/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090403.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, April 3, 2009, Vol. 13, No. 92 Headlines 155 EAST: $5.7 Mil. Interest Nonpayment Cues S&P's 'D' Rating 155 EAST: Missed Interest Payment Won't Affect Moody's 'Ca' Rating 24 HOUR: Moody's Affirms Corporate Family Rating at 'B2' 39500 HWY 82: Voluntary Chapter 11 Case Summary 815 2ND STREET: Voluntary Chapter 11 Case Summary ABITIBIBOWATER INC: Debt Refinancing Plan Cues Annual Report Delay ABITIBIBOWATER INC: Fairfax, Steelhead Offer Funding for Bowater ADVANCED MEDICAL: S&P Withdraws 'B+' Corporate Credit Rating ADVANTAGE RENT-A-CAR: Enterprise Won't Bid Further for Firm AMERICAN GENERAL: S&P Corrects Counterparty Credit Rating to 'B' AMERICAN GREETINGS: Moody's Cuts Corporate Family Rating to 'Ba3' AMERICAN INT'L: Former CEO Says Gov't Rescue Has "Failed" AMSCAN HOLDINGS: 10K Annual Report Won't Affect S&P's 'B' Rating ANNAPOLIS STATION: Voluntary Chapter 11 Case Summary ANTHRACITE CAPITAL: Lenders Extend Waiver to April 15 ASARCO LLC: Gets $6BB in Damages for AMC Fraudulent Conveyance ATLAS PIPELINE: Williams Venture Won't Affect S&P's 'B' Rating BALDOR ELECTRIC: Moody's Affirms 'B1' Corporate Family Rating BANK OF AMERICA: Senior Banker George Young Resigns BARRINGTON BROADCASTING: Moody's Gives 'Caa1/LD' Default Rating BATTERSON PARK: Fitch Changes Ratings on Class B Notes to 'C/RR4' BAUSCH & LOMB: Moody's Gives Negative Outlook; Keeps 'B2' Rating BEACH HOUSE PROPERTY: Has Plan for Sale to BankFirst BERNARD L. MADOFF: Customers Want Founder in Ch. 7 Bankruptcy BI-LO LLC: U.S. Trustee Forms Nine-Member Creditors Committee BI-LO LLC: May File Schedules and Statements Until June 1 BIG 10 TIRES: Files for Bankruptcy in Wilmington to Reduce Debt BIG 10 TIRES: Case Summary & 30 Largest Unsecured Creditors BOSCOV'S INC: To Modify Plan to Save Buyer's Tax Benefits BOSTON SCIENTIFIC: South Korean Study Won't Move S&P's BB+ Rating CARE TO PETS: Voluntary Chapter 11 Case Summary CHAMPION ENTERPRISES: S&P Cuts Corporate Credit Rating to 'CCC-' CHAMPION HOME: S&P Cuts Corporate Credit Rating to 'CCC-' CHARTER COMMUNICATIONS: Gets Interim OK to Access $640MM Cash CHARTER COMMUNICATIONS: Seeks Approval of Kirkland Engagement CHARTER COMMUNICATIONS: Taps Friend Hudak as Telecom Counsel CHARTER COMMUNICATIONS: Taps Curtis Mallet-Prevost as Counsel CHRYSLER LLC: Linamar Discloses Receivables Exposure CIRCUIT CITY: Authorized to Sell Trademarks to Bell Canada CITIGROUP INC: 3 Japanese Firms Submit Bids for Nikko Cordial CMR MORTGAGE II: Case Summary & 18 Largest Unsecured Creditors CMR MORTGAGE III: Case Summary & 14 Largest Unsecured Creditors COLONIAL BANCGROUP: Fitch Retains Negative Watch on 'BB' Rating COLONIAL BANCGROUP: Moody's Cuts Bank Strength Rating to 'E+' COMMUNITY BANCORP: Delays Filing of 2008 Annual Report COMMUNITY BANCORP: Defers TruPS Interest Payment, to Merge Units COMMUNITY BANCORP: Discloses Non-Compliance Under $6.6MM Loan CONSECO INC: S&P Removes 'CCC' Rating from Negative CreditWatch COOPER COMPANIES: Moody's Changes Outlook on Ba3 Rating to Stable COUNTRYWIDE FINANCIAL: Resolves Subprime Lawsuit, To Modify Loans CRUSADER ENERGY: Proposes to Use Cash, Has No Lenders Consent CU NATIONAL: Case Summary & 20 Largest Unsecured Creditors DAVID ZOOK: Voluntary Chapter 11 Case Summary DEAN NELSON: Voluntary Chapter 11 Case Summary DELPHI CORP: Auto Panel to Decide on Add'l GM Funding April 30 DELPHI CORP: Proposes May 15 Auction for Suspension and Brake Biz DELSITE INC: Runs Out of R&D Funding; Files for Chapter 7 DENAR RESTAURANTS: Voluntary Chapter 11 Case Summary DESTINY PLASTICS: Voluntary Chapter 11 Case Summary EBRO FOODS: Voluntary Chapter 11 Case Summary DIAL-A-MATTRESS: Court Okays $550,000 Loan From Sleepy's Unit DOLLAR GENERAL: S&P Raises Corporate Credit Rating to 'B+' DREIER LLP: Fortress & Elliot Mgt. Bought $225-Mil. in Phony Notes DRUG FAIR: Creditors Committee Wants Case Moved to New Jersey ESP FUNDING: Novation Agreement Won't Affect Moody's Note Ratings EURAMAX INTERNATIONAL: S&P Cuts Corporate Credit Rating to 'CC' FELCOR LODGING: S&P Downgrades Rating on Preferred Stock to 'C' FIDELITY NATIONAL: Fitch Affirms Issuer Default Rating at 'BB+' FIDELITY NATIONAL: Moody's Comments on Metavante Acquisition FIDELITY NATIONAL: S&P Affirms 'BB+' Corporate Credit Rating FLEETWOOD ENTERPRISES: Can Access $80MM BofA Facility on Interim FLINT HILL TOWER: Voluntary Chapter 11 Case Summary GENERAL MOTORS: Panel to Decide on More Loans to Delphi Apr. 30 GENERAL MOTORS: Auto Task Force Urged Firm to Consider Bankruptcy GENERAL MOTORS: European Units May Need More Drastic Govt. Aid GENERAL MOTORS: Linamar Discloses Receivables Exposure GENERAL MOTORS: Loan & Security Pact With Gov't Amended GEORGIA GULF: Moody's Downgrades Ratings on Senior Notes 'C' GEORGIA GULF: S&P Downgrades Corporate Credit Rating to 'CC' GHOST TOWN: Owes Around $2.5 Million to More Than 220 Firms GLIMCHER REALTY: S&P Junks Rating $210 Million of Preferred Stock GOODY'S LLC: Delaware District Judge Pro-Rates Stub Rent GOODY'S LLC: Creditors Committee Settles With Secured Lenders GRAMERCY FISH: Involuntary Chapter 11 Case Summary GRAY TELEVISION: Moody's Downgrades Corp. Family Rating to 'Caa1' GULF COAST: Moody's Upgrades Long-Term Rating on Revenue Bonds HAWAIIAN TELCOM: U.S. Trustee Seeks to Block $15.5 Mil. in Bonuses HELMAN GROUP: Voluntary Chapter 11 Case Summary HERITAGE LAND: Files for Chapter 11 Bankruptcy Protection HOVNANIAN ENTERPRISES: Moody's Assigns 'Caa1/LD' Default Rating HOVNANIAN ENTERPRISES: S&P Junks Corp. Credit Rating From 'B-' HUBBARD AUTOMOTIVE: Files for Chapter 11 Bankruptcy Protection IDEARC INC: Gets Interim OK to Use JPMorgan Cash Collateral INFOGROUP INC: Macro Sale Won't Affect Moody's 'Ba3' Rating INTERMET CORP: Reaches Deals with USW, GMP and Non-Union Staff INTRA-STATE AMERICA: Voluntary Chapter 11 Case Summary INTROGEN THERAPEUTICS: Wants Plan Filing Deadline Moved to April 7 JC PENNEY: Moody's Downgrades Rating on Senior Notes to 'Ba1' JOHN BOGGS: Voluntary Chapter 11 Case Summary KIMBALL HILL: Chapter 11 Plan Declared Effective March 24 LAS VEGAS CASINO LINES: Voluntary Chapter 11 Case Summary LEHMAN BROTHERS: Authorized to Contribute $15 Million to Bank Unit LIVE NATION: Ticketmaster Merger Won't Affect Moody's 'B1' Rating MACY'S INC: Moody's Downgrades Ratings on Senior Notes to 'Ba2' MAGNA ENTERTAINMENT: Parties Object to Sale & Bidding Procedures MERUELO MADDUX: Wants Access to Cash Collateral Until December 9 METAVANTE CORP: S&P Puts 'BB' Corporate Rating on Positive Watch MGM MIRAGE: Colony Capital Mulls Investment in City Center MICHIGAN PUBLIC: S&P Raises Ratings on 2006 Revenue Bonds to BB+ MIDWAY GAMES: Proposes Revised Key Employee Incentive Plan MORIN BRICK: Assets Sold to R.J. Finlay; To Restart Plant in April MORTON INDUSTRIAL: Obtains Temporary Authority for $20-Mil. Loan MORTON INDUSTRIAL: Proposes Executive Bonus Plan for Credit Bid NATIONAL MOBILE: Wachovia to Sell Collateral at April 3 Auction NES RENTALS: Moody's Downgrades Default Rating to 'Caa3' NEW CENTURY: Trustee Sues KPMG for Negligent Audits & Reviews NEWPAGE CORP: S&P Changes Outlook to Negative; Affirms 'B' Rating NORTEL NETWORKS: May Fetch $500 Million for Ethernet Business NTK HOLDINGS: Moody's Junks Corporate Family Rating From 'B3' NORTEL NETWORKS: Estimates $375MM Pensions Deficit, to Pay $4.9MM NUVEEN INVESTMENTS: Decline in Earnings Cue Moody's Junk Rating NUVEEN INVESTMENTS: S&P Downgrades Counterparty Rating to 'B-' PACIFIC ENERGY: Meyers Norris Penny Raises Going Concern Doubt PACIFIC ETHANOL: May Have to File for Bankruptcy Protection PHILADELPHIA AUTHORITY: S&P Raises Revenue Bond Ratings From BB+ POLAROID CORP: Patriarch Wins Auction; Sale Hearing on Monday PROSPECT MEDICAL: Moody's Reviews B3 Rating for Likely Downgrade PRICE TRUCKING: Blames Decline in Cement Demand for Bankruptcy QMG HOLDINGS: Liquidity Concerns Cue S&P's Junk Corporate Rating QTC MANAGEMENT: S&P Changes Outlook to Positive; Holds 'B' Rating QUESTEX MEDI: Liquidity Concerns Cue S&P to Junk Ratings RHODES COMPANIES: Files Bare-Bones Petition in Las Vegas RITCHIE CAPITAL: Patriarch Wins Polaroid Auction SALANDER-O'REILLY: Proprietor Indicted for Securities Fraud SAYLES PLACE HOMES: Voluntary Chapter 11 Case Summary SENSATA TECHNOLOGIES: Moody's Changes Default Rating to 'Caa2/LD' SENSATA TECHNOLOGIES: S&P Raises Corp. Credit Rating to 'CCC+' SERENA SOFTWARE: S&P Affirms 'B' Corporate Credit Rating SERVICE DEVELOPMENT GROUP: Voluntary Chapter 11 Case Summary SHRIMP HUNTERS: Voluntary Chapter 11 Case Summary SOLSTICE LLC: Authorized to Borrow $1.3-Mil. From Members SOLSTICE LLC: Selling Luxury Yacht; April 15 Sale Hearing Set SONIC AUTOMOTIVE: Moody's Downgrades Corp. Family Rating to 'B2' SOLUTIA INC: Judge Beatty Awards Attys. Fees for PI Claimants SOLUTIA INC: To Sell Nylon Biz to SK Capital for $54MM Cash SPIRIT FINANCE: Challenge Liquidity Cues Moody's Junk Rating STANDARD MOTOR: Offer to Replace Old Debentures Expires April 17 STAR INTERNATIONAL: S&P Raises Ratings on Certificates From 'BB+' STATION CASINOS: Posts $3.19BB Net Loss in Fourth Quarter 2008 STORABLES INC: Files for Chapter 11 Bankruptcy Protection SUN-TIMES MEDIA: Receives Approval of All First-Day Motions TAIPEI FUBON: Will Commence Liquidation of New York Agency TEXAS PUBLIC: Fitch Downgrades Rating on $99 Mil. Bonds to 'BB+' THOENE SALES: Voluntary Chapter 11 Case Summary THORNBURG MORTGAGE: S&P Changes Counterparty Credit Rating to 'D' TKG ENTERPRISES: Voluntary Chapter 11 Case Summary TROPICANA ENTERTAINMENT: Begins Solicitation of Votes on Plans TROPICANA ENTERTAINMENT: Lenders Send $200MM Credit Bid for Casino UNITED SUBCONTRACTORS: Files Chapter 11 with Pre-Negotiated Plan UNITED SUBCONTRACTORS: Chapter 11 Filing Cues S&P's 'D' Rating UNIVERSAL CITY: Refinancing Concerns Cue Moody's Junk Rating UNIVERSAL CITY: S&P Changes Outlook to Negative; Keeps B+ Rating VALENTIN TRUCKING: Voluntary Chapter 11 Case Summary VARIG LOGISTICA: Wants Brazil Court to Govern Reorganization VERMILLION INC: Files for Chapter 11, Reduces Workforce VERMILLION INC: Case Summary & 20 Largest Unsecured Creditors WEINGARTEN REALTY: S&P Gives Negative Outlook; Holds 'BB+' Rating WILLIAMS COS: Atlas Pipeline Venture Won't Affect S&P's Rating WOLVERINE TUBE: Exchange Offer for 2009 Notes Expires April 7 WORLDWIDE HOLDING: Voluntary Chapter 11 Case Summary YELLOWSTONE CLUB: Court Delays Plan Hearing to May 18 * Bankrupt Public Company Assets in 2009 Top $101 Billion * Calif. Home Prices Drop 41% in Feb, Double U.S. Decline * S&P/Case-Shiller Index Says Home Prices in January Fell 19% * Economy Shrinks 6.3% in 2008 Q4, Higher Than Original Estimate * Court Nullifies Mortgage on Defective Notary * Paul Weiss Partner Paul Ginsberg Is "Dealmaker of the Year" * Sheon Karol Joins CRG Partners as Partner * BOOK REVIEW: How To Measure Managerial Performance ********* 155 EAST: $5.7 Mil. Interest Nonpayment Cues S&P's 'D' Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas-based 155 East Tropicana to 'D' from 'CCC-'. In addition, S&P lowered the issue-level rating on the company's $130 million 8.75% senior secured notes to 'D'. Following these actions, S&P withdrew S&P's ratings on the company. "The rating actions stem from the company's announcement in its Form 10-K filed March 31, 2009 that it would not make a $5.7 million interest payment on its senior secured notes due April 1, 2009," said Standard & Poor's credit analyst Melissa Long. A payment default has not occurred relative to the legal provisions of the notes since there is a 30-day grace period to make the payments. However, S&P considers a default to have occurred, even if a grace period exists, when the nonpayment is a function of the borrower being under financial stress -- unless S&P is confident that the payment will be made in full during the grace period. If the interest payment due under the senior secured notes is not paid during the 30-day grace period, an event of default under the notes indenture will exist. An event of default under the notes indenture would allow the lender of the company's $15 million revolving credit facility, which is unrated, to declare a default under the credit facility. 155 East Tropicana expects to enter into discussions with note holders and its credit facility lender to attempt to negotiate forbearance agreements. The company has engaged Jefferies & Company Inc. as its financial advisor to assist with its evaluation of financial and strategic alternatives, which may include a recapitalization, refinancing, restructuring, or reorganization of its obligations, or a sale of some or all of its businesses. This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer's management. Standard & Poor's has used information from sources believed to be reliable, but does not guarantee the accuracy, adequacy, or completeness of any information used. 155 EAST: Missed Interest Payment Won't Affect Moody's 'Ca' Rating ------------------------------------------------------------------ Moody's Investors Service said 155 East Tropicana LLC's ratings are not affected by the announcement that the company will not make the April 1, 2009 scheduled interest payment on its 8.75% senior secured notes due 2012. Moody's last rating action for 155 East Tropicana occurred on December 12, 2008 when the company's corporate family rating and probability of default rating were downgraded to Ca from Caa3. 155 East Tropicana LLC owns the Hooters Casino Hotel in Las Vegas, Nevada. The property is located one-half block from the intersection of Tropicana Avenue and Las Vegas Boulevard, a major intersection on the Las Vegas Strip. The company generated net revenues of approximately $60 million in 2008. 24 HOUR: Moody's Affirms Corporate Family Rating at 'B2' -------------------------------------------------------- Moody's Investors Service affirmed the B2 Corporate Family Rating of 24 Hour Fitness Worldwide, Inc. The rating outlook remains stable. The B2 corporate family rating is constrained by modestly weak credit metrics for the rating category, an expected decline in comparable club revenues over the next few quarters, geographic concentration in California and the potential for tightening headroom under financial covenants. The ratings are supported by the company's large base of profitable fitness clubs in leading markets, aggressive cost reduction and efficiency initiatives, and the expectation of improved free cash flow in 2009 as the company reduces planned capital expenditures and benefits from the maturation of recently built clubs. These ratings were affirmed: -- Corporate Family Rating, B2 -- Probability of Default rating, B2 -- $100 million Revolving Credit Facility due 2011, Ba3 (LGD 3, 32%) -- $600 million Term Loan B Facility due 2012, Ba3 (LGD 3, 32%) The last rating action on 24 Hour Fitness was on September 22, 2006 at which time Moody's upgraded the secured credit facility rating to Ba3 from B2 in accordance with the implementation of the Loss Given Default rating methodology for the Consumer Services sector. 24 Hour Fitness is the largest owner and operator of fitness clubs in the United States. Revenues in the year ended December 31, 2008, were approximately $1.3 billion. 39500 HWY 82: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: 39500 Hwy 82, LLC c/o Ken Noel Esq. 202 North Ave., PMB 235 Grand Junction, CO 81501-7540 Bankruptcy Case No.: 09-14930 Chapter 11 Petition Date: March 24, 2009 Judge: Michael E. Romero Court: United States Bankruptcy Court District of Colorado (Denver) Debtor's Counsel: Philipp C. Theune, Esq. 1763 Franklin St. Denver, CO 80218-1124 Tel: (303) 832-1150 Fax: (303) 845-6934 Email: philipp@theunelaw.com Total Assets: $3,400,000 Total Debts: $1,941,500 The petition was signed by Kenneth Noel, a manager of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cob09-14930.pdf 815 2ND STREET: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: 815 2nd Street Partners LP 1219 Morningside Drive Manhattan Beach, CA 90266 Bankruptcy Case No.: 09-16627 Chapter 11 Petition Date: March 23, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Victoria S. Kaufman Debtor's Counsel: Lorraine L. Loder, Esq. Law Office of Lorraine L. Loder 601 W. Fifth St., 8th Floor Los Angeles, CA 90071 Tel: (213) 623-8774 Fax: (213) 623-1409 Email: lloder@sbcglobal.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by David Arias, a manager of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-16627.pdf ABITIBIBOWATER INC: Debt Refinancing Plan Cues Annual Report Delay ------------------------------------------------------------------ AbitibiBowater Inc. and AbitibiBowater Canada Inc. said they are not able to file their annual financial statements, accompanying management's discussion and analysis and related CEO and CFO certifications for the financial year ended December 31, 2008, within the period prescribed for the filing of the documents under Parts 4 and 5 of National Instrument 51-102 and pursuant to National Instrument 52-109, namely within 90 days of year-end. The Companies expect to file the 2008 Annual Financial Statements shortly. AbitibiBowater Canada is an "exchangeable security issuer" that normally relies on a statutory exemption set forth in Part 13 of National Instrument 51-102 which permits it, when the conditions specified therein are satisfied, not to prepare and file its own financial statements and accompanying MD&A, among other continuous disclosure documents, and to rely on the financial statements and MD&A of its parent company, AbitibiBowater. Despite their efforts, the Companies are not currently in a position to timely file the 2008 Annual Financial Statements, primarily as a result of the time required to finalize the accounting for certain transactions, to complete their accounting analysis, primarily related to goodwill impairment and long-lived asset impairment, and to reflect and account for the outcome of a significant pending debt refinancing in the 2008 Annual Financial statements. The Companies confirmed they intend to satisfy the provisions of the alternative information guidelines found at sections 4.3 and 4.4 of National Policy 12-203 for so long as they remain in default as a result of the late filing of the 2008 Annual Financial Statements. During the period of default, the Companies will issue bi-weekly default status reports in the form of further press releases, which will also be filed on SEDAR. The Companies confirmed that there are no insolvency proceedings against them as of March 31, 2009. The Companies have made a joint application to the applicable Canadian securities regulatory authorities for a management cease trade order. There is no certainty that the order will be granted. The applicable Canadian securities regulatory authorities may issue general cease trade orders against the Companies for failure to file the 2008 Annual Financial Statements within the prescribed time period. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange. * * * On March 13, 2009, AbitibiBowater Inc. and its Abitibi- Consolidated Inc. subsidiary commenced a recapitalization proposal which is intended to, among other things, reduce the Company's net debt by roughly $2.4 billion, lower its annual interest expense by approximately $162 million and raise roughly $350 million through the issuance of new notes of ACI and common stock and warrants of the Company. The Recapitalization is proposed to be implemented as part of a plan of arrangement, which was filed in connection with an application for an interim order with the Commercial Division of the Superior Court of Quebec in Montreal on March 13 pursuant to section 192 of the Canada Business Corporations Act. The Court granted an interim order on March 13, which included a stay of proceedings in favor of ACI and certain of its affiliates. As reported in the Troubled Company Reporter on Nov. 13, 2008, AbitibiBowater Inc. reported a net loss of US$302 million on sales of US$1.7 billion for the third quarter 2008. These results compare with a net loss of US$142 million on sales of US$815 million for the third quarter of 2007, which consisted only of Bowater Incorporated. The company's 2008 third quarter results reflect the full quarter results for Abitibi-Consolidated Inc. and Bowater Incorporated as a combined company after their combination on Oct. 29, 2007. As reported by the TCR on January 29, 2009, Moody's Investors Service downgraded the corporate family rating of AbitibiBowater Inc.'s subsidiaries Abitibi-Consolidated Inc. and Bowater Incorporated to Caa3 from Caa1. The rating action, according to Moody's, was prompted by AbitibiBowater's weakened liquidity position and the deteriorating economic and industry conditions. "The Caa3 corporate family ratings of Abitibi and Bowater reflect a heightened probability of default in the near term given the anticipated challenges of refinancing or paying down their significant short term debt obligations through asset sales, either of which may prove to be difficult in the current market environment." The ratings of both Abitibi and Bowater also reflect the accelerating decline in demand for newsprint and other paper grades manufactured by both companies as consumers continue to migrate to online news and other forms of electronic media. The TCR reported on February 12, 2009, that Standard & Poor's Ratings lowered its long-term corporate credit rating on newsprint producers AbitibiBowater Inc. and subsidiaries Bowater Inc. and Bowater Canadian Forest Products Inc. two notches to 'CC' from 'CCC'. S&P also lowered the long-term corporate credit rating on Abitibi-Consolidated Inc. one notch to 'CCC-' from 'CCC'. ABITIBIBOWATER INC: Fairfax, Steelhead Offer Funding for Bowater ---------------------------------------------------------------- Fairfax Financial Holdings Limited and Steelhead Partners, LLC, said they are prepared to negotiate to arrange additional funding of at least $50 million to Bowater Incorporated, a subsidiary of AbitibiBowater Inc., through Bowater's credit facility. They said if the funding were made available to Bowater, it would provide Bowater with additional liquidity as it continues to evaluate restructuring alternatives and pursue further negotiations with its debtholders to restructure its debt. The proposal does not constitute a binding commitment to lend or provide any additional funding to Bowater, and there can be no guarantee that any such additional funding will be provided. The funding proposal remains subject to the negotiation of specific terms mutually acceptable to Bowater, Fairfax, Steelhead and the lending syndicate currently participating in Bowater's credit facility and definitive documentation reflecting those terms. Discussions with Bowater are on-going and not definitive in any way. AbitibiBowater Inc. noted that the proposed financing is subject to negotiation of specific terms with the lending syndicate participating in Bowater's credit facility and execution of definitive agreements. "We appreciate Steelhead's and Fairfax's confidence and willingness to support our restructuring initiatives. AbitibiBowater's efforts will now be directed at obtaining support from our banks to bring Steelhead and Fairfax into our lending syndicate," stated William G. Harvey, Senior Vice President and Chief Financial Officer of AbitibiBowater. "We believe the additional funds proposed to be made available by Steelhead and Fairfax would provide us with sufficient short-term liquidity while we continue to address our restructuring of Bowater's debt. The approval from and support of our banks in this process is a crucial step to a successful outcome." Fairfax Financial Holdings Limited (Toronto:FFH.TO)(NYSE:FFH) is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management. Steelhead Partners, LLC is an investment manager founded in 1996 and based in Seattle, Washington. Company Explores Other Options, BowFin Exchange Offer Expires AbitibiBowater said Wednesday it is evaluating new restructuring alternatives and is currently in active discussions with lenders and debt holders of its Bowater Incorporated subsidiary to restructure Bowater's debt and implement alternatives for maintaining adequate liquidity levels. The developments follow the expiration and termination of Bowater's previously announced exchange offers. "We are optimistic that we will be able to work constructively with all of our lenders, debt holders and other constituencies to successfully implement an alternative restructuring of our overall debt," stated David J. Paterson, President and Chief Executive Officer. AbitibiBowater and Bowater Finance II LLC, an indirect wholly owned subsidiary of AbitibiBowater, also announced Wednesday the expiration and termination of the private exchange offers and consent solicitation relating to these outstanding indebtedness of Bowater and its subsidiaries: -- 9.00% Debentures due 2009, -- Floating Rate Senior Notes due 2010, -- 7.95% Notes due 2011, -- 9.50% Debentures due 2012, -- 6.50% Notes due 2013 and -- 9.375% Debentures due 2021 In addition, the concurrent private notes offering has also expired and terminated. The Exchange Offers, Consent Solicitation and Concurrent Notes Offering, which were commenced on February 9, 2009, expired at 11:59 p.m. on March 31, 2009. The Exchange Offers, Consent Solicitation and Concurrent Notes Offering had been scheduled to expire at 5:00 p.m., New York City time, on March 27, 2009, but the deadline was moved to March 31. As of March 27, 2009, roughly 60.3% of the outstanding 9.00% Debentures due 2009, 60.6% of the outstanding Floating Rate Senior Notes due 2010, 70.9% of the outstanding 7.95% Notes due 2011, 70.2% of the outstanding 9.50% Debentures due 2012, 80.2% of the outstanding 6.50% Notes due 2013 and 36.0% of the outstanding 9.375% Debentures due 2021 were validly tendered and not validly withdrawn in the Exchange Offers. The Exchange Offers and Concurrent Notes Offering were made to qualified institutional buyers inside the United States and to certain non-U.S. investors located outside the United States. Creditors Meeting Postponed The Company said that, although the successful completion of the Exchange Offers was a condition to the completion of the $2.4 billion recapitalization effort being undertaken by Abitibi- Consolidated Inc. under the Canada Business Corporations Act, AbitibiBowater and Abitibi currently intend to continue the Abitibi recapitalization under the CBCA process and to amend the process as necessary to take into account the developments on the Bowater refinancing. As a result, the meetings of creditors and anticipated implementation dates are expected to be postponed to later dates. With regard to the expiration and termination of the Exchange Offers, Consent Solicitation and Concurrent Notes Offering, all tendered Notes will be returned, without expense, to each tendering noteholder's account at Depository Trust Company or at other account designated by the holder. In connection therewith, all consents given by holders with respect to the proposed amendments to the indentures for the Notes will be deemed withdrawn and canceled, and all funds submitted in connection with the Concurrent Notes Offering will be returned without interest. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. AbitibiBowater's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange. * * * On March 13, 2009, AbitibiBowater Inc. and its Abitibi- Consolidated Inc. subsidiary commenced a recapitalization proposal which is intended to, among other things, reduce the Company's net debt by roughly $2.4 billion, lower its annual interest expense by approximately $162 million and raise roughly $350 million through the issuance of new notes of ACI and common stock and warrants of the Company. The Recapitalization is proposed to be implemented as part of a plan of arrangement, which was filed in connection with an application for an interim order with the Commercial Division of the Superior Court of Quebec in Montreal on March 13 pursuant to section 192 of the Canada Business Corporations Act. The Court granted an interim order on March 13, which included a stay of proceedings in favor of ACI and certain of its affiliates. As reported in the Troubled Company Reporter on Nov. 13, 2008, AbitibiBowater Inc. reported a net loss of US$302 million on sales of US$1.7 billion for the third quarter 2008. These results compare with a net loss of US$142 million on sales of US$815 million for the third quarter of 2007, which consisted only of Bowater Incorporated. The company's 2008 third quarter results reflect the full quarter results for Abitibi-Consolidated Inc. and Bowater Incorporated as a combined company after their combination on Oct. 29, 2007. As reported by the TCR on January 29, 2009, Moody's Investors Service downgraded the corporate family rating of AbitibiBowater Inc.'s subsidiaries Abitibi-Consolidated Inc. and Bowater Incorporated to Caa3 from Caa1. The rating action, according to Moody's, was prompted by AbitibiBowater's weakened liquidity position and the deteriorating economic and industry conditions. "The Caa3 corporate family ratings of Abitibi and Bowater reflect a heightened probability of default in the near term given the anticipated challenges of refinancing or paying down their significant short term debt obligations through asset sales, either of which may prove to be difficult in the current market environment." The ratings of both Abitibi and Bowater also reflect the accelerating decline in demand for newsprint and other paper grades manufactured by both companies as consumers continue to migrate to online news and other forms of electronic media. The TCR reported on February 12, 2009, that Standard & Poor's Ratings lowered its long-term corporate credit rating on newsprint producers AbitibiBowater Inc. and subsidiaries Bowater Inc. and Bowater Canadian Forest Products Inc. two notches to 'CC' from 'CCC'. S&P also lowered the long-term corporate credit rating on Abitibi-Consolidated Inc. one notch to 'CCC-' from 'CCC'. ADVANCED MEDICAL: S&P Withdraws 'B+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said that it has withdrawn the corporate credit rating and debt ratings for Advanced Medical Optics, Inc. These actions reflect the company's acquisition by Abbott Laboratories. At this time, substantially all of Advanced Medical Optics' debt has been tendered or retired. Ratings List Advanced Medical Optics Ratings Withdrawn To From ----------------- -- ---- Corporate credit rating NR B+/Watch Neg/-- ADVANTAGE RENT-A-CAR: Enterprise Won't Bid Further for Firm ----------------------------------------------------------- Enterprise Rent-A-Car has declined to bid further for certain assets of Advantage Rent-A-Car, which are being sold out of bankruptcy. In early March, Enterprise Rent-A-Car disclosed its intention to purchase the Advantage Rent-A-Car assets for $19 million pending approval of the bankruptcy court, which would also consider competing bids. A competitive bid situation did develop and a court-ordered auction was conducted yesterday in Minneapolis. The auction process escalated the purchase price for the assets of Advantage Rent-A-Car to in excess of $30 million, higher than the management of Enterprise Rent-A-Car deemed appropriate for the failed business. Enterprise Rent-A-Car formally declined to increase its bid once the asking price exceeded the company's return-on-investment criteria. As reported in yesterday's TCR, Hertz Global Holdings, Inc., has won the right to purchase certain assets of Advantage Rent A Car which, according to company filings, generated full year 2008 revenues of about $146 million. The purchase price, subject to court approval, is approximately $33 million. The purchase agreement provides Hertz with the rights to purchase certain rights, trademarks and copyrights to use the Advantage brand name, Web site and phone numbers. Advantage Rent A Car previously signed an asset purchase agreement to purchase the Advantage brand name and other assets, but the deal was still subject to competing bids. Hertz won the auction after its latest offer was 70% higher than Enterprise's initial offer of $19 million. About the Enterprise Family of Companies Headquartered in St. Louis, the Enterprise family of companies operates Enterprise Rent-A-Car, National Car Rental, and Alamo Rent A Car at more than 8,000 rental locations in neighborhoods and at airports worldwide. Enterprise Rent-A-Car has more than 6,900 offices. Enterprise Rent-A-Car Company -- http://www.enterprise.com/car_rental/home.do-- is a privately held company serving customers in the U.S., Canada, Germany, Ireland, Puerto Rico, and the U.K. They are also the owners of the Vanguard Automotive Group, operator of National Car Rental and Alamo Rent A Car in North America. About Advantage Rent-A-Car Advantage Rent-A-Car -- http://www.advantage.com-- is a car rental company with 50 locations in the U.S. and 130 international affiliate locations. It is privately held by Denny Hecker Family Ventures, with headquarter operations in Minneapolis. Advantage serves travel and leisure, lifestyle, business, government and insurance replacement rentals. The Hecker group of companies include automobile dealerships, leasing, daily automobile and motorcycle rental, commercial, and residential real estate development, aviation, hospitality, and technology. As reported by the Troubled Company Reporter on Dec. 10, 2008, Advantage Rent-A-Car filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Minnesota. AMERICAN GENERAL: S&P Corrects Counterparty Credit Rating to 'B' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it corrected its short-term counterparty credit rating on American General Finance Inc. to be in line with that on its operating subsidiary, American General Finance Corp. The short-term counterparty credit rating and the commercial paper rating on American General Finance Inc. are corrected to 'B' from 'A-3'. On Feb. 9, 2009, S&P lowered the rating on American General Finance Corp. to 'BB+/B' from 'BBB/A-3.' AMERICAN GREETINGS: Moody's Cuts Corporate Family Rating to 'Ba3' ----------------------------------------------------------------- Moody's Investors Service lowered American Greetings Corp's ratings, including its corporate family and probability of default ratings to Ba3 from Ba2, confirmed the senior secured debt instrument ratings at Ba1 (LGD2, 22%, adjusted) and lowered the senior unsecured notes rating to B1 (LGD5, 75%, adjusted) from Ba3 (LGD5, 77%), given the company's weakening credit metrics alongside integration and economic challenges. The confirmation of the Ba1 senior secured rating reflects the still significant junior debt in the capital structure. In Moody's view, AM's operating performance is likely to continue to decline modestly from historical performance while its debt has increased notably. Free cash flow has deteriorated precipitously and the company will need to invest in the integration of its Recycled Paper Greetings acquisition over the near term. Moody's stable outlook reflects that the company has proven only modestly vulnerable to the economic downturn and, as a result, should be able to improve its balance sheet over the year with internally generated cash flow and the potential for proceeds from the sale of certain intellectual property. This concludes Moody's review of AM initiated on January 2009. In addition, Moody's assigned an SGL-2 speculative grade liquidity rating given Moody's expectations that the company will maintain good liquidity over the next four quarters due to reasonable cash and cash flow (despite significant seasonality), good availability under its revolving credit facility, and generous cushion under financial maintenance covenants. Ratings lowered: -- Corporate family rating lowered to Ba3 from Ba2; -- Probability-of-default rating lowered to Ba3 from Ba2; -- Senior unsecured notes due 2016 lowered to B1 (LGD5, 75%, adjusted) from Ba3 (LGD5, 77%). Ratings Confirmed: -- Senior secured revolving credit facility due 2011 at Ba1 (LGD2, 22%, adjusted) and -- Senior secured delay draw term loan facility due 2013 at Ba1 (LGD2, 22%, adjusted). The rating outlook is stable. AM's Ba3 corporate family rating is primarily driven by the significant business risks inherent in the greeting card industry that is characterized by low or declining growth rates, weak consumer branding, strong competition, and vulnerability to its stronger retail customers and its ongoing consolidation. High leverage from several factors including share repurchases, weakening operating performance and significant operating leases associated with AM's retail operations was exacerbated by the acquisition of Recycled Paper Greetings which is likely to generate marginal EBITDA. Notwithstanding these risks, the rating is supported by the company's leading and stable market position in the U.S. greeting card industry with approximately 30% to 35% market share (and a stronger position with mass merchandisers), its long operating history, the predictable demand for its products, and key relationships with retail customers. Moody's notes that while revenues have deteriorated, it has been by a far lower margin than other discretionary consumer products. With principal executive offices in Cleveland, Ohio, American Greetings Corporation is a leading developer, manufacturer and distributor of greeting cards and social expression products. Sales were approximately $1.8 billion for the twelve months ended November 28, 2008. AMERICAN INT'L: Former CEO Says Gov't Rescue Has "Failed" --------------------------------------------------------- Former American International Group chairperson and CEO Maurice Greenberg said that the government's rescue of the Company has "failed", Liam Pleven and Michael R. Crittenden at The Wall Street Journal report. Mr. Greenberg, WSJ relates, said that taxpayers are losing money on their investment. Billions in government funds shouldn't have been paid to AIG's counterparties, as giving other financial firms guarantees would have been a better option, WSJ states, citing Mr. Greenberg. According to WSJ, Mr. Greenberg said that the bailout should be replaced by a plan to restructure AIG. Citing Mr. Greenberg, WSJ states that the government should reduce its investment in AIG and replace it with government guarantees, instead of liquidating the Company and selling off its assets. Mr. Greenberg, WSJ relates, said that the government should reduce its stake in AIG to 15% from 80% to attract private capital. Mr. Greenberg also suggested that the AIG management and board of directors be replaced, WSJ states. AIG Completes Two Asset Sales AIG has closed the sales of two business units this week. AIG completed the sale of AIG Life of Canada to BMO Financial Group for approximately $263 million. The Company on Tuesday closed the sale of Hartford Steam Boiler to the Munich Re Group for $739 million, plus the assumption of $76 million of outstanding HSB capital securities. "Despite highly adverse market conditions, AIG is working tirelessly to execute an orderly and effective asset disposition plan to repay the U. S. government," said Edward Liddy, AIG's Chairman and Chief Executive Officer. "In the past few months, we have reached agreements on the sale of 10 businesses. Several other transactions are under discussion, and we continue to evaluate how best to assure the continued strength and success of all of AIG's businesses for the benefit of all AIG stakeholders." Elizabeth Monrad Guilty of Manipulating Financial Statements Dow Jones Newswires reports that Elizabeth A. Monrad, General Re Corp.'s former chief financial officer, was sentenced to 18 months in prison on Thursday for her role in a fraudulent scheme to manipulate AIG's financial statements. According to Dow Jones, Ms. Monrad was ordered to pay a $250,000 fine. Dow Jones Newswires reports that relates that on February 25, a federal jury in Hartford found Ms. Monrad guilty of conspiracy, securities fraud, false statements to the U.S. Securities and Exchange Commission and mail fraud charges. According to Dow Jones, these individuals were also accused of participating in falsely inflating AIG's reported loss reserves: -- Ronald E. Ferguson, -- Robert D. Graham, -- Christopher P. Garand, and -- Christian M. Milton. Dow Jones states that the defendants, including Ms. Monrad, were convicted in the case. The report says that Mr. Milton was sentenced to four years in prison and a $200,000 fine; Mr. Ferguson was sentenced to two years in prison and a $200,000 fine; and Mr. Garand was sentenced to one year and one day in prison. 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 September 8, 2008, to $4.76 on September 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 September 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 September 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since September 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 September 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 September 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. AMSCAN HOLDINGS: 10K Annual Report Won't Affect S&P's 'B' Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said that Elmsford, New York- based Amscan Holdings Inc.'s (B/Negative/--) disclosure in its 10K annual report filed with the SEC on March 31, 2009 that its majority-owned subsidiary, Party City Franchise Group, was in technical default on its bank credit facility, consisting of a $30 million term loan ($27.5 outstanding at Dec. 31, 2008) and $20 million revolving credit facility, will not affect the company ratings or outlook. Based on Amscan's disclosure that PCFG is an unrestricted subsidiary, Standard & Poor's does not believe that PCFG's default triggers a cross default with any of Amscan's debt facilities. Moreover, S&P believes that in light of its majority interest in PCFG, Amscan would continue to financially support PCFG if its lenders accelerated payment of any borrowings outstanding on this facility and/or any other obligations of PCFG. S&P still believe that Amscan has adequate liquidity to fund PCFG's operations. As of Dec. 31, 2008, Amscan had $13 million in cash and about $97 million in availability under its $250 million asset-backed loan facility (BB-/1) maturing 2012. Amscan also had $368 million outstanding on its $375 million first-lien term loan (B/3) maturing 2013 and $175 million in senior subordinated notes (CCC+/6) due 2014. ANNAPOLIS STATION: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Annapolis Station, LLC 11021 Nicholas Lane, Unit 9 Ocean Pines, MD 21811 Bankruptcy Case No.: 09-14927 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court District of Maryland (Baltimore) Judge: Duncan W. Keir Debtor's Counsel: Robert W. Thompson, Esq. 134 Holiday Court, Suite 301 Annapolis, MD 21401 Tel: (410) 841-5060 Email: 50bob@msn.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Robert W. Douglas, managing member of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mdb09-14927.pdf ANTHRACITE CAPITAL: Lenders Extend Waiver to April 15 ----------------------------------------------------- Anthracite Capital, Inc. said it continues to have discussions with its secured credit facility lenders and that the waivers described in Anthracite's 2008 fourth quarter earnings release have been extended by the lenders from April 1, 2009 to April 15, 2009. In connection with the discussions with its secured credit facility lenders, the Company did not make interest payments due on March 30, 2009, on its junior subordinated notes due 2036 related to Anthracite Capital Trust III and 7.20% senior notes due 2016. Under the indentures governing these notes, the failure to make an interest payment is subject to a 30-day cure period before constituting an event of default. On March 17, 2009, the Company received waivers concerning covenant breaches from its secured credit facility lenders. In addition, the Company's secured credit facility lenders agreed to permanently waive minimum liquidity covenants in the facilities. In connection with the waivers, the Company agreed to pay $6 million to each of Morgan Stanley and Bank of America and $3 million to Deutsche Bank. Breach of Covenants Financial covenants in certain of the Company's secured credit facilities include, without limitation, a covenant that the Company's net income will not be less than $1.00 for any period of two consecutive quarters and covenants that on any date the Company's tangible net worth will not have decreased by twenty percent or more from the Company's tangible net worth as of the last business day in the third month preceding such date. The Company's significant net loss for the three months ended December 31, 2008 resulted in the Company not being in compliance with the covenants. On March 17, 2009, the secured credit facility lenders waived this covenant breach. In addition, the Company's secured credit facility with BlackRock Holdco 2, Inc., requires the Company to immediately repay outstanding borrowings under the facility to the extent outstanding borrowings exceed 60% of the fair market value of the shares of common stock of Carbon Capital II, Inc. securing such facility. As of February 28, 2009, 60% of the fair market value of such shares declined to roughly $24,840 and outstanding borrowings under the facility were $33,450. On March 17, 2009, Holdco 2 waived this breach. Additionally, in the first quarter of 2009, Anthracite Euro CRE CDO 2006-1 plc failed to satisfy its Class E overcollateralization and interest reinvestment tests. As a result of Euro CDO's failure to satisfy these tests, half of each interest payment due to the Company, as the Euro CDO's preferred shareholder, will remain in the CDO as reinvestable cash until the tests are cured. However, since the Euro CDO's preferred shares were pledged to one of the Company's secured lenders in December 2008, the cash flow was already being diverted to pay down that lender's outstanding balance. Inability to Satisfy Margin Call During the first quarter 2009, the Company received a margin call of $46,300 and C$5,300 from one of its secured credit facility lenders. On March 17, 2009, the lender waived this event of default until April 1, 2009, and the secured credit facility lenders agreed to waive the right to make margin calls until April 1, 2009. Reduction or Elimination of Dividends Due to current market conditions and the Company's current liquidity position, the Company's Board of Directors anticipated that the Company would pay cash dividends on its stock only to the extent necessary to maintain its REIT status until the Company's liquidity position has improved and market values of commercial real estate debt show signs of stability. The Board of Directors did not declare a dividend on the Company's common stock for the fourth quarter of 2008 since the Company's 2008 net taxable income distribution requirements under REIT rules were satisfied by distributions made for the first three quarters of 2008. The Board of Directors also did not declare a dividend on the common stock and the Company's preferred stock for the first quarter of 2009. To the extent the Company is required to make distributions to maintain its qualification as a REIT in 2009, the Company anticipated it would rely upon temporary guidance that was recently issued by the Internal Revenue Service, which allows certain publicly traded REITs to satisfy their net taxable income distribution requirements during 2009 by distributing up to 90% in stock, with the remainder distributed in cash. The terms of the Company's preferred stock prohibit the Company from declaring or paying cash dividends on the common stock unless full cumulative dividends have been declared and paid on the preferred stock. The Company had said that an event of default under any of the Company's facilities, absent a waiver, would trigger cross-default and cross-acceleration provisions in all of the Company's other facilities and, if the debt were accelerated, would trigger a cross-acceleration provision in the indenture governing the Company's convertible senior unsecured notes (with an aggregate principal amount of $80,000). In such an event, the Company would be required to repay all outstanding indebtedness under its secured credit facilities and the convertible senior unsecured notes indenture immediately. The Company would not have sufficient liquid assets available to repay such indebtedness and, unless the Company were able to obtain additional capital resources or waivers, the Company would be unable to continue to fund its operations or continue its business. $296.1-Mil Net Loss in Q4 2008 Anthracite Capital reported net loss of $296.1 million for the fourth quarter 2008, compared to $18.5 million net income for the same three-month period in 2007. For the year ended December 31, 2008, the Company posted $193.6 million net loss, compared to $83.9 million net income for the year ended December 31, 2007. The Company had $3.82 billion in total assets and $3.16 billion in total liabilities at December 31, 2008. Going Concern Doubt The Company's independent registered public accounting firm has issued an opinion on the Company's consolidated financial statements that states the consolidated financial statements have been prepared assuming the Company will continue as a going concern and further states that the Company's liquidity position, current market conditions and the uncertainty relating to the outcome of the Company's ongoing negotiations with its lenders have raised substantial doubt about the Company's ability to continue as a going concern. The Company obtained agreements from its secured credit facility lenders on March 17, 2009, that the going concern reference in the independent registered public accounting firm's opinion to the consolidated financial statements is waived. About Anthracite Anthracite Capital, Inc. is a specialty finance company focused on investments in high yield commercial real estate loans and related securities. Anthracite is externally managed by BlackRock Financial Management, Inc., which is a subsidiary of BlackRock, Inc., one of the largest publicly traded investment management firms in the United States with roughly $1.307 trillion in global assets under management at December 31, 2008. BlackRock Realty Advisors, Inc., another subsidiary of BlackRock, provides real estate equity and other real estate-related products and services in a variety of strategies to meet the needs of institutional investors. ASARCO LLC: Gets $6BB in Damages for AMC Fraudulent Conveyance -------------------------------------------------------------- U.S. District Judge Andrew Hanen of Brownsville, Texas, has issued a damages award to ASARCO LLC, currently valued at about $6.04 billion. The ruling stems from the judge's decision in August 2008 that Americas Mining Corporation, a subsidiary of Grupo Mexico S.A. de C.V., had fraudulently transferred to itself ASARCO's 54.18% interest in Southern Peru Copper Corporation. As restitution, the judge ordered that AMC return to ASARCO 260,093,694 shares of Southern Copper Corporation stock, which based on Wednesday's closing price is worth approximately $4.68 billion, and pay money damages of approximately $1.35 billion. The money damages are comprised of dividends AMC received of $1.94 billion and prejudgment interest on those dividends of $329 million, less the $747 million that AMC had paid for SPCC in the 2003 transfer, together with interest on that 2003 payment of $164 million. ASARCO will own an approximate 30% equity interest in Southern Copper Corporation. The award represents return to ASARCO of the value of equity interest that it lost in the fraudulent conveyance, plus post- transfer dividends that ASARCO would have been paid over the past six years had the transfer not taken place, and pre-judgment interest on those dividends. "Justice has ultimately prevailed," said Joseph F. Lapinsky, President and Chief Executive Officer of ASARCO. "This award is for the benefit of ASARCO's creditors in the bankruptcy and should assist the Company in its efforts to successfully emerge from chapter 11 in the coming months," he added. Judge Hanen issued his liability opinion for the SPCC transfer on August 30, 2008, finding AMC liable for actual fraudulent transfer, aiding and abetting a breach of fiduciary duty, and conspiracy. ASARCO filed for chapter 11 bankruptcy protection on August 9, 2005. Its parent, ASARCO Incorporated, a wholly owned subsidiary of AMC, lost control of ASARCO in December 2005, when the bankruptcy court appointed an independent board of directors to manage the company. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ATLAS PIPELINE: Williams Venture Won't Affect S&P's 'B' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that midstream energy master limited partnership Atlas Pipeline Partners L.P.'s (B/Watch Neg/--) announcement that it has entered into a definitive agreement with a subsidiary of The Williams Cos. Inc. (BBB- /Stable/--) to form a joint venture in Appalachia will not affect the company's rating or outlook at this time. S&P views the joint venture, Laurel Mountain Midstream LLC, as supportive of credit due to its potential to raise cash proceeds that will allow Atlas to reduce debt and improve liquidity. The transaction, which requires lender approval, is valued at $250 million and would have Atlas receive $90 million in cash and a $25.5 million note in exchange for a 49% ownership interest. After the transaction closes, Atlas's liquidity could also benefit because payments that Williams will make under a note can be converted at Atlas's option to fund its share of joint venture capital expenditures in the near term. If Atlas successfully closes the joint venture, S&P will reevaluate the effect that a reduction in debt may have on the company's capital structure, and the implications the change could have on both the senior secured and unsecured recovery ratings, if any. It is S&P's opinion that even with the successful consummation of the joint venture, Atlas's liquidity and leverage may continue to be under pressure, and S&P will continue to monitor the potential for additional asset sales, including the company's Ozark assets and an interest in its Nine Mile processing plant. Laurel Mountain Midstream will own gathering and processing assets in the Marcellus Shale region in Southwestern Pennsylvania used by Atlas Energy Resources LLC (B+/Negative/--) and other third-party producers. BALDOR ELECTRIC: Moody's Affirms 'B1' Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service affirmed Baldor Electric Company's B1 Corporate Family Rating and Probability of Default rating. At the same time, the rating agency upgraded the Speculative Grade Liquidity rating to SGL-2 from SGL-3. The Ba3 rating on the company's senior secured bank debt and B3 rating on its unsecured notes were also affirmed. The outlook was left unchanged at negative. Baldor recently obtained bank group approval to amend the senior secured and total leverage covenants under its credit agreements. In doing so, the company has obtained satisfactory compliance cushion under those covenants over the intermediate term and reduced the potential for a technical default. Although Moody's would anticipate Baldor's financial performance will be adversely affected by the extent of decline in industrial demand for electric motors and mechanical power transmission products over the next year, the company should generate significant levels of free cash flow which will be available to reduce indebtedness. Management's cost reduction initiatives and lower metal costs are expected to mitigate most of the impact of lower volumes, thereby sustaining material operating profitability. As a result, debt protection measures are expected to remain representative of the B1 rating category, and the company's liquidity profile has improved. Accordingly, both the CFR and PDR were affirmed. The B1 CFR considers residual levels of financial leverage from earlier acquisitions combined with respectable EBITA margins, interest coverage and free cash flow metrics. Several trailing ratios have established some cushion for potential softening should end-market demand materially weaken during 2009 and should remain supportive of the rating absent an acceleration of the pace of retreat in industrial production. The rating incorporates a business profile with a competitive market share and product offering along with sufficient scale, sizable installed base, brand recognition, diverse industrial end-markets, and a revenue mix in which less cyclical replacement demand constitutes roughly 50% of total sales. Conversely, Baldor continues with significant geographic concentration in North America and exposure to downturns in the OEM sector. Over time, demand for the company's energy efficient electric motors, which provide some of its highest margins, should benefit from legislation fostering energy conservation. Baldor's liquidity is considered good (SGL-2), supported by about $13 million of cash at year end 2008, a $200 million revolving credit facility maturing in 2012 (under which $113 million remained available after borrowings of $60 million and letter of credit issuance of $27 million) and prospects for continued free cash flow generation. Along with continued operating profitability, lower working capital requirements associated with reduced volumes and lower metal prices are likely to contribute to free cash flow in 2009. Baldor's recent amendment to its credit agreement reduces the extent and pace at which its leverage covenants step-down over time (a fixed charge coverage requirement is un-affected). The revised leverage covenants are expected to provide sufficient compliance cushion over the intermediate period. The bank credit facilities are secured by all material domestic tangible and intangible assets of the borrower and guaranteeing subsidiaries which limits the extent to which alternate liquidity could be arranged. The outlook remains negative despite an improved liquidity profile and prospects for debt reduction. This flows from uncertainties of the net impact on margins from lower volumes and metal costs and the pace at which management initiatives to reduce expenses are achieved. In addition, competitive dynamics affecting end- market pricing in this environment may similarly impact profitability. Should actual results demonstrate sustained or higher margins, material debt reduction and maintenance of a satisfactory liquidity profile, the outlook could be revisited. Ratings affirmed and up-dated Loss Given Default Assessments: -- Corporate Family Rating, B1 -- Probability of Default Rating, B1 -- Secured bank credit facilities, Ba3 (LGD-3, 31%) -- Unsecured senior notes, B3 (LGD-5, 84%) The last rating action was on January 20, 2009 when Baldor's B1 Corporate Family rating was affirmed, the outlook revised to negative from stable, and the Speculative Grade Liquidity rating was lowered to SGL-3 from SGL-1. Baldor Electric Company is a manufacturer of industrial electric motors, drives, generators and other mechanical power transmission products. Products are sold to a diverse customer base consisting of original equipment manufacturers and distributors. Revenues in 2008 were approximately $2 billion. BANK OF AMERICA: Senior Banker George Young Resigns --------------------------------------------------- Susanne Craig at The Wall Street Journal reports that George H. Young III will leave Bank of America Corp. According to WSJ, Mr. Young is the latest in a string of senior bankers with ties to Merrill Lynch & Co. who have left Bank of America. WSJ relates that Mr. Young is one of Wall Street's top telecommunications bankers and ran Merrill Lynch's global technology, media and telecommunications group. He joined Merrill Lynch last year, weeks before Bank of America disclosed plans of acquiring the firm, WSJ states. WSJ notes that Merrill Lynch bankers have been annoyed of Bank of America's more corporate approach to banking, complaining that the bank doesn't understand that individuals are key to keeping banking relationships. 