/raid1/www/Hosts/bankrupt/TCR_Public/090505.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, May 5, 2009, Vol. 13, No. 123
Headlines
706 FOURTH AVENUE: Voluntary Chapter 11 Case Summary
7710 SW 59: Case Summary & 2 Largest Unsecured Creditors
A RAY ROGER: Case Summary & 20 Largest Unsecured Creditors
AMERICAN AXLE: Posts $32.7MM Net Loss in First Quarter 2009
AMERICAN AXLE: Seeks to Reduce Dependence on GM, Chrysler
AMERICAN INT'L: Former Lawyer Sues, Exposes "Corrupt" Korea Deal
AMERICAN INT'L: Ex-CEO Greenberg to Sell Shares to Own Hedge Fund
AMERICAN INT'L: Reports 2008 Compensation to Officers & Directors
AMERICAN INT'L: Unveils Exchange Offer for 8.250% and 8.175% Notes
AMERICAN INT'L: May Close Mortgage Guarantor Unit
ANTHRACITE CAPITAL: Withholds More Than $5MM in Interest Payments
BANDY B. MULLINS: Case Summary & 10 Largest Unsecured Creditors
BAT INC.: Case Summary & 20 Largest Unsecured Creditors
BAY MEDICAL: Moody's Downgrades Underlying Rating to 'Ba1'
BERENILDES GOMEZ: Case Summary & 17 Largest Unsecured Creditors
BOOKBINDER'S RESTAURANT: Court Dismisses Chapter 11 Case
BROADVIEW NETWORKS: S&P Gives Positive Outlook; Keeps 'B-' Rating
CALTEX HOLDINGS: June 10 Set as Bar Date for Proofs of Claim
CALTEX HOLDINGS: May Use NewStar Cash Collateral Until June 28
CALTEX HOLDINGS: Sec. 341(a) Creditors Meeting Set for May 19
CANWEST LIMITED: S&P Assigns 'CCC' Corporate Credit Rating
CERUS CORP: Posts $7.4MM Q1 2009 Net Loss, Has Going Concern Doubt
CHATSWORTH DATA: Case Summary & 20 Largest Unsecured Creditors
CHRYSLER LLC: Seeks OK of $4.5BB DIP Loan from US Treasury & EDC
CHRYSLER LLC: Tom LaSorda Retires from Post as President
CHRYSLER LLC: Taps Jones Day as Lead Bankruptcy Counsel
CHRYSLER LLC: Proposes to Maintain Existing Bank Accounts
CHRYSLER LLC: Seeks Waiver of Section 345 Deposit Requirements
CHRYSLER LLC: To Grant Admin. Claims for Postpetition Deliveries
CHRYSLER LLC: Seeks to Honor Vehicle Warranty Programs
CHRYSLER LLC: Proposes to Pay Outstanding Prepetition Wages
CHRYSLER LLC: Chap. 11 Filing Elicits Mixed Reactions
CHRYSLER LLC: Bankruptcy Pushes Japan to Protect Suppliers
CHRYSLER LLC: Lost $16.8 Bil. in 2008, May Lose $4.7 Bil. in 2009
CHRYSLER LLC: Salaried Retirees to Seek Committee Appointment
CHRYSLER LLC: S&P Changes CreditWatch on 'CCC-' Rating to Negative
CLEAN HARBORS: Moody's Affirms Corporate Family Rating at 'Ba3'
CLAUDIA Z. NEWELL: Case Summary & 20 Largest Unsecured Creditors
COLUMBIAN PUBLISHING: Files for Chapter 11 Bankruptcy Protection
COLUMBIAN PUBLISHING: Case Summary & 20 Largest Unsec. Creditors
CONGRESSIONAL HOTEL: Case Summary & 20 Largest Unsecured Creditors
CONSOLIDATED CONTAINER: S&P Cuts Rating on $390 Mil. Loan to 'B-'
CONSTAR INT'L: Court Confirms Plan; To Exit Ch. 11 by Month's End
CROCS INC: Q1 '09 Report on May 7; Stockholders Meeting on June 25
CROCS INC: Slashes 38 Positions at Niwot, Colorado Headquarters
CROWN VILLAGE: Case Summary & Four Largest Unsecured Creditors
DANIEL WEBSTER: Moody's Puts 'B1' Bond Rating on Watchlist
DAVIDSON DIVERSIFIED III: To Sell Apartment Complex for $21 Mil.
DOMINICK J. RIINA: Case Summary & 11 Largest Unsecured Creditors
DRUG FAIR: May Implement $476,000 Severance and Incentive Plan
DRUG FAIR: Wants to Sell Prescription Files at Somerset, NJ Store
DYMARO INC: Case Summary & 8 Largest Unsecured Creditors
EASTMAN KODAK: Fitch Affirms Issuer Default Rating at 'B-'
EATON VANCE: S&P Downgrades Issuer Credit Rating on Notes to 'CC'
EMC PACKAGING: Case Summary & 20 Largest Unsecured Creditors
ENERGY PARTNERS: Gets Approval to Use $13,000,000 Cash Collateral
ENERGY PARTNERS: Chapter 11 Filing Cues Moody's Rating Cut to 'D'
ENERGY PARTNERS: Case Summary & 20 Largest Unsecured Creditors
FAIRCHILD CORP: Panel Wants Butler Rubin as Bankruptcy Counsel
FAIRCHILD CORP: Panel Wants Elliott Greenleaf as Delaware Counsel
FILENE'S BASEMENT: Files for Chapter 22; Agrees to Sell 17 Stores
FORD MOTOR: April Retail Sales Down 32%, Fleet Down 30% From 2008
GANNETT CO: Re-elects Eight Directors to Board, Names Executives
GATEWAY ETHANOL: Court Okays Increase of Loan Amount to $6,881,995
GATEWAY ETHANOL: Plan Filing Period Extended to June 2
GENERAL MOTORS: Fiat Steps Up Plan to Buy Majority Stake in Opel
GENERAL MOTORS: Reports 173,007 Deliveries in April, Sales Up 11%
GENERAL MOTORS: To Talk With KDB on Sale of GM Daewoo Stake
GENERAL MOTORS: Hires Steven Girsky to Help Sell Saturn Brand
GENERAL MOTORS: Magna Confirms Involvement in Potential Opel Deal
GETRAG TRANSMISSION: May Employ Baker & Daniels as Special Counsel
GHOST TOWN: Seeks $200,000 Loan From Maggie Valley
GMAC LLC: Chrysler Agreement Won't Affect S&P's 'CCC' Rating
GOOD SAMARITAN: Moody's Affirms 'B2' Rating on $76 Mil. Bonds
HARLAND CLARKE: S&P Explains Rating Change on Secured Facilities
HATFIELD LC: Case Summary & 16 Largest Unsecured Creditors
HELLER EHRMAN: Plan Filing Period Extended to August 25
HERITAGE-MONTGOMERY: Files for Chapter 11 Bankruptcy Protection
INDUSTRIAL ENTERPRISES: Case Summary & 20 Largest Unsec. Creditors
INGLES MARKETS: S&P Gives Negative Outlook; Affirms 'BB-' Rating
JOHN STOKES: U.S. Trustee Seeks Conversion to Ch. 7 Liquidation
JOSEPH F. AZZOLINO: Case Summary & 3 Largest Unsecured Creditors
KTP ENTERPRISES: Case Summary & 1 Largest Unsecured Creditor
LA ESTANCIA: Case Summary & 20 Largest Unsecured Creditors
LAURO QUILON: Case Summary & 20 Largest Unsecured Creditors
LAUTH INVESTMENT: Files for Chapter 11 on Real Estate Woes
LAUTH INVESTMENT: Case Summary & 2 Largest Unsecured Creditors
LBI MEDIA: Projected Weak Credit Profile Cues Moody's Junk Rating
LODGIAN INC: July 2009 Maturity of $128,000,000 Merrill Debt Looms
MAGNA ENTERTAINMENT: Withdraws Proposal to Auction Off 3 Assets
GENERAL MOTORS: Magna Confirms Involvement in Potential Opel Deal
MARINE GROWTH VENTURES: Funding Needs Prompt Going Concern Doubt
MARK IV: Chapter 11 Filing Cues S&P's Rating Downgrade to 'D'
MARK IV: Moody's Downgrades Probability of Default Ratings to 'D'
MASHANTUCKET PEQUOT: Moody's Cuts Corporate Family Rating to 'B1'
MASSACHUSETTS EYE: Moody's Affirms 'Ba1' Rating 1998B Bonds
MICHAEL ANTHONY DOWLEN: Case Summary & 20 Largest Unsec. Creditors
MGM MIRAGE: Posts $105.1 Million in Net Income for Q1 2009
MOHEGAN TRIBAL: Moody's Downgrades Corporate Family Rating to 'B3'
MOTORSPORT AFTERMARKET: Weak Performance Cues S&P's Junk Rating
MERRILL LYNCH: Faces MBIA Suit Over $5.7 Billion of CDS Contracts
MODTECH HOLDINGS: Panel Wants to Employ Marshack Hays as Counsel
MYRON FARMS: Case Summary & 3 Largest Unsecured Creditors
NEW YORK TIMES: Boston Globe Extends Talks With Union Workers
NOVA HOLDING: Can Continue to Use WestLB Cash Collateral to May 22
NOVA HOLDING: U.S. Trustee Appoint 5-Member Creditors Committee
OLEG OVRUCHSKY: Case Summary & 15 Largest Unsecured Creditors
ONE VISION: Voluntary Chapter 11 Case Summary
OPUS SOUTH: Can Initially Use BofA & Transamerica Cash Collateral
PARSONS MEDICAL: Case Summary & 2 Largest Unsecured Creditors
PENNY E DIXON: Voluntary Chapter 11 Case Summary
PLY GEM: Moody's Affirms Corporate Family Rating at 'Caa2'
POLYDEX PHARMA: Schwartz Levitsky Expresses Going Concern Doubt
PRIME GROUP: Silent on $41 Million Loan Payment Due April 30
R KENNETH ADKINS: Case Summary & 20 Largest Unsec. Creditors
RAYMOR INDUSTRIES: Court Okays Plan to Pay $750,000 to Creditors
RBS GLOBAL: Moody's Changes Default Rating to 'Caa1/LD'
RED TOP: Gets Initial OK on $2.6MM DIP Loan from Secured Lenders
REEL REVOLUTION: Case Summary & 20 Largest Unsecured Creditors
REXNORD LLC: S&P Raises Corporate Credit Rating to 'B' From 'SD'
RXUSA WHOLESALE: Case Summary & 2 Largest Unsecured Creditors
RYLAND GROUP: Fitch Assigns 'BB' Rating on $230 Mil. Notes
RYLAND GROUP: S&P Assigns 'BB-' Rating on $230 Mil. Senior Notes
SOURCE INTERLINK: Chapter 11 Filing Cues S&P's Rating Cut to 'D'
SOURCE INTERLINK: Taps Kirkland & Ellis as Lead Bankruptcy Counsel
SOURCE INTERLINK: Wants KCC as Notice, Claims and Balloting Agent
SOURCE INTERLINK: Wants to Reject Nonresidential Property Leases
SOUTHEAST BANKING: Plan Encounters Delay After Modena Exit
SHINYA MCHENRY: Case Summary & 20 Largest Unsecured Creditors
SOUTH SIDE: Voluntary Chapter 11 Case Summary
SOUTHEASTERN INCOME: Case Summary & Eight Largest Unsec. Creditors
SOUTHWINDS @ LEXINGTON: Case Summary & 20 Largest Unsec. Creditors
SPANSION JAPAN: Voluntary Chapter 15 Case Summary
STARS & STRIPES: Files for Chapter 11 Bankruptcy Protection
STRATEGIC RESTAURANT: Case Summary & 12 Largest Unsec. Creditors
TERRA NOSTRA: Section 341(a) Meeting Set for May 14
TH PROPERTIES: Files for Chapter 11 Bankruptcy Protection
TH PROPERTIES: Case Summary & 20 Largest Unsecured Creditors
TIGERMARK: Case Summary & 20 Largest Unsecured Creditors
TILE TRENDS: Case Summary & 20 Largest Unsecured Creditors
TRIAD GUARANTY: To Announce Q1 2009 Results on May 15
TRIANGLE TRANSPORT: Case Summary & 20 Largest Unsecured Creditors
TRIBORO BAR: Case Summary & 20 Largest Unsecured Creditors
TRIBUNE LIMITED: Moody's Cuts Ratings on $80 Mil. Notes to 'C'
TRIOMPHE RE: Moody's Withdraws 'Ba1' Ratings on $40 Mil. Loan
TROPICANA INN: Court OKs Secured Lender's Request for Dismissal
TUBE CITY: Moody's Downgrades Corporate Family Rating to 'B2'
UNITED GUARANTY: May Cease Operations on Mounting Losses
WATERFORD GAMING: Moody's Cuts Corporate Family Rating to 'Caa2'
WATERWORKS INC: Case Summary & 20 Largest Unsecured Creditors
WEIRTON MEDICAL: Moody's Cuts Underlying Bond Rating to 'Ba1'
WORKFLOW MANAGEMENT: Amendment on Facilities Cues S&P's SD Rating
* Moody's Gives Negative Outlook for U.S. Auto Parts Suppliers
* S&P Says 40 Global Corporate Issuers Defaulted in April
* Survey Says American Carmakers Woes Won't Impact Next Purchase
* Large Companies With Insolvent Balance Sheets
*********
706 FOURTH AVENUE: Voluntary Chapter 11 Case Summary
----------------------------------------------------
Debtor: 706 Fourth Avenue LLC
706 - 708 Fourth Avenue
Brooklyn, NY 11232
Bankruptcy Case No.: 09-43604
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of New York (Brooklyn)
Judge: Jerome Feller
Debtor's Counsel: Bruce Weiner, Esq.
Rosenberg Musso & Weiner LLP
26 Court Street
Suite 2211
Brooklyn, NY 11242
Tel: (718) 855-6840
Fax: (718) 625-1966
Email: rmwlaw@att.net
Total Assets: $2,000,000
Total Debts: $940,000
According to its schedules of assets and liabilities, $940,000 of
the debt is owing to secured creditors.
The Company says it does not have unsecured creditors who are non
insiders when it filed its petition.
The petition was signed by Nick Faselis, managing member of the
Company.
7710 SW 59: Case Summary & 2 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: 7710 SW 59 Court, LLC
5810 Commerce Lane
South Miami, FL 33143
Bankruptcy Case No.: 09-18440
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Judge: A. Jay Cristol
Debtor's Counsel: Bruce J. Smoler, Esq.
2611 Hollywood Blvd
Hollywood, FL 33020
Tel: (954) 922-2811
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A list of the Company's 2 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flsb09-18440.pdf
The petition was signed by Carlos Deleon, manager and member of
the Company.
A RAY ROGER: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: A Ray Roger
3936 Miller Drive
Dalton, GA 30721
Bankruptcy Case No.: 09-12715
Chapter 11 Petition Date: May 3, 2009
Court: United States Bankruptcy Court
Eastern District of Tennessee (Chattanooga)
Judge: John C. Cook
Debtor's Counsel: Kyle R. Weems, Esq.
Suite 203
5312 Ringgold Road
Chattanooga, TN 37412
Tel: (423) 624-1000
Email: weemslaw@earthlink.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 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/tneb09-12715.pdf
The petition was signed by Roger A Ray.
AMERICAN AXLE: Posts $32.7MM Net Loss in First Quarter 2009
-----------------------------------------------------------
American Axle & Manufacturing Holdings, Inc. reported financial
results for the first quarter of 2009:
-- Net sales in the first quarter of 2009 were $402.4 million
as compared to $587.6 million in the first quarter of 2008
and $503.0 million in the fourth quarter of 2008;
-- Net loss of $32.7 million, or $0.59 per share, compared to a
net loss of $27.0 million or $0.50 per share in the first
quarter of 2008;
-- Special charges and other non-recurring operating costs of
$12.3 million, or $0.22 per share, primarily related to
hourly and salaried workforce reductions, plant closures and
other actions to rationalize capacity, redeploy
underutilized assets and align AAM's business to current and
projected market requirements;
-- 36% year-over-year decline in total light truck production
volumes as compared to the first quarter of 2008;
-- Customer production volumes for the North American light
truck and SUV programs AAM currently supports for GM and
Chrysler were down roughly 36% in the first quarter of
2009 as compared to the first quarter of 2008;
-- Content-per-vehicle of $1,424, roughly 7% higher than
the previous year. AAM's content-per-vehicle is measured by
the dollar value of its product sales supporting GM's North
American light truck and SUV programs and Chrysler's heavy
duty Dodge Ram pickup trucks.
-- Sales to GM of roughly 76% of total net sales for the three
months ended March 31, 2009. Accounts and other receivables
due from GM were $104.0 million and GM postretirement cost
sharing asset was $216.4 million as of March 31, 2009;
-- Non-GM sales of $95.6 million, or roughly 24% of total net
Sales.
"AAM's business continued to be adversely affected by a dramatic
downturn in production volumes and revenue generation in the first
quarter of 2009," said AAM's Co-Founder, Chairman of the Board and
Chief Executive Officer, Richard E. Dauch. "As a result, AAM's
entire global management team is doing what is necessary to
accelerate and expand reductions to our cost structure and other
improvements to our overall market cost competitiveness."
"We are also working to support the flawless and anonymous launch
of numerous new product programs for AAM's existing customers and
many new customers in 2009. The progress we are making in AAM's
comprehensive restructuring plan, as well as the continued
expansion and diversification of AAM's customer base and product
portfolio is helping to position our company for a return to
profitability."
As of March 31, 2009, AAM had roughly $330 million of liquidity,
consisting of available cash, short-term investments and committed
borrowing capacity on its Revolving Credit Facility. The
Revolving Credit Facility provides up to $476.9 million of
revolving bank financing commitments through April 2010 and $369.4
million of such revolving bank financing commitments through
December 2011. The Revolving Credit Facility bears interest at
rates based on LIBOR or an alternate base rate, plus an applicable
margin. At March 31, 2009, AAM had $174.7 million available under
the Revolving Credit Facility. This availability reflects a
reduction of $52.2 million for standby letters of credit issued
against the facility.
AAM expects full year capital spending in 2009 to be roughly $140
million to $150 million.
AAM's new and incremental new business backlog is roughly $1.2
billion and launches in the years 2009 to 2013.
AAM is currently bidding on roughly $800 million of new business,
of which, roughly 90% is non-GM business related quotes. AAM is
accelerating the idling and consolidation of operations at its
Detroit Manufacturing Complex to transition to new, lower customer
and market requirements.
AAM currently estimates that the extended production shutdowns
will reduce sales by roughly $250 million and will adversely
impact operating results by roughly $80 million to $85 million
during the second and third quarters of 2009.
As of March 31, 2009, AAM is in compliance with the covenants in
its Revolving Credit Facility agreement. As a result of the
current automotive industry environment, including the uncertainty
relating to the ability of General Motors to continue as a going
concern, the recent announcement of extended production shutdowns
by GM and Chrysler LLC and the bankruptcy filing by Chrysler on
April 30, 2009, AAM said it is uncertain whether it will continue
to be in compliance with the financial covenants or have access to
sufficient liquidity to meet its needs in 2009. If necessary, AAM
said it will work with lenders to modify existing agreements or
enter into new agreements. Should AAM fail to be in compliance
with the covenants and it is unable to obtain a waiver or amend
these covenants, or lack access to sufficient liquidity to meet
its needs, AAM said it be unable to continue as a going concern.
AAM had $2.07 billion in total assets and $2.52 billion in total
liabilities, resulting in $452.5 million in stockholders' deficit
as of March 31, 2009.
A full-text copy of AAM's quarterly report is available at no
charge at http://ResearchArchives.com/t/s?3c6c
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- is a world
leader in the manufacture, engineering, design and validation of
driveline and drivetrain systems and related components and
modules, chassis systems and metal-formed products for trucks,
sport utility vehicles, passenger cars and crossover utility
vehicles. In addition to locations in the United States
(Michigan, New York, Ohio and Indiana), the company also has
offices or facilities in Brazil, China, Germany, India, Japan,
Luxembourg, Mexico, Poland, South Korea, Thailand and the United
Kingdom.
* * *
Deloitte & Touche LLP, American Axle's auditors, have raised
substantial doubt about the ability of the Company to continue as
a going concern. Deloitte noted the significant downturn in the
domestic automotive industry which has an adverse impact on
American Axle's two largest customers.
As reported by the Troubled Company Reporter on April 30, 2009,
Fitch Ratings downgraded American Axle & Manufacturing Holdings,
Inc.'s Long-term Issuer Default Rating to 'CCC' from 'B-'; and
American Axle & Manufacturing, Inc.'s Long-term IDR to 'CCC' from
'B-'; Senior secured bank facility to 'B-/RR3' from 'B+/RR2'; and
Senior unsecured notes to 'C/RR6' from 'CCC/RR6'.
AMERICAN AXLE: Seeks to Reduce Dependence on GM, Chrysler
---------------------------------------------------------
American Axle & Manufacturing Holdings, Inc., is seeking to wean
itself from General Motors Corp. and Chrysler LLC. American Axle
said it is currently bidding on roughly $800 million of new
business, of which, roughly 90% is non-GM business related quotes.
AAM is also accelerating the idling and consolidation of
operations at its Detroit Manufacturing Complex to transition to
new, lower customer and market requirements.
American Axle currently estimates that the extended production
shutdowns will reduce sales by roughly $250 million and will
adversely impact operating results by roughly $80 million to $85
million during the second and third quarters of 2009.
American Axle, in its report for the three months ended March 31,
2009, acknowledged that if GM is not able to continue operations,
many suppliers, including AAM, could suffer unfavorable
consequences. These unfavorable consequences could include
significant lost revenue, payment delays, inability to collect
trade and other accounts receivable, increased demands by trade
creditors, price reductions or the inability of GM to honor
contractual commitments, including sourcing decisions and
financial obligations.
American Axle is the | Percent of
principal supplier of | Q1 09 Net Sales
driveline components to | ---------------
GM for its rear-wheel | GM 76% +++++++++++++++++++
drive light trucks and | Chrysler 11% ++
SUVs manufactured in | Other OEMS 13% +++
North America, supplying |
substantially all of GM's |_____________________________________
rear axle and front four-
wheel drive and all-wheel drive (4WD/AWD) axle requirements for
these vehicle platforms. Sales to GM were roughly 76% of American
Axle's total net sales in the first quarter of 2009 as compared to
74% for the first quarter of 2008 and the full-year 2008.
American Axle is also the principal supplier of driveline system
products for the Chrysler Group's heavy-duty Dodge Ram full-size
pickup trucks and its derivatives. Sales to Chrysler LLC were
approximately 11% of American Axle's total net sales in the first
quarter of 2009 as compared to 12% for the first quarter of 2008
and 10% for the full-year 2008.
American Axle supplies driveline systems and other related
components to PACCAR Inc., Ford Motor Company, Harley-Davidson and
other original equipment manufacturers and Tier I supplier
companies such as The Timken Company, Hino Motors, Ltd. and Jatco
Ltd. American Axle net sales to customers other than GM and
Chrysler were 13% of total net sales in the first quarter of 2009
as compared to 14% for the first quarter of 2008.
American Axle reported net sales in the first quarter of 2009 of
$402.4 million compared to $587.6 million in the first quarter of
2008 and $503.0 million in the fourth quarter of 2008. It posted
net loss of $32.7 million compared to net loss of $27.0 million in
the first quarter of 2008.
American Axle is the sole-source supplier to GM for certain axles
and other driveline products for the life of each GM vehicle
program covered by a Lifetime Program Contract. Substantially all
of American Axle's sales to GM are made pursuant to the LPCs. The
LPCs have terms equal to the lives of the relevant vehicle
programs or their derivatives, which typically run 6 to 10 years,
and require American Axle to remain competitive with respect to
technology, design and quality.
American Axle also warned that its ability to comply with
covenants in its revolving credit facility agreement in 2009 is
impacted by GM's ability to continue as a going concern, and by
Chrysler's bankruptcy filing, among others.
If necessary, American Axle said it will work with lenders to
modify existing agreements or enter into new agreements. Should
AAM fail to be in compliance with the covenants and it is unable
to obtain a waiver or amend these covenants, or lack access to
sufficient liquidity to meet its needs, AAM said it be unable to
continue as a going concern.
The Revolving Credit Facility provides up to $476.9 million of
revolving bank financing commitments through April 2010 and $369.4
million of such revolving bank financing commitments through
December 2011. At March 31, 2009, AAM had $174.7 million
available under the Revolving Credit Facility.
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- is a world
leader in the manufacture, engineering, design and validation of
driveline and drivetrain systems and related components and
modules, chassis systems and metal-formed products for trucks,
sport utility vehicles, passenger cars and crossover utility
vehicles. In addition to locations in the United States
(Michigan, New York, Ohio and Indiana), the company also has
offices or facilities in Brazil, China, Germany, India, Japan,
Luxembourg, Mexico, Poland, South Korea, Thailand and the United
Kingdom.
* * *
Deloitte & Touche LLP, American Axle's auditors, have raised
substantial doubt about the ability of the Company to continue as
a going concern. Deloitte noted the significant downturn in the
domestic automotive industry which has an adverse impact on
American Axle's two largest customers.
As reported by the Troubled Company Reporter on April 30, 2009,
Fitch Ratings downgraded American Axle & Manufacturing Holdings,
Inc.'s Long-term Issuer Default Rating to 'CCC' from 'B-'; and
American Axle & Manufacturing, Inc.'s Long-term IDR to 'CCC' from
'B-'; Senior secured bank facility to 'B-/RR3' from 'B+/RR2'; and
Senior unsecured notes to 'C/RR6' from 'CCC/RR6'.
AMERICAN INT'L: Former Lawyer Sues, Exposes "Corrupt" Korea Deal
----------------------------------------------------------------
Jennifer Levitz at The Wall Street Journal reports that Kimberly
Lebron, a former compliance manager and lawyer at American
International Group, has filed a lawsuit in the U.S. District
Court in New York, claiming that she was fired after protesting
what she alleges was a potentially "corrupt arrangement" between
the Company and a banking entity of the South Korean government.
According to WSJ, Ms. Lebron said that the South Korean agency
invested in an AIG real-estate fund.
Ms. Lebron said in court documents that she was fired in July 2008
after reporting to company higher-ups that AIG employees had
negotiated a possibly illegal quid pro quo with the agency. The
entity would invest $50 million in an AIG real-estate fund and in
return, AIG would sponsor a Korean government employee for a "six-
week paid vacation" in New York and London "under the guise of
learning about the real-estate industry," WSJ relates, citing
Ms. Lebron.
AIG spokesperson Mark Herr has denied the allegations, WSJ states.
WSJ reports that Ms. Lebron first filed a complaint on Sept. 23,
2008, with the Labor Department under the 2002 Sarbanes-Oxley
Act's whistle-blower provisions protecting employees who allege
corporate wrongdoing. The lawsuit was dismissed on February 19,
2009, saying that Ms. Lebron had no standing because she worked at
an AIG subsidiary.
About American International
Based in New York, American International Group, Inc. (AIG), is
the leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on September 8, 2008, to
$4.76 on September 15, 2008. On that date, AIG's long-term debt
ratings were downgraded by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch
Ratings, which triggered additional requirements for liquidity.
These and other events severely limited AIG's access to debt and
equity markets.
On September 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At September 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since September 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to September 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On 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 U.S. Treasury and the Federal Reserve. This concludes a
review for possible downgrade that was initiated on September 15,
2008.
AMERICAN INT'L: Ex-CEO Greenberg to Sell Shares to Own Hedge Fund
-----------------------------------------------------------------
Starr International and each of C.V. Starr, C.V. Starr Trust,
Greenberg Foundation, Greenberg Joint Tenancy Company, Maurice R.
Greenberg and Universal Foundation -- the Sellers -- entered into
a securities purchase agreement on May 1, 2009. Pursuant to the
Securities Purchase Agreement, Starr International has agreed to
purchase from the Sellers shares of American International Group
Inc. Common Stock:
* C.V. Starr (10,492,652 shares sold),
* C.V. Starr Trust (8,580,850 shares sold),
* Greenberg Foundation (989,308 shares sold),
* Greenberg Joint Tenancy Company (25,269,689 shares sold),
* Mr. Greenberg (12,888,666 shares sold) and
* Universal Foundation (2,112,119 shares sold).
Mr. Greenberg and his hedge funds may be deemed to beneficially
own in the aggregate 269,019,475 shares of AIG common stock as of
May 1, 2009, representing roughly 9.9979% of AIG's outstanding
Common Stock based on 2,690,747,320 shares of Common Stock
reported by AIG as outstanding as of January 30, 2009.
Mr. Greenberg is the head of Starr International and one of 12
voting shareholders of the investment entity, Reuters notes. Mr.
Greenberg served as AIG's CEO for nearly 40 years.
Each share of Common Stock will be purchased by Starr
International at a price per share equal to the closing price of a
share of Common Stock as reported on the New York Stock Exchange
composite tape on the date immediately prior to the closing,
provided that such per share purchase price will be no less than
$1.25 per Share and will otherwise not exceed a price to be
mutually agreed upon by the parties. The closing of the purchases
and sales contemplated by the Securities Purchase Agreement are
subject to certain conditions, including the expiration or
termination of any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvement Act of 1976, as amended.
Mr. Greenberg has the sole power to vote and direct the
disposition of 2,487,500 shares of AIG Common Stock, which may be
acquired pursuant to incentive stock options previously granted by
AIG to Mr. Greenberg as its officer and director that are
exercisable by July 1, 2009. Mr. Greenberg has the shared power
to vote and direct the disposition of 58,292,582 shares of Common
Stock, 12,888,666 shares of which are held as tenant in common
with Mr. Greenberg's wife, 71,417 shares of which are held in
family trusts of which Mr. Greenberg is a trustee, 10,492,652
shares of which are held by CV Starr, 8,580,850 shares of which
are held by CV Starr Trust, for which CV Starr is a beneficiary
and Mr. Greenberg is a trustee, 989,308 shares of which are held
by the Greenberg Foundation, of which Mr. Greenberg, his wife and
family members are directors and 25,269,689 shares of which are
held by the Greenberg Joint Tenancy Company of which the Greenberg
Joint Tenancy Corporation is the managing member.
Mr. Greenberg has the shared power to direct the disposition of
2,112,119 shares of Common Stock held by Universal Foundation for
which CV Starr has the shared power to direct the disposition of
pursuant to an Investment Management Agreement (described below).
Mr. Greenberg owns 27.27% of the common stock of CV Starr
directly. Mr. Greenberg disclaims beneficial ownership of the
shares of Common Stock held by CV Starr, CV Starr Trust, Universal
Foundation, the Greenberg Foundation and the family trusts.
A full-text copy of Mr. Greenberg's Schedule 13D filing with the
Securities and Exchange Commission is available at no charge at:
http://ResearchArchives.com/t/s?3c64
A full-text copy of Securities Purchase Agreement is available at
no charge at http://ResearchArchives.com/t/s?3c65
About American International Group
According to Liam Pleven at the Wall Street Journal, Mr. Greenberg
is the chief of Starr International and one of 12 voting
shareholders of the privately held company. Mr. Greenberg, by
selling his AIG stake, would have no direct economic interest in
the Company, other than the 71,000 shares held by family trusts,
WSJ states.
WSJ relates that Starr International, which was the largest single
shareholder in AIG before the Company was bailed out by the
government in September 2008, already holds 206 million shares in
the Company. WSJ says that Starr International would also buy:
-- 25.3 million shares in AIG from the Greenberg Joint
Tenancy Co.;
-- 10.5 million shares from C.V. Starr & Co., another firm
that Mr. Greenberg leads; and
-- other shares from affiliated entities.
The arrangements were part of a plan to give Mr. Greenberg's
assets to charity in the future, WSJ states, citing a person
familiar with the matter.
WSJ notes that AIG has had a legal fight with Starr International
over what Starr International's stake in AIG can be used for, and
the case has been scheduled for trial in June 2009.
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.
AMERICAN INT'L: Reports 2008 Compensation to Officers & Directors
-----------------------------------------------------------------
American International Group filed an amendment to its Annual
Report on Form 10-K for the year ended December 31, 2008. In the
Form 10-K amendment, AIG disclosed information on:
* Directors, Executive Officers and Corporate Governance;
* Executive Compensation;
* Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters;
* Certain Relationships and Related Transactions, and Director
Independence; and
* Principal Accounting Fees and Services
AIG CEO Edward Liddy volunteered to receive only $1 in salary.
AIG said Mr. Liddy has received no cash incentive compensation and
no equity-based compensation. AIG, however, paid Mr. Liddy about
$460,000 to cover costs he incurred after taking over the company.
It was expected that Mr. Liddy ultimately would be compensated
through an equity grant. However, Mr. Liddy declined to move
forward on work toward that arrangement as AIG addressed the
immediate challenges facing it.
AIG implemented a policy of no regular salary increases for the
Leadership Group and other Senior Partners (other than in
connection with promotions).
AIG agreed not to use government funds to pay Leadership Group or
other Senior Partner performance-based pay. In addition, AIG
agreed that the annual pool for performance-based pay for Senior
Partners for each of 2008 and 2009 may not exceed the average of
the annual pools for 2006 and 2007 (regardless of the performance
achieved in those years). In connection with this agreement, each
member of the Leadership Group volunteered not to receive annual
variable performance-based pay for 2008.
AIG's named executives have agreed that they may not receive any
termination payments or benefits (other than fully vested,
previously earned amounts). For Senior Partners, including other
members of the Leadership Group, termination payments and benefits
were limited to three times the individual's average historical
annual compensation.
Separately, the members of the Leadership Group and other Senior
Partners agreed to limit the total amount of 2009 variable
performance-based pay, special retention awards and termination
payments and benefits (if applicable) they may receive.
AIG's named executives have agreed that any incentive award earned
during the Department of the Treasury's investment in AIG will be
subject to recovery by AIG if it is determined to have been based
on materially inaccurate financial results.
A full-text copy of the 10-K Amendment is available at no charge
at http://ResearchArchives.com/t/s?3c63
About American International Group
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.
AMERICAN INT'L: Unveils Exchange Offer for 8.250% and 8.175% Notes
------------------------------------------------------------------
American International Group, Inc., is making an offer to
exchange:
-- up to $3,250,000,000 of its 8.250% Notes due 2018 for any
and all of its outstanding 8.250% Notes due 2018; and
-- up to $4,000,000,000 of its 8.175% Series A-6 Junior
Subordinated Debentures for any and all of its outstanding
8.175% Series A-6 Junior Subordinated Debentures.
The offerings are being made pursuant to separate prospectus. The
offerings are not contingent upon or related to one another.
The terms of the new 8.250% Notes due 2018 are substantially
identical to the terms of the old 8.250% Notes due 2018, except
that the New Notes are registered under the Securities Act of
1933, and the transfer restrictions, registration rights and
additional interest provisions currently applicable to the Old
Notes do not apply to the New Notes.
A full-text copy of AIG's Amendment No. 1 to Form S-4 Registration
Statement related to the 8.250% Notes due 2018 exchange offer is
available at no charge at http://ResearchArchives.com/t/s?3c62
The terms of the new junior subordinated debentures are
substantially identical to the terms of the old junior
subordinated debentures, except that the new junior subordinated
debentures are registered under the Securities Act of 1933, and
the transfer restrictions, registration rights and additional
interest provisions currently applicable to the old junior
subordinated debentures do not apply to the new junior
subordinated debentures.
A full-text copy of AIG's Amendment No. 1 to Form S-4 Registration
Statement related to the 8.175% Series A-6 Junior Subordinated
Debentures exchange offer is available at no charge at
http://ResearchArchives.com/t/s?3c61
About American International Group
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.
AMERICAN INT'L: May Close Mortgage Guarantor Unit
-------------------------------------------------
American International Group Inc., may shut its mortgage
guarantor, United Guaranty Corp., after failing to turn around the
unprofitable unit, Bloomberg News' Hugh Son reports, citing two
people familiar with the matter.
United Guaranty has posted more than $2.8 billion in operating
losses since April 2007. AIG may wind down any parts of the
mortgage insurer that can't be sold, said one of the people, who
asked not to be identified because the plans are confidential,
Bloomberg says.
"We're talking to a number of prospective buyers and we're
considering a number of options, but no decisions have been made"
about United Guaranty, said Peter Tulupman, a spokesman for New
York-based AIG, according to Bloomberg.
A source told Bloomberg that AIG has hired consulting firm
McKinsey & Co. to examine all operations being divested.
Bloomberg notes that AIG intends to place its two biggest non-U.S.
life insurers into trusts for eventual initial public offerings or
sales as the credit crisis hobbled potential buyers' ability to
make bids. According to Bloomberg, AIG has announced about
$4.4 billion of asset sales since receiving bailout fund from the
U.S. government in September 2008. AIG seeks to sell businesses
to repay the government loan.
If AIG winds down the business, it may enter "runoff," continuing
to pay claims and book profits or losses from previously sold
policies. The company would stop selling new coverage and cease
operations when the last of its existing policies expires,
Bloomberg says.
Bloomberg cites that No. 7 Triad Guaranty Inc. entered runoff last
year after capital ran short. Triad Guaranty was ordered by its
state regulator early in April to defer 40% of claims payments
because of "uncertainty" over whether it will meet its
obligations, Bloomberg adds.
Based in Greensboro, North Carolina, United Guaranty Corp. --
https://www.ugcorp.com/ -- reimburses mortgage lenders when
borrowers cannot repay and foreclosure fails to cover costs.
United Guaranty was founded in 1963 and sold to AIG in 1981. It
employs about 950 employees worldwide.
Bloomberg notes that United Guaranty posted losses for seven
straight quarters and AIG indicated in October that it may be
difficult to find a buyer for the unit. United Guaranty generated
$2.8 billion in operating income and $600 million in dividends for
AIG in the eight years prior to the housing slump, according to
Bloomberg.
The firm was ranked the fifth-largest U.S. mortgage insurer by
2008 sales, behind No. 1 ranked MGIC Investment Corp., Genworth
Financial Inc., Radian Group Inc. and PMI Group Inc., Bloomberg
says, citing Inside Mortgage Finance, a trade journal.
About American International Group
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 U.S. Treasury and the Federal Reserve. This concludes a
review for possible downgrade that was initiated on September 15,
2008.
ANTHRACITE CAPITAL: Withholds More Than $5MM in Interest Payments
-----------------------------------------------------------------
Anthracite Capital, Inc., said it continues to have discussions
with its secured credit facility lenders and that the lenders have
agreed to further extend covenant waivers to May 8, 2009.
The Company also said it paid to note holders the interest
payments on its junior subordinated notes due 2036 related to
Anthracite Capital Trust III and 7.20% senior notes due 2016 that
were originally due March 30, 2009. The payments were made within
the 30-day cure period under the notes.
The Company also said that certain interest payments due April 30,
2009, under other unsecured outstanding debt are being withheld.
Under the indentures governing the notes, the failure to make an
interest payment is subject to a 30-day cure period before
constituting an event of default. As of the close of the business
on April 30, these interest payments totaled roughly $5.1 million
and EUR589,000.
About Anthracite
Anthracite Capital, Inc., is a specialty finance company focused
on investments in high yield commercial real estate loans and
related securities. Anthracite is externally managed by BlackRock
Financial Management, Inc., which is a subsidiary of BlackRock,
Inc., one of the largest publicly traded investment management
firms in the United States with roughly $1.307 trillion in global
assets under management at December 31, 2008. BlackRock Realty
Advisors, Inc., another subsidiary of BlackRock, provides real
estate equity and other real estate-related products and services
in a variety of strategies to meet the needs of institutional
investors.
Going Concern Doubt
The Company's independent registered public accounting firm has
issued an opinion on the Company's consolidated financial
statements that states the consolidated financial statements have
been prepared assuming the Company will continue as a going
concern and further states that the Company's liquidity position,
current market conditions and the uncertainty relating to the
outcome of the Company's ongoing negotiations with its lenders
have raised substantial doubt about the Company's ability to
continue as a going concern. The Company obtained agreements from
its secured credit facility lenders on March 17, 2009, that the
going concern reference in the independent registered public
accounting firm's opinion to the consolidated financial statements
is waived.
BANDY B. MULLINS: Case Summary & 10 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Bandy Bill Mullins
309 Chestnut Hill Road
Summersville, WV 26651
Bankruptcy Case No.: 09-20490
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Southern District of West Virginia (Charleston)
Judge: Ronald G. Pearson
Debtor's Counsel: Brian Richard Blickenstaff, Esq.
Turner & Johns, PLLC
216 Brooks St, Suite 301
Charleston, WV 25301
Tel: (304) 720-2300
Fax: (304) 720-2311
Email: bblickenstaff@turnerjohns.com
Total Assets: $2,744,120
Total Debts: $1,239,438
According to its schedules of assets and liabilities, $705,536 of
the debt is owing to secured creditors, $104,921 for taxes owed to
governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Mr. Mullins' petition, including his list
of 10 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/wvs09-20490.pdf
The petition was signed by Mr. Mullins.
BAT INC.: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: BAT, Inc.
dba "Anderson Trucking"
4411 Winwood Lane
Bumpass, VA 23024
Bankruptcy Case No.: 09-32827
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of Virginia (Richmond)
Judge: Kevin R. Huennekens
Debtor's Counsel: David K. Spiro, Esq.
Hirschler Fleischer
Post Office Box 500
Richmond, VA 23218-0500
Tel: (804) 771-9500
Fax: (804) 644-0957
Email: dspiro@cantorarkema.com
Total Assets: $681,900
Total Debts: $4,427,003
According to its schedules of assets and liabilities, $1,011,000
of the debt is owing to secured creditors, $310,000 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/vaeb09-32827.pdf
The petition was signed by Brock L. Anderson, secretary of the
Company.
BAY MEDICAL: Moody's Downgrades Underlying Rating to 'Ba1'
----------------------------------------------------------
Moody's Investors Service has downgraded Bay Medical Center's
underlying rating to Ba1 from Baa3. This rating action affects the
Series 2007A and B variable rate demand obligations ($126.4
million outstanding). The Series 2007A & B bonds are jointly
supported by Bay Medical Center and a direct Letter of Credit from
Regions Bank. The enhanced rating on the Series 2007A & B bonds
has been downgraded to Aa2/VMIG1 from Aa1/VMIG1. In conjunction
with the downgrade, the rating has been placed on watchlist for
downgrade.
The rating downgrade reflects two consecutive years of operating
losses, risks presented by the current debt structure (29.5% cash-
to-VRDO debt, 100% VRDO debt and 100% concentration with one
liquidity facility provider), and limited cushion with respect to
financial covenant levels. The downgrade to below Baa3 is
currently an event of default in the LOC Reimbursement Agreement
between BMC and Regions Bank, allowing Regions to accelerate the
bonds if it elects to do so. Likewise, there is a cross default
provision in the swap agreements which may allow the swap
counterparties to terminate the swaps, requiring BMC to pay $14.5
million in termination costs. Management is currently endeavoring
to renegotiate the LOC Reimbursement Agreement to lower the rating
triggers and amend the swap aggrement to remove the cross default
provision. The rating is on watchlist because in the event that
BMC's swaps are terminated or BMC is unable to lower the rating
triggers in a timely manner, a multi-notch rating downgrade could
likely ensue.
Legal Security: The bonds are secured by a gross revenue pledge of
Bay Medical Center. Bay Medical Center is an independent special
district of the state of Florida but has no taxing authority.
Events of Default include: 65 days cash on hand covenant (excluded
bad debt expense, currently 72.6 days as of March 31, 2009)
measured semi annually, 1.25 times rate covenant, downgrade below
Baa3, and a material adverse change clause.
Interest Rate Derivatives: BMC entered into two fixed payer swaps
in conjunction with the Series 2007 bonds. BMC pays 3.343% and
receives SIFMA on the first swap with Lehman Brothers as the
counterparty on a notional amount of $22.3 million that has a swap
liability of $1.2 million as of March 31, 2009. BMC pays 3.633%
on the second swap and receives 67% of one month LIBOR with
Wachovia Bank N.A. as the counterparty on a notional amount of $60
million that has a swap liability of $13.2 million as of March 31,
2009. As a governmental entity, BMC is not required to post
collateral; both swaps have termination events via cross defualt
provisions upon rating downgrades below Baa3.
Challenges
* BMC's debt structure which is 100% variable rate debt heightens
credit risk. The LOC from Regions Bank for the Series 2007A & B
bonds ($126.3 million outstanding), with these events of
default: downgrade of BMC's rating to below Baa3, debt service
coverage ratio below 1.25 times, minimum days cash on hand below
65 days (excluding bad debt expense, measured semi-annually),
and material adverse change. An event of default could trigger
an acceleration of the bonds, further accelerating credit
decline, and potentially resulting in a multi-notch rating
downgrade. 100% concentration in liquidity facility provider
(A2-rated Regions Bank) also increases rollover risk (LOC
expires in October, 2012). In the event that the bonds become
bank bonds, Moody's anticipate that the accelerated amortization
will challenge BMC's ability to meet its rate covenant. BMC
maintains an extremely low 32.4% cash-to-VRDO debt.
* Additional credit stress stemming from two Interest rate
derivatives with current swap liabilities of $14.4. Occurrence
of a swap termination event (rating downgraded to below Baa3)
will result in additional credit stress in the event that BMC
does not amend the swap documents to remove the rating trigger.
* The recent departure of five orthopedic surgeons to Gulf Coast
Hospital in FY 2007 contributed to a 5% decline in volumes in FY
2007 and further 5% decline in volumes in FY 2008, resulting in
challenged financial performance in the last quarter of FY 2007
that has continued through the first quarter of FY 2009; Moody's
note that following the successful recruitment of key
physicians, management has quickly replaced these surgeons,
resulting in 2% admission growth through the first six months of
FY 2009.
* Bay Medical Center's free standing psychiatric hospital has been
a significant contributor to lower operating margins in fiscal
years 2008 and 2009. Moody's note that Bay Medical Center has
engaged an advisor to divest this asset. This potential
divestiture has the potential long-term impact of increased cash
and elimination of operating losses.
* High reliance on governmental payers (60% combined) given BMC's
role as a safety net provider in the county and its full service
array
* Construction of a new all-private patient tower and new energy
plant, which Moody's believe confers long term benefits; short
term credit concerns associated with large construction projects
are present.
Strengths
* Leading full service provider with 55.2% market share in Bay
County followed by for-profit Gulf Coast hospital, which
captures 40% market share and does not offer the breadth of
services as BMC
* Local demographics exhibit some growth trends with population
projected to increase 7.4% from 2006 to 2012
* Status as a special hospital district has conferred credit
benefit via a conservative investment allocation; as a
governmental facility, BMC is prohibited from investing in
equities and is 100% invested in governmental securities. As a
governmental facility, BMC enjoys sovereign immunity and is not
governed by ERISA and does not face the same immediate pension
contribution requirements in the short term
Rated Debt (debt outstanding as of March 31, 2008)
-- Series 2007A Hospital Revenue Bonds variable rate ($22.3
million outstanding), rated Aa2/VMIG1 supported by a two
party pay letter of credit agreement with Regions Bank
(expiring October, 2012), Ba1 underlying rating
-- Series 2007B Hospital Revenue Bonds variable rate ($104.0
million outstanding), rated Aa2/VMIG1 supported by a two
party pay letter of credit agreement with Regions Bank
(expiring October, 2012), Ba1 underlying rating
The last rating action was on May 30, 2008, when the rating was
affirmed and the rating outlook was revised to negative from
stable
BERENILDES GOMEZ: Case Summary & 17 Largest Unsecured Creditors
---------------------------------------------------------------
Joint Debtors: Berenildes Gomez-Martinez
aka Berenildes Gomez
aka Berenildes Marte
Jose M. Martinez
12 Wintergreen Drive West
Melville, NY 11747
Bankruptcy Case No.: 09-73085
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of North Carolina (Wilson)
Judge: Robert E. Grossman
Debtors' Counsel: Marc A. Pergament, Esq.
