/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090811.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 11, 2009, Vol. 13, No. 221 Headlines ABITIBIBOWATER INC: Court Extends Removal, Lease Decision Periods ABITIBIBOWATER INC: Gets Quebec Court OK to Sell Timberland Assets ABITIBIBOWATER INC: Proposes to Scrap Confidential Call Agreement ABITIBIBOWATER INC: Subsidiaries' Schedules of Assets and Debts ABITIBIBOWATER INC: Subsidiaries' Statements of Financial Affairs ADVENTRX PHARMACEUTICALS: Closes Sale of 5% Series C Preferreds AMBAC ASSURANCE: S&P Changes Outlook on 'CC' Rating to Negative AMERICAN ACHIEVEMENT: S&P Cuts Rating to SD on Buyback at 65% Off ALPINE SECURITIZATION: DBRS Rates $67MM Liquidity Facility at 'BB' AMERICAS INSURANCE: AM Best Assigns 'B' Financial Strength Rating ANGIOTECH PHARMACEUTICALS: Posts $11.8MM Net Loss for June 30 Qtr ANNIE LEIBOVITZ: Ambitious Building Renovations Caused Woes ASARCO LLC: Objects to Globeville Civic's $7 Million Claim ASARCO LLC: Parent Appeals SCC Judgment Bidders' Reimbursements ASARCO LLC: Proposes $20 Million Indemnity Escrow Account ASARCO LLC: Wants Lease Decision Deadline Moved to Dec. 31 BALLY TOTAL: Assumes Credit Card Pact With Merchant Services BALLY TOTAL: HSBC Bank Files Suit to Pursue Distribution for Notes BALLY TOTAL: Rejects Laurelhurst Concession Contract BALLY TOTAL: Returns Lease Deposit to BTF Greenwood BANK OF AMERICA: District Judge Won't OK Settlement With SEC BANKUNITED FINANCIAL: Panel Can Retain KT&T as Local Counsel BANKUNITED FINANCIAL: Asks for August 21 Extension for Schedules BASHAS' INC: Creditors Panel Retains Pepper Hamilton, Mesirow BOSCOV'S INC: Gets $43.7 Million Loan from Housing Agency BOWNE & CO: S&P Changes Outlook to Positive, Affirms 'B' Rating CANNERY CASINO: S&P Downgrades Corporate Credit Rating to 'B' CASCADE GRAIN: Votes for Proposed Plan Due September 1 CATHOLIC CHURCH: BSNC Wants to Buy Fairbanks' Pilgrim Hot Springs CATHOLIC CHURCH: Fairbanks Committee Retains J.H. Cohn as Advisor CATHOLIC CHURCH: Tort Claimants' Plea to Reopen Tucson Case Denied CATHOLIC CHURCH: Tucson Tort Committee Proposes $1MM Distribution CDX GAS: Second Lien Lenders to Own Company After Ch. 11 Exit CEDAR FAIR: Moody's Assigns 'Ba3' Rating on New Term Loans CEDAR FAIR: S&P Assigns 'BB-' Rating on $900 Mil. Senior Loan CELL THERAPEUTICS: Amends Terms of SMI Acquisition Deal CELL THERAPEUTICS: Posts $18.0 Million Net Loss for Q2 2009 CELL THERAPEUTICS: Sets Annual Shareholders' Meeting on Oct. 20 CENTER CUT: Deteriorating Cash Flow Cues Moody's Junk Rating CENTRUE FINANIAL: Defers Interest Payments on Trust Preferreds CHEMTURA CORP: Posts $118 Million Net Loss in 2009 Second Quarter CHEMTURA CORP: Court Okays Eastman & Albemarle Set-Offs CHEMTURA CORP: Expands Scope of KPMG LLP Work CHINA DIGITAL: Earns $1.8MM But Discloses Going Concern Doubt COEUR D'ALENE: S&P Raises Corporate Credit Rating to 'B-' COEUR D'ALENE: Swings to $11.6 Million Net Income for June 30 Qtr COLONIAL BANCGROUP: May Be Placed Into FDIC Receivership COLONIAL BANCGROUP: DBRS Downgrades Senior Debt to 'C' COMDISCO HOLDING: Posts $144,000 Net Loss in Third Quarter 2009 COMFORCE CORP: Posts $598,000 Net Income for 2nd Quarter 2009 CONTINENTAL AIRLINES: Equity Issuance Won't Move Moody's B2 Rating COOPER-STANDARD: To Continue Customer Programs Postpetition COYOTES HOCKEY: NHL Seeks to Push Jim Balsillie Out of Bidding CROCS INC: Posts $30.2 Million Net Loss for June 30 Quarter CRUCIBLE MATERIALS: Asks for Dec. 2 Extension to File Ch. 11 Plan CRUCIBLE MATERIALS: Seeks to Pay PRL Industries' Prepetition Claim DANA HOLDING: Moody's Changes Default Rating to 'Caa1/LD' DEERFIELD CAPITAL: Gets Relief from Net Worth Covenants DELTA AIR LINES: Reports July 2009 Traffic Results DELTA PETROLEUM: Second Quarter Net Loss Widens to $180.4MM DUNE ENERGY: Narrows Net Loss to $16.4 Million in Q2 2009 EINSTEIN NOAH: General Counsel and Secretary Jill Sisson to Retire EINSTEIN NOAH: Posts Slightly Lower Net Income in June 30 Quarter EMPIRE RESORTS: Delays Filing of June 30 Quarterly Report EMPIRE RESORTS: Receives Default Notice From 5-1/2% Noteholders EMPIRE RESORTS: Register 5,000,000 Shares Under 2005 Equity Plan ENERGY PARTNERS: Chapter 11 Filing Raises Going Concern Doubt FINLAY ENTERPRISES: Discloses Terms of Gordon Brothers Agency Deal FINLAY ENTERPRISES: Ch. 11 Filing Cues Moody's Rating Cut to 'D' FINLAY ENTERPRISES: S&P Withdraws 'D' Corporate Credit Rating FIRST BANKS: Defers Interest Payments on Jr. Subordinated Notes FIRST BANKS: Defers Interest Payments on Trust Preferreds FIRSTPLUS FINANCIAL: Can Employ Cox Smith as Attorneys FIRSTPLUS FINANCIAL: Creditors Meeting Continued to August 21 FIRSTPLUS FINANCIAL: Taps John Clarson for General Corp. Advice FIRSTPLUS FINANCIAL: Taps Michael Eberhardt to Advise CFO FIRSTPLUS FINANCIAL: Taps Patton Boggs for DOJ Probe FONTAINEBLEAU: Cash Collateral Use Extended Until September 3 FONTAINEBLEAU: Court OKs Rejection of Employment & Sales Pacts FONTAINEBLEAU: Turnberry Agrees to 6 Mos.' License Suspension FONTAINEBLEAU: Wants to Scrap TB Realty Marketing Agreement FORD MOTOR: DBRS Confirms Issuer Rating at 'CCC' FRONTIER AIRLINES: Southwest Submits Bid of More Than $170 Million FRONTIER AIRLINES: Has Pact With Teamsters on Concessions GENERAL GROWTH: Committee Retains Halperin as Conflicts Counsel GENERAL GROWTH: Committee Retains FTI as Financial Advisors GENERAL GROWTH: Hires Cushman & Wakefield as Appraisers GENERAL GROWTH: Proposes Assessment Tech. as Tax Consultants GENERAL MOTORS: Targets Public Offering by July 2010 GENERAL MOTORS: Pre-Bankruptcy Stock Have No Value GENERAL MOTORS: RHJ to Sweeten Bid for Opel/Vauxhall Operations GLOBAL MOTORSPORT: Files Chapter 11 Plan of Liquidation GMAC INC: Biz. Capital Group Sr. Managers Join Mountain Funding GMAC INC: To Provide Lease Financing on 2009, 2010 Models GREAT ATLANTIC: Moody's Affirms 'B3' Corporate Family Rating GREEKTOWN HOLDINGS: Court OKs March-May Fee Applications GREENBRIER COMPANIES: Moody's Cuts Corp. Family Rating to 'Caa1' HERBST GAMING: Sr. Lenders Won't Recover 100% on $500M Value HSP GAMING: S&P Assigns Corporate Credit Rating at 'B-' HUNTSMAN CORPORATION: Moody's Cuts Corporate Family Rating to 'B1' IMAX CORP: Reports $2.6 Million Net Income for June 30 Quarter JEFFERSON COUNTY: Governor Riley Calls Special Session JER INVESTORS: Cuts Deals With Three Trust Preferred Shareholders JOURNAL REGISTER: Emerges From Chapter 11 Bankruptcy KEATING CHEVROLET: Files for Chapter 11 in Texas KINGSLEY CAPITAL: Confirmation Hearing to be Held on August 12 KIRK PIGFORD: Court Dismisses Chapter 11 Proceeding LA PLACITA: Shopping Center Rents Constitute Cash Collateral LANDAMERICA FIN'L: Waterstone Has 8.06% Equity Stake LEHMAN BROTHERS: Alvarez & Marsal Bills $42MM for March-May Work LEHMAN BROTHERS: FSA's Issues on JPMorgan Account Resolved LEHMAN BROTHERS: HK Lawmakers Question Minibonds Settlement LEHMAN BROTHERS: SONICblue Estate to Pay $1.3MM LBI Claim LEHMAN BROTHERS: Stipulations on Return of Erroneous Transfers LEHMAN BROTHERS: To Assign Visteon Loan to Pentwater LENNY DYKSTRA: Creditor Wants Case Converted to Chapter 7 LINN ENERGY: Asset Sale Deals Won't Affect Moody's 'B1' Rating LOWER BUCKS: Moody's Junks Rating on $27 Mil. Series 1992 Bonds LYONDELL CHEMICAL: Court Approves J. Gallogly Employment Pact MAMMOTH SAN JUAN: Sec. 341(a) Meeting Continued to August 19 MECACHROME INTERNATIONAL: Creditors Meeting to be Hld on August 26 MERIDIAN AUTOMOTIVE: Voluntary Chapter 7 Case Summary FRONTIER AIRLINES: Southwest Submits Bid of More Than $170 Million FRONTIER AIRLINES: Has Pact With Teamsters on Concessions MICHELLE SHEPHERD: Bankruptcy Auction on August 19 MICROMET INC: Posts $13.9 Million Net Loss for June 30 Quarter NII HOLDINGS: Moody's Assigns Corporate Family Rating at 'B2' NII HOLDINGS: S&P Assigns Corporate Credit Rating at 'B+' NORTEL NETWORKS: CEO Zafirovski Steps Down Following Assets Sale NORTEL NETWORKS: Posts 25% Revenue Drop, $274 Mil. Net Loss in Q2 NORTEL NETWORKS: Has Protocol for Prompt Payment to Ex-Employees NORTEL NETWORKS: Interim Supplier Pacts Extended to Sept. 9 NORTEL NETWORKS: Proposes $1.3 Million Settlement With Synnex NPS PHARMACEUTICALS: Inks Equity Line of Credit Pact with Azimuth NPS PHARMACEUTICALS: Posts $2.6 Million Net Income in Q2 2009 NPS PHARMACEUTICALS: To Raise $100,000,000 by Issuing Securities NV BROADCASTING: To End WKTV Weekday Newscast September 21 OSCIENT PHARMACEUTICALS: Panels Taps Mesirow as Financial Advisor PARADIGM MEDICAL: March 31 Balance Sheet Upside-Down by $4 Mil. PAULA DORF: Wants New Lender, Files for Chapter 11 Bankruptcy PENN NATIONAL: S&P Assigns 'BB-' Rating on $250 Mil. Senior Notes PEOPLES COMMUNITY: To File for Ch. 11 on Bank Closing, Foiled Sale PHOENIX FOOTWEAR: Forbearance Period Extended Until September 30 PILGRIM'S PRIDE: 43 Trade Creditors Transfer $2.44 Mil. in Claims PILGRIM'S PRIDE: Incurs $53.24MM Loss for Quarter Ended June 27 POLAROID CORP: C2 Invested $2.6MM to Acquire 5% Interest REPUBLIC STORAGE: Disc Statement OK'd; Sept 3 Voting Deadline Set RESIDENTIAL CAPITAL: Business Capital Group Joins Mountain Funding RIO VISTA ENERGY: Warns of Bankruptcy if Unit's Sale Fails SEMGROUP LP: Applicants' CCAA Stay Extended Until October 1 SEMGROUP LP: Examiner Discharged From Chapter 11 Probe Duties SIX FLAGS: Committee Proposes Solomon as Financial Advisor SIX FLAGS: Committee Sets Information Access Protocol SIX FLAGS: Seeks Bankruptcy Court's Nod to Pay Foreign Vendors SIX FLAGS: Court Allows Committee Members to Trade in Securities SMITHFIELD FOODS: Moody's Affirms 'Ba3' Rating on Senior Notes SMITHFIELD FOODS: S&P Assigns 'B+' Rating on $225 Mil. Add-On Debt SMITHFIELD FOODS: S&P Downgrades Corporate Credit Rating to 'B-' SPANSION INC: Key Parties Object to Formation of Equity Committee SPANSION INC: Latham & Watkins Bills $4.1MM for March to June Work SPANSION INC: Tessera Wants Probe for Infringement Claims SPECTRUM BRANDS: Sales Down to $589MM; To Exit Ch. 11 This Month SPORTS ROCK: Fails to Pay Drink Tax, Files for Chapter 11 Bankr. STANDARD MOTOR: Plans to Raise $75 Million by Issuing Securities STANDARD MOTOR: Posts $5.31MM Net Earnings for June 30 Quarter STANT PARENT CORP: U.S. Trustee Appoints 5-Member Creditors' Panel STEEL NETWORK: Can Use BofA's Cash Collateral Until August 21 STERLING MINING: Sunshine Precious Asks Court to Dismiss Case STOLLE MACHINERY: S&P Withdraws 'B+' Corporate Credit Rating SYNTAX-BRILLIAN: Greenberg Traurig Wants $6 Million in Fees TITLEMAX HOLDINGS: To Avoid $164MM Interest Payment, Lenders Say TRUMP ENTERTAINMENT: Incurs $581MM Net Loss on Impairment Charges UBS AG: Settlement Talks Continue, Drafting Pact Needs More Time UNIVERSAL MARKETING: Can Access TD Bank's Cash Until August 17 UNIVERSAL MARKETING: Schedules Filing Extended Until August 24 UNUM GROUP: Net Income Rises to $267MM in Quarter Ended June 30 VERSACOLD INTERNATIONAL: S&P Keeps 'B' Corporate Credit Rating VONAGE HOLDINGS: Posts $2.28 Mil. Net Income for June 30 Quarter WESTMORELAND COAL: WML Unit in Default of Leverage Ratio Covenant WORLDSPACE INC: Asks Court to Extend Plan Filing Until Dec. 31 XERIUM TECHNOLOGIES: Swings to $7.84MM Net Loss in First Half 2009 XERIUM TECHNOLOGIES: Warns of Covenant Breach in Sept. 30 Quarter * Large Companies With Insolvent Balance Sheets ********* ABITIBIBOWATER INC: Court Extends Removal, Lease Decision Periods ----------------------------------------------------------------- The Bankruptcy Court extended the time within which the Debtors may file notices of removal of civil actions and proceedings in state and federal courts to which they are or may become parties, through and including November 12, 2009. A certificate of no objection was filed in relation to the Debtors' request. Judge Kevin Carey also extended the period within which the Debtors may assume or reject leases, through and including November 12, 2009, with respect to 20 leases, which are of critical importance to the Debtors' ongoing business. The 20 Leases comprise of plant, office, warehouse, industrial and timberland leases. The Court's Order is subject, and without prejudice, to the rights of the Debtors to seek further extension of their Lease Decision Period with the consent of the affected lessor. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Gets Quebec Court OK to Sell Timberland Assets ------------------------------------------------------------------ Honorable Mr. Justice Clement Gascon, J.S.C., of the Superior Court Commercial Division for the District of Montreal in Quebec, Canada, authorized Abitibi-Consolidated Inc. and its affiliates to sell their Quebec Timberland Assets for C$53 million. Mr. Justice Gascon approved these agreements in relation to the Quebec Timberland Asset Sale, and authorized the CCAA Applicants to implement the transactions contemplated by the Agreements: (a) The Purchase and Sale Agreement of the Mauricie Timberlands Assets, with respect of timberland assets located in the Mauricie region, by and among Abitibi- Consolidated Inc. and Abitibi-Consolidated Company of Canada, as vendors, and Solifor Mauricie, societe en commandite, as purchaser. (b) The Purchase and Sale Agreement of the Charlevoix Timberland Assets in relation to timberland assets in the region of Charlevoix/Saguenay, by and among ACI and ACCC, as vendors, and Solifor Charlevoix/Saguenay, Societe en Commandite, as purchaser. (c) The Purchase and Sale Agreement of the Cote-Nord Timberland Assets with respect to timberland assets located in the Cote-Nord region, by and between ACCC, as vendor, and 3908666 Canada Inc. In an 8-page opinion, Mr. Justice Gascon determined that the Timberland Assets represent less than 1% of the total timber sourced by the CCAA Applicants in Quebec. The Assets are not required to continue the operations of the CCAA Applicants and are not vital to successfully restructure their business, the Canadian Court held. Before the entry of the Court's ruling, the Senior Secured Noteholders opposed the CCAA Applicants' projected use of the Timberland Asset Sale proceeds to provide liquidity for operating purposes. The McBurney Corporation, McBurney Power Limited and MBB Power Services Inc., as lienholders, joined in the Noteholders' objection. The Senior Secured Noteholders asked the Canadian Court to rule that the proceeds should be paid to the ACI DIP Lender as a prepayment of the ACI DIP Loan, with the balance, if any, being retained by the Court-appointed CCAA Monitor in a trust pending further Court order. Mr. Justice Gascon held that there is no valid reason to deal with the proceeds of the Sale in the manner proposed by the Senior Secured Noteholders. The Canadian Court acknowledged that the Sale proceeds will provide the CCAA Applicants with additional and well-needed liquidity. In its 12th Monitor Report submitted to the Canadian Court, Ernst & Young LLP recommended approval of the Sale. E&Y determined that, among other things, the Purchase Price is reasonable compared to precedent transactions in the Province of Quebec, and is within a reasonable range of appraised values. The Purchase Price will provide the ACI Group with much needed liquidity, E&Y noted. "It is moreover important for the [CCAA Applicants] to maintain sufficient liquidity so as to avoid being in default under the existing Securitization Program agreements," Mr. Justice Gascon said. "If the Timberland Assets proceeds cannot be used to provide liquidity for operating purposes, the [Applicants] will lose the benefit of the margin of comfort which excess liquidity provides," he stated. The Sale Order constitutes the only authorization required by the CCAA Applicants to proceed with the Transactions, the Canadian Court held. No shareholder or regulatory approval is required in connection with the Transactions contemplated in the Agreements. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Proposes to Scrap Confidential Call Agreement ----------------------------------------------------------------- Abitibibowater Inc. and its affiliates filed with the U.S. Bankruptcy Court for the District of Delaware a redacted motion, seeking permission to reject a certain call agreement. In a separate statement, the Debtors explained that the Call Agreement "contains a confidentiality provision that prohibits unilateral disclosure concerning the transactions contemplated therein." Disclosure of the Agreement and its contents "would violate the confidentiality provisions in the Agreement," according to Sean T. Greecher, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware. Accordingly, the Debtors asked the Court to authorize them to file the Confidential Motion under seal, pursuant to Section 107(b) of the Bankruptcy Code. The Debtors intend to provide an unredacted copy of the Confidential Motion on a confidential basis, to (i) the Court, (ii) the Office of the United States Trustee for the District of Delaware, (iii) the Official Committee of Unsecured Creditors, (iv) certain counterparties to the Agreement, and (v) any other parties as the Court may allow. Woodbridge Reacts The Woodbridge Company Limited, Woodbridge International Holdings Limited and Woodbridge International Holdings SA, maintain that the Debtors' request to reject the Call Agreement must be denied because: (i) the Call Agreement is a constituent part of a single, integrated agreement along with a certain Partnership Agreement -- both of which are executed by the same Parties regarding the same subject matter in the course of the same transaction and must therefore be either assumed or rejected in toto; and (ii) the Call Agreement is not an executory contract, as no material obligations were due as of the Petition Date from any party and therefore, is not subject to rejection under Section 365(a) of the Bankruptcy Code. David P. Primack, Esq., at Drinker Biddle & Reath LLP, in Wilmington, Delaware, relates that in 2001, the Debtors entered into a partnership arrangement with the Woodbridge Entities to operate a newsprint mill in Augusta, Georgia. The Partnership was created on September 6, 2001, when the Woodbridge Partner acquired a 50% interest in a partnership from Thomson Newsprint Inc., which is a public company whose largest shareholder is TWCL. The Partnership Arrangement is made up of two integral parts, which include the Partnership Agreement and the Call Agreement. Mr. Primack insists that the Partnership Arrangement would not exist without the terms of Call Agreement. The terms of the Call Agreement and the Partnership Agreement "were considered to be -- and, indeed, were treated as -- the complete set of terms of the Partnership Arrangement [hence] . . . the Debtors should not be able to cherry pick through the whole and decide to reject some terms while retaining the benefit of others," he argues. Against this backdrop, the Woodbridge Entities ask Judge Carey to deny the Debtors' rejection request. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Subsidiaries' Schedules of Assets and Debts --------------------------------------------------------------- Twenty-three debtor affiliates of AbitibiBowater Inc. filed with the Court separate schedules of assets and liabilities: Debtor Entity Assets Liabilities ------------- ------------ -------------- Bowater Canadian Forest Products Inc. $896,319,036 $281,122,798 Donohue Corp. 364,574,381 1,053,104,555 Bowater Alabama LLC 332,100,048 415,884,995 Bowater Newsprint South Operations 220,508,008 407,881,464 Abitibi-Consolidated Corp. 179,128,086 1,056,886,004 Alabama River Newsprint Co. 178,526,800 1,054,551,547 Bowater America Inc. 126,848,861 273,085,199 Abitibi Consolidated Sales Corp. 94,297,459 1,068,922,663 Bowater Maritimes Inc. 9,162,667 2,028,282 Bowater Nuway Mid-States Inc. 5,710,162 272,713,841 Abitibi-Consolidated Alabama Corp. 4,411,205 1,052,867,769 Bowater Nuway Inc. 321,483 272,555,011 Augusta Woodlands, LLC 298,307 1,052,867,769 Bowater LaHave Corporation 45,529 128,172,797 Bowater Canadian Holdings Inc. 2,538 128,172,797 Bowater Canada Finance Corporation 2,104 28,172,797 Bowater Newsprint South LLC 1,046 400,732,389 AbitibiBowater Canada Inc. 2,079 0 Bowater Finance Company Inc. 30,063,069 undisclosed Bowater Canadian Limited 643,425 undisclosed Coosa Pines Golf Club Holdings LLC 264,518 undisclosed Lake Superior Forest Products Inc. 1,868 undisclosed Bowater Ventures Inc. 734 undisclosed These six Debtor Entities submitted Schedules that reflected assets and liabilities in unknown amounts: * AbitibiBowater US Holding 1 Corp. * AbitibiBowater US Holdings LLC * Bowater Finance II LLC * Bowater South American Holdings Inc. * Catawba Property Holdings, LLC * Tenex Data Inc. Abitibi-Consolidated Finance LP posted unknown amount of assets and liabilities totaling $7,842,000. Six Debtors Amended their Schedules On August 4, 2009, six Debtor affiliates filed amended Schedules with the Court to reflect a revised list of creditors holding unsecured non-priority claims in these aggregate amounts: Schedule F Debtor Entity Total Amount ------------- -------------- Bowater Incorporated $2,291,195,872 Bowater Canadian Forest Products Inc. 308,947,878 Abitibi-Consolidated Corporation 296,975,583 Alabama River Newsprint Company 294,652,778 Bowater Alabama LLC 15,172,197 Bowater Nuway Mid-states, Inc. 213,841 About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Subsidiaries' Statements of Financial Affairs ----------------------------------------------------------------- William G. Harvey, AbitibiBowater Inc.'s senior vice president and chief financial officer, reports that these Debtor-affiliates of AbitibiBowater, Inc., earned revenues in the form of interest income and disposal of assets during these periods: Revenue from Interest Income/ Debtor-affiliate Period Disposal of Assets ---------------- ------------ ------------------ Abitibi-Consolidated Corp. YTD 2009 $12,903,418 Abitibi-Consolidated YTD 2009 4,284,325 Sales Corp. YE 2008/2007 Augusta Woodlands LLC YE 2008/2007 220,486 AbitibiBowater Canada Inc. YE 2008/2007 77,449 Alabama River Newsprint Co. YTD 2009 42,999 YE 2007 Bowater Nuway Inc. YTD 2009 83,357,109 YE 2008/2007 Bowater Canadian Forest YTD 2009 4,706,886 Products, Inc. YE 2008/2007 Donohue Corp. YTD 2009 4,151,820 Bowater Canadian YTD 2009 3,127,493 Holdings, Inc. YE 2008/2007 Bowater Alabama LLC YTD 2009 & YE 2007 319,254 Bowater Maritimes, Inc. YTD 2009 144,491 YE 2008/2007 Bowater Newsprint South YE 2007 88,279 Operations LLC Bowater Canada YE 2007 44,913 Finance Corp. Bowater Canadian Limited YE 2008/2007 17,864 Within 90 days to the Petition Date, these Debtor-affiliates made transfers to various creditors: Total Amount of Debtor-affiliate Transfers Made ---------------- --------------- Abitibi-Consolidated Sales Corp. $24,625,719 Alabama River Newsprint Co. $1,239,977 Bowater Newsprint South LLC $6,544,746 Bowater Alabama LLC $10,346,578 Bowater America, Inc. $12,463,829 Abitibi-Consolidated Corp. C$3,779,132 Bowater Maritimes, Inc. C$5,189,241 Bowater Nuway Mid-States Inc. US$454,991 Bowater Nuway Mid-States Inc. C$6,295 Bowater Canadian Forest Products Inc. US$12,022,134 Bowater Canadian Forest Products Inc. C$91,951,616 These Debtor-entities paid a total of $18,741,180 to company insiders, consisting of various officers and directors in the U.S. and Canada, or withdrew or distributed to those insiders compensation in any form during the one year period prior to the Petition Date: -- AbitibiBowater U.S. Holding LLC -- Donohue Corp. -- Abitibi-Consolidated Alabama Corp. -- Augusta Woodlands LLC -- Tenex Data, Inc. -- Abitibi-Consolidated Finance LP -- Bowater Newsprint South Operations LLC -- Bowater Finance II LLC -- Coosa Pines Golf Club -- Catawba Property Holdings -- Bowater Finance Company Inc. -- Bowater South American Holdings -- Lake Superior Forest Products, Inc. -- Bowater Canada Finance Corp. -- Bowater Canadian Holdings, Inc. -- AbitibiBowater Canada Inc. -- Bowater Maritimes, Inc. -- Bowater LaHave Corp. -- Bowater Nuway Inc. -- Bowater Nuway Mid-States Inc. -- Bowater Ventures Inc. -- Bowater Finance II -- Abitibi-Consolidated Sales Corp. -- Alabama River Newsprint Co. -- Abitibi-Consolidated Corp. -- Bowater Newsprint South LLC -- Bowater Alabama LLC -- Bowater America, Inc. -- Bowater Canadian Forest Products, Inc. Bowater Canadian Forest Products, Inc., Bowater Alabama LLC, Abitibi-Consolidated Corp., Abitibi-Consolidated Sales Corp., Coosa Pines Golf Club, Bowater Maritimes, Inc., and AbitibiBowater Canada Inc. became parties to civil or personal injury lawsuits prior to the Petition Date. Bowater Canadian Forest Products, Inc., Bowater Alabama LLC, Bowater Newsprint South Operations LLC, Abitibi-Consolidated Corp., Alabama River Newsprint Co. and Lake Superior Forest Products, Inc. made contributions to various charitable institutions prior to the Petition Date. Abitibi-Consolidated Sales Corp. incurred losses totaling $4,300 due to theft and fire within one year to the Petition Date. Bowater Alabama LLC had total losses of $138,200. Abitibi- Consolidated Corp., for its part, had total losses of $173,038 and Bowater Canadian Forest Products, Inc. incurred losses that aggregate $3,190,699. These Debtor-affiliates made payments or property transfers, totaling $15,665,148 to certain parties for consultation concerning debt consolidation, relief under the bankruptcy law or preparation of the Chapter 11 Petition within one year immediately preceding the Petition Date: * AbitibiBowater U.S. Holding LLC * Donohue Corp. * Abitibi-Consolidated Alabama Corp. * Augusta Woodlands LLC * Tenex Data, Inc. * Abitibi-Consolidated Finance LP * Bowater Finance II LLC * Catawba Property Holdings * Bowater Finance Company Inc. * Bowater South American Holdings * Lake Superior Forest Products, Inc. * Bowater Canadian Holdings, Inc. * AbitibiBowater Canada Inc. * Bowater Maritimes, Inc. * Bowater LaHave Corp. * Bowater Canadian Limited * Bowater Nuway Inc. * Bowater Nuway Mid-States Inc. * Bowater Ventures Inc. * Bowater Finance II * Abitibi-Consolidated Sales Corp. * Alabama River Newsprint Co. * Abitibi-Consolidated Corp. * Bowater Newsprint South Operations LLC * Bowater Newsprint South LLC * Bowater Alabama LLC * Bowater America, Inc. * Bowater Canadian Forest Products, Inc. Within two years to the Petition Date, various transfers were made by various Debtor-affiliates: (a) Bowater Newsprint South LLC granted mortgage to Wachovia Bank National Association. (b) Donohue Corp. made transfers relating to security interests in favor of Goldman Sachs Credit Partners, LP. (c) Bowater Newsprint South Operations transferred track mobile valued at $68,000 to AbitibiBowater-McKenzie. (d) Bowater Nuway Mid-States Inc. distributed term promissory notes to Bowater Incorporated. (e) Abitibi-Consolidated Sales Corp. transferred all assets of the Snowflake Mill to Catalyst Paper Corporation. (f) Bowater Alabama LLC granted mortgage to Wachovia Bank and sold land to Presbytery of Sheppards and Lapsley. (g) Bowater Canadian Forest Products, Inc., made various land transfers to more than 30 entities. (h) Abitibi-Consolidated Corp. transferred various items to more than 20 entities. Bowater Canadian Forest Products, Inc., Bowater Alabama LLC, Abitibi-Consolidated Corp., Alabama River Newsprint Co., Bowater Newsprint South Operations, Bowater Nuway Mid-States Inc. and Coosa Pines Golf Club further disclosed that they control or hold various equipment and certain other property that are owned by other entities. Bowater Nuway Inc. occupied 1155 Metcalfe Street, in Montreal, Quebec, within three years before the Petition Date. Similarly, Abitibi-Consolidated Sales Corp. occupied premises in Alpharetta, Charlestown, Chicago White Plains and Charlestown North, Las Vegas. Bowater Canadian Forest Products, Inc., Alabama River Newsprint Co., Coosa Pines, Bowater Maritimes, Inc. and Catawba Property Holdings received notice from governmental units regarding potential liabilities under violation of certain environmental laws. Bowater Alabama LLC and Bowater Canadian Forest Products, Inc. also sent notices regarding release of hazardous material to various government units. Six years before the Petition Date, these Debtor-affiliates owned 5% or more of the voting equity securities of certain entities: Debtor-affiliate Owned 5% of ---------------- ----------- AbitibiBowater U.S. Holding LLC Donohue Corp. Donohue Corp. Abitibi-Consolidated Sales Corp. Donohue Corp. Abitibi-Consolidated Corp. Abitibi-Consolidated Alabama Corp. Alabama River Newsprint Company Bowater Newsprint South Operations Bowater Finance II LLC Lake Superior Forest Products, Inc. Ponderay Newsprint Company Bowater Canadian Holdings, Inc. AbitibiBowater Canada, Inc. and Bowater Canada Treasury Corp. AbitibiBowater Canada Inc. Abitibi-Consolidated Inc. and Bowater Canadian Products, Inc. Bowater Maritimes, Inc. The Restiguche Log Driving and Boom Company Bowater LaHave Corp. Bowater-Korea Ltd. Bowater Canadian Limited Bowater Mersey Paper Company Limited Bowater Nuway Inc. Calhoun Newsprint Co. Abitibi-Consolidated Sales Corp. Abitibi-Consolidated Alabama Corp. and Abitibi-Consolidated US Funding Corp. Alabama River Newsprint Co. Alabama River Newsprint Mill Abitibi-Consolidated Corp. Augusta Woodlands, LLC Bowater Newsprint South LLC Bowater Alabama LLC and Bowater Newsprint South Operations LLC Bowater Alabama LLC Bowater Finance II LLC Bowater America, Inc. Lake Superior Forest Products, Inc. Bowater Canadian Forest 9032-4286 Quebec Inc., Products, Inc. et al. Mr. Harvey states that within six years to the Petition Date, P&R Auditores Independentes Ltda., Danny Eaton, Gino LeBlanc, Bill Kerr, Bruno Monette, Bruno Taillion, Dave Lawrence, Mark Rooney, Tracy Porter, Alain Quenneville, Brian Robinson, Cassandra Price, Barbara Cole, Pierre Rogeau, Robin Villanueve, Jocelyn Pepin, Chris Thomas, Joehl Ihrig, Rob Rozee, John Mielke, Joseph Johnson, Linda Gauvin, Anita Gilliland Cassandra Price, and William Harvey kept or supervised the keeping of books of account and records of the Remaining Debtors, as applicable, or were in possession of those books and records as of the Petition Date. PricewaterhouseCoopers LLP audited the books and records of Bowater Canadian Forest Products, Inc., within two years to the Petition Date. Inventories on certain of the Debtors were conducted or kept by these individuals or entities, as applicable: (1) Dan Garlington (2) Jeff Petit (3) Phil Elmore (4) Ricky Baker (5) Roy Doyle (6) Sheen Lewis (7) Joseph Johnson (8) Oma Fiedler (9) Aiman Harmon (10) Jeremy Reding (11) Rick Eddins (12) Travis Martin (13) Bob Ward (14) Carolyn Lee (15) Gary Anacker (16) Gary Harbin (17) David White (18) Mac McGhee (19) Matt Crocker (20) Glenn Joiner As parent companies, these Debtor-affiliates directly or indirectly hold 100% of the voting or equity securities of these Remaining Debtors: Debtor-affiliate 100% Of Equity Owned By ---------------- ----------------------------- AbitibiBowater U.S. Holding AbitibiBowater, Inc. Donohue Corp. AbitibiBowater US Holding Abitibi-Consolidated Alabama Abitibi-Consolidated Sales Augusta Woodland Abitibi-Consolidated Corp. Tenex Data, Inc. Abitibi-Consolidated Canadian Office Products Holdings, Inc. Bowater Newsprint South Operations LLC Bowater Newsprint South LLC Coosa Pines Golf Club Bowater Alabama LLC Catawba Property Holdings Bowater Incorporated Bowater Finance Company Inc. Bowater Incorporated Bowater South American Holdings Bowater Incorporated Lake Superior Forest Products, Inc. Bowater America, Inc. Bowater Canada Finance Corp. Bowater Incorporated Bowater Canadian Holdings, Inc. Bowater Incorporated AbitibiBowater Canada Inc. Bowater Canadian Holdings, Inc. Bowater Maritimes, Inc. Bowater Canadian Forest Products Bowater LaHave Corp. Bowater Canadian Forest Products Bowater Nuway Inc. Bowater Incorporated Bowater Nuway Mid-States Inc. Bowater Nuway, Inc. Bowater Ventures Inc. Bowater Incorporated Bowater Finance II AbitibiBowater Inc. Abitibi-Consolidated Sales Corp. Donohue Corp. Abitibi-Consolidated Corp. Donohue Corp. Bowater Alabama LLC Bowater Newsprint South LLC Bowater America, Inc. Bowater Incorporated Bowater Canadian Forest Products, Inc. AbitibiBowater Canada, Inc. Abitibi-Consolidated Company of Canada asserts 99% of the stock ownership, while Abitibi-Consolidated Nova Scotia has 1% stock ownership, in Abitibi-Consolidated Finance LP. Bowater Alabama LLC and Bowater Newsprint South Operations LLC each hold 50% of the stocks of Bowater Finance II LLC. Similarly, Alabama River Newsprint Co.'s stocks are 1% owned by Abitibi-Consolidated Sales Corp., and 99& by Abitibi-Consolidated Alabama Corp. These individuals terminated their relationship with the Remaining Debtors, as applicable: * Allen Dea * Breen Blaine * John McKee * Andrew E. Taylor * Robert Kanee * Colin R. Wolfe * C. Randolph Ellington * William McCormick * Claude St-Laurent * Duane R. Wolfe * Vincent Maranda * Darryl Wharton Abitibi-Consolidated Sales Corp. and Bowater Canadian Forest Products, Inc., contributed to various pension plans and retirement plans for hourly paid and salaried employees. About AbitibiBowater Inc. Headquartered in Montreal, Canada, AbitibiBowater Inc. -- http://www.abitibibowater.com/-- produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 27 pulp and paper facilities and 34 wood products facilities located in the United States, Canada, the United Kingdom and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has more third-party certified sustainable forest land than any other company in the world. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of September 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes Abitibibowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ADVENTRX PHARMACEUTICALS: Closes Sale of 5% Series C Preferreds --------------------------------------------------------------- ADVENTRX Pharmaceuticals, Inc., has completed the sale of shares of its 5% Series C convertible preferred stock pursuant to a registered direct offering to a single institutional investor, representing gross proceeds of approximately $900,000. ADVENTRX said 12-1/2%, or $115,250, of the gross proceeds will be placed in an escrow account, which amounts will be released to make the dividend and other payments. The preferred stock is convertible into shares of ADVENTRX's common stock at the option of the investor at a price of $0.13 per share and will accrue a 5% cumulative dividend until February 10, 2012. If the convertible preferred stock is converted at any time prior to February 10, 2012, ADVENTRX will pay the holder an amount equal to the total dividend that would accrue on the convertible preferred stock from the conversion date through February 10, 2012, or $125 per $1,000 of stated value of notes converted, less any dividend payments made with respect to the converted convertible preferred stock. ADVENTRX plans to use the net proceeds from the offering to fund activities necessary to advance ANX-530 (vinorelbine emulsion) toward commercialization in the U.S. and to continue development of ANX-514 (docetaxel emulsion), and for general corporate purposes. The shares were sold by ADVENTRX pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission. A prospectus supplement relating to the offering was filed with the SEC on August 5, 2009. Rodman & Renshaw, LLC, a wholly owned subsidiary of Rodman & Renshaw Capital Group, Inc. (NasdaqGM: RODM), acted as the exclusive placement agent for the transaction. As reported by the Troubled Company Reporter on August 4, 2009, ADVENTRX was notified by staff of the NYSE Amex that its compliance plan has been accepted. On June 1, 2009, ADVENTRX was notified by the NYSE Amex staff that it was not in compliance with the NYSE Amex's continued listing standards as set forth in Part 10 of the NYSE Amex's Company Guide. In order to maintain its listing, the NYSE Amex required ADVENTRX to submit a plan by July 1, 2009, addressing how it intends to regain compliance by December 1, 2010, which the Company submitted timely. On July 31, 2009, the NYSE Amex staff notified ADVENTRX that it has determined that the Plan makes a reasonable demonstration of ADVENTRX's ability to regain compliance with the NYSE Amex's continued listing standards and has determined to grant an extension until December 1, 2010, for ADVENTRX to regain compliance with the NYSE Amex's continued listing standards. During the Extension Period, ADVENTRX will be subject to periodic review to determine whether it is making progress consistent with the Plan. If ADVENTRX does not show progress consistent with the Plan, the NYSE Amex staff will review the circumstances and may immediately commence delisting proceedings. On June 1, 2009, the NYSE Amex staff indicated that the Company is not in compliance with Section 1003(a)(ii) of the NYSE Amex Company Guide with stockholders' equity of less than $4,000,000 and losses from continuing operations and net losses in three of its four most recent fiscal years and Section 1003(a)(iii) of the NYSE Amex Company Guide with stockholders' equity of less than $6,000,000 and losses from continuing operations and net losses in its five most recent fiscal years. About ADVENTRX Pharmaceuticals ADVENTRX Pharmaceuticals, Inc. (NYSE Amex: ANX) -- http://www.adventrx.com/-- is a biopharmaceutical company whose product candidates are designed to improve the safety of existing cancer treatments. AMBAC ASSURANCE: S&P Changes Outlook on 'CC' Rating to Negative --------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on its counterparty credit rating on Ambac Assurance Corp to negative from developing. The outlook on the financial strength rating remains developing. Standard & Poor's also said that it affirmed its 'CC' counterparty credit, financial strength, and financial enhancement ratings on Ambac. In addition, Standard & Poor's affirmed its 'CC' counterparty credit rating on Ambac Financial Group Inc. (Ambac Financial). The outlook on Ambac Financial remains negative. "Ambac has received regulatory approval to release contingency reserves to bolster surplus," noted Standard & Poor's credit analyst David Veno. "However, the rating reflects its view that there could be additional commutations, which S&P will view as distressed exchanges." Once a distressed exchange has occurred, S&P will lower the counterparty credit rating on Ambac to 'SD'. Following the commutation, S&P will also complete a forward- looking review that takes into account whatever benefits the company realized from it as well as any other interim developments, and S&P will adjust the ratings as warranted. The rating also reflects its view that further deterioration in Ambac's insured portfolio of nonprime residential mortgage-backed securities and related CDO of ABS exposure would require the company to strengthen reserves to account for higher projected claims. The additional reserves will hurt operating results, which S&P believes could cause surplus to decline to below regulator-required minimums. "The negative outlook on the Ambac counterparty credit rating reflects the possibility that S&P could lower the rating to 'SD' upon the completion of additional commutations," Mr. Veno added. "The outlook on the Ambac financial strength rating is developing because S&P could raise the rating upon the completion of additional commutations that strengthen Ambac's financial position." The negative outlook on Ambac Financial reflects the company's dependence on dividends from Ambac to pay its debt. S&P could lower the rating if Ambac were not able to provide sufficient cash to Ambac Financial to service this debt. AMERICAN ACHIEVEMENT: S&P Cuts Rating to SD on Buyback at 65% Off ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Austin, Texas-based American Achievement Corp. to 'SD' (selective default) from 'CC'. S&P also lowered its issue-level rating on ultimate parent company American Achievement Group Holding Corp.'s 12.75% senior PIK notes to 'D' from 'C'. The recovery rating on these notes remains at '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default. These actions follow the company's announced final results of its tender offer and repurchase of $65.3 million, or 59.4% of the outstanding PIK notes. All other outstanding ratings on the company's debt remain unchanged. The issue-level ratings remain on CreditWatch with positive implications, given the expectation that S&P will raise the corporate credit rating for AAC upon the reevaluation of its pro forma capital structure. The rating actions follow AAC's repurchase of $65.3 million of 12.75% senior PIK notes (issued by ultimate parent company American Achievement Group Holding Corp.) in cash for a total of about $22.9 million. The downgrade of the corporate credit rating to 'SD' reflects S&P's view that the purchase, which was executed at a price of $350 per $1,000 per principal amount of the notes, was executed at a significant discount to par and is tantamount to a default given the distressed financial condition of the company. In March 2009, prior to the tender offer, S&P lowered its corporate credit rating on AAC to 'CCC+'. S&P said it was concerned that the company would find it difficult to sustain its capital structure over the intermediate term given S&P's expectation that debt balances would accrete in excess of the company's generation of free cash flow. Based on the reduction of consolidated debt balances and annual capitalized interest as a result of the completed tender, S&P expects to raise AAC's corporate credit rating as soon as is practical. On June 5, 2009, S&P cited a preliminary expectation that the corporate credit rating could possibly be raised to 'B-' in the event that 100% of the holders of the senior PIK notes would tender their holdings. Given the 59.4% participation rate in the tender offer, S&P intends to reevaluate its operating assumptions for the company, as well as the accretion of remaining debt balances relative to S&P's projections for free cash flow. In addition, S&P's analysis will focus on the company's flexibility to service and repay its debt obligations, particularly the senior secured credit facilities, which mature in March 2011. In conjunction with the raising of the corporate credit rating, S&P would also raise the issue-level ratings on the company's debt at the operating company and intermediate company levels, consistent with S&P's notching criteria. S&P expects to complete this review in the next several days. ALPINE SECURITIZATION: DBRS Rates $67MM Liquidity Facility at 'BB' ------------------------------------------------------------------ DBRS has confirmed the rating of R-1 (high) for the Commercial Paper (CP) issued by Alpine Securitization Corp. (Alpine), an asset-backed commercial paper (ABCP) vehicle administered by Credit Suisse, New York branch. In addition, DBRS has confirmed the ratings and revised the tranche sizes of the aggregate liquidity facilities (the Liquidity) provided to Alpine by Credit Suisse. The $9,815,014,482 aggregate liquidity facilities are tranched as follows: -- $9,482,666,314 rated AAA -- $74,453,756 rated AA -- $41,601,920 rated A -- $53,155,174 rated BBB -- $67,311,271 rated BB -- $31,872,787 rated B -- $63,953,260 unrated The ratings are based on March 31, 2009 data. The CP rating reflects the AAA credit quality of Alpine's asset portfolio. The updated credit quality aspect of the CP rating is based on both the portfolio of assets and the available program- wide credit enhancement (PWCE). The rationale for the CP rating is based on the updated AAA credit quality assessment as well as DBRS' prior and ongoing review of legal, operational and liquidity risks associated with Alpine's overall risk profile. The ratings assigned to the Liquidity reflect the credit quality of Alpine's asset portfolio based on an analysis that assesses each transaction to a term standard. The tranching of the Liquidity reflects the credit risk of the portfolio at each rating level. The tranche sizes are expected to vary each month based on changes in portfolio composition. For Alpine, both the CP and the Liquidity ratings use DBRS' simulation methodology, which was developed to analyze diverse ABCP conduit portfolios. This analysis uses the DBRS CDO Toolbox simulation model, with adjustments to reflect the unique structure of an ABCP conduit and its underlying assets. DBRS determines attachment points for risk based on an analysis of the portfolio and models the portfolio based on key inputs such as asset ratings, asset tenors and recovery rates. The attachment points determine the portion of the exposure rated AAA, AA, A through B as well as unrated. DBRS models the portfolio on an ongoing basis to reflect changes in Alpine's portfolio composition and credit quality. The rating results are updated and posted on the DBRS website. AMERICAS INSURANCE: AM Best Assigns 'B' Financial Strength Rating ----------------------------------------------------------------- A.M. Best Co. has assigned a financial strength rating of B (Fair) and an issuer credit rating of "bb" to Americas Insurance Company (Americas) (New Orleans, LA). The outlook assigned to both ratings is stable. Americas' positive rating factors include its low underwriting leverage and conservative investment portfolio. Additionally, Americas' management has good local market knowledge, and the current risk profile is supported by adequate reinsurance coverage. Americas' ratings also reflect the current capitalization at the holding company, geographic concentration in Louisiana and its homeowners' product offering. As a single state writer in a catastrophe-exposed region, earnings are exposed to frequent and severe weather-related events. In addition, Americas is exposed to regulatory and competitive concerns. ANGIOTECH PHARMACEUTICALS: Posts $11.8MM Net Loss for June 30 Qtr ----------------------------------------------------------------- Angiotech Pharmaceuticals, Inc., narrowed its net loss to $11.8 million for the three months ended June 30, 2009, from a net loss of $26.0 million for the same period a year ago. For the six months ended June 30, 2009, the Company booked net income of $567,000 from a net loss of $41.8 million a year ago. As of June 30, 2009, the Company had $382.3 million in total assets; and $58.6 million in total current liabilities and $620.6 million in total non-current liabilities; resulting in $297.0 million in stockholders' deficit. The Company had $843.1 million in accumulated deficit as of June 30, 2009. "We were pleased to observe continued sales growth in our Proprietary Medical Products business during the quarter, including continued acceleration of our important QuillTM SRS and HemoStreamTM product lines," said Dr. William Hunter, President and CEO of Angiotech. "Despite the continued challenges we are experiencing in certain parts of our Base Medical Products business, the continued stabilization of our TAXUSR-derived royalty revenue, the possibility that Cook's ZilverTM paclitaxel- eluting peripheral stent may contribute additional royalty revenue and the recent FDA approval of our OptionT Inferior Vena Cava Filter leaves us optimistic about the second half of 2009 and 2010." The Company's Second Quarter financial highlights: -- Total revenue was $64.6 million. -- Net product sales were $47.2 million. Sales of Proprietary Medical Products were $13.5 million, or 29% of total product sales. Sales of Base Medical Products were $33.7 million, or 71% of total product sales. -- Royalty revenue was $17.0 million. -- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted to exclude certain non-cash and non-recurring items) was $12.6 million. -- Research and development expenses were $6.8 million, and as adjusted to exclude non-cash stock-based compensation expenses and other non-recurring costs were $6.1 million. -- Selling, general and administrative expenses were $21.6 million, and as adjusted to exclude non-cash stock- based compensation expenses, certain litigation costs, non-recurring financing fees and other non-recurring costs were $19.0 million. -- GAAP net loss and net loss per share for the quarter were ($11.9) million and ($0.14), respectively. Adjusted net loss and adjusted net loss per share for the quarter were ($1.8) million and ($0.02), respectively. -- As of June 30, 2009, cash and short-term investments were $52.3 million and net debt was $522.7 million. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?414d Based in Vancouver, British Columbia, Angiotech Pharmaceuticals Inc. (NASDAQ: ANPI, TSX: ANP)-- http://www.angiotech.com/-- is a pharmaceutical and medical device company with over 1,500 dedicated employees. Angiotech discovers, develops and markets innovative treatment solutions for diseases or complications associated with medical device implants, surgical interventions and acute injury. ANNIE LEIBOVITZ: Ambitious Building Renovations Caused Woes ----------------------------------------------------------- Annie Leibovitz embarked on extensive renovations of two 19th century buildings at 755-757 Greenwich Street, in Manhattan, which she planned to combine into a single 9,000-square-foot live-and- work space, according to documents filed with the New York City Landmarks Preservation Commission, Bloomberg News reported. According to Katya Kazakina at Bloomberg, the renovations dragged on for years, igniting opposition by the Greenwich Village Society for Historic Preservation and a $15 million lawsuit against Leibovitz by her next-door neighbor. In September 2003, Leibovitz settled the suit by buying the neighbor's building for $1.87 million. These three properties, according to Bloomberg, contributed to the "dire financial condition" that led her to seek a $24 million loan from Art Capital Group Inc. Art Capital Group, in September 2008, gave celebrity photographer Annie Leibovitz access to a $24 million loan, backed by rights to her photograph and real estate in New York. Their agreement was that Art Capital would be the "irrevocable, exclusive agent" for the sale of her works and property for the loan's length and for two years after she pays it off. Ms. Leibovitz has been unable to pay off the loan. Art Capital is now suing Ms. Leibovitz before the New York State Supreme Court, New York County, in Manhattan (Case No. 09-602334), for breach of contract, claiming that Ms. Leibovitz has not cooperated with the sale of her photographs and has not granted access to the real estate backing the loans. According to an August 5 report by Bloomberg News, Thomas Kline, Esq., a partner at Andrews Kurth, which specializes in art law and litigation, said that filing for bankruptcy rather than challenging the lawsuit, may be better legal strategy for Ms. Leibovitz. Mr. Kline, Bloomberg relates, said that while a bankruptcy filing would make Ms. Leibovitz's finances public, it would stay the lawsuit while she considers her options. According to Mr. Kline, the bankruptcy court may be "may be more attuned to fairness issues with regard to her and to all her creditors." Annie Leibovitz, 59, is the creator of famous photographs including a nude of John Lennon in a fetal position with Yoko Ono, and a portrait of a pregnant, naked Demi Moore published on the cover of Vanity Fair magazine. ASARCO LLC: Objects to Globeville Civic's $7 Million Claim ---------------------------------------------------------- ASARCO LLC asks the Court to deny in its entirety Claim No. 19195 asserted by Globeville Civic Association for $7,000,000. Nathaniel Peter Holzer, Esq., at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Corpus Christi, Texas, contends that Claim No. 1915 should be denied because: -- it was filed after the Claims Bar Date; -- it is a claim under the Comprehensive Environmental Response, Compensation, and Liability Act, and CERCLA has no private right of action; -- it is barred by limitations; -- the Claimant has no legal standing to pursue this type of claim for homeowners; -- no facts are provided that show the Claimant itself was damaged; and -- the Claim itself recites facts that show there were no damages. Mr. Holzer further asserts that there is no legal basis for the Claimant to recover damages from ASARCO for money paid by someone else. The Court will commence a hearing on September 15, 2009, to consider the request. 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). Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Parent Appeals SCC Judgment Bidders' Reimbursements --------------------------------------------------------------- ASARCO LLC filed with Court on August 4, 2009, a sealed expense reimbursement document. To recall, ASARCO sought and obtained the Bankruptcy Court's approval for the reimbursement of expenses incurred by certain bidders in connection with the potential auction and sale of all or a portion of the judgment entered on April 15, 2009, by the U.S. District Court for the Southern District of Texas, Brownsville Division, in favor of ASARCO LLC, in the litigation against Americas Mining Corporation relating to shares of Southern Peru Copper Company, now known as Southern Copper Corporation. Parent Appeals Reimbursement Order, Seeks Stay of Order Pending Appeal Americas Mining Corporation and Asarco Incorporated notify the U.S. Bankruptcy Court for the Southern District of Texas that they will take an appeal to the U.S. District Court for the Southern District of Texas of Judge Schmidt's Expense Reimbursement Order dated July 29, 2009, with respect to expenses incurred by certain bidders in connection with the potential auction and sale of all or a portion of the SCC Final Judgment. The Parent also seeks to appeal the Bankruptcy Court order allowing ASARCO LLC to file under seal exhibits related to the Expense Reimbursement request, and all adverse orders included within the Seal Order. In a separate filing, the Parent has elected to have its Appeal considered at the District Court. On the Parent's behalf, Charles A. Beckham, Jr., Esq., at Haynes and Boone, LLP, contends that the Reimbursement Order and related Seal Order represent two unprecedented actions that will likely be reversed on appeal. To this end, he reiterates, the Parent has filed a notice of appeal to correct the fatal legal defects of the Orders and anticipates prevailing on appeal. However, because of the nature of the relief granted, the irreparable harm that the Parent will suffer in addition to the harm to third parties and the public at large, appellate review alone is not adequate to protect the Parent's rights, Mr. Beckham asserts. Accordingly, the Parent asks Judge Schmidt to stay both Orders pending appellate review. The Debtors have made clear their intentions to proceed with the bid solicitation process for the SCC Final Judgment as quickly as possible, which makes the request to stay extremely time- sensitive and necessitate an emergency hearing, Mr. Beckham contends. 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 US$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 US$1.1 billion in cash and a US$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 US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Proposes $20 Million Indemnity Escrow Account --------------------------------------------------------- The Bankruptcy Court previously authorized and approved ASARCO LLC's grant of indemnification, advancement of expense, and related rights to its current directors, officers and certain employees. While ASARCO LLC is not aware of any pending or threatened claims that would trigger its obligation to defend, advance expenses, and indemnify any Indemnified Party with respect to the ASARCO indemnification obligations, the Debtors' bankruptcy cases involve a complex reorganization with diverse and, at times, conflicting interests among constituents, relates Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas. Mr. Kinzie notes that ASARCO LLC is a large company with over 2,500 employees and business relationships with thousands of domestic and foreign trade creditors, vendors and customers. Given the complexity of ASARCO's reorganization and its size and operations, he asserts that it is possible that ASARCO may be asked to honor its indemnification obligations for a substantial period after confirmation of a Chapter 11 plan of reorganization. The Debtors are now preparing to exit bankruptcy, which will entail the inevitable change of control if one of the three competing reorganization plans before the Court is confirmed and consummated, Mr. Kinzie avers. Regardless of which plan is confirmed, he notes, allowed administrative claims, including claims for indemnification, must be paid in full on the Plan Effective Date under Section 1129(a)(9)(A) of the Bankruptcy Code. Thus, he tells the Court, the bankruptcy estates will need to provide for an adequate reserve to pay administrative indemnification claims. The Debtors' Plan and the Harbinger Plan expressly provide for a six-year, $20 million cash escrow account for that purpose and stipulate that the escrow is to be created and funded on the Plan Effective Date. By this motion, the Debtors seek the Court's authority to establish a six-year, $20 million cash escrow account prior to confirmation to secure the estates' administrative indemnification obligations to the Indemnified Parties. ASARCO also asks the Court for an expedited hearing of its request in advance of Plan Confirmation Hearing, and because ASARCO needs to renew its fiduciary coverage that is set to expire August 14. Mr. Kinzie assures the Court that any funds remaining in the Indemnity Escrow Account after it has served its purpose will be distributed in accordance with the priority scheme provided under any Chapter 11 plan that is confirmed. "Establishing the Indemnity Escrow Account now will ensure that the Indemnified Parties, who have labored long and hard under exceedingly difficult, complex, and often litigious circumstances to help ASARCO emerge from bankruptcy, will have a source of payment for post-bankruptcy obligations no matter which of the three reorganization plans is confirmed," Mr. Kinzie contends. In partial resolution of a corporate governance dispute in December 2005, the Court ordered ASARCO to obtain directors' and officers' insurance covering risks as appropriate for a company of ASARCO's size and circumstances as a debtor-in-possession under Chapter 11. The Court also directed ASARCO to establish a cash reserve to pay any retention or deductible under the D&O policies with the consent of the official creditor committees. In accordance with the Court's order, ASARCO has maintained directors' and officers' errors and omissions and fiduciary coverage in each year since filing for bankruptcy protection and, and in light of the upcoming change of control under any confirmed plan, is (i) increasing its errors and omission coverage from $25 million to $55 million and its fiduciary coverage from $10 million to $20 million, and (ii) exercising its option under the policies to purchase six-year, run-off coverage. Mr. Kinzie tells Judge Schmidt that ASARCO is negotiating with various carriers, but expects the approximate total cost for the errors and omissions coverage to be $955,000 and for the fiduciary coverage to be $350,000. Over the current renewal rates, the amount represents an incremental increase of approximately $310,000 for the additional $30 million of errors and omissions coverage and approximately $160,000 for the additional $10 million of fiduciary coverage, including the six-year runoff coverage for both. As for the Court-approved cash reserve to pay any retention or deductible under applicable policies, ASARCO proposes to satisfy the obligation by providing in the terms of the Indemnity Escrow Agreement that the $20 million to be held may also be used to fund any retainage or deductible under the applicable insurance policies. The establishment of a cash escrow and the procurement of appropriate insurance to protect the estate and general unsecured creditors if the administrative indemnification obligations are triggered in the future is a prudent exercise of ASARCO's business judgment that is within the ordinary course of ASARCO's business; is fair and equitable to ASARCO's directors, officers, and employees; and is subsumed by the Court's prior authorization under the December 15, 2005 corporate governance stipulation and order, Mr. Kinzie contends. Nevertheless, out of an abundance of caution and to provide the plan sponsors and all parties-in- interest notice of its proposed actions, ASARCO is seeking the Court's approval of the action. ASARCO filed exhibit lists in support of its request. * * * Judge Schmidt grants ASARCO LLC's request in part. The Court approves the form of Indemnity Escrow Agreement, and authorizes ASARCO to make non-material changes to the form as is appropriate. The Court also rules that no Plan Sponsor may, after the Effective Date, reduce the amount of errors and omission insurance or the fiduciary coverage below the new coverage amounts. ASARCO is authorized and directed to immediately procure the appropriate errors and omission and fiduciary insurance in the new coverage amounts set forth in the request. ASARCO's request for authority to fund the Indemnity Escrow Account with $20 million is continued and reset for further hearing on August 10, 2009. Competing Plans ASARCO LLC has sent to creditors three competing Chapter 11 plans for voting -- plans sponsored by investors led by Harbinger Capital Partners Master Fund I Ltd., another by parent Grupo Mexico SAB, through ASARCO Inc. and a third by ASARCO LLC. The Bankruptcy Court is scheduled to begin confirmation hearings for the competing plans on August 10. ASARCO LLC's plan is built upon an agreement to sell assets to Vedanta unit Sterlite Industries Inc. Sterlite has agreed to provide a $770 million promissory note, pay $1.1 billion in cash and assume certain liabilities as part of its consideration in exchange for ASARCO's assets. Grupo Mexico, through ASARCO Inc. and Americas Mining Corp., is offering to purchase ASARCO LLC, and exchange offer creditors 100% 100% of the value of the claims: 97% in the form of payments in cash and equivalents, consisting of $3.152 billion, as well as the remaining 3% from amounts recovered from various litigation proceedings, including against Sterlite. Grupo Mexico recently beefed up its plan to provide recovery options for creditors. Harbinger's plan proposes to purchase ASARCO's assets for $500 million and the assumption of certain liabilities. Harbinger said in early August that while it is not withdrawing its Plan, it wants the Court to suspend confirmation of its own plan in order to conserve estate resources. It said that since it filed its plan, the Debtors and Grupo Mexico have made substantial modifications to the terms of their proposed plans. Copies of the disclosure statement explaining the three plans, as divided into five parts, are available for free at: http://bankrupt.com/misc/ASARCO_Joint_DS_070609_01.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_02.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_03.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_04.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_05.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). Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Wants Lease Decision Deadline Moved to Dec. 31 ---------------------------------------------------------- ASARCO LLC and its affiliates ask the Bankruptcy Court to extend the time by which they must assume or reject certain unexpired leases of non-residential real property through December 31, 2009. Judith W. Ross, Esq., at Baker Botts L.L.P., in Dallas, Texas, relates that the vast majority of the Leases relate to Mission Mine that ASARCO LLC operates on lands leased from the San Xavier District of the Tohono O'odham Nation and certain individual members of the Tohono O'odham Nation, who hold trust patent allotments of the lands. ASARCO LLC operates the mine on the lands pursuant and subject to federal regulations imposed by the U.S. Department of the Interior Bureau of Land Management and Bureau of Indian Affairs. Ms. Ross reminds the Court that the Indian Leases contain provisions imposing on ASARCO LLC an obligation to conduct post- mining reclamation. The nature and scope of the reclamation obligation was the subject of significant disagreement among the parties, which the Debtors, the District, the BLM and the BIA resolved in a comprehensive settlement that the Court approved on April 9, 2008. Accordingly, she notes, the most significant of ASARCO LLC's real property Leases have been assumed in accordance with the Mission Mine Settlement. Before the Court are three competing Chapter 11 plans of reorganization for the Debtors. Ms. Ross avers each Plan addresses unexpired leases and thus, extension of the Debtors' Lease Decision Deadline through December 2009 will give ASARCO LLC and the two other Plan Sponsors the additional time needed to evaluate the Leases in anticipation of confirmation and consummation of a Chapter 11 Plan. The Debtors assure Judge Schmidt that they are current on all of their postpetition obligations under the Leases, and will remain so until the Leases are assumed or rejected. The Debtors also sought and obtained a Court order for an expedited hearing on their request to allow additional time for ASARCO LLC to evaluate certain Leases before the Confirmation Hearing. Accordingly, Judge Schmidt will commence a hearing on August 7, 2009, to consider the extension. * * * Accordingly, Judge Schmidt issued a bridge order with respect to the Debtors' extension request. The Debtors' lease disposition period expired August 1. Judge Schmidt extended the time within which the Debtors may assume or reject the Leases from August 1 until the Court enters an order resolving the extension request. 