/raid1/www/Hosts/bankrupt/TCR_Public/090518.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, May 18, 2009, Vol. 13, No. 136
Headlines
1031 TAX GROUP: Chapter 11 Trustee Files $150-Mil. Suit vs. Okun
2715 N MILWAUKEE: Case Summary & 18 Largest Unsecured Creditors
ADRIANA ELDERLY: Case Summary & 6 Largest Unsecured Creditors
ALLOU DISTRIBUTORS: Sound Around Keeps $150K Prepetition Payment
APARTMENT INVESTMENT: Fitch Cuts Issuer Default Rating to 'BB+'
APEX GLOBAL: District Court Examines Committee's Standing
APRIA HEALTHCARE: Moody's Assigns 'Ba2' Rating on $600 Mil. Notes
ASARCO LLC: Parent Files Competing Plan to Retain Equity Interest
ASARCO LLC: Court Extends Maturity of $10MM Intercompany Loan
ASARCO LLC: Court Extends Solicitation Period Until Sept. 30
ASARCO LLC: Subsidiary Committee and FCR Seek Documents
ASHLAND INC: S&P Affirms Corporate Credit Rating at 'BB-'
AUTO WORLD LLC: Case Summary & 20 Largest Unsecured Creditors
BANK OF AMERICA: Govt Wants Board With More Banking Experience
BANK OF AMERICA: Moody's Reviews 'D' Financial Strength Rating
BRODER BROS: Gets 95% of Noteholders' Support for Exchange Offer
BUNTING SWINE: Meeting of Creditors Scheduled for June 11
CAROLINA FIRST: Moody's Downgrades Bank Strength Rating to 'D'
CEYLON HOTELS: Case Summary & 19 Largest Unsecured Creditors
CHEMTURA CORP: Lyondell Seeks Lift Stay to Reject Chemtura Pacts
CHEMTURA CORP: Creditors Panel Taps Akin Gump as Counsel
CHEMTURA CORP: Gets Court Okay to Tap Katten Muchin as IP Counsel
CHEMTURA CORP: Hires Ogilvy Renault as Counsel on NAFTA Issue
CHEMTURA CORP: Seeks to Hire Deloitte as Tax Consultants
CHEMTURA CORP: To Reject Tolling Agreement With Spartech
CHRYSLER LLC: GM May Pursue Sec. 363(b) Sale in Bankruptcy
CHRYSLER LLC: To Include Retirees' Benefits as Debts in New Firm
CHRYSLER LLC: Notifies & to Pay 1,200 Suppliers Co. Wants to Keep
CHRYSLER LLC: Dealer Cuts Needed to Be Viable, Says Treasury
CIRCUIT CITY: Wins Nod to Sell Internet Name, Marks to Systemax
CITIGROUP INC: Moody's Reviews Baa3 Preferred Stock
CLARK ATLANTA: Moody's Affirms 'Ba1' Rating on $19 Mil. Bonds
CONGRESSIONAL HOTEL: Section 341(a) Meeting Slated for June 1
CONVERGYS CORP: Moody's Confirms Corporate Family Rating at 'Ba1'
COPANS MOTORS: Meeting of Creditors Scheduled for June 18
COYOTES HOCKEY: Jim Balsillie Fights for Buy & Transfer Attempt
COYOTES HOCKEY: NHL Lays Out Reasons for Opposing Sale
COYOTES HOCKEY: U.S. Trustee Sets Meeting of Creditors for June 5
CROWN HOLDINGS: Fitch Upgrades Issuer Default Rating to 'BB-'
CROWN VILLAGE: U.S. Trustee Sets Meeting of Creditors for June 4
CRUCIBLE MATERIALS: Meeting of Creditors Scheduled for June 8
DBSD NORTH AMERICA: Files Pre-Negotiated Plan to Restructure Debt
DBSD NORTH AMERICA: Case Summary & 50 Largest Unsecured Creditors
DENNIS P MORROW: Section 341(a) Meeting Slated for June 4
DHP HOLDINGS: Travelers Seeks to Lift Stay to Pursue Litigation
EL POLLO: Moody's Assigns 'B2' Rating on $132.5 Mil. Notes
E*TRADE FINANCIAL: Likely Material Losses Cue Moody's Junk Rating
FIFTH THIRD BANCORP: Moody's Reviews Baa3 Preferred Stock
FILENE'S BASEMENT: Section 341(a) Meeting Scheduled for June 11
FOCUS ENHANCEMENTS: Implements Chapter 11 Plan
FORD MOTOR: DBRS Comments on Common Shares Offering
FREEDOM BANK: Problems Not Promptly Addressed by FDIC, Says Audit
GANDI INNOVATIONS: Voluntary Chapter 15 Case Summary
GENERAL GROWTH: Gets Green Light to Use Lenders' Collateral
GENERAL GROWTH: U.S. Trustee Balks at Weil Gotshal Engagement
GENERAL GROWTH: U.S. Trustee Balks at Kirkland Engagement
GENERAL GROWTH: Wells Fargo Wants 2 Debtors' Cases Dismissed
GENERAL GROWTH: D&Os Disclose Ownership of Common Stock
GENERAL MOTORS: Will Cut Dealer Network to 3,600 by End of 2010
GENERAL MOTORS: Sec. 363(b) Sale "Most Likely" If It Files Ch. 11
GENERAL MOTORS: Dealer Cuts Part of Viability Plan
GENERAL MOTORS: Willing to Cut U.S. Imports From Other Countries
GLOBAL GROUP: U.S. Trustee Sets Meeting of Creditors for June 6
GMAC LLC: Will Rename GMAC Bank to Ally Bank
GREENVILLE CASUALTY: A.M. Best Upgrades FSR to 'B+' Froom 'B'
GULF COAST OIL: Court Rejects Asset Sale Outside of a Ch 11 Plan
HANLON DEVELOPMENT: Voluntary Chapter 11 Case Summary
HAYES LEMMERZ: Receives Delisting Notice from NASDAQ
HILL COUNTRY: US Trustee Sets Section 341(a) Meeting for June 10
HLA INC: Case Summary & 20 Largest Unsecured Creditors
INTERMET CORP: Court Approves June 22 Auction for All Assets
JEFFERY L BENFIELD: Section 341(a) Meeting Scheduled for June 10
JEFFERSON NATIONAL: A.M. Best Cuts Fin'l Strength Ratings to 'B-'
JO-ANN STORES: S&P Raises Corporate Credit Rating to 'B+'
KEY CORP: Moody's Reviews Baa3 Preferred Stock
KIRK CORP: Gets Court OK to Access to $600,000 in Sales Proceeds
LANDMARK FENCE: Case Summary & 20 Largest Unsecured Creditors
LANDO LANE ELLIS: Voluntary Chapter 11 Case Summary
LAS VEGAS CASINO: Larry Mullin Returns to President, CEO Post
LEHMAN BROTHERS: Special Committee to Review Attorneys' Fees
LENOX HILL: Fitch Affirms 'BB' Rating on $130.5 Mil. 2001 Bonds
LYNEVE RESTAURANT: Case Summary & 13 Largest Unsecured Creditors
LYONDELL CHEMICAL: Seeks to Reject Contracts with Chemtura Unit
MACY'S INC: Posts $88,000,000 Net Loss in First Quarter 2009
MBIA INC: Sued by 18 Banks Over Insurance Unit Split
MGB8 LLC: Case Summary & 11 Largest Unsecured Creditors
MICHAEL A. FORBES: Case Summary & 20 Largest Unsecured Creditors
MIDTOWN MENTAL: Case Summary & 20 Largest Unsecured Creditors
MOMENTIVE PERFORMANCE: Exchange Offers Expires June 12
MORTON INDUSTRIAL: Court Approves Management Incentive Plan
MORTGAGE LENDERS: Court Approves Class Suit Settlement
MUZAK HOLDINGS: Has New Approved License Agreement with ASCAP
NANOGEN INC: Files for Ch. 11 Bankr.; to Sell Assets to Elitech
NATURAL CLEANERS: Case Summary & 15 Largest Unsecured Creditors
NRL RENTALS: Case Summary & 7 Largest Unsecured Creditors
PACKAGING DYNAMICS: Moody's Reviews 'B2' Corporate Family Rating
PADILLA PROPERTIES: Case Summary & 6 Largest Unsecured Creditors
PALMETTO GREENS: Files for Chapter 11 Bankruptcy Protection
PAUL NORMAN: U.S. Trustee Sets Meeting of Creditors for June 5
PACKAGING DYNAMICS: Moody's Reviews 'B2' Corporate Family Rating
PLIANT CORP: Apollo to Propose 'Superior' Chapter 11 Plan
RANDA LUGGAGE: Second Lien Lender Questions Ch. 11 Filing
RANDA LUGGAGE: Second Lien Lender Questions Ch. 11 Filing
REGENCY ENERGY: Moody's Affirms Corporate Family Rating at 'Ba3'
RH DONNELLEY: Misses $55-Mil. Interest Payment on Unsec. Notes
RIVER VALLEY: U.S. Trustee Sets Meeting of Creditors for June 19
ROCK-TENN CO: Moody's Assigns 'Ba3' Rating on Senior Notes
ROCK-TENN CO: S&P Affirms Rating on Senior Unsec. Notes at 'BB-'
RR VALVE: Voluntary Chapter 11 Case Summary
SAVANNAH BLUEPRINT: Case Summary & 20 Largest Unsecured Creditors
SEALY CORP: Moody's Assigns 'Ba3' Rating on Senior Secured Notes
SEITEL INC: Declining Performance Cues S&P's to Junk Ratings
SEMGROUP LP: To Distribute $2.27BB to Creditors Under Plan
SEMGROUP LP: Suppliers Battle Banks Over Unpaid Oil Sales
SENTINEL MANAGEMENT: Ad Hoc Committee Must Pay Its Own Fees
SHAWN BURGUENO: Voluntary Chapter 11 Case Summary
SIDNEY KIMMEL: Auction Sale of Assets Set for June 15
SOUTH SIDE: U.S. Trustee Sets Meeting of Creditors for June 8
SOUTHEASTERN INCOME: Section 341(a) Meeting Scheduled for May 29
SPEEDWAY MOTORSPORTS: Moody's Puts 'Ba1' Rating on $250MM Notes
SPEEDWAY MOTORSPORTS: S&P Assigns 'BB' Rating on $250 Mil. Notes
STAR TRIBUNE: Gets Green Light to Amend Two CBAs with Unions
STATION CASINOS: Has $33.7MM Q1 Loss, Forbearance Until May 29
SUNTRUST BANKS: Moody's Reviews Ba2 Preferred Stock
SYNCORA HOLDINGS: Expiration Date for Offer for RMBS Securities
TRI-COUNTY COMMUNITY: Case Summary 4 Largest Unsecured Creditors
TRIBUNE CO: Court Okays $13.3MM in Bonus Payments to Managers
TROPICANA ENT: Auction Sale of N.J. Debtors Assets Set for June 5
TWO DOHENY: Case Summary & 7 Largest Unsecured Creditors
VISANT HOLDING: S&P Puts 'B+' Rating on Positive CreditWatch
VALUE CITY: Amended Appointment to Creditors Committee
VECTOR URBAN: SFT I to Auction Partners' Interests on May 22
WELLS FARGO: Moody's Upgrades Preferred Stock Rating to 'Ba3'
WHISPERING PINES: Mortgagee Ready to Sell Collateral on June 3
WL HOMES: Protests Panel Liquidation Plea; Tweaks Emaar Sale Deal
WL HOMES: Wants Bidding Procedures for Asset Sale Approved
ZOOMER GROUP: Case Summary & 20 Largest Unsecured Creditors
* Circuits Differ on Treatment for Company Officers
* A.M. Best Says Economic Slump Hit Europe's Insurance Industry
* Chrysler, General Growth Are Largest Filings in Past Month
* Retail Sales Unexpectedly Fall in April for Second Month
* BOND PRICING -- For the Week From May 11 to 15, 2009
*********
1031 TAX GROUP: Chapter 11 Trustee Files $150-Mil. Suit vs. Okun
----------------------------------------------------------------
Gerard A. McHale, Jr., the Chapter 11 trustee for The 1031 Tax
Group LLC and its debtor-affiliates, sued owner Edward H. Okun for
fraudulent transfers and guaranty, conversion, and breach of
fiduciary duty. Mr. Okun is in federal prison at Northern Neck
Regional Jail in Warsaw, Virginia, after being convicted of mail
fraud, among other charges.
The Chapter 11 Trustee seeks to recover from Mr. Okun at least
$150 million he misappropriated based on claims of conversion,
breach of guaranty, and breach of fiduciary duties. Mr. McHale
asserts that the Debtors are entitled to recover more than
$125 million based on a written guaranty Mr. Okun provided to the
Debtors on May 13, 2007.
According to the Trustee, between 2005 and 2007, Mr. Okun and
other individuals engaged in several misappropriations of funds of
the Debtors. Mr. Okun, et al., transferred certain proceeds from
the Debtors' Sec. 1031 exchange business to his personal and
business accounts then misappropriated them. The funds were used
for Mr. Okun's lavish lifestyle including acquiring properties and
luxury assets, and pay monies and bonuses to other participants,
the Complaint alleges.
The Chapter 11 Trustee tells the Court that Mr. Okun, et al., have
misappropriated more than $100 million.
Several individuals and entities are also facing the same charges
alleged by the Chapter 11 Trustee including Aline Bolani, Roy
Kenneth Herrera, John Cantrell, John H. Marzotto, Christopher
Hoctor, Thomas D. Applewhite, Elizabeth A. McNamee, Roger O'Dell,
Robert A. O'Grady, Brenton Fisher Paty, Eric Perkins, Jeffrey
Zacarias, Citibank N.A., Dorothy E. Jones fka KHR Holding Co., LLC
1-15 Hartsdale Ave., Naidip Capital L.C., Burnham Center 8 LLC,
Shatkin Carmax Florida LLC, Millennium Garfield LLC, Whippoorwill
Lake Campground Inc., Alamo Fairgrounds Ltd., Whitworth Family
Ltd., Michael J. Voynovich, ElanUSA Group Inc., Marketing Concepts
LLC, United States Automobile Association, USAA Federal Savings
Bank, Jamieson Manufacturing Co., Terracon Consultants Inc., CBS
Coverage Group Inc., Protiviti Inc., PENTA Advisory Services LLC,
Brownstein Hyatt Farber Schreck LLP, A.W. Perry Inc., Timothy
Stephens, Gregory H. Busch, Wendy L. Craft, Cherie Embree, Matthew
Scheriff, Barry J. Powlishen, and David Kuns.
A full-text copy of the Chapter 11 Trustee's adversary proceeding
is available for free at http://ResearchArchives.com/t/s?3cf2
About The 1031 Tax Group
Headquartered in Richmond, Virginia, The 1031 Tax Group LLC --
http://www.ixg1031.com/-- was a privately held consolidated group
of qualified intermediaries created to service real property
exchanges under Section 1031 of the Internal Revenue Code.
The Company and 15 of its affiliates filed for Chapter 11
protection on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447
through 07-11462). Gerard A. McHale, Jr., was appointed Chapter
11 trustee. Jonathan L. Flaxer, Esq., and David J. Eisenman,
Esq., at Golenbock Eiseman Assor Bell & Peskoe LLP, represent the
Chapter 11 trustee. Thomas J. Weber, Esq., Melanie L. Cyganowski,
Esq., and Allen G. Kadish, Esq., at Greenberg Traurig, LLP,
represent the Official Committee of Unsecured Creditors. The
Debtors' operating report for the month ended Sept. 30, 2007,
showed net loss of $67,903 on $0 revenues. As of Sept. 30, 2007,
the Debtors had total assets of $164,231,012 and total liabilities
of $168,126,294, resulting in a total stockholders' deficit of
$3,895,282.
2715 N MILWAUKEE: Case Summary & 18 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: 2715 N. Milwaukee LLC
2715 N. Milwaukee Avenue
Chicago, IL 60647-1336
Bankruptcy Case No.: 09-17543
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Northern District of Illinois (Chicago)
Debtor's Counsel: Gregory J. Jordan, Esq.
Apostol, Kowal & Jordan, Ltd.
200 South Wacker Drive - 32nd Floor
Chicago, IL 60606
Tel: (312) 854-7181
Fax: (312) 276-9285
Email: gjordan@akjltd.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A full-text copy of the Debtor's petition, including its list of
18 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ilnb09-17543.pdf
The petition was signed by Saul Azar, manager of the Company.
ADRIANA ELDERLY: Case Summary & 6 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Adriana Elderly Care Homes Inc.
24081 Roma Dr
Mission Viejo, CA 92691
Bankruptcy Case No.: 09-14477
Chapter 11 Petition Date: May 13, 2009
Court: United States Bankruptcy Court
Central District of California (Santa Ana)
Judge: Theodor Albert
Debtor's Counsel: MacKenzie Batzer, Esq.
17702 Mitchell N
Irvine, CA 92614
Tel: (949) 756-9050
Fax: (949) 756-9060
Email: mbatzer@madisonharbor.com
Estimated Assets: $50,001 to $100,000
Estimated Debts: $10,000,001 to $50,000,000
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/cacb09-14477.pdf
The petition was signed by Richard Mendoza, president of the
Company.
ALLOU DISTRIBUTORS: Sound Around Keeps $150K Prepetition Payment
----------------------------------------------------------------
Kenneth P. Sliverman, serving as the chapter 7 trustee liquidating
Allou Distributors, Inc.'s estate (Bankr. E.D.N.Y. Case No. 03-
82321), sued Sound Around, Inc. (Bankr. E.D.N.Y. Adv. Pro. No. 05-
8219), to recover $149,945 Allou paid to Sound Around prior to its
bankruptcy filing. Mr. Silverman alleged the payment was
improper, and Sound Around said there was nothing improper.
On January 3, 2008, the parties filed a Joint Pretrial Memorandum
stipulating that:
1. On or about June 15, 1999, the Debtors transferred
$149,945 to Sound Around;
2. The Transfer constituted a transfer of the Debtors'
interest in property;
3. The Debtors were insolvent at the time of the Transfer;
4. At the time of the Transfer, the Debtors were engaged in a
business or transaction for which the property remaining
in its possession after the conveyance was unreasonably
small capital;
5. At the time of the Transfer, the Debtors had incurred
debts beyond its ability to pay them as they matured;
6. No portion of the Transfer was returned to the Debtors or
anyone; associated with the Debtors, including any member
of the Jacobs family; and
7. Zigmund Brach had no personal or business ties to any
member of the Jacobs family.
Based on these stipulated facts, the only issue for the Honorable
Elizabeth S. Stong to consider at trial was whether the Sound
Around Transfer was made without fair consideration.
After reviewing the available evidence -- much of which Sound
Around had destroyed in the ordinary course of business between
1999 and 2005 -- Judge Stong concludes that the payment looks
suspicious because it was recorded only on one of two sets of
books the debtors maintained, but that's not sufficient to
conclude that the transaction was a sham.
Mr. Silverman was represented in this dispute by:
Ronald J. Friedman, Esq.
David J. Mahoney, Esq.
Silverman Acampora LLP
100 Jericho Quadrangle, Suite 300
Jericho, NY 11753
and Sound Around was represented by:
Stuart A. Blander, Esq.
Evan R. Shusterman, Esq.
Heller, Horowitz & Feit, P.C.
292 Madison Avenue
New York, NY 10017
See In re Allou Distributors, Inc., --- B.R. ----, 2009 WL
1097988, http://is.gd/AnI1(Bankr. E.D.N.Y.)
Prior to its bankruptcy filing, Allou Distributors, Inc., was a
distributor of health and beauty aid products, pharmaceuticals,
fragrances, and cosmetics. On April 9, 2003, involuntary Chapter
11 petitions were filed against ADI and three of its affiliates,
M. Sobol, Inc., Direct Fragrances, Inc., and Standford Personal
Care, Inc. (Bankr. E.D.N.Y. Case Nos. 03-82321, through 03-
82325). The Original Debtors consented to the entry of orders for
relief under Chapter 11, and on April 10, 2003, the Court issued
orders for relief in each of the Original Debtors' Chapter 11
cases. On April 18, 2003, involuntary Chapter 11 petitions were
filed against two ADI affiliates, Trans World Grocers Inc. and
Rona Beauty Supplies, Inc. (Bankr. E.D.N.Y. Case Nos. 03-82660 and
03-82661). On May 1, 2003, the Court entered orders for relief in
the Chapter 11 cases of the Subsequent Debtors. On April 25,
2003, voluntary Chapter 11 petitions were filed on behalf of four
ADI subsidiaries, Core Marketing, Inc., HBA Distributors, Inc.,
HBA National Sales Corp., and Pastel Cosmetic & Beauty Aids, Inc.
(Bankr. E.D.N.Y. Case Nos. 03-82838 through 03-82841). On July
11, 2003, Allou Healthcare Inc., a direct or indirect parent of
the Debtors, consented to the entry of an order for relief under
Chapter 11 and the joint administration of its case with those of
the Original Debtors and Subsequent Debtors (Bankr. E.D.N.Y. Case
No. 03-82662). By order dated September 16, 2003, the Debtors'
Chapter 11 cases were converted to liquidation cases under Chapter
7 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 03-82321,
Docket No. 583). Kenneth P. Silverman was appointed as the
Chapter 7 trustee in these cases. Id. The Debtors' cases were
substantively consolidated by order dated December 22, 2003
(Docket No. 923).
Allou's Principals Victor Jacobs and his sons Herman Jacobs and
Jacob Jacobs held approximately 61 percent of the voting stock of
AHI. The Jacobs held various positions as officers of Allou and
were controlling shareholders of Allou at all relevant times. On
June 30, 2003, involuntary Chapter 7 bankruptcy petitions were
filed against Victor Jacobs, Herman Jacobs, and Jacob Jacobs.
Orders for relief were entered on September 9, 2003, and Allan B.
Mendelsohn was appointed as the Chapter 7 trustee in these cases.
APARTMENT INVESTMENT: Fitch Cuts Issuer Default Rating to 'BB+'
---------------------------------------------------------------
Fitch Ratings has downgraded these credit ratings of Apartment
Investment and Management Company and AIMCO Properties, L.P.:
Aimco
-- Issuer Default Rating to 'BB+' from 'BBB-';
-- $180 million revolving credit facility to 'BB+' from 'BBB-';
-- $350 million term loan facility to 'BB+' from 'BBB-';
-- $696.5 million preferred stock to 'BB-' from 'BB+'.
AIMCO Properties, L.P.
-- IDR to 'BB+' from 'BBB-';
-- $180 million revolving credit facility to 'BB+' from 'BBB-';
-- $350 million term loan facility to 'BB+' from 'BBB-'.
In addition, Fitch has revised the Rating Outlook to Stable from
Negative.
The rating action reflects Fitch's view that Aimco has a small
pool of unencumbered properties that is more commensurate with a
'BB+' IDR. In revising Aimco's Rating Outlook to Negative from
Stable on Oct. 17, 2008, Fitch stated that the ratings could be
downgraded if the company did not take meaningful steps towards
establishing an unencumbered pool to the point where unencumbered
assets to unsecured corporate debt reached 100%. While the
company had a large portfolio of $10.9 billion in gross book
assets across 23 target markets and various other markets as of
March 31, 2009, only 1.1% of these assets (representing $118.8
million in value) were unencumbered, compared to $365 million in
corporate debt that the company had outstanding as of March 31,
2009. While Aimco continues to generate residual cash flow
available to corporate debt investors from its encumbered assets,
nearly all of this cash flow generated by the company's portfolio
is structurally subordinated to Aimco's nonrecourse secured
property debt.
The downgrade also reflects the challenging operating environment
and Fitch's view that Aimco's same-store NOI may decline to the
lower end of the 0% to -5% range in 2009. The company's fixed
charge coverage ratio (defined as recurring EBITDA less capital
expenditures divided by interest expense, capitalized interest and
preferred dividends) was 1.4 times (x) for the trailing twelve
months ended March 31, 2009, and Fitch anticipates the potential
for a slight decline in fixed charge coverage to a level
commensurate with a 'BB+' rating.
The two notch differential between Aimco'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 Aimco's
preferred stock does not contain covenant protections comparable
to those within agreements governing the company's corporate debt.
In addition, based on Fitch's criteria report, 'Equity Credit for
Hybrids & Other Capital Securities,' Aimco's preferred stock is
75% equity-like and 25% debt-like since AIV'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 9.2x and 60.6%, respectively, as of March 31, 2009, up from
8.5x and 58.5% as of Dec. 31, 2008.
The Stable Outlook is consistent with Fitch's outlook for the
multifamily REIT sector and also reflects Aimco's adequate
liquidity position, with sources of liquidity (cash, availability
under the company's revolving credit facility, retained cash flows
from operating activities including additional retained cash from
dividend reductions) less uses of liquidity (debt maturities and
capital replacement expenditures) resulting in a liquidity surplus
of approximately $170 million from March 31, 2009 to Dec. 31,
2010. The company's liquidity position has improved in recent
quarters as Aimco has sold assets to repay certain term loan
borrowings, reduced capital expenditures, reduced its common stock
dividend, and successfully refinanced non-recourse secured
mortgage financings.
The Stable Outlook also points to the strength of the company's
management team, Aimco's large, geographically diversified
portfolio, strong redevelopment platform, and the multiple earning
streams generated through Aimco's various businesses.
These factors may result in positive momentum for Aimco's ratings:
-- If the company's unencumbered asset pool grows to represent
over 10% of total real estate;
-- If the company's secured debt-to-total debt ratio sustains
below 80% (as of March 31, 2009, secured debt-to-total debt
was 93.2%).
These factors may result in negative momentum for Aimco's ratings:
-- If in the coming quarters, the company has a liquidity
shortfall;
-- If the company's fixed charge coverage ratio sustains below
1.2x;
-- If the company's risk-adjusted capital for a 'BB' rating
category stress level declines below 1.0x (as of March 31,
2009, the company's risk-adjusted capital ratio was 1.4x).
Headquartered in Denver, Aimco is an equity real estate investment
trust engaged in the acquisition, ownership, management and
development of apartment communities with a total owned and
managed portfolio of 976 properties as of March 31, 2009. Aimco
was incorporated on Jan. 10, 1994 and as of March 31, 2009, Aimco
had $11.4 billion in undepreciated book assets and a total market
capitalization of $7.2 billion.
APEX GLOBAL: District Court Examines Committee's Standing
---------------------------------------------------------
WestLaw reports that even if the claims of the original members of
an unsecured creditors committee in a Chapter 11 case had been
satisfied or mooted prior to the committee's initiation of an
adversary proceeding against a telecommunications company, the
continued existence of the unsecured creditors class was
sufficient to maintain a justiciable controversy under Article
III. In so holding, the Michigan district court acknowledged that
the equitable underpinnings of the company's objections to a
unsecured creditors committee that lacked members which were
unsecured creditors. It noted, however, that concerns of
potential bias and conflicts of interest were alleviated by the
fiduciary duty owed by committee members. Official Committee of
Unsecured Creditors of Apex Global Information Services, Inc. v.
Qwest Communications Corp., --- B.R. ----, 2009 WL 996958 (E.D.
Mich.).
Apex Global Information Services n/k/a A.P. Liquidating Co. sought
Chapter 11 protection in February 25, 2000 (Bankr. E.D. Mic. Case
No. 00-42839). A Creditors' Committee was appointed on March 29,
2000. On April 12, 2000, the Court entered an order authorizing
the employment of the firm of Jackier, Gould, Bean, Upfal &
Eizelman, P.C., as counsel for the Committee. On April 24, 2000,
AGIS conducted an auction of substantially all of its assets.
Telia Internet, Inc. was the successful bidder. The sale did not
include the IRU Agreement. AGIS had rejected the IRU Agreement by
order dated April 10, 2000. On June 26, 2000, AGIS filed its
Combined Plan and Disclosure Statement. The plan was confirmed
August 9, 2000. Pursuant to the terms of the plan, McTevia &
Assoc. was appointed as Liquidating Agent to conduct the
liquidation of AGIS's assets, consummate the plan and administer
the bankruptcy case post-confirmation. On June 30, 2000, Qwest
filed a proof of claim alleging a secured claim of $310 million.
On May 1, 2001, the Liquidating Agent filed an objection to
Qwest's proof of claim. On September 7, 2001, Qwest filed a
motion to withdraw its proof of claim. A stipulated order
authorizing Qwest's withdrawal of its claim was entered
November 2, 2001. On March 29, 2002, the Liquidating Agent and
the Committee filed a complaint (Bankr. E.D. Mich. Adv. Pro. No.
02-4559) against Qwest alleging breach of contract and fraud.
APRIA HEALTHCARE: Moody's Assigns 'Ba2' Rating on $600 Mil. Notes
-----------------------------------------------------------------
Moody's Investors Service assigned Ba2 to the proposed $600
million senior secured series A-1 notes due 2014 and B1 to the
proposed $410 million senior secured series A-2 notes due 2014 of
Apria Healthcare Group Inc. Concurrently, Moody's affirmed the
Ba3 Corporate Family and Probability of Default ratings of the
company. The outlook for the ratings is stable.
On October 28, 2008, Sky Acquisition LLC, an affiliate of The
Blackstone Group, completed its acquisition of Apria for about
$1.6 billion (before transaction fees) or about five times pro
forma EBITDA, inclusive of about $673 million in common equity.
The proposed notes are intended to refinance a portion of the
company's senior secured bridge loan credit agreement, which was
incurred in conjunction with the transaction.
Apria's Ba3 corporate family rating is constrained by relatively
high leverage in light of the ongoing unfavorable Medicare
reimbursement environment. Moody's remains concerned that future
Medicare legislation could further constrain Apria's revenue and
cash flow through further, more stringent caps on oxygen rentals
and other adverse reimbursement changes. Nonetheless, the ratings
benefit from the reprieve offered by the Medicare Improvements for
Patients and Providers Act of 2008: In particular, the act
postponed the implementation of competitive bidding for medical
equipment in exchange for 9.5% price cuts for existing suppliers
across several DME/oxygen product categories which started in
January 2009. The legislation also clarified the extent of the
loss of revenue in Apria's oxygen therapy business commencing in
2009. The ratings benefit from the relatively recession resistant
nature of Apria's volumes, significant market share in key
business segments, and leading positions with both health care
providers and third party payors. Apria also benefits from the
expansion of the company's infusion business following the
acquisition of Coram in December 2007 and the potential for
incremental growth in specialty pharmaceuticals and infusion going
forward The ratings reflect Moody's expectations that cost
reduction initiatives already under way are likely to
significantly offset reimbursement pressures from legislation that
has already been enacted.
The stable outlook is supported by progress with cost-cutting
efforts largely offsetting the effects of reimbursement cuts
already enacted, the potential for significant additional savings,
and strong liquidity. However, the potential exists that, in a
fluid environment surrounding healthcare reform, future
legislative developments could pressure reimbursements at a rate
greater than originally envisioned. The effect of further
reimbursement cuts would be an increase in leverage and lower cash
flow generation to levels incompatible with the current rating.
Specific areas of concern include the potential for acceleration
of competitive bidding for DMEPOS, further cuts to capped rental
period for oxygen equipment and negotiated drug prices. Also,
increasing unemployment and loss of healthcare coverage through
2010 will place near-term pressures on the company through
increases in bad debt expense.
Moody's took these rating actions:
-- Assigned Ba2 (LGD 2, 29%) to the proposed $600 million senior
secured series A-1 notes due 2014;
-- Assigned B1 (LGD 5, 80%) to the proposed $410 million senior
secured series A-2 notes due 2014;
-- Withdrew the Ba3 (LGD 3, 45%) rating on the $1.01 billion
senior secured notes due 2014, which had originally been
proposed in conjunction with the acquisition;
-- Affirmed the Ba3 Corporate Family Rating; and
-- Affirmed the Ba3 Probability of Default Rating.
The ratings outlook is stable.
The last rating action was on October 6, 2008, when the Ba3
Corporate Family Rating was assigned to the acquisition vehicle,
and was subsequently transferred to the continuing entity.
Apria Healthcare Group Inc., headquartered in Lake Forest,
California, provides respiratory therapy (51% of revenues), home
infusion (40%) and home medical equipment (9%) through
approximately 550 locations serving patients in all 50 states. On
December 3, 2007, Apria completed the acquisition of Coram, Inc.,
a provider of home infusion and specialty pharmaceutical services
for about $350 million. Coram considerably expanded Apria's
existing business, bringing the total patients in home infusion to
over 100,000 patients in 50 states. Revenues for fiscal 2008 were
about $2.1 billion.
ASARCO LLC: Parent Files Competing Plan to Retain Equity Interest
-----------------------------------------------------------------
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, on Friday filed its Reorganization Plan for ASARCO to retain
its equity interest in its wholly-owned indirect subsidiary,
ASARCO LLC. AMC has been seeking to reclaim full equity ownership
of its indirect wholly owned subsidiary ASARCO LLC since it filed
for Chapter 11 protection in August 2005.
Under the terms of the plan, which was filed in connection with
ASARCO's Chapter 11 proceeding, AMC is offering a total
consideration of more than $1.6 billion, including $1.3 billion in
cash and a $250 million fully committed loan to ASARCO. In
contrast, the competing plan under consideration by the U.S.
Bankruptcy Court for the Southern District of Texas, offered by
India-based Vedanta, offers only $1.1 billion in cash and a non-
interest bearing so-called "copper note," which Vedanta values at
$200 million, backstopped only by a $100 million letter of credit.
In addition to the superior economic value, AMC's plan has the
full support of ASARCO's asbestos creditors, one of the most
important creditor groups involved in ASARCO's bankruptcy.
Vedanta's plan is conditioned upon its obtaining support of the
asbestos creditors, which limits its ability to be confirmed by
the Court.
"AMC's plan is superior to Vedanta's proposal in every way," said
Alberto de la Parra, General Counsel of Grupo Mexico. "It offers
exceptional value and enjoys the full support of the asbestos
creditors, which is essential to receiving ultimate approval by
the Courts. We look forward to the Court's decision in this
process and to regaining control of our subsidiary."
As reported by the Troubled Company Reporter, Judge Richard S.
Schmidt 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 is 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.
Competing Plan
Judge Schmidt reserves all rights to supplement his Disclosure
Statement Order, as may be necessary, to the extent Asarco
Incorporated and AMC file a competing Chapter 11 plan of
reorganization on or before May 15, 2009, to address a potential
"Joint Disclosure Statement" to be filed by the Debtors and the
Parent in connection with their competing plans.
In recent court filings, certain parties have made known to Judge
Schmidt their interest in filing a competing plan. Harbinger
Capital Partners Masters Fund I, Ltd., Harbinger Capital Partners
Special Situations Fund, L.P. and Citigroup Global Markets, Inc.
stated they are in discussions with the Creditors Committee for a
possible Section 363 Plan. Glencore Ltd. has also noted in court
papers that it submitted a plan proposal to the Debtors on
April 21, 2009.
Judge Schmidt is set to consider the Debtors' proposed
solicitation and tabulation procedures for the Plan voting,
including approval of the forms of ballots and confirmation
notices, on May 26, 2009.
Parties to Join Confirmation-Related Discovery
Several parties have made known to the Court their intention to
participate in the discovery related to the proposed confirmation
of the ASARCO debtors' Amended Chapter 11 Plan. They are:
* Montana Resources Inc.
* Wells Fargo Bank National Association
* Plainfield Special Situations Master Fund Limited
* Union Pacific Railroad Company
* Wilmington Trust Company
* Fireman's Fund Insurance Company
* Mitsui & Co. (U.S.A.) Inc.
* Harbinger Capital Partners Master Fund I, Ltd.
* Harbinger Capital Partners Special Situations Fund, L.P.
* Citigroup Global Markets, Inc.
* Everest Reinsurance Company
* Mt. McKinley Insurance Company
* Deutsche Bank Trust Company Americas
* Century Indemnity Company
* Fireman's Fund Insurance Company
* PA-PDC Urban Renewal, LLC
The Debtors also filed with the Court on May 5, 2009, a
Confirmation Service List which noted the parties that were served
with the details with respect to the plan confirmation. The
Service Parties include counsel to the Committees, the Future
Claims Representative, counsel to the Parent, the U.S. Department
of Justice, the U.S. Government, the United Steelworkers of
America, the U.S. Trustee, The Texas Commission on Environmental
Quality, counsel to Fireman's Fund Insurance Company, Mitsui & Co.
(USA), Inc., and Perth Amboy Urban Renewal LLC.
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: Court Extends Maturity of $10MM Intercompany Loan
-------------------------------------------------------------
Judge Richard Schmidt of the U.S. Bankruptcy Court for the
Southern District of Texas authorized ASARCO LLC in September 2008
to extend a one-time intercompany loan of up to $10,000,000 to the
Asbestos Subsidiary Debtors on a secured basis. The Loan
terminated according to its own terms last April 1, 2009, and
ASARCO notified the Asbestos Subsidiary Debtors of the
termination. In response, the Official Unsecured Creditors
Committee for the Asbestos Subsidiary Debtors and Robert C. Pate,
the Future Claims Representative, asked the Court to abate the
reorganization cases or to compel ASARCO to extend the DIP loan.
After hearing arguments from the parties, the Court urged ASARCO
to extend the DIP loan through May 15, 2009. Based on the Court's
suggestion, ASARCO has agreed to an order, signed by Judge
Schmidt, that:
(a) the authorization granted to ASARCO under the DIP
Financing Order to loan money to the Asbestos Subsidiary
Debtors under the DIP Finance Agreement is extended from
April 1, 2009, through May 15, 2009;
(b) the Commitment Termination Date under the DIP Financing
Order and the DIP Finance Agreement is extended from
April 1, to May 15;
(c) all borrowings under the DIP Finance Agreement during the
Extension Period are subject to the terms and conditions
of the DIP Finance Agreement and the DIP Financing Order;
and
(d) all borrowings under the DIP Finance Agreement during the
Extension Period are secured by liens against the
collateral set forth in the DIP Finance Agreement, the
Superpriority Claims and the setoff and recoupment rights
under the DIP Financing Order retroactive to the date of
entry of the DIP Financing Order.
The request for abatement of the Debtors' cases is continued until
May 26, 2009.
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: Court Extends Solicitation Period Until Sept. 30
------------------------------------------------------------
Judge Richard Schmidt of the U.S. Bankruptcy Court for the
Southern District of Texas extends the period within which ASARCO
LLC has the exclusive right to solicit acceptances of its
bankruptcy plan through September 30, 2009.
The Court modified the solicitation period, however, solely to
allow parent Americas Mining Corporation to file a competing plan
of reorganization and solicit acceptance of that plan.
According to Reuters, the Court is ready to consider "credible
rival proposals," but remains cautious not to cause further delay
in ASARCO LLC's restructuring process.
Reuters quoted Judge Schmidt as saying, "If somebody comes
forward with a real possibility of a plan, not only will we move
mountains to try to get it in the scheme to get it to
confirmation, but certainly will provide you with whatever
hearing time you need to get that thing handled. . . But it seems
to me that if you open up exclusivity and just let anything
happen, then any number of things could get filed and could in
fact interfere with the process".
Harbinger Capital Partners Masters Fund I, Ltd., Harbinger
Capital Partners Special Situations Fund, L.P. and Citigroup
Global Markets, Inc., had tried to block extension of the
Exclusive Periods, arguing that there is no basis for any
extension of the Debtors' Exclusivity Periods.
Phillip L. Lamberson, Esq., at Winstead PC, in Houston, Texas, had
said the requested solicitation deadline of September 30, 2009, is
the fourth anniversary of the Debtors' cases. Instead, he said,
the Debtors' agreement to settle their claims against Sterlite
(USA) Inc. and its affiliates should compel denial of the
extension request. The Sterlite Settlement provides for Sterlite
paying $1.3 billion in cash and a note for ASARCO LLC's assets in
exchange for the Debtors' release of a $2.6 billion litigation of
Sterlite's breach of a 2008 sale contract. Numerous parties
opposed the Sterlite Agreement because no party could meaningfully
bid against Sterlite since the Sterlite litigation would be
released immediately if the Debtors accepted a competing bid.
Asarco Incorporated and Americas Mining Corporation, parent
company of ASARCO LLC, could file a competing plan, but that plan
could provide for a release of the Debtors' $6.87 billion
fraudulent transfer judgment against the Parent, Mr. Lamberson had
pointed out.
The Harbinger Parties had told the Court that one or more third
parties may be prepared to buy the operating assets of the Debtors
without any order purporting to release asbestos claims. Those
parties would rely on the power of the Court to sell assets, free
and clear of claims under Section 363 of the Bankruptcy Code,
which provides that that the purchasers do not assume asbestos
claims against the sellers. "A plan relying on Section 363 might
not pay as much as Sterlite . . . but it would preserve for
creditors the $2.6 billion Sterlite Litigation and the $6.87
billion Grupo Mexico Judgment."
The Harbinger Parties had told Judge Schmidt that they have
discussed a Section 363 Plan with the Official Committee of
Unsecured Creditors. In this light, the Harbinger Parties aver
that the Exclusivity Period should not preclude them or any other
party from filing a Section 363 Plan and offering creditors a
choice.
Glencore Ltd. joined in the arguments of the Harbinger Parties.
Glencore related in court papers that it submitted its most recent
proposal for ASARCO's operating assets on April 21, 2009. It
tells the Court that it remains interested in acquiring the ASARCO
LLC assets.
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: Subsidiary Committee and FCR Seek Documents
-------------------------------------------------------
The Official Committee of Unsecured Creditors of ASARCO LLC's
subsidiary debtors and Future Claims Representative Robert C. Pate
tell the U.S. Bankruptcy Court for the Southern District of Texas
that in scrambling to prepare for the June 22, 2009 estimation
hearing on asbestos liabilities, they have specifically requested
material evidence from ASARCO LLC.
However, the Subsidiary Committee and Mr. Pate complain that their
requests have either been denied or ignored. The evidence at
issue consists of:
* An April 2003 analysis of ASARCO's aggregate asbestos
liabilities, projecting ASARCO's future asbestos liabilities
at approximately $1,000,000,000. This analysis, which was
prepared for ASARCO by LECG, was introduced into evidence by
ASARCO during the Brownsville Litigation, and was given to
ASARCO's expert witnesses and specifically cited and
discussed in their December 14, 2007, expert report.
* Various insurance coverage settlement documents introduced
by ASARCO and relied upon by ASARCO's expert witnesses
during the Brownsville Litigation;
* Analyses of ASARCO's asbestos liability identified in a
letter from ASARCO's counsel to counsel for Montana
Resources, Inc.;
* Minutes from ASARCO board of directors meetings, as well as
ASARCO board resolutions, considering and approving a
$750 million settlement of ASARCO's asbestos liability; and
* Asbestos-related documents recently reviewed by Porzio
Bromberg & Newman P.C. -- prior national asbestos counsel to
ASARCO, CAPCO and LAQ.
Representing the Subsidiary Committee, Sander L. Esserman, Esq.,
at Stutzman, Bromberg, Esserman & Plifka, in Dallas, Texas,
relates that the Subsidiary Committee and the FCR have
specifically requested these documents from ASARCO -- not just in
its Production Requests, but in targeted correspondence to
ASARCO's counsel over the course of the last two weeks of April
2009 -- and have endeavored in good faith to resolve the disputes
existing with regard to these documents without resorting to the
Court. However, Mr. Esserman says, these efforts have been in
vain. "ASARCO refuses to produce the evidence requested,
ignoring [the] Court's prior orders that, as to the Subsidiary
Committee and the FCR -- who both stand in the shoes of the
Asbestos Subsidiary Debtors for purposes of the derivative
asbestos estimation -- no privilege exists with regard to these
types of documents. Alternatively, even if the requested
documents were privileged -- which they are not, ASARCO has
waived any privileges applicable to the Brownsville Documents by
affirmatively relying on those documents during the Brownsville
Litigation."
The Brownsville Litigation refers to the case styled ASARCO LLC
et al. v. Americas Mining Corporation, 1:07-CV-00018, pending
before Judge Andrew Hanen in the United States District Court for
the Southern District of Texas, Brownsville Division.
The Subsidiary Committee and the FCR ask the Court to order
ASARCO to produce the Brownsville Evidence, the MRI Evidence, the
Board Minutes, and the Porzio Documents.
At the Subsidiary Committee and the FCR's request, an expedited
hearing was held on May 7, 2009.
Jacob L. Newton, Esq., at Stutzman, Bromberg, Esserman & Plifka,
in Dallas, Texas, submitted a declaration in support of the
Motion to Compel Document Production. Among others, Mr. Newton
gave the Court copies of First Request for Production of
Documents and Supplement to Second Amended Log of ASARCO-Only
Privileged Documents. A full-text copy of Mr. Newton's
declaration and accompanying exhibits is available for free at:
http://bankrupt.com/misc/ASARCO_NewtonDec.pdf
ASARCO Supplements Estimation Request
ASARCO LLC supplemented its March 26 request for the estimation of
derivative asbestos liabilities. Under the supplemental request,
ASARCO urges the Court to estimate its "direct asbestos liability"
and include that estimation for matters that are to be considered
on June 22, 2009.
Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas,
said the supplemental request is in furtherance of ASARCO's effort
to determine the total amount of its contingent liability and
formulate a viable Chapter 11 plan of reorganization. He reminded
the Court that ASARCO is alleged to be liable, under various alter
ego and similar veil-piercing theories, for the asbestos
liabilities of certain of its subsidiaries, primarily Lac
d'Amiante due Quebec Ltee, formerly known as Lake Asbestos of
Quebec, Ltd., and CAPCO Pipe Company, Inc., formerly known as
Cement Asbestos Products Company. Those asbestos claims, totaling
more than 100,000, are the subject of ASARCO's original request.
The timing of ASARCO raising the estimation issues with the Court
is neither strategic nor sinister, Mr. Kinzie maintained. Rather,
ASARCO believed that all asbestos claims, direct and indirect,
were resolved pursuant to the agreement-in-principle reached at a
Court-ordered mediation before the Honorable Elizabeth Magner.
However, on April 13, 2009, counsel for the Official Committee of
Asbestos Claimants and counsel for the Future Claims
Representative repudiated that agreement-in-principle and said
they would recommend to their clients to instead support a
prospective plan to be sponsored by Grupo Mexico S.A.B. de C.V.,
Mr. Kinzie noted. As a result, he pointed out, ASARCO is now
forced to proceed with having the Court estimate its contingent
liability.
Pursuant to the plan of reorganization proposed by the Debtors, an
Asbestos Trust will be created. If that plan is confirmed, the
Debtors anticipate their liability for present and future asbestos
liabilities to be assumed by and channeled to the Asbestos Trust
on the plan effective date, and all persons will be permanently
enjoined from asserting liabilities against the Debtors, the
Reorganized Debtors, or other persons entitled to protection
pursuant to the plan. The Asbestos Trust will be funded with cash
in the amount of the present and future asbestos liabilities
against ASARCO, as estimated by the Court. The Asbestos Trust
will create an Asbestos Premises Liability Claims Fund for payment
of present and future premises liabilities, and a separate
Asbestos Personal Injury Claims Fund for payment of present and
future asbestos liabilities other than premises liabilities.
Thus, to ensure the estimation process moves forward
expeditiously, ASARCO asked the Court (i) to also estimate its
direct asbestos liability to determine the confirmability and
feasibility of their Chapter 11 plan, and (ii) to establish
estimation procedures of direct asbestos claims asserted against
them.
Mr. Kinzie maintained that minimal, if any, new discovery is
necessary, as all of the interested parties should already have
the relevant claims information. He added that each party's
expert witnesses has already prepared to testify on the
methodology for estimating claims at the estimation hearing.
The parties will not be prejudiced by the sought expansion of the
estimation hearing, and they should have little difficulty
preparing the additional information for submission to the Court
at the June 22 hearing, Mr. Kinzie emphasized. To the contrary,
he pointed out, if not estimated, the Debtors' direct liability
claims will cause significant and undue delay to the confirmation
process and could jeopardize the Debtors' plan going forward.
In the alternative, ASARCO asked the Bankruptcy Court to issue
findings of fact and conclusions of law to the U.S. District Court
for the Southern District of Texas regarding the estimated value
of the direct liability claims against ASARCO for purposes of
distribution, and conduct proceedings in accordance with the case
management order resulting in an estimation of the claims.
ASARCO seeks an expedited hearing for claims estimation
supplemental request for May 29, 2009, with objections to be due
by May 21.
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: S&P Affirms Corporate Credit Rating at 'BB-'
---------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed all its
ratings, including its 'BB-' corporate credit rating, on Ashland
Inc. The outlook is stable.
At the same time, S&P assigned an unsecured debt rating of 'BB-'
(same as the corporate credit rating) and a recovery rating of '4'
to Ashland's proposed offering of $600 million of senior unsecured
notes due 2017 to be issued under Rule 144A with registration
rights. These ratings indicate S&P's expectation that creditors
would experience average (30% to 50%) recovery in the event of a
payment default.
Ashland plans to use proceeds from the proposed notes, along with
other available liquidity, to repay in full the $750 million
bridge loan used to finance the November 2008 acquisition of
Hercules Inc. S&P views the notes issuance as a net positive for
credit quality because it extends debt maturities. The fact that
it reduces liquidity somewhat is a modest concern, but S&P
believes that it will nevertheless remain adequate.
"The rating on Covington, Kentucky-based Ashland reflects the
company's weak, but improving, business risk profile and highly
leveraged financial risk profile," said Standard & Poor's credit
analyst Cynthia Werneth. "From a business risk perspective, the
$3.5 billion Hercules acquisition was a strong positive because it
added substantial specialty chemical assets with favorable
business risk characteristics." Ashland now has leading positions
in water-soluble polymers, water treatment chemicals, and
chemicals used in paper production. In addition, Ashland
manufactures composites and adhesives and has a sizable chemicals
distribution business. The acquisition should result in more
favorable growth prospects and a more stable, consistently
profitable, and geographically diverse chemicals company, with
reduced reliance on the lower-margin distribution business and
Valvoline products. Despite difficult market conditions,
profitability measures in the short time since the acquisition
have exceeded S&P's expectations. Operating margins (before
depreciation and amortization) appear poised to remain more than
10% (versus S&P's earlier expectation of about 7% to 8%), with
pretax return on capital also higher than S&P's mid-single-digit
percentage expectation.
The outlook is stable. Supportive financial policies, aggressive
cost-cutting actions, and good progress in improving profitability
and reducing debt since the November 2008 Hercules acquisition are
indications that credit quality should not deteriorate even in the
face of continuing economic weakness. Nevertheless, S&P could
revise the outlook to negative or lower the ratings if market
conditions or other factors cause funds from operations to debt to
drop to less than 15%. Alternatively, if market conditions
improve, and the company continues to strengthen profitability and
cash flow and reduce debt, S&P could revise the outlook to
positive with a view to a slightly higher rating.
AUTO WORLD LLC: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Auto World LLC
P.O. Box 400
Christiansted, VI 00821
Bankruptcy Case No.: 09-10007
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
District Court of the Virgin Islands
Bankruptcy Division (St. Croix)
Judge: Mary F. Walrath
Debtor's Counsel: Benjamin A. Currence, Esq.
P.O. Box 6143
St. Thomas, VI 00804-6143
Tel: (340) 775-3434
Email: currence@surfvi.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/vib09-10007.pdf
The petition was signed by Richard Kirton, manager of the Company.
BANK OF AMERICA: Govt Wants Board With More Banking Experience
--------------------------------------------------------------
Dan Fitzpatrick and Damian Paletta at The Wall Street Journal
report that federal officials have pressured Bank of America Corp.
to revamp its board and bring in directors with more banking
experience.
Government officials, WSJ states, suggested that independent
directors lead the task of reshuffling the board.
According to WSJ, many of BofA's woes stem from its Merrill Lynch
& Co. acquisition. WSJ states that the Merrill Lynch
deliberations were the start of regulators' deepening involvement
in BofA's day-to-day operations.
WSJ relates that Walter Massey, who replaced BofA CEO Kenneth
Lewis as chairperson, unveiled a committee to recommend changes to
the board's structure and size. According to the report, the
committee members are:
-- Mr. Massey;
-- former MBNA Corp. Executive Vice Chairman Frank Bramble;
-- NSTAR Chief Executive Thomas May;
-- former Internal Revenue Service Commissioner Charles
Rossotti; and
-- former FleetBoston Financial Group CEO Charles Gifford,
who served as chairman for several months in 2004
following BofA's acquisition of FleetBoston.
WSJ says that the committee would supervise BofA's response to a
federal "stress test" that showed the need for $33.9 billion in
additional equity. Citing a person familiar with the matter, WSJ
states that the group is expected to examine the strength of the
team and the issue of CEO succession. These executives have been
cited as candidates:
-- Brian Moynihan,
-- Barbara Desoer, and
-- Joe Price.
"Every bank" that participated in the recent U.S. stress tests
"was directed to review [its] board and management," WSJ reports,
citing BofA spokesperson Robert Stickler.
Based in Charlotte, North Carolina, Bank of America --
http://www.bankofamerica.com/-- is one of the world's largest
financial institutions, serving individual consumers, small and
middle market businesses and large corporations with a full range
of banking, investing, asset management and other financial and
risk-management products and services. The company serves more
than 59 million consumer and small business relationships with
more than 6,100 retail banking offices, nearly 18,700 ATMs and
online banking with nearly 29 million active users. Following the
acquisition of Merrill Lynch on January 1, 2009, Bank of America
is among the world's leading wealth management companies and is a
global leader in corporate and investment banking and trading
across a broad range of asset classes serving corporations,
governments, institutions and individuals around the world. Bank
of America offers support to more than 4 million small business
owners. The company serves clients in more than 150 countries.
Bank of America Corporation stock is a component of the Dow Jones
Industrial Average and is listed on the New York Stock Exchange.
The bank needed the government's financial help in completing its
acquisition of Merrill Lynch.
Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth
management, capital markets and advisory companies with offices in
40 countries and territories. As an investment bank, it is a
leading global trader and underwriter of securities and
derivatives across a broad range of asset classes and serves as a
strategic advisor to corporations, governments, institutions and
individuals worldwide. Merrill Lynch owns approximately half of
BlackRock, one of the world's largest publicly traded investment
management companies with more than $1 trillion in assets under
management. Merrill Lynch's operations are organized into two
business segments: Global Markets and Investment Banking (GMI) and
Global Wealth Management (GWM).
As reported by the Troubled Company Reporter on March 27, 2009,
Moody's Investors Service lowered the senior debt rating of Bank
of America Corporation to A2 from A1, the senior subordinated debt
rating to A3 from A2, and the junior subordinated debt rating to
Baa3 from A2. The preferred stock rating was downgraded to B3
from Baa1. The holding company's short-term rating was affirmed
at Prime-1.
BANK OF AMERICA: Moody's Reviews 'D' Financial Strength Rating
--------------------------------------------------------------
Moody's Investors Service put on review for possible upgrade the D
bank financial strength rating of the U.S. bank subsidiaries of
Bank of America Corporation. The rating agency also changed the
ratings outlook on BAC's non-cumulative preferred securities to
developing from negative, and changed the outlook on the BAC's
junior subordinated trust preferred securities to stable from
negative. All other ratings of BAC and its subsidiaries (holdco
senior unsecured at A2, bank deposits at Aa3) were affirmed with a
stable outlook.
These actions had no impact on the ratings of the FDIC-guaranteed
debt issued by BAC and its lead bank subsidiary, which remain at
Aaa with a stable outlook.
"The review of the BFSR reflects Moody's view that BAC's capital
raising initiatives, if successful, should strengthen BAC's
capital position without impairing BAC's franchise or future
earnings power," said Moody's Senior Vice President, David Fanger.
BAC's capital raising initiatives are being undertaken in response
to the U.S. government's Supervisory Capital Assessment Program.