Weinberg Gross & Pergament LLP
400 Garden City Plaza
Garden City, NY 11530
Tel: (516) 877-2424
Email: mpergament@wgplaw.com
Total Assets: $1,330,400
Total Debts: $2,170,571
According to its schedules of assets and liabilities, $1,245,087
of the debt is owing to secured creditors, $45,417 for taxes owed
to governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Debtors' petition, including their list of
17 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nyeb09-73085.pdf
The petition was signed by the Joint Debtors.
BOOKBINDER'S RESTAURANT: Court Dismisses Chapter 11 Case
--------------------------------------------------------
Michael Klein at The Philadelphia Inquirer reports that the Hon.
Eric L. Frank of the U.S. Bankruptcy Court for the Eastern
District of Pennsylvania has dismissed the Chapter 11 case of
Bookbinder's Restaurant, Inc., dba Old Original Bookbinders.
The Inquirer relates that Judge Frank agreed with most creditors
and the U.S. trustee that converting Bookbinder's Restaurant's
Chapter 11 bankruptcy case to Chapter 7 wouldn't be productive
because of the high administrative costs.
According to The Inquirer, Bookbinder's Restaurant owes creditors
about $1.8 million. Those creditors must find a way outside of
the bankruptcy court to seek reimbursement from Bookbinder's
Restaurant's owners John E. Taxin and his aunt Sandy Taxin, The
Inquirer states.
Mr. Taxin closed Bookbinder's Restaurant last month as he tried to
look for someone to save the Company, says The Inquirer. Two
interested parties had come forward in the last month but there
was no sale, the report states, citing Albert A. Ciardi III,
Bookbinder's Restaurant's bankruptcy counsel. Mr. Ciardi,
according to the report, said that Bookbinder's Restaurant's name
has value and could still be sold.
The Inquirer relates that Mr. Taxin already handed over the keys
to the Old City landmark at 125 Walnut Street and a new tenant is
currently being sought. The report says that equipment and
furnishings remain at the building.
Philadelphia, Pennsylvania-based Bookbinder's Restaurant, Inc. --
http://www.bookbindersfoods.com/-- dba Old Original Bookbinders,
markets and retails condiments, sauces, soup, and other food
products. It has operated the Old Original Bookbinder's
Restaurant since the late 1800's. The Debtor is also a subsidiary
of Silver Springs Gardens, Inc., one of the leading growers and
processors of horseradish, mustard, and other condiments.
The Company filed for Chapter 11 bankruptcy protection on June 5,
2006 (Bankr. E.D. Pa. Case No. 06-12302). Albert A. Ciardi, III,
Esq., at Ciardi & Ciardi, P.C., assists the Debtor in its
restructuring efforts. The Debtor listed $1 million to
$10 million in assets and $1 million to $10 million in debts.
BROADVIEW NETWORKS: S&P Gives Positive Outlook; Keeps 'B-' Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it revised the outlook on
Rye Brook, New York-based competitive local exchange carrier
Broadview Networks Holdings Inc. to positive from stable. At the
same time, S&P affirmed the company's ratings, including its 'B-'
corporate credit and 'CCC+' secured issue ratings. The '5'
recovery rating on the secured debt remains unchanged. At
Dec. 31, 2008, the company had total funded debt outstanding of
$336.8 million.
"The revision in outlook to positive reflects our view that the
company will be able to achieve break-even to modestly positive
net free cash flow in 2009," said Standard & Poor's credit analyst
Catherine Cosentino, "a material improvement from the
$12.5 million deficit incurred in 2008." This will be
accomplished through improved gross and EBITDA margins. With the
larger scale it has achieved over the past few years through
several acquisitions, S&P expects Broadview to benefit in 2009
from improved operating efficiencies and an enhanced ability to
provide small-to-midsize business customers a suite of integrated
communications services, which will help enable it to improve its
overall level of profitability. "In addition, the company's
reduction of its outbound telemarketing sales channel," continued
Ms. Cosentino, "coupled with some additional incremental targeted
cost savings and/or efficiency improvements from businesses
acquired in the past one to two years, should likewise contribute
to improved profitability."
CALTEX HOLDINGS: June 10 Set as Bar Date for Proofs of Claim
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas has
established June 20, 2009, as the general bar date for the filing
of proofs of claim in CalTex Holdings LP's bankruptcy case.
Headquartered in Houston, Texas, CalTex Holdings LP was formed on
December 12, 2006. Its limited partners were Sierra Mesa LLC and
Paseo Group LLC. The general partner is CalTex Holdings GP, Inc.,
which owns a 1% limited partner interest. Paseo owns 75% of the
stock of GP, and Sierra owns 25% of the stock of GP.
CalTex filed for Chapter 11 protection on March 20, 2009 (Bankr.
S.D. Tex. Case No. 09-31875). H. Rey Stroube, III, Esq., and S.
Margie Venus, Esq., at Strong Pipkin Bissell & Ledyard, L.L.P.,
represent the Debtor as counsel. The Debtor listed assets of
$50 million to $100 million and debts of $10 million to
$50 million.
CALTEX HOLDINGS: May Use NewStar Cash Collateral Until June 28
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas has
granted CalTex Holdings LP permission to use cash collateral of
NewStar Financial, Inc., and certain of its related entities
until June 28, 2009, solely in accordance with a budget.
As adequate protection for the use of the cash collateral, NewStar
is granted replacement security interests and liens on all of the
Debtor's existing and hereafter acquired assets.
NewStar asserts a claim against the Debtor in the amount of
$22,719,675 as of the petition date, secured by first priority
lien in substantially all of the Debtor's assets.
A full-text copy of the Court's cash collateral order dated
April 30, 2009, is available at:
http://bankrupt.com/misc/CalTex.cashcollorder.pdf
About CalTex Holdings LP
Headquartered in Houston, Texas, CalTex Holdings LP was formed on
December 12, 2006. Its limited partners were Sierra Mesa LLC and
Paseo Group LLC. The general partner is CalTex Holdings GP, Inc.,
which owns a 1% limited partner interest. Paseo owns 75% of the
stock of GP, and Sierra owns 25% of the stock of GP.
CalTex filed for Chapter 11 protection on March 20, 2009 (Bankr.
S.D. Tex. Case No. 09-31875). H. Rey Stroube, III, Esq., and S.
Margie Venus, Esq., at Strong Pipkin Bissell & Ledyard, L.L.P.,
represent the Debtor as counsel. The Debtor listed assets of
$50 million to $100 million and debts of $10 million to
$50 million.
CALTEX HOLDINGS: Sec. 341(a) Creditors Meeting Set for May 19
-------------------------------------------------------------
Charles McVay, the United States Trustee for Region 7, will
convene a meeting of CalTex Holdings LP's creditors on May 19,
2009, at 10:00 a.m., at Suite 3401, 515 Rusk Ave., Houston, TX
77002.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtor under oath about the Debtor's financial affairs and
operations that would be of interest to the general body of
creditors.
About CalTex Holdings LP
Headquartered in Houston, Texas, CalTex Holdings LP was formed on
December 12, 2006. Its limited partners were Sierra Mesa LLC and
Paseo Group LLC. The general partner is CalTex Holdings GP, Inc.,
which owns a 1% limited partner interest. Paseo owns 75% of the
stock of GP, and Sierra owns 25% of the stock of GP.
CalTex filed for Chapter 11 protection on March 20, 2009 (Bankr.
S.D. Tex. Case No. 09-31875). H. Rey Stroube, III, Esq., and S.
Margie Venus, Esq., at Strong Pipkin Bissell & Ledyard, L.L.P.,
represent the Debtor as counsel. The Debtor listed assets of
$50 million to $100 million and debts of $10 million to
$50 million.
CANWEST LIMITED: S&P Assigns 'CCC' Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services said it assigned its 'CCC'
long-term corporate credit rating to Toronto-based newspaper
publisher Canwest Limited Partnership. The outlook is negative.
At the same time, S&P lowered the senior secured debt rating on
the company to 'CCC' (the same as the corporate credit rating)
from 'CCC+'. S&P also revised the recovery rating on Canwest LP's
senior secured debt to '3' from '2'. The '3' recovery rating
indicates S&P's opinion of an expectation of meaningful (50%-70%)
recovery in the event of a default, in contrast to a '2' recovery
rating, which indicates S&P's opinion of an expectation of
substantial (70%-90%) recovery. Standard & Poor's revised the
recovery rating due to S&P's use of a lower EBITDA amount and
EBITDA multiple in the event of default.
In addition, S&P affirmed the 'CC' debt rating on Canwest LP's
senior subordinated debt (two notches below the corporate credit
rating), with a recovery rating of '6'. The '6' recovery rating
indicates S&P's opinion of an expectation of negligible (0%-10%)
recovery in a default scenario. (For the complete corporate
credit rating rationale, see the research report to be published
on RatingsDirect immediately following this media release.)
Canwest LP is a wholly owned subsidiary of media company Canwest
Media Inc. (D/--/--). Standard & Poor's had previously notched
the issue ratings on Canwest LP from the long-term corporate
credit rating on parent Canwest Media. However, the two companies
now have separate corporate credit ratings given the default
status of Canwest Media. That Canwest LP is not a guarantor under
Canwest Media's defaulted senior subordinated debt supports the
separation of ratings, in S&P's view. Still, Standard & Poor's
will continue to monitor Canwest Media's senior secured and
subordinated lender negotiations to determine the extent of any
effect on the ratings on Canwest LP.
"The ratings on Canwest LP reflect what S&P views as its weak
financial risk profile, including a material decline in
profitability in the quarter ended Feb. 28, 2009, high debt
leverage, limited liquidity, and financial covenant concerns,"
said Standard & Poor's credit analyst Lori Harris.
Furthermore, Standard & Poor's believes the company's performance
in fiscal 2009 (ending Aug. 31) is likely to remain weak because
of the expectation of lower advertising revenues.
The negative outlook reflects Standard & Poor's assessment of
Canwest LP's weak operating performance, its limited access to the
revolving credit facility, and covenant concerns. S&P could
consider lowering the ratings if the company's performance or
financial flexibility weakens further, or if Canwest LP is
negatively affected by events related to Canwest Media.
Alternatively, S&P could consider revising the outlook to stable
if Canwest LP resolves its liquidity and covenant concerns, and
the company's operating performance strengthens.
CERUS CORP: Posts $7.4MM Q1 2009 Net Loss, Has Going Concern Doubt
------------------------------------------------------------------
Cerus Corporation posted a net loss for the first quarter ended
March 31, 2009, of $7.4 million, or $0.23 per share, compared to a
net loss of $5.9 million, or $0.18 per share, for the first
quarter of 2008.
Cerus said product revenue for the INTERCEPT Blood System was
$3.1 million during the first quarter of 2009, down from
$4.9 million during the first quarter of 2008, when $1.2 million
of previously deferred product revenue was recognized. This
decline in product revenue was largely due to no illuminators
being sold during the first quarter of 2009 in contrast to the
first quarter of 2008. Despite the lack of illuminator sales,
disposable kit sales in total increased in the first quarter of
2009 compared to the same period in 2008. Government grant
revenue in the first quarter of 2009 was $0.4 million, compared to
$0.1 million in the first quarter of 2008. Total revenue for the
first quarter of 2009 was $3.5 million, down from $5.0 million for
the first quarter of 2008, due primarily to decreased product
sales offset by modestly higher government grant revenue.
Total operating expenses for the first quarter of 2009 were
$8.8 million, down from $9.9 million for the same period in 2008.
The decrease in operating expenses was due to a reduction in
research and development expenses and selling, general and
administrative expenses, partially offset by non-recurring
restructuring costs of $0.7 million associated with the Company's
restructuring plans, which were announced in March 2009.
In March 2009, the Company began implementing a plan to focus
resources on commercializing the INTERCEPT platelet and plasma
systems in Europe and to realign its costs structure accordingly.
The Company's Board of Directors committed to a restructuring plan
that included the dismissal of 31 employees, or roughly 30% of its
workforce. As a consequence of this re-focusing and the
associated reduction in force, management expects operating
expense levels to decline meaningfully and to carefully manage
further investment in working capital in future periods.
At March 31, 2009, the Company had $39.1 million in total assets,
$11.8 million in total liabilities, and $27.3 million in
shareholders' equity. At March 31, 2009, the Company had cash,
cash equivalents and short-term investments of $15.4 million, down
from $22.6 million at December 31, 2008. Management expects the
rate of cash consumed during the remainder of 2009 to be
significantly reduced relative to the first quarter of 2009, due
in large part to the savings expected to be realized as a result
of implementing the restructuring plan. As a consequence,
management expects existing cash resources to be adequate to fund
the Company's operations into the first half of 2010.
"It has been an active, yet challenging quarter for Cerus. We
took several meaningful steps toward commercial success in Europe.
Through a re-focusing of the company's priorities, we have
significantly extended our cash runway," said Claes Glassell,
president and CEO of Cerus Corporation.
Ernst & Young LLP in Palo Alto, California, in its March 2009
audit report on the Company's Annual Report for the year ended
December 31, 2008, raised substantial doubt about the Company's
ability to continue as a going concern. Ernst & Young cited
recurring operating losses the Company incurred.
In its first quarter 2009 report, Cerus said it may borrow
additional capital from institutional and commercial banking
sources to fund future growth. Cerus said the going concern
opinion may make it more difficult for the Company to raise funds
when needed.
"We do not know whether additional capital will be available when
needed, or that, if available, we will be able to obtain
additional capital on reasonable terms. If we are unable to raise
additional capital due to the recent disruptions to the credit and
financial markets in the United States and worldwide or other
factors, we will need to curtail planned development and
commercialization activities," the Company said.
In late October 2008 the Company filed a shelf registration
statement on Form S-3 to offer and sell up to $200.0 million of
common stock, preferred stock, warrants, or debt securities. This
shelf registration statement was declared effective by the
Securities and Exchange Commission in December 2008.
A full-text copy of Cerus' first quarter report is available at no
charge at http://ResearchArchives.com/t/s?3c68
About Cerus Corp.
Based in Concord, California, Cerus Corporation (NASDAQ: CERS) is
a biomedical products company focused on commercializing the
INTERCEPT Blood System to enhance blood safety. The INTERCEPT
Blood System is designed to inactivate blood-borne pathogens in
donated blood components intended for transfusion. Cerus
currently markets the INTERCEPT Blood System for both platelets
and plasma in Europe and the Middle East. The Company's products
are not yet approved in the United States. The INTERCEPT red
blood cell system is currently in clinical development.
CHATSWORTH DATA: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Chatsworth Data Corporation
20710 Lassen St.
Chatsworth, CA 91311-4507
Bankruptcy Case No.: 09-15075
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Central District of California (San Fernando Valley)
Judge: Maureen Tighe
Debtor's Counsel: Stephen F. Biegenzahn, Esq.
4300 Via Marisol Ste 764
Los Angeles, CA 90042-5079
Tel: (213) 617-0017
Fax: (480) 247-5977
Email: efile@sfblaw.com
Total Assets: $2,147,659
Total Debts: $2,293,707
According to its schedules of assets and liabilities, $1,050,000
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/cacb09-15075.pdf
The petition was signed by Sid L. Anderson, chief executive
officer of the Company.
CHRYSLER LLC: Seeks OK of $4.5BB DIP Loan from US Treasury & EDC
----------------------------------------------------------------
Chrysler LLC and its affiliates seek approval from Judge Arthur
Gonzalez of the U.S. Bankruptcy Court for the Southern District of
New York to dip their hands into a $4,500,000,000 loan under a
Second Lien Secured Priming Superpriority Debtor-In-Possession
Credit Agreement with the United States Department of the Treasury
and Export Development Canada.
It is essential that the Debtors obtain immediate postpetition
financing as contemplated by the DIP Credit Facility to enable
them to accomplish their strategic restructuring goals and
successfully complete a sale process and consummate a value-
maximizing transaction, explains the Debtors' proposed counsel,
Corinne Ball, Esq., at Jones Day, in New York.
As of April 30, Ms. Ball explains, the Debtors' First Lien
Prepetition Lenders have not agreed to the Debtors' use of
cash collateral, and the Debtors are facing a liquidity crisis and
need immediate access to credit under the DIP Credit Facility to
fund working capital and certain other costs pending a sale
transaction. Absent this new liquidity, not only would the
Debtors' ability to maximize the value of their estates and
successfully preserve asset values be jeopardized, but the Debtors
also could be forced to immediately and abruptly liquidate to the
direct detriment of all parties in interest, she contends.
By contrast, once the DIP Credit Facility is approved, the
Debtors' ability to minimize disruption to their businesses and
instill confidence in their various stakeholders will be
substantially enhanced. The Debtors' need for access to the DIP
Credit Facility, therefore, is urgent.
Because the Debtors lack sufficient unencumbered funds to meet
certain imminent expenses necessary both to preserve value pending
a sale transaction and to facilitate a smooth transition to
chapter 11, it is essential that they obtain interim financing
under the DIP Credit Facility pending a final hearing on their
request.
The Court was slated to consider approval of the request on May 4,
2009, at 10:00 a.m. The Company has not provided updates on its
DIP Motion as of press time.
DIP Terms
A. Commitment
A senior secured priming superpriority debtor-in-possession term
loan credit facility authorized under Sections 364(c)(1), (2) and
(3), and Section 364(d) of the Bankruptcy Code in the aggregate
amount of $4,500,000,000:
United States Department of the Treasury $3,340,000,000
Export Development Canada $1,160,000,000
--------------
Total Commitments $4,500,000,000
Of the Total Commitments, $1,800,000,000 will be made
available upon entry of the court's interim order approving the
request, and the full amount upon entry of the Court's final and
non-appealable order approving the DIP Facility.
B. Guarantors
These guarantors are jointly and severally liable with Chrysler on
the obligations under the DIP Credit Facility: Alpha Holding LP,
Chrysler Aviation Inc., Chrysler Dutch Holding LLC, Chrysler Dutch
Investment LLC, Chrysler Dutch Operating Group LLC, Chrysler
Institute of Engineering, Chrysler International Corporation,
Chrysler International Limited, L.L.C., Chrysler International
Services, S.A., Chrysler Investment Holdings LLC, Chrysler Motors
LLC, Chrysler Realty Company LLC, Chrysler Service Contracts
Florida, Inc., Chrysler Service Contracts, Inc., Chrysler
Technologies Middle East Ltd., Chrysler Transport, Inc., Chrysler
Vans LLC, DCC 929, Inc., Dealer Capital, Inc., Global Electric
Motorcars, LLC, NEV Mobile Service, LLC, NEV Service, LLC, Peapod
Mobility LLC, TPF Asset, LLC, TPF Note, LLC, and Utility Assets
LLC.
C. Maturity Date
The earlier of:
(a) 60 days after the date upon which all conditions precedent
with respect to the Interim Commitment are satisfied or
waived by the DIP Lenders -- the DIP Closing Date;
(b) 35 days after the Petition Date of the bankruptcy cases if
the Final Order has not become final and non-appealable
prior to the expiration of the 35-day period;
(c) the effective date of a plan of reorganization or
liquidation that is confirmed pursuant to an order entered
in the bankruptcy cases by the Bankruptcy Court;
(d) the acceleration of any loans and the termination of the
Commitment in accordance with the terms of the DIP Credit
Documentation; and
(e) September 30, 2009.
D. Interest Rate
3% plus with respect to each loan, the greater of (a) 2% and (b)
the rate -- adjusted for statutory reserve requirements for
Eurocurrency liabilities -- for eurodollar deposits for a period
equal to three months appearing on Reuters Screen LIBOR01 Page.
E. Default Interest Rate
(i) all outstanding loans under the DIP Credit Facility bear
interest at 5% above the rate otherwise applicable, which in the
sole discretion of the DIP Lenders, may be the base rate plus 2%,
and (ii) all other outstanding obligations bear interest at 5%
above the rate per annum equal to the base rate plus 2%.
F. Additional Consideration
On the DIP Closing Date, each DIP Lender will receive a promissory
note in the amount of 6.67% of its Commitment, which will be
payable on the Maturity Date and which will bear interest at the
Interest Rate.
G. Approved Budget
A budget acceptable in form and substance to the DIP Lenders
setting forth in reasonable detail all receipts and disbursements
of the Credit Parties on a weekly basis from the commencement of
the bankruptcy cases through and including July 3, 2009, and on a
monthly basis thereafter until June 30, 2010.
H. Adequate Protection
In accordance with existing arrangements, the lender under the
TARP Loan Agreement will receive adequate protection for the
priming of the liens on property securing the TARP Loan Agreement
in the form of (i) a claim as contemplated by Section 507(b) of
the Bankruptcy Code, and (ii) a lien on the Collateral, which lien
will have a priority immediately junior to the DIP Liens; provided
that the claims and liens described in clauses (i) and (ii) above
will be granted only to the extent of any diminution in the value
of the interests in the Collateral of the lenders
under the TARP Loan Agreement.
I. Carve-Out
"Carve-Out" means, following the occurrence and during the
continuance of an Event of Default, an amount sufficient for
payment of (i) allowed professional fees and disbursements
incurred by professionals retained by the Credit Parties and any
statutory committees of unsecured creditors appointed in the
bankruptcy cases in an aggregate amount not to exceed $10,000,000,
and (ii) fees pursuant to 28 U.S.C. Section 1930 and any fees
payable to the clerk of the Bankruptcy Court; provided that, so
long as an Event of Default has not occurred, the Credit Parties
will be permitted to pay fees and expenses allowed and payable
under 11 U.S.C. Sections 330 and 31, as the same may become due
and payable, and the same will not reduce the Carve-Out.
J. Expenses and Indemnification
Chrysler will pay all out-of-pocket expenses of each DIP Lender in
connection with the enforcement of the DIP Credit Documentation
and the rights of each DIP Lender. Each DIP Lender
will have no liability for, and will be indemnified and held
harmless against, any loss, liability, cost or expense incurred in
respect of the financing contemplated or the use or the proposed
use of proceeds, and expenses incurred in connection with any
default in respect of the DIP Credit Facility and any exercise of
remedies.
K. Events of Default
Among other things, these events are considered events of default
under the DIP Credit Agreement:
(a) Chrysler's failure to obtain entry by the Bankruptcy Court
in the Cases of a bidding procedures order with respect to
the Fiat Transaction pursuant to Section 363 of the
Bankruptcy Code in form and substance acceptable to the
Required Lenders no later than seven days after the
Petition Date, or the Bidding Procedures Order will fail
to be entered and not stayed by May 15, 2009;
(b) Chrysler's failure to obtain entry by the Bankruptcy Court
in the cases of one or more final and non-appealable
orders in form and substance acceptable to the Required
Lenders approving the Related Section 363 Transactions on
or prior to June 15, 2009;
(c) the failure of any of these milestones to be satisfied
within the time periods specified:
May 4, 2009 Chrysler shall have filed with
the Bankruptcy Court its motion
to approve the Sale Motion
May 8, 2009 Hearing for the motion to approve
the Bidding Procedures Order
May 20, 2009 Chrysler will have accepted all
bids from all Potential Bidders
participating in the in-court
auction
May 29, 2009 Chrysler will have determined the
Lead Bid
June 1, 2009 Hearing for the motion to approve
the Sale Motion will be held
June 27, 2009 Chrysler will close the Sale
Transactions
(d) Chrysler's failure to obtain entry by the Bankruptcy Court
in the Cases of one or more final and non-appealable
orders in form and substance acceptable to the Required
Lenders approving the Related Section 363 Transactions on
or prior to the date that is 40 days after the Petition
Date.
Loan Proceeds
According to Ms. Ball, the loan proceeds will be used to finance
the Debtors' working capital needs, capital expenditures, the
payment of warranty claims and other general corporate purposes,
including the payment of expenses associated with the
administration of the bankruptcy cases, in each case, subject to
compliance with the financial covenants.
In the event of a termination of the Debtors' Master Transaction
Agreement with Fiat S.p.A., a portion of the DIP Credit Facility
will be available to be drawn and used to fund the liquidation and
wind down of the Debtors' estates in an orderly manner. None of
the proceeds of the loans will be used in connection with:
(a) any investigation, including discovery proceedings,
initiation or prosecution of any claims, causes of action,
adversary proceedings or other litigation against either
DIP Lender,
(b) the initiation or prosecution of any claims, causes of
action, adversary proceedings or other litigation against
either the Lender or any of its affiliates with respect to
any loans or other financial accommodations made by the
DIP Lender to any of the "Credit Parties" prior to the
Petition Date, or
(c) any loans, advances, extensions of credit, dividends or
other investments to any person not a Credit Party other
than for certain permitted exceptions set forth in DIP
Credit Facility, including, without limitation, a basket
for investments in an amount not to exceed $10,000,000.
The Debtors also ask the Court to grant:
* to the DIP Lender security interests in and liens upon
the Collateral, subject only to the liens granted pursuant
to the Amended and Restated First Lien Credit Agreement
dated as of August 3, 2007 among CarCo Intermediate
HoldCo II LLC, Chrysler, and the lender parties; the
Permitted Encumbrances; and the Carve-Out;
* superpriority administrative expense claims status to the
claims of the DIP Lenders under the DIP Credit Facility;
* to the DIP Lender security interests in and liens upon the
Collateral;
* adequate protection to the U.S. Treasury, as Third
Lien Prepetitions Lender, pursuant to the TARP Loan
Agreement dated as of December 31, 2008, between Chrysler
Parent, as borrower, and the U.S. Treasury.
A full-text copy of the DIP Credit Agreement is available for free
at http://bankrupt.com/misc/CHRYSLER_DIP_Pact.pdf
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Tom LaSorda Retires from Post as President
--------------------------------------------------------
Chrysler LLC President and Vice Chairman Tom LaSorda is retiring
from his post, effective immediately, reports The Associated
Press. A successor has not been named.
Mr. LaSorda, who joined Chrysler in 2000, previously worked at
General Motors Corp. in several roles, including heading its
European unit, Opel.
AP says Mr. LaSorda disclosed Thursday that he planned to retire,
but set no specific date.
Chrysler CEO Robert Nardelli had previously announced to Chrysler
LLC's Board of Management and the U.S. Treasury his plan to leave
the company following the emergence of the new company from
Chapter 11 and the completion of the alliance with Fiat. He said
he will return to Cerberus Capital Management LP as an advisor.
"Now is an appropriate time to let others take the lead in the
transformation of Chrysler with Fiat," Mr. Nardelli had said.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Taps Jones Day as Lead Bankruptcy Counsel
-------------------------------------------------------
Chrysler LLC and its 24 debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the Southern District of New York to
employ Jones Day as lead bankruptcy counsel in their Chapter 11
cases, nunc pro tunc to April 30, 2009, the day they filed for
bankruptcy.
Chrysler's senior vice president, general counsel and secretary,
Holly E. Leese, relates that Jones Day is intimately familiar with
the Debtors' businesses and financial affairs. Jones Day's
professionals have worked closely with the Debtors' management
and other professionals in connection with various prepetition
matters, including by:
(a) providing advice in connection with the Debtors'
prepetition restructuring efforts and their efforts to
obtain emergency financial assistance from the U.S.
government;
(b) assisting the Debtors in their efforts to document and
implement the Fiat Transaction; and
(c) preparing for the commencement of the Chapter 11 cases.
As a result, Jones Day's lawyers have become well acquainted with
the Debtors' history, business operations, capital structure and
related matters, Ms. Leese says. Jones Day has developed
substantial knowledge regarding the Debtors that will allow Jones
Day to provide effective and efficient services in the Chapter 11
cases, she adds.
As lead counsel for the Debtors, Jones Day will:
(a) advise the Debtors of their rights, powers and duties as
debtors and debtors-in-possession continuing to operate
and to manage their businesses and properties under
Chapter 11 of the Bankruptcy Code;
(b) prepare on behalf of the Debtors all necessary and
appropriate applications, motions, draft orders, other
pleadings, notices, schedules and other documents, and
reviewing all financial and other reports to be filed in
the Chapter 11 cases;
(c) advise the Debtors concerning, and preparing responses to,
applications, motions, other pleadings, notices and other
papers that may be filed by other parties in the Chapter
11 cases;
(d) advise the Debtors with respect to, and assisting in the
negotiation and documentation of, financing agreements and
related transactions;
(e) review the nature and validity of any liens asserted
against the Debtors' property and advising the Debtors
concerning the enforceability of the liens;
(f) advise the Debtors regarding their ability to initiate
actions to collect and recover property for the benefit
of their estates;
(g) advise and assist the Debtors in connection with any
commercial transactions, including the Fiat Transaction
or other similar sale transaction;
(h) advise and assist the Debtors in negotiations or
communications with the Debtors' suppliers, dealers,
unions, debt holders and other stakeholders, and
government regulatory bodies;
(i) advise the Debtors concerning executory contracts and
unexpired lease assumptions, assignments and rejections
and lease restructurings and recharacterizations;
(j) advise the Debtors in connection with the formulation,
negotiation and promulgation of a Chapter 11 plan or
plans, and related transactional documents;
(k) assist the Debtors in reviewing, estimating and resolving
claims asserted against the Debtors' estates;
(l) commence and conduct litigation necessary and appropriate
to assert rights held by the Debtors, protect assets of
the Debtors' Chapter 11 estates or otherwise further the
goal of completing the Debtors' successful Chapter 11
process, and to defend against any litigation brought
against the Debtors;
(m) provide non-bankruptcy services for the Debtors to the
extent requested by the Debtors; and
(n) perform all other necessary and appropriate legal services
in connection with the Chapter 11 cases on behalf of the
Debtors.
The Debtors will pay Jones Day for its legal services based on the
firm's hourly rates:
Professionals Low High
------------- --- ----
Partners $425 $950
Of Counsel $375 $800
Counsel $300 $625
Associates $175 $625
Staff Attorneys $225 $450
Paralegals $150 $350
Project Assistants and
Other Staff $50 $375
The Jones Day professionals currently expected to spend
significant time on the Debtors' cases and their hourly rates are:
Professional Position Hourly Rate
------------ -------- -----------
John R. Cornell Partner $950
Corinne Ball Partner $900
David G. Heiman Partner $900
Thomas F. Cullen Partner $875
Jere R. Thomson Partner $875
Jeffrey B. Ellman Partner $725
Richard H. Engman Partner $725
Candace A. Ridgway Partner $725
Marilyn A. Sonnie Partner $725
Brett P. Barragate Partner $700
John K. Kane Partner $700
Kevyn Orr Partner $700
Gregory Shumaker Partner $700
Pedro Jimenez Partner $675
Mark Cody Partner $650
Richard Shaw Partner $600
John E. Mazey Partner $500
Robert W. Hamilton Of Counsel $700
Veerle Roovers Associate $600
Lisa Rothman Jesner Associate $575
Colleen E. Laduzinski Associate $550
Benjamin Rosenblum Associate $450
Jason Cover Associate $425
Nathan P.J. Lebioda Associate $425
Thomas A. Wilson Associate $400
Amanda Gabai Associate $375
Joseph Tiller Associate $375
Nicole H. Adolphus Associate $350
Justin F. Carroll Associate $315
Haben Goitom Associate $315
Nicholas C. Kamphaus Associate $315
Denise M. Hirtzel Paralegal $275
The Debtors will also reimburse Jones Day for its necessary out-
of-pocket expenses.
A full-text copy of the parties' engagement letter is available
for free at:
http://bankrupt.com/misc/Chrysler_JonesDay_EngagementLetter.pdf
On November 21, 2008, the Debtors provided Jones Day with an
advance payment of $1,000,000 to establish a retainer pay for
legal services rendered or to be rendered by the firm in
connection with the Debtors' efforts to pursue a possible out-of-
court restructuring and in preparation for the commencement of the
Chapter 11 cases. Pursuant to the Engagement Letter, the Debtors
replenished and maintained the Retainer through the provision of
subsequent deposits:
Date of Amount of
Replenishing Deposits Replenishing Deposits
--------------------- ---------------------
December 8, 2008 $1,000,000
December 19, 2008 $3,000,000
January 28, 2009 $2,000,000
February 27, 2009 $1,000,000
April 14, 2009 $2,000,000
April 27, 2009 $100,050
April 27, 2009 $3,000,000
April 29, 2009 $1,548,245
April 29, 2009 $1,500,000
April 29, 2009 $2,719,125
The source of the Initial Deposit and all of the Replenishing
Deposits comprising the Retainer was the Debtors' operating cash,
Ms. Leese discloses.
From time to time, she notes, Jones Day has applied the Retainer
proceeds to actual fees and expenses and, in one instance
immediately prior to the Petition Date, to estimated fees and
expenses. These Prepetition Draws totaled $13,098,207. As of the
Petition Date, $5,769,213 of the Retainer, as maintained through
the Replenishing Deposits, remained unapplied.
Upon the conclusion of Jones Day's representation of the Debtors,
Ms. Leese continues, Jones Day will apply any remaining portion of
the Retainer against any unpaid fees or unreimbursed
disbursements, with any unapplied portion of the Retainer to be
promptly returned to the Debtors. She notes that Jones Day is in
the process of adjusting the Retainer amount downwards. The Firm
has not yet reconciled its actual fees and expenses through the
Petition Date against estimated fees and expenses through the
Petition Date. Any Prepetition Draws in excess of Jones Day's
actual fees and expenses for the applicable invoice period will be
added to, and treated as part of, the Retainer. Any shortfall in
the Prepetition Draws compared to Jones Day's actual fees and
expenses will result in an application, and corresponding
reduction in the amount, of the Retainer, she notes. Accordingly,
the amount of the Retainer remaining after (a) the reconciliation
of any estimated Prepetition Draws and (b) the application of the
Prepetition Draws and the Retainer to Jones Day's actual fees and
expenses for the prepetition period, may differ from the amount
stated, she says.
According to Ms. Leese, Jones Day expects to (a) complete its
reconciliation of prepetition fees and expenses actually incurred
through the Petition Date no later than the filing of its first
interim fee application in the Chapter 11 cases; and (b) make a
corresponding adjustment to the amount and application of the
Retainer described on or about that date.
Corinne Ball, Esq., a partner at Jones Day, assures the Court that
Jones Day is a "disinterested person," as defined in Section
101(14) of the Bankruptcy Code and as required by Section 327(a).
Jones Day also submitted to the Court a list of entities that
Jones Day has represented in the past two years, or currently
represents, in matters unrelated to the Debtors' Chapter 11 cases.
A list of these entities is available for free at
http://bankrupt.com/misc/Chrysler_JonesDayApp_Sched2.pdf
Jones Day Fees Entitled to Superpriority Status,
Says Chrysler
Chrysler LLC asks Judge Gonzalez to order that "Jones Day's fees
and expenses incurred in its representation of the [automaker be]
granted superpriority status, pursuant to section 364(c)(1) of the
Bankruptcy Code."
That's an unusual provision that doesn't appear in papers filed by
Tribune Company, Lehman Brothers, Boscov's or Tarragon
Corporation, when they hired Jones Day in their chapter 11 cases.
In its application to hire Jones Day, Holly E. Leese, Chrysler's
Senior Vice President and General Counsel, tells Judge Gonzalez:
"It is anticipated that the estate professionals
retained in these cases, including Jones Day, will
incur significant fees in connection with the Debtors'
efforts to preserve, protect and maximize the value of
their assets under difficult and challenging
circumstances. As such, Jones Day and other estate
professionals will be extending significant amounts of
credit to the Debtors to assist them in their efforts
to pursue available opportunities in these chapter 11
cases. Under the circumstances, the fees and expenses
of Jones Day and other estate professionals should be
granted superpriority status pursuant to section
364(c)(1) of the Bankruptcy Code. Granting
superpriority status will ensure that Jones Day and
other estate professionals are not placed at
unnecessary risk of funding the Debtors' chapter 11
cases.
"Moreover, any fees and expenses will remain in all
cases subject to review and allowance under sections
328, 330 and 331 and the other applicable requirements
established by the Bankruptcy Code, the Bankruptcy
Rules, the Local Bankruptcy Rules, U.S. Trustee
Guidelines and orders of this Court."
Section 364(c)(1) of the Bankruptcy Code allows a debtor to borrow
money following a bankruptcy filing and direct that the
postpetition lender be repaid in full before payment of any other
administrative expense arising under Sections 503 or 507 of the
Bankruptcy Code. Debtor-in-possession lenders typically receive
superpriority administrative claim status for the dollars they
lend to debtors. Ordinarily, professionals employed and retained
in a bankruptcy case obtain comfort that their fees and expenses
will be paid by obtaining a so-called carve-out from the DIP
lender's superpriority lien to earmark a fixed dollar amount for
payment of professional fees in the event of a meltdown.
The employment arrangement proposed by Chrysler makes Jones Day's
fees:
-- pari passu with:
(a) the United States Department of the Treasury
and Export Development Canada under the terms
of the $4.5 billion Second Lien Secured Priming
Superpriority Debtor-In-Possession Credit
Agreement dated as of April 30, 2009, and
delivered to the Bankruptcy Court on May 1 (to
the extent the traditional $10 million Carve-
Out established under Sections 1.l and 3.15 of
the DIP Facility wouldn't, in the event of a
DIP Loan default, cover fees of all
professionals representing Chrysler and any
official creditors' committees and the U.S.
Trustee); and
(b) all intercompany claims (granted superpriority
status by Judge Gonzalez at May 1 hearing); and
-- senior to all other administrative priority claims
arising in Chrysler's chapter 11 proceeding.
Chrysler's request appears to be a matter of first impression for
Judge Gonzalez, and may draw comment from United States Trustee's
office. The issue for Jones Day, as described by Thomas J.
Salerno, Esq., and Jordan A. Kroop, Esq., in BANKRUPTCY LITIGATION
AND PRACTICE: A PRACTITIONER'S GUIDE, Sec. 8.13 at 8-40 (2006-1
Supp.), is payment of the firm's fees and expenses in the event
Chrysler's estate turns out to be administratively insolvent, and
possible disgorgement of interim compensation paid to the firm
under Sec. 331 of the Bankruptcy Code. Jones Day doesn't appear
to want to face that risk.
Chrysler's application to employ Togut, Togut & Segal LLP as
conflicts counsel does not contain a request that the firm's fees
and expenses be accorded superpriority status.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Proposes to Maintain Existing Bank Accounts
---------------------------------------------------------
Chrysler LLC and its affiliates seek authority from the U.S.
Bankruptcy Court for the Southern District of New York to maintain
their existing bank accounts.
In connection with their cash management system, the Debtors
maintained approximately 96 foreign and domestic bank accounts in
the ordinary course of their businesses. They manage cash
receipts and disbursements through these bank accounts. The Bank
Accounts include concentration, collection, disbursement, demand
deposit, payroll and benefits, and other special purpose accounts.
A list of the Chrysler Bank Accounts is available for free at:
http://bankrupt.com/misc/Chrysler_List_BankAccounts.pdf
Corinne Ball, Esq., at Jones Day, in New York, proposed counsel to
the Debtors, assures the Court and parties-in-interest that all of
Chrysler's domestic Bank Accounts are maintained at financial
institutions insured by the Federal Deposit Insurance Corporation
or the Federal Savings and Loan Insurance Corporation.
The Debtors utilized the Bank Accounts, on a regular basis, as
part of the Cash Management System. Thus, to avoid substantial
disruption of their ability to manage cash, the Debtors seek the
Court's authority to continue using their existing Bank Accounts
and allow those Accounts to be maintained with the same account
numbers to assist the Debtors in accomplishing a smooth transition
to Chapter 11.
The Debtors also Judge Gonzalez to authorize their banks to honor
their requests to open or close any bank account, provided that
any new domestic account is established at a bank insured with the
FDIC or the FSLIC and that is organized under the laws of the
United States; or in the case of accounts that may carry a balance
exceeding insurance limitations, that new domestic account must
also be on the list of authorized bank depositories for the
Southern District of New York.
"To protect against the possible inadvertent payment of
prepetition claims, the Debtors immediately will advise their
Banks not to honor checks issued prior to the Petition
Date, except as otherwise expressly permitted by an order of the
Court and directed by the Debtors," Ms. Ball assures Judge
Gonzalez. She maintains that the Debtors have the capacity to
draw the necessary distinctions between prepetition and
postpetition obligations and payments without closing the Bank
Accounts and opening new ones.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Seeks Waiver of Section 345 Deposit Requirements
--------------------------------------------------------------
All excess funds generated by Chrysler LLC and its affiliates are
historically maintained in domestic bank accounts insured by the
United States through Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation, or invested in low
risk investments through the Debtors' investment accounts.
Section 345(b) of the Bankruptcy Court provides that any deposit
or other investment made by a debtor, except those insured or
guaranteed by the United States or by a department, agency or
instrumentality of the United States or backed by the full faith
and credit of the United States, must be secured by either a bond
in favor of the United States that is secured by the undertaking
of a corporate surety approved by the United States Trustee for
the relevant district or the deposit of securities of the kind
specified in Section 9303 of the Money and Finance Code. Section
345(b) provides further, however, that a bankruptcy court may
allow the use of alternatives to approved investment guidelines
"for cause."
Although their Investment Guidelines may not strictly comply with
the approved investment guidelines identified in Section 345 in
all cases, the Debtors' deposits and investments nevertheless are
safe, prudent, and designed to yield the maximum reasonable net
return on the funds invested, taking into account the safety of
the deposits and investments, proposed counsel to the Debtors,
Corinne Ball, Esq., at Jones Day, in New York, tells the Court.
Accordingly, the Debtors seek the Court's authority to invest and
deposit funds in accordance with their Investment Guidelines,
notwithstanding that the guidelines may not strictly comply in all
respects with the approved investment guidelines set forth in
Section 345.
The Debtors also ask Judge Gonzalez to authorize and direct
applicable institutions to accept and hold or invest funds, at
their direction, in accordance with their Investment Guidelines.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: To Grant Admin. Claims for Postpetition Deliveries
----------------------------------------------------------------
Numerous suppliers regularly provide goods and services to
Chrysler LLC. As of their bankruptcy filing, Chrysler and its
affiliates have outstanding prepetition purchase orders or
outstanding releases under existing purchase orders with their
suppliers.
Proposed counsel to the Debtors, Corinne Ball, Esq., at Jones Day,
in New York, tells the U.S. Bankruptcy Court for the Southern
District of New York that the Debtors are currently pursuing the
prompt approval and consummation of their transaction with Fiat
S.p.A. or a similar transaction with a competing bidder. Pending
that sale, the Debtors have idled most operations as they conserve
their resources while at the same time ensuring that the
facilities are prepared to resume normal production schedules
quickly upon the completion of a sale and consumers are not
impacted by the filing, she cites. Immediately upon the
consummation of the Fiat transaction, the Debtors anticipate their
manufacturing and assembly facilities to resume normal operations
under the ownership of new Chrysler.
"Under the circumstances, in many cases, the Debtors will not wish
to take delivery of additional goods or receive additional
services after the Petition Date while their manufacturing
facilities are idled," Ms. Ball says.
The Debtors, however, aver that they continue to operate certain
parts depots and are maintaining their facilities to be prepared
to restart quickly in connection with a sale. In support of these
activities, the Debtors may wish to have certain goods delivered
to them or to have certain services performed after the filing of
their Chapter 11 cases to help preserve and maximize the value of
their assets, according to Ms. Ball.
Under these circumstances, the Debtors expect their suppliers to
perceive a risk that they will not be paid or may be treated as
prepetition general unsecured creditors for the cost of any
shipments made or services provided after the Petition Date. This
perceived risk, Ms. Ball notes, may be enhanced given the idling
of the Debtors' operations. In effect, she continues, the
suppliers may even refuse to ship goods or provide services to the
Debtors.
Accordingly, the Debtors ask the Court to issue a ruling pursuant
to Sections 105, 363(c) and 503(b)(1)(A) of the Bankruptcy Code
confirming:
(i) the administrative expense priority status of the Debtors'
undisputed and liquidated obligations to suppliers and
service providers for the postpetition delivery of goods
and services; and
(ii) that the Debtors have authority to pay those expenses in
the ordinary course of their business.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Seeks to Honor Vehicle Warranty Programs
------------------------------------------------------
On the ordinary course of their business, Chrysler LLC and its
units maintains programs to establish good relationship with
customers:
A. Warranty Programs
* General Warranty Programs -- The Debtors' basic warranty
on vehicles sold in the U.S. which generally covers (a)
all necessary repairs, as well as related labor costs,
arising during the earlier of three years or 36,000 miles
after purchase, (b) certain corrosion-related repairs and
(c) certain other vehicle repairs for the lifetime of the
vehicle.
* Recall Services and Good Will Repairs -- The Debtors
sometimes are required by federal law to institute recall
campaigns to correct suspected defects in vehicles. From
time to time, the Debtors initiate their own service
campaigns to repair vehicles or have their vehicles
checked by authorized repair technicians for certain
potential defects. To build and maintain customer "good
will," the Debtors in limited instances authorize and pay
for certain repairs that are not expressly covered under
an existing warranty. All of the recall services or good
will repairs are treated and administered by the Debtors
like other Warranty Program obligations.
* Warranty Programs Related to International Sales -- In
certain instances, warranty claims asserted by end
consumers and the costs of recall-related repairs in
foreign countries filter up through the distribution
chain and are ultimately honored by the Debtors. In
these cases, a foreign consumer's warranty claim is
honored, or repair work associated with a recall is
performed, by the distributor or dealer in that country,
which are reimbursed by Chrysler International
Corporation, one of the Debtors, for any costs incurred.
The Debtors, in turn, reimburse CIC on a monthly basis
which generally average approximately $3 million.
* Outstanding Warranty Obligations -- Given the length of
the warranties and the delay between their issuance and
the assertion of warranty claims, warranties issued by
the Debtors before the Petition Date give rise to
prepetition contingent claims that may remain contingent
for a number of years. The estimated amount that the
Debtors paid in respect of Warranty Program obligations
either to dealers or to their foreign affiliates in 2008
was between $1.1 billion and $1.5 billion. The Debtors
estimate that the amount of accrued and unsatisfied
obligations under the Warranty Programs as of the
Petition Date was approximately $2.8 billion,
approximately $28.5 million of which has already been
borne by the Debtors' dealers or CIC and is awaiting
reimbursement.
B. Extended Service Programs
* General Extended Service Programs -- Purchasers of new
and used vehicles manufactured by the Debtors have the
option to purchase a vehicle service contract under one
of the Debtors' Extended Service Programs that (a) covers
certain vehicle services and repairs after the regular
Warranty Program has expired or (b) provides enhanced
coverage during the warranty period. Consumers can
purchase the Debtors' extended warranties through an
authorized Chrysler, Jeep or Dodge dealer when the
vehicle is purchased, or may purchase such a warranty
directly from the Debtors pursuant to a subsequent direct
solicitation from the Debtors.
* Outstanding Extended Service Program Obligations --
Because several years can pass between the issuance of
the extended service contracts and the assertion of
claims thereunder, claims under the contracts are
prepetition contingent claims that may remain contingent
for a number of years. The estimated amount that the
Debtors paid under their Extended Service Programs in
2008 was approximately $236 million. The Debtors
estimate that the amount of accrued and unsatisfied
obligations under the Extended Service Programs as of
March 31, 2009 was approximately $980 million.
C. Incentive and Rebate Programs
In connection with the Debtors' global sales and marketing
programs, the Debtors offer their domestic dealers and end
consumers a number of cash allowances, financing programs,
discounts, holdbacks and other incentives to provide dealers:
* dealers an incentive to purchase particular products from
the Debtors based upon a variety of metrics;
* dealers a direct incentive to encourage or assist in the
sale of particular vehicles or products to end consumers;
and
* end consumers an incentive to purchase or lease
particular vehicles from the dealers.
D. Dealer Credits and Allowances
From time to time, the Debtors' dealers may become entitled to
certain credits or allowances from the Debtors, which arise from,
among other things, inadvertent overbilling by the Debtors and the
reconciliation of prior credits and debits issued in the ordinary
course between the Debtors and their dealers.
With respect to the inventory parts that are purchased by the
dealers from the Debtors, the Debtors also provide their dealers
with a number of programs, including:
* credits for damaged parts or the shipment of wrong parts;
* returns from end consumers within a 60-day or 120-day
period; and
* programs designed to encourage dealers to purchase parts
without the fear of having to bear the full cost of those
parts if they become obsolete before they are purchased
by end consumers from the dealers, including (i) an
annual inventory parts allowance equal to a one percent
to two percent of the parts purchased by the dealer to
provide incentives to dealers to stock certain often-used
parts and automatic replenishment order returns and (ii)
automatic replenishment order returns for certain parts
that the Debtors and their dealers agree are
automatically replenished upon orders by end consumers
but which sometimes become obsolete and are then returned
to the Debtors by the dealers.