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 US$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 US$1.1 billion in cash and a US$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 US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Assumes Credit Card Pact With Merchant Services ------------------------------------------------------------ Bally Total Fitness Holding Corp. and its affiliates obtained the consent of the Bankruptcy Court to assume an amended credit card agreement with Merchant Services, Inc., as successor-in-interest to First USA Merchant Services, Inc., originally dated March 1, 1996. Under the Merchant Agreement, Paymentech provides the Debtors with necessary services related to the processing of credit card transactions, consisting of all transactions involving credit cards, charge cards, check cards, travel cards, and any related cards that could be used for electronic payment. The Merchant Agreement primarily concerns the processing of VISA and Mastercard transactions by Paymentech. The Debtors' clubs also accept payment by Discover Card and American Express. In addition, Paymentech handles the logistics surrounding Discover Card and American Express transactions and charges a fee. Pursuant to the Merchant Agreement, Paymentech is compensated at varying rates and formulas for VISA and Mastercard transactions based on the services provided to the Debtors. It further sets forth the procedures for transmittal of information and settlement of accounts with Bally after each transaction. In this regard, Paymentech holds approximately $12 million in reserve to ensure reimbursement after processing credit card transactions. In March 2009, Paymentech filed Claim No. 1686 against Bally for $29,220,635 of which (i) $11,648,572 was secured, and (ii) $17,572,063 was unsecured. In July 2009, the Debtors and Paymentech entered into the Amended Merchant Agreement that provides for these terms: (a) Paymentech will process electronic check payments and PIN based debit transactions for the Debtors, which were previously processed by JPMorgan Chase. (b) The Debtors' current reserve requirement for the processing of the Transactions will be reduced by more than $3.5 million after the services are consolidated with one processor. (c) Approximately $673,000 as of July 1, 2009, will be paid by the Debtors to Paymentech to cure all defaults under the Agreement, as required by Section 365(b) of the Bankruptcy Code. To satisfy the Cure Amount, Paymentech will draw down on the Reserve. (d) Within 10 days of assumption of the Agreement, as modified by the Amendment, Paymentech will withdraw its Claim. According to Bradley O'Neill, Esq., at Kramer Levin Naftalis & Frankel LLP, the Debtors' ability to accept credit cards as a form of payment is essential to their survival both during and after the Chapter 11 cases because a substantial amount of payments received from customers come in the form of credit card payments. Accordingly, the Debtors seek to assume the Agreement to ensure that Paymentech continues to provide its critical services to the Debtors. Assumption of the Amended Agreement will allow the Debtors to realize efficiencies in the areas of reporting, file transmission, deposits and relationship management by consolidating electronic payment processing for both credit cards and checks through one processor, Mr. O'Neill told the Court. Mr. O'Neill added that the assumption of the Amended Agreement is a more attractive alternative for the Debtors than the rejection of the Agreement, or the subsequent renegotiation of a new credit card agreement. While Paymentech is not the sole provider of credit card services, identifying a replacement supplier would be particularly challenging in today's marketplace, he noted. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S.D.N.Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bally Total Fitness Holding and its 42 debtor-affiliates delivered their Joint Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York on June 10, 2009. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: HSBC Bank Files Suit to Pursue Distribution for Notes ------------------------------------------------------------------ HSBC Bank USA, National Association contends that holders of Bally Total Fitness Holdings Corporation's 15-5/8/ 14% Senior Subordinated Toggle Notes due 2013 are entitled to receive and retain their pro rata distribution of the Unsecured Claims Distribution under the Amended Joint Plan of Reorganization. HSBC Bank is the indenture trustee under an Indenture dated as of October 1, 2007, pursuant to which Bally issued the 15-5/8/ 14% Notes in the principal amount of $200,000,000. Bally also issued 13% Notes due 2011 in the principal amount of $247,337,500 on October 1, 2007. The 15-5/8/14% Notes are subordinate to Senior Indebtedness to the limited extent set forth in the Indenture. The Indenture also unambiguously exempts the holders of the 15-5/8/ 14% Notes from any obligation to pay over their portion of a distribution consisting of Permitted Junior Securities to the 13% Notes under the Plan, Stephanie Wickouski, Esq., at Drinker Biddle & Reath LLP, in New York, tells the Court. Therefore, the holders of the 15-5/8/ 14% Notes are entitled to retain their Pro Rata distribution of the Unsecured Claims Distribution, which consists solely of stock and warrants, that are expressly and clearly outside the scope of the Subordination Provisions of the Indenture, Ms. Wickouski says. Ms. Wickouski maintains that if HSBC Bank had not filed the Adversary Action, the Debtors would pay the Class 10 distribution to the holders of Allowed Senior Note Claims pursuant to the terms of the Plan and in contravention of the Indenture. Thus, until the Subordination Dispute commenced in the Adversary Action is resolved by the Court, the Debtors have created an actual controversy within the meaning of Section 2201(a) of the Judiciary and Judicial Procedures Code, Ms. Wickouski adds. Against this backdrop, HSBC Bank seeks a judgment from the Court against the Debtors: (1) declaring that the 15-5/8/ 14% Noteholders are entitled to receive and retain their Pro Rata distribution of the Unsecured Claims Distribution under the Plan; (2) declaring in any event, that HSBC is entitled to exercise its charging lien against the Class 10 Distribution, to the extent necessary for payment of its fees and expenses in full; and (3) in the alternative, declaring that if the Class 10 Distribution is held to be subject to the subordination provisions of the Indenture, then the Class 10 distribution be distributed to holders of all Senior Indebtedness, pursuant to the terms of the Indenture. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S.D.N.Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bally Total Fitness Holding and its 42 debtor-affiliates delivered their Joint Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York on June 10, 2009. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Rejects Laurelhurst Concession Contract ---------------------------------------------------- At the request of Bally Total Fitness Holding Corp. and its affiliates, Judge Burton Lifland authorized the rejection of a master concession agreement dated January 1, 2001, that the Debtors entered into with Laurelhurst Physical Therapy Clinic LLC. Pursuant to the Executory Contract, Laurelhurst operated a physical therapy concession at the Debtors' fitness club located at 8785 SW Beaverton Hillsdale Highway in Raleigh Hills, Oregon. The Sports Center Location has been previously rejected by the Debtors. The Debtors are ceasing operations at the Sport Center Location and will be surrendering the premises to the landlord. Without the Sport Center Location, the Master Concession Agreement provides no value to the Debtors' estates, Stephen D. Zide, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, told the Court. The Debtors have also determined that the Agreement does not have any market value that could be captured by the Debtors' estates. Absent a timely rejection the Agreement, the Debtors may incur needless postpetition expenses under it, Mr. Zide said. Parties asserting damages with respect to the rejection of the Agreement must file a proof of claim on or before August 22, 2009, the Court ruled. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S.D.N.Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bally Total Fitness Holding and its 42 debtor-affiliates delivered their Joint Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York on June 10, 2009. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BALLY TOTAL: Returns Lease Deposit to BTF Greenwood --------------------------------------------------- In August 1999, BTF Greenwood Corporation deposited $500,000 with BTFF Corporation, one of Bally Total Fitness Holding Corp.'s units, which amount was required in connection with financing the premises subject to a lease agreement between the parties, dated April 20, 1988. BTF Greenwood has received payments reflecting interest on the Landlord Deposit from BTFF from time to time, and seeks the return of the Landlord Deposit. In connection with its demand for a return of the Landlord Deposit, BTF Greenwood asserted, and the Debtors have not disputed, that the Landlord Deposit is not property of any Debtors' estates pursuant to Section 541 of the Bankruptcy Code. Accordingly, the parties have agreed to the return of the Landlord Deposit in accordance with these terms: (a) BTFF will pay BTF Greenwood a settlement payment of $504,719 through check. (b) Upon receipt of BTFF's Settlement Payment, BTF Greenwood will withdraw its Claim No. 1190 against BTFF. The Agreement will become effective upon its deemed approval pursuant by the Court. About Bally Total Fitness Based in Chicago, Illinois, Bally Total Fitness Holding Corp. (Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates fitness centers in the U.S., with over 375 facilities located in 26 states, Mexico, Canada, Korea, China, and the Caribbean under the Bally Total Fitness(R), Bally Sports Clubs(R), and Sports Clubs of Canada (R) brands. Bally Total and its affiliates filed for Chapter 11 protection on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after obtaining requisite number of votes in favor of their pre- packaged Chapter 11 plan. Joseph Furst, III, Esq., at Latham & Watkins, L.L.P., represents the Debtors in their restructuring efforts. As of June 30, 2007, the Debtors had US$408,546,205 in total assets and US$1,825,941,54627 in total liabilities. The Debtors filed their Joint Prepackaged Plan & Disclosure Statement on July 31, 2007. The Court confirmed the Plan in September 2007. The Plan was declared effective October 1, 2007. Bally Total Fitness Holding Corp. and its debtor-affiliates and subsidiaries again filed voluntary petitions under Chapter 11 on December 3, 2008 (Bankr. S.D.N.Y., Lead Case No. 08-14818). Their counsel is Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York. As of September 30, 2008, the Company (including non-debtor affiliates) had consolidated assets totaling approximately $1.376 billion and recorded consolidated liabilities totaling approximately $1.538 billion. Bally Total Fitness Holding and its 42 debtor-affiliates delivered their Joint Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York on June 10, 2009. Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings of Bally Total Fitness Holding Corp. and its debtor-affiliates (http://bankrupt.com/newsstand/or 215/945-7000) BANK OF AMERICA: District Judge Won't OK Settlement With SEC ------------------------------------------------------------ Thom Weidlich at Bloomberg News reports that U.S. District Judge Jed Rakoff refused to approve Bank of America Corp.'s $33 million settlement of a lawsuit over bonuses tied to its January acquisition of Merrill Lynch & Co., saying the amount isn't appropriate if the bank lied about billions in payments. Judge Rakoff said he needs more information on the accord between the bank and the U.S. Securities and Exchange Commission, which filed the suit. If the SEC is correct that Bank of America lied about whether to pay the bonuses, then the proposed settlement isn't "remotely reasonable," Judge Rakoff said. Judge Rakoff asked for further filings by Aug. 24 and said he wouldn't be able to approve the settlement before Sept. 9. On August 3, Bank of America said it agreed to pay the SEC a penalty of $33 million on charges of misleading investors about billions of dollars in bonuses that were being paid to Merrill Lynch & Co. executives at the time of its acquisition of the firm. The SEC, according to a complaint filed together with the settlement, alleges that in proxy materials soliciting the votes of shareholders on the proposed acquisition of Merrill, Bank of America stated that Merrill had agreed that it would not pay year- end performance bonuses or other discretionary compensation to its executives prior to the closing of the merger without Bank of America's consent. In fact, Bank of America had already contractually authorized Merrill to pay up to $5.8 billion in discretionary bonuses to Merrill executives for 2008. According to the SEC's complaint, the disclosures in the proxy statement were rendered materially false and misleading by the existence of the prior undisclosed agreement allowing Merrill to pay billions of dollars in bonuses for 2008. "Companies must give shareholders all material information about corporate transactions they are asked to approve," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Failing to disclose that a struggling company will pay out billions of dollars in performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by [the] settlement." David Rosenfeld, Associate Director of the SEC's New York Regional Office, said, "As Merrill was on the brink of bankruptcy and posting record losses, Bank of America agreed to allow Merrill to pay its executives billions of dollars in bonuses. Shareholders were not told about this agreement at the time they voted on the merger." The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, alleges that Bank of America represented in the merger agreement that Merrill had agreed not to pay any bonuses to its executives before the merger closed, except as set forth in a schedule. Unbeknownst to shareholders, the schedule was already in place weeks before the proxy statement was filed with the SEC and disseminated to shareholders. Under the schedule, Bank of America had agreed that Merrill could pay up to $5.8 billion, or nearly 12 percent of the $50 billion merger consideration, in discretionary bonuses to its executives. The merger agreement was included as an appendix and summarized in the joint proxy statement that was distributed to all 283,000 shareholders of both companies. But Bank of America's agreement to allow Merrill to pay these discretionary bonuses was in a separate document that was omitted from the proxy statement and whose contents were never disclosed before the shareholders' vote on the merger. In settling the SEC's charges without admitting or denying the allegations, Bank of America consented to the entry of a judgment that permanently enjoins Bank of America from violating the proxy solicitation rules -- Section 14(a) of the Exchange Act of 1934 and Rule 14a-9 -- and orders Bank of America to pay the financial penalty. The settlement is subject to court approval. About Bank of America Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The Company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The Company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. The bank needed the government's financial help in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BANKUNITED FINANCIAL: Panel Can Retain KT&T as Local Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida has granted the official committee of unsecured creditors of BankUnited Financial Corporation, et al., permission to retain Kozyak Tropin & Throckmorton, P.A., as its local counsel, effective as of June 9, 2009. As the Committee's local counsel, KT&T has agreed, inter alia, to: a. render legal advice regarding the Committee's organization, duties and powers in the Debtors' cases; b. assist the Committee in its investigation of the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses and the desirability of continuing the same, the potential sale of the Debtors' assets, and any other matter relevant to the cases or the formulation and analysis of any plan of reorganization or plan of liquidation; and c. attend meetings of the Committee and meetings with the Debtors, their attorneys, and other professionals, as requested by the Committee. The Committee did not provide details pertaining to KT&T's normal hourly rates. BankUnited Financial Corporation -- http://www.bankunited.com/-- was the holding company for BankUnited FSB, the largest banking institution headquartered in Coral Gables, Florida. On May 21, 2009, BankUnited FSB was closed by regulators and the Federal Deposit Insurance Corporation facilitated a sale of the bank to a management team headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank, and a group of investors led by W.L. Ross & Co. BankUnited, FSB, had assets of $12.8 billion and deposits of $8.6 billion as of May 2, 2009. The Company and its affiliates filed for Chapter 11 on May 22, 2009 (Bankr. S.D. Fla. Lead Case No. 09-19940). Stephen P. Drobny, Esq., and Peter Levitt, Esq., at Shutts & Bowen LLP; Mark D. Bloom, Esq., and Scott M. Grossman, Esq., at Greenberg Traurig, LLP; and Michael C. Sontag, at Camner, Lipsitz, P.A., represent the Debtors as counsel. The U.S. Trustee for Region 21 appointed three creditors to serve on an official committee of unsecured creditors. Corali Lopez-Castro, Esq., David Samole, Esq., at Kozyak Tropin & Throckmorton, P.A.; and Todd C. Meyers, Esq., at Kilpatrick Stockton LLP, serve as the Committee's counsel. The Debtors' financial condition as of March 31, 2009, showed total assets of $37,729,520 and total debts of $559,740,185. The Debtors have $237,261,000 trust preferred securities, $120,000,000 convertible subordinated senior notes, $12,500,000 junior subordinated debentures, and $184,000,000 convertible subordinated senior HiMEDS. The Debtors listed 1,226,853 noncumulative convertible preferred stock, Series B; and $35,507,988 Class A and 719,947 Class B shares of common stock. BANKUNITED FINANCIAL: Asks for August 21 Extension for Schedules ---------------------------------------------------------------- BankUnited Financial Corporation and its affiliated debtors ask the U.S. Bankruptcy Court for the Southern District of Florida for a second extension of the deadline to file their bankruptcy schedules, statements of financial affairs, and payroll and tax reports, through and including August 21, 2009. The Debtors tell the Court that they are still in the process of obtaining and reviewing further information necessary to prepare the schedules, statements of financial affairs and payroll and tax reports. BankUnited Financial Corporation -- http://www.bankunited.com/-- was the holding company for BankUnited FSB, the largest banking institution headquartered in Coral Gables, Florida. On May 21, 2009, BankUnited FSB was closed by regulators and the Federal Deposit Insurance Corporation facilitated a sale of the bank to a management team headed by John Kanas, a veteran of the banking industry and former head of North Fork Bank, and a group of investors led by W.L. Ross & Co. BankUnited, FSB, had assets of $12.8 billion and deposits of $8.6 billion as of May 2, 2009. The Company and its affiliates filed for Chapter 11 on May 22, 2009 (Bankr. S.D. Fla. Lead Case No. 09-19940). Stephen P. Drobny, Esq., and Peter Levitt, Esq., at Shutts & Bowen LLP; Mark D. Bloom, Esq., and Scott M. Grossman, Esq., at Greenberg Traurig, LLP; and Michael C. Sontag, at Camner, Lipsitz, P.A., represent the Debtors as counsel. The U.S. Trustee for Region 21 appointed three creditors to serve on an official committee of unsecured creditors. Corali Lopez-Castro, Esq., David Samole, Esq., at Kozyak Tropin & Throckmorton, P.A.; and Todd C. Meyers, Esq., at Kilpatrick Stockton LLP, serve as the Committee's counsel. The Debtors' financial condition as of March 31, 2009, showed total assets of $37,729,520 and total debts of $559,740,185. The Debtors have $237,261,000 trust preferred securities, $120,000,000 convertible subordinated senior notes, $12,500,000 junior subordinated debentures, and $184,000,000 convertible subordinated senior HiMEDS. The Debtors listed 1,226,853 noncumulative convertible preferred stock, Series B; and $35,507,988 Class A and 719,947 Class B shares of common stock. BASHAS' INC: Creditors Panel Retains Pepper Hamilton, Mesirow ------------------------------------------------------------- According to NetDockets, the Official Committee of Unsecured Creditors appointed in Bashas' Inc. and its affiliates' bankruptcy cases is seeking court permission to retain legal and financial professionals to assist the panel prosecute its constituencies' interest in the bankruptcy case. The United States Trustee appointed these members to the Unsecured Creditors Committee in July 2009: -- Pension Benefit Guaranty Corp.; -- Coca-Cola Enterprises, Inc.; -- PepsiCo Inc.; -- Cardinal Health 411, Inc.; -- Shamrock Foods Company; -- Kalil Bottling Company; -- Kraft Foods; -- Hickman's Egg Ranch, Inc.; and -- Cold Mountain Mechanical, Inc. The Committee is seeking to retain: -- Pepper Hamilton LLP and Osborn Maledon, P.A. as legal Counsel; and -- Mesirow Financial Consulting LLC as its financial advisors. According to the Committee's application, NetDockets relates, Pepper Hamilton is uniquely qualified to represent the Committee in the cases because the firm has represented unsecured creditors committees in 29 cases in the "grocery store, supermarket chain and food processing industries, in addition to several cases in the drugstore industry." The Company and its affiliates filed for Chapter 11 bankruptcy protection on July 12, 2009 (Bankr. D. Ariz. Case No. 09-16050). Frederick J. Petersen, Esq., at Mesch, Clark & Rothschild, P.C., assists the Debtors in their restructuring efforts. Michael W. Carmel, Ltd., is the Debtors' co-counsel. Deloitte Financial Advisory LLP serves as financial advisors. Epiq Bankruptcy Solutions, LLC, serves as claims and notice agent. In its bankruptcy petition, Bashas' listed $100,000,001 to $500,000,000 in assets and $100,000,001 to $500,000,000 in debts. BOSCOV'S INC: Gets $43.7 Million Loan from Housing Agency --------------------------------------------------------- The Boscov's department store chain has received a $43.7 million loan from the U.S. Department of Housing and Urban Development that will be used to buy the company out of bankruptcy, according to American Bankruptcy Institute. Headquartered in Reading, Pennsylvania, Boscov's Inc. -- http://www.boscovs.com/-- is America's largest family-owned independent department store, with 49 stores in Pennsylvania, New York, New Jersey, Maryland, Delaware and Virginia. Boscov's Inc. and its debtor-affiliates filed for Chapter 11 protection on August 4, 2008 (Bankr. D. Del. Case No. 08-11637). Judge Kevin Gross presides over the cases. David G. Heiman, Esq., and Thomas A. Wilson, Esq., at Jones Day, serve as the Debtors' lead counsel. The Debtors' financial advisor is Capstone Advisory Group and their investment banker is Lehman Brothers, Inc. The Debtors' claims agent is Kurtzman Carson Consultants L.L.C. Boscov's listed assets of $318.9 million against debt totaling $412.8 million. Secured creditors are owed $196.2 million. On November 21, 2008, Judge Kevin Gross approved the sale of the Debtors' assets to a family group led by former company chairman Albert Boscov and former company executive Edwin Lakin. The deal, valued at $300 million, was completed in December. Following the sale Boscov's Inc., and Boscov's Department Store, LLC, revised their corporate names to BSCV, Inc., and BSCV Department Store, LLC. BOWNE & CO: S&P Changes Outlook to Positive, Affirms 'B' Rating --------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on New York City-based Bowne & Co. to positive from negative. Ratings on the company, including the 'B' corporate credit rating, were affirmed. The outlook revision follows the announced pricing of the company's common stock offering of 10.5 million shares at $5.96 per share. The proceeds from the offering will be used to repay the company's term loans in their entirety, with the remaining proceeds to be used to repay outstanding obligations under its revolving credit facility. "The positive outlook reflects the improvement in the company's financial profile attributable to the reduction in the company's debt leverage and the elimination of required quarterly amortization payments on its term debt, given the repayment in full of these obligations," said Standard & Poor's credit analyst Michael Listner. Also, despite its belief that difficult operating conditions will continue to affect Bowne's major business segments, S&P expects that the company will generate sufficient free cash flow in the second half of 2009 to provide the flexibility for additional repayment on its revolver. As a result, S&P expects that debt to EBITDA (fully adjusted for operating leases, pensions, and postretirement obligations) could decline to about 4x by the end of 2009. The 'B' corporate credit rating reflects Bowne's concentration in the competitive financial print business and its exposure to the volatility related to transaction-based financial printing volumes. Given the company's operating performance, credit measures have deteriorated rapidly over the past year, resulting in total debt to EBITDA (adjusted for operating leases and pension and post-retirement obligations) of 7.7x for the 12 months ended June 30, 2009, versus 3.3x in the comparable prior-year period. Pro forma for the equity issuance and repayment of debt, this measure improves to about 6.1x. This measure, when calculated on a trailing basis, is significantly influenced by EBITDA losses of $9.5 million in the second half of 2008. Based on its expectation for 2009 EBITDA to be about $40 million, leverage would end the year at about 4x. CANNERY CASINO: S&P Downgrades Corporate Credit Rating to 'B' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based Cannery Casino Resorts LLC and removed them from CreditWatch, where they had been placed with negative implications on March 13, 2009. S&P lowered the corporate credit rating to 'B' from 'B+'. The rating outlook is negative. At the same time, S&P revised its recovery rating on Cannery's first-lien credit facilities to '2', indicating its expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default, from '1'. S&P lowered its issue-level rating on this debt to 'B+' (one notch higher than the 'B' corporate credit rating) from 'BB', in accordance with its notching criteria for a '2' recovery rating. The revised recovery rating primarily reflects a reduction in its assumed emergence EBITDA multiple to 6.5x from 7.0x, due to widespread and persistent challenging operating conditions in the gaming sector, and its expectation that these conditions will impact valuations in the future. In addition, S&P lowered the issue-level rating on the company's second-lien credit facility to 'CCC+' (two notches below the corporate credit rating) from 'B-'. The recovery rating on this debt remains at '6', indicating its expectation of negligible (0% to 10%) recovery in the event of a payment default. "The corporate credit rating downgrade reflects weaker-than- expected operating performance and its assessment that credit measures are likely to remain more in line with a 'B' rating over the near term," said Standard & Poor's credit analyst Melissa Long. In 2009, S&P expects gains from the opening of the permanent facility at The Meadows and any incremental EBITDA that followed the opening of Eastside Cannery in August 2008 to be offset by declines at other Las Vegas locals properties. As a result, S&P expects relatively flat operating performance in 2009 compared with 2008. Under its performance assumptions and factoring in permitted add-backs to the company's covenant calculation, S&P expects Cannery to remain in compliance with its total leverage covenant in 2009, even though the covenant steps down by 0.25x in both the third and fourth quarters of 2009. However, S&P believes it is unlikely that the company will be able to stay in compliance with the total leverage covenant, as it continues to step down in 2010 and nonrecurring add-backs to covenant EBITDA roll off. The 'B' rating reflects Cannery's highly leveraged financial profile, the highly competitive dynamics of the Las Vegas locals market and its expectation that challenging operating conditions in this market will continue over the next several quarters. Still, these factors are tempered somewhat by the cash flow diversification provided by operating in two markets on opposite sides of the country, and by an experienced management team with a proven track record within the gaming industry. While S&P is concerned about a potential covenant violation in 2010, S&P believes an amendment is likely, since S&P expects the company to continue generating adequate cash flow, and S&P believes the operating environment will begin to improve by the second half of next year. CASCADE GRAIN: Votes for Proposed Plan Due September 1 ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon, in Portland, will convene a hearing on September 8 to consider confirmation of the proposed Joint Plan of Reorganization proposed by Cascade Grain Products LLC and its affiliates. Under the Plan, Berggruen Holdings Ltd., co-proponent to the Plan, will make an equity contribution of $5,500,000 to the Debtor. Berggruen is the existing owner of the Debtor. Berggruen, a British Virgin Islands company, has agreed to pay $10,000,000 under a settlement with the Debtor, and has agreed to forgive amounts owed to it. Other salient terms of the Plan are: -- The Debtor's secured bank debt will be forgiven or contributed to the Debtor. -- Berggruen and prepetition lenders owed $86,680,000 for a term loan and $12,000,000 for a working loan, and the State of Oregon, owed $19,862,000, will share the equity in the Reorganized Debtor. Berggruen will get 80.1% of the equity. The lenders will receive 19.9%, subject to dilution. -- Priority and administrative claims will be paid in full. -- Holders of general unsecured claims aggregating $5,285,560 (less claims classified under the Convenience Class) will receive pro rata portions of a $400,000 fund plus the net proceeds of any avoidance actions. General unsecured claims are expected to recover between 7% and 8% of the face amount of their claims. -- General unsecured creditors with smaller claims -- the Convenience Class -- will be entitled to be paid 50% of their claims rather than sharing in the Unsecured Account. Claims under this class are expected to total $110,000. -- The existing equity holder, Cascade Grain Holdings LLC, a unit of Berggruen, will take nothing on account of its equity interests. The Debtor's operating facility is currently in a cold shutdown mode, but will be restarted as soon as it is economically feasible. The Debtor disputes virtually all of the claims of JH Kelly LLC Ethanol, a joint venture between JH Kelly Holdings LLC and TIC - The Industrial Company, the company that designed and built the Plant. The Debtor believes Kelly's errors and omissions in design and construction of the Plant have led to major delays in completion of the Plant, serious deficiencies in construction of the Plant, reduced capacity, and increased costs of operating the Plant. Under the Plan, the dispute with Kelly will be resolved in some appropriate forum and, if Kelly is successful in establishing an Allowed Claim against the Debtor's Estate and that claim is determined to be a Secured Claim, Kelly will have a first priority security interest in the Plant and will be paid out with a market rate of interest over 10 years. Kelly has recorded a construction lien in the amount of approximately $27.8 million against Cascade. Cascade, through its counsel, Greenberg Traurig LLP, filed suit against Kelly in Oregon state court, seeking the discharge or, alternatively, a reduction in the amount of such construction lien. The Debtor believes that the Plan is in the best interests of Debtor and its creditors, and that creditors should vote to approve the Plan. Holders of claims who are impaired under the Plan are entitled to vote to accept or reject the Plan. Ballots are due September 1. The Bankruptcy Court may confirm the Plan if it is approved by creditors holding more than two-thirds in amount of the claims voted and one-half in number of the claims voted in each impaired class of claims under the Plan. Class 8, the class of equity interests (with only one member, the holder of all membership interests in Debtor) is impaired but does not vote because it is receiving nothing under the Plan and therefore is conclusively deemed to have rejected the Plan. Nevertheless, the Bankruptcy Court may still confirm the Plan if the Bankruptcy Court finds that the Plan does not unfairly discriminate against, and accords fair and equitable treatment to, any rejecting impaired class. The Plan Proponents intend to request a "cramdown" confirmation with respect to Class 8 and any other Class that does not vote in favor of the Plan. A copy of the disclosure statement explaining the terms of Cascade's proposed Joint Plan of Reorganization dated July 31, 2009, is available for free at: Cascade Grain's counsel may be reached at: PERKINS COIE LLP Douglas R. Pahl, Esq. Alan D. Smith, Esq. 1120 N.W. Couch Street, Tenth Floor Portland, OR 97209-4128 Telephone: 503.727.2000 Facsimile: 503.727.2222 A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/CascadeGrain_DiscStatement.pdf Cascade Grain Products LLC -- http://www.cascadegrain.com-- is a member of a family of companies ultimately controlled by Berggruen Holdings Ltd. Cascade Grain Products has a 113.4 million gallon ethanol plant in Oregon. Cascade Grain Products filed for Chapter 11 on Jan. 28, 2009 (Bankr. D. Oregon Case No. 09-30508). Douglas R. Pahl, Esq., at Perkins Coie LLP, represents the Debtor. The petition says that assets and debts range $100 million to $500 million. CATHOLIC CHURCH: BSNC Wants to Buy Fairbanks' Pilgrim Hot Springs ----------------------------------------------------------------- Bering Straits Native Corporation submitted an offer for the outright purchase of the Pilgrim Hot Springs property of the Diocese of Fairbanks for $900,000 through a letter signed by Gail R. Schubert. BNSC says that the property contains 320 acres of land with an estimated value of $200,000. Ms. Schubert, BSNC's executive vice president & general counsel, tells the U.S. Bankruptcy Court for the District of Alaska that the letter is written on behalf of BNSC, the regional Alaska Native Claims Settlement Act corporation for the Bering Straits region, and Sitnasuak Native Corporation, the ANCSA village corporation for the city of Nome. "Our interest in the property is based in part on social and cultural factors, including the importance of the area to our shareholders and other stakeholders," Ms. Schubert says. "We believe Pilgrim Hot Springs can be utilized as a place of healing and restoration, and that our shareholders and the people of the Bering Straits region will benefit from our ownership," she adds. "While Pilgrim Hot Springs is believed to have geothermal potential, we have not based our decision to purchase the property on this factor," Ms. Schubert further says. "We note that the amount we are offering is $2,812.50 per acre, a rate that well exceeds comparable property sales in the region," she continues. 