/raid1/www/Hosts/bankrupt/TCR_Public/090501.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, May 1, 2009, Vol. 13, No. 119
Headlines
AMERICAN COMMUNITY: Selling to Lenders by Late May
AMERICAN COMMUNITY: Taps Administar Services as Claims Agent
AMERICAN INT'L: Names M. Winter as Vice Chair for Planning
APPLETON PAPERS: Moody's Confirms 'B2' Corporate Family Rating
BANEX 1: Voluntary Chapter 11 Case Summary
BANK OF AMERICA: Lawmakers to Call for Hearings on Merrill Buy
BAYTEX ENERGY: S&P Downgrades Rating on US$180 Mil. Notes to 'B'
BAYOU GROUP: Hennessee Charged for Recommending Hedge Fund
BERNOULLI HIGH: Moody's Cuts Rating on $750 Mil. Notes to 'C'
BERRY PETROLEUM: S&P Affirms 'BB-' Corporate Credit Rating
BRANDYWINE REALTY: Fitch Cuts Credit Ratings; Affirms 'BB+' Rating
BRUNO'S SUPERMARKETS: Final Sale Hearing Continued to May 4
BUCCANEER BEACH: Case Summary & 3 Largest Unsecured Creditors
BULTMAN COMPANY: Case Summary & 20 Largest Unsecured Creditors
CALEDONIA SPRINGS: Case Summary & 20 Largest Unsecured Creditors
CAPITAL CROSSING: Ernst & Young Raises Going Concern Doubt
CHRYSLER FINANCIAL: Customers, Dealers to Be Financed by GMAC
CHRYSLER FINANCIAL: Moody's Reviews Ratings on Five Tranches
CHRYSLER FINANCIAL: Moody's Downgrades Ratings on Two Classes
CHRYSLER LLC: Seeks Bankruptcy Protection in Manhattan
CHRYSLER LLC: 8 Plants Won't Go to Fiat; $200M for Estate WindDown
CHRYSLER LLC: Customers, Dealers to Be Financed by GMAC
CHRYSLER LLC: Case Summary & 50 Largest Unsecured Creditors
CHRYSLER LLC: Non-Tarp Lenders Says Offer to Get 40% Cut Rejected
CHRYSLER LLC: Bankruptcy Deal Must Protect Tier 2 and 3 Suppliers
CHRYSLER LLC: Fitch Cuts Rating, Sees 50-70% Recovery for Sr. Loan
CHRYSLER LLC: To Remain as Sponsor Under Pension Plan, PBGC Says
CHRYSLER LLC: Companies Disclose Exposure to Bankruptcy
CHRYSLER LLC: Will Temporarily Idle Most of Manufacturing
CIERA PROPERTIES: Case Summary & 3 Largest Unsecured Creditors
CINCINNATI BELL: Moody's Downgrades Rating on Sr. Bonds to 'Ba1'
CITIGROUP INC: Lehman Agrees to Transfer of $2BB Deposit
COMMERCIAL CAPITAL: Section 341(a) Meeting Scheduled for May 27
COMMERCIAL CAPITAL: Judge Michael Romero Takes Over Ch. 11 Case
CORIOLANUS LIMITED: Moody's Cuts Rating on $125 Mil. Notes to 'C'
COSINE COMMUNICATIONS: Asset Redeployment Cues Going Concern Doubt
CRESCENT RESOURCES: Has Third S&P Downgrade in 10 Months
DELPHI CORP: Closes Sale of Select Exhaust Business Sites
DELPHI CORP: Seeks DIP Loan Amendment to Join Supplier Program
DELPHI CORP: Gov't Rejects GM Bid to Increase Delphi Commitment
DELPHI CORP: Goldman Sachs Seeks Court Dismissal of Lawsuit
DEN-L-TRANS: Voluntary Chapter 11 Case Summary
DENISON MINES: Raises C$75.4 Million in KEPCO Deal
E*TRADE FINANCIAL: Moody's Reviews 'B2' Senior Credit Rating
EMERALD INVESTMENT: Moody's Junks Ratings on $30 Mil. Notes
EOS AIRLINES: UK Administration Concludes; Final Report Filed
HEREFORD FIOFUELS: May Use Lenders' Cash Collateral Until May 31
EUROFRESH INC: Wins Interim OK for KCC as Claims & Noticing Agent
EXTENDED FAMILY: Case Summary & 20 Largest Unsecured Creditors
FREDDIE MAC: Probed by FBI on Possible Accounting Violations
FRONTIER AIRLINES: Reports Net Loss of $161-Mil. for Q1
GENERAL MOTORS: Bondholders to Get 58% Equity Stake in Own Plan
GENERAL MOTORS: Exchange Offers Approved in Europe
GENERAL MOTORS: Gov't Rejects Bid to Increase Delphi Commitment
GENERAL MOTORS: Gov't Rejects Bid to Increase Delphi Commitment
GEORGE Z. PATTEN: Case Summary & 20 Largest Unsec. Creditors
GMAC LLC: To Provide Financing for Chrysler Dealers and Customers
HAMPDEN CBO: Moody's Downgrades Ratings on Various Classes
HEREFORD FIOFUELS: Court Okays Sale of Assets to Senior Lenders
HIGH-MARKET CORP.: Voluntary Chapter 11 Case Summary
HILO HATTIE: U.S. Trustee Wants Case Converted to Chapter 7
HOUGHTON EXPRESS LLC: Case Summary & 20 Largest Unsec. Creditors
HUMBOLDT CREAMERY: U.S. Trustee Picks 7-Member Creditors Committee
IDEARC INC: Wants to Hire Moelis & Company as Financial Advisor
IDEARC INC: Court Gives Final Nod on Cash Collateral Use
JARDEN CORP: S&P Affirms Corporate Credit Rating at 'B+'
JOURNAL REGISTER: Revised Plan Offers 9.2% to Unsec. Creditors
LALJI HOTELS: Case Summary & 3 Largest Unsecured Creditors
LAZARD GROUP: Moody's Changes Outlook on 'Ba1' Rating to Negative
LEHMAN BROTHERS: U.K. Unit Opposes Proposed Int'l Case Protocol
LEHMAN BROTHERS: Bankhaus Seeks Recognition of Insolvency Case
LEHMAN BROTHERS: Asks Court to Approve GTH Settlement
LEHMAN BROTHERS: Examiner Seeks to Retain 20 Contract Lawyers
LEHMAN BROTHERS: UPRS Wants Stay Lifted to Recover $5,000,000
LEHMAN BROTHERS: Inks Pact on Transfer of $2BB Citibank Deposit
LEHMAN BROTHERS: Hughes Hubbard Bills $14.2MM in LBI's SIPA Case
LEHMAN BROTHERS: Going Concern Doubt Raised on CRE Loan Unit
LUCKY CHASE: Case Summary & 20 Largest Unsecured Creditors
MAGELLAN AEROSPACE: Says Loan Extension Critical to Going Concern
MALABAR FOLSOM: Case Summary & 21 Largest Unsecured Creditors
MANCHESTER MALL: Case Summary & 1 Largest Unsecured Creditor
MARTIN W. HOWSER: Case Summary & 20 Largest Unsecured Creditors
MGM MIRAGE: Dubai World Drops Lawsuit, Resumes Funding CityCenter
MICHAEL H. CLEMENT: Case Summary & 20 Largest Unsecured Creditors
MORTON INDUSTRIAL: Has Until May 10 to File Schedules & Statements
NIAGARA FALLS MEMORIAL: Pension Payment Default Cues PBGC Takeover
NEVADA DEPARTMENT: Moody's Cuts Ratings on $439MM Bonds to 'Caa2'
NOBLE INTERNATIONAL: Receives Additional Nasdaq Notice
OPUS SOUTH: Wants to Move Schedules and Statements Filing Deadline
PACIFIC AMERICAN: Case Summary & 10 Largest Unsecured Creditors
PALMETTO FOREST: Case Summary & 20 Largest Unsecured Creditors
PARK LANE I: Files for Chapter 11 in Manhattan
PCI GAMING: Solid Net Revenues Cue Moody's to Retain 'B1' Rating
PEM GROUP: Faces Fraud Charges From SEC, Assets Frozen
PFF BANCORP: Wants Plan Filing Period Extended to July 6
PLANTATION INVESTMENT: Case Summary & 20 Largest Unsec. Creditors
PLY GEM: Poor Credit Metrics Cues Moody's 'Caa2' Corp. Rating
PONTA NEGRA: Faces Fraud Charges From SEC, Assets Frozen
PREVENTION LABORATORIES: Can Access Cash Collateral until July 21
PROGRAMMED FUNDING: Case Summary & 3 Largest Unsecured Creditors
RANDALL G. SOTKA: Case Summary & 20 Largest Unsecured Creditors
RICHMOND REDEVELOPMENT: Moody's Affirms 'Ba3' Rating on Bonds
RIVERSIDE REAL ESTATE: Voluntary Chapter 11 Case Summary
ROCK SOURCE: Voluntary Chapter 11 Case Summary
RUDERMAN CAPITAL: Faces Fraud Charges From SEC, Assets Frozen
RUTLAND RATED: Moody's Downgrades Ratings on Notes to 'C'
SHERRIL M. RIEUX: Case Summary & 9 Largest Unsecured Creditors
SHILOH PV: Voluntary Chapter 11 Case Summary
SILICON GRAPHICS: Court Approves $42.5MM Sale to Rackable Systems
SLEEP DOCTOR: Case Summary & 20 Largest Unsecured Creditors
SOURCE INTERLINK: Seeks Permission to Tap $385MM DIP Facility
SYNTAX-BRILLIAN: Faces Breach-Of-Contract Suit From Amergence
TENNECO INC: Fitch Downgrades Issuer Default Rating to 'B-'
TEXTRON FINANCIAL: Unaffected by S&P's Rating Actions on Parent
TEXTRON INC: Fitch Downgrades Issuer Default Ratings to 'BB+'
TEXTRON INC: S&P Revises Outlook to Negative From Developing
TURTLE CREEK: Case Summary & 20 Largest Unsecured Creditors
TRAWICK TILE: Case Summary & 20 Largest Unsecured Creditors
TWIFORD LLC: Case Summary & 4 Largest Unsecured Creditors
UNIVERSITY FOOD: Case Summary & 20 Largest Unsecured Creditors
WELLDUNN MIAMI: Case Summary & 20 Largest Unsecured Creditors
WESCAST INDUSTRIES: Auto Industry Woes Cue Going Concern Doubt
WESTHAMPTON COACHWORKS: Case Summary & 20 Largest Unsec. Creditors
WILTON PRODUCTS: S&P Withdraws 'CCC+' Corporate Credit Rating
WORLDSPACE INC: Court OKs Settlement Among Major Stakeholders
YELLOWSTONE CLUB: Auction Set for May 13; Sam Bryce Offers $100MM
* Fitch Releases Results on Rating Review of Student Loan ABS
* Fitch Reports Impact of Swine Flu Outbreak on Food Industry
* Almost 50% of Americans Won't Buy from Troubled Automakers
* GDP Has Largest Decline in 50 Years, Exceeds Predictions
* Senate Rejects Bid to Permit Judges to Modify Home Loan Terms
* BOOK REVIEW: Beyond the Quick Fix: Managing Five Tracks To
Organizational Success
*********
AMERICAN COMMUNITY: Selling to Lenders by Late May
--------------------------------------------------
Bill Rochelle at Bloomberg News relates that American Community
Newspapers LLC is proposing a May 22 auction to determine whether
anyone will top an offer from existing secured creditors to buy
the business.
According to the report, the secured lenders, owed $107 million on
a term loan and revolving credit, agreed on a contract with ACN to
buy the operation in exchange for $32 million they're owed. The
buyers also will pay the cost of curing default on contracts they
take over. In addition, the buyers will pay off whatever is
outstanding on the $5 million secured credit being provided for
the reorganization by Bank of Montreal and General Electric
Capital Corp.
The proposed protocol contemplates this schedule:
-- competing bids would be due May 19.
-- an auction will be held May 22 if qualified bids in
addition to the secured lenders' are received by the bid
deadline.
-- the hearing for approval of the sale is sought to be held
May 26.
Headquartered in Addison, Texas, American Community Newspapers LLC
-- http://www.americancommunitynewspapers.com/-- claims to be one
of the top community newspaper publishers in the United States
based on circulation, and operates in four of the most attractive
major U.S. markets: Minneapolis - St. Paul, Columbus, Dallas -
Fort Worth and Suburban Washington, D.C. - Northern Virginia. The
Company's award winning group of 86 newspapers and fourteen niche
publications reaches approximately 1.4 million households in the
suburban communities surrounding these major cities and enjoys
market leading circulation penetration in all of its markets.
The Company and four of its affiliates filed for Chapter 11
protection on April 28, 2009 (Bankr. D. Del. Lead Case No. 09-
11446). Landis Rath & Cobb LLC and Lowenstein Sandler PC
represents the Debtors in their restructuring efforts. The Debtor
proposed Carl Marks & Co. Inc. as financial advisor, and Graubard
Miller as special corporate counsel. When the Debtors filed for
protection from their creditors, they listed assets between
$50 million and $100 million, and debts between $100 million and
$500 million.
AMERICAN COMMUNITY: Taps Administar Services as Claims Agent
------------------------------------------------------------
American Community Newspaper LLC and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for permission
to employ Administar Services Group LLC as their noticing and
claims agent.
The firm will:
a) prepare and serve required notices in the Debtors' Chapter 11
cases
b) prepare for filing with the Court a certificate or affidavit
of service
c) assist the Debtors in the preparation of their schedules of
assets and liabilities, and statements of financial affairs
if requested;
d) receive and record proofs of claim and proofs of interest
filed;
e) create and maintain official claims registers;
f) maintain an up-to-date mailing list for all entities that
have filed a proof of claim or proof of interest
g) provide access to the public for examination of copies of the
proofs of claim or interest without charge during regular
business hours;
h) record all transfers of claims pursuant to Rule 3001(e) of
the Federal Rules of Bankruptcy Procedure, and provide notice
of the transfers as required by Bankruptcy Rule 3001(e);
i) comply with applicable federal, state, municipal, and local
statutes, ordinances, rules, regulations, orders and other
requirements;
j) assist the Debtors and provide temporary employees to
process, reconcile and resolve claims, as necessary;
k) promptly comply with such further conditions and requirements
as the Clerk's Office or the Court may at any time prescribe;
and
l) perform other administrative and support services related to
noticing, claims, docketing, and distribution as the Debtors
may reasonably request.
The firm will charge the Debtors at these rates:
Designation Hourly Rate
----------- -----------
president/senior vice president $185-$225
vice president/executive consultant $150-$225
bankruptcy consultant and senior bankruptcy consultant $90-$150
bankruptcy analyst/senior bankruptcy analyst $55-$85
administrative/operations/call center attendant $25-$45
To the best of the Debtors' knowledge, the firm is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
Headquartered in Addison, Texas, American Community Newspapers LLC
-- http://www.americancommunitynewspapers.com/-- claims to be one
of the top community newspaper publishers in the United States
based on circulation, and operates in four of the most attractive
major U.S. markets: Minneapolis - St. Paul, Columbus, Dallas -
Fort Worth and Suburban Washington, D.C. - Northern Virginia. The
Company's award winning group of 86 newspapers and fourteen niche
publications reaches approximately 1.4 million households in the
suburban communities surrounding these major cities and enjoys
market leading circulation penetration in all of its markets.
The Company and four of its affiliates filed for Chapter 11
protection on April 28, 2009 (Bankr. D. Del. Lead Case No. 09-
11446). Landis Rath & Cobb LLC and Lowenstein Sandler PC
represents the Debtors in their restructuring efforts. The Debtor
proposed Carl Marks & Co. Inc. as financial advisor, and Graubard
Miller as special corporate counsel. When the Debtors filed for
protection from their creditors, they listed assets between
$50 million and $100 million, and debts between $100 million and
$500 million.
AMERICAN INT'L: Names M. Winter as Vice Chair for Planning
----------------------------------------------------------
American International Group, Inc., reported that Matthew E.
Winter -- AIG Senior Vice President, President and CEO of American
General Life Companies -- has been named Vice Chairperson,
Transition Planning and Administration, reporting to AIG
Chairperson and CEO Edward M. Liddy. In this position, Mr. Winter
succeeds Richard H. Booth, who has retired.
Mr. Winter will continue to serve as President and CEO of American
General Life Companies, a position he has held since joining AIG
in 2006. He was elected AIG Senior Vice President in March 2007.
Previously he served as Executive Vice President and member of the
Office of the CEO for MassMutual Financial Group.
Jeffrey Hurd has also been named AIG Vice President and Chief
Administrative Officer and will oversee AIG's global operations
and systems, corporate administration and a variety of special
projects, reporting to Mr. Winter. Mr. Hurd will continue to
serve as Senior Vice President and Head of Asset Management
Restructuring, reporting to Paula Reynolds. He joined AIG in 1998
in the Corporate Legal Department, and was most recently AIG
Investments Senior Managing Director, Chief Administrative Officer
and General Counsel.
Commenting on the appointments, Mr. Liddy said Mr. Winter and Mr.
Hurd will play key roles in AIG's efforts to restructure its
businesses and repay the government assistance it has received.
"We continue to make progress every day," Mr. Liddy said. "With
their excellent management skills, Matt and Jeff will help
continue our momentum."
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 November 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.
APPLETON PAPERS: Moody's Confirms 'B2' Corporate Family Rating
--------------------------------------------------------------
Moody's Investors Service confirmed all ratings of Appleton Papers
Inc. that were placed under review for downgrade on February 3,
2009, including the company's corporate family rating and
probability of default rating of B2, its senior secured bank
facility rating of Ba3, its senior unsecured notes rating of B3,
and its senior subordinated notes rating of Caa1. At the same
time, Moody's affirmed the company's speculative grade liquidity
rating of SGL-4. A negative ratings outlook was assigned.
In March 2009, Appleton successfully renogotiated its financial
covenants, which should provide the company with improved
financial flexibility over the near to intermediate term. Per the
covenant amendments, Appleton relaxed its total leverage ratio
through June 2011, added a senior secured leverage ratio, and
replaced its interest coverage ratio with a fixed charge coverage
ratio. Despite the improved financial flexibility, Moody's
expects the cushion under Appleton's revised financial covenants
to be modest at best in 2009, and to erode considerably in 2010 as
required covenant levels step down.
Appleton's B2 corporate family rating reflects the challenges it
will face with respect to covenant compliance and liquidity;
eroding credit metrics; sharp expected declines in the carbonless
paper segment; and the lower margins associated with a migration
away from the carbonless paper segment. The ratings also consider
Moody's expectation for less pressure on materials costs; the
potential for future robust thermal papers growth as a result of
the recent capacity expansion at the company's West Carrollton,
Ohio mill; and the company's strong market position within both
the carbonless and thermal paper segments.
The outlook revision to negative reflects Moody's expectation that
further volume declines in the company's carbonless segment will
continue to pressure margins, cash flow generation, and leverage.
The speculative grade liquidity rating looks ahead 12-18 months
and considers internal sources of liquidity (cash on hand plus
free cash flow generation), external sources of liquidity,
covenant compliance, and alternate sources of liquidity. The
company's SGL-4 rating indicates weak liquidity. While Appleton's
recent credit facility amendment provides the company with
increased flexibility under its financial covenants, Moody's
expects compliance to be challenging in 2009 and 2010. In
addition, Moody's expects the company to rely heavily on its
committed facilities to augment its small cash balance and limited
cash flow generation.
These ratings were affected:
-- Corporate family rating confirmed at B2;
-- Probability of default rating confirmed at B2;
-- Senior secured revolving credit facility confirmed at Ba3
(LGD2, 24%);
-- Senior secured term loan B confirmed at Ba3 (LGD2, 24%);
-- Senior unsecured notes confirmed at B3 (LGD4, 65%);
-- Senior subordinated notes confirmed at Caa1 (LGD5, 89%);
-- Speculative grade liquidity rating affirmed at SGL-4;
-- Outlook changed to negative from stable.
The last rating action on Appleton occurred on February 3, 2009
when Moody's lowered the company's corporate family rating to B2
from B1, and placed its ratings under review for further
downgrade.
Appleton Papers Inc., headquartered in Appleton, Wisconsin,
develops and manufactures specialty coated paper products,
including carbonless paper, thermal paper, and other specialty
papers. It also develops and manufactures flexible packaging
products.
BANEX 1: Voluntary Chapter 11 Case Summary
------------------------------------------
Debtor: Banex 1, LLC
1825 S. Lake Stevens Road
Snohomish, WA 98258
Bankruptcy Case No.: 09-14116
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Streamline Tower Associates, LLC 09-14119
Streamline Tower,LLC 09-14122
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Western District of Washington (Seattle)
Debtor's Counsel: Marc S. Stern, Esq.
1825 NW 65th St
Seattle, WA 98117
Tel: (206) 448-7996
Email: marc@hutzbah.com
Estimated Assets: $100 million to $500 million
Estimated Debts: $100 million to $500 million
Banex did not file a list of 20 largest unsecured creditors when
it filed its petition.
The petition was signed by Patrick L. McCourt, chief executive
officer.
BANK OF AMERICA: Lawmakers to Call for Hearings on Merrill Buy
--------------------------------------------------------------
Michael R. Crittenden and Lliz Rappaport at The Wall Street
Journal report that lawmakers will likely call for hearings to
inquire about the involvement of the Treasury and the Federal
Reserve in Bank of America Corp.'s acquisition of Merrill Lynch &
Co.
According to WSJ, Spencer Bachus of Alabama, the ranking
Republican on the House Financial Services Committee, said that he
probably would seek testimony former Treasury Secretary Henry
Paulson and Federal Reserve Chairman Ben Bernanke, among others.
WSJ relates that Mr. Lewis had said that he felt pressured by
Messrs. Paulson and Bernanke to complete the deal after attempting
to abandon it when he learned of Merrill's ballooning losses and
to not publicly disclose issues with Merrill's finances. "There
is a serious disagreement among the people involved, and we need
to get a clearer picture of what transpired," the report quoted
Mr. Bachus as saying.
Bank of America CEO Kenneth Lewis should get some credit for doing
"the right thing" by going through with the Merrill Lynch deal in
December 2008 because he was acting "in the public interest" to
help stabilize the financial system, WSJ relates, citing House
Financial Services Committee Chairman Barney Frank.
According to WSJ, a spokesperson for House Oversight and
Government Reform Committee Chairman Rep. Edolphus Towns said that
the panel wants to hear further from Mr. Lewis about claims that
he was pressured by government officials to proceed with a deal he
felt was bad for certain shareholders. A panel subcommittee
chaired by Rep. Dennis Kucinich will review documents requested
from the Fed and the Treasury on the matter, WSJ states, citing
the spokesperson. The report states that Mr. Bernanke and
Treasury Secretary Timothy Geithner will likely be interrogated
about the merger during their appearances on Capitol Hill.
WSJ relates that Senate Banking Chairman Christopher Dodd said
earlier this week that he would schedule a committee hearing after
Wednesday's Bank of America shareholder meeting.
MBIA Sues Merrill Over $5.7BB in Derivative Pacts
Serena Ng at WSJ reports that the bond insurance unit of MBIA Inc.
has filed a lawsuit in a New York state court against Merrill
Lynch over $5.7 billion in soured derivative contracts.
WSJ states that MBIA is seeking to cancel the contracts and
recover losses it incurred on contracts tied to Merrill-arranged
CDOs that were purchased by European banks. MBIA, WSJ relates, is
facing hundreds of millions of dollars in losses from swaps.
According to WSJ, the MBIA unit is claiming that Merrill Lynch
deliberately offloaded its deteriorating subprime mortgage
exposures onto the insurer and misrepresented them as high-quality
assets back in 2006 and 2007. MBIA, WSJ relates, said that it was
paid an average of less than 0.08% per year to insure $5.7 billion
in collateralized debt obligations backed by mortgage assets, or
less than $4.6 million a year. According to the report, MBIA said
that one of its affiliates, LaCrosse Financial Products LLC, wrote
credit default swaps on CDOs arranged by Merrill based mainly on
the bank's representations that the collateral backing the
securities was of good quality. The report states that Merrill
was the counterparty on some of the contracts, which were written
between September 2006 and March 2007.
WsJ relates that MBIA claimed that Merrill was aware that the
mortgage assets were losing value and were more likely to be hit
by defaults. Merrill "flipped its losing positions" to investors
and credit-default-swap counterparties, WSJ says, citing MBIA.
According to WSJ, MBIA said that Merrill knew that the insurer,
which guaranteed LaCrosse's obligations, "did not and could not"
perform a cost-effective and detailed analysis of the CDOs and the
mortgage loans underlying them. MBIA, says WSJ, relied primarily
on models based on credit ratings and other gauges to estimate the
risk of the securities.
Bank of America
Based in Charlotte, North Carolina, Bank of America --
http://www.bankofamerica.com/-- 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 serves more
than 59 million consumer and small business relationships with
more than 6,100 retail banking offices, nearly 18,700 ATMs and
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 support to more than 4 million small business
owners. The company serves clients in more than 150 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.
BAYTEX ENERGY: S&P Downgrades Rating on US$180 Mil. Notes to 'B'
----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its debt rating
on Calgary, Alberta-based Baytex Energy Trust's (Baytex or the
trust) US$180 million senior subordinated notes to 'B' from 'B+'.
At the same time, Standard & Poor's revised the recovery rating on
the notes to '6' from '5'. The '6' recovery rating indicates an
expectation for negligible recovery (0%-10%) recovery in the event
of default.
Standard & Poor's also affirmed its 'BB-' long-term corporate
credit rating on the trust. The outlook is stable.
"The affirmation follows our review of Baytex's consolidated
business risk and financial risk profiles, both of which remain
consistent with the 'BB-' ratings category," said Standard &
Poor's credit analyst Jamie Koutsoukis. "We view the trust's
demonstrated ability to largely fund its capital expenditures and
its cash distributions through internally generated cash flow as a
strong credit positive, and feel that there is sufficient cushion
at the rating for the trust to withstand lower profitability in
the low hydrocarbon price environment," Ms. Koutsoukis added.
The changes to the debt and recovery ratings follow the company
increasing its secured credit facility since S&P's last recovery
report in April 2008. The amount of the additional secured,
priority debt reduces S&P's estimated residual enterprise value
available to unsecured debtholders to the extent that S&P's
expected recovery for the rated unsecured debt is now 0%-10%. S&P
has not made changes to S&P's simulated default scenario
assumptions.
The stable outlook reflects Standard & Poor's expectation that
Baytex will continue to largely pay for its capital spending
program and distributions through internally generated funds,
manage distribution levels to balance market conditions, while
maintaining a stable production and reserve profile. The trust's
credit profile, which S&P believes remains strong for the ratings,
should provide adequate cushion to absorb some financial
deterioration. Furthermore, Baytex's cost structure should allow
it to withstand a decline in profitability due to weak hydrocarbon
prices. While a positive rating action is possible if the trust
can increase both its product and geographic diversification while
adhering to its existing financial policies, it is unlikely in the
near term, given a sustained, reduced hydrocarbon price
environment. Conversely, S&P could lower the ratings if Baytex
materially ramps up its spending or distributions above operating
cash flow, while increasing debt levels or if hydrocarbon prices
materially fall below forecast levels.
BAYOU GROUP: Hennessee Charged for Recommending Hedge Fund
----------------------------------------------------------
The Securities and Exchange Commission has charged New York-based
investment adviser Hennessee Group LLC and its principal Charles
J. Gradante with securities law violations for failing to perform
their advertised review and analysis before recommending that
their clients invest in the Bayou hedge funds that were later
discovered to be a fraud.
In a settled administrative proceeding, the Commission issued an
order finding that Hennessee Group and Gradante did not perform
key elements of the due diligence that they had represented they
would conduct prior to recommending investments in the Bayou hedge
funds. The SEC also finds that they failed to conduct a
reasonable investigation into red flags concerning Bayou.
Hennessee Group and Gradante routinely represented to clients and
prospective clients that they would not recommend investments in
hedge funds that did not satisfy all phases of their due diligence
evaluation.
"Forewarned is forearmed -- investment advisers must make good on
their promises or face the consequences of vigorous SEC
enforcement action," said Robert Khuzami, Director of the SEC's
Division of Enforcement.
"As the Commission found, these investment advisers failed to
honor the representations they made to their clients and did not
disclose these material departures from their advertised
services," said Antonia Chion, Associate Director of the SEC's
Division of Enforcement. "The advice that clients receive from
hedge fund consultants is especially critical when the hedge funds
are neither regulated nor transparent."
According to the Commission's order, approximately 40 clients
invested millions of dollars in the Bayou hedge funds from
February 2003 through August 2005 after the Hennessee Group
recommended those investments. Most of the money was lost through
trading or dissipated by Bayou's principals, who defrauded their
investors by fabricating Bayou's performance in client account
statements and year-end financial statements. The SEC charged the
managers of the Bayou hedge funds with fraud in 2005.
The Commission's order finds that Hennessee Group and Gradante
failed to conduct the portfolio and trading analysis that it had
advertised to clients. Instead of analyzing Bayou's results and
processes through a review of Bayou's historical trading methods
to determine whether the fund was, in fact, successfully executing
its purported day-trading strategy, Hennessee Group and Gradante
decided not to perform any analysis after Bayou refused to produce
its trading data. They relied entirely on Bayou's uncorroborated
representations about its strategy and its purported rates of
return.
The Commission's order also finds that despite conflicting reports
from Bayou about the identity of their independent auditor,
Hennessee Group and Gradante failed to verify Bayou's relationship
with its auditor. In fact, the accounting firm that purportedly
conducted Bayou's annual audit was a non-existent entity
fabricated by one of Bayou's principals, who was identified in
publicly available state accountancy board records as the
registered agent for the bogus accounting firm.
According to the Commission's order, Hennessee Group and Gradante
also failed to respond to red flags concerning Bayou that came to
their attention while they were monitoring Bayou on behalf of
their clients. In particular, they failed to inquire or
investigate when Bayou provided contradictory responses regarding
the identity of its auditor or to adequately inquire about a rumor
that one of Bayou's principals was affiliated with Bayou's
purported outside auditing firm.
The Commission's order finds that Hennessee Group and Gradante
violated Section 206(2) of the Advisers Act. The order requires
Hennessee Group and Gradante to pay $814,644.12 in disgorgement
and penalties, and to cease and desist from committing or causing
further violations. The parties also are required to adopt
policies to ensure adequate disclosures in the future and to
provide copies of the Commission's Order to all current and
prospective clients for a period of two years.
Hennessee Group and Gradante consented to the entry of the
Commission's order without admitting or denying the findings.
About Bayou Group
Based in Chicago, Illinois, Bayou Group LLC operates and manages
hedge funds. The company and its affiliates filed for chapter 11
protection on May 30, 2006 (Bankr. S.D.N.Y. Lead Case No.
06-22306) to pursue recoveries for the benefit of defrauded
investors.
Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors
in their restructuring efforts. Joseph A. Gershman, Esq., and
Robert M. Novick, Esq., at Kasowitz, Benson, Torres & Friedman,
LLP, represent the Official Committee of Unsecured Creditors.
Kasowitz, Benson, Torres & Friedman LLP is counsel to the
Unofficial Committee of the Bayou Onshore Funds. Sonnenschein
Nath & Rosenthal LLP represents certain investors. When the
Debtors filed for protection from their creditors, they reported
estimated assets and debts of more than $100 million.
Bayou also filed lawsuits against former investors who allegedly
received fictitious profits and an inequitably large return of
their principal investments. Jeff J. Marwil, Esq., at Jenner &
Block, was appointed on April 28, 2006, as the federal equity
receiver.
As reported in the Troubled Company Reporter on April 16, 2008,
Bayou Group and its debtor-affiliates delivered 47 adversary
complaints to the Honorable Adlai S. Hardin Jr. of the U.S.
Bankruptcy Court for the Southern District of New York, seeking to
recover certain fraudulent transfers made by investors against the
Debtors. The Bayou entities include Bayou Management LLC, Bayou
Advisors LLC, Bayou Equities LLC, Bayou Fund LLC, Bayou Superfund,
Bayou No Leverage Fund LLC, Bayou Affiliates Fund LLC, and Bayou
Accredited Fund LLC.
The Debtors said the adversary proceedings arose from a massive
fraudulent investment scheme committed by the Bayou entities,
which controlled private pooled investment hedge funds.
BERNOULLI HIGH: Moody's Cuts Rating on $750 Mil. Notes to 'C'
-------------------------------------------------------------
Moody's Investors Service announced that it has downgraded these
notes issued by Bernoulli High Grade CDO II, Ltd.:
-- US$750,000,000 Class A-1A First Priority Senior Secured
Floating Rate Notes due October 2054, Downgraded to C;
previously on 12/11/2008 Downgraded to Caa3 and Placed on
Review for Possible Downgrade
Moody's explained that the rating action listed above reflects
certain updates and projections and recent rating actions on the
transaction's underlying collateral pool consisting of exposure to
subprime RMBS securities.
Moody's revised loss projections for subprime RMBS issued from
2005 to 2007 were described in a press release titled "2005-7
subprime RMBS on downgrade review" published on February 26, 2009.
The revised loss projection for 2006 vintage subprime pools is
expected to fall within the range of 28% to 32% of the original
balance of such pools, whereas Moody's previous estimate was 22%.
For 2005 and 2007 pools, such projections are expected to range
from 12% to 14% and 33% to 37% of original balance, respectively.
BERRY PETROLEUM: S&P Affirms 'BB-' Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its 'BB-'
corporate credit rating on exploration and production company
Berry Petroleum Co. At the same time, Standard & Poor's removed
its ratings on Berry from CreditWatch with negative implications,
where they were placed on Dec. 29, 2008. The issue-level and
recovery ratings on Berry's subordinated notes remain at 'B' and
'6', respectively. The outlook is stable.
"The rating action follows Berry's announcement that they have
entered into a $140 million second-lien credit facility agreement
and along with the final resolution of the borrowing base
redetermination and completion of the Denver-Julesberg basin asset
sales, announced previously," said Standard & Poor's credit
analyst Aniki Saha-Yannopoulos. "The company's actions have also
improved its liquidity substantially, thus addressing our
liquidity concerns." In addition, on Feb. 19, 2009, Berry
received amendments on its revolving credit facility that ease its
financial covenants and thus allow ample headroom under the
covenants.
The ratings on Berry Petroleum Co. reflect its heavy oil
concentration, high lifting costs for the capital-intensive oil
fields, lower operating margins relative to other E&P companies,
and volatile commodity prices. The ratings also reflect the
company's relatively low-risk nature of reserve base, competitive
finding and development costs, good reserve replacement and large
hedge book temper the company's weaknesses.
The outlook is stable. S&P expects management to keep capital
expenditures within operating cash flow, and to use the free cash
flow to pay down debt. If the company is successful, such that
debt to EBITDA is less than 3x, S&P may consider a revision to
positive outlook provided that the industry conditions are strong.
Poorer-than-expected operating performance leading to debt to
EBITDA of more than 4x or decreased liquidity could trigger a
downgrade.
BRANDYWINE REALTY: Fitch Cuts Credit Ratings; Affirms 'BB+' Rating
------------------------------------------------------------------
Fitch Ratings downgraded the credit ratings of Brandywine Realty
Trust on April 2, 2009. The Rating Outlook is Negative.
The recent downgrade reflects Fitch's view that BDN's risk-
adjusted capitalization ratio, leverage and liquidity positions
are consistent with a 'BB+' Issuer Default Rating. Offsetting
strengths include the large portfolio of unencumbered properties,
granular tenant roster, solid leasing profile and manageable lease
expiration schedule.
The Negative Rating Outlook is based on the expectation that BDN's
leverage will remain elevated as assets are encumbered to meet
cash needs and increasing vacancy ratings, negative absorption,
and weaker year over year rent growth in BDN's markets will
challenge the company's portfolio.
Fitch's current ratings for Brandywine Realty Trust are:
-- IDR: 'BB+';
-- Unsecured bank credit facility: 'BB+';
-- Senior unsecured notes: 'BB+';
-- Preferred stock: 'BB-'.
BRUNO'S SUPERMARKETS: Final Sale Hearing Continued to May 4
-----------------------------------------------------------
The final sale hearing on Bruno's Supermarkets' LLC's motion to
sell substantially all of its assets, set for April 30, 2009, has
been continued to May 4, 2009, at 9:00 a.m. Central Time.
Pursuant to the amended bidding procedures, the Debtor
commenced the auction on April 29, 2009. However, the Debtor was
unable to conclude the auction as it was then in substantial
negotiations with potential purchasers to purchase its assets.
Accordingly, the Debtor announced at the auction that it would
continue the auction to April 30, 2009, at 10:00 a.m. Central
Time.
As earlier reported by the TCR, Judge Benjamin Cohen of the U.S.
Bankruptcy Court for the Northern District Alabama (Birmingham)
refused to allow Bruno's Supermarkets LLC to terminate its labor
contract with its workers, Bloomberg's Bill Rochelle reported.
According to Bill Rochelle, the Company argued to Judge Benjamin
Cohen that no one would buy the stores and continue operations so
long as the contract remains in place with the United Food &
Commercial Workers Union. The union countered with evidence that
two buyers would bid at auction with the understanding that
completion of the sale would depend on successfully negotiating a
new contract with the union. The Court denied Bruno's request to
scrap its union contract in its entirety, based on that evidence.
The union vowed to strike if the collective bargaining agreement
were terminated by the Court.
According to Mr. Rochelle, the Court ruled in the union's favor
after the employee group modified its initial position. At the
outset, the union wanted the judge to deny the motion outright and
require any bidders to purchase the business under the existing
contract. The union later said it would be willing to negotiate
with buyers, without guaranteeing it would agree on a new
contract.
Bruno's previously said it had a "tentative understanding" with an
unidentified supermarket operator to buy 36 of the stores.
Bids are being accepted from both liquidators and going-concern
buyers. Bruno's is already in the process of closing 11 stores.
About Bruno's Supermarkets
Bruno's Supermarkets, LLC, is a privately held company
headquartered in Birmingham, Alabama. Bruno's is the parent
company of the Bruno's, Food World, and FoodMax grocery store
chains, which includes 23 Bruno's, 41 Food World, and 2 FoodMax
locations in Alabama and the Florida panhandle. Founded in 1933,
Bruno's has operated as an independent company since 2007 after
undergoing several transitions and changes in ownership starting
in 1995.
Bruno's filed for Chapter 11 relief on February 5, 2009 (Bankr.
N.D. Ala. Case No. 09-00634). Burr & Forman LLP is the Debtor's
lead counsel. Najjar Denaburg, P.C., is the Debtor's conflicts
counsel. Greenberg Traurig, LLP, is the official committee of
unsecured creditors' counsel. Alvarez & Marsal is the Debtor's
restructuring advisor. When Bruno's filed for Chapter 11
protection from its creditors, it listed assets and debts of
between $100 million and $500 million each.
BUCCANEER BEACH: Case Summary & 3 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Buccaneer Beach Resort Motel, Inc.
10107 Tarpon Dr.
Treasure Island, FL 33706
Bankruptcy Case No.: 09-08431
Chapter 11 Petition Date: April 28, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Judge: Catherine Peek McEwen
Debtor's Counsel: Buddy D. Ford, Esq.
115 N. MacDill Avenue
Tampa, FL 33609-1521
Tel: (813) 877-4669
Fax: (813) 877-5543
Email: Buddy@tampaesq.com
Total Assets: $9,030,077
Total Debts: $4,690,899
According to its schedules of assets and liabilities, $4,649,310
of the debt is owing to secured creditors and the remaining
$41,589 for unsecured priority claims held by governmental units.
A list of the Company's 3 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flmb09-08431.pdf
The petition was signed by Boja J. Loncarski, vice president of
the Company.
BULTMAN COMPANY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Bultman Company Inc., Manufacturing
aka BCI Manufacturing
aka BCI .
aka BCI Manufacturing Powder, Coati
PO Box 428
Hugoton, KS 67951-0428
Bankruptcy Case No.: 09-11263
Debtor-affiliate filing separate Chapter 11 petition:
Entity Case No.
------ --------
Bultman Tire, Inc. 09-11264
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of Kansas (Wichita)
Judge: Chief Judge Robert E. Nugent
Debtor's Counsel: Christopher W. O'Brien, Esq.
Brown, Dengler & O'Brien, LLC
1938 N. Woodlawn, Ste. 405
Wichita, KS 67208
Tel: (316) 260-9720
Fax: (316) 260-8867
Email: cobrien@bdolaw.com
Total Assets: $1 million to $10 million
Total Debts: $1 million to $10 million
A full-text copy of the Bultman Company's petition, including its
list of 20 largest unsecured creditors and schedules of assets and
debts, is available for free at:
http://bankrupt.com/misc/ksb09-11263.pdf
The petition was signed by Alan D. Bultman, president of the
Company.
CALEDONIA SPRINGS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Caledonia Springs, Inc.
P.O. Box 1997
Kingshill, VI 00851
Bankruptcy Case No.: 09-10006
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District Court of the Virgin Islands -
Bankruptcy Division (St. Croix)
Debtor's Counsel: Lydia Logie-Moolenaar, Esq.
Center for Professional Legal Services
1142 King Street
Christiansted, VI 00820
Tel: (340) 719-6494
Email: lydrogovi@viaccess.net
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/vib09-10006.pdf
The petition was signed by Gail W. Chaiang, president of the
Company.
CAPITAL CROSSING: Ernst & Young Raises Going Concern Doubt
----------------------------------------------------------
The audit report of Ernst & Young, LLP, in Boston, Massachusetts,
the independent registered accounting firm of Capital Crossing
Preferred Corporation, expresses substantial doubt on the
Company's ability to continue as a going concern.
Ernst & Young cited the bankruptcy of Lehman Brothers Holdings
Inc., and the ability of the Office of Thrift Supervision to
regulate and restrict the business and operations of Capital
Crossing, in light of a Cease and Desist Order and the Prompt
Corrective Action Directive.
Lehman Brothers Holdings Inc., is the parent company of Lehman
Brothers Bank, FSB, and the ultimate parent company of Capital
Crossing.
Lehman Bank, the owner of all of the common stock of Capital
Crossing, is subject to a Cease and Desist Order, dated January
26, 2009, and a Prompt Corrective Action Directive, dated February
4, 2009, issued by the Office of Thrift Supervision, requiring
Lehman Bank, among other matters, to submit a capital restoration
plan and a liquidity management plan, and imposing restrictions on
certain activities of Lehman Bank and Capital Crossing.
Capital Crossing said the administration of the Company has been
significantly impacted by the OTS' issuance of the Order and the
PCA Directive to Lehman Bank. The Order requires Lehman Bank to
ensure that each of its subsidiaries, including the Company,
complies with the Order, including the operating restrictions
contained in the Order. These operating restrictions, among other
things, restrict transactions with affiliates, contracts outside
the ordinary course of business and changes in senior executive
officers, board members or their employment arrangements without
prior written notice to the OTS. Until the termination of the
Order and the PCA Directive, effectively, any cash or in-kind
distribution, any asset acquisition or disposition, or any
significant change in the business of operations of the Company
will be subject to prior approval by the OTS.
