/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090515.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 15, 2009, Vol. 13, No. 133 Headlines 53-54 PALISADES: Case Summary & 19 Largest Unsecured Creditors AAA WIRELESS: Case Summary & 20 Largest Unsecured Creditors ACCURIDE CORP: Thin Liquidity Cues S&P to Junk Corporate Rating ADVANTA BUSINESS: S&P Junks Ratings on Class D of Notes AFFILIATED FOODS: Meeting of Creditors Scheduled for June 11 AMERICAN INT'L: IPO Asia Life-Insurance Arm Could Raise $5 Billion ANTHRACITE CAPITAL: Lenders' Covenant Waivers Expire Today ASARCO LLC: Obtains Approval of Fifth Amended Disclosure Statement ASARCO LLC: Deadline for Grupo Mexico's Competing Plan Today ASHLAND INC: Moody's Assigns 'Ba3' Rating on $600 Mil. Notes BACHRACH ACQUISITION: Section 341(a) Meeting Slated for June 16 BANKUNITED FINANCIAL: Delays Q2 Report, Expects $443.1MM Net Loss BELLA HIGHLANDS: Case Summary & 6 Largest Unsecured Creditors BENNETT ENVIRONMENTAL: Raises Going Concern Doubt, Seeks Funding BERNARD L MADOFF: Trustee Seeks to Recover $1.1BB from Harley BERNARD L MADOFF: Trustee Seeks to Recover $6.7BB from Picower BRIGHT SKY: Involuntary Chapter 11 Case Summary CALIFORNIA STATE: "Loan" of City Funds to Bail Out Budget Opposed CANFIELD INVESTMENT: Voluntary Chapter 11 Case Summary CAPITAL CORP: Files for Bankruptcy, Sees No Dime for Shareholders CELLU TISSUE: S&P Affirms Corporate Credit Rating at 'B' CELLU TISSUE: Moody's Assigns 'B2' Rating on $230 Mil. Notes CIB MARINE: To Amend Proposal to Restructure TruPS CHARTER COMMS: Court Blocks DirecTV's Bankruptcy Ads CHEMTURA CORP: Taps Allen & Overy as Counsel on EU Matters CHEMTURA CORP: Gets Court OK to Tap Genetelli as Tax Consultants CHEMTURA CORP: Can Hire Great American as Appraisers CHEMTURA CORP: Withdraws WolfBlock Hiring After Firm Dissolved CHEMTURA CORP: Duane Morris Assumes WolfBlock Assignment CHEMTURA CORP: Court OKs DLA Piper Engagement as Special Counsel CHEMTURA CORP: S&P Assigns 'BB+' Rating on $400 Mil. Facility CHRYSLER LLC: To Walk Away From 789 Dealership Agreements CHRYSLER LLC: Ohio Wants Workers' Compensation Paid by Buyer CHRYSLER LLC: Bankruptcy May Take 2 Yrs.; UAW Agrees Not to Strike CHRYSLER LLC: Non-Union Retirees Nix Bid for Official Committee CHRYSLER LLC: GMAC Will Provide Financing to Clients CHRYSLER LLC: Obtains Approval of Chrysler Financial Pact CITIGROUP INC: Launches $5 Billion Municipal Lending Program COLONIAL PROPERTIES: Fitch Cuts Issuer Default Rating to 'BB+' CORE COMMUNITIES: In Talks With Lenders for Covenant Relief COMPUTER WORLD: Kevin Gore Pleads Not Guilty to Fraud Charges COYOTES HOCKEY: Possible Move to Canada Won't Affect Contracts COYOTES HOCKEY: Balsillie Responds to NHL Filing, Reiterates Bid CROCS INC: To Move Aurora Operations to Los Angeles, Cuts 37 Jobs DECORO USA: Case Summary & 23 Largest Unsecured Creditors EL POLLO: S&P Raises Corporate Credit Rating to 'B-' From 'CCC+' FIROOZHE A. ZAFARI: Case Summary & 18 Largest Unsecured Creditors FORTUNOFF HOLDINGS: Court OKs June 18 Auction for Marks/IP Assets FRONTIER COMMUNICATIONS: Fitch Puts 'BB' Rating on Positive Watch FRONTIER COMMUNICATIONS: Moody's Reviews 'Ba2' Corp. Family Rating FRONTIER COMMUNICATIONS: S&P Affirms 'BB' Corporate Credit Rating GENERAL MOTORS: May Sell Main Biz, Liquidate Other Assets in Ch 11 GENERAL MOTORS: To Pay Suppliers Ahead of Deadline for Plan/ Ch.11 GOODY'S LLC: Wants Plan Filing Period Extended to August 11 GREGORY WAYNE MAPLES: Case Summary & 17 Largest Unsec. Creditors GREEKTOWN CASINO: Court OKs Assumption of Detroit Development Pact HAYES LEMMERZ: Seeks Court Approval of $200MM DIP Facility HAYES LEMMERZ: Euro Noteholders Balk at $200MM DIP Facility HAYES LEMMERZ: Receives Court Approval of First Day Motions INTOWN PROPERTIES: Voluntary Chapter 11 Case Summary JOURNAL REGISTER: Seeks to Rescind Contracts with Unions KINGSWAY FINANCIAL: S&P Downgrades Counterparty Rating to 'B-' KINGSWAY LINKED: S&P Downgrades Global Scale Rating to 'B-' LANDAMERICA FINANCIAL: Fidelity to Acquire LoanCare for $16.3MM LEAR CORP: Posts $264.8 Million 1st Quarter 2009 Net Loss LOS ANGELES: Faces $529MM Budget Deficit, Opposes "Loan" of Funds LOUISIANA VALVE: Case Summary & 20 Largest Unsecured Creditors LUCKY CHASE: Section 341(a) Meeting Set for June 3 LUCKY CHASE: AmTrust Wants Case Dismissed as Bad Faith Filing LUMINENT MORTGAGE: Can Secure Add'l Advance of $305,000 from Arco LYNEVE RESTAURANT: Case Summary & 13 Largest Unsecured Creditors LYONDELL CHEMICAL: Names ConocoPhillips' Gallogly as CEO LYONDELL CHEMICAL: Court Moves Plan Filing Deadline to Sept. 15 MANITOWOC CO: May Violate Loan Covenants, in Talks with Bank Group MARC T DEWBERRY: Case Summary & 13 Largest Unsecured Creditors MGM MIRAGE: Fitch Upgrades Issuer Default Rating to 'CCC' MGM MIRAGE: Moody's Affirms 'Caa2' Corporate Family Rating MGM MIRAGE: S&P Puts 'CCC' Corp. Rating on Positive CreditWatch MIDWAY GAMES: Unsec. Creditors Sue Sumner Redstone, Thomas & Board MILACRON INC: Retirees Protest Proposal to End Benefit Plans MILACRON INC: Files Schedules of Assets and Liabilities MOMENTIVE PERFORMANCE: S&P Cuts Corporate Credit Rating to 'CC' MORTGAGES LTD: Committee Balks at Rushed SCM Deal & Sale MORTGAGES LTD: Submits Mahakian Backed Chapter 11 Plan NATIONAL CENTURY: Plaintiffs Attys. Seek Cut from e-MedSoft Deal NES RENTALS: Buyback Offer Cues S&P's Rating Cut to 'SD' NORTHFIELD TRUCKING: Case Summary & 20 Largest Unsecured Creditors OAISIS CHURCH: Case Summary & 8 Largest Unsecured Creditors OHIO ENERGY: Case Summary & 4 Largest Unsecured Creditors PACIFIC ENERGY: Seeks Court Approval of Employee Incentive Plan PEBBLE CREEK: Case Summary & 4 Largest Unsecured Creditors PEOPLES COMMUNITY: Seeks to Sell Branches to Raise Cash PEPE PROPERTIES: Case Summary & 11 Largest Unsecured Creditors POMARE LTD: U.S. Trustee Recommends Conversion or Dismissal POMARE LTD: Says Trustee Not in Best Interests of Creditors ROLLING OAKS UTILITIES: Case Summary & 20 Largest Unsec. Creditors ROHNERT PARK: Faces Budget Deficit, Opposes "Loan" of Funds RR VALVE: Voluntary Chapter 11 Case Summary SANDERSON INDUSTRIES: Files Chapter 11 in Atlanta SCO GROUP: Ch. 7 Liquidation Sought by U.S. Trustee, Creditors SEITEL INC: In Talks With Lender for Covenant Relief SLM CORP: Moody's Downgrades Senior Unsecured Rating to 'Ba1' SPANSION INC: Posts $112 Million First Quarter Net Loss SPGS SPC: Write-Downs Cue S&P's 'D' Rating on 2006-IIC Notes STANFORD GROUP: Investors to Force Int'l Bank to Bankruptcy STAR TRIBUNE: Has Until August 13 to File Chapter 11 Plan STOCKTON CITY: Faces $31MM Budget Deficit, Opposes "Loan" of Funds SUNWISC: Case Summary & 18 Largest Unsecured Creditors VALENTINE GROUP: Files for Chapter 7; to Shut Business Today VALLEJO CITY: Opposes "Loan" of Funds to Bail Out State Budget WARNER MUSIC: Moody's Reviews 'B1' Corporate Family Rating WESTHAMPTON COACHWORKS: Files for Chapter 11 Bankruptcy Protection WOOZYFLY INC: Case Summary & 4 Largest Unsecured Creditors WORLD ENGINEERING: Case Summary & 20 Largest Unsecured Creditors WYNDHAM WORLDWIDE: Moody's Assigns 'Ba2' Rating on $200 Mil. Notes YELLOWSTONE CLUB: Court Adopts $232 Million Valuation YELLOWSTONE CLUB: Credit Suisse's $232MM Demoted for Greedy Scheme YELLOWSTONE CLUB: Credit Suisse Must Offer $42 Million in Cash YRC WORLDWIDE: Will Seek $1 Billion Gov't Financial Assistance * BOOK REVIEW: Performance Evaluation of Hedge Funds ********* 53-54 PALISADES: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: 53-54 Palisades Hudson Associates, LLC c/o CNY Builders LLC 6401 Park Avenue West New York, NJ 07093 Bankruptcy Case No.: 09-22269 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court District of New Jersey (Newark) Debtor's Counsel: Daniel M. Eliades, Esq. Forman Holt Eliades & Ravin LLC 80 Route 4 East Paramus, NJ 07652 Tel: (201) 845-1000 Email: deliades@formanlaw.com Total Assets: $1,755 Total Debts: $12,257,387 A full-text copy of the Debtor's petition, including its list of 19 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/njb09-22269.pdf The petition was signed by Louis Bertinato, managing member of the Company. AAA WIRELESS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: AAA Wireless, Inc. P.O. Box 11489 South Bend, IN 46624 Bankruptcy Case No.: 09-32243 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Northern District of Indiana (South Bend Division) Debtor's Counsel: James K. Tamke, Esq. 115 S. Lafayette Blvd. Suite 512 South Bend, IN 46601 Tel: (574) 289-8788 Email: tamke@attorney-cpa.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including its list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/innb09-32243.pdf The petition was signed by Rudolph C. Yakym, Jr., president of the Company. ACCURIDE CORP: Thin Liquidity Cues S&P to Junk Corporate Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Accuride Corp. to 'CCC' from 'B-'. S&P also lowered its issue-level ratings on the company's senior secured and subordinated debt. The outlook is negative. "The downgrades reflect the company's thin liquidity and our belief that low commercial truck production volumes in North America will continue to strain the company's highly leveraged financial risk profile," Standard & Poor's credit analyst Gregg Lemos Stein said. "The downgrades also reflect the near-term risk that the company may violate a financial covenant, as well as the possibility that the company may seek to restructure its debt obligations," he said. The outlook is negative. The ratings reflect S&P's expectation that Accuride's profitability, cash flow, and liquidity will remain under pressure through the rest of 2009 and perhaps longer. S&P could lower the rating if the company falls out of compliance with its secured debt covenants or if it pursues a restructuring of its debt, which S&P would likely consider to be a distressed exchange. ADVANTA BUSINESS: S&P Junks Ratings on Class D of Notes ------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on all classes of notes issued out of Advanta Business Card Master Trust and placed them on CreditWatch with negative implications, with the exception of the 'AA' rating on class A (2005-A5), which S&P affirmed, as the accumulation amount held on deposit in the collection account is sufficient to retire the entire class balance of $200 million on the May distribution date. The lowered ratings follow Advanta Corp.'s (CC/Negative/C) May 11, 2009, announcement that it intends to close the open-to-buy lines associated with cardholder accounts in the ABCMT, which means that Advanta will no longer fund new purchases associated with existing cardholders. The company also stated that the trust will likely enter early amortization on June 10, 2009, a reflection that Advanta expects the excess spread amount trigger to be breached as of May 2009, although this in and of itself would not typically result in a rating action. Additionally, Advanta announced that it plans to make a cash tender offer for the ABCMT class A senior notes at a price between 65% and 75% of their face value in a modified Dutch Auction. S&P would likely not view such an exchange as a default on the senior notes unless S&P view it as a distressed offer under S&P's current criteria. Standard & Poor's would most likely treat Advanta's proposed cash tender offer as de facto restructuring, equivalent to a default, if both of these criteria are met: -- The offer, in S&P's view, implies that investors will receive less value than the promise of the original securities; and -- The offer, in S&P's view, is distressed, rather than purely opportunistic. S&P generally view an offer as distressed if in S&P's opinion, apart from the offer, there is a realistic possibility of a conventional default (i.e., S&P believes the issuer would face insolvency, bankruptcy, or imminent payment default on the notes if the offer was not executed). S&P does not, however, currently believe the class A noteholders are at such risk. Based on past experience with the NextCard Credit Card Master Note and First Consumer Credit Card Master Note Trusts, where the open- to-buy lines were shut down, S&P expects the performance of ABCMT to deteriorate precipitously as cardholders lose the ability to use their credit cards. While S&P view these precedents as relevant comparables, performance of the ABCMT trust could differ, as NextCard's and FCNB's obligor base was consumers, whereas ABCMT's obligor base is small businesses. First, as stronger obligors payoff their balances and exit the trust, the credit quality of the portfolio will likely deteriorate. This deterioration will likely be due to adverse selection, as the pool will migrate toward lower-quality obligors. As a result, S&P believes the payment rate could decline substantially, potentially dropping to the mid-single digit range from its present level of 18-20%. In addition, S&P believes there is a high likelihood that delinquencies and charge-offs, which are already at elevated levels (11.9% and 16.5%, respectively, at the end of March 2009) will increase significantly. A declining pool balance will cause higher loss rates on a percentage basis. S&P believes losses may rise to 30%-40% in the next six-12 months -- given current delinquencies and a projected declining pool balance resulting from Advanta's decision to close its credit lines. As S&P has stated in previous press releases on this trust, ABCMT exhibited rapid growth in 2006 and 2007 in states that have been most affected by significant home price declines and higher unemployment rates, such as California and Florida. Given S&P's May 12, 2009, downgrade of Advanta and Advanta Bank Corp. (the originator and servicer of the underlying credit card receivables in the master trust to CC/Negative/C, coupled with the expected loss of credit card utility, S&P has lowered its purchase rate assumptions at all rating categories to zero. Standard & Poor's will continue to monitor the performance of the key risk indicators associated with the aforementioned trust and will continue to inform the market of its views as events continue to unfold. Ratings Lowered And Placed On Creditwatch Negative Advanta Business Card Master Trust AdvantaSeries Rating ------ Class To From ----- -- ---- A BBB-/Watch Neg AA B BB-/Watch Neg BBB+ C B-/Watch Neg BB+ D CCC/Watch Neg B+ Rating Affirmed Class Rating ----- ------ A(2005-A5) AA AFFILIATED FOODS: Meeting of Creditors Scheduled for June 11 ------------------------------------------------------------ The U.S. Trustee for Region 13 will convene a meeting of creditors in the Chapter 11 cases of Affiliated Foods Southwest, Inc. and its debtor-affiliates on June 11, 2009, at 2:00 p.m. The meeting will be held at the U.S. Trustee's Office, Bank of America Building, 200 West Capitol, Ste. 1200, in Little Rock, Arkansas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Little Rock, Arkansas-based Affiliated Foods Southwest, Inc., and its affiliates filed for Chapter 11 on May 5, 2009 (Bankr. E. D. Ark. Case No. 09-13178). Tristan Manthey, Esq., at Heller Draper Hayden Patrick & Horn and W. Michael Reif, Esq., at Dover Dixon Horne, represent the Debtors in their restructuring efforts. The Debtors listed assets between $10 million to $50 million and debts between $100 million to $500 million. AMERICAN INT'L: IPO Asia Life-Insurance Arm Could Raise $5 Billion ------------------------------------------------------------------ The 2010 initial public offering of American International Group Inc.'s Asian life-insurance arm, American International Assurance Co., could raise more than US$5 billion, depending on the structure of the deal, Rick Carew and Jonathan Cheng at The Wall Street Journal report, citing people familiar with the matter. According to WSJ, sources said that bankers expect AIG to invite investment banks to submit proposals as early as next week to underwrite a listing of AIA. The terms of the AIA IPO will depend on market conditions, WSJ says, citing bankers. WSJ relates that AIG failed to find a buyer for AIA through an auction earlier this year. The bankers, according to the report, said that they intend to suggest a structure that would call for selling around 20% of AIA's stock to the public, which would raise at least US$5 billion if investors value the entire AIA around US$25 billion. WSJ, citing people familiar with the matter, reports that AIA has been working with consultants at McKinsey to consolidate its operations and shore up its brand. AIG could shift from the AIG marquee and adopt the AIA logo, the report says. Citing people familiar with the matter, WSJ states that AIG is also taking steps to sell to bidders or the public its operating life-insurance unit in Taiwan, Nan Shan Life Insurance Co. AIG, says WSJ, hired Morgan Stanley to sell Nan Shan, which had a book value of 87 billion New Taiwan Dollars, or around US$2.64 billion, as of March 2009. WSJ quoted Nan Shan as saying, "AIG is reviewing various strategic options for Nan Shan at the moment. No particular decision has been made." WSJ relates that the sales are intended to pay back part of a $173 billion U.S. government bailout of AIG. 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: Lenders' Covenant Waivers Expire Today ---------------------------------------------------------- Anthracite Capital Inc. has said it is currently in negotiations with Bank of America, Deutsche Bank and Morgan Stanley to restructure its secured credit facilities. Anthracite Capital warned that if the Company were unable to satisfactorily restructure its secured credit facilities or obtain extensions of the waivers from the secured credit facility lenders on or before May 15, 2009, an event of default will immediately or with the passage of time occur under the applicable respective facility. Anthracite Capital said an event of default under any of the Company's facilities, absent a waiver, would trigger cross-default and cross-acceleration provisions in all of the Company's other facilities and, if such debt were accelerated, would trigger a cross-acceleration provision in one of the Company's indentures. In such an event, the Company would be required to repay all outstanding indebtedness under its secured credit facilities and the one indenture immediately. Anthracite Capital said it would not have sufficient liquid assets available to repay the indebtedness and, unless the Company were able to obtain additional capital resources or waivers, the Company would be unable to continue to fund its operations or continue its business. Anthracite Capital said in a regulatory filing with the Securities and Exchange Commission that the recessionary economic conditions and ongoing market disruptions have had an adverse effect on the Company and the commercial real estate and other assets in which the Company has invested: -- The Company incurred net loss available to common stockholders of $258,049,000 for the year ended December 31, 2008 compared with net income of $71,854,000 for the year ended December 31, 2007, driven primarily by significant net realized and unrealized losses, the incurrence of a $165,928,000 provision for loan losses (including the establishment of a general reserve) and a loss from equity investments $53,630,000 compared with earnings of $32,093,000 in the prior year. The establishment of a general reserve for loan losses was deemed necessary given the dramatic change in the prospects for loan performance as a result of significant property value declines in the fourth quarter. The Company updates its general reserve calculation on a quarterly basis. -- The Company's unrestricted cash and cash equivalents sharply decreased to $9,686,000 at December 31, 2008 from $91,547,000 at December 31, 2007 due to, among other things, an increase in the receipt and funding of margin calls and amortization payments under the Company's secured credit facilities and reduced cash flow from investments. Unrestricted cash and cash equivalents further decreased to $3,872,000 at March 31, 2009. To secure the amendment and extension of its secured credit facilities (including repurchase agreements) in 2008 with Bank of America, Deutsche Bank and Morgan Stanley, the Company agreed not to request new borrowings under the facilities. Financings through collateralized debt obligations, which the Company historically utilized, are no longer available, and the Company does not expect to be able to finance investments through CDOs for the foreseeable future. -- The Company is currently focused on managing its liquidity and, unless its liquidity position and market conditions significantly improve, anticipates no new investment activity in 2009. In addition, the Company's Board of Directors anticipates that the Company will only pay cash dividends on its preferred and common stock to the extent necessary to maintain its REIT status until the Company's liquidity position has improved. These effects, the Company said, have led to these adverse consequences: -- The Company's independent registered public accounting firm has issued an opinion on the Company's December 31, 2008 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 and the lender under the Company's secured credit facility with BlackRock Holdco 2, Inc., on March 17, 2009 that the covenant breach caused by the going concern reference in the independent registered public accounting firm's opinion to the consolidated financial statements is permanently waived or such reference does not constitute an event of default or covenant breach under the applicable facilities. -- Financial covenants in certain of the Company's secured credit facilities include, without limitation, a covenant that the Company's net income (as defined in the applicable credit facility) will not be less than $1.00 for any period of two consecutive quarters and covenants that on any date the Company's tangible net worth will not have decreased by 20 percent or more from the Company's tangible net worth as of the last business day in the third month preceding such date. The Company's significant net loss for the year ended December 31, 2008 resulted in the Company not being in compliance with these covenants. On March 17, 2009, the secured credit facility lenders waived these covenant breaches until April 1, 2009 and subsequently extended this waiver until May 15, 2009. In addition, the Company's secured credit facility with BlackRock Holdco 2 requires the Company to immediately repay outstanding borrowings under the facility to the extent outstanding borrowings exceed 60% of the fair market value (as determined by the Company's manager, of the shares of common stock of Carbon Capital II, Inc., securing the facility. As of February 28, 2009, 60% of the fair market value of such shares declined to approximately $24,840,000 and outstanding borrowings under the facility were $33,450,000. On March 17, 2009, Holdco 2 waived this breach until April 1, 2009 and subsequently extended this waiver until May 15, 2009. Additionally, in the first quarter of 2009, Anthracite Euro CRE CDO 2006-1 plc failed to satisfy its Class E overcollateralization and interest coverage tests. As a result of Euro CDO's failure to satisfy these tests, each interest payment due to the Company, as the Euro CDO's preferred shareholder, will remain in the CDO as reinvestable cash until the tests are satisfied. However, since the Euro CDO's preferred shares were pledged to one of the Company's secured lenders in December 2008, the cash flow was already being diverted to pay down that lender's outstanding balance. -- During the first quarter of 2009, the Company received a margin call of $46,300,000 and C$5,300,000 from one of its secured credit facility lenders. On March 17, 2009, the lender waived this event of default until April 1, 2009, and subsequently extended this waiver until May 15, 2009. -- Due to current market conditions and the Company's current liquidity position, the Company's Board of Directors anticipates that the Company will pay cash dividends on its common and preferred stock only to the extent necessary to maintain its REIT status until the Company's liquidity position has improved and market values of commercial real estate debt show signs of stability. The Board of Directors did not declare a dividend on the Common Stock for the fourth quarter of 2008 since the Company estimated that its 2008 net taxable income distribution requirements under REIT rules were satisfied by distributions made for the first three quarters of 2008. The Board of Directors also did not declare a dividend on the Common Stock and the Company's preferred stock for the first quarter of 2009. To the extent the Company is required to make distributions to maintain its qualification as a REIT in 2009, the Company may rely upon temporary guidance that was issued by the Internal Revenue Service, which allows certain publicly traded REITs to satisfy their net taxable income distribution requirements during 2009 by distributing up to 90% in stock, with the remainder distributed in cash. However, the terms of the Company's preferred stock prohibit the Company from declaring or paying cash dividends on the Common Stock unless full cumulative dividends have been declared and paid on the preferred stock. Anthracite Capital said that, at March 31, 2009, the total amount of debt owed to the Bank of America, Deutsche Bank and Morgan Stanley was $395,932,000, and $33,450,000 was owed to BlackRock Holdco 2, Inc. As of May 11, 2009 the amounts owed are $375,106,000 and $33,450,000, respectively. At March 31, 2009, the total amount owed to the Company's secured lenders was $429,382,000 versus $480,332,000 at December 31, 2008, resulting in net reduction of $50,950,000. These paydowns were funded by cash from operating activities of $46,637,000 for the three months ended March 31, 2009 and cash on hand at December 31, 2008 of $9,686,000. On Tuesday, Anthracite Capital reported net income of $25.5 million for the three months ended March 31, 2009, compared to $53.9 million for the same period in 2008. Anthracite Capital had $4.85 billion in total assets, including cash and cash equivalents of $3.87 million, and $4.22 million in total liabilities, resulting in $584.0 million in stockholders' equity at March 31, 2009. A full-text copy of Anthracite Capital's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3ce4 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. ASARCO LLC: Obtains Approval of Fifth Amended Disclosure Statement ------------------------------------------------------------------ Judge Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas signed a written order, on May 12, 2009, approving the Disclosure Statement explaining the Fifth Amended Joint Plan of Reorganization of ASARCO LLC and its debtor affiliates, as containing "adequate information" within the meaning of Section 1125 of the Bankruptcy Code. The Fifth Amended Plan was delivered to the Court by the Debtors on May 11, 2009, a day before the rescheduled Disclosure Statement Hearing on May 12. That hearing was originally scheduled for May 15. The Debtors reflected certain modifications to the Fifth Amended Plan and Disclosure Statement to address the concerns of certain parties. Specifically, the Fifth Amended Disclosure Statement contains statements included at the request of the Parent, the Asbestos Subsidiary Committee, the Future Claims Representative and certain other parties. The Statements are on contentions and assertions with respect to asbestos-related claims and intercompany loans and claims, among others. The Debtors nevertheless remind the Court and parties-in-interest that they do not represent accuracy of the Statements, and that any reference to those Statements should not be taken as their agreement with all or part of those Statements. The Official Committee of Asbestos Claimants and the FCR, however, complained that although the Fifth Disclosure Statement contained some of the disclosures requested, it ignores numerous others, including the Debtors' failure to file amendments describing proposed treatment of asbestos creditors in light of statements made on the record at a hearing on April 13 and 14, 2009, and a status conference on April 20, 2009, and the Debtors' repeated refusal to disclose the amount owed by ASARCO LLC and the Asbestos Subsidiaries on account of prepetition asbestos- related settlements. The Fifth Amended Plan was also updated to reflect the creation of the Plan Liquidation Trust and the Southern Copper Corporation Litigation Trust as of the Effective Date as well as updates on recent events in these bankruptcy cases, including Americas Mining Corporation's request to alter or amend Judge Hanen's final judgment in the adversary complaint commenced by ASARCO LLC against AMC on a transfer dispute of certain stocks of Southern Peru Copper Company, now known as Southern Copper Corporation, to AMC, and the Parent's additional arguments regarding Sterlite (USA), Inc.'s refusal to close the original sale agreement for the ASARCO LLC operating assets. The Parent has insisted that claims against Sterlite could be as high as $3 billion. The creation of, and other matters related to, the Residual Assets Liquidation Trust has been omitted in the Fifth Amended Plan. The Fifth Disclosure Statement further explains that once sent, the vote on a ballot cannot be changed unless the Court, after notice and hearing, permits the change "for cause shown." However, the Debtors agree that estimation of Asbestos Personal Injury Claims at an amount greater than $500 million will constitute "cause" for holders of Class 3 Claims to change their votes. The Debtors will not oppose request to change vote, provided the request is timely received based on any deadlines the Court may set for changing the vote. Clean and blacklined copies of the Debtors' Fifth Amended Plan and Disclosure Statement are available for free at: http://bankrupt.com/misc/ASARCO_5thAmended_Plan.pdf http://bankrupt.com/misc/ASARCO_5thAmended_DS.pdf http://bankrupt.com/misc/ASARCO_5th_Plan_Blacklined.pdf http://bankrupt.com/misc/ASARCO_5th_DS_Blacklined.pdf Designation & Treatment of Claims Under Fifth Amended Plan In formulating the estimated recovery set forth in the Fifth Amended Plan, the Debtors made a projection of cash anticipated to be on hand on the Plan Effective Date from operations and other sources, added the Cash expected from the Plan Sponsor, and considered projected uses of Cash between now and the Effective Date. Holders of Class 2 Secured Claims can vote on the Fifth Amended Plan, but only the votes of claimants receiving the Cash Payment Option will be counted. Although no assurances can be given, the Debtors believe that Class 3 could receive a Cash distribution on the Initial Distribution Date that will result in a Cash recovery ranging from 43% to 100% of the principal amount of their Claims. Class 3 would also receive Liquidation Trust Interests and SCC Litigation Trust Interests. The Parent believes that the Debtors' Plan is patently unconfirmable because the Plan violates the absolute priority rule. The Parent notes that under the Debtors' Plan, holders of Class 3 claims would be entitled to the Liquidation Trust Interests and the SCC Litigation Trust Interests and could receive more than 100% of their Allowed Claims, while holders of Claims and Interests in Classes 6 through 10 receive no distributions. The Debtors believe that the provisions of their Plan provide all holders of Claims and Interests the protections afforded by the absolute priority rule. Class 4 Unsecured Asbestos Personal Injury Claims is divided into two subclasses under the Fifth Amended Plan: (1) Class 4A - Asbestos Premises Liability Claims; and (2) Class 4B - Unsecured Asbestos Personal Injury Claims other than Asbestos Premises Liability Claims. The Asbestos Trust will create a fund allocated for the payment of Asbestos Premises Liability Claims and Demands. It will be funded with Premises Liability Claims and Demands against ASARCO, as estimated by the Court pursuant to its estimation order, following an evidentiary hearing, plus postpetition interest on that amount; provided that if the parties reach an agreement regarding the aggregate allowed amount of the claims for purposes of the Fifth Amended Plan, that amount will be approved by the Court in accordance with certain procedures. The Asbestos Trust will also create a fund for the payment of all Unsecured Asbestos Personal Injury Claims and Demands other than Asbestos Premises Liability Claims and Demands. The Asbestos Personal Injury Claims Fund will be funded with (i) 100% of the interests in Reorganized Covington, and (ii) cash in the amount of the Unsecured Asbestos Personal Injury Claims against ASARCO other than Asbestos Premises Liability Claims, as estimated by the Court, pursuant to its estimation order following an evidentiary hearing, plus postpetition interest on that amount. The Debtors believe that Class 4 claim holders will be paid in full by treatment afforded under the Fifth Amended Plan. The Official Committee of Asbestos Claimants asserts that the aggregate Allowed Amount of Unsecured Asbestos Personal Injury Claims may be as high as $2.1 billion. If the aggregate Unsecured Asbestos Personal Injury Claims were allowed at $2.1 billion, the Debtors do not believe that there would be sufficient Cash to provide a meaningful Cash recovery to Class 3 Claimants on the Effective Date. The Asbestos Claimants Committee and the FCR strongly disagree that any plan with the proposed treatment for current and future asbestos claimants as proposed under the Fifth Amended Plan is permissible under the Bankruptcy Code. The Asbestos Claimants Committee and the FCR assert that no channeling injunction may be issued pursuant to Section 524(g) of the Bankruptcy Code without the affirmative vote of 75% of holders of Asbestos Personal Injury Claims, and the FCR asserts that his consent is mandatory for all holders of demands to be bound by any of that injunction. The Asbestos Claimants Committee and the FCR make clear that the U.S. Congress specifically enacted Section 524(g) as the exclusive means of achieving a permanent channeling injunction against present and future asbestos claims, and that the Debtors' attempt through the Fifth Amended Plan to obtain a channeling injunction without complying with the mandates of Section 524(g) is impermissible. Intercompany DIP Credit Facility ASARCO LLC and the Asbestos Subsidiary Debtors sought and obtained the Court's permission in 2008 for a senior secured term loan of up to $10 million to be extended by ASARCO LLC to the Asbestos Subsidiary Debtors, pursuant to Section 364 of the Bankruptcy Code. The proffer of Douglas E. McAllister, ASARCO's executive vice president, general counsel and secretary, supporting the request stated, "To raise cash, ASARCO monetized insurance coverage for asbestos-related liability and used the money to pay its own expenses and other debts rather than to pay settlement agreements previously reached with asbestos plaintiffs. This monetization and diversion practice is documented repeatedly in the findings included in Judge Hanen's recent ruling. ASARCO's debt to the Asbestos Subsidiary Debtors for such actions is more than the $10 million face amount of the Intercompany DIP Loan. Thus, even if the Joint Plan is not confirmed for any reason, ASARCO may offset against such intercompany liability to ensure satisfaction of the loan." The Intercompany Term Loan Credit facility expired on April 1, 2009. The total balance under the Intercompany Facility was $2.1 million as of April 17, 2009. The Asbestos Subsidiary Committee and the FCR maintain that ASARCO's debt to the Asbestos Subsidiary Debtors for monetization and diversion of insurance is more than the $10 million face amount of the loan, which ASARCO admitted during the initial hearing on the request to approve the loan. After the Debtors learned that the FCR and the Asbestos Subsidiary Committee had agreed to support a prospective Parent's plan and actively oppose confirmation of the Debtors' Plan, the Debtors informed the FCR and the Asbestos Subsidiary Committee that it had decided not to renew the expired Intercompany Facility. At the request of the Court, the Facility has nevertheless now been extended through May 15, 2009. The Parent, the Asbestos Claimants Committee, and the FCR contend that if the Facility is not further extended, the Asbestos Claimants and the FCR may be unable to pay professionals and may be denied adequate representation. The Parent, the Asbestos Claimants Committee and the FCR are concerned that that under the circumstances, (i) the Asbestos Subsidiary Committee, which represents one of the largest stakeholders in the ASARCO reorganization cases, and the FCR are at risk of a compromise of their fiduciary duties to the Asbestos Claimants, and (ii) there is a risk of compromising the integrity of the processes surrounding confirmation of the Debtors' Plan, all resulting from the Debtors' strategic maneuvering. The Debtors disagree with these contentions. ASARCO LLC remains that there is no evidence to support that it took assets from its subsidiaries to evade asbestos-related liability or for any fraudulent purpose. ASARCO insists that documents show that when it received payments from the subsidiaries, the subsidiaries received fair consideration in return, including debt cancellation and management and administrative services. The Asbestos Subsidiary Committee and the FCR, however, contend that ASARCO's actions in compromising certain insurance policies for ongoing operations prior to Petition Date constitutes evidence that ASARCO took assets to evade asbestos-related liability. ASARCO disagrees with these contentions, and asserts that its actions were necessary to maintain ASARCO as a going concern, which inured to the benefit of all parties, including the Asbestos Subsidiary Debtors. ASARCO adds that the rights of the Asbestos Subsidiary Debtors have been preserved by the actions giving rise to Intercompany Claims in favor of the Asbestos Subsidiary Debtors. Estimation of Derivative Asbestos Claims ASARCO believes its insurance will cover a substantial amount of the Asbestos Premises Liability Claims, though it admits it cannot disclose the terms and conditions of the confidential agreements in place agreements. ASARCO anticipates that its total present and future liability for Asbestos Premises Liability Claims will be between $30 million and $32 million, and that the amount not covered by insurance is a fraction of the estimated amount. To recall, asbestos parties submitted in early 2007 their estimates of the maximum aggregate asbestos-related liability of the Asbestos Subsidiary Debtors as of April and August 2005. The estimates ranged from $180 million to $2.655 billion, excluding the Asbestos Premises Liability Claims, Asbestos Premises Liability Demands, direct asbestos claims against ASARCO or defense costs. Prior to the Petition Date, ASARCO entered into various prepetition asbestos-related settlements agreements and was also held liable on certain unpaid prepetition asbestos-related judgments. The Fifth Amended Disclosure Statement reveals that ASARCO does not have a complete listing of the "liable" judgments, but it estimates that its liability on the prepetition settlements and judgments for asbestos premises liability aggregate $2 million or more. Other Financial Provisions The Fifth Amended Plan also provides that the Plan Administration Reserve contains amounts that ASARCO has set aside to cover various contingencies that may arise after the Effective Date, including $5 million in the Unpaid Cure Claims Reserve, $12.5 million to $25 million in the Prepetition ASARCO Environmental Trust Escrow, $20 million in the Indemnification Escrow, $10 million in the Liquidation Trust Reserve and $15 million in the SCC Liquidation Reserve. The Plan Administrator will also establish and fund various other bank accounts pursuant to the Fifth Amended Plan to address Reorganized ASARCO's administrative expenses. The ASARCO Residual Assets, including the Plan Administrative Reserve, the Vested Causes of Action, stock in Freeport McMoRan Copper & Gold Inc., AgLand FS, Gateway Co-op and Revett Minerals, certain coal royalty, and various insurance policies will vest in Reorganized ASARCO on the Effective Date. ASARCO reserves the right to contribute one or more of the ASARCO Residual Assets to Reorganized Covington, in ASARCO's sole discretion, as ASARCO will deem appropriate to obtain confirmation of the Fifth Amended Plan. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for $2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and on March 11, 2009, ASARCO LLC sought Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for $1.7 billion. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC would provide up to US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Deadline for Grupo Mexico's Competing Plan Today ------------------------------------------------------------ After a court affirms that the disclosure statement contains adequate information necessary for creditors to make an informed judgment on the plan, the debtor usually proceeds to solicitation of votes on the plan. Not for Asarco LLC's case. Judge Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas signed a written order, on May 12, 2009, approving the Disclosure Statement explaining the Fifth Amended Joint Plan of Reorganization of ASARCO LLC and its debtor affiliates, as containing "adequate information" within the meaning of Section 1125 of the Bankruptcy Code. According to Bloomberg's Bill Rochelle, despite ASARCO getting approval of the Disclosure Statement, solicitation packages won't be sent yet as ASARCO's parent Grupo Mexico SAB still has until May 15 to file a rival plan. Americas Mining Corporation is an affiliate of Grupo Mexico, ASARCO LLC's ultimate parent. Judge Schmidt said he would consider approving a joint disclosure statement if Grupo Mexico files a plan, Bloomberg relates. Creditors, Mr. Rochelle notes, may end up having more than two plans from which to chose. In recent court filings, certain parties have made known to Judge Schmidt their interest in filing a competing plan. Glencore Ltd. has noted in court papers that it submitted a plan proposal to the Debtors on April 21, 2009. Harbinger Capital Partners Masters Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P. and Citigroup Global Markets, Inc., which say they together own two-thirds of Asarco's bonds and debentures, stated they are in discussions with the Creditors Committee for a possible Section 363 Plan. Bill Rochelle recounts that Harbinger and Citigroup made a run at buying Asarco this time last year and lost out to an offer from Sterlite Industries (India) Ltd., which later received the bankruptcy court's authorization to purchase the business for $2.6 billion. Asarco was scheduled to confirm a plan in November until the sale fell though when Sterlite, a subsidiary of India's Vedanta Resources Plc, refused to complete the acquisition. Judge Schmidt in April authorized Asarco to sign a new contract with Sterlite for a price of $1.1 billion cash and a non-interest bearing nine-year note for $600 million. The lower price required changes to ASARCO's plan and results to lower recovery by creditors. Sterlite's offer though is subject to higher and better offers at a court sanctioned auction, which, according to Mr. Rochelle, will be held in connection the plan confirmation process. In the Plan that ASARCO failed to obtain confirmation last year, unsecured creditors and bond holders with claims totaling $1 billion were expected to obtain full recovery. In the present Plan, the entire body of unsecured creditors with claims possibly reaching $2.4 billion are slated to receive between 60 to 75 cents on the dollar. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for $2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and on March 11, 2009, ASARCO LLC sought Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for $1.7 billion. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC would provide up to US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASHLAND INC: Moody's Assigns 'Ba3' Rating on $600 Mil. Notes ------------------------------------------------------------ Moody's Investors Service assigned a rating of Ba3 to Ashland Inc.'s new $600 million senior unsecured notes due 2017. Ashland's Ba2 Corporate Family Rating and debt ratings were affirmed. Proceeds from the debt offering will be applied towards refinancing Ashland's existing $750 bridge loan, which partially financed the November 2008 acquisition of Hercules Incorporated. The rating outlook remains negative. The Ba2 CFR reflects Ashland's recent strong 2009 performance that supports good credit metrics, moderate leverage for its rating category, diversified portfolio of chemicals businesses, large size with a diversified customer base in the US and internationally, meaningful market shares in certain businesses (e.g., water technologies, Aqualon functional ingredients), and operational and geographic diversity. The Hercules acquisition supports Ashland's strategic goal of expanding its specialty chemicals business and is expected to improve Ashland's stability of cash flows and margins through the business cycle. The ratings reflect expectations that Ashland will apply free cash flow towards de-leveraging; as of March 31, 2009, the company had repaid $206 million of acquisition debt. The CFR also reflects the typical acquisition integration risks associated with the Hercules purchase (Moody's note Ashland has announced that it has already achieved synergies at an annualized run rate of $217 million since the acquisition) as well as significant asbestos-related litigation and environmental liabilities from both the Ashland legacy businesses and the Hercules businesses. Ashland's low historical EBITDA margins (partly a function of its large distribution business), volatile raw material costs and inconsistent free cash flow generation have also constrained the rating. The ratings are summarized below. Issuer: Ashland Inc. These ratings were assigned: -- $600mm Senior Unsecured Notes due 2017, Ba3 (LGD5, 75%) These ratings were affirmed: -- Corporate Family Rating, Ba2 -- Probability of Default Rating, Ba2 -- Senior Unsecured Medium-Term Note Program, Ba3 -- 7.72% Senior Unsecured Medium Term Notes due 07/15/2013, Ba3 (LGD5, 75%) from Ba3 (LGD5, 76%) -- 8.38% Senior Unsecured Medium Term Notes due 04/01/2015, Ba3 (LGD5, 75%) from Ba3 (LGD5, 76%) -- Senior Unsecured Regular Bond/Debenture -- 8.8% Senior Unsecured Debentures due 11/15/2012, Ba3 (LGD5, 75%) from Ba3 (LGD5, 76%) -- $400mm sr sec revolving credit facility due 2013, Ba1 (LGD2, 27%) from Ba1 (LGD2, 24%) -- $400mm sr sec term loan A due 2013, Ba1 (LGD2, 27%) from Ba1 (LGD2, 24%) -- $850mm sr sec term loan B due 2015, Ba1 (LGD2, 27%) from Ba1 (LGD2, 24%) Issuer: Hercules Incorporated -- 6.60% Notes due 2027, Ba1 (LGD2, 27%) from Ba1 (LGD2, 24%) -- 6.50% Jr sub debentures due 2029, B1 (LGD6, 95%) from B1 (LGD6 91%) -- Ratings outlook: Negative Ashland's good liquidity profile is a positive for the credit profile in the current uncertain credit markets. Its liquidity is supported by expectations for positive free cash flow over the next 12-15 months, cash balances of $203 million as of March 31, 2009, and $280 million of unused availability under its $400 million revolving credit facility due 2013. Additionally, only $40 million was outstanding under its $200 million accounts receivable securitization program and the company had $242 million par value of illiquid auction rate securities classified as non current assets (carried on Ashland's books at $214 million), that might be a source of liquidity in the future. Ashland's revolver matures in 2013 and is expected to remain undrawn, except for occasional use for working capital purposes and to support letters of credit ($120 million as of March 31, 2009). Terms of the unsecured bonds will limit the amount of dividends payable by the company. The company has a favorable debt maturity profile with no significant debt maturities for the next five years, but must make debt amortization payments. (Short-term debt and the current portion of long-term debt totaled $178 million as of March 31, 2009.) The credit agreement includes financial covenants (maximum leverage ratio, minimum fixed charge coverage ratio, minimum net worth, maximum capital expenditures) that Ashland is expected to be able to comply with over the next year. The negative outlook reflects the uncertain 2009 outlook for Ashland's revenues due to the weakness in the global economy and end markets such as autos and housing where Ashland has exposure. The Ba3 rating on the new senior unsecured notes reflects the substantial amount of debt (predominately $1.2 billion of term loans and $400 million revolving credit facility) in the capital structure that is secured and ranks senior to the new notes. The notes are guaranteed on a senior unsecured basis by all of Ashland's domestic subsidiaries that guarantee obligations under Ashland's Credit Agreement (which encompasses all material US subsidiaries of the Ashland organization and includes those acquired as part of the Hercules acquisition). The bonds will contain covenants that will limit the incurrence of additional debt if Ashland's Fixed Charge Coverage Ratio is less than 2.25:1.00 and places upper limits on dividends or other distributions. Moody's most recent rating action for Ashland was on November 14, 2008, when the CFR was lowered to Ba2 (from Ba1) and a negative outlook assigned at the time of the Hercules acquisition. Ashland, headquartered in Covington, Kentucky, is a distributor of chemicals and plastics, a manufacturer of specialty chemicals and related services with a focus on performance materials and paper and water technologies and, through its Valvoline brand, a marketer of premium-branded automotive and commercial lubricants. The company acquired Hercules Incorporated, which had revenues of $2.3 billion for the LTM ended September 30, 2008, in a transaction valued at approximately $3.4 billion on November 13, 2008. Ashland had revenues of $8.4 billion for the LTM ended March 31, 2009, which reflected less than five months of Hercules' operating results. BACHRACH ACQUISITION: Section 341(a) Meeting Slated for June 16 --------------------------------------------------------------- The U.S. Trustee for Region 2 will convene a meeting of creditors in Bachrach Acquisition, LLC's Chapter 11 case on June 16, 2009, at 2:30 p.m. The meeting will be held at the Office of the United States Trustee, 80 Broad Street, Fourth Floor, New York City. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in New York City, Bachrach Acquisition, LLC -- http://www.bachrach.com/-- sells men's apparel. The Company filed for Chapter 11 on May 6, 2009 (Bankr. S. D. N.Y. Case No. 09-12918). Clifford A. Katz, Esq., Evan J. Salan, Esq., Henry G. Swergold, Esq., and Teresa Sadutto-Carley, Esq., at Platzer, Swergold, Karlan, Levine, Goldberg & Jaslow, LLP, represent the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. BANKUNITED FINANCIAL: Delays Q2 Report, Expects $443.1MM Net Loss ----------------------------------------------------------------- BankUnited Financial Corporation has been unable to file its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009, by the filing deadline of May 11, 2009. The Company said it has not completed the preparation of its financial results for either the fiscal year ended September 30, 2008, or the fiscal quarters ended March 31, 2009, and December 31, 2008. The delay results from the continuing adverse market conditions, the complexity of accounting and disclosure issues, which increased the need for additional review and analysis of BankUnited Financial's business including, without limitation, regulatory issues, liquidity and capital and the material weaknesses in internal control over financial reporting. BankUnited Financial expects to report a loss of $443.1 million or $12.55 per share for the second quarter 2009 compared to a loss of $65.8 million or $1.88 per share for the quarter ended March 31, 2008. For the six months ended March 31, 2009, it expects to report a loss of approximately $920.6 million, or $26.08 per share compared to a loss of $91.3 million, or $2.61 per share for the same period in 2008. The Company said the increase in loss is primarily a result of its continuing recognition of significant provisions for loan losses related to its payment option adjustable rate mortgage portfolio, lower net interest income due to higher nonperforming assets, additional cost of maintaining excess cash for liquidity purposes, other-than-temporary impairments, the write-off of goodwill and higher losses and carrying costs associated with repossessed real estate. As of March 31, 2009, the Company maintains reserves of approximately $1.0 billion for losses on its loan portfolio. BankUnited Financial said it is working diligently to try to complete the filing of its 2008 Form 10-K, First Quarter 2009 Form 10-Q and Second Quarter 2009 Form 10-Q by June 15, 2009. However, no assurances can be given concerning its ability to file by June 15, 2009. If BankUnited Financial does not file by June 15, 2009, it intends to request additional time from NASDAQ to make the required filings, although there is no assurance that they will grant the Company additional time. BankUnited Seeks Merger or Sale Since July 2008, the Company and BankUnited, FSB, its wholly owned subsidiary, have entered into various agreements with the Office of Thrift Supervision that have progressively increased the Company's regulatory monitoring and reporting requirements and added significant restrictions on its operations. On April 14, 2009, the Board of Directors of the Bank entered into a Stipulation and Consent to Prompt Corrective Action Directive with the OTS. The PCA Agreements reiterated several mandatory operating restrictions of previous agreements, including the Cease and Desist Orders entered into with the OTS on September 19, 2008. The PCA Agreements direct the Bank to be capitalized by a merger with or an acquisition by another financial institution or another entity, or through the sale of all or substantially all of the Bank's assets and liabilities to another financial institution or another entity, within 20 days of the issuance of the PCA Agreements, pursuant to a written definitive agreement that the Bank was required to execute within 15 days of the effective date of the PCA Agreements, unless such timeframes were extended in writing by the OTS. A source told The Miami Herald that prospective buyers had until 11 a.m. Thursday to file their bids with the FDIC. People familiar with the situation, according to Miami Herald, say the bids are likely to be structured to include proposals for some sort of loss-sharing agreement on the huge portfolio of troubled assets the thrift holds. Miami Herald says three likely bidder groups have emerged: 1) TD Bank, which has a major base in Florida, and Goldman Sachs; 2) WL Ross & Co., a distressed asset firm founded by Wilbur Ross. Private equity giants Blackstone Group and Carlyle Group were expected to join in that bid, sources told Miami Herald; and 3) JC Flowers & Co., a New York investment firm run by J. Christopher Flowers. The PCA Agreements further required the Bank to achieve and maintain, at a minimum, these ratios: (i) Total Risk Based Capital Ratio of 8%; (ii) Tier I Core Risk Based Capital Ratio of 4%; and (iii) Leverage Ratio of 4% within 20 days of the effective date of the PCA Agreements. Based on its March 31, 2009 reported capital levels, BankUnited Financial would need to raise approximately $1.0 billion to meet the Total Risk Based Capital Ratio of 8%, approximately $706 million to meet the Tier I Core Risk Based Capital Ratio of 4% and approximately $937 million to meet the Leverage Ratio of 4%. The 20-day period to raise capital and achieve the mandatory minimum capital requirements under the PCA Agreements expired on May 4, 2009 without compliance by the Bank. As a result of the circumstances, the Bank is subject to regulatory enforcement actions, including the Federal Deposit Insurance Corporation receivership. These events raise substantial doubt about the Company's ability to continue as a going concern. Efforts to Raise Capital BankUnited Financial has been actively trying to raise capital at the holding company level for over a year. These efforts have required substantial time, resources and energy from BankUnited Financial's senior management, who has persistently sought to identify investors and structure a feasible transaction. Although management continues to seek capital at the holding company level, BankUnited Financial's efforts at this time primarily relate to a direct recapitalization of the Bank. No assurance can be given that BankUnited Financial will be able to raise capital at either the Bank or the holding company level. In addition, a recapitalization of the Bank without a simultaneous recapitalization of the holding company would reduce or eliminate the Company's ownership in the Bank, thus raising substantial doubt about the Company's ability to continue as a going concern. Liquidity and Capital Resources At May 7, 2009, the Bank had total cash and cash equivalents of $1.3 billion compared to $1.2 billion and $513 million at September 30, 2008 and 2007, respectively. The increase from September 30, 2007 was primarily driven by an increase in retail deposit balances and payments received on the Bank's loans and investment securities. Management elected to increase cash and cash equivalents in response to market disturbances that adversely affected the liquidity position at other financial institutions. Since November 2008 the Bank has had no available borrowing capacity with the Federal Home Loan Bank of Atlanta. As a consequence, BankUnited Financial has been repaying the FHLB borrowings as they mature. Similarly, the Bank has had no available borrowing capacity from brokered deposits since July 2008, which BankUnited Financial has also been paying as they mature. BankUnited Financial's primary funding sources are principal and interest payments from investments and loan portfolios, retail deposit growth and cash reserves. As of March 31, 2009, cash and cash equivalents were $1.5 billion. Repayment of FHLB advances of $145 million and brokered deposits of $112 million at their scheduled maturity dates subsequent to March 31, 2009, resulted in a net decline of cash and cash equivalents to $1.3 billion as of May 7, 2009. BankUnited Financial has $395 million of FHLB advances scheduled to mature, and an additional $655 million of FHLB advances are scheduled to mature through the fiscal year ending September 30, 2009. As of May 7, 2009, BankUnited Financial had brokered deposits of approximately $182 million maturing through the fiscal year ending September 30, 2009. A continued decline in the Company's financial condition and additional market disturbances could create additional concern among depositors, making retail deposits more costly and difficult to attract and maintain. Nevertheless, BankUnited Financial anticipates seeking to maintain and increase retail deposit levels for liquidity purposes. In addition to the Bank's liquidity, management also monitors the liquidity at the holding company. As of May 7, 2009, BankUnited Financial had an estimated $19 million of liquid assets available at the holding company. This amount should allow the Company to meet obligations at least through the end of the fiscal year ended September 30, 2009, assuming the continued deferrals of the Company's debt service obligations on the trust preferred securities. The Company has estimated its debt service obligations as of March 31, 2009, to be approximately $30 million per year at the holding company level for interest and debt payments on its Convertible Senior Notes, HiMEDS Units senior notes, senior debentures and trust preferred securities. As permitted by the terms of the Company's trust preferred securities, during the fourth fiscal quarter in 2008 -- the quarter ended September 30, 2008 -- BankUnited Financial had elected to defer approximately $13.6 million of the annual debt service obligation on the trust preferred securities. Pursuant to the indentures for the trust preferred securities, BankUnited Financial is permitted to defer interest payments for 20 consecutive quarters. To date, BankUnited Financial has deferred interest payments for three consecutive quarters. BankUnited Financial, however, said it cannot defer annual payments of approximately $16.8 million of combined interest obligations on our Convertible Senior Notes, HiMEDS Units senior notes, and senior debentures, of which $8.4 million is required to be paid between April 1, 2009 and September 30, 2009. Additionally, the holding company incurs non-fixed cash charges for general and administrative matters of approximately $3.6 million per quarter. The PCA Agreements prohibit the Bank from making dividend payments to the holding company and the holding company has few other sources of income. Therefore, no assurances can be given that the Company will be able to make the required payments on the debt after the available liquid assets at the holding company level are depleted. About BankUnited BankUnited Financial Corp. -- http://www.bankunited.com/-- is the holding company for BankUnited FSB, the largest banking institution headquartered in Coral Gables, Florida. Serving customers through 85 branches in 13 coastal counties, BankUnited offers a full spectrum of consumer and commercial banking products and services, including online products. BELLA HIGHLANDS: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Bella Highlands, LLC 1291 Galleria Drive Suite 200 Henderson, NV 89014 Bankruptcy Case No.: 09-17699 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Andrew F. Dixon, Esq. Bowler Dixon & Twitchell LLP 400 N. Stephanie Street Suite 235 Henderson, NV 89014 Tel: 702 436-4333 Email: andrew@bdtlawyers.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 6 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-17699.pdf The petition was signed by Todd Parriott. BENNETT ENVIRONMENTAL: Raises Going Concern Doubt, Seeks Funding ---------------------------------------------------------------- Bennett Environmental Inc. said there is substantial doubt about its ability to continue as a going concern. The Company incurred a loss of C$2,324,020 from continuing operations during the three month period ended March 31, 2009. The Company has generated negative cash flows from operations over the last four years and has an accumulated deficit of C$66,032,950 at March 31, 2009. The Company operated its RSI facility in Quebec during the quarter for less than a week due to a lack of volume to support efficient operations. The RSI facility re-opened on April 6, 2009. The Company is continuing with its operational reorganization plans and on December 18, 2008, sold the shares of its Trans-Cycle Industries, Ltd., and Material Resource Recovery S.R.B.P. Inc. subsidiaries. The Company has also entered into an agreement to sell its Belledune facility which is not operational. According to Bennett Environmental, continued operations depend on the Company's ability to generate future profitable operations, to obtain sufficient financing to fund future operations and, ultimately, to generate positive cash flows from operating activities. The Company is continuing to focus on securing sufficient sales volumes at profitable sales prices and to maintain the cost reduction strategies implemented during previous years. Bennett Environmental said its ability to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities as they become due is dependent on the successful completion of the actions taken or planned, which management believes will mitigate the adverse financial conditions faced by the Company. There is uncertainty as to whether or not these objectives will be achieved. If the Company's strategies are achieved, management believes that the Company will have sufficient cash and working capital to fund operations beyond the first quarter of 2010. Bennett Environmental posted a net loss of C$2.3 million for the three months ended March 31, 2009, on sales of C$437,185, compared to a net loss of C$1.6 million on sales of C$1.2 million. At March 31, 2009, the Company had C$21.9 million in total assets; C$7.9 million in current liabilities and C$3.5 million in long- term liabilities; and C$10.7 million in shareholders' equity. At March 31, 2009, the Company has a cash and cash equivalents balance of C$6.4 million and positive working capital of C$1.6 million. About Bennett Environmental Based in Oakville, Ontario, Canada, Bennett Environmental Inc. -- http://www.bennettenv.com/-- is a North American leader in high temperature treatment services for the treatment of contaminated soil and has provided thermal solutions to contamination problems throughout Canada and the U.S. Bennett Environmental's technology provides for the safe, economical and permanent solution to contaminated soil. Independent testing has consistently proven that the technology operates well within the most stringent criteria in North America. BERNARD L MADOFF: Trustee Seeks to Recover $1.1BB from Harley ------------------------------------------------------------- Irving H. Picard, Esq., as trustee for the liquidation of the business of Bernard L. Madoff Investment Securities LLC, has filed a complaint against Harley International (Cayman) Limited before BLMIS's SIPA proceeding in the U.S. Bankruptcy Court for the Southern District of New York. Mr. Picard wants Harley to return a total of $1,072,800,000 it received from Madoff from June 23. 2004, until Dec. 11, 2008. Mr. Picard explains that the adversary proceeding arises from the massive Ponzi scheme perpetrated by Bernard L. Madoff. In early December 2008, BLMIS generated client account statements for its nearly 7,000 client accounts at BLMIS. Mr. Picard relates that when added together, these statements purportedly show that clients of BLMIS had approximately $64.8 billion invested with BLMIS. In reality, BLMIS had assets on hand worth a small fraction of that amount. On March 12, 2009, Madoff admitted to the fraudulent scheme and pled guilty to 11 felony counts. Harley, according to Mr. Picard, received avoidable transfers from BLMIS, which he aims to recover. Harley, Mr. Pircard notes, "knew or should have known that its account statements at BLMIS did not reflect legitimate trading activity and that Madoff was engaged in fraud." The Trustee's counsel, David J. Sheehan, Esq., at Baker & Hostetler LLP, in New York, explains that from at least 1996 until 2008, Harley received unrealistically high and consistent annual returns, approximating 13.5%, in contrast to the vastly larger fluctuations in the S & P 100 Index on which Madoff's trading activity was purportedly based during the time period. Between 1998 and 2008, at least 148 purported trades reflected on Harley's monthly customer account statements were allegedly exercised at prices outside the daily range for such securities traded in the market on the days in question, a fact that easily could have been confirmed by any investment professional managing the account. In just the 90 days prior to Madoff's public disclosure of the Ponzi scheme, Harley withdrew $425 million from BLMIS, which it knew or should have known was non-existent principal and other investors' money. "Harley knew or should have known that BLMIS was engaged in fraud based on these facts and the numerous other indicia of fraud [described in the Complaint]," Mr. Sheehan asserts. Mr. Picard brings the adversary proceeding pursuant to 15 U.S.C. Sections 78fff(b) and 78fff- 2(c)(3) sections 105(a), 542, 544, 547, 548(a), 550(a) and 551 of 11 U.S.C. Sections 101, et. seq., the New York Fraudulent Conveyance Act (N.Y. Debt & Cred. 270, et. seq. (McKinney 2001)), and other applicable law, for turnover, accounting, preferences, fraudulent conveyances, damages in connection with certain transfers of property by BLMIS to or for the benefit of Haley. The Trustee seeks to set aside such transfers and preserve the property for the benefit of BLMIS' defrauded customers. While bankruptcy law on fraudulent transfer covers a two-year period prior to the filing, and preferential transfers cover 90 days, the Trustee asserts it is entitled to a judgment: avoiding and preserving transfers to Haley within six years of the filing date pursuant to New York Debtor And Creditor Law Sections 276, 276-a, 278 AND/OR 279. A full-text copy of the Harley Complaint is available for free at: http://bankrupt.com/misc/Madoff_Trustee_Suit_Harley.pdf "Should Have Known" Theory "As the Harley complaint is framed, it appears to rest on the theory that a sophisticated investor should have seen enough red flags to investigate whether there was a fraud," Bloomberg's Bill Rochelle pointed out. Mr. Rochelle also noted that last week the trustee sued Gabriel Capital LP and its managing partner, Ezra Merkin. The Merkin suit contained allegations that employees for the investor had suspicions that a fraud was being conducted. The Harley complaint lacks similar allegations, Mr. Rochelle stated. Furthermore, according to Mr. Rochelle, although the law in this area isn't crystal clear, some theories say an investor in a Ponzi scheme can be required to pay back fictitious profits even if the investor had no reason to believe a fraud was being conducted. A companion theory holds that an investor also can be compelled to return repayment of principal if the investor knew there was a fraud or had seen enough red flags to suspect that a fraud was being perpetrated. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. About Bernard L Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BERNARD L MADOFF: Trustee Seeks to Recover $6.7BB from Picower -------------------------------------------------------------- Irving H. Picard, Esq., as trustee for the liquidation of the business of Bernard L. Madoff Investment Securities LLC, has filed a complaint against Jeffry M. Picower, his wife, his foundation and his related entities, before the U.S. Bankruptcy Court for the Southern District of New York. Mr. Picard wants Mr. Picower, et al., to return transfers totaling of $6.7 billion, majority of which, the trustee says, are "other people's money." According to the Complaint, Jeffry Picower was a beneficiary of this Ponzi scheme for more than 20 years. Since December 1995, he and his related entities collectively profited from this scheme through the withdrawal of more than $6.7 billion dollars. The Trustee's investigation has revealed that at least five billion dollars of this amount was fictitious profit from the Ponzi scheme. In other words, Picower, et al., have received, at a minimum, more than five billion dollars of other people's money. The trustee's counsel, David J. Sheehan, Esq., at Baker & Hostetler LLP, in New York, asserts that, among other reasons, Mr. Picower "knew or should have known that they were profiting from fraud because of the implausibly high rates of return that their accounts supposedly achieved." According to Mr. Sheehan, Mr. Picower was one of a handful of BLMIS clients with special access to information from BLMIS, including access to information about BLMIS' 'target' rates of return for Picower's accounts. He noted that in several cases, Picower's purported annual rates of return were more than 100%, with some annual returns as high as 500% or even 950% per year. The average annual rate of return for the Picower Entities'' regular trading accounts between 1996 and 2007 was approximately 22%, even taking into account extremely low rates of return in 2000 (ranging as low as negative 770%). "These anomalous and astronomical rates of return - both positive and negative - were neither credible nor consistent with legitimate trading activity, and should have caused any reasonable investor to inquire further," Mr. Sheehan said. Mr. Picower, et al., also knew or should have known that they were reaping the benefits of manipulated purported returns, false documents and fictitious profit, Mr. Sheehan asserted. He cited some purported "trades" in Picower, et al.'s accounts supposedly took place before the relevant direction from Picower, or even before the relevant account was opened or funded. BLMIS records further suggest, according to Mr. Sheehan, that not only was Picower aware (or at a minimum, should have been aware) that BLMIS was creating backdated transactions, but that Picower and/or his agent may have used backdated documents to direct such backdated trades themselves. Basis for the Suit Mr. Sheehan asserts that the transfers or payments totaling $6.7 billion to Picower, et al., are avoidable and recoverable under Sections 544, 550(a)(1) and 551 of the Bankruptcy Code, applicable provisions of SIPA, particularly 15 U.S.C. Sections 78fff- 2(c)(3), and applicable provisions of N.Y. CPRL 203(g) (McKinney 2001) and N.Y. Debt. & Cred. Sections 273 - 276 (McKinney 2001). From December 1995 to the Filing Date, Defendants withdrew approximately $6.5 billion from their accounts at BLMIS, at least $5 billion of which was other people's money. Of the Transfers, more than 220 transfers in the collective amount of at least $2.4 billion were made during the six years prior to the Filing Date and are avoidable and recoverable under applicable provisions of N.Y. Debt. & Cred. Sections 273 to 276, and the applicable provisions of of the Bankruptcy Code and SIPA, Mr. Sheehan added. Mr. Picard also asserts the return a portion of the Transfers pursuant to the rules on preferential transfers (for transfers made 90 days prior to the filing) and fraudulent transfers and conveyances (for transfers made two years before the filing) under the Bankruptcy Code. A full-text copy of the Complaint is available for free at: http://bankrupt.com/misc/Madoff_Trustee_Suit_Picower.pdf About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BRIGHT SKY: Involuntary Chapter 11 Case Summary ----------------------------------------------- Alleged Debtor: Bright Sky Holdings, LLC 655 Hembree Parkway, Suite D Roswell, GA 30076 Case Number: 09-72060 Involuntary Petition Date: May 7, 2009 Court: Northern District of Georgia (Atlanta) Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Hawaii Holdings LLC breach of contract $80,252 1088 Bishop St., Suite 4100 Honlulu, HI 96813 CALIFORNIA STATE: "Loan" of City Funds to Bail Out Budget Opposed ----------------------------------------------------------------- Just as mayors and city councils in the state of California slash city budgets and reduce services to deal with the worst economic crisis in decades, they learned yesterday that state leaders may try to coerce local governments into providing a forced $2 billion bailout of the state budget if the May 19 ballot measures fail. The May Revise option released by Gov. Arnold Schwarzenegger, containing that bailout, or "loan," essentially forces cities to rescue the state from its financial quagmire and would cripple city services. To take money from cash-strapped cities now amounts to a profound "anti-stimulus" action by the state. Saying that he absolutely "despised the proposal," the Governor also said earlier this week in a meeting with mayors and council members that he understands this proposal would be devastating to public safety services and that he did not know how the state would pay back the loan. Statewide opinion polls consistently show a vast majority of Californians themselves don't believe borrowing should be used to balance the state's budget and oppose public safety cuts. The League of California Cities in a statement said California cities cannot afford to bail out the state when they are already adopting extremely painful cuts to balance their own budgets. This shotgun "loan" of city property tax revenues would force additional service cuts including police and firefighter layoffs and result in longer emergency response times and fire station closures. The League of California Cities cite a snapshot of what some of California's cities are facing: -- Los Angeles is facing a $529 million budget deficit and Mayor Villaraigosa has urged the city council to declare a fiscal emergency to give him authority to layoff and furlough thousands of city employees; -- Rohnert Park may have to lay off 31 employees, including 17 Sworn officers and nine public safety technicians -- and would still not be able to balance its budget; -- Stockton, to address a $31 million budget deficit, sent layoff notices to 55 police officers, 35 civilian employees and demoted seven officers; and -- Vallejo, in the midst of bankruptcy, may be forced to decimate city services by 20 percent and staff are recommending that the city council cut 30 sworn officer positions as well as close two fire stations. "It's absolutely unthinkable that the state would consider sacrificing local public safety at a time like this. City officials are already making painful cuts locally, laying off employees, cutting services and much more, to make our budgets balance. Taking local funds used for public safety to bail out the state budget is the last thing the public wants to see," said League President and Rolling Hills Estates Mayor Judy Mitchell. "It's painful. We're going well below our ability to provide essential services. We have nothing left to cut," said Vallejo City Council Member Stephanie Gomes. Reflecting the impact that the stagnating economy has had on city budgets, cities across the state are passing resolutions declaring a state of severe fiscal hardship. To date, close to 100 cities have either passed or are scheduled to pass a resolution. California's news leaders understand why it's fundamentally wrong for the state to raid local revenues. Writing in an op-ed in the Los Angeles Times, D.J. Waldie, a contributing editor, expressed it poignantly stating: "The quality of life in California's neighborhoods will be part of the wreckage. Closed libraries mean kids won't have a place to go after school. Unsupervised parks means they won't have a safe place to play. Furloughed workers won't be available to process your business license, check your building plans or deal with your complaint. Everyday life -- the level at which local government works -- will be harder and coarser." The Governor met with city officials earlier this week in Culver City and San Jose to discuss Propositions 1A-F and the impact of their failure on state and local services. He told the assembled city officials that he will be under extraordinary pressure to "borrow" local government funds if the ballot measures fail and the budget deficit reaches $21.3 billion. The League and the city officials present told the Governor that they strongly opposed any borrowing on top of the $900 million cities already provide the state each year in city property taxes. The League endorsed the propositions on April 6. "The League is supporting Props. 1A -- F because they provide a framework for beginning to responsibly balance the state budget without gimmicks. The state should follow the lead of the cities of California in dealing with its budget deficit -- cut spending, sell assets, enhance revenues and don't borrow," said League Executive Director Chris McKenzie. City officials will fight any budget proposal that attempts to raid local property tax revenues to bail out the state budget. Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials. CANFIELD INVESTMENT: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Canfield Investment Co. 445 Main Street P.O. Box 9 Canfield, OH 44406 Bankruptcy Case No.: 09-41718 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Joseph C. Lucci, Esq. 20 West Federal Street #600 Youngstown, OH 44503-1423 Tel: (330) 744-0247 Fax: (330) 744-8690 Email: jclucci@nnblaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company says it does not have unsecured creditors who are non insiders when they filed their petition. The petition was signed by D. Scott Owens, general partner of the Company. CAPITAL CORP: Files for Bankruptcy, Sees No Dime for Shareholders ----------------------------------------------------------------- Capital Corp of the West anticipates that there will be no funds available for distribution to any equity holders of the Company in view of its bankruptcy. Capital Corp filed for voluntary bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of California, Fresno Division on Monday, May 11, 2009. The Bankruptcy Court assumed jurisdiction over the assets of the Company as of the date of the filing of the bankruptcy petition. The Company will remain in possession of its assets and continue to manage its assets as debtor-in-possession, subject to the provisions of the U.S. Bankruptcy Code and the supervision and orders of the Bankruptcy Court. To date no trustee or examiner has been appointed. The business operations of its former subsidiary County Bank were discontinued on February 6, 2009, when the California Department of Financial Institutions closed the Bank and appointed the Federal Deposit Insurance Corporation as receiver of the Bank. The Company has not filed its annual report on Form 10-K for the year ended December 31, 2008, does not intend to hold an annual meeting of shareholders in 2009. As reported by the Troubled Company Reporter on May 8, 2009, Capital Corp received a notice of default with respect to $25.8 million in floating rate junior subordinated debentures due 2037. Capital Corp of the West said in a regulatory filing it is obligated under an indenture dated as of October 31, 2007, for floating rate junior subordinated deferrable interest debentures due 2037. Wilmington Trust Company is the trustee under the indenture. The amount of these subordinated debt securities is $25,774,000 plus interest accrued since the Company elected in July 2008 to defer quarterly interest payments due for the second quarter and thereafter. On April 29, 2009, the Company received from Wilmington Trust Company as trustee under the indenture a purported notice of default dated April 21, 2009, asserting that the closing of the Company's subsidiary County Bank violated the provision of the indenture that requires the Company to have an operating subsidiary that is an insured depository institution. Under the indenture, the Company generally has 60 days after notice to remedy an alleged default before it can become an "event of default". The Company has no plans to contest the closing of County Bank. Wilmington Trust's notice, according to the filing with the Securities and Exchange Commission, also asserts that the seizure of the Bank violates the provision that makes it an event of default for a substantial portion of the Company's property to become subject to a court-ordered receivership if the receivership remains in effect for 90 days. The 90th day of County Bank's receivership is May 6, 2009. However, the receivership is not the result of a "decree or order" of a "court of competent jurisdiction." The Company said that upon the occurrence of an event of default, the entire principal, premium and any accrued unpaid interest may be declared immediately due and payable without further action by either the trustee or the holders of the related trust preferred securities. The Company has three other series of indentures and related trust preferred securities. The trustees under the three other indentures have sent similar notices. As reported by the TCR, County Bank, based in Merced, California, was closed February 6, 2009, by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Westamerica Bank, based in San Rafael, California, to assume all of the deposits of County Bank. As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. In addition to assuming all of the failed bank's deposits, including those from brokers, Westamerica Bank agreed to purchase all of County Bank's assets. A total of 32 banks have been closed as of May 1 this year. Only 25 banks were shut by regulators in 2008. About Capital Corp of the West Capital Corp of the West is a bank holding company, whose primary asset and source of income is County Bank of Merced. The Bank has three wholly owned subsidiaries, Merced Area Investment & Development, Inc., a real estate company, County Asset Advisors, and 1977 Services Corporation, which was formed in 2007 to hold foreclosed real estate. As of September 30, 2008, CAA was inactive, and MAID has limited operations serving as the owner of certain bank properties. The Company is also the parent of County Statutory Trust I, County Statutory Trust II, County Statutory Trust III, and County Statutory Trust IV, which are all trust subsidiaries, established to facilitate the issuance of trust preferred securities. On October 5, 2007, the Company acquired Bay View Funding, a factoring business headquartered in San Mateo, CA. On November 2, 2007, the Bank acquired 11 California branches of National Bank of Arizona dba The Stockmen's Bank of California. The Bank is a community bank with operations located mainly in the San Joaquin Valley of Central California with additional business banking operations in the San Francisco Bay Area. The corporate headquarters of the Company and the Bank's main branch facility are located at 550 West Main Street, Merced, California. The proceeding is entitled In re Capital Corp of the West (Bankr. E.D. Calif. Case No. 09-14298). Paul J. Pascuzzi of Felderstein Fitzgerald Willoughby & Pascuzzi, serves as the Debtor's bankruptcy counsel. As of September 30, 2008, Capital Corp. of the West had $1.87 billion in total assets, $1.79 billion in total liabilities and shareholders' equity of $73.9 million. In its Chapter 11 petition, the Company disclosed $1 million to $10 million in assets. CELLU TISSUE: S&P Affirms Corporate Credit Rating at 'B' -------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its ratings on Alpharetta, Georgia-based Cellu Tissue Holdings Inc., including its 'B' corporate credit rating. S&P removed all of the ratings from CreditWatch where they were placed with negative implications on March 6, 2009. The outlook is positive. At the same time, Standard & Poor's assigned its 'B' issue-level rating (same as the corporate credit rating) and '4' recovery rating (indicating that lenders can expect average (30%-50%) recovery in the event of a payment default) to Cellu Tissue's proposed $230 million senior secured notes due 2014, based on preliminary terms and conditions. Proceeds from the new notes will be used to refinance the company's existing $230 million senior secured notes due 2010. "The affirmation reflects our expectation that the new notes offering will eliminate the uncertainty regarding the company's ability to address its March 2010 note maturity and the potential acceleration of its outstanding borrowings under the revolving credit facility required if the existing notes were not refinanced by December 2009," said Standard & Poor's credit analyst Andy Sookram. "The positive outlook reflects our assessment that Cellu Tissue's credit measures are likely to improve to a level that S&P would consider to be consistent with a higher rating over the next few quarters as the company benefits from an improved product mix, lower input costs, and acquisition-related synergies despite lower volumes and potential pricing pressures in conjunction with the lingering U.S. recession." The ratings reflect Cellu Tissue's highly leveraged financial profile due to its high debt levels, modest scale in an industry dominated by significantly larger and financially stronger competitors, vulnerability to volatile pulp prices (although a significant portion of the company's sales contracts allow it to adjust for price increases), and slightly declining demand for machine-glazed paper. The ratings also reflect an increasing percentage of higher-margin converted tissue product sales. Cellu Tissue is less diversified than other paper manufacturers, and it purchases, rather than manufactures, its primary raw material pulp (which accounts for about 46% of the cost of sales), made from wood or recycled paper. Pulp is a global product whose prices can fluctuate greatly because of reasons unrelated to demand for the company's products, such as foreign currency, weather conditions, and buying behaviors of end users. It purchases about 50% of its pulp requirement under agreements with pulp vendors. Prices are based on market rates, exposing the company to rising prices. However, the company's sales contracts allows it to adjust its selling prices during rising pulp prices, albeit at a lag that could lead to temporary margin erosion. Cellu Tissue has expanded its production of private-label converted tissue products following the acquisition of Atlantic Paper & Foil in mid 2008. S&P expects demand for these products to increase during a recessionary environment as consumers trade down from premium brands. However, S&P believes the company's away-from-home tissue products will continue to be affected by the decline in leisure travel and higher unemployment because of the weak economic environment. Operating margins, before depreciation and amortization, were virtually unchanged at about 11% for the 12 months ended February 28, 2009, compared with the same period a year ago as improvements in selling prices and product mix, combined with cost reductions have helped to offset higher pulp and energy costs. S&P expects operating margins to increase modestly over the next several quarters because of the combination of higher sales of converted tissue products, which have a higher selling price than parent rolls (large rolls converted by others into facial and bath tissue, napkins, and paper towels), continued benefits derived from the company's profit improvement program, and the full-year earnings contribution of Atlantic Paper & Foil. The outlook is positive. S&P believes that Cellu Tissue's financial results will continue to improve over the next few quarters because of increased sales of higher-margin private label converted tissue products that tend to perform better during a recessionary environment. As a result, S&P expects credit measures to improve to levels S&P would consider to be good for the current ratings. Specifically, S&P expects debt to EBITDA and fund from operations to debt to improve to about 4x and 13%, respectively, during the next few quarters. S&P could raise the ratings by one notch if earnings improve more than S&P expect, due to further penetration into the private-label converted tissue market, or if the company is able to further reduce its operating costs via cost savings initiatives, which could lead to debt to EBITDA and funds from operations to debt of 4x and 15% on a sustained basis. S&P would consider revising the outlook to stable if sales volumes decline more than S&P expects or if there is a significant increase in pulp or energy costs, without corresponding sales price increases, such that debt to EBITDA is more likely to be sustained between 5x and 6x and funds from operations to debt of less than 10%. CELLU TISSUE: Moody's Assigns 'B2' Rating on $230 Mil. Notes ------------------------------------------------------------ Moody's Investors Service assigned a B2 rating to Cellu Tissue Holdings, Inc.'s proposed $230 million senior secured notes due 2014. Concurrently, the ratings outlook was raised to positive from stable and Moody's affirmed Cellu Tissue's B2 Corporate Family Rating, B2 Probability of Default Rating, and SGL-3 liquidity rating. The proceeds from the sale of the 2014 notes will be used to redeem the existing $222 million 9 _ senior secured notes due 2010 and for other general corporate purposes. The B2 rating on the 2010 notes is unchanged and Moody's expects to withdraw this rating upon closing of the redemption. The positive outlook reflects improved operating margins, profitability and cash flow over the past two years which have resulted in leverage and interest coverage metrics that are strong for the B2 rating category. Cellu Tissue appears to have successfully integrated the July 2008 Atlantic Paper & Foil acquisition and has realized synergies and process improvements in excess of original expectations. Additionally, the company continues to strategically grow its converted tissue segment, particularly in the private label retail market that is somewhat recession-resistant and has steadily taken North American market share from branded products over the past decade. Nonetheless, the ratings are constrained by Cellu Tissue's relatively small revenue base and limited geographic scale. The outlook could be stabilized if volumes or margins decline on a sustained basis, liquidity deteriorates, or the company undertakes a significant debt-financed acquisition. This rating (LGD assessment) was assigned: -- $230 million proposed senior secured notes due 2014, B2 (LGD4, 57%) Moody's affirmed these ratings (LGD assessment): -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 -- Speculative Grade Liquidity Rating, SGL-3 -- $222.3 million senior secured notes due March 2010, B2 (LGD4, 57%) Cellu Tissue is a manufacturer of converted tissue products, tissue hard rolls and machine-glazed paper used in the manufacture of various end products, including diapers, facial and bath tissue, assorted paper towels and food wraps. Headquartered in Alpharetta, Georgia, Cellu Tissue generated pro forma sales of approximately $552 million in the fiscal year ended February 28, 2009. CIB MARINE: To Amend Proposal to Restructure TruPS -------------------------------------------------- The Milwaukee Journal Sentinel reports that John P. Hickey Jr., president and chief executive of CIB Marine Bancshares, Inc., said the Company is in the process of preparing an amended proposal that is more acceptable to holders of its trust-preferred securities. As reported by the Troubled Company Reporter on April 20, CIB Marine moved to May 11 the deadline for bondholders to vote in the Company's proposal to restructure obligations related to its trust preferred securities. As of the April 10 voting deadline, CIB Marine was notified that a sufficient number of negative votes were cast by the applicable holders of two series of TruPS to prevent approval of the Plan of Restructuring. Based upon conversations that CIB Marine and its investment banking firm have had with certain of the TruPS holders, including certain holders who have initially voted against the Consent Solicitation, CIB Marine elected to extend the voting deadline to give it more time to consider amending the terms of the Consent Solicitation and Plan of Restructuring to address the holders' concerns, as well as to consider other available options. "We'll go back out to them in the next few weeks," Mr. Hickey said, according to the Milwaukee Journal Sentinel. The Company is seeking consent from all trust preferred securities holders, including: -- the holders of securities that represent a part of the collateral pool for these CDOs in which senior bondholders are eligible to vote: (1) Regional Diversified Funding (CUSIPs: 75902AAA6 and 75902AAB4), (2) Senior Tranche of PreTSL I (Preferred Term Securities, Ltd. (CUSIPs: 740408AA7 and G7219MAA4)), and (3) Senior Tranche of PreTSL II (Preferred Term Securities II, Ltd. (CUSIPs: 74040KAB8, 74040KAF9, G7220EAB7)); and -- the holders of securities issued by CIB Statutory Trust V. CIB Marine submitted on March 16, 2009, a Consent Solicitation to holders of its existing TruPS to restructure its obligations under those instruments. Pursuant to its Plan of Restructuring, the roughly $100.9 million of current indebtedness (including accrued interest of $39.1 million) under the debentures held by the Trusts would be replaced with roughly $94.9 million aggregate liquidation preference of newly-issued CIB Marine 7% Fixed Rate Perpetual Noncumulative Preferred Stock. CIB Marine proposed the Plan of Restructuring for these reasons: * To prevent the default of CIB Marine's outstanding debentures scheduled to occur between March 25, 2009, and April 30, 2009 and to help provide it with a more stable capital structure; * To eliminate $100.9 million of indebtedness from CIB Marine's balance sheet and significantly improve its regulatory capital position; * To substitute noncumulative 7% dividends (on the Company Preferred) for the higher-rate interest on the debentures in order to help improve CIB Marine's future operating results. By preventing or curing the default of the debentures and TruPS, reducing debt, and improving its equity, regulatory capital position and future operating results, CIB Marine hoped the approval of the Plan would position the Company itself to seek a business combination transaction on terms that could be more advantageous to CIB Marine and result in greater value for both the holders of the existing TruPS, as well as CIB Marine's common shareholders. If the Plan of Restructuring is ultimately not approved, CIB Marine will not be able to cure its default on the TruPS. CIB Marine continued to sustain significant operating losses in 2008. Net loss after factoring in income from discontinued operations was $34.4 million, compared to $13.8 million in 2007. Net loss from continuing operations was $36.2 million, compared to $15.2 million in 2007. At December 31, 2008, total assets at the CIB Marine parent company were $117.1 million, which included $13.2 million of liquid assets; and total liabilities were $102.3 million. CIB Marine has said there is no other source of repayment of the TruPS, other than these assets. CIB Marine defaulted on one series of the TruPS on March 25, 2009 and, absent additional capital, cash or a successful restructuring of the TruPS, will default on the other three series of TruPS during the second quarter of 2009. KPMG LLP, in Milwaukee, Wisconsin, in its audit report, raised substantial doubt about the Company's ability to continue as a going concern. About CIB Marine Bancshares CIB Marine Bancshares, Inc., is a multi-bank holding company with its principal executive offices in Pewaukee, Wisconsin, a suburb of Milwaukee. CIB Marine owned and operated two separately chartered commercial banking organizations at December 31, 2008: Central Illinois Bank, with its main office in Champaign, Illinois, and Marine Bank, with its main office in Wauwatosa, Wisconsin, a suburb of Milwaukee. CIB Marine offers a full array of traditional banking services through its bank subsidiaries. These services include a broad range of loan products, such as commercial loans, commercial real estate loans, commercial and residential construction loans, one-to-four family residential real estate loans, consumer loans, and commercial and standby letters of credit; accepting demand, savings and time deposits, providing commercial paper and repurchase agreements; and providing other banking services. At December 31, 2008, CIB Marine and all of its bank and nonbank subsidiaries had a combined total of 197 full-time equivalent employees. CHARTER COMMS: Court Blocks DirecTV's Bankruptcy Ads ---------------------------------------------------- Andrew M. Harris at Bloomberg News reports that the Charter Communications Inc. has won a lawsuit against DirecTV Inc., whose advertisements allegedly try to mislead consumers into switching TV service. "We are pleased that a temporary restraining order against DirecTV's clearly false and misleading advertisements was granted," Charter General Counsel Grier Raclin said in an e- mailed statement to Bloomberg. According to Mr. Harris, U.S. District Judge Rodney Sippel barred some of the allegedly offending after hearing argument from company lawyers in St. Louis federal court. As reported by the Troubled Company Reporter on May 14, 2009, Charter Communications sued DirecTV over advertisements that tout the Company's bankruptcy filing. Charter Communications alleged that DirecTV used "false and misleading" ads claiming that Charter couldn't provide the latest technology, add high-definition channels or offer new exclusive programming given its financial troubles. The ads have been running in print, radio, billboards, and direct mailings to consumers in Connecticut, Illinois, Louisiana, Michigan, Missouri, Nevada, South Carolina, and Wisconsin. According to Bloomberg, the court has blocked DirecTV from running the ads. Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. On March 16, 2009, Charter Communications filed its annual report on Form 10-K, which contained a going concern modification to the audit opinion from its independent registered public accounting firm. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y. Case No. 09-11435). Pacific Microwave filed for bankruptcy protection on April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditors. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008, the Debtors had total assets of $13,881,617,723, and total liabilities of $24,185,668,550. Bankruptcy Creditors' Service, Inc., publishes Charter Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Charter Communications and more than 100 of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Taps Allen & Overy as Counsel on EU Matters ---------------------------------------------------------- Chemtura Corp. and its affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Allen & Overy LLP as their special litigation counsel nunc pro tunc to their Chapter 11 petition date, pursuant to Section 327(e) of the Bankruptcy Code, in connection with certain European Union anti-trust matters. Pre-bankruptcy the Debtors engaged Allen & Overy in conjunction with the European Commission's investigation on possible anti- trust violations relating to the sale and marketing of various classes of heat stabilizers, related Billie S. Flaherty, Chemtura Corporation senior vice president, general counsel and secretary. The European Commission has granted the Debtors immunity from fines conditioned on the Debtors' cooperation with the investigation, Mr. Flaherty noted. As anti-trust litigation counsel to the Debtors, Allen & Overy will: (a) complete a review of the documents on the European Commission's file; (b) prepare a response to the Statement of Objections that was issued by the European Commission on March 17, 2009, after discussions with the Debtors on the strategy to be adopted; (c) prepare for and attend the oral hearing; and (d) liaise with the European Commission to ensure that queries or requests for additional information are responded to expeditiously. The Debtors will pay Allen & Overy for its services based on these rates: Professional Hourly Rate ------------ ----------- Partners $860 to $925 Counsel $860 Associates $435 to $775 Trainees/Paralegals $275 The Debtors will also reimburse the firm for reasonable and necessary out-of-pocket expenses. Before the Petition Date, Allen & Overy invoiced the Debtors GBP549,714 for legal services it provided, GBP103,781 of which has not been paid. Ms. Flaherty assures the Court that while certain aspects of the firm's representation will involve both Allen & Overy and the Debtors' restructuring counsel, Allen & Overy's services will be complementary rather than duplicative of those to be rendered by the Debtors' restructuring counsel. Philip Mansfield, Esq., a partner at Allen & Overy, in the United Kingdom, disclosed that while certain of his firm's current or former clients or the affiliates of those clients are potentially interested parties of the Debtors, the matters of possible conflict have already been resolved and are no longer open. He assured the Court that Allen & Overy does not hold represent any interest adverse to the Debtors in matters for which the firm is engaged. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Gets Court OK to Tap Genetelli as Tax Consultants ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Chemtura Corp. and its affiliates to employ Richard W. Genetelli, C.P.A., P.C., doing business as The Genetelli Consulting Group, as their state and local tax services provider nunc pro tunc to March 18, 2009. The Debtors relate that they engaged Genetelli to provide state and local tax related services prepetition. As tax compliance services provider to the Debtors postpetition, the Genetelli firm will: (a) prepare and review the Debtors' state and local income and franchise tax returns in the various jurisdictions where they have business presence that creates a filing requirement; (b) prepare and review the Debtors' state and local gross receipts and sales and use tax returns in pertinent jurisdictions; and (c) prepare and review the Debtors' state and local personal property tax returns in the various jurisdictions where business personal property is located. The Debtors will pay Richard W. Genetelli's services at an hourly rate of $300 per hour, and Mr. Genetelli's staff at an hourly rate of $150. The Genetelli firm will also provide the Debtors various state and local tax consulting and advisory services, including: (1) state and local tax consulting and advisory services that may involve research, review of information, computations, analysis, preparation and review of memoranda, preparation and review of schedules, meetings and discussions with company representatives; (2) evaluation of certain tax planning strategies; (3) advice and assistance with respect to matters involving state and local tax authorities on audits, notices and other communications with respect to all state and local taxes; (4) sales and use tax consulting services; (5) determination of quarterly provisions for state and local tax purposes; and (6) assistance with respect to the withdrawals of entities from states in the event of a termination, merger, liquidation, dissolution or similar event. For the additional advisory services, the Debtors will pay Mr. Genetelli $400 an hour and his staff $275 an hour. The Debtors will also reimburse the firm for reasonable out-of-pocket expenses incurred in connection with the engagement. The Debtors relate that within 90 days before the Petition Date, they paid Genetelli $528,550 for services rendered. Mr. Genetelli assured the Court that his firm is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code, as required by Section 327(a) of the Bankruptcy Code. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Can Hire Great American as Appraisers ---------------------------------------------------- Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York signed an order authorizing Chemtura Corp. and its affiliates to employ Great American Group Machinery & Equipment, LLC, as their appraisers nunc pro tunc to March 18, 2009. Great American will conduct an appraisal of the Debtors' machinery and equipment and will also provide analysis and consultation to the Debtors pertaining to the valuation of the assets as part of the due diligence necessary to obtain debtor- in-possession financing. Steven C. Forsyth, Chemtura Corporation's executive vice president and chief financial officer, disclosed that the Debtors employed Great American prepetition to provide appraisal and valuation-related services. In the postpetition period, the Debtors expect Great American to: -- provide them a projection of gross and net values relative to certain machinery and equipment located at their facilities; -- assess certain machinery and equipment and compare current related values for similar assets in consideration of age, manufacturer, model, characteristics, size and capabilities; and -- provide an appraisal report to include an explanation of valuation methodology, Debtor and valuation overviews, and description of probable liquidation scenarios, and possible liquidation strategies along with projected timelines. The Debtors will pay Great American a fixed rate of $135,000 for its services, plus reimbursement of reasonable and related out- of-pocket costs incurred and will incur. The Debtors paid Great American a $67,500 deposit in the 90-day period immediately prior to the Petition Date, according to Great American's records. Marc Swirsky, president of Great American Group Machinery & Equipment LLC, in Woodland Hills, California, assures the Court that his firm does not hold or represent an interest adverse to the Debtors' estates, and is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code, as required by Section 327(a) of the Bankruptcy Code. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Withdraws WolfBlock Hiring After Firm Dissolved -------------------------------------------------------------- Chemtura Corp. and its affiliates inform Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York that the partnership of WolfBlock LLP was dissolved in March 2009. Accordingly, the Debtors withdraw their application to employ the firm as their conflicts counsel. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Duane Morris Assumes WolfBlock Assignment -------------------------------------------------------- At the behest of Chemtura Corp. and its affiliates, Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York signed an order authorizing the employment of Duane Morris LLP, on an interim basis, (i) as the Debtors' conflicts counsel, nunc pro tunc to April 13, 2009, under a general retainer, and (ii) as the Debtors' counsel under a contingent fee agreement in connection with a pending price fixing litigation. The Debtors have withdrawn their request to employ WolfBlock LLP as conflicts counsel as the firm has dissolved. In its place, the Debtors tapped Duane Morris to replace WolfBlock. As conflicts counsel to the Debtors, Duane Morris will render professional services for certain discrete matters. Duane Morris is also expected to: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (c) take necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing the Debtors' interests in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the estates; (d) prepare motions, applications, answers, orders, appeals, reports and papers necessary to the administration of the Debtors' estates; (e) take any necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of one or more Chapter 11 plans; (f) represent the Debtors in connection with obtaining postpetition financing; (g) advise the Debtors in connection with any potential sale of assets; (h) advise the Debtors on the rights of offset and the applicability of the "safe harbor" provisions of the Bankruptcy Code; (i) appear before the Court, any appellate courts and the U.S. Trustee, and protect the interests of the Debtors' estates before those Courts and the U.S. Trustee; (j) consult with the Debtors regarding tax matters; and (k) perform other services, including the analysis of the Debtors' leases and executory contracts and their assumption, rejection or assignment; the analysis of the validity of liens against the Debtors' interests in property and advice on corporate, litigation, employment, intellectual property, governmental investigatory, regulatory and environmental matters. For these services, the Debtors will pay Duane Morris based on these hourly rates: Professional Hourly Rate ------------ ----------- Partners $360 to $920 Special Counsel $305 to $785 Associates $245 to $550 Paraprofessionals $135 to $355 The Debtors will also reimburse the firm for necessary expenses it incurred or will incur in connection with the contemplated services. Gerard S. Catalanello, the primary partner at WolfBlock who had been engaged by the Debtors, has joined Duane Morris as a partner, the Debtors disclosed. In addition to providing the conflicts-related legal services, the Debtors also seek to employ Duane Morris to continue its representation in a complaint filed on behalf of Chemtura Corporation against Solvay S.A., Solvay America, Inc., Solvay Chemicals, Inc., FMC Corporation, Arkema, S.A. and Arkema, Inc., for conspiracy in fixing the prices of hyrdogen peroxide sold to the Debtors, in violation of anti-trust law. The case is pending before the U.S. District Court for the Eastern District of Pennsylvania. The Debtors seek to pay Duane Morris a contingent fee equal to the higher of (i) 20% of any recovery, including any amount awarded as attorneys' fees, or (ii) the amount of a fee award, for services in the fixing litigation, excluding expenses awarded that were paid by the Debtors. The Debtors will also reimburse the firm of related actual, necessary expenses incurred. The Chemtura Antitrust Complaint has been consolidated with putative claims against FMC and Arkema. Class claims against Solvay have been settlement, but Chemtura opted out of the class settlement and has pursued its individual claims against Solvay. Prior to the Petition Date, the Debtors and Solvay negotiated to settle the Debtors' claims but no consensual settlement materialized. As of April 24, 2009, the Debtors have not opted out of a potential class settlement with FMC and Arkema. Duane Morris has agreed to advise the Debtors in their participation in the putative class against FMC and Arkema and to waive any right to a contingent fee based on receipts the Debtors may receive from their participation in the putative class. If the Debtors opt out of any class settlement with FMC and Arkema, Duane Morris will be entitled to the contingent fee for pursuing the Debtors' claims against FMC and Arkema. Gerard S. Catalanello, Esq., a member of Duane Morris LLP, in New York, assured the Court that his firm is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors estates. In a supplemental declaration, Mr. Catalanello disclosed that Duane Morris will implement a formal ethical screen, as requested by the Office of the U.S. Trustee for Region 2, pursuant to which any screened attorneys at the firm will not be allowed access to confidential information related to the firm's representation of the Debtors. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Court OKs DLA Piper Engagement as Special Counsel ---------------------------------------------------------------- Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York signed an order authorizing Chemtura Corp. and its affiliates to employ DLA Piper LLP (US) as special counsel nunc pro tunc to the Petition Date in connection with matters related to litigation, environmental concerns, labor issues and franchise issues. * Litigation. DLA Piper represents Debtors Bio-Lab, Inc., Great Lakes Chemical Company, and Chemtura Corporation with respect to all claims and lawsuits relating to a May 24, 2004 fire at Bio-Lab's facilities in Conyers, Georgia. Four putative class actions and nine lawsuits with multiple plaintiffs are currently pending in relation to the Georgia Litigation. * Environmental DLA Piper represents Bio-Lab in an ongoing investigation and threatened enforcement action initiated by the United States Environmental Protection Agency related to a 2004 pool chemicals warehouse fire in Conyers, Georgia. The EPA contends that Bio-Lab violated the Clean Air Act, the Clean Water Act and other environmental statutes and their implementing regulations, and has demanded million of dollars in civil penalties as well as injunctive relief. The EPA has not yet commenced a civil judicial enforcement action. * Labor. DLA Piper acts as general outside labor counsel for the Debtors and handles all labor matters, with minor exceptions. DLA Piper performs services with respect to collective bargaining, NLRB proceedings, labor litigation, and general labor advice. * Trademark. DLA Piper represents the Debtors in (i) chain- of-title trademark assignment issues for the FLOCON mark in foreign jurisdictions, and (ii) in preparing and drafting arguments to the United States Patent and Trademark Office in response to the Office Action issued against U.S. Trademark Application No. 78/644,643. * Franchising DLA Piper is assisting the Debtors in the development of the franchising of its WKND retail store and service business concepts. DLA Piper has represented the Debtors in certain prior to the Petition Date. The Debtors will pay DLA Piper for its services based on the firm's customary rates: Professional Hourly Rate ------------ ------------ Partners $436 to $695 Of Counsel $396 to $554 Associates $273 to $576 Paralegals $146 to $215 Staff Attorneys $220 The Debtors will also reimburse the firm for reasonable and necessary out-of-pocket expenses. During the 90 days immediately before the Petition Date, the Debtors paid DLA Piper $361,339 for prepetition services. The firm asserts that as of the Petition Date, the Debtors owe it $1,017,380 for prepetition fees and services. The Debtors continue to review their records as to the amount owing to the firm. Billie S. Flaherty, the Debtors' senior vice president, general counsel and secretary, noted that by having DLA Piper focus on the issues noted as special counsel, the Debtors' main restructuring and other special counsel will be able to better focus on their own competencies in the Debtors' reorganization process. Thomas R. Califano, Esq., a partner at DLA Piper, in New York, assures the Court that no professional of his firm represents any interest adverse to the Debtors. About Chemtura Corp. Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D. N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: S&P Assigns 'BB+' Rating on $400 Mil. Facility ------------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned a preliminary 'BB+' rating to Chemtura Corp.'s $400 million debtor- in-possession senior secured super-priority credit facility. The DIP facility consists of a $250 million new money term loan, a $63.5 million new money revolving credit facility, and an $86.5 million "roll-up" of prepetition revolver commitments. The borrower of the new money and roll-up loans is parent company Chemtura. The DIP facilities mature the earlier of March 18, 2010, or upon the effectiveness of a reorganization plan. Ratings List Chemtura Corp. Corporate credit rating D/--/-- New Rating $400 mil DIP sr secured super-priority credit facility BB+ (Prelim) CHRYSLER LLC: To Walk Away From 789 Dealership Agreements --------------------------------------------------------- Pursuant to Sections 105, 365 and 525 of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, Chrysler LLC and its affiliates ask Judge Arthur Gonzalez to enter an order authorizing them to reject, effective as of June 9, 2009, Chrysler, Jeep, Dodge or Dodge Truck dealership agreements with 789 dealers. A list of the 789 Dealership Agreements is available for free at: http://bankrupt.com/misc/Chrysler_Rejected_Delears.pdf A list of the Dealership Agreements to be assumed by the Fiat- owned Company in connection with the 11 Sec. 363 transaction is available for free at: http://bankrupt.com/misc/Chrysler_Designated_Dealer_Agreements.pdf A copy of the Rejection Motion is available for free at: http://bankrupt.com/misc/Chrysler_Motion_Dealers_Rejection.pdf The Court will convene a hearing to consider the proposal June 3, 2009, 11:00 a.m. (ET). Objections are due May 26, 2009, 4:00 p.m. (ET). Corinne Ball, Esq., at Jones Day, in New York, explains that other than certain sales to the government, virtually all of the vehicles manufactured by the Debtors are sold to the U.S. general public through a network of authorized dealers. Over the years, this network grew to cover all 50 states, peaking at approximately 6,500 dealers in the mid-1960s, which has subsequently declined over time. According to Ms. Ball, although the Debtors' large and extensive domestic dealer network provides increased outlets for the sale of the Debtors' products, its size and scope has created significant challenges as market conditions and demographic factors have changed over time. For example, the Debtors' dealers compete not only with dealers selling the products of other original equipment manufacturers, such as Ford and Toyota, but also with each other in surrounding markets. Some of the Debtors' dealers may have only one linemake (for example, Chrysler, Dodge or Jeep), while others have all three linemakes. Thus, a Chrysler-Jeep dealership may compete with a nearby Dodge dealership. For example, a Chrysler dealer may sell Chrysler Town & Country minivans and a nearby Dodge dealer may sell Dodge Caravan minivans, which may compete for the same customers. Over time, the market for new motor vehicles has changed dramatically, Ms. Ball further explains. Numerous other competitors selling a wide variety of vehicles, including Toyota, Honda, Hyundai and Kia, have entered the market and captured a larger share of the automotive market. As a result, the larger Domestic Dealer Network has faced increasing financial pressures on profitability as the market share of the Debtors and other domestic OEMs declined over time in the face of increasing foreign competition. With so many outlets available for the Debtors' products and more limited market share, many dealers' annual sales of vehicles fell below targeted levels, limiting dealer profitability and the ability of many dealers to reinvest in the dealership and enhance the experience of consumers. In addition, as suburbs grew and the modern interstate system continued to evolve, longstanding dealerships no longer were in the best or growing locations. Many rural locations also served a diminishing population of potential consumers. Some dealership facilities became outdated. Other locations faced declining traffic count and declining populations. By contrast, the newer OEMs selling competing vehicles, such as Toyota, Honda, Hyundai and others, did not enter the U.S. markets or did not significantly expand within U.S. markets until much later in time. They did not have the legacy network dealers. They began to assemble new networks with new and better locations in growing markets, with numerous models consolidated under a single roof, with more modern facilities, focused on large metropolitan areas. "Over time, the throughput of the newer OEMs continued to grow while the throughput of the Debtors continued to decline. On average, the dealers for several of the newer OEMs now have substantially higher throughput, resulting in better and more sustainable sales and profitability and providing greater resources for marketing, reinvesting in the business, improving facilities and enhancing the consumer experience and customer service," Ms. Ball states. In addition, such larger throughput supports substantially higher average profits for competitive dealerships, enables competitors to often attract the more experienced and highly qualified personnel from the Debtors' Domestic Dealer Network, and enables those dealers to offer extra services and benefits that can improve customer satisfaction for the brands offered. The Debtors' larger Domestic Dealer Network also substantially increases expenses and inefficiencies in the distribution system, forcing the Debtors to spend additional resources on training, new vehicle allocation personnel, processes, and procedures, oversight of the Domestic Dealer Network, auditing and monitoring expenses for dealer operations, and all of the other operational expenses that must be incurred to maintain, support, facilitate and oversee a larger dealer network. In addition, the numerous "partial line" dealerships in the Domestic Dealer Network requires the continued production of overlapping models under different brands, which further increases unnecessary costs and introduces substantial inefficiencies in the distribution system. In sum, the smaller, more efficient, more profitable dealer network for the transplant OEMs has become a competitive disadvantage for the Domestic Dealer Network. According to Ms. Ball, the Debtors have been actively addressing their dealer network issues for a number of years. As part of their ongoing business plans, the Debtors have engaged in a long term process to rationalize their dealer network. The goals of this effort included working with the dealers to consolidate all three of the Debtors' brands at each dealership and reshape the network to realign the retail outlets using the best dealers, in the best locations, with the best facilities. This process has been time-consuming and expensive as a result of a complex web of state laws that protect dealers and limit the ability of the Debtors to expeditiously terminate, relocate or consolidate dealerships. Despite these obstacles, and at substantial cost, the Debtors have reduced their dealer network from approximately 4,320 dealers in 2001 to 3,181 as of the Petition Date. These efforts are ongoing. As part of their prepetition long-term viability plan, the Debtors identified the completion of their dealership rationalization efforts as one of the core initiatives. Consistent with their Viability Plan, the Debtors are seeking to obtain approval of and implement the Fiat Transaction or another transaction with a competing bidder to sell their assets on a going concern basis. A key component of the Fiat Transaction is the transfer to New Chrysler of a strong, well-positioned dealer network to continue selling Chrysler, Dodge and Jeep vehicles to consumers and to service these vehicles. To that end, the Fiat Transaction contemplates and, in fact, requires the acceleration of the Debtors' network rationalization. This effort to strengthen the Domestic Dealer Network is a critical component of the proposed Fiat Transaction both to improve the viability of the Domestic Dealer Network and position New Chrysler for viability and long-term success. Such effort also is expected to be important in any alternative sale transaction involving the Domestic Dealer Network. The consummation of such a sale, including the further rationalization of the Domestic Dealer Network, will materially benefit the Debtors' estates, maximize the value available to stakeholders and provide substantial benefits to the remaining dealers. As a result, the Debtors have determined, in a sound exercise of their business judgment and after an extensive analysis and consultation with New Chrysler, to exercise their right to reject 789 dealership agreements and related ancillary agreements, pursuant to Section 365 of the Bankruptcy Code. Moreover, given (a) the complexity and urgency of the transactions involved, (b) the number of dealers and other parties impacted, (c) the need for the Debtors to move quickly to implement the requested relief through affirmative actions in the marketplace and (d) the possibility of disputes regarding the impact of rejection on the implicated commercial relationships and related legal rights, the Debtors believe that it is essential for the Court to issue related rulings to ensure that the Debtors obtain the full and immediate benefit of rejection. There is little precedent for the bankruptcy of a major OEM, and dealers and other parties impacted by rejection may not understand (or accept) its impact. Thus, the Debtors seek ancillary relief in support of rejection to minimize any risks caused by ongoing disputes or uncertainty and to ensure that the benefits of the rejection are preserved to the fullest extent possible. Chrysler asks the Court to enter an order: (a) determining that any state and local statutes, rules and regulations of any kind or nature whatsoever, including without limitation the dealer statutes, are preempted by the Bankruptcy Code to the extent that they purport to, or could be interpreted or applied to, interfere with, undermine or impact the full and complete rejection of the Rejected Dealer Agreements; (b) determining that New Chrysler and all Remaining Dealers are "person[s] with whom [the Debtors have] been associated" within the meaning of Section 525 of the Bankruptcy Code and therefore are entitled to the protections of section 525 of the Bankruptcy Code; (c) clarifying the scope of the Affected Dealers' claims, status and rights arising under or in any way related to the Dealer Laws and the Debtors' rejection of the Rejected Dealer Agreements; and (d) approving procedures to provide the Debtors with swift and efficient means of seeking judicial intervention to assist them in resolving any disputes that might arise with Affected Dealers. * * * Neal E. Boudette, Jeff Bennett, and Alex P. Kellogg at The Wall Street Journal report affected dealerships include those in Yakima, Washington, where Hahn Motor Co. is set to shut and Fort Lauderdale, Florida, where AutoNation Dodge is tabbed to go out of business. WSJ states that dealers set to close will get no compensation. The bankruptcy court can tear up contracts with Chrysler business partners, including dealers, WSJ relates. The report says that if the move to eliminate dealers gets the court's approval, Chrysler will be left with about 2,392 outlets. WSJ notes that Chrysler dealers chosen for closure are supposed to try to sell their vehicle inventory to surviving franchises, but with the current glut of unsold cars, the vehicles likely won't get anything close to what the dealers paid for them. WSJ states that Leo Jerome -- whose Story Chrysler Jeep in Lansing, Michigan, is among the dealerships to be terminated -- is especially concerned because he responded earlier this year when Chrysler officials pleaded with dealers to buy extra inventory to boost the Company's sales, which resulted in $2 million worth of cars and trucks on his lot. WSJ relates that many of Chrysler's 3,181 dealers sell too few new vehicles to make money. Citing Chrysler Vice Chairperson Jim Press, WSJ reports that half of the dealers being closed sold fewer than 100 new vehicles last year. According to WSJ, AutoNation Inc. -- the largest chain of dealerships in the U.S. -- will see seven of its 17 Chrysler stores closed. The seven stores represent 1% of AutoNation's operating profit, WSJ says, citing Michael J. Jackson, the company's chairperson and chief executive. WSJ notes that Chrysler may still have too many dealerships even after the cuts. Toyota, WSJ says, has some 1,200 U.S. stores -- about half the number Chrysler will have -- but the company will be selling about 60% more vehicles in the U.S. About Chrysler LLC 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 December 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: Ohio Wants Workers' Compensation Paid by Buyer ------------------------------------------------------------ The Ohio Bureau of Workers' Compensation says that it doesn't want to block the sale of Chrysler LLC's assets to a Fiat S.p.A. backed company or to another firm with a higher and better bid. However, it wants the sale process denied, unless the buyer is required to assume workers' compensation liabilities, in accordance with Ohio Revised Code Section 4123.75. The Sale Motion provides that the successful bidder will assume Debtors' employment and termination liabilities "other than workers' compensation." Victoria D. Garry, assistant attorney general, warns that if substantially all of Debtors' assets are sold to the successful bidder without assumption of Debtors' Ohio workers' compensation liabilities, the Debtors are unlikely to have the resources to pay all or even a substantial amount of their Ohio workers' compensation obligations. "If the workers' compensation liabilities are not assumed by the qualifying bidder and if Debtors default on their Ohio self- insured obligations, BWC must assume payment and administration of Debtors' Ohio workers' compensation claims. Ohio Revised Code 4123.75. Such a result could (a) potentially be a devastating blow to Ohio's self-insured program, which could ultimately result in tremendous financial problems or insolvency of other Ohio self- insured employers and (b) ultimately affect Chrysler's injured workers' benefits," she explained. "Perhaps more importantly for a prospective successful purchaser, if the Sale Motion is approved as presented, it is very unlikely that the successful purchaser will be eligible for self-insured status in Ohio. For example, a determination whether to allow self-insured status to the ultimately successful purchaser would depend upon whether the criteria for self-insured status are met, including, but not limited to, whether the new employer operated a business in Ohio for a minimum of two years or whether the new employer is a successor employer as defined by Ohio statute and administrative rules. See Ohio Revised Code 4123.35(B) and Ohio Administrative Code 4123-19-03." The Ohio Bureau of Workers' Compensation notes that the assumption of Debtors' workers' compensation liabilities would be a strong factor toward whether the ultimately successful purchaser is granted self-insured status in Ohio. According to the agency, granting the Sale Motion, as presented, (a) may ultimately result in substantial harm to the Ohio's workers' compensation system; (b) could potentially place a burden on other existing but struggling self-insured employers in Ohio; (c) may ultimately affect the workers' compensation benefits to Debtors' injured Ohio workers; and (d) could ultimately result in the successful purchaser being ineligible for self-insuring status under Ohio's workers' compensation laws. Auction/Sale is On As reported by the TCR on May 13, Chrysler LLC and its affiliated debtors obtained approval from the U.S. Bankruptcy Code for the Southern District of New York of the bidding procedures for the sale of substantially all of their assets. A full-text copy of the Bidding Procedures is available for free at http://bankrupt.com/misc/ChryslerBiddingProcedures.pdf "The bidding procedures constitute a reasonable, sufficient, adequate and proper means to provide potential competing bidders with an opportunity to submit and pursue higher and better offers for all or substantially all of the assets," Judge Arthur Gonzalez said in his order dated May 7, 2009. The assets to be sold include facilities, executory contracts and leases, intellectual property rights, and those related to the research, production and distribution of vehicles under brand names including Chrysler, Jeep(R) and Dodge. The Debtors offered to sell their assets to New CarCo Acquisition LLC, a Delaware company formed by Fiat S.p.A., subject to higher and better bids, as part of the Master Transaction Agreement that Chrysler signed with Fiat and New CarCo on April 30, 2009. The Fiat group's $2 billion offer for the assets will be the lead bid in a court-supervised auction to be held on May 27, 2009. Fiat will receive a $35 million breakup fee in case it is outbid at the auction. Prior to the Court's approval of the bidding procedures, Chrysler argued in Court that it is imperative that the process be completed expeditiously in order to secure the maximum value for the company's stakeholders through the Chapter 11 process. Chrysler said that given the stress on all aspects of the automotive industry and the current idling of its manufacturing facilities, key relationships with suppliers, dealers, and other business partners cannot be preserved if the sale process is not concluded quickly. In addition, Chrysler noted that substantial new financial commitments from the U.S. and Canadian governments require the consummation of a transaction with Fiat within 60 days and make DIP financing available for only that period. The recently announced agreements with the UAW and CAW providing for modifications to the collective bargaining agreement for active employees and for a new schedule of contributions to a VEBA that will provide retiree medical benefits is also conditioned on the expeditious consummation of the Fiat transaction. "While Chrysler has already conducted discussions with Nissan, GM, Volkswagen, Tata motors, Magna, GAZ, Hyundai, Honda and Toyota and others over an extended period of time, these discussions have not produced any viable alternative to the proposed alliance with Fiat," the company disclosed in an official statement. In connection with the proposed sale, the Court approved the procedures governing the assumption and assignment of executory contracts and unexpired leases to New Carco. A full-text copy of the notice containing the procedures is available for free at: http://bankrupt.com/misc/ChryslerAssignmentNotice.pdf The procedures may be modified by further court order if a company other than New CarCo is the winning bidder, or if a transaction other than the proposed sale is consummated for the sale of the Debtors' assets, says Judge Gonzalez. A Sale Notice will also be circulated widely, and notice will also be published in major newspapers to provide opportunity for any interested party to emerge. Full-text copies of the court- approved Sale Notice, Publication Notice and the UAW Retiree Notices, are available for free at: http://bankrupt.com/misc/ChryslerSaleNotice.pdf http://bankrupt.com/misc/ChryslerPublicationNotice.pdf http://bankrupt.com/misc/ChryslerUAWRetireeNotices.pdf The Court will convene a hearing on May 27, 2009, at 10:00 a.m. (Eastern Time), to approve the winning bid. The Court set May 26, 2009, as the deadline for the notice of designation of lead bidder. Companies interested to acquire the assets have until May 20, 2009 to submit competing bids. All parties-in-interest, including the Debtors' prepetition senior secured lenders, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and the Official Committee Of Unsecured Creditors have until May 19, 2009, 4:00 p.m. (Eastern Time), to object to the approval of the Sale Transaction and the UAW Retiree Settlement Agreement. If a determination is made at the Sale Hearing that the Successful Bidder is a bidder other than New CarCo, parties-in- interest may object solely to the determination at the Sale Hearing. The Court will also consider approval of the UAW Retiree Settlement Agreement at the May 27, 2009 Sale Hearing. A full- text copy of the UAW Retiree Settlement Agreement is available for free at: http://bankrupt.com/misc/Chrysler_UAWRetireeSettlementPact.pdf A full-text copy of the Equity Recapture Agreement with the voluntary employees' beneficiary association trust is available for free at: http://bankrupt.com/misc/Chrysler_EquityRecapAgreement.PDF The Debtors relate that New Chrysler has agreed to enter into the Non-Pension Retiree Settlement Agreement on terms and conditions that differ from those established by a settlement agreement, dated March 30, 2008, in the class action UAW, et al. v. Chrysler LLC. The Non-Pension Retiree Settlement Agreement will include, among other things, the funding of benefits with a combination of an equity interest in New Chrysler and a new $4,587,000,000 note. Under the UAW Settlement Agreement, certain benefit reductions will take effect July 1, 2009, assuming consummation of the Sale Transaction. About Chrysler LLC 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 December 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 May Take 2 Yrs.; UAW Agrees Not to Strike ------------------------------------------------------------------ Bloomberg News reports that an administration official said that Chrysler LLC's bankruptcy may take as long as two years. Bloomberg notes that President Barack Obama previously suggested that Chrysler's bankruptcy should only take two months. However, an administration official is now saying that the 60 days that President Obama projected at an April 30 press conference only applies to a sale of the Company's best assets to a new entity. Lawyers, according to Bloomberg, said that creditors would then fight over unwanted factories and other assets to recover money. Ajay Kamalakaran at Reuters relates that the court has allowed Chrysler to proceed with a rapid sale of most of its assets to a new company held by Fiat SpA, a United Auto Workers union-aligned trust, and the U.S. and Canadian governments. Citing people familiar with the matter, Jeff Green and Serena Saitto at Bloomberg states that Fiat may use designs or technology from General Motors Corp.'s Opel in future Chrysler models as part of a global auto alliance. According to Bloomberg, sources said that Fiat is in talks on folding GM and Fiat's European and Latin American operations into a new company. Sources said that GM wants a 40% stake in the new company, Fiat prefers to give the automaker a 30% stake, Bloomberg states. Bloomberg notes that adapting Opel designs for Chrysler vehicles would form a tight link between GM and the Fiat-Chrysler venture, and would spread costs among more models to save money. Union Agrees to Hold Off Strike Court documents say that the United Auto Worker union has agreed to refrain from holding a strike against Chrysler or Fiat at least through September 2015, as a condition for Chrysler receiving its initial $4 billion from the Treasury Department's Troubled Asset Relief Program. Greg Gardner at Detroit Free Press relates that the union agreed to submit to "binding arbitration" any unresolved issue in bargaining a new contract in 2011. "What it really says is there will be labor peace for the next six years," Free Press quoted Michigan State University's School of Labor and Industrial Relations professor Richard Block as saying. Free Press says that the UAW also agreed to: -- freeze wages through September 2011, -- let higher-paid skilled trade workers to perform production work, -- reduce health care benefits for retirees, and -- let the new company to pay a lower hourly wage of about $14 to all new hires. According to Free Press, Chrysler will also be enforcing a stricter attendance policy. Marie Beaudette posted at The Wall Street Journal blog that the court approved agreements that allow GMAC LLC to become the primary lender to Chrysler's dealerships, which lost their main financing source after Chrysler's bankruptcy. About Chrysler LLC 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 December 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: Non-Union Retirees Nix Bid for Official Committee --------------------------------------------------------------- Trent Cornell, Stahl Cowen Crowley Addis LLC, in Chicago, counsel to the National Chrysler Retirement Organization said, ""We are gratified that Chrysler LLC has acknowledged the obligation to its 19,000 salaried (non-union) retirees and their families by agreeing to move their pension and retiree benefit obligations over to the New Company," as the company's attorneys set forth in front of Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York yesterday. "Because of this assurance, there is no reason to form a Retiree Committee under Section 1114 of the Bankruptcy Code, as we sought on behalf of the National Chrysler Retirement Organization (NCRO) last week. We look forward to working with Chrysler as it adjusts the wording on retiree obligations in its sales documents to include salaried retirees," the firm said. The NCRO appeared before Judge Gonzalez yesterday to pursue its bid for the appointment of an Official Non-Union Retiree Committee. The NCRO was established in 2008 with an express purpose of protecting pension and retiree benefits for Chrysler's non-union retirees. Trent P. Cornell, Esq., at Stahl Cowen Crowley Addis LLC, in Chicago, Illinois, counsel for the NCRO, said in papers filed in court there are more than 16,000 non-union retirees and surviving spouses receiving health insurance benefits from the Debtors that are slated for elimination. Mr. Cornell said the aggregate present value of the Debtors' obligation is suspected to total several hundred million dollars. "While the Debtors have evaded communication, their pleadings and the exhibits thereto speak volumes about their intentions," Mr. Cornell had told the Court. "These documents evidence a clear and immediate plan to eliminate non-union retiree benefits, while at the same time heralding the continuation of retiree healthcare benefits for the Debtors' unionized retirees," Mr. Cornell had said. According to Mr. Cornell, it is paramount for the U.S. Trustee to appoint a Retiree Committee consisting of individuals that can quickly and comprehensively represent the Affected Retiree population. About Chrysler LLC 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 December 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: GMAC Will Provide Financing to Clients ---------------------------------------------------- Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York (Manhattan) entered an order authorizing Chrysler LLC to enter into the GMAC Master Financial Services Agreement and related agreements. Dealers and customers of Chrysler will be eligible for financing from auto lender GMAC LLC under an agreement tentatively approved by Judge Gonzalez after creditors' objections were worked out, Bill Rochelle said May 13. Chrysler submitted a motion seeking authority to (i) enter into a Master Autofinance Agreement Term Sheet between Chrysler LLC and GMAC LLC, dated as of April 30, 2009, and all other documents, agreements or instruments in connection with or related to the MAFA Term Sheet, including one or more repurchase agreements with terms and conditions set forth in the MAFA Term Sheet and other related transactions, and (ii) obtain unsecured credit pursuant to the terms of the GMAC MAFA Documents. The Debtors filed under seal the MAFA Term Sheet, citing that it contains sensitive and confidential information that should be kept confidential. Ms. Ball asserts that the request would allow the Debtors to: (a) provide their dealers with certain financing and services, including: * new and used vehicle inventory financing; * capital loans; * equipment loans; * real estate loans; * dealer insurance products and services * remarketing services; and * electronic cash and drafting settlement systems; (b) provide certain retail financing to the Debtors' fleet and retail customers, including: * consumer retail financing; * commercial retail financing; and * commercial fleet financing; and (c) obtain unsecured credit from GMAC and to perform other and further acts as may be contemplated by, or required in connection with, the GMAC MAFA Documents. The MAFA Prior to the Petition Date, Dealers and Customers were provided with wholesale and retail financing from Chrysler Financial Services Americas LLC, which has its own independent board and management, separate from Chyrsler LLC. On August 3, 2007, Chrysler and Chrysler Financial entered into the Master Autofinance Agreement, which required Chrysler to use Chrysler Financial for both wholesale standard rate and subvention and incentive financing programs for Chrysler's Dealers in addition to retail financing for Customers when certain financing thresholds and targets were met. Under the Prepetition MAFA and related agreements, Chrysler Financial provided financing to Dealers and Customers subject to an obligation on the part of Chrysler to repurchase inventory from Chrysler Financial or Chrysler's Dealers under certain circumstances. As of the start of the fourth quarter of 2008, approximately 62% of Chrysler's Dealers relied on Chrysler Financial to finance their businesses, and approximately 50% of all Customers financed their vehicle purchases through Chrysler Financial. Beginning in October 2008, the level of financing provided by Chrysler Financial to Chrysler's Dealers and Customers through the Prepetition MAFA plummeted to the point where, at times, almost no funding was available. In November 2008, Chrysler undertook an organized effort to obtain alternative financing for both its Dealers and Customers. Programs were established with JPMorgan Chase and US Bank that provided some increased level of financing but Chrysler's ability to provide floor plan and retail financing continued to be inadequate and car sales suffered. On May 1, 2009, Chrysler Financial announced that it would no longer provide wholesale or retail financing to Chrysler's Dealers or Customers. Thus, the need to obtain alternative financing to supplant the financing previously provided by the Prepetition MAFA is immediate and crucial, Ms. Ball contends. She adds that entry into the GMAC MAFA is necessary to ensure the requisite postpetition financing is available to their Dealers and Customers. She notes that the largest source of revenue for the Debtors comes from direct purchases of automobiles by the Dealers. Dealer Financing provides the Dealers with the necessary financing to purchase automobiles from the Debtors, and the Dealers provide the Debtors with the only channel to sell automobiles to Customers, Ms. Ball relates. She asserts that the Dealers rely almost exclusively on readily accessible and commercially affordable financing to stock their inventory floorplans, purchase necessary parts, provide incidental services to their customers, finance incentive and subvention programs, make payroll disbursements and otherwise operate their businesses in the ordinary course. Therefore, she says, Dealer Financing provides the Dealers with the necessary capital to operate their businesses. Similarly, Ms. Ball explains, Retail Financing provides Customers with the necessary financing to purchase automobiles directly from Dealers. Ultimately, consumer purchases drive the business model of the Dealers, and manufacturers and suppliers. Without adequate retail credit lines, the business model grinds to a halt essentially shutting down Dealers and manufacturers alike. "The GMAC MAFA will fill the capital void created by the termination of the Prepetition MAFA at a time when alternative sources of credit are severely curtailed or, in some cases, nonexistent," Ms. Ball contends. "Both Dealer Financing and Retail Financing serve as a reliable, affordable and necessary source of capital to be used by Dealers and Customers when purchasing the Debtors' automobiles and related products," she continues. The Debtors submit that GMAC is the best available source of financing for Dealers and Customers on a going-forward basis. GMAC's global automotive finance business offers a wide range of financial services and products to retail automotive consumers, automotive dealerships, and other commercial businesses, and provides automotive financing primarily to franchised General Motors Corporation's dealers and customers. In consultation with the U.S. Treasury, the Debtors have considered various alternative sources of Dealer and Customer financing and have concluded that the GMAC MAFA represents the best financing alternative available in the market. The GMAC MAFA is the result of extensive negotiations among the Debtors, the U.S. Treasury and GMAC, and is an essential component of the Debtors' reorganization. The U.S. Treasury has publicly stated that "[t]he U.S. Government is supporting the automotive restructuring initiative by promoting the availability of credit financing for dealers and customers, including liquidity and capitalization that would be available to GMAC, and by providing the capitalization that GMAC requires to support the Chrysler business." In addition, "Chrysler Financial has agreed to uphold and cooperate in the transition of its current agreements with dealers to GMAC." Salient Terms Under the GMAC MAFA, the Debtors' wholesale, retail and other related product financing will be provided in large part by GMAC for an initial four-year term. Currently, GMAC does not offer lease financing other than standard rate products; however, if GMAC provides other lease financing products in the future, the Debtors' dealer network will have access to those products, subject to the terms and conditions described in the MAFA Term Sheet. GMAC's financial services will be for all brands distributed through the Debtors' dealer network in the United States, Canada and Mexico with additional international markets being added if the parties agree to do so at a later date. GMAC will use commercially reasonable efforts (i) to offer standard retail financing and to put in place new interim dealer funding for new and used inventory as soon as reasonably practicable with a target completion date of May 15, 2009, and (ii) to offer subvented retail financing as soon as reasonably practicable with a target completion date of June 1, 2009. Initially, with respect to wholesale financing, most Dealers currently financed by Chrysler Financial will be covered under the GMAC MAFA, Ms. Ball tells the Court. However, if the Debtors' request is approved, GMAC will conduct Dealer credit assessments over the next 180 days to determine which Dealers are eligible for a longer-term credit line with GMAC. Decisions will be made on a rolling basis during the 180-day review period. GMAC will provide sufficient advance notice to Dealers that do not pass GMAC's credit assessment so that those Dealers can seek alternative sources of wholesale financing, she informs Judge Gonzalez. After May 16, 2009, GMAC is entitled to terminate the GMAC MAFA and the transactions contemplated in the agreement without liability if on or prior to that date: -- the Court will not have entered one or more orders reasonably acceptable to GMAC (i) approving the GMAC MAFA, Repurchase Agreements and related transactions, and (ii) requiring that in connection with any sale, disposition or other transfer, whether by merger, consolidation, reorganization or otherwise, of all or substantially all of the assets of Chrysler and its subsidiaries in the bankruptcy cases, the transferee of the assets will assume all of the obligations of Chrysler under the GMAC MAFA, Repurchase Agreements and related transactions in accordance with documentation reasonably acceptable to GMAC; or -- GMAC will not have obtained regulatory approvals as previously discussed between the U.S. Treasury and GMAC required to permit GMAC to perform its obligations under the Agreement; or -- the U.S. Treasury will not have (i) provided GMAC with an amount and form of equity capital consistent with prior discussions between the U.S. Treasury and GMAC, and (ii) entered into a binding agreement with GMAC providing for loss sharing by the U.S. government of certain losses incurred by GMAC, GMAC Bank or any other GMAC subsidiary in connection with the Agreement in an amount and on terms previously discussed with and mutually agreed by the U.S. Treasury and GMAC. 