Moody's will focus on the likelihood that BAC will succeed in its
efforts during the review.
"By strengthening BAC's tangible common equity position, the
proposed capital increase would reduce the likelihood of the U.S.
government needing to provide additional capital support to BAC.
The BFSR is intended to express an opinion about the likelihood of
such an event," explained Mr. Fanger.
In reponse to BAC's capital raising initiatives, Moody's also
changed the rating outlook on BAC's preferred stock and trust
preferred securities. The outlook on BAC's B3 preferred stock
rating was changed to developing from negative. "The previous
negative outlook reflected the risk that BAC could suspend
preferred dividends or even offer a distressed exchange to
preferred shareholders in order to boost its common equity
position, said Mr. Fanger. Moody's believe that BAC's capital
raising initiatives, if successful, should reduce that risk." The
developing outlook reflects the remaining uncertainty regarding
BAC's ability to avoid a dividend omission or distressed exchange
while the capital raising initiatives are still pending.
The outlooks on BAC's junior-subordinated-backed trust preferred
securities, rated Baa3, and BAC's Hybrid Income Trust Securities,
rated Ba3, were changed to stable from negative. Similar to the
preferred stock, the previous negative outlook on the ratings of
these instruments also reflected the risk of a dividend deferral
or distressed exchange, although their higher ratings also
reflected Moody's view that this risk was more remote than for
BAC's preferred stock. The inclusion of new common equity
issuance and asset sale gains in BAC's capital raising initiatives
makes it more unlikely that BAC will need to defer dividends on,
or seek conversion of, its junior subordinated-backed trust
preferred securities or the HITS. In light of this, Moody's
believes that a stable outlook is now more appropriate for the
ratings on these securities.
Although the capital raising should improve BAC's capital
position, Moody's noted that BAC continues to face significant
challenges stemming from the current economic environment, as well
as the ongoing integration of Merrill Lynch. "After loan loss
provisions, Moody's does not expect Bank of America to generate
sizable earnings until the second half of 2010 at the earliest,"
Mr. Fanger noted. Higher unemployment, a weak U.S. economy, and
challenging real estate markets are likely to contribute to a rise
in delinquent and problem loans, most notably in credit cards,
residential mortgages, and commercial real estate loans. This
will require significant additional loan loss provisions in 2009
and into 2010. "The bank's decision to end negotiations to
acquire asset protection from the U.S. government on a pool of
$118 billion in legacy capital markets assets also leaves it more
exposed to adverse developments in the capital markets," Mr.
Fanger added. Until there is greater clarity on the economic
outlook and the likely future trends in BAC's asset quality, these
challenges are likely to limit the extent of any upgrade of BAC's
BFSR.
At the same time, Moody's affirmed the ratings for BAC's deposits,
senior debt and senior subordinated debt, which continue to have a
stable outlook. Those ratings are based on Moody's expectation of
very high systemic support for these instruments, and the view
that such support will enable the substantial value of BAC's
franchise to materialize in the medium to long-term.
The rating actions are consistent with Moody's recent announcement
that it is recalibrating some of the weights and relative
importance attached to certain rating factors within its current
bank rating methodologies. Capital adequacy, in particular, takes
on increasing importance in determining the BFSR in the current
environment. Meanwhile, debt and deposit ratings will reflect the
fact that Moody's expects that its support assumptions will
continue to increase for systemically important institutions
during this global financial crisis.
The last rating action on BAC was on March 25, 2009, when Moody's
lowered BAC's senior unsecured debt rating to A2 from A1. The
last rating action on BAC Capital Trust XII and BAC Capital Trust
XIV was on April 24, 2009, when Moody's lowered the ratings on the
HITS to Ba3 from Baa3.
These ratings and outlooks were affected:
Bank of America, N.A., Merrill Lynch Bank & Trust Company, and
Merrill Lynch Bank USA:
-- Bank Financial Strength Rating Placed on Review for Possible
Upgrade, currently D
-- Outlook Changed To Rating Under Review From Stable(m)
Outlook Changed To Developing From Negative for these Issuers:
-- BAC AAH Capital Funding LLC I
-- BAC AAH Capital Funding LLC II
-- BAC AAH Capital Funding LLC III
-- BAC AAH Capital Funding LLC IV
-- BAC AAH Capital Funding LLC IX
-- BAC AAH Capital Funding LLC V
-- BAC AAH Capital Funding LLC VI
-- BAC AAH Capital Funding LLC VII
-- BAC AAH Capital Funding LLC VIII
-- BAC AAH Capital Funding LLC X
-- BAC AAH Capital Funding LLC XI
-- BAC AAH Capital Funding LLC XII
-- BAC AAH Capital Funding LLC XIII
-- BAC AAH Capital Funding LLC XIV
-- BAC AAH Capital Funding LLC XIX
-- BAC AAH Capital Funding LLC XV
-- BAC AAH Capital Funding LLC XVI
-- BAC AAH Capital Funding LLC XVIII
-- BAC LB Capital Funding LLC I
-- BAC LB Capital Funding LLC II
-- BAC North America Holding Company
-- Banc of America Preferred Funding Corp.
-- BankBoston Corporation
-- Barnett Banks, Incorporated (Old)
-- LaSalle National Corporation
-- Shawmut National Corporation
-- Summit Bancorp
Outlook Changed To Stable From Negative for these Issuers:
-- BAC Capital Trust I
-- BAC Capital Trust II
-- BAC Capital Trust III
-- BAC Capital Trust IV
-- BAC Capital Trust IX
-- BAC Capital Trust V
-- BAC Capital Trust VI
-- BAC Capital Trust VII
-- BAC Capital Trust VIII
-- BAC Capital Trust X
-- BAC Capital Trust XI
-- BAC Capital Trust XII
-- BAC Capital Trust XIII
-- BAC Capital Trust XIV
-- BAC Capital Trust XIX
-- BAC Capital Trust XV
-- BAC Capital Trust XVI
-- BAC Capital Trust XVII
-- BAC Capital Trust XVIII
-- BAC Capital Trust XX
-- BankAmerica Capital I
-- BankAmerica Capital II
-- BankAmerica Capital III
-- BankAmerica Institutional Capital A
-- BankAmerica Institutional Capital B
-- BankBoston Capital Trust III
-- BankBoston Capital Trust IV
-- Barnett Capital Trust III
-- Countrywide Capital III
-- Countrywide Capital IV
-- Countrywide Capital V
-- Fleet Capital Trust II
-- Fleet Capital Trust IX
-- Fleet Capital Trust V
-- Fleet Capital Trust VII
-- Fleet Capital Trust VIII
-- MBNA Capital A
-- MBNA Capital B
-- MBNA Capital C
-- MBNA Capital D
-- MBNA Capital E
-- MBNA Capital F
-- MBNA Capital G
-- Merrill Lynch Capital Trust I
-- Merrill Lynch Capital Trust II
-- Merrill Lynch Capital Trust III
-- Merrill Lynch Preferred Capital Trust III
-- Merrill Lynch Preferred Capital Trust IV
-- Merrill Lynch Preferred Capital Trust V
-- Merrill Lynch Preferred Capital Trust VI
-- Merrill Lynch Preferred Funding I, L.P.
-- Merrill Lynch Preferred Funding II, L.P.
-- Merrill Lynch Preferred Funding III, L.P.
-- Merrill Lynch Preferred Funding IV, L.P.
-- Merrill Lynch Preferred Funding V, L.P.
-- Merrill Lynch Preferred Funding VI, L.P.
-- NB Capital Trust I
-- NB Capital Trust II
-- NB Capital Trust III
-- NB Capital Trust IV
-- NB Capital Trust V
BRODER BROS: Gets 95% of Noteholders' Support for Exchange Offer
----------------------------------------------------------------
Broder Bros., Co., said its pending private exchange offer for all
of its 11.25% senior notes due 2010 expired at 1:00 p.m., New York
City time, on May 15, 2009. As of the Expiration Time,
$213,456,000 in aggregate principal amount of Existing Notes, or
approximately 95% of the outstanding Existing Notes, had been
validly tendered in the exchange offer and not withdrawn.
The Company intends to accept all Existing Notes tendered in the
exchange offer and otherwise complete the transactions
contemplated by the exchange offer on May 20, 2009. In accordance
with the terms of the exchange offer, the Company will issue on
the Settlement Date to holders, for each $1,000 principal amount
of Existing Notes tendered, $444.44 in principal amount of the
Company's newly issued 12%/15% senior paymentinkind toggle notes
due 2013 and their pro rata portions of shares of the Company's
common stock, which shares will in the aggregate represent 96% of
its common stock outstanding as of the issuance date. Holders of
Existing Notes who validly tendered their Existing Notes will also
be paid a consent payment in cash equal to $20.00 per $1,000
principal amount of Existing Notes tendered, of which $10.00 will
be paid on the Settlement Date and $10.00 will be paid October 1,
2009.
To facilitate the satisfaction of the minimum tender condition,
the existing stockholders of the Company have agreed that the
holders of Existing Notes that were tendered in the exchange offer
will receive an additional 1% of the common stock of the Company
outstanding as of the issuance date (for a an aggregate amount of
96%), and that the warrants to purchase shares of the Company's
common stock to be issued to existing stockholders on the
Settlement Date will represent an aggregate of 12% -- which has
been reduced from the previously announced 15% -- of the Company's
fully diluted common stock as of the Settlement Date.
On the Settlement Date, the mutual release, under which the
parties thereto, including the holders tendering their Existing
Notes, the Company and the existing stockholders of the Company,
have agreed to release the other parties to the mutual release and
their related parties from all claims that the parties and their
related parties have, had or may have directly or indirectly
related to the Company, subject to limited exceptions set forth in
the release, will become effective and the supplemental indenture
amending the indenture governing the Existing Notes to waive any
and all existing defaults and events of default that have arisen
or may arise under the Existing Notes, eliminate substantially all
of the covenants in the Existing Indenture that govern the
Company's actions, other than the covenants to pay principal of
and interest on the Existing Notes when due, and eliminate or
modify the related events of default, will become operative.
The Company intends to pay the overdue April 15, 2009 interest
payment to holders of Existing Notes that were not tendered in the
exchange offer. The Company believes that following the payment
and the effectiveness of the Supplemental Indenture, all existing
defaults under such Existing Notes will be cured or waived as of
Settlement Date.
The exchange offer and mutual release and consent solicitation was
made upon the terms and subject to the conditions set forth in the
Offering Memorandum and Mutual Release and Consent Solicitation
Statement, dated April 17, 2009, as supplemented by Supplement No.
1, dated April 28, 2009, and the Company's press releases dated
May 1, 2009, May 6, 2009 and May 11, 2009, and the accompanying
Letter of Transmittal, Mutual Release and Consent distributed to
eligible holders. D.F. King & Co., Inc. is serving as exchange
agent and information agent for the exchange offer and may be
contacted at (800) 8598508 or (212) 2695550.
The new securities issued pursuant to the exchange offer have not
been and will not be registered under the Securities Act or any
state securities laws. Therefore, the new securities may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act and any applicable state securities laws.
As reported by the Troubled Company Reporter on May 12, 2009,
Broder Bros. said the Company and its restructuring advisors have
prepared the materials necessary to file for bankruptcy under
Chapter 11 of the Bankruptcy Code if the minimum tender condition
is not satisfied. The Company believes that an in-court
restructuring will be on terms much less favorable to the holders
of the Existing Notes than the terms of the pending exchange
offer.
The Company estimates that an in-court restructuring would result
in an additional $25 million in fees, expenses and borrowing costs
and that the Company would need to seek additional capital to pay
these costs and expenses. This estimate excludes additional
liquidity constraints associated with a reduction in sales and
collections, an acceleration of vendor payments as a result of a
contraction of trade terms, fees associated with a new capital
investment and general business degradation, resulting from an in-
court restructuring. The Company expects this additional capital
to be on terms that would materially reduce what holders of the
Existing Notes would receive, if anything, in an in-court
restructuring on account of their Existing Notes.
If the Company were forced to undertake an in-court restructuring,
the benefits of the Company's recent amendment to its revolving
credit facility will be lost and lenders thereunder could seek to
compel the liquidation or sale of the Company, neither of which
the Company believes will maximize value for the holders of the
Existing Notes.
About Broder Bros., Co.
Broder Bros., Co. -- http://www.broderbrosco.com/-- is one of the
nation's largest distributors of trade, private label, and
exclusive apparel brands to the imprinting, embroidery and
promotional product industries, serving customers since 1919. It
currently has eight distribution centers across the U.S. and has
the capability to deliver to approximately 80 percent of the U.S.
population in one day. Via its three divisions, the company
distributes industry-leading brands Anvil, Fruit of the Loom,
Gildan, Hanes and Jerzees as well as exclusive retail brands
Adidas Golf and Champion.
* * *
As reported by the Troubled Company Reporter on April 20, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Broder Bros. Co. to 'SD' from 'CC'. S&P also lowered
the ratings on the company's $225 million 11.25% senior notes due
2010 to 'D' from 'C'. The recovery rating on these notes remains
at '6', indicating expectations for negligible (0%-10%) recovery
in the event of payment default. As of December 31, 2008, S&P
estimates Broder had about $375 million in reported debt
outstanding.
The TCR said March 6, 2009, that Moody's Investors Service
downgraded Broder Bros., Co.'s Probability of Default and
Corporate Family Ratings to Ca from Caa3. Moody's also lowered
the rating on the company's senior unsecured notes to C from Ca.
The rating outlook remains negative.
BUNTING SWINE: Meeting of Creditors Scheduled for June 11
---------------------------------------------------------
The Bankruptcy Administrator for North Carolina will convene a
meeting of creditors in Bunting Swine Farms, L.L.C., and Bunting
Enterprises, LLC's Chapter 11 cases on June 11, 2009, at
10:00 a.m. The meeting will be held at USBA Creditors Meeting
Room, 1760 B Parkwood Blvd., Wilson, North Carolina.
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.
Pinetops, North Carolina-based Bunting Swine Farms, L.L.C., c/o C.
B. Bunting, Jr., and Bunting Enterprises, LLC, filed for separate
Chapter 11 on May 4, 2009 (Bankr. E. D. N.C. Lead Case No. 09-
03646). Stephen L. Beaman, PLLC, represents the Debtors in their
restructuring efforts. The Debtors listed total assets of
$4,794,867 and total debts of $18,262,800.
CAROLINA FIRST: Moody's Downgrades Bank Strength Rating to 'D'
--------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Carolina First
Bank (bank financial strength to D from C-, long term deposits to
Ba2 from Baa1, and short term deposits to Not-Prime from Prime-2).
Carolina First is the lead bank of The South Financial Group,
Inc., an unrated bank holding company. Following the downgrade,
the outlook on Carolina First is negative. This rating action
concludes the review for possible downgrade that began on March
12, 2009.
The multiple notch downgrade and negative outlook reflect Moody's
view that South Financial's capital position could come under
pressure in the near to medium term because of its large
commercial real estate concentration, residential development in
particular. Although Moody's had previously incorporated this
concentration into its ratings, the sharp decline in real estate
prices and anticipated deterioration in CRE loan performance,
especially residential construction and development loans, has led
Moody's to considerably increase its loss expectations on these
assets. The concern that 2009 credit costs could impact South
Financial's capital ratios holds increased rating pertinence as
Moody's recently stated that it is making some recalibration of
the weights and relative importance attached to certain rating
factors within its current rating methodologies. Capital
adequacy, in particular, is taking on increased importance in
determining financial strength ratings.
Since the initiation of the ratings review on March 12th, Moody's
has sharply increased its expected loss assumptions for
residential development, which is a large concentration risk for
South Financial, accounting for 1.6 times tangible common equity.
This increase in loss expectations contributed to a more severe
downgrade than Moody's had initially anticipated. Moody's also
noted that South Financial's core profitability weakened
considerably in the first quarter of 2009 as a result of credit
related expenses. Moody's view that South Financial is not
expected to be profitable at least through 2009 also contributed
to the magnitude of the downgrade.
South Financial's CRE accounts for approximately 4.7 times TCE,
with construction lending comprising almost one-half of total CRE.
South Financial has seen more than a doubling of nonperforming
assets (including 90+) over the last five quarters, to 5.15% of
loans plus OREO at March 31, 2009, driven by deterioration in the
Florida residential construction book, as well as increasing
weakness in its North and South Carolina markets. Moody's expects
further deterioration in these portfolios as the credit cycle
continues to unfold. Regarding liquidity, Moody's also
highlighted that South Financial's core deposit funding is weaker
than peers, which is reflected in its current ratings.
Moody's last rating action was on March 12, 2009 when Carolina
First's ratings were placed on review for possible downgrade.
Downgrades:
Issuer: Carolina First Bank
-- Bank Financial Strength Rating, Downgraded to D from C-
-- Issuer Rating, Downgraded to Ba3 from Baa1
-- OSO Rating, Downgraded to NP from P-2
-- Deposit Rating, Downgraded to NP from P-2
-- OSO Senior Unsecured OSO Rating, Downgraded to Ba3 from Baa1
-- Senior Unsecured Deposit Note/Takedown, Downgraded to Ba2
from Baa1
-- Senior Unsecured Deposit Rating, Downgraded to Ba2 from Baa1
Outlook Actions:
Issuer: Carolina First Bank
-- Outlook, Changed To Negative From Rating Under Review
CEYLON HOTELS: Case Summary & 19 Largest Unsecured Creditors
------------------------------------------------------------
Debtor: Ceylon Hotels Management, LLC
dba Best Western Plaza Inn
1100 West Rex Allen Drive
Willcox, AZ 85643
Bankruptcy Case No.: 09-10399
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
District of Arizona (Tucson)
Debtor's Counsel: Joseph E. Cotterman, Esq.
Gallagher & Kennedy, P.A.
2575 E. Camelback Rd.
Phoenix, AZ 85016-9225
Tel: (602) 530-8000
Fax: (602) 530-8500
Email: jec@gknet.com
David Durfee, Esq.
Gallagher & Kennedy, P.A.
2575 E. Camelback Rd.
Phoenix, AZ 85016
Tel: (602) 530-8000
Fax: (602) 530-8500
Email: jec@gknet.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
19 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/azb09-10399.pdf
The petition was signed by Wilfred Weragoda, managing partner of
the Company.
CHEMTURA CORP: Lyondell Seeks Lift Stay to Reject Chemtura Pacts
----------------------------------------------------------------
Lyondell Chemical Co. asks the U.S. Bankruptcy Court for the
Southern District of New York (Manhattan) for authority to reject
two executory contracts with a unit of Chemtura Corp.
Because Chemtura and its units are also in bankruptcy, Lyondell
filed a motion in Chemtura's case to seek relief from the
automatic stay to allow it to terminate the contracts.
Bill Rochelle at Bloomberg notes that Lyondell Chemical and
Chemtura are both chemical producers and are both undergoing
bankruptcy reorganization in New York in front of the same
bankruptcy judge, Judge Robert E. Gerber
Debtor Lyondell Chemical Company owned a facility consisting of
certain manufacturing facilities and infrastructure located in
Lake Charles, Louisiana. Lyondell operated a portion of the Lake
Charles Facility for the production of petrochemicals, but idled
those production units in September 2005, due to escalating raw
materials and energy prices and decreased demand.
Lyondell leased a portion of the Lake Charles Facility to BioLab,
Inc. a subsidiary of Chemtura Corporation, under a Land Lease.
Lyondell provides (i) utilities and related services to BioLab
under an Amended and Restated Services Agreement; and (ii)
railcar switching services pursuant to a Railcar Switching
Agreement. Lyondell provides similar utilities-related services
to Arch Chemicals Inc., which owns a production facility on real
property near the Lake Charles Facility, under a Services
Agreement. To facilitate the provision of those services,
Lyondell's predecessor-in-interest contracted third-parties to
operate the utility infrastructure assets at the Lake Charles
Facility. Under a Build, Own & Operate Agreement, Veolia Water
North America Operating Services LLC operates a demineralized
water plant at the Lake Charles Facility and leases the land upon
which its water plant is located under an Agreement for Lease of
Real Estate. Pursuant to an On-Site Product Supply Agreement,
Air Products L.P. operates a nitrogen plant at the Lake Charles
Facility.
By this Motion, the Lyondell Entities seek the Court's authority
to reject the Lake Charles Agreements as set forth in this
schedule:
http://bankrupt.com/misc/Lyondell_RejectedLakeCharlesPacts.pdf
The Lyondell Entities are not seeking to reject the BioLab Land
Lease, but are reserving all rights regarding that agreement.
Christopher R. Mirick, Esq., at Cadwalader, Wickersham & Taft
LLP, in New York, stresses that if the Lyondell Entities do not
reject the Lake Charles Agreements, their estates will continue to
incur payment obligations to Veolia and Air Products, as well as
ongoing personnel costs that far exceed the amount the Debtors
are able to recover from Arch and BioLab by over $6.5 million per
year. He notes that rejection of the Lake Charles Agreement will
save the Lyondell Entities' estates more than $500,000 per month
in postpetition costs. Moreover, the Lyondell Entities believe
that the Lake Charles Agreements are not necessary to their
ongoing business operations or restructuring efforts because their
operating units at the Lake Charles Facility have been idled for
over three years and they have no current plans to resume
operations. Moreover, Lyondell maintains a 28-employee workforce
at the Lake Charles Facility to oversee and maintain the idled
operating units and oversee the provision of services pursuant to
the Lake Charles Agreements. If their request is granted,
Lyondell will reassign or reduce some or all of the Lake Charles
Facility workforce in accordance with its ordinary practices.
Lyondell has not yet made a decision regarding its continued
ownership of the Lake Charles Facility or any course of action
with respect to other leases associated with the Lake Charles
Facility, and reserves all rights regarding those assets.
Given the potential burden that the rejection of the Lake Charles
Agreements, specifically the BioLab Services Agreement and the
Arch Services Agreement, could impose on the counterparties, the
Lyondell Entities further ask the Court to rule that rejection of
the Lake Charles Agreements be effective as of the 30th day after
entry of an order. The Lyondell Entities believe that this timing
will afford the counterparties to the Lake Charles Agreements
sufficient time to make alternative arrangements, while minimizing
the continued uncompensated losses incurred by Lyondell under
these agreements. As the Lyondell Entities are seeking relief
from the automatic stay in Chemtura's Chapter 11 case in order to
proceed with the rejection of the Lake Charles Agreements, as the
rejection may affect BioLab, the Lyondell Entities reserve the
right to adjourn its request as to some or all of the Lake Charles
Agreements, or to proceed as to some of the Lake Charles
Agreements and not others, if necessary.
Consistent with Section 362 of the Bankruptcy Code, to the extent
that any of the Debtors have deposited amounts with counterparties
to the Lake Charles Agreements as a security deposit, or if
counterparties owe any of Lyondell Entities' amounts under the
Lake Charles Agreements, the Lyondell Entities ask the Court to
prohibit counterparties from offsetting or using the amounts from
deposit, or other amount owed by Lyondell without further Court
order.
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)
About Lyondell Chemical
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)
CHEMTURA CORP: Creditors Panel Taps Akin Gump as Counsel
--------------------------------------------------------
The official committee of unsecured creditors appointed in the
bankruptcy cases of Chemtura Corp. and its affiliates asks Judge
Robert Gerber of the U.S. Bankruptcy Court for the Southern
District of New York to sign an order authorizing the employment
of Akin Gump Strauss Hauer & Feld LLP, as its counsel nunc pro
tunc to March 26, 2009.
As the Committee's counsel, Akin Gump will:
(a) advise the Committee with respect to its rights, duties
and powers in the Debtors' Chapter 11 cases;
(b) assist and advise the Committee in its consultations with
the Debtors relative to the administration of these cases;
(c) assist the Committee in analyzing the claims of the
Debtors' creditors and the Debtors' capital structure and
in negotiating with holders of claims and equity
interests;
(d) assist the Committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of
the Debtors and of the operation of the Debtors'
businesses;
(e) assist the Committee in its analysis of, and negotiations
with, the Debtors or any third party concerning matters
related to the assumption or rejection of certain leases
of non-residential real property and executory contracts,
asset dispositions, financing of other transactions and
the terms of one or more plans of reorganization for the
Debtors and accompanying disclosure statements and related
plan documents;
(f) assist and advise the Committee as to its communications
to the general creditor body regarding significant matters
in these cases;
(g) represent the Committee at all hearings and other
proceedings before the Court;
(h) review and analyze motions, applications, orders,
statements, operating reports and schedules filed with the
Court and advise the Committee as to their propriety;
(i) advise and assist the Committee with respect to any
legislative, regulatory or governmental activities;
(j) assist the Committee in preparing pleadings and
applications as may be necessary in furtherance of the
Committee's interests and objectives;
(k) assist the Committee in its review and analysis of all of
the Debtors' various agreements;
(l) prepare, on behalf of the Committee, any pleadings,
statements, motions, applications, memoranda, adversary
complaints, objections or comments in connection with any
matter related to the Debtors or these cases;
(m) investigate and analyze any claims against the Debtors'
non-debtor affiliates; and
(n) perform other legal services as may be required or are
deemed to be in the Committee's interests in accordance
with the Committee's powers and duties under the
Bankruptcy Code, Bankruptcy Rules or other applicable law.
Akin Gump will be paid for its services based on these rates:
Professional Hourly Rate
------------ -----------
Partners $500 to $1,100
Special Counsel and Counsel $470 to $810
Associates $290 to $580
Paraprofessionals $75 to $250
Akin Gump will also be reimbursed for reasonable and necessary
out-of-pocket expenses incurred in its representation of the
Committee.
Daniel H. Golden, Esq., a partner at Akin Gump Strauss Hauer &
Feld LLP, in New York, disclosed that his firm represented Debtor
Chemtura Corporation in connection with two discreet legislative
and environmental matters. He says Akin Gump has not rendered
service pertaining to those matters since November 7, 2008, and
that Chemtura has agreed to waive any actual or potential
conflict of interest as to Akin Gump, permitting Akin Gump to
withdraw as counsel of Chemtura. Akin Gump has also represented
Chemtura in another matter and Great Lakes Chemical Corporation
in a separate matter. Akin Gump no longer provided services in
those matters when the partners-in-charge of the representations
transferred to other firms. In this light, Mr. Golden assures
the Court that his firm does not represent any interest adverse
to the Committee or the Debtors' estates with respect to the
services for which it will be retained. Akin Gump, he avers, is
a disinterested person within the meaning of Section 101(14) of
the Bankruptcy Code, as modified by section 1107(b) of the
Bankruptcy Code.
The Court will consider the Committee's application on May 19,
2009.
About Chemtura Corp.
Based in Middlebury, Connecticut, Chemtura Corporation (CEM) --
http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a
global manufacturer and marketer of specialty chemicals, crop
protection products, and pool, spa and home care products.
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 Okay to Tap Katten Muchin as IP Counsel
-----------------------------------------------------------------
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 Katten
Muchin Rosenman LLP as the Debtors' special counsel nunc pro tunc
to the Petition Date, in matters of patent and intellectual
property law.
As special counsel to the Debtors, Katten Muchin will:
(a) advise and consult the Debtors on intellectual property
matters and in particular, patent matters, and will take
all necessary action to protect and preserve the Debtors'
intellectual property estate;
(b) monitor and handle the Debtors' pending U.S. patent
applications in the U.S. Patent & Trademark Office, as
well as analyze office actions, meet with patent
examiners, coordinate strategy for responding to office
actions with Debtors' scientists and IP counsel, and
handle appeals before the Board of Patent Appeals and
Interferences;
(c) monitor and coordinate prosecution of Debtors' foreign
patent applications with foreign patent counsel;
(d) prepare new patent applications for Debtors and file the
applications in the U.S. and internationally;
(e) review patents and applications owned by the Debtors'
competitors, and counsel the Debtors on freedom-to-operate
issues relating to their technology, as well as prepare
patent opinions concerning those technology;
(f) represent the Debtors as plaintiff in pending patent
infringement litigation against Albemarle Chemical
Corporation in the Eastern District of Virginia, Richmond
Division;
(g) advise the Debtors in regard to trade regulation and
compliance, including U.S. Customs and Border Protection
issues, in connection with tariff classification of
imported merchandise, country-of-origin determinations
under substantial transformation and tariff shift rules,
country-of-origin marking requirements, preferential
tariff programs as the Generalized System of Preferences
and the North American Free Trade Agreement, as well as
U.S. export controls and economic sanctions, including
Export Administration Regulations administered by the
Bureau of Industry and Security of the U.S. Commerce
Department, the International Traffic in Arms Regulations
administered by the Directorate of Defense Trade Controls
of the U.S. State Department, the Foreign Trade
Regulations administered by the U.S. Census Bureau and the
various trade embargoes and economic sanctions regulations
maintained by the Office of Foreign Assets Control of the
U.S. Treasury Department, as well as related federal
statutes on imports, exports and economic sanctions; and
(h) perform other legal services in the areas of patent and
intellectual property law for the Debtors as may be
necessary and appropriate these cases.
Billie S. Flaherty, the Debtors' senior vice president, general
counsel and secretary, said the Debtors hired Katten Muchin
before the Petition Date for professional services related to
patent law, patent prosecution, patent litigation, and general
intellectual property law.
The Debtors will pay Katten Muchin for it services based on these
hourly rates:
Professional Hourly Rate
------------ -----------
Partners $475 to $650
Associates $280 to $495
Paraprofessionals $130 to $240
The Debtors will also reimburse Katten Muchin for reasonable and
necessary out-of-pocket expenses incurred or will incur in
connection with the engagement.
The Debtors note that during the 90-day period before the
Petition Date, they paid the firm $373,276 for prepetition fees.
Justin L. Krieger, Esq., a partner at Katten Muchin, in
Washington, DC, disclosed that his firm has invoiced the Debtors
$556,321 for prepetition legal services provided and that amount
is still unpaid as of April 24, 2009.
Mr. Krieger further disclosed that Katten Muchin represents
certain of the Debtors' creditors and parties-in-interest in
ongoing matters unrelated to the Debtors' Chapter 11 cases.
Katten Muchin does not represent interests materially adverse to
those of the Debtors' estates, Mr. Krieger assured the Court.
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: Hires Ogilvy Renault as Counsel on NAFTA Issue
-------------------------------------------------------------
Chemtura Corp. and its affiliates ask Judge Robert Gerber of the
U.S. Bankruptcy Court for the Southern District of New York for
permission to employ Ogilvy Renault LLP as their special counsel,
nunc pro tunc to the Petition Date, in the ongoing NAFTA investor-
state arbitration the Debtors filed against the government of
Canada.
The Debtors sued the Canadian government for damages from alleged
breaches of the Canadian government's obligations to the Debtors
as investors in Canada.
Ogilvy Renault, a Canadian national full-service law firm, has
represented the Debtors and certain of their affiliates before
the Petition Date, Billie S. Flaherty, senior vice president,
general counsel and secretary of Chemtura Corporation, relates.
The firm also represented the Debtors in related regulatory
matters prepetition, he adds. Because of the firm's considerable
knowledge in the Debtors' circumstances, Ogilvy Renault is
particularly well suited to serve as the Debtors' special
counsel, Ms. Flaherty avers.
The Debtors seek to pay Ogilvy Renault's services on these rates:
Professional Hourly Rates
------------ ------------
Partners $525 to $850
Associates $250 to $450
Paraprofessionals $125 to $275
The Debtors will also reimburse the firm for necessary and
reasonable expenses incurred related to the engagement.
According to Ogilvy Renault's records, the Debtors owe the firm
$376,075 as of the Petition Date for prepetition services.
Gregory Somers, Esq., a partner at Ogilvy Renault LLP, in
Ontario, Canada, related in an affidavit that his firm neither
holds nor represents any interest adverse to the Debtors in
matters for which it is to be employed.
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: Seeks to Hire Deloitte as Tax Consultants
--------------------------------------------------------
Chemtura Corp. and its affiliates ask Judge Robert Gerber of the
U.S. Bankruptcy Court for the Southern District of New York to
sign an order authorizing the employment of Deloitte Tax LLP as
their tax services provider nunc pro tunc to the Petition Date.
The Debtors expect Deloitte Tax to:
(a) assist them with the federal, state, and foreign income
tax provisions for the quarters ended March 31, 2009,
June 30, 2009, and September 30, 2009, and for the year
ended December 31, 2009;
(b) provide assistance in connection with the tax account roll
forwards, valuation allowances, effective rate
reconciliation and 10Q and 10K disclosures;
(d) assist in the preparation and review of the recognition of
Uncertain Tax Positions required by FIN 48 and the
measurement of those UTPs as required by FIN 48;
(e) assist with the allocation of expenses between U.S. source
and foreign source income;
(f) assist with the Section 956 inclusion and reviewing the
Debtors' calculations related to same;
(g) assist with the preparation of the foreign tax credit
model;
(h) assist with the calculation of the APB 23 model;
(i) provide ongoing assistance with the IRS audit;
(j) assist them with the redesign of their tax provision
software tool;
(k) assist with the Legal Entity "Operating Margins" to
ascertain whether the Legal Entity is in compliance with
the Debtors' transfer pricing policy, in the event the
operating margins are below or above the policy ranges,
pricing adjustments will be pursued;
(l) assist in preparing U.S. Contemporaneous Documentation
to comply with tax return requirements for September 15,
2009 and with the review of significant foreign legal
entities for Local Transfer Pricing documentation
requirements, studies, and tax return compliance put in
place where required;
(m) assist with the developing a transfer pricing policy and
its implementation for Baxenden and Bio Lab based on
benchmarking and financial analysis effective for 2009;
(n) assist with the calculation and charge out of Management
Service Fee Allocations on a quarterly basis;
(o) assist, as requested, on Foreign Affiliates Transfer
Pricing issues for new product sales and new sales flows,
in addition, advice and support transfer pricing analysis
will be provided as necessary in the event foreign audits
need to be addressed;
(p) assist with the analysis and measurement of the Debtors'
Intercompany State transactions to assure accurate
compliance with State Tax regulations;
(q) advise them on restructuring or bankruptcy emergence
process, including tax work plan;
(r) advise them on the cancellation of debt income for tax
purposes under Internal Revenue Code Section 108;
(s) advise them on post-bankruptcy tax attributes, tax basis
in assets and net operating loss carryovers, available
under the applicable tax regulations and the absorption of
those attributes based on the Debtors' operating
projections, including a technical analysis of the effects
of Treasury Regulation Section 1.1502-28 and the interplay
with IRC Sections 108/1017, and assist with the
preparation of tax basis balance sheets;
(t) advise them on the potential effect of the Alternative
Minimum Tax in various post-emergence scenarios;
(u) advise them on the effects of tax rules under IRC Sections
382(l)(5) and (l)(6) pertaining to the post-bankruptcy net
operating loss carryovers and limitations on their
utilization and their ability to qualify for IRC Section
382(l)(5);
(v) advise them on Net Built-in Gain or Loss position at the
time of any ownership change, including limitations on use
of tax losses generated from post-bankruptcy asset or
stock sales;
(w) advise them in their work with creditors' counsel, their
counsel, and their financial advisors on cash tax effects
of restructuring and bankruptcy and the post-restructuring
tax profile, including a plan of reorganization tax
projection, and gaining an understanding of the financial
advisors' valuation model and disclosure model to consider
accuracy of tax assumptions;
(x) advise them as to the proper tax treatment of postpetition
interest for state and federal income tax purposes;
(y) advise them on the proper state and federal income tax
treatment of reorganization costs, the categorization and
analysis of those costs, and the related technical
positions;
(z) advise them in their evaluation and modeling of the
effects of liquidating, merging, or converting entities as
part of the restructuring, as well as the effects on
federal and state tax attributes, state incentives,
apportionment, earnings and profits of foreign
subsidiaries, withholding taxes and other tax planning;
(aa) advise them in their effort to identify tax issues and
planning related to the restructuring of the worldwide
group of which the Debtors are a part, including
considering whether there are any consequences and impact
on future utilization of foreign tax credits;
(bb) document the firm's tax analysis, opinions,
recommendation, observations, and correspondences for any
proposed restructuring alternative tax issue or other tax
matters;
(cc) advise them on other state or federal income tax questions
that may arise in the course of the engagement; and
(dd) advise them in their efforts to preliminarily identify tax
issues and state and local planning opportunities related
to post-restructuring, including evaluation of structural
strategies to help the Debtors minimize state income taxes
by utilizing net operating losses, creating special
purpose entities or reorganize the business along
functional lines, property taxes, sales and use taxes, and
7other state and local taxes.
For the contemplated services, the Debtors propose to pay
Deloitte Tax these rates:
Hourly Rates
===================================
Bankruptcy Tax Acctg & Other
Professional Tax Services Tax Matters
------------ ------------ ------------------
Partner/Principal $635 $490
Director $635 $450
Senior Manager $540 $400
Manager $470 $360
Senior Associate $400 $285
Associate $275 $200
Deloitte Tax will also seek reimbursement of necessary and
reasonable expenses incurred pertaining to the engagement with
the Debtors.
Rick F. Oricchio, a partner at Deloitte Tax LLP, in Stamford,
Connecticut, relates that his firm received from the Debtors
$1,490,000 for professional services earned and expenses incurred
within the 90 days before the Petition Date. As of the Petition
Date, he avers, the Debtors owe Deloitte Tax $1,570,000 for
prepetition legal services, which amount the firm has agreed to
waive upon the Court's approval of the employment application.
Mr. Oricchio reveals that Deloitte Tax represents certain of the
Debtors' largest unsecured creditors and other parties-in-
interest in matters unrelated to the Debtors' Chapter 11 cases.
Deloitte Tax does not represent any interest adverse to that of
the Debtors, Mr. Oricchio assures the Court.
The Court will consider approval of the Debtors' application on
May 15, 2009. Objections must be filed no later than May 12.
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: To Reject Tolling Agreement With Spartech
--------------------------------------------------------
Chemtura Corporation and its affiliates sought and obtained
permission from Judge Robert Gerber of the U.S. Bankruptcy Court
for the Southern District of New York to reject a Toll
Manufacturing and Sales Agreement entered into prepetition by
Debtor Great Lakes Chemical Corporation with Spartech Polycom,
Inc. The parties entered into the Tolling Agreement after GLCC
closed its plant in Newport, Tennessee, where it had been
manufacturing polymer additives and other finished products.
Pursuant to the Tolling Agreement:
(a) GLCC purchased all of its tolling requirements of the
finished products from Spartech, and Spartech manufactured
and supplied the finished products exclusively to GLCC.
(b) Spartech purchased from GLCC the lesser of (i) 50% of its
requirements of antioxidant and UV compounds or (ii)
$2,000,000 in the aggregate of those compounds.
(c) GLCC paid different fees for each key operation in the
manufacturing process, namely, blending, granulating,
extruding and repackaging.
(d) GLCC paid pay Spartech a minimum quarterly fee of $450,000
for fixed maintenance costs of Spartech's plant in
Arlington, Texas. GLCC paid about Spartech $3.4 million
in 2008.
(e) GLCC supplied Spartech the raw materials and equipment for
use in the toll manufacturing process. GLCC retains title
to the raw materials and equipment at all times.
(f) upon GLCC's termination of the Agreement, GLCC has the
sole and exclusive option to purchase Spartech's interest
in the Arlington facility and the related manufacturing
equipment. Likewise, upon Spartech's termination of the
Agreement, Spartech has the right to require GLCC to
purchase the Spartech business.
Spartech recently reduced its staffing levels, resulting to
extended manufacturing lead times and consequently, to untimely
delivery of finished products to GLCC. Based on GLCC's estimate,
the delay could cost up to $5 million in lost sales annually for
products currently tolled by Spartech. Moreover, GLCC said it
will be unable to mitigate the effects of extended lead time due
to the high variation of products processed by Spartech.
GLCC, however, estimates it can cut $3.9 million in costs if it
shifts the manufacture and supply of the finished products
through December 2012, when the initial term of the Agreement
ends, to a combination of internal capacity and third-party toll
manufacturers. Moreover, rejection of the Agreement will allow
Spartech to avoid $0.5 million it would otherwise incur if it had
to perform under the Agreement, Richard M. Cieri, Esq., at
Kirkland & Ellis LLP, in New York, averred.
Mr. Cieri further disclosed that a lawsuit filed by Spartech
against GLCC for breach is pending and currently stayed pursuant
to the Debtors' Chapter 11 filing. Spartech alleged that GLCC
purchased from a third party certain goods that were subject to
the Agreement. GLCC, denying the allegations, asserted
counterclaims for material breach and termination of the
Agreement. The parties, however, have continued to conduct
Biolab Office & Warehouse Leases
Meanwhile, the Debtors sought and obtained the Court's authority
to reject (1) an office space lease in Bentonville, Arkansas, with
Harrison French Development, LLC, and (2) a warehouse space lease
in Covington, Georgia, with Gwinnett, Industries, Inc., which
leases Debtor Biolab, Inc., entered into before the Petition Date.
The Bentonville Office is historically an office of Biolab's
category analysts, who review sales data from Biolab's customers
and who report to Biolab's marketing Department, relates M.
Natasha Labovitz, Esq., at Kirkland & Ellis, in New York. Due to
recent changes in BioLab's staffing needs as well as the ability
of its category analysts to work remotely, BioLab no longer needs
the Bentonville office. BioLab pays $2,259 monthly for the
Bentonville office lease, which is set to expire on March 31,
2010.
The Covington Warehouse is used to store BioLab products and
other inventory. Due to recent manufacturing reductions in
BioLab's business as well as the Debtors' shift to third party
logistics providers for warehouse space, BioLab does not need the
Covington warehouse, Ms. Labovitz explains. BioLab spends
$53,910 monthly on the Covington warehouse lease, which is set to
expire on October 31, 2009.
About Chemtura Corp.
Based in Middlebury, Connecticut, Chemtura Corporation (CEM) --
http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a
global manufacturer and marketer of specialty chemicals, crop
protection products, and pool, spa and home care products.
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)
CHRYSLER LLC: GM May Pursue Sec. 363(b) Sale in Bankruptcy
----------------------------------------------------------
General Motors Corp. on May 14 posted a supplement to the
prospectus relating to its public exchange offers for $27 billion
of its unsecured public notes. GM has previously said that the
exchange offers, which were launched April 27, are a vital
component of GM's overall restructuring plan to achieve and
sustain long-term viability and the successful consummation of the
exchange offers will allow GM to restructure out of bankruptcy
court.
In the prospectus supplement, GM provided details about
alternatives it is considering under the Bankruptcy Code. "In the
event that we do not receive prior to June 1, 2009 enough tenders
of old notes, including the old Series D notes, to consummate the
exchange offers, we currently expect to seek relief under the U.S.
Bankruptcy Code," GM reiterated. According to GM, this relief may
include:
(i) seeking bankruptcy court approval for the sale of most or
substantially all of its assets pursuant to Section 363(b)
of the U.S. Bankruptcy Code to a new operating company,
and a subsequent liquidation of the remaining assets in
the bankruptcy case;
(ii) pursuing a plan of reorganization (where votes for the
plan are solicited from certain classes of creditors prior
to a bankruptcy filing) that it would seek to confirm (or
"cram down") despite the deemed rejection of the plan by
the class of holders of old notes; or
(iii) seeking another form of bankruptcy relief, all of which
involve uncertainties, potential delays and litigation
risks.
"We are considering these alternatives in consultation with the
U.S. Department of the Treasury, our largest lender. We currently
believe that if we pursue one of these alternatives, a 363(b) Sale
would be the most likely, although we could pursue any of these
alternatives," GM added.
GM also noted that if its seeks bankruptcy relief, holders of old
notes may receive consideration that is less than what is being
offered in the exchange offers, and it is possible that the
holders may receive no consideration at all for their old notes.
A copy of the prospectus supplement is available for free at:
http://researcharchives.com/t/s?3cfb
Chrysler's Bankruptcy
GM's "Section 363(b) sale" alternative is the path being followed
by co-Michigan automaker Chrysler LLC, which filed for Chapter 11
on April 30, 2009.
Chrysler has filed a motion before the U.S. Bankruptcy Court for
the Southern District of New York to sell its primary operating
assets to a new company that will be partly owned by Fiat S.p.A.
Terms under the Fiat Deal include:
* New CarCo will issue (i) a note for $4.571 billion and
55% of its total Membership Interests on a diluted basis to
a new Voluntary Employee Beneficiary Association, (ii) 8% of
its total Membership Interests on a diluted basis to the U.S.
Treasury, and (iii) 2% of the total Membership Interests on a
diluted basis to the Canadian government.
* Fiat will hold 20% of the Membership Interests in New CarCo,
which will automatically increase to 35% upon its
achievement of certain milestones that are specified in the
Purchaser Amended and Restated Limited Liability Company
Agreement.
* Fiat will have the right to acquire an additional 16% of New
CarCo's total Membership Interests, and pursuant to a
separate call option agreement, an option to buy 40% of New
CarCo's Membership Interests held by the VEBA.
* The U.S. Treasury and the Canadian government will provide
debt financing to New CarCo.
The Court has approved a sale process, under which Chrysler would
transfer its assets to the Fiat-owned company, absent higher and
better bids at an auction on May 27. Bids will be due May 20.
Chrysler will return to the Court to seek approval of the results
of the auction at a hearing also on May 27. Fiat will receive a
$35 million breakup fee in case it is outbid at the auction.
A full-text copy of the Bidding Procedures is available for free
at http://bankrupt.com/misc/ChryslerBiddingProcedures.pdf
A full-text copy of the Purchase Agreement with Fiat is available
for free at http://bankrupt.com/misc/ChryslerPurchaseAgreement.pdf
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.
After the transaction with Fiat, Chrysler would be provided $200
million through the U.S. Treasury DIP loan to run a safe, prudent
and orderly wind down and sale of the estate for the benefit of
Chrysler's creditors. The major assets remaining would include
eight manufacturing facilities, and related machinery and
equipment, with a book value of $2.3 billion.
The Exchange Offer
____________________________
GM is offering to exchange 225 |
shares of GM common stock for |EXCHANGE OFFER
each 1,000 US dollar equivalent |IN A NUTSHELL:
of principal amount -- or |
accreted value as of the |* Common stock plus accrued
settlement date, if applicable | interest in cash offered
-- of outstanding notes of each | for $27 billion of
series and is offering to pay, | outstanding public debt
in cash, accrued interest on |
the GM notes from the most |* Successful exchange to
recent interest payment date to | Result in at least
the settlement date. In respect | $44 billion reduction in
of the exchange offers for the | total liabilities from
GM Nova Scotia notes, General | bondholders, Treasury
Motors Nova Scotia Finance | and VEBA
Company is jointly making the |
exchange offers with GM. |* Bondholders to own 10%
| of GM after successful
GM believes its restructuring | exchange offer
plan and the successful |
consummation of the exchange |* Exchange contingent on
offers will provide the best | VEBA modifications and
path for the future success of | Treasury debt conversion
the company while enabling it to | conditions resulting in
continue operating its business | at least $20 billion
without the negative impacts of | reduction in liabilities
a bankruptcy and reducing the |
risk of a potentially |* To seek bankruptcy relief
precipitous decline in revenues | if the exchange offers
in a bankruptcy. | are not consummated
|____________________________
In the event GM does not receive prior to June 1, 2009 enough
tenders of notes to consummate the exchange offers, GM currently
expects to seek relief under the U.S. Bankruptcy Code. GM is
considering its alternatives in seeking bankruptcy relief.
Concurrently with the exchange offers, GM is soliciting consents
from noteholders to amend the terms of the debt instruments that
govern each series of notes and insert a call option to redeem the
non-USD notes.
Each of the exchange offers and consent solicitations will expire
at 11:59 p.m. New York City time on Tuesday, May 26, 2009, unless
extended. Tendered notes may be validly withdrawn at any time
prior to 11:59 p.m. New York City time on Tuesday, May 26, 2009,
subject to certain circumstances where we may extend or reinstate
withdrawal rights.
A full-text copy of GM's Registration Statement on Form S-4,
including its revised Viability Plan, filed with the Securities
and Exchange Commission is available at no charge at
http://ResearchArchives.com/t/s?3c09
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.
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: To Include Retirees' Benefits as Debts in New Firm
----------------------------------------------------------------
Alisa Priddle at The Detroit News reports that Chrysler LLC has
agreed to include the salaried retirees' benefits and pensions in
the liabilities of the new company.
As previously reported by the TCR, a new company (NewCo),
initially to be 20% owned by Fiat S.p.A. will purchase the
operating assets of Chrysler in a bankruptcy-court sanctioned sale
process. Assets not purchased by NewCo will be liquidated by
Chrysler.
Chrysler, says Detroit News, first planned to leave its
obligations to the retirees among other bad assets remaining in
bankruptcy. The report states that The National Chrysler
Retirement Organization (NCRO) hired the law firm of Stahl Cowen
Crowley Addis LLC to represent the non-union retirees who had
objected to Chrysler's first plan. The NCRO filed a motion
seeking for an appointment of an official committee that will
represent non-union retirees. Chrysler, however, objected, citing
that there was no need for a committee because the benefits hadn't
yet been terminated.
The Hon. Arthur Gonzalez granted the retirees the right to come
back before the Court "on three days" notice if Chrysler goes back
on its word," The Detroit News states, citing NCRO attorney Trent
Cornell.
Stephen Koff at Washington Bureau Chief relates that Twinsburg
Mayor Katherine Procop and the United Autoworkers Union
representatives have met with Ed Montgomery -- who was appointed
by President Barack Obama to help communities deal with the auto
industry's devastation -- to try to stop the closure of the
Twinsburg Stamping Plant. The report says that no promises
resulted from the meeting. There were "absolutely no promises,
but there are a lot of ideas for revitalization of the plant," the
report quoted Mayor Procop as saying.
Washington Bureau Chief states that Mayor Procop is hoping for a
meeting with others on the auto task force who are working
directly with Chrysler.
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)
CHRYSLER LLC: Notifies & to Pay 1,200 Suppliers Co. Wants to Keep
-----------------------------------------------------------------
Jeff Bennett at The Wall Street Journal reports that Chrysler LLC
has started notifying the initial 1,200 suppliers it wants to keep
after the Company completes its planned merger with Fiat S.p.A.
According to WSJ, Chrysler CEO Bob Nardelli notified the suppliers
how they could switch their contract to the new company and said
that they will be paid some of the money owed them before the
Company filed for bankruptcy protection.
WSJ quoted Mr. Nardelli as saying, "We recognize that our Chapter
11 restructuring has caused anxiety for suppliers that have been
affected by the industry downturn and economic recession just as
we have.... As you know, there is a high degree of
interdependence between the auto makers and supplier partners in
this industry. That is why it is critical to get all of our key
suppliers on board to take on new agreements and move business
quickly to the new company. This will allow us to swiftly move
forward and resume our business of building and selling vehicles."
Chrysler's plants are temporarily shut down, WSJ relates.
Fiat to Meet With Gov't & Unions
Stacy Meichtry at the WSJ reports that Fiat CEO Sergio Marchionne
has agreed to hold negotiations with Italian government officials
and unions to try to avert labor opposition that could derail his
plans. According to WSJ, Mr. Marchionne sent a letter to Italian
Industry Minister Claudio Scajola on Friday, pledging to meet with
the government and unions as soon as it knows the result of its
proposed merger with Opel. Fiat has already signed a deal to buy
20% of Chrysler LLC, WSJ relates.
WSJ says that Mr. Marchionne has confirmed his plan to submit an
offer for Opel by the German government's May 20 deadline.
Mr. Marchionne, according to WSJ, is under pressure from the
Italian and German governments over potential plant closures and
job losses his plans for Opel and Chrysler could bring. German
union leaders who sit on Opel's board are against the deal, saying
that the merger could lay off about 18,000 workers across Europe,
WSJ states.
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: Dealer Cuts Needed to Be Viable, Says Treasury
------------------------------------------------------------
Chrysler LLC's decision to eliminate 789 dealers is one of several
steps the automaker is taking to restructure to achieve financial
viability, the U.S. Treasury, which has given loans to Chrysler
pre-bankruptcy, said in a news release. According to the
government agency, the dealer cuts have been part of Chrysler's
plan for some time.
The Treasury relates that a month ago, Chrysler faced the real
prospect of liquidation, which would have eliminated all 3,200 of
the company's dealers. As a result of the successful Chrysler-Fiat
partnership and the backing of the President's Auto Task Force,
Chrysler is now positioned to move forward with a plan that
retains 75% of its dealers -- representing 87% of Chrysler sales.
Consistent with the Task Force's role in the restructuring
process, it was not involved in the specific design or
implementation of Chrysler's dealer consolidation plan. The Task
Force played no role in deciding which dealers, or how many
dealers, were part of Chrysler's announcement today.
The Treasury states, "We understand that this rationalization will
be difficult on the dealers that will no longer be selling
Chrysler cars and on the communities in which they operate.
However, the sacrifices by the dealer community - alongside those
of auto workers, suppliers, creditors, and other Chrysler
stakeholders - are necessary for this company and the industry to
succeed. And a stronger Chrysler, supported by an efficient and
effective dealer network, will provide more stability for current
employees and the prospect for future employment growth."
According to the Treasury, The Obama Administration is committed
to continuing its significant efforts to help ensure that
financing is available to creditworthy dealers and pursuing
efforts to help boost domestic demand for cars. These steps will
help auto dealers, the auto industry, and the American economy,
the agency said.
789 Dealers to Be Cut
As reported by the TCR on May 15, 2009, Chrysler LLC and its
affiliates submitted to Judge Arthur Gonzalez of the U.S.
Bankruptcy Court for the Southern District of New York a motion
seeking authority 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, said that the
reduction of 3,181 dealers by 789 is required by Chrysler's 11
U.S.C. Sec. 363 sale transaction with Fiat S.p.A. She said the
acceleration of Chrysler's dealer network rationalization is a
critical component of the transaction, to position New Chrysler
for viability and long-term success.
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)
CIRCUIT CITY: Wins Nod to Sell Internet Name, Marks to Systemax
---------------------------------------------------------------
Circuit City Stores Inc. was authorized by the U.S. Bankruptcy
Court for the Eastern District of Virginia (Richmond) to sell its
Internet domain name and trademarks for $14 million to Systemax
Inc. The original $6.5 million bid from Systemax increased at
auction.
As reported by the TCR on April 23, 2009, the U.S. Bankruptcy
Court for the Eastern District of Virginia has approved (i)
procedures for the sale of Circuit City Stores West Coast, Inc.,
and Circuit City Stores, Inc.'s intellectual property, internet-
related property and customer information, and (ii) a "stalking
horse" agreement with Systemax Inc.
Pursuant to the sale procedures, the Debtors will still be
accepting offers for their intellectual property assets.
Competing bids are due no later than 5:00 p.m. Eastern on May 6,
2009. In order to have a "qualified bid", an interested party
must provide a bid that, among other things, exceeds the stalking
horse bid by $350,000. Systemax, the stalking horse bidder, has
offered $6.5 million in cash plus a share in future revenues.
If the Debtors receive qualified bids in addition to Systemax's,
an auction will be conducted at the offices of Skadden, Arps,
Slate, Meagher & Flom, LLP, 4 Times Square, New York, NY 10036,
commencing at 10:00 a.m. Eastern on May 11, 2009.
A sale hearing will be held on May 13, 2009, at 10:00 a.m. Eastern
at which date and time, the Sellers will seek approval of the
successful bid. Objections, if any, to the approval of the sale
are due before May 12, 2009, at 4:00 p.m. Eastern.
The Court has authorized Circuit City to pay a $250,000 break-up
fee and expense reimbursement not to exceed $75,000 to Systemax if
the Debtors consummate a sale transaction with another party.
As reported in the Troubled Company Reporter on April 15, 2009,
Systemax Inc. signed a "stalking horse" agreement to purchase
selected assets of Circuit City's e-commerce business for
$6.5 million in cash plus a share of future revenue generated
utilizing those assets over a 30-month period.