The OTS has informed Lehman Bank that prior approval of the OTS is
not required under the Order or the PCA Directive for payment by
the Company of dividends on the Series D preferred stock. There
can be no assurance, however, that future dividends on the Series
D preferred stock will not require prior approval of the OTS,
Capital Crossing said. There also can be no assurance that such
approvals, if required, will be received from the OTS or when or
if Lehman Bank will achieve sufficient regulatory capitalization
levels to remove any such OTS approval requirement. Furthermore,
any future dividends on the Series D preferred stock will be
payable only when, as and if declared by the Board of Directors.
As of December 31, 2008, Capital Crossing had $96.0 million in
total assets, $931,000 in total liabilities, and $95.1 million in
stockholders' equity. It posted a net income of $6.0 million for
year 2008.
A full-text copy of Capital Crossing's Annual Report on Form 10-K
is available at no charge at http://ResearchArchives.com/t/s?3c42
Capital Crossing Preferred Corporation is a commercial mortgage
investment subsidiary of Lehman Bank, which is owned by Lehman
Brothers Holdings. Capital Crossing holds mortgage assets that
generate net income for distribution to stockholders. The Company
may acquire additional mortgage assets in the future, although
management currently has no intention of acquiring additional
assets other than in connection with the potential asset exchange.
All of the mortgage assets in the Company's loan portfolio at
December 31, 2008, were acquired from Capital Crossing Bank and it
is anticipated that substantially all additional mortgage assets,
if any are acquired in the future, will be acquired from Lehman
Bank, currently, the sole common shareholder. As of December 31,
2008, the Company held loans acquired from Capital Crossing Bank
with net investment balances of $53.0 million. The Company's loan
portfolio at December 31, 2008, consisted of mortgage assets
secured by commercial, residential and multi-family properties.
In the event that the Exchange is consummated, the Company's loan
portfolio will consist primarily of loans secured by residential
real estate.
Lehman Bank is responsible for the administration of the day-to-
day activities of the Company in its roles as servicer under a
master service agreement between Lehman Bank and the Company and
as advisor under an advisory agreement. The Company pays Lehman
Bank servicing and advisory fees.
CHRYSLER FINANCIAL: Customers, Dealers to Be Financed by GMAC
-------------------------------------------------------------
GMAC Financial Services has entered into an agreement with
Chrysler LLC to provide automotive financing products and services
to Chrysler dealers and customers. GMAC will be the preferred
provider of new wholesale financing for Chrysler dealer inventory
and has a four-year agreement for incentivized retail financing
with limited exclusivity.
The U.S. government has indicated that it intends to support GMAC
in promoting the availability of credit for dealers and customers
by making liquidity and capital available and by providing the
capitalization that GMAC requires to support the Chrysler
business.
"GMAC is pleased to be part of the solution to restructure and
stabilize the U.S. auto industry," said GMAC Chief Executive
Officer Alvaro G. de Molina. "Providing financing options to
dealers and consumers is critical as we work through one of the
most challenging periods in the global auto sector. We will
leverage our strengths and capabilities as the leading automotive
finance company to serve our new customers, while maintaining our
commitment to current customers.
"Serving as the primary source of financing for Chrysler is
consistent with our strategy to diversify our automotive
business," de Molina said. "We intend to work through the
operational process quickly and effectively to ensure that the
appropriate level of credit is available to support the sale of
Chrysler vehicles."
GMAC will leverage its servicing platform to provide customer
service for the newly originated assets. GMAC has not acquired
the existing assets or liabilities of Chrysler Financial.
The majority of Chrysler dealers and consumers are located in the
U.S., while there are smaller concentrations of business in Canada
and Mexico and other international markets.
GMAC was advised by Wachtell, Lipton, Rosen & Katz and Morgan
Stanley in this transaction.
About GMAC LLC
GMAC Financial Services -- http://www.gmacfs.com/-- formerly
General Motors Acceptance Corporation, is a bank holding company
with operations in North America, South America, Europe and Asia-
Pacific. GMAC specializes in automotive finance, real estate
finance, insurance, commercial finance and online banking. As of
Dec. 31, 2008, the company had $189 billion in assets and serviced
15 million customers around the world.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is wholly owned by GMAC LLC. Cerberus
Capital Management LP led a group of investors that bought a 51%
stake in GMAC LLC from General Motors Corp. in December 2006 for
$14 billion.
On Dec. 24, 2008, GMAC Financial Services' application to become a
bank holding company under the Bank Holding Company Act of 1956,
as amended, was approved by the Board of Governors of the Federal
Reserve System. In addition, GMAC Bank received approval from the
Utah Department of Financial Institutions to convert to a state
bank.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
CHRYSLER FINANCIAL: Moody's Reviews Ratings on Five Tranches
------------------------------------------------------------
Moody's Investors Service has placed five subordinate tranches
from three auto loan securitizations sponsored by Chrysler
Financial Services Americas LLC on review for possible downgrade.
On April 21, Moody's downgraded the Corporate Family Ratings for
Chrysler LLC to C. The downgrade of the corporate rating was
driven by the impact that the unprecedented erosion in the North
American auto markets is having on Chrysler's ongoing viability,
and on the value of its tangible assets and its various brands.
The rating actions on the loan transactions were prompted by the
additional stress that a possible bankruptcy of Chrysler LLC, the
manufacturer of the underlying vehicles, could have on the
recoveries of vehicles backing defaulted accounts. The ratings of
the subordinate securities in these pools are more sensitive to
recoveries than Chrysler-sponsored transactions issued prior to
2007 due to significantly higher than expected defaults relative
to available credit enhancement. During its review, Moody's will
continue to monitor developments and will further assess the
potential impact of lower recoveries on the credit enhancement
available to the securities affected.
Complete rating actions are:
Issuer: Chrysler Financial Auto Securitization Trust 2007-A
-- Cl. B, Placed on Review for Possible Downgrade; previously on
February 18, 2009, Downgraded to Baa3 from A2
-- Cl. C, Placed on Review for Possible Downgrade; previously on
February 18, 2009, Upgraded to Ba2 from B1
Issuer: Chrysler Financial Auto Securitization Trust 2008-A
-- Cl. B, Placed on Review for Possible Downgrade; previously on
February 18, 2009, Downgraded to Baa3 from Aa3
-- Cl. C, Placed on Review for Possible Downgrade; previously on
February 18, 2009, Downgraded to Ba3 from Baa2
Issuer: Chrysler Financial Auto Securitization Trust 2008-B
-- Cl. B, Placed on Review for Possible Downgrade; previously on
February 18, 2009, Downgraded to Ba1 from A2
Originator and Servicer
Chrysler Financial is a wholly-owned indirect subsidiary of
Chrysler Holding LLC and engages in providing consumer and dealer
automotive financing for the products of Chrysler LLC and other
manufacturers, including retail and lease financing for vehicles,
dealer inventory and other financing needs. Chrysler Holding owns
both Chrysler Financial and Chrysler LLC. The Corporate Family
Ratings for Chrysler Financial and Chrysler LLC are Ca and C,
respectively. The outlook for both ratings is negative.
CHRYSLER FINANCIAL: Moody's Downgrades Ratings on Two Classes
-------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of two
classes of notes from two auto lease securitizations sponsored by
Chrysler Financial Services Americas LLC. The transactions remain
on review for further possible downgrade. On April 21, Moody's
downgraded the Corporate Family Ratings for Chrysler LLC to C.
The downgrade of the corporate rating was driven by the impact
that the unprecedented erosion in the North American auto markets
is having on Chrysler's ongoing viability, and on the value of its
tangible assets and its various brands. The actions on the
Chrysler Financial lease securitizations also reflect the impact
that a possible bankruptcy of the manufacturer could have on the
residual values of the vehicles backing the underlying lease pool.
Vehicle residual values are crucial to the performance of auto
lease transactions since they comprise a significant portion of
the collateral value that is securitized. Moreover, exposure to
residual values grows over time as leases near termination. Used
vehicle prices, and hence residual values, have experienced
unprecedented volatility at various points during the last twelve
months for Chrysler as well as the auto industry as a whole; it is
likely that a manufacturer bankruptcy would put further pressure
on vehicle values.
The rating actions reflect the current bankruptcy probability and
the significant event risk facing Chrysler's outstanding lease
transactions. The ratings are now consistent with Moody's
expectation that a Chapter 11 filing is quite likely but that an
immediate Chapter 7 filing is not likely. The notes remain on
review for further possible downgrade due to significant
uncertainty surrounding Chrysler in 2009. Moody's will continue
to monitor developments and will further assess the potential
impact on their rated outstanding lease transactions as necessary.
On March 31, the Obama administration rejected as inadequate the
restructuring plans submitted by Chrysler. The administration
also affirmed its willingness to rely on the bankruptcy process to
restructure the company unless it can formulate a new plan that
the administration determines will be effective in restoring its
competitiveness. Chrysler faces a difficult burden in
demonstrating its viability due to a narrow window for submitting
a revised plan (by April 30, 2009).
The complete rating actions are:
Issuer: Chrysler CA Lease Receivables Trust II, CALN2 Notes
-- CALN2 Class A Note, Downgraded to Baa3 and Placed on Review
for Possible Downgrade; previously on April 23, 2009, Baa1
Placed on Review for Possible Downgrade
Issuer: Chrysler CA Lease Receivables Trust II, CALW2 Notes
-- CALW2 Class A Note, Downgraded to Ba3 and Placed on Review
for Possible Downgrade; previously on April 23, 2009, Baa2
Placed on Review for Possible Downgrade
Originator and Servicer
Chrysler Financial is a wholly-owned indirect subsidiary of
Chrysler Holding LLC and engages in providing consumer and dealer
automotive financing for the products of Chrysler LLC and other
manufacturers, including retail and lease financing for vehicles,
dealer inventory and other financing needs. Chrysler Holding owns
both Chrysler Financial and Chrysler LLC. The Corporate Family
Ratings for Chrysler Financial and Chrysler LLC are Ca and C,
respectively. The outlook for both ratings is negative.
CHRYSLER LLC: Seeks Bankruptcy Protection in Manhattan
------------------------------------------------------
Chrysler LLC and 24 affiliates have sought Chapter 11 protection
from creditors before the U.S. Bankruptcy Court for the Southern
District of New York.
President Barack Obama announced the bankruptcy filing by one of
the Detroit Big 3 automakers at a 12:00 noon press conference
yesterday.
The U.S. government will provide Chrysler with more loans as it
forms an alliance with Italy's Fiat SpA.
"This partnership transforms Chrysler into a vibrant new company
with a wealth of strategic advantages," said Robert Nardelli,
Chairman and CEO of Chrysler. "It enables us to better serve our
customers and dealers with a broader and more competitive line-up
of environmentally friendly, fuel-efficient high-quality vehicles.
Benefits to the new company include access to exciting products
that complement our current portfolio, technology cooperation and
stronger global distribution."
Chrysler initiated discussions with Fiat more than a year ago to
develop plans for a global product alliance. Over the past several
months, these discussions have evolved and expanded. Chrysler and
many of its stakeholders worked tirelessly to agree upon
concessions that will result in a significantly lower cost base
and enable fulfillment of a broader strategic alliance.
A slimmed-down version of Chrysler, armed with Fiat's small-car
technology, would emerge from a bankruptcy process, giving the
carmaker a "new lease on life," President Obama said.
An Obama administration official, according to press reports, gave
details about the U.S. government's plans for Chrysler's
bankruptcy case:
-- a sale transaction with Fiat under Section 363 of the
Bankruptcy Code should be completed in two months' time;
-- the U.S. government will provide as much as $3.5 billion in
operating loans during the Chapter 11 process. The Canadian
government will contribute a portion of the funding for
Chrysler's debtor-in-possession financing;
-- the bankruptcy process will be used to extinguish dealer some
contracts to thin the Company's dealership network;
-- there will be no immediate plant closures or job cuts as a
result of the bankruptcy filing; and
-- Chrysler will name a new board of directors.
The Canadian government will contribute $2.42 billion, according
to Canadian officials.
Mr. Nardelli will return to Cerberus Capital Management LP as an
advisor.
Chrysler has hired:
-- Jones Day, as lead counsel;
-- Togut Segal & Segal LLP, as conflicts counsel;
-- Capstone Advisory Group LLC, and
-- Greenhill & Co. LLC, for financial advisory services; and
-- Epiq Bankruptcy Solutions LLC, as its claims agent.
The board of directors of Chrysler Motors LLC, the sole member of
Chrysler Realty Company LLC, passed the resolution sending the
Debtors to bankruptcy.
Judge Arthur Gonzalez is handling the case. The Debtors'
schedules of assets and liabilities and statements of financial
affairs are due May 15, based on the deadline imposed under Rule
1007 of the Federal Rules of Bankruptcy Procedure.
Chrysler's Mexican, Canadian and other international operations
are not part of the bankruptcy filing. Chrysler does not
anticipate commencing a CCAA proceeding in Canada or other
ancillary foreign proceedings.
As part of the restructuring and with the backing of the U.S.
Treasury, Chrysler has reached an agreement in principle with GMAC
to become the preferred lender for Chrysler dealer and consumer
business. GMAC will be able to offer the best long-term finance
options for Chrysler dealers and customers with standard rate
installment products.
When the transaction with Fiat is completed:
* the Voluntary Employee Beneficiary Association (VEBA)
will own 55% of the new company;
* the U.S. and Canadian governments will own
proportionate shares of a 10% equity stake; and
* Fiat will initially hold a 20% ownership stake in
New Chrysler.
Fiat will have the right to increase its ownership stake an
additional 15% in three increments as it meets these criteria:
* 5% for bringing a 40 mpg vehicle platform to
Chrysler to be produced in the U.S.;
* 5% for providing a fuel-efficient engine family
to be produced in the U.S. for use in Chrysler
vehicles; and
* 5% for providing Chrysler access to its vast
global distribution network to facilitate the
export of Chrysler vehicles.
Fiat cannot become a majority owner until after all U.S.
government loans have been completely repaid.
According to Bloomberg, Mr. Nardelli said on a conference call
that the new Chrysler board will be comprised of six directors
selected by the U.S, and three by Fiat.
As a part of the restructuring, most manufacturing operations will
be temporarily idled effective Monday, May 4, 2009. Normal
production schedules will resume when the transaction is
completed, which is anticipated within 30 to 60 days.
Chrysler President Tom LaSorda said, according to Bloomberg, that
Chrysler can have a Fiat-based model available in the U.S. within
18 months.
Chrysler's says that as of Dec. 31, 2008, it has $39,336,000,000
in assets and $55,233,000,000 in debts.
April 30 Deadline
On January 2, 2009, the Treasury granted Chrysler access to a
$4 billion loan. Chrysler submitted an out-of-court restructuring
plan to the Treasury on February 17, which plan called for an
additional $6 billion in loans from the U.S. government. On March
31, the Obama administration concluded that Chrysler's plan did
not establish "a credible path to viability" and that Chrysler "is
not viable as a stand-alone company." The Obama administration
set an April 30 deadline for (i) Chrysler reaching an acceptable
definitive agreement for a partnership Fiat SpA, (ii) Chrysler
restructuring its balance sheet so that it has a sustainable debt
burden, and (iii) Chrysler, FIAT and the UAW need to reach an
agreement that entails more concessions.
In a prime-time press conference on April 29, President Obama
said he was "hopeful" that Chrysler would reach a deal with debt
holders, merge with Italy's Fiat SpA and remain a competitive
automaker. According to Bloomberg, Chrysler in the past week has
"nearly accomplished" a set of goals set by the U.S. Treasury,
including cost-saving labor agreements with its unions and a
tentative agreement to extinguish the vast majority of its bank
debt.
However, President Obama said April 30 that Chrysler is filing for
bankruptcy after Chrysler's smaller lenders, including hedge funds
that he didn't name -- "a small group of speculators" -- refused
to make the concessions agreed to by the Company's major debt
holders and workers. Hours before the announcement, various
sources, including Reuters, Bloomberg, and The Wall Street
Journal, had cited two Obama administration officials as saying
that Chrysler would file for bankruptcy after talks with creditors
broke down.
Chrysler tried to negotiate an alliance with Fiat, slash $6.9
billion in secured loans and cut $10.6 billion owed to a pension
fund. Some lenders, Bloomberg relates, refused to slash the debt
to $2.25 billion, which President Obama pejoratively called
"speculators" in his news conference yesterday.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: 8 Plants Won't Go to Fiat; $200M for Estate WindDown
------------------------------------------------------------------
Ronald E. Kolka, executive vice president and chief financial
officer of Chrysler LLC, said Chrysler will be seeking approval
from the U.S. Bankruptcy Court for the Southern District of New
York to consummate the only sale transaction that preserves the
Company "as a going concern and averts a liquidation of historic
proportions." Mr. Kolka notes that if the proposed transaction,
designed to effect an alliance with Italian automobile
manufacturer, Fiat S.p.A., is rejected and Chrysler liquidates, it
will mean the end of an iconic, 83-year-old American car company
whose name has been synonymous with innovative engineering, from
the Slant-Six and HEMI engines, to power windows, power brakes and
power steering, to the minivan. A liquidation would also have
significant adverse impacts on the nation's economy and Chrysler's
stakeholders:
-- 38,500 hourly and salaried Chrysler workers in the U.S. will
lose their jobs;
-- Chrysler's workers and retirees and their surviving spouses
will also lose over $9.8 billion of health care and other
benefits and put at risk $2 billion in annual pension
payments;
-- All 23 of Chrysler's manufacturing plants and facilities and
20 parts depots in the United States will shut down (as well
as 18 additional plants and parts depots worldwide);
-- Approximately 3,200 Chrysler dealers will be put out of
business and the over 140,000 employees of those dealerships
will lose their jobs;
-- Over $5.3 billion in outstanding auto parts and service
supplier invoices will not be paid to Chrysler's suppliers,
forcing hundreds of suppliers out of business and the loss
of hundreds of thousands of additional jobs;
-- Over 31 million Chrysler, Jeep and Dodge owners would lose
significant value in their cars and trucks as questions are
created regarding their warranties and replacement parts and
services;
-- U.S. local, state and federal governments will lose billions
of dollars in tax revenues, according to a research
memorandum published by the Center for Automotive Research
in November 2008;
-- Billions in annual sales will disappear from local
economies; and
-- Chrysler's first lien secured creditors will receive net
present value recoveries of less than 38 cents on the dollar
and possibly as little as 9 cents; the U.S. government,
another secured creditor, will receive less than that; and
Chrysler's unsecured creditors will receive nothing.
The proposed sale transaction preserves Chrysler's business as a
U.S.-based company under new ownership -- New Chrysler. The
transaction would create the sixth-largest global automaker by
volume unit: Chrysler and its profitable larger car, truck and
minivan platform in North America, allied with Fiat and its fuel-
efficient, low emission, smaller car portfolio in Europe, Latin
America, and Asia.
Only Hedge Funds Doesn't Support Transaction
According to Mr. Kolka, the proposed sale transaction that
Chrysler is seeking approval under Section 363 of the Bankruptcy
Code is the result of thousands of hours of negotiations among
multiple parties. The transaction is being financially backed
by the U.S. Treasury, which will provide the new alliance with
$6 billion of taxpayer money to start up and maintain operations.
This would be an addition to the proposed $4.5 billion DIP loan.
In addition to this unprecedented government support, virtually
all of the major constituencies that would be affected by a
Chrysler liquidation have recognized how devastating it would be
and have made important concessions in support of the alliance.
* The International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America and the
Canadian Auto Workers have agreed to wage and benefit
reductions in the context of a sale to New Chrysler, which
would receive the benefit of a new collective bargaining
agreement in which certain severance benefits are reduced and
retiree health care benefits are restructured;
* Chrysler's dealers have agreed to reduce both their dealer
and service contract margins and reimbursement programs;
* Chrysler's suppliers have agreed to significant price
reductions and other measures that will save millions of
dollars;
* Chrysler's largest secured creditors, JP Morgan Chase,
Goldman Sachs, Morgan Stanley and Citigroup, have agreed to
the transaction that would substantially compromise their
first lien debt, compromising 70% of the $6.9 billion total
outstanding, for an estimated recovery of roughly 28 cents on
the dollar; and
* Chrysler's shareholders, Daimler AG and Cerberus have agreed
as part of a settlement with Chrysler, to forgive $2.0 bill.
of second lien debt and assist in funding Chrysler's pension
plans.
According to Mr. Kolka, the primary remaining constituency that
does not support the proposed sale transaction are the hedge funds
and other financial investors who hold approximately 30% of
Chrysler's first tier debt. Chrysler's distressed debt currently
trades at around 15 cents on the dollar.
Automotive Market Meltdown Blamed
The automotive market meltdown, the worst in at least 26 years,
disrupted Chrysler's substantial progress in implementing a long-
term plan to reduce costs and transform its businesses for the
next generation of cars, Mr. Kolka explains. With sales
plummeting and credit markets frozen, Chrysler undertook an
intense effort to address the challenges it faced. After months
of hard work and dedication by Chrysler's management, employees
and advisors, working with all key stakeholders and with the
support of the U.S. government, Chrysler has commenced Chapter 11
cases to implement a prompt sale to preserve the going concern
value of its business and return its business to viability under
new ownership.
On April 30, 2009, Chrysler, Fiat and New Chrysler entered into a
Master Transaction Agreement that is supported by the U.S.
government. Pursuant to that agreement, among other things:
(a) Chrysler will transfer substantially all of its operating
assets to New CarCo Acquisition LLC ("New Chrysler"); and
(b) in exchange for those assets, New Chrysler will assume
certain liabilities of Chrysler and pay Chrysler $2
billion in cash.
Prior to the "Closing Date", (a) Fiat will contribute to New
Chrysler access to competitive fuel-efficient vehicle platforms,
certain technology, distribution capabilities in key growth
markets and substantial cost saving opportunities; and (b)
New Chrysler will issue approximately 55%, 8% and 2% of the
Membership Interests in New Chrysler to a new VEBA, the U.S.
Treasury and the Canadian government, respectively. After the
"Fiat Transaction", a subsidiary of Fiat will own 20% of the
equity of New Chrysler, with the right to acquire additional 31%
of New Chrysler's Membership Interests under certain
circumstances. The initial Board of Directors will have nine
members.
The U.S. Treasury will initially appoint three Directors to serve
on the Board, at least two of whom will be independent. Those
initial Directors will choose another independent Director. The
VEBA and the Canadian government will each be entitled to
designate one Director. Fiat will have the right to designate
three Directors, at least one of whom will be independent.
Upon the consummation of the Fiat Transaction, it is anticipated
that no cash would remain with Chrysler. Chrysler, however, would
be provided $200 million through the U.S. Treasury DIP loan to run
a safe, prudent and orderly wind down and sale of the estate for
the benefit of Chrysler's creditors. The major assets remaining
would include eight manufacturing facilities, and related
machinery and equipment, with a book value of $2.3 billion.
$39 Billion in Assets
Chrysler's says that as of Dec. 31, 2008, it had $39,336,000,000
in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion
in cash at that time.
Chrysler also tells the bankruptcy court that:
-- for the twelve months ended December 31, 2008, the Chrysler
Companies recorded revenue of more than $48.4 billion;
-- it employs approximately 55,000 hourly and salaried workers
worldwide, 70% of whom are based in the United States; and
-- it makes payments for health care and related benefits to
more than 105,000 retirees
-- 80.1% of its membership interests in Chrysler were held by
Cerberus or its affiliates and 19.9% were held by Daimler or
its affiliate.
During the first 30 days of its Chapter 11 case, the Debtors
expect to make these payments:
Payments to Employees Week 1 $24.7 million
Week 2 $21.7 million
Week 3 $7.4 million
Week 4 $84.4 million
Payments to Officers $457,501
Directors $0
Stockholders $0
Payments to Financial and
Business Consultants:
Capstone Advisory Group LLC $2.0 million
Deloitte Tax, LLP $1.5 million
Greenhill & Co., Inc. $3.0 million
Chrysler's projected cash receipts and disbursements for the next
30 days are:
Cash Receipts $261 million
Cash Disbursements $2,382 million
Net Cash Loss $(2,121 million)
Unpaid Obligations $22.9 billion
Unpaid Receivables $3.9 billion
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Customers, Dealers to Be Financed by GMAC
-------------------------------------------------------
GMAC Financial Services has entered into an agreement with
Chrysler LLC to provide automotive financing products and services
to Chrysler dealers and customers. GMAC will be the preferred
provider of new wholesale financing for Chrysler dealer inventory
and has a four-year agreement for incentivized retail financing
with limited exclusivity.
The U.S. government has indicated that it intends to support GMAC
in promoting the availability of credit for dealers and customers
by making liquidity and capital available and by providing the
capitalization that GMAC requires to support the Chrysler
business.
"GMAC is pleased to be part of the solution to restructure and
stabilize the U.S. auto industry," said GMAC Chief Executive
Officer Alvaro G. de Molina. "Providing financing options to
dealers and consumers is critical as we work through one of the
most challenging periods in the global auto sector. We will
leverage our strengths and capabilities as the leading automotive
finance company to serve our new customers, while maintaining our
commitment to current customers.
"Serving as the primary source of financing for Chrysler is
consistent with our strategy to diversify our automotive
business," de Molina said. "We intend to work through the
operational process quickly and effectively to ensure that the
appropriate level of credit is available to support the sale of
Chrysler vehicles."
GMAC will leverage its servicing platform to provide customer
service for the newly originated assets. GMAC has not acquired
the existing assets or liabilities of Chrysler Financial.
The majority of Chrysler dealers and consumers are located in the
U.S., while there are smaller concentrations of business in Canada
and Mexico and other international markets.
GMAC was advised by Wachtell, Lipton, Rosen & Katz and Morgan
Stanley in this transaction.
About GMAC LLC
GMAC Financial Services -- http://www.gmacfs.com/-- formerly
General Motors Acceptance Corporation, is a bank holding company
with operations in North America, South America, Europe and Asia-
Pacific. GMAC specializes in automotive finance, real estate
finance, insurance, commercial finance and online banking. As of
Dec. 31, 2008, the company had $189 billion in assets and serviced
15 million customers around the world.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is wholly owned by GMAC LLC. Cerberus
Capital Management LP led a group of investors that bought a 51%
stake in GMAC LLC from General Motors Corp. in December 2006 for
$14 billion.
On Dec. 24, 2008, GMAC Financial Services' application to become a
bank holding company under the Bank Holding Company Act of 1956,
as amended, was approved by the Board of Governors of the Federal
Reserve System. In addition, GMAC Bank received approval from the
Utah Department of Financial Institutions to convert to a state
bank.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Case Summary & 50 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Chrysler LLC
aka Chrysler Aspen
aka Chrysler Town & Country
aka Chrysler 300
aka Chrysler Sebring
aka Chrysler PT Cruiser
aka Dodge
aka Dodge Avenger
aka Dodge Caliber
aka Dodge Challenger
aka Dodge Dakota
aka Dodge Durango
aka Dodge Grand Caravan
aka Dodge Journey
aka Dodge Nitro
aka Dodge Ram
aka Dodge Sprinter
aka Dodge Viper
aka Jeep
aka Jeep Commander
aka Jeep Compass
aka Jeep Grand Cherokee
aka Jeep Liberty
aka Jeep Patriot
aka Jeep Wrangler
aka Mopar
aka Plymouth
aka Dodge Charger
1000 Chrysler Drive
Auburn Hills, MI 48326
Bankruptcy Case No.: 09-50002
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Chrysler Realty Company LLC 09-50000
Peapod Mobility LLC 09-50001
Chrysler Aviation Inc. 09-50003
Chrysler Dutch Holding LLC 09-50004
Chrysler Dutch Investment LLC 09-50005
Chrysler Dutch Operating Group LLC 09-50006
Chrysler Institute of Engineering 09-50007
Chrysler International Corporation 09-50008
Chrysler International Limited, L.L.C. 09-50009
Chrysler International Services, S.A. 09-50010
Chrysler Motors LLC 09-50011
Chrysler Service Contracts Florida, Inc. 09-50012
Chrysler Service Contracts Inc. 09-50013
Chrysler Technologies Middle East Ltd. 09-50014
Chrysler Transport Inc. 09-50015
Chrysler Vans LLC 09-50016
DCC 929, Inc. 09-50017
Dealer Capital, Inc. 09-50018
Global Electric Motorcars, LLC 09-50019
NEV Mobile Service, LLC 09-50020
NEV Service, LLC 09-50021
TPF Asset, LLC 09-50022
TPF Note, LLC 09-50023
Utility Assets LLC 09-50024
Related Information: Chrysler LLC manufactures 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.
In 2007, Cerberus Capital Management LP
acquired an 80.1% stake in Chrysler for $7.2
billion. Daimler AG kept a 19.9% stake.
Late in 2008, Daimler attempted to sell its
remaining stake to Cerberus, but talks have
been stalled.
A report by The Wall Street Journal in March
2009 said Cerberus is set to shed its stake
in Chrysler as part of the conditions
surrounding the company's bailout arrangement
with the U.S. government. An anonymous
source within the Obama administration
told WSJ Cerberus' equity stake no longer
holds value. The source told WSJ Cerberus
will still hold on to a controlling stake in
Chrysler Financial, but its stake in the
automaker itself will likely be eviscerated.
Pursuant to the U.S. Government's Automotive
Industry Financing Program, the U.S.
Department of the Treasury made emergency
loans to General Motors Corp., Chrysler
Holding LLC, and Chrysler Financial Services
Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange,
Chrysler and GM submitted restructuring plans
to the Treasury on February 17, 2009. Upon
submission, President Obama's Designee on the
Auto Industry determined that the
restructuring plans did not meet the
threshold for long-term viability. However,
on March 30, 2009, both GM and Chrysler were
granted extensions to complete the
restructuring plans to comply with the
requirements set forth under the Automotive
Industry Financing Program.
The Government has told Chrysler it would
provide up to $6 billion in financing if
Chrysler and Fiat SpA could complete a deal
by the end of April -- on top of the $4
billion Chrysler has already received. Fiat
originally agreed to take 35% of Chrysler,
but it was subsequently reduced to 20%.
GM faces a June 1 deadline to complete
restructuring plans that satisfy the
government's auto task force. So far, GM has
received $13.4 billion in federal loans.
The Office of the Special Inspector General
for the Troubled Asset Relief Program has
said GM may receive up to $5 billion and
Chrysler up to $500 million in additional
working capital. The additional loans are
part of the modification to the existing loan
program.
GM and Chrysler admitted in their viability
plans submitted in February that they
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 by the Troubled Company Reporter
on April 14, 2009, Standard & Poor's Ratings
Services lowered its issue-level ratings
on Chrysler's senior secured first-lien term
loan due 2013 to 'CC' (the same as the 'CC'
corporate credit rating on Chrysler) from
'CCC'. The recovery rating was revised to
'4' from '1', indicating S&P's view that
lenders can expect average (30% to 50%)
recovery in the event of a payment default.
The corporate credit rating is unchanged, at
'CC', which reflects S&P's view of the
likelihood of default -- from either a
bankruptcy or a distressed debt exchange.
Moody's Investors Service said February 18
that the risk of a bankruptcy filing by GM
and Chrysler remains high. The last
rating action on GM and Chrysler was a
downgrade of their Corporate Family Ratings
to Ca on December 3, 2008.
See http://www.chrysler.com/
Chapter 11 Petition Date: April 30, 2009
Court: Southern District of New York (Manhattan)
Judge: Arthur J. Gonzalez
Debtor's Counsel: Corinne Ball, Esq.
cball@jonesday.com
David G. Heiman, Esq.
Jones Day
222 East 41st Street
New York, NY 10017
Tel: (212)326-3939
Fax: (212)755-7306
Other Professionals: Capstone Advisory Group LLC
1065 Avenue of the Americas, Suite 1801
New York, NY 10018
Tel: (212) 782-1400
http://www.capstonecr.com/
Greenhill & Co. LLC
300 Park Avenue
New York, NY 10022
United States of America
Tel: (212) 389 1500
Fax: (212) 389 1700
http://www.greenhill.com/
Togut, Segal & Segal LLP
One Penn Plaza
New York, NY 10119
Tel: (212) 594-5000
Fax: (212) 967-4258
http://teamtogutlaw.com/
Epiq Bankruptcy Solutions LLC
757 Third Avenue, Third Floor
New York, NY 1001
http://www.epiqbankruptcysolutions.com/
Total Assets: $39.3 billion at December 31, 2008
Total Debts: $55.2 billion at December 31, 2008
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Ohio module Mfg Co LLC Trade $70,337,248
3900 Stickney Avenue
Toledo, OHIO 43608
Tel: (419) 729-6700
BBDO Detroit Inc Trade $58,055,133
840 W Long Lake Road
Troy, Michigan 48098-6360
Tel: (212)415-3600
Johnson Controls Inc Trade $50,312,511
One Prince Center SPD& PAB
Holland, Michigan 49423
Johnson Controls -
Rockwood PLTJIT
20201 Woodruff Road
Rockwood, Michigan 48173
Johnson Controls
Taylorplant-JlT
13500 Huron
Taylor, Michigan 48180
Johnson Controls Sycamore
- PA B
1701 West Bethany Road
Sycamore, Illinois 60178
Tel: (414)228-1200
Fax: (734)454-6889
Continental Automotive Trade $46,995,802
Huntsville
One Continental Dr
Auburn Hills, Michigan 48326
Tel: (256)464-1200
+4951193814016
Cummins Engine Company Inc. Trade $43,912,930
500 Jackson Street
PO Box 3005
Columbus, Indiana 47202-3005
Tel: (812)377-1766
Fax: (812)377-7897
Germersheim Spare Parts Trade $36,231,566
Industriegebiel Nord ABL 900
Hafenstrasse I Germersheim
Rheinland-PFALZ 76725
Germany, ABL 900
+4972 74 560 3791
Comau Inc Trade $32,069,462
21000 Telegraph Road
Southfield, Michigan
48034-4280
Tel: (039) 116-5651
Visteon Trade $25,608,790
4 East Laskey Road
Toledo, OH 43612
Visteon Corporation
50W Main Bldg
I Village Ctrdr
Vanburentwp, MI 48111-5711
Tel: (734) 736-5506
Fax: (734) 710-7250
New Process Gear Division Trade $19,636,149
6600 New Venture Gear Drive
East Syracuse, NY 13057
Tel: (905) 726-7046
Fax: (905) 726-2593
Denso International America Trade $18,704,831
Inc.
PO Box 5133
Southfield, MI 48086-5047
Tel: (248) 372-8550
Yazaki North America Trade $18,301,816
6801 Haggerty Road
Canton, MI 48187-3599
Tel: (734) 983-5186
Bridgewater Interiors LLC Trade $17,996,260
4617 W Fort Street
Detroit, Michigan 48209
Tel: (414)228-120
United States Steel Corp Trade $16,182,772
600 Grant Street Room 6100
Pittsburgh, PA 15219-4776
Tel: (412)433-1121
Fax: (412)433-2015
MB Tech Auto Die LLC Trade $13,488,125
44 Coldbrook N W
Grand rapids, Michigan 49503
Tel: (039) 116-5651
Harmanibecker Automotive Sys- Trade $13,474,376
US
1201 Sohio
Martinsville, IN 4615I-2914
Tel: (202)393-1101
Decoma Team Systems Trade $12,979,451
14253 Frazho
Warren, Michigan 48089
Tel: (905) 726-7046
(905)726-2593
(248)729-2650
(248) 729-2828
Cosma International Group Cos Trade $11,446,479
Canada
2550 Steeles Ave East
Brampton, Ontario L6T 5R3 2550
Tel: (905)726-7046
(905)726-2593
(248)729-2650
(248)729-2828
Tata America International Trade $11,338,715
Corporation
101 Park Avenue, 26th Floor
NEw York, NY 10178
Tel: (212)557-8038
Metalsa S A DEC V Trade $11,O19,457
Av Constituci0n 405 PTE
Monterrey, Nuevoleon 64000
+52 (818)369-7405
+52 (818)369-7232
Varitykelsey-Hayes Trade $10,099,570
12025 Tech Center Drive
Livonia, Michigan 48150
Tel: (734) 855-2660
Fax: (734) 855-2473
Mayco International Trade $8,391,564
42400 Merrill
Sterling Heights, MI 48314
Tel: (586) 803-6000
(586)803-6113
(586)254-1550
(586)254-1555
Flex-N-Gate Corporation Trade $8,340,684
1306 E University
PO BOX 727
Urbana, Illinois 61801
Tel: (217)278-2611
(217)278-2318
(586) 759-8975
(586)759-8995
Caravan/Knight Facilities Mgt Trade $8,148,788
LLC
304 S Niagara Street
Saginaw, Michigan 48602
Tel: (989) 737-4290
(898) 921-9353
(517)793-8820
(517)921-9353
Magna Powertrain Inc Trade $8,111,474
1000 Tesma Way
Concord, Ontario L4K5R8
Canada
Tel: (905) 726-7046
(905) 726-2593
(248) 729-2650
(248) 729-2828
Prime Wheel Corporation Trade $7,947,028
17705 S Main Street
Gardena, California 90248
Tel: (310) 516-9126
(310) 532-3700
(310) 8194125
(3IO) 532-3700
Shell Oil Products US Trade $7,792,570
1100 Louisiana
Houston, Texas 7721
Tel: (713) 241-7200
(248) 693-5360
(281) 212-3055
Venchurs Packaging Inc Trade $7,737,523
800 Center Street Inc
Adrian, Michigan 49221
Venchurs Packaging Inc-PFK
800 Liberty Street
Adrian, Michigan 49221
Tel: (517)2644346
(517)265-7468
(517)266-5766
(517)265-7468
Temic Automotive of North Trade $7,644,496
America
21440 West Lake Cook RD
Deerpark, Illinois 60010
Tel: (847) 862-5000
+495 1193814016
Continental Teves Trade $7,420,363
One Continental Drive
Auburn Hills, Michigan 48326
Tel: (248) 393-5300
+495 119-381 4016
Kuka Toledo Production Trade $7,318,878
OPS - PA
B3770 Stickney Ave
Toledo, Ohio 43608
Tel: (049)721-1430
The Wackenhut Corporation Trade $7,094,023
4200 Wackenhut Drive Suite 100
Palm Beach Gardens, Florida
33410
Tel: (800) 749-5686
Fax: (561) 691-6511
Computer Sciences Corporation Trade $6,905,182
3170 Fairview
Falls Church, Virginia 22042
Tel: (703) 641-3300
Fax: (401) 965-2579
AK Steel Corporation Trade $6,608,908
703 Curtis Street
Middletown, Ohio 45043
Tel: (513) 425-5412
Fax: (513) 425-5392
Mahar Tool Supply Company Inc Trade $6,418,103
112 Williams Street
PO Box 1747
Saginaw, Michigan 48605
Tel: (517) 799-5530
Fax: (517) 799-0830
Gaggeneau Plant Trade $6,222,741
Sulzbacherstrasse TOR4
Gaggenau 76571
+497225610
Faurecia Auto Seating Inc ST H Trade $5,942,278
PAB2380 Meijer Dr
Troy, Michigan 48084
Tel: (705) 727-1909
Arcelormittal Burns Harbor LLC Trade $5,843,083
3250 Interstate Drive
Richfield, Ohio 44286
Tel: (330) 659-911O
Fax: (610) 694-5198
Valiant International Inc Trade $5,629,386
1511 E 14 Mile Road
Troy, Michigan 48083
Tel: (519) 974-5200
HI Lexcontrols - Inc. Trade $5,594,001
15780 Steiger Industrial Dr
Hudson, Michigan 49247
Tel: (517) 448-2752
Borgwarner Emissions/Thermal Trade $5,537,893
Sys
3800 Automation Ave
Auburn Hills, Michigan 48326
Tel: (312) 322-8550
Fax: (247) 754-0500
Nemaks-A Trade $5,510,106
APDO Postal 100
Garza, Garcia 66221
Mexico
+528187485208
+528187485240
+528187485296
+528187485230
Continental Automotive Trade $5,504,798
Guadalajara
One Continental Dr
Auburn Hills, Michigan 48326
+495 1193814016
Autoliv ASP Inc. Trade $5,403,471
3350 Airport Road
Ogden, Utah 84405
Tel: (248) 475-0468
Fax: (248) 475-9115
+46858720656
+468244416
The Worthington Steel Company Trade $5,202,569
1205 Dearborn Drive
Columbus, Ohio 43085-4769
Tel: (614) 438-3210
Fax: (614) 438-3210
Magna Steyr LLC Trade $5,125,253
600 Wilshire Dr
Troy, Michigan 48084
Tel: (248) 729-2650
(248) 729-2828
(905)726-7046
(905)726-2593
GT Technologies Inc. Trade $5,116,460
5859 E Executive Dr
Westland, Michigan 48185
Tel: (419) 661-1333
Fax: (419) 661-1337
Robert Bosch Corporation Trade $5,100,395
2800 S 25th Avenue
Roadview, Illinois 60153-4532
Tel: (248) 848-2363
(248) 848-6505
(248) 876-1426
(248)876-1439
Diesel Recon Company Division Trade $5,079,870
4155 Quest Way
Memphis, Tennessee 38115
Tel: (812) 377-1766
Fax: (812) 377-7897
Nippei Toyoma Cor PC Trade $5,065,021
c/o NTC America
46605 Magellan Dr
Novi, Michigan 48377
Tel: (248) 560-1220
Fax: (248) 560-0215
TRW Chassis System Trade $5,050,331
42315 Mancini
Sterling Heights, Michigan
48314
Tel: (734) 855-2912
(734) 855-2600
(734) 855-2473
(734) 855-2999
The petition was signed by Holly E. Leese, senior vice president,
general counsel and secretary.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Non-Tarp Lenders Says Offer to Get 40% Cut Rejected
-----------------------------------------------------------------
A group of non-tarp lenders to Chrysler LLC reveals what it thinks
is the reason for the impasse in restructuring talks at Chrysler.
The Non-Tarp Lenders group says it has made significant
concessions although it has been systematically precluded from
engaging in direct discussions or negotiations with the
government; instead, it has been forced to communicate "through an
obviously conflicted intermediary: a group of banks that have
received billions of TARP funds."
"What created this much-publicized impasse? Under long recognized
legal and business principles, junior creditors are ordinarily not
entitled to anything until senior secured creditors like our
investors are repaid in full. Nevertheless, to facilitate
Chrysler's rehabilitation, we offered to take a 40% haircut even
though some groups lower down in the legal priority chain in
Chrysler debt were being given recoveries of up to 50% or more and
being allowed to take out billions of dollars," the group says.
In contrast, the group notes, over at General Motors, senior
secured lenders are being left unimpaired with 100% recoveries,
while even GM's unsecured bondholders are receiving a far better
recovery than we are as Chrysler's first lien secured lenders.
"Our offer has been flatly rejected or ignored. The fact is, in
this process and in its earnest effort to ensure the survival of
Chrysler and the well being of the company's employees, the
government has risked overturning the rule of law and practices
that have governed our world-leading bankruptcy code for decades."
The Non-Tarp Lenders are a group of roughly 20 relatively small
organizations representing teachers unions, major pension and
retirement plans and school endowments who have invested through
each member of the group in senior secured loans to Chrysler.