In addition, from time to time the Debtors issue dealer credits to
resolve issues that arise in connection with the delivery of
vehicles to the Debtors' dealers.
E. Dealer Support Programs and Promotional Allowances
The Debtors often assist the dealers in their advertising and
marketing activities and engage in joint promotional efforts with
their dealers to promote the sale of the Debtors' vehicles to end
consumers. The Debtors designate a certain portion of the invoice
price they charge for vehicles sold to dealers for marketing or
advertising fees, which are collected and passed on by the Debtors
to local and regional dealer associations to pay for the costs of
advertising for the dealerships in a particular market. At times,
the Debtors provide dealers with matching funds to support certain
specified advertising programs or otherwise support dealer
advertising activities. In addition, the Debtors act as a
collecting agent with respect to certain funds for individual
dealer advertising expenses and for the cost of certain employee
benefit programs.
In 2008, the Debtors estimate that they provided $800 million to
their dealers and the dealer associations representing their
dealers for advertising and employee benefit programs. The
Debtors estimate that approximately $54 million in were
outstanding as of the Petition Date.
The Debtors are pursuing the prompt approval and consummation of a
transaction with Fiat S.p.A. or a similar going concern
transaction with a competing bidder. During the period between
the Petition Date and the anticipated consummation of a Sale
Transaction, the Debtors intend to make every effort to minimize
the adverse effects of their Chapter 11 filing on the transition
of the Debtors' assets to New CarCo Acquisition LLC, a newly
established Delaware limited liability company that currently is
an indirect wholly-owned subsidiary of Fiat, or other purchaser.
Corinne Ball, Esq., at Jones Day, in New York, the Debtors'
proposed counsel, tells the U.S. Bankruptcy Court for the Southern
District of New York it is essential for the Debtors to continue
honoring the Customer Obligations, most of which are provided
through the Debtors' network of dealers. She notes that despite
the temporary idling of most of the Debtors' operations, dealers
have substantial inventories and, pending a sale, are expected to
(a) continue selling and servicing vehicles manufactured by the
Debtors, and (b) incurring related obligations for warranties and
incentives that typically would be satisfied by the Debtors in the
ordinary course of business.
Without the payment of warranty and incentive payments to dealers,
Ms. Ball says dealers will have difficulty surviving until the
consummation of a sale. She added that without the dealers, no
sale may be possible.
Ms. Ball further contends that satisfying consumer warranty claims
without interruption is imperative to preserving going concern
value. She explains that during a period where all aspects of the
Debtors' businesses are certain to be under intense public
scrutiny, any interruption in the ability of consumers to have
their vehicles maintained and repaired would threaten a collapse
in confidence in the Debtors' brands.
Accordingly, pursuant to Sections 105(a) and 363(c) of the
Bankruptcy Code, the Debtors seek authority to:
(a) continue their warranty programs and extended service
programs, and to perform their obligations related thereto
in the ordinary course of business; and
(b) perform their prepetition obligations to their customers;
and continue, renew, replace, modify or terminate Customer
Programs as they see fit in their business judgment, or
implement other new customer programs, in the ordinary
course of their businesses and without further approval of
the Court.
Debtors to Set-Off Debts Owed to Dealers
The Debtors also ask the Court to permit the ordinary course set-
off or recoupment of amounts owed by the Debtors to individual
dealers and by individual dealers to the Debtors as of the
Petition Date.
In the ordinary course of their business transactions with the
dealers in the United States, the Debtors and the dealers track
credits and debits on an electronic ledger identified as the
"Parts Statement."
Ms. Ball relates that although designated as the "Parts
Statement," suggesting that it addresses only costs for vehicle
parts, the accounting mechanism serves to account for most of the
amounts paid by the Debtors to the dealers or paid by the dealers
to the Debtors in the United States. She notes that each of the
amounts identified as obligations that may be owed by the Debtors
to their U.S. dealers, like various forms of sales incentives,
warranty program obligations and extended service program
obligations, among other items, are listed as debits on the "Parts
Statement" while amounts, including amounts paid by the dealers to
the Debtors for non-warranty "Mopar" service parts and accessories
and for the wholesale price of the service contracts, among other
items, are listed as credits on the "Parts Statement."
Ms. Ball submits that the amounts to be set off are mutual
obligations of a Debtor and a dealer that would be subject to set-
off under state law and Section 553 of the Bankruptcy Code.
C. Program Checks
The Debtors further ask the Court to authorize and direct all
applicable banks and other financial institutions, when asked by
the Debtors, to receive, process, honor and pay any and all checks
presented for payment of, and to honor all fund transfer requests
made by the Debtors related to, customer obligations, whether the
checks were presented or fund transfer requests were submitted
before, on or after the Petition Date, provided that sufficient
funds are available in the applicable accounts to make the
payments.
Ms. Ball tells the Court that the checks are drawn on identifiable
disbursement accounts and can be readily identified as relating
directly to the authorized payment of Customer Obligations.
Accordingly, she believes that checks other than those relating to
authorized payments will not be honored inadvertently.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Proposes to Pay Outstanding Prepetition Wages
-----------------------------------------------------------
Chrysler LLC and its affiliates currently employ approximately
38,500 hourly and salaried employees, including 30,800 union
employees in the United States, as well as approximately 70
employees currently living overseas. These employees perform a
variety of critical functions for the Debtors' businesses,
including manufacturing, procurement and supply, sales, marketing,
accounting, administration, budgeting and planning, environmental
health and safety, finance, human resources and communication,
legal, product research and development, training and compliance.
In addition to the Regular Employees, the Debtors also rely on a
number of other individuals to provide essential employee
services. The Additional Workforce consists of about 2,300
contract workers who are employed by various service providers
specializing in providing skilled employees on an as-needed basis.
The Regular Employees' skills and their specialized knowledge and
understanding of the Debtors' infrastructure, assets and
operations, as well as their relationships with dealers, vendors
and other third parties, are essential to the administration of
the Debtors' Chapter 11 cases, the preservation of the Debtors'
businesses and the Debtors' ability to consummate a Sale
Transaction on a going concern basis that maximizes value
available for stakeholders, Corinne Ball, Esq., at Jones Day, in
New York, proposed counsel to the Debtors, tells the U.S.
Bankruptcy Court for the Southern District of New York.
The Debtors estimate that, as of the Petition Date, approximately
$14.5 million in Prepetition Compensation was owed to the Regular
Employees. The Debtors also estimate that the Additional
Workforce Costs owing to Third-Party Employers as of the Petition
Date total about $32.1 million.
In addition, the Debtors owe the Regular Employees compensation
with respect to benefit plans, charitable contributions, health
and dental benefits, life insurance, unused vacation pay, and
costs for processing the workers' benefits and insurance. On top
of the Regular Employee wages and Additional Workforce costs, the
Debtors estimate that they owe more than $19 million with respect
to workers' benefits and insurance:
Regular Employees' business expenses $2,200,000
Deductions from Regular Employees 11,000,000
Tax Withholdings 9,400,000
Pay-roll related processing costs 6,800,000
After the Petition Date, the Debtors will idle their operations to
conserve cash while pursuing their sale transaction with Fiat
S.p.A. or other similar transaction.
In the interim, the Debtors also intend to place the majority of
their unionized workforce on lay-off status with benefits under
the Debtors' collectively bargained supplemental unemployment
benefits plan that coordinates with state system benefits.
Completing a Sale Transaction quickly is essential to preserve
going concern value for the benefit of stakeholders, Ms. Ball
asserts. To achieve the goal and complete a successful Chapter 11
process, the Debtors require the ongoing dedication, support,
knowledge, loyalty and cooperation of their workforce.
Chrysler's employees, Ms. Ball contends, will be instrumental to
the bankruptcy process as they (i) assist in the operation of
parts depots to ensure an uninterrupted supply of service parts to
customers, (ii) maintain and secure facilities, and (iii) preserve
the value of operating assets pending the sale. She adds that
administrative employees must take on the additional burdens of
assisting in the administration of the Chapter 11 process and
preparing for the proposed sale.
The Debtors will also look to the employees on lay-off to assist
in the critical task of restarting operations to consummate a Sale
Transaction. Under the circumstances, Ms. Ball insists that
honoring the immediate obligations to the Debtors' workforce is
essential.
For these reasons, the Debtors seek authority from the U.S.
Bankruptcy Court for the Southern District of New York, in
accordance with their policies and in their sole discretion, to
pay:
(a) certain prepetition wages, salaries, overtime pay,
incentive pay, contractual compensation, sick pay,
vacation pay, holiday pay and other accrued compensation
to their more than 38,500 regular employees;
(b) prepetition business expenses, including travel, lodging,
moving and other relocation expenses and other
reimbursable business expenses to Regular Employees;
(c) prepetition contributions to, and benefits under, the
Regular Employees' benefit plans, including self-insured
plans, third-party insured plans and company-sponsored
benefit programs;
(d) prepetition payroll deductions and prepetition
withholdings with respect to Regular Employees;
(e) certain prepetition costs for additional workforce, which
consists of approximately 2,300 contract workers employed
by various service providers specializing in providing
skilled employees on an as-needed basis; and
(f) all costs and expenses incident to the payments and
contributions, including payroll-related taxes and
processing costs.
Moreover, the Debtors ask the Court to authorize and direct banks
and other financial institutions to receive, process and honor all
checks presented, or fund transfer requests for payment to the
Regular Employees, taxing authorities, and other parties relating
to their prepetition obligations, provided that sufficient funds
are available in applicable accounts to make the payments.
The Debtors represent that their checks are drawn on identifiable
payroll and disbursement accounts, and can be readily identified
as relating directly to the authorized payment of prepetition
obligations in connection with employee compensation and benefits.
They believe that checks other than those relating to authorized
payments will not be honored inadvertently.
The Debtors assure Judge Gonzalez that they have anticipated
access to sufficient debtor in possession financing to pay all of
their prepetition obligations.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Chap. 11 Filing Elicits Mixed Reactions
-----------------------------------------------------
While the Obama Administration expressed optimism about Chrysler's
future, many are skeptical as to whether the government-led
restructuring of the automaker would prove successful.
David E. Sanger of The New York Times says there's reason for
skepticism as the structure of the new Chrysler sets the stage for
a conflict between current workers and retirees. He points out
that while Chrysler's workers are desperate to preserve their job
security, their wages and their generous health care benefits,
built up over years of negotiations, it is Chrysler's retirees who
will hold a seat on the new company's board, representing the
interests of a dwindling and expensive retirement health plan.
"There's a potential conflict there, absolutely," one of Mr.
Obama's aides had conceded, notes Mr. Sanger.
With regards the deal with Italian automaker Fiat, Mr. Sanger
noted that when Chrysler was controlled by Daimler-Benz, one of
Europe's most successful luxury carmakers, the potential of great
crossborder synergies never materialized.
John Ivison of the Financial Post, citing Toronto-based automotive
analyst Dennis DesRosiers, said "three near miracles" will be
required if the Fiat deal is to work.
"First, Americans have to embrace smaller cars, which they never
have. Second, they have to buy Italian small cars, which they
never have. Third, Fiat/Chrysler has to find a way to make small
cars profitable in North America, which no one, including the
Japanese, has been able to do," Mr. DesRosiers said.
"[T]he Fiat deal is great, but a lot has to happen for it to make
a financial difference for Chrysler," Mr. DesRosiers added.
Administration staff members have been telling the press that the
Chapter 11 process might only take a little more than a month.
"Pigs also fly," counters Douglas A. McIntyre of 24/7wallst.com.
Mr. McIntyre contends that there is no guarantee that a court will
approve 100% of the plans of the government, the UAW, or Fiat.
With $6.9 billion in debt on the line, Chrysler's creditors have
every reason to push an expensive and prolonged legal battle, he
added.
The Wall Street Journal further said that developments sparked
fresh questions about Chrysler's prospects for quickly exiting
from bankruptcy protection and about the web of suppliers and
dealers that are linked to the company. The Journal's Alex P.
Kellogg and Jeff Bennett pointed out that plants were idled after
suppliers halted shipments, while dealers were squeezed when
Chrysler Financial stopped providing cut-rate loans.
Chrysler was preparing to shut down all of its vehicle assembly
plants for 60 days on Monday. But on Friday two plants in the
U.S. and two in Canada were forced to cease production because a
few suppliers stopped shipping parts or materials, says the
report.
Bankruptcy adds a new element of risk to the government-led
restructuring of Chrysler, notes Mr. Bennett. Since Chrysler is
halting production, shipments of parts and materials from
suppliers to its 12 North American assembly plants will cease,
putting jobs at suppliers as well as at Chrysler on the line.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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 Pushes Japan to Protect Suppliers
----------------------------------------------------------
Japan's Economy, Trade and Industry Minister Toshihiro Nikai
assured Japanese auto parts suppliers that the government will
take every necessary step to mitigate the impact of Chrysler LLC's
on them, according to a report by the Kyodo News International
Inc.
Mr. Nikai assured that the government will respond immediately but
did not give comment in detail on whether the government will
offer aid to the suppliers, mainly small and midsized firms,
through state-backed financial institutions, the report further
said.
Mr. Nikai also said that many Japanese firms had expected such an
emergency situation and have considered how to protect themselves.
Meanwhile, Finance Minister Kaoru Yosano said the impact from
Chrysler's bankruptcy will be "extremely small" since the U.S. and
Canadian governments have financially supported the carmaker,
Kyodo News further reported.
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.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Lost $16.8 Bil. in 2008, May Lose $4.7 Bil. in 2009
-----------------------------------------------------------------
Court documents say that Chrysler LLC lost about $16.8 billion
last year and expects to lose $4.7 billion this year.
Chrysler said in court documents that it believes it can become
profitable in 2012 if it gets through the Chapter 11 process
quickly and proceeds with its planned alliance with Fiat SpA.
Neal E. Boudette at The Wall Street Journal reports that Chrysler
said in an income statement forecast submitted to the court that
it expects to earn $100 million in 2012 and $1.6 billion in 2013.
According to WSJ, Chrysler expects its net income to increase to
$3 billion by 2016.
WSJ relates that the income statement was submitted along with an
affidavit from Robert Manzo, executive director of the Capstone
Advisory Group LLC, a consultancy that started working with
Chrysler in November 2008 and helped the Company prepare for its
bankruptcy filing last week. According to the report, the
affidavit was submitted as part of a bid to urge the court to
speed up Chrysler's stay in bankruptcy court.
WSJ notes that many of Chrysler's forecasts are based on its
emergence from Chapter 11 bankruptcy by July 1.
Will Launch Ad Campaign to Attract Buyers
Jeff Bennett at WSJ relates that Chrysler will launch a marketing
campaign on TV and print to reassure clients and potential buyers
that the Company is still operating and would bounce back from its
bankruptcy filing. Citing dealers who were briefed on the
campaign, WSJ states that Chrysler will also back its ads with
incentives starting May 5.
WSJ quoted Chrysler sales and marketing chief Steve Landry as
saying, "We want to establish a level of trust and confidence that
customers can still buy cars and trucks from us and it's business
as usual. We are working to exit bankruptcy as fast as we can."
WSJ relates that Chrysler's vehicles sales dropped 48% in April
2009. Chrysler said on Friday that its vehicles sales decreased
48% in April to 76,682 cars and light trucks, according to WSJ.
WSJ states that many dealers suffered as showroom traffic dropped
in the past few weeks due to expectations of a bankruptcy filing.
Clients have been asking about the bankruptcy filing, and
salespeople were uneasy until news reports indicated that Chrysler
could emerge from bankruptcy relatively quickly, WSJ reports,
citing sales associate Armando Bulnes.
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 U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker'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.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
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.
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.
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: Salaried Retirees to Seek Committee Appointment
-------------------------------------------------------------
The National Chrysler Retirement Organization has retained the
Chicago law firm of Stahl Cowen Crowley Addis LLC to represent
non-union retirees in Chrysler's bankruptcy proceedings in New
York. Trent Cornell, Esq., leads the team that has represented
retirees in several other large bankruptcies, including recent
cases involving Dana, Intermet and Delphi.
Cornell will petition the Bankruptcy Court this week in New York
to form a Retiree Committee through Section 1114 of the bankruptcy
code. Section 1114 was enacted by Congress in the wake of several
high-profile bankruptcies where courts had allowed companies
(notably LTV/Bethlehem Steel) to summarily cut the healthcare
benefits of thousands of retirees and their dependents. It is
Section 1114 that gives non-union retirees a voice in a
bankruptcy.
"There are nearly 16,000 salaried retirees of Chrysler and their
families who are dependent on the healthcare and pension benefits
they earned," said NCRO President Chuck Austin. NCRO is the only
representative of Chrysler salaried retirees, and its members
represent a wide range of disciplines, from clerical and
administrative staff to engineers to managers.
"Salaried retirees at Chrysler are caught between a rock and a
hard place," added Mr. Austin. "On one hand, in bankruptcy
Chrysler will seek to cut off every liability that it can. On the
other, the United Auto Worker-represented retirees have protection
and government support that salaried retirees don't have. Our goal
is to assure balanced and even treatment for all retirees."
Mr. Austin pointed out that, while President Obama praised the UAW
for sacrificing benefits, Chrysler has reduced or canceled
compensation and benefits for its non-union employees and retirees
over a period of many years, in an effort to help the Company
control costs and become more competitive.
Last year, Chrysler salaried retirees were the only group among
retirees or employees to lose life insurance. In January 2007,
salaried retirees were asked to share premium increases according
to ability to pay (100% for high pension earners). Union retirees
will begin to pay premiums for their health care coverage when the
VEBA goes into effect in 2010.
On average, Chrysler salaried employees in 2009 paid about one-
third of their total health care bill (including premiums and out-
of-pocket costs such as deductibles and co-insurance), about three
times the rate paid by UAW employees, according to Chrysler data.
Similar comparisons for retirees are difficult to access, said Mr.
Austin, but would be "in the same neighborhood."
Mr. Austin did praise the UAW for its part in attempting to avoid
bankruptcy. "They came to the party in a big way," he said. "We
don't want the UAW package; we just want to be treated fairly."
Cornell added that a Salaried Committee would help standardize
treatment of all retirees, but is critical to those who are
vulnerable. "In some cases, especially for high-risk elderly
retirees, losing or compromising health care could have serious
consequences," he said. "We hope that Judge Gonzalez will uphold
the intent of Section 1114 by giving these 16,000 retirees and
their families an opportunity to be heard and to defend
themselves."
On the Net: http://www.ncro.org/
http://www.stahlcowen.com/
http://www.chryslerretirees.com/
Contacts: Mike Aberlich
Tel: (248) 889-3481
Trent Cornell, Stahl Cowen
Tel: (312) 641-0060
CHRYSLER LLC: S&P Changes CreditWatch on 'CCC-' Rating to Negative
------------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised the
CreditWatch status on S&P's 'CCC-' long-term counterparty credit
rating on Chrysler to negative from developing. The rating was
originally placed on CreditWatch Developing on Dec. 23, 2008.
"The CreditWatch revision follows the announcement that GMAC LLC
has entered into an agreement with Chrysler," said Standard &
Poor's credit analyst John K. Bartko, C.P.A. GMAC will be the
preferred provider of new wholesale financing for Chrysler dealer
inventory and has a four-year agreement to provide incentivized
retail financing with limited exclusivity. According to the
company, GMAC has not acquired the existing assets or liabilities
of Chrysler.
There remains a significant amount of uncertainty regarding the
fate of Chrysler as a result of this agreement, and S&P will
therefore continue to monitor developments as they occur.
However, at this time S&P believes the developments have removed
the upgrade possibility incorporated in the previously assigned
developing outlook. In S&P's opinion, Chrysler's operating
prospects have dimmed. S&P will resolve the CreditWatch within 90
days as more clarity is brought to Chrysler's operating situation.
CLEAN HARBORS: Moody's Affirms Corporate Family Rating at 'Ba3'
---------------------------------------------------------------
Moody's Investors Service affirmed the Ba3 corporate family and
probability of default ratings of Clean Harbors, Inc. upon the
April 29, 2009 announcement of the planned acquisition of Eveready
Inc. (not rated by Moody's). Moody's lowered its rating on Clean
Harbors' first lien senior secured credit facilities to Ba1 from
Baa3 and its rating on the second lien senior secured notes to B1
from Ba2 in consideration of the changes in the company's capital
structure. The ratings outlook is stable.
The affirmation of the CFR and PDR reflect Moody's belief that
Clean Harbor's credit profile would remain supportive of the Ba3
rating category after the combination of Eveready Inc.'s
operations. The transaction values Eveready at approximately $387
million, about 3.8 times 2008 EBITDA or about 4.5 times Moody's
estimate of 2009 EBITDA. Moody's expects the purchase price will
be funded with $49 million of cash on hand, the issuance of 2.4
million new common shares and the assumption of about $220 million
(US$equivalent) of debt. "Moody's believes the acquisition
enhances Clean Harbor's competitive and market positions as it
broadens its service offerings, customer base and geographic
coverage," said Moody's Analyst Jonathan Root. Moody's expects
proforma metrics to modestly weaken, diminishing some of the
cushion current metrics provide relative to the median values of
the Ba3 rating category.
The downgrades of the instrument ratings reflect the changed
composition of the company's capital structure as reflected in the
Loss Given Default waterfall. The outstanding balance of the
second lien notes has significantly declined resulting in a lower
proportion of junior ranking obligations in the debt structure.
The consolidation of Eveready's existing first lien senior secured
debt of about $200 million significantly increases first lien debt
obligations in the LGD waterfall. The combined effect of greater
first lien obligations and lesser second lien obligations results
in the respective one and two notch downgrades of the first lien
and second lien senior secured ratings, when applying Moody's LGD
methodology.
The change in the outlook to stable reflects the expected decrease
in the credit metrics cushion, the higher debt balance the
consolidated operations will carry and the potential for the
current North American economic environment to temper free cash
flow generation relative to that of Clean Harbors' current
expectations. Moody's believes that Eveready's performance in
2009 could fall short of Eveready management's current guidance
because of the effect of $50 per barrel oil on Canadian oil sands
activity. Potentially lower demand from the industrial customer
base could also weigh on earnings and cash flows over the near
term.
The Ba3 corporate family rating reflects Clean Harbors' leading
market position in the non-nuclear hazardous waste disposal
services sector. Good customer and geographic diversification of
revenues, the wide scope of service offerings and the broad North
American footprint of its disposal asset base should sustain funds
from operations at levels that comfortably cover debt service
obligations over the course of the economic cycle. High entry
barriers and the potential for outsourcing of disposal by captive
waste generators should also support Clean Harbors' organic growth
prospects. The potential of higher leverage from additional
acquisitions balances the noted supportive rating factors as does
the sizeable amount of environmental remediation obligations,
which Moody's treats as debt when measuring adjusted credit
metrics. However, Moody's does not expect payments on these
obligations to impair cash flow generation since the obligations
relate to multiple sites, have long durations and do not typically
simultaneously settle.
The outlook could be changed to positive or the ratings could be
upgraded if Clean Harbors sustains EBIT to Interest above 3.0
times and Debt to EBITDA below 3.0 times. The outlook could be
changed to negative if EBIT to Interest is sustained below 2.5
times, if Debt to EBITDA approaches 4.0 times or if availability
on the U.S. revolver falls below $25 million.
Clean Harbors' ratings were assigned by evaluating factors Moody's
believe are relevant to the credit profile of the issuer, such as
i) the business risk and competitive position of the company
versus others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected performance of
the company over the near to intermediate term, and iv)
management's track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of Clean Harbors' core industry and Clean Harbors' ratings
are believed to be comparable to those of other issuers of similar
credit risk.
The last rating action was on September 9, 2008 when Moody's
affirmed the Ba3 CFR and PDR ratings, upgraded the rating on the
second lien notes to Ba2 from Ba3 and changed the outlook to
positive.
Downgrades:
Issuer: Clean Harbors, Inc.
-- Senior Secured Bank Credit Facility, Downgraded to a range of
Ba1, LGD2, 27% from a range of Baa3, LGD2, 16%
-- Senior Secured Regular Bond/Debenture, Downgraded to a range
of B1, LGD4, 60% from a range of Ba2, LGD3, 40%
Outlook Actions:
Issuer: Clean Harbors, Inc.
-- Outlook, Changed To Stable From Positive
Clean Harbors, Inc., headquartered in Norwell, Massachusetts, is a
leading provider of environmental services and a leading operator
of non-nuclear hazardous waste treatment facilities in North
America.
CLAUDIA Z. NEWELL: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Claudia Z. Newell
aka Claudia Z Touhey
aka Cee Touhey
aka Cee Newell
Post Office Box 9
Ocracoke, NC 27960
Bankruptcy Case No.: 09-03636
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of North Carolina (Wilson)
Debtor's Counsel: James B. Angell, Esq.
Howard, Stallings, From & Hutson, PA
PO Box 12347
Raleigh, NC 27605-2347
Tel: (919) 821-7700
Fax: (919) 821-7703
Email: jangell@hsfh.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 Ms. Newell's petition, including her list
of 20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nceb09-03636.pdf
The petition was signed by Ms. Newell.
COLUMBIAN PUBLISHING: Files for Chapter 11 Bankruptcy Protection
----------------------------------------------------------------
The Associated Press reports that The Columbian Publishing Co. has
filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy
Court for the Western District of Washington to resolve credit
issues involving a building project.
The Columbian relates that the case involves credit issues with
Bank of America, the primary lender on a $40 million building
project that Columbian Publishing completed in 2008 in Vancouver.
The economy's recent severe downtown was partly to blame for
Columbian Publishing's bankruptcy filing, The AP states, citing
Columbian Publisher Scott Campbell. The AP relates that Columbian
Publishing owes $17 million to the Bank of America and a variety
of unsecured creditors.
Columbian Publishing is a family owned company with 259 employees
that operates The Columbian newspaper Which serves Clark County
and other parts of southwest Washington. It also runs the Web
site http://www.columbian.com/
COLUMBIAN PUBLISHING: Case Summary & 20 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: The Columbian Publishing Company
dba columbianjobfrog.com
dba peopleinneed.com
dba Columbian
dba camaspostrecord.com
dba jobsinthenorthwest.com
dba Columbian Printing Company
dba marketplace.columbian.com
dba Columbian Publishing Company
dba The Columbian
dba clarkcountyhomes.com
dba columbian.com
dba remembersthelens.com
dba artwalkvancouver.com
dba columbiansubscriber.com
dba columbianonline.com
dba columbianshop.com
dba jobsinthenw.com
dba questfortheorb.com
dba Camas-Washougal Post-Record
dba heartofvancouver.com
dba easttownfest.com
dba columbiantalk.com
dba pdxguide.com
POB 180
Vancouver, WA 98666
Bankruptcy Case No.: 09-43133
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Western District of Washington (Tacoma)
Judge: Paul B. Snyder
Debtor's Counsel: Albert N. Kennedy, Esq.
Tonkon Torp LLP
888 SW 5th Ave Ste 1600
Portland, OR 97204-2099
Tel: (503) 221-1440
Email: al.kennedy@tonkon.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://bankrupt.com/misc/wawb09-43133.pdf
The petition was signed by Scott Campbell, owner of the Company.
CONGRESSIONAL HOTEL: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------------
Debtor: Congressional Hotel Corp.
dba The Legacy Hotel & Meeting Centre
fka The Ramada Inn
1775 Rockville Pike
Rockville, MD 20850
Bankruptcy Case No.: 09-17901
Chapter 11 Petition Date: May 3, 2009
Court: District of Maryland (Greenbelt)
Judge: Paul Mannes
Debtor's Counsel: James Greenan, Esq.
jgreenan@mhlawyers.com
McNamee Hosea
6411 Ivy Lane, Suite 200
Greenbelt, MD 20770
Tel: (301) 441-2420
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Mervis Diamond Corporation $3,426,419
1900 Mervis Way
Vienna, VA 22182
Katz & Stone, LLP $255,623
8230 Leesburg Pike #600
Vienna, VA 22182
Ellin & Tucker Chartered $110,589
100 South Charles St. # 1300
Baltimore, MD 21201
Preferred Hotel Group Inc $56,527
US Foodservice Inc $43,978
Interstate Hotel & Resorts $34,429
Dobil Laboratories Inc $22,808
Mbox Communications LLC $18,991
Wendy W. Moe $16,291
Phillips Franchise LLC $11,682
Martin Seafood Company $11,009
Mark Cohen $10,003
Belair Produce Co Inc $7,655
Guest Supply Inc $7,401
Nicole Jang $7,359
Rosalind McCollough $6,157
Conference & Visitors Bureau $5,610
Phillips Foods Inc $5,197
Corporate Express $4,934
Micros systems Inc $4,792
The petition was signed by Eric L. Siegel, vice president.
CONSOLIDATED CONTAINER: S&P Cuts Rating on $390 Mil. Loan to 'B-'
-----------------------------------------------------------------
Standard & Poor's said that it revised the recovery rating on
Consolidated Container Co. LLC's $390 million first-lien senior
secured term loan to '3' from '2'. S&P lowered the issue rating
to 'B-' from 'B'. The ratings indicate S&P's expectation of
meaningful (50% to 70%) recovery in the event of a payment
default.
S&P affirmed all other ratings on Consolidated Container,
including the 'B-' corporate credit rating and the ratings on the
company's $250 million second-lien senior secured term loan.
The rating on Consolidated Container and its wholly owned
subsidiary, Consolidated Container Capital Inc., reflects the
company's highly leveraged financial profile, which overshadows
its weak business risk profile in the relatively stable beverage
and consumer product packaging markets.
Atlanta-based Consolidated Container has annual revenues of about
$922 million and is a domestic producer of rigid plastic
containers for dairy products, water, juice, and other beverages;
food, household, and agricultural chemicals; and motor oil.
The outlook is stable. Key underpinnings for rating stability are
preservation of sufficient liquidity under the revolving credit
facility, the company's ability to improve operating results, and
generation of sufficient cash flows through ongoing cost
reductions to meet capital-spending needs. S&P could lower the
rating if the company's liquidity deteriorates because of lower
operating results, or if it does not achieve sufficient free cash
generation to meet its internal needs in 2009. S&P could revise
the outlook to positive if operating results stabilize through a
business cycle resulting in an improved financial profile.
CONSTAR INT'L: Court Confirms Plan; To Exit Ch. 11 by Month's End
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware indicated
its approval of Constar International Inc.'s emergence from
Chapter 11 in accordance with the Plan of Reorganization for
Constar and its affiliated debtors. At the hearing, the Court
ruled that Constar had met all of the statutory requirements to
confirm its Plan, and overruled the one remaining objection to
confirmation. Constar expects to emerge from Chapter 11 by the
end of May, after entry of the Court's confirmation order.
Under the Plan, Constar's Subordinated Notes will be converted
into common stock of the reorganized company. All other creditor
classes will be unimpaired. The Company's current equity will be
cancelled and prepetition equity holders will receive no
distribution under the Plan.
Michael Hoffman, President and Chief Executive Officer of Constar,
commented, "We are very pleased with the Court's decision today.
We could not have accomplished this without the loyalty of our
customers, the professionalism of our employees and the commitment
of our creditors. We are grateful for their support through this
process."
The Company's Debtor in Possession credit facility contemplates
conversion of the facility into exit financing upon the
satisfaction of various conditions. Constar expects to convert
the DIP credit facility into exit financing upon the Company's
emergence from Chapter 11.
Headquartered in Philadelphia, Pennsylvania, Constar International
Inc. (NASDAQ: CNST) -- http://www.constar.net/-- produces
polyethylene terephthalate plastic containers for food, soft
drinks and water. The Company provides full-service packaging
services. The Company and five of its affiliates filed for
Chapter 11 protection on Dec. 30, 2008 (Bankr. D. Del. Lead Case
No. 08-13432). Bayard, P.A. represents the Debtors as counsel.
Wilmer Cutler Pickering Hale and Dorr LLP represents the Debtors
as co-counsel. Goodwin Procter LLP, and Young, Conaway, Stargatt
& Taylor, LLP, are the Official Committee of Unsecured Creditors'
proposed counsel.
CROCS INC: Q1 '09 Report on May 7; Stockholders Meeting on June 25
------------------------------------------------------------------
Crocs, Inc., is scheduled to report first-quarter 2009 earnings on
May 7.
Crocs will hold its 2009 Annual Meeting of Stockholders at the St.
Julien Hotel, 900 Walnut Street, in Boulder, Colorado, on June 25,
2009, at 9:00 a.m. Mountain Time.
The meeting's purpose is to:
-- elect two Class I directors;
-- ratify the appointment of Deloitte & Touche LLP as
independent registered public accounting firm for fiscal
year 2009; and
-- consider any other matters that properly come before the
meeting or any postponement or adjournment thereof.
Stockholders of record of the Company's common stock at the close
of business on April 27, 2009, are entitled to receive notice of
and to vote at the meeting. Each share of common stock is
entitled to one vote.
A full-text copy of Crocs' proxy statement is available at no
charge at http://ResearchArchives.com/t/s?3c69
About Crocs Inc.
Based in Niwot, Colorado, Crocs Inc. (NASDAQ: CROX) designs and
sells a broad offering of footwear, apparel, gear and accessories
that utilize proprietary closed cell-resin, called Croslite. The
Company sells Crocs-branded products throughout the U.S. and in
128 countries, through domestic and international retailers and
distributors and directly to end-user consumers through its
webstores, Company-operated retail stores, outlets and kiosks.
Going Concern Doubt
Deloitte & Touche LLP, in Denver, Colorado, has raised substantial
doubt about Croc's ability to continue as a going concern. Crocs
incurred losses of $185.1 million in the year ended December 31,
2008, and experienced a decline in revenues from $847.4 million
for the year ended December 31, 2007, to $721.6 million for the
year ended December 31, 2008. Continued operations are dependent
on Crocs' ability to secure adequate financing and maintain a
reasonable level of liquidity such that it can timely pay
obligations when due. As of December 31, 2008, Crocs had
$22.4 million in borrowings under its loan agreement with the
Union Bank of California, and the Company had $51.6 million in
cash and cash equivalents. As of December 31, 2008, Crocs had
$455.9 million in total assets and $168.8 in total liabilities.
On March 31, 2009, Crocs entered into a tenth amendment of its
Revolving Credit Facility with Union Bank of California, N.A. The
Amendment extends the loan maturity date to September 30, 2009.
Crocs said it is talks to secure an asset backed borrowing
arrangement to replace its Revolving Credit Facility. Crocs
cautioned the time period required to procure a new asset backed
credit facility may extend beyond the maturity date of the current
Revolving Credit Facility requiring Crocs to seek an extension of
that maturity date with current lenders.
CROCS INC: Slashes 38 Positions at Niwot, Colorado Headquarters
---------------------------------------------------------------
Crocs Inc. spokeswoman Tia Mattson confirmed last week that the
company laid off 38 employees at its Niwot, Colorado headquarters,
as part of the Company's plans to restructure the organization,
DailyCamera.com reports.
DailyCamera.com says the job cut account for nearly 10% of Croc's
force at the local site and affected a variety of positions.
About 430 people were employed at the Niwot operations prior to
the latest cuts, the report notes.
DailyCamera.com notes that in 2008, Crocs reduced its worldwide
employee county by 2,100 people, and at least 100 people were laid
off locally in efforts to "right-size" the company's operations in
the midst of slumping demand and a weakened retail environment.
In January, it adds, Crocs cut 14 positions companywide as part of
further restructuring efforts. Crocs employs fewer than 3,000
people companywide, the report notes.
About Crocs Inc.
Based in Niwot, Colorado, Crocs Inc. (NASDAQ: CROX) designs and
sells a broad offering of footwear, apparel, gear and accessories
that utilize proprietary closed cell-resin, called Croslite. The
Company sells Crocs-branded products throughout the U.S. and in
128 countries, through domestic and international retailers and
distributors and directly to end-user consumers through its
webstores, Company-operated retail stores, outlets and kiosks.
Going Concern Doubt
Deloitte & Touche LLP, in Denver, Colorado, has raised substantial
doubt about Croc's ability to continue as a going concern. Crocs
incurred losses of $185.1 million in the year ended December 31,
2008, and experienced a decline in revenues from $847.4 million
for the year ended December 31, 2007, to $721.6 million for the
year ended December 31, 2008. Continued operations are dependent
on Crocs' ability to secure adequate financing and maintain a
reasonable level of liquidity such that it can timely pay
obligations when due. As of December 31, 2008, Crocs had
$22.4 million in borrowings under its loan agreement with the
Union Bank of California, and the Company had $51.6 million in
cash and cash equivalents. As of December 31, 2008, Crocs had
$455.9 million in total assets and $168.8 in total liabilities.
On March 31, 2009, Crocs entered into a tenth amendment of its
Revolving Credit Facility with Union Bank of California, N.A. The
Amendment extends the loan maturity date to September 30, 2009.
Crocs said it is talks to secure an asset backed borrowing
arrangement to replace its Revolving Credit Facility. Crocs
cautioned the time period required to procure a new asset backed
credit facility may extend beyond the maturity date of the current
Revolving Credit Facility requiring Crocs to seek an extension of
that maturity date with current lenders.
CROWN VILLAGE: Case Summary & Four Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Crown Village Farm, LLC
8219 Leesburg Pike, Suite 300
Vienna, VA 22182
Bankruptcy Case No.: 09-11522
Type of Business: The Debtor makes semiconductor products.
Chapter 11 Petition Date: May 1, 2009
Court: District of Delaware (Delaware)
Debtor's Counsel: Chun I. Jang, Esq.
jang@rlf.com
Daniel J. DeFranceschi, Esq.
defranceschi@rlf.com
Richards, Layton & Finger
One Rodney Square, P.O. Box 551
Wilmington, DE 19899
Tel: (302) 651-7700
Fax: (302) 651-7701
Estimated Assets: $50 million to $100 million
Estimated Debts: $100 million to $500 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
ARL, L.L.C. Consultation Fees Unknown
Steven Lebling, c/o Lebling
Development, 2401
Research Boulevard, Suite
103, Rockville, MD 20850
Tel: (301)921-8223
Fax: (301) 921-8227
Jerunazargabr, LLC Consultation Fees Unknown
Aris Mardirossian
21533 Davis Mill Road
Germantown, MD 20876
Tel: (240) 499-8331
Fax: (240) 499-8332
Crown Farm Retail LLC Litigation Party Unknown
4733 Bethesda Avenue, Ste. 650
Bethesda, MD 20814
Tel: (301) 656-4111
Fax: (301) 656-0515
HBW Properties, Inc. Broker Fees Unknown
d/b/a HBW Group
1055 First Street, #200,
Rockville, MD 20850
Tel: (301) 424-2900
Fax: (301) 424-1491
The petition was signed by David R. Stanton.
DANIEL WEBSTER: Moody's Puts 'B1' Bond Rating on Watchlist
----------------------------------------------------------
Moody's Investors Service has placed Daniel Webster College's B1
rating on the Series 1999 and 2001 bonds on watchlist direction
uncertain. The rating action impacts $16.2 million of rated debt.
The bonds were issued through the New Hampshire Health and
Educational Facilities Authority. The rating action reflects the
planned acquisition of the not-for-profit college by ITT
Educational Services, a chain of for-profit schools. The purchase
has received preliminary approval by the New England Association
of Schools and Colleges, the regional accreditation agency, and
change in ownership is expected by July 1, 2009. Moody's is in
the process of following up with the College's management on
details of the planned acquisition and the ultimate impact on
payment of the Series 1999 and 2001 bonds.
Legal Security Of Series 1999 And 2001 Bonds: Obligations under
the bond loan agreements are a general obligation of College. The
bonds are secured by debt service reserve funds, a pledge of the
College's gross receipts, and a first priority mortgage on and
security interest in substantially all of the College's land,
building, and equipment at its Nashua, New Hampshire campus,
subject to permitted encumbrances.
Debt-Related Rate Derivatives: None
Rated Debt:
-- Series 1999 and 2001: B1 on watchlist with a developing
outlook
The last rating action was on March 11, 2008 when the College's
rating and outlook were affirmed.
DAVIDSON DIVERSIFIED III: To Sell Apartment Complex for $21 Mil.
----------------------------------------------------------------
Plainview Apartments, L.P. -- a South Carolina limited partnership
of which Davidson Diversified Real Estate III, L.P., owns a 99.99%
interest -- is seeking to sell a 480-unit apartment complex
located in Louisville, Kentucky, to NTS-Plainview Associates for
$21,035,000.
Plainview Apartments entered into a Purchase and Sale Contract on
April 6, 2009 with NTS-Plainview Associates, a Kentucky limited
partnership.
The purchase price is subject to a credit in the total amount of
the outstanding mortgage loan and accrued interest, which was
equal to approximately $15,336,000 as of the Effective Date. The
Purchaser currently is the lender with regard to the wraparound
debt encumbering Plainview. The Purchaser delivered an initial
deposit of $225,000 to Fidelity National Title Insurance Company,
as Escrow Agent.
The sale agreement provides for a feasibility period which ends
today, May 5, 2009. Within one day after the expiration of the
feasibility period, the Purchaser is required to deliver an
additional deposit of $200,000. If the Purchaser fails to notify
the Seller in writing of its intent to terminate the contract
prior to the end of the feasibility period, the Initial Deposit
will become non-refundable.
The expected closing date of the transaction is June 5, 2009. The
Seller has the option to extend the closing date to July 20 by
delivering written notice to the Purchaser prior to the expiration
of the feasibility period. The closing is also subject to
customary closing conditions and deliveries.
The Purchaser will pay any mortgage assumption, sales, use, gross
receipts or similar taxes, the cost of recording any instruments
required to discharge any liens or encumbrances against the
property, recording fees for the transfer documents, all premiums
or fees required to be paid by the Purchaser with respect to the
title policy, all survey costs and one-half of the customary
closing costs of the Escrow Agent. The Seller will pay any
transfer taxes and one-half of the customary closing costs of the
Escrow Agent.
A full-text copy of the Sale Contract is available at no charge
at:
http://ResearchArchives.com/t/s?3c6a
Davidson Diversified Real Estate III
Based in Greenville, South Carolina, Davidson Diversified Real
Estate III, L.P., operates and holds for investment existing
income-producing residential real estate properties. The general
partners of Davidson Diversified III are Davidson Diversified
Properties, Inc., as Managing General Partner; Freeman Equities,
Limited, as Associate General Partner; and David W. Talley and
James T. Gunn as Individual General Partners. The Managing
General Partner is a wholly owned subsidiary of Apartment
Investment and Management Company, a publicly traded real estate
investment trust. The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2010, unless
terminated prior to such date.
Going Concern Doubt
Ernst & Young LLP in Greenville, South Carolina -- in its March
2009 audit report on the Partnership's Annual Report on Form 10-K
for the year ended December 31, 2008 -- said there is substantial
doubt about the Partnership's ability to continue as a going
concern, citing recurring operating losses and an accumulated
deficit incurred by the Partnership.
Davidson Diversified III posted $1.0 million in net loss on total
revenues of $3.9 million for year 2008 compared to $878,000 in net
loss on $4.0 million total revenues for year 2007. Davidson
Diversified III had $11.9 million in total assets, $22.9 million
in total liabilities, and $11.0 million in partners' deficit as of
December 31, 2008.
DOMINICK J. RIINA: Case Summary & 11 Largest Unsecured Creditors
----------------------------------------------------------------
Joint Debtors: Dominick J. Riina
MaryAnn Riina
10 Rita Lane
LaGrangeville, NY 12540
Bankruptcy Case No.: 09-36129
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Southern District of New York (Poughkeepsie)
Judge: Cecelia G. Morris
Debtors' Counsel: Andrea B. Malin, Esq.
Genova & Malin
1136 Route 9
Wappingers Falls, NY 12590
Tel: (845) 298-1600
Fax: (845) 298-1265
Email: genmallaw@optonline.net
Total Assets: $1,327,307
Total Debts: $1,423,538
According to its schedules of assets and liabilities, $1,257,320
of the debt is owing to secured creditors and the remaining debt
to creditors holding unsecured nonpriority claims.
A full-text copy of the Debtors' petition, including their list of
11 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nysb09-36129.pdf
The petition was signed by the Joint Debtors.
DRUG FAIR: May Implement $476,000 Severance and Incentive Plan
--------------------------------------------------------------
Drug Fair Group Inc. won approval from the U.S. Bankruptcy Court
for the District of Delaware to implement a $476,000 incentive and
severance program for two top executives and non-management
workers.
A copy of the Drug Fair Severance and Management Incentive Plan is
available for free at:
http://bankrupt.com/misc/DrugFair.DE157.pdf
As reported in the Troubled Company Reporter on April 30, 2009,
Drug Fair Group Inc. won authorization from the Bankruptcy Court
to sell 31 stores for about $54 million to drugstore chain
Walgreen Co.
According to Bloomberg's Bill Rochelle, Drug Fair said that
Walgreen Co., the lead bidder for 32 stores, will pick up $175,000
of the cost of the severance program. The report notes that the
executive bonuses won't be paid until the assets are sold to
Walgreen or another buyer and the first-lien debt is paid in full.
Drug Fair signed a deal last month to sell 32 stores in central
and northern New Jersey to a unit of Deerfield, Illinois-based
Walgreen Co. for about $54 million. Walgreen's offer may rise to
as much as $65.1 million, depending on a valuation of the stores'
inventory. Walgreen's offer was open to competing bids, if any,
at an auction on April 24.
Drug Fair has signed an agreement with Hudson Capital Partners LLC
for going-out-of-business sales in 22 other stores.
About Drug Fair Group
Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. --
http://www.drugfair.com/or http://www.costcuttersonline.com/--
fka Community Distributors, Inc., operates pharmacies and general
merchandise stores in northern and central New Jersey. The
Company, with stores in central and northern New Jersey, is
indirectly owned by Sun Capital Partners Inc., a private-equity
investor based in Boca Raton, Florida.
Drug Fair and CDI Group, Inc., filed for Chapter 11 protection on
March 18, 2009, (Bankr. D. Del. Lead Case No. 09-10897). Domenic
E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr
Harrison Harvey Branzburg & Ellers, represent the Debtors in their
restructuring efforts. Warren J. Martin, Jr., Esq., and Brett S.
Moore, Esq., at Porzio Bromberg & Newman, P.C., represent the
official committee of unsecured creditors as counsel. Norman L.
Pernick, Esq., and Patrick J. Reilley, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, P.A., represent the creditors committee
as Delaware counsel. Epiq Bankruptcy Solutions, LLC is the
Debtors' notice and claims agent. The Debtors listed assets of
$50 million to $100 million and debts of $100 million to
$500 million.
DRUG FAIR: Wants to Sell Prescription Files at Somerset, NJ Store
-----------------------------------------------------------------
Drug Fair Group Inc. asks the U.S. Bankruptcy Court for the
District of Delaware to approve the sale to Village Super Market
of NJ, LP of all prescription files, customer lists, and records
associated with their store located at 1760 Easton Avenue,
Somerset, NJ, for $50,000. The agreement with the purchaser
requires that the sale close by May 9.
As reported in the Troubled Company Reporter on April 30, 2009,
Drug Fair Group Inc. won authorization from the Bankruptcy Court
to sell 31 stores for about $54 million to drugstore chain
Walgreen Co.
According to Bloomberg's Bill Rochelle, Drug Fair said that
Walgreen Co., the lead bidder for 32 stores, will pick up $175,000
of the cost of the severance program. The report notes that the
executive bonuses won't be paid until the assets are sold to
Walgreen or another buyer and the first-lien debt is paid in full.
Drug Fair signed a deal last month to sell 32 stores in central
and northern New Jersey to a unit of Deerfield, Illinois-based
Walgreen Co. for about $54 million. Walgreen's offer may rise to
as much as $65.1 million, depending on a valuation of the stores'
inventory. Walgreen's offer was open to competing bids, if any,
at an auction on April 24.
Drug Fair has signed an agreement with Hudson Capital Partners LLC
for going-out-of-business sales in 22 other stores.
About Drug Fair Group
Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. --
http://www.drugfair.com/or http://www.costcuttersonline.com/--
fka Community Distributors, Inc., operates pharmacies and general
merchandise stores in northern and central New Jersey. The
Company, with stores in central and northern New Jersey, is
indirectly owned by Sun Capital Partners Inc., a private-equity
investor based in Boca Raton, Florida.
