive in return $218 million in new notes, and 100% of Spectrum's equity. The Plan projects the company -- after the reorganization -- will generate $125 million in free cash flow for fiscal year ending 09/30/10. According to Mittleman Brothers, at a low multiple of only 10x free cash flow, there would be $1.25 billion of equity value to cover the $872 million in face value that the Noteholders would exchange. Adding the $218 million in new bonds that the Noteholders would also receive to the conservatively appraised equity value of $1.25 billion, means that Noteholders would be receiving $1.468 billion under the Plan, or $378 million more than the $1.09 billion face value of the bonds they now own. Mittleman Brothers said the $378 million of excess compensation to Spectrum's Noteholders under the Plan rightly belongs to the existing shareholders. In other words, even if 30% of the post- Plan equity was granted to existing shareholders, the Noteholders would still receive par value for their bonds with their remaining 70% of the equity. That $378 million in excess equity value equates to $7.16 per share to existing shareholders, roughly where the stock was valued as recently as June 2007, when Spectrum's near-term prospects were much less favorable. "This exercise ignores the likely substantial net present value of the net operating loss carry-forwards (NOLs) that Spectrum projects should total $1.25 bil. for U.S. Federal taxes and $2.1 bil. for state taxes as of 09/30/09. That these NOLs represent significant potential value is underscored by Spectrum's recent efforts to preserve them, in a motion made to the Bankruptcy Court and granted on an interim basis on Feb. 6, 2009, which may allow Spectrum to limit certain shareholders from achieving a 5% ownership threshold," the letter said. A full-text copy of the February 23rd Letter is available at no charge at: http://researcharchives.com/t/s?3a38 About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc. and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) ST. MARY'S HOSPITAL: Files Chapter 11 in Newark ----------------------------------------------- St. Mary's Hospital filed for Chapter 11 reorganization on March 9 before the U.S. Bankruptcy Court for the District of New Jersey in Newark. Bloomberg's Bill Rochelle said that St. Mary's, the last-remaining acute care hospital in Passaic, will finance the Chapter 11 case with a $20 million revolving credit loan from an existing lender. About $9.75 million will be made available upon interim approval of the loan. The hospital, Bloomberg, relates, began soliciting offers last year from potential buyers. Although three parties expressed an interest, no transaction could be secured before bankruptcy, the report said, citing a court filing by Colene Y. Daniel, the hospital's chief executive. St. Mary's Hospital said in a statement that it filed for bankruptcy due to the economic crisis and a drop in the number of patients seeking treatment. The Leader relates that St. Mary Hospital's expenses have increased since it acquired Beth Israel Hospital two years ago. Revenue of $155 million in 2008 resulted in a $16.5 million net loss. St. Mary's Hospital said that it will remain open for business during the reorganization period allowed with a Chapter 11 filing. The Leader quoted St. Mary's CEO as saying, "St. Mary's needs the strong support of the community during this time. Continued delivery of quality healthcare and concern for our employees is our primary focus. We need the community to work with us in making sure that Passaic keeps its only hospital, and that St. Mary's emerges from this process stronger, financially viable and even better." In its bankruptcy petition, St. Mary's listed assets of $70.8 million and debts of $128 million. According to Mr. Rochelle, debt includes a $43 million loan secured by the facility and a revolving credit with $9 million outstanding at the outset of bankruptcy. St. Mary's Hospital, Passaic, N.J., filed for Chapter 11 bankruptcy protection on March 9, 2009 (Bankr. D. N.J. Case No. 09-15619). Joseph Lubertazzi, Jr., Esq., at McCarter & English assists the hospital in its restructuring effort. STANFORD GROUP: Receiver Sues N.Y. Landlord for Ending Lease ------------------------------------------------------------ Ralph Janvey, the court-appointed receiver for companies controlled by Texas financier R. Allen Stanford, sued a New York landlord to assert "wrongful termination" of a lease for Stanford Group Co.'s midtown Manhattan offices, Carla Main of Bloomberg said. The Bloomberg report said that the complaint filed March 6 in New York State Supreme Court said that Stanford leased four floors from the landlord, 330 Madison Co., beginning in February 2005. 330 Madison claimed March 3 that Stanford was in default and was terminating the lease. Mr. Janvey, however, asserts that the lease has not expired and has important economic value to the receivership estate. About Stanford Group 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. The U.S. Securities and Exchange Commission on Feb. 17, charged Robert Allen 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 SIBL chief financial officer James Davis as well as Laura Pendergest- Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action. STANFORD GROUP: Court Unfreezes Investor Accounts ------------------------------------------------- U.S. District Court Judge David C. Godbey issued on March 5, 2009, an order at the request of Ralph S. Janvey -- the court-appointed receiver of Stanford Group -- to unfreeze roughly 12,000 Stanford investor accounts held at Pershing LLC. The court's order applies to customer accounts valued at $250,000 or less as of month-end February 2009, and is effective on March 9, 2009. According to a statement by the Securities and Exchange Commission, customers can immediately begin the process of obtaining control of their accounts by arranging to transfer their accounts to a new broker-dealer. To do so, the customer should make arrangements with the new broker-dealer to open a new account. Typically, the first step in opening a new account is for the customer to obtain and complete an account transfer form and a new account opening form. These forms are available from broker- dealers directly or on their Web sites. The completed forms are then submitted to the new broker-dealer who in turn will provide appropriate instruction to Pershing LLC regarding the transfer of the accounts. There is typically a small fee associated with the transfer of accounts from one broker to another. The court has authorized the release of these accounts unless any of the following conditions apply: * They are owned by Stanford shareholders, directors, and certain employees. * They are owned for the benefit of Stanford companies. * They are managed by Stanford companies. * They secure unpaid balances owed by customers or non- purpose loans made to customers. * They are related to accounts in any of these categories by social security number, address or other similar indicators. Meanwhile, Stanford Group Co.'s court-appointed receiver fired about 1,000 workers, 85%t of the firm's employees, to help conserve the value of the estate for investors, Bloomberg said. About Stanford Group 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. The U.S. Securities and Exchange Commission on Feb. 17, charged Robert Allen 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 SIBL chief financial officer James Davis as well as Laura Pendergest- Holt, chief investment officer of Stanford Financial Group (SFG), in the enforcement action. STAR TRIBUNE: Committee Can Hire Lowenstein Sandler as Counsel -------------------------------------------------------------- The Official Committee of Unsecured creditors in Star Tribune Company and Star Tribune Holdings Corporation's Chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Lowenstein Sandler PC as counsel. If the Court agrees, Lowenstein Sandler will: a) provide legal advice as necessary with respect to the committee's powers and duties as an official committee; b) assist the Committee in investigating the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' business, potential claims, and any other matters relevant to the case, or to the formulation of a Plan of reorganization or sale of estate assets; c) participate in the formulation of a Plan or sale of assets; d) provide legal advice as necessary with respect to any disclosure statement and Plan in these cases and with respect to the process for approving or disapproving disclosure statements and confirming or denying confirmation of a Plan; e) prepare on behalf of the Committee, as necessary motions, applications, motions, complaints, answers, orders, agreements and other legal papers; f) appear in Court to present necessary motions, applications and pleadings, and otherwise protect the interests of those represented by the Committee; g) assist the committee in requesting the appointment of a trustee or examiner, if the action be is necessary; and h) perform other legal services as may be required and that are in the best interest of the Committee and creditors. Lowenstein Sandler's hourly rates are: Partners $400 - $765 Senior Counsel $310 - $520 Counsel $335 - $405 Associates $220 - $350 Legal $120 - $195 To the best of the Committee's knowledge, Lowenstein Sandler is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Star Tribune Headquartered in Minneapolis, Minnesota, The Star Tribune Company -- http://www.startribune.com-- operate the largest newspaper in the U.S. state of Minnesota and published seven days each week in an edition for the Minneapolis-Saint Paul metropolitan area. The company and its affiliate, Star Tribune Holdings Corporation, filed for Chapter 11 protection on January 15, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10245). Marshall Scott Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. The Debtors proposed Blackstone Group LP as their financial advisor; and Curtis, Mallet-Prevost, Colt & Mosle LLP as conflict counsel; and Garden City Group Inc. as claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. STERLING BANCSHARES: Fitch Affirms Preferred Rating at 'BB' ----------------------------------------------------------- Fitch Ratings has affirmed the ratings of Sterling Bancshares, Inc. and its banking subsidiary Sterling Bank (Texas). Fitch has also revised the Rating Outlook to Stable from Positive. Fitch affirmed the ratings given SBIB's good funding profile, core earnings strength, and solid capital position. Fitch expects that SBIB will continue to perform reasonably well and anticipates the company will emerge from the current credit cycle in a sound position, especially compared to similarly rated peers. Nonetheless, Fitch revised the Outlook due to deteriorating asset quality and expectations for weaker earnings over the near term, as well as increased economic uncertainty. While the Texas economy continues to fare better than most other state economies, lower energy prices, waning exports, and the national economic slowdown will temper the state's growth and could ultimately pressure SBIB's asset quality performance. Providing support to SBIB's ratings, profitability remained relatively good in 2008, although below historical levels due to elevated credit costs. Higher provisioning expense offset the benefits of a growing earning asset base and an enviably strong and stable net interest margin. In addition, SBIB benefits from good liquidity, derived from a strong commercial deposit base of which approximately 30% is non-interest bearing. Capital levels also remain solid with a tangible common equity to tangible asset ratio at approximately 7%. SBIB participated in the Treasury's capital purchase plan, and issued $125 million (or 3% of risk- weighted assets) in preferred stock in December 2008. SBIB is working through a large exposure to the SemGroup, a company which declared bankruptcy in July 2008. Credit deterioration, outside of the large SemGroup relationship, has been acceptable and mainly driven by commercial real estate deterioration. The Stable Outlook presumes manageable credit deterioration and the continuation of solid capital levels over the near- to intermediate term. Fitch has affirmed these ratings: Sterling Bancshares, Inc. -- Long-term Issuer Default Rating (IDR) at 'BBB-'; -- Short-term IDR at 'F3'; -- Individual at 'B/C'; -- Support at '5'; -- Support floor 'NF'; -- Preferred at 'BB'. Sterling Bank -- Long-term IDR at 'BBB-'; -- Short-term IDR at 'F3'; -- Individual at 'B/C'; -- Support at '5'; -- Support floor 'NF'. -- Long-term deposits at 'BBB'; -- Short-term deposits at 'F3'. Sterling Bancshares Capital Trust II, III -- Preferred at 'BB'. STONE ENERGY: Monetization of Hedges Won't Change Moody's B3 ------------------------------------------------------------ Moody's commented that Stone Energy Corp.'s announcement that it had monetized its 2009 crude oil and natural gas hedges for $113 million of net proceeds would have no immediate impact on Stone's B3 Corporate Family Rating, Caa1 (LGD 4; 62%) senior subordinated note rating and SGL-3 Speculative Grade Liquidity rating. The outlook remains stable. Please the issuer comment on moodys.com for further details. Moody's last rating action for Stone dates from May 1, 2008, at which time Moody's affirmed existing ratings and lowered the Speculative Grade Liquidity from SGL-3 to SGL-2. Stone Energy Corporation is headquartered in Lafayette, LA. is an independent oil and gas company engaged in the acquisition and subsequent exploration and production of oil and natural gas properties primarily in the conventional shelf of the Gulf of Mexico, deep shelf GOM, and deepwater GOM and to the lesser extent in the Appalachia region. SUNSET AVIATION: Files Chapter 7 Petition in Wilmington ------------------------------------------------------- Dawn McCarty of Bloomberg reported that Sunset Aviation Inc., filed to liquidate itself in bankruptcy without giving a reason. The company filed its Chapter 7 petition in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on March 6. The company estimated debt of less than $500 million and assets of less than $10 million. It checked a box in its bankruptcy petition that says it won't have funds available to pay unsecured creditors. Novato, California-based, Sunset Aviation Inc. is a provider of jet and turbo-prop aircraft. Sunset, founded in 1992, was acquired by JetDirect Aviation Holdings LLC in 2007. charter services. SUNWEST MANAGEMENT: Lenders Want Judge Disqualified in Fraud Case ----------------------------------------------------------------- Jeff Manning in The Oregonian reports that the lawyers of Sunwest Management Inc.'s lenders have challenged objectivity of U.S. District Judge Michael Hogan and demanded that he disqualify himself in the securities fraud case. Judge Hogan, according to The Oregonian is hearing the U.S. Securities and Exchange Commission's securities fraud lawsuit, which was filed on March 2. The Oregonian relates that Judge Hogan has also been serving as mediator in a related case involving Sunwest Management and its former CEO, Jon Harder, since early February. The Oregonian states that Mr. Harder stepped down as CEO in December 2008 and put Sunwest Management in the hands of a corporate restructuring consultant, before he filed for personal bankruptcy, which led to Judge Hogan's involvement. Sunwest Management's creditors want Judge Hogan out of the case due to his involvement as a mediator in Mr. Harder's bankruptcy case, according to The Oregonian. Sunwest Management, says The Oregonian, is based in Salem where there is no federal court, making the SEC file its complaint in Eugene. The Oregonian relates that the case was assigned to Magistrate Judge Thomas Coffin, but lawyers close to the case said that the SEC asked for a full-fledged judge who had authority to issue a temporary restraining order. The SEC, The Oregonian states, sought a temporary restraining order freezing Sunwest Management's assets and the appointment of a receiver to take control of the company. The case landed with Judge Hogan, says the report. According to The Oregonian, Judge Hogan had learned a lot about Sunwest Management since the first mediation sessions had started in February, which lenders considered as enough reason to disqualify the judge. "Just having access to information that you might not otherwise have is a problem," the report quoted University of Washington School of Law professor Allan Kirtley as saying. The Oregonian reports that Judge Hogan didn't disqualify himself from the fraud case and infuriated the lenders when he issued a ban on any new foreclosures against Sunwest Management's properties on March 3. Judge Hogan, says the report, made his order effective until further notice. "It is strange indeed" that Judge Hogan prohibited foreclosures when the SEC never requested such a ban, the report states, citing David Criswell, a Portland lawyer writing for a consortium of banks. Salem, Oregon-based Sunwest Management Inc. -- http://www.sunwestmanagement.com/-- manages 275 assisted-living facilities in 36 states. Sunwest Management was founded in 1991 with a portfolio of three properties: two retirement communities and one skilled nursing community. It has a network of regional managers that handles various services from accounting to operations. Sunwest Management has put 10 assisted living centers -- two in Oregon -- into Chapter 11 bankruptcy. Briarwood Retirement and Assisted Living Community LLC, which owns a retirement center in Springfield, and Century Fields Retirement and Assisted Living Community LLC, which owns a center in Lebanon, filed for Chapter 11 on Aug. 19, 2008. On Aug. 17, 2008, eight Sunwest-affiliated LLCs filed for Chapter 11 bankruptcy protection from creditors in Tennessee. As reported by the Troubled Company Reporter on March 9, 2009, Sunwest Management Inc. might file for Chapter 11 bankruptcy protection. SUPERIOR ENERGY: BG Group to Maintain Funding for Trinidad Venture ------------------------------------------------------------------ Despite decision of its partner, Canadian Superior Energy Inc., to seek bankruptcy protection in Canada, BG Group Plc said it will continue to fund drilling and testing of an offshore natural gas well in Trinidad and Tobago, Eduard Gismatullin of Bloomberg said. Bloomberg relates that the partners are exploring Block 5(c), about 94 kilometers (59 miles) off the east coast of Trinidad, and are drilling a third well. Canadian Superior, according to Bloomberg, said last month it plans to sell at least a quarter of its 45 percent interest in the project to pay creditors and end bankruptcy protection. BG, the report adds, will become the venture's operator on April 21. Calgary, Alberta-based Canadian Superior Energy Inc. -- http://www.cansup.com-- is a diversified global energy company engaged in the exploration and production of oil and natural gas, and liquefied natural gas projects, with operations offshore Trinidad and Tobago, offshore Nova Scotia, Canada, in Western Canada, in the United States and in North Africa. Canadian Superior has approximately 20,000 shareholders worldwide, including some of the top institutional shareholders in North America. Canadian Superior Energy Inc. on March 6 said its application to the Court of Queen's Bench of Alberta for an Order under the Companies' Creditors Arrangement Act (Canada) was successful, allowing the Company to prepare a plan of arrangement for its creditors, and staying all claims and actions against the Company and its assets. The Order was made under section 11 of the CCAA and it is in effect until March 25, 2009, at which time the matter will be reviewed by the court. TAHERA DIAMOND: Canadian Court Extends CCAA Stay Until May 29 ------------------------------------------------------------- Tahera Diamond Corporation has received an extension to the stay period under the Companies' Creditors Arrangement Act, which was previously set to expire on March 6, 2009. The court-approved extension is now in place until May 29, 2009. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. On Jan. 16, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. TAHERA DIAMOND: Obtains $500,000 Loan From Potential Asset Buyer ---------------------------------------------------------------- Tahera Diamond Corporation on March 3, 2009, entered into a confidential letter of intent with a third party in respect of a proposed transaction. The Entity has agreed to provide a staged secured loan of up to $500,000 during the CCAA proceedings in exchange for exclusivity during their due diligence review and thereafter until closing of the proposed Transaction, which is conditional, among other things, upon the satisfaction of the Entity's due diligence and the parties entering into a mutually acceptable definitive agreement. The Entity can elect not to proceed with the Transaction and demand repayment of the advances under the loan at any time. In addition, Caz Petroleum Inc., the company's leading secured creditor, has agreed to provide additional debtor-in-possession financing to the Company to assist with the funding of the day to day operating expenses of the company necessary for the preservation of value of the company's assets and the redevelopment of the Jericho Mine. The deadline for completion of the Entity's due diligence is the later of March 31, 2009 or the 21st day after the date that the Interim Court Approval has been obtained. It is anticipated that, if completed, the final form of Transaction will involve the assignment of the Jericho Mine assets to a newly-incorporated, wholly-owned subsidiary of the Company. While there is no assurance that the Transaction will be successfully concluded, the Company believes that if the Transaction can be successfully concluded the Company may then be in a position to formulate a plan of arrangement to its creditors. No value is expected to remain available to Tahera's shareholders as a result. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. On Jan. 16, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. TARRAGON CORP: May Obtain $6.25 Million DIP Loan from ARKOMD LLC ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey has authorized Tarragon Corp., et al., on a final basis, to obtain up to a total amount of $6,250,000 from ARKOMD, LLC. Proceeds of loan will be used for working capital and general business purposes in accordance with a Budget. As security for the DIP obligations, the DIP Lender is granted a superpriority postpetition security interest in Tarragon's Equity Interests, and unencumbered assets and property of the Borrowers. Subject to the Carve Out, all DIP obligations will be an allowed superpriority administrative expense claim under Sections 363 and 364 of the Bankruptcy Code. The significant terms of the DIP Facility are: Facility/Amount : Revolving Credit Facility of $6.25 million Termination Date: The earliest of: (a) 180 days after the Filing Date; (b) the effective date of a confirmed plan; (c) the date of consummation of a sale of all or substantially all of the Debtors' assets; and (d) following an event of default, the date ARKOMD declares all obligations to be immediately due and payable. Interest Rates : 12% per annum payable in arrears. Upon an event of default, the interest rate will be increased by 2% per annum. Tarragon Corp's pre-petition indebtedness consists of unsecured debt totalling approximately $170 million, exclusive of contingent guaranty obligations: (a) $125 million of subordinated unsecured debt to Taberna Capital Management LLC and certain of its affiliates; (b) approximately $40 million of unsecured debt to affiliates of the Debtors, Beachworld Partners, L.P. and Robert P. Rothenberg (Tarragon Corp.'s president); and (c) other unsecured debt. ARKOMD, LLC is an affiliate of Arko Holdings, Ltd., a publicly traded Israel company. Beginning in the summer of 2008, the Debtors and its officers were engaged with Arko regarding the recapitalization of the Debtor and its affiliates, but as of the Filind Date, had not produced an agreement on an Arko-sponsored restructuring of the Debtors. Negotiations are still ongoing. 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. TELEPLUS WORLD: Wants Arnstein & Lehr as Bankruptcy Counsel ----------------------------------------------------------- Teleplus World, Corp. seeks authority from the U.S. Bankruptcy Court for the Southern District of Florida to employ Arnstein & Lehr, LLP, as counsel. A&L will: a) advise the Debtor with respect to its powers and duties as debtor-in-possession and the continued management of its business operations; b) advise the Debtor with respect to its responsibilities in complying with the U.S. Trustee's operating guidelines and reporting requirements and with the rules of the Court; c) prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of the case; d) protect the interest of the Debtor in all matters pending before the Court; and e) represent the Debtor in negotiation with its creditors in the preparation of a Plan. Phillip M. Hudson III, a lawyer at A&L, tells the Court that his hourly rate is $475. Other lawyers and paralegals may render services as needed and when appropriate. Mr. Hudson adds that A&L received a $50,000 retainer to be applied to all fees and expenses incurred in the preparation, filing, and conduct of all matters in this Chapter 11 case. Mr. Hudson assures the Court that Arnstein & Lehr is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Hudson can be reached at: Arnstein & Lehr, LLP 200 S. Biscayne Blvd., Suite 3600 Miami, FL 33131 Tel: (305) 374-3330 Fax: (305) 374-4744 About Teleplus World, Corp. Headquartered in Miami-Lakes, Florida, Teleplus World, Corp. -- http://www.teleplusworld.com/en/-- provides telecommunications products and services including local lines, long distance, toll free and high speed internet services to customers in 53 distinct centrex serving areas. The Debtor filed for Chapter 11 protection on March 5, 2009, (Bankr. S.D. Fla. Case No.: 09-13799) Phillip M. Hudson, III, Esq. represents the Debtor in its restructuring efforts. The Debtor's financial condition as of Feb. 28, 2009, showed total assets of $10,825,743 and total debts of $21,244,618. TRIBUNE CO: Talks Ongoing for Sale of Cubs to Rickets Family ------------------------------------------------------------ Tribune Co. is still in negotiations with the Ricketts family regarding the sale of the Chicago Cubs franchise, the Chicago Tribune reported. Major League Baseball Commissioner Bud Selig said discussions are ongoing. "It hasn't moved from there. It still hasn't come close to us [for approval]. But I'm very anxious for it to proceed and I think [the sale] is in everybody's best interest. "I can't give you a timetable. One can be hopeful about Opening Day, but I'm not sure they'll make it. It's up to the parties. There are a lot of conversations going on. I think they're down to [economic] kinds of issues. Here are issues between the parties that need to be resolved." Tribune previously set a Nov. 27 deadline for bids for its baseball franchise, but opted to extend the date. According to the Wall Street Journal, instability in the credit markets is making the process more difficult, and two people familiar with the sale said that groups interested in Chicago Cubs learned that the deadline is now considered "soft." Uncertainty among major lenders has made determining the value of Chicago Cubs and the costs of bids more difficult and time-consuming, making the Nov. 27 deadline impossible to meet, WSJ says, citing bidders. WSJ said November that Tribune's offer to keep as much as 50% of the team for an undetermined period would make purchasing Chicago Cubs more affordable, but Tribune's debt problems have increased the risk of a potential leveraged partnership with the company. Headquartered in Chicago, Illinois, Tribune Company -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08-13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRINITY INNOVATIVE: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Trinity Innovative Enterprises, LLC t/a DirectBuy of the Lehigh Valley 7036 Snowdrift Road, Suite 110 Allentown, PA 18106 Bankruptcy Case No.: 09-20579 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Reading) Judge: Richard E. Fehling Debtor's Counsel: David F. Dunn, Esq. David Dunn Law Offices PC 21 South 9th Street Allentown, PA 18102 Tel: (610) 439-1500 Email: dunncourtpapers@choiceonemail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors together with its petition. The petition was signed by Thomas Giacchi, Managing Member of the company. UAL CORP: Files Full Year 2008 Financial Report with SEC -------------------------------------------------------- UAL Corporation filed with the Securities and Exchange Commission on March 2, 2009, its annual report for the year ended Dec. 31, 2008. The report notes that the unprecedented increase in fuel price and a worsening global recession have created an extremely challenging environment for the airline industry. While UAL significantly improved its financial performance in 2006 and 2007, UAL was not able to financially compensate for the substantial increase in fuel prices during 2008. UAL's average consolidated fuel price per gallon, including net hedge losses that are classified in fuel expense, increased 59% from 2007 to 2008. The increased cost of fuel purchases and hedging losses drove the $3.1 billion increase in UAL's consolidated fuel costs. UAL's fuel hedge losses that are classified in non-operating expense also had a significant negative impact on its 2008 liquidity and results of operations. International PRASM was up 2.4% year-over-year with a related capacity increase of 0.9%. Cargo revenues increased by $84 million, or 11%, in 2008 as compared to 2007, primarily due to higher fuel surcharges and improved fleet utilization. In the fourth quarter of 2008, mainline passenger revenues decreased 10% due to lower traffic as a result of UAL's 12% capacity reduction and lower demand due to the weak global economy. Other revenues decreased 11% in 2008 as compared to 2007 due to lower jet fuel sales to third parties. UAL reduced its mainline domestic by 14% and international capacity by 8% in response to high fuel costs and the weakening global economy. Consolidated capacity was 11% and 4% lower in the fourth quarter and the full year of 2008, respectively, as compared to the year-ago periods. UAL reduced its capital expenditures in 2008 as compared to 2007 by more than $200 million. In addition, UAL plans to limit capital spending to $450 million during 2009. Moreover, UAL expects a total workforce reduction of 9,000 positions by the end of 2009, which 6,000 positions were eliminated as of December 31, 2008. During the fourth quarter of 2008, UAL began a public offering of up to $200 million of UAL common stock, generating gross proceeds of $172 million in 2008 and January 2009. UAL may issue additional shares during 2009 until it reaches $200 million in proceeds. United also completed a $241 million credit agreement secured by 26 of UAL's currently owned and mortgaged A319 and A320 aircraft. United also entered into an $84 million loan agreement secured by three aircraft, including two Airbus A320 and one Boeing B777 aircraft. The loan requires principal and interest payments every three months and has a final maturity in June 2015. UAL also completed an amendment of its marketing services agreement with its Mileage Plus co-branded bankcard partner and its largest credit card processor, which resulted to, among others, an immediate increase in UAL's cash position by $1 billion, which included $600 million for the advanced purchase of miles and the licensing extension payment, as well as the release of approximately $357 million in previously restricted cash for reserves required under the credit card processing agreement. About $100 million of additional cash receipts are expected over the next two years based on the amended terms of the co-brand agreement as compared to cash that would have been generated under the terms of the previous co-brand agreement. The decrease in UAL's cash, restricted cash and short-term investments balances was primarily due to a $3.4 billion unfavorable reduction in cash flows from operations in 2008 as compared to 2007. The operating cash decrease was due to increased cash expenses, mainly fuel and fuel hedge cash settlements. Fuel hedge collateral requirements also used operating cash of $965 million in the year ended December 31, 2008. A full-text copy of UAL's Annual Report on Form 10-K is available for free at: http://ResearchArchives.com/t/s?3a09 UAL Corporation and Subsidiary Companies Statement of Consolidated Financial Position At December 31, 2008 (In Millions) Assets Current Assets: Cash and cash equivalents $2,039 Short-term investments - Restricted cash 54 Fuel hedge collateral deposits 953 Receivables, less allowance for doubtful accounts 714 Deferred income taxes 263 Prepaid fuel 219 Aircraft fuel 237 Prepaid expenses and other 382 Operating property and equipment: Owned equipment 10,517 Less - Accumulated depreciating and amortization (1,598) ----------- Total owned equipment 8,919 Capital leases - 10,517 Less - Accumulated amortization (224) ----------- Total capital leases 1,393 ----------- Total operating property 10,312 Other assets: Intangibles 2,693 Goodwill - Aircraft lease deposits 297 Restricted cash 218 Investments 81 Others 999 ----------- Total other assets 4,288 ----------- TOTAL ASSETS $19,461 =========== Liabilities and Stockholders' Equity Current liabilities: Advance ticket sales 1,530 Mileage Plus deferred revenue 1,414 Accounts payable 829 Long-term debt maturing within one year 782 Accrued salaries, wages and benefits 756 Fuel derivative payable 858 Fuel purchase commitments 219 Current obligations under capital leases 168 Accrued Interest 112 Distribution payable 4 Advanced purchase of miles - Other 609 ----------- Total current liabilities 7,281 Long-term debt 6,007 Long-term obligations under capital leases 1,192 Other liabilities and deferred credits: Mileage Plus deferred revenue 2,768 Postretirement benefit liability 1,812 Advanced purchase of miles 1,087 Deferred income taxes 799 Other 980 ----------- Total other liabilities 7,446 ----------- Commitments and contingent liabilities - Mandatorily convertible preferred securities - Stockholders' equity: Preferred stock - Common stock 1 Additional capital invested 2,666 Retained earnings (5,199) Stock held in treasury (26) Accumulated other comprehensive income 93 ----------- TOTAL LIABILITIES $19,461 =========== UAL Corporation and Subsidiary Companies Unaudited Statement of Consolidated Operations Year Ended December 31, 2008 (In Millions) Operating revenues: Passenger - United Airlines $15,337 Passenger - Regional Affiliates 3,098 Cargo 854 Other operating revenues 905 ----------- Total Operating Expenses 20,194 Operating expenses: Aircraft fuel 7,722 Salaries and related costs 4,311 Regional affiliates 3,248 Purchased services 1,375 Aircraft maintenance 1,096 Depreciation and amortization 932 Landing fees and other rent 862 Distribution expenses 710 Aircraft rent 409 Cost of third party sales 272 Goodwill impairment 2,277 Other impairments and special items 339 Other operating expenses 1,079 ----------- Total Operating Expenses 24,632 Earnings (loss) from operations (4,438) Other income (expense): Interest expense (523) Interest income 112 Interest capitalized 20 Gain on sale of investment - Miscellaneous, net (550) ----------- Total other income (941) Loss before income taxes (5,379) and equity in loss) of affiliates Income tax benefit (25) ----------- Loss before equity in loss of affiliates (5,354) Equity in earnings (loss) of affiliates, net of tax 