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: Obtains Approval of Chrysler Financial Pact --------------------------------------------------------- Chrysler LLC and its affiliates sought and obtained approval from Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York to enter into a Risk Sharing Agreement Term Sheet and the definitive Risk Sharing Agreement, with Chrysler Financial Services Americas, LLC, and New Chrysler. New Chrysler is the stalking horse bidder for the operating assets of Chrysler LLC pursuant to 11 U.S.C. Sec. 363. Italy's Fiat SpA would initially hold a 20% stake in New Chrysler, while the U.S. and Canadian governments will provide financing for the buyer. The Debtors, in accordance with their sound business judgment, seek to enter into the RSA Term Sheet, as such agreement will ensure that the Debtors' dealers, who are the lifeblood of the Debtors' revenue generating capacity, continue to have access to both wholesale and retail financing. On May 1, 2009, Chrysler Financial, which provides wholesale financing to approximately 62% of the Debtors' dealers announced that it would no longer provide additional advances under the wholesale lines of such Dealers because the filing of the chapter 11 cases caused its sources of financing to cease funding Chrysler Financial. Chrysler Financial has liens, however, on most of these Dealers' assets (including, among other things, new and used cars, parts, and other inventory). Additionally, certain contractual prohibitions in favor of Chrysler Financial in its financing agreements with the Dealers bar them from placing new liens on Chrysler Financial's collateral without a waiver from Chrysler Financial. Chrysler Financial has asserted that the imposition of third-party liens on Chrysler Financial's collateral would, absent Chrysler Financial's consent, result in an event of default under the financing documents between Chrysler Financial and the Dealers that would permit Chrysler Financial to exercise its remedies against the Dealers and their assets. The RSA is the culmination of a series of intense negotiations among Chrysler, Chrysler Financial and New Chrysler to set forth the terms and conditions upon which Chrysler Financial would be willing to consent to GMAC's imposition of liens on the new vehicles financed by GMAC. Relationship with Chrysler Financial Chrysler and Chrysler Financial are affiliates although they are governed by separate boards of directors. Chrysler Financial is a wholly-owned subsidiary of FinCo Intermediate HoldCo LLC, which, in turn, is a wholly-owned subsidiary of Chrysler Holdings LLC, the ultimate parent of Chrysler. As of the Petition Date, Chrysler Financial was also the main source of financing for Chrysler's automotive operations, including each of its main business lines. Chrysler Financial funded approximately 62% of Chrysler's dealers and approximately 50% of all consumers who bought Chrysler products. Additionally, Chrysler and Chrysler Financial are parties to a Master Autofinance Agreement, pursuant to which the parties have agreed to provide each other with a number of essential services. Under the Chrysler Financial MAFA, among other things, Chrysler Financial had the exclusive right to finance incentives Chrysler offered to consumers and support financial subsidies, incentives, or special terms offered by Chrysler to its dealers. If Chrysler Financial chose to finance these programs, Chrysler would compensate Chrysler Financial according to a pricing schedule set forth in the Chrysler Financial MAFA. As security for these and other obligations arising under the Chrysler Financial MAFA, Chrysler Financial is secured by collateral with a nominal value of $1.5 billion. The Collateral is comprised of $500 million in cash and a $1 billion income note pledged to Chrysler Financial. The Chrysler Financial MAFA further provides that, upon the occurrence of certain events (including default in payment of any obligations under the Chrysler Financial MAFA, the occurrence of certain bankruptcy events and a PBGC demand), Chrysler Financial may draw down all or a portion of the cash collateral in such account up to the sum of any obligations then outstanding. As of the Petition Date, the parties believe that the Debtors owe Chrysler Financial an amount in excess of the value of the Collateral for obligations arising under the Chrysler Financial MAFA. Chrysler Financial and the Dealers Chrysler Financial provides wholesale financing to approximately 62% of the Debtors' Dealers. To memorialize the terms of such wholesale financing, Chrysler Financial and each of the Dealers entered into a standard Master Loan and Security Agreement or similar agreement ("MLSA") that sets forth the terms and conditions upon which Chrysler Financial will lend to the Dealers. The MLSA provides that, in exchange for lending to the Dealers, Chrysler Financial receives a security interest in "Collateral," which security interest continues until it is released by Chrysler Financial after all obligations to Chrysler Financial have been paid in full. Collateral is defined in the MLSA to include, among others, (a) all inventories, including all new and used vehicles and parts, (b) all equipment, including, without limitation, all furniture, fixtures, machinery, and tools, (c) all general intangibles, (d) all proceeds of the Collateral, including cash and other funds held in deposit accounts. Notably, Chrysler Financial asserts that the MLSA prohibits the Dealers from granting any liens or encumbrances on the Collateral, or from taking other actions that may be adverse to the Collateral, which would be an event of default under the MLSA and trigger Chrysler Financial's right to exercise all available remedies against the Dealers. Chrysler Financial asserts that, because none of the Dealers are debtors in these chapter 11 cases, the automatic stay would not prohibit Chrysler Financial from immediately exercising any of the remedies set forth in the MLSA. On the day after the Petition Date, Chrysler Financial ceased all additional advances of its wholesale lines to Dealers because the filing of these chapter 11 cases caused its sources of financing to cease funding Chrysler Financial. The Debtors have sought alternative financing from GMAC to replace the financing previously provided by Chrysler Financial. The Debtors, with the assistance of the US Treasury, determined that GMAC was the best option in a limited credit market to provide financing for Chrysler and the Dealers on a go-forward basis. To memorialize this arrangement, the Debtors and GMAC negotiated a term sheet for a new master autofinance agreement, the approval of which is currently pending before the Court. Because the GMAC MAFA contemplates, inter alia, GMAC providing wholesale financing to the Dealers, secured by a lien on the new vehicles financed by GMAC and purchased from Chrysler by the Dealers, the Debtors consider it crucial that Chrysler Financial give its consent and waiver to remove any potential impediment to the Dealers' ability to grant liens on the new vehicles to be financed by GMAC on the terms and conditions set forth in the GMAC MAFA. The RSA Chrysler believes that before it can begin facilitating funding to its Dealers under the terms of the GMAC MAFA, it must obtain the consent and waiver of Chrysler Financial. Accordingly, Chrysler and Chrysler Financial have negotiated an integrated arrangement under which Chrysler Financial would provide its consent and waiver to the creation of liens for the benefit of GMAC on the new vehicles financed by GMAC in exchange for various agreements, including, among others, the return of the Collateral to Chrysler Financial. The RSA also provides that Chrysler and, after the 363 Sale, New Chrysler will be jointly and severally liable for all claims arising under the RSA and the definitive RSA and that such claims against Chrysler will be entitled to priority over all other administrative expenses of the types specified in Sections 503(b) and 507(b) of the Bankruptcy Code. The RSA Term Sheet has not been shared to the public. The Debtors have sought approval from Judge Gonzalez to file the RSA under seal, saying the document contains proprietary and sensitive information. Chrysler LLC and Chrysler Financial believe that the financial terms in the RSA are proprietary in nature and extremely sensitive. "Public release of this information would compromise this arrangement and provide third parties with an improvident glimpse into the confidential business practices of the parties to the RSA, and the public has no legitimate interest in knowing this information," says Corinne Ball, Esq., at Jones Day, in New York. About Chrysler LLC 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) CITIGROUP INC: Launches $5 Billion Municipal Lending Program ------------------------------------------------------------ Citigroup Inc. will lend up to $5 billion to state and local governments, municipal agencies, universities and non-profit hospitals to fund projects that will help create jobs and spur economic growth. The municipal program and three other new primary lending initiatives approved by Citigroup in the first quarter of 2009 are supported by capital the U.S. Treasury invested in the Company as part of the Troubled Asset Relief Program, or TARP. All of the initiatives are presented in Citigroup's second quarterly TARP Progress Report published today and titled, "What Citi is Doing to Expand the Flow of Credit, Support Homeowners and Help the U.S. Economy." The municipal lending program is intended to help finance the construction of schools, airports, non-profit hospitals and other infrastructure and capital projects. Loans made as part of the initiative will provide "AA"-rated municipal clients with access to tax-exempt funding for three years for capital investment projects or to refinance existing variable rate debt. Citigroup has already made proposals to potential borrowers totaling more than half of the $5 billion available under the program. "Citi's municipal lending program is designed to help communities around the country pursue infrastructure development and other projects at a time when the difficult credit environment has limited access to other funding sources," Citigroup Chief Executive Officer Vikram Pandit said. "Investments in projects like schools and hospitals help create jobs and will be an integral part of our country's economic recovery." In addition to providing access to funding that is currently unavailable from other sources, Citigroup also expects the program to lower borrowing costs and add funding flexibility for municipal clients. First Quarter TARP Progress Report Citigroup's TARP committee has authorized initiatives to deploy $44.75 billion across key areas of the U.S. economy to help expand the flow of credit to consumers, businesses and communities. The total includes $8.25 billion in new programs approved in the first quarter. In addition to the municipal lending program, these new initiatives are: * Supplier Financing -- $2.0 billion to purchase trade receivables from small and medium-sized businesses in the United States in order to provide them with needed liquidity; * Residential Mortgages -- an additional $1.0 billion in mortgages to lend to qualified borrowers to refinance their primary residences; and -- Auto Loans -- $250 million to lend to consumers via dealerships nationwide As of March 31, Citigroup had put $8.2 billion of its approved TARP capital initiatives to work in the economy, primarily to purchase mortgage securities in the secondary market, a critically important source of funds that supports lending to home buyers. "We will continue to explore every opportunity to put TARP capital to work in a disciplined, transparent and responsible fashion over the coming quarters, consistent with Citi's prudent lending standards," Mr. Pandit said. Despite the challenging economic environment, Citigroup has extended more than $200 billion in credit commitments in the U.S. since October 2008. These commitments include more than $120 billion in the first quarter in the form of loans to consumers and businesses as well as underwriting. About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. COLONIAL PROPERTIES: Fitch Cuts Issuer Default Rating to 'BB+' -------------------------------------------------------------- Fitch Ratings-New York-13 May 2009: Fitch Ratings has downgraded these credit ratings of Colonial Properties Trust and its operating partnership, Colonial Realty Limited Partnership: Colonial Properties Trust -- Issuer Default Rating to 'BB+' from 'BBB-'; -- $100 million preferred stock to 'BB-' from 'BB+'. Colonial Realty Limited Partnership -- IDR to 'BB+' from 'BBB-'; -- $675 million unsecured revolving credit facility to 'BB+' from 'BBB-'; -- $1 billion senior unsecured notes to 'BB+' from 'BBB-'; -- $100 million preferred stock to 'BB-' from 'BB+'. In addition, Fitch has revised the Rating Outlook to Stable from Negative. The rating action revolves around the view that in light of the company's first quarter-2009 (1Q'09) operating results and Fitch's expectations for the performance of CLP's geographically diversified portfolio in 2009-2010, the company's creditworthiness is more consistent with a 'BB+' IDR. When Fitch revised its Rating Outlook on CLP to Negative from Stable in March 2009, Fitch stated that one factor that may result in a downgrade of CLP's ratings would be if fixed charge coverage were to sustain below 1.5 times (x). In 2008 and 1Q'09, fixed charge coverage (defined as recurring EBITDA less capital expenditures less straight-line rent adjustments divided by interest expense, capitalized interest and preferred dividends) was 1.5x and 1.4x, respectively, and in light of 1Q'09 results, Fitch anticipates that ongoing declines of same-store net operating income will result in fixed charge coverage sustaining below 1.5x. The rating action also reflects the fact that secured debt increased materially, with secured debt-to-total debt rising to 26% as of March 31, 2009 from 5.9% as of Dec. 31, 2008. While this increase was incorporated into Fitch's Negative Outlook, Fitch anticipates that the position of bondholders may further weaken over the next 12-24 months in the event that the company continues to fund unsecured debt maturities with new secured debt funding. The two notch differential between CLP's IDR and its preferred stock is consistent with Fitch's criteria for corporate entities with an IDR of 'BB+' and further reflects the fact that CLP's preferred stock does not contain covenant protections comparable to those within indentures governing senior CLP's unsecured debt obligations. In addition, based on Fitch's criteria report, 'Equity Credit for Hybrids & Other Capital Securities', CLP's preferred stock is 75% equity-like and 25% debt-like since CLP's preferred stock is perpetual and has no covenants, but has a cumulative deferral option. Debt plus 25% of preferred stock-to- recurring EBITDA and debt plus 25% of preferred stock-to- undepreciated book capital were 10.9x and 51.2%, respectively, as of March 31, 2009, compared with 10.0x and 52.9% as of Dec. 31, 2008. The Stable Outlook takes into account the company's manageable debt maturity schedule and good liquidity position, which was recently bolstered by a $350 million secured credit facility originated by PNC ARCS LLC for repurchase by Fannie Mae. The Stable Outlook further underscores prudent steps that Colonial has taken to strengthen its balance sheet and improve liquidity, through unsecured debt repurchases and reductions in common stock dividends. With respect to liquidity, Colonial Realty Limited Partnership recently executed a cash tender offer for $250 million of certain series of Colonial Realty Limited Partnership's outstanding notes maturing in 2010 and 2011. In addition, during 1Q'09, the company repurchased $96.9 million of Colonial Realty's outstanding unsecured senior notes under the company's previously announced $500 million unsecured note repurchase program. The purchases were made at an average 27.1% discount to par, which represents a 12.6% yield to maturity. Fitch views these transactions favorably in that they reduce near-term uses of liquidity. Fitch calculates that proforma for the tender offer, sources of liquidity (cash, availability under the company's revolving credit facility, and retained cash flows from operating activities, including $80 in additional liquidity due to the company's common stock dividend reduction) less uses of liquidity (debt maturities and recurring capital expenditures) result in a liquidity surplus of $334 million from March 31, 2009 to Dec. 31, 2010. The Stable Outlook further reflects that despite the company's $117 million in property impairments that Colonial incurred during 4Q'08 on its for-sale residential properties, mixed-use and for- sale residential land portfolio and a retail development project, impairments were notably modest in 1Q'09 at $736,000. The 1Q'09 impairments were predominantly due to CLP's noncontrolling interest in its Craft Farms joint venture and the sale of all of the remaining units in Regents Park, one of CLP's for-sale residential projects. While CLP's residential-for-sale portfolio and overall development pipeline remain exposed to further devaluation risk, the Stable Outlook also reflects CLP's reduction in planned development spending in 2009. Going forward, these factors may have a positive impact on the ratings: -- If fixed charge coverage (defined as recurring EBITDA less capital expenditures less straight-line rents divided by total fixed charges) sustains above 1.5x (for the trailing 12 months ended March 31, 2009, recurring EBITDA divided by total fixed charges was equal to 1.5x). -- If debt-to-recurring EBITDA were to sustain below 9.0x (for the 12 months ended March 31, 2009, debt to recurring EBITDA was 10.4x); -- If unencumbered asset coverage as defined under CLP's unsecured bond indenture using undepreciated book value were to sustain above 220% (as of March 31, 2009, unencumbered assets-to-unsecured debt was 211.2%). These factors may have a negative impact on CLP's ratings: -- If fixed charge coverage were to sustain below 1.3x for several quarters; -- If the company has a liquidity shortfall; -- If unencumbered assets-to-unsecured debt as defined under CLP's unsecured bond indenture falls below 180%. Colonial Properties Trust is a real estate investment trust based in Birmingham, Alabama that had an interest in 120 multifamily properties and 84 commercial properties (including those under management) across the Sunbelt region of the United States as of March 31, 2009. As of March 31, 2009, the company had approximately $3.6 billion in undepreciated book assets and a total market capitalization of approximately $2.6 billion. CORE COMMUNITIES: In Talks With Lenders for Covenant Relief ----------------------------------------------------------- Woodbridge Holdings Corp., formerly Levitt Corp., said its Core Communities LLC's operations have been negatively impacted by the downturn in the residential and commercial real-estate industries. Market conditions have adversely affected Core's commercial leasing projects and its ability to complete sales, and Core is currently experiencing cash flow deficits. Possible liquidity sources available to Core include the sale of real estate inventory, including commercial properties, debt or outside equity financing, including secured borrowings using unencumbered land; however, there is no assurance that any or all of these alternatives will be available to Core on attractive terms, if at all, or that Core will otherwise be in a position to utilize such alternatives to improve its cash position. In addition, while funding from Woodbridge is a possible source of liquidity, Woodbridge is under no obligation to provide funding to Core and there can be no assurance that it will do so. Core has a credit agreement with a financial institution which provides for borrowings of up to $64.3 million, of which $58.3 million was outstanding at March 31, 2009. This facility matures in June 2009 and has two one-year extension options. The loan agreement requires that Core provide at least 30 days' notice prior to the initial maturity of its election to exercise the one- year option period. Throughout the extension period, the collateral must generate a debt service coverage ratio of 1.20:1, otherwise Core would be required to re-margin the loan. While Core does not currently anticipate it will meet the debt service coverage ratio requirement, Core is in discussions with its lender regarding the credit agreement. Under the terms of the loan, Core can make a re-margining payment, if necessary, from current cash reserves, and the loan will be extended automatically. As part of its discussions with the lender, Core is seeking to achieve the extension by restructuring the loan absent a re-margining payment. However, there can be no assurance that Core will be successful in doing so. All of Core's debt facilities contain financial covenants generally requiring certain net worth, liquidity and loan to value ratios. In January of 2009, Core was advised by one of its lenders that the lender had received an external appraisal on the land that serves as collateral for a development mortgage note payable, which had an outstanding balance of $86.7 million at March 31, 2009. The appraised value would suggest the potential for a re-margining payment to bring the note payable back in line with the minimum loan-to-value requirement. The lender is conducting its internal review procedures, including the determination of the appraised value. Woodbridge says that lender's evaluation is continuing and, until such time as there is final conclusion on the part of the lender, the amount of a possible re-margining requirement is not determinable. According to Woodbridge, the negative trends in the operations of Core which have been impacted by the deterioration of the real estate market, and the potential for re-margining payments, of yet unknown amounts on two of its development loans, raise substantial doubt regarding Core's ability to continue as a going concern, if Woodbridge chooses not to provide Core with the cash needed to meet any such obligations when and if they arise. About Core Communities Core Communities develops master-planned communities and is currently developing Tradition, Florida, which is located in Port St. Lucie, Florida, and Tradition Hilton Head, which is located in Hardeeville, South Carolina. At March 31, 2009, Core had cash and cash equivalents of $14.6 million. Cash decreased $2.3 million during the three months ended March 31, 2009, primarily as a result of cash used to fund the continued development of Core's projects as well as selling, general and administrative expenses. At March 31, 2009, Core had no immediate availability under its various lines of credit. Core has made efforts to minimize its development expenditures in both Tradition, Florida and in Tradition Hilton Head; however, Core continues to incur expenses related to the development of these communities, particularly at Tradition Hilton Head, which is in the early stage of the master-planned community's development cycle to develop the community infrastructure. About Woodbridge Holdings Woodbridge Holdings Corporation and its wholly-owned subsidiaries engage in business activities through its Land Division and Other Operations segment. The Land Division consists of the operations of Core Communities. The Other Operations segment includes the parent company operations of Woodbridge, the consolidated operations of Pizza Fusion Holdings, Inc., the consolidated operations of Carolina Oak Homes, LLC, which engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008, and the activities of Cypress Creek Capital Holdings, LLC, and Snapper Creek Equity Management, LLC. An equity investment in Bluegreen Corporation and an investment in Office Depot, Inc., are also included in the Other Operations segment. Prior to November 9, 2007, the Company also conducted homebuilding operations through Levitt and Sons, LLC, which comprised the Company's Homebuilding Division. On November 9, 2007, Levitt and Sons and substantially all of its subsidiaries filed for Chapter 11 bankruptcy protection before the United States Bankruptcy Court for the Southern District of Florida. In connection with the filing of the Chapter 11 Cases, Woodbridge deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations of Levitt and Sons from Woodbridge's financial results of operations. COMPUTER WORLD: Kevin Gore Pleads Not Guilty to Fraud Charges ------------------------------------------------------------- Joseph Ryan at Daily Herald reports that former Computer World Solution chief operating officer Kevin M. Gore has plead not guilty to charges stemming from an alleged $17 million bank fraud scheme. As reported by the Troubled Company Reporter on May 14, 2009, authorities said that the line of credit was secured by Computer World's accounts receivable. According to the authorities, Mr. Gore created certificates with falsely inflated figures and, after Mr. Yuan signed them, submitted them to Fifth Third. Mr. Gore and co-defendant Noel Yuan, Computer World's founder and president, allegedly swindled Fifth Third Bank out of more than $17 million by fraudulently obtaining money through a revolving line of credit. Mr. Yuan pleaded guilty to two counts of bank fraud in December 2008 and is awaiting sentencing. Mr. Gore was arrested in the Philippines in February 2009 and has been returned to Chicago. Mr. Gore had left U.S. just before Computer World went bankrupt. Mr. Gore, according to Daily Herald, is being held without bond and a trial date has been set for October 19. Computer World Solution, Inc., manufactures consumer electronics. Its products include LCD monitors and televisions, and digital audio/video devices, including MP3/MP4, DVD players, and portable DVD players. The Company has operations in North America, South America, Europe, Australia, and Africa. The Company was founded in 2001 and is based in Wheeling, Illinois. On November 9, 2007, an involuntary petition for reorganization under Chapter 11 was filed against Computer World in the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago. On November 28, 2007, the involuntary petition was approved by the Court. COYOTES HOCKEY: Possible Move to Canada Won't Affect Contracts -------------------------------------------------------------- John Ourand at Phoenix Business Journal reports that Phoenix Coyotes' possible transfer to Canada wouldn't have a major effect on the team's local TV contract or the National Hockey League's national TV contracts. As reported by the Troubled Company Reporter on May 14, 2009, legal experts said that the U.S. Bankruptcy Court for the District of Arizona could rule against Canadian billionaire Jim Balsillie in his bid to overturn the NHL's rules governing relocation of the Phoenix Coyotes. NHL submitted papers before the Court, alleging that team owner Jerry Moyes, the chief executive officer of Swift Transportation Co., didn't have the right to file the petition and can't control the team's management. The Coyotes responded by filing an antitrust suit before the Court against the NHL, claiming that the league's "unreasonable restrictions" on relocating teams is an illegal restraint of trade. Mr. Moyes filed bankruptcy to carry out a sale of the team to Mr. Balsille, who intends to move the team to southern Ontario. Mr. Balsillie wants to purchase the Phoenix Coyotes out of bankruptcy protection for about $212.5 million and move the club to Hamilton. The NHL opposes the offer, as league rules prevent a team from moving within 80 kilometers of another team without permission. Citing a source with the NHL's board of governors, Business Journal states that Coyotes Hockey's local TV deal with Fox Sports Arizona ended in April 2009, when the team's season came to a close. The report says that Coyotes Hockey had been negotiating a renewal, but failed to come to terms. Court documents say that Coyotes Hockey owes the regional sports network $261,439 for production-related costs. According to Business Journal, Fox Sports Arizona has held the Coyotes Hockey's rights since the team moved to Phoenix in 1996. Business Journal states that under terms of the most recent deal, Fox Sports pays Coyotes Hockey a rights fee to carry about 40 games a year and produce another 20 or so for a local broadcast channel. Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates own the Phoenix Coyotes team and franchise in the National Hockey League. Dewey Ranch, together with affiliates Arena Management Group, LLC, Coyotes Holdings, LLC, and Coyotes Hockey, LLC, filed for Chapter 11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No. 09-09488), to implement a court-approved sale of Phoenix Coyotes under the Bankruptcy Code. The filing included a proposed sale of the franchise to PSE Sports & Entertainment, LP, which would move the franchise to southern Ontario, Canada. Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in their restructuring efforts. Dewey Ranch listed $100 million to $500 million in assets and $100 million to $500 million in debts. COYOTES HOCKEY: Balsillie Responds to NHL Filing, Reiterates Bid ---------------------------------------------------------------- Jim Balsillie issued a statement with regard to the National Hockey League's motions filed in the U.S. Bankruptcy Court for the District of Arizona in Phoenix. "My response to the NHL motion, will be made in the appropriate forum at bankruptcy court for consideration by Judge Baum. I continue to respect the court process leading to Tuesday's scheduled hearing," Mr. Balsillie said. "I can tell you this. I made a generous good faith offer to buy the Coyotes from Jerry Moyes, who I understand is the owner of the Coyotes. Who owns or controls the team is a distinction without a difference. The team itself is still bankrupt, voluntarily or not. The owner of the team has a fiduciary obligation towards the creditors." "My offer, which goes the furthest in satisfying creditors' claims, is still the same. It's $212 million to buy the Coyotes and bring them to the best un-served hockey market in the world in Southern Ontario. We look forward to discussing this no matter what the outcome on May 19th." "At the end of the day, this is about the passion Canadians feel for the game of hockey and a chance to provide those fans with the opportunity to support a seventh NHL team. That's what this is all about, great hockey fans in a great hockey market." The Troubled Company Reporter, citing a report by Paul Waldie and David Naylor at Theglobeandmail.com, said yesterday legal experts believe the U.S. Bankruptcy Court could rule against Canadian billionaire Balsillie in his bid to overturn the NHL's rules governing relocation of the Phoenix Coyotes. On Tuesday, the TCR said the NHL submitted papers before the Court, alleging that team owner Moyes, the chief executive officer of Swift Transportation Co., didn't have the right to file the petition and can't control the team's management. The Coyotes responded by filing an antitrust suit before the Court against the NHL, claiming that the league's "unreasonable restrictions" on relocating teams is an illegal restraint of trade. The NHL opposes the offer, as league rules prevent a team from moving within 80 kilometers of another team without permission. Theglobeandmail.com quoted Rodney Fort, a professor of sport management at the University of Michigan, as saying, "Usually when [the issue] has to do with actions by the . . . owners, about the location of [the league's] own teams, the courts side with the owners." Fans Speak Up Meanwhile, a new Web site has become a grassroots hockey fan movement in favor of relocating the Phoenix Coyotes NHL franchise to Southern Ontario, reaching 120,000 supporters and still climbing. The Website www.makeitseven.ca was launched eight days ago at the time Mr. Balsillie's offer was made public. It was designed to give hockey fans a grassroots opportunity to indicate their support. Fans can also take part in the conversation at http://www.twitter.com/makeitseven Thousands of fans from both the United States and Canada have supplied their email addresses and postal/zip codes to sign up in fervent support. In addition, Canada's Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty have both expressed support for an NHL franchise in Southern Ontario. Many fans have also emailed supportive messages indicating they wholeheartedly back the relocation of the franchise in Southern Ontario, a region with a population of more than 7 million people and a strong economic base. "I want to thank hockey fans from both the United States and Canada for their overwhelming support. It's amazing to see this level of excitement for NHL hockey in Southern Ontario, which I believe to be the best un-served hockey market in the world," Mr. Balsillie said. About Coyotes Hockey Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates own the Phoenix Coyotes team and franchise in the National Hockey League. Dewey Ranch, together with affiliates Arena Management Group, LLC, Coyotes Holdings, LLC, and Coyotes Hockey, LLC, filed for Chapter 11 bankruptcy protection on May 5, 2009 (Bankr. D. Ariz. Case No. 09-09488), to implement a court-approved sale of Phoenix Coyotes under the Bankruptcy Code. The filing included a proposed sale of the franchise to PSE Sports & Entertainment, LP, which would move the franchise to southern Ontario, Canada. Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, assists the Debtors in their restructuring efforts. Dewey Ranch listed $100 million to $500 million in assets and $100 million to $500 million in debts. CROCS INC: To Move Aurora Operations to Los Angeles, Cuts 37 Jobs ----------------------------------------------------------------- Crocs, Inc., on Monday notified 37 workers at its distribution center in Aurora, Colorado, that it will close the site in July 2009, The Denver Post reports. Crocs spokeswoman Tia Mattson, according to the Post, said the Company is consolidating its warehousing and distribution locations, and is moving all distribution to its warehouse facility in Los Angeles, California. A couple of weeks ago, Ms. Mattson confirmed the Company laid off 38 employees at its Niwot, Colorado headquarters, as part of the Company's plans to restructure the organization. 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, Crocs cut 14 positions companywide as part of further restructuring efforts. Crocs employs fewer than 3,000 people companywide. The Post's Elizabeth Aguilera says the announcement to close the Aurora facility was preceded by a plan to close a smaller warehouse facility in Longmont at the end of May. She says the Company expects to create 100 jobs at the Los Angeles facility. Crocs last week said it is currently in discussions for a new borrowing arrangement and is exploring alternatives for other source of capital for ongoing cash needs. The Company, however, noted that the time period required to procure a new credit facility may extend beyond the maturity date of its current revolving credit facility requiring the Company to seek an extension of that maturity date with its current lenders. "There can be no assurance that the Company will be able to secure additional debt or equity financing or receive an extension of the current Revolving Credit Facility by or before the date of maturity of the Revolving Credit Facility and, accordingly, the Company's liquidity and ability to timely pay its obligations when due could be adversely affected," Crocs said. During the first quarter of 2009, the Company was successful in extending the term of its bank credit facility through September 30, 2009, Crocs continues to re-evaluate its operating plans for the next 12 months and is considering certain restructuring and right-sizing activities to address the potential for continued decreases in revenues. The Company's ability to continue as a going concern is dependent upon achieving a cost structure which supports the levels of revenues the Company is able to achieve. The ability of the Company to return to profitability is dependent on the timely completion of these activities and there can be no assurance that any actions taken by the Company will result in a return to profitability. Crocs reported first quarter 2009 revenues of $134.9 million, up 7% from the fourth quarter of 2008 and down $63.6, or 32% from the first quarter of 2008. The Company reported a net loss of $22.4 million in the first quarter of 2009 with a diluted loss per share of $0.27, compared to a fourth quarter 2008 net loss of $34.7 million, or ($0.42) per share and a first quarter 2008 net loss of $4.5 million, or ($0.05) per share. Selling, general and administrative costs are down 26% compared to Q4 2008 and down 6.2% from the same quarter a year ago. At March 31, 2009, Crocs had $446.9 million in total assets and $182.0 million in total liabilities, resulting to $264.9 million in stockholders' equity. Year-over-year changes in the Company's channel revenue streams were: * Retail sales increased 60% to $27.9 million; * Internet sales increased 46% to $11.7 million; and * Wholesale sales decreased 45% to $95.3 million. Changes in the Company's regional revenue streams during the same periods were: * Asia increased 7% to $39.0 million; * Europe decreased 49% to $28.3 million; and * Americas decreased 37% to $67.6 million. The Company's cash and cash equivalents declined to $50.9 million from $51.7 million as of December 31, 2008. However, compared to the quarter ended March 31, 2008, the Company's cash and cash equivalents increased by approximately $21.3 million. Borrowings under the Company's credit facility were $19.8 million at March 31, 2009, compared to $22.4 million at December 31, 2008, and $42.8 million at March 31, 2008. "While our first quarter results were generally in line with expectations, there is still much work ahead of us in order to improve on our recent performance and return to consistent profitability," stated John Duerden, President and Chief Executive Officer of Crocs, Inc. "Crocs achieved a tremendous amount in a few short years and quickly established itself as a truly global brand with market penetration in more than 100 countries. During this time, the product line evolved significantly from a few key items into seasonal footwear collections that have created a large and loyal consumer base. With this rapid growth came a number of challenges which, along with the recent recession, have negatively impacted the business. In response, Crocs took several steps throughout 2008 to better align its expense structure with lower sales volumes and strengthen its balance sheet. "Our intention in 2009 is to preserve the strength of the Crocs brand while endeavoring to strike a balance between lowering our fixed cost base and responsibly reducing our inventory. I am confident that with the solid foundation already in place and the talented group of people working here that we can accomplish our near-term objectives while creating a stronger, more efficient company for the future." The Company expects to generate between $135 million to $160 million in revenue during its fiscal second quarter, with a diluted loss per share between ($0.31) and ($0.15). Due to uncertainties created by the current global economic downturn, the Company did not provide annual guidance at this time. A full-text copy of Crocs' quarterly report is available at no charge at http://ResearchArchives.com/t/s?3cdb 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. DECORO USA: Case Summary & 23 Largest Unsecured Creditors --------------------------------------------------------- Debtor: DeCoro USA, Ltd c/o Executive Sounding Board Assoc. 112 S. Tryon St., Suite 1370 Charlotte, NC 28284 Bankruptcy Case No.: 09-10846 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Middle District of North Carolina (Greensboro) Debtor's Counsel: Christine L. Myatt, Esq. Suite 100 701 Green Valley Rd. P. O. Box 3463 Greensboro, NC 27408 Tel: (336) 373-1600 Email: cmyatt@nexsenpruet.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 23 largest unsecured creditors is available for free at: http://bankrupt.com/misc/ncmb09-10846.pdf The petition was signed by Michael DuFrayne. EL POLLO: S&P Raises Corporate Credit Rating to 'B-' From 'CCC+' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it raised its corporate credit rating on the Costa Mesa, California-based El Pollo Loco Inc. to 'B-' from 'CCC+' after the company said it planned to refinance its senior secured credit facility with a new senior secured note issuance and also that it will procure a new revolving credit facility. The outlook is stable. S&P also took these rating actions: Assigned '1' recovery and 'B+' issue-level (two notches above the corporate credit rating) ratings to the company's new $12.5 million revolving credit facility. The '1' recovery rating indicates S&P's expectation of very high (90%-100%) recovery of principal in the event of default. Assigned '2' recovery and 'B' issue-level (one notch above the corporate credit rating) ratings to the company's new $120 million senior secured notes. The '2' recovery rating indicates S&P's expectation of substantial (70%- 90%) recovery of principal in the event of default. Maintained S&P's '6' recovery rating on the company's senior unsecured notes due 2013, but raised the issue-level rating to 'CCC' (two notches below the corporate credit rating) from 'CCC-'. The '6' recovery rating indicates S&P's expectation of negligible (0%-10%) recovery of principal in the event of default. "El Pollo Loco will now have greater financial flexibility and enhanced liquidity, since it no longer has to comply with maintenance financial covenants," explained Standard & Poor's credit analyst Charles Pinson-Rose. The previous corporate credit rating reflected that the company would have difficulty complying with financial covenants and would have to allocate excess cash to debt reduction to do so. FIROOZHE A. ZAFARI: Case Summary & 18 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Firoozhe A. Zafari 13503 Hunting Hill Way Gaithersburg, MD 20878 Bankruptcy Case No.: 09-18537 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: Richard B. Rosenblatt, Esq. The Law Offices of Richard B. Rosenblatt 30 Courthouse Square Ste. 302 Rockville, MD 20850 Tel: (301) 838-0098 Email: rrosenblatt@rosenblattlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of Mr. Zafari's petition, including his list of 18 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mdb09-18537.pdf The petition was signed by Mr. Zafari. FORTUNOFF HOLDINGS: Court OKs June 18 Auction for Marks/IP Assets ----------------------------------------------------------------- Fortunoff Holdings Inc. obtained on May 12, 2009, approval from the Bankruptcy Court for the Southern District of New York, obtained approval of procedures for the sale of the Company's intellectual property assets. The approved sale procedures include an auction, which is scheduled to be held on June 18 at the offices of Sidley Austin, LLP, 787 Seventh Avenue, New York, NY 10019. A bid deadline of June 16, 2009, has been set, with a scheduled sale approval hearing on June 22, 2009. CONSOR Intellectual Asset Management was retained by Fortunoff to assist in the marketing and sale of the Company's IP assets. Fortunoff's intellectual asset portfolio for sale includes certain trademarks, domain names, and customer databases. In addition, CONSOR has identified additional value added elements such as the bridal registry, exclusive jewelry designs, 1-800-Fortunoff, training materials, knowledge databases and IT systems. The primary IP assets for sale are: Worldwide Trademark Portfolio: Over 70 registered trademarks including, Fortunoff, The Source, Prime Time, Oxford Hall, FSS and Avignon. Domain Names: Over 75 International domain names including, Fortunoff.com, fortunoffbrides.com and fortunoffjewelry.com. Toll Free Numbers: 1-800-FORTUNOFF / 1-866-FORTUNOFF / 1-888- Fortunoff Customer Database: Over 750,000 customer names, many with detailed purchase history in jewelry, home furnishings and bridal registries. IT Assets: -- Fortunoff.com website- including copyrighted design layout and source code -- Customer Relationship Management (CRM) System -- Fortunoff Intranet - Complete training materials, style guides and other critical marketing/training assets -- DCWizard Warehousing System -- Using radio frequency technology, this system provides real-time inventory management and distribution. Exclusive Jewelry Designs: -- Petra collection (approximately 25 designs) -- House 533 collection (approximately 1,000 designs) -- House 511 collection (approximately 500 designs) -- House 513 collection (approximately 2,000 designs) -- Avignon - Branded Swiss watches Fortunoff Branded Products: -- The Source grills -- Window treatments -- Dinnerware -- Towels On this assignment, CONSOR will work alongside Fortunoff's financial advisor, Zolfo Cooper, in the auction and sale of the assets as contemplated under the sale procedures. CONSOR's retention was approved by the bankruptcy court on April 17, 2009. "We are very pleased to be retained by Fortunoff," said Daryl Martin, Executive Vice President of CONSOR. "Fortunoff is a bastion in the luxury home goods segment. We are confident that the marketplace recognizes the heritage and longevity of the Fortunoff brand, and that the goodwill amassed over the last 85+ years will ultimately translate into a sizable recovery for the estate." About CONSOR CONSOR is recognized as an industry leader in the valuation, licensing and disposition of all forms of intellectual property and intangible assets. CONSOR professionals have extensive experience in protecting, preserving and maximizing the value of intellectual property and intangible assets in distressed situations. Over the years CONSOR has valued and/or disposed of the intellectual property portfolios for major retailers in bankruptcy including Barneys, Montgomery Wards and Service Merchandise, among others. Recently, CONSOR has managed multi- million dollar dispositions of the intellectual property portfolios for Tower Records and Collins & Aikman. About Fortunoff Holdings New York-based Fortunoff Holdings LLC -- http://www.fortunoff.com/ -- started out as a family-owned business founded by Max and Clara Fortunoff in 1922, until it merged with M. Fortunoff of Westbury, L.L.C. and Source Financing Corporation in 2004. Fortunoff offers customers fine jewelry and watches, antique jewelry and silver, everything for the table, fine gifts, home furnishings including bedroom and bath, fireplace furnishings, housewares, and seasonal shops including outdoor furniture shop in summer and enchanting Christmas Store in the winter. It opened some 20 satellite stores in the New Jersey, Long Island, Connecticut and Pennsylvania markets featuring outdoor furniture and grills during the Spring/Summer season and indoor furniture (and in some locations Christmas trees and decor) in the Fall/Winter season. Fortunoff Holdings and its affiliate, Fortunoff Card Company LLC, filed for Chapter 11 protection on February 5, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10497). Lee Stein Attanasio, Esq., at Sidley Austin LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Zolfo Cooper LLC as their special financial advisor and The Garden City Group Inc. as their claims agent. When the Debtors filed for protection from their creditors, they listed assets and debts between $100 million to $500 million each. This is the second bankruptcy filing by Fortunoff. In 2008, Fortunoff Fine Jewelry and Silverware LLC filed for Chapter 11. An entity owned by NRDC Equity Partners bought Fortunoff during its first Chapter 11 case. FRONTIER COMMUNICATIONS: Fitch Puts 'BB' Rating on Positive Watch ----------------------------------------------------------------- Fitch Ratings has placed Frontier Communications Corporation's Issuer Default Rating of 'BB' and its securities on Rating Watch Positive owing to its proposed transaction with Verizon Communications Inc. In the transaction, Verizon will spin-off local exchange assets in 14 states, consisting of approximately 4.8 million access lines, into a separate company which will then merge with Frontier in a tax-free transaction to create a large local exchange company. The company to be merged into Frontier will be moderately levered, and post-merger Frontier is expected be less levered than currently. As a result, Frontier's 'BB' IDR and other ratings have been placed on Rating Watch Positive. The transaction values the company that will be merged into Frontier (Spinco) at approximately $8.6 billion, consisting of approximately $5.3 billion in equity and $3.3 billion of debt. Verizon shareholders will receive $5.3 billion in Frontier equity in the merger, and there is a share price collar of $7.00 to $8.50 on Frontier's common stock price. The transaction is subject to customary regulatory approvals, the approval of Frontier's shareholders, and the obtaining of financing. Fitch will evaluate Frontier's prospective financial performance as well as its anticipated capital structure in determining Frontier's ratings. Fitch believes there is execution risk regarding Frontier's integration of the former Verizon operations into its own. Fitch believes the execution risk is offset to some extent by Frontier's significant experience in integrating large transactions and the scalability of is existing systems. Fitch will evaluate Frontier's capability to mitigate such risks. Fitch places these ratings on Rating Watch Positive: Frontier Communications Corporation: -- IDR 'BB'; -- Senior unsecured $250 million credit facility due May 18, 2012 'BB'; -- Senior unsecured $148.5 million senior unsecured term loan due Dec. 31, 2012; -- Senior unsecured notes and debentures 'BB'. Industrial development revenue bonds (IDRBs) 'BB': -- Maricopa County Industrial Development Authority (AZ) IDRB series 1995. FRONTIER COMMUNICATIONS: Moody's Reviews 'Ba2' Corp. Family Rating ------------------------------------------------------------------ Moody's Investors Service has placed the debt ratings of Frontier Communications Corporation on review for possible upgrade, following the announcement that it plans to merge with a company to be spun out of Verizon Communications' northern and western operations in a reverse Morris Trust transaction, valued at $8.6 billion in cash and stock, where by Verizon shareholders will own between 66% and 71% of the post-merger entity. However, Moody's believes the change of control provisions in Frontier's debt are unlikely to be triggered and Moody's expects the existing Frontier debt to stay in place. As part of the transaction, VZ-Spinco will issue approximately $3 billion of new debt, while it is anticipated that $250 million of existing debt at the Verizon entities to be acquired will remain in place post-merger, although the amount may be up to $425 million, depending on the final timing of the merger closing. As a result Moody's has also placed the A3 senior unsecured debt ratings of Verizon - Northwest, North, and West Virginia on review for a possible downgrade, as it is unlikely that the post-merger entity will be rated at that level. The ratings actions incude: On Review for Possible Downgrade: Issuer: Verizon North Inc. -- Senior Unsecured Regular Bond/Debenture, currently A3 Issuer: Verizon Northwest Inc. -- Senior Unsecured Regular Bond/Debenture, currently A3 Issuer: Verizon West Virginia, Inc. -- Senior Unsecured Regular Bond/Debenture, currently A3 On Review for Possible Upgrade: Issuer: Frontier Communications Corporation -- Corporate Family Rating, currently Ba2 -- Probability of Default Rating, currently Ba2 -- Senior Unsecured Bank Credit Facility, currently Ba2 LGD4-53% -- Senior Unsecured Regular Bond/Debenture, currently Ba2 LGD4- 53% -- Senior Unsecured Shelf, currently (P)Ba2 Outlook Actions: Issuer: Frontier Communications Corporation -- Outlook, Changed To Rating Under Review From Stable Issuer: Verizon North Inc. -- Outlook, Changed To Rating Under Review From Negative Issuer: Verizon Northwest Inc. -- Outlook, Changed To Rating Under Review From Negative Issuer: Verizon West Virginia, Inc. -- Outlook, Changed To Rating Under Review From Negative Frontier expects to generate significant expense savings from the merger, initially estimated at about $500 million annually. Non- recurring integration costs will likely be in the $200 million range, while the company is likely to ramp up capital expenditures during the first years of integration in order to increase VZ- Spinco properties' high speed data addressability. Frontier's current high speed data availability is approximately 90%. The merger will produce a company with operations in 27 states serving over 7 million access lines. The increase in scale is expected to bolster Frontier's overall competitive position and increase operational and capital efficiencies, especially those related to network modernization and new product development. However, the challenge to Frontier of integrating a company more than twice its size is substantial and will be an additional and significant focus of Moody's review of the ratings. Frontier believes that the operating systems transition in this situation will be easier than in some recent Verizon asset sales, as only the West Virginia operations, which represent about 13% of the VZ-Spinco lines, will require a systems conversion at closing. For the remaining lines, VZ-Spinco will be operating under independent management and operating systems prior to the merger effectiveness and will not require a timed cutover, which is expected to materially reduce the transition issues that other carriers have experienced. The transaction is expected to result in significant deleveraging at Frontier, leading to a potentially improved credit profile. The combined pro forma 2008 Debt/EBITDA would be 2.6x, while its dividend would be cut by 25% due to a $0.25 annual per share dividend reduction effective after closing of the transaction. Frontier has stated its intent to achieve investment grade financial metrics following the merger. Moody's will assess management's commitment and ability to maintain an investment grade credit profile for the combined company in light of the intense competitive challenges confronting the sector and the resulting pressures to achieve the targeted cost savings. Before the transaction can close, numerous regulatory approvals, including those of several state Public Utility Commissions, are required. Conditions that may be imposed by some of these states' regulatory authorities could have a material impact on the combined entities' future operating performance and financial profile. In addition, the Obama administration and Federal Communication Commission could potentially put forth comprehensive reforms of intercarrier compensation and universal service rules. Changes to the current structure of these and other regulatory frameworks could also have an impact on the combined company's future operating and financial performance and will also be a focus of Moody's review. Moody's most recent rating action for Frontier was on April 3, 2009, at which time Moody's assigned a Ba2 rating to the company's new note issuance. Moody's most recent rating action for Verizon - Northwest, North, and West Virginia Frontier was on October 28, 2008, at which time Moody's confirmed the issuers' A3 senior unsecured rating and placed a negative outlook on the debt ratings. Pro-forma for the transaction, Frontier, headquartered in Stamford, Connecticut, will become the fifth largest wireline telecommunications company in the US, serving over 7 million access lines in primarily rural areas and small- and medium-sized cities. Verizon Communications is headquartered in Basking Ridge, New Jersey. FRONTIER COMMUNICATIONS: S&P Affirms 'BB' Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Rating Services said it affirmed all ratings, including the 'BB' corporate credit and senior unsecured debt ratings on Stamford, Connecticut-based Frontier Communications Corp. The outlook is stable. The '3' recovery rating on the senior unsecured debt remains unchanged and indicates expectations for meaningful (50%-70%) recovery in the event of payment default. However, S&P's affirmation of the current unsecured debt ratings assumes no material change in recovery as a result of the prospective financing although the company has not identified a pro forma capital structure. The affirmation follows the company's announcement that it has signed a definitive agreement to acquire approximately 4.8 million lines and 1 million broadband customers in 14 states created by a spin-off of a portion of Verizon Communications Inc.'s wireline assets in a stock-based transaction valued at about $8.6 billion. The new entity will carry approximately $3.3 billion of debt, about $3 billion of which will be debt issued at the new entity while the remainder is existing debt at the Verizon entities. Verizon shareholders will receive shares of Frontier common stock, which is expected to have a value of $5.25 billion. "The ratings affirmation reflects the lower pro forma leverage of the combined company, which S&P believes will be at or under 3.0x adjusted post-transaction close, compared to 4.2x as of March 31, 2009," said Standard & Poor's credit analyst Allyn Arden, "as well as the potential for meaningful operating synergies." These factors are largely offset by S&P's concerns regarding the integration of the acquired Verizon properties longer term, given that the new company will be about 3x the size of Frontier on a stand-alone basis, as well as the potential for accelerating line losses in these markets because of competitive challenges currently facing the wireline industry. While the above average line losses and lower digital subscriber line penetration in the legacy Verizon markets provides opportunities for Frontier, during an extended transition period, they also entail the risk of further customer losses. Access-line losses at stand-alone Frontier were about 7.1% during the first quarter of 2009, in line with the industry average. However, line losses at the legacy Verizon properties are greater, at over 10%, despite the rural nature of these markets. GENERAL MOTORS: May Sell Main Biz, Liquidate Other Assets in Ch 11 ------------------------------------------------------------------ John Kell at Dow Jones Newswires reports that General Motors Corp. said that it would likely sell assets to a new operating company and liquidate its remaining assets if it were to file for bankruptcy protection. Dow Jones relates that GM said that if it doesn't receive enough tenders under its exchange offer for $27 billion in notes by June 1, would file for bankruptcy. Dow Jones states that GM said that it is continuing to solicit support from its bondholders, saying if the exchange offer was successful, it would allow the Company to restructure out of bankruptcy court. Neal E. Boudette, Jeff Bennett, and Alex P. Kellogg at The Wall Street Journal report that GM will be notifying on May 15 about 1,000 GM dealers that the Company will close. About 1,600 more of GM's approximately 6,000 dealers are likely to be hurt when the Company phases out or sells its Pontiac, Hummer, Saturn, and Saab brands, WSJ notes. Kevin Krolicki at Reuters relates that as part of its restructuring, GM has had legal advisers mapping out a strategy if it is forced to file for bankruptcy. GM, according to Reuters, has said that those options could include a sale of its profitable assets under "Section 363" of the bankruptcy code. According to Dow Jones, GM is looking to focus on four core brands. It is planning to close and sell off its underperforming offerings as it seeks to make itself more viable amid a sharp downturn in auto sales. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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 Pay Suppliers Ahead of Deadline for Plan/ Ch.11 ------------------------------------------------------------------ Jewel Gopwani and Tim Higgins at Detroit Free Press report that General Motors Corp. has accelerated plans to pay many of its suppliers on May 28, instead of June 2. Free Press quoted Brett Hoselton, auto analyst for KeyBanc Capital Markets, as saying, "It incrementally increases the probability that General Motors will file for Chapter 11 bankruptcy protection as it accelerates supplier payments ahead of its deadline to meet the terms of the U.S. Treasury's loan or file for Chapter 11." According to Free Press, GM spokesperson Dan Flores said, "With all the marketplace uncertainty and planned production down time we are taking this action to help our suppliers. We think this decision is good news." The decision doesn't mean that GM will file for bankruptcy protection, the report says, citing Mr. Flores. Free Press quoted International Component Holdings Group North America spokesperson David Ladd as saying, This brings stability to what would have been a very chaotic moment, if they filed for Chapter 11." Opel Merger With Fiat May Lead to Job Loss According to The Wall Street Journal, Klaus Franz, the chief of workers' council of GM's Adam Opel AG, said that a possible merger of the Company's European business and Fiat SpA could lead to a loss of as many as 18,000 jobs. WSJ relates that a German government official said that ministers will be holding a meeting -- to be attended by German Vice Chancellor Frank-Walter Steinmeier, German Finance Minister Peer Steinbrueck, German Labor Minister Olaf Scholz, German Economics Minister Karl-Theodor zu Guttenberg and chancellery chief Thomas de Maiziere -- to discuss bridge financing for Opel. 