A full-text copy of the Court's Bid Procedures Order is available
at http://bankrupt.com/misc/Circuit.BPOrder.pdf
About Circuit City Stores
Headquartered in Richmond, Virginia, Circuit City Stores Inc.
(NYSE: CC) -- http://www.circuitcity.com/-- was a specialty
retailer of consumer electronics, home office products,
entertainment software and related services in the U.S. and
Canada.
Circuit City Stores together with 17 affiliates filed a voluntary
petition for reorganization relief under Chapter 11 of the
Bankruptcy Code on November 10 (Bankr. E.D. Va. Lead Case No. 08-
35653). InterTAN Canada, Ltd., which runs Circuit City's Canadian
operations, also sought protection under the Companies' Creditors
Arrangement Act in Canada.
Gregg M. Galardi, Esq., and Ian S. Fredericks, Esq., at Skadden,
Arps, Slate, Meagher & Flom, LLP, are the Debtors' general
restructuring counsel. Dion W. Hayes, Esq., and Douglas M. Foley,
Esq., at McGuireWoods LLP, are the Debtors' local counsel. The
Debtors also tapped Kirkland & Ellis LLP as special financing
counsel; Wilmer, Cutler, Pickering, Hale and Dorr, LLP, as special
securities counsel; and FTI Consulting, Inc., and Rotschild Inc.
as financial advisors. The Debtors' Canadian general
restructuring counsel is Osler, Hoskin & Harcourt LLP. Kurtzman
Carson Consultants LLC is the Debtors' claims and voting agent.
The Debtors disclosed total assets of $3,400,080,000 and debts of
$2,323,328,000 as of Aug. 31, 2008.
Circuit City has opted to liquidate its 721 stores. It has
obtained the Bankruptcy Court's approval to pursue going-out-of-
business sales, and sell its store leases.
Bankruptcy Creditors' Service, Inc., publishes Circuit City
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Circuit City Stores Inc. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CITIGROUP INC: Moody's Reviews Baa3 Preferred Stock
---------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
the ratings on hybrid securities of four U.S. bank holding
companies. The issuers and their affected securities are:
* Citigroup's trust preferred securities rated Baa3 and Eggs Upper
Tier II notes rated Ba1
* Fifth Third Bancorp's preferred stock rated Baa3 and its trust
preferred securities rated Baa2
* KeyCorp's preferred stock rated Baa3 and its trust preferred
securities rated Baa2
* SunTrust Banks, Inc's preferred stock rated Ba2, trust preferred
securities rated Baa2, and SunTrust Real Estate Investment
Corporation's Baa3 REIT preferred stock.
Moody's added that its ratings on Regions Financial Corporation
are currently on review for possible downgrade and the Baa1 rating
on Region's trust preferred securities will be reviewed in
conjunction with the four other issuers' hybrid securities.
Moody's said the reviews reflect its opinion that the probability
of a missed dividend or interest payment on these securities has
increased because these companies must raise capital in response
to the outcome of the U.S. government's stress test.
These firms must submit plans to build their capital "buffer"
within the next month, and complete the execution of the plan
within the next six months. In deciding which securities ratings
to put on review for possible downgrade, Moody's analyzed each of
the banks' capital raising needs and considered the potential
methods to achieve this requirement. That is, Moody's considered
each of the bank's capital structures and how far up the capital
structure the bank may need to offer an exchange in order to raise
the amount of capital required by the U.S. government.
In coming to a conclusion about the rating outcome for these
securities, Moody's reviews will focus on these:
A) the likelihood that these five companies (including Regions
Financial) can successfully raise capital from their own
resources -- including through common equity issuance, asset
sales, and internal capital generation.
B) the likelihood of each company needing to suspend payments on
its preferred or hybrid securities in order to increase the
success of any exchange offers.
C) the likelihood that any of these companies will require
additional capital from the U.S. government, including the
conversion of any existing TARP preferred or the need to take
additional U.S. government capital. This is noteworthy because
Moody's believes that a conversion of government-held TARP
preferred shares, or a further government capital infusion
would result in significant pressure on a bank to eliminate the
payment on its preferred or hybrid securities.
D) The expected loss on each security if the company were to
eliminate payments on the security.
Moody's expects that it will conclude these reviews in the next
few weeks.
Previous Rating Action And Principal Methodologies
Moody's last rating action for Citigroup was on March 4th, 2009
when it lowered the senior debt ratings of Citigroup Inc. to A3
from A2, the senior subordinated debt to Baa1 from A3, the junior
subordinated debt to Baa3 from A3 with a negative outlook (issued
by various Citigroup Capital Trust vehicles), and the preferred
debt ratings to Ca from Baa3. The short-term rating at Citigroup
Inc. was confirmed at Prime-1. Citibank N.A.'s rating for
deposits was lowered to A1 from Aa3, and its Prime-1 short-term
rating was affirmed. The Citibank's bank financial strength
rating was confirmed at C- with a negative outlook, while its
baseline credit assessment was lowered to Baa2 from Baa1. All
ratings were assigned a stable outlook except for Citibank's bank
financial strength rating and Citigroup's junior subordinated debt
rating. These actions concluded a review that commenced on
December 18th, 2008.
Moody's last rating action for Fifth Third Bancorp was on April
14th, 2009 when it downgraded the ratings of Fifth Third Bancorp
and the bank financial strength rating of its operating banks by
two notches (senior debt at the holding company to Baa1 from A2;
BFSR to C from B-). Fifth Third Bancorp's short-term rating was
also downgraded, to Prime-2 from Prime-1. The long-term debt and
deposit ratings of Fifth Third Bank, Ohio and Fifth Third Bank,
Michigan, were lowered by one notch (long-term deposits to A2 from
A1). The Prime-1 short-term ratings of both bank subsidiaries
were affirmed. Following these rating actions, the outlook on
Fifth Third and its subsidiaries is negative.
Moody's last rating action for Keycorp was on April 30th, 2009
when it downgraded the senior debt rating of KeyCorp to Baa1 from
A2, the subordinated debt rating to Baa2 from A3, and the
preferred stock rating to Baa3 from Baa1. The holding company's
short-term rating was downgraded to Prime-2 from Prime-1. The
long-term ratings of KeyBank National Association, the lead bank
subsidiary, were also downgraded. KeyBank's financial strength
rating was lowered to C from B-, its long-term deposits and senior
debt were lowered to A2 from A1, and its subordinated debt rating
was lowered to A3 from A2. The bank's Prime-1 short-term rating
was affirmed. Following these rating actions, the outlook on Key
and its subsidiaries is negative.
Moody's last rating action for SunTrust Banks, Inc. was on April
23rd, 2009 when it downgraded the senior debt rating of SunTrust
Banks, Inc. to Baa1 from A1, the subordinated debt rating to Baa2
from A2, and the preferred stock rating to Ba2 from A3. The
holding company's short-term rating was downgraded to Prime-2 from
Prime-1. The long-term ratings of SunTrust Bank, the lead bank
subsidiary, were also downgraded. SunTrust Bank's financial
strength rating was lowered to C- from B, its long-term deposits
and senior debt were lowered to A2 from Aa3, and its subordinated
debt rating was lowered to A3 from A1. However, the bank's Prime-
1 short-term rating was affirmed. Following these rating actions,
the outlook on SunTrust and its subsidiaries was negative.
CLARK ATLANTA: Moody's Affirms 'Ba1' Rating on $19 Mil. Bonds
-------------------------------------------------------------
Moody's Investors Service has affirmed its Ba1 rating on Clark
Atlanta University's $19 million of Series 1995 Revenue Bonds.
The rating carries a stable outlook. The bonds were issued
through the Development Authority of Fulton County.
Legal Security: General obligation secured by certain unrestricted
revenues and a mortgage on the 1995 student housing facility.
Debt service reserve fund. Additional bonds tests.
Interest Rate Derivatives: None.
Strengths
* Solid market niche as a historically black institution with an
applied studies and research focus with net tuition per student
of $12,837 in fiscal year 2008. While full-time equivalent
enrollment has continued to edge downward to 3,819 students in
the fall of 2008 from 4,253 in the fall of 2006, overall net
tuition revenue has grown, increasing 7% in FY 2007 and 2% in FY
2008. Management reports that confirmed students for next
fall's entering undergraduate and graduate classes are running
slightly ahead of last year. Revenue diversity is aided by
research enterprise with $9.4 million in research expenses in FY
2008.
* Improved operating performance resulting from past program cuts
and careful expense control. Moody's calculation of average
operating performance of 3.7% at the end of fiscal year 2008
proves sharp contrast to the -6.1% average at the end of 2004.
Cash flow from operations supported 1.6 times debt service
coverage in FY 2008. Early in calendar year 2009, the
University terminated the employment of approximately 50 faculty
members and 30 staff members, signaling an ongoing commitment to
balanced operations.
* Clear management focus on information systems and processes with
a goal of responding to prospective students quickly and
efficiently. The information technology focus should also
enhance the University's abilities around donor cultivation,
faculty resource utilization decisions, and other key management
responsibilities.
* Substantial, even if reduced, donor support with gift revenue
averaging $8.5 million over the last three years.
* Conservative debt structure with no put risk. While the
University has some variable rate debt, it is all under The
Historically Black College and University Capital Financing
Program with interest costs near to short term U.S. Treasury
rates and no put risk.
Challenges
* Competitive market environment for students as indicated in 22%
yield rate for the fall 2008 freshmen class for tuition-
dependent university (student charges provided 72% of operating
revenues in FY 2008). Economic climate could drive some
potential students to seek lower cost alternatives including
public universities.
* Thin financial resource base relative to debt and operations.
At the end of FY 2008, expendable financial resources of $28.9
million cushions $49.6 million of pro forma direct debt by 0.6
times and 33% of annual operating expenses. Comprehensive debt
(which includes $56.5 million of indirect debt including $50
million of indirect student housing debt as well as Clark
Atlanta's share of energy services contract related debt) is
cushioned just 0.3 times by expendable resources. Assuming a
30% reduction in expendable financial resources from investment
losses and endowment spending, reduced expendable financial
resources cushion pro forma direct debt 0.4 times.
* Significant capital needs on campus which has had constrained
resources to invest in its plant, with age of plant at 10.6
years. The University has borrowed an additional approximately
$10 million in the current fiscal year to finance housing
facility improvements. The additional debt was issued under The
Historically Black College and University Capital Financing
Program.
Recent Developments:
Through the end of April the University reports an approximately -
26% return on its endowment assets. As of May 11, 2009 the asset
allocation (with a lag on alternative investment valuations) was
65% global equities, 22% fixed income, 8% alternatives, and 4%
cash. Moody's view manager concentration as a potential credit
risk as one domestic equity manager holds 38% of assets (as of May
11, 2009), one fixed income manager holds 19% of assets and
another domestic equity manager with nearly 12% of assets.
Outlook
The stable outlook is based on Moody's expectation that the
University will continue to generate solid debt service coverage
from operations. Moody's expect the recent trend of gradual
growth in net tuition revenue and continued emphasis on cost
containment to continue. Moody's stable outlook is also based on
the expectation of no additional borrowing plans.
What Could Change the Rating - UP
Growth in financial resources through fundraising, sponsored
programs and operating surpluses; limited future borrowing; and
improvement in student market position.
What Could Change the Rating - DOWN
Decline in net tuition revenue; ongoing decline in financial
resources or debt service coverage.
Key Indicators (Fall 2008 enrollment, FY 2008 Financial
Information):
* Numbers in parentheses estimate the impact of a 30% decline in
financial resources
* Full-time equivalent enrollment: 3,819 students
* Selectivity rate: 57%
* Matriculation rate: 22%
* Expendable Resources to pro forma Direct Debt: 0.6 times (0.4
times)
* Expendable Resources to pro forma Comprehensive Debt: 0.3 times
(0.2 times)
* Total financial resources: $48.6 million ($34.1 million)
* Total pro forma Direct Debt: $49.6 million
* Expendable financial resources to operations: 0.33 times (0.23
times)
* Average operating margin: 3.7%
* Average debt service coverage: 2.0 times
* Operating Revenues: $90.8 million
Rated Debt:
-- Series 1995 Revenue Bonds: Ba1; insured by Ambac (Connie Lee)
with current financial strength rating of Ba3 with a
developing outlook
The last rating action on the Series 1995 Bonds was on December
21, 2006 when the rating was upgraded to Ba1 from Ba2.
CONGRESSIONAL HOTEL: Section 341(a) Meeting Slated for June 1
-------------------------------------------------------------
The U.S. Trustee for Region 4 will convene a meeting of creditors
in Congressional Hotel Corp.'s Chapter 11 case on June 1, 2009, at
11:00 a.m. The meeting will be held at 6305 Ivy Lane, Sixth
Floor, Greenbelt, Maryland.
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.
Rockville, Maryland-based Congressional Hotel Corp. dba The Legacy
Hotel & Meeting Centre fka The Ramada Inn filed for Chapter 11 on
May 3, 2009 (Bankr. D. Md. Case No. 09-17901). James Greenan,
Esq., at McNamee Hosea represents the Debtor in its restructuring
efforts. The Debtor's assets and debts both range from $10
million to $50 million.
CONVERGYS CORP: Moody's Confirms Corporate Family Rating at 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service confirmed Convergys Corporation's
corporate family and senior unsecured notes ratings at Ba1. The
rating outlook is negative. The ratings action concludes the
review for possible downgrade initiated on July 16, 2008.
The ratings confirmation reflects recent improvements in the
performance of the Human Resources Management and Customer
Management segments, as evidenced by free cash flow generation of
$129 million during the six months ended March 31, 2009. The
negative outlook considers the company's tightened liquidity and
remaining execution risks associated with certain HR
implementation contracts.
During the first nine months of 2008, the HR business had
generated significant cash outflows and operating losses related
to weak execution of implementation projects. Since then, the
company has taken measures to improve the performance of the HR
business (e.g., by no longer pursuing new implementation
contracts) and has reached key "go live" milestones with a second
major HR contract in early 2009. While Moody's believes that
implementation risks still exist for the remaining portion of the
two major Fortune 50 client contracts, Moody's believe that the
downside is capped by the fact that key portions of the
implementation have been completed. Moody's expectation is that
the company will manage the remaining implementation phases more
cost effectively through either the use of partners or by
negotiating modifications in the scope and timing of these two
contracts.
Despite the current economic recession, the CM segment has shown
improved profitability on flat revenues for the first quarter of
2009 (adjusted for the Intervoice acquisition in September 2009).
The stable revenue stream reflects the ongoing client demand for
services that can improve customer satisfaction during a difficult
environment. Operating margins in the CM segment improved both
year-over-year basis and sequentially driven by more efficient
work force management, increased pricing, and lower overhead
costs. Given the improving margin profile of the CM segment and
the stabilization of the HR business, Moody's believe the company
is on track to achieve its stated goal of $200 million of free
cash flow for 2009.
The company's liquidity position has tightened because of the
limited cash flow generation in 2008 (arising from cost overruns
on HR implementation contracts) and full draw-down of the $400
million revolving credit facility to fund the Intervoice
acquisition. The pressure on internal and external sources of
liquidity (note: the company has $278 million of cash and
equivalents as of March 31, 2009) and the current challenging
credit markets may pose refinancing risks with respect to the $250
million unsecured senior notes due December 15, 2009. To the
extent that economic conditions deteriorate further,
implementation cost overruns continue to plague the company, or
access to capital markets remain limited, Moody's believes that
Convergys may have to sell certain assets or business lines to pay
the December 2009 notes maturity.
Ratings confirmed:
* Corporate Family Rating -- Ba1
* Probability of Default Rating -- Ba1
* Speculative Grade Liquidity Rating -- SGL 2
* $250 million senior unsecured notes due December 2009 at Ba1
(LGD 3, 50%)
* Senior unsecured shelf rating at (P)Ba1 (LGD 3, 50%)
* Preferred shelf rating (P)Ba2 (LGD 6, 97%)
The last rating action was on December 15, 2008 when Moody's
downgraded Convergys' senior unsecured notes to Ba1 from Baa3,
senior unsecured shelf to (P)Ba1 from (P)Baa3, and short-term
rating for commercial paper to Not Prime from Prime-3 (P-3), and
assigned a Ba1 corporate family rating. In addition, Moody's kept
the ratings under review for further possible downgrade.
Convergys Corporation, headquartered in Cincinnati, Ohio, provides
outsourced customer care, telecommunications and cable billing
services, and human resource services.
COPANS MOTORS: Meeting of Creditors Scheduled for June 18
---------------------------------------------------------
The U.S. Trustee for Region 21 will convene a meeting of creditors
in Copans Motors, Inc.'s Chapter 11 case on June 18, 2009, at 3:00
p.m. The meeting will be held at the U.S. Courthouse, 299 E.
Broward Blvd No. 411, Ft. Lauderdale, Florida.
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.
Pompano Beach, Florida-based Copans Motors, Inc. dba Champion
Motors sells automobiles.
The Company filed for Chapter 11 on May 7, 2009 (Bankr. S. D. Fla.
Case No. 09-18807). Bart A. Houston, Esq., represents the Debtor
in its restructuring efforts. The Debtor's assets and debts both
range from $10 million to $50 million.
COYOTES HOCKEY: Jim Balsillie Fights for Buy & Transfer Attempt
---------------------------------------------------------------
The Associated Press reports that Jim Balsillie has defended his
attempt to purchase and move the Phoenix Coyotes.
According to The AP, the NHL argued that Mr. Balsillie's effort to
purchase the Phoenix Coyotes out of Chapter 11 bankruptcy and
relocate them to Hamilton is a "sham."
The AP relates that Mr. Balsillie has twice tried and failed to
acquire an NHL team in Pittsburgh and Nashville and move it to
southern Ontario. The AP says that for the Phoenix Coyotes, Mr.
Balsillie has offered more than $212 million. Mr. Balsillie,
according to the report, said that his offer is conditional on
moving the team to southern Ontario and goes the furthest in
"satisfying creditors' claims."
Mr. Balsillie said in a statement, "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."
Citing NHL, The AP states that the Phoenix Coyotes' majority
owner, Jerry Moyes, gave up the right to place the team into
bankruptcy when he received financing from the league in 2008.
NHL claimed that Mr. Moyes has no right to complete a sale
conditional on a move to southern Ontario because that territory
belongs to the league, The AP relates. The report quoted NHL as
saying, "Any bid for the sale of the Phoenix Coyotes solely for
relocation to Ontario is a sham and should be rejected by this
court."
Mr. Moyes hasn't complied with all the rules he agreed to when he
acquired the Phoenix Coyotes, and there isn't time for the
franchise to be moved before next season, The AP reports.
The court has scheduled a hearing for Tuesday, The AP states.
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: NHL Lays Out Reasons for Opposing Sale
------------------------------------------------------
According to Bloomberg's Bill Rochelle, the National Hockey League
laid out in a filing with the U.S. Bankruptcy Court for the
District of Arizona (Phoenix) why the bankruptcy judge can't
approve the sale of the Phoenix Coyotes to the team's chosen
buyer, James Balsillie, a founder of Research in Motion Ltd.
Balsillie would move the franchise to southern Ontario. The NHL
said in May 13 court papers that the Coyotes own the right to
operate an NHL franchise only in Phoenix, not anywhere else. The
NHL also points out how a transfer of ownership requires league
approval.
Bill Rochelle adds that another barrier arises under federal
bankruptcy law. To reaffirm the contract with the league, the
team must perform the existing agreements exactly as they are
written, which means complying with all league rules governing
where teams may operate and how ownership may be transferred.
The NHL will appear in bankruptcy court at a May 19 hearing
opposing the Coyotes' motion for approval of sale procedures
where Balsillie would have the initial bid at auction.
At that hearing, the bankruptcy judge will also hear argument
about whether Jerry Moyes, the current owner, had the right to
file bankruptcy in the first place given the proxy he gave the NHL
in return for funding.
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 stated 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: U.S. Trustee Sets Meeting of Creditors for June 5
-----------------------------------------------------------------
The U.S. Trustee for Region 14 will convene a meeting of creditors
in Dewey Ranch Hockey LLC and its affiliates' Chapter 11 cases on
June 5, 2009, at 11:00 a.m. The meeting will be held at U.S.
Trustee Meeting Room, City Council Chambers, 201 South Cortez,
Prescott, Arizona.
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.
Dewey Ranch Hockey LLC and its affiliates filed for separate
Chapter 11 on May 5, 2009 (Bankr. D. Ariz. Lead Case No. 09-
09488). Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey,
LLP represents the Debtors in their restructuring efforts. The
Debtors listed $100 million to $500 million in assets and debts.
CROWN HOLDINGS: Fitch Upgrades Issuer Default Rating to 'BB-'
-------------------------------------------------------------
Fitch Ratings has upgraded the ratings for Crown Holdings, Inc.,
and its subsidiaries Crown Cork & Seal Company, Inc., Crown
Americas, LLC., and Crown European Holdings, SA:
Crown:
-- Issuer Default Rating to 'BB-' from 'B+'.
CCS:
-- IDR to 'BB-' from 'B+';
-- Senior unsecured notes to 'B+' from 'B/RR5'.
CA:
-- IDR to 'BB-' from 'B+';
-- Senior secured dollar term facility to 'BBB-' from 'BB+/RR1';
-- Senior secured dollar revolving facility to 'BBB-' from
'BB+/RR1';
-- Senior unsecured notes to 'BB-' from 'B+/RR4'.
CEH:
-- IDR to 'BB-' from 'B+';
-- Senior secured euro term facility to 'BBB-' from 'BB+/RR1';
-- Senior secured euro revolving facility to 'BBB-' from
'BB+/RR1';
-- Senior secured euro 1st priority notes to 'BBB-' from
'BB+/RR1'.
Fitch also assigned a 'BB-' rating to CA's and Crown Americas
Capital Corp. II offering of US$400 million 7 5/8% senior
unsecured notes due 2017. The notes will be unconditionally
guaranteed by the company and substantially all of its U.S.
subsidiaries. The net proceeds will be used for general corporate
purposes consisting of the permanent repayment of indebtedness
under the company's senior secured credit facilities, the
repurchase of a portion of Crown European Holdings' first priority
notes and/or the funding of one or more acquisitions. Until that
time, the company intends to use such net proceeds to temporarily
repay existing indebtedness under its senior secured revolving
credit facilities and accounts receivable securitization
facilities. The Rating Outlook is Stable.
The ratings upgrade reflects the improved credit profile of the
company due to past debt reduction efforts, sustained levels of
free cash flow, conservative current cash allocation strategies
and cost containment efforts that has led to improved
profitability despite challenging economic conditions. Leverage
(adjusted debt to EBITDAR) at the end of the first quarter was
approximately 3.5 times (x) compared with 4.4x a year ago. Fitch
also believes the geographical diversification across both mature
and emerging markets with a diverse customer mix results in a more
balanced revenue stream that lends greater stability through
economic cycles, thus supporting the rating. Fitch expects
underlying volume demand should remain relatively stable in
Crown's end-markets for the rest of 2009. When factoring in cost-
improvement efforts, Fitch believes EBITDA generation will remain
rather consistent with 2008 levels. Any further ratings upgrade
for the company is dependent upon additional permanent leverage
reduction, continued revenue growth across its segments, as well
as sustained level of free cash flow and its expected uses.
Rating risks include the growing pension obligation, competition
in mature markets, unexpected increases to the asbestos liability,
long-term packaging conversion to other substrates, and an
acquisition that would materially increase leverage.
Under current market conditions, Crown's top financial priority
will be to use free cash flow to improve its liquidity position by
either paying down debt or increasing liquidity. Crown's
liquidity is solid at approximately US$850 million, which
consisted of US$552 million of availability under its credit
facilities and US$296 million of cash. In addition, the company
has capacity under its securitization program. Crown had
approximately US$95 million and EUR82 million outstanding under
the company's committed $US225 million North American and EUR120
million European securitization facilities, which mature in March
2010 and June 2010, respectively. Crown's US$410 million
revolving secured credit facility matures in May 2011 along with
the US$350 million European revolving secured credit facility. As
a result of past deleveraging and cash flow growth, Crown
currently has a material cushion under its covenants, and Fitch
believes the company should be able to maintain sufficient cushion
when the covenants moderately tighten at the end of 2009.
Current maturities are modest. Crown has US460 million first lien
secured notes due in September 2011. Crown also has US$354
million secured term loan and US$368 million European secured term
loan due November 2012. The term loans are prepayable without
penalty. Crown currently expects free cash flow in excess of
US$400 million with the majority of the cash flow to be used for
debt reduction. FCF for the last 12 months was US$329 million.
Other uses of cash in 2009 include pension contributions of US$74
million, expected asbestos liabilities of US$25 million and
minority dividends, which increased to US$65 million in 2008 due
to higher profits in the company's joint venture beverage can
operations. While the company has a US$500 million share
repurchase program with US$467 million available as of the first
quarter, Fitch does not expect Crown to repurchase stock over the
near term.
CROWN VILLAGE: U.S. Trustee Sets Meeting of Creditors for June 4
----------------------------------------------------------------
The U.S. Trustee for Region 3 will convene a meeting of creditors
in Crown Village Farm, LLC's Chapter 11 case on June 4, 2009, at
12:00 p.m. The meeting will be held at the J. Caleb Boggs Federal
Building, 2nd Floor, Room 2112, Wilmington, Delaware.
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.
Vienna, Virginia-based Crown Village Farm, LLC, makes
semiconductor products.
The Company filed for Chapter 11 on May 1, 2009 (Bankr. D. Del.
Case No. 09-11522). Chun I. Jang, Esq., and Daniel J.
DeFranceschi, Esq., at Richards, Layton & Finger, represent the
Debtor in its restructuring efforts. The Debtor listed assets
between $50 million to $100 million and debts between $100 million
to $500 million.
CRUCIBLE MATERIALS: Meeting of Creditors Scheduled for June 8
-------------------------------------------------------------
Roberta DeAngelis, acting U.S. Trustee for Region 3 will convene a
meeting of creditors in Crucible Materials Corporation and
Crucible Development Corporation's Chapter 11 cases on June 8,
2009, at 2:00 p.m. The meeting will be held at the J. Caleb Boggs
Federal Building, 2nd Floor, Room 2112, in Wilmington, Delaware.
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.
Based in Syracuse, New York, Crucible Materials Corporation --
http://www.crucible.com/-- aka Crucible Specialty Metals,
Crucible Service Centers, Crucible Compaction Metals, Crucible
Research and Trent Tube makes stainless and alloy steel for use in
the aircraft, automotive, petrochemical, and other industries.
The Company sold its trent tubes unit to Plymouth Tube in 2007.
The Company and its affiliate, Crucible Development Corporation,
filed for Chapter 11 protection on May 6, 2009, (Bankr. D. Del.
Lead Case No. 09-11582) Mark Minuti, Esq., at Saul Ewing LLP
represents the Debtors in their restructuring efforts. The
Debtors propose to employ Duff & Phelps Securities LLP as
investment banker; RAS Management Advisors LLC as business
advisor; and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors listed assets and debts both ranging from $100 million to
$500 million.
DBSD NORTH AMERICA: Files Pre-Negotiated Plan to Restructure Debt
-----------------------------------------------------------------
DBSD North America, Inc., formerly known as ICO North America,
Inc. and a subsidiary of ICO Global Communications (Holdings)
Limited, filed a voluntary petition under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York on Friday to complete a
restructuring of its $750 million of convertible notes which are
due in August 2009. The Company and ICO Global have entered into
agreements with holders of approximately 57% of the Notes to
implement a plan of recapitalization pursuant to which holders of
the Notes would receive shares of common stock of the reorganized
company representing approximately 95% of the outstanding equity
and ICO Global would receive shares of common stock representing
approximately 5% of the outstanding equity. In addition, ICO
Global would receive warrants to purchase at $0.01 per share up to
an additional 10% of the equity which shall be exercisable upon
certain valuation events.
DBSD anticipates that it will continue to operate in a business-
as-usual manner during the restructuring process, subject to court
approval. ICO Global is not involved in the Chapter 11
reorganization, and its operations and other assets including its
judgment against The Boeing Company are not impacted by the DBSD
restructuring process.
Michael Corkery, acting chief executive officer of ICO Global and
DBSD said, "After a careful evaluation of all of our alternatives,
DBSD and the majority of our note holders agreed that a Chapter 11
filing is the best way to implement the restructuring of the
Notes. DBSD and its subsidiaries have made tremendous progress in
the past year to lay the foundation for delivering innovative
mobile satellite services. This restructuring will allow us to
significantly improve the financial position for DBSD and its
subsidiaries, and will also allow DBSD to focus on maximizing the
value of its capabilities and assets."
DBSD's principal legal advisors for the restructuring process and
Chapter 11 proceedings are Kirkland and Ellis, LLP, and Davis
Wright Tremaine LLP. The Company's financial advisor is Jefferies
& Company, Inc. UBS Securities LLC acted as financial advisor,
and Milbank, Tweed, Hadley & McCloy LLP acted as principal legal
advisor to the note holders supporting the restructuring.
DBSD NORTH AMERICA: Case Summary & 50 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: DBSD North America, Inc.
aka ICO Member Services, Inc.
aka ICO North America, Inc.
11700 Plaza America Drive, Suite 1010
Reston, VA 20190
Bankruptcy Case No.: 09-13061
Debtor-affiliates filing subject to Chapter 11 petitions:
Entity Case No.
------ --------
DBSD North America, Inc. 09-13061
3421554 Canada Inc. 09-13063
DBSD Satellite Management, LLC 09-13064
DBSD Satellite North America Limited 09-13065
DBSD Satellite Services G.P. 09-13066
DBSD Satellite Services Limited 09-13067
DBSD Services Limited 09-13068
New DBSD Satellite Services G.P. 09-13069
SSG UK Limited 09-13070
Type of Business: The Debtors offer satellite communications
services.
Chapter 11 Petition Date: May 15, 2009
Court: Southern District of New York (Manhattan)
Judge: Robert E. Gerber
Debtor's Counsel: Christopher Marcus, Esq.
cmarcus@kirkland.com
Kirkland & Ellis LLP
153 E. 53rd Street
New York, NY 10022
Tel: (212) 446-4800
Fax: (212) 446-4900
Investment Banker and Financial Advisor: Jefferies& Company
Inc.
Notice and Claims Agent: The Garden City Group Inc.
Estimated Assets: $500 million to $1 billion
Estimated Debts: $500 million to $1 billion
ICO Global Communications (Holdings) Limited in Reston, Virginia,
holds 99.84% shares in the Debtors.
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Space Systems/Loral Trade $5,211,563
3825 Fabian Way
Palo Alto, California 90245
Tel: (650) 852-6217
Fax: (650) 852-5377
Hughes Network Systems LLC Trade $1,849,950
11717 Exploration Lane
Germantown, Maryland 20876
Tel: (301) 601-7444
Fax: (301) 428-5588
Alcatel-Lucent Trade $503,924
600-700 Mountain Avenue
Murray Hill, NJ 07974-2008
Tel: (972) 801-2622
Fax: (720) 482-6005
Delphi Corporation Trade $492,752
QUALCOMM Incorporated Trade $300,000
Holme Roberts & Owen LLP Trade $168,924
Intelsat Corporation Trade $90,000
Ernst & Young LLP Trade $84,520
SES AMERICOM Trade $75,925
Business Growth Trade $45,000
Implementation Associates
Global Technology Associates Trade $40,181
Morrison & Foerster LLP Trade $31,982
Davis Graham & Stubbs LLP Trade $27,026
XO Communications Trade $25,907
NAGRAVISION Trade $25,000
Comsearch Janelia Technology Trade $17,617
Park
Wireless Strategy LLC Trade $16,062
Internap Network Services Trade $15,178
Corporation
Janiel Eggleston Trade $12,875
Broadview Consulting Trade $12,560
EXPWAY Trade $12,150
Two Degrees, LLC Trade $11,662
Stanton Communications, Inc. Trade $11,107
Cooley Godward Kronish LLP Trade $10,061
Quantum Trade $8,400
Archer Consulting LLC Trade $7,520
FedEx Trade $6,995
Electro Rent Corporation Trade $6,290
Verizon Wireless Trade $5,478
Wildcat Systems LLC Trade $5,000
AT&T Mobility Trade $4,016
Sarbox Solutions Trade $3,817
TR Security Trade $3,750
Kinetics Marketing & Trade $3,000
Communications
Professional Products, Inc. Trade $2,805
Huron Consulting Group Trade $2,780
EMBARQ Corporate Trade $2,503
Vintage Filings, LLC Trade $2,260
Davis Wright Tremaine LLP Trade $1,936
KONIKA MINOLTA Trade $1,283
Pillsbury Winthrop Shaw Trade $1,273
Pittman LLP
Purple Onion Catering Company Trade $1,131
Corporation Services Company Trade $750
WYLDE Consulting Trade $750
Speakeasy, Inc. Trade $614
Staples Business Advantage Trade $578
Staples, Inc. Trade $343
Automatic Data Processing Inc. Trade $315
Muzak Trade $239
The petition was signed by Michael P. Corkery.
DENNIS P MORROW: Section 341(a) Meeting Slated for June 4
---------------------------------------------------------
The U.S. Trustee for Region 18 will convene a meeting of creditors
in Dennis Patrick Morrow and Dianne Marie Morrow's Chapter 11 case
on June 4, 2009, at 9:30 a.m. The meeting will be held at U.S.
Courthouse 700 Stewart St., Room 4107. Seattle, Washington.
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.
Port Orchard, Washington-based Dennis Patrick Morrow and Dianne
Marie Morrow filed for Chapter 11 on May 7, 2009 (Bankr. W. D.
Wash. Case No. 09-14448). Steven R. Levy, Esq., represents the
Debtors in their restructuring efforts. The Debtors listed total
assets of $17,711,100 and total debts of $11,050,730.
DHP HOLDINGS: Travelers Seeks to Lift Stay to Pursue Litigation
-------------------------------------------------------------
The Travelers Indemnity Company of America asks the U.S.
Bankruptcy Court for the District of Delaware to lift the
automatic stay to permit the continuation of Illinois State Court
Litigation.
Insurance firm Travelers filed a complaint against certain of the
Debtors' affiliates -- including Stockyard Corrugated Packaging
Corporation, DESA LLC, and DESA Heating LLC -- in the Circuit
Court of Cook County, Illinois, alleging that installing portable
heaters in the property violated its oral lease with 1300 W.
Exchange LLC by operating the property in an unsafe manner and
that the introduction of those heaters ignited a fire in the
property damaging it.
Travelers is the first party property insurer of 1300 Exchange,
providing coverage for the warehouse and industrial building
located at 1300 W. Exchange Avenue in Chicago, Illinois.
Travelers is subrogee to all payments made to 1300 Exchange
including all rights of action third parties legally responsible
for causing damage to the property under the terms of its policy
with 1300 Exchange.
Travelers alleges causes of action against Stockyard for breach of
contract, negligence and willful and wanton conduct against
Stockyard, and DESA entities for strict product liability and
negligence. Travelers does not expect any award for damages from
the litigation to exceed $6 million.
A hearing is set for June 19, 2009, at 2:00 p.m., to consider the
request. Objections, if any, are due June 5, 2009, by 4:00 p.m.
Womble Carlyle Sandridge & Rice PLLC represents Travelers.
About DHP Holdings
Headquartered in Bowling Green, Kentucky, DHP Holdings II
Corporation is the parent of DESA Heating, which sells and
distributes heating commercial products in Europe and Mexico under
brand names including ReddyHeater, Comfort Glow and Master
Portable Heaters. The Company has manufacturing, storage and
distribution facilities in Alabama and California.
DHP Holdings II and six of its affiliates filed for Chapter 11
protection on December 29, 2008 (Bankr. D. Del. Lead Case No.
08-13422). The Company's international arm, HIG-DHP Barbados, has
not filed for bankruptcy. HIG-DHP Barbados holds 100% of the
equity of all foreign nondebtor subsidiaries, which manufacture,
distribute and sell commercial and consumer goods in Europe,
Mexico, and Canada.
Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at
Pachulski, Stang, Ziehl Young & Jones LLP, represent the Debtors
as counsel. The Debtors proposed AEG Partners as restructuring
consultants, and Craig S. Dean as chief restructuring officer and
Kevin Willis as assistant chief restructuring officer. The Court
approved Epiq Bankruptcy Solutions LLC as noticing, claims and
balloting agent. When the Debtors filed for protection from their
creditors, they listed assets and debts between $100 million to
$500 million each. According to Reuters, as of November 29, the
Company, along with its non-debtor subsidiaries and affiliates,
had assets of $132.5 million and liabilities of $133.2 million.
DESA Holdings Corporation and DESA International LLC filed
voluntary petitions on June 8, 2002. HIG-DESA Acquisition, nka
DESA LLC, acquired on December 13, 2002, substantially all assets
of the DESA Entities for $198 million comprised of $185 million in
cash plus unsecured subordinated notes in the original aggregate
amount of $13 million priced at 10% per annum due payable on
December 24, 2007. The sale closed on December 24, 2002.
Kirkland & Ellis, LLP, and Pachulski, Stang, Ziehl Young Jones &
Weintraub, P.C., represented the DESA entities.
The Hon. Walter Shapero of the U.S. Bankruptcy Court for the
District of Delaware confirmed the Chapter 11 plan of DESA
Holdings and DESA Int'l on April 1, 2005, and Plan took effect the
same day. The Chapter 11 cases of the former DESA Entities is
still active; However, activity occurring in those cases consists
of limited claims resolution, and required filing of necessary
post-confirmation reports and payment of post-confirmation fees.
No issues remain open between the Debtors and the former DESA
Entities.
EL POLLO: Moody's Assigns 'B2' Rating on $132.5 Mil. Notes
----------------------------------------------------------
Moody's Investors Service assigned a B2(LGD2,25%) rating to El
Pollo Loco, Inc.'s proposed $132.5 million 2nd lien Senior Secured
Notes due 2012, and a B1 (LGD1, 1%) rating to its proposed $12.5
million 1st lien Senior Secured Revolving Credit Facility due
2012. The net proceeds from the transaction will be mainly used
to repay all the outstanding amount of approximately $103.4
million under the company's existing senior secured credit
facilities, consisting of a term loan and a revolving credit
facility.
Concurrently, Moody's affirmed El Pollo's Caa1 Corporate Family
Rating and Caa2 rating of the senior unsecured notes due 2013.
The rating outlook remained negative. El Pollo's Speculative
Grade Liquidity Rating, currently at SGL-4, will be revisited upon
closing of the transaction and Moody's review of final
documentation.
The affirmation of Caa1 CFR reflects El Pollo's likely improvement
in liquidity after refinancing, overshadowed by its weaker than
expected recent financial results mainly due to deteriorating same
store sales. Moody's expects that its operating result will
remain under pressure given the weak macro-economic environment
and intensified competition, and its same store sales would likely
remain negative in 2009. The Caa1 also incorporates the modest
deterioration on a pro-forma basis under the new capital structure
post transaction, resulting from expected higher interest expense
and funded debt balance. However, initiatives implemented by the
management to improve cost efficiency, some moderation in input
costs and cut-back in unit expansion, could somewhat mitigate the
negative pressure on the rating.
The negative outlook depicts Moody's concern on the deteriorating
same store sales trend despite the expected improvement in El
Pollo's liquidity profile resulting from the proposed refinancing.
The worsening trend was largely driven by the eroding guest
traffic and unfavorable menu mix, as consumer confidence stays low
and unemployment rate escalated to double digit in California, El
Pollo's home state. The fierce competition focusing on value
offering could further pressure its revenue and margin in the
medium term. Additionally, Moody's also notes the pay-in-kind
interest of approximately $4 million per annum on the senior
unsecured notes due 2014 ($26.9 million outstanding, not rated) at
El Pollo's parent company will become cash-pay after November 15,
2009. The indenture of the 2013 senior unsecured notes restricts
the ability of El Pollo or other subsidiaries to make dividend or
other payments to the parent to service the interest.
The rating action is :
Ratings assigned:
-- $12.5 million 1st lien senior secured revolving credit
facility due 2012, B1 (LGD1,1%)
-- $120 million 2nd lien senior secured notes due 2012, B2
(LGD2, 25%)
Ratings affirmed:
* Corporate Family Rating -- Caa1
* Probability of Default Rating -- Caa1
* $125 million ($106.5 million outstanding) senior unsecured notes
due 2013 -- Caa2 (LGD5, 70%)
* Speculative Grade Liquidity Rating - SGL-4
Ratings remain unchanged and will be withdrawn upon closing:
* $25 million senior secured revolving credit facility due 2010 --
B1(LGD2, 19%)
* $99 million senior secured term loan due 2011 -- B1 (LGD2,19%)
* Rating outlook: negative
Moody's last rating action for El Pollo occured on January 20,
2009 when its CFR was downgraded to Caa1 with negative outlook.
El Pollo Loco Inc, headquartered in Irvine, California, is a
quick-service restaurant chain specializing in flame-grilled
chicken and other Mexican-inspired entrees. The company operates
or franchises approximately 417 restaurants primarily around Los
Angeles and throughout Southwestern US, and generated total
revenues of approximately $298 million in the last twelve months
ended March 31, 2009.
E*TRADE FINANCIAL: Likely Material Losses Cue Moody's Junk Rating
-----------------------------------------------------------------
Moody's Investors Service downgraded to Caa3 from B2 the ratings
on the senior unsecured bonds of E*TRADE Financial Corporation.
Moody's also lowered to B3 from B2 E*TRADE's long-term issuer
rating. All long-term ratings including those of E*TRADE's thrift
subsidiary, E*TRADE Bank (BFSR at D-, Deposit Rating at Ba3),
remain on review for possible downgrade, originally commenced on
April 29, 2009. E*TRADE Bank's short-term rating remains Not-
Prime.
The downgrade of the bond ratings to Caa3 reflects the increased
probability of material credit losses for E*TRADE's senior
bondholders as a result of the company's stated strategy to employ
debt-for-equity exchanges as the primary tool in reducing leverage
and improving the company's precarious financial condition.
E*TRADE's May 8th regulatory filing noted that that the company
"anticipate[d] that the primary method for reducing [its] debt
will involve debt-for-equity exchanges."
E*TRADE's credit profile is challenged by persistent asset-quality
problems and capital needs at the thrift and, notwithstanding the
solid performance of E*TRADE's retail brokerage business, thin
debt-service capacity at the holding company. Furthermore, absent
a near-term improvement in its capital structure, there exists a
real possibility of regulatory intervention aimed at protecting
the thrift's depositors, which would in all likelihood lead to
losses for holding company creditors.
"In light of the company's stated strategy, a debt-for-equity
exchange offer appears very likely. Given E*TRADE's challenging
circumstances, such an exchange would be tantamount to default
avoidance, and Moody's would thus consider it a distressed
exchange," said Moody's Vice President, Alexander Yavorsky.
"Under the Moody's definition, this would constitute an event of
default on the exchanged bonds."
The downgrade of E*TRADE's issuer rating to B3 from B2 reflects
the holding company's significant structural subordination to the
thrift. Previously, Moody's viewed the holding company's
subordination as being based on these factors -- 1) continuing
need to downstream capital into the thrift to maintain its well-
capitalized status; 2) high degree of holding company double-
leverage; and 3) potential for regulatory intervention, which
would likely lead to losses for holding company creditors.
These factors have now been compounded by the regulators' request
to move E*TRADE's introducing broker, E*TRADE Securities LLC,
under the thrift, which further subordinates the holding company's
claim on operating cash flows, and on the proceeds from any
prospective sale of the broker's monetizable assets, to that of
the thrift.
Whether, and to what extent, any prospective debt-for-equity
exchange will be beneficial to E*TRADE's and E*TRADE Bank's credit
profiles is as yet uncertain. Among the factors considered by
Moody's during the review will be the sustainability of the new
capital structure and E*TRADE's ability to service and ultimately
repay its remaining debt.
Such an analysis will take into account the possibility of both
declining retail brokerage revenues and increasing losses in the
company's large mortgage portfolio. Moody's is currently updating
its stress test on E*TRADE's mortgage portfolio to incorporate
both its current performance and Moody's expectations for possible
future loss rates. Moody's will also evaluate E*TRADE's overall
strategies for reducing its leverage, including equity raises or
asset sales.
The last rating action on E*TRADE was on April 29, 2009 when its
ratings, and those of E*TRADE Bank, were placed on review for a
possible downgrade.
E*TRADE is a major online retail brokerage firm that reported a
pre-tax loss from continuing operations of $470 million on $1.9
billion in net revenue in 2008.
Issuer: E*TRADE Financial Corp.
Downgrades:
-- Issuer Rating, Downgraded to B3 from B2; Placed Under Review
for further Possible Downgrade
-- Senior Unsecured Regular Bond/Debenture Due 2011, Downgraded
to Caa3 from B2; Placed Under Review for further Possible
Downgrade
-- Senior Unsecured Regular Bond/Debenture Due 2013, Downgraded
to Caa3 from B2; Placed Under Review for further Possible
Downgrade
-- Senior Unsecured Regular Bond/Debenture Due 2015, Downgraded
to Caa3 from B2; Placed Under Review for further Possible
Downgrade
-- Multiple Seniority Shelf, Downgraded to (P)B3 from (P)B2;
Placed Under Review for further Possible Downgrade
-- Multiple Seniority Shelf, Downgraded to (P)Ca from (P)B3;
Placed Under Review for further Possible Downgrade
-- Multiple Seniority Shelf, Downgraded to (P)Ca from (P)Caa1;
Placed Under Review for further Possible Downgrade
Issuer: E*TRADE Bank
Downgrades:
-- Issuer Rating, Downgraded to B1 from Ba3; Placed Under Review
for further Possible Downgrade
-- OSO Senior Unsecured OSO Rating, Downgraded to B1 from Ba3;
Placed Under Review for further Possible Downgrade
Continuing Review for Possible Downgrade:
-- Bank Financial Strength Rating, currently D-
-- Senior Unsecured Deposit Rating, currently Ba3
FIFTH THIRD BANCORP: Moody's Reviews Baa3 Preferred Stock
---------------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
the ratings on hybrid securities of four U.S. bank holding
companies. The issuers and their affected securities are:
* Citigroup's trust preferred securities rated Baa3 and Eggs Upper
Tier II notes rated Ba1
* Fifth Third Bancorp's preferred stock rated Baa3 and its trust
preferred securities rated Baa2
* KeyCorp's preferred stock rated Baa3 and its trust preferred
securities rated Baa2
* SunTrust Banks, Inc's preferred stock rated Ba2, trust preferred
securities rated Baa2, and SunTrust Real Estate Investment
Corporation's Baa3 REIT preferred stock.
Moody's added that its ratings on Regions Financial Corporation
are currently on review for possible downgrade and the Baa1 rating
on Region's trust preferred securities will be reviewed in
conjunction with the four other issuers' hybrid securities.
Moody's said the reviews reflect its opinion that the probability
of a missed dividend or interest payment on these securities has
increased because these companies must raise capital in response
to the outcome of the U.S. government's stress test.
These firms must submit plans to build their capital "buffer"
within the next month, and complete the execution of the plan
within the next six months. In deciding which securities ratings
to put on review for possible downgrade, Moody's analyzed each of
the banks' capital raising needs and considered the potential
methods to achieve this requirement. That is, Moody's considered
each of the bank's capital structures and how far up the capital
structure the bank may need to offer an exchange in order to raise
the amount of capital required by the U.S. government.
In coming to a conclusion about the rating outcome for these
securities, Moody's reviews will focus on these:
A) the likelihood that these five companies (including Regions
Financial) can successfully raise capital from their own
resources -- including through common equity issuance, asset
sales, and internal capital generation.
B) the likelihood of each company needing to suspend payments on
its preferred or hybrid securities in order to increase the
success of any exchange offers.
C) the likelihood that any of these companies will require
additional capital from the U.S. government, including the
conversion of any existing TARP preferred or the need to take
additional U.S. government capital. This is noteworthy because
Moody's believes that a conversion of government-held TARP
preferred shares, or a further government capital infusion
would result in significant pressure on a bank to eliminate the
payment on its preferred or hybrid securities.
D) The expected loss on each security if the company were to
eliminate payments on the security.
Moody's expects that it will conclude these reviews in the next
few weeks.
Previous Rating Action And Principal Methodologies
Moody's last rating action for Citigroup was on March 4th, 2009
when it lowered the senior debt ratings of Citigroup Inc. to A3
from A2, the senior subordinated debt to Baa1 from A3, the junior
subordinated debt to Baa3 from A3 with a negative outlook (issued
by various Citigroup Capital Trust vehicles), and the preferred
debt ratings to Ca from Baa3. The short-term rating at Citigroup
Inc. was confirmed at Prime-1. Citibank N.A.'s rating for
deposits was lowered to A1 from Aa3, and its Prime-1 short-term
rating was affirmed. The Citibank's bank financial strength
rating was confirmed at C- with a negative outlook, while its
baseline credit assessment was lowered to Baa2 from Baa1. All
ratings were assigned a stable outlook except for Citibank's bank
financial strength rating and Citigroup's junior subordinated debt
rating. These actions concluded a review that commenced on
December 18th, 2008.
Moody's last rating action for Fifth Third Bancorp was on April
14th, 2009 when it downgraded the ratings of Fifth Third Bancorp
and the bank financial strength rating of its operating banks by
two notches (senior debt at the holding company to Baa1 from A2;
BFSR to C from B-). Fifth Third Bancorp's short-term rating was
also downgraded, to Prime-2 from Prime-1. The long-term debt and
deposit ratings of Fifth Third Bank, Ohio and Fifth Third Bank,
Michigan, were lowered by one notch (long-term deposits to A2 from
A1). The Prime-1 short-term ratings of both bank subsidiaries
were affirmed. Following these rating actions, the outlook on
Fifth Third and its subsidiaries is negative.
Moody's last rating action for Keycorp was on April 30th, 2009
when it downgraded the senior debt rating of KeyCorp to Baa1 from
A2, the subordinated debt rating to Baa2 from A3, and the
preferred stock rating to Baa3 from Baa1. The holding company's
short-term rating was downgraded to Prime-2 from Prime-1. The
long-term ratings of KeyBank National Association, the lead bank
subsidiary, were also downgraded. KeyBank's financial strength
rating was lowered to C from B-, its long-term deposits and senior
debt were lowered to A2 from A1, and its subordinated debt rating
was lowered to A3 from A2. The bank's Prime-1 short-term rating
was affirmed. Following these rating actions, the outlook on Key
and its subsidiaries is negative.
Moody's last rating action for SunTrust Banks, Inc. was on April
23rd, 2009 when it downgraded the senior debt rating of SunTrust
Banks, Inc. to Baa1 from A1, the subordinated debt rating to Baa2
from A2, and the preferred stock rating to Ba2 from A3. The
holding company's short-term rating was downgraded to Prime-2 from
Prime-1. The long-term ratings of SunTrust Bank, the lead bank
subsidiary, were also downgraded. SunTrust Bank's financial
strength rating was lowered to C- from B, its long-term deposits
and senior debt were lowered to A2 from Aa3, and its subordinated
debt rating was lowered to A3 from A1. However, the bank's Prime-
1 short-term rating was affirmed. Following these rating actions,
the outlook on SunTrust and its subsidiaries was negative.
FILENE'S BASEMENT: Section 341(a) Meeting Scheduled for June 11
---------------------------------------------------------------
Roberta DeAngelis, Acting U.S. Trustee for Region 3 will convene a
meeting of creditors in Filenes Basement, Inc. and its debtor-
affiliates' Chapter 11 cases on June 11, 2009, at 1:00 p.m. The
meeting will be held at the J. Caleb Boggs Federal Building, 2nd
Floor, Room 2112, Wilmington, Delaware.
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.
Filene's Basement Corp., also called The Basement, is a
Massachusetts-based chain of department stores owned by Retail
Ventures, Inc. The oldest off-price retailer in the United
States, The Basement focuses on high-end goods and is known for
its distinctive, low-technology automatic markdown system. As of
late 2006, the company operated stores in metropolitan areas of
eight U.S. states and Washington, D.C. The chain also uses a
470,000-square-foot distribution center in Auburn, Massachusetts.
The store's name is derived from the subterranean location of its
flagship store, in the basement of the former Filene's department
store at Downtown Crossing in Boston, Massachusetts.
Filene's Basement, Inc. and its affiliates filed for Chapter 22 on
May 4, 2009, (Bankr. D. Del. Case No. 09-11525) James E. O'Neill,
Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael
Seidl, Esq. and Timothy P. Cairns, Esq. at Pachulski Stang Ziehl &
Jones LLP represents the Debtors in their restructuring effort.
The Debtors listed $50,000,001 to $100,000,000 in assets and
$100,000,001 to $500,000,000 in debts.
Filene's Basement filed for Chapter 11 bankruptcy protection in
August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures the following year. As reported by the Troubled
Company Reporter on October 23, 2000, the U.S. Bankruptcy Court
confirmed Filene's Basement's Amended Joint Plan of Liquidation,
filed on June 16, 2000.
Retail Ventures in April 2009 transferred the unit to Buxbaum
Group, which appraises and liquidates assets, for no proceeds.
FOCUS ENHANCEMENTS: Implements Chapter 11 Plan
----------------------------------------------
Focus Enhancements Inc., implemented a reorganization plan
approved by the U.S. Bankruptcy Court for the Northern District of
California (San Jose) in late April, Bloomberg's Bill Rochelle
reported. According to the report, the Plan gives the stock to
investors in return for waiving a $2.5 million loan given for the
reorganization. Unsecured creditors with claims of as much as
$5.7 million are to split up $240,000 cash.
Headquartered in Campbell, California, Focus Enhancements, Inc.
(NASDAQ:FCSE) -- http://www.videonics.com/-- designs video and
wireless AV technologies. Focus Enhancements, Inc. filed for
chapter 11 protection on Sept. 16, 2008, (Bankr. N.D. C. Case No.
08-55216) Gregory A. Rougeau, Esq. at Law Offices of Manasian and
Rougeau represents the Debtor. The Debtor has total assets of
$9,695,000 and total debts of $37,429,000.
FORD MOTOR: DBRS Comments on Common Shares Offering
---------------------------------------------------
Dominion Bond Rating Service notes that Ford Motor Company
announced a registered public offering of 300 million shares of
its common stock at par value of $0.01 per share. It is estimated
that Ford could raise about $1.8 billion from the equity issue at
closing prices -- Ford has also granted the underwriters a 30-day
option to purchase up to 45 million shares. DBRS considers the
equity issue to be modestly positive as it further strengthens the
Company's liquidity position while also granting Ford additional
flexibilty with respect to the funding of its Voluntary Employee
Beneficiary Association obligations. However, this transaction is
not significant enough at this time to warrant any ratings action.
Ford further indicated that the net proceeds from the Offering are
expected to be used for general corporate purposes, including to
fund with cash, instead of stock, a portion of the payments the
Company is required to make to the VEBA.
The Company has been making progress in improving its financial
position, notably the recently completed debt restructuring
initiatives. However, DBRS notes that Ford must also demonstrate
continued progress with respect to other aspects (i.e.,
operations, cost and capacity reductions, product portfolio, etc.)
of its attempted transformation. This progress is all the more
challenging in the face of current global automotive industry
conditions that appear to be deteriorating even relative to last
year's severe downturn.
FREEDOM BANK: Problems Not Promptly Addressed by FDIC, Says Audit
-----------------------------------------------------------------
As required by section 38(k) of the Federal Deposit Insurance
(FDI) Act, the Office of Inspector General conducted a material
loss review of the failure of Freedom Bank (FB), Bradenton,
Florida.
As reported by the TCR, the State of Florida, Office of Financial
Regulation, on Oct. 31, 2008, closed FB and named the FDIC as
receiver. On November 10, 2008, the Federal Deposit Insurance
Corporation notified the OIG that FB's total assets at closing
were $276 million, and the estimated loss to the Deposit Insurance
Fund was $92 million.
