/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090527.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 27, 2009, Vol. 13, No. 145 Headlines 5K UTILITY: Case Summary & 20 Largest Unsecured Creditors ADT CONSTRUCTION: Court Converts Case to Chapter 7 Liquidation AJAZ AHMED NIZAM: Case Summary & 8 Largest Unsecured Creditors ALL AMERICAN: Case Summary & 20 Largest Unsecured Creditors ALLAN D MURRAY: Case Summary & 9 Largest Unsecured Creditors ALERIS INT'L: Court Sets September 15 Claims Bar Date ALERIS INT'L: Asks Court to Approve Deloitte Tax Engagement ALERIS INT'L: Alvarez & Marsal Seeks $668,588 for Feb-March Work ALERIS INT'L: To Idle Plants Due to GM and Chrysler Shutdowns AMERICAN INT'L: Bids to Arrange Asian Life Unit IPO Due May 29 AMERIMOLD TECH: Case Summary & 20 Largest Unsecured Creditors AMTG INVESTMENT: Voluntary Chapter 11 Case Summary ASARCO LLC: Harbinger Offers Full-Payment, "Confirmable" Plan BANK OF AMERICA: May Hike Investment Bankers' Base Salaries BERNARD L MADOFF: Banco Santander to Pay $235MM to Settle Lawsuit BERNARD L MADOFF: Fairfield Sued for $3.4BB for Ignoring Red Flags BERNARD L MADOFF: Talon Wants Trustee to Act on Private Jet Deal BOWNETREE LLC: Court Confirms Chapter 11 Plan of Reorganization BULLDOG INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors CANWEST MEDIA: DBRS Discontinues 'CC' Secured Bank Debt Rating CATHOLIC CHURCH: Fairbanks Moving Ahead With Ch. 11 Plan CDX GAS: Investors Sue to Deny Access of $10 Mil. in Escrow CDX GAS: Court Okays Bid Protocol for CDX Assets & New Rio Equity CDX GAS: Wants to Sell Portion of Rowland Acreage to Dominion CF MONTANE: Case Summary & 25 Largest Unsecured Creditors CHRYSLER LLC: Court OKs Payment on Prepetition Supplier Claims CHRYSLER LLC: 20-Day Claimants Want Immediate Payment CHRYSLER LLC: Hoegh Wants to Keep Cars Absent Shipping Payments CHRYSLER LLC: White & Case Names New Clients in Case CHRYSLER LLC: Financial Unit Resumes APR Programs With 0% Rate CHRYSLER LLC: Blasts Indiana's Demand for Review of Fiat Sale CHRYSLER LLC: New Co. to Honor Minor Warranty Claims Only CHRYSLER LLC: Shutdowns Force Aleris to Idle Plants CITIGROUP INC: May Increase Investment Bankers' Base Salaries CONEXANT SYSTEMS: Deregisters Preferred Share Purchase Rights CONTECH LLC: PBGC to Assume Underfunded Pension Plan COOPERATIVE BANKSHARES: Actively Searching for New CEO COOPERATIVE BANKSHARES: Retirement Plan Discloses 9.60% Stake COOPERATIVE BANKSHARES: Willetts Discloses 10.66% Equity Stake COYOTES HOCKEY: Rejection of Arena Pact Unavailing, Says Glendale COYOTES HOCKEY: Jim Balsillie Applies NHL OK Purchase, Transfer CRESCENT OIL: Former President Says Titan Global Swindled Firm CRUCIBLE MATERIAL: 3 Utilities Want Access to Escrowed Amounts DM ELECTRIC: Case Summary & 20 Largest Unsecured Creditors DRUG FAIR: To Auction Off Trucks, Tractors; June 4 Sale Hearing EUGENE BAKER: Case Summary & 15 Largest Unsecured Creditors FOAMEX INT'L: To Re-Auction Assets After Bidder Cries Foul GENERAL MOTORS: Toyota Denies Plan to Give Technology for Hybrids GENERAL MOTORS: Payment to UAW Lowered to 17.5% of Stock GENERAL MOTORS: Fiat Presses Takeover Offer for Opel GENERAL MOTORS: Shutdowns Force Aleris to Idle Plants GMAC LLC: DBRS Revises Ratings to Under Developing, Senior at CCC GOTTSCHALKS INC: To Auction Real Property Assets on May 28 HILL COUNTRY: Can Access Cash Securing BofA Loan Until June 5 HRP MYRTLE: HRP Creative Sues FPI MB for Trademark Infringement INDUSTRIAL ENTERPRISES: Wants 15-Day Extension for SALs and SOFAs JSM4JC INVESTMENT: Case Summary & 1 Largest Unsecured Creditor KA AND KM DEVELOPMENT: Gets Initial OK on Latham Shuker as Counsel KA AND KM DEVELOPMENT: Wants Access to Cash Securing SunTrust Loan INTERLAKE MATERIAL: Can File Plan Until August 3 INTERLAKE MATERIAL: Seeks RSS Holdings-Led Sale of J&D Assets IRISH PUB: Case Summary & 15 Largest Unsecured Creditors LANDAMERICA FINANCIAL: Court OKs Sale of Warranty Biz to BPG LIA REALTY: Case Summary & Largest Unsecured Creditor LYNNWOOD SEPTIC: Case Summary & 20 Largest Unsecured Creditors MAGNUS OIL AND GAS: Voluntary Chapter 11 Case Summary MAHALO ENERGY: Files for CCAA Protection; Alger is Monitor MAHALO ENERGY: U.S. Unit Files for Chapter 11, to Sell to Lenders MUZAK HOLDINGS: Court Set July 2 Bar Date for Proofs of Claim MUZAK HOLDINGS: Muzak LLC Files Schedules of Assets and Debts NOBLE INTERNATIONAL: Creditors Appeal ArcelorMittal-Led Auction NORWOOD PROMOTIONAL: Taps Kirkland & Ellis as Bankruptcy Counsel NORWOOD PROMOTIONAL: Proposes Young Conaway as Co-Counsel NORWOOD PROMOTIONAL: Wants Additional 30 Days in Schedules Filing PILGRIM'S PRIDE: Completes Foster Farms Sale, Repays DIP Credit PLAZA MANAGEMENT: New Jersey Court Approves Ch. 15 Petition PLIANT CORP: GE Capital to Arrange $135MM Revolving Loan for Exit PEOPLES COMMUNITY: Barred From Selling and Servicing Mortgages POMARE LTD: Court to Consider Sale to Maui Divers on June 22 PRECISION PARTS: Exclusive Plan Filing Period Extended to July 13 PRINCETON OFFICE: Ordered to File Chapter 11 Plan by June 15 PROPERTIES PLUS: Case Summary & 20 Largest Unsecured Creditors PSYSTAR CORP: Files for Chapter 11 Bankruptcy Protection R & L NEVADA: Case Summary & 3 Largest Unsecured Creditors REPUBLIC WESTERN: A.M. Best Upgrades Ratings to 'B+' From 'B' RETAIL PRO: Seeks Sept. 11 Extension of Plan Filing Deadline RGB TRANSPORTATION: Case Summary & 20 Largest Unsecured Creditors RICHARD L. WORSHAM: Case Summary & 20 Largest Unsecured Creditors RIVER WEST: Court Orders Closure of Plaquemine Hospital ROSE HILL GREENHOUSES: Case Summary & 20 Largest Unsec. Creditors RYLAND GROUP: Amends American Stock Transfer Rights Agreement RYLAND GROUP: Swaps $12.5MM in 2015 Notes for Common Stock SALYER AMERICAN: Banks Refuse to Lend Money to Pay Growers SENCORP: Court Extends Schedules & Statements Filing Until June 14 SENCORP: Court to Consider Bank of America DIP Financing Today SENCORP: Receives Temporary OK to Hire Frost Brown as Co-Counsel SENCORP: Gets Temporary OK to Hire Latham & Watkins as Counsel SHARP PLUMBING: Case Summary & 20 Largest Unsecured Creditors SIGNAL POINT: Case Summary & 20 Largest Unsecured Creditors SOURCE INTERLINK: IRS to Block Plan Unless Tax Returns Filed SPANSION INC: Court Grants Final Approval to Cash Collateral Use SPANSION INC: Court Extends Removal Deadline to August 28 SPANSION INC: Noteholders Balk at $70MM Samsung Settlement SPANSION INC: Court Allows SanDisk to Pursue Appeal on IP Suit SPANSION INC: Subject of ITC Cease and Desist Order SPRINT NEXTEL: Issues $405.6MM Shares to 1988 Employee Plan STRUCTURAL INVESTMENTS: Involuntary Chapter 11 Case Summary SUN WEST BOTTLERS: Case Summary & 19 Largest Unsecured Creditors THELMA V SPIRTOS: Case Summary & 14 Largest Unsecured Creditors TOWN AND COUNTRY: A.M. Best Cuts FS Rating to 'B' from 'B+' TRIESTE INVESTMENTS: Plan Hearing Continued to June 18 TRILOGY DEV'T: Bankruptcy Forestalls Payment of $13.8MM Debt to JE TUMBLEWEED INC: Wants to Employ Jones Law as Special Counsel VERASUN ENERGY: McGladrey & Pullen Steps Down as Accountants VERASUN ENERGY: Endres Ceases to Serve as CEO, Stays as Director WASHINGTON MUTUAL: Wants $4-Bil. Summary Judgment vs. JPMorgan WASHINGTON MUTUAL: Extends Plan Filing Deadline Until July 23 WASHINGTON MUTUAL: JPMorgan Says Rule 2004 Exam Inappropriate WOOD STREET: Voluntary Chapter 11 Case Summary WORKMEN'S AUTO: A.M. Best Affirms FS Rating at "B" YOSI SHEMTOV: Case Summary & 20 Largest Unsecured Creditors * Upcoming Meetings, Conferences and Seminars ********* 5K UTILITY: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: 5k Utility and Construction, Inc. 6630 West Nashville Hwy Shelbyville, TN 37160 Bankruptcy Case No.: 09-05808 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Middle District of Tennessee (Nashville) Judge: Keith M. Lundin Debtor's Counsel: Steven L. Lefkovitz, Esq. Law Offices Lefkovitz & Lefkovitz 618 Church St., Suite 410 Nashville, TN 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Email: Stevelefkovitz@aol.com Total Assets: $1,259,600 Total Debts: $2,156,473 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/tnmb09-05808.pdf The petition was signed by Kevin Surprise, president of the Company. ADT CONSTRUCTION: Court Converts Case to Chapter 7 Liquidation -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada has converted ADT Construction Group, Inc.'s Chapter 11 case to Chapter 7. As reported in the Troubled Company Reporter on March 18, 2009, Sara L. Kistler, the acting United States Trustee for Region 17, asked the Bankruptcy Court to convert the Debtor's bankruptcy case to a Chapter 7 proceeding for "cause", pursuant to Sec. 1112(b) of the Bankruptcy Code. The acting U.S. Trustee related that the Court required the Debtor to pay examiner fees in two installments but the Debtor failed to pay either installment. The acting U.S. Trustee added that the Debtor also failed to timely file its December 2008 monthly operating report. Headquartered in Las Vegas, Nevada, ADT Construction Group, Inc. - - http://www.adtconstruction.com/-- aka Advanced Demolition Technologies, offers full-service contracting services. The Debtor filed for Chapter 11 protection on June 24, 2008 (Bankr. D. Nev. Case No. 08-16841). Jason A. Imes, Esq., at Schwartzer & McPherson Law Firm, represents the Debtor. The Debtor has total assets of $11,202,109 and total debts of $7,411,364. AJAZ AHMED NIZAM: Case Summary & 8 Largest Unsecured Creditors -------------------------------------------------------------- Joint Debtors: Ajaz Ahmed Nizam dba Intero Real Estate dba Cal State Corporation dba Cal State Financial Shaista Yasmin 43936 Rosemere Dr. Fremont, CA 94539 Bankruptcy Case No.: 09-44393 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Northern District of California (Oakland) Judge: Edward D. Jellen Debtors' Counsel: Drew Henwood, Esq. Law Offices of Drew Henwood 41 Sutter St. #621 San Francisco, CA 94104 Tel: (415) 362-7412 Email: dfhenwood@aol.com Total Assets: $1,149,508 Total Debts: $1,436,122 A full-text copy of the Debtor's petition, including a list of its 8 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/canb09-44393.pdf The petition was signed by the Joint Debtors. ALL AMERICAN: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: All American Aviation Services, LLC 13105 Booker T. Washington Hwy Suite A-3 Hardy, VA 24101 Bankruptcy Case No.: 09-71287 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Western District of Virginia (Roanoke) Judge: William F. Stone Jr. Debtor's Counsel: George I Vogel, III, Esq. Vogel & Cromwell LLC P. O. Box 18188 Roanoke, VA 24014-0188 Tel: (540) 982-1220 Email: gvogel3@vogelandcromwell.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $500,001 to $1,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/vawb09-71287.pdf The petition was signed by R. Thomas Alouf, Jr., member manager of the Company. ALLAN D MURRAY: Case Summary & 9 Largest Unsecured Creditors ------------------------------------------------------------ Joint Debtors: Allan D. Murray aka Allan Douglas Murray Florence K. Murray aka Florence Kay Murray aka Goldie Murray 762 Viewcrest Drive Eagle Point, OR 97524 Bankruptcy Case No.: 09-62706 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court District of Oregon Judge: Frank R. Alley, III Debtors' Counsel: Stephen L. Behrends, Esq. POB 10552 Eugene, OR 97440 Tel: (541) 344-7472 Email: sbehrends@oregon-attorneys.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including a list of their 9 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/orb09-62706.pdf The petition was signed by the Joint Debtors. ALERIS INT'L: Court Sets September 15 Claims Bar Date ----------------------------------------------------- Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware established September 15, 2009, at 5:00 p.m. Eastern Time, as the deadline for any person or entity to file proofs of claim for prepetition claims against Aleris International, Inc., and its debtor-affiliates. The Court approved the proof of claim form, bar date notices, and notice procedures for the bar date proposed by the Debtors. Proofs of claim must be actually received on or before the Bar Date by the Debtors' claim agent, Kurtzman Carson Consultants LLC, at 2335 Alaska Avenue, in El Segundo, California, to be enforceable against the Debtors. No timely objections were received with respect to the Bar Date Motion. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INT'L: Asks Court to Approve Deloitte Tax Engagement ----------------------------------------------------------- Aleris International, Inc., and its debtor-affiliates ask Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware to employ Deloitte Tax LLP to provide them tax services, nunc pro tunc to March 18, 2009. As the Debtors' tax services provider, Deloitte Tax will: (a) assist in preparing tax projections on both a tax return and financial accounting basis; (b) assist with preparing a tax model determining the effect of Section 382 of the Internal Revenue Code attribute limitation rules and Section 108 of the IRC attribute reduction rules; (c) advise the Debtors concerning potential positions that are available with respect to the tax treatment of a plan reorganization; (d) recommend actions that may be taken by the Debtors in structuring a plan of reorganization and additional tax planning ideas; and (e) perform other tax services as requested by the Debtors and agreed to by Deloitte Tax. The Debtors will pay Deloitte Tax for the contemplated services based on these rates: Professional Hourly Rate ------------ ----------- Partner/Principal $575 Director $550 Senior Manager $475 Manager $375 Senior $325 The Debtors will also reimburse Deloitte Tax for reasonable out- of-pocket expenses incurred in connection with the engagement. Lee Zimet, a director at Deloitte Tax LLP, in New York, relates that in the 90 days before the Petition Date, his firm received $63,000 from the Debtors for services rendered prepetition. As of the Petition Date, the Debtors owe the firm approximately $123,000 for prepetition services, claim to which amount Deloitte Tax has agreed to waive, subject to the approval of the employment application. Mr. Zimet assures the Court that Deloitte Tax is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INT'L: Alvarez & Marsal Seeks $668,588 for Feb-March Work ---------------------------------------------------------------- Alvarez & Marsal North America, LLC, restructuring advisors to Aleris International, Inc., and its debtor-affiliates, seeks payment of $668,588 in fees and reimbursement of $33,232 in expenses incurred between February 12, 2009, to March 31, 2009. Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INT'L: To Idle Plants Due to GM and Chrysler Shutdowns ------------------------------------------------------------- Aleris International, Inc., plans to idle its plant in Coldwater, Michigan, as well as other secondary aluminum alloy plants due to the plans of General Motors Corp. and Chrysler, LLC, to shut down their plants, according to a Steelguru report dated May 24, 2009. An Aleris spokesperson said that the specific timing and length of the shutdown will vary by plan based on current demand and inventory levels, noting that employees will be recalled as Aleris demand increases, the report said. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) AMERICAN INT'L: Bids to Arrange Asian Life Unit IPO Due May 29 -------------------------------------------------------------- Amy Or at Dow Jones Newswires reports that American International Group Inc. will choose at least two investment banks as global coordinators for the initial public offering of American International Assurance Co., its Asian life insurance unit. Dow Jones states that investment banks have until May 29 to present bids, while selection interviews will be held in Hong Kong on June 9 and June 10. Dow Jones relates that investment banks will be selected on their underwriting abilities, after-market support, willingness to participate in a credit facility to support AIA, and experience in helping with AIG's restructuring efforts. Dow Jones notes that one of the investment banks to be chosen will likely be Morgan Stanley based on its "qualifications and its understanding of AIG's overall restructuring process." According to Dow Jones, Morgan Stanley has been advising the U.S. Federal Reserve on the rescue of AIG since September 2008. Dow Jones relates that Blackstone Group LP, AIG's sole advisor on the rescue, is also advising on AIA's IPO. Citing people familiar with the matter, Dow Jones says that Citigroup Inc. and Goldman Sachs Group Inc. stand a good chance of being selected as coordinators. Dow Jones states that Citigroup and Goldman Sachs were involved in the failed attempt to sell a stake of up to 49% in AIA earlier this year. Based in New York, American International Group, Inc. (AIG), is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. During the third quarter of 2008, requirements to post collateral in connection with AIG Financial Products Corp.'s credit default swap portfolio and other AIGFP transactions and to fund returns of securities lending collateral placed stress on AIG's liquidity. AIG's stock price declined from $22.76 on September 8, 2008, to $4.76 on September 15, 2008. On that date, AIG's long-term debt ratings were downgraded by Standard & Poor's, a division of The McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch Ratings, which triggered additional requirements for liquidity. These factors and other events severely limited AIG's access to debt and equity markets. On September 22, 2008, AIG entered into an $85 billion revolving credit agreement with the Federal Reserve Bank of New York and pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000 shares of Series C Perpetual, Convertible, Participating Preferred Stock to a trust for the benefit of the United States Treasury. At September 30, 2008, amounts owed under the facility created pursuant to the Fed Credit Agreement totaled $63 billion, including accrued fees and interest. Since September 30, 2008, AIG has borrowed additional amounts under the Fed Facility and has announced plans to sell assets and businesses to repay amounts owed in connection with the Fed Credit Agreement. Certain of AIG's domestic life insurance subsidiaries subsequently entered into an agreement with the NY Fed pursuant to which the NY Fed has borrowed, in return for cash collateral, investment grade fixed maturity securities from the insurance subsidiaries. On November 10, 2008, the U.S. Treasury agreed to purchase, through its Troubled Asset Relief Program, $40 billion of newly issued AIG perpetual preferred shares and warrants to purchase a number of shares of common stock of AIG equal to 2% of the issued and outstanding shares as of the purchase date. All of the proceeds will be used to pay down a portion of the Federal Reserve Bank of New York credit facility. The perpetual preferred shares will carry a 10% coupon with cumulative dividends. AIG and the Fed also agreed to revise the existing FRBNY credit facility. The loan terms were extended from two to five years to give AIG more time to complete its planned asset sales in an orderly manner. The equity interest that taxpayers will hold in AIG, coupled with the warrants, will total 79.9%. At September 30, 2008, AIG had $1.022 trillion in total consolidated assets and $950.9 billion in total debts. Shareholders' equity was $71.18 billion, including the addition of $23 billion of consideration received for preferred stock not yet issued. The Troubled Company Reporter reported on March 4, 2009, that Moody's Investors Service confirmed the A3 senior unsecured debt and Prime-1 short-term debt ratings of American International Group, Inc. AIG's subordinated debt rating has been downgraded to Ba2 from Baa1. The rating outlook for AIG is negative. This rating action follows AIG's announcement of net losses of $62 billion for the fourth quarter and $99 billion for the full year of 2008, along with a revised restructuring plan supported by the U.S. Treasury and the Federal Reserve. This concludes a review for possible downgrade that was initiated on September 15, 2008. AMERIMOLD TECH: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Amerimold Tech Inc. 9 Timber Lane Marlboro, NJ 07746 Bankruptcy Case No.: 09-23269 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court District of New Jersey (Trenton) Judge: Michael B. Kaplan Debtor's Counsel: David A. Nicolette, Esq. Nicolette Law Firm, LLC 3 University Plaza Suite 503 Hackensack, NJ 07601 Tel: (201) 488-9080 Email: dnicolette@nicolettelawfirm.com Total Assets: $1,494,546 Total Debts: $1,580,643 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/njb09-23269.pdf The petition was signed by Michael Schon, president of the Company. AMTG INVESTMENT: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: AMTG Investment LLC 22817 Ventura Blvd Ste 401 Woodland Hills, CA 91364 Bankruptcy Case No.: 09-16060 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court Central District of California (San Fernando Valley) Judge: Kathleen Thompson Debtor's Counsel: Michael D. Kolodzi, Esq. 21941 Plummer St Chatsworth, CA 91311-6094 Tel: (818) 428-2089 Fax: (866) 571-6094 Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Company says it does not have unsecured creditors who are non insiders when it filed its petition. The petition was signed by Saeid Mohebbi, owner of the Company. ASARCO LLC: Harbinger Offers Full-Payment, "Confirmable" Plan ------------------------------------------------------------- Harbinger Capital Partners Master Fund I, Ltd., asks the U.S. Bankruptcy Court for the Southern District of Texas to enter an order terminating ASARCO LLC's and its parent's exclusivity so that it could file its own reorganization plan for the Debtor. With 14 extension of exclusivity, ASARCO LLC and Asarco Incorporated have filed proposed Chapter 11 plans for ASARCO LLC. The Debtors have proposed a chapter 11 plan of reorganization that provides for ASARCO to sell substantially all of its tangible and intangible operating assets to Sterlite (USA), Inc. Specifically, the Debtors' Plan contemplates the distribution of cash and interests in certain litigation trusts to the Debtors' general unsecured creditors. In addition, the Debtors' Plan contemplates the establishment of an asbestos trust as the sole source of recovery for unsecured asbestos personal and premises injury claimants as well as future asbestos claimants. To that end, the Debtors' Plan provides for a channeling injunction pursuant to Section 524(g) of the Bankruptcy Code which will protect certain ASARCO-related parties as well as Sterlite from all direct and indirect asbestos-related liability. As an alternative to the Debtors' Plan, the Parent has proposed a chapter 11 plan of reorganization that will result in the Parent's retention of its equity ownership in ASARCO in exchange for a $1.3 billion contribution of cash or cash equivalents (which Parent asserts may include unencumbered shares of Southern Copper Corporation). However, according to Harbinger, there are substantial risks that the Debtors will not be able to confirm their current plan or close the new Sterlite sale embodied in the plan. Similarly, according to Harbinger, the Parent's recently filed plan violates several 11 U.S.C. Section 1129 confirmation requirements on its face and presents even more confirmation risk than the Debtors' plan. "Indeed, both the Debtors and the Parent were both forced to withdraw their previously filed plans (which are very similar to their current plans) before confirmation, leading this Court to characterize both Sterlite and the Parent as "unreliable suitors" for the Debtors," Harbinger points out. Harbinger is prepared to file its plan immediately upon the termination of exclusivity and solicit acceptance of the plan using the Harbinger Disclosure Statement and on the schedule the Court has already set for the Debtors' Current Plan and the Parent's Current Plan. Harbinger says it has prepared a plan that, with the Court's permission, is ready to be filed immediately and solicited for acceptance on the same solicitation and confirmation schedule as the Debtors' plan and the Parents' plan. Significantly, Harbinger's plan does not contain the same consummation risks as the Debtors' plan or the Parent's plan. If the Debtors and the Parent are again unable to confirm their plans, preservation of exclusivity at this time would have simply prevented Harbinger from proposing its imminently confirmable plan. After nearly four years in bankruptcy, such a result is untenable, unnecessary and unwise. Harbinger's Plan provides for ASARCO to sell substantially all of its tangible and intangible operating assets free and clear of all liens, claims interests and encumbrances, to an entity designated by Harbinger in exchange for $500,000,000 in cash and the assumption of certain liabilities. Under the Plan, there will be an estimation with respect to ASARCO's liability on account of Asbestos Personal Injury Claims and Unknown Asbestos Claims, however, as a condition precedent to the Harbinger Plan, the estimated or agreed upon amount of such Claims shall not exceed $500,000,000 in the aggregate. Harbinger says its plan has several significant advantages over the Debtors' Current Plan and the Parent's Current Plan: -- The Harbinger Plan does not require a 524(g) trust or any extraordinary rulings from the Court regarding the Debtors' asbestos liability. -- The Harbinger Plan preserves, and allows the Debtors' creditors to benefit from, the Debtors' valuable litigation claims against both Sterlite and the Parent. -- Because it retains all of the Debtors' litigation rights, the Harbinger Plan will eventually pay all creditors 100% of their claims with interest. -- The Harbinger Plan clearly satisfies the hypothetical Chapter 7 liquidation test under Sec. 1129(a)(7). -- The Harbinger Plan clearly satisfies the feasibility test under Sec. 1129(a)(11). -- The Harbinger Plan does not discriminate unfairly among classes of creditors as required by Sec. 1129(b)(1). -- The Harbinger Plan clearly satisfies the absolute priority rule under Sec. 1129(b)(2). -- Harbinger has previously reached an agreement with the Debtors' unions and are certain that they will again; thus, the Harbinger Plan has virtually no risk of union rejection. A full text copy of Harbinger's proposed Plan filed as an exhibit to its Motion is available at: http://bankrupt.com/misc/ASARCO_Harbinger_Plan.pdf A full text copy of Harbinger's disclosure statement to its plan is available at: http://bankrupt.com/misc/ASARCO_Harbinger_DiscStatement.pdf A full text copy of Harbinger's proposed asset purchase agreement is available at: http://bankrupt.com/misc/ASARCO_Harbinger_APA.pdf 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 August 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 October 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 December 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 ASARCO LLC has obtained Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for $1.1 billion in cash and a $600 million note. 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 offered provide up to $2.7 billion in cash and a $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) BANK OF AMERICA: May Hike Investment Bankers' Base Salaries ----------------------------------------------------------- Sources said that Citigroup Inc. and Bank of America Corp. are expected to raise base salaries for investment bankers to compensate for limits on annual bonuses, Joe Bel Bruno at The Wall Street Journal reports. "Pressures in the investment-banking and capital-markets businesses continue to be intense" and BofA would "take the steps necessary to retain key employees," WSJ quoted BofA spokesperson Jessica Oppenheim as saying. Citing people familiar with the matter, WSJ relates that Citigroup and BofA are considering a plan to take similar steps unveiled by Morgan Stanley last week. WSJ notes that like Morgan Stanley, Citigroup and BofA hope higher base salaries will retain key employees. Aaron Lucchetti at WSJ states that Morgan Stanley said it would raise the base salaries of most of its top officers and many top- earning workers to lessen the importance of their annual bonuses. WSJ says that Morgan Stanley will increase the base salary of its co-presidents, James Gorman and Walid Chammah, by one-third to $800,000 a year, while Chief Financial Officer Colm Kelleher, Chief Legal Officer Gary Lynch, and Chief Administrative Officer Thomas Nides will get a base salary of $750,000 each. Citing a person familiar with the matter, WSJ reports that managing directors will see about 25% to 30% of their overall compensation come from their base salary, up from about 15% to 20%, said a person familiar with the matter. WSJ relates that a managing director's base salary could increase to $400,000, from $250,000. 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. BERNARD L MADOFF: Banco Santander to Pay $235MM to Settle Lawsuit ----------------------------------------------------------------- Amir Efrati and Thomas Catan at The Wall Street Journal report that Banco Santander SA agreed to pay $235 million to settle potential legal claims by Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities LLC. WSJ relates that Banco Santander is one of the largest conduits of investor money to Bernard Madoff, with about $3 billion of its clients' money invested with Mr. Madoff through its investment fund Optimal Investment Services SA. Banco Santander's payment would increase the amount of assets Mr. Picard has recovered for Madoff investors to more than $1.2 billion, WSJ notes. Mr. Picard, according to the report, said that he so far has committed about $116 million of cash advances to 237 Madoff investors. The agreement with Banco Santander is 85% of what would have been sought from Optimal, the report states, citing Mr. Picard. WSJ quoted a Banco Santander spokesperson as saying, "Optimal has agreed to repay to the trustee a portion of the funds that were redeemed in the 90 days before Madoff was shut down. This clears up all legal issues between the trustee and Optimal, leaving only the question of Optimal's claims against the Madoff estate to be resolved." Court documents say that Mr. Picard's investigation concluded that Optimal had no knowledge of Mr. Madoff's fraud. Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BERNARD L MADOFF: Fairfield Sued for $3.4BB for Ignoring Red Flags ------------------------------------------------------------------ Bernard L. Madoff ascribed his investment advisory business' consistent investment success to his investment strategy called the "split-strike conversion" strategy. Mr. Madoff told customers (i) that their funds would be invested in a basket of common stocks within the S&P 100 Index; and purchases would be carefully times to maximize value; (ii) purchases would be hedged with option contracts and option contracts would be purchased or sold to control the downside risk of price changes in the basket of stocks. As stated in the charges filed by the Securities and Exchange Commission, Bernard L. Madoff Investment Securities LLC's investment advisory business, however, was operated as a Ponzi scheme and Madoff and BLMIS concealed the ongoing fraud in an effort to hinder and delay other current and prospective customers of BLMIS from discovering the fraud. The money received from investors was not set aside to buy securities as purported. Instead, the money was primarily used to make the distributions to, or payments on behalf of, other investors. Although customers of the BLMIS' IA Business received monthly or quarterly statements, these statements were a complete fabrication. Customers had approximately $64.8 billion invested with BLMIS. While many investors had claimed that they did not know that Mr. Madoff's business was a fraud, Irving H. Picard, the liquidating trustee for BLMIS believes that Fairfield Greenwich Group and its hedge funds were aware of various "indicia of irregularity and fraud" but failed to act on these. Accordingly, Mr. Picard has filed a complaint against Fairfield Sentry Limited, Greenwich Sentry, L.P., and Greenwich Sentry Partners, L.P. to recover $3,547,676,083 in transfers made by Mr. Madoff to these hedge funds. Counsel to Mr. Picard, David J. Sheehan, Esq., at Baker & Hostetler LLP, in New York, relates that The Fairfield Greenwich Group and its hedge funds worked closely with Mr. Madoff and BLMIS throughout a nearly 20-year relationship, including, but not limited to: (1) coordinating responses to United States Securities Exchange Commission investigations of BLMIS, (2) collaborating in SEC filings, and (3) obtaining new money used by BLMIS to perpetuate his Ponzi scheme. According to Mr. Sheehan, Fairfield did little, if any, due diligence of BLMIS and instead "ignored multiple red flags" because with their continued investment in BLMIS, they reaped massive fees, in excess of hundreds of millions of dollars, purportedly for investment performance which has proven to be nothing but fiction. From at least 1996 through 2007, Fairfield funds received from BLMIS unrealistically high and consistent annual returns of between 10% and 21% in contrast to the vastly larger fluctuations in the S&P 100 Index on which BLMIS' trading activity was purportedly based during that time period. Between December 1, 1995 and Dec. 11, 2008, Fairfield invested $4.5 billion with BLMIS through 242 separate transfers via check and wire directly into the BLMIS Bank Account. The BLMIS Bank Account was maintained at a JPMorgan Chase & Co. branch in New York. Fairfield received a total of $3,547,676,083 in transfers from Madoff during the same period ("Transfers"). Mr. Picard commences the adversary proceeding against Fairfield pursuant to SIPA Sections 78fff(b) and 78fff-2(c)(3), sections 105(a), 542, 544, 547, 548(a), 550(a) and 551 of 11 U.S.C. Sections 101 et. seq., the New York Fraudulent Conveyance Act (N.Y. Debt. & Cred. Sec. 270 et. seq. (McKinney 2001)), and other applicable law, for turnover, accounting, preferences, fraudulent conveyances, damages and objection to claim in connection with certain transfers of property by BLMIS to or for the benefit of Fairfield. The Trustee seeks to set aside the Transfers and preserve the property for the benefit of BLMIS' defrauded customers. Fairfield Greenwich Group is Controlled by three principal partners, Walter Noel, Jeffrey Trucker and Andres Piedrahita. "Sophisticated Investors" According to Mr. Picard, Fairfield and its managers knew or should have known that the BLMIS' IA Business was predicated on fraud. Mr. Sheehan says that hedge funds and funds of funds like Fairfield were "sophisticated investors that accepted fees from their customers based on purported assets under management and/or stock performance in consideration for the diligence they were expected to exercise in selecting and monitoring investment managers like Madoff and BLMIS." Fairfield failed to exercise reasonable due diligence of BLMIS and its auditors in connection with the Ponzi scheme, Mr. Sheehan asserts. He points out that among other things, Fairfield were on notice of these indicia of irregularity and fraud but failed to make sufficient inquiry: 1. Impossibilities Inherent in BLMIS' Investment Strategy. BLMIS reported returns that were too good to be true, reflecting a pattern of abnormal profitability, both in terms of consistency and amount that was simply not credible. In addition: -- BLMIS' investment strategy would have been impossible to execute as the number of put and call options that BLMIS would have to buy or sell on any given day often exceeded the number of put and call options bought or sold in the entire market on those days. -- The type of options BLMIS purported to purchase and sell was counter-intuitive. -- At times, Fairfield's monthly account statements reflected trades purportedly purchased or sold on behalf of Fairfield's account in certain securities that were allegedly executed at prices outside the daily range of prices for such securities traded in the market on the days in question. -- Certain of Fairfield's monthly BLMIS account statements reflected trades purchased or sold on behalf of Fairfield's account in certain securities that were allegedly settled on weekends and/or holidays -- Based on monthly account statements for January 2008 received by Fairfield, BLMIS on January 23 purportedly brought a total of put options at a volume exceeded the total volume traded at the Chicago Board Options Exchange on that date. 2. Lack of Oversight of BLMIS by Independent Entities. BLMIS functioned as both investment manager and custodian of securities, eliminating check and balance in investment management by excluding an independent custodian of securities. BLMIS, which reputedly ran the world's largest hedge fund, was purportedly audited by Friehling & Horowitz, an accounting firm that had only three employees, one of whom was semi-retired. 