6 ----------- NET LOSS ($5,348) =========== Corporation and Subsidiary Companies Statements of Consolidated Cash Flows Year Ended December 31, 2008 (In Millions) Cash flows provided (used) by operating activities: Net income before reorganization items ($5,348) Adjustments to reconcile to net cash provided by operating activities: Goodwill impairment 2,277 Other impairments and special items 339 Depreciation and amortization 932 Mileage Plus deferred revenue and advance purchase of miles 738 Debt and lease discount amortization 49 Share-based compensation 31 Deferred income taxes (26) Pension expense (13) Postretirement benefit expense 1 Gain on sale of investments - Other operating activities 27 Changes in assets and liabilities Increase in fuel hedge collateral (965) Increase in fuel derivative payables 858 Increase (decrease) in accrued liabilities (155) Increase (decrease) in advance ticket sales (388) Decrease (increase) in other current assets 257 Decrease (increase) in receivables 195 Increase (decrease) in accounts payable (48) ----------- Net cash flows from (used) by operating activities (1,239) ----------- Cash flows from reorganization activities: Reorganization items, net - Increase in other liabilities - Increase in non-aircraft claims accrual - Discharge of claims and liabilities - Revaluation of Mileage Plus frequent flyer deferred revenue - Revaluation of other assets and liabilities - Pension curtailment, settlement and termination - ----------- Net cash flows from reorganization activities - ----------- Cash flows provided (used) by investing activities: Net (purchases) sales of short-term investments 2,295 Purchases of EETC securities - Additions to property and equipment (415) (Increase) Decrease in restricted cash 484 Decrease in segregated funds - Additions to deferred software costs (60) Proceeds on disposition of property and equipment 94 Proceeds from asset sale-leasebacks 274 Proceeds on litigation of advanced deposits 41 Other, net 8 ----------- Net cash flows provided (used) by investing activities 2,721 ----------- Cash flows provided (used) by financing activities: Proceeds from Credit Facility - Repayment of Credit Facility (18) Repayment of DIP Financing - Repayment of other long-term debt (666) Principal payments under capital leases (235) Proceeds from issuance of long-term debt 337 Special distribution to common shareholders (253) Decrease in aircraft lease deposits 155 Payment of deferred financing costs (120) Proceeds from sale of common stock 107 Purchases of treasury stock (11) Proceeds from exercise of stock options - Other, net 2 ----------- Net cash flows provided (used in) by financing activities (702) ----------- Increase (decrease) in cash and cash equivalents 780 Cash and cash equivalents at beginning of year 1,259 ----------- Cash and cash equivalents at end of year $2,039 =========== About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORP: Settles Claims, Various Disputes wit LAX -------------------------------------------------- United Air Lines, Inc., asks the U.S. Bankruptcy Court for the Northern District of Illinois to approve a settlement agreement it entered into with the city of Los Angeles, acting on behalf of the Los Angeles World Airports for the resolution of adversary proceeding no. 05-02806, case no. 08-cv-3337, certain proofs of claim filed by the City, and issues concerning United's occupancy of Terminals 6, 7 and 8 at Los Angeles International Airport. Micah E. Marcus, Esq., at Kirkland & Ellis LLP, in Chicago Illinois, recounts that United and the City are parties to a Terminal Lease Agreement that covers space Terminal 6 and Terminal 7 at LAX. United and the City are also parties to a lease that covers space in Terminal 7 and Terminal 8 at LAX, including space used for FIS. United and the City now desire to terminate the Terminal 6/7 Lease, settling certain matters related to United's occupancy of space in Terminals 6, 7, and 8, and to enter into a new lease covering United's use of certain space in Terminal 6. Pursuant to the Debtors' Second Amended Joint Plan of Reorganization, United Air Lines, Inc. assumed executory contracts and unexpired leases with the City of Los Angeles related to its operations at Los Angeles International Airport. In February 2006, the City filed 14 requests for payment of cure claims and United has disputed the Cure Claims. No distributions have been made to the City on account of those claims. Accordingly, the salient terms of the Settlement Agreement provides that: * On the closing date of the stipulation, the City will pay United $34,061,895. The City will deposit the Terminal Fee into an escrow subject to certain conditions to closing. * The Terminal 6 or 7 Termination Fee will be calculated as (i) $225 million representing the agreed value of United's assets in Terminals 6 and 7 being transferred to the City, plus (ii) $10 million, plus (iii) $653,547 -- the Terminal 7 Non-Leased Space Settlement, plus (iv) $3,580,269 -- United lawsuit Settlement, minus (v) $630,385 -- Terminal 6 Tariff Settlement, and minus (vi) $4,541,536 -- the Cure Claim amount. * The Terminal 6 or 7 Lease will be terminated and United will relinquish the space it occupies, including United's assets located in Terminals 6 and 7. Despite the termination, United agrees to fulfill its restoration obligations with respect to its relinquished space in Terminals 6 and 7 no later than September 30, 2009. * United will assign its sublease of certain space in Terminal 6 from Continental Airlines, Inc. to the City and agrees to obtain all consents and approvals from Continental necessary for the assignment. United's fulfillment of its restoration obligations and obtaining all consents and approvals required to assign the Continental Sublease are conditions to the closing date. * Effective on the Closing Date, United and the City will enter a new lease for certain space located in Terminal 6. * The parties agree to modify the Terminal 7 or 8 Lease to provide for the deletion and addition of a minor amount of space in Terminal 7. United agrees to fulfill its restoration obligations with respect to all space relinquished under the Terminal 7/8 Lease. * As to any space occupied in Terminals 6 or 7 and 8 after the relinquishment date not subject to the Continental Sublease, the Terminal 7 or 8 Lease or the new Terminal 6 lease, United agrees that the space will be occupied pursuant to the Los Angeles International Airport Passenger Terminal Tariff. United also agrees to fulfill all of its obligations under the Tariff upon vacating any space occupied under the Tariff, including any restoration obligations. * Contingent upon occurrence of the Closing Date prior to September 30, 2009, the parties agree that the Settlement Agreement will constitute a full satisfaction of all claims asserted in the adversary proceedings or the "Terminal 7 or 8 litigation" and agree to cooperate in the filing of one or more stipulations to dismiss the Terminal 7 or 8 Litigation. * If the Closing Date does not occur prior to September 30, 2009, the parties agree that the Settlement Agreement will include the unwinding of acts taken in furtherance of termination of the Terminal 6 Lease, and the Terminal 7 or 8 Litigation will continue. * The Cure Claims will be settled for a payment of $4,541,536. However, the environmental claim filed under (i) Claim No. 044991 for $6,385,000, (ii) Claim No. 044992 for $6,385,000, and (iii) Claim No. 045001 for $5,623,000 are resolved by the parties' agreement that the Environmental Claims will not be discharged in the bankruptcy cases, but will remain subject to United's right to object or contest any claims. The Cure Claims will be withdrawn with respect to the bankruptcy cases; provided, however, the Environmental Claims are not waived. * Unsecured Claim No. 44983, filed by the City, will be allowed for $945,667 in Class 2E-6 under the Plan. * United and the City exchange mutual releases except for (i) amounts owing under the Settlement Agreement, (ii) claims arising under the Settlement Agreement, and (iii) any claims, actions or arguments, arising under or related to the adversary proceedings (iv) any claims, actions, or arguments arising under or related to a certain action between the parties before the U. S. District Court for the Central District of California that was dismissed without prejudice on February 26, 2008, including any matters covered by the interim settlement agreement between the parties which was executed on February 21, 2008, and which was amended on January 12, 2009. Mr. Marcus stresses that given the complexity and uncertainty of the outcome of the Terminal 7 or 8 Litigation, the expense, inconvenience and delay could be substantial if the parties are forced to continue the litigation. He notes that the Terminal 7 or 8 Litigation has spanned over 3 years, and the Court's Memorandum of Decision, entered on May 31, 2008, is still under review by the U.S. District Court for the Northern District of Illinois. By entering into the Settlement Agreement, United and the City will avoid future litigation costs concerning Terminals 6, 7 and 8, resolve the Terminal 7/8 Litigation, provide an amicable framework for United's continued operations at LAX, and resolve the Cure Claims in the most economically manner possible, he says. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORP: 7th Cir. Affirms Lower Court Ruling on ALPA Dispute ------------------------------------------------------------- The U.S. Court of Appeals for the Seventh Circuit has affirmed a judgment issued by Judge Joan Lefkow of the U.S. District Court for the Northern District of Illinois with respect to a dispute between UAL Corporation's United Air Lines and the Air Line Pilots Association and ALPA-UAL members. United had alleged that the union engaged in unlawful job action. The District Court entered a preliminary injunction order on November 18, 2008, barring each of the ALPA and the pilots, from calling, permitting, instigating, authorizing, encouraging, participating in approving or continuing any interference with United's airline operations. On December 10, 2008, ALPA and Messrs. Tamkin, Domaleski, Fernandez and Freeman took an appeal to the United States Court of Appeals for the Seventh Circuit from the Preliminary Injunction Order. The Seventh Circuit agrees with the District Court's complete findings with respect to evidence showing the Defendants' involvement in various job actions. The Panel holds that the District Court did not err in finding that United clearly provided that the Defendants authorized and ratified the unlawful job actions. The Seventh Circuit only reversed the District Court's findings solely to point out that the statistical evidence regarding a marked increase in sick leave is not enough to constitute clear proof that ALPA was implicated in a sick-out scheme. The ALPA and ALPA-UAL members Steven M. Tamkin, Robert J. Domaleski, Jr., Xavier Fernandez, and Anthony R. Freeman had taken appeal from the District Court's preliminary injunction order, raising four main issues: (i) the six-month statute of limitations bars United's claim that ALPA engaged in an unlawful job action; (ii) ALPA has made reasonable efforts under Section 2, First of the Railway Labor Act in response to the alleged sick-out; (iii) United has not satisfied the requirements of Section 6 of the Norris-LaGuardia Act because it failed to show that the Defendants participated in or ratified any unlawful acts; and (iv) the requirements of Section 7 of the NLGA were not satisfied and that an injunction was not necessary to prevent a violation of Section 2, First of the RLA. The Seventh Circuit noted that the RLA has no statute of limitations for actions under Section 2, First, they borrowed the six-month statute of limitations from Section 10(b) of the National Labor Relations Act. According to the Panel, they find that the Defendants engaged in unlawful actions before and during the limitations period that caused injuries to United before and during the limitations period. The Seventh Circuit, thus, believes that United's action is not time barred. The Seventh Circuit held that the Defendants' argument that they made reasonable effort to address the alleged acts is without merit. The Seventh Circuit accorded substantial deference to the District Court's findings that ALPA has not engaged in a good faith effort in ending the sick out and the Defendants do not come close to demonstrating clear error. The Seventh Circuit further held that Section 6 of the NLGA applies to United's claims for injunctive relief, and that it need not revisit the use of the clear proof of standard because United still prevails under the higher clear proof standard, which requires "clear and convincing evidence, as opposed to a preponderance." The Defendants have mischaracterized the District Court's analysis related to a letter dated July 21, 2008, related to sick leave usage, the Seventh Circuit pointed out. The Defendants have complained that the District Court erred by drawing a negative inference from the failure of the individual defendants to testify at the hearing regarding the June 11, 2008 meeting regarding the sick-out. Pursuant to the District Court's finding of material inconsistencies in the deposition testimony of the Defendants, the Seventh Circuit held that there is nothing inappropriate in drawing that inference and adhering to it in the absence of any evidence to the contrary. As to the letter dated July 15, 2008, the Seventh Circuit believes that the District Court was correct to consider the letter's content and tone in relation to all of the other evidence about the job actions. The letter used inflammatory language and informed the pilots that it was necessary to begin working on a new collective bargaining agreement, the Seventh Circuit panel said. The Seventh Circuit also noted that the Defendants have attempted to characterize the Standstill Agreement as a "voluntary" cessation of any job actions. However, the District Court was within its discretion to find that an agreement signed only after a lawsuit has been filed is not voluntary, and that even a voluntary cessation is not determinative. The District Court may also consider how easily former practices might be resumed at any time in determining the appropriateness of injunctive relief, the Panel said. ALPA and the Pilot-Defendants had employed means of communication, including telephone trees that left no trail of evidence. Moreover, the Strike Preparedness Committee had been reactivated. Without the threat of contempt, the District Court could reason that ALPA would continue to say one thing in public and to the court, and another thing to its members. The Seventh Circuit agreed with the District Court that a voluntary cessation of wrongful conduct is a factor for a court to consider in deciding whether an injunction is necessary. The Seventh Circuit said the Defendants had been "less than candid" in their testimony. Accordingly, the District Court was within its discretion in finding that an injunction was the only means of assuring compliance with the status quo provisions of the RLA, the Seventh Circuit said. A full-text copy of the Seventh Circuit Opinion is available for free at: http://bankrupt.com/misc/UAL_7thCircOpinionreALPAAppeal.pdf Permanent Injunction Trial set for May 26 On February 6, 2009, United Air Lines, Inc. and Air Line Pilots Association, International, Steven Tamkin, Robert Domaleski, Xavier Fernandez and Anthony Freeman submitted to the U.S. District Court a stipulated schedule for the completion of discovery and establishing trial dates on United's request for permanent injunction pursuant to Section 151 of the Railway Labor Act. The parties have agreed to February 13, 2009, as the deadline for filing supplemental responses to all discovery requests and March 6, 2009, as deadline for production of supplemental documents to document requests. The parties also agreed to these deadlines: * April 1, 2009 -- deadline to file additional discovery requests. * April 30, 2009 -- deadline to complete depositions * May 26, 2009 -- trial on United's request for a permanent injunction, which will resume on June 8, 2009 Judge Lefkow approved the stipulated schedule on February 12, 2009. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORP: Status Hearing in Chapter 11 Case on March 31 ------------------------------------------------------- UAL Corporation and its affiliates notify parties-in-interest that a status hearing on their Chapter 11 cases will be held March 31, 2009. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. UAL CORP: FMR Reports 15% Equity Stake; BofA Holds 13% of Shares ---------------------------------------------------------------- In a regulatory filing with the U.S. Securities and Exchange Commission dated February 12, 2009, FMR Corp. disclosed that it beneficially owns 19,583,387 shares of UAL Corp. Common Stock, representing 15% of UAL's total outstanding shares. UAL has 143,885,823 outstanding shares of common stock as of February 20, 2009. FMR has sole power to vote or to direct the vote of 804,045 shares, and sole power to dispose of or to direct the disposition of 19,583,387 shares. Fidelity Management & Research As a wholly owned subsidiary of FMR Corp., and as investment adviser to various investment companies, Fidelity Management & Research Company is the beneficial owner of 18,759,982 shares or 14.369% of UAL's common stock outstanding. The number of UAL shares owned by the investment companies at December 31, 2008, included 1,634,440 shares of Common Stock resulting from the assumed conversion of $53,340,000 principal amount of UAL CORP CV 4.5% 6/30/21 144A -- 30.6419 shares of Common Stock for each $1,000 principal amount of debenture. FMR and its chairman, Edward C. Johnson 3d, through their control of Fidelity and the funds, each has sole power to dispose of the 18,759,982 shares owned by the Funds. Members of Mr. Johnson's family are the predominant owners, directly or through trusts, of Series B shares of FMR common stock representing 49% of FMR's voting power. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B shares will be voted in accordance with the majority vote of Series B shares. Accordingly, through their ownership of voting common stock and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR. Neither FMR LLC nor Mr. Johnson has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds' Boards of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds' Boards of Trustees. Pyramis Global Advisors Trust Pyramis Global Advisors Trust Company, an indirect wholly owned subsidiary of FMR Corp. and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 437,045 shares or 0.335% of the UAL outstanding Common Stock as a result of its capacity as investment manager of institutional accounts owning the shares. The number of UAL shares owned by the institutional accounts at December 31, 2008, included 51,155 shares of Common Stock resulting from the assumed conversion of $1,800,000 principal amount of UAL CORP CV 4.5% 6/30/21 144A -- 30.6419 shares of Common Stock for each $1,000 principal amount of debenture. Mr. Johnson and FMR, through their control of Pyramis Global, each has sole dispositive power over 437,045 shares and sole power to vote or to direct the voting of 417,685 shares of Common Stock owned by the institutional accounts. Fidelity International Fidelity International Limited and various foreign-based subsidiaries provide investment advisory and management services to a number of non-U.S. investment companies and certain institutional investors. Fidelity International is the beneficial owner of 386,360 shares or 0.296% of UAL Common Stock outstanding. Partnerships controlled predominantly by members of the family of Mr. Johnson, chairman of FMR Corp. and Fidelity International, or trusts for their benefit, own shares of Fidelity International voting stock with the right to cast approximately 47% of the total votes which may be cast by all holders of Fidelity International voting stock. FMR Corp. and Fidelity International are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals. Bank of America Discloses 13.96% Stake In a regulatory filing with the United States Securities and Exchange Commission, dated February 13, 2008, Bank of America Corporation disclosed that it beneficially owns 17,866,324 shares of UAL Corp. Common Stock, representing 13.96% of UAL's total outstanding shares. UAL had 143,885,823 outstanding shares of common stock as of February 20, 2009. BofA reported that it has shared voting power of 17,722,206 shares, as well as shared dispositive power of 17,866,234 shares. BofA is the parent holding company of 11 other entities, which also disclosed its individual ownership of UAL stock: % of UAL's No. of outstanding Entity Shares shares ------ ------ ----------- NB Holdings Corporation 15,722,835 12.20% BAC North America Holding Company 14,883,135 11.55% BANA Holding Corporation 14,883,135 11.55% Bank of America, N.A. 14,883,135 11.55% NMS Services, Inc. 2,143,289 1.66% NMS Services (Cayman), Inc. 2,143,289 1.66% Columbia Management Group LLC 835,718 0.65% Columbia Management Advisors LLC 835,718 0.65% Banc of America Securities Holdings Corporation 839,700 0.65% Banc of America Securities LLC 839,700 0.65% Banc of America Investment Advisors, Inc 4,708 0.004% Charles F. Bowman, senior vice president of Bank of America Corporation, reported that BofA, N.A.'s shares include: -- 4,934,476 shares of UAL common stock held on behalf of The Employer Stock Fund under the United Air Lines, Inc. Ground Employee 401(k) Plan; -- 2,097,329 shares of UAL common stock held on behalf of The Employer Stock Fund under the United Management and Administrative 401(k) Plan; and -- 2,303,098 shares of UAL common stock held on behalf of The Employer Stock Fund under the United Flight Attendant 401K Plan. BofA, N.A. has shared voting and shared dispositive powers with respect to the shares of UAL common stock held under the trusts maintained pursuant to the plans. Moreover, BofA, N.A. has sole power to dispose of 4,712,432 shares and it also shares the power to direct the disposition of 10,170,703 shares. NB Holdings shares the power to vote for 15,578,717 shares and has shared dispositive power of 15,722,835 shares. BAC North America has shared voting power for 14,739,017 shares and has shared dispositive power for 14,883,135 shares. BANA shares the power to vote on 14,739,017 shares and has shared dispositive power of $14,883,135 shares. Columbia Management Group shares the power to vote on 686,678 shares and has shared dispositive power of 835,718 shares. Columbia Management Advisor has sole voting power for 685,338 shares and shares the power to vote on 1,340 shares. Columbia Management Advisor has sole dispositive power of 798,278 and shares the power to dispose of shares for 37,440. BofASH, BofAS, NMS Services and NMS Services Cayman, and BofA Investment each have shared voting and dispositive power of all their shares. Capital World Discloses 8.1% Stake Capital World Investors, in its capacity as investment adviser to various investment companies registered under Section 8 of the Investment Company Act of 1940, disclosed in a regulatory filing with the United States Securities and Exchange Commission, dated February 12, 2009, that it is the beneficial owner of 10,670,070 shares of UAL Corp. Common Stock, as of December 31, 2008. The 10,670,070 shares represent 8.1% of the 128,839,000 shares of UAL common stock outstanding, Donald H. Rolfe, attorney-in-fact of Capital World, reported. The shares reported by Capital World, include 2,224,600 shares resulting from the assumed conversion of $72,600 principal amount of the 4.5% Senior Convertible Notes due June 30, 2021. Mr. Rolfe also stated that one or more clients of Capital World Investors have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the common stock of UAL, on behalf of New Perspective Fund, Inc. Legg Mason Reports 4.74% Stake In a regulatory filing with the U.S. Securities and Exchange Commission dated February 17, 2009, LMM LLC disclosed that it beneficially owns 6,105,000 shares of UAL Corp. common stock, representing 4.74% of UAL's total outstanding shares. UAL had 143,885,823 outstanding shares of common stock as of February 20, 2009. LMM said that it has shared voting power and shared dispositive power of all its shares. In the same filing, Legg Mason Capital Management, Inc. disclosed that it beneficially owns 3,222,089 shares of UAL common stock, representing 2.5% of UAL's outstanding shares. Legg Mason Capital Management has shared voting power and shared dispositive power of all its shares. D.E. Shaw Reports 1.5% Stake In a regulatory filing with the U.S. Securities and Exchange Commission dated February 17, 2009, D.E. Shaw & Co., L.P. and David E. Shaw disclosed that they each beneficially own 1,911,090 shares of UAL Corp. common stock, representing 1.5% of UAL's total outstanding shares. UAL had 143,885,823 outstanding shares of common stock as of February 20, 2009. Furthermore, D.E Shaw and Mr. Shaw reported that they have shared voting and dispositive power for their individual holdings. D.E. Shaw and Mr. Shaw's individual holdings are comprised of: * 549,090 shares in the name of D.E. Shaw Valence Portfolios, L.L.C.; * 1,360,100 shares that D.E. Shaw Valence has the right to acquire through exercise of listed call options; and * 1,900 shares in the name of D.E. Shaw Investment Management, L.L.C. However, Mr. Shaw does not own any shares directly. Mr. Shaw is the president and sole shareholder of D.E. Shaw & Co. Inc., which is the general partner of D.E. Shaw & Co. L.P. D.E. Shaw & Co. L.P. is the investment adviser of D. E Shaw Oculus Portfolios and D.E. Shaw Synoptic Portfolios 2 -- the managing member and investment adviser of Valence Portfolios and the managing member of D.E. Shaw Investment Management, L.L.C. By virtue of Mr. Shaw's position in the companies, he may be deemed to have the shared power to vote or direct the vote of, and the shared power to dispose or direct the disposition of, the 1,911,090 shares attributed to him. Therefore, Mr. Shaw may be deemed to be the beneficial owner of the shares. Nevertheless, Mr. Shaw disclaims beneficial ownership of the 1,911,090 shares. Executives Dispose of Shares In separate regulatory filings with the Securities and Exchange Commission, four directors of UAL Corp. disclosed their disposition of shares of UAL common stock as of February 2, 2009: Date of No. of Shares No. of Shares Officer Deposition Deposed of Currently Owned ------- ---------- ------------- --------------- Paul R. Lovejoy 02/02/09 6,825 67,392 Kathryn A. Mikells 02/02/09 1,706 41,214 John P. Tague, 02/02/09 13,165 115,269 Glenn F. Tilton 02/02/09 33,225 304,908 The Directors disposed of their shares of UAL common stock at $10.009 per share. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. USA DATANET: Court Approves Sale of Wholesale & Hosted VoIP Assets ------------------------------------------------------------------ Warwick Valley Telephone Company said WVT Communications' modified initial bid for the acquisition of the wholesale and hosted VoIP assets of USA Datanet has been accepted by the United States Bankruptcy Court for the Northern District of New York. Warwick Valley did not disclose the terms of the deal. Contact: Warwick Valley Telephone Company Duane W. Albro President & CEO Tel: (845) 986-2100 Founded in 1998, US Datanet Corporation, aka USA Datanet -- http://www.usadatanet.com-- based in Syracuse, New York, provides IP-enabled voice, Internet access and enhanced communications services for commercial, carrier and residential customers throughout the Upstate New York region. The company and two other affiliates filed for bankruptcy on October 3, 2008 (Bankr. N.D. N.Y. Case No. 08-32560). Judge Margaret M. Cangilos-Ruiz presides over the case. John R. Weider, Esq., at Harter, Secrest & Emery LLP, in Rochester, serves as the Debtors' bankruptcy counsel. When it filed for bankruptcy, US Datanet disclosed less than $50,000 in assets, and between $1 million and $10 million in debts. Its two affiliates both disclosed between $1 million and $10 million in both assets and debts. VALLEJO CITY: $12MM Deficit May Lead to Salary & Services Cut ------------------------------------------------------------- Carolyn Jones at San Francisco Chronicle reports that the city of Vallejo, in California, is considering a 20% cut on city salaries and services to make up for an unexpected $12 million budget deficit. According to San Francisco Chronicle, the City Council will discuss cutback scenarios for the next fiscal year, seeking ways to compensate for drastic declines in property tax, sales tax, and building fees. Vallejo, says the report, also has a $2 million legal bill for its bankruptcy case, which would increase over the next few months as proceedings continue. San Francisco Chronicle relates that the general fund would drop to $71 million, from $83 million in 2008. Citing city finance director Robert Stout and city manager Joe Tanner, San Francisco Chronicle states that this year's cuts will affect public safety. According to the report, the city staff is recommending that the council cut 30 sworn police positions from a current staff of 115, and close two fire stations. San Francisco Chronicle quoted City Councilwoman Stephanie Gomes as saying, "It's painful. We're going well below our ability to provide essential services. We have nothing left to cut." About the City of Vallejo Vallejo -- http://www.ci.vallejo.ca.us/GovSite-- is a city in Solano County, in California. As of the 2000 census, the city had a total population of 116,760. It is located in the San Francisco Bay Area on the northern shore of San Pablo Bay. The City is a charter city organized and exercising governmental functions under its charter and the laws and constitution of the state. Its governing body is its City Council. The City filed for protection under Chapter 9 of the U.S. Bankruptcy Code on May 23, 2008 (Bankr. E.D. Calif. Case No. 08-26813). Marc A. Levinson, Esq., and Norman C. Hile, Esq., at Orrick, Herrington & Sutcliffe LLP in Sacramento, California, represent the City. According to Vallejo's comprehensive annual report for the year ended June 30, 2007, the city has $983 million in assets and $358 million in debts. VANDERBILT UNIVERSITY: Moody's Assigns Rating on $330 Mil. Bonds ---------------------------------------------------------------- Moody's Investors Service has assigned an Aa2 rating to Vanderbilt University's $330 million Series 2009A and 2009B Revenue Bonds to be issued by The Health and Educational Facilities Board of the Metropolitan Government of Nashville and Davidson County, Tennessee. The rating carries a stable outlook. At this time Moody's have also affirmed the ratings of Aa2, P1 and VMIG1 on the University's debt, as detailed at the end of this report (Rated Debt section). Use Of Proceeds: Proceeds from the Series 2009A and 2009B Revenue Bonds will be used to refund tax-exempt commercial paper used for various capital projects (approximately $104 million), financing various capital improvements ($100 million) which include an ambulatory care facility, refunding of the Series 2005 B-1 and 2005 B-2 bonds ($126 million, currently in flexible rate and term rate modes, respectively) and to pay costs of issuance. Legal Security: General unsecured obligation of the University. Debt-Related Derivative Instruments: The University currently has 25 active and outstanding interest rate swap agreements with five highly rated counterparties, each with $20 million collateral posting thresholds, above which Vanderbilt must post collateral. The total notional amount is $1.7 billion and represents a blend of fixed-payer swaps, basis swaps and fixed-receiver swaps. As of February 28, 2009, the University was required to post approximately $190 million in collateral, an amount which had increased markedly with recent declines in 30-year LIBOR-based swap rates in FY 2009, but remains lower than levels in mid- December. Given the University's financial resource base, capable financial management team and contingency planning around the potential for additional collateral posting requirements, Moody's Aa2 rating reflects the derivative exposure. Strengths * Excellent financial resource cushion with total financial resources of $4.3 billion (80% of which is expendable), covering pro-forma debt by 3.9 times at the end of FY 2008. With Moody's estimated decline of 30% (based on industry averages in the first half of the fiscal year) in FY 2009 from endowment spending and investment losses, however, the total declines to just over $3 billion, cushioning pro-forma debt by 2.1 times. Reduced expendable financial resources cushion pro- forma debt by 1.7 times, or 86% of annual operating expenses. * Vibrant market positions supporting education, research and health care revenue streams, for comprehensive university with 11,577 full-time equivalent students and $444 million in research expenditures in FY 2008. * Healthy operating performance with a 2.9% average operating margin and 9.3% operating cash flow margin for FY 2008, aided by healthy performance of patient care activities. * Solid level of donor support with gift revenues averaging $140 million per year over the last three years. The University has raised $1.65 billion towards its $1.75 billion comprehensive campaign, with over 100,000 donors to date. Challenges * Reduction in liquidity from funds locked up in the Commonfund Short-Term (approximately $73 million as of February 28, 2009) and Intermediate ($70 million as of February 28, 2009) Funds and collateral posting requirements under swap agreements ($190 million as February 28, 2009) combined with investment losses which Moody's estimate to be in the 25% range fiscal year to date based on industry averages. The University continues to act to rebuild liquidity through the prior issuance of the Series 2009A Taxable Notes, through prior and planned liquidation of hedge fund and limited partnership positions, through positive operating cash flow which continues as a credit strength and through an easing of spending plans for various capital projects. The current financing refunds a portion of Vanderbilt's self-liquidity debt, thereby reducing potential demands on liquidity. * Exposure to health care industry, which is potentially more volatile than higher education, with patient care revenues comprising 64% of total revenue base in FY 2008. * Heavy competition for constrained research funding, particularly for NIH grants, comprising approximately 80% of research grant revenue in FY 2008. Market/Competitive Strategy: Growing National Prominence For Academic Programs, With Strong Research And Healthcare Competitive Positions Vanderbilt continues to make progress in strengthening its student and research market positions, which should translate into ongoing fiscal stability when combined with the improvement in performance of the health service operations. Total full-time equivalent enrollment for the University's comprehensive array of undergraduate, graduate, and professional programs stood at 11,577 in fall 2008, reflecting a manageable 6% increase over the past four years. Undergraduate students comprise approximately 57% of the University's total FTE enrollment. Freshman application volume continues to grow and combined with an improved yield on accepted applicants, has enabled Vanderbilt to become progressively more selective, accepting 25.3% of freshman applicants for fall 2008. Yield on admitted students was 36.6% for the same period. Net tuition per student of $19,167 remains somewhat below Moody's median of $21,687 for all Aa-rated private universities, as Vanderbilt continues to use