Combined, these loans total about $1 billion, the group said.
None of the group's members have taken a dime in TARP money.
The group says it was continuing to discuss its position with the
United States Treasury.
"As much as anyone, we want to see Chrysler emerge from its
current situation as a viable American company, and we are
committed to doing what we can to help," the group says.
"We have made a proposal which we earnestly believe is fair and
would appropriately recognize our legal position."
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Bankruptcy Deal Must Protect Tier 2 and 3 Suppliers
-----------------------------------------------------------------
The Precision Metalforming Association and the National Tooling &
Machining Association has called on U.S. government negotiators,
Chrysler officials, and others to ensure that Chapter 11
bankruptcy protection for Chrysler recognizes the importance of
the solvency of middle market suppliers by including payment of
outstanding accounts owed to auto parts suppliers, particularly
Tier 2 and Tier 3 companies in the supply chain.
"We need the Obama Administration's support right now to help
ensure the survival of Tier 2 and 3 suppliers," said PMA President
Bill Gaskin. "To date, issues of concern for the OEMs, unions,
bondholders and Tier 1 suppliers have all been taken into account,
but little attention has been focused on the thousands of middle-
market, lower tier suppliers comprising the bulk of the automotive
supply chain."
"The fate of Chrysler will have a ripple effect that reaches much
farther and wider than the company and its direct affiliates,"
said Gaskin. "A recovery plan for Chrysler is simply not viable
unless it takes into account the entire automotive supply chain,
including the thousands of small and medium-sized businesses who
supply Tier 1 companies. Without a viable supply chain, recovery
for the rest of the automotive industry is impossible."
"The small and medium sized Tier 2 and 3 companies, especially
those who build dies, molds and special fixtures for welding and
assembly operations, make up the backbone of this economy," said
NTMA Chief Operating Officer Rob Akers. "Bankruptcy protection for
Chrysler must not be confined to guarantees for the company or
Tier 1 suppliers only. The fate of tens of thousands of workers
spread throughout the supply chain -- and throughout hundreds of
communities across the United States -- depends on fair treatment
by Chrysler, the U.S. government and bankruptcy courts."
About NTMA
NTMA is the national association representing the precision custom
manufacturing industry, which employs more than 440,000 skilled
workers in the United States. Its mission is to help members of
the U.S. precision custom manufacturing industry achieve business
success in a global economy through advocacy, advice, networking,
information, programs and services. Many NTMA members are
privately owned small businesses, yet the industry generates sales
in excess of $40 billion a year. NTMA's nearly 1,600 member
companies design and manufacture special tools, dies, jigs,
fixtures, gages, special machines and precision-machined parts.
Some firms specialize in experimental research and development
work.
About PMA
PMA is the full-service trade association representing the $91-
billion metalforming industry of North America. Its nearly 1,100
member companies include metal stampers, fabricators, spinners,
slide formers and roll formers as well as suppliers of equipment,
materials and services to the industry. Through advocacy,
networking, statistics, the Educational Foundation, METALFORM
tradeshows and MetalForming magazine, PMA helps lead innovative
member companies toward superior competitiveness and
profitability.
On the Net: http://www.metalworkingadvocate.org/
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Fitch Cuts Rating, Sees 50-70% Recovery for Sr. Loan
------------------------------------------------------------------
Fitch Ratings has downgraded Chrysler LLC's Issuer Default Rating
(IDR) to 'D' from 'C' based on the company's filing for Chapter 11
bankruptcy.
Fitch's existing ratings on Chrysler remain as:
-- $6.9 billion first-lien senior secured loan 'CC/RR3';
-- Second-lien secured loan 'C/RR6'.
Recovery Ratings (RRs) on the first-lien senior secured loan
remain at 'RR3', indicating expected recoveries in the range of
50-70%. Fitch's analysis is based on a liquidation scenario, with
primary values derived from the value of the Jeep brand and the
Dodge Ram pickup truck platform, modestly supplemented by other
intangible brand values, assorted discounted short-term assets and
long-term fixed assets.
Recoveries for first-lien holders may fall below 50% as a result
of the pre-bankruptcy stances between a portion of the bank group,
Chrysler, the UAW and the government task force. This would
indicate that efforts to create a going concern may take
precedence over the interests of the secured lenders, impairing
secured creditors' ability to realize the full value of the assets
in a liquidation process. In this scenario, current recoveries
would be reduced, as the initial value of the equity granted to
the secured debtholders (valued by Fitch at zero) will be less
than the value of their security interest. Incremental recovery
over the long-term could be realized through value accruing to the
equity in the event that a viable, restructured Chrysler emerges.
The rating of RR6 on the second-lien secured loan indicates
minimal recoveries of 0-10% on the second-lien loans, with actual
recovery expected to be zero.
CHRYSLER LLC: To Remain as Sponsor Under Pension Plan, PBGC Says
----------------------------------------------------------------
Vince Snowbarger, acting director of the Pension Benefit Guaranty
Corporation, said Chrysler's entry into Chapter 11 bankruptcy
protection does not change the status of its defined benefit
pension plans. He said the plans remain ongoing under the
sponsorship of Chrysler, and are insured by the Pension Benefit
Guaranty Corporation. As the bankruptcy process unfolds, the PBGC
will work with Chrysler, its unions, and all other stakeholders to
ensure continuation of the pension plans, he said.
"Benefits in the Chrysler pension plans are guaranteed up to the
limits set by law. If one or more of the plans end in the course
of bankruptcy, many workers and retirees, typically those who
retire at younger ages, would see reduced benefits," he said.
Workers and retirees who are concerned about their benefit and the
impact of a possible pension termination should consult the PBGC's
special Chrysler information page at:
http://www.pbgc.gov/workers-retirees/chrysler.html
The PBGC is a federal corporation created under the Employee
Retirement Income Security Act of 1974. It currently guarantees
payment of basic pension benefits earned by 44 million American
workers and retirees participating in over 29,000 private-sector
defined benefit pension plans. The agency receives no funds from
general tax revenues. Operations are financed largely by
insurance premiums paid by companies that sponsor pension plans
and by investment returns.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Companies Disclose Exposure to Bankruptcy
-------------------------------------------------------
Guelph, Ontario-based Linamar said it has limited exposure to
Chrysler LLC and General Motors on both the receivables and sales
volume side. With respect to receivables, the outstanding balance
owing from Chrysler that is older than 20 days for Chrysler
Canadian and American entities is estimated at less than $700,000.
For better assurance of full recovery, Linamar has EDC insurance
coverage in place for all of the outstanding receivables.
Additionally, over the past few months, Linamar has been working
with Chrysler to minimize the outstanding receivables balance.
"We are of course disappointed that Chrysler was unable to
successfully negotiate with stakeholders a satisfactory solution
to allow them to avoid Chapter 11, however, we feel that we are in
a very strong position to weather the situation given steps we
have taken with Chrysler over the past months to minimize our
exposure to them", said Linamar CEO Linda Hasenfratz.
Linamar is confident that given the steps it has taken, it will
recover the majority of its receivables either within or outside
of the Chapter 11 process.
Linamar looks forward to continuing to work with its valued
customer, Chrysler, as it moves through this restructuring
process.
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 10,000 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.
Strattec Security Corporation said it has delayed reporting
operating results for the fiscal third quarter ended March 29,
2009 pending further understanding of the impact of the Chrysler
LLC bankruptcy filing. The company anticipates being able to
release its fiscal third quarter results on or before May 8, 2009.
STRATTEC designs, develops, manufactures and markets automotive
Security Products including mechanical locks and keys,
electronically enhanced locks and keys, steering column and
instrument panel ignition lock housings; and Access Control
Products including latches, power sliding side door systems, power
lift gate systems, power deck lid systems and related products.
These products are provided to customers in North America, and on
a global basis through the VAST Alliance in which STRATTEC
participates with WITTE Automotive of Velbert, Germany and ADAC
Automotive of Grand Rapids, Michigan. STRATTEC's history in the
automotive business spans 100 years.
Conshohocken, Pennsylvania-based Quaker Chemical Corporation has
said it is closely monitoring the current circumstances
surrounding Chrysler and General Motors, two of the Company's
largest customers, both of whom have pending requests for
additional government funding. The Company's accounts receivable
for General Motors and Chrysler were approximately $6.7 million
and $5.8 million, respectively, as of March 31, 2009. Quaker has
taken steps which it believes significantly reduces its exposure,
and continues to pursue other measures to minimize this risk.
Quaker Chemical -- http://www.quakerchem.com/-- is a leading
global provider of process chemicals, chemical specialties,
services, and technical expertise to a wide range of industries -
including steel, automotive, mining, aerospace, tube and pipe,
coatings and construction materials. Our products, technical
solutions, and chemical management services enhance our customers'
processes, improve their quality, and lower their costs. Quaker's
headquarters is located near Philadelphia in Conshohocken,
Pennsylvania.
As reported by the Troubled Company Reporter, Dollar Thrifty
Automotive Group, Inc., last week said it has no credit exposure
to GM and has potential exposure to Chrysler, its principal
supplier, comprised of:
-- approximately $11 million in trade receivables from Chrysler
Under incentive and vehicle repurchase programs.
-- approximately $5 million in estimated exposure for residual
Value guarantees provided by Chrysler on approximately
690 program vehicles that have been returned to auction but
not yet sold. Vehicles have been at auction an average of
172 days. At the time of sale, Chrysler will be obligated
to pay the Company the difference between the auction price
of the vehicle and the residual value agreed by the parties
at the time of purchase. Auction proceeds will be paid
directly to the Company by the auction.
-- approximately $23 million in estimated exposure for residual
Value guarantees on approximately 3,600 program vehicles
currently in the Company's rental fleet. These vehicles are
subject to return to auction in the third and fourth
quarters of 2009. In the event of a Chrysler bankruptcy,
the Company has the ability to extend the holding
period of these vehicles by converting them to risk
vehicles. This would allow the Company to generate
additional revenue over the useful life of the vehicle to
offset the cost of the loss of the residual value guarantee.
Dollar Thrifty Automotive Group, Inc. -- -- http://www.dollar.com/
and http://www.thrifty.com/-- is a Fortune 1000 company
headquartered in Tulsa, Oklahoma. Driven by the mission "Value
Every Time," the Company's brands, Dollar Rent A Car and Thrifty
Car Rental, serve value-conscious travelers in over 70 countries.
Dollar and Thrifty have over 700 corporate and franchised
locations in the United States and Canada, operating in virtually
all of the top U.S. and Canadian airport markets. The Company's
approximately 6,800 employees are located mainly in North America,
but global service capabilities exist through an expanding
international franchise network.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Will Temporarily Idle Most of Manufacturing
---------------------------------------------------------
Sharon Terlep at The Wall Street Journal reports that Chrysler LLC
said that it will temporarily halt most of its manufacturing
during the bankruptcy process starting this coming Monday.
Citing Chysler Vice Chairperson Tom LaSorda, WSJ relates that two
suppliers refused to ship parts to Chrysler on Thursday, forcing
the Company to close a Warren, Michigan, factory ahead of the
planned shutdown.
According to WSJ, factories of Chrysler as well as General Motors
Corp. could be idled for up to nine weeks. Citing Original
Equipment Suppliers Association industry analysis and economics
vice president Dave Andrea, WSJ relates that Chrysler's move
threatens to push many suppliers closer to bankruptcy, and could
ultimately lead to disruption in the flow of parts to other
automakers, including Ford Motor Co.
WSJ quoted Mr. Andrea as saying, "With a tremendous amount of
effort and cost, the system has been able to hold together. But
with every piece of news like this, that becomes more difficult.
This is where we could see disruptions at Ford and other auto
makers that are still running." Ford spokesperson Todd Nissen
said that the Company doesn't expect a production disruption but
is still monitoring the situation, the report says.
WSJ, citing Mr. Andrea, relates that the Chrysler shutdown will
likely lower U.S. auto production to eight million cars and trucks
for this year, which would be less than half what it was in 2000.
Mr. Andrea said that about 50% of U.S. suppliers will likely be in
"significant distress' as a result of the cuts, up from 35% to 40%
at the end of the first quarter, WSJ states. Other than lost
production, suppliers are at risk of having their payments from
Chrysler disrupted as the Company's finances are managed in
bankruptcy court, according to WSJ.
Citing Plante & Moran auto analyst Craig Fitzgerald, WSJ reports
that around 400, or about one-fifth of top-tier parts makers have
joined a U.S. Treasury program launched in Pril to guarantee
receivables in case an automaker files for bankruptcy. WSJ quoted
Mr. Fitzgerald as saying, "That assistance took a little bit of
the sting out of a bankruptcy. But it doesn't solve the problem"
of production cuts. According to the report, Mr. Fitzgerald said
that more government support will likely be needed to avert a
"cascading and devastating " effect on the U.S. auto industry.
Mr. Andrea said that suppliers' ability to survive the shutdown
will mainly depend on the willingness of banks to continue
financing the firms through the impending revenue shortage, WSJ
states.
Dealers Fear Forced Shutdown
Kate Linebaugh at WSJ relates that many dealers worry that
Chrysler will seek permission from the bankruptcy court to rescind
franchise contracts and force many dealers to close shop.
WSJ states that as part of its restructuring, Chrysler will reduce
its 3,200 dealers. According to WSJ, the National Automobile
Dealer Association said that Chrysler's bankruptcy filing
shouldn't be used to slash dealer ranks. NADA said in a
statement, "A rapid reduction in dealer numbers would not only do
absolutely nothing to improve Chrysler's viability in the short
term, but it would actually work against Chrysler's stated
objective to increase revenue and cut costs."
Dealers like Bob Shuman are worried about selling the growing
stock of vehicles on his lot, WSJ reports. "I have a tremendous
inventory that I was pretty much forced to take," WSJ quoted Mr.
Shuman as saying. According to WSJ, Chrysler offered offered its
dealers cash to take new vehicles to help drive revenue and keep
its factories going and that program stuck Mr. Shuman with about
six months' supply of vehicles.
WSJ states that Troy Allen, who is the owner of a Chrysler-Dodge-
Jeep dealership, calls Chrysler's collapse "a seven-month-long,
slow-motion train wreck." WSJ relates that Mr. Allen took counsel
from a bankruptcy attorney in December 2008 and said that if sales
don't pick up he may have to go out of business. "I certainly
don't think that anybody has done anybody any good dragging this
out for this long . . . there are still 3,200 dealers that are
almost broke," the report quoted Mr. Allen as saying. According
to the report, Mr. Allen doesn't believe that the Fiat alliance
will provide the a near-term boost that his business needs, as the
small vehicles that Fiat produces won't come for two years.
Chrysler Bankruptcy Judge Handled Enron, WorldCom Cases
Reuters relates that the Hon. Arthur Gonzalez of the U.S.
Bankruptcy Court for the Southern District of New York, who
supervised the massive cleanup after the Enron and WorldCom
meltdowns, is handling Chrysler LLC's Chapter 11 case.
Reuters quoted Natasha Labovitz, a partner in the restructuring
group at law firm Kirkland & Ellis LLP, as saying, "We have a
judge here with experience, who did Enron and WorldCom at the same
time, so he's not afraid of work and he understands complex
issues."
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CIERA PROPERTIES: Case Summary & 3 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Ciera Properties, LLC
10909 Atlantic Boulevard
Jacksonville, Fl 32225
Bankruptcy Case No.: 09-03344
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Jacksonville)
Judge: Paul M. Glenn
Debtor's Counsel: Bradley R. Markey, Esq.
Stutsman, Thames & Markey P.A.
50 N Laura Street Suite 1600
Jacksonville, FL 32202-3614
Tel: (904) 358-4000
Fax: (904) 358-4001
Email: BRM@stmlaw.net
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 3 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flmb09-03344.pdf
The petition was signed by Clint D. Miller, president of the
Company.
CINCINNATI BELL: Moody's Downgrades Rating on Sr. Bonds to 'Ba1'
----------------------------------------------------------------
Moody's Investors Service has lowered Cincinnati Bell's short term
liquidity rating to SGL-3 from SGL-1, reflecting primarily the
pending maturity of the Company's revolving credit facility in
early 2010. Although the Company intends to extend the maturity
of the revolver, and has the capacity to repay the revolver
outstandings prior to its scheduled maturity in February 2010, the
lack of an external facility and the resulting modest cash
balances will leave the company with a lower liquidity cushion
over the forward four-quarter period ending March 31, 2010.
Still, Moody's recognizes the Company's ability to generate about
$380 million in cash from operations over the next year, which
should leave it in an adequate liquidity position overall. Should
the company refinance the maturing revolver with a multi-year
facility, the liquidity rating would likely improve.
As part of the rating action, Moody's also downgraded the ratings
on the debt of the Company's Cincinnati Bell Telephone Company
subsidiary, reflecting the continuing repayments of senior
unsecured debt at CBB, which reduced the debt cushion afforded to
the structurally senior debt at CBT. In addition, as Moody's
considers the underfunded pension obligations to be primarily a
liability at CBT, the regulated entity's proportion of total debt
has increased in 2008, thereby moving the CBT ratings closer to
the parent CBB's Ba3 corporate family rating. The outlook remains
stable.
Downgrades:
Issuer: Cincinnati Bell Inc.
-- Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-1
Issuer: Cincinnati Bell Telephone Company
-- Senior Unsecured Regular Bonds/Debentures, Downgraded to Ba1,
LGD2, 18% from Baa3, LGD2, 12%
LGD Changes:
Issuer: Cincinnati Bell Inc.
-- Senior Secured Bank Credit Facility, Downgraded to LGD3, 38%
from LGD3, 34%
-- Senior Secured Regular Bond/Debenture, Downgraded to LGD3,
38% from LGD3, 34%
-- Senior Unsecured Regular Bond/Debenture, Downgraded to LGD4,
57% from LGD4, 50%
CBB's Ba3 CFR reflects the Company's relatively high leverage and
modest free cash flow in relation to total debt. The rating is
supported by the Company's still strong cash generation from the
legacy wireline operations and by increasing contributions from
its wireless and technology segments. While CBB's high leverage
is attributed to the Company's prior acquisitions which performed
below expectations, the Company's capital expenditures in its
wireless and technology solutions segments will strain free cash
flow growth over the rating horizon. In addition, Moody's
anticipates the downward pressure on the Company's free cash flow
to persist due to continuing access line losses in CBB's incumbent
wireline territories. As a result, although the Company has been
selectively paying down debt over the past year and will continue
to do so in 2009, Moody's does not anticipate material
deleveraging in the near to medium term.
Moody's Vice President and Senior Analyst, Gerald Granovsky, says
that the stable outlook is based on expectations that CBB will
maintain stable credit metrics over the rating horizon, as the
rating agency expects the Company to offset the impact of access
line losses in the company's incumbent wireline territories by
operating improvements in the wireless and technology segments,
increasing CLEC, data and broadband revenue, and managing the
company's cost structure effectively.
Moody's most recent rating action for CBB was on February 7, 2008.
At that time Moody's affirmed the Company's ratings.
Cincinnati Bell Inc., with headquarters in Cincinnati, Ohio,
provides telecommunications products and services to residential
and business customers in Ohio, Kentucky and Indiana.
CITIGROUP INC: Lehman Agrees to Transfer of $2BB Deposit
--------------------------------------------------------
Judge James Peck of the U.S. Bankruptcy Court for the Southern
District of New York approved a stipulation between Lehman
Brothers Holdings Inc. and its affiliated debtors, and Citigroup
Inc. and its affiliates for the transfer of a prepetition deposit
to an interest-bearing account.
The deposit in the sum of $2 billion is currently maintained in a
direct account which bears no interest at Citibank N.A., an
affiliate of Citigroup. Citibank asserts rights of netting,
recoupment, offset or claims of right against the deposit on
account of its prepetition and postpetition claims against the
Debtors.
Under the stipulation, Citibank is required to transfer the
deposit to a custody account, in which income is paid with respect
to the balance therein and which is insured by the Federal Deposit
Insurance Corporation in connection with the Temporary Liquidity
Guaranty Program. All income earned on the new account will
constitute property of LBHI's estate.
In another stipulation approved by the Court, Citibank is required
to turn over to the Debtors postpetition deposits that the Debtors
may request, within (i) as to accounts located in the United
States, three days after the request; or (ii) as to accounts
located in foreign jurisdictions, 14 days after the request. On
the date of transfer, Citibank is required to wire the funds to be
released in accordance with the Debtors' wire instructions.
As part of their stipulation, the Debtors will indemnify and
defend Citibank against claims asserted by any third party that
may result from the turnover of postpetition deposits to the
Debtors.
Lehman Agrees to Return EUR759,993 to Barclays
Separately, Lehman Brothers sought and obtained Court approval of
a stipulation it entered into with Lehman Commercial Paper Inc.
and Barclays Bank PLC.
Under the deal, LBHI is required to return the EUR759,993 by wire
transfer to Barclays Bank in accordance with wire instructions to
be provided by Barclays Bank. In return for the transfer,
Barclays Bank agreed to discharge all claims it may have against
the Debtors, their estates and successors solely with respect to
the transfer.
The EUR759,993 was sent in error by Barclays Bank to JPMorgan's
account held at LBHI (UK) for the benefit of LCPI. LCPI is the
participating lender on a revolving credit facility, with Endemol
Finance BV as borrower and Barclays Bank as the agent.
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)
COMMERCIAL CAPITAL: Section 341(a) Meeting Scheduled for May 27
---------------------------------------------------------------
The U.S. Trustee for Region 19 will convene a meeting of creditors
in Commercial Capital, Inc.'s Chapter 11 case on May 27, 2009, at
1:00 p.m., at U.S. Custom House, 721 19th St., Room 104, Denver,
Colorado.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Englewood, Colorado, Commercial Capital, Inc. --
http://www.commercialcapitalinc.com/-- is a commercial real
estate lender and investment partner, which engage in short-
term commercial mortgage.
The Company filed for Chapter 11 on April 22, 2009 (Bankr. D.
Colo. Case No. 09-17238). The Debtor listed $100 million to
$500 million in assets and $50 million to $100 million in debts.
COMMERCIAL CAPITAL: Judge Michael Romero Takes Over Ch. 11 Case
---------------------------------------------------------------
Renee McGaw at Denver Business Journal reports that the Hon.
Michael Romero will now be handling the bankruptcy cases of
Commercial Capital, Inc., and CCI Funding I, LLC.
According to Business Journal, the Hon. Sidney Brooks has recused
himself from the Chapter 11 bankruptcy cases of Commercial Capital
and CCI Funding without citing any reason.
Business Journal relates that Commercial Capital said it will lay
off 15 of 20 employees, over the next few weeks and will continue
to represent and broker commercial real estate loans throughout
the U.S.
Commercial Capital, according to Business Journal, said that the
Debtors' bankruptcy will leave as many as a dozen large Rocky
Mountain region construction projects unfinished.
Commercial Capital CEO Matthew Witt said in a statement, "We lent
out over $200 million in commercial mortgage loans mostly
throughout the Rocky Mountain region over the past two years, and
our borrowers cannot sell their properties or refinance their
loans given the current credit crisis we are in. The commercial
real estate economic conditions are tragic right now."
Citing Mr. Witt, Business Journal states that Commercial Capital
has initiated over the past 90 days default or foreclosure actions
on more than 25% of the loans it originated. CCI officials said
that due to the underperformance of Commercial Capital's loan
portfolio, a Denver-based hedge fund and an international bank
that provided financing to failed to honor their funding
commitments, which were more than $30 million, Business Journal
relates.
Greenwood Village, Colorado-based Commercial Capital, Inc. --
http://www.commercialcapitalinc.com/-- and its affiliate, CCI
Funding I, LLC, are commercial real estate lenders and investment
partners engaging in short-term commercial mortgage. Commercial
Capital and CCI Funding filed for Chapter 11 bankruptcy protection
on April 22, 2009 (Bankr. D. Colo. Case No. 09-17238 and Bankr. D.
Colo. Case No. 09-17437). Robert Padjen, Esq., at Laufer and
Padjen LLC assists Commercial Capital in its restructuring
efforts, while Jeffrey Weinman, Esq., at Weinman & Associates,
P.C., represents Commercial Capital in its bankruptcy case. The
Debtors each listed $100 million to $500 million in assets.
Commercial Capital listed $50 million to $100 million in debts,
wile CCI Funding listed $100 million to $500 million in
liabilities.
CORIOLANUS LIMITED: Moody's Cuts Rating on $125 Mil. Notes to 'C'
-----------------------------------------------------------------
Moody's Investors Service announced that it has downgraded its
rating of Series 82 $125,000,000 Variable Floating Rate CDO Linked
Secured Notes due 2051 issued pursuant to its EUR10,000,000,000
Secured Note Programme issued by Coriolanus Limited.
The rating actions are:
Class Description: Series 82 $125,000,000 Variable Floating Rate
CDO Linked Secured Notes due 2051
-- Current Rating: C
-- Prior Rating: Ca
-- Prior Rating Date: 04/23/09
The transaction is a repackaged security whose rating changes with
the ratings of the underlying securities. The rating action is a
result of the change of the ratings of Class A-1 Senior Secured
Floating Rate Notes Due December 2051 and Class A-2 Senior Secured
Floating Rate Notes Due December 2051.
COSINE COMMUNICATIONS: Asset Redeployment Cues Going Concern Doubt
------------------------------------------------------------------
CoSine Communications Inc. said its restructuring activities and
new redeployment of assets strategy raise substantial doubt as to
its ability to continue as a going concern.
The report dated February 17, 2009, of Burr, Pilger & Mayer LLP in
Palo Alto, California, the Company's independent registered public
accounting firm, on the Company's financial statements for the
period ended December 31, 2008, expressed doubt on the Company's
ability to continue as a going concern.
CoSine was a provider of carrier network equipment products and
services until the fourth quarter of fiscal year 2004 during which
time it discontinued its product lines, took actions to lay off
most of its employees, terminated contract manufacturing
arrangements, contractor and consulting arrangements and various
facility leases, and sold, scrapped or wrote-off its inventory,
property, and equipment. From the fourth quarter of fiscal year
2004 through December 31, 2006, CoSine's business consisted
primarily of a customer support capability for its discontinued
products provided by a third party.
In 2006, CoSine Communications completed the wrap-up of its
carrier services business. In March 2006, CoSine sold the rights
to its patent portfolio, and in November 2006, it sold the
remaining intellectual property rights to its carrier network
equipment products and services. CoSine terminated all customer
service operations effective December 31, 2006, and does not
intend to offer customer support services for its discontinued
products in the future.
CoSine is currently attempting to redeploy existing assets by
identifying and acquiring one or more new business operations with
existing or prospective taxable earnings that can be offset by use
of net operating loss carry-forwards. No candidate for
acquisition has yet been identified, and no assurance can be given
that CoSine will find suitable candidates, and if it does, that it
will be able to utilize existing NOLs.
Based on the Company's $23.2 million in cash and short term
investments at December 31, 2008, and on its cost reduction
activities, CoSine Communications believes that it possesses
sufficient liquidity and capital resources to fund operations and
working capital requirements for at least the next 12 months.
As of December 31, 2008, the Company had $23.2 million in total
assets, $$260,000 in total liabilities, and $516.1 million in
accumulated deficit. The Company had no revenue in 2008 or 2007,
as it had discontinued all service offerings.
CRESCENT RESOURCES: Has Third S&P Downgrade in 10 Months
--------------------------------------------------------
According to Bloomberg's Bill Rochelle, real-estate developer
Crescent Resources LLC received its third downgrade in less than
10 months when Standard & Poor's lowered the corporate peg two
more notches April 28 to CCC+.
As reported in yesterday's TCR, Standard & Poor's Ratings Services
lowered its corporate credit rating on Crescent Resources LLC to
'CCC+' from 'B'. At the same time, S&P lowered the rating
assigned to the senior secured bank loan to 'CCC+' from 'B+' and
revised the related recovery rating to '3' from '2'. In addition,
S&P placed the ratings on Crescent on CreditWatch with negative
implications.
"The downgrades anticipate further deterioration in Crescent's
already weak credit metrics, given our opinion that the current
economic recession will continue to weigh on the company's
transaction-driven revenues," said Standard & Poor's credit
analyst George Skoufis. "We also believe Crescent's liquidity may
be strained because of potentially weaker cash flow, the company's
historically heavy revolver use, difficult credit markets, and the
capital-intensive nature of Crescent's business."
The CreditWatch placements further reflect a lack of recent
financial information on the company (its year-end financials are
due by the end of April), potential covenant pressures, and the
possibility that Crescent may need to amend or restructure its
rated bank loan agreement
Charlotte, North Carolina-based Crescent is a joint venture
between Duke Energy Corp. and Morgan Stanley Real Estate Fund.
It has projects in 10 southeastern and southwestern states
including residential, office and industrial properties.
DELPHI CORP: Closes Sale of Select Exhaust Business Sites
---------------------------------------------------------
Delphi Corporation (PINKSHEETS: DPHIQ) has finalized the sale to
Mexican company Bienes Turgon of assets and shares related to the
company's global exhaust business in Blonie, Poland; Clayton,
Australia; Port Elizabeth, South Africa; joint venture interests
in Monterrey, Mexico; technical centers in Auburn Hills, Mich.
USA; and Bascharage, Luxembourg. Bienes Turgon officially begins
operation of the business on May 1, 2009, under the name Katcon
Global.
As part of this transaction, the sale of assets to Bienes Turgon
from the remaining two locations -- Gurgaon, India and Shanghai,
China -- is expected to close during the second half of 2009.
As announced in December 2008, Delphi received approval from the
U.S. Bankruptcy Court for the Southern District of New York for
the sale of assets related to the company's global exhaust
business to Bienes Turgon.
Although the company is divesting its exhaust business, Delphi
Powertrain Systems continues to provide full engine management
systems -- including air and fuel management, combustion and valve
train technology -- through its gas EMS product business unit.
As reported by the Troubled Company Reporter on December 22, 2008,
Delphi received approval from the U.S. Bankruptcy Court for the
Southern District of New York for the sale of assets related to
the global exhaust business to Bienes Turgon for $17 million,
subject to adjustments.
Delphi selected Bienes Turgon as the lead bidder and received
court approval to proceed with the sale process for the global
exhaust business.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is a global supplier of mobile
electronics and transportation systems, including powertrain,
safety, steering, thermal, and controls & security systems,
electrical/electronic architecture, and in-car entertainment
technologies. Delphi technology is also found in computing,
communications, consumer accessories, energy and medical
applications. Delphi has approximately 146,600 employees and
operates 150 wholly owned manufacturing sites in 34 countries with
sales of $18.1 billion in 2008.
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: Seeks DIP Loan Amendment to Join Supplier Program
--------------------------------------------------------------
Delphi Corporation and its affiliates seek the U.S. Bankruptcy
Court for the Southern District of New York's interim and final
authority to enter into a "fourth amendment" of their $4.35
billion DIP Loan Facility with JP Morgan Chase Bank, N.A., as
administrative agent, and certain lenders, and a "first amendment"
of their Security and Pledge Agreement with the DIP Lenders.
The Fourth DIP Credit Agreement Amendments will permit Delphi to
participate in a supplier program funded by the U.S. Department of
Treasury Auto Task Force, according to John Wm. Butler, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois.
Delphi has been operating in Chapter 11 as of January 2007 by
utilizing the proceeds of the JPMorgan DIP Loan Facility, which
consist of a Tranche A first priority revolving credit facility, a
Tranche B first priority term loan, and a Tranche C second
priority term loan. The DIP Credit Agreement has been amended
since them, the latest of which being on May 9, 2008. In
conjunction with the DIP Credit Agreement, Delphi and the DIP
Lenders have also entered into a Security and Pledge Agreement to
govern the parties' rights with respect to the security interests,
pledges, and liens granted to the DIP Lenders as security for
Delphi's DIP Loan obligations. By the fourth quarter of 2008,
Delphi negotiated an accommodation agreement with JPMorgan,
allowing it to continue using certain of DIP Loan proceeds through
June 30, 2009, subject to certain conditions. The DIP
Accommodation Agreement has been supplemented several times, the
latest modification of which is an extension of the time Delphi is
required to submit a term sheet detailing General Motors
Corporation's role in the Delphi reorganization through May 4,
2009.
The U.S. automotive industry, Mr. Butler notes, is undergoing a
large-scale transformation with significant involvement by the
U.S. Treasury Department's Auto Task Force. In addition to its
substantial role in the ongoing restructurings of Chrysler LLC and
GM, the Auto Task Force has taken additional measures to provide
financial support to the network of companies that supply parts to
the Original Equipment Manufacturers. Indeed, on March 19, 2009,
the Auto Task Force stated it was funding up to $5 billion for a
program, whereby participating suppliers would be able to sell
receivables owing from participating OEMs at a modest discount to
special purpose vehicles supported by Treasury Department-funded
credit facilities at third party servicers.
Under the Auto Supplier Support Program, participating suppliers
may opt to sell their eligible receivables for an immediate cash
payment from the Supplier Program SPV or "Payment Option 1," or a
guaranteed cash payment upon the maturity of the eligible
receivables from the Supplier Program SPV or "Payment Option 2."
Only receivables for products shipped after March 19, 2009, on
qualifying commercial terms may be sold into the Auto Supplier
Support Program. Both GM and Chrysler established Supplier
Program SPVs under the Auto Supplier Support Program in early
April 2009.
Mr. Butler tells the Court that Delphi intends to participate in
the Auto Supplier Support Program by selling, pursuant to Payment
Option 2, qualifying receivables owed to it by Chrysler and its
affiliates to Chrysler Receivables SPV, LLC. As a prerequisite
for selling eligible receivables to Chrysler SPV, Delphi must be
able to grant Chrysler SPV a first priority security interest in
the transferred receivables. This requirement is in order to
protect Chrysler SPV in the event the transaction is judicially
characterized as a loan rather than as a sale. Delphi, however,
is restricted from transferring those eligible receivables under
the Amended DIP Credit Agreement. Thus, to participate in the
Auto Supplier Support Program, Delphi needs to amend the DIP
Credit Agreement and Security and Pledge Agreement.
Accordingly, on April 24, 2009, the Debtors and the requisite DIP
Lenders entered into a Fourth Amendment of the DIP Credit
Agreement to facilitate the Debtors' participation in the Auto
Supplier Support Program.
The salient provisions of the Fourth DIP Credit Agreement
Amendments are:
(1) A provision that authorizes the DIP Agent to execute and
deliver agreements and instruments evidencing:
-- the release of the DIP Lenders' Liens on the Chrysler
receivables sold to Chrysler SPV; and
-- the subordination of the DIP Lenders' Liens on the
Chrysler receivables sold to the Liens granted by the
Debtors on the receivables to Chrysler SPV.
The agreements and instruments must either be in form of a
Lien Priority Agreement to the Fourth DIP Credit Agreement
Amendments or in other form satisfactory to the DIP Agent.
(2) Amended negative covenant provisions relating to (i) Liens,
(ii) Loans, (iii) Investments, Loans, and Advances, and
(iv) Disposition of Assets to permit the Debtors to sell
their Chrysler receivables to Chrysler SPV, grant priority
liens on the receivables to Chrysler SPV, incur loans if
any sale is recharacterized as a loan, and if required
under the Auto Supplier Support Program, repurchase the
Chrysler receivables. The Debtors are also required to
include information relating to the receivables sold to
Chrysler SPV and amounts owed to the Debtors by Chrysler
SPV in Borrowing Base Certificates that the Debtors
deliver to the DIP Agent.
(3) A new provision to alleviate potential obstacles to the DIP
Agent's recovery on the DIP Credit Facility in certain
foreign jurisdictions to the DIP Lenders, to be owed to the
DIP Agent in its individual capacity rather than as
representative for other DIP Lenders. Any payment received
by the DIP Agent as a "parallel debt" creditor will be
distributed according to the priorities set forth under
Loan Documents. This technical provision will facilitate
the DIP Agent's ability to recover on the DIP Facility in
foreign jurisdictions that do not recognize the trust
relationship between the administrative agents and lending
syndicates.
(4) A condition to the effectiveness of the Fourth DIP Credit
Agreement Amendments, which is the Debtors' payment of, as
already provided under the DIP Credit Agreement prior to
amendments, reasonable and out-of-pocket expenses,
including the reasonable fees and expenses of the DIP
Agent's counsel incurred in preparation and execution of
these amendments, to the DIP Agent. No additional fees and
expenses are paid to the DIP Lenders or their advisors in
connection with the Fourth DIP Credit Agreement Amendments.
A full-text copy of the Fourth DIP Credit Agreement Amendments,
including a Lien Priority Agreement form, dated April 24, 2009, is
available for free at:
http://bankrupt.com/misc/Delphi_4thDIPCredAgrAmendment.pdf
A full-text copy of the Auto Supplier Program and related
documents is available for free at:
http://bankrupt.com/misc/Delphi_AutoSupplierProgramDocs.pdf
Mr. Butler avers that auto suppliers like the Debtors are
currently operating in the most difficult economic environment
seen in decades by the automotive industry. The Debtors relate
that they are actively seeking opportunities to protect their
assets, including receivables, as they negotiate a complex global
resolution of their Chapter 11 cases with their key stakeholders
and the U.S. Treasury Department. By participating into the Auto
Supplier Support Program pursuant to Payment Option 2, the Debtors
would be guaranteed payment of their Chrysler receivables upon
their maturity regardless of the path of Chrysler's restructuring,
including a reorganization or liquidation pursuant to Chapter 11,
Mr. Butler points out. "The elimination of the risk of delay or
non-payment of Chrysler receivables in the event Chrysler does
become subject to a case under Chapter 11 is a significant benefit
to the Debtors' estates," he argues.
The Court is set to consider interim approval of the Fourth Credit
Agreement Amendments Motion on May 7, 2009, subject to a final
hearing on May 21, 2009. Objections to the interim approval of
the DIP Facility Amendment request are due May 6, and objections
to the final approval of the request are due May 14.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is a global supplier of mobile
electronics and transportation systems, including powertrain,
safety, steering, thermal, and controls & security systems,
electrical/electronic architecture, and in-car entertainment
technologies. Delphi technology is also found in computing,
communications, consumer accessories, energy and medical
applications. Delphi has approximately 146,600 employees and
operates 150 wholly owned manufacturing sites in 34 countries with
sales of $18.1 billion in 2008.
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: Gov't Rejects GM Bid to Increase Delphi Commitment
---------------------------------------------------------------
General Motors Corporation Chief Executive Officer Frederick A.
Henderson disclosed in a Form S-4 filing with the U.S. Securities
and Exchange Commission on April 27, 2009, that the U.S Department
of Treasury's Auto Task Force did not approve increases of GM's
commitments to Delphi Corp. under a Liquidity Support Agreement.
Given the current credit markets, the lack of plan investors and
the challenges facing the automotive industry, it is unlikely that
Delphi will emerge from bankruptcy in the near-term without
government support, according to Mr. Henderson. "[I]t is [even]
possible that [Delphi] may not emerge successfully at all," he
says.
GM agreed in March 2009 to increase its commitments of liquidity
aid to Delphi from $300,000,000 to $450,000,000 pursuant several
amendments under the GM-Delphi Agreement. The increases were
subject to approvals from the GM Board of Directors, the U.S.
Bankruptcy Court for the Southern District o New York, the U.S.
Department of Treasury's Auto Task Force and certain other
conditions.
Similarly, Mr. Henderson stated that the Auto Task Force also did
not approve the terms of GM's acquisition of Delphi's global
steering option pursuant to Delphi's Option Exercise Agreement
Motion.
The Bankruptcy Court hearings for the approval of amendments to
the GM-Delphi Liquidity Support Agreement as well as the Steering
Business Option Agreement have been adjourned several times from
since late March 2009 upon the request of the Auto Task Force,
citing that it needed more time to review the issues between GM
and Delphi. The current date for the hearings is May 7, 2009.
The Auto Task Force previously told the Court 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 in conjunction of GM's
risks associated with continuity of auto parts supply. The Auto
Task Force, Delphi and GM need to submit a term sheet detailing
Delphi's emergence from bankruptcy to Delphi's DIP Lenders by
May 4, 2009.
Mr. Henderson notes that though Delphi will continue to look for
alternative arrangements to emerge from bankruptcy, there can be
no assurance that it will be successful in obtaining alternative
arrangements. If Delphi is unable to successfully emerge from
bankruptcy in the near-term, it may even be forced to sell all of
its assets, he says. In this scenario, Mr. Henderson relates, GM
may be required to pay additional amounts to secure the parts it
needs until alternative suppliers are secured or new contracts are
executed with the buyers of Delphi's assets. GM may even have to
consider acquiring some of Delphi's manufacturing operations in
order to ensure uninterrupted supply of parts, he states.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is a global supplier of mobile
electronics and transportation systems, including powertrain,
safety, steering, thermal, and controls & security systems,
electrical/electronic architecture, and in-car entertainment
technologies. Delphi technology is also found in computing,
communications, consumer accessories, energy and medical
applications. Delphi has approximately 146,600 employees and
operates 150 wholly owned manufacturing sites in 34 countries with
sales of $18.1 billion in 2008.
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: Goldman Sachs Seeks Court Dismissal of Lawsuit
-----------------------------------------------------------
Goldman Sachs & Co. asks Judge Robert Drain of the U.S. Bankruptcy
Court for the Southern District of New York to grant it partial
summary judgment by dismissing all remaining claims asserted
against it by Delphi Corp. and its debtor affiliates, except
insofar as the Debtors assert that Goldman Sachs is jointly and
severally liable for a willful breach of the Equity Purchase and
Commitment Agreement by another Plan Investor of up to
$39,215,000.
Robinson B. Lacy, Esq., at Sullivan & Cromwell LLP, in New York,
notes that the Court has held that the Debtors' Complaint, as
amended, does not allege that Goldman Sachs breached any provision
of the EPCA. The EPCA only permits the Debtors to seek damages
against Goldman Sachs of up to $39,215,000, and only based on
other Appaloosa Defendant's alleged breach. Mr. Lacy asserts that
Goldman Sachs' assumption of joint liability, subject to the
express damages limitation, should not be the basis for ordering
Goldman Sachs, under the guise of specific performance, to fund
its original $400 million commitment under the EPCA, of which
amount is ten times more than $39 million.
Moreover, Mr. Lacy says, there is no dispute that A-D Acquisition
Holdings, LLC's April 4, 2008 notice of termination was sent
before the scheduled closing of the EPCA. He avers that as
testified by Goldman Sachs witnesses, Goldman Sachs was willing
and prepared to fund the EPCA on April 4, 2008, provided that
other Plan Investors agreed to fund the Agreement as well.
Goldman Sachs was excused from funding either because the Debtors
failed to satisfy the conditions for closing or because the other
Plan Investors never funded their own commitments, Mr. Lacy
reminds the Court.
Mr. Lacy maintains that Goldman Sachs validly exercised its right
to terminate the EPCA. He elaborates that Goldman Sachs'
position with respect to the failure of ADAH and the other Plan
Investors to fund is no different than if the Debtors had refused
to consummate the transactions contemplated by the EPCA. He
points out that the Court has already dismissed the Debtors'
breach of contract claims against Harbinger Capital Partners
Master Fund I, Ltd. and Harbinger Del-Auto Investment Company
Ltd., Pardus DPH Holding LLC and Pardus Special Opportunities
Master Fund L.P., to the extent the Debtors sought monetary
damages more than the $38,944,000 cap for Harbinger Del-Auto and
$33,593,000 cap for Pardus DPH Holdings. Since Harbinger Del-
Auto and Pardus DPH are incapable of funding their commitments and
would not be able to perform under the EPCA, Goldman Sachs can be
excused from its funding obligations as well, Mr. Lacy contends.