According to OIG's audti results, Freedom Bank failed primarily
due to bank management's aggressive pursuit of asset growth
concentrated in high-risk CRE loans with inadequate loan
underwriting and a lack of other loan portfolio and risk
management controls. In addition, FB had a lending incentive
compensation program without substantive credit quality
controls that contributed to the bank's rapid loan portfolio
growth and rewarded loan officers without consideration of actual
loan performance. Resulting losses severely eroded FB's earnings
and capital and negatively impacted liquidity, leading to the
bank's failure and a material loss to the DIF.
-- Management.
The OIG said that FB's board of directors (BOD) did not ensure
that bank management identified, measured, monitored, and
controlled the risk of the institution's activities. In addition,
the BOD did not implement corrective actions in response to bank
examiner and audit recommendations. FB revised its business plan
to incorporate aggressive asset growth in CRE lending without
implementing commensurate risk management controls.
This aggressive growth strategy continued during and after the
significant downturn in the economy, beginning in 2006, and
resulted in a high level of problem assets and overall
deterioration in the bank's financial condition. Further, FB's
president/chief executive officer (CEO)-a dominant official-had a
history of rapidly growing banks without establishing adequate
risk management controls.
-- Asset Quality.
Examiners noted concerns about FB's asset quality at each
examination and visitation. FB's loan portfolio, with CRE/ADC
loan concentrations, included high-risk terms, such as collateral
dependency, interest-only provisions with balloon payments, and
interest reserves. Due to FB's unsound loan underwriting and
administration practices, FB did not (1) effectively identify loan
portfolio risk; (2) obtain adequate financial information on
borrowers and guarantors; (3) ensure appropriate use, control, and
reporting of interest reserves; and (4) appropriately report to
the BOD. Further, FB's allowance for loan and
lease losses was not adequate.
-- Liquidity.
The OIG said that the bank's liquidity position was affected by
FB's increasing dependence on non-core/volatile sources of
funding, such as large time deposits and brokered deposits, to
fund its significant loan growth. FB also used Federal Home Loan
Bank advances. At the 2008 examination, FB's liquidity position
was inadequate considering declining earnings, capital, potential
deposit withdrawals, and insufficient access to
secondary and emergency funds.
-- Supervision.
The OIG concluded that the FDIC and OFR conducted timely
examinations of FB, and the FDIC conducted visitations and off-
site monitoring. "The OFR and FDIC examinations and visitations
conducted in October 2005 and May 2006, respectively, identified
the weaknesses in management and asset quality that ultimately led
to FB's failure, but supervisory action was not taken commensurate
with the risks these weaknesses posed to the de novo institution.
Rather, the FDIC did not take supervisory action until it issued a
joint Memorandum of Understanding with OFR after the OFR's March
2007 examination," the OIG said.
The OIG stated that more timely supervisory action, directed
at the performance of FB's president/CEO, high-risk lending, weak
credit underwriting and administration practices, and the bank's
increasing risk should have been taken as a result of the FDIC's
2006 examination.
The FDIC, the OIG acknowledges, has taken steps to improve its
supervisory review of de novo business plans, contingency
liquidity plans, and oversight of financial institutions that have
CRE loan concentrations and use interest reserves.
In May 2008, the FDIC required FB to submit a capital restoration
plan. In September 2008, the FDIC issued a Cease and Desist Order
requiring the bank to take various actions, including increasing
capital and improving management and asset quality. The FDIC
notified FB of applicable restrictions under PCA in May and August
2008 after the bank became less than well capitalized but did not
issue a PCA Directive.
The FDIC has authority to take a wide range of supervisory
actions. In the case of FB, however, supervisory actions were not
timely and effective in addressing the bank's most significant
problems, the OIG added.
The FDIC OIG plans to issue a series of summary reports on the
material loss reviews it is conducting and will make appropriate
recommendations related to the failure of FB and other FDIC-
supervised banks at that time, including with regard to
implementation of PCA provisions.
A copy of the Audit Report is available at:
http://www.fdicig.gov/reports09/09-011.pdf
GANDI INNOVATIONS: Voluntary Chapter 15 Case Summary
----------------------------------------------------
Chapter 15 Petitioner: Blair F. Davidson
BDO Dunwoody Limited
Financial Recovery Services
123 Front Street West, #1200
Toronto, ON M5J 2M2
Canada
Chapter 15 Debtor: Gandi Innovations Holdings, LLC
941 Isom Road
San Antonio, TX 78216-4136
Chapter 15 Case No.: 09-51782
Debtor-affiliates filing separate Chapter 15 petitions:
Entity Case No.
------ --------
Gandi Innovations, LLC 09-51783
Gandi Innovations Limited 09-51784
Chapter 15 Petition Date: May 14, 2009
Court: Western District of Texas (San Antonio)
Judge: Leif M. Clark
Chapter 15 Petitioner's Counsel: Daniel Murdoch, Esq.
Maria Konyukhova, Esq.
Strikeman Elliot LLP
Barrister & Solicitors
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L 1B9
Canada
Tel: (416) 367-6266
Fax: (416) 947-0866
David S. Gragg, Esq.
dgragg@langleybanack.com
Langley & Banack, Inc
Trinity Plaza II
745 E Mulberry, Suite 900
San Antonio, TX 78212
Tel: (210) 736-6600
Fax: (210) 735-6889
Harry Wylde, Esq.
Anderson & Wylde
401 Bay Street, Suite 2112
Toronto, ON M5H 2Y4
Canada
Roger Jaipargas
Borden Ladner Gervais, LLP
Scotia Plaza, 40 King Street
West Toronto, ON M5H 3Y4
Canada
Tel: (416) 367-6266
Fax: (416) 361-7067
Estimated Assets: $10 million to $50 million
Estimated Debts: $50 million to $100 million
GENERAL GROWTH: Gets Green Light to Use Lenders' Collateral
-----------------------------------------------------------
Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern
District of New York authorized, on a final basis, General Growth
Properties, Inc., and its affiliates to tap the cash collateral
securing their prepetition indebtedness.
Each Debtor is authorized to use all Cash Collateral, wherever it
may be located and regardless of whether it is in an account
controlled by any party subject to adequate protection. All
Adequate Protection Parties are ordered to relinquish control over
all Cash Collateral to the Debtors and will not interfere with any
effort by the Debtors or their banks to redirect Cash Collateral
to the Main Operating Account, Judge Gropper said at the May 13,
2009, hearing.
As adequate protection, the Debtors will grant replacement liens
and superpriority claims to the Adequate Protection Parties to
the extent of any diminution in value of the Adequate Protection
Parties' interests in property of the Debtors or their estates,
as adequate protection for the use of Cash Collateral.
The Adequate Protection Parties are also granted:
-- a continuing, valid, binding, enforceable, and
automatically perfected postpetition first-priority
security interest in, and lien on (A) the Intercompany
Claims that its applicable Debtor receives on account of
the net cash that flows into the Debtors' centralized Cash
Management System and (B) the Main Operating Account; and
-- upon the repayment in full of the Prepetition Goldman
Facility pursuant to the Final Cash Collateral Order, a
second-priority lien on the properties currently securing
the Prepetition Goldman Facility, which liens will be
junior to (a) the DIP Liens and (b) the Goldman Facility
Indemnity Lien, with each lien in an amount equal to the
lesser of (x) the Aggregate Value Diminution and (y) the
postpetition net positive balance of the Intercompany Claim
of the Debtor whose property constitutes Prepetition
Collateral of the Adequate Protection Party.
Holders of claims against any of the Debtors, which claims are
secured by the Shopping Center Properties, or in any other real
property of a Debtor whose cash constitutes Cash Collateral and
whose cash the Debtors use are entitled, pursuant to Sections 361
and 363(e) of the Bankruptcy Code, to adequate protection of
their interests in their respective prepetition collateral
including the Cash Collateral, for and equal in amount to the
aggregate diminution in the value of the Adequate Protection
Parties' interest in the Prepetition Collateral as may be
determined by the Court.
The Adequate Protection Liens will be subject and subordinate
only to any liens on the Collateral that are senior to, or pari
passu with, the Prepetition Liens and Carve-Out. The Adequate
Protection Second Liens, however, will be subject and subordinate
to the DIP Liens and the Goldman Facility Indemnity Lien.
Whether or not payments on account of the Adequate Protection
Obligations are made, holders of the Adequate Protection Second
Liens will not be entitled to exercise any rights or remedies
with respect to the Adequate Protection Second Liens until the
Obligations have been paid in full in cash or converted to equity
or post reorganization debt as contemplated by the DIP Credit
Agreement. Until the DIP Obligations are paid in full, the
Debtors will not use the Collateral or the sale proceeds to pay
the Adequate Protection Obligations. The Adequate Protection
Liens of holders of mechanics' and materialmens' liens will
secure only interest that may accrue under applicable law on
account of the claims secured by M&M Liens.
The applicable Adequate Protection Parties are granted, subject
to the payment of the Carve-Out, allowed superpriority claims as
and to the extent provided for in Sections 503(b) and 507(b),
senior to the claims under Section 364(c)(1) held by the Lenders.
As further adequate protection, and prior to acceleration of the
Term Loan, each applicable Adequate Protection Party will
continue to receive from the Debtors current payment of interest
at the non-default contract rate set forth in the Adequate
Protection Party's respective credit documentation; provided
that:
(i) the Debtors expressly reserve all rights in respect of
the application of payments to a the Adequate Protection
Party's claim pursuant to Section 506 or otherwise;
(ii) the Debtors will continue to operate the Adequate
Protection Properties in the ordinary course of business
and pay in the ordinary course of business the necessary
postpetition costs and expenses of operating and
maintaining the Adequate Protection Properties; and
(iii) the Debtors will pay the prepetition and postpetition
property taxes relating to the Adequate Protection
Properties.
The Debtors will provide to each Adequate Protection Party and
the holder of each Prepetition Lien secured by any Negative
Pledge Property (i) financial reporting as was required
prepetition under each Adequate Protection Party's first mortgage
documents as the same were in place at origination of the related
loans and (ii) a monthly summary of the cash balance in the Main
Operating Account and a monthly summary of the Intercompany
Claims then outstanding. In instances where documents require
the Debtors to provide audited financial statements for the
property owning entity, the Debtors will provide unaudited
information. Any financial reports provided by the Debtors will
be simultaneously provided to counsel to the Lenders and counsel
to the Official Committee of Unsecured Creditors.
Judge Gropper overruled on the merits any objection and
reservation of rights, to the extent not withdrawn with
prejudice, settled or resolved.
A full-text copy of the Final Cash Collateral Order is available
for free at:
http://bankrupt.com/misc/GenGrowth_FinalCashCollOrder.pdf
Prior to the May 13 hearing, Eurohypo AG, New York Branch,
administrative agent to 2008 Facility Lenders, raised these
comments and concerns for the record:
* The Adequate Protection Liens should encompass both the use
of the Cash Collateral and the postpetition diminution in
value of the Adequate Petition Parties' prepetition
collateral. Moreover, the Adequate Protection Liens
should secure all Adequate Protection Obligations, including
the obligation to pay contract interest and property level
expenses under the DIP Order.
* The Adequate Protection Parties should receive first
priority security interests and liens on the Main Operating
Account, and should also preserve their claim to a second
lien for their security interest in post-petition rents
under Section 552(b)(2) of the Bankruptcy Code. The DIP
lien should be junior to both of those liens in favor of the
Adequate Protection Parties.
* The Adequate Protection Payments, including payment of
contract interest and all property expenses should be paid
regardless of whether the DIP loan has been accelerated.
* The proposed DIP Order should be modified to recognize the
priority rights of the Adequate Protection Parties in the
Main Operating Account. The DIP Lender should not have
enforcement rights against the cash in the Main Operating
account until the Adequate Protection Parties' liens have
been satisfied.
* The Debtors should agree to provide monthly financial
reporting, to the Adequate Protection Parties, of property
level income, property level expenses, and cash flows, as
well as a monthly reconciliation of the intercompany
accounts.
General Growth Properties filed with the U.S. Securities and
Exchange Commission on May 11, cash forecast information presented
to the Court during the May 8 hearing. A full-text copy of the
Cash Flow Forecast is available for free at:
http://ResearchArchives.com/t/s?3ccc
General Growth's President and Chief Financial Officer Thomas H.
Nolan, Jr., discloses that the Cash Forecast Information includes
weekly cash flow forecasts for General Growth and Debtors on a
consolidated basis through July 31, 2009, and monthly cash flow
forecasts for General Growth on a consolidated basis through
December 31, 2009 and December 31, 2010. He says that the Cash
Forecast Information is subject to a number of assumptions,
including the assumption that the Debtors and certain other
parties enter into a $400 million debtor-in-possession credit
agreement. As disclosed in the Bankruptcy Court on May 8, he
states that General Growth currently has competing DIP financing
proposals, and is determining which of those proposals will be
accepted.
GENERAL GROWTH: U.S. Trustee Balks at Weil Gotshal Engagement
-------------------------------------------------------------
Diana G. Adams, United States Trustee for Region 2, disputes
General Growth Properties' bid to employ Weil Gotshal & Mangers
LLP as the Debtors' lead counsel. The U.S. Trustee notes that the
disclosure filed by Gary T. Holtzer, Esq., a partner at Weil
Gotshal, did not disclose the exact percentage of revenue the firm
derived from representing its four major clients namely Lehman
Brothers, Inc., General Electric, Microsoft and Citigroup, over
the last 12 months. The disclosure also did not indicate whether
the firm's attorneys working on matters related to the four
clients have been screened from matters related to the Debtors'
Chapter 11 cases and, what, if any, screening procedures were
implemented.
Ms. Adams complains that the Holtzer Affidavit is also silent as
to whether any conflicts counsel will handle matters involving
the Four Clients that Weil Gotshal is unable to undertake. She
notes that the Holtzer Affidavit does not list the names of any
specific Weil Gotshal attorneys or staff, which may be conflicted
from participating in the Debtors' Chapter 11 cases because of
their past or present representations or affiliations. She adds
that the Holtzer Affidavit does not state whether Weil Gotshal
will notify the Court or the Official Committee of Unsecured
Creditors as to any change of his firm's billing rates.
Against this backdrop, U.S. Trustee has sought from Weil Gotshal
supplemental information, including:
* exact percentage of revenue that Weil Gotshal derived from
representing the Four Clients in unrelated matters over the
last 12 months and a statement as to whether Weil Gotshal
can be adverse to the Four Clients;
* list of Weil Gotshal attorneys who worked on matters related
to the Four Clients and, if any, have been screened from
working on the Debtors' cases and the nature of the
screening procedures; and
* an explanation on what the Holtzer Affidavit meant by
"directly related" in this phrase, Weil Gotshal will not
represent any current clients in "matters directly related
to the Debtors or the Chapter 11 Cases.
Accordingly, the U.S. Trustee asks the Court to grant her request
and deny the Debtors' application.
Since late December 2009, the Debtors have employed Weil Gotshal
and the Debtors believe that the firm has acquired significant
expertise regarding the unique legal issues associated with the
Chapter 11 cases.
Specifically, during the firm's prepetition representation of the
Debtors, the firm has been primarily responsible for providing
strategic advice regarding restructuring alternatives;
developing, together with Kirkland & Ellis LLP, a comprehensive
filing strategy for the Debtors at both the corporate and project
levels; and counseling the Debtors with respect to, and preparing
the documentation necessary for obtaining "first day" relief upon
the commencement of the Chapter 11 cases, among others.
As bankruptcy counsel, Weil Gotshal will:
(a) advise the Debtors on obtaining "first day" relief from
the Court, including financing, cash collateral usage,
adequate protection issues and cash management;
(b) advise the Debtors on negotiating with holders of existing
corporate level debt and equity, including holders of the
Rouse Bonds, TRUPS, the GGP LP Notes and the 2008
Facility;
(c) advise the Debtors on various project level restructuring
matters;
(d) advise the Debtors on their plan of reorganization,
including confirmation matters and related litigation
affecting all Debtors;
(e) 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;
(f) prepare pleadings, including motions, applications,
answers, orders, reports and papers necessary or otherwise
beneficial to the administration of the Debtors' estate;
(g) appear before the Court and any appellate courts to
represent the interests of the Debtors' estates before
those courts; and
(h) perform all other legal services reasonably necessary or
otherwise beneficial for the Debtors in connection with
the prosecution of their Chapter 11 cases.
The Debtors will pay Weil Gotshal in accordance with the firm's
customary hourly rates:
Members & counsel $675 to $950
Associates $355 to $640
Paraprofessionals $155 to $290
The Debtors will also reimburse Weil Gotshal for any necessary
out-of-pocket expenses it incurs.
Gary T. Holtzer, a member of Weil, Gotshal & Manges LLP, assures
the Court that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code, as modified
by Section 1107(b), and does not represent any interest adverse
to the Debtors, their estates, and their creditors.
A schedule of Weil Gotshal's current and former clients that are
parties-in-interest in the Debtors' bankruptcy cases is available
for free at http://bankrupt.com/misc/wgmclientlist.pdf
Mr. Holtzer discloses that as of the Petition Date, (i) the fees
and expenses incurred by WG&M approximated $14,226,899 and (ii)
WG&M had a remaining credit balance in favor of the Debtors for
future professional services to be performed, and expenses to be
incurred, in the approximate amount of $872,821. He says that
once all prepetition amounts have been reconciled, the remaining
balance will be applied for future professional services to be
performed, and expenses to be incurred.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner, having ownership interest in, or management
responsibility for, more than 200 regional shopping malls in 44
states, as well as ownership in master planned community
developments and commercial office buildings. The Company's
portfolio totals roughly 200 million square feet of retail space
and includes more than 24,000 retail stores nationwide. General
Growth is a self-administered and self-managed real estate
investment trust.
General Growth Properties Inc. and its affiliates filed for
Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09-
11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P.
Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, have been tapped as bankruptcy counsel. Kirkland &
Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been
engaged as claims agent. The Company also hired AlixPartners LLP
as financial advisor and Miller Buckfire Co. LLC, as investment
bankers. The Debtors disclosed $29,557,330,000 in assets and
$27,293,734,000 in debts as of Dec. 31, 2008.
Bankruptcy Creditors' Service, Inc., publishes General Growth
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by General Growth Properties Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL GROWTH: U.S. Trustee Balks at Kirkland Engagement
---------------------------------------------------------
Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern
District of New York will convene a hearing on May 20, 2009, to
consider approval of General Growth Properties' bid to employ
Kirkland & Ellis as co-counsel.
Diana G. Adams, as the United States Trustee for Region 2, has
objected to the request. In the application, the Debtors seek to
employ Kirkland & Ellis to represent all but six of the Debtors.
The U.S. Trustee says this arrangement is generally disfavored in
the Southern District of New York.
The risk of excessive and duplicative services that necessarily
follow in the wake of a co-counsel retention exponentially
increases the costs of administering bankruptcy estates, Ms.
Adams asserts. While she does not doubt the good faith of both
counsel in allocating duties to minimize additional costs to the
estate, a complete division of duties is simply not practical,
Ms. Adams contends.
While the retention of co-counsel may be permissible under
Section 327(a) of the Bankruptcy Code, Ms. Adams points out that
the facts in the Debtors' bankruptcy cases do not appear to
warrant a dual retention.
To the extent that the Court finds that co-counsel may be
appropriate in this case, Ms. Adams asserts that K&E may not be
retained by the Debtors under Section 327(a), as it has two
disqualifying conflicts:
(1) K&E is currently representing the plaintiffs in an action
where Debtors Rouse LLC, The Rouse Company, L.P., General
Growth Properties LP, and General Growth Properties, Inc.,
are being sued; and
(2) an attorney who is of counsel to K&E represents an entity
involved in an appeal against two adversaries that include
Debtors Rouse Company Operating Partnership, LP and The
Rouse Company BT, LLC.
K&E, Ms. Adams asserts, holds an interest adverse to the Debtors
and is not disinterested, and, therefore, cannot be retained
under Section 327(a).
The U.S. Trustee further notes that the declaration filed by
James H.M. Sprayregen, Esq., a partner at K&E, does not disclose
that the firm Kirkland & Ellis will notify the Court, the U.S.
Trustee and the Official Committee of Unsecured Creditors any
change in hourly rates charged by Kirkland & Ellis for services
rendered.
The U.S. Trustee says it has asked supplemental information from
Kirkland & Ellis, to which the firm has provided. Among others,
Kirkland & Ellis stated that it (i) will not take positions
directly adverse to affiliates of Goldman Sachs Group, Inc.,
General Motors or General Motors Acceptance Corp. without first
securing a waiver; and (ii) would take reasonable steps to seek a
waiver.
Kirkland & Ellis was employed by the Debtors in late December
2008. Among others, Kirkland & Ellis has analyzed certain aspects
of more than 200 loan agreements arising from the Debtors'
mortgage level debt. The review encompassed the Debtors' various
loan agreements connected with their more than 100 commercial
mortgage-backed securities transactions and the various pooling
and servicing agreements associated with those loans. In
addition, the firm has also begun developing strategies with
respect to the long-term considerations for the Debtors' project
level assets and undertaken a comprehensive review of the
organizational documents relevant to each entity.
As bankruptcy co-counsel, Kirkland & Ellis will:
(a) advise the Debtors on obtaining "first day" relief from
the Court, including financing, cash collateral usage,
adequate protection issues and cash management;
(b) advise the Debtors on negotiating with holders of existing
corporate level debt and equity, including holders of the
Rouse Bonds, TRUPS, the GGP LP Notes, and the 2008
Facility;
(c) advise the Debtors on various project level restructuring
matters;
(d) advise the Debtors on their plan of reorganization,
including confirmation matters and related litigation
affecting all Debtors;
(e) 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;
(f) prepare pleadings, including motions, applications,
answers, orders, reports, and papers necessary or
otherwise beneficial to the administration of the Debtors'
estates; and
(g) appear before the Court and any appellate courts to
represent the interests of the Debtors' estates before
those courts.
The Debtors will pay Kirkland & Ellis according to the firm's
customary hourly rates:
Partners $550-$965
Of Counsel $390-$965
Associates $320-$660
Paraprofessionals $120-$280
The Debtors will also reimburse the firm for its necessary out-
of-pocket expenses.
The Debtors will provide to the firm a "classic retainer" of
$500,000. The classic retainer was subsequently increased by
$300,000 on March 12, 2009; by $800,000 on March 19; by $250,000
on March 31; by $250,000 on April 7; and $200,000 on April 15.
James H.M. Sprayregen, P.C., Esq., at Kirkland & Ellis, LLP,
assures the Court that his firm does not represent any interest
adverse to the Debtors, their estates, and their creditors, and
is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy.
General Growth Properties, Inc., and certain of its affiliates
are defendants in civil litigation pending before the Circuit
Court of Cook County, Illinois, captioned Center Partners, Ltd.,
et al., v. Urban Shopping Centers, L.P., et. al. Mr. Sprayregen
discloses that K&E represents the plaintiffs on behalf of their
beneficial owner, JMB Realty Corp.
A list of Kirkland & Ellis' clients that are parties-in-interest
in the Debtors' bankruptcy cases is available for free at:
http://bankrupt.com/misc/k&eclientlist.pdf
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner, having ownership interest in, or management
responsibility for, more than 200 regional shopping malls in 44
states, as well as ownership in master planned community
developments and commercial office buildings. The Company's
portfolio totals roughly 200 million square feet of retail space
and includes more than 24,000 retail stores nationwide. General
Growth is a self-administered and self-managed real estate
investment trust.
General Growth Properties Inc. and its affiliates filed for
Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09-
11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P.
Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, have been tapped as bankruptcy counsel. Kirkland &
Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been
engaged as claims agent. The Company also hired AlixPartners LLP
as financial advisor and Miller Buckfire Co. LLC, as investment
bankers. The Debtors disclosed $29,557,330,000 in assets and
$27,293,734,000 in debts as of Dec. 31, 2008.
Bankruptcy Creditors' Service, Inc., publishes General Growth
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by General Growth Properties Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL GROWTH: Wells Fargo Wants 2 Debtors' Cases Dismissed
------------------------------------------------------------
Wells Fargo Bank, N.A., as trustee for the holders of Banc of
America Commercial Mortgage, Inc., Commercial Mortgage Pass-
through certificates, and Wells Fargo Bank, N.A., and Credit
Suisse First Boston Mortgage Securities Corp., Commercial Mortgage
Pass-through Certificates, ask the U.S. Bankruptcy Court for the
Southern District of New York to dismiss the Chapter 11 cases of
Debtors Faneuil Hall Marketplace LLC and Saint Louis Galleria
L.L.C., affiliates of General Growth Properties, Inc.
Wells Fargo is special servicer for Helios AMC, lender of the
Debtors under these loans:
Loan Debtor Loan Amount Maturity
---- ------ ----------- --------
Faneuil Hall Faneuil Hall $94-Mil. 04/2013
St. Louis Galleria St. Louis Galleria $237-Mil. 07/2010
Wells Fargo, as trustee, is holder of a duly-perfected first
mortgage against leasehold interest of Faneuil Hall and St. Louis
Galleria.
Wells Fargo tells the Court that each Property has positive cash
flow, and the monthly cash flow exceeds the amounts required
under the applicable loan documents to pay debt service and cover
the Property's operating expenses. Wells Fargo discloses, that
according to the latest information available, the Net Operating
Income Debt Service Coverage Ratio with respect to the Faneuil
Hall Marketplace is 1.35x and 1.34x to the St. Louis Galleria.
Against this backdrop, Wells Fargo argues that there is no
imminent threat to the financial stability of the Faneuil Hall
and St. Louis Galleria and no legally cognizable reason for
Faneuil Hall and St. Louis Galleria to be debtors under the
Bankruptcy Code.
Accordingly, Wells Fargo adopts, by reference, the arguments set
forth in ING Capital Loan Services, LLC's Motion to Dismiss Nine
Debtors' Chapter 11 cases. Wells Fargo further reserves its
right to expand upon arguments and raise additional bases for
dismissal as and when facts supporting further arguments become
available to the Mall Lenders.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner, having ownership interest in, or management
responsibility for, more than 200 regional shopping malls in 44
states, as well as ownership in master planned community
developments and commercial office buildings. The Company's
portfolio totals roughly 200 million square feet of retail space
and includes more than 24,000 retail stores nationwide. General
Growth is a self-administered and self-managed real estate
investment trust.
General Growth Properties Inc. and its affiliates filed for
Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09-
11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P.
Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, have been tapped as bankruptcy counsel. Kirkland &
Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been
engaged as claims agent. The Company also hired AlixPartners LLP
as financial advisor and Miller Buckfire Co. LLC, as investment
bankers. The Debtors disclosed $29,557,330,000 in assets and
$27,293,734,000 in debts as of Dec. 31, 2008.
Bankruptcy Creditors' Service, Inc., publishes General Growth
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by General Growth Properties Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL GROWTH: D&Os Disclose Ownership of Common Stock
-------------------------------------------------------
In separate Form 4s filed with the Securities and Exchange
Commission, four directors and officers disclosed that on May 13,
2009, they acquired common stock shares of General Growth
Properties, Inc. at $0:
Shares Beneficially
Director/Officer Acquired Shares Owned Post-Transaction
---------------- --------------- ----------------------
Alan S. Cohen 10,000 21,442
John Riordan 10,000 21,569
Beth Stewart 10,000 15,845
Anthony Downs 10,000 46,400
Each Reporting Director received 10,000 shares of restricted
stock that vests one-third on the date of grant and one-third on
each of the first and second anniversaries of the date of grant.
Mr. Downs further discloses that he shares beneficial ownership
of 10,404 shares of General Growth common stock with a trust.
About General Growth
Based in Chicago, Illinois, General Growth Properties, Inc.
(NYSE:GGP) -- http://www.ggp.com/-- is the second-largest U.S.
mall owner, having ownership interest in, or management
responsibility for, more than 200 regional shopping malls in 44
states, as well as ownership in master planned community
developments and commercial office buildings. The Company's
portfolio totals roughly 200 million square feet of retail space
and includes more than 24,000 retail stores nationwide. General
Growth is a self-administered and self-managed real estate
investment trust.
General Growth Properties Inc. and its affiliates filed for
Chapter 11 on April 16, 2009 (Bankr. S.D. N.Y., Case No. 09-
11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P.
Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal &
Manges LLP, have been tapped as bankruptcy counsel. Kirkland &
Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been
engaged as claims agent. The Company also hired AlixPartners LLP
as financial advisor and Miller Buckfire Co. LLC, as investment
bankers. The Debtors disclosed $29,557,330,000 in assets and
$27,293,734,000 in debts as of Dec. 31, 2008.
Bankruptcy Creditors' Service, Inc., publishes General Growth
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by General Growth Properties Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
GENERAL MOTORS: Will Cut Dealer Network to 3,600 by End of 2010
---------------------------------------------------------------
General Motors said on May 15 that it would start reducing its
dealer network from 5,969 stores to approximately 3,600 by the end
of 2010.
GM has begun contacting dealers regarding its long term planning.
GM sales chief Mark LaNeve said, "We are not terminating any
dealerships today [May 15]. We will be talking to all of our
dealers over the next few weeks, letting them know now in the
spirit of open communication, so they are advised well in advance,
about our long-term plans and their role in them. Long term, GM
should have fewer, healthier dealers, maintaining GM's current
high customer satisfaction ratings, with more sales per outlet."
Approximately 1,100 underperforming and very small sales volume
U.S. dealers will be advised that GM does not see them as part of
its dealer network on a long-term basis. In most cases, existing
franchise agreements run through October of 2010.
Sharon Terlep at Dow Jones Newswires relates that GM said that it
will cut around 1,100 dealerships, which represent 18% of the
Company's network and produced 7% of its sales in 2008. Among
those to be cut include dealerships that sell Saturns, Saabs, and
Hummers, which the company plans to shut down or sell, Dow Jones
reports. GM will also be updating about 470 Saturn, Hummer, and
Saab dealers on the status of those brands and the Company will be
discussing how the remaining dealers will support its retail plans
going forward
Dow Jones states that GM told dealership chain AutoNation Inc.
that contracts for six of its 41 GM stores won't be renewed. The
six outposts weren't generating any operating profit, the report
says, citing AutoNation CEO Michael J. Jackson.
According to Dow Jones, Mr. LaNeve said that almost 500 of the
workers sell fewer than 35 new vehicles per year. The affected
dealerships employ about 63,000 salespeople, mechanics and other
personnel, Dow Jones says, citing The National Automobile Dealers
Association.
While additional cuts will be made, the Company believes that the
vast majority, over 90%, of the remaining dealers will be offered
a chance to remain with GM. However, specific dealer issues,
further attrition and additional possible dealer network actions
are expected to bring the number of future GM dealers to around
3,600 by the end of 2010, as described in the Plan. The actual
number could vary given levels of attrition, etc., outside of GM's
control.
"We have said from the beginning that our dealers are not a
problem but an asset for General Motors," said Mr. LaNeve.
"However it is imperative that a healthy, viable GM have a
healthy, viable dealer body that can not only survive but prosper
during cyclical downturns. It is obvious that almost all parts of
GM, including the dealer body, must get smaller and more
efficient. In response, we are letting them know about our long
term plans. GM's viability plan calls for fewer, stronger brands
as well as fewer, stronger dealers. We have taken a very
difficult step by identifying those dealerships we'd like to keep
in the GM dealer network and those with whom we will have to wind
down our business relationships."
As independently owned businesses, dealer owners will make their
own decisions if and when they want to make this information
public. GM is not releasing the names of any dealers.
Mr. LaNeve, according to Dow Jones, said that dealers whose brands
are being eliminated in many cases will have a chance to sell GM
lines that survive. Dow Jones notes that overall, the GM stores
to be closed have a combined inventory of 65,000 cars and trucks.
According to Dow Jones, GM will repurchase some of the dealers'
remaining inventory, parts, and equipment.
"NADA fully expects GM to honor all its obligations to the
affected dealers, whether or not they decide to wind down their
operations," Dow Jones quoted NADA as saying.
Dow Jones relates that GM expects additional dealership reductions
will come as dealers, struggling with the worst sales environment
in decades, go out of business on their own.
Mr. LaNeve, says Dow Jones, acknowledged that carrying out the
plan would be difficult outside of bankruptcy-court protection, as
state franchise laws make it burdensome and expensive for
manufacturers to force dealers out of business. Franchise
contracts, according to Dow Jones, can be nullified in bankruptcy
court. Dow Jones states that the letters that went to the 1,100
GM dealerships don't mention the possibility of a bankruptcy
filing.
Deal With Union
Citing people familiar with the matter, John D. Stoll at The Wall
Street Journal reports that GM is almost reaching a deal with the
United Auto Workers. GM and the union, says WSJ, could finalize
terms as early as next week.
WSJ states that GM is seeking to cut its hourly labor costs by
more than $1 billion per year and reduce its $20 billion pledge to
the union to cover health-care obligations. GM would halve its
remaining cash outlays for retiree health costs to $10 billion,
and supplement that contribution with a 39% equity stake in the
reorganized GM, WSJ relates, citing people familiar with the
matter.
German Gov't Eyeing Orderly Insolvency for Opel
Andrea Thomas and Christoph Rauwald at WSJ states that the German
government said that an orderly insolvency would be an option for
GM's Adam Opel AG, stepping up pressure in its efforts to help
rescue the unit. The German government, states the report, said
that it won't be taking a stake in Opel.
The alternative of a trusteeship depends on how substantial the
expected bids for Opel turn out to be, WSJ says, citing German
Economics Minister Karl-Theodor zu Guttenberg. The minister said
in a statement, "The trusteeship model with a guarantee... will
only materialize if the yet to be submitted concepts by the
bidders are solid. Should the later not be the case or should the
trusteeship model not be accepted by the participants, then an
orderly insolvency could be a starting point for a successful new
beginning of the company and its employees."
According to WSJ, the German government disclosed on Thursday that
should GM enter bankruptcy-court protection in the U.S. before the
unit can be sold, Opel could be placed into a state-supported
trusteeship to keep it operating. The report states that the
trusteeship step for Opel includes bridge financing for the
business during the coming months. The trusteeship, says the
report, will be considered if at least one of two known bidders
for Opel -- Fiat SpA and a consortium including Canadian auto
parts maker Magna International Inc. -- present feasible proposals
by May 20. The proposals have to include plans for the German
production sites and jobs, according to the report.
WSJ relates that the U.S. Treasury and GM would have to support
the trusteeship, which would give time for talks with an investor
in GM's European operations.
The German government, according to WSJ, would have a direct say
in the search for an investor. WSJ notes that GM could maintain
its influence in its European operations, instead of losing it to
the insolvency procedure.
WSJ relates that Opel dealer association Euroda said on Friday
that it wants to take a stake of around 15% in the company if a
spinoff happens.
According to WSJ, Opel might get a credit line provided by
Kreditanstalt fuer Wiederaufbau -- a state-owned bank for
infrastructure financing -- and state-owned banks in states that
have Opel plants. Opel would need more than EUR1 billion in
Credit, WSJ reports, citing GM's European operations chief Carl-
Peter Forster.
Fiat to Meet With Gov't & Unions
Stacy Meichtry at the WSJ reports that Fiat CEO Sergio Marchionne
has agreed to hold negotiations with Italian government officials
and unions to try to avert labor opposition that could derail his
plans. According to WSJ, Mr. Marchionne sent a letter to Italian
Industry Minister Claudio Scajola on Friday, pledging to meet with
the government and unions as soon as it knows the result of its
proposed merger with Opel. Fiat has already signed a deal to buy
20% of Chrysler LLC, WSJ relates.
WSJ says that Mr. Marchionne has confirmed his plan to submit an
offer for Opel by the German government's May 20 deadline.
Mr. Marchionne, according to WSJ, is under pressure from the
Italian and German governments over potential plant closures and
job losses his plans for Opel and Chrysler could bring. German
union leaders who sit on Opel's board are against the deal, saying
that the merger could lay off about 18,000 workers across Europe,
WSJ states.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in Miramar,
Florida.
As reported 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: Sec. 363(b) Sale "Most Likely" If It Files Ch. 11
-----------------------------------------------------------------
General Motors Corp. on May 14 posted a supplement to the
prospectus relating to its public exchange offers for $27 billion
of its unsecured public notes. GM has previously said that the
exchange offers, which were launched April 27 are, are a vital
component of GM's overall restructuring plan to achieve and
sustain long-term viability and the successful consummation of the
exchange offers will allow GM to restructure out of bankruptcy
court.
In the prospectus supplement, GM provided details about
alternatives it is considering under the Bankruptcy Code. "In the
event that we do not receive prior to June 1, 2009 enough tenders
of old notes, including the old Series D notes, to consummate the
exchange offers, we currently expect to seek relief under the U.S.
Bankruptcy Code," GM reiterated. According to GM, this relief may
include
(i) seeking bankruptcy court approval for the sale of most or
substantially all of its assets pursuant to Section 363(b)
of the U.S. Bankruptcy Code to a new operating company,
and a subsequent liquidation of the remaining assets in
the bankruptcy case;
(ii) pursuing a plan of reorganization (where votes for the
plan are solicited from certain classes of creditors prior
to a bankruptcy filing) that it would seek to confirm (or
"cram down") despite the deemed rejection of the plan by
the class of holders of old notes; or
(iii) seeking another form of bankruptcy relief, all of which
involve uncertainties, potential delays and litigation
risks.
"We are considering these alternatives in consultation with the
U.S. Department of the Treasury, our largest lender. We currently
believe that if we pursue one of these alternatives, a 363(b) Sale
would be the most likely, although we could pursue any of these
alternatives," GM added.
GM also noted that if its seeks bankruptcy relief, holders of old
notes may receive consideration that is less than what is being
offered in the exchange offers, and it is possible that the
holders may receive no consideration at all for their old notes.
A copy of the prospectus supplement is available for free at:
http://researcharchives.com/t/s?3cfb
Chrysler's Bankruptcy
GM's "Section 363(b) sale" alternative is the path being followed
by co-Michigan automaker Chrysler LLC, which filed for Chapter 11
on April 30, 2009.
Chrysler has filed a motion before the U.S. Bankruptcy Court for
the Southern District of New York to sell its primary operating
assets to a new company that will be partly owned by Fiat S.p.A.
Terms under the Fiat Deal include:
* New CarCo will issue (i) a note for $4.571 billion and
55% of its total Membership Interests on a diluted basis to
a new Voluntary Employee Beneficiary Association, (ii) 8% of
its total Membership Interests on a diluted basis to the U.S.
Treasury, and (iii) 2% of the total Membership Interests on a
diluted basis to the Canadian government.
* Fiat will hold 20% of the Membership Interests in New CarCo,
which will automatically increase to 35% upon its
achievement of certain milestones that are specified in the
Purchaser Amended and Restated Limited Liability Company
Agreement.
* Fiat will have the right to acquire an additional 16% of New
CarCo's total Membership Interests, and pursuant to a
separate call option agreement, an option to buy 40% of New
CarCo's Membership Interests held by the VEBA.
* The U.S. Treasury and the Canadian government will provide
debt financing to New CarCo.
The Court has approved a sale process, under which Chrysler would
transfer its assets to the Fiat-owned company, absent higher and
better bids at an auction on May 27. Bids will be due May 20.
Chrysler will return to the Court to seek approval of the results
of the auction at a hearing also on May 27. Fiat will receive a
$35 million breakup fee in case it is outbid at the auction.
A full-text copy of the Bidding Procedures is available for free
at http://bankrupt.com/misc/ChryslerBiddingProcedures.pdf
A full-text copy of the Purchase Agreement with Fiat is available
for free at http://bankrupt.com/misc/ChryslerPurchaseAgreement.pdf
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.
After the transaction with Fiat, Chrysler would be provided $200
million through the U.S. Treasury DIP loan to run a safe, prudent
and orderly wind down and sale of the estate for the benefit of
Chrysler's creditors. The major assets remaining would include
eight manufacturing facilities, and related machinery and
equipment, with a book value of $2.3 billion.
The Exchange Offer
____________________________
GM is offering to exchange 225 |
shares of GM common stock for |EXCHANGE OFFER
each 1,000 US dollar equivalent |IN A NUTSHELL:
of principal amount -- or |
accreted value as of the |* Common stock plus accrued
settlement date, if applicable | interest in cash offered
-- of outstanding notes of each | for $27 billion of
series and is offering to pay, | outstanding public debt
in cash, accrued interest on |
the GM notes from the most |* Successful exchange to
recent interest payment date to | Result in at least
the settlement date. In respect | $44 billion reduction in
of the exchange offers for the | total liabilities from
GM Nova Scotia notes, General | bondholders, Treasury
Motors Nova Scotia Finance | and VEBA
Company is jointly making the |
exchange offers with GM. |* Bondholders to own 10%
| of GM after successful
GM believes its restructuring | exchange offer
plan and the successful |
consummation of the exchange |* Exchange contingent on
offers will provide the best | VEBA modifications and
path for the future success of | Treasury debt conversion
the company while enabling it to | conditions resulting in
continue operating its business | at least $20 billion
without the negative impacts of | reduction in liabilities
a bankruptcy and reducing the |
risk of a potentially |* To seek bankruptcy relief
precipitous decline in revenues | if the exchange offers
in a bankruptcy. | are not consummated
|____________________________
In the event GM does not receive prior to June 1, 2009 enough
tenders of notes to consummate the exchange offers, GM currently
expects to seek relief under the U.S. Bankruptcy Code. GM is
considering its alternatives in seeking bankruptcy relief.
Concurrently with the exchange offers, GM is soliciting consents
from noteholders to amend the terms of the debt instruments that
govern each series of notes and insert a call option to redeem the
non-USD notes.
Each of the exchange offers and consent solicitations will expire
at 11:59 p.m. New York City time on Tuesday, May 26, 2009, unless
extended. Tendered notes may be validly withdrawn at any time
prior to 11:59 p.m. New York City time on Tuesday, May 26, 2009,
subject to certain circumstances where we may extend or reinstate
withdrawal rights.
A full-text copy of GM's Registration Statement on Form S-4,
including its revised Viability Plan, filed with the Securities
and Exchange Commission is available at no charge at
http://ResearchArchives.com/t/s?3c09
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.
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)
GENERAL MOTORS: Dealer Cuts Part of Viability Plan
--------------------------------------------------
General Motors corp.'s May 15 announcement to reduce its network
of dealers is part of its interim plan submitted on April 27,
2009, the U.S. Treasury said.
According to the Treasury, GM's announcement is part of the
company's larger effort to restructure to achieve financial
viability. "The Task Force is continuing to work with GM and all
its stakeholders and will stand behind GM during this process to
ensure that it emerges as a more competitive, viable business in
the long-term. As was the case with Chrysler's dealer
consolidation plan, the Task Force was not involved in deciding
which dealers, or how many dealers, were part of GM's announcement
[May 15]."
As difficult as these announcements are for the dealers that will
no longer be selling GM and Chrysler cars and the communities in
which they operate, without the President's intervention, the
entire GM and Chrysler dealer networks could have been lost. The
Administration's commitment to this industry has given both
companies a new lease on life. By supporting a restructuring that
results in stronger car companies -- supported by efficient and
effective dealer networks -- this process will not only provide
more stability and certainty for current employees but the
prospect for future employment growth.
In addition, the Administration is committed to continuing its
significant efforts to help ensure that financing is available to
creditworthy dealers and to pursuing efforts to help boost
domestic demand for cars. These steps will help auto dealers, the
auto industry, and the American economy, the Treasury said.
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.
GENERAL MOTORS: Willing to Cut U.S. Imports From Other Countries
-----------------------------------------------------------------
Jeff Green and Greg Miles at Bloomberg News report that General
Motors Corp. is willing to cut planned U.S. imports from China and
other countries to reach an agreement with the United Auto
Workers.
UAW Vice President Cal Rapson said that GM has renewed talks with
the union and is proposing a labor-saving agreement similar to
that approved earlier by Chrysler LLC workers, Bloomberg, states,
citing people familiar with the matter. Bloomberg says that GM
proposed that the UAW swap $20 billion in the Company's
obligations to a union health-care fund for $10 billion in cash
paid out over an unspecified period, as well as equity equal to
39% of a restructured company.
Citing GM CEO Fritz Henderson, Bloomberg states that using U.S.
production instead of imports would pivot on whether the UAW can
build the vehicles at a cost GM can afford. According to the
report, Mr. Henderson said that GM expected a 12-fold increase in
imports to 235,000 by 2014.
Bloomberg, citing UAW Vice President Bob King, relates that UAW
President Ron Gettelfinger and Mr. Rapson met with the auto task
force on May 5 in Michigan to protest the import plans. The
report states that UAW also wrote to senators urging them to prod
GM to lessen U.S. plant closings. U.S. Senator Sherrod Brown,
says the report, urged GM to cancel plans to import cars from
China. Sen. Brown said in a statement, "If officials at General
Motors think that U.S. taxpayers will finance cars made in China
while American plants are closing, they're either tone- deaf or
shortsighted."
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.
GLOBAL GROUP: U.S. Trustee Sets Meeting of Creditors for June 6
---------------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of creditors
in Global Group, Inc.'s Chapter 11 case on June 3, 2009, at 11:00
a.m. The meeting will be held at Fritz G. Lanham Federal
Building, 819 Taylor Street, Room 7A24, Ft. Worth, Texas.
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.
Fort Worth, Texas-based Global Group, Inc., filed for Chapter 11
protection on May 4, 2009 (Bankr. N. D. Tex. Case No. 09-42719).
Jeff P. Prostok, Esq., at Forshey & Prostok, LLP represents the
Debtor in its restructuring efforts. The Debtor's assets and
debts both range from $10 million to $50 million.
GMAC LLC: Will Rename GMAC Bank to Ally Bank
--------------------------------------------
Aparajita Saha-Bubna at The Wall Street Journal reports that GMAC
LLC will rename GMAC Bank to Ally Bank.
According to WSJ, GMAC's executives hope that the rebranding of
GMAC Bank will spur retail deposit growth, a key funding source
for the Company amid the credit squeeze. WSJ notes that the name
change marks a shift away from the GMAC brand that underscored the
lender's association with the GM. WSJ quoted Sanjay Gupta, GMAC's
chief marketing officer, as saying, "We certainly value our
relationship with GM and GM continues to be an important customer.
In addition to that, GMAC wants to grow as a bank holding company.
The launch of Ally Bank provides a new platform to increase
deposits."
WSJ relates that owners GM and Cerberus Capital Management LP will
significantly scale back their ownership in GMAC by the end of May
as a condition of the lender becoming a bank holding company.
GMAC, says WSJ, is awaiting federal funds, which might be granted
as early as Saturday, after the Company assumed the mantle of
lender for Chrysler LLC vehicles. According to the report, the
financial support GMAC gets from the government would boost its
capital position. GMAC, states the report, has an $11.5 billion
capital hole to fill under the stress-test results.
GMAC Financial Services -- http://www.gmacfs.com/-- formerly
General Motors Acceptance Corporation, is a bank holding company
with operations in North America, South America, Europe and Asia-
Pacific. GMAC specializes in automotive finance, real estate
finance, insurance, commercial finance and online banking. As of
Dec. 31, 2008, the company had $189 billion in assets and serviced
15 million customers around the world.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is wholly owned by GMAC LLC. Cerberus
Capital Management LP led a group of investors that bought a 51%
stake in GMAC LLC from General Motors Corp. in December 2006 for
$14 billion.
On December 24, 2008, GMAC Financial Services' application to
become a bank holding company under the Bank Holding Company Act
of 1956, as amended, was approved by the Board of Governors of the
Federal Reserve System. In addition, GMAC Bank received approval
from the Utah Department of Financial Institutions to convert to a
state bank.
* * *
As reported in the Troubled Company Reporter on May 5, 2009,
Standard & Poor's Ratings Services maintains its CCC/Negative/C
rating on GMAC LLC despite the Company's announcement that it
entered into an agreement with Chrysler Financial Services
Americas LLC to provide future automotive financing products and
services to Chrysler dealers and customers.
GREENVILLE CASUALTY: A.M. Best Upgrades FSR to 'B+' Froom 'B'
-------------------------------------------------------------
A.M. Best Co. has upgraded the financial strength rating to B+
(Good) from B (Fair) and issuer credit rating to "bbb-" from "bb+"
of Greenville Casualty Insurance Company (Greenville) (Greer, SC).
The outlook for both ratings is being revised to stable from
positive.
The rating actions reflect Greenville's favorable risk-adjusted
capitalization stemming from its low underwriting leverage and
strong liquidity position, which is attributable to its
conservative investment portfolio. The ratings also recognize the
corrective actions management has taken to boost overall
profitability, including new product offerings, the termination of
unprofitable agents and gradual geographic expansion. As a
result, Greenville's loss experience continued to trend favorably,
and overall operating performance significantly improved.
Partially offsetting these positive rating factors are
Greenville's premium volatility and historically elevated expense
structure related to start-up and business development costs. In
addition, Greenville historically maintained a limited business
profile with product and geographic concentrations as a
nonstandard auto writer in South Carolina. However, Greenville
recently entered the standard and preferred auto market, while
gradually expanding into North Carolina. This expansion brings
with it some risks, as the diversification, coupled with an
unseasoned book of business, will continue to be a factor in
Greenville's risk profile.
GULF COAST OIL: Court Rejects Asset Sale Outside of a Ch 11 Plan
----------------------------------------------------------------
WestLaw reports that a bankruptcy court would not approve a
proposed sale of substantially all of a Chapter 11 debtors' assets
outside the ordinary course of its business, and outside the
protections provided by the plan confirmation process. There was
no evidence that the assets were perishable or that any value
would be lost through delay to permit plan confirmation.
Moreover, the likely purchaser, a substantially undersecured
creditor that had been authorized to credit bid the amount of its
claim, sought benefits, through assignment of the debtors'
executory contracts and entry of an order eliminating any
successor liability, of a kind generally obtained only through
bargaining on a plan and a determination that plan confirmation
requirements were met. In re Gulf Coast Oil Corp., --- B.R. ----,
2009 WL 361741 (Bankr. S.D. Tex.).
HANLON DEVELOPMENT: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: Hanlon Development LLC
6789 Knollwood Drive
Fairview, PA 16415
Bankruptcy Case No.: 09-10917
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Western District of Pennsylvania (Erie)
Debtor's Counsel: Ronald T. Conway, Esq.
Conway Hoffman & Associates
1040 5th Avenue
Suite 200
Pittsburgh, PA 15219
Tel: (412) 281-6911
Fax: (412) 281-6925
Email: RTC@Conwaylawoffices.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $500,001 to $1,000,000
The Company says it does not have unsecured creditors who are non
insiders when they filed their petition.
The petition was signed by Eve Hanlon.
HAYES LEMMERZ: Receives Delisting Notice from NASDAQ
----------------------------------------------------
Hayes Lemmerz International, Inc. said that on May 12, 2009, the
NASDAQ Stock Market notified the Company that, in accordance with
Listing Rules 5100 and 5110(b), as a result of the Company's
filing of petitions under Chapter 11 of the United States
Bankruptcy Code, the Company's common stock will be delisted by
NASDAQ and trading will be suspended at the opening of business on
May 21, 2009. As required by NASDAQ Listing Rule 5250(b)(2) and
as previously disclosed, the Company also said that its audited
financial statements included in its Annual Report on Form 10-K
for the fiscal year ended January 31, 2009, contained a going
concern qualification from the Company's independent registered
public accounting firm.
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.
HILL COUNTRY: US Trustee Sets Section 341(a) Meeting for June 10
----------------------------------------------------------------
The U.S. Trustee for Region 7 will convene a meeting of creditors
in Hill Country Galleria, L.P.'s Chapter 11 case on June 10, 2009,
at 2:00 p.m. The meeting will be held at Austin Room 118, Homer
Thornberry Bldg., 903 San Jacinto, Austin, Texas.
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.
Bee Cave, Texas-based Hill Country Galleria, L.P., is a single
asset real estate company.
The Company filed for Chapter 11 on May 4, 2009 (Bankr. W. D. Tex.
Case No. 09-11175). Bryan L. Elwood, Esq., at Greenberg Traurig,
LLP, represents the Debtor in its restructuring efforts. The
Debtor's assets and debts both range from $100 million to
$500 million.
HLA INC: Case Summary & 20 Largest Unsecured Creditors
------------------------------------------------------
Debtor: HLA, Inc.
1950 North Park Place
Suite 400
Atlanta, GA 30339
Bankruptcy Case No.: 09-22026
Debtor-affiliates filing separate Chapter 11 petition:
Entity Case No.
------ --------
Hidden Lake Academy, Inc. 09-22028
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Northern District of Georgia (Gainesville)
Judge: Robert Brizendine
Debtor's Counsel: M. Denise Dotson, LLC, Esq.
170 Mitchell St.
Atlanta, GA 30303
Tel: (404) 526-8869
Fax: (404) 526-8855
Email: ddotsonlaw@me.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $10,000,001 to $50,000,000
A full-text copy of the Debtors' petition, including their list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/ganb09-22026.pdf
The petition was signed by Kenneth Spooner, chief executive
officer of the Company.
INTERMET CORP: Court Approves June 22 Auction for All Assets
------------------------------------------------------------
Bloomberg's Bill Rochelle reports that the U.S. Bankruptcy Court
for the District of Delaware (Wilmington) has authorized Intermet
Corp. to hold an auction for its assets on June 22. The schedule
is about two weeks slower than Intermet had proposed. Intermet
has signed a contract to sell its assets to first lien lenders,
absent higher and better bids for its assets. A party who intends
to submit a rival offer to the first lien lenders' credit must
submit an offer of at least $23 million cash by June 19. to
qualify. The sale hearing is on July 14.
Intermet originally proposed other bids by June 1 and a June
8 auction.
According to Bloomberg, the Company already has agreements with
its labor unions on modifications to the existing collective-
bargaining agreements. The Company said it is on the cusp of
filing a Chapter 11 plan to carry out the sale.
Based in Fort Worth, Texas, Intermet Corp. designs and
manufactures machine precision iron and aluminum castings for the
automotive and industrial markets. The Company and its debtor-
affiliates filed for Chapter 11 protection on August 12, 2008
(D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878).
Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E.
Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New
York, serve as the Debtors' counsel. James E. O'Neill, Esq.,
Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the
Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as
the Debtors' claims, notice and balloting agent. An Official
Committee of Unsecured Creditors has been formed in this case.
When the Debtors filed for protection from their creditors, they
listed assets of between $50 million and $100 million and debts of
between $100 million and $500 million.
This is the Debtors' second bankruptcy filing. Intermet Corp.,
along with its debtor-affiliates, filed for Chapter 11 protection
on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597
through 04-67614). Salvatore A. Barbatano, Esq., at Foley &
Lardner LLP, represents the Debtors. In their previous bankruptcy
filing, they listed $735,821,000 in total assets and $592,816,000
in total debts. Intermet Corporation emerged from this first
bankruptcy filing in November 2005.
JEFFERY L BENFIELD: Section 341(a) Meeting Scheduled for June 10
----------------------------------------------------------------
The U.S. Bankruptcy Administrator for the Western District of
North Carolina will convene a meeting of creditors in Jeffery L.
Benfield and April E. Benfield's Chapter 11 case on June 10, 2009,
at 1:00 p.m. The meeting will be held at the Bankruptcy
Courtroom, First Floor, 100 Otis Street, Asheville, North
Carolina.
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.
Newland, North Carolina-based Jeffery L. Benfield and April E.
Benfield aka Blue Ridge Wood Products, Inc., Woodlawn
Transportation Jeff Benfield Nursery, Inc. and Benfield Land and
Timber filed for Chapter 11 on May 7, 2009, (Bankr. W. D. N.C.
Case No. 09-10539). David G. Gray, Esq., represents the Debtors
in their restructuring efforts. The Debtors' assets and debts
both range from $10 million to $50 million.