financial aid to attract sought-after students. Research funding has grown at a remarkable pace over recent years with research expenditures reaching $444 million in FY 2008. Vanderbilt holds a solid track record in garnering increases in National Institutes of Health funding. Between FY 2005 and FY 2008, the University had an 18% increase in federal research funding, of which NIH funding is the majority. The University's School of Medicine is now ranked tenth nationally in NIH awards, up strongly from its 24th ranking in 2000. The growth has been supported by significant facilities investments. Operating Performance: Healthy Operating Performance And Cash Flow Generation, Bolstered By Good Performance In Health Care Operations Moody's expects the University's overall operating performance to remain positive. Through the end of FY 2008, Vanderbilt generated an average 2.9% operating margin, resulting in over five times coverage of actual debt service requirements. The University's operating cash flow margin was 9.3% in FY 2008 in line with prior years. Management is taking steps to restrain some operating expenditures in light of the broader economic climate. With 64% of the University's consolidated revenues derived from patient care, the financial performance of the health services functions are critical to sustained credit quality. Vanderbilt's primary health operations include 836 licensed beds approved for operation with potential expansion over the next few years to 946 beds. Hospital discharges and outpatient visits continue to expand. The relatively new Children's Hospital continues to see favorable volume trends. The University is investing in additional outpatient facilities designed to further increase volume. Management expects FY 2009 operating cash flow to remain positive. The payor mix has evolved over the last decade, with 2008 showing increases in managed care to (43%), followed by Medicare (21%), TennCare (18%), commercial indemnity (10%) and self pay and other (8%). The Medical Center does have exposure to potential state reductions in the TennCare plan, potentially offset for some time by federal stimulus to help states with health care coverage for Medicaid and other health care programs. Balance Sheet Position: Strong Level Of Financial Resources Despite Recent Losses; Reduced Future Borrowing Plans Remain Manageable Moody's expects the University's large, albeit reduced, financial resource base to continue providing a good cushion relative to debt and annual operating expenses. For FY 2008, Vanderbilt had total financial resources of $4.3 billion, up 50% since FY 2004; with a superior level of unrestricted resources, 78% as of June 30, 2008. With Moody's estimated decline of 30% (based on industry averages in the first half of the fiscal year) in FY 2009 from endowment spending and investment losses, however, the total declines to just over $3 billion cushioning pro-forma debt by 2.1 times. Reduced expendable financial resources cushion pro-forma debt by 1.7 times or 86% of annual operating expenses. Moody's note that with the majority of the Taxable Notes proceeds from a February sale used as a boost to liquidity, that those assets will provide management with considerable flexibility. Other capital plans beyond those with firm donor commitments are under review with likely postponement of some in response to broader economic climate. During FY 2008 Vanderbilt's endowment posted a 2.1% return, with a solid 10-year annualized return as of the same date of 11.1%. The endowment had an estimated negative 15.7% return for the first six months of FY 2009, somewhat aided by a larger than typical allocation to cash as several manager positions were in transition. Vanderbilt recently had a smooth transition in its Vice Chancellor for Investments role and has made material additions to its staff members in investment oversight and risk budgeting. The asset allocation is broadly diversified with (as of December 2008) equities accounting for 23%, venture capital and private equity 23%, hedge funds 22%, real assets 16%, fixed income 9% and cash 7%. Vanderbilt's $1.75 billion comprehensive campaign is on target to meet its goal by 2010, with $1.65 billion raised through January 2009. Total gift revenue has averaged $140 million per year over the last three years. Almost $500 million of gifts received through December 2008 were targeted for endowment, further bolstering ongoing financial resource levels. Short-Term Rating Rationale Moody's believes that Vanderbilt's self-liquidity program offers adequate coverage for the tender features of its weekly variable- rate demand bonds and combined program total of $675 million of commercial paper under the taxable and tax-exempt commercial paper programs. It is intended that the CP program will be managed to a maximum aggregate $50 million daily maturity and no more than $100 million maturing in any five consecutive business days. The liquidity profile also supports the $61 million of Series 2005 B1 Revenue Bonds currently in flexible mode as well as the $64 million of Series 2005 B2 Revenue Bonds with a mandatory tender on April 1, 2009. Currently, the University has $126 million of tax- exempt CP and $124 million of taxable CP outstanding, well under the $675 million program limit. With the refunding of the Series 2005 B1 and 2005 B2 Bonds, along with $104 million of tax-exempt CP, the University is substantially reducing outstanding debt supported by its self liquidity program. Given the University's capable treasury management team and sound reporting on its self- liquidity assets and liabilities, Moody's apply Moody's Modified Approach as detailed in Moody's November 2006 report, "Variable Rate Debt Instruments Supported By An Issuer's Own Liquidity." The obligation to make payments on tendered bonds that are not remarketed and to pay commercial paper at maturity is a general obligation of Vanderbilt University, and the University manages its own self-liquidity program. Moody's believes that Vanderbilt's self-liquidity program, which, in addition to the University's own cash and investments, also relies on the presence of two bank liquidity support agreements for same-day liquidity, provides adequate coverage for the tender features of the variable-rate demand bonds ($277 million), taxable and tax-exempt commercial paper programs ($100 million weekly limit), Flex Rate 2005 B-1 bonds ($61 million-to be refunded) as well as the Series 2005 B-2 Revenue Bonds ($62 million-to be refunded) with a mandatory tender on April 1, 2009. The University currently has $598 million of investments with same-day liquidity including funds with State Street US Treasury Money Market Fund (rated Aaa by Moody's), working cash deposits with P-1 rated banks and approximately $83 million in highly rated fixed income holdings which include predominantly US Treasuries with same-day or next-day availability. Management has deployed a considerable portion of the proceeds of the Series 2009A Taxable Notes in liquid funds which will provide an additional cushion relative to potential demands on liquidity. In addition to its $125 million Bank of America, N.A. (rated Aa2/P-1) credit agreement to supplement the University's investments with same-day liquidity, the University has a $250 million Wells Fargo Bank, N.A. (rated Aa1/P-1) dedicated line of credit in order to provide additional self-liquidity support. Combined, the two agreements currently provide coverage of $375 million of maturing commercial paper and/or tendered variable-rate bonds that have not been remarketed, although the lines will not cover interest payments on maturing CP or bonds. The University is responsible for making the request for funding, and funds will be provided by the banks directly to the Tender and Paying Agents. Moody's has reviewed the bond and commercial paper documents and believes that the coordination of timing between bank credit agreements and the bond and CP documents allow adequate time for the University to draw on the lines of credit and have funds deposited with the Tender and/or Paying Agents. The University has the right to cancel the bank agreements with notice and/or replace the financial institutions at its discretion. In addition, under certain circumstances Bank of America can terminate its commitment immediately. There is no mandatory tender of outstanding bonds upon the expiration or termination of the liquidity agreement. Events which would cause the Bank of America Agreement to terminate are directly related to the credit quality of Vanderbilt University and include: 1) Vanderbilt's failure to pay principal or interest on the Bonds when due; 2) downgrade of the rating on the Bonds by Moody's and S&P ratings on the debt to below Baa3 and BBB-, respectively; 3) University becoming insolvent or unable to pay its debts, or a court proceeding seeking an order for liquidation of the University which is not terminated for a period of 60 days; 4) University defaulting in principal or interest payments on any Debt which equals or exceeds $15 million; 5) failure to pay or satisfy a final, non-appealable judgment in excess of $5 million within 60 days; or 6) a provision of the Agreement relating to payment of principal or interest ceasing to be valid and binding. Under certain circumstances Wells Fargo can terminate its commitment immediately. There is no mandatory tender of outstanding bonds upon the expiration or termination of the liquidity agreement. Events which would cause the Wells Fargo Agreement to terminate are directly related to the credit quality of Vanderbilt University and include: 1) Vanderbilt's failure to pay principal or interest on the Bonds when due; 2) downgrade of the rating on the Bonds by Moody's and S&P ratings on the debt to below Baa3 and BBB-, respectively; 3) University becoming insolvent or unable to pay its debts, or a court proceeding seeking an order for liquidation of the University which is not terminated for a period of 60 days; 4) University defaulting in the due performance or observance of any term, covenant or agreement contained in any Debt Instrument relating to Debt which equals or exceeds $10 million where the effect of such default is to accelerate the maturity of such related debt; 5) failure to pay or satisfy a final, non-appealable judgment in excess of $5 million within 30 days; or 6) a provision of the Agreement relating to payment of principal or interest ceasing to be valid and binding. In addition to these immediate termination events, other less severe events of default could enable the Banks to terminate the facilities as soon as 45 days later. Thus, Moody's regularly monitors the University's levels of available funds which could be shifted from longer-term investment strategies to investments with same-day liquidity. Should the bank lines of credit be terminated with notice or not renewed upon their expiration dates, Moody's believe coverage is currently sufficient. Outlook Moody's stable outlook is based on Moody's expectations of continued positive operating performance of the consolidated university, including the healthcare operations, coupled with ongoing improvement in liquidity profile, as well as continued strong market positions in teaching, research and healthcare and manageable debt plans. What could change the rating - UP Material growth in financial resources with manageable increases in debt; sustained favorable operating performance aided by health care operations. What could change the rating - DOWN Decline in financial resources; deterioration in operating performance to consistent losses; significant weakening in leverage ratios from additional borrowing; material reduction in liquidity through collateral posting requirements without offsetting increases in liquid assets. Key Indicators (Fall 2008 enrollment data and FY 2008 financial data, the figure in parentheses, when present, represents an estimated 30% decline from FYE2008 resource levels): * Enrollment: 11,577 full-time equivalent students * Freshmen Selectivity: 25.3% * Freshmen Yield: 36.6% * Total Financial Resources: $ 4.3 billion ($3.0 billion) * Total Pro-Forma Debt: $1.5 billion * Expendable Financial Resources to Pro-Forma Debt: 2.4 times (1.7 times) * Expendable Financial Resources to Operations: 1.2 times (0.86 times) * Average Operating Margin (3 years): 2.9% * Patient Care as Portion of Operating Revenues: 64% Rated Debt * Series 1998B, 1998C, 2001A, 2001B, 2008A, 2008B, 2009A, 2009B and Taxable Notes Series 2009A: Aa2 * Series 2005 B1 (to be refunded): Aa2/VMIG1 (self-liquidity flex-rate mode); insured by MBIA whose current financial strength rating is Baa1 under review for possible upgrade * Series 2005 B2 (to be refunded) and B3: Aa2; insured by MBIA whose current financial strength rating is Baa1 under review for possible upgrade * Series 2000A, 2000B, 2002A, 2003A, 2005A: Aa2/VMIG1 (self - liquidity) * Tax-Exempt Standard and Extendible Municipal Commercial Paper Notes, Series A and B: P1 (self-liquidity) * Taxable Commercial Paper Notes, Series C: P1 (self-liquidity) VERSO TECH: Files Disclosure Statement In Support of Joint Plan --------------------------------------------------------------- Verso Technologies, Inc., et al., and the Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court for the Northern District of Georgia on February 20, 2009, an explanatory Disclosure Statement in support of their Joint Plan of Liquidation. The Plan Proponents disclose that under the Plan, all holders of Allowed Claims will receive at least their pro rata share of the liquidation value of the Debtors' assets. Therefore, the Plan Proponents believe the Plan is in the best interests of all holders of Claims. The Plan calls for the substantive consolidation of all five of the Debtors' assets and liabilities into a single estate. The Plan further provides that, on the Plan's Effective Date, all existing assets of the estate will be transferred to a Liquidating Trust. It will be the Liquidating Trustee's task to complete liquidation of the assets, including pursuing Causes of Action, with approval by and consultation with a Beneficiaries Committee as provided under the Plan. The Liquidating Trustee will also be primarily responsible for objections to Claims and for distributions to the various classes. The Debtors have sold substantially all of their assets pursuant to a court-approved sales process. The Debtors currently hold certain assets including cash, cash equivalents, deposits, rights to refunds, tax refunds, bank balances, certain accounts receivable, all business-related documents, all Causes of Action, assets held under employee benefit plans, and insurance policies or right to insurance proceeds. As of February 15, 2009, after payment of all administrative expenses billed to date, the Debtors had approximately $2.61 million in cash. The estimated value of other remaining assets (exclusive of Causes of Action and related insurance policies and proceeds but including a refund of the professional fees advanced to the Canadian bankruptcy) is estimated to be approximately $319,000. Classification of Claims and Interests The Plan divides the claims against and interests in the Debtors parties into seven classes: Class 1 Administrative Expense Claims. Class 2 Tax Claims Class 3 Priority Claims Class 4 General Unsecured Claims Class 5 Convenience Class Unsecured Claims Class 6 Secured Claims Class 7 Interests Classes 1, 2, 3 and 6 are unimpaired under the Plan. Classes 4 and 5 are impaired under the Plan and are entitled to vote to accept or reject the Plan. Holders of Interests under Class 7 will not receive or retain any property under the Plan and are thus deemed to have rejected the Plan. Their votes will not be solicited. On the Plan's Effective Date, the Liquidating Trustee shall make a pro-rata distribution to General Unsecured Claims under Class 4 of any liquidation proceeds that remain in the estate after the payment and satisfaction of Allowed Claims in Classes 1 through 3 and Class 6. Thereafter, on each Distribution Date, the Liquidating Trustee shall continue to make pro-rata distributions to the holders of Class 4 Claims of any available Liquidation Proceeds that remain in the Liquidating Trust after the payment of remaining claims, until the Consummation Date or the date on which all Class 4 claims have been paid in full, whichever occurs first. A summary of all of the classes, including an estimation of the liability and potential Distributions is presented in the following table: Liability Distribution Class Claim Type Estimate Estimate 1 Administrative $72,842 100% 2 Tax Claims $45,000 100% 3 Priority Claims $65,000 100% 4 General Unsecured Claims $17,000,000 10% - 25% 5 Convenience Class Unsecured Claims $550,000 12% 6 Secured Claims $0 N/A 7 Allowed Interests N/A N/A "Cramdown" Provisions Because Class 7 is deemed to have rejected the Plan, the Plan Proponents will seek confirmation of the Plan pursuant to the "cramdown" provisions of Sec. 1129(b) of the Bankruptcy Code. Under Sec. 1129(b), even without the requisite number of acceptances of each impaired Class, the Court may still confirm the Plan provided that at least one impaired Class has accepted the Plan without regard to the acceptances of insiders, and the Plan does not discriminate unfairly against, and is otherwise fair and equitable, to such impaired Class. A full-text copy of the Plan Proponents' Explanatory Disclosure Statement, dated as February 20, 2009, is available at: http://bankrupt.com/misc/VersoTech.JointDisclosureStatement.pdf About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No. 08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson, James R. Sacca, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP represent the Debtors as counsel. The Debtors selected Logan and Company Inc. as their claims agent. Darryl S. Laddin, Esq., and Stephen M. Dorvee, Esq., at Arnall Golden Gregory LLP represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VISTEON CORP: Makes Payment on Outstanding Bonds ------------------------------------------------ Kimberly S. Johnson at The Associated Press reports that Visteon Corp. said that it has made a major payment on outstanding bonds by a Tuesday deadline. According to Alex Ortolani of Bloomberg, Visteon made the interest payment of about $16 million on its bonds a day after Fitch Ratings said the company faces "imminent or inevitable" default. Visteon, the Bloomberg report relates, pays 7 percent annual interest on $450 million in bonds, in two payments each year, on March 10 and Sept. 10, according to its regulatory report for 2007. The AP relates that some analysts had expected Visteon to miss the payment and instead file for Chapter 11 bankruptcy protection. The Troubled Company Reporter, citing The Wall Street Journal, said in January that Visteon hired Kirkland & Ellis LLP as legal counsel and Rothschild Inc. as financial adviser to prepare for a possible bankruptcy filing. According to the Journal's John D. Stoll and Jeffrey McCracken, people familiar with the matter said that Visteon and its advisers are studying whether it should file for bankruptcy pre-emptively to conserve its cash. Visteon spokesperson Jim Fisher, according to The AP, said that the Company made an interest payment of $16 million on bonds set to mature in 2014. The report quoted Mr. Fisher as saying, "Our bond interest payment was paid in full today [March 11], and we continue to manage through the current challenging operating environment." The AP states that the New York Stock Exchange delisted Visteon shares last week due to low trading levels. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is an automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. * * * As reported by the Troubled Company Reporter on February 27, 2009, Visteon, for fourth quarter 2008, posted a net loss of $328 million on sales from continuing operations of $1.7 billion. For fourth quarter 2007, Visteon reported a net loss of $43 million on sales of $2.9 billion. For the full year 2008, Visteon reported a net loss of $663 million on sales of $9.5 billion compared with a net loss of $372 million on sales of $11.3 billion for full year 2007. As of Dec. 31, 2008, Visteon had $5.26 billion in total assets, $1.71 billion in current liabilities, $2.61 billion in long-term debt. Visteon also had $627 million in employee benefit obligations, including pension obligations; $404 million in postretirement benefits other than pensions; $139 million in deferred income tax obligations; $365 million in other non-current liabilities; and $264 million in minority interests in consolidated subsidiaries. Visteon has an $869 million shareholders' deficit. As reported by the Troubled Company Reporter on March 11, 2009, Fitch Ratings downgraded the Issuer Default Rating of Visteon Corporation to 'C' from 'CC', indicating that a default was imminent or inevitable. The ratings were removed from Rating Watch Negative, where they were placed on Dec. 11, 2008. The TCR said on Jan. 14, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Visteon Corp. to 'CCC' from 'B-' and removed all the ratings from CreditWatch, where they had been placed on Nov. 13, 2008, with negative implications. The outlook is negative. At the same time, S&P also lowered its issue-level ratings on the company's debt. The TCR reported on Nov. 27, 2008, that Moody's Investors Service lowered Visteon Corporation's corporate family and probability of default ratings to Caa2, and Caa1, respectively. In a related action, Moody's also lowered the ratings of Visteon's senior secured term loan to B3 from Ba3, unguaranteed senior unsecured notes to Caa3 from Caa2, and guaranteed senior unsecured notes to Caa2 from Caa1. Visteon's Speculative Grade Liquidity remains SGL-3. The outlook is negative. W.R. GRACE: Court Okays Voting Procedures; Ballots Due May 20 ------------------------------------------------------------- Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware has given W.R. Grace & Co. and its debtor- affiliates the green light to solicit votes on its bankruptcy exit plan. As reported in yesterday's Troubled Company Reporter, Judge Fitzgerald approved the Disclosure Statement explaining the First Amended Chapter 11 Joint Plan of Reorganization filed by W.R. Grace and 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, as containing adequate information within the meaning of Section 1125 of the Bankruptcy Code. Judge Fitzgerald found that the Disclosure Statement complies with Rule 3013 of the Federal Rules of Bankruptcy Procedure, and describes in specific and conspicuous language all acts to be enjoined by, and identifies the entities subject to, all Plan injunctions against conduct not otherwise enjoined under the Bankruptcy Code. Judge Fitzgerald also ruled that the Debtors' voting procedures provide for a fair and equitable voting process and are consistent with Section 1126 of the Bankruptcy Code and the Bankruptcy Rules. All Ballots must be received by the Debtors' noticing agent, BMC Group, Inc., no later than 4:00 p.m. (Eastern Time) of May 20, 2009, by either: (a) U.S. Mail: BMC Group, Inc. Attn: W.R. Grace Voting Agent P.O. Box 2007 Chanhassen, MN 55317-2007 (b) Courier: BMC Group, Inc. Attn: W.R. Grace Voting Agent 17850 Lake Drive East Chanhassen, MN 55317 Judge Fitzgerald established March 11, 2009, as the record date for determining creditors and interest holders entitled to vote on the Plan. The Debtors' Plan is premised on the settlement of the Debtors' asbestos-related personal injury liabilities and obtaining a $1.0 billion exit financing. Under the Plan, the Debtors will pay about $3.9 billion to asbestos PI creditors. "It's an important step and we're looking forward to working on the next phase," Bill Corcoran, Grace's vice president of public and regulatory affairs, told Steven Church of Bloomberg News. W.R. Grace has indicated that current capital-market conditions may preclude obtaining the $1 billion loan it will need for emerging from Chapter 11 reorganization. The Court will convene the Phase I hearing to consider confirmation of the Plan at 9:00 a.m. (Eastern Time) each day from June 22 to June 25, 2009. The Court will resume for Phase II of the confirmation hearings from September 8 to 11, 2009, at 11:00 a.m. every day on those dates. Parties entitled to vote on the Plan must file objections to Plan confirmation, if any, no later than 4:00 p.m. Eastern time on May 20, 2009. Supplements to the Plan may be filed until May 10. All objections to the Plan must (a) state with particularity the legal and factual grounds for that objection, (b) provide, where applicable, the specific text that the objecting party believes to be appropriate to insert into the Plan, and (c) describe the nature and amount of the objector's claim or equity interest. Objections not timely filed and served in accordance with the provisions of the Confirmation Procedures Order will not be heard and will be overruled. The Debtors must serve notice of the hearing on the Plan Confirmation on or before April 25. A full-text copy of the Disclosure Statement Order is available for free at: http://bankrupt.com/misc/grace_DS_order.pdf Solicitation Period and Procedures The Debtors must mail to parties entitled to vote to accept or reject the Plan, no later than March 30, 2009, the Solicitation Package containing: * the confirmation hearing notice; * the confirmation procedures order, without referenced exhibits; * the Disclosure Statement; * the Exhibit Book, with the Plan attached; * the Voting Procedures; * one or more applicable Ballots or Master Ballots; and * pre-addressed return envelopes Copies of the Plan, Disclosure Statement, Confirmation Hearing Notice, Exhibit Book and the Confirmation Procedures Order can be accessed for free at the Debtors' Web site at http://www.grace.com/or at the Voting Agent's Web site at http://www.bmcgroup.com/wrgrace/ Claimants who have more than one claim will receive one solicitation package only, to avoid duplication and to reduce expenses. Those claimants, however, will receive one Ballot for each different claim. Any holder of a claim who seeks to challenge the amount of its claim for voting purposes may file a motion, pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure, temporarily allowing the claim in a different amount for voting purposes. A holder of a claim who intends to object to the Plan confirmation on account of its claim not being properly classified may ask the Voting Agent a ballot for provisional voting under a different class and may vote to accept or reject the Plan under certain prescribed procedures. The Debtors may correct or otherwise make non-substantive changes to the Plan, Exhibit Book, Disclosure Statement, Voting Procedures, Ballots and Master Ballots and other related Court- approved notices without further Court order prior to mailing to parties-in-interest. Revised Financial Projections Prior to entry of the Disclosure Statement Order, W.R. Grace submitted a second corrected copy of their pro-forma and prospective financial information in line with the First Amended Joint Plan filed on February 27, 2009. In the corrected pro-forma financial data, the Debtors revised the estimated equity value of their shares of common stock as of the presumed December 31, 2009, effective date from the $5.99 to $11.40 per share range to that of $5.96 to $11.38 per share range. A full-text copy of the second corrected pro-forma financial data is available for free at: http://bankrupt.com/misc/grace_amnddprojctns.pdf Parties File Notices of Discovery Discovery relating to the confirmation of the Debtors' Plan is still ongoing. These parties-in-interest filed notices with the Court disclosing that they have conducted discovery in connection with the Plan. (a) The Debtors served notices of: * responses and objections to Arrowood Indemnity Company's document requests; * responses to the first set of admission requests, first set of interrogatories and documents requests of CNA Companies, certain insurers, Government Employees Insurance Company and Columbia Insurance Company; OneBeacon America Insurance Company and Seaton Insurance Company; * joinder of Zurich Insurance Company and Zurich International (Bermuda) Ltd. in CNA Companies' first set of interrogatories and first set of document request. (b) David Austern served notice of discovery responses of Asbestos PI Future Claimants' Representative. (c) The Official Committee of Asbestos Personal Injury Claimants served notices of: * responses to Zurich's joinder in the discovery requests propounded on the CNA Companies; * objections and responses to discovery requests propounded by certain insurers, OneBeacon American Insurance Company and Seaton Insurance Company, Government Employees Insurance Company and Columbia Insurance Company and CNA Companies; (d) The Debtors, Official Committee of Asbestos Personal Injury Claimants, Asbestos PI FCR, the Official Committee of Equity Security Holders filed joint response of first set of admission request, interrogatories and document requests of Federal Insurance Company; (e) Arrowood Indemnity Company notified parties-in-interest of its objections and responses to the interrogatories of the Debtors, Asbestos PI FCR and the Asbestos Committee; and (f) Travelers Casualty and Surety Company's served notice of responses and objections to the Debtors' Phase I request for production of documents to certain objecting parties. 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) WILLIAM DOUGHTY: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: William E. Doughty, Sr. 4108 Lincoln Circle P.O. Box 3726 Tupelo, MS 38803 Bankruptcy Case No.: 09-11148 Chapter 11 Petition Date: March 6, 2009 Court: United States Bankruptcy Court Northern District of Mississippi (Aberdeen) Debtor's Counsel: Craig M. Geno, Esq. Harris Jernigan & Geno, PLLC P.O. Box 3380 Ridgeland, MS 39158-3380 Tel: (601) 427-0048 Email: cmgeno@harrisgeno.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors together with its petition. The petition was signed by William E, Doughty, Sr. WL HOMES: DIP Financing Hearing Moved to March 23 ------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has postponed to March 23 the hearing to consider final approval of WL Homes LLC's request to access $30.9 million in debtor-in- possession financing. According to Bloomberg's Bill Rochelle, the Court gave WL Homes an extension of interim authority to borrow $5.3 million from Emaar Properties PJSC, the Dubai-based company that acquired WL in 2006 for $1.05 billion cash. Mr. Rochelle said the court extended the final DIP hearing to afford more time for discussions between WL Homes and creditors who have objection to the DIP loans. The official committee of unsecured creditors of the company, Bloomberg relates, contends that the financing is a "blatant scheme" to "extract releases" from creditors, "eviscerate rights of creditors to meaningfully participate in the bankruptcy process," and "destroy the committee's ability to serve as the only independent fiduciary." The Creditors Committee, the report adds, argues that the Court should examine the DIP financing with the "heightened scrutiny of an insider transaction." The committee believes the proposed lending is part of a scheme to declare the loan in "default and seize the debtor's assets." About WL Homes LLC 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. * Moody's Has 283 Cos. W/ High Default Risk in Bottom Rung Report ----------------------------------------------------------------- Moody's Investors Service has launched the "Bottom Rung," a list of the lowest-rated U.S. non-financial speculative-grade companies, as a tool to help investors discern which companies are under the most stress at a time of tight credit markets and global economic weakness. The inaugural Bottom Rung list includes the 283 companies that carry either a Probability of Default Rating of Caa1 or lower, a B3 with a negative rating outlook or a B3 with a rating under review for downgrade. These companies have not defaulted, but their current ratings indicate elevated risk of default relative to other rated corporate issuers. "The number of companies in this low-rated tier has increased substantially, which coincides with Moody's forecasts of a sharply higher speculative-grade default rate this year," said David Keisman, senior vice president at Moody's Investors Service. "There are now nearly twice as many companies on the Bottom Rung list as there would have been a year ago." An increasing percentage of U.S. speculative-grade companies are appearing on the Bottom Rung. More than 23% of that universe currently meets the Bottom Rung rating criteria. In contrast, 12% met the criteria in the first quarter of 2008 and just over 9% did so in the first quarter of 2007. "Even as the overall number of speculative-grade companies increases, the percentage in the Bottom Rung continues to rise sharply as well," Mr. Keisman said. "The expansion of this low- rated tier reflects wide-ranging stress in corporate credit markets and the pronounced effects of the global economic slowdown." Moody's currently forecasts that the trailing 12-month default rate for all U.S. speculative-grade issuers will reach 14.5% in November 2009, compared with an actual default rate of 4.4% at the end of 2008. For the already low rated Bottom Rung population as a whole, the estimated default rate over the next 12 months is just over 45%. The probability of default varies significantly from issuer to issuer, with the companies in the lowest rating categories (C,Ca,Caa3) at a substantially higher risk of default than the companies on the list with relatively higher ratings. Moody's defines default as a bankruptcy, a missed payment of principal or interest, or a distressed exchange. The Bottom Rung is one of many tools and research products that Moody's provides to help investors identify companies most at risk as the default cycle begins to accelerate. These include Probability of Default Ratings, Loss Given Default assessments, Speculative Grade Liquidity ratings, and, later this year, SGL component scores. These data points, which are increasingly used in leveraged finance practice, aim to improve ratings transparency; the Bottom Rung publication will now aggregate them for each company on the list. The Bottom Rung list does not reflect any change in Moody's analytical approach, but aggregates for investors companies with already-low ratings to help highlight the scope of stress in speculative-grade credit. * Fed Reserve Chair Defends Bail-Out for Financial Institutions --------------------------------------------------------------- Arizona Senator John McCain said in an interview with CNBC that the U.S. government should allow some automakers and large banks to declare bankruptcy. He said that the government's efforts to bail out troubled companies using taxpayers' money have only worsened the economy. Federal Reserve Chairman Ben S. Bernanke, however, in his speech delivered at the Council on Foreign Relations on March 10, defended the U.S. government's decision to provide loans to struggling financial institutions. Mr. Bernanke said, "In the midst of this crisis, given the highly fragile state of financial markets and the global economy, government assistance to avoid the failures of major financial institutions has been necessary to avoid a further serious destabilization of the financial system, and our commitment to avoiding such a failure remains firm. Looking to the future, however, it is imperative that policymakers address this issue by better supervising systemically critical firms to prevent excessive risk-taking and by strengthening the resilience of the financial system to minimize the consequences when a large firm must be unwound." Mr. Bernanke stated