Goldman Sachs notes that the Debtors' only remaining claim against
it, aside from the claims of specific performance, is the claim
under Section 1142 of the Bankruptcy Code. Mr. Lacy states that
while the rights the Debtors seek to enforce through the Section
1142 claim arise solely out of the EPCA, the EPCA precludes any
claim to compel performance in the absence of a willful breach.
"It would thus be directly inconsistent with the EPCA and the
Confirmation Order to require Goldman Sachs to provide funding
pursuant to the EPCA after it has terminated the agreement, and
when the conditions to its funding obligation have not been
satisfied."
Mr. Lacy presented to the Court a declaration on April 28, 2009,
containing copies of excerpts from the depositions of Justin
Slatky, Edward Oakley, Sandip Khosla, Esq., of Goldman Sachs in
support of Goldman Sachs' Partial Summary Judgment Motion.
Pursuant to Rule 7056-1 of the Federal Rules of Bankruptcy
Procedure, Mr. Lacy also filed a statement of facts to assert that
there is no genuine issue to be tried in connection with Goldman
Sachs' Partial Summary Judgment Motion. He insists that
undisputed material facts establish that specific performance is
not applicable as a matter of law with respect to Goldman Sachs
for these reasons:
-- Goldman Sachs only assumed joint and several liability to
the extent of $39,250,000;
-- Goldman Sachs did not breach the EPCA;
-- Goldman Sachs validly terminated the EPCA as to itself in
accordance with its unconditional right to do so under
Section 12(d) of the EPCA; and
-- a condition to Goldman Sachs' obligation to close under the
EPCA will never be satisfied because at least two of the
other Plan Investors also failed to satisfy their
obligations under the EPCA.
The Court will convene a hearing on June 8, 2009, to consider
Goldman Sachs' request. Written objections to the request are due
not later than May 22.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is a global supplier of mobile
electronics and transportation systems, including powertrain,
safety, steering, thermal, and controls & security systems,
electrical/electronic architecture, and in-car entertainment
technologies. Delphi technology is also found in computing,
communications, consumer accessories, energy and medical
applications. Delphi has approximately 146,600 employees and
operates 150 wholly owned manufacturing sites in 34 countries with
sales of $18.1 billion in 2008.
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)
DEN-L-TRANS: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Den-L-Trans, Inc.
41 Main Street
Oxford, MA 01540
Bankruptcy Case No.: 09-41613
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of Massachusetts (Worcester)
Judge: Joel B. Rosenthal
Debtor's Counsel: Stephan M. Rodolakis, Esq.
Pojani, Hurley, Ritter & Salvidio, LLP
446 Main Street
Worcester, MA 01608
Tel: (508) 798-2480
Email: phrsbankruptcy@yahoo.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
when it filed its petition.
The petition was signed by Dennis Lawless, Sr., president of the
Company.
DENISON MINES: Raises C$75.4 Million in KEPCO Deal
--------------------------------------------------
Denison Mines Corp. said it had entered into a non-binding
memorandum of understanding with Korea Electric Power Corporation
dated April 13, 2009. The MOU provides that KEPCO will execute a
proposed off-take agreement to purchase 20% of the Company's
uranium oxide concentrates -- U3O8 -- production and acquire by
way of private placement roughly 58 million common shares of the
Company at a subscription price of C$1.30 per Common Share,
representing 19.9% of the post-transaction Common Shares
outstanding, for gross proceeds of C$75.4 million.
The Company said the MOU also stipulates that entities yet to be
determined, which are to be nominated by or affiliated with the
Company's chairman of the board, Lukas Lundin, will acquire
roughly 15 million Common Shares at a subscription price of C$1.30
per Common Share for additional gross proceeds of C$19.5 million.
The subscription price of C$1.30 per share represents a 15%
premium to the 30-day moving average price of the Common Shares on
the Toronto Stock Exchange prior to the execution of the MOU.
If completed, the off-take agreement will provide for deliveries
commencing in 2010 with minimum deliveries of 510,000 to 690,000
pounds of U3O8 per year from 2010 to 2015. The purchase price per
pound of the U3O8 will be on industry standard terms.
Pursuant to the terms of the MOU, KEPCO will obtain the right to
appoint two directors to the Company's board of directors and a
right of first offer to acquire up to 20% of any assets the
Company acquires with a partner or sells.
The transactions are subject to the completion of due diligence by
KEPCO, execution and delivery of definitive agreements on or
before June 15, 2009, and receipt of certain regulatory approvals
including TSX and NYSE Amex approval. There is no guarantee that
the parties will enter into definitive agreements with respect to
the proposed transactions or that such transactions will be
completed.
Going Concern Doubt Raised
Denison, in its annual report for the year ended December 31,
2008, said it is addressing the near term liquidity requirements
by taking a number of steps to reduce the borrowing requirements
including the temporary closure of negative cash flow operations,
the deferral of exploration and development expenditures and the
reduction of the Company's workforce. In addition the Company is
pursuing the sale of certain of its interests in assets and
investigating alternate debt or equity financing that will allow
the Company to meet its obligations in the normal course of
business. Denison had said there are no assurances that
additional financing will be raised and in the event that the
Company sells an asset or assets that the price obtained will
support the amounts required.
"Until the outcome [of the Company's actions} is known there is
considerable uncertainty about the appropriateness of the going
concern basis of accounting," Denison said.
As of December 31, 2008, Denison had US$884.9 million in total
assets and US$276.5 million in total liabilities. The Company
posted a net loss of US$80.6 million for year 2008.
A full-text copy of Denison's 2008 annual report is available at
no charge at http://bankrupt.com/misc/DenisonY2008report.PDF
About Denison Mines
Denison Mines Corp. and its subsidiary companies and joint
ventures are engaged in uranium mining and related activities,
including acquisition, exploration and development of uranium
bearing properties, extraction, processing, selling and
reclamation. The environmental services division of the Company
provides mine decommissioning and decommissioned site monitoring
services for third parties.
The Company has a 100% interest in the White Mesa mill located in
Utah, United States and a 22.5% interest in the McClean Lake mill
located in the Athabasca Basin of Saskatchewan, Canada. The
Company has interests in a number of nearby mines at both
locations, as well as interests in development and exploration
projects located in Canada, the United States, Mongolia and
Zambia, some of which are operated through joint ventures and
joint arrangements. Uranium, the Company's primary product, is
produced in the form of uranium oxide concentrates and sold to
various customers around the world for further processing.
Vanadium, a co-product of some of the Company's mines is also
produced and is in the form of vanadium pentoxide, or V2O5. The
Company is also in the business of recycling uranium bearing waste
materials, referred to as "alternate feed materials".
Denison Mines Inc., a subsidiary of the Company, is the manager of
Uranium Participation Corporation, a publicly listed investment
holding company formed to invest substantially all of its assets
in U3O8 and uranium hexafluoride. The Company has no ownership
interest in UPC but receives various fees for management services
and commissions from the purchase and sale of U3O8 and UF6 by UPC.
E*TRADE FINANCIAL: Moody's Reviews 'B2' Senior Credit Rating
------------------------------------------------------------
Moody's placed on review for a possible downgrade the B2 senior
credit rating of E*TRADE Financial Corporation's, as well as the
ratings of E*TRADE Bank, E*TRADE's thrift subsidiary, including
its D- Bank Financial Strength Rating and Ba3 deposit rating.
E*TRADE Bank's short-term rating remains Not-Prime.
The primary reason for the rating action is the continuing poor
performance of E*TRADE Bank's legacy mortgage portfolio, which is
severely constraining the company's operating and financial
flexibility. During the review process, and in light of worsening
of economic conditions, Moody's will update its stress tests of
E*TRADE's mortgage and RMBS portfolios. Moody's last rating
action on E*TRADE, in November of 2008, incorporated pre-tax
lifetime portfolio credit losses of up to $2.2 billion. E*TRADE's
loan loss provisions during the last two quarters have amounted to
$967 million.
"If on a going forward basis, credit losses remain high or
increase, or if revenues are impacted by sharper cyclical
declines, the holding company's ability to service and repay debt
may be challenged," said Alexander Yavorsky, a Moody's Vice
President.
Substantial loan loss provisions at E*TRADE Bank have continued to
require periodic capital infusions from E*TRADE in order to
maintain a cushion above regulatory capital requirements. This
pattern leaves the holding company, itself burdened with $340
million in annual interest costs, entirely reliant on dividends
from its brokerage subsidiary.
E*TRADE's retail brokerage business is performing well, and
customer balances and activity levels provide good evidence that
E*TRADE's customer franchise is stable and remains competitive.
However, the EBITDA generated by the retail brokerage business is
currently only about 1.7x the interest costs of the parent, which
leaves E*TRADE with limited operating flexibility, if unforeseen
cash flow needs arise or if customer trading activity slows down.
Furthermore, E*TRADE has $436 million in long-term debt maturing
in 2011 (out of total long-term debt of $3.1 billion) and, at
current levels, the company's free cash flow generation ability
leaves it with a very small margin of error in repaying this debt
through earnings. Importantly, at the end of 1Q09, there was
approximately $400 million in cash at the holding company, but,
depending on the future capital needs of the bank, this cash may
not be readily available for repayment of senior debt.
During its review, Moody's will examine E*TRADE's various capital
raising strategies, and their likelihood of success in improving
the financial flexibility and health of the company. To the
extent that E*TRADE is forced to rely on debt-for-equity swaps as
a major component of its de-levering strategy, Moody's may
consider this a distressed exchange. In this case, this would
likely lead to multi-notch downgrade as Moody's considers a
distressed exchange to be an event of default.
The last rating action on E*TRADE was on November 6, 2008 when
Moody's downgraded E*TRADE's senior rating to B2 from Ba3 and
downgraded E*TRADE Bank's BFSR to D- from D and its deposit rating
to Ba3 from Ba2. The outlook on all ratings remained negative.
E*TRADE is a major online retail brokerage firm that reported a
pre-tax loss from continuing operations of $470 million on $1.9
billion in net revenue in 2008.
These ratings were placed on review:
Issuer: E*TRADE Financial Corp.
On Review for Possible Downgrade:
-- Issuer Rating, Placed on Review for Possible Downgrade,
currently B2
-- Multiple Seniority Shelf, Placed on Review for Possible
Downgrade, currently (P)Caa1
-- Senior Unsecured Regular Bond/Debenture, Placed on Review for
Possible Downgrade, currently B2
Outlook Actions:
-- Outlook, Changed To Rating Under Review From Negative
Issuer: E*TRADE Bank
On Review for Possible Downgrade:
-- Bank Financial Strength Rating, Placed on Review for
Possible Downgrade, currently D-
-- Issuer Rating, Placed on Review for Possible Downgrade,
currently Ba3
-- OSO Senior Unsecured OSO Rating, Placed on Review for
Possible Downgrade, currently Ba3
-- Senior Unsecured Deposit Rating, Placed on Review for
Possible Downgrade, currently Ba3
Outlook Actions:
-- Outlook, Changed To Rating Under Review From Negative
EMERALD INVESTMENT: Moody's Junks Ratings on $30 Mil. Notes
-----------------------------------------------------------
Moody's Investors Service announced that it has downgraded its
rating on these notes issued by Emerald Investment Grade CBO,
Limited:
-- US$30,000,000 Class III Mezzanine Secured Fixed Rate Notes
Due 2011, Downgraded to Caa2; previously on December 21, 2006
Upgraded to B1.
According to Moody's, the rating action taken on the notes is the
result of applying Moody's revised assumptions with respect to
default probability, the treatment of ratings on "Review for
Possible Downgrade" or with a "Negative Outlook," and the
calculation of the Diversity Score. The action also reflects
consideration of credit deterioration of the underlying portfolio.
The revised assumptions that have been applied to all corporate
credits in the underlying portfolio are described in the press
release dated February 4, 2009.
Credit deterioration of the collateral pool is observed in, among
others, a decline in the average credit rating (as measured
through the weighted average rating factor), an increase in the
proportion of securities from issuers rated below investment
grade, and failure of the Senior Interest Coverage Test and the
Mezzanine Interest Coverage Test. Moody's also assessed the
collateral pool's elevated concentration risk in a small number of
industries. This includes a significant concentration in debt
obligations of companies in the banking, finance, real estate, and
insurance industries, which Moody's views to be more strongly
correlated in the current market environment.
EOS AIRLINES: UK Administration Concludes; Final Report Filed
-------------------------------------------------------------
The UK Administration of Eos Airlines, Inc. was concluded on
April 24, 2009.
In compliance with the High Court of Justice, Chancery Division,
Companies Court's order dated July 2, 2008, pursuant to the
UNCITRAL Model Law on Cross-Border Insolvency as set out in the
Cross-Border Insolvency Regulations 2006, Geoffrey Wayne Bouchier,
former Joint Administrator of the above named company, gives
notice to foreign creditors that a copy of the Joint
Administrators' progress and final report can be obtained at:
http://www.kccllc.net/eosairlines/
If foreign creditors are unable to download a copy, they may
request a written copy of the same by writing to the former Joint
Administrators of EOS Airlines, Inc. at MCR, 43-45 Portman Square,
London W1H 6LY, UK.
Geoffrey Wayne Bouchier and Andrew Gordon Stoneman of Menzies
Corporate Restructuring were appointed Joint Administrators of the
UK business of EOS Airlines on April 28, 2008.
As reported in the Troubled Company Reporter on July 7, 2008,
the High Court of Justice, Chancery Division, Companies Court
ordered, under Europe's Cross Border Insolvency Regulations 2006,
that the Chapter 11 proceedings of EOS Airlines, Inc. be
recognized as a foreign main proceeding.
The High Court also declared that the administration order given
by the U.S. Bankruptcy Court for the Southern District of New York
be restricted to the Debtor's assets located in the U.K.
As reported in the Troubled Company Reporter on February 5, 2009,
the Bankruptcy Court confirmed on Jan. 28, 2009, the Joint Plan of
Liquidation of Eos Airlines, Inc., under Chapter 11 of the
Bankruptcy Code submitted by the Debtor and the Official Committee
of Unsecured Creditors. Thus, without further application to the
Court, the Debtor, the Committee and the Liquidating Trustee are
authorized to enter into, implement and effect all transactions
contemplated under the Joint Plan.
Pursuant to the terms of the Joint Plan, on the Effective Date of
the Plan, a liquidating trustee will be appointed to liquidate all
of the Debtor's remaining non-cash assets, if any, and to
distribute the Debtor's cash assets, net of the costs of
administration, to the Debtor's creditors in accordance with the
Bankruptcy Code and the Plan.
Under the Plan, all equity interests in the Debtor will be
cancelled, terminated, extinguished and void. Secured Claims will
receive (i) the collateral securing the claim; (ii) if the
collateral is sold for cash, proceeds in the amount of
the allowed claim; or (iii) other consideration as is necessary to
render the allowed secured claim as unimpaired.
Allowed priority non-tax claims will be paid by the Liquidating
Trustee from cash held by the Trust within 10 days after the
allowance date.
Allowed unsecured Warn Act claims will be treated in accordance
with the terms of the settlement agreement reached by the parties.
Each holder of an allowed general unsecured claim will receive its
pro rata share of the available cash on each distribution date
until the Trust has been fully administered, all Estate Property
completely liquidated and all resulting Trust Cash distributed.
A full-text copy of the Disclosure Statement in support of EOS
Airlines, Inc. and the Official Committee of Unsecured Creditors'
Joint Plan of Liquidation is available for free at:
http://bankrupt.com/misc/EOSAirlines_DS.pdf
About EOS Airlines
Based in Purchase, New York, EOS Airlines, Inc. --
http://www.eosairlines.com/-- is a transatlantic airline. The
company filed for Chapter 11 relief on April 26, 2008 (Bankr.
S.D.N.Y. Case No.08-22581). Tim J. Robinson, Esq., and Nicholas
J. Brannick, Esq., at Squire, Sanders & Dempsey L.L.P., in
Columbus, Ohio; and Christine M. Pierpont, Esq., at Squire,
Sanders & Dempsey L.L.P, in Cleveland, Ohio, represent the Debtor
as counsel. Kurztman Carson Consultants LLC acts as the Official
Claims Agent for the maintenance and recordation of claims. The
U.S. Trustee for Region 2 appointed creditors to serve on an
Official Committee of Unsecured Creditors. Joseph M. Vann, Esq.,
and Robert A. Boghosian, Esq., at Cohen Tauber Spievack & Wagner
P.C., in New York, represent the Creditors Committee as counsel.
Alvarez & Marsal in New York is the Financial Advisor for the
Debtor.
Menzies Corporate Restructuring were appointed as joint
administrators in the U.K.
In its schedules, EOS Airlines, Inc. listed total assets of
$57,707,999 and total debts of $16,409,993.
HEREFORD FIOFUELS: May Use Lenders' Cash Collateral Until May 31
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
extended to May 31, 2009, Hereford Biofuels, L.P.'s authority to
use cash collateral of the senior secured lenders, in accordance
with a modified budget.
The Debtors, Societe Generale, as administrative agent to the
Debtors' senior secured lenders, and the official committee of
unsecured creditors have agreed to the extension of the
termination date. Hereford's right to use cash collateral will
automatically terminate upon the occurrence of certain events,
including the dismissal or conversion of the Debtors' Chapter 11
cases, the consummation of a plan of reorganization for the
Debtors, or the entry of an order of the Court approving the terms
of any debtor-in-possession financing for the Debtors.
Pursuant to the Court's Final Cash Collateral Order, dated
February 25, 2009, Hereford's authorization to use cash collateral
terminates on April 27, 2009.
A copy of Hereford's modified cash collateral budget is available
at http://bankrupt.com/misc/Hereford.DE327.pdf
Based in Dallas, Hereford Biofuels Holdings, LLC is a unit of
Panda Ethanol Inc. which is currently developing six 115 million
gallon-per-year denatured ethanol projects located in Texas,
Colorado and Kansas. Panda Ethanol's founder is Panda Energy
International, an American privately-held company.
Hereford Biofuels and three of its debtor-affiliates filed
separate petitions for Chapter 11 relief of January 23, 2009
(Bankr. N.D. Tex. Lead Case No. 09-30453). Dan B. Prieto, Esq.,
Gregory M. Gordon, Esq., and Robert J. Jud, Esq., at Jones Day,
represent the Debtors as counsel. Joseph M. Coleman, Esq., and
Joseph A. Friedman, Esq., at Kane, Russell, Coleman & Logan,
represent the Official Committee of Unsecured Creditors as
counsel. When the Debtor filed for protection from its creditors,
it listed assets of between $50 million and $100 million, and
debts of between $100 million and $500 million.
EUROFRESH INC: Wins Interim OK for KCC as Claims & Noticing Agent
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona authorized,
on an interim basis, Eurofresh, Inc., and Eurofresh Produce Ltd.
to employ Kurtzman Carson Consultants LLC as claims, noticing and
solicitation agent.
A final hearing on the motion is scheduled for May 27, 2009, at
10:00 a.m., prevailing Pacific Time, before this Court.
Objections are due on May 20, 2009.
KCC is expected to, among other things:
a) provide assistance with the preparation of the Debtors'
schedules and statements of financial affairs, well as
creditor matrices;
b) serve as the Court's noticing agent to mail notices to
certain estates' creditors and other parties-in-interest;
c) provide computerized claims, objection and balloting
database services;
d) provide expertise, consultation and assistance in claim and
ballot processing and with the dissemination of other
administrative information related to the Chapter 11 cases,
and
e) provide voting and balloting services, and review and
tabulate the cast of ballots to a Plan.
The Debtors paid KCC a $25,000 retainer prepetition.
The hourly rates of KCC professionals are:
Senior Consultant/ Senior
Management Consultant $255 - $325
Consultant $165 - $245
Technology/Programming Consultant $145 - $195
Project Specialist $80 - $140
Clerical $45 - $65
Weekends, Holidays, Overtime Waived
To the best of the Debtors' knowledge, KCC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About Eurofresh, Inc.
Headquartered in Snowflake, Arizona, Eurofresh, Inc. --
http://www.eurofresh.com/-- produces and sells tomatoes. The
Company and Eurofresh Produce Ltd., its affiliate, filed for
Chapter 11 on April 21, 2009 (Bankruptcy D. Ariz. Lead Case No.
09-07970). Craig D. Hansen, Esq., at Squire, Sanders & Dempsey
L.L.P. represents the Debtors in their restructuring effort. The
Eurofresh Inc., in its bankruptcy petition, said it has assets
worth $50 million to $100 million and debts of $100 million to
$500 million.
EXTENDED FAMILY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Extended Family Concepts Inc.
dba Heather Ridge Commons
913 Pittsburgh Avenue NW
North Canton, OH 44720
Bankruptcy Case No.: 09-61648
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Northern District of Ohio (Canton)
Judge: Russ Kendig
Debtor's Counsel: Anthony J. DeGirolamo, Esq.
116 Cleveland Ave., N.W.
Suite 307
Canton, OH 44702
Tel: (330) 588-9700
Fax: (330) 588-9713
Email: ajdlaw@sbcglobal.net
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ohnb09-61648.pdf
The petition was signed by Gloria J. Prose, president of the
Company.
FREDDIE MAC: Probed by FBI on Possible Accounting Violations
------------------------------------------------------------
The Federal Bureau of Investigation is probing Freddie Mac on
possible accounting violations and on allegations that the Company
improperly delayed the recognition of billions of dollars of
losses, James R. Hagerty and Evan Perez at The Wall Street Journal
report, citing people familiar with the matter.
The sources, according to WSJ, said that a confidential February
2008 report by the investigative firm Kroll concluded that
"inappropriate application" of accounting rules allowed Freddie
Mac "to defer billions of dollars of losses incurred from 2001
through 2004" on derivative contracts whose value depends on
fluctuations in interest rates. WSJ states that the losses are
currently pegged at $3.7 billion and are due to be gradually
recognized in quarterly earnings statements over the next several
years. WSJ, citing people familiar with the matter, relates that
the FBI has obtained a copy of the Kroll report and recently
sought more information on the issue.
WSJ quoted a Freddie Mac spokesperson as saying, "We are confident
that our accounting treatment was appropriate and consistent with
all applicable accounting guidance."
According to WSJ, a spokesperson for the regulator, the Federal
Housing Finance Agency, said that the agency had decided early in
2008 "not to take issue with the accounting" despite the findings
of Kroll, which the regulator had hired to look into the matter,
due to "disagreement among the experts" and Freddie Mac's defense
of its accounting.
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
At December 31, 2008, the Company's balance sheet showed total
assets of $850.9 billion and total liabilities of $881.6 billion,
resulting in a stockholders' deficit of $30.7 billion.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
Being under Conservatorship, Freddie Mac said it is dependent upon
the continued support of Treasury and FHFA to continue operating
its business.
FRONTIER AIRLINES: Reports Net Loss of $161-Mil. for Q1
-------------------------------------------------------
Frontier Airlines Inc. reported a net loss of $160,979,000 on
$263,919,000 in revenues for the three months ended March 31,
2009.
Frontier recorded an operating profit of $25,093,000, but costs
related reorganization items resulted to the net loss for the
first quarter of 2009. The reorganization items included
$3,983,000 paid to professionals, and $177,679,000 for unsecured
claims allowed by the Court.
Frontier Airlines has incurred losses of $237,482,000 on revenues
totaling $1,250,117,000 since its bankruptcy filing on April 10,
2008. Frontier also said that it has paid a total of $22,442,000
for professionals relates to its reorganization.
On March 20, 2009, the Bankruptcy Court approved an order
authorizing a $40 million Amended and Restated DIP Credit Facility
with Republic Airways Holdings, Inc. The Bankruptcy Court also
allowed the damage claim of Republic Airways Holdings, Inc. in the
amount of $150 million arising from the Debtors' rejection of the
Airline Services Agreement with Republic Airlines, Inc. and
Republic Airways Holdings, Inc. The allowance of this claim was
a condition to Republic Airways Holdings, Inc. providing the
Amended DIP Credit Agreement. The Company retired the existing
$30 million DIP Credit Agreement on April 1, 2009.
A copy of Frontier's March 2009 operating report is available at:
http://ResearchArchives.com/t/s?3c43
Cash at the end of March was $71.8 million.
According to Bloomberg's Bill Rochelle, November and December were
the only profitable months since Frontier filed under Chapter 11.
With 62 aircraft serving 70 destinations when it began
reorganizing in April 2008, Frontier now has 51 mainline aircraft
and 10 regional jets serving 50 destinations.
Bill Rochelle also notes that among seven passenger airlines
seeking bankruptcy protection since late 2007, Frontier and Sun
Country Airlines Inc. are the only ones still operating.
About Frontier Airlines
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provides air transportation
for passengers and freight. It operates jet service carriers
linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities
in Mexico, and 1 city in Canada, as well as provide service from
other non-hub cities, including service from 10 non-hub cities to
Mexico.
Frontier Airlines and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.
08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh
R. McCullough, Esq., at Davis Polk & Wardwell, represent the
Debtors in their restructuring efforts. Togul, Segal & Segal
LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is
the Debtors' Special Counsel, and Kekst and Company is the
Debtors' Communications Advisors.
Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Frontier Airlines Inc. and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL MOTORS: Bondholders to Get 58% Equity Stake in Own Plan
---------------------------------------------------------------
An Ad Hoc Committee of General Motors Bondholders unveiled its
proposed plan to save General Motors Corp. and avoid a lengthy and
difficult bankruptcy process that would hurt all stakeholders,
employees and customers. The proposal, the group said, will save
U.S. taxpayers $10 billion in cash, prevents the nationalization
of one of the country's largest companies and provides for a fair
and equitable allocation of new GM equity across all stakeholder
classes.
According to Eric Siegert, senior managing director of Houlihan
Lokey Howard and Zukin and financial advisor to the Ad Hoc
Committee, the bondholder proposal is reasonable and equitable and
provides for all parties to share equally in the future of GM.
The proposal involves allocating new GM equity equally across the
board to union VEBA and GM bondholders, pro rata to the level of
financial obligation owed to each by GM. There would be no cash
component in this proposed restructuring and the US Government
would not own any equity. The union VEBA, based on the current
$20 billion in health benefits obligations it owes to retirees,
would own 41% of the new GM. Bondholders, as a result of their
$27 billion of notes outstanding, would own 58% of the new GM.
Current shareholders would retain 1% of the equity of the new GM.
"Freed of its obligation to make cash payments to the VEBA or
bondholders, the US Government would not have to convert any of
its $20 billion in loans to equity and dramatically reduce the
need to make additional loans," said Mr. Siegert.
"Our proposed restructuring is quite simple. We will save the
American taxpayer $10 billion in cash that would have been spent
under the Government's proposed plan. We think that this is an
extremely attractive proposition given our current fiscal crisis,"
said Mr. Siegert.
Mr. Siegert continued, "Unlike the current proposal, our plan does
not grant a controlling interest in GM to the federal Government.
We do not believe that nationalizing one of America's largest and
most important companies is the right policy decision for our
country. And finally, any reasonable person reviewing our plan
would come to the conclusion that a completely fair and even
allocation of new GM equity pro rata to the obligation that GM
owes each stakeholder is the best way to resolve competing claims
in an out-of-court process."
Mr. Siegert said that the GM bondholders understand that sacrifice
and pain is necessary to get to a fair solution of the current
financial situation facing GM. That is why the bondholders have
proposed to convert their entire claim to equity so long as others
are willing to do so as well.
"We want to see GM emerge as a stronger and viable manufacturer,
providing thousands of jobs and products that appeal to consumers
around the world. While we have not seen the revised business
plan being developed by the Company and the Auto Task Force, we
commit to working constructively with all parties on a plan that
sets GM on the right path forward towards a financially healthy,
operationally sound competitor. We will present our ideas to the
ATF this afternoon and look forward to an ongoing dialogue and an
agreement that is fair and equitable to all parties. Time is of
the essence, and we stand ready to engage with all the parties to
get to a solution that works," Mr. Siegert said.
Small Bondholders Voice Concerns
Mayor Jim Fouts in Warren, Michigan, and many of the GM "Main
Street" bondholders came together on April 29, to launch a
coalition to demand a voice in GM bankruptcy talks with the Obama
Administration. The GM "Main Street" Bondholders Coalition, a
project of The 60 Plus Association, works to give a voice to small
investors and calls on President Obama to take action as part of
his promise to better the lives of Americans during his first 100
days in office. The Main Street bondholders do not have the same
resources as Wall Street investors and ask for their voices to be
heard on a decision that will affect the rest of their lives.
Hundreds of letters have been sent to Congress on behalf of
concerned bondholders asking for their voices to be heard.
"We are here today to hear from the silent sufferers, Main Street
America, the small bondholders who stand to lose the most," Mayor
Jim Fouts said. "The treatment of the small bondholders is
fundamentally un-American. These bondholders are seniors and
retirees that risked their life savings and our now left out in
the cold. GM's bankruptcy will truly hurt everyone."
"I oppose a bankruptcy because it would be devastating to my city,
my state, and my country. Small bondholders feel like they don't
have a voice in this debate and we're here today to hear their
stories and other average Americans' that have played by the rules
and invested in GM during their financial peak."
60 Plus, an advocacy group for senior citizens which has more than
5.5 million supporters nationally and over 161,000 in Michigan,
has received hundreds of emails from individuals worried about a
potential GM bankruptcy and its impact on their retirement
savings. The organization represents small bondholders as an
unheard voice that should be taken into consideration at the
bargaining table. The Obama Administration's offer to "Main
Street" bondholders is unfair -- cents on the dollar -- for
individuals relying on these bonds to finance retirements, college
tuition, and medical expenses.
"While we are sympathetic to all parties in this negotiation, our
government should also be sympathetic to small investors who may
have invested their entire life savings in the General Motors
Corporation," 60 Plus Vice President Amy Noone Frederick said.
"Small investors are financing their retirements, school payments
for their children, medical expenses, and other critical needs
with bonds purchased from the icon of corporate America, GM.
Actually, these negotiations are a real slap in the face to soon
to be retirees and seniors who will receive next to nothing in the
proposed settlement."
Almost a quarter of GM bondholders are average citizens that stand
to get wiped out if GM enters bankruptcy proceedings. The
bondholders ask Washington to stand up for small bondholders and
allow them to have a seat at the bargaining table during
negotiations.
The GM "Main Street" Bondholders Coalition has a Web site
http://60plus.org/news.asp?docID=514
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It revised the recovery rating
on this facility to '2' from '1', indicating its view that lenders
can expect substantial (70% to 90%) recovery in the event of a
payment default. The corporate credit rating remains unchanged,
at 'CC', reflecting its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Exchange Offers Approved in Europe
--------------------------------------------------
The United Kingdom Listing Authority has approved a prospectus to
be published by General Motors Corporation in certain
jurisdictions in the European Union for GM's exchange offers and
consent solicitations in which GM is offering to exchange 225
shares of its common stock for each 1,000 U.S. dollar equivalent
principal amount (or accreted value as of the settlement date if
applicable) of its outstanding notes of each series set forth in
the prospectus and is offering to pay, in cash, accrued interest
on such notes from the most recent interest payment date to the
settlement date. In respect of the exchange offers for the notes
issued by General Motors Nova Scotia Finance Company, GM is
jointly making the exchange offers with GM Nova Scotia.
As reported by the Troubled Company Reporter on April 28, 2009, GM
is commencing public exchange offers for $27 billion of its
unsecured public notes. GM said the exchange offers are a vital
component of its overall restructuring plan to achieve and sustain
long-term viability and the successful consummation of the
exchange offers will allow GM to restructure out of bankruptcy
court.
The exchange offers will expire May 26.
The prospectus was passported under European regulations to
France, Germany, Belgium, the Netherlands, Luxembourg, Austria,
and Spain. Resident in countries other than the France, Germany,
Belgium, the Netherlands, Luxembourg, Austria, Spain, the United
States and the United Kingdom, may or may not be eligible to
participate in the exchange offers and consent solicitations
pursuant to the laws of that country. GM has advised bondholders
in the EU to contact D.F. King, the Solicitation and Information
Agent, to assist in determining eligibility.
D.F. King (Europe) Limited
One Ropemaker Street
London EC2Y 9HT
Banks and Brokers call: +44 20 7920 9700
All others call toll free: 00 800 5464 5464
Email: gm@dfking.com
The prospectus has also been passported to Italy, but the exchange
offers in Italy are subject to clearance by CONSOB pursuant to
Article 102 onwards of Legislative Decree No. 58 of February 24,
1998. Therefore, the exchange offer period in Italy will only
commence following such clearance.
The Exchange Offer
The exchange offers and consent solicitations are being made to
holders of notes upon the terms and subject to the conditions set
forth in the prospectus dated April 27, 2009, including any
documents incorporated by reference into the prospectus, as
approved by the United Kingdom Listing Authority as competent
authority under EU Directive 2003/71/EC and the Registration
Statement on Form S-4 dated April 27, 2009, which includes a
combined prospectus and proxy statement and information in
accordance with the disclosure requirements of the tender offer
rules of the U.S. Securities and Exchange Commission, and the
related letter of transmittal (or form of electronic instruction
notice, in the case of notes held through Euroclear or
Clearstream), as each may be amended from time to time.
GM and its directors and executive officers and other members of
management and employees may be deemed participants in the
solicitation of proxies with respect to the consent solicitations.
Offers to holders in the United Kingdom, Austria, Belgium, France,
Germany, Italy, Luxembourg, the Netherlands, Spain and Switzerland
will be made by the European Prospectus. Outside of these
jurisdictions (and the United States) only non U.S. qualified
offerees are authorized to participate in the exchange offers and
consent solicitations.
About General Motors Corp.
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.
For the 2008 calendar year, GM reported an adjusted net loss,
excluding special items, of $16.8 billion. This compares to an
adjusted net loss of $279 million. Including special items, the
company reported a loss of $30.9 billion, compared to a reported
loss of $43.3 billion in 2007, which included a non-cash special
charge of $38.3 billion in the third quarter related to the
valuation allowance against deferred tax assets.
As of December 31, 2008, GM reported $91,047,000,000 in total
assets, $176,387,000,000 in total liabilities, and $86,154,000,000
in stockholders' deficit.
GM 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.
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would not be able to
continue as a going concern and could potentially be forced to
seek relief through a filing under the U.S. Bankruptcy Code.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It revised the recovery rating
on this facility to '2' from '1', indicating its view that lenders
can expect substantial (70% to 90%) recovery in the event of a
payment default. The corporate credit rating remains unchanged,
at 'CC', reflecting its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Gov't Rejects Bid to Increase Delphi Commitment
---------------------------------------------------------------
General Motors Corporation Chief Executive Officer Frederick A.
Henderson disclosed in a Form S-4 filing with the U.S. Securities
and Exchange Commission on April 27, 2009, that the U.S Department
of Treasury's Auto Task Force did not approve increases of GM's
commitments to Delphi Corp. under a Liquidity Support Agreement.
Given the current credit markets, the lack of plan investors and
the challenges facing the automotive industry, it is unlikely that
Delphi will emerge from bankruptcy in the near-term without
government support, according to Mr. Henderson. "[I]t is [even]
possible that [Delphi] may not emerge successfully at all," he
says.
GM agreed in March 2009 to increase its commitments of liquidity
aid to Delphi from $300,000,000 to $450,000,000 pursuant several
amendments under the GM-Delphi Agreement. The increases were
subject to approvals from the GM Board of Directors, the U.S.
Bankruptcy Court for the Southern District o New York, the U.S.
Department of Treasury's Auto Task Force and certain other
conditions.
Similarly, Mr. Henderson stated that the Auto Task Force also did
not approve the terms of GM's acquisition of Delphi's global
steering option pursuant to Delphi's Option Exercise Agreement
Motion.
The Bankruptcy Court hearings for the approval of amendments to
the GM-Delphi Liquidity Support Agreement as well as the Steering
Business Option Agreement have been adjourned several times from
since late March 2009 upon the request of the Auto Task Force,
citing that it needed more time to review the issues between GM
and Delphi. The current date for the hearings is May 7, 2009.
The Auto Task Force previously told the Court 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 in conjunction of GM's
risks associated with continuity of auto parts supply. The Auto
Task Force, Delphi and GM need to submit a term sheet detailing
Delphi's emergence from bankruptcy to Delphi's DIP Lenders by
May 4, 2009.
Mr. Henderson notes that though Delphi will continue to look for
alternative arrangements to emerge from bankruptcy, there can be
no assurance that it will be successful in obtaining alternative
arrangements. If Delphi is unable to successfully emerge from
bankruptcy in the near-term, it may even be forced to sell all of
its assets, he says. In this scenario, Mr. Henderson relates, GM
may be required to pay additional amounts to secure the parts it
needs until alternative suppliers are secured or new contracts are
executed with the buyers of Delphi's assets. GM may even have to
consider acquiring some of Delphi's manufacturing operations in
order to ensure uninterrupted supply of parts, he states.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is a global supplier of mobile
electronics and transportation systems, including powertrain,
safety, steering, thermal, and controls & security systems,
electrical/electronic architecture, and in-car entertainment
technologies. Delphi technology is also found in computing,
communications, consumer accessories, energy and medical
applications. Delphi has approximately 146,600 employees and
operates 150 wholly owned manufacturing sites in 34 countries with
sales of $18.1 billion in 2008.
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: Gov't Rejects Bid to Increase Delphi Commitment
---------------------------------------------------------------
General Motors Corporation Chief Executive Officer Frederick A.
Henderson disclosed in a Form S-4 filing with the U.S. Securities
and Exchange Commission on April 27, 2009, that the U.S Department
of Treasury's Auto Task Force did not approve increases of GM's
commitments to Delphi Corp. under a Liquidity Support Agreement.
Given the current credit markets, the lack of plan investors and
the challenges facing the automotive industry, it is unlikely that
Delphi will emerge from bankruptcy in the near-term without
government support, according to Mr. Henderson. "[I]t is [even]
possible that [Delphi] may not emerge successfully at all," he
says.
GM agreed in March 2009 to increase its commitments of liquidity
aid to Delphi from $300,000,000 to $450,000,000 pursuant several
amendments under the GM-Delphi Agreement. The increases were
subject to approvals from the GM Board of Directors, the U.S.
Bankruptcy Court for the Southern District o New York, the U.S.
Department of Treasury's Auto Task Force and certain other
conditions.
Similarly, Mr. Henderson stated that the Auto Task Force also did
not approve the terms of GM's acquisition of Delphi's global
steering option pursuant to Delphi's Option Exercise Agreement
Motion.
The Bankruptcy Court hearings for the approval of amendments to
the GM-Delphi Liquidity Support Agreement as well as the Steering
Business Option Agreement have been adjourned several times from
since late March 2009 upon the request of the Auto Task Force,
citing that it needed more time to review the issues between GM
and Delphi. The current date for the hearings is May 7, 2009.
The Auto Task Force previously told the Court 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 in conjunction of GM's
risks associated with continuity of auto parts supply. The Auto
Task Force, Delphi and GM need to submit a term sheet detailing
Delphi's emergence from bankruptcy to Delphi's DIP Lenders by
May 4, 2009.
Mr. Henderson notes that though Delphi will continue to look for
alternative arrangements to emerge from bankruptcy, there can be
no assurance that it will be successful in obtaining alternative
arrangements. If Delphi is unable to successfully emerge from
bankruptcy in the near-term, it may even be forced to sell all of
its assets, he says. In this scenario, Mr. Henderson relates, GM
may be required to pay additional amounts to secure the parts it
needs until alternative suppliers are secured or new contracts are
executed with the buyers of Delphi's assets. GM may even have to
consider acquiring some of Delphi's manufacturing operations in
order to ensure uninterrupted supply of parts, he states.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ)
-- http://www.delphi.com/-- is a global supplier of mobile
electronics and transportation systems, including powertrain,
safety, steering, thermal, and controls & security systems,
electrical/electronic architecture, and in-car entertainment
technologies. Delphi technology is also found in computing,
communications, consumer accessories, energy and medical
applications. Delphi has approximately 146,600 employees and
operates 150 wholly owned manufacturing sites in 34 countries with
sales of $18.1 billion in 2008.
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)
GEORGE Z. PATTEN: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------
Debtor: George Zeboim Patten, Jr.
1714 Minnekahda Road
Chattanooga, TN 37405
Bankruptcy Case No.: 09-12637
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Eastern District of Tennessee (Chattanooga)
Judge: John C. Cook
Debtor's Counsel: W. Thomas Bible, Jr., Esq.
6918 Shallowford Rd., Suite 100
Chattanooga, TN 37421
Tel: (423) 424-3116
Email: melinda@tombiblelaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/tneb09-12637.pdf
The petition was signed by Mr. Patten.
GMAC LLC: To Provide Financing for Chrysler Dealers and Customers
-----------------------------------------------------------------
GMAC Financial Services has entered into an agreement with
Chrysler LLC to provide automotive financing products and services
to Chrysler dealers and customers. GMAC will be the preferred
provider of new wholesale financing for Chrysler dealer inventory
and has a four-year agreement for incentivized retail financing
with limited exclusivity.
The U.S. government has indicated that it intends to support GMAC
in promoting the availability of credit for dealers and customers
by making liquidity and capital available and by providing the
capitalization that GMAC requires to support the Chrysler
business.
"GMAC is pleased to be part of the solution to restructure and
stabilize the U.S. auto industry," said GMAC Chief Executive
Officer Alvaro G. de Molina. "Providing financing options to
dealers and consumers is critical as we work through one of the
most challenging periods in the global auto sector. We will
leverage our strengths and capabilities as the leading automotive
finance company to serve our new customers, while maintaining our
commitment to current customers.
"Serving as the primary source of financing for Chrysler is
consistent with our strategy to diversify our automotive
business," de Molina said. "We intend to work through the
operational process quickly and effectively to ensure that the
appropriate level of credit is available to support the sale of
Chrysler vehicles."
GMAC will leverage its servicing platform to provide customer
service for the newly originated assets. GMAC has not acquired
the existing assets or liabilities of Chrysler Financial.
The majority of Chrysler dealers and consumers are located in the
U.S., while there are smaller concentrations of business in Canada
and Mexico and other international markets.
GMAC was advised by Wachtell, Lipton, Rosen & Katz and Morgan
Stanley in this transaction.
About GMAC LLC
GMAC Financial Services -- http://www.gmacfs.com/-- formerly
General Motors Acceptance Corporation, is a bank holding company
with operations in North America, South America, Europe and Asia-
Pacific. GMAC specializes in automotive finance, real estate
finance, insurance, commercial finance and online banking. As of
Dec. 31, 2008, the company had $189 billion in assets and serviced
15 million customers around the world.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is wholly owned by GMAC LLC. Cerberus
Capital Management LP led a group of investors that bought a 51%
stake in GMAC LLC from General Motors Corp. in December 2006 for
$14 billion.