JEFFERSON NATIONAL: A.M. Best Cuts Fin'l Strength Ratings to 'B-'
-----------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to B-
(Fair) from B (Fair) and issuer credit rating to "bb-" from "bb"
of Jefferson National Life Insurance Company (Dallas, TX). The
outlook has been revised to negative from stable.
These rating actions reflect JNL's significant decrease in its
statutory capital and surplus funds due to realized investment
losses, net operating losses and a dividend to its parent company.
As a result, JNL's risk-adjusted capitalization has weakened as
far as supporting its insurance and investment risks.
In 2008, JNL sustained large net operating losses, largely due to
Guaranteed Minimum Death Benefit reserves that support its legacy
in-force variable annuity business. While these GMDB's are 100%
reinsured by JNL, the company must increase reserves based on the
resultant increase in reinsurance premiums. In addition, its
operating performance was impacted by lower fee income from assets
under management. JNL also incurred realized capital losses
through impairments in several of its bond holdings, which led to
a large net loss in 2008, further eroding its statutory capital
and surplus funds.
The negative outlook reflects A.M. Best's view that JNL's balance
sheet and operating performance will continue to be pressured by
volatility in the U.S. equity markets, which in turn, may impact
its variable annuity business and the company's underlying
profitability.
Partially offsetting these rating factors are JNL's strong
technology platform, flat fee-based variable annuity product and
management's initiatives to reduce expenses and raise new capital
to shore up its balance sheet position.
JO-ANN STORES: S&P Raises Corporate Credit Rating to 'B+'
---------------------------------------------------------
Standard & Poor's Ratings Services said it raised its corporate
credit rating on Jo-Ann Stores Inc. to 'B+' from 'B'. The outlook
is stable.
S&P also raised the rating on the company's subordinated notes
one-notch to 'B-' from 'CCC+'. The recovery rating on those notes
remains at '6', indicating S&P's expectation for negligible (0%-
10%) recovery in the event of default.
"The upgrade is a result of the company's annualized profitability
improvement and debt reduction through open market repurchases of
its senior subordinated notes," said Standard & Poor's credit
analyst Charles Pinson-Rose, who added, "We are also confident
that the company can maintain credit metrics at current levels."
KEY CORP: Moody's Reviews Baa3 Preferred Stock
----------------------------------------------
Moody's Investors Service placed on review for possible downgrade
the ratings on hybrid securities of four U.S. bank holding
companies. The issuers and their affected securities are:
* Citigroup's trust preferred securities rated Baa3 and Eggs Upper
Tier II notes rated Ba1
* Fifth Third Bancorp's preferred stock rated Baa3 and its trust
preferred securities rated Baa2
* KeyCorp's preferred stock rated Baa3 and its trust preferred
securities rated Baa2
* SunTrust Banks, Inc's preferred stock rated Ba2, trust preferred
securities rated Baa2, and SunTrust Real Estate Investment
Corporation's Baa3 REIT preferred stock.
Moody's added that its ratings on Regions Financial Corporation
are currently on review for possible downgrade and the Baa1 rating
on Region's trust preferred securities will be reviewed in
conjunction with the four other issuers' hybrid securities.
Moody's said the reviews reflect its opinion that the probability
of a missed dividend or interest payment on these securities has
increased because these companies must raise capital in response
to the outcome of the U.S. government's stress test.
These firms must submit plans to build their capital "buffer"
within the next month, and complete the execution of the plan
within the next six months. In deciding which securities ratings
to put on review for possible downgrade, Moody's analyzed each of
the banks' capital raising needs and considered the potential
methods to achieve this requirement. That is, Moody's considered
each of the bank's capital structures and how far up the capital
structure the bank may need to offer an exchange in order to raise
the amount of capital required by the U.S. government.
In coming to a conclusion about the rating outcome for these
securities, Moody's reviews will focus on these:
A) the likelihood that these five companies (including Regions
Financial) can successfully raise capital from their own
resources -- including through common equity issuance, asset
sales, and internal capital generation.
B) the likelihood of each company needing to suspend payments on
its preferred or hybrid securities in order to increase the
success of any exchange offers.
C) the likelihood that any of these companies will require
additional capital from the U.S. government, including the
conversion of any existing TARP preferred or the need to take
additional U.S. government capital. This is noteworthy because
Moody's believes that a conversion of government-held TARP
preferred shares, or a further government capital infusion
would result in significant pressure on a bank to eliminate the
payment on its preferred or hybrid securities.
D) The expected loss on each security if the company were to
eliminate payments on the security.
Moody's expects that it will conclude these reviews in the next
few weeks.
Previous Rating Action And Principal Methodologies
Moody's last rating action for Citigroup was on March 4th, 2009
when it lowered the senior debt ratings of Citigroup Inc. to A3
from A2, the senior subordinated debt to Baa1 from A3, the junior
subordinated debt to Baa3 from A3 with a negative outlook (issued
by various Citigroup Capital Trust vehicles), and the preferred
debt ratings to Ca from Baa3. The short-term rating at Citigroup
Inc. was confirmed at Prime-1. Citibank N.A.'s rating for
deposits was lowered to A1 from Aa3, and its Prime-1 short-term
rating was affirmed. The Citibank's bank financial strength
rating was confirmed at C- with a negative outlook, while its
baseline credit assessment was lowered to Baa2 from Baa1. All
ratings were assigned a stable outlook except for Citibank's bank
financial strength rating and Citigroup's junior subordinated debt
rating. These actions concluded a review that commenced on
December 18th, 2008.
Moody's last rating action for Fifth Third Bancorp was on April
14th, 2009 when it downgraded the ratings of Fifth Third Bancorp
and the bank financial strength rating of its operating banks by
two notches (senior debt at the holding company to Baa1 from A2;
BFSR to C from B-). Fifth Third Bancorp's short-term rating was
also downgraded, to Prime-2 from Prime-1. The long-term debt and
deposit ratings of Fifth Third Bank, Ohio and Fifth Third Bank,
Michigan, were lowered by one notch (long-term deposits to A2 from
A1). The Prime-1 short-term ratings of both bank subsidiaries
were affirmed. Following these rating actions, the outlook on
Fifth Third and its subsidiaries is negative.
Moody's last rating action for Keycorp was on April 30th, 2009
when it downgraded the senior debt rating of KeyCorp to Baa1 from
A2, the subordinated debt rating to Baa2 from A3, and the
preferred stock rating to Baa3 from Baa1. The holding company's
short-term rating was downgraded to Prime-2 from Prime-1. The
long-term ratings of KeyBank National Association, the lead bank
subsidiary, were also downgraded. KeyBank's financial strength
rating was lowered to C from B-, its long-term deposits and senior
debt were lowered to A2 from A1, and its subordinated debt rating
was lowered to A3 from A2. The bank's Prime-1 short-term rating
was affirmed. Following these rating actions, the outlook on Key
and its subsidiaries is negative.
Moody's last rating action for SunTrust Banks, Inc. was on April
23rd, 2009 when it downgraded the senior debt rating of SunTrust
Banks, Inc. to Baa1 from A1, the subordinated debt rating to Baa2
from A2, and the preferred stock rating to Ba2 from A3. The
holding company's short-term rating was downgraded to Prime-2 from
Prime-1. The long-term ratings of SunTrust Bank, the lead bank
subsidiary, were also downgraded. SunTrust Bank's financial
strength rating was lowered to C- from B, its long-term deposits
and senior debt were lowered to A2 from Aa3, and its subordinated
debt rating was lowered to A3 from A1. However, the bank's Prime-
1 short-term rating was affirmed. Following these rating actions,
the outlook on SunTrust and its subsidiaries was negative.
KIRK CORP: Gets Court OK to Access to $600,000 in Sales Proceeds
----------------------------------------------------------------
Francine Knowles at Chicago Sun-Times reports that Kirk Corp. CEO
John Carroll said that the U.S. Bankruptcy Court for the Northern
District of Illinois has granted the Company access to roughly
$600,000 in sales proceeds to help it continue operations.
Chicago Sun-Times relates that Kirk has homes under construction
in Bolingbrook, Hoffman Estates, Lakemoor, and Woodstock.
According to Chicago Sun-Times, Kirk said that it will complete
homes under construction, start new construction on recently sold
homes, and continue sales and marketing. Kirk, the report states,
said that construction would begin on any sold homes that haven't
already begun work within the next 60 days.
According to Chicago Sun-Times, Kirk said that it will continue to
provide warranty services.
Chicago Sun-Times quoted Mr. Carroll as saying, "We had been
negotiating with our lenders for a long period of time. We had
been optimistic we could reach agreement on a workout plan, but it
became apparent we weren't going to be able to be successful in
that regard," and that prompted the Company to file for
bankruptcy.
Mr. Carroll, according to Chicago Sun-Times, said, "We are
confident that the reorganization process gives us more
opportunity to work with our lenders . . . and to secure
additional financing which will allow us to continue building
high-quality homes for Chicago area homeowners for many years to
come."
Kirk Homes, an industry leader in sustainable development
initiatives and preservation of open space, is currently building
communities in Bolingbrook, Hoffman Estates, Lakemoor and
Woodstock. Kirk Corporation is based in Streamwood, Illinois.
Kirk voluntarily filed for reorganization under Chapter 11 of the
U.S. Bankruptcy Code in the Northern District of Illinois.
LANDMARK FENCE: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Landmark Fence Co., Inc.
3964 Mission Blvd.
Montclair, CA 91763
Bankruptcy Case No.: 09-20206
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Central District of California (Riverside)
Judge: Meredith A. Jury
Debtor's Counsel: Charles Liu, Esq.
Winthrop Couchot
660 Newport Center Dr, 4th Flr
Newport Beach, CA 92660
Tel: (949) 720-4175
Fax: (949) 720-4111
Email: cliu@winthropcouchot.com
Marc J. Winthrop, Esq.
660 Newport Center Dr
Ste 400
Newport Beach, CA 92660
Tel: (949) 720-4100
Email: pj@winthropcouchot.com
Estimated Assets: $50,001 to $100,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-20206.pdf
The petition was signed by Robert Yanik, president of the Company.
LANDO LANE ELLIS: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Lando Lane Ellis
dba Lando Ellis Logging
1702 Brentwood Drive
Lufkin, TX 75901
Bankruptcy Case No.: 09-90160
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Eastern District of Texas (Lufkin)
Debtor's Counsel: Larry G. Byrd, Esq.
Williams and Byrd
103 East Lufkin Avenue
Lufkin, TX 75901-3098
Tel: (936) 639-3191
Fax: (936) 634-8200
Email: tssandlin@consolidated.net
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 Mr. Ellis.
LAS VEGAS CASINO: Larry Mullin Returns to President, CEO Post
-------------------------------------------------------------
Wayne T. Price at Florida Today reports that Larry Mullin, Las
Vegas Casino Lines LLC's former president and chief executive
officer, has returned to his post in the Company.
According to Florida Today, Mr. Mullin resigned from Las Vegas
Casino in 2008. Florida Today relates that Mr. Mullin announced
his return on Tuesday, saying that he would remedy any back pay
owed to about 200 workers. Mr. Mullin, states the report, said
that he planned to continue daily gambling excursions.
Mr. Mullin, according to the report, said on Tuesday that he would
return to his earlier strategy of marketing the gambling operation
to area convention attendees as one way to make the operation
successful. The report says that Mr. Mullin will also beef up
food and entertainment on the cruise.
Cape Canaveral, Florida-based Las Vegas Casino Lines LLC --
http://new.lasvegascasinolines.com/-- is a casino ship sailing
out of Port Canaveral. The Company filed for Chapter 11
bankruptcy protection on March 24, 2009 (Bankr. M.D. Fla. Case No.
09-03690). Raymond J. Rotella, Esq., at Kosto & Rotella PA
assists the Company in its restructuring efforts. The Company
listed $1,000,001 to $10,000,000 in assets and $1,000,001 to
$10,000,000 in debts.
LEHMAN BROTHERS: Special Committee to Review Attorneys' Fees
------------------------------------------------------------
Attorneys retained in the Chapter 11 cases of Lehman Brothers
Holdings Inc. agreed to a delay in the hearing to consider
approval of their fees and expenses to give way for the formation
of a review committee. The special committee that will review fee
requests will consist of representatives from Lehman, the official
committee of unsecured creditors, and the U.S. Trustee.
The Court was scheduled to convene on May 13, a hearing to
consider the interim fee applications of retained professionals.
As reported by the TCR on April 14, 2009, Weil, Gotshal & Manges
LLP, the lead bankruptcy counsel of Lehman Brothers is seeking
approval of $55,140,791 in fees for services rendered for the
first four-and-a-half months of Lehman's Chapter 11 case. In all,
fifteen of the firms retained in the case have sought over
$90 million for services rendered during the first four months of
the case.
A. Debtors' Professionals:
Professional Period Fees Expenses
------------ ------ ---- --------
Weil, Gotshal & 09/15/08- $55,140,791 $1,336,880
Manges LLP 01/31/09
Lazard Freres 09/15/08- 6,600,000 33,467
& Co. LLC 01/31/09
Curtis Mallet-Prevost 09/26/08- 4,611,589 151,402
Colt & Mosle LLP 01/31/09
McKee Nelson LLP 09/15/08- 2,727,562 105,916
01/31/09
Simpson Thacher & 09/15/08- 1,383,114 28,601
Bartlett LLP 01/31/09
Jones Day Engagement 1,258,056 10,425
dates to
01/31/09
McKenna Long & 09/15/08- 631,156 35,620
Aldridge LLP 01/31/09
Ernst & Young LLP 09/15/08- 552,700 0
01/31/09
Reilly Pozner LLP 09/15/08- 464,631 33,888
01/31/09
Bortstein Legal LLC 12/15/08- 353,154 0
01/31/09
Weil Gotshal is the Debtors' lead bankruptcy counsel. Curtis is
their conflicts counsel. Bortstein Legal, McKee Nelson, Jones
Day, Simpson Thacher, McKenna Nelson and Reilly Pozner are their
special counsel. Ernst & Young is the Debtors' auditor. Lazard
Freres is their investment banker.
B. Official Committee of Unsecured Creditors' Professionals
Professional Period Fees Expenses
------------ ------ ---- --------
Milbank, Tweed, Hadley 09/17/08- $12,132,376 $668,388
& McCloy LLP 01/31/09
FTI Consulting Inc. 09/17/08- 5,261,715 148,515
01/31/09
Houlihan Lokey Howard 09/17/08- 2,233,333 159,070
& Zukin Capital, Inc. 01/31/09
Quinn Emanuel Urquhart 09/15/08- 2,129,413 41,113
Oliver & Hedges, LLP 01/31/09
Milbank is the legal counsel of the Creditors' Committee while
Quinn Emanuel serves as the panel's special counsel. FTI is the
panel's financial advisor; Houlihan Lokey its investment banker.
C. Chapter 11 Examiner's Professionals
Professional Period Fees Expenses
------------ ------ ---- --------
Anton Valukas/Jenner 01/19/09- $613,650 $13,514
& Block LLP 01/31/09
Jenner & Block is the legal counsel for Anton Valukas, the
examiner appointed in the Debtors' bankruptcy cases.
A hearing to consider approval of the interim fee applications is
scheduled for May 13, 2009. Creditors and other concerned
parties have until May 6 to file their objections.
Lehman Brothers' Collapse
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com/-- was the fourth largest investment bank
in the United States, offering a full array of financial services
in equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed $639 billion in assets
and $613 billion in debts, effectively making the firm's
bankruptcy filing the largest in U.S. history. Several affiliates
filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on Sept. 16. The
two units have combined liabilities of JPY4 trillion -- US$38
billion. Akio Katsuragi, a former Morgan Stanley executive, runs
Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
LENOX HILL: Fitch Affirms 'BB' Rating on $130.5 Mil. 2001 Bonds
---------------------------------------------------------------
Fitch Ratings has affirmed the 'BB' rating on approximately
$130.5 million New York State Dormitory Authority (Lenox Hill
Hospital Obligated Group) revenue bonds, series 2001. The Rating
Outlook has been revised to Negative from Stable.
The affirmation reflects Lenox Hill's substantial liquidity for
the 'BB' rating category and manageable debt burden. It also
reflects the expected positive effect of the finalization of Lenox
Hill's merger with the Manhattan Eye, Ear, and Throat Hospital, as
well as recent physician gains, most notably the signing of a
large cardiology group. However, Lenox Hill's ongoing negative
operating performance and lower patient volumes are significant
credit concern and the primary reason for the revision of the
Outlook to Negative.
At year end 2008, Lenox's Hill had 83.6 days cash on hand, a 7.5
times (x) cushion ratio and cash-to-debt of 98.8%, all solid
liquidity figures relative to Fitch's 'BB' category and consistent
with prior year figures. Capital ratios over the last two years
compare favorably to Fitch's 'BB' category with maximum annual
debt service coverage at 2.7x and 2.3x, MADS as a percentage of
revenue at 3.2% and 3%, and Debt to EBIDA at 3.3x and 3.3x, for
2007 and 2008, respectively. In December 2007, after numerous
delays, Lenox Hill finalized its merger with MEETH. Fitch views
the MEETH merger with Lenox Hill as a credit positive; however,
delays in the merger were a strain on Lenox Hill's operations,
limiting its ability to move forward with plans to reconfigure the
MEETH site for outpatient services and physician offices.
Expenses related to the MEETH merger were offset by $25.1 million
in grant funding from New York State through its Healthcare
Efficiency and Affordability Law for New Yorkers program.
Credit concerns include Lenox Hill's continued negative operating
margins. Lenox Hill has not posted a positive operating margin
since 2003. In 2007 and 2008, operating margins were a negative
2.3% ($13.5 million operating loss) and a negative 5.8% ($36.2
million operating loss), respectively, controlling for one-time
items. In 2007, Lenox Hill sold a building for $51.8 million,
and, in 2008, it received $25.1 million in HEAL IV grant funds.
The inclusion of these one-time items helped limit the affect of
these operating losses. Further pressuring the negative operating
performance has been a significant drop-off in inpatient and
outpatient volumes, especially towards the last half of 2008 and
through the first two months of 2009. In 2008, Lenox Hill missed
its budgeted inpatient admissions by 1,846 (more than 5% below
budget) and inpatient admissions dropped by 1,343 year over year.
Outpatient visits in 2008 were below budget by 5,516
(approximately 3% below budget) and dropped by 16,258 year over
year. For 2009, Lenox Hill has lowered its budgeted volume
numbers and made cost cuts to better align expenses with the lower
utilization numbers. Lenox Hill is budgeting for a $20 million
loss from operations in 2009, which would be an improvement over
2008. Operations should be helped by recent improvements to payor
contracts and Lenox Hill's recent signing of a five year contract
with a large cardiac group that has a significant presence in
Queens. Currently 13.9% of Lenox Hill's admissions comes from
Queens, and Lenox Hill estimates that the cardiology group will
generate approximately 1,200 new admissions a year.
The revision of the Outlook to Negative reflects the drop in Lenox
Hill's utilization and continued negative operating performance.
Additional credit concerns factored into the Negative Outlook
include Lenox Hill's alternative investments, future pension
obligations, and vulnerability to changes in state or federal
reimbursement due to the budgetary stress of the current economic
environment. Approximately 35% ($54.1 million as of Dec. 31,
2008) of Lenox Hill's cash and unrestricted investments are
invested in alternative investments. While overall Lenox Hill's
investment portfolio has performed relatively well through the
recent economic downturn (Lenox Hill had $10.4 million in
unrealized losses in 2008), with Lenox Hill's liquidity figures
remaining stable over the last year, this exposure to alternatives
is a concern, especially given Lenox Hill's reliance on its
liquidity as a key credit strength. Mitigating this risk is that
approximately 40% of the alternative investments can be liquidated
immediately and another 40% can be liquidated quarterly. In 2008,
the year end actuarial assessment of Lenox Hill's defined pension
plan had a negative $102 million adjustment, which lowered the
funding status of the plan to 64% from 88%. Each of the next
three years Lenox Hill will have to increase its contribution to
the plan, by as much as an additional $5 to $15 million, in order
to comply with the Pension Protection Act of 2006. Finally,
changes in reimbursement due to State and federal budgetary
pressures could affect Lenox Hill's already negative operations.
In 2009, Lenox Hill had to budget for an $8 million decrease due
to less state funding and additional state taxes.
Lenox Hill has other non-core real estate to sell which could help
offset the negative operating pressures. However, once the non-
core real estate is sold and with HEAL NY grant funding ended,
Lenox Hill will no longer have access to one time infusions of
cash to offset operating losses. Continued operating losses
coupled with additional pressure from any of the risks mentioned
above (reimbursement changes, pension funding, continued declines
in volumes) may result in a rating downgrade.
Located in New York City, Lenox Hill operates 652 beds on two
hospital campuses. Lenox Hill had total revenue of $626.2 million
in 2008. Lenox Hill covenants to provide only annual audited
information to bondholders but voluntarily provides monthly
disclosure to bondholders through the NRMSIRs. Lenox Hill's
monthly disclosure has been excellent to date and includes
management discussion and analysis, balance sheet, income
statement, cash flow statement, and utilization statistics.
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: Seeks to Reject Contracts with Chemtura Unit
---------------------------------------------------------------
Lyondell Chemical Co. asks the U.S. Bankruptcy Court for the
Southern District of New York (Manhattan) for authority to reject
two executory contracts with a unit of Chemtura Corp.
Because Chemtura and its units are also in bankruptcy, Lyondell
filed a motion in Chemtura's case to seek relief from the
automatic stay to allow it to terminate the contracts.
Bill Rochelle at Bloomberg notes that Lyondell Chemical and
Chemtura are both chemical producers and are both undergoing
bankruptcy reorganization in New York in front of the same
bankruptcy judge, Judge Robert E. Gerber
Debtor Lyondell Chemical Company owned a facility consisting of
certain manufacturing facilities and infrastructure located in
Lake Charles, Louisiana. Lyondell operated a portion of the Lake
Charles Facility for the production of petrochemicals, but idled
those production units in September 2005, due to escalating raw
materials and energy prices and decreased demand.
Lyondell leased a portion of the Lake Charles Facility to BioLab,
Inc. a subsidiary of Chemtura Corporation, under a Land Lease.
Lyondell provides (i) utilities and related services to BioLab
under an Amended and Restated Services Agreement; and (ii)
railcar switching services pursuant to a Railcar Switching
Agreement. Lyondell provides similar utilities-related services
to Arch Chemicals Inc., which owns a production facility on real
property near the Lake Charles Facility, under a Services
Agreement. To facilitate the provision of those services,
Lyondell's predecessor-in-interest contracted third-parties to
operate the utility infrastructure assets at the Lake Charles
Facility. Under a Build, Own & Operate Agreement, Veolia Water
North America Operating Services LLC operates a demineralized
water plant at the Lake Charles Facility and leases the land upon
which its water plant is located under an Agreement for Lease of
Real Estate. Pursuant to an On-Site Product Supply Agreement,
Air Products L.P. operates a nitrogen plant at the Lake Charles
Facility.
By this Motion, the Lyondell Entities seek the Court's authority
to reject the Lake Charles Agreements as set forth in this
schedule:
http://bankrupt.com/misc/Lyondell_RejectedLakeCharlesPacts.pdf
The Lyondell Entities are not seeking to reject the BioLab Land
Lease, but are reserving all rights regarding that agreement.
Christopher R. Mirick, Esq., at Cadwalader, Wickersham & Taft
LLP, in New York, stresses that if the Lyondell Entities do not
reject the Lake Charles Agreements, their estates will continue to
incur payment obligations to Veolia and Air Products, as well as
ongoing personnel costs that far exceed the amount the Debtors
are able to recover from Arch and BioLab by over $6.5 million per
year. He notes that rejection of the Lake Charles Agreement will
save the Lyondell Entities' estates more than $500,000 per month
in postpetition costs. Moreover, the Lyondell Entities believe
that the Lake Charles Agreements are not necessary to their
ongoing business operations or restructuring efforts because their
operating units at the Lake Charles Facility have been idled for
over three years and they have no current plans to resume
operations. Moreover, Lyondell maintains a 28-employee workforce
at the Lake Charles Facility to oversee and maintain the idled
operating units and oversee the provision of services pursuant to
the Lake Charles Agreements. If their request is granted,
Lyondell will reassign or reduce some or all of the Lake Charles
Facility workforce in accordance with its ordinary practices.
Lyondell has not yet made a decision regarding its continued
ownership of the Lake Charles Facility or any course of action
with respect to other leases associated with the Lake Charles
Facility, and reserves all rights regarding those assets.
Given the potential burden that the rejection of the Lake Charles
Agreements, specifically the BioLab Services Agreement and the
Arch Services Agreement, could impose on the counterparties, the
Lyondell Entities further ask the Court to rule that rejection of
the Lake Charles Agreements be effective as of the 30th day after
entry of an order. The Lyondell Entities believe that this timing
will afford the counterparties to the Lake Charles Agreements
sufficient time to make alternative arrangements, while minimizing
the continued uncompensated losses incurred by Lyondell under
these agreements. As the Lyondell Entities are seeking relief
from the automatic stay in Chemtura's Chapter 11 case in order to
proceed with the rejection of the Lake Charles Agreements, as the
rejection may affect BioLab, the Lyondell Entities reserve the
right to adjourn its request as to some or all of the Lake Charles
Agreements, or to proceed as to some of the Lake Charles
Agreements and not others, if necessary.
Consistent with Section 362 of the Bankruptcy Code, to the extent
that any of the Debtors have deposited amounts with counterparties
to the Lake Charles Agreements as a security deposit, or if
counterparties owe any of Lyondell Entities' amounts under the
Lake Charles Agreements, the Lyondell Entities ask the Court to
prohibit counterparties from offsetting or using the amounts from
deposit, or other amount owed by Lyondell without further Court
order.
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)
About Lyondell Chemical
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)
MACY'S INC: Posts $88,000,000 Net Loss in First Quarter 2009
------------------------------------------------------------
Macy's, Inc., reported a net loss of 21 cents per diluted share
for the first quarter of 2009, ended May 2, 2009. These results
include restructuring charges of $138 million ($20 million after
tax; 5 cents per share) related to division consolidations and
localization initiatives announced in February 2009. Excluding
these charges, the Company lost 16 cents per diluted share in the
first quarter of 2009. This is better than recent guidance for a
loss of 19 cents to 21 cents per diluted share, excluding
restructuring charges.
MACY'S, INC.
Consolidated Statements of Operations (Unaudited) (Note 1)
(All amounts in millions except percentages and per share
figures)
13 Weeks Ended 13 Weeks Ended
May 2, 2009 May 3, 2008
--------------------- ---------------------
% to % to
$ Net sales $ Net sales
-------- ----------- -------- ----------
Net sales $ 5,199 $ 5,747
Cost of sales (Note 2) 3,219 61.9% 3,527 61.4%
------ ------- ------ -------
Gross margin 1,980 38.1% 2,220 38.6%
Selling, general and
administrative expenses
(Note 3) (1,956) (37.6%) (2,103) (36.6%)
Division consolidation
costs (Note 4) (138) (2.7%) (87) (1.5%)
------ ------- ------ -------
Operating income (loss) (114) (2.2%) 30 0.5%
Interest expense -- net (141) (136)
------ ------
Loss before income taxes (255) (106)
Federal, state and local
income tax benefit
(Note 5) 167 47
------ ------
Net loss $ (88) $ (59)
====== ======
Basic loss per share $ (.21) $ (.14)
====== ======
Diluted loss per share $ (.21) $ (.14)
====== ======
Average common shares:
Basic 421.4 420.9
Diluted 421.4 420.9
End of period common
shares outstanding 420.6 420.5
Depreciation and
amortization
expense $ 303 $ 315
MACY'S, Inc., Consolidated Statements of Operations (Unaudited)
(Note 1)
Notes:
(1) Because of the seasonal nature of the retail business, the
results of operations for the 13 weeks ended May 2, 2009, and
May 3, 2008 (which do not include the Christmas season) are
not necessarily indicative of such results for the fiscal
year. During the fourth quarter of 2008, the Company
recorded an estimated pre-tax goodwill impairment charge of
$5,382 million, $5,083 million after income taxes, based on
the preliminary results of goodwill impairment testing as of
January 31, 2009. The first step of the goodwill impairment
test has been completed and involved estimating the fair
value of each of the Company's reporting units based on its
estimated discounted cash flows and comparing the estimated
fair value of each reporting unit to its carrying value. The
second step of the goodwill impairment test, which is
substantially complete, requires the Company to allocate the
estimated fair value of each of its reporting units to the
estimated fair value of the reporting unit's net assets, with
any fair value in excess of amounts allocated to such net
assets representing the implied fair value of goodwill for
that reporting unit. The completion of the second step of
the goodwill impairment testing process is not expected to
have a material impact on the estimated goodwill impairment
charge recorded in the fourth quarter of 2008.
(2) Merchandise inventories are primarily valued at the lower of
cost or market using the last-in, first-out (LIFO) retail
inventory method. Application of this method did not impact
cost of sales for the 13 weeks ended May 2, 2009, or May 3,
2008.
(3) For the 13 weeks ended May 3, 2008, selling, general and
administrative expenses included an accrual related to a
legal dispute of approximately $23 million or $.03 per
diluted share.
(4) Represents costs and expenses associated with the division
consolidation and localization initiatives, primarily
severance and other human resource-related costs. Based on
projected annual income before income taxes for fiscal 2009,
the effective tax rate including these costs and expenses is
currently estimated to be approximately 65%. Excluding costs
related to the division consolidation and localization
initiatives announced in February 2009 from projected annual
income before income taxes would reduce the effective tax
rate to approximately 40% due to higher income before income
taxes. Accordingly, the effect of excluding $138 million of
costs related to the division consolidation and localization
initiatives announced in February 2009 from income before
income taxes for the 13 weeks ended May 2, 2009, would reduce
the federal, state and local income tax benefit recorded
during the period by $118 million, and would reduce the net
loss by $20 million or $.05 per diluted share. For the 13
weeks ended May 3, 2008, costs related to the division
consolidation and localization initiatives announced in
February 2008 amounted to $.13 per diluted share.
(5) The federal, state and local income tax benefit differs from
the federal income tax statutory rate of 35%, principally
because of the effect of state and local taxes, including the
settlement of various tax issues and tax examinations.
Operating Income (Loss)
Macy's, Inc.'s operating loss totaled $114 million or 2.2 percent
of sales for the quarter ended May 2, 2009, compared with
operating income of $30 million or 0.5 percent of sales for the
same period last year. First quarter 2009 operating loss included
$138 million in restructuring charges. Excluding these costs,
operating income for the first quarter of 2009 was
$24 million or 0.5 percent of sales. Macy's, Inc.'s first quarter
2008 operating income included $87 million in division
consolidation costs and a $23 million reserve for the potential
litigation settlement. Excluding these costs, operating income for
the first quarter of 2008 was $140 million or 2.4 percent of
sales.
In the first quarter of 2008, Macy's, Inc., lost 14 cents per
diluted share. Excluding costs related to divisional
consolidations announced in 2008 of $87 million ($55 million after
tax; 13 cents per diluted share), and a reserve for a potential
settlement of litigation of $23 million ($14 million after tax; 3
cents per diluted share), first quarter 2008 diluted earnings per
share were 2 cents.
"We continue to successfully navigate this very difficult economic
environment," said Terry J. Lundgren, Macy's, Inc. chairman,
president and chief executive officer. "Our first quarter sales
were consistent with our initial expectations, while earnings and
cash flow performance were better than expected.
"By the end of the first quarter, we completed the unification of
our organizational structure, as well as the nationwide rollout of
our My Macy's localization initiative. We have entered the second
quarter with our new organization in place and expect to benefit
from approximately $400 million of annual expense savings
beginning in 2010 (and $250 million in the partial year of 2009).
Meanwhile, we expect to see an improvement in sales trend from My
Macy's beginning in the fourth quarter of 2009 and especially in
spring 2010," Ms. Lundgren said.
Sales
Sales in the first quarter totaled $5.199 billion, down
9.5 percent from total sales of $5.747 billion in the first 13
weeks of 2008. On a same-store basis, Macy's, Inc.'s first quarter
sales were down 9.0 percent.
Online sales (macys.com and bloomingdales.com combined) were up
16.2 percent in the first quarter of 2009 and positively affected
the company's first quarter 2009 same-store sales by 0.5
percentage points. Online sales are included in the same-store
sales calculation for Macy's Inc.
In the first quarter of 2009, the Company opened one new Macy's
store in the Phoenix market.
Cash Flow
Net cash used by operating activities was $35 million in the first
quarter of 2009, compared with $21 million of net cash provided in
the first quarter last year. Net cash used by investing
activities in the first quarter of 2009 was $68 million, compared
with $99 million a year ago. Net cash used by financing activities
in the first quarter of 2009 was $908 million, including
$837 million used to repay debt. Net cash used by financing
activities was $139 million in the first quarter last year.
About Macy's Inc.
Based in Cincinnati and New York, Macy's Inc. (NYSE: M) fka
Federated Department Stores Inc. -- http://www.fds.com/-- is one
of the nation's premier retailers. The company operates more than
850 department stores in 45 states, the District of Columbia, Guam
and Puerto Rico under the names of Macy's and Bloomingdale's. The
Company also operates macys.com, bloomingdales.com and
Bloomingdale's By Mail.
As of May 2, 2009, the Company reported $21,331,000,000 in total
assets, $4,397,000,000 in total current debt, $8,719,000,000 in
long-term debt, and $4,555,000,000 shareholders' equity.
* * *
As reported by the Troubled Company Reporter on April 3, 2009,
Moody's Investors Service downgraded Macy's, Inc. ratings,
including the senior unsecured notes to Ba2 from Baa3. In
addition, Moody's assigned a Corporate Family Rating of Ba2, a
Probability of Default Rating of Ba2, and a Speculative Grade
Liquidity Rating of SGL-2. The rating outlook is stable.
MBIA INC: Sued by 18 Banks Over Insurance Unit Split
----------------------------------------------------
Serena Ng at The Wall Street Journal reports that 18 financial
institutions have filed a lawsuit against MBIA Inc.
WSJ relates that MBIA separated in February its troubled mortgage
exposures from its profitable U.S. municipal-bond insurance
portfolio to resume writing guarantees on municipal debt. The
report says that the original MBIA Insurance unit was left with
$10 billion in claims-paying resources to back guarantees on
$240 billion in structured-finance securities and non-U.S. bonds.
MBIA Insurance's rating, the report states, was downgraded to
"junk" by credit-rating agencies.
According to WSJ, the group -- which includes U.S. and foreign
banks, including J.P. Morgan Chase & Co., Bank of America Corp.,
Morgan Stanley, Canadian Imperial Bank of Commerce, Barclays PLC
and UBS AG -- claimed that MBIA's decision to split its businesses
earlier this year was fraudulent and left one of the units
effectively "insolvent." MBIA's transfer of cash and securities
from its insurance unit to a dedicated muni-bond insurance company
was "fraudulent" and "an unlawful attempt to escape" its
contractual obligations to cover losses from souring mortgage
securities, WSJ quoted the group as saying.
WSJ relates that Vince DiBlasi, a lawyer at Sullivan & Cromwell
who is representing the banks suing MBIA, said, "Our lawsuit
simply seeks to ensure that policy holders receive what they have
paid premiums for: contractually guaranteed insurance protection,"
said Vince DiBlasi, a lawyer at Sullivan & Cromwell who is
representing the banks suing MBIA.
WSJ states that many of the banks had purchased credit derivatives
from MBIA that insured them against losses on securities backed by
subprime mortgage assets and commercial real-estate loans.
MBIA executives, says WSJ, have denied the allegations, saying
that the complaints are "without merit."
MBIA's business split has so far benefited shareholders of the
holding company as well as MBIA's top management, WSJ states,
citing the complainants. MBIA and insurance regulators,
according to the report, have said that their internal projections
and estimates of future losses indicate the original insurance
unit remains solvent, the banks, however, said that they believe
MBIA Insurance is "undercapitalized and has no prospect of writing
new insurance" and will end up with more liabilities than claims-
paying resources.
About MBIA Inc.
Headquartered in Armonk, New York, MBIA Inc. (NYSE:MBI) --
http://www.mbia.com/-- provides financial guarantee insurance,
investment management services, and municipal and other services
to public finance and structured finance clients on a global
basis.
As reported by the Troubled Company Reporter on February 20, 2009,
Standard & Poor's Ratings Services lowered its counterparty credit
rating on MBIA Inc. to BB+/Negative/-- from A-/Negative/--.
According to the TCR on November 11, 2008, Moody's Investors
Service downgraded to Baa1 from A2 the insurance financial
strength rating of MBIA Insurance Corporation and supported
insurance companies. In the same rating action, Moody's
downgraded the debt ratings of MBIA, Inc. (senior unsecured debt
to Ba1 from Baa2) and related financing trusts.
MGB8 LLC: Case Summary & 11 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: MGB8 LLC
dba MGB 8 LLC
750 Third Avenue
Suite 980
New York, NY 10017
Bankruptcy Case No.: 09-13038
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Southern District of New York (Manhattan)
Judge: Burton R. Lifland
Debtor's Counsel: Edward E. Neiger, Esq.
Neiger LLP
111 John Street
New York, NY 10038
Tel: (212) 267-7342
Fax: (212) 406-3677
Email: eneiger@neigerllp.com
Total Assets: $7,003,000
Total Debts: $7,273,200
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/nysb09-13038.pdf
The petition was signed by Sammy Twena, managing member of the
Company.
MICHAEL A. FORBES: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Michael A. Forbes
3818 Newton St.
Torrance, CA 90505
Bankruptcy Case No.: 09-21605
Chapter 11 Petition Date: May 13, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Victoria S. Kaufman
Debtor's Counsel: Blake Lindemann, Esq.
433 N Camden Dr 4th Fl
Beverly Hills, CA 90210
Tel: (310) 279-5269
Fax: (310) 279-5370
Email: ecf@llgbankruptcy.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. Forbes' petition, including his list of 20
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-21605.pdf
The petition was signed by Mr. Forbes.
MIDTOWN MENTAL: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Midtown Mental Health Center, Inc.
fdba Midtown Counseling Center, Inc.
Julian T. Bolton, Agent
81 Monroe Street
Suite 400
Memphis, TN 38103
Bankruptcy Case No.: 09-25228
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Western District of Tennessee (Memphis)
Judge: George W. Emerson Jr.
Debtor's Counsel: John L. Ryder, Esq.
One Commerce Square
Suite 2700
Memphis, TN 38103-2555
Tel: (901) 525-1455
Email: jryder@harrisshelton.com
Total Assets: $1,593,114
Total Debts: $1,533,065
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/tnwb09-25228.pdf
The petition was signed by Julian Bolton.
MOMENTIVE PERFORMANCE: Exchange Offers Expires June 12
------------------------------------------------------
Momentive Performance Materials Inc. announced May 12 that it has
commenced private exchange offers to exchange a new series of
12.5% Second-Lien Senior Secured Notes due 2014 for certain
outstanding Momentive notes.
The purpose of the exchange offers is to reduce the outstanding
principal amount of Momentive's debt. The terms of the exchange
offers are described more fully in a confidential offering
memorandum prepared in connection with the exchange offers. The
Offering Memorandum sets out the modified Dutch auction procedure
that will be used to calculate the principal amount of new second
lien notes to be issued in exchange for tendered old notes.
The exchange offers will expire at 5:00 P.M., New York City time,
on June 9, 2009, unless terminated or withdrawn earlier, or unless
extended.
The new second lien notes will be guaranteed on a senior secured
basis by each of Momentive's U.S. subsidiaries that is a guarantor
under Momentive's existing senior secured credit facilities. The
new second lien notes will be secured by a second-priority
security interest in certain assets of Momentive and the
guarantors, which interest will be junior in priority to the liens
on substantially the same collateral securing Momentive's existing
senior secured credit facilities. The new second lien notes will
rank in parity with all existing and future senior indebtedness of
Momentive and senior to all existing and future subordinated
indebtedness of Momentive.
Momentive is offering an early delivery payment in the exchange
offers, which will be paid in principal amount of new second lien
notes. This payment will be made only to holders who tender old
notes prior to 5:00 p.m., New York City time, on May 26, 2009,
unless extended (the "early tender date"). Tendered old notes may
be validly withdrawn at any time prior to 5:00 p.m., New York City
time, on May 26, 2009 (the "withdrawal deadline"), unless the
withdrawal deadline is extended, but not thereafter.
In the exchange offers, no more than $200,000,000 aggregate
principal amount of new second lien notes will be issued in
exchange for tendered old notes, and no more than $50,000,000 of
such aggregate principal amount will be issued in exchange for
tendered 11.50% Senior Subordinated Notes due 2016.
Outstanding Momentive Notes
CUSIP/ISIN Outstanding Title of Old Notes
Principal Amount to be Tendered
--------- ---------------- -------------------
60877U AC1 /
US60877UAC18 $765,000,000 9.75% Senior Notes due 2014
60877U AJ6 /
US60877UAJ60 $316,312,500 10-1/8 /10-7/8% Senior
Toggle Notes due 2014
60877U AM9 /
US60877UAM99 $500,000,000 11.5% Senior Subordinated
Notes due 2016
60877U AF4 /
XS0338823601 EUR275,000,000 9% Senior Notes due 2014
The new second lien notes have not been registered under the
Securities Act of 1933, as amended, and may not be offered or sold
in the United States absent registration or an applicable
exemption from the registration requirements of such Act.
The exchange offers are being made only in the United States to
holders of old notes who are both "qualified institutional buyers"
and "U.S. persons" and outside the United States to persons other
than "U.S. persons" who are "non-U.S. qualified offerees" (in each
case, as such terms are used in the letter of eligibility). The
exchange offers are made only by, and pursuant to, the terms set
forth in the Offering Memorandum. The exchange offers are not
conditioned on a minimum principal amount of old notes being
tendered or the issuance of a minimum principal amount of new
second lien notes. However, the exchange offers are subject to
certain other significant conditions. The complete terms and
conditions of the exchange offers are set forth in the Offering
Memorandum and other documents relating to the exchange offers
which will be distributed to eligible holders of old notes.
Momentive has the right to amend, terminate or withdraw the
exchange offers, at any time and for any reason, including if any
of the conditions to the exchange offers is not satisfied.
Documents relating to the exchange offers, including the Offering
Memorandum, will only be distributed to holders of old notes who
complete and return a letter of eligibility confirming that they
are within the category of eligible holders for the exchange
offers. Holders of old notes who desire a copy of the eligibility
letter should contact Global Bondholder Services Corporation, the
Information Agent for the exchange offers, at (866) 794-2200 (U.S.
Toll-free) or (212) 430-3774 (Collect).
About Momentive Performance
Momentive Performance Materials Inc. is a producer of silicones
and silicone derivatives, and is engaged in the development and
manufacture of products derived from quartz and specialty
ceramics. As of December 31, 2008, the Company had 25 production
sites located worldwide, which allows it to produce the majority
of its products locally in the Americas, Europe and Asia.
Momentive's customers include companies in industries, such as
Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola,
L'Oreal, BASF, The Home Depot and Lowe's.
Standard & Poor's Ratings Services said mid March 2009 it lowered
its ratings on Momentive Performance Inc. and its subsidiaries by
two notches, including its corporate credit rating to 'CCC' from
'B-' and placed them on CreditWatch with negative implications.
According to S&P, these rating actions reflect a near-term risk of
default. They follow a sharp decline in earnings and cash flow
during the fourth quarter of 2008 and management's projection of
extremely weak EBITDA of $5 million to $15 million in the first
quarter of 2009.
MORTON INDUSTRIAL: Court Approves Management Incentive Plan
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
approved an incentive plan for Morton Industrial Group Inc.'s
executives.
According to Bill Rochelle, out of collateral belonging to the
secured lenders, as much as $2.47 million can be paid if the sale
of the assets realizes more than $40 million. The chief executive
stands to take home $1.1 million. Morton found a buyer willing to
pay $33 million for the assets and serve as the so-called stalking
horse at the auction. The hearing for approval of the sale is
set for May 21.
Headquartered in Morton, Illinois, Morton Industrial Group Inc. --
http://www.mortongroup.com/-- and its affiliates are contract
metal fabricators serving an array of Original Equipment
Manufacturers. The Debtors operate five manufacturing facilities
located in the Midwestern and Southeastern United States. The
Debtors' customers are Caterpillar Inc., Deere & Co., JLG
Industries, Inc., Hallmark Cards, Kubota Manufacturing of America
and Winnebago Industries, Inc.
Morton Industrial and its affiliates, including MMC Precision
Holdings Corp., filed for Chapter 11 protection on March 22, 2009,
(Bankr. D. Del. Lead Case No.: 09-10998) Paul, Hastings, Janofsky
& Walker LLP represents the Debtors in their restructuring
efforts. The Debtors propose to hire Paul N. Heath, Esq., at
Richards, Layton & Finger PA as co-counsel, AlixPartners, LLP as
restructuring advisors, Kurtzman Carson Consultants LLC as claims,
noticing and balloting agent. Roberta A. DeAngelis, United States
Trustee for Region 3, appointed three members to serve on the
Official Committee of Unsecured Creditors of Morton Industrial
Group Inc. and its debtor-affiliates. The Debtors listed
estimated assets of $50 million to $100 million and estimated
debts of $100 million to $500 million.
MORTGAGE LENDERS: Court Approves Class Suit Settlement
------------------------------------------------------
According to Bloomberg's Bill Rochelle, Mortgage Lenders Network
USA Inc. received preliminary bankruptcy court approval to pay
$2.7 million in settlement of a class-action suit on behalf of
workers who were fired without the 60-days' notice required under
U.S. labor law. Lawyers for the workers are to receive $975,000
from the settlement amount for their fees.
A bankruptcy court in Delaware has set an Aug. 5, 2009 hearing
for the proposed settlement of a purported class-action lawsuit
against now-defunct Mortgage Lenders Network, The Hartford
Courant reports.
More than 1,600 employees of company are expected to share in
the proposed $2.7 million settlement, according to The Hartford
Courant report.
The lawsuit accused the Middletown-based subprime lender, which
shut down abruptly in early 2007 and filed for bankruptcy, of
failing to comply with federal regulations that require
employers to give 60 days notice before shutting down a company,
reports The Hartford Courant.
The settlement, which was given preliminary approval on May 111,
2009, covers wages that would have been paid in the 60-day
period covered by the class-action lawsuit, The Hartford Courant
reported.
Middletown, Connecticut-based Mortgage Lenders Network USA Inc. --
http://www.mlnusa.com/-- was once the 15th largest mortgage
lender in the United States. The Company filed for Chapter 11
protection on Feb. 5, 2007 (Bankr. D. Del. Case No. 07-10146).
Pachulski Stang Ziehl & Jones LLP represents the Debtor. Blank
Rome LLP represents the Official Committee of Unsecured Creditors.
In the Debtor's schedules of assets and liabilities filed with the
Court, it disclosed total assets of $464,847,213 and total debts
of $556,459,464.
The Company's liquidating Chapter 11 plan was approved in a
February confirmation order. A full-text copy of the Debtor's
First Amended Liquidating Plan under Chapter 11 of the Bankruptcy
Code, dated Dec. 19, 2008, is available for free at:
http://bankrupt.com/misc/MortgageLendersLiquidatingPlan.pdf
MUZAK HOLDINGS: Has New Approved License Agreement with ASCAP
-------------------------------------------------------------
According to Bloomberg's Bill Rochelle, Muzak Holdings, LLC,
provider of music programming for businesses, has reached an
agreement with The American Society of Composers, Authors and
Publishers (ASCAP) in order to be able to continue to play music
whose copyright are controlled by ASCAP's.
Muzak, the report relates, agreed to assume their license
agreement on modified terms. Muzak won a reduction in some of the
royalties payable monthly. The amounts were kept confidential.
Muzak also agreed to pay $681,000 owed to ASCAP prepetition.
Muzak recognized that ASCAP's "musical repertory is not fungible
and cannot be easily substituted by another provider."
Headquartered in Fort Mill, South Carolina, Muzak Holdings LLC --
http://www.muzak.com/-- creates a variety of music programming
from a catalog of over 2.6 million songs and produces targeted
custom in-store and on-hold messaging. Through its national
service and support network, Muzak designs and installs
professional sound systems, digital signage, drive-thru systems,
commercial television and more. The Company and 14 affiliates
filed for Chapter 11 protection on February 10, 2009 (Bankr. D.
Del., Lead Case No. 09-10422). Moelis & Company is serving as
financial advisor to the Company. Kirkland & Ellis LLP is the
Debtors' counsel. Klehr Harrison Harvey Branzburg & Ellers has
been tapped as local counsel. In its bankruptcy petition, the
Company estimated assets and debts of $100 million to $500 million
each.
NANOGEN INC: Files for Ch. 11 Bankr.; to Sell Assets to Elitech
---------------------------------------------------------------
Reuters reports that Nanogen Inc. said that it has filed for
bankruptcy protection in the U.S. Bankruptcy Court for the
District of Delaware.
Court documents say that Nanogen listed $14.7 million in assets
and $41.5 million in debts. According to Reuters, Nanogen said
that its business operations continued to improve, but its
available cash resources were insufficient.
Reuters relates that Nanogen agreed to sell its assets to Elitech
Group for $25.7 million. Reuters states that the Bankruptcy Court
may solicit higher and better offers for the assets through an
auction process. The report says that Nanogen had disclosed plans
to merge with Elitech in August 2008, but the deal couldn't be
completed by a March 31, 2009, deadline.
Nanogen, according to Reuters, said that it expects to have break-
even earnings before interest, tax, depreciation, and amortization
(EBITDA) on revenue of more than $60 million this year due to
certain restructuring activities conducted earlier.
San Diego, California-based Nanogen Inc. (NASDAQ: NGEN) --
http://www.nanogen.com/-- provides advanced diagnostic products.
As of March 16, 2007, the Company was developing several product
lines that directly target specific markets within the advanced
diagnostics field. Its diagnostic technologies focus on the
identification of the nucleic acid sequences, gene variations and
gene expressions associated with both genetic conditions and
infectious diseases. Nanogen has four categories of advanced
diagnostic technologies: molecular testing platforms molecular
reagents point-of-care tests and advanced genetic markers. On
February 6, 2006, Nanogen acquired the rapid cardiac immunoassay
point-of-care test business of Spectral Diagnostics Inc. The
acquired products include rapid tests for levels of CKMB,
Myoglobin and Troponin, all of which are frequently used in
cardiac care. On May 1, 2006, it completed the acquisition of the
diagnostics division of Amplimedical S.P.A.
At September 30, 2008, the Company's balance sheet showed total
assets of $92.1 million total liabilities of $81.7 million and
stockholders' equity of $10.4 million.
For three months ended September 30, 2008, the Company posted net
loss of $5.9 million compared with net loss of $901,000 for the
same period in the previous year.
For nine months ended September 30, 2008, the Company posted net
loss of $36.1 million compared with net loss of $27.4 million for
the same period in the previous year.
At September 30, 2008, the Company has cash and cash equivalents
of approximately $1.7 million.
NATURAL CLEANERS: Case Summary & 15 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Natural Cleaners, LLC
P.O. Box 100940
Denver, CO 80250
Bankruptcy Case No.: 09-19031
Chapter 11 Petition Date: May 13, 2009
Court: United States Bankruptcy Court
District of Colorado (Denver
Judge: Howard R. Tallman
Debtor's Counsel: Harvey J. Williamson, Esq.
Law Office of Harvey J. Williamson, LLC
445 Union Blvd.
Suite 100A
Lakewood, CO 80228-1239
Tel: (303)716-9666
Fax: (303)980-7928
Total Assets: $256,360
Total Debts: $1,014,676
A list of the Company's 15 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/cob09-19031.pdf
The petition was signed by Donald P. Oswald, managing member of
the Company.
NRL RENTALS: Case Summary & 7 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: NRL Rentals, LLC
5255 S. Valley View Blvd.
Las Vegas, NV 89118
Bankruptcy Case No.: 09-17790
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
District of Nevada (Las Vegas)
Judge: Bruce A. Markell
Debtor's Counsel: Spencer M. Judd, Esq.
Albright, Stoddard, Warnick & Albright
801 S. Rancho Dr., Bldg. D
Las Vegas, NV 89106
Tel: (702) 384-7111
Fax: (702) 384-0605
Email: sjudd@albrightstoddard.com
Estimated Assets: $100,001 to $500,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of 7
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/nvb09-17790.pdf
The petition was signed by Bob Balli, manager of the Company.
PACKAGING DYNAMICS: Moody's Reviews 'B2' Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service placed all the credit ratings of
Packaging Dynamics Corporation on review for possible downgrade.
This rating action was prompted by a substantial decline in
consolidated first quarter sales and EBITDA to levels considerably
below previous expectations. Solid results in PDC's Food
Packaging segment only partially offset significant volume
declines in the company's Specialty Papers and Specialty
Laminations segments, which have been negatively impacted by weak
demand in the industrial and building products industries.
While challenges in the company's end markets are not expected to
rebound materially during 2009, PDC's near-term liquidity appears
adequate and management has recently implemented operational
restructurings and other cost-saving initiatives. The review for
possible downgrade will focus on medium-term expected run rates
for each of the businesses (particularly Specialty Papers)
including volume, pricing, input costs and cash flow generation.
Moody's placed these ratings on review:
* $126 million senior secured term loan due 2013, B1 (LGD3, 38% -
assessment is subject to change)
* $150 million senior subordinated notes due 2016, Caa1 (LGD5, 86%
- assessment is subject to change)
* Corporate Family Rating, B2
* Probability of Default Rating, B2
The last rating action occurred on April 30, 2008 when Moody's
downgraded PDC's Corporate Family Rating to B2.
Packaging Dynamics Corporation is a leading flexible packaging and
specialty papers company headquartered in Chicago, Illinois. The
company is privately held and generated revenues of $761 million
in the twelve months ended March 31, 2009.
PADILLA PROPERTIES: Case Summary & 6 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Padilla Properties, LLC
2034 Colorado Blvd. #8
Los Angeles, CA 90041
Bankruptcy Case No.: 09-21587
Chapter 11 Petition Date: May 13, 2009
Court: United States Bankruptcy Court
Central District of California (Los Angeles)
Judge: Ellen Carroll
Debtor's Counsel: Michael Jay Berger, Esq.
9454 Wilshire Blvd 6th Flr
Beverly Hills, CA 90212-2929
Tel: (310) 271-6223
Fax: (310) 271-9805
Email: michael.berger@bankruptcypower.com
Total Assets: $3,961,071
Total Debts: $2,218,790
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/cacb09-21587.pdf
The petition was signed by Ben Padilla, manager of the Company.
PALMETTO GREENS: Files for Chapter 11 Bankruptcy Protection
-----------------------------------------------------------
The (Myrtle Beach) Sun News reports that Mike Matheny, the owner
of both the Palmetto Greens course and Carolina Shores Golf &
Country Club, has filed a Chapter 11 bankruptcy petition for
Palmetto Greens Development Company, LLC, in the U.S. Bankruptcy
Court for the Eastern District of North Carolina.
The Sun News relates that David Haidt, the attorney for Palmetto
Greens, said that the golf course is a separate company and is
excluded from the bankruptcy filing.
According to The Sun News, Mr. Matheny has until May 22 to file a
schedule of financial affairs. Mr. Matheny, says the report, is
scheduled to meet with creditors to answer questions on June 4.
Mr. Matheny said in a statement that Palmetto Greens has been
compromised by the downturn in the housing and real estate market
in the area, as well as the national credit crunch. Palmetto
Greens wasn't going to be able to satisfy upcoming debt payment to
Waccamaw Bank, The Sun News relates, citing Mr. Haidt.