Drug Fair and CDI Group, Inc., filed for Chapter 11 protection on
March 18, 2009, (Bankr. D. Del. Lead Case No. 09-10897). Domenic
E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr
Harrison Harvey Branzburg & Ellers, represent the Debtors in their
restructuring efforts. Warren J. Martin, Jr., Esq., and Brett S.
Moore, Esq., at Porzio Bromberg & Newman, P.C., represent the
official committee of unsecured creditors as counsel. Norman L.
Pernick, Esq., and Patrick J. Reilley, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, P.A., represent the creditors committee
as Delaware counsel. Epiq Bankruptcy Solutions, LLC is the
Debtors' notice and claims agent. The Debtors listed assets of
$50 million to $100 million and debts of $100 million to
$500 million.
DYMARO INC: Case Summary & 8 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Dymaro, Inc.
ta Chambersburg Fitness Center
209 Shively Road
Chambersburg, PA 17201
Bankruptcy Case No.: 09-03428
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Middle District of Pennsylvania (Harrisburg)
Judge: Mary D. France
Debtor's Counsel: Robert E. Chernicoff, Esq.
Cunningham and Chernicoff PC
2320 North Second Street
Harrisburg, PA 17110
Tel: (717) 238-6570
Fax: (717) 238-4809
Email: rec@cclawpc.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 8 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/pamb09-03428.pdf
The petition was signed by Lulu R. Bliss, vice president of the
Company.
EASTMAN KODAK: Fitch Affirms Issuer Default Rating at 'B-'
----------------------------------------------------------
Fitch Ratings has affirmed Eastman Kodak Company's ratings
following the company's announcement of weak financial results for
first quarter-2009 (1Q'09) and suspension of its cash dividend.
The Rating Outlook remains Negative. These ratings are affirmed:
-- Issuer Default Rating at 'B-';
-- Senior secured revolving credit facility at 'BB-/RR1';
-- Senior unsecured debt at 'B-/RR4'.
Kodak's weak 1Q'09 financial results are in line with Fitch's
expectations as Fitch's Jan. 30, 2009 one-notch downgrade of
Kodak's ratings and the Negative Outlook reflect expectations for
significant top-line and operating profit deterioration in all of
the company's businesses through at least 2009. Nonetheless,
Fitch's primary concern remains the company's liquidity position,
particularly given the $575 million convertible put in October
2010. Improvement in the company's liquidity position is
dependent on the success of its restructuring initiatives and a
return to profitability and positive free cash flow, which Fitch
will monitor on a quarterly basis.
The global economic downturn has severely reduced consumer and
business spending, thereby magnifying the already significant
secular challenges facing the company. Sales declined 29% year-
over-year in 1Q'09 (23% decline on a constant currency basis),
driven by significant weakness across all segments. Furthermore,
profitability weakened materially as EBITDA margin dropped to -7%
from 1.5% in the year-ago quarter as newly implemented cost
reductions trailed revenue declines. As a result, leverage (total
debt/operating EBITDA) increased to 3.3 times (x) as of March 31,
2009 from 2.5x on Dec. 31, 2008, while interest coverage
(operating EBITDA/ gross interest expense) fell to 3.8x from 4.9x.
Fitch expects credit protection measures to continue to
deteriorate through 2009, due to material reduction in
profitability versus 2008.
In line with Fitch's expectations, Kodak's liquidity position
deteriorated in the quarter due to negative free cash flow of $810
million and a $500 million reduction in RCF capacity under the
amended credit agreement (discussed below). Fitch notes
seasonality and working capital requirements normally result in
significant cash usage in the first quarter, as Kodak generated
negative free cash flow of $820 million in 1Q'08. However, Fitch
estimates that funds flow from operations (FCF less change in
working capital) declined to -$207 million in 1Q'09 from $70
million in 1Q'08, driven by lower revenue and profitability.
While Fitch expects 1Q'09 FCF to be the nadir of 2009,
expectations remain for full-year FCF to be significantly negative
in 2009 due to continued top line and profitability pressures, as
well as $225-$275 million of cash restructuring costs. Fitch
believes Kodak's suspension of the dividend, which totaled $139
million in 2008, the temporary compensation reduction for senior
management and other employees and previously announced cost
reduction efforts are unlikely to offset revenue and profitability
pressures in 2009. Significant further deterioration in FCF is a
concern given the company's i) $575 million of convertible senior
notes that are putable on Oct. 15, 2010, which cannot be repaid
with borrowings under the RCF, and ii) at least 50% reduction in
RCF capacity under the amended credit facility, with the potential
for further reductions in the event of a decline in the borrowing
base.
Liquidity on March 31, 2009 consisted of approximately $1.3
billion of cash and cash equivalents and an undrawn $500 million
senior secured RCF (approximately $368 million net of letters of
credit). On March 31, Kodak amended its secured $1 billion RCF,
driven by the company's expectations that EBITDA declines would
likely cause a near-term breach of one or both of the prior
financial covenants, which included maximum leverage of 3.5x and
minimum coverage of 3.0x. The amended facility is asset-based,
with a maximum capacity of $500 million, based on the company's
borrowing base consisting of designated percentages of eligible
receivables, inventory, real property and equipment. Financial
covenants under the amended facility include a minimum $250
million of US-based cash, as well as a minimum 1.1x fixed charge
coverage ratio in the event that excess availability is below $100
million. As of March 31, approximately 25% of RCF capacity
matures in October 2010, with the remainder maturing in March
2012.
Negative rating actions could occur if:
-- Cash usage over the next several quarters exceeds Fitch's
expectations, resulting in a significant further reduction in
cash balances;
-- Kodak's financial results deteriorate beyond Fitch's
expectations.
The Recovery Ratings reflect Fitch's belief that Kodak's
enterprise value would be maximized in a liquidation, rather than
a going-concern, scenario. In estimating liquidation, Fitch
applies advance rates of 80%, 20%, and 10% to Kodak's accounts
receivables, inventories, and property, plant, and equipment
balances, respectively. Fitch arrives at an adjusted
reorganization value of $1.2 billion after subtracting
administrative claims. Based upon these assumptions, the 'RR1'
for Kodak's secured bank facility reflects Fitch's belief that
100% recovery is realistic. Based on March 31, 2009 values, Fitch
estimates that the unsecured debt would recover over 50%.
However, Fitch believes that declining sales and ongoing
restructuring efforts, including potential asset sales, are likely
to reduce the liquidation value going forward. Therefore, Fitch
believes that recovery rates will decline below 50% in the near-
term, supporting the 'RR4' (31%-50% recovery) for the senior
unsecured debt.
Total debt as of March 31, 2009 was approximately $1.3 billion,
consisting primarily of: $500 million senior notes due 2013 and
$575 million convertible senior notes due 2033, which have a
conversion price of $31.02 per share and are putable to the
company in October 2010.
EATON VANCE: S&P Downgrades Issuer Credit Rating on Notes to 'CC'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issuer credit
rating on Eaton Vance Variable Leverage Fund Ltd. and its long-
term rating on EVVLF's medium-term notes. At the same time,
Standard & Poor's removed the ratings from CreditWatch with
negative implications, where they were placed March 12, 2008.
S&P's outlook on EVVLF is negative.
The lowered ratings reflect S&P's view that EVVLF will be unable
to repay its remaining $10 million in MTNs due August 29, 2016,
following the completion of its asset liquidation.
EVVLF is the sole remaining structured investment vehicle that
hasn't either been wrapped with liquidity support or been declared
insolvent due to its inability to mitigate time-subordination
challenges across pari passu senior investors that invested in
different maturities. EVVLF also differs from other SIVs in that
its investment focus is on corporate loans. In addition, its
senior class of commercial paper was refinanced with MTNs.
Therefore, post-refinancing, EVVLF more closely resembles a market
value collateralized loan obligation than a traditional SIV.
When EVVLF entered into enforcement mode on October 14, 2008, it
had $455 million in MTNs outstanding. Thus far, EVVLF has
completed the sale of its loan assets and has paid back
$445 million in MTNs. In other words, EVVLF repaid 97.8% of the
MTNs that were outstanding on October 14, 2008, in full with the
proceeds from its asset liquidation. As of the April 28, 2009,
report that S&P received from EVVLF's manager, the vehicle had
$0.29 million in cash on deposit and $10.3 million in MTNs
outstanding. EVVLF has no remaining assets other than the
$0.29 million cash. In addition, since EVVLF entered enforcement
mode, it has continued to pay MTN interest each quarter.
S&P will likely lower its issuer credit rating on EVVLF and S&P's
long-term rating on the MTNs to 'D' on the earlier of the MTNs'
maturity date, the date on which EVVLF fails to make an interest
payment, or when the manager closes the program (if it chooses to
do so).
Ratings Lowered And Removed From Creditwatch Negative
Eaton Vance Variable Leverage Fund Ltd.
Rating
------
Issue To From
----- -- ----
Issuer credit rating CC CCC-/Watch Neg
MTN issues CC CCC-/Watch Neg
EMC PACKAGING: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: EMC Packaging, Inc.
550 James Street
Lakewood, NJ 08701
Bankruptcy Case No.: 09-11524
Chapter 11 Petition Date: May 3, 2009
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Debtor's Counsel: Pace Reich, Esq.
726 Meetinghouse Road
Elkins Park, PA 19027
Tel: (215) 887-0130
Fax: (215) 887-5617
Email: pacereichpc@msn.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $100,001 to $500,000
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/deb09-11524.pdf
The petition was signed by Michael F. Dignazio, corporate
secretary of the Company.
ENERGY PARTNERS: Gets Approval to Use $13,000,000 Cash Collateral
-----------------------------------------------------------------
Energy Partners, Ltd., received approval of all of its first-day
motions from the United States Bankruptcy Court for the Southern
District of Texas, Houston Division.
On May 1, 2009, the Company received Court approval during its
first-day hearings to, among other things, pay employee wages and
continue healthcare and related benefit plans during its
restructuring under Chapter 11 on an interim basis. EPL has also
received interim authority to maintain its cash management systems
and for the use of its cash collateral. At the time of filing,
EPL had in excess of $13 million in cash on hand. As it proceeds
with its financial restructuring, the Company expects, based on
current commodity prices, that its cash on hand and cash from
operating activities will be adequate to fund its projected cash
needs, including the payment of operating costs and expenses.
"We are pleased that the Court has granted these approvals so
quickly," said Alan D. Bell, Chief Restructuring Officer.
"Gaining these approvals will allow us to continue to operate in
the ordinary course as we proceed through our restructuring
process as planned. We intend to work closely with all of our
constituencies to facilitate a controlled and expeditious process,
and we look forward to emerging as a stronger and more competitive
company."
About Energy Partners
Based in New Orleans, Louisiana, Energy Partners, Ltd., (Pink
Sheets: ERPL.PK) is an independent oil and natural gas exploration
and production company. The Company had interests in 24 producing
fields, six fields under development and one property on which
drilling operations were then being conducted, all of which are
located in the Gulf of Mexico Region.
EPL has retained Vinson & Elkins LLP as legal counsel, and Parkman
Whaling LLC as financial advisor.
ENERGY PARTNERS: Chapter 11 Filing Cues Moody's Rating Cut to 'D'
-----------------------------------------------------------------
Moody's Investors Service downgraded Energy Partners, Ltd.'s
Probability of Default Rating to D from Ca, following the
company's announcement that it filed voluntary petitions under
Chapter 11 of the United States Bankruptcy Code with the United
States Bankruptcy Court for the Southern District of Texas,
Houston Division. The ratings will be withdrawn in the near
future due to the bankruptcy. This summarizes the ratings:
Rating changes:
* Probability of Default Rating -- D from Ca
Ratings unchanged:
* Corporate Family Rating -- Ca
* $300mm 9.75% Senior Unsecured Notes due 04/15/2014 -- C (LGD5,
76%)
* $150mm Floating Senior Unsecured Notes due 04/15/2013 -- C
(LGD5, 76%)
The last rating action on Energy Partners was on April 16, 2009
when Moody's downgraded the company's CFR and PDR to Ca and the
senior unsecured notes to C, following the company's announcement
that it had not made a $17 million interest payment on its senior
notes.
Energy Partners, Ltd. is an independent E&P company headquartered
in New Orleans, Louisiana.
ENERGY PARTNERS: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Energy Partners, Ltd.
201 St. Charles Avenue, Suite 3400
New Orleans, LA 70170-3400
Bankruptcy Case No.: 09-32957
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Delaware EPL of Texas, LLC 09-32956
EPL Pioneer Houston, Inc. 09-32958
EPL of Louisiana, L.L.C. 09-32959
EPL Pipeline, L.L.C. 09-32960
Nighthawk, L.L.C. 09-32961
Type of Business: Energy Partners is an independent oil and
natural gas exploration and production company.
It has interests in 24 producing fields, six
fields under development and one property on
which drilling operations were then being
conducted, all of which are located in the Gulf
of Mexico Region.
Chapter 11 Petition Date: May 1, 2009
Court: Southern District of Texas
Debtors' Counsel: Paul E. Heath, Esq.
Vinson & Elkins LLP
2001 Ross Avenue, Suite 3700
Dallas, TX 75201
Tel: (214) 220-7700
The Debtors' financial condition as of December 31, 2008:
Total Assets: $770,445,000
Total Debts: $708,370,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
U.S. Bank National Association indenture trustee $450,000,000
5555 San Felipe, Suite 1150 for fixed and
Houston, Texas 77056 floating rate
notes
Wells Fargo, N.A. indenture trustee $4,501,000
505 Main Street, Suite 301 8.75 senior
Fort Worth, TX 76102 unsecured notes
Diamond Offshore Company trade $2,901,077
15415 Katy Freeway, Suite 100
Houston TX 77094
Attn: Ray, Susan
Tel: (281) 492-5300
Fax: (281) 492-5316
Noble Energy, Inc. trade $2,123,637
PO Box 9 10083
Dallas TX 7539 1-0083
Tel: (281) 872-3100
Fax: (281) 872-3111
Kilgore Marine Services, Inc. trade $1,353,016
1819 W. Pinhook, Suite 109
Lafayette LA 70508
Attn: Connie Leblanc
Tel: (337) 232-5552
Fax: (337) 232-5581
Hercules Drilling Company trade $1,442,798
2929 Briarpark Drive
Suite 400
Houston TX 77042
Tel: (713) 952-7977
Fax: (713) 952-7990
Global Industries trade $1,367,297
Offshore LLC
Dept. 0275
PO Box 120275
Dallas TX 753 12-0275
Tel: (337) 583-5000
Fax: (337) 583-5100
Chevron USA Production Co. trade $877,685
Section 9 17, P.O. Box J
Concord, CA 94524-2060
Tel: (713) 432-2500
Fax: (713) 432-3330
Production Services Network trade $672,884
9821 Katy Freeway, Suite 400
Houston TX 77024
Tel: (713) 461-1250
Fax: (713) 461-1308
Aries Marine Corporation trade $348,180
Blanchard Contractors, Inc. trade $277,778
Gallon Petroleum Operating Co. trade $675,573
Laredo Offshore Services, Inc. trade $227,925
Knight Oil Services trade $420,244
Superior Energy Services LLC trade $475,480
Elevating Boats, LLC trade $708,011
201 Dean Court
Houma, LA 70363
Tel: (985) 868-9655
Fax: (985) 868-9656
Triton Diving Services, Inc. trade $317,048
Grasso Production Management trade $306,974
Crosby Tugs LLC trade $248,400
XTO Energy Inc. trade $227,427
A full-text copy of the Debtors' list of 20 largest unsecured
creditors is available for free at:
http://ResearchArchives.com/t/s?3c67
The petition was signed by Alan D. Bell, chief restructuring
officer.
FAIRCHILD CORP: Panel Wants Butler Rubin as Bankruptcy Counsel
--------------------------------------------------------------
The official committee of unsecured creditors of The Fairchild
Corporation, et al., asks the U.S. Bankruptcy Court for authority
to employ Butler Rubin Saltarelli & Boyd LLP as bankruptcy
counsel, nunc pro tunc to April 6, 2009.
Butler Rubin will, among others:
a) advise the committee with respect to its rights, duties and
powers in the Debtors' cases;
b) assist and advise the committee in its consultation with the
Debtors relative to the administration of the Debtors'
cases; and
c) assist the committee in analyzing the claims of the Debtors'
creditors and the Debtors' capital structure and in
negotiating with holders of claims and equity interests.
Neal L. Wolf, Esq., a partner at Butler Rubin, assures the Court
that the firm does not hold or represent any interest adverse to
the committee or the Debtors, and that the firm is a
"disinterested person" as that term is defined under Sec. 101(14)
of the Bankruptcy Code.
Mr. Wolf tells the Court that currently, Gerald Saltarelli, Esq.,
a partner at Butler Rubin, is the chairman of the 3-person
arbitration panel hearing an indemnity claim by Rexnord
Industries, LLC, and Invensys, Inc., against RHI Holdings and
Fairchild Corporation. Mr. Wolf says Butler Rubin has obtained
express conflicts waivers from all parties to the arbitration to
represent the committee in the Fairchild case, and that Elliott
Greenleaf, the committee's special conflicts counsel, would handle
all issues in the bankruptcy related to this dispute.
The primary Butler Rubin attorneys who will be representing the
committee and their corresponding rates are:
Hourly Rate
-----------
Neal L. Wolf, Esq. $625
Gerald F. Munitz, Esq. $625
Kevin J. O'Brien, Esq. $465
Karen Borg, Esq. $405
Nathan Larsen, Esq. $270
Anita Jaffe $185
Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK)
-- http://www.fairchild.com/-- operates under three segments:
aerospace, real estate, and motorcycle apparel. Fairchild's
aerospace segment is engaged in the aerospace distribution
business which stocks and distributes a wide variety of parts to
operators and aerospace companies providing aircraft parts and
services to customers worldwide. Fairchild also owns and develops
commercial real estate. Fairchild's motorcycle apparel business
designs and produces apparel under private labels for third
parties, including Harley-Davidson and also owns a 49% interest in
PoloExpress, a business which designs and sells motorcycle
protective apparel, helmets, and a large selection of technical
accessories, for motorcyclists and operates approximately 96
retail shops in Switzerland and Germany.
The Debtor and 60 of its affiliates filed for Chapter 11
protection on March 18, 2009 (Bankr. D. Del Lead Case No.
09-10899). Steven J. Reisman, Esq., Timothy A. Barnes, Esq., and
Veronique A. Hodeau, Esq., at Curtis, Mallet-Prevost, Cold & Mosle
LLP, represent the Debtors as counsel. Jason M. Madron, Esq.,
Michael J. Merchant, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A., represent the Debtors as co-counsel. At
January 31, 2009, the Debtor had $89,433,000 in total assets and
$228,095,000 in total debts.
FAIRCHILD CORP: Panel Wants Elliott Greenleaf as Delaware Counsel
-----------------------------------------------------------------
The official committee of unsecured creditors of The Fairchild
Corporation, et al., asks the U.S. Bankruptcy Court for authority
to employ Elliott Greenleaf as its Delaware and conflicts counsel,
nunc pro tunc to April 7, 2009.
Elliott Greeenleaf will, among others:
a) render legal advice with respect to the powers and duties of
the committee and the other participants in the Debtors'
cases;
b) assist the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the
Debtor's business and any other matter relevant to the
bankruptcy cases, as to the extent the said matters may
affect the Debtors' creditors;
c) participate in negotiations with parties-in-interest with
respect to any disposition of the Debtors' assets, plan of
reorganization and disclosure statement in connection with
said plan, and otherwise protect and promote the interests of
the Debtors' unsecured creditors.
Subject to the Court's approval, Elliott Greenleaf will charge for
its legal services on an hourly basis in accordance with its
ordinary and customary hourly rates in effect on the date services
are rendered.
Rafael X. Zahralddin-Aravena, Esq., a managing shareholder at the
Wilmington office of Elliott Greenleaf, assures the Court that the
firm does not hold or represent any interest adverse to the Debtor
or its estate, and that the firm is a "disinterested person" as
that term is defined under Section 101(14) of the Bankruptcy Code.
The primary Elliott Greenleaf attorneys who will be representing
the committee and their corresponding rates are:
Hourly Rate
-----------
Rafael X. Zahralddin-Aravena, Esq. $575
Henry F. Siedzikowski, Esq. $565
Shelley A. Kinsella, Esq. $385
Brian R. Elias, Esq. $260
Neil R. Lapinski, Esq. $375
William M. Kelleher Esq. $400
Jeffrey M. Rigby, Esq. $225
Elizabeth A. Williams, Esq. $225
Kristin A. McCloskey $200
Aron M. Pillard $200
Based in McLean, Virginia, The Fairchild Corporation (OTC:FCHD.PK)
-- http://www.fairchild.com/-- operates under three segments:
aerospace, real estate, and motorcycle apparel. Fairchild's
aerospace segment is engaged in the aerospace distribution
business which stocks and distributes a wide variety of parts to
operators and aerospace companies providing aircraft parts and
services to customers worldwide. Fairchild also owns and develops
commercial real estate. Fairchild's motorcycle apparel business
designs and produces apparel under private labels for third
parties, including Harley-Davidson and also owns a 49% interest in
PoloExpress, a business which designs and sells motorcycle
protective apparel, helmets, and a large selection of technical
accessories, for motorcyclists and operates approximately 96
retail shops in Switzerland and Germany.
The Debtor and 60 of its affiliates filed for Chapter 11
protection on March 18, 2009 (Bankr. D. Del Lead Case No.
09-10899). Steven J. Reisman, Esq., Timothy A. Barnes, Esq., and
Veronique A. Hodeau, Esq., at Curtis, Mallet-Prevost, Cold & Mosle
LLP, represent the Debtors as counsel. Jason M. Madron, Esq.,
Michael J. Merchant, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A., represent the Debtors as co-counsel. At
Jan. 31, 2009, the Debtor had $89,433,000 in total assets and
$228,095,000 in total debts.
FILENE'S BASEMENT: Files for Chapter 22; Agrees to Sell 17 Stores
-----------------------------------------------------------------
Filene's Basement yesterday morning filed to reorganize under
Chapter 11 of the Federal Bankruptcy Code in the U.S. Bankruptcy
Court for the District of Delaware.
This is the Company's second trip to the Bankruptcy Court.
Concurrent with the filing, the company entered into an agreement,
subject to Bankruptcy Court approval, with an affiliate of Crown
Acquisitions to purchase 17 of the chain's 25 stores, including
the flagship stores in Boston and Union Square. Crown, which is
based in New York, intends to continue to operate the stores under
the Filene's Basement name, while maintaining the chain's value
merchandising model.
Retail real estate owner Stanley Chera's Crown Acquisitions, in
partnership with The Chetrit Group, signed the $22 million asset
purchase agreement with Filene's Basement's parent, Retail
Ventures, Inc., on May 1.
The stores are primarily located on the East Coast, including New
York, Boston, Chicago, Atlanta and Florida. Because RVI put
Filene's Basement into bankruptcy yesterday morning, the
transaction saves the chain's 17 most profitable stores and
thousands of jobs, Crown Acquisitions said.
The partnership of New York-based Crown Acquisitions and The
Chetrit Group, also of New York, will capitalize the stores with
strong equity and no bank debt. Both companies have roots in the
fashion and retailing industries that will support their
management and revitalization of the Filene's Basement chain. The
partnership stressed that it will not liquidate the inventory or
real estate, but will instead use its real estate expertise and
retail/fashion background to grow the company by adding the best
locations and injecting fresh capital to the already profitable
stores.
Morris Missry, Esq., at Wachtel, Masyr represented the partnership
of Crown Acquisitions and The Chetrit Group in this acquisition.
The contract with Crown is subject to a Bankruptcy Court auction
under which additional offers for the 17 stores, the remaining
Filene's Basement stores, and other Filene's assets will be
solicited. The auction is expected to be held in roughly five
weeks, subject to the approval of the Bankruptcy Court.
On January 20, 2009, the company announced that it was closing 11
of its 36 locations.
"This transaction provides an excellent opportunity to continue
the Filene's Basement tradition of top-quality apparel at low
prices in most of the chain's marquee locations," said Scott
Rusczyk, President of FB Acquisition II, the Buxbaum Group
affiliate that acquired Filene's Basement on April 20.
Advisors to Filene's Basement include Alan Cohen, who was engaged
as Chief Restructuring Officer, and Pachulski, Stang, Ziehl &
Jones LLP, which was retained as counsel. Morris Missry and Scott
Lesser of Wachtel & Masyr, LLP, and Arthur Steinberg of King &
Spaulding advised Crown Acquisitions in connection with this
matter.
About Buxbaum Group
Buxbaum Group, based in Agoura Hills, Calif., has built its
reputation for over 30 years as one of the largest liquidators and
appraisers of retail and wholesale inventories across North
America. While continuing to operate in those areas, the company
has shifted its primary focus in recent years to turnaround
investing.
About Crown & Chetrit Group
Crown Acquisitions, founded by Stanley Chera, has an ownership
interest in more than 15 million square feet of retail and office
property throughout North America. It has assets in major cities
including New York, Chicago, Toronto, Philadelphia, Boston and
Miami. An investor, owner, operator and developer, Crown
Acquisitions' holdings include interests in more than 50
properties, such as World Trade Center towers 2, 3 and 4, Herald
Center, 551 Fifth Avenue, 600 Broadway, 717 Fifth Avenue and 598
Madison Avenue in New York; 645 North Michigan Avenue in Chicago,
IL; and the Miami Merchant's Mart in Miami, FL.
The Chetrit Group is a real estate owner with its roots in the
fashion business, as a manufacturer of denim and ladies apparel.
The company's substantial real estate holdings include the Sears
Tower and 620 Sixth Avenue, the property which houses one of
Filene's most successful Manhattan stores.
About Filene's Basement
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot (44,000 m2) distribution center in Auburn,
Massachusetts. The store's name is derived from the subterranean
location of its flagship store, in the basement of the former
Filene's department store at Downtown Crossing in Boston,
Massachusetts.
Filene's Basement filed for Chapter 11 bankruptcy protection in
August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000.
Retail Ventures in April 2009 transferred the unit to Buxbaum
Group, which appraises and liquidates assets, for no proceeds.
FORD MOTOR: April Retail Sales Down 32%, Fleet Down 30% From 2008
-----------------------------------------------------------------
Ford Motor Company said sales of Ford Fusion totaled 18,321, a
record for any month.
Meanwhile, Ford, Lincoln and Mercury sales totaled 129,898, down
31% compared with April 2008. The Company said retail sales were
down 32% compared with a year ago and fleet sales were down 30%.
According to Ford, "new, fuel-efficient products and quality on
par with the best in the industry helped Ford increase retail
market share in April -- the sixth time in the last seven months
that Ford's share of the retail market was higher than a year
ago."
Ford said April was the first full month of sales for the
redesigned 2010 model and the new Fusion Hybrid version, and April
is believed to be the first month that Fusion was among the top
three-selling mid-size sedans. Recent independent studies rate
Fusion and the Mercury Milan -- the most fuel-efficient mid-size
sedans in America -- as having the best predicted reliability
among all mid-size sedans.
"We continue to operate in a very challenging economic and
competitive environment," said Ken Czubay, Ford vice president,
Sales and Marketing. "Especially given this external environment,
we're very encouraged by the consumer response to our new mid-size
sedans."
"Sales of the 2010 Ford Fusion, Mercury Milan, Lincoln MKZ and
hybrid versions exceeded our plan and customers also are equipping
our new products with levels of content and features that are
higher than we expected," he added. "This suggests consumers view
our high-quality, fuel-efficient new products as offering
outstanding value."
The new Fusion Hybrid is one of four hybrid models offered by
Ford. Hybrid models also are offered in the Mercury Milan mid-
size sedan and the Ford Escape and Mercury Mariner small utility
vehicles. All Ford hybrid models are the most fuel-efficient
vehicles in their class, and the Ford Escape and Ford Fusion
recently were named to Kelley Blue Book's list of Top 10 Green
Cars. In April, combined sales of all hybrid models totaled
2,299, up 21 percent versus a year ago.
Other new Ford products contributed to the retail share
performance, including the new F-150 pickup, America's best-
selling vehicle, and Ford Flex, the distinctively styled crossover
utility that had its best sales month ever (3,190).
Growing awareness and consideration of Ford and its high-quality,
fuel-efficient products are starting to take hold. Plus, through
June 1, Ford is offering consumers additional reasons to "Drive
one."
The Ford Advantage Plan offers payment protection up to 12 months
for up to $700 per month on any new Ford, Lincoln or Mercury
vehicle if a customer loses his or her job. Plus, 0% financing
from Ford Motor Credit is available on select vehicles.
On Tuesday, April 28, Ford launched a community engagement phase
of the Ford Advantage Plan. Through June 1, Ford will donate
$20 to Susan G. Komen for the Cure for every test drive taken at a
participating Ford, Lincoln and Mercury dealership -- up to
$1 million. That amount could grow even higher as more than a
thousand dealers around the country are joining in to match the
company's donation. During the past 15 years, Ford has
contributed more than $100 million to the fight against breast
cancer.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The Company has operations in Japan in the Asia Pacific region. In
Europe, the Company maintains a presence in Sweden, and the United
Kingdom. The Company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported by the Troubled Company Reporter on April 15, 2009,
Standard & Poor's Ratings Services said it raised its ratings on
Ford Motor Co. and related entities, including the corporate
credit rating, to 'CCC+' from 'SD-'. The ratings on Ford Motor
Credit Co. are unchanged, at 'CCC+', and the ratings on FCE Bank
PLC, Ford Credit's European bank, are also unchanged, at 'B-',
maintaining the one-notch rating differential between FCE and its
parent Ford Credit. S&P said that the outlook on all entities is
negative.
Moody's Investors Service in December 2008 lowered the Corporate
Family Rating and Probability of Default Rating of Ford Motor
Company to Caa3 from Caa1 and lowered the company's Speculative
Grade Liquidity rating to SGL-4 from SGL-3. The outlook is
negative. The downgrade reflects the increased risk that Ford
will have to undertake some form of balance sheet restructuring to
achieve the same UAW concessions that General Motors and Chrysler
are likely to achieve as a result of the recently-approved
government bailout loans. Such a balance sheet restructuring
would likely entail a loss for bond holders and would be viewed by
Moody's as a distressed exchange and consequently treated as a
default for analytic purposes.
GANNETT CO: Re-elects Eight Directors to Board, Names Executives
----------------------------------------------------------------
Shareholders of Gannett Co., Inc., have re-elected Chairman,
President and CEO Craig A. Dubow, Howard D. Elias, Marjorie
Magner, Scott K. McCune, Duncan M. McFarland, Donna E. Shalala,
Neal Shapiro and Karen Hastie Williams to the Board of Directors
at the annual meeting held at the Company's headquarters. Each
received more than 95% of the votes cast.
The directors were elected to serve one-year terms ending at
Gannett's annual meeting in 2010. Gannett's shareholders also
ratified the appointment of Ernst & Young as the company's
independent accounting firm for the 2009 fiscal year.
The Board of Directors also declared a regular quarterly dividend
of four cents per share, payable on July 1, 2009, to shareholders
of record on June 5, 2009.
David Hunke Named as President, Publisher of USA TODAY
David Hunke was named president and publisher of USA TODAY, the
flagship newspaper and Web site of Gannett Co., Inc. Mr. Hunke
currently is chief executive officer of the Detroit Media
Partnership and publisher of the Detroit Free Press.
The announcement was made by Mr. Dubow at the company's Annual
Shareholders Meeting.
"Dave is a highly talented, multi-faceted leader, who drives
excellence throughout his organization while making the tough
business decisions. At the same time, he has the courage to be
innovative and take chances. He is just the right person for USA
TODAY at this juncture," said Mr. Dubow. "I am thrilled he will
be joining my executive team."
Mr. Hunke headed the team that this month won the Pulitzer Prize
for local reporting. He also led the Detroit Media Partnership
through a ground-breaking transformation earlier this year which
changed the way the two newspapers in the city are produced and
delivered.
Mr. Hunke named John Hillkirk editor of USA TODAY. Mr. Hillkirk
currently is executive editor of the newspaper.
Mr. Hunke said, "John has taken on every challenge USA TODAY has
thrown at him and not only succeeded, but did it with calm
assurance and creativity. He is a top-notch journalist with great
instincts who also understands and can articulate the future of
the industry. Together, John and I can make a real difference at
the nation's newspaper."
Mr. Hunke succeeds Craig Moon, who retired on April 17. Mr.
Hillkirk succeeds Ken Paulson, who left in February.
Mr. Hunke has been CEO of the Detroit Media Partnership and
publisher of the Detroit Free Press since 2005. Prior to that, he
was president and publisher of the Rochester Democrat and
Chronicle from 1999 to 2005 and vice president of Advertising for
the Cincinnati Enquirer from 1992-1999.
He began his journalism career in 1974 in advertising sales at the
Kansas City Star. He held various sales positions beginning in
1977 with the Knight-Ridder company, including advertising
director of The Miami Herald. He is a graduate of the University
of Kansas with a BS in journalism.
Mr. Hillkirk has been an editor and reporter at USA TODAY since
the newspaper launched in 1982. He was named executive editor in
2004 after serving nine years as managing editor of the
newspaper's Money section. Prior to joining USA TODAY, he was a
business reporter at the Times-Union in Rochester and the Valley
Dispatch in Tarentum. He is the co-author of three books: "Xerox:
American Samurai"; "Grots Guts and Genius"; and "A Better Idea:
Redefining the Way Americans Work." He is a graduate of Allegheny
College in Meadville, PA.
Executive Appointments at
Detroit Media & Detroit Free Press
Susie Ellwood will become CEO of the Detroit Media Partnership.
Ms. Ellwood has been executive vice president and general manager
of the partnership since 2006. She succeeds Mr. Hunke, who has
been named president and publisher of USA TODAY.
Ms. Ellwood has been executive vice president and general manager
of the Detroit Media Partnership since 2006. Except for two years
as vice president /market development for the Gannett Newspaper
Division, Ms. Ellwood has been in various marketing roles in
Detroit since 1991. She also was vice president and director of
marketing for the Arkansas Gazette in Little Rock. Ms. Ellwood is
an Arkansas native and a graduate of Arkansas State University
with a B.S.E. in business.
Paul Anger will become editor and publisher of the Detroit Free
Press. Mr. Anger has been vice president/News and editor of the
Free Press since 2005. Most recently, Mr. Anger led the Free
Press team that won the Pulitzer Prize for Local Reporting.
Mr. Anger was named vice president/News and editor of the Detroit
Free Press in 2005. He had been vice president and editor of the
Des Moines (IA) Register since 2002 and formerly was with The
Miami Herald as executive sports editor. Mr. Anger also served as
editor and publisher of the Herald's Broward County publications;
and news editor of the Knight-Ridder News Service. Mr. Anger has
a journalism degree from the University of Wisconsin-Oshkosh.
Joyce Jenereaux will become executive vice president of the
Detroit Media Partnership. She has been senior vice
president/Finance since 2005.
Ms. Jenereaux has been senior vice president/Finance of the
Detroit Media Partnership since 2005. She served as vice
president and controller since 1999 and has been in several other
financial roles at the partnership since 1990, including financial
reporting manager and assistant controller. She graduated from
Eastern Michigan University with a bachelor's degree in business
administration.
"The depth and range of talent at the Detroit operation makes this
transition all the easier," said Mr. Hunke, who will continue to
supervise the Detroit operation. "Susie truly knows Detroit, as
well as how to run the DMP. She is an experienced hand and will
step in seamlessly."
"Paul is a top notch editor and newsroom leader, who also
understands the business of journalism. His prize winning work at
Detroit remains among the best Gannett has to offer. And Joyce
has been a mainstay on the financial side of the Detroit
operations for nearly 20 years. She is a top notch manager and
ready for the EVP role," Mr. Hunke said.
The Detroit Media Partnership jointly operates the business side
of the Detroit Free Press, which is owned by Gannett, and The
Detroit News, which is owned by MediaNews Group. Editorial
operations for the two newspapers are run separately.
Todd Mayman as SVP & General Counsel
Todd A. Mayman was named senior vice president, general counsel
and secretary for Gannett Co., Inc. Mr. Mayman has been the
company's vice president/associate general counsel, secretary and
chief governance officer since 2003.
Mr. Mayman replaces Kurt Wimmer, who is leaving to take a leading
role in the media practice as a partner at the law firm of
Covington & Burling LLP.
Mr. Mayman began his career with Gannett in 1993 as assistant
general counsel and served as senior legal counsel before becoming
associate general counsel and secretary. Prior to 1993, he was
with the Washington DC, law firm of Arent Fox Kintner Plotkin &
Kahn.
He is a graduate of Swarthmore College and of the Boston
University School of Law.
Barbara W. Wall will become vice president and senior associate
general counsel, the Company said. Ms. Wall has been vice
president and associate general counsel. Ms. Wall joined Gannett
in 1985 as assistant general counsel. She is a graduate of the
University of Virginia and the University of Virginia Law School.
Prior to 1985, she was with the New York City law firm of
Satterless & Stephens.
"Todd's breadth of knowledge about Gannett and his keen legal
skills already are well known to our management team and to our
Board of Directors. This new position will enable Todd to expand
his role in ways that can only benefit Gannett going forward,"
said Mr. Dubow.
"Barbara's role as our guardian of the First Amendment is legend
among our journalists. She is their champion and a voice of
reason. But she also plays an essential part in our work on
content rights, libel and Internet law. With this promotion, we
not only expand her duties but also acknowledge her significance
in our battle on behalf of good journalism," Mr. Dubow said.
"Kurt has been a great asset to Gannett in his time here. His
knowledge of First Amendment law and broadcast issues were crucial
to the company's advancement during this time," Mr. Dubow said.
"Nevertheless, we truly understand the lure of his new position
and wish him all the best."
About Gannett Co. Inc.
Headquartered in McLean, Virginia, Gannett Co. Inc. (NYSE:GCI) --
http://www.gannett.com/-- is an international news and
information company. In the United States, the Company publishes
85 daily newspapers, including USA TODAY, and nearly 900 non-daily
publications. Along with each of its daily newspapers, the
company operates Websites offering news, information and
advertising that is customized for the market served and
integrated with its publishing operations. Newspaper publishing
operations in the United Kingdom, operating as Newsquest, include
17 paid-for daily newspapers, almost 300 non-daily publications,
locally integrated Websites and classified business Websites with
national reach. The Company has two segments: newspaper
publishing and broadcasting.
As reported by the Troubled Company Reporter on January 19, 2009,
Gannett reported that it is offering to sell certain assets of the
Tucson (AZ) Citizen. If a sale is not completed by March 21,
2009, Gannett said it will have to close the newspaper.
According to the TCR on January 15, 2009, Gannett said that it
asked U.S. non-unionized workers to take a week of unpaid leave
the first quarter. Gannett CEO and Chairperson Craig Dubow said
that the company needs to preserve its operations and continue to
deliver for its customers while confronting the issues raised by
some of the most difficult economic conditions that the Company
has ever experienced. Mr. Gannett said that employees in unions
will also be asked to participate in the furlough.
The TCR reported on October 2, 2008, that Gannett drew on a
revolving credit line to ensure it has funds to repay its
commercial paper. The action was taken in response to credit-
market disruption. The company said it has significant credit
available under a $3.9 billion revolving credit line, in excess of
its $2 billion in commercial paper outstanding.
As reported by the TCR on April 15, 2009, Gannett's several non-
daily newspapers in Oakland County said that they will cease or
merge publications on May 31, 2009. These editions of the
Eccentric will close:
-- The Birmingham,
-- West Bloomfield,
-- Troy, and
-- Rochester.
According to the TCR on April 22, 2009, Moody's Investors Service
placed Gannett's Ba1 Corporate Family Rating, Ba1 Probability of
Default Rating and Ba2 senior unsecured note ratings on review for
possible downgrade and lowered the speculative-grade liquidity
rating to SGL-4 from SGL-3.
GATEWAY ETHANOL: Court Okays Increase of Loan Amount to $6,881,995
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Kansas approved on
April 27, 2009, amendments to its stipulated final order granting
Gateway Ethanol, L.L.C., authority to obtain secured postpetition
financing from Dougherty Funding LLC.
The amendments include an increase in the maximum principal amount
from $5,931,611, to $6,881,995, and postponement to June 30 of the
deadline to close the asset sale.
A full-text copy of the Court order, which includes a revised
budget, is available at :
http://bankrupt.com/misc/Gateway.DE384.pdf
On April 13, 2009, the Bankruptcy Court increased the maximum
principal amount available under the financing from $5,707,319 to
$5,931,611, and postponement to April 24 of the deadline to close
the asset sale.
As reported by the Troubled Company Reporter on Nov 19, 2008,
pursuant to the DIP Loan terms, the financing terminates if
certain milestones are not achieved, including the completion of a
sale at a specified date.
Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol
plant that has a capacity of 55 million gallons a year, according
to Orion Ethanol's Web site. The Company filed for bankruptcy
protection on October 5, 2008 (Bankr. D. Ks., Case No. 08-22579).
Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E.
McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its
restructuring efforts. In its schedules, the Debtor listed total
assets of $94,545,022, and total debts of $93,353,654.
GATEWAY ETHANOL: Plan Filing Period Extended to June 2
------------------------------------------------------
The U.S. Bankruptcy Court for the District of Kansas has extended
Gateway Ethanol, LLC's exclusive period to file a plan until
June 2, 2009, and its exclusive period to solicit acceptances of
that plan until August 1, 2009.
This is the second extension of the Debtor's exclusive periods.
As reported in the Troubled Company Reporter on March 26, 2009,
Gateway Ethanol told the Court that it is requesting the extension
of its exclusive periods to give it sufficient time to close the
sale of its assets to Dougherty Funding LLC. Gateway added that
because the sale of its assets to Dougherty has not yet closed, it
would be premature for it to consider developing a Plan, and would
not serve the interests of the Debtor, the estate, or creditors.
Pratt, Kansas-based Gateway Ethanol, LLC, operates an ethanol
plant that has a capacity of 55 million gallons a year, according
to Orion Ethanol's Web site. The Company filed for bankruptcy
protection on October 5, 2008 (Bankr. D. Ks., Case No. 08-22579).
Laurence M. Frazen, Esq., Megan J. Redmond, Esq., and Tammee E.
McVey, Esq., at Bryan Cave, LLP, represent the Debtor in its
restructuring efforts. In its schedules, the Debtor listed total
assets of $94,545,022, and total debts of $93,353,654.
GENERAL MOTORS: Fiat Steps Up Plan to Buy Majority Stake in Opel
----------------------------------------------------------------
Stacy Meichtry at The Wall Street Journal reports that Fiat SpA
CEO Sergio Marchionne is stepping up plans to acquire a majority
stake in General Motors Corp.'s German unit Opel.
According to WSJ, Mr. Marchionne is crafting a three-way alliance
among Fiat, Chrysler, and Opel that is expected to generate about
$105.84 billion in revenue a year. Mr. Marchionne already signed
a partnership with Chrysler LLC in Washington last week, WSJ
states. Fiat said in a statement that its board of directors met
on Sunday and allowed Mr. Marchionne to seek a potential merger
between Fiat and GM's European operations, including Opel and its
U.K. unit Vauxhall. Citing people familiar with the matter, WSJ
relates that Mr. Marchionne would meet senior German government
officials in Berlin to try to get support for a potential alliance
with Opel.
Fiat said in a statement that if a deal is reached, Fiat will
consider creating a new publicly traded company that combines its
car unit, Fiat Group Automobiles, with GM's European operations.
WSJ relates that Fiat would be able to reach Mr. Marchionne's goal
of producing at least 5.5 million cars a year by merging with
Opel, in addition to its alliance with Chrysler. According to te
reports, a deal with Opel wouldn't alter the Chrysler partnership.
Fiat, says WSJ, sees the two deals as complementary. The report
states that Chrysler would form the backbone of Fiat's reentry
into the U.S. market, while a deal with Opel would make Fiat one
the biggest automakers in Europe.
WSJ states that Mr. Marchionne suggested that closing down plants
isn't a realistic option in Europe, where many employees are
protected by contracts that make it costly for companies to lay
off workers. According to the report, Mr. Marchionne said that he
preferred cutting back production at some plants over shutting
them down entirely.
Citing a person familiar with the matter, WSJ reports that Fiat is
also likely to seek government support from Berlin to prop up the
potential alliance while Fiat retools Opel's operations.
GM to Accelerate Talks With UAW & Close 2,600 Dealerships
According to John D. Stoll at WSJ, GM would accelerate talks with
the United Auto Workers union this week and move toward closing
2,600 dealerships.
WSJ reports that GM has yet to sign a deal with the UAW on labor-
cost reductions and retooling retiree health-care obligations.
The talks with the union are expected to take all month, says WSJ.
According to the report, GM is offering its union a 39% stake and
$10 billion in cash in exchange for the $20 billion the Company
owes a UAW trust fund responsible for paying health benefits.
The union will turn up the heat on GM negotiations after it gets
squared away with the Chrysler bankruptcy, WSJ states, citing UAW
President Ron Gettelfinger.
WSJ, citing people familiar with the matter, relates that GM is
expected to offer payments to the dealers who are targeted for
closure next Monday. WSJ says that those dealers can either
accept the offer, or take their chances in bankruptcy court.
WSJ relates that GM is looking to shed or sell several divisions,
including Saturn and Pontiac, in addition to confronting an issue
with unsecured bondholders. WSJ notes that dealers have expressed
concern over how GM will determine which franchises survive.
WSJ quoted Lewis Rosenbloom, a bankruptcy lawyer with Dewey &
LeBoeuf, as saying, "The move with Chrysler signals to the GM
creditors that bankruptcy is a viable option. The government is
not just going to throw money at this without getting a consensual
accord, so I think this is a harbinger of things to come."
According to WSJ, the Obama administration has said that it will
support a GM bankruptcy so that it moves quickly. Talks for the
sale of Saturn and Hummer to interested parties have been slowed
by the potential bankruptcy filing, WSJ states.
GM, says WSJ, is likely to approach banks holding secured debt
this month to try to work out terms to ease its debt burden.
About General Motors Corp.
Founded in 1908, General Motors Corp. (NYSE: GM), one of the
world's largest automakers, manufactures cars and trucks in 34
countries. With its global headquarters in Detroit, GM --
http://www.gm.com/-- employs 243,000 people in every major region
of the world, and sells and services vehicles in some 140
countries. In 2008, GM sold 8.35 million cars and trucks globally
under these brands -- Buick, Cadillac, Chevrolet, GMC, GM Daewoo,
Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.
GM's largest national market is the United States, followed by
China, Brazil, the United Kingdom, Canada, Russia and Germany.
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: Reports 173,007 Deliveries in April, Sales Up 11%
-----------------------------------------------------------------
General Motors dealers in the United States delivered 173,007
vehicles in April, down 34% compared with a year ago. However,
when comparing GM's April sales with March, total volume was up
11%, or about 16,600 cars, crossovers and trucks, largely driven
by a return to more normal volumes of fleet sales compared with a
very weak first quarter. GM's car sales compared with March were
up nearly 2,900 vehicles (4%), truck sales increased more than
9,500 vehicles (16%), and crossover sales were up nearly 4,200
vehicles (14%).
"From a retail standpoint, GM and the industry continued at about
the same selling rate as February and March. We see that
stabilization, along with a firming up of our fleet business and
improvement in Silverado and Sierra sales, as an encouraging
sign," said Mark LaNeve, vice president, GM North America Vehicle
Sales, Service and Marketing. "We're pleased to see R.L. Polk
information this week indicating that a majority of consumers plan
to buy a vehicle in the next two years -- that shows pent-up
demand is building. With our full line-up of cars, crossovers,
trucks and hybrids -- and some very competitive incentive offers -
we're well-positioned to meet this growing consumer demand in the
months ahead. For example, we have more than 15,000 sold orders
for the white-hot Chevy Camaro."
GM total truck sales (including crossovers) of 102,032 were down
28% and car sales of 71,775 were off 41% compared with a year ago.
GM's four core brands performed strongly compared with March.