On Dec. 24, 2008, GMAC Financial Services' application to become a
bank holding company under the Bank Holding Company Act of 1956,
as amended, was approved by the Board of Governors of the Federal
Reserve System. In addition, GMAC Bank received approval from the
Utah Department of Financial Institutions to convert to a state
bank.
* * *
As reported in the Troubled Company Reporter on Dec. 15, 2008,
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (CC/Watch Neg/C) and its 100% owned subsidiary, Residential
Capital LLC (CC/Watch Neg/C) are not affected by GMAC's
announcement that it extended the early delivery time with respect
to separate private exchange offers and cash tender offers to
purchase or exchange certain of its and its subsidiaries' and
Residential Capital's outstanding notes to provide investors with
a final opportunity to consider the GMAC and Residential Capital
LLC offers.
About Chrysler
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. Late
in 2008, Daimler attempted to sell its remaining stake to
Cerberus, but talks have been stalled.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The Government has told Chrysler it would provide up to $6 billion
in financing if Chrysler and Fiat SpA could complete a deal by the
end of April -- on top of the $4 billion Chrysler has already
received. Fiat originally agreed to take 35% of Chrysler, but it
was subsequently reduced to 20%.
HAMPDEN CBO: Moody's Downgrades Ratings on Various Classes
----------------------------------------------------------
Moody's Investors Service announced that it has downgraded the
ratings of these notes issued by Hampden CBO Ltd:
-- Class A-2-A Floating Rate Senior Notes Due 2013, Downgraded
to A1; previously on 3/28/2001 Assigned Aa2;
-- Class A-2-B Fixed Rate Senior Notes Due 2013, Downgraded to
A1; previously on 3/28/2001 Assigned Aa2;
-- Class B-1 Floating Rate Notes Due 2013, Downgraded to Ca;
previously on 12/16/2005 Downgraded to Ba1;
-- Class B-2 Fixed Rate Senior Subordinated Notes due 2013,
Downgraded to Ca; previously on 12/16/2005 Downgraded to Ba1.
According to Moody's, the rating actions taken on the notes are a
result of applying Moody's revised assumptions with respect to
default probability, the treatment of ratings on "Review for
Possible Downgrade" or with a "Negative Outlook," and the
calculation of the Diversity Score. The actions also reflect
consideration of credit deterioration of the underlying portfolio.
The revised assumptions that have been applied to all corporate
credits in the underlying portfolio are described in the press
release dated February 4, 2009.
Credit deterioration of the collateral pool is observed in, among
others, a decline in the average credit rating (as measured
through the weighted average rating factor), a high concentration
of below-investment grade securities, an increase in the dollar
amount of defaulted securities, failure of the Senior Subordinate
Principal Coverage Ratio, and failure of both the Senior Interest
Coverage Ratio and the Senior Subordinate Interest Coverage Ratio.
Moody's also noted that the transaction is negatively impacted by
a large pay-fixed, receive-floating interest rate swap, the
notional of which exceeds the current portfolio par. Due to this
mismatch between the swap notional and the asset par, payments to
the hedge counterparty absorb a large portion of the excess spread
in the deal.
HEREFORD FIOFUELS: Court Okays Sale of Assets to Senior Lenders
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
has approved the sale of substantially all of the assets of
Hereford Biofuels, L.P., et al., free and clear of all liens and
encumbrances, to Ethanol Acquisition, LLC, the highest and best
bidder for the Debtors' assets at an auction held on April 22,
2009. Ethanol Europe, N.A., the stalking horse, submitted the
next best bid.
The members of the purchaser are the Debtors' senior secured
lenders, Societe Generale as administrative Agent, disbursement
agent, collateral agent and LC Fronting Bank, and SG Americas
Securities, LLC, as lead arranger under that Financing Agreement
dated as of July 28, 2006.
The purchaser offered to pay (i) a principal amount of the
obligations equal to $25,000,000; and (ii) the assumption of the
assumed liabilities.
Objections of Idaho Energy Limited Partnership to the sale,
specifically the assumption and assignment of any assumed contract
to which Idaho Energy is a party, are preserved and not waived,
and will be heard by the Court at a later date. All other
objections that have not been withdrawn, waived, or settled were
overruled.
A copy of the asset purchase agreement is available at:
http://bankrupt.com/misc/Hereford.APA.pdf
As reported in the Troubled Company Reporter on March 30, 2009
the U.S. Bankruptcy Court for the Northern District of Texas
approved at a hearing on March 12, 2009, auction and sale
procedures for the sale of substantially all of the assets of
Hereford Biofuels, L.P., et al., free and clear of all liens and
encumbrances.
Hereford Biofuels, L.P. entered into a stalking horse agreement
with Ethanol Europe B.V. on March 20, 2009. Ethanol Europe B.V.
offered to pay (i) an amount equal to $15,000,000, less any cure
amounts paid and (ii) the assumption of the assumed liabilities.
Bids to be accepted must exceed the aggregate consideration
offered pursuant to the Stalking Horse Agreement by at least
$400,000.
The Debtors will accept "cash only" bids. In accordance with the
Bidding Procedures, bids must be accompanied by a certified check
or wire transfer payable to the Debtor in the amount of $500,000,
as "good faith deposit".
A copy of the Court's bid procedures order is available at:
http://bankrupt.com/misc/Hereford.BidProceduresOrder.pdf
As reported in the Troubled Company Reporter on January 26, 2009,
Hereford Biofuels planned to sell its ethanol refinery pursuant to
a Section 363 sale process to be approved by the Court. The
bankruptcy filing was precipitated by the refusal of one of the
project's leading banks to fund its loans, which the company
believes is a breach of the bank's financial commitment.
Based in Dallas, Hereford Biofuels Holdings, LLC is a unit of
Panda Ethanol Inc. which is currently developing six 115 million
gallon-per-year denatured ethanol projects located in Texas,
Colorado and Kansas. Panda Ethanol's founder is Panda Energy
International, an American privately-held company.
Hereford Biofuels and three of its debtor-affiliates filed
separate petitions for Chapter 11 relief of January 23, 2009
(Bankr. N.D. Tex. Lead Case No. 09-30453). Dan B. Prieto, Esq.,
Gregory M. Gordon, Esq., and Robert J. Jud, Esq., at Jones Day,
represent the Debtors as counsel. Joseph M. Coleman, Esq., and
Joseph A. Friedman, Esq., at Kane, Russell, Coleman & Logan,
represent the Official Committee of Unsecured Creditors as
counsel. When the Debtor filed for protection from its creditors,
it listed assets of between $50 million and $100 million, and
debts of between $100 million and $500 million.
HIGH-MARKET CORP.: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: High-Market Corp.
PO Box 56
Canal Winchester, OH 43110
Bankruptcy Case No.: 09-54675
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Southern District of Ohio (Columbus)
Debtor's Counsel: Robert J. Morje, Esq.
620 E Broad St
Columbus, OH 43215
Tel: (614) 242-4242
Email: rmorje@dvslv.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $500,001 to $1,000,000
The Company says it does not have unsecured creditors who are non
insiders when they filed their petition.
The petition was signed by Philip W. Herb, secretary and treasurer
of the Company.
HILO HATTIE: U.S. Trustee Wants Case Converted to Chapter 7
-----------------------------------------------------------
Janis L. Magin at Pacific Business News reports that acting U.S.
Trustee Tiffany Carroll and assistant trustee Curtis Ching have
filed a motion seeking to convert Hilo Hattie's Chapter 11
reorganization case to Chapter 7 liquidation.
The trustees said in court documents that Hilo Hattie's
"reorganization efforts have failed, and the (Company's) financial
condition is far worse now than it was at the commencement of the
case."
Chuck Choi, the attorney for Hilo Hattie, said that his client
will file an objection to the motion, which is scheduled for
hearing on June 22, Pacific Business states. Citing Hilo Hattie's
owner, PBN relates that the only way to save Hilo Hattie is to let
it proceed with its bankruptcy reorganization.
According to court documents, Hilo Hattie opposed the committee of
unsecured creditors' April 13 motion to appoint a trustee to take
over management of the Company. Court documents state that Hilo
Hattie said that a trustee would put plans to open new stores at
risk and would cause vendors to stop extending credit. Pacific
Business states that a hearing on that motion is set for May 11.
Investment bank Janas Associates "will be working with us as our
plan comes together to help provide the appropriate level of
capital to fund the new plan as it materializes," Pacific Business
quoted Hilo Hattie CEO Ted Nelson as saying. The report states
that part of that plan includes opening new, smaller stores in
tourist centers. According to court documents, Hilo Hattie
expects to have letters of intent for a mall-level space at Ala
Moana Center, space in at least one of Kyo-ya's four Starwood
hotels in Waikiki, at Aloha Tower Marketplace, at Queen's Market
Place in Waikoloa on the Big Island and at the Kapaa Center on
Kauai.
Hilo Hattie, Pacific Business relates, lost $5.1 million after
taxes from October 2 through April 4.
Hilo Hattie founder Jim Romig sold the company to CEO Ted Nelson
and a group of California investors called TOC Inc. last year for
$25,000 plus monthly payments of an undisclosed amount.
HOUGHTON EXPRESS LLC: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Houghton Express LLC
dba Holiday Inn Express Houghton, MI
5629 Grand Ave Ste 2
Duluth, MN 55807
Bankruptcy Case No.: 09-50562
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of Minnesota (Duluth)
Judge: Robert J. Kressel
Debtor's Counsel: Yvonne Michaud Novak, Esq.
Law Office of Yvonne Michaud Novak
202 W. Superior Street
Suite 405
Duluth, MN 55802
Tel: (218) 720-2888
Email: yvonne@ymnlaw.com
Total Assets: $4,880,793
Total Debts: $5,099,524
According to its schedules of assets and liabilities, $4,957,260
of the debt is owing to secured creditors, $2,441 for taxes owed
to governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/mnb09-50562.pdf
The petition was signed by Seth Oliver, managing member of the
Company.
HUMBOLDT CREAMERY: U.S. Trustee Picks 7-Member Creditors Committee
------------------------------------------------------------------
Sara L. Kistler, Acting U.S. Trustee for Region 17, appointed
seven members to the official committee of unsecured creditors of
Humboldt Creamery, LLC's Chapter 11 case.
The panel consists of:
1. CA Dairies
Attn: Ray Gutierrec
2000 N. Plaza Dr.
Visalia, CA 93291
2. Rumiano Cheese
Attn: Baird Rumiano
P.O. Box 863
Willows, CA 95988
3. Sweetener Productions Inc.
Attn: Jim Boltinghouse
P.O. Box 58426
Vernon, CA 90058
4. Mass Marketing Services
Attn: John Carlson
7851 Mission Cntr., #115
San Diego, CA 92108
5. Steve Wills Trucking
Attn: Steve Wills
P.O. Box 335
Fortuna, CA 95540
6. Barry Plastics Corp.
Attn: Ronda Hale
101 Oakley Street
Evansville, IN 47710
7. Certified Freight Logistics
Attn: Scott Cramer
P.O. Box 5819
Santa Maria, CA 93456
Headquartered in Fortuna, California, Humboldt Creamery, LLC --
http://www.humboldtcreamery.com/-- makes ice cream and milk
products.
The Company filed for Chapter 11 on April 21, 2009 (Bankr. N.D.
Calif. Case No. 09-11078). Ori Katz, Esq., at Sheppard, Mullin,
Richter and Hampton, represents the Debtor in its restructuring
efforts. The Debtor disclosed total assets and debts from
$50 million to $100 million.
IDEARC INC: Wants to Hire Moelis & Company as Financial Advisor
---------------------------------------------------------------
Idearc Inc. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Northern District of Texas for permission to employ
Moelis & Company LLC as financial advisor.
Moelis will:
a) familiarize with and analyze the business, operations,
properties, financial condition and prospects of the Debtors
as it relates to any transaction;
b) advise the Debtors on the state of the restructuring and
capital markets;
c) assist and advise the Debtors in developing a general
strategy for accomplishing a restructuring transaction;
d) along with the Debtors' advisors, assist and advise the
Debtors on implementing any restructuring transaction;
e) along with the Debtors' advisors, assist and advise the
Debtors in evaluating and analyzing any restructuring
transaction;
f) render other financial restructuring advisory services as
may from time to time be agreed upon in writing by the
Debtors and Moelis; and
g) provide expertise in connection with the Bankruptcy Case,
including being named as financial advisor in any
solicitation made in the Bankruptcy Case and providing
valuation advice in connection with the Bankruptcy Case.
Thane Carlston, a managing director of Moelis, tells the Court
that the Debtors propose to compensate and reimburse Moelis in
accordance with these payment terms, procedures and conditions:
a) a nonrefundable cash fee of $300,000 per month.
b) immediately upon the closing of a restructuring transaction,
the Debtors will pay Moelis a cash fee in an amount equal to
$9,000,000 less amounts credited.
c) without regard to whether a restructuring transaction is
consummated or the engagement letter expires or is
terminated, the Debtors will pay to Moelis all reasonable
disbursements and out-of-pocket expenses as incurred by
Moelis in connection with its services to be rendered under
the engagement letter. Moelis agrees to provide reasonable
backup relating to the expenses to the extent requested by
the Debtors and as may be requested by the Bankruptcy
Court.
Mr. Carlston assures the Court that Moelis is a "disinterested
person as that term is defined in Section 101(14) of the
Bankruptcy Code.
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.
Idearc and its 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.
IDEARC INC: Court Gives Final Nod on Cash Collateral Use
--------------------------------------------------------
The Hon. Barbara J. Houser of the United States Bankruptcy Court
for the Northern District of Texas authorized Idearc Inc. and its
debtor-affiliates to access, on a final basis, cash collateral
securing payment of secured loan to JPMorgan Chase Bank, N.A., in
accordance to the budget.
The Debtors and JPMorgan have negotiated at arm's length and in
good faith regarding the use of the cash collateral to fund the
administration of the Debtors' estates and continued operation of
their businesses.
JPMorgan has consented to the Debtors' use of the cash collateral
based upon:
(a) the terms and conditions agreed by the parties,
(b) the agreement in principle reached prior to the Debtors'
bankruptcy filing among the Debtors, JPMorgan and a
steering committee of the lenders concerning key elements
of a plan of reorganization for the Debtors, and
(c) the scheduling of hearings to consider approval of a
disclosure statement and confirmation of a plan of
reorganization, in each case anticipated to be filed by the
Debtors by May 15, 2009.
The Debtors' right to use the cash collateral will terminate on
the earliest to occur of (i) consummation of a plan of
reorganization in these cases, (ii) Sept. 30, 2009, unless
otherwise extended by the Debtors with the consent of JPMorgan, in
its sole discretion, or (iii) upon written notice by JPMorgan to
the Debtors after the occurrence and continuance of any of these
events beyond any applicable grace period, among other things:
-- failure of the Debtors to comply in any material respect with
the terms of this final order, and failure will continue
unremedied for more than three business days after;
-- failure of the Debtors to deliver a proposed budget at least
20 days prior to the expiration of the then applicable
budget;
-- failure of the Debtors to maintain a minimum available net
cash balance (i) on April 30, 2009, of at least $350 million
and (ii) on the last Friday of each month thereafter, in an
amount to be set forth in the budget;
-- any of the Chapter 11 cases will be dismissed or converted to
a Chapter 7 case; or a Chapter 11 Trustee with plenary
powers, a responsible officer, or an examiner with enlarged
powers relating to the operation of the businesses of the
Debtors will be appointed in any of these cases; and
-- any judgment in excess of $3,000,000 as to any postpetition
obligation not covered by insurance will be rendered against
the Debtors and the enforcement thereof will not be stayed.
According to Troubled Company Reporter on April 3, 2009, JPMorgan
made in excess of $6.4 billion of loans and other financial
accommodations, under a certain credit agreement dated
November 17, 2006, for the benefit of the Debtors.
The Debtors owe 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
credit agreement.
The Debtors acknowledge that JPMorgan holds a valid, enforceable,
first priority, perfected liens and security interests in the
prepetition collateral and the cash collateral to secure the
prepetition obligations.
As adequate protection, JPMorgan will be 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.
A full-text copy of the Debtors' cash collateral budget is
available for free at http://ResearchArchives.com/t/s?3c3b
Objections
Prior to the hearing, U.S. Bank National Association, as Indenture
Trustee in respect of $2.85 billion in senior unsecured notes,
objected to the adequate protection 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 the case other than
unencumbered assets.
The Official Committee of Unsecured Creditors also objected to the
use of cash collateral, citing several issues. Through the
negotiation process, the Debtors, JPMorgan as the Committee have
resolved all but one of the issues raised. The sole unresolved
issue relates to the proposed limitation respecting the
Committee's ability to prosecute a lien challenge against
JPMorgan. Thus, the Debtors and JPMorgan have agreed to provide
the Committee with use of cash collateral up to $500,000, an
increase of $300,000 over the initial permitted amount and to
investigate whether JPMorgan has a properly perfected, unavoidable
lien of $250 million.
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.
Idearc is the exclusive official publisher of Verizon print
directories in the markets in which Verizon is currently the
incumbent local exchange carrier. Idearc uses the Verizon brand
on their print directories in their incumbent markets, well as in
their expansion markets.
Idearc and its 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. William T. Neary, the
United States Trustee for Region 6, appointed six creditors to
serve on an official committee of unsecured creditors of Idearc
Inc. and its debtor-affiliates. The Committee selected Mark
Milbank, Tweed, Hadley & McCloy LLP, as counsel, and Haynes and
Boone, LLP, co-counsel. The Debtors' financial condition as of
December 31, 2008, showed total assets of $1,815,000,000 and total
debts of $9,515,000,000.
JARDEN CORP: S&P Affirms Corporate Credit Rating at 'B+'
--------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its 'B+'
corporate credit rating on Rye, New York-based Jarden Corp. At
the same time, Standard & Poor's assigned its 'B+' issue-level
rating with a recovery rating of '3' (indicating the likelihood of
meaningful (50% to 70%) recovery in a payment default) to Jarden's
new $300 million of 8% senior unsecured notes due 2016. Jarden
will use the proceeds from the debt issuance to refinance a
portion of its senior credit facility term loans. In light of the
refinancing and change in composition of the capital structure,
Standard & Poor's reviewed Jarden's existing issue-level and
recovery ratings. As a result, S&P raised the issue-level rating
on Jarden's senior secured bank facility to 'BB' (two notches
above the corporate credit rating) from 'BB-', and revised the
recovery rating to '1' from '2', indicating the expectation for
very high (90% to 100%) recovery in a payment default. At same
time, S&P lowered the issue-level rating on Jarden's subordinated
debt to 'B-' (two notches below the corporate credit rating) from
'B'. S&P also revised the recovery rating to '6' from '5',
indicating the likelihood of negligible (0%-10%) recovery in a
payment default. As of March 31, 2009, the company had about $2.8
billion of debt. The outlook is positive.
Jarden has improved its credit metrics in recent quarters, despite
the current weak economy and difficult consumer spending
environment.
"While S&P believes the weak economy will continue to affect sales
trends over the near term, S&P could raise the rating over the
next six months if Jarden can further improve credit measures,
reduce, and sustain leverage in the 4x to 4.5x area, and maintain
cash flows and adjusted EBITDA margins currently close to 12%,"
said Standard & Poor's credit analyst Rick Joy. S&P estimate that
even if sales declined by 10% in 2009, EBITDA margins would remain
near current levels. If Jarden completes its planned debt
reduction this year, leverage would be below 4.5x at year end.
"Alternatively, S&P could revise the outlook to stable or
negative, if the company encounters significant operating issues,
if financial performance falls below our expectations, or if
credit protection measures meaningfully weaken and leverage
increased to more than 5x," he continued.
JOURNAL REGISTER: Revised Plan Offers 9.2% to Unsec. Creditors
--------------------------------------------------------------
Journal Register Co. filed an amended bankruptcy reorganization
plan and a revised explanatory disclosure statement.
According to Bloomberg's Bill Rochelle, the revised plan has
support from the official unsecured creditors' committee, which
urges creditors to vote "yes." Mr. Rochelle notes that originally,
unsecured creditors who didn't provide goods and services were to
receive nothing. Now, unsecured creditors with some $27.1 million
in claims are to recover 9.2% of their claims.
The revised plan would give all of the new stock and $225 million
in new term loans to the pre-bankruptcy secured lenders owed $695
million. Existing stock would be canceled. The disclosure
statement says the plan represents a 42% recovery for the lenders.
A hearing to approve the disclosure statement is set for May 5.
About Journal Register
Yardley, Pennsylvania-based Journal Register Company (PINKSHEETS:
JRCO) -- http://www.JournalRegister.com-- owns 20 daily
newspapers, more than 180 non-daily publications and operates over
200 individual Web sites that are affiliated with the Company's
daily newspapers, non-daily publications and its network of
employment Web sites. All of the company's operations are
strategically clustered in six geographic areas: Greater
Philadelphia; Michigan; Connecticut; Greater Cleveland; and the
Capital-Saratoga and Mid-Hudson regions of New York. The company
also owns JobsInTheUS, a network of 20 employment Web sites.
The company, along with its affiliates, filed for Chapter 11
bankruptcy protection on February 21, 2009 (Bankr. S.D. N.Y. Case
No. 09-10769). Marc Abrams, Esq., Rachel C. Strickland, Esq.,
Shaunna D. Jones, Esq., and Jennifer J. Hardy, Esq., at Willkie
Farr & Gallagher LLP, represent the Debtors as counsel. William
M. Silverman, Esq., Scott L. Hazan, Esq., and Jeanette A. Barrow-
Bosshart, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.,
represent the Official Committee of Unsecured Creditors as
counsel. Conway, Del Genio, Gries & Co., LLC provides
restructuring management services to the Debtors. Robert P.
Conway is the company's chief restructuring officer. The company
listed $100 million to $500 million in total assets and
$500 million to $1 billion in total debts.
LALJI HOTELS: Case Summary & 3 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Lalji Hotels, LLC
dba Quality Inn
3150 Oak Hampton Way
Duluth, GA 30096
Bankruptcy Case No.: 09-70624
Chapter 11 Petition Date: April 27, 2009
Court: United States Bankruptcy Court
Northern District of Georgia (Atlanta)
Debtor's Counsel: Joseph H. Turner, Esq.
Suite D
6139 Oakbrook Parkway
Norcross, GA 30093
Tel: (770) 480-1939
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 list of 3
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ganb09-70624.pdf
The petition was signed by Jitendra Patel, manager of the Company.
LAZARD GROUP: Moody's Changes Outlook on 'Ba1' Rating to Negative
-----------------------------------------------------------------
Moody's Investors Service changed the outlook on the Ba1 senior
unsecured rating of Lazard Group LLC to negative from stable.
The change to a negative outlook results from the pre-tax $90.7
million operating loss (including a $62.5 million restructuring
expense) reported by the firm for Q109 and the challenges it faces
looking forward. This loss reflects lower industry activity
levels in Lazard's M&A advisory business and the impact of
declining AUM on asset management revenues. Revenues from the
businesses declined substantially and were only partially offset
by increased revenues from the firm's restructuring practice.
Operating income and EBITDA were further depressed by high
compensation expense in the quarter. The compensation to
operating revenue ratio reached 74.6% in the quarter, well above
the firm's long run target of 57.5% of revenues. This may
indicate less expense flexibility in the firm's operating model
than Moody's has assumed.
Previously Moody's stated that a permanent deterioration of
Debt/EBITDA ratios at Lazard to 4x or higher could prompt a
downgrade. "It appears increasingly unlikely that Lazard will be
able to maintain a Debt/EBITDA ratio below 4x, consistent with a
Ba1 rating, in 2009" said Peter Nerby, a Moody's Senior Vice-
President. Moody's will consider whether this represents a
cyclical issue, or is indicative of a more permanent challenge to
Lazard's credit profile.
Moody's noted that the low capital intensity of its businesses and
the liquidity and simplicity of Lazard's balance sheet remain
strengths of the credit. At March 31, 2009, the firm held a net
balance of cash and cash equivalents of $735 million (after
deducting accrued compensation).
The rating agency also observed that Lazard may be positioned to
upgrade and expand its advisory platform considering the pressures
facing many of its competitors. However, these franchise
expansion efforts have so far resulted in a high compensation
burden that, combined with severely depressed revenues, led to an
operating loss in 1Q09. "Lazard's desire to grow its franchise
while competition is retrenching may succeed in the long-run.
Presently, however, it has contributed to weak operating
performance and increased risk for bondholders," Nerby said.
Moody's observed that management's commitment to maintaining a
manageable compensation ratio through the industry cycle has been
a factor supporting the ratings of the firm. If Lazard cannot
maintain this compensation discipline in 2009, this could mean
that the business model is not as flexible as Moody's expected and
this could also contribute to a downgrade.
Moody's last rating action on Lazard was on November 25, 2008 when
the rating outlook was changed to stable from positive.
Lazard Group LLC, the entity rated by Moody's, is an intermediate
holding company of publicly traded Lazard Limited. These ratings
of Lazard Group LLC were affirmed with a negative outlook:
$600 million 6.85% Senior Notes due 6/15/2017 rated Ba1;
$550 million 7.125% Senior Notes due 5/15/2015 rated Ba1;
Lazard Ltd is an international advisory and money management firm
that reported a net loss on a fully-exchanged basis of $85.8
million for the first quarter of 2009.
LEHMAN BROTHERS: U.K. Unit Opposes Proposed Int'l Case Protocol
---------------------------------------------------------------
Administrators of Lehman Brothers Holdings, Inc.'s United Kingdom
affiliate, Lehman Brothers International (Europe), opposed a
proposed protocol intended to govern the winding down of Lehman's
global affiliates.
In early April 2009, administrators of Lehman's global affiliates,
including entities in Australia, Germany, Holland, Hong Kong,
Japan, Singapore and Switzerland, agreed and signed the
international case protocol. But the U.K. administrators refused
to sign.
Judge James Peck of the U.S. Bankruptcy Court for the Southern
District of New York held a conference on April 7 to hear reports
on the status of the proposed international case protocol.
In a letter dated April 9, 2009, counsel for the LBEI
Administrators, Mary K. Warren, Esq., at Linklaters, in New York,
told Judge Peck that "many of the remarks made in court [during
the April 7 conference] by representatives of LBHI were
surprising." She added that her firm and the LBEI Administrators
have discussed the matters raised during the April 7 conference.
The LBEI Administrators told LBEI creditors in a report that "at
this time, the administrators do not consider it to be in the best
interests of [our client] and its creditors to be party to or
bound by such a broad arrangement . . . which could potentially
place a very significant burden on LBIE," The Crain's New York
Business reported on April 28, 2009.
If unresolved, the dispute over the international case protocol --
whether Lehman's worldwide affiliates will work together to
liquidate their assets and pay back creditors or whether each
worldwide unit will work on its own -- has the potential to stall
Lehman Brothers' bankruptcy proceedings "for years," Crain's said.
The proposed international case protocol, Crain's explained,
intends to ease the flow of information, which was interrupted
when Lehman Brothers Holdings filed for bankruptcy in September
2008.
Since the London entity served as a clearinghouse for most of
Lehman Brothers' European operations, its participation in the
protocol is key, Richard Krasnow, Esq., a partner at Weil Gotshal
& Manges, told Crain's. The London entity's refusal to
participate was a "showstopper" during his argument Judge Peck's
chambers during the April 7 conference, he added.
Crain's related that Judge Peck scolded the British lawyers in
court, saying, "[t]he position that's being taken by [LBIE]
appears to be getting in the way of a global initiative."
In response to Ms. Warren's letter, Judge Peck, in a letter dated
April 10, invited Ms. Warren, her firm, and the LBEI
Administrators to join another conference on the international
case protocol scheduled for April 14. Judge Peck encouraged the
U.K. firm to voice its concerns but cautions that the telephonic
conference will continue without LBEI or any of its
representative's participation.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Bankhaus Seeks Recognition of Insolvency Case
--------------------------------------------------------------
Dr. Michael C. Frege as the duly authorized Insolvency
Administrator of Lehman Brothers Holdings, Inc.'s affiliate,
Lehman Brothers Bankhaus AG, filed a petition for the U.S.
Bankruptcy Court for the Southern District of New York to find:
(a) that the insolvency proceedings of Bankhaus in Germany is
a "foreign main proceeding" under Section 1517 of the U.S.
Bankruptcy Code; and
(b) Dr. Frege as as the "foreign representative" of LBB in
connection with the German Insolvency.
Dr. Frege filed the petition on April 29, 2009. LBB's Chapter 15
case is assigned Case No. 09-12704. Dr. Frege is represented by
David Farrington Yates, Esq., at Sonnenschein, Nath & Rosenthal
LLP, in New York.
LBB conducts banking activities of any kind excluding (i) mortgage
backed lending, (ii) the business of building societies, and (iii)
the mutual investment fund business. LBHI is the sole shareholder
of LLB.
In support of its Chapter 15 recognition request, Dr. Frege
relates that LBB maintains its registered office in Frankfurt,
Germany. LBB's books and records are maintained at its
headquarters in Frankfurt am Main, Germany.
In addition to recognition of the Germany Insolvency as a foreign
main proceeding and of Dr. Frege as LBB's foreign representative,
Dr. Frege also seeks relief pursuant to Section 1521 of the U.S.
Bankruptcy Code, which provides that, in addition to the stay
effective automatically under Section 1520 upon recognition of a
foreign main proceeding, a court may grant relief to a foreign
representative "where necessary to effectuate the purpose of
[Chapter 15] and to protect the assets of the debtor or the
interests of creditors . . ."
Dr. Frege also seeks relief pursuant to Sections 1521(a)(4), which
enables a foreign representative to take discovery in connection
with the debtor's assets and affairs. Dr. Frege believes that
examination of witnesses, collecting evidence and delivery of
information concerning LBB's assets, affairs, rights, obligations,
or liabilities provided under Section 1521(a)(4) are particularly
appropriate and necessary with respect to LBB. Dr. Frege explains
that like many of the Lehman Brothers affiliated entities, the
status of some of LBB's U.S. assets is currently unknown or
uncertain, and the ability to gather facts is essential for Dr.
Frege to carry out his obligations under the German Insolvency Act
as Insolvency Administrator to protect LBB's assets and to serve
the interests of LBB's creditors.
Dr. Frege also seeks relief under Section 1521(a)(5), which
provides that, upon the recognition of a foreign proceeding, the
foreign representative may seek to be entrusted with the
administration or realization of the debtor's U.S. assets. Dr.
Frege will administer and distribute LBB's assets in a fair and
equitable manner, similar in virtually all respects to the manner
in which such assets would be handled in a U.S. bankruptcy case.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Asks Court to Approve GTH Settlement
-----------------------------------------------------
Lehman Brothers Holdings Inc. and its affiliated debtors ask Judge
James Peck of the U.S. Bankruptcy Court for the Southern District
of New York to approve a settlement agreement they entered into
with GTH LLC and GT Investment Company I, LLC.
GT Investment is a wholly-owned, non-debtor subsidiary of LBHI
established to hold membership interests in GTH LLC. GT
Investment's only assets are its membership interests in GTH, and
LBHI is its primary creditor. GT Investment initially acquired a
membership interest in GTH in October 2007 and subsequently
increased its interests pursuant to three additional investments.
GT Investment has invested about $35 million and currently holds
3,429.71 Class A-1 Units or 20% of the equity of GTH.
In October of 2008, GTH, a subprime mortgage loan servicer, raised
an additional $70 million in capital by issuing five year
convertible notes. While GT Investment was offered its
contractually agreed-upon preemptive rights under the Limited
Liability Company Agreement of GTH dated December 31, 2007, at
that time, GT Investment declined to invest in the convertible
notes based on concerns about GTH's long-term viability. The
convertible notes contained a "full ratchet anti-dilution"
provision, which was punitive to existing members of GTH, such as
GT Investment, that did not exercise their pro rata participation
rights to acquire convertible notes.
GT Investment claimed it had a consent right under the Limited
Liability Company Agreement and, pursuant to such claimed right,
the company notified GTH that it did not consent to the issuance
of the convertible notes, which was disputed by GTH. GT
Investment did not pursue litigation with respect to the issuance
of the convertible notes and, instead, initiated negotiations with
GTH for, among other things, the acquisition by GTH of the Class
A-1 Units.
The Membership Interest Sale Transaction
Subsequent to the Petition Date, the Debtors and their advisors
identified these considerations in evaluating their options
vis-a-vis GT Investment's interest in GTH:
(1) Viability of GTH's business. As a general matter, market
conditions for loan servicers will be challenging in the
near term and the residual values for whole loan
investments and securitizations have fallen and will
continue to be unstable. Moreover, delinquency ratios
have increased in GTH's portfolio and are expected to
remain high in the near to medium term. Compounding these
issues, the asset classes that GTH primarily focused on,
manufactured housing loans, home equity lines of credit,
and recreational vehicle loans, typically contain lower
credit qualities.
(2) Necessity of additional capital contribution. Based on a
conservative estimate, GTH will require in excess of $100
million in additional capital in the near future to
replace expiring debt facilities; replace a line of credit
to cover margin calls on interest rate swaps; and acquire
master servicing rights to grow its business. Given the
full ratchet anti-dilution provision in the convertible
notes, the Debtors would be forced to participate in the
notes and provide additional funding to avoid having GT
Investment's ownership interest in GTH significantly
diluted.
Based primarily on these considerations, the Debtors determined to
seek a buyer for the Class A-1 Units, according to Lori Fife,
Esq., at Weil Gotshal & Manges LLP, in New York. She points out,
however, that the units are subject to certain transfer
restrictions contained in the Limited Liability Company Agreement.
Seeking to avoid the delay and expense inherent in challenging the
transfer restrictions, the Debtors reached out to GTH to determine
the company's interest in repurchasing the Class A-1 Units, Ms.
Fife relates.
Following negotiations, LBHI, GTH and GT Investment entered into a
purchase agreement dated April 13, 2009, under which GT Investment
consented to sell the Class A-1 Units to GTH for $17 million, and
withdraw as a member of GTH. In turn, GTH will purchase the Class
A-1 Units from GT Investment and will immediately cancel all such
units, extinguishing any interests and obligations that GT
Investment may have had in GTH. As a result, all rights, powers
and privileges granted by the Limited Liability Company Agreement
to LBHI, as sole member of GT Investment, will be terminated.
The Purchase Agreement contains important provisions, one of which
requires that GT Investment and LBHI deliver a release to GTH.
The Release contemplates that GT Investment and LBHI will waive
any claims that may have accrued to them pursuant to the issuance
or the terms of the convertible notes. It does not release,
however, any obligations of Lehman pursuant to Flow Subservicing
Agreements that Lehman Capital and Lehman Brothers Bank, FSB
signed with Green Tree Servicing LLC.
The Purchase Agreement also contains certain provisions regarding
the non-solicitation of alternative transactions and further
assurances. Specifically, section 9.1(a) of the Purchase
Agreement provides that GT Investment and LBHI should not directly
or indirectly:
(1) solicit, participate or continue to participate in any
discussion or negotiations with any person other than GTH
regarding the sale of the Class A-1 Units; the sale of the
equity of GT Investment; the merger, reorganization,
amalgamation, dissolution or similar transaction involving
GT Investment; or any "alternative transaction" involving
GT Investment or its assets that would impede, delay,
impair or prevent, or be competitive with, the
transactions contemplated by the Purchase Agreement;
(2) enter into or agree to enter into any agreement with
respect to any alternative transaction; or
(3) furnish to any person any information, or take any other
action to facilitate any inquiries or the making of any
proposal, with respect to any alternative transaction.
The Purchase Agreement also contains a "non-interference
provision," which requires GTH, GT Investment and LBHI to execute
and deliver all additional instruments and agreements, and to take
such further actions in order to evidence or carry out the
provisions of the Purchase Agreement or to consummate the
transactions contemplated therein.
According to Ms. Fife, each of the parties agrees not to take any
action that would result in any of the conditions set in the
Purchase Agreement not being satisfied or satisfaction of those
conditions being materially delayed.
From April 13, 2009, and following the closing of the sale of the
Class A-1 Units, GT Investment and LBHI agree not to take,
directly or indirectly, any action in the chapter 11 cases or
otherwise that would adversely impact GTH with respect to the
transactions contemplated by the Purchase Agreement, Ms. Fife
relates.
"In the case of a breach of the non-interference provision of the
Purchase Agreement by LBHI, GTH's remedies are limited to
equitable relief in the form of an injunction or specific
performance," Ms. Fife says.
By this motion, the Debtors seek the Court's authority to enter
into the Release and the non-interference provision; and take all
corporate actions necessary to comply with their other obligations
under the Purchase Agreement.
"From LBHI's perspective, the Release benefits its estate by
eliminating the estate's exposure to GTH by terminating LBHI under
the [Limited Liability Company Agreement]," Ms. Fife says.
These obligations, Ms. Fife says, include LBHI's covenant to (i)
own, directly or indirectly, 100% of the membership interests in
GT Investment, and cause GT Investment to comply with its
obligations under the Limited Liability Company Agreement.
"The only prospective claims [GT Investment] and LBHI are aware
that they will be giving up, pursuant to the Release, are claims
related to the issuance of the [convertible notes]. Any
resolution of that issue would likely entail litigation that
would be costly, time consuming and, even if successful, damaging
to the value of [GT Investment's] interest in GTH," Ms. Fife
further says.
A hearing to consider approval of the Debtors' request is
scheduled for May 13, 2009. Creditors and other concerned
parties have until May 8, 2009 to file their objections.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Examiner Seeks to Retain 20 Contract Lawyers
-------------------------------------------------------------
Anton Valukas, the Chapter 11 Examiner appointed in Lehman
Brothers Inc.'s case, seeks authority from Judge James Peck of the
U.S. Bankruptcy Court for the Southern District of New York,
pursuant to Section 327 of the Bankruptcy Code, to retain 20
contract attorneys to perform specific document review tasks
effective April 15, 2009.
"The Examiner has determined that the addition of certain contract
attorneys to perform specific document review tasks is necessary
in order to proceed with the investigation as expeditiously as
possible," says Patrick Trostle, Esq., at Jenner & Block LLP, in
New York.
Mr. Trostle says that the Examiner has already reached an
agreement with Strategic Legal Solutions, a placement agency, to
provide attorneys on a temporary basis.
The attorneys selected by the Examiner are:
* Camille Agard
* Shermaine Carter
* Robert J. Foley, Jr.
* Dan Free
* Edward Garris
* Krista Harms
* Emmanuel Odoemene
* Christopher J. Papajohn
* Ajibola Peter-Koyi
* Camiel Richards
* Jasmine Rodriguez
* Nicholas Ronconi
* Antoinette Roush
* Alain Rozan
* Aimee Woodbury Rylko
* John Smee
* J. Eve Sorenson
* W. Randolph Torres
* Deborah Twardowski
* Julianne Yun
Pursuant to the agreement, the estate will be charged a rate of
$43.50 an hour for the attorneys, which is the actual cost
without any mark-up, according to Mr. Trostle.
"This amount is the current market rate for contract attorneys
and is subject to adjustment by Strategic Legal Solutions from
time to time based upon changes in market rates for contract
Attorneys," Mr. Trostle says, adding that during the course of
the attorneys' retention, there may be an increase in the rate,
which would be passed to the estate at cost.
Mr. Trostle says the Examiner will reflect the charges incurred
with respect to the attorneys on the fee statements and
applications of his legal counsel, Jenner & Block.
In their affidavits, the 20 attorneys disclosed that they do not
hold any claim, debt or equity security of the Debtors. The
attorneys also disclosed that they have not been a director,
officer or employee of the Debtors within two years before the
bankruptcy filing.
A hearing to consider approval of the proposed employment will be
held on May 13, 2009. Creditors and other concerned parties have
until May 8 to file their objections.
Examiner Inks Info Sharing Protocol w/ FRB New York
In a separate request, The Federal Reserve Bank of New York and
Mr. Valukas ask the Court to approve a stipulation.
FRB and Mr. Valukas entered into a stipulation to protect the
confidentiality of sensitive information that the bank may share
with the examiner in connection with the investigation of the
Debtors. The information (i) relates to confidential business
practices, plans, strategies or projections of FRB, its customers
and affiliates, and confidential financial information; (ii) is
reasonably likely to cause harm to the reputation of any
individual; and (iii) is kept confidential by the FRB pursuant to
law or regulation.
The key terms of the stipulation are:
(1) Information produced by the FRB should be maintained in
confidence and should not be shared by the Examiner with
any person other than those who have already seen or
received the document at issue; the Examiner's counsel;
professional firms or persons retained by the Examiner to
provide specialized advice in connection with the
investigation; copy services or document management
vendors used by the Examiner in connection with the
investigation; (v) the Court; and (vi) other persons upon
further court order or consent of FRB.
(2) If the Examiner believes that it is necessary to provide
confidential information to another person or entity to
effectively carry out his duties, the Examiner should,
prior to the disclosure, provide that person with a copy
of the stipulation. That person or the entity's qualified
representative is required to execute a non-disclosure
declaration.
If confidential information is utilized in a deposition or
other recorded interview, it should be indicated on the
record by the Examiner's counsel that a question or a line
of questioning concerning a particular subject matter,
calls for confidential information, and a transcript of
the designated testimony should be bound in a separate
volume and marked "Confidential Information Governed by
Protective Order" by the reporter.
(3) The FRB reserves the right to designate certain
information that it deems of the most sensitive nature.
"Highly confidential information" must be treated in the
same manner as confidential information. In case, the
Examiner deems it necessary to disclose highly
confidential information to another person or entity, he
should provide notice to the FRB. The FRB and the
Examiner should allow the use of such material within
within five days while protecting the bank's need for
confidentiality. If they could not resolve an issue
concerning the use of highly confidential information, the
matter should be presented to the Court for resolution.
(4) If at any time FRB determines or realizes that certain
testimony or some portions of materials that it previously
produced should be designated as confidential or highly
confidential information, FRB may apprise the Examiner in
writing, and such designated testimony or portions of the
materials will thereafter be treated as confidential or
highly confidential information under the terms of the
agreement, provided that FRB should, at its cost, provide
the Examiner with substitute copies bearing the
designation of any such materials.
(5) All confidential information or highly confidential
information filed with the Court, and all portions of
pleadings, motions or other papers filed with the Court
that disclose confidential or highly confidential
information, or the contents thereof, should be filed
under seal with the Clerk of the Court and kept under seal
until further court order.
(6) In case the Examiner objects to any designation of
testimony or materials as confidential or highly
confidential information, the Examiner should inform the
FRB, stating the grounds of the objection. The parties
have seven days to resolve the Examiner's objection, at
the end of which the Examiner may seek a ruling from the
Court that such information should not be treated as
confidential or highly confidential information, provided
that no confidential or highly confidential information
should be filed in the public record prior to such a
determination by the Court.
(7) In case the Examiner is required by law to provide
confidential or highly confidential information to any
third party, the Examiner should first provide prompt
prior written notice to counsel for the FRB, which will be
given opportunity to seek protection from a court.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: UPRS Wants Stay Lifted to Recover $5,000,000
-------------------------------------------------------------
Unclaimed Property Recovery Service Inc. asks the U.S. Bankruptcy
Court for the Southern District of New York to lift the automatic
stay to permit the company to recover about $5 million from the
New York State Office of Unclaimed Funds.