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. As reported by the Troubled Company Reporter, GM reported net loss of $6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of $3.3 billion in the year-ago quarter. Excluding special items, the company reported an adjusted net loss of $5.9 billion in the first quarter of 2009 compared to an adjusted net loss of $381 million in the first quarter of 2008. As of March 31, 2009, GM had $82.2 billion in total assets and $$172.8 billion in total liabilities, resulting in $90.5 billion in stockholders' deficit. On April 27, General Motors Corp. presented the United States Department of Treasury with an updated plan as required by the loan agreement signed by GM and the U.S. Treasury on December 31, 2008. The plan addresses the key restructuring targets required by the loan agreement, including a number of the critical elements of the plan that was submitted to the U.S. government on December 2, 2008. Among these are: U.S. market competitiveness; fuel economy and emissions; competitive labor cost; and restructuring of the company's unsecured debt. It also includes a timeline for repayment of the Federal loans, and an analysis of the company's positive net present value. The plan details the future reduction of GM's vehicle brands and nameplates in the U.S., further consolidation in its workforce and dealer network, accelerated capacity actions and enhanced manufacturing competitiveness, while maintaining GM's strong commitment to high-quality, fuel-efficient vehicles and advanced propulsion technologies. GM also launched a bond exchange offer for roughly $27 billion of unsecured public debt. If successful, the bond exchange would result in the conversion of a large majority of this debt to equity. GM is also in talks with the UAW to modify the terms of the Voluntary Employee Benefit Association, and with the U.S. Treasury regarding possible conversion of its debt to equity. The current bond exchange offer is conditioned on the converting to equity of at least 50% of GM's outstanding U.S. Treasury debt at June 1, 2009, and at least 50% of GM's future financial obligations to the new VEBA. GM expects a debt reduction of at least $20 billion between the two actions. In total, the U.S. Treasury debt conversion, VEBA modification and bond exchange could result in at least $44 billion in debt reduction. GM filed with the Securities and Exchange Commission a registration statement related to its exchange offer. The filing incorporates the revised Viability Plan. A full-text copy of the filing is available at http://ResearchArchives.com/t/s?3c09 A full-text copy of GM's viability plan presented in February 2009 is available at http://researcharchives.com/t/s?39a4 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. GOODY'S LLC: Wants Plan Filing Period Extended to August 11 ----------------------------------------------------------- Goody's, LLC, et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive period to propose a plan until August 11, 2009, and their exclusive period to solicit acceptances of a plan until October 12, 2009. This is the first request of the Debtors for the extension of their exclusive periods. The Debtors tell the Court that since filing for bankruptcy, they have focused their attention on conducting GOB sales and winding down their businesses, in addition to running the day-to-day operations of their businesses. As a result, the Debtors relate that they have not had an adequate opportunity to develop and negotiate a Chapter 11 plan that can be approved by the Court and their creditor constituencies. In addition, the Debtors relate that their cases are only 4 months old and while a bar date has been established by the Court, this deadline has not yet passed. As reported in the Troubled Company Reporter on April 29, 2009, the Court established June 22, 2009, on or before 5:00 p.m. (Eastern Time), as the general bar date for filing proofs of claim in the Debtors' bankruptcy cases. The governmental bar date is July 13, 2009. About Goody's LLC Headquartered in Wilmington, Delaware, Goody's LLC, successor to Goody's Family Clothing Inc., operates a chain of clothing stores. Goody's LLC and 13 of its affiliates filed for Chapter 11 protection on January 13, 2009 (Bankr. D. Del. Lead Case No. 09-10124). M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor, LLP; Paul G. Jennings, Esq., Gene L. Humphreys, Esq., Edward C. Meade, Esq., and Kristen C. Wright, Esq., at Bass Berry & Sims PLC represent the Debtors as counsel. Skadden, Arps, Slate Meagher & Flom, LLP is the Debtors' special counsel; FTI Consulting Inc. is the Debtors' financial advisor. Goody's Family Clothing Inc., as of May 31, 2008, operated 355 stores in several states with approximately 9,868 personnel of which 170 employees are covered under a collective bargaining agreement. Goody's Family and 19 of its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. D. Del. Lead Case No. 08-11133). Gregg M. Galardi, Esq., and Marion M. Quirk, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Paul G. Jennings, Esq., at Bass, Berry & Sims PLC, represented the Debtors. The Company emerged from bankruptcy October 20, 2008, after closing more than 70 stores. The reorganized entity was named Goody's LLC. GREGORY WAYNE MAPLES: Case Summary & 17 Largest Unsec. Creditors ---------------------------------------------------------------- Joint Debtors: Gregory Wayne Maples Patricia E Maples 2995 McLemore Cir Franklin, TN 37064 Bankruptcy Case No.: 09-05366 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Middle District of Tennessee (Nashville) Judge: Keith M. Lundin Debtors' Counsel: Elliott Warner Jones, Esq. Drescher & Sharp Pc 1720 West End Avenue Suite 300 Nashville, TN 37203 Tel: (615) 425-7121 Fax: (615) 425-7111 Email: ejones@dsattorneys.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 17 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/tnmb09-05366.pdf The petition was signed by the Joint Debtors. GREEKTOWN CASINO: Court OKs Assumption of Detroit Development Pact ------------------------------------------------------------------ The Honorable Judge Walter Shapiro issued an opinion declaring Greektown Casino-Hotel is not in default of the development agreement it entered into with the City of Detroit and the Economic Development Corporation of the City of Detroit, and in turn granted Greektown's motion to assume the development agreement. Judge Shapiro noted in his opinion, ". . . particularly in this case, the Court believes the assumption statute contemplates and favors affording Greektown (and the City as well) the full range of the benefits and obligations of, and in, their carefully negotiated bargain." He concluded, ". . . Greektown's motion is granted and it should present an appropriate order." "We are incredibly pleased with Judge Shapiro's ruling," said Charles M. Moore, Senior Managing Director at Conway MacKenzie, Inc., the restructuring advisor assisting Greektown with its reorganization. "This decision is an important step for Greektown to obtain the tax rollback it is entitled to and furthermore, an important step in moving Greektown out of bankruptcy. That outcome will not only benefit Greektown and the many people depending on its solvency, but it will also ultimately benefit the city of Detroit." As reported by the Troubled Company Reporter on April 15, 2009, the Debtors reiterated before the U.S. Bankruptcy Court for the Eastern District of Michigan that they merely seek authority to assume their Development Agreement with the City of Detroit and the Economic Development Corporation of the City of Detroit, and continue to perform under the Agreement. Daniel J. Weiner, Esq., at Schafer and Weiner PLLC, in Bloomfield Hills, Michigan, said the Debtors do not intend to assign the Development Agreement to any other party. The Debtors noted that the City of Detroit seems intent on blocking them from assuming the Development Contract by citing certain provisions of Section 365 of the Bankruptcy Code. Mr. Weiner said Section 365 is clear that it does not prevent a debtor-in-possession from assuming, and continuing to perform pursuant to, an executory contract in a Chapter 11 reorganization, but rather serve only to prevent the assignment of a contract by a trustee to a third party other than the debtor or debtor-in- possession in violation of non-bankruptcy "applicable" state or federal law -- none of which apply to the Debtors' request. Should the City succeed in blocking the Debtors' right to assume the Development Contract and terminating the Contract by enforcing its "ipso facto clauses," the City will have destroyed any chance for reorganization in the Debtors' cases as the Debtors would be forced to immediately cease operations, irretrievably losing tremendous value, and dashing any hopes for recovery for the creditors of the Debtors' estates, Mr. Weiner said. Judge Shapero authorized the City to file its responses to the Debtors' requests under seal. In a separate order, Judge Shapero approved the Debtors' and the City of Detroit's request to take certain limited depositions. The Detroit Free Press reported in April that counsel for the City of Detroit argued before Bankruptcy Judge Shapero that Greektown Casino "has failed multiple times to fulfill promises it made to the City . . . that are crucial to a tax break." A 5% tax rollback could improve Greektown's cash flow by up to $15 million annually, Mary Francis Masson of the Detroit Free Press related. Greektown previously asserted that it is entitled to this tax rollback by virtue of the opening of the Greektown Casino Hotel Complex in February 2009. Representing the City, Michael J. Schaller Esq., at Shefsky & Froelich, enumerated to the Court certain instances whereby Greektown Casino is noted not to have performed under its Development Agreement with the City, the newspaper noted. The news source quoted Mr. Schaller as saying: -- Greektown Casino's bankruptcy filing violated the Contract; -- Greektown never completed a public hearing that required it to offer 10% ownership; and -- Greektown owe the City $660,000 in related fees. Greektown refuted the City's allegations. Amidst the dispute over the tax rollback, the Michigan Gaming Control Board also needs to make a stand on the matter, Ms. Masson of the Detroit Free Press said. The Board has the authority to grant the tax rollback. "The precedent says we wait for the City of Detroit to tell us that the city is in full compliance. That would be the triggering event for us. We would defer to the City of Detroit in that regard," Gaming Board Chairman Damian Kassab told the news source. The Detroit Free Press said Judge Shapero, together with an attorney representing the City of Detroit and an attorney representing Greektown Casino estate, toured the Casino Complex on April 7, 2009. A number of entities expressed interest in bidding for the acquisition of Greektown's Casino complex, Detroit Free Press said in a report in April. The potential buyers though maintained that a tax rollback is crucial to their offer because it would put Greektown under the same tax rate as its competitors MotorCity and MGM Grand, the newspaper said. Tom Celani, a Michigan businessman, was one of those interested in buying the Casino complex, various reports have said. Mr. Celani partnered with Plainfield Asset Management L.L.C., a Connecticut- based hedge fund to bid for Greektown's Casino, according to the report. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operates world- class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). HAYES LEMMERZ: Seeks Court Approval of $200MM DIP Facility ---------------------------------------------------------- Hayes Lemmerz International Inc. and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to borrow up to $100,000,000 in new money priority term loans and up to $100,000,000 in roll-up loans, pursuant to the Second Amended and Restated Credit Agreement, dated May 30, 2007, as amended. The Debtors seek permission to use no more than $30,000,000 in new money priority term loans on an interim basis. The Debtors also seek authority to use their prepetition secured lenders' cash collateral and grant adequate protection to the prepetition lenders. $200-Mil. DIP Facility The Debtors have obtained from certain of the Prepetition Lenders a superpriority priming delayed draw term loan facility in an aggregate principal amount of up to $200,000,000 and other financial accommodations allocated as: (1) A superpriority priming delayed draw term loan facility in an aggregate principal amount of $80,000,000 to be used to fund the operating and working capital needs of the Debtors and the Non-US Guarantors in accordance with a 13-week budget; (2) A standby uncommitted multiple draw term loan facility in excess of full utilization of New Money Priority Term Loan Commitments, in one or more series, in an aggregate amount not exceeding $20,000,000. Participating lenders have the right to roll-up on a dollar-for- dollar basis the principal amount of their Prepetition Loans. Anthony W. Clark, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, the Debtors' proposed counsel, says a bankruptcy majority of the Prepetition Lenders -- i.e., more than 50% in number and 2/3 in amount -- have committed to fund or have consented to the DIP Facility. The other Prepetition Lenders say they support the Debtors' restructuring efforts and do not want them to discontinue business operations or liquidate their assets, which would be the unavoidable consequence if the DIP Facility or some other immediate financing is not approved very soon. The maturity date of the Priority Term Facility will be the earliest of (i) stated maturity which will be six months following interim approval of the DIP facility or (ii) the effective date of a Chapter 11 plan for any Debtor. The Maturity Date may be extended by up to three months by the Requisite DIP Lenders upon payment by the U.S. Borrower to the DIP Lenders of a non-cash fee satisfactory to the Requisite DIP Lenders. The Priority Tem Lenders will have a lien in all assets of the Debtors, including a claim or cause of action arising under Bankruptcy Code sections 544, 545, 547, 548, 549, 553(b), 723(a), or 724(a), subject to a carve-out for U.S. Trustee fees and Clerk of the Bankruptcy Court fees, as well as for fees payable to professionals retained in the Debtors' cases. The Debtors also propose to remit to the Priority Term Facility Agent 100% of all accounts receivable collections, proceeds of sales of inventory, fixed assets, and any other assets, including sales in and outside the ordinary course of business, and all other cash or cash equivalents. The Debtors propose to pay these fees: * An upfront fee of [4%] of New Money Priority Term Loans payable to the account of the DIP Lenders. * An exit fee of [3]% of New Money Priority Term Loans payable to the account of the DIP Lenders. * The Prepetition Lenders that did not commit to participate in the Priority Term Facility, but consented to enter into the DIP Credit Agreement will be entitled to a consent fee of 8.5% of the issued common stock of the reorganized company upon consummation of the transactions, actions, proceedings or cases contemplated by a Plan Term Sheet filed with the Court. * Agency Fees as agreed with the DIP Administrative Agent. Citicorp North America, Inc. is the Administrative Agent under the Debtors' $495,000,000 prepetition credit facility. Deutsche Bank Securities Inc. acts as Prepetition Syndication Agent; and Citicorp North America, Inc., acts as Prepetition Documentation Agent. Citigroup Global Markets Inc. anddeutsche Bank Securities Inc. serve as Joint Book-Running Lead Managers and Joint Lead Arrangers for the Prepetition Facilities. Deutsche Bank Trust Company Americas acts as Administrative Agent under the Debtors' $80,000,000 Senior Secured Superpriority DIP Credit Facility and $80,000,000 Senior Secured Superpriority Roll- Up Credit Facility. Deutsche Bank Securities Inc. and General Electric Capital Corporation serve as Joint Book-Running Lead Managers, Joint Lead Arrangers and Syndication Agents for the DIP Facilities. Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and Brian Kinney, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York; and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, serve as counsel to the DIP Agent. The Debtors' prepetition credit facilities consist of a term loan facility of EUR260 million maturing in 2014 borrowed by Hayes Luxembourg; a revolving credit facility of $125 million maturing in 2013 available to HLI Operating Company, Inc., and Hayes Luxembourg; and a synthetic letter of credit facility of EUR15 million available to both borrowers. Hayes' non-debtor affiliates are indebted pursuant to short term bank borrowings and other notes in the aggregate amount of $46.6 million as of January 31, 2009. Hayes also had a domestic accounts receivable securitization facility with a normal program limit of $25 million during Fiscal 2007 and 2008. The facility has an expiration date of May 30, 2013. Due to concentration limits and restrictions on financing certain receivables, the majority of the program has not been available. There were $6 million of borrowings under the programs as of January 31, 2009, which was the maximum amount available under this facility. The facility limit was reduced to $5 million in April 2009 and no future advances will be made under the facility. If the borrowing base falls below $5 million, amounts currently advanced in excess of the borrowing base will need to be repaid. As of January 31, 2009, Hayes had approximately $670.1 million of total indebtedness. Lenders Dictate Plan Process By May 21, the Debtors will provide a milestone schedule satisfactory to the Requisite DIP Lenders regarding efforts to effectuate a sale of substantially all of the assets of the Debtors, whether pursuant to one or more sales under Section 363 of the Bankruptcy Code, a plan of reorganization, liquidation or any other change in control transaction. If requested, the Debtors will provide weekly updates to the DIP Lenders and their advisors regarding the progress of the Debtors towards meeting the sale transaction milestones and facilitating a Sale Transaction. The Debtors will simultaneously pursue both the transactions contemplated by the Plan Term Sheet and the Sales Transactions which will include the active marketing of assets to potential financial and strategic purchasers. The DIP Lenders will later determine whether the Debtors should pursue transactions contemplated by the Plan Term Sheet or the Sales Transactions. The Plan Term Sheet proposes to give: -- 87.25% of the shares of new common stock to be issued by the Reorganized Company to the DIP Lenders in full satisfaction of their claims; -- 8.5% of the shares of New Common Stock to consenting prepetition secured lenders; -- 4% of the New Common Stock to the Holders of Prepetition Secured Obligations -- other than Lenders that participated in the DIP Facility -- in full satisfaction of their claims; and -- 0.25% of the New Common Stock to the Holders of the 2015 notes issued by Hayes Luxembourg in full satisfaction of their claims. Other Unsecured Creditors will share on a $250,000 cash pool. Holders of equity interest are out of the money. If the DIP Lenders elect the transactions contemplated by the Plan Term Sheet, the Debtors will immediately suspend all efforts concerning the Sale Process, unless the Debtors determine that proceeding with the Sales Transactions maximizes the value of the Debtors' estates. If the DIP Lenders elect the Sales Transactions, the Debtors will immediately suspend all efforts concerning transactions contemplated by the Plan Term Sheet, and proceed solely with the Sales Transactions, unless the Debtors. In connection with the Sales Transaction, the Debtors' Lenders may "credit bid" their claims to serve as a "stalking horse bid". The DIP Lenders require the Debtors to cause confirmation of a chapter 11 plan of reorganization before the 150th day following the Petition Date or consummate an acceptable chapter 11 plan prior to the Maturity Date. "None of the Prepetition Lenders have argued that liquidating the Debtors is better than reorganizing them or selling their business as a going concern," Mr. Clark says. "Nonetheless, there may be unresolved intercreditor issues raised by certain of the Prepetition Lenders regarding the terms of the DIP Facility and the allocation of value among the Prepetition Lenders under a potential plan of reorganization or going concern sale. If liquidation is to be avoided, these issues must be resolved, whether by agreement or through litigation, now." About Hayes Lemmerz International, Inc. Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC serves as the Company's financial advisors. AlixPartners, LLP serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22. Hayes Lemmerz and its direct and indirect domestic subsidiaries and one subsidiary in Mexico filed for bankruptcy in December 2001 before the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens, according to Mr. Clawson, who also served as chairman and chief executive officer at that time. The Court confirmed the Company's reorganization plan in May 2003, allowing the Company to exit bankruptcy in June 2003. In accordance with the 2003 Plan, approximately $2.1 billion in pre- petition debt and other liabilities were discharged. The Plan provided for holders of prepetition secured claims to receive $478.5 million in cash and 53.1% of the reorganized company common stock. Holders of senior note claims were to receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims were to receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. HAYES LEMMERZ: Euro Noteholders Balk at $200MM DIP Facility ----------------------------------------------------------- An ad hoc group of holders of Euro notes issued by Hayes Luxembourg objects to Hayes Lemmerz International, Inc., and its affiliates' request to incur postpetition secured financing. The Euro note holders call the Debtors' DIP motion a disguised asset purchase agreement, noting that the proposed loan agreement and related Plan Term Sheet allows the DIP Lenders to credit bid their DIP loans for purposes of acquiring the Debtors' assets. The group says the key terms of the DIP facility serve to stifle, rather than encourage value maximizing strategies. The group takes exception with the proposed roll-up of up to $100 million in prepetition loans. "Roll-ups are troubling in every bankruptcy case, and they always warrant careful scrutiny," the group says. According to the noteholder group, the proposed roll-up serves as a break-up fee on a $100 million asset purchase agreement. The group says the Plan Term Sheet doesn't attempt to justify the proposed allocation of equity in the reorganized company. The Plan Term Sheet proposes to give: -- 87.25% of the shares of new common stock to be issued by the Reorganized Company to the DIP Lenders in full satisfaction of their claims; -- 8.5% of the shares of New Common Stock to consenting prepetition secured lenders; -- 4% of the New Common Stock to the Holders of Prepetition Secured Obligations -- other than Lenders that participated in the DIP Facility -- in full satisfaction of their claims; and -- 0.25% of the New Common Stock to the Holders of the 2015 notes issued by Hayes Luxembourg in full satisfaction of their claims. The group also points out that the DIP loan permits the Lenders to exercise excessive control over the Debtors' pursuit of alternative restructuring strategies. The Euro Note Holders group is represented by Garvan F. McDaniel, Esq., at Bifferato Gentilotti LLC in Wilmington, Delaware; and Timothy B. DeSieno, Esq., Mark W. Deveno, Esq., and Scott K. Seamon, Esq., at Bingham McCutchen LLP in New York. About Hayes Lemmerz International, Inc. Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC serves as the Company's financial advisors. AlixPartners, LLP serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22. Hayes Lemmerz and its direct and indirect domestic subsidiaries and one subsidiary in Mexico filed for bankruptcy in December 2001 before the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens, according to Mr. Clawson, who also served as chairman and chief executive officer at that time. The Court confirmed the Company's reorganization plan in May 2003, allowing the Company to exit bankruptcy in June 2003. In accordance with the 2003 Plan, approximately $2.1 billion in pre- petition debt and other liabilities were discharged. The Plan provided for holders of prepetition secured claims to receive $478.5 million in cash and 53.1% of the reorganized company common stock. Holders of senior note claims were to receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims were to receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. HAYES LEMMERZ: Receives Court Approval of First Day Motions ----------------------------------------------------------- Hayes Lemmerz International, Inc., received Court approval of up to $100 million of debtor-in-possession financing, permitting it immediate access to up to $30 million to continue operations in the ordinary course of business. The DIP financing is being provided by lenders holding a majority of the Company's prepetition secured debt. Nearly all of the lenders holding the Company's prepetition secured debt executed consents approving the DIP loan. A final hearing on the DIP financing has been set for June 10, 2009. The Company also received approval of several first day motions designed to ensure daily operations will continue normally during the restructuring. The "first-day" relief approved by the Honorable Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware also provides the Company with permission to pay certain prepetition and postpetition employee wages and benefits during its restructuring, to honor certain prepetition obligations to customers and to continue use of its cash management systems. The Company also received approval to pay certain prepetition amounts owed to essential suppliers and freight carriers. "The court's approval of our DIP financing will provide us with sufficient liquidity to fund operating expenses and meet obligations during the restructuring, assuring that we are able to conduct business as usual," said Chief Executive Officer Curtis J. Clawson. "As we use the Chapter 11 process to strengthen our balance sheet, our operations around the globe remain focused on being a premier automotive supplier by satisfying customers, being a low-cost producer and having the best people." About Hayes Lemmerz International, Inc. Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC serves as the Company's financial advisors. AlixPartners, LLP serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22. Hayes Lemmerz and its direct and indirect domestic subsidiaries and one subsidiary in Mexico filed for bankruptcy in December 2001 before the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens, according to Mr. Clawson, who also served as chairman and chief executive officer at that time. The Court confirmed the Company's reorganization plan in May 2003, allowing the Company to exit bankruptcy in June 2003. In accordance with the 2003 Plan, approximately $2.1 billion in pre- petition debt and other liabilities were discharged. The Plan provided for holders of prepetition secured claims to receive $478.5 million in cash and 53.1% of the reorganized company common stock. Holders of senior note claims were to receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims were to receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. INTOWN PROPERTIES: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Intown Properties, LLC P.O. Box 10250 Portland, ME 04104 Bankruptcy Case No.: 09-20692 Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. ------ -------- Munjoy Hill Properties, LLC 09-20693 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Maine (Portland) Debtor's Counsel: D. Sam Anderson, Esq. Bernstein Shur Sawyer & Nelson 100 Middle St., West Tower Portland, ME 04101 Tel: (207) 774-1200 Fax: (207) 774-1127 Email: sanderson@bernsteinshur.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by William P. Simpson, manager of the Company. JOURNAL REGISTER: Seeks to Rescind Contracts with Unions -------------------------------------------------------- Eric Morath at Dow Jones Newswires reports that Journal Register Co. is seeking the permission of the permission of the U.S. States Bankruptcy Court for the Southern District of New York to terminate its contracts with a group of unions representing about 220 workers. The affected unions include the Newspaper Drivers and Handlers, the Graphic Communications Conference, Local 13N; the Newspaper Guild of Detroit, Local 22; and the Detroit Mailers Union, No. 40. Dow Jones relates that a hearing on Journal Register's request to break the contract is scheduled for May 29. According to court documents, Journal Register wants to stop certain pension obligations and impose a 15% wage reduction on those workers to save about $2.6 million in annual labor cost. Eliminating the pension programs is critical because those plans are underfunded, and the minimum payment obligations are expected to increase this year, Dow Jones states, citing Journal Register. Journal Register, says Dow Jones, also wants to institute new policies concerning overtime and other work rules for the union- represented workers at the Company's Independent Newspapers Inc. subsidiary. Journal Register said in court documents that the "exceptional and disproportionate" cost increases associated with the pension plans pose "considerable risk" to the subsidiary's vitality and the company's overall hopes of a successful reorganization. Dow Jones notes that Journal register may not find support for its reorganization plan without the cost cuts. Dow Jones quoted Dave DeLong, president of the Newspaper Drivers and Handlers, Local 372 union, as saying, "We never like to see any concessions. But in bankruptcy they're making the case for their needs, and we're trying to minimize our pain." Mr. DeLong, according to Dow Jones, said that he anticipates continuing out-of-court negotiations, but no new bargaining sessions have been scheduled. Journal Register has been in talks with the unions since February 2009, and both agreed to the cancellation of pension plans for the pressman and drivers, Dow Jones states. The locals, says Dow Jones, wouldn't consent to the cancellation of the plans for the writers' guild and the printers and mailers. The unions said in court documents said that those plans should continue because they aren't as severely underfunded. Yardley, Pennsylvania-based Journal Register Company (PINKSHEETS: JRCO) -- http://www.JournalRegister.com/-- owns 20 daily newspapers, more than 180 non-daily publications and operates over 200 individual Web sites that are affiliated with the Company's daily newspapers, non-daily publications and its network of employment Web sites. All of the company's operations are strategically clustered in six geographic areas: Greater Philadelphia; Michigan; Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson regions of New York. The company also owns JobsInTheUS, a network of 20 employment Web sites. The company, along with its affiliates, filed for Chapter 11 bankruptcy protection on February 21, 2009 (Bankr. S.D. N.Y. Case No. 09-10769). Marc Abrams, Esq., Rachel C. Strickland, Esq., Shaunna D. Jones, Esq., and Jennifer J. Hardy, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors as counsel. William M. Silverman, Esq., Scott L. Hazan, Esq., and Jeanette A. Barrow- Bosshart, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors as counsel. Conway, Del Genio, Gries & Co., LLC, provides restructuring management services to the Debtors. Robert P. Conway is the company's chief restructuring officer. The company listed $100 million to $500 million in total assets and $500 million to $1 billion in total debts. KINGSWAY FINANCIAL: S&P Downgrades Counterparty Rating to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term counterparty credit and senior unsecured debt ratings on Toronto- based specialty insurance provider Kingsway Financial Services Inc. to 'B-' from 'B'. At the same time, Standard & Poor's removed its ratings from CreditWatch with negative implications, where they were placed February 10, 2009. The outlook is negative. "The downgrade reflects Kingsway's weak first-quarter 2009 results and the continued deterioration and lack of stability surrounding its business franchise," said Standard & Poor's credit analyst Foster Cheng. Moreover, it also reflects the company's weaker liquidity and cash flow position. During the quarter, the company experienced weakness on both side of the border. In Canada, underwriting losses were experienced at its cross-border trucking insurance operations, while in the U.S. the company continued to experience troubles within its lead U.S. operating company, Lincoln General Insurance Co. The results represent the 10th straight quarter the company has had unfavorable reserve development at Lincoln, which continues to be the main source of Kingsway's financial issues without any clear end. S&P expects Kingsway's profitability to remain weak especially as the company tries to refocus. In efforts to rebuild profitability, capital adequacy, and de-risk its business, Kingsway has, or plans to, introduce several strategic initiatives. These include major cost cutting; staff reductions; divesture of its common equity exposure; exiting noncore or unprofitable lines of business at Lincoln, Kingsway General Insurance Co., and Southern United Fire Insurance Co.; and selling off other noncore assets (including putting them into run-off). Part of its restructuring plans has also included executive changes, including the appointment of a several new board of directors and a new president and CEO, all of which S&P view as neutral to the rating. Despite these actions, S&P believes that a return to profitability in the immediate future will be difficult mainly due to the possibility of additional write-downs during Kingsway's restructuring process, its uncertain insurance franchise, its reduced competitive position, and extremely competitive insurance markets. The negative outlook reflects S&P's assessment of the company's weak financial profitability and liquidity, its weakened capital adequacy, its uncertain insurance franchise, and reduced competitive position. It also reflects what S&P view as the company's weak management oversight, weak enterprise risk management, reduced financial flexibility, and the uncertainty surrounding the acceptance of Lincoln's run-off plan by the Pennsylvania Insurance Department. If Kingsway were to experience additional deterioration within its insurance franchise or liquidity profile, or encounter further material reserve adjustments or write-downs, S&P could lower the ratings by at least one notch. However, if Kingsway demonstrates stability around its reserves and underwriting performance, S&P could revise the outlook to stable within the next six to 18 months. It is unlikely the ratings will improve in the near future, given it will take time for management to implement all of its initiatives in efforts to significantly improve its financial strength. Nevertheless, for year-end 2009, S&P expects Kingsway to maintain a leverage ratio of less than 65% (currently at 47.6%) and a hybrid-to-total capital ratio of less than 30% (currently at 23.6%). S&P believes the fixed-charge coverage and interest coverage ratio will continue to be negative for the remainder of 2009 as the company refocuses its strategy to become profitable again. KINGSWAY LINKED: S&P Downgrades Global Scale Rating to 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the linked return of capital preferred units issued by Kingsway Linked Return of Capital Trust. The lowering of these ratings mirrors the downgrade of the Kingsway ROCGP's senior unsecured 10-year note, which is linked to the LROC preferred units. Ratings Lowered Kingsway Linked Return of Capital Trust Rating ------ Class To From ----- -- ---- LROC preferred units Canada national scale P-4 (Low) P-4 Global scale B- B LANDAMERICA FINANCIAL: Fidelity to Acquire LoanCare for $16.3MM --------------------------------------------------------------- Fidelity National Financial, Inc., signed a definitive agreement under which it will acquire LoanCare Servicing Center, Inc. LoanCare, founded in 1983, provides subservicing services on more than 100,000 loans for 90 companies in all 50 states, making it roughly the seventh largest subservicer in the nation. LoanCare, which generated 2008 revenue of roughly $19 million and adjusted pre-tax earnings of roughly $4.4 million, provides traditional subservicing, outsourced loss mitigation and other servicing related products and services. The company has previously been a wholly-owned subsidiary of LandAmerica Financial Group, Inc. The total purchase price was roughly $16.3 million and LoanCare had tangible equity of roughly $12.4 million at February 28, 2009. The closing of the acquisition is subject to the satisfaction of certain closing conditions, including approval of the court overseeing the LandAmerica Chapter 11 bankruptcy proceeding. "We are excited to add the LoanCare capabilities to the FNF family of companies," said Chairman William P. Foley, II. "We believe that LoanCare and ServiceLink, our national lender platform, can generate substantial ancillary product revenue opportunities through the subservicing and loss mitigation platforms, including additional title and closing revenue, trustee sale guarantees, valuations and a broad range of significant default based revenues." Fidelity National Financial, Inc. -- http://www.fnf.com/-- provides title insurance, specialty insurance, claims management services and information services. FNF is the nation's largest title insurance company through its title insurance underwriters -- Fidelity National Title, Chicago Title, Commonwealth Land Title, Lawyers Title, Ticor Title, Security Union Title and Alamo Title -- that collectively issue more title insurance policies than any other title company in the United States. FNF also provides flood insurance, personal lines insurance and home warranty insurance through its specialty insurance business. FNF also is a leading provider of outsourced claims management services to large corporate and public sector entities through its minority-owned subsidiary, Sedgwick CMS. FNF is also an information services company in the human resource, retail and transportation markets through another minority-owned subsidiary, Ceridian Corporation. About LandAmerica Financial Group LandAmerica Financial Group, Inc. is a leading provider of real estate transaction services with offices nationwide and a vast network of active agents. LandAmerica and its affiliates operate through approximately 700 offices and a network of more than 10,000 active agents throughout the world, including Mexico, Canada, the Caribbean, Latin America, Europe and Asia. LandAmerica Financial Group and its affiliate LandAmerica 1031 Exchange Services, Inc., filed for Chapter 11 protection November 26, 2008 (Bankr. E.D. Va. Lead Case No. 08-35994). Dion W. Hayes, Esq., and John H. Maddock III, Esq., at McGuireWoods LLP, are the Debtors' bankruptcy counsel. In its bankruptcy petition, LFG listed total assets of $3,325,100,000, and total debts of $2,839,800,000 as of September 30, 2008. On March 6, 2009, affiliate LandAmerica Assessment Corporation, aka National Assessment Corporation, filed its own petition for Chapter 11 relief. Affiliate LandAmerica Title Company filed for for Chapter 11 relief on March 27, 2009. Bankruptcy Creditors' Service, Inc., publishes LandAmerica Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by LandAmerica Financial and its affiliate LandAmerica 1031 Exchange Services, Inc. (http://bankrupt.com/newsstand/or 215/945-7000) LEAR CORP: Posts $264.8 Million 1st Quarter 2009 Net Loss --------------------------------------------------------- Lear Corporation reported a net loss (attributable to Lear) of $264.8 million, or $3.42 per share, in the first quarter of 2009. This compares with net income (attributable to Lear) of $78.2 million, or $1.00 per share, in the first quarter of 2008. Lear reported net sales of $2.2 billion and a pretax loss of $257.1 million, including restructuring costs and other special items of $121.2 million. Pretax income (loss) before interest, other expense, restructuring costs and other special items (core operating earnings) was negative $66.7 million in the first quarter of 2009. This compares with net sales of $3.9 billion, pretax income of $113.5 million and core operating earnings of $186.5 million in the first quarter of 2008. Lear said the decline in net sales for the quarter, compared with a year ago, primarily reflects the significant decline in industry production in North America and Europe. Lear noted that the business environment in the first quarter was extremely challenging due to significantly lower production volumes globally. In North America, industry production compared with a year ago was down 51%. In Europe, industry production was down 40%. Globally, automotive production was down 36%. In the first quarter of 2009, free cash flow was negative $219.0 million, as compared with free cash flow of negative $21.2 million in the first quarter of 2008. The decline in free cash flow compared with a year ago primarily reflects lower earnings. Net cash used in operating activities was $336.8 million in the first quarter of 2009, and net cash provided by operating activities was $136.0 million in the first quarter of 2008. The Company had approximately $1.2 billion in cash and cash equivalents as of April 4, 2009, as compared to approximately $1.6 billion as of December 31, 2008. The decline reflects negative free cash flow in the first quarter, as well as the termination of an accounts receivable factoring facility in Europe. Lear had total assets of $6.4 billion, current liabilities of $4.4 billion and long-term liabilities of $2.0 billion, resulting in $41.4 million in stockholders' deficit. "Given the adverse economic conditions and dramatic slowdown in automotive demand at the end of last year, many of our major customers had extended plant shutdowns in the first quarter," said Bob Rossiter, Lear's chairman, chief executive officer and president. "As a result, production was down sharply in North America and Europe. In this difficult environment, we are minimizing our operating costs and accelerating our restructuring efforts." "Despite these challenges, Lear continued to make progress on its operating priorities, including further diversification of its global sales, business development in emerging markets and continued new product innovation. We have global scale and excellent technical capabilities in critical product lines, as well as a competitive low-cost footprint, a solid backlog of new business and a strong cash position of $1.2 billion," Mr. Rossiter added. "We remain focused on weathering the current downturn, while positioning ourselves for future success when industry conditions improve." Going Concern Doubt Ernst & Young LLP in Detroit, Michigan, in its March 2009 audit report, raised substantial doubt about the Company's ability to continue as a going concern. During the fourth quarter of 2008, Lear elected to borrow $1.2 billion under its primary credit facility to protect against possible disruptions in the capital markets and uncertain industry conditions, as well as to further bolster its liquidity position. As of December 31, 2008, Lear had approximately $1.6 billion in cash and cash equivalents on hand, providing adequate resources to satisfy ordinary course business obligations. Lear, however, elected not to repay the amounts borrowed at year end in light of continued market and industry uncertainty. As a result, as of December 31, 2008, Lear was no longer in compliance with the leverage ratio covenant contained in the primary credit facility. On May 13, 2009, the Company and the lenders under its primary credit facility entered into an amendment and waiver of covenant defaults through June 30, 2009. Discussions with the Company's lenders and others regarding alternatives to address the Company's capital structure are on-going. In its Annual Report on Form 10-K for the year ended December 31, 2008, Lear said it was reviewing strategic and financing alternatives available to the Company and has retained legal and financial advisors to assist it. Lear has said a restructuring would likely affect the terms of its primary credit facility, other debt obligations, including its senior notes, and common stock and may be effected through negotiated modifications to the agreements related to its debt obligations or through other forms of restructurings, which Lear may be required to effect under court supervision pursuant to a voluntary bankruptcy filing under Chapter 11 of the U.S. Bankruptcy Code. A default under Lear's primary credit facility could result in a cross-default or the acceleration of Lear's payment obligations under other financing agreements. As of December 31, 2008, the scheduled maturities of Lear's long- term debt, excluding obligations under the primary credit facility, for the five succeeding years are: Year Maturities ---- ---------- 2009 $4,300,000 2010 $7,500,000 2011 $1,800,000 2012 $1,300,000 2013 $301,700,000 Lear will hold its Annual Meeting of Stockholders on May 21, 2009, at 10:00 a.m. EDT. The meeting will take place at the Company's headquarters in Southfield, Michigan. About Lear Corp. Based in Southfield, Michigan, Lear Corporation -- http://www.lear.com/-- is one of the world's leading suppliers of automotive seating systems, electrical distribution systems and electronic products. The Company's products are designed, engineered and manufactured by a diverse team of 80,000 employees at 210 facilities in 36 countries. Lear is traded on the New York Stock Exchange under the symbol [LEA]. * * * Lear Corp. had approximately $1.6 billion in cash and cash equivalents as of December 31, 2008, providing more than adequate resources to satisfy ordinary course business obligations, according to the Company. Lear had $6.8 billion in total assets, $4.6 billion in total current liabilities, $2.0 billion in long term liabilities, and $198.9 million in stockholders' equity as of December 31, 2008. In January, Moody's Investors Service lowered the Corporate Family and Probability of Default ratings of Lear, to Caa2 from B3. In a related action, the rating of the senior secured term loan was lowered to Caa1 from B2, and the rating on the senior unsecured notes was lowered to Caa2 from B3. The ratings remain on review for further possible downgrade. Standard & Poor's Ratings Services also lowered its corporate credit rating on Lear to 'B-' from 'B'. At the same time, S&P also lowered its issue-level ratings on the company's debt. The ratings remain on CreditWatch, where they had been placed with negative implications on Nov. 13, 2008. LOS ANGELES: Faces $529MM Budget Deficit, Opposes "Loan" of Funds ----------------------------------------------------------------- Just as mayors and city councils in the state of California slash city budgets and reduce services to deal with the worst economic crisis in decades, they learned yesterday that state leaders may try to coerce local governments into providing a forced $2 billion bailout of the state budget if the May 19 ballot measures fail. The May Revise option released by Gov. Arnold Schwarzenegger, containing that bailout, or "loan," essentially forces cities to rescue the state from its financial quagmire and would cripple city services. To take money from cash-strapped cities now amounts to a profound "anti-stimulus" action by the state. Saying that he absolutely "despised the proposal," the Governor also said earlier this week in a meeting with mayors and council members that he understands this proposal would be devastating to public safety services and that he did not know how the state would pay back the loan. Statewide opinion polls consistently show a vast majority of Californians themselves don't believe borrowing should be used to balance the state's budget and oppose public safety cuts. The League of California Cities in a statement said California cities cannot afford to bail out the state when they are already adopting extremely painful cuts to balance their own budgets. This shotgun "loan" of city property tax revenues would force additional service cuts including police and firefighter layoffs and result in longer emergency response times and fire station closures. The League of California Cities cite a snapshot of what some of California's cities are facing: -- Los Angeles is facing a $529 million budget deficit and Mayor Villaraigosa has urged the city council to declare a fiscal emergency to give him authority to layoff and furlough thousands of city employees; -- Rohnert Park may have to lay off 31 employees, including 17 Sworn officers and nine public safety technicians -- and would still not be able to balance its budget; -- Stockton, to address a $31 million budget deficit, sent layoff notices to 55 police officers, 35 civilian employees and demoted seven officers; and -- Vallejo, in the midst of bankruptcy, may be forced to decimate city services by 20 percent and staff are recommending that the city council cut 30 sworn officer positions as well as close two fire stations. "It's absolutely unthinkable that the state would consider sacrificing local public safety at a time like this. City officials are already making painful cuts locally, laying off employees, cutting services and much more, to make our budgets balance. Taking local funds used for public safety to bail out the state budget is the last thing the public wants to see," said League President and Rolling Hills Estates Mayor Judy Mitchell. "It's painful. We're going well below our ability to provide essential services. We have nothing left to cut," said Vallejo City Council Member Stephanie Gomes. Reflecting the impact that the stagnating economy has had on city budgets, cities across the state are passing resolutions declaring a state of severe fiscal hardship. To date, close to 100 cities have either passed or are scheduled to pass a resolution. California's news leaders understand why it's fundamentally wrong for the state to raid local revenues. Writing in an op-ed in the Los Angeles Times, D.J. Waldie, a contributing editor, expressed it poignantly stating: "The quality of life in California's neighborhoods will be part of the wreckage. Closed libraries mean kids won't have a place to go after school. Unsupervised parks means they won't have a safe place to play. Furloughed workers won't be available to process your business license, check your building plans or deal with your complaint. Everyday life -- the level at which local government works -- will be harder and coarser." The Governor met with city officials earlier this week in Culver City and San Jose to discuss Propositions 1A-F and the impact of their failure on state and local services. He told the assembled city officials that he will be under extraordinary pressure to "borrow" local government funds if the ballot measures fail and the budget deficit reaches $21.3 billion. The League and the city officials present told the Governor that they strongly opposed any borrowing on top of the $900 million cities already provide the state each year in city property taxes. The League endorsed the propositions on April 6. "The League is supporting Props. 1A -- F because they provide a framework for beginning to responsibly balance the state budget without gimmicks. The state should follow the lead of the cities of California in dealing with its budget deficit -- cut spending, sell assets, enhance revenues and don't borrow," said League Executive Director Chris McKenzie. City officials will fight any budget proposal that attempts to raid local property tax revenues to bail out the state budget. Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials. LOUISIANA VALVE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Louisiana Valve & Machine Works, Inc. 4122 Riverview Dr. Port Allen, LA 70767 Bankruptcy Case No.: 09-10664 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Middle District of Louisiana (Baton Rouge) Judge: Douglas D. Dodd Debtor's Counsel: Arthur A. Vingiello, Esq. Steffes, Vingiello & McKenzie, LLC. 13702 Corsey Boulevard, Building 3 Baton Rouge, LA 70817 Tel: (225) 751-1751 Fax: (225) 751-1998 Email: avingiello@steffeslaw.com Estimated Assets: $0 to $50,000 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/lamb09-10664.pdf The petition was signed by Wayne Marchand, owner of the Company. LUCKY CHASE: Section 341(a) Meeting Set for June 3 -------------------------------------------------- Donald F. Walton, the United States Trustee for Region 21, will convene a meeting of creditors of Lucky Chase II, LLC on June 3, 2009, at 1:30 p.m., at the Claude Pepper Federal Bldg., 51 SW First Avenue, Room 1021, Miami, FL 33130. 