Cary, North Carolina-based Palmetto Greens Development Company,
LLC, is a development company that sells lots around Palmetto
Greens Golf & Country Club. The Company filed for Chapter 11
bankruptcy protection on May 7, 2009 (Bankr. E.D. N.C. Case No.
09-03779). David J. Haidt, Esq., at Ayers, Haidt & Trabucco,
P.A., assists the Company in its restructuring efforts. The
Company listed $1,000,001 to $10,000,000 in assets and $1,000,001
to $10,000,000 in debts.
PAUL NORMAN: U.S. Trustee Sets Meeting of Creditors for June 5
--------------------------------------------------------------
The U.S. Trustee for Region 17 will convene a meeting of creditors
in Paul Norman and Tina Marie Lewis' Chapter 11 case on June 5,
2009, at 1:30 p.m. The meeting will be held at the Office of the
U.S. Trustee, 777 Sonoma Ave., No. 116, Santa Rosa, California.
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.
Napa, California-based Paul Norman and Tina Marie Lewis filed for
Chapter 11 on May 4, 2009 (Bankr. N. D. Calif. Case No. 09-11266).
David N. Chandler, Esq., represents the Debtor in their
restructuring efforts. The Debtors' assets and debts both range
from $10 million to $50 million.
PACKAGING DYNAMICS: Moody's Reviews 'B2' Corporate Family Rating
----------------------------------------------------------------
Moody's Investors Service placed all the credit ratings of
Packaging Dynamics Corporation on review for possible downgrade.
This rating action was prompted by a substantial decline in
consolidated first quarter sales and EBITDA to levels considerably
below previous expectations. Solid results in PDC's Food
Packaging segment only partially offset significant volume
declines in the company's Specialty Papers and Specialty
Laminations segments, which have been negatively impacted by weak
demand in the industrial and building products industries.
While challenges in the company's end markets are not expected to
rebound materially during 2009, PDC's near-term liquidity appears
adequate and management has recently implemented operational
restructurings and other cost-saving initiatives. The review for
possible downgrade will focus on medium-term expected run rates
for each of the businesses (particularly Specialty Papers)
including volume, pricing, input costs and cash flow generation.
Moody's placed these ratings on review:
* $126 million senior secured term loan due 2013, B1 (LGD3, 38% -
assessment is subject to change)
* $150 million senior subordinated notes due 2016, Caa1 (LGD5, 86%
- assessment is subject to change)
* Corporate Family Rating, B2
* Probability of Default Rating, B2
The last rating action occurred on April 30, 2008 when Moody's
downgraded PDC's Corporate Family Rating to B2.
Packaging Dynamics Corporation is a leading flexible packaging and
specialty papers company headquartered in Chicago, Illinois. The
company is privately held and generated revenues of $761 million
in the twelve months ended March 31, 2009.
PLIANT CORP: Apollo to Propose 'Superior' Chapter 11 Plan
---------------------------------------------------------
Bill Rochelle at Bloomberg reported that Pliant's proposed Chapter
11 plan hit a roadblock after Apollo Management LP conveyed its
intent to sponsor a reorganization plan for the Company.
According to the report, Apollo's plan would be superior to the
plan that had submitted to Court as it would provide more recovery
to stakeholders.
The plan that Pliant negotiated with constituents pre-bankruptcy
offers 100% of the stock of the reorganized company to holders of
$393 million in first-lien notes. Other creditors, including the
holders of $262 million in second-lien notes, would receive
warrants to buy new stock, Mr. Rochelle said. Holders of more
than two-thirds of the first-lien notes have already have already
expressed support for the Plan.
According to the Committee, Apollo's plan would pay the first-lien
lenders with $75 million cash and $156 million in new first-lien
notes. Unsecured creditors will recover 17.5% to be paid in cash.
Second-lien noteholders would receive common stock including the
right to force the company to buy the equity. Apollo would
backstop the so-called put with $175 million. Apollo, the
Committee adds, has arranged $150 million in exit financing.
In light of the recent developments, the U.S. Bankruptcy Court for
the District of Delaware has pushed back to June 11 the hearing on
the adequacy of the disclosure statement to Pliant's plan.
Pliant's exclusive period to file a Chapter 11 plan has not yet
expired. The Committee, according to Bloomberg, wants those
rights terminated to allow for the filing of the Apollo-backed
plan.
About Pliant Corp.
Headquartered in Schaumburg, Illinois, Pliant Corporation produces
polymer-based films and flexible packaging products for food,
beverage, personal care, medical, agricultural and industrial
applications. The Company has operations in Australia, New
Zealand, Germany, and Mexico.
The Debtor and 10 of its affiliates filed for Chapter 11
protection on January 3, 2006 (Bankr. D. Del. Lead Case No.
06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon
L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway,
Stargatt & Taylor, represented the Debtors in their restructuring
efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as
Canadian counsel. As of September 30, 2005, the Company had
$604.3 million in total assets and $1.19 billion in total debts.
The Debtors emerged from Chapter 11 on July 19, 2006.
Pliant Corp. and its affiliates again filed for Chapter 11 after
reaching terms of a pre-packaged restructuring plan. The
voluntary petitions were filed Feb. 11, 2009 (Bank. D. Del. Case
Nos. 09-10443 through 09-10451). The Hon. Mary F. Walrath
presides over the cases. Jessica C.K. Boelter, Esq., at Sidley
Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, provide bankruptcy counsel to the Debtors.
Epiq Bankruptcy Solutions LLC acts as claims and noticing agent.
The U.S. Trustee for Region 3 appointed five creditors to serve on
an Official Committee of Unsecured Creditors. The Committee
selected Lowenstein Sandler PC as its counsel. As of
September 30, 2008, the Debtors had $688.6 million in total assets
and $1.03 billion in total debts.
RANDA LUGGAGE: Second Lien Lender Questions Ch. 11 Filing
---------------------------------------------------------
Randa Luggage Inc. may have its Chapter 11 case dismissed if the
U.S. Bankruptcy Court for the District of Delaware (Wilmington)
determines that the case was not filed in "good faith."
According to Bloomberg's Bill Rochelle, Gladstone Capital Corp., a
second-lien lender to Randa Luggage, says there should be an
investigation into whether Randa filed in good faith.
Gladstone, the report relates, asserts that Randa, the first-lien
lender owed $23 million and the proposed buyer are all controlled
by the same individual. McLean, Virginia-based Gladstone also
says that the senior lender, Adnar Finance LLC, accelerated its
debt to precipitate "an artificial crisis" so it could buy the
Business, the same report says.
The TCR reported May 14, 2009 reported that Randa Luggage filed
a Chapter 11 petition for a "prompt sale" of assets to the first-
lien lender, Adnar Finance LLC. Randa said it was forced to use
bankruptcy for selling the assets as a result of lower consumer
spending and reductions in travel.
Adnar has committed to provide $16 million in financing to fund
Randa's Chapter 11 case. Adnar is already owed $23 million on the
first-lien financing, while another $16.9 million is outstanding
on second-lien debt.
Randa Luggage Inc., formerly known as Badanco Enterprises Inc., is
a luggage marketer based in Totowa, New Jersey. Randa
manufactures, distributes and markets luggage, bags, backpacks and
briefcases under brand names including Tommy Bahama, Nautica,
Diane von Furstenberg, Perry Ellis and Liz Claiborne.
Randa Luggage and its affiliates including Badanco Acquisition LLC
filed for Chapter 11 on May 11 (Bankr. D. Del. Case No. 09-11638).
RANDA LUGGAGE: Second Lien Lender Questions Ch. 11 Filing
---------------------------------------------------------
Randa Luggage Inc. may have its Chapter 11 case dismissed if the
U.S. Bankruptcy Court for the District of Delaware (Wilmington)
determines that the case was not filed in "good faith."
According to Bloomberg's Bill Rochelle, Gladstone Capital Corp., a
second-lien lender to Randa Luggage, says there should be an
investigation into whether Randa filed in good faith.
Gladstone, the report relates, asserts that Randa, the first-lien
lender owed $23 million and the proposed buyer are all controlled
by the same individual. McLean, Virginia-based Gladstone also
says that the senior lender, Adnar Finance LLC, accelerated its
debt to precipitate "an artificial crisis" so it could buy the
Business, the same report says.
The TCR said May 14, 2009, that Randa Luggage and its affiliates
including Badanco Acquisition LLC filed for Chapter 11 on May 11
(Bankr. D. Del. Case No. 09-11638) for a "prompt sale" of assets
to the first-lien lender, Adnar Finance. Randa said it was forced
to use bankruptcy for selling the assets as a result of lower
consumer spending and reductions in travel.
Adnar has committed to provide $16 million in financing to fund
Randa's Chapter 11 case. Adnar is already owed $23 million on the
first-lien financing, while another $16.9 million is outstanding
on second-lien debt.
Randa Luggage Inc., formerly known as Badanco Enterprises Inc., is
a luggage marketer based in Totowa, New Jersey. Randa
manufactures, distributes and markets luggage, bags, backpacks and
briefcases under brand names including Tommy Bahama, Nautica,
Diane von Furstenberg, Perry Ellis and Liz Claiborne.
REGENCY ENERGY: Moody's Affirms Corporate Family Rating at 'Ba3'
----------------------------------------------------------------
Moody's Investors Service affirmed Regency Energy Partners LP's
Ba3 Corporate Family Rating, Ba3 Probability of Default Rating,
and B1 (LGD5; 81%) rating on its senior unsecured notes.
Simultaneously, Moody's rated Regency's proposed $250 million
senior secured notes offering B1 (LGD 5; 81%). The Speculative
Grade LiquiditY is unchanged at SGL-3. The outlook remains
negative.
The rating outlook remains negative due to elevated leverage over
2009, the execution risk associated with the Regency Intrastate
Gas expansion in the Haynesville shale region, and the weaker
operating environment for the company's gathering and processing
segment.
The rating affirmation reflects the improvement in Regency's
liquidity profile, the progress on the RIGS expansion that has so
far been on time and on budget, the company's track record to date
in issuing equity, and management's commitment to issuing
additional equity. Proceeds from the proposed notes offering will
be used to repay revolver borrowings and is therefore viewed as
liquidity enhancing with minimal anticipated impact on
consolidated leverage over the near term. However, leverage is
expected to remain elevated and distribution coverage weak until
the completion of the RIGS expansion. Regency is now receiving
38% of the cash flows from the existing RIGS system, which was put
into a joint venture structure in March of 2009.
Regency's ratings would be downgraded if the RIGS expansion were
to suffer material cost overruns or delays; or if weaker than
expected operating performance were to increase or keep leverage
elevated. Regency's G&P business is expected to suffer
significant volume declines during 2009, and without a meaningful
pickup in drilling activity or improvement in gas prices, volumes
could continue to decline into 2010. Also, while Regency has a
significant majority of its commodity exposure hedged in 2009, its
hedging profile in 2010 is significantly lower, and even as hedges
roll-on they will likely be at less favorable price levels. In
addition, while the company's contract compression business has so
far continued to grow, it is not immune to volume declines and
could also face pricing pressure. Finally, Regency's B1 senior
unsecured notes could be double notched below the Corporate Family
Rating if secured debt levels increase relative to unsecured debt
levels.
The rating outlook could stabilize if the RIGS project is
completed reasonably on time and on budget, if Regency's
businesses perform within expectations and if leverage returns to
the low 4.0x range.
The last rating action on Regency was on September 11, 2008 when
Moody's affirmed the company's ratings at Ba3 with a negative
outlook following the company's announcement of the RIGS
expansion.
Headquartered in Dallas, Texas, Regency Energy Partners LP is a
publicly traded master limited partnership engaged in natural gas
gathering, processing, contract compression and transportation.
RH DONNELLEY: Misses $55-Mil. Interest Payment on Unsec. Notes
---------------------------------------------------------------
R.H. Donnelley said May 14 it has entered into forbearance
agreements with certain of its bondholders and bank lenders with
respect to the consequences of the expiration of the 30-day grace
period relating to a $55 million interest payment on one series of
the company's senior unsecured notes. The relevant interest
payment was due April 15, 2009 and the 30-day grace period for
such payment expires on May 15, 2009. The bondholders and bank
lenders party to the forbearance agreements agreed not to pursue
their rights and remedies under the company's and its
subsidiaries' applicable debt agreements relating to such interest
payment through May 28, 2009.
The Company also said that it would exercise a 30-day grace period
on an aggregate of approximately $78 million in interest payments
due on May 15, 2009 on four series of notes issued by its
subsidiaries, the 11.75 percent Senior Notes due 2015 of R.H.
Donnelley Inc., the 8 percent Notes due 2013 and 9 percent
Discount Notes due 2013 of Dex Media, Inc. and the 5 7/8 percent
Senior Notes due 2011 of Dex Media West LLC, while it continues to
have discussions with ad hoc steering committees representing
certain of its bondholders and banks lenders.
The Company said the missed interest payments on the subsidiary
notes do not constitute events of default under the bond
indentures or any of its or its subsidiaries' other debt
agreements unless R.H. Donnelley Inc., Dex Media, Inc. or Dex
Media West LLC fails to make the payment within 30 days of the due
date, absent an extension.
While the company remains optimistic that it will be successful in
its discussions with the ad hoc steering committees, there can be
no guarantee of that outcome.
Going Concern Doubt
KPMG LLP, the Company's independent auditor, in March 2009, raised
substantial doubt on the Company's ability to continue as a going
concern. "The Company has significant amounts of maturing debt
which it may be unable to satisfy commencing March 31, 2010,
significant negative impacts on operating results and cash flows
from the overall downturn in the global economy and higher
customer attrition, and possible debt covenant violations in 2009
that raise substantial doubt about its ability to continue as a
going concern," KPMG said in its March 27 report.
R.H. Donnelley reported a net loss of $2.29 billion for the year
ended December 31, 2008, on net revenues of $2.61 billion. As of
December 31, the Company had $11.8 billion in total assets and
$12.3 billion in total liabilities, resulting in $493.3 million in
shareholders' deficit.
About R.H. Donnelley
Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka
The Dun & Bradstreet Corp., -- http://www.rhdonnelley.com/--
(NYSE: RHD) publishes and distributes print and online directories
in the U.S. It offers print directory advertising products, such
as yellow pages and white pages directories. R.H. Donnelley Inc.,
Dex Media, Inc. and Local Launch, Inc. are the company's only
direct wholly owned subsidiaries.
* * *
As reported by the Troubled Company Reporter on April 20, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating for R.H. Donnelley Corp. to 'D' from 'CCC+'. In addition,
the issue-level rating on RHD's $1.23 billion 8.875% series A-4
senior notes was lowered to 'D' from 'CCC-'. All other issue-
level ratings at RHD were lowered to 'C' from 'CCC-'.
According to the TCR on February 11, 2009, Moody's Investors
Service downgraded R.H. Donnelley's Corporate Family Rating to
Caa1 and its Probability of Default Rating to Caa2, prompted by
concerns that the company may determine that a complete debt
restructuring represents the best alternative of addressing its
currently challenged capital structure.
RIVER VALLEY: U.S. Trustee Sets Meeting of Creditors for June 19
----------------------------------------------------------------
The U.S. Trustee for Region 6 will convene a meeting of creditors
in River Valley Ranch, LP's Chapter 11 case on June 19, 2009, at
1:30 p.m. The meeting will be held at Plano Center.
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.
DeKalb, Texas-based River Valley Ranch, LP, filed for Chapter 11
on May 4, 2009 (Bankr. E.D. Tex. Case No. 09-50102). George B.
Flint, Esq. at Flint - Lambert, P.C. represents the Debtor in its
restructuring efforts. The Debtor's assets and debts both range
from $10 million to $50 million.
ROCK-TENN CO: Moody's Assigns 'Ba3' Rating on Senior Notes
----------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Rock-Tenn
Company's proposed add-on senior unsecured guaranteed notes
offering due 2016 and revised the rating outlook to positive from
stable. At the same time, Moody's affirmed Rock Tenn' Ba2
corporate family rating, the Ba1 ratings on the senior secured
credit facilities, the Ba3 ratings on the 2011 and 2013 senior
notes, the Ba3 senior unsecured note rating, and the SGL-2
speculative grade liquidity rating.
The terms of the proposed issue will be identical to that of the
company's $200 million 9.25% senior unsecured guaranteed notes due
2016 rated Ba3. Rock Tenn intends to use the net proceeds from
the notes offering, together with cash and borrowings under its
revolving credit facility, to fund a portion of its $250 million
8.20% senior secured notes due 2011. The notes will rank equally
in right of payment with all of the company's existing and future
senior unsecured indebtedness.
Rock Tenn's revised outlook reflects the company's improved credit
protection metrics and operating margins despite the challenging
operational environment, the expectation of continued strong
financial performance, and management's commitment to further debt
reduction. Despite the economic slowdown, the company's low cost
mill system and management's cost reduction focus have helped
improve margins and cash flow. Through ongoing free cash flow
generation and debt reduction, credit protection metrics have
improved to levels commensurate with the current Ba2 corporate
family rating. Moody's expects the company's credit protection
metrics to continue to improve to levels that exceed those
required to support a Ba2 rating as management achieves further
operational synergies and continues to reduce debt from operating
cash flow. Rock Tenn has reduced gross debt by approximately $340
million over the past 12 months and management is currently ahead
of its debt reduction target.
Rock Tenn's Ba2 corporate family rating reflects the company's low
cost vertically integrated asset base, its position as one of the
largest producers of folding cartons and promotional point-of-
purchase displays in North America, the company's strong financial
performance and its good committed liquidity arrangements. The
company has a strong ability to manage its costs with its modern,
well-invested mill system that is significantly forward integrated
into converting plants. Most of the company's products are
supplied to the consumer non-durable end markets (primarily food)
which are stable and more resilient to weak economic conditions.
Offsetting these strengths are the company's lack of product and
geographic diversification, volatile input costs, and declining
demand for packaging.
The SGL-2 liquidity rating indicates that Rock Tenn has a good
liquidity profile supported by expectations of positive free cash
flow generation over the next four quarters with no significant
near term debt maturities, sufficient availability under its
credit facilities, and expectations that compliance with financial
covenants will not pose a problem for the next four quarters.
Assignments:
Issuer: Rock-Tenn Company
-- Senior Unsecured Regular Bond/Debenture, Assigned Ba3, LGD 5,
78%
Outlook Actions:
Issuer: Rock-Tenn Company
-- Outlook, Changed To Positive From Stable
Moody's last rating action was on February 26, 2009 when Moody's
upgraded the ratings on the company's senior secured credit
facilities to Ba1 from Ba2, revised the rating outlook to stable
from negative, and affirmed all the other ratings.
Headquartered in Norcross, Georgia, Rock Tenn is a manufacturer of
packaging products, containerboard, merchandising displays, and
bleached and recycled paperboard. The company had annual net
sales of approximately $2.8 billion in its fiscal year ending
September 30, 2008, and has operating locations in the United
States, Canada, Mexico, Chile and Argentina.
ROCK-TENN CO: S&P Affirms Rating on Senior Unsec. Notes at 'BB-'
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it affirmed its
rating on Rock-Tenn Co.'s senior unsecured notes due 2016 at
'BB-' (two notches below the 'BB+' corporate credit rating). The
recovery rating remains at '6', indicating S&P's expectation of
negligible (0%-10%) recovery for noteholders in a payment default.
The affirmations follow the company's announcement of a
$100 million increase to the notes, under the existing indenture
dated March 5, 2008. The increase will bring the total size of
the note issue to $300 million. The company will use the proceeds
from the add-on together, if needed, with cash on hand or
borrowings under the revolving credit facility, to finance the
recently announced tender offer of about $100 million of its
senior secured notes due 2011.
Standard & Poor's also revised the recovery rating on Rock-Tenn's
senior secured notes to '3', indicating S&P's expectation of
meaningful (50%-70%) recovery in a payment default, from '4'.
This action reflects the reduced secured debt as a result of the
tender offer providing additional value available to the secured
debtholders. The issue-level rating was affirmed at 'BB+'.
The corporate credit rating on Norcross, Georgia-based packaging
products manufacturer Rock-Tenn is due to its aggressive financial
risk profile, the highly competitive nature of the paperboard and
corrugated packaging industry, its exposure to volatile raw
material and energy costs, and its exposure to the lingering
recession. Rock-Tenn's good competitive position, the benefits it
gains from forward integration, relatively stable cash flow
generation, and improving credit measures somewhat offset these
factors.
The company's credit measures continue to improve as a result of
increased earnings and lower debt balances. EBITDA increased to
$476 million for the 12 months ended March 31, 2009, from
$317 million during the previous-year period, reflecting earnings
contribution from Southern Container, higher selling prices, and
benefits from cost-reduction efforts. During this period,
adjusted debt declined to $1.6 billion from $1.9 billion as the
company used excess cash flow to repay debt. As a result, debt to
EBITDA improved to 3.3x, a level Standard & Poor's would consider
in line with the rating.
Rock-Tenn is one of the leading manufacturers of paperboard,
containerboard, consumer and corrugated packaging, and
merchandising displays in North America.
Ratings List
Rock-Tenn Co.
Corp. credit rating BB+/Stable/--
Ratings Affirmed
Senior unsecured BB-
Recovery rating 6
Ratings Affirmed And Revised
To From
-- ----
Senior secured debt BB+ BB+
Recovery rating 3 4
RR VALVE: Voluntary Chapter 11 Case Summary
-------------------------------------------
Debtor: RR Valve, Inc., a Texas corporation
5201 Mitchelldale # A-11
Houston, TX 77092
Bankruptcy Case No.: 09-33377
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Southern District of Texas (Houston)
Judge: Letitia Z. Paul
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.
SAVANNAH BLUEPRINT: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: Savannah Blueprint Company
dba DPI
dba Digital Printed Images
dba Island Repro
Post Office Box 16417
Savannah, GA 31416
Bankruptcy Case No.: 09-41038
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Southern District of Georgia (Savannah)
Debtor's Counsel: C. James McCallar, Jr., Esq.
McCallar Law Firm
P. O. Box 9026
Savannah, GA 31412
Tel: (912) 234-1215
Fax: (912) 236-7549
Email: mccallarlawfirm@aol.com
Total Assets: $260,145
Total Debts: $1,435,517
A list of the Company's 20 largest unsecured creditors is
available for free at:
http://bankrupt.com/misc/gasb09-41038.pdf
The petition was signed by George P. Martin, CEO of the Company.
SEALY CORP: Moody's Assigns 'Ba3' Rating on Senior Secured Notes
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Sealy
Corporation's proposed senior secured notes. At the same time,
Sealy's B2 corporate family rating and probability-of-default
rating was affirmed as was the Caa1 rating on the senior
subordinated notes and SGL 3 liquidity rating. The ratings
outlook remains negative.
Moody's expects that the proceeds from the $350 million secured
notes together with proceeds from a $177 million convertible 3rd
lien note offering will be used to repay amounts outstanding under
the existing senior secured term loan and revolving credit
facility and improve its existing cash balances. The ratings on
the term loan and revolver will be withdrawn when the amounts are
repaid.
The Ba3 rating on the senior secured notes reflects a B2
probability-of-default rating and an LGD 2. The Ba3 senior
secured note rating also reflects its junior position to the new
proposed $100 million ABL revolving credit facility, its seniority
to subordinated notes and its upstream guarantees from operating
subsidiaries.
If the transaction closes under its current terms, the company's
liquidity profile will significantly improve and its liquidity
rating may be upgraded accordingly. Liquidity highlights of the
proposed refinancing are the lack of any maturities over the next
six years and a new $100 million ABL revolving credit facility,
which lacks financial covenants provided the borrowing capacity is
at least $15 million.
Sealy's B2 corporate family rating reflects the continuing
decrease in consumer spending over the last year, which has
resulted in a significant decrease in revenue, operating income
and cash flow and has put pressure on credit metrics. While the
severity of the decline may moderate later in the year, operating
performance and credit metrics are likely to remain weak in the
near term. Supporting Sealy's B2 rating is its strong market
position and brand names and its history of generating good
operating cash flow.
The ratings outlook remains negative due to the combination of
higher financial leverage from this transaction and the ongoing
uncertainty in discretionary consumer spending.
Ratings/assessments assigned:
-- $350 million senior secured notes due 2016 at Ba3 (LGD 2,
26%);
Ratings affirmed/assessments revised:
-- Corporate family rating at B2;
-- Probability of default rating at B2;
-- $300 million senior secured term loan due August 2011 at Ba3
(LGD 2, 28%);
-- $140 million senior secured term loan due August 2012 at Ba3
(LGD 2, 28%);
-- $125 million senior secured revolving credit facility due
January 2010 at Ba3 (LGD 2, 28%);
-- $390 million senior subordinated notes due 2014 at Caa1 (LGD
5 87% from LGD 5 83%);
-- Speculative grade liquidity rating at SGL 3;
Moody's also assigned these ratings pursuant to the company's
April 2, 2009 registration filing:
-- Senior secured shelf: (P) Ba3
Sealy Mattress Company, a wholly-owned subsidiary of Sealy
Corporation, is headquartered in Trinity, North Carolina. Net
sales for the twelve months ended February 2009 approximated $1.4
billion.
SEITEL INC: Declining Performance Cues S&P's to Junk Ratings
------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Seitel Inc. to 'CCC' from 'B-'. The
outlook is negative.
"The downgrade reflects the significant deterioration in operating
performance such that cash EBITDA declined to $5.2 million in the
first quarter of 2009 compared with $12.8 million for the same
period in 2008," said Standard & Poor's credit analyst Amy Eddy.
As a result of the significant reduction in North American
drilling activity, the company's operating and financial
performance have declined precipitously. Annualized first quarter
EBITDA is significantly less than trailing 12-month cash EBITDA of
approximately $87 million. S&P now expects financial performance
to be significantly below prior expectations. For the trailing
12-months ended March 31, 2009, the company's debt to cash EBITDA
was more than 4.6x and interest coverage was slightly more than
2.1x. If first-quarter results were annualized, interest coverage
would be significantly less than 1x and leverage would be well in
excess of 15x, indicating that at current operating levels the
company's debt load is unsustainable.
As of March 31, 2009, Houston, Texas-based Seitel had
$405 million in total balance sheet debt outstanding.
Seitel provides seismic data and processing services to North
American exploration and production companies ranging from small,
independent producers to major integrated firms. Therefore,
demand is closely correlated with the capital budgets of E&P
firms. For example, cash resales -- new contracts for data
licenses from the company's data library, payable in cash --
decreased by approximately 50% in the first quarter of 2009
compared with the first quarter of 2008. S&P expects results to
remain very soft in 2009 because of the sharp decline in commodity
prices and corresponding capital expenditure reductions.
The outlook is negative. S&P could quickly lower the ratings if
S&P expects that the company is unable to make an interest
payment. A positive rating action is unlikely in the near term.
SEMGROUP LP: To Distribute $2.27BB to Creditors Under Plan
----------------------------------------------------------
SemGroup, LP and certain of its subsidiaries on Friday announced
the filing of their Plan of Reorganization and related Disclosure
Statement with the U.S. Bankruptcy Court for the District of
Delaware.
"The filing of the plan and disclosure statement is a major
milestone in SemGroup's restructuring," said Terry Ronan, the
company's president and chief executive. "The plan will allow
SemGroup to exit bankruptcy with a stronger balance sheet, reduced
debt, and more efficient operations to ensure the company remains
a leader in the gathering, storage, transportation and
distribution of crude oil, refined petroleum products, and natural
gas."
Key provisions of the Company's Plan, as filed with the Bankruptcy
Court, include:
-- Reorganization of all business units with the exception of
the domestic operations of SemMaterials, the assets of
which have previously been sold in a series of
transactions.
-- Creditors will own substantially all of the equity of the
Reorganized company.
-- $500 million senior secured revolving credit facility to be
provided by a subset of the Company's Pre-Petition
Lenders. Borrowings under the facility will provide
working capital to the company once it exits Chapter 11
protection, Letters of Credit, and allow the Company to
re-enter the crude marketing business.
-- Emergence from Chapter 11 as a publicly traded company.
-- The creation and funding of a Litigation Trust for the
purpose of continuing to pursue certain claims of the
estate.
-- Issuance of $300 million in New Secured Notes.
-- Refinancing of an existing $120 million secured facility
used to partially fund construction of the White Cliffs
pipeline.
-- The Plan contemplates the Canadian subsidiaries will
remain a part of the reorganized company. Concurrent with
the U.S. proceedings, the Canadian subsidiaries are
undergoing reorganization in a Canadian court.
-- The Company expects to maintain its headquarters in Tulsa,
Oklahoma.
"I would like to thank all of our talented employees who have
worked so hard to make this plan possible and ensure SemGroup's
place atop the industry for years to come," Ronan said. "While we
have accomplished much, there's still a lot of work ahead of us.
We all need to remain focused to make the restructuring a
success."
The Disclosure Statement includes an overview of the Company's
restructuring progress and other information about the company, a
description of distributions to creditors and an analysis of the
Plan's feasibility, as well as many of the technical matters
required prior to exiting from Chapter 11, such as descriptions of
who will be eligible to vote on the Plan and the voting process.
About SemGroup LP
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No.
08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark
D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller,
Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil,
Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A.
Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors
in their restructuring efforts. Kurtzman Carson Consultants
L.L.C. is the Debtors' claims agent. The Debtors' financial
advisors are The Blackstone Group L.P. and A.P. Services LLC.
Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye
Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter
Anderson & Corroon LLP, represent the Debtors' prepetition
lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.,
is the appointed monitor of SemCanada Crude Company and its
affiliates' reorganization proceedings before the Canadian
Companies' Creditors Arrangement Act. The CCAA stay expires on
Nov. 21, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy
News. The newsletter tracks the chapter 11 proceedings undertaken
by SemGroup L.P. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-700)
SEMGROUP LP: Suppliers Battle Banks Over Unpaid Oil Sales
---------------------------------------------------------
Steven Church at Bloomberg News reports that suppliers to
SemGroup LP opened a two-day court battle with lenders led by Bank
of America Corp. to win payment for 3.1 million barrels of crude
the bankrupt oil transporter bought last year at near-record
prices. About 900 small oil suppliers claim state laws in Texas,
Oklahoma and Kansas give them the right to be paid before Bank
of America and other lenders owed about $2.5 billion. The
dispute also involves the commodities-trading unit of Goldman
Sachs Group Inc., J. Aron & Co., which may have purchased some
of the oil from SemGroup.
"We're not talking about three-digit numbers here,"
Bankruptcy Judge Brendan Linehan Shannon said in court today in
Wilmington, Delaware. "There is enough at stake for people to
fight over."
In the two months before SemGroup filed bankruptcy, it promised to
pay $404 million for the oil, or about $138 a barrel, Bloomberg
said, citing court records filed by J. Aron. SemGroup filed for
bankruptcy July 22, after acknowledging $2.4 billion in energy-
trading losses.
SemGroup, according to Bloomberg, has about $600 million in cash
available to pay producers should they prevail, according to court
documents. Should Bank of America win, the lenders would have
first call on that cash and on the proceeds from the sale of
SemGroup's assets.
Producers' Complaint vs. Debtors
Samson Resources Company, Lone Star, LLC, Samson Contour Energy
E&P, LLC, JMA Energy Company, L.L.C., New Dominion, L.L.C.,
Benson Mineral Group, Inc., The Mint Limited Partnership,
Chesapeake Exploration Limited Liability Company, Chesapeake
Energy Marketing, Inc., Special Energy Corporation, DC Energy,
Inc., Dunne Equities, Inc., Lario Oil & Gas Company, McCoy
Petroleum Corporation, Braden-Deem, Inc., W.D. Short Oil Co.,
L.L.C., Short & Short, L.L.C., Weinkauf Petroleum, Inc., Special
Energy Corporation, Veenker Resources, Inc., Lance Ruffel Oil &
Gas Corporation, and St. Mary Land Exploration Company, filed a
complaint against the Debtors, seeking declaratory relief
pursuant to Rule 7001(9) of the Federal Rules of Bankruptcy
Procedure.
The Oklahoma Producers own and represent working interests,
royalty interests, overriding interests and other interests under
applicable law in the mineral acreage and oil and gas produced
from various wells in the State of Oklahoma. They also operate
numerous wells pursuant to operating agreements executed with
non-operating interest owners as well as pooling orders issued by
the Oklahoma Corporate Commission.
As of the Petition Date, during the period from June 1 to July
22, 2008, the Debtors held unsold oil and gas product from wells
located in the State of Oklahoma. The Debtors also held
receivables representing accounts generated from the sale of
Oklahoma Products, as well as cash representing payments for the
sale of Oklahoma Products.
Since the Petition Date, the Debtors continued to sell Oklahoma
Products, generating additional Oklahoma Receivables. They have
also made collections on account of the sale of Oklahoma
Products, resulting in additional cash.
The Oklahoma Producers assert that pursuant to the Oklahoma
Production Revenue Standards Act, all proceeds from the sale of
the Oklahoma Products will be regarded separate and distinct from
all other funds until they are paid to legally entitled Oklahoma
Producers, and any person holding proceeds from the sale is
required to hold those for the benefit of the legally entitled
owners of the proceeds. The Oklahoma Producers are owners, they
assert, thus all revenue derived from the sale of Oklahoma
Products must be held in trust until the Debtors have remitted
the full payment.
The Oklahoma Producers maintain that they hold a security
interest and lien on all Oklahoma Products sold and delivered in
June and July 2008, to secure the obligations of the Debtors.
They also hold a security interest and lien in the Oklahoma
Products, the Oklahoma Receivables and the Oklahoma Cash.
According to the Oklahoma Producers, Bank of America, as
administrative agent for the secured parties, asserts that it
hold a first and prior security interest and lien in the Oklahoma
Products, the Oklahoma Receivables and the Oklahoma Cash. The
Oklahoma Producers contest the validity of BofA's liens and
interests on the Oklahoma Products, and insist that those
interests are subordinate to their own. They maintain that
BofA's lien and interests do not attach to the Oklahoma Products
because they constitute property held in trust.
The Oklahoma Producers ask that the Court require the Debtors to
provide an accounting of:
(i) all Oklahoma Products sold during the period from
June 1 to July 22, 2008;
(ii) the sale and disposition of all Oklahoma Products sold to
the Debtors during the period;
(iii) the amount of Oklahoma Products, the Oklahoma Receivables
and the Oklahoma Cash on hand as of the Petition Date;
and
(iv) the use or disposition of all Oklahoma Products, Oklahoma
Receivables and Oklahoma Cash since the Petition Date.
BofA Seeks Judgment on Oklahoma Products
Bank of America, N.A., as administrative agent to the Debtors'
prepetition secured lenders, seeks a summary judgment on the
threshold questions of law pertaining to the interpretation of
the Oklahoma Lien Act and Oklahoma Production Revenue Standards
Act.
In a brief filed with the Court, Laurie Selber Silverstein, Esq.,
at Potter Anderson & Corroon LLP, in Wilmington, Delaware,
asserts that BofA's prior perfected security lien has priority,
even if the Producers satisfied the requirements of the Lien Act.
BofA also argues that the Oklahoma Statute provides no valid
basis to subordinate BofA's prior perfected security interest in
the Debtors' assets, citing that the Producers' reading of the
Oklahoma PRSA is inconsistent with Oklahoma trust law and is at
odds with the statute's plain terms and legislative history.
Accordingly, BofA asserts that the Court should render a summary
judgment that gives BofA priority on all of the Producers' claims
with respect to Oklahoma products and proceeds.
About SemGroup LP
SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream
service company providing the energy industry means to move
products from the wellhead to the wholesale marketplace. SemGroup
provides diversified services for end users and consumers of crude
oil, natural gas, natural gas liquids, refined products and
asphalt. Services include purchasing, selling, processing,
transporting, terminaling and storing energy. SemGroup serves
customers in the United States, Canada, Mexico, Wales, Switzerland
and Vietnam.
SemGroup L.P. and its debtor-affiliates filed for Chapter 11
protection on July 22, 2008 (Bankr. D. Del. Lead Case No.
08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark
D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller,
Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil,
Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A.
Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors
in their restructuring efforts. Kurtzman Carson Consultants
L.L.C. is the Debtors' claims agent. The Debtors' financial
advisors are The Blackstone Group L.P. and A.P. Services LLC.
Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye
Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter
Anderson & Corroon LLP, represent the Debtors' prepetition
lenders.
SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude
Company, sought protection under the Companies' Creditors
Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc.,
is the appointed monitor of SemCanada Crude Company and its
affiliates' reorganization proceedings before the Canadian
Companies' Creditors Arrangement Act. The CCAA stay expires on
Nov. 21, 2008.
SemGroup L.P.'s consolidated, unaudited financial conditions as of
June 30, 2007, showed $5,429,038,000 in total assets and
$5,033,214,000 in total debts. In their petition, they showed
more than $1,000,000,000 in estimated total assets and more than
$1,000,000,000 in total debts.
Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy
News. The newsletter tracks the chapter 11 proceedings undertaken
by SemGroup L.P. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-700)
SENTINEL MANAGEMENT: Ad Hoc Committee Must Pay Its Own Fees
-----------------------------------------------------------
WestLaw reports that an ad hoc creditors' committee, in
successfully opposing a provision of a proposed Chapter 11 plan
that would have resolved a dispute over whether property was part
of the estate, on the ground that this property-of-the-estate
issue required an adversary proceeding, and in convincing the
trustee to amend the plan to establish a reserve for the benefit
of creditors which the committee represented, did not make a
"substantial contribution" to the case, within the meaning of an
administrative expense provision. The committee's efforts were
not in the nature of an "extraordinary" act, and even if they
were, the committee did not demonstrate, at least regarding this
reserve issue, that its actions were not undertaken primarily for
the benefit of creditors that it represented. In re Sentinel
Management Group, Inc., --- B.R. ----, 2009 WL 1220651 (Bankr.
N.D. Ill.).
About Sentinel Management
Based in Northbrook, Illinois, Sentinel Management Group Inc. --
http://www.sentinelmgi.com/-- is a full service firm offering a
variety of security solutions. The company filed a voluntary
chapter 11 petition on August 17, 2007 (Bankr. N.D. Ill. Case No.
07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and
Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black
Rosenbloom & Moritz, Ltd. represent the Debtor as counsel. Quinn,
Emanuel Urquhart Oliver & Hedges, LLP, represents the Official
Committee of Unsecured Creditors as counsel. DLA Piper US LLP is
the Committee's co-counsel. When the Debtor sought bankruptcy
protection, it listed assets and debts of more than $100 million.
On August 28, 2007, the Court approved Frederick Grede as the
Debtor's Chapter 11 Trustee. Marc I. Fenton, Esq., at DLA Piper
US LLP, and Vincent E. Lazar, Esq, at Jenner & Block LLP,
represent the Chapter 11 Trustee as counsel.
As reported by the Troubled Company Reporter on January 2, 2009,
the Court confirmed on December 15, 2008, the plan of liquidation
of Sentinel, and Mr. Grede is managing the liquidation. A copy of
the Plan is available for free at:
http://bankrupt.com/misc/SentinelManagement_4thAmendedPlan.pdf
SHAWN BURGUENO: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Shawn Burgueno
1141 E. Tuckey Ln.
Phoenix, AZ 85014
Bankruptcy Case No.: 09-10375
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Randolph J. Haines
Debtor's Counsel: D. Lamar Hawkins, Esq.
Aiken Schenk Hawkins & Ricciardi PC
4742 North 24th Street
Suite 100
Phoenix, AZ 85016
Tel: (602) 248-8203
Fax: (602) 248-8840
Email: dlh@ashrlaw.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 Mr. Burgueno.
SIDNEY KIMMEL: Auction Sale of Assets Set for June 15
-----------------------------------------------------
Sidney Kimmel Cancer Center asks the U.S. Bankruptcy Court for the
Southern District of California for authority to sell
substantially all of its assets, free and clear of all liens,
claims, encumbrances and interests to Burnham Institute for
Medical Research, subject to competitive bidding.
Pursuant to the Asset Purchase Agreement with BIMR, the Debtor
agreed to sell its 72,000 square foot research facility located on
3.5 acres in the Torrey Pines Mesa in San Diego, California, a
2.5 acre vacant lot adjacent to the research facility, and the
majority of the fixtures, equipment, furniture, furnishings,
appliances, supplies, and research animals owned by the Debtor in
exchange for BIMR assuming liabilities estimated to be
approximately $28.15 million as of June 1, 2009.
On May 8, 2009, the Bankruptcy Court approved the bidding and sale
procedures. Pursuant to the approved procedures, the initial
overbid must be $800,000 more than BIMR's offer and subsequent
overbids must be $150,000 more than the previous bid.
All potential bidders must comply with the bidding and sale
procedures and qualify as a Qualified Over Bidder no later than
June 10, 2009.
The auction for the assets and hearing on the sale motion is
scheduled to occur on June 15, 2009, at 2:30 p.m.
Objections to the sale motion, if any, must be filed with the
Bankruptcy Court and served on all parties-in-interest not later
than June 1, 2009.
For further information, please contact:
Jan D'Alvise
Interim Chief Executive Officer
Sidney Kimmel Cancer Center
10905 Road to the Cure
San Diego
California 92121
Based in San Diego, California, Sidney Kimmel Cancer Center is a
research institute. The Company filed for Chapter 11 on April 17,
2009 (Bankr. S. D. Calif. Case No. 09-05065). Victor A.
Vilaplana, Esq., at Foley & Lardner represents the Debtor in its
restructuring effort. The Debtor has assets and debts both
ranging from $10 million to $50 million.
SOUTH SIDE: U.S. Trustee Sets Meeting of Creditors for June 8
-------------------------------------------------------------
The U.S. Trustee for Region 2 will convene a meeting of creditors
in South Side House LLC's Chapter 11 case on June 8, 2009, at
10:00 a.m. The meeting will be held at 271 Cadman Plaza East,
Room 4529, Brooklyn, New York.
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.
Brooklyn, New York-based South Side House LLC is a single asset
real estate company.
The Company filed for Chapter 11 on April 30, 2009 (Bankr. E. D.
N.Y. Case No. 09-43576). Leo Fox, Esq., represents the Debtor in
its restructuring efforts. The Debtor's assets and debts both
range from $10,000,001 to $50,000,000.
SOUTHEASTERN INCOME: Section 341(a) Meeting Scheduled for May 29
----------------------------------------------------------------
The U.S. Trustee for Region 21 will convene a meeting of creditors
in Southeastern Income Properties, Inc., Gulf South Income
Properties, Inc.'s Chapter 11 cases on May 29, 2009, at 3:00 p.m.
The meeting will be held at Room 100-B, Timberlake Annex, 501 E.
Polk Street, Tampa, Florida.
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.
Tampa, Florida-based Southeastern Income Properties, Inc. dba
EconoLodge and Gulf South Income Properties, Inc. filed for
separate Chapter 11 on May 1, 2009, (Bankr. M. D. Fla. Lead Case
No.: 09-0907) Buddy D. Ford, P.A. represents the Debtors in their
restructuring efforts. The Debtors listed assets between
$100 million to $500 million and debts between $500,000 to
$1 million.
SPEEDWAY MOTORSPORTS: Moody's Puts 'Ba1' Rating on $250MM Notes
---------------------------------------------------------------
Moody's Investors Service assigned a Ba1 rating to Speedway
Motorsports, Inc's proposed $250 million guaranteed senior
unsecured notes due June 1, 2016. SMI plans to utilize the net
proceeds to repay revolver borrowings. The senior note offering
and revolver pay down improve SMI's liquidity position, but the
SGL-4 speculative grade liquidity rating continues to reflect the
refinancing risk associated with the March 2010 revolver maturity
and increasingly tight prospective compliance with financial
maintenance covenants. Loss given default assessments were
updated to reflect the revised priority of claim structure. The
rating outlook remains negative.
Assignments:
Issuer: Speedway Motorsports Inc.
-- Senior unsecured notes, assigned Ba1, LGD3 - 38%
LGD Updates:
Issuer: Speedway Motorsports Inc.
-- Senior secured revolver, changed to LGD2 - 29% from LGD2 -
27% (no change to Baa3 rating)
-- Senior subordinated notes, changed to LGD5 - 83% from LGD5 -
81% (no change to Ba2 rating)
The senior notes have senior unsecured guarantees from operating
subsidiaries while the guarantee of the revolver is supported by a
stock pledge of subsidiaries. Moody's believes the stock pledge
provides limited support to the revolver guarantee, and ranks the
revolver and senior notes the same in Moody's loss given default
notching model. However, the mandatory paydown of the revolver
from 100% of net asset sale proceeds (subject to a six month
reinvestment window) and the lender control created by financial
maintenance covenants in the revolver provide protection to the
revolver lenders that is not afforded to the senior note holders.
Moody's is therefore utilizing its one notch override discretion
of the loss given default modeling template implied outcome to
rate the senior notes Ba1, which is one notch below the Baa3
revolver rating. The senior notes have a change of control put at
101% of par and a limitation on liens that covers all assets with
carve-outs permitting up to $450 million of revolver debt to be
secured, or secured debt if the senior secured leverage ratio does
not exceed 2.5x (estimated 1.5x LTM 3/31/09).
Cash interest costs will increase as a result of the offering and
Moody's expects EBITDA will decline in a 20% range in 2009 due to
weakness in spectator and corporate spending at SMI's motorsports
facilities. However, Moody's believes the pressures are largely
cyclical and anticipates free cash flow in 2009 will exceed the
$51 million generated in 2008 due to a reduction in capital
spending and significantly lower cash taxes resulting from lower
earnings and the end of accelerated deferred tax liability
payments ($28 million annually from 2005-2008) related to the 2005
extension of the depreciable life on motor sports facilities.
The SGL-4 rating continues to reflect Moody's opinion that SMI
does not have sufficient excess cash and projected free cash flow
to fund the remaining $142 million drawn on the revolver expiring
on March 31, 2010 absent an incremental capital raise or revolver
renewal. SMI has indicated it is currently negotiating a term
sheet for a replacement revolver, and the liquidity rating would
likely be upgraded to SGL-3 if a new revolver is put in place and
the company is projected to remain in compliance with its
covenants.
The negative rating outlook reflects the pressure on liquidity
from the approach of the revolver maturity and the thinning
covenant cushion, as well as Moody's concern that SMI is managing
its financial structure aggressively by distributing cash to
shareholders at a time when the consumer-led recession is
pressuring the company's EBITDA and its ability to maintain
compliance with financial covenants. Continued aggressive
financial management, debt-to-EBITDA (3.1x LTM 3/31/09
incorporating Moody's standard adjustments) sustained above a 3x
range, or an inability to put in place a new revolver over the
near term with greater covenant cushion could lead to downward
rating pressure.
The last rating action was on March 24, 2009 when Moody's changed
SMI's rating outlook to negative from stable and downgraded the
speculative-grade liquidity rating to SGL-4 from SGL-2.
Moody's subscribers can find further details on SMI's rating
rationale in the credit opinion published on www.moodys.com.
SMI's ratings were assigned by evaluating factors Moody's believe
are relevant to the credit profile of the issuer, such as i) the
business risk and competitive position of the company versus
others within its industry, ii) the capital structure and
financial risk of the company, iii) the projected performance of
the company over the near to intermediate term, and iv)
management's track record and tolerance for risk. These
attributes were compared against other issuers both within and
outside of SMI's core industry and SMI's ratings are believed to
be comparable to those of other issuers of similar credit risk.
SMI, headquartered in Concord, North Carolina, is the second
largest promoter, marketer and sponsor of motor sports activities
in the US primarily through its ownership of seven major race
tracks including New Hampshire Motor Speedway, which SMI acquired
for $340 million in January 2008. NASCAR sanctioned events
account for the majority of SMI's approximate $600 million annual
revenue.
SPEEDWAY MOTORSPORTS: S&P Assigns 'BB' Rating on $250 Mil. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it has assigned a
'BB' issue-level rating (the same as the corporate credit rating),
and a '3' recovery rating to Concord, North Carolina-based
Speedway Motorsports Inc.'s proposed $250 million senior unsecured
notes due 2016. A recovery rating of '3' indicates S&P's
expectation of meaningful (50% to 70%) recovery in the event of a
payment default. Proceeds from the offering will be used to
reduce outstanding borrowings under the company's existing
revolving credit facility. At the same time, S&P revised its
ratings outlook on Speedway Motorsports to negative from stable.
S&P also lowered the issue-level rating on the $330 million senior
subordinated notes to 'B+' (two notches lower than the corporate
credit rating) from 'BB'. The recovery rating is revised to '6',
indicating S&P's expectation of negligible (0%-10%) recovery in
the event of a payment default, from '4'.
"The outlook revision reflects our concerns that the recession
will resulting in a double-digit decline in both revenues and
EBITDA, pushing lease adjusted debt leverage above 3.3x, and
narrowing compliance with the existing credit facility's
covenants," said Standard & Poor's credit analyst Andy Liu.
Separately, S&P expects that the company will seek to obtain a new
credit facility over the near term.
The 'BB' rating reflects Speedway Motorsports' concentrated
earnings profile, uncertainty regarding the earnings potential of
its Kentucky Speedway acquisition, and relatively high debt
leverage. The company's good market position in the motorsports
industry and high barriers to entry are positives.
Speedway Motorsports is the smaller of two major companies that
host auto races sanctioned by National Association for Stock Car
Auto Racing. Rival International Speedway Corp. is controlled by
the same family that controls NASCAR. High-margin broadcasting
and sponsorship contracts, account for the majority of Speedway's
EBITDA and represent stabilizing factors for revenues and EBITDA.
STAR TRIBUNE: Gets Green Light to Amend Two CBAs with Unions
------------------------------------------------------------
The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the
Southern District of Delaware authorized Star Tribune Holdings
Corporation and The Star Tribune Company to enter into a letter of
agreement that modifies their collective bargaining agreements
with (i) Graphic Communications Conference/International
Brotherhood of Teamsters, Local 1-M; and (ii) Minnesota Newspaper
Guild/Typographical Union, CWA Local 37002.
The Court found that the letters of agreement have been approved
by majority of Graphic Communications and Minnesota Newspaper.
The original letters of agreement of Graphic Communications and
Minnesota Newspaper expired last year, the Debtors say. Both
letters of agreement provides for adjustments to wages, overtime,
paid time off and benefits to Graphic Communications and Minnesota
Newspaper employees, the Debtors note.
According to the Debtors, Graphic Communications LOA is expected
to save $139,000 in labor cost annually while Minnesota Newspaper
LOA would result at least $1.655 million in annualized cost
savings.
A copy of the letter of agreement of Graphic Communications is
available for free at http://ResearchArchives.com/t/s?3cf5
A copy of the letter of agreement of Minnesota Newspaper is
available for free at http://ResearchArchives.com/t/s?3cf6
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. When the Debtors filed for protection from their
creditors, they listed assets and debts between
$100 million and $500 million each.
* * *
The Court has extended the Debtors' exclusive periods to file a
plan of reorganization until August 13, 2009.
STATION CASINOS: Has $33.7MM Q1 Loss, Forbearance Until May 29
--------------------------------------------------------------
Station Casinos, Inc., incurred a net loss of $33,709,000 on
$282,748,000 of net revenues for the first quarter ended March 31,
2009.
The Company's net revenues for the first quarter ending March 31,
2009, were down 20% from $378,780,000 for the first quarter. The
Company reported Adjusted EBITDA for the quarter of $98.0 million,
a decrease of 28% compared to the prior year's first quarter. For
the first quarter, the Company reported a net loss of $33.7
million as compared to a net loss of $70.9 million in the prior
year's first quarter.
During the first quarter, the Company incurred $5.3 million in
write-downs and other charges, of which $4.8 million related to
loss related to a disposition of a land parcel, $0.1 million
related to loss on asset disposals and $0.2 million related to
severance expense. The Company also incurred $0.6 million in costs
to develop new gaming opportunities, $2.8 million of expense
related to equity-based awards, $1.7 million of preopening
expenses and $4.0 million in legal fees related to the proposed
debt restructuring and other non-recurring costs. In addition, the
Company purchased $48.0 million in aggregate principal amount of
its outstanding senior subordinated notes during the first quarter
which resulted in a $40.3 million gain on early retirement of
debt.
The Company's first quarter earnings from its Green Valley Ranch
joint venture were $6.7 million, which represents a combination of
the Company's management fee plus 50% of Green Valley Ranch's
operating income. For the first quarter, Green Valley Ranch
generated Adjusted EBITDA before management fees of $17.4 million,
a decrease of 31% compared to the same period in the prior year.
Green Valley Ranch reported net income of $1.3 million for the
first quarter as compared to net income of $1.4 million in the
same period in the prior year.
Las Vegas Market Results
For the first quarter, net revenues from the Major Las Vegas
Operations, excluding Green Valley Ranch, were $258.8 million, a
19% decrease compared to the prior year's first quarter, while
Adjusted EBITDA from those operations decreased 24% to $87.1
million from $114.2 million in the same period in the prior year.
The Major Las Vegas Operations reported a net loss of $5.7 million
for the first quarter as compared to net income of $6.7 million in
the same period in the prior year.
Adjusted EBITDA is not a generally accepted accounting principle
("GAAP") measurement and is presented solely as a supplemental
disclosure because the Company believes that it is a widely used
measure of operating performance in the gaming industry and is a
principal basis for the valuation of gaming companies. EBITDA and
Adjusted EBITDA are further defined in footnote 1.
Balance Sheet and Capital Expenditures
The Company had total assets of $5,762,499,000 against total debts
of $6,467,770,000 as of March 31, 2009.
Long-term debt was $5.74 billion as of March 31, 2009. Total
capital expenditures were $14.2 million for the first quarter
which consisted primarily of maintenance capital purchases and
other projects. Equity contributions to joint ventures during the
first quarter were $1.9 million.
A copy of the Company's First Quarter report is available for free
at http://researcharchives.com/t/s?3cfc
Forbearance Until May 29
As previously disclosed, on March 2, 2009, Station Casinos, Inc.
entered into a forbearance agreement, as amended by the amendment
to note forbearance agreement dated April 14, 2009, with the
holders of a majority in principal amount of each of the 6% Senior
Notes due 2012, 7-3/4% Senior Notes due 2016, 6-1/2% Senior
Subordinated Notes due 2014, 6-7/8% Senior Subordinated Notes due
2016 and 6-5/8% Senior Subordinated Notes due 2018. In addition,
on March 2, 2009, the Company also entered into a forbearance
agreement, as amended by the first amendment to forbearance
agreement dated April 14, 2009, with the lenders holding a
majority in principal amount of the loans and commitments under
its Credit Agreement dated as of November 7, 2007.
On May 15, 2009, the Company and the Holders of a majority in
principal amount of each series of Notes entered into Amendment
No. 2 to Forbearance Agreement, pursuant to which the Holders
agreed to extend the "Forbearance Period" from May 15, 2009 to
May 29, 2009.
On May 15, 2009, the Company and the Lenders holding a majority in
principal amount of the loans and commitments under its Credit
Agreement also entered into a Second Amendment to Forbearance
Agreement, pursuant to which the Lenders agreed to extend the
forbearance period for the Company from May 15, 2009 to May 29,
2009.
The Company said that the extended forbearance period will permit
it to continue ongoing discussions regarding the terms of its
restructuring with the Lenders and the holders of its Notes.
Potential Bankruptcy Filing
The Company is in discussions regarding a restructuring with the
lenders under its Credit Facility, CMBS Facility and land loan and
the holders of its Notes; however, the Company can provide no
assurance that it will be able to successfully restructure its
debt obligations. If the Company is not successful in
restructuring its debt obligations, the Company may be required to
seek protection under Chapter 11 of the U.S. Bankruptcy Code.
The Company has retained the services of outside advisors to
assist the Company in instituting and implementing a restructuring
transaction. As of March 31, 2009, the Company has incurred a
total of $17.9 million in fees from legal firms and financial
advisory firms for the various lenders with whom it is in
discussions regarding debt restructuring.