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). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BARRINGTON BROADCASTING: Moody's Gives 'Caa1/LD' Default Rating --------------------------------------------------------------- Moody's Investors Service changed the probability of default rating for Barrington Broadcasting Group LLC (Barrington) to Caa1 / LD following the company's repurchase of a portion of its Senior Subordinated Notes due 2014 ($125 million outstanding prior to buyback) at a significant haircut to the original principal amount. Moody's considers this transaction and the ongoing bond repurchase program a distressed exchange due to the significant monetary loss relative to the principal value of the bonds incurred by participating bondholders, as well as Barrington's weak credit profile. The LD designation signifies a limited default and also applies to future purchases under the bond buyback authorized with the February 2009 amendment to the credit agreement (remaining cash capacity for bond buyback as of March 2009 was $1 to $2 million and is permitted through February 2010). Moody's also upgraded Barrington's Speculative Grade Liquidity Rating to SGL-3 from SGL-4 due to expectations for an improved cushion of compliance with bank financial covenants following the approximately $68 million debt reduction and the $16 million cash contribution from Barrington's equity sponsors (which is added to EBITDA for covenant calculation purposes). Notwithstanding the significant debt reduction, Moody's affirmed the Caa1 corporate family rating and negative outlook, incorporating uncertainty that the current pace of declining market spending on TV advertising could continue unabated over the near term. The PDR will revert to Caa1 and the LD designation will be removed in approximately 3 days. The Caa1 PDR reflects the diminished probability of default of Barrington's post- exchange credit profile, compared to the prior Caa2 PDR. Moody's also downgraded the rating on Barrington's senior subordinated notes to C from Caa3. Subordinated note holders accepted a principal reduction of over 80%, and the rating reflects this substantial loss. Based on the post-exchange capital structure, Moody's expects to change the rating on the remaining portion of the subordinated bonds to Caa3 in approximately 3 days. Moody's also downgraded the secured bank rating to B3 from B2, because with the reduction in subordinated bonds outstanding, the cushion of junior capital for bank lenders diminishes. A summary of the actions follows. Barrington Broadcasting Group LLC -- Probability of Default Rating, Changed to Caa1 / LD from Caa2 -- Affirmed Caa1 Corporate Family Rating -- Senior Subordinated Bonds, Downgraded to C, LGD5, 83% from Caa3, LGD5, 72% -- Senior Secured Bank Credit Facility, Downgraded to B3, LGD3, 37% from B2, LGD2, 19% -- Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 -- Outlook, Negative The last rating action was on February 24, 2008, when the probability of default rating of Barrington was downgraded to Caa2 from Caa1 and the Caa1 corporate family rating was affirmed. Barrington Broadcasting Group, LLC, headquartered in Hoffman Estates, Illinois, owns or programs 23 network television stations in 15 markets. Its revenue for the year ended December 31, 2008, was $119 million. BATTERSON PARK: Fitch Changes Ratings on Class B Notes to 'C/RR4' ----------------------------------------------------------------- Fitch Ratings has revised the Recovery Rating on the classes of notes issued by Batterson Park CBO I, Ltd.: -- $9,708,494 class B revised to 'C/RR4' from 'C/DR3'. Batterson Park is a collateralized debt obligation that closed Nov. 17, 1998 and is managed by General Re/New England Asset Management. The proceeds of the issuance were invested in a portfolio of U.S high yield corporate bonds and loans. Currently only two bonds remain as collateral for the CDO, one of which is in default. Payments are made semi-annually in January and July and the reinvestment period ended in January 2003. The downward revision to the RR on the class B notes is the result of a lower recovery expectation on the notes given that only one performing asset remains. According to the Feb. 26, 2009 trustee report the remaining performing security has a par face amount of $3.5 million. As such, there is significant undercollateralization to these notes. The overcollateralization test failed at 26.46% with a trigger of 130%. The rating of the class B notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The Distressed Recovery Rating on the classes of notes has been revised to RR to reflect Fitch's updated Rating Definitions Criteria released March 3, 2009. BAUSCH & LOMB: Moody's Gives Negative Outlook; Keeps 'B2' Rating ---------------------------------------------------------------- Moody's Investors Service changed the rating outlook of Bausch & Lomb Incorporated to negative from stable. At the same time, the company's speculative grade liquidity rating was moved to SGL-3 from SGL-2 and its existing debt ratings were affirmed. The change in outlook to negative reflects Moody's concerns that: (1) Bausch's organic growth rates could be negatively impacted by strong competition and a downturn in consumer discretionary spending; (2) debt levels could increase due in part to cash flow implications of acquisition or licensing transactions and ongoing MoistureLoc litigation expenses; (3) financial metrics are expected to be weak for the rating category; and (4) significant changes in senior management create additional operating risk. "Bausch will need to demonstrate improved organic growth rates to retain its current ratings," said Diana Lee, a Senior Credit Officer at Moody's. This will prove challenging given strong competition and a weaker economy. Lee continues, "A transformation to a more cost competitive company will also be critical to improve profitability and cash flow." The B2 Corporate Family Rating acknowledges high leverage, cash flow results and projections for the ratings horizon, ongoing litigation risk stemming from tax and product recall matters, and a highly competitive eye care sector. The B2 Corporate Family Rating also considers Bausch's strong brand equity, geographic diversity and its good size relative to other "B" rated companies. If the company is not able to improve its organic growth trends and relies on its credit facilities, the ratings could be lowered. The change to an SGL-3 speculative grade liquidity rating reflects Moody's view that liquidity is reduced but still adequate over the next 12 months. Although reliance on external credit facilities may occur, Bausch is expected to maintain availability under its $500 million senior secured revolver and $300 million delayed draw term loan. In addition, the company should have sufficient cushion under its leverage covenant. The last rating action was taken on October 16, 2007 when Moody's affirmed Bausch's existing ratings but withdrew the Caa1 ratings associated with the proposed $175 million PIK notes and $175 million senior subordinated notes after the company revised its capital structure. This rating was downgraded: Bausch & Lomb, Incorporated -- Speculative Grade Liquidity Rating to SGL-3 from SGL-2 These ratings were affirmed: Bausch & Lomb, Incorporated: -- Corporate Family Rating at B2 -- Probability of Default Rating at B2 -- $500 million Senior Secured Revolver at B1, LGD3, 36% -- $1,200 million U.S. Senior Secured Term Loan at B1, LGD3, 36% -- $300 million Delayed Draw Term Loan at B1, LGD3, 36% -- $650 million Senior Unsecured Notes at Caa1, LGD5, 88% Bausch & Lomb, B.V.: -- $575 million European Senior Secured Term Loan at B1, LGD3, 36% Headquartered in Rochester, New York, Bausch & Lomb Incorporated is a leading worldwide provider of eye care products, including contact lens, lens care, ophthalmic pharmaceuticals, and surgical products. Bausch & Lomb was acquired by Warburg Pincus, a private equity firm in October 2007. BEACH HOUSE PROPERTY: Has Plan for Sale to BankFirst ---------------------------------------------------- The U.S. Bankruptcy Court for the District of Florida (Miami) has approved the disclosure statement explaining Beach House Property LLC's latest Chapter 11 plan. A Chapter 11 trustee was appointed for Beach House Property, a developer converting a hotel into a condominium in Surfside, Florida, north of Miami Beach. The trustee, according to Bill Rochelle, came to agreement on a plan with the secured creditor BankFirst, owed more than $40 million. After plan confirmation, an auction will be held where the bank can bid using its secured claim rather than cash. Unsecured claims amount to less than $500,000 and will share in the liquidation of miscellaneous assets. The Court will consider confirmation of the Chapter 11 Plan on May 6. About Beach House Headquartered in Surfside, Florida, Beach House Property, L.L.C. owns various real estate properties. The Debtor commenced chapter 11 proceedings Feb. 15, 2008, before the U.S. Bankruptcy Court for the Southern District of Florida in Miami (Case No. 08-11761). Robert C. Furr, Esq., at Furr and Cohen in Boca Raton, Florida, represents the Debtor. The U.S. Trustee for Region 21 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. When it filed for bankruptcy, Beach House estimated assets between $50 million and $100 million, and debts between $10 million to $50 million. BERNARD L. MADOFF: Customers Want Founder in Ch. 7 Bankruptcy ------------------------------------------------------------- Bankruptcy Law360 reports that customers of Bernard L. Madoff Investment Securities LLC, who say they hold more than $64 million in claims against the defunct broker-dealer and Mr. Madoff himself, are asking the U.S. District Court for the Southern District of New York for permission to file an involuntary bankruptcy petition against Mr. Madoff personally. The report says Milberg LLP and Seeger Weiss LLP filed a motion seeking to place Mr. Madoff in Chapter 7 liquidation proceedings. 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 Mr. Madoff and his investment firm 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. istrict 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. BI-LO LLC: U.S. Trustee Forms Nine-Member Creditors Committee ------------------------------------------------------------- W. Clarkson Mcdow, Jr., United States Trustee for Region 4, appointed nine creditors to serve on an official committee of unsecured creditors of Bi-Lo LLC and its debtor-affiliates. The members of the Committee are: 1) Sandra Schirmang Senior Director of Credit Kraft/Nabisco Three Lakes Drive Northfield, IL 60093 Tel: (847) 646-6719 Fax: (847) 646-4479 2) Tom Gerhardt Credit Manager Cardinal Health 110, Inc. 7000 Cardinal Place Dublin, OH 43017 Tel: (614) 553-3124 Fax: (614) 652-6848 3) Mark Gross, Esq. C&S Wholesale Grocers, Inc. 7 Corporate Drive 1700 Keene, NH 03431 Tel: (603) 354-4604 Fax: (603) 354-4694 4) Emily Chou, Esq. Kellogg Company c/o Warner Stevens, LLP 301 Commerce Street, Ste Ft. Worth, TX 76102 Tel: (817) 810-5250 Fax: (817) 810-5255 5) Jerri D. Sponik Sara Lee Corp. 111 Corporate Office Drive, Ste 100 Earth City, MO 63045 Tel: (314) 506-3595 Fax: (314) 506-3720 6) Eric C. Cotton, Esq. Associate General Counsel Developers Diversified Realty Corp. 3300 Enterprise Parkway Beachwood, OH 44122 Tel: (216) 755-5660 Fax: (216) 755-1660 7) Michael Bevilacqua Director of Credit Bottling Group, LLC (Pepsi) 1100 Reynolds Boulevard Winston Salem, NC 27102 Tel: (336) 896-5577 Fax: (336) 896-6002 8) Richard W. Stiteler Director of Credit & Risk Mgmt. Coca-Cola Bottling, Inc. 521 Lake Kathy Drive Brandon, FL 33510-3945 Tel: (813) 569-3708 Fax: (813) 569-3085 9) Jess Maggard Flowers Baking Co. of Morristown, LLC 1725 W. 1st North Morristown, TN 37816-1774 Tel: (423) 586-2471 Fax: (423) 586-3728 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. Greenville, South Carolina-based BI-LO LLC -- http://my.bi-lo.com/ -- is a chain of 215 supermarkets based in Greenville, South Carolina. Founded in 1964 by Frank Outlaw, the Company and its affiliates operate supermarkets around South Carolina, North Carolina, Georgia, and Tennessee and have about 17,000 employees. Dallas-based Lone Star Funds bought the business in 2005 from Koninklijke Ahold NV, the Dutch supermarket operator. Lone Star also owns Bruno's Supermarkets LLC, a chain of 66 stores that filed under Chapter 11 in February in Birmingham, Alabama. BI-LO and its affiliates filed for Chapter 11 bankruptcy protection on March 23, 2009 (Bankr. D. S.C. Case No. 09-02140). Betsy Johnson Burn, Esq., Frank B.B. Knowlton, Esq., George Barry Cauthen, Esq., and Jody A. Bedenbaugh, Esq., at Nelson, Mullins, Riley and Scarborough assist the Companies in their restructuring efforts. The Companies listed $100 million to $500 million in assets and $100 million to $500 million in debts. BI-LO LLC: May File Schedules and Statements Until June 1 --------------------------------------------------------- The United States Bankruptcy Court for the District of South Carolina granted Bi-Lo LLC and its debtor-affiliates more time to file their schedules of assets and liabilities, and statements of financial affairs. The Debtors will file a current summary of their schedules and statements by May 1, 2009; and a final schedules and statements by June 1, 2009. The Debtors told the Court that the 15-day automatic extension of time is not enough to complete their schedules and statements given the complex nature of their business and circumstances surrounding the Chapter 11 cases and limited employees. About Bi-Lo LLC Greenville, South Carolina-based Bi-Lo LLC -- http://my.bi-lo.com/ -- is a chain of 215 supermarkets based in Greenville, South Carolina. Founded in 1964 by Frank Outlaw, the Company and its affiliates operate supermarkets around South Carolina, North Carolina, Georgia, and Tennessee and have about 17,000 employees. Dallas-based Lone Star Funds bought the business in 2005 from Koninklijke Ahold NV, the Dutch supermarket operator. Lone Star also owns Bruno's Supermarkets LLC, a chain of 66 stores that filed under Chapter 11 in February in Birmingham, Alabama. BI-LO and its affiliates filed for Chapter 11 bankruptcy protection on March 23, 2009 (Bankr. D. S.C. Case No. 09-02140). Betsy Johnson Burn, Esq., Frank B.B. Knowlton, Esq., George Barry Cauthen, Esq., and Jody A. Bedenbaugh, Esq., at Nelson, Mullins, Riley and Scarborough assist the Companies in their restructuring efforts. The Companies listed $100 million to $500 million in assets and $100 million to $500 million in debts. BIG 10 TIRES: Files for Bankruptcy in Wilmington to Reduce Debt --------------------------------------------------------------- Big 10 Tire Stores, Inc., a leading independent tire retailer in the Southeast, has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Big 10 Tires has adequate cash to continue paying for the day-to- day goods and services it needs to operate and to serve its customers well, but said it took this action to improve its capital structure and reduce debt, strengthen its financial and competitive position, and ultimately to get the business back on a growth track. During the reorganization period, the Company will operate as usual at its retail locations, and will continue to honor all product and service warranties. In connection with the reorganization, Big 10 Tires has secured Debtor-In-Possession financing from an affiliate of Sun Capital Partners. An affiliate of Sun Capital Partners purchased the Company in November 2006 and continues to be supportive of Big 10 Tires' reorganization efforts. Proceeds from the DIP financing, together with cash flow generated from day-to-day operations, will be used to fund post-petition operating expenses, including obligations to vendors and employee wages, salaries and benefits. Big 10 Tires said it will also be negotiating with its landlords for necessary rent concessions at certain locations. Like many other retail service businesses that are dependent on consumer and business spending, Big 10 Tires has been negatively impacted by the economic downturn. "We strongly believe that volume levels and premium product sales will return as the economy picks up, and as an outgrowth of the successful reorganization of the Company," said Don Kennemer, Chief Executive Officer. "At this time, we are intensely focused on continuing to serve our customers well, and working closely with our vendors to build the business. We expect to continue to conduct business throughout the reorganization with minimal disruption." About Big 10 Tires Big 10 Tires -- http://www.big10tires.com/-- headquartered in Mobile, Alabama, and established in May 1954 in Pensacola, Florida, has grown to become one of the largest independent tire dealers in North America, with the majority of its stores located in key markets in the Southeast. In addition to tire sales, the Company provides services such as tire rotations, oil changes, belts, hoses, parts and warranty sales. Big 10 Tires enjoys a leading market position in 8 of its 11 key markets, and prides itself on its strong, long-standing relationships with customers and vendors. BIG 10 TIRES: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: BT Tires Group Holding, LLC 3938A Government Blvd., Suite 102 Mobile, AL 36693 Bankruptcy Case No.: 09-11173 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- BT Tires Holding Finance Corp. 09-11174 BT Tires Holding Corp. 09-11175 Big 10 Tire Stores, Inc. 09-11176 Type of Business: The Debtors are tire dealers, offering an array of tire products consists of performance, light truck and sport utility and all-season touring tires in Alabama, Georgia and Florida. See http://www.big10tires.com/ Chapter 11 Petition Date: April 2, 2009 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Chad A. Fights, Esq. rdehney@mnat.com Robert J. Dehney, Esq. cfights@mnat.com Morris, Nichols, Arsht & Tunnell 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 Tel: (302) 658-9200 Fax: (302) 658-3989 Investment Banker: NatCity Investment Inc. Claims and Noticing Agent: Epiq Bankruptcy Solutions LLC Communications Consultant: Stanton Crenshaw Communications Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Tire Centers Trade debt $3,032,927 ATTN: Evon Cason-Acct 310 Inglesby Parkway Duncan, SC 29334 Tel: (800) 603-2430 Fax: (864) 329-2929 Bridgestone/Firestone LLC Trade debt $1,917,537 P.O. Box 730026 Dallas, TX 75373-0026 Tel: (615) 937-1000 Fax: (615) 937-3621 Realty Income Corporation Lessor $696,991 600 La Terraza Blvd. Escondido, CA 92025 Tel: (760) 741-2111 Fax: (760) 741-2235 American Tire Distributor Trade debt $390,338 Chevron Products Company Trade debt $243,465 Florida Depart. of Revenue Tax $154,000 Advance Auto Parts Trade debt $146,593 O'Reilly Auto Parts Trade debt $108,710 Mighty/Atlanta/North Trade debt $101,082 AM-PAC Tire Dist Inc. Trade debt $85,545 Carquest Str. 21 Trade debt $84,000 Alabama Dept. of Revenue Tax $78,000 Georgia Dept. of Revenue Tax $77,991 National Yellow Pages Trade debt $64,494 Southern Company Trade debt $61,736 Auto Zone Trade debt $60,000 LL&T Properties Trade debt $58,602 Visa Card SunTrust Merchant Trade debt $56,000 Services Carroll Tire Company Trade debt $52,413 AT&T Trade debt $44,921 Myers Tire Supply Trade debt $35,017 Kaufman Tire (Orlando) Trade debt $32,737 Atlanta Journal Trade debt $32,283 Omar Inc. Trade debt $30,885 S&S Tire and Auto Svc Trade debt $29,572 Kayser Realty Ltd. Lessor $27,386 Georgia Disposal Fee Services $26,496 JC Morehouse Investments LLC Lessor $24,309 Liberty/Lakin Nat'l Tire Trade debt $24,038 Recycling LLC Tire Rack Trade debt $17,719 The petition was signed by James T. Gamer, chief financial officer. BOSCOV'S INC: To Modify Plan to Save Buyer's Tax Benefits --------------------------------------------------------- Boscov's Inc., now formally known as BSCV Inc. following the sale of 39 department stores to entities affiliated with members of the controlling Boscov and Lakin families, slowed down the process of confirming a liquidating Chapter 11 plan when the purchaser requested changes to help preserve tax losses, Bloomberg's Bill Rochelle said. According to Bill Rochelle, Boscov's was prepared for a hearing on March 20 to seek approval of the disclosure statement explaining the liquidating plan. The Debtor, however, held up the hearing so it could modify the Plan, at the request of the buyers of its department stores. The purchasers had a provision in the contract compelling the company on request to adjust the Chapter 11 plan so tax benefits would be preserved. The buyers must reimburse the company for extra expenses in changing the plan. Pursuant to the Plan, unsecured creditors would receive a dividend between 6.3% and 14.4% on their claims totaling between $140 million and $160 million. Holders of existing equity interests won't receive anything. A full-text copy of the original version of the Liquidation Plan is available for free at: http://bankrupt.com/misc/BSCV_Ch11LiquidationPlan.pdf A full-text copy of the original version of the Disclosure Statement is available for free at: http://bankrupt.com/misc/BSCV_DisclosureStatement.pdf Meanwhile, according to Mr. Rochelle, Boscov's is asking for an extension until Aug. 3 of the exclusive right to propose a plan. The Court will convene a hearing to consider the extension on April 24. About Boscov's Inc. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on Aug. 4, 2008 (Bankr. D. Del. Case No. 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $318.9 million against debt totaling $412.8 million. Secured creditors are owed $196.2 million. On November 21, Judge Kevin Gross approved the sale of the Debtors' assets to a family group led by former company chairman Albert Boscov and former company executive Edwin Lakin. The deal, valued at $300 million, was completed in December. Following the sale Boscov's Inc., and Boscov's Department Store, LLC, revised their corporate names to BSCV, Inc., and BSCV Department Store, LLC. (Boscov's Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) BOSTON SCIENTIFIC: South Korean Study Won't Move S&P's BB+ Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that data from a South Korean study presented at the American College of Cardiology annual conference comparing drug-eluting stent performance has no impact on its BB+/Positive/-- rating for Boston Scientific Corp. The study concluded that Boston Scientific's Taxus DES rate of re- treatment is higher than its competitors'. Moreover, results of the Spirit II and III trials, conducted by Boston Scientific and presented at the same conference, also suggest that Abbott Laboratories' XIENCE DES may have superior outcomes relative to Taxus. Boston Scientific markets XIENCE as PROMUS, per rights it retained when it sold Guidant Corp.'s vascular intervention and endovascular businesses to Abbott. At year-end 2008, Boston Scientific held a 25% U.S. market share with PROMUS and a 24% U.S. market share with TAXUS; its worldwide share was estimated at 34%. Given royalties paid to Abbott for XIENCE sales, XIENCE is only one-half as profitable as TAXUS. As a result, the loss of TAXUS revenues, even if recaptured as PROMUS sales, would have a negative impact on EBITDA. Still, the contraction of the DES market over the past several years and the purchase of Guidant's cardiac rhythm management business has reduced the company's exposure to DES; coronary stents represented 23% of Boston Scientific's 2008 sales. As a result, S&P believes that continued growth in the company's diversified portfolio can offset further DES shifts in market share. CARE TO PETS: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Care to Pets Center, Inc. 7338 Market Street Youngstown, OH 44512 dba Petland Tel: (330) 758-4950 Bankruptcy Case No.: 09-40938 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Joseph C. Lucci, Esq. 20 West Federal Street, #600 Youngstown, OH 44503-1423 Tel: (330) 744-0247 Fax: (330) 744-8690 Email: jclucci@nnblaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Jeffrey Reisman, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ohnb09-40938.pdf CHAMPION ENTERPRISES: S&P Cuts Corporate Credit Rating to 'CCC-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings, including its corporate credit ratings, on Champion Enterprises Inc. and its wholly owned subsidiary, Champion Home Builders Co. S&P lowered the corporate credit ratings to 'CCC-' from 'CCC+'. The outlook is negative. The downgrade reflects S&P's assessment that Champion's ability to service its current capital structure over the intermediate term will be challenged given S&P's expectation that the company will continue to face continued operating pressures in the near term due to weak demand for manufactured homes in the U.S. and deteriorating international sales as a result of the global economic slowdown. Furthermore, given S&P's assumptions for weak earnings and operating cash flow in 2009, a near-term covenant violation is possible. Given the company's highly leveraged capital structure, S&P is skeptical that any future amendment to the credit facility that is not accompanied by a significant reduction in outstanding debt would enable Champion to meet debt service requirements over the intermediate term. Despite Champion's leading market position in the manufactured and modular homes business in North America, as well as its steel- framed modular building business in the U.K., the combination of extremely challenging operating conditions and an overleveraged financial profile will likely challenge the company's ability to service its current capital structure. In S&P's opinion, this will likely cause Champion to restructure all or some of its debt obligations, unless the company raises significant cash through asset dispositions and/or an infusion of equity. CHAMPION HOME: S&P Cuts Corporate Credit Rating to 'CCC-' --------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings, including its corporate credit ratings, on Champion Enterprises Inc. and its wholly owned subsidiary, Champion Home Builders Co. S&P lowered the corporate credit ratings to 'CCC-' from 'CCC+'. The outlook is negative. The downgrade reflects S&P's assessment that Champion's ability to service its current capital structure over the intermediate term will be challenged given S&P's expectation that the company will continue to face continued operating pressures in the near term due to weak demand for manufactured homes in the U.S. and deteriorating international sales as a result of the global economic slowdown. Furthermore, given S&P's assumptions for weak earnings and operating cash flow in 2009, a near-term covenant violation is possible. Given the company's highly leveraged capital structure, S&P is skeptical that any future amendment to the credit facility that is not accompanied by a significant reduction in outstanding debt would enable Champion to meet debt service requirements over the intermediate term. Despite Champion's leading market position in the manufactured and modular homes business in North America, as well as its steel- framed modular building business in the U.K., the combination of extremely challenging operating conditions and an overleveraged financial profile will likely challenge the company's ability to service its current capital structure. In S&P's opinion, this will likely cause Champion to restructure all or some of its debt obligations, unless the company raises significant cash through asset dispositions and/or an infusion of equity. CHARTER COMMUNICATIONS: Gets Interim OK to Access $640MM Cash ------------------------------------------------------------- Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York granted, on an interim basis, the request of Charter Communications Inc. and its affiliates, to use at least $640 million in cash collateral securing obligations to their lenders in order to provide sufficient working capital while they operate in Chapter 11. The Court has set a final hearing on the request on April 15, 2009. Written objections must be filed no later than April 8. Charter Communications Operating, LLC is party to an $8 billion Amended and Restated Credit Agreement, dated as of March 6, 2007 by and among CCO, as borrower; CCO Holdings, LLC, as guarantor; JPMorgan Chase Bank, N.A., as administrative agent for the lenders from time to time party thereto; JPMorgan Chase Bank, N.A. and Bank of America, N.A., as syndication agents; Citicorp North America, Inc., Deutsche Bank Securities Inc., General Electric Capital Corporation and Credit Suisse Securities (USA) LLC, as revolving facility co-documentation agents; Citicorp North America, Inc., and Credit Suisse Securities (USA) LLC, General Electric Capital Corporation and Deutsche Bank Securities Inc., as term facility co-documentation agents. The Credit Agreement -- the First Lien Facility -- provides for financing of up to $8 billion consisting of: (a) a $6.5 billion senior secured term loan, with the ability to enter into incremental term loans in the aggregate amount of up to $0.5 billion, and (b) a $1.5 billion senior secured revolving credit facility. From time to time and as of the Petition Date, CCO has entered into certain interest rate swap agreements -- each a Specified Hedge Agreement -- with certain non-Debtor counterparties who were, at the time of entering into the Specified Hedge Agreements, First Lien Lenders under the Credit Agreement. The Operating Debtors' obligations under the Specified Hedge Agreements also constitute secured obligations under a Guarantee and Collateral Agreement and are secured with security interests in the collateral pledged thereunder. Pursuant to an Amended and Restated Guarantee and Collateral Agreement, dated as of March 18, 1999, as amended and restated as of March 6, 2007, in each case executed and as in effect prior to the Petition Date, CCO and the other Operating Debtors -- those Debtors which are "borrowers" or "guarantors" under the Credit Agreement -- party to the Guarantee and Collateral Agreement have granted to the Administrative Agent a security interest in certain of their assets and property as set forth in the Guarantee and Collateral Agreement -- the "Prepetition Collateral" -- as collateral security for payment and performance when due of the secured obligations under the Prepetition Loan Documents and the Specified Hedge Agreements. The Prepetition Collateral includes cash collateral of the Administrative Agent and the other First Lien Secured Parties within the meaning of Section 363(a) of the Bankruptcy Code. Charter Communications, Inc., and its subsidiaries use funds deposited in their bank accounts to fund their day-to-day operations. Full-text copies of the Debtors' 2009 Budget and 13-Week Cash Forecast may be accessed for free at: http://bankrupt.com/misc/charter_13wkfrcst_2009bdgt.pdf As of the Petition Date, the Operating Debtors had approximately $640 million of cash on hand which comprises Cash Collateral. In their request, the Debtors also sought the Court's approval to provide adequate protection to the secured creditors' interest, and for the Court to set a final hearing on their request no later than 25 days following the entry of an interim cash collateral order. Summary of Terms Parties with Interest in Cash Collateral: JPMorgan Chase Bank, N.A., as administrative agent and as syndication agent, Bank of America, N.A., as co- syndication agent, Citicorp North America, Inc., Deutsche Bank Securities Inc., General Electric Capital Corporation and Credit Suisse Securities (USA) LLC, as revolving facility co- documentation agents and as term facility co-documentation agents, and the First Lien Lenders party to the Credit Agreement, and the non-Debtor counterparties to each Specified Hedge Agreement Wilmington Trust Company, as representative of the Second Lien Secured Parties Bank of America, N.A., as representative of the Third Lien Secured Parties. Use of Cash Collateral: (a) working capital and general corporate purposes, including, but not limited to, capital expenditures and making payments to general unsecured creditors of the Operating Debtors in the ordinary course on account of their prepetition claims; (b) adequate protection payments; (c) fees payable pursuant to the Debtors' management agreements; and (d) distributions to Affiliated Debtors for administrative costs and expenses related to the administration of their Chapter 11 Cases. Adequate Protection: In each case subject to the Carve Out, the Administrative Agent and the First Lien Lenders, and, as applicable, the non-Debtor counterparties to each Specified Hedge Agreement will receive: -- Section 507(b) Claim -- Adequate Protection Liens -- Adequate Protection Payments -- Covenants -- Reports Carve Out: The Adequate Protection Liens, the 507(b)Claims and any other adequate protection, liens or claims securing the Prepetition First Lien Obligations granted held by the Adequate Protection Parties are subject to: (a) unpaid fees payable to the United States Trustee and clerk of the Bankruptcy Court, (b) allowed professional fees and expenses incurred by the Debtors and any statutory committee appointed in the Chapter 11 Cases and unpaid, prior to the delivery of a Carve-Out Trigger Notice, (c) Professional Fees incurred after the first business day following delivery of the Carve-Out Trigger Notice in an aggregate amount not in excess of $20 million, and (d) the approved professional fees and Expenses incurred by any court appointed Chapter 7 trustee up to an aggregate amount of $200,000. Term: The use of Cash Collateral will end on the earliest of occur of: (i) six months from the date of entry of the Interim Cash Collateral Order; (ii) 25 days after the Petition Date if the Final Order has not been entered on or before that date; or (iii) upon five business days' written notice after the occurrence and continuation of a Termination Event. To successfully navigate through the Chapter 11 Cases, it is extremely important that the Debtors maintain sufficient liquidity to support the continued ordinary course operations of their businesses notwithstanding the challenges posed by market conditions and the filing of the Chapter 11 Cases, explains the Debtors' proposed counsel, Richard M. Cieri, Esq., at Kirkland & Ellis LLP, in New York. Absent authorization to use the Cash Collateral, Mr. Cieri says, the Debtors will certainly be unable to sustain their businesses and, as a result, will have to terminate their operations and liquidate their assets, all to the material detriment of all parties-in-interest. The Administrative Agent and the members of the steering committee for the First Lien Lenders have consented to the Debtors' use of Cash Collateral in the ordinary course of business, subject to the terms discussed, Mr. Cieri relates. "This consent was the result of good faith, arms' length negotiations between the Administrative Agent and the Debtors regarding the Debtors' use of the Cash Collateral to fund the Debtors' business operations and maintain the value of the Debtors' estates," he says. "Pursuant to the First-Second Lien Intercreditor Agreement, the Second Lien Representative and the Second Lien Secured Parties are deemed to have consented to the Debtors' use of Cash Collateral." Prior to the Court's entry of its interim order, Wilmington Trust Company, as representative of the Second Lien Secured Parties, submitted a statement to "apprise" the Court and the parties that it believes the denial of adequate protection to the second lien noteholders pending entry of the final First Lien Cash Collateral Order violates the intercreditor agreement among Wilmington Trust and the first lien secured parties. "[T]here is no support . . . for the First Lien Representative's contention that the Second Lien Secured Parties may not be granted adequate protection until entry of the Final First Lien Cash Collateral Order," said Wilmington Trust. The First Lien Lender Group, on the other hand, submitted a limited objection arguing that it is entitled to reimbursement as Adequate Protection by Charter Communications of all its reasonable fees and disbursements incurred in the Chapter 11 proceedings, not just fees and expenses up to a monthly cap. The Interim Order provides that the Administrative Agent and Lenders admit, stipulate, and agree that upon entry of a Final Order acceptable to the Administrative Agent and the Steering Committee, the Debtors may provide to parties other than the Adequate Protection Parties, adequate protection of the parties' interests in the Prepetition Collateral, including Cash Collateral, in each case in accordance with, as applicable, (i) the Amended and Restated Intercreditor Agreement, dated as of March 19, 2008 -- the First-Second Lien Intercreditor Agreement -- between the Administrative Agent and Wilmington Trust Company, as trustee for the holders of certain secured notes issued on April 27, 2004 and March 19, 2008, and (ii) the Intercreditor Agreement, dated as of March 6, 2007 -- the "First-Third Lien Intercreditor Agreement" -- between the Administrative Agent and Bank of America, N.A., as administrative agent for the lenders under the junior lien credit agreement, dated as of March 6, 2007. Judge Peck held that the funds on deposit in a certain escrow account established at Wilmington Trust Bank F.S.B. and governed by the escrow agreement dated February 10, 2009 -- the Irell Proceeds -- will (i) continue to be on deposit in an escrow account maintained at Wilmington Trust Bank F.S.B. and (ii) not be spent by the Debtors, absent further Court order. The rights of all parties on the issue of whether the proceeds constitute "Cash Collateral" or property of any of the Operating Debtors are preserved, he said. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet- Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: Seeks Approval of Kirkland Engagement ------------------------------------------------------------- Charter Communications, Inc., and its affiliates seek authority from Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to employ Kirkland & Ellis LLP, as their attorneys, nunc pro tunc to March 27, 2009. Kirkland & Ellis is recognized in its expertise and extensive experience and knowledge in the field of debtors' protections, creditors' rights, and business reorganizations under Chapter 11. The firm has been actively involved in major Chapter 11 cases and has represented many debtors, including Flying J, Inc., ACG Holdings, Inc., Tropicana Entertainment, LLC, Kimball Hill, Inc., Wellman, Inc., and Collins & Aikman Corp., Gregory L. Doody, the Debtors' chief restructuring officer and senior counsel, relates. According to Mr. Doody, Kirkland & Ellis will: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) take all necessary action to protect and preserve the Debtors' estates; (c) represent the Debtors in connection with obtaining postpetition financing; (d) advise the Debtors in connection with any potential sale of assets; (e) take any necessary action on behalf of the Debtors to negotiate, prepare on behalf of the Debtors, and obtain approval of a Chapter 11 plan and all related documents; and (f) perform all other necessary or otherwise beneficial legal services for the Debtors in connection with the prosecution of their Chapter 11 cases. The Debtors will pay Kirkland & Ellis according to its customary hourly rates, and reimburse the firm for actually incurred expenses. The firm's current hourly rates are: Partners $550 - $965 Counsel $390 - $965 Associates $320 - $660 Paraprofessionals $110 - $280 Consistent with the terms of the engagement letter between the parties, on December 8, 2008, the Debtors paid $400,000 to Kirkland & Ellis as a classic retainer. On December 9, 2008, the Debtors paid to the firm an additional classic retainer of $400,000. These retainers constitute "classic retainers" as defined in In re Prod. Assocs., Ltd., 264 B.R. 180, 184-85 (Bankr. N.D. Ill. 2001), and In re McDonald Brothers Construction, Inc., 114 B.R. 989, 997-99 (Bankr. N.D. Ill. 1990), according to Mr. Doody. As such, Kirkland & Ellis earned the classic retainer upon receipt and, consequently, placed the amount into its general cash account. The Debtors have replenished and increased the classic retainer subsequently, Mr. Doody says. As of the Petition Date, the retainer balance was roughly $1,999,700. Richard M. Cieri, a partner at Kirkland & Ellis, tells the Court that the firm and certain of its partners and associates may have in the past represented, may currently represent, and likely in the future will represent parties-in-interest in connection with matters unrelated to the Debtors and their Chapter 11 cases. In connection with services to be rendered to the Debtors, Kirkland & Ellis will not commence a cause of action against certain current clients with respect to the Debtors' Chapter 11 case, unless the firm receives a waiver from the Current Client allowing Kirkland & Ellis to commence an action, or is no longer representing the Current Client in any matters. In connection with the Debtors' bankruptcy cases, to the extent any causes of action are commenced by or against a Current Client, and a waiver letter is not obtained permitting Kirkland & Ellis to participate in the action, the Debtors' proposed conflicts counsel, Curtis, Mallet-Prevost, Colt & Mosle LLP, will represent the Debtors in that action, according to Mr. Cieri. Kirkland & Ellis represents certain of the Debtors' creditors, equity security holders or other parties-in-interest in ongoing matters unrelated to the Debtors and their bankruptcy cases, Mr. Cieri says. He assures the Court, however, that none of the representations are materially adverse to the interests of the Debtors' estates. These entities include: * J.P. Morgan Chase, * Madison Dearborn Partners, * Verizon Communications, Inc., and * Ambit Microsystems, Inc., Cisco Systems, Inc., ARRIS, Netgear, Motorola, Scientific Atlanta, and Thomson. Kirkland & Ellis is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors' estates, Mr. Cieri attests. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet- Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: Taps Friend Hudak as Telecom Counsel ------------------------------------------------------------ Charter Communications, Inc., and its affiliates seek authority from Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to employ Friend, Hudak & Harris, LLP, as their special telecommunications counsel. Friend Hudak handles matters in virtually every aspect of telecommunications law. The firm's practice includes advising clients on matters related to their operations at the United States federal level, in all 50 states, in U.S. Territories, and in many international markets, Gregory L. Doody, the Debtors' chief restructuring officer and senior counsel, relates. Since 2003, Friend Hudak and certain of its members and associates have rendered legal services to the Debtors in connection with various matters. The firm's services have related to counseling the Debtors on state and federal telecommunications regulatory issues arising from the Debtors' construction, installation, operation and acquisition of telecommunications networks, and their provision of telecommunications services. As a result, Friend Hudak is intimately familiar with the Debtors' business and the related complex legal issues that have arisen and may likely arise in connection with the Debtors' restructuring, Mr. Doody says. He adds that Friend Hudak has been retained as special telecommunications counsel in a number of troubled company situations, including MobileMedia Communications, Inc., ETS Payphones, Inc., and Maxxis Group, Inc. As the Debtors' special telecommunications counsel, Friend Hudak will provide telecommunications-related advisory services, including: (a) advising the Debtors as to telecommunications regulatory requirements arising from a filing under the Bankruptcy Code; (b) representing the Debtors, as needed, before telecommunications regulatory bodies; (c) advising the Debtors on telecommunications regulatory issues involved with sales of assets or transfers of control by the Debtors, if required, and the Debtors' reorganization plan; (d) providing any other necessary legal services and advice; and (e) continuing to provide legal services in the areas in which the firm has advised the Debtors in the past. Pursuant to the engagement letter between the parties, the fixed price for the work allocated to Friend Hudak is $5,891,184 over 36 months spanning January 1, 2008, through December 31, 2010. The price is based on a weighted hourly rate of $272 for approximately 21,600 hours, according to Mr. Doody. Mr. Doody informs the Court that during the period, payment will be made in equal monthly payments of $163,644. The pricing arrangements will be reviewed on March 1, 2009, and March 1, 2010, to determine whether the number of hours, and included disbursements, actually and reasonably expended by the firm is consistent with these projections: -- as of March 1, 2009: approximately 8,400 hours worked, and -- as of March 1, 2010: approximately 15,600 hours worked. According to Mr. Doody, upon each annual review, if the total of the actual hours worked is between 90% and 110% of the pro rata portion of the allocated hours for the period, there will be no adjustment to the pricing arrangements. However, if the total of the actual hours worked is below 90% or above 110% of the pro rata portion of the allocated hours for the period, the Debtors will, after consultation with Friend Hudak, have the choice of these adjustments: (1) If the total actual hours worked is below 90%, Friend Hudak will refund to the Debtors the difference between the fees due for actual hours worked and the fees due for 90% of the total hours projected for the year, at the agreed hourly rate of $272; or (2) If the total actual hours worked is more than 110%, the Debtors will pay Friend Hudak the difference between the fees due for the actual hours worked and the fees due for 110% of the total hours, at the agreed hourly rate of $272. After December 31, 2010, adjustments, if necessary, will be made in accordance with those options, resulting in an adjustment to fees if the actual hours worked during the reference period are less than 90% or more than 110% of the allocated hours, Mr. Doody says. Charles A. Hudak, Esq., a partner at Friend Hudak, discloses that the Debtors recognize that the firm may not be a "disinterested person" as the term is defined in Sections 101(14) and 327 of the Bankruptcy Code because (i) the firm is or may be a creditor of the Debtors on account of unpaid prepetition bills for fees and costs, (ii) the firm received payment on account of its bills for fees and services in the ordinary course of business during the 90 days before the Petition Date, (iii) some of the firm's attorneys or staff own or owned a small number of share of stock in Charter Communications before or as of the Petition Date, and (iv) several professionals or members of the firm's staff were or may have been employees of Charter Communications or other entities during the two years before the Petition Date. The Debtors note that they are not seeking to engage Friend Hudak as bankruptcy counsel pursuant to Section 327(a) and, therefore, submit that the fact that the firm may not be "disinterested" does not preclude its employment as special telecommunications counsel under Section 327(e). Mr. Hudak adds that Friend Hudak represented or currently represents certain entities in matters unrelated to the Debtors' Chapter 11 cases, including: * Adelphia Communications Corporation, * Delta Airlines, Inc., * KPMG, * Ernst & Young LLP, and * Fidelity Investments. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet- Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHARTER COMMUNICATIONS: Taps Curtis Mallet-Prevost as Counsel ------------------------------------------------------------- Charter Communications, Inc., and its affiliates seek authority from Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to employ Curtis, Mallet-Prevost, Colt & Mosle LLP, as their conflicts counsel, nunc pro tunc to the Petition Date. Gregory L. Doody, the Debtors' chief restructuring officer and senior counsel, relates that the Debtors filed an application to employ and retain Kirkland & Ellis LLP as their lead attorneys in the Chapter 11 cases. Kirkland & Ellis is aware of certain conflicts of interest. Accordingly, the Debtors seek to employ CMP to handle matters that are not appropriately handled by Kirkland & Ellis or other counsel to the Debtors because of actual or potential conflicts of interest issues or, alternatively, which the Debtors, Kirkland & Ellis, or other counsel to the Debtors, request to be handled by CMP. Kirkland & Ellix and CMP will coordinate their efforts and function cohesively to ensure that the legal services provided to the Debtors by each firm are not duplicative, Mr. Doody assures the Court. According to Mr. Doody, CMP, as conflicts counsel, will: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) take necessary action to protect and preserve the Debtors' estates; (c) take necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of one or more Chapter 11 plans; (d) advise the Debtors in connection with any potential sale of assets; and (e) perform other necessary legal services and provide other necessary legal advice to the Debtors in connection with their Chapter 11 cases. CMP will periodically file an updated schedule listing those public matters on which the firm is representing the Debtors, Mr. Doody says. CMP's current hourly rates are: Partners $675 - $785 Counsel $525 - $575 Associates $290 - $575 Paraprofessionals $170 - $210 Managing clerks $415 Other support personnel $55 - $325 CMP received a classic retainer of $100,000 from the Debtors before the Petition Date, and the firm has offset amounts for prepetition fees and expenses against the retainer and will hold the balance of the retainer and apply it to postpetition fees and expenses. CMP will also be reimbursed for expenses incurred in connection with the Debtors' bankruptcy cases, according to Mr. Doody. Steven J. Reisman, Esq., a member at CMP, informs the Court that the firm employs more than 250 attorneys worldwide and presently represents, and may in the future represent, entities that are claimants of, or interest holders in, the Debtors in matters unrelated to the Chapter 11 cases. Some of these entities are, or may consider themselves to be, creditors or parties-in-interest in the Debtors' bankruptcy cases although the Debtors are unaware of these claims or interests, he adds. CMP has not, does not, and will not represent any of its current clients or potential parties-in-interests in matters related to the Debtors' Chapter 11 cases, Mr. Reisman assures the Court. These entities include: * JPMorgan Chase Bank, * PricewaterhouseCoopers, * Wilmington Trust Company, * Deutsche Bank, * General Electric Capital Corporation, and * UBS Securities. CMP does not hold or represent an interest that is adverse to the Debtors' estates. CMP is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code, Mr. Reisman attests. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (NASDAQ: CHTR) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet- Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Linamar Discloses Receivables Exposure ---------------------------------------------------- In light of the uncertainties existing in the automotive marketplace, Linamar Corporation (CA:LNR) disclosed its current receivable exposure levels to GM and Chrysler. Linamar understands that under U.S. bankruptcy laws, in the event of a company entering chapter 11 bankruptcy, all goods delivered within 20 days of the date of the chapter 11 filing obtain a special priority and are paid as part of the chapter 11 reorganization, once the reorganization plan is approved. Any goods shipped prior to 20 days before the date of the chapter 11 filing are at risk. A GM or Chrysler bankruptcy would be a unique and unusual event whose consequences can't be foreseen and there can be no assurance of recovery. The combined total of Linamar's receivables balance greater than 20 days with GM and Chrysler is in aggregate estimated to be less than $30 million or approximately 9% of Linamar's total receivables balance as of March 31, 2009. "Our typical experience with customers in the past that have filed for chapter 11 protection is that we have been able to recover up to half or more of at risk receivables", said Linamar CEO Linda Hasenfratz. "We are pleased that our diversification efforts have allowed us to minimize our risk with any one customer in this way, particularly in light of uncertainties in the industry at this time". Based in Guelph, Ontario, in Canada, Linamar Corporation (CA:LNR) -- http://www.linamar.com/-- is a diversified global manufacturing company of highly engineered products. The company's Powertrain and Driveline focused divisions are world leaders in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle and power generation markets. The company's Industrial division is a world leader in the design and production of innovative mobile industrial equipment, notably its class-leading aerial work platforms and telehandlers. With more than 11,000 employees in 37 manufacturing locations, 5 R&D centers and 11 sales offices in Canada, the US, Mexico, Germany, Hungary, the UK, China, Korea and Japan Linamar generated sales of over $2.2 Billion in 2008. Certain information regarding Linamar set forth in this document, including management's assessment of the Company's future plans and operations may constitute forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results may differ materially from these anticipated in the forward-looking statements due to factors such as customer demand and timing of buying decisions, product mix, competitive products and pricing pressure. In addition, uncertainties and difficulties in domestic and foreign financial markets and economies could adv 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. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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 Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. Viability Plan Chrysler has been trying to keep itself afloat. As reported by the Troubled Company Reporter on March 20, 2009, its Chief Financial Officer Ron Kolka, has said even if Chrysler gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next. The Company's CFO has said Chrysler planned for the $4 billion federal government bailout it received Jan. 2 to last through March 31. Chrysler admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of the Chrysler viability plan is available at: http://ResearchArchives.com/t/s?39a3 As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CIRCUIT CITY: Authorized to Sell Trademarks to Bell Canada ---------------------------------------------------------- Circuit City Stores Inc. won permission from the U.S. Bankruptcy Court for the Eastern District of Virginia to its trademarks and trade names for the company's Canadian business to an affiliate of Bell Canada for $11.6 million, Bloomberg's Bill Rochelle said. The Bankruptcy Court entered on its docket on March 20, 2009, an order granting approval of the sale of Circuit City's Canadian operations to Bell Canada. InterTAN Canada Ltd., a subsidiary of Circuit City, controls the operations and operates more than 750 The Source stores across Canada. The sale was approved by the Ontario Superior Court of Justice on March 10, 2009. In the motion filed before the U.S. Bankruptcy Court, Circuit City Stores, InterTAN, Circuit City Stores West Coast, Inc., and Ventoux International, Inc., asked the Court, pursuant to Sections 105 and 363 of the Bankruptcy Code, to: (a) approve the sale or licensing, as applicable, of certain trademarks and licensed trademarks by West Coast, and shares in Circuit City Global Sourcing Limited by Ventoux to purchaser 4458729 Canada Inc. free and clear of all interests, through an Asset Purchase Agreement, dated February 23, 2009, among InterTAN Canada Ltd., West Coast, Ventoux, the Purchaser and Bell Canada. The Purchaser is a direct, wholly-owned subsidiary of Bell Canada; (b) approve InterTAN's authorization for InterTAN Canada Ltd. to sell substantially all of its assets to the Purchaser; (c) authorize Circuit City, West Coast and Ventoux to enter into an Intercompany Agreement, dated February 23, 2009, with InterTAN Canada; (d) authorize West Coast to enter into the Settlement and Coexistence Agreement, dated February 20, 2009, among Foto Source Canada, Inc., InterTAN Canada and West Coast. The Purchase Agreement contains confidential information. Copies of the agreement have been provided only to the Court, the Office of the U.S. Trustee, the Official Committee of Unsecured Creditors, and certain other parties. A full-text copy of the list of Trademarks and Licensed Trademarks, the Intercompany Agreement, InterTAN resolution, and the Foto Source Settlement Agreement is available for free at: http://bankrupt.com/misc/CC_Trademarks_&_Agreements.pdf InterTAN's equity interest in InterTAN Canada, the Trademarks and the CCGS Shares represent valuable assets of the Debtors' and InterTAN's bankruptcy estates. Accordingly, the Debtors, together with InterTAN Canada, have been extensively marketing the US Assets to interested parties. As a result, they believe that the Sale by West Coast and Ventoux of the US Assets and InterTAN's authorization of InterTAN Canada's sale of the InterTAN Canada Assets could bring significant recovery for the their estates and creditors, and that the Purchase Agreement represents the highest and best offer for the Purchased Assets. The Debtors and InterTAN believe that (i) the allocation of the purchase price under the Purchase Agreement represents a fair and reasonable allocation, (ii) the Foto Source Settlement Agreement represents a fair and reasonable compromise of the dispute with Foto Source, and (iii) both are in the best interest of the Debtors, InterTAN, and their estates and creditors. The Purchase Agreement The InterTAN Canada assets are comprised of substantially all of InterTAN Canada's undertaking, property, assets, interests and rights of any kind other than certain excluded assets, which includes certain cash, insurance policies, refundable taxes, minute books and tax records, and accounts receivable from Circuit City. The Trademarks are comprised of certain trademarks and other intellectual property used in the day-to-day operations of InterTAN Canada, including "The Source" and "The Source by Circuit City", which is the name under which InterTAN Canada trades. The CCGS Shares comprise all of the issued and outstanding shares in CCGS, through which InterTAN Canada sources private label products from factories in Asia and utilizes CCGS's offices in Hong Kong, Shenzhen, China, and Taipei, Taiwan, for sourcing, merchandising and quality control. The Purchaser has provided a deposit of C$15,000,000, deposited with Alvarez & Marsal Canada ULC, as escrow agent. Alvarez & Marsal, the monitor in the proceedings under the Companies' Creditors Arrangement Act commenced by InterTAN Canada and Tourmalet Corporation, has received the Deposit in trust to be held pending the closing of the transaction pursuant to an escrow agreement it executed with InterTAN Canada and the Purchaser. Bell Canada has guaranteed the performance by the Purchaser of its obligations. The closing of the sale transaction would occur (i) on the date that is the later of June 30, 2009, and the date that is two business days after the day on which all of the closing conditions set forth in the Purchase Agreement have been satisfied, or (ii) other date as may be agreed by the parties. The outside date for the Closing is July 31, 2009, subject to extension to September 30 in accordance with the terms of the Purchase Agreement. InterTAN Canada and the Sellers have agreed that they will immediately cease any existing discussions with persons other than the Purchaser with respect to a purchase, sale, license or transfer of the Purchased Assets, other than the sale of inventory in the ordinary course of business. Under the Purchase Agreement, the Purchaser would, among other things, (i) assume the written employment agreements for InterTAN Canada's "Executive Employees," (ii) offer employment to all of InterTAN Canada's "Non-Executive Employees," and (iii) assume the collective agreement applicable to InterTAN Canada's unionized workers at its Barrie warehouse. Circuit City acquired InterTAN in May 2004. InterTAN is the subject of a court-monitored sales process following the Company's entry into creditor protection in Canada in November 2008. The sale is being managed by Rothschild and is expected to close in the third calendar quarter of 2009. Amendment to Bylaws Earlier this month, Circuit City adopted an amendment to its bylaws. The amendment revised the Bylaws to decrease the size of the Company's Board of Directors from 13 to five directors. On March 11, 2009, Carolyn H. Byrd, James F. Hardymon, Lyle G. Heidemann, J. Patrick Spainhour, Ronald L. Turner, Elliott Wahle and Carolyn Y. Woo resigned as directors of the Company effective as of that date. There was no disagreement between any of the individuals and the Company on any matter relating to the Company's operations, policies or practices. The Company also has provided notice to each of its employees that it is anticipated that each employee's employment with the Company will terminate on March 21, 2009 or a date within 14 days thereafter that the Company may subsequently provide. The employees that received this notice included: * James A. Marcum, Vice Chairman, Acting President and Chief Executive Officer and a director of the Company; * John T. Harlow, Executive Vice President and Chief Operating Officer; * Reginald D. Hedgebeth, Senior Vice President, General Counsel and Secretary; * Eric A. Jonas, Jr., Senior Vice President -- Human Resources; and * Michelle O. Mosier, Vice President and Controller and the Company's principal financial officer and principal accounting officer. The Company's employment of Messrs. Harlow, Hedgebeth and Jonas terminated March 21, 2009. The Company has continued to employ Mr. Marcum and Ms. Mosier for an undetermined period of time to manage the process to liquidate the assets of the Company and its subsidiaries as part of the Chapter 11 proceedings. About Circuit City Stores 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) CITIGROUP INC: 3 Japanese Firms Submit Bids for Nikko Cordial ------------------------------------------------------------- Alison Tudor at The Wall Street Journal reports that Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc., and Mizuho Financial Group Inc. have presented preliminary offers for Citigroup Inc.'s Nikko Cordial Securities Inc. According to WSJ, the winner will get Nikko Cordial's 109 retail branches across Japan and about 7,000 salespeople. People familiar with the matter said that MUFG was an early favorite to win the bidding, WSJ relates. WSJ states that Citigroup isn't likely to get JPY1.6 trillion, which it paid for Nikko Cordial in a series of deals completed in January 2008. According to WSJ, financial analysts estimate that Nikko Cordial is valued JPY300 billion to JPY400 billion. Citing people familiar with the matter, WSJ says that the final value is difficult to predict, partly because it isn't clear if about JPY200 billion of surplus capital will be included. Citigroup, WSJ relates, may want to maintain some links between its investment-banking operations and Nikko Cordial. WSJ says that Citigroup could also try to forge a joint venture with one of the large Japanese banks. People familiar with the matter said that this could make SMFG or Mizuho, with no current ties to Morgan Stanley, a more attractive buyer, WSJ states. According to WSJ, the second round of bidding is likely to finish around the end of April. WSJ, citing people familiar with the matter, relates that the Japanese banks received documentation this week and are now conducting their due diligence. About Citigroup Inc. Based in New York, Citigroup (NYSE: C) -- http://www.citigroup.com -- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citigroup had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported by the TCR on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan. CMR MORTGAGE II: Case Summary & 18 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: CMR Mortgage Fund II, LLC 62 First Street, 4th Floor San Francisco, CA 94105 Bankruptcy Case No.: 09-30788 Chapter 11 Petition Date: March 31, 2009 Court: Northern District of California (San Francisco) Judge: Thomas E. Carlson Debtor's Counsel: Robert G. Harris, Esq. rob@bindermalter.com Law Offices of Binder and Malter 2775 Park Ave. Santa Clara, CA 95050 Tel: (408) 295-1700 Roya Shakoori, Esq. roya@bindermalter.com Binder and Malter 2775 Park Ave. Santa Clara, CA 95050 Tel: (408) 295-1700 Estimated Assets: $100 million to $500 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Orrick, Herrington, et al. Legal Fees $418,184 c/o M.J. Pritchett 405 Howard Street San Francisco, CA 94105-2669 Tel: (415) 773-5540 Perry Smith LLP Accountant $96,620 c/o Michael Soza One Embarcadero Center, Ste. 1330 San Francisco, CA 94111 Tel: (415) 946-7447 Imperial A.I. Credit Trade Debt $68,627 Companies c/o Steven Poleri Department 7615 Los Angeles, CA 90084 Tel: (415) 836-2854 21 Mira Mesa, LLC Trade Debt $50,312 Fidelity National Title Trade Debt $45,416 Company Stein & Lubin LLP Legal Fees $34,791 L.A. Commercial Group, Inc. Trade Debt $10,251 S.B.S. Trust Deed Network Trade Debt $7,471 Seattle Specialty Insurance Trade Debt $6,962 Services City of Oakland Trade Debt $3,631 15 SSFDEV, LLC Trade Debt $2,100 Entreken Associates, Inc. Trade Debt $1,532 CB Richard Ellis Trade Debt $802 Merrill Communications, LLC Trade Debt $416 2 Antioch, LLC Trade Debt $290 CT Corporation Trade Debt $257 Jeffer, Mangels, et al. Trade Debt $32 Jeffrey D. Trowbridge Trade Debt $32 The petition was signed by Graham Seel, senior vice-president. CMR MORTGAGE III: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: CMR Mortgage Fund III, LLC 62 First Street, Fourth Floor San Francisco, CA 94105 Bankruptcy Case No.: 09-30802 Chapter 11 Petition Date: March 31, 2009 Court: Northern District of California (San Francisco) Judge: Dennis Montali Debtor's Counsel: Reno F.R. Fernandez, Esq. r.fernandez@macdonaldlawsf.com Macdonald and Assoc. 221 Sansome St. San Francisco, CA 94104 Tel: (415)362-0449 Estimated Assets: $10 million to $50 million Estimated Debts: $1 million to $10 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ CMR Mortgage Fund II, LLC Loan $1,316,765 62 First Street, Fourth Floor San Francisco, CA 94105 Orrick, Herrington & Sutcliffe Services $539,866 LLP 405 Howard Street San Francisco, CA 94105-2669 Fidelity National Title Services $68,019 Company 209 Kearny Street, 2nd Floor San Francisco, CA 94108 Stein & Lubin LLP Services $31,481 Perry-Smith LLP Services $17,650 L.A. Commercial Group, Inc. Services $12,251 Wheatland Holdings, LLC Loan $9,992 EnviroDetics, Inc. Services $5,500 S.B.S. Trust Deed Network Trustee's fees $5,222 Property Sciences Appraisal Fees $4,000 First Street Commercial Loan $2,311 Mortgage Fund, LLC CB Richard Ellis Services $1,794 Binder & Malter, LLP Services $1,780 CT Corp. Services $1,218 The petition was signed by Graham Seel, senior vice-president. COLONIAL BANCGROUP: Fitch Retains Negative Watch on 'BB' Rating --------------------------------------------------------------- The Colonial BancGroup remains on Rating Watch Negative by Fitch Ratings following an announcement that it has entered into a definitive agreement with a consortium of private investors to purchase $300 million of equity in the company. The maintenance of the Negative Watch reflects the meaningful conditions attached to the agreement which include a number of regulatory approvals, the investors obtaining satisfactory financing, and conversion to a thrift charter. The consortium is lead by Ocala, Florida-based mortgage lender Taylor Bean & Whitaker. Upon completion of the transaction majority control would transfer to the new consortium. This transaction appears to meet the U.S. Treasury's condition for CNB to raise equity from the private sector prior to issuing preferred stock through the Capital Purchase Program, for which CNB already received preliminary approval, amounting to 3% of risk-weighted assets. However, should the transaction not come to fruition and CNB not raise the necessary capital through private and public sources, multiple notch downgrades would result. As part of CNB's informal Memorandum of Understanding with the FDIC and the Federal Reserve Bank of Atlanta, the company agreed to increase Colonial Bank's Tier 1 leverage and total risk-based capital ratios to 8% and 12%, respectively, by March 31, 2009, as recently disclosed in CNB's 10K. Colonial Bank's Tier 1 leverage and total risk-based capital ratios were at 6.03% and 11.37% at Dec. 31, 2008, respectively. While there is a definitive agreement in place, clearly the March 31st capital ratios will not benefit from this transaction. While the capital augmentation from TBW alone would not allow CNB to reach these levels, the additional CPP funding should bring the company's capital ratios into compliance. Separate from the concerns regarding CNB's capital position, should asset quality deteriorate beyond levels already incorporated in its current ratings, Fitch would likely downgrade CNB's ratings. Furthermore, under the MOU the company agreed to improve asset quality by dates beginning June 30, 2009. Fitch has downgraded the rating of CBG Florida REIT, a subsidiary of Colonial Bank. This reflects the heightened probability that the conditional exchange event, as provided for under the original offering, could be triggered depending on the bank's capital ratios, under which the REIT preferred would become preferred of the holding company should the bank become undercapitalized. These ratings remain on Negative Watch: The Colonial BancGroup, Inc. -- Long-term Issuer Default Rating 'BB'; -- Short-term IDR 'B'; -- Subordinated debt 'BB-'; -- Individual 'C/D'; -- Support at '5'; -- Support Floor at 'NF'. Colonial Bank -- Long-term IDR 'BB+'; -- Long-term deposits 'BBB-'; -- Short-term IDR 'B'; -- Short-term deposits 'F3'; -- Subordinated debt 'BB'; -- Individual 'C/D' -- Support at '5'; -- Support Floor at 'NF'. Colonial Capital Trust IV -- Preferred stock 'B+'. Fitch has downgraded this rating which remains on Negative Watch: CBG Florida REIT -- Preferred stock to 'B+' from 'BB'. COLONIAL BANCGROUP: Moody's Cuts Bank Strength Rating to 'E+' ------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Colonial BancGroup (issuer to Caa1 from B2) and its subsidiaries, including its lead bank, Colonial Bank (financial strength to E+ from D, and long term bank deposits to B1 from Ba2). Following the downgrade, the ratings remain on review with direction uncertain. Moody's said the downgrade reflects its opinion that, given the likely credit costs in the bank's commercial real estate portfolio, there is a significant risk of the firm becoming undercapitalized, absent a substantial capital injection. Moody's notes that Colonial announced that it has signed an agreement with Taylor, Bean & Whitaker which is leading a consortium that has conditionally agreed to invest $300 million of equity in the company. However, the rating agency believes that there is substantial execution risk to this deal being consummated. Of particular concern is the need for the consortium to obtain financing for its portion of the investment. This concern is heightened by the current challenging environment for obtaining such financing. In Moody's opinion, the other contingencies attached to this capital injection also present challenges. These contingencies include, receipt by Colonial of satisfactory confirmation and final approval that the U.S. Treasury Department will purchase shares of preferred stock and warrants pursuant to the Capital Purchase Program equal to 3% of Colonial's risk weighted assets, the obtaining of necessary financing by the investors, receipt of all regulatory and NYSE approvals, and the completion of satisfactory due diligence by the investor consortium by April 30, 2009. Moody's said that its review with direction uncertain indicates that the conclusion of the ratings review is dependent on the outcome of the capital injection. If Colonial is successful in securing the approximate $850 million of capital ($300 million in private capital and approximate $550 million in TARP preferred capital), then Colonial's bank financial strength rating could move back into the D category. This is because the significant capital raise would be expected to be sufficient to absorb expected losses in the portfolio. However, if Colonial is unsuccessful in securing the approximate $850 million of capital, the bank financial strength rating could move to E. Moody's said that Colonial's sizable concentration in Florida commercial real estate, residential development in particular, presents a substantial risk to the firm. The CRE portfolio accounts for approximately 6 times tangible common equity, with construction lending comprising approximately 60% of total CRE. Colonial has seen more than a four-fold increase in nonperforming assets from the prior year end, largely in the residential construction and land portfolio. Moody's further notes Colonial's inability to secure the approximate $850 million of equity would result in the company not meeting the requirements set out in the informal Memorandums of Understanding that it entered into with the FDIC and the Alabama State Banking Department as well as the Federal Reserve Bank of Atlanta. In this MOU Colonial agreed to increase its Tier 1 leverage ratio to 8% and its total risk based capital ratio to 12% by March 31, 2009. Failure to adequately address the regulatory concerns could result in further regulatory action, including the eventual appointment of a receiver or conservator of Colonial Bank's net assets. Moody's last rating action on Colonial was on January 28, 2009, when the bank's financial strength rating was downgraded to D from C- and long term deposits to Ba2 from Baa1. Following the downgrade, the ratings were placed on review for possible further downgrade. These debts were downgraded: Downgrades: Issuer: CBG Florida REIT Corp. -- Preferred Stock Preferred Stock, Downgraded to Ca from Caa2 Issuer: Colonial BancGroup, Inc. (The) -- Issuer Rating, Downgraded to Caa1 from B2 -- Multiple Seniority Shelf, Downgraded to a range of (P)Ca to (P)Caa3 from a range of (P)Caa2 to (P)Caa1 -- Subordinate Regular Bond/Debenture, Downgraded to Caa3 from Caa1 Issuer: Colonial Bank -- Bank Financial Strength Rating, Downgraded to E+ from D -- Issuer Rating, Downgraded to B2 from Ba3 -- OSO Senior Unsecured OSO Rating, Downgraded to B2 from Ba3 -- Subordinate Regular Bond/Debenture, Downgraded to Caa1 from B2 -- Senior Unsecured Deposit Rating, Downgraded to B1 from Ba2 Issuer: Colonial Capital Trust IV -- Preferred Stock Preferred Stock, Downgraded to Caa3 from Caa1 Colonial is headquartered in Montgomery, Alabama, and its reported assets were $26 billion at December 31, 2008. COMMUNITY BANCORP: Delays Filing of 2008 Annual Report ------------------------------------------------------ Community Bancorp filed on April 1, 2009, a Notification of Late Filing on Form 12b-25 with the Securities and Exchange Commission to report that it was not able to file its Annual Report on Form 10-K for the year ended December 31, 2008. In February 2009, the Company disclosed that it is in the process of completing its study of goodwill impairment and assessing the appropriate level of the allowance for loan losses in light of challenging market conditions. The Company has not concluded the goodwill impairment study, and the assessment of the appropriate level of the allowance for loan losses has not been completed. Therefore, the Company is still in the process of completing its financial statements for 2008 and is still unable to report on its final results for the year. The Company expects that it will report a loss for the year ended December 31, 2008, compared to net income of $20.4 million for the year ended December 31, 2007, report a provision for loan losses higher than the amount reported in regulatory reports and incur a charge to operations for a valuation allowance on deferred taxes. However, the Company is unable to report on its final results for 2008 until the audit of its consolidated financial statements has been completed. As a result of these losses, the Company expects its principal banking subsidiary, Community Bank of Nevada, to be "adequately capitalized" and Community Bank of Arizona to be "well- capitalized" for regulatory purposes as of December 31, 2008. These losses, the Company's level of non-performing assets at year-end 2008 and discussions with regulators have led management to expect that federal and state regulators will require a formal agreement with respect to, among other things, asset quality, capital and earnings. Community Bancorp -- http://www.community-bancorp.com/-- headquartered in Las Vegas, Nevada, is the holding company for Community Bank of Nevada and Community Bank of Arizona. In 2002, Community Bancorp was formed as the holding company of Community Bank of Nevada, a Las Vegas based bank organized in July 1995 by local community leaders and experienced bankers with the mission of providing superior community banking services. As of September 30, 2008, Community Bancorp had $1.78 billion in total assets and $1.55 billion in total liabilities. Community Bancorp reported a net loss of $2.96 million for the three months ended September 30, 2008. COMMUNITY BANCORP: Defers TruPS Interest Payment, to Merge Units ---------------------------------------------------------------- To bolster the capital ratios at its Nevada bank, Community Bancorp has filed applications with bank regulatory agencies to merge its Arizona subsidiary bank into Community Bank of Nevada, thereby acquiring excess capital at the Arizona subsidiary and reducing expenses. Additionally, it has begun to (i) defer the interest payments on its subordinated trust preferred obligations as permitted by the governing instruments, (ii) explore the possibility of selling performing loans in order to reduce its risk based assets, (iii) reduce its reliance on brokered deposits and (iv) initiate other strategies to preserve and expand its capital and those of its subsidiaries. While the Company is deferring interest payments on the subordinated trust preferred obligations, it is prohibited from making any dividend payments on or repurchasing its capital stock. As reported in today's Troubled Company Reporter, the Company expects to report a loss for the year ended December 31, 2008, compared to net income of $20.4 million for the year ended December 31, 2007. The Company expects its principal banking subsidiary, Community Bank of Nevada, to be "adequately capitalized" and Community Bank of Arizona to be "well- capitalized" for regulatory purposes as of December 31, 2008. The losses, the Company's level of non-performing assets at year-end 2008 and discussions with regulators have led management to expect that federal and state regulators will require a formal agreement with respect to, among other things, asset quality, capital and earnings. Community Bancorp -- http://www.community-bancorp.com/-- headquartered in Las Vegas, Nevada, is the holding company for Community Bank of Nevada and Community Bank of Arizona. In 2002, Community Bancorp was formed as the holding company of Community Bank of Nevada, a Las Vegas based bank organized in July 1995 by local community leaders and experienced bankers with the mission of providing superior community banking services. As of September 30, 2008, Community Bancorp had $1.78 billion in total assets and $1.55 billion in total liabilities. Community Bancorp reported a net loss of $2.96 million for the three months ended September 30, 2008. COMMUNITY BANCORP: Discloses Non-Compliance Under $6.6MM Loan ------------------------------------------------------------- Community Bancorp said it is not in compliance with the debt service coverage ratios of a $6.6 million borrowing at December 31, 2008, and the non-compliance continues. To obtain a previous waiver of non-compliance with these ratios, the Company secured the borrowing with the shares of its Arizona subsidiary bank. Interest and principal payments on the borrowing are current, but the Company's ability to continue to service the debt may require approval depending on the terms of the anticipated formal agreement with bank regulators. The Company expects to repay the borrowing as part of the merger of the two subsidiaries. As reported in today's Troubled Company Reporter, Community Bancorp has filed applications with bank regulatory agencies to merge its Arizona subsidiary bank into Community Bank of Nevada -- to bolster the capital ratios at its Nevada bank by acquiring excess capital at the Arizona subsidiary and reducing expenses. While the Company remains in default of the covenant or any other covenant or obligation of the borrowing, the lender may elect to sell the collateral to repay the borrowing. "As we witnessed in the news throughout the country, real estate values have declined and Nevada and Arizona real estate experienced their share of substantial declines in values during the fourth quarter of 2008 and continue to have downward pressure this year," Edward M. Jamison, its Chairman, President and Chief Executive Officer, said. "With the decline in the economic indicators in Nevada and Arizona and our own experience with stressed businesses and loans, we have and continue to assess the underlying collateral values supporting our loan portfolio and, when appropriate, either set aside reserves or write off these reductions in values. This resulted in higher reserves and higher loan amounts being written-off during 2008. Banks with real estate concentration have been impacted by these declining values and loan performance issues. "Nevada, with the gaming and hospitality industry, construction, and small businesses, is feeling the impact of the times. Arizona likewise has had declines in property values, heightened vacancies in commercial offices and the retail real estate sector and increasing unemployment numbers. Our communities, in which we operate, have been severely impacted by the economic downturn and continue to do so. Local banks in general are a reflection of the economy of the communities in which they operate and our community has been economically stressed. Likewise as recovery comes we believe that Las Vegas will rebound and grow and recover along with the country as a whole. "We believe that the Board of Directors and management of the Company have implemented a very aggressive strategy to address the challenges of this economic cycle. We are moving forward and executing our plans to strengthen our capital, our earnings and our asset quality. We have hundreds of dedicated officers and employees working toward solutions and progress is being made. Our customers are loyal and we appreciate that." Community Bancorp -- http://www.community-bancorp.com/-- headquartered in Las Vegas, Nevada, is the holding company for Community Bank of Nevada and Community Bank of Arizona. In 2002, Community Bancorp was formed as the holding company of Community Bank of Nevada, a Las Vegas based bank organized in July 1995 by local community leaders and experienced bankers with the mission of providing superior community banking services. As of September 30, 2008, Community Bancorp had $1.78 billion in total assets and $1.55 billion in total liabilities. Community Bancorp reported a net loss of $2.96 million for the three months ended September 30, 2008. CONSECO INC: S&P Removes 'CCC' Rating from Negative CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services said that it removed its 'CCC' counterparty credit rating on Conseco Inc. and its 'BB-' counterparty credit and financial strength ratings on Conseco Inc.'s insurance operations from CreditWatch, where they were placed on March 2, 2009, with negative implications. Standard & Poor's also said that it affirmed all these ratings. The outlook on all these companies is negative. "We took these rating actions following Conseco's announcements that it has successfully amended the covenants of its credit facility to provide a greater level of cushion and that the auditor's opinion regarding 2008 operating results is unqualified," explained Standard & Poor's credit analyst Jon Reichert. Although operating earnings did improve in 2008, the negative outlook reflects the uncertainty regarding the sustainability of the improved performance, given the weak economic environment. Further investment write-downs or deterioration in the insurance subsidiaries' operating performance would likely reduce the group's statutory capital base. The ratings anticipate that the consolidated insurance group will maintain an NAIC risk-based capital ratio of at least 225% and that statutory (cash) fixed- charge coverage will remain above 1x. "If the company does not meet these metrics, S&P will likely lower the ratings," Mr. Reichert added. "Alternatively, if the group can demonstrate a sustained track record of steadily improving operating earnings and capital, S&P could revise the outlook to stable." COOPER COMPANIES: Moody's Changes Outlook on Ba3 Rating to Stable ----------------------------------------------------------------- Moody's Investors Service has changed the rating outlook for The Cooper Companies, Inc. to stable from negative reflecting the prospect of enhanced cash generation and debt reduction over the next twelve months. In addition, Moody's has affirmed all of Cooper's long term ratings at Ba3, including the corporate family and probability of default ratings, as well as its SGL-3 speculative grade liquidity rating. The stable outlook reflects Moody's expectation that Cooper will deliver solid top-line performance and strong earnings over the near term despite challenging global economic conditions. The completion of Cooper's multi-year, capital intensive restructuring of its manufacturing facilities and production capabilities during 2008 is viewed positively and should benefit earnings in 2009 and 2010. The stable outlook incorporates Moody's view that the restoration of financial metrics will be gradual as these actions continue to gain traction, cash flow demonstrates its sustainability and management executes its strategy to reduce the debt load and financial leverage. The company's stated strategy of debt reduction is a key component of the stable outlook. A meaningful deviation from the current fiscal posture that results in increased event risk or shareholder friendly activities could have negative rating implications. These ratings were affirmed: -- Corporate Family Rating at Ba3; -- Probability of Default Rating at Ba3; -- Ba3 rating (LGD4/51%) on Senior Unsecured Notes due 2015; and -- Speculative Grade Liquidity Rating at SGL-3. The previous action on Cooper was the March 19, 2008 downgrade of the speculative grade liquidity rating to SGL-3 from SGL-2. Headquartered in Pleasanton, California, The Cooper Companies, Inc., through its principal business units, develops, manufactures and markets healthcare products. CooperVision develops, manufactures and markets a broad range of contact lenses for the worldwide vision correction market. CooperSurgical develops, manufactures and markets medical devices, diagnostic products and surgical instruments and accessories used primarily by gynecologists and obstetricians. For the twelve months ended January 31, 2009, the company reported approximately $1.1 billion in revenues. COUNTRYWIDE FINANCIAL: Resolves Subprime Lawsuit, To Modify Loans ----------------------------------------------------------------- Jay Miller at The Wall Street Journal reports that Countrywide Financial Corp. has settled allegations by New Jersey borrowers that the Company put borrowers in risky subprime loans. According to WSJ, the judgment calls for a no-fee, streamlined loan-modification program and sets aside $3.67 million for the borrowers and for foreclosure-mitigation programs. WSJ states that Countrywide Financial agreed to work with borrowers to modify loans and not to start foreclosure proceedings until it can be determined whether a borrower is staying in his home. Countrywide Financial will submit quarterly reports to the state on the status of its modification program. WSJ quoted Governor Jon S. Corzine as saying, "I am pleased by the agreement with Countrywide Financial. These are homeowners who through aggressive sales and marketing of inappropriate or bad loans have lost their homes or are in danger of losing their homes. This judgment dovetails New Jersey's ongoing efforts through our Economic Assistance and Recovery Plan to help those who have lost their homes through foreclosure." WSJ relates that Bank of America Corp., Countrywide Financial's owner, is retiring the Countrywide name in April. The Countrywide brand became a symbol of loose lending practices, aggressive salesmanship, and risky mortgages, WSJ states. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. As reported by the Troubled Company Reporter, Bank of America closed its purchase of Countrywide Financial for $2.5 billion on July 1, 2008. The mortgage lender was originally priced at $4 billion, but the purchase price eventually was whittled down to $2.5 billion based on BofA's stock prices that fell over 40% since the time it agreed to buy the ailing lender. CRUSADER ENERGY: Proposes to Use Cash, Has No Lenders Consent ------------------------------------------------------------ Crusader Energy Corp. has filed a request with the U.S. Bankruptcy Court for the Northern District of Texas to use cash collateral although there isn't an agreement with secured creditors to use their collateral, Bloomberg's Bill Rochelle said. Crusader Energy owes $30 million to a first-lien creditor and $250 million to second-lien debt holders. Crusader Energy listed debts totaling $326 million and assets of $750 million. According to Bill Rochelle, to protect the lenders for use of cash that's part of the collateral for their claims, Crusader proposes paying interest to the second-lien creditors. Crusader contends that the first-lien lender is protected by an equity cushion. The Company has retained Vinson & Elkins LLP as lead legal counsel and Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C. as special counsel. In addition, the Company's financial advisors, Jefferies & Company, Inc., will continue to assist the Company in evaluating and assessing various financial and strategic alternatives during the restructure process. About Crusader Energy Oklahoma City-based Crusader Energy Group Inc. -- http://www.crusaderenergy.com-- is an oil and gas company with assets focused in various producing domestic basins. The Company has a primary focus on the development of unconventional resource plays which includes the application of horizontal drilling and cutting edge completion technology aimed at developing shale and tight sand reservoirs. The Crusader assets are located in various domestic basins, the majority of which are in the Anadarko Basin and Central Uplift, Ft. Worth Basin Barnett Shale, Delaware Basin, Val Verde Basin, and the Bakken Shale of the Williston Basin. Crusader Energy Group Inc. and six affiliates filed for Chapter 11 on March 30, 2009 (Bankr. N. D. Tex., Case No.: 09-31797). Richard H. London, Esq., and William Louis Wallander, Esq., at Vinson & Elkins, LLP, have been tapped as counsel. CU NATIONAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: CU National Mortgage LLC 19D Chapin Road Pine Brook, NJ 07058 Bankruptcy Case No.: 09-18104 Chapter 11 Petition Date: April 1, 2009 Debtor-affiliates filing subject to Chapter 11 petitions on Feb. 23, 2009: Entity Case No. ------ -------- U.S. Mortgage Corp. 09-14301 Court: District of New Jersey (Newark) Judge: Rosemary Gambardella Debtor's Counsel: Bruce D. Buechler, Esq. bbuechler@lowenstein.com Lowenstein Sandler PC 65 Livingston Avenue Roseland, NJ 07068 Tel: (973) 597-2308 Estimated Assets: $1 million to $10 million Estimated Debts: $100 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Fannie Mae loan $99,204,453 185 Market Street, Suite 2300 Philadelphia, PA 19103 Suffolf Federal Credit Union loan $33,756,848 3681 Horseblock Road Medord, NY 11768 Proponent Federal Credit Union loan $21,614,908 536 Washington Avenue Nutley, NJ 07110 Picatinny Federal Credit Union loan $9,491,133 100 Mineral Springs Road Dover, NJ 07801 Sperry Associates Federal loan $9,168,163 Credit Union 2400 Jericho Turnpike Garden City, NY 1104 Treasury Department FCU loan $8,707,587 1101 2nd Street, NE Washington, DC 20002 Grand Bank NA loan $5,725,274 1 Edinburg Road Trenton, NJ 08619 Novartis Federal Credit Union loan $3,105,334 One Health Plaza Building 101/103 Link East Hanover, NJ 07936 Educational Systems Federal loan $3,095,838 Credit Union 7500 Greenway Center Drive Suite 1300 Greenbelt, MD 20768 County Educators Federal loan $2,790,155 Credit Union Energy Federal Credit Union loan $2,648,619 5 Choke Cherry Road, Ste. 110 Rockville, MD 20850 Rutgers Federal Credit Union loan $2,227,970 100 College Avenue New Brunswick, NJ 08901 Piedmont Aviation Credit Union loan $2,149,315 3810 North Liberty Street Winston Salem, NC 27105 Pinnacle Federal Credit Union loan $1,765,487 135 Raritan Center Parkway Edison, NJ 08837 Velocity County FCU loan $1,469,255 2801 PGA Boulevard Palm Beach Gardens, FL 33410 TCT Federal Credit Union loan $1,029,786 416 Rowland Street Ballston Spa, NY 12020 Lassen County Federal Credit loan $832,467 Union 2505 Riverside Drive Susanville, CA 96130 JM Associates Federal Credit loan $502,278 Union 8019 Bayberry Road Jacksonville, FL 32256 Miami Firefighters Federal loan $490,000 Credit Union First Florida Credit Union loan $447,537 The petition was signed by Andres Liput, senior vice president and general counsel. DAVID ZOOK: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: David J. Zook 5623 N. 68th Pl. Paradise Valley, AZ 85253 Bankruptcy Case No.: 09-05415 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Daniel P. Collins Collins May Potenza Baran & Gillespie 2210 Chase Tower 201 North Central Avenue Phoenix, AZ 85004-0022 Tel: (602) 252-1900 Fax: (602) 252-1114 Email: dcollins@cmpbglaw.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/azb09-05415.pdf DEAN NELSON: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Dean Allen Nelson 1764 Ben Fulton Road North Lawrence, OH 44666 Bankruptcy Case No.: 09-61037 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Northern District of Ohio (Canton) Judge: Russ Kendig Debtor's Counsel: Terrence J. Steel, Esq. 4600 Euclid Avenue, Suite 400 Cleveland, OH 44103 Tel: (216) 241-2880 Email: terry@cowdenlaw.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/ohnb09-61037.pdf DELPHI CORP: Auto Panel to Decide on Add'l GM Funding April 30 -------------------------------------------------------------- The Auto Task Force of the United States Department of the Treasury submitted to the U.S. Bankruptcy Court for the Southern District of New York a statement in response to the second amendment to an Accommodation Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the requisite lenders from Tranche A and Tranche B of the Debtors' $4.35 billion DIP credit facility, which became effective on March 31, 2009. The amendment effectively extends the March 31 default deadline under the Accommodation Agreement to April 7, and requires Delphi to secure an additional $150 million from General Motors by this new date, or, in the alternative, to apply the $117 million on deposit in the Incremental Borrowing Base Cash Collateral Account to the Tranche A Facility and the Tranche B Term Loan on April 8, or otherwise be in default under the Accommodation Agreement. The Treasury informed the Court that the extension through April 7 is insufficient and that it will need 30 days - until April 30 - (a) to undertake its due diligence of the GM-Delphi relationship and assess whether to reconsider its objection to GM's commitment to fund Delphi with $150 million pursuant to Amendment 4 and Amendment 5 to the GM Arrangement and (b) to sit with all relevant stakeholders to attempt to reach a comprehensive solution that permits Delphi to emerge from chapter 11. The Treasury has articulated this need for 30 days to Delphi, GM and the Lenders. The Treasury's right to prohibit GM from funding Delphi $150 million is unequivocal. Specifically, as a condition to the GM Amendments' effectiveness, the Treasury must not have notified GM, on or before March 23, that it objects to the increase in GM's commitment to $450 million. The Treasury's right to object is contained in the Loan and Security Agreement, dated December 31, 2008, by and between GM (and certain other borrowers) and Treasury. The LSA provides the Treasury with the right to prohibit borrowers from engaging in Material Transactions, defined as transactions not in the ordinary course of business that exceed $100 million. In accordance with its rights, on March 23, the Treasury objected to GM's funding of Delphi in the amount of $150 million. The Treasury reserved the right to reconsider its objection upon obtaining a more thorough understanding of the transactions and the needs of Delphi and GM. The Treasury has informed Delphi that any further funding by GM can only be made in conjunction with the requisite parties' resolving Delphi's liquidity needs in bankruptcy, including emergence funding, as well as GM's risks associated with continuity of supply of auto parts. The Treasury's position is that a standstill agreement that preserves the status-quo through April 30 will provide it and other interested parties, including Delphi, the Lenders, the unsecured creditors and GM, breathing space to assemble a modified restructuring plan that is mutually beneficial to GM and Delphi and its creditors. As evidence of its good faith, the Treasury is prepared to provide the Court with interim updates assessing progress towards a global resolution during this 30 day period. $150-Mil. Add'l Funding from GM As reported by the TCR on March 4, Delphi disclosed several agreements reached with General Motors to supplement Delphi's liquidity position and to substantially complete Delphi's portfolio transformation through the sale of Delphi's global Steering business. The sale of the Steering business is a strategic component of Delphi's transformation strategy, which was announced in March 2006. Pursuant to two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase from $300 million to $450 million the amount it is committed to advance to Delphi. The Bankruptcy Court adjourned hearings on agreements to provide additional time for the U.S. Treasury to evaluate the agreements, which the U.S. Treasury determined are "material transactions" under its December 31, 2008 loan agreement with GM, and for Delphi to meet and confer with objectors to the approval of the GM Steering Option Exercise Agreement regarding objections not otherwise settled prior to Tuesday's hearing. The sale of the Steering business is a strategic component of Delphi's transformation strategy, which was announced in March 2006. Pursuant to two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase from $300 million to $450 million the amount it is committed to advance to Delphi. The three agreements remain subject to certain conditions including U.S. Treasury concurrence. The Court has deferred to another date the hearing scheduled for April 2 on the Delphi's proposed additional loans from GM and deal in connection with the steering business sale. The hearing was adjourned at the request of the Treasury. According to Bloomberg News, John Wm. Butler, Esq., at Skadden, Arps, said at the April 2 hearing, "I personally take this as a very good news that the auto task force has appeared in this court" and is ready to play a substantial role in Delphi's reorganization. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- is the single supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The company's technology and products are present in more than 75 million vehicles on the road worldwide. Delphi has regional headquarters in Japan, Brazil and France. The company filed for Chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court approved Delphi's First Amended Joint Disclosure Statement and related solicitation procedures for the solicitation of votes on the First Amended Plan on Dec. 20, 2007. The Court confirmed the Debtors' First Amended Plan on Jan. 25, 2008. The Plan has not been consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. (Delphi Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DELPHI CORP: Proposes May 15 Auction for Suspension and Brake Biz ----------------------------------------------------------------- Delphi Corp. has signed a deal to sell the remainder of its suspension and brake business to BeijingWest Industries Co., but the sale is subject to higher and better offers at an auction. Delphi has submitted to the U.S. Bankruptcy Court for the Southern District of New York proposed auction procedures for its suspension and brake business. The procedures provide for these terms: -- All qualified bidders would be afforded an opportunity to participate in the due diligence process. -- Competing bids will be due May 11, 2009. -- If competing bids are timely received, an auction will be held on May 15. -- A hearing to consider approval of the sale to the winning bidder on May 21. Sale objections are due May 14. The Court will convene a hearing on the proposed procedures on April 23, 2009. Objections are due April 16. A copy of the proposed Bid Procedures is available for free at: http://bankrupt.com/misc/Delphi_Brakes_SaleProtocol.pdf BeijingWest has offered to buy Delphi's brakes and ride dynamics businesses for $90 million. The purchase price is subject to adjustment for a number of items including adjustments for inventory; certain liabilities associated with employees; an upward adjustment for amounts paid to purchase leased engineering vehicles that the Buyer wishes to buy at closing; an adjustment for certain capital expenditures made by the Sellers between June and August 2009, in the event such expenditures are greater or less than the targeted capital expenditures for that period; and, in the event the closing does not occur by November 1, 2009 for certain reasons; an upward or downward adjustment for certain capital expenditures in August, but only in the event that such expenditures are greater or less than the targeted capital expenditures for that period; an upward adjustment for certain payments to a certain customer; an upward adjustment for certain capital expenditures in Mexico; and an upward adjustment for certain advance payments. In addition, BeijingWest has agreed to reimburse the Sellers for capital expenditures (i) of approximately $7 million to Shanghai Dynamics and Propulsion Systems, Co., Ltd. -- Delphi China Brakes -- a non-Debtor affiliate, within two days of the entry of the sale order, and (ii) additional payments for certain capital expenditures to the Poland and/or U.K. businesses. BeijingWest is a Chinese investment entity, of which key investors include Shougang Corporation as the majority owner, and an affiliate of Tempo International Group, Inc. Under the Agreement, on or prior to April 9, 2009, the Buyer will deliver to an escrow agent the sum of $20,000,000 as an earnest money deposit amount. In the event that the Agreement is terminated as a result of a material breach of the Agreement or Bidding Procedures by the Buyer, the Sellers would be permitted to retain the Deposit Amount. Delphi will pay BeijingWest a break-up fee of $2,940,000 in the event it enters into a sale transaction with another party. Other parties are required to submit bids exceeding BeijingWest's offer by an amount more than the break-up fee. A copy of the BeijingWest Asset Purchase Agreement is available for free at http://bankrupt.com/misc/Delphi_BeijingWestAPA.pdf The Brakes Business The Brakes Business began in the 1930s as part of GM and was spun off as part of the Chassis Division in 1999 when Delphi was formed. At the time of the spinoff, the Brakes Business began product launches on vehicles produced in China. Delphi's Brakes Business produces brake systems as well as brake components. These systems and components range from traditional hydraulic brake systems (known as foundation brakes) to controlled brake products which integrate foundation brakes with electronic controls (such as anti-lock brakes). In addition to brake systems and components, the Brakes Business also offers value-added brake corner modules, which typically include assembled components such as steering knuckles, brake calipers and linings, rotors or drums, wheel bearings, and various fasteners. The Brakes Business has assets in China, the U.S., and Mexico, with two manufacturing facilities located in Shanghai, China and one such facility in Juarez, Mexico. In addition to certain engineering capabilities at the Chinese manufacturing sites, the Brakes Business also maintains three technical centers in each of Brighton, Michigan; Dayton, Ohio; and Shanghai, China, in which application and development engineers provide engineering services which include developing new products and interfacing with customers to fit the product to the vehicle and provide feedback for future product needs. In addition, the Brakes Business leases certain testing and storage facilities which will be transferred as part of the sale. The dedicated workforce for the Brakes Business is comprised of approximately 843 employees, including 465 hourly employees and 378 salaried employees. Of these employees, 149 are U.S. employees, all of whom are salaried employees (primarily engineers). The Brakes Business has a diversified customer base which primarily consists of China's major automotive OEMs. Nearly two- thirds of the forecasted 2009 revenue for the Brakes Business is from Shanghai General Motors, but the business has significant sales to BYD, Chang'an Motors, and Chery, among other customers. At its Mexico plant, the Brakes Business produces brakes for Harley-Davidson Motor Company and is currently Harley- Davidson's exclusive supplier for controlled braking products. Globally, it is estimated that for the year ended December 31, 2008, the Brakes Business achieved revenue approximating $235 million. In 2008, the Brakes Business booked more than $900 million in new business. The Ride Dynamics Business The Ride Dynamics Business traces its history back to 1927 and is a global designer and manufacturer of highly-engineered suspensions systems. Since Delphi's spinoff from GM, the Ride Dynamics Business has diversified and expanded its customer base to become a world leader in suspensions systems. Delphi's Ride Dynamics Business consists primarily of two product lines: passive dampers (including hydraulic/mechanical shocks, struts, and related suspension modules) and electrically-controlled damping systems (including controlled dampers, active stabilizer bars, and leveling systems). The Ride Dynamics Business has significant manufacturing assets in China, India, Mexico, Poland, and the United Kingdom, and also maintains multiple worldwide engineering locations. The Ride Dynamics Business' products are primarily manufactured in four facilities located in Noida, India; Chihuahua (Los Pinos), Mexico; Krosno, Poland; and Luton, U.K. In addition to certain engineering capabilities at the Ride Dynamics Business' headquarters in Dayton, Ohio, the Ride Dynamics Business also maintains technical centers in Brighton, Michigan; Krakow, Poland; Paris, France; Shanghai, China; and Tokyo, Japan, as well as Italy and Germany, in which application and development engineers provide Engineering Services. The dedicated workforce for the Ride Dynamics Business is comprised of approximately 2,125 employees, including 1,417 hourly employees and 708 salaried employees. Of the latter, 124 are salaried U.S. employees (primarily engineers). 29. The Ride Dynamics Business has a diversified customer base, including Acura, Audi, BMW, Ferrari, Ford, GM, Land Rover, Mercedes, and other companies. Approximately 25% of the forecasted 2009 revenue for the Ride Dynamics Business is from sales to GeneralMotors North America, but the business also has significant sales to BMW, Ford, and Honda, among other customers. Globally, for the year ended December 31, 2008, the Ride Dynamics Business achieved estimated revenue approximating $434.6 million. 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) DELSITE INC: Runs Out of R&D Funding; Files for Chapter 7 --------------------------------------------------------- Irving, Texas-based DelSite, Inc. filed for bankruptcy protection under Chapter 7 of the U.S. bankruptcy laws yesterday and the Company will be liquidated. The Company's Board of Directors authorized the filing in a teleconference on April 1, 2009, after extensive efforts to raise funds for its ongoing drug development operations and for its H5N1 bird flu clinical trial proved unsuccessful. Since the company discontinued its manufacturing operations in January 2009 it has not had sufficient revenue to sustain its operations and the inability to secure additional funding has left the company's cash resources depleted. The company is in default on its debt and is unable to pay its creditors, secured and unsecured. As of the date of the filing of the voluntary bankruptcy petition the trustee assumed jurisdiction over all of the assets of the Company, including all of the outstanding shares of DelSite Biotechnologies, Inc. and Sabila Industrial, S.A., both wholly- owned subsidiaries of the Company. The Company ceased operations effective at the time of the filing and has no ability to continue funding the business operations of DelSite Biotechnologies, Inc. or Sabila Industrial, S.A. The business operations of Sabila Industrial were discontinued on or about January 29, 2009. The Company was unable to file its Form 10-K Annual Report for 2008 and anticipates that there will be no funds available for distribution to equity holders of the Company. About DelSite DelSite, Inc. is an ISO 9001-certified, research-based, biopharmaceutical and consumer products company with a core technology based on naturally occurring complex carbohydrates. DelSite is developing its proprietary GelSite(R) technology designed to provide controlled release of peptide and protein- based drugs. More than 130 patents protect its technology. DENAR RESTAURANTS: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Denar Restaurants, LLC 3318 Forest Lane, Suite 200 Dallas, TX 75234 Bankruptcy Case No.: 09-41675 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Fries Management, LLC 09-41676 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Northern District of Texas (Fort Worth) Judge: Russell F. Nelms Debtor's Counsel: Davor Rukavina, Esq. Munsch, Hardt, Kopf & Harr 500 N. Akard Street, Ste. 3800 Dallas, TX 75201-6659 Tel: (214) 855-7587 Fax: (214) 978-5359 Email: drukavina@munsch.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Richard J. Dobbyn, vice president of the company. A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/wiwb09-11613.pdf DESTINY PLASTICS: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Destiny Plastics, Inc. 57 Bell Canyon Dr. Dove Canyon, CA 92679 Tel: (949) 709-1985 Bankruptcy Case No.: 09-15376 Chapter 11 Petition Date: March 23, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Sheri Bluebond Debtor's Counsel: Marc C. Forsythe, Esq. 660 Newport Center Drive, Suite 320 Newport Beach, CA 92660 Tel: (949) 467-3780 Fax: (949) 721-0409 Email: kmurphy@goeforlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Kevin McMullin, CEO of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-15376.pdf EBRO FOODS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Ebro Foods, Inc. 1330 W. 43rd Street Chicago, IL 60609 Tel: (773) 696-0150 Bankruptcy Case No.: 09-10101 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Company Description: Ebro Foods, Inc., operates a food processing facility producing canned specialty foods. See http://www.ebrofoods.com/ Debtor's Counsel: Forrest L. Ingram, Esq. Forrest L. Ingram, P.C. 79 W Monroe Street, Suite 900 Chicago, IL 60603 Tel: (312) 759-2838 Fax: (312) 759-0298 Email: fingram@fingramlaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Zenaida E. Abreu, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-10101.pdf DIAL-A-MATTRESS: Court Okays $550,000 Loan From Sleepy's Unit ------------------------------------------------------------- The Hon. Dennis E. Milton of the U.S. Bankruptcy Court for the Eastern District of New York authorized Dial-A-Mattress Operating Corp. and its affiliates to borrow on an interim basis up to $550,000 in postpetition secured financing from Newco Trading LLC. Newco Trading is a subsidiary of Sleepy's Holdings LLC, a fellow mattress retailer seeking to buy the Debtors' assets, Bankruptcy Law360 reports. The Debtors are also authorized to use the cash collateral securing their obligations to their prepetition lenders. To fund the Debtors' operations in 2008, Dial secured a $700,000 loan from Rex Bedding Corp. secured by a lien on substantially all of the assets of Dial, Dial-A-Mattress International Ltd. and 1- 800-Mattress Corp. On March 16, 2009, the Rex Loan was amended to include an additional $192,090. As of the Petition Date, $892,090 was due under the Rex Loan. On December 31, 2008, Dial entered into a Term Note, Loan and Security Agreement with JPMorgan, which provided for the borrowing of $450,000 and which was secured, senior to Rex, in all of the assets of the Dial. The Chase Loan was guaranteed by substantially all of the assets of the Debtors. Repayment of the Chase Loan is due June 2009, and has an outstanding principal balance of $385,000. Judge Milton held that JPMorgan Chase Bank and Rex will be granted additional and replacement liens and security interests in the Debtors' property in respect of the Debtors' use of cash collateral and to the same extent and in the same amount and priority as those which existed as of the Voluntary Petition Date. On March 17, 2009, Blue Bell Mattress Company, 6225 Jericho Turnpike LLC and Sealy, Inc., as petitioning creditors, filed an involuntary petition against Dial-A-Mattress Operating Corp. for relief under chapter 7 of the Bankruptcy Code. On March 23, Dial filed a motion for order converting its existing chapter 7 case into a voluntary chapter 11 petition; and 1-800-Mattress Corp. and Dial-A-Mattress International Ltd., both affiliates of Dial, each filed petitions for relief under Chapter 11 of the Bankruptcy Code. The Debtors had $9.37 million in total assets; $11.1 million in total current liabilities, plus other obligations. Dial International and 1800 disclosed both assets and debts below $1 million. The United States Trustee has appointed seven members to an official committee of unsecured creditors. The members are: (1) Sealy Mattress One Office Parkway at Sealy Drive Trinity, NC 27370 Attn: Mike Murray Tel: (336) 861-3699 (2) Simmons Bedding Co. One Concourse Parkway, Suite 800 Atlanta, GA 30328 Attn: Tom Brkanovic Tel: (770) 206-2674 (3) New York Broadcast Services, Inc. 2141 Deer Park Ave. Deer Park, NY 11729 Attn: Thomas Pirrone Tel: (631) 242-1700 (4) Knickerbocker Bed Company 770 Commercial Avenue Carlstadt, NJ 07072 Attn: Richard Polney Tel: (201) 933-3100 (5) S & S Mattress Distribution Corp. 3706 Carrel Blvd. Oceanside, NY 11572 Attn: Sandra Singh Tel: (347) 723-2224 (6) SendTraffic.com 469 7th, Ave., 10th Floor New York, NY 10018 Attn: Andrew Zaref Tel: (212) 716-1977 (7) Blue Bell Mattress d/b/a King Koil 24 Thompson Road East Windsor, CT 06088 Attn: Mark Kovolson Tel: (800) 243-8834 The committee members are among the 20 largest unsecured creditors of the Debtors that -- after being contacted by the U.S. Trustee - -- were willing to serve on the committee. The case is In re DIAL-A-MATTRESS OPERATING CORP., et al., (Bankr. E.D. N.Y. Case No. 09- 41966). Marc L. Hamroff, Esq., Leslie A. Berkoff, Esq., and Theresa A. Driscoll, Esq., at Moritt Hock Hamroff & Horowitz LLP, serve as the Debtors' counsel. A full-text copy of the Interim DIP Order is available at no charge at http://bankrupt.com/misc/nyeb09-41966InterimDIPOrder.PDF A full-text copy of the First Day Affidavit, which includes a list of Dial's 30 Largest Unsecured Creditors and a summary of the Company's asset and debt information is available at no charge at http://bankrupt.com/misc/nyeb09-41966Affidavit.PDF Founded in 1976, 1800mattress.com -- http://www.1800mattress.com -- is the leading national multi-channel (internet, chat, call center and showrooms) retailer of mattresses, box springs and bedding products. It features products by all major brands, including custom sizes, sofa beds, Murphy beds, futons, and adjustable and organic beds. DOLLAR GENERAL: S&P Raises Corporate Credit Rating to 'B+' ---------------------------------------------------------- Standard & Poor's Ratings Services said it raised its ratings on Goodlettsville, Tennessee-based Dollar General Corp., including its corporate credit rating to 'B+' from 'B'. The outlook is stable. "The rating action follows Dollar General's better-than-expected operating results for the fiscal year ended Jan. 30, 2009," said Standard & Poor's credit analyst Ana Lai, "and our expectations that this positive operating momentum will continue for the remainder of 2009, resulting in improving cash flow and stronger credit protection measures." DREIER LLP: Fortress & Elliot Mgt. Bought $225-Mil. in Phony Notes ------------------------------------------------------------------ Fortress Investment Group LLC and Elliott Management Corp. together lost more than $225 million buying phony notes sold by Marc Dreier, Bloomberg's Bill Rochelle said. Bloomberg previously reported that Mr. Dreier pleaded not guilty to a charge that he laundered $700 million as part of an alleged scheme to sell phony promissory notes. The money-laundering charge was added to the criminal case against Mr. Dreier on March 17. Bob Van Voris of Bloomoberg relates that Mr. Dreier previously pleaded not guilty to conspiracy, securities fraud and wire fraud. U.S. prosecutors claim Mr. Dreier sold more than $700 million in phony notes to at least 13 hedge funds and three individuals. U.S. District Judge Jed Rakoff set a June 15 trial date in the case. Mr. Dreier's lawyer, Gerald Shargel, has said he expects his client to plead guilty before trial. Assistant U.S. Attorney Jonathan Streeter told Judge Rakoff that prosecutors want to sell Mr. Dreier's luxury East Side Manhattan apartment as soon as possible, to preserve assets for his victims. According to the report, Mr. Streeter said the apartment, where Mr. Dreier is confined and watched around the clock by armed guards, costs as much as $35,000 a month in mortgage interest and condominium fees. About Dreier LLP Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On Dec. 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier has been charged by the U.S. government for conspiracy, securities fraud and wire fraud before the U.S. District Court for the Southern District of New York (Manhattan) (Case No. 09-cr-00085-JSR). Dreier LLP filed for Chapter 11 on Dec. 16, 2008 (Bankr. S. D. N.Y., Case No. 08-15051). Judge Robert E. Gerber handles the case. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, has been retained as counsel. The Debtor listed assets between $100 million to $500 million, and debts between $10 million to $50 million in its filing. Wachovia Bank National Association, Sheila M. Gowan as trustee for Chapter 11 estate of Dreier LLP, and Steven J. Reisman as post- confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that sent Mr. Dreier to bankruptcy under Chapter 7 on Jan. 26, 2009 (Bankr. S.D. N.Y., Case No. 09-10371). DRUG FAIR: Creditors Committee Wants Case Moved to New Jersey ------------------------------------------------------------- The newly appointed official committee of unsecured creditors of Drug Fair Group Inc. wants the Chapter 11 case of the Company moved to the U.S. Bankruptcy Court for the District of New Jersey. The Creditors Committee has asked the U.S. Bankruptcy Court for the District of Delaware to move the case to New Jersey, where the Debtor operates. The panel, according to Bloomberg's Bill Rochelle, cited that: -- Creditors prepared papers to file an involuntary petition in New Jersey against Drug Fair. The Company won the race to the courthouse by two hours. -- More creditors are located in New Jersey than anywhere else. -- Being incorporated in Delaware is the only reason Somerset, New Jersey-based Drug Fair finds itself in a Delaware bankruptcy court. Bill Rochelle adds that the Committee is also objecting to the proposed procedures for a quick sale of the Company's business. Aside from vague statement about dire financial difficulty, the Committee says there is no factual support for holding a sale so quickly, the report relates. As reported by the TCR on March 24, Drug Fair and its affiliates informed the Delaware Bankruptcy Court that the best way to maximize value for the benefit of their estates and creditors is to "attempt an expeditious sale of their assets through one or more transactions." To that end, the Debtors executed an asset purchase agreement with Walgreen Eastern Co., Inc., for the sale of 32 of 58 pharmacies to Walgreen, for $54 million. Walgreen, a national, publicly traded drug store chain with over 6,000 drugstores in the U.S., already bought 11 of the Debtors' stores pre-bankruptcy. The Debtors will entertain competing bids for the drug stores. In the event the Debtors seek to close a transaction with another party, Walgreen will be entitled to a $1,620,000 break-up fee, and up to $600,000 expense reimbursement. Pursuant to the APA, the Debtors are required to obtain approval of the auction procedures on or before April 6, 2009, and approval of the sale 35 days later. The Debtors' debtor-in-possession financing has required approval of the auction protocol by 15 days after the bankruptcy filing (about April 2) and the sale 45 days after the petition date (about May 2). The schedule for the auction and the bidding deadline will be known after the Court approves the auction procedures. The Debtors did not state their proposed dates in the auction procedures presented to the Court. The Debtors are seeking approval of the sale to Walgreen or the winning bidder at the auction pursuant to Section 363 of the Bankruptcy Code. A full text copy of the Walgreen APA is available for free at: http://bankrupt.com/misc/DrugFair_WalgreenAPA.pdf Walgreen is represented by: Sidley Austin LLP One South Dearborn Chicago, Illinois 60603 Attention: Chris Abbinante Phone: (312) 853-7000 Fax: (312) 853-7036 About Drug Fair Group, Inc. Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. -- http://www.drugfair.com/-- fka Community Distributors, Inc., sells dietary health supplements. Drug Fair and CDI Group, Inc. filed for Chapter 11 protection on March 18, 2009, (Bankr. D. Del. Case No.: 09-10897 to 09-10898) Domenic E. Pacitti, Esq. and Michael W. Yurkewicz, Esq. at Klehr Harrison Harvey Branzburg & Ellers represent the Debtors in their restructuring efforts. The Debtors propose to employ Epiq Bankruptcy Solutions, LLC as claims agent. The Debtors listed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. ESP FUNDING: Novation Agreement Won't Affect Moody's Note Ratings ----------------------------------------------------------------- Moody's Investors Service announced that it has determined that the entry into and execution of a novation agreement dated as of March 27, 2009 among ESP Funding I, Ltd. (the "Issuer"), Citigroup Financial Products, Inc. (the "Counterparty"), Bank of America, National Association (the "Trustee"), Babson Capital Management LLC (the "Collateral Manager") and Deutsche Bank AG, London Branch (the "Transferee") (the "Novation Agreement") will not, in and of itself, result in the reduction, withdrawal or other adverse action with respect to its current ratings on these notes issued by ESP Funding I, Ltd.: -- U.S. $225,000,000 Advance Swap between IXIS Financial Products and ESP Funding I, Ltd., Ba1 Under Review for Possible Downgrade; Previously on December 16, 2008 downgraded to Ba1 and Placed Under Review for Possible Downgrade; -- U.S. $100,000,000 Class A-1R Revolving Floating Rate Senior Secured Notes Due 2046; Caa3 Under Review for Possible Downgrade, Previously on September 26, 2008 downgraded to Caa3 and Placed Under Review for Possible Downgrade; -- U.S. $395,000,000 Class A-1T1 Floating Rate Senior Secured Notes Due 2046, Caa3 Under Review for Possible Downgrade; previously on September 26, 2008 downgraded to Caa3 and Placed Under Review for Possible Downgrade; -- U.S. $30,000,000 Class A-1T2 Floating Rate Senior Secured Notes Due 2046, Ca; Previously on September 26, 2008 downgraded to Ca; -- U.S. $100,000,000 Class A-2 Floating Rate Senior Secured Notes Due 2046, Ca; Previously on September 26, 2008 downgraded to Ca; -- U.S. $90,000,000 Class A-3 Floating Rate Senior Secured Notes Due 2046, Ca; Previously on May 30, 2008 downgraded to Ca; -- U.S. $27,000,000 Class A-4 Floating Rate Senior Secured Notes Due 2046, Ca; Previously on March 27, 2008 downgraded to Ca; -- U.S. $15,000,000 Class B Floating Rate Subordinate Secured Notes Due 2046, C; Previously on March 27, 2008 downgraded to C; and -- U.S. $10,000,000 Class C Floating Rate Junior Subordinate Secured Notes Due 2046, C; Previously on March 27, 2008 downgraded to C. On September 7, 2006, Citigroup Financial Products Inc. and the Issuer entered into an interest rate swap, as documented by an ISDA Master Agreement, Schedule thereto and related confirmation. On February 27, 2009, Moody's downgraded the Senior Unsecured rating of Citigroup Inc. to A3. The downgrade of Citigroup Inc., which acts as a guarantor to the Counterparty in the transaction, triggered a Substitution Event under the Swap Documentation. Following a Substitution Event, the Counterparty must, within a specific period, transfer its rights and obligations to a new swap counterparty which satisfies the Hedge Counterparty Rating Requirements under the Swap Documentation. Moody's reviewed the Novation Agreement, which provides for the transfer of all Counterparty's rights and obligations under the Swap Documentation to Deutsche Bank AG, London Branch. As of the date of this press release, Deutsche Bank AG, has a Senior Unsecured rating of Aa1 and a short-term rating of P-1, both of which meet the Hedge Counterparty Rating Requirements. In Moody's opinion, although the novation could potentially have cash flow implications for the noteholders, Moody's analysis has concluded that such novation would not lead to a reduction, withdrawal or other adverse action with respect to the current Moody's ratings of the Notes. Many CDO documents (to which Moody's is never a party) specify that, in order to amend the documents, Issuer must obtain an opinion from the rating agencies that the proposed amendment would not in and of itself result in the related ratings being downgraded or withdrawn at the time of the amendment. This type of provision is typically referred to in the CDO indenture as a "rating agency condition" or "RAC". Moody's is never obligated to provide a RAC and the decision whether or not to issue a RAC lies entirely within Moody's sole discretion. Before providing a RAC for an amendment, the proposal will be reviewed by a Moody's credit committee which will consider, among other things, the performance of the specific CDO and collateral manager as well as the specifics of the proposed amendment and the particular structure of the CDO. A RAC is purely an opinion as of the point in time at which the RAC is provided, that the proposed amendment in isolation does not introduce sufficient additional credit risk so as to negatively impact the related ratings. In other words, it does not consider the impact of other factors on the ratings, such as collateral deterioration. Also, the RAC does not address any other, non-credit related impact that the amendment might have. Moody's further emphasizes that a RAC is not a substituted for noteholder consent or for independent analyses by noteholders of the impact on them of any proposed amendment. Originally rated on September 7, 2006, ESP Funding I, Ltd. is an ABS CDO currently managed by Babson Capital Management LLC. EURAMAX INTERNATIONAL: S&P Cuts Corporate Credit Rating to 'CC' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Norcross, Georgia-based Euramax International Inc., including the long-term corporate credit rating to 'CC' from 'CCC+'. The outlook is negative. "The rating action reflects continued weak conditions in Euramax's end markets and the company's continuing to operate under a forbearance agreement with regard to its credit agreement, which suggests that a negotiated resolution remains possible," said Standard & Poor's credit analyst Dan Picciotto. Conditions in the construction and recreational vehicle end markets have been challenged both domestically and abroad. Euramax manufactures products made from aluminum, steel, and other materials for the building construction and transportation markets. Products include rain-carrying (gutter) systems for contractors and the do-it-yourself markets, and aluminum sidewall for the towable recreational vehicle and manufactured housing markets. Euramax manufactures its products in the U.S., the U.K., the Netherlands, and France with the majority of its sales generated in the U.S. S&P could lower the ratings to 'D' if the company fails to meet its financial obligations. FELCOR LODGING: S&P Downgrades Rating on Preferred Stock to 'C' --------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its issue-level rating on Irving, Texas-based FelCor Lodging Trust Inc.'s preferred stock to 'C' from 'CCC-' after the company announced that it had suspended the cash dividend on its preferred shares. S&P lowered the rating in conjunction with its criteria on hybrid securities published on Sept. 15, 2008, on RatingsDirect. Ratings on FelCor, including its 'B-' corporate credit rating, remain on CreditWatch with negative implications due to the potential for a near-term covenant violation associated with the requirement under its revolving credit facility that it maintain EBITDA coverage of fixed charges of at least 1.5x. FelCor is attempting to raise $200 million through a secured term loan facility to repay and cancel the revolver, thereby eliminating this covenant. The bank's calculation of fixed charges includes preferred dividends, whether paid or accrued. Thus, the suspension of FelCor's preferred dividends, which will now accrue, does not provide extra cushion in the covenant. The company previously announced that it has completed the refinancing of its $117 million mortgage due this month. S&P's ratings had incorporated the expectation that this transaction would close successfully. FIDELITY NATIONAL: Fitch Affirms Issuer Default Rating at 'BB+' --------------------------------------------------------------- Following Fidelity National Information Systems' announced all- stock acquisition of Metavante Technologies plus assumption of remaining debt obligations, Fitch Ratings has affirmed FIS's ratings: -- Issuer Default Rating at 'BB+'; -- $900 million secured revolving credit facility (RCF) at 'BBB-'; -- Secured term loan at 'BBB-'. The Rating Outlook has been revised to Positive from Stable. This reflects expectations for increased free cash flow and a greater ability to de-lever the balance sheet to 2.5 times (x) leverage (total debt to total operating EBITDA) or less, compared to current leverage of 2.9x, resulting from the proposed merger. Fitch expects increased customer and product diversification as well as opportunities for increased EBITDA margin resulting from the proposed merger and expected cost synergies to also positively impact the credit. Positive rating action could occur post-acquisition based on the company's ability to realize expected cost reductions and increased free cash flow leading to reduced leverage. Conversely, the Outlook could be stabilized if the acquisition does not close or expected free cash flow generation does not materialize. Additionally, if the company is negatively impacted by on-going consolidation in the financial services industry, any increased free cash flow generated by the consolidation could be negated. FIS will assume $1.3 billion and repay $0.4 billion of MV's $1.7 billion senior secured term loan. FIS is receiving a total equity investment of approximately $250 million from Thomas H Lee Partners and Fidelity National Financial to fund a portion of the debt repayment. Of the $1.3 billion assumed debt, $500 million will convert to an incremental term loan to FIS's existing senior secured bank facility as an obligation of FIS. The remaining $800 million of principal outstanding under MV's term loan will remain at MV and receive a senior unsecured guarantee from the parent company, FIS. Fitch expects to assign ratings to all assumed debt by the close of the acquisition. Ratings for the remaining MV debt will be influenced by terms of the loan amendments plus assumptions regarding the source of future cash flow by operating subsidiaries. The combined company would have revenue of $5.2 billion and EBITDA of $1.4 billion (excluding potential cost synergies) in 2008 with over 2,000 core processing customers. The company expects to be able to achieve $260 million of cost synergies within two years of the deal close and potentially realize a 200 basis point increase to organic revenue growth from greater cross-selling opportunities. The acquisition of MV is subject to a shareholder approval by both companies as well as various regulatory approvals and is expected to close in the third quarter of 2009. Debt as of Dec 31, 2008 and including expected debt assumed from the MV acquisition would be approximately $4.0 billion and consist primarily of: i) a $2.0 billion senior secured term loan A at FIS maturing January 2012; ii) $499 million drawn on a $900 million senior secured revolving credit facility at FIS; iii) a $500 million term loan issued under an accordion feature of FIS's secured term loan facility (used to assume $500 million of MV's term loan) maturing January 2012; iv) $145 million outstanding under a new accounts receivable securitization facility expiring November 2013; and v) an $800 million secured term loan maturing Nov 2014 at MV which has a senior unsecured guarantee from FIS. Liquidity, pro forma for the acquisition, is expected to be sufficient and include approximately $283 million cash with over $400 million of availability under FIS's $900 million senior secured credit facility maturing 2012. FIDELITY NATIONAL: Moody's Comments on Metavante Acquisition ------------------------------------------------------------ Moody's Investors Service announced that it is likely to affirm the ratings for Fidelity National Information Services, Inc. following the announcement that FIS will acquire Metavante Corporation in a stock-for-stock deal. Moody's placed Metavante's Ba2 corporate family and senior secured credit facilities ratings and the Ba3 probability of default rating on review for possible upgrade following the announcement. Under the merger agreement, Metavante shareholders will receive 1.35 shares of FIS common stock for each share of Metavante common stock. The transaction is expected to be completed in the third quarter of 2009, subject to regulatory approvals and approval by FIS and Metavante shareholders. The business combination will create a worldwide leader in payment and bank processing services that should facilitate margin and cash flow expansion and de-levering over time as global scale is achieved, cost redundancies are eliminated, and relative competitive advantages are shared. In connection with the proposed transaction, FIS will reduce Metavante's $1.7 billion senior secured term loan to $800 million with $500 million being exchanged into an accordion term loan at the FIS level. In addition, FIS will enter into a new $145 million receivables-backed facility. On a consolidated basis, pro forma leverage (Moody's adjusted) will be about 3.3x, (less than 3x after incorporating company-estimated synergies of $260 million), which is consistent with FIS' Ba1 rating category. Moody's review of Metavante's ratings will assess the combined company's underlying business prospects, potential synergies of the merger, capital structure subsequent to the transaction's closing, and management's intentions with respect to its financial policies, including debt reduction, share repurchases, and additional acquisitions. Metavante's ratings under review for possible upgrade are: * Corporate Family Rating -- Ba2 * Probability of Default -- Ba3 * $250 million senior secured revolving credit facility (expires 2013) -- Ba2, LGD 3 (34%) * $1.75 billion senior secured Term Loan B (due 2014) -- Ba2, LGD 3 (34%) Moody's latest rating action for FIS was taken on July 2, 2008 at which time the Ba1 corporate family rating was confirmed following the spin off of its Lender Processing Services division into a separate publicly traded company. Moody's most recent rating action concerning Metavante was taken on September 28, 2007 at which time Moody's Investors Service assigned a Ba2 CFR and a Ba2 rating to the company's senior secured credit facilities in connection with its spin off from Marshall & Ilsley Corporation. Fidelity National Information Services, Inc., headquartered in Jacksonville, Florida, provides card issuing, core bank processing, and online bill payment services to financial institutions. Metavante Corporation, headquartered in Milwaukee, Wisconsin is one of the leading U.S. providers of bank processing services, including electronic payments. FIDELITY NATIONAL: S&P Affirms 'BB+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services said that it affirmed its 'BB+' corporate credit rating on Jacksonville, Florida-based Fidelity National Information Services Inc. The rating outlook is revised to positive from stable. S&P assigned its 'BBB' bank loan rating to FIS' proposed senior secured $145 million accounts receivable-backed revolving credit facility due 2013 -- two notches higher than the company's corporate credit rating, with a '1' recovery rating, indicating the expectation for very high (90% to 100%) recovery in the event of a payment default or bankruptcy scenario. At the same time, S&P assigned its 'BB+' bank loan rating to FIS' $1.995 billion senior secured term loan A and $500 million senior secured term loan C, with a '3' recovery rating, reflecting expectations for a meaningful (50%-80%) recovery for secured lenders in a default or bankruptcy scenario. "The rating actions follow the announcement that FIS will acquire Milwaukee, Wisconsin-based Metavante Corp. (BB/Watch Pos/--)," said Standard & Poor's credit analyst Philip Schrank. Under the merger agreement, Metavante Corp.'s shareholders will receive 1.35 shares of FIS common stock for each share of Metavante Corp.'s common stock. The purchase price including debt outstanding is approximately $4.4 billion. The agreement is subject to customary closing conditions, including regulatory and shareholder approvals. FIS and Metavante expect to complete the transaction in the third quarter of 2009. Following the completion of the transaction, the combined company will be named Fidelity National Information Services, Inc. The merged companies had pro forma 2008 revenues of $5.2 billion and EBITDA exceeding $1.3 billion. The outlook revision reflects S&P's view that the new company will possess an investment-grade business risk profile, although S&P does not believe it will initially have the financial profile of an investment-grade company. Pro forma total debt to EBITDA is expected to initially be above 3x (excluding $260 million of potential synergies). However, the positive outlook reflects management's commitment to achieving and maintaining an investment grade financial profile. Given the company's cash generating ability, expected financial policy, and potential to realize significant synergies, it has the capacity to reduce debt and achieve an investment grade corporate credit rating in the near to intermediate term. FLEETWOOD ENTERPRISES: Can Access $80MM BofA Facility on Interim ---------------------------------------------------------------- The Honorable Meredith A. Jury of the U.S. Bankruptcy Court for the Central District of California authorized Fleetwood Enterprises Inc. and its debtor-affiliates to obtain, on an interim basis, up to $80 million in postpetition financing, which includes a $65 million sublimit for letters of credit, under the debtor-in-possession credit agreement dated March 26, 2009, with a syndicate of financial institutions Bank of America, N.A., as administrative agent, and lenders Wells Fargo Foothill Inc. f/k/a Foothill Capital Corporation, Textron Financial Corporation, PNC Bank National Association, and Wachovia Bank National Association f/k/a Wachovia Capital Finance Corporation. Each of the DIP Lenders are prepetition secured parties under a secured credit facility, as amended several times between Jan. 5, 2007, and Nov. 26, 2008, which is secured by substantially of the personal property of the Debtors. The DIP facility will bear interest at a rate per annum equal to the Base Rate plus 4.5% under the credit agreement. Default rate is interest rate plus 2% per annum. The DIP credit agreement will expire and become due (i) Oct. 31, 2009, (ii) effective date of any confirmed Chapter 11 plan(s) of reorganization of the Debtors, and (iii) the date the facility is terminated either by the Debtors or the majority lenders, among other things. Furthermore, the credit agreement contains appropriate events of default. The DIP facility is subject to carve-out to pay professionals fees incurred by the Debtors' professionals not more than $2 million. The Debtors granted the lenders superpriority administrative claim status to secured their DIP obligations. The Debtors said that the lenders are substantially oversecured. The Debtors told the Court that they have more than $400 million in total assets and the outstanding amount of all obligations to the lenders is about $62 million consists entirely of outstanding letters of credit which have not been drawn. Judge Jury will consider final approval of the DIP facility on April 21, at 1:30 p.m. A full-text copy of the Debtor-in-Possession Credit Agreement is available for free at: http://ResearchArchives.com/t/s?3af5 A full-text copy of the DIP budget is available for free at: http://ResearchArchives.com/t/s?3af4 About Fleetwood Headquartered Riverside, California, Fleetwood Enterprises, -- http://www.fleetwood.com-- produces recreational vehicles and manufactured homes. The Debtors have about 9,000 associates working in facilities strategically located throughout the nation. The Company and 19 of its affiliates filed for Chapter 11 protection on March 10, 2009 (Bankr. C.D. Calif. Lead Case No. 09-14254). Craig Millet, Esq., at Gibson, Dunn & Crutcher LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Ernst & Young LLP as auditor, FTI Consulting Inc. as consultant, and Greenhill & Co. LLC as financial advisor. FLINT HILL TOWER: Voluntary Chapter 11 Case Summary --------------------------------------------------- Debtor: Flint Hill Tower, LLC Attn: Gerald A. Benda, Esq. 1801 Peachtree Street, N.E., Suite 330 Atlanta, GA 30309 Bankruptcy Case No.: 09-67448 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: George M. Geeslin, Esq. Eight Piedmont Center, Suite 550 3525 Piedmont Road, N.E. Atlanta, GA 30305-1565 Tel: (404) 841-3464 Fax: (404) 816-1108 Email: geeslingm@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Javier Macias, owner of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ganb09-67448.pdf GENERAL MOTORS: Panel to Decide on More Loans to Delphi Apr. 30 --------------------------------------------------------------- The Auto Task Force of the United States Department of the Treasury submitted to the U.S. Bankruptcy Court for the Southern District of New York a statement in response to the second amendment to an Accommodation Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the requisite lenders from Tranche A and Tranche B of the Debtors' $4.35 billion DIP credit facility, which became effective on March 31, 2009. The amendment effectively extends the March 31 default deadline under the Accommodation Agreement to April 7, and requires Delphi to secure an additional $150 million from General Motors by this new date, or, in the alternative, to apply the $117 million on deposit in the Incremental Borrowing Base Cash Collateral Account to the Tranche A Facility and the Tranche B Term Loan on April 8, or otherwise be in default under the Accommodation Agreement. The Treasury informed the Court that the extension through April 7 is insufficient and that it will need 30 days - until April 30 - (a) to undertake its due diligence of the GM-Delphi relationship and assess whether to reconsider its objection to GM's commitment to fund Delphi with $150 million pursuant to Amendment 4 and Amendment 5 to the GM Arrangement and (b) to sit with all relevant stakeholders to attempt to reach a comprehensive solution that permits Delphi to emerge from chapter 11. The Treasury has articulated this need for 30 days to Delphi, GM and the Lenders. The Treasury's right to prohibit GM from funding Delphi $150 million is unequivocal. Specifically, as a condition to the GM Amendments' effectiveness, the Treasury must not have notified GM, on or before March 23, that it objects to the increase in GM's commitment to $450 million. The Treasury's right to object is contained in the Loan and Security Agreement, dated December 31, 2008, by and between GM (and certain other borrowers) and Treasury. The LSA provides the Treasury with the right to prohibit borrowers from engaging in Material Transactions, defined as transactions not in the ordinary course of business that exceed $100 million. In accordance with its rights, on March 23, the Treasury objected to GM's funding of Delphi in the amount of $150 million. The Treasury reserved the right to reconsider its objection upon obtaining a more thorough understanding of the transactions and the needs of Delphi and GM. The Treasury has informed Delphi that any further funding by GM can only be made in conjunction with the requisite parties' resolving Delphi's liquidity needs in bankruptcy, including emergence funding, as well as GM's risks associated with continuity of supply of auto parts. The Treasury's position is that a standstill agreement that preserves the status-quo through April 30 will provide it and other interested parties, including Delphi, the Lenders, the unsecured creditors and GM, breathing space to assemble a modified restructuring plan that is mutually beneficial to GM and Delphi and its creditors. As evidence of its good faith, the Treasury is prepared to provide the Court with interim updates assessing progress towards a global resolution during this 30 day period. $150-Mil. Add'l Funding from GM As reported by the TCR on March 4, Delphi disclosed several agreements reached with General Motors to supplement Delphi's liquidity position and to substantially complete Delphi's portfolio transformation through the sale of Delphi's global Steering business. The sale of the Steering business is a strategic component of Delphi's transformation strategy, which was announced in March 2006. Pursuant to two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase from $300 million to $450 million the amount it is committed to advance to Delphi. The Bankruptcy Court adjourned hearings on agreements to provide additional time for the U.S. Treasury to evaluate the agreements, which the U.S. Treasury determined are "material transactions" under its December 31, 2008 loan agreement with GM, and for Delphi to meet and confer with objectors to the approval of the GM Steering Option Exercise Agreement regarding objections not otherwise settled prior to Tuesday's hearing. The sale of the Steering business is a strategic component of Delphi's transformation strategy, which was announced in March 2006. Pursuant to two amendments to GM's liquidity advance agreement with Delphi, GM has agreed to increase from $300 million to $450 million the amount it is committed to advance to Delphi. The three agreements remain subject to certain conditions including U.S. Treasury concurrence. The Court has deferred to another date the hearing scheduled for April 2 on the Delphi's proposed additional loans from GM and deal in connection with the steering business sale. The hearing was adjourned at the request of the Treasury. According to Bloomberg News, John Wm. Butler, Esq., at Skadden, Arps, said at the April 2 hearing, "I personally take this as a very good news that the auto task force has appeared in this court" and is ready to play a substantial role in Delphi's reorganization. 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) GENERAL MOTORS: Auto Task Force Urged Firm to Consider Bankruptcy ----------------------------------------------------------------- The auto task force has urged General Motors Corp. to consider a form of bankruptcy that would split the Company in two, Peter Whoriskey at The Washington Post reports, citing people familiar with the matter. As reported by the Troubled Company Reporter on March 31, 2009, the Obama administration was considering a plan to fix General Motors Corp. and Chrysler by dividing their "good" and "bad" assets and putting them into bankruptcy to eliminate their biggest problems. Ryan Beene at Crain's Detroit Business relates that Section 363 of the Bankruptcy Code could be used as a mechanism for allowing GM to separate the Company's healthy parts from its less-competitive parts in the event of a Chapter 11 filing. Section 363, according to Crain's, is used to sell assets free of liens and other claims. Crain's states that the most typical outcome would be selling off chunks of GM's business to multiple buyers. Jim Plemmons, who leads the automotive group at Dickinson Wright P.L.L.C., said that purchasing assets from a 363 sale is appealing "because when walk out and you close your transaction, there's no question" about what is included in the deal, according to Crain's. The Washington Post relates that GM, which prefers not to file for bankruptcy for fear that it would drive consumers away and further damage sales, will be forced to do so if it fails to win concessions from its bondholders, union, and dealers in 60 days. According to the report, the bankruptcy court would then force GM stakeholders to make sacrifices by clearing away billions of dollars of debts from the Company's balance sheet. Kent Kresa, GM's new chairperson, said that he is going to meet with the Obama administration next week in Washington as part of the government's ongoing oversight of the Company, The Washington Post states. 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. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. * * * As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GENERAL MOTORS: European Units May Need More Drastic Govt. Aid -------------------------------------------------------------- General Motors Corp.'s European units may need "more drastic" government intervention to save the operations should efforts to secure help from a third-party investor fail, Sharon Terlep at The Wall Street Journal reports, citing people familiar with the matter. WSJ states that GM promised a revamp of its money-losing European operations as part of its request for up to $30 billion in U.S. government loans. According to WSJ, GM said that its European restructuring may not be complete until midyear and that the Company is developing "contingency plans" in case talks with investors and the German government fail. WSJ states that GM is seeking government loan guarantees that would entice a third party to invest in the Company's Opel/Vauxhall operations. Citing people familiar with the matter, WSJ states that GM believes it can secure government backing by the end of the second quarter. WSJ relates that GM said that it expects no financial aid from the Swedish government unless it can find an investor for its Swedish Saab unit, which the Company is looking to offload. GM is seeking court protection for the unit from creditors, the report says. GM, according to WSJ, said that it is also in talks with the Export-Import Bank of Thailand about loans for operations there. GM to Cut Shifts at Australian Assembly Plant Dow Jones Newswires reports that GM Holden Chairman and Managing Director Mark Reuss said that the subsidiary will halve shifts at its Elizabeth assembly plant in Adelaide. Australian Broadcasting Corp. radio quoted Mr. Reuss as saying, "We are going to move from a two shift set of production here at Elizabeth to a two crew single shift with no redundancies or retrenchments." The changes will be made due to the global financial crisis that decreased export markets of up to 80% for some products, Dow Jones states, citing Mr. Reuss. According to Dow Jones, Mr. Reuss said that despite the slowdown, GM Holden has managed to maintain low inventory levels and will be continuing to produce V8 vehicles. 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. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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: Linamar Discloses Receivables Exposure ------------------------------------------------------ In light of the uncertainties existing in the automotive marketplace, Linamar Corporation (CA:LNR) disclosed its current receivable exposure levels to GM and Chrysler. Linamar understands that under U.S. bankruptcy laws, in the event of a company entering chapter 11 bankruptcy, all goods delivered within 20 days of the date of the chapter 11 filing obtain a special priority and are paid as part of the chapter 11 reorganization, once the reorganization plan is approved. Any goods shipped prior to 20 days before the date of the chapter 11 filing are at risk. A GM or Chrysler bankruptcy would be a unique and unusual event whose consequences can't be foreseen and there can be no assurance of recovery. The combined total of Linamar's receivables balance greater than 20 days with GM and Chrysler is in aggregate estimated to be less than $30 million or approximately 9% of Linamar's total receivables balance as of March 31, 2009. "Our typical experience with customers in the past that have filed for chapter 11 protection is that we have been able to recover up to half or more of at risk receivables", said Linamar CEO Linda Hasenfratz. "We are pleased that our diversification efforts have allowed us to minimize our risk with any one customer in this way, particularly in light of uncertainties in the industry at this time". Based in Guelph, Ontario, in Canada, Linamar Corporation (CA:LNR) -- http://www.linamar.com/-- is a diversified global manufacturing company of highly engineered products. The company's Powertrain and Driveline focused divisions are world leaders in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle and power generation markets. The company's Industrial division is a world leader in the design and production of innovative mobile industrial equipment, notably its class-leading aerial work platforms and telehandlers. With more than 11,000 employees in 37 manufacturing locations, 5 R&D centers and 11 sales offices in Canada, the US, Mexico, Germany, Hungary, the UK, China, Korea and Japan Linamar generated sales of over $2.2 Billion in 2008. Certain information regarding Linamar set forth in this document, including management's assessment of the Company's future plans and operations may constitute forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results may differ materially from these anticipated in the forward-looking statements due to factors such as customer demand and timing of buying decisions, product mix, competitive products and pricing pressure. In addition, uncertainties and difficulties in domestic and foreign financial markets and economies could adv 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. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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 Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. Viability Plan Chrysler has been trying to keep itself afloat. As reported by the Troubled Company Reporter on March 20, 2009, its Chief Financial Officer Ron Kolka, has said even if Chrysler gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next. The Company's CFO has said Chrysler planned for the $4 billion federal government bailout it received Jan. 2 to last through March 31. Chrysler admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of the Chrysler viability plan is available at: http://ResearchArchives.com/t/s?39a3 As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. GENERAL MOTORS: Loan & Security Pact With Gov't Amended ------------------------------------------------------- General Motors Corp. entered on March 31, 2009, into amendments to the Loan and Security Agreement dated as of December 31, 2009, between GM and the United States Department of the Treasury, and to the Loan and Security Agreement dated as of January 16, 2009, between GM and the U.S. Treasury. Prior to entry into the amendments, GM was required under the First Treasury Loan Agreement to submit to the President's Designee, by March 31, 2009, a certification and report detailing, among other things, the progress made by GM and its subsidiaries in implementing the Restructuring Plan, including evidence satisfactory to the Presidents Designee that the following have occurred: (a) the Labor Modifications have been approved by the members of the Unions, (b) all necessary approvals of the VEBA Modifications, other than regulatory and judicial approvals, have been received, and (c) an exchange offer to implement a Bond Exchange has been commenced. In addition, each of the Treasury Loan Agreements provided that if, by March 31, 2009, or a later date (not to exceed 30 days after March 31, 2009) as determined by the President's Designee, the President's Designee has not issued a certification that GM and its subsidiaries have taken all steps necessary to achieve and sustain long-term viability, international competitiveness and energy efficiency in accordance with the Restructuring Plan, then the advances and other obligations under the U.S. Treasury Loan Agreements would become due and payable on the 30th day after the Certification Deadline. Under the amendment to the First Treasury Loan Agreement, the requirement with respect to the certification of the occurrence the Specified Events has been modified to require that: (a) the Restructuring Plan Report will include evidence that on or before March 31, 2009, the Specified Events have occurred, or, if such events have not occurred, the status of GM's efforts with respect thereto, and (b) on or before June 1, 2009, GM will deliver evidence satisfactory to the President's Designee that the Specified Events have occurred. Under the amendment to each of the Treasury Loan Agreements, the Certification Deadline has been changed to June 1, 2009. A copy of the Amendment To Loan And Security Agreement Dated As Of December 31, 2008 is available for free at: http://researcharchives.com/t/s?3aff A copy of the Amendment To Loan And Security Agreement Dated As Of January 16, 2009 is available for free at: http://researcharchives.com/t/s?3b00 GM Bankruptcy's Effect on Funds Ian Salisbury and Lynn Cowan at Dow Jones Newswires report that GM's bankruptcy would barely register for the Company's largest shareholders, as its biggest owners are index funds for whom it is now "just a drop in the bucket." FactSet states that mutual funds hold 27% of GM's outstanding shares, far more than other large institutions like hedge funds which own 2.8% and pension funds with 2.2%. Dow Jones notes that while GM's declining share price may have hurt performance in the past, most of the damage has already occurred. A bankruptcy probably won't have a big effect, Dow Jones says. Citing Standard & Poor's, the report states that if GM's shares were wiped out, it would shear only 0.14 point from S&P 500. Dow Jones notes that as of December 31, 2008, pension fund New York State Common Retirement Fund held 1.87 million shares, or 0.31% of GM's stock, about 0.01% of the pension fund's portfolio. 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. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. As reported in the Troubled Company Reporter on Nov. 11, 2008, Standard & Poor's Ratings Services lowered its ratings, including the corporate credit rating, on General Motors Corp. to 'CCC+' from 'B-' and removed them from CreditWatch, where they had been placed with negative implications on Oct. 9, 2008. S&P said that the outlook is negative. Fitch Ratings, as reported in the Troubled Company Reporter on Nov. 11, 2008, placed the Issuer Default Rating of General Motors on Rating Watch Negative as a result of the company's rapidly diminishing liquidity position. Given the current liquidity level of US$16.2 billion and the pace of negative cash flows, Fitch expects that GM will require direct federal assistance over the next quarter and the forbearance of trade creditors in order to avoid default. With virtually no further access to external capital and little potential for material asset sales, cash holdings are expected to shortly reach minimum required operating levels. Fitch placed these on Rating Watch Negative: -- Senior secured at 'B/RR1'; -- Senior unsecured at 'CCC-/RR5'. As reported in the Troubled Company Reporter on June 24, 2008, DBRS has placed the ratings of General Motors Corp. and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. Economy. GEORGIA GULF: Moody's Downgrades Ratings on Senior Notes 'C' ------------------------------------------------------------ Moody's Investors Service downgraded the ratings on the senior unsecured notes of Georgia Gulf Corporation and its subordinated notes to C (from Caa3 and Ca, respectively) following the announcement of an exchange offer by the company. Moody's also affirmed GGC's Corporate Family Rating of Caa2 and the B3 ratings on its senior secured first lien debt. The outlook is negative. Georgia Gulf plans to issue $250 million of 15% senior secured second lien notes due 2014 to note-holders who tender their debt by the April 27, 2009 expiration date. Additionally, roughly 6.9 million shares GGC common equity will be issued to existing note holders who tender by the April 14, 2009 early participation deadline. These exchange offers are subject to certain conditions, which GGC may waive, including the condition that it receives tenders and consents for at least 95% of each of the outstanding unsecured and subordinated note issues. Moody's notes that Georgia Gulf only needs tenders and consents for 50.1% of each issue to modify their respective covenants. The downgrade of the notes to C reflects the substantial loss of value relative to the original face value of the unsecured and subordinate debt. The affirmation of the B3 rating on the existing senior secured debt indicates the expected loss of principle remains low. A successful completion of the tender offer on the current terms could potentially have a positive impact on GGC's CFR as credit metrics would improve significantly (pro forma 2008 Net Debt/EBITDA would decline to 5.2x from 7.7x, these metrics incorporate Moody's Standard Analytical Adjustments). However, the terms of this exchange offer are subject to modification and there is uncertainty over GGC's ability to obtain tenders and consents for 95% of each issue. Ratings downgraded: Georgia Gulf Corporation -- Probability of Default Rating to Caa3 from Caa2 -- $100 million 7.125% Gtd. Senior Unsecured Notes due 2013 to C from Caa3 -- $500 million 9.5% Gtd. Senior Unsecured Notes due 2014 to C from Caa3 -- $200 million 10.75% Senior Subordinated Notes due 2016 to C from Ca The last rating action on Georgia Gulf Corporation was on February 20, 2009, when Moody's lowered the company's CFR to Caa2 from B3. Georgia Gulf Corporation, headquartered in Atlanta, Georgia, is a producer of commodity chemicals including chlorovinyls (chlorine, caustic soda, vinyl chloride monomer, polyvinyl chloride resins and vinyl compounds), PVC fabricated products (pipe, siding, window profiles, plastic lumber, etc.), and aromatics (cumene, phenol and acetone). GEORGIA GULF: S&P Downgrades Corporate Credit Rating to 'CC' ------------------------------------------------------------ Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Atlanta, Georgia-based Georgia Gulf Corp. to 'CC' from 'CCC+'. The outlook is negative. At the same time, Standard & Poor's lowered the issue ratings on the company's $100 million 7.125% senior notes due 2013 and $500 million 9.5% senior notes due 2014 to 'C' (one notch below the corporate credit rating) from 'CCC'. S&P also lowered the rating on the company's $200 million 10.75% senior subordinated notes due 2016 to 'C' from 'CCC-'. In addition, S&P lowered the rating on the company's senior secured credit first-lien facilities to 'CCC' (two notches above the corporate credit rating) from 'B' and placed the rating on CreditWatch with developing implications. The lowering of the corporate credit rating follows Georgia Gulf's announcement that it is undertaking a tender offer for its $100 million 7.125% senior notes, $500 million 9.5% senior notes, and its $200 million 10.75% senior subordinated notes. The company plans to exchange these notes for second-lien notes, and in some instances equity, for an amount that is below face value. The negative outlook reflects the likelihood of a downgrade to 'SD' (selective default) following the completion of the transaction. The 'SD' rating would reflect S&P's expectation that Georgia Gulf will continue to pay its other creditors after the completion of the exchange offer. The CreditWatch with developing implications on the first-lien facilities indicates that S&P may lower, affirm, or raise the rating on the senior secured credit facilities following the exchange offer's completion, and after S&P reassess default risk and recovery prospects under the new capital structure. S&P will lower the ratings on the senior notes and subordinated notes being exchanged to 'D' if the exchange offer is completed for an amount that is less than face value as contemplated by the company. Georgia Gulf is an integrated producer of chlorovinyl products, polyvinyl chloride building and home improvement products, and aromatic chemicals with a combined annual revenue of slightly below $3 billion as of Dec. 31, 2008. In October 2006, Georgia Gulf acquired the Royal Group business for approximately $1.6 billion in a debt-financed acquisition. GHOST TOWN: Owes Around $2.5 Million to More Than 220 Firms ----------------------------------------------------------- Becky Johnson at Smoky Mountain News reports that Ghost Town Partners, LLC, owes has around $2.5 million unpaid bills to more than 220 firms. Apple Creek Electric owner John Mudge said that his company is owed $4,800, Smoky Mountain News states. Apple Creek, according to the report, did extensive work at Ghost Town, revamping almost all of the dated wiring at the park. Mr. Mudge, who makes a salary of between $30,000 and $40,000 per year, had to cover the salary of the employee who did the work for Ghost Town, causing him cash flow problems, the report says. Smokey Mountain News relates that Ghost Town President Steve Shiver said that the Company was banking on a loan to help pay off the debts. Smokey Mountain News says that the recession and credit crunch making it difficult to secure a loan and every loan that Ghost Town sought fell through. Ghost Town, Smokey Mountain states, owes Jackie Shuler at Balsam Equipment Rental about $6,600. Smokey Mountain relates that Ms. Shuler has had a steady stream of equipment on loan to Ghost Town: scissors lifts, floor buffers, a demolition hammer, heated pressure washers. The report says that Ghost Town would typically let a bill accumulate, then pay it down just enough to keep renting. According to Smokey Mountain News, Maggie Valley contractor Burton Edwards claims that Ghost Town owes him $28,000 on a quarter million dollar job. The report says that Mr. Edwards had filed a civil suit against Ghost Town, demanding payment. The report states that Ghost Town managers are disputing the lien, claiming the rock wall he built failed. Smokey Mountain News report that Ghost Town has similar debts across the country, from $45,000 to a company that makes cap guns in Tennessee to a firm owed more than $300,000 for rebuilding the incline railway. Based in Waynesville, North Carolina, Ghost Town Partners, LLC, operates an amusement park. The Debtor filed for Chapter 11 protection on March 11, 2009 (Bankr. W. D. N.C. Case No.: 09- 10271). David G. Gray, Esq. at Westall, Gray, Connolly & Davis, P.A. represents the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor listed total assets of $13,035,300 and total debts of $12,305,672. GLIMCHER REALTY: S&P Junks Rating $210 Million of Preferred Stock ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Glimcher Realty Trust to 'B+' from 'BB-'. At the same time, S&P lowered its rating on the company's $210 million of preferred stock to 'CCC+' from 'B-'. The outlook remains negative. "Our one-notch downgrade reflects our expectations for further erosion of the REIT's constrained financial profile and its smaller, less competitively positioned portfolio in the context of the ongoing weakness in the retail sector," said credit analyst Linda Phelps. "However, Glimcher's portfolio was well occupied and coverage of fixed charges remained steady, albeit at low levels, through fiscal 2008. In addition, the company's ability to cover all recurring capital expenditures and dividends with operating cash flow has been enhanced following the March 2009 dividend cut, which is expected to conserve roughly $36 million in capital." The company's operating and financial metrics could continue to be pressured given the currently very weak operating conditions and Glimcher's smaller, less competitively positioned portfolio. S&P could lower its ratings further if the company's FCC weakens below the 1.4x level contemplated in S&P's scenario analysis. A revision of the outlook to stable is unlikely in the near term given the uncertain retail environment and the REIT's less- productive portfolio. GOODY'S LLC: Delaware District Judge Pro-Rates Stub Rent -------------------------------------------------------- In a case involving Goody's Family Clothing Inc., U.S. District Judge Renee Marie Bumb ruled March 31 in Delaware that if a company files for bankruptcy reorganization in mid-month when rent was due on the first of the month, the tenant must pay rent based on the number of days in Chapter 11, Bill Rochelle of Bloomberg said. According to Bill Rochelle, changes Congress made in bankruptcy law in 2005 gave rise to an ambiguity allowing tenants to argue that none of the first month's rent need be paid in full as an expense of the reorganization if the lease later is rejected. Judge Bumb wasn't convinced by the idea. Affirming the bankruptcy judge in the Chapter 11 case of Goody's Family Clothing Inc., Judge Bumb reached the same result as U.S. Bankruptcy Judge Kevin Huennekens when he decided the issue in January. Judge Huennekens' opinion was made in the Chapter 11 liquidation of Circuit City Stores Inc. Mr. Rochelle recalls that in December Bankruptcy Judge Allan Gropper in New York reached the same result in the liquidation of Circuit City Stores Inc. when he decided the first month's rent should be pro-rated. The issue was so important for Gropper that he certified the case for a direct appeal to the 2nd U.S. Circuit Court of Appeals. Jump Bumb wasn't persuaded by technical arguments focusing on one statutory provision in isolation. The judge's opinion was based on her view that rent after a bankruptcy filing is "an actual expense necessary to the preservation" of the business. The stub rent ruling is part of Goody's first bankruptcy case. 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). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, LLP; Paul G. Jennings, Esq., Gene L. Humphreys, Esq., Edward C. Meade, Esq., and Kristen C. Wright, Esq., at 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. GOODY'S LLC: Creditors Committee Settles With Secured Lenders ------------------------------------------------------------- The official committee of unsecured creditors of Goody's LLC has reached a settlement with secured lenders. According to Bloomberg's Bill Rochelle, in return for dropping a challenge to the validity of the lenders' claims, Goody's will receive a refund of $300,000 out of $750,000 in early-termination fees paid when the new case began in January. Meanwhile, the U.S. Bankruptcy Court for the District of Delaware has approved a modified bonus program for five executives and other employees. 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). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, LLP; Paul G. Jennings, Esq., Gene L. Humphreys, Esq., Edward C. Meade, Esq., and Kristen C. Wright, Esq., at 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. GRAMERCY FISH: Involuntary Chapter 11 Case Summary -------------------------------------------------- Alleged Debtor: Gramercy Fish Co, Inc. 383 Second Avenue New York, NY 10010 Case Number: 09-11720 Type of Business: The Debtor operates a supermarket. Involuntary Petition Date: April 1, 2009 Court: Southern District of New York (Manhattan) Judge: Martin Glenn Petitioner's Counsel: Lawrence Morrison, Esq. Lawrence Morrison P.C 110 East 59th St. New York, NY 10022 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Gaudercio Rosendo unsecured $51,000 c/o Lawrence Morrison 110 East 59th ST. New York, NY 10022 GRAY TELEVISION: Moody's Downgrades Corp. Family Rating to 'Caa1' ----------------------------------------------------------------- Moody's Investors Service has downgraded Gray Television, Inc.'s Corporate Family Rating to Caa1 and its Probability of Default Rating to Caa2 following the conclusion of a recent amendment to its senior secured credit agreement. The company's speculative liquidity rating remains SGL-4 and the rating outlook is negative. Moody's has taken these rating actions: Issuer: Gray Television, Inc. * Corporate Family Rating -- Downgraded to Caa1 from B3 * Probability of Default rating -- Downgraded to Caa2 from Caa1 * Senior Secured Credit Facility -- Downgraded to Caa1 (LGD3, 34%) from B3 (LGD3, 35%) * Speculative Grade Liquidity Rating -- Remains at SGL-4 * Outlook -- Remains Negative Moody's does not rate Gray's $100 million of Series D preferred stock. Moody's treats 75% of the preferred stock as debt and the credit metrics cited herein incorporate this adjustment. The downgrades incorporate Moody's expectation that the U.S. economy's impact on broadcast revenues will be greater than forecasted when it lowered Gray's ratings in October 2008. Gray's 2008 revenues of $327 million missed Moody's October projections by about $20 million due to a severe reduction in both local and national revenues of 17% and 24%, respectively, in Q4 2008. Moody's believes these rates of decline are indicative of the depth and severity of the U.S. recession and drive the expectation that Gray's revenues will decline between 15% -- 20% in 2009 (including the impact of the normal "off-year" political advertising cycle). Moody's projects that this rate of decline will result in EBITDA contraction of about 40% in 2009 and will increase Gray's leverage to about 12.9x (incorporating Moody's standard adjustments) by year end, up from 7.6x as of 12/31/2008. Moody's believes the weak economic environment and the increased borrowing costs (including a 3% annual facility fee) associated with the company's amendment may preclude Gray from sustaining average leverage below 9.0x over political and non-political years. Moody's considers that the recently concluded amendment has averted a potential liquidity squeeze and has provided Gray with more manageable headroom under its revised covenant tests only on an immediate basis through the balance of 2009. The downgrade of the PDR in particular, however, reflects Moody's view that Gray faces likely renewed covenant pressure starting as early as Q1 2010 if the current pace of declining market spending on TV advertising continues unabated over the near-term, coupled with Moody's expectation that the company will need to seek another amendment and/or waiver from its lenders in order to avoid a default. Gray's Caa2 PDR reflects Moody's belief that there is high risk of default. However, Moody's considers that debt holders may receive higher than average recovery in the event of default. Gray's Caa1 CFR continues to reflect the modest cash flows, high leverage of 7.6x at the end of 2008, a weak liquidity position underscored by the company's SGL-4 speculative grade liquidity rating, and the top-line pressure caused by the recessionary market conditions currently borne by the TV broadcast sector. The negative rating outlook incorporates Moody's concern that the benefits of recently-announced cost-cutting measures (headcount reduction and salary freezes), increasing digital and retransmission-based revenues and a moderation of capital spending (following the completion of major facility upgrades) will be insufficient to offset the effects of continuing top line erosion in the face of very soft market conditions and will likely hamper Gray's ability to remain in compliance with its financial covenant. Additionally, Moody's believes that any potential remedy of covenant problems could involve additional step-up in pricing thereby further pressuring the company's cash flow and credit metrics. On March 31, 2009, Gray entered into an amendment to its senior secured credit agreement, which relaxed the level of its financial ratio test through the end of 2009, reduced the size of the revolving credit facility to $50 million from $100 million, increased the contractual rate of interest, and instituted an annual facility fee among other provisions. The last rating action occurred on December 4, 2008 when Moody's downgraded Gray's CFR to B3 from B2 and revised its rating outlook to negative. Headquartered in Atlanta, Georgia, Gray Television, Inc. operates 36 primary television stations serving 30 mid-sized markets. The company's total revenues were approximately $327 million for the year ending December 31, 2008. GULF COAST: Moody's Upgrades Long-Term Rating on Revenue Bonds -------------------------------------------------------------- Moody's Investors Service has upgraded the long-term rating to Aaa from Aa1 and affirmed the short-term rating of VMIG 1 assigned to Gulf Coast Industrial Development Authority Environmental Facilities Revenue Bonds (CITGO Petroleum Project), Series 2004. The rating has been upgraded in conjunction with the substitution of the prior letter of credit provided by Calyon as a provider of the underlying letter of credit with a new letter of credit provided by BNP Paribas. The long-term rating will continue to reflect Moody's approach to rating jointly supported transactions and will be based upon the letter of credit provided by BNP Paribas, the rating of CITGO Petroleum Corporation, the structure of the transaction which ensures that timely debt service and purchase price payments are made to investors, and Moody's evaluation of the creditworthiness of the institution issuing the letter of credit. Moody's currently rates BNP Paribas Aa1 for long-term obligations and P-1 for short-term obligations. Moody's currently rates CITGO Ba1. Since a loss to investors will occur only if both the Bank and CITGO default in payment, Moody's has assigned a long-term rating based upon the joint probability of default by both parties. In determining the joint probability of default, Moody's considers the level of correlation between the letter of credit bank and the company. Moody's has determined that there is a low level of correlation between the bank and the company. Given this correlation, Moody's believe the joint probability of default of the Bank and CITGO, rated Aa1 and Ba1, respectively, results in credit risk consistent with an Aaa rating. Interest Rate Modes And Payment The bonds are currently in the daily rate mode and pay interest on the first business day of each month. The bonds may be converted in whole, to bear interest in a weekly, commercial paper or term rate mode. The bonds in the weekly rate modes will also pay interest on the first business day of each month. Moody's joint support rating applies to the bonds bearing interest in the daily and weekly rate modes only. The Letter Of Credit The new letter of credit will cover full principal plus 35 days of interest at a rate of 12%, the maximum interest rate on the Bonds. The letter of credit will be available to make payments of principal and interest, as well as purchase price, to the extent remarketing proceeds received by the trustee are insufficient. The letter of credit provides sufficient coverage for the Bonds while they bear interest in the weekly rate mode. Conforming draws for principal and/or interest received by the bank by 4:00 p.m., New York time, will be honored by 1:00 p.m., New York time, on the next business day. Conforming draws for purchase price received by the letter of credit bank by 12:30 p.m., New York time, will be honored by 2:30 p.m., New York time, on the same business day. Draws made under the letter of credit for interest shall be automatically and immediately reinstated on the date of such drawing. The bank may at any time send the trustee notice stating that an event of default under the reimbursement agreement has occurred directing an acceleration of the bonds. The letter of credit will expire on the tenth day following the trustee's receipt of such notice. Upon receipt of such notice, the bonds will be subject to immediate acceleration and the letter of credit will be immediately drawn upon. Interest will cease to accrue upon payment of the bonds. Under the trust indenture the borrower has the right to provide the trustee with a substitute letter of credit, with the Bonds being subject to mandatory tender on the substitution date. Reinstatement of Interest Draws for interest will be reinstated on the sixth day of the Bank's honoring an interest drawing unless within five calendar days from the date the Bank honors such interest drawing, the trustee receives a notice from the Bank that the interest component will not be reinstated. Upon receipt of such notice the trustee shall declare the outstanding Bonds immediately due and payable. Interest shall cease to accrue upon declaration. Expiration / Termination Of The Letter Of Credit The letter of credit expires upon the earliest to occur of: (1) April 9, 2010 (the stated expiration date); (2) upon the bank's receipt of a notice from the trustee stating that the letter of credit is being surrendered to the bank for cancellation due to an alternate letter of credit or because no bonds remain outstanding; (3) the honoring by the bank of the final draw; and (4) the tenth day following the trustee's receipt of notice from the bank that an event of default under the reimbursement agreement has occurred and directing the trustee to accelerate the bonds. The most recent rating action on the bonds was on February 9, 2009, when the long-term rating on the Bonds was downgraded to Aa1 from Aaa. There was no action on the short-term rating of the Bonds at that time. -- Trustee: The Bank of New York Trust Company -- Underwriter / Remarketing agent: Goldman Sachs and Co. HAWAIIAN TELCOM: U.S. Trustee Seeks to Block $15.5 Mil. in Bonuses ------------------------------------------------------------------ Erik Larson at Bloomberg News reports that Acting U.S. Trustee Tiffany Carroll is seeking to block Hawaiian Telcom Communications Inc.'s planned $15.5 million in bonuses to executives and workers. Bloomberg relates that Hawaiian Telcom sought court approval to pay bonuses, mostly to six executives and 494 nonunion workers. According to court documents, Ms. Carroll told the U.S. Bankruptcy Court in Honolulu that the bonuses for last year and this year, of $6 million and $9.5 million respectively, should be denied because they were improperly increased or preempted by the bankruptcy. Ms. Carroll said in court documents, "The debtors apparently seek to pay its management above- market and increasing cash compensation, despite this Chapter 11 filing, ongoing projected losses, and costly management consultants." Bloomberg states that the amount of the 2008 bonus was reduced from $7.9 million to win the support of lenders. Bloomberg says that the Court will hold a hearing on the bonuses on April 16. According to Bloomberg, a committee of Hawaiian Telcom's unsecured creditors also objected the bonuses, saying that the Company couldn't justify "lucrative" payments after estimating it would lose $80 million during the two-year period covered by the program. The 2008 bonus recipients should file claims like other unsecured creditors, Bloomberg states, citing Ms Carroll. "The majority of the 2008 incentive bonuses constitute pre-petition unsecured claims. Such claims are not entitled to be paid at this time ahead of other creditors similarly situated," Ms. Carroll said in court documents. As reported by the TCR on March 24, pursuant to the proposed bonus program, senior managers will receive $70,000 each, or a total of $420,000, and non-senior management employees will receive almost $3.6 million. According to the Honolulu Advertiser, Hawaiian Telcom, said that its unionized workers qualify for $2 million in incentive pay under the terms of their collective bargaining agreement signed in October 2008. Hawaiian Telcom said in court documents that its employees are eligible for the bonuses because the Company reached performance targets for revenue, cash flow, and other measures in 2008. The Honolulu Advertiser quoted Hawaiian Telcom chairperson Walter Dods as saying, "Our employees are key to our long-term success and our ability to emerge from Chapter 11, so I, and the rest of the board members, have determined that it is critical that we stand behind their accomplishments and honor our commitment to them." According to The Honolulu Advertiser, Gov. Linda Lingle said that the bonuses are "unconscionable," and that her administration will oppose them in court. "Hawaiian Telcom is the critical communications backbone for our state, and its action to pay millions in bonuses puts the Company in a precarious position that jeopardizes its long-term viability, as well as threatens Hawai'i's economic recovery," the report quoted Gov. Lingle as saying. Based in Honolulu, Hawaii, Hawaiian Telecom 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 TCR 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 and 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) HELMAN GROUP: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Helman Group, LLC 1466 S. Foothills Hwy Boulder, CO 80305 Bankruptcy Case No.: 09-14935 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court District of Colorado (Denver) Debtor's Counsel: Cynthia T. Kennedy, Esq. 308 1/2 E. Simpson St. Lafayette, CO 80026 Tel: (303) 604-1600 Email: ctk@kandkatlaw.com Total Assets: $2,557,500 Total Debts: $1,931,499 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cob09-14935.pdf HERITAGE LAND: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------- Ken Ritter at The Associated Press reports that Heritage Land Company, LLC, and its affiliates -- which include Rhodes Design and Development Corp. -- have filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Nevada. Court documents say that Rhodes Design listed $100 million to $500 million each in assets and debts. Rhodes Design, according to court documents, listed 32 corporate debtors, including several construction entities, and property in Las Vegas, Henderson and Arizona. The AP relates that Rhodes Design estimated that 5,000 to 10,000 creditors would have claims. According to The AP, Rhodes Design blamed declining land values and dramatically reduced home sales for its collapse. Rhodes Design founder and chief Jim Rhodes said in a statement, "The economic crisis affecting Las Vegas, along with the inability to secure alternative and cost-effective financing, has hurt homebuilders. We are hopeful that this financial reorganization will produce successful results for residents and owners of homes built by Rhodes Homes." Mr. Rhodes said in a statement that Rhodes Design missed a March 31 loan payment, but the Company expects to deliver homes currently on order and would continue to take new orders. Las Vegas, Nevada-based Heritage Land Company, LLC, is a private master planned community developer and homebuilder in the Las Vegas valley. The Rhodes Companies was founded in 1991. The Company and its affiliates, which include Rhodes Design and Development Corp., filed for Chapter 11 bankruptcy protection on March 31, 2009 (Bankr. D. Nev. Case No. 09-14778). Zachariah Larson, Esq., at Larson & Stephens assists the Debtors in their restructuring efforts. The Debtors listed $100 million to $500 million in assets and $100 million to $500 million in debts. HOVNANIAN ENTERPRISES: Moody's Assigns 'Caa1/LD' Default Rating --------------------------------------------------------------- Moody's Investors Service assigned a Caa1/LD probability of default rating to Hovnanian Enterprises, Inc., following the company's disclosure in its most recent 10-Q filing that between October 31, 2008, and March 11, 2009, it repurchased approximately $368 million face value of senior unsecured and senior subordinated notes at substantial discounts to par. The open market transactions, considered together, constitute a distressed exchange and a limited default by Moody's definition. The LD designation signifies a limited default and also incorporates Moody's expectations of open market transactions at substantial discounts to par over the next twelve months. The ratings on securities impacted by open market transactions during the period October 31, 2008, and March 11, 2009, were lowered to reflect the estimated losses incurred by participating bondholders. In addition, Moody's lowered the ratings on securities that are expected to participate in discounted open market purchases over the next 12 months. After approximately three business days, Moody's will remove the LD designation and change the ratings on the company's debt securities consistent with Moody's LGD (loss given default) framework. As a result of the distressed exchange transaction (as well as the expectation for future transactions of this type), these ratings were lowered: -- Probability of default rating changed to Caa1/LD from Caa1; -- $100 million 8% senior unsecured notes due 2012 lowered to Ca (LGD4, 65%) from Caa2 (LGD4, 65%); -- $215 million 6.5% senior unsecured notes due 2014 lowered to C (LGD5, 71%) from Caa2 (LGD4, 65%); -- $150 million 6.375% senior unsecured notes due 2014 lowered to C (LGD5, 72%) from Caa2 (LGD4, 65%); -- $200 million 6.25% senior unsecured notes due 2015 lowered to C (LGD5, 75%) from Caa2 (LGD4, 65%); -- $300 million 6.25% senior unsecured notes due 2016 lowered to C (LGD5, 74%) from Caa2 (LGD4, 65%); -- $300 million 7.5% senior unsecured notes due 2016 lowered to C (LGD5, 73%) from Caa2 (LGD4, 65%); -- $250 million 8.625% senior unsecured notes due 2017 lowered to C (LGD5, 74%) from Caa2 (LGD4, 65%); -- $150 million 8.875% senior subordinated notes due 2012 lowered to Ca (LGD4, 67%) from Caa3 (LGD6, 93%); and -- $150 million 7.75% senior subordinated notes due 2013 lowered to C (LGD5, 76%) from Caa3 (LGD6, 93%). Moody's last rating action for Hovnanian occurred on March 6, 2009, at which time Moody's lowered the company's corporate family rating and probability of default rating to Caa1 from B3. Established in 1959 and headquartered in Red Bank, New Jersey, Hovnanian Enterprises, Inc. designs, constructs and markets single-family detached homes and attached condominium apartments and townhouses. Homebuilding revenues and consolidated net income for the trailing twelve months ended January 31, 2009 were approximately $2.5 billion and ($1.2 billion), respectively. HOVNANIAN ENTERPRISES: S&P Junks Corp. Credit Rating From 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Hovnanian Enterprises Inc. to 'CCC' from 'B-'. S&P also lowered its ratings on Hovnanian's debt. At the same time, S&P removed the ratings from CreditWatch with negative implications, where they were placed on March 4, 2009. The outlook is negative. These actions affect roughly $2.4 billion of rated debt obligations. "The downgrade reflects the continued pressure on HOV's already weak margins, which S&P believes will extend the trend of negative earnings through 2009 and 2010 and further erode the company's already small equity base and sustain its high leverage," said credit analyst George Skoufis. "Additionally, while HOV currently maintains sufficient cash holdings to meet its 2009 needs, weak consumer confidence and excess supply will continue to weigh on demand and pricing, which S&P believes will make it more difficult for HOV to generate positive cash flow from operations." The negative outlook reflects the extremely challenging conditions under which HOV and its peers are operating and S&P's view that continued net losses could erode the company's currently modest equity base. While the current credit rating anticipates operating losses and weak cash flow in the near term, S&P would lower its rating further if losses and cash flow deficits are more severe than S&P anticipate and/or HOV utilizes its precious liquidity to buy back debt such that its unrestricted cash position falls below $350 million. Although unlikely in the near- term due to the very challenging operating environment, S&P would consider raising the rating if the company can recapitalize its balance sheet and maintain sufficient liquidity. HUBBARD AUTOMOTIVE: Files for Chapter 11 Bankruptcy Protection -------------------------------------------------------------- Charlotte Business Journal reports that Hubbard Automotive/Lake Norman has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of North Carolina. According to court documents, Hubbard Automotive listed 50 to 99 creditors and debts between $1 million and $10 million. Business Journal relates that Hubbard Automotive owes: -- WSOC-TV almost $85,000, -- WCCB-TV almost $78,000, -- Time Warner Cable more than $58,000, and -- American Honda Finance about $140,500. Hubbard Automotive/Lake Norman is a dealership in Huntersville. IDEARC INC: Gets Interim OK to Use JPMorgan Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas granted, on an interim basis, Idearc Inc. and its debtor- affiliates authority to: i) use cash collateral during the period from the petition date through and including the termination date in accordance with their rolling weekly cash forecast for the period ending April 24, 2009; and ii) grant adequate protection to the JPMorgan Chase Bank, N.A. and the lenders for any diminution in the value of the lenders' interests in the prepetition collateral, including for the use of the cash collateral, the use, sale or lease of the prepetition collateral other than the cash collateral, or the imposition of the automatic stay. A final hearing on the cash collateral motion will take place on April 27, 2009, at 1:15 p.m., before Hon. Barbara J. Houser, at the U.S. Bankruptcy Court, 1100 Commerce Street, 14th Floor, Dallas, Texas. Objections to the interim order are due 5:00 p.m. (Central Time) on April 22, 2009. Pursuant to the credit agreement dated as of Nov. 17, 2006, as amended, supplemented or otherwise modified, among Idearc, the lenders party thereto and JPMorgan Chase, as administrative agent for the lenders, the lenders made in excess of $6.4 billion of loans and other financial accommodations to or for the benefit of Idearc and the other Debtors. The Debtors were liable to the lenders under the credit agreement and the other loan documents in the aggregate principal amount of not less than $6.4 billion under the credit agreement, plus not less than $42 million in accrued but unpaid interest, plus not less than $51 million in respect of the Swap Obligations, plus any and all other fees, costs, and expenses of the lenders and agent under the loan documents. The agent holds, on behalf of the lenders, valid, enforceable, first priority, perfected liens and security interests in the prepetition collateral and the cash collatera to secure the prepetition obligations. The Debtors relate that their cash balances, which exceeded $650 million as of the petition date, together with amounts generated by the collection of accounts receivable, the sale of inventory or other disposition or collection of the prepetition collateral, constitute prepetition collateral or the proceeds of the prepetition collateral, and are therefore cash collateral of the lenders. The Debtors will use the cash collateral to preserve and maintain the going concern value of the Debtors and their estates, and to enhance the prospects for a successful reorganization of the Debtors. The cash collateral is more than sufficient, however, to fund the Debtors' businesses and these Cases and no separate post- petition financing is contemplated. As adequate protection, the agent and the lenders are granted: -- valid and perfected, replacement security interests in, and liens on, all of the right, title and interest of the Debtors in, to and under all present and after-acquired property of the Debtors of any nature whatsoever including, without limitation, all cash contained in any account of the Debtors, and the proceeds of all causes of action; -- subject to the Carve Out, the adequate protection obligations will constitute expenses of administration with priority in payment over any and all administrative expenses of the kinds specified or ordered pursuant to any provision of the Bankruptcy Code, and will at all times be senior to the rights of the Debtors, and any successor trustee or any creditor, in these cases or, to the extent permitted by applicable law, any subsequent proceedings under the Bankruptcy Code. So long as no written notice of the occurrence of an Event of Default has been delivered to the Debtors, the Debtors will be permitted to pay without reduction of the Carve Out, but subject to the Interim Budget or the Budget, as applicable, the Professional Fees and Disbursements, as the same may be due and payable. -- the Debtors will pay in cash to the agent $250 million no later than 2 business days after the date of this interim order. This payment will be (a) applied by the agent to reduce the pre-petition obligations in accordance with the terms of the guarantee and collateral agreement; (b) subject to further order of this Court in connection with any successful challenge to the validity of the agent's and the lenders' liens on the cash collateral. The use of the cash collateral to make the adequate protection payment will not constitute a diminution in value of the pre- petition collateral giving rise to an adequate protection obligation. As additional adequate protection, the Debtors are authorized and directed, within 20 days of submission of invoices therefore, to pay all reasonable fees and expenses incurred by the agent, in each case, in connection with matters relating to the credit agreement and the other loan documents, the prepetition obligations, these cases or the enforcement and protection of the rights and interests of the agent and the lenders in these cases. A full-text copy of the Budget is available for free at: http://bankrupt.com/misc/idearcinccashcollbudget.pdf Indenture Trustee's Objection U.S. Bank National Association, as Indenture Trustee in respect of approximately $2.85 billion in senior unsecured notes, objected to the payment of $250 million to the prepetition lenders. The Indenture Trustee said that at this early stage in these cases, it is not clear whether there will be anything for unsecured creditors in this case other than unencumbered assets. Therefore, unencumbered assets must be preserved and must not be encumbered by post-petition liens or consumed in the operation of the business which ultimately may not benefit anyone other than the secured creditors. About Idearc Inc. Headquartered in DFW Airport, Texas, Idearc Inc. (NYSE: IAR) -- http://www.idearc.com/-- fka Verizon Directories Disposition Corporation provides yellow and white page directories and related advertising products in the United States and the District of Columbia. Products include print yellow pages, print white pages, Superpages.com, Switchboard.com and LocalSearch.com, the company's online local search resources, and Superpages Mobile, their information directory for wireless subscribers. The Debtors are the exclusive official publisher of Verizon print directories in the markets in which Verizon is currently the incumbent local exchange carrier. The Debtors use the Verizon brand on their print directories in their incumbent markets, well as in their expansion markets. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 31, 2009, (Bankr. N. D. Tex. Lead Case No. 09- 31828) Toby L. Gerber, Esq. at Fulbright & Jaworski, LLP represents the Debtors in their restructuring efforts. The Debtors propose Moelis & Company as their investment banker; Kurtzman Carson Consultants LLC as their claims agent. The Debtors' financial condition as of Dec. 31, 2008, showed total assets of $1,815,000,000 and total debts of $9,515,000,000. INFOGROUP INC: Macro Sale Won't Affect Moody's 'Ba3' Rating ----------------------------------------------------------- Moody's Investors Service commented that infoGROUP Inc.'s announcement that it completed the sale of its Macro International Inc. subsidiary to ICF International for $155 million does not have an immediate impact on its ratings and outlook (Ba3 corporate family rating; negative outlook). The last rating action was on September 17, 2008 when Moody's confirmed infoGROUP's Ba3 corporate family rating and the Ba2 rating on its senior secured credit facilities. A negative ratings outlook was assigned. Headquartered in Omaha, Nebraska, infoGROUP Inc. is a leading provider of business and consumer information, data processing and database marketing services. The company reported sales of approximately $738 million through the fiscal-year ended December 31, 2008. INTERMET CORP: Reaches Deals with USW, GMP and Non-Union Staff -------------------------------------------------------------- Intermet Corporation and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to: i) approve the compromise of controversy regarding the modification of retiree benefits for retired staff employees not represented by a union (the Staff Retirees); (ii) approve the compromise of controversy regarding the modification of the collective bargaining agreements between Intermet and the United Steelworkers' (USW) represented employees and the modification of retiree benefits for retired USW-represented employees (the USW Retirees); iii) approve the compromise of controversy regarding the modification of the CBA between Intermet and the Glass, Molders, Pottery, Plastics and Allied Workers International Union's (GMP) represented employees; iv) release claims against Intermet's bankruptcy estates pursuant to the terms of the Agreements; and v) determine that the Staff Retiree Committee, the USW, and the International Association of Machinists (IAM) have satisfied their duties under Section 1114(c) of the Bankruptcy Code and applicable non-bankruptcy law. The Debtors assert that the Agreements are "unquestionably" fair and equitable and strikes a fair balance among the USW-represented employees and retirees, and the other constituencies in the bankruptcy estate. Intermet further submits that the recovery for the retirees and the union-represented employees will be in line with the recovery for other parties affected by the Section 1113 and 1114 Motion. All constituents benefit from the proposed settlements because, absent the modifications contained in the Agreements, Intermet will be in breach of its obligations under the Customer Agreement and would likely face liquidation, resulting in no recovery to unsecured creditors. Proposed Modifications to Staff Retiree Benefits Intermet and the Staff Retiree Committee executed the Staff Retiree Agreement, which modifies the Staff Retiree Benefits, as of March 28, 2009. The material terms of the proposed settlement are: a. All Retiree Benefits being received by the Staff Retirees, pursuant to any Retiree Welfare Plan, will be continued to each such participant through July 31, 2009, with such benefits terminating as of August 1, 2009. b. Intermet will grant the Staff Retirees whose benefits are terminated a general unsecured claim in the amount of $3,100,798 in the aggregate, with the parties to cooperate in allocating the claim among the individual Staff Retirees. c. Intermet will establish a hardship fund in the amount of $15,000 to be paid to certain Staff Retirees pursuant to written directions provided by the Staff Retiree Committee. d. Intermet will comply with its obligations under the Consolidated Omnibus Budget Reconciliation Act (COBRA) to the full extent of the law. In addition, Intermet will provide reasonable assistance to retirees presently receiving life insurance benefits to convert such life insurance benefits to the extent no significant out-of- pocket expenditure by Intermet is required. e. The Staff Retiree Committee will withdraw its opposition to Intermet's motion to authorize payments of incentive awards to non-insider employees. Proposed Modifications to the USW CBAs and the USW Retiree Benefits On March 26, 2009, Intermet and the USW executed the USW Agreement, which modifies the USW CBAs and the USW Retiree Benefits. The material terms of the proposed settlement are: a. Intermet will continue all retiree benefit programs of the USW Retirees through the later of July 31, 2009, or the date on which Intermet ceases to provide retiree benefits to any group of former employees. Intermet will send a letter to the USW Retirees explaining the reason for the termination of benefits. b. The USW will be granted, on behalf of the USW Retirees, an allowed general unsecured claim for the value of the terminated benefits, discounted to present value using a discount rate of 6.25%. c. Intermet will comply with its obligations under the COBRA to the full extent of the law. In addition, Intermet will provide reasonable assistance to retirees presently receiving life insurance benefits to convert such life insurance benefits to the extent no significant out-of-pocket expenditure by Intermet is required. d. Intermet agrees to cooperate with the USW to take maximum advantage of the Health Care Tax Credit program established under the Trade Act of 2002 to the extent no significant out-of-pocket expenditure by Intermet is required. e. Intermet will establish a hardship fund in the amount of $75,000 payable to USW Retirees, with the amounts to be distributed among the USW Retirees at the USW's direction. f. USW consents to the termination of all defined benefit plans covering USW-represented employees and retirees. g. Any obligation in any CBA for Intermet to make any company contributions to any 401(k) or other defined contribution plan will terminate effective upon the earlier of July 31, 2009, or a "Liquidation Condition" (as defined in the USW Agreement). h. The parties will modify the New River, Archer Creek and Columbus collective bargaining agreements to include a successorship clause providing for recognition of the USW as a bargaining representative for the unionized employees at those plants, and a requirement that a purchaser hire all USW-represented employees on the rolls as of January 1, 2009 (subject to such purchasers' discretion to set staffing levels) and provide preferential recall rights to those USW-represented workers who are not immediately hired. i. If Intermet emerges from Chapter 11 pursuant to a confirmed plan of reorganization on a standalone basis and as a going concern, it is agreed that within six months of such plan, Intermet and the USW will bargain with respect to the topics of a replacement defined contribution plan for retirees. j. Intermet and the USW agree to extend the CBA between Lynchburg Foundry, LC and the USW covering employees of the Archer Creek Facility to March 31, 2009. k. The USW will withdraw its objection to the motion to authorized payments of incentive awards to non-insider employees. Proposed Modifications to the GMP CBA On March 27, 2009, Intermet and the GMP executed the GMP Agreement which modified the GMP CBA. The GMP Asgreement was ratified by the Hibbing plant. The material terms of the proposed settlement are: a. Any obligation in the GMP CBA for Intermet to make any contributions to any 401(k) or other defined contribution plan will terminate effective upon the earlier of July 31, 2009, or a "Liquidtion Condition". b. The parties will immediately modify the GMP CBA to include a succesorship clause providing for recognition of the GMP as bargaining representative for the unionized employees at the Hibbing plant, and a requirement that a purchaser hire all GMP-represented employees on the rolls as of January 1, 2009 (subject to such purchaser's discretion to set staffing levels) and provide preferential recall rights to those GMP-represented workers who are not immediately hired. c. If Intermet emerges from Chapter 11 pursuant to a confirmed plan of reorganization on a standalone basis and as a going concern, it is agreed that within six months of such plan, Intermet and the GMP will bargain with respect to the topics of a replacement defined contribution pension plan. As reported in the Troubled Company Reporter on March 20, 2009, Intermet Corp. submitted to the Court a motion to reject the CBAs with the GMP and the USW unions. Intermet asserted that without the concessions they could gain from the rejections of the CBAs with the two unions, there will be "no prospects of successfully reorganizing." The IAM was not covered by the termination request because it had already agreed to concessions with the Debtor. Intermet requested the Court's authority to (ii) reject under Section 1113 of the Bankruptcy Code the CBAs of the two unions unless they reach an agreement; and (ii) terminate under Section 1114 of the Bankruptcy Code the provision of retiree welfare benefits to existing retirees as of May 31. Pursuant to Section 1113, a court can only approve a CBA rejection if the debtor (1) has submitted to the union a proposal for modifications that are necessary to permit its reorganization and assures that all parties are treated fairly and equitably, (2) the union has refused to accept the proposal without good case, and (3) the balance of equities clearly favors the rejection of the CBA. Under Section 1114, the court may allow the debtor from modifying or not paying retiree benefits if the court finds that (i) the debtor has submitted to the retirees' representative a proposal for modifications that are necessary to permit its reorganization, (ii) the representative has refused to accept the proposal without good cause, and (iii) the modification is necessary to permit the reorganization of the debtor and assures that all parties are treated fairly and equitably, and is clearly favored by the balance of equities. Previous Proposals by the Parties According to Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, with respect to the CBAs, Intermet developed an initial proposal pursuant to Section 1113 to the USW, the IAM and the GMP to modify the terms of the CBAs and, to a limited extent, certain retiree benefits associated therewith. The Section 1113 Proposal is identical for all CBAs and all hourly employees, and includes these provisions: a. Pension Plans and Retiree Welfare Benefits. Any obligation in any CBA to provide for the continued accrual of defined benefit pension plan benefits and/or to maintain or to fund a defined benefit pension plan on behalf of employees covered by such CBA will terminate effective immediately. The Unions will consent to the termination of the defined benefit pensions plans, whether through a distress termination or other proceeding. Any obligation in any CBA for Intermet to make any company contributions to any 401(k) or other defined contribution plan will terminate effective immediately. Any express or implied obligation in any CBA to provide medical coverage or life insurance to an employee who retires during the term of such CBA will terminate (i) if such employee has retired prior to the date hereof, then effective on February 28, 2009, or (ii) otherwise, effective on the date such employee retires. Any claim, as that term is defined in section 101(5) of the Bankruptcy Code, of the Unions or of an employee covered by any CBA with respect to pension or retiree welfare benefits will be a prepetition unsecured claim. b. Asset Sale or Liquidation. In the event that either (i) Intermet consummates a sale of substantially all of its assets, whether pursuant to Section 363 of the Bankruptcy Code or a plan of reorganization, or (ii) Intermet's bankruptcy case is converted to Chapter 7 or Intermet liquidates its assets or business pursuant to a plan of liquidation, each CBA will terminate and be of no further force and effect on the effective date of such sale, plan of reorganization or liquidation or conversion to Chapter 7. Intermet will use reasonable efforts to obtain recognition of the Unions as the bargaining representative of hourly employees, as applicable, who are offered employment by an acquirer of some or all of Intermet's assets. In the event of such termination, any claim, as that term is defined in Section 101(5) of the Bankruptcy Code, of the Unions or of an employee covered by any CBA arising with respect to the CBA will be a prepetition unsecured claim. With respect to retiree welfare benefits, Intermet formulated an initial proposal pursuant to section 1114 of the Bankruptcy Code to the USW, the IAM and the official committee of retirees. The Section 1114 Proposal is identical for the salaried retirees and the IAM- and USW-represented employees who receive benefits under one of the postretirement plans, and states the following: "Intermet proposes to terminate all Retiree Welfare Plans and to end coverage as to each staff and hourly retiree participating in such Retiree Welfare Plans, effective February 28, 2009." This date was later modified to May 31, 2009. The IAM accepted both Proposals as to the employees and retirees for which it serves as Authorized Representative on March 4, 2009. USW said that in its counterproposal to the Debtor, it consented to termination of the defined-benefit plans and the health and life insurance benefits for retirees, and that it asked "only for certain modest items in exchange for the enormous sacrifice that these terminations will impose upon the workers whose skill and effort make this company run and upon the financially vulnerable retirees who gave many years of their lives to the company." Among other things, in response to the termination of retiree welfare benefits at the end of May 2009, USW sought one additional month of benefits before the termination -- at a cost that will almost certainly be less than the cost of the bonuses that Intermet expects to pay to a handful of management employees at its corporate headquarters. USW also sought a modest profit- sharing plan for the retirees, to be paid based on the financial performance of the plants where the USW employees work. Intermet, however, at that time refused to those provisions. The Agreements presented to the Court resolves the outstanding disputes between the parties. Customers Require Plan Approval by June 30 Intermet has noted that its accommodation agreement with customers require certain milestones. If the Debtor fails to achieve these requirements, it will be in default of its obligations under the agreement and the customers may terminate the pricing and other accommodations necessary to its continued survival. Date Item Status ---- ---- ------ 10/31/08 Obtain Financing through 6/30/09 Achieved 03/31/09 Elimination or significant reduction in legacy costs In Progress Achieved 04/30/09 File a reorganization plan, execute a merger or asset purchase agreement In Progress 06/__/09 Achieve 50% increase in capacity utilization In Progress 06/30/09 Confirmed plan of reorganization, close merger or asset purchase transaction In Progress "If Intermet can neither submit a plan of reorganization nor consummate an asset purchase agreement by April 30, 2009, it could be forced into a liquidation and cease all business operations." About Intermet Corp. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The company and its debtor- affiliates filed for Chapter 11 protection on Aug. 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as the Debtors' claims, notice and balloting agent. An Official Committee of Unsecured Creditors has been formed in this case. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and debts of between $100 million and $500 million. This is the Debtors' second bankruptcy filing. Intermet Corp., along with its debtor-affiliates, filed for Chapter 11 protection on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represents the Debtors. In their previous bankruptcy filing, they listed $735,821,000 in total assets and $592,816,000 in total debts. Intermet Corporation emerged from this first bankruptcy filing in November 2005. INTRA-STATE AMERICA: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Intra-State America Corporation 1005 Chili Avenue, Suite 2 Rochester, NY 14611 Tel: (585) 242-8650 Bankruptcy Case No.: 09-20708 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Western District of New York (Rochester) Company Description: The company provides trucking services. Debtor's Counsel: Louis V. Asandrov, Esq. Asandrov Law Offices 159 S. Fitzhugh Street Rochester, NY 14608 Tel: (585) 546-7620 Fax: (585) 546-7634 Email: asandrov@rochester.rr.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Nicholas Passero. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nywb09-20708.pdf INTROGEN THERAPEUTICS: Wants Plan Filing Deadline Moved to April 7 ------------------------------------------------------------------ Introgen Therapeutics Inc. is asking the U.S. Bankruptcy Court for the Western District of Texas to extend until June 2, 2009, its exclusive period to propose a Chapter 11 plan, Bloomberg's Bill Rochelle reports. According to Bloomberg, Introgen is scheduled to auction equipment and patents on April 7. The Court will convene a hearing to approval the sale on the same day. Introgen Therapeutics Inc. is a cancer-drug developer. Introgen Therapeutics filed for Chapter 11 on Dec. 3, 2008 (Bankr. W.D. Texas, Case No. 08-12442). Patricia Baron Tomasco, Esq., at Brown McCarroll, L.L.P., is the Company's bankruptcy lawyer. In its petition, the Company listed assets of $9,107,868 and debts of $12,932,950. JC PENNEY: Moody's Downgrades Rating on Senior Notes to 'Ba1' ------------------------------------------------------------- Moody's Investors Service downgraded J.C. Penney Company Inc. senior unsecured notes to Ba1 and assigned a Baa1 to the proposed senior secured revolving credit facility due April 2012. The rating outlook is stable. The downgrade is a result of Moody's expectations that J.C. Penney's operating results will continue to decline in fiscal 2009 and are likely to remain below their historical levels over the near to medium term. Moody's believes that this likely decline in results will lead to J.C. Penny's credit metrics falling to levels that are more appropriate for a mid Ba rating. For example, Moody's expects debt to EBITDA to rise to about 4.8 times and EBITA to interest expense to fall to nearly 1.5 times for the fiscal year ending February 2, 2010. In addition, the downgrade also reflects Moody's expectations that J.C. Penney's credit metrics are likely to improve over the medium term but will still remain at levels appropriate for a Ba1 rating. J. C. Penney is currently seeking commitments for a senior secured bank credit facility that will replace its existing $1.2 billion unsecured bank credit facility. The assignment of a Baa1 to the senior secured bank credit facility acknowledges the facility's size and scale, as well as its first lien on inventory and the guarantees provided by all material subsidiaries. This places the senior secured bank credit facility ahead of J.C. Penney's unsecured notes as well as ahead of the company's other unsecured liabilities. These ratings are downgraded: -- Senior unsecured bank credit facility to Ba1 (LGD 4, 60%) from Baa3; -- Senior unsecured notes to Ba1 (LGD4, 60%) from Baa3; -- Senior unsecured shelf to (P) Ba1 from (P) Baa3. These ratings are assigned: -- Corporate Family Rating at Ba1; -- Probability of Default Rating at Ba1; -- Senior secured bank credit facility at Baa1 (LGD 1-9%) -- Speculative Grade Liquidity Rating of SGL-1 The rating on the $1.2 billion senior unsecured bank credit facility will be withdrawn when the refinancing is complete. J.C. Penney's Ba1 corporate family rating considers its relatively weak credit metrics and the expectation that metrics will fall to levels more appropriate for a mid Ba rating. The rating is supported by J.C. Penney's very good liquidity and history of balanced financial policies. Moody's believes that these two items will allow J.C. Penney to weather the current weak consumer spending environment -- albeit while maintaining weaker than historical credit metrics. The rating also acknowledges Moody's opinion that J.C. Penney's continued decline in earnings is predominantly related to the current weak consumer spending environment and is not an indication of a weakening franchise. Positive ratings consideration is given to J.C. Penney's large revenue base, strong national presence, and its portfolio of well recognized brand names. Moody's also considers J.C. Penney's sizable portfolio of unencumbered real estate to be a credit positive. However, Moody's notes that the rating is constrained by the company's need to invest in renovating its store base to the same level of its peer group. "While J.C. Penney's credit metrics are expected to erode to levels more appropriate for a mid Ba rating, its very good liquidity and historically conservative financial policies provide us with comfort that the company will successfully weather the current economic storm", stated Maggie Taylor, Vice President & Senior Credit Officer. "Although the company will experience a period of weak credit metrics, Moody's fundamental views justify Moody's stable rating outlook". The last rating action on J.C. Penney's was on February 5, 2009, when its long term ratings, including its senior unsecured notes rating at Baa3, were placed on review for possible downgrade. J.C. Penney is one of the country's largest department store operators with about 1,100 locations in the United States and Puerto Rico. Revenues are about $19 billion. JOHN BOGGS: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: John David Boggs 2115 Club Vista Place Louisville, KY 40245 Bankruptcy Case No.: 09-31435 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Western District of Kentucky (Louisville) Debtor's Counsel: Dean A. Langdon, Esq. Wise DelCotto PLLC 200 N. Upper Street Lexington, KY 40507 Tel: (859) 231-5800 Email: langdonbk@wisedel.com Total Assets: $2,787,175 Total Debts: $5,737,448 A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/kywb09-31435.pdf KIMBALL HILL: Chapter 11 Plan Declared Effective March 24 --------------------------------------------------------- Kimball Hill, Inc., and its debtor subsidiaries' Joint Chapter 11 Plan was declared effective on March 24, 2009. As previously reported in the Troubled Company Reporter, the U.S. Bankruptcy Court for the Northern District of Illinois confirmed on March 12 the Chapter 11 liquidation plan of Kimball Hill, Inc. Andrew M. Harris of Bloomberg reported 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." Pursuant to the Plan, all assets of the Debtors were transferred to the post-consummation trust or the liquidation trust, as applicable. Bloomberg stated that two post-bankruptcy trusts created are: -- 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. LAS VEGAS CASINO LINES: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: Las Vegas Casino Lines LLC 240 Christopher Columbus Drive Cape Canaveral, FL 32920 Tel: (321)868-1097 Fax: (321)868-7490 Email: info@lasvegascasinolines.com Bankruptcy Case No.: 09-03690 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Judge: Arthur B. Briskman Company Description: Las Vegas Casino Lines is the newest and fastest casino ship sailing out of Port Canaveral. See http://new.lasvegascasinolines.com/ Debtor's Counsel: Raymond J. Rotella, Esq. Kosto & Rotella PA 619 East Washington Street Orlando, FL 32801 Tel: (407) 425-3456 Fax: (407) 423-5498 Email: rrotella@kostoandrotella.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Giles Malone, managing member of the company. A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/flmb09-03690.pdf LEHMAN BROTHERS: Authorized to Contribute $15 Million to Bank Unit ------------------------------------------------------------------ Lehman Brothers Holdings Inc. was authorized by Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York to contribute $15 million and mortgage servicing right to a nonbankrupt subsidiary, Lehman Brothers Bank FSB. LBHI and Lehman Commercial Paper Inc. sought approval to step up these actions to support the capital level of Lehman Brothers Bank: * LBHI's entry into one or more assignment agreements with Aurora Loan to transfer all or part of a portfolio of LBHI's unencumbered mortgage servicing rights to Aurora Loan; * LBHI's entry into a settlement agreement with Lehman Brothers Bank and Aurora Loan, pursuant to which LBHI will convey to and confirm Aurora Loan's ownership of certain funds; * LBHI's investment of cash of up to $15 million in one or more capital contributions; and * The consensual termination of unfunded loan commitments with General Electric Capital Corporation, among others, in which LCPI, Lehman Brothers Bank, and the Bank and Woodlands Commercial Bank are participants aggregating $1.375 billion. LBHI and its affiliated debtors earlier obtained from Judge Peck permission to ink a master repurchase agreement with Lehman Brothers Bank. The agreement permits LBHI to purchase from Lehman Brothers Bank a portfolio of residential mortgage loans for up to $325 million in exchange for its agreement to repurchase those loans at the same price on a certain date. Attorney for LBHI, Alfredo Perez, Esq., at Weil Gotshal & Manges LLP, in New York, said that the agreement would help Lehman Brothers Bank's subsidiary, Aurora Loan Services LLC, to make advance monthly payment to mortgagees in connection with its mortgage servicing business. Lehman Brothers Bank conducts its residential mortgage loan servicing operation in the United States primarily through Aurora Loan. Due to the recent collapse of the financial markets, Lehman Brothers Bank is unable to access the sources from where it usually gets fund to finance Aurora Loan, Mr. Perez related. 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) LIVE NATION: Ticketmaster Merger Won't Affect Moody's 'B1' Rating ----------------------------------------------------------------- Moody's preliminary view is that the corporate family ratings for Live Nation Inc. and Ticketmaster Entertainment, Inc. will remain unchanged when the contemplated merger of the two entities to form Live Nation Entertainment closes. Although equity investors will be presented with a single publicly traded company and it is presumed that operations will be coordinated, the two predecessor companies will continue as independent legal entities and all pre- existing financing arrangements will remain in place. There will be no cross default or guarantee between the two companies' debts. Consequently, upon closing, Moody's anticipates that Live Nation's existing B1 CFR and Ticketmaster's Ba2 CFR will continue to apply along with all currently existing individual debt instrument ratings. Moody's emphasizes that this ratings' guidance is preliminary, based on a limited fact set, and is offered for information purposes only. Moody's most recent rating action for both Live Nation and Ticketmaster was taken on February 10, 2009, at which time Live Nation's B1 CFR and PDR and Ticketmaster's Ba2 CFR and PDR were placed on review following their February 9th joint announcement concerning the above-noted business combination. The ratings review will be concluded approximately concurrent with closing, at which time formal ratings will be disseminated to the market. Live Nation, Inc., headquartered in Beverly Hills, California, owns, operates and/or exclusively books live entertainment venues in the U.S. and Europe in addition to owning the rights to several globally recognized performing artists under all-inclusive contracts. Ticketmaster, headquartered in West Hollywood, California, is a leading live entertainment ticketing and marketing company. MACY'S INC: Moody's Downgrades Ratings on Senior Notes to 'Ba2' --------------------------------------------------------------- Moody's Investors Service downgraded Macy's, Inc. ratings, including the senior unsecured notes to Ba2 from Baa3. In addition, Moody's assigned a Corporate Family Rating of Ba2, a Probability of Default Rating of Ba2, and a Speculative Grade Liquidity Rating of SGL-2. The rating outlook is stable. "The downgrade reflects the sharp deterioration in Macy's credit metrics to levels that are more appropriate for a mid Ba rating" stated Maggie Taylor, Vice President & Senior Credit Officer. "The downgrade also reflects Moody's expectation that Macy's operating performance will continue to be pressured given the current challenging consumer spending environment." Given this, Moody's expects Macy's credit metrics will deteriorate further over the next twelve months to levels that will be weak even for the new Ba2 rating. The Ba2 Corporate Family Rating reflects Macy's sizeable debt load, its moderately weak credit metrics, its eroding margins, and Moody's expectations that metrics will deteriorate further in the year ahead. It also acknowledges that Macy's performance decline is largely correlated to the current weak consumer spending environment and is not a result of any fundamental issue with its franchise or execution ability. The rating is supported by Macy's good liquidity and its ability to pay off its near dated maturities with cash. Macy's has implemented several efforts to preserve cash, including reductions in its dividend, capital expenditures, inventory, and expenses. However, Moody's notes that these efforts will be partially offset by Macy's pension plan funding requirements. Positive ratings consideration is also given to the company's solid position within the department store sector, its strong national presence, quality of its real estate locations, and the likely benefits from the expansion of the My Macy's program. The stable outlook reflects Moody's expectation that Macy's good liquidity and expense reductions will provide it with the ability to weather the current economic storm, albeit with credit metrics that may fall to levels that are weak for the Ba2 rating. These ratings are downgraded: Macy's Retail Holdings, Inc.: -- Senior unsecured to Ba2 (LGD4, 58%) from Baa3; -- Senior unsecured shelf to (P)Ba2 from (P)Baa3; -- Subordinated shelf to (P)B1 from (P)Ba1; -- Commercial paper to Not Prime from Prime-3. Macy's Inc.: -- Senior unsecured shelf to (P)B1 from (P)Baa3; May Department Store Company (debt assumed by Macy's Retail Holdings): -- Senior unsecured to Ba2 (LGD4, 58%) from Baa3. These ratings are assigned: Macy's, Inc.: -- Corporate Family Rating at Ba2; -- Probability of Default Rating at Ba2; -- Speculative Grade Liquidity Rating at SGL-2. At the company's request, the commercial paper rating of Not Prime will be withdrawn following this rating action. The last rating action on Macy's was on February 2, 2009, when its ratings were placed on review for possible downgrade. Macy's, Inc., is one of the United States largest department store operators with nearly 850 stores operating under the Macy's and Bloomingdale's nameplates. Revenues are nearly $25 billion. MAGNA ENTERTAINMENT: Parties Object to Sale & Bidding Procedures ---------------------------------------------------------------- Several parties-in-interest filed with the U.S. Bankruptcy Court for the District of Delaware objections to Magna Entertainment Corp. and its debtor-affiliates' motion and proposed bid procedures for the sale of certain key assets to MI Developments Inc. Secured lender Bank of Montreal says it supports an auction process for the assets but believes that the bidding procedures are structured to discourage, rather than encourage, an open and fair auction process where the highest and best offer could be obtained for certain assets of the Debtor. BMO relates that the procedures fail to deliver adequate protection to BMO as a secured lender. Churchill Downs Incorporated, a creditor in the Debtor's Chapter 11 cases, and a partner in certain joint ventures that the Debtors are seeking to sell, objects to the sale motions on two grounds. First, it is unclear what interests or assets pertaining to the joint ventures the Debtors are trying to sell or otherwise affect through the sale motions. Second, certain joint venture interests cannot be sold and assigned under the sale motions because (a) the joint venture interests are not property of the Debtors' estates and cannot be sold; (b) the joint venture interests, even if they were property of the estate, are not assignable under applicable non-bankruptcy law; (c) sale of the joint venture interests will result in a change in control transaction under the LLC agreements, entitling CDI to effect dissolution of the LLCs under Delaware law and the LLC Agreements,; and (d) sale of joint venture interests without CDI's consent will constitute a material breach of each of the LLC agreements. Greenlight Capital Offshore Partners and its affiliates, an unsecured creditor and a shareholder of MID, objects to the entry of the bid procedures because the bid procedures order: (i) is silent to the role and rights of the MID lender, MID and Frank Stronach in the sale process, MID and Mr. Stronach have nearly complete control over the sale process through the MID lender and DIP financing; (ii) fails to address the issue of whether MID will be authorized to credit bid the MID lender's purportedly secured claim, or whether MID even has the authority to bid on the auction assets; and (iii) provides the Debtors with simply too much discretion regarding the sale process. Heritage Racing LLC, a potential bidder that may be able to provide significant value to the Debtors' estates, relates that the procedures provided for with the motion fail to meet requisite standard. Under the proposed Procedures and APA, Heritage says that there is insufficient clarity to determine the scope of what is included in the sale and that there are no guidelines or methodology to determine who is deemed a qualified bidder for purposes of participation in the auction. The State of Maryland, which has jurisdiction over the Debtors' Pimlico Race Course and Laurel Park, well as the Bowie Training Center, states that the bid procedures and form of asset purchase agreement proposed do not take into account any of Maryland's statutory requirements, and completely ignore the statutory, police and regulatory power of the State of Maryland to regulate horse racing and betting within its borders. The State's licensure, review, approval and other statutory requirements must be addressed and honored by the Debtors in any bid procedures that might be approved by this Court. The Mayor and City Council of Baltimore, parties-in-interest, tell the Court that the inconsistencies between the motion, proposed bidding procedures order, and the form agreement must be reconciled to allow appropriate scrutiny of the bidding procedures and sale. PA Meadows, LLC, requires clarification that the "Meadows Note" described in the moving papers is being sold subject to the rights of PA Meadows and certain of its affiliates under that agreement. The asset at issue is an agreement between PA Meadows and Magna Entertainment Corp. that sets forth the terms and conditions of a deferred-purchase-price arrangement between the parties related to a stock purchase transaction in 2006 through which PA Meadows obtained ownership of The Meadows racetrack, and MEC agreed to run the racetrack for a period of up to five years. Interested party The Village at Gulfstream Park Community Development District seeks a revision to the purchase agreement in a manner that clarifies the intention of the Debtors that any special assessments or liens securing special assessments or ad valorem property taxes levied by a local governmental unit which are assumed by the purchasers will remain attached property when sold by the Debtors. Specifically, VGP-CDD seeks to include purchaser assumed liens expressly in the definition of permitted encumbrances set forth in purchase agreement. Also VGB-CDD seeks adequate assurance that the validity of its own purchaser assumed liens must be accepted, in writing, by the purchaser as part of purchase agreement. These revisions will clarify that the pertinent purchased assets are not sold free and clear of VGP- CDD's purchaser assumed liens and, in turn, the liabilities related to those liens may not be asserted against debtors. Wells Fargo Bank, National Association, a holder of priority lien on Santa Anita park, one of the assets to be sold, seeks changes to the proposed order and bidding procedures to the extent necessary to ensure that competing bids will be received for the assets. As drafted, the bidding procedures will ensure the opposite result: the unfettered discretion granted to the Debtors will dissuade all potential bidders. 