that the world is suffering through the worst financial crisis since the 1930s, a crisis that has precipitated a sharp downturn in the global economy. "In the near term, governments around the world must continue to take forceful and, when appropriate, coordinated actions to restore financial market functioning and the flow of credit," he stated. "Until we stabilize the financial system, a sustainable economic recovery will remain out of reach." * Stinging Economy Surges Demand for Law Firms in Calgary --------------------------------------------------------- Nathan Vanderklippe of The Globe and Mail reports, as some Calgary companies find themselves struggling to stay ahead of creditors, law firms can hardly keep up with all the work. According to The Globe and Mail, a booming economy previously triggered a serious drought for insolvency and restructuring lawyers in Canada, but especially in Calgary, where more than a decade of roaring oil and gas prices caused many people to forget the sting of economic pain. Now, between choked credit markets and nose-diving petroleum prices, flailing energy and real estate companies are creating a rush of work for those whose job it is to help companies and creditors navigate troubled water, said The Globe and Mail. According to the report, more than a year after manufacturing troubles in Central Canada brought a surge in demand for eastern law firms, Calgary's firms are now scrambling to hire and re-train qualified talent. The report cites Borden Ladner Gervais LLP has tripled its insolvency ranks, among many firms. According to the report, There is no simple way to track the volume of Companies' Creditors Arrangement Act filings made by distressed companies seeking bankruptcy protection from their creditors, but Robert Anderson of Osler Hoskin & Harcourt LLP estimates that the numbers "have far more than doubled." * U.S. Auto Suppliers Facing Reduced Payments This Month -------------------------------------------------------- Alex Ortolani of Bloomberg reports that thousands of U.S. auto suppliers, including Visteon Corp. and TRW Automotive Holdings Corp., are receiving reduced payments from automakers this month as President Barack Obama's car task force considers further aid for the industry. According to Bloomberg, auto-parts makers may have trouble meeting bills or buying new materials due to a dearth of payments this month after the lack of business in December and January. Mike Wall, a CSM Worldwide Inc. analyst, stated the cash pinch means layoffs and restructuring for many of the more than 4,000 U.S. partsmakers, and bankruptcy and liquidation for others. Treasury Secretary Timothy Geithner, co-leader of Barack Obama's auto task force, is expected to make a decision by month's end on the request by Chrysler LLC and General Motors Corp for additional $21.6 billion in loans. The automakers have sought concessions from suppliers and unions in order to cut costs. * FDIC May Get $500 Billion to Guarantee Bank Deposits ------------------------------------------------------ Damian Paletta at The Wall Street Journal reports that Senate Banking Committee Chairperson Christopher Dodd introduced a bill that would temporarily let Federal Deposit Insurance Corp. borrow $500 billion from the Federal Reserve and Treasury Department to replenish the fund it uses to guarantee bank deposits. According to WSJ, The funds would be distinct from the $700 billion financial-sector bailout that lawmakers aren't willing to expand. WSJ relates that the FDIC can presently borrow $30 billion from Treasury, but the bill would permanently increase that amount to $100 billion, which the FDIC could use without approval from the Federal Reserve and Treasury. WSJ quoted former FDIC Chairperson Bill Seidman as saying, "The amount of deposits is growing fast and the FDIC's risk is growing. They've got to have the money, and have it right away, if the depositors need to be protected." WSJ notes that bank failures depleted the FDIC's deposit-insurance fund to $19 billion at the end of the fourth quarter to backstop $4.5 trillion of insured deposits at more than 8,000 banks. Citing Capitol Hill aides, WSJ says that the size of the request suggests the government is looking for flexibility to either stabilize or wind down a large bank. The government, according to the report, has suggested it wouldn't let any of the nineteen U.S. banks with more than $100 billion of assets to collapse. WSJ states that Democrats might try attaching the measure to a separate bill that would let bankruptcy judges alter the terms of mortgages that are in foreclosure. * U.S. Gov't Mulls Financial Assistance for Small Businesses ------------------------------------------------------------ The U.S. government is considering providing new assistance to small businesses, Greg Hitt, Damian Paletta, and Jonathan Weisman at The Wall Street Journal report, citing Treasury Secretary Timothy Geithner. According to WSJ, people familiar with the matter said that Mr. Geithner told House Democrats that the government is working on plans to boost liquidity for small businesses as part of the administration's broadening efforts to increase lending and stop job losses. WSJ relates that White House officials pointed to $730 million from the stimulus plan that went to the Small Business Administration to reduce small-business fees and guarantee a greater share of some SBA loans. According to the report, the government would authorize the SBA to support $28 billion in lending guarantees. The government will launch a plan next week to provide financing, liquidity, and guarantees to open up small- business lending, the report says, citing Mr. Geithner. WSJ states that the program would be added to the Term Asset- Backed Securities Loan Facility, which government officials hope will generate up to $1 trillion of lending for businesses and households. Citing Mr. Geithner, WSJ states that a "small-business and community-bank lending initiative" would finance the purchase of highly rated Small Business Administration loans, increase the government guarantee for SBA loans, and reduce the fees on certain SBA loans, among other things. * SEC Beefs Up Account Inspections due to Recent Frauds ------------------------------------------------------- Lisa Brennan of Bloomberg reports that the U.S. Securities and Exchange Commission is asking investors to verify holdings as the agency increases scrutiny of money managers in the wake of Bernard Madoff's alleged $50 billion fraud. The SEC is sending letters to investment-advisory customers to learn whether their account statements match what money managers have disclosed to the agency, Bloomberg reported, citing Lori Richards, who heads the SEC's inspections office. Disparities may mean advisers are keeping two sets of books, as regulators say Mr. Madoff did. "We are beefing up our exam procedures in light of the recent frauds," Ms. Richards said in a March 6 interview. "Investors should not draw any negative conclusions" about their money managers "if they get one of these letters." As it expands examinations in response to Mr. Madoff and R. Allen Stanford, the Houston-based financier accused last month of falsifying statements and misappropriating clients' funds, the SEC faces questions over whether it's unnecessarily scaring investors. * Nadler to Propose Lifting of BAPCPA's 210-Day Limit for Leases ---------------------------------------------------------------- According to Bloomberg, U.S. Representative Jerrold Nadler will propose changes to the bankruptcy code that would lift the 210-day limit for retailers to decide which stores to keep operating. Those in favor of an extension or the lifting of the seven-month limit said the current law forces more companies to consider liquidation as creditors push for quicker resolutions, as in the case of Circuit City Stores Inc. Bloomberg News reports that Harvey Miller of Weil, Gotshal & Manges LP said he will testify at the Congressional hearings on proposed changes to the Bankruptcy Code. In April 2005, Congress revised the Bankruptcy Code to counter abuses in the bankruptcy system. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 shortened debtors' time to decide on whether to assume or reject leases to a mere seven months, disallowed periodic extensions of the debtors' exclusive periods to file a plan of reorganization, and limited bonuses to managers through the key employee retention programs. "BAPCPA's numerous creditor-friendly amendments and modifications have profoundly impacted the Chapter 11 process, to the point that it is nearly impossible for retailers to reorganize, regardless of the prevailing national and international economic conditions," said Lawrence C. Gottlieb, Michael Klein, Ronald R. Sussman, in an article titled BAPCPA's Effects on Retail Chapter 11s Are Profound. BACPCA amended Section 365(d)(4) to require debtors to assume or reject their real property leases within 120 says of filing, subject to an additional 90-day court-approved extension. Extensions beyond this initial 210-day period cannot be granted without the consent of the landlord, regardless of the size of the retailer. According to Bankruptcy Creditors Service, Inc., many retailers filed for bankruptcy with a prospect for reorganizing, but ended up closing their stores and liquidating inventory. Retailers covered by BCSI that were unable to keep their business or sell their business as a going concern include Circuit City Stores, Inc., Linens 'n Things, Inc., Mervyn's LLC, Sharper Image and Levitz. The counter-parties to these leases -- shopping centers, malls and landlords -- plan to fight any changes to the 210-day rule, Lauren Coleman-Lochner Bloomberg reported on March 11. According her report, the International Council of Shopping Centers is in favor of keeping the rule, saying it gives landlords flexibility in filling the vacancies. The time limit, added to the bankruptcy code in 2005, is "a firewall to keep one retail bankruptcy from harming shopping center owners and other retailers," said Betsy Laird, a Washington-based senior vice president of the ICSC's global policy office. "The provisions in 2005 were the result of seven or eight years of negotiations." Harvey Miller, however, offered a different view. The current law is "self-defeating" for landlords "because they're going to have a lot of shopping centers that are not going to have a tenant," Mr. Miller said, according to the report. * David Hawthorne Joins Focus Management ---------------------------------------- Focus Management Group President J. Tim Pruban said that David Hawthorne has joined the business restructuring firm to broaden its growing hospitality industry practice. Capitalizing on his extensive background in hospitality and hotel turnarounds, Mr. Hawthorne will reinforce and expand upon the Company's nationwide support of its hospitality clientele. "David is an expert in improving the operations of hospitality clients, and we are excited to have someone of his caliber join the Focus team," said Mr. Pruban. "David has an unprecedented knowledge of the hospitality industry, and his expertise in guiding large hotel corporations through restructuring challenges will be a valuable resource to our clients and their stakeholders." Mr. Hawthorne is a veteran of the hospitality industry and brings to Focus Management Group over 20 years of experience in improving P&L, achieving business turnarounds for distressed companies, spearheading rapid emergence from bankruptcy and managing successful real estate development projects. Prior to joining Focus, David served as the President and CEO for a leading U.S. hotel conglomerate with over 100 facilities. Mr. Hawthorne deployed strategies to overhaul financial and operational processes, led the company through all phases of a planned bankruptcy and decreased hotel costs while enhancing efficiency and customer satisfaction through the establishment of effective incentives. In other prior experience, Mr. Hawthorne developed and implemented a program to improve service and profitability of a major Las Vegas casino and hotel, which achieved higher operating profits and customer satisfaction for the business. Mr. Hawthorne is based out of Focus Management Group's Tampa office and can be reached at (800) 528-8985 or via e-mail at d.hawthorne@focusmg.com. About Focus Management Group Focus Management Group provides nationwide services in turnaround management, insolvency proceedings, business restructuring and operational improvement with a senior-level team of ninety professionals. Headquartered in Tampa, Florida, with offices in Atlanta, Chicago, Cleveland, Greenwich, Los Angeles and Nashville, the firm provides a full portfolio of services to distressed companies and their stakeholders, including secured lenders and equity sponsors. * Law Firm Group Pushes for Worldwide Financial Court ----------------------------------------------------- Erik Larson of Bloomberg reports that a group of 45 law firms representing about 10,000 victims of Bernard L. Madoff's alleged fraud is seeking the creation of an international court of financial services to supplement legal proceedings in each country. The Global Law Firm Alliance said the proposed court would give financial-fraud victims around the world another venue for restitution when local courts run out of options for recovering cash. The Alliance wants the proposal included in the agenda at the April 2 meeting in London of the 20 biggest economies. "We want a global answer to this global problem," Alliance Chairman Javier Cremades said at a press conference in New York, according to Bloomberg. "An additional forum would increase legal certainty and help to restore confidence" in the financial system, he said. Members of the Global Law Firm alliance met for the first time in Madrid on February 17 for a conference. Their original aim was to establish an international alliance of law firms in reaction to the global fraud committed by Bernard Madoff. Members agreed to form an international network and coordinate the legal teams in support of the victims who have been affected by the worldwide fraud. Speechly Bircham, which joined the coalition, said that various firms of the Alliance are representing banks, hedge funds, public authorities and individuals. The Alliance, according to Speechly, will provide a platform for the coordination of legal actions in different jurisdictions and a forum for the exchange of experiences, information and know-how. Javier Cremades, founder and executive director of Spanish firm Cremades & Calvo-Sotelo, has been appointed as President of the Alliance. Mr. Cremades said in a February statement, "This represents a milestone. A group of lawyers from a variety of law firms and different continents, coming together to evaluate the scope of damage caused and to articulate the right to defence of the defrauded. Possibly this is the first time in history that a real global answer is sought to a global problem. This is even more important in a case like the Madoff-case as it escapes the traditional reach of national jurisdictions." * Moelis Taps Mark Hootnick to Boost Restructuring Group -------------------------------------------------------- Moelis & Company announced March 9 that Mark Hootnick has joined the firm as a Managing Director in its Recapitalization & Restructuring Group. Mr. Hootnick, who will be based in New York, brings over 14 years of restructuring experience and expertise to the firm. Mr. Hootnick has had a long career of providing restructuring advice to companies, creditors, shareholders and other interested parties on restructuring transactions both in Chapter 11 and in non-bankruptcy driven resolutions. After beginning his career as an attorney at Kramer, Levin, Naftalis & Frankel, he became a founding member of Miller Buckfire. Mr. Hootnick also served as a Managing Director at Greenhill & Co. and Imperial Capital and most recently as a Managing Director at Broadpoint Securities. Ken Moelis, Chief Executive Officer of Moelis & Company, said, "Expanding our restructuring capabilities is a top priority of our firm as we continue to explore new and innovative ways to help our clients solve the problems they are facing in these challenging times." Bill Derrough, Co-Head of the Recapitalization & Restructuring Group, added, "Mark is a great addition to our growing Recapitalization & Restructuring Group, which now has over 50 professionals working closely with clients on critical strategic transactions. We have known and respected Mark for many years and are very excited to have him on our team." About Moelis & Company Moelis & Company is an investment bank that provides financial advisory services and capital raising solutions to clients in connection with mergers and acquisitions, restructurings and other strategic matters. The firm also manages investment funds that integrate capital with its advisory expertise. Moelis & Company serves a broad client base through its offices in New York, Boston, Chicago, London and Los Angeles. For more information, please visit www.moelis.com. * Richard Fries, Todd Marcus & Scott Stern Join Bingham McCutchen ----------------------------------------------------------------- Bingham McCutchen LLP has added three real estate finance and litigation partners known as authorities in distressed loan restructuring, real estate finance and litigation to its New York office, continuing the firm's strategic growth in key financial centers. Richard Fries, Todd Marcus, and Scott Stern join Bingham from the New York office of DLA Piper. They focus their practices on representing national and global financial institutions in real estate finance, workouts and restructurings and related litigation. Messrs. Fries and Stern join as partners in Bingham's Real Estate Practice Group, with Mr. Fries leading the firm's commercial real estate restructuring effort within the