3. Lack of Transparency. Mr. Madoff cloaked his and BLMIS' operation in secrecy. Investors that questioned BLMIS' investment methodology were threatened with removal from BLMIS programs and BLMIS did not allow any real-time electronic access to trading, which is customarily provided in the industry to significant, sophisticated hedge fund investors like Fairfield. 4. Skepticism by Others in the Industry and by Fairfield's Customers. Representatives of Fairfield's funds' manager were present at a 2000 meeting at which Credit Suisse raised concerns about BLMIS' auditor, its service as custodian for its customers' assets, and the fact that Madoff would not say how much money he managed. Credit Suisse urged its customers to withdraw their money from BLMIS because Credit Suisse could not determine how the money was made. In addition, many banks, industry advisors and insiders who made an effort to conduct reasonable due diligence flatly refused to deal with BLMIS because they had serious concerns that BLMIS' IA Business operations was not legitimate. 5. BLMIS' SEC Filings and Involvement in SEC Investigations. The information contained in BMLIS' Form 13F filed with the SEC was not consistent with the trades that BMLIS was allegedly executing on behalf of the funds. In 2005, the SEC was conducting an investigation of BLMIS; and Madoff asked Fairfield's representatives disclose true and accurate information about BLMIS in their meeting with SEC attorneys. According to Mr. Sheehan, the Transfers were, in part, false and fraudulent payments of nonexistent profits supposedly earned in the Account. He asserts that Fairfield's hedge funds were among the beneficiaries of this scheme, receiving Transfers from BLMIS totaling more than $3.5 billion since December 1995 alone. Of the Transfers, multiple Transfers in the collective amount of approximately $3.2 billion were made during the six years prior to the Filing Date and are avoidable and recoverable under sections 544, 550(a)(1) and 551 of the Bankruptcy Code, applicable provisions of SIPA, particularly SIPA Sec. 78fff- 2(c)(3), and applicable provisions of N.Y. Debt. & Cred. Sections 273 - 276. Of the Six Year Transfers, multiple Transfers in the collective amount of $1.7 billion were made during the two years prior to the Filing Date, and are additionally recoverable under sections 548(a)(1), 550(a)(1) and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA Sec. 78fff-2(c)(3). Of the Two Year Transfers, multiple Transfers in the collective amount of $1.2 billion were made during the 90 days prior to the Dec. 11, 2008 filing date of the SIPA proceeding, and is additionally recoverable under Sections 547, 550(a)(1) and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA Sec. 78fff-2(c)(3). Motion to End Benefits Meanwhile, while the trustee for Bernard L. Madoff Investment Securities Inc. is moving to end benefits for the firm's workers, he doesn't want to disclose the names of the employees given the "emotionally charged environment," Bloomberg's Bill Rochelle said. About Bernard Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BERNARD L MADOFF: Talon Wants Trustee to Act on Private Jet Deal ---------------------------------------------------------------- In March 2008, Bernard L. Madoff, through BLM Air Charter LLC, purchased a 50% interest in a $25 million Embraer Legacy 600 private jet. Edward Blumenfeld's BDG Aircharter Inc. owns the other 50% interest in the aircraft. Now that Mr. Madoff has been charged for a $50 billion Ponzi scheme and his firm is undergoing liquidation, Talon Air Inc. asks the U.S. Bankruptcy Court for the Southern District of New York to compel Irving H. Picard, the liquidating trustee for Bernard L. Madoff Investment Securities LLC to (i) pay outstanding amounts under a management agreement for the Aircraft, and (ii) decide by June 12 on whether to assume or reject the management agreement and a lease agreement for the aircraft. Under the Management Agreement with BDG and Madoff, Talon provided training and pilot and ground crew personnel necessary to operate and maintain the Aircraft. Talon says that it is still owed $47,217 for the period Dec. 12, 2008, through April 30, 2009, and $92,525 for the period prior to Dec. 12, 2008. Talon is also party with BDG and BLM to a lease agreement, under which Talon may lease the Aircraft to provide charter air transportation services to third parties for a rental fee for each flight hour of use. Talon still owes BLM a total of $112,896.00 under the lease agreement. About Bernard Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on Dec. 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Madoff's fraud were allegedly at least $50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Mr. Madoff, if found guilty of all counts, would be imprisoned for 150 years, but legal experts expect the actual sentence to be much lower and would still be an effective life sentence for the 70- year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would also face millions of dollars in possible criminal fines. The report says that Mr. Madoff has been free on bail since his arrest on December 11, 2008. There was no plea agreement with Mr. Madoff in which leniency in sentencing might be recommended, the report states, citing prosecutors. BOWNETREE LLC: Court Confirms Chapter 11 Plan of Reorganization --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York confirmed on May 20, 2009, Bownetree LLC's Chapter 11 Plan of Reorganization dated March 4, 2009, pursuant to Section 1129(a) of the Bankruptcy Code. All objections to confirmation of the Plan are deemed withdrawn with prejudice. The Plan divides claims and interests into four classes: Class Description Treatment ----- --------------------------- ---------- 1 Kennedy Funding, Inc. Unimpaired Secured, 1st Mortgage Claim 2 36-20 Bowne, LLC Impaired Secured, 2nd Mortgage 3 General Unsecured Claims Impaired 4 Equity Interests Impaired Classes 2, 3 and 4 are impaired, and, thus, were entitled to vote to accept or reject the Plan. Holders of general unsecured claims, expected to aggregate $1,195,525, will be paid at least 15% of their respective claims, from the proceeds of the sale of the Debtor's properties. The exact percentage is estimated to be between 10% to 20% and will be based on the balance of the $300,000 amount 36-20 Bowne has agreed to pay, less Debtor's administrative expenses. Equity holders have undertaken to fund the administrative expenses. Equity interests will not receive any property under the Plan as after confirmation, the Company will liquidate. Suzuki Capital Funding through its members and president, Sam Suzuki, holds 93% of the equity interest Kennedy Funding Ltd's 1st Mortgage Claim of $3,739,150 will be paid in full from the proceeds of the sale of the Debtor's real estate properties, unless the real property is sold to 36-20 Bowne, LLC, the 2nd mortgage holder, in which case the sale will be contingent upon the terms of the agreement between Kennedy and 36-20 Bowne regarding the terms of the assumption, by 36-20 Bowne, of Kennedy's first mortgage lien on the real property or (2) the entry of an order approving the sale. Pursuant to the Plan, 36-20 Bowne, which is owed $5,084,771, will purchase all of the Debtor's real estate for the purchase price equal to (a) the Debtor's outstanding indebtedness to 36-20 Bowne as of the Closing Date, (b) the assumption of the Debtor's outstanding indebtedness to Kennedy Funding, (c) at least 15% of all costs and expenses listed as obligations owed by the Debtor to unsecured creditors, and (d) all bankruptcy related legal fees and administrative costs of the Seller, provided that the aggregate amount under subsections (c) and (d) do not exceed $300,000. A full-text copy of the disclosure statement explaining the Plan is available at: http://bankrupt.com/misc/BownetreeLLC.4thAmendedDS.pdf Headquartered in New York City, Bownetree LLC is engaged in the business of real estate development, sales, and construction. The Company filed for Chapter 11 protection on September 4, 2008 (Bankr. E.D. N.Y. 08-45854). The Debtor's schedules showed assets of $17,301,277 and liabilities of $10,940,615. Alina N. Solodchikova, Esq., and Stephen B. Kass, Esq., at the Law Offices of Stephen B. Kass, in New York City, represent the Debtor as counsel. BULLDOG INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Bulldog Investments, Inc PO Box 1070 Umatilla, FL 32784 Bankruptcy Case No.: 09-07094 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Middle District of Florida (Orlando) Judge: Karen S. Jennemann Debtor's Counsel: R Scott Shuker, Esq. Latham Shuker Eden & Beaudine LLP Post Office Box 3353 Orlando, FL 32802 Tel: (407) 481-5800 Fax: (407) 481-5801 Email: bankruptcynotice@lseblaw.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/flmb09-07094.pdf The petition was signed by Richard Waters, director of the Company. CANWEST MEDIA: DBRS Discontinues 'CC' Secured Bank Debt Rating -------------------------------------------------------------- Dominion Bond Rating Service discontinued its ratings on Canwest Media Inc.'s Secured Bank Debt, as borrowings under this facility have been fully repaid. The instrument rating on this debt was CC, with a recovery rating of RR1. This repayment was concurrent with the May 22, 2009, closure of a previously announced transaction to raise $175 million of new debt financing. This financing has allowed Canwest Media to repay its Secured Bank Debt and settle related obligations while giving it additional time to operate in the ordinary course as it continues to pursue a recapitalization of its balance sheet. (See DBRS press release dated May 20, 2009, for more details.) The C Issuer Rating of Canwest Media remains Under Review with Negative Implications, as do the C (high) Issuer Rating and CC (low)/C (low) instrument ratings of Canwest Limited Partnership. CATHOLIC CHURCH: Fairbanks Moving Ahead With Ch. 11 Plan -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Alaska will consider approval of the disclosure statement explaining the Chapter 11 plan of the Catholic Diocese of Fairbanks, Alaska, on June 16. According to Bill Rochelle at Bloomberg, to compensate victims of sexual-abuse claims, the diocese hopes to raise as much as $8.6 million from contributions, selling property and putting mortgages on real estate. The fund is also to receive proceeds from insurance coverage that could be $27 million. The Disclosure Statement, Bloomberg, relates, says the process of validating sexual-abuse claims will be "streamlined." Victims won't be required to show that their claims aren't barred by the statute of limitations. After seeking bankruptcy protection in March 2008, the diocese sued CNA Financial Corp. and Travelers Cos. in bankruptcy court in April 2008 to determine whether the insurance companies are obligated to cover the 150 sexual abuse claims that brought the diocese into bankruptcy court. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules showed total assets of $13,316,864 and total liabilities of $1,838,719. CDX GAS: Investors Sue to Deny Access of $10 Mil. in Escrow ----------------------------------------------------------- Several investors, including Van P. Whitfield, Stephen Clark, Richard McCullough, Dan Behrendt, Lawrence Finn, and Doug Seams, have filed a complaint before the U.S. Bankruptcy Court for the Southern District of Texas, seeking declaratory judgment that the interest of CDX Gas LLC and its debtor affiliates in their settlement and purchase agreement are not property of the estates. According to papers filed with the Court, the claims held by all of the investors are addressed in the purchase agreement and partially in an escrow funded settlement agreement dated Dec. 18, 2007, between the investors and the Debtors, which addressed the indemnity provisions the Debtors have provided by way of that agreement. The indemnity provisions of the purchase agreement and settlement agreement provide that the Debtors will indemnify and functionally be responsible for paying any recoveries awarded to the investors. These relationships and agreements, Whitfield, et al., say, are appropriately referenced in various of the Debtors' schedules and statements of affairs, including, among other things -- personal property showing the $10 million funded escrow agreement set up by the settlement agreement; and -- executory contracts and leases. "The Joint Escrow Account was established in relation to the Debtors' initial purchase in order to provide indemnification to the Debtors with respect to specified claims," the Investors state. "The escrowed funds are not available for use by the Debtors in their general operations," they assert. Wright Ginsberg & Brusilow LLP in Dallas, Texas, represents the Investors. About CDX Gas Based in Houston, Texas, CDX Gas LLC -- http://www.cdxgas.com/-- is an independent gas company that explores, develops, and produces onshore North American unconventional natural gas resources located in coal, shale, and tight gas sandstone formations. The Company and 19 of its affiliates filed for Chapter 11 protection on December 12, 2008 (Bankr. S.D. Tex. Lead Case No. 08-37922). Harry Perrin, Esq., D. Bobbitt Noel, Esq., John E. Mitchell, Esq., and Michaela C. Crocker, Esq., at Vinson Elkins LLP, represent the Debtors in their restructuring efforts. In its schedules, CDX listed total assets of $996,308,606 and total debts of $831,259,526. * * * According to the Troubled Company Reporter on May 8, 2009, the Debtors delivered to the Court a disclosure statement explaining its Chapter 11 plan of reorganization. The Plan, among other things, does not provide for any distribution to holders of general unsecured claims. A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?3c8f A full-text copy of the proposed Chapter 11 Plan is available for free at http://ResearchArchives.com/t/s?3c90 The Debtors' exclusive period to file a plan will expire on July 30, 2009, and its solicitation period will end on September 28, 2009. CDX GAS: Court Okays Bid Protocol for CDX Assets & New Rio Equity ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas has approved bidding procedures and bid protections in connection with the proposed sale of certain assets of CDX Gas, LLC, CDX Shale, LLC and CDX Barnett, LLC, including CDX Gas' 75% ownership in Arkoma Gathering, LLC, and 100% of the new membership interest to be issued by CDX Rio. The issuance of new membership interests by CDX Rio is in connection with its plan of reorganization which was filed on April 24, 2009. Pursuant to the bid procedures, to EnerVest Energy Institutional Fund XI-A, L.P. and EnerVest Energy Institutional Fund XI-WI, L.P., will be the lead bidder. EnerVest has offered to pay the sum of $29,321,380 for the CDX Assets and $73,100,320 as consideration for the issuance of the New Equity by CDX Rio. The Debtor will accept competing bids for the assets. The deadline for the submission of competing proposals is 5:00 p.m. (Central Time) on June 19, 2009. An auction, if necessary, has been set for June 22, 2009. The sale hearing and confirmation hearing on the Plan will be held on June 24, 2009, at 10:45 a.m. (Central Time). Objections to the entry of the order approving the sale of the Assets and new Rio Equity, if any, must be filed with the Court so as to be actually received by no later than 5:00 p.m. (Central Time) on June 19, 2009. A full-text copy of the approved bidding procedures is available at http://bankrupt.com/misc/CDX.BidProtocol.pdf Based in Houston, Texas, CDX Gas LLC -- http://www.cdxgas.com/-- is an independent gas company that explores, develops, and produces onshore North American unconventional natural gas resources located in coal, shale, and tight gas sandstone formations. The Company and 19 of its affiliates filed for Chapter 11 protection on December 12, 2008 (Bankr. S.D. Tex. Lead Case No. 08-37922). CDX Rio, LLC, an entity in which CDX Gas indirectly owns a 90% membership interest, and Arkoma Gathering, LLC, an entity in which CDX Gas owns a 75% membership interest, filed for Chapter 11 protection on April 1, 2009. Harry Perrin, Esq., D. Bobbitt Noel, Esq., John E. Mitchell, Esq., and Michaela C. Crocker, Esq., at Vinson Elkins LLP, represent the Debtors in their restructuring efforts. In its schedules, CDX listed total assets of $996,308,606 and total debts of $831,259,526. CDX GAS: Wants to Sell Portion of Rowland Acreage to Dominion ------------------------------------------------------------- CDX Gas, LLC, et al., ask the U.S. Bankruptcy Court for the Southern District of Texas to approve bidding procedures for the sale of a portion of CDX's interests in various oil and gas assets in Boone, Fayette, and Raleigh Counties, West Virginia (the "Rowland Acreage") to Dominion Exploration & Production, Inc., subject to higher and better offers at an auction. A hearing on the motion has been scheduled for June 2, 2009. Dominion has offered $4,900,000 plus assumption of the Assumed Liabilities for the assets. The Debtors proposes this timeline for the sale of the Rowland Acreage: * Bid Deadline is on June 24, 2009, * An auction will be held June 27, and * The Court will convene a sale hearing on June 30. A full-text copy of the proposed bid procedures is available at: http://bankrupt.com/misc/CDX.RowlandBidProtocol.pdf Based in Houston, Texas, CDX Gas LLC -- http://www.cdxgas.com/-- is an independent gas company that explores, develops, and produces onshore North American unconventional natural gas resources located in coal, shale, and tight gas sandstone formations. The Company and 19 of its affiliates filed for Chapter 11 protection on December 12, 2008 (Bankr. S.D. Tex. Lead Case No. 08-37922). CDX Rio, LLC, an entity in which CDX Gas indirectly owns a 90% membership interest, and Arkoma Gathering, LLC, an entity in which CDX Gas owns a 75% membership interest, filed for Chapter 11 protection on April 1, 2009. Harry Perrin, Esq., D. Bobbitt Noel, Esq., John E. Mitchell, Esq., and Michaela C. Crocker, Esq., at Vinson Elkins LLP, represent the Debtors in their restructuring efforts. In its schedules, CDX listed total assets of $996,308,606 and total debts of $831,259,526. CF MONTANE: Case Summary & 25 Largest Unsecured Creditors --------------------------------------------------------- Debtor: CF Montane SLP LLC 2 North LaSalle St. Suite 925 Chicago, IL 60602 Bankruptcy Case No.: 09-18747 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- CF Montane LP LLC 09-18750 WCSE Montane Limited Partnership 09-18752 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Jacqueline P. Cox Debtor's Counsel: Steven B. Towbin, Esq. Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 N Clark St., Suite 800 Chicago, IL 60610 Tel: (312) 276-1333 Fax: (312) 275-0569 Email: stowbin@shawgussis.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 a list of its 25 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-18747.pdf The petition was signed by Jonathan Hoeg, vice president of the Company. CHRYSLER LLC: Court OKs Payment on Prepetition Supplier Claims -------------------------------------------------------------- Chrysler LLC and its affiliates sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to: -- pay in the ordinary course of their businesses, certain prepetition nonpriority claims of certain parties who supply goods or services critical to the going concern value of their businesses or the consummation of the sale of substantially all of Chrysler's assets to New Chrysler; -- in their sole discretion, pay claims for the value of goods received in the ordinary course of their businesses during the 20-day period before the Petition Date, which claims are entitled to administrative expense priority under Section 503(b)(9) of the Bankruptcy Code; -- continue their troubled supplier program; -- in their sole discretion, pay certain prepetition unsecured nonpriority claims of certain troubled suppliers; -- implement procedures to address those vendors who repudiate and refuse to honor their postpetition contractual obligations to the Debtors; and -- continue their participation in the Auto Supplier Support Program established by the U.S. Treasury to the extent the Program remains in place after the Petition Date. Panasonic Automotive Systems Company of America tried to block the Debtors' request, asking Judge Arthur Gonzalez to deny Chrysler LLC's request to pay the prepetition claims of certain essential suppliers and administrative claimholders, and continue its troubled supplier program. Jonathan L. Flaxer, Esq., at Golenbock Eiseman Assor Bell & Peskoe LLP, in New York, said the proposed order accompanying the Debtors' Request should be revised to make clear that that the Supplier Program is not mandatory and non-acceptance of an Essential Supplier Payment does not make the recipient a participant in the Essential Supplier Program. In addition, Mr. Flaxer said Panasonic objects to the Debtors' Request on the basis that participants in the Essential Supplier Program cannot be bound, and the Court lacks the power to bind, participating parties to undefined business terms that may be imposed by the Debtors for an unlimited period of time. The Timken Company, Harmann Becker Automotive Systems, Inc. and its affiliated companies, and Superior Industries, Inc. joined in Panasonic's objection. In a separate filing, Magna International, Inc. joined in the objections made by SKF USA, Inc. and Peer Bearing Co. SKF and Peer Bearing were "surprised" that a proposed interim order to the Debtors' request were submitted without SKF's and Peer Bearing's consent. 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 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 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: 20-Day Claimants Want Immediate Payment ----------------------------------------------------- Several parties filed separate objections to the Debtors' request to establish procedures for the assertion of claims under Section 503(b)(9) of the Bankruptcy Code relating to goods received by the Debtors within 20 days before the Petition Date. The Objecting Parties and alleged amount of the goods they delivered to the Debtors are: Vendor/Creditor Amount --------------- ------ Brembo North America, Inc. $1,235,000 Freudenberg-NOK G. P. 800,000 Key Plastics, L.L.C. 600,000 Citation Corporation 121,000 Experi-Metal, Inc. 10,000 Kongsberg Automotive, Inc. -- Johnson Controls, Inc. -- Tower Automotive, Inc. -- Under Sections 507(a)(2) and 503(b)(9) of the Bankruptcy Code, Objecting Parties contend that their Claims are entitled to administrative priority. They assert that the proposed Reclamation Procedures, as the sole and exclusive method for asserting the Claims, would prohibit all holders from requesting immediate or expedited payment of the Claims no matter what the circumstances or hardship to the claimants, and without any showing whatsoever of hardship to the Debtors. The Reclamation Procedures, if approved, would eviscerate the very factors, which the Court is supposed to weigh and impermissibly replace the discretion of the Court with the desires of the Debtors, the Objecting Parties argue. They point out that many of the Debtors' suppliers will be hard-pressed to survive without payment of their Claims. The Objecting Parties propose that the Court approve the proposed procedures, but permit each individual holder of a Claim to move for immediate or expedited payment where the creditor believes that payment is warranted. The Objecting Parties further contend, among other things, that under Section 1129(a)(9) of the Bankruptcy Code, administrative claims, including their Claims, must be paid, at the latest, on the effective date of a confirmed plan of reorganization. Johnson Controls, Inc., informs Judge Gonzalez that it files an objection to preserve its rights and to seek clarification regarding the interaction of two seemingly inconsistent sets of procedures proposed by the Debtors: (i) the procedures for asserting claims under the request to pay the prepetition claims of certain essential suppliers and Reclamation Procedures, and (ii) the procedures for the assumption and assignment of contracts in connection with the Debtors' proposed sale transaction. Automotive Corporation, Inc., joins in and supports the objection filed by Tower Automotive, Inc. Valeo, Inc., and its affiliates also submit a joinder in Key Plastics' objection. The Timken Company, Harman Becker Automotive Systems, Inc., and Superior Industries, Inc., jointly support the objection filed by The Dow Chemical Company and Tower Automotive. Debtors Respond The Debtors filed the request to establish procedures for asserting Section 503(b)(9) Claims to provide an organized process for the assertion and evaluation of prepetition claims asserted as claims entitled to administrative priority status under Section 503(b)(9) of the Bankruptcy Code, says proposed counsel for the Debtors, Corinne Ball, Esq., at Jones Day, in New York. She asserts that particularly given the potentially large number of claims, the Debtors believe that establishing an organized process is necessary and appropriate to avoid the costs and distractions of an ad hoc approach. Without the proposed process, the Debtors submit that the likely parade of requests seeking immediate payment of the Claims would represent an unnecessary and counterproductive use of the Debtors' and the Court's limited resources, particularly in the early weeks of the bankruptcy cases as the Debtors pursue the consummation of the Chrysler-Fiat sale transaction or other sale transaction. Ms. Ball contends that the claimants that filed objections to the Debtors' request falls into two basic categories: (1) objections that questions the appropriateness of the Reclamation Procedures taken as a whole, which proposes that the Claims be asserted as part of the normal proof of claim process; and (2) objections that generally seek to ensure that the Reclamation Procedures do not adversely impact rights afforded to creditors under various provisions of the Bankruptcy Code. The first category of objections, Ms. Ball argues, fails to properly consider that, because the Claims represent prepetition claims, it is proper to reconcile and pay the Claims in the same manner as all other prepetition claims. She adds that the Reclamation Procedures will not adversely affect any of the claimants' or the Debtors' substantive rights under the Bankruptcy Code with respect to the ultimate allowance or treatment of the Claims. To address concerns raised by several of the objecting parties with regards to the second category of objections, the Debtors propose to modify the form of order granting the request by including an additional language to clarify that no substantive rights relating to the allowance or treatment of the Claims will be impacted by the requested relief. Court Enters Order The Debtors obtained final court approval of their proposed procedures governing the resolution of claims entitled to priority under Section 503(b)(9) of the Bankruptcy Code for goods received within 20 days before April 30, 2009. Pursuant to the final order, creditors are not allowed to file motions to compel allowance of or payment of administrative expenses for their claims or schedule a hearing to consider those claims without leave of the Court. The court-approved procedures do not affect the rights and remedies of the claimants, the Debtors, any official committee appointed or any other concerned party with regard to avoidance actions, the final order said. The final order and the court-approved procedures do not affect, modify, expand or limit the rights of the claimants, the Debtors or any other concerned party to raise or prosecute "any argument, challenge, right or defense in connection with the allowance, disallowance or treatment of any claim, all of which rights are fully preserved." Objections to the procedures filed by Plast-O-Foam, LLC and over 20 other companies were resolved. 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 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 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: Hoegh Wants to Keep Cars Absent Shipping Payments --------------------------------------------------------------- Hoegh Autoliners AS asks the U.S. Bankruptcy Court for the Southern District of New York for adequate protection of its common carrier liens on certain property of Chrysler LLC or its affiliates. Hoegh, an ocean common carrier that carries many vehicles for the Debtors on specialized ocean-going vessels that are pure car and truck carriers, maintains a tariff pursuant to and is regulated as a common carrier under the U.S. Shipping Act of 1984. Pursuant to applicable non-bankruptcy law, Hoegh possesses common carrier liens in and on certain of the Property to secure various freight and other shipping charges owing to Hoegh. The liens are perfected by Hoegh's continued possession of the Property, and any relinquishment of the possession could extinguish Hoegh's liens, asserts Richardo I. Kilpatrick, Esq., at Kilpatrick & Associates, P.C., in Auburn Hills, Michigan. Pursuant to Sections 362(b)(3) and 546(b)(1)(B) of the Bankruptcy Code, Hoegh is authorized to maintain possession of the Property to preserve and continue the perfection of its liens, Mr. Kilpatrick contends. Hence, Hoegh asks that the Debtors provide it with adequate protection of its interest in the Property, as the Debtors are required to do under Section 363(e) of the Bankruptcy Code, before the Debtors can use, sell, or lease the Property subject to Hoegh's liens. At the Debtors' request, on the Petition Date, Hoegh was in the process of shipping or otherwise had in its possession, 173 of the Debtors' automobiles -- the collateral. An additional 39 vehicles were loaded on another Hoegh vessel on May 13, 2009. Mr. Kilpatrick discloses that charges associated with Hoegh's shipment of the Collateral totals $131,037. He notes that the Collateral, which Hoegh currently possesses, will accrue storage and demurrage charges postpetition. Mr. Kilpatrick reminds the Court that the Debtors sought and obtained the Court's permission to pay prepetition claims of certain potential lienholders. He notes that the Debtors acknowledge that foreign and domestic commercial common carriers hold possessory liens on the Debtors' cargo that were in the possession of the common carrier on the Petition Date, and that common carrier liens on cargo in the carriers' possession are generally superior to existing security interests. Immediately following the bankruptcy filing, Hoegh contacted the Debtors to inform them of its common carrier liens, Mr. Kilpatrick relates. Although the parties have had numerous conversations, he contends that the Debtors have not satisfied or provided adequate protection of Hoegh's liens, and instead, the Debtors have essentially indicated that Hoegh may not be a critical vendor for New Chrysler by stopping payment on checks issued to Hoegh prior to or on the Petition Date for other prepetition shipments, while allowing checks to clear for other vendors. The Debtors have also refused to enter discussions regarding a trade agreement covering vehicles in transit on the Petition Date and thereafter, as authorized by the Critical Vendor Order, Mr. Kilpatrick alleges. He asserts that the position of Hoegh, and other similarly situated common carriers is particularly precarious, given the proposed timeline for the sale of substantially all of the Debtors' assets. "In particular, because freight charges on cargo in transit after the Petition Date may not be due until after completion of the sale transaction, common carriers moving cargo will have no way of gauging their potential risk exposure if, as it appears, (i) these liabilities may not be assumed by New Chrysler, and (ii) there may not be sufficient funds to cover the postposition expenses of Old Chrysler," Mr. Kilpatrick further argues. Hence, Hoegh asks the Court for adequate protection of its interest in the Collateral in the form of indefeasible payment in full of the Outstanding Balance for the Collateral and for the freight and any related charges incurred for vehicles currently in its possession, or which may come into its possession in the future. Hoegh also asks the Court for an expedited hearing on its request. Hoegh proposes to have the request considered June 3, 2009, with objections due by May 29. 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 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 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: White & Case Names New Clients in Case ---------------------------------------------------- Glenn M. Kurtz, Esq., at White & Case LLP, in New York, discloses, pursuant to Rule 2019(a) of the Federal Rules of Bankruptcy Procedure, that his firm serves as counsel to the Indiana State Teachers Retirement Fund and Indiana State Police Pension Trust, pension funds that are fiduciaries for the investment of retirement assets for approximately 100,000 civil servants, and Indiana Major Moves Construction Fund, an infrastructure construction fund. According to Mr. Kurtz, the Indiana Pensioners are lenders under a certain Amended and Restated First Lien Credit Agreement, dated as of August 3, 2007 among Chrysler and certain of its affiliates, as borrowers, JPMorgan Chase, N.A., as administrative agent, and certain lenders party from time to time, under which the Senior Lenders are owed $6.9 billion. The names and addresses of each of the Indiana Pensioners are: Approximate Approximate Holders & Address Holdings Date Acquired Amount Paid ----------------- ----------- ------------- ----------- Indiana State Teachers $32,355,000 8/13/08? $13,912,650 Retirement Fund 8/15/08 150 West Market Street Ste. 300 Indianapolis, IN 46204 Indiana State Police $1,329,874 8/13/08? $571,845 Pension Trust 8/15/08 200 W. Washington Street Room 242 Indianapolis, IN 46204 Indiana Major Moves $8,817,859 8/13/08? $3,791,679 Construction Fund 8/15/08 200 W. Washington Street Room 242 Indianapolis, IN 46204 ----------- Approximate Aggregate Holdings $42,502,733 As of May 20, 2009, each of the Indiana Pensioners is a holder, or investment advisor to a holder, of the Senior Debt. White & Case has been advised by the Indiana Pensioners that they collectively are the beneficial owner of, or the holder or manager of, various accounts with investment authority, contractual authority or voting authority for more than $42,502,733 principal amount of the Senior Debt. Mr. Kurtz says the Indiana Pensioners first engaged White & Case late in the evening of May 18, 2009. Although the Indiana Pensioners have hired White & Case to represent their interests and to enable their voices to be heard more effectively and efficiently as a group, each of the Indiana Pensioners makes its own decisions as to how it wishes to proceed and does not speak for, or on behalf of, any other creditor, including the other Indiana Pensioners in their individual capacities. Thomas E. Lauria, Esq., a partner at White Case, is also representing the Indiana Pensioners. To recall, Mr. Lauria represented the Non-TARP Lenders, which strongly opposed the Chrysler-Fiat Transaction. The Non-TARP Lenders was reported to have disbanded a few weeks ago. 