About Station Casinos
Station Casinos, Inc. is a gaming and entertainment company that
currently owns and operates nine major hotel/casino properties
(one of which is 50% owned) and eight smaller casino properties
(three of which are 50% owned), in the Las Vegas metropolitan
area, as well as manages a casino for a Native American tribe.
* * *
As reported by the Troubled Company Reporter on April 6, 2009,
Standard & Poor's Ratings Services said that it lowered its issue-
level rating on Station Casinos's 6% senior notes to 'D' from
'CC'. S&P also removed the rating from CreditWatch, where it was
initially placed with negative implications Dec. 16, 2008. These
actions reflect the missed April 1, 2009 interest payment on the
notes. A payment default has not occurred relative to the legal
provisions of the notes, because there is a 30-day grace period to
make the payment. However, S&P consider a default to have
occurred, even if a grace period exists, when the nonpayment is a
function of the borrower being under financial stress -- unless
S&P is confident that the company will make the payment in full
during the grace period.
As reported by the Troubled Company Reporter on February 24,
Moody's Investors Service said Station Casinos's ratings are not
affected by the announcement that it failed to make a February 15,
2009 scheduled interest payment on its 7.75% senior notes due
2016. Standard & Poor's Ratings Services lowered its issue-level
rating on Station Casinos' 7.75% senior notes to 'D' from 'CC'.
The rating action reflects the missed February 15, 2009 interest
payment on the notes.
SUNTRUST BANKS: Moody's Reviews Ba2 Preferred Stock
---------------------------------------------------
Moody's Investors Service placed on review for possible downgrade
the ratings on hybrid securities of four U.S. bank holding
companies. The issuers and their affected securities are:
* Citigroup's trust preferred securities rated Baa3 and Eggs Upper
Tier II notes rated Ba1
* Fifth Third Bancorp's preferred stock rated Baa3 and its trust
preferred securities rated Baa2
* KeyCorp's preferred stock rated Baa3 and its trust preferred
securities rated Baa2
* SunTrust Banks, Inc's preferred stock rated Ba2, trust preferred
securities rated Baa2, and SunTrust Real Estate Investment
Corporation's Baa3 REIT preferred stock.
Moody's added that its ratings on Regions Financial Corporation
are currently on review for possible downgrade and the Baa1 rating
on Region's trust preferred securities will be reviewed in
conjunction with the four other issuers' hybrid securities.
Moody's said the reviews reflect its opinion that the probability
of a missed dividend or interest payment on these securities has
increased because these companies must raise capital in response
to the outcome of the U.S. government's stress test.
These firms must submit plans to build their capital "buffer"
within the next month, and complete the execution of the plan
within the next six months. In deciding which securities ratings
to put on review for possible downgrade, Moody's analyzed each of
the banks' capital raising needs and considered the potential
methods to achieve this requirement. That is, Moody's considered
each of the bank's capital structures and how far up the capital
structure the bank may need to offer an exchange in order to raise
the amount of capital required by the U.S. government.
In coming to a conclusion about the rating outcome for these
securities, Moody's reviews will focus on these:
A) the likelihood that these five companies (including Regions
Financial) can successfully raise capital from their own
resources -- including through common equity issuance, asset
sales, and internal capital generation.
B) the likelihood of each company needing to suspend payments on
its preferred or hybrid securities in order to increase the
success of any exchange offers.
C) the likelihood that any of these companies will require
additional capital from the U.S. government, including the
conversion of any existing TARP preferred or the need to take
additional U.S. government capital. This is noteworthy because
Moody's believes that a conversion of government-held TARP
preferred shares, or a further government capital infusion
would result in significant pressure on a bank to eliminate the
payment on its preferred or hybrid securities.
D) The expected loss on each security if the company were to
eliminate payments on the security.
Moody's expects that it will conclude these reviews in the next
few weeks.
Previous Rating Action And Principal Methodologies
Moody's last rating action for Citigroup was on March 4th, 2009
when it lowered the senior debt ratings of Citigroup Inc. to A3
from A2, the senior subordinated debt to Baa1 from A3, the junior
subordinated debt to Baa3 from A3 with a negative outlook (issued
by various Citigroup Capital Trust vehicles), and the preferred
debt ratings to Ca from Baa3. The short-term rating at Citigroup
Inc. was confirmed at Prime-1. Citibank N.A.'s rating for
deposits was lowered to A1 from Aa3, and its Prime-1 short-term
rating was affirmed. The Citibank's bank financial strength
rating was confirmed at C- with a negative outlook, while its
baseline credit assessment was lowered to Baa2 from Baa1. All
ratings were assigned a stable outlook except for Citibank's bank
financial strength rating and Citigroup's junior subordinated debt
rating. These actions concluded a review that commenced on
December 18th, 2008.
Moody's last rating action for Fifth Third Bancorp was on April
14th, 2009 when it downgraded the ratings of Fifth Third Bancorp
and the bank financial strength rating of its operating banks by
two notches (senior debt at the holding company to Baa1 from A2;
BFSR to C from B-). Fifth Third Bancorp's short-term rating was
also downgraded, to Prime-2 from Prime-1. The long-term debt and
deposit ratings of Fifth Third Bank, Ohio and Fifth Third Bank,
Michigan, were lowered by one notch (long-term deposits to A2 from
A1). The Prime-1 short-term ratings of both bank subsidiaries
were affirmed. Following these rating actions, the outlook on
Fifth Third and its subsidiaries is negative.
Moody's last rating action for Keycorp was on April 30th, 2009
when it downgraded the senior debt rating of KeyCorp to Baa1 from
A2, the subordinated debt rating to Baa2 from A3, and the
preferred stock rating to Baa3 from Baa1. The holding company's
short-term rating was downgraded to Prime-2 from Prime-1. The
long-term ratings of KeyBank National Association, the lead bank
subsidiary, were also downgraded. KeyBank's financial strength
rating was lowered to C from B-, its long-term deposits and senior
debt were lowered to A2 from A1, and its subordinated debt rating
was lowered to A3 from A2. The bank's Prime-1 short-term rating
was affirmed. Following these rating actions, the outlook on Key
and its subsidiaries is negative.
Moody's last rating action for SunTrust Banks, Inc. was on April
23rd, 2009 when it downgraded the senior debt rating of SunTrust
Banks, Inc. to Baa1 from A1, the subordinated debt rating to Baa2
from A2, and the preferred stock rating to Ba2 from A3. The
holding company's short-term rating was downgraded to Prime-2 from
Prime-1. The long-term ratings of SunTrust Bank, the lead bank
subsidiary, were also downgraded. SunTrust Bank's financial
strength rating was lowered to C- from B, its long-term deposits
and senior debt were lowered to A2 from Aa3, and its subordinated
debt rating was lowered to A3 from A1. However, the bank's Prime-
1 short-term rating was affirmed. Following these rating actions,
the outlook on SunTrust and its subsidiaries was negative.
SYNCORA HOLDINGS: Expiration Date for Offer for RMBS Securities
---------------------------------------------------------------
The BCP Voyager Master Funds SPC, Ltd., acting on behalf of and
for the account of, the Distressed Opportunities Master Segregated
Portfolio, has extended the expiration date of the Fund's offer
for 56 classes of residential mortgage backed securities insured
by Syncora Guarantee Inc. to 11:59 p.m., New York City time, on
Friday, May 29, 2009.
The sale option for the offer has been terminated, effective
immediately. The consent option for the offer remains open,
pursuant to which holders of RMBS may tender their securities and
be eligible to receive a cash payment plus a certificate generally
representing the economics of the RMBS without the benefit of the
Syncora Guarantee insurance policy. Syncora Guarantee will
continue to provide financing of up to $375 million for the
consent option, including transaction fees and costs. The Fund
will release to holders all RMBS that have been tendered pursuant
to the sale option.
The New York State Department of Insurance has been informed of
the offer and the closing of the offer and related financing are
conditioned upon the approval of the NYID. The offer and related
financing are also conditioned on the execution and consummation
of an agreement with certain financial institutions that are
counterparties to its credit default swap transactions and
financial guarantee insurance policies following the entry into a
non-binding letter of intent between Syncora Guarantee and 17
counterparties effective as of March 5, 2009, and the tender of a
minimum amount of RMBS, among other conditions.
The RMBS will be accepted into the offer according to the priority
disclosed in the offer. The Fund has revised the priority of
acceptance that the RMBS will be accepted into the offer from the
priority previously disclosed. The Fund has also revised the
consent prices offered for each class of RMBS from those
previously disclosed. If there are only sufficient funds to accept
a portion of the tendered RMBS of a given priority of acceptance,
then tenders for that given priority of acceptance will be
accepted pro rata.
The Fund is extending the expiration date for the offer and
granting withdrawal rights for a limited period to all holders.
The dates relevant to the offer are:
Date Calendar Date Event
---- ------------- -----
Expiration 11:59 p.m., New York City The last time for holders
Date time, Friday, May 29, to tender RMBS in the
2009, unless extended. offer.
Withdrawal 11:59 p.m., New York City The last time for holders
Deadline time, Thursday, May 21, to validly withdraw
2009, unless extended. tendered RMBS.
The offer is being conducted only with qualified institutional
buyers and is exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended. The certificates that may be
issued pursuant to the consent option in the offer have not been
and, at the time of the closing of the transaction, will not be
registered under the Securities Act or any state securities laws.
The certificates may not be offered or sold in the United States
absent registration under, or an applicable exemption from, the
registration requirements of the Securities Act and applicable
state securities laws.
About Syncora Holdings
Based in Hamilton, Bermuda, Syncora Holdings Ltd., formerly
Security Capital Assurance Limited, is a holding company whose
operating subsidiaries provide financial guarantee insurance,
reinsurance, and other credit enhancement products to the public
finance and structured finance markets throughout the United
States and internationally. The Company's businesses consists of
Syncora Guarantee Inc. (formerly XL Capital Assurance Inc.) and
its wholly owned subsidiary, XL Capital Assurance (U.K.) Limited
(XLCA-UK) and Syncora Guarantee Re Ltd. (formerly XL Financial
Assurance Ltd.). The segments of the Company are financial
guarantee insurance and financial guarantee reinsurance. The
financial guarantee insurance segment offers financial guarantee
insurance policies and credit-default swaps (CDS) contracts. The
financial guarantee reinsurance segment reinsures financial
guarantee policies and CDS contracts issued by other monoline
financial guarantee insurance companies.
Junk Ratings
Prior to the first quarter of 2008, the Company had maintained
triple-A ratings from Moody's, Fitch and S&P, and these ratings
had been fundamental to its historical business plan and business
activities. However, in response to the deteriorating market
conditions, the rating agencies updated their analyses and
evaluations of the financial guarantee insurance industry
including the Company. As a result, the Company's IFS ratings
have been downgraded by the rating agencies and the rating
agencies have placed its IFS ratings on creditwatch/ratings watch
negative or on review for further downgrade. Consequently, the
Company suspended writing substantially all new business in
January 2008.
On March 9, 2009, Moody's downgraded to "Ca" from "Caa1" the IFS
ratings of Syncora Guarantee and Syncora Guarantee-UK, with the
ratings placed on developing outlook, and on January 29, 2009, S&P
downgraded to "CC" from "B" the IFS ratings of Syncora Guarantee
and Syncora Guarantee-UK, with the ratings placed on negative
outlook. Effective August 27, 2008, the Company terminated the
agreement for the provision of ratings with Fitch. Since it has
suspended writing substantially all new business, the Company
believes ratings from two agencies are sufficient. Moody's, S&P
and Fitch have also downgraded the Company's debt and other
ratings.
The rating agency actions reflect Moody's, S&P's and Fitch's
current assessment of the Company's creditworthiness, business
franchise and claims-paying ability. This assessment reflects the
Company's direct and indirect exposures to the U.S. residential
mortgage market, which has precipitated its weakened financial
position and business profile based on increased reserves for
losses and loss adjustment expenses, realized and unrealized
losses on credit derivatives and modeled capital shortfalls.
$2.4 Billion Policyholders' Deficit
As reported by the Troubled Company Reporter on March 17, 2009,
Syncora Guarantee has reported a policyholders' deficit of $2.4
billion as of December 31, 2008. Failure to maintain positive
statutory policyholders' surplus or non-compliance with the
statutory minimum policyholders' surplus requirement permits the
New York Superintendent of Insurance to seek court appointment as
rehabilitator or liquidator of Syncora Guarantee.
As a result of this material adverse development, and in
accordance with the Company's strategic plan, effective as of
March 5, 2009, Syncora Guarantee signed a non-binding letter of
intent with certain of the Counterparties whereby the parties
agreed to negotiate in good faith to seek to promptly agree on
mutually agreeable definitive documentation, in the form of a
master transaction agreement and related agreements. In addition,
pursuant to the RMBS Transaction Agreement, dated as of March 5,
2009, on March 11, 2009, the fund referenced therein commenced a
tender offer to acquire certain residential mortgage-backed
securities that are insured by Syncora Guarantee. The 2009 MTA and
tender offer represent the principal elements of the second phase
of the Company's strategic plan.
As of Dec. 31, 2008, Syncora Guarantee has $3.90 billion in
assets, and debts of $3.17 billion, according to its Annual Report
on Form 10-K. The Company reported a $1.42 billion net loss for
year 2008. A full-text copy of the Company's Annual Report is
available at no charge at http://ResearchArchives.com/t/s?3b59
PricewaterhouseCoopers LLP in New York in its audit report says
there is substantial doubt about the Company's ability to continue
as a going concern.
TRI-COUNTY COMMUNITY: Case Summary 4 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Tri-County Community Development Corp, Inc.
13150 Memorial Highway
Miami, FL 33161
Bankruptcy Case No.: 09-19332
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Southern District of Florida (Miami)
Judge: A. Jay Cristol
Debtor's Counsel: Joel M. Aresty, Esq.
13499 Biscayne Blvd #T-3
No. Miami, FL 33181
Tel: (305) 899-876
Fax: (305) 723-7893
Email: aresty@mac.com
Total Assets: $1,500,000
Total Debts: $3,708,247
A list of the Company's 4 largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/flsb09-19332.pdf
The petition was signed by Nelson Bell, president of the Company.
TRIBUNE CO: Court Okays $13.3MM in Bonus Payments to Managers
-------------------------------------------------------------
Jennifer Harper at The Washington Times reports that the U.S.
Bankruptcy Court for the District of Delaware has allowed Tribune
Co. to pay out $13.3 million in bonuses to 700 local and corporate
managers.
According to The Washington Times, the payouts come as some
$2.7 million in severance pay to 68 employees who lost their jobs
in 2008 remains frozen. The Washington Times relates that two
employees who had been laid off before the bankruptcy were granted
approval for the payments.
The Washington Times quoted Tribune Chief Financial Officer
Chandler Bigelow III as saying, "We need to motivate and
incentivize the key people who will implement change. These are
really good people we're talking about. They're the best and the
brightest in the Company."
The Washington Times relates that The Tribune Co. is also facing
an Internal Revenue Service audit of $1.8 billion in income tax
write-offs that the Company claimed after real estate mogul Sam
Zell bought it in 2007. The report states that the agency is
evaluating a $250 million acquisition of Tribune shares by an
employee stock-ownership plan. The agency, according to the
report, said that it will "determine if the transaction was for
the benefit of employees."
Headquartered in Chicago, Illinois, Tribune Company --
http://www.tribune.com/-- is a media company, operating
businesses in publishing, interactive and broadcasting, including
ten daily newspapers and commuter tabloids, 23 television
stations, WGN America, WGN-AM and the Chicago Cubs baseball
team. The company and 110 of its affiliates filed for Chapter 11
protection on December 8, 2008 (Bankr. D. Del. Lead Case No.
08-13141). The Debtors proposed Sidley Austion LLP as their
counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware
counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as
financial advisors; and Epiq Bankruptcy Solutions LLC as claims
agent. As of December 8, 2008, the Debtors have $7,604,195,000 in
total assets and $12,972,541,148 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Tribune
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Tribune Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TROPICANA ENT: Auction Sale of N.J. Debtors Assets Set for June 5
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey has
approved the form of the "stalking horse" asset puchase agreement
and the bidding procedures for the sale of substantially all
of the assets of Adamar of New Jersey, Inc. and Manchester Mall,
Inc., dba Tropicana Casino and Resort - Atlantic City, free and
clear of liens, claims, encumbrances, and interests, subject
to higher and better bids at an auction.
If necessary, an auction sale of of the assets will be conducted
on June 5, 2009, at 11:00 a.m., at the offices of Cole, Schotz,
Meisel, Forman & Leonard, P.A., Court Plaza North, 25 Main St.,
Hackensack, NJ 07601.
A hearing to confirm the results of the auction, if any, and to
authorize the Debtors to sell, assign and transfer the assets
to the successful bidder will be held on June 12, 2009, at
10:00 a.m. (EST).
Objections, if any, to final approval of the assets and assumption
and assignment of the acquired contrats and CBAs (including the
Debtors' Cure Amount Schedule), must be filed no later than
June 9, 2009, at 5:00 p.m. (EST).
The assets are being sold by the Debtors on an "as is, where is
and with all faults" basis.
Any party interested in submitting a bid for the assets may
contact the Debtors' investment banker:
Moelis & Company
Attn: Frank Sellman, Senior V.P.
245 Park Avenue
33rd Floor, New York, NY
Tel: (212) 907-6062
email: frank.sellman@moelis.com
All other inquiries regarding the sale may be directed to:
Cole, Schotz, Meisel, Forman & Leonard, P.A.
Attn: Ryan T. Jareck, Esq.
Court Plaza North
25 Main Street
Hackensack, NJ 07601
Tel: (201) 525-6278
Fax: (201) 678-6278
email: rjareck@coleschotz.com
As reported in the Troubled Company Reporter on May 6, 2009,
pursuant to Section 363 of the Bankruptcy Code, the N.J. Debtors
asked the Bankruptcy Court to approve a stalking horse asset
purchase agreement they entered into with Credit Suisse, as
administrative agent under a Credit Agreement dated January 2007,
for the sale of substantially all of their assets, free and clear
of all liens, claims and encumbrances.
In December 2007, Tropicana Casinos and Resorts, Inc.'s
application for plenary qualification as a holding company of
Adamar was denied. Subsequently, pursuant to an October 2006
Interim Casino Authorization Trust Agreement, retired New Jersey
Supreme Court Justice Gary S. Stein was appointed by the New
Jersey Casino Control Commission as trustee for the Adamar stock
and conservator of all Adamar assets. He was also required to
dispose all the equity and assets of Adamar.
Marketing Efforts
Since then, Justice Stein undertook comprehensive and extensive
efforts Tropicana Casino and Resort Atlantic City, the casino
resort owned and operated by the New Jersey Debtors. The sale
process, however, was interrupted by the bankruptcy filings of
Aztar Corporation, Tropicana Entertainment LLC and certain of its
affiliates in the U.S. Bankruptcy Court for the District of
Delaware in May 2008.
Justice Stein subsequently retained Moelis & Co., LLP, as his
investment bank, and Moelis contacted over 140 parties for
potential interest in acquiring the Tropicana AC in July and
August 2008. Upon review and upon discussion with certain
constituents, Justice Stein publicly announced that the Cordish
Company was the leading bidder. By mid-December 2008, Justice
Stein and his advisors participated in a meeting with Cordish and
its representatives and counsel to the steering committee of the
OpCo Lenders to move the Cordish deal forward and attempt to
resolve any impasse. As a result, a revised asset purchase
agreement was provided to Cordish's counsel towards the end of
December 2008.
The OpCo Lenders refer to Credit Suisse, as administrative and
collateral agent under a Credit Agreement dated January 7, 2007,
and certain lender parties, who extended a $1.71 billion secured
loan to Debtor Tropicana Entertainment LLC, formerly Wimar OpCo
LLC and Wimar OpCo Intermediate Holdings LLC, and certain of the
Debtors as financing for the acquisition of Aztar Acquisition.
The New Jersey Debtors guaranteed repayment of the Tropicana
Entertainment Debtors' obligations under the OpCo Credit Facility
and granted the OpCo Agent, for the benefit of the OpCo Lenders,
a first priority security interest in substantially all their
assets, pursuant to a Guaranty and Collateral Agreement dated
January 3, 2007. As of the New Jersey Petition Date, the total
amount outstanding under the OpCo Credit Facility is roughly
$1,380,000,000.
The NJ Commission extended the deadline for the sale of Tropicana
AC several times to give way to more negotiations. However, on
February 2, 2009, the OpCo Lenders informed Justice Stein and his
advisors that they could not agree on acceptable sale terms with
Cordish. Justice Stein thus sought a further extension of the
sale deadline and sought authority to file Chapter 11 bankruptcy
petitions for the New Jersey Debtors.
In the meantime, Justice Stein requested a meeting with members
of the OpCo Steering Committee to discuss, among other things,
the possibility of a credit bid to serve as the stalking horse
for the sale of the New Jersey Debtors' assets. The meeting took
place on February 10, 2009. Accordingly, by February 18, 2009,
OpCo Steering Committee representatives related to the NJ
Commission that they would pursue a transaction in which the OpCo
Agent, at the direction of and on behalf of the Secured Parties
under the OpCo Credit Facility, would make a credit bid for the
New Jersey Debtors' assets.
On March 16, 2009, Justice Stein and the OpCo Steering Committee
field a joint petition with the NJ Commission seeking, among
other things, (i) approval of a proposed asset purchase
agreement, (ii) authorization for Justice Stein to sell Adamar's
assets pursuant to Section 363 of the Bankruptcy Code, and (iii)
an extension of the sale period for at least six months to
complete the Section 363 sale process and subsequent licensing
approval process that will be required before closing.
Justice Stein and the OpCo Steering Committee submitted to the NJ
Commission on April 17, 2009, a final form of the Asset Purchase
Agreement among the New Jersey Debtors, Justice Stein, Tropicana
Entertainment, Ramada New Jersey Holdings Corporation, Atlantic-
Deauville, Inc., Adamar Garage Corporation, Ramada New Jersey,
Inc., and the OpCo Agent.
A full-text copy of the Stalking Horse APA is available at no
charge at http://bankrupt.com/misc/Tropi_OpCoAPA_042909.pdf
The NJ Commission, at a April 29, 2009 hearing, granted Justice
Stein authority to sign the APA and to commence Chapter 11
petitions on behalf of the New Jersey Debtors. The Commission
also extended the sale period through December 31, 2009.
Material Terms of APA
Pursuant to the Stalking Horse APA, the New Jersey Debtors will
sell to an assignee of the OpCo Agent or the "Buyer" their right,
title and interest in and to the Assets to be sold, subject to a
Court-approved auction and sale process and any higher and better
offers.
Michael Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard,
P.A., in Hackesack, New Jersey, the New Jersey Debtors' proposed
counsel, related that the other material terms of the APA are:
(a) Buyer. If the OpCo Secured Parties' credit bid is
successful, the Adamar Assets will be acquired by the
Buyer, who the OpCo Agent will designate as promptly as
practicable after the end of the auction period upon the
direction of certain Required Lenders. The Buyer will
execute and deliver a Form of Joinder to Asset Purchase
Agreement, agreeing and confirming that it joins and
becomes a party to the APA.
(b) Assets. The Adamar Assets include, but is not limited to,
owned property, owned personal property, leased personal
property, contracts, accounts receivable, claims, books
and records, all cash, negotiable instruments, gaming
value and non-value chops and plaques and cash equivalents
and all other assets owned by the New Jersey Debtors.
(c) Purchase Price. At the Closing, the OpCo Agent, on behalf
of the OpCo Secured Parties, will surrender a portion of
the obligations secured by the Original Collateral
Agreement in the aggregate principal amount of
$200,000,000, no portion of that amount will constitute
interest or the right to receive interest, which will be
retained by the OpCo Secured Parties.
(d) Assumed Liabilities. The Buyer will assume certain
liabilities, including (1) those arising out of the
Acquired Contracts as of the Closing; (2) those arising
from certain Leased Personal Property arising after the
Closing Date; (3) those for postpetition ordinary course
obligations and business trade payables or those incurred
by the New Jersey Debtors that would qualify as an
administrative expense under Section 503(b) of the
Bankruptcy Code; (4) certain specified prepetition
operating liabilities; (6) certain tax liabilities; and
(7) liabilities relating to employees arising under
certain benefit plans.
A list of the Owned Property Leases of the sellers is
available at no charge at:
http://bankrupt.com/misc/Tropi_APA042909_OwnedPropertyLeases.pdf
(e) Cure Payments. The New Jersey Debtors will assume and
assign to Buyer as of the Closing Date all Contracts and
Collective Bargaining Agreements to which they are a party
to. The New Jersey Debtors will pay all cure costs
arising from the assumption and assignment of those
contracts and agreements, as and when required by a sale
order.
(f) Closing. The Closing Date will be the fourth business
day, or any date as agreed by Justice Stein and Buyer,
following the date on which all conditions to Closing in
the APA have been satisfied or, if permissible waived by
the party entitled to make a waiver.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC and its debtor-affiliates filed for
Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No.
08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at
Richards Layton & Finger, represent the Debtors in their
restructuring efforts. Their financial advisor is Lazard Ltd.
Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
On April 29, 2009, Adamar of New Jersey, Inc., doing business as
Tropicana Casino and Resort, and its affiliate, Manchester Mall,
Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09-
20711). Judge Judith H. Wizmur presides over the cases. Adamar
and Manchester Mall or the New Jersey Debtors are both affiliates
of Tropicana Entertainment LLC. Manchester Mall is a wholly owned
subsidiary of Adamar that owns and operates certain real property
utilized in the New Jersey Debtors' business operations.
The New Jersey Debtors own and operate one of the largest, and one
of the most established, destination casino resorts in Atlantic
City, New Jersey, known as Tropicana Casino and Resort - Atlantic
City, which ranks third in gaming positions among Atlantic City's
11 casino properties. The New Jersey Debtors initiated the
Chapter 11 cases to effectuate a sale of substantially all their
assets in accordance with a mandate issued by the New Jersey
Casino Control Commission pursuant to the New Jersey Casino
Control Act.
Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the
New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their
claims and notice agent. Adamar disclosed $500 million to
$1 billion both in total assets and debts in its petition.
Manchester Mall disclosed $1 million to $10 million in total
assets, and less than $50,000 in total debts in its petition.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the Chapter 11
restructuring proceedings commenced by Tropicana Entertainment LLC
and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TWO DOHENY: Case Summary & 7 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Two Doheny LLC
13 Camino Lienzo
San Clemente, CA 92673
Bankruptcy Case No.: 09-14478
Chapter 11 Petition Date: May 13, 2009
Court: United States Bankruptcy Court
Central District of California (Santa Ana)
Judge: Theodor Albert
Debtor's Counsel: Nanette D. Sanders, Esq.
Ringstad & Sanders
2030 Main St
Ste 1200
Irvine, CA 92614
Tel: (949) 851-7450
Email: becky@ringstadlaw.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 7
largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/cacb09-14478.pdf
The petition was signed by Paul Douglas, managing member of the
Company
VISANT HOLDING: S&P Puts 'B+' Rating on Positive CreditWatch
------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating for Armonk, New York-based school affinity provider
and niche printing company Visant Holding Corp., as well as all
issue-level ratings on the company and its operating subsidiary,
Visant Corp., on CreditWatch with positive implications.
"The CreditWatch listing reflects our expectation that Visant's
good relative operating performance and moderately less aggressive
financial policy could enable the company to sustain lower
leverage levels on average over the next few years," explained
Standard & Poor's credit analyst Michael Listner.
S&P believes that due to tighter financing markets and uncertainty
regarding acquisition targets, Visant may not make a large
leveraging acquisition over the intermediate term, which may
enable the company to maintain credit measures more aligned with a
higher rating. The company's total adjusted leverage (adjusted
for operating leases and pension and other post-retirement
obligations) of about 4.9x as of April 4, 2009 (already good for
the current rating) is lower than the 5.0x level that S&P has
previously stated would be consistent with a 'BB-' rating for
Visant.
Visant's operating performance has exhibited relative stability
throughout the economic cycle. Earlier, the company nnounced net
sales of approximately $266 million for the first quarter of 2009
-- an increase of about 7.5% from the prior year -- and a 33%
increase in EBITDA to approximately $48.9 million (inclusive of
one-time charges for restructuring and consolidation).
Improvements in operating performance were attributable to
incremental volume from the April 2008 acquisition of Phoenix
Color and volume increases in the company's jewelry and graduation
product businesses due to a shift in the timing of orders. Visant
generates adequate levels of free cash flow for the current
rating, and S&P expects that the company will be successful
refinancing its revolving credit facility, which matures in
October 2009.
In resolving the CreditWatch listing, S&P will assess the
company's expected levels of EBITDA and free cash flow generation
over the next few years, as well as S&P's expectation for Visant's
financial policy regarding leverage. S&P expects to resolve the
CreditWatch listing over the next 30 days.
VALUE CITY: Amended Appointment to Creditors Committee
------------------------------------------------------
Diana G. Adams, the U.S. Trustee for Region 2, entered an "amended
appointment" of the committee of unsecured creditors in the
Chapter 11 cases of Value City Holdings Inc. and its debtor-
affiliates.
The Committee originally had nine members. Thor Macomb Mall LLC
was not included in the amended appointment.
The present members of the Committee are:
1. National Janitorial Solutions, Inc.
Attention: James H.B. Hoff
14000 Commerce Parkway, Suite C
Mt. Laurel, NJ 08054
Tel: (856) 762-0510 ext. 111
2. Rosenthal & Rosenthal
Attention: Allan Spielman
1370 Broadway
New York, New York 10018
Tel: (212) 356-1438
3. Kimco Realty Corp.
Attention: Ray Edwards
3333 New Hyde Park Road
New Hyde Park, New York 11047
Tel: (516) 869-2586
4. American Greetings
Attention: Art Tuttle
One American Road
Cleveland, Ohio 44144
Tel: (216) 252-7300
5. Nej, Inc.
Attention: Ed Mascolo
170 Pinesbridge Road
Beacon Falls, Connecticut 06403
Tel: (203) 463-3301
6. Graphic Communications Holdings, Inc.
Attention: Gerald Nonaka
16-B Journey
Aliso Viejo, California 92656-3317
Tel: (949) 215-9388
7. San Malone Enterprises, Inc.
Attention: Lewis Jia
19865 East Harrison Avenue
City of Industry, California 91789
Tel: (909) 594-1112
8. Federal Jeans, Inc.
Attention: Eyal Ben-Yosef
1385 Broadway, 5th Floor
New York, New York 10018
Tel: (212) 302-5140
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Value City
Headquartered in Columbus, Ohio, Value City Holdings Inc. --
http://www.valuecity.com/-- operates a chain of department stores
in the United States. The company and eight of its affiliates
filed for Chapter 11 protection on Oct. 26, 2008 (Bankr. S.D.N.Y.
Lead Case No. 08-14197). John Longmire, Esq., and Lauren C.
Cohen, Esq., at Willkie Farr & Gallagher LLP, represent the
Debtors' in their restructuring efforts. Epiq Bankruptcy
Solutions LLC is the claims, noticing and balloting agent for the
Debtors. Glenn R. Rice, Esq., at Otterbourg Steindler Houston &
Rosen, PC, represents the official committee of unsecured
creditors as counsel. When the Debtors filed for protection from
their creditors, they listed assets and debts between $100 million
and $500 million each.
In November 2008, Judge James M. Peck of the U.S. Bankruptcy Court
for the Southern District of New York granted Value City Holdings
permission to conduct going-out-of-business sales to be managed by
liquidator and financial consultant Tiger Capital Group LLC.
VECTOR URBAN: SFT I to Auction Partners' Interests on May 22
------------------------------------------------------------
SFT I, Inc., as Lender, will sell at a public auction on May 22,
2009, at 10:00 a.m. (Eastern) all of its right, title and interest
in Pledgors Metro H West, LLC's 1% general partnerhip interest,
Metro HarborSpire West, LLC's 94% limited partnership interest,
and West Vector, LLC's 5% interest, in Vector Urban Renewal
Associates I, L.P., as Borrower, pursuant to that certain Security
Agreement dated January 3, 2006.
Vector Urban, a New Jersey limited partnership, defaulted on its
obligations to Lender under the above-referenced Security
Agreement and that certain Mezzanie Loan Agreement with SFT I,
also dated January 3, 2006.
The collateral includes, without limitation, each Pledgor's right,
title and interest:
(a) as a partner in Borrower;
(b) in Borrower's property;
(c) to participate in the management and voting of borrower;
(d) in and to all rights, privileges, authority and power of
each Pledgor as owner and holder of (a), (b) and (c);
(e) all options and other agreements for the purchase or
acquisition of any interests of Borrower; and
(f) any document or certificate representing or evidencing
said Plegor's rights and interests in Borrower.
Parties interested in bidding on the collateral at the sale should
contact counsel for SFT I:
Jeffrey A. Chadwick, Esq.
Katten Muchin Rosenman LLP
525 West Monroe Street,
Chicago, IL 60661
Tel: (312) 902-5318
WELLS FARGO: Moody's Upgrades Preferred Stock Rating to 'Ba3'
-------------------------------------------------------------
Moody's Investors Service upgraded Wells Fargo & Company's
preferred stock rating to Ba3 from B2. Moody's also raised its
bank financial strength rating on Wells Fargo & Company's bank
subsidiaries to C- from D+ and its baseline credit assessment to
Baa2 from Ba1. All other Moody's ratings on Wells Fargo & Company
and its subsidiaries were affirmed. These include the Aa2 on its
bank subsidiaries for deposits, and A1, A2 and A3 ratings for
senior debt, senior subordinated debt, and junior subordinated
debt, respectively, issued by Wells Fargo & Company. The Prime-1
rating for Wells Fargo & Company and its subsidiaries was also
affirmed. The rating outlook on the BFSR and the preferred
ratings are "developing". The rating outlook on all other ratings
remains stable.
These actions had no impact on the FDIC-guaranteed debt issued by
Wells Fargo, which remains at Aaa with a stable outlook.
The upgrades on Wells Fargo's BFSR and preferred ratings were due
to the improved financial flexibility that Wells Fargo obtained by
raising $8.6 billion in common equity. Wells Fargo's larger
capital position reduces the possibility that Wells Fargo would
need to cut its preferred dividends so as to support its capital
structure. Moody's did not change Wells Fargo's deposits and
senior debt and subordinated debt ratings because they had already
benefited from sizable lift, due to Moody's very high systemic
support assumptions on Wells Fargo and a view that its valuable
franchise will remain intact.
The "developing" rating outlook on the BFSR and the preferred
stock reflects the sensitivity of these ratings to Wells Fargo's
capital trends. Further improvement in Wells Fargo's capital
ratios would put upward pressure on the ratings. Conversely,
negative pressures would exist if Wells Fargo's credit costs were
larger than Moody's expectations or management took steps that
resulted in increasing leverage such as repaying its $25 billion
in TARP preferred stock without taking compensating actions.
The rating actions are consistent with Moody's announcement in
February 2009 that it is recalibrating some of the weights and
relative importance attached to certain rating factors within its
current bank rating methodologies. Capital adequacy, in
particular, is taking on increasing importance in determining
BFSRs in the current environment. Meanwhile, debt and deposit
ratings are expected to reflect higher support assumptions for
systemically important institutions during this global financial
crisis.
BFSR Upgrade Due To Higher Capital Ratios
The upgrade of Wells Fargo Bank N.A.'s BFSR to C- from D+ was
driven by the improvement in Wells Fargo's capital ratios
resulting from it raising $8.6 billion in common equity from
investors. The capital improvement reduces the probability of
Wells Fargo's need for future systemic capital support even if it
has to take sizable credit costs in 2009 and 2010.
"Recent low capital ratios undermined Wells Fargo's credit
profile, especially when it was facing the asset quality
challenges brought upon by a recession and high unemployment,"
said Moody's Senior Vice President, Sean Jones. "Wells Fargo's
decision to take advantage of its improved access to the capital
markets by raising a sizable amount of common equity helps to
address this weakness," added Mr. Jones.
The $8.6 billion common equity raised improves Wells Fargo's
Moody's Equity ratio by approximately 100 basis points, increasing
the ratio to approximately 5.7% on a pro forma basis over risk-
weighted assets. Moody's equity is primarily regulatory tangible
common equity in addition to giving limited equity benefit to
hybrid equity securities. Meanwhile, the additional $8.6 billion
increases Wells Fargo's Tier I ratio to over 9% from 8.3% at 1Q09.
The increased capital is an important credit issue because Moody's
is still assuming that Wells Fargo will have large credit costs in
2009 and 2010. "Residential mortgages and commercial real estate
exposure makes up 58% of Wells Fargo's loans and the quality of
that portfolio will be further challenged by the current difficult
economic conditions," explained Mr. Jones.
When evaluating Wells Fargo's ability to absorb losses, Moody's
incorporates additional mitigating factors other than Wells
Fargo's current capital position. These additional factors
include: 1) the $37.1 billion mark it took against Wachovia's
loans, which it acquired at year-end 2008, 2) a high proportion of
Wells Fargo's loan-loss reserve, which stood at $22.3 billion at
March 31st 2009, 3) charge-offs it took against its residential
and commercial real estate loans since the beginning of 2008, 4)
tax-effecting forecasted losses, and 5) assuming quite high core
earnings, which are reduced by Wells Fargo's payments of preferred
and common dividends that average about $737 million per quarter
on a pro forma basis.
Larger Capital Base Reduces The Possibility Of A Cut In
Preferred Dividends
The upgrade of the preferred stock rating to Ba3 from B2 was based
on Moody's view that Wells Fargo's larger capital base decreases
the possibility that it would need to cut its preferred dividend
payments in an effort to support its capital base. Moody's past
assumption was that, if Wells Fargo could not raise equity in the
capital markets it could be a recipient of capital support from
the U.S. government. Moody's expected that such support might be
accompanied by the suspension of dividends, or even a distressed
exchange. That step would have limited the size of the U.S.
government's stake in the bank in the event that support was
required.
"The increased capital means that, even if Wells Fargo's credit
costs result in its reporting quarterly losses, its capital ratios
should still remain respectable, reducing the possibility of its
cutting its preferred dividends," said Moody's Mr. Jones. If
Wells Fargo can generate capital in 2009, that would put further
upward pressure on Wells Fargo's preferred stock rating and its
BFSR, but not on its deposit, senior and subordinated debt
ratings, which already benefit from sizable lift, due to Moody's
very high systemic support assumptions on Wells Fargo.
Previous Rating Action And Principal Methodologies
The last rating action on Wells Fargo was on March 25, 2009 when
Moody's Investors Service lowered the senior debt rating of Wells
Fargo & Company to A1 from Aa3, the senior subordinated debt
rating to A2 from A1, and the junior subordinated debt rating to
A3 from A1. The preferred stock rating was downgraded to B2 from
A2. Wells Fargo's short-term rating was affirmed at Prime-1.
Wells Fargo & Company is headquartered in San Francisco. Its
reported assets at March 31st,2009 were $1.3 trillion.
Issuer: First Fidelity Bancorporation
Upgrades:
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
Issuer: Wachovia Bank, N.A.
Upgrades:
-- Bank Financial Strength Rating, Upgraded to C- from D+
Issuer: Wachovia Capital Trust III
Upgrades:
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
-- Preferred Stock Shelf, Upgraded to (P)Ba3 from (P)B2
Issuer: Wachovia Corporation
Upgrades:
-- Multiple Seniority Shelf, Upgraded to (P)Ba3 from (P)B2
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
-- Preferred Stock Shelf, Upgraded to (P)Ba3 from (P)B2
Issuer: Wachovia Preferred Funding Corp.
Upgrades:
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
Issuer: Wells Fargo & Company
Upgrades:
-- Multiple Seniority Shelf, Upgraded to (P)Ba3 from (P)B2
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
-- Preferred Stock Shelf, Upgraded to (P)Ba3 from (P)B2
Issuer: Wells Fargo Bank Northwest, N.A.
Upgrades:
-- Bank Financial Strength Rating, Upgraded to C- from D+
Issuer: Wells Fargo Bank, N.A.
Upgrades:
-- Bank Financial Strength Rating, Upgraded to C- from D+
Issuer: Wells Fargo Capital XIII
Upgrades:
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
-- Preferred Stock Shelf, Upgraded to (P)Ba3 from (P)B2
Issuer: Wells Fargo Capital XV
Upgrades:
-- Preferred Stock Preferred Stock, Upgraded to Ba3 from B2
Issuer: World Savings Bank, FSB
Upgrades:
-- Bank Financial Strength Rating, Upgraded to C- from D+
WHISPERING PINES: Mortgagee Ready to Sell Collateral on June 3
--------------------------------------------------------------
Flash Island, Inc., published notice of its intent, pursuant to
the power of sale contained in a certain Mortgage, Security
Agreement, Lease Agreement and financing Statement given by
Whispering Pines Estate, Inc., to Flash Island, Inc., dated
June 25, 2004, and recorded with the Rockingham County (N.H.)
Registry of Deeds at Book 4319, Page 903 to sell at public auction
that certain tract or parcel of land, together with the buildings
and improvements thereon, and appurtenances thereto, located at
936 South Street, in the City of Portsmouth, County of Rockingham,
and State of New Hampshire conveyed to the Mortgagee by the
Mortgage. The notice appeared in Sunday's edition of The Union
Leader.
The sale will be held on Wednesday, June 3, 2009, at 11:00 a.m. on
the Debtor's Premises located 936 South Street, Portsmouth, New
Hampshire.
Interested bidders must present to the Mortgagee or its agent at
time of sale a $50,000 deposit in cash or by certified check,
cashier's or treasurer's check or bank draft or other form of
payment acceptable to Mortgagee in its sole discretion. Deposits
of unsuccessful bidders shall be returned at the conclusion of the
public auction. The successful bidder for the Premises shall be
required to sign a memorandum of mortgagee's sale at the
conclusion of the public auction on the day of sale, must increase
the Deposit amount in Satisfactory Funds to 10% of the successful
bid amount not later than 5:00 p.m. on the tenth calendar day
following but not counting the date of sale, and must pay the
balance of the bid price in full in Satisfactory Funds upon tender
of Mortgagee's Foreclosure Deed, within 30 days after the day of
sale.
The successful bidder agrees that in the event of its default it
shall forfeit its Deposit to the Mortgagee and its rights as
successful bidder shall be automatically assigned to the Mortgagee
who may further assign such rights. The Premises are currently
operated as a "Residential Care Home Facility" pursuant to License
#01654 issued by the New Hampshire Health Facilities Bureau,
Licensure. It is recommended that any bidder intending to
continue operation of the Premises as a Residential Care Home
Facility apply for such a license prior to bidding or make other
appropriate arrangements with the New Hampshire Health Facilities
Administration, Licensing, 129 Pleasant Street, Concord, NH 03301,
telephone 603.271.4607. Such application should specify that
ownership of the Premises by the current holder of the existing
license is being transferred by foreclosure. The United States
Bankruptcy Court for the District of New Hampshire granted the
Mortgagee authority to proceed with this power of sale foreclosure
proceeding by Order dated December 8, 2008, Docket Entry #755
issued in In Re: Whispering Pines Estate, Inc., Case No. 05-56003-
MWV, Chapter 11, which Order is final and not subject to appeal.
For further information with respect to the Premises and Personal
Property to be sold, contact:
James R. St. Jean Auctioneers
250 Commercial Street, Suite 1011
Manchester, NH 03101
Telephone (603) 624-1818
Flash Island, Inc., is represented by:
R. Carl Anderson, Esq.
Sulloway & Hollis, P.L.L.C.
9 Capitol Street
Concord, NH 03301
Telephone (603) 224-2341
Whispering Pines Estate, Inc., d/b/a The Pines at Edgewood Centre,
and AMI-Burlington, Inc., d/b/a The Anchorage Inn, filed for
Chapter 11 protection on November 16, 2006 (Bankr. D. N.H. Case
No. 05-56003), represented by:
Jennifer Rood, Esq.
Bernstein, Shur, Sawyer & Nelson, PA
P.O. Box 1120
Manchester, NH 03105-1120
Telephone (603) 623-8700
The Debtors filed an amended plan of reorganization dated
August 17, 2007, and Flash Island objected to confirmation and
sought relief from the automatic stay. On February 1, 2008, the
Honorable Mark W. Vaughn held a confirmation hearing on the plan
and took the matter under advisement. On December 8, 2008, Judge
Vaughn denied confirmation of the Debtors' plan -- see
http://is.gd/AHax-- because it failed to satisfy the feasibility
test imposed under 11 U.S.C. Sec. 1129(a)(11) and granted Flash
Island relief from the automatic stay.
WL HOMES: Protests Panel Liquidation Plea; Tweaks Emaar Sale Deal
-----------------------------------------------------------------
WL Homes LLC and its debtor-affiliates objects request to convert
their Chapter 11 cases to Chapter 7 liquidation proceedings filed
on May 6, 2009, by the Official Committee of Unsecured Creditors
before the U.S. Bankruptcy Court for the District of Delaware.
The Debtors tell the Court that they received on May 12, 2009, a
revised proposal from Emaar American Corporation to purchase
certain of their assets under Section 363. The Debtors cite some
changes in the revised proposal to the terms of the original
proposal, including:
-- while the cash portion of the purchase price has been
reduced from $8 million to $7 million, it is no longer
subject to any reductions for cure cost, i.e., Emaar
American is to bear all costs associated with the
assumption and assignment of executory contracts and other
agreements;
-- as part of the purchase price, Emaar American has agreed to
assume up to $11 million in outstanding principal amounts
under the debtor-in-possession financing, increased from
$8 million in the original proposal;
-- the break-up fee of $2 million has been reduced to an
expense reimbursement based on actual expenses of Emaar
American incurred in making its offer, not to exceed
$200,000;
-- the initial minimum overbid increment has been reduced from
$3 million to $450,000 and subsequent minimum overbid
increments have been reduced from $1 million to $250,000;
and
-- the good faith deposit for a competing bid has been reduced
from $1.6 million to $300,000.
The Debtors adds that there are no financing or due diligence
contingencies and the only material provision that would permit
Emaar American to terminate its deal to purchase the acquired
assets is the material adverse change provision of the revised
proposal.
Sale of the Debtors' assets to Emaar American or overbidder offers
a substantially higher return to unsecured creditors than
conversion, Laura Davis Jones, Esq., at Pachulski Stang Ziehl &
Jones LLP, says. Allowing these cases to remain in Chapter 11
creates a substantial likelihood that the net assets of the the
Debtors' estates will be increased by approximately $5.5 million -
- or approximately 79% -- over and above net liquidation
realizable value and that the unsubordinated, unsecured claims of
the Debtors' estate will be reduced by more than $400 million, or
by approximately two-thirds, Ms. Jones adds.
Committee Chapter 7 Liquidation Request
According to the Troubled Company Reporter on May 11, 2009, the
Committee argued that the Debtors' reorganization efforts appear
to exist solely at the behest and for the benefit of their insider
prepetition lender and corporate parent, Emaar American
Corporation, and indirect subsidiary of Emaar Properties PJSC. In
its objection, Emaar American is:
-- the indirect holder of 100% of the equity in each of the
Debtors';
-- an unsecured creditors asserting claims for loans of about
$400 million;
-- a secured creditor asserting claims for prepetition loans
or secured guaranties of approximately $8 million; and
-- the proposed debtor-in-possession lender with respect a
$30.8 million DIP facility.
The Committee reminded the Court that it also objected to the
Debtors' request to obtain postpetition secured financing
protesting that Emaar American's effort to manipulate the DIP
facility terms to (i) gain release from the Debtors and their
creditors; (ii) eviscerate creditors' rights to meaningfully
participate in the Chapter 11 cases; and (iii) hamstring the
Committee's role to act as the only independent fiduciary in the
Debtors' cases to review their operations and monitor the actions
of Emaar American.
On that background, confirmation of a plan is not possible because
the only impaired consenting class of creditors that could confirm
a plan is the class of non-insider unsecured creditors, the
Committee pointed out. The Debtors have shut down operations and
plan to liquidate their assets to Emaar American rather than
restructure, the Committee related.
The conversion of the Debtors' cases is necessary to allow an
independent fiduciary to administer these cases and liquidate
these assets in a fair and impartial manner, the Committee
contended. The conversion will preserve unencumbered assets of
the Debtor, the Committee added.
A hearing is set for May 19, 2009, at 10:00 a.m., to consider the
Committee's request. Objections, if any, are due May 12, 2009.
A full-text copy of the Debtors and Emaar American revised
proposal is available for free at:
http://ResearchArchives.com/t/s?3ceb
A full-text copy of the Debtors and Emaar American orginal
proposal is available for free at:
http://ResearchArchives.com/t/s?3cec
Headquartered in Irvine, California, WL Homes LLC, dba John Laing
Homes, sells and builds houses. The Debtor and five of its
affiliates filed for Chapter 11 protection on February 19, 2009
(Bankr. D. Del. Lead Case No. 09-10571). Laura Davis Jones, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP,
represent the Debtors' in their restructuring efforts. The U.S.
Trustee for Region 2 appointed creditors to serve on the Official
Committee of Unsecured Creditors of the Debtors' Chapter 11 cases.
Ashby & Geddes represents the Committee. When the Debtors sought
protection from their creditors, they listed assets of more than
$1 billion, and debts between $500 million and $1 billion.
WL HOMES: Wants Bidding Procedures for Asset Sale Approved
----------------------------------------------------------
WL Homes LLC and its debtor-affiliates ask the U.S. Bankruptcy
Court for the District of Delaware to approve bidding procedures
to govern the sale of certain their assets including real
property, account receivable, contracts, trademarks and
intellectual property.
Emaar American Corporation, the designated stalking-horse bidder,
agreed to purchase the Debtors' assets for about $7 million. In
addition, Emaar agreed to assume the Debtors' liabilities at
closing, which is expected to occur on June 29, 2009. Emaar
American is their prepetition secured lender under a certain
prepetition secured facility, the Debtors disclose.
The Debtors propose June 15, 2009, as deadline for interested
purchasers to submit their offer for the Debtors' assets.
Purchasers are required to make a $300,000 good faith deposit
before the proposed bid deadline.
The Debtors plan to auction their assets on June 18, 2009, at
10:00 a.m., at the Offices of Pachulski Stang Ziehl & Jones LLP in
Wilmington, Delaware. During the auction, bidding will start
initially with the highest qualified bid and subsequently continue
in minimum increments of at least $250,000.
If the Debtors fails consummate the sale to another party or fails
to close on June 29, Emaar American will be reimbursed of at least
$200,000, which will have priority and secured by a senior lien
under Section 364.
According to Bill Rochelle at Bloomberg, Emaar signed a letter of
intent describing a purchase in which it will pay $7 million in
cash, assume almost $41 million in debt and subordinate its $408
million claim so unsecured creditors could be paid first. Emaar
also would receive a release of any claims that could be the
foundation for a lawsuit by creditors.
As reported by the Troubled Company Reporter on May 11, 2009, the
Official Committee of Unsecured Creditors of WL Homes has
submitted a motion to convert the Debtors' Chapter 11 cases to
Chapter 7 liquidation proceedings.
The Creditors Committee argues that the Debtors' reorganization
efforts appear to exist solely at the behest and for the benefit
of their insider prepetition lender and corporate parent, Emaar
American Corporation, and indirect subsidiary of Emaar Properties
PJSC. In its objection, the Committee noted that Emaar American
is:
-- the indirect holder of 100% of the equity in each of the
Debtors';
-- an unsecured creditors asserting claims for loans of about
$400 million;
-- a secured creditor asserting claims for prepetition loans or
secured guaranties of approximately $8 million; and
-- the proposed debtor-in-possession lender with respect a
$30.8 million DIP facility.
The Creditors Committee asserts that on the background,
confirmation of a plan is not possible because the only impaired
consenting class of creditors that could confirm a plan is the
class of non-insider unsecured creditors, the Committee points
out. The Debtors have shut down operations and plan to liquidate
their assets to Emaar American rather than restructure, the
Committee relates.
The conversion of the Debtors' cases is necessary to allow an
independent fiduciary to administer these cases and liquidate
these assets in a fair and impartial manner, the Committee
contends. The conversion will preserve unencumbered assets of the
Debtor, the Committee adds.
Emaar Offer Better than Liquidation, Says Debtor
According to Bill Rochelle, to blunt objections by the Creditors
Committee, WL Homes prevailed on Emaar Properties PJSC, the Dubai-
based parent, to sweeten the offer to purchase assets. WL Homes,
says the Emaar offer will produce $5.5 million more for creditors
than a liquidation.
The modified purchase offer from Emaar, which will be tested at
auction, now provides a $7 million cash payment that won't be
reduced for the cost of curing arrearages on contracts. Rather
than $8 million, Emaar will now assume up to $11 million in
financing for the reorganization. In addition, a $2 million
breakup fee has been eliminated in favor of $200,000 in expense
reimbursement if someone else wins the auction.
WL Homes calculates that cash from the Emaar sale together
with the value of assets being retained will be worth some
$12.5 million. In liquidation, the company says $7 million would
be left.
The Emaar offer also entails subordinating its $408 million
claim so unsecured creditors could be paid first. In return,
Emaar is to receive a release of any claims that could be the
foundation for lawsuits by creditors.
About WL Homes LLC
Headquartered in Irvine, California, WL Homes LLC, dba John Laing
Homes, sells and builds houses. The Debtor and five of its
affiliates filed for Chapter 11 protection on February 19, 2009
(Bankr. D. Del. Lead Case No. 09-10571). Laura Davis Jones, Esq.,
and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP,
represent the Debtors' in their restructuring efforts. The U.S.
Trustee for Region 2 appointed creditors to serve on the Official
Committee of Unsecured Creditors of the Debtors' Chapter 11 cases.
Ashby & Geddes represens the Committee. When the Debtors sought
protection from their creditors, they listed assets of more than
$1 billion, and debts between $500 million and $1 billion.
ZOOMER GROUP: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Zoomer Group, LLC
457 State Avenue
Beaver, PA 15009
Bankruptcy Case No.: 09-23555
Chapter 11 Petition Date: May 14, 2009
Court: United States Bankruptcy Court
Western District of Pennsylvania (Pittsburgh)
Debtor's Counsel: Edgardo D. Santillan, Esq.
Santillan & Associates,P.C.
650 Corporation Street
Ste 304
Beaver, PA 15009
Tel: (724) 770-1040
Fax : (724) 774-2266
Email: edscourt@debtlaw.com
Estimated Assets: $0 to $50,000
Estimated Debts: $1,000,001 to $10,000,000
A full-text copy of the Debtor's petition, including its list of
20 largest unsecured creditors, is available for free at:
http://bankrupt.com/misc/pawb09-23555.pdf
The petition was signed by Michael W. Staaf.
* Circuits Differ on Treatment for Company Officers
---------------------------------------------------
The U.S. Court of Appeals in New York ruled that when a company
fails to make contributions to pension and worker benefit funds,
company officers aren't personally liable and are eligible for a
discharge if they file personal bankruptcies.
In the present case, a company and one of its officers each filed
Chapter 7 bankruptcy. The company hadn't made required
contributions to benefit plans. The union contended in the
officer's individual bankruptcy that he breached fiduciary duties
to the pension plan and shouldn't be relieved of liability for the
unpaid contributions.
According to Bloomberg, the bankruptcy court and the district
court both decided that unpaid contributions were not assets of
the pension plans. Affirming on May 11, the court of appeals
agreed, saying contributions are assets of a pension plan only
after they are paid. Since there were no assets in existence, the
company officer had no fiduciary duties to violate. Not making a
payment only creates a debt by the company and doesn't result in
the creation of duties like those owed by a trustee. If the
result were otherwise, company executives would be saddled with
non-dischargeable debts in their personal bankruptcies any time
pension plan contributions aren't made. The 2nd Circuit court
said it was "difficult to envision how proprietors could ever
operate a business enterprise under such circumstances." The court
said it was "inconceivable" that Congress intended such a result.