group. Mr. Marcus joins as a partner in Bingham's Financial Institutions Litigation Group. "Richard, Todd and Scott bring a wealth of sophisticated, cutting- edge workouts, transactional and litigation experience that will benefit our clients in the current market," said Robert Dombroff, New York office managing partner. "They have developed a significant and well-respected real estate finance practice in New York and nationally." In addition to further reinforcing Bingham's real estate strength in one of the world's key financial centers, the new partners complement the firm's recognized financial restructuring team, noted New York partner Jeffrey Sabin, co-leader of Bingham's global Financial Restructuring Group. "The worldwide economic crisis has led to major financial institutions with real estate matters facing complex legal issues," said Mr. Sabin. "The arrival of Richard and his team couldn't be more timely and further positions Bingham as a market leader in the financial restructuring arena." Messrs. Fries, Marcus, and Stern represent lenders, owners and developers in distressed loan workouts and restructurings; mortgage foreclosure and defaulted loan litigation, real estate litigation, distressed portfolio and asset sales; property disposition; creditors' rights and insolvency; commercial real estate loan origination, asset-based and structured finance; loan participations and syndications; and private equity joint ventures. Mr. Fries is well-known throughout the New York real estate and finance communities. He was the primary draftsperson of New York's non-judicial foreclosure statute. He lectures regularly on distressed loan workouts, mortgage foreclosure and remedies, and is acknowledged by lawyers and clients alike as a leading authority in this area. The attraction to Bingham for Mr. Fries was the firm's "world- class financial institutions and elite restructuring practices" and the opportunity to lead a team dedicated to resolving real estate issues for clients affected by the current economic market. "Bingham's first-tier insolvency practice is a perfect fit for us," said Mr. Fries, adding that the firm's commitment to New York, and its strategic leadership and growth were also factors. In addition to a market-leading financial restructuring practice, Bingham has a lengthy history of representing clients throughout the United States in major real estate transactions, advising many of the country's largest and most sophisticated financial institutions, developers, corporations, government entities, REITs and other property owners in a full range of real estate transactions. Bingham has invested significantly in its New York office during the past year, adding several key lawyers. Mr. Sabin joined in September 2008 from Schulte Roth & Zabel to co-chair Bingham's global Financial Restructuring Group. Kenneth Kopelman and Gerald Russello, both formerly with Bear Stearns, also joined Bingham's Securities Area in September. Earlier in 2008, Steven Howard and Thomas Majewski, formerly of Thacher Proffitt & Wood, joined the Securities Area and Investment Management Practice Group. With approximately 1,000 lawyers in 12 offices spanning the United States and abroad, Bingham focuses on serving clients in cross- border restructurings and insolvencies; complex securities and financial regulatory matters; high-stakes litigation; environmental issues; government affairs; and sophisticated corporate, financing and technology transactions. * White & Case to Fire 400 Staff, Staff; 3 Other Firms Make Cuts ---------------------------------------------------------------- White & Case LLP announced plans to fire about 200 junior attorneys and 200 staffers in response to the decreasing market for legal services, Bloomberg News said. White & Case also will defer the start date of about 60% of this year's incoming class of first-year attorneys in the U.S. until 2010, the firm said in a statement, according to Bloomberg. An undetermined number of partners will be laid off in the future, according to the statement. A Legal Week report stated that White & Case Chairman Hugh Verrier has confirmed the firm is to make 400 staff redundant in a grim day for the U.S. legal market that saw four major firms announce more than 800 job losses. Legal Week said the cuts, which constitute around 10% of White & Case's non-partner fee earner base, are the second round of layoffs the law firm has made after announcing in November that it was to cut 70 associates and 90 support staff firmwide. White & Case LLP is a global law firm with more than 2,400 lawyers in 34 offices in 23 countries. Among the first U.S.-based law firms to establish a truly global presence, it provides counsel and representation in virtually every area of law that affects cross-border business. Aside from White & Case, Morgan Lewis & Bockius has cut 55 lawyers and 161 staff, King & Spalding is cutting 37 associates and 85 support staff, while K&L Gates eliminated 36 associates and 76 staff in its U.S. offices, Legal Week said. * Chapter 11 Cases With Assets and Liabilities Below $1,000,000 --------------------------------------------------------------- In Re Susan Ai Kaer Bankr. D. Alaska Case No. 09-00121 Chapter 11 Petition filed March 3, 2009 Filed as Pro Se In Re Lemons, John Donnell Bankr. C.D. Calif. Case No. 09-14870 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/cacb09-14870.pdf In Re James and Carlton Family Pizza, Inc. dba Tulare Pizza Factory dba Woodlake Pizza Factory dba Visalia Pizza Factory Bankr. E.D. Calif. Case No. 09-11730 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/caeb09-11730p.pdf See http://bankrupt.com/misc/caeb09-11730c.pdf In Re D.R. Mabry, Inc. Bankr. M.D. Fla. Case No. 09-04000 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/flmb09-04000.pdf In Re Fort Worth Diagnostic Clinic, P.A. fka Fort Worth Internal Medicine & Cardiovascular Clinic, P.A. fka Fort Worth Internal Medicine & Diagnostic Clinic, P.A. Bankr. M.D. Ga. Case No. 09-70351 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/txnb09-41361.pdf In Re Hardman, Comus E. III Hardman, Jeanette Lynne Bankr. N.D. Ga. Case No. 09-65680 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/ganb09-65680.pdf In Re Pacific Investments - Sushmita, LLC Bankr. N.D. Ga. Case No. 09-65702 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/ganb09-65702.pdf In Re Smyrson, Timothy Ray dba Smyrson & Sons, Inc. dba Smyrson Enterprises, Inc. fdba AquaFuzion of Lubbock, Inc. dba Kirby Service Center dba Waterlogix of Lubbock Bankr. N.D. Tex. Case No. 09-50101 Chapter 11 Petition filed March 3, 2009 See http://bankrupt.com/misc/utb09-50101.pdf In Re C&G Enterprises, Inc. dba Cindy's Arizona Cafe Bankr. D. Ariz. Case No. 09-03825 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/azb09-03825.pdf In Re Brown, David Roger aka David Brown aka David R. Brown Bankr. C.D. Calif. Case No. 09-14993 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/cacb09-14993.pdf In Re New Century Transportation Bankr. N.D. Calif. Case No. 09-51486 Chapter 11 Petition filed March 4, 2009 Filed as Pro Se In Re Art Temple Inc. aka Marivana Viscuso Bankr. S.D. Fla. Case No. 09-13700 Chapter 11 Petition filed March 4, 2009 Filed as Pro Se In Re Ronard Industries, Inc. Bankr. N.D. Ind. Case No. 09-30770 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/innb09-30770.pdf In Re Quality Time Early Learning Center, Inc. Bankr. D. Md. Case No. 09-13569 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/mdb09-13569.pdf In Re Elegance By Design, LLC Bankr. E.D. Mich. Case No. 09-46247 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/mieb09-46247.pdf In Re Khoan Chea Than, Than, Khoan Chea (db) Khem Muoy Than dba K T Apartments Bankr. D. Nev. Case No. 09-12939 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/nvb09-12939.pdf In Re Cardinal Medical Associates, LLC Bankr. D. N.J. Case No. 09-15327 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/njb09-15327.pdf In Re Lake, Scott A. Bankr. E.D. N.Y. Case No. 09-71355 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/nyeb09-71355.pdf In Re Global Supply Force, Inc. dba Alternative Pharma dba Global Supply dba Recoup Bankr. E.D. Pa. Case No. 09-20544 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/paeb09-20544p.pdf See http://bankrupt.com/misc/paeb09-20544c.pdf In Re Elmer, Charles H. Elmer, Toni M. Bankr. W.D. Pa. Case No. 09-21484 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/pawb09-21484.pdf In Re Westerly Tire & Automotive, Inc. Bankr. N.D. Tex. Case No. 09-41391 Chapter 11 Petition filed March 4, 2009 See http://bankrupt.com/misc/txnb09-41391.pdf In Re Unger, Gregory Lewis aka Greg L. Unger Bankr. M.D. Ala. Case No. 09-10450 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/almb09-10450.pdf In Re Sears, Morris C. dba ABBA Bonding Bankr. S.D. Ala. Case No. 09-11053 Chapter 11 Petition filed March 5, 2009 Filed as Pro Se In Re Ray-Zeke Construction, Inc. Bankr. D. Ariz. Case No. 09-04001 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/azb09-04001.pdf In Re Aluminum Roofing Specialists, Inc. dba DIAL ONE Window Replacement Specialist Bankr. C.D. Calif. Case No. 09-11910 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/cacb09-11910p.pdf See http://bankrupt.com/misc/cacb09-11910c.pdf In Re The New Shakespeare Arms, Inc. Bankr. D. Conn. Case No. 09-50377 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/ctb09-50377p.pdf See http://bankrupt.com/misc/ctb09-50377c.pdf In Re Dual, Joseph Jr. Bankr. D. D.C. Case No. 09-00170 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/dcb09-00170.pdf In Re Precision Pavers, Inc. Bankr. M.D. Fla. Case No. 09-04157 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/flmb09-04157.pdf In Re Lowe, James H. aka Lowe, Jim H. Lowe, Barbara Ann aka Hunnell, Barbara Ann aka Lowe, Barbara A. Bankr. N.D. Fla. Case No. 09-30338 Chapter 11 Petition filed March 5, 2009 Filed as Pro Se In Re A & R Flooring, Inc. dba A and R Flooring dba A & R Mohawk Floorz Direct Bankr. S.D. Ga. Case No. 09-40496 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/gasb09-40496.pdf In Re Stewart Hay Company, Inc. Bankr. D. Nev. Case No. 09-50581 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/nvb09-50581.pdf In Re Ancae, Inc. Heating & A/C Bankr. D. N.M. Case No. 09-10895 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/nmb09-10895p.pdf See http://bankrupt.com/misc/nmb09-10895c.pdf In Re Lazy P Bar Ranch, LLC Bankr. W.D. Okla. Case No. 09-11023 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/okwb09-11023.pdf In Re Parmenter, Barbara K. aka Barbara K. Parmenter-Pierce aka Barbara K. Parmenter-McCormick Bankr. D. Ore. Case No. 09-60875 Chapter 11 Petition filed March 5, 2009 Filed as Pro Se In Re Valley Farms Construction, LLC Bankr. D. S.C. Case No. 09-01685 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/scb09-01685.pdf In Re Morris Radio Enterprises, L.L.C. Bankr. N.D. Tex. Case No. 09-31416 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/txnb09-31416p.pdf See http://bankrupt.com/misc/txnb09-31416c.pdf In Re Agape Overhead Doors, Inc. dba Competitive Overhead Doors dba Access Garage Doors dba Cedar Garage Doors of Texas Bankr. S.D. Tex. Case No. 09-31582 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/txsb09-31582.pdf In Re Karin's Beauty Supplies, Inc. Bankr. W.D. Wash. Case No. 09-12018 Chapter 11 Petition filed March 5, 2009 See http://bankrupt.com/misc/wawb09-12018.pdf In Re Modder, Inc. Bankr. N.D. Ala. Case No. 09-01403 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/alnb09-01403.pdf In Re Bessemer Brown Service Funeral Home, LLC Bankr. N.D. Ala. Case No. 09-01406 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/alnb09-01406.pdf In Re Brown Service Funeral Home West, LLC Bankr. N.D. Ala. Case No. 09-01407 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/alnb09-01407.pdf In Re Judy Ables-Morin Bankr. D. Ariz. Case No. 09-04062 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/azb09-04062.pdf In Re Vermillion, LLC Bankr. N.D. Calif. Case No. 09-51564 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/canb09-51564.pdf In Re W.S.R.M. Enterprises, Inc. dba Kansai Bistro dba Sushi Rock #3 Bankr. N.D. Calif. Case No. 09-30532 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/canb09-30532p.pdf See http://bankrupt.com/misc/canb09-30532c.pdf In Re Accelerated Paving, Inc. Bankr. D. Idaho Case No. 09-40290 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/idb09-40290.pdf In Re South Star Group LLC dba La Cucina Gourmet Bankr. S.D. N.Y. Case No. 09-11039 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/nysb09-11039.pdf In Re Bingham & Guy Roofing Co., Inc. Bankr. E.D. Tenn. Case No. 09-11394 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/tneb09-11394.pdf In Re Linda Joye Britt dba Britt's St B Auto Care & Towing Bankr. M.D. Tenn. Case No. 09-02570 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/tnmb09-02570.pdf In Re Austin Millworks LLC Bankr. W.D. Tex. Case No. 09-10552 Chapter 11 Petition filed March 6, 2009 See http://bankrupt.com/misc/txwb09-10552.pdf In Re Pac Solutions, Inc. Bankr. M.D. Ala. Case No. 09-30625 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/almb09-30625.pdf In Re Hasblady Guzman Inc., A California Corp. dba Bokaos Aveda Lifestyle Salon Bankr. C.D. Calif. Case No. 09-15212 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/cacb09-15212.pdf In Re Needleman, Eden aka Eden Ruiz Ari Bankr. C.D. Calif. Case No. 09-15218 Chapter 11 Petition filed March 9, 2009 Filed as Pro Se In Re Brode, James W. Bankr. E.D. Calif. Case No. 09-23983 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/caeb09-23983.pdf In Re Newton, Gary L. dba Newton Chiropractic dba Silicon Valley Chiropractic Bankr. N.D. Calif. Case No. 09-51597 Chapter 11 Petition filed March 9, 2009 Filed as Pro Se In Re Iron Wok Bankr. S.D. Calif. Case No. 09-02885 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/casb09-02885.pdf In Re Animated Design Group, Inc. dba VDO Bankr. M.D. Fla. Case No. 09-04227 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/flmb09-04227.pdf In Re Greg Holland, Inc. Bankr. N.D. Ga. Case No. 09-66184 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/ganb09-66184.pdf In Re Person, Eva J. Person, George T. Bankr. N.D. Ill. Case No. 09-07715 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/ilnb09-07715.pdf In Re Fulfillment, Print & Mail Solutions, Inc. Bankr. D. Mass. Case No. 09-40769 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/mab09-40769.pdf In Re Thomas Mid Mosser aka Thomas M. Mosser fdba Emerald City Investments, Inc. fdba Imperial Inn fdba Downtown Guest House, LLC fdba Downtown Realty Investors, LLC fdba Watford Inn fdba Guest House Bankr. D. Mont. Case No. 09-60299 Chapter 11 Petition filed March 9, 2009 Filed as Pro Se In Re Shark River Tire and Auto Center, LLC Bankr. D. N.J. Case No. 09-15658 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/njb09-15658.pdf In Re MGB Squared Corp. Bankr. S.D. N.Y. Case No. 09-11056 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/nysb09-11056.pdf In Re Quesenberry, Joseph D. aka J. Douglas Quesenberry Bankr. S.D. N.Y Case No. 09-35522 Chapter 11 Petition filed March 9, 2009 Filed as Pro Se In Re J & L Hospitality, Inc. dba Madrid San Juan Restaurant Bankr. D. P.R. Case No. 09-01768 Chapter 11 Petition filed March 9, 2009 See http://bankrupt.com/misc/prb09-01768.pdf In Re MT II LLC Bankr. E.D. Wash. Case No. 09-01199 Chapter 11 Petition filed March 9, 2009 Filed as Pro Se In Re Kent Gordon England dba Kent Gordon England, Inc. dba Classic Gardens Bankr. N.D. Calif. Case No. 09-51619 Chapter 11 Petition filed March 10, 2009 Filed as Pro Se In Re Watermelon Express, LLC Bankr. D. Conn. Case No. 09-30555 Chapter 11 Petition filed March 10, 2009 Filed as Pro Se In Re Academy of Professional Careers, Inc. Bankr. M.D. Fla. Case No. 09-02793 Chapter 11 Petition filed March 10, 2009 Filed as Pro Se In Re Star Fire Protection, Inc. Bankr. M.D. Fla. Case No. 09-01664 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/flmb09-01664.pdf In Re Mark Richey Rebecca Lundsgaard Richey aka Rebecca Ruth Lundsgaard aka Rebecca Ruth Richey Bankr. E.D. La. Case No. 09-10652 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/laeb09-10652.pdf In Re Smith, Walter Monroe Sr. Smith, Phyllis Kay Bankr. W.D. La. Case No. 09-80292 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/lawb09-80292.pdf In Re Cafe Med, LLC fdba Tel Aviv Cafe fdba Cafe Peju dba Juste Lounge Bankr. D. Md. Case No. 09-13932 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/mdb09-13932p.pdf See http://bankrupt.com/misc/mdb09-13932c.pdf In Re Jamieson, Raymond G. Bankr. D. Mass. Case No. 09-11931 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/mab09-11931.pdf In Re Anderson, Timothy G. asf Valleyview Development LLC Lindberg, Charlene M. asf Heartlight Chiropractic PA Bankr. D. Minn. Case No. 09-31470 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/mnb09-31470.pdf In Re Tomarchio, Tina Bankr. D. N.J. Case No. 09-15742 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/njb09-15742.pdf In Re Weaver Estates, Inc. Bankr. S.D. N.Y. Case No. 09-22344 Chapter 11 Petition filed March 10, 2009 Filed as Pro Se In Re Fat Joes Pizza Pasta Bar, Inc. aka Fat Joes Pizza Pasta Subs, Inc. Bankr. E.D. Tex. Case No. 09-40726 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/txeb09-40726.pdf In Re Unicare Home Health, Inc. Bankr. E.D. Tex. Case No. 09-31173 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/mieb09-31173p.pdf See http://bankrupt.com/misc/mieb09-31173c.pdf In Re Fisher Automotive, LLC Bankr. E.D. Wisc. Case No. 09-22783 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/wieb09-22783.pdf In Re N&P Holdings, LLC Bankr. E.D. Wisc. Case No. 09-22791 Chapter 11 Petition filed March 10, 2009 See http://bankrupt.com/misc/wieb09-22791.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 ***