UPRS made the move after the director of the NYS Office sought a
court order to pay the $5 million to Lehman Brothers Inc.
The $5 million represents unclaimed funds, which UPRS is tasked
to recover from the NYS Office pursuant to the company's
agreements with LBI. The New York State Comptroller serves as
the custodian of unclaimed funds and oversees the return of these
funds to their owners including those of LBI.
Paul Batista, Esq., at Paul Batista P.C., in New York, asserts
that UPRS would lost about $500,000 or 10% of its fees, which it
is entitled to receive under the agreements as a result of the
NYS Office's action.
"The impact of the director's position has been to thwart UPRS'
ability to recover approximately $5 million in unclaimed funds
for LBI and receive a 10% fee," he says.
Mr. Batista asserts that the stay "does not apply to the actions
sought to be taken by UPRS because it is not exercising any right
against the property of [Lehman Brothers Holdings Inc.]."
"The approximately $5 million in unclaimed funds outstanding that
UPRS has claimed are due LBI, not LBHI," Mr. Batista says. "LBHI
does not have a security interest or ownership interest in this
property and LBHI does not have any equity in the property."
UPRS also requests (i) allowance and payment of a postpetition
administrative expense claim of $500,000 or 10% of its fees; and
(ii) allowance and payment to recoup the $500,000 outstanding
balance owing to the company from the unclaimed funds recovered.
A hearing to consider UPRS' request is scheduled for May 17,
2009. Creditors and other concerned parties have until May 6 to
file their objections.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Inks Pact on Transfer of $2BB Citibank Deposit
---------------------------------------------------------------
Judge James Peck of the U.S. Bankruptcy Court for the Southern
District of New York approved a stipulation between Lehman
Brothers Holdings Inc. and its affiliated debtors, and Citigroup
Inc. and its affiliates for the transfer of a prepetition deposit
to an interest-bearing account.
The deposit in the sum of $2 billion is currently maintained in a
direct account which bears no interest at Citibank N.A., an
affiliate of Citigroup. Citibank asserts rights of netting,
recoupment, offset or claims of right against the deposit on
account of its prepetition and postpetition claims against the
Debtors.
Under the stipulation, Citibank is required to transfer the
deposit to a custody account, in which income is paid with respect
to the balance therein and which is insured by the Federal Deposit
Insurance Corporation in connection with the Temporary Liquidity
Guaranty Program. All income earned on the new account will
constitute property of LBHI's estate.
In another stipulation approved by the Court, Citibank is required
to turn over to the Debtors postpetition deposits that the Debtors
may request, within (i) as to accounts located in the United
States, three days after the request; or (ii) as to accounts
located in foreign jurisdictions, 14 days after the request. On
the date of transfer, Citibank is required to wire the funds to be
released in accordance with the Debtors' wire instructions.
As part of their stipulation, the Debtors will indemnify and
defend Citibank against claims asserted by any third party that
may result from the turnover of postpetition deposits to the
Debtors.
Lehman Agrees to Return EUR759,993 to Barclays
Separately, Lehman Brothers sought and obtained Court approval of
a stipulation it entered into with Lehman Commercial Paper Inc.
and Barclays Bank PLC.
Under the deal, LBHI is required to return the EUR759,993 by wire
transfer to Barclays Bank in accordance with wire instructions to
be provided by Barclays Bank. In return for the transfer,
Barclays Bank agreed to discharge all claims it may have against
the Debtors, their estates and successors solely with respect to
the transfer.
The EUR759,993 was sent in error by Barclays Bank to JPMorgan's
account held at LBHI (UK) for the benefit of LCPI. LCPI is the
participating lender on a revolving credit facility, with Endemol
Finance BV as borrower and Barclays Bank as the agent.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Hughes Hubbard Bills $14.2MM in LBI's SIPA Case
----------------------------------------------------------------
Professionals hired in Lehman Brothers, Inc.'s Securities Investor
Protection Act liquidation, filed interim applications for
allowance and payment of their fees and expenses:
Professional Period Fees Expenses
------------ ------ ---- --------
Hughes Hubbard & 09/13/08- $14,261,785 $213,820
Reed LLP 01/31/09
Norton Rose LLP 10/27/08- 169,713 4,283
01/29/09
Norton Rose is the United Kingdom counsel for James W. Giddens,
the trustee for the SIPA liquidation of LBI. Hughes Hubbard is
the Trustee's lead counsel.
The SIPA Trustee filed an amended proposed order seeking allowance
of $12,116,908 of fees for Hughes Hubbard for the first interim
fee period.
At the hearing, the U.S. Bankruptcy Court for the Southern
District of New York, which oversees the SIPA case, awarded Hughes
Hubbard $12,116,908 for fees and $213,806 for expenses for the
first interim fee period.
SIPA Trustee's Recommendation
The SIPA Trustee tells the Court that Hughes Hubbard rendered
substantial services to the administration of LBI's estate during
the interim fee period. The liquidation proceeding, the Trustee
says, has progressed to a point where the review and
determination of customer claims is underway, and the completion
of administration will also require Hughes Hubbard to assist the
Trustee in (1) continuing with the marshaling and distribution of
the assets of the estate; and (2) dealing with other matters as
the firm may called upon to resolve. The SIPA Trustee says it
has no objection to the allowance of Hughes Hubbard's interim fee
application.
The Official Committee of Unsecured Creditors in Lehman Brothers
Holdings, Inc.'s Chapter 11 case, reserves its rights to be heard
by the Court in connection with the fees and expenses requested
in the Hughes Hubbard's application until the hearing on the
firm's final fee application. The Committee states that it is
possible at this point in the SIPA Proceeding to evaluate either
the reasonableness of the fees and expenses requested by the
Hughes Hubbard's fee application.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LEHMAN BROTHERS: Going Concern Doubt Raised on CRE Loan Unit
------------------------------------------------------------
The audit report of Ernst & Young, LLP, in Boston, Massachusetts,
the independent registered accounting firm of Capital Crossing
Preferred Corporation, expresses substantial doubt on the
Company's ability to continue as a going concern.
Ernst & Young cited the bankruptcy of Lehman Brothers Holdings
Inc., and the ability of the Office of Thrift Supervision to
regulate and restrict the business and operations of Capital
Crossing, in light of a Cease and Desist Order and the Prompt
Corrective Action Directive.
Lehman Brothers Holdings Inc., is the parent company of Lehman
Brothers Bank, FSB, and the ultimate parent company of Capital
Crossing.
Lehman Bank, the owner of all of the common stock of Capital
Crossing, is subject to a Cease and Desist Order, dated January
26, 2009, and a Prompt Corrective Action Directive, dated February
4, 2009, issued by the Office of Thrift Supervision, requiring
Lehman Bank, among other matters, to submit a capital restoration
plan and a liquidity management plan, and imposing restrictions on
certain activities of Lehman Bank and Capital Crossing.
Capital Crossing said the administration of the Company has been
significantly impacted by the OTS' issuance of the Order and the
PCA Directive to Lehman Bank. The Order requires Lehman Bank to
ensure that each of its subsidiaries, including the Company,
complies with the Order, including the operating restrictions
contained in the Order. These operating restrictions, among other
things, restrict transactions with affiliates, contracts outside
the ordinary course of business and changes in senior executive
officers, board members or their employment arrangements without
prior written notice to the OTS. Until the termination of the
Order and the PCA Directive, effectively, any cash or in-kind
distribution, any asset acquisition or disposition, or any
significant change in the business of operations of the Company
will be subject to prior approval by the OTS.
The OTS has informed Lehman Bank that prior approval of the OTS is
not required under the Order or the PCA Directive for payment by
the Company of dividends on the Series D preferred stock. There
can be no assurance, however, that future dividends on the Series
D preferred stock will not require prior approval of the OTS,
Capital Crossing said. There also can be no assurance that such
approvals, if required, will be received from the OTS or when or
if Lehman Bank will achieve sufficient regulatory capitalization
levels to remove any such OTS approval requirement. Furthermore,
any future dividends on the Series D preferred stock will be
payable only when, as and if declared by the Board of Directors.
As of December 31, 2008, Capital Crossing had $96.0 million in
total assets, $931,000 in total liabilities, and $95.1 million in
stockholders' equity. It posted a net income of $6.0 million for
year 2008.
A full-text copy of Capital Crossing's Annual Report on Form 10-K
is available at no charge at http://ResearchArchives.com/t/s?3c42
Capital Crossing Preferred Corporation is a commercial mortgage
investment subsidiary of Lehman Bank, which is owned by Lehman
Brothers Holdings. Capital Crossing holds mortgage assets that
generate net income for distribution to stockholders. The Company
may acquire additional mortgage assets in the future, although
management currently has no intention of acquiring additional
assets other than in connection with the potential asset exchange.
All of the mortgage assets in the Company's loan portfolio at
December 31, 2008, were acquired from Capital Crossing Bank and it
is anticipated that substantially all additional mortgage assets,
if any are acquired in the future, will be acquired from Lehman
Bank, currently, the sole common shareholder. As of December 31,
2008, the Company held loans acquired from Capital Crossing Bank
with net investment balances of $53.0 million. The Company's loan
portfolio at December 31, 2008, consisted of mortgage assets
secured by commercial, residential and multi-family properties.
In the event that the Exchange is consummated, the Company's loan
portfolio will consist primarily of loans secured by residential
real estate.
Lehman Bank is responsible for the administration of the day-to-
day activities of the Company in its roles as servicer under a
master service agreement between Lehman Bank and the Company and
as advisor under an advisory agreement. The Company pays Lehman
Bank servicing and advisory fees.
LUCKY CHASE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Lucky Chase II, LLC
P.O. Box 90160
Pittsburgh, PA 33131
Bankruptcy Case No.: 09-18087
Type of Business: The Debtor is a single-asset, real estate
company.
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Judge: Robert A. Mark
Debtor's Counsel: Arthur J. Spector, Esq.
350 E Las Olas Blvd #1000
Ft. Lauderdale, FL 33301
Tel: (954) 525-9900
Fax : (954) 523-2872
Email: aspector@bergersingerman.com
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
------ --------------- ------------
DCI Association Services Property Management $48,309
2035 Harding Street, Ste 200 Services
Hollywood, Fl 33020
House of Floors of Palm Vendor $46,386
Beach, Inc.
1081 Holland Drive
Boca Raton, FL 33487
US Alliance Management Security Services $46,206
P.O. Box 226618
Miami, FL 33122
Sun Sentinel Vendor $36,000
Moody Plumbing, Inc. Plumbing Services $34,929
Atlantic Southern Paving Paving Services $34,503
and Sealcoating, Inc.
Flatiron Capital Insurance Premiums $26,651
HD Supply Facilities Supplies $21,872
The Sherwin Williams Co. Final Judgement $21,585
dated 2/5/9
First Response Carpet Carpet Cleaning $19,579
Cleaning Services
Luke Brothers, Inc. Landscaping $16,000
Services
Southern Painting Painting Services $15,907
Wilmar Industries Janitorial Supplies $15,356
Sachs Sax Caplan, P.L. Legal Services $10,140
South Florida Appliance Appliances $8,590
Alpat Company, Inc. Collection Agency $6,596
A1 Fire Equipment Correction of fire $6,581
code violation
For Rent Magazine Advertising $5,652
HD Supply Facilities Supplies $5,135
Maintenance
FPL General Mail Facility Utilities $4,406
The petition was signed by Scott I. Deaktor, manager.
MAGELLAN AEROSPACE: Says Loan Extension Critical to Going Concern
-----------------------------------------------------------------
Magellan Aerospace Corporation will hold its annual meeting of
shareholders at The Living Arts Centre, 4141 Living Arts Drive, in
Mississauga, Ontario, in Canada, on May 12, 2009, at 2:00 p.m.
(Toronto time).
The agenda of the meeting are:
1) to receive the consolidated financial statements of the
Company for its financial year ended December 31, 2008,
together with the report of the auditors, Ernst & Young
LLP, Chartered Accountants;
2) to set the number of directors to be elected at nine and
to elect directors for the ensuing year;
3) to appoint auditors, with remuneration to be fixed by the
directors; and
4) to transact further or other business as may properly come
before the meeting or any adjournment.
In its 2008 annual report filed in March, Magellan said, despite
successes it achieved in 2008 operationally, due to the Company's
current financial position, the high level of indebtedness on its
balance sheet, and well publicized challenges in the financial
markets, Magellan faces significant financial challenges in 2009
and beyond.
Magellan said its operating credit facility is due for its annual
renewal in May 2009. As part of the financing initiatives
negotiated in February 2009, the Company has said it would attempt
to renew its operating credit facility by April 30, 2009.
Early in April, the Company commenced discussions with its lenders
of the operating credit facility regarding the renewal.
The Company has said that if it is unable to renew this facility,
its ability to continue as going concern is uncertain.
"To address the uncertainty in 2009, efforts are being made to
conserve cash through management of inventory levels, productivity
improvements through cycle time reduction, cost reduction through
off-load of non-core products, and restriction of capital
investments," the Company has said.
Magellan said the year 2008 was one of growth for the Company --
revenues increased by more than C$88 million to C$686 million, and
earnings grew by C$24 million resulting in C$0.62 net income per
share for year-ended December 31, 2008 as compared to C$0.71 net
loss per share for year-ended December 31, 2007. Magellan posted
a net income of C$12.9 million for year 2008 compared to a net
loss of C$11.3 million the previous year.
As of December 31, 2008, Magellan had C$670.6 million in total
assets, including C$267.0 million in total current liabilities;
and C$355.2 million in total current liabilities, and C$51.6
million in total long-term liabilities.
Debt Obligations
Magellan amended and restated its bank credit agreement with its
existing lender on June 24, 2008. Under the terms of the Bank
Facility Agreement, Magellan has an operating credit facility,
expiring on May 23, 2009, and extendable for unlimited one year
periods by agreement of Magellan and the lenders. Magellan's Bank
Facility Agreement also requires it to maintain specified
financial ratios. Magellan admitted its ability to meet the
financial ratios can be affected by events beyond its control, and
there can be no assurance that Magellan will be able to meet the
ratios. There is no assurance that the Bank Facility Agreement
will be renewed every year or that the terms of renewal will not
be materially adverse to the Corporation.
The credit facility is fully guaranteed by N. Murray Edwards, a
director and Chairman of the Board of Magellan. Magellan said
there is no assurance that Mr. Edward's guarantee, if required,
will be available beyond the term of the current commitment which
ends on May 23, 2009. There is no assurance that Magellan will be
in compliance with its bank covenant at all times during the
upcoming 12 months due to unforeseen events or circumstances.
Magellan also said its C$20.95 million principal amount of the
8.5% convertible unsecured subordinated debentures are due January
31, 2010, and Magellan will need to finance repayment of the
amount. Magellan has borrowed C$50.0 million pursuant to a loan,
which is due July 1, 2009, unless extended to July 1, 2010,
pursuant to the 2009 Financing Arrangements.
In addition, Magellan said the completion of the 2009 Financing
Arrangements will result it being required to offer to purchase
the New Debentures at 102.5% of the principal amount plus unpaid
and accrued interest. There is no assurance that alternative debt
or equity financing will be available, or will be available on
satisfactory terms, to the Company to refinance the repayment of,
or to fund the offer to purchase, the New Debentures or the
Original Loan, Magellan said. Credit ratings and access to the
capital markets may be impacted by a number of matters and a
number of external factors beyond the Company's control, and there
can be no assurance that access to the capital markets will be
available to refinance, or to fund the offer to purchase, the New
Debentures or the Original Loan, Magellan said.
Magellan further related that pursuant to the 2009 Financing
Arrangements, if completed, the Original Loan and the new C$15.0
million secured subordinated loan will be due on July 1, 2010.
Subject to the terms of the Ontario Business Corporations Act, the
holders of the First Preference Shares Series A issued in 2005 for
C$20.0 million have the right to retract the Preference Shares for
the issue price plus accrued and unpaid dividends from July 1,
2010, in the event the volume weighted average trading price of
the common shares on the TSX for at least 20 trading days in any
consecutive 30 day period ending on the fifth trading day prior to
such date is less than C$12.00 per common share, or upon the
occurrence of a change of control of Magellan involving the
acquisition or voting control or direction over at least 66-2/3%
of the common shares and instruments convertible into common
shares. If the 2009 Financing Arrangements are completed, subject
to the terms of the OBCA, Magellan would be required to retract
the Preference Shares in whole or in part.
Magellan said it does not currently believe it will be able to
retract the Preference Shares as it does not expect to have the
funds to do so, and in any event, it is prohibited from doing so
by the terms of its Bank Facility Agreement, and any default in
the operating credit facility would result in Magellan being
unable to pay its liabilities as they become due and constitute a
contravention of the OBCA. There can be no assurance that the
Company will determine to or be able to pay future dividends on
the Preference Shares, Magellan said.
A full-text copy of Magellan's 2008 Annual Report is available at
no charge at http://bankrupt.com/misc/MagellanY2008report.PDF
About Magellan Aerospace
Based in Mississauga, Ontario, Canada, Magellan Aerospace
Corporation -- http://www.magellanaerospace.com/-- through its
wholly owned subsidiaries, designs, engineers, and manufactures
aero-engine and aero-structure components for aerospace markets,
advanced products for military and space markets, and
complementary specialty products. Magellan supplies the world's
premier aircraft and engine makers, the defense forces and space
agencies of leading nations, and users of specialty engineered
products produced within the company. Magellan is a public
company whose shares trade on the Toronto Stock Exchange (TSX: MAL
and TSX: MAL.DB), and has operating units throughout Canada, the
United States and the United Kingdom.
MALABAR FOLSOM: Case Summary & 21 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Malabar Folsom LLC
1770 Prairie City Rd
Folsom, CA 95630
Bankruptcy Case No.: 09-28232
Chapter 11 Petition Date: April 28, 2009
Court: United States Bankruptcy Court
Eastern District of California (Sacramento)
Judge: Thomas Holman
Debtor's Counsel: Rebecca E. Ihejirika, Esq.
2737 Fulton Ave #213
Sacramento, CA 95821
Tel: (916) 972-8774
Fax: (916) 231-9828
Email: ihejirika@yahoo.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
21 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/caeb09-28232.pdf
The petition was signed by John Cook, operating partner of the
Company.
MANCHESTER MALL: Case Summary & 1 Largest Unsecured Creditor
------------------------------------------------------------
Debtor: Manchester Mall, Inc.
c/o The Phoenix
Boardwalk & Stenton Place
Atlantic City, NJ 08401
Bankruptcy Case No.: 09-20716
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of New Jersey (Camden)
Judge: Chief Judge Judith H. Wizmur
Debtor's Counsel: Ilana Volkov, Esq.
Cole, Schotz, Meisel, Forman & Leonard
25 Main St.
Hackensack, NJ 07601
Tel: (201) 489-3000
Fax: (201) 489-1536
Email: ivolkov@coleschotz.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $0 to $50,000
A full-text copy of the Debtor's petition, including its list of 1
largest unsecured creditor, is available for free at:
http://bankrupt.com/misc/njb09-20716.pdf
The petition was signed by Mark Giannantonio, president and chief
operating officer of the Company.
MARTIN W. HOWSER: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Martin W. Howser
405 W. Sumner Ave.
Spokane, WA 99204
Bankruptcy Case No.: 09-02439
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Eastern district of Washington
Judge: Patricia C. Williams
Debtor's Counsel: Timothy R. Fischer, Esq.
Murphy Bantz & Bury PS
818 W Riverside Ave Ste #631
Spokane, WA 99201
Tel: (509) 838-4458
Fax: (509) 838-5466
Email: tfischer@mbandbps.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/waeb09-02439.pdf
The petition was signed by Mr. Howser.
MGM MIRAGE: Dubai World Drops Lawsuit, Resumes Funding CityCenter
-----------------------------------------------------------------
MGM MIRAGE and Dubai World through subsidiary Infinity World,
50/50 joint venture partners in the CityCenter project, have
reached an agreement on a revised joint venture agreement and also
reached an agreement with CityCenter's lenders on a comprehensive
plan to fully fund the completion of CityCenter for its scheduled
opening later this year.
Under the plan, Dubai World and MGM MIRAGE will fund their
remaining equity contributions to CityCenter through letters of
credit. In addition, CityCenter's lenders will immediately fund
the full $1.8 billion senior secured credit facility.
Additionally, Dubai World will dismiss its lawsuit filed against
MGM MIRAGE in Delaware Chancery Court on March 22, 2009, and Dubai
World and MGM MIRAGE will exchange mutual releases.
"We are pleased that MGM MIRAGE and Dubai World, with the strong
support of CityCenter's lenders, have agreed to a comprehensive
plan for the financing and completion of CityCenter," said Jim
Murren, Chairman and CEO of MGM MIRAGE and Chris O'Donnell, Dubai
World's Director of the CityCenter joint venture. "CityCenter is
now fully funded and on track to open in December 2009," they
said.
"CityCenter will be unlike anything anyone has seen in Las Vegas
or anywhere else. We are confident in the potential of CityCenter
to contribute significantly to our cash flow," said Mr. Murren.
"CityCenter is a powerful engine for growth and employment in Las
Vegas and Nevada. With all funding in place, we will focus, along
with our partner, on planning for an exciting opening in December
and continuing to book rooms and conventions. We appreciate
greatly the strong support of our lenders, who share our vision as
to the importance of this project to the Las Vegas community and
the entire state of Nevada."
Mr. O'Donnell said, "This agreement provides a stable financial
framework for one of the most exciting destination resort
development projects ever to be constructed. MGM MIRAGE is the
industry's premier luxury hotel, resort and casino developer and
operator. We believe CityCenter has a bright future and will
benefit both the partners and the local economy, and we look
forward to working with MGM management to realize that potential."
Key terms of the various agreements include:
-- MGM MIRAGE will be responsible for completion costs to the
extent net condominium proceeds are less than $243 million
and for completion costs in excess of the current budget of
$8.5 billion.
-- Dubai World has agreed to fully fund its original sponsor
contributions to CityCenter, including $135 million in
payments previously funded by MGM MIRAGE on Dubai World's
behalf. Dubai World is relieved of all completion
guarantees.
-- Until the completion of CityCenter, MGM MIRAGE's
obligations with respect to additional construction costs,
if any, will be supported by the assets of Circus Circus
Las Vegas and certain adjacent land through a completion
guarantee.
-- The CityCenter credit facility has been amended as part of
the global financing plan. Such amendments include:
-- The facility will mature on June 30, 2012.
-- The interest rate margin was increased by 2.00%,
though such amount is "pay in kind" through September
2010, with additional periodic margin increases through
the term of the facility.
-- Condominium proceeds of up to $250 million may be used
to pay for construction costs; 30% of net condominium
proceeds in excess of $250 million will be applied to
reduce outstanding borrowings under the credit
facility, with the remaining 70% available as
distributable cash upon CityCenter satisfying certain
performance criteria.
-- Certain financial covenants were modified to provide
CityCenter with greater flexibility during its first 18
months of operations.
Evercore Partners served as financial advisor to MGM MIRAGE and
Moelis & Company and Perella Weinberg Partners served as financial
advisors to Dubai World. Glaser, Weil, Fink, Jacobs, Howard &
Shapiro, LLP and Morrison & Foerster served as legal advisors to
MGM MIRAGE and Paul, Hastings, Janofsky & Walker LLP and Quinn
Emanuel Urquhart, Oliver & Hedges served as legal advisors to
Dubai World.
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'.
MICHAEL H. CLEMENT: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Michael H. Clement Corporation
3500 Wilbur Avenue
Antioch, CA 94509
Bankruptcy Case No.: 09-43502
Chapter 11 Petition Date: April 28, 2009
Court: United States Bankruptcy Court
Northern District of California (Oakland)
Judge: Leslie J. Tchaikovsky
Debtor's Counsel: James A. Tiemstra, Esq.
Law Offices of James A. Tiemstra
Tribune Tower
409 13th St. 15th Fl
Oakland, CA 94612
Tel: (510) 987-8000
Email: jat@tiemlaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $500,001 to $1,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/canb09-43502.pdf
The petition was signed by Mr. Clement.
MORTON INDUSTRIAL: Has Until May 10 to File Schedules & Statements
------------------------------------------------------------------
The Hon Brendan L. Shannon of the United States Bankruptcy Court
for the District of Delaware extended until May 10, 2009, the
period within which Morton Industrial Group Inc. and its debtor-
affiliates may file their schedules of assets and liabilities, and
statements of financial affairs.
Headquartered in Morton, Illinois, Morton Industrial Group Inc.
and its affiliates -- http://www.mortongroup.com/-- are contract
metal fabricators serving an array of original equipment
manufacturers. They operate five manufacturing facilities located
in the Midwestern and Southeastern United States. Customers are
Caterpillar Inc., Deere & Co., JLG Industries, Inc., Hallmark
Cards, Kubota Manufacturing of America and Winnebago Industries,
Inc.
Morton Industrial and its 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 hired Paul N.
Heath, Esq., at Richards, Layton & Finger PA as co-counsel,
AlixPartners, LLP as restructuring advisors, and Kurtzman Carson
Consultants LLC as claims, noticing and balloting agent. Roberta
A. DeAngelis, United States Trustee for Region 3, appointed three
members to serve on the Official Committee of Unsecured Creditors
of Morton Industrial Group Inc. and its debtor-affiliates. The
Debtors listed estimated assets of $50 million to $100 million
and estimated debts of $100 million to $500 million.
NIAGARA FALLS MEMORIAL: Pension Payment Default Cues PBGC Takeover
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The Pension Benefit Guaranty Corporation assumed responsibility
for a pension plan covering more than 1,200 workers and retirees
of Niagara Falls Memorial Medical Center, a healthcare provider in
New York State.
The PBGC stepped in because the medical center missed about
$7 million in legally required pension contributions. Niagara has
not paid into the plan since September 2006, and lacks the assets
to make past due or future payments. Additionally, Niagara's
failure to make such payments left the plan non-compliant with
minimum funding standards under the Internal Revenue Code.
According to PBGC estimates, the Retirement Plan of Niagara Falls
Memorial Medical Center is about 54% funded, with assets of
$9 million and benefit liabilities of $21 million. The agency
expects to be responsible for about $7.6 million of the $11.8
million shortfall.
The PBGC will take over the assets and use insurance funds to pay
guaranteed benefits earned under the plan, which ended April 30,
2009. Assumption of the plan's unfunded liabilities will have no
material effect on the PBGC's financial statements, according to
generally accepted accounting principles.
Retirees and beneficiaries will continue to receive their monthly
benefit checks without interruption, and other participants will
receive their pensions when they are eligible to retire.
Niagara Falls Memorial Medical Center is a 315-bed, non-profit
hospital and nursing home in Niagara County, NY. The medical
center provides care for a disproportionate number of the county's
uninsured patients.
Within the next several weeks, the PBGC will send notification
letters to all participants in the Niagara Falls Memorial Medical
Center Pension Plan. Under provisions of the Pension Protection
Act of 2006, the maximum guaranteed pension the PBGC can pay is
determined by the legal limits in force on the day the plan ended.
Therefore, participants in the pension plan are subject to the
limits in effect on April 30, 2009, which set a maximum guaranteed
amount of $54,000 for a 65-year-old.
The maximum guaranteed amount is lower for those who retire
earlier or elect survivor benefits. In addition, certain early
retirement subsidies and benefit increases made within the past
five years may not be fully guaranteed.
Workers and retirees with questions may consult the PBGC Web site,
http://www.pbgc.gov/or call toll-free at 1-800-400-7242. For
TTY/TDD users, call the federal relay service toll-free at 1-800-
877-8339 and ask for 800-400-7242.
Retirees of the medical center who draw a benefit from the PBGC
may be eligible for the federal Health Coverage Tax Credit.
Further information may be found on the PBGC Web site at
http://www.pbgc.gov/workers-retirees/benefits-
information/content/page13692.html.
The PBGC is a federal corporation created under the Employee
Retirement Income Security Act of 1974. It currently guarantees
payment of basic pension benefits earned by 44 million American
workers and retirees participating in over 29,000 private-sector
defined benefit pension plans. The agency receives no funds from
general tax revenues. Operations are financed largely by
insurance premiums paid by companies that sponsor pension plans
and by investment returns.
NEVADA DEPARTMENT: Moody's Cuts Ratings on $439MM Bonds to 'Caa2'
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Moody's Investors Service has downgraded the ratings on the Nevada
Department of Business and Industry Las Vegas Monorail Project's
(Monorail Project) $439 million 1st Tier Series 2000 Revenue Bonds
from Caa2 to Ca and assigned a negative outlook to the rating.
The downgrade reflects the continued weak performance of the
Monorail Project and Moody's opinion that bondholders are exposed
to a significant loss in principal. As a result, Moody's expects
that Ambac Assurance Corporation (insurance financial strength
rating of Ba3) will be required to perform under the surety bond
and its financial guarantee.
Given the low operating revenues, Las Vegas Monorail Company has
not complied with the rate covenant requirement since 2005. The
rate covenant requires that the first tier debt service coverage
ratio equal 1.40 times (x) debt service and 1.10x debt service for
all debt, including the second tier and subordinate bonds. The
first tier debt service coverage ratio in 2008 equaled
approximately 0.30.
Based on the 2009 budget and unaudited financials, the 2009 total
operating revenue is expected to be approximately 2% lower than
that achieved in 2008. According to LVMC, the reduction in
revenues is a result of the reduction in ridership, which is a
function of the number of visitors to Las Vegas, as well as a
reduction in investment income due to the draw down in the
reserves. According to the Las Vegas Convention and Visitor
Authority, total visitors to Las Vegas are expected to equal 37.5
million in 2009, down 4.5% compared to that in 2008.
Since 2007, Wells Fargo Bank, National Association, the Trustee,
has withdrawn funds from the first tier and second tier debt
service reserve funds to pay debt service. This was required
because operating revenues, after covering operating expenses,
were not sufficient to cover the first tier and second tier debt
service payments. It is likely that the cash portion of the 1st
tier and 2nd tier debt service reserve funds will both be depleted
in July 2009 and that the Trustee will have to make a demand on
Ambac Assurance Corporation to cover the remaining shortfall.
The 1st Tier Series 2000 project revenue bond ratings were
assigned by evaluating factors believed to be relevant to the
credit profile of the Project such as i) the business risk and
competitive position of the issuer versus others within its
industry or sector, ii) the capital structure and financial risk
of the issuer, iii) the projected performance of the issuer over
the near to intermediate term, and iv) the issuer's history of
achieving consistent operating performance and meeting budget or
financial plan goals. These attributes were compared against
other issuers both within and outside of the Monorail Project's
core peer group and the 1st Tier Series 2000 project revenue bond
ratings are believed to be comparable to ratings assigned to other
issuers of similar credit risk.
The last rating action was on January 29, 2008 when the 1st Tier
Series 2000 bonds were downgraded from B3 to Caa2.
NOBLE INTERNATIONAL: Receives Additional Nasdaq Notice
------------------------------------------------------
Noble International, Ltd. has received a Staff Determination
letter from The Nasdaq Stock Market notifying it that, in
accordance with Listing Rules 5100, 5110(b) and IM-5100-1, the
Company's filing for protection under Chapter 11 of the U.S.
Bankruptcy Code serves as an additional basis for delisting the
Company's common stock.
This letter was in addition to the Nasdaq Staff Determination
relating to the failure to pay certain required fees that the
Company received on April 16, 2009.
The Company has appealed the Nasdaq Staff Determinations to the
Nasdaq Listing Qualifications Panel. There can be no assurance
the Panel will grant the Company's request for continued listing.
About Noble International
Headquartered in Warren, Michigan, Noble International, Ltd. --
http://www.nobleintl.com/home.html/-- provides flat, tubular,
shaped and enclosed formed structures to automotive original
equipment manufacturers and their suppliers, for use in automobile
applications, including doors, fenders, body side panels, pillars,
bumpers, door beams, load floors, windshield headers, door tracks,
door frames, and glass channels.
Noble Int'l and its affiliates filed for Chapter 11 protection on
April 15, 2009 (Bankr. E. D. Mi. Case No. 09-51720). The Debtors
proposed Foley & Lardner LLP as their general bankruptcy counsel.
Daniel M. McDermott, the United States Trustee for Region 9,
appointed three creditors to serve on an official committee of
unsecured creditors. The Debtors disclosed total assets of
$190,763,000 and total debts of $38,691,000, as of January 10,
2009.
OPUS SOUTH: Wants to Move Schedules and Statements Filing Deadline
------------------------------------------------------------------
Opus South Corporation and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to extend the time
within which they must file their schedules of assets and
liabilities, lists and statement of financial affairs for a total
of 45 days from the petition date.
The Debtors relate that they would not be able to complete the
schedules by the prescribed time. The Debtors add that they
needed sufficient time to collect and assemble all the requisite
financial data and other information and to prepare all of the
schedules.
The Debtors assure the Court that the proposed extension will
enable the parties-in-interest to review the schedules prior to
the proposed sale of the Debtors' assets.
Headquartered in Atlanta, Georgia, Opus South Corporation --
http://www.opuscorp.com/-- provides an array of real estate
related services across the United States including real estate
development, architecture & engineering, construction and project
management, property management and financial services.
The Company and its affiliates filed for Chapter 11 on April 22,
2009 (Bankr. D. Del. Lead Case No. 09-11390). Victoria Watson
Counihan, Esq. at Greenberg Traurig, LLP represents the Debtors in
their restructuring efforts. The Debtors propose to employ
Landis, Rath & Cobb, LLP as conflicts counsel, Chatham Financial
Corporation as real estate broker, Delaware Claims Agency LLC as
claims agent. The Debtors have assets and debts both ranging from
$50 million to $100 million.
PACIFIC AMERICAN: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Pacific American Management, LLC
6841 S Eastern Ave
Las Vegas, NV 89119
Bankruptcy Case No.: 09-16637
Debtor-affiliate filing separate Chapter 11 petition:
Entity Case No.
------ --------
Pacific American Ventures, LP 09-16638
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Mike K. Nakagawa
Debtor's Counsel: Spencer M. Judd, Esq.
Albright, Stoddard, Warnick & Albright
801 S. RANCHO DR., BLDG. D
Las Vegas, NV 89106
Tel: (702) 384-7111
Fax: (702) 384-0605
Email: sjudd@albrightstoddard.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Pacific American Management's petition,
including its list of 10 largest unsecured creditors, is available
for free at:
http://www.bankrupt.com/misc/nvb09-16637.pdf
The petition was signed by Paul Miller, managing member of the
Company.
PALMETTO FOREST: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Palmetto Forest Products, Inc.
dba Palmetto Forest Products, Incorporated
Post Office Box 1677
Moncks Corner, SC 29461
Bankruptcy Case No.: 09-03245
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of South Carolina (Charleston)
Debtor's Counsel: Felix B. Clayton, Esq.
Law Office of Felix B. Clayton
P.O. Box 1044
Beaufort, SC 29901
Tel: (843) 437-9729
Email: fbutchclayton@gmail.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 list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/scb09-03245.pdf
The petition was signed by Christopher B. Riley, president of the
Company.
PARK LANE I: Files for Chapter 11 in Manhattan
----------------------------------------------
According to Bloomberg's Bill Rochelle, Park Lane I, LLC's
properties in Alabama were taken over last year by a state-court
receiver following loan defaults. The Company acquired the
properties in 2006 for $138 million.
Aside from properties in Alabama, the Company also owns real
property in New York City.
As reported by the TCR, Park Lane I filed for Chapter 11 April 28
(Bankr. S. D. N.Y., Case No. 09-12635). It said total assets and
debts both exceed $100 million.
PCI GAMING: Solid Net Revenues Cue Moody's to Retain 'B1' Rating
----------------------------------------------------------------
Moody's Investors Service said that PCI Gaming Authority's
ratings, including the B1 corporate family rating, and the stable
outlook remain unchanged, based on the company's solid net
revenues and earnings reported in the first half of fiscal year
ended September 30, 2009, the expectation that the operating trend
will not sharply deteriorate in the near term, although the weak
local economy could somewhat constrain earnings, as well as PCI
Gaming's low financial leverage for the rating category and
adequate liquidity.
The last rating action on PCI Gaming was on March 25, 2008, when
Moody's affirmed the B1 corporate family rating.
PCI Gaming is an unincorporated instrumentality of the Poarch Band
of Creek Indians, which owns and operates three Class II gaming
facilities in Alabama.
PEM GROUP: Faces Fraud Charges From SEC, Assets Frozen
------------------------------------------------------
The Securities and Exchange Commission obtained an emergency court
order on Wednesday freezing the assets of Newport Beach, Calif.-
based financier Danny Pang and his two companies for allegedly
defrauding investors of hundreds of millions of dollars by
misrepresenting investments in the life insurance policies of
senior citizens and in timeshare real estate. The SEC obtained
additional relief against Pang including an order requiring him to
repatriate assets sent overseas and turn over to the court all of
his passports.
The SEC alleges that Pang and his Irvine, Calif.-based firms
Private Equity Management Group, Inc. and Private Equity
Management Group LLC (the PEM Group) misled investors by falsely
claiming that their returns would come from proceeds made on the
timeshare or insurance policies investments. Instead, some of the
purported returns were paid out of funds raised from newer
investors. Furthermore, in at least one instance, the PEM Group
presented investors with a forged $108 million insurance policy to
support a false claim that a particular investment was entirely
covered by insurance.
The SEC also alleges that Pang and the PEM Group attracted
investors by falsely representing Pang as a former senior vice
president and high-tech merger adviser from Morgan Stanley & Co.
with an MBA from the University of California at Irvine. Pang
never worked at Morgan Stanley nor did he attend or obtain any
degrees from UC Irvine.
"We allege that Pang lured investors with false claims and even
bogus documents to dupe them into believing their principal and
interest were guaranteed and insured," said Robert Khuzami,
Director of the SEC's Division of Enforcement. "Swift and
decisive enforcement action is critical to rooting out
unscrupulous promoters who will stop at nothing to create an aura
of authenticity when making unreal assurances to investors."
Rosalind R. Tyson, Director of the SEC's Los Angeles Regional
Office, said, "Pang's alleged use of phony credentials and false
insurance coverage to guarantee his investments underscores how
critical it is for investors to exercise due diligence before
entrusting their savings to promoters."
The Honorable Philip S. Gutierrez, U.S. District Judge for the
Central District of California, granted the SEC's request for
emergency relief for investors including the appointment of a
receiver over the PEM Group. The receiver, Robert P. Mosier, is
responsible for marshaling and safeguarding assets held by these
entities.
Neither Pang nor his entities have ever been registered with the
SEC. According to the SEC's complaint, Pang and the PEM Group have
been engaged in the fraudulent offering of securities since at
least 2003 and raised several hundreds of millions of dollars from
investors, primarily located in Taiwan. Pang and the PEM Group
told investors that they would generate enough profit to pay
returns on their investments through purchasing life insurance
policies at a discount before maturity and then collecting the
proceeds of the policy upon the death of the insured. In fact, the
life insurance policies did not generate sufficient profit to
cover the cost of the premiums to maintain the policies and pay
the purported returns to investors. Pang instead directed PEM
Group to use funds raised from subsequent investors, who were
supposed to be investing in timeshares, to pay the purported
returns of earlier investors in the ill-fated life insurance
investment.
The SEC alleges that Pang and the PEM Group claimed that both
principal and interest were insured and "guaranteed" by the
purported $108 million of insurance when in fact the relevant
insurance policy was for approximately $31 million. In response
to investor requests to see the policy, Pang had the policy
altered to increase the face amount of the policy and the PEM
Group provided investors with the bogus insurance policy when
soliciting their investments.
The SEC's complaint alleges that Pang and the PEM Group violated
Section 17(a) of the Securities Act of 1933, Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In
addition to emergency relief, the SEC's complaint seeks
disgorgement of the defendants' ill-gotten gains, prejudgment
interest, and financial penalties.
The SEC's investigation is continuing.
PFF BANCORP: Wants Plan Filing Period Extended to July 6
--------------------------------------------------------
PFF Bancorp, Inc., et al., ask the U.S. Bankruptcy Court for the
District of Delaware to extend its exclusive periods to file a
Chapter 11 plan and to solicit acceptance of said plan to July 6,
2009, and September 3, 2009.
On November 21, 2008, when PFF Bancorp's potential acquisition by
FBOP Corporation failed to close, the Office of Thrift Supervision
closed PFF Bank & Trust and appointed the FDIC as receiver.
Subsequent to the closure, a subsidiary of Minneapolis-based U.S.
Bancorp acquired all of the deposit accounts and all of the loans
of PFF Bank from the FCIC. Subsequent to the Bank Receivership,
the Debtors commenced these Chapter 11 cases to liquidate their
assets.
The Debtors tell the Court that they only obtained access to their
books and records on January 27, 2007. In addition, they have
still to file their statements of financial affairs and schedules
of assets and liabilities based on those records. Under these
circumstances, an extension of their exclusive periods is needed
ibefore they can formulate a consensual
Chapter 11 plan in their bankruptcy cases.
PFF Bancorp Inc. -- http://www.pffbank.com/-- was a non-
diversified unitary savings and loan holding company within the
meaning of the Home Owners' Loan Act with headquarters formerly
located in Rancho Cucamonga, California. Bancorp is the direct
parent of each of the remaining Debtors.
Prior to filing for bankruptcy, Bancorp was also the direct parent
of PFF Bank & Trust, a federally chartered savings institution,
and said bank's subsidiaries.
PFF Bancorp Inc. and its affiliates sought Chapter 11 protection
on Dec. 5, 2008 (Bankr. D. Del. Case No. 08-13127 to 08-13131).
Chun I. Jang, Esq., and Paul N. Heath, Esq., at Richards, Layton &
Finger, P.A., represent the Debtors in their restructuring
efforts. Kurtzman Carson Consultants LLC serves as the Debtors'
claims agent.
At February 28, 2009, PFF Bancorp had total assets of
$159,857,902, total liabilities of $117,430,056, and total equity
of $42,427,846.
PLANTATION INVESTMENT: Case Summary & 20 Largest Unsec. Creditors
-----------------------------------------------------------------
Debtor: Plantation Investment Group, LLC
10605 N. 56th Street
Tampa, FL 33617
Bankruptcy Case No.: 09-08416
Chapter 11 Petition Date: April 28, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Tampa)
Judge: Michael G. Williamson
Debtor's Counsel: Phillip M. Hudson, III, Esq.
Arnstein & Lehr LLP
200 South Biscayne Boulevard
Suite 3600
Miami, FL 33131
Tel: (305) 374-3330
Fax: (305) 374-4744
Email: pmhudson@arnstein.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://www.bankrupt.com/misc/flmb09-08416.pdf
The petition was signed by Raquel Nobo-Alvarez, managing member of
the Company.
PLY GEM: Poor Credit Metrics Cues Moody's 'Caa2' Corp. Rating
-------------------------------------------------------------
Moody's Investors Service downgraded Ply Gem Industries, Inc.'s
corporate family rating to Caa2, probability of default to Ca/LD,
$700 million senior notes to Caa1, and $360 million subordinated
notes to C. The ratings downgrade reflects the deterioration in
the company's credit metrics. The ratings outlook remains
negative.