Three other circuit courts reached the same result.
Bill Rochelle notes that the New York-based appeals court's
decision is in stark contrast with an opinion by the U.S. Court of
Appeals in Cincinnati. The Cincinnati court ruled that a
responsible officer of a general contractor can't receive a
discharge in a personal bankruptcy when the general contractor
fails to pay subcontractors.
The 2nd Circuit case is Spraragen v. Halpin (In re Halpin), 07-
2306, 2nd U.S. Circuit Court of Appeals (Manhattan). The 6th
Circuit opinion is Patel v. Shamrock Floorcovering Service Inc.
(In re Patel), 08-1265, 6th U.S. Circuit Court of Appeals
(Cincinnati).
* A.M. Best Says Economic Slump Hit Europe's Insurance Industry
---------------------------------------------------------------
Ever since American International Group's troubles sent ripples of
panic through the financial markets in September 2008, the
insurance industry has also come under the spotlight, although
most European insurers enjoyed a position of relative financial
strength immediately prior to the current crisis.
Overall, compared with the European banking sector, the European
insurance market has limited direct exposure to U.S. subprime
mortgage and other "toxic" assets, but European (re)insurers also
face considerable challenges. In contrast to other major
insurance markets (the U.S., for instance), the top market
participants in Europe are composite insurance groups and thus
simultaneously have to manage both their life and non-life
business portfolios through the financial crisis.
A.M. Best's analysis of the 10 biggest insurance groups in Europe
and the top five European reinsurers highlights a number of issues
for the European insurance industry arising out of the financial
turmoil:
-- The current turbulence is expected to particularly impact
insurance groups with significant life insurance
operations, given the reduction in the level of personal
disposable income. The deterioration in investment
performance, with increased amounts of realised and
unrealised losses as a result of market-to-market
practices, has significantly eroded capital. The
uncertainty surrounding the macro environment and
interest rates pose difficulties for planning guarantee
payments and (re)designing products. On the non-life
side, insurers are likely to continue to report further
increases in combined ratios. Increased natural
catastrophe activity has impacted operating performance,
and strong competition in the market constrains insurers'
ability to maintain earnings through price increases.
-- In addition to diminished underwriting performance, the
increased magnitude of credit write-downs and the
deterioration in companies' financial flexibility,
leverage and liquidity have led A.M. Best to revise the
outlook to negative and/or downgrade the ratings of a
number of European insurers. A.M. Best expects the pace
of these negative rating actions to accelerate
(particularly in the case of insurance groups with
significant life operations) if dislocation of the
financial markets persists and the economic recession
deepens. Strong enterprise risk management (ERM)
continues to be important in today's challenging
environment and crucial to maintain higher rating levels.
-- Owing to poor current liquidity in the credit markets
with limited access to debt and equity funding,
reinsurance provides an alternative form of capital,
boosting reinsurers' prospects for premium income.
However, pricing is yet to universally harden based on
2009 renewal activity to date, and future large
catastrophic losses and/or investment losses could place
further significant stress on reinsurers' capital
cushions.
Founded in 1899, A.M. Best Company is a global full-service credit
rating organization dedicated to serving the financial and health
care service industries, including insurance companies, banks,
hospitals and health care system providers.
* Chrysler, General Growth Are Largest Filings in Past Month
------------------------------------------------------------
For the past month ended May 15, six companies with assets
exceeding $1 billion sought bankruptcy protection under Chapter 11
of the Bankruptcy Code.
Chrysler LLC, the U.S.'s third largest auto manufacturer, is the
biggest bankruptcy filing for the past 30-day period and appears
to be the largest casualty so far in 2009. Joining Chrysler are
five other billion-dollar companies -- AbitibiBowater, General
Growth Properties, Source Interlink, Chrysler LLC, Thornburg
Mortgage, and Hayes Lemmerz.
Petition Total Assets Total Debts
Date ($ in Bil.) ($ in Bil.)
-------- ------------ -----------
AbitibiBowater 04/16 $9.9 +++ $8.7 +++
General Growth 04/16 $29.5 ++++++++++ $27.2 +++++++++
Source Interlink 04/27 $2.4 + $1.9 +
Chrysler LLC 04/30 $39.3 +++++++++++++ $55.2
++++++++++++++++++
Thornburg Mortgage 05/01 $24.4 ++++++++ $24.7 ++++++++
Hayes Lemmerz 05/11 $1.3 - $1.4 -
(A) Chrysler
Chrysler and 24 affiliates filed for chapter 11 protection before
the U.S. Bankruptcy Court for the Southern District of New York
after the automaker's smaller lenders, including hedge funds,
refused to make the concessions agreed to by the Company's major
debt holders and workers.
In connection with the bankruptcy filing, Chrysler 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 Fiat. 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.
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.
.
President Barack Obama, who made history by being the first
president to announce a company's bankruptcy filing, suggested
that Chrysler's bankruptcy should only take two months. However,
an administration official recently clarified that the 60 days
applies only to a sale of the Company's best assets to a new
entity. Experts believe it may take as long as two years to
resolve the bankruptcy.
(B) AbitibiBowater
AbitibiBowater produces a wide range of newsprint, commercial
printing papers, market pulp and wood products. It is the eighth
largest publicly traded pulp and paper manufacturer in the world.
AbitibiBowater tried to renegotiate about $2.9 billion in the
debts of its Canadian unit, Abitibi-Consolidated, and $1.8 billion
of its U.S. unit, Bowater Inc. On March 13, AbitibiBowater and
Abitibi-Consolidated commenced a recapitalization proposal which
was intended to, among others, reduce the Company's net debt by
roughly $2.4 billion, and raise roughly $350 million through the
issuance of new notes of ACI and common stock and warrants of the
Company.
The Company's Canadian affiliates commenced parallel restructuring
proceedings under the Companies' Creditors Arrangement Act before
the Quebec Superior Court Commercial Division the next day. Alex
F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor.
Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the
Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as
the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in
Wilmington, Delaware, serves as the Debtors' co-counsel, while
Troutman Sanders LLP in New York, serves as the Debtors' conflicts
counsel in the Chapter 11 proceedings. The Debtors' financial
advisors are Advisory Services LP, and their noticing and claims
agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's
counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario.
Abitibi-Consolidated Inc. and various Canadian subsidiaries filed
for protection under Chapter 15 of the U.S. Bankruptcy Code on
April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles
the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T.
Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in
Wilmington, represent the Chapter 15 Debtors.
(C) General Growth
Dubbed the biggest mall operator bankruptcy, General Growth filed
in Manhattan after it failed to refinance billions of dollars in
mortgage and other debts that became due or would soon become due.
General Growth Properties owns 200 shopping centers and other
properties in the U.S. Marcia L. Goldstein, Esq., Gary T.
Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman,
Esq., at Weil, Gotshal & Manges LLP, have been tapped as
bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman
Carson Consultants LLC has been engaged as claims agent. The
Company also hired AlixPartners LLP as financial advisor and
Miller Buckfire Co. LLC, as investment bankers.
(D) Source Interlink
Source Interlink Companies is a U.S. distributor of home
entertainment products and services and one of the largest
publishers of magazines and online content for enthusiast
audiences. Source Interlink Media, LLC publishes more than 75
magazines and 90 related Web sites. Source Interlink Distribution
services tens of thousands of retail store locations throughout
North America distributing DVDs, music CDs, magazines, video
games, books, and related items. In addition to distributing more
than 6,000 distinct magazine titles annually, the Company
maintains the largest in-stock catalog of CDs and DVDs in the US -
- a combined total of more than 260,000 titles. Supply chain
relationships include consumer goods advertisers, subscribers,
movie studios, record labels, magazine, book, and newspaper
publishers, confectionary companies and manufacturers of general
merchandise.
Source Interlink reached a restructured agreement with its lenders
to eliminate approximately $1 billion dollars of existing debt and
privatize the company. The agreement compels it to file for
bankruptcy.
Under the agreement, the company's lenders will cancel nearly $1
billion of the company's existing debt and provide approximately
$100 million in additional liquidity. Source Interlink, will pay
all of its vendors in full and on time if they agree to maintain
current credit and payment terms. To facilitate the
restructuring, the Company filed a lender-approved pre-packaged
Plan of Reorganization under Chapter 11 in the U.S. Bankruptcy
Code. The Company anticipates it will emerge within 35 days.
Source Interlink, Inc. and 17 affiliates filed for bankruptcy on
April 27, 2009 (Bankr. D. Del. Case No. 09-11424). Judge Kevin
Gross presides over the case. David Eaton, Esq., an David Agay,
Esq., at Kirkland & Ellis LLP; and Laura Davis Jones, Esq., Mark
M. Billion, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang
Ziehl Young Jones in Wilmington, Delaware, serve as bankruptcy
counsel. Meolis & Company LLC serves as the Debtors' financial
advisors, while Kurtzman Carson Consultants LLC is the Debtors'
claims and notice agent.
(E) Thornburg Mortgage
Based in Santa Fe, New Mexico, Thornburg Mortgage is a single-
family residential mortgage lender focused principally on prime
and super-prime borrowers seeking jumbo and super-jumbo
adjustable-rate mortgages. It originates, acquires, and retains
investments in adjustable and variable rate mortgage assets. Its
ARM assets comprise of purchased ARM assets and ARM loans,
including traditional ARM assets and hybrid ARM assets.
Thornburg Mortgage and its four affiliates filed for Chapter 11 on
May 1 (Bankr. D. Md. Lead Case No. 09-17787). Judge Duncan W.
Keir is handling the case.
The counterparties to Thornburg Mortgage's financing agreements
gave notice that they would be foreclosing on the Company's assets
securing its obligations. In April, the Company announced it
would halt doing business. The Company also agreed to cooperate
with the Counterparties to transfer the Company's mortgage
servicing rights, which were granted to the Counterparties as
security for the Company's obligations to the Counterparties under
their financing agreements.
David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, has
been tapped as counsel. Orrick, Herrington & Sutcliffe LLP is
employed as special counsel. Jim Murray, and David Hilty, at
Houlihan Lokey Howard & Zukin Capital, Inc., have been tapped as
investment banker and financial advisor. Protiviti Inc. has also
been engaged for financial advisory services. KPMG LLP is the tax
consultant. Epiq Systems, Inc. is claims and noticing agent.
(F) Hayes Lemmerz
Last week, Hayes Lemmerz International, Inc., made its second trip
to the bankruptcy court since 2001. The Company reached
agreements with lenders holding a majority of the Company's
secured debt regarding a restructuring of the Company's debt.
Certain of the lenders. The Company is seeking the best way
possible to maximize.
Hayes' Plan 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.
Another notable filer is Accredited Home Lenders Holding Co.,
which filed for bankruptcy May 1. Accredited is a mortgage banker
servicing U.S. markets for conforming and non-prime residential
mortgage loans operating throughout the U.S. and in Canada.
Accredited was one of the top subprime mortgage lenders during the
housing bubble early this decade. Accredited was acquired by Lone
Star Fund V (U.S.) L.P. in a contentious buyout deal that the
Company suing Lone Star to force it to make good on its offer.
The parties eventually settled terms and Lone Star bought the
Company at a lower revised purchase price.
At Dec. 31, 2006, Accredited's consolidated balance sheet showed
$11.35 billion in total assets, $10.69 billion in total
liabilities, $97.9 million in minority interest in subsidiary, and
$556.1 million in total stockholders' equity. In its bankruptcy
petition, Accredited disclosed total assets between $10 million
and $50 million.
Lehman Brothers Holding Corp. remains the biggest corporate bust
in history. Lehman, which filed last year, had $639,000,000,000
in total assets and $613,000,000,000 in total debts at that time
of its filing.
Other big filings during the past month are the cases of U.S.
Shipping Partners LP and Energy Partners Ltd. Edison, New York-
based U.S. Shipping, which filed in Manhattan, had $717,443,000 in
total assets and $606,534,000 in total debts at the time of
filing.
New Orleans-based Energy Partners Ltd., which filed in the U.S.
Bankruptcy Court for the Southern District of Texas, had
$770,445,000 in total assets and $708,370,000 in total debts on
the petition date.
U.S. Shipping, a transporter of oil, petrochemicals and
commodities, sought court protection after a 92% plunge in
commodity shipping rates last year.
Energy Partners is an independent oil and natural gas exploration
and production company. Energy Partners filed its Chapter 11
Cases pursuant to a Plan Support and Lock-Up Agreement, dated as
of April 30, 2009, among the Company and holders of more than
66.6% of the outstanding principal amount of the Company's 9.75%
Senior Unsecured Notes due 2014 and the Company's Senior Floating
Notes due 2013. Under the terms of the plan of reorganization,
the holders of the Senior Notes and the holders of the Company's
8.75% Senior Notes due 2010 would receive their pro rata share of
100% of the outstanding common stock in the reorganized Company
upon its emergence from bankruptcy. In addition, the current
stockholders of the Company would receive warrants exercisable for
12.5% of the common stock of the reorganized Company.
In addition, roughly 22 more cases where filed the past 30 days
involving entities with assets between $100 million to $500
million:
* Noble International, Ltd., Warren MI
* Dayton Superior Corporation, Dayton OH
* TitleMax Holdings, LLC, Savannah, GA
* ASYST Technologies, Inc, Fremont CA
* Commercial Capital, Inc., Englewood CO
* Amaravathi LP, dba Monterone Round Rock, Houston TX
* Commercial Capital Inc., and CCI Funding I, LLC, Greenwood
Village, CO
* Park Lane I, LLC, New York
* Banex 1, LLC, Snohomish, WA
* TH Properties, LP, Harleysville, PA
* Mark IV Industries, Inc., Amherst NY
* Southeastern Income Properties, Inc., Tampa, FL
* Gurosa Corporation, Brownsville, TX
* Hill Country Galleria, LP, Bee Cave TX
* Dewey Ranch Hockey LLC (Coyotes Hockey), Glendale AZ
* Norwood Promotional Products Holdings, Inc., Indianapolis, IN
* Crucible Materials Corp., Syracuse NY
* AGT Crunch Acquisition, LLC, New York
* White Energy Inc., Dallas TX
* November 2005 Land Investors, LLC, Las Vegas, NV
* SENCORP Cincinnati OH
* Roland P. Weddell, Carson City, NV
Car parts maker Mark IV Industries said it had more than $2
billion in debt.
* Retail Sales Unexpectedly Fall in April for Second Month
----------------------------------------------------------
Retail sales unexpectedly fell in the U.S. in April, the
second monthly decline in a row, Bill Rochelle at Bloomberg said.
The April decline of 0.4 percent came on the heels of a revised
1.3 percent drop in March.
The U.S. Census Bureau announced May 13 that advance estimates of
U.S. retail and food services sales for April, adjusted for
seasonal variation and holiday and trading-day differences, but
not for price changes, were $337.7 billion, a decrease of 0.4
percent (ñ0.5%) from the previous month and 10.1 percent (ñ0.7%)
below April 2008. Total sales for the February through April 2009
period were down 9.2 percent (ñ0.5%) from the same period a year
ago. The February to March 2009 percent change was revised from -
1.2 percent (ñ0.5%) to -1.3 percent (ñ0.3%).
Retail trade sales were down 0.4 percent (ñ0.7%) from March 2009
and 11.4 percent (ñ0.7%) below last year. Gasoline stations sales
were down 36.4 percent (ñ1.5%) from April 2008 and motor vehicle
and parts dealers sales were down 20.7 percent (ñ2.3%) from last
year.
* BOND PRICING -- For the Week From May 11 to 15, 2009
------------------------------------------------------
Company Coupon Maturity Bid Price
------- ------ -------- ---------
ACCURIDE CORP 8.50% 2/1/2015 29.50
ACE CASH EXPRESS 10.25% 10/1/2014 37.25
ADVANTA CAP TR 8.99% 12/17/2026 9.50
AHERN RENTALS 9.25% 8/15/2013 35.50
ALERIS INTL INC 9.00% 12/15/2014 1.50
ALERIS INTL INC 10.00% 12/15/2016 2.75
ALION SCIENCE 10.25% 2/1/2015 23.00
ALLIED CAP CORP 6.00% 4/1/2012 42.00
ALLIED CAP CORP 6.63% 7/15/2011 36.00
AMBASSADORS INTL 3.75% 4/15/2027 29.00
AMBASSADORS INTL 3.75% 4/15/2027 31.63
AMER AXLE & MFG 5.25% 2/11/2014 27.00
AMER AXLE & MFG 7.88% 3/1/2017 23.00
AMER CAP STRATEG 8.60% 8/1/2012 46.00
AMER GENL FIN 3.88% 10/1/2009 90.50
AMER GENL FIN 5.00% 10/15/2010 35.00
AMER GENL FIN 5.00% 12/15/2010 36.00
AMER GENL FIN 5.00% 1/15/2011 40.00
AMER GENL FIN 5.00% 3/15/2011 57.09
AMER GENL FIN 5.35% 7/15/2010 50.00
AMER GENL FIN 5.38% 9/1/2009 94.98
AMER MEDIA OPER 8.88% 1/15/2011 36.00
AMR CORP 9.20% 1/30/2012 50.00
AMR CORP 10.40% 3/15/2011 46.00
AMR CORP 10.42% 3/15/2011 46.00
ANTHRACITE CAP 11.75% 9/1/2027 9.38
ANTIGENICS 5.25% 2/1/2025 25.50
APPLETON PAPERS 9.75% 6/15/2014 35.06
ARCO CHEMICAL CO 9.80% 2/1/2020 25.25
ARCO CHEMICAL CO 10.25% 11/1/2010 26.94
ARVINMERITOR 8.13% 9/15/2015 35.00
ARVINMERITOR 8.75% 3/1/2012 41.00
AT HOME CORP 0.52% 12/28/2018 0.06
AVENTINE RENEW 10.00% 4/1/2017 12.75
BALLY TOTAL FITN 14.00% 10/1/2013 1.00
BANK NEW ENGLAND 8.75% 4/1/1999 9.00
BANK NEW ENGLAND 9.88% 9/15/1999 1.00
BANKUNITED CAP 3.13% 3/1/2034 36.00
BARRINGTON BROAD 10.50% 8/15/2014 20.00
BEAZER HOMES USA 4.63% 6/15/2024 50.63
BEAZER HOMES USA 8.38% 4/15/2012 49.38
BEAZER HOMES USA 8.63% 5/15/2011 59.13
BELL MICROPRODUC 3.75% 3/5/2024 24.00
BON-TON DEPT STR 10.25% 3/15/2014 35.94
BORDEN INC 8.38% 4/15/2016 24.00
BORDEN INC 9.20% 3/15/2021 24.00
BOWATER INC 6.50% 6/15/2013 15.00
BOWATER INC 9.38% 12/15/2021 15.25
BOWATER INC 9.50% 10/15/2012 15.25
BRODER BROS CO 11.25% 10/15/2010 30.13
BROOKSTONE CO 12.00% 10/15/2012 38.00
C&D TECHNOLOGIES 5.50% 11/15/2026 44.66
CALLON PETROLEUM 9.75% 12/8/2010 45.00
CAPMARK FINL GRP 7.88% 5/10/2012 28.50
CAPMARK FINL GRP 8.30% 5/10/2017 25.00
CCH I LLC 9.92% 4/1/2014 1.00
CCH I LLC 10.00% 5/15/2014 1.38
CCH I LLC 11.13% 1/15/2014 1.00
CCH I LLC 11.75% 5/15/2014 0.40
CCH I LLC 12.13% 1/15/2015 1.06
CCH I LLC 13.50% 1/15/2014 1.00
CCH I/CCH I CP 11.00% 10/1/2015 9.25
CCH I/CCH I CP 11.00% 10/1/2015 10.25
CHAMPION ENTERPR 2.75% 11/1/2037 24.25
CHARTER COMM HLD 9.92% 4/1/2011 0.56
CHARTER COMM HLD 10.00% 5/15/2011 1.50
CHARTER COMM HLD 11.75% 5/15/2011 1.50
CHARTER COMM HLD 12.13% 1/15/2012 1.50
CHARTER COMM HLD 13.50% 1/15/2011 1.50
CHARTER COMM INC 6.50% 10/1/2027 12.50
CIRCUS CIRCUS 7.63% 7/15/2013 41.97
CIT GROUP INC 4.50% 6/15/2009 97.20
CIT GROUP INC 4.50% 7/15/2009 91.00
CIT GROUP INC 4.85% 12/15/2011 40.00
CIT GROUP INC 5.00% 9/15/2009 88.10
CIT GROUP INC 5.05% 11/15/2010 55.00
CIT GROUP INC 5.25% 6/15/2009 96.51
CIT GROUP INC 5.30% 7/15/2014 26.50
CIT GROUP INC 5.38% 8/15/2015 18.40
CIT GROUP INC 5.40% 9/15/2013 30.00
CIT GROUP INC 6.13% 6/15/2009 97.72
CIT GROUP INC 6.15% 1/15/2013 38.75
CIT GROUP INC 6.25% 2/15/2010 81.00
CIT GROUP INC 6.50% 3/15/2011 45.39
CIT GROUP INC 6.60% 2/15/2011 60.00
CIT GROUP INC 7.00% 2/15/2012 45.75
CIT GROUP INC 7.25% 12/15/2012 40.50
CIT GROUP INC 7.85% 2/15/2014 34.55
CLEAR CHANNEL 4.40% 5/15/2011 22.00
CLEAR CHANNEL 4.50% 1/15/2010 46.50
CLEAR CHANNEL 4.90% 5/15/2015 15.40
CLEAR CHANNEL 5.00% 3/15/2012 12.00
CLEAR CHANNEL 5.50% 9/15/2014 12.50
CLEAR CHANNEL 5.50% 12/15/2016 17.00
CLEAR CHANNEL 5.75% 1/15/2013 15.00
CLEAR CHANNEL 6.88% 6/15/2018 12.00
CLEAR CHANNEL 7.25% 10/15/2027 14.00
CLEAR CHANNEL 7.65% 9/15/2010 34.00
CLEAR CHANNEL 10.75% 8/1/2016 21.38
CMP SUSQUEHANNA 9.88% 5/15/2014 4.50
COMMERCIAL VEHIC 8.00% 7/1/2013 32.10
COMPREHENS CARE 7.50% 4/15/2010 75.13
COMPUCREDIT 3.63% 5/30/2025 35.00
CONEXANT SYSTEMS 4.00% 3/1/2026 24.75
CONSTAR INTL 11.00% 12/1/2012 3.00
COOPER-STANDARD 7.00% 12/15/2012 19.00
COOPER-STANDARD 8.38% 12/15/2014 12.09
CREDENCE SYSTEM 3.50% 5/15/2010 37.00
DAE AVIATION 11.25% 8/1/2015 34.50
DECODE GENETICS 3.50% 4/15/2011 5.50
DELPHI CORP 6.50% 8/15/2013 1.50
DELPHI CORP 8.25% 10/15/2033 0.01
DELTA AIR LINES 8.00% 12/1/2015 25.00
DELTA PETROLEUM 3.75% 5/1/2037 36.00
DEX MEDIA INC 8.00% 11/15/2013 12.00
DEX MEDIA WEST 8.50% 8/15/2010 65.88
DEX MEDIA WEST 9.88% 8/15/2013 20.00
DOWNEY FINANCIAL 6.50% 7/1/2014 0.50
DUNE ENERGY INC 10.50% 6/1/2012 40.13
EDDIE BAUER HLDG 5.25% 4/1/2014 7.63
ENCOMPASS SERVIC 10.50% 5/1/2009 5.00
ENERGY PARTNERS 8.75% 8/1/2010 35.00
EPIX MEDICAL INC 3.00% 6/15/2024 19.13
EVERGREEN SOLAR 4.00% 7/15/2013 32.50
FAIRPOINT COMMUN 13.13% 4/1/2018 31.06
FIBERTOWER CORP 9.00% 11/15/2012 41.25
FINISAR CORP 2.50% 10/15/2010 50.00
FINLAY FINE JWLY 8.38% 6/1/2012 3.09
FIRST DATA CORP 5.63% 11/1/2011 47.00
FLOTEK INDS 5.25% 2/15/2028 32.00
FONTAINEBLEAU LA 11.00% 6/15/2015 4.00
FORD MOTOR CRED 4.80% 7/20/2009 91.09
FORD MOTOR CRED 4.90% 5/20/2009 99.79
FORD MOTOR CRED 5.00% 8/20/2009 90.00
FORD MOTOR CRED 5.25% 12/21/2009 83.00
FORD MOTOR CRED 5.25% 2/22/2011 53.00
FORD MOTOR CRED 5.50% 5/20/2009 99.69
FORD MOTOR CRED 5.50% 6/22/2009 94.00
FORD MOTOR CRED 5.50% 2/22/2010 79.32
FORD MOTOR CRED 5.55% 8/22/2011 49.68
FORD MOTOR CRED 5.70% 3/22/2010 72.50
FORD MOTOR CRED 5.75% 3/22/2010 73.50
FORD MOTOR CRED 5.75% 2/21/2012 44.50
FORD MOTOR CRED 5.85% 5/20/2010 74.73
FORD MOTOR CRED 6.00% 2/22/2010 72.50
FORD MOTOR CRED 6.30% 3/22/2010 76.00
FORD MOTOR CRED 6.55% 8/20/2010 63.28
FORD MOTOR CRED 7.00% 7/1/2010 71.50
FORD MOTOR CRED 7.15% 8/20/2010 57.52
FORD MOTOR CRED 7.72% 5/17/2010 70.53
FORD MOTOR CRED 8.00% 12/20/2010 62.00
FRANKLIN BANK 4.00% 5/1/2027 0.01
FREESCALE SEMICO 10.13% 12/15/2016 25.00
FRONTIER AIRLINE 5.00% 12/15/2025 8.00
GENCORP INC 2.25% 11/15/2024 39.00
GENCORP INC 4.00% 1/16/2024 77.27
GENERAL MOTORS 6.75% 5/1/2028 6.00
GENERAL MOTORS 7.13% 7/15/2013 4.25
GENERAL MOTORS 7.20% 1/15/2011 3.00
GENERAL MOTORS 7.40% 9/1/2025 4.02
GENERAL MOTORS 7.70% 4/15/2016 3.75
GENERAL MOTORS 8.10% 6/15/2024 2.97
GENERAL MOTORS 8.25% 7/15/2023 4.15
GENERAL MOTORS 8.38% 7/15/2033 5.02
GENERAL MOTORS 8.80% 3/1/2021 5.10
GENERAL MOTORS 9.40% 7/15/2021 4.25
GENERAL MOTORS 9.45% 11/1/2011 10.02
GENWORTH GLOBAL 6.10% 4/15/2033 15.25
GEORGIA GULF CRP 7.13% 12/15/2013 22.25
GGP LP 3.98% 4/15/2027 24.50
GMAC LLC 4.90% 10/15/2009 83.00
GMAC LLC 4.90% 10/15/2009 87.50
GMAC LLC 4.95% 10/15/2009 87.50
GMAC LLC 5.00% 8/15/2009 86.50
GMAC LLC 5.00% 8/15/2009 86.00
GMAC LLC 5.00% 9/15/2009 83.50
GMAC LLC 5.00% 9/15/2009 90.50
GMAC LLC 5.00% 9/15/2009 90.10
GMAC LLC 5.00% 10/15/2009 86.50
GMAC LLC 5.05% 7/15/2009 92.00
GMAC LLC 5.10% 7/15/2009 90.00
GMAC LLC 5.10% 8/15/2009 89.02
GMAC LLC 5.20% 11/15/2009 85.00
GMAC LLC 5.25% 6/15/2009 95.50
GMAC LLC 5.25% 7/15/2009 92.00
GMAC LLC 5.25% 7/15/2009 90.00
GMAC LLC 5.25% 8/15/2009 92.17
GMAC LLC 5.25% 8/15/2009 91.25
GMAC LLC 5.25% 11/15/2009 81.50
GMAC LLC 5.30% 1/15/2010 81.50
GMAC LLC 5.35% 6/15/2009 97.75
GMAC LLC 5.35% 11/15/2009 86.00
GMAC LLC 5.35% 12/15/2009 82.90
GMAC LLC 5.40% 6/15/2009 97.00
GMAC LLC 5.40% 12/15/2009 83.00
GMAC LLC 5.40% 12/15/2009 75.00
GMAC LLC 5.50% 6/15/2009 95.00
GMAC LLC 5.50% 6/15/2009 97.50
GMAC LLC 5.50% 1/15/2010 77.71
GMAC LLC 5.70% 6/15/2013 30.00
GMAC LLC 5.75% 1/15/2010 76.00
GMAC LLC 5.85% 2/15/2010 79.50
GMAC LLC 6.00% 1/15/2010 78.13
GMAC LLC 6.00% 2/15/2010 75.00
GMAC LLC 6.05% 3/15/2010 75.33
GMAC LLC 6.25% 6/15/2009 86.50
GMAC LLC 6.25% 7/15/2013 31.00
GMAC LLC 6.30% 6/15/2009 91.00
GMAC LLC 6.30% 7/15/2009 84.50
GMAC LLC 6.50% 6/15/2009 96.49
GMAC LLC 6.50% 7/15/2009 92.00
GMAC LLC 6.50% 10/15/2009 85.50
GMAC LLC 6.50% 2/15/2013 32.00
GMAC LLC 6.50% 8/15/2013 18.89
GMAC LLC 6.60% 7/15/2009 92.00
GMAC LLC 6.65% 7/15/2009 85.58
GMAC LLC 6.65% 2/15/2013 33.12
GMAC LLC 6.70% 6/15/2009 96.49
GMAC LLC 6.70% 5/15/2014 23.39
GMAC LLC 6.75% 11/15/2009 75.50
GMAC LLC 6.80% 7/15/2009 94.56
GMAC LLC 6.80% 11/15/2009 68.02
GMAC LLC 6.85% 7/15/2009 94.00
GMAC LLC 6.85% 10/15/2009 73.25
GMAC LLC 6.90% 12/15/2009 84.53
GMAC LLC 6.95% 8/15/2009 87.00
GMAC LLC 7.00% 7/15/2009 94.06
GMAC LLC 7.00% 8/15/2009 91.27
GMAC LLC 7.00% 9/15/2009 89.00
GMAC LLC 7.00% 9/15/2009 87.25
GMAC LLC 7.00% 10/15/2009 86.10
GMAC LLC 7.00% 11/15/2009 68.00
GMAC LLC 7.00% 12/15/2009 82.75
GMAC LLC 7.00% 1/15/2010 68.00
GMAC LLC 7.00% 3/15/2010 74.99
GMAC LLC 7.05% 10/15/2009 83.00
GMAC LLC 7.13% 8/15/2009 91.09
GMAC LLC 7.15% 8/15/2009 91.00
GMAC LLC 7.20% 8/15/2009 92.00
GMAC LLC 7.25% 1/15/2010 66.00
GMAC LLC 7.50% 9/15/2010 57.00
GMAC LLC 7.63% 11/15/2012 34.50
GMAC LLC 7.70% 8/15/2010 70.00
GMAC LLC 7.70% 8/15/2010 71.50
GMAC LLC 8.00% 6/15/2010 72.85
GMAC LLC 8.00% 9/15/2010 69.90
GMAC LLC 8.20% 7/15/2010 72.99
GMAC LLC 8.25% 9/15/2012 34.00
GMAC LLC 8.40% 4/15/2010 75.00
GMAC LLC 8.50% 5/15/2010 75.50
GMAC LLC 8.50% 8/15/2015 28.00
GMAC LLC 8.65% 8/15/2015 30.09
HAIGHTS CROSS OP 11.75% 8/15/2011 40.63
HANNA (MA) CO 6.52% 2/23/2010 70.06
HARRAHS OPER CO 8.00% 2/1/2011 41.00
HARRY & DAVID OP 9.00% 3/1/2013 35.75
HAWAIIAN TELCOM 9.75% 5/1/2013 3.00
HEADWATERS INC 2.88% 6/1/2016 31.00
HINES NURSERIES 10.25% 10/1/2011 14.00
HUTCHINSON TECH 3.25% 1/15/2026 33.00
IDEARC INC 8.00% 11/15/2016 2.00
INCYTE CORP 3.50% 2/15/2011 57.00
INN OF THE MOUNT 12.00% 11/15/2010 12.50
INTCOMEX INC 11.75% 1/15/2011 34.00
INTERDENT SVC 10.75% 12/15/2011 52.40
INTL LEASE FIN 3.25% 2/15/2010 65.00
INTL LEASE FIN 3.88% 2/15/2010 75.38
INTL LEASE FIN 4.00% 10/15/2009 75.25
INTL LEASE FIN 4.00% 12/15/2009 74.50
INTL LEASE FIN 4.10% 2/15/2013 30.00
INTL LEASE FIN 4.15% 10/15/2010 61.75
INTL LEASE FIN 4.25% 10/15/2010 60.50
INTL LEASE FIN 4.30% 8/15/2010 51.20
INTL LEASE FIN 4.38% 8/15/2009 91.75
INTL LEASE FIN 4.95% 6/15/2010 7.76
INTL LEASE FIN 5.00% 8/15/2010 65.00
INTL LEASE FIN 5.00% 6/15/2012 42.00
INTL LEASE FIN 5.50% 4/15/2012 33.25
INTL LEASE FIN 7.25% 2/15/2010 65.88
INTL LEASE FIN 7.90% 8/15/2010 65.90
ISTAR FINANCIAL 5.13% 4/1/2011 47.50
ISTAR FINANCIAL 5.13% 4/1/2011 48.00
ISTAR FINANCIAL 5.15% 3/1/2012 41.00
ISTAR FINANCIAL 5.38% 4/15/2010 74.00
ISTAR FINANCIAL 5.50% 6/15/2012 41.75
ISTAR FINANCIAL 5.65% 9/15/2011 47.00
ISTAR FINANCIAL 5.80% 3/15/2011 54.00
ISTAR FINANCIAL 6.00% 12/15/2010 61.00
ISTAR FINANCIAL 8.63% 6/1/2013 44.00
JAZZ TECHNOLOGIE 8.00% 12/31/2011 24.50
JEFFERSON SMURFI 7.50% 6/1/2013 21.42
JEFFERSON SMURFI 8.25% 10/1/2012 25.50
K HOVNANIAN ENTR 7.75% 5/15/2013 35.00
K HOVNANIAN ENTR 8.00% 4/1/2012 50.00
K HOVNANIAN ENTR 8.88% 4/1/2012 47.00
KAISER ALUM&CHEM 12.75% 2/1/2003 8.10
KELLWOOD CO 7.63% 10/15/2017 5.00
KEMET CORP 2.25% 11/15/2026 34.50
KEMET CORP 2.25% 11/15/2026 34.75
KEYSTONE AUTO OP 9.75% 11/1/2013 35.59
KKR FINANCIAL 7.00% 7/15/2012 43.25
KNIGHT RIDDER 4.63% 11/1/2014 19.50
KNIGHT RIDDER 5.75% 9/1/2017 18.00
KNIGHT RIDDER 6.88% 3/15/2029 17.81
KNIGHT RIDDER 7.13% 6/1/2011 24.50
KNIGHT RIDDER 7.15% 11/1/2027 18.00
LANDAMERICA 3.13% 11/15/2033 11.52
LANDAMERICA 3.25% 5/15/2034 12.25
LEAR CORP 8.50% 12/1/2013 28.00
LEAR CORP 8.75% 12/1/2016 30.00
LEHMAN BROS HLDG 1.50% 3/23/2012 12.50
LEHMAN BROS HLDG 4.25% 1/27/2010 12.93
LEHMAN BROS HLDG 4.38% 11/30/2010 14.13
LEHMAN BROS HLDG 4.50% 7/26/2010 13.73
LEHMAN BROS HLDG 4.50% 8/3/2011 8.50
LEHMAN BROS HLDG 4.80% 2/27/2013 7.00
LEHMAN BROS HLDG 4.80% 3/13/2014 12.75
LEHMAN BROS HLDG 4.80% 6/24/2023 7.25
LEHMAN BROS HLDG 5.00% 1/14/2011 13.10
LEHMAN BROS HLDG 5.00% 1/22/2013 6.25
LEHMAN BROS HLDG 5.00% 2/11/2013 9.50
LEHMAN BROS HLDG 5.00% 3/27/2013 7.00
LEHMAN BROS HLDG 5.00% 8/3/2014 7.25
LEHMAN BROS HLDG 5.00% 8/5/2015 6.00
LEHMAN BROS HLDG 5.00% 12/18/2015 10.00
LEHMAN BROS HLDG 5.00% 5/28/2023 8.25
LEHMAN BROS HLDG 5.00% 5/30/2023 9.25
LEHMAN BROS HLDG 5.00% 6/10/2023 10.10
LEHMAN BROS HLDG 5.00% 6/17/2023 7.25
LEHMAN BROS HLDG 5.10% 1/28/2013 8.50
LEHMAN BROS HLDG 5.10% 2/15/2020 7.00
LEHMAN BROS HLDG 5.15% 2/4/2015 9.50
LEHMAN BROS HLDG 5.20% 5/13/2020 7.18
LEHMAN BROS HLDG 5.25% 2/6/2012 13.00
LEHMAN BROS HLDG 5.25% 1/30/2014 7.13
LEHMAN BROS HLDG 5.25% 2/11/2015 9.55
LEHMAN BROS HLDG 5.25% 3/8/2020 7.25
LEHMAN BROS HLDG 5.25% 5/20/2023 7.38
LEHMAN BROS HLDG 5.35% 2/25/2018 7.00
LEHMAN BROS HLDG 5.35% 3/13/2020 7.50
LEHMAN BROS HLDG 5.35% 6/14/2030 7.55
LEHMAN BROS HLDG 5.38% 5/6/2023 9.25
LEHMAN BROS HLDG 5.40% 3/6/2020 7.00
LEHMAN BROS HLDG 5.40% 3/20/2020 9.25
LEHMAN BROS HLDG 5.40% 3/30/2029 7.25
LEHMAN BROS HLDG 5.40% 6/21/2030 8.00
LEHMAN BROS HLDG 5.45% 3/15/2025 6.39
LEHMAN BROS HLDG 5.45% 4/6/2029 7.00
LEHMAN BROS HLDG 5.45% 2/22/2030 6.93
LEHMAN BROS HLDG 5.45% 7/19/2030 7.50
LEHMAN BROS HLDG 5.45% 9/20/2030 8.00
LEHMAN BROS HLDG 5.50% 4/4/2016 14.38
LEHMAN BROS HLDG 5.50% 2/4/2018 8.50
LEHMAN BROS HLDG 5.50% 2/19/2018 5.60
LEHMAN BROS HLDG 5.50% 11/4/2018 7.25
LEHMAN BROS HLDG 5.50% 2/27/2020 7.70
LEHMAN BROS HLDG 5.50% 8/19/2020 7.25
LEHMAN BROS HLDG 5.50% 3/14/2023 7.50
LEHMAN BROS HLDG 5.50% 4/8/2023 7.00
LEHMAN BROS HLDG 5.50% 4/15/2023 8.00
LEHMAN BROS HLDG 5.50% 4/23/2023 9.25
LEHMAN BROS HLDG 5.50% 8/5/2023 4.95
LEHMAN BROS HLDG 5.50% 10/7/2023 7.50
LEHMAN BROS HLDG 5.50% 1/27/2029 7.25
LEHMAN BROS HLDG 5.50% 2/3/2029 7.00
LEHMAN BROS HLDG 5.50% 8/2/2030 7.50
LEHMAN BROS HLDG 5.55% 2/11/2018 7.00
LEHMAN BROS HLDG 5.55% 3/9/2029 7.25
LEHMAN BROS HLDG 5.55% 1/25/2030 5.75
LEHMAN BROS HLDG 5.55% 9/27/2030 8.17
LEHMAN BROS HLDG 5.55% 12/31/2034 8.09
LEHMAN BROS HLDG 5.60% 1/22/2018 8.75
LEHMAN BROS HLDG 5.60% 2/17/2029 7.55
LEHMAN BROS HLDG 5.60% 2/24/2029 8.50
LEHMAN BROS HLDG 5.60% 3/2/2029 8.20
LEHMAN BROS HLDG 5.60% 2/25/2030 7.50
LEHMAN BROS HLDG 5.60% 5/3/2030 7.61
LEHMAN BROS HLDG 5.63% 1/24/2013 15.88
LEHMAN BROS HLDG 5.63% 3/15/2030 7.66
LEHMAN BROS HLDG 5.65% 11/23/2029 7.63
LEHMAN BROS HLDG 5.65% 8/16/2030 7.50
LEHMAN BROS HLDG 5.65% 12/31/2034 7.00
LEHMAN BROS HLDG 5.70% 1/28/2018 6.50
LEHMAN BROS HLDG 5.70% 2/10/2029 7.50
LEHMAN BROS HLDG 5.70% 4/13/2029 7.00
LEHMAN BROS HLDG 5.70% 9/7/2029 8.00
LEHMAN BROS HLDG 5.70% 12/14/2029 7.30
LEHMAN BROS HLDG 5.75% 4/25/2011 14.63
LEHMAN BROS HLDG 5.75% 7/18/2011 13.00
LEHMAN BROS HLDG 5.75% 5/17/2013 14.00
LEHMAN BROS HLDG 5.75% 3/27/2023 8.00
LEHMAN BROS HLDG 5.75% 9/16/2023 9.00
LEHMAN BROS HLDG 5.75% 10/15/2023 8.50
LEHMAN BROS HLDG 5.75% 10/21/2023 7.00
LEHMAN BROS HLDG 5.75% 11/12/2023 6.85
LEHMAN BROS HLDG 5.75% 11/25/2023 6.93
LEHMAN BROS HLDG 5.75% 12/16/2028 6.52
LEHMAN BROS HLDG 5.75% 12/23/2028 6.99
LEHMAN BROS HLDG 5.75% 8/24/2029 9.00
LEHMAN BROS HLDG 5.75% 9/14/2029 5.66
LEHMAN BROS HLDG 5.75% 10/12/2029 7.65
LEHMAN BROS HLDG 5.75% 3/29/2030 6.76
LEHMAN BROS HLDG 5.80% 9/3/2020 7.90
LEHMAN BROS HLDG 5.80% 10/25/2030 6.50
LEHMAN BROS HLDG 5.88% 11/15/2017 12.00
LEHMAN BROS HLDG 5.90% 5/4/2029 7.12
LEHMAN BROS HLDG 5.90% 2/7/2031 7.00
LEHMAN BROS HLDG 5.95% 12/20/2030 7.50
LEHMAN BROS HLDG 6.00% 7/19/2012 16.50
LEHMAN BROS HLDG 6.00% 1/22/2020 9.00
LEHMAN BROS HLDG 6.00% 2/12/2020 8.40
LEHMAN BROS HLDG 6.00% 1/29/2021 8.10
LEHMAN BROS HLDG 6.00% 10/23/2028 7.76
LEHMAN BROS HLDG 6.00% 11/18/2028 7.00
LEHMAN BROS HLDG 6.00% 5/11/2029 7.50
LEHMAN BROS HLDG 6.00% 7/20/2029 6.93
LEHMAN BROS HLDG 6.00% 4/30/2034 7.52
LEHMAN BROS HLDG 6.00% 7/30/2034 6.00
LEHMAN BROS HLDG 6.00% 2/21/2036 6.00
LEHMAN BROS HLDG 6.00% 2/24/2036 8.25
LEHMAN BROS HLDG 6.00% 2/12/2037 7.50
LEHMAN BROS HLDG 6.10% 8/12/2023 8.76
LEHMAN BROS HLDG 6.15% 4/11/2031 6.75
LEHMAN BROS HLDG 6.20% 9/26/2014 15.02
LEHMAN BROS HLDG 6.20% 6/15/2027 7.00
LEHMAN BROS HLDG 6.20% 5/25/2029 7.25
LEHMAN BROS HLDG 6.25% 2/5/2021 6.73
LEHMAN BROS HLDG 6.25% 2/22/2023 6.50
LEHMAN BROS HLDG 6.30% 3/27/2037 8.25
LEHMAN BROS HLDG 6.40% 10/11/2022 7.25
LEHMAN BROS HLDG 6.40% 12/19/2036 12.50
LEHMAN BROS HLDG 6.50% 2/28/2023 7.61
LEHMAN BROS HLDG 6.50% 3/6/2023 7.35
LEHMAN BROS HLDG 6.50% 10/18/2027 5.93
LEHMAN BROS HLDG 6.50% 10/25/2027 7.00
LEHMAN BROS HLDG 6.50% 11/15/2032 7.35
LEHMAN BROS HLDG 6.50% 1/17/2033 3.09
LEHMAN BROS HLDG 6.50% 12/22/2036 7.50
LEHMAN BROS HLDG 6.50% 2/13/2037 8.50
LEHMAN BROS HLDG 6.50% 6/21/2037 7.00
LEHMAN BROS HLDG 6.50% 7/13/2037 7.00
LEHMAN BROS HLDG 6.60% 10/3/2022 7.75
LEHMAN BROS HLDG 6.63% 1/18/2012 14.25
LEHMAN BROS HLDG 6.75% 7/1/2022 8.00
LEHMAN BROS HLDG 6.75% 11/22/2027 9.00
LEHMAN BROS HLDG 6.75% 3/11/2033 7.63
LEHMAN BROS HLDG 6.75% 10/26/2037 9.00
LEHMAN BROS HLDG 6.80% 9/7/2032 7.25
LEHMAN BROS HLDG 6.85% 8/16/2032 7.00
LEHMAN BROS HLDG 6.88% 5/2/2018 16.25
LEHMAN BROS HLDG 6.88% 7/17/2037 0.03
LEHMAN BROS HLDG 6.90% 9/1/2032 8.75
LEHMAN BROS HLDG 7.00% 4/16/2019 7.50
LEHMAN BROS HLDG 7.00% 5/12/2023 7.09
LEHMAN BROS HLDG 7.00% 9/27/2027 14.50
LEHMAN BROS HLDG 7.00% 10/4/2032 7.00
LEHMAN BROS HLDG 7.00% 7/27/2037 7.13
LEHMAN BROS HLDG 7.00% 9/28/2037 6.63
LEHMAN BROS HLDG 7.00% 11/16/2037 7.45
LEHMAN BROS HLDG 7.00% 12/28/2037 8.17
LEHMAN BROS HLDG 7.00% 2/7/2038 10.13
LEHMAN BROS HLDG 7.00% 2/8/2038 6.00
LEHMAN BROS HLDG 7.00% 4/22/2038 7.00
LEHMAN BROS HLDG 7.10% 3/25/2038 7.25
LEHMAN BROS HLDG 7.25% 2/27/2038 6.00
LEHMAN BROS HLDG 7.25% 4/29/2038 8.75
LEHMAN BROS HLDG 7.35% 5/6/2038 7.27
LEHMAN BROS HLDG 7.73% 10/15/2023 5.83
LEHMAN BROS HLDG 7.88% 8/15/2010 11.00
LEHMAN BROS HLDG 8.05% 1/15/2019 5.06
LEHMAN BROS HLDG 8.50% 8/1/2015 9.00
LEHMAN BROS HLDG 8.80% 3/1/2015 11.90
LEHMAN BROS HLDG 9.50% 12/28/2022 6.26
LEHMAN BROS HLDG 9.50% 1/30/2023 4.13
LEHMAN BROS HLDG 9.50% 2/27/2023 7.50
LEHMAN BROS HLDG 10.00% 3/13/2023 6.00
LEHMAN BROS HLDG 10.38% 5/24/2024 7.80
LEHMAN BROS HLDG 11.00% 10/25/2017 9.00
LEHMAN BROS HLDG 11.00% 6/22/2022 7.50
LIFETIME BRANDS 4.75% 7/15/2011 43.00
LOCAL INSIGHT 11.00% 12/1/2017 20.25
MAGNA ENTERTAINM 8.55% 6/15/2010 14.05
MAJESTIC STAR 9.50% 10/15/2010 57.50
MAJESTIC STAR 9.75% 1/15/2011 9.00
MANDALAY RESORT 6.50% 7/31/2009 99.75
MASHANTUCKET PEQ 8.50% 11/15/2015 21.63
MERCER INTL INC 9.25% 2/15/2013 35.00
MERISANT CO 9.50% 7/15/2013 2.30
MERRILL LYNCH 0.35% 3/9/2011 88.50
METALDYNE CORP 11.00% 6/15/2012 10.00
MILACRON ESCROW 11.50% 5/15/2011 20.50
MILLENNIUM AMER 7.63% 11/15/2026 5.00
MOMENTIVE PERFOR 11.50% 12/1/2016 25.50
MORRIS PUBLISH 7.00% 8/1/2013 5.00
NATL FINANCIAL 0.75% 2/1/2012 38.00
NEFF CORP 10.00% 6/1/2015 22.00
NETWORK COMMUNIC 10.75% 12/1/2013 20.50
NEW PLAN EXCEL 4.50% 2/1/2011 55.25
NEW PLAN EXCEL 7.40% 9/15/2009 85.50
NEW PLAN EXCEL 7.50% 7/30/2029 15.13
NEW PLAN REALTY 6.90% 2/15/2028 15.00
NEW PLAN REALTY 7.65% 11/2/2026 15.00
NEW PLAN REALTY 7.68% 11/2/2026 11.00
NEW PLAN REALTY 7.97% 8/14/2026 16.00
NEWPAGE CORP 12.00% 5/1/2013 32.00
NORTEK INC 8.50% 9/1/2014 24.00
NORTH ATL TRADNG 9.25% 3/1/2012 19.96
NTK HOLDINGS INC 0.00% 3/1/2014 12.25
OUTBOARD MARINE 9.13% 4/15/2017 3.50
PALM HARBOR 3.25% 5/15/2024 32.00
PANOLAM INDUSTRI 10.75% 10/1/2013 5.00
PARK PLACE ENT 7.50% 9/1/2009 71.31
PARK PLACE ENT 7.88% 3/15/2010 81.00
PENHALL INTL 12.00% 8/1/2014 36.25
PHH CORP 6.45% 4/15/2010 70.00
PHH CORP 6.70% 4/15/2010 77.58
PLY GEM INDS 9.00% 2/15/2012 23.94
PREIT ASSOCIATES 4.00% 6/1/2012 36.50
PRIMUS TELECOM 3.75% 9/15/2010 2.63
PRIMUS TELECOM 8.00% 1/15/2014 5.40
PRIMUS TELECOMM 14.25% 5/20/2011 38.69
QUALITY DISTRIBU 9.00% 11/15/2010 31.04
RADIAN GROUP 7.75% 6/1/2011 58.00
RADIO ONE INC 6.38% 2/15/2013 18.00
RADIO ONE INC 8.88% 7/1/2011 27.50
RAFAELLA APPAREL 11.25% 6/15/2011 16.75
RAIT FINANCIAL 6.88% 4/15/2027 28.87
RATHGIBSON INC 11.25% 2/15/2014 23.25
RAYOVAC CORP 8.50% 10/1/2013 11.11
READER'S DIGEST 9.00% 2/15/2017 4.00
REAL MEX RESTAUR 10.00% 4/1/2010 78.00
REALOGY CORP 10.50% 4/15/2014 37.50
REALOGY CORP 12.38% 4/15/2015 28.50
REALOGY CORP 12.38% 4/15/2015 29.63
RENTECH INC 4.00% 4/15/2013 29.52
RESIDENTIAL CAP 8.00% 2/22/2011 36.50
RESIDENTIAL CAP 8.38% 6/30/2010 67.50
RH DONNELLEY 6.88% 1/15/2013 5.13
RH DONNELLEY 6.88% 1/15/2013 4.88
RH DONNELLEY 6.88% 1/15/2013 6.00
RH DONNELLEY 8.88% 1/15/2016 6.00
RH DONNELLEY 8.88% 10/15/2017 5.00
RH DONNELLEY INC 11.75% 5/15/2015 20.75
RJ TOWER CORP 12.00% 6/1/2013 1.50
ROTECH HEALTHCA 9.50% 4/1/2012 15.75
SALEM COMM HLDG 7.75% 12/15/2010 30.50
SEQUA CORP 11.75% 12/1/2015 20.00
SIMMONS BEDDING 7.88% 1/15/2014 15.75
SINCLAIR BROAD 3.00% 5/15/2027 67.50
SINCLAIR BROAD 6.00% 9/15/2012 31.00
SIX FLAGS INC 4.50% 5/15/2015 14.75
SIX FLAGS INC 8.88% 2/1/2010 19.50
SIX FLAGS INC 9.63% 6/1/2014 12.05
SIX FLAGS INC 9.75% 4/15/2013 13.90
SPACEHAB INC 5.50% 10/15/2010 58.10
SPHERIS INC 11.00% 12/15/2012 37.75
STALLION OILFIEL 9.75% 2/1/2015 19.13
STANDARD MTR 6.75% 7/15/2009 88.00
STATION CASINOS 6.00% 4/1/2012 35.50
STATION CASINOS 6.50% 2/1/2014 4.50
STATION CASINOS 6.63% 3/15/2018 3.50
STATION CASINOS 6.88% 3/1/2016 7.00
STONE CONTAINER 8.38% 7/1/2012 26.25
SWIFT TRANS CO 12.50% 5/15/2017 33.50
TEKNI-PLEX INC 12.75% 6/15/2010 75.00
THORNBURG MTG 8.00% 5/15/2013 5.00
TIMES MIRROR CO 6.61% 9/15/2027 2.60
TIMES MIRROR CO 7.25% 3/1/2013 6.13
TIMES MIRROR CO 7.25% 11/15/2096 4.00
TIMES MIRROR CO 7.50% 7/1/2023 4.00
TOUSA INC 7.50% 3/15/2011 1.00
TRIBUNE CO 4.88% 8/15/2010 6.00
TRIBUNE CO 5.25% 8/15/2015 6.63
TRIBUNE CO 5.67% 12/8/2008 2.50
TRICO MARINE SER 6.50% 5/15/2028 30.75
TRONOX WORLDWIDE 9.50% 12/1/2012 19.88
TRUMP ENTERTNMNT 8.50% 6/1/2015 8.00
UAL CORP 4.50% 6/30/2021 41.25
UAL CORP 5.00% 2/1/2021 45.50
UNISYS CORP 6.88% 3/15/2010 74.90
UNIV CITY FL HLD 8.38% 5/1/2010 70.50
USFREIGHTWAYS 8.50% 4/15/2010 44.00
VERASUN ENERGY 9.38% 6/1/2017 4.50
VERENIUM CORP 5.50% 4/1/2027 17.00
VERSO PAPER 11.38% 8/1/2016 32.13
VION PHARM INC 7.75% 2/15/2012 28.75
VISTEON CORP 7.00% 3/10/2014 5.00
VISTEON CORP 12.25% 12/31/2016 6.63
VOUGHT AIRCRAFT 8.00% 7/15/2011 41.07
WASH MUT BANK FA 5.65% 8/15/2014 0.50
WASH MUT BANK NV 5.50% 1/15/2013 0.01
WASH MUT BANK NV 5.55% 6/16/2010 23.00
WASH MUT BANK NV 5.95% 5/20/2013 0.47
WASH MUTUAL INC 4.20% 1/15/2010 84.06
WASH MUTUAL INC 8.25% 4/1/2010 61.25
WCI COMMUNITIES 4.00% 8/5/2023 0.83
WCI COMMUNITIES 6.63% 3/15/2015 2.00
WCI COMMUNITIES 7.88% 10/1/2013 1.00
WCI COMMUNITIES 9.13% 5/1/2012 0.58
WII COMPONENTS 10.00% 2/15/2012 41.00
WILLIAM LYONS 7.50% 2/15/2014 23.00
WILLIAM LYONS 7.63% 12/15/2012 24.50
WILLIAM LYONS 10.75% 4/1/2013 22.40
XM SATELLITE 13.00% 8/1/2013 42.13
*********
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 ***