Total Chevrolet sales of more than 115,000 vehicles were up 22%;
Cadillac sales of more than 8,300 vehicles increased 2%; GMC sales
of more than 20,400 vehicles were up 7%; and Buick sales of nearly
9,000 vehicles were up 21%. Specifically, when April sales are
compared with March:
* Driven by double-digit increases in Silverado, Tahoe,
Traverse and HHR sales, Chevrolet trucks and crossovers were
up 22%; Chevrolet cars were powered by Cobalt, Impala and
Corvette sales, driving an increase of 21%.
* Cadillac trucks and crossovers were down 11%; however, STS
and DTS sales hikes pushed Cadillac car volume up 7%.
* GMC trucks and crossovers increased 7% with Sierra and Yukon
leading the way.
* The Buick Enclave saw a 17% increase in sales; while a
double-digit increase in Lucerne sales pushed cars up 25%.
"We're hearing very positive feedback from dealers and customers,
so we're keeping the rally going by extending the Total Confidence
plan for Chevrolet, Buick, Pontiac, GMC and Saturn customers in
May," Mr. LaNeve said. "More than 750,000 people visited our
Total Confidence Web site in April, and about 70% of those folks
came to us from third-party sites."
"We'd also like to see continued actions by the government to
stimulate sales, such as the proposed scrappage program. The
President's comments yesterday encouraging customers to buy
American cars and trucks was also very positive. We have said
many times that Americans should consider our products because
they are the best. The economic advantages are a plus to that,"
Mr. LaNeve added. "The President restated our shared belief that
GM will be a part of a strong and viable auto industry for many
years to come, and customers should feel very comfortable buying
our vehicles."
A total of 1,534 GM hybrid vehicles were delivered in the month,
illustrating the wide range of hybrid product offerings available.
GM offers the Chevrolet Malibu, Tahoe and Silverado, GMC Yukon and
Sierra, Cadillac Escalade, Saturn Aura and Vue hybrids. So far,
in 2009, GM has delivered 5,156 hybrid vehicles.
GM inventories dropped compared with a year ago. At the end of
April, about 742,000 vehicles were in stock, down about 82,000
vehicles (or 10%) compared with last year. There were about
313,000 cars and 429,000 trucks (including crossovers) in
inventory at the end of April. Inventories were reduced about
25,000 vehicles compared with March. Importantly, last week, GM
announced that it would lower production by approximately 190,000
vehicles through the early part of the third quarter as it
continues to reduce inventories to an expected level of about
525,000 vehicles by the end of July. The schedule for launch
vehicles including the all-new Chevrolet Camaro, Buick LaCrosse,
Cadillac SRX and GMC Terrain is being maintained so that customers
will continue to see a full selection of new and launch vehicles
in dealer showrooms.
Certified Used Vehicles
GM Certified Used Vehicles, Saturn Certified Pre-Owned Vehicles,
Cadillac Certified Pre-Owned Vehicles, Saab Certified Pre-Owned
Vehicles, and HUMMER Certified Pre-Owned Vehicles, combined sold
34,079 vehicles.
GM Certified Used Vehicles, the industry's top-selling certified
brand, posted April sales of 28,722 vehicles, down 26% from April
2008. Saturn Certified Pre-Owned Vehicles sold 1,066 vehicles,
down 8%. Saab Certified Pre-Owned Vehicles sold 493 vehicles,
down 34%. However, two brands posted gains: Cadillac Certified
Pre-Owned Vehicles sold 3,566 vehicles, up 0.03% and HUMMER
Certified Pre-Owned Vehicles sold 232 vehicles, up 39%.
"GM's manufacturer-certified programs continue to offer a strong
value for consumers and we are seeing some optimism in the
market," said Mr. LaNeve. "In particular, our Cadillac CPO brand
has been resonating with consumers and remains on a positive
track. Not only do Certified Used Vehicles offer the largest
selection in the industry, they also come with strong factory
backed warranties, such as the 12-month/12,000 mile bumper-to-
bumper warranty. Certified Used Vehicles offer the peace of mind
in purchasing a durable and reliable vehicle."
GM North America reports April 2009 production; Q2 2009 production
forecast set at 390,000 vehicles
In April, GM North America produced 171,000 vehicles (59,000 cars
and 112,000 trucks). This is down 71,000 vehicles or 29% compared
with April 2008 when the region produced 242,000 vehicles (128,000
cars and 114,000 trucks). (Production totals include joint
venture production of 7,000 vehicles in April 2009 and 22,000
vehicles in April 2008.)
The region's 2009 second-quarter production forecast is set at
390,000 vehicles (172,000 cars and 218,000 trucks), which is down
about 53% compared with a year ago. GM North America built
834,000 vehicles (382,000 cars and 452,000 trucks) in the second-
quarter of 2008.
About General Motors Corp.
Founded in 1908, General Motors Corp. (NYSE: GM), one of the
world's largest automakers, manufactures cars and trucks in 34
countries. With its global headquarters in Detroit, GM --
http://www.gm.com/-- employs 243,000 people in every major region
of the world, and sells and services vehicles in some 140
countries. In 2008, GM sold 8.35 million cars and trucks globally
under these brands -- Buick, Cadillac, Chevrolet, GMC, GM Daewoo,
Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.
GM's largest national market is the United States, followed by
China, Brazil, the United Kingdom, Canada, Russia and Germany.
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: To Talk With KDB on Sale of GM Daewoo Stake
-----------------------------------------------------------
Nick Reilly, President GM Asia Pacific, said Friday General Motors
Corp. will talk to the Korea Development Bank about selling a
stake in GM Daewoo.
Reuters says KDB officials said Thursday the state-run bank was
considering raising its stake in GM Daewoo. KDB holds a 28% in GM
Daewoo, and is the second largest stakeholder behind GM's 51%.
According to Reuters, Mr. Reilly said GM and KDB were discussing
possible financial support for GM Daewoo. He, however, denied
local media reports that KDB had requested a 30% stake in GM
Daewoo, Reuters relate.
Mr. Reilly, according to Reuters, said GM wants to keep GM Daewoo
Auto & Technology as part of the group, citing the importance of
engineering skills at the unit.
Reuters says GM Daewoo has requested additional loans from banks,
including KDB, its main creditor, after using up a $2 billion
credit line. KDB last week said South Korean banks decided to
roll over the expiration of half of $890 million in short-term
foreign currency forwards of GM Daewoo, says Reuters.
GM Daewoo is South Korea's No. 3 automaker. It sells almost 90%
of its products overseas, including Europe and North America,
under the Chevrolet, Pontiac, Holden and Suzuki brands.
About General Motors Corp.
Founded in 1908, General Motors Corp. (NYSE: GM), one of the
world's largest automakers, manufactures cars and trucks in 34
countries. With its global headquarters in Detroit, GM --
http://www.gm.com/-- employs 243,000 people in every major region
of the world, and sells and services vehicles in some 140
countries. In 2008, GM sold 8.35 million cars and trucks globally
under these brands -- Buick, Cadillac, Chevrolet, GMC, GM Daewoo,
Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.
GM's largest national market is the United States, followed by
China, Brazil, the United Kingdom, Canada, Russia and Germany.
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: Hires Steven Girsky to Help Sell Saturn Brand
-------------------------------------------------------------
Sharon Terlep and Kerry E. Grace at The Wall Street Journal report
that General Motors Corp. said on Monday that it hired Steven
Girsky to help sell its Saturn brand by year-end.
According to WSJ, Mr. Girsky is an auto industry adviser, a former
Morgan Stanley analyst, and one-time advisor to departed former GM
CEO Rick Wagoner. GM, WSJ relates, said that it will assist GM as
it reviews offers from potential buyers.
WSJ states that Saturn has lost money since GM launched the brand
in 1984 to lure back customers who had defected to foreign-based
competitors like Toyota Motor Co. WSJ says Saturn never delivered
the competitive edge or profits that GM anticipated and the
Company's efforts to revive the Saturn lineup by spending big on a
fresh lineup of vehicles were insufficient. GM, according to the
report, said earlier this year that it would sell or dismantle
Saturn as part of its restructuring plans.
GM hoped to attract interest in Saturn's retail network, as
dealerships for the brand often are newer and more modern than
other GM-brand dealerships and tend to be located in more
desirable locales, WSJ says.
WSJ relates that several parties had expressed interest in Saturn,
among them a group that includes some Saturn dealers. Sharon
Terlep at Dow Jones Newswires reports that GM said on Monday that
it is reviewing "expressions of interest" from "a number" of
potential buyers.
A group that includes Black Oak Partners LLC offered for Saturn,
proposing a plan in which it would seek to transform Saturn into a
fuel-efficient brand, sell GM vehicles through Saturn's network of
U.S. and Canadian dealers, and later add vehicles from other auto
makers, WSJ states. A spokesperson for Black Oak said that the
group is still interested in Saturn but has received no official
response from GM, according to the report.
Citing people familiar with the matter, Dow Jones reports that
Roger Penske -- owner of the second-largest U.S. auto retailer,
Penske Automotive Group Inc. -- has emerged as another potential
bidder for Saturn.
Dow Jones states that GM, under any Saturn deal, would eventually
stop providing the vehicles and they would be built by another
manufacturer and sold through the Saturn retail chain.
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: Magna Confirms Involvement in Potential Opel Deal
-----------------------------------------------------------------
Magna International Inc. confirmed that it is in talks with Opel,
General Motors and German government officials regarding potential
alternatives for the future of Opel, which could include Magna
taking a minority stake in Opel.
There is no assurance that any transaction will result from
Magna's current involvement.
Alex Ortolani of Bloomberg News said Magna International, American
Axle & Manufacturing Holdings Inc. may be most at risk for
billions of dollars in lost payments to partsmakers in a
bankruptcy filing by General Motors Corp. or Chrysler LLC.
Based in Aurora, Ontario, Magna International Inc. designs,
develops and manufactures technologically advanced systems,
assemblies, modules and components, and engineers and assembles
complete vehicles, primarily for sale to original equipment
manufacturers of cars and light trucks. Magna has roughly 70,000
employees in 240 manufacturing operations and 86 product
development, engineering and sales centers in 25 countries.
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.
GETRAG TRANSMISSION: May Employ Baker & Daniels as Special Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan has
granted GETRAG Transmission Manufacturing, LLC, permission to
employ Baker & Daniels LLP, as its special counsel for issues and
matters relating to real property tax assessments as well as
issues and matters relating to certain Tipton Country economic
incentives, including revenue bonds issued by Tipton County, for
the Debtor.
As reported in the Troubled Company Reporter on April 15, 2009,
Mark S. Moore, Esq., a partner at Baker & Daniels LLP, assured the
Court that the firm does not hold or represent any interest
adverse to the Debtor or its estate.
Payment of Baker's fees and expenses is subject to Court approval
after notice and a hearing.
Baker's professionals bill at these hourly rates:
Position Hourly Rate
-------- -----------
Partner $350-$620
Associate $225-$280
Real Estate Analysts $230-$270
Paralegal $140
About GETRAG Transmission
Headquartered in Sterling Heights, Michigan, GETRAG Transmission
Manufacturing LLC -- http://www.getrag.de/-- designs and makes
dual clutch transmission its facility in Tipton, Indiana. The
company filed for Chapter 11 relief on Nov. 17, 2008 (Bankr. E.D.
Mich. Case No. 08-68112). Jayson Ruff, Esq., Jeffrey S. Grasi,
Esq., and Stephen M. Gross, Esq., at McDonald Hopkins, represent
the Debtor as counsel. Matthew Wilkins, Esq., and Paula A. Hall,
Esq., at Brooks Wilkins Sharkey & Turco PLLC, represent the
Official Committee of Unsecured Creditors as counsel.
In its schedules, the Debtor listed total assets of $690,071,505
and total debts of $582,208,616.
GHOST TOWN: Seeks $200,000 Loan From Maggie Valley
--------------------------------------------------
Jon Ostendorff at Citizen-Times.com reports that Ghost Town
Partners, LLC, is trying to secure a $200,000 loan from Maggie
Valley.
Ghost Town CEO Steve Shiver said that the money is needed to start
"the season", Citizen-Times.com relates. Citizen-Times.com states
that Ghost Town has an annual payroll of more than $2 million.
Ghost Town, according to the report, said that it has spent more
than $20 million since reopening in 2007, including more than
$6 million on the Cliffhanger roller coaster. Ghost Town, the
report says, wants to hire 200 people for the season.
According to Citizen-Times.com, the town could legally make the
loan under a provision in state law that allows for spending on
economic development. The town has never loaned money to a
business before, the report says, citing Town Manager Tim Barth.
The report states that Maggie Valley's Board of Aldermen will have
the final say on making the loan.
Citing N.C. Department of Labor spokesperson Dolores Quesenberry,
Citizen-Times.com says that none of Ghost Town's rides have been
inspected this year, and the department hasn't received an
inspection request from the park, which is required 10 days before
the first planned date of operation. The report states that the
rides can't open without inspections. Mr. Shiver, according to
the report, said that Ghost Town is working with the state and
hopes to have the rides open.
Citizen-Times.com relates that Alderman Colin Edwards, a member of
the Board of Aldermen, is against the loan, saying that he can't
vote for the loan because Ghost Town hasn't provided a plan to
repay the amount and doesn't have collateral. According to
Citizen-Times.com, Mr. Edwards said that he also is worried that
Ghost Town might not get Chapter 11 protection and might instead
end up in Chapter 7, which would mean the court would liquidate
the Company to pay its debts, and that the town would end up at
the end the line of people and banks owed money.
Mr. Edwards said that Ghost Town owes him money for a retaining
wall he built there, Citizen-Times.com reports. Mr. Edwards,
Citizen-Times.com states, said that Mr. Shiver has tried to
prevent him from voting due to a conflict of interest.
Based in Waynesville, North Carolina, Ghost Town Partners, LLC,
operates an amusement park. The Debtor filed for Chapter 11
protection on March 11, 2009 (Bankr. W. D. N.C. Case No. 09-
10271). David G. Gray, Esq., at Westall, Gray, Connolly & Davis,
P.A., represents the Debtor in its restructuring efforts. In its
bankruptcy petition, the Debtor listed total assets of $13,035,300
and total debts of $12,305,672.
GMAC LLC: Chrysler Agreement Won't Affect S&P's 'CCC' Rating
------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings on GMAC
LLC (GMAC; CCC/Negative/C) would not be affected by the company's
announcement that it has entered into an agreement with Chrysler
Financial Services Americas LLC to provide future automotive
financing products and services to Chrysler dealers and customers.
Under the agreement, 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. In addition, the government has announced that it
intends to support GMAC in this agreement by making liquidity
available to GMAC and by providing the capitalization GMAC
requires to support the Chrysler business. However, specifics of
the support have not yet been disclosed. The agreement does not
involve GMAC's acquisition of Chrysler assets or liabilities.
GOOD SAMARITAN: Moody's Affirms 'B2' Rating on $76 Mil. Bonds
-------------------------------------------------------------
Moody's Investors Service has affirmed the B2 bond rating on Good
Samaritan Hospital's bonds, affecting $76 million of Series 1991
fixed rate bonds. The outlook remains negative. Good Samaritan
is located in Los Angeles, California. Despite some early
evidence of operating improvement in fiscal year 2009, the rating
and negative outlook reflects Moody's belief that the hospital's
extremely low cash position of $20 million and weak cashflow
threaten the hospital's viability and ability to make future debt
service payments. While the hospital does have an additional $44
million in unrestricted cash from a land sale, which provides a
short-term liquidity source, the hospital plans to use this cash
for capital.
Legal Security: Bonds are secured by a first lien on certain
pledged assets, which include the medical center and underlying
real estate, a conference center, and two parking structures.
There are limits on additional indebtedness. There is no debt
service reserve fund; the hospital makes monthly interest and
sinking fund payments into a bond fund.
Interest Rate Derivatives: None
Strengths
* High-end clinical provider with almost 200 open heart surgeries
performed in fiscal year 2008, and a relatively high Medicare
case mix index of 1.74; trends in heart surgeries are negative
due to alternative treatments and competition
* Debt structure with all fixed rate debt and no interest rate
derivatives
* Presence of $44 million in unrestricted cash from a land sale
that could provide a short-term source of liquidity for
operations and debt service, but is expected to be spent on
capital
* Potential future benefit from projected growth and
revitalization of the downtown Los Angeles area
Challenges
* Excluding the $44 million in proceeds from a land sale,
unrestricted cash declined over the last two years to a level
that is not adequate to meet operating needs and debt service
(unrestricted cash was $20 million as of March 31, 2009; about
26 days of cash on hand)
* Long-term historical trend of erratic volumes due to physician
turnover and continued declines in certain profitable cardiac
services, which have been replaced with growth in less
profitable obstetrics; however, inpatient and outpatient volumes
in fiscal year 2008 and through the six months of fiscal year
2009 are up due to the successful recruitment of physicians
* High and growing Medi-Cal patient base, representing 22% of
revenues and more than doubling in the last five years, due to a
shift in service mix, and resulting in a higher dependency on
the state for adequate funding
* Even with recent operating improvement in seven months of fiscal
year 2009, history of extremely weak cashflow margins of under
4% and negative operating cashflow in 2008, resulting in very
weak leverage measures including a very low peak debt service
coverage of 0.7 times
* Small and very competitive primary service area consisting of 11
hospitals; larger service area includes over 20 hospitals
* Unionized nursing staff and sizable wage increases
* Deferred capital needs, resulting in a very high average age of
plant of 24 years
Recent Developments/Results
Since Moody's last report in October 2008, Good Samaritan's
unrestricted cash position is slightly higher, although remains
very weak. As of March 31, 2009, unrestricted cash was $19.6
million (26 days of cash on hand), compared with $16.2 million (23
days of cash on hand) as of August 31, 2008. Management had
projected cash to decline to approximately $8 million by fiscal
year end 2009 (August 31), although with recent operating
improvement cash is now expected to be better. Routine capital
spending in FY 2009 is expected to be $10-$12 million. The
hospital's cash is primarily invested in money markets or bonds.
The project funds are invested approximately 25% in equities,
which Moody's believe creates risk given market volatility and the
intent to use these funds in the near future.
Good Samaritan currently has an additional source of liquidity in
the form of $44 million in cash acquired from a land sale. The
funds are unrestricted and can be used to support operations and
debt service. However, this money has been set aside by the board
to fund the construction of a large 190,000 square foot medical
office building and outpatient pavilion, which will assist with
recruiting physicians and expand clinical space. The total cost
of this project is approximately $80 million. If the project
proceeds, the hospital is targeting fundraising to supplement the
$44 million in designated cash. While the hospital has hired a
new development director and has board members with resources,
there has been very little evidence historically of fundraising of
the magnitude needed. The hospital does have a pledge of $14
million but will begin the project before having pledges for the
remaining gifts, which Moody's view as a significant risk.
Historically the hospital's volumes have been very erratic and
tied to physician turnover, although recent trends are more
positive. Following inpatient and outpatient declines in 2007,
admissions were up 3.9% and outpatient surgeries up 8.4% in 2008
due to the recruitment of new surgeons. Through the six months of
fiscal year 2009, admissions were up 2.5%, outpatient surgeries
were up modestly at 0.8% and inpatient surgeries were up 34%.
Growth in admissions is due to the recent recruitment of
orthopedists, and to the opening of a clinical decision unit that
has driven an increase in the number of medical transports
received through the emergency department. Importantly, growth
has been in more profitable Medicare volumes. Cardiology volumes
continue to decline with cardiac caths down 13%.
Operating results in both FY 2007 and FY 2008 were worse than FY
2006, and operating losses were high. The operating loss was
$15.6 million (-6%) in fiscal year 2008, compared with an
operating loss of $14.6 million (-6%) in 2007 (excluding a $4.5
million non-recurring Medicare settlement as well as investment
income and gifts). Operating cashflow was $0.9 million (0.4%) in
2008, compared with $1.8 million (0.7%) in 2007. Operating
cashflow from operations (as shown on the cashflow statement) was
negative in 2008. Both years were affected by the loss of
orthopedists, the replacement of which did not start until well
into fiscal year 2008. Additionally, the hospital continues to
face high wage increases under its current union contracts, which
expire in 2009.
Fiscal year 2009 is showing some early signs of operating
improvement. Through seven months of fiscal year 2009, the
operating loss was $2.6 million (-1.6%), compared with a loss of
$8.7 million (-6.2%) in the prior year period. The improvement is
due to volume growth, higher Medicare business, and a timing issue
related to a special state funding received in the current period
but not in the prior period.
While performance in 2009 is better, over the longer-term the
hospital has not been able to translate its size, presence and
service strength into profitable and sustainable performance,
which has resulted in its very weak financial position.
Furthermore, the hospital has failed thus far to demonstrate a
strong capacity to fundraise. Given its fundamental strengths and
prominent board, Moody's believe the hospital should be performing
at much better levels. Moody's believe that the hospital's
viability will be dictated by whether management and the board are
able to reverse operating losses and sustain adequate operating
profits, invest in needed facilities to retain physicians and grow
volume, restore cash levels and realize potential fundraising
opportunities.
Good Samaritan's Medi-Cal business continues to rise, increasing
its dependency on state funding sources. Medi-Cal increased to
22% from 21% of gross revenue in the last year. The hospital is
expecting a rate increase under its contract with Medi-Cal;
however, Moody's believe the state's fiscal challenges put this
funding at risk. In 2006 Good Samaritan qualified for funding
under a special funding distribution from the State of California,
which has been received through 2009. The future of this funding
is uncertain.
Outlook
The negative outlook reflects Moody's belief that the hospital's
extremely low cash position of $20 million and weak cashflow
threaten the hospital's viability and ability to make future debt
service payments. While the hospital does have an additional $44
million in unrestricted cash from a land sale, which provides a
short-term source of liquidity, the hospital plans to use this
cash for capital.
What could change the rating--UP
The negative outlook suggests an upgrade is not likely in the
absence of an extraordinary cash infusion
What could change the rating--DOWN
Further decline in unrestricted cash, continued operating losses
Key Indicators
Assumptions & Adjustments:
-- Based on financial statements for Good Samaritan Hospital
-- First number reflects audit fiscal year ended August 31, 2007
-- Second number reflects audit fiscal year ended August 31,
2008
-- Investment returns smoothed at 6% unless otherwise noted
-- Fiscal Year 2007 data has been adjusted to exclude a non-
recurring $4.5 million non-cash Medicare-related adjustment
from operating income
* Inpatient admissions: 17,383; 18,067
* Total operating revenues: $244 million; $259 million
* Moody's-adjusted net revenue available for debt service: $6.7
million; $6.2 million
* Total debt outstanding: $76 million; $76 million
* Maximum annual debt service (MADS): $8.6 million; $8.6 million
* MADS coverage based on reported investment income: 1.0 times;
1.4 times
* Moody's-adjusted MADS coverage: 0.8 times; 0.7 times
* Debt-to-cash flow: 62 times; 89 times
* Days cash on hand: 46 days; 22 days
* Cash-to-debt: 41%; 21%
* Operating margin: (6.0)%; (6.0)%
* Operating cash flow margin: 0.7%; 0.4%
The last rating action was on October 15, 2008 when the rating for
Good Samaritan Hospital was downgraded to B2 from B1 and the
negative outlook maintained.
HARLAND CLARKE: S&P Explains Rating Change on Secured Facilities
----------------------------------------------------------------
The original version of this report was published on April 29,
2009. This version better clarifies the reason for the recovery
rating change on Harland Clarke's secured credit facilities.
Standard & Poor's Ratings Services revised its recovery rating on
Harland Clarke Holdings Corp.'s senior secured credit facilities
to '3', indicating S&P's expectation of meaningful (50% to 70%)
recovery for lenders in the event of a payment default, from '2'.
In addition, S&P lowered the issue-level rating on these loans to
'B+' (at the same level as the 'B+' corporate credit rating on the
company) from 'BB-', in accordance with S&P's notching criteria
for a recovery rating of '3'.
"The revised recovery rating is attributable to S&P's simulated
default scenario envisioning a more significant decline in cash
flow than it did in our previous analysis, as well as a reduction
in S&P's assumed emergence multiple to 5.0x from 5.5x due to the
challenging operating conditions in the check printing sector,
reflecting secular declines and the adverse effects of the weak
economy," said Standard & Poor's credit analyst Ariel Silverberg.
The corporate credit rating on Harland Clarke is 'B+' and the
rating outlook is stable. The 'B+' rating reflects the company's
high debt leverage, and exposure to a secular shift from print
check usage to alternative forms of payment. These factors are
somewhat mitigated by the company's stable cash flow generation
and increased diversification following the John H. Harland and
Data Management acquisitions. In addition, the rating
incorporates the credit quality of M&F Worldwide Corp., the parent
of Harland Clarke Holdings, and the expectation that MFW will
continue to maintain an aggressive financial policy.
Ratings List
Harland Clarke Holdings Corp.
Corporate Credit Rating B+/Stable/--
Ratings Revised
Harland Clarke Holdings Corp.
To From
-- ----
Secured B+ BB-
Recovery Rating 3 2
HATFIELD LC: Case Summary & 16 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Hatfield, LC
aka Hatfield's Rug Cleaners
aka Hatfield's --
5301 S. Dixie Highway
West Palm Beach, FL 33405
Bankruptcy Case No.: 09-18446
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Southern District of Florida (West Palm Beach)
Judge: Paul G. Hyman Jr.
Debtor's Counsel: Julianne R. Frank, Esq.
11382 Prosperity Farms Rd. #230
Palm Beach Gardens, FL 33410
Tel: (561) 626-4700
Fax: (561) 627-9479
Email: fwbbnk@bellsouth.net
Total Assets: $2,560,162
Total Debts: $1,167,654
According to its schedules of assets and liabilities, $1,008,866
of the debt is owing to secured creditors, $214 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
16 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/flsb09-18446.pdf
The petition was signed by Yujel Akdeniz, president of the
Company.
HELLER EHRMAN: Plan Filing Period Extended to August 25
-------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of California
has extended Heller Ehrman, LLP's exclusive periods to file a plan
and solicit acceptances of said plan to August 25, 2009, and
October 24, 2009, respectively.
As reported in the Troubled Company Reporter on April 21, 2009,
Peter J. Benvenutti, a member of the company's Dissolution
Committee, informed the Court that the negotiation between the
Debtor and the official committee of unsecured creditors cannot go
forward until the report of Development Specialists, Inc., is
completed. Mr. Benvenutti said that it is the Debtor's hope that
DSI's report will serve as a common reference point for
negotiation regarding the appropriate contribution, if any, to be
made by the shareholders of the Debtor's partners to a consensual
liquidating plan.
DSI was employed by the Debtor and the creditors committee to
perform a series of investigative tasks, including among other
things the preparation of a written report identifying the
Debtor's point of insolvency.
Headquartered in San Francisco, California, Heller Ehrman, LLP LP
-- http://www.hewm.com/-- was an international law firm of more
than 730 attorneys in 15 offices in the United States, Europe, and
Asia. The firm filed a voluntary petition under Chapter 11 of the
Bankruptcy Code on December 28, 2008 (Bankr. N.D. Calif., Case No.
08-32514). Members of the firm's dissolution committee led by
Peter J. Benvenutti approved a plan dated September 26, 2008, to
dissolve the firm.
The Hon. Dennis Montali presides over the case. John D. Fiero,
Esq., and Miriam Khatiblou, Esq., at Pachulski, Stang, Ziehl,
Young and Jones, represent the Debtors as counsel. Thomas A.
Willoughby, Esq., at Felderstein Fitzgerald Willoughby & Pascuzzi
LLP, represents the official committee of unsecured creditors of
the Debtor. The firm listed assets and debts between $50 million
and $100 million each in its bankruptcy petition. According to
reports, the firm still has roughly $63 million in assets and 54
employees at the time of its filing.
HERITAGE-MONTGOMERY: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------------
Evan Brandt and Michelle Karas at The Mercury report that
Heritage-Montgomery Center, LP, and its affiliates have filed for
Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the
District of New Jersey.
According to The Mercury, Anthony E. Maras -- an attorney with
Heritage Building Group Inc. -- said, "This filing was due, in
large part, to the inability of Sunnybrook and its lenders to
restructure the current loan agreements. Sunnybrook is seeking
this relief in order to restructure the loans in a manner which
allows it to pay vendors going forward, and be competitive on the
leasing of this property. This filing does not impact any other
affiliated or related entities of Sunnybrook."
The Debtors' bankruptcy will have little effect on township
residents and businesses and Heritage is "pretty well done" with
its commercial project, The Mercury states, citing Lower
Pottsgrove Township solicitor R. Kurtz Holloway. The report
quoted Mr. Holloway as saying, "Fortunately, this is not a THP
type of situation for us." Mr. Holloway, according to the report,
was referring to the ceasing of operations at Lower Salford-based
builder T.H. Properties.
Heritage-Sunnybrook Village and related companies will continue to
operate without suspension or interruption in property management
or tenant services, "and all security deposits remain in escrow,"
The Mercury states, citing Mr. Maras.
Court documents say that Heritage-Montgomery has between one and
49 creditors.
Heritage-Sunnybrook Village L.P. is a real estate partnership that
built a commercial development in the township.
Jamison, Pennsylvania-based Heritage-Montgomery Center, LP, and
its affiliates filed for Chapter 11 bankruptcy protection on
April 28, 2009 (Bankr. D. N.J. Case No. 09-20593). Albert A.
Ciardi, III, Esq., at Ciardi Ciardi & Astin, P.C., assists the
Debtors in their restructuring efforts. The Debtors listed
$1,000,001 to $10,000,000 in assets and $1,000,001 to $10,000,000
in debts.
INDUSTRIAL ENTERPRISES: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------------
Debtor: Industrial Enterprises of America, Inc.
651 Holiday Drive
Suite 300
Pittsburgh, PA 15220
Bankruptcy Case No.: 09-11508
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
District of Delaware (Delaware)
Judge: Brendan Linehan Shannon
Debtor's Counsel: Pace Reich, Esq.
726 Meetinghouse Road
Elkins Park, PA 19027
Tel: (215) 887-0130
Fax: (215) 887-5617
Email: pacereichpc@msn.com
Total Assets: $50,476,697
Total Debts: $17,853,997
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/deb09-11508.pdf
The petition was signed by Michael F. Dignazio, corporate
secretary of the Company.
INGLES MARKETS: S&P Gives Negative Outlook; Affirms 'BB-' Rating
----------------------------------------------------------------
Standard & Poor's Ratings Services said it revised its outlook for
Ingles Markets Inc. to negative from stable. At the same time,
S&P affirmed the company's 'BB-' corporate credit rating.
"This action reflects the company's weaker credit metrics
following its greater-than-expected debt issuance yesterday," said
Standard & Poor's credit analyst Stella Kapur. While the
company's cushion on its net debt to EBITDA covenant is currently
around 15%, pro forma for the refinancing transaction, this
covenant cushion could deteriorate quickly as the company uses the
roughly $76 million of pro forma cash on its balance sheet.
"Given that the covenant is calculated on a net debt basis,"
explained Ms. Kapur, "if EBITDA and outstanding debt levels remain
constant, the cushion under this covenant could deteriorate below
10% if the company only has $15 million of remaining cash on its
balance sheet."
JOHN STOKES: U.S. Trustee Seeks Conversion to Ch. 7 Liquidation
---------------------------------------------------------------
Gazette News Services reports that the Neal Jensen, assistant
trustee with the Office of the U.S. Trustee Program, have filed a
motion on behalf of the federal government to convert John Stokes'
Chapter 11 reorganization case to a Chapter 7 liquidation.
According to the motion filed by Mr. Jensen, Mr. Stokes didn't
include numerous assets and debts in his bankruptcy filing.
Gazette News relates that Mr. Stokes was ordered last year to pay
about $3.8 million in a defamation lawsuit for making malicious
false statements about two neighboring businessmen on his radio
show. Citing the government, Gazette News states that Mr. Stokes
didn't include that liability in his bankruptcy case, along with
back taxes he owes. Court documents say that Mr. Stokes
undervalued or didn't list many of his assets, including the radio
station.
Gazette News relates that Mr. Stokes has until May 6 to reply to
the trustee's motion.
John Stokes owns a Kalispell radio station. He filed for
Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for
the District of Montana. Mr. Stokes' bankruptcy filing includes
his two unregistered corporations, Z-600 Inc. and Skyline
Broadcasting.
JOSEPH F. AZZOLINO: Case Summary & 3 Largest Unsecured Creditors
----------------------------------------------------------------
Joint Debtors: Joseph F. Azzolino
Marta Rita Azzolino
178 Lisbon St.
San Francisco, CA 94112
Bankruptcy Case No.: 09-31150
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Northern District of California (San Francisco)
Judge: Thomas E. Carlson
Debtors' Counsel: Cory A. Birnberg, Esq.
Law Offices of Birnberg and Assoc.
1083 Mission St. 3rd Fl
San Francisco, CA 94103
Tel: (415) 398-1040
Fax: (415)398-2001
Email: birnberg@birnberg.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 Debtors' petition, including their list of
3 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/canb09-31150.pdf
The petition was signed by the Joint Debtors.
KTP ENTERPRISES: Case Summary & 1 Largest Unsecured Creditor
------------------------------------------------------------
Debtor: KTP Enterprises, LLC
1103 Otter Circle
Beaufort, SC 29902
Bankruptcy Case No.: 09-03334
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
District of South Carolina (Charleston)
Judge: David R. Duncan
Debtor's Counsel: Elizabeth M. Atkins, Esq.
778 St. Andrews Blvd
Charleston, SC 29407
Tel: (843) 763-0333
Email: ematkins2000@yahoo.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of 1
largest unsecured creditor is available for free at:
http://bankrupt.com/misc/scb09-03334.pdf
The petition was signed by Kevin Thomas Peeples, managing member
of the Company.
LA ESTANCIA: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: La Estancia, LLC
2660 Crimson Canyon Drive, Ste. 110
Las Vegas, NV 89128
Bankruptcy Case No.: 09-16996
Chapter 11 Petition Date: May 1, 2009
Court: District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Matthew L. Johnson, Esq.
bankruptcy@mjohnsonlaw.com
Matthew L. Johnson & Associates, P.C.
8831 W. Sahara Ave.
Las Vegas, NV 89117
Tel: (702) 471-0065
Fax: (702) 471-0075
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
------ --------------- ------------
Double E Family LLC $10,208,990
10799 W Twain
Las Vegas, NV 89135
MH Funding, LLC Trade debt $4,125,000
2860 Filbert Street
San Francisco, CA 94123
Diablo Village, LLC $1,328,819
2660 Crimson Canyon Drive
Ste. 110
Las Vegas, NV 89128
Boise 170, LLC $872,522
Origin Properties $497,611
Meyers Hendrick Trade debt $170,000
Bradley & Lori Burns Trust $148,484
KTGY Group Inc. Trade debt $144,919
Pima Country Treasurer Property taxes $57,609
RBF Consulting Trade debt $55,436
Westland Resources Trade debt $27,489
Michael Clabby Trade debt $10,440
Slutes, Sakrison & Rogers Trade debt $8,698
Fennemore Craig, P.C. Trade debt $7,510
Kaercher & Associates Trade debt $6,791
Castro Engineering Trade debt $5,228
Harvest Consulting Trade debt $3,369
John Lupo Trade debt $2,400
Cox Castle & Nicholson Trade debt $1,800
WRI Construction, Inc. Trade debt $1,700
The petition was signed by Bradley F. Burns, manager of BFB
Enterprises, LLC.
LAURO QUILON: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Joint Debtors: Lauro Quilon Espinueva
Evangelina Buen Espinueva
7521 Desertscape Ave.
Las Vegas, NV 89178
Bankruptcy Case No.: 09-17006
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Linda B. Riegle
Debtors' Counsel: Thomas E. Crowe, Esq.
7381 W. Charleston Blvd. #110
Las Vegas, Nv 89117
Tel: (702) 794-0373
Fax: (702) 794-0734
Email: Tcrowelaw@Yahoo.Com
Total Assets: $3,131,545
Total Debts: $3,753,600
According to its schedules of assets and liabilities, $2,961,000
of the debt is owing to secured creditors and the remaining debt
to creditors holding unsecured nonpriority claims.
A full-text copy of the Debtors' petition, including their list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-17006.pdf
The petition was signed by the Joint Debtors.
LAUTH INVESTMENT: Files for Chapter 11 on Real Estate Woes
----------------------------------------------------------
Tom Spalding at The Indianapolis Star reports that Lauth
Investment Properties, LIP Development, and LIP Investment have
filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy
Court for the Southern District of Indiana.
Court documents say that the Debtors owe $2.06 million to Charter
One and $21,955 to Ernst & Young.
The Indianapolis Star quoted Lauth spokesperson Myra Borshoff Cook
as saying, "Even though real estate companies have ups and downs
and lows, this is the worst market they have ever seen."
Carmel-based Lauth Property Group is one of the nation's top
developers. Lauth Investment Properties, LIP Development, and LIP
Investment are three holding companies affiliated with Lauth
Property.
LAUTH INVESTMENT: Case Summary & 2 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Lauth Investment Properties, LLC
401 Pennsylvania Parkway
Indianapolis, IN 46280
Bankruptcy Case No.: 09-06065
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Development, LLC 09-06066
LIP Investment, LLC 09-06067
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Southern District of Indiana (Indianapolis)
Judge: Basil H. Lorch III
Debtor's Counsel: Jeffrey J. Graham, Esq.
Taft Stettinius & Hollister LLP
One Indiana Square
Suite 3500
Indianapolis, IN 46204
Tel: (317) 713-3500
Fax: (317) 713-3699
Email: jgraham@taftlaw.com
Jerald I. Ancel, Esq.
Taft Stettinius & Hollister LLP
One Indiana Sq Ste 3500
Indianapolis, IN 46204
Tel: (317) 713-3500
Fax: (317) 713-3699
Email: jancel@taftlaw.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 2 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/insb09-06065.pdf
The petition was signed by Robert L. Lauth, Jr., chairman of the
Company.
LBI MEDIA: Projected Weak Credit Profile Cues Moody's Junk Rating
-----------------------------------------------------------------
Moody's Investors Service downgraded the corporate family and
probability of default ratings for LBI Media, Inc. each to Caa1
from B2.
The downgrades reflect Moody's expectation that LBI's credit
profile will weaken further and more significantly then previously
anticipated in 2009 due to declines in advertising spending
resulting from continued softening of the U.S. economy.
Notwithstanding Moody's view that external liquidity from LBI's
$150 million revolving credit facility and ample cushion under its
bank facility's one financial covenant position the company well
to manage the cyclical downturn, the projected double digit
leverage and weak fixed charge coverage suggest a potentially
untenable capital structure over the medium-to-longer term and
correspondingly heightened credit risk that is deemed to be more
consistent with a Caa1 CFR at present.
The outlook remains negative, reflecting the potential for further
ratings downgrades if advertising revenue declines outpace Moody's
expectations in terms of severity or duration.
Moody's also downgraded security ratings as shown below. A
summary of the actions follows.
LBI Media, Inc.
-- Probability of Default Rating, Downgraded to Caa1 from B2
-- Corporate Family Rating, Downgraded to Caa1 from B2
-- Senior Subordinated Bonds, Downgraded to Caa2, LGD5, 74% from
B3, LGD4, 69%
-- Senior Secured Bank Credit Facility, Downgraded to B1, LGD2,
22% from Ba2, LGD2, 19%
-- Outlook, Negative
LBI derives the majority of its revenue from cyclical advertising
spending, and the resultant pressure on cash flow from this
cyclicality and the weak economic conditions have contributed to
very high leverage (approximately 9.3 times adjusted debt-to-
EBITDA) and expectations for modestly negative free cash flow in
2009. However, the company benefits from its strong position with
its targeted local Hispanic demographic. Although this focus will
likely enable LBI to continue to achieve above industry average
revenue trends, Moody's forecast a double digit revenue decline in
2009. Nevertheless, LBI's external liquidity, ample cushion under
its one financial maintenance covenant, and high EBITDA margin
(albeit expected to deteriorate in 2009) position it well to
manage through the downturn. The revised Caa1 corporate family
rating also incorporates the company's modest scale and geographic
concentration.
Moody's most recent rating action concerning LBI occurred November
4, 2008. At that time Moody's affirmed the B2 corporate family
rating and changed the outlook to negative from stable.
Headquartered in Burbank, California, LBI Media, Inc., is a
Spanish-language broadcasting company that owns 22 radio stations
and 6 television stations in Los Angeles (including Riverside-San
Bernardino), Houston, Dallas-Fort Worth, San Diego, Salt Lake City
and Phoenix.
LODGIAN INC: July 2009 Maturity of $128,000,000 Merrill Debt Looms
------------------------------------------------------------------
Lodgian Inc. is seeking to extend or refinance roughly
$128 million in mortgage debt scheduled to mature in July 2009.
Lodgian has said it cannot currently predict whether efforts to
obtain an extension will be successful.
The $128 million indebtedness comprises three of the Company's
four fixed rate loans in June 2004 with Merrill Lynch Mortgage
Lending, Inc. The four loans, which totaled $260 million at
inception, bear a fixed interest rate of 6.58%. Except for
certain defeasance provisions, Lodgian may not prepay the loans
except during the 60 days prior to maturity. One of the loans was
defeased in 2007. The remaining three loans are currently secured
by 17 hotels. The loans are not cross-collateralized. Each loan
is non-recourse; however, Lodgian agreed to indemnify Merrill
Lynch in certain situations, such as fraud, waste,
misappropriation of funds, certain environmental matters, asset
transfers in violation of the loan agreements, or violation of
certain single-purpose entity covenants. In addition, each loan
will become full recourse in certain limited cases such as
bankruptcy of a borrower or Lodgian. The Merrill Lynch loans
cannot be extended without the approval of the loan servicers,
which extension has been requested but not yet granted.
To address the pending maturities in July 2009, Lodgian is
pursuing opportunities to refinance the maturing mortgage debt or
to acquire new mortgage debt using currently unencumbered
properties. The Company has been unable to secure refinancing.
The Company told the SEC in March 2009 that in light of the
current credit markets generally and the real estate credit
markets specifically, it expects it would remain difficult to
refinance the mortgage debt prior to the July 2009 maturity date.
As of December 31, 2008, Lodgian had $332.6 million of total
mortgage obligations outstanding. The mortgage indebtedness is
secured by interests in certain of the Company's hotel properties.
Approximately $148.5 million of the mortgage debt matures in May
and December of 2009, both of which Lodgian expects to extend for
additional one-year periods in accordance with the extension
options set forth in the loan documents.
In its March 2009 audit report, Deloitte & Touche LLP in Atlanta,
Georgia, expressed substantial doubt about the Company's ability
to continue as a going concern.
"Our ability to operate as a going concern is dependent upon our
ability to extend, refinance or repay our July 2009 mortgage debt
prior to or upon its maturity," Lodgian has told the SEC. "For
example, if we default on this mortgage debt our lenders could
seek to foreclose on the properties securing the debt, which could
cause the loss of any anticipated income and cash flow from, and
our invested capital in, the hotels. Moreover, we could be
required to utilize an increasing percentage of our cash flow to
service any remaining debt or any new debt incurred with a
refinancing, which would further limit our cash flow available to
fund business operations and our strategic plan. If we are unable
to refinance or extend the maturity of our July 2009 mortgage debt
and maintain sufficient cash flow to fund our operations, our
business, financial condition, results of operations and stock
price may be materially adversely affected, and we may be forced
to restructure or significantly curtail our operations or to seek
protection from our lenders."
As of March 1, 2009, Lodgian had six hotels held for sale.
However, it said, because of the deteriorating economic
conditions, the proceeds from the sale of these assets could be
lower than currently anticipated.
Lodgian on Wednesday held its Annual Meeting of Stockholders at
the Wyndham-DFW Airport North, 4441 W. John Carpenter Freeway, in
Irving, Texas. According to a regulatory filing by the Company
with the Securities and Exchange Commission, the purpose of the
Annual Meeting was:
1. To elect as directors the eight nominees, each to serve
until the 2010 annual meeting of stockholders;
2. To amend Lodgian's Second Amended and Restated Certificate
of Incorporation to effect a reverse stock split of its
common stock at one of these ratios, as selected by the
Board of Directors: 1-for-5, 1-for-51/2, 1-for-6,
1-for-61/2, 1-for-7, 1-for-71/2, 1-for-8, 1-for-81/2,
1-for-9, 1-for-91/2 or 1-for-10;
3. To ratify the appointment of Deloitte & Touche LLP as its
independent registered public accounting firm for the
fiscal year ending December 31, 2009; and
4. To consider and act upon other business as may properly
come before the annual meeting.
Lodgian posted a net loss of $11.9 million on $240.4 million in
total revenues for year 2008 compared to $8.44 million net loss on
$242.5 million in total revenues for year 2007. Lodgian had
$555.4 million in total assets, $368.0 million in total
liabilities, and $187.4 million in stockholders' equity as of
December 31, 2008.
Based in located in Atlanta, Georgia, Lodgian Inc. is one of the
largest independent owners and operators of full-service hotels in
the United States in terms of number of guest rooms according to
Hotel Business. Lodgian operates substantially all of its hotels
under nationally recognized brands, such as "Crowne Plaza,", "Four
Points by Sheraton", "Hilton," "Holiday Inn," "Marriott," and
"Wyndham". As of March 1, 2009, Lodgian operated 41 hotels with
an aggregate of 7,578 rooms, located in 23 states and Canada. Of
the 41 hotels, 35 hotels, with an aggregate of 6,655 rooms, are
held for use and the results of operations are classified in
continuing operations, while 6 hotels, with an aggregate of 923
rooms, are held for sale. One hotel is operated through a joint
venture, in which a Lodgian subsidiary serves as the general
partner, has a 51% voting interest, and exercises significant
control.
MAGNA ENTERTAINMENT: Withdraws Proposal to Auction Off 3 Assets
---------------------------------------------------------------
Gadi Dechter at Baltimoresun.com reports that Magna Entertainment
Corp. has withdrawn its proposal to auction off Preakness Stakes,
Pimlico Race Course, and Laurel Park in Maryland.
Baltimoresun.com states that Magna Entertainment decided to remove
the Maryland assets from its auction proposal comes after the
General Assembly authorized Gov. Martin O'Malley in April to use
eminent domain to seize the Preakness and the tracks. According
to Baltimoresun.com, at least four potential bidders have emerged
for Laurel and Pimlico.
Attorneys for Magna Entertainment said in court documents that
they would still "explore all alternatives" with respect to those
assets.
Baltimoresun.com quoted Shaun Adamec, a spokesperson for Gov.
Martin O'Malley, as saying, "We take this as a potentially
positive sign. The governor is prepared to work with Magna and
all other potential buyers to reach an outcome that preserves the
tradition and economic vitality of the sport in our state."
According to Baltimoresun.com, Magna Entertainment is still asking
the court for permission to auction off much of its other assets,
including the Santa Anita Park in California in September.
Based in Aurora, Ontario, Magna Entertainment Corp. is North
America's largest owner and operator of horse racetracks, based on
revenue. The Company develops, owns and operates horse racetracks
and related pari-mutuel wagering operations, including off-track
betting facilities. MEC also develops, owns and operates casinos
in conjunction with its racetracks where permitted by law.
MEC owns and operates AmTote International, Inc., a provider of
totalisator services to the pari-mutuel industry, XpressBet(R), a
national Internet and telephone account wagering system, as well
as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC
has a fifty percent interest in HorseRacing TV(R), a 24-hour horse
racing television network, and TrackNet Media Group LLC, a content
management company formed for distribution of the full breadth of
MEC's horse racing content.
As of December 31, 2008, the Company had total assets of
$1,049,387,000 and total debts of $958,591,000.
Following its failure to meet obligations to lenders led by PNC
Bank, National Association, and Wells Fargo Bank, National
Association, and controlling shareholder MI Developments Inc.'s
decision not to provide further financial backing, Magna
Entertainment Corp. and 24 affiliates filed for Chapter 11 on
March 5, 2009 (Bankr. D. Del., Lead Case No. 09-10720).
Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil,
Gotshal & Manges LLP, have been engaged as bankruptcy counsel.
L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards,
Layton & Finger, P.A., are the Debtors' local counsel. Miller
Buckfire & Co. LLC, has been tapped as financial advisor and
Kurtzman Carson Consultants LLC, as claims agent.