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 show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on Jan. 15, 2009. (Catholic Church Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Fairbanks Committee Retains J.H. Cohn as Advisor ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the bankruptcy case of the Catholic Bishop of Northern Alaska obtained the Bankruptcy Court's authority to retain J.H. Cohn LLP as financial advisors. David H. Bundy, Esq., at David H. Bundy, P.C., in Anchorage, Alaska, relates that the Creditors Committee deferred retention of a financial advisor until it became necessary once the Diocese began pursuing approval of its disclosure statement and confirmation of its proposed plan of reorganization. He notes that J.H. Cohn began work at the Creditors Committee's request on May 7, 2009, in anticipation of the imminent filing of the Diocese's proposed plan and disclosure statement. The Diocese proposed that it engage J.H. Cohn to: (a) assist and advise the Creditors Committee and its counsel in analyzing the Debtor's assets and liabilities, books and records, and financial documents, and review any proposed plan and disclosure statements, asset sales, any asset dispositions and financing arrangements; (b) assist and advise the Creditors Committee and its counsel in investigating the assets, liabilities, and financial condition of the Diocese, the Diocese's operations and the desirability of the continuance of any portion of those operations, and any other financial matters relevant to the bankruptcy case or to the formulation of a plan; (c) assist and advise the Creditors Committee and its counsel in the evaluation of claims and on any litigation matters, including avoidance actions; and (d) analyze compliance with restrictions or limitations with respect to funds held in accounts or allegedly held in trust. J.H. Cohn will be paid based on its professionals' customary hourly rates in effect at the time that it performs its services. Chad J. Shandler, a partner at J.H. Cohn, will be the business person with the primary responsibility for the work set forth in the application. Mr. Bundy tells Judge MacDonald that Mr. Shandler's current hourly rate is $600 but Mr. Shandler proposes to be paid $480 per hour in this case. Diocese's Objection The Diocese filed an objection to the retention of J.H. Cohn, on arguing that the Committee had literally no explanation why it requires a financial advisor at this time, why the estate should pay the premium rates associated with a large accounting firm based across the street from Rockefeller Center in Manhattan, New York, what the scope of work will be, and why the firm should be appointed, nunc pro tunc to May 7, 2009. Susan G. Boswell, Esq., at Quarles & Brady LLP, in Tucson, Arizona, relates that the Diocese and its staff has made sacrifices to be able to emerge from bankruptcy and meet its obligations under its Plan, including elimination of five full- time positions and pay reduction from the Bishop to the clerks in its offices. Although CBNA understands that the Creditors Committee may need some assistance from financial advisors in connection with the Plan confirmation process, the application should be denied because they are too expensive, they are from too far away, they bring no special knowledge or experience germane to the case, there is no reason for nunc pro tunc appointment, and, based on the document request that they apparently were involved in preparing, they intend to engage in an unbridled romp analyzing irrelevant information about the Diocese's financial dealings over the last 10 years, Ms. Boswell contended. The Committee insisted that it be allowed to hire a financial advisor, arguing that the Diocese's "hyperbolic objections" are nothing more than a strategy to prevent it from accessing information critical to its assessment of the Disclosure Statement. The Committee's counsel, Mr. Bundy, told the Court that J.H. Cohn has the expertise to give the Creditors Committee the needed financial advice because Mr. Shandler worked with Pachulski Stang Ziehl & Jones LLP as financial advisor to the Tort Litigants' Committee in the Diocese of Spokane's bankruptcy case. * * * The Court heard arguments of the parties at a hearing held July 30, 2009. Consequently, Judge MacDonald entered an order approving the application holding that J.H. Cohn will be retained to assist the Creditors Committee with regard to the four tasks set forth in the application, as well as issues relating to the Diocese's endowment, Catholic Trust of Northern Alaska, and the Monroe Foundation, Inc. If the Creditors Committee desires J.H. Cohn's retention on other matters, the Creditors Committee should file a separate application, Judge MacDonald said. 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 show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on Jan. 15, 2009. (Catholic Church Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Tort Claimants' Plea to Reopen Tucson Case Denied ------------------------------------------------------------------ The Official Committee of Tort Claimants asked the U.S. Bankruptcy Court for the District of Arizona to reopen the Diocese of Tucson's bankruptcy case for the limited purpose of requesting for authorization additional distributions from funds in the Settlement Trust. The Tort Claimants Committee, with the concurrence of the Unknown Claims Representative and the Guardian ad litem, says it intends to make the request pursuant to the Diocese's confirmed Plan of Reorganization. To recall, Judge James M. Marlar issued a final decree on March 30, 2009, closing Tucson's bankruptcy case. After due consideration, Judge Marlar denied the motion to reopen, without prejudice to the Tort Claimants presenting their motion, in accordance with Plan provisions and after giving limited notice to the principal parties. He maintained that the Court retained jurisdiction for the limited purpose, among others, and therefore, finds that it is unnecessary to formally reopen the case. The matter requiring decision, and of importance to the Tort Claimants, may be dealt with, without a formal order reopening the entire case, Judge Marlar held. About the Diocese of Tucson The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the Portland Archdiocese in its restructuring efforts. Portland's Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Tucson Tort Committee Proposes $1MM Distribution ----------------------------------------------------------------- The Official Committee of Tort Claimants, pursuant to the Diocese of Tucson's confirmed Third Amended and Restated Plan of Reorganization, asks the U.S. Bankruptcy Court for the District of Arizona to authorize the Trustee to make interim distributions of the Settlement Trust established pursuant to the Plan. The Tort Claimants Committee seeks authorization for the Trustee to distribute $1,000,000 from the funds remaining in the Unknown Claims Reserve to Tort Claimants holding Allowed Claims in Tier 1, Tier 2, Tier 3, and Tier 4. The Unknown Claims Representative and the Guardian ad litem have concurred to the request, relates Christopher Graver, Esq., at Stinson Morrison Hecker LLP, in Phoenix, Arizona. The Unknown Claims Reserve consists of funds that are intended to compensate the victims of clergy sexual abuse. The funds were reserved from the initial distributions to Allowed Tort Claimants under the Plan to protect the interests of hypothetical "Unknown Tort Claimants," whose claims had not been asserted. The amount of the reserve was arrived at after lengthy negotiation among the Tort Claimants Committee, the Diocese, the Court-appointed Unknown Claims Representative, and the Court-appointed Guardian ad litem. Since it is the nature of "unknown claims" to be unknown, the reserve was necessarily an estimation. About $5,000,000 was initially set aside, but the Plan expressly contemplates the release of some or all of those funds to the known Allowed Tort Claimants if it appears the funds are not needed for Unknown Tort Claimants. Thus, the Committee, with the concurrence of the Unknown Claims Representative and the Guardian ad litem, requests that the Court authorize an interim distribution of $1,000,000 from the Unknown Claims Reserve of the Settlement Trust. As provided in the Plan, 80% of the funds will be distributed proportionally among the injured parties, whose Allowed Tort Claims were placed in Tiers 1 through 4, and 20% will go to the Diocese for use in Special Projects. This will leave $2,700,000 remaining in the Unknown Claims Reserve to provide for possible future claims. Since the Effective Date of the Plan more than three and a half years ago, the initial $5,000,000 has been reduced by just $820,000 on account of new claimants. Deducting these payments, along with a previous Court-authorized excess distribution of $1,000,000 to holders of existing Allowed Tort Claims, as well as the fees and expenses of the Special Arbitrator, Committee counsel, and the Trustee, the Unknown Claims Reserve, including accrued interest, now stands at approximately $3,700,000. The reserve is simply too high, and unnecessarily denies holders of Allowed Tort Claims part of the compensation they are entitled to, Mr. Graver tells the Court. In light of the history of the claims asserted and resolved since the Effective Date, and as contemplated by the Plan itself, he notes, the Creditors Committee seeks to place the unnecessary portion of reserved funds where they belong -- in the hands of the injured parties. In a supplemental request, the Tort Claimants Committee inform the Court of the status of the only two pending Unknown Claims, Claim Nos. 272 and 273, both of which were filed on June 5, 2009. Mr. Graver contends that the two Claims were meritless but would be fully reserved for. Under the Plan, any "unknown" tort claims that are asserted after confirmation are to be determined solely by the Special Arbitrator, and the Court, therefore, will not be asked on the merits of any of those claims. On July 1, 2009, at an initial conference before the Special Arbitrator with respect to Claim No. 272, additional information was presented that might link the acts complained of by the Claimant to the Diocese of Tucson, Mr. Graver avers. He assures the Court that the Claim is fully protected by the $2.7 million that would remain in the Unknown Claims Reserve after the distribution proposed in the Committee's request. Mr. Graver further discloses that Claim No. 273 has been settled for $5,500 and no reserve is required for it. Butler and Arnold Respond In a joint response, A. Bates Butler III, the Unknown Claims Representative, and Charles L. Arnold, the Guardian Ad Litem, tell the Court that they have no objection to the distribution of $1,000,000. However, Messrs. Butler and Arnold say that it has come to their attention that the Proof of Claim Form utilized by the Diocese provides: "THIS PROOF OF CLAIM FORM MUST BE RECEIVED NO LATER THAN 4:00 P.M. MOUNTAIN STANDARD TIME, FRIDAY, APRIL 15, 2005." The language makes it appear that an unknown claimant, who has a timely claim may determine that its claim is time barred, they argue. Therefore, Messrs. Butler and Arnold ask the Court to require the Diocese to modify the language in the Proof of Claim Form. About the Diocese of Tucson The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the Portland Archdiocese in its restructuring efforts. Portland's Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) CDX GAS: Second Lien Lenders to Own Company After Ch. 11 Exit ------------------------------------------------------------- CDX Gas, LLC, and its affiliates filed a document containing three separate Chapter 11 plans. The three Chapter 11 plans are explained in detail under a "Joint Chapter 11 Plan" and explanatory disclosure statement. For purposes of voting on the Joint Chapter 11 Plan and receiving distributions under the Plan, votes will be tabulated separately for each of the Reorganizing Debtors. A failure to confirm any one or more of the plans will not affect other plans confirmed by the Bankruptcy Court. The Debtors owe $6.8 million as of August 1, 2009 under a first lien debt. The Debtors owed $400 million of principal outstanding plus an additional amount for interest under a second lien debt as of the petition date. Three Chapter 11 Plans (i) CDX Acquisition Company, LLC The Plan for CDX Acquisition will be a liquidating plan. On the effective date of the Plan, the Debtor will be dissolved by operation of the Plan without any further action by the members, shareholders, directors, managers or any other Person or Entity holding any Equity Interest. An Acquisition Wind-Up Representative will be appointed by existing equity owners of the Debtor to effectuate the dissolution and winding up of the Company. The Representative will also take possession and control of the assets of Acquisition and making distributions under the Acquisition Plan. Under the Acquisition Plan, general unsecured claims will receive no distribution on their Claims. (ii) CDX Gas LLC The Plan for CDX Gas' is a reorganization plan. Holders of debt backed by second priority liens on CDX's assets will receive 95.5% of the membership interests of reorganized CDX Gas. Holders of first lien debt will receive full payment. The initial board of directors of Reorganized CDX Gas will consist of five directors designated by Credit Suisse, in its capacity as administrative agent to holders of Second Lien Debt Claims. Holders of Second Lien Debt Claims were given superpriority administrative claims for diminution in value of their collateral. These claimants have suffered significant diminution in value of their collateral securing their claims in an amount not less than $200 million, and the amount exceeds amounts recoverable under potential avoidance actions. In partial satisfaction, release, settlement and discharge of the superpriority Administrative claims, the Reorganizing Debtors will assign all avoidance actions to the Second Lien Debt Agent who in turn, will be deemed to simultaneously transfer the Avoidance Actions to Reorganized CDX Gas in partial consideration of the issuance of the New CDX Gas Membership Interests. As a result, all the causes of action are specifically preserved with the Reorganized CDX Gas having sole authority to bring the causes of action. Holders of allowed general unsecured claims will receive on the effective date of the Plan pro rata share of distributions to be provided by a creditors' trust. CDX Minerals, CDX Panther and CDX Plum Creek will be merged with and into CDX Gas with any Claims against any of the CDX Gas Merging Entities to be considered as Claims against CDX Gas. If the CDX Gas Plan is confirmed and becomes effective, the Chapter 11 bankruptcy cases of affiliates CDX Tapicito, CDX BC, CDX Sequoya, CDX Gas International, CDX Services, CDX Isolate, Cahaba Gathering and CDX Operating will be, at the option of CDX Gas, either (i) converted to cases under Chapter 7 of the Bankruptcy Code or (ii) dismissed. (iii) CD Exploration, LLC (formerly CD Exploration, Inc.) CDX Gas currently holds an intercompany claim against CDX Canada in the approximate amount of $31.0 million. On the Effective Date, CDX Gas will transfer as an equity contribution to CD Exploration in the approximate amount of $7.3 million of the intercompany claim and after contribution, CDX Canada and Reorganized CD Exploration will effect offsets of all Intercompany Claims between Reorganized CD Exploration and CDX Canada. CDX East and CMV JV will be merged with and into CD Exploration with any Claims against any of these merging entities to be considered as claims against CD Exploration. Holders of Second Lien Debt Claims will receive membership interests in reorganized CD Exploration. Holders of allowed general unsecured claims will receive no distribution on their claims. Copies of the Plan and the Disclosure Statement are available for free at: http://bankrupt.com/misc/CDX_DiscStatement.pdf http://bankrupt.com/misc/CDX_Plan.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. In its schedules, CDX listed total assets of $996,308,606 and total debts of $831,259,526. 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. Gardere Wynne Sewell LLP, serves as conflicts counsel. Epiq Bankruptcy Solutions, LLC, is the claims and noticing agent. The Debtors also hired Ryder Scott Company, L.P. as Petroleum Consultants; Wilhoit & Kaiser as special title examination counsel; Fish & Richardson LLP as Special Intellectual Property Counsel; Deloitte Tax LLP as Tax Consultants; and Jefferies & Company, Inc. as valuation experts. On January 7, 2009, the Office of the United States Trustee informed the Court of its inability to solicit sufficient interest from creditors to form an official committee of unsecured creditors. CEDAR FAIR: Moody's Assigns 'Ba3' Rating on New Term Loans ---------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating and LGD3 -- 34% assessment to the new term loans issued by Cedar Fair, L.P., and Canada's Wonderland Company in conjunction with the company's amendment and extension of a portion of its existing guaranteed senior secured credit facility. The amendment extends the maturity of $900 million of Cedar Fair and Wonderland's $1.67 billion term loans by two years to February and August 2014. Moody's believes the extension and Cedar Fair's recent efforts to pay down debt improve the company's intermediate term liquidity position by reducing the amount of obligations that need to be refinanced in 2012. Cedar Fair's Ba3 Corporate Family Rating, B1 Probability of Default Rating and SGL-3 speculative- grade liquidity rating and the ratings on the continuing credit facility instruments are not affected. The rating outlook remains negative. Assignments: Issuer: Cedar Fair, L.P. -- Senior Secured Bank Credit Facility, Assigned Ba3, LGD3 - 34% Issuer: Canada's Wonderland Company -- Senior Secured Bank Credit Facility, Assigned Ba3, LGD3 - 34% The amendment increases the spread on the $900 million of extended term loans to 400 basis points from 200 bp. The approximate $18 million of incremental cash interest expense weakens interest coverage and, in Moody's view, will likely lead to moderately higher revolver borrowings over the next several years as Moody's does not expect Cedar Fair to further reduce the quarterly cash distribution to limited partnership unit holders voluntarily. The aggregate revolver commitments were also lowered to $310 million from $345 million, although Moody's believes Cedar Fair continues to have sufficient revolver capacity to fund its highly seasonal amusement park operations. The negative rating outlook continues to reflect Moody's concern that continued weakness in consumer spending into 2010 could make it increasingly challenging for Cedar Fair to meet the step downs in its debt-to-EBITDA covenant over the next 18 months. Additionally, Moody's is concerned that the amend and extend transaction along with other actions to refinance the remaining term loans maturing in 2012 or amend covenants, if necessary, could move interest coverage and credit metrics to levels that are weaker than expected for the Ba3 CFR. On July 28, 2009, Moody's changed Cedar Fair's rating outlook from stable to negative and affirmed the company's Ba3 Corporate Family Rating (CFR), B1 Probability of Default Rating, and SGL-3 speculative-grade liquidity rating. Cedar Fair's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Cedar Fair's core industry and Cedar Fair's ratings are believed to be comparable to those of other issuers of similar credit risk. Cedar Fair, headquartered in Sandusky, Ohio, is a publicly traded Delaware master limited partnership formed in 1987 that owns and operates 11 amusement parks, seven water parks (six outdoor and one indoor) and hotels in North America. Properties are located in the U.S. and Canada and include Cedar Point (OH), Knott's Berry Farm (CA), and Canada's Wonderland (Toronto). In June 2006, Cedar Fair, L.P., completed the acquisition of Paramount Parks, Inc., from a subsidiary of CBS Corporation for a purchase price of $1.24 billion. Cedar Fair's 2008 revenue was $996 million. CEDAR FAIR: S&P Assigns 'BB-' Rating on $900 Mil. Senior Loan ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its issue-level and recovery ratings to Cedar Fair L.P.'s $900 million senior secured term loan due 2014, consisting of $836 million term loan facility due 2014 and US$64 million-equivalent Canadian-dollar term loan facility due 2014. S&P assigned the loan an issue-level rating of 'BB-' (one notch higher than the 'B+' corporate credit rating on the company) with a recovery rating of '2', indicating its expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default. The $900 million term loan will extend the maturity of about 54% of the company's $1.671 billion in existing term loans from 2012 to 2014. All other ratings on Cedar Fair, including the 'B+' corporate credit rating, were affirmed. The rating outlook is negative. Sandusky, Ohio-based Cedar Fair is the second-largest regional amusement park company in the U.S. in terms of attendance. Total debt was $1.81 billion as of June 28, 2009. "The 'B+' rating on Cedar Fair reflects high debt leverage, a large distribution payout, and a weak near-term operating outlook," said Standard & Poor's credit analyst Hal Diamond. "The partnership's competitive position and its operating track record are modest positives that do not offset these risks." Profitability is highly seasonal, with a significant percentage of EBITDA earned between Memorial Day and Labor Day. Sales declined 10.8% in the three months ended June 28, 2009, while EBITDA declined 17.8% due to an attendance decline as a result of the recession, fewer operating days, and unfavorable weather. Also, attendance declined 7% during July, and S&P expects operating performance to remain under pressure for the remainder of the 2009 operating season, notwithstanding more operating days than in the 2008 third quarter due to the Labor Day weekend falling later in September. Debt to EBITDA, pro forma for the $50 million reduction in term debt from the impending sale of surplus land in Toronto, was flat at 5.2x for the 12 months ended June 28, 2009. Lower EBITDA was offset by a reduction in debt. Pro forma EBITDA coverage of interest expense was flat at 2.5x over the same period, as lower market interest rates and optional debt prepayments were offset by higher interest costs on the term loan extension. Discretionary cash flow was minimal in the 12 months ended June 28, 2009, reflecting the partnership's formerly high capital spending and distribution payout. S&P expects discretionary cash flow to improve in full-year 2009, notwithstanding the weak operating outlook, as the quarterly share distribution was reduced by 48% beginning May 15, 2009. This will result in its estimate of conversion of EBITDA to discretionary cash flow rising to about 20% in 2009 from 8% in 2008. Discretionary cash flow will also benefit from Cedar Fair's plans to lower its capital spending by roughly 26%, or $21.5 million, in 2009. The partnership plans to use excess cash flow to accelerate debt repayments in excess of the limited mandatory term loan amortization. Furthermore, the partnership is exploring selective park sales, though the weak operating outlook and capital markets will likely affect the timing and magnitude of these efforts. CELL THERAPEUTICS: Amends Terms of SMI Acquisition Deal ------------------------------------------------------- Cell Therapeutics, Inc., on August 6, 2009, entered into a Second Amendment to Acquisition Agreement, amending a July 2007 Acquisition Agreement among the Company, Cactus Acquisition Corp., Saguaro Acquisition Company LLC, Systems Medicine, Inc., and Tom Hornaday and Lon Smith, in their capacities as Stockholder Representatives of the SMI stockholders. Under the Acquisition Agreement, pursuant to which the Company acquired SMI in a stock-for-stock merger, the SMI Stockholders were granted rights to receive potential milestone payments of $5 million and $10 million based on certain FDA milestones for Brostallicin. Under the First Amendment, the Company agreed to pay the SMI Stockholders an immediate substitute payment of $5 million in lieu of the Earn Out Payment, payable in shares of the Company's common stock at a price of $0.13 per share, provided that the non-accredited SMI Stockholders would instead be paid in cash. On January 23, 2009, the Company received an Additional Staff Determination Letter from The NASDAQ Stock Market stating that the staff had concluded that the Issuance did not comply with the shareholder approval requirements set forth in NASDAQ Marketplace Rule 4350(i)(1)(C), currently codified in NASDAQ Listing Rule 5635(a). NASDAQ Listing Rule 5635(a) requires shareholder approval for shares issued in connection with an acquisition if the issuance or potential issuance is greater than 20% of the shares outstanding prior to the transaction. In response to the Determination Letter, the Company entered into the Cancellation Agreement to cancel the Issuance under the First Amendment and reinstate the original terms of the Acquisition Agreement. Notwithstanding the Cancellation Agreement, the Nonaccredited Holders were paid their pro rata shares in cash, thereby satisfying the Company's obligation to pay such Nonaccredited Holders their portion of the Earn Out Payment. Under the Second Amendment, the Company and the SMI Stockholders agreed to replace the Earn Out Payment with an immediate substitute payment of $6 million, payable in that number of shares of the Company's common stock, equal to $6 million divided by the closing price of the Company's common stock on the day the Company obtains the requisite shareholder vote. The issuance of the Substitute Shares is subject to certain conditions, including, but not limited to, the Required Shareholder Approval. If the Closing Conditions are not satisfied, then in lieu of issuing the Substitute Shares, the Company will pay the SMI Stockholders (other than the Nonaccredited Holders) $5 million in cash. A full-text copy of the Second Amendment is available at no charge at http://researcharchives.com/t/s?4151 Headquartered in Seattle, Washington, Cell Therapeutics, Inc., (Nasdaq and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Going Concern Doubt Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Cell Therapeutics' ability to continue as a going concern after auditing company's financial statements for the years ended December 31, 2008, and 2007. The auditing firm reported that the Company has substantial monetary liabilities in excess of monetary assets as of December 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. It also noted that the Company has sustained loss from operations over the audit periods, incurred an accumulated deficit, and has substantial monetary liabilities in excess of monetary assets as of December 31, 2008. CELL THERAPEUTICS: Posts $18.0 Million Net Loss for Q2 2009 ----------------------------------------------------------- Cell Therapeutics, Inc. reported a net loss of $18.0 million for the second quarter ended June 30, 2009, compared to a net loss of $58.0 million for the second quarter of 2008. For the six months ended June 30, 2009, the Company booked a net loss of $32.9 million from a net loss of $96.1 million a year ago. The Company reported total revenues of $20,000 for the second quarter of 2009, compared to revenues of $2.89 million for the second quarter of 2008. The Company recorded total revenues of $40,000 for the first six months of 2009, compared to revenues of $6.28 million for the first six months of 2008. As of June 30, 2009, the Company had $43.2 million in total assets; and $98.7 million in total liabilities; resulting in $57.6 million in shareholders' deficit. The Company had $1.35 billion in accumulated deficit as of June 30, 2009. At March 31, 2009, the Company's balance sheet showed total assets of $42.9 million and total liabilities of $158.9 million, resulting in a stockholders' deficit of about $116.0 million "The second quarter of 2009 was a transforming quarter for the Company as we reported, in a peer reviewed setting, pixantrone phase III data at the American Society of Clinical Oncology Annual Meeting and completed the submission of the pixantrone New Drug Application (NDA) to the U.S. Food & Drug Administration (FDA)," said James A. Bianco, M.D., CEO of Cell Therapeutics. "On the financial front, we continue to reduce and control our operating expenses, eliminated 44.5% of our outstanding debt through exchange offers completed in June 2009, and raised significant capital to continue to advance pixantrone to market." A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?414f On August 6, Cell Therapeutics provided a monthly update of certain information relating to the Company's management and financial situation, pursuant to a request from the Italian securities regulatory authority, CONSOB. A full-text copy of the Company's monthly update is available at no charge at: http://researcharchives.com/t/s?4150 Headquartered in Seattle, Washington, Cell Therapeutics, Inc., (Nasdaq and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Going Concern Doubt Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Cell Therapeutics' ability to continue as a going concern after auditing company's financial statements for the years ended December 31, 2008, and 2007. The auditing firm reported that the Company has substantial monetary liabilities in excess of monetary assets as of December 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. It also noted that the Company has sustained loss from operations over the audit periods, incurred an accumulated deficit, and has substantial monetary liabilities in excess of monetary assets as of December 31, 2008. CELL THERAPEUTICS: Sets Annual Shareholders' Meeting on Oct. 20 --------------------------------------------------------------- Cell Therapeutics, Inc., on August 10, 2009, sent a letter regarding the Company's Annual Meeting of Shareholders to Italian participating banks whose clients hold shares of the Company through Monte Titoli. The Company instructed the banks to forward a copy of the letter to the banks' clients holding shares of the Company. The letter relates to the Annual Shareholders' Meeting of Cell Therapeutics to be held October 20, 2009, at 10 a.m. (Seattle, Washington time), at the Company's headquarters in Seattle, Washington. The purpose of the Annual Meeting is to resolve upon these matters: (i) to elect three Class III directors, each to serve until the 2012 Annual Meeting; (ii) to approve an amendment to the 2007 Equity Incentive Plan to increase the number of shares available for issuance under the plan, in a reasonable amount to be determined by the Board of Directors; (iii) to approve an amendment to the 2007 Employee Stock Purchase Plan to increase the number of shares available for the issuance under the plan, in a reasonable amount to be determined by the Board of Directors; (iv) to ratify the selection of Stonefield Josephson, Inc. as independent auditors for the year ending December 31, 2009; (v) to approve the