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 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 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: Financial Unit Resumes APR Programs With 0% Rate -------------------------------------------------------------- Chrysler Financial announced the resumption of subvented retail A.P.R. programs in conjunction with Chrysler LLC. Effective through June 1, qualified customers have an option of selecting 0% financing for 72 months on select 2008 model year Chrysler, Jeep(R) and Dodge vehicles through Chrysler Financial. "As this is a challenging market for dealers, Chrysler Financial is pleased to announce our return to retail subvented financing for the month of May to support our dealers and help them move inventory," said Tom F. Gilman, Chairman and CEO - Chrysler Financial. This program is in addition to our standard retail financing programs which continued to be offered to qualified retail customers through Chrysler, Jeep and Dodge dealerships. About Chrysler Financial Chrysler Financial offers automotive financial products and services to both dealers and consumers of Chrysler, Jeep and Dodge vehicles in the U.S., Canada, Mexico and Venezuela. In addition, it offers vehicle wholesale and retail financing to more than 3,200 Chrysler, Jeep and Dodge dealers. Currently, nearly three million drivers in the United States enjoy the benefits of financing with Chrysler Financial. Chrysler Financial has an employee base of 3,400 and supports a global portfolio of nearly $50 billion. For more information, visit http://corp.chryslerfinancial.com 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 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 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: Blasts Indiana's Demand for Review of Fiat Sale ------------------------------------------------------------- MarketWatch reports that Chrysler LLC said that a legal review demanded by the state of Indiana would do harm to both the Company and the state. According to MarketWatch, attorneys for Indiana state pension funds and a state construction fund will challenge the legality of Chrysler's plan to exit bankruptcy protection. The Associated Press relates that the funds hold a combined $42.5 million of Chrysler's total $6.9 billion in secured debt. MarketWatch says that Indiana State Treasurer Richard Mourdock is protesting Chrysler's bankruptcy and planned sale on behalf of the three state funds, which he supervises. Citing the funds, The AP states that the unprecedented role of the Treasury Department makes a legal review of the automakers protection from its creditors necessary. MarketWatch quoted Chrysler as saying, "Chrysler strongly believes Indiana Treasurer Mourdock's position is wrong. Satisfying the Indiana treasurer's demands would lead to the liquidation of Chrysler, resulting in the loss of more than 4,000 Chrysler jobs and 9,000 retiree pensions in Indiana alone." According to Reuters, Chrysler said that the combined investments in the three state pension funds totaled $17 million and the cumulative loss under the proposed deal would be about $2 million. Reuters relates that the Indiana pension funds are asking for the appointment of an examiner to conduct a probe on Chrysler's business decisions. The funds, says Reuters, are also seeking to put Chrysler in the hands of a Chapter 11 trustee who can act independently of the government. 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 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 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: New Co. to Honor Minor Warranty Claims Only --------------------------------------------------------- Ross Edwards at Autoloandaily.com reports that defective vehicles sold before Chrysler LLC entered bankruptcy won't be shouldered by the new company. ABC News relates that Chrysler will honor minor warranty claims, but any serious defects on the vehicles won't be the responsibility of the new company. ABC News notes that this will lower the already dismal resale value Chrysler vehicles have. Workers Try to Block Plans to Close Plant Robert Schoenberger at Plain Dealer Reporter reports that hundreds of auto workers held demonstrations as automotive recovery chief talked to public officials and toured Chrysler's closed stamping plant on Friday. According to the report, the workers are seeking to keep the plant open. Plain Dealer Reporter states that Ed Montgomery, an Obama official whose job is to help automotive communities survive the ongoing struggles of the industry, said that his goal was to help workers and the community find government support to survive closure, not to prevent it. Citing Mr. Montgomery, the report says that Chrysler will decide which plants to keep open and which ones to close. According to Plain Dealer Reporter, Chrysler officials said that they will be able to move stamping equipment from Twinsburg to the Company's remaining plants in Michigan. Bankruptcy Not Affecting May Sales Tom Krisher at The Associated Press reports that Chrysler Executive Vice President for Sales and Marketing Steven Landry said that the Company's bankruptcy filing doesn't appear to be affecting May sales so far. According to The AP, Mr. Landry said that early sales data shows that Chrysler is on pace to sell 60,000 to 70,000 vehicles to individuals in May, which is better than expected. 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 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 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: Shutdowns Force Aleris to Idle Plants --------------------------------------------------- Aleris International, Inc., plans to idle its plant in Coldwater, Michigan, as well as other secondary aluminum alloy plants due to the plans of General Motors Corp. and Chrysler, LLC, to shut down their plants, according to a Steelguru report dated May 24, 2009. An Aleris spokesperson said that the specific timing and length of the shutdown will vary by plan based on current demand and inventory levels, noting that employees will be recalled as Aleris demand increases, the report said. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) CITIGROUP INC: May Increase Investment Bankers' Base Salaries ------------------------------------------------------------- Sources said that Citigroup Inc. and Bank of America Corp. are expected to raise base salaries for investment bankers to compensate for limits on annual bonuses, Joe Bel Bruno at The Wall Street Journal reports. "Pressures in the investment-banking and capital-markets businesses continue to be intense" and BofA would "take the steps necessary to retain key employees," WSJ quoted BofA spokesperson Jessica Oppenheim as saying. Citing people familiar with the matter, WSJ relates that Citigroup and BofA are considering a plan to take similar steps unveiled by Morgan Stanley last week. WSJ notes that like Morgan Stanley, Citigroup and BofA hope higher base salaries will retain key employees. Aaron Lucchetti at WSJ states that Morgan Stanley said it would raise the base salaries of most of its top officers and many top- earning workers to lessen the importance of their annual bonuses. WSJ says that Morgan Stanley will increase the base salary of its co-presidents, James Gorman and Walid Chammah, by one-third to $800,000 a year, while Chief Financial Officer Colm Kelleher, Chief Legal Officer Gary Lynch, and Chief Administrative Officer Thomas Nides will get a base salary of $750,000 each. Citing a person familiar with the matter, WSJ reports that managing directors will see about 25% to 30% of their overall compensation come from their base salary, up from about 15% to 20%, said a person familiar with the matter. WSJ relates that a managing director's base salary could increase to $400,000, from $250,000. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CONEXANT SYSTEMS: Deregisters Preferred Share Purchase Rights ------------------------------------------------------------- Conexant Systems, Inc., filed a Form 15 with the Securities and Exchange Commission to terminate the registration of its Preferred Share Purchase Rights. On May 13, 2009, the Compensation Committee of the Board of Directors of Conexant, in recognition of the importance of the current outstanding level of performance by Scott Mercer, the Company's Chairman and Chief Executive Officer, and his continuing role in providing guidance and leadership to enhance the Company's strategic position, approved a discretionary, one-time cash bonus of $250,000 for Mr. Mercer, payable by the end of May 2009. Headquartered in Newport Beach, California, Conexant Systems, Inc. (NASDAQ: CNXT) -- http://www.conexant.com/-- has a comprehensive portfolio of innovative semiconductor solutions which includes products for Internet connectivity, digital imaging, and media processing applications. Outside the United States, the company has subsidiaries in Northern Ireland, China, Barbados, Korea, Mauritius, Hong Kong, France, Germany, the United Kingdom, Iceland, India, Israel, Japan, Netherlands, Singapore and Israel. As of April 3, 2009, the Company's balance sheet showed total assets of $392.2 million and total liabilities of $557.9 million, resulting in total shareholders' deficit of $164.9 million. Conexant's loss from continuing operations for the six fiscal months ended April 3, 2009 was $25.3 million. Its losses from continuing operations for fiscal 2008, 2007 and 2006 were $133.4 million, $221.2 million, and $97.1 million, respectively. The results have had a negative impact on Conexant's financial condition and operating cash flows. Conexant's primary sources of liquidity include borrowing under its credit facility, available cash and cash equivalents. Conexant believes that its existing sources of liquidity, together with cash expected to be generated from product sales, will be sufficient to fund operations, research and development, anticipated capital expenditures and working capital for at least the next 12 months. However, Conexant cannot provide any assurance that its business will become profitable or that it will not incur additional substantial losses in the future. Additional operating losses or lower than expected product sales will adversely affect its cash flow and financial condition and could impair its ability to satisfy indebtedness obligations as such obligations come due. If at a future date Conexant is unable to demonstrate that it has sufficient cash to meet its obligations for at least the next 12 months, Conexant said it may no longer be able to use the "going concern" basis of presentation in its financial statements. The receipt of a "going concern" qualification in future financial statements would likely adversely impact Conexant's ability to access the capital and credit markets and impede its ability to conduct business with suppliers and customers. CONTECH LLC: PBGC to Assume Underfunded Pension Plan ---------------------------------------------------- The Pension Benefit Guaranty Corporation will take responsibility for the underfunded pension plan covering 532 workers and retirees of Contech US LLC, an auto parts maker based in Portage, Michigan. The agency's action comes during Contech's bankruptcy proceeding, in which the Company is liquidating through sales of its divisions and subsidiaries to third-party purchasers. The buyers have not agreed to assume the retirement plan. As a result, the pension plan will be without a sponsor at the conclusion of the proceedings. According to PBGC estimates, the Contech US LLC Pension Plan No. 203 is 38% funded, with assets of $8.4 million to cover benefit liabilities of $22 million. The agency expects to cover $12 million of the $13.6 million shortfall. The plan was frozen on Dec. 31, 2007. The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ends on May 26, 2009. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire. Within the next several weeks, the PBGC will send notification letters to all participants in the Contech plan. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore participants in this pension plan are subject to the limits in effect on Jan. 30, 2009, which set a maximum guaranteed amount of $54,000 for a 65-year-old. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed. Privately held Contech was founded in 1950 and performs light metal die casting and machining for automobile and parts manufacturers. The business was sold from former owner SPX Corp. to Marathon Asset Management, a private equity firm in 2007. Spurred by the economic downturn, on Jan. 30, 2009, the Company filed for Chapter 11 protection in the U.S. Bankruptcy Court in Detroit. The case changed from a reorganization to a liquidation following court approval for a sale of the company's major assets. Workers and retirees with questions may consult the PBGC Web site, http://www.pbgc.gov/or call toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800- 877-8339 and ask for 800-400-7242. Contech retirees who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Assumption of the plan's unfunded liabilities will increase the PBGC's claims by $12 million and was not previously included in the agency's fiscal year 2008 financial statements. The PBGC is a federal corporation created under the ERISA. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 29,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns. Headquartered in Portage, Michigan, Contech LLC -- http://www.contech-global.com/-- sells and supplies light-weight cast component for automotive OEM's and Tier I suppliers. The Company also manufactures safety steel forged automotive components and tube fabrications primarily for commercial trucks. The Company and two of its affiliates filed for Chapter 11 protection on Jan. 30, 2009 (Bankr. E.D. Mich. Lead Case No. 09- 42392). Richard A. Chesley, Esq., and Kimberly D. Newmarch, Esq., at Paul, Hastings, Janofsky & Walker, LLP, are the Debtors' counsel. Robert A. Weisberg, Esq., and Christopher A. Grosman, Esq., at Carson Fischer, P.L.C., are local counsel. Kurtzman Carson Consultants LLC is the claims, noticing and balloting agent for the Debtors. In its bankruptcy petition, Contech said its assets and debts are both between $100 million and $500 million. COOPERATIVE BANKSHARES: Actively Searching for New CEO ------------------------------------------------------ Cooperative Bankshares, Inc., is actively engaged in a national search for a new chief executive officer, to comply with regulatory directives. Cooperative Bankshares has interviewed numerous candidates and, subject to the approval of its regulators, intends to appoint a new CEO as soon as possible. To achieve compliance with its regulatory directives, among other things, the Company and the Bank must hire a new CEO and must either raise capital, sell assets, or both. Additionally, the Company is undertaking certain actions designed to improve its capital position and has engaged financial advisors to assist with this effort and to evaluate the Company's strategic options, including a possible sale or merger of the Company or possible sale of certain of the Bank's assets. The Company believes that it needs to raise a minimum of $30.0 million of additional capital, assuming no change in risk-weighted assets or its capital position, to be capitalized at the levels required by the regulatory directives. To date, the Company has neither raised any additional capital nor agreed to a sale of the Company, the Bank, or any Bank assets (other than Bank loans) and no assurances can be made as to when or whether such capital will be raised or whether the Company will be successful in negotiating a sale of the Company or any of its assets. Last week, Cooperative Bankshares reported net income for the quarter ended March 31, 2009, of $949,000, an increase of 26.2% over the same quarter last year. Net income for the quarter ended March 31, 2008, was $752,000. The Company said the increase in net income during the first quarter of 2009 compared to the prior year period was mainly due to a tax benefit recognized as a result of a decrease to the valuation allowance on the Company's net deferred tax asset and a reduction of compensation and fringe benefits, partially offset by a reduction in net interest income and an increase in the provision for loan losses. The Company reported a tax benefit of $1.6 million on an operating loss of $642,000 for the quarter ended March 31, 2009 compared to a tax expense of $359,000 on an operating profit of $1.1 million for the quarter ended March 31, 2008. Net deferred tax asset before any valuation allowance decreased from $13.8 million at December 31, 2008 to $12.8 million at March 31, 2009, primarily as a result of a decrease to the allowance for loan losses during this period due to net charge offs exceeding the provision for loan losses. The Company recorded a tax benefit of $1.0 million due to a reduction of the valuation allowance on the decreased balance of the net deferred tax asset. The Company was also able to record a tax benefit on its operating loss for the first quarter of 2009. Compensation and fringe benefits decreased to $1.7 million during the first quarter of 2009 compared to $3.3 million for the same period a year earlier. Most of this decrease is related to the $1.1 million reversal of the EITF 06-4 accrual as a result of the Company's decision, with agreement from the directors and applicable executive officers, to surrender select bank-owned life insurance policies during the first quarter of 2009. The remainder of the decrease in compensation and fringe benefits is related to salary and benefit reductions implemented in the fourth quarter of 2008 or in the first quarter of 2009. Net interest income for the quarter ended March 31, 2009 was $4.8 million compared to $6.3 million for the quarter ended March 31, 2008. The decrease in net interest income for the three months ended March 31, 2009, from the prior year period was primarily caused by a reduction in the interest rate spread of 62 basis points. This decrease is primarily attributable to action taken by the Federal Reserve to reduce interest rates by 400 basis points during 2008, which had a corresponding effect on market rates of interest, and an increase in non-accrual loans at March 31, 2009, which accounted for a 27 basis point decrease in the interest rate spread during the quarter ended March 31, 2009. As a result of these rate reductions, the Bank's loan portfolio has repriced faster than deposits, causing a decline in net interest income. The provision for loan losses increased to $2.0 million for the quarter ended March 31, 2009 compared to $855,000 for the quarter ended March 31, 2008. The increase in the provision for loan losses during the first quarter of 2009 was primarily the result of an increase in valuation allowances for the recorded investment in nonperforming loans compounded by the decline of real estate collateral values as a result of the deterioration of the economy. "The decline in real estate values and the economic environment continues to be a challenge, but we are beginning to see the benefits in several of the changes that we have implemented, including cost cutting measures and working with our troubled assets," said Todd L. Sammons, the Company's Chief Financial Officer and Interim President and Chief Executive Officer. Total assets increased to $967.3 million at March 31, 2009 compared to $951.0 million at December 31, 2008. Asset growth was primarily the result of an increase in cash and cash equivalents from the payoff of loans held for investment, the sales of loans held for sale, the surrender of select bank-owned life insurance policies, and an increase in deposits. Cash and cash equivalents increased to $63.7 million at March 31, 2009 compared to $7.9 million at December 31, 2008, representing an improvement in the Bank's liquidity position. Loans decreased to $842.9 million at March 31, 2009 compared to $871.2 million at December 31, 2008. For the three-month period ended March 31, 2009, the bulk of the decrease in the loan portfolio occurred in one-to-four family loans, which decreased $17.1 million (3.4%), and construction and land development loans, which decreased $5.4 million (3.5%). Cooperative Bank halted or slowed the origination of loans held for investment beginning in the last quarter of 2008 to comply with regulatory directives and to improve its capital ratios. Deposits at March 31, 2009 increased $72.3 million for the quarter, partially offset by a reduction in borrowings of $56.1 million. At March 31, 2009, stockholders' equity was $20.5 million and represented 2.12% of assets, compared to $19.6 million representing 2.06% of assets at December 31, 2008. A full-text copy of the Company's quarterly report is available at no charge at http://ResearchArchives.com/t/s?3d45 About Cooperative Bank Cooperative Bankshares, Inc., serves as the holding company for Cooperative Bank, a North Carolina chartered commercial bank. Bankshares' primary activities consist of holding the stock of Cooperative Bank and operating the business of the Bank and its subsidiaries. Bankshares formed Cooperative Bankshares Capital Trust I, which is wholly owned by Bankshares, on August 30, 2005 to facilitate the issuance of trust preferred securities totaling $15.0 million. Chartered in 1898, Cooperative Bank's headquarters are located in Wilmington, North Carolina. Cooperative operates 22 offices in North Carolina and three offices in South Carolina. Effective December 31, 2002, the Bank converted its charter from that of a state savings bank to a state commercial bank. At December 31, 2008, Bankshares had total assets of $951.0 million, deposits of $695.6 million, and stockholders' equity of $19.6 million. The Bank's subsidiary, Lumina Mortgage, Inc., is a mortgage- banking firm, originating and selling residential mortgage loans through four offices in North Carolina. Going Concern Consideration Cooperative Bankshares entered into a stipulation and consent to the issuance of a March 12, 2009 order to cease and desist with the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks, whereby Cooperative Bank consented to the issuance of an Order to Cease and Desist promulgated by the FDIC and the Commissioner without admitting or denying the alleged charges. Cooperative Bankshares said the Order requires the Company to increase capital ratios so that the Bank has a minimum Tier 1 Core Capital ratio of 6% and a minimum Total Risk-Based Capital ratio of 10% within 120 days of the date of the Order. If Cooperative Bankshares does not obtain additional capital, it does not expect to meet the ratios set forth in the Order. Failure to meet the minimum ratios set forth in the Order could result in Cooperative Bankshares' regulators taking additional enforcement actions regarding the Bank. "[E]ven if we are successful in meeting the capital ratios mandated in the Order, we cannot assure you that we will not need to raise additional capital in the future. Additionally, because of the Company's cumulative losses and its liquidity and capital positions, the FDIC and the Commissioner may take additional significant regulatory action against the Bank that could, among other things, materially adversely impact the Company's stockholders," Cooperative Bankshares said. Dixon Hughes PLLC, in Greenville, North Carolina, in its April 30, 2009 audit report, said substantial doubt exists as to Cooperative Bankshares' ability to continue as a going concern. COOPERATIVE BANKSHARES: Retirement Plan Discloses 9.60% Stake ------------------------------------------------------------- Cooperative Bank 401(K) Supplemental Retirement Plan discloses holding 632,673 shares, or roughly 9.60%, of the common stock of Cooperative Bankshares, Inc., as of May 21, 2009. The shares are held in the 401(k) Savings Accounts and ESOP Accounts under the Cooperative Bank 401(k) Supplemental Retirement Plan. As of April 30, 2009, 6,589,256 shares of Cooperative Bankshares Common Stock were outstanding. About Cooperative Bank Cooperative Bankshares, Inc., serves as the holding company for Cooperative Bank, a North Carolina chartered commercial bank. Bankshares' primary activities consist of holding the stock of Cooperative Bank and operating the business of the Bank and its subsidiaries. Bankshares formed Cooperative Bankshares Capital Trust I, which is wholly owned by Bankshares, on August 30, 2005 to facilitate the issuance of trust preferred securities totaling $15.0 million. Chartered in 1898, Cooperative Bank's headquarters are located in Wilmington, North Carolina. Cooperative operates 22 offices in North Carolina and three offices in South Carolina. Effective December 31, 2002, the Bank converted its charter from that of a state savings bank to a state commercial bank. At December 31, 2008, Bankshares had total assets of $951.0 million, deposits of $695.6 million, and stockholders' equity of $19.6 million. The Bank's subsidiary, Lumina Mortgage, Inc., is a mortgage- banking firm, originating and selling residential mortgage loans through four offices in North Carolina. Going Concern Consideration Cooperative Bankshares entered into a stipulation and consent to the issuance of a March 12, 2009 order to cease and desist with the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks, whereby Cooperative Bank consented to the issuance of an Order to Cease and Desist promulgated by the FDIC and the Commissioner without admitting or denying the alleged charges. Cooperative Bankshares said the Order requires the Company to increase capital ratios so that the Bank has a minimum Tier 1 Core Capital ratio of 6% and a minimum Total Risk-Based Capital ratio of 10% within 120 days of the date of the Order. If Cooperative Bankshares does not obtain additional capital, it does not expect to meet the ratios set forth in the Order. Failure to meet the minimum ratios set forth in the Order could result in Cooperative Bankshares' regulators taking additional enforcement actions regarding the Bank. "[E]ven if we are successful in meeting the capital ratios mandated in the Order, we cannot assure you that we will not need to raise additional capital in the future. Additionally, because of the Company's cumulative losses and its liquidity and capital positions, the FDIC and the Commissioner may take additional significant regulatory action against the Bank that could, among other things, materially adversely impact the Company's stockholders," Cooperative Bankshares said. Dixon Hughes PLLC, in Greenville, North Carolina, in its April 30, 2009 audit report, said substantial doubt exists as to Cooperative Bankshares' ability to continue as a going concern. COOPERATIVE BANKSHARES: Willetts Discloses 10.66% Equity Stake -------------------------------------------------------------- Frederick Willetts, III, reports that he beneficially owns 705,432 shares, constituting 10.66% of the 6,589,256 outstanding shares of Cooperative Bankshares, Inc. common stock. Included in this amount are 26,250 shares of common stock which Mr. Willetts has the right to acquire under Cooperative Bankshares' stock option plan. Mr. Willetts has sole voting and dispositive power over: -- the 254,271 shares he holds directly; -- the 9,354 shares held in his childrens' trust, over which he serves as sole trustee; -- the 35,825 shares held in the Elizabeth Messick Willetts Medical Trust, over which he serves as sole trustee. In addition, Mr. Willetts has sole voting and dispositive power with respect to the 26,250 shares which he may acquire pursuant to the exercise of currently exercisable stock options. Mr. Willetts shares voting and dispositive power over the 159,812 shares held in two trusts for which he serves as co-trustee and may be deemed to share voting and dispositive power with respect to (i) the 3,547 shares held by his spouse; (ii) the 1,046 shares for which his spouse serves as custodian for the benefit of their children; (iii) the 101,120 shares held by his mother and her IRA account; (iv) the 43,327 shares held by Helen Margaret Willetts; (v) the 3,537 shares for which Helen Margaret Willetts serves as custodian and trustee; and (vi) the 4,851 shares owned by Elizabeth M. Willetts. Mr. Willets shares voting power but has no dispositive power over the 37,540 shares held in his personal 401(k) Savings Account under the 401(k) Plan and the 24,952 shares held in his personal ESOP Account under the 401(k) Plan. About Cooperative Bank Cooperative Bankshares, Inc., serves as the holding company for Cooperative Bank, a North Carolina chartered commercial bank. Bankshares' primary activities consist of holding the stock of Cooperative Bank and operating the business of the Bank and its subsidiaries. Bankshares formed Cooperative Bankshares Capital Trust I, which is wholly owned by Bankshares, on August 30, 2005 to facilitate the issuance of trust preferred securities totaling $15.0 million. Chartered in 1898, Cooperative Bank's headquarters are located in Wilmington, North Carolina. Cooperative operates 22 offices in North Carolina and three offices in South Carolina. Effective December 31, 2002, the Bank converted its charter from that of a state savings bank to a state commercial bank. At December 31, 2008, Bankshares had total assets of $951.0 million, deposits of $695.6 million, and stockholders' equity of $19.6 million. The Bank's subsidiary, Lumina Mortgage, Inc., is a mortgage- banking firm, originating and selling residential mortgage loans through four offices in North Carolina. Going Concern Consideration Cooperative Bankshares entered into a stipulation and consent to the issuance of a March 12, 2009 order to cease and desist with the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks, whereby Cooperative Bank consented to the issuance of an Order to Cease and Desist promulgated by the FDIC and the Commissioner without admitting or denying the alleged charges. Cooperative Bankshares said the Order requires the Company to increase capital ratios so that the Bank has a minimum Tier 1 Core Capital ratio of 6% and a minimum Total Risk-Based Capital ratio of 10% within 120 days of the date of the Order. If Cooperative Bankshares does not obtain additional capital, it does not expect to meet the ratios set forth in the Order. Failure to meet the minimum ratios set forth in the Order could result in Cooperative Bankshares' regulators taking additional enforcement actions regarding the Bank. "[E]ven if we are successful in meeting the capital ratios mandated in the Order, we cannot assure you that we will not need to raise additional capital in the future. Additionally, because of the Company's cumulative losses and its liquidity and capital positions, the FDIC and the Commissioner may take additional significant regulatory action against the Bank that could, among other things, materially adversely impact the Company's stockholders," Cooperative Bankshares said. Dixon Hughes PLLC, in Greenville, North Carolina, in its April 30, 2009 audit report, said substantial doubt exists as to Cooperative Bankshares' ability to continue as a going concern. COYOTES HOCKEY: Rejection of Arena Pact Unavailing, Says Glendale ----------------------------------------------------------------- Counsel to the city of Glendale, in Arizona, Cathy L. Reece, Fennemore Craig, P.C., notes that the Phoenix Coyotes is bound by an Arena Management, Use and Lease Agreement, under which it has agreed to stay in the Glendale Arena for at least 30 National Hockey League seasons. Glendale has commenced an adversary proceeding against Coyotes Hockey LLC and its affiliates, to enjoin the Debtors' from proceeding with plans to move the Phoenix Coyotes team to southern Ontario from Glendale. On May 5, 2009, less than five years into the 30-year term of the Use Agreement, Coyotes Hockey and related parties filed voluntary petitions for relief under Chapter 11. Coyotes Hockey submitted, together with its petition, an asset purchase agreement with Jim Balsillie's PSE Sports & Entertainment L.P., pursuant to which Mr. Balsillie agreed to purchase the team for $212.5 million. Mr. Balsillie conveyed plans to transfer the team to southern Ontario. The National Hockey League opposes the sale and the transfer, citing that Phoenix Coyotes team owner Jerry Moyes, the chief executive officer of Swift Transportation Co., doesn't have the right to transfer the team. The Team originated in 1972 as the Winnipeg Jets, joined the NHL in 1979, and moved to Phoenix, Arizona under new ownership in 1995. When the 1996 NHL season began, the Team played its home games in the America West Arena in Phoenix. Because the arena was a state-of-the-art basketball facility that housed the Phoenix Suns basketball team, it was ill suited for professional hockey and playing in this venue caused the Coyotes financial hardship, Ms. Reece recounts. According to Ms. Reece, the Team found a solution to its arena woes on November 29, 2001, when Coyotes Hockey entered into the Use Agreement. The City agreed to facilitate and provide $183 million funding for the development of the 17,500 seat Glendale Arena. In return for the new arena and the City's funding, the Debtor agreed and covenanted that it would stay at the Arena for a period of at least 30 NHL seasons. In light of the planned sale and transfer, the City of Glendale asks the Bankruptcy Court to enjoin Coyotes Hockey, as well as its agents, servants and employees, and all others acting in concert or participating with it, from relocating or attempting to relocate the Phoenix Coyotes hockey team. Ms. Reece notes that the express "team use covenant" of the Use Agreement provides that the Debtor may not relocate the Team until the end of the 2035 NHL season, and calls for specific performance should the Debtor breach that covenant. The specific performance provision is enforceable, and the Debtor may not reject the Use Agreement, she asserts. She notes that there is no provision in the Use Agreement for early termination by the Debtor. Rejection under Sec. 365 Glendale anticipates that the Debtor will argue the City cannot succeed on the merits of its claim because the Debtor has a right to reject the Use Agreement pursuant to Section 365 of the Bankruptcy Code. "This argument is unavailing," Ms. Reece asserts. Generally, a debtor in a chapter 11 case has the right to reject executory contracts and leases pursuant to Section 365 of the Bankruptcy Code if, in the exercise of its business judgment, it can show to the court that rejection will benefit general unsecured creditors. However, citing In re Huang, 23 B.R. 798, 801 (B.A.P. 9th Cir. 1982) and In re Aslan, 65 B.R. 826, 831 (Bankr. C.D. Cal. 1986), Ms. Reece notes that courts in the Ninth Circuit take a balancing of interests approach and weigh the harm that rejection will cause to the affected creditor under the contract or lease against the benefit or harm to other creditors as well as the potential harm to the debtor. According to Ms. Reece, rejection of the Use Agreement will cause incalculable harm to the City and its residents. Apart from the harms that cannot be adequately compensated by money damages, the City's claim for damages will be well into the hundreds of millions of dollars, she points out. About Coyotes Hockey Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates, including Coyotes Hockey LLC, 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: Jim Balsillie Applies NHL OK Purchase, Transfer --------------------------------------------------------------- CBC reports that Jim Balsillie has filed a formal application with the National Hockey League to buy Phoenix Coyotes from majority owner Jerry Moyes. As reported by the Troubled Company Reporter on May 19, 2009, Earl Scudder of Phoenix Coyotes is seeking to sell the team to Canadian Blackberry magnate Jim Balsillie for $212.5 million on the condition that the team be moved to Hamilton in southern Ontario. The lead attorney for the Phoenix Coyotes noted that NHL commissioner Gary Bettman would rather return the Phoenix Coyotes to Winnipeg than transfer it to southern Ontario. Attorneys representing Mr. Moyes emphasized that blocking the move to Canada would breach U.S. and Canadian antitrust law. NHL maintained that its authority has been upheld by U.S. and Canadian courts. According to CBC, Mr. Balsillie agreed to provide $17 million in bridge financing to keep Phoenix