GENERAL MOTORS: Magna Confirms Involvement in Potential Opel Deal
-----------------------------------------------------------------
Magna International Inc. confirmed that it is in talks with Opel,
General Motors and German government officials regarding potential
alternatives for the future of Opel, which could include Magna
taking a minority stake in Opel.
There is no assurance that any transaction will result from
Magna's current involvement.
Alex Ortolani of Bloomberg News said Magna International, American
Axle & Manufacturing Holdings Inc. may be most at risk for
billions of dollars in lost payments to partsmakers in a
bankruptcy filing by General Motors Corp. or Chrysler LLC.
Based in Aurora, Ontario, Magna International Inc. designs,
develops and manufactures technologically advanced systems,
assemblies, modules and components, and engineers and assembles
complete vehicles, primarily for sale to original equipment
manufacturers of cars and light trucks. Magna has roughly 70,000
employees in 240 manufacturing operations and 86 product
development, engineering and sales centers in 25 countries.
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.
MARINE GROWTH VENTURES: Funding Needs Prompt Going Concern Doubt
----------------------------------------------------------------
Marine Growth Ventures, Inc., said there is substantial doubt
about its ability to continue as a going concern.
Marine Growth Ventures explained that since its inception, the
Company has been dependent upon the proceeds of loans from its
stockholders and the receipt of capital investments to fund its
continuing activities. The Company has incurred operating losses
since its inception. The Company expects to incur significant
increasing operating losses over the next several years, primarily
due to the expansion of its business. There is no assurance that
the Company's developmental and marketing efforts will be
successful. The Company will continue to require the infusion of
capital or loans until operations become profitable. There can be
no assurance that the Company will ever achieve any revenues or
profitable operations from the sale of its proposed products. The
Company is seeking additional capital at this time.
During the three months ended March 31, 2009, the Company had a
net loss of $239,013 and a negative cash flow from operations of
$68,169 and as March 31, 2009, the Company had a working capital
deficiency of $4,595,252 and a stockholders' deficiency of
$4,579,389. The Company had $2,943,780 in total assets and
$7,523,169 in total current liabilities as of March 31.
A full-text copy of the Company's Quarterly Report is available at
no charge at http://ResearchArchives.com/t/s?3c6b
Marine Growth Ventures, Inc., is a holding company that conducts
its operations primarily through a wholly owned subsidiary,
Sophlex Ship Management, Inc. The Company had no significant
business operations until its acquisition of Sophlex in September
2004. Sophlex, which was founded in 1999, provides ship crewing
and management services to vessel owners and operators in the
United States and abroad. The founder and the sole shareholder
of Sophlex at the time of the acquisition is the current Chief
Operating Officer of the Company. At the time acquisition both
companies were private entities. In addition, the Company is
pursuing other opportunities in the shipping industry.
MARK IV: Chapter 11 Filing Cues S&P's Rating Downgrade to 'D'
-------------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit and all issue-level ratings on Amherst, New York-
based Mark IV Industries Inc. and its subsidiaries to 'D'. The
rating actions reflect the filing by Mark IV and certain of its
U.S. subsidiaries and affiliates for Chapter 11 bankruptcy
protection on April 30, 2009.
"We believe the filing was prompted by the company's heavy debt
and a sharp decline in liquidity caused by severe automotive
production declines in the U.S. and Europe," said Standard &
Poor's credit analyst Gregg Lemos Stein. Pending further
information from the bankruptcy proceedings, the recovery ratings
remain unchanged.
The automotive supplier had approximately $1.1 billion in debt
outstanding at Feb. 28, 2009.
MARK IV: Moody's Downgrades Probability of Default Ratings to 'D'
-----------------------------------------------------------------
Moody's Investors Service has lowered the Corporate Family and
Probability of Default Ratings of Mark IV Industries to Ca from
Caa3, and to D from Caa3, respectively. In a related action
Moody's lowered the ratings of the senior secured first lien
facilities, to Caa3 from Caa2; and senior secured second lien term
loan, to C from Ca.
The lowered ratings reflect the filing for Chapter 11 protection
by Mark IV on April 30, 2009. As part of the Chapter 11 filing
announcement, the company said it has already reached agreement in
principle with a steering committee of its senior lenders on a
plan of reorganization and new capital structure for the
reorganized Company. Also according the announcement, Mark IV's
international operations and its IVHS business, which includes the
manufacturing operations of electronic toll collection equipment
in North America, are excluded from the filing. Consistent with
Moody's Withdrawal Policy, Moody's will withdraw the ratings of
Mark IV.
These ratings were lowered:
Mark IV Industries, Inc.
-- Corporate Family Rating, to Ca from Caa3;
-- Probability of Default Rating to D from Caa3;
Dayco Products, LLC
-- Senior secured credit facilities, to Caa3 (LGD 3, 32%) from
Caa2 (LGD 3, 32%), consisting of:
-- $150 million US/European revolving credit facility due 2010
(up to $50 million-equivalent to be available in Euros); and
a
-- $635 million (remaining balance) 7-year US term loan B due
2011;
-- $148 million (remaining balance) senior secured second lien
term loan due 2011, to C (LGD5, 86%) from Ca (LGD5, 86%);
Dayco Europe SrL
-- $28 million (remaining balance) equivalent euro equivalent
denominated European term loan A due 2010, to Caa3 (LGD 3,
32%) from Caa2 (LGD 3, 32%)
The last rating action for Mark IV was on February 12, 2009 when
the Corporate Family Rating was lowered to Caa3.
Mark IV Industries is a diversified manufacturer of engineered
systems and components utilizing radio frequency identification,
information display system, mechanical power transmission, air
admission, and other technologies that serve industrial,
transportation and automotive markets. Mark IV manages and
reports its operations into two categories: (i)
Industrial/Distribution and (ii) Automotive OEM. Annual revenues
approximate $1.4 billion.
MASHANTUCKET PEQUOT: Moody's Cuts Corporate Family Rating to 'B1'
-----------------------------------------------------------------
Moody's Investors Service lowered the Mashantucket (Western)
Pequot Tribal Nation's Corporate Family Rating and Probability of
Default Rating to B1 from Ba3. The Tribe's Subordinated Special
Revenue Obligations and 2007 Series A Notes were also lowered. Its
Special Revenue Obligations were confirmed. The rating outlook is
negative. This rating action concludes the review process that
was initiated on February 3, 2009.
These ratings were lowered:
-- Corporate Family Rating to B1 from Ba3
-- Probability of Default Rating to B1 from Ba3
-- Subordinated Special Revenue Obligations to B2 (LGD 5, 73%)
from B1 (LGD 5, 71%)
-- 2007 Series A Notes to B3 (LGD 6, 90%) from B2 (LGD 5, 89%)
This rating was confirmed and LGD assessment revised:
-- Special Revenue Obligations at Ba2 (LGD 2, 29% from LGD 2,
27%)
The downgrade is based on Moody's expectation that weak gaming
demand trends in the Connecticut gaming market will make it
difficult for the Tribe to meaningfully reduce leverage over the
near to medium term to levels acceptable to the prior rating.
Debt/EBITDA for the 12-month period ended December 31, 2008 was
slightly above 7 times.
Although the Tribe reported a slight improvement in comparable
monthly Connecticut gaming revenues in February and March of this
year, it remains exposed to weak gaming demand trends as well as
increased competition from video lottery terminal facilities in
New York and Rhode Island. "We believe the Connecticut market
will eventually stabilize, however the timing and degree of any
stabilization is difficult to predict at this time," stated Keith
Foley, Moody's Senior Vice President.
The confirmation of the Tribe's Special Revenue Obligations
reflects modest changes to the Tribe's outstanding debt amounts
that occurred since September 30, 2008. These changes -- albeit
small -- increased the relative cushion these obligations receive
from debt lower in the capital structure. As a result, ratings on
these obligations remain unchanged despite the downgrade of the
Tribe's CFR and PDR.
The negative outlook acknowledges that the Tribe remains weakly
positioned within its current rating category. As a result, the
continuation or acceleration of weak gaming demand trends would
likely pressure credit metrics enough to prompt a negative rating
action.
Moody's previous rating action was on February 3, 2009, when the
Tribe's Corporate Family Rating was lowered to Ba3 from Ba2 and
all of its ratings were placed on review for possible downgrade.
The Mashantucket (Western) Pequot Tribal Nation owns Foxwoods
Resort Casino. The Mashantucket Pequot Gaming Enterprise, a
wholly-owned, unincorporated division of the Tribe, conducts the
Tribe's gaming and resort operations.
MASSACHUSETTS EYE: Moody's Affirms 'Ba1' Rating 1998B Bonds
-----------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 rating on
Massachusetts Eye and Ear Infirmary's outstanding Series 1998B
bonds ($12.7 million outstanding) issued through the Massachusetts
Health and Educational Facilities Financing Authority. The rating
outlook is stable.
Legal Security: Bonds are secured by a gross revenue pledge of the
obligated group which includes MEEI, the parent organization (the
Foundation) and the faculty physician division. MEEI's 2005 $14
million pool loan borrowing and 2007 pool loan borrowing ($20
million) are parity to the Series 1998B bonds.
Interest Rate Derivatives: None
Strengths
* While down from FY 2007, MEEI maintains a healthy unrestricted
cash position with $72 million or 140 days cash on hand and 149%
cash-to-debt at the end of FY 2008, a decline from $84 million
(177 days) and 156% cash to debt in the prior year due to
investment losses. Investment allocation is more akin to a
private university with 45% of long-term assets in equity, 20%
in marketable alternatives, 10% in inflation hedges, 20% in
private equity and 16% in fixed income and cash. MEEI has $15.8
million in future funding commitments to various investments
over the next several years.
* Niche provider of highly specialized ophthalmology and
otolaryngology services and is a teaching site for Harvard
Medical School; MEEI continues to adjust to the migration of
patient modalities to the outpatient setting; approximately 85%
of MEEI's patient service revenues reflect outpatient business.
* Very strong 12% increase in admissions in FY 2008 representing
two consecutive years of volume increases, surgeries are up as
well which has continued through the first five months of FY
2009; new surgeons and a strategy to increase referrals is
gaining traction.
* Bonded fixed rate debt matures in 2011.
Challenges
* Even with the increase in FY 2008 volumes and healthy 10% growth
in revenues, MEEI incurred an operating loss in FY 2008 when
excluding investment income, albeit lower than FY 2007; debt
coverage measures improved to 2.15 maximum annual debt service
from 1.78 times in FY 2007.
* Relatively small size ($144 million in net patient revenues in
FY 2008), physician base and limited diversification of revenue
present credit risk and limited ability to generate a material
profit margin.
* Expected decline in fundraising in FY 2009 given economic
downturn; formal capital campaign launch remains on hold.
Outlook
The stable outlook on MEEI's Ba1 rating reflects Moody's belief
that financial performance should continue to produce adequate
debt service coverage measures.
What could change the rating - UP
Materially improved financial performance and debt coverage
measures
What could change the rating - DOWN
Material downturn in financial performance; material liquidity
declines; increase in debt
Key Indicators:
Assumptions & Adjustments:
-- Based on financial statements for Foundation of the
Massachusetts Eye and Ear Infirmary, Inc.
-- First number reflects audit year ended September 30, 2007
-- Second number reflects audit year ended September 30, 2008
-- Investment income removed from total operating revenues;
investment returns smoothed at 6% unless otherwise noted
-- Unrestricted cash is net of permanently restricted funds and
temporarily restricted funds (less realized and unrealized
gains on donor restricted funds)
* Inpatient admissions: 1,247; 1,432
* Outpatient visits: 246,470; 275,295
* Total operating revenues: $167 million; $197 million (includes
research and contributions)
* Moody's-adjusted net revenue available for debt service: $13.0
million; $15.8 million
* Total debt outstanding: $54.1 million; $48.5 million
* Maximum annual debt service (MADS): $7.3 million; $7.3 million
* MADS Coverage with reported investment income: 1.77 times; 1.94
times
* Moody's-adjusted MADS Coverage with normalized investment
income: 1.78 times; 2.15 times
* Debt-to-cash flow: 4.85 times; 3.49 times
* Days cash on hand: 177 days; 140 days
* Cash-to-debt: 156%; 149%
* Operating margin: -2.1%; -0.6%
* Operating cash flow margin: 4.1%; 5.5%
The last rating action was on September 23, 2008 when the rating
of MEEI was affirmed at Ba1 and the stable outlook affirmed.
MICHAEL ANTHONY DOWLEN: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------------
Debtor: Michael Anthony Dowlen
3785 Kings Road
Chattanooga, TN 37416
Bankruptcy Case No.: 09-12687
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of Tennessee (Chattanooga)
Judge: R. Thomas Stinnett
Debtor's Counsel: Thomas E. Ray, Esq.
Samples, Jennings, Ray & Clem
130 Jordan Drive
Chattanooga, TN 37421
Tel: (423) 892-2006
Email: tn10@ecfcbis.com
Total Assets: $2,403,683
Total Debts: $4,033,805
According to its schedules of assets and liabilities, $1,255,511
of the debt is owing to secured creditors, $6,000 for taxes owed
to governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/tneb09-12687.pdf
The petition was signed by Mr. Dowlen.
MGM MIRAGE: Posts $105.1 Million in Net Income for Q1 2009
----------------------------------------------------------
MGM MIRAGE reported net income of $105.1 million on total revenues
of $1.66 billion for the three months ended March 31, 2009,
compared to $118.3 million in net income on $1.88 billion in total
revenues for the same period in 2008. The current year results
include a gain related to the sale of the Treasure Island hotel
and casino.
MGM MIRAGE said revenues were negatively impacted by increased
convention cancellations -- particularly in January and February
and at the Company's Las Vegas Strip resorts -- and a continued
decline in discretionary spending due to the weakened economy.
Occupancy at the Company's Las Vegas Strip resorts was unusually
low in January, improved in February, and returned to a normalized
level of roughly 95% in March. The convention cancellations
forced the Company to shift hotel business to the leisure segment
at lower room rates. As a result of these factors, Las Vegas
Strip hotel Revenue per Available Room decreased by 34%, to $102
for the first quarter of 2009 compared to $154 in the first
quarter of 2008.
Total casino revenue declined 16%, with slots revenue down 12% for
the quarter. The Company's table games volume, excluding
baccarat, was down 20% in the quarter, but the high-end of the
gaming segment was more resilient, with baccarat volume only down
1% in the 2009 quarter. The overall table games hold percentage
was slightly lower in 2009 than the prior year quarter and near
the top end of the Company's normal 18% to 22% range in both
periods.
Operating income for the first quarter of 2009 was $355 million
compared to $341 million in the first quarter of 2008. The
current year results include the pre-tax gain on the TI sale --
$190 million -- as well as $15 million of Monte Carlo business
interruption insurance recovery income (recorded as a reduction to
SG&A expense) and $7 million of Monte Carlo property damage
insurance recovery income (recorded as property transactions,
net). Property EBITDA, which does not include the TI gain, was
roughly $372 million in the 2009 quarter, down 35% from $575
million. Property EBITDA, excluding the Monte Carlo insurance
recovery income and other items affecting comparability
(preopening expenses and other property transactions, net),
declined 38% on a comparable basis with a margin of 24% versus 31%
in the prior year quarter. Consolidated EBITDA was $532 million in
the 2009 quarter, which includes the $190 million pre-tax gain on
the TI sale, compared to $536 million in the prior year period.
The Company's regional properties reported strong results with MGM
Grand Detroit's EBITDA up 18% to $41 million in the 2009 quarter,
and the combined EBITDA of Beau Rivage and Gold Strike Tunica up
15% to $31 million. Corporate expense declined 25% to $24 million,
despite increased costs for legal and other corporate finance
costs. The Company has continued to implement cost savings
initiatives on a company-wide basis, which positively impacted
results in the quarter.
"While we experienced significant group cancellations early in the
quarter and experienced a continuation of negative consumer
spending trends from the fourth quarter, cancellations have
tapered off and we see signs that business levels seem to be
stabilizing," said Jim Murren, MGM MIRAGE Chairman and Chief
Executive Officer. "Our resorts have seen sequential increases in
occupancy levels through the first quarter and into April, and our
forward booking pace is improving. This is allowing us the
opportunity to better yield our room pricing. Additionally,
world-class events at our resorts continue to drive revenue and we
have an exceptionally strong event calendar in the second and
third quarters, with recent events such as the Pacquiao vs. Hatton
fight; and numerous other premier concerts and events in the
summer months."
At March 31, 2009, the Company had $23.8 billion in total assets;
$16.0 billion in total current liabilities, $3.34 billion in
deferred income tax obligations, $3.99 million in long-term debt,
and $391.6 million in other long-term obligations; and $4.09
billion in stockholders' equity. At March 31, 2009 The Company
had roughly $14.4 billion of borrowings outstanding and its cash
balance was roughly $1.4 billion. These balances included the
results of:
-- In March 2009, the Company closed on the TI sale. The
Company received cash of $600 million and a note receivable
of $175 million at closing from the purchaser, Ruffin
Acquisition, LLC.
-- During the quarter, the Company drew down the remainder of
Unused borrowing capacity available under its $7.0 billion
senior credit facility.
-- During the quarter, capital expenditures were $56 million.
-- On March 16, 2009, the Company obtained a waiver through
May 15, 2009 of the requirement that the Company comply
with the financial covenants in its senior credit facility
as of March 31, 2009. As part of the amendment, the
Company repaid $300 million of the outstanding borrowings
under the facility.
-- During the first quarter, the Company funded $437 million
of equity contributions to CityCenter, which included
$100 million that should have been funded by Dubai World.
On April 17, 2009, the Company made an additional investment of
$70 million in CityCenter, which included $35 million that should
have been funded by Dubai World. On April 29, the Company, Dubai
World and the CityCenter lenders entered into a series of
agreements, including an amendment to the CityCenter joint venture
agreement and the CityCenter senior secured credit facility,
resulting in a comprehensive plan to fully fund the completion of
CityCenter for its scheduled opening later this year.
On April 29, 2009, the Company received $155 million, plus accrued
interest, from Ruffin Acquisition, LLC in full payment of the note
receivable, with a $20 million discount for early payment.
The Company also reached an agreement with its senior lenders for
a further waiver of noncompliance -- as of March 31, 2009 -- with
financial covenants under its senior credit facility through
June 30, 2009. As part of these agreements and amendments, the
Company funded the remaining $224 million of its required equity
contributions for CityCenter through the issuance of a letter of
credit.
"We continue to work constructively with our advisors and senior
lenders to find a comprehensive long-term solution to improve our
financial position," said Dan D'Arrigo, MGM MIRAGE Executive Vice
President and Chief Financial Officer. "We are evaluating a
variety of options - which may include asset sales, new capital,
and modifying or extending our existing debt -- to address our
liquidity needs and strengthen our balance sheet."
The Company intends to further formulate its plans to address
near-term liquidity issues and its overall levels of outstanding
borrowings and leverage, and to work with its lenders to approve
and implement such solutions and to obtain additional waivers or
amendments prior to June 30, 2009 to address future noncompliance
with the senior credit facility; however, the Company can provide
no assurance that it will be able to secure such waivers or
amendments. Following expiration of the waiver on June 30, 2009,
the Company will be subject to an event of default related to
noncompliance with financial covenants under the senior credit
facility at March 31, 2009. Under the terms of the senior credit
facility, noncompliance with financial covenants is an event of
default, under which the lenders (with a vote of more than 50% of
the lenders) may exercise any or all of their remedies, including
demanding immediate repayment of all outstanding borrowings under
the senior credit facility.
In addition, there are provisions in the indentures governing the
Company's senior and senior subordinated notes under which a) the
event of default under the senior credit facility, or b) the
remedies under an event of default under the senior credit
facility, would cause an event of default under the relevant
senior and senior subordinated notes, which would also allow
holders of the senior and senior subordinated notes to demand
immediate repayment and decline to release subsidiary guarantees.
If the lenders exercise any or all such rights, the Company may
determine to seek relief through a filing under the U.S.
Bankruptcy Code.
As a result of the short-term nature of the waiver under the
senior credit facility and potential cross-defaults under the
indentures, the Company has classified all of its outstanding
borrowings as current liabilities as of March 31, 2009 in the
accompanying consolidated balance sheet.
The Company has yet to file its first quarter report on Form 10-Q
with the Securities and Exchange Commission.
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'.
MOHEGAN TRIBAL: Moody's Downgrades Corporate Family Rating to 'B3'
------------------------------------------------------------------
Moody's Investors Service lowered the Mohegan Tribal Gaming
Authority's Probability of Default and Corporate Family ratings to
B3 from B2. This action is in response to a continuation of weak
revenue trends that, along with several other factors, will make
it difficult for the company to meaningfully reduce leverage in
the foreseeable future. The rating outlook is negative. This
rating action concludes the review process that was initiated on
February 3, 2009.
These ratings were lowered:
-- Corporate Family Rating to B3 from B2
-- Probability of Default Rating to B3 from B2
-- $250 million senior notes to B1 (LGD 3, 32%) from Ba3 (LGD 3,
30%)
-- $957 million senior subordinated notes to Caa2 (LGD 5, 79%)
from Caa1 (LGD 5, 80%)
The downgrade is based on the expectation that weak visitation and
spending trends in the Connecticut gaming market will make it
difficult for MTGA to meaningfully reduce leverage over the near
to medium term to levels acceptable to the prior rating.
Debt/EBITDA for the 12-month period ended December 31, 2008 was
significant, at close to 8.0 times. Other factors Moody's believe
will limit MTGA's ability to generate cash available to reduce
debt include the company's large interest burden, significant
dividend obligation to the Mohegan Tribe, and increased
competition.
"The decline in MTGA's comparable monthly Connecticut gaming
revenues has accelerated so far this year and remains vulnerable
to competition from gaming and hotel capacity added by Foxwoods
Resort Casino, its primary competitor, as well as from neighboring
jurisdictions," stated Keith Foley, Moody's Senior Vice President.
"Although the company's Pennsylvania racino is performing well,
its contribution at this time is not enough to mitigate the cash
flow decline at the Mohegan Sun in Connecticut."
The negative outlook reflects Moody's concerns that weak gaming
demand will continue and this trend may constrain operating
performance and force MTGA to seek covenant relief during 2009.
The negative outlook also acknowledges a possible increase in the
company's term loan amortization requirement. MTGA's bank
agreement -- which has a March 2012 maturity -- includes a
provision that increases the term loan amortization to $30 million
per quarter beginning June 2010 if the $150 million term loans are
not fully repaid prior to that date. Moody's believes that the
company will not be able to generate the internal cash resources
to repay the $150 million term loan by June 2010, and will need to
refinance this debt.
Moody's previous rating action was on February 3, 2009, when
MTGA's Corporate Family Rating was lowered to B2 from B1 and all
of its ratings were placed on review for possible downgrade.
MTGA owns and operates a gaming and entertainment complex located
near Uncasville, Connecticut, known as Mohegan Sun, and a gaming
and entertainment facility offering slot machines and harness
racing in Plains Township, Pennsylvania, known as Mohegan Sun at
Pocono Downs. MTGA net revenues are approximately $1.6 billion.
MOTORSPORT AFTERMARKET: Weak Performance Cues S&P's Junk Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its ratings on
Motorsport Aftermarket Group Inc., including the corporate credit
rating to 'CCC+' from 'B-'. In addition, S&P removed the ratings
from CreditWatch with negative implications, where they were
placed on Dec. 22, 2008. The rating outlook is negative. Irvine,
California-based MAG had total debt of $283 million as of Feb. 28,
2009.
Concurrently, S&P lowered the issue-level rating on the company's
senior secured credit facilities to 'CCC+' (the same as the
corporate credit rating) from 'B' and revised the recovery rating
on this debt to '3' from '2'. The '3' recovery rating indicates
S&P's expectation of meaningful (50%-70% range) recovery in the
event of a payment default.
"The downgrade reflects Standard & Poor's concern that company's
weakening operating performance and rising debt leverage could
jeopardize its ability to comply with bank debt covenant levels,"
said Standard & Poor's credit analyst Hal F. Diamond.
MERRILL LYNCH: Faces MBIA Suit Over $5.7 Billion of CDS Contracts
-----------------------------------------------------------------
MBIA Inc.'s insurance subsidiary, MBIA Insurance Corporation, and
LaCrosse Financial Products, LLC, have filed a lawsuit in the
Supreme Court of the State of New York against Merrill Lynch,
Pierce, Fenner and Smith Inc., and Merrill Lynch International.
The lawsuit seeks the rescission of certain credit default swap
contracts and related insurance policies issued to Merrill Lynch
and damages resulting from Merrill Lynch's misrepresentations and
breaches of contract in connection with MBIA's $5.7 billion in
gross exposure to a series of structured product transactions that
Merrill Lynch arranged and marketed between July 2006 and March
2007. More specifically, the suit seeks to void the policies and
credit default swaps where Merrill Lynch is the counterparty and
to recover damages for MBIA's losses where the CDS Contracts and
related policies were issued to third party counterparties other
than Merrill Lynch.
LaCrosse is a special purpose vehicle that entered into the CDS
Contracts with Merrill Lynch and others that were in turn insured
by MBIA.
MBIA believes that Merrill Lynch's effort to market the CDS
Contracts to MBIA was part of a deliberate strategy to offload
billions of dollars in deteriorating U.S. subprime residential
mortgages that Merrill Lynch held on its books by packaging them
into collateralized debt obligations or hedging their exposure
through swaps guaranteed by insurers. Based upon Merrill Lynch's
misrepresentations regarding, among other things, the credit
quality of the collateral underlying the CDOs and the level of
subordination protection, MBIA, through LaCrosse, insured over
$5.7 billion of credit default protection on the super-senior and
senior tranches of four CDOs. As a direct result of Merrill
Lynch's misrepresentations and breaches of contract, MBIA now
faces expected losses on these four CDOs presently estimated to be
in excess of several hundred million dollars.
Commenting on the lawsuit, Jay Brown, MBIA CEO, said, "[The]
action is consistent with our intention to pursue all available
remedies against those parties whose improper actions have
directly resulted in substantial losses for MBIA and its
shareholders. Although we will honor all legitimate claims by
third-party policyholders, in this case Merrill Lynch is both the
beneficiary of some of our policies and the party who improperly
induced MBIA to issue these policies. Consequently, we are asking
the court to rescind the contracts with Merrill Lynch and require
them to compensate us for our payments to other counterparties."
Reuters notes that a spokesman for Merrill declined comment on the
lawsuit.
Reuters also notes that Security Capital Assurance, another bond
insurer, severed $3.1 billion in credit guarantee contracts with
Merrill in 2008, after SCA claimed Merrill Lynch gave rights
promised to SCA under the contracts to at least one other party.
A federal judge ruled in June that SCA had to stand by the
guarantees, Reuters says.
MBIA Inc. (NYSE: MBI) -- http://www.mbia.com/-- headquartered in
Armonk, New York, is a holding company whose subsidiaries provide
financial guarantee insurance, fixed-income asset management, and
other specialized financial services. The Company services its
clients around the globe, with offices in New York, Denver, San
Francisco, Paris, London, Madrid, Mexico City, Sydney, and Tokyo.
About Merrill Lynch
Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth
management, capital markets and advisory companies with offices in
40 countries and territories. As an investment bank, it is a
leading global trader and underwriter of securities and
derivatives across a broad range of asset classes and serves as a
strategic advisor to corporations, governments, institutions and
individuals worldwide. Merrill Lynch owns approximately half of
BlackRock, one of the world's largest publicly traded investment
management companies with more than $1 trillion in assets under
management. Merrill Lynch's operations are organized into two
business segments: Global Markets and Investment Banking (GMI) and
Global Wealth Management (GWM).
Bank of America Corp. bought Merrill Lynch in January 2009, after
losses from complex debt securities and mortgages forced Merrill
Lynch to sell itself.
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.
MODTECH HOLDINGS: Panel Wants to Employ Marshack Hays as Counsel
----------------------------------------------------------------
The official committee of unsecured creditors of Modtech Holdings
asks the U.S. Bankruptcy Court for the Central District of
California for authority to employ Marshack Hays LLP as its
general counsel.
As the committee's general counsel, Marshack Hay will, among other
things, advise the committee with respect to its rights, powers
and obligations in the Debtor's bankruptcy case.
As compensation for their services, Marshack Hays' professionals
bill:
Hourly Rate
-----------
Partners $400-$490
Associates $250-$350
Paralegals $110-$190
Richard A. Marshack, a principal at Marshack Hays, assures the
Court that the firm does not hold or represent any interest
adverse to the Debtor or the bankruptcy estate, and that the firm
is a "disinterested person" as that term is defined in
Sec. 101(14) of the Bankruptcy Code.
Mr. Marshack discloses that in his capacity as a Chapter 7 and
Chapter 11 trustee, he had employed Squar, Milner, Peterson,
Miranda and Williamson, LLP, a member of the committee, as his
accountant in other non-related bankruptcy cases and uses SMLLP
for his personal and business tax returns.
Headquartered in Perris, California, Modtech Holdings, Inc. --
http://www.modtech.com/-- makes and sells modular and
relocatable classrooms, commercial and light industrial modular
buildings. The Company filed for Chapter 11 protection on
October 20, 2008 (Bankr. C.D. Calif. Case No. 08-24324). Charles
Liu, Esq., and Marc J. Winthrop, Esq., at Winthrop Couchot,
represent the Debtor as counsel. Richard A. Marshack, Esq., at
Shulman Hodges & Bastian LLP, represent the Official Committee of
Unsecured Creditors as counsel. In its schedules, the Debtor
listed total assets of $16,727,444 and total debts of $30,151,514.
MYRON FARMS: Case Summary & 3 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Myron Farms, LP
P.O. Box 609
Portland, IN 47371
Bankruptcy Case No.: 09-11902
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Northern District of Indiana (Fort Wayne Division)
Judge: Robert E. Grant
Debtor's Counsel: Daniel J. Skekloff, Esq.
Skekloff, Adelsperger & Kleven, LLP
927 South Harrison Street
Fort Wayne, IN 46802
Tel: (260) 407-7000
Fax: (260) 407-7137
Email: djs@sak-law.com
Sarah Mustard Heil, Esq.
Skekloff, Adelsperger & Kleven, LLP
927 S. Harrison Street
Fort Wayne, IN 46802
Tel: (260) 407-7000
Fax: (260) 407-7137
Email: sheil@sak-law.com
Scot T. Skekloff, Esq.
Skekloff, Adelsperger & Kleven, LLP
927 South Harrison Street
Fort Wayne, IN 46802
Tel: (260) 407-7000
Fax: (260) 407-7137
Email: sts@sak-law.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of 3
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/innb09-11902.pdf
The petition was signed by Stephen Myron, CEO-managing partner of
the Company.
NEW YORK TIMES: Boston Globe Extends Talks With Union Workers
-------------------------------------------------------------
Greg Bensinger at Bloomberg News reports that The New York Times
Co.'s The Boston Globe has extended negotiations with workers who
are members of The Boston Newspaper Guild past Sunday's deadline.
The NY Times, Bloomberg relates, has asked 10 unions to find about
$20 million in savings, half of that from the Guild, the largest
union at the newspaper.
Russell Adams at The Wall Street Journal reports that The Guild
said that it has offered more than enough in wage and benefits
cuts to save The Globe from closure. The NY Times had given The
Globe's unions 30 days to agree to concessions. The first
deadline was Friday, but shortly after midnight Friday, management
said it had extended the deadline by two days because of progress
in negotiations.
Talks were ongoing, Bloomberg states, citing The NY Times
spokesperson Catherine Mathis.
According to Bloomberg, the Globe is seeking to cut $20 million in
costs and avert a possible closure. Citing The Boston Globe
spokesperson Bob Powers, Bloomberg relates that the newspaper
presented unions on Sunday with copies of paperwork required under
the Workers Adjustment and Retraining Notification Act that if
filed, would result in the newspaper's shutdown in two months.
The NY Times said that the newspaper it acquired in 1993 for about
$1 billion may lose as much as $85 million in 2009, Bloomberg
states. Bloomberg says that in the latest period, the Globe lost
14% of its average weekday circulation.
The Guild President Dan Totten said in a statement that the union
submitted on Sunday a new proposal with more than the $10 million
in cuts to The NY Times. The Guild proposed cuts "across
virtually all categories of compensation and benefits," Bloomberg
relates, citing Mr. Totten.
The New York Times Co., a leading media company with 2008 revenues
of $2.9 billion, includes The New York Times, the International
Herald Tribune, The Boston Globe, 16 other daily newspapers, WQXR-
FM and more than 50 Web sites, including NYTimes.com, Boston.com
and About.com. The Company was founded in 1896.
* * *
As reported in the Troubled Company Reporter on Dec. 4, 2008, the
NY Times cut its quarterly dividend by 74%, as part of an effort
to conserve cash. The NY Times said that it took steps to lower
debt and increase liquidity, including reevaluating its assets.
The NY Times has laid off employees, merged sections of the NY
Times and Globe to reduce printing costs, and consolidated New
York area printing plants this year.
According to the TCR on April 28, 2009, Moody's Investors Service
downgraded The New York Times Company's Corporate Family Rating
and Probability of Default ratings to B1 from Ba3 and ratings on
the senior unsecured notes to B1 from Ba3. The company's
speculative grade liquidity rating remains SGL-3 and the rating
outlook is negative.
The TCR reported on April 24, 2009, that Standard & Poor's Ratings
Services lowered its corporate credit rating for The New York
Times Co., as well as its issue-level rating on the company's
senior unsecured debt, to 'B+' from 'BB-', and placed them on
CreditWatch with negative implications.
NOVA HOLDING: Can Continue to Use WestLB Cash Collateral to May 22
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
extended until May 22, 2009, Nova Biofuels Seneca, LLC, Nova
Biosource Fuels, Inc., Biosource America, Inc., Nova Biosource
Technologies, LLC, and Nova Biofuels Trade Group, LLC's interim
authority to use cash securing their obligations to WestLB, AG.
The Debtors are authorized to use cash collateral to fund general
corporate and working capital requirements and capital
expenditures, solely in accordance with a revised 13-week interim
budget for Seneca and a revised 13-week interim budget for the
non-Seneca Debtors.
The Debtors' authorization to use cash collateral will terminate
on the earliest to occur of:
i) May 22, 2009;
ii) the dismissal of the Debtors' Chapter 11 cases or the
conversion of any of their Chapter 11 cases to a case under
Chapter 7 of the Bankruptcy Code;
iii) the appointment of a trustee or examiner with expanded
powers in the Debtors' Chapter 11 cases;
iv) the entry of an order reversing, staying, vacating or
otherwise modifying in any material respect the first
interim cash collateral order or this second interim cash
collateral order;
v) failure by the Debtors to comply with an material provision
of the first interim cash collateral order or this second
cash collateral order;
vi) the sale after the petition date of any material portion of
the Debtors' assets outside the ordinary course of
business; without the prior written consent of WestLB; and
vii) the failure of any of the Debtors to comply with sections
of the Credit Agreement specified in Paragraph 12 of the
first interim cash collateral order.
The final hearing on the motion is continued to May 22, 2009, at
11:00 a.m. (prevailing Eastern Time).
A full-text copy of the revised and updated Seneca Budget is
available for free at:
http://bankrupt.com/misc/Nova.RevisedSenecaBudget.pdf
A full-text copy of the revised and updated Non-Seneca Budget is
available for free at:
http://bankrupt.com/misc/Nova.Non-SenecaBudget.pdf
As reported in the Troubled Company Reporter on April 8, 2009,
the Bankruptcy Court authorized, on an interim basis, the Debtors
to access the cash collateral securing repayment of loan from
West LB, AG, until May 1, 2009.
A full-text copy of the First Interim Cash Collateral Order is
available for free at:
http://bankrupt.com/misc/Nova.1stInterimCCOrder.pdf
Based in Seneca, Illinois, Nova Holding Clinton County, LLC, makes
industrial organic chemicals and biological products. Nova
Holding and certain affiliates filed for Chapter 11 protection on
March 30, 2009 (Bankr. D. Del. Lead Case No. 09-11081). Michael
B. Schaedle, Esq., Melissa S. Vongtama, Esq., and Josef W. Mintz,
Esq., at Blank rome LLP, in Philadelphia, represent the Debtors as
counsel. David W. Carickhoff, Esq., at Blank Rome LLP, in
Wilmington, represents the Debtors as Delaware counsel. The
Debtors listed assets and debts of $10 million to $50 million.
NOVA HOLDING: U.S. Trustee Appoint 5-Member Creditors Committee
---------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3,
appointed five creditors to serve on the official committee of
unsecured creditors in Nova Holding Clinton County, LLC, et al.'s
Chapter 11 cases.
The Creditors Committee members are:
a) Highbridge International LLC
Attn: Eric Colandrea
c/o Highbridge Capital Management, LLC
9 West 57th St., 27th Floor
New York, NY 10019
Tel: (212) 287-4735
Fax: (212) 757-0755
b) DePue Mechanical, Inc.
Attn: James C.M. Jacobsen, Jr.
113 S. Ridge Rd., PO Box 857
Minooka, IL 60447
Tel: (815) 642-3436
Fax: (815) 521-8471
c) The Bank of New York Mellon Trust Company, N.A.
Attn: J. Chris Matthews
601 Travis, 16th Floor
Houston, TX 77002
Tel: (713) 483-6267
Fax: (713) 483-6979
d) Lipid Logistics, LLC
Attn: William A. Kaluzny
151 Springfield Ave., Suite 2B
Joliet, IL 60435
Tel: (815) 741-9300
Fax: (815) 741-9344
e) Veolia Environment Services, Industrial Service
2525 Southshore Blvd., Suite 410
League City, TX 77573
Tel: (713) 307-2160
Fax: (713) 307-7622
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtor's expense. They may investigate the Debtor's business
and financial affairs. Importantly, official committees serve
as fiduciaries to the general population of creditors they
represent. Those committees will also attempt to negotiate the
terms of a consensual Chapter 11 plan -- almost always subject
to the terms of strict confidentiality agreements with the
Debtors and other core parties-in-interest. If negotiations
break down, the Committee may ask the Bankruptcy Court to
replace management with an independent trustee. If the
Committee concludes reorganization of the Debtor is impossible,
the Committee will urge the Bankruptcy Court to convert the
Chapter 11 cases to a liquidation proceeding.
Based in Seneca, Illinois, Nova Holding Clinton County, LLC, makes
industrial organic chemicals and biological products. Nova
Holding and certain affiliates filed for Chapter 11 protection on
March 30, 2009 (Bankr. D. Del. Lead Case No. 09-11081). Michael
B. Schaedle, Esq., Melissa S. Vongtama, Esq., and Josef W. Mintz,
Esq., at Blank rome LLP, in Philadelphia, represent the Debtors as
counsel. David W. Carickhoff, Esq., at Blank Rome LLP, in
Wilmington, represents the Debtors as Delaware counsel. The
Debtors listed assets and debts of $10 million to $50 million.
OLEG OVRUCHSKY: Case Summary & 15 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Oleg Ovruchsky
PO Box 1108
Santa Monica, CA 90402-1108
Bankruptcy Case No.: 09-20398
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Barry Russell
Debtor's Counsel: Jerry A. Chad, Esq.
Law Offices of Jerry A Chad
POB 358
Topanga, CA 90290
Tel: (310) 739-4616
Email: jerrychadjd@aol.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
15 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-20398.pdf
The petition was signed by Oleg Ovruchsky.
ONE VISION: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: One Vision Park, Inc.
47 Jennings Lane
Atherton, CA 94027
Bankruptcy Case No.: 09-31130
Chapter 11 Petition Date: April 30, 2009
Court: United States Bankruptcy Court
Northern District of California (San Francisco)
Judge: Thomas E. Carlson
Debtor's Counsel: Arlo Hale Smith, Esq.
Law Offices of Arlo H. Smith
66 San Fernando Way
San Francisco, CA 94127
Tel: (415) 681-9572
Email: halesf7@aol.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $1,000,001 to $10,000,000
The Debtor did not file a list of creditors together with its
petition.
The petition was signed by Arlo E. Smith, a shareholder of the
company.
OPUS SOUTH: Can Initially Use BofA & Transamerica Cash Collateral
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized,
on an interim basis, Opus South Corporation and its debtor-
affiliates to:
a) access cash securing repayment of loan from Transamerica
Life Insurance Company and Bank of America, N.A.; and
b) grant secured lenders adequate protection.
A final hearing is set for May 15, 2009, at 2:00 p.m. before this
Court. Objections are due five days prior to the final hearing.
Certain of the Debtors have entered into credit facilities with
various lenders. In connection with the credit facilities, the
Debtors granted to each lender a security interest in and lien
upon lease payments received by the Debtors.
8th & 14th, L.L.C., a subsidiary of Opus South, entered into loan
agreement dated as of December 15, 2005, with Transamerica
Occidental Life Insurance Company. The loan is evidenced by a
$145.0 million security promissory note dated as of December 15,
2005, and guaranteed by Opus South.
8th & 14th granted Transamerica (a) a mortgage on the real
property and security interest in all of the assets of 8th & 14th
and the improvements, fistures, sales contracts, escrow deposits,
and other rights related to the real estate; (b) all rights in and
to all leases and rents related to the property. the outstanding
balance of the loan as of April 1, 2009, was $141.8 million.
Altaire Village, L.L.C., a subsidiary of Opus South Development,
L.L.C., a non-bankruptcy entity, refinanced development of a real
estate project in May 2007 and entered into a $5.2 million loan
agreement dated as of May 27, 2007, with National City. The loan
is evidenced by renewal promissory note in the original principal
amount of $5.7 million and guaranteed by Opus South.
In connection with the refinancing in May 15, 2007, National City
was assigned security agreements which included (a) mortgage and
security agreement with Regions Bank dated as of Nov. 24, 2004, as
modified, pursuant to which Altaire Village granted to Regions a
mortgage on the real property and security interest in the
improvements, fixtures, and other rights related thereto; and (b)
assignment of leases, rents and contract rights, pursuant to which
Altaire Village assigned all of its rights in and and to all
leases, rents, contracts and other agreements related to the
property. The outstanding balance of the loan as of April 1,
2009, was $5.2 million.
Nature Coast Commons, L.L.C., a subsidiary of Opus South, entered
into a construction loan agreement, as amended, dated as of
Jan. 3, 2007, with Bank of America, pursuant to which BofA agreed
to make a loan to opus South for the financing of Nature Coast in
the principal amount of $39.1 million and certain other financial
accommodations. The loan is evidence by $35.3 million,
$3.8 million (which has been paid in full), and $3.7 million
promissory notes, and guaranteed by Opus South.
As security for the promissory note, Nature Coast granted BofA a
mortgage on the real property and security interest in the
improvements, fixtures, and other rights related thereto, and
assigned all of its rights in and to all leases and rents. The
outstanding balance of the loan as of April 1, 2009, was
$29.5 million.
The cash collateral sought to be used will maintain and preserve
the value of the properties pending completion of the proposed
sale process.
Concurrently herewith, the Debtors filed a motion asking
permission to sell substantially all of the Debtors' assets free
and clear of liens, encumbrances and other interests.
Pre-bankruptcy, the Debtors and their professionals engaged in
discussions with the secured lenders and explored a variety of
financing and other alternatives to market the properties to the
secured lenders. As of the petition date, the parties were not
able to agree on the terms for the use of cash collateral.
The Debtor will grant Transamerica adequate protection in the form
of maintenance and protection of the Birmingham Social security
Administration Center located in Birmingham, Alabama.
The Court authorized, on an interim basis, the Debtors to grant
BofA adequate protection in the form of:
a) Debtor Nature Coast's maintenance and protection of the
Nature Coast project;
b) the Debtors will permit BofA, its employees and agents, full
and unfettered access to knowledgeable agents and
representatives and the books and records of Debtor Nature
Coast, including, without limitation, any and all leases and
rents.
The Debtors right to use the BofA cash collateral will terminate
automatically upon the earliest of:
a) the termination of the interim specified period; or
b) the occurrence of a cash collateral termination event:
-- any default of the Debtors;
-- any representation by the Debtor in this order, or any
related schedule, statement, and subsequent report,
notice, certificate, or other writing furnished by the
Debtors to BofA is untrue or misleading in any material
respect on the date as of which the facts are stated or
certified;
-- the occurrence of any fraudulent act, conduct or omission
by the Debtor;
-- appointment of a trustee or of an examiner with enhanced
powers for the Debtor or the property of the estate of the
Debtors;
-- conversion of the Debtors' Chapter 11 case to a case under
Chapter 7 of the Bankruptcy Code or the dismissal of the
Chapter 11 case;
-- the entry of an order granting any lien superior or equal
in priority to those held by BofA on the Nature Coast
project, including, without limitation, the leases and
rents derived therefrom, and the cash collateral; and
-- the entry of an order staying, reversing, vacating or
otherwise modifying the order.
A full-text copy of the budgets are available for free at:
http://bankrupt.com/misc/OPUS_budget.pdf
BofA's Objection
Bank of America, N.A., a mortgagee of Nature Coast Debtor,
objected to the Debtors' use of cash collateral motion.
BofA related that the Debtors have no historical contractual
arrangement for the charging of administrative fees.
BofA added that it is not adequately protected and its interests
in the real and personal property of Nature Coast are not
adequately protected.
BofA remains available to negotiate with Debtors for the
consensual use of cash collateral.
About Opus South Corporation
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.
PARSONS MEDICAL: Case Summary & 2 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Parsons Medical Center Pharmacy Inc. (II)
81 Seaview Blvd.
Port Washington, NY 11050
Bankruptcy Case No.: 09-73081
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of New York (Central Islip)
Judge: Robert E. Grossman
Debtor's Counsel: Ronald M. Terenzi, Esq.
Berkman Henoch Peterson & Peddy PC
100 Garden City Plaza-3rd Fl
Garden City, NY 11530
Tel: (516) 222-6200
Email: r.terenzi@bhpp.com
Total Assets: $79,000
Total Debts: $2,829,000
According to its schedules of assets and liabilities, $2,829,000
of the debt is owing to creditors holding unsecured nonpriority
claims.
A full-text copy of the Debtor's petition, including its list of 2
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nyeb09-73081.pdf
The petition was signed by Robert Drucker, president of the
Company.
PENNY E DIXON: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Penny E. Dixon
5859 Millikin Road
Liberty Township, OH 45011
Tel: (513) 721-4532
Bankruptcy Case No.: 09-12658
Chapter 11 Petition Date: April 30, 2009
Court: United States Bankruptcy Court
Southern District of Ohio (Cincinnati)
Debtor's Counsel: Matthew A. Rich, Esq.
255 East Fifth Street, Suite 2400
Cincinnati, OH 45202
Tel: (513) 977-3475
Email: mrich@katzteller.com
Estimated Assets: $10,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $10,000,000
Ms. Dixon did not file a list of creditors together with her
petition.
The petition was signed by Penny E. Dixon.
PLY GEM: Moody's Affirms Corporate Family Rating at 'Caa2'
----------------------------------------------------------
Moody's Investors Service affirmed of Ply Gem Industries, Inc.'s
ratings, including the company's corporate family rating of Caa2
and the Caa1 rating on the company's senior secured notes. At the
same time, Moody's upgraded the company's probability of default
rating to Caa2 and removed the limited default designation.
Moody's also upgraded the company's subordinated notes Ca. The
ratings outlook is negative.
These ratings and assessments were affected:
-- Corporate family rating affirmed at Caa2;
-- Probability of default upgraded to Caa2 from Ca/LD;
-- $700 million senior secured notes due 2013, affirmed at Caa1
(LGD3, 36%);
-- $360 million subordinated notes due 2012, upgraded to Ca
(LGD5, 89%) from C (LGD5, 80%).
Ply Gem's Caa2 corporate family rating takes into consideration
its weakened financial performance due to the contraction in new
home construction and a reduction in large ticket home remodeling,
weakening 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 meaningfully. 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.
The negative rating outlook reflects the belief that the company's
operating performance is likely to continue to weaken and that any
meaningful strengthening of its credit metrics over the next year
is unlikely. 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 April 29, 2009 when Ply Gem's CFR
was lowered to Caa2 from B3 and probability of default rating was
lowered to Ca/LD from B3.
Ply-Gem Industries, Inc., headquartered in Cary, North Carolina,
is a manufacturer of vinyl siding, windows, patio doors, fencing,
railing, and stone serving both the new construction and repair
and remodel end markets. Revenues for 2008 were $1.18 billion.