issuance of shares of common stock as consideration under the Second Amendment to Acquisition Agreement, which amends the Acquisition Agreement with Systems Medicine, Inc. dated as of July 24, 2007, as amended by that certain First Amendment to Acquisition Agreement dated as of January 6, 2009; (vi) to approve any matter which may be required by Washington law or any listing Authority whose regulations apply to the Company's shares; and (vii) to transact other business as may properly come before the meeting and all adjournments and postponements thereof. Shareholders of record at the close of business on September 14, 2009, will be entitled to vote at the Annual Meeting. Details of the proposals will be set forth in a proxy statement that will be made available shortly after the record date. A full-text copy of the letter signed by James A. Bianco, M.D., Chief Executive Officer of Cell Therapeutics, is available at no charge at http://researcharchives.com/t/s?4152 Headquartered in Seattle, Washington, Cell Therapeutics, Inc., (Nasdaq and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Going Concern Doubt Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Cell Therapeutics' ability to continue as a going concern after auditing company's financial statements for the years ended December 31, 2008, and 2007. The auditing firm reported that the Company has substantial monetary liabilities in excess of monetary assets as of December 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. It also noted that the Company has sustained loss from operations over the audit periods, incurred an accumulated deficit, and has substantial monetary liabilities in excess of monetary assets as of December 31, 2008. CENTER CUT: Deteriorating Cash Flow Cues Moody's Junk Rating ------------------------------------------------------------ Moody's Investors Service downgraded Center Cut Hospitality, Inc.'s Corporate Family Rating to Caa1 from B3, and its speculative grade liquidity rating to SGL-4 from SGL-3, as the company is approaching a potential covenant violation in the second half of 2009 due to deteriorating operating performance. The rating outlook remains negative. The downgrades reflect Center Cut's deteriorating cash flow generation and eroding margin, mainly driven by accelerating negative same store sales trend at both its Del Frisco's and Sullivan's steakhouse concepts due to declining guest traffic since the second half of 2008, as both business and individual customers continue to rationalize discretionary spending on fine dining. The company reported a double-digit decline in revenues in the second quarter 2009, and its operating margin worsened considerably, primarily due to the deleveraging effect from lower sales (partially offset by lower food input cost). As a result of the lower EBITDA, there was little cushion under its financial covenants, in particular the minimum EBITDA and the maximum leverage covenants at the end of the second quarter. The downgrade of the liquidity rating to SGL-4 reflects Moody's concern that the company will likely breach its financial covenant and will need to seek an amendment/waiver from its lenders in the coming quarters. Should Center Cut secure a waiver/amendment in a timely manner, the SGL would likely revert to SGL-3 subject to Moody's review of the final terms. "The white-table-cloth sub-sector in which Center Cut operates, appears to be the most vulnerable part of the restaurant industry in the current recession," commented Moody's analyst John Zhao. "Most high-end steakhouse operators reported substantial decline in same store sales recently and will likely continue to be challenged in the medium term." The Caa1 CFR positively incorporates Center Cut's comparatively solid margin, adequate interest coverage and Moody's expectation that its free cash flow would likely remain slightly-positive or break-even partly due to the significant scaling-back of growth capital expenditure from the 2008 level. The negative outlook, however, considers the persistently negative traffic trend, the pace and magnitude of the recent decline in sales and margin, as well as limited prospect of a strong near-term recovery in the fine dining sector in Moody's view. The outlook also reflects the mounting liquidity pressure arising from the potential covenant breach. The rating action is: Ratings downgraded: * Corporate Family Rating -- to Caa1 from B3 * Probability of Default Rating -- to Caa1 from B3 * $20 million senior secured revolving credit facility -- to B3(LGD3, 36%) from B2(LGD3, 37%) * $110 million senior secured term loan -- to B3(LGD3, 36%) from B2(LGD3, 37%) * Speculative Grade Liquidity Rating -- to SGL-4 from SGL-3 * Rating outlook: remains negative Moody's last rating action on Center Cut occurred on November 21, 2008 when its rating outlook was revised to negative from stable. Center Cut hospitality, Inc., headquarter in Wichita Kansas, is an owner and operator 27 white table cloth steakhouse and seafood restaurants located throughout the United States under the names Del Frisco's Double Eagle Steak House and Sullivan's Steakhouses. For the trailing twelve months ended June 19, 2009 the company's 8 Del Frisco's locations and 19 Sullivan's generated approximately $171 million in revenue. CENTRUE FINANIAL: Defers Interest Payments on Trust Preferreds -------------------------------------------------------------- In an effort to bolster its capital and liquidity positions, the Board of Directors of Centrue Financial Corporation (NASDAQ: TRUE), parent company of Centrue Bank, has elected to temporarily defer interest expense payments on all $20.2 million in outstanding junior subordinated debentures related to the Company's trust preferred securities. The terms of the junior subordinated debentures and the trust documents allow the Company to defer payments of interest for up to 20 consecutive quarterly periods without default or penalty. The Company will also suspend regularly scheduled dividend payments on its common stock and defer regularly scheduled dividend payments on the $0.5 million in principal outstanding on Series A convertible preferred stock (aggregate liquidation preference of $2.8 million), the $0.3 million principal outstanding Series B mandatory redeemable preferred stock and $29.9 million in principal outstanding Series C fixed rate, cumulative perpetual preferred stock (aggregate liquidation preference of $32.7 million). By taking these actions, the Company expects to save approximately $2.8 million in annual cash payments. Though it currently has sufficient capital and liquidity to satisfy regulatory requirements, Centrue says this action will allow further preservation of already strong positions. At June 30, 2009, Centrue's balance sheet showed $1.31 billion in assets and $1.18 billion in liabilities. Centrue Financial Corporation -- http://www.centrue.com/-- is a regional financial services company headquartered in St. Louis, Missouri, and says it "devotes special attention to personal service." The Company serves a market area which extends from the far western and southern suburbs of the Chicago metropolitan area across Central Illinois down to the metropolitan St. Louis area. CHEMTURA CORP: Posts $118 Million Net Loss in 2009 Second Quarter ----------------------------------------------------------------- Chemtura Corporation filed its Quarterly Report on Form 10-Q for the second quarter. The Company recorded a net loss of $118 million, or $0.49 per share, for the second quarter of 2009 and a net loss on a managed basis of $6 million, or $0.02 per share, for the second quarter of 2009. As of June 30, 2009, the Company had $3.10 billion in total assets; and $631 million in total current liabilities, $975 million in total liabilities not subject to compromise, and $1.80 billion in total liabilities subject to compromise; resulting in $319 million in stockholders' equity. A summary of second quarter financial results on a GAAP basis: (In millions, except per share data) Second Quarter 2009 2008 % change ---- ---- -------- Net sales $687 $1,023 (33)% Operating loss ($75) ($241) 69% Net loss attributable to Chemtura ($118) ($273) 57% Net loss per share ($0.49) ($1.13) 57% attributable to Chemtura A summary of second quarter financial results on a managed basis: (In millions, except per share data) Second Quarter 2009 2008 % change ---- ---- -------- Net sales $687 $1,023 (33)% Operating profit $30 $90 (67)% Net (loss) earnings ($6) $45 NM attributable to Chemtura Net (loss) earnings ($0.02) $0.18 NM per share attributable to Chemtura NM = Not Meaningful U.S. Chapter 11 Proceedings On July 13, 2009, the Company and parties to the $400 million senior secured debtor-in-possession credit facility entered into Amendment No. 2 to the DIP Credit Facility which provides for, among other things, an option by the Company to extend the maturity of the DIP Credit Facility for two, consecutive three month periods. Prior to Amendment No. 2, the DIP Credit Facility matured on the earlier of 364 days or the effective date of a plan of reorganization. On July 28, 2009, the Court approved an extension of the exclusive right of Chemtura, the parent company, and the 26 subsidiaries organized in the United States that filed for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code to file a plan of reorganization. The extension expires on November 13, 2009. Impairment of Long-Lived Assets -- In the second quarter of 2009, the Company developed and completed a new five-year long range plan. Based on the detailed cash flow projections, the Company recorded impairments of long-lived assets as follows: -- $37 million goodwill impairment charge for the Consumer Performance Products segment; and -- $60 million impairment charge relating to PVC Additives, a component of Industrial Engineered Products, impacting property, plant and equipment and intangible assets. Second Quarter 2009 Business Segment Highlights -- Consumer Performance Products revenues declined 13% or $26 million compared with the second quarter of 2008 due to reduced sales volume primarily driven by cooler and wetter weather than normal in the northeastern and mid- western regions of the United States, some weakness in demand attributed to economic conditions in both the United States and Europe, and the deemphasizing of participation in the distribution channel. The volume impact was partially offset by the benefit of price increases. Operating profit decreased $2 million primarily due to the impact from the reduction in sales volume. -- Industrial Performance Products revenues declined 38% or $148 million driven primarily by reduced sales volume. While all product lines saw reduced sales volume due to the recession, antioxidant and urethane products saw the greatest impact. Operating profit decreased $13 million primarily due to the impact from the reduction in sales volume and the resulting impact of unfavorable manufacturing costs. -- Crop Protection Engineered Products revenues declined 23% or $26 million primarily due to lower sales volume and unfavorable foreign currency translation. With growers facing restricted credit, the season started more slowly than usual, particularly in Europe, but demand returned to more normal levels by the end of the second quarter. Operating profit decreased $12 million primarily due to the impact of lower sales volume. -- Industrial Engineered Products revenues declined 42% or $136 million primarily due to reduced sales volume. Products sold to electronic, building and construction, and consumer durable polymer applications continued to show the most dramatic year-over-year reductions from the impact of the global recession. Nevertheless, demand showed modest improvement compared with the first quarter of 2009 as the most significant effects of inventory de-stocking abated. Operating loss of $11 million deteriorated $36 million from the second quarter of 2008 primarily due to lower volume and the resulting impact of unfavorable manufacturing costs. -- Corporate expense for the second quarter of 2009 was $22 million compared with $15 million in the same quarter last year. Corporate expense included amortization expense related to intangibles of $9 million and $11 million for the second quarters ended 2009 and 2008, respectively. The increase in corporate expense of $7 million was primarily driven by a pension plan curtailment gain in 2008 which reduced expense in the second quarter of 2008. Second Quarter Results - GAAP -- Revenue for the second quarter of 2009 was $687 million compared with second quarter 2008 revenue of $1.023 billion. The decrease in revenue was attributable to reduced sales volumes of $316 million (primarily due to the global recession) and unfavorable foreign currency translation of $24 million, partially offset by higher selling prices of $4 million. -- Gross profit for the second quarter of 2009 was $152 million, a decrease of $96 million compared with the same quarter of last year. Gross profit as a percentage of sales decreased to 22% in the second quarter of 2009 from 24% in the same quarter of last year. The Company succeeded in mitigating most of the impact on the percentage gross profit margins of lower volume and manufacturing capacity utilization through efforts to variablize costs and leverage lower raw material cost. The decrease in gross profit was primarily due to a $75 million impact from reduced volume and unfavorable product mix; $35 million from unfavorable manufacturing costs (primarily due to lower plant utilization); $6 million from unfavorable foreign currency translation; a $3 million benefit in 2008 from insurance proceeds associated with the 2005 hurricanes Katrina and Rita; $1 million in inventory write-offs; and other cost increases of $5 million. These impacts were partially offset by an $18 million decrease in raw material and energy costs; a $7 million reduction in distribution costs; and $4 million benefit from higher selling prices. -- The operating loss for the second quarter of 2009 was $75 million compared with an operating loss of $241 million for the second quarter of 2008. The decrease in the operating loss is primarily due to a $320 million goodwill impairment charge for the Consumer Performance Products segment in the second quarter of 2008; a $23 million decrease in selling, general and administrative, and research and development costs primarily due to savings from the Company's restructuring programs; a $14 million decrease in depreciation and amortization primarily due to lower accelerated depreciation of property, plant and equipment; a $3 million decrease in antitrust costs; and a $1 million decrease in loss on the sale of businesses. These favorable impacts were partially offset by a $96 million decrease in gross profit; a $60 million impairment charge for PVC Additives, a component of Industrial Engineered Products, relating to the write-down of property, plant and equipment and intangible assets; a $37 million goodwill impairment charge for the Consumer Performance Products segment in the second quarter of 2009; and lower equity income of $2 million. -- Interest expense of $15 million for the second quarter of 2009 was $4 million lower than the same period in 2008. Lower interest expense from unrecorded contractual interest expense on unsecured debt as a result of the Chapter 11 filing was partially offset by an increase due to borrowings under the DIP Credit Facility and higher average borrowings under the senior credit facility. -- Other expense, net increased by $19 million in the second quarter of 2009 as compared with the same quarter last year. The increase primarily reflects foreign exchange losses from un-hedged balance sheet positions in 2009 due to the Company's inability to purchase foreign currency forward contracts, partially offset by lower fees associated with the termination of its U.S. and European accounts receivable financing facilities. -- Reorganization items, net amounted to $6 million and represent items realized or incurred by the Company related to its reorganization under Chapter 11. Reorganization items, net includes professional fees directly associated with the reorganization, partially offset by gains on the settlement of certain pre-petition liabilities. -- Net loss attributable to Chemtura for the second quarter of 2009 was $118 million, or $0.49 per share, compared with a loss of $273 million, or $1.13 per share, for the second quarter of 2008. The decrease primarily reflects the $166 million decrease in operating loss; an $11 million decrease in income tax expense; and a $4 million decrease in interest expense, partially offset by a $19 million increase in other expense, net; $6 million in reorganization items, net; and $1 million of net income attributable to non-controlling interests. Second Quarter Results - Managed Basis -- On a managed basis, second quarter 2009 gross profit was $152 million, or 22% of net sales, as compared with second quarter 2008 managed basis gross profit of $245 million, or 24% of net sales. Increases in manufacturing costs due to lower plant utilization were the primary drivers of the reduction in margin percentage. -- On a managed basis, second quarter 2009 operating profit was $30 million as compared with second quarter 2008 operating profit of $90 million. The decrease in operating profit primarily reflects the decrease in gross profit due to lower sales volumes, partially offset by decreases in SGA&R costs primarily due to the benefit of the Company's restructuring programs, and lower depreciation and amortization expense. -- The loss before income taxes on a managed basis in 2009 and the earnings before income taxes on a managed basis in 2008 exclude pre-tax GAAP charges of $111 million and $331 million, respectively. These charges are primarily related to costs associated with the Chapter 11 reorganization; accelerated depreciation of property, plant and equipment; antitrust costs; loss on sale of businesses; impairment of long-lived assets; pension curtailment gains; and a recovery of insurance proceeds associated with the 2005 hurricanes Katrina and Rita. -- Chemtura's managed basis tax rate of 35% represents a standard tax rate for the Company's core operations to simplify comparison of underlying operating performance during the course of the Chapter 11 proceedings. The Company has chosen to apply this rate to pre-tax income on a managed basis. Cash Flows - GAAP -- Net cash provided by operating activities in the quarter ended June 30, 2009 was $22 million as compared with net cash provided by operating activities of $10 million in the quarter ended June 30, 2008. As a result of the Chapter 11 filing, payments related to accounts payable were lower in the quarter due to the automatic stay on the payment of prepetition liabilities, benefiting cash provided by operating activities. The Company is re-establishing more favorable trade credit terms with its vendors for the post Chapter 11 filing purchase of goods and services, but, in the aggregate, trade credit terms are still significantly unfavorable compared to historical levels. -- The Company's remaining accounts receivable financing facility terminated in June 2009. The balance of accounts receivable sold under the Company's accounts receivable financing facilities was $103 million as of December 31, 2008 and $350 million as of June 30, 2008. -- The reduction in proceeds from the sale of accounts receivable was $10 million in the second quarter of 2009 compared with a $13 million increase in proceeds in the second quarter of 2008. Excluding the effect of accounts receivable financing facilities, net cash provided by operating activities for the second quarter of 2009 was $32 million as compared with $3 million of net cash used in operating activities in the second quarter of 2008. -- As of June 30, 2009, the Company's accounts receivable balances before the sale of accounts receivable were $539 million as compared with $452 million as of March 31, 2009 and $495 million as of December 31, 2008. The increase was due to seasonal demand primarily in the Consumer Performance Products and Crop Protection Engineered Products segments. -- As of June 30, 2009, the Company's inventory balance was $514 million as compared with $530 million as of March 31, 2009 and $611 million at December 31, 2008. The decrease was primarily due to optimizing production levels as industry demand declined. -- Capital expenditures for the quarter ended June 30, 2009 were $8 million compared with $36 million in 2008. The Company currently anticipates capital spending of approximately $60 million in 2009. -- With a continued focus on cash generation, the Company generated $14 million in cash provided by operating activities net of cash used in investing activities in the second quarter of 2009 compared to using $20 million in cash in the second quarter of 2008. -- The Company's total debt of $1,402 million as of June 30, 2009 increased slightly as compared with $1,400 million as of March 31, 2009. Cash and cash equivalents were $144 million as of June 30, 2009 compared with $135 million as of March 31, 2009. Chemtura Corporation (Pink Sheets: CEMJQ) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Court Okays Eastman & Albemarle Set-Offs ------------------------------------------------------- In a Bankruptcy Court-approved stipulation, Chemtura Corp. and its affiliates consented to the modification of the automatic stay solely to allow Albemarle Corporation to set off: -- $170,975 of prepetition debt Chemtura Corporation owes Albemarle against the $348,105 Albemarle owes Chemtura; and -- $206,611 of prepetition debt Great Lakes Chemical Corporation owes Albemarle against the $244,407 Albemarle owes Great Lakes. Upon the exercise of the setoff, Albemarle will have a remaining payable obligation to GLCC amounting to $175,535, which will be paid to GLCC in immediately available funds. In another Court-approved stipulation, the Debtors and Eastman Chemical Company agreed that the automatic stay will be lifted to allow Eastman to set off $697,618, which Eastman owed to the Debtors, against $373,967, which the Debtors owe to Eastman. After the setoff, Eastman will have a remaining payable obligation to the Debtors amounting to $323,650, which will be paid in immediately available funds. About Chemtura Corp Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHEMTURA CORP: Expands Scope of KPMG LLP Work --------------------------------------------- Chemtura Corp. previously obtained the Bankruptcy Court's authority to hire KPMG LLP as auditors. The Debtors now ask the Court for authority to expand the scope of KMPG Lip's services to include the analysis of: a. the "first day orders" entered in the Debtors' Chapter 11 cases; b. proof of claims with respect to all tax matters including income tax and indirect taxes; c. Section 382 issues including historical Section 382 matters and Section 382 issues arising in connection with the restructuring/bankruptcy plan of reorganization; d. "Nubig/Nubil" tax matters and Notice 2003-65 as applied to the Chemtura restructuring/bankruptcy; e. the Debtors' tax attributes including credits, tax basis in assets and tax basis in stock of all subsidiaries; f. analysis of whether Section 505(b) of the Bankruptcy Code asks for prompt determination are to be utilized; g. the deductibility of postpetition interest on unsecured debt obligations; h. the tax treatment of professional fees and other bankruptcy costs incurred by Chemtura; i. the liabilities subject to compromise account which could yield a tax deduction or cancellation of debt; j. COD, including section 108 and consolidated tax return regulations, related to non-intercompany and intercompany debt; k. the effects of Treasury Regulation Section 1.1502-28 and benefit analysis of Section 108(b)(5) and 1017(b)(3)(D) elections; l. the tax implications of any internal reorganizations and proposal of restructuring alternatives; m. potential bad debt and retirement tax losses; n. the tax implications related to the modification or settlement of any intercompany debt; o. the cash tax implications of any proposed reorganization/bankruptcy plan of reorganization; and p. state tax attribute reduction. In addition, the Debtors need KPMG to provide assistance with the tax section of the bankruptcy plan disclosure statement and review of the plan of reorganization. The Debtors maintain that the Additional Services is cost- effective and will simplify KPMG's subsequent audit review procedures. The Debtors intend to work with KPMG and Deloitte Tax LLP to define the nature of the work that needs to be performed and their requirements and expectations of supporting analysis to satisfy KPMG's audit review procedures. Fees for the Additional Services will be based on KPMG's hourly rates: Partner/Director $635 Senior Manager 540 Manager 470 Senior Tax Associate 400 Tax Associate 275 The Debtors have already obtained permission to hire KPMG to: (a) integrate audit of the consolidated financial statements of the Debtors; (b) perform quarterly review of the Debtors' unaudited interim financial information; (c) provide statutory audits, where applicable; (d) perform audit on certain events and accounting pronouncements, which may have a significant impact on the firm's audit efforts and which were not anticipated in establishing a fixed fee for the firm's services, including: -- significant acquisitions or dispositions of businesses implications, -- significant and infrequent transactions with complex business implications, -- additional audit, if any, as a result of the Debtors' Chapter 11 filings, and -- change in operating segments or reporting units, interim goodwill impairment analysis, the adoption of new accounting or auditing pronouncements, internal control weaknesses, client delays and lack of client support, which involve significant research, investigation or incremental testing on the part of KPMG, (e) perform other audit, consulting, advice, research, planning and analysis regarding audit services as may be necessary or requested from time to time. Howard B. Steinberg, a partner at KPMG, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Chemtura Corp Based in Middlebury, Connecticut, Chemtura Corporation (CEM) -- http://www.chemtura.com/-- with 2008 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection products, and pool, spa and home care products. Chemtura Corporation and 26 of its U.S. affiliates filed voluntary petitions for relief under Chapter 11 on March 18, 2009 (Bankr. S.D.N.Y. Case No. 09-11233). M. Natasha Labovitz, Esq., at Kirkland & Ellis LLP, in New York, serves as bankruptcy counsel. Wolfblock LLP serves as the Debtors' special counsel. The Debtors' auditors and accountant are KPMG LLP; their investment bankers are Lazard Freres & Co.; their strategic communications advisors are Joele Frank, Wilkinson Brimmer Katcher; their business advisors are Alvarez & Marsal LLC and Ray Dombrowski serves as their chief restructuring officer; and their claims and noticing agent is Kurtzman Carson Consultants LLC. As of December 31, 2008, the Debtors had total assets of $3.06 billion and total debts of $1.02 billion. Bankruptcy Creditors' Service, Inc., publishes Chemtura Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Chemtura Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHINA DIGITAL: Earns $1.8MM But Discloses Going Concern Doubt ------------------------------------------------------------- China Digital Communication Group reported a net income of $1,842,938 for six months ended June 30, 2009, compared with a net loss of $177,984 for the same period in 2008. For three months ended June 30, 2009, the Company posted a net loss of $1,338,656 compared with a net loss of $587 for the same period in 2008. At June 30, 2009, the Company's balance sheet showed total assets of $16,829,967, total liabilities of $4,335,194 and stockholders' equity of $12,494,773. The Company related that its cash and cash equivalents were $9,964,948 as of June 30, 2009. Working capital at June 30, 2009, was $10,914,273. The Company also said that there is substantial doubt about the Company's ability to continue as a going concern. The Company said that it has sufficient cash to continue its current business through June 30, 2010, due to expected increased sales revenue and net income from operations. However, the Company has suffered recurring losses in the past and have a large accumulated deficit. The Company took certain restructuring steps to provide the necessary capital to continue its operations. These steps included: (1) acquisition of profitable operations through issuance of equity instruments; and (2) seeking of additional funding and restructuring the acquired subsidiaries to increase profits and minimize the liabilities. A full-text copy of the Company's FORM 10-Q is available for free at http://ResearchArchives.com/t/s?4100 About China Digital China Digital Communication Group (OTC: CHID) -- http://www.chinadigitalgroup.com/-- changed its name and business in 2004, when it bought Billion Electronics and its wholly owned principal operating subsidiary, Shenzhen E'Jinie Technology Development, one of China's largest battery shell manufacturers. China Digital Communication Group now makes aluminum shells and battery caps for lithium ion batteries that are used in digital mobile devices, such as digital still cameras, cell phones, MP3 players, laptop computers, and PDAs. In 2006 the company acquired Galaxy View International for nearly $7 million in cash and stock; the following year, it sold Galaxy View for $3 million. The Company is headquartered in Shenzhen, Guangdong, Republic of China. COEUR D'ALENE: S&P Raises Corporate Credit Rating to 'B-' --------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Coeur D'Alene Mines Corp. to 'B-' from 'CCC' and raised the ratings on the company's $180 million senior unsecured notes due 2024 ($106 million outstanding) and $230 million senior unsecured notes due 2028 ($150 million outstanding) to 'CCC+' from 'CCC-'. The recovery rating on the notes remains unchanged at '5'. S&P removed the corporate credit and issue-level ratings from CreditWatch, where they were placed with positive implications on May 18, 2009. The outlook is positive. "The rating actions follow its assessment that the company's liquidity profile and its ramp up of the low-cost Palmarejo mine in Mexico will be sufficient to fund the company's meaningful second-half 2009 capital expenditure program of $110 million," said Standard & Poor's credit analyst Sherwin Brandford. In addition, the higher production level should help to sustain the company's liquidity position over the next several quarters. Specifically, S&P expects EBITDA to materially improve to approximately $70 million in the second half from around $30 million in the first half and think this positive momentum will continue into 2010 when the company will benefit from a full year of production from the mine. The ratings on Idaho-based Coeur D'Alene Mines reflects the company's vulnerable business risk profile as a small, capital- intensive, precious metal company with a modest scope of operations, political and environmental risks, relatively high cost operations, and exposure to volatile precious metal prices. The positive outlook reflects the potential for a higher rating if the company successfully ramps up production at its Kensington operations which would improve its operational diversity and add meaningfully to its ability to generate cash flows in the future. If the mine is successfully developed, its potential rating upgrade with likely be limited to one notch. S&P may revise the outlook to stable if the company is unable to commence production at Kensington in 2010 as planned because of further environmental or permitting issues or other factors. If the company does not succeed in developing Kensington, S&P could also revise the outlook to stable. COEUR D'ALENE: Swings to $11.6 Million Net Income for June 30 Qtr ----------------------------------------------------------------- Coeur d'Alene Mines Corporation swung to an $11.6 million net income for the three months ended June 30, 2009, from a net loss of $5.37 million for the same period a year ago. For the six months ended June 30, 2009, Coeur d'Alene Mines posted a $17.6 million net income compared to a $656,000 net loss for the same six-month period a year ago. As of June 30, 2009, the Company had $3.05 billion in total assets and $924.8 million in total liabilities, resulting in $1.95 billion in stockholders' equity. Coeur d'Alene Mines had $402.2 million in accumulated deficit as of June 30, 2009. The Company said sales of metal from continuing operations in the second quarter of 2009 increased by $23.2 million, or 46.3%, from $50.0 million in the second quarter of 2008 to $73.2 million. The increase in sales of metal was primarily due to an increase in the quantity of silver ounces sold due to the contribution from the Company's two new mines (i) the San Bartolome silver mine, which operated at full capacity during the quarter and was in its initial start-up phase during the second quarter of 2008; and (ii) the Palmarejo silver and gold mine, which began commercial production on April 20, 2009. Sales of metal from continuing operations in the six months ended June 30, 2009, increased to $123.0 million from $107.3 million in the same period in 2008, or 14.6%. The Company's working capital at June 30, 2009, decreased by $2.8 million to a deficit of approximately $11.3 million compared to a deficit of $8.5 million at December 31, 2008. The increase in the deficit was attributed to capital spending related to the Palmarejo and the Kensington projects. The ratio of current assets to current liabilities was 0.94 to 1 at June 30, 2009, compared to 0.95 to 1 at December 31, 2008. As of June 30, 2009, the Company's cash equivalents and short term investments totaled $24.7 million. During the first half of 2009, the Company received roughly $95.4 million of cash proceeds consisting of $20.4 million from the exercise of a warrant relating to the Senior Secured Floating Rate Convertible Notes due 2012 and $75 million from a gold royalty stream transaction with Franco-Nevada Corporation and $55 million related to the sale of Broken Hill in July 2009. The Company believes that its liquidity and projected 2009 operating cashflows will be adequate to meet its obligations for at least the next 12 months. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4146 In June 2009, Coeur d'Alene Mines disclosed that pursuant to privately negotiated agreements it had agreed with certain holders to exchange $15,916,000 aggregate principal amount of the Company's 1.25% Convertible Senior Notes due 2024 and $17,475,000 of the Company's 3.25% Convertible Senior Notes due 2028 for a number of shares of its common stock, par value $0.01. On June 18, 2009, the Prior Agreements were rescinded pursuant to their terms. No shares of Common Stock were issued in connection with the Prior Agreements, and no Notes were delivered to the Company by the Holders. On June 22, 2009, the Company entered into new privately negotiated agreements with the Holders pursuant to which the Company was expected to issue an aggregate of [1,806,215] shares of Common Stock to the Holders on different dates beginning June 22 and ending July 2. The Company had disclosed that pursuant to a privately negotiated agreement dated June 8, 2009, it agreed to exchange $9,000,000 of its 3.25% Convertible Senior Notes due 2028 for shares of its Common Stock. In connection with that agreement and pursuant to the formula disclosed, the Company issued an aggregate of 509,305 shares of Common Stock on June 22, 2009. The Company issued the shares pursuant to the exemption from the registration requirements afforded by Section 3(a)(9) of the Securities Act of 1933, as amended. About Coeur d'Alene Coeur d'Alene Mines Corp. (NYSE:CDE) (TSX:CDM) -- http://www.coeur.com/-- is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile, Bolivia, and Australia. * * * As the Troubled Company Reporter reported on May 20, 2009, Standard & Poor's Ratings Services placed its ratings, including its 'CCC' corporate credit rating, on Coeur d'Alene Mines Corp. on CreditWatch with positive implications. The CreditWatch listing reflects S&P's assessment that near term operating cash flow generation will likely increase due to the combination of higher metal volumes and continued favorable gold and silver prices. Idaho-based Coeur d'Alene completed construction of its Palmarejo mine and successfully started operating it in the first quarter of 2009, which is increasing volumes. COLONIAL BANCGROUP: May Be Placed Into FDIC Receivership -------------------------------------------------------- The Colonial BancGroup, Inc. (NYSE: CNB) said August 6 that on August 6, 2009, it was informed by the U.S. Department of Justice that it is the target of a federal criminal investigation relating to the Company's mortgage warehouse lending division and related alleged accounting irregularities. The Company has been informed that the alleged accounting irregularities relate to more than one year's audited financial statements and regulatory financial reporting, and the Company's Board of Directors and Audit Committee are making every effort to determine the impact of these alleged accounting irregularities on the Company's financial statements and regulatory financial reporting. The Company intends to cooperate with the investigation. Earlier in 2009, BancGroup provided documents to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) in response to a subpoena issued by SIGTARP. Also, the SEC has issued subpoenas to BancGroup seeking documents related to, among other things, BancGroup's disclosures related to its participation in the U.S. Treasury Department's Troubled Asset Relief Program and BancGroup's disclosures respecting accounting for loan loss reserves. BancGroup has provided, and continues to provide, documents in response to these subpoenas. On August 5, 2009, the Alabama State Banking Department provided notice to Colonial Bank that the Alabama State Banking Board will meet on August 12, 2009, at which time Colonial Bank will be asked to consent to the Superintendent's exercise of his statutory authority to appoint the FDIC as receiver or conservator for the Bank if and when the Superintendent deems such appointment to be necessary. In the meantime, the Company continues to explore all possible capital-raising alternatives that would position it and Colonial Bank to comply with the requirements of the Orders to Cease and Desist to which they are subject. About Colonial BancGroup Colonial BancGroup (NYSE: CNB) -- http://www.colonialbank.com/-- operates 354 branches in Florida, Alabama, Georgia, Nevada and Texas with over $26 billion in assets. BancGroup posted a net loss of $606 million, or $3.02 per common share, in the quarter compared to a net loss of $168 million, or $0.86 per common share, in the 1st quarter of 2009. As a result of regulatory actions and the current uncertainties associated with Colonial's ability to increase its capital levels to meet regulatory requirements, management has concluded that there is substantial doubt about Colonial's ability to continue as a going concern. As reported by the TCR on August 4, Fitch Ratings has downgraded the ratings of The Colonial BancGroup's Long-term Issuer Default Rating (IDR) to 'C' from 'CCC' and Colonial Bank's long-term IDR to 'C' from 'B-'. Moody's Investors Service downgraded the issuer ratings of Colonial BancGroup to 'C' from 'Caa1'. The rating actions follow the announcement that the pending $300 million investment by Taylor Bean & Whitaker and its consortium of investors has terminated. BancGroup was mandated to raise $300 million in equity from the private sector in order to receive the much needed $550 million of capital through the Treasury's Capital Purchase Program, for which it already received preliminary approval. COLONIAL BANCGROUP: DBRS Downgrades Senior Debt to 'C' ------------------------------------------------------ DBRS has downgraded the senior debt rating for Colonial BancGroup, Inc. (Colonial or the Company) to C from CC, the senior debt rating for Colonial Bank (Bank), its principal banking subsidiary to CC from CCC and the Bank's subordinated debt rating to C from CC. The Bank's deposit rating is unchanged at CCC. All ratings remain Under Review with Negative Implications. The rating actions follow Colonial's disclosures regarding SEC and U.S. Department of Justice investigations into the Company's operations and accounting. The rating actions reflect DBRS's view that the SEC and the Department of Justice investigations will place additional significant strain on Colonial's ability to survive and remain as a going concern. Indeed, DBRS notes that these investigations may result in financial re-statements, possible penalties and perhaps reduce the likelihood of additional capital raises and asset sales. At this time, DBRS notes the need to bifurcate the Bank's senior debt and deposit ratings, in view of the higher expected loss rate for the senior debt holders versus that for uninsured depositors to which the deposit rating applies. DBRS notes that the Company's capital position and asset quality remains under severe pressure, especially given its substantial troubled Florida-based construction and development portfolio. DBRS will continue monitoring the Bank's ability to protect its deposit franchise, which is an underlying factor in the ratings. In an 8-k filing with the SEC, Colonial disclosed that it was informed by the U.S. Department of Justice that it is the target of a federal criminal investigation relating to its warehouse lending division and related alleged accounting irregularities. Moreover, the Company disclosed that the SEC has issued subpoenas to it, seeking documents relating to, among other things, its disclosures related to its participation in the U.S. Treasury TARP program, and disclosures respecting accounting for loan loss reserves. Finally, the Alabama State Banking Department provided notice to Colonial that its board will meet on August 12, 2009, at which time, the Bank will be asked to consent to the Superintendent's exercise of his statutory authority to appoint the FDIC as receiver or conservator for the Bank, if and when the Superintendent deems such appointment to be necessary. About Colonial Bank Colonial BancGroup (NYSE: CNB) -- http://www.colonialbank.com/-- operates 355 branches in Florida, Alabama, Georgia, Nevada and Texas with over $25 billion in assets. According to the Troubled Company Reporter on June 11, 2009, Fitch Ratings has downgraded the ratings of The Colonial BancGroup and its subsidiaries following Colonial Bank, CNB's bank subsidiary, entering into an Order to Cease and Desist with the FDIC and the Alabama State Banking Department on June 9, 2009. Fitch has placed the ratings on Rating Watch Evolving. Fitch downgraded Colonial Bank's Colonial Bank's Long-term IDR to 'B-' from 'B+'; Long-term deposits to 'B/RR3' from 'BB-/RR3'; Subordinated debt to 'CC/RR6' from 'B/RR6'; and Individual to 'E' from 'D/E'. BancGroup posted a net loss of $606 million, or $3.02 per common share, in the quarter compared to a net loss of $168 million, or $0.86 per common share, in the 1st quarter of 2009. As a result of regulatory actions and the current uncertainties associated with Colonial's ability to increase its capital levels to meet regulatory requirements, management has concluded that there is substantial doubt about Colonial's ability to continue as a going concern. As reported by the TCR on August 4, Fitch Ratings has downgraded the ratings of The Colonial BancGroup's Long-term Issuer Default Rating (IDR) to 'C' from 'CCC' and Colonial Bank's long-term IDR to 'C' from 'B-'. The rating action follows the announcement that the pending $300 million investment by Taylor Bean & Whitaker and its consortium of investors has terminated. BancGroup was mandated to raise $300 million in equity from the private sector in order to receive the much needed $550 million of capital through the Treasury's Capital Purchase Program, for which it already received preliminary approval. COMDISCO HOLDING: Posts $144,000 Net Loss in Third Quarter 2009 --------------------------------------------------------------- Comdisco Holding Company, Inc., reported financial results for its fiscal third quarter ended June 30, 2009. Comdisco Holding Company, Inc., emerged from Chapter 11 bankruptcy proceedings on August 12, 2002, and, under its Plan of Reorganization, its business purpose is limited to the orderly sale or run-off of all its remaining assets. For the quarter ended June 30, 2009, Comdisco reported a net loss of approximately $144,000, or $0.04 per common share (basic and diluted). The per share results for Comdisco are based on 4,029,055 shares of common stock outstanding on average during the quarter ended June 30, 2009. For the quarter ended June 30, 2009, total revenue increased by 47% to approximately $1,277,000. The increase is primarily the result of higher gains on the sale of equity securities in the current quarter. Gains were approximately $896,000 for the current quarter compared to gains of approximately $554,000 for the quarter ended June 30, 2008. Net cash provided by operating activities was approximately $6,455,000 for the nine months ended June 30, 2009, compared to net cash provided by operating activities of approximately $10,217,000 for the nine months ended June 30, 2008. The net cash provided by operating activities in the nine months ended June 30, 2009, included cash receipts of approximately $5,359,000 from income tax refunds for Comdisco's Canadian subsidiary. However, such receipts are anticipated to be used to satisfy Canadian taxes payable. Total assets are approximately $77,385,000 as of June 30, 2009, which included approximately $64,166,000 of unrestricted cash, compared to total assets of approximately $75,464,000 as of September 30, 2008, which included approximately $57,554,000 of unrestricted cash. As a result of bankruptcy restructuring transactions, adoption of fresh-start reporting and multiple asset sales, Comdisco's financial results are not comparable to those of its predecessor company, Comdisco, Inc. About Comdisco Comdisco emerged from Chapter 11 bankruptcy proceedings August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations. The Company filed on August 12, 2004, a Certificate of Dissolution with the Secretary of State of the State of Delaware to formally extinguish Comdisco Holding Company, Inc.'s corporate existence with the State of Delaware except for the purpose of completing the wind-down contemplated by the Plan. COMFORCE CORP: Posts $598,000 Net Income for 2nd Quarter 2009 ------------------------------------------------------------- COMFORCE Corporation reported net income of $598,000, or $0.02 per basic and diluted share, for the second quarter ended June 28, 2009, compared to net income of $1.59 million, $0.08 per basic share and $0.05 per diluted share, for the second quarter of 2008. For the six months ended June 28, 2009, the Company booked net income of $754,000 from net income of $2.59 million a year ago. The Company reported revenues of $141.7 million for the second quarter of 2009, compared to revenues of $152.8 million for the second quarter of 2008, a 7.2% decrease. Lower revenues for the quarter were primarily due to the continued decline in the global economy, which has adversely affected demand in the labor markets. Sequentially, revenues for the second quarter 2009 improved 2.7% from the prior quarter. COMFORCE recorded revenues of $279.7 million for the first six months of 2009, compared to revenues of $303.0 million for the first six months of 2008. As of June 28, 2009, the Company had $179.0 million in total assets; and $182.0 million in total liabilities; resulting in $2.98 million in stockholders' deficit. The Company had $66.2 million in accumulated deficit as of June 28, 2009. COMFORCE and various of its operating subsidiaries are parties to the $110.0 million PNC Credit Facility with PNC, as a lender and administrative agent, and other financial institutions participating as lenders to provide for a revolving line of credit with available borrowings based, generally, on 87.0% of the Company's accounts receivable aged 90 days or less, subject to specified limitations and exceptions. The Company entered into the PNC Credit Facility in June 2003 and it has been subject to eight amendments. The obligations under the PNC Credit Facility are collateralized by a pledge of the capital stock of certain key operating subsidiaries of the Company and by security interests in substantially all of the assets of the Company. The PNC Credit Facility contains various financial and other covenants and conditions, including, but not limited to, a prohibition on paying cash dividends and limitations on engaging in affiliate transactions, making acquisitions and incurring additional indebtedness. The maturity date of the PNC Credit Facility is July 24, 2010. The Company also had standby letters of credit outstanding under the PNC Credit Facility at June 28, 2009 in the aggregate amount of $4.2 million, principally as security for the Company's obligations under its workers compensation insurance policies. At June 28, 2009, the Company had outstanding $70.9 million principal amount under the PNC Credit Facility bearing interest at a weighted average rate of 2.0% per annum. At such date, it had remaining availability of up to $15.1 million based upon the borrowing base, as defined in the agreement, under the PNC Credit Facility. At June 28, 2009, the Company also had outstanding $1.8 million principal amount of Convertible Notes bearing interest at 8% per annum. Management of the Company believes that cash flow from operations and funds anticipated to be available under the PNC Credit Facility will be sufficient to service the Company's indebtedness and to meet currently anticipated working capital requirements for the next 12 months. The Company was in compliance with all covenants under the PNC Credit Facility at June 28, 2009 and expects to remain in compliance for the next 12 months. The Company has had discussions with PNC to extend the PNC Credit Facility beyond its current maturity date of July 24, 2010. No assurance can be given that the Company will resolve such discussions on a satisfactory basis. The Company is currently undergoing audits for certain state and local tax returns, including the state tax examination related to certain business taxes for which the Company has recorded an additional accrual in the second quarter of 2009. The results of the audits are not expected to have a material effect upon the Company's results of operations. John Fanning, Chairman and Chief Executive Officer of COMFORCE commented, "While our results for the second quarter continued to be negatively impacted by the global economy, sequentially, we realized improved financial performance in key metrics including revenues, operating income, and net income. The sequential improvement suggests stabilization in our business that we began to observe toward the end of the first quarter and continued into our second quarter." Mr. Fanning continued, "We continue to position our company for future growth and remain focused on those business areas that we believe will be more in demand as the economy recovers, including PrO Unlimited and RightSourcing(R). At the same time, we continue to prudently manage our costs and allocate our capital to seek to position our company for long-term sustainable growth." "Our primary goal is to meet our customers' needs and build COMFORCE to the benefit of our shareholders longer term," concluded Mr. Fanning. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?414e About COMFORCE COMFORCE Corporation provides outsourced staffing management services that enable Fortune 1000 companies and other large employers to consolidate, automate and manage staffing, compliance and oversight processes for their contingent workforces. It also provide specialty staffing, consulting and other outsourcing services to Fortune 1000 companies and other large employers for their healthcare support, technical and engineering, information technology, telecommunications and other staffing needs. It operates in three segments -- Human Capital Management Services, Staff Augmentation and Financial Outsourcing Services. CONTINENTAL AIRLINES: Equity Issuance Won't Move Moody's B2 Rating ------------------------------------------------------------------ Moody's Investors Service said Continental Airlines, Inc.'s recent equity issuance is a positive development that enhances the company's financial condition and liquidity profile, but that it does not affect the B2 corporate family or other debt ratings of the company. The last rating action on Continental was the June 30, 2009, assignment of the Baa2 senior secured debt rating to Continental's Pass-Through Certificates, Series 2009-1A. Continental Airlines, Inc., based in Houston Texas, is the world's 5th largest passenger airline. COOPER-STANDARD: To Continue Customer Programs Postpetition ----------------------------------------------------------- Cooper-Standard Holdings Inc. and its affiliated debtors sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to continue their prepetition customer programs. The Debtors run the programs as a means to generate goodwill and induce their customers to purchase their products. Their customer programs include: (1) Warranty Programs The Debtors issue warranties for their products as well as their obligations under their original equipment manufacturers (OEM) customers warranty programs. Under the OEM warranties, the Debtors remain liable for their warranty obligation for the statutory period provided by applicable laws. Where the OEM has granted their customers a longer warranty term than that provided by statute, the Debtors remain liable until the expiration of the warranty. The Debtors also participate in warranty reduction programs offered by the OEMS, which are incentive-based programs intended to reduce OEM's warranty liability over time. They also participate in warranty sharing programs with certain OEMs, under which the Debtors are responsible for a pre-negotiated percentage of warranty claims related to their product brought against the OEM. As of August 3, 2009, the Debtors' outstanding warranty sharing obligation is less than $629,239. (2) Clearinghouse Functions The Debtors function as an intermediary buyer or clearinghouse for many of their customers. In many cases, the Debtors need to purchase specialized equipment in order to make end products ordered by the customer. In these situations, while the customer owns the equipment, the Debtors sub-contract on the customers' behalf with vendors to perform tooling production work, perform quality control assessments, among other things. The customer either advances payment to the Debtors or reimburses them for funds they paid to the tool maker. (3) Purchasing Programs The Debtors participate in several purchasing programs, under which the OEMs facilitate the purchasing of parts and raw materials to allow the Debtors to take advantage of the OEMs' aggregate purchasing power. In some instances, the OEM issues purchase orders directly to the suppliers who then ship the materials directly to the Debtors to be used in manufacturing their products. The OEM's purchases are netted against receivables from the finished products shipped by the Debtors to the OEM. In other cases, the Debtors purchase the materials or parts directly from the suppliers, but the OEM guarantees the difference between the price the Debtors paid and what the OEM's purchase price would have been. The Court authorized the banks and other financial institutions to honor prepetition wire transfer requests, checks or drafts issued by the Debtors in connection with the implementation of their customer programs. About Cooper-Standard Cooper-Standard Automotive Inc., headquartered in Novi, Mich., is a leading global automotive supplier specializing in the manufacture and marketing of systems and components for the automotive industry. Products include body sealing systems, fluid handling systems and NVH control systems. The Company is one of the leading suppliers of chassis products in North America, with about 14% of market share. The Company's main custoemrs include Ford Motor Company, General Motors, Chrysler, Audi, Volkswagen, BMW, Fiat and Honda, among other automakers. Cooper-Standard Automotive employs approximately 16,000 people globally with more than 70 facilities throughout the world. For more information, visit the Company's Web site at: http://www.cooperstandard.com/ Cooper-Standard is a privately-held portfolio company of The Cypress Group and Goldman Sachs Capital Partners Funds. Cooper-Standard Holdings Inc., together with affiliates, filed for Chapter 11 on August 4, 2009 (Bankr. D. Del. Case No. 09-12743). Attorneys at Fried, Frank, Harris, Shriver & Jacobson LLP and Richards, Layton & Finger, P.A., will serve as bankruptcy counsel to the Debtors. Lazard FrŠres & Co. is serving as investment banker while Alvarez & Marsal is financial advisor. Kurtzman Carson Consultants LLC is notice, claims and solicitation agent. In its bankruptcy petition, the Company said that assets on a consolidated basis total $1,733,017,000 while debts total $1,785,039,000 as of March 31, 2009. The Company's Canadian subsidiary, Cooper-Standard Automotive Canada Limited, also sought relief under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Toronto, Ontario, Canada. Bankruptcy Creditors' Service, Inc., publishes Cooper-Standard Bankruptcy News. The newsletter tracks the Chapter 11 and CCAA proceedings undertaken by Cooper-Standard Holdings Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) COYOTES HOCKEY: NHL Seeks to Push Jim Balsillie Out of Bidding -------------------------------------------------------------- Bob Baum at The Associated Press reports that the National Hockey League has asked the U.S. Bankruptcy to reject Jim Balsillie's bid to acquire the Phoenix Coyotes. The NHL said in court documents that the owners have concluded that Mr. Balsillie would be untrustworthy, based on the bidder's behavior in previous attempts to buy the Pittsburgh Penguins and Nashville Predators. The NHL said that the Court has no right to overturn their July 29 vote. As reported by the Troubled Company Reporter on August 7, 2009, the Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the District of Arizona held that Mr. Balsillie's $212.5 million offer for the Phoenix Coyotes must be included in the September 10 auction for the National Hockey League franchise. The NHL previously conveyed objections to the sale to Mr. Balsillie, Research in Motion Ltd.'s co-chief executive Officer, because it contemplates moving the team to the city of Hamilton, in Canada. Phoenix Coyotes owner Jerry Moyes submitted to the Bankruptcy Court its deal signed with Mr. Balsillie together with Coyotes Hockey LLC's bankruptcy petition. The AP quoted Boston Bruins owner and NHL board of governors chairperson Jeremy Jacobs as saying, "We voted to deny approval to Mr. Balsillie because we concluded he lacks the good character and integrity required of a new owner under NHL bylaws." "This court should put an end to Mr. Moyes' and Mr. Balsillie's jointly devised scheme to force entry into the league through the bankruptcy 'side door. There is only a front door, and it is now unavailable to Mr. Balsillie in accordance with the NHL's constitution and bylaws," NHL said in court documents. "Mr. Balsillie's answers during the interview [with the NHL, which preceded the vote] only served to confirm our conclusion that he is not willing to comply with league rules and procedures and would not be a good business partner," The AP quoted Mr. Jacobs as saying. According to The AP, Minnesota Wild owner Craig Leipold said, "Based on my owner experiences with Mr. Balsillie, I have formed a highly unfavorable opinion regarding him, including his suitability as an NHL owner." Meanwhile, attorneys from Jennings Strouss & Salmon PLC for Phoenix Coyotes owner Jerry Moyes have apologized for inadvertently leaking a confidential document containing details of delicate, ongoing negotiations over bidding for the Coyotes, according to Law360. About Coyotes Hockey Dewey Ranch Hockey LLC, Arena Management Group, LLC, Coyotes Holdings, LLC, and Coyotes Hockey, LLC -- owners and affiliates of the Phoenix Coyotes National Hockey League team -- filed for Chapter 11 protection (Bankr. D. Ariz. Case No. 09-09488) on May 5, 2009. The Debtors are represented by Thomas J. Salerno, Esq., at Squire, Sanders & Dempsey, LLP, in Phoenix, and estimate their assets and liabilities are between $100 million and $500 million. Jim Balsillie, Research in Motion Ltd.'s co-chief executive officer, offered to buy the Phoenix Coyotes for $212 million and move the NHL team to Hamilton, Ontario, and the League balked at the relocation proposal. Mr. Balsillie was unsuccessful in 2007 when he attempted to buy and relocate the Nashville Predators, and lost a similar bid in 2006 to buy and relocate the Pittsburgh Penguins. CROCS INC: Posts $30.2 Million Net Loss for June 30 Quarter ----------------------------------------------------------- Crocs Inc. posted a net loss of $30.2 million for the three months ended June 30, 2009, compared net income of $2.13 million for the same period a year ago. For the six months ended June 30, 2009, Crocs booked a net loss of $52.6 million, compared to a net loss of $2.39 million a year ago. Crocs warned it may incur additional losses through the remainder of 2009 and in the future. As of June 30, 2009, the Company had $437.5 million in total assets; and $175.6 million in total liabilities; resulting in $261.9 million in stockholders' equity. The Company's cash and cash equivalents increased 50% to $77.5 million at June 30, 2009, from $51.7 million as of December 31, 2008. Crocs said its strong quarter end cash position allowed it to completely repay the $17.3 million borrowed under the Company's credit facility as of June 30, 2009, subsequent to the end of the second quarter. The credit facility was extinguished on August 3, 2009, ahead of its September 30, 2009 maturity date. The Company has signed a term sheet with a well-known lender and intends to secure a new asset-backed revolving credit facility by the end of the third quarter. Crocs had $17.3 million in borrowings outstanding at June 30, 2009, under its credit agreement. On August 3, 2009, Crocs fully repaid its outstanding credit agreement with Union Bank of California, N.A. The Revolving Credit Facility had an outstanding balance as of June 30, 2009, of $17.3 million. Termination of the Revolving Credit Facility became effective upon full repayment by the Company on August 3, 2009. The Company did not incur any penalties for early repayment of the Revolving Credit Facility. Crocs is currently in discussions to obtain a new borrowing arrangement, which will most likely be an asset-backed revolving line of credit, to provide it with flexibility with respect to ongoing cash needs. Additionally, the Company has filed a Form S-3 with the SEC to allow it additional flexibility in exploring financing options. There can be no assurance that the Company will be able to secure additional debt or equity financing and, accordingly, the Company's liquidity and ability to timely pay its obligations when due could be adversely affected. As the Company continues to re-evaluate its operating plans for 2009 and beyond, it has undertaken certain restructuring and right-sizing activities to address the potential for continued decreases in revenues. The Company's ability to continue as a going concern is dependent upon achieving a cost structure which supports the levels of revenues the Company is able to achieve. There can be no assurance that any actions taken by the Company will result in a return to profitability. "Our second quarter performance reflects the tangible business improvements we're continuing to make and underscores the enduring consumer appeal of the Crocs brand," said John Duerden, President and Chief Executive Officer. "Our top-line results were better than expected driven by strong gains in our retail channel, as consumers responded positively to the broad product assortment now available at our Company-operated locations. We continue to gain market share in Asia, where our business has been strong in recent quarters. We strengthened our balance sheet, reducing inventory and repaying all outstanding borrowings under our credit facility. While we are encouraged by our progress, we are clearly not satisfied with these results. We intend to reduce expenses, improve our cash position and making targeted investments in our systems and procedures to serve customers better and to increase productivity." Mr. Duerden continued, "We've made substantial progress on the disposal of our excess inventory in a responsible manner. Our U.S. distribution facilities have been consolidated down from seven locations to one, enabling us to provide our product to customers more effectively and efficiently. As we continue to streamline our cost base, we expect to reduce our operating losses through the balance of this year and return to profitability next year." The Company expects to generate between $150 million and $160 million in revenue during its fiscal third quarter, with a diluted loss per share between $0.14 and $0.06. This guidance excludes the effect of one-time and non-recurring charges. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?4153 About Crocs Inc. Based in Niwot, Colorado, Crocs Inc. (NASDAQ: CROX) designs and sells a broad offering of footwear, apparel, gear and accessories that utilize proprietary closed cell-resin, called Croslite. The Company sells Crocs-branded products throughout the U.S. and in 128 countries, through domestic and international retailers and distributors and directly to end-user consumers through its webstores, Company-operated retail stores, outlets and kiosks. Going Concern Doubt Deloitte & Touche LLP, in Denver, Colorado, has raised substantial doubt about Croc's ability to continue as a going concern. As reported by the Troubled Company Reporter on May 15, 2009, Crocs reported first quarter 2009 revenues of $134.9 million, up 7% from the fourth quarter of 2008 and down $63.6, or 32% from the first quarter of 2008. The Company reported a net loss of $22.4 million in the first quarter of 2009 with a diluted loss per share of $0.27, compared to a fourth quarter 2008 net loss of $34.7 million, or ($0.42) per share and a first quarter 2008 net loss of $4.5 million, or ($0.05) per share. Selling, general and administrative costs are down 26% compared to Q4 2008 and down 6.2% from the same quarter a year ago. At March 31, 2009, Crocs had $446.9 million in total assets and $182.0 million in total liabilities, resulting to $264.9 million in stockholders' equity. On March 31, 2009, Crocs entered into a tenth amendment of its Revolving Credit Facility with Union Bank of California, N.A. The Amendment extends the loan maturity date to September 30, 2009. CRUCIBLE MATERIALS: Asks for Dec. 2 Extension to File Ch. 11 Plan ----------------------------------------------------------------- Crucible Materials Corp. asks the U.S. Bankruptcy Court for the District of Delaware to extend until December 2, 2009, its exclusive period to file a Chapter 11 plan. The Company also asked the Court to corresponding period to solicit acceptances of the Chapter 11 plan until Jan. 31, 2010. According to Carla Main at Bloomberg News, Crucible cited the "size and complexity" of the case and "numerous discussions" with the creditors committee and lenders as signs of good faith. A hearing on the proposed extension is scheduled for August 25. Objections are due August 18. 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. Crucible is currently employee-owned. 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 engaged 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. The Debtors listed assets and debts both ranging from $100 million to $500 million. CRUCIBLE MATERIALS: Seeks to Pay PRL Industries' Prepetition Claim ------------------------------------------------------------------ Crucible Materials Corporation asks the U.S. Bankruptcy Court for the District of Delaware for authority to pay a $39,260 prepetition claim of PRL Industries, Inc. According to NetDockets, Crucible indicated that PRL Industries is demanding payment of the prepetition claim as a condition of accepting new purchase orders from Crucible and the services that PRL provides cannot easily be re-sourced from another supplier. According to NetDockets, Crucible finds itself in the position of having to accede to PRL's demands because the parties do not have a long-term contract; rather, PRL provides services pursuant to individual purchase orders. Specifically, PRL is a specialty metals testing company which tests, inspects and performs some machining on alloy pump castings manufactured by Crucible's Compaction Metals Division. Certain of those alloy pump castings are sold to Curtiss-Wright Electro-Mechanical Corporation's Engineered Pump Division for a price of more than $500,000 each. The prepetition claims relate to two casings that were sold to Curtiss-Wright, NetDockets notes. According to NetDockets, Crucible requires PRL's services going- forward because it received a purchase order from Curtiss-Wright for 14 additional casings on or about April 27, 2009. According to NetDockets, Crucible reports that it expects the Curtiss-Wright purchase order to be assumed and assigned to the purchaser of the Compaction Metals Division. Crucible said the purchase order accounts for "a significant portion of the value of the Debtors' estates". Because Crucible cannot easily replace PRL's services with services from another supplier and such services are required for Crucible to be able to perform under the new Curtiss-Wright purchase order, NetDockets continues, Crucible asserts that payment of the prepetition PRL claim is justified under section 363 of the Bankruptcy Code or, alternatively, under the "doctrine of necessity." 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 engaged 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. The Debtors listed assets and debts both ranging from $100 million to $500 million. DANA HOLDING: Moody's Changes Default Rating to 'Caa1/LD' --------------------------------------------------------- Moody's Investors Service revised Dana Holding Corporation's Probability of Default Rating to Caa1\LD from Caa1. In related action Moody's affirmed Dana's Corporate Family Rating at Caa2; affirmed the B3 rating on the senior secured asset based revolving credit facility; affirmed the Caa1 rating on the senior secured term loan; and affirmed the Speculative Grade Liquidity Rating at SGL-3. The company's rating outlook remains negative. The positioning of Dana's PDR at Caa1\LD reflects the company's second quarter earnings call announcement of completing additional open market purchases of its senior secured term loan at distressed prices beyond levels previously achieved through the Dutch auction concluded in May 2009. Moody's deems the amount of the total debt purchased material enough to be considered a "limited default". The PDR will revert to Caa1 in approximately three business days. The affirmation of Dana's CFR at Caa2 reflects Moody's belief that despite the company's sequential quarterly improvement in operations, further improvement in operating performance will continue to be pressured by weak global automotive and commercial vehicle markets. The anticipation of these conditions prompted management to indicate that it no longer expects fiscal year 2009 EBITDA to outpace the prior fiscal year level of approximately $350 million. These pressures continue to support Moody's employing a 40% family recovery rate in its Loss Given Default assessment for the company, which drives the positioning of the CFR at Caa2 under the Loss Given Default Methodology. The negative outlook continues to consider the ongoing challenges in the global automotive and commercial vehicle markets. These markets continue to be pressured by weak global economic conditions adversely affecting demand. While these conditions will be somewhat offset by Dana's restructuring actions, the company's credit metrics and liquidity levels will continue to be pressured. The Speculative Grade Liquidity Rating of SGL-3 reflects adequate liquidity. Moody's continues to expect that industry conditions could result in negative free cash flow over the next twelve months. However, the company maintained strong cash balances at June 30, 2009, of $553 million, and had approximately $126 million of availability under its $650 million asset based revolving credit, net of letters of credit, and subject to covenant restrictions. The company also maintains a European receivables loan facility of Euro 170 million, maturing in July 2012, which had availability of $65 million at June 30, 2008. The recent term loan purchases and prepayments made by the company may help alleviate industry pressures on the financial covenant cushions under Dana's term loan facility over the near term. Alternative liquidity is limited as all of the company's domestic assets and 66% of the equity of the non-domestic subsidiaries secure the revolving credit and term-loan. There is capacity to incur up to $400 million of additional debt in the foreign subsidiaries, subject to financial covenant limitations. Ratings revised: * Probability of Default Rating, to Caa1\LD from Caa1; Rating affirmed: * Caa2, Corporate Family Rating; * $650 million senior secured asset based revolving credit facility, to B3 (LGD3, 43%); * $1.14 billion (remaining amount) senior secured term loan, to Caa1 (LGD3, 46%); * Speculative Grade Liquidity rating, SGL-3 The last rating action for Dana Holding Corporation was on June 5, 2009 when the Corporate Family Rating was lowered to Caa2. The company's performance continues to be consistent with Moody's Credit Opinion dated July 9, 2009. Dana is a world leader in the supply of axles; driveshafts; and structural, sealing, and thermal management products. The company's customer base includes virtually every major vehicle and engine manufacturer in the global automotive, commercial vehicle, and off-highway markets, which collectively produce more than 65 million vehicles annually. The company employs approximately 32,000 people in 26 countries. DEERFIELD CAPITAL: Gets Relief from Net Worth Covenants ------------------------------------------------------- Deerfield Capital Corp. has entered into three supplemental indentures with the holders of trust preferred securities issued by Deerfield Capital Trust I, Deerfield Capital Trust II and Deerfield Capital Trust III. The Supplemental Indentures amend the consolidated net worth covenants contained in the indentures governing the Trust Preferred Securities to: (a) permanently decrease the net worth required by the Net Worth Covenants from $175 million to $50 million and (b) provide that the initial measurement date for compliance with the Net Worth Covenants will be September 30, 2012. These provisions supersede the temporary waiver of the Net Worth Covenants obtained from the holders of the Trust Preferred Securities in November 2008. The Supplemental Indentures also contain provisions prohibiting the Company from incurring additional indebtedness and declaring additional dividends and distributions on its capital stock, in each case for the life of the Trust Preferred Securities and except as specifically permitted under the terms of the Supplemental Indentures. Based in Chicago, Ill., Deerfield Capital Corp. (NYSE: DFR) -- http://www.deerfieldcapital.com/-- through its subsidiary, Deerfield Capital Management LLC, manages client assets, including bank loans and other corporate debt, RMBS, government securities and asset-backed securities. In addition, Deerfield has a principal investing portfolio comprised of fixed income investments, including bank loans and other corporate debt and RMBS. Assets under management totaled $9.9 billion at July 1, 2009. DELTA AIR LINES: Reports July 2009 Traffic Results -------------------------------------------------- Delta Air Lines (NYSE: DAL) reported traffic results for July 2009. System traffic in July 2009, including both Delta and Northwest operations, decreased 2.5 percent compared to July 2008 on a 3.6 percent decrease in capacity, and load factor increased 1.0 point to 87.7 percent. Domestic traffic decreased 1.6 percent year over year on a 2.6 percent decrease in capacity. Domestic load factor increased 1.0 point to 88.6 percent. International traffic decreased 3.9 percent year over year on a 5.0 percent decrease in capacity, and load factor increased 1.0 point to 86.3 percent. Delta Air Lines Monthly Traffic Results July 2009 July 2008 Change --------- --------- ------ RPMs (000): Domestic 11,746,041 11,935,758 (1.6%) Mainline 9,259,655 9,607,288 (3.6%) Regional 2,486,386 2,328,471 6.8% International 7,775,345 8,093,142 (3.9%) Latin America 1,127,725 1,195,945 (5.7%) Mainline 1,102,622 1,138,353 (3.1%) Regional 25,103 57,592 (56.4%) Atlantic 4,679,014 4,898,325 (4.5%) Pacific 1,968,606 1,998,872 (1.5%) System 19,521,386 20,028,901 (2.5%) ASMs (000): Domestic 13,257,335 13,617,766 (2.6%) Mainline 10,256,585 10,771,567 (4.8%) Regional 3,000,750 2,846,199 5.4% International 9,014,372 9,487,228 (5.0%) Latin America 1,296,510 1,437,114 (9.8%) Mainline 1,267,047 1,363,592 (7.1%) Regional 29,463 73,521 (59.9%) Atlantic 5,330,459 5,703,098 (6.5%) Pacific 2,387,403 2,347,017 1.7% System 22,271,707 23,104,995 (3.6%) Load Factor Domestic 88.6% 87.6% 1.0 pts Mainline 90.3% 89.2% 1.1 pts Regional 82.9% 81.8% 1.1 pts International 86.3% 85.3% 1.0 pts Latin America 87.0% 83.2% 3.8 pts Mainline 87.0% 83.5% 3.5 pts Regional 85.2% 78.3% 6.9 pts Atlantic 87.8% 85.9% 1.9 pts Pacific 82.5% 85.2% (2.7) pts System 87.7% 86.7% 1.0 pts Passengers Boarded 16,062,346 16,317,834 (1.6%) Mainline Completion Factor 99.4% 98.6% 0.8 pts Cargo Ton Miles (000): Mail 6,887 9,358 (26.4%) Freight 197,297 246,574 (20.0%) System 204,185 255,932 (20.2%) Delta Air Lines Year-To-Date Traffic Results July 2009 July 2008 Change --------- --------- ------ RPMs (000): Domestic 68,867,942 74,082,279 (7.0%) Mainline 54,079,669 59,349,130 (8.9%) Regional 14,788,273 14,733,149 0.4% International 42,670,920 46,696,639 (8.6%) Latin America 7,123,747 7,940,874 (10.3%) Mainline 7,000,015 7,554,757 (7.3%) Regional 123,732 386,117 (68.0%) Atlantic 24,467,245 25,801,138 (5.2%) Pacific 11,079,929 12,954,627 (14.5%) System 111,538,862 120,778,918 (7.7%) ASMs (000): Domestic 82,940,970 89,206,539 (7.0%) Mainline 63,708,113 70,335,753 (9.4%) Regional 19,232,856 18,870,786 1.9% International 54,080,642 56,853,445 (4.9%) Latin America 9,171,002 9,801,584 (6.4%) Mainline 8,992,474 9,296,740 (3.3%) Regional 178,528 504,844 (64.6%) Atlantic 31,102,977 31,912,712 (2.5%) Pacific 13,806,663 15,139,150 (8.8%) System 137,021,611 146,059,984 (6.2%) Load Factor Domestic 83.0% 83.0% 0.0 pts Mainline 84.9% 84.4% 0.5 pts Regional 76.9% 78.1% (1.2) pts International 78.9% 82.1% (3.2) pts Latin America 77.7% 81.0% (3.3) pts Mainline 77.8% 81.3% (3.5) pts Regional 69.3% 76.5% (7.2) pts Atlantic 78.7% 80.8% (2.1) pts Pacific 80.3% 85.6% (5.3) pts System 81.4% 82.7% (1.3) pts Passengers Boarded 95,422,718 102,733,044 (7.1%) Cargo Ton Miles (000): Mail 46,839 66,050 (29.1%) Freight 1,168,380 1,718,218 (32.0%) System 1,215,218 1,784,268 (31.9%) About Delta Air Lines With its acquisition of Northwest Airlines, Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- is now the world's largest airline. From its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Salt Lake City and Tokyo-Narita, Delta, its Northwest subsidiary and Delta Connection carriers offer service to more than 376 destinations worldwide in 66 countries and serves more than 170 million passengers each year. Delta's marketing alliances allow customers to earn and redeem either SkyMiles or WorldPerks on more than 16,000 daily flights offered by SkyTeam and other partners. The merger closed on October 29, 2008. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represented the Northwest Debtors in their restructuring efforts. On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). As reported by the TCR on June 29, 2009, Fitch Ratings has downgraded the debt ratings of Delta Air Lines, Inc., and its wholly owned subsidiary Northwest Airlines, Inc. -- (i) DAL's Issuer Default Rating to 'B-' from 'B', First-lien senior secured credit facilities to 'BB-/RR1' from 'BB/RR1', and Second-lien secured credit facility to 'B-/RR4' from 'B/RR4', and (ii) NWA's IDR to 'B-' from 'B'; and Secured bank credit facility to 'BB- /RR1' from 'BB/RR1'. The downgrade of DAL's ratings reflects the continued erosion of the airline's near-term cash flow generation potential that has resulted from extremely weak business travel demand and large year-over-year declines in passenger revenue per available seat mile. DELTA PETROLEUM: Second Quarter Net Loss Widens to $180.4MM ----------------------------------------------------------- Delta Petroleum Corp. reported wider net loss of $180.4 million for the second quarter ended June 30, 2009, from a $23.2 million net loss during the same period a year ago. For the six months ended June 30, 2009, the Company reported a net loss of $209.9 million from a $44.3 million net loss during the same period a year ago. Delta booked a net loss attributable to Delta common stockholders of $172.3 million for the three months ended June 30, 2009. Delta booked a net loss attributable to Delta common stockholders of $197.8 million for the six months ended June 30, 2009. As of June 30, 2009, Delta had $1.66 billion in total assets; and $366.5 million in total current liabilities and $463.8 million in total long-term liabilities. Going Concern Doubt The Company had at June 30, 2009, a working capital deficiency of $225.5 million, including $83.0 million outstanding under its credit agreement and $83.3 million outstanding under the credit agreement of DHS Drilling Company, the Company's 49.8% subsidiary. The net loss and working capital deficiency, the Company said, raises substantial doubt about the Company's ability to continue as a going concern. At June 30, 2009, the Company was in compliance with its quarterly financial covenants under its credit agreement; however, projections indicate that without an increase in Rocky Mountain natural gas prices upon which the majority of the Company's production is sold, the senior secured debt to EBITDAX ratio covenant in its credit agreement could be violated within the next twelve months. The borrowing base under the Company's credit agreement is to be redetermined effective September 1, 2009. A decrease in the borrowing base determined by the lenders would decrease the Company's remaining availability under the line of credit. DHS Default At June 30, 2009, DHS was in not in compliance with its obligation to provide to Lehman Commercial Paper, Inc., by March 31 of each year audited financial statements reported on without a going concern qualification or exception by the independent auditor and DHS's previous forbearance agreement with LCPI expired on June 15, 2009. In addition, DHS was not in compliance with its various financial covenants as of June 30, 2009. Although DHS is in ongoing negotiations with LCPI to modify the terms of the existing DHS credit facility, there can be no assurance that DHS will be able to renegotiate the terms of its debt agreement. The DHS facility is non-recourse to Delta. The Company had $79.0 million of accounts payable at June 30, 2009, which if not timely paid could result in liens filed against the Company's properties or withdrawal of trade credit provided by vendors, which in turn could limit the Company's ability to conduct operations on its properties. On May 13, 2009, Delta completed an underwritten public offering of 172.5 million shares of common stock at $1.50 per share for net proceeds of $247.2 million. On May 19, 2009, the Company received $48.7 million of net proceeds related to the first portion of the judgments awarded on the offshore litigation with the U.S. government. With proceeds from the transactions, the Company has reduced borrowings outstanding under the credit facility from $294.5 million at December 31, 2008 to $83.0 million at June 30, 2009, with $140.8 million of remaining availability based on the current $225.0 million borrowing base. Delta continues to have the support of its banking group and is confident that the September bank re-determination will not have a material impact on the Company's effort to preserve liquidity. In addition, Delta reduced its accounts payable from $159.0 million at December 31, 2008, to $79.0 million at June 30, 2009. During May 2009, DHS sold Rig #7 for cash proceeds of $7.8 million which, combined with proceeds from minor spare equipment sales and the collection of accounts receivable, were used to reduce borrowings outstanding under the DHS credit facility from $93.8 million at December 31, 2008 to $83.3 million at June 30, 2009. DHS remains out of compliance with the debt covenants under its credit facility and its previous forbearance agreement has expired. DHS is at risk of losing their assets if they are not able to successfully negotiate a new credit agreement with Lehman Commercial Paper. While the May 2009 public equity offering has substantially funded the Company's near term liquidity needs, the Company continues to pursue other potential capital raising activities, such as joint ventures, or other industry partnerships, or non-core asset dispositions. In addition, the Company continues to limit its capital expenditure program and has implemented additional cost saving measures, including a second reduction in force during June 2009, that when combined with the March 2009 reduction in force, has reduced the Company's total number of employees by 50%. Depending on changes in commodity prices, the outcome of the Company's borrowing base re-determination scheduled for September 1, 2009, and developments related to the Company's remaining offshore litigation, the Company will evaluate the need to raise additional capital. There can be no assurance that the actions undertaken by the Company will be sufficient to repay the obligations under the credit agreement, or, if not sufficient, or if additional defaults occur, that the lenders will be willing to waive the defaults or amend the agreement. In addition, there can be no assurance that cash flow from operations and other sources of liquidity, including asset sales or joint venture or other industry partnerships, will be sufficient to meet contractual, operating and capital obligations. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4154 On August 6, Delta held an earnings conference call to discuss its financial and operating results for the June 30 quarter. A full- text copy of the opening remarks of the conference call is available at no charger at http://ResearchArchives.com/t/s?4155 About Delta Petroleum Corporation Headquartered in Denver, Colorado, Delta Petroleum Corporation (NASDAQ: DPTR) -- http://www.deltapetro.com/-- is an oil and gas exploration and development company. The company's core areas of operations are the Gulf Coast and Rocky Mountain Regions, which comprise the majority of its proved reserves, production and long- term growth prospects. * * * As reported by the Troubled Company Reporter on March 3, 2009, KPMG LLP in Denver, Colorado, raised substantial doubt about Delta Petroleum Corporation's ability to continue as a going concern after auditing the Company's financial statements for the periods ended December 31, 2008, and 2007. The auditors related that the Company has suffered recurring losses from operations, has a working capital deficiency, and was not in compliance with its debt covenants at December 31, 2008. According to the TCR on March 9, 2009, Moody's Investors Service downgraded Delta Petroleum Corporation's (Delta) $150 million 7% senior unsecured notes due 2015 to Ca (LGD 5, 78%) from Caa3 (LGD 5, 76%). Moody's also downgraded Delta's Corporate Family Rating to Caa3 from Caa2 and its Probability of Default Rating to Caa3 from Caa2. Delta's Speculative Grade Liquidity rating remains at SGL-4. Moody's said that the outlook is negative. The TCR reported on March 6, 2009, Standard & Poor's Ratings Services said that it lowered the corporate credit rating on exploration and production company Delta Petroleum Corp. to 'CCC' from 'B-'. S&P removed all ratings from CreditWatch with negative implications where they were placed on January 16, 2009, because of concerns about near-term liquidity and covenant compliance. S&P said that the outlook is developing. DUNE ENERGY: Narrows Net Loss to $16.4 Million in Q2 2009 --------------------------------------------------------- Dune Energy Inc. said net loss totaled $16.4 million for the second quarter of 2009, versus a $33.1 million loss for the second quarter of 2008. The second quarter 2008 loss included a $24.5 million loss for discontinued operations in the Barnett Shale of North Texas. Preferred stock dividends were $10.5 million in the second quarter of 2009 versus $74.7 million in the second quarter of 2008 primarily reflecting the difference in coupon rate of the preferred stock and the $68.4 million dividend associated with the change in conversion price of the preferred which occurred in the second quarter of 2008. Net loss per share both basic and fully diluted for the quarter was $0.21, based on 125.2 million weighted average shares outstanding as compared with $1.24 loss in the second quarter of 2008 with 86.9 million weighted average shares outstanding. The increased outstanding common shares are predominately associated with conversion of preferred shares into common shares. For the six months ended June 30, 2009, the Company posted a $28.4 million net loss compared to a $41.8 million net loss for the same six-month period a year ago. Revenue for the second quarter totaled $14.9 million as compared with $51.5 million for the second quarter of 2008. The primary reasons behind the decrease in revenue were lower production and lower average sales prices in the second quarter of 2009 versus the second quarter of 2008. As of June 30, 2009, the Company had $382.3 million in total assets; and $355.6 million in total liabilities and $213.4 million in Redeemable convertible preferred stock; resulting in $186.7 million in stockholders' deficit. The Company had $252.0 million in accumulated deficit as of June 30, 2009. At the end of the quarter cash was $12.8 million versus $15.5 million at year end 2008. Accounts payable were $7.5 million in the current quarter versus $21.7 million at year end 2008. Availability under the Wells Fargo Foothill Revolver was reduced to $35 million after the year end redetermination. Currently there is $17 million drawn against the revolver and $8.8 million issued in standby letters of credit. The $17 million is now considered a current liability as the maturity of the revolver is May 15, 2010. Under the Wells Fargo Foothill revolver, the Company is required to maintain $10 million of cash or availability at the end of each quarter. Mid-Year Reserves The Company prepared a mid-year unaudited reserve report for review of the borrowing base with Wells Fargo Foothill. Based on this review proved reserves were 138.1 Bcfe up from 133.0 Bcfe at year end 2008. Oil reserves were 9.2 million barrels and natural gas reserves were 82.6 Bcf. PV10 based on NYMEX strip pricing as of June 30, 2009 was $460 million. Probable and possible reserves were an additional 23.2 Bcfe with a PV10 value of $42 million. Exploratory upside associated with unbooked prospects at Garden Island Bay, Bateman Lake and Chocolate Bayou could add an additional net 142 Bcfe on an unrisked basis with a PV10 of $388 million. The potential reserves are dependent of successfully establishing joint ventures for the drilling of the various prospects. By category 43.3% of the mid year reserves were proved developed producing, 21.6% were proved behind pipe and 35.1% were proved undeveloped. At year end 2008 the category breakdown was 33.4%, 33.2% and 33.4% respectively. Common Equity and Preferred Shares At the end of the quarter there were 139.4 million common shares outstanding up from 108.0 million at the end of the first quarter reflecting the conversion of 21,116 preferred shares into 31.2 million new common shares. This total includes 19.1 million common shares issued to pay make whole premiums. The make whole premium can be paid at Dune's election in cash or shares of common stock. When paid in shares of common stock, this creates significant dilution for the common stock holders. This provision is only applicable through June of 2010. At the end of the quarter there were 221,686 preferred shares outstanding. James A. Watt, President and Chief Executive Officer commented "This has been a challenging year for Dune and the industry. We have restructured our business plan to utilize available cash flow coupled with industry joint ventures to fund our ongoing projects. Once the uncertainty associated with the dilutive impact of the make whole shares is behind us, we believe that our positive operating results and the upside potential of many of our fields should translate into increased value for the common equity." A full-text copy of Dune Energy's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?4147 About Dune Energy Based in Houston, Texas, Dune Energy, Inc., is an independent energy company. Since May of 2004, it has been engaged in the exploration, development, acquisition and exploitation of natural gas and crude oil properties, with interests along the Louisiana/Texas Gulf Coast. Its properties cover 100,000 gross acres across 23 producing oil and natural gas fields. EINSTEIN NOAH: General Counsel and Secretary Jill Sisson to Retire ------------------------------------------------------------------ Jill B. W. Sisson, Einstein Noah Restaurant Group's General Counsel and Secretary and a named executive officer, on August 3, 2009, gave notice of her intent to retire effective September 3, 2009. Ms. Sisson has acted as a consultant to the Company since December 2003. Ms. Sisson joined the company as a consultant in December 2003 and was appointed as General Counsel and Secretary at that time. Jeff O'Neill, Chief Executive Officer and President of Einstein Noah, stated, "On behalf of the executive team and the board of directors, I want to thank Jill for her commitment to our company and wish her the best in her well-deserved retirement. Jill leaves behind a strong legacy at Einstein Noah and a distinguished record of service. We have truly valued her leadership, legal expertise, and the exemplary role she has displayed in demonstrating our company values." Jill Sisson, stated, "I have been fortunate to work at Einstein Noah for nearly six years and it has been both personally and professionally rewarding to participate in the growth and success of this company. After a very satisfying legal career, I am looking forward to the next chapter in my life. About Einstein Noah Restaurant Based in Lakewood, Colorado, Einstein Noah Restaurant Group Inc. (Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a a retail chain of quick casual restaurants in the United States, specializing in foods for breakfast and lunch. The Company operates locations primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brands and primarily franchises locations under the Manhattan Bage(R) brand. The Company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. As of June 30, 2009, the Company had $172.9 million in total assets; and $186.5 million in total liabilities; resulting in $13.6 million stockholders' deficit. EINSTEIN NOAH: Posts Slightly Lower Net Income in June 30 Quarter ----------------------------------------------------------------- Einstein Noah Restaurant Group, Inc., reported slightly lower net income of $6.46 million during the 13 weeks ended June 30, 2009, from $6.91 million net income for the 13 weeks ended July 1, 2008. For the 26 weeks ended June 30, 2009, the Company reported net income of $10.7 million from $8.31 million net income during the same period ended July 1, 2008. As of June 30, 2009, the Company had $172.9 million in total assets; and $186.5 million in total liabilities; resulting in $13.6 million stockholders' deficit. Selected Highlights for the Second Quarter 2009: -- Substantial improvement in company-owned restaurant operating margins of 19.2% drove overall corporate margins back to 20.0% in the second quarter; -- Total revenues declined a modest $1.0 million to $104.4 million vs. $105.4 million in the second quarter of 2008; -- System-wide comparable store sales decreased 2.2%, a 150 basis point improvement over the first quarter trend; -- Net income and diluted EPS of $6.5 million and $0.39, respectively, vs. net income and diluted EPS of $6.9 million and $0.42 in the second quarter of 2008; -- Redeemed $20 million in Series Z Preferred Stock on June 30, 2009 Jeff O'Neill, Chief Executive Officer and President of Einstein Noah, stated, "Our comparable store sales and transaction performance continued to show improvement during the second quarter, despite the economic slowdown. We are encouraged by the early acceptance of our new marketing and merchandising initiatives. They are designed to build awareness, trial, and frequency of our core offerings and new product launches. In addition, the operational initiatives we put in place helped to drive margin improvement by 430 basis points compared to the first quarter which demonstrated strong progress toward our goal of returning margins back to historical levels through the balance of the year. While there is still much work ahead, we are confident that Einstein Noah has the brands, the people, and the value proposition to become a premier destination within the fast casual restaurant segment." A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4156 The Company held a conference call on August 6 -- archived on the Company's Web site at http://ResearchArchives.com/t/s?4157 These points were discussed during the call: -- System-wide comparable store sales and related transactions for July were at similar levels as the second quarter of 2009. -- The wheat requirements that the Company has locked in for 2010 will be $1 per bushel lower from what the Company will pay in fiscal 2009. About Einstein Noah Restaurant Based in Lakewood, Colorado, Einstein Noah Restaurant Group Inc. (Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a a retail chain of quick casual restaurants in the United States, specializing in foods for breakfast and lunch. The Company operates locations primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brands and primarily franchises locations under the Manhattan Bage(R) brand. The Company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. EMPIRE RESORTS: Delays Filing of June 30 Quarterly Report --------------------------------------------------------- Empire Resorts Inc. says its report on Form 10-Q for the period ended June 30, 2009, could not be filed without unreasonable effort or expense because it was unable to obtain all needed information by the filing due date. Empire Resorts -- http://www.empiresorts.com/-- owns and operates the Monticello Casino & Raceway, including slot machines and a 230-acre harness racing facility in Sullivan County, 90 miles from midtown Manhattan. EMPIRE RESORTS: Receives Default Notice From 5-1/2% Noteholders --------------------------------------------------------------- Empire Resorts, Inc., on August 3, 2009, received a notice from Plainfield Special Situations Master Fund Limited, Highbridge International LLC and Whitebox Advisors LLC -- purported beneficial owners of $48,730,000 principal amount of the Company's 5-1/2% senior convertible notes -- alleging that an event of default has occurred with respect to the Notes and reserving their respective rights and remedies. The noteholders allege that an event of default has occurred as a result of the Company's failure to pay the principal amount of the Notes plus accrued and unpaid interest and liquidated damages upon their purported timely exercise of certain put rights under the indenture dated as of July 26, 2004 by and among the Company and The Bank of New York Mellon Corporation/ The Notice did not include copies of executed put exercise notices required under the Indenture to exercise a put. Consequently, the Company is of the view that no exercise of any put rights has occurred and that the Notes will mature on July 31, 2014. On August 5, 2009, the Company filed a declaratory judgment action against the beneficial owners of the Notes, as well as The Depository Trust Company and the Trustee, in the Supreme Court of the State of New York in Sullivan County. In its complaint, the Company seeks a judicial determination that (1) no Holder, as defined under the Indenture, delivered a Put Notice to the office of the Trustee within the lawfully mandated time for exercise of a Holder's put rights under the Indenture prior to the close of business on July 31, 2009, and that (2) the Notes, in the full amount of $65,000,000, mature on July 31, 2014. A full-text copy of the letter is available at no charge at: http://ResearchArchives.com/t/s?415c About Empire Resorts Empire Resorts Inc. -- http://www.empiresorts.com/-- owns and operates the Monticello Casino & Raceway, including slot machines and a 230-acre harness racing facility in Sullivan County, 90 miles from midtown Manhattan. EMPIRE RESORTS: Register 5,000,000 Shares Under 2005 Equity Plan ---------------------------------------------------------------- Empire Resorts Inc. filed with the Securities and Exchange Commission on Form S-8 to register an additional 5,000,000 shares of its common stock, $0.01 par value per share, issuable under the Company's Amended and Restated 2005 Equity Incentive Plan. The increase in the number of shares authorized for issuance under the Plan from 3,500,000 to 8,500,000 was approved by the Company's stockholders at the 2009 annual meeting held on June 16, 2009. On March 31, 2006, the Company filed with the Securities and Exchange Commission a Registration Statement on Form S-8 (Registration No. 333-132889) registering of 3,500,000 shares of Common Stock, which were to be issued in connection with the Plan. A full-text copy of the Registration Statement is available at no charge at http://ResearchArchives.com/t/s?415d Empire Resorts Inc. -- http://www.empiresorts.com/-- owns and operates the Monticello Casino & Raceway, including slot machines and a 230-acre harness racing facility in Sullivan County, 90 miles from midtown Manhattan. ENERGY PARTNERS: Chapter 11 Filing Raises Going Concern Doubt ------------------------------------------------------------- KPMG LLP in New Orleans, Louisiana, raised substantial doubt about Energy Partners, Ltd.