Coyotes operating in advance of the sale, which is being opposed by the NHL. The U.S. Bankruptcy Court for the District of Arizona, says CBC, has scheduled a hearing for June 22, at which it would rule on whether the team can be relocated to remove Phoenix Coyotes from bankruptcy. Bankruptcy Judge Redfield T. Baum ordered NHL and Mr. Moyes into mediation in an attempt to untangle the team's ownership situation and potential sale and to help facilitate an agreement between the two parties regarding control of the hockey team. Judge Baum questioned why the dispute between Phoenix Coyotes and NHL had reached the Court without any prior attempts to settle the matter. Judge Baum ordered a report on the progress of mediation by May 27, says the CBC report. CBC notes that if the mediator can't get the parties to settle, Judge Baum will rule on which side has control of Phoenix Coyotes. Judge Baum, CBC states, can also agree to an extension at the mediator's request. About Coyotes Hockey Glendale, Arizona-based Dewey Ranch Hockey LLC and its affiliates, including Coyotes Hockey LLC, 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. CRESCENT OIL: Former President Says Titan Global Swindled Firm -------------------------------------------------------------- Steve Everly at The Kansas City Star reports that Phillip Near, former Crescent Fuels Inc. president, has filed a lawsuit against Titan Global Holdings Inc. for allegedly swindling the Company. According to The Kansas City Star, Mr. Near claimed that Crescent Fuels' financial difficulties were caused by Titan Global, which looted the Company. Court documents say that Mr. Near has lost Crescent Fuels and his life savings, while those who did the looting are now driving around Kansas in a luxury Bentley automobile. Mr. Near said in court documents that the defendants lied, cheated and stole from Mr. Near. Court documents say that Titan Global agreed to purchase Crescent Fuels but never gave anything of value even though the defendant took over the Company. The Kansas City Star relates that Mr. Near was looking for a partner or merger to continue to expand the business when he was introduced to Titan Global. Mr. Near said in court documents that Tital Global was to merge with Crescent Fuels and name Mr. Near as CEO. The Kansas City Star relates that a deal was made and Mr. Near's Crescent Fuels stock was sent to Titan Global's law firm, which was to hold the stock pending the closing of the sale. The deal ran into problems, including Titan Global's agreement to relieve Mr. Near of liability for a $35-million bank loan, but that didn't happen and Mr. Near didn't get any payment for his share of the Crescent Fuels, according to court documents. Titan Global acted as if the deal were done, court documents say. The Kansas City Star quoted Michael Pospisil, who represents Mr. Near in the case, as saying, "They came in and acted like they owned the company and they kicked Phil out." Mr. Near said in court documents that Titan Global milked Crescent Fuels of cash. Titan Global, The Kansas City Star relates, had financial problems and was unable to buy wholesale fuel, so it used Crescent Fuels' credit with suppliers to purchase about $1.5 million of fuel, which wasn't repaid to the Company. Court documents say that other Crescent cash -- about $500,000 -- was wired to persons connected with Titan Global. The Kansas City Star reports that Mr. Near remains liable for Crescent Fuels' $35 million bank loan, $6 million in unpaid fuel taxes, $5 million to fuel suppliers and $1 million for leases. St. Louis, Missouri-based Crescent Oil Company Inc. is a fuel supplier for six Midwest states. The Company and its affiliates - - which includes Crescent Fuels, Inc., Berger -- filed for Chapter 11 bankruptcy protection on February 8, 2009 (Bankr. D. Kan. Case No. 09-20258). Lisa A. Epps, Esq., at Spencer Fane Britt & Browne LLP assists the Debtors in their restructuring efforts. According to Bloomberg News, Crescent Oil listed $85.3 million in assets and $88.8 million in debts. CRUCIBLE MATERIAL: 3 Utilities Want Access to Escrowed Amounts -------------------------------------------------------------- Three power utility companies -- Dominion Peoples, The East Ohio Gas Company dba Dominion East Ohio, and West Penn Power Company dba Allegheny Power -- assert that Crucible Materials Corporation and its debtor-affiliates violated the Section 366(c)(2) of the Bankruptcy Code, which requires the Debtors' to provide adequate assurance of payment. According to the power utility companies, the utility motion filed by the Debtors failed to comply with Rule 9014(b) of the Federal Rules of the Bankruptcy Procedures. The Debtors did not provide proper notice of their request in violation of the power utilities' rights to due process, and evidence to substantiate the accuracy of the Debtors' estimated escrow account deposit or the actual monthly costs of their utility usage, says Maria Aprile Sawczuk, Esq., at Stevens & Lee, P.C., in Wilmington, Delaware, the power utilities' co- counsel. Ms. Sawczuk relates that the Debtors' elected to file the request and sought ex parte Court approval for the escrow account that will contain a deposit of $838,014, which purportedly equal to 50% of their average aggregate monthly utility costs of $1,676,028 over the last six months. However, the Debtors failed to (i) identify who would hold the escrow account, (ii) how the power utilities would access the escrow account, or (iii) what would happen to the monies contained in that account in the event of default by the Debtors concerning their postpetition financing, she points out. Mr. Sawczuk adds that the Debtors want to reduce the escrow account for accounts that they terminate before confirming that they have pain, in full, all postpetition amounts due on those accounts. If the power utilities are not permitted to apply funds from the escrow account to final amounts due, then that account is not really serving as security, she concluded. Accordingly, the power utilities want the Debtors' utility motion denied and award them the postpetition adequate assurance of payment requested. A hearing is set for May 28, 2009, at 11:30 a.m., to consider the power companies' request. About Crucible Materials Corporation 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. Roberta A. DeAngelis, United States Trustee for Region 3, appointed five creditors to serve on the Official Committee of Unsecured Creditors of Crucible Materials Corporation and its debtor-affiliates. The Debtors listed assets and debts both ranging from $100 million to $500 million. DM ELECTRIC: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: DM Electric, Inc. 291 S. Sierra Way Suite B 293 S. Sierra Way San Bernardino, CA 92408 Bankruptcy Case No.: 09-21085 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Thomas B. Donovan Debtor's Counsel: Steven P. Chang, Esq. 801 S Garfield Ave, Suite Alhambra, CA 91801 Tel: (626) 281-1232 Email: schang@spclawoffice.com Total Assets: $4,098,316 Total Debts: $7,782,367 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-21085.pdf The petition was signed by Daniel Moore, president of the Company. DRUG FAIR: To Auction Off Trucks, Tractors; June 4 Sale Hearing --------------------------------------------------------------- According to Bill Rochelle at Bloomberg News, the U.S. Bankruptcy Court for the District of Delaware will convene a hearing June 4 to consider Drug Fair Group Inc.'s proposal to auction of its fleet of trucks and tractors. Under the proposal, the auctioneer will earn a 6% commission. Drug Fair has sold or shut its stores and no longer has any use for those vehicles. As reported by the TCR on April 30, 2009, Drug Fair Group Inc. won authorization from the U.S. Bankruptcy Court for the District of Delaware to sell 31 stores for about $54 million to drugstore chain Walgreen Co. Drug Fair has signed an agreement with Hudson Capital Partners LLC for going-out-of-business sales in 22 other stores. About Drug Fair Group Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. -- http://www.drugfair.com/or http://www.costcuttersonline.com/-- fka Community Distributors, Inc., operated pharmacies and general merchandise stores in northern and central New Jersey. The Company was indirectly owned by Sun Capital Partners Inc., a private-equity investor based in Boca Raton, Florida. Drug Fair and CDI Group, Inc., filed for Chapter 11 protection on March 18, 2009, (Bankr. D. Del. Case No.: 09-10897 to 09-10898) Domenic E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers represent the Debtors in their restructuring efforts. The Debtors propose to employ Epiq Bankruptcy Solutions, LLC, as claims agent. The Debtors listed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. EUGENE BAKER: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------- Joint Debtors: Eugene Baker Kimberly Baker 15218 E. Sage Drive Fountain Hills, AZ 85268 Bankruptcy Case No.: 09-11159 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Charles G. Case II Debtors' Counsel: Brian N. Spector, Esq. Jennings Strouss & Salmon, PLC The Collier Center, 11th Fl. 201 E. Washington St. Phoenix, AZ 85004-2385 Tel: (602) 262-5977 Fax: (602) 495-2654 Email: bspector@jsslaw.com Total Assets: $1,698,860 Total Debts: $18,259,296 A full-text copy of the Debtors' petition, including a list of their 15 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/azb09-11159.pdf The petition was signed by the Joint Debtors. FOAMEX INT'L: To Re-Auction Assets After Bidder Cries Foul ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has reopened the auction for Foamex International Inc.'s assets after MatlinPatterson Global Opportunities Partners protested when the Debtor accepted a cash offer that is $5 million less from Wayzata Capital Investment Partners LLC, according to Law360. MatlinPatterson Global, the report says, alleged that the Debtor threw out its $146.5 million offer in favor of Wayazata Capital's $141.5 million cash bid. Matlin's offer includes the assumption of $26.6 million in liabilities, with most of the remainder representing financing for the Debtor's reorganization process, according to the Troubled Company Reporter on May 25, 2009. About Foamex International Foamex International Inc. (FMXL) -- http://www.foamex.com/-- headquartered in Media, PA, produces polyurethane foam-based solutions and specialty comfort products. The Company services the bedding, furniture, carpet cushion and automotive markets and also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. Foamex and eight affiliates first filed for Chapter 11 protection on September 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05- 12693). On February 2, 2007, the U.S. Bankruptcy Court for the District of Delaware confirmed the Debtors' reorganization plan. The Plan became effective and the Company emerged from Chapter 11 bankruptcy on February 12, 2007. Foamex missed $7.3 million in interest payments due at the end of the January 21 grace periods on the Company's $325 million first- lien term loan and the $47 million second-lien term loan. On February 18, 2009, Foamex International Inc. and seven affiliates filed separate voluntary Chapter 11 petitions (Bankr. D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq., and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer, in New York, represent the Debtors as counsel. Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at Cozen O'Connor, in Wilmington, Delaware, represent the Debtors as Delaware counsel. Investment banker is Houlihan Lokey; accountant is McGladrey & Pullen LLP; and claims and noticing agent is Epiq Bankruptcy Solutions LLC. Sharon L. Levine, Esq., at Lowenstein Sandler, is counsel to the Official Committee of Unsecured Creditors. David M. Fournier, Esq., Evelyn J. Meltze, Esq., and Leigh-Anne M. Raport, Esq., at Pepper Hamilton LLP, is the Committee's Delaware counsel. As of September 28, 2008, the Debtors had $363,821,000 in assets, and $379,710,000 in debts. GENERAL MOTORS: Toyota Denies Plan to Give Technology for Hybrids ----------------------------------------------------------------- Yoshio Takahashi at Dow Jones Newswires reports that Toyota Motor Corp. denied on Monday that it is considering providing its technology for hybrid vehicles to General Motors Corp. According to The Yomiuri Shimbun, sources said that Toyota was considering giving GM its patented technology for increasing fuel economy. Citing the sources, the report says that Toyota is ready to provide the technology if GM asks it to do so, even if it files for bankruptcy. The Yomiuri Shimbun states that GM fell behind in the field of environment-friendly technologies, which, along with increasing gasoline prices caused, resulted in a sharp drop in sales of large vehicles. The Yomiuri Shimbun notes that Toyota is considering offering indirect support for GM's reconstruction by providing the company with its hybrid vehicle technology. Toyota, according to the report, would benefit by having its hybrid technology effectively become the de facto world standard. GM Bankruptcy Inevitable, Experts Say Joseph Szczesny at The Oakland Press relates that experts believe that a bankruptcy filing by GM is inevitable. As reported by the Troubled Company Reporter on May 25, 2009, GM reached an agreement with the United Auto Workers to cut retiree health-care obligations and labor costs. The labor pact was too late, The Oakland Press states, citing experts. The Oakland Press quoted Brad Coulter of O'Keefe & Associates as saying, "I do not think GM can avoid bankruptcy at this point. While they have come to an agreement with the UAW, it will take the powers of the bankruptcy court to impose the concessions required from the bondholders and dealer base. In addition, the longer there is uncertainty on the filing, the longer GM sales will suffer. They need to file for bankruptcy and then work over the next two months to resolve the case and emerge as the 'New GM' by August and in time to launch the 2010 models." Niall McGee at BNN relates that Standard and Poor's analyst Efraim Levy said that he still expects GM to file for Chapter 11. The real key to saving GM is reaching an agreement with bondholders, the report states, citing Mr. Levy. Three Executives Sell More Than 200,000 Shares Dan Strumpf at The Associated Press reports that three top GM executives sold almost 204,000 shares of the Company at prices ranging between $1.09 and $1.25 per share. According to The AP, these executives disposed the shares on Tuesday: -- departing Vice Chairperson Bob Lutz, who sold 133,859 shares; -- Vice Chairperson Thomas Stephens, who sold 49,011 shares; and -- Group Vice President Maureen Kempston Darkes, who sold 20,745 shares. The AP states that Messrs. Lutz and Stephens already unloaded GM shares earlier this month. The sale didn't indicate a lack of faith in the Company among the executives, The AP says, citing GM spokesperson Julie Gibson. According to the report, Ms. Gibson said that the executives had a "small window" in which to sell the shares. The AP notes that if GM files for bankruptcy, current shareholders would almost certainly be wiped out. The AP relates that under GM's current restructuring plan, the federal government will take a majority stake in GM, leaving existing shareholders highly diluted. 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 presented the U.S. 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: Payment to UAW Lowered to 17.5% of Stock -------------------------------------------------------- John D. Stoll, Sharon Terlep, and Jeff Mccracken at The Wall Street Journal report that the United Auto Workers Union has agreed that its healthcare trust get a 17.5% stake in General Motors Corp., a smaller stake compared to the previously agreed 39% stake, in exchange for significant retiree health-care concessions. As reported by the Troubled Company Reporter on May 25, 2009, GM reached an agreement with UAW to cut retiree health-care obligations and labor costs, including cost-of-living allowances, bonuses, and some holidays. GM would also consolidate of job classifications, while wages would remain unchanged; create a provision for future job buyouts; and ban strikes until 2015. GM sought a deal with the union to reduce by at least half the $20 billion in cash it owes for retiree health care benefits, and cut at least $1 billion off annual hourly labor costs that reached $8 billion last year. GM, in exchange for receiving the right to use stock instead of cash to fund half of its $20 billion liability to a retiree health-care trust, offered the union about 39% of the Company's equity and representation on its board. Citing people familiar with the matter, WSJ relates that UAW sought for a lower stake in GM in exchange for preferred shares and debt it considered less risky. WSJ states that under the previous agreement, GM would have given the UAW $10 billion in already-set-aside assets, a $2.5 billion note, a $6.5 preferred- equity stake, and 17.5% of GM's shares with the option for up to 20% over time, to fund the healthcare trust. UAW would also get a seat on GM's board, under the previous agreement, WSJ says. The union, concerned that GM's viability was based on an increasingly unlikely U.S. auto-sales rate of 10 million vehicles per year, instead sought the preferred stock that will pay out a $585 million annual dividend, the report states. People familiar with the matter said that UAW agreed to let GM make additional buyout offers for the 60,000 people employed at the Company's U.S. factories, and to not to hold strike before 2015, WSJ states. According to WSJ, wages are expected to remain unchanged, but employees on temporary layoff will see a reduction in supplemental unemployment pay. In exchange, GM agreed to take back five car-parts plants from Delphi Corp. and use an idled GM plant to make small and compact cars, WSJ says. According to WSJ, the new restructuring plan would increase the U.S. government's stake in GM to as much as 70%, from $50%. Update on Talks With Bondholders WSJ reports that GM would provide an update on its negotiations on a $27 billion debt-for-equity swap with thousands of unsecured bondholders as early as May 27. Citing a person familiar with the matter, WSJ says that very few bondholders had agreed to the debt swap as of Tuesday. Sharon Terlep at Dow Jones Newswires reports that Jim Graves, a former software developer who is part of a group called the Main Street Bondholders, has resigned from the committee negotiating a debt exchange with General Motors Corp. According to Dow Jones, Mr. Graves is the sole person representing individual GM bondholders on the committee. He said that he couldn't bring himself to either support or reject GM's proposal that bondholders exchange $27 billion in debt for a 10% stake in GM, Dow Jones relates. Dow Jones states that the bondholders committee in talks with GM and the U.S. Treasury had been comprised of institutional bondholders, until a separate group of individual bondholders holding about 20% of the Company's bond debt started to organize in protest of the offer. The effort resulted in Mr. Graves' membership in the ad hoc committee, Dow Jones says. GM, according to Dow Jones, is expected to disclose on May 27 how many bondholders signed off on the debt swap. People familiar with the matter said that as of Tuesday evening, the number was very low, Dow Jones reports. Dow Jones relates that GM could extend the deadline for the exchange to appeal to more bondholders. Secured Bank Lenders to Get Recovery on $6BB Loans Two sources said that under bankruptcy plan being finalized this week by the U.S. Treasury, secured bank lenders to General Motors Corp. would get a full recovery on $6 billion in loans made to the Company, Jeffrey Mccracken and John Stoll at The Wall Street Journal report. Citing people familiar with the matter, WSJ states that the Treasury will inject $50 billion in various financings to back a GM workout, most of which would take the form of company equity. WSJ relates that the sources said that the reorganized GM is hoped to have only $10 billion to $12 billion in debt once it emerges from bankruptcy. WSJ notes that the government had considered letting GM exit bankruptcy with up to $40 billion in debt, but it determined earlier this month that GM couldn't handle that amount. 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 presented the U.S. 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: Fiat Presses Takeover Offer for Opel ---------------------------------------------------- The Associated Press reports that Fiat SpA CEO Sergio Marchionne has pressed his offer to take over General Motors Corp.'s Adam Opel GmbH in direct talks with German Chancellor Angela Merkel. According to The AP, Fiat spokesperson Gualberto Ranieri said that Mr. Marchionne discussed the details of his bid with Ms. Merkel for an hour. "He outlined the Fiat offer and underlined the various industrial aspects and the process of the Fiat proposal," the report quoted Mr. Ranieri as saying. As reported by the Troubled Company Reporter on May 21, 2009, Opel received three bids for the acquisition of a stake or the company as a whole, GM Europe spokesperson Chris Preuss said. Mr. Preuss confirmed that the bids had been received. Fiat SpA has been negotiating with GM for months about a potential merger with the Company's European and Latin American operations. Fiat wants to integrate the operations into a global alliance with its auto unit and Chrysler LLC. According to the report, Magna International Inc. has also signaled its interest in GM Europe. WSJ states that with many German politicians indicating a preference for Magna International, Mr. Marchionne has sought to dispel fears that Fiat's offer would mean drastic layoffs, telling the Bild am Sonntag newspaper that "in the worst case, a maximum of 2,000 jobs in Germany would be affected" by the planned integration. 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 presented the U.S. 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: Shutdowns Force Aleris to Idle Plants ----------------------------------------------------- Aleris International, Inc., plans to idle its plant in Coldwater, Michigan, as well as other secondary aluminum alloy plants due to the plans of General Motors Corp. and Chrysler, LLC, to shut down their plants, according to a Steelguru report dated May 24, 2009. An Aleris spokesperson said that the specific timing and length of the shutdown will vary by plan based on current demand and inventory levels, noting that employees will be recalled as Aleris demand increases, the report said. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC a as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of Dec. 31, 2008, the Debtors had total assets of $4,168,700,000; and total debts of $3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) GMAC LLC: DBRS Revises Ratings to Under Developing, Senior at CCC ----------------------------------------------------------------- Dominion Bond Rating Service placed all ratings of GMAC LLC, and its related subsidiaries, Under Review - Developing following the Company's announced capital and liquidity actions. The rating action considers GMAC's announcement that it had received a $7.5 billion capital investment from the U.S Treasury. The Treasury's capital infusion includes $4.0 billion of Mandatorily Convertible Preferred membership interests and warrants, which will be used to support the additional volume associated with the agreement to support the origination of Chrysler LLC related loans. The remaining $3.5 billion of MCP is applied towards the Supervisory Capital Assessment Program requirement. Under the S-CAP program, GMAC is required to raise $11.5 billion of Tier 1 common or contingent common capital, of which $9.1 billion must be new Tier 1 capital. The $3.5 billion investment by Treasury is considered new capital for GMAC and will be applied towards the total and reduces the level of new capital required to $5.6 billion. DBRS views this transaction as a significant step in the recapitalization of GMAC. Furthermore, GMAC is currently evaluating alternatives to meet the capital requirements, but the Treasury has indicated that it may provide additional new capital. The rating action also factors GMAC's improving liquidity position. GMAC's approval to participate in the Federal Deposit Insurance Corporation Temporary Liquidity Guarantee Program bolsters the Company's funding profile. This approval, which allows GMAC to issue up to $7.4 billion of lower cost AAA-rated FDIC guaranteed debt, relieves much of the near-term funding pressure. Further, liquidity is bolstered by the Federal Reserve's granting of a 23A waiver, which permits GMAC to fund a finite amount of GM-related retail and wholesale assets within its Bank. DBRS views this as an important step in achieving the Company's long-term strategy of funding more auto related assets through its bank, which has recently been renamed Ally Bank (Ally). DBRS views each of these actions positively, yet risks remain. In total the actions improve the Company's capital position, access to liquidity, and ultimately provide a degree of stability to GMAC's balance sheet, while removing much of the near-term refinancing risk. Moreover, DBRS believes GMAC's agreement to provide financing to Chrysler related products will enhance and diversify GMAC's retail and wholesale auto loan origination volume. However, negative rating pressure lingers. DBRS remains concerned about the uncertainties regarding the form and timing of the resolution of a General Motors (GM) restructuring and any impact this may have on GMAC's business and relationship with GM. Further, although the US Treasury has stated that it may provide additional capital support to GMAC, the form and timing of such support remains unclear. DBRS's review with Developing Implications recognizes the positive developments, however significant uncertainties remain. DBRS continues to review GMAC's future earnings potential, its liquidity profile, and its capitalization. Included in its review, DBRS will assess GMAC's ability to return to profitability. DBRS sees this as a challenge given the current operating environment. Moreover, DBRS will review GMAC's business plan and its strategy for the medium-term given the recent restructuring in the auto industry and the changing landscape for Residential Capital LLC, its residential mortgage lending and servicing unit. Furthermore, DBRS will assess the Company's plans to raise the additional required capital under S-CAP. A full-text copy of DBRS' rating actions is available at no charge at http://ResearchArchives.com/t/s?3d44 GOTTSCHALKS INC: To Auction Real Property Assets on May 28 ---------------------------------------------------------- Gottschalks Inc. will auction on May 28, 2009, Thursday, its interest in a non-residential real property. Last week, the Debtor received a $17.7 million offer for its real property from Forever 21 Retail Inc. under the purchase and sale agreement filed before the U.S. Bankruptcy Court for the District of Delaware. Forever 21 said it will deposit $1.77 million to the Debtor a day after the agreement is fully executed to secure the performance of its obligations. The sale is expected to close by June 12, 2009. The Debtor supports Forever 21's offer, according to the Troubled Company Reporter on May 25, 2009. Forever 21 then dropped the Debtor's River Park from its bid. Shopping center representatives have objected because some tenants have contracts that require a full-service, upscale department store in River Park, TCR noted. Forever 21 said that it would rather focus on plans for Fashion Fair mall, TCR added. The Debtor said it will to pay Forever 21 $354,000 if it accepts a different bid for the stores, TCR relates. A full-text copy of the Debtor and Forever's purchase and sale agreement is available for free at http://ResearchArchives.com/t/s?3d42 Headquartered in Fresno, California, Gottschalks Inc. (Pink Sheets: GOTTQ.PK) -- http://www.gottschalks.com/-- is a regional department store chain, operating 58 department stores and three specialty apparel stores in six western states. Gottschalks offers better to moderate brand-name fashion apparel, cosmetics, shoes, accessories and home merchandise. The Company filed for Chapter 11 protection on January 14, 2009 (Bankr. D. Del. Case No. 09-10157). O'Melveny & Myers LLP represents the Debtor in its Chapter 11 case. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., will serve as the Debtors' co-counsel. The Debtor selected Kurtzman Carson Consultants LLC as its claims agent. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $288,438,000 in total assets and $197,072,000 in total debts as of January 3, 2009. HILL COUNTRY: Can Access Cash Securing BofA Loan Until June 5 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas authorized Hill Country Galleria, L.P., to access cash securing repayment of loan from Bank of America, N.A., until 5:00 p.m., Central Time, on June 5, 2009. As of Hill Country's petition date, the Debtor was indebted $160,132,413 to Bank of America, N.A., as agent for secured lenders under the construction loan dated July 27, 2006. The Debtor granted the secured lenders a (i) mortgage on the Debtor's real property and a security interest in the improvements, fixtures, and other rights related thereto, and (ii) a security interest in all, or substantially all, of the Debtor's assets. The Debtor also assigned certain of its rights to leases, rents, contracts, and other agreements related to the real property. The Debtor is authorized to grant the secured lenders: (a) valid, perfected, and enforceable, replacement liens on and first priority postpetition security interest in all assets of the Debtor; (b) an allowed administrative superpriority expense lien on all of the postpetition collateral; and (c) the right to continue to accrue and add to the prepetition indebtedness expenses of the secured lenders incurred and to be incurred in connection with negotiating, monitoring and implementing the cash collateral. About Hill Country Galleria, L.P. Bee Cave, Texas-based Hill Country Galleria, L.P., is a single asset real estate company. The Company was formed for the purpose of acquiring land and constructing, operating, managing, leasing and disposing of a real estate development project known as Hill Country Galleria. 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. HRP MYRTLE: HRP Creative Sues FPI MB for Trademark Infringement --------------------------------------------------------------- The Associated Press reports that HRP Creative Services, the original owner of the former Hard Rock Park in South Carolina, has filed a lawsuit against the new owners, FPI MB Entertainment, for trademark infringement. Court documents say that HRP Creative Services is asking for unspecified monetary damages. The AP relates that HRP Creative claims that FPI MB is using intellectual property that belongs to the complainant, like rides and the park's layout. Based in Myrtle Beach, South Carolina, HRP Myrtle Beach Holdings, LLC, owned and operated Hard Rock Park, a rock-n-roll theme park in Myrtle Beach, South Carolina, under a long-term license agreement with Hard Rock Cafe International (USA), Inc. The Company and six of its affiliates filed for Chapter 11 protection on Sept. 24, 2008 (Bankr. D. Del. Lead Case No. 08-12193). Attorneys at Richards, Layton & Finger represented the Debtors as counsel. Attorneys at Dorsey & Whitney LLP represented the Official Committee of Unsecured Creditors. HRP said in its bankruptcy petition it had $100 million to $500 million in assets and debts. The Chapter 11 case was converted to liquidation proceedings under Chapter 7 in January 2009. INDUSTRIAL ENTERPRISES: Wants 15-Day Extension for SALs and SOFAs ----------------------------------------------------------------- Industrial Enterprises of America, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend the time to file their schedules of assets and liabilities and statements of financial affairs by an additional 15 days. The Debtors relate that they needed more time to gather information necessary to properly and accurately complete the schedules and statements. The Debtors add that one of their secured lenders took possession of the assets of Pitt Penn Oil Co., LLC, including its computers and servers which made the preparation of the Schedules and Statements very difficult and time consuming. Pittsburgh, Pennsylvania-based Industrial Enterprises of America, Inc. filed for Chapter 11 on May 1, 2009, (Bankr. D. Del. Case No. 09-11508) Pace Reich, Esq., represents the Debtors in their restructuring efforts. The Debtors listed total assets of $50,476,697 and total debts of $17,853,997. JSM4JC INVESTMENT: Case Summary & 1 Largest Unsecured Creditor -------------------------------------------------------------- Debtor: JSM4JC Investment Properties, LLC 18199 Stoneridge St., Unit F South Bend, IN 46637 Bankruptcy Case No.: 09-32460 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- JSM Auto, Inc. 09-32287 Jeffrey Scott Miller And Wanda Janell Miller 09-32299 Chapter 11 Petition Date: May 25, 2009 Court: United States Bankruptcy Court Northern District of Indiana (South Bend Division) Judge: Harry C. Dees, Jr. Debtor's Counsel: James K. Tamke, Esq. 115 S. Lafayette Blvd., Suite 512 South Bend, IN 46601 Tel: (574) 289-8788 Email: tamke@attorney-cpa.com Estimated Assets: $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 a list of its 1 largest unsecured creditor, is available for free at: http://bankrupt.com/misc/innb09-32460.pdf The petition was signed by Jeffrey S. Miller, president of the Company. KA AND KM DEVELOPMENT: Gets Initial OK on Latham Shuker as Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida authorized KA and KM Development, Inc., to employ Elizabeth A. Green and the law firm of Latham Shuker Eden & Beaudine LLP as counsel. Latham Shuker is expected to: -- advise the Debtor's rights and duties in the Chapter 11 case; -- prepare pleadings related to the Chapter 11 cases; and -- take any and all other necessary action incident to the proper preservation and administration of the estate. Prior to the commencement of the Chapter 11 case, Latham Shuker received an advanced retainer of $93,322 for postpetition services and expenses in connection with the Chapter 11 case. The Debtor paid Latham Shuker $93,493, on a current basis, for services rendered prepetition. The Court ordered that until September 17, 2009, Latham Shuker may bill against the retainer on a monthly basis for 100% of its costs and for 70% of its fees as they accrue without further order but subject to final review and approval of the Court. The Court will conduct a status conference on October 21, 2009, at 10:15 a.m., at which time the Court will hear any applications for interim fees and reimbursement of expenses. Objections, if any, are due 20 days from the date of service of this order. To the best of the Debtor's knowledge, Latham Shuker is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Latham Shuker Eden & Beaudine LLP 390 North Orange Avenue, Suite 600 Orlando, FL 32801 Tel: (407) 481-5800 Fax: (407) 481-5801 About KA and KM Development, Inc. Orlando, Florida-based KA and KM Development, Inc., aka Villas at Lake Eve and Lake Eve Resort filed for Chapter 11 on May 6, 2009 (Bankr. M. D. Fla. Case No. 09-06245). Elizabeth A. Green, Esq., at Latham Shuker Eden & Beaudine LLP, represents the Debtor in its restructuring efforts. The Debtor has assets and debts both ranging from $10 million to $50 million. KA AND KM DEVELOPMENT: Wants Access to Cash Securing SunTrust Loan ------------------------------------------------------------------ KA and KM Development, Inc., asks the U.S. Bankruptcy Court for the Middle District of Florida for authority to access cash securing repayment of loan from SunTrust Bank; and grant adequate protection to the secured lender. The Debtor owes SunTrust Bank $38,200,000 under a construction loan agreement and mortgage note dated June 21, 2007. The loan is secured by a mortgage, assignment of rents and leases and security agreement dated June 1, 2007. The loan is also