These ratings and assessments were affected:
-- Corporate family rating downgraded to Caa2 from B3;
-- Probability of default downgraded to Ca/LD from B3;
-- $700 million senior secured notes due 2013, downgraded to
Caa1 (LGD3, 36%) from B2 (LGD3, 36%);
-- $360 million subordinated notes due 2012, downgraded to C
(LGD5, 80%) from Caa2 (LGD5, 88%).
The downgrade in the company's CFR to Caa2 from B3 reflects the
deterioration in the company's financial performance due to the
contraction in new home construction and a reduction in large
ticket home remodeling, its poor liquidity profile, and its high
financial leverage. Moody's believe that demand will remain
suppressed until home equity values stabilize, home improvement
loans become more readily available, or home starts increase. The
company's attempt to aggressively cut costs has not been
sufficient to fully offset top line contraction. Moreover, the
decline in industry-wide volume has eroded pricing integrity,
further weakening gross and operating margins.
CI Capital Partners, LLC is Ply Gem's sponsor. Following the
purchase of the majority of Ply Gem's 9% Sr notes due 2/2012 these
notes by CIC, Ply Gem solicited to eliminate substantially all of
the restrictive covenants and certain events of default. However,
the same covenants still exist in the 11.75% bonds. Moody's has
determined that the purchase of the notes by CIC and the
subsequent change in covenants is a Distressed Exchange under
Moody's definition of Distressed Exchanges and changed to
probability of default rating to Ca/LD. The LD designation
signifies a limited default. More information on DEs can be found
on Moodys.com.
The rating on securities impacted by the open market transactions
was lowered to reflect the estimated losses incurred by
participating bondholders. After approximately three business
days, Moody's will remove the LD designation and change the rating
on the company's debt security consistent with Moody's LGD (loss
given default) framework.
The negative rating outlook reflects the belief that the company's
financial performance continues to deteriorate and that any
meaningful strengthening of its credit metrics from operations is
unlikely over the next year. Were the company to experience
increased organic sales and improving operating margins, the
rating and/or outlook could improve.
The last rating action was on June 2, 2008 when Ply Gem's CFR and
subordinated notes were affirmed at B3 and Caa2, respectively. At
the same time, Moody's assigned a B2 rating to the company's
proposed $700 million senior secured notes.
Ply-Gem Industries, Inc., headquartered in Kearney, Missouri, is a
manufacturer of vinyl siding, windows, patio doors, fencing,
railing, and decking serving both the new construction and repair
and remodel end markets. Revenues for 2008 were $1.18 billion.
PONTA NEGRA: Faces Fraud Charges From SEC, Assets Frozen
--------------------------------------------------------
The Securities and Exchange Commission obtained an emergency court
order on Wednesday to freeze the assets of a Connecticut-based
money manager and the hedge funds that he controls, alleging that
he forged documents, promised false returns, and misrepresented
assets managed by the funds to illicitly raise more than $30
million from investors.
According to the SEC's complaint, filed in federal court in
Austin, Francesco Rusciano solicited investments for two hedge
funds he controls -- Ponta Negra Fund I, LLC and Ponta Negra
Offshore Fund I, LTD - and also is the principal of Ponta Negra
Group, LLC, which is located at his residence in Stamford, Conn.
Specifically, the SEC alleges that on at least two occasions,
Rusciano forged brokerage account statements to make it appear
that a hedge fund account had millions of dollars more in assets
than it actually had.
"Rusciano went to great lengths to deceive investors, and the SEC
is committed to ensuring that money managers who provide
inaccurate information to investors and fail to uphold their
fiduciary duties are held responsible for their misconduct," said
Rose Romero, Director of the SEC's Fort Worth Regional Office.
Pursuant to the SEC's motions for emergency relief for investors,
U.S. District Judge Sam Sparks entered a temporary restraining
order, froze the defendants' assets, and ordered a hearing on the
appointment of a receiver to marshal assets belonging to the
funds.
According to the SEC's complaint, Rusciano provided a selling
agent with a Jan. 11, 2008, brokerage statement reflecting an
account balance of more than $43 million for Ponta Negra Fund I.
The SEC alleges that the correct balance for that account on that
date was less than $3 million. Similarly, the SEC's complaint
says that on Aug. 5, 2008, Rusciano produced to another selling
agent a brokerage account statement reflecting an "equity" balance
for Ponta Negra Fund LLC of more than $64 million. The SEC
alleges that Rusciano altered the account statement by "whiting
out" the word "excess" in the "excess equity" field on the account
statement to make it appear as though the hedge fund's account had
approximately $64 million, when in fact the account had less than
$7 million.
In addition to forging brokerage account statements, the SEC
alleges that Rusciano misrepresented the hedge fund's monthly and
yearly performance results. Rusciano falsely represented that the
funds had consistently achieved positive results for every month
throughout 2007 and 2008 when, in fact, the hedge funds lost money
in 10 of the 24 months from March 2007 through March 2009 in the
account that held most of the hedge fund's assets. The SEC also
alleges that Rusciano misrepresented that the Ponta Negra hedge
funds earned total annual returns of 42.99 percent for 2007, 24.85
percent for 2008, and 6.14 percent for the first two months of
2009. The account that held most of the Ponta Negra hedge funds'
assets actually suffered substantial trading losses in 2007, had
modest profits in 2008, and again sustained losses in 2009.
The SEC further alleges that on April 21, 2009, Rusciano sent an
e-mail to a selling agent detailing the hedge fund's assets under
management. According to the e-mail, the Ponta Negra hedge funds
had $59 million in assets under management as of February 2009.
According to the SEC's complaint, the hedge funds had less than
$10 million.
The SEC's complaint charges, among other things, that the
defendants violated the anti-fraud provisions of the Securities
Act of 1933 and the Securities Exchange Act of 1934. In addition
to emergency and interim relief that has been obtained, the SEC
seeks a final judgment permanently enjoining the defendants from
future violations of the relevant provisions of the federal
securities laws and ordering them to pay financial penalties and
disgorgement of ill-gotten gains with prejudgment interest.
The Commodity Futures Trading Commission assisted the SEC.
The SEC's investigation is continuing.
PREVENTION LABORATORIES: Can Access Cash Collateral until July 21
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Illinois
authorized, on an interim basis, Prevention Laboratories, L.L.C.,
to:
a) use until July 21, 2009, the cash securing repayment for
the Daniel Nicolosi loan;
b) grant Daniel Nicolosi postpetition liens on its inventory
and accounts receivable to the extent that the Debtor uses
the cash collateral.
A final hearing on the motion to use cash collateral is scheduled
for July 21, 2009, at 9:00 AM in the U.S. Bankruptcy Court, 301
W. Main St, Benton, Illinois.
As reported in the Trouble Company Reporter on April 30, 2009,
pre-bankruptcy, the Debtor granted to People's National Bank a
mortgage on its property at 5110 Hwy 34 North, Raleigh, Illinois
and a security interest in these assets -- all inventory,
equipment, accounts, chattel paper, instruments, letter-of-credit
rights, letters of credit, documents, deposit accounts, investment
property, money, other rights to payment and performance, and
general intangibles.
On Dec. 26, 2006, People's National Bank assigned its mortgage
and security interest to Daniel Nicolosi. The prepetition
indebtedness due to Mr. Nicolosi, as of April 20, 2009, is
$756,244.
The Nicolosi security interest was properly perfected by People's
National Bank by filing a UCC financing statement on April 17,
2006, and is a first lien on the Debtor's personal property.
The Internal Revenue Service has liens on Debtor's personal
property. It has three unreleased tax liens filed with the
Illinois Secretary of State's office.
Additionally, the IRS has served non-wage garnishments on Debtor's
bank accounts at Old National Bank on April 3, 2009. 3 accounts
were garnished for a total amount of $740.
As of Prevention Laboratories' petition date, the value of these
collateral of the Mr. Nicolosi loan and the IRS liens were:
A. 5110 Hwy 34 North -- $756,000
B. Accounts Receivable -- $174,733
C. Existing Patents and Trademarks -- $6,550,000
D. Pending Patents -- $15,000,000
E. Inventory -- $930,829
F. Manufacturing Equipment -- $207,477
On Nov. 26, 2008, Ricky Dean Thompson and Tammy Jean Thompson were
granted judgment against Debtor in the Circuit Court of the First
Judicial Circuit, Saline County, Illinois. The judgment against
Debtor amounts to $165,000. The Thompsons have subsequently
garnished Debtor's accounts receivable by serving non-wage
garnishments on Debtor's customers. The Debtor relates the
Thompson wage garnishments are inferior to the liens of Nicolosi
and the IRS.
The Debtor relates that the IRS and the Thompsons are adequately
protected by the large equity cushion and the replacement lien
being granted to Mr. Nicolosi.
The Court ordered that as further adequate protection, the Debtor
will pay adequate protection payments of $6,000 each on or before
June 21, 2009, and July 21, 2009, to Mr. Nicolosi.
About Prevention Laboratories
Headquartered in Marion, Illinois, Prevention Laboratories, L.L.C.
-- http://www.preventionlabs.com/-- makes and sells hygiene
products. The Company filed for Chapter 11 on April 21, 2009
(Bankr. S. D. Ill. Case No. 09-40678). Douglas A. Antonik, Esq.,
represents the Debtor in its restructuring efforts. The Debtor
listed total assets of $38,275,349 and total debts of $6,430,386.
PROGRAMMED FUNDING: Case Summary & 3 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Programmed Funding, Inc.
6433 E. Washington St.
Indianapolis, IN 46219
Bankruptcy Case No.: 09-05865
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Southern District of Indiana (Indianapolis)
Judge: James K. Coachys
Debtor's Counsel: KC Cohen, Esq.
151 N Delaware St Ste 1104
Indianapolis, IN 46204
Tel: (317) 715-1845
Fax: (317) 916-0406
Email: kc@esoft-legal.com
Total Assets: $602,050
Total Debts: $795,639
According to its schedules of assets and liabilities, $590,000 of
the debt is owing to secured creditors, $69,521 for taxes owed to
governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Debtor's petition, including its list of 3
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/insb09-05865.pdf
The petition was signed by Joseph W. McNeal, president of the
Company.
RANDALL G. SOTKA: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Randall G. Sotka
PO box 866
Reno, NV 89504
Bankruptcy Case No.: 09-51292
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of Nevada (Reno)
Judge: Gregg W. Zive
Debtor's Counsel: Kevin A. Sarby, Esq.
Darby Law Practice, Ltd.
200 South Virginia St., Ste. 800
Reno, NV 89501
Tel: (775) 322-1237
Fax: (775) 996-7290
Email: kevin@darbylawpractice.com
Total Assets: $3,853,409
Total Debts: $4,635,867
According to its schedules of assets and liabilities, $4,605,313
of the debt is owing to secured creditors and the remaining debt
to creditors holding unsecured nonpriority claims.
A full-text copy of the Mr. Sotka's petition, including his list
of 20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-51292.pdf
The petition was signed by Mr. Sotka.
RICHMOND REDEVELOPMENT: Moody's Affirms 'Ba3' Rating on Bonds
-------------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 rating on the
Richmond Redevelopment and Housing Authority's $5.2 million of
outstanding Multi-Family Housing Revenue Bonds (Berkeley
Place/Warwick Place Apartments) Series 1995A and changed the
outlook to negative from stable. The rating affirmation is
reflective of debt service coverage that is thin but remains above
1.0x. The negative outlook reflects recent occupancy declines
within the context of thin debt service coverage and a debt
service reserve sized to half a year of debt service.
Legal Security: The bonds are limited obligations payable solely
from the revenues, receipts and security pledged in the Trust
Indenture.
Recent Developments/Results
Debt service coverage of 1.14x, which was derived from for the
full-year, unaudited 2008 financial statements, is sufficient for
this rating category. In summer 2008 occupancy declined to a
range of 85%-87%, where it remained for the rest of year. March
2009 occupancy is weak at 86.4%.
Market data provided by Torto Wheaton Research indicate that
multi-family occupancy in Central Richmond for 2008 was 95%. TWR
forecasts that occupancy in the Richmond market will decline
slightly to 94.4% for 2009 and rent inflation will be weak at
1.0%. Moody's believes that the debt service coverage in 2008
warrants a rating affirmation but the decline in occupancy
combined with a debt service reserve structured at half of a
year's debt service warrants a negative outlook.
The last rating action was on December 11, 2007 when the Ba3
rating was affirmed.
Outlook
The outlook for the bonds is negative based upon recent occupancy
declines and a weak rent growth forecast for 2009.
RIVERSIDE REAL ESTATE: Voluntary Chapter 11 Case Summary
--------------------------------------------------------
Debtor: Riverside Real Estate, LLC
41 Main Street
Oxford, MA 01540
Bankruptcy Case No.: 09-41610
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
District of Massachusetts (Worcester)
Judge: Joel B. Rosenthal
Debtor's Counsel: Stephan M. Rodolakis, Esq.
Pojani, Hurley, Ritter & Salvidio, LLP
446 Main Street
Worcester, MA 01608
Tel: (508) 798-2480
Email: phrsbankruptcy@yahoo.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Company says it does not have unsecured creditors who are non
insiders when they filed their petition.
The petition was signed by Dennise Lawless, Sr., president of the
Company.
ROCK SOURCE: Voluntary Chapter 11 Case Summary
----------------------------------------------
Debtor: Rock Source, LLC
23500 North 7th Street
Phoenix, AZ 85024
Bankruptcy Case No.: 09-08744
Chapter 11 Petition Date: April 28, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Sarah Sharer Curley
Debtor's Counsel: Donald W. Powell, Esq.
carmichael & powell, p.c.
7301 n. 16th St., #103
Phoenix, AZ 85020
Tel: (602) 861-0777
Fax: (602) 870-0296
Email: d.powell@cplawfirm.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of 20 largest unsecured creditors
when it filed its petition.
The petition was signed by Reynold E. Kraft, authorized agent of
the Company.
RUDERMAN CAPITAL: Faces Fraud Charges From SEC, Assets Frozen
-------------------------------------------------------------
The Securities and Exchange Commission obtained a court order on
Wednesday halting a fraudulent scheme in Beverly Hills, Calif., in
which investors were coaxed into investing in two hedge funds that
purportedly held more than $800 million in assets when in fact the
funds lost money and have less than $1 million in assets.
The SEC alleges that Bradley L. Ruderman raised at least
$38 million from investors through his two hedge funds, Ruderman
Capital Partners and Ruderman Capital Partners A. Through fake and
misleading account statements, Ruderman assured investors that the
hedge funds had earned positive returns as high as 60% per year.
He falsely claimed that the funds held positions in well-known
securities such as Apple, Microsoft Corp., Qualcomm, and Wal-Mart
Stores, and he obtained money from at least one investor by
claiming that some prominent people were investors in his funds
when in fact they were not.
"As alleged in our complaint, Ruderman was willing to say or do
anything to persuade investors to entrust their money to him,
particularly when his scheme was unraveling," said Rosalind R.
Tyson, Director of the SEC's Los Angeles Regional Office.
"Ruderman's fabricated account statements presented a rosy picture
for investors who were cajoled into believing these hedge funds
were well-capitalized and experiencing significant gains rather
than major losses."
According to the SEC's complaint, filed in federal court in Los
Angeles, neither Ruderman nor his company and hedge funds are
registered with the SEC in any capacity.
The SEC alleges that Ruderman made at least one Ponzi-like payment
earlier this year when an investor requested a $750,000
withdrawal. Only after receiving two $500,000 deposits from new
investors was Ruderman able to transfer funds out of the account
to pay the earlier investor.
The SEC's complaint also alleges that Ruderman lied to at least
one prospective investor by saying that Lowell Milken (chairman of
the Milken Family Foundation and Michael Milken's younger brother)
and Larry Ellison (CEO of Oracle Corporation) were investors in
the hedge funds. The prospective investor went on to invest in
one of the hedge funds under the false impression that Milken and
Ellison were invested in them.
The Honorable Valerie Baker Fairbank, U.S. District Judge for the
Central District of California, granted the SEC's request for
emergency relief for investors, including an order temporarily
enjoining Ruderman, his company Ruderman Capital Management (RCM),
and the hedge funds from future violations of the antifraud
provisions and freezing their assets. The Commission seeks
preliminary and permanent injunctions, disgorgement, and financial
penalties against the defendants.
RUTLAND RATED: Moody's Downgrades Ratings on Notes to 'C'
---------------------------------------------------------
Moody's Investors Service announced that it has downgraded these
notes issued by Rutland Rated Investments Series 31 (Millbrook
2006-4):
-- Series 31 (Millbrook 2006-4) US$15,500,000 Asset Backed
Securities Class A Variable Rate Credit-Linked Notes ("Class
A Notes") due May 2046, Downgraded to C; previously on
12/16/2008 Downgraded to Caa1 and remains on Review for
Possible Downgrade
Moody's explained that the rating action listed above reflects
certain updates and projections and recent rating actions on the
transaction's underlying collateral pool consisting primarily of
subprime RMBS securities. The Class A Notes has a notional
balance equals to 2% of the total collateral balance with a credit
enhancement that equals to 12.45% of the total collateral balance.
As of April 27, 2009, 72.9% of the collateral pool is rated Ca or
C.
Moody's revised loss projections for subprime RMBS issued from
2005 to 2007 were described in a press release titled published
on February 26, 2009. The revised loss projection for 2006
vintage subprime pools is expected to fall within the range of 28%
to 32% of the original balance of such pools, whereas Moody's
previous estimate was 22%. For 2005 and 2007 pools, such
projections are expected to range from 12% to 14% and 33% to 37%
of original balance, respectively.
SHERRIL M. RIEUX: Case Summary & 9 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Sherril M. Rieux
aka Sherril M Rieux, MD
171 N Church Ln PH 15
Los Angeles, CA 90049
Bankruptcy Case No.: 09-20063
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Samuel L. Bufford
Debtor's Counsel: John W. Harris, Esq.
Harris & Associates
915 Wilshire Blvd Ste 1820
Los Angeles, CA 90017
Tel: (213) 489-9833
Fax: (213) 489-3761
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Ms. Rieux's petition, including her list
of 9 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-20063.pdf
The petition was signed by Ms. Rieux.
SHILOH PV: Voluntary Chapter 11 Case Summary
--------------------------------------------
Debtor: Shiloh PV, LLC, an Arizona Limited Liability Company
c/o Becker & House, PLLC
7047 East Greenway Pkway Suite 370
Scottsdale, AZ 85254
Bankruptcy Case No.: 09-08726
Chapter 11 Petition Date: April 28, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: James M. Marlar
Debtor's Counsel: John R. Becker, Esq.
Becker & House PLLC
7047 E Greenway Pkwy #370
Scottsdale, AZ 85254
Tel: (480) 240-4020
Estimated Assets: $10 million to $50 million
Estimated Debts: $1 million to $10 million
The Debtor did not file a list of 20 largest unsecured creditors
together with its petition.
The petition was signed by Everette E. Wrighteman, manager.
SILICON GRAPHICS: Court Approves $42.5MM Sale to Rackable Systems
-----------------------------------------------------------------
Rackable Systems, Inc. has received court approval to acquire
substantially all of the assets of Silicon Graphics, Inc. for
$42.5 million in cash, plus the assumption of certain liabilities
associated with the acquired assets.
The sale, pursuant to an amended asset purchase agreement as
approved in U.S. Bankruptcy Court in New York, allows Rackable
Systems to complete the transaction under Section 363 of the U.S.
Bankruptcy Code. The acquisition is anticipated to be completed
by approximately May 8, 2009, subject to closing conditions.
"We are pleased with [the] news," said Mark J. Barrenechea,
president and CEO of Rackable Systems. "With this acquisition,
Rackable will be positioned to solve the most demanding business
and technology challenges our customers confront today. We
believe we will have a stronger company with differentiated
product lines and professional services; reaching commercial,
government and scientific sectors on a worldwide basis."
Rackable and SGI customers will benefit from a comprehensive
portfolio of hardware, software and services, enabling the
deployment of technologies for large-scale data storage and
management, clustered compute scale-out, shared memory systems,
visualization solutions, data center solutions and HPC
productivity tools.
Rackable Systems will discuss this update as part of its first
quarter 2009 earnings financial call on Tuesday, May 5, 2009, at
2:00 p.m. PDT (5:00 p.m. EDT).
About Rackable Systems
Rackable Systems, Inc. (NASDAQ:RACK) -- http://www.rackable.com/
-- provides Eco-Logical(TM) servers and storage for medium- to
large-scale data center deployments. Rackable serves cluster
computing and services, enterprise software, federal government,
digital media, financial services, oil and gas exploration and HPC
customers worldwide, and maintains headquarters in Fremont,
California.
About Silicon Graphics
Headquartered in Sunnyvale, California, Silicon Graphics Inc. --
http://www.sgi.com/-- delivers an array of server, visualization,
and storage software.
This is the second bankruptcy filing for Silicon Graphics. The
Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y.
Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and
Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the
Debtors in their restructuring efforts. The Court confirmed
the Debtors' Plan of Reorganization on September 19, 2006. When
the Debtors filed for protection from their creditors, they listed
total assets of $369,416,815 and total debts of $664,268,602.
The Company and 14 of its affiliates filed for protection for the
second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No.
09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP,
represents the Debtors in their restructuring efforts. The
Debtors proposed Davis Polk & Wardell as their corporate counsel;
AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard &
Zukin Capital, Inc., as financial advisor; and Donlin, Recano &
Company, Inc., as claims and noticing agent. When the Debtors
filed for protection from their creditors, they listed
$390,462,000 in total assets and $526,548,000 in total debts as of
2008.
SLEEP DOCTOR: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Sleep Doctor, LLC
3755 Broadmoor
Suite F
Grand Rapids, MI 49512
Bankruptcy Case No.: 09-05102
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Western District of Michigan (Grand Rapids)
Judge: James D. Gregg
Debtor's Counsel: A. Todd Almassian, Esq.
Keller Vincent & Almassian PLC
2810 East Beltline Ln, NE
Grand Rapids, MI 49525
Tel: (616) 364-2100
Email: kvalaw@sbcglobal.net
Estimated Assets: $500,001 to $1,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/miwb09-05102.pdf
The petition was signed by Roger A. Wardell, managing member of
the Company.
SOURCE INTERLINK: Seeks Permission to Tap $385MM DIP Facility
-------------------------------------------------------------
Bankruptcy Law360 reports that Source Interlink Cos. Inc. has
asked the U.S. Bankruptcy Court for the District of Delaware for
permission to borrow up to $385 million in post-petition financing
to fund operations while in Chapter 11.
As reported by the Troubled Company Reporter on April 29, 2009,
Source Interlink Companies and its affiliates reached a
restructured agreement with its lenders to eliminate approximately
$1 billion dollars of existing debt and privatize the company.
Under the agreement, the lenders will cancel nearly $1 billion of
the company's existing debt and provide approximately $100 million
in additional liquidity. Source Interlink, in agreement with its
lenders, will pay all of its vendors in full and on time if they
agree to maintain current credit and payment terms.
Source Interlink filed for bankruptcy to facilitate the
restructuring. The Company anticipates it will emerge within 35
days.
Pachulski Stang Ziehl Young Jones and Kirkland & Ellis LLP serve
as bankruptcy counsel. Laura Davis Jones, Esq., at Pachulski
Stang, charges $795 per hour for her work. Kirkland's David
Eaton, Esq., charges $895 per hour while David Agay, Esq., bills
at a $660 an hour.
Kirkland has disclosed receiving a $250,000 retainer from the
Debtors before the petition date. Pachulski Stang said it
received $70,000 before the petition date.
J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom,
told The Am Law Daily he represents a group of secured lenders
that have voted in favor of the DIP package. Mr. Milmoe said the
secured lenders led by Citigroup, as administrative agent, will
have 100% of Source Interlink's equity when the company emerges
from bankruptcy, The Am Law Daily relates.
"I think you're going to see a lot more deals like this," The Am
Law Daily quotes Mr. Milmoe as saying. "This is one where the
lenders are converting their preferred debt to equity. And that's
about the only way some of these companies are going to stay in
business."
About Source Interlink
Bonita Springs, Florida-based Source Interlink Companies, Inc., --
http://www.sourceinterlink.com/-- is a U.S. distributor of home
entertainment products and services and one of the largest
publishers of magazines and online content for enthusiast
audiences. Source Interlink Media, LLC publishes more than 75
magazines and 90 related Web sites. Source Interlink Distribution
services tens of thousands of retail store locations throughout
North America distributing DVDs, music CDs, magazines, video
games, books, and related items. In addition to distributing more
than 6,000 distinct magazine titles annually, the Company
maintains the largest in-stock catalog of CDs and DVDs in the US
-- a combined total of more than 260,000 titles. Supply chain
relationships include consumer goods advertisers, subscribers,
movie studios, record labels, magazine, book, and newspaper
publishers, confectionary companies and manufacturers of general
merchandise.
Source Interlink Companies, Inc. and 17 affiliates filed for
bankruptcy on April 27, 2009 (Bankr. D. Del. Case No. 09-11424).
Judge Kevin Gross presides over the case. David Eaton, Esq., and
David Agay, Esq., at Kirkland & Ellis LLP; and Laura Davis Jones,
Esq., Mark M. Billion, Esq., and Timothy P. Cairns, Esq., at
Pachulski Stang Ziehl Young Jones in Wilmington, Delaware, serve
as bankruptcy counsel. Meolis & Company LLC serves as the
Debtors' financial advisors, while Kurtzman Carson Consultants LLC
is the Debtors' claims and notice agent.
As of April 24, 2009, the Debtors had $2,436,005,000 in total
assets and $1,995,504,000 in total debts.
SYNTAX-BRILLIAN: Faces Breach-Of-Contract Suit From Amergence
-------------------------------------------------------------
Amergence Technology Inc., filed an adversary complaint against
Syntax-Brillian Corp., after the Debtors breached an agreement to
sell the Olevia brand of televisions and associated intellectual
property to Amergence.
Amergence asks the U.S. Bankruptcy Court for the District of
Delaware to enter a temporary restraining order barring the
Debtors from selling the assets to another party.
Amergence is an IT and electronics services provider based in City
of Industry, California. On March 27, the Debtors and Amergence
entered into an asset purchase agreement wherein Amergence was the
stalking horse bidder for the Olevia brand. The Court on April 16
approved bidding and auction procedures for the sale, and set
April 24 as the deadline for competing bids.
Amergence relates that by the bid deadline it was not informed of
any competing offer for the asset. Three days later, however, the
Debtors informed Amergence that they have accepted an overbid from
Emerson Radio Corporation. The Debtors also intended for
SilverPoint Capital to credit bid at the auction.
Amergence contends that the Debtors cannot unilaterally extend the
Court-ordered bid deadline, and the purported extension is in
direct violation of the Bidding Procedures Order. Amergence also
contends that the ERC bid is non-confirming since it was submitted
late. Amergence asks the Court to enforce the Bidding Procedures
Order and disallow non-confirming bids.
In response, the Debtors relate that they received a $400,000
offer from ERC on April 27, and ERC wired the money on the same
day.
Amergence offered $280,000 for the asset. Amergence is entitled
to a $28,000 breakup fee if the asset is sold to another buyer.
"The Debtors have been put in a bind. On the one hand, this Court
approved the Bidding Procedures, including approval of Amergence's
bid as the stalking horse bid and certain related procedures. On
the other hand, the Debtors have received a higher competitive bid
before the Aucti0on, but after the deadline for submitting bids,"
Syntax-Brillian said in court filings. "The Debtors simply
cannot, as Amergence demands, ignore Emerson's higher bid and
preclude the possibility of obtaining greater value for their
estates."
The Debtors remind the Court that they have a fiduciary duty to
maximize the value of the estate for distribution to creditors.
The auction was slated for April 28. The hearing on the sale and
Amergence's request were slated the day after. As of press time,
the Debtors have not provided any update on the matter.
As reported by the Troubled Company Reporter on April 24, 2009,
the Court confirmed the Debtors' Chapter 11 liquidation plan. The
Debtors' Plan proposes to set up liquidating trusts to sell assets
and distribute proceeds to secured and unsecured creditors.
Bloomberg relates that the explanatory disclosure statement did
not provide for the estimated recovery by secured and unsecured
creditors given the uncertainty about how much will be collected
in lawsuits.
The Company has said it owes $125 million under a prepetition
credit facility and unsecured claims against it will total $65
million to $100 million.
In 2008, Syntax-Brillian cut a deal to sell its business assets to
Olevia International Group LLC. On September 10, 2008, OIG told
the Bankruptcy Court that it won't pursue the deal, contending
that the Debtors irreparably breached various covenants and
representations contained in the Purchase Agreement, causing
various Closing Conditions to fail, and rendering it unable to
comply with its obligations under the Purchase Agreement. OIG
also accused the Debtors of violating their sale contract by
losing business from Target Corp., the Debtors' main customer.
The following day, the Debtors filed a lawsuit asking the Court to
compel Olevia to complete the purchase. On October 10, the
Bankruptcy Court denied OIG's emergency request to excuse it from
its obligations. OIG took an appeal of that order.
After the buyer failed to complete the sale, the Court held the
buyer and its officers in contempt, forfeited the buyer's
$5 million deposit and directed two of the buyer's officers to pay
$3 million a week until they made up the remainder of the purchase
price. The bankruptcy judge also ordered the two arrested in
connection with contempt proceedings. The sale was never
completed, so the plan will have liquidating trusts dispose of the
assets. The company did sell its Vivitar camera business, with
$11.8 million in proceeds given to secured creditors.
The outcome for unsecured creditors will turn on the success of a
lawsuit brought in November by the creditors' committee against
officers and directors seeking more than $300 million in damages.
The suit was filed before the time ran out on claims covered by
Syntax's directors and officer's liability insurance policy.
About Syntax-Brillian
Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:
BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated
debtors, Syntax-Brillian SPE, Inc., and Syntax Groups Corp.
design, develop, and distribute high-definition televisions
(HDTVs) utilizing liquid crystal display (LCD) and, formerly,
liquid crystal (LCoS) technologies. The Debtors sell their HDTVs
under the Olevia brand name. SBC is also the sole shareholder of
Vivitar Corp., a supplier of film cameras and a line of digital
imaging products, including digital cameras.
The Debtors filed separate petitions for Chapter 11 relief July 8,
2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell,
Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg
Traurig LLP in New York, represent the Debtors as counsel.
Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington,
Delaware, represents the Debtors as Delaware counsel. Five members
compose the Official Committee of Unsecured Creditors. Pepper
Hamilton, LLP, represents the Committee as counsel. Epiq
Bankruptcy Solutions, LLC, is the Debtors' balloting, notice, and
claims agent.
When the Debtors filed for protection from their creditors, they
listed total assets of $175,714,000 and total debts of
$259,389,000.
TENNECO INC: Fitch Downgrades Issuer Default Rating to 'B-'
-----------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating and
outstanding debt ratings of Tenneco, Inc.:
-- IDR downgraded to 'B-' from 'B';
-- Senior secured revolving credit facility to 'B+/RR2' from
'BB-/RR2';
-- Senior secured term loan to 'B+/RR2' from 'BB-/RR2';
-- Senior secured tranche B-1 letter of credit/revolving loan
facility to 'B+/RR2' from 'BB-/RR2';
-- Senior secured second lien notes to 'CC/RR6' from 'CCC/RR6';
-- Senior unsecured notes to 'CC/RR6' from 'CCC/RR6';
-- Subordinated notes to 'CC/RR6' from 'CCC/RR6'.
The ratings remain on Rating Watch Negative where they were placed
on Dec. 11, 2008. The Rating Watch Negative remains in effect due
to the uncertain production and sales ramifications of near term
events at General Motors and/or Chrysler, including potential
bankruptcy filings. Approximately $1.5 billion of debt
outstanding is covered by these ratings.
The downgrade of the ratings is prompted by the further extended
shutdowns scheduled by GM later in 2009, a deteriorating outlook
for automotive sales in Europe (the region TEN defines as Europe,
South American and India accounted for 50% of 2008 sales),
declining liquidity, and Fitch's view that in a downside scenario
TEN may need to seek additional amendments for covenant relief at
the end of 2009 or in 2010.
The key rating factors are the continued deterioration in the auto
and truck markets, and the related announcement by GM, a
significant customer for TEN, that it will shut down 13 of its
manufacturing plants in North America during the second and third
quarters of 2009. The shutdown for some plants may begin as early
as mid-May. GM is taking more extended summer shutdowns than
usual this year to reduce vehicle inventory which was 767,000 at
the end of March; with this planned shutdown GM hopes to have
inventory of 525,000 at the end of July. The announced plant
closures will challenge all of GM's suppliers, and TEN will feel
its impact given that 20% of its 2008 sales were from GM. Only 2%
of 2008 sales were from Chrysler.
A potential bankruptcy filing by GM and/or Chrysler is
incorporated into the ratings, and further rating actions will
depend on the impact of any filing on GM's and Chrysler's
production. Fitch believes that in the event of a filing by GM or
Chrysler, the U.S. government would provide additional financial
assistance in an attempt to support an orderly bankruptcy. This
expected support from the government would be done in an effort to
keep the fragile supplier base intact and prevent wider industry
repercussions. Importantly, the ratings remain on Watch Negative
since the supplier base may not withstand the fallout of a GM
bankruptcy despite potential efforts to prevent negative
consequences.
Deep production cuts by domestic and international manufacturers
in TEN's major product platforms are expected to more than offset
potential growth in TEN's global customer base and products.
Products with expected growth are in TEN's adjacent/non-automotive
business lines (such as emission control products for
locomotives). In the near term, diminished product demand for
automotive parts will cause a significant drop in EBITDA and
balance sheet recovery is not expected until late 2010 or in 2011.
Over the longer term, TEN's position in the emissions segment
positions the company well to expand its customer base and
volumes. Also over a longer time horizon, product demand should
increase given plans for tighter emission standards and expected
growth in revenues and profits should come from TEN's migration to
more technological, value-added products should also support
margins.
Liquidity decreased over the course of 2008 to $520 million (which
excludes availability on the U.S accounts receivable program as
well as the European accounts receivable programs, some of which
can be canceled with 30 days notice). At year-end 2008, cash on
hand was $126 million, availability on the revolving credit
facility was $394 million. In addition to the $520 million of
liquidity, the U.S. accounts receivable securitization program had
$19 million of availability but since year-end this facility was
reduced from a maximum of $120 million to a maximum of $100
million. This program expires in February 2010. Importantly, TEN
does not have any significant debt maturities until 2012 when $700
million of the $830 million of the credit facility expires. TEN
has a $249 million underfunded pension plan, which due to losses
in the equity and fixed income markets in 2008, is likely to
require incremental contributions over the near term. At the end
of 2008, the pension plan's funding status was 59%.
In February, the company amended its $830 million secured credit
facility to provide it with additional cushion on its financial
covenants during the industry downturn; the $550 million revolver
and $150 million term loan expire in 2012 and the $130 million
tranche B-1 letter of credit/revolving loan facility expires in
2014. The size and tenor of the facility remain the same, but
there is a significant change in covenant ratios. Most
significantly, the net leverage covenant increases to 7.35 times
(x) and 7.90x during second quarter 2009 (2Q09) and 3Q09,
respectively, illustrating the significant impact the industry
environment will likely have on TEN's financial results. After
those quarters the leverage requirement steps down: 6.6x in 4Q09,
5.5x in 1Q10, 5.0x in 2Q10, 4.75x in 3Q10, 4.5x in 4Q10, and lower
beyond that.
Fitch believes that under a downside scenario, TEN may need to
request further covenant relief from its lending group in 4Q09 or
in 2010. As seen with others in the auto supply sector, lenders
may require a reduction in the size of the facility and more
restrictions to the borrower. Fitch estimates that the current
facility might not realize full recovery in a distressed scenario,
supporting the expectation that the facility could be reduced if
covenants are modified.
The recovery ratings reflect Fitch's recovery expectations under a
scenario in which distressed enterprise value is allocated to the
various debt classes. The recovery ratings were affirmed and
reflect the deteriorating automotive environment. Recovery
ratings on the senior secured facilities (revolving credit
facility, Term Loan A, and Tranche B1) were affirmed at 'RR2'
which implies a recovery in the range of 71%-90%. The second lien
notes and senior unsecured recovery ratings remain 'RR6' which
reflects a recovery in the range of 0%-10%. Fitch is seeing this
possible low recovery outcome for unsecured creditors throughout
the automotive sector.
If TEN wants to improve its liquidity, it could utilize the U.S.
government's supplier support program which is a program that
Fitch believes to be limited and costly for auto suppliers that
are already operating in a low EBITDA margin environment. The
support program falls short of the request from the Original
Equipment Suppliers Association for $18.5 billion in relief.
TEXTRON FINANCIAL: Unaffected by S&P's Rating Actions on Parent
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Textron
Inc. to negative from developing. S&P affirmed the ratings,
including the 'BBB-' long-term corporate credit rating and 'A-3'
short-term rating. At the same time, S&P assigned its 'BBB-'
rating to the company's proposed $300 million convertible senior
notes due 2013, which will be issued under an existing rule 415
shelf registration. The ratings on the company's wholly owned
finance subsidiary, Textron Financial Corp. (BB+/Developing/B),
are not affected by these actions.
"The outlook revision reflects reduced earnings guidance for 2009,
due mostly to lower profitability at the Cessna business jet unit
and increased losses at TFC," said Standard & Poor's credit
analyst Christopher DeNicolo. Revenues at Cessna declined almost
40% in the first quarter of 2009 and the company expects them to
be down more than 35% for the year.
The company reduced its planned production of business jets to 295
from previous expectations of 375. The global economic slowdown
and tight credit markets resulted in 92 net cancellations in the
first quarter, half of which were related to 2009 deliveries. The
company now expects segment margins to be only 4.5%-5.5%, down
from previous expectations of 10%-12% and 2008 margins of 16%, due
to the lower volumes and a higher proportion of lower margin
aircraft, especially the Mustang very light jet. The company is
taking actions to mitigate the lower profitability at Cessna,
including reducing headcount and R&D spending, which will involve
suspending development of the new Citation Columbus business jet.
For the consolidated company, revenue guidance was reduced to $11
billion from $12.5 billion, and earnings guidance (from continuing
operations and before special charges) was reduced to $0.45-$0.75
a share from $1.00-$1.50 a share.
The ratings on Providence, Rhode Island-based Textron are
supported by its leading market positions in selected segments of
aircraft (Cessna business jets and Bell helicopters), fairly
steady results of expanded defense operations, and sufficient cash
flow for operating needs and required capital contributions to
TFC. The ratings also take into account Textron's exposure to TFC
because of its earnings and funding problems, participation in
highly competitive and cyclical industries, and consolidated
profit margins somewhat below those of its peers.
Textron's credit protection measures deteriorated in 2008 due to
lower earnings and higher pension liabilities, with funds from
operations to debt declining to 35% (excluding the $625 million
capital contribution to TFC from FFO) from 42% in 2007, debt to
capital increasing to 64% from 47%, and EBITDA interest coverage
declining to 13x from 15x.
The outlook on Textron's ratings is negative. The difficult
economic environment in 2009, larger-than-expected losses at TFC
and possible material additional capital contributions required by
Textron, and reduced liquidity could lead us to lower the long-
term ratings. Although not expected in the next year, S&P could
revise the outlook to stable if the plan to transform TFC into a
captive finance company is successful, earnings and cash
generation of the manufacturing businesses are not worse than
expected, and liquidity improves.
TEXTRON INC: Fitch Downgrades Issuer Default Ratings to 'BB+'
-------------------------------------------------------------
Fitch Ratings downgraded the Issuer Default Ratings and long-term
debt ratings for Textron Inc. and Textron Financial Corporation to
'BB+' from 'BBB-'. Fitch also downgraded the short-term IDRs and
commercial paper ratings to 'B' from 'F3'. In addition, Fitch
assigned an expected 'BB+' rating to TXT's planned issuance of
convertible senior unsecured notes due May 1, 2013.
TXT's rating downgrade and Negative Outlook reflect deteriorating
operating results at TXT and continuing concerns about TFC's asset
quality and execution risks surrounding plans to exit TFC's non-
captive finance business. The rapid deterioration in some of
TXT's manufacturing businesses has exceeded Fitch's downside
scenarios, and Fitch believes this has left the parent with less
capacity to support TFC as it winds down its non-captive business
lines in a difficult business environment. These concerns more
than offset the positive impact on TXT's liquidity from its
planned issuance of debt and equity.
Yesterday, TXT announced its intention to issue $300 million of
senior unsecured convertible notes and 19 million shares of common
stock. The exact amounts and terms have not been finalized.
Proceeds will be used to increase TXT's cash balances and support
the company's liquidity, including funds available to fund future
debt repayment. The increase in equity strengthens TXT's capital
base and mitigates the increase in gross leverage. The new debt
and equity issuance will increase the company's financial
flexibility as TFC liquidates its non-captive finance portfolio.
Continued pressure on asset quality coupled with significant
reliance on cash flow generated via liquidation of portfolio
receivables to meet maturing debt obligations and continued
support from TXT to meet financial covenants has limited TFC's
financial flexibility.
Fitch recognizes that management has been exploring various
alternatives to address liquidity concerns, including efforts to
accelerate repayment of portfolio receivables, assets sales and
capital market transactions. While Fitch believes the company has
made near-term progress and will likely have sufficient capacity,
via existing cash balances and expected cash proceeds from the
liquidation of TFC's non-captive portfolio receivables, to meet
TFC's debt and funding obligations in a timely fashion, execution
risks and the uncertainty and reliance on cash flow generated via
the exit from non-captive finance are high, particularly in light
of difficult economic circumstances and the potential for
significant asset quality deterioration. Furthermore, TFC's near-
term profitability and operating performance will remain weak,
which will require TXT to continue to make modest capital
contributions as required under its support agreement to maintain
TFC's fixed charge ratio at 1.25 times (x). Fitch believes these
factors are inconsistent with investment grade ratings.
The Negative Outlook also reflects the challenges relating to the
liquidation of TFC's non-captive portfolio in the current
operating environment. If TFC is unable to exit its non-captive
assets in a timely manner or at reasonable values, the ratings
could be pressured on the downside. On the other hand, further
actions to successfully generate additional cash via either
financing or asset sales would be viewed positively and would help
to alleviate current downward rating momentum. Fitch expects such
challenges to remain for the intermediate term.
TXT's manufacturing businesses have experienced a significant
decline in demand due to the global economic recession, especially
at the Cessna and Industrial segments. The primary credit concern
for the manufacturing businesses is the sharp drop-off in demand
for business jets. TXT has lowered its estimate for deliveries in
2009 to 290-300 aircraft, a 37% reduction from the 467 jets that
were delivered in 2008. TXT reported 92 net cancellations in the
first quarter of 2009, indicating that deliveries may not soon
return to previous levels. The impact is partly offset by
Cessna's large backlog that totaled $13.0 billion at the end of
the first quarter of 2009 after peaking at $15.6 billion in
September 2008 although approximately $2.4 billion is for the
Citation Columbus on which development has been suspended until
market conditions improve.