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. MERUELO MADDUX: Wants Access to Cash Collateral Until December 9 ---------------------------------------------------------------- Meruelo Maddux Properties, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Central District of California for authorization to: (i) use cash collateral to pay amounts of expenses set forth in the operating projections for the cash collateral properties, subject to a variance of 20% per line item listed in the budget; (ii) after payment of the expenses in the budget, use the excess to fund the costs and expenses of the Chapter 11 cases, including the cost and expenses of the Debtors who do not generate revenue or generate insufficient income to pay for their cost of operation in full; and (iii) provide adequate protection to lenders. Creditors of the Debtors that may be holding or claiming an interest in the Debtors' real properties that generate cash collateral are: a) Bank of America b) California Bank & Trust c) Capmark Finance, Inc. d) Cathay Bank e) Chinatrust Bank f) East West Bankruptcy g) Imperial Capital Bankruptcy h) Pacific Commerce Bank i) The Stafford Group j) United Commercial Bank k) V & A chamilian l) Western Mixers m) Y & F Murakami The Debtors propose to use cash collateral first, to and through the date fixed by the Court for the conduct of the final cash collateral hearing and, in that connection, seek on a final basis to use cash collateral through Dec. 31, 2009, subject to further extension, if appropriate. The Debtors propose to grant the Bank of America, et al., liens replacement in their cash collateral properties, and also replacement liens on real properties that are subject to liens of lenders and do not generate any income, junior to existing liens. The Debtors relate that an equity cushion may stand as and for adequate protection for a secured creditor's interest in its collateral. The Debtors believe the value of all their properties, encumbered and unemcumbered, exceed $587 million, with the debts and or claims secured by some of the properties to $284 million, including real property taxes, with priority claims of approximately $8.7 million, excluding inter-company debt and contingent and unliquidated claims arising from guarantees. The Debtors relate that the value of their properties is more than enough to provide adequate protection for the lenders. CB&T Objects California Bank & Trust, a party to a $7.5 million loan extension agreement dated March 27, 2008, with 788 South Alameda, LLC, one of the affiliated debtors, relates that as to the cash collateral motion, there is no competent evidence that CB&T's lien over 788 Alameda's property is adequately protected, either by the equity in the property that secures the obligation owed to CB&T, or by the pledge of other property of suspect value. The cash collateral motion, according to CB&T, fails to acknowledge and address the requirements of Section 363 of the Bankruptcy Code as they are applicable to the cash collateral rights of CB&T. There is no showing by competent evidence that CB&T's security interest in its collateral owned by 788 Alameda is adequately protected, CB&T adds. 788 Alameda is a special purpose entity formed for the purpose of holding title to the refrigerated warehouse property that comprises CB&T's real property collateral and generates the rents that constitute CB&T s cash collateral. CB&T also objects to the consolidation motion. CB&T does not object to the use of a consolidation account cash management system per se, as long as CB&T's contractual and statutory rights are recognized and preserved. The strong possibility, if not likelihood, that the relief requested by the Debtors will modify CB&T s rights against its cash collateral forces CB&T to object to the Consolidation Motion. About Meruelo Maddux Based in Los Angeles, California, Meruelo Maddux Properties, Inc., -- http://www.meruelomaddux.com/-- together with its affiliates, engage in residential, commercial and industrial development. Meruelo Maddux and its affiliates filed for Chapter 11 protection on March 26, 2009 (Bankr. C. D. Calif. Lead Case No.: 09-13356). John J. Bingham, Jr., Esq. represents the Debtors in their restructuring efforts. The Debtors' financial condition as of Dec. 31, 2008, showed estimated assets of $681,769,000 and estimated debts of $342,022,000. METAVANTE CORP: S&P Puts 'BB' Corporate Rating on Positive Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its ratings, including its 'BB' corporate credit rating, on Milwaukee, Wisconsin-based Metavante Corp. on CreditWatch with positive implications. "The CreditWatch placement follows the announcement that Metavante has agreed to be acquired by 'BB+' rated Fidelity National Information Services Inc. for approximately $4.4 billion including debt outstanding," said Standard & Poor's credit analyst Philip Schrank. Jacksonville, Florida-based FIS is a leading provider of core financial institution processing, card issuer and transaction processing services and outsourcing services to more than 14,000 financial institutions worldwide. Metavante is a leading provider of banking and payments technologies to approximately 8,000 financial services firms and businesses. The merged company will be named Fidelity National Information Services, Inc. FIS and Metavante expect to complete the transaction in the third quarter of 2009, pending regulatory and shareholder approval. Following the completion of the transaction, S&P expects to withdraw Metavante Corp.'s corporate credit rating and also withdraw the 'BB' senior secured rating on its $250 million revolving credit facility. The company's issue rating will likely be notched off of S&P's 'BB+' corporate credit rating for FIS. S&P expects Metavante Corp.'s 'BB'-rated $1.7 billion senior secured term loan B to be reduced to $1.3 billion and split into two tranches (pending various amendments to the Metavante credit agreement): $800 million is expected to remain outstanding with Metavante Corp. (and be assumed by the new company as acquired debt). If the transaction closes as expected (following a review of final documentation), S&P will raise its rating to 'BBB' (two notches higher than its 'BB+' corporate credit rating for FIS) from 'BB'. S&P also would revise the recovery rating on these notes to '1', indicating the expectation for very high (90% to 100%) recovery in the event of a payment default, from '3'. The remaining $500 million will be exchanged for a $500 million incremental term loan at Fidelity National Information Services Inc., and a rating will be assigned. MGM MIRAGE: Colony Capital Mulls Investment in City Center ---------------------------------------------------------- Real estate firm Colony Capital LLC is considering investing in MGM Mirage's City Center project, Tamara Audi at The Wall Street Journal reports, citing people familiar with the matter. A source said that Colony Capital is in talks with MGM Mirage and its partner, Dubai World, about "any role they might play in helping City Center get completed without any court action," WSJ states. Citing the source, WSJ says that the talks could result in an investment "as well as just brokering a strained relationship" between Dubai World and MGM Mirage. According to WSJ, an investment could keep the $8.6 billion City Center project from bankruptcy. WSJ relates that the investment could also keep the owners from halting work on the project. As reported by the Troubled Company Reporter on March 30, 2009, MGM Mirage received waivers from its lenders to fund 100% of the required march equity contributions for City Center. MGM Mirage said that it is -- with the authorization of its senior lenders -- providing $200 million of funding to City Center to satisfy the required sponsor equity contributions due on or about March 24, 2009. The funding includes $100 million which should have been funded by Dubai World. This allows construction to continue while MGM MIRAGE seeks additional funding for City Center. WSJ notes that MGM Mirage's $200 million payment to City Center gave the Company and Dubai World a few weeks to negotiate a permanent funding solution. According to the report, another payment to City Center is due April 13. "Talks are being held with a number of potential investors in a cooperative fashion. So far, none are particularly close to a resolution," WSJ quoted a person close to Dubai World as saying. About MGM Mirage Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It 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 reported a net loss of $1.14 billion on revenues of $1.62 billion for the three months ended December 31, 2008. MGM MIRAGE reported a net loss of $855.2 million on revenues of $7.20 billion for year 2008. MGM MIRAGE had $23.2 billion in total assets, including $1.53 billion in total current assets; $3.0 billion in total current liabilities; and $12.4 billion in long-term debt. A full-text copy of the Annual Report on Form 10- K is available at no charge at: http://researcharchives.com/t/s?3ae0 The Company does not expect to be in compliance with the financial covenants under its senior credit facility at March 31, 2009. On March 17, Company obtained an amendment to the senior credit facility, which included a waiver of the requirement to comply with the financial covenants through May 15, 2009. Following expiration of the waiver on May 15, 2009, the Company will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on Jan. 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MICHIGAN PUBLIC: S&P Raises Ratings on 2006 Revenue Bonds to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services said it raised to 'BB+' from 'BB' the rating on Michigan Public Education Facilities Authority's series 2006 limited obligation revenue bonds, issued for Michigan Technical Academy. The outlook is stable. "The upgrade reflects the academy's improved financial operations following various budgetary measures in fiscal 2008," said Standard & Poor's credit analyst Corey Friedman. Other factors supporting the rating are: -- A high school that draws students from a wide area; -- A good relationship with the charter authorizer, Central Michigan University; -- Improved financial operations following the academy's termination of its management contract; -- Three successful charter renewals with a current charter that expires in 2011; and -- The full faith and credit pledge of the academy to make payments in support of debt service. However, these strengths are somewhat offset by such factors as an inefficient enrollment sequence, low comparative test scores, and a limit to the pledge of revenue to pay debt service of 20% of per-pupil revenues. Another factor is the inherent uncertainty associated with charter renewals given that the final maturity of the bonds exceeds the time horizon of the existing charter. Michigan Technical Academy began operations in the 1995-1996 year as a grade 10-12 school. Initial enrollment was 30, but the number has grown to 1,140 students in 2008-2009 since the addition of grades and expansion of facilities. The academy can accommodate students up to its charter cap of 1,425. MIDWAY GAMES: Proposes Revised Key Employee Incentive Plan ---------------------------------------------------------- Michael McWhertor at Kotaku.com reports that Midway Games Inc. has submitted to the U.S. Bankruptcy Court for the District of Delaware a revised proposal for an incentive program for its key employees. As reported by the Troubled Company Reporter on April 1, 2009, a government-appointed trustee overseeing Midway Games' financial and legal proceedings has opposed the Company's planned bonus payments to its top employees. Midway Games is still seeking ways to pay out almost $4 million in bonuses, despite poor sales and a bankruptcy filing. Kotaku.com relates that the Vin Diesel-starring game, which has been released as part of a deal between Ubisoft and Midway, was attached to a bonus incentive that creditors and the trustee opposed, because the deal had already happened quite some time ago. The revised plan, Kotaku.com states, addresses concerns about the proposed payouts going to 29 employees. According to Kotaku.com, one of the alterations to Midway's "Key Employee Incentive Program" was the exclusion of CEO Matt Booty from eligibility of those payouts, reducing the number of folks who could potentially benefit to 28. The report says that Mortal Kombat has also been removed from the agreement, and the "milestone" previously attached to the sale of Mortal Kombat now includes the company's assets -- possibly all of them -- to the tune of a committee approved "target cash amount." Rights to Narc, Smash TV, and Area 51 must first be sold before certain bonuses would be paid out, according to the report. Headquartered in Chicago, Illinois, Midway Games Inc. -- http://www.midway.com-- develops video games and sell them primarily in North America, Europe, Asia and Australia. The company and nine of its affiliates filed for Chapter 11 protection on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The Debtors' financial condition as of Sept. 30, 2008, showed $167,523,000 in total assets and $281,033,000 in total debts. MORIN BRICK: Assets Sold to R.J. Finlay; To Restart Plant in April ------------------------------------------------------------------ The Mainebiz reports that R.J. Finlay & Co., a New Hampshire real estate firm and investment arm of Hillcrest Capital Partners LLC, has purchased Morin Brick in Auburn. According to Mainebiz, the purchase has allowed Morin Brick emerge from Chapter 11 bankruptcy and will let the Company restart production this month. Sun Journal relates that Morin Brick will rehire the 40 employees it laid off after it filed for bankruptcy protection. Morin Brick, with capital supplied by R.J. Finlay, will be able to complete efficiency and technology upgrades it started three years ago at the Auburn plant, Sun Journal states. Headquartered in Auburn, Maine, Morin Brick Company -- http://www.morinbrick.com/-- manufactures moulded and waterstruck brick and extruded brick for customers primarily located in the Northeastern United States and Canada. The Company filed for Chapter 11 protection on Sept. 3, 2008 (Bankr. D. Maine Case No. 08-21022). D. Sam Anderson, Esq., and Robert J. Keach, Esq., at Bernstein Shur Sawyer & Nelson P.A., in Portland, Maine, represent the Debtor as counsel. Anthony J. Manhart, Esq., Fred W. Bopp III, Esq., and Randy J. Creswell, Esq., at Perkins Thompson, P.A., represent the Official Committee of Unsecured Creditors as counsel. Tron Group is the Debtor's Chief Restructuring Officer. When the Debtor filed for protection from its creditors, it listed assets of between $10 million and $50 million, and debts of between $1 million and $10 million. MORTON INDUSTRIAL: Obtains Temporary Authority for $20-Mil. Loan ---------------------------------------------------------------- Morton Industrial Group Inc. was given temporary authority to borrow from a $20 million loan for the reorganization supplied by National City Bank, as agent for the pre-bankruptcy lenders. The U.S. Bankruptcy Court for the District of Delaware authorized, on an interim basis, MMC Precision Holdings and its debtor- affiliates to: a) obtain postpetition financing by entering into certain second amended and restated credit agreement with National City Bank; b) grant liens and provide superpriority claims; and c) grant adequate protection to certain prepetition secured parties. The Court will consider the Debtors' motion at a final hearing to be held on April 15, 2009 at 12:00 p.m. Objections are due April 8, 2009, 4:00 p.m. (Prevailing Eastern Time). The Debtors' primary non-trade debt, interest-bearing liabilities consist of: i) a revolving credit facility; ii) term loans; and iii) 12% senior subordinated notes due Sept. 30, 2014. As of March 15, 2009, the Debtors' interest bearing liabilities totaled $78,074,333, with $14,400,000 attributable to the prepetition revolving facility, $33,250,000 attributable to the prepetition term loans, $27,414,000 attributable to the prepetition subordinated notes, $2,275,333 attributable to the letters of credit issued under the prepetition revolving facility, and $735,000 attributable to a "swap", as of Dec. 31, 2008. Morton Industrial Group, Inc., and parent entered into a secured revolving credit facility and secured term loan dated as of Aug. 25, 2006, as amended, with a syndicate of financial institutions led by National City Bank, as administrative agent. The Debtors borrowed up to a maximum of $33,250,000 under the prepetition term loans and up to a maximum of $20,000,000 under the prepetition revolving credit facility. A full-text copy of the Second Amended and Restated Credit Agreement is available for free at: http://bankrupt.com/misc/MMC_DIPAccord.pdf The Debtors granted the lenders first lien security interest on substantially all of their existing and thereafter acquired real and personal property. On February 20, 2009, the Lenders agreed to extend the Debtors and additional $2,000,000 in revolving credit to fund the Debtors' working capital through March 20, 2009. As of the petition date, the Debtors indebtedness to the lenders under the prepetition credit agreement was $47,650,000, exclusive of the prepetition letters of credit, the Swap, accrued interest, fees, costs and expenses. On Aug. 28, 2006, Morton Industrial entered into an interest rate swap agreement with National City effective on Oct. 2, 2006 on $31,500,000 of its prepetition term loan debt in order to manage the risk associated with the variable interest rate under the prepetition credit agreement. As of Feb. 10, 2009, the Swap was recorded as a liability of $735,000. The lenders agreed to extend the Debtors the DIP loan of $20,000,000. Salient Terms of DIP Credit Agreement Borrower: Morton Industrial Group, Inc. Guarantor: MMC Precision Holdings Corp. and all other Debtors Lead Arranger: National City Bank Administrative Agent: National City Bank Lenders: Syndicate of Financial Institutions Purpose: 1. replace the prepetition revolving credit facility, including the prepetition revolving supplemental revolver and the prepetition letters of credit; and 2. provide interim working capital financing, subject to the budget. Letter of Credit Issuer: National City Bank Commitment Amount: Upon approval, the borrower will have access to $20,000,000 in non-amortizing revolving credit including a $2,275,333 sub-facility to provide for letters of credit. Loans under the revolving DIP facility will be available through the termination date. All revolving loans outstanding will become due and payable in full, inclusive of all interest, fees, and costs due thereunder, on the termination date. Availability: Revolving loans and letters of credit under the revolving DIP facility will not exceed in the aggregate the amount of $20,000,000. In the event that existing letters of credit are reduced, availability under the revolving loans will increase subject to the Budget variance. Each borrowing will be in an aggregate amount of $250,000 or higher multiple of $50,000. Priorities/Carve Out: Except as otherwise provided, the liens and claims granted to the agent will be subject only to: (i) the aggregate allowed unpaid fees and expenses payable to professionals retained pursuant to an order of the Court by the Debtors and the committee. As adequate protection for the lenders' interest in the prepetition collateral, subject to the carve Out, the agent is granted (i) a superpriority administrative expense claim against the estate, and (ii) replacement liens on the DIP collateral. Closing Date: The closing date will occur as promptly as practicable after entry of the interim order. The revolving DIP facility will be made available to borrower on an interim basis immediately upon entry of the interim order. Term and Final Maturity Date: The revolving loans will be repaid in full, and the revolving DIP facility will terminate, at the earliest of (i) June 5, 2009, provided, however, if borrower has presented a written agreement for a sale transaction to the agent and the lenders, which the agent and the lenders in their sole discretion find acceptable, the final maturity date may be extended upon the written consent of the agent and the lenders; (ii) if the Debtors terminate otherwise for any reason cease their efforts to implement the sale and the termination or cessation continues for 5 days; (iii) upon the request of the required lenders, an occurrence of an event of default in accordance with the terms of the DIP credit agreement, (iv) sale of all or substantially all of the Debtors' business; (v) consummation of a Plan of Reorganization or liquidation; and (vi) the case is converted to Chapter 7 of the bankruptcy Code or dismissed. Payment Terms: All principal and accrued but unpaid interest and other obligations of borrower under the revolving DIP facility will be repaid in full on or before the termination date. Interest The revolving DIP facility loans will bear interest at a per annum rate equal to the case rate plus 4.5%. Fees: * Letter of Credit Borrower agrees to pay the agent for the account of the lenders pro rata according to their revolving percentages a letter of credit fee for renewal, extension or replacement of a letter of credit at a rate per annum equal to 4.5% as in effect from time to time. * Commitment Fee Borrower agrees to pay to the agent for the account of each lender a commitment fee, for the period from the closing date to the termination date, at a rate per annum equal to 0.75% on the daily average of the lender's revolving percentage of the unused commitment amount. * Upfront Fee Borrower agrees to pay the lenders pro rata according to their revolving percentages of the revolving loans an upfront fee equal to $200,000 that will be earned at the closing and will be payable on the earlier to occur of the termination date and the final maturity date. * Additional Fee Additional fee is equal to $200,000 that will be earned only in the event that the revolving loans are not paid on or before the termination date, but if earned will be due and payable on the earlier to occur of the termination date and final maturity date. Waiver of Claims: All payments under the credit agreement and the revolving DIP facility will be made without setoff, reduction or countercalim by borrower of any kind. Treatment of Sub Debt: No cash payments will be made on the prepetition subordinated notes and borrower will propose no Plan of Reorganization that contemplates any cash payment to the prepetition subordinated creditors or any transfers to the prepetition subordinated creditors of the Debtors prepetition or postpetition assets that is prohibited by the intercreditor agreement unless and until the revolving DIP facility and prepetition term loans are each repaid in full in cash. Arrangement Fee: $75,000 to National City as agent and arranger to be paid at the final maturity date. The agreement contains certain event of default. A full-text copy of the Budget is available for free at: http://bankrupt.com/misc/MMC_Budget.pdf Additionally, the Debtors, with the assistance of AlixPartners, LLC, their restructuring advisors, have commenced a marketing and sale process for their assets. The Debtors intend to file a motion to approve bidding procedures for the sale. The Debtors believe this strategy will enable then to meet several critical objectives including allowing the ongoing operation of the Debtors' business without interruption to supplier and customer relationships. About Morton Group Headquartered in Morton, Illinois, MMC Precision Holdings Corp. -- http://www.mortongroup.com/-- and its affiliates are contract metal fabricators serving an array of Original Equipment Manufacturers. The Debtors operate five manufacturing facilities located in the Midwestern and Southeastern United States. The Debtors' customers are Caterpillar Inc., Deere & Co., JLG Industries, Inc., Hallmark Cards, Kubota Manufacturing of America and Winnebago Industries, Inc. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 22, 2009, (Bankr. D. Del. Lead Case No. 09- 10998). Paul, Hastings, Janofsky & Walker LLP represents the Debtors in their restructuring efforts. The Debtors propose to hire Paul N. Heath, Esq., at Richards, Layton & Finger PA as co- counsel, AlixPartners, LLP, as restructuring advisors, Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. The Debtors listed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. MORTON INDUSTRIAL: Proposes Executive Bonus Plan for Credit Bid --------------------------------------------------------------- Morton Industrial Group Inc. has filed with the U.S. Bankruptcy Court for the District of Delaware a request for approval of bonuses that may pay top executives almost $2.5 million, with more than $1.1 million for the chief executive officer, a Bloomberg report said. According to Bloomberg's Bill Rochelle, the Company says the program complies with bankruptcy law because it's incentive-based. Congress outlawed retention bonuses for executives of bankrupt companies in 2005. Bill Rochelle details that the five top executive and other high- level officers would split $2.47 million if more than $40 million is realized in a sale of the business. If the assets are liquidated and bring in as much as $26 million, the executives as a group see $1.26 million. The executives receive the same $1.26 million if the secured lenders buy the company using their claims rather than cash. About MMC Precision Holdings Corp. Headquartered in Morton, Illinois, MMC Precision Holdings Corp. -- http://www.mortongroup.com/-- and its affiliates are contract metal fabricators serving an array of Original Equipment Manufacturers. The Debtors operate five manufacturing facilities located in the Midwestern and Southeastern United States. The Debtors' customers are Caterpillar Inc., Deere & Co., JLG Industries, Inc., Hallmark Cards, Kubota Manufacturing of America and Winnebago Industries, Inc. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 22, 2009, (Bankr. D. Del. Lead Case No.: 09- 10998) Paul, Hastings, Janofsky & Walker LLP represents the Debtors in their restructuring efforts. The Debtors propose to hire Paul N. Heath, Esq., at Richards, Layton & Finger PA as co- counsel, AlixPartners, LLP as restructuring advisors, Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. The Debtors listed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. NATIONAL MOBILE: Wachovia to Sell Collateral at April 3 Auction --------------------------------------------------------------- Wachovia Capital Finance Corporation will sell at a public auction on April 3, 2009, at 10:00 a.m. Central Time, all of the right, title and interest of National Mobile Television, Inc., Venue Services Group, Inc., NMT Holding Corp., NMT Intermediate Holding Corporation and NMT Media Group, Inc. (collectively, the Grantors) in the collateral securing obligations owed to it by the Grantors. The collateral consists of substantially all of the Grantors' equipment, mobile broadcast units, inventory, accounts, general intangibles and other personal property. The auction will be held at the offices of Goldenberg Kohn Bell Black Rosenbloom & Moritz, Ltd., 55 E. Monroe Street, Suite 3300, in Chicago, Illinois. Wachovia says that the total amount of outstanding obligations is not less than $6,800,000, exclusive of accrued and accruing interests and other charges. The collateral will be offered and sold at the public sale, on an "as is, where is" basis. All offers must be for cash, contain no contingencies that are unsatisfactory to the Lender and, unless otherwise agreed by the Lender, be payable on the day of the public sale. Parties interested in inspecting the collateral or obtaining further detail regarding the collateral should contact Wachovia Capital Finance Corporation. NES RENTALS: Moody's Downgrades Default Rating to 'Caa3' -------------------------------------------------------- Moody's Investors Service downgraded the probability of default rating of NES Rentals Holdings, Inc. to Caa3 from Caa1 and downgraded the ratings on NES' second lien notes to Ca LGD 4, 58% from Caa2 LGD 5, 77%. The outlook has been revised to negative from stable. The Caa1 corporate family rating remains unchanged. The action follows NES' February 26, 2009 execution of a second lien credit agreement amendment that permits up to $100 million of second lien term loan to be prepaid at a discount to face value through February 26, 2010. Moody's considers the amendment a distressed exchange announcement because of NES' weak credit profile, and the significant monetary loss relative to term loan principal value that participating lenders will likely incur. The prices at which term loan prepayments are to occur will be determined by a modified auction process. Furthermore, per the amendment, prepayment proceeds will come from equity infused into NES' parent, subsequently down-streamed to NES. Although prepayments are not obligated, the amendment will become ineffective if at least $15 million is not offered for prepayment by end of April 2009, as defined. The probability of default rating downgrade reflects likelihood that discounted prepayment will occur, while the second lien term loan downgrade corresponds to the price at which the company is minimally required to prepay the first $15 million face value of term loan, which would approximate a 58% loss. Upon the first discounted second lien term loan prepayment, Moody's expects to revise the ratings to reflect the post-exchange credit profile; at that time, to denote the limited default, an LD designation would be added to the probability of default rating. In that post-exchange credit profile, probability of default and the second lien term loan ratings of Caa1 and Caa2, respectively, would be likely. The negative outlook reflects severe pressure facing construction end markets, concerns over the impact of declining used equipment prices and fleet depreciation on NES' liquidity profile, and possibility that further debt exchange transactions may be pursued. Moody's last rating action occurred January 30, 2009 when NES' corporate family rating was downgraded to Caa1 from B3. NES Rentals Holdings, Inc., based in Chicago, Illinois, is one of the largest equipment rental companies in the U.S. NEW CENTURY: Trustee Sues KPMG for Negligent Audits & Reviews ------------------------------------------------------------- Bloomberg News reports that Alan M. Jacobs, the trustee for New Century Financial Corp., has filed a lawsuit against KPMG International for allegedly failing in its role as "gatekeeper." According to Bloomberg, the trustee claimed that negligent audits and reviews by KPMG, the U.S. member firm of KPMG International, led to New Century's collapse. The lawsuit, which names both KPMG and KPMG International as defendants, seeks at least $1 billion in damages. Bloomberg quoted Steven Thomas, an attorney for Mr. Jacobs, as saying, "Once an auditing firm lacks independence, then their audits aren't worth the paper they're written on. KPMG had a duty directly to New Century and a duty directly to the public." Bloomberg relates that KPMG spokesperson Dan Ginsburg said that the company hadn't yet seen the complaint and denied any wrongdoing. Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. The Company and its affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Court confirmed the Debtors' second amended joint Chapter 11 plan on July 15, 2008. (New Century Bankruptcy News, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEWPAGE CORP: S&P Changes Outlook to Negative; Affirms 'B' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on Miamisburg, Ohio-based NewPage Corp. to negative from stable. S&P affirmed all of the company's ratings, including the 'B' corporate credit rating. "The outlook revision reflects Standard & Poor's assessment that, because of the difficult operating environment associated with the recession in the U.S., NewPage's credit measures will weaken, resulting in a tighter cushion under the company's financial covenants," said Standard & Poor's credit analyst Andy Sookram. S&P expects that, while the recent decline in input costs and benefits from cost improvement are positive, selling prices could drop over the next few quarters due to weaker demand, resulting in reduced operating margins. Under this scenario, total adjusted debt to EBITDA could increase to around 7.5x or higher by year-end 2009, from 7.0x for the same period in 2008. The ratings on NewPage reflect the company's aggressive debt leverage; participation in mature, cyclical, and highly competitive coated-paper markets; limited product and geographic diversity; and some customer concentration. The company's attractive customer base, high level of pulp integration, and good cost position that is competitive with other North American producers somewhat offset these factors. NORTEL NETWORKS: May Fetch $500 Million for Ethernet Business ------------------------------------------------------------- Nortel Networks Corp. might fetch $500 million for its business of making corporate networks, Bloomberg News reported, citing someone close to the situation said. According to Bloomberg's Bill Rochelle, bids are due this week, and may include bids from Avaya Inc. and Siemens Enterprise Communications Ltd. Nortel's Metro Ethernet Networks unit may be valued at about $300 million, a person familiar with the situation told Bloomberg. According to Bloomberg, Lazard Ltd. is handling a possible sale of Nortel's assets, and information about the Company will be made available to prospective buyers, according to another person close to the matter. Nortel is considering selling two key units, its core wireless- equipment business and a office telecom system manufacturing unit, Sarah Silver and Jeffrey McCracken of The Wall Street Journal quoted people familiar with the matter as saying in a March 12, 2009 report. Those businesses generated $6.7 billion in sales in 2008, according to the report. Entities interested in the Nortel assets include Avaya Inc. and Siemens Enterprise Communications, The Journal quoted its source as saying. The Journal added that Nortel is also entertaining discussions for a sale of its wireless voice gear unit to rivals, including Nokia Siemens Networks. A sale of Nortel's income-generating units could complicate any plans to emerge from bankruptcy, Ms. Silver and Mr. McCracken of The Journal point out. People close to the issue have said it is too early to tell if Nortel is going the "liquidation" mode. Bloomberg News noted in a separate report that Ciena Corp. is expressing interest in acquiring Nortel's Metro Ethernet Networks, the company's fiber optic unit. Nortel previously tagged the Ethernet unit for sale in September 2008, but rethought those plans when it filed for bankruptcy protection in January 2009, Bloomberg related. Layer 4-7 Business Nortel Networks obtained approval of the U.S. Bankruptcy Court for the District of Delaware to sell a portion of its Layer 4-7 application delivery business to Radware Ltd. for $17.65 million, a Bloomberg report said. Radware, as stalking horse bidder, would have been entitled to receive a break-up fee of $650,000 and reimbursement of up to $400,000 in expenses had Nortel consummated a transaction with another buyer. There were no competing bids at auction, Bloomberg's Bill Rochelle. Ernst & Young, Inc., as monitor of the proceedings commenced by Nortel Networks Corporation and its affiliates under Canada's Companies' Creditors Arrangement Act, said in its fifth monitor report on March 26, 2009, that it supports the proposed sale, saying it represents the best offer available for the business. "Despite having contacted a number of potential purchasers, there has been limited interest in the Layer 4-7 business and ultimately, no bids other than the Radware bid were submitted pursuant to the bidding procedures," Ernst & Young said. The assets included in the sale consist primarily of customer contracts, inventory, fixed assets and intellectual property related to the NNI and other U.S.-based Debtors' Layer 4-7 business, part of which they owned through their acquisition of Alteon WebSystems Inc in 2000. The Layer 4-7 business sells application delivery products and has an installed base of more than 1,000 customers. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NTK HOLDINGS: Moody's Junks Corporate Family Rating From 'B3' ------------------------------------------------------------- Moody's Investors Service has downgraded NTK Holdings and its subsidiary Nortek's corporate family rating to Caa2 from B3, and downgraded rated debt instruments as outlined below. The ratings outlook is negative. These ratings and LGD assessments have been downgraded/affected: Issuer: NTK Holdings, Inc. -- Corporate family rating downgraded to Caa2 from B3; -- Probability of default (PDR) downgraded to Caa2 from B3; -- $403 million senior discount notes due 2014, downgraded to Ca (LGD6, 90%) from Caa2 (LGD6, 94%). Issuer: Nortek, Inc. -- $750 million Senior Secured Notes, due 2013, downgraded to B3 (LGD2, 28%) from B1 (LGD3, 32%); -- $625 million 8.5% Senior Subordinated Notes due 2014, downgraded to Caa3 (LGD4, 69%) from Caa1 (LGD5, 78%). The ratings outlook is negative. The ratings downgrade reflects the anticipation that the company's revenues, operating income, and cash flow generation will continue to contract in 2009. The downgrade also considers the company's high leverage and projected debt to EBITDA of over 10x for 2009. The company's leverage metrics are unlikely to improve over the short term as free cash flow available for debt reduction is anticipated by Moody's to be negative in 2009. Demand for the company's products is anticipated to remain under pressure so long as the new home construction market and the remodeling market remain weak. Homeowners' willingness to commit to large projects is likely to remain soft so long as home equity continues to decline. Nortek sells a full range of kitchen extraction fans and also sells air quality systems for the home. The company's music systems are relatively high-end and are a discretionary luxury in Moody's view. The company's commercial air conditioning business has performed better than its residential businesses. The negative ratings outlook reflects the belief that revenue and margin pressure are likely to continue through 2009 and possibly into 2010. The company's ability to generate positive cash flow is likely to remain challenging until housing starts rebound meaningfully and discretionary spending on home improvement rebounds. The company's ability to cut costs to address the margin impact of the downturn may prove challenging given the varied products and the number of operating units. The last rating action was on May 13, 2008, when the company's CFR was affirmed and Nortek's $750 million senior secured notes, due 2013, was assigned a B1 rating. Nortek, Inc., headquartered in Providence, Rhode Island, is a leading diversified manufacturer of innovative, branded, residential and commercial ventilation, HVAC, and home technology convenience and security products. Its products include range hoods and other ventilation products, heating and air conditioning systems, indoor air quality systems, and home technology products. Revenues for the LTM period through September 27, 2008, were approximately $2.3 billion. NORTEL NETWORKS: Estimates $375MM Pensions Deficit, to Pay $4.9MM ----------------------------------------------------------------- Nortel Networks Corp. said in documents submitted to the U.S. Bankruptcy Court for the District of Delaware that its pension plans are underfunded by $375 million. Nortel is seeking approval from the Court to pay $4.9 million -- $1.2 million for April 15 and $3.7 million for July 15 -- in minimum funding contributions under their benefit pension plan. Its lawyer said that a standard termination of the pension plan would result in a significant cost to the estates as opposed to maintaining the plan. Thomas Driscoll III, Esq., at Morris Nichols Arsht & Tunnell LLP, added that since the pension plan is underfunded on a termination basis, Nortel cannot seek a standard termination unless they fund the benefit liabilities under the pension plan. Mr. Driscoll said that although the plan sponsors are currently in the process of determining how much it would cost to fully fund the benefit pension plan in the event of a termination, they estimate the deficit for funding purposes to be approximately $375 million. As of December 31, 2008, the pension plan has about 23,000 participants. Its assets are estimated to be worth $828 million. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NUVEEN INVESTMENTS: Decline in Earnings Cue Moody's Junk Rating --------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating of Nuveen Investments, Inc., to Caa1 from B2. In the same rating action, Moody's also lowered the rating of Nuveen's senior secured bank facility to B3 from B1 and lowered the rating of the company's senior unsecured notes to Caa3 from Caa1. The outlook on all the ratings is stable. The rating action concludes the review for possible downgrade that was initiated on December 12, 2008. Moody's stated that the downgrade reflects the substantial reduction in the company's earnings strength resulting from the impact of severe equity market declines and elevated net asset outflows. Moody's Vice President/Senior Credit Officer Matthew Noll stated, "Nuveen's debt has become excessive relative to Moody's expectations for the ratings in the context of the current turbulent markets. Moody's ratings incorporate the likelihood that an eventual capital restructuring or other significant remedial action will be necessary, with a modest economic loss to creditors." Based on Moody's projected 2009 EBITDA of around $360 million, Nuveen's net debt to EBITDA will be extremely high at 10x. The rating agency commented that reestablishing Nuveen's strong AUM and revenue growth, and executing an eventual sale of the company at a sufficiently high exit multiple to pay down debt, will remain serious challenges indefinitely. Refinancing options are also likely to remain very limited; thus, Moody's views a restructuring of the company's debt as probable. In spite of Moody's challenged intermediate-to long-term view of Nuveen's prospects, the company's liquidity, which included $466 million in cash and short-term investments as of December 31, 2008, remains sufficient to cover the company's approximately $230 million of senior notes due in 2010. The company's remaining $3.6 billion in loans and notes are due in 2015. The rating agency noted that Nuveen has a fair probability of managing its senior secured net debt to EBITDA covenant of 6x in 2009. Moody's also expects Nuveen to continue reducing operating costs should AUM further decline. Moody's added that Nuveen's ratings could face a further downgrade if average AUM drops to $90 billion or if the S&P 500 index level is likely to remain in the 600's for an extended period of time. A rating downgrade could also occur if quarterly EBITDA falls to below $85 million, or if the company is experiencing quarterly net outflows in excess of 2.5% of beginning of quarter AUM. Conversely, Nuveen's ratings could be upgraded if the company executed a successful restructuring of the company's debt, and if these hurdles can consistently be met: quarterly average AUM levels rise to above $140 billion; quarterly EBITDA is sustained above $125 million; net quarterly asset inflows exceed 1% of beginning of quarter AUM. These ratings were downgraded with a stable outlook: -- Nuveen Investments, Inc.: Corporate family rating downgraded to Caa1 from B2; senior secured revolver downgraded to B3 from B1; senior secured term loan downgraded to B3 from B1; senior unsecured notes downgrade to Caa3 from Caa1. -- Nuveen Investments, Inc., headquartered in Chicago, is a US- domiciled holding company whose subsidiaries provide investment management products and services to retail and institutional investors predominantly in the US. The company's assets under management were $119 billion as of December 31, 2008. The last rating action was on December 12, 2008, when Nuveen's corporate family rating was downgraded to B2 from B1 and the rating was placed on review for further possible downgrade. Moody's Corporate Family Ratings are opinions of a corporate family's ability to honor all of its financial obligations and is assigned to a corporate family as if it had a single class of debt and a single consolidated legal entity structure. NUVEEN INVESTMENTS: S&P Downgrades Counterparty Rating to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its local currency long-term counterparty credit rating on Nuveen Investments Inc. to 'B-' from 'B'. The outlook is stable. "The rating action resulted from several factors, including weakening operating cash flows, reduced financial flexibility, continued net client outflows, and a decline in assets under management amid notable market depreciation," said Standard & Poor's credit analyst Robert Hansen. S&P expects that revenue, earnings, and operating cash flows in 2009 will be less than S&P expected earlier, primarily due to persistent weakness in the capital markets and generally reduced investor confidence. However, cost reduction initiatives, which S&P views favorably, should partially mitigate revenue challenges that S&P expects in 2009. S&P believes the firm's financial flexibility has declined, pressured by the recent acquisition of Winslow Capital Management, a large-cap growth manager. In sum, S&P believes that the company's ability to refinance or repay the $250 million in senior notes, which come due in September 2010, has weakened. However, the counterparty credit rating also reflects Nuveen's strong competitive niche position, solid reputation, and generally good investment performance. PACIFIC ENERGY: Meyers Norris Penny Raises Going Concern Doubt -------------------------------------------------------------- Pacific Energy Resources Ltd. has filed its Annual Report on Form 20-F for the year ended 2008. Meyers Norris Penny LLP said that it is not possible to predict the outcome of the Company's Chapter 11 bankruptcy proceedings and, as such, realization of assets and discharge of liabilities is subject to significant uncertainty. Accordingly, substantial doubt exists as to whether the Company will be able to continue as a going concern. Further, it is not possible to predict whether the actions taken in any restructuring will result in improvements to the financial condition of the Company sufficient to allow it to continue as a going concern. Pacific Energy hasn't developed a comprehensive restructuring plan, and cannot predict the ultimate outcome of the reorganization process, or predict or quantify the potential impact on our business, financial condition or results of operations. The bankruptcy and protection proceedings provide the Company with a period of time to attempt to stabilize our operations and financial condition and develop a comprehensive restructuring plan. However, it is not possible to predict whether this period will be shortened or to predict the outcome of the proceedings whether or not the period is shortened to allow foreclosure on the Company's assets rather than implementation of a comprehensive restructuring plan. Accordingly, the realization of assets and discharge of liabilities are each subject to significant uncertainty. Therefore, substantial doubt exists as to whether Pacific Energy will be able to continue as a going concern. Pacific Energy continuation as a going concern is dependent upon, among other things, its ability to develop, obtain confirmation or approval and implement a comprehensive restructuring plan, generate sufficient cash from operations; maintain adequate cash on hand and comply with the terms of the DIP Facility or obtain sufficient other financing during the bankruptcy and protection proceedings and thereafter; resolve ongoing issues with creditors and other third parties; and attain profitability. As of December 31, 2008, the Company listed $536,370,000 in assets, $618,478,000 in liabilities, and $82,108,000 in shareholders' deficit. The Company posted $257,608,000 in net loss for the year ended December 31, 2008. The Company's Financial Statements are available at: http://ResearchArchives.com/t/s?3af6 About Pacific Energy 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., Laura Davis Jones, Esq., and Scotta Edelen McFarland, 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 of between $100 million and $500 million each. PACIFIC ETHANOL: May Have to File for Bankruptcy Protection ----------------------------------------------------------- Dale Kasler at The Sacramento Bee reports that Pacific Ethanol, Inc., said that it might have to file for bankruptcy protection. According to The Sacramento Bee, Pacific Ethanol could run out of money as early as the end of the month. Hein & Associates LLP, Pacific Ethanol's independent accounting firm, said that the Company is in default under its loan agreements and has entered into forbearance agreements with each of the lenders under which the lenders agreed to forbear from exercising their rights until April 30, 2009, absent further defaults. The Company does not currently have sufficient liquidity to meet its anticipated working capital, debt service and other liquidity needs in the very near term-term. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As a result of ethanol industry conditions that have negatively affected Pacific Ethanol's business, the Company does not currently have sufficient liquidity to meet its anticipated working capital, debt service and other liquidity needs in the very near-term. Pacific Ethanol believes that it has sufficient working capital to continue operations only until approximately April 30, 2009, at the latest unless it successfully restructures its debt, experience a significant improvement in margins, and obtain other sources of liquidity. Although various secured creditors are presently forbearing through April 30, 2009, under outstanding forbearance agreements from exercising their rights, once those forbearance periods expire or in the event of additional defaults, Pacific Ethanol will be in default to those secured creditors who collectively hold security interests in substantially all of its assets. As of March 26, 2009, Pacific Ethanol owed about $246.5 million in term loans and lines of credit associated with the construction and operation of its ethanol plants and approximately $5.3 million under its revolving credit facility. As of that date, the Company had only $4.0 million in cash and $4.7 million of additional borrowing availability under its revolving credit facility. As Pacific Ethanol continues to reduce the number of gallons of ethanol it sells and holds in inventory, working capital available to support borrowings under its revolving credit facility will reduce proportionately. Pacific Ethanol does not expect to have sufficient liquidity to meet anticipated working capital, debt service and other liquidity needs beyond April 30, 2009, at the latest unless the Company successfully restructures its debt, experience a significant improvement in margins and obtain other sources of liquidity. Based on the current spread between corn and ethanol prices, the industry is operating at or near break-even cash margins. The current spread between ethanol and corn prices cannot support the long-term viability of the U.S. ethanol industry in general. If Pacific Ethanol cannot restructure its debt and obtain sufficient liquidity in the very near term, it may need to seek to protection under the U.S. Bankruptcy Code. If it seeks protection under the U.S. Bankruptcy Code, all of its outstanding shares of capital stock could be cancelled and holders of its capital stock may not be entitled to any payment in respect of their shares. Pacific Ethanol has incurred significant losses and negative operating cash flow in the past and it will likely incur significant losses and negative operating cash flow in the foreseeable future. Continued losses and negative operating cash flow will hamper the Company's operations and prevent it from expanding its business. For the years ended December 31, 2008, 2007 and 2006, Pacific Ethanol incurred net losses of approximately $146.5 million, $14.4 million and $142,000, respectively. For the years ended December 31, 2008, and 2006, the Company incurred negative operating cash flow of $55.2 million and $8.1 million, respectively. Pacific Ethanol will likely incur significant losses and negative operating cash flow in the foreseeable future. The Company expects to rely on cash on hand, cash, if any, generated from its operations and cash, if any, generated from our future financing activities to fund all of the cash requirements of its business. Continued losses and negative operating cash flow will hamper the Company's operations and prevent it from expanding its business. Continued losses and negative operating cash flow are also likely to make Pacific Ethanol's capital raising needs more acute while limiting its ability to raise additional financing on satisfactory terms. As of March 26, 2009, Pacific Ethanol owed $246.5 million in term loans and lines of credit associated with the construction and operation of its ethanol plants and about $5.3 million under its revolving credit facility. As of that date, the Company had about $4.0 million in cash and $4.7 million of additional borrowing availability under its revolving credit facility. As of December 31, 2008, Pacific Ethanol had $616,834,000 in assets, $364,638,000 in liabilities, and $209,373,000 in stockholders' equity. About Pacific Ethanol, Inc Based in Sacramento, California, Pacific Ethanol, Inc. (NASDAQ GM: PEIX) -- http://www.pacificethanol.net-- is the largest West Coast-based marketer and producer of ethanol. Pacific Ethanol has ethanol plants in Madera and Stockton, California; Boardman, Oregon; and Burley, Idaho. Pacific Ethanol also owns a 42% interest in Front Range Energy, LLC which owns an ethanol plant in Windsor, Colorado. PHILADELPHIA AUTHORITY: S&P Raises Revenue Bond Ratings From BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services said it raised to 'BBB-' from 'BB+' its rating on Philadelphia Authority for Industrial Development, Pennsylvania's tax-exempt fixed-rate revenue bonds, series 2006, supported by Richard Allen Preparatory Charter School. The outlook is stable. "The upgrade reflects the school's maintenance of very good financial results, which provide good coverage of annual debt service," said Standard & Poor's credit analyst Corey Friedman. Other credit factors supporting the rating are adequate liquidity, improved scores on standardized tests, a well-developed waiting list, and the school's charter renewal through 2010. These factors are limited by the inherent uncertainty associated with charter renewals, given that the final maturity of the bonds exceeds the time horizon of the existing charter, full enrollment following relocation to the new facility, and an adequate working relationship with the local school district, Philadelphia Public Schools, which is the charter authorizer. The bonds are secured by a gross revenue pledge and a first deed of trust on the school's buildings. RAPCS is in western Philadelphia and serves grades five through eight. The school currently operates one facility. The charter was originally granted in 2001 and was renewed in 2005 for an additional five years. POLAROID CORP: Patriarch Wins Auction; Sale Hearing on Monday ------------------------------------------------------------- Polaroid Holding Company and Patriarch Partners LLC said the investment funds they manage have won a court-supervised auction to acquire substantially all of the assets of Polaroid Corp., including all of Polaroid's intellectual property rights and the Polaroid name and brand, following a bidding process that concluded March 31, 2009. A motion to approve Patriarch as the buyer will be heard by the bankruptcy court in St. Paul, Minnesota on April 6. "We look forward to reconnecting Polaroid with its history of innovation in photography," said Lynn Tilton, CEO of Patriarch Partners. "We intend to continue rebuilding the brand of this great American company on a worldwide scale and to re-establish Polaroid as a globally acknowledged innovator." As reported by the Troubled Company Reporter on March 12, 2009, the U.S. Bankruptcy Court for the District of Minnesota approved the auction and bidding procedures for the sale of all the properties, assets and rights of Polaroid 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. According to the TCR, Michael O'Shaughnessy, the former chief executive officer of Polaroid, asked the Court to block the sale as planned unless the Debtors agrees to pay him $7.2 million. Ritchie Capital Management, L.L.C. and related companies also argued that the sale under "fire sale" conditions will result in significantly less recovery for the bankruptcy estate than could be obtained if Polaroid's assets were sold separately, at a later date, and under better market conditions. Ritchie Capital noted that the proposed sale price is only one-tenth of the amount Petters Group Worldwide paid for Polaroid three years ago, and its assets have not significantly changed or diminished in value since then. According to Mary Jeffries, Polaroid's chief executive officer, Patriarch's plans for Polaroid build on prior work to reposition Polaroid as the leading brand in digital instant photography and selected consumer electronics categories. "Patriarch Partners has the vision and the resources to act on the myriad of opportunities to leverage this iconic brand," said Ms. Jeffries. Houlihan Lokey is acting as financial advisor to Polaroid Holding Company and Lindquist & Vennum is providing legal counsel. Jones Day is providing legal counsel to Patriarch Partners. About Polaroid With more than 70 years of visual innovation that includes the invention of instant photography, Polaroid has established itself as a trusted consumer electronics company. In addition to its flagship line of Polaroid PoGo(TM) digital instant products, Polaroid is globally recognized as a leading brand for LCD TVs, digital cameras, digital photo frames and more. About Patriarch Partners Based in New York, Patriarch Partners LLC, founded in 2000, is a distressed private equity firm, concentrating on direct investments in distressed businesses, managing funds with more than $6 billion of equity and secured loan assets with equity investments in more than 70 companies. The Patriarch funds have investments in an extensive portfolio of companies, including Rand McNally, Arizona Iced Tea and MD Helicopters. Patriarch specializes in rebuilding companies that span across a broad spectrum of consumer and industrial sectors by providing innovative financial solutions, strategic direction and operational expertise. PROSPECT MEDICAL: Moody's Reviews B3 Rating for Likely Downgrade ---------------------------------------------------------------- Moody's Investors Service placed Prospect Medical Holdings, Inc.'s ratings (first lien senior secured debt rating at B3; second lien senior secured debt rating at Caa3; and the corporate family rating at Caa1) under review for possible downgrade following the recent notice of non-monetary default from its lenders. Commenting on the review for possible downgrade, Moody's said that although Prospect's earnings have stabilized over the last year, there remains continuing uncertainty with respect to both potential future earnings volatility and the prospects for the company's overall business strategy. There is also uncertainty with respect to the financial impact of the default notice and concern that management focus may be distracted, which could jeopardize operational performance. In particular, the rating agency noted that while Prospect's Hospital Services segment is currently profitable, there are concerns with the ability of the hospital to produce consistent earnings to meet the company's debt service requirements over the intermediate- to long-term. Notably, a large percentage of the hospital segment's revenues are derived from Medicare and Medi- Cal, which are both currently facing financial pressure. In addition, Prospect's IPA Management segment is under pressure from declining HMO enrollment in Southern California, the tight credit markets and the restrictions in Prospect's renegotiated credit facility. In addition to dealing with these issues, management is now facing a litigious situation with its lenders, which may prove to be time consuming, disruptive, and very costly. Moody's stated that its review will focus on further developments with respect to Prospect remedying the default notice on its credit facility, the ultimate financial impact to the company, and the affect on operational results. The last rating action on Prospect was on June 4, 2008, when the ratings were downgraded and the outlook was changed to negative from stable. These ratings were placed under review for possible downgrade: * Prospect Medical Holdings, Inc. -- first lien senior secured debt rating at B3; second lien senior secured debt rating