POLYDEX PHARMA: Schwartz Levitsky Expresses Going Concern Doubt
---------------------------------------------------------------
Schwartz Levitsky Feldman LLP in Toronto, Ontario, Canada, is the
Company's independent auditors, said there is substantial doubt on
Polydex Pharmaceuticals Limited's ability to continue as a going
concern. "The continuance of the Company is dependent on its
future profitability and the ongoing support of its stockholders,
affiliates and creditors," the auditor said.
The Company in a press statement said its ability to continue as a
going concern is in doubt, as it is dependent on its ability to
attain profitable operations, and affecting its ability to meet
Company liabilities as they come due. The outcome of these
matters is dependent on factors outside the Company's control and
cannot be predicted at this time. However, if management's plans
to achieve profitability and liquidity requirements fall short,
management intends to seek other sources of investment from new or
existing investors, creditors and customers.
Polydex Pharmaceuticals last week reported financial results for
its fiscal year ended January 31, 2009. The Company posted a net
loss of US$1.59 million on sales of US$4.82 million for fiscal
year ended 2009, compared to $885,211 in net loss on sales of
$5.73 million for the fiscal year ended 2008. As of January 31,
2009, Polydex had US$6.33 million in total assets and US$1.51
million in total liabilities. The Company has positive working
capital of $1,359,946 as at January 31, 2009.
Management is continuing to focus on the manufacture and sales of
the core product lines that have traditionally been the backbone
of the Company. Amid the continued instability of the global
marketplace, some producers of Dextran and Dextran derivatives may
cease to produce these lines of products, opening new potential
opportunities to the Company to increase production and sales of
these key products. The Company has been receiving increased
interest for its products, particularly the higher-margin powdered
products, and management is actively responding to these
enquiries.
The Company is well positioned to take advantage of this increased
interest as a result of having invested significant effort and
capital into the upgrade and replacement of its spray drying
equipment. The last steps of implementation are underway and when
complete, should ensure consistent production of the highest
quality product, allowing the Company to satisfy the interest in
powdered products being received from large pharmaceutical
companies, some of whom have not only researched and tested
alternative sources but who have also visited the Toronto plant to
confirm their desire to continue or expand their relationship with
Polydex Pharmaceuticals.
Fiscal 2009, the period ending January 31, 2009, was a very
challenging year for the company. Reduced orders from some of its
customers coupled with the volatility of the currency exchange
between the Canadian and U.S. dollars significantly affected cash
flows and profitability. As well, when estimated future cash
flows are less than the carrying value of an asset, an impairment
loss is recognized for the difference between estimated fair value
and carrying value. This year, the Company has incurred an
impairment loss of $550,956, which is included in the increased
Net Loss for the year.
Management made some difficult decisions to drastically reduce
costs of operation, including the closure of the plant for 8 weeks
during the fiscal year, payroll reductions, management
compensation reduction, implementation of shorter plant hours of
work when appropriate, together with further reductions achieved
in raw material pricing, plant repairs, insurance, legal,
consulting and reporting costs.
A full-text copy of the Company's Annual Report on Form 10-K is
available at no charge at http://ResearchArchives.com/t/s?3c66
Polydex Pharmaceuticals Limited (OTCBB:POLXF) --
http://www.Polydex.com/-- based in Toronto, Ontario, Canada, is
engaged in the development, manufacture and marketing of
biotechnology-based products for the human pharmaceutical market,
and also manufactures bulk pharmaceutical intermediates for the
worldwide veterinary pharmaceutical industry.
PRIME GROUP: Silent on $41 Million Loan Payment Due April 30
------------------------------------------------------------
Prime Group Realty Trust remains mum on a $41.0 million loan
payment due Citicorp USA Inc. on April 30, 2008.
Citicorp had agreed to move the payment deadline from March 2,
2009, until April 30. Another $20.0 million was due March 31,
2009, under the Citicorp loan. The balance of the loan is due
June 15, 2009.
The loan currently has an outstanding principal amount of
$80.0 million, according to Prime Group in its report to the
Securities and Exchange Commission in March. Prime Group had said
it anticipates that all or a portion of the required repayments
would be funded by affiliates of The Lightstone Group, Lightstone
Holdings LLC; and David Lichtenstein, Chairman of the Board of
Directors at Prime Group. The Company, however, cautioned that
there can be no assurances that this will be the case.
Prime Group's wholly owned qualified REIT subsidiary PGRT ESH,
Inc., entered into the $120.0 million non-recourse loan with
Citicorp in June 2007. PGRT ESH extended the maturity date of the
Citicorp Loan from June 10, 2008, until June 15, 2009. The loan
is non-recourse to PGRT ESH and is secured by, among other things,
a pledge of PGRT ESH's membership interest in BHAC Capital IV,
L.L.C., an entity that owns 100% of Extended Stay, Inc. The loan
is guaranteed by Lightstone Holdings and Mr. Lichtenstein. As of
December 31, 2008, affiliates of Guarantors repaid $38.5 million
of principal on the loan and paid $11.3 million in debt service
and other fees on the loan.
The loan extension had a $3.0 million restructuring fee payable in
three installments through September 30, 2008. The loan also has
a $1.1 million exit fee.
The Citicorp loan has been amended four times to adjust the
principal repayment schedule. The First Amendment entered into in
October 2008 raised the interest rate to LIBOR plus 10%. The
Second Amendment in December 2008 adjusted the principal repayment
schedule: (i) $41.0 million was due by January 30, 2009, (ii)
$20.0 million was due on March 31, 2009, (iii) the balance of the
loan was due on June 15, 2009 or earlier in the event of the
occurrence of certain asset sales of PGRT ESH or the Guarantors or
its affiliates; and (iv) a $1.0 million fee is due upon the loan
repayment or maturity. In addition, certain minimum payments were
required which will be applied to the repayment schedule if
certain asset sales of Guarantor's and PGRT ESH's affiliates are
consummated or certain other events occur.
The Third Amendment entered into on January 30 moved the date for
making the $41.0 million payment until March 2. The Fourth
Amendment entered into on March 4 moved the $41.0 million payment
deadline until April 30. In addition, the remaining $1.0 million
restructuring fee due at September 30, 2008, was included with the
$1.0 million fee originally due upon maturity.
Prime Group also disclosed to the SEC that it is in the process of
renegotiating the terms of a non-recourse mortgage note on its 800
Jorie Boulevard property with the special servicer and the lender.
Prime Group in October 2008, received a notice of default from the
special servicer of the Jorie Boulevard loan. Due to the property
generating negative cash flows, debt service payments were
discontinued as of September 1, 2008. Prime Group said a default
on the Jorie Boulevard loan does not cause a default on any of the
Company's other loans.
Prime Group further indicated that the financial covenants
contained in some of its loan agreements and guarantee agreements
with lenders include minimum ratios for debt service coverage and
other financial covenants. As of December 31, 2008, Prime Group
said, it is in compliance with the requirements of all of the
financial covenants.
In April 2009 Prime Group's Board of Trustees determined not to
declare a quarterly distribution on the Company's Series B
Preferred Shares for the first quarter of 2009. The Board is
unable to determine when the Company might recommence
distributions on the Series B Preferred Shares. The Board is also
in the process of considering various financing and other
capitalization alternatives for the Company.
Prime Group said the Board's decision was based on the Company's
current capital resources and liquidity needs and the overall
negative state of the economy and capital markets. The Board
intends to review the suspension of the Series B Preferred
distributions periodically based on the Board's ongoing review of
the Company's financial results, capital resources and liquidity
needs, and the condition of the economy and capital markets. The
Company said it could give no assurances that distributions on the
Company's Series B Preferred Shares will be resumed, or that any
financing or other capitalization alternatives will be
satisfactorily concluded.
About the Lightstone Group
The Lightstone Group -- http://www.lightstonegroup.com/-- is one
of the country's largest privately held real estate companies with
interests in residential, office, retail, hospitality, and
industrial real estate assets. The company, principally through
its related operating entities, Beacon Management, Prime Retail,
Extended Stay Hotels, and Prime Group Realty Trust, owns a
diversified portfolio of over 680 hotels, 22,000 multifamily units
and roughly 20 million square feet of office, industrial and
retail properties in 46 states, the District of Columbia, Canada
and Puerto Rico. Employing roughly 14,000 staff and
professionals, The Lightstone Group maintains its corporate
headquarters in New York with regional offices in New Jersey,
Maryland, Illinois and South Carolina.
About Prime Group Realty Trust
Prime Group Realty Trust (NYSE: PGEPRB) -- http://www.pgrt.com/--
is a fully-integrated, self-administered, and self-managed real
estate investment trust which owns, manages, leases, develops, and
redevelops office and industrial real estate, primarily in
metropolitan Chicago. The Company owns 9 office properties
containing an aggregate of 3.5 million net rentable square feet, a
joint venture interest in one office property comprised of roughly
101,000 net rentable square feet and a membership interest in an
unconsolidated entity which owns mid-priced extended-stay hotels
with roughly 76,000 rooms located in 44 states and Canada. The
Company leases and manages roughly 3.5 million square feet
comprising all of its wholly-owned properties. The Company is
also the managing agent for the roughly 1.5 million square foot
Citadel Center office building located at 131 South Dearborn
Street in Chicago, Illinois. The Company is owned by private real
estate owner The Lightstone Group.
Prime Group posted a net loss of $73.3 million on $64.8 million in
total revenues for the year ended December 31, 2008, compared to
$59.0 million in net loss on $73.1 million in total revenues for
2007. As of December 31, 2008, the Company had $521.6 million in
total assets, $515.6 million in total liabilities and
$5.96 million in shareholders' equity. Grant Thornton LLP in
Chicago, Illinois, audited Prime Group's annual report.
Going Concern Doubt on BHAC Capital
Prime Group held a membership interest in BHAC Capital IV LLC
joint venture. During the second quarter of 2008, Prime Group
recorded an asset impairment of $5.6 million related to the write-
down of the remaining balance of its investment in the joint
venture.
Ernst & Young LLP, in Greenville, South Carolina, in March 2009
expressed substantial doubt about BHAC Capital IV LLC's ability to
continue as a going concern. The auditor cited the joint
venture's recurring losses from operations, net working capital
deficiency, members' deficit, and inability to generate sufficient
cash flow to meet its obligations and sustain its operations. The
auditor said the joint venture may not be in compliance with
certain covenants of loan agreements with banks.
R KENNETH ADKINS: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------
Joint Debtors: Robert Kenneth Adkins
aka R. Kenneth Adkins
aka Ken Adkins
Nancy Jarrett Adkins
P. O. Box 16062
Greensboro, NC 27416
Bankruptcy Case No.: 09-10775
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Middle District of North Carolina (Greensboro)
Debtors' Counsel: Jennifer F. Adams, Esq.
Suite 500
101 West Friendly Ave.
P. O. Box 20570
Greensboro, NC 27420-0570
Tel: (336) 273-1600
Email: jadams@greensborolaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $500,001 to $1,000,000
A full-text copy of the Debtors' petition, including their list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ncmb09-10775.pdf
The petition was signed by the Joint Debtors.
RAYMOR INDUSTRIES: Court Okays Plan to Pay $750,000 to Creditors
----------------------------------------------------------------
Raymor Industries Inc. said the Superior Court approved on May 1,
2009, its proposal which had been submitted to its unsecured
creditors pursuant to the Bankruptcy and Insolvency Act.
At a meeting held on April 30 2009, the Proposal was approved by
92% of the Company's Creditors.
In the judgment rendered on May 1, 2009, the Superior Court also
granted Raymor the right to hold a single annual shareholders
meeting for both fiscal years ended on December 31, 2007 and
December 31, 2008, no later than July 15, 2009. The date of the
annual shareholders meeting will be disclosed in due time
depending on the progress and completion of the Company's year end
financial statements ending December 31, 2008.
The Company is still in the process of restructuring its
activities. The Company resumed its operations in the first week
of April 2009.
The management intends to continue providing updates with respect
to Company's restructuring plan on a regular basis and in
accordance with its continuous disclosure obligations under
securities laws.
The common shares of Raymor remain suspended from trading on the
TSX Venture Exchange. Raymor is currently taking the necessary
steps to reinstate the trading of its common shares.
The approved Proposal provided for a maximum of $750,000 to be
distributed in this manner:
a) All the Creditors will receive a maximum amount of a
$1,000 or, if the value of a Creditor's debt is less than
$1,000, an amount covering its debt. The amounts will be
paid to the Creditors 60 days following approval of the
Proposal by the Court;
b) With regards to the balance of the Total Amount after
deduction of the amount a) each Creditor will be paid on a
pro rata basis of the Balance of the Debt. The Creditors
will have the option of i) being paid their Balance of the
Debt in four equal cash payments payable every 90 days, as
of December 15, 2009, until September 15, 2010 or, ii)
advising the Trustee before November 15, 2009, that they
wish to participate in a shares for debt transaction in
accordance with Policy 4.3 of the TSX Venture Exchange by
converting 100% of their Balance of the Debt into units of
Raymor. Each Unit will have a value of $0.15 and will
consist of one common share and one common share purchase
warrant. Each common share purchase warrant will entitle
the holder thereof to acquire one additional common share
of Raymor at a price of $0.25 per share for a period of 12
months expiring on November 15, 2010. In lieu of Units,
the insiders will be entitled to common shares of Raymor,
subject to the terms which are otherwise applicable.
To be eligible to participate in the Transaction, the Creditors
will have to complete a form entitled "Option to Convert" attached
to the Proposal and return it to the Trustee before November 15,
2009. The common shares and the common share purchase warrants
issuable pursuant to the Transaction will be delivered after
November 15, 2009. The Transaction is subject to receipt of all
necessary approvals from the TSX Venture Exchange.
About Raymor Industries
Based in Boisbriand, Quebec, Raymor Industries, Inc. (CA:RAR)
develops single-walled carbon nanotubes, nanomaterials and other
advanced materials for high value-added applications. Raymor
Industries operates three wholly-owned, industrial subsidiaries,
Raymor Nanotech, Raymor Aerospace and AP&C Advanced Powders and
Coatings, specializing in nanotechnology and advanced materials,
and comprising four divisions: (1) nanotechnology products,
including nano-powders, nano-coatings, and single-walled carbon
nanotubes (C-SWNT) for "the applications of tomorrow"; (2) thermal
spray coatings, which largely targets military, aeronautical,
aerospace, specialized industrial, and mining applications; (3)
spherical metallic powders, primarily used for biomedical and
aerospace applications; and (4) net-shape forming, a component
manufacturing technique used for ballistic protection and other
aerospace and military applications. Raymor holds the exclusive
rights to more than 20 patents throughout the world, with other
patents pending.
Raymor Industries Inc. and some of its subsidiaries filed on
January 16, 2009, with the official receiver a notice of intention
to make a proposal under the Bankruptcy and Insolvency Act. The
filing is intended to facilitate the Company's ability to
successfully implement a restructuring plan. Raymor is required
to file its proposal within 30 days unless an extension is granted
by the courts.
Also on January 16, Raymor received from its principal financial
institution a Notice to Enforce a Security under the article
244(1) of the Bankruptcy and Insolvency Act. A second Notice to
Enforce a Security was received by SE Techno Plus Inc., a
subsidiary of Raymor Aerospace, from its financial institution
requesting the full repayment of its obligation.
RBS GLOBAL: Moody's Changes Default Rating to 'Caa1/LD'
-------------------------------------------------------
Moody's Investors Service changed RBS Global, Inc.'s Probability
of Default Rating to Caa1/LD from Ca reflecting the closing of the
company's exchange offer for a portion of its outstanding debt at
values below par. In a related rating action Moody's affirmed the
company's Caa1 Corporate Family Rating. Moody's also confirmed
the company's senior secured bank credit facility at B1 and
adjusted ratings of certain other debt instruments in
consideration of the capital structure change resulting from the
completion of the company's exchange offer. The Speculative Grade
Liquidity rating remains SGL-3. The outlook is stable. Moody's
will remove the PDR's LD component after three business days.
The change in the company's PDR reflects RBS' recent announcement
of the completion of its private exchange offer. RBS indicated
that it issued $196.3 million of new senior unsecured notes due
2014 for $71 million of senior unsecured notes due 2016 and $243.6
million of PIK Toggle Notes and Loans due 2013 issued by Rexnord
Holdings, Inc., RBS' parent company. The new notes due 2014 rank
pari passu with RBS' other unsecured obligations.
The Caa1 Corporate Family Rating incorporates Moody's view that
RBS' credit metrics will remain highly speculative in spite of the
reduction of approximately $118.3 million of debt, representing
about 5% of the company's total debt, including the remaining debt
at Rexnord Holdings Inc., RBS' parent company. The severity of
the downturn in the global economy is negatively impacting RBS'
Water Management and Power Transmission businesses. The non-
residential construction industry, the main driver of its WM
business, is likely to remain weak through at least mid-2010. The
current disruption in the credit markets and the lack of third-
party funding for new projects are further dampening construction
spending. Industrial manufacturers, an important source of
revenues for RBS' PT business, are also experiencing a difficult
operating environment.
RBS' SGL-3 speculative grade liquidity rating reflects Moody's
belief that the company will maintain an adequate liquidity
profile over the next twelve months. Even though operating cash
flow will be adversely impacted by the current downturn in the
global economy, existing cash balances and availability under the
company's revolving credit facility should be adequate to make up
any potential shortfalls in funding the company's normal operating
requirements and capital spending needs. Term loan amortization
is minimal at about $2 million per year for the next three years.
Moody's believes that headroom under the company's financial
covenants should be sufficient over the next twelve months.
Constraining the liquidity rating is that the company's assets are
encumbered to secure its bank borrowings.
The stable outlook is based on Moody's expectations that RBS'
ongoing cost reduction program and improvements from working
capital should allow the company to contend with the ongoing
economic challenges.
These ratings/assessments were affected by this action:
-- Corporate family rating affirmed at Caa1;
-- Probability of default rating changed to Caa1/LD from Ca;
-- $908.0 million (originally $960.0 million) senior secured
bank credit facility confirmed at B1, but its loss given
default assessment is changed to (LGD2, 15%) from (LGD2,
13%);
-- $802.5 million senior unsecured notes due 2014 lowered to
Caa2 (LGD4, 59%) from Caa1 (LGD4, 52%);
-- $196.3 million senior unsecured notes due 2014 affirmed at
Caa2, but its loss given default assessment is changed to
(LGD4, 59%) from (LGD4, 61%);
-- $79.0 million (originally $150.0 million) senior unsecured
notes due 2016 changed to Caa2 (LGD4, 59%) from Caa3 (LGD2,
26%);
-- $300.0 million senior subordinated notes due 2016 lowered to
Caa3 (LGD6, 91%) from Caa2 (LGD5, 83%).
The company's speculative grade liquidity rating remains SGL-3.
The last rating action was on April 2, 2009 at which time Moody's
lowered the Probability of Default Rating to Ca.
RBS Global, Inc., headquartered in Milwaukee, Wisconsin, is an
industrial company comprised of two strategic businesses including
power transmission and water management. Revenues for the last
twelve months through December 27, 2008 totaled approximately
$1.95 billion.
RED TOP: Gets Initial OK on $2.6MM DIP Loan from Secured Lenders
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Indiana
authorized, on an interim basis, Red Top Rentals, Inc., to:
a) obtain postpetition financing of up to $2.6 million from its
prepetition secured senior lender;
b) use prepetition cash collateral of the senior lender and to
provide adequate protection to the senior lender;
c) grant the DIP lender security interests in all of
Debtor's owned and after-acquired property to secure the
Debtor's obligations under the DIP loan; and
d) grant the DIP Lender superpriority claims with respect to
the Debtor's obligations under the DIP loan over any and all
administrative expenses.
A final hearing on the Debtors' motion is scheduled for May 22,
2009, at 9:00 o'clock a.m. Objections are due 3 business days
prior to the final hearing date.
As reported in the Troubled Company Reporter on April 29, 2009,
the Debtor's operations was financed through cash flow from
business operations and from financing provided by M&I Marshall &
Ilsley Bank in participation with Indiana Bank & Trust.
As of Red Top's petition date, the senior lender has asserted
first priority secured claims against the Debtor in the principal
amount of not less than $20.0 million, by virtue of (a) the loan
agreement executed by the Debtor dated June 28, 2006, as amended;
(b) a note dated June 28, 2006, as amended, in the principal
amount of $30.0 million; (c) a note dated June 28, 2006, as
amended, in the principal amount of $3.0 million; and (d) a
security agreement dated June 28, 2006, as amended.
The senior lender asserted that the prepetition obligations are
secured by a duly perfected first priority security interest
and liens in substantially all of the Debtor's business assets,
with priority over all liens, claims, and interests of all other
persons and entities including the Debtor; that the prepetition
obligations constitute an allowable claim; and the prepetition
obligations are due and payable without defense, set off, or
counterclaim.
The senior lender maintained that the proceeds of the prepetition
collateral constitute cash collateral. As of the petition date,
Debtor had cash of $172,829, accounts receivable of $7.0 million,
and inventory of $20.0 million.
The Debtor noted that lenders other than the senior lender may
have an interest in Debtor's cash collateral, as interest in
rental income from the lease of Debtor's inventory which falls
within the definition of proceeds. However the Debtor believes
that more than 90% of the cash collateral belongs to the senior
lender. These lenders may include Caterpillar Financial Services
Corporation, CitiCapital Commercial Corporation, DeLage Landen
Financial Services, Inc., and Rudd Equipment Company, Inc.
The senior lender agreed to extend postpetition secured credit of
$2.6 million to the Debtor until the entry of the final order.
The Debtor was unable to obtain credit without the Debtor granting
liens on all of the assets of the Debtor.
Salient Terms of the DIP Loan
The cash collateral will be used by the Debtor to pay:
A. its actual operating expenses, which are the same or
similar to those experienced by it in the past operation of
the business and which are necessary to the continued
operation of the business;
B. maintenance and preservation of property of the estate;
C. current taxes incurred in the operation of the business;
and
D. payment of expenses associated with the Chapter 11 case,
including United States Trustee's fees and professional fees
and expenses.
The DIP Lender will receive perfected senior liens with priority
over all other liens attaching to Debtor's collateral. The DIP
Lender is also granted replacement liens to provide the DIP Lender
with adequate protection. The Debtor's postpetition lien and
replacement liens will have priority as well.
About Red Top Rentals, Inc.
Headquartered in Indianapolis, Indiana, Red Top Rentals, Inc. --
http://www.redtoprentals.com/-- rents construction equipment
including trucks, dozers, scrapers, excavators, graders, rubber-
tired loaders, crawler loaders, loader-backhoes, hydraulic
hammers, skid steer loaders, sheepsfoot rollers, smooth drum
rollers, draglines and other construction related items.
The Company filed for Chapter 11 on April 20, 2009 (Bankr. S. D.
Ind. Case No. 09-05229). Jeffrey M. Hester, Esq., at Tucker
Hester, LLC, represents the Debtor in its restructuring efforts.
The Debtor listed total assets of $23,249,558 and total debts of
$32,892,169.
REEL REVOLUTION: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Reel Revolution Manufacturing LLC
14121 Highway 290 W. Number 11D
Austin, TX 78737
Bankruptcy Case No.: 09-70093
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Western District of Texas (Midland)
Judge: Craig A. Gargotta
Debtor's Counsel: Roy Byrn Bass, Jr., Esq.
4716 4th Street, Suite 100
Lubbock, TX 79416
Tel: (806) 785-1250
Fax: (806) 771-1260
Email: bbass@bbasslaw.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/txwb09-70093.pdf
The petition was signed by Terence Borst, manager of the Company.
REXNORD LLC: S&P Raises Corporate Credit Rating to 'B' From 'SD'
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its long-term corporate
credit rating on Rexnord LLC to 'B' from 'SD' (selective default).
At the same time, S&P affirmed the issue-level ratings on the
company's rated debt. The outlook is negative.
"The upgrade follows our review of the company's capital structure
after the settlement of various debt exchange offers," said
Standard & Poor's credit analyst Dan Picciotto. "While the new
capital structure has somewhat less debt, the company will have a
higher cash interest burden. S&P has raised the corporate credit
rating to 'B', the same level that existed prior to the exchange
offer."
The ratings on Rexnord reflect the company's highly leveraged
financial profile, which more than offsets its business position,
characterized by leading market positions and good product and
end-market diversity. Rexnord's highly leveraged balance sheet
and thin cash flow protection result from equity sponsor Apollo
Management L.P.'s acquisition of the company in July 2006; the
February 2007 acquisition of Zurn, Jacuzzi Brands Inc.'s water
management business; and a subsequent dividend payout.
Operating margin (before depreciation and amortization) has been
good and remains in the high teens. Near-term prospects are
weakening, with some markets, such as commercial construction,
showing signs of slowing. Adjusted capital expenditures typically
average 3% to 4% of sales and working-capital as a percentage of
sales is considered to be relatively high due, in part, to the
company's extensive distribution network. Still, S&P expects
Rexnord to generate moderate free cash flow. The company's focus
on enhancing internal operations through its Rexnord Business
System strategies should eventually reduce delivery times and
manufacturing inefficiencies, and improve working-capital
management, potentially serving as a source of cash.
Total debt (including pensions and operating leases) to EBITDA was
7.5x at year-end and funds from operation to debt was 6%, below
the 10% S&P expects. These amounts included debt held at
Rexnord's indirect parent, Rexnord Holdings Inc., which pays
either payment-in-kind or cash interest, subject to certain
restrictions. A majority of these notes were replaced with new
9.5% senior notes in an exchange offer which closed in April and
this reduced leverage somewhat. However, the new notes will also
result in a higher cash interest burden.
S&P could lower the ratings if a deterioration in operating
performance results in very elevated leverage. For instance, if
total debt to EBITDA were to approach 9x and free cash flow
generation was not meaningfully positive, S&P could lower the
ratings. A revision of the outlook to stable would be possible if
Rexnord appears likely to maintain FFO to total debt approaching
10%. Also, if Rexnord's parent, Rexnord Holdings Inc., is
successful in executing its proposed IPO transaction S&P would
reevaluate the situation and could consider a favorable revision
of the outlook because credit measures would likely improve.
RXUSA WHOLESALE: Case Summary & 2 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Rxusa Wholesale, Inc.
81 Seaview Blvd.
Port Washington, NY 11050
Bankruptcy Case No.: 09-73083
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Eastern District of New York (Central Islip)
Judge: Alan S. Trust
Debtor's Counsel: Ronald M. Terenzi, Esq.
Berkman Henoch Peterson & Peddy PC
100 Garden City Plaza-3rd Fl
Garden City, NY 11530
Tel: (516) 222-6200
Email: r.terenzi@bhpp.com
Total Assets: $8,407,027
Total Debts: $11,157,027
According to its schedules of assets and liabilities, $11,157,027
of the debt is owing to creditors holding unsecured nonpriority
claims.
A full-text copy of the Debtor's petition, including its list of 2
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nyeb09-73083.pdf
The petition was signed by Robert Drucker, president of the
Company.
RYLAND GROUP: Fitch Assigns 'BB' Rating on $230 Mil. Notes
----------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Ryland Group, Inc.'s
$230 million 8.40% senior notes due May 15, 2017. The Rating
Outlook is Negative. The issue will be ranked on a pari passu
basis with all other senior unsecured debt, including RYL's $200
million unsecured bank credit facility. The approximately $225.4
million in proceeds will be used for general corporate purposes.
The company is expected to opportunistically pay down near-term
debt (as it did in the first quarter of 2009) and when appropriate
make direct land purchases (i.e. 'grow the business') and/or
invest in its joint venture with Oaktree Capital. This offering
was an opportunistic access of the capital markets, which might
not be as accessible to homebuilders in the future. Liquidity was
enhanced with a longer maturity at a moderately higher cost than
its other debt with limited constraints from covenants. The debt-
to-capital ratio rises to 59.0% pro forma, but the net debt-to-
capital ratio is only 22.2%. Over the longer term debt-to-capital
is expected to be maintained within the company's targeted range
of 45%-50%.
Fitch lowered RYL's Issuer Default Rating and senior unsecured
rating in mid-December 2008 from 'BB+' to 'BB'. The downgrade
reflected the very difficult housing environment and Fitch
expectations that housing activity will be even more challenging
than previously anticipated throughout calendar 2009. The
recessionary economy and impaired mortgage markets are, of course,
contributing to the housing shortfall. The ratings changes also
reflected negative trends in RYL's operating margins, further
deterioration in credit metrics (especially interest coverage and
debt/EBITDA ratios) and erosion in tangible net worth from non-
cash real estate charges. RYL's liquidity position provides a
buffer and supports the current ratings. Fitch notes there is
potential for lower cash flow from operations in 2009, excluding
income tax refunds of $165 million. However, management's recent
comments that land spend will be significantly below the original
guidance of $250 million supports Fitch's projection of $45
million-$70 million in cash flow from operations this year.
Future ratings and Outlooks will be influenced by broad housing-
market trends as well as company-specific activity, such as land
and development spending, general inventory levels, speculative
inventory activity (including the impact of high cancellation
rates on such activity), gross and net new order activity, debt
levels and free cash flow trends and uses.
The ratings reflect RYL's successful execution of its business
model, moderate financial policies, and geographic and product
line diversity. In recent years RYL has improved its capital
structure, pursued conservative capitalization policies and has
positioned itself to withstand a meaningful housing downturn.
RYL's significant ranking (within the top five or top 10) in most
of its markets, its presale operating strategy and a return on
capital focus provide the framework to soften the impact on
margins from declining market conditions. Acquisitions have not
played a part in RYL's operating strategy, as management has
preferred to focus on internal growth (expanding its position in
existing markets and occasional greenfield new market entries).
RYL's inventory turns remain strong in comparison to the industry,
demonstrating the company's ability to generate liquidity from its
inventory base. Inventory/net debt stood at 5.3 times (x) at
March 31, 2009, which is above the average 5.1x of the 2001-2005
period and provides some buffer against an extended continuation
in the downturn in housing and/or in economic conditions. RYL
maintains a 3.2-year supply of lots (based on last 12 months
deliveries), 83% of which are owned and the balance controlled
through options. (The options share of total lots controlled is
down sharply over the past two-plus years as the company has
written off substantial numbers of options.)
As the housing cycle continues to contract, creditors should
benefit from RYL's financial flexibility supported by cash and
equivalents of $534 million and $115 million available under its
$200 million unsecured credit facility as of March 31, 2009. In
January 2009, RYL amended its credit facility to, among other
things, reduce the aggregate commitment from $550 million to $200
million and modify the tangible net worth and leverage covenants.
The credit facility matures in January 2011.
RYLAND GROUP: S&P Assigns 'BB-' Rating on $230 Mil. Senior Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' rating and
'4' recovery rating to a $230 million 8.4% senior unsecured note
offering due May 2017 that is guaranteed, jointly and severally,
by substantially all of The Ryland Group Inc.'s direct and
indirect wholly owned homebuilding subsidiaries. The '4' recovery
rating indicates S&P's expectation for an average recovery of
principal (30%-50%) in the event of a payment default.
Ryland's newly issued notes will rank equally with $750 million of
existing unsecured and unsubordinated debt. However, if a change-
of-control repurchase event were to occur, each holder of these
new notes will have the right to require Ryland to repurchase all
or any part of the notes at a price equal to 101% of their
principal amount, plus accrued and unpaid interest.
Ryland will use the proceeds of the note offering for general
corporate purchases. In the interim, Ryland's leverage will rise
and will likely be tight relative to its bank covenant. However,
given the company's cash positions, S&P believes it's possible
that Ryland may continue to repurchase some of its debt (as it did
in the first quarter), which should provide additional cushion
under the leverage covenant.
Southern California-based Ryland operates a national platform that
sells entry-level and first- and second-time move-up homes through
19 divisions in 15 states. Ryland is more diversified than many
of its peers and has less exposure to some of the overbuilt
coastal and southwestern markets, such as California, Las Vegas,
and Arizona. However, at this point in the cycle, nearly every
major housing market is oversupplied and suffering from weak
demand.
The ratings on Ryland (BB-/Negative/--) reflect the company's
adequate liquidity position, which is supported by an increase in
the level of cash on hand, minimal near-term debt maturities, and
more cushion under a previously tight tangible net worth covenant.
Offsetting these credit supports is the diminished capacity under
the company's revolving credit facility following a recent
amendment. As such, Ryland's ability to maintain an appropriate
cash position to mitigate the more-modest revolver capacity will
be critical to support the current rating.
Rating List
New Ratings
The Ryland Group Inc.
Senior unsecured
$230 million 8.4% notes due 05/15/2017 BB-
Recovery rating 4
SOURCE INTERLINK: Chapter 11 Filing Cues S&P's Rating Cut to 'D'
----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its corporate
credit rating, as well as all issue-level ratings, on Source
Interlink Cos. Inc. to 'D'. S&P lowered the corporate credit
rating to 'D' from 'CCC'. The recovery ratings on the company's
debt issues remain unchanged.
"The ratings downgrade follows the company's announcement of its
Chapter 11 filing and related prearranged restructuring," said
Standard & Poor's credit analyst Hal F. Diamond. The plan of
reorganization also calls for debtor-in-possession (DIP) financing
from pre-petition lenders, consisting of a $300 million revolver
and $85 million term loan. Total debt was $1.545 billion as of
April 25, 2009.
"The recession and secular trends affecting the magazine
publishing industry have hurt the company's operating
performance," said Mr. Diamond. The profitability of the
specialty magazine publishing segment, which accounts for slightly
more than half of overall profitability, has sharply declined as a
result of weak newsstand circulation and advertising revenues.
Automotive non-original equipment manufacturers, which have
suffered from the sharp decline in U.S. auto sales, account for
the majority of advertising revenues.
SOURCE INTERLINK: Taps Kirkland & Ellis as Lead Bankruptcy Counsel
------------------------------------------------------------------
Source Interlink Companies, Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware for
permission to employ Kirkland & Ellis LLP as lead counsel.
K & E will, among other things:
a) advise the Debtors with respect to their rights, powers and
duties as debtor-in-possession in the continued management
and operation of their business and properties;
b) attend meetings and negotiate with representatives of the
creditors and other parties-in-interest; and
c) take all necessary action to protect and preserve the
Debtors' estates, including prosecute actions on the
Debtors' behalf, defend any action commenced against the
Debtors, and represent the Debtors' interests in
negotiations concerning all litigation in which the Debtors
are involved, including objections to claims filed
against the Debtors' estates;
The hourly rates of K & E personnel are:
Partners $660 - $965
Associates $365 - $520
Paraprofessionals $130 - 235
The hourly rates of K & E personnel having primary responsibility
in the Chapter 11 cases are:
David L. Eaton $895
David L. Agay $660
Mr. Eaton tells the Court that on March 30, 2009, the Debtors paid
K & E a $250,000 classic retainer. As of the petition date, the
Debtors do not owe any amounts from K & E.
Mr. Eaton assure the Court that K & E is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy
Court.
Mr. Eaton can be reached at:
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
Tel: +1 312-862-2000
Fax: +1 312-862-2200
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.
SOURCE INTERLINK: Wants KCC as Notice, Claims and Balloting Agent
-----------------------------------------------------------------
Source Interlink Companies, Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware for
permission to employ Kurtzman Carson Consultants LLC as notice,
claims and balloting agent.
KCC will, among other things:
a) prepare and serve required notices in the Chapter 11 cases;
b) receive, examine and maintain copies of all proofs of claim
and proofs of interest filed in the chapter 11 cases; and
c) monitor the Court's docket for any claims related pleading
filed and making necessary notations on the claims register.
Michael J. Frisberg, vice president of corporate restructuring
services of KCC, tells the Court that KCC will be paid a $50,000
retainer for the services performed and expenses incurred.
Mr. Frisberg assures the Court that KCC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
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.
SOURCE INTERLINK: Wants to Reject Nonresidential Property Leases
----------------------------------------------------------------
Source Interlink Companies, Inc., and its debtor-affiliates ask
the U.S. Bankruptcy Court for the District of Delaware for
permission to reject certain unexpired leases for non-residential
real property.
The Debtors are party to a lease of nonresidential real property
at 2455 East Sunrise Boulevard, Fort Lauderdale, Florida. The
Sunrise Lease covers 1,861 rentable square feet of space and is
scheduled to expire on November 30, 2010. Pre-bankruptcy, the
Debtors determined that these offices were no longer necessary to
their ongoing operations and could be consolidated into the
Debtors' other facilities located near Fort Lauderdale, Florida.
The Debtors also are party to 2twoleases of nonresidential real
property located at 961 Fairview, Carson City, Nevada and 2025
Kansas Street, Carson City, Nevada. The Carson City Leases cover
145,356 square feet of space and expire on October 31, 2021. The
Debtors do not intend to utilize the Carson City, Navada premises
in the future.
The Debtors relate the rejection of the leases is in the best
interest of the Debtors, their estates and their creditors.
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.
SOUTHEAST BANKING: Plan Encounters Delay After Modena Exit
----------------------------------------------------------
Jeffrey H. Beck, as Chapter 11 Trustee for the estate of
Southeast Banking Corporation, asks the U.S. Bankruptcy Court for
the Southern District of Florida for authority:
1) to modify the Trustee's Third Amended Chapter 11 Plan in
order to extend the deadline for the occurrence of the
Effective Date until June 30, 2009, and
2) to further extend the Effective Date deadline for one or more
additional periods upon consultation with parties-in-interest
in the case, without further order of the Court.
As reported in the Troubled Company Reporter on March 20, 2009,
the Bankruptcy Court entered on March 13, 2009, an order
confirming the Trustee's Third Amended Chapter 11 Plan of
Reorganization for Southeast Banking Corporation. Section 1.38 of
the Plan provides that the Plan must be consummated on or before
April 30, 2009.
On April 28, 2009, Modena 2004-1 LLC notified the Trustee of its
election to terminate the Master Subscription Agreement pursuant
to Section6.12(f) thereof. Accordingly, the Effective Date will
not occur on or before April 30, 2009.
The Trustee tells the Court that the extension of the Effective
Date deadline will afford him an opportunity to seek alternative
investors or to explore the possibility of closing the
Transaction with Modena or any of Modena's affiliates at a later
date.
Other than the modification to the Plan's Effective Date, the Plan
remains unchanged.
Summary of the Transaction
The Plan proposes to rehabilitate SEBC and certain of its non-
debtor subsidiaries by recapitalizing SEBC through an investment
of $1.639 billion by Modena 2004-1 LLC, an indirect wholly owned
subsidiary of Merrill Lynch & Co., Inc., and reorganizing SEBC
into SEBC Financial Corporation, with a new holding company, SEBC
Holdings, LP. SEBC Holdings will own 60% of the common stock of
Reorganized SEBC and a new subsidiary, SEBC Real Estate, LLC, that
will acquire and hold SEBC's real estate-owning subsidiaries. The
equity investment would be utilized by Reorganized SEBC to
purchase equity securities from a newly formed special purpose
vehicle to be established on or after the Closing Date.
A full-text copy of the Disclosure Statement explaining the
Trustee's Third Amended Plan for Southeast Banking Corporation,
dated February 9, 2009, is available for free at:
http://bankrupt.com/misc/SoutheastBankingDSThirdAmendedPlan.pdf
As provided in the Plan, upon the occurrence of the Effective Date
Reorganized SEBC will file and publish a separate Notice setting
forth that the Transaction has closed and the Effective Date has
occurred.
About Southeast Banking
Southeast Banking Corp. was the holding company of Southeast Bank,
N.A., and its sister institution, Southeast Bank of West Florida,
and the direct or indirect parent of a number of subsidiary
corporations and affiliates, active and inactive, which at various
times conducted substantial business throughout the State of
Florida and beyond. The businesses of SEBC and its affiliates
consisted of banking, real estate investment and development,
insurance, mortgage banking, venture capital, and asset
investment.
At the time of their failure the Banks had total assets of
$10.5 billion and total deposits of $7.6 billion. Most of the
assets were with SEBNA, which had 218 of the combined 224 branches
and all but $100 million of the assets. Together, the two banks
had approximately 6,200 employees, operating exclusively in
Florida.
On September 20, 1991, Southeast Bank filed a voluntary petition
under Chapter 7 of the Bankruptcy Code (Bankr. S.D. Fla. Case
No. 91-14561). Southeast Bank, N.A., was seized by federal
regulators while Southeast Bank of West Florida was seized by
state regulators on September 19, 1991. On September 20, 1991,
SEBC's board of directors voted to authorize the filing of a
voluntary Chapter 7 petition, and then promptly resigned along
with all of SEBC's officers.
Jeffrey H. Beck was the fourth Trustee appointed in the Debtor's
liquidation proceeding.
This bankruptcy case was converted to Chapter 11 on September 17,
2007, almost sixteen years after its initial filing.
SHINYA MCHENRY: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Joint Debtors: Shinya McHenry
Marcy McHenry
911 Mendakota Court
Mendota Heights, MN 55120-0000
Bankruptcy Case No.: 09-33022
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
District of Minnesota (St Paul)
Judge: Chief Judge Nancy C. Dreher
Debtors' Counsel: Jamie R. Pierce, Esq.
Hinshaw & Culbertson LLP
333 South Seventh Street
Suite 2000
Minneapolis, MN 55402
Tel: (612) 33-3434
Email: jpierce@hinshawlaw.com
Total Assets: $1,014,650
Total Debts: $2,422,160
According to its schedules of assets and liabilities, $1,520,078
of the debt is owing to secured creditors, $6,876 for taxes owed
to governmental units, and the remaining debt to creditors holding
unsecured nonpriority claims.
A full-text copy of the Debtors' petition, including their list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/mnb09-33022.pdf
The petition was signed by the Joint Debtors.
SOUTH SIDE: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: South Side House LLC
80 Clay St.
Brooklyn, NY 11222
Bankruptcy Case No.: 09-43576
Chapter 11 Petition Date: April 30, 2009
Court: United States Bankruptcy Court
Eastern District of New York (Brooklyn)
Judge: Elizabeth S. Stong
Type of Business: The company is a single asset real estate
debtor.
Debtor's Counsel: Leo Fox, Esq.
630 Third Avenue
New York, NY 10017
Tel: (212) 867-9595
Fax: (212) 949-1857
Email: leofox1947@aol.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Debts: $10,000,001 to $50,000,000
The Debtor did not file a list of creditors together with its
petition.
The petition was signed by Menachem Stark,a 50% equity holder of
the Company.
SOUTHEASTERN INCOME: Case Summary & Eight Largest Unsec. Creditors
------------------------------------------------------------------
Debtor: Southeastern Income Properties, Inc.
dba EconoLodge
13725 Susan Kay Dr.
Tampa, FL 33613
Bankruptcy Case No.: 09-09079
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
Gulf South Income Properties, Inc 09-09080
Chapter 11 Petition Date: May 1, 2009
Court: Middle District of Florida (Tampa)
Judge: K. Rodney May
Debtor's Counsel: Buddy D. Ford, Esq.
Buddy@tampaesq.com
Buddy D. Ford, P.A.
115 N. MacDill Avenue
Tampa, FL 33609-1521
Tel: (813) 877-4669
Fax: (813) 877-5543
Estimated Assets: $100 million to $500 million
Estimated Debts: $500,000 to $1 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Orange County Tax Collector taxes $422,182
PO Box 545100
Orlando, FL 32854-5100
Best Western International lawsuit $300,000
PO Box 53505
Phoenix, AZ 85072-3505
AEL Financial furniture $57,000
c/o GCR Capital
200 - 9th Ave. N., Ste. 200
Safety Harbor, FL 34695
Sterling National Bank full headboard $45,000
Enterprise Funding Group $38,000
Leaf Funding Corp. furniture $32,000
CFC Investment Company case mounted wall $28,000
guard
AXIS Capital, Inc. $20,000
The petition was signed by Jevon Estes, president.
SOUTHWINDS @ LEXINGTON: Case Summary & 20 Largest Unsec. Creditors
------------------------------------------------------------------
Debtor: Southwinds @ Lexington, LLC
fdba Southwinds of Lexington, LLC
3125 Hebron Dr.
West Columbia, SC 29169
Bankruptcy Case No.: 09-03366
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
District of South Carolina (Columbia)
Judge: David R. Duncan
Debtor's Counsel: Reid B. Smith, Esq.
Price Bird Smith & Boulware PA
1712 St Julian Place, Suite 102
Columbia, SC 29204
Tel: (803) 779-2255
Email: reid@pricebirdlaw.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
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/scb09-03366.pdf
The petition was signed by Gina Toney, managing member of the
Company.
SPANSION JAPAN: Voluntary Chapter 15 Case Summary
-------------------------------------------------
Chapter 15 Debtor: Spansion Japan Limited
2 Takaku-Kogyo-Danchi
Aizwakamatsu-shi
Fukushima
Japan
Chapter 15 Case No.: 09-11480
Type of Business: The Debtor operates chemical and material
production facility.
On March 1, 2009, each of the affiliated
entities of Spansion Inc. filed for bankruptcy.
These cases are being jointly administered for
procedural purposes and are maintained on the
case docket for Spansion Inc., Case No. 09-
10690. However, the Foreign Representative is
not seeking joint administration of the
chapter 15 case with that of the U.S. Debtors.
Entities Case No.
-------- --------
Spansion Inc. 09-10690
Spansion Technology LLC 09-10691
Spansion LLC 09-10692
Spansion International, Inc. 09-10693
Cerium Laboratories LLC 09-10694
Chapter 15 Petition Date: April 30, 2009
Court: District of Delaware (Delaware)
Judge: Kevin J. Carey
Chapter 15 Petitioner's Counsel: Gregory Alan Taylor, Esq.
bankruptcy@ashby-geddes.com
Ashby & Geddes
500 Delaware Avenue, 8th Floor
P.O. Box 1150
Wilmington, DE 19899
Tel: (302) 654-1888
Fax: (302) 654-2067
Estimated Assets: $10 million to $50 million
Estimated Debts: $50 million to $100 million
STARS & STRIPES: Files for Chapter 11 Bankruptcy Protection
-----------------------------------------------------------
Kirby J. Harrison at AINonline.com reports that Stars & Stripes
Air Tours has filed for Chapter 11 bankruptcy protection.
According to AINonline.com, Stars & Stripes spokesperson said that
tourism in the Las Vegas area, from where many of the Company's
clients are drawn, is down from 25 to 35%. "The filing by Stars &
Stripes is one of protection, not abandonment. It allows us to
continue operations reliably and safely," the report quoted the
spokesperson as saying.
AINonline.com states that the operational fleet consists of seven
aircraft in a mixed fleet of helicopters and airplanes. According
to the report, the spokesperson said that three other aircraft
were hangared "in response to the economic slowdown in Las Vegas."
Stars & Stripes Air Tours is owned by father Al Trenk and son
Steve. The family also owns and operates Liberty Helicopter Tours
out of its West Side Heliport in New York City.
STRATEGIC RESTAURANT: Case Summary & 12 Largest Unsec. Creditors
----------------------------------------------------------------
Debtor: Strategic Restaurant Concepts, LLC
108 Julington Plaza Drive
Saint Johns, FL 32259
Bankruptcy Case No.: 09-03523
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Middle District of Florida (Jacksonville)
Debtor's Counsel: J Randall Frier, Esq.
Frier & Frier, P.A.
1682-A Metropolitan Circle
Tallahassee, FL 32308
Tel: (850) 894-2084
Fax: (850) 894-2086
Email: Cumberland_1988@yahoo.com
Total Assets: $1,502,850
Total Debts: $3,995,651
According to its schedules of assets and liabilities, $3,977,000
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
12 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/flmb09-03523.pdf
The petition was signed by Richard M. Cieslinski, managing member
of the Company.
TERRA NOSTRA: Section 341(a) Meeting Set for May 14
---------------------------------------------------
Diana G. Adams, the United States Trustee for Region 2, will
convene a meeting of Terra Nostra Resources Corp.'s creditors on
May 14, 2009, at 2:30 p.m., at 80 Broad Street, 4th Floor, New
York, NY 1004.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible officer of the
Debtor under oath about the Debtor's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Pasadena, California, Terra Nostra Resources
Corp. (OTCBB: TNRO) owns a 51% interest in two China Joint Venture
companies in the strategic copper and stainless steel industries.