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 Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. About Lucky Chase II, LLC Headquartered in Pittsburgh, Pennsylvania, Lucky Chase II, LLC, operates a single-asset, real estate company. The Company filed for Chapter 11 on April 29, 2009 (Bankr. S. D. Fla. Case No. 09-18087). Arthur J. Spector, Esq., represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. LUCKY CHASE: AmTrust Wants Case Dismissed as Bad Faith Filing ------------------------------------------------------------- Amtrust Bank, secured creditor, asks the U.S. Bankruptcy Court for the Southern District of Florida to dismiss Lucky Chase II, LLC's Chapter 11 proceeding as a "bad faith" filing. AmTrust tells the Court that the Debtor filed for bankruptcy merely to forestall its foreclosure of the Debtor's property. In fact, AmTrust relates, unsecured claims in the Debtor's bankruptcy case total to no more than $440,000, or no more than 1.5% of the secured debt owed to it in the amount of $29.8 million as of May 4, 2009. AmTrust further states that there is substantial and continuing loss and diminution of the estate as property values continue to decrease on a regular basis. Further, AmTrust believes that the Debtor has no equity in the property, and assuming that any equity does exits, it is quickly being depleted by the falling real estate market, the accuing default interest and late charges and the additional liabilities the Debtor is allowing to accrue on the property. Additionally, AmTrust narrates that the Debtor has also allowed the property to fall into disrepair and has not paid the 2008 property taxes. Finally, AmTrust says that the Debtor has also engaged in the unauthorized use of rents, issues and profits/cash collateral. Based on the foregoing statements, AmTrust Bank believes there is abundant and compelling "cause" to dismiss this Chapter 11 ase. As reported in the Troubled Company Reporter on May 14, 2009, AmTrust Bank asked the Bankruptcy Court for the appointment of a Chapter 11 trustee in the Debtor's bankruptcy case. AmTrust tells the Court that it is urgent that a trustee be appointed in the Chapter 11 case to ensure that the property is secure and to collect rental payments pledged to AmTrust. The Debtor executed and delivered to Ohio Savings Bank, the predecessor in interest to AmTrust Bank, a $44.4 million promissory noted date August 10, 2006. To secure payment and performance of the note, the Debtor also executed and delivered to AmTrust a certain Renewal Mortgage and Security Agreement dated August 10, 2006. In August 2008, the Debtor and the guarantors: Scott Deaktor, Marsha Deaktor and Marcia Deaktor, defaulted under the note and mortgage. The Debtor and guarantors owe the lender $28,209,824 that is due as outstanding principal on the note, together with accrued interest thereon. A hearing on AmTrust's motion is set for May 14, 2009. About Lucky Chase II, LLC Headquartered in Pittsburgh, Pennsylvania, Lucky Chase II, LLC operates a single-asset, real estate company. The Company filed for Chapter 11 on April 29, 2009 (Bankr. S. D. Fla. Case No. 09-18087). Arthur J. Spector, Esq., represents the Debtor in its restructuring efforts. The Debtor's assets and debts both range from $10 million to $50 million. LUMINENT MORTGAGE: Can Secure Add'l Advance of $305,000 from Arco ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland has granted Luminent Mortgage Capital, Inc., et al., permission to obtain post-petition secured super-priority financing of up to $305,000 on the same terms and conditions set forth in the DIP Agreement dated September 5, 2008, among the Debtors and Arco Capital, Ltd., as lender. The final DIP order was entered by the Court on October 6, 2008. The additional advance of $305,000 will be use solely for paying certain insurance premiums pursuant to the terms of the DIP Agreement. The DIP Liens securing the DIP obligations, including the additional advance, will attach to all assets of the Debtors and their estates, including all cash deposits, tax refunds, claims, causes of action and any other asset subject to the DIP liens securing the DIP obligations as provided in the final DIP order. In no event will the maximum aggregate amount which may be borrowed under the DIP agreement, including this additional advance, exceed the amount of $3,242,000. About Luminent Mortgage Luminent Mortgage Capital, Inc. (OTCBB: LUMCE), is a real estate investment trust, or REIT, which, together with its subsidiaries, has historically invested in two core mortgage investment strategies. Under its Residential Mortgage Credit strategy, the company invests in mortgage loans purchased from selected high- quality providers within certain established criteria as well as subordinated mortgage-backed securities and other asset-backed securities that have credit ratings below AAA. Under its Spread strategy, the company invests primarily in U.S. agency and other highly-rated single-family, adjustable-rate and hybrid adjustable- rate mortgage-backed securities. Luminent and nine subsidiaries filed on September 5, 2008, for relief under Chapter 11 of the U.S Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland, Baltimore Division (Lead Case No. 08-21389). Immediately prior to the filing, the Debtor executed a Plan Support and Forbearance Agreement with secured creditor Arco Capital Corp., Ltd., WAMU Capital Corp. and convertible noteholders representing 100% of the outstanding principal amount of its convertible notes. Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the Debtors as counsel. The U.S. Trustee for Region 4 appointed creditors to serve on an Official Committee of Unsecured Creditors. Jeffrey Neil Rothleder, Esq., at Arent Fox LLP, represents the Creditors Committee as counsel. In its operating report for the month of September 2008, Luminent Mortgage Capital, Inc., reported $1,960,516 in total assets and $374,868,632 in total liabilities, resulting in a $372,908,116 stockholders' deficit. Full-text copies of the Debtors' operating report for September 2008 are available for free at: http://researcharchives.com/t/s?345b At March 31, 2008, Luminent Mortgage Capital, Inc.'s consolidated balance sheet showed $3,757,205,000 in total assets, $3,980,417,000 in total liabilities, and $223,212,000 in stockholders' deficit. Luminent and its debtor-subsidiaries continue to operate their business as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. LYNEVE RESTAURANT: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Lyneve Restaurant, Inc. dba Delphi Diner 350 Montauk Highway West Islip, NY 11795 Bankruptcy Case No.: 09-73459 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Eastern District of New York (Central Islip) Judge: Alan S. Trust Debtor's Counsel: Edward Zinker, Esq. 278 East Main Street P.O. Box 866 Smithtown, NY 11787-0866 Tel: (631) 265-2133 Email: mail@zandhlaw.com Total Assets: $886,000 Total Debts: $1,116,892 A full-text copy of the Debtor's petition, including its list of 13 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nyeb09-73459.pdf The petition was signed by Elias Panagoulias, president of the Company. LYONDELL CHEMICAL: Names ConocoPhillips' Gallogly as CEO -------------------------------------------------------- LyondellBasell Industries said its Supervisory Board has named James L. Gallogly chief executive officer, effective immediately. Gallogly will succeed Volker Trautz who has announced his retirement from the company. The terms of the appointment are subject to the approval of the U.S. bankruptcy court overseeing LyondellBasell's reorganization plan. "Jim is a highly respected executive in the polymers, chemicals and fuels industries and experienced in successfully navigating the cyclical challenges of these businesses," said Len Blavatnik, Chairman of LyondellBasell's Supervisory Board. "His impressive record in the industry, combined with years of international experience, makes him the right person to head LyondellBasell and to fully realize the company's potential," Mr. Blavatnik said. "I am pleased to welcome Jim to LyondellBasell," said Mr. Trautz. "I have known him for many years, and I am confident that he will successfully guide the company as it reaffirms its leadership position in the chemical industry." Mr. Gallogly commented: "LyondellBasell has an extremely capable management team and a sound strategy for advancing the company in the years to come. My role will be to harness the initiatives that are currently in motion, and manage the business and operations as we successfully transition out of Chapter 11 near year end. "LyondellBasell boasts a heritage of innovation and excellence and a global footprint that makes it one of the elite participants in the chemicals and polymers markets. I believe in LyondellBasell's long-term potential, and I have the highest admiration for the people at all levels of the company who have executed well in recent months under extremely challenging conditions. I look forward to working with the leadership team to deliver value to our customers, employees, creditors and investors," Mr. Gallogly said. Mr. Gallogly already has met with a number of the company's stakeholders and shared his vision for the company. Mr. Gallogly comes to LyondellBasell from ConocoPhillips where he served as executive vice president of exploration & production, and before that as executive vice president of refining, marketing and transportation. From 2000 to 2006, he was president and chief executive officer of Chevron Phillips Chemical Company, one of the world's top producers of olefins and polyolefins. Mr. Gallogly began his career with Phillips Petroleum Company in 1980, serving in a variety of legal, finance and operational roles including two assignments in Stavanger, Norway. He also served as vice president of plastics and later senior vice president of chemicals. Mr. Gallogly serves on the board of directors of the American Petroleum Institute. He previously served on the boards of the American Chemistry Council, the American Plastics Council and the National Petrochemical and Refiners Association. He received a Bachelor of Arts degree from the University of Colorado in 1974 and a law degree from the University of Oklahoma in 1977. He completed the Advanced Executive Program at the J.L. Kellogg Graduate School of Management at Northwestern University in 1998. Mr. Gallogly was born in St. John's, Newfoundland, Canada. He currently resides in Houston. About LyondellBasell Industries LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan (comprising $3.25 billion in new loans and a $3.25 billion roll-up of existing loans) and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24 in order to seek protection against claims by certain financial and U.S. trade creditors. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Court Moves Plan Filing Deadline to Sept. 15 --------------------------------------------------------------- Judge Robert Gerber of the U.S. Bankruptcy Court for the Southern District of New York ruled in favor of Lyondell Chemical Company and its affiliates and extended the Debtors' (i) exclusive plan filing period through and including September 15, 2009, and (ii) exclusive solicitation period, through and including December 15, 2009. Several parties objected to the request. At the hearing held April 30, 2009, Judge Gerber said that "we haven't had enough time for the debtor to form the financial underpinnings of a plan," Tiffany Kary of Bloomberg News reports. Judge Gerber noted that Lyondell was proceeding in good faith to form a plan, notes Bloomberg. A. USB AG UBS AG, Stamford Branch, as agent for the Term DIP Lenders, argued that the proposed extension of the Exclusive Solicitation Period to December 15, 2009, runs beyond the December 1, 2009 DIP Financing Facility milestone, the date by which the confirmation hearing to a reorganization plan must occur. Moreover, December 15, 2009 is the maturity date of the DIP Financing Facility. UBS explained that it is aware that the Confirmation Hearing Milestone can be briefly extended under certain circumstances. However, in order to comply with the DIP Financing Facility's requirement that the confirmation hearing take place on or before December 1, 2009, the Debtors would need to complete the plan solicitation process at least several weeks prior to the final date of the Debtors' requested Solicitation Period extension. UBS said although it is not objecting to the Motion, it is reserving all rights under the Term DIP Facility. B. Committee The Official Committee of Unsecured Creditors noted that it does not object to an extension of the Exclusive Periods, and in fact supports the extension. However, the Committee explained that at this stage in the Debtors' Chapter 11 cases, the length of the extensions is excessive and should be limited to 75 days. Steven D. Pohl, Esq., at Brown Rudnick LLP, in New York, pointed out that the Chapter 11 cases have been foreshortened by the milestones set in the DIP Order. The Debtors' proposed extension would effectively grant the Debtors a monopoly for the remainder of their Chapter 11 cases, would unfairly tip the balance in their favor and disadvantage the creditors, he asserted. More importantly, he noted there are two intervening events that will occur in the near term that may change the context of the Debtors Chapter 11 cases: (i) the Debtors have not yet completed their business plan, which will form the basis of their reorganization plan and related negotiations; and (ii) the Committee has a June 1 deadline to file its motion for standing to assert lender claims on behalf of the Debtors' estates and the related draft complaint. If approved, the Committee's Standing Motion may have significant ramifications for the formulation and confirmation of a plan. Against this backdrop, the Committee asked the Court to sustain its Objection and limit any extension of the Debtors' Exclusive Periods to no more than 75 days. Debtors Respond to Committee The Debtors' counsel, Christopher R. Mirick, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, said that in February 2009, the Committee had argued that the milestones were unreasonable because the Debtors could not be expected to negotiate, propose and confirm a reorganization plan by the end of 2009. Now, the Committee seeks to limit even further than the milestones the Debtors' Exclusive Periods by shortening the proposed extension for only 75 days, he said. Mr. Mirick asserted that the proposed extension is not atypical because all relevant factors support the sought extension pursuant to the Motion. This is not a case, where a debtor is using exclusivity as a hammer in its negotiations with creditor constituencies, he explains. Instead, this is a large and complex case, where within the milestones the Debtors are working diligently through the plan process, he explains. Mr. Mirick stated that the fact that the Debtors' business plan will be available in June 2009, shows the Debtors' effort to move the Chapter 11 cases forward on a fair basis for all constituencies. By completing the business plan in June 2009, the Debtors' creditors will have the business plan for three months and will enhance all parties' ability to negotiate a reorganization plan before the filing of a disclosure statement and plan in September 2009 to comply with the milestones, he assured the Court. The Committee's possible filing of a motion for standing simply has no bearing on whether the Debtors' Exclusive Periods should be extended, he adds. Mr. Mirick also said none of the reasons argued by the Committee provides justifiable cause for denying the Debtors' proposed extension. If the Exclusive Periods are only extended for two and one-half months, it is certain that the Debtors will file a further extension request, and cost and expense will be incurred, whether truly needed or not, he pointed out. About LyondellBasell Industries LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. About a year after completing the merger, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc., filed for Chapter 11. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan (comprising $3.25 billion in new loans and a $3.25 billion roll-up of existing loans) and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24 in order to seek protection against claims by certain financial and U.S. trade creditors. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MANITOWOC CO: May Violate Loan Covenants, in Talks with Bank Group ------------------------------------------------------------------ The Manitowoc Company, Inc., said it is likely to violate financial covenants pertaining to its $2.925 billion credit facility, as amended and restated August 2008, and its senior notes due 2013, as early as the second quarter of 2009 based on a lower financial reforecast for its businesses completed in April 2009. As of March 31, Manitowoc was in compliance with all affirmative and negative covenants in its debt instruments. Manitowoc said it has begun negotiations with its banking group to obtain an amendment to its New Credit Agreement to avoid the potential violation. "Despite our present belief that we will obtain the amendment, we cannot provide absolute assurance that we will be able to secure any amendments to the New Credit Agreement or waivers of the covenants contained in the New Credit Agreement," Manitowoc said. "Any such amendment to the New Credit Agreement or waiver of the covenants will likely involve upfront fees, higher annual interest costs and other terms less favorable to us than those currently in the New Credit Agreement." "In the event we are not able to obtain the appropriate amendment waiver, the outstanding debt under the New Credit Agreement would become due and we would need to seek alternative financing. We cannot provide absolute assurance that we would be able to obtain alternative financing. The failure to obtain alternative financing would have a material adverse impact on the company and raise substantial doubt about our ability to continue as a going concern." Manitowoc entered into a $2.4 billion credit agreement in April 2008, which was amended and restated as of August 25, 2008, to ultimately increase the size of the total facility to $2.925 billion, to fund its acquisition of Enodis, a global leader in the design and manufacture of innovative equipment for the commercial foodservice industry. The New Credit Agreement includes four loan facilities: -- a revolving facility of $400.0 million with a five-year term, -- a Term Loan A of $1,025.0 million with a five-year term, -- a Term Loan B of $1,200.0 million with a six-year term, and -- a Term Loan X of $300.0 million with an 18-month term. Manitowoc has the option to increase the borrowing capacity of the revolving facility or Term Loan A, if agreed upon by the lenders, up to an aggregate amount of $300.0 million. Manitowoc is obligated to prepay the three term loan facilities from the net proceeds of asset sales, casualty losses, equity offerings, and new indebtedness for borrowed money, and from a portion of its excess cash flow, subject to certain exceptions. As of March 31, 2009, Manitowoc had outstanding $52.0 million of borrowings under the revolving facility with an interest rate of 3.7%. Borrowings under the revolving facility, Term Loan A, and Term Loan X initially bear interest at 3.25 percent in excess of an adjusted London Interbank Offered rate as defined in the New Credit Agreement, or 1.50 percent in excess of an alternate base rate, at the company's option. Borrowings under the Term Loan B initially bear interest at 3.50 percent in excess of an adjusted LIBO rate as defined in the New Credit Agreement, or 1.50 percent in excess of an alternate base rate, at the company's option. Manitowoc cannot borrow under the alternate base rate option if that rate is lower than the adjusted LIBO rate. A commitment fee of 0.50 percent per year applies to the unused portion of the revolving facility. The New Credit Agreement contains financial covenants whereby the ratio of (a) consolidated earnings before interest, taxes, depreciation and amortization, and other adjustments (EBITDA), as defined in the New Credit Agreement to (b) consolidated interest expense, each for the most recent four fiscal quarters (Consolidated Interest Coverage Ratio) and the ratio of (c) consolidated indebtedness to (d) consolidated EBITDA for the most recent four fiscal quarters (Consolidated Total Leverage Ratio), at all times must each meet certain defined limits. The minimum Consolidated Interest Coverage Ratio is required to be greater than 2.50:1.00 for fiscal quarters through March 31, 2009, 2.75:1.00 for fiscal quarters after March 31, 2009 through March 31, 2010 and greater than 3.00:1.00 thereafter. The Consolidated Total Leverage Ratio is required to be less than 4.00:1.00 through December 30, 2009, less than 3.75:1.00 from December 31, 2009 through December 30, 2010; and less than 3.50:1.00 thereafter. The New Credit agreement also contains customary representations and warranties and events of default. The 2013 Senior Notes also contains customary affirmative and negative covenants. Among other restrictions, the covenants require Manitowoc to meet specified financial tests, which include a consolidated interest coverage ratio (calculated in a manner consistent with the New Credit Agreement) and consolidated senior leverage ratio (Senior Leverage Ratio). The Senior Leverage Ratio is required to be less than 3.00:1.00 for the life of the agreement. The ratio is calculated by comparing the total consolidated indebtedness less subordinated and consolidated EBITDA for the most recent four fiscal quarters. The covenants also limit, among other things, Manitowoc's ability to redeem or repurchase debt, incur additional debt, make acquisitions, merge with other entities, pay dividends or distributions, repurchase capital stock, and create or become subject to liens. As of March 31, 2009 the Company had outstanding $113.8 million of indebtedness that has a weighted-average interest rate of approximately 6.0%. This debt includes outstanding overdraft balances in the Americas, Asia and Europe and various capital leases. Manitowoc reported a net loss of $656.3 million for the first quarter of 2009 versus net income of $102.7 million in the first quarter of the prior year. The loss in the current quarter was due to the combined $729 million non-cash impairment charges. Also affecting profitability in the quarter was a reduction in crane sales, a $10.8 million reduction from foreign currency fluctuations, and restructuring charges of $2.8 million. At March 31, 2009, Manitowoc had $5.16 billion in total assets; $1.46 billion in current liabilities, and $3.10 billion in non- current liabilities, resulting in $592.4 million in total equity. A full-text copy of Manitowoc's first quarter 2009 report is available at no charge at http://ResearchArchives.com/t/s?3cdd About The Manitowoc Company Based in Manitowoc, Wisconsin, The Manitowoc Company, Inc. -- http://www.manitowoc.com/-- is a multi-industry, capital goods manufacturer with over 100 manufacturing and service facilities in 27 countries. It is recognized as one of the world's largest providers of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. Manitowoc also is one of the world's leading innovators and manufacturers of commercial foodservice equipment serving the ice, beverage, refrigeration, food prep, and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications. MARC T DEWBERRY: Case Summary & 13 Largest Unsecured Creditors -------------------------------------------------------------- Joint Debtors: Marc Thomas Dewberry Donna S. Dewberry 9006 Mossy Oak Lane Clermont, FL 34711 Bankruptcy Case No.: 09-06553 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Debtors' Counsel: Peter N. Hill, Esq. Wolff Hill McFarlin & Herron PA 1851 West Colonial Drive Orlando, FL 32804 Tel: (407) 648-0058 Fax: (407) 648-0681 Email: phill@whmh.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 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-06553.pdf The petition was signed by the Joint Debtors. MGM MIRAGE: Fitch Upgrades Issuer Default Rating to 'CCC' --------------------------------------------------------- Fitch Ratings has upgraded MGM MIRAGE's Issuer Default Rating to 'CCC' following the company's announcement of a planned $2.5 billion capital raise and the amendment of its credit facility. Fitch's rating actions are: -- IDR upgraded to 'CCC' from 'C'; -- Senior secured notes upgraded to 'B/RR2' (71-90% recovery band) from 'CCC/RR2'; -- Senior credit facility upgraded to 'B-/RR3' from 'CC/RR3' (51%-70%); -- Senior unsecured notes upgraded to 'CCC/RR4' from 'C/RR4' (31%-50%); -- Senior subordinated notes affirmed at 'C/RR6' (0%-10%). The rating actions affect MGM's $7 billion credit facility, $6.2 billion of outstanding senior unsecured debt, $848 million of outstanding senior subordinated debt, and $750 million of senior secured notes. Fitch has not assigned a Rating Outlook. The upgrade of MGM's IDR to 'CCC' reflects the reduction of near- term restructuring risk primarily due to: -- The raising of roughly $1 billion of equity, which will enable debt repayment; -- The terms of the amended credit facility removed leverage and coverage covenants and waived a potential default from 'going concern' language, which will reduce the near-term likelihood of a bank covenant default; -- The tender of 2009 bonds at par or close to par, which will remove near-term maturity risk; -- The expected issuance of $1.5 billion of senior secured debt, which will supplement liquidity. The proceeds from the capital raising efforts will be used in part to repay $1.9 billion of debt, including at least $750 million under the credit facility, $100 million of 2017 notes, and $1.05 billion of 2009 notes. However, the net debt reduction will be offset by the new $1.5 billion secured debt issuance, which will be secured by the assets and equity in Bellagio and The Mirage, and will carry a much higher cost of capital than the debt it will refinance. The 'CCC' IDR indicates that even if the transactions announced are completed as planned, MGM will remain a highly leveraged gaming operator with high exposure to the Las Vegas Strip, a market that is likely to continue to be under significant operating pressure in upcoming quarters. In addition, the rating incorporates the company's heavy debt maturity schedule in 2010 and beyond, and the uncertainty of the impact that the late 2009 opening of CityCenter may have on MGM's wholly-owned properties. Fitch recognizes that there have been signs that declines in travel demand trends have started to moderate in recent weeks. However, MGM's credit profile contains significant credit risk if those stabilization trends do not continue. Fitch had downgraded MGM's IDR to 'C' on March 23, 2009 following the two-month covenant waiver MGM obtained from bank lenders. That downgrade reflected Fitch's view that there was a high likelihood that bank lenders would exert pressure to address the company's highly leveraged capital structure, resulting in a high risk of a Coercive Debt Exchange, which would be considered a restricted default, but would also be a helpful step in avoiding a bankruptcy filing. Fitch believed it was unlikely that bank lenders would allow for near-term bondholders to be made whole without forcing some concessions. The announcement of the transactions reduces that risk in the near-term, but a CDE or other type of default remains a possibility over the next couple of years, in Fitch's view. In the revised credit agreement, bank lenders minimized their near-term bargaining position by waiving leverage and coverage covenants, granting the release of up to $1.5 billion of collateral, and permitting the repayment of near-term maturities. Rather than extracting additional collateral, bank lenders are seeking to exchange collateral for cash, reduce their overall commitments, and make MGM a more solvent entity that is more attractive to the capital markets, in Fitch's view. By implementing a minimum EBITDA test, the bank lenders' position is supported if the recent stabilization trends do not continue. The amendment to the credit agreement also provides for additional repayment of the credit facility from additional indebtedness or asset sales. An upgrade of MGM's IDR into the 'B' category or a downgrade from 'CCC' would likely be influenced by: -- the continued stabilization of recent travel demand trends that will impact MGM's operating outlook and potential for asset sales; -- the impact of CityCenter on the Las Vegas market and MGM's wholly-owned properties; -- the sustainability of the recent resurgence in capital market activity that could facilitate or restrict reasonable capital market access; -- a change in Fitch's macro-economic outlook, which currently calls for U.S. gross domestic product to decline 3.4% and U.S. consumer spending to decline 2.8% this year, with an expectation that the unemployment rate will peak at 10% in 2010 and there will be a return to slightly positive economic growth next year. Recovery Ratings Fitch will revise its recovery analysis and ratings upon the closing of the $1.5 billion secured notes issuance. At this point, Fitch expects the ratings to be impacted: Fitch currently estimates superior recovery in the 71%-90% range for the NY-NY secured notes, which results in 'B/RR2' rating, or a two-notch positive differential from MGM's 'CCC' IDR. The secured notes will share equally and ratably in the additional collateral that will secure the new $1.5 billion secured notes issuance. Therefore, Fitch expects to upgrade the Recovery Rating for the NY-NY secured notes to RR1 when that transaction closes. Fitch currently estimates good recovery in the 51%-70% range for MGM's senior credit facility, which results in the 'B-/RR3' rating, or a one-notch positive differential from MGM's 'CCC' IDR. The recovery prospects for the credit facility will be negatively impacted by the agreement to release $1.5 billion of collateral, but will be offset by the reduced commitment from the $750 million required paydown. As a result, the credit facility rating is likely to be affirmed or reduced one notch. Fitch currently estimates average recovery toward the high-end of the 31%-50% range for MGM's senior unsecured notes, which results in the 'CCC/RR4' rating, on par with MGM's 'CCC' IDR. The recovery prospects for the unsecured notes will be negatively impacted by collateral to be granted in the new secured issuance, but will be offset by the unsecured tender offer. As a result, the unsecured debt rating is likely to be affirmed, as it has some cushion in the current recovery band. Fitch currently estimate poor recovery in the 0%-10% range for MGM's subordinated debt, resulting in the 'C/RR6' rating, which is a two-notch negative differential from MGM's 'CCC' IDR. The subordinated debt rating won't be affected, due to the existing expectation of minimal recovery. MGM MIRAGE: Moody's Affirms 'Caa2' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service affirmed MGM MIRAGE's Caa2 Corporate Family Rating and Caa3 Probability of Default Rating following the company's announcement it intends to issue $1.0 of new common equity and $1.5 billion of new senior secured notes. A B1 rating was assigned to the proposed $1.5 billion senior secured guaranteed notes. MGM has an SGL-4 Speculative Grade Liquidity rating and a negative rating outlook. The proceeds from the planned debt and $1.0 billion equity offerings will be used to repay bank debt, tender for various notes due in 2009, and redeem notes due 2017. The new senior secured notes will be secured by liens on the Bellagio and Mirage properties and guaranteed by most domestic subsidiaries. The affirmation of MGM's ratings and negative outlook incorporates the anticipated improvement in liquidity as a result of the debt and equity issuance and expected amendment and waiver to its senior credit facility. The amendment will eliminate the total leverage and interest coverage ratios, and permanently waive certain defaults. MGM's Speculative Grade Liquidity rating could be raised to SGL-3 if the proposed transaction closes. The ratings and outlook also reflect MGM's high leverage, the extremely weak operating environment in Las Vegas, and the need to complete and ramp up the massive City Center project. MGM's debt- to-EBITDA for the twelve month period ended March 31, 2009 was about 8.7 times and is likely to increase even with the planned debt repayment. "Despite the expected improvement in MGM's liquidity profile resulting from the planned capital raise, MGM's negative outlook continues to reflect weak demand on the Las Vegas Strip along with the possibility that the company may pursue a transaction that Moody's would deem to be a distressed exchange," said Moody's Senior Analyst Peggy Holloway. Given the company's strong market share and solid fundamental franchise within the gaming industry, a 65% family recovery estimate is applied rather than the 50% mean family-level LGD estimate. The higher recovery estimate results in a Corporate Family Rating that is one-notch higher than the Probability of Default Rating. Ratings assigned: MGM MIRAGE -- $1.5 billion senior secured guaranteed notes at B1 (LGD 1, 2%) Ratings affirmed and assessments updated: MGM MIRAGE -- Corporate Family Rating at Caa2 -- Probability of Default Rating at Caa3 -- Senior unsecured notes at Caa2 (LGD 3, 40%) -- Senior subordinated at Ca (LGD 5, 85%) -- Senior secured notes at B1 (LGD 1, 2%) Mirage Resorts -- Senior unsecured notes at Caa2 (LGD 3, 40%) Mandalay Resort Group -- Senior unsecured notes at Caa2 (LGD 3, 40%) -- Senior subordinated at Ca (LGD 5, 85%) Moody's latest rating action was on March 19, 2009 when the MGM's Corporate Family Rating was lowered to Caa2 from Caa1 and its Probability of Default Rating was lowered to downgraded to Caa3 and Caa2. MGM MIRAGE owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM MIRAGE has a 50% interest in CityCenter Holdings, Inc., a mixed-use project on the Las Vegas Strip and a 50% interest in MGM Grand Macau, a hotel-casino resort in Macau S.A.R. The company generates approximately $7.2 billion of net revenue annually. MGM MIRAGE: S&P Puts 'CCC' Corp. Rating on Positive CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC' corporate credit rating on MGM MIRAGE, as well as all issue-level ratings for the company, on CreditWatch with positive implications. Furthermore, S&P has concluded that, based upon the planned transactions that the company announced this morning, S&P expects to raise S&P's ratings upon the successful execution of the planned transactions, including raising the corporate credit rating by one notch to 'CCC+'. At the same time, S&P assigned its issue-level rating of 'B' (two notches higher than the expected post-transaction 'CCC+' corporate credit rating on the company) to MGM MIRAGE's proposed $1.5 billion senior secured notes. The recovery rating on this debt is '1', indicating S&P's expectation of very high (90% to 100%) recovery for noteholders in the event of a payment default. The issuance of these notes, however, is predicated upon the successful issuance of at least $1 billion of common equity. The notes will be secured by a first-priority lien on substantially all of the assets of the Bellagio Hotel and Casino and The Mirage, and, upon receipt of the necessary gaming approvals, a first- priority pledge of the equity interests in Bellagio LLC and The Mirage Casino-Hotel. Upon completion of the new secured notes and common stock offerings, S&P plan to revise its recovery ratings on MGM's outstanding 13% senior secured notes and senior unsecured debt. S&P plan to revise S&P's recovery rating on the 13% senior secured notes to '1' from '2'. In accordance with S&P's notching criteria for a recovery rating of '1', S&P would also raise its issue-level rating on these notes to 'B' (two notches higher than the expected post-transaction 'CCC+' corporate credit rating) from 'CCC+'. The holders of the 13% secured notes will have an equal and ratable lien in the collateral securing the new secured notes in addition to their lien on the equity interests and assets of the New York- New York property. S&P also expects to revise its recovery rating on MGM MIRAGE's senior unsecured debt to '4', indicating S&P's expectation of average (30% to 50%) recovery for debtholders in the event of a payment default, from '3'. The revised recovery rating reflects the $1.5 billion of senior secured debt being added to the capital structure, which will be senior to these obligations. With the planned upgrade of the corporate credit rating, S&P will raise its issue-level rating on these securities to 'CCC+' (at the same level as the expected post-transaction 'CCC+' corporate credit rating) from 'CCC'. In addition, as a result of S&P's expected corporate credit rating upgrade, S&P would raise its issue-level rating on the company's subordinated debt to 'CCC-' (two notches lower than the expected post-transaction 'CCC+' corporate credit rating) from 'CC'. The recovery rating on these securities will remain at '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. S&P's CreditWatch listing reflects MGM MIRAGE's announced plans to raise at least $2.5 billion of capital, including at least $1 billion of common equity. In addition, as part of the planned capital raise, the company has entered into a comprehensive amendment to its bank facility, contingent upon the execution of the capital raise. Among other issues, the amendment would eliminate the total leverage and interest charge coverage ratios and replace them with a quarterly minimum EBITDA test and a limitation on annual capital expenditures. The amendment would also permanently waive any potential default from the inclusion of the "going concern" language in recent filings. "These proposed transactions would provide a substantial boost to the company's intermediate-term liquidity profile," noted Standard & Poor's credit analyst Ben Bubeck. When S&P lowered its corporate credit rating on MGM MIRAGE to 'CCC' on March 19, 2009, S&P expressed concern that, given S&P's expectations for cash flow generation over the next few years, combined with substantial capital needs to fund the completion of CityCenter and to meet debt maturities in 2009 and 2010, the company's ability to service its capital structure was in doubt. S&P's expectations for cash flow generation have not changed: S&P continue to expect EBITDA to decline by 25% this year and to remain relatively flat in 2010. However, the proposed capital raise, in combination with the agreement for the completion of CityCenter that the company reached with Dubai World and its bank group last month, addresses S&P's concerns around the company's ability to meet debt maturities in 2009 and 2010. Still, S&P remains concerned about 2011 debt maturities, which include the expiration of the $5.85 billion bank facility. Further rating upside would be contingent upon the company addressing this maturity, which S&P expects management to work toward addressing in the coming months. In addition, credit measures remain weak, as S&P expects leverage to approached 10x and EBITDA interest coverage to be in the low-1x area by the end of 2009. S&P expects to resolve its CreditWatch listing upon the completion of the proposed transactions, as outlined above. In the event the company is not successful in executing the capital raise, S&P's ratings would be removed from CreditWatch and affirmed at current levels. MIDWAY GAMES: Unsec. Creditors Sue Sumner Redstone, Thomas & Board ------------------------------------------------------------------ The official committee of unsecured creditors of Midway Games Inc. and its debtor-affiliates has filed a suit before the U.S. Bankruptcy Court for the District of Delaware against former majority shareholder Sumner Redstone, current owner Mark Thomas, and members of its board. for series of "disastrous and ill advised financial transactions" that occurred in 2008. The Committee alleges that the defendants made certain transactions that generated more than $700 million in tax losses, which enabled them to obtain a massive tax refund. The transactions, the Committee says, have caused the Debtors to lose the ability to take advantage of their valuable accumulated net operating losses and other tax assets. The Committee questioned the Board's decision to seek $90 million from Mr. Redstone's National Amusements Inc. when the Company was already in perilous financial shape. According to the Committee, the transactions benefited the Redstone entities, and Mr. Thomas, to detriment of the Debtors. The Board either approved of the deals or looked other way -- taking no steps to investigate and unwind them -- the Committee argues. The Committee tells the Court that the Board put the interest of Redstone above the Debtors' interest, and directed an apparently insolvent company to enter into a transaction with Redstone, that piled $70 million in additional debt on the struggling Debtors. Redstone secretly transferred his 87% stake in Midway and his interest in the $70 million of debt owed to National Amusements, in exchange for the de minimis amount of $100,000, the Committee points out. Mr. Thomas took over the $70 million in debt -- consisting of a $40 million unsecured claim and $30 million secured claim -- owed to National Amusements. According to Chicago Tribune, Mr. Thomas' secured claim put him ahead of all other unsecured creditors in the bankruptcy. The defendants to the suit are: A. Redstone Defendants -- National Amusements Inc.; -- Sumco Inc.; -- Sumner M. Redstone 2003 trustee; and -- Sumner M. Redstone. B. Thomas Defedants -- Acquistion Holdings Subsidiary I LLC; -- MT Acquisition Holdings LLC; and -- Mark E. Thomas. C. Board Defendants -- Shari E. Redstone; -- Robert J. Steele; -- Joseph A. Califano; -- Robert N. Waxman; -- William C. Bartholomay; and -- Peter C. Brown. About Midway Games Headquartered in Chicago, Illinois, Midway Games Inc. -- http://www.midway.com/-- develops video games and sell them primarily in North America, Europe, Asia and Australia. The company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed five creditors to serve on an official committee of unsecured creditors of Midway Games Inc. and its debtor- affiliates. Milbank Tweed Hadley & McCloy LLP and Richards, Layton & Finger PA represent the Committee. The Debtors' financial condition as of September 30, 2008, showed $167,523,000 in total assets and $281,033,000 in total debt. MILACRON INC: Retirees Protest Proposal to End Benefit Plans ------------------------------------------------------------ The Milacron Retired Executive Group and other similarly situated retirees object Milacron Inc.'s request to terminate certain employee benefit plans and set effective dates of termination before the Hon. J. Vincent Aug, Jr., of the U.S. Bankruptcy Court for the Southern District of Ohio. The Debtor contends the employee benefit plans should terminate effective April 24, 2009, the executive group noted. The Debtor has provided employee benefit plans -- including retirement, severance and bonus benefits -- to the executive group, according to Court Documents. Some plans include non- competition or exclusivity clauses, which limit individuals from working with other company in the industry, source says. The executive group tells the Court that the Debtor has failed to pay them benefits for the months of March, April and May 2009. Cohen, Todd, Kite & Stanford LLC in Cincinnati, Ohio, represents the executive group. Headquartered in Batavia, Ohio, Milacron Inc. (Pink Sheets: MZIAQ) supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron is also manufactures synthetic water-based industrial fluids used in metalworking applications. The company and six of its affiliates filed for protection on March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). On the same day, the company filed an ancillary proceeding for reorganization of its Canadian subsidiary under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. The Petitions include the company and its U.S. and Canadian subsidiaries and its non-operating Dutch holding company subsidiary only, and do not include any of the company's operating subsidiaries outside the U.S. and Canada. Kim Martin Lewis, Esq., Tim J. Robinson, Esq., and Patrick D. Burns, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. Conway, Del Genio, Gries Co., LLC is the Debtors' financial advisor. Rothschild Inc. is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the noticing, balloting and disbursing agent for the Debtors. Paul, Hastings, Janofsky & Walker LLP, represents DIP Lender General Electric Capital Corp. Taft Stettinius & Hollister LLP is counsel for the Official Committee of Unsecured Creditors. In its bankruptcy petition, Milacron said assets and debts are both between $500 million to $1 billion. Its formal schedules showed assets of $374,042,665 and debts of at least $279,642,990. MILACRON INC: Files Schedules of Assets and Liabilities ------------------------------------------------------- Milacron Inc. delivered to the U.S. Bankruptcy Court for the Southern District of Ohio its schedules of assets and liabilities, and statements of financial affairs, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ------------ A. Real Property $173,278 B. Personal Property $373,869,387 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $277,429,589 E. Creditors Holding Unsecured Priority Claims $79,885 F. Creditors Holding Unsecured Non-priority Claims $2,133,516 ------------ ------------ TOTAL $374,042,665 $279,642,990 A full-text copy of the Debtors' schedules of assets and liabilities are available for free at http://ResearchArchives.com/t/s?3cd5 A full-text copy of the Debtors' statements of financial affairs are available for free at http://ResearchArchives.com/t/s?3cd6 Headquartered in Batavia, Ohio, Milacron Inc. (Pink Sheets: MZIAQ) supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron is also manufactures synthetic water-based industrial fluids used in metalworking applications. The company and six of its affiliates filed for protection on March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). On the same day, the company filed an ancillary proceeding for reorganization of its Canadian subsidiary under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. The Petitions include the company and its U.S. and Canadian subsidiaries and its non-operating Dutch holding company subsidiary only, and do not include any of the company's operating subsidiaries outside the U.S. and Canada. Kim Martin Lewis, Esq., Tim J. Robinson, Esq., and Patrick D. Burns, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. Conway, Del Genio, Gries Co., LLC is the Debtors' financial advisor. Rothschild Inc. is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the noticing, balloting and disbursing agent for the Debtors. Paul, Hastings, Janofsky & Walker LLP, represents DIP Lender General Electric Capital Corp. Taft Stettinius & Hollister LLP is counsel for the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and debts between $500 million to $1 billion. MOMENTIVE PERFORMANCE: S&P Cuts Corporate Credit Rating to 'CC' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Momentive Performance Materials Inc. and its subsidiaries by two notches, including its corporate credit rating to 'CC' from 'CCC'. The ratings remain on CreditWatch with negative implications, where they were originally placed on March 17, 2009. "The downgrade reflects Momentive's announcement that the company has begun the process of exchanging a variety of existing senior unsecured notes for up to $200 million of new, second-lien senior secured notes due 2014 at a value substantially less than par," said Standard & Poor's credit analyst Cynthia Werneth. "If the transaction is completed as proposed, S&P would view the exchange as being tantamount to a default and would lower the corporate credit rating to 'SD'." Momentive's operating performance has deteriorated considerably in recent months. A significant, broad-based drop in demand and production volumes across most of the company's product lines reduced operating profitability in the fourth quarter of 2008, with further significant earnings compression occurring in the first quarter of 2009. The purpose of the exchange offers is to meaningfully reduce the outstanding principal amount of Momentive's debt and to lower the company's cash interest expense, which would provide the company with additional financial flexibility. The exchange offers expire on June 9, 2009, unless terminated, withdrawn earlier, or extended. After the completion of the exchange offers, S&P intend to lower the ratings on the exchanged notes to 'D'. The notes to be exchanged are the company's 9.75% senior notes due 2014, the senior toggle notes due 2014, the 11.5% senior subordinated notes due 2016, and the 9% senior notes due 2014. S&P intend to assign ratings to the new second-lien notes shortly and to reassess the corporate credit and issue ratings following the completion of the debt exchange. Momentive is a global producer of silicones for a wide variety of end uses and also produces quartz, primarily for semiconductors. An affiliate of Apollo Management L.P. controls the company. The CreditWatch with negative implications indicates the likelihood that S&P will lower the ratings if the company completes the exchange offer as announced. S&P will reassess default risk and recovery prospects following the completion of the exchange offer. S&P plan to complete this review within the next few weeks. MORTGAGES LTD: Committee Balks at Rushed SCM Deal & Sale -------------------------------------------------------- The official committee of unsecured creditors objects to the expedited request for approval of settlement between Mortgages Ltd., S.M. Coles LLC, and Secured Capital Management citing insufficient information for creditors to make a reasoned analysis of the settlement. The Creditors Committee told the U.S. Bankruptcy Court for the District of Arizona that the settlement should not be determined based upon artificial timeline, which is simply not appropriate. Secured Capital has set a May 20 target date for sale of the Debtor's property, but without any grounds for the expedited sale. This is not a sufficient reason to rush the decision on the proposed settlement, the Committee relates to the Court. The Settlement is expected to resolve $3 million Atermis Realty Capital LLC loan and pay it in full from the proceeds of the sale of the Debtor's Central Avenue and Central & Highland properties. Secured Capital purchased the Artemis loan on Sept. 12, 2009, which is secured by those properties. Secured Capital will retain its $1.05 million credit bid for the Central Avenue and make an opening credit bid of $2.7 million for the Central & Highland property. Secured Capital will be paid $2.8 million in full satisfaction of its allowed claim against the Debtor and S.M. Coles. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/ -- acted as a full service private lender prior to filing for bankruptcy. Through its licensed broker dealer, Mortgages Ltd. Securities, ML received money raised from approximately 2,700 investors for placement into loans secured by real estate located solely in Arizona. These accredited investors financed the lending operations of ML and received as collateral for their funding direct fractional interests in "pass through" loans and deeds of trust or membership interests in "Opportunity Funds" which held fractionalized interests in loans and deeds of trust. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- in the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. D. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C., replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor. Nussbaum & Gillis P.C. represents the Committee. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORTGAGES LTD: Submits Mahakian Backed Chapter 11 Plan ------------------------------------------------------ Mortgages Ltd., together with a group of investors, creditors, and parties-in-interest, delivered on May 12, 2009, to the U.S. Bankruptcy Court for District of Arizona a disclosure statement in support of a Chapter 11 plan of reorganization. The entities that co-proposed the Plan, designated as the Mahakian Parties, are comprised of Carol Mahakian, Allen B. Bickart, Vicki Greiff, Nicholas Esposito, Carolyn A. Bickart, H. Victor Rubin, Minas Zistatsis, Arianthi Zistatsis, Koumbas, L.L.C., Wendy Abrahams, Leo P. Malone, Kim Westberg, Laverne Westberg, and Adele Abrahams. The Plan provides that the assets and operations of the Debtors will be separated into two entities, Phoenix Loan Services LLC and ML Grantor Trust. PLS is essentially the reorganized debtor and will continue to manage the ML loans under the existing agency agreements through which the servicing rights will be assigned to Hillspoint Asset Management, the new servicer. ML Guarantor Trust will liquidate certain assets and the causes of actions against third parties. PLS will be wholly owned by ML Trust, which will be managed by a board of trustees and a liquidating trustee for the benefit of the allowed unsecured creditors. ML Trust's initial board of trustees on the effective date will consist of three members, including: Bart Brown as the liquidating trustee; and Mary Leonard and Peter Dunn, current ML board of directors. Accordingly, PLS and ML Trust will be operated for the benefit of the creditors and investors. Funds to emerge from bankruptcy will be provided in the form of debt by what is referred to as the emergence capital source. After confirmation of the plan, investors and allowed unsecured creditors of the Debtor will receive a substantial amount, or interest spread, and other fees due when Debtors pay their loans or the property securing the loans is liquidated. Inverstors and allowed unsecured creditors are allowed to vote for the plan. A full-text copy of the disclosure statement is available for free at http://ResearchArchives.com/t/s?3cd7 A full-text copy of the Chapter 11 plan of reorganization is available for free at http://ResearchArchives.com/t/s?3cd8 About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/ -- acted as a full service private lender prior to filing for bankruptcy. Through its licensed broker dealer, Mortgages Ltd. Securities, ML received money raised from approximately 2,700 investors for placement into loans secured by real estate located solely in Arizona. These accredited investors financed the lending operations of ML and received as collateral for their funding direct fractional interests in "pass through" loans and deeds of trust or membership interests in "Opportunity Funds" which held fractionalized interests in loans and deeds of trust. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- in the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. D. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C., replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. NATIONAL CENTURY: Plaintiffs Attys. Seek Cut from e-MedSoft Deal ---------------------------------------------------------------- Plaintiffs' attorneys are asking for a cut of about $200,000 in the settlement of a class-action lawsuit accusing former executives and directors of e-MedSoft.com, health care software company, of misleading investors about its alliance with collapsed National Century Financial Enterprises Inc., Law360 reports. The attorneys made the request in a motion filed on May 11, 2009, in the U.S. District Court for the Southern District of Ohio, according to the Law360 report. Law360 reported that attorneys have asked the U.S. District Court for the Southern District of Ohio to approve the settlement (Class Action Reporter, February 3, 2009). About National Century Financial Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- was the largest issuer of medical accounts receivable asset backed securities in the United States before it collapsed in bankruptcy in November 2002 amid allegations of widespread fraud and misappropriation of assets. Senior executives of the Company have been convicted or pled guilty to federal charges of conspiracy, securities fraud, wire fraud, and money laundering arising out of the NCFE securitization program. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represented the Debtors. NCFE -- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust -- liquidated the estate assets. NES RENTALS: Buyback Offer Cues S&P's Rating Cut to 'SD' -------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on NES Rentals Holdings Inc. to 'SD' (selective default) from 'CC' and lowered its issue-level rating on the company's second-lien debt to 'D' (default). "The rating actions are consistent with our previously published intentions to lower the rating upon the company's completion of the buyback offer, which S&P view as distressed under our criteria and, as such, tantamount to a default," said Standard & Poor's credit analyst Helena Song. The company announced on May 11, 2009, that it had purchased back about $14 million principal amount of its $280 million second-lien term loan due 2013 with cash at a discounted price of 42% of the face value. In S&P's view, the retirement of the debt for less than originally contracted is a de facto partial restructuring. Similarly, investors' willingness to accept a substantial discount to contractual terms provides evidence that they have significant doubts about receiving full payment on obligations. S&P expects to assign a new corporate credit rating to NES Rentals within the next week. The new rating will be based on, among other things, S&P's assessment of the company's new capital structure and liquidity profile. NORTHFIELD TRUCKING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Northfield Trucking Company, Inc 10401 Harrison Ste 101 Romulus, MI 48174 Bankruptcy Case No.: 09-54938 Chapter 11 Petition Date: May 11, 2009 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Walter Shapero.Detroit Debtor's Counsel: Michael P. DiLaura, Esq. 105 Cass Ave. Mt. Clemens, MI 48043 Tel: (586) 468-5600 Fax: (586) 465-9113 Email: miked@mikedlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/mieb09-54938.pdf The petition was signed by Leigh A. Vallimont. OAISIS CHURCH: Case Summary & 8 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Oaisis Church International aka Wayn A. Babb 4980 Welcome All Road Atlanta, GA 30349 Bankruptcy Case No.: 09-72349 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Stephen Levinson, Esq. Smith White Sharma & Halpern Lions Gate Manor 1126 Ponce de Leon Ave. N.E. Atlanta, Georgia 30306 Tel: (404) 872-7086 Fax: (404) 892-1128 Total Assets: $2,902,460 Total Debts: $3,751,255 A full-text copy of the Debtor's petition, including its list of 8 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ganb09-72349.pdf The petition was signed by Clive A. Babb, president of the Company. OHIO ENERGY: Case Summary & 4 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Ohio Energy Specialties, Inc. 21801 Lakeshore Boulevard Euclid, OH 44123 Bankruptcy Case No.: 09-14149 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Northern District of Ohio (Cleveland) Judge: Randolph Baxter Debtor's Counsel: Glenn E. Forbes, Esq. 166 Main St Painesville, OH 44077-3403 Tel: (440)357-6211 Email: Bankruptcy@cooperandforbes.com Total Assets: $585 Total Debts: $1,873,175 A full-text copy of the Debtor's petition, including its list of 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ohnb09-14149.pdf The petition was signed by Mary Tatarko, member of the Company. PACIFIC ENERGY: Seeks Court Approval of Employee Incentive Plan --------------------------------------------------------------- Pacific Energy Resources asks the U.S. Bankruptcy Court for the District of Delaware to approve a key employee incentive plan. Bankruptcy Data reports that the Debtors' plan is a performance bonus plan that is designed to incentivize a select list of 25 employees who are expected to have an integral role in maximizing value for the Debtors' Chapter 11 estates and their creditors. The plan, according to the report, is based on the performance against various metrics that have been established, each of which aims to enhance the value of the Debtor's estate. The metrics includes sale values and royalty relief of the Company's Beta and Alaska facilities, daily production goals at the Beta site, and spending to budget at both the Beta and Alaska sites. The report says the total bonus to be paid under this plan will be between zero (if none of the minimum performance targets are reached) and approximately $1.4 million (if all are met). The low payout is expected to be approximately $380,000 with a mid or likely payout being approximately $740,000. The Court is slated to consider approval of the incentive plan at a hearing for June 3, 2009. Headquartered in Long Beach, California, Pacific Energy Resources Ltd. -- http://www.pacenergy.com/-- engages in the acquisition and development of oil and gas properties, primarily in the United States. The Company and seven of its affiliates filed for Chapter 11 protection on March 8, 2009 (Bankr. D. Del. Lead Case No. 09-10785). Attorneys at Pachulski Stang Ziehl & Jones LLP, represent the Debtors as counsel. The Debtors proposed Rutan & Tucker LLP as special corporation and litigation counsel; Schully, Roberts, Slattery & Marino, PLC, as special oil and gas and transactional counsel; Devlin Jensen as special Canadian counsel; Scott W. Winn, at Zolfo Cooper Management, LLC as chief restructuring officer; Lazard Freres & Co. LLC as investment banker; and Albrecht & Associates, Inc., as agent for the Debtors in the sale of their oil and gas properties. Omni Management Group, LLC, is the claims, balloting, notice and administrative agent for the Debtors. When the Debtors filed for protection from their creditors, they listed assets and debts of between $100 million and $500 million each. PEBBLE CREEK: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Pebble Creek, LLC 1291 Galleria Drive Suite 200 Henderson, NV 89014 Bankruptcy Case No.: 09-17700 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Andrew F. Dixon, Esq. Bowler Dixon & Twitchell LLP 400 N. Stephanie Street Suite 235 Henderson, NV 89014 Tel: (702) 436-4333 Email: andrew@bdtlawyers.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 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-17700.pdf The petition was signed by Todd Parriott. PEOPLES COMMUNITY: Seeks to Sell Branches to Raise Cash ------------------------------------------------------- Peoples Community Bancorp, Inc., and its wholly owned banking subsidiary, Peoples Community Bank, are in negotiations concerning a transaction to sell certain branches of the Bank. The Bank intends to negotiate and enter into a deal to reduce assets and liabilities, generate a deposit premium and return the Bank to an adequately capitalized status. Peoples Community Bancorp said it cannot provide assurance that an agreement related to the Branch Transaction will be entered into or consummated or that the Bank's capital plan will be acceptable to the Office of Thrift Supervision. Peoples Community Bancorp said that if the Capital Plan is not approved by the OTS or the Bank cannot enter into and consummate a transaction to return the Bank to an adequately capitalized status on a timely basis, the Company will not be able to continue as a going concern. Going Concern Doubt The report of BKD, LLP, in Cincinnati, Ohio, the Company's independent registered public accounting firm for the year ended December 31, 2007, contained an explanatory paragraph as to the Company's ability to continue as a going concern primarily due to the Company's current lack of liquidity to repay its obligation under an outstanding line of credit with Integra Bank, N.A. The line of credit is secured by all outstanding shares of common stock of the Bank. The audit report of Plante & Moran, PLLC, in Columbus, Ohio, for the year ended December 31, 2008, also contained an explanatory paragraph as to the Company's ability to continue as a going concern. For year 2008, Peoples posted a net loss of $68.5 million compared to a net loss of $33.3 million for year 2007. At December 31, 2008, Peoples had $712.4 million in total assets, $727.2 million in total liabilities, resulting in $14.8 million in stockholders' deficit. On April 2, 2008, the Company and the Bank each consented to the terms of Cease and Desist Orders issued by the OTS, which require the Company and the Bank to, among other things, file with the OTS updated business plans. The Orders prohibit the Bank from paying cash dividends to the Company without the prior consent of the OTS and the Company will be able to rely upon only a limited amount of existing cash and cash equivalents for its liquidity. Without the ability to rely on dividends from the Bank, the Company will require funds from other capital sources to meet its obligations such as restructuring or replacing the line of credit. Peoples is actively evaluating various funding strategies to meet its obligations, including restructuring its outstanding debt and selling branch offices. Any increase in the Company's outstanding indebtedness will also require OTS approval. The Company cannot provide assurance that it will succeed in obtaining funds to meet its financial obligations. Failure to do so will have a material adverse effect on, and impair the Company's business, financial condition and ability to operate as a going concern. Integra Loan Default As of December 31, 2007, the Company was not in compliance with certain covenants of its line of credit with Integra. On June 30, 2008, the loan matured and was due in full. Effective July 24, 2008, the Company entered into a forbearance agreement with Integra regarding its $17.5 million line of credit. The forbearance was negotiated to extend the repayment period and allow the Company to structure a transaction which would result in repayment of the $17.5 million line of credit. On September 12, 2008, the Company entered into a purchase and assumption agreement with a buyer and a third party. The Agreement provided for the purchase of a substantial portion of the Bank's assets, as well as the assumption of the Bank's deposits and certain other liabilities. The Company or the buyer could terminate the Agreement if the closing of the transactions did not occur on or before December 31, 2008. By letter dated December 29, 2008, the buyer terminated its obligations under the Agreement pursuant to Section 25(f) of the Agreement. On December 31, 2008, the Company and the third party entered into the First Amendment to the Agreement to extend the Company's and third party's obligations under the Agreement to January 31, 2009. The Company and the third party reaffirmed their representations and warranties and acknowledged that the third party will require another financial institution acceptable to the Office of Thrift Supervision to perform its or their obligations under the Agreement. No agreement was reached by January 31, 2009. On December 31, 2008, the Company and Integra extended the forbearance period to January 31, 2009. The forbearance period has expired and the Company is in default on its line of credit with Integra. This matter remains unresolved. OTS Tightens Grip On April 28, 2009, the Bank consented to an Amended Order to Cease and Desist issued by the OTS. The Amended Order became effective on April 29, 2009. The Amended Order supplements and amends the previously issued Cease and Desist Order issued by the OTS against the Bank on April 2, 2008. The Amended Order requires that the Bank achieve by July 14, 2009 and maintain: (i) a Tier 1 (Core) Capital Ratio of at least 8%; and (ii) a Total Risk-Based Capital Ratio of at least 12%. Contingency Plan Due May 14 The Amended Order also requires the Bank to file with the OTS a written contingency plan by May 14, 2009 that will be implemented by the Bank in the event it becomes critically undercapitalized. The Contingency Plan will require that the Bank achieve one of these results: (i) a merger with or acquisition by another federally insured institution or holding company, or (ii) a voluntary liquidation by, among other things, filing the appropriate applications with OTS in conformity with federal laws and regulations. The Contingency Plan will be implemented if the Bank becomes critically undercapitalized or upon notification by the OTS. In addition, the Amended Order requires the Bank to refrain from certain actions, including: (i) accepting, renewing or rolling over any brokered deposit; (ii) acting as a deposit broker; or (iii) soliciting deposits by offering an effective yield on insured deposits that exceeds the limitation provided by OTS regulations. On April 30, 2009, the Bank filed its Thrift Financial Report for the quarter ended March 31, 2009. This report reflected the Bank's capital under the framework for prompt corrective action at the "critically undercapitalized" level. -- Enter into any material transactions other than in the usual course of business, including any investment, expansion, acquisition, sale of assets, or similar action with respect to which the Bank is required to give notice to OTS; -- Extend credit for any highly leveraged transaction; -- Amend its charter or bylaws, except to the extent necessary to carry out any other requirement of any law, regulation, or order; -- Make any material change in accounting methods; -- Engage in any covered transaction; -- Pay excessive compensation or bonuses; or -- Make payments on subordinated debt. On May 4, 2009, Peoples Community received written notification from The Nasdaq Stock Market that based on the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the U.S. Securities and Exchange Commission on May 1, 2009, Nasdaq has determined that the Company now complies with Nasdaq's Marketplace Rule 5250(c)(1). Accordingly, the Company's common stock is no longer subject to delisting. On April 16, 2009, Lori M. Henn tendered her resignation as the Senior Vice President and Compliance Officer of both Peoples Community Bancorp and the Bank, with the resignation effective as of May 1. A full-text copy of Peoples' 2008 Annual Report on Form 10-K is available at no charge at http://ResearchArchives.com/t/s?3cde A full-text copy of Peoples' 2008 Report for Stockholders is available at no charge at http://ResearchArchives.com/t/s?3cdf Headquartered in West Chester, Ohio, Peoples Community Bancorp Inc. (NasdaqGM: PCBI) -- http://www.pcbionline.com/-- is the holding company for Peoples Community Bank, a federally chartered savings bank with 19 full service offices in Butler, Warren and Hamilton counties in southwestern Ohio and Dearborn and Ohio counties in southeastern Indiana. PEPE PROPERTIES: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Pepe Properties, LLC P.O. Box 760863 San Antonio, TX 78245 Bankruptcy Case No.: 09-51775 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Western District of Texas (San Antonio) Judge: Chief Bankruptcy Judge Ronald B. King Debtor's Counsel: Claiborne B. Gregory, Jr., Esq. 112 E Pecan, Suite 2400 San Antonio, TX 78205 Tel: (210) 978-7700 Email: cgregory@jw.com Total Assets: $2,750,000 Total Debts: $1,864,848 A full-text copy of the Debtor's petition, including its list of 11 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/txwb09-51775.pdf The petition was signed by Raul Aguilar, manager of the Company. POMARE LTD: U.S. Trustee Recommends Conversion or Dismissal ----------------------------------------------------------- Tiffany Carroll, acting United States Trustee, asks the U.S. Bankruptcy Court for the District of Hawaii to either convert Pomare Ltd. dba. Hilo Hattie's bankruptcy case to one under Chapter 7, or dismiss the Debtor's case. In support of the motion, the U.S. Trustee states that the Debtor's reorganization efforts have failed, and its financial condition is far worse now than it was at the commencement of the case. The U.S. Trustee adds that the Debtor's plan in Chapter 11 of relocating to the Royal Hawaiian Shopping Center has been abandoned because there was no money to finance the move, and it does not appear that the Debtor has a viable alternative business plan. Moreover, the U.S. Trustee relates, the Debtor's inventory and receivables have diminished while post-petition payables have increased. Foregoing considered, the U.S. Trustee believes that cause exists to convert or dismiss the Debtor's case. If the Court orders the appointment of a Chapter 11 trustee, as requested by the official committee of unsecured creditors, that trustee should have the opportunity to determine whether he or she can provide some benefit to creditors by facilitating a sale or engaging in some other course of action. Based in Honolulu, Hawaii, Pomare Ltd. dba. Hilo Hattie, makes and sells men's clothing. The company filed for Chapter 11 relief on October 2, 2008 (Bankr. D. Hawaii Case No. 08-01448). Chuck C. Choi, Esq., and James A. Wagner, Esq., at Wagner Choi & Verbrugge, represent the Debtor as counsel. Alexis M. McGinness, Esq., and Ted N. Pettit, Esq., at Case Lombardi & Pettit, represent The Official Committee of Unsecured Creditors as counsel. In its schedules, the Debtor listed total assets of $15,825,657, and total debts of $13,767,047. POMARE LTD: Says Trustee Not in Best Interests of Creditors ----------------------------------------------------------- Pomare, Ltd., dba Hilo Hattie, objects to the official committee of unsecured creditors' motion for the appointment of a Chapter 11 trustee in its bankruptcy case. As reported in the Troubled Companay Reporter on April 17, 2009, the committee asked the Bankruptcy Court to appoint a Chapter 11 trustee of the Debtor, for cause, including but not limited to these grounds: -- incompetence and/or gross mismanagement of the Debtor either before or after the commencement of the case, or similar cause. -- appointment of a trustee is in the best interests of creditors, any equity holders, and other interests of the estate. -- grounds exist to convert or dismiss the case under Sec. 1112. The committee, the Debtor relates, is intent on replacing current management, and believes that placing a Chapter 11 trustee at the helm of the Debtor will either result in its reorganization or the prompt sale of the assets. In opposition to the motion, Debtors argues that: -- Based on the Debtor's current financial condition and business model, it is impossible to see how a trustee could reorganize the Debtors financial affairs. Landlors would have no incentive to engage with engage with a short-term trustee regarding a restructure of a current lease, or enter into a new lease with a trustee. Vendors would likely cease extending credit. Under a liquidation scenario, pre-petition creditors would not receive a distribution. -- The suggestion it is interfering with a sale of the business is false. The appointment of a trustee will not result in a sale of the business because, to date, there has been no viable offer. -- There is no evidence of mismanagement as alleged by a former CEO of the company. Contrary to the committee's position, the Debtor has accomplished a remarkable job of stemming losses in the face of a deteriorating economic backdrop. In conclusion, the Debtor says that the appointment of a trustee would surely undermine its efforts to reorganize the Debtor's financial affairs including negotiating with potential landlors to open one or more new stores and may even lead to almost certain closure of the Debtor's operations. Based in Honolulu, Hawaii, Pomare Ltd. dba. Hilo Hattie, makes and sells men's clothing. The company filed for Chapter 11 relief on October 2, 2008 (Bankr. D. Hawaii Case No. 08-01448). Chuck C. Choi, Esq., and James A. Wagner, Esq., at Wagner Choi & Verbrugge, represent the Debtor as counsel. Alexis M. McGinness, Esq., and Ted N. Pettit, Esq., at Case Lombardi & Pettit, represent The Official Committee of Unsecured Creditors as counsel. In its schedules, the Debtor listed total assets of $15,825,657, and total debts of $13,767,047. ROLLING OAKS UTILITIES: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Rolling Oaks Utilities, Inc. 670 W. Colbert Court Beverly Hills, FL 34465-8761 Bankruptcy Case No.: 09-03861 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Middle District of Florida (Jacksonville) Debtor's Counsel: Jason B. Burnett, Esq. GrayRobinson, P.A. 50 N. Laura Street, Suite 1100 Jacksonville, FL 32202 Tel: (904) 598-9929 Email: jburnett@gray-robinson.com Total Assets: $2,750,000 Total Debts: $1,864,848 A full-text copy of the Debtor's petition, including its list of 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-03861.pdf The petition was signed by John W. Patton III, president of the Company. ROHNERT PARK: Faces Budget Deficit, Opposes "Loan" of Funds ----------------------------------------------------------- Just as mayors and city councils in the state of California slash city budgets and reduce services to deal with the worst economic crisis in decades, they learned yesterday that state leaders may try to coerce local governments into providing a forced $2 billion bailout of the state budget if the May 19 ballot measures fail. The May Revise option released by Gov. Arnold Schwarzenegger, containing that bailout, or "loan," essentially forces cities to rescue the state from its financial quagmire and would cripple city services. To take money from cash-strapped cities now amounts to a profound "anti-stimulus" action by the state. Saying that he absolutely "despised the proposal," the Governor also said earlier this week in a meeting with mayors and council members that he understands this proposal would be devastating to public safety services and that he did not know how the state would pay back the loan. Statewide opinion polls consistently show a vast majority of Californians themselves don't believe borrowing should be used to balance the state's budget and oppose public safety cuts. The League of California Cities in a statement said California cities cannot afford to bail out the state when they are already adopting extremely painful cuts to balance their own budgets. This shotgun "loan" of city property tax revenues would force additional service cuts including police and firefighter layoffs and result in longer emergency response times and fire station closures. The League of California Cities cite a snapshot of what some of California's cities are facing: -- Los Angeles is facing a $529 million budget deficit and Mayor Villaraigosa has urged the city council to declare a fiscal emergency to give him authority to layoff and furlough thousands of city employees; -- Rohnert Park may have to lay off 31 employees, including 17 Sworn officers and nine public safety technicians -- and would still not be able to balance its budget; -- Stockton, to address a $31 million budget deficit, sent layoff notices to 55 police officers, 35 civilian employees and demoted seven officers; and -- Vallejo, in the midst of bankruptcy, may be forced to decimate city services by 20 percent and staff are recommending that the city council cut 30 sworn officer positions as well as close two fire stations. "It's absolutely unthinkable that the state would consider sacrificing local public safety at a time like this. City officials are already making painful cuts locally, laying off employees, cutting services and much more, to make our budgets balance. Taking local funds used for public safety to bail out the state budget is the last thing the public wants to see," said League President and Rolling Hills Estates Mayor Judy Mitchell. "It's painful. We're going well below our ability to provide essential services. We have nothing left to cut," said Vallejo City Council Member Stephanie Gomes. Reflecting the impact that the stagnating economy has had on city budgets, cities across the state are passing resolutions declaring a state of severe fiscal hardship. To date, close to 100 cities have either passed or are scheduled to pass a resolution. California's news leaders understand why it's fundamentally wrong for the state to raid local revenues. Writing in an op-ed in the Los Angeles Times, D.J. Waldie, a contributing editor, expressed it poignantly stating: "The quality of life in California's neighborhoods will be part of the wreckage. Closed libraries mean kids won't have a place to go after school. Unsupervised parks means they won't have a safe place to play. Furloughed workers won't be available to process your business license, check your building plans or deal with your complaint. Everyday life -- the level at which local government works -- will be harder and coarser." The Governor met with city officials earlier this week in Culver City and San Jose to discuss Propositions 1A-F and the impact of their failure on state and local services. He told the assembled city officials that he will be under extraordinary pressure to "borrow" local government funds if the ballot measures fail and the budget deficit reaches $21.3 billion. The League and the city officials present told the Governor that they strongly opposed any borrowing on top of the $900 million cities already provide the state each year in city property taxes. The League endorsed the propositions on April 6. "The League is supporting Props. 1A -- F because they provide a framework for beginning to responsibly balance the state budget without gimmicks. The state should follow the lead of the cities of California in dealing with its budget deficit -- cut spending, sell assets, enhance revenues and don't borrow," said League Executive Director Chris McKenzie. City officials will fight any budget proposal that attempts to raid local property tax revenues to bail out the state budget. Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials. RR VALVE: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: RR Valve, Inc., a Nevada corporation 5201 Mitchelldale # A-11 Houston, TX 77092 Bankruptcy Case No.: 09-33345 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Southern District of Texas (Houston) Debtor's Counsel: John H Bennett, Jr., Esq. Attorney at Law 2777 Allen Parkway Ste 1000 Houston, TX 77019-2165 Tel: (713) 650-8222 Fax: (713) 650-3033 Email: jb@johnhbennettjr.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of 20 largest unsecured creditors when it filed its petition. The petition was signed by Gerard Stephan Lazzara, president of the Company. SANDERSON INDUSTRIES: Files Chapter 11 in Atlanta ------------------------------------------------- Sanderson Industries Inc. filed a Chapter 11 petition on May 11 before the U.S. Bankruptcy Court for the Northern District of Georgia (Atlanta), Bloomberg's Bill Rochelle said. The Company said it has assets of $12.9 million against debt totaling $16.5 million, including $5.4 million owed to secured lenders. Atlanta, Georgia, based Sanderson Industries Inc. is a producer of metal stampings and welded assemblies for the auto industry. (Bankr. N. D. Georgia, Case No. 09-72311). SCO GROUP: Ch. 7 Liquidation Sought by U.S. Trustee, Creditors -------------------------------------------------------------- International Business Machines Corporation, Novell Inc. and Linux Gmbh, and Roberta A. DeAngelis, the United States Trustee for Region 3, ask the U.S. Bankruptcy Court for the District of Delaware to convert the Chapter 11 cases of The SCO Group Inc. and its debtor-affiliates to Chapter 7 liquidation proceedings. The U.S. Trustee tells the Court that there is a continuing loss to the Debtors' estates and the absent of a reasonable likelihood of rehabilitation under Chapter 11. Novell and IBM express the same sentiment. According to the U.S. Trustee, the Debtors have had in excess of $3.5 million of negative cash flow postpetition. The U.S. Trustee says that the Debtors have initiated efforts to sell their assets but they failed. IBM says that the Debtors' case should be converted to save whatever value may still remain in their assets. Novel asserts that it is time to shut down the Debtors' highly- unprofitable operations and place a reliable neutral in charge of making thoughtful decisions that are in the best interests of creditors. IBM, Novell and the U.S. Trustee filed separate motions before the Court. A hearing is set for June 12, 2009, 2:00 p.m., to consider approval of IBM et al.'s requests. Objections, if any, are due May 26. About The SCO Group Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company has office locations in Australia, Austria, Argentina, Brazil, China, Japan, Poland, Russia, the United Kingdom, among others. The Company and its affiliate, SCO Operations Inc., filed for Chapter 11 protection on September 14, 2007, (Bankr. D. Del. Lead Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur Spector, Esq., at Berger Singerman P.A., represent the Debtors in their restructuring efforts. James O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the Debtors' Delaware and conflicts counsels. Epiq Bankruptcy Solutions LLC, acts as the Debtors' claims and noticing agent. The United States Trustee failed to form an Official Committee of Unsecured Creditors in the Debtors' cases due to insufficient response from creditors. As of January 31, 2009, the Company had $8.78 million in total assets and $13.2 million in total liabilities, resulting in $4.51 million in stockholders' deficit. SEITEL INC: In Talks With Lender for Covenant Relief ---------------------------------------------------- Seitel, Inc., said that as a result of its lower cash EBITDA for the first quarter of 2009, it was not in compliance with the cash margin covenant contained in its U.S. credit facility. Therefore, an event of default has occurred which prohibits Seitel from borrowing under the credit facility without the lender's consent. This event of default has not been waived and is continuing. Seitel said it is currently in discussions with the lender to amend the terms of the credit agreement. If it is not able to amend the credit agreement, Seitel may not be able to access the facility. At present, there is no outstanding balance under the credit facility. At the end of the first quarter ended March 31, 2009, Seitel's cash balance was $42.2 million. Seitel currently expects to satisfy its debt service as well as its operating and capital needs for the remainder of 2009 from available cash and operating cash flows. Seitel on Tuesday reported results for the first quarter ended March 31, 2009. Revenue for the first quarter was $34.7 million as compared to $47.4 million during the first quarter of 2008. For the first quarter of 2009, the net loss was $22.5 million as compared to last year's loss of $18.4 million. Seitel said the higher loss resulted from the lower revenue level, compensated by a $5.5 million decrease in data amortization expense and by a $2.2 million reduction in selling, general and administrative expenses. Seitel said Cash EBITDA, defined as cash revenue less cash operating expenses excluding various non-recurring items, was $5.2 million for the first quarter of 2009, as compared to $12.8 million in the same quarter of 2008. This decrease was driven by a $10.1 million reduction in cash revenue offset by a $2.6 million decrease in cash operating expenses, essentially a $2.3 million or 37% reduction in cash compensation expenses. The lower compensation expenses reflected headcount reductions, elimination of employee bonuses, and reduced commissions. Excluded from cash operating expenses in the quarter were one-time expenses for cost reduction measures implemented in the first quarter, primarily severance costs of $500,000, and a write-off totaling $300,000 in capital expenditure costs following Seitel's decision to cancel an on-going survey. "As we had anticipated, drilling activity in North America has continued to drop in line with weak natural gas prices, tight credit for many of our customers, and expectations for soft oil and gas demand during the remainder of 2009," commented Rob Monson, president and chief executive officer. "Most of our customers continue to preserve their cash, while waiting for more visibility before spending on longer term projects involving exploration and seismic activity. "The cost reduction measures we've implemented have served us well during the first quarter, as we've already benefited from sharply lower cash operating expenses. Given the results of our first quarter, we also implemented additional cost reductions in the second quarter, including pay cuts to senior management and directors, that, combined with our earlier reductions, should result in an annual 30% drop in cash operating expenses," stated Mr. Monson. "We expect drilling activity in the U.S. and Canada to continue to be weak over the quarters ahead of us, and we will continue to tightly control our operating costs and capital expenditures during the remainder of 2009, and well into 2010." Seitel had $595.2 million in total assets and $504.8 million in total liabilities as of March 31, 2009. Based in Houston, Texas, Seitel Inc. provides seismic data to the oil and gas industry in North America. Seitel's data products and services are critical for oil and gas exploration and the development and management of hydrocarbon reserves by E&P companies. Seitel owns an extensive library of proprietary onshore and offshore seismic data that it has accumulated since 1982 and that it licenses to a wide range of oil and gas companies. Seitel believes that its library of onshore seismic data is one of the largest available for licensing in the United States and Canada. Seitel's seismic data library includes both onshore and offshore 3D and 2D data. Seitel has ownership in over 41,000 square miles of 3D and approximately 1.1 million linear miles of 2D seismic data concentrated in the major active North American oil and gas producing regions. Seitel serves a market which includes over 1,600 companies in the oil and gas industry. SLM CORP: Moody's Downgrades Senior Unsecured Rating to 'Ba1' ------------------------------------------------------------- Moody's Investors Service downgraded the long-term and short-term ratings of SLM Corp. (senior unsecured to Ba1 from Baa2, short- term to Not Prime from Prime-2) and assigned a negative outlook. The rating action concludes the review for possible downgrade initiated on February 27, 2009. The rating action reflects Moody's concerns regarding SLM's earnings and cash flow generation capacity as the company transitions to a post-FFELP lending environment, continued uncertainties facing the company related to the political and consumer lending environment, and its liquidity and funding position. This combination of circumstances is not consistent with an investment grade ratings profile, in Moody's view. President Obama's budget proposal, if adopted, would end the FFELP lending program effective July 1, 2010. As a result, SLM's traditional role as a lender and servicer in the federal student loan program would change to one of originator and servicer, in competition with other prospective vendors. This new business model has implications for SLM's future profitability and cash flows because profit contribution from the servicing business is less than that from the current ECASLA model, and is likely to remain so as profits from servicing loans for the US government are likely to be heavily scrutinized. Also challenging the firm's profitability prospects are an ongoing dislocation of the CP/LIBOR spread, which affects the firm's yield on earning assets, and continuing asset quality challenges in SLM's private education loan portfolio. Cash flow generation is taking on increasing importance in SLM's credit profile because the firm's debt balance exceeds its unencumbered loans, and refinancing in the unsecured debt markets is unreliable. Therefore, SLM will need to generate profits and cash flow in order to service and ultimately repay some of its debt, as opposed to generating the required cash through asset liquidation. SLM has put forward a counter-proposal to the President's plan, calling for the choice of vendors to rest with the schools rather than the government, and for vendors to be given incentives for default aversion via risk sharing. However, the counter-proposal faces considerable uncertainty, given the strong support of the Administration's original proposal. Moody's is also concerned that the private education lending business could come under regulatory and legislative scrutiny, which could result in greater restrictions and lower returns from this business line. Regarding liquidity and funding, SLM faces an asset-liability mismatch, particularly over the next several years, as scheduled term unsecured debt maturities exceed collections on unencumbered loans and other internally generated sources. As noted above,SLM does hold a significant balance of unencumbered assets that it may monetize in order to meet coming maturities. However, the company continues to face a difficult environment for capital markets- sourced term funding. Pricing in the term ABS market -- even for government guaranteed loans -- remains at relatively wide levels; and the unsecured market remains unavailable to the company given current trading levels. There have been some positive recent developments, including the extension of the company's ABCP facility and the closing of the Department of Education's Straight A Funding conduit facility, which reduces the firm's near-term liquidity risks. But Moody's is concerned that constrained capital markets conditions, if sustained, could challenge the company's financial flexibility and debt service capability in the intermediate future. Balancing these concerns, SLM possesses a strong franchise in the student loan industry, with industry leading scale, operating efficiency in originations and servicing, and longstanding relationships with colleges and universities. This positions the company well to gain a significant share of originations and servicing business and to maintain access to schools for its private education lending business. SLM's ratings also incorporate its improved corporate governance as reflected in a strengthened senior management team, board, and corporate commitment to risk management; and improved operating efficiencies via its ongoing expense reduction program. The negative outlook on the company's long-term ratings reflects the continuing challenges associated with business transition issues and funding uncertainties that could place further pressure on the firm's ratings over the next several quarters. In order to return to a stable outlook, Moody's would need to observe progress in SLM's transition of its government student loan business to an origination and servicing model from a lending-based model, as evidenced by the achievement of a significant role in the post- FFELP student loan era while achieving acceptable profitability and cash flow generation. Moody's would also need to observe further improvement in the company's funding profile, including re-establishing reliable access to the term debt markets to fund private loan originations and generating liquidity to meet unsecured debt maturities. A stable outlook would also require a reduction in SLM's asset quality volatility in the private education loan business, demonstrated by lower delinquencies, credit losses, and provisioning requirements. A negative rating action could be precipitated by a disruption or weakening of SLM's liquidity and funding profile; and/or additional degradation of asset quality and core profitability. These ratings of SLM Corp. were downgraded: * Senior unsecured debt -- to Ba1 from Baa2 * Subordinate shelf -- to (P) Ba2 from (P) Baa3 * Preferred stock -- to Ba3 from Ba1 * Short-term debt -- to Not Prime from Prime-2 The last rating action on SLM was on February 27, 2009 when Moody's placed the company's ratings on review for possible downgrade. Headquartered in Reston, Virginia, SLM is the nation's leading provider of saving- and paying-for-college programs. The company manages approximately $185 billion in education loans and serves 10 million student and parent customers. SPANSION INC: Posts $112 Million First Quarter Net Loss ------------------------------------------------------- Spansion Inc. has released financial results for its fiscal quarter ended March 29, 2009. Net Loss Non-GAAP net loss in the first quarter of 2009 was $112 million compared to a net loss of $120 million in the first quarter of 2008. The non-GAAP net loss in the first quarter 2009 was primarily driven by $104 million in underutilization costs, due mostly to the temporary shutdown of facilities in the first half of the quarter, and $21 million in restructuring and bankruptcy- related charges. In the first quarter of 2009, net loss on a GAAP basis for Spansion was $89 million. Net Sales Non-GAAP net sales for the first quarter of 2009 were $401 million, down 14% from the prior quarter, largely in line with seasonal trends. Non-GAAP net sales were down 30% compared to the first quarter of 2008, primarily due to decreased global demand for Flash memory as a result of the continued deterioration of the macroeconomic environment. On a GAAP-basis, Spansion net sales for the first quarter of 2009 were $400 million. In the first quarter of 2009, the Company's Consumer, Set-top Box and Industrial Division (CSID), which focuses on the embedded solutions market, generated non-GAAP net sales of $224 million, a decrease of 8% compared to the prior quarter and 18% from Q1 of 2008. Non-GAAP net sales for the Wireless Solutions Division (WSD), which focuses on the wireless handset market, were $174 million, a decrease of 21% compared to the prior quarter and 41% from the first quarter of 2008. Spansion's GAAP net sales for CSID were $222 million, and $174 million for WSD in the first quarter of 2009. Gross Margin Non-GAAP gross margin was 6% in the first quarter of 2009, down from approximately 17% in the first quarter of 2008 due to the underutilization of Spansion's manufacturing facilities during the early part of the first quarter of 2009. GAAP gross margin for Spansion was (2%) in the first quarter of 2009. The Company experienced a relatively stable pricing environment in Q1 of 2009. Operating Expenses During the first quarter of 2009, management continued its aggressive cost reductions as part of its restructuring efforts. Total operating expenses on a non-GAAP basis were $112 million in the first quarter of 2009 and included $13 million of restructuring charges, down approximately 43% from the first quarter of 2008. The Company believes that its cost reduction efforts have further reduced its operating expense run rate by approximately 15% since the end of its first quarter of 2009. GAAP operating expenses for Spansion in the first quarter 2009 were $106 million and included $13 million of restructuring charges. In addition to operating expense reductions, the Company reduced non-GAAP capital expenditures to $7 million in the first quarter of 2009, down from $177 million in the first quarter of 2008. Capital expenditures on a GAAP basis in the first quarter of 2009 were $4 million. Cash Spansion's consolidated operations ended the first quarter with approximately $124 million in cash, on a non-GAAP basis. On a GAAP basis, Spansion ended the first quarter of 2009 with cash of approximately $95 million. Since the close of the first quarter of 2009, cash collections from customers have outpaced cash disbursements. As a result, non-GAAP total cash on hand as of May 3, 2009, was approximately $208 million, of which approximately $132 million was held by Spansion LLC, the U.S. operating subsidiary of Spansion's GAAP cash on hand as of May 3, 2009, was $141 million. Spansion believes it has adequate liquidity for ongoing normal operations throughout the reorganization process. "Q1 was a pivotal quarter for Spansion. We took definitive actions to cut our operating expenses, restructure our balance sheet, and refocus the company," said John Kispert, CEO of Spansion. "Our cost structure is improving and with our long-term focus on embedded solutions and licensing, we are driving towards an operating model with improved gross margins and operating cash flows." Unit's Reorganization Spansion Japan Limited, a subsidiary of Spansion, commenced corporate reorganization proceedings in Japan on March 3, 2009. As a result, Spansion is no longer able to consolidate the financial results of Spansion Japan Limited in accordance with U.S. GAAP. However, Spansion Japan Limited remains fully dependent on Spansion as its sole source of funding, its sole foundry customer, and its sole distribution agent. In addition, Spansion Japan Limited and Spansion continue to operate, as they did prior to the commencement of the reorganization proceedings, on a collaborative basis. Therefore Spansion is presenting certain non-GAAP financial information reflecting the consolidation of Spansion Japan Limited, because management believes their collective financial results are relevant to investor, creditor, and other stakeholder understanding of the company's business, particularly during the reorganization process. Spansion Inc. (Debtor-in-Possession as of March 1, 2009) CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) March 29 December 28 2009 2008* ---- ---- Assets Current assets: Cash and cash equivalents $95,328 $116,387 Accounts receivable, net 186,820 249,357 Inventories 179,820 379,157 Deferred income taxes 3,213 3,213 Prepaid expenses and other current assets 40,833 35,225 --------------------------- ------ ------ Total current assets 506,014 783,339 Property, plant and equipment, net 453,759 795,030 Acquisition related intangible assets, net 1,559 1,646 Auction rate securities 104,848 94,014 Other assets (**) 83,550 99,843 ------------ ---------- ---------- Total Assets $1,149,730 $1,773,872 ============ ========== ========== Liabilities and Stockholders' Deficit Current liabilities: Note payable to banks under revolving loans $- $105,687 Short term note 79,197 - Accounts payable and accrued liabilities 96,204 634,471 Accrued compensation and benefits 14,360 60,412 Income taxes payable 1,833 3,972 Deferred income on shipments to distributors 28,041 35,285 Current portion of long-term debt and capital lease obligations - 1,226,090 ----------------------------- ------- --------- Total current liabilities 219,635 2,065,917 Deferred income taxes 3,267 3,267 Long-term debt and capital lease obligations (**) - 111,005 Other long-term liabilities 6,889 44,330 Liabilities subject to compromise 1,359,622 - --------------------------------- --------- -------- Total liabilities 1,589,413 2,224,519 Stockholders' deficit (**) (439,683) (450,647) ----------------------------------- ---------- ---------- Total Liabilities and Stockholders' Deficit $1,149,730 $1,773,872 =================================== ========== ========== * Derived from the December 28, 2008 audited financial statements of Spansion Inc. ** Balances as of December 28, 2008 as adjusted to give effect to the retrospective application of FSP APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)." Spansion Inc. (Debtor-in-Possession as of March 1, 2009) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts) Quarter Ended ------------------- March 29 March 30 2009 2008 Net sales $399,746 $570,272 Cost of sales 409,043 475,810 -------------- ------- ------- Gross profit/(loss) (9,297) 94,462 Research and development 45,829 120,321 Sales, general and administrative 47,225 64,764 Acquisition related in-process research and development - 10,800 Restructuring charges (*) 13,304 - ----------------- -------- -------- Operating loss before reorganization items (115,655) (101,423) Gain on deconsolidation of subsidiary 55,171 - Interest and other income (expense), net 247 3,379 Interest expense (**) (21,572) (22,814) --------------------- ------- ------- Loss before reorganization items and income taxes (81,809) (120,858) Reorganization items (7,241) - -------------------- ------ ------ Loss before income taxes (89,050) (120,858) Provision (benefit) for income taxes 168 (564) Net loss $(89,218) $(120,294) Net loss per share Basic and diluted (***) $(0.55) $(0.87) Shares used in per share calculation - Basic and diluted (***) 161,283 138,765 * Includes $8,569 for involuntary terminations of manufacturing employees in the quarter ended March 29, 2009. ** Quarter ended March 30, 2008 as adjusted to give effect to the retrospective application of FSP APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)." *** Shares used in per share calculation is computed based on the weighted-average number of common shares outstanding during the period. The shares used in net loss per share calculation for the quarters ended March 29, 2009, and March 30, 2008, included 22,729 and 3,347 of weighted- average common shares related to the acquisition of Saifun Semiconductors Ltd., respectively. Spansion Inc. (Debtor-in-Possession as of March 1, 2009) Reconciliation of GAAP measures to Non-GAAP (In thousands) Quarter Ended March 29, March 29, Difference* 2009 2009 (GAAP) (Non-GAAP) Net sales $399,746 $401,487 $(1,741) Gross margin -2% 6% -8% Total operating expenses $106,358 $112,144 $(5,786) Net loss $(89,218) $(111,995) $22,777 * Differences between the GAAP and Non-GAAP numbers represent the impact of deconsolidating the operating results of the Company's Japanese subsidiary beginning on March 3, 2009. Spansion Inc. (Debtor-in-Possession as of March 1, 2009) Reconciliation of GAAP measures to Non-GAAP (In thousands) March 29, March 29, Difference* 2009 2009 GAAP Non-GAAP Cash and cash equivalents $95,328 $123,866 $(28,538) * Differences between the GAAP and Non-GAAP numbers represent the impact of the deconsolidation of the Company's Japanese subsidiary beginning on March 3, 2009 Spansion Inc. (Debtor-in-Possession as of March 1, 2009) Reconciliation of GAAP measures to Non-GAAP (In millions) Quarter Ended March 29, March 29, Difference* 2009 2009 GAAP Non-GAAP Purchases of property, plant and equipment $4 $ 7 $(3) Consumer, Set-top Box and Industrial Division (CSID) $222 $224 $(2) * Differences between the GAAP and Non-GAAP numbers represent the impact of deconsolidation of the Company's Japanese subsidiary beginning on March 3, 2009 About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc. and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPGS SPC: Write-Downs Cue S&P's 'D' Rating on 2006-IIC Notes ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on SPGS SPC's ABSpoke Portfolio I 2006-IIC notes to 'D' from 'CCC-'. The lowered rating follows a number of recent write-downs of underlying reference entities, which have caused the notes to incur partial principal losses. Rating Lowered SPGS SPC ABSpoke Portfolio I 2006-IIC Rating ------ Class To From ----- -- ---- Var notes D CCC- STANFORD GROUP: Investors to Force Int'l Bank to Bankruptcy ----------------------------------------------------------- Three members of a group of investors claiming they lost $100 million in Robert Allen Stanford's alleged $8 billion ponzi scheme are trying to drag Stanford International Bank Ltd. into bankruptcy to protect creditors' interests, according to Law360. The TCR-Latin America, citing Caribbean360.com, reported May 1 that Stanford Financial Group court-appointed receiver Ralph Janvey, in his report filed with the U.S. District Court for the Northern District of Texas, said he has no confidence in the courts in Antigua and Barbuda to properly carry out Stanford International Bank Limited (SIBL)'s liquidation. The report relates Mr. Janvey said the American court system should be allowed to deal with the matter. As reported in the Troubled Company Reporter-Latin America on April 22, 2009, Caribbean360.com said Mr. Janvey is challenging SIBL's liquidation. Nigel Hamilton-Smith and Peter Wastell, client partners at Vantis Business Recovery Services, were appointed as joint liquidators for SIBL on April 15, 2009, by an Order of the High Court of Antigua and Barbuda. Stanford Trust Company Limited meanwhile remains in receivership and the receivers continue with their investigations. The liquidation proceedings have been commenced following the receivership of SIBL, during which time the receivers concluded that it had become clear that the bank's assets were significantly less than its liabilities. Messrs. Hamilton-Smith and Wastell were previously appointed by the Antiguan Financial Services Regulatory Commission as receivers for SIBL. "The Antiguan liquidators essentially request that the U.S. Court cede to the Antiguan court system control over the marshaling, liquidation, claims adjudication and distribution process. That, in the receiver's view, would be unwise and detrimental to claimants, as the Antiguan court system lacks experience in the administration and winding up of a business of the size and scope of the Stanford family of companies," Mr. Janvey said in his report obtained by Caribbean360.com. "Further, the Antiguan liquidators have liquidation authority over only SIBL, which is just one of the more than 100 Stanford companies involved in what was an integral - and allegedly fraudulent - operation." According to Caribbean360.com, Mr. Janvey spoke of looking for opportunities in which cooperation with the Antiguan receivers is possible and reasonably likely to benefit the receivership estate. The report relates Mr. Janvey insisted that although SIBL's headquarters was in Antigua, all of its financial operations, including CD sales, were controlled and managed from Sir Allen's offices in the US and he should therefore have control of its assets. About Stanford International Domiciled in Antigua, Stanford International Bank Limited -- http://www.stanfordinternationalbank.com/-- is a member of Stanford Private Wealth Management, a global financial services network with US$51 billion in deposits and assets under management or advisement. Stanford Private Wealth Management serves more than 70,000 clients in 140 countries. * * * The Securities and Exchange Commission (SEC), on Feb. 17, charged Mr. Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an US$8 billion Certificate of Deposit program. Mr. Stanford's companies include SIBL, Stanford Group Company (SGC), and investment adviser Stanford Capital Management. As reported in the Troubled Company Reporter-Latin America on April 8, 2009, Bloomberg News said U.S. District Judge David Godbey seized all of Mr. Stanford's corporate and personal assets and placed them under the control of court-appointed SGC receiver Ralph Janvey. STAR TRIBUNE: Has Until August 13 to File Chapter 11 Plan --------------------------------------------------------- The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York extended the exclusive periods of Star Tribune Holdings Corporation and The Star Tribune Company to: a) file a plan of reorganization until Aug. 13, 2009; and b) solicit acceptances of that plan until Oct. 12, 2009. The Debtors' current exclusive plan filing period will expired on May 15, 2009. The Debtors said they need enough time to avoid the necessity of having to finalize a plan prematurely and to ensure that the plan best addresses the interest of their employees, creditors and estates. According to the Debtors, the steering committee of their first lien lenders support the extension, while the official committee of unsecured creditors has not conveyed opposition to the proposal. The Debtors further said that the Committees have agreed with respect to a proposed plan recovery for unsecured creditors. About Star Tribune Headquartered in Minneapolis, Minnesota, The Star Tribune Company -- http://www.startribune.com/-- operates the largest newspaper in the U.S. state of Minnesota and published seven days each week in an edition for the Minneapolis-Saint Paul metropolitan area. The Company and its affiliate, Star Tribune Holdings Corporation, filed for Chapter 11 protection on January 15, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-10245). Marshall Scott Huebner, Esq., James I. McClammy, Esq., and Lynn Poss, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Blackstone Advisory Services L.P. is the Debtors' financial advisor. Diana G. Adams, the U.S. Trustee for Region 2, selected seven members to the official committee of unsecured creditors in the Debtors' Chapter 11 cases. Scott Cargill, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC, represents the Committee as counsel. STOCKTON CITY: Faces $31MM Budget Deficit, Opposes "Loan" of Funds ------------------------------------------------------------------ Just as mayors and city councils in the state of California slash city budgets and reduce services to deal with the worst economic crisis in decades, they learned yesterday that state leaders may try to coerce local governments into providing a forced $2 billion bailout of the state budget if the May 19 ballot measures fail. The May Revise option released by Gov. Arnold Schwarzenegger, containing that bailout, or "loan," essentially forces cities to rescue the state from its financial quagmire and would cripple city services. To take money from cash-strapped cities now amounts to a profound "anti-stimulus" action by the state. Saying that he absolutely "despised the proposal," the Governor also said earlier this week in a meeting with mayors and council members that he understands this proposal would be devastating to public safety services and that he did not know how the state would pay back the loan. Statewide opinion polls consistently show a vast majority of Californians themselves don't believe borrowing should be used to balance the state's budget and oppose public safety cuts. The League of California Cities in a statement said California cities cannot afford to bail out the state when they are already adopting extremely painful cuts to balance their own budgets. This shotgun "loan" of city property tax revenues would force additional service cuts including police and firefighter layoffs and result in longer emergency response times and fire station closures. The League of California Cities cite a snapshot of what some of California's cities are facing: -- Los Angeles is facing a $529 million budget deficit and Mayor Villaraigosa has urged the city council to declare a fiscal emergency to give him authority to layoff and furlough thousands of city employees; -- Rohnert Park may have to lay off 31 employees, including 17 Sworn officers and nine public safety technicians -- and would still not be able to balance its budget; -- Stockton, to address a $31 million budget deficit, sent layoff notices to 55 police officers, 35 civilian employees and demoted seven officers; and -- Vallejo, in the midst of bankruptcy, may be forced to decimate city services by 20 percent and staff are recommending that the city council cut 30 sworn officer positions as well as close two fire stations. "It's absolutely unthinkable that the state would consider sacrificing local public safety at a time like this. City officials are already making painful cuts locally, laying off employees, cutting services and much more, to make our budgets balance. Taking local funds used for public safety to bail out the state budget is the last thing the public wants to see," said League President and Rolling Hills Estates Mayor Judy Mitchell. "It's painful. We're going well below our ability to provide essential services. We have nothing left to cut," said Vallejo City Council Member Stephanie Gomes. Reflecting the impact that the stagnating economy has had on city budgets, cities across the state are passing resolutions declaring a state of severe fiscal hardship. To date, close to 100 cities have either passed or are scheduled to pass a resolution. California's news leaders understand why it's fundamentally wrong for the state to raid local revenues. Writing in an op-ed in the Los Angeles Times, D.J. Waldie, a contributing editor, expressed it poignantly stating: "The quality of life in California's neighborhoods will be part of the wreckage. Closed libraries mean kids won't have a place to go after school. Unsupervised parks means they won't have a safe place to play. Furloughed workers won't be available to process your business license, check your building plans or deal with your complaint. Everyday life -- the level at which local government works -- will be harder and coarser." The Governor met with city officials earlier this week in Culver City and San Jose to discuss Propositions 1A-F and the impact of their failure on state and local services. He told the assembled city officials that he will be under extraordinary pressure to "borrow" local government funds if the ballot measures fail and the budget deficit reaches $21.3 billion. The League and the city officials present told the Governor that they strongly opposed any borrowing on top of the $900 million cities already provide the state each year in city property taxes. The League endorsed the propositions on April 6. "The League is supporting Props. 1A -- F because they provide a framework for beginning to responsibly balance the state budget without gimmicks. The state should follow the lead of the cities of California in dealing with its budget deficit -- cut spending, sell assets, enhance revenues and don't borrow," said League Executive Director Chris McKenzie. City officials will fight any budget proposal that attempts to raid local property tax revenues to bail out the state budget. Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials. SUNWISC: Case Summary & 18 Largest Unsecured Creditors ------------------------------------------------------ Debtor: Sunwisc, L.L.C. PO Box 191268 Little Rock, AR 72219 Bankruptcy Case No.: 09-13384 Chapter 11 Petition Date: May 13, 2009 Court: United States Bankruptcy Court Eastern District of Arkansas (Little Rock) Debtor's Counsel: Basil V. Hicks, Jr. Attorney at Law P.O. Box 5670 N. Little Rock, AR 72119-5670 Tel: (501) 301-7700 Fax: (501) 301-7999 Email: basil.hicks@comcast.net 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 18 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/areb09-13384.pdf The petition was signed by Mary Nash, owner of the Company. VALENTINE GROUP: Files for Chapter 7; to Shut Business Today ------------------------------------------------------------ Court documents say that The Valentine Group Inc. has filed for Chapter 7 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. Citing a Valentine Group employee, Crain's New York Business states that the Company will close on May 15, 2009. Court documents say that Valentine Group listed $376,089 in liabilities. The largest of its debts, according to Crain's, is about $100,000, which is owed to Chase Loan. Crain's relates that Valentine Group also owes about $62,000 to printing firm Earth Enterprise. The Valentine Group Inc. is an almost two decade old branding and design firm that played a role creating Time Inc.'s magazine, Real Simple. It was founded by Robert Valentine, who is also its president. Valentine Group designed the prototype and the first three issues of the magazine. Valentine Group also worked on the launch of Martha Stewart Living magazine, and designed the Chic Simple line of lifestyle hardcover books that were popular in the 1990s. More recently it worked on a rebranding and advertising campaign for the Cole Haan fashion label. VALLEJO CITY: Opposes "Loan" of Funds to Bail Out State Budget -------------------------------------------------------------- Just as mayors and city councils in the state of California slash city budgets and reduce services to deal with the worst economic crisis in decades, they learned yesterday that state leaders may try to coerce local governments into providing a forced $2 billion bailout of the state budget if the May 19 ballot measures fail. The May Revise option released by Gov. Arnold Schwarzenegger, containing that bailout, or "loan," essentially forces cities to rescue the state from its financial quagmire and would cripple city services. To take money from cash-strapped cities now amounts to a profound "anti-stimulus" action by the state. Saying that he absolutely "despised the proposal," the Governor also said earlier this week in a meeting with mayors and council members that he understands this proposal would be devastating to public safety services and that he did not know how the state would pay back the loan. Statewide opinion polls consistently show a vast majority of Californians themselves don't believe borrowing should be used to balance the state's budget and oppose public safety cuts. The League of California Cities in a statement said California cities cannot afford to bail out the state when they are already adopting extremely painful cuts to balance their own budgets. This shotgun "loan" of city property tax revenues would force additional service cuts including police and firefighter layoffs and result in longer emergency response times and fire station closures. The League of California Cities cite a snapshot of what some of California's cities are facing: -- Los Angeles is facing a $529 million budget deficit and Mayor Villaraigosa has urged the city council to declare a fiscal emergency to give him authority to layoff and furlough thousands of city employees; -- Rohnert Park may have to lay off 31 employees, including 17 Sworn officers and nine public safety technicians -- and would still not be able to balance its budget; -- Stockton, to address a $31 million budget deficit, sent layoff notices to 55 police officers, 35 civilian employees and demoted seven officers; and -- Vallejo, in the midst of bankruptcy, may be forced to decimate city services by 20 percent and staff are recommending that the city council cut 30 sworn officer positions as well as close two fire stations. "It's absolutely unthinkable that the state would consider sacrificing local public safety at a time like this. City officials are already making painful cuts locally, laying off employees, cutting services and much more, to make our budgets balance. Taking local funds used for public safety to bail out the state budget is the last thing the public wants to see," said League President and Rolling Hills Estates Mayor Judy Mitchell. "It's painful. We're going well below our ability to provide essential services. We have nothing left to cut," said Vallejo City Council Member Stephanie Gomes. Reflecting the impact that the stagnating economy has had on city budgets, cities across the state are passing resolutions declaring a state of severe fiscal hardship. To date, close to 100 cities have either passed or are scheduled to pass a resolution. California's news leaders understand why it's fundamentally wrong for the state to raid local revenues. Writing in an op-ed in the Los Angeles Times, D.J. Waldie, a contributing editor, expressed it poignantly stating: "The quality of life in California's neighborhoods will be part of the wreckage. Closed libraries mean kids won't have a place to go after school. Unsupervised parks means they won't have a safe place to play. Furloughed workers won't be available to process your business license, check your building plans or deal with your complaint. Everyday life -- the level at which local government works -- will be harder and coarser." The Governor met with city officials earlier this week in Culver City and San Jose to discuss Propositions 1A-F and the impact of their failure on state and local services. He told the assembled city officials that he will be under extraordinary pressure to "borrow" local government funds if the ballot measures fail and the budget deficit reaches $21.3 billion. The League and the city officials present told the Governor that they strongly opposed any borrowing on top of the $900 million cities already provide the state each year in city property taxes. The League endorsed the propositions on April 6. "The League is supporting Props. 1A -- F because they provide a framework for beginning to responsibly balance the state budget without gimmicks. The state should follow the lead of the cities of California in dealing with its budget deficit -- cut spending, sell assets, enhance revenues and don't borrow," said League Executive Director Chris McKenzie. City officials will fight any budget proposal that attempts to raid local property tax revenues to bail out the state budget. Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials. WARNER MUSIC: Moody's Reviews 'B1' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service placed Warner Music Group Corp.'s ratings for possible upgrade. The company's current ratings include its B1 Corporate Family Rating, B1 Probability of Default Rating, Ba3 senior secured bank credit facility rating, B3 senior discount notes rating, B3 senior subordinated bond rating and SGL- 3 liquidity rating. The ratings review is prompted by WMG's strengthening credit metrics, particularly its moderate net debt leverage, and the potential for continuing improvement over the next 12 to 24 months which should create headroom under credit agreement covenants over the next year. Financial discipline exhibited by the company over the last year (such as suspending dividend payments and significantly reducing investment spending in order to maintain financial flexibility) also contributes to the positive momentum in WMG's ratings. Moody's has taken these rating actions: -- Corporate Family Rating, Placed on Review for Possible Upgrade, currently B1 -- Probability of Default Rating, Placed on Review for Possible Upgrade, currently B1 -- Senior Subordinated Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B3 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently Ba3 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently B3 -- Outlook revised from stable to under review for possible upgrade Moody's review will focus on (1) the company's strategies and its ability to continue to adjust its business model in order to maintain digital leadership and offset revenue declines from loss of physical CD sales; (2) WMG's plans for the use of cash ($658 million at 3/31/2009) and (3) management's plans in addressing its future refinancing needs, and creating sufficient cushion under financial maintenance covenants to strengthen its liquidity position, which in Moody's opinion takes on heightened importance in the current economic environment. The last rating action was on February 13, 2008 when Moody's lowered WMG's corporate family rating from Ba3 to B1 and the Speculative Grade Liquidity rating from SGL-2 to SGL-3, due to liquidity concerns. WMG's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside WMG's core industry and believes WMG's ratings are comparable to those of other issuers with similar credit risk. Warner Music Group Corp., with its headquarters in New York, is a leading music content company, with domestic and international operations in recorded music and music publishing. Annual revenues approximate $3.2 billion. WESTHAMPTON COACHWORKS: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------------ Jessica DiNapoli at The Southampton Press reports that Richard Rubio has filed Chapter 11 petitions in the U.S. Bankruptcy Court for the Eastern District of New York for his companies Manhattan Motorcars of the Hamptons and Westhampton Coachworks. Court documents say that the Westhampton Coachworks has about $500,000 in assets and about $2.2 million in liabilities, while Manhattan Motorcars of the Hamptons has about $350,000 in assets and $3.2 million in liabilities. Kenneth Reynolds, a bankruptcy attorney representing Mr. Rubio, said that the total estimated assets are subject to change depending on the outcome of litigation, The Southampton Press states. Citing Mr. Reynolds, The Southampton Press says that the liabilities figures are what creditors are claiming Mr. Rubio owes them, but they are subject to evaluation in court. According to The Southampton Press, Westhampton Coachworks and Manhattan Motorcars have a combined estimated 99 to 148 creditors, including Lotus Cars USA, Porsche of Roslyn in Roslyn Heights, and Rosemar Construction, Inc. Mr. Reynolds, the report states, said that Mr. Rubio either took loans from the creditors or bought goods from them. The Southampton Press relates that Mr. Rubio might pursue other actions other than a lawsuit against Automobili Lamborghini. The purpose of the lawsuit or lawsuits is to bring assets to the Companies so that Mr. Rubio can pay back his creditors, the report says, citing Mr. Reynolds. Citing Mr. Rubio, The Southampton Press states that the Annona Restaurant on the second floor of the building housing Manhattan Motorcars of the Hamptons and the leasing division, MMH Automotive, aren't included in the Chapter 11 filing. According to the report, Mr. Rubio said that bankruptcies are products of the bad economy. A court hearing is set for May 28, The Southampton Press relates. Westhampton Beach, New York-based Westhampton Coachworks, Ltd., is an automotive repair business. Its affiliate, Manhattan Motorcars, started in the late 1970s as a small repair shop and grew into one of the most glitzy automobile dealerships on the East End. Westhampton Coachworks and Manhattan Motorcars filed for Chapter 11 bankruptcy protection on April 29, 2009 (Bankr. E.D. N.Y. Case No. 09-73008). Kenneth A. Reynolds, Esq., at McBreen & Kopko, assists the Debtors in their restructuring efforts. WOOZYFLY INC: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Woozyfly, Inc aka Woozyfly Productions aka Pet Express Supply, Inc aka CJ Vision Enterprises, Inc. aka Woozyfly.com 59 West 19th Street, 6th Floor New York, NY Bankruptcy Case No.: 09-13022 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: James M. Peck Debtor's Counsel: Michael S. Fox, Esq. Olshan Grundman Frome Rosenzweig & Wolosky, LLP Park Avenue Tower 65 E. 55th Street New York, NY 10022 Tel: (212) 451-2300 Fax: (212) 451-2222 Email: mfox@olshanlaw.com Total Assets: $221,047 Total Debts: $1,845,773 A full-text copy of the Debtor's petition, including its list of 4 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nysb09-13022.pdf The petition was signed by Eric Stoppenhagen, interim president of the Company. WORLD ENGINEERING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: World Engineering Solutions Corp. aka Glass Solutions Corp. PO Box 390 Arroyo, PR 00714-0390 Bankruptcy Case No.: 09-03842 Chapter 11 Petition Date: May 12, 2009 Court: United States Bankruptcy Court District of Puerto Rico (Ponce) Debtor's Counsel: Winston Vidal-Gambaro, Esq. Winston Vidal Law Office PO Box 193673 San Juan, PR 00919-3673 Tel: (787) 751-2864 Fax: (787) 763-6114 Email: wvidal@prtc.net Total Assets: $3,565,447 Total Debts: $4,145,934 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/prb09-03842.pdf The petition was signed by Nelson Nieves Zeno, president of the Company. WYNDHAM WORLDWIDE: Moody's Assigns 'Ba2' Rating on $200 Mil. Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to Wyndham Worldwide, Inc.'s proposed $200 million unsecured convertible notes due 2012. Moody's also assigned a Ba2 rating to the company's proposed senior unsecured notes due 2014. The amount of the senior unsecured notes due 2014 has not yet been determined. Wyndham's Ba1 Corporate Family Rating, Ba1 Probability of Default Rating, and Ba2 existing senior unsecured bonds were affirmed. The rating outlook is stable. The proceeds from the notes will be used repay a portion of amounts outstanding under the company's $900 million revolving credit facility. Wyndham's ratings consider its leading market share in each of its three business segments, and the high margins and low capital intensity of its hotel franchise and vacation exchange and rental segments. This helps to offset some of the risk of the lower margin and more capital intensive vacation ownership (e.g. "timeshare") segment. Key credit concerns include continued access to the securitization market to recycle timeshare receivables and risks associated with extending credit to purchasers of vacation ownership intervals. The stable outlook reflects Moody's expectation that Wyndham's credit metrics will remain in line with a Ba1 rating despite earnings pressure. It also acknowledges the improvement in Wyndham's liquidity that will result from the repayment of amounts outstanding under its revolver with proceeds from these proposed note offerings. Wyndham's Ba2 senior unsecured rating could be upgraded if the company issues a significant amount of the proposed senior unsecured notes due 2014. Any upgrade would also consider Moody's assumptions regarding revolver usage going forward. Ratings assigned: -- $200 million unsecured convertible notes due 2012 at Ba2 (LGD 4, 64%) -- Senior unsecured notes (amount to be determined) due 2014 at Ba2 (LGD 4, 64%) -- Unsecured debt shelf at (P) Ba2 (LGD 4, 64%) -- Preferred debt shelf at (P) Ba2 (LDG 6, 97%) Ratings affirmed: -- Corporate Family Rating at Ba1 -- Probability of Default Rating at Ba1 -- Senior unsecured bonds at Ba2 (LGD 4, 64%) Moody's last rating action on Wyndham was on April 28, 2009 when the company's senior unsecured ratings were lowered to Ba2 from Baa3 and a Ba1 Corporate Family Rating was assigned. Wyndham Worldwide Corporation operates in three segments of the hospitality industry -- lodging, vacation exchange and rental, and vacation ownership. The company operates well known brand names such as, Wyndham Hotels & Resorts, Ramada, Days Inn, and RCI, among others. Annual revenues exceeded $4 billion in 2008. YELLOWSTONE CLUB: Court Adopts $232 Million Valuation ----------------------------------------------------- After being presented with two differing valuations for Yellowstone Club, Judge Ralph B. Kirscher of the U.S. Bankruptcy Court for the District of Montana held that Yellowstone Club's assets pledged to Credit Suisse is worth $232 million. Credit Suisse loaned the Debtors $375 million, which loans were backed by a first lien on portions of the Debtors' property, but specifically excludes significant parcels, including, but not limited to the Warren Miller Lodge. This is 43% lower than the offer to buy the Club more than a year ago. In approximately March of 2008, Samuel T. Byrne of CrossHarbor was proposing to purchase the assets of the Yellowstone Club for approximately $407 million. However, since Yellowstone Mountain Club's bankruptcy filing in November 2008, CrossHarbor submitted a stalking horse bid of $100 million, consisting of cash and notes. The drop in the bid was due to "macro factors", including the fact that 142 units located within the boundaries of the Yellowstone Club are on the market, but are not included in the Chapter 11 filing. Yellowstone has filed a proposed Chapter 11 plan built upon the sale to Crossharbor or to another party with a higher offer. The Plan is scheduled for confirmation May 18. A copy of the disclosure statement to the Plan is available at: http://bankrupt.com/misc/Yellowstone_Disc_Statement.pdf $232 Million Vs. $113 Million Christopher Donaldson, managing director of Cushman & Wakefield of Colorado, Inc., appraised the Debtors' assets and stated that the market value of the "Credit Suisse Collateral Owners Revised Unit Mix" was $232 million as of April 1, 2009, with a market exposure period of 18 months. Mr. Donaldson's appraisal also asserts that the liquidation value of the "Credit Suisse Collateral Owners Revised Unit Mix" as of April 1, 2009, was $116 million. Mr. Donaldson estimates that Debtors will sell their 150 National memberships over a five-year period starting in 2012 at an average price of $700,000 each, for a total of $105 million. He does not expect the Debtors to sell any National memberships until 2012 because it will take a couple of years to get back to reasonable demand and absorption in the market. Mr. Donaldson also projects that the Debtors could sell three lots between April 1, 2009, and March 31, 2010, and projects five or six lot sales in the second year. He explained that the slow absorption in the first two years accommodates the present market and allows for additional planning for future development. Gregory Hartmann and Darius Hatami of HVS International appraised the Debtors' property and determined that the market value of the Debtors' assets as of June 1, 2009, will be $113 million, with a market exposure period of three to eighteen months. Mr. Hartmann and Mr. Hatami used the Income Capitalization approach, reasoning that such "approach produces the most supportable value estimate, and it is generally given the greatest weight in the valuation process." Mr. Hartmann and Mr. Hatami project that the Debtors will sell two lots in 2009/2010 and six lots in 2010/2011. In reaching their valuation, Messrs. Hartmann and Hatami concluded that the Debtor would sell the 150 National memberships "only after developer real estate is sold out" and Messrs. Hartmann and Hatami project that such memberships will sell for $300,000. Such projected price is in stark contrast to Donaldson's projected sales price of $700,000. Messrs. Hartmann and Hatami valued the Warren Miller Lodge at $20.4 million. Mr. Donaldson did not appraise the property. Mr. Hartmann's and Mr. Hatami's qualifications were challenged by Credit Suisse. Mr. Hartmann has appraised in excess of 5,000 properties, including residential communities and hotels. However, Mr. Hartmann has never appraised a master-planned community such as the Yellowstone Club. Court's Decision After observing Messrs. Donaldson, Hartmann and Hatami, in conjunction with the other witnesses and after carefully reviewing the appraisal reports, the Court concludes that Donaldson's appraisal is more persuasive, more accurately reflects current market conditions and is thus entitled to greater weight. Mr. Donaldson's appraisal differs from that of Hartmann and Hatami appraisal in two important respects: the value assigned to the National memberships and the projected discount rate. While both items are "very subjective," the judge said he was convinced by additional testimony and evidence that HVS has undervalued Credit Suisse's collateral. Thus, the Court adopts Mr. Donaldson's valuation estimate of $232 million as the value of Credit Suisse's collateral. Based on his extensive due diligence, Mr. Byrne maintains that he was willing to purchase the Yellowstone Club in March 2008 for $407 million. Assuming a 20% to 50% drop in real estate since March 2008 that value results in a discounted price of $325,600,00 to $203,500,000. Mr. Donaldson did not assign a specific value to the Warren Miller Lodge and Credit Suisse did not appear to dispute Messrs. Hartmann and Hatami's valuation of $20.4 million. Accordingly, the Court assigned a separate value of $20.4 million to the Warren Miller Lodge, which amount is in addition to the value of $232 million assigned to Credit Suisse's collateral. A full-text copy of the Court's Memorandum Decision is available for free at: http://bankrupt.com/misc/Yellowstone_Valuation_Opinion.pdf Credit Suisse, which is owed $375,000,000 backed by liens on substantially all assets of Yellowstone Mountain Club LLC, will have a secured claim of $232 million. The Court, however, has entered a separate opinion equitably subordinating the secured claim to the debtor-in-possession facility and unsecured claims due to Credit Suisse's "predatory lending practices". About Yellowstone Club Located near Big Sky, Montana, Yellowstone Club -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. Yellowstone Mountain Club LLC and its affiliates filed for Chapter 11 on Nov. 10, 2008 (Bankr. D. Montana, Case No. 08-61570). The Company's owner affiliate Edra D. Blixseth, filed for Chapter 11 on March 27, 2009 (Case No. 09-60452). Connie Sue Martin, Esq., David A. Ernst, Esq., Lawrence R Ream, Esq., Richard G. Birinyi, Esq., Stephen Deatherage, Esq., Thomas L. Hutchinson, Esq., and Troy Greenfield, Esq., at Bullivant Houser Bailey PC; and James A. Patten, Esq., at Patten, Peterman, Bekkedahl & Green PLLC, represent the Debtors as counsel. The Debtors hired FTI Consulting Inc. and Ronald Greenspan as CRO. The official committee of unsecured creditors in the case are represented by J. Thomas Beckett, Esq., and David P. Billings, Esq., at Parsons, Behle and Latimer, as counsel, and James H. Cossitt, Esq., at local counsel. Credit Suisse, the prepetition first lien lender, is represented by Skadden, Arps, Slate, Meagher & Flom. YELLOWSTONE CLUB: Credit Suisse's $232MM Demoted for Greedy Scheme ------------------------------------------------------------------ In 2004, Credit Suisse contacted Timothy L. Blixseth, controlling member of Yellowstone Club, to offer a syndicated term loan, a product it has also marketed to other master-planned residential and recreational communities. On September 30, 2005, after several months of negotiations, Credit Suisse agreed to loan Yellowstone Club $375,000,000, from the $150,000,000 originally proposed. In 2008, Yellowstone Mountain Club, one of the first private ski and golf community, filed for Chapter 11, aiming to sell the resort and the business to payoff debts. Credit Suisse hopes to submit a credit bid to purchase the business. While the loan was secured by assets of the Debtor, Credit Suisse couldn't rely solely on its $232,000,000 secured claim to acquire Yellowstone Club as this was "equitably subordinated" by Judge Ralph B. Kirscher of the U.S. Bankruptcy Court for the District of Montana. "Credit Suisse's actions in the case were so far overreaching and self-serving that they shocked the conscience of the Court," Judge Kirscher said in an order issued May 13, 2009. Judge Kirscher recounts that in 2005, Credit Suisse was offering a new financial product for sale -- it was offering the owners of luxury second-home developments the opportunity to take their profits up front by mortgaging their development projects to the hilt. According to Judge Kirscher, because Jeffrey Barcy, a director in Credit Suisse's Investment Banking Division, and other members of the team only earned fees if they sold loan, they thus devised a loan scheme whereby it encouraged developers of high-end residential resorts, such as Mr. Blixseth, to take unnecessary loans. However, this scheme only benefited Credit Suisse with substantial fees and owners with "profit dividend" while leaving the developments with "enormous debt", Judge Kirscher said. "Credit Suisse and the development owners would benefit, while their developments -- and especially the creditors of their developments -- bore all the risk of loss. This newly developed syndicated loan product enriched Credit Suisse, its employees and more than one luxury development owner, but it left the developments too thinly capitalized to survive. Numerous entities that received Credit Suisse's syndicated loan product have failed financially, including Tamarack Resort, Promontory, Lake Las Vegas, Turtle Bay and Ginn. If the foregoing developments were anything like this case, they were doomed to failure once they received their loans from Credit Suisse." Blixseth Withdrew Loaned Money According to Judge Kirscher, Credit Suisse's new loan product was marketed to developers on grounds that developers were authorized to take a substantial portion of their Credit Suisse loan proceeds as a distribution, or as Mr. Blixseth argues, a loan. In this case, Credit Suisse had not a single care how Mr. Blixseth used a majority of the loan proceeds, and in fact authorized Mr. Blixseth to take $209 million and use it for any purpose unrelated to the Yellowstone Club. Mr. Blixseth, however, had a problem in this case because he was not the sole owner of the Yellowstone Club and he did not want to share the loan proceeds with the B shareholders, which owned 13% of the Club, the Court noted. Thus, Mr. Blixseth booked the $209 million proceeds that he took from the Yellowstone Club as a loan months after he actually took the proceeds. Mr. Blixseth claims he always intended to repay the $209 million BGI note, but Mr. Blixseth's former wife Edra testified to the contrary. Mr. Blixseth testified that he always intended to take the $209 million loan proceeds as a loan rather than a distribution because booking the transaction as a distribution would have caused his owner's equity account to have a negative balance. The negative owner's equity would have appeared as a qualification on the Debtors' audited financial statements and may have caused the Debtors' to be out of compliance with the Credit Agreement. A sophisticated lender such as Credit Suisse had to have known what a distribution would do to the Debtors' financial statements, and in particular, their balance sheets, yet Credit Suisse proceeded with the loan, and thus earned its large fee. In addition to turning a blind eye to Debtors' financial statements, Credit Suisse's due diligence with respect to the $375 million loan was almost all but non-existent, Judge Kirscher held. He noted that Credit Suisse spent a fair amount of money on legal bills to ascertain that the Debtors did in fact own the property at the Yellowstone Club, and Credit Suisse also spent a fair amount ensuring that it was not violating any laws with its loan product. Credit Suisse, however, did little financial due diligence. Mr. Barcy testified that Credit Suisse was aware that Cushman & Wakefield had appraised Debtors' assets in 2004 and thus either knew or should have known that the collateral that Mr. Blixseth proposed for the Credit Suisse loan had a fair market value of $420 million in 2004. "The Court highly doubts that Credit Suisse could have successfully syndicated the Yellowstone Club loan if the loan to value ratio was 90 percent," Judge Kirscher said. While the Debtors historically only had debt between $4 to $60 million, Credit Suisse proposed to increase the Debtors' debt load by at least six times, Judge Kirscher pointed out. Thus, he said, Mr. Barcy and the rest of the Credit Suisse syndicated loan team could not have believed under any set of circumstances that the Debtors could service such an increased debt load, particularly when the Debtors had several years of net operating losses, mixed with a couple years of net operating revenues. "The naked greed in this case combined with Credit Suisse's complete disregard for the Debtors or any other person or entity who was subordinated to Credit Suisse's first lien position, shocks the conscience of this Court," Judge Kirscher reiterated. Subordination While Credit Suisse's new loan product resulted in enormous fees to Credit Suisse in 2005, it resulted in financial ruin for several residential resort communities, Judge Kirscher said. According to Judge Kirscher, the only equitable remedy to compensate for Credit Suisse's overreaching and predatory lending practices in Yellowstone's case is to subordinate Credit Suisse's first lien position to that of CrossHarbor's superpriority debtor- in-possession financing and to subordinate such lien to that of the allowed claims of unsecured creditors. The Court, however, declines to equitably subordinate Credit Suisse's secured claim to those of the members, including members of the Ad Hoc Committee of Yellowstone Club Members or the Ad Hoc Group of Class B Unit Holders. The Court, further ruled, "For purposes of the upcoming auction of Debtors' assets scheduled for May 13, 2009, Credit Suisse shall be allowed to submit a credit bid for the amount of its allowed secured claim of $232 million. However, because Credit Suisse's claim is equitably subordinated, Credit Suisse must provide, as a component of its credit bid, sufficient funds to pay the CrossHarbor debtor-in-possession financing, the administrative fees and costs of the Debtors' bankruptcy estate and the allowed unsecured claims of non-member creditors. Credit Suisse's allowed secured claim of $232 million is equitably subordinated to: (1) CrossHarbor's debtor-in-possession financing; (2) approved administrative fees and costs of the bankruptcy estate; and (3) the allowed claims of unsecured creditors. The Court has also denied Credit Suisse's request's request for adequate protection for any diminution in value of its collateral. A copy of the Court's Subordination Order is available for free at http://bankrupt.com/misc/Yellowstone_Subordination_Order.pdf "We are disappointed in this ruling and disagree with the court's findings," Duncan King, a Credit Suisse spokesman, said in a phone interview with Bloomberg. "We are weighing our options at this time." About Yellowstone Club Located near Big Sky, Montana, Yellowstone Club -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. Yellowstone Mountain Club LLC and its affiliates filed for Chapter 11 on Nov. 10, 2008 (Bankr. D. Montana, Case No. 08-61570). The Company's owner affiliate Edra D. Blixseth, filed for Chapter 11 on March 27, 2009 (Case No. 09-60452). Connie Sue Martin, Esq., David A. Ernst, Esq., Lawrence R Ream, Esq., Richard G. Birinyi, Esq., Stephen Deatherage, Esq., Thomas L. Hutchinson, Esq., and Troy Greenfield, Esq., at Bullivant Houser Bailey PC; and James A. Patten, Esq., at Patten, Peterman, Bekkedahl & Green PLLC, represent the Debtors as counsel. The Debtors hired FTI Consulting Inc. and Ronald Greenspan as CRO. The official committee of unsecured creditors in the case are represented by J. Thomas Beckett, Esq., and David P. Billings, Esq., at Parsons, Behle and Latimer, as counsel, and James H. Cossitt, Esq., at local counsel. Credit Suisse, the prepetition first lien lender, is represented by Skadden, Arps, Slate, Meagher & Flom. YELLOWSTONE CLUB: Credit Suisse Must Offer $42 Million in Cash -------------------------------------------------------------- Kahrin Deines at The Associated Press reports that the Hon. Ralph Kirscher of the U.S. Bankruptcy Court for the District of Montana has ruled that Credit Suisse must offer $42 million in cash to clear other creditor's claims before it can bid for Yellowstone Mountain Club, LLC. The AP states that the scheduled start for an auction in Billings on Wednesday was called off over disagreements about the actual amount of the other prioritized claims, and how Credit Suisse could meet its obligation for repayment. The AP relates that the Court found that Credit Suisse's $375 million loan to Yellowstone Club was predatory. The Court, according to The AP, ruled that Yellowstone Club first pay many of its other debts before repaying the Credit Suisse loan. The Court, The AP says, requires Credit Suisse to cover other parties' debts in any offer it makes, since the company is using its $232-million lien on Yellowstone Club to make one of two bids in an auction for the resort. The AP notes that about $7.7 million owed to a group of trade creditors and another $35.4 million in other debts will have to be met by a cash component in any Credit Suisse bid. According to the report, Credit Suisse can offset another $14.3 million in disputed debt with a promise to pay those creditors from money generated by liquidation of Yellowstone Club's assets. The report says that those repayments won't take priority over any money that is due to new investors involved in the bid. According to The AP, James Patten, the attorney for Yellowstone Club, asked Judge Kirscher to put the disputed $14.3 million first in line for repayment, and not put a final cap on its total. The report quoted Mr. Patten as saying, "It's turning around the order that this court issued yesterday [May 12], and it's at the expense and at the risk of the unsecured claims." Credit Suisse, The AP relates, said that they wouldn't be able to make a bid without that protection for new investors, leaving Yellowstone Club without a competitive bankruptcy auction. The report quoted Mark Chehi, the attorney for Credit Suisse as saying, "We can't be in the position of guaranteeing one-hundred percent recovery to all the unsecured creditors." About Yellowstone Club Located near Big Sky, Montana, Yellowstone Club -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. Yellowstone Mountain Club LLC and its affiliates filed for Chapter 11 on Nov. 10, 2008 (Bankr. D. Montana, Case No. 08-61570). The Company's owner affiliate Edra D. Blixseth, filed for Chapter 11 on March 27, 2009 (Case No. 09-60452). Connie Sue Martin, Esq., David A. Ernst, Esq., Lawrence R Ream, Esq., Richard G. Birinyi, Esq., Stephen Deatherage, Esq., Thomas L. Hutchinson, Esq., and Troy Greenfield, Esq., at Bullivant Houser Bailey PC; and James A. Patten, Esq., at Patten, Peterman, Bekkedahl & Green PLLC, represent the Debtors as counsel. The Debtors hired FTI Consulting Inc. and Ronald Greenspan as CRO. The official committee of unsecured creditors in the case are represented by J. Thomas Beckett, Esq., and David P. Billings, Esq., at Parsons, Behle and Latimer, as counsel, and James H. Cossitt, Esq., at local counsel. Credit Suisse, the prepetition first lien lender, is represented by Skadden, Arps, Slate, Meagher & Flom. YRC WORLDWIDE: Will Seek $1 Billion Gov't Financial Assistance -------------------------------------------------------------- Alex Roth and Robin Sidel at The Wall Street Journal report that YRC Worldwide Inc. CEO William Zollars said that the Company will ask $1 billion financial assistance from the government to help relieve pension obligations. YRC Worldwide will seek the money to help cover the cost of its estimated $2 billion pension obligation over the next four years, WSJ states, citing Mr. Zollars. According to WSJ, about half of YRC Worldwide's contributions to a multi-employer union pension fund cover the costs of retirees who never worked for the Company. Mr. Zollars, WSJ relates, said that YRC Worldwide shouldn't be forced to pay the pension benefits of employees who never worked for the Company. WSJ quoted Mr. Zollars as saying, "We're making really good progress on our financial-recovery plan and we think this is an extra burden we shouldn't have to be carrying." Applying for the TARP funds is a "way to get the dialogue started about the pension issue," WSJ says, citing Mr. Zollars. Mr. Zollars, WSJ relates, said that by applying to the U.S. Treasury for money under the Troubled Asset Relief Program, he hopes to "get the conversation started" with federal authorities about cutting YRC Worldwide's pension obligations. WSJ, citing Mr. Zollars, states that YRC Worldwide will submit an application to the Treasury Department as early May 15. According to WSJ, experts said that YRC Worldwide's odds of actually getting TARP money appear to be slim. The report quoted Frank Bonaventure Jr., a lawyer who has represented banking clients seeking TARP funds, as saying, "My experience dealing with Treasury is that with TARP funds they are relatively narrow in how they view things. They have not been very expansive in terms of how it is applied and what industries could get it." WSJ states that YRC Worldwide is trying to reduce costs and raise cash. YRC Worldwide recently negotiated a 10% wage cut for its 35,000 Teamster workers and requested to put up some of its property as collateral to defer three months' worth of payments to its pension plan, WSJ relates. YRC Worldwide, the report says, also notified investors that it might breach the terms of its bank covenant. According to the report, Mr. Zollars said on Thursday that YRC Worldwide "continues to work closely with our bank group and would expect no issues around the second-quarter covenant." Citing a person familiar with the matter, WSJ says that YRC Worldwide could seek to let the Pension Benefit Guaranty Corp. to take over financial responsibility for pension payments to retirees who didn't work for the Company but for other firms that have since gone out of business and are no longer contributing to the multi-employer plan. About YRC Worldwide Inc. Headquartered in Overland Park, Kansas, YRC Worldwide Inc. -- http://www.yrcw.com/-- a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of brands including Yellow Transportation, Roadway, Reimer Express, YRC Logistics, New Penn, USF Holland, USF Reddaway, and USF Glen Moore. The enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. YRC Worldwide employs roughly 58,000 people. * * * As reported in the Troubled Company Reporter on April 28, 2009, Standard & Poor's Ratings Services revised the implications of its CreditWatch review on YRC Worldwide Inc. (CCC/Watch Neg/--) to negative from positive. The CreditWatch revision reflects weak conditions in the less-than-truckload sector. "Despite YRC's ongoing integration of the Yellow Transportation and Roadway networks and cost-saving initiatives, its first-quarter financial results were weaker than expected. Further, S&P expects declining tonnage and industry overcapacity to continue to put pressure on earnings for the duration of 2009," said Standard & Poor's credit analyst Anita Ogbara. This raises concerns that the company may not be able to meet its recently amended bank covenants. The company's success in securing the amendments was the basis for S&P's revising the CreditWatch implications on the ratings to positive from developing on Feb. 17, 2009. * BOOK REVIEW: Performance Evaluation of Hedge Funds ---------------------------------------------------- Edited by Greg N. Gregoriou, Fabrice Rouah, and Komlan Sedzro Publisher: Beard Books Hardcover: 203 pages Listprice: $59.95 Review by Henry Berry Hedge funds can be traced back to 1949 when Alfred Winslow Jones formed the first one to "hedge" his investments in the stock market by betting that some stocks would go up and others down. However, it has only been within the past decade that hedge funds have exploded in growth. The rise of global markets and the uncertainties that have arisen from the valuation of different currencies have given a boost to hedge funds. In 1998, there were approximately 3,500 hedge funds, managing capital of about $150 billion. By mid-2006, 9,000 hedge funds were managing $1.2 trillion in assets. Despite their growing prominence in the investment community, hedge funds are only vaguely understood by most people. Performance Evaluation of Hedge Funds addresses this shortcoming. The book describes the structure, workings, purpose, and goals of hedge funds. While hedge funds are loosely defined as "funds with no rules," the editors define these funds more usefully as "privately pooled investments, usually structured as a partnership between the fund managers and the investors." The authors then expand upon this definition by explaining what sorts of investments hedge funds are, the work of the managers, and the reasons investors join a hedge fund and what they are looking for in doing so. For example, hedge funds are characterized as an "important avenue for investors opting to diversify their traditional portfolios and better control risk" -- an apt characterization considering their tremendous growth over the last decade. The qualifications to join a hedge fund generally include a net worth in excess of $1 million; thus, funds are for high net-worth individuals and institutional investors such as foundations, life insurance companies, endowments, and investment banks. However, there are many individuals with net worths below $1 million that take part in hedge funds by pooling funds in financial entities that are then eligible for a hedge fund. This book discusses why hedge funds have become "notorious as speculating vehicles," in part because of highly publicized incidents, both pro and con. For example, George Soros made $1 billion in 1992 by betting against the British pound. Conversely, the hedge fund Long-Term Capital Management (LTCP) imploded in 1998, with losses totalling $4.6 billion. Nonetheless, these are the exceptions rather than the rule, and the editors offer statistics, studies, and other research showing that the "volatility of hedge funds is closer to that of bonds than mutual funds or equities." After clarifying what hedge funds are and are not, the book explains how to analyze hedge fund performance and select a successful hedge fund. It is here that the book has its greatest utility, and the text is supplemented with graphs, tables, and formulas. The analysis makes one thing clear: for some investors, hedge funds are an investment worth considering. Most have a demonstrable record of investment performance and the risk is low, contrary to common perception. Investors who have the necessary capital to invest in a hedge fund or readers who aspire to join that select club will want to absorb the research, information, analyses, commentary, and guidance of this unique book. Greg N. Gregoriou teaches at U. S. and Canadian universities and does research for large corporations. Fabrice Rouah also teaches at the university level and does financial research. Komlan Sedzro is a professor of finance at the University of Quebec and an advisor to the Montreal Derivatives Exchange. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Ma. Theresa Amor J. Tan Singco, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***