Losses in the Industrial segment could be higher in 2009 than
Fitch had expected. The segment has a large exposure to the
automotive segment through its Kautex business, but the segment
has typically represented a relatively small proportion of TXT's
overall profitability. Results at the Bell and Textron Systems
segments are more stable due to their exposure to defense
spending, although some parts of the Systems segment are
performing weaker than Fitch had expected
As a result of lower sales and margins across TXT's manufacturing
group anticipated in 2009, free cash flow could be pressured,
although Fitch believes that manufacturing cash flow will still be
positive for the year. TXT has expanded its restructuring efforts
in order to bring costs in line with demand, including actions to
reduce its work force by 19%. Working capital may serve to dampen
the negative impact on free cash flow in the near term as Cessna
delivers aircraft at a much lower rate. Lower operating earnings,
combined with TXT's new debt, can be expected to pressure the
company's credit measures during 2009, with gross debt to EBITDA
possibly rising above 3.0x, compared to 1.5x in 2008.
Fitch believes TXT has sufficient flexibility to manage its
manufacturing businesses through the current recession and could
be a weak investment grade company on a stand-alone basis.
However, when considering its obligations to support TFC, it does
not reflect an investment grade profile in Fitch's view,
particularly given TFC's stand-alone financial profile. TXT has
less financial capacity than in the past to support TFC while TFC
copes with an especially difficult business environment. Risks
related to TFC's asset quality and liquidation could potentially
strain TXT's liquidity and are reflected in the current ratings
and outlook. Fitch expects TXT to make additional capital
contributions to TFC.
Textron's consolidated cash balances increased by over $1.1
billion during the first quarter of 2009, to $1.7 billion. The
increase included the impact of a full drawdown of $3.0 billion of
committed bank facilities in February 2009, along with the
repayment of commercial paper backed by the facilities. The bank
facilities mature in 2012. TXT's and TFC's exposure to risks
related to short-term funding have been reduced by the transaction
and by the planned issuance of debt and equity. However, the
draw-down of the bank facilities potentially makes covenant
compliance under the facilities a material credit issue. Fitch
estimates that TXT is well within the required range of its debt
to capitalization covenant. TFC will continue to rely on TXT to
help maintain its fixed charge ratio at 1.25x.
At TXT there are minimal scheduled debt maturities until 2010 when
$250 million is scheduled to mature. Other cash requirements
include pension contributions that are not expected to increase
significantly from modest amounts until at least 2010. TXT's
liquidity has benefited from two actions in the first quarter of
2009: the decision to reduce the company's dividend payout by 91%,
equivalent to approximately $200 million annually, and the sale of
HR Textron for after-tax cash proceeds of approximately $265
million. An ongoing concern for TXT is its support for TFC
through required capital contributions under its support
agreement. In 2008 TXT contributed $625 million to TFC. Much of
the cash can be returned to TXT through dividends, but the support
agreement highlights TXT's exposure to TFC.
Due to the existence of a support agreement and other factors,
TFC's ratings are linked to TXT's ratings. The support agreement
requires TXT to maintain TFC's floor net worth and fixed charge
coverage at $200 million and 1.25 times, respectively.
Debt totaled approximately $10.8 billion at April 4, 2009
including $2.9 billion at TXT and $7.9 billion at TFC.
TEXTRON INC: S&P Revises Outlook to Negative From Developing
--------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Textron
Inc. to negative from developing. S&P affirmed the ratings,
including the 'BBB-' long-term corporate credit rating and 'A-3'
short-term rating. At the same time, S&P assigned its 'BBB-'
rating to the company's proposed $300 million convertible senior
notes due 2013, which will be issued under an existing rule 415
shelf registration. The ratings on the company's wholly owned
finance subsidiary, Textron Financial Corp. (BB+/Developing/B),
are not affected by these actions.
"The outlook revision reflects reduced earnings guidance for 2009,
due mostly to lower profitability at the Cessna business jet unit
and increased losses at TFC," said Standard & Poor's credit
analyst Christopher DeNicolo. Revenues at Cessna declined almost
40% in the first quarter of 2009 and the company expects them to
be down more than 35% for the year.
The company reduced its planned production of business jets to 295
from previous expectations of 375. The global economic slowdown
and tight credit markets resulted in 92 net cancellations in the
first quarter, half of which were related to 2009 deliveries. The
company now expects segment margins to be only 4.5%-5.5%, down
from previous expectations of 10%-12% and 2008 margins of
16%, due to the lower volumes and a higher proportion of lower
margin aircraft, especially the Mustang very light jet. The
company is taking actions to mitigate the lower profitability at
Cessna, including reducing headcount and R&D spending, which will
involve suspending development of the new Citation Columbus
business jet. For the consolidated company, revenue guidance was
reduced to $11 billion from $12.5 billion, and earnings guidance
(from continuing operations and before special charges) was
reduced to $0.45-$0.75 a share from $1.00-$1.50 a share.
The ratings on Providence, Rhode Island-based Textron are
supported by its leading market positions in selected segments of
aircraft (Cessna business jets and Bell helicopters), fairly
steady results of expanded defense operations, and sufficient cash
flow for operating needs and required capital contributions to
TFC. The ratings also take into account Textron's exposure to TFC
because of its earnings and funding problems, participation in
highly competitive and cyclical industries, and consolidated
profit margins somewhat below those of its peers.
Textron's credit protection measures deteriorated in 2008 due to
lower earnings and higher pension liabilities, with funds from
operations to debt declining to 35% (excluding the $625 million
capital contribution to TFC from FFO) from 42% in 2007, debt to
capital increasing to 64% from 47%, and EBITDA interest coverage
declining to 13x from 15x.
The outlook on Textron's ratings is negative. The difficult
economic environment in 2009, larger-than-expected losses at TFC
and possible material additional capital contributions required by
Textron, and reduced liquidity could lead us to lower the long-
term ratings. Although not expected in the next year, S&P could
revise the outlook to stable if the plan to transform TFC into a
captive finance company is successful, earnings and cash
generation of the manufacturing businesses are not worse than
expected, and liquidity improves.
TURTLE CREEK: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Turtle Creek, Ltd.
dba Turtle Creek Apartments
P.O. Box 369
Bonita Springs, FL 34133-0369
Bankruptcy Case No.: 09-08595
Type of Business: The Debtor is a single-asset, real estate
company.
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Ft. Myers)
Judge: Alexander L. Paskay
Debtor's Counsel: Amy Denton Harris, Esq.
Stephen R Leslie, Esq.
Stichter, Riedel, Blain & Prosser, P.A.
110 E Madison Street, Suite 200
Tampa, FL 33602-4700
Tel: (813) 229-0144
Fax : (813) 229-1811
Email: aharris.ecf@srbp.com
sleslie.ecf@srbp.com
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
------ --------------- ------------
Collier County Tax Collector $182,443
Courthouse Complex
Building C-1
Naples, FL 33962
Chadwell $4,452
1721 South Kings Ave.
Brandon, FL 33511
Henderson Franklin Starnes & $3,559
Holt, P.A.
P.O. Box 280
Ft. Myers, FL 33902
Home Depot Credit Services $2,691
Accent Floor $2,532
Naples Daily News $2,154
Environmental Mowing, Inc. $2,000
Hole In One Golf Carts $1,565
DSP Service Corporation $1,500
SW Florida Apt. Guide $625
Hulett Environmental Services $569
Johnstone Supply $492
American Fertilizer & Supply $300
Coca Cola $221
J.S. Paluch Co. Inc. $150
MAF Screening Services $148
Ricoh Americas Corporation $136
Department of Housing & Urban
Development Undetermined
Wayne Automatic Fire Sprinkler Undetermined
The petition was signed by Charles J. Erdman, Jr., general
partner.
TRAWICK TILE: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Trawick Tile, Inc.
629 South 8th Street
Fernandina Beach, FL 32034
Bankruptcy Case No.: 09-03391
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Jacksonville)
Debtor's Counsel: Albert H. Mickler, Esq.
5452 Arlington Expressway
Jacksonville, FL 32211
Tel: (904) 725-0822
Email: court@planlaw.com
Total Assets: $837,786
Total Debts: $1,213,303
According to its schedules of assets and liabilities, $1,089,967
of the debt is owing to secured creditors and the remaining debt
to creditors holding unsecured nonpriority claims.
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/flmb09-03391.pdf
The petition was signed by Matthew Trawick, president of the
Company.
TWIFORD LLC: Case Summary & 4 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Twiford, LLC
PO Box 355
Manteo, NC 27954
Bankruptcy Case No.: 09-03499
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Eastern District of North Carolina (Wilson)
Judge: Randy D. Doub
Debtor's Counsel: George M. Oliver, Esq.
Oliver & Friesen, PLLC
PO Box 1548
New Bern, NC 28563
Tel: (252) 633-1930
Fax: (252) 633-1950
Email: efile@oliverandfriesen.com
Total Assets: $5,105,000
Total Debts: $1,009,873
According to its schedules of assets and liabilities, $811,787 of
the debt is owing to secured creditors and the remaining debt to
creditors holding unsecured nonpriority claims.
A full-text copy of the Debtor's petition, including its list of 4
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nceb09-03499.pdf
The petition was signed by William Brantley Twiford, Sr.
UNIVERSITY FOOD: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: University Food Systems, Inc.
3424 South State Street
Chicago, IL 60616
Bankruptcy Case No.: 09-15487
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Northern District of Illinois (Chicago)
Judge: Jack B. Schmetterer
Debtor's Counsel: George P. Hampilos, Esq.
Schirger, Monteleone, Hampilos
308 West State Street
Suite 210
Rockford, IL 61101
Tel: (815) 962-0044
Fax: (815) 962-6250
Email: georgehamp@aol.com
Total Assets: $142,065
Total Debts: $1,008,430
According to its schedules of assets and liabilities, $171,267 of
the debt is owing to secured creditors, $91,655 for taxes owed to
governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ilnb09-15487.pdf
The petition was signed by Richard Mott, president of the Company.
WELLDUNN MIAMI: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Welldunn Miami, LLC
dba Prime Blue Grille, Debtor
315 South Biscayne Blvd.
Miami, FL 33131
Bankruptcy Case No.: 09-17967
Debtor-affiliates filing separate Chapter 11 petition:
Entity Case No.
------ --------
Welldunn Restaurant Group, Inc. 09-17970
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Judge: A. Jay Cristol
Debtor's Counsel: Michael D. Seese, Esq.
201 S Biscayne Blvd 17th Fl
Miami, FL 33131
Tel: (305) 379-9000
Email: mseese@kpkb.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Welldunn Miami's petition, including its
list of 20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/flsb09-17967.pdf
The petition was signed by James M. Dunn, manager of the Company.
WESCAST INDUSTRIES: Auto Industry Woes Cue Going Concern Doubt
--------------------------------------------------------------
Wescast Industries Inc. has said there is uncertainty about its
ability to continue as a going concern.
The Company noted that it incurred a significant loss in fiscal
2008 due to restructuring charges related to actions the Company
has taken to right-size its North American operations to be more
effectively aligned with the current economic and automotive
market conditions. The Company said the global credit market
crisis has had a dramatic effect on the automotive industry and
the financial health of the Company's OEM customers.
"These factors, among others, raise uncertainty about the ability
of the Company to continue as a going concern," the Company said.
Early this week, the Company reported a net loss of C$9.8 million
for the first quarter of 2009 compared with a net loss of C$2.5
million reported in the first quarter of 2008. The deterioration
in profitability was due mainly to the significantly lower sales
volumes in North America and Europe.
As of March 29, 2009, the Company had C$295.5 million in total
assets and C$73.2 million in total liabilities. The Company
reported a net loss of C$9.8 million for the three months ended
March 29, 2009, compared with a net loss of C$2.5 million for the
same period in 2007.
Wescast on Tuesday reported consolidated sales of C$42.7 million,
a decline of 47.9% compared to the C$81.9 million reported in the
first quarter of 2008, due to significantly lower sales generated
by the Company's North American and European operations. The most
significant factors contributing to the sales decline were the
global economic crisis and the resulting further deterioration of
the automotive market conditions. The Company noted that its
primary North American customer base, the Detroit 3 automakers,
experienced a 53.8% decline in light vehicle production in the
first quarter of 2009 compared to the first quarter of 2008.
The Company ended the first quarter 2009 with net cash of
C$2.6 million.
On April 20, the Company established a new credit facility with
The Toronto-Dominion Bank and Export Development Canada. The new
structure provides for a 364-day committed revolving term credit
facility in the maximum principal amount of up to C$30 million.
The facility, secured by the assets of Wescast and certain
obligors, may be used to finance working capital requirements and
for general corporate purposes.
The Company incurred restructuring charges of C$72.6 million for
its North American operations during 2008. These charges were
comprised primarily of severance and benefit costs relating to
workforce reductions and foundry and machining asset impairment
charges, including those relating to the announced closure of the
Company's Wingham North Huron foundry. The Company was slated to
close the foundry by March 31, 2009.
A copy of the Company's first quarter 2009 report is available at
no charge at http://bankrupt.com/misc/WestcastQ12009.PDF
About Wescast Industries
Based in Brantford, Ontario, Wescast Industries Inc. (TSX:WCS.A)
-- http://www.wescast.com/-- supplies cast iron exhaust manifolds
for passenger cars and light trucks. The Company designs, casts,
machines and assembles iron exhaust system components for
automotive original equipment manufacturers and Tier 1 customers
for the car and light truck markets in North America, Europe and
Asia. The Company employs roughly 1,700 people in 7 production
facilities and 5 sales and design centres in Canada, Hungary, the
United States, Germany, Japan and China. The Company also has
sales and technical design representation in the United Kingdom
and France.
Wescast Industries on its Web site that it has an estimated 51%
share of the North American exhaust manifold market -- including
65% among the Detroit Big 3 -- making the Company the dominant
exhaust manifold supplier to North American auto makers. In
Europe, although it has only been in operation for a short period,
the Company said it has already captured 14% of the European
market with a customer list that includes Volkswagen, PSA Peugeot
Citroen, Renault, Audi and Ford of Europe.
WESTHAMPTON COACHWORKS: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------------
Debtor: Westhampton Coachworks, Ltd.
114 Riverhead Road
Westhampton Beach, NY 11978
Bankruptcy Case No.: 09-73008
Debtor-affiliates filing separate Chapter 11 petition:
Entity Case No.
------ --------
Westhampton Classic Cars 09-73009
dba Manhattan Motorcars Trust
Chapter 11 Petition Date: April 29, 2009
Court: United States Bankruptcy Court
Eastern District of New York (Central Islip)
Judge: Alan S. Trust
Debtor's Counsel: Kenneth A. Reynolds, Esq.
McBreen & Kopko
500 North Broadway
Suite 129
Jericho, NY 11783
Tel: (516) 364-1095
Fax: (516) 364-0612
Email: kreynolds@mklawnyc.com
Total Assets: $535,242
Total Debts: $2,644,782
According to its schedules of assets and liabilities, $350,962 of
the debt is owing to secured creditors, $23,481 for taxes owed to
governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Westhampton Coachworks's petition,
including its list of 20 largest unsecured creditors, is available
for free at:
http://bankrupt.com/misc/nyeb09-73008.pdf
The petition was signed by Richard Rubio, president of the
Company.
WILTON PRODUCTS: S&P Withdraws 'CCC+' Corporate Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it withdrew its
ratings on Woodbridge, Illinois-based Wilton Products Inc.,
including its 'CCC+' corporate credit rating, at the company's
request.
S&P said that it lowered its ratings on Wilton Products Inc. one
notch, including the corporate credit rating to 'CCC+' from 'B-'.
At the same time, S&P removed these ratings from CreditWatch with
negative implications, where S&P placed them on March 24, 2009.
The recovery ratings remain unchanged. The outlook is developing.
For analytical purposes, S&P views Wilton Holdings Inc. and Wilton
Products as one entity.
"The downgrade reflects our belief that Wilton will face
significant challenges to meet its first-quarter 2009 bank
financial covenants, because its covenant tightened, which follows
a covenant step-down in the fourth-quarter 2008," said Standard &
Poor's credit analyst Jean C. Stout. Wilton's operating
performance has been below S&P's expectations. This is largely
due to weak macroeconomic conditions which have negatively
affected sales at retailers. In addition, retailers have
drastically cut back their inventories.
WORLDSPACE INC: Court OKs Settlement Among Major Stakeholders
-------------------------------------------------------------
Judge Peter Walsh of the U.S. Bankruptcy Court for the District of
Delaware approved a settlement stipulation resolving claims
between and among WorldSpace Inc. and its affiliates; the official
committee of unsecured creditors in the case; the prepetition
secured noteholders; the DIP lenders; certain professionals
retained by the Debtors and the Committee; and Yenura Pte. Ltd,
and Yenura's principals, Noah Samara and Sala Idris, the buyer of
the Debtors' assets.
The settlement, according to the Debtors, resolves claims among
the parties through releases or subordination, and earmarks
specific proceeds from the $28 million sale of the Debtors' assets
to Yenura for unsecured creditors and to pay certain
administrative and priority claims as well as other chapter 11
expenses. Unsecured creditors receive substantial benefits,
including, in the event the Yenura sale closes, guaranteed cash of
at least $1 million for distribution to unsecured creditors and
funds to establish a creditor trust to wind down the estate and
prosecute estate causes of action and claims objections that will
be managed at the Creditors Committee's direction.
The Secured Noteholders, DIP Lenders and Yenura agree not to share
in any portion of the funds allocated to unsecured creditors, thus
reducing the unsecured pool to an expected amount of less than
$25,000,000.
The Debtors and the Committee jointly filed the request,
indicating that if the stipulation isn't approved by April 30, the
parties to the asset purchase agreement will acquire rights to
termination that could substantially impact the Chapter 11 cases.
"At the inception of these cases . . . it was uncertain whether
there would be any distribution to unsecured creditors, including
administrative and priority creditors) in light of the significant
secured claims encumbering all of the estates' assets.
Additionally, due to the size of the general unsecured claims
pool, it seemed that any distribution would be so heavily diluted
as to be insubstantial for any individual creditor," the Debtors
said.
Prepetition and DIP Indebtedness
The Debtors owed in excess of $72.5 million, plus interest and
fees, on the petition date to holders of WorldSpace Inc.'s Bridge
Notes and Convertible Notes.
The Debtors owed their DIP Lenders $14.3 million. The DIP loan
matured March 6, 2009.
The Final DIP Order entered by the Court granted the DIP Lenders
and the Secured NOteholders a 25% interest in any net recovery on
avoidance actions.
The Debtors assigned to the Committee their rights to prosecute
claims against the DIP Lenders and Secured Noteholders, which the
Court approved. The DIP Lenders and Secured Noteholders have
sought reconsideration of the order, and a hearing on the
reconsideration motion has been adjourned until May 14, 2009. The
Committee and the Secured Noteholders have agreed to permit the
Committee to file a complaint with respect to certain claims until
prior to a decision on the reconsideration motion.
Yenura Sale
The Court authorized the Debtors in March to sell substantially
all of their assets to Yenura for $28,000,000 plus amounts
necessary to (1) cure monetary defaults on contracts of the
Debtors that yenura seeks to assumed and (ii) pay for the Debtors'
operating expenses. Yenura has filed a proof of unsecured claim
for $55.2 million against the Debtors.
The Debtors note that the purchase price is insufficient to pay
for prepetition secured obligations, raising concerns that the
Debtors' estates may be administratively insolvent and unsecured
creditors will get nothing.
The sale is expected to close July 31, 2009.
Settlement Stipulation
(A) Provisions Applicable If Yenura Sale Closes
An aggregate $3.7 million will be set aside for ongoing
administrative and priority expenses of the Debtors. The funds
will be taken from either payments made by Yenura pre-closing
pursuant to a budget or the sale cash proceeds. The remaining
sale cash proceeds will be distributed in this manner:
* First, to pay fees due under 28 U.S.C. Sec. 1930(a)(6);
* Second, to pay all DIP obligations;
* Third, the next $200,000 wil lbe set aside to be used to pay
any administrative or priority claims not satisfied out of
the Administrative Expense Allowance;
* Fourth, 75% to the Secured Noteholders and 25% to the
Debtors' estates until the total amount available for
distribution to general unsecured creditors under any plan of
liquidation equals $3.5 million.
Secured Noteholders will receive $4 million on account of their
prepetition secured claims.
In addition, $875,000 will be set aside to fund the creditor trust
that will be created to pursue estate causes of action.
(B) Provisions Applicable If Yenura Sale Does Not Close
The cash consideration received in any subsequent sale or
liquidation would be distributed in substantially the same manner,
except:
-- certain amounts would be used to repay any superpriority
claims of Yenura, and
-- unsecured creditors would not receive the guaranteed minimum
of $1 million.
Any remainder will be turned over the Secured Noteholders until
their Prepetition Secured Claims are satisfied in full.
There is no provision for an administrative expenses allowqance.
(C) Provisions Applicable Irrespective of Whether Sale Closes
The Secured Noteholders and the DIP Lenders will subordinate their
unsecured deficiency claims to the claims of the general unsecured
creditors and will release and waive any claims to avoidance
actions or any causes of action against the Debtors' directors and
officers. The Yenura entities will also be released. Avoidance
claims against Shearman & Sterling LLP and The Bank Street Group
will also be released.
All parties agree to support a liquidation plan to be drafted by
the Creditors Committee.
The Committee is granted standing to pursue estate claims.
Sub Rosa Plan
New Satellite Radio Srl tried to block approval of the deal,
saying the stipulation goes far beyond the boundaries of a
compromise under Rule 9019 of the Federal Rules of Bankruptcy
Procedure and contain provisions that effectively determine the
material terms of any future plan, and affect the substantive
rights of creditors and administrative claim holders, without the
protections afforded by the plan process. NSR asserts an
administrative claim for substantial contribution; NSR said Yenura
had to increase the base purchase price from $25.3 million to $28
million after NSR objected.
The Court's two-page order did not touch on NSR's plea.
"This Court shall retain jurisdiction with respect to all maters
arising from or related to the implementation of this Order,"
Judge Walsh said.
About 1worldspace(TM)
Based in the Washington, DC metropolitan area, WorldSpace, Inc.
(WRSPQ.PK) -- http://www.1worldspace.com/-- provides satellite-
based radio and data broadcasting services to paying subscribers
in 10 countries throughout Europe, India, the Middle East, and
Africa. 1worldspace(TM) satellites cover two-thirds of the earth
and enable the Company to offer a wide range of services for
enterprises and governments globally, including distance learning,
alert delivery, data delivery, and disaster readiness and response
systems. 1worldspace(TM) is a pioneer of satellite-based digital
radio services.
The Debtors and their affiliates operate two geostationary
satellites, AfriStar and Asia Star, which are in orbit over Africa
and Asia. The Debtor and two of its affiliates filed for Chapter
11 bankruptcy protection on Oct. 17, 2008 (Bankr. D. Del., Case
No. 08-12412 - 08-12414). James E. O'Neill, Esq., Laura Davis
Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl
& Jones, LLP, represent the Debtors as counsel.
The U.S. Trustee for Region 3 appointed creditors to serve on an
Official Committee of Unsecured Creditors. Neil Raymond Lapinski,
Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot
Greenleaf represent the Committee as counsel. When the Debtors
filed for bankruptcy, they listed total assets of $307,382,000 and
total debts of $2,122,904,000.
YELLOWSTONE CLUB: Auction Set for May 13; Sam Bryce Offers $100MM
-----------------------------------------------------------------
The Billings Gazette reports that an auction for Yellowstone
Mountain Club, LLC, is scheduled for May 13, 2009.
According to Billings Gazette, Sam Byrne at Crossharbor Capital
Partners has offered to buy the Company for $100 million, but the
price could increase during the auction.
Billings Gazette relates that Mr. Byrne sought to acquire
Yellowstone Mountain Club for $470 million in 2008 but later
withdrew that proposal. The report states that former club owner
Tim Blixseth has accused his ex-wife, Edra, of colluding with Mr.
Byrne to "prepackage" the resort's bankruptcy so that Mr. Byrne
could later pick up the club at a bargain price. According to the
report, Credit Suisse has made similar accusations. The court,
says the report, has rejected the allegations.
Mr. Blixseth, Billings Gazette states, said that he will bid to
regain control of Yellowstone Mountain Club.
Yellowstone Mountain Club's creditors and members accuse Mr.
Blixseth of looting the Company, says Billings Gazette. The loan
Mr. Blixseth took for Yellowstone Mountain Club was fraudulent
because Credit Suisse knew it would not benefit the Company, the
report states, citing the creditors and club members. The report
quoted Troy Greenfield, the attorney for Ms. Blixseth, as saying,
"The corporate greed of Credit Suisse coupled with Mr. Blixseth's
sense of entitlement is a very, very bad situation."
According to Billings Gazette, Mr. Blixseth's lawyer, Mike Flynn,
said the fact that some of the money went to his client was a red
herring and that "anyone in America" who "builds a business and
wants to take money out of the business ... they're absolutely
entitled to do so."
Billings Gazette relates that the attorneys for the creditors have
accused Mr. Blixseth of engineering the 2005 loan that makes up
most of Yellowstone Mountain Club's debts. Ms. Bliseth, according
to Billings Gazette, said that she objected to the deal at that
time even though she made off the loan.
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.
Yellowstone Mountain Club filed for Chapter 11 on Nov. 10, 2008
(Bankr. D. Montana, Case No. 08-61570). The Company's owner
affiliate Edra D. Blixseth, filed for Chapter 11 on March 27 (Case
No. 09-60452). Ms. Blixseth listed estimated assets of
$100 million to $500 million and estimated debts of $500 million
to $1 billion.
Connie Sue Martin, Esq., David A. Ernst, Esq., Lawrence R Ream,
Esq., Richard G. Birinyi, Esq., Stephen Deatherage, Esq., Thomas
L. Hutchinson, Esq., and Troy Greenfield, Esq., at Bullivant
Houser Bailey PC; and James A. Patten, Esq., at Patten, Peterman,
Bekkedahl & Green PLLC, represent the Debtors as counsel.
* Fitch Releases Results on Rating Review of Student Loan ABS
-------------------------------------------------------------
Fitch Ratings has completed the bulk of its review of all student
loan ABS with auction rate exposures, and the results are
summarized below.
As previously announced, Fitch initiated the review of its student
loan ABS transactions with auction rate bonds following the
disruption in the auction rate market. Fitch's analysis focused
on transactions that utilized auction rate debt to finance FFELP
and private student loan collateral. While most trusts were
structured to withstand the market freeze, several were affected
significantly by the market dislocation.
The review consisted of 90 trusts and as of March 31, 2009, both
senior and subordinate bonds of 62 trusts were affirmed. Fitch
downgraded 84 classes consisting of 36 senior and 48 subordinate
or junior subordinate classes from 25 trusts. The downgrade
results are:
Senior bonds rated AAA:
-- 7 bonds downgraded to 'A';
-- 3 bonds downgraded to 'AA';
-- 3 bonds downgraded to 'AA-';
-- 23 bonds downgraded to 'BBB'.
Subordinate bonds:
-- 3 bonds downgraded to 'A' from 'AAA';
-- 1 bond downgraded to 'A' from 'AA';
-- 2 bonds downgraded to 'BBB' from' A';
-- 22 bonds downgraded to 'BB' from 'A';
-- 19 bonds downgraded to 'B' from 'A';
-- 1 bond downgraded to 'BB' from 'BBB'.
Classes downgraded to 'BB' and 'B' could experience principal
losses but are expected to receive timely interest payments for a
number of years depending on the transaction structure and
interest rate environment. Nine classes from three trusts remain
on Rating Watch Negative awaiting additional information, and will
be reviewed in the near future.
Fitch's auction rate review was primarily focused on the direction
and speed of parity change, the transaction structure and the
generation of excess spread. A declining parity ratio indicated
that the trust was not generating sufficient income to cover its
interest and expenses. The maximum auction rate definition was a
critical factor in Fitch's analysis as this rate dictated the
amount of bond interest paid to investors. For most tax-exempt
trusts, definitions were based on an index such as 91-day t-bill,
SIFMA or the Kenny Index, and 90-day CP. For most trusts with
taxable ARS, the definition was based on LIBOR plus a spread or
the net loan rate, which is typically the student loan rate minus
fees.
Fitch's analysis revealed that, due to the current interest rate
environment, those trusts with maximum rate definitions based on
91-day t-bill, 90-day CP, SIFMA and the Kenny Index were able to
build parity as these indices either declined or remained
relatively low for most of 2008. As a result, the ratings of
these trusts were affirmed. Additionally, the debt structure of
many of the trusts that were affirmed were mixed funded with debt
having a lower cost of funds which positively impacted parity.
It is important to note that although these trusts were able to
survive the current interest rate environment, there is latent
basis risk, and a change in interest rates could cause issues in
the future.
The majority of rating downgrades occurred in trusts that were
under-collateralized, and where the maximum auction rate was held
at the net loan rate. In most cases, the imbalance between the
assets and liabilities created a mismatch between the earnings
received on the assets and the interest expense paid on the bonds.
As a result, principal receipts were used to pay bond interest.
Further, some of these trusts also contained a significant
percentage of private student loans that were experiencing higher
than expected defaults, thus adding to the parity deterioration.
* Fitch Reports Impact of Swine Flu Outbreak on Food Industry
-------------------------------------------------------------
While it has been confirmed that the H1N1 'aka swine flu' virus is
not transmitted by food, uncertainty regarding its origin will
continue to cause disruptions for segments of the food and
restaurant industry, according to Fitch Ratings. Protein and
agricultural processing companies along with restaurants with
meaningful exposure to Mexico, such as Burger King Holdings, Inc.,
will likely be impacted. Burger King announced that it expects
double-digit sales declines in Mexico due to government-imposed
operating restrictions on local restaurants. As human cases grow
and developments unfold, consumer fear regarding pork consumption
and to a lesser extent, dining out, is likely to escalate. In
addition, government and health policy providers' actions
regarding export policy and quarantines will have a negative
impact on economic activity. To date, most of the confirmed cases
have been in Mexico and the U.S., but H1N1 flu cases continue to
develop worldwide.
Fitch expects any reduction in demand for U.S. pork either
domestically or internationally to effect live hog prices,
domestic inventory and retail pork prices. Lower pork demand will
also lead to lower hog production, causing a further decrease in
demand of animal feed, which may negatively impact farmers and the
agricultural processors. Although the effects are likely to be
temporary, the financial implications could be devastating for
certain companies. The U.S. is the world's largest exporter of
pork and pork products with exports representing roughly 16% of
U.S. commercial hog production. Trade restrictions on U.S. pork
and to a lesser extent, poultry, continue to be instituted as a
result of the H1N1 outbreak. Russia, a top export destination for
U.S. chicken and beef, has temporarily banned imports of all U.S.
meat and poultry from several states in the U.S. China, which has
been responsible for most of the growth in U.S. pork exports, has
also instituted a ban on pork from states with confirmed cases of
the virus. These actions will result in excess protein supply and
destabilization in protein prices in the U.S.
Following unprecedented losses for the protein industry in 2008,
declining hog and poultry supplies and modest increases in prices
was expected to help the industry in 2009. However, the potential
for a more pronounced supply/demand imbalance, driven by the
current outbreak, could delay or eliminate any meaningful near-
term improvement in profitability.
Smithfield Foods, Inc. is the leader in hog processing with
approximately 30% market share followed by Tyson Foods Inc. with
just under 20% share, JBS's Swift and Cargill's Excel with about
10% share each and Hormel Foods with an estimated 8-9% share.
During fiscal 2008, Smithfield's International operations
generated 11% of the company's $11.4 billion in sales while
exports represented 13% of its pork processing segment's volumes.
Fitch views Smithfield as most at risk, given its weak credit
profile which is characterized by high financial leverage and
negative free cash flow. Furthermore, its vertical integration in
pork and lack of diversification in other proteins or businesses
increases overall business risk. Reduced operating and financial
risk for Smithfield is predicated on improved profitability in its
hog production business, which continues to generate operating
losses. The company currently expects improvement in its hog
production business during the fiscal year ending May 2, 2010, but
reduced demand for pork products is likely to cause a setback.
Diversification and good financial flexibility remain the best
defense during periods of volatility, especially within the
agricultural commodity food industry. Tyson's pork segment
represented 13% of the company's nearly $27 billion of sales in
2008 while beef, pork and prepared foods represented 44%, 33% and
10%, respectively. The company's pork processing operation
continues to generate above normal profitability, but any pullback
in pork demand could hurt margins. Consumer substitution into
other proteins, including lower priced chicken and to a lesser
extent higher priced beef products could offset any temporary
pullback in pork. Fitch's ratings and Outlook for Tyson currently
assume improving fundamentals for the chicken industry during
2009.
The ratings of the major U.S. agribusiness companies, Cargill,
Archer Daniels Midland and Bunge Limited are supported by their
strong liquidity, well diversified product lines and vast
geographic footprints. Credit metrics for these companies are
currently strong but were already expected to weaken in 2009 due
to a slowdown in earnings. While ADM and Bunge do not have
protein processing operations, all three companies are soybean
processors that can be negatively impacted by slower animal feed
demand. Reduced animal feed demand will be exacerbated by recent
bans on protein products discussed above. Although there is
currently not a change to ratings or Outlooks for these companies,
the H1N1 flu situation will be monitored closely. Rating or
Outlook changes may occur in the future if the magnitude and/or
duration of the outbreak greatly increase.
Fitch's ratings on companies discussed in this commentary are:
Tyson Foods Inc.
-- Long-term Issuer Default Rating 'BB';
-- Asset-based loan bank facility 'BB+';
-- Guaranteed senior unsecured notes 'BB';
-- Senior unsecured notes 'BB-';
Tyson Fresh Meats, Inc.
-- Senior secured notes 'BB+'.
The Rating Outlook is Stable.
Cargill Incorporated
-- Long-term IDR 'A';
-- Senior unsecured notes 'A';
-- U.S. medium-term notes 'A';
-- Euro medium-term notes 'A';
-- Credit facility 'A';
-- Short-term IDR 'F1';
-- Commercial paper 'F1'.
Cargill Ltd.
-- Short-term IDR 'F1';
-- CP 'F1'.
Cargill Global Funding PLC
-- Short-term IDR 'F1';
-- CP 'F1'.
Cargill Asia Pacific Treasury Ltd
-- Short-term IDR 'F1';
-- CP 'F1'.
The Rating Outlook is Stable.
Bunge Limited
-- Long-term IDR 'BBB';
-- Preference Shares 'BBB-'.
Bunge Limited Finance Corp.
-- IDR 'BBB';
-- Senior unsecured notes 'BBB';
-- Credit Facility 'BBB'.
Bunge Finance Europe B.V.
-- Long-term IDR 'BBB'.
Bunge N.A. Finance L.P.
-- Long-term IDR 'BBB';
-- Senior unsecured notes 'BBB'.
The Rating Outlook is Stable.
Archer Daniel Midland
-- Long-term IDR 'A';
-- Senior unsecured debt 'A';
-- Convertible notes 'A';
-- Credit facilities 'A';
-- Short-term IDR 'F1';
-- CP 'F1'.
The Rating Outlook is Stable.
Burger King Corporation
-- Long-term IDR 'BB';
-- Secured bank credit facility 'BB+'.
The Rating Outlook is Positive.
* Almost 50% of Americans Won't Buy from Troubled Automakers
------------------------------------------------------------
Twenty-one percent of consumers say they definitely would not
consider buying a car from an automaker considering bankruptcy,
according to a new survey. Another 28.6% said they probably would
not consider buying a car from a struggling manufacturer.
The Ad-ology Research survey studied advertising's impact in the
current economy. Fifty percent of respondents think an auto
dealership must be struggling if they stop or cut back on
advertising, and 19% assume the dealership will be less willing to
deal.
"The effect that a reduction of advertising can have on a business
is profound," said C. Lee Smith, president and CEO of Ad-ology
Research. "It's not just out of sight, out of mind. It's worse.
Whether it's GM, Chrysler or individual dealerships, the auto
industry must stay top-of-mind to rebuild consumer confidence,"
Smith said.
Another hurdle for automakers is that 46% of consumers say they
view a company's products or services much less or somewhat less
favorably after an announcement of a large number of layoffs.
Other key findings from the survey:
* Of consumers who would consider buying a car from a
struggling automaker "only if they got a great deal," 38.6%
said a deeply discounted price and 38.8% said a
discounted/free extended warranty would make a purchase more
likely
* 80% of consumers surveyed are as willing or even more
willing to pay more for "green" products than they were a
year ago
* 33% think a "focus on value" is the most effective tone for
advertising in the current economic climate
* TV, newspaper, direct mail and Internet top local media from
which consumers saw/heard an ad within the last 30 days that
led them to take action
The report, Advertising's Impact in a Soft Economy, will be
released May 7, 2009 through Ad-ology.net.
About Ad-ology Research
Ad-ology Research analyzes key marketing and advertising trends in
over 400 industries and what motivates end-customers. Over 2,000
advertising agencies, media properties, and product marketing
departments across the United States use the company's research.
Ad-ology Research is a division of Sales Development Services
(SDS), Inc. -- a Westerville, Ohio firm founded in 1989.
Ad-ology Research surveyed an online consumer panel of 1,225
adults in a manner that is 98% representative of the adult
population of the United States from April 24-29, 2009. The margin
of error for this survey is +/- 2.2 percentage points.
* GDP Has Largest Decline in 50 Years, Exceeds Predictions
----------------------------------------------------------
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 6.1% in the first quarter of 2009,
according to advance estimates released by the Bureau of
Economic Analysis on April 29. In the fourth quarter of 2008,
real GDP decreased 6.3%.
Bill Rochelle at Bloomberg notes that apart from the Great
Depression, the current contraction is the deepest in 50
years and second only to the 1957-58 recession. The decline in
the first quarter exceeded economists' expectations.
GDP, according to Bloomberg, has fallen 3.3% since its peak in the
second quarter of 2008, so far trailing only the 3.8% decline in
the 1957-58 recession.
The Bureau emphasized that the first-quarter "advance" estimates
are based on source data that are incomplete or subject to further
revision by the source agency. The first-quarter "preliminary"
estimates, based on more comprehensive data, will be released on
May 29, 2009.
The decrease in real GDP in the first quarter primarily reflected
negative contributions from exports, private inventory investment,
equipment and software, nonresidential structures, and residential
fixed investment that were partly offset by a positive
contribution from personal consumption expenditures (PCE).
Imports, which are a subtraction in the calculation of GDP,
decreased.
The slightly smaller decrease in real GDP in the first quarter
than in the fourth reflected an upturn in PCE for durable and
nondurable goods and a larger decrease in imports that were mostly
offset by larger decreases in private inventory investment and in
nonresidential structures and a downturn in federal government
spending.
Motor vehicle output subtracted 1.36 percentage points from the
first-quarter change in real GDP after subtracting 2.01 percentage
points from the fourth-quarter change. Final sales of computers
added 0.05 percentage point to the first-quarter change in real
GDP after subtracting 0.02 percentage point from the fourth-
quarter change.
* Senate Rejects Bid to Permit Judges to Modify Home Loan Terms
---------------------------------------------------------------
The Senate has voted down a proposal to allow bankruptcy judges to
modify home loans to fair market terms.
"Bankers win," The Center for Responsible Lending said in a news
statement.
The Center for Responsible Lending calls the proposal the "one
common-sense solution that would have prevented over a million
families from losing their homes to foreclosure." It said the
measure would have encouraged mortgage servicers to voluntarily
restructure mortgages to make them affordable in much greater
numbers, saving up to 1.7 million families from foreclosure. It
also would have saved their neighbors from losing an additional
$300 billion in reduced property values caused by these
preventable foreclosures.
"The banking industry, after receiving hundreds of billions of
dollars in federal assistance, spent millions of dollars in its
campaign against this measure. As a result of [the Senate] vote,
foreclosures will continue to soar, the value of all homes will be
diminished and the entire economy will be worse off," the Center
for Responsible Lending said.
"The mortgage crisis continues to worsen, and the need for this
legislation will only grow," said Mike Calhoun, president of the
Center for Responsible Lending. "Unfortunately, millions of
homeowners and all Americans waiting for economic recovery will
pay dearly for this delay."
About the Center for Responsible Lending
The Center for Responsible Lending --
http://www.responsiblelending.org/-- is a nonprofit, nonpartisan
research and policy organization dedicated to protecting
homeownership and family wealth by working to eliminate abusive
financial practices. CRL is affiliated with Self-Help, one of the
nation's largest community development financial institutions.
* BOOK REVIEW: Beyond the Quick Fix: Managing Five Tracks To
Organizational Success
------------------------------------------------------------
Author: Ralph H. Kilmann
Publisher: Beard Books
Hardcover: 320 pages
Listprice: $34.95
Review by Henry Berry
Every few years, a new approach is offered for unleashing the full
potential of organized efforts. These are the quick fixes to
which the title of this book refers. The jargon of the quick fix
is familiar to any businessperson: decentralization, human
resources, restructuring, mission statement, corporate strategy,
corporate culture, and so on. These terms are all limited in
scope or objective, and some are even irrelevant or misconceived
with regard to the overall well-being and purpose of a
corporation.
With his extensive experience as a corporate consultant, author of
numerous articles, and professor in business studies, Kilmann
recognizes that each new idea for optimum performance and results
is germane to some area of a corporation. However, he also
recognizes that each new idea inevitably falls short in bringing
positive change -- that is, a change that is spread throughout the
corporation and is lasting. At best, when a corporation relies on
an alluring, and sometimes little more than fashionable, idea, it
is a wasteful distraction. At worst, it can skew a corporate
organization and its operations, thereby allowing the
corporation's true problems or weaknesses to grow until they
become ruinous. As the author puts it, "Essentially, it is not
the single approach of culture, strategy, or restructuring that is
inherently ineffective. Rather, each is ineffective only if it is
applied by itself -- as a "quick fix"."
Kilmann tells corporate leaders how to break the cycle of
embracing a quick fix, discarding it after it proves ineffective,
and then turning to a newer and ostensibly better quick fix that
soon proves to be equally ineffective. For a corporation to break
this self-defeating cycle, the author offers a five-track program.
The five tracks, or elements, of this program are corporate
culture, management skills, team-building, strategy-structure, and
reward system. These elements are interrelated. The virtue of
Kilmann's multidimensional five-track program is that it addresses
a corporation in its entirety, not simply parts of it.
Kilmann's five tracks offer structural and operational aspects of
a corporation that executives and managers will find familiar in
their day-to-day leadership and strategic thinking. Thus, the
author does not introduce any unfamiliar or radical perspectives
or ideas, but rather advises readers on how to get all parts of a
corporation involved in productive change by integrating the five
tracks into "a carefully designed sequence of action: one by one,
each track sets the stage for the next track." Kilmann does more,
though, than bring all significant features of a modern
corporation together in a five-track program and demonstrate the
interrelation of its elements. His singularly pertinent and
useful contribution is providing a sequence of steps to be
implemented with respect to each track so that a corporation
progresses toward its goals in an integrated way.
Beyond the Quick Fix is a manual for implementing and evaluating
the progress of a five-track program for corporate success. The
book should be read by any corporate leader desiring to bring
change to his or her organization.
Ralph H. Kilmann has been connected with the University of
Pittsburgh for 30 years. For a time, he was its George H. Love
Professor of Organization and Management at its Katz Graduate
School of Business. Additionally, he is president of a firm
specializing in quantum transformations.
*********
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.
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