secured by a collateral assignment of purchase and sale contracts, permits and rights, dated June 21, 2007. The Debtor estimates that it will require the use of $189,111 of cash collateral to maintain operations for the next four weeks. The Debtor proposes to grant SunTrust a replacement lien to the same validity, extent, and priority as its prepetition lien. About KA and KM Development, Inc. Orlando, Florida-based KA and KM Development, Inc., aka Villas at Lake Eve and Lake Eve Resort filed for Chapter 11 on May 6, 2009 (Bankr. M. D. Fla. Case No. 09-06245). Elizabeth A. Green, Esq., at Latham Shuker Eden & Beaudine LLP, represents the Debtor in its restructuring efforts. The Debtor has assets and debts both ranging from $10 million to $50 million. INTERLAKE MATERIAL: Can File Plan Until August 3 ------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has extended Interlake Material Handling, Inc., et al.'s exclusive period to file a plan to August 3, 2009, and their exclusive period to solicit acceptances of that plan to September 30, 2009. This is the first extension of the Debtors' exclusive periods. In papers filed with the Court, the Debtors related that they have still to complete discussions with the official committee of unsecured creditors and their lenders regarding the terms of a consensual Chapter 11 plan. The Debtors said they hope to reach agreement on the principal terms of a plan within the next few weeks. About Interlake Material Headquartered in Naperville, Illinois, Interlake Material Handling, Inc. -- http://www.interlake.com/-- makes steel storage racks in the United States. The Company and three of its affiliates filed for protection on January 5, 2009 (Bankr. D. Del. Lead Case No. 09-10019). Winston & Strawn LLP represents the Debtors in their restructuring efforts. Young, Conaway, Stargatt & Taylor LLP is the Debtors' local counsel. Lake Pointe Partners, LLC is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the claims agent for the Debtors. Lowenstein Sandler PC represents the official committee of unsecured creditors as counsel. Stevens & Lee, P.C., represents the committee as Delaware counsel. When the Debtors filed for protection from their creditors, they listed assets between $50 million and $100 million, and debts between $100 million and $500 million. INTERLAKE MATERIAL: Seeks RSS Holdings-Led Sale of J&D Assets ------------------------------------------------------------- Interlake Material Handling, Inc. and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve procedures for the sale of a portion of J&D & Company, LLC's assets, free and clear of all liens and encumbrances, to RSS Holdings, LLC, subject to higher or otherwise better offers at an auction. J&D is a wholly owned subsidiary of United Fixtures Company, Inc. which, in turn, is a wholly owned subsidiary of UFC Interlake Holding Co. J&D filed for bankruptcy on May 20, 2009, in order to effectuate the sale of of a significant portion of its assets. RSS Holdings has agreed to purchase the assets related to J&D's Retail Service Solutions Division, including inventory, accounts receivable, fixed assets, permits, intellectual property, and Purchased Contracts, for a purchase price of approximately $3,200,000, comprised of $900,000 in cash and the assumption of specified Assumed Liabilities. The Debtors also ask the Court for authority to pay purchaser a break-up fee of $55,000, in the event of the sale to another bidder at the auction. Debtors state that two insiders of J&D will be minority owners of the purchaser: Jeff Nicklaus, the current president of J&D, and Robert Blake-Ward, a current vice presidentof J&D. Messrs. Nicklaus and Blake-Ward will both also hold officer positions in purchaser upon consummation of the sale. A copy of the proposed bid procedures and asset purchase agreement with RSS Holdings LLC, dated as of May 20, 2009, is available at http://bankrupt.com/misc/Interlake,APA.pdf The Debtors have not disclosed any other details pertaining to the sale, including bid deadlines and the date of the proposed auction sale. About Interlake Material Headquatered in Naperville, Illinois, Interlake Material Handling, Inc. -- http://www.interlake.com-- makes steel storage racks in the United States. The Company and three of its affiliates filed for protection on January 5, 2009 (Bankr. D. Del. Lead Case No. 09-10019). Winston & Strawn LLP represents the Debtors in their restructuring efforts. Young, Conaway, Stargatt & Taylor LLP is the Debtors' local counsel. Lake Pointe Partners, LLC is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the claims agent for the Debtors. Lowenstein Sandler PC represents the official committee of unsecured creditors as counsel. Stevens & Lee, P.C., represents the committee as Delaware counsel. When the Debtors filed for protection from their creditors, they listed assets between $50 million and $100 million, and debts between $100 million and $500 million. IRISH PUB: Case Summary & 15 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Irish Pub - Arrowhead LLC 5821 E. Larkspur Dr. Scottsdale, AZ 85254 Bankruptcy Case No.: 09-11124 Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. ------ -------- Irish Pub - Arrowhead Land LLC 09-11137 Chapter 11 Petition Date: May 21, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Chief Judge Redfield T. Baum Sr. Debtor's Counsel: John J. Hebert, Esq. Polsinelli Shughart, P.C. 3636 N. Central Avenue, Suite 1200 Phoenix, AZ 85012 Tel: (602) 650-2011 Fax: (602) 391-2546 Email: jhebert@polsinelli.com Wesley Denton Ray, Esq. Polsinelli Shughart 3636 N Central Ave #1200 Phoenix, AZ 85012 Tel: (602) 650-2005 Fax: (602) 926-2751 Email: wray@polsinelli.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 15 largest unsecured creditors is available for free at: http://bankrupt.com/misc/azb09-11124.pdf The petition was signed by Steve Goumas. LANDAMERICA FINANCIAL: Court OKs Sale of Warranty Biz to BPG ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Virginia authorized LandAmerica Financial Group Inc. to sell its home warranty and inspection businesses Buyers Protection Group Inc. for $12.2 million. According to Bill Rochelle at Bloomberg, the price rose $2.2 million at auction, where Buyers Protection was the stalking horse bidder. LandAmerica filed papers last week asking the Bankruptcy Court to approve a performance incentive plan for 17 employees. The Debto says that the PIP is designed to maximize the assets available for distribution to creditors by providing incentives to 17 key employees, to assist the Debtors with the completion of specific tasks critical to these cases. 13 of the 17 key employees are not officers of LFG, and none of the key employees exercise control over the Debtors or perform any executive function. If all Bonus Awards are paid in full, the maximum aggregate cost of PIP will be $499,571.00, or approximately $20,387 per Key Employee. About LandAmerica Financial Group LandAmerica Financial Group, Inc. is a leading provider of real estate transaction services with offices nationwide and a vast network of active agents. LandAmerica and its affiliates operate through approximately 700 offices and a network of more than 10,000 active agents throughout the world, including Mexico, Canada, the Caribbean, Latin America, Europe and Asia. LandAmerica Financial Group and its affiliate LandAmerica 1031 Exchange Services, Inc., filed for Chapter 11 protection November 26, 2008 (Bankr. E.D. Va. Lead Case No. 08-35994). Dion W. Hayes, Esq., and John H. Maddock III, Esq., at McGuireWoods LLP, are the Debtors' bankruptcy counsel. In its bankruptcy petition, LFG listed total assets of $3,325,100,000, and total debts of $2,839,800,000 as of September 30, 2008. On March 6, 2009, affiliate LandAmerica Assessment Corporation, aka National Assessment Corporation, filed its own petition for Chapter 11 relief. Affiliate LandAmerica Title Company filed for for Chapter 11 relief on March 27, 2009. Bankruptcy Creditors' Service, Inc., publishes LandAmerica Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by LandAmerica Financial and its affiliate LandAmerica 1031 Exchange Services, Inc. (http://bankrupt.com/newsstand/or 215/945-7000) LIA REALTY: Case Summary & Largest Unsecured Creditor ----------------------------------------------------- Debtor: Lia Realty, LLC P O Box 2439 Lenox, MA 01240 Bankruptcy Case No.: 09-30867 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court District of Massachusetts (Springfield) Judge: Henry J. Boroff Debtor's Counsel: Richard I. Isacoff, Esq. 100 North Street, Suite 405 Pittsfield, MA 01201 Tel: (413) 443-8164 Fax: (413) 443-8171 Email: rii@isacofflaw.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its largest unsecured creditor, is available for free at: http://bankrupt.com/misc/mab09-30867.pdf The petition was signed by James Sarvis, president of the Company. LYNNWOOD SEPTIC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Lynnwood Septic Tank Co., Inc. dba Torset Excavating 1030 Ave. D #2 Snohomish, WA 98290 Bankruptcy Case No.: 09-15013 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Lawrence K. Engel, Esq. Attorney at Law 40 Lake Bellevue, Suite 100 PO Box 580 Bellevue, WA 98009 Tel: (425) 688-2999/ (425) 454-5500 Email: engelpleadings@hotmail.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/wawb09-15013.pdf The petition was signed by Ladon Torset, president of the Company. MAGNUS OIL AND GAS: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Magnus Oil and Gas Corporation aka ranscontinental Minerals Corp 10077 Grogan's Mill Road The Woodlands, TX 77380 Bankruptcy Case No.: 09-33544 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Southern District of Texas (Houston) Judge: Marvin Isgur Debtor's Counsel: Gregory Louis Sweeney, Esq. Attorneys & Counselors 9525 Katy Fwy, Suite 450 Houston, TX 77024 Tel: (713) 464-3000 Email: gsweeneylaw@juno.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 its 20 largest unsecured creditors when it filed its petition. The petition was signed by Arturo Hernandez, vice president - finance of the Company. MAHALO ENERGY: Files for CCAA Protection; Alger is Monitor ---------------------------------------------------------- Mahalo Energy Ltd. obtained an order May 22 from the Court of Queen's Bench of Alberta, Judicial District of Calgary for protection under the Companies' Creditors Arrangement Act (Canada). Alger & Associates Inc. was appointed monitor under the order. Subject to the order, proceedings by creditors and others cannot be continued or commenced without the consent of Mahalo and the monitor, or leave of the court. A copy of the order will be made available on the monitor's Web site. Management of the Company has been exploring strategic alternatives since the fall of 2008 and has had discussions with a number of interested parties. To date, no satisfactory offers or proposals have been made and management has concluded that no transaction is likely to take place in the immediate future. The order permits Mahalo to remain in possession and control of its property, carry on its business and retain employees while the Company continues its previously announced process to evaluate strategic alternatives available to the Company, including the sale of Mahalo or its assets. Mahalo is a junior, unconventional natural gas company, focusing on the development and production of coal bed methane and shale gas prospects in the United States. MAHALO ENERGY: U.S. Unit Files for Chapter 11, to Sell to Lenders ----------------------------------------------------------------- Mahalo Energy Ltd. announced May 22 that its wholly owned subsidiary Mahalo Energy (USA) Inc., a corporation organized under the laws of the State of Delaware, is filing for Chapter 11 bankruptcy protection under the United States Bankruptcy Code. Management of the Company has been exploring strategic alternatives since the fall of 2008 and has had discussions with a number of interested parties. To date, no satisfactory offers or proposals have been made and management has concluded that no transaction is likely to take place in the immediate future, Mahalo Energy Ltd. said. The order permits Mahalo to remain in possession and control of its property, carry on its business, retain employees and other service providers and continue with its previously announced process to evaluate strategic alternatives available to the Company, including a sale of Mahalo or its assets. The Company also announced that it has entered into a financing commitment with Ableco Finance, LLC for debtor-in-possession financing totaling approximately $2 million for its U.S. subsidiary. These arrangements are subject to customary approval of the Courts in the United States and will allow the Company to meet current operating needs, including wages, benefits and other operating expenses. According to Bloomberg's Bill Rochelle, Mahalo Energy (USA) Inc., has a contract for the sale of the assets to secured lenders Ableco Finance LLC and Wells Fargo Foothill LLC. The sale contract provides for the lenders to receive the assets in exchange for up to $73 million in debt plus $350,000 cash. The agreement requires having the bankruptcy court approve sales procedures within 18 days, with an auction not more than 30 days later and completion of the sale 30 days after that. About Mahalo Energy Mahalo Energy Ltd. is a junior, unconventional natural gas company, focusing on the development and production of coal bed methane and shale gas prospects in the United States. Mahalo Energy's U.S. unit, Mahalo Energy (USA), Inc., filed for Chapter 11 on May 21, 2009 (Bank. E. D. Oklahoma Case No. 09- 80795). Stephen W. Elliott, Esq., at Kline, Kline, Elliot & Bryant, PC, is counsel to the Debtor. In its Chapter 11 petition, the Debtor estimated $10 million to $50 million in assets and $100 million to $500 million in debts. MUZAK HOLDINGS: Court Set July 2 Bar Date for Proofs of Claim ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has established July 2, 2009, at 5:00 p.m. prevailing Eastern Time, as the general bar date for the filing of proofs of claim, including 503(b)(9) claims, in Muzak Holdings LLC, et al.'s bankruptcy cases. The governmental bar date is August 10, 2009, at 5:00 p.m. prevailing Eastern Time. Proofs of claim must be filed, including supporting documentation, by U.S. Mail or other hand delivery system, so as to be actually received by Epiq Bankruptcy Solutions, LLC, the Debtors' claims and noticing agent, on or before the general bar date or the governmental bar date, as applicable, at this address: a) if by first-class mail: Muzak Holdings LLC Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5269 New York, NY 10150-5269 b) If by Hand Delivery or Overnight mail: Muzak Holdings LLC Claim Processing Center c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New York, NY 10017 Proofs of claim submitted by facsimile or electronic mail will not be accepted. 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. MUZAK HOLDINGS: Muzak LLC Files Schedules of Assets and Debts ------------------------------------------------------------- Muzak LLC filed with the U.S. Bankruptcy Court for the District of Delaware on May 18, 2009, amended schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------------ ------------- A. Real Property $254,408 B. Personal Property $119,270,080 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $101,325,000 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority Claims $353,309,100 ------------ ------------ TOTAL $119,524,489 $454,634,100 A copy of Muzak LLC's amended schedules is available at: http://bankrupt.com/misc/MuzakLLC.AmendedSAL.pdf 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. NOBLE INTERNATIONAL: Creditors Appeal ArcelorMittal-Led Auction --------------------------------------------------------------- Noble International Ltd. obtained approval from the U.S. Bankruptcy Court for the Eastern District of Michigan of a sale process for its European business, under which ArcelorMittal SA, its prior owner, will be the stalking horse bidder at a May 28 auction. Noble is scheduled to seek approval of the sale to Luxembourg-based ArcelorMittal or to the winning bidder at a hearing on May 29. While Noble International has not yet convened an auction, the official committee of unsecured creditors has said it is taking an appeal to the District Court from Judge Marci B. McIvor's order approving the auction procedures. The Creditors Committee wants the sale processed stayed pending its appeal because, among other things, the Bankruptcy Court "erred, as a matter of fact and of law, in granting the Sale Motion and in entering the Order." As reported by the TCR on May 21, 2009, Noble International has signed a deal under which it will sell all issued and outstanding Shares of Noble European Holdings BV together with the direct and indirect holdings and assets of Noble BV to steelmaker ArcelorMittal absent higher and better bids for the business. The Debtor has selected ArcelorMittal's offer -- payment of $2.1 million cash, assumption of all debt, aggregating EUR80.24 million, and retention by Noble BV of the proceeds of its sale of its 49% equity interest in Sumisho Noble (Thailand) Co., Ltd., and certain related contract rights -- as the stalking horse bid. While the amount of the minimum bid by rival bidders was not stated, the sale motion provides that a competing bidder must provide a bona fide offer that would result in greater economic value being received for the benefit of the Noble's creditors than under the APA. A copy of the Asset Purchase Agreement signed by Noble International and ArcelorMittal is available for free at: http://bankrupt.com/misc/Noble_AM_APA.pdf Noble BV owns approximately 17 operating entities in Europe, engaged in the production of automotive parts. Noble BV, as of December 31, 2008, had assets in excess of $235 million and a stated equity of $49 million per the Asset Purchase Agreement, the Committee points out. The Creditors Committee asserts the Bankruptcy Court committed error in for these reasons: -- The Court approved a negotiated break-up fee (negotiated between the Debtors and ArcelorMittal but over the objection of the Committee) of $2,100,000 based on its determination that the consideration being paid by ArcelorMittal under the APA was in the $150,000,000 range, rather than $2,100,000, as set forth in the APA governing the Sale. -- In establishing the break-up fee at $2,100,000, the incremental overbid of the first incremental bidder was established to be $2,100,000 higher than the initial bid of ArcelorMittal, also coincidentally in the amount of $2,100,000. Therefore, a competitive bidder would be required to place an initial opening bid of $4,300,000, based on the setting of the break-up fee at $2,100,000. If the sale is permitted to proceed with this artificially high incremental bid amount, the bidding could be seriously chilled. -- The Court made certain factual findings or assumed certain factual representations provided through competing offers of proof, instead of taking testimony to resolve the conflicting issues of fact raised in the conflicting offers of proof. The Creditors Committee previously tried, but failed, to block the proposed sale process, saying that it unduly hurried process that unfairly favors ArcelorMittal, an insider and the proposed Stalking Horse Bidder. ArcelorMittal is the 58.8% majority shareholder of Noble International and holds or controls all board seats. ArcelorMittal was the prior owner of Noble Europe before ArcelorMittal sold it to Noble for approximately $300 million in 2007. According to the Committee, ArcelorMittal now seeks to repurchase the same assets, within approximately 2 years time for $292.9 million less. About Noble International Headquartered in Warren, Michigan, Noble International, Ltd. -- http://www.nobleintl.com/home.html/-- provides flat, tubular, shaped and enclosed formed structures to automotive original equipment manufacturers and their suppliers, for use in automobile applications, including doors, fenders, body side panels, pillars, bumpers, door beams, load floors, windshield headers, door tracks, door frames, and glass channels. Noble International and its affiliates filed for Chapter 11 protection on April 15, 2009 (Bankr. E. D. Mi. Case No. 09-51720). The Debtors proposed Foley & Lardner LLP as their general bankruptcy counsel. Conway Mackenzie, Inc., has been tapped as the Debtors' financial advisors. The official committee of unsecured creditors is represented by Jaffe Raitt Heuer & Weiss, P.C. The Debtors disclosed total assets of $190,763,000 and total debts of $38,691,000, as of January 10, 2009. NORWOOD PROMOTIONAL: Taps Kirkland & Ellis as Bankruptcy Counsel ---------------------------------------------------------------- Norwood Promotional Products Holdings Inc. and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware's consent to employ Kirkland & Ellis LLP as restructuring counsel. K&E will, among other things: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses; b) advise and consult on the conduct of the Chapter 11 cases, including all of the legal and administrative requirements of operating in Chapter 11; and c) attend meetings and negotiate with representatives of creditors and other parties-in-interest. K&E will coordinate its efforts with Young Conaway Stargatt & Taylor, LLP, as co-counsel to avoid duplication of efforts. K&E received a $750,000 advanced retainer and placed the amount in its general cash account. As of the petition date, the Debtors do not owe any amounts for legal services rendered prepetition. David L. Eaton, a partner at K&E, tells the Court that the hourly rates of K&E personnel are: Partners $550 - $1,045 Of Counsel $390 - $965 Associates $320 - $660 Paraprofessionals $110 - $280 Mr. Eaton adds that he and Lisa G. Laukitis will have primary responsibility in the Chapter 11 cases. Mr. Eaton assures the Court that K&E is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Eaton can be reached at: Kirkland & Ellis LLP 300 North LaSalle Chicago, IL 60654 Tel: +1 312-862-2000 Fax: +1 312-862-2200 About Norwood Promotional Norwood Promotional Products -- http://www.norwood.com/-- is an industry leading supplier of imprinted promotional products. The Company offers nearly 5,000 products and is a market leader in several of the industry's major product categories. Norwood also offers hundreds of products on 24-Hour service at no extra charge. Norwood Promotional Products Holdings, Inc. and five affiliates filed for Chapter 11 on May 5 (Bankr. D. Del. Case No. 09-11547). Judge Peter Walsh is handling the case. The Debtors hired Margaret Whiteman Greecher, Esq., and Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, as counsel. Epiq Bankruptcy Solutions, LLC, has been hired as claims and noticing agent. The Company said it had assets of $150 million against debt of $295 million. NORWOOD PROMOTIONAL: Proposes Young Conaway as Co-Counsel --------------------------------------------------------- Norwood Promotional Products Holdings Inc. and its debtor- affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Young Conaway Stargatt & Taylor, LLP, as co-counsel. Young Conaway will, among other things: a) provide legal advice with respect to the Debtors' powers and duties as debtor-in-possession in the continued operation of their business and management of their properties; b) pursue the confirmation of a Chapter 11 Plan of Reorganization and approval of the corresponding solicitation procedures and disclosure statement; and c) prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports and other legal papers. Young Conaway discussed division of responsibilities with Kirkland & Ellis LLP, the proposed counsel, to avoid duplication of efforts. Young Conaway received a $50,000 retainer in connection with the planning and preparation of a Chapter 11 filing and the postpetition representation. The amount of retainer was increased by $60,000. A portion of the retainer was applied to cover the fees and expenses incurred by Young Conaway through the commencement of the Chapter 11 cases. The remainder of the retainer will constitute a general retainer as security for postpetition services and expenses. The hourly rates of Young Conaway's personnel are: Pauline K. Morgan, partner $600 Edmon L. Morton, partner $480 David R. Hurst, partner $480 Margaret Whiteman Greecher, associate $310 Jaime Luton, associate $265 Tracy Amoroso, paralegal $125 Ms. Morgan assures the Court that Young Conaway is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Ms. Morgan can be reached at: Young Conaway Stargatt & Taylor, LLP The Brandywine Building, 17th Floor 1000 West Street, Wilmington, DE 19801 About Norwood Promotional Norwood Promotional Products -- http://www.norwood.com/-- is an industry leading supplier of imprinted promotional products. The Company offers nearly 5,000 products and is a market leader in several of the industry's major product categories. Norwood also offers hundreds of products on 24-Hour service at no extra charge. Norwood Promotional Products Holdings, Inc., and five affiliates filed for Chapter 11 on May 5 (Bankr. D. Del. Case No. 09-11547). Judge Peter Walsh is handling the case. The Debtors hired Margaret Whiteman Greecher, Esq., and Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, as counsel. Kirkland & Ellis LLP is general counsel and Mackinax Partners LLC is the restructuring consultant. Epiq Bankruptcy Solutions, LLC, has been hired as claims and noticing agent. The Company said its assets are $150 million while debt totals $295 million. NORWOOD PROMOTIONAL: Wants Additional 30 Days in Schedules Filing ------------------------------------------------------------------ Norwood Promotional Products Holdings Inc. and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend for an additional 30 days, the time to file their: i) schedules of assets and liabilities; ii) schedules of current income and expenditures; iii) schedules of executory contracts; iv) unexpired leases; and v) statement of financial affairs. The Debtors needed more time to finish the compilation of information required to complete its schedules and statements. About Norwood Promotional Norwood Promotional Products -- http://www.norwood.com/-- is an industry leading supplier of imprinted promotional products. The Company offers nearly 5,000 products and is a market leader in several of the industry's major product categories. Norwood also offers hundreds of products on 24-Hour service at no extra charge. Norwood Promotional Products Holdings, Inc. and five affiliates filed for Chapter 11 on May 5 (Bankr. D. Del. Case No. 09-11547). Judge Peter Walsh is handling the case. The Debtors hired Margaret Whiteman Greecher, Esq., and Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor, as counsel. Kirkland & Ellis LLP is general counsel and Mackinax Partners LLC is the restructuring consultant. Epiq Bankruptcy Solutions, LLC, has been hired as claims and noticing agent. The Company said its assets are $150 million while debt totals $295 million. PILGRIM'S PRIDE: Completes Foster Farms Sale, Repays DIP Credit --------------------------------------------------------------- According to Bill Rochelle at Bloomberg, Pilgrim's Pride Corp. completed the sale of a processing plant in Farmerville, Louisiana. The report relates that the final price was $72.3 million, lower than the originally announced $80 million, because of inventory adjustments. Pilgrim's Pride said in a statement last week that it has fully repaid the $450 million financing for the Chapter 11 reorganization. Proceeds from the Foster Farms sale are being held for use in operations, Bloomberg says. As reported by the TCR on May 22, Pilgrim's Pride obtained permission from Judge D. Michael Lynn of the U.S. District Court for the Northern District of Texas, Forth Worth Division, to sell their Farmerville, Louisiana facility to Foster Poultry Farms. Assets included in the sale are: (1) A chicken processing plant, which includes the plant, truck shop, micro laboratory, dry goods, storage warehouse and all its attached structures, and a protein conversion plant in Farmerville; a hatchery and an administrative office in Choudrant, Louisiana; a hatchery in Athens, Louisiana; and a feed mill in Arcadia, Louisiana; and (2) All of PPC's and its subsidiaries' right, title and interest in and to all of the Purchased Contracts and the other Assets and Properties located at the Facilities or the use of which is necessary or primarily related to the operation of the Facilities, including, among others: -- the real property used primarily in the operation of the Facilities; -- all packaging, ingredients, maintenance, repair and operations and product supply inventories that are owned by PPC or its subsidiaries located at the Facilities; and -- inventory, if any, owned by PPC or its subsidiaries located at the Facilities. About Pilgrim's Pride Corp. Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- produces, distributes and markets poultry processed products through retailers, foodservice distributors and restaurants in the U.S., Mexico and in Puerto Rico. In addition, the Company owns 34 processing plants in the United States and 3 processing plants in Mexico. The processing plants are supported by 42 hatcheries, 31 feed mills and 12 rendering plants in the United States and 7 hatcheries, 4 feed mills and 2 rendering plants in Mexico. Moreover, the company owns 12 prepared food production facilities in the United States. The Company employs about 40,000 people and has major operations in Texas, Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee, Virginia, West Virginia, Mexico, and Puerto Rico, with other facilities in Arizona, Florida, Iowa, Mississippi, and Utah. Pilgrim's Pride Corp. and six other affiliates filed Chapter 11 petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No. 08-45664). The Debtors' operations in Mexico and certain operations in the United States were not included in the filing and continue to operate as usual outside of the Chapter 11 process. Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A. Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges LLP, as bankruptcy counsel. The Debtors have also tapped Baker & McKenzie LLP as special counsel. Lazard Freres & Co., LLC, is the company's investment bankers and William K. Snyder of CRG Partners Group LLC as chief restructuring officer. The Company's claims and noticing agent is Kurtzman Carson Consulting LLC. A nine-member committee of unsecured creditors has been appointed in the case. As of December 27, 2008, the Company had $3,215,103,000 in total assets, $612,682,000 in total current liabilities, $225,991,000 in total long-term debt and other liabilities, and $2,253,391,000 in liabilities subject to compromise. Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride Bankruptcy News. The newsletter tracks the Chapter 11 proceeding of Pilgrim's Pride Corp. and its various affiliates. PLAZA MANAGEMENT: New Jersey Court Approves Ch. 15 Petition ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey granted Plaza Management Overseas SA relief under Chapter 15 and ruled that Plaza Management's bankruptcy in the British Virgin Islands is the "foreign main proceeding," Bloomberg's Bill Rochelle reported. According to the report, Plaza Management obtained the ruling after it reached a settlement with an affiliate of Zurich- based Credit Suisse Group. The Credit Suisse affiliate had previously argued in filing with the U.S. Bankruptcy Court for the District of New Jersey that there is "substantial evidence that the Debtors have attempted to orchestrate a fraud" on lenders. Credit Suisse points to what it called a "sham" settlement in which assets worth more than $340 million were transferred to a related party. Saying it invested more than $750 million, Credit Suisse then said that Plaza Management is not eligible for Chapter 15 because the procedures in the British Virgin Islands don't have court supervision and aren't bankruptcy or insolvency proceedings. Plaza Management Overseas SA is a family-owned manager of investment portfolios. It filed for Chapter 16 protection on March 18 (Bankr. D. N.J., Case No. 09-16545). PLIANT CORP: GE Capital to Arrange $135MM Revolving Loan for Exit ----------------------------------------------------------------- Pliant Corporation and its affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authorization (a) to enter into an engagement letter with GE Capital Markets, Inc. and General Electric Capital Corporation, and to pay the fees contemplated therein and (b) at the conclusion of GE's due diligence process, to enter into a fully underwritten exit financing commitment for a revolving loan facility in an aggregate principal amount of up to $135 million and pay any fees in connection therewith. The Debtors believe that GE's proposal contains the most attractive terms for the Debtors' revolving loan needs. A full-text copy of the engagement letter with GE and proposed term sheet for the $135 million revolving credit facility is available at: http://bankrupt.com/misc/Pliant.GE.EngagementLetter.pdf Pliant Corp. filed with the Court on May 12, 2009, proposed revisions to their First Amended Joint Plan of Reorganization. A key component of that Plan is the entry of the reorganized Debtors into an Exit Financing Credit Agreement to provide sufficient funding to meet their cash obligations under the Plan. The Debtors tell the Court that they have estimated that they will require exit facilities in the aggregate committed amount of at least approximately $225 million and that they expect that the exit financing will likely have three principal components: (1) an asset-based revolving loan facility in the aggregate committed amount of between $125 and $150 million, (2) a term loan facility in the aggregate principal amount between $90 and $100 million and (3) a foreign facility in the aggregate committed amount between $10 and $15 million. The GE Capital proposal addresses the asset-based revolving loan facility, which is the first component. 