at Caa3; corporate family rating at Caa1. Prospect Medical Holdings, Inc. is headquartered in Los Angeles, California. For the fiscal year ending September 30, 2008, total revenue was $330 million with ending HMO enrollees of approximately 184,900. As of September 30, 2008, the company reported shareholders' equity of $72.8 million. Moody's corporate family rating is an opinion of a corporate family's ability to honor all of its financial obligations and is assigned to a corporate family as if it had a single class of debt and a single consolidated legal entity structure. PRICE TRUCKING: Blames Decline in Cement Demand for Bankruptcy -------------------------------------------------------------- Bulk cement truckers F.T. Silfies Inc. and affiliate Price Trucking Inc. filed bankruptcy petitions before the U.S. Bankruptcy Court for the District of Maryland (Baltimore). According to Bloomberg's Bill Rochelle, the Debtors blamed the decline in cement consumption for their financial troubles. F.T. Silfies Inc. and affiliate Price Trucking Inc. operate 150 tractors and almost 400 trailers. Silfies is based in Allentown, Pennsylvania, while Price has headquarters in Aberdeen, Maryland. Price Trucking (Bankr. D. Maryland, Case No. 09-15044) and F.T. Silfies, (Case No. 09-15049) filed for Chapter 11 on March 25, 2009. The Debtors tapped J. Daniel Vorsteg, Esq., at Whiteford Taylor & Preston, as counsel. Both Debtors say their assets and debts are less than $50 million. QMG HOLDINGS: Liquidity Concerns Cue S&P's Junk Corporate Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings, including the corporate credit rating on QMG Holdings Inc., and its ratings on its operating subsidiary, Questex Media Group Inc., to 'CCC+' from 'B'. S&P removed these ratings from CreditWatch, where S&P had placed them with negative implications on Dec. 22, 2008. The outlook is negative. At the same time, S&P lowered its issue-level rating on Questex Media Group's senior secured first-lien credit facilities to 'CCC+' (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 meaningful (30% to 50%) recovery in the event of a payment default, from '3'. S&P also lowered its issue-level rating on the senior secured second-lien credit facilities to 'CCC-', (two notches below the corporate credit rating) from 'CCC+'. The recovery rating is unchanged at '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. "The ratings downgrade reflects our concern about the near-term prospects for the business-to-business publishing and trade show sector, and the repercussions for Questex Media's liquidity amid tightening financial covenants," said Standard & Poor's credit analyst Tulip Lim. "We believe that Questex Media's operating performance will be weak in the near term, because the recession will cause clients to reduce advertising and marketing spending and companies to cut down on business travel," she continued. The outlook reflects Standard & Poor's concern over Questex Media's narrowing margin of compliance with financial covenants. S&P could lower the ratings if the company violates its financial covenants and S&P become concerned about its ability to obtain a waiver or amendment. Assuming debt repayment of only mandatory amortization, S&P believes this could occur if the company's last 12 months EBITDA as calculated per the covenants declines 4% to 5% in the first quarter, or 2% in the third quarter from that of year-end Dec. 31, 2008. S&P could also lower the ratings if S&P become concerned that the company cannot maintain positive discretionary cash flow or EBITDA interest coverage above 1.1x. Although less likely, an outlook revision to stable or positive would require Questex Media to increase its headroom against financial covenants, improve discretionary cash flow generation, and increase overall profitability. QTC MANAGEMENT: S&P Changes Outlook to Positive; Holds 'B' Rating ----------------------------------------------------------------- Standard & Poor's Rating Services said that it has revised the outlook on Diamond Bar, California-based QTC Management Inc. to positive from negative. All ratings, including the 'B' corporate credit rating, are affirmed. "The action follows the recent signing of an amendment that gives the company relief from a near-term significant tightening of covenants, without increasing pricing on the company's credit facility," said Standard & Poor's credit analyst Alain Pelanne. QTC's base business continues to perform within expectations, and S&P expects strong free cash flow generation to help the company stay in compliance with newly negotiated covenant levels. The rating on outsourced disability exam provider QTC continues to reflect the company's vulnerabilities tied to its narrow business focus, heavy reliance on three customers, and its aggressive financial risk profile. These factors partly are offset by its established positions with key government agencies, strong margins and cash flows, and scalable business model. QTC performs medical examinations under contract on a fee-for- service basis with about 15 different government agencies and offices, including the Department of Veterans Affairs, the Department of Labor, and the Social Security Administration, among others. The company's largest contract is with the VA, which contributes a significant portion of its revenues and, therefore, poses a significant customer concentration risk. The company's contracts remain vulnerable to turnover as a result of the bidding process, especially if the company doesn't perform to pre- negotiated levels of quality and timeliness. Heightened political and public attention to the needs of disabled veterans helps underscore the importance of QTC's role in the care received by veterans: the company assists government agencies process disability claims on a more timely basis. However, this exposes QTC to new entrants and technologies in a niche industry, and political processes that can have unforeseen impacts on government outsourcing. The company has deleveraged meaningfully since its 2005 LBO through increased earnings and debt repayment. S&P expects QTC to be leveraged at less than 4x on a lease-adjusted basis, immediately after repayments of debt associated with the recent amendment. QUESTEX MEDI: Liquidity Concerns Cue S&P to Junk Ratings -------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings, including the corporate credit rating on QMG Holdings Inc., and its ratings on its operating subsidiary, Questex Media Group Inc., to 'CCC+' from 'B'. S&P removed these ratings from CreditWatch, where S&P had placed them with negative implications on Dec. 22, 2008. The outlook is negative. At the same time, S&P lowered its issue-level rating on Questex Media Group's senior secured first-lien credit facilities to 'CCC+' (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 meaningful (30% to 50%) recovery in the event of a payment default, from '3'. S&P also lowered its issue-level rating on the senior secured second-lien credit facilities to 'CCC-', (two notches below the corporate credit rating) from 'CCC+'. The recovery rating is unchanged at '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. "The ratings downgrade reflects our concern about the near-term prospects for the business-to-business publishing and trade show sector, and the repercussions for Questex Media's liquidity amid tightening financial covenants," said Standard & Poor's credit analyst Tulip Lim. "We believe that Questex Media's operating performance will be weak in the near term, because the recession will cause clients to reduce advertising and marketing spending and companies to cut down on business travel," she continued. The outlook reflects Standard & Poor's concern over Questex Media's narrowing margin of compliance with financial covenants. S&P could lower the ratings if the company violates its financial covenants and S&P become concerned about its ability to obtain a waiver or amendment. Assuming debt repayment of only mandatory amortization, S&P believes this could occur if the company's last 12 months EBITDA as calculated per the covenants declines 4% to 5% in the first quarter, or 2% in the third quarter from that of year-end Dec. 31, 2008. S&P could also lower the ratings if S&P become concerned that the company cannot maintain positive discretionary cash flow or EBITDA interest coverage above 1.1x. Although less likely, an outlook revision to stable or positive would require Questex Media to increase its headroom against financial covenants, improve discretionary cash flow generation, and increase overall profitability. RHODES COMPANIES: Files Bare-Bones Petition in Las Vegas -------------------------------------------------------- Rhodes Cos. filed for Chapter 11 before the U.S. Bankruptcy Court for the District of Nevada on March 31, 2009. According to Bloomberg's Bill Rochelle, the petition wasn't accompanied by the motions and other papers ordinarily filed on the first day of a reorganization. As reported in yesterday's TCR, the Company has tapped Zachariah Larson, Esq., at Larson & Stephens, as counsel. In its bankruptcy petition, Rhodes Cos. said that said its assets and debt both exceed $100 million. Rhodes in its list of 20 largest unsecured creditors named Sunstate Companies Inc., as having the largest on account of a trade debt of $201,094, and GC Wallace with a trade debt of $201,000. Rhodes Cos. is a real estate developer in Las Vegas. RITCHIE CAPITAL: Patriarch Wins Polaroid Auction ------------------------------------------------ Polaroid Holding Company and Patriarch Partners LLC said the investment funds they manage have won a court-supervised auction to acquire substantially all of the assets of Polaroid Corp., including all of Polaroid's intellectual property rights and the Polaroid name and brand, following a bidding process that concluded March 31, 2009. A motion to approve Patriarch as the buyer will be heard by the bankruptcy court in St. Paul, Minnesota on April 6. "We look forward to reconnecting Polaroid with its history of innovation in photography," said Lynn Tilton, CEO of Patriarch Partners. "We intend to continue rebuilding the brand of this great American company on a worldwide scale and to re-establish Polaroid as a globally acknowledged innovator." As reported by the Troubled Company Reporter on March 12, 2009, the U.S. Bankruptcy Court for the District of Minnesota approved the auction and bidding procedures for the sale of all the properties, assets and rights of Polaroid 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. According to the TCR, Michael O'Shaughnessy, the former chief executive officer of Polaroid, asked the Court to block the sale as planned unless the Debtors agrees to pay him $7.2 million. Ritchie Capital Management, L.L.C. and related companies also argued that the sale under "fire sale" conditions will result in significantly less recovery for the bankruptcy estate than could be obtained if Polaroid's assets were sold separately, at a later date, and under better market conditions. Ritchie Capital noted that the proposed sale price is only one-tenth of the amount Petters Group Worldwide paid for Polaroid three years ago, and its assets have not significantly changed or diminished in value since then. According to Mary Jeffries, Polaroid's chief executive officer, Patriarch's plans for Polaroid build on prior work to reposition Polaroid as the leading brand in digital instant photography and selected consumer electronics categories. "Patriarch Partners has the vision and the resources to act on the myriad of opportunities to leverage this iconic brand," said Ms. Jeffries. Houlihan Lokey is acting as financial advisor to Polaroid Holding Company and Lindquist & Vennum is providing legal counsel. Jones Day is providing legal counsel to Patriarch Partners. About Polaroid With more than 70 years of visual innovation that includes the invention of instant photography, Polaroid has established itself as a trusted consumer electronics company. In addition to its flagship line of Polaroid PoGo(TM) digital instant products, Polaroid is globally recognized as a leading brand for LCD TVs, digital cameras, digital photo frames and more. About Patriarch Partners Based in New York, Patriarch Partners LLC, founded in 2000, is a distressed private equity firm, concentrating on direct investments in distressed businesses, managing funds with more than $6 billion of equity and secured loan assets with equity investments in more than 70 companies. The Patriarch funds have investments in an extensive portfolio of companies, including Rand McNally, Arizona Iced Tea and MD Helicopters. Patriarch specializes in rebuilding companies that span across a broad spectrum of consumer and industrial sectors by providing innovative financial solutions, strategic direction and operational expertise. SALANDER-O'REILLY: Proprietor Indicted for Securities Fraud ----------------------------------------------------------- According to Bloomberg's Bill Rochelle, Lawrence Salander, the proprietor of the Salander-O'Reilly Galleries LLC, was indicted yesterday by the Manhattan District Attorney on charges of grand larceny, securities fraud, scheme to defraud, forgery, criminal possession of a forged instrument, falsifying business records and perjury relating to an $88 million scam going back 13 years. The TCR reported on April 22, 2008, that Judge Cecelia Morris of the U.S. Bankruptcy Court for the Southern District of New York ordered Lawrence Salander and his wife, Julie, to surrender control of their finances to an independent trustee after the judge approved the conversion of the couple's chapter 11 case to a chapter 7 liquidation, Philip Boroff of Bloomberg News says. The chapter 7 trustee would handle the disposal of the Debtors' assets. According to the report, the Justice Department of the United States requested the case conversion in March 2008. Eric Small, Esq., counsel to the Justice Department, commented that the conversion motion is based on the belief that the Salanders were "slow to sell and quick to accumulate new debt" since they filed chapter 11 in November 2007, Bloomberg relates. Bloomberg recounted the denial of Mr. Salander's motion to be hired in relation to the auction of the gallery's artworks. The Troubled Company reported that the Debtor's unsecured creditors objected to the motion. Judge Morris said that Mr. Salander's motion and the resulting objections slowed the bankruptcy. Judge Morris also rebuked Mr. Salander's lawyer Richard Bernard, Esq., at Baker Hostetler, for filing the employment application. The motion was considered "fatally flawed." The Salanders lack the confidence from their lenders, Bloomberg quotes Lewis Wrobel, Esq., counsel to Renaissance Art Investors, as saying. Renaissance Art Investors supported the case conversion. Renaissance Art Investors also asserts interest on some 600 of the artworks in the Debtors' keeping. Douglas E. Spelfogel, Esq., at Baker & Hostetler LLP, defended the Debtors by saying a chapter 7 trustee won't be as effective in liquidating the Debtors' properties as Mr. Salander himself, Bloomberg reports. About Salander-O'Reilly Established in 1976, New York-based Salander-O'Reilly Galleries LLC -- http://www.salander.com/-- exhibits and manages fine art from renaissance to contemporary. On Nov. 1, 2007, three creditors filed an involuntary chapter 7 petition against the gallery (Bankr. S.D.N.Y. Case Number 07-13476). The petitioners, Carol F. Cohen of Two Swans Farm, Cavallon Family LP, and Richard Ellenberg, disclosed total claims of more than $5 million. Amos Alter, Esq., at Troutman Sanders LLP and John Koegel, Esq., at The Koegel Group LLP represent the petitioners. On Nov. 9, 2007, the Debtor's case was converted to a chapter 11 proceeding (Bankr. S.D.N.Y. Case No. 07-30005). Alan D. Halperin, Esq., at Halperin Battaglia Raicht, LLP, represents the gallery. Salander-O'Reilly Galleries is owned by Lawrence B. Salander and his wife, Julie D. Salander, of Millbrook, New York. The couple also has membership interests in galleries including non-debtor entities, Renaissance Art Investors and Salander Decorative Arts LLC. The couple filed for chapter 11 protection on Nov. 2, 2007 (Bankr. S.D.N.Y. Case No. 07-36735). Douglas E. Spelfogel, Esq. and Richard J. Bernard, Esq. at Baker & Hostetler LLP and Susan P. Persichilli, Esq. at Buchanan Ingersoll PC represent the Debtors in their restructuring efforts. When they filed for bankruptcy, Mr. and Mrs. Salander listed assets and debts between $50 million and $100 million. Prior to bankruptcy, Mr. Salander resigned as Salander-O'Reilly Galleries' manager and turned over the control to Triax Capital Advisors LLC, an independent turnaround firm. SAYLES PLACE HOMES: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Sayles Place Homes, Inc. 2716 Douglas Place, SE Washington, DC 20020 Tel: (202) 942-5000 Bankruptcy Case No.: 09-00241 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court District of Columbia (Washington D.C.) Company Description: Sayles Place Homes, Inc., is a cooperative with 7 buildings which includes 61 townhouses located in the Hillsdale area of Southeast Washington, DC. Debtor's Counsel: Charles A. Malloy, Esq. Arnold & Porter LLP 555 Twelfth Street, N.W. Washington, DC 20004 Tel: (202) 942-5000 Email: charles_malloy@aporter.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Wanda Glover, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/dcb09-00241.pdf SENSATA TECHNOLOGIES: Moody's Changes Default Rating to 'Caa2/LD' ----------------------------------------------------------------- Moody's Investors Service changed Sensata's Technologies B.V.'s Probability of Default Rating to Caa2/LD from Caa3 reflecting the closing of the Dutch auction tender. In a related rating action, Moody's affirmed all other ratings, including the company's Caa2 Corporate Family Rating. The Speculative Grade Liquidity rating remains SGL-3. The outlook is negative. The change in the company's PDR reflects Sensata's recent announcement of the expiration and final results of two separate Dutch auction tender offers. In the first auction Sensata accepted to purchase about $110 million of the 8% senior unsecured notes due 2014 for approximately $41 million. In the other auction Sensata accepted to purchase about EUR4.0 million of the 11.25% senior subordinated notes due 2014 and about EUR40.3 million of the 9% senior subordinated notes due 2016 collectively for approximately $10 million (equivalent). Moody's will remove the PDR's LD component after three business days. The Caa2 Corporate Family Rating reflects Moody's expectation that Sensata's credit metrics will remain highly speculative in spite of the reduction of approximately $168 million (equivalent) of balance sheet debt, representing about 7% of the company's total rated debt. The severity of the downturn in the global economy is continuing to negatively impact Sensata's sensors and controls businesses. The global automotive industry, from which the company earns about 51% of its total revenues and is the main driver of Sensata's sensors business, will likely remain significantly depressed at least through 2009. Additionally, the anemic U.S. economy is adversely impacting the telecommunications and domestic housing markets, important sources of revenues for Sensata's controls business. Sensata's SGL-3 speculative grade liquidity rating reflects Moody's belief that the company will maintain an adequate liquidity profile over the next twelve months. Operating cash flow generation should be adequate to fund the company's normal operating requirements and capital spending needs. Term loan amortization approximates $16 million per annum. Even though the company has reduced balance sheet debt, Moody's believes that Sensata's ability to meet its leverage covenant obligation, especially as the leverage covenant ratio tightens at 4Q09, remains uncertain due to the ongoing deteriorating business conditions in the company's end markets. The negative outlook reflects Moody's view that Sensata will continue to face a difficult economic environment through 2009 resulting in the company's credit metrics remaining stressed for the foreseeable future. These ratings/assessments were affected by this action: -- Corporate family rating affirmed at Caa2; -- Probability of default rating changed to Caa2/LD from Caa3; -- Senior secured credit facility affirmed at B3, but its loss given default assessment is changed to (LGD3, 31%) from (LGD2, 29%); -- $340 million (originally $450 million) senior unsecured notes due 2014 affirmed at Caa3, but its loss given default assessment is changed to (LGD5, 77%) from (LGD5, 75%); -- EUR137 million (originally EUR141 million) senior subordinate notes due 2014 affirmed at Ca (LGD6, 91%); -- EUR205 million (originally EUR245 million) senior subordinate notes due 2016 affirmed at Ca (LGD6, 91%); and, The company's speculative grade liquidity rating remains SGL-3. The last rating action was on March 5, 2009, at which time Moody's lowered the Probability of Default Rating to Caa3. Sensata Technologies B.V., incorporated under the laws of The Netherlands and headquartered in Attleboro, Massachusetts, designs and manufactures sensors and electronic controls. Sensata is a global designer, manufacturer, and marketer of customized and highly-engineered sensors and control products. Revenues for FY08 totaled about $1.4 billion. SENSATA TECHNOLOGIES: S&P Raises Corp. Credit Rating to 'CCC+' -------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Attleboro, Massachusetts-based Sensata Technologies B.V. to 'CCC+' from 'SD'. The outlook is negative. At the same time, S&P raised its issue-level rating on Sensata's subordinated debt issues to 'CCC-' (two notches lower than the 'CCC+' corporate credit rating on the company) from 'D'. The recovery rating on these securities remains at '6', indicating S&P's expectation for negligible (0% to 10%) recovery for lenders in the event of a payment default. S&P affirmed the 'B' issue- level rating on company's senior secured debt and removed the rating from CreditWatch, where it was placed with negative implications on March 3, 2009. The recovery rating on these securities remains at '1', indicating S&P's expectation for very high (90% to 100%) recovery for lenders in the event of a payment default. "The upgrade of Sensata follows the conclusion of our review of the company's new capital structure following the settlement of its below-par debt tender offer, which S&P viewed as being tantamount to default," said Standard & Poor's credit analyst Dan Picciotto. Through the tender offer the company was able to reduce the face value of debt obligations by approximately $168 million with cash. "Still, the company remains highly leveraged and end markets continue to be weak. S&P believes these factors could result in some pressure under covenants later in the year despite the company's reduced debt burden." The ratings on Sensata reflect its highly leveraged financial profile and weak business risk profile. The company's good geographic diversification and solid operating margins are more than offset by its high debt level. Sensata, formerly a division of Texas Instruments Inc., consists of two business units that manufacture highly engineered electronic sensors and controls, generating about $1.4 billion in revenue but experiencing rapid declines of late. The company's products are sold into mature, cyclical end markets that expand primarily at GDP-like rates. The company also has a significant exposure to the challenged global automotive market, which accounts for more than half of sales. However, the company does benefit from strong market positions, as it is the sole or primary source for most of its customers. S&P could lower the ratings if the company violates its covenants and appears unlikely to obtain satisfactory relief or if it fails to meet its financial obligations. S&P could also lower the ratings if the company announces another tender offer that S&P views as a distressed exchange. On the other hand, S&P could reconsider the outlook if the company appears likely to maintain adequate headroom under its covenants (which become tighter in the fourth quarter of 2009) and does not have any other liquidity challenges. SERENA SOFTWARE: S&P Affirms 'B' Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B' corporate credit rating on San Mateo, California-based Serena Software Inc. but revised the rating outlook to negative from positive. "The outlook revision reflects our view that an extended global recessionary environment could weaken financial parameters and challenge the company's ability to meet financial covenants over the next one to two years," said Standard & Poor's credit analyst Richard Siderman. Revenues in the fiscal third quarter experienced a material drop, with particular weakness in the sale of new software. "A prolonged downward trend in new software sales would, in turn, reduce the future stream of revenues from the ensuing, longer term maintenance contracts," added Mr. Siderman. SERVICE DEVELOPMENT GROUP: Voluntary Chapter 11 Case Summary ------------------------------------------------------------ Debtor: Service Development Group Inc. 1020 E. Main St., Suite N Purcellville, VA 20132-6156 dba The Grille Tel: (540) 338-2550 Bankruptcy Case No.: 09-12174 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Eastern of Virginia (Alexandria) Company Description: The debtor operates a restaurant. See http://www.thegrilleatmainstreetstation.com/ Debtor's Counsel: Spencer D. Ault, Esq. Law Office of Spencer D. Ault 13193 Mountain Road Lovettsville, VA 20180 Tel: (703) 777-7800 Fax: (540) 822-3880 Email: Spencer@Aultlawyer.com Total Assets: $100,000 Total Debts: $1,624,597 The petition was signed by John Hoyer, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/vaeb09-12174.pdf SHRIMP HUNTERS: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Shrimp Hunters, Inc. 1001 Calabash Road NW Calabash, NC 28467 Tel: (910) 579-6364 Bankruptcy Case No.: 09-02375 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Eastern of North Carolina (Wilson) Company Description: The debtor is engaged in the shellfish industry. Debtor's Counsel: James Oliver Carter, Esq. Carter & Carter, P.A. 408 Market Street Wilmington, NC 28401 Tel: (910) 763-3626 Fax: (910) 343-8966 Email: jocc1@bellsouth.net Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Thomas Rex Roberts, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nceb09-02375.pdf SOLSTICE LLC: Authorized to Borrow $1.3-Mil. From Members --------------------------------------------------------- Solstice LLC won approval from the U.S. Bankruptcy Court for the Southern District of New York to finance its Chapter 11 case with $1.3 million borrowed from some of the members of the luxury destination homes club it is operating. The Company, in its bankruptcy petition, listed $67.8 million in assets against liabilities totaling $106 million. The club has 94 members who paid refundable deposits up to $1.95 million each. Annual dues are as much as $86,000. Membership deposits represent debt of $61.6 million. The $23.6 million secured loan comes from Fortress Credit Funding IV LP. Solstice is based in San Francisco. Based in San Francisco, California, Solstice LLC and affiliates operate luxury destination homes and a yacht in the U.S., Europe and Latin American. Solstice, LLC dba Solstice Collection and its affiliates filed for Chapter 11 on March 5, 2009 (Bankr. S.D. N.Y., Case No. 09-11010). Arthur Jay Steinberg, Esq., at King & Spalding LLP, represents the Debtor. SOLSTICE LLC: Selling Luxury Yacht; April 15 Sale Hearing Set ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will consider at a hearing on April 15, 2009, at 11:00 a.m. (prevailing Eastern Time) the request of Solstice, LLC, et al., for authority to sell a Dover Motor Corp. luxury yacht, subject to higher and/or better offers. Objections, if any, to the sale must be filed with the Bankruptcy Court, so as to be received not later than 4:00 p.m. (prevailing Eastern time) on April 8, 2009. One of the Debtors' ninety-four (94) members has offered to purchase the yacht for the purchase price of $350,000, subject to the Court's approval. Pursuant to the terms of the proposed sale, the sale process will take 30 days, and during that period, other parties may tender bids. Should a new and better offer be received during the 30 day period, purchaser has a right to match the better offer. The Debtors are still soliciting bids for the yacht. Bids are due by April 8, 2009, at 4:00 p.m. (prevailing Eastern Time). Pursuant to the sale terms, if competing bids are submitted by the Bid Deadline, the Debtors will hold an auction for the yacht at the offices of the Debtor's counsel, King & Spalding LLP, 1198 Avenue of the Americas, New York, NY 10036, at 10:00 a.m. (prevailing Eastern Time) on April 13, 2009. There is no break-up fee in connection with the sale of the yacht. Fortress Credit Funding III LP and Fortress Credit Funding IV hold a holds a senior-secured lien against the yacht. Proceeds of the sale, after deducting $25,000 for the Debtors' expenses incurred in connection with the sale, will go to Fortress. Based in San Francisco, Solstice, LLC is a holding company that owns, directly or indirectly, 100% of the stock of its management company Solstice Management, LLC, and certain direct or indirect subsidiaries. The Debtors are collectively a destination club business, owning or leasing luxury destination homes in various locations in the United States, Latin America and Europe. Solstice, LLC and fourteen (14) of its affiliates filed separate petitions for Chapter 11 relief on March 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11010). Arthur Jay Steinberg, Esq. at King & Spalding LLP, represents the Debtors as counsel. Schuyler G. Carroll, Esq., at Arent Fox LLP, represents the Official Commitee of Unsecured Creditors as counsel. In its petition, Solstice, LLC, listed assets between $500,000 and $1 million, and debts between $50 million to $100 million. SONIC AUTOMOTIVE: Moody's Downgrades Corp. Family Rating to 'B2' ---------------------------------------------------------------- Moody's Investors Service downgraded the Probability of Default Rating of Sonic Automotive Holdings, Inc., to Caa3, and downgraded the Corporate Family Rating to B2. These ratings remain on review for further possible downgrade. These rating actions result from Sonic's disclosure in its recently-filed Form 10K that it had agreed to not utilize proceeds from its revolving credit facility to repay debt maturities, including the upcoming $105 million maturing in May 2009. "The lack of revolver availability for this repayment creates significant likelihood of a distressed exchange with regard to the May 2009 maturity, which Moody's would likely view as a default" stated Moody's Senior Analyst Charlie O'Shea". "This is a key driver of the Caa3 Probability of Default Rating. Given the increased risk of a distressed exchange of the $105MM senior subordinated convertible notes due May 7, 2009, and the higher expected loss that holders of these securities could incur, Moody's have lowered the rating on these securities to Caa3. In the event Sonic is able to successfully negotiate a solution with its lenders allowing it to utilize the revolver to satisfy this debt maturity, the probability of default rating would likely be upgraded." The downgrade of the corporate family rating results from Sonic's poor fourth quarter operating performance, as well as the strain on liquidity that it is presently experiencing. The B2 rating considers Sonic's weakening credit profile, balanced by its still- solid market position in the very fragmented auto retailing segment. The rating also considers Sonic's historically-favorable brand mix, with 73% of new vehicle sales coming from luxury and import brands, and its operating profit trend away from new vehicle sales. Sonic's business model, with solid parts and service and finance and insurance segments, reduces reliance on new car sales. Finally, the rating considers the strains on liquidity presently being faced as a result of the looming $105 million debt maturity. Ratings downgraded and left on review for possible downgrade include these: -- Probability of Default Rating to Caa3 from B1; -- Corporate Family Rating to B2 from B1; -- 8.625% Senior guaranteed subordinated notes due August 2013 to Caa1 from B3; -- 4.25% Senior convertible subordinated notes due November 2015 to Caa1 from B3, and -- 5.25% Senior convertible subordinated notes due May 2009 to Caa3 from B3. The most recent rating action for Sonic was the March 25, 2009 downgrade of the the corporate family and probability of default ratings to B1, with all ratings left on review for possible downgrade. Sonic Automotive, Inc., headquartered in Charlotte, North Carolina is a leading auto retailer with 122 franchises, and generates annual revenues of around $7 billion. SOLUTIA INC: Judge Beatty Awards Attys. Fees for PI Claimants ------------------------------------------------------------- According to Bloomberg's Bill Rochelle, Judge Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York awarded more than $280,000 to lawyers for personal injury claimants for performing work that the lawyers for the bankrupt company, Solutia Inc., "were unwilling to perform." According to Bill Rochelle, bankruptcy has a little-used provision allowing an individual creditor to recover its attorneys' fees from a reorganizing company by showing it made a "substantial contribution" in the Chapter 11 case. Judge Beatty, according to the report, lauded the claimants' lawyers for writing provisions in the Chapter 11 plan clearing up the treatment of tort victims whose claims were to be unaffected by the bankruptcy. She said the original draft of the plan by Solutia's lawyers "was inadequate." Judge Beatty, Mr. Rochelle adds, ruled that the lawyer for the tort claimants were entitled to payment of their fees from Solutia because they benefited the holders of thousands of other claims, not just their own clients. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. "The downgrade reflects our expectations for a weaker operating performance in 2009 relative to 2008, as continued global economic weakness puts pressure on Solutia's already challenged automotive- and housing-related end-markets," said Standard & Poor's credit analyst Paul Kurias. SOLUTIA INC: To Sell Nylon Biz to SK Capital for $54MM Cash ----------------------------------------------------------- Solutia Inc., entered into a Transaction Agreement on March 31, 2009, with NyCo LLC, a direct, wholly-owned subsidiary of Solutia; SK Capital Partners II, L.P.; and SK Titan Holdings LLC, a direct, wholly-owned subsidiary of SK Capital. Solutia will sell to SK Titan a majority interest in Newco, which will hold substantially all of the assets that constitute Solutia's nylon business. Solutia will contribute to Newco the assets primarily related to the Nylon Business. Newco will assume all of the liabilities of Solutia related to the Nylon Business as of the closing, with limited exceptions. Solutia will thereafter contribute all of the equity interests of Newco to NyCo Holdings, Inc. -- a Delaware corporation to be formed by Solutia and SK Capital prior to the closing to own Newco -- in exchange for $50 million of cash and 2% of the stock of Holdings. SK Titan will contribute $50 million of cash to Holdings in exchange for 98% of the stock of Holdings. Solutia will also receive an additional $4 million of cash in four annual installments beginning on September 1, 2011. The Transaction Agreement includes a customary working capital adjustment. The closing of the transaction is subject to customary conditions. In addition, the closing is subject to SK Titan's receipt of $75 million of debt financing and SK Titan's of the equity financing proceeds from SK Capital. SK Titan has provided a non-binding letter of intent from a senior lender to arrange a $100 million asset-backed loan facility and an equity commitment from SK Capital for $50 million. The Transaction Agreement includes customary representations, warranties and covenants of Solutia, Newco, SK Capital and SK Titan. From the date of the Transaction Agreement until the closing or the termination of the Transaction Agreement, Solutia will not solicit interest in alternative acquisition proposals for the Nylon Business. However, Solutia may take any action, including having negotiations and discussions, providing confidential information and entering agreements, in response to unsolicited alternative acquisition proposals -- including renewals of prior acquisition proposals. Solutia may terminate the Transaction Agreement to accept an unsolicited alternative acquisition proposal upon the payment of a $5 million fee to SK Titan. The Transaction Agreement includes customary termination provisions for both Solutia and SK Capital, including that the Transaction Agreement may be terminated by Solutia or SK Capital if the closing has not occurred by June 30, 2009. The Transaction Agreement provides that, in connection with the termination of the Transaction Agreement under specified circumstances, a party may be required to pay the other party a termination fee of $5 million. The maximum liability of Solutia or SK Capital under the Transaction Agreement prior to the closing is $5 million (whether for the payment of the termination fee that may become payable, for breach or otherwise). The Transaction Agreement does not permit specific enforcement of the obligation to close the transaction. "Following this divestiture, Solutia will have completed its transformation into a pure-play performance materials and specialty chemicals company, with a portfolio of high-value products with world-leading positions," said Jeffry N. Quinn, chairman, president, and CEO of Solutia Inc. "Solutia is well positioned to generate consistent financial returns and to further develop and enhance its portfolio in the specialty chemicals sector." James M. Sullivan, executive vice president and CFO, Solutia Inc., added, "Despite the challenging global economic conditions, we are pleased to have reached an agreement with SK Capital that provides fair value to Solutia stakeholders and advances the overall strategic positioning of the company." Mr. Quinn added, "The nylon sale is a positive step toward securing Solutia's future. We recognize that we are operating in an unprecedented economic environment and we remain focused on cost reduction, operational efficiency, cash flow generation, liquidity, and covenant compliance." The nylon business sale includes the business' management and employees, as well as all five of its manufacturing plants: Alvin, Texas (Chocolate Bayou); Decatur, Alabama; Greenwood, South Carolina; Pensacola, Florida; and Foley, Alabama. "We believe this transaction positions the nylon business to achieve its full potential," added Mr. Quinn. "The business was the core of Solutia for many years and before that was the centerpiece of the former Monsanto's chemical business for decades. The combination of the highly dedicated men and women of the business along with the experienced SK Capital team marks the beginning of a new chapter for the business." The deal is expected to close in the second quarter 2009. HSBC Securities (USA) Inc. advised Solutia on the transaction. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (NYSE: SOA) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. Solutia was represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC was the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represented the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provided the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., was represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. Solutia's $2.05 billion exit financing facility was funded by Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. The exit financing is being used to pay certain creditors, and for ongoing operations. Bankruptcy Creditors' Service, Inc., publishes Solutia Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Solutia Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on March 5, 2009, Standard & Poor's Ratings Services said it lowered its corporate credit rating on Solutia Inc. to 'B' from 'B+', and placed the ratings on CreditWatch with negative implications. At the same time, Standard & Poor's lowered its rating on the company's $1.2 billion senior secured term loan facility to 'B' from 'B+', and revised its recovery rating on the term loan to '4', indicating average recovery (30%- 50%) of principal in the event of a default, from '3'. "The downgrade reflects our expectations for a weaker operating performance in 2009 relative to 2008, as continued global economic weakness puts pressure on Solutia's already challenged automotive- and housing-related end-markets," said Standard & Poor's credit analyst Paul Kurias. SPIRIT FINANCE: Challenge Liquidity Cues Moody's Junk Rating ------------------------------------------------------------ Moody's Investors Service downgraded the ratings of Spirit Finance Corporation: corporate family rating to Caa1 from B2 and the rating of the Senior Secured Term Loan to Ca from B3. The ratings remain on review for possible downgrade. The Senior Secured Term Loan is secured by a pledge of subsidiary stock. This rating action reflects Spirit's challenged liquidity due to the near-term maturity of its warehouse line and the on-going sales of assets to repay outstanding amounts. Moody's believes these asset sales in the current market environment to be dilutive and anticipates additional pressure on Spirit's cash flows and coverage measures as a result. In addition, Moody's is concerned about Spirit's ability to remain in compliance with its covenants under the $850 million Senior Secured Term Loan rated by Moody's. Also, Moody's Investors Service anticipates Spirit's portfolio performance to be increasingly pressured due to the overall recessionary economic environment. In particular, Moody's believes that the retail and restaurant segments in which Spirit focuses its investments are likely to be disproportionately affected as a result of their dependence on consumer spending. These concerns are counterbalanced by Spirit's long-term, triple- net leases with well-laddered expirations, as well as its master lease structures. Moody's also acknowledges that Spirit's debt maturities over the near-term are modest. In its review Moody's will focus on Spirit's liquidity and covenant compliance, as well as the rate of weakening of its portfolio performance in the deteriorating current market conditions. The rating would likely be stabilized once Moody's is comfortable with Spirit's ability to meet all of its covenants under the term loan. Adequate liquidity would also be key for the stable outlook, including the completion of asset sales and final payoff of the warehouse facility. A stable outlook would also be predicated on a moderate level of rent losses due to tenant bankruptcies. Downward rating movement would occur due to a failure to pay off remaining amounts under the warehouse line, inability to address potential covenant violations or other breaches of the Senior Secured Term Loan, as well as any other liquidity challenges. These ratings were downgraded and remain on review for possible downgrade: * Spirit Finance Corporation -- corporate family rating to Caa1, from B2; Senior Secured Term Loan to Ca, from B3. Moody's last rating action with respect to Spirit was on December 19, 2008, when the agency downgraded Spirit's corporate family rating to B2 from B1 and Senior Secured Term Loan rating to B3 from B2 and placed the ratings on review for possible downgrade. Spirit Finance Corporation, headquartered in Scottsdale, Arizona, is a REIT that acquires single-tenant, operationally essential real estate throughout the United States to be leased on a long- term, triple-net basis to retail, distribution and service- oriented companies. STANDARD MOTOR: Offer to Replace Old Debentures Expires April 17 ---------------------------------------------------------------- Standard Motor Products, Inc.'s exchange offer for up to a maximum of $20,000,000 aggregate principal amount of its outstanding 6_% Convertible Subordinated Debentures due 2009 expires April 17. SMP is offering to exchange $1,000 in principal amount of 15% Convertible Subordinated Debentures due 2011 for each $1,000 in principal amount of its Old Debentures accepted for exchange. If more than $20,000,000 aggregate principal amount of Old Debentures are tendered, all tenders will be accepted on a pro rata basis. As of March 20, 2009, $44.9 million aggregate principal amount of the Old Debentures was outstanding. The New Debentures will be substantially the same as the Old Debentures, except that, as described in the Company's Offer to Exchange, the New Debentures will have, among other features, a higher interest rate, lower conversion price and extended maturity date. About Standard Motor Standard Motor Products, Inc. (NYSE: SMP) is an independent manufacturer, distributor and marketer of replacement parts for motor vehicles in the automotive aftermarket industry. The Company operates in two segments: Engine Management Segment, which manufactures ignition and emission parts, ignition wires, battery cables and fuel system parts and Temperature Control Segment, which manufactures and remanufactures air conditioning compressors, air conditioning and heating parts, engine cooling system parts, power window accessories, and windshield washer system parts. Standard Motor Products also sells its products in Europe through its European Segment. The Company distributes parts under its own brand names, such as Standard, ACi, BWD, Hayden and Four Seasons, and through private labels, such as CARQUEST and NAPA Echlin. As reported by the TCR on March 27, 2009, Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Standard Motor to 'CC' from 'CCC+' and lowered the ratings on the company's various debt issues. The outlook is negative. "Under our criteria, S&P views the exchange as being made by a company under substantial financial pressure and offering investors less than the original promise -- in this case, when the new debentures' maturities extend beyond the original maturities," said Standard & Poor's credit analyst Lawrence Orlowski, referring to the proposed offering to exchange $1,000 principal of its 15% convertible subordinated debentures due 2011 for each $1,000 principal amount of its outstanding 6-3/4% convertible subordinated debentures due July 2009, up to a maximum of $20 million aggregate principal amount. On the same day, Moody's Investors Service lowered Standard Motor's Probability of Default rating to Ca from Caa1 in light of the debt exchange offer announcement. STAR INTERNATIONAL: S&P Raises Ratings on Certificates From 'BB+' ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on Star International Academy, Michigan's certificates of participation two notches to 'BBB' from 'BB+' based on the academy's continued strong financial performance that includes good annual debt service coverage and very strong liquidity. The outlook is stable. Other rating factors include the school's history of growing enrollment, bolstered by a large waiting list; strong financial position, coupled with strong liquidity; good relationship with Oakland University, the charter authorizer; and two successful charter renewals with a current charter that expires in 2012. These strengths are tempered, in part, by the limit on the school's revenue pledge to pay debt service at 20% of per pupil revenues, as well as a projected use of 16%-17% of state aid over the next five years to cover debt service, limiting operating flexibility; an additional layer of complexity since the feeder school's charter is authorized by a different organization; and the inherent uncertainty associated with charter renewals since the bonds' final maturity exceeds the existing charter's time horizon. "We believe student enrollment will be sufficient to generate satisfactory per pupil revenues to provide good debt service coverage," said Standard & Poor's credit analyst Linda Merus. "We also believe that any future projects of the academy will not place pressure on its financial operations." In Standard & Poor's view, Star's reserve position is good. As of fiscal year-end June 30, 2008, the academy had $13.5 million of reserves, or a very strong 156% of operating expenditures. Reserves have increased in previous years due mostly to an increase in students since enrollment drives state funding. Star has been able to maintain manageable operating expenditures for the additional students. Reserves should decrease slightly because the school plans to use $3.7 million to fund the construction of an athletic facility. Star had a net cash position of $13 million, or 549 days' unrestricted cash on hand. The debt carrying charge was 14.3% of the general fund budget in fiscal 2008. STATION CASINOS: Posts $3.19BB Net Loss in Fourth Quarter 2008 -------------------------------------------------------------- Station Casinos, Inc., has released the results of its operations for the fourth quarter ended December 31, 2008. Results of Operations The Company's net revenues for the fourth quarter ended December 31, 2008, were approximately $289.8 million, a decrease of 19% compared to the prior year's fourth quarter. The Company reported Adjusted EBITDA for the quarter of $97.6 million, a decrease of 26% compared to the prior year's fourth quarter. For the fourth quarter, the Company reported a net loss of $3.19 billion as compared to a net loss of $437.4 million in the prior year's fourth quarter. During the fourth quarter, the Company incurred $3.39 billion in write-downs and other charges, of which $3.34 billion related to non-cash impairment charges to write down certain portions of our goodwill, intangible assets, investments in joint ventures and land held for development to their fair value, $44.6 million related to the write-off of certain development project costs, $3.3 million related to loss on asset disposals and $3.7 million for cancelled debt offering fees. The $3.34 billion non-cash impairment charge is the result of lower valuation of assets due to decreases in projected cash flows, decreased valuation multiples for gaming assets due to the current market conditions and higher discount rates resulting from turmoil in the credit markets. In addition, the Company incurred $1.3 million in costs to develop new gaming opportunities, $3.5 million of expense related to equity-based awards, $6.4 million of preopening expenses, $3.1 million in lease termination costs and $2.0 million in severance expense and other non-recurring costs. The Company's fourth quarter earnings from its Green Valley Ranch joint venture were $5.8 million, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the fourth quarter, Green Valley Ranch generated Adjusted EBITDA before management fees of $15.8 million, a decrease of 45% compared to the same period in the prior year. Green Valley Ranch reported a net loss of $23.2 million for the fourth quarter as compared to net income of $7.0 million in the same period in the prior year. Las Vegas Market Results For the fourth quarter, net revenues from the Major Las Vegas Operations, excluding Green Valley Ranch, were $262.3 million, a 20% decrease compared to the prior year's fourth quarter, while Adjusted EBITDA from those operations decreased 8% to $81.8 million from $89.3 million in the same period in the prior year. The Major Las Vegas Operations reported a net loss of $1.22 billion for the fourth quarter as compared to a net loss of $1.2 million in the same period in the prior year. Balance Sheet and Capital Expenditures Long-term debt was $5.78 billion as of December 31, 2008. Total capital expenditures were $40.0 million for the fourth quarter which consisted primarily of maintenance capital purchases, other projects and land. Equity contributions to joint ventures during the fourth quarter were $0.7 million. Restructuring Plan The Company is in discussions regarding a restructuring with the lenders under its credit facility, CMBS facility and land loan and the holders of its senior and senior subordinated notes and are soliciting ballots in favor of a plan or reorganization. Aliante Station On November 11, 2008, Station Casinos opened Aliante Station Casino + Hotel, a hotel and casino located in the Aliante master- planned community in North Las Vegas, Nevada. The Company developed Aliante Station on a 40-acre site on the northeast corner of Interstate 215 and Aliante Parkway, which was contributed by an affiliate of the Greenspun Corporation for a 50% ownership in the joint venture. Station Casinos is the managing partner of Aliante Station and will receive a management fee for its services of 2% of the property's revenues and approximately 5% of EBITDA. About Station Casinos Station Casinos, Inc. is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. * * * As reported by the Troubled Company Reporter on March 19, 2009, Station Casinos Inc. said that it will file for bankruptcy protection on or before April 15. The TCR reported on March 24, 2009, that Standard & Poor's Ratings Services said that it lowered its issue-level rating on Las Vegas- based Station Casinos Inc.'s 6.625% senior subordinated notes to 'D' from 'C'. According to the TCR on February 24, Moody's Investors Service said Station Casinos's ratings are not affected by the announcement that it failed to make a February 15, 2009 scheduled interest payment on its 7.75% senior notes due 2016. Standard & Poor's Ratings Services lowered its issue-level rating on Station Casinos' 7.75% senior notes to 'D' from 'CC'. The rating action reflects the missed February 15, 2009 interest payment on the notes. STORABLES INC: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------- Laura Gunderson at The Oregonian reports that Storables Inc. said that it has filed for Chapter 11 bankruptcy protection. According to The Oregonian, Storables President Dodd Fischer said that the Company has closed its store in Scottsdale, Arizona, but will keep these locations open: -- two in the Portland area, -- three in Washington, -- one in Edina, Minnesota, and -- one in San Jose, California. Storables, says The Oregonian, will also continue to operate its Web site. Storables will honor gift cards and returns, the report states, citing Mr. Fischer. The Oregonian relates that Storables said that its sales dropped significantly in the last half of 2008, corresponding with a series of rent increases it couldn't renegotiate. Citing Mr. Fischer, The Oregonian states that the Scottsdale store was closed because the landlord wouldn't negotiate the lease. Mr. Fischer said that he filed for bankruptcy "to reject one lease immediately and to continue to restructure its operations," The Oregonian reports. According to the report, Mr. Fischer expects to file a plan to pay creditors within two months. Portland-based Storables Inc. is a 27-year-old retailer That specializes in home and office organization products. SUN-TIMES MEDIA: Receives Approval of All First-Day Motions ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has approved first-day motions in Sun-Times Media Group Inc.'s Chapter 11 cases. The approval enables Sun-Times Media Group and its newspapers and their associated Web sites to continue normal business operations without interruption, including the payment of wages and benefits, subscriber and advertiser programs, and cash management matters. "We are pleased with the court's prompt approval of our 'first day motions', which enables us to continue business as usual for our valued employees, readers, advertisers and the many communities we serve," said Jeremy L. Halbreich, Chairman of Board and Interim Chief Executive Officer of Sun-Times Media Group. "Today's approval allows us to move forward with our previously announced plans to strengthen our operations and explore new investment and the sale of assets." Sun-Times Media Group's case has been assigned #09-11092-CSS before the Honorable Christopher S. Sontchi. According to The Associated Press, Sun-Times Media can already pay workers and vendors and use its existing cash management system. Lawyers for Sun-Times Media said that the Company's Chapter 11 bankruptcy filing could result in either a restructuring or a sale, The AP states. Sun-Times Media Group, Inc. (Pink Sheets:SUTM) -- http://www.thesuntimesgroup.com/-- owns media properties including the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities across Chicago. The Company and its affiliates conduct business as a single operating segment which is concentrated in the publishing, printing, and distribution of newspapers in greater Chicago, Illinois, metropolitan area and the operation of various related Web sites. The Company also has affiliates in Canada, the United Kingdom, and Burma. Sun-Times Media's balance sheet at Sept. 30, 2008, showed total assets of $479.9 million, total liabilities of $801.7 million, resulting in a stockholders' deficit of roughly $321.8 million. The Company and its affiliates filed for Chapter 11 bankruptcy protection on March 31, 2009 (Bankr. D. Delaware Case No. 09- 11092). James H.M. Sprayregan, P.C., James A. Stempel, Esq., David A. Agay, Esq., and Sarah H. Seewer, Esq., at Kirkland & Ellis LLP assist the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claims agent. As of November 7, 2008, the Debtors listed $479,000,000 in assets and $801,000,000 in debts. TAIPEI FUBON: Will Commence Liquidation of New York Agency ---------------------------------------------------------- Taipei Fubon Commercial Bank earlier disclosed that on or about April 1, 2009, it will commence the voluntary liquidation of its New York Agency located at 100 Wall Street, 14th Floor, New York, NY 10005. Upon completion thereof, all business related thereto will be conducted from their Los Angeles Office. Customers and creditors of the Taipei Fubon Commercial Bank may direct their inquiries with respect to the winding-up of the New York Agency to: Michael Tan Tel: (212) 968-9876 TEXAS PUBLIC: Fitch Downgrades Rating on $99 Mil. Bonds to 'BB+' ---------------------------------------------------------------- Fitch Ratings has downgraded to 'BB+' from 'BBB' its rating on approximately $99 million of revenue financing system bonds issued by the Texas Public Finance Authority on behalf of Texas Southern University (TSU, or the university). The bonds are secured by a pledge of all legally available revenues and funds balances of TSU, excluding state-appropriated funds and restricted funds. The rating has been removed from Rating Watch Negative. The Rating Outlook is Negative. The rating downgrade reflects the impact that TSU's historically lax governance and management structure has had on its credit profile. Although a new management team has recently been installed, TSU's financial metrics have weakened materially over the past several years, with student demand, measured by both enrollment and applications, badly damaged by the loss of its Southern Association of Colleges and Universities accreditation in fiscal 2007, and its high cost of attendance compared to other public universities within the state. The Negative Outlook indicates that additional negative rating action could be taken should the new management team fail to rebuild financial integrity, stabilize financial performance, and rebuild enrollment. TSU's 'BB+' rating incorporates the university's aforementioned credit pressures as well as the university's fairly high debt burden. Offsetting these concerns are a track record of strong operating and capital support from the 'AA' rated state of Texas (the state); operating performance which has historically been at or above the break-even level; and adequate, though pressured, liquidity which provides TSU a margin of safety to address its various challenges. TSU lost its accreditation in fiscal 2007 as a result of the removal of its Board of Regents by the governor. The university recently completed the reaccreditation process and expects to receive a response from SACS during the first quarter of 2010. As a result of the accreditation loss, the university suffered severe declines in enrollment, beginning fall 2006, which further compounded already weak selectivity and demand metrics. TSU's fall 2008 FTE (full-time equivalent) enrollment of 7,820 represented a 23.6% decline from fall 2004 FTEs of 10,240. Although TSU maintained an "open door" enrollment policy in the past, the university's new president established enrollment standards in 2008 and student quality is expected to increase. Despite an improved, but still high, acceptance rate of 82.3% in fall 2008, the university's matriculation rate was a weak 20.5%. TSU is in the process of implementing a number of recruiting strategies, including the creation of an academic village, and working with high schools and community colleges. TSU is reliant upon continuing state support to rebuild its financial operations, restore liquidity, and fund capital needs. State appropriations represented 46.1% of total fiscal 2008 revenues. Fitch considers the state's ability and willingness to maintain funding to TSU essential to its ability to generate break-even to positive operating margins. Despite the track record of state support, the university's liquidity has declined steadily since fiscal 2004, with available funds, or total cash and investments (less permanently restricted net assets) equaling $43.5 million for fiscal 2008, representing 25.7% of operating expenses and 19.8% of total long-term obligations. As of Jan. 31, 2009, TSU's liquidity was further reduced as a result of declines in cash and investment balances. TSU has a high debt burden, with fiscal 2008 debt service representing 10.9% of 2008 operating revenues. In addition to the outstanding revenue financing system bonds, the university's total long-term debt (approximately $219.5 million) includes off-balance-sheet financings for parking and student housing ($58.2 million), litigation liabilities ($23.2 million), capital leases and notes payable. As management addresses the university's deferred maintenance and revitalizes TSU's facilities and campus services, Fitch expects TSU to balance the financing of its capital needs with available resources, including those provided by the state. Established in 1947, TSU is a public four-year liberal arts institution and is the second-largest, single-campus African American university in the country. TSU's 145-acre campus is located approximately three miles from downtown Houston. THOENE SALES: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Thoene Sales Co., Inc. P.O. Box 69 Walburg, TX 78673 Tel: (512) 930-1941 Fax: (512) 930-1973 E-Mail: thoene@io.com Bankruptcy Case No.: 09-10694 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Western District of Texas (Austin) Company Description: The debtor owns and operates vending machines. See http://www.thoenevending.com/ Debtor's Counsel: Lee Norton Bain 120 West 8th St. Georgetown, TX 78626 Tel: (512) 863-2813 Fax: (512) 869-5090 Email: leebain@leebainlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Charles A. Thoene, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/txwb09-10694.pdf THORNBURG MORTGAGE: S&P Changes Counterparty Credit Rating to 'D' ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it changed its long- term counterparty credit rating on Thornburg Mortgage Inc. to 'D' from 'CC'. In addition, S&P changed the issue rating on Thornburg's senior notes to 'D' from 'CC'. "This rating change follows Thornburg's announcement that it expects to file for Chapter 11 bankruptcy protection, and will not be able to make its March 31, 2009, interest payment on its senior subordinated notes," said Standard & Poor's credit analyst Adom Rosengarten. TKG ENTERPRISES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: TKG Enterprises, L.L.C. 30 W Silverdome Industrial Park Pontiac, MI 48340 Bankruptcy Case No.: 09-48876 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Debtor's Counsel: Charles D. Bullock, Esq. Stevenson & Bullock, P.L.C. 29200 Southfield Rd., Suite 210 Southfield, MI 48076 Tel: (248) 423-8200 Fax: (248) 423-8201 Email: cbullock@gatecom.