Creditors filed an involuntary Chapter 11 petition on November 25,
2008 (Bankr. S.D. N.Y. Case No. 08-14708). Karen Ostad, Esq., at
Morrison & Foerster LLP represents the petitioning creditors.
TH PROPERTIES: Files for Chapter 11 Bankruptcy Protection
---------------------------------------------------------
The Associated Press reports that T.H. Properties L.P. has filed
for Chapter 11 bankruptcy protection.
According to court documents, T.H. Properties listed $100 million
to $500 million in assets and $10 million to $50 million in debts.
The AP relates that T.H. Properties stopped operating in April
2009 as lenders and suppliers started closing in. The report says
that buyers have hundreds of thousands of dollars in deposits on
houses in THP developments.
Philadelphia-based T.H. Properties L.P. has 12 working
developments in Pennsylvania and New Jersey. Timothy Hendricks
and his brother Todd started the firm in 1992.
TH PROPERTIES: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: TH Properties, L.P., Debtor
345 Main Street
Harleysville, PA 19438-2420
Bankruptcy Case No.: 09-13201
Chapter 11 Petition Date: April 30, 2009
Court: United States Bankruptcy Court
Eastern District of Pennsylvania (Philadelphia)
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
T.H. Properties, Inc. 09-13204
Northgate Development Company, LP 09-13208
TH Properties of New Jersey, L.P. 09-13211
Morgan Hill Drive, LP 09-13213
Debtor's Counsel: Barry E. Bressler, Esq.
Schnader, Harrison, Segal & Lewis, LLP
1600 Market Street, Suite 3600
Philadelphia, PA 19103 7393
Tel: (215) 751-2000
Email: bbressler@schnader.com
and
Natalie D. Ramsey, Esq.
Montgomery McCracken Walker and Rhoads LLP
123 South Broad Street
Philadelphia, PA 19109
Tel: (215) 772-7354
Email: nramsey@mmwr.com
Estimated Assets: $100,000,001 to $500,000,000
Estimated Debts: $10,000,001 to $50,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Jimmy Costa - $4,644,951
(Central Concrete)
1066 Gravel Hill Road
Southampton, PA 18966
Marche Development Co. - 1,200,000
2047 Bridge Road
Schwenksville, PA 19473
Andrea Construction, Inc. - 963,760
1202 Slough Drive
Collegeville, PA 19426
RAM-T Corporation - 534,838
Secured 100,000
Fireside Hearth & Home - 336,696
Secured 100,000
Vernon and Janet Ruth - 950,000
John and Grace Rohr - 611,335
Alice & Norman Rittenhouse - 509,863
New Hanover Township Disputed 500,000
Paul Rohr - 428,284
Lester Wismer - 258,287
Mary Gehman - 142,992
Johanna Gehman - 142,992
Paul Nice - 91,295
Boyertown Area School District - 82,294
Souderton Area School District - 57,102
Rhonda Gehman - 54,997
Accent on Beaute, LLC Contingent 51,400
Sharon Wismer - 48,947
Galyna Shvets Disputed 38,498
The petition was signed by Timothy P. Hendricks, President of the
company.
TIGERMARK: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Tigermark, Ltd.
Attn: Herman Schwartz, Manager
2801 Flower Mound Road
Flower Mound, TX 75022
Bankruptcy Case No.: 09-41346
Chapter 11 Petition Date: May 2, 2009
Court: United States Bankruptcy Court
Eastern District of Texas (Sherman)
Judge: Brenda T. Rhoades
Debtor's Counsel: Jeffrey R. Hacker, Esq.
16801 Addison Road, Suite 246
Addison, TX 75001-5501
Tel: (972) 380-5630
Fax: (972) 380-0926
Email: jhacker@usa.net
Total Assets: $5,420,000
Total Debts: $5,079,103
According to its schedules of assets and liabilities, $4,917,457
of the debt is owing to secured creditors, $60,000 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/txeb09-41346.pdf
The petition was signed by Herman Schwartz, manager of the
Company.
TILE TRENDS: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Tile Trends Inc
1311 Lawrence Dr
Newbury Park, CA 91320
Bankruptcy Case No.: 09-15119
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
Central District of California (San Fernando Valley)
Judge: Kathleen Thompson
Debtor's Counsel: Paul M. Brent, Esq.
Steinberg Nutter & Brent
23801 Calabasas Rd Ste 2031
Calabasas, CA 91302
Tel: (818) 876-8535
Fax: (818) 876-8536
Email: snb300@aol.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-15119.pdf
The petition was signed by David Costanzo, president of the
Company.
TRIAD GUARANTY: To Announce Q1 2009 Results on May 15
-----------------------------------------------------
Triad Guaranty Inc. will release 2009 first quarter results after
the market closes on May 15, 2009. The Company does not plan to
hold a conference call.
On April 1, 2009, Triad Guaranty Inc. received a Corrective Order
from the Illinois Director of Insurance, impacting the Company's
insurance subsidiaries, Triad Guaranty Insurance Corporation and
Triad Guaranty Assurance Corporation. Under the Order, effective
June 1, 2009, or a later date established by the Illinois
Director, all valid claims under Triad's mortgage guaranty
insurance policies will be paid 60% in cash and 40% by the
creation of a deferred payment obligation. The DPO will be
represented by a separate entry in Triad's financial statements
and will accrue a carrying charge based on the investment yield
earned by Triad's investment portfolio. Payments of the carrying
charge and the DPO will be subject to Triad's future financial
performance and will require approval of the Illinois Director.
Triad will continue to operate under the terms of the original
Corrective Order in addition to this additional Corrective Order.
Ken Jones, President and CEO, on April 1 said, "The significant
and rapid decline in housing prices over the past two years,
coupled with the ongoing recession, contributed to a high default
rate in our insured loans. The reserves established on our
financial statements to cover the expected future claims on these
delinquencies resulted in large reported losses, which has
significantly reduced our capital base. Triad's claims-paying
resources represented by our invested assets, capital supporting
our reinsurance contracts and expected future premiums are
substantial, totaling over $2 billion. Despite these resources,
the uncertainty in the future direction of the economy and the
decline in our capital have increased the possibility that Triad
may not be able to meet all future obligations under its policies.
On June 1, 2009, or a later date established by the Illinois
Director, all future paid claims, whether on loans that are
already delinquent or loans that default in the future, will be
treated equally in terms of the ultimate cash settlement. Triad
believes that the Order establishes an equitable process for
payment of our policyholders' claims and helps us preserve
resources available to pay claims."
About Triad Guaranty
Based in Winston-Salem, North Carolina, Triad Guaranty Inc. --
http://www.triadguaranty.com/-- is a holding company that
historically has provided private mortgage insurance coverage in
the United States through its wholly-owned subsidiary, Triad
Guaranty Insurance Corporation. Triad was formed in 1987 and was
acquired by Collateral Mortgage, Ltd., now called Collateral
Holdings, Ltd., a mortgage banking and real estate lending firm,
in 1989. As of December 31, 2008, CHL owns 17.0% of the
outstanding common stock of the Company.
Currently, Triad is licensed to do business in all 50 U.S. states
and the District of Columbia. Another wholly owned subsidiary,
Triad Guaranty Insurance Corporation Canada, was formed in 2007
for the purpose of exploring opportunities for providing mortgage
insurance in Canada. TGICC was liquidated in the fourth quarter
of 2008. TGICC did not write any business and only incurred
start-up expenses prior to its liquidation.
Triad ceased issuing new commitments for mortgage guaranty
insurance coverage on July 15, 2008, and is operating its business
in run-off under a Corrective Order issued by the Illinois
Department of Financial and Professional Regulation, Division of
Insurance. The term "run-off" refers to Triad no longer being
able to write new mortgage insurance policies, but continuing to
service its existing policies. Servicing existing policies
includes: receiving premiums on policies that remain in force;
cancelling coverage at the insured's request; terminating policies
for non-payment of premium; working with borrowers in default to
remedy the default or mitigate our loss; and settling all
legitimate filed claims per our contractual obligations. The
Corrective Order from the Division, among other items, allows the
executive officers of the Company to continue to operate Triad
under close supervision and includes restrictions on the
distribution of dividends and payment by Triad of interest on
notes payable to its parent.
In October 2008, Triad received approval of a corrective plan
provided to the Division. The corrective plan, among other items,
provided Triad's best estimate of the financial results of Triad
through December 31, 2012.
Going Concern Doubt, Bankruptcy Warning
In its Annual Report on Form 10-K for the year ended December 31,
2008, Triad said there is substantial doubt as to the Company's
ability to continue as a going concern. This uncertainty, Triad
explained, is based on its ability to comply with the run-off
provisions of the Corrective Order, the Company's recurring losses
from operations and a deficit in assets at December 31, 2008.
The Company incurred significant operating losses in 2007 and in
2008 and has a deficit in assets at December 31, 2008 of
$136.7 million. Triad said the losses are the result of increased
defaults and foreclosures arising from steeply declining home
prices as the full impact of the recession is now being felt on
the mortgages that Triad insures.
Triad said that since the approval of the initial corrective plan,
it has revised the assumptions it initially utilized as a result
of continued deteriorating economic conditions impacting its
financial condition, results of operations and future prospects.
Triad's new assumptions produce a range of potential ultimate
outcomes for its run-off and project that absent additional action
by the Division or favorable changes in Triad's business, Triad
will report a deficiency in policyholders' surplus as early as
March 31, 2009, and continuing through 2011.
Triad said management is currently working with the Division to
structure a revised corrective plan in a manner that is expected
to provide for a solvent run-off. If the revised corrective plan
is unsuccessful, the Division may be forced to place Triad into
receivership which would effectively compel the parent, Triad
Guaranty Inc. to declare bankruptcy. The ability to successfully
develop, gain approval of and implement the revised corrective
plan by management is unknown at this time, Triad said.
Ernst & Young LLP, in Raleigh, North Carolina, serves as the
Company's independent auditors.
As of December 31, 2008, Triad had $1.13 billion in total assets
and $1.26 billion in total liabilities, resulting in
$136.6 million in stockholders' deficit. Triad posted
$631.1 million net loss for year 2008 compared to $77.4 million in
2007.
TRIANGLE TRANSPORT: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Triangle Transport Inc.
136 Harbor Drive
Jersey City, NJ 07305
Bankruptcy Case No.: 09-21261
Chapter 11 Petition Date: May 1, 2009
Court: United States Bankruptcy Court
District of New Jersey (Newark)
Judge: Morris Stern
Debtor's Counsel: Kenneth Rosen, Esq.
Lowenstein Sandler
65 Livingston Avenue
Roseland, NJ 07068
Tel: (973) 597-2500
Email: krosen@lowenstein.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/njb09-21261.pdf
The petition was signed by Caryn Blanc, president of the Company.
TRIBORO BAR: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Triboro Bar & Restaurant Supply Co., Inc.
1803 Bronxdale Avenue
Bronx, NY 10462
Bankruptcy Case No.: 09-12847
Chapter 11 Petition Date: May 2, 2009
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Debtor's Counsel: Ronald De Caprio, Esq.
Attorney At Law
65 West Ramapo Road
Garnerville, NY 10923
Tel: (845) 354-3212
Fax: (845) 354-3213
Email: rdecaprio@optonline.net
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nysb09-12847.pdf
The petition was signed by John Ferrando, president of the
Company.
TRIBUNE LIMITED: Moody's Cuts Ratings on $80 Mil. Notes to 'C'
--------------------------------------------------------------
Moody's Investors Service announced that it has downgraded the
notes issued by Tribune Limited Series 48:
-- US$80,000,000 Floating Rate Credit Linked Secured Notes
due 2050, Downgraded to C; previously on 12/11/2008
Downgraded to Caa1 and remains on Review for Possible
Downgrade
The Tribune Limited Series 48 is a synthetic transaction
referencing the Senior Swap issued by ABCDS 2006-1, Ltd., an ABS
CDO that closed in February 2007. The Senior Swap was downgraded
to C on 05/01/2009. The swap was previously downgraded to Caa1 on
12/11/2008.
TRIOMPHE RE: Moody's Withdraws 'Ba1' Ratings on $40 Mil. Loan
-------------------------------------------------------------
Moody's Investors Service has withdrawn its ratings on the bank
credit facilities of Triomphe Re Limited, following the payment in
full of the facilities effective February 20, 2009. The lenders
did not suffer any loss of interest or principal during the life
of the transaction. Triomphe Re, a sidecar, is a licensed Class 3
Bermuda reinsurer that provided quota share retrocessional
coverage for two years, exclusively to the PARIS RE Group. At the
mutual agreement of PARIS RE and Triomphe Re, the quota share
agreement was terminated on a cut-off basis effective December 31,
2008, with PARIS RE assuming unexpired exposures.
These ratings have been withdrawn:
* Triomphe Re Limited -- $24 million senior secured term loan
(Term A facility) at Baa2;
* Triomphe Re Limited -- $40 million senior secured term loan
(Term B facility) at Ba1;
The last rating action on Triomphe Re occurred on July 13, 2007
when Moody's assigned ratings to the company's bank loans.
TROPICANA INN: Court OKs Secured Lender's Request for Dismissal
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Nevada dismissed
Tropicana Inn Investors, LLC's Chapter 11 bankruptcy case,
effective April 8, 2009.
As reported in the Troubled Company Reporter on February 26, 2009,
Marshall Investments Corporation, a secured creditor of Tropicana
Inn Investors, LLC, asked the U.S. Bankruptcy Court to terminate
the stay for the Debtor's primary asset consisting of The Onyx
Condominiums, a 63 unit luxury condominium complex on a 1.98
parcel located at 5150 Duke Ellington Way in Las Vegas, Nevada.
In the alternative, Marshall Investments asked the Court to
convert the Debtor's bankruptcy case, on the basis that the
Debtor's bankruptcy serves no legitimate purpose.
Marshall Investments told the Court that as of Feb. 11, 2009, it
is owed in excess of $37 million by the Debtor. Marshall
Investments said the proposals made to it by the Debtor and the
contractor, Summit Builders of Nevada fall far short of paying the
Marshall indebtedness and provide for no distribution to any other
creditors, or parties-in-interest, including unsecured creditors.
Marshall Investments disclosed that the Debtor's postpetition
financier, Equity Capital Partners, has ceased all involvement in
the Debtors' bankruptcy. The Debtor, according to Marshall
Investments, has been unable to secure other financing to fund its
plan of reorganization.
Marxhall Investments presented these additional grounds in support
of its request for termination of the stay:
-- the Debtor has not made any adequate protection payments to
it;
-- the Debtor has no equity in the Property and therefore no
chance for reorganization; and
-- the Property is a single real estate and reorganization is
not likely within a reasonable time because of the Debtor's
recent withdrawal of its disclosure statement and proposed
plan.
About Tropicana Inn Investors
Las Vegas, Nevada-based Tropicana Inn Investors, LLC, is the
developer of Onyx, a 63-unit luxury condominium project in Las
Vegas, Nevada. The $28 million mid-rise project was announced in
2005 as an affordable alternative to the high rises that were
being constructed near the Strip. Units at Onyx ranged from 740
square feet to 2,300 square feet and were priced from $400,000 to
more than $900,000.
On August 4, 2008, seven (7) creditors filed an involuntary
petition for Chapter 11 relief against the Debtor (Bankr. D. Nev.
Case No. 08-18719). David E. Doxey, Esq., and David J. Winterton,
Esq., at David J. Winterton & Assoc., Ltd. represent the Debtor as
counsel.
TUBE CITY: Moody's Downgrades Corporate Family Rating to 'B2'
-------------------------------------------------------------
Moody's Investors Service downgraded Tube City IMS Corporation's
ratings, including the corporate family rating which was lowered
to B2 from B1. The outlook is negative. This concludes the
review for downgrade initiated on December 11, 2008. Moody's also
affirmed TCIMS' SGL-3 speculative grade liquidity rating.
The corporate family rating downgrade reflects Moody's view that
the substantive deterioration in steel capacity utilization will
result in a more highly leveraged enterprise with less ability to
generate cash flow over the intermediate term. TCIMS generates a
majority of its revenues through service contracts tied to steel
production volumes. Domestic capacity utilization for the steel
industry has declined sharply from nearly 90% in the late summer
of 2008 to the low-mid 40% range as producers continue to reduce
volumes through production curtailments and suspended operations.
Moody's does not expect a substantial recovery in production
volumes over the near-term. As a result, Moody's expect TCIMS
could experience an unfavorable step-change in its ability to
generate cash flow from operations due to a smaller portfolio of
operating mills and lower production volumes. Relatively flexible
site-based costs suggest an ability to protect site-level margins.
However, Moody's expect that overhead costs could pressure EBITDA
margins and relatively fixed debt service costs could pressure
debt protection metrics beyond Moody's previous expectations for
TCIMS in a downturn.
The negative rating outlook reflects the uncertainty in the global
steel industry and risks associated with anticipated shifts in
production volumes among individual facilities as the domestic
steel industry adjusts to end market demand. The ratings could be
lowered if TCIMS began to consume cash on a sustained basis, if
the company were unable to maintain site-level margins, if
available liquidity were expected to deteriorate meaningfully, or
in the event of a change in capital structure.
The SGL-3 rating continues to reflect an adequate liquidity
profile. Depressed steel production may continue to result in
reduced availability under the company's $165 million asset-based
revolving credit facility (the borrowing base was approximately
$87.5 million with $45.9 million outstanding at December 31,
2008). While Moody's expects that TCIMS should continue
generating positive cash flow from operations, it could be
insufficient to cover upfront capital expenditure requirements for
any new contracts. The SGL-3 is supported by a $50 million
commitment from the company's private equity sponsor, Onex
Partners II L.P. Moody's expects that approximately $20 million
of these funds remain available after giving consideration to
growth capital spending in the first quarter of 2009. The SGL
also reflects the absence of any financial covenants until
availability is below $15 million under the asset-based revolving
credit facility.
These ratings were impacted by the actions:
-- Corporate Family Rating lowered to B2 from B1
-- Probability of Default Rating lowered to B2 from B1
-- Senior Secured Letter of Credit Facility lowered to B1 (LGD
3; 38%) from Ba3 (LGD 3; 35%)
-- Senior Secured Term Loan lowered to B1 (LGD 3; 38%) from Ba3
(LGD 3; 35%)
-- Senior Subordinate Notes lowered to Caa1 (LGD 5; 82%) from B3
(LGD 5; 82%)
The prior rating action for Tube City IMS was on December 11, 2008
when the corporate family rating was placed under review for
possible downgrade.
Tube City IMS Corporation's ratings were assigned by evaluating
factors Moody's believe are relevant to the credit profile of the
issuer, such as i) the business risk and competitive position of
the company versus others within its industry, ii) the capital
structure and financial risk of the company, iii) the projected
performance of the company over the near to intermediate term, and
iv) management's track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of Tube City IMS's core industry and Tube City IMS's
ratings are believed to be comparable to those of other issuers of
similar credit risk.
Tube City IMS Corporation, headquartered in Glassport,
Pennsylvania, is a leading provider of on-site steel mill services
such as material handling, scrap management, metal recovery and
slag processing. In 2008, its sales were approximately $3
billion, and sales net of the cost of scrap shipments were
approximately $467 million.
UNITED GUARANTY: May Cease Operations on Mounting Losses
--------------------------------------------------------
American International Group Inc., may shut its mortgage
guarantor, United Guaranty Corp., after failing to turn around the
unprofitable unit, Bloomberg News' Hugh Son reports, citing two
people familiar with the matter.
United Guaranty has posted more than $2.8 billion in operating
losses since April 2007. AIG may wind down any parts of the
mortgage insurer that can't be sold, said one of the people, who
asked not to be identified because the plans are confidential,
Bloomberg says.
"We're talking to a number of prospective buyers and we're
considering a number of options, but no decisions have been made"
about United Guaranty, said Peter Tulupman, a spokesman for New
York-based AIG, according to Bloomberg.
A source told Bloomberg that AIG has hired consulting firm
McKinsey & Co. to examine all operations being divested.
Bloomberg notes that AIG intends to place its two biggest non-U.S.
life insurers into trusts for eventual initial public offerings or
sales as the credit crisis hobbled potential buyers' ability to
make bids. According to Bloomberg, AIG has announced about
$4.4 billion of asset sales since receiving bailout fund from the
U.S. government in September 2008. AIG seeks to sell businesses
to repay the government loan.
If AIG winds down the business, it may enter "runoff," continuing
to pay claims and book profits or losses from previously sold
policies. The company would stop selling new coverage and cease
operations when the last of its existing policies expires,
Bloomberg says.
Bloomberg cites that No. 7 Triad Guaranty Inc. entered runoff last
year after capital ran short. Triad Guaranty was ordered by its
state regulator early in April to defer 40% of claims payments
because of "uncertainty" over whether it will meet its
obligations, Bloomberg adds.
Based in Greensboro, North Carolina, United Guaranty Corp. --
https://www.ugcorp.com/ -- reimburses mortgage lenders when
borrowers cannot repay and foreclosure fails to cover costs.
United Guaranty was founded in 1963 and sold to AIG in 1981. It
employs about 950 employees worldwide.
Bloomberg notes that United Guaranty posted losses for seven
straight quarters and AIG indicated in October that it may be
difficult to find a buyer for the unit. United Guaranty generated
$2.8 billion in operating income and $600 million in dividends for
AIG in the eight years prior to the housing slump, according to
Bloomberg.
The firm was ranked the fifth-largest U.S. mortgage insurer by
2008 sales, behind No. 1 ranked MGIC Investment Corp., Genworth
Financial Inc., Radian Group Inc. and PMI Group Inc., Bloomberg
says, citing Inside Mortgage Finance, a trade journal.
About American International Group
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.
WATERFORD GAMING: Moody's Cuts Corporate Family Rating to 'Caa2'
----------------------------------------------------------------
Moody's Investors Service lowered the corporate family and senior
unsecured notes ratings of Waterford Gaming LLC's and its wholly-
owned subsidiary and co-issuer, Waterford Gaming Finance Corp. to
Caa2 from Caa1. It also downgraded the probability of default
rating to Caa1 from B3. The rating outlook is negative. The
rating actions follow the downgrade of Mohegan Tribal Gaming
Authority's Corporate Family rating to B3, with a negative
outlook, which reflects the expectation of MTGA's continuing weak
operating trends and high leverage in the foreseeable future, as
well as concerns regarding its liquidity profile.
To service its debt, Waterford fully relies on the upstream cash
distributions made by Trading Cove Associates, its 50%-owned
general partnership, which earns a 5% relinquishment fee based on
certain gross revenues of MTGA's Mohegan Sun casino. The adequacy
of the distributions to Waterford fully depends on the amount and
timing of MTGA's relinquishment fee payments. Beyond the Mohegan
Sun Casino's weakening revenue generation, the downgrade of
Waterford's ratings further considers MTGA's high financial
leverage and weak liquidity profile. MTGA has the ability to
block all or part of the relinquishment payments to TCA in the
event of a payment or non-payment default on MTGA's senior secured
or senior unsecured debt. Moody's also caution about the
uncertain recovery prospects for Waterford in the event of MTGA's
bankruptcy, liquidation or reorganization.
The negative outlook reflects the risk that MTGA's liquidity
further deteriorates, putting at risk the ongoing payment of
relinquishment fees.
The last rating action was made on February 3, 2009, when Moody's
placed Waterford's ratings on review for possible downgrade.
Ratings downgraded:
-- Corporate family rating to Caa2 from Caa1
-- Probability of default rating to Caa1 from B3
-- Senior unsecured notes rating to Caa2 (LGD4, 65%) from Caa1
(LGD 4, 65%)
Waterford is a special purpose company formed solely for the
purpose of holding a 50% partnership interest, as a general
partner, in TCA, a Connecticut general partnership and the manager
(until January 1, 2000) and developer of the Mohegan Sun casino
located in Uncasville, Connecticut. The Mohegan Sun casino is
owned and operated by MTGA.
WATERWORKS INC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Waterworks, Inc.
fka PDS Associates, Inc.
60 Backus Avenue
Danbury, CT 06810
Bankruptcy Case No.: 09-50870
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
WWPDS, Inc. 09-50871
PDS Procurement & Finance, Inc. 09-50872
WWSDP, LLC 09-50873
Waterworks Georgetown, LLC 09-50874
Waterworks Holding Corp. 09-50875
Type of Business: The Debtors sell bathroom accessories.
See http://www.waterworks.com/
Chapter 11 Petition Date: May 3, 2009
Court: District of Connecticut (Bridgeport)
Judge: Alan H.W. Shiff
Debtor's Counsel: James Berman, Esq.
jberman@zeislaw.com
Jed Horwitt, Esq.
jhorwitt@zeislaw.com
Zeisler and Zeisler
558 Clinton Avenue
P.O. Box 3186
Bridgeport, CT 06605
Tel: (203) 368-4234
Fax: (203) 367-9678
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
------ --------------- ------------
Tetard Haudiquez Grisoni SA supplier $719,552
35 Rue Tourniere-b.p. 212
Bethencuort-sur-mer
80535 Friville Cedex, France
Briant Vent contract $550,000
8300 Del Mar Blvd. Apt. 413
Saint Louis, MO 63124
Stone Partnership Inc. supplier $427,632
2100 Garry Road
Cinnaminson, NJ 08077
Mosaique Surface supplier $390,377
New Ravenna supplier $238,250
Wizard Enterprise supplier $226,893
Americh Corporation supplier $223,055
Pilot Air Freight freight carrier $208,120
Geary-Market Investment Co. property lessor $202,865
Sheldon Mindel & Associates royalty $149,102
PSI Systems LLC supplier $155,371
UPS $152,668
GBI Title & Stone Inc. $151,529
Sirrus supplier $150,786
DXR Corporation contract $147,565
Horus supplier $137,935
Goergetown Renaissance LLC $134,799
Pricewaterhousecoopers services $129,530
Innovative Concepts supplier $106,765
Cifial Tornieras supplier $102,019
The petition was signed by Ralph Bennett, chief financial officer.
WEIRTON MEDICAL: Moody's Cuts Underlying Bond Rating to 'Ba1'
-------------------------------------------------------------
Moody's Investors Service has downgraded Weirton Medical Center's
underlying bond rating to Ba1 from Baa3. The downgrade affects
approximately $21.9 million of outstanding Series 2001A and 2001B
revenue bonds (listed at the conclusion of this report) issued by
the Weirton Municipal Hospital Building Commission. The Series
2001B variable rate demand bonds are jointly supported by Weirton
Medical Center and secured by a letter of credit from PNC Bank.
The enhanced rating on the Series 2001B bonds has been downgraded
to Aa1/VMIG1 from Aaa/VMIG1. The downgrade is attributable to
continued operating losses in FY 2008 that has worsened through
nine-months of 2009, deterioration in liquidity primarily due to
investment losses, and increased risk of violating financial
covenants under a letter of credit agreement. The rating outlook
remains negative.
Legal Security: Bonds are secured by a lien on gross revenues of
Weirton Medical Center and Deed of Trust (mortgage pledge).
Interest Rate Derivatives: There are no swaps outstanding.
Challenges
* History of weak operating performance with continued operating
losses for the seventh consecutive year in FY 2008 and operating
losses continuing through nine-months FY 2009
* Unrestricted liquidity declined to a $30.9 million (111 days) as
of March 31, 2009, down from $38 million (142 days) at FYE 2008.
As a result, cash-to-debt declined to 115% as of March 31, 2009,
down from 135% at FYE 2008
* Credit pressures related to debt structure that includes 51%
variable rate demand bonds supported by a PNC letter of credit
which adds liquidity and renewal risk, mitigated by
WMC's cash-to-VRDO debt of 220% as of March 31, 2009
* Potential competitive pressures likely to emerge after the
opening of a new physician-owned long-term acute care hospital
approximately 12 miles southwest of WMC
* Five consecutive years of capital investment below depreciation
levels; deferred maintenance remains an ongoing concern
* Weak demographics in the primary service area characterized by
declining population growth, variable volume growth trends, and
rise in bad debt levels
Strengths
* Sole inpatient provider in Hancock and Brooke Counties, although
competition is located 13 miles west in Steubenville, Ohio, and
27 miles east with the presence of several Pittsburgh providers;
market position protected by certificate of need laws in the
state
* Operating results exceeded budget expectations in FY 2008, with
a lower operating loss of $1.3 million (-1.3% margin) from
budgeted $1.9 million (-1.9% margin) due to implementation of
several performance improvement initiatives; Management is
budgeting a lower operating loss of approximately $1.0 million
for FYE 2009
* WMC maintains favorable cash-to-VRDO debt of 220% as of March
31, 2009
Recent Developments/Results
WMC's operating performance improved for the second consecutive
year with a lower than budgeted operating loss of $1.3 million (-
1.3% operating margin) in audited FY 2008 from $1.9 million
budgeted for FY 2008 and from a larger operating loss of $2.7
million (2.9% operating margin) generated in FY 2007. Absolute
operating cash flow improved to $3.8 million (3.8% margin) in FY
2008 from $2.9 million (3.1% margin) in FY 2007. Through nine-
months FY 2009, operating performance has deteriorated slightly
with a reported operating loss of $1.5 million (-1.9% margin) from
an operating loss of $961 thousand through nine-months FY 2008.
Operating cash flow is also down to $1.8 million (2.3% margin)
from $2.9 million (3.9% margin) from the prior period. The
continued weak operating performance is attributable to flat to
declining volume trends reflecting unfavorable demographics of the
service area characterized by declining population trends. In FY
2008, inpatient admissions declined by 0.8% from a 1.8% decrease
in FY 2007. Total surgical cases declined by a sizable 4.1% in FY
2008 from a modest 1.1% increase in FY 2007, primarily due to a
general surgeon leaving the organization. Through nine-months FY
2009, inpatient admissions are down 1.4%, although, total surgical
volume is trending upward by a strong 4.7%. Total combined bad
debt and charity care increased by a sizable 19% in FY 2008 after
declining by 8% in FY 2007 and improved by 15% through nine-months
FY 2009. Management continues to evaluate and implement various
revenue growth and expense reduction strategies including revenue
cycle initiatives, charge capture review by department, evaluation
of various service lines, and development of a labor management
program. WMC engaged Premier to evaluate the organizations
processes and staffing levels and has identified and is
implementing $2 million in approved annual savings and has reduced
staffing by 38 FTEs.
Due to improved cash flow generation in FY 2008, debt coverage
levels increased slightly with debt-to-cash flow measuring a still
high 5.5 times and Moody's adjusted maximum annual debt service
coverage measuring 2.3 times. However, through nine-months FY
2009 (annualized), debt coverage levels have weakened with debt-
to-cash flow increasing to an unfavorable 8.8 times and Moody's
adjusted maximum annual debt service coverage measuring a modest
1.6 times.
WMC's liquidity balance has deteriorated since FYE 2008. As of
unaudited March 31, 2008, unrestricted liquidity declined to $30.9
million from $38.0 million at FYE 2008, primarily due to market
losses stemming from WMC's investment portfolio which is currently
54%% invested in equities and 46% invested in fixed income and
cash. As a result, liquidity measures declined to 111 days cash
on hand and 115% cash-to-debt as of March 31, 2009 from 142 days
cash on hand and 135% cash-to-debt measured at FYE 2008. Moody's
notes that deferred maintenance continues to remain a concern with
an average age of plant increasing to 20.9 years and capital
investment below one times depreciation over the past five years.
Capital spending for FY 2009 is budgeted for a higher $4 million
than $1.9 million capital spent in FY 2008. Management indicates
approximately half has been spent as of March 31, 2009 and another
$1.0 million will be spent by FYE 2009.
WMC's current debt structure poses some bank-related exposure
including renewal and liquidity risk. WMC's debt structure
includes an aggressive 51% variable rate demand debt supported by
a letter of credit agreement. Although, WMC's cash-to-puttable
debt is favorable at 220% (as of March 31, 2009) and provides
adequate cushion in the event the LOCs are not renewed or
obligations are unexpectedly accelerated by the liquidity
provider. The Series 2001B LOC is expected to expire January
2010. Under the LOC agreement, WMC is required to maintain several
financial covenants including days cash on hand (minimum 100 days
measured monthly), debt service coverage ratio (minimum 1.5 times
measured quarterly), and debt to capitalization (no more than 0.55
measured quarterly). WMC currently maintains very little headroom
under the required liquidity covenant with 113 days cash on hand
and debt service coverage ratio of 1.8 times (based on
calculations defined under the LOC) as of March 31, 2009, which
increases the possibility of a covenant violation in the near term
in the event liquidity and operating performance were to further
decline. Moody's believes the continued weak operating
performance coupled with the sizable decline in unrestricted
liquidity and limited headroom under bank covenants are
significant credit concerns and primary drivers for the rating
downgrade.
WMC is a sole community provider located in Weirton, WV in Brooke
County. The primary service area comprises of Hancock and
northern Brooke Counties in the tri-state West Virginia, Ohio, and
Pennsylvania area. Although WMC is a sole provider in its PSA,
the nearest competitor, Trinity Health System (A3-rated) is 13
miles away in Steubenville, Ohio and larger tertiary providers are
35 miles away in Pittsburgh, Pennsylvania. Moody's note that
competitive pressures will likely emerge in the near future with
the opening of new physician-owned long term acute care facility
in Winterville, Ohio approximately 12 miles southwest of WMC
scheduled to open within a six month period.
Outlook
The outlook remains negative reflecting renewal risk, continued
operating losses, deterioration in liquidity and Moody's concern
that prolonged weak operating performance and cash balance will
stress lower debt and liquidity ratios and increase the
possibility of covenant violations under the bank agreement.
What could change the rating-UP
Growth and stability of inpatient and outpatient volume; continued
implementation of turnaround strategies resulting in notable
improvement in operating performance and ability to sustain
improved levels for multiple years, material improvement in debt
coverage and liquidity measures
What could change the rating-DOWN
Further declines in volumes and operating performance, continued
weakening of liquidity balance, significant unexpected debt
issuance without commensurate increase in cash and cash flow
generation
Key Indicators
Assumptions & Adjustments:
-- Based on financial statements for Weirton Medical Center
-- First number reflects audit year ended June 30, 2007
-- Second number reflects audit year ended June 30, 2008
-- Investment returns normalized at 6% unless otherwise noted
* Inpatient admissions: 8,109; 7,961
* Total operating revenues: $94.0 million; $100.0 million
* Moody's-adjusted net revenue available for debt service: $5.5
million; $6.4 million
* Total debt outstanding: $29.6 million; $28.0 million
* Maximum annual debt service (MADS): $2.8 million; $2.7 million
* MADS Coverage with reported investment income: 2.1 times; 2.3
times
* Moody's-adjusted MADS Coverage with normalized investment
income: 2.0 times; 2.3 times
* Debt-to-cash flow: 7.3 times; 5.5 times
* Days cash on hand: 151 days; 142 days
* Cash-to-debt: 129%; 135%
* Operating margin: -2.9%; -1.3%
* Operating cash flow margin: 3.1%; 3.8%
RATED DEBT (debt outstanding as of June 30, 2008)
-- Series 2001A (fixed rate) ($7.9 million outstanding), rated
Ba1
-- Series 2001B (variable rate) ($14.0 million outstanding),
Aa1/VMIG1 jointly supported by PNC Bank Letter of Credit
(expires January 2010) and Weirton Medical Center, Ba1
underlying rating
The last rating action was on January 8, 2008 when the Baa3 rating
of Weirton Medical Center was affirmed and outlook remained
negative.
WORKFLOW MANAGEMENT: Amendment on Facilities Cues S&P's SD Rating
-----------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Stamford, Connecticut-based Workflow
Management Inc. to 'SD' (selective default) from 'CC'. S&P also
lowered the issue-level rating on the company's $140 million
second-lien term loan to 'D' from 'C'.
In addition, S&P revised its recovery rating on the company's
40 million secured revolving credit facility and $275 million
first-lien term loan to '2', indicating S&P's expectation for
substantial (70% to 90%) recovery for lenders in the event of a
payment default, from '1'. The revised recovery rating reflects
S&P's expectation for a more significant decline in cash flow in
S&P's simulated default scenario than that used in S&P's previous
analysis. The issue-level rating on the first-lien debt was
affirmed at 'CCC'.
The rating actions follow the amendments to the company's first-
and second-lien credit facilities. S&P views the terms of the
amendment, relative to the second-lien facility, as not fulfilling
the obligation in accordance with its original terms --
particularly because interest under the second-lien notes will be
paid in kind during the next year, whereas most of it is currently
paid in cash.
S&P views the amendment of the second-lien facility as tantamount
to default, given the distressed financial condition of the
company and S&P's previously stated concerns around Workflow's
ability to service its capital structure, absent this amendment
and the resultant change to full PIK interest on the second-lien
facility. As S&P views the accrual of full interest as a material
departure from the original terms and conditions of the second-
lien credit agreement (which requires a combination of cash and
PIK interest), S&P has lowered the issue-level rating on the
second-lien debt to 'D', and the corporate credit rating to 'SD'.
A condition of the amendment also removes the rating requirement
from the second-lien credit agreement and, as such, S&P will
withdraw the rating on the second-lien facility once S&P assign a
revised corporate credit rating to the company.
"It is our preliminary expectation that S&P will raise our
corporate credit rating on Workflow to 'CCC-' following our
reassessment of the company's revised capital structure," said
Standard & Poor's credit analyst Michael Listner. "The 'CCC'
issue-level rating on the company's first-lien debt is one notch
higher than the prospective corporate credit rating of
'CCC-'," he continued.
* Moody's Gives Negative Outlook for U.S. Auto Parts Suppliers
--------------------------------------------------------------
The fundamental problems in the auto industry and the likelihood
that the global economic downturn will extend well into 2010 will
lead to a shrinking of the automotive parts industry, says
Moody's Investors Service.
"Weak economic conditions are forcing consumers to restrain
spending, resulting in a sharp decline in auto sales and
production," says Moody's VP-Senior Analyst Timothy Harrod. This
loss of millions of units of production is severely pressuring
revenue, profitability and cash flow for the auto parts suppliers.
The biggest change in the landscape for automotive parts suppliers
is the steep drop in car and light truck sales during the last few
months, says Moody's. Through the first quarter of 2009, US auto
sales came in at an annualized pace of less than 10 million,
compared with about 16 million at the cyclical peak.
In addition, "liquidity is a key concern for most auto parts
suppliers," says Harrod, "especially because of the uncertainty
around timing of a recovery in the auto business." Parts
suppliers who are unable to maintain sufficient liquidity over the
near term may need to use the bankruptcy process to restructure
their operations.
Overall, many auto parts suppliers are reacting to industry
pressures with reductions in direct and indirect labor, salary and
benefit reductions and plant closures, says Moody's.
On a positive note however, the restructuring is likely to result
in a smaller industry that will take on the eventual rebound in
demand for vehicles as credit markets recover and credit access
improves for consumers and companies, says Harrod. Thus, as equity
capital seeks value opportunities, restructured auto parts
suppliers could begin to attract investments for new product
development.
The full report titled, "U.S. Auto Parts Suppliers," is available
at http://www.moodys.com/
* S&P Says 40 Global Corporate Issuers Defaulted in April
---------------------------------------------------------
Ten global corporate issuers defaulted this week, bringing April's
tally of global corporate defaults to 40 issuers and the 2009
year-to-date tally to 102 issuers, said an article published by
Standard & Poor's.
By comparison, the total in April is the highest monthly tally
since March 2002 (when 47 issuers defaulted) and the second
highest since S&P's series began in 1981. The high in March 2002
was reached three months prior to the default cycle's eventual
default rate peak of 11.9%. In the current default cycle, S&P
expects defaults to continue into 2010, leading to an expected
all-time high of 14.3% by March 2010, according to the article.
Of this week's 10 global corporate defaulters, five were based in
the U.S. and five were based in the emerging markets, which
currently lead defaults by region with counts of 71 and 17,
respectively. The other developed region (Australia, Canada,
Japan, and New Zealand) follows with eight defaults so far this
year and Europe trails with six defaults.
"The reasons for default this week were mixed, with four missed
payments, three distressed exchanges, one regulatory supervision,
Chrysler's Chapter 11 filing yesterday, and a confidential
default," said Diane Vazza, head of Standard & Poor's Global Fixed
Income Research Group. "Missed payments currently are the leading
reason for defaults this year, with 35 issuers." Bankruptcy-
related defaults follow with 30 issuers, distressed exchanges with
28 issuers, regulatory supervision with four issuers, and various
other reasons with five issuers.
The average recovery rating this week was '4', indicative of
average recovery prospects, largely because of the number of
distressed exchanges, which tend to have higher recovery prospects
than other default reasons like bankruptcies. Nevertheless, the
majority of recovery ratings for defaulted issuers so far this
year are still '5' or '6', indicative of S&P's expectation for
modest (10%-30%) or negligible (0%-10%) recovery, respectively, on
defaulted issues. Conversely, only 27% of the issuers that have
defaulted this year had issues with recovery ratings of '1' or
'2', which indicate very high (90%-100%) or substantial (70%-90%)
recovery, respectively.
* Survey Says American Carmakers Woes Won't Impact Next Purchase
----------------------------------------------------------------
According to a recent Cars.com survey, 59% of consumers said that
the current economy and struggles of the American car
manufacturers will have no impact on whether or not their next car
purchase will be an American car.
The survey, which was intended to gauge how the economy and
various government and manufacturer incentives have impacted car
shoppers, also showed that only 1 in 5 consumers said the threat
of bankruptcy would likely preclude them from considering an
American car with their next purchase.
"I think it's clear that most Americans believe that the American
car manufacturers are going to survive in some capacity and many
are just taking a wait and see approach like many other facets of
this economy," said Cars.com Editor in Chief Patrick Olsen. "The
survey also showed that the older you are the more likely you
believe in the survival of these companies."
More than 40% of consumers between the ages of 45 to 64 said they
were confident that the American manufacturers would succeed vs.
12% of consumers between the ages of 18 to 24.
When it comes to the various government and manufacturer
incentives designed to bolster consumer confidence in the auto
industry, 38% said that the government's announcement that it will
allow consumers to deduct the state sales tax on new car purchases
would provide the biggest incentive to purchase a new car; 28%
said the various manufacturer assurance programs that provide
support if the purchaser of a new vehicle losses their job would
have the greatest impact; and 13% said that government backed
manufacturer warranties was the most valuable incentive.
The survey was conducted for Cars.com by Impulse Research. The
survey was conducted online with a random sample of 1028 men and
women, 18 years of age and older. The sample has been carefully
selected to closely match US population demographics and the
respondents are representative of American men and women 18 + who
own automobiles. Research was conducted in April 2009. The
overall sampling error rate for this survey is +/-3% at the 95%
level of confidence
About Cars.com
Cars.com -- http://www.cars.com-- offers online car shoppers
credible, easy-to-understand information from consumers and
experts to help buyers formulate opinions on what to buy, where to
buy and how much to pay for a car. With comprehensive pricing
information, side-by-side comparison tools, photo galleries,
videos, unbiased editorial content and a large selection of new-
and used-car inventory, Cars.com puts millions of car buyers in
control of their shopping process with the information they need
to make confident buying decisions. Launched in June 1998,
Cars.com is a division of Classified Ventures, LLC, which is owned
by leading media companies, including Belo, Gannett Co., Inc., The
McClatchy Company, Tribune Company and The Washington Post
Company.
* Large Companies With Insolvent Balance Sheets
-----------------------------------------------
Total
Share- Total
Total holders' Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------ -------- -------
ABSOLUTE SOFTWRE ABT CN 107 (7) 24
AFC ENTERPRISES AFCE US 132 (39) (4)
AMR CORP AMR US 24,518 (3,109) (3,546)
ARBITRON INC ARB US 190 (3) (29)
AUTOZONE INC AZO US 5,235 (187) 112
BARE ESCENTUALS BARE US 300 (0) 146
BLOUNT INTL BLT US 500 (44) 128
BOEING CO BA US 55,340 (509) (2,161)
BOEING CO BAB BB 55,340 (509) (2,161)
BOEING CO-CED BA AR 55,340 (509) (2,161)
CABLEVISION SYS CVC US 9,383 (5,354) (438)
CENTENNIAL COMM CYCL US 1,414 (993) 148
CENVEO INC CVO US 1,552 (221) 190
CHENIERE ENERGY CQP US 1,979 (352) 139
CHENIERE ENERGY LNG US 2,922 (354) 350
CHOICE HOTELS CHH US 334 (146) (11)
CLOROX CO CLX US 4,398 (403) (389)
CROWN MEDIA HL-A CRWN US 739 (667) 1
DELTEK INC PROJ US 191 (49) 42
DEXCOM DXCM US 44 (39) 17
DISH NETWORK-A DISH US 6,460 (1,949) (882)
DOMINO'S PIZZA DPZ US 473 (1,397) 100
DUN & BRADSTREET DNB US 1,586 (851) (213)
EINSTEIN NOAH RE BAGL US 173 (14) (51)
EMBARQ CORP EQ US 8,371 (608) (6)
ENERGY SAV INCOM SIF-U CN 552 (423) (162)
EXELIXIS INC EXEL US 402 (56) 82
EXTENDICARE REAL EXE-U CN 1,806 (40) 95
FORD MOTOR CO F US 222,977 (18,651) (13,313)
FORD MOTOR CO F BB 222,977 (18,651) (13,313)
GARTNER INC IT US 1,093 (21) (238)
GENTEK INC GETI US 425 (22) 88
GLG PARTNERS-UTS GLG/U US 490 (376) 70
HEALTHSOUTH CORP HLS US 1,998 (700) (64)
IMAX CORP IMX CN 229 (97) 34
IMAX CORP IMAX US 229 (97) 34
INTERMUNE INC ITMN US 193 (82) 138
IPCS INC IPCS US 538 (48) 49
JOHN BEAN TECH JBT US 591 (9) 93
KNOLOGY INC KNOL US 643 (56) 26
LINEAR TECH CORP LLTC US 1,492 (289) 996
MEAD JOHNSON-A MJN US 1,361 (1,396) 64
MEDIACOM COMM-A MCCC US 3,719 (347) (274)
MOODY'S CORP MCO US 1,774 (948) (483)
NATIONAL CINEMED NCMI US 610 (526) 96
NAVISTAR INTL NAV US 9,623 (1,493) 1,367
NPS PHARM INC NPSP US 204 (215) 97
OCH-ZIFF CAPIT-A OZM US 2,003 (219) N.A.
OSIRIS THERAPEUT OSIR US 137 (5) 71
OVERSTOCK.COM OSTK US 136 (5) 34
PALM INC PALM US 656 (84) 31
PDL BIOPHARMA IN PDLI US 191 (353) 149
PRIMEDIA INC PRM US 270 (124) (3)
QWEST COMMUNICAT Q US 19,711 (1,164) (344)
REGAL ENTERTAI-A RGC US 2,600 (242) (93)
RENAISSANCE LEA RLRN US 53 (3) (12)
REVLON INC-A REV US 785 (1,095) 104
SALLY BEAUTY HOL SBH US 1,489 (720) 365
SEALY CORP ZZ US 889 (162) 34
SEMGROUP ENERGY SGLP US 314 (130) (432)
SONIC CORP SONC US 821 (43) 27
STAR SCIENTIFIC STSI US 12 (0) 6
SUCCESSFACTORS I SFSF US 163 (5) 3
SUN COMMUNITIES SUI US 1,207 (28) N.A.
TAUBMAN CENTERS TCO US 2,922 (277) N.A.
TEAL EXPLORATION TEL SJ 50 (72) (105)
TENNECO INC TEN US 2,742 (304) 272
THERAVANCE THRX US 215 (144) 174
UAL CORP UAUA US 19,101 (2,655) (2,348)
UNITED RENTALS URI US 3,977 (56) 266
US AIRWAYS GROUP LCC US 7,421 (596) (707)
VENOCO INC VQ US 864 (135) 3
VERIFONE HOLDING PAY IT 840 (38) 308
VERIFONE HOLDING PAY US 840 (38) 308
VERIFONE HOLDING VF2 GR 840 (38) 308
WALTER INVESTMEN WAC US 14 (38) N.A.
WARNER MUSIC GRO WMG US 4,465 (41) (412)
WEIGHT WATCHERS WTW US 1,107 (888) (270)
WR GRACE & CO GRA US 3,727 (375) 898
*********
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
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
not guaranteed.
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