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 February 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. PEOPLES COMMUNITY: Barred From Selling and Servicing Mortgages -------------------------------------------------------------- Peoples Community Bank, the wholly-owned banking subsidiary of Peoples Community Bancorp, Inc., received on May 20, 2009, a notice that the Bank's eligibility to sell mortgage loans to and service mortgages for the Federal Home Loan Mortgage Corporation has been terminated. Pursuant to the FHLMC Single-Family Seller/Servicer Guide, the Bank will timely file an appeal of this decision. The termination of the Bank's ability to service loans for FHLMC will result in the charge-off of the Bank's servicing asset which amounted to $453,000 at March 31, 2009. This charge-off will be reflected on the Company's operations for the three and six months ended June 30, 2009. Peoples Community Bancorp reported a net loss from operations of $4.4 million for the quarter ended March 31, 2009. Peoples Community Bancorp had $675.4 million in total assets, $694.2 million in total liabilities and $18.8 million in stockholders' deficit as of March 31, 2009. As reported by the Troubled Company Reporter on May 25, 2009, Peoples Community Bancorp and Peoples Community Bank entered into a Purchase and Assumption Agreement with First Financial Bank, N.A., the wholly owned subsidiary of First Financial Bancorp., for the sale of certain of People Community's assets for approximately $12 million. The Assets to be sold includes 17 of People Community's branch offices located in southwestern Ohio and southeastern Indiana; approximately $260 million of certain business and consumer loans and other assets; and the assumption of approximately $310 million of the Bank's deposits and certain other liabilities by First Financial. Completion of the proposed transaction is subject to the approval of the Office of Thrift Supervision. The transaction contemplated by the Agreement is expected to close during the third quarter of 2009, subject to the receipt of all necessary regulatory approvals and the satisfaction of certain other closing conditions as set forth in the Agreement. Peoples Community was considered critically undercapitalized under the regulatory framework for prompt corrective action. Following completion of the proposed transaction, the Bank expects to return to a well capitalized status in accordance with the capital restoration plan filed by the Bank with the Office of Thrift Supervision on April 30, 2009. The Bank will continue to conduct banking operations from its two branches in Lebanon, Ohio, and expects to retain approximately $325 million in assets, including certain loans, investment securities and real estate assets as well as certain liabilities. Going Concern Doubt The report of BKD, LLP, in Cincinnati, Ohio, the Company's independent registered public accounting firm for the year ended December 31, 2007, contained an explanatory paragraph as to the Company's ability to continue as a going concern primarily due to the Company's current lack of liquidity to repay its obligation under an outstanding line of credit with Integra Bank, N.A. The line of credit is secured by all outstanding shares of common stock of the Bank. On April 2, 2008, the Company and the Bank each consented to the terms of Cease and Desist Orders issued by the OTS, which require the Company and the Bank to, among other things, file with the OTS updated business plans. The Orders prohibit the Bank from paying cash dividends to the Company without the prior consent of the OTS and the Company will be able to rely upon only a limited amount of existing cash and cash equivalents for its liquidity. Without the ability to rely on dividends from the Bank, the Company will require funds from other capital sources to meet its obligations such as restructuring or replacing the line of credit. The report of Plante & Moran, PLLC, in Columbus, Ohio, for the year ended December 31, 2008, also contained an explanatory paragraph as to the Company's ability to continue as a going concern. Reasons cited include the Bank's low level of capital, exposure to significant regulatory sanctions and significant losses from operations. Integra Loan Default As of December 31, 2007, Peoples Community was not in compliance with certain covenants of its line of credit with Integra. On June 30, 2008, the loan matured and was due in full. Effective July 24, 2008, the Company entered into a forbearance agreement with Integra regarding its $17.5 million line of credit. The forbearance was negotiated to extend the repayment period and allow the Company to structure a transaction which would result in repayment of the $17.5 million line of credit. On December 31, 2008, the Company and Integra extended the forbearance period to January 31, 2009. The forbearance period has expired and the Company is in default on its line of credit with Integra. The matter remains unresolved. About Peoples Community Bancorp Headquartered in West Chester, Ohio, Peoples Community Bancorp Inc. (NasdaqGM: PCBI) -- http://www.pcbionline.com/-- is the holding company for Peoples Community Bank, a federally chartered savings bank with 19 full service offices in Butler, Warren and Hamilton counties in southwestern Ohio and Dearborn and Ohio counties in southeastern Indiana. POMARE LTD: Court to Consider Sale to Maui Divers on June 22 ------------------------------------------------------------ The U.S. Bankruptcy Court, District of Hawaii in Honolulu will convene a hearing June 22 to consider approval of the sale of the business of case Pomare Ltd., doing business as Hilo Hattie. Maui Divers of Hawaii Ltd. has agreed to (i) pay $1 million to cover the cost of curing defaults on contracts that are part of the sale, and (ii) invest $2 million equity in the business. Competing bids for the business will be accepted at the sale hearing. According to Bill Rochelle of Bloomberg, the official committee of unsecured creditors found the buyer. The Committee was given authority from the bankruptcy judge to locate a buyer after the creditors filed a motion for the appointment of a Chapter 11 trustee. The sale, Bloomberg relates, has a deadline to close by June 22, the date when the bankruptcy judge is scheduled to decide if there should be a trustee or the case converted to a liquidation in Chapter 7. Based in Honolulu, Hawaii, Pomare Ltd. dba. Hilo Hattie, , a tourist-destination retailer with operations chiefly in Hawaii. The Company filed for Chapter 11 relief on October 2, 2008 (Bankr. D. Hawaii Case No. 08-01448). Chuck C. Choi, Esq., and James A. Wagner, Esq., at Wagner Choi & Verbrugge, represent the Debtor as counsel. Alexis M. McGinness, Esq., and Ted N. Pettit, Esq., at Case Lombardi & Pettit, represent the Official Committee of Unsecured Creditors. In its schedules, the Debtor listed total assets of $15,825,657, and total debts of $13,767,047. PRECISION PARTS: Exclusive Plan Filing Period Extended to July 13 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has extended Precision Parts International Services Corp., et al.'s exclusive period to file a plan through July 13, 2009, and the period to solicit acceptances of that plan through September 14, 2009. The Debtors related that while they have completed the sale of a substantial portion of their assets, additional assets remain to be disposed. The sale of substantially all of the Debtors' assets to Cerion, LLC, closed on March 25, 2009. The Debtors informed the Court that they will use the extension to examine strategic alternatives with regard to their remaining assets and to complete discussions with their lenders regarding disposition of the sale proceeds. Headquartered in Rochester Hills, Michigan, Precision Parts International Services Corp. -- http://www.precisionparts.com/-- sells products to major north American automotive and non- automotive original equipment manufacturers and Tier 1 and 2 suppliers. PPI and its units operate six manufacturing facilities throughout north America, including a facility in Mexico operated on their behalf by Intermex Manufactura de Chihuahua under a shelter and logistics agreement. The Company and eight of its affiliates filed for Chapter 11 protection on December 12, 2008 (Bankr. D. Del. Lead Case No. 08-13289). Attorneys at Pepper Hamilton LLP are bankruptcy counsel to the Debtors. Alvarez & Marsal North America LLC is the Debtor's financial advisors and Kurtzman Carson Consultants LLC is the claims, noticing and balloting agent. When PPI Holdings, Inc. filed for protection from its creditors, it listed assets of between $100 million and $500 million, and the same range of debt. PRINCETON OFFICE: Ordered to File Chapter 11 Plan by June 15 ------------------------------------------------------------ The Hon. Michael B. Kaplan of the U.S. Bankruptcy Court for the District of New Jersey has ordered Princeton Office Park, LP, to file a Chapter 11 plan of reorganization and explanatory disclosure statement by June 15, 2009. Judge Kaplan also ordered the Debtor to comply with the operating guidelines issued by the Office of the United States Trustee particularly as they apply to the filing of operating reports and payment of the required quarterly fees to the U.S. Trustee pursuant to Sec. 1930 of the U.S. Code. Headquartered in Morristown, New Jersey, Princeton Office Park, LP, is a real estate development company. The assets of the Company consist of approximately 220,000 square feet of building on 37 acres located at 4100 Quakerbridge Road, Township of Lawrence, Mercer County, in New Jersey. The property has been re- zoned for multi-family residental use at 10 units per acre or 370 units. The Company filed for Chapter 11 protection on September 9, 2008 (Bankr. D. N.J. Case No. 08-27149). Melissa A. Pena, Esq., at Norris, McLauglin & Marcus, in New York, and Morris S. Bauer, Esq., at Norris McLaughlin & Marcus PA, in Somerville, New Jersey, represent the Debtor as counsel. In its schedules, the Debtor listed total assets of $25,000,000 and total debts of $2,517,370. PROPERTIES PLUS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Properties Plus, Inc dba Century 21 Properties Plus Inc 118 W Richardson Ave Summerville, SC 29483-6022 Bankruptcy Case No.: 09-03908 Chapter 11 Petition Date: May 25, 2009 Court: United States Bankruptcy Court District of South Carolina (Charleston) Judge: Chief Judge John E. Waites Debtor's Counsel: Kevin Campbell, Esq. PO Box 684 890 Jonnie Dodds Blvd Mt. Pleasant, SC 29465 Tel: (843) 884-6874 Email: kcampbell@campbell-law-firm.com Estimated Assets: $100,000 to $500,000 Estimated Debts: $1,000,000 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/scb09-03908.pdf The petition was signed by Timothy J. Rash, owner and president of the Company. PSYSTAR CORP: Files for Chapter 11 Bankruptcy Protection -------------------------------------------------------- Rachel Feintzeig at The Wall Street Journal reports that Psystar Corp. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida, blaming its collapse on the downturn in consumer spending amid the worldwide financial crisis. Court documents say that Psystar listed less than $50,000 in assets and $100,000 to $500,000 in liabilities. Psystar faces a lawsuit by Apple Inc. in the U.S. District Court in San Jose, WSJ relates. According to WSJ, Apple sued Psystar just three months after the Company started selling its "Open Computer" with Max OS X in April 2008. WSJ states that Apple claims that Psystar has breached the software license agreement protecting Apple's Leopard operating system and that the Company's product was originally called the "OpenMac." WSJ reports that Psystar has denied that it produces computers that run a "modified, unauthorized version of the Leopard operating system." Psystar said that it called the product OpenMac for a few hours, WSJ relates. Psystar said in court documents that its model applies to the Mac operating system and to various Microsoft and Linux operating systems. Psystar, according to WSJ, said that its products are an attractive alternative to computers from products like those of Apple, due to their lower prices. Doral, Florida-based Psystar Corp. makes computers that are capable of running Apple Inc.'s Macintosh operating system. It sells its computer over the Internet. R & L NEVADA: Case Summary & 3 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: R & L Nevada Holdings, LLC 1275 Stardust Road Reno, NV 89503 Bankruptcy Case No.: 09-51584 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Jeffrey L. Hartman, Esq. Hartman & Hartman 510 West Plumb Lane, Suite B Reno, NV 89509 Tel: (775) 324-2800 Fax: (775) 324-1818 Email: notices@bankruptcyreno.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 3 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-51584.pdf The petition was signed by Roger Baylocq, co-manager of the Company. REPUBLIC WESTERN: A.M. Best Upgrades Ratings to 'B+' From 'B' ------------------------------------------------------------- A.M. Best Co. has upgraded the financial strength rating to B+ (Good) from B (Fair) and issuer credit ratings (ICR) to "bbb-" from "bb" of the Republic Western Insurance Group and its members, which include Republic Western Insurance Company in Phoenix, Arizona, and its wholly owned subsidiary, North American Fire & Casualty Insurance Company in Mandeville, Louisiana. The outlook for all ratings is stable. The ratings reflect Republic Western's solid risk-adjusted capitalization and improved underwriting and operating performance in recent years. The improved performance and subsequent capitalization accumulation were driven by management's corrective actions, including cost reductions, rate refinement and the discontinuation of all non-U-Haul business. Furthermore, Republic Western's publicly traded parent, AMERCO [NASDAQ: UHAL], does not rely on its insurance operations to meet its debt service and holding company obligations, which will further benefit growth in surplus. These positive factors are offset by historically poor underwriting performance and weakened capitalization, primarily due to significant adverse loss reserve development from discontinued programs. Despite these concerns, the rating outlook is based on A.M. Best's expectation that improved operating results will continue to offset the historical earnings drag generated from the group's discontinued operations and contribute to surplus growth over the near term. RETAIL PRO: Seeks Sept. 11 Extension of Plan Filing Deadline ------------------------------------------------------------ Retail Pro Inc. and its affiliates have asked the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive period to file a Chapter 11 plan until Sept. 11, 2009, and their period to solicit acceptances for that plan until Nov. 11, 2009. As reported by the TCR on May 14, 2009, Retail Pro Inc. has sold its assets to secured creditors Laurus Master Fund Ltd. and Midsummer Investment Ltd., which together are owed $19.6 million. The U.S. Bankruptcy Court for the District of Delaware has authorized the sale to Laurus/Midsummer for $400,000 in cash plus a credit bid using their secured claims. In its extension request, Retail Pro said they are diligently working on the essential terms of what they hope to be a consensual plan of liquidation. The Court will convene a hearing on June 22 to consider Retail Pro's first request for an extension of its exclusive periods. Objections are due May 29. About Retail Pro Based in La Jolla, California, Retail Pro Inc. -- http://www.retailpro.com/-- operated a chain of retail stores. The Company and three of its affiliates filed for Chapter 11 protection on January 10, 2009 (Bankr. D. Del. Lead Case No. 09-10087). Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young & Jones, represent the Debtors in their restructuring efforts. The Debtors have tapped View Partners Capital LLC as their investment banker and Kurtzman Carson Consultants LLC as their notice, claims and solicitation agent. As of November 30, 2008, the Debtors have $24,652,353 in total assets and $28,867,462 in total debts. RGB TRANSPORTATION: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: RGB Transportation Company, Inc. 1034 Humble Place El Paso, TX 79915 Bankruptcy Case No.: 09-31102 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Western District of Texas (El Paso) Judge: Bankruptcy Judge Leif M. Clark Debtor's Counsel: Sidney J. Diamond, Esq. 3800 N Mesa C-4 El Paso, TX 79902 Tel: (915) 532-3327 Fax: (915) 532-3355 Email: usbc@sidneydiamond.com Total Assets: $8,444,895 Total Debts: $7,036,810 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/txwb09-31102.pdf The petition was signed by Rufus B. Brijalba, Jr., president of the Company. RICHARD L. WORSHAM: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Joint Debtors: Richard L. Worsham dba Branden's Farming dba Worsham & Associates dba Richard L. Worsham Marketing Director Terri D. Worsham aka Terri L. Worsham aka Terri Worsham aka Terri Delilah Lee-Worsham aka Terri Lee Worsham P.O. Box 68 Mansfield, TN 38236 Bankruptcy Case No.: 09-12088 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Western District of Tennessee (Jackson) Judge: G. Harvey Boswell Debtors' Counsel: Robert B. Vandiver, Jr., Esq. 227 W. Baltimore P.O. Box 906 Jackson, TN 38302-0906 Tel: (731) 554-1313 Email: bankruptcy@robvandiver.com Total Assets: $3,782,257 Total Debts: $4,428,371 A full-text copy of the Debtors' petition, including a list of their 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/tnwb09-12088.pdf The petition was signed by the Joint Debtors. RIVER WEST: Court Orders Closure of Plaquemine Hospital ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District Louisiana ordered the River West LP's hospital in Plaquemine, Louisiana, to be closed on May 15. According to Bill Rochelle at Bloomberg, after the Debtor was sent to Chapter 11 by creditors, a patient care ombudsman was appointed to oversee the quality of care being provided. When the ombudsman reported there was a "risk of imminent harm to patients," the bankruptcy judge ordered the hospital closed immediately. The involuntary petitioners said it was imperative for the hospital to remain in operation since it's the only such facility in the surrounding parishes. River West LP owns the River West Medical Center in Plaquemine, Louisiana. Creditors filed an involuntary Chapter 11 petition against River West LP in February. In response, River West filed for Chapter 11 in March (Bankr. M. D. La. Case No. 09-10146). ROSE HILL GREENHOUSES: Case Summary & 20 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: Rose Hill Greenhouses, Inc. 4429 Jackson Road Eminence, KY 40019 Bankruptcy Case No.: 09-30414 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Eastern District of Kentucky (Frankfort) Debtor's Counsel: Dean A. Langdon, Esq. 200 N Upper St Lexington, KY 40507 Tel: (859) 231-5800 Email: langdonbk@wisedel.com Megan M. McLain, Esq. The Barton House 200 North Upper Street Lexington, KY 40507 Tel: (859) 231-5800 Email: mmclain@wisedel.com Total Assets: $3,998,556 Total Debts: $6,982,085 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/kyb09-30414.pdf The petition was signed by Robert L. Mathis, president of the Company. RYLAND GROUP: Amends American Stock Transfer Rights Agreement ------------------------------------------------------------- The Ryland Group, Inc., has executed an amendment to the Rights Agreement by and between the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, dated as of December 18, 2008. The Company adopted the Rights Agreement to protect stockholder value by attempting to diminish the risk that the Company's ability to use its net operating losses and unrealized losses to reduce potential future federal income tax obligations may become substantially limited. Prior to the Amendment, the beneficial ownership percentage threshold to trigger exercisability of the rights was based on Rule 13d-3 of the Securities Exchange Act of 1934, as amended. As amended, the rights generally become exercisable if a person or group becomes the beneficial owner of 4.9% or more of the Company's then-outstanding common stock, whether directly or indirectly, and including shares such person would be deemed to constructively own or which otherwise would be aggregated with shares owned by such person pursuant to Section 382 of the Internal Revenue Code. The amended definition of beneficial ownership is consistent with the charter amendment that was recently adopted by the Company and approved by its stockholders to restrict transfers of common stock that also is designed to preserve the value of the Company's NOLs under Section 382 of the Internal Revenue Code. A full-text copy of the Amendment to the Rights Agreement dated as of May 18, 2009, between The Ryland Group, Inc. and American Stock Transfer & Trust Company, LLC, as Rights Agent, is available at no charge at http://ResearchArchives.com/t/s?3d40 About Ryland Group Based in Calabasas, California and founded in 1967, The Ryland Group Inc. (NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's largest homebuilders and a leading mortgage-finance company. The Company currently operates in 28 markets across the country and has built more than 275,000 homes and financed more than 230,000 mortgages since its founding in 1967. As of March 31, 2009, the Company had $1.65 billion in total assets and $994.8 million in total liabilities. * * * The Troubled Company Reporter on May 5, 2009, said Standard & Poor's Ratings Services assigned its 'BB-' rating and '4' recovery rating to a $230 million 8.4% senior unsecured note offering due May 2017 that is guaranteed, jointly and severally, by substantially all of The Ryland Group Inc.'s direct and indirect wholly owned homebuilding subsidiaries. The '4' recovery rating indicates S&P's expectation for an average recovery of principal (30%-50%) in the event of a payment default. Fitch Ratings assigned a 'BB' rating to the 2017 Notes. The Rating Outlook is Negative. Fitch said the issue will be ranked on a pari passu basis with all other senior unsecured debt, including RYL's $200 million unsecured bank credit facility. The approximately $225.4 million in proceeds will be used for general corporate purposes. On May 4, 2009, Moody's Investors Service assigned a Ba3 rating to the 2017 Notes. Moody's also affirmed the company's existing ratings, including its corporate family rating and probability of default rating at Ba3, and the ratings on its various issues of senior unsecured notes at Ba3. Ryland's speculative grade liquidity rating was raised to SGL-2 from SGL-3. The rating outlook remains negative. RYLAND GROUP: Swaps $12.5MM in 2015 Notes for Common Stock ---------------------------------------------------------- The Ryland Group, Inc., last week entered into privately negotiated agreements with holders of its 5-3/8% Senior Notes due 2015, pursuant to which the Company agreed to exchange shares of its common stock, par value $1.00 per share for the Notes. Between May 7 and May 26, 2009, the Company issued or expects to have issued an aggregate of 584,000 shares of its Common Stock in exchange for $12.5 million in aggregate principal amount of the Notes. The Company will not receive any cash proceeds as a result of the exchange of its Common Stock for the Notes. The Company may engage in additional exchanges in respect of its outstanding indebtedness if and as favorable opportunities arise. The Company has issued or will issue the Common Stock pursuant to the exemption from the registration requirements afforded by Section 3(a)(9) of the Securities Act of 1933, as amended. About Ryland Group Based in Calabasas, California and founded in 1967, The Ryland Group Inc. (NYSE: RYL) -- http://www.ryland.com/-- is one of the nation's largest homebuilders and a leading mortgage-finance company. The Company currently operates in 28 markets across the country and has built more than 275,000 homes and financed more than 230,000 mortgages since its founding in 1967. As of March 31, 2009, the Company had $1.65 billion in total assets and $994.8 million in total liabilities. * * * The Troubled Company Reporter on May 5, 2009, said Standard & Poor's Ratings Services assigned its 'BB-' rating and '4' recovery rating to a $230 million 8.4% senior unsecured note offering due May 2017 that is guaranteed, jointly and severally, by substantially all of The Ryland Group Inc.'s direct and indirect wholly owned homebuilding subsidiaries. The '4' recovery rating indicates S&P's expectation for an average recovery of principal (30%-50%) in the event of a payment default. Fitch Ratings assigned a 'BB' rating to the 2017 Notes. The Rating Outlook is Negative. Fitch said the issue will be ranked on a pari passu basis with all other senior unsecured debt, including RYL's $200 million unsecured bank credit facility. The approximately $225.4 million in proceeds will be used for general corporate purposes. On May 4, 2009, Moody's Investors Service assigned a Ba3 rating to the 2017 Notes. Moody's also affirmed the company's existing ratings, including its corporate family rating and probability of default rating at Ba3, and the ratings on its various issues of senior unsecured notes at Ba3. Ryland's speculative grade liquidity rating was raised to SGL-2 from SGL-3. The rating outlook remains negative. SALYER AMERICAN: Banks Refuse to Lend Money to Pay Growers ---------------------------------------------------------- The Packer reports that banks, citing Salyer American Fresh Foods' financial status, have refused to lend the Company money to pay for crops under cultivation, citing the Company's financial status. According to The Packer, lenders claim that Salyer American hasn't paid back a $35 million made in 2007. The Packer relates that Steve Franson, the court-appointed receiver who took over Salyer American early this month, said that he was told by the primary lenders "that they would not advance (the Company) any additional funds" because they stand to lose "significant sums of money to defaults." Mr. Franson said in a statement that he will be collecting money over the next several months for accounts receivable, securing, and selling Salyer American's assets that are subject to liens, evaluating and paying legitimate claims of growers who sold commodities to or through Salyer American, and paying other legitimate debts. The Packer states that Salyer American told its growers in April to stop planting. According to the report, Salyer American reportedly cut seven positions on May 15 and may close based on Mr. Franson's determination. Salyer American Fresh Foods -- http://www.salyeramerican.com/-- is owned by the Salyer family and is based in California. Salyer American first began as a premium commodity grower and shipper in 1986 and has since evolved into one of the largest grower/shippers of top-grade vegetables nationwide. SENCORP: Court Extends Schedules & Statements Filing Until June 14 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Ohio extended until June 14, 2009, SENCORP and its debtor-affiliates' time to file its schedules and statements. The extension is in the best interests of the Debtors' estates, their creditors, and other parties-in-interest. Cincinnati, Ohio-based SENCORP sells air-powered nail guns and fasteners. The Company and its affiliates filed for Chapter 11 on May 8, 2009 (Bankr. S. D. Ohio Lead Case No. 09-12869). Latham & Watkins LLP represent the Debtors in their restructuring efforts. The Debtors propose to hire Morris-Anderson & Associates Ltd. as financial advisor; Mesirow Financial Inc. as investment banker and The Garden City Group as claims agent. The Debtors have assets and debts both ranging from $100 million to $500 million. SENCORP: Court to Consider Bank of America DIP Financing Today -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio authorized, on an interim basis, SENCORP and its debtor-affiliates to: i) obtain credit and incur debt with Bank of America, N.A., as administrative agent in accordance with that certain Postpetition Third Amended and Restated Credit Agreement; ii) grant first priority, valid, priming, perfected and enforceable liens and superpriority claims to the DIP Agent, for the benefit of the DIP Lenders, against all property of the Debtors' estates; iii) use cash collateral, grant security interests, mortgages and other liens and superpriority claims in order to provide adequate protection to the prepetition agent and prepetition lenders. The final hearing on the Debtors' motion is scheduled for May 27, 2009, at 10:000 a.m. SENCORP, Senco Products, Inc., were parties to the Second Amended and Restated Credit Agreement dated March 30, 2007, with various financial institutions and Bank of America, N.A., successor by merger to LaSalle Bank National Association. The borrowers' obligations to the prepetition lenders under the prepetition credit agreement were and are guaranteed by Sentron Medical, Inc., Senco International, Inc., Nexicor LLC, Tyrex, LLC, Global Fastening Solutions, LLC, Omnifast LLC. The Debtors owe, as of the petition date, $23,000,000 in loans and other financial accommodations made by the prepetition lenders to the Debtors pursuant to the prepetition financing documents, inclusive of accrued and unpaid interest and fees and expenses incurred in connection therewith, well as all other Obligations arising under the prepetition financing documents as provided in the prepetition financing documents. To secure the prepetition indebtedness, each of the borrowers and guarantors granted to the prepetition agent, for the security interests in all personal property of the Debtors, and all proceeds thereof. Pursuant to the terms of the prepetition financing documents, the Debtors agreed to make all payments on the accounts directly to a post office box, designated by and under the exclusive control of the prepetition agent, and the Debtors would establish an account with the prepetition agent into which the Debtors would immediately deposit all payments received by the Debtors. Pre-bankruptcy, the Debtors attempted to obtain postpetition financing proposals from other lenders, but were unable to obtain postpetition financing in the form of unsecured credit allowable as an administrative expense. In addition, due to the Debtors' urgent financial constraints, the Debtors are unable to obtain, in the ordinary course of business or otherwise, credit, except from the DIP Lenders on the terms and conditions contained in the DIP Facility. Salient Terms of the DIP Agreement The Borrowers: Sencorp, and Senco Products, Inc. Guarantors: Sentron Medical, Inc., Senco International, Inc., Nexicor LLC, DuraSpin Products, LLC, Global Fastening Solutions, LLC, Omnifast LLC, Senco Export, Inc., SenSource Global Sourcing, LLC, Agrifast, LLC, S C FINANCIAL, INC., and Gregg Laboratories, Inc. Agent/Lenders: Bank of America, N.A., as DIP agent and lender and the other lenders from time to time part to the DIP Credit Agreement. Use of Proceeds/ Roll-Up Provisions: Proceeds of the DIP Facility will be used to (i) fund the Borrower's working capital and other general corporate needs and to pay (ii)(A) the Prepetition Indebtedness arising from the Revolving Loans and (B) the Term Loans. Term/Maturity Date: The DIP Facility terminates on the earliest of these: (a) the entry of an order approving the sale of substantially all of any of the Debtors' assets; (b) the effective date of any Plan of Reorganization; (c) conversion of any of the Chapter 11 cases to a case under Chapter 7 of the Bankruptcy Code; (d) appointment of a trustee or examiner in any of these Chapter 11 cases; (e) dismissal of any of the Chapter 11 cases; (f) upon the occurrence of a Termination Event; and (g) July 24, 2009. Interest Rate: At all times while a Loan is a Base Rate Loan, it will bear interest at a rate per annum equal to the sum of the Base Rate from time to time in effect plus the Base Rate Margin for the Term Loan or the Revolving Loan, as applicable; and At all times while a Loan is a LIBOR Loan, it will bear interest at a rate per annum equal to the sum of the LIBOR Rate applicable to each Interest Period for the Loan plus the LIBOR Margin for the Term Loan or the Revolving Loan, as applicable. The default interest rate during the continuance of an Event of Default will be at an additional 2% per annum. Liens/Security: All amounts owing by the Borrowers and the DIP Guarantors will be secured by a first priority perfected priming security interests in, and liens on, all prepetition and postpetition property and assets of the Debtors, subject only to the Carve-Out and any Permitted Lien that is senior in priority to Prepetition Agent's Liens. In addition, the DIP Agent will be granted allowed superpriority administrative expense claims having priority over any and all administrative expenses, except for the Carve-Out. Adequate Protection: The Prepetition Agent, on behalf of the Prepetition Lenders, will receive valid, binding, enforceable and perfected liens in all Postpetition Collateral, excluding, Avoidance Actions, to secure an amount of Prepetition Indebtedness equal to the sum of the aggregate amount of diminution in value of the Prepetition Collateral, whether by depreciation, use, sale, loss, decline in market price, or otherwise. The Adequate Protection Liens are subject only to: (i) the DIP Liens; (ii) the Carve- Out; and (iii) any Permitted Lien that is senior in priority to Prepetition Agent's Liens. Upon the expiration of the Investigation Period, and so long as no claims are brought against the Prepetition Agent and the Prepetition Lenders, the Adequate protection Liens and the Adequate Protection Obligations will be discharged and released. Fees: The Borrowers agree to pay on the Third Restatement Effective Date to the DIP Agent for the account of each Lender based upon the Lender's Pro Rata Share of the Revolving Commitment a fully-earned, non-refundable commitment fee of $240,000. The Borrowers agree to pay on the earliest to occur of (i) July 17, 2009, (ii) the entry of an order approving the sale of all or substantially all of the Loan Parties' assets, or (iii) the effective date of a Plan of Reorganization approved by an order of the Bankruptcy Court, to the DIP Agent for the account of each Lender based upon the Lender's Pro Rata Share of the Revolving Commitment a fully-earned, non-refundable exit fee of $480,000. Carve-Out: Carve-Out means: (a) the unpaid fees of the clerk of the Bankruptcy Court or District Court, as applicable, and of the U.S. Trustee and (b); (b) upon the occurrence of a termination event between the petition date and June 12, 2009, (1) the aggregate allowed unpaid fees and expenses payable to Latham & Watkins LLP, as counsel to the Debtors, in an amount will not exceed $375,000, less any amounts actually paid to Latham & Watkins LLP after the petition date, (2) the aggregate allowed unpaid fees and expenses payable to Frost Brown Todd LLC, as counsel to the Debtors, in the amount not to exceed $75,000, less any amounts actually paid to Frost Brown Todd LLC after the petition date, (3) the aggregate allowed unpaid fees and expenses to Morris-Anderson & Associates Ltd., as financial advisor to the Debtors, in the amount not to exceed $87,500, less any amounts actually paid to Morris-Anderson & Associates Ltd. after the petition date, and (4) the aggregate allowed unpaid fees and expenses payable to The Garden City Group, Inc., as the Debtors' claims and noticing agent, in the amount not to exceed $87,500, less any amounts actually paid to The Garden City Group, Inc., after the petition date,(c) upon the occurrence of a termination event after June 12, 2009, (i) the aggregate allowed unpaid fees and expenses payable to Latham & Watkins LLP, as counsel to the Debtors, in an amount will not exceed $750,000, less any amounts actually paid to Latham & Watkins LLP after the petition date, (ii) the aggregate allowed unpaid fees and expenses payable to Frost Brown Todd LLC, as counsel to the Debtors, in the amount not to exceed $150,000, less any amounts actually paid to Frost Brown Todd LLC after the petition date, (iii) the aggregate allowed unpaid fees and expenses payable to Morris-Anderson & Associates Ltd., as financial advisor to the Debtors, in the amount not to exceed $175,000, less any amounts actually paid to Morris-Anderson & Associates Ltd. after the petition date, and (4) the aggregate allowed unpaid fees and expenses payable to The Garden City Group, Inc., as the Debtors' claims and noticing agent, in the amount not to exceed $175,000, less any amounts actually paid to The Garden City Group, Inc., after the petition date, and (d) the aggregate allowed unpaid fees and expenses payable to professional persons retained pursuant to Court order by Committee incurred but unpaid prior to the occurrence of a termination event in the amount not to exceed $50,000. The agreement contained certain events of default. About SENCORP Cincinnati, Ohio-based SENCORP sells air-powered nail guns and fasteners. The Company and its affiliates filed for Chapter 11 on May 8, 2009 (Bankr. S. D. Ohio Lead Case No. 09-12869). Latham & Watkins LLP represent the Debtors in their restructuring efforts. The Debtors propose to hire Morris-Anderson & Associates Ltd. as financial advisor; Mesirow Financial Inc. as investment banker and The Garden City Group as claims agent. The Debtors have assets and debts both ranging from $100 million to $500 million. SENCORP: Receives Temporary OK to Hire Frost Brown as Co-Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio authorized, on an interim basis, SENCORP and its debtor-affiliates to employ Frost Brown Todd LLC as bankruptcy co-counsel. A hearing will be held before Hon. J. Vincent Aug, Jr. in Courtroom No. 1 of the U.S. Bankruptcy Court, 221 E. Fourth Street, Atrium Two Suite 800, Cincinnati, Ohio on June 8, 2009, at 2:00 p.m. (prevailing Eastern time.) Objections, if any, are due 4:00 p.m. (prevailing Eastern time) on June 2, 2009. Frost Brown is expected to: a) advise the Debtors of their powers and duties as debtors-in- possession in the continued operation of their businesses and properties; b) provide assistance, advice and representation concerning a Plan of Reorganization, a disclosure statement relating thereto, and the solicitation