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Kimberly Spencer, authorized representative of the company. A list of the Debtor's largest unsecured creditors is available for free at: http://bankrupt.com/misc/mieb09-48876.pdf TROPICANA ENTERTAINMENT: Begins Solicitation of Votes on Plans -------------------------------------------------------------- Tropicana Entertainment LLC and its affiliates have begun the solicitation of creditors' support for their proposed Chapter 11 plans. Tropicana said March 24 that its proposed bankruptcy-exit plans are supported by its official committee of unsecured creditors and lenders holding all of the claims for borrowed money. The solicitation packages delivered to parties entitled to vote on the Plan include a letter from the Committee urging voters to accept the plans developed by the company's new Board and management team. The plans of reorganization, which are the result of a process that began when Tropicana filed for protection from its creditors a year ago, generally call for secured debt to be converted to common stock and for general unsecured debt to be discharged in exchange for warrants, interests in a litigation trust and cash for certain creditors. The plans also cancel all the equity interests of former owner William J. Yung, III, who will not hold any positions with the company. Creditors who are allowed to vote have until April 17, 2009 to submit their ballots. If creditors vote to accept the plans and the Bankruptcy Court finds that they meet all statutory requirements at confirmation hearings scheduled to begin April 27, 2009, Tropicana hopes to emerge from Chapter 11 soon thereafter. In its letter to creditors, the Committee wrote that its support is the result of "vigorous negotiations" among Tropicana, the secured lenders and the Committee. The letter asserts that the Committee obtained what "it believes is improved treatment for all classes of general unsecured claims compared with treatment proposed in previously-filed versions." "Due to the facts and circumstances of the [Tropicana] cases, in particular, the litigation risk and uncertainty associated with challenging valuation and confirmation...the Committee recommends that general unsecured creditors vote to accept the [current] plan," the letter continued. "Understanding that the backdrop for this effort has been the nation's continuing financial crisis, we commend our lenders and the Committee for engaging in a highly productive negotiation," said Tropicana CEO Scott C. Butera. "Our plan is stronger for these efforts because we have been able to take into account the interests of all the company's key stakeholders. "Our employees have earned our highest respect," Butera said. "Throughout the restructuring process, they have been enthusiastic and extremely loyal. Now, with renewed regulatory and community relationships, stronger employee relations, and better overall business systems in place, we feel we have the resources necessary to operate in the highly competitive hospitality and gaming industry." As reported by the TCR on March 30, 2009, Tropicana Entertainment LLC and 26 other debtors -- the OpCo Debtors -- and Tropicana Las Vegas Holdings, LLC, and six debtor affiliates -- the LandCo Debtors -- presented to the U.S. Bankruptcy Court for the District of Delaware additional modifications to their First Amended Chapter 11 Plan of Reorganizations and accompanying Disclosure Statements dated March 20, 2009. Among other things, both Debtor groups made additional disclosures with respect to intellectual property rights. The OpCo Amended Plan also includes a note that the Official Committee of Unsecured Creditors believes that the Plan is in the best interests of the general unsecured creditors and recommends those creditors to vote to accept the Plan. The LandCo Amended Plan included additional disclosure of a "Working Capital Facility" to be provided by Wells Fargo Foothill and certain other LandCo Lenders for the extension of a capital loan to New LandCo of up to $15 million on terms acceptable to both parties. It also provides that holders of allowed Class 4 Claims and allowed Class 6 Claims will receive a settlement payment, which consists of a cash payment of an amount equal to the lesser of (1) the aggregate amount of each allowed Class 4 and Class 6 Claims, or (2) $400,000 in the aggregate. The LandCo Debtors also disclosed an increase in the projected recovery of certain classes of Claims, which include: Class Description Treatment of Claim; Recovery ----- ----------- ---------------------------- 4 LandCo General Pro rata share of the Unsecured Claims Litigation Trust Proceeds and Settlement Payment Est. Recovery: 1.1% to 12.3% Est. Amount: $3,200,000 to $9,400,000 6 Insider Claims In Cash, the pro rata share of the Litigation Trust Proceeds and Settlement Payment Est. Recovery: Less than 1.1% Est. Amount: $28,200,000 Full-text copies of the blacklined versions of the March 20 Plan Modifications are available at no charge at: http://bankrupt.com/misc/Tropi_Blacklined1stAmOpCoPlan_Mar20.pdf http://bankrupt.com/misc/Tropi_BlacklinedDS1stAmOpCoPlan_Mar20.pdf http://bankrupt.com/misc/Tropi_Blacklined1stAmLandCoPlan_Mar20.pdf http://bankrupt.com/misc/Tropi_BlacklinedDS1stAmLandCoPlan_Mar20.p df As reported by the Troubled Company Reporter on March 9, 2009, the Court has approved both Debtor groups' disclosure statements. Tropicana has begun distributing the ballots, which are accompanied by a letter of support from the unsecured creditors committee. Judge Kevin Carey has set this timeline for each of the OpCo and LandCo Plans: -- March 10 as the record date for the purpose of determining claims that are entitled to receive solicitation packages. -- April 17, as the voting deadline for the Plan. -- April 20 as the deadline for filing objections to the Plan. -- April 27, 2009 at 10:00 a.m. as the first day of the confirmation hearing. According to the LandCo Disclosure Statement, the LandCo Plan originally provided for 0% to 12.3% recovery by unsecured creditors, the cancellation of existing stock and zero recovery for stockholders. Holders of the LandCo Credit Facility Claims will receive full recovery for the first $358,000,000 to $378,000,000, but zero recovery for a deficiency claim of $65 million to $85 million. A full-text copy of the LandCo Disclosure Statement, as first amended, is available at http://researcharchives.com/t/s?3a25 For the OpCo Plan, unsecured claims totaling up to $330,200,000 will receive less than 1% recovery, and also the cancellation of all equity interests. Holders of the OpCo Credit Facility claims aggregating $552 million to $707 million will receive full recovery. A copy of the Opco Disclosure Statement, as first amended, is available at http://researcharchives.com/t/s?3a24 In its letter to creditors, the Committee wrote that its support is the result of "vigorous negotiations" among Tropicana, the secured lenders and the Committee. The letter asserts that the Committee obtained what "it believes is improved treatment for all classes of general unsecured claims compared with treatment proposed in previously-filed versions." "Due to the facts and circumstances of the [Tropicana] cases, in particular, the litigation risk and uncertainty associated with challenging valuation and confirmation . . . the Committee recommends that general unsecured creditors vote to accept the [current] plan," the letter continued. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENTERTAINMENT: Lenders Send $200MM Credit Bid for Casino ------------------------------------------------------------------ Setting the opening, or "stalking horse," bid in a court- supervised auction, lenders to the Tropicana Atlantic City Casino and Resort offered to buy the property in exchange for the cancellation of at least $200 million in debt, Bloomberg Greg Chang reports. The state-appointed trustee and conservator of the property Gary Stein said the auction may generate multiple bids, according to the report. Bloomberg earlier reported that New Jersey Casino Control Commission's sale of Tropicana Entertainment LLC's affiliated casino in Atlantic City has been extended until April 30, 2009, from March 18, 2009. According to Bloomberg, Carl Icahn and other creditors of Tropicana will bid for the casino affiliate, which would file for court protection. The affiliate, says Bloomberg, would then be sold in a court-supervised auction with the creditors' offer as the lead bid. Bloomberg states that the New Jersey Casino Control Commission said that it may consider the sale at an April 15 hearing if a purchase agreement is completed by then. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada, and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq., at Richards Layton & Finger, represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors' Web site administration agent. AlixPartners LLP is the Debtors' restructuring advisor. Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell LLP represent the Official Committee of Unsecured Creditors in this case. Capstone Advisory Group LLC is financial advisor to the Creditors' Committee. Bankruptcy Creditors' Service, Inc., publishes Tropicana Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Tropicana Entertainment LLC and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) UNITED SUBCONTRACTORS: Files Chapter 11 with Pre-Negotiated Plan ---------------------------------------------------------------- United Subcontractors, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. USI has reached an agreement in principle with holders of the Company's first-lien loan due in 2012 and holders of the Company's second-lien loans due in 2013 on the terms of a financial restructuring to reduce the Company's funded indebtedness by $314 million, via a conversion of the bulk of that debt to 100% of the equity in the Company upon the effective date of the reorganization plan. Under the terms of the plan of reorganization, all letters of credit will remain in place during and after the bankruptcy. The Company believes the filing will have little impact on its operations and it will look to maintain "business as usual" during the restructuring process. USI expects to emerge from Chapter 11 in the early summer. Once completed and approved by the Court, the financial restructuring will de-leverage the Company's balance sheet by approximately $314 million, leaving the Company with a healthy balance sheet and total debt of approximately $22.5 million. According to Bloomberg's Bill Rochelle, the Chapter 11 plan has support from holders of 80% of the first-lien debt and 95% of the second-lien creditors. The Plan will convert $290 million of first-lien obligations into $22.5 million in senior secured notes and 96% of the stock. The second-lien creditors will receive the other 4% of the stock for their $66.4 million in claims. About United Subcontractors United Subcontractors, Inc. -- http://www.unitedsub.com/-- is a privately owned company with approximately 40 branches and 1,600 employees across the country. Founded in 1998 and based in Edina, Minnesota, USI is a market leader in the installation of a wide range of residential and commercial products within the construction industry. The Company and its affiliates filed for Chapter 11 bankruptcy protection on March 31, 2009 (Bankr. D. Delaware Case No. 09- 11152). Mark K. Thomas, Esq., Paul V. Possinger, Esq., and Peter J. Young, Esq., at Proskauer Rose LLP assist the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC is the Debtors' claim agents. The Debtors listed $50 million to $100 million in assets and $100 million to $500 million in debts. UNITED SUBCONTRACTORS: Chapter 11 Filing Cues S&P's 'D' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on United Subcontractors Inc. to 'D' from 'CCC-'. At the same time, Standard & Poor's lowered all of its issue-level ratings on the company to 'D' and revised the recovery rating on the company's $295 million senior secured term loan to '6', indicating expectations for negligible (0% to 10%) recovery, from '5'. The recovery rating on the $65 million second-lien term loan remains at '6', also indicating expectations for negligible (0% to 10%) recovery. "The lowering of the corporate credit rating and issue-level ratings follows USI's announcement that the company has filed voluntary petitions for reorganization under Chapter 11 in the U.S. Bankruptcy Court and that the company has reached an agreement with lenders related to its first- and second-lien loans," said Standard & Poor's credit analyst Thomas Nadramia. "The pre-planned reorganization allows USI to convert $314 million of its debt to equity in the business, leaving approximately $22.5 million in debt when reorganization is complete." As a result, once the reorganization is consummated, negligible recovery will be available to holders of the first- and second-lien term loans. UNIVERSAL CITY: Refinancing Concerns Cue Moody's Junk Rating ------------------------------------------------------------ Moody's Investors Service downgraded Universal City Florida Holding Co. II's Probability of Default Rating to Caa1 from B3 and its senior unsecured notes to Caa2 from Caa1. Moody's also confirmed UCFH's B2 Corporate Family Rating and Universal City Development Partners, Ltd's Ba2 senior secured credit facility and B2 senior unsecured note ratings. The rating actions conclude the review for downgrade initiated on March 12, 2009 and the rating outlook is negative. The downgrades reflect Moody's heightened concern regarding the company's ability to refinance $950 million of bonds due in April/May 2010 at par given weak credit market conditions and the expected pressure on Universal Orlando's attendance and cash flow from the downturn in consumer spending. The confirmation of the CFR and UCDP's debt ratings and the two-notch gap between the CFR and PDR reflect Moody's view that default risk is elevated relative to other issuers with a B2 CFR, as well as the projected above-average recovery expectation for the company that would largely accrue to the benefit of the more senior creditors in a default scenario. Loss given default assessments and point estimates were updated to reflect the updated recovery assumptions. Moody's has taken these rating actions: Downgrades: Issuer: Universal City Florida Holding Co. II -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Senior Unsecured Notes, Downgraded to Caa2, LGD4 - 59% from Caa1, LGD5 - 71% Confirmations: Issuer: Universal City Florida Holding Co. II -- Corporate Family Rating, Confirmed at B2 Issuer: Universal City Development Partners, Ltd. -- Senior Secured Bank Credit Facility, Confirmed at Ba2, LGD1 - 5% (changed from LGD1 - 6%) -- Senior Unsecured Notes, Confirmed at B2, LGD3 - 27% (changed from LGD3 - 36%) Outlook Actions: Issuer: Universal City Development Partners, Ltd. -- Outlook, Changed To Negative From Rating Under Review Issuer: Universal City Florida Holding Co. II -- Outlook, Changed To Negative From Rating Under Review The maturity of UCDP's senior secured credit facility will move up to April 1, 2010 if the maturing bonds are not refinanced by that date and this creates additional refinancing risk. Moody's believes the company's financial sponsors (Blackstone Capital Partners and NBC Universal) will seek to preserve their investment as part of any refinancing because of the close strategic ties with Universal Studios and the expected completion of the Hollywood Rip Ride Rockit roller coaster and Wizarding World of Harry Potter attractions in the next two years that the sponsors have helped to fund and should generate consumer interest. In Moody's opinion, this suggests an exchange offer, discounted debt repurchase, or similar restructuring is more likely than a bankruptcy filing. Moody's did not assume Steven Spielberg's put right is exercised in the current ratings since the right to put beginning in June 2010 is subsequent to the maturities. There may also be a financial incentive for Mr. Spielberg to wait until Univeral's proposed theme parks in Dubai and Signapore are completed, since the put related to consultant fees on international parks cannot be exercised until the parks have been operating for at least one year. In Moody's opinion, an exercise of the put could utilize some of Universal Orlando's debt capacity and adversely affect recovery rates for existing creditors. Moody's last rating action related to Universal Orlando was on March 12, 2009 when Moody's downgraded the CFR to B2 from B1, the PDR to B3 from B1, UCFH's notes to Caa1 from B3, UCDP's senior secured credit facility to Ba2 from Ba1, and UCDP's senior unsecured notes to B2 from B1 with all ratings remaining on review for possible downgrade. Universal Orlando's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Universal Orlando's core industry and Universal Orlando's ratings are believed to be comparable to those of other issuers of similar credit risk. UCDP, headquartered in Orlando Florida, operates the Universal Studios Florida, Universal Islands of Adventure theme parks and Universal CityWalk Orlando, a dining, retail and entertainment complex. Universal City Florida Holding Co. I and Universal City Florida Holding Co. II are holding companies that own UCDP. The company is a 50-50 joint venture of Blackstone Capital Partners and a wholly-owned subsidiary of Vivendi Universal Entertainment LLP. Annual revenue in 2008 was $923 million. UNIVERSAL CITY: S&P Changes Outlook to Negative; Keeps B+ Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Orlando, Florida-based Universal City Florida Holdings Co. I to negative from stable. Ratings on the company, including the 'B+' corporate credit rating, were affirmed. As of Dec. 31, 2008, the company had outstanding debt of $1.46 billion. "The outlook revision reflects our concerns with the company's 2009 performance, which S&P expects will be weak as U.S. consumers reduce their discretionary spending and vacation travel amid a severe recession," said Standard & Poor's credit analyst Andy Liu. "Also, with credit markets still under significant strain and the company looking to refinance its 2010 and perhaps its 2011 maturities, S&P believes that the refinancing terms won't be as favorable, which could further diminish cash flow generation under difficult business conditions." The 'B+' corporate credit rating reflects UCFH's geographically concentrated earnings, cyclical and seasonal operating performance, and high financial risks, including near-term refinancing needs. The company derives nearly all of its profits from its Universal Orlando resort, which owns and operates Universal Studios Florida and Islands of Adventure, and competes with market leader Walt Disney World. UO has been attempting to transform itself into a multiday destination resort, with its CityWalk shopping, dining, and entertainment complex, and three adjacent non-company-owned theme hotels. However, attractions generally are not extensive enough to support sales of passes for longer than two days. Revenues from sales of one- and two-day passes account for almost 60% of ticket revenues. UO competes with five major theme parks within a 10-mile radius in the Orlando area, four of which are owned by The Walt Disney Co. The company's target market is families with children older than 10. Its market share of slightly less than 20% of Orlando theme park attendance has declined modestly in the past two years as a result of Disney's addition of new attractions and its success in selling multiday passes. Each of Disney's four theme parks has higher attendance than Universal Studios or Islands of Adventure. VALENTIN TRUCKING: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Valentin Trucking Services, Inc. P.O. Box 7258 Carolina, PR 00986-7258 Bankruptcy Case No.: 09-12197 Chapter 11 Petition Date: March 24, 2009 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Wigberto Lugo Mender, Esq. Lugo Mender & Co. Centro Internacional De Mercadeo Rd 165 Torre 1 Suite 501 Guaynabo, PR 00968 Tel: (787) 707-0404 Email: wlugo@lugomender.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Selma Valentin Delgado, president of the company. A full-text copy of the Debtor's petition, including its largest unsecured creditors, is available for free at: http://bankrupt.com/misc/prb09-02197.pdf VARIG LOGISTICA: Wants Brazil Court to Govern Reorganization ------------------------------------------------------------ Varig Logistica SA filed a Chapter 15 petition before the U.S. Bankruptcy Court for the Southern District of Florida to seek recognition of its reorganization case in Brazil. Varig sent itself to bankruptcy in Brazil on March 3. The Company said it owes $180 million to creditors, including $101 million to creditors in the U.S. If the Florida court approves the Chapter 15 petition, Brazil will be considered as the home of the "foreign main proceeding," and creditor actions in the U.S. will be halted permanently. According to Bloomberg's Bill Rochelle, the Company filed for Chapter 15 to stop U.S. creditors who sued to recover possession of aircraft and engines under defaulted leases. The Company was also being sued in the U.S. for non-payment to suppliers. Bill Rochelle relates that in an ordinary airline bankruptcy under Chapter 11, a special rule applies requiring the airline to bring payments on aircraft current in 60 days. If defaults aren't cured, the aircraft owner may repossess. This rule doesn't apply in Chapter 15 cases like VarigLog's. Varig Logistica SA is a Brazilian cargo airline and provides air transport services to major cargo companies including, among others, Federal Express, DHL and UPS. It was previously controlled by affiliates of MatlinPatterson Global Advisers LLC. On March 31, 2009, Alexandre Savio Abs da Cruz, manager of flight operations of Varig Logstica S.A., filed a Chapter 15 petition for the company (Bankr. S.D. Fla., Case No.: 09-15717). Stephen P. Drobny, Esq., is the petitioner's counsel. The Company has assets and debts of $100 million to $500 million. VERMILLION INC: Files for Chapter 11, Reduces Workforce ------------------------------------------------------- Vermillion, Inc., filed a voluntary petition for reorganization relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware. The company plans to continue operating without interruption as it focuses on obtaining regulatory clearance respecting the company's ovarian tumor triage test 510(k) pre-market notification to the United States Food and Drug Administration. That submission is currently pending and the company continues to work diligently to provide information and data in response to FDA inquiries. Upon receipt of FDA regulatory clearance, the company would then seek to move forward, including with a strategic alliance partner, to bring the OVA1 test to market. In conjunction with the filing, the company is seeking customary authority from the Bankruptcy Court that will enable it to continue operating its business in the ordinary course. To address its financial condition and deteriorating liquidity position, as a cost-saving measure, the company reduced its workforce. In connection with the filing, directors Kenneth Conway, Rajen Dalal, James Rathmann and John Young resigned from the Board of Directors, effective immediately. Gail Page has been elected as the Executive Chair of the Board of Directors of the company, also effective immediately. The board will continue to operate with a reduced number of directors as a cost-saving measure. The board now consists of Gail Page, John Hamilton and James Burns, all of whom have indicated their intention to continue their role as directors of the company for the time being. For purposes of conserving company resources, on March 27, 2009, Vermillion requested the resignation of several of its executive officers. The officers who have resigned following this request are Gail Page, President and Chief Executive Officer, Qun Zhou, Interim Chief Financial Officer, and Simon Shorter, Vice President of Corporate Business Development. The sole reason for these resignations was to conserve company resources and was not the result of any disagreement with the company on any matter relating to the company's operations, policies or practices or in any way for cause. The resigning personnel will continue to act as consultants to Vermillion. They will accrue severance and other rights as a result of the termination to the extent funds for such payments are available in the bankruptcy reorganization. According to Bloomberg's Bill Rochelle, the petition listed assets of $7.2 million against debt totaling $32 million. Debt, according to the report, includes $10 million owing to Quest Diagnostics Inc. and $16.3 million on convertible notes. About Vermillion Vermillion, Inc. -- http://www.vermillion.com/-- is dedicated to the discovery, development and commercialization of novel high- value diagnostic tests that help physicians diagnose, treat and improve outcomes for patients. Vermillion, along with its prestigious scientific collaborators, has diagnostic programs in oncology, hematology, cardiology and women's health. Vermillion is based in Fremont, California. VERMILLION INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Vermillion, Inc. fka Abiotic Systems fka Ciphergen Biosystems, Inc. 47350 Fremont Blvd. Fremont, CA 94538 Bankruptcy Case No.: 09-11091 Type of Business: The Debtor engages in the development and commercialization of diagnostic tests to aid physicians diagnose and treat results for patients. See http://www.vermillion.com/ Chapter 11 Petition Date: March 30, 2009 Court: District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Francis A. Monaco Jr., Esq. fmonaco@wcsr.com Mark L. Desgrosseilliers, Esq. mdesgrosseilliers@wcsr.com Womble Carlyle Sandridge & Rice, PLLC 222 Delaware Avenue, Suite 1501 Wilmington, DE 19801 The Debtor's financial condition as of September 30, 2008: Total Assets: $7,150,000 Total Debts: $32,015,000 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Hig hbridge International LLC 7% Convertible $11,100,000 9 W. 57th Street Senior Notes 27th Floor New York, NY 10019 Attn : Eric Colandrea Fax: (212) 751-0755 Oaktree Capital Management LP 4.5% Convertible $2,365,000 333 South Grand Avenue Senior Notes 26th Floor Los Angeles, CA 90071 Attn: Andrew Watts Fax: (213) 830-6293 Bruce Fund Inc. 7% Convertible $1,800,000 20 North Wacker Drive Senior Notes Sui te 2414 Chicago, IL S0606 Attn : Jeff Bruce F: (317)937-3014 Deerfield International Ltd. 7% Convertible $1,560,000 780 3rd Avenue Senior Notes 37th Floor New York, NY 10017 Attn: Robert Olan Deerfield Partners L.P. 7% Convertible $1,440,000 780 3rd Avenue Senior Notes 37th Floor New York, NY 10017 Attn : Robert Olan U.S. Bank Interest on the $633,750 CM 9705 4.5% and 7% P.O. Box 70870 Convertible Senior Saint Paul MN 55170 Notes Attn: Paul Briggs Professional Life & Casualty 7% Convertible $600,000 20 North Wacker Drive Senior Notes Suite 2414 Chicago, IL 60606 Attn: Jeff Bruce F: (317) 937-3014 John Hopkins University Trade debt $323,260 Applied Clinical Intelligence Trade debt $220,746 Bruce & Co. 4.5% Convertible $135,000 Senior Notes Edwards Angell Palmer & Trade debt $132,318 Dodge LLP Deloitte Tax, LLP Trade debt $107,971 Townsend and Townsend Trade debt $90,947 and Crew ThinkPanmure, LLC Trade debt $77,814 Precision Med. Inc. Trade debt $53,336 PricewaterhouseCoopers LLP Trade debt $45,000 Foley & Lardner Trade debt $34,646 HSBC Bank USA Trade debt $14,699 E-Trade Financial Trade debt $6,213 Certified Compliance Trade debt $6,072 Solutions, Inc. The petition was signed by Gail S. Page, chair of the board of directors. WEINGARTEN REALTY: S&P Gives Negative Outlook; Holds 'BB+' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook for Weingarten Realty Investors to negative from stable. At the same time, S&P affirmed its 'BBB' corporate credit and senior unsecured debt ratings and its 'BB+' preferred stock rating on Weingarten. The affirmations affect roughly $1.775 billion of Weingarten's senior unsecured notes and $498 million of the company's preferred stock. "The outlook revision reflects our concerns regarding Weingarten's comparatively large 2011 debt maturities in light of the company's above-average leverage," said credit analyst Elizabeth Campbell. "We believe Weingarten's efforts to improve liquidity and deleverage over the next two years will be challenging given the current weak retail environment and constrained capital markets." S&P would consider a downgrade if Weingarten's leverage and credit facility usage remain high over the next two years, or if gain- adjusted debt service coverage falls below S&P's scenario forecast level of 2.2x, which could happen because of greater-than-expected tenant vacancies. S&P would revise the outlook to stable if Weingarten reduces leverage and improves liquidity before its comparatively large 2011 debt maturities. Sustaining debt service coverage measures above 2.2x and successfully stabilizing the bulk of its development pipeline would also be viewed favorably. WILLIAMS COS: Atlas Pipeline Venture Won't Affect S&P's Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that diversified energy company The Williams Cos. Inc.'s (BBB-/Stable/--) announcement that it has formed a joint venture in Appalachia with Atlas Pipeline Partners L.P. (B/Watch Neg/--) will not affect the company's ratings or outlook at this time. As reported by the Troubled Company Reporter on March 2, 2009, S&P affirmed its 'BBB-' corporate credit rating on diversified energy company The Williams Cos. Inc. and its affiliates. At the same time, S&P assigned a 'BB+' issue rating to Williams' $600 million senior unsecured notes due 2020. S&P views the joint venture, Laurel Mountain Midstream LLC, as enhancing Williams' business profile because it expands the company's geographic footprint into the Marcellus Shale region. At the same time, S&P does not believe the joint venture will be a significant cash flow driver for Williams in the intermediate term. S&P also believes that the joint venture will complement Williams' future asset expansions, including its Rockies Connector project, a proposed expansion of Transcontinental Gas Pipe Line Co. LLC, which is designed to move Appalachian and Rockies gas to East Coast markets. The transaction, which requires Atlas's lender approval, is valued at about $250 million. Williams will contribute $102 million and a $25.5 million note in exchange for a 51% ownership interest and will operate the gathering system. WOLVERINE TUBE: Exchange Offer for 2009 Notes Expires April 7 ------------------------------------------------------------- Wolverine Tube Inc. extended the expiration date until April 7 on the exchange offer to holders of the approximately $100 million in 10.5% notes maturing April 1. The exchange offer and consent solicitation for the 10.5% Senior Notes due 2009 were originally announced in February. According to the Company, as of March 25, tenders have been received with respect to approximately $43.7 million aggregate principal amount of Existing Notes, representing approximately 44% of the outstanding Existing Notes. Including the $38.3 million in principal amount of our 10�% Senior Exchange Notes due 2009 that will be exchanged for New Notes, holders of approximately $82 million, or 59.4%, of our $138 million in principal amount of notes outstanding have agreed to exchange their notes for New Notes. Wolverine Tube also has revised the terms of its Offer. Under the revised Offer, Wolverine Tube is offering holders of its Existing Notes the opportunity to exchange any and all of their Existing Notes, for each $1,000 of principal amount of Existing Notes tendered, $1,000 in principal amount of the Company's 10% Senior Secured Notes due 2011 and a cash exchange fee equal to 3.0% of the principal amount of the Existing Notes tendered by such holder. In addition, holders who validly tender and do not withdraw their Existing Notes in the Offer will also be paid accrued and unpaid interest from the most recent interest payment date for the Existing Notes up to, but not including, the Payment Date (as defined in the Statement), payable on the Payment Date. The revised terms of the Offer are: -- The Company has amended the Offer to eliminate the ability of holders of Existing Notes to receive the Cash Option (as defined in the Statement). Holders of Existing Notes may tender their Existing Notes in exchange for the Exchange Offer Consideration; -- The Company has amended the Offer to increase the cash exchange fee to 3.0% of the principal amount of the Existing Notes tendered by such holder; -- The Company has amended the terms of the New Notes to provide that the New Notes will have an initial cash interest rate of 10% and will mature on March 31, 2011; provided that (a) if the outstanding principal amount of New Notes at the close of business on March 31, 2010 exceeds $90 million, the cash interest rate applicable to the New Notes will increase to 12% as of April 1, 2010, (b) if the outstanding principal amount of New Notes on March 31, 2011 does not exceed $60 million, the maturity of the New Notes automatically will be extended to March 31, 2012, and (c) if the maturity of the New Notes is extended to March 31, 2012, the cash interest rate applicable to the New Notes (if not previously increased pursuant to clause (a)) will increase to 12% as of April 1, 2011; -- The Company has amended the terms of the New Notes to provide that (a) the Company will have the option to pay interest on the New Notes either in cash or by issuing additional New Notes ("PIK Interest"), and (b) with respect to any interest period for which the Company elects to pay PIK Interest, the interest rate applicable to the New Notes will equal the sum of (i) the then current cash interest rate applicable to the New Notes, plus (ii) 4.0%; and -- The Company has amended the terms of the New Notes to provide that (a) no liens on assets securing the New Notes may be released, and no liens on assets securing the New Notes may be granted to lenders under a new revolving credit facility, without the consent of holders of at least 66.67% in principal amount of New Notes and (b) unless otherwise provided in connection with the solicitation of consents of holders of the New Notes to entering into a new revolving credit facility, the Company will not be obligated to redeem any of the New Notes with the proceeds of a new revolving credit facility. Wolverine Tube, Inc. (OTC: WLVT) is a global manufacturer and distributor of copper and copper alloy tube, fabricated products, and metal joining products. The Company's focus is on custom- engineered, tubular products, including fabricated copper components and metal joining products, which enhance performance and energy efficiency in applications, including commercial and residential heating, ventilation and air conditioning, refrigeration, home appliances, industrial equipment, power generation, petrochemicals and chemical processing. Wolverine classified its products as commercial products and wholesale products. On February 29, 2008, the Company closed on the sale of its Small Tube Products business. On November 6, 2007, Wolverine announced the planned closing of its manufacturing facilities located in Decatur, Alabama and Booneville, Mississippi. * * * As reported by the TCR on March 31, 2009, Moody's Investors Service downgraded the probability of default rating of Wolverine Tube, Inc. to D from Caa3. The downgrade follows the March 25, 2009 announcement that Wolverine had received agreement for tenders of up to $43.7 million, or 44%, of the outstanding 10.5% senior notes due April 1, 2009. Moody's views this transaction as a distressed exchange, which is an event of default under Moody's definition of default. Subsequent to the rating action and upon completion of the exchange offer for substantially all of the outstanding notes or at the maturity of the notes, Moody's will withdraw all ratings. WORLDWIDE HOLDING: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Worldwide Holding, LLC 2842 E. Lake Boulevard North Las Vegas, NV 89030 Bankruptcy Case No.: 09-14163 Chapter 11 Petition Date: March 23, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Debtor's Counsel: Richard McKnight, Esq. 330 S. Third St., #900 Las Vegas, NV 89101 Tel: (702) 388-7185 Fax: (702)388-0108 Email: mcknightlaw@cox.net Total Assets: $2,000,000 Total Debts: $1,818,000 The Debtor did not file a list of 20 largest unsecured creditors together with its petition. YELLOWSTONE CLUB: Court Delays Plan Hearing to May 18 ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Montana has again deferred the confirmation hearing on Yellowstone Mountain Club LLC's proposed Chapter 11 plan until May 18 due to outstanding disputes between the parties. Bloomberg's Bill Rochelle said that Judge Ralph B. Kirscher, the judge handling Yellowstone Club's Chapter 11 case, has directed the contending parties to mediate with another bankruptcy judge on April 17. Judge Kirscher has said in his written opinion that the bankruptcy lawyers in Yellowstone Club's case are "all too happy to litigate every little nuance" and are turning the case into a "lawyers' relief program." Yellowstone Club has filed a proposed plan based on a sale of the resort to private-equity investor CrossHarbor Capital Partners LLC for $100 million, consisting of $30 million cash and a note for $70 million. According to Bill Rochelle, the secured creditors owed $307 million, represented by an affiliate of Credit Suisse Group AG as agent, asked Judge Kirscher to hold a hearing before plan confirmation to put a value on the project. The judge turned down Yellowstone's "baseless attempt to sidestep Credit Suisse's right for a valuation." The judge also said a valuation trial would help him, since previous appraisals by Yellowstone put the value first at $1.1 billion and later at $780 million. Kirscher said that CrossHarbor is trying to "snatch the debtor's assets" for $100 million. The Bloomberg report said that the Court has set this new schedule: -- parties will undergo mediation on April 17 -- Judge Kirscher will hold a trial between April 22 and April 29 on the lawsuit by the creditors' committee seeking to knock out the Credit Suisse secured claim. -- If the lender survives the trial with a secured claim intact, Judge Kirscher will hold another trial on May 8 to value the Credit Suisse collateral. -- The hearing for confirmation of the Chapter 11 plan is tentatively set for May 18. Bloomberg also notes that Judge Kirscher previously established other milestones in the auction and confirmation process. Bids in competition with CrossHarbor will be due 10 days before the confirmation hearing on Yellowstone's Chapter 11 plan. The auction will be five days before the hearing. He also said he would hold a hearing to decide whether Credit Suisse would be able to bid at the auction and use its secured claim for part of the purchase price. The official committee of unsecured creditors of Yellowstone filed a lawsuit on March 3 aimed at invaliding the Credit Suisse claim while recovering $146 million Yellowstone paid on what was originally $375 million in loans, Mr. Rochelle says. The complaint cites the loan agreement as saying $352 million of the loan, made in September 2005, wouldn't be used for Yellowstone itself. The complaint contends Credit Suisse knew the loan would be used for the personal benefit of the owners, Timothy Blixseth and his wife Edra Blixseth, or companies they controlled. Yellowstone has lost its exclusive rights to file a plan. About Yellowstone Club Located near Big Sky, Montana, Yellowstone Mountain Club LLC -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. As reported in the Troubled Company Reporter on Nov. 13, 2008, Yellowstone Club filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Montana. In its bankruptcy petition, it listed debts of more than $360 million. * Bankrupt Public Company Assets in 2009 Top $101 Billion --------------------------------------------------------- Sixty-four public companies have filed in Chapter 11 this year, compared with 30 in the first quarter of 2008, Bloomberg's Bill Rochelle said, citing Bankruptcydata.com. In the first three months of 2007, there were only 16. Assets listed on balance sheets of the newly filed companies total almost $101 billion. By the same time last year, the assets of filing public companies aggregated $11.7 billion, according to Bankruptcy Data. With the Chapter 11 filing of IDEARC Inc. this week, the number of companies with estimated assets exceeding $1 billion that have filed for Chapter 11 has reached 16 this year: (in millions) COMPANY DATE ASSETS DEBTS ------- -------- ------ ----- Lyondell Chemical Co. 1/06/09 $27,177 $27,345 Tronox Inc. 1/12/09 $1,614 $1,237 Nortel Networks 1/14/09 $11,609 $11,793 Smurfit-Stone Container Corp. 1/26/09 $7,450 $5,582 Spectrum Brands Inc. 2/03/09 $2,247 $3,275 Aleris International, Inc. 2/12/09 $4,168 $3,978 Trump Entertainment Resorts 2/17/09 $2,056 $1,738 BearingPoint Inc. 2/18/09 $1,763 $2,232 Qimonda Richmond LLC 2/20/09 >$1,000 >$1,000 Spansion Inc. 3/01/09 $3,840 $2,398 Magna Entertainment 3/05/09 $1,049 $958 Masonite International Corp. 3/16/09 $1,527 $2,641 Chemtura Corp 3/18/09 $3,060 $1,020 Herbst Gaming Inc. 3/22/09 $1,022 $1,242 Charter Communications Inc. 3/27/09 $13,882 $24,186 IDEARC Inc. 3/31/09 $1,815 $9,515 The list could rise later this month after Thornburg Mortgage Inc. and Station Casinos Inc. have conveyed plans to file for Chapter 11. Thornburg Mortgage (total assets of $26.2 billion and debts of $26.6 billion as of Sept. 30, 2008) has a forbearance agreement with lenders until April 30. Thornburg intends to cease doing business and liquidate. Station Casinos (assets of $8.88 billion, debts of $6.37 billion as of Sept. 30, 2008), owner of nine hotel casinos in the Las Vegas area, is soliciting support for a plan that offers bondholders a combination of secured notes and cash in exchange for their outstanding bonds. Other large firms that have said they might have to seek bankruptcy protection absent covenant relief or forbearance from lenders or other factors include: 1. EDGE PETROLEUM CORP. 2. GENERAL GROWTH PROPERTIES INC. 3. SIX FLAGS INC. 4. CHRYSLER LLC 5. GENERAL MOTORS CORP. 6. AVENTINE (By April says S&P) 7. ZILA INC 8. INT'L COASTAL 9. THORNBURG MORTGAGE INC 10. LEAR CORP 11. CRUSADER ENERGY 12. COMSTOCK HOMEBUILDING COS. 13. VISTEON CORP. As for Chrysler and GM, they are seeking additional aid from the U.S. government to avert bankruptcy. * Calif. Home Prices Drop 41% in Feb, Double U.S. Decline --------------------------------------------------------- According to Bloomberg's Bill Rochelle, the median price of a California home fell 41% in February from a year earlier, while home prices in the nation averaged a 16% decline. Bill Rochelle notes that foreclosures were responsible for 58% of home sales in California during February. In the country as a whole, foreclosures represented only 33%. Home sales increased 83% in February in California compared with the same period a year ago, while the median price of an existing home declined 40.8%, the California Association of Realtors(R) reported March 25. "Home sales in California continue to be considerably stronger than the nationwide sales figures," said C.A.R. President James Liptak. "The market will continue to register large, but diminishing year-to-year percentage gains in the coming months, as current sales are compared against the extremely low numbers that prevailed during the early months of the credit crunch." Closed escrow sales of existing, single-family detached homes in California totaled 620,410 in February at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR(R) associations statewide. Statewide home resale activity increased 83% from the revised 338,970 sales pace recorded in February 2008. Sales in February 2009 decreased 0.8% compared with the previous month. The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the February pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales. The median price of an existing, single-family detached home in California during February 2009 was $247,590, a 40.8% decrease from the revised $418,260 median for February 2008, C.A.R. reported. The February 2009 median price fell 2.3% compared with January's revised $253,330 median price. "The California median price has declined by a larger margin than the nationwide median price," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "This can be attributed to the under $500,000 portion of the market, which has experienced larger price declines than the other market segments due to the large share of distressed homes for sale. This further contributed to the decline in the statewide median." * S&P/Case-Shiller Index Says Home Prices in January Fell 19% ------------------------------------------------------------- According to the S&P/Case-Shiller index of 20 metropolitan areas, home prices in January were 19% below the year before. The January decline exceeded the 18.6% shrinkage in December. Bloomberg's Bill Rochelle said, the index has fallen every month since January 2007. Compared with December, prices were 2.8% lower. Data through January 2009, released March 31 by Standard & Poor's for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008. "Home prices, which peaked in mid-2006, continued their decline in 2009," says David M. Blitzer, Chairman of the Index committee at Standard & Poor's. "There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSA's falling more than 20% in the last year. Indeed, the two composites are very close to that rate and have been reporting consecutive annual record declines since October 2007. The monthly data follows a similar trend, with the 10-City and 20-City Composite showing thirty consecutive months of negative returns." As of January 2009, average home prices across the United States are at similar levels to what they were in late 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2% and the 20-City Composite is down 29.1%. All 20 metro areas are reporting negative monthly and annual rates of change in average home prices. Seven metro areas and the 20- City Composite recorded a record monthly decline in January. In addition, seven metro areas (not always the same seven) reported declines in excess of 4% in the month of January alone. Phoenix led with a report of -5.5%. Every MSA has had at least five consecutive months of decline, dating back to September 2008. On a marginally positive note Cleveland, Los Angeles and Las Vegas are reporting a relative improvement in year-over-year returns, in terms of lesser rates of decline than last month's values. Furthermore, Las Vegas, along with five other metro areas, showed a marginal improvement in monthly returns, albeit still negative. The three worst performing cities, in terms of annual declines, continue to be from the Sunbelt, each reporting negative returns in excess of 30%. Phoenix was down 35.0%, Las Vegas declined 32.5% and San Francisco fell 32.4%. Dallas, Denver and Cleveland faired the best in terms of annual declines down 4.9%, 5.1% and 5.2%, respectively. A copy of the S&P/Case-Shiller release, which contains charts, is available at http://researcharchives.com/t/s?3afe * Economy Shrinks 6.3% in 2008 Q4, Higher Than Original Estimate ---------------------------------------------------------------- According to Bloomberg's Bill Rochelle, the economy contracted more 6.3% in the fourth quarter, more than the originally estimated 6.2%. The performance was the worst since 1982. The Bureau of Economic Analysis said March 26 that real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 6.3% in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to final estimates released by the BEA. In the third quarter, real GDP decreased 0.5%. The latest GDP estimates, according to the BEA, are based on more complete source data than were available for the preliminary estimates issued last month. In the preliminary estimates, the decrease in real GDP was 6.2%. The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by a positive contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased. Most of the major components contributed to the much larger decrease in real GDP in the fourth quarter than in the third. The largest contributors were a downturn in exports and a much larger decrease in equipment and software. The most notable offset was a much larger decrease in imports. * Court Nullifies Mortgage on Defective Notary ---------------------------------------------- In the case Burden v. CIT Group/Consumer Finance Inc. (In re Wilson), the 6th U.S. Circuit Court of Appeals voided a mortgage on a bankruptcy's home the acknowledgement by the notary when the loan was made didn't strictly follow Kentucky law. Bill Rochelle of Bloomberg notes that when someone buys a house or refinances a home mortgage, among the dozens of documents for signature is an acknowledgement where the homeowners swear in front of a notary public that they are the individuals named in the mortgage documents. The bankruptcy trustee sued the lender saying the mortgage was void because the form of the acknowledgment didn't strictly follow Kentucky law. The bankruptcy court agreed with the bankruptcy trustee's contentions and voided the mortgage, Mr. Rochelle narrated. The ruling was upheld by the Bankruptcy Appellate Panel. Another appeal was made to the 6th Circuit Court, which agreed with the lower courts in a March 19 opinion. The appeals court said the "authentication of a deed of trust is not a purposeless formality." Mr. Rochelle points out that the result may not be the same in all states because local laws differ on the formalities in signing mortgage documents. He notes that the result in the present case left the lender with an unsecured claim for the balance of the mortgage and possibly also with the prospect of facing preference claims to recover payments received before bankruptcy. * Paul Weiss Partner Paul Ginsberg Is "Dealmaker of the Year" ------------------------------------------------------------- Paul D. Ginsberg, co-head of Paul, Weiss, Rifkind, Wharton Garrison LLP's Mergers and Acquisitions Group, has been selected as a "Dealmaker of the Year" by The American Lawyer magazine for his role in Triarc Companies Inc.'s acquisition of Wendy's International Inc. Mr. Ginsberg is one of four Paul, Weiss lawyers to have been honored as "Dealmaker of the Year" in the past six years. "Paul is an exceptional lawyer and adviser, and the Triarc deal is emblematic of the outstanding results that he consistently achieves for our clients," said Brad S. Karp, chair of Paul, Weiss. "Paul has the great ability to identify an opportunity or challenge, strategically evaluate the client's situation, and provide creative solutions that achieve the optimal result for the client," Mr. Karp added, "The Triarc deal was particularly complex, high stakes, and obstacle laden." Triarc's courtship of Wendy's was lengthy, and culminated in September 2008 when Triarc, the owner of the Arby's restaurant chain, acquired Wendy's International, the owner of the Wendy's hamburger chain, for $2.34 billion. The acquisition created the third largest quick service restaurant chain in the United States. Mr. Ginsberg led the legal team's efforts, helping to overcome the reluctance of Wendy's board to sell to Triarc and the challenges posed by collapsing credit markets that threatened the ability to complete any transaction. As part of his mergers and acquisitions practice, Mr. Ginsberg has represented public companies such as Automatic Data Processing, Inc., Citigroup Inc., EMI plc, MasterCard International Incorporated, Time Warner Inc. and Viacom Inc., as well as private equity and other funds, including Apollo Management, Clarion Capital Partners, Passport Capital, Quellos Group, Soros Private Equity Partners and TowerBrook Capital Partners. Mr. Ginsberg has served as a member of the firm's management committee and as deputy chair of the firm's Corporate Department. Previous Paul, Weiss "Dealmaker of the Year" honorees include Finance Group co-head Jordan E. Yarett (2007) for his role in the securitization of Dunkin' Donuts, Corporate Department chair Robert B. Schumer (2006) for his role in Time Warner Inc.'s acquisition of Adelphia Communications, and Bankruptcy and Corporate Reorganization Department chair Alan W. Kornberg (2004) for his role in the Pacific Gas & Electric Company bankruptcy. About Paul Weiss Paul Weiss - http://www.paulweiss.com/-- is a firm of more than 500 lawyers with diverse backgrounds, personalities, ideas and interests who collaboratively provide innovative solutions to clients' most critical and complex legal and business challenges. The firm represent a varied range of clients, including some of the largest publicly and privately held corporations and financial institutions in the U.S. and abroad. * Sheon Karol Joins CRG Partners as Partner ------------------------------------------- Sheon Karol joins CRG Partners as partner, bringing turnaround expertise to the company's growing New York headquarters. With more than twenty years of financial services and turnaround experience, Mr. Karol's innovative leadership and collaborative approach will support CRG's efforts to provide its clients with exceptional operational and financial improvement services. "We're delighted to have Sheon on board," said Scott Avila, managing partner at CRG Partners. "His deep-rooted experience in our industry and the New York market will be a key asset to our continued growth and development. His unique combination of turnaround, executive and legal experience will significantly enhance our offering to clients. Clients particularly welcome his ability to innovate in a manner that encourages participation." Mr. Karol was a managing director at national restructuring firms where he served as a chief restructuring officer and played a key role in several major turnarounds, including Winn-Dixie supermarkets. A Yale Law School graduate, Mr. Karol is an active member of the American Bankruptcy Institute (ABI) as well as the Turnaround Management Association. Mr. Karol can be reached at: Tel: 646-391-6913 or E-mail: sheon.karol@crgpartners.com About CRG Partners CRG Partners -- http://www.crgpartners.com-- is a leading provider of operational improvement and financial restructuring services specializing in creating value for the stakeholders of underperforming companies. CRG Partners offers superior leadership and expertise of the restructuring process, while collaborating with our clients' management teams to quickly identify, develop and implement solutions that yield sustainable results. With an international presence and offices throughout the country, CRG Partners is one of the largest advisory and interim management firms in the U.S. * BOOK REVIEW: How To Measure Managerial Performance ---------------------------------------------------- Author: Richard S. Sloma Publisher: Beard Books Paperback: 272 pages List Price: $34.95 Order your personal copy at: http://www.amazon.com/exec/obidos/ASIN/1893122646/internetbankrupt How to Measure Managerial Performance by Richard S. Sloma is a valuable reference tool. This practical handbook provides new insights into enterprising management techniques. This book is a compendium of principles and techniques to improve and measure managerial performance in a number of areas important to the successful operation of a business. Rigorous application of the concepts of this instructive book will enable an organization to perform at several levels higher in efficiency and effectiveness. ********* 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. Ma. Theresa Amor J. Tan Singco, 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 ***