of consents to and confirmation of the plan; c) advise the Debtors in connection with any sale of assets; d) provide assistance, advice and representation concerning any further investigation of the assets, liabilities and financial condition of the Debtors that may be required; e) represent the Debtors at hearings or matters pertaining to their affairs as debtors-in-possession; f) prosecute and defend litigation matters and other matters that might arise during and related to these Chapter 11 cases; g) provide counseling and representation with respect to the assumption or rejection of executory contracts and leases and other bankruptcy-related matters arising from these Chapter 11 cases; h) render advice with respect to the myriad general corporate and litigation issues as they relate to these Chapter 11 cases, including, but not limited to, real estate, ERISA, securities, corporate finance, tax and commercial matters health services matters; and i) perform other legal services as may be necessary and appropriate for the efficient and economical administration of these Chapter 11 cases, including handling matters where L&W is prohibited from assisting the Debtors due to the existence of a conflict of interest. The Debtors related that Frost Brown's primary role in these Chapter 11 Cases will involve (i) serving as local counsel and assisting L&W in matters involving local law, (ii) handling discrete matters where L&W is prohibited from assisting the Debtors due to the existence of a conflict of interest, and (iii) handling other matters as agreed to by Frost Brown and L&W. Frost Brown will coordinate its representation of the Debtors with Latham & Watkins LLP, the proposed counsel to the Debtors to avoid duplication of services. Ronald E. Gold, Esq., a member of Frost Brown, told the Court that the firm has received a $35,000 general retainer on March 26, 2009; a $25,000 general retainer on April 30, 2009; and an $8,000 general retainer on May 7, 2009. The source of the FBT retainer was cash from operating funds of the Debtors. In addition, the Debtors provided Frost Brown $13,507 for filing fees. As of the petition date, the FBT retainer had a remaining balance of $11,934. Mr. Gold added that pre-bankruptcy, Frost Brown received $280,691 on account of its prepetition services to the Debtors. As of the Petition Date, Frost Brown has no accrued or unpaid fees or expenses owing by the Debtors. Mr. Gold assured that Frost Brown is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Gold can be reached at: Frost Brown Todd LLC 2200 PNC Center 201 East Fifth Street Cincinnati, OH 45202 Tel: (513) 651-6800 Fax: (513) 651-6981 About SENCORP Cincinnati, Ohio-based SENCORP sells air-powered nail guns and fasteners. The Company and its affiliates filed for Chapter 11 on May 8, 2009 (Bankr. S. D. Ohio Lead Case No. 09-12869). Latham & Watkins LLP represent the Debtors in their restructuring efforts. The Debtors propose to hire Morris-Anderson & Associates Ltd. as financial advisor; Mesirow Financial Inc. as investment banker and The Garden City Group as claims agent. The Debtors have assets and debts both ranging from $100 million to $500 million. SENCORP: Gets Temporary OK to Hire Latham & Watkins as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio authorized, on an interim basis, SENCORP and its debtor-affiliates to employ Latham & Watkins LLP as counsel. A hearing to consider final approval of the Application will be held before Hon. J. Vincent Aug, Jr. in Courtroom No. 1 of the U.S. Bankruptcy Court, 221 E. Fourth Street, Atrium Two Suite 800, Cincinnati, Ohio on June 8, 2009, at 2:00 p.m. (prevailing Eastern time). Objections, if any, are due 4:00 p.m. on June 2, 2009. L&W is expected to: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; c) take all necessary action to protect and preserve the Debtors' estate, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors, and representing the Debtors' interests in negotiations concerning all litigation in which the Debtors are involved, including, objections to claims filed against the estates; d) prepare all motions, applications, answers, orders, reports, and papers necessary to the administration of the Debtors' estates; e) take any necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of the Debtors' Plan of Reorganization; f) advise the Debtors in connection with any potential sale of assets; g) appear before this Court, any appellate courts, and the U.S. Trustee and protecting the interests of the Debtors' estates before the Courts and the U.S. Trustee; and h) perform all other necessary legal services for the Debtors in connection with these Chapter 11 Cases, including (i) analyzing the Debtors' leases and executory contracts and the assumption or assignment thereof, (ii) analyze the validity of liens against the Debtors, and, (iii) advise on corporate, litigation, environmental, and other legal matters. L&W assured the Debtors that there will be no duplication of efforts Frost Brown Todd LLC, the Debtors' proposed co-counsel, or any other counsel of the Debtors retained in the Chapter 11 cases. The hourly rates of L&W personnel are: Partners $650 - $975 Of Counsel $650 - $750 Associates $295 - $590 Paraprofessionals $170 - $360 The Debtors related that L&W professionals having primary responsibility in the Chapter 11 cases are Josef S. Athanas, Stephen R. Tetro II and Caroline A. Reckler. Pre-bankruptcy, L&W received a retainer of $1,150,000. The source of the retainer was cash from the Debtors' revolver under its prepetition credit facility. L&W has not received any additional fees or retainers from the Debtors within the period of one year prior to the petition date. As of the petition date, L&W's retainer balance is $15,000. The Debtors do not owe L&W any amounts for legal services rendered before the petition date. Mr. Athanas assured the Court that L&W is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Athanas can be reached at: Latham & Watkins LLP 223 S. Wacker Drive Chicago, IL 60606 About SENCORP Cincinnati, Ohio-based SENCORP sells air-powered nail guns and fasteners. The Company and its affiliates filed for Chapter 11 on May 8, 2009 (Bankr. S. D. Ohio Lead Case No. 09-12869). The Debtors have tapped Frost Brown Todd LLC, as co-counsel. The Debtors have also engaged Morris-Anderson & Associates Ltd. as financial advisor; Mesirow Financial Inc. as investment banker; and The Garden City Group as claims agent. The Debtors have assets and debts both ranging from $100 million to $500 million. SHARP PLUMBING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Sharp Plumbing, Inc. 4842 N. Berg Street North Las Vegas, NV 89031 Bankruptcy Case No.: 09-18505 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Mike K. Nakagawa Debtor's Counsel: Zachariah Larson, Esq. Larson & Stephens 810 S. Casino Center Blvd., Suite 104 Las Vegas, NV 89101 Tel: (702) 382-1170 Fax: (702) 382-1169 Email: ecf@lslawnv.com Total Assets: $2,247,929 Total Debts: $3,778,657 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-18505.pdf The petition was signed by Henry Sharp, president of the Company. SIGNAL POINT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Signal Point Development, Inc. aka Signal Point Marina 100 Marina Lane Guntersville, AL 35976 Bankruptcy Case No.: 09-41518 Chapter 11 Petition Date: May 25, 2009 Court: United States Bankruptcy Court Northern District Of Alabama (Anniston) Debtor's Counsel: Steven Vincent Smith, Esq. PO Box 363 Albertville, AL 35950 Tel: (256) 894-6493 Fax: (256) 894-6591 Email: smith52701@Bellsouth.net Total Assets: $912,200 Total Debts: $763,828 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/alnb09-41518.pdf SOURCE INTERLINK: IRS to Block Plan Unless Tax Returns Filed ------------------------------------------------------------ Internal Revenue Services holding $12.1 million in prepetition claims asserts that the prepackaged joint Chapter 11 plan of reorganization filed on April 28, 2009, by Source Interlink Companies Inc. and its debtor-affiliates before the U.S. Bankruptcy Court for the District of Delaware, should not be confirmed unless all outstanding federal tax returns of the Debtors have been filed. IRS says it will object to the treatment of plan of its priority tax claims if the Debtors waive to pay the agency's priority tax claims in full in cash before the Plan's effective date. IRS says the Plan failed to provide a date certain for the commencement of payments to it on account of its general unsecured claims. Accordingly, the IRS asserts that the confirmation of the Plan must be denied, unless the requested changes are made. A hearing is set for May 28, 2009, at 2:30 p.m., to consider the agency's request. Westchester Fire Insurance Company and ACE USA; SINV LLC, SINV II LLC and BFG Holdings 2000 LLC; and Maureen Linehan also object to various terms of the Plan. Connolly Bove Lodge & Hutz LLP represents the SINV entities; Ruden, McClosky, Smith, Schuster & Russell P.A. represents Ms. Linehan; and Ballard Spahr Andrews & Ingersoll LLP represents Westchester Fire and ACE. According to the Troubled Company Reporter on May 8, 2009, the Plan proposes to pay holders of term loan claims 66.4% of their allowed claims. General unsecured claimants will get 100% of the amount they're owed. Holders of Senior Notes and equity securities won't get a dime. A full-text copy of Source Interlink's plan summary is available at no charge at: http://ResearchArchives.com/t/s?3d3f About Source Interlink Bonita Springs, Florida-based Source Interlink Companies, Inc., -- http://www.sourceinterlink.com/-- is a U.S. distributor of home entertainment products and services and one of the largest publishers of magazines and online content for enthusiast audiences. Source Interlink Media, LLC publishes more than 75 magazines and 90 related Web sites. Source Interlink and 17 affiliates filed for bankruptcy on April 27, 2009 (Bankr. D. Del. Case No. 09-11424). Judge Kevin Gross presides over the case. David Eaton, Esq., and David Agay, Esq., at Kirkland & Ellis LLP; and Laura Davis Jones, Esq., Mark M. Billion, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl Young Jones in Wilmington, Delaware, serve as bankruptcy counsel. Meolis & Company LLC serves as the Debtors' financial advisors, while Kurtzman Carson Consultants LLC is the Debtors' claims and notice agent. As of April 24, 2009, the Debtors had $2,436,005,000 in total assets and $1,995,504,000 in total debts. SPANSION INC: Court Grants Final Approval to Cash Collateral Use ---------------------------------------------------------------- Judge Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware authorized Spansion Inc., and its debtor affiliates, to use cash collateral on a final basis. Judge Carey held that all objections that have not been withdrawn are overruled. The Court's authorization to use Cash Collateral is solely in accordance with the approved budget, a copy of which is available for free at: http://bankrupt.com/misc/Spansion_April23Budget.pdf Judge Carey permitted the Debtors to: (i) carry over any amounts not expended for a particular line item in any week to succeeding weeks; (ii) expend up to 15% more than the amounts set forth in a particular line item for a specific week in that week so long as the aggregate expenditures during the period do not exceed the total shown on the Approved Budget for that period by more than 15%; and (iii) pay amounts incurred from and after the Petition Date, in addition to or for categories not listed in the Approved Budget with the prior written consent of the Prepetition Agent and the Ad Hoc Consortium and three business days' notice to the Official Committee of Unsecured Creditors and counsel to the FRN Trustee. The Court held that the Cash Collateral may not be used to investigate, bring or prosecute any claims and defenses; provided that up to $100,000 of the Cash Collateral may be used to pay the allowed fees and expenses of professionals retained by the Committee and incurred in investigating, but not initiating or prosecuting any avoidance actions or any other claims. A full-text copy of the Final Cash Collateral Order is available for free at: http://bankrupt.com/misc/Spansion_FinalCashCollOrd.pdf Noteholders Opposed Committee Proposal Prior to the Court's order, the Ad Hoc Consortium of Floating Rate Noteholders had asked the Court to overrule the objection presented by the Creditors Committee to the proposed final order authorizing the use of the Cash Collateral. The Ad Hoc Consortium asserted there is a zero-percent chance that alternative financing on better or at least comparable terms can be found in the marketplace. Thomas M. Horan, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, counsel to the Ad Hoc Consortium, told Judge Carey that by consenting to cash collateral usage, the Ad Hoc Consortium has already assumed tremendous incremental risk: (a) As of May 12, 2009, the Debtors have already consumed nearly $120,000,000 in FRN cash collateral. (b) The Debtors are now undergoing a massive operational restructuring, exiting their "wireless" chip business, and focusing almost exclusively on their "embedded" chip business. (c) The only major asset-class not subject to FRN liens is the Debtors' intellectual property, and not a shred of evidence exists proving that the property has a value exceeding $120,000,000. (d) The FRN's are required to assume significant "know your borrower" risk, given that there has been complete management turn-over -- involving replacement of the Debtors' Chief Executive Officer and Chief Financial Officer, retention of a Chief Restructuring Officer, and termination of the General Counsel -- all within the last few weeks. The Ad Hoc Consortium asserted it is unwilling to consent to cash collateral usage on the terms proposed by the Official Committee. In response, the Debtors explained it is uncontroverted that the cash collateral is their only source of working capital, and they would be forced to discontinue their business operations and immediately wind-down their business without further authorization to use Cash Collateral. The Debtors added that nothing in the proposed Cash Collateral order waives the rights of any party to challenge any valuation of the Secured Creditors' collateral. Moreover, the Debtors said, the proposed final Cash Collateral order expressly provides that the FRN Noteholders must apply the Adequate Protection Payments to the principal amount of their debt in the event that they are determined not to be entitled to postpetition interest. While the Debtors shared with the Committee's concerns that in the future the Ad Hoc Consortium could represent FRN Noteholders holding less than 50% of FRNs, they assert that nothing in the proposed Cash Collateral order would prevent the Debtors from seeking modifications to he Ad Hoc Consortium's rights at that time. The Debtors also disagreed with the Committee's assertion that there is no suggestion of any diminution in the FRN Noteholders' collateral values arising from their use of Cash Collateral. In fact, the Debtors relate, based on their analyses, there bas been at least approximately $10,000,000 in diminution and there may be further diminution as they wind-down their wireless business and restructure around their other product lines. The Debtors, the Committee and the Ad Hoc Consortium submitted with the Court their joint pre-trial memorandum in anticipation of the May 18, 2009 Cash Collateral Hearing. The Debtors offered John Brincko as a witness at the hearing, who provided testimony regarding the Debtors' postpetition build up of cash and the Debtors' analyses regarding the value of the FRN Holders' collateral. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Court Extends Removal Deadline to August 28 --------------------------------------------------------- Judge Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware extended the deadline for Spansion Inc. and its affiliates to remove civil actions through August 28, 2009. Prior to the Court's order, De Bella Mechanical, Inc., a secured creditor of the Debtors, asked the Court to deny the Debtors' request for further extension of the period to remove civil actions. De Bella asserted that the Debtors have not yet filed their schedules of assets and liabilities and the late-filed schedules have already caused creditors, including itself, to be delayed. De Bella have filed and perfected its mechanics' lien before Petition Date. Out of abundance of caution, De Bella also filed a notice of the perfection of its lien in the U.S. Bankruptcy Court for the District of Delaware. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Noteholders Balk at $70MM Samsung Settlement ---------------------------------------------------------- The Ad Hoc Consortium of Floating Rate Noteholders objects to a $70 million settlement agreement between Spansion Inc. and Samsung Electronics Co., Ltd. The group relates that while it continues to review the adequacy of the proposed agreement between the Debtors and Samsung, the group firmly believes that the structural problems with the Agreement render it not in the paramount interest of creditors, as required by law, and thus should not be approved by the Court. The Ad Hoc Consortium is comprised of institutions that collectively hold: (i) nearly 84% of the Senior Secured Floating Rate Notes issued or guaranteed by the Debtors and secured by the vast majority of the Debtors' fixed and current assets; (ii) approximately 36% of the Debtors' unsecured Senior Notes; and (iii) approximately 13% of the Debtors' unsecured Exchangeable Senior Subordinated Debentures. Thomas M. Horan, Esq., at Womble Carlyle Sandridge & Rice, PLLC, in Wilmington, Delaware, counsel to the Ad Hoc Consortium, says the Settlement Agreement involves some very difficult issues for the Court to resolve, which may be categorized as structural issues and evaluation of the settlement quantum. Mr. Horan asserts there are three primary structural problems with the Settlement Agreement: (i) The forms of "mutual release" ending the litigation are entirely unbalanced. The Debtors, on the one hand, provide Samsung an all-encompassing, royalty free world- wide license in perpetuity, covering all intellectual property now owned or created or acquired in the future. Samsung, on the other hand, furnishes the Debtors only a "Covenant Not to Assert" that is limited only to intellectual property held by Samsung's "Semi-Conductor" business unit; (ii) While Samsung agrees not to sue Spansion "personally," the Settlement Agreement does not preclude Samsung from suing any distributor, reseller, retailer or customer of a Spansion product employing an element that allegedly infringes on a Samsumg patent; and (iii) Samsung's Covenant Not to Assert evaporates by its terms upon a "Change of Control," which is defined to include a broad-spectrum of Merger & Acquisition transactions. Regarding the settlement quantum, the Ad Hoc Consortium relates it does not have sufficient facts to conclude that the stipulated amount is reasonable and adequate. Should it determine to press an objection to the settlement amount, the Ad Hoc Consortium avers it will hold the Debtors to their burdens of proof and persuasion regarding the legal sufficiency of this aspect of the Settlement Agreement. The Ad Hoc Consortium maintains that the claims against Samsung appear quite strong and could yield devastating injunctive remedies or an astronomical award of monetary damages to the Debtors. The Ad Hoc Consortium asserts a reasonable inference as to the strength of the Debtors' claims can be inferred from the fact that Samsung's almost immediate response to the complaints being filed was agreement to settle both Actions for payments totaling $70,000,000. Committee Responds The Official Committee of Unsecured Creditors, for its part, says that while it generally supports the Motion, it does have certain structural issues that need to be revised to protect the interests of the Debtors, their estates and the unsecured creditors. The Committee asserts that the provisions related to cross-licensing and covenants not to sue should be mirror provisions for the Debtors and Samsung; or in the alternative, the covenant not to sue by Samsung should also apply to Spansion's customers, distributors, retailers and resellers. Moreover, the Committee tells the Court, the definition of "Change-in-Control" in the Settlement Agreement does not exclude from a Change-in-Control scenario where unsecured creditors receive equity in a plan of reorganization in exchange of their debt claims. According to the Committee, the Settlement Agreement must clarify that Samsung may not exercise any set-off or recoupment rights against the settlement amount. Kristine M. Shryock, Esq., at Paul, Hastings, Janofsky & Walker LLP, in Wilmington, Delaware, attorney for the Committee, asserts that the attorneys' fees for the Debtors' special counsel, King & Spalding, LLP, related to the Samsung litigation should be subject to the Court's review before they are paid and the Settlement Agreement should be modified to provide that the settlement payments should be paid to the Debtors directly as property of their estates. The Committee further asserts it should receive copies of the certifications delivered by Samsung to the Debtors related to the Korean tax payments. Debtors Talk Back The Debtors reiterate that the Settlement Agreement is a result of good faith, arm's-length negotiations between the parties. While the Settlement Agreement may provide less than the Ad Hoc Consortium and the Committee believes it should, the Debtors assert there has been no showing of impairment of their position and no unfairness on them. In November 2008, Spansion filed a patent infringement complaint against Samsung with the International Trade Commission. The complaint seeks the exclusion from the United States market of more than 100 million mp3 players, cell phones, digital cameras and other consumer electronic devices containing Samsung's flash memory components. The Debtors had alleged in the ITC Action that those components infringe on four of their patents relating to "floating gate" technology. Simultaneously with the ITC Action, the Debtors filed a patent infringement lawsuit against Samsung in the United States District Court for the District of Delaware, seeking both an injunction and damages for alleged violations relating to Samsung Flash Memory. Samsung has filed counter-claims in the Delaware Action, alleging that the Debtors are infringing five Samsung patents and seeking injunction and damages for the alleged violations. In addition, Samsung filed a patent infringement action against the Debtors' Japanese subsidiary, Spansion Japan Limited, seeking an injunction against Spansion Japan from manufacturing and selling certain products that allegedly infringe on Samsung's intellectual property as well as the destruction of all those products. The Debtors have spent millions of dollars preparing for and litigating the ITC Action and the Delaware Action. The Debtors estimate that the litigation costs to them of the Actions will be approximately $15,000,000 per year for the next three to five years. The Debtors and Samsung had a series of discussions about settling the ITC Action, the Delaware Action and the Japanese Action and entering into licenses for, and covenants not to sue with respect to, each other's semiconductor-related intellectual property. Under the Agreement, the parties agree to dismiss the ITC Action, the Delaware Action and the Japanese Action. The Debtors will grant Samsung a non-exclusive, worldwide, fully paid-up, royalty- free, perpetual and irrevocable license to all of their existing and future patent and patent applications. The Debtors also covenant not to sue Samsung or its subsidiaries, distributors, retailers or customers, or in connection with, the use by Samsung or its subsidiaries of the Licensed Patents in connection with any products or services of Samsung or its subsidiaries. In exchange, Samsung will pay the Debtors $70,000,000. Of this amount, $40,000,000 will be paid within 10 days after the order approving the motion has become final, non-appealable and the ITC Action, the Delaware Action and the Japanese Action have been dismissed. The remaining $30,000,000 will be paid over six months in monthly $5,000,000 increments commencing 30 days after the initial payment is made. In addition, Samsung covenants not to assert the patent and patent applications owned by it and controlled by its Semiconductor Division against the Debtors and their subsidiaries personally with respect to any product they make and sell exclusively under a brand they own or control. A full-text copy of the Settlement Agreement is available for free at http://bankrupt.com/misc/Spansion&SamsungAgreement.pdf According to Sommer L. Ross, Esq., at Duane Morris, LLP, in Wilmington, Delaware, although the objections assert that the Settlement Agreement should not be approved, the Ad Hoc Consortium and the Committee do not contend that the $70,000,000 settlement is unreasonable or that it renders the Settlement Agreement unreasonable. Indeed, Ms. Ross adds, the Ad Hoc Consortium's own supposed expert confirms that he has reached no conclusions as to the value of the Settlement Agreement to the Debtors. Ms. Ross says the Settlement Agreement is unquestionably reasonable. "[E]ven if every single term, viewed in isolation and divorced from the larger business context in which the deal was forged, does not necessarily tip in favor of the Debtors," she asserts. Exhibits to Be Filed Under Seal The Debtors seek the Court's authority to lodge and maintain confidential exhibits to be offered by Samsung at the hearing. The Debtors further request to close to the public those portions of the hearing related to the Confidential Exhibits and seal or redact from the public record those portions of the hearing transcript relating to the Confidential Exhibits. Moreover, the Debtors ask the Court to enter an order directing that the Confidential Exhibits and the hearing transcript will remain under seal and confidential, and will not be made available to anyone other than: (a) the Court; (b) the Office of the United States Trustee; (c) counsel to the Committee of Unsecured Creditors; (d) counsel to the Ad Hoc Consortium; and (e) counsel to the Debtors. Ad Hoc Consortium's Motion in Limine The Ad Hoc Consortium sought and obtained the Court's order precluding the Debtors from introducing any evidence based on privileged information in support of their motion authorizing their settlement with Samsung. Mr. Horan relates that in the discovery process in connection with the Samsung Settlement Motion, the Debtors produced scant evidence to justify the Settlement Agreement. Indeed, Mr. Horan adds, in response to the Ad Hoc Consortium's requests for information provided to the Board of Directors in connection with its consideration of the proposed settlement, the Debtors produced just two heavily redacted documents, which contain no substantive information regarding the Settlement Agreement. According to Mr. Horan, the Debtors have refused to produce crucial information considered by the Board concerning the Settlement Agreement on the basis that they are subject to the attorney-client privilege. Yet, at the same time, Mr. Horan avers, the Debtors have relied on this privileged information as the basis for supporting the Settlement Agreement. "If they intend on relying on privileged communications in support of the Settlement Agreement, they cannot withhold in discovery the underlying information and testimony relating thereto," assert Mr. Horan. "Contrary to the Debtors' unfounded position, the attorney-client privilege cannot be used as a sword and a shield." The Ad Hoc Consortium asserted that if the Debtors seek to introduce evidence at the hearing on the Samsung Settlement Motion that was previously shielded from discovery, the Ad Hoc Consortium will be substantially prejudiced. In a separate filing, the Ad Hoc Consortium sought and obtained the Court's authority to file under seal exhibits B to C to the declaration of Andrew Dash in support of the Ad Hoc Consortium's motion in lime to preclude Debtors' use of privileged documents. Moreover, the Ad Hoc Consortium request that the Court remove Exhibit A to the declaration of Mr. Dash. Debtors' Response Under Seal The Debtors sought and obtained the Court's authority to file their opposition to the Ad Hoc Consortium's Motion in Limine under seal. The response and will not be made available to anyone other than the Court, the Office of the United States Trustee, counsel to the Official Committee of Unsecured Creditors, counsel to the Ad Hoc Consortium, counsel to the Debtors, counsel to the administrative agent for the Debtors' prepetition lenders, members of the Committee, members of the Ad Hoc Consortium that have signed a confidentiality agreement with the Debtors and employees of the Debtors. The Debtors asserted their opposition includes highly confidential discussion regarding their litigation strategy, evaluation of the Settlement Agreement and justifications for approving and determining to proceed with the Settlement Agreement. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Court Allows SanDisk to Pursue Appeal on IP Suit -------------------------------------------------------------- At SanDisk Corporation's behest, Judge Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware lifted the automatic stay in the bankruptcy cases of Spansion Inc. and its affiliates, to allow SanDisk to file and pursue an appeal in the U.S. District Court of Appeals for the Federal Circuit from a judgment entered by the U.S. Patent and Trademark Office's Board of Patent Appeals and Interferences. On March 18, 2009, the Board had entered a judgment upon an interference action against SanDisk, finding that SanDisk had failed to properly incorporate by reference a certain previously filed patent application into its application no 09/310,880. At issue was a priority between the 880 Application and of application no. 08/160,582, filed on December 1, 1993 entitled PROGRAMMED REFERENCE, which was assigned to Advanced Micro Devices, Inc. That application was issued as U.S. Patent No. 5,828,601 on October 27, 1998. The 601 Patent was allegedly acquired by Spansion LLC. The Board found that the 880 Application lacked disclosure necessary to support SanDisk's claims. As that was dispositive of the Interference, the judgment was entered in favor of Spansion and against SanDisk. Carl N. Kunz III, Esq., at Morris James LLP, in Wilmington, Delaware, counsel for SanDisk, asserted that commencement and prosecution of the Action will not prejudice the Debtors' reorganization efforts. Indeed, Mr. Kunz notes, resolving the Action will assist the Debtors in administering its estate as it will determine whether the claimed invention is actually property of the Debtors' estates or not. "This is an issue that should be determined so that parties interested in these bankruptcy cases, including the Debtors, understand the extent of the Debtors' estates," Mr. Kunz said. "While the Debtors will undoubtedly incur some costs in litigating the proposed appeal, such costs are inevitable," Mar. Kunz added. The Debtors contended that granting SanDisk relief from automatic stay would undermine the purposes of the Bankruptcy Code and would, at a very critical stage, distract their attempts to reorganize their business and confirm a plan of reorganization. However, the Debtors averred, while SanDisk has failed to show cause for relief from the automatic stay in order to pursue its proposed District Court Action, they would be willing to a limited relief from the automatic stay to allow SanDisk to pursue an appeal to the United States Court of Appeals for the Federal Circuit, where the accompanying costs and resources of the Debtors would be significantly less burdensome. SanDisk originally sought to pursue an appeal to either the United States District Court for the District of Columbia or the United States District Court for the Northern District of California. In its response to the Debtors' objection, SanDisk asserted that the proposed District Action will not require the involvement of the Debtors' reorganization team or management generally, so the Debtors cannot prove they are harmed in any meaningful way. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPANSION INC: Subject of ITC Cease and Desist Order --------------------------------------------------- Tessera Technologies, Inc., last week said the International Trade Commission (ITC) issued a final determination in the action brought by Tessera against certain wireless manufacturers, Investigation No. 337-TA-605 (Wireless ITC action), finding Tessera's asserted patents are valid and infringed. The ITC issued a Limited Exclusion Order that prohibits the importation of certain infringing electronic devices that use Tessera's patented technology, which are imported by or on behalf of the named respondents. The Commission also issued a Cease and Desist Order against Motorola, Qualcomm, Freescale and Spansion, directing them to cease their unfair acts including selling infringing articles out of their US inventories. "This is a powerful victory for Tessera and the rights of patent holders everywhere," said Henry R. Nothhaft, president and CEO of Tessera. "The ITC's decision establishes that the patents in this case are valid and enforceable, and sends a positive message to other innovators that depend on their patent rights to protect their inventions against would-be infringers." The respondents in the Wireless ITC action were ATI Technologies, Freescale Semiconductor, Inc., Motorola, Inc., Qualcomm, Inc., Spansion, Inc., Spansion, LLC and ST Microelectronics N.V. Tessera asserted infringement of two Tessera patents, U.S. Patent No. 6,433,419 ('419) and U.S. Patent No. 5,852,326 ('326). Tessera -- http://www.tessera.com/-- develops and delivers technologies for wireless, consumer and computing products. The company's packaging and interconnect solutions enable smaller, higher-functionality electronic devices. Tessera's imaging and optics solutions provide low-cost, high-quality camera functionality in electronic products and include image sensor packaging, wafer-level optics and image enhancement intellectual property. The company also offers customized micro-optic lenses, from diffractive and refractive optical elements to integrated micro-optical subassemblies. Tessera licenses its technologies, as well as delivers products based on these technologies, to promote the development of the supply chain infrastructure. The company is headquartered in San Jose, California. About Spansion Inc. Spansion Inc. (NASDAQ: SPSN) -- http://www.spansion.com/-- is a Flash memory solutions provider, dedicated to enabling, storing and protecting digital content in wireless, automotive, networking and consumer electronics applications. Spansion, previously a joint venture of AMD and Fujitsu, is the largest company in the world dedicated exclusively to designing, developing, manufacturing, marketing, selling and licensing Flash memory solutions. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of $3,840,000,000, and total debts of $2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had $10 million to $50 million in assets and $50 million to $100 million in debts. SPRINT NEXTEL: Issues $405.6MM Shares to 1988 Employee Plan ----------------------------------------------------------- Sprint Nextel Corporation filed a Registration Statement on Form S-8 with the Securities and Exchange Commission relating to an additional 80,000,000 shares of its Series I common stock, par value $2.00 per share, issuable to eligible employees of the Company under the 1988 Employees Stock Purchase Plan. The Common Stock is in addition to the 20,004,186 shares of Common Stock registered on the Company's Form S-8 filed on May 15, 2004. The proposed maximum offering price per share is $5.07. The proposed maximum aggregate offering price is $405,600,000. A full-text copy of the EMPLOYEES STOCK PURCHASE PLAN, AMENDED AND RESTATED EFFECTIVE APRIL 1, 2009, is available at no charge at http://ResearchArchives.com/t/s?3d41 As of March 31, 2009, Sprint Nextel had $57.2 billion in total assets, $38.1 billion in total liabilities, and $19.0 billion in shareholders' equity. The Company posted $594 million in net loss for the three months ended March 31, 2009, compared to a net loss of $505 million for the same period in 2008. About Sprint Nextel Sprint Nextel Corporation is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses and government subscribers. Sprint Nextel is the third largest wireless communications company in the United States based on the number of wireless subscribers. Sprint Nextel is also one of the largest providers of wireline long distance services and one of the largest carriers of Internet traffic in the nation. * * * As reported by the Troubled Company Reporter on April 7, 2009, Standard & Poor's Rating Services revised its outlook on Sprint Nextel and its subsidiaries to negative from stable. At the same time, S&P affirmed all other ratings on the company, including the 'BB' corporate credit rating. Total funded debt outstanding as of Dec. 31, 2008, was about $22 billion. "The outlook revision reflects our concerns that Sprint Nextel's credit measures could deteriorate further in 2009," said Standard & Poor's credit analyst Allyn Arden, "given the company's weaker business position stemming from the ongoing erosion of its subscriber base." Total debt to EBITDA was 3.9x for 2008, up from 2.8x a year ago as revenue and EBITDA fell by 11% and 29%, respectively, largely because of the loss of post-paid customers that totaled 4.1 million and a decline in average revenue per user. STRUCTURAL INVESTMENTS: Involuntary Chapter 11 Case Summary ----------------------------------------------------------- Alleged Debtor: Structural Investments & Planning VII, L.L.C. 5125 E. Thomas Road Phoenix, AZ 85016 Case Number: 09-10427 Involuntary Petition Date: May 14, 2009 Court: District of Arizona (Phoenix) Judge: Sarah Sharer Curley Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Carole Pavelin loan $50,000 1946 E. Kentucky Lane Tempe, AZ 85284 Peter Day commission $6,300 3620 E. Campbell Ave., S.F Phoenix, AZ 85018 Patrick O'Donnell event bookings $4,000 201 E Southern Ave., S. 118 Tempe AZ, AZ 85282 SUN WEST BOTTLERS: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Sun West Bottlers, LLC 5530 W. Bethany Home Road Glendale, AZ 85301 Bankruptcy Case No.: 09-11283 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Randolph J. Haines Debtor's Counsel: Daniel P. Collins, Esq. Collins, May, Potenza, Baran & Gillespie 2210 Chase Tower 201 North Central Avenue Phoenix, AZ 85004-0022 Tel: (602) 252-1900 Fax: (602) 252-1114 Email: dcollins@cmpbglaw.com Total Assets: $295,541 Total Debts: $5,055,749 A full-text copy of the Debtor's petition, including a list of its 19 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/azb09-11283.pdf The petition was signed by Tina M. Placourakis, managing member of the Company. THELMA V SPIRTOS: Case Summary & 14 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Thelma V. Spirtos 16018 Puesta Del Sol Whittier, CA 90603 Bankruptcy Case No.: 09-22687 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Victoria S. Kaufman Debtor's Counsel: Jon Eardley, Esq. 16020 Puesta Del Sol Whittier, CA 90603 Tel: (562) 947-2006 Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $500,000 to $1,000,000 A full-text copy of Ms. Spirtos' petition, including a list of her 14 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-22687.pdf The petition was signed by Ms. Spirtos. TOWN AND COUNTRY: A.M. Best Cuts FS Rating to 'B' from 'B+' ----------------------------------------------------------- A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Good) and issuer credit rating to "bb" from "bbb-" of Town and Country Mutual Insurance Company in Bryant, Arkansas. The ratings have been removed from under review with negative implications and assigned a stable outlook. The ratings were placed under review with negative implications on April 7, 2009, following a significant decline in Town and Country's surplus in 2008 and pending discussions with management regarding its capital management strategy. The rating downgrades are due in part to the continuation of underwriting losses in 2009, following a 40.5% surplus decline in 2008. Town and Country experienced frequent and severe storm losses from wind, hail and tornadoes in 2008, resulting in a $1.2 million underwriting loss. Furthermore, a severe ice storm in January 2009 and tornadoes in April 2009 also resulted in significant losses. A.M. Best also considered Town and Country's capital management strategies, which included a 25% quota share reinsurance agreement. This quota share will improve net premium leverage and contributed to the assignment of the stable outlook. However, A.M. Best remains concerned with Town and Country's poor operating performance and ability to generate surplus growth. TRIESTE INVESTMENTS: Plan Hearing Continued to June 18 ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Arizona has continued to June 18, 2009, at 2:00 p.m. the confirmation hearing on Trieste Investment, LLLP's First Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code. All creditors will be paid in full over the term of the Plan. The Debtor's equity holders will receive no dividends or distributions during the life of the Plan, unless all senior classes have been paid. On the Plan's effective date, the Debtor will pay the secured claim of Weldon Alders that amount required to reinstate the allowed claim by bringing all then due and outstanding principal and contract rate of interest payments current pursuant to the Alders Note. The secured claim of Weldon Alders, the former owner, will be paid through (1) payments from condemnation proceeds received from the Louis Dreyfus lawsuit settlement, (2) proceeds from the timber contract with Carl Kleinmann, (3) credit for the proceeds of $127,000 received directly by Alders from Chevron prior to the Bankruptcy Case, (4) proceeds to be realized from the Texas Dept. of Transportation for its condemnation or taking of a widened highway easement along Texas State Highway 146, which runs contiguous to the Property, (5) sales of released parcels from the Property or the sale of the entire Property, and, (6) postpetition financing from third parties, until the Alders Loan is paid in full. General Unsecured Claims will be paid after the payment of all senior classes under Classes 2 through 5. The Debtor anticipates obtaining a $4,000,000.00 loan at a minimum, with interest at an annual rate of 15%, payable over a 4- year loan period. On the net proceeds from the sale of the Property or any parcels after the Plan's Effective Date and from DIP Financing, the proceeds shall be distributed: first to pay any amounts then due and owing under the DIP Financing and to pay the secured claim of Weldon Alders; then pro rata to the Allowed Secured Claims of Classes 3 and 4 until paid in full; and lastly, pro rata to the Allowed Unsecured Claims of Class 6 until paid in full. Classification of Claims The Plan classified claims and interests into 7 classes: Class Description Treatment ----- ----------------------- --------- 1 Administrative Claims Paid in full 2 Secured Claim of Weldon Impaired Alders 3 Secured Claim of AHK Texas Holdings, L.L.C. Impaired 4 Secured Claim of MW2 Investments, L.L.C. Impaired 5 Priority Tax Claims Paid in full 6 General Unsecured Claims Impaired 7 Equity Interest Holders Will receive zero distributions during the life of the Plan. A full-text copy of the amended disclosure statement explaining Trieste Investments' First Amended Plan of Reorganization is available at http://bankrupt.com/misc/triesteDS.pdf Scottsdale, Arizona-based Trieste Investments, LLLP holds investment property in Liberty County, Texas. The Company filed for Chapter 11 protection on October 6, 2008 (Bankr. D. Ariz. Case No. 08-13674). Franklin D. Dodge, Esq., at Ryan Rapp & Underwood, P.L.C., represents the company as counsel. The company listed assets of $10 million to $50 million and debts of $10 million to $50 million. TRILOGY DEV'T: Bankruptcy Forestalls Payment of $13.8MM Debt to JE ------------------------------------------------------------------ Steve Vockrodt at Kansas City Business Journal reports that Trilogy Development Co. LLC's bankruptcy filing has cancelled a May 18 hearing in the Jackson County Circuit Court, where a judge might have confirmed an arbitration panel's decision that the Company owed JE Dunn some $13.87 million in construction costs. According to Business Journal, Trilogy and JE Dunn have been in legal battle since the Company walked off the $116 million mixed- use project at 48th Street and Roanoke Parkway amid disputes about payments and work quality. Trilogy, says Business Journal lost in arbitration, but said it would dispute the panel's findings. Citing bankruptcy lawyer Mark Moedritzer at Shook Hardy & Bacon LLP, Business Journal relates that although the Jackson County Circuit Court could have declined to confirm the arbitration award at the May 18 hearing, such rulings are rarely overturned in court, "unless there's fraud or something like that, that's typically not the case." Business Journal notes that a court-confirmed award would have carried considerable weight in bankruptcy proceedings because mechanic's liens underlie the claim and are among the first debts to be resolved in a Chapter 11 reorganization. According to Business Journal, JE Dunn filed a February 2 mechanic's lien that claims Trilogy owes it about $17.19 million. The arbitration award against Trilogy would be best resolved in bankruptcy court, Business Journal relates, citing Jonathan Margolies of McDowell Rice Smith & Buchanan PC who represents Trilogy in the bankruptcy proceeding. The report quoted Mr. Margolies as saying, "We were cognizant of that action, and we also think and continue to think that whole dispute and the issues underlying that dispute . . . should be adjudicated in bankruptcy court." According to Business Journal, a JE Dunn official said that the company still expects to collect its arbitration award. Business Journal quoted Dirk Schafer, project manager for JE Dunn, as saying, "We were not contacted by Trilogy or its attorneys prior to its filing Chapter 11 bankruptcy. As you are aware, JE Dunn has won a final, binding award of arbitration related to its work on the West Edge project. We expect to hear from Trilogy or their attorneys about their plans to satisfy our award." Kansas City, Missouri-based Trilogy Development Co. LLC is the entity formed by advertising magnate Bob Bernstein to build the West Edge project. The Company filed for Chapter 11 bankruptcy protection on May 15, 2009 (Bankr. W.D. Mo. Case No. 09-42219). Jonathan A. Margolies, Esq., and R. Pete Smith, Esq., at McDowell, Rice, Smith & Buchanan assists the Company in its restructuring efforts. The Company listed $100 million to $50 million in assets and $100 million to $50 million in debts. TUMBLEWEED INC: Wants to Employ Jones Law as Special Counsel ------------------------------------------------------------ Tumbleweed, Inc., asks the U.S. Bankruptcy Court for the Western District of Kentucky for authority to employ Jones Law Offices as special counsel, nunc pro tunc to May 13, 2009. Jones Law Offices will represent the Debtor with respect to ongoing and anticipated beverage licensing-related matters in the State of Ohio. Gary L. Jones, Esq., a member at Jones Law Offices, assures the Court that the firm does not have any interest materially adverse to the Debtor's estate, its creditors, or equity security holders, and that the firm is a "disinterested person" as that term is defined in Sec. 101(14) of the Bankruptcy Code. As compensation for their services, JLO's professionals bill: Professional Hourly Rate ------------ ----------- Gary L. Jones, Esq. $225 Robyn Jones, Esq. $200 About Tumbleweed, Inc. Headquartered in Louisville, Kentucky, Tumbleweed, Inc. -- http://www.tumbleweedrestaurant.com/-- together with Custom Food Solutions LLC operate a chain of restaurants. Tubleweed and its affiliates filed separate petitions for Chapter 11 relief on March 27, 2009 (Bankr. W.D. Ky. Case No. 09-31525 to 09-31526). Ruby D. Fenton-Iler, Esq., at Borowitz & Goldsmith, PLC, and David M. Cantor, Esq., at Seiller Waterman LLC, represent the Tumbleweed, Inc. as counsel. The Debtor listed assets of $10 million to $50 million and debts of $10 million to $50 million. VERASUN ENERGY: McGladrey & Pullen Steps Down as Accountants ------------------------------------------------------------ VeraSun Energy Corporation on May 20, 2009, received notification from McGladrey & Pullen LLP of their resignation as the Company's independent registered public accounting firm. McGladrey's report on the Company's consolidated financial statements for the year ended December 31, 2007, did not contain an adverse opinion or a disclaimer of opinion, nor was such report qualified or modified as to uncertainty, audit scope, or accounting principles. McGladrey did not issue a report on the Company's consolidated financial statements for the year ended December 31, 2008. During the Company's fiscal year ended December 31, 2007, and the period January 1, 2008 through May 20, 2009, there were no disagreements between the Company and McGladrey on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure that, if not resolved to McGladrey's satisfaction, would have caused it to make reference to the matter in conjunction with their report on the Company's consolidated financial statements for the relevant year. During the Company's fiscal years ended December 31, 2007, and the period January 1, 2008 through May 20, 2009, there were no reportable events -- as defined in Item 304(a)(1)(v) of Regulation S-K -- except that during the quarter ended September 30, 2008, the accountants advised the registrant of identified deficiencies in internal control over financial reporting that, in the aggregate, were determined to be a material weakness. This communication was discussed with the Company's audit committee. About VeraSun Energy Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -- http://www.verasun.comor http://www.VE85.com/-- produces and markets ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The Company and its debtor-affiliates filed for Chapter 11 protection on October 31, 2008, (Bankr. D. Del. Case No. 08-12606) Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun closed on April 1, 2009, the sale of substantially all of its assets to Valero Renewable Fuels, a subsidiary of Valero Energy Corporation, North America's largest petroleum refiner and marketer. The purchased assets included five ethanol production facilities and a development site. The facilities are located in Aurora, South Dakota; Fort Dodge, Charles City, and Hartley, Iowa; and Welcome, Minnesota, and the development site is in Reynolds, Indiana. Valero paid $350 million for the ethanol production facilities in Aurora, Fort Dodge, Charles City, Hartley and Welcome, in addition to the Reynolds site. Valero also successfully bid $72 million for the Albert City facility and $55 million for the Albion facility. The purchase price also includes working capital and other certain adjustments. VeraSun also completed on April 9 the sale to AgStar Financial Services PCA of substantially all of the assets relating to the company's production facilities in Dyersville, Iowa; Hankinson, North Dakota; Janesville, Minnesota; Central City and Ord, Nebraska; and Woodbury, Michigan. AgStar released the USBE Subsidiaries from their obligations under $319 million of existing indebtedness and assumed certain liabilities relating to the AgStar Facilities. On April 13, US BioEnergy Corporation and US Bio Marion LLC completed the sale to Marion Energy Investments LLC, as assignee of Dougherty and First Bank & Trust, of substantially all of the assets relating to the Debtors' production facility in Marion, South Dakota. The consideration for the acquired assets consisted of release of US Bio Marion from its obligations under approximately $93 million of existing indebtedness to the Marion Buyers, payment by MEI of $934,861 in cash and assumption by the Marion Purchasers of certain liabilities relating to the Marion facility. VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). VERASUN ENERGY: Endres Ceases to Serve as CEO, Stays as Director ---------------------------------------------------------------- VeraSun Energy Corporation disclosed in a regulatory filing with the Securities and Exchange Commission that on May 18, 2009, its Board of Directors determined that the office of Chief Executive Officer is no longer necessary because: -- of the completion of work and termination of the Transition Services Agreement, dated April 1, 2009, between the Company and Valero Renewable Fuels Company, LLC; and -- the remaining activities of the Company are expected to consist of completing the wind-down of its operations and implementation a plan of reorganization, effectiveness of which will be subject to creditor approval and confirmation by the Bankruptcy Court. Accordingly, Donald L. Endres, the Company's CEO, ceased to serve as CEO effective May 18, 2009, and his employment with the Company terminated effective as of May 26, 2009. Mr. Endres will continue to serve as a director of the Company. About VeraSun Energy Headquartered in Sioux Falls, South Dakota, VeraSun Energy Corp. -- http://www.verasun.comor http://www.VE85.com/-- produces and markets ethanol and distillers grains. Founded in 2001, the company has a fleet of 16 production facilities in eight states, with 14 in operation. The Company and its debtor-affiliates filed for Chapter 11 protection on October 31, 2008, (Bankr. D. Del. Case No. 08-12606) Mark S. Chehi, Esq., at Skadden Arps Slate Meagher & Flom LLP represents the Debtors in their restructuring efforts. AlixPartners LLP serves as their restructuring advisor. Rothschild Inc. is their investment banker and Sitrick & Company is their communication agent. The Debtors' claims noticing and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' total assets as of June 30, 2008, was $3,452,985,000 and their total debts as of June 30, 2008, was $1,913,214,000. VeraSun closed on April 1, 2009, the sale of substantially all of its assets to Valero Renewable Fuels, a subsidiary of Valero Energy Corporation, North America's largest petroleum refiner and marketer. The purchased assets included five ethanol production facilities and a development site. The facilities are located in Aurora, South Dakota; Fort Dodge, Charles City, and Hartley, Iowa; and Welcome, Minnesota, and the development site is in Reynolds, Indiana. Valero paid $350 million for the ethanol production facilities in Aurora, Fort Dodge, Charles City, Hartley and Welcome, in addition to the Reynolds site. Valero also successfully bid $72 million for the Albert City facility and $55 million for the Albion facility. The purchase price also includes working capital and other certain adjustments. VeraSun also completed on April 9 the sale to AgStar Financial Services PCA of substantially all of the assets relating to the company's production facilities in Dyersville, Iowa; Hankinson, North Dakota; Janesville, Minnesota; Central City and Ord, Nebraska; and Woodbury, Michigan. AgStar released the USBE Subsidiaries from their obligations under $319 million of existing indebtedness and assumed certain liabilities relating to the AgStar Facilities. On April 13, US BioEnergy Corporation and US Bio Marion LLC completed the sale to Marion Energy Investments LLC, as assignee of Dougherty and First Bank & Trust, of substantially all of the assets relating to the Debtors' production facility in Marion, South Dakota. The consideration for the acquired assets consisted of release of US Bio Marion from its obligations under approximately $93 million of existing indebtedness to the Marion Buyers, payment by MEI of $934,861 in cash and assumption by the Marion Purchasers of certain liabilities relating to the Marion facility. VeraSun Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Wants $4-Bil. Summary Judgment vs. JPMorgan -------------------------------------------------------------- Washington Mutual Inc. asks the U.S. Bankruptcy Court for the District of Delaware to rule summarily that it's entitled to recover $4 billion it was holding in deposit accounts at its bank unit when the thrift unit was taken over in September by the Federal Deposit Insurance Corp. and immediately transferred to JPMorgan Chase & Co. Citing that there are "no genuine issues of material fact," Washington Mutual Inc., asks the Court to rule on its summary judgment motion, which is part of the adversary proceeding commenced by WaMu in late April against New York-based JPMorgan. As reported by the Troubled Company Reporter, the Debtors initiated a complaint against JPMorgan, asking the Bankruptcy Court to: (1) direct JPMorgan to pay the Deposits, including pre- judgment interest, in the WMB and WMB fsb Accounts; (2) compel JPMorgan to pay restitution to the Debtors in an amount equal to JPMorgan's "unjust enrichment;" and (3) award them costs they incurred in pursuing the Adversary Complaint. The Debtors aver that as of the Petition Date, they had cash on deposit with their former subsidiaries, Washington Mutual Bank in Henderson, Nevada and Washington Mutual Bank fsb, in Park City, Utah, in excess of $3,800,000,000, consisting of more than $135,000 in demand deposit accounts at WMB and approximately $3,668,000,000 at WMB fsb. In addition to the suit against JPMorgan, there are two other suits in file in connection with its efforts to recover property lost in September when its bank subsidiaries were taken over by the FDIC and promptly transferred to JPM: -- Washington Mutual filed suit in March against the FDIC in U.S. District Court in Washington after its claim in the bank receivership was denied. The Debtor seeks to recover $6.5 billion in capital contributions, $4 billion in preferred securities and $3 billion in tax refunds. The lawsuit contends the FDIC sold the bank for substantially less than the assets were worth. The holding company believes the bank's assets were worth more than the bank's debt. -- JPMorgan filed an adversary complaint against Washington Mutual and WMI Investment Corp., and Federal Deposit Insurance Corporation, seeking (i) to ensure that it is not divested of the assets and interests purchased in good faith from the FDIC, as receiver for WMB; and (ii) for indemnification and recovery against the Debtors for certain liabilities that may be asserted against JPMorgan, as successor by merger to WMB, pursuant to a Purchase and Assumption Agreement dated September 25, 2008, with the FDIC. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Extends Plan Filing Deadline Until July 23 ------------------------------------------------------------- Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware extended the exclusive periods within which Washington Mutual, Inc., and WMI Investment Corp. may: (1) file a plan of reorganization through July 23, 2009; and (2) solicit and obtain acceptances of that plan through September 21, 2009. The Debtors maintained that the 90-day extension of their Exclusive Periods will allow them to continue making progress on resolving the legal status of certain of their assets, including those that relate to the Federal Deposit Insurance Corporation and JPMorgan Chase Bank. The Debtors commenced a complaint against the Federal Deposit Insurance Corporation in the U.S. District Court for the District of Columbia to challenge the FDIC's disallowance of their claim. The Debtors seek to recover $6.5 billion in capital contributions, $4 billion in preferred securities, and $3 billion in tax refunds. The Debtors said their Litigation against FDIC requires from them a significant portion of time and energy and "constitute a substantial drain on the[ir] resources." Moreover, the Debtors reasoned that they could not propose a feasible plan unless they know the amount of assets available for distribution to their creditors. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: JPMorgan Says Rule 2004 Exam Inappropriate ------------------------------------------------------------- JPMorgan Chase Bank, National Association, tells the U.S. Bankruptcy Court for the District of Delaware that while Washington Mutual, Inc., and WMI Investment Corp.'s proposed discovery on them under Rule 2004 of the Federal Rules of Bankruptcy Procedure is "critical to the Debtors' full understanding of affirmative claims and counterclaims against JPMorgan Bank," the Federal Rules provide that Discovery is available only through related, pending litigations. Adam G. Landis, Esq., at Landis Rath & Cobb LLP, in Wilmington, Delaware, relates that there are two pending litigations that relate to the Rule 2004 Discovery request: (1) The Debtors' action against the Federal Deposit Insurance Corporation in the U.S. District Court for the District of Columbia, captioned Washington Mutual, Inc., et al. v. FDIC, in which the Debtors are already broadly challenging the conduct of the FDIC in connection with the failure of Washington Mutual Bank and the resulting sale of substantially all of the assets of WMB to JPMorgan on September 25, 2008; and (2) JPMorgan's adversary proceeding against the Debtors, in which JPMorgan asserts claims that result from the Debtors' efforts to assert ownership rights over the Purchased Assets from the FDIC. To the extent the Rule 2004 Discovery Requests are being propounded for the purpose of exploring "counterclaims" against JPMorgan Bank, the Counterclaims are related to the Pending Litigations and therefore, may be appropriately pursued in the context of either or both of the Litigations "but not independently through Rule 2004," Mr. Landis argues. Moreover, he continues, to the extent the Rule 2004 Discovery Requests are directed at JPMorgan Bank to explore other potential "claims" against JPMorgan Bank, those claims relate to the sale of WMB's assets by the FDIC to JPMorgan Bank -- a subject of both the D.C. Action and the Adversary Proceeding. The use of Rule 2004 to seek discovery is inappropriate and an "abuse" when it clearly relates to and is available in the pending proceeding, Mr. Landis says, pointing the Court to Snyder v. Soc y Bank, 181 B.R. 40, 41 (S.D. Tex. 1994). "There is no justification for permitting the Debtors to proceed with piecemeal Rule 2004 Discovery while full-scale discovery is ready to proceed," he maintains. He adds that the Debtors' Rule 2004 Motion is a not-so-subtle attempt to proceed with duplicative discovery and circumvent the protections and efficiencies that a comprehensive discovery schedule would provide. The Rule 2004 discovery clearly will require the review of documents from some of the same custodians and sources from whom JPMorgan will collect documents for the Adversary Proceeding and other Related Litigations, resulting in needless duplication and expense, Mr. Landis tells the Court. The Debtors, Mr. Landis points out, have already laid out claims in the D.C. Action that would be compulsory counterclaims to the Adversary Proceeding, with respect to attempting to "claw back" Trust Securities, tax refunds, capital contributions and other assets that belong to JPMorgan. Hence, he avers, the possibility that the Debtors may develop new counterclaims as the Litigations progress is not a basis for their request to extend their time to file counterclaims against JPMorgan Bank. Debtors React The Requested Examination is "necessary to explore and uncover potential business-destruction tort claims" that the Debtors, as estate fiduciaries, must bring for the benefit of all stakeholders, Rafael X. Zahralddin-Aravena, Esq., at Elliott Greenleaf, in Wilmington, Delaware, insists. Because much of the Debtors' institutional knowledge is now in the hands of JPMorgan or third parties that are no longer employed by the Debtors, the Debtors need the Rule 2004 Discovery, he maintains. Mr. Zahralddin-Aravena asserts that the objection of JPMorgan Chase Bank N.A. is without merit because the entity from which the Debtors ultimately will be seeking discovery is JPMorgan Chase & Co., which is not a party to the Adversary Proceeding or the D.C. Action. Accordingly, he elaborates, JPMorgan Bank's filing of an Adversary Proceeding with the Court prior to the Debtors' request for Rule 2004 Discovery should have no impact on the Discovery Request. "In fact, the Requested Examination was tailored and targeted to ensure that it was not duplicative of the issues germane in the Adversary Proceeding," Mr. Zahralddin-Aravena says. He clarifies that the Adversary Proceeding asks the Court to make a series of legal determinations regarding JPMorgan's interests in certain assets it claims to have purchased from the FDIC. In contrast, he notes, the Discovery sought through the Debtors' Requested Examination concerns JPMorgan's alleged misconduct, including gaining access to the Debtors' confidential information in connection with its supposed interest in bidding for the company, then causing market panic, thereby fomenting an FDIC seizure of WaMu. He further points out that discovery in the Adversary Proceeding will be a much slower process and will involve significant resistance by JPMorgan Bank to provide the "business-destruction discovery" sought by the Debtors. Nevertheless, Mr. Zahralddin-Aravena maintains, to the extent the requested Examination demonstrates that the Debtors have viable claims against JPMorgan, the Debtors should not be limited in choosing the proper venue to bring those Claims. Mr. Zahralddin-Aravena adds that contrary to JPMorgan's assertion, the Debtors' Requested Examination is designed neither to evade the Federal Rules of Bankruptcy Procedure nor to bolster the Debtors' defenses in the Adversary Proceeding. Rather, the Debtors maintain that they are properly using Rule 2004 as a "pre-litigation tool for identifying separate potential claims" and to unearth potential estate claims, which relate to business tort claims against JPMorgan and which it did not raise in the Adversary Proceeding. The Debtors insist that their request for extension of time to assert counterclaims against JPMorgan is necessary, because they are "severely understaffed and suffering from a lack of institutional memory" due to JPMorgan's purchase of WMB from the FDIC. The Debtors filed on May 18, 2009, their response to JPMorgan's objection, pursuant to a Court-approved stipulation extending the Response Period. In a separate filing, the Official Committee of Unsecured Creditors informed the Court and parties-in-interest that it joins the Debtors' request for an examination of JPMorgan under Rule 2004. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over Sept. 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. (Washington Mutual Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). WOOD STREET: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Wood Street Commons Associates 9189 Marshall Road Cranberry Twp, PA 16066 Bankruptcy Case No.: 09-23767 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Samuel R. Grego, Esq. Dickie, McCamey & Chilcote Suite 400 2 PPG Place Pittsburgh, PA 15222 Tel: (412) 392-5507 Fax: (412) 392-5367 Email: gregos@dmclaw.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 its 20 largest unsecured creditors when it filed its petition. The petition was signed by D. Thomas Mistick. WORKMEN'S AUTO: A.M. Best Affirms FS Rating at "B" -------------------------------------------------- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of B (Fair) and issuer credit rating of "bb" of Workmen's Auto Insurance Company in Los Angeles, California). The revised outlook reflects the deterioration in Workmen's risk- adjusted capitalization following significant operating losses in 2008. The ratings of Workmen's reflect its marginal risk-adjusted capitalization and elevated underwriting leverage. Underwriting performance was impacted by significant underwriting losses as well as one time costs due to expenses from litigation and the execution of management's product and distribution strategies. In addition, the ratings recognize the company's concentration of exposures in the non-standard automobile line of business. These rating factors are partially offset by the actions of the management team who implemented refined underwriting procedures, revised rates, expanded its product distribution, initiated agency management strategies and improved claims procedures. Additionally, Workmen's holds a conservative investment portfolio consisting primarily of highly-rated bonds, which generated relatively consistent levels of investment income that offset underwriting losses over the past five years. YOSI SHEMTOV: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Yosi Shemtov 193-53 McLaughlin Avenue Queens, NY 11423 Bankruptcy Case No.: 09-44229 Chapter 11 Petition Date: May 22, 2009 Court: United States Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Jerome Feller Debtor's Counsel: Narissa A. Joseph, Esq. 277 Broadway, Suite 501 New York, NY 10017 Tel: (212) 233-3060 Fax: (212) 608-0304 Email: njosephlaw@aol.com Estimated Assets: $1,000,000 to $10,000,000 Estimated Debts: $1,000,000 to $10,000,000 A full-text copy of Mr. Shemtov's petition, including a list of his 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nyeb09-44229.pdf The petition was signed by Mr. Shemtov. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- June 10-13, 2009 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 25th Annual Bankruptcy & Restructuring Conference The Ritz-Carlton Orlando Grande Lakes Orlando, Florida Contact: http://www.aria.org/ June 11-14, 2009 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ June 21-24, 2009 INTERNATIONAL ASSOCIATION OF RESTRUCTURING, INSOLVENCY & BANKRUPTCY PROFESSIONALS 8th International World Congress TBA Contact: http://www.insol.org/ July 16-19, 2009 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Mt. Washington Inn Bretton Woods, New Hampshire Contact: http://www.abiworld.org/ July 29-Aug. 1, 2009 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Westin Hilton Head Island Resort & Spa, Hilton Head Island, S.C. Contact: http://www.abiworld.org/ Aug. 6-8, 2009 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Conference Hotel Hershey, Hershey, Pa. Contact: http://www.abiworld.org/ Sept. 10-11, 2009 AMERICAN BANKRUPTCY INSTITUTE Complex Financial Restructuring Program Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Sept. 10-12, 2009 AMERICAN BANKRUPTCY INSTITUTE 17th Annual Southwest Bankruptcy Conference Hyatt Regency Lake Tahoe, Incline Village, Nevada Contact: http://www.abiworld.org/ Oct. 2, 2009 AMERICAN BANKRUPTCY INSTITUTE ABI/GULC "Views from the Bench" Georgetown University Law Center, Washington, D.C. Contact: http://www.abiworld.org/ Oct. 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ Oct. 20, 2009 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Paris Las Vegas, Las Vegas, Nev. Contact: http://www.abiworld.org/ Dec. 3-5, 2009 AMERICAN BANKRUPTCY INSTITUTE 21st Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ Apr. 29-May 2, 2010 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 17-20, 2010 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 7-10, 2010 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2010 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Conference The Ritz-Carlton Amelia Island, Amelia, Fla. Contact: http://www.abiworld.org/ Aug. 5-7, 2010 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ Dec. 2-4, 2010 AMERICAN BANKRUPTCY INSTITUTE 22nd Annual Winter Leadership Conference Camelback Inn, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ Mar. 31-Apr. 3, 2011 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ June 9-12, 2011 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort and Spa Traverse City, Michigan Contact: http://www.abiworld.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, California Contact: 1-703-739-0800; http://www.abiworld.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. Last Updated: May 18, 2009 ********* 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 ***