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal years ended December 31, 2008, and 2007. The Company noted that the Company filed voluntary petitions on May 1, 2009, for reorganization under Chapter 11. At December 31, 2008, the Company's balance sheet showed total assets of $766,766,000, total liabilities of $709,647,000 and stockholders' equity of 57,119,000. For fiscal year ended December 31, 2008, the Company posted a net loss of $52,212,000 compared with a net loss of $79,955, for the same period in 2008. A full-text copy of the Company's Form 10-K is available for free at http://ResearchArchives.com/t/s?4142 Based in New Orleans, Louisiana, Energy Partners, Ltd., (Pink Sheets: ERPL.PK) is an independent oil and natural gas exploration and production company. The Company had interests in 24 producing fields, six fields under development and one property on which drilling operations were then being conducted, all of which are located in the Gulf of Mexico Region. Energy Partners, Ltd., and its affiliates filed for Chapter 11 on May 1, 2009 (Bankr. S.D. Tex. Lead Case No. 09-32957). Paul E. Heath, Esq., at Vinson & Elkins LLP, represents the Debtors in their restructuring efforts. The Debtors propose to employ Parkman Whaling LLC as financial advisor. The Debtors' financial condition as of December 31, 2008, showed total assets of $770,445,000 and total debts of $708,370,000. FINLAY ENTERPRISES: Discloses Terms of Gordon Brothers Agency Deal ------------------------------------------------------------------ Finlay Fine Jewelry Corporation, a wholly owned subsidiary of Finlay Enterprises, Inc., on August 5, 2009, entered into an Agency Agreement with Gordon Brothers Retail Partners, LLC, pursuant to which Finlay Jewelry appointed Gordon Brothers to act as Finlay Jewelry's agent to conduct "store closing" or similar sales of merchandise located at all of Finlay Jewelry's retail store locations and Finlay Jewelry's two distribution centers. Subject to certain conditions, Gordon Brothers guarantees that the proceeds of the Sale will equal 64.75% of the aggregate cost value of the merchandise. To the extent that the Sale generates sufficient proceeds to cover the Guaranteed Amount and the reimbursement of the expenses enumerated in the Agency Agreement, Gordon Brothers will be paid a base agency fee of 4.25% of the aggregate cost value of the merchandise that is sold during the Sale, and an additional fee of 2.125% of the documented cost of any additional merchandise that is procured by Gordon Brothers on consignment and sold during the Sale. To the extent that the proceeds that are received from the Sale exceed the sum of (i) the Guaranteed Amount, (ii) the Expenses that are incurred during the conduct of the Sale, and (iii) the Agent's Fee, any additional proceeds that are obtained from the Sale shall be shared 50% as to Finlay Jewelry and 50% as to Gordon Brothers. In the event that a party other than Gordon Brothers is selected to conduct the Sale, or Finlay Jewelry's retail stores are otherwise disposed of or sold to one or more third parties, Gordon Brothers will be paid a break-up fee of $850,000. Notwithstanding, if a party other than Gordon Brothers is selected by Finlay to conduct the Sale at the retail stores that are not the subject of the Consulting Agreement, and Gordon Brothers continues to provide consulting services to Finlay Jewelry in accordance with the terms of the Consulting Agreement and the Consignment Agreement, the Break-Up Fee will be $100,000. The Agency Agreement, including the Break-Up Fee, is subject to the approval of the United States Bankruptcy Court for the Southern District of New York and will be of no force and effect if the Court does not approve the Agency Agreement by September 2, 2009. The Agency Agreement is also subject to higher or better bids to be submitted as part of a competitive bidding process to be approved by the Court. Finlay Jewelry and Gordon Brothers are also parties to these agreements: (a) a consulting agreement, dated as of March 20, 2009, as amended by an amendment dated May 20, 2009, pursuant to which Gordon Brothers agreed to act as Finlay Jewelry's consultant in relation to the clearance of merchandise located at 58 of Finlay Jewelry's specialty stores; (b) a consulting agreement, dated as of March 20, 2009, pursuant to which Gordon Brothers agreed to act as Finlay Jewelry's consultant in relation to the clearance of merchandise located at 526 leased department store locations; and (c) a consignment agreement, dated as of April 6, 2009, pursuant to which Gordon Brothers was permitted to consign additional merchandise to Finlay Jewelry for sale. With the exception of the Agency Agreement and the Prior Agreements, there is no material relationship between Finlay and Gordon Brothers. A full-text copy of the Agency Agreement is available at no charge at http://researcharchives.com/t/s?4148 As reported by the Troubled Company Reporter, Finlay and Finlay Jewelry filed voluntary petitions for relief under chapter 11 of Title 11 of the United States Bankruptcy Code on August 5. The Company will continue to operate its business as a "debtor-in- possession" under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Finlay said the Chapter 11 filing constitutes, or may constitute, an event of default or otherwise triggers, or may trigger, repayment obligations under the terms of certain instruments and agreements relating to direct financial obligations of the Company. As a result of an event of default or triggering event, all obligations under the Debt Documents would by the terms of the Debt Documents have, or may have become, automatically and immediately due and payable. The Company believes that any efforts to enforce such payment obligations under the Debt Documents are stayed as a result of the filing of the Chapter 11 Petitions in the Court. The Debt Documents include, without limitation: -- the Fourth Amended and Restated Credit Agreement, dated as of November 9, 2007, by and among Finlay, as borrower, the banks and other financial institutions, General Electric Capital Corporation (as a lender and as agent for the Lenders), and Wachovia Bank, NA, as documentation agent for the Lenders, which governs the Company's $216.6 million revolving line of credit; -- the Indenture dated as of November 26, 2008, with HSBC Bank U.S.A., National Association, as trustee, of Finlay Jewelry's 11.375%/12.125% Senior Secured Second Lien Notes due June 1, 2012; -- the Indenture dated as of November 26, 2008, with HSBC Bank U.S.A., National Association, as trustee, of Finlay Jewelry's 8.375%/8.945% Senior Secured Third Lien Notes due June 1, 2012; -- the Indenture dated as of June 3, 2004 (as amended on November 26, 2008), with HSBC Bank U.S.A., National Association, which has resigned as trustee and has appointed U.S. Bank National Association, as successor trustee, of Finlay Jewelry's 8-3/8% Senior Notes due June 1, 2012; and --various operating leases, some or all of which may require notice to the Company before the occurrence of an event of default or triggering event. About Finlay Enterprises Finlay Enterprises, Inc. (OTC Bulletin Board: FNLY) through its wholly owned subsidiary, Finlay Fine Jewelry Corporation, is a retailer of fine jewelry operating luxury stand-alone specialty jewelry stores and licensed fine jewelry departments in department stores throughout the United States and achieved sales of $754.3 million in fiscal 2008. The number of locations at the end of the second quarter ended August 1, 2009 totaled 182, including 67 Bailey Banks & Biddle, 34 Carlyle and four Congress specialty jewelry stores and 77 licensed departments with The Bon Ton. The Company and seven affiliates filed for Chapter 11 on August 5, 2009 (Bankr. S.D.N.Y. Case No. 09-14873). Weil, Gotshal & Manges LLP, serves as bankruptcy counsel. Alvarez & Marsal North America, LLC, is engaged as restructuring advisor in the Chapter 11 case, and the firm's David Coles is appointed as chief restructuring officer. Epiq Bankruptcy Solutions, LLC, serves as claims and notice agent. Judge James Peck presides over the case. In its bankruptcy petition, Finlay Enterprises disclosed assets of $331,824,000 against debts of $385,476,000 as of July 4, 2009. As of the Petition Date, Finlay owes $38 million outstanding under a first lien credit agreement, $24.7 million under second lien notes, $176.6 million outstanding under third lien notes (in addition to $17.5 million to secured vendors), and $40.6 million under remaining unsecured obligations under the senior notes. FINLAY ENTERPRISES: Ch. 11 Filing Cues Moody's Rating Cut to 'D' ---------------------------------------------------------------- Moody's Investors Service downgraded Finlay Fine Jewelry Corporation's Probability of Default Rating to D from Ca/LD following its voluntary filing for Chapter 11 bankruptcy along with its parent company (Finlay Enterprises Inc). All other existing ratings were affirmed. Given that Finlay has filed for bankruptcy, subsequent to the action all ratings will be withdrawn. Ratings lowered: -- Probability of default rating to D from Ca/LD Ratings affirmed -- Corporate family rating at Ca -- 8.375% senior unsecured notes rating at C (LGD6, 92%) Moody's last rating action for Finlay occurred on July 8, 2009, when the company's Probability of Default Rating was downgraded to Ca/LD from Caa3. Finlay Fine Jewelry, headquartered in New York City, is a retailer of fine jewelry operating stand-alone specialty jewelry stores and licensed jewelry departments in department stores throughout the United States. The company achieved sales of approximately $754 million in fiscal 2008. FINLAY ENTERPRISES: S&P Withdraws 'D' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services said that it has withdrawn its unsolicited 'D' ratings on Finlay Enterprises Inc. and its wholly owned subsidiary, Finlay Fine Jewelry Corp. The company and each of its U.S. subsidiaries filed for protection under Chapter 11 of the Bankruptcy Code on August 5, 2009. Ratings List Finlay Enterprises Inc. Ratings Withdrawn To From ----------------- -- ---- Corporate credit rating NR D Finlay Fine Jewelry Corp. Ratings Withdrawn To From ----------------- -- ---- Corporate credit rating NR D Senior secured debt NR D Recovery Rating NR 6 Senior unsecured debt NR D Recovery Rating NR 6 FIRST BANKS: Defers Interest Payments on Jr. Subordinated Notes --------------------------------------------------------------- First Banks Inc. intends to defer regularly scheduled interest payments on its outstanding junior subordinated notes relating to its $345.0 million of trust preferred securities in conjunction with the full implementation of its Capital Optimization Plan. The terms of the junior subordinated notes and the related trust indentures allow the Company to defer the payments of interest for up to 20 consecutive quarterly periods without default or penalty. The deferral of the payments is to begin with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October of this year. During the deferral period, the Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated notes. The Company also intends to suspend the payment of cash dividends on its outstanding common stock and preferred stock. The Company expects that its deferral of interest on the junior subordinated notes and its suspension of cash dividends on its common stock and preferred stock will preserve approximately $8.0 million per quarter based upon the interest and dividend payments completed in the first and second quarters of 2009. During 2008, First Banks initiated the Capital Optimization Plan to preserve risk-based capital during the current and continuing economic downturn. First Banks has completed a number of significant actions with respect to the Plan, including: -- Completion of a cumulative investment of $125.0 million throughout 2008 from existing shareholders into First Bank; -- Issuance of $295.4 million of senior preferred stock and a related warrant to the U.S. Treasury pursuant to the Troubled Asset Relief Program's Capital Purchase Program on December 31, 2008; -- Reduction of First Banks' net risk-weighted assets by $1.43 billion from $10.25 billion at December 31, 2007 to $8.82 billion at June 30, 2009 which had the effect of increasing the Company's risk-based capital by approximately $142.6 million; and -- Significant reduction in certain controllable expenses including, but not limited to, compensation, marketing and business development, travel and entertainment and office supplies. In addition to these completed initiatives, First Banks expects to complete these additional capital optimization initiatives over the course of the next two quarters: -- The sale of certain assets and the transfer of certain liabilities of its Texas franchise to Sterling Bank under a purchase and assumption agreement. The transaction, which is expected to close in the fourth quarter of 2009, is expected to allow for the redeployment of in excess of $50.0 million of risk-based capital through the deposit premium of approximately $30.0 million and the reduction in net risk-weighted assets of $225.5 million, which will have the effect of increasing the Company's risk-based capital by approximately $22.5 million; -- The engagement of Hovde Financial, Inc. to represent First Banks in the potential divestiture of its Chicago franchise which has approximately $640.5 million and $1.20 billion of loans and deposits at June 30, 2009, respectively; and -- The potential sale of other non-core ancillary businesses which would generate approximately $40.0 million to $50.0 million of additional risk-based capital. At June 30, 2009, First Banks was considered "well-capitalized" with total risk-based, tier 1 risk-based, and tier 1 leverage ratios of 10.72%, 6.73% and 5.89%, respectively. First Banks also had significant available liquidity at June 30, 2009 with cash and cash equivalents of $873.5 million. Terrance M. McCarthy, President and Chief Executive Officer of First Banks, said, "As the length and severity of the economic downturn has progressed, we have continued to adjust our business strategies and capital plans accordingly. We continue to position the Company to both survive the storm as well as position it for growth once the downturn subsides. While no one can fully project the future length and severity of the economic cycle, we are managing to the expectation that it could continue for the foreseeable future. During the second quarter of 2009, we saw evidence from our customers that the pace of deterioration is slowing but still continuing. We have been fortunate over the years to have built a successful and valuable franchise and business segments that we can now look to as sources of capital to support the Company's future projected capital needs. The proceeds from these initiatives will be used to support our core banking franchise throughout our Missouri, Illinois, California and Florida markets." St. Louis, Missouri-based First Banks Inc. -- http://www.firstbanks.com/-- the parent company of First Bank, had assets of $10.40 billion at June 30, 2009 and currently operates 210 branch banking offices in California, Florida, Illinois, Missouri and Texas. Through its subsidiary bank, First Bank, the Company offers a broad range of financial products and services to consumers, businesses and institutions. FIRST BANKS: Defers Interest Payments on Trust Preferreds --------------------------------------------------------- First Banks, Inc., the parent company of First Bank, intends to defer regularly scheduled interest payments on its outstanding junior subordinated notes relating to its $345.0 million of trust preferred securities. The terms of the junior subordinated notes and the related trust indentures allow the Company to defer such payments of interest for up to 20 consecutive quarterly periods without default or penalty. The deferral of these payments is to begin with the regularly scheduled quarterly interest payments that would otherwise have been made in September and October of this year. During the deferral period, the Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock or preferred stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated notes. Accordingly, the Company also intends to suspend the payment of cash dividends on its outstanding common stock and preferred stock. The Company expects that its deferral of interest on the junior subordinated notes and its suspension of cash dividends on its common stock and preferred stock will preserve approximately $8.0 million per quarter based upon the interest and dividend payments completed in the first and second quarters of 2009. At June 30, 2009, First Banks was considered "well-capitalized" with total risk-based, tier 1 risk-based, and tier 1 leverage ratios of 10.72%, 6.73% and 5.89%, respectively. First Banks also had significant available liquidity at June 30, 2009, with cash and cash equivalents of $873.5 million. Terrance M. McCarthy, President and Chief Executive Officer of First Banks, said, "As the length and severity of the economic downturn has progressed, we have continued to adjust our business strategies and capital plans accordingly. We continue to position the Company to both survive the storm as well as position it for growth once the downturn subsides. While no one can fully project the future length and severity of the economic cycle, we are managing to the expectation that it could continue for the foreseeable future. During the second quarter of 2009, we saw evidence from our customers that the pace of deterioration is slowing but still continuing. We have been fortunate over the years to have built a successful and valuable franchise and business segments that we can now look to as sources of capital to support the Company's future projected capital needs. The proceeds from these initiatives will be used to support our core banking franchise throughout our Missouri, Illinois, California and Florida markets." Based in St. Louis, Missouri, First Banks, Inc. -- http://www.firstbanks.com/-- had assets of $10.40 billion at June 30, 2009, and currently operates 210 branch banking offices in California, Florida, Illinois, Missouri and Texas. Through its subsidiary bank, First Bank, the Company offers a broad range of financial products and services to consumers, businesses and institutions. FIRSTPLUS FINANCIAL: Can Employ Cox Smith as Attorneys ------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Texas has granted FirstPlus Financial Group Inc. permission to employ Cox Smith Matthews Incorporated as its attorneys, nunc pro tunc to the petition date. The firm has agreed to: a) take all necessary action to protect and preserve the estate of the Debtor, including the prosecution of actions filed in the Bankruptcy Court on the Debtor's behalf, the defense of any action commenced against the Debtor in the Bankruptcy Court, the negotiation of disputes in which the Debtor is involved, and the preparation of objections to claims filed against the Debtor's estate; b) prepare on behalf of the Debtor all motions, applications, answers, orders, reports, and papers in connection with the administration and prosecution of the Debtor's bankruptcy case; c) assist the Debtor in connection with any proposed sale or acquisition of assets pursuant to Bankruptcy Code section 363; d) advise the Debtor in respect of bankruptcy and issues pertinent to the bankruptcy case, or other such services as requested; and e) perform all other legal services in connection with the Chapter 11 case. The firm's hourly rates are: Professional Designation Hourly Rate ------------ ----------- ----------- George H. Tarpley, Esq. Shareholder $550 Aaron M. Kaufman, Esq. Associate $265 Deborah Andreacchi Paralegal $165 Based in Beaumont, Texas, FirstPlus Financial Group, Inc. -- http://www.firstplusgroup.com/-- (Pink Sheets: FPFX) is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company has three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., has three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly own FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development has one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended plan of reorganization was confirmed in that case in April 2000. The Company filed for Chapter 11 protection on June 23, 2009 (Bankr. N. D. Tex. Case No. 09-33918). Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, serves as counsel. The Debtor has total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FIRSTPLUS FINANCIAL: Creditors Meeting Continued to August 21 ------------------------------------------------------------- William T. Neary, United States Trustee for Region 6, has continued the meeting of creditors of FirstPlus Financial Group, Inc. to August 21, 2009, at 10:30 a.m. at the Office of the United States Trustee, 1100 Commerce Street, Room 976, in Dallas, Texas. Based in Beaumont, Texas, FirstPlus Financial Group, Inc. -- http://www.firstplusgroup.com/-- (Pink Sheets: FPFX) is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company has three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., has three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly own FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development has one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended plan of reorganization was confirmed in that case in April 2000. The Company filed for Chapter 11 protection on June 23, 2009 (Bankr. N. D. Tex. Case No. 09-33918). Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, serves as counsel. The Debtor has total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FIRSTPLUS FINANCIAL: Taps John Clarson for General Corp. Advice --------------------------------------------------------------- FirstPlus Financial Group, Inc. asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ John Clarson, Esq., as special counsel, nunc pro tunc to the petition date. John Clarson has agreed to provide general corporate advice and services to the Debtor, which includes, inter alia, advising the Debtor of its SEC reporting obligations, assisting the Debtor in complying with said obligations, drafting and reviewing agreements, proposed transactions, board meeting minutes, stock transfer items, and other similar secretarial matters. Mr. Clarson's hourly rate is $175. Mr. Clarson tells the Court that he does not hold or represent an interest adverse to the Debtor and its estate with respect to the matters for which he is seeking to be retained. Based in Beaumont, Texas, FirstPlus Financial Group, Inc. -- http://www.firstplusgroup.com/-- (Pink Sheets: FPFX) is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company has three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., has three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly own FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development has one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended plan of reorganization was confirmed in that case in April 2000. The Company filed for Chapter 11 protection on June 23, 2009 (Bankr. N.D. Tex. Case No. 09-33918). Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, serves as counsel. The Debtor has total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FIRSTPLUS FINANCIAL: Taps Michael Eberhardt to Advise CFO --------------------------------------------------------- FirstPlus Financial Group, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Michael C. Eberhardt, Esq., as special counsel, nunc pro tunc to the petition date. Michael C. Eberhardt, Esq., has agreed, among others, to: a) advise the Audit Committee and the Debtor's chief financial officer regarding the generation of current financial statements and retrieving relevant information, including missing bank and brokerage accounts; b) ensure proper engagement and oversight of outside auditors, and maintain communications with the outside auditors to assist the Audit Committee in fulfilling its oversight obligations; and c) advise the Audit Committee in revising its company policies, including insider stock trades, transactions with related parties, disclosure of conflicts of interest and, importantly, cooperation with federal criminal investigations. Mr. Eberhardt's hourly rate is $195. Mr. Eberhardt tells the Court that he does not hold or represent an interest adverse to the Debtor or to the estate with respect to the matters for which he seeks to be retained. Based in Beaumont, Texas, FirstPlus Financial Group, Inc. -- http://www.firstplusgroup.com/-- (Pink Sheets: FPFX) is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company has three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., has three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly own FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development has one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended plan of reorganization was confirmed in that case in April 2000. The Company filed for Chapter 11 protection on June 23, 2009 (Bankr. N.D. Tex. Case No. 09-33918). Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, serves as counsel. The Debtor has total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FIRSTPLUS FINANCIAL: Taps Patton Boggs for DOJ Probe ---------------------------------------------------- FirstPlus Financial Group, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to employ Patton Boggs, LLP as its special counsel, nunc pro tunc to the petition date. The Debtor says that the employment of Patton Boggs is necessary to enable it to interact with and assist the Department of Justice regarding ongoing federal investigations of certain of its current and former directors, officers and alleged consultants. Patton Boggs has agreed, among others, to: a) take all necessary actions to ensure the Debtor's cooperation with ongoing federal investigations; b) monitor the status of the Department of Justice's investigations and prospective indictments; and c) work with the Debtor's bankruptcy counsel to ensure that the appropriate governmental authorities are kept apprised of the actions taken in the Bankruptcy Court. Patton Boggs' hourly rates are: S. Cass Weiland, Esq. $500 Constance Ariagno, Esq. $450 Robert Hawkins, Esq. $400 Karen O'Halloran $200 S. Cass Weiland, Esq., a partner at Patton Boggs, tells the Court that the firm does not hold or represent an interest adverse to the Debtor and its estate with respect to the matters for which the firm seeks to be retained. Based in Beaumont, Texas, FirstPlus Financial Group, Inc. -- http://www.firstplusgroup.com/-- (Pink Sheets: FPFX) is a diversified company that provides commercial loan, consumer lending, residential and commercial restoration, facility (janitorial and maintenance) services, insurance adjusting services, construction management services and a facilities and restoration franchise business. The Company has three direct subsidiaries, Rutgers Investment Group, Inc., FirstPlus Development Company and FirstPlus Enterprises, Inc. In turn, FirstPlus Enterprises, Inc., has three of its own direct subsidiaries, FirstPlus Restoration Co., LLC, FirstPlus Facility Services Co., LLC and The Premier Group, LLC. FirstPlus Restoration and FirstPlus Facility jointly own FirstPlus Restoration & Facility Services Company. Additionally, FirstPlus Development has one direct subsidiary FirstPlus Acquisitions-1, Inc. A subsidiary of FirstPlus Financial Group -- FirstPlus Financial Inc. -- filed for Chapter 11 bankruptcy in March 1999 before the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, amid turmoil in the asset-backed securitization markets and the lack of a reliable, committed secondary take-out source for high LTV loans. A modified third amended plan of reorganization was confirmed in that case in April 2000. The Company filed for Chapter 11 protection on June 23, 2009 (Bankr. N.D. Tex. Case No. 09-33918). Aaron Michael Kaufman, Esq., and George H. Tarpley, Esq., at Cox Smith Matthews Incorporated, serves as counsel. The Debtor has total assets of $15,503,125 and total debts of $4,539,063 as of June 30, 2008. FONTAINEBLEAU: Cash Collateral Use Extended Until September 3 ------------------------------------------------------------- The Bankruptcy Court has further authorized Fontainebleau Las Vegas Holdings LLC and its affiliates, on a third interim basis, to use the Cash Collateral solely and exclusively for the disbursements set forth in their Budget for the period from August 9, 2009, until the earliest to occur of (a) the date that the Interim Order or a Final Order ceases to be in full force and effect or (b) the occurrence and continuation of a Termination Event. A Termination Event will constitute any of these events: * September 3, 2009; * the Debtors fail to comply with any of the terms of the Interim Order; * the Debtors seek any modification or extension of the Interim Order without the prior written consent of the Term Lender Steering Group, or any order be entered, other than with the consent of the Term Lender Steering Group, amending, supplementing, or modifying the Order in any material respect or terminating the use of Cash Collateral by the Debtors pursuant to the Interim Order; * the cumulative aggregate cash disbursements exceed 105% of cumulative aggregate amount of cash disbursements for four weeks projected in the Budget line "Weekly Subtotal" during the term of the Budget; and * an application filed by any Debtor for the approval of any Superpriority Claim or any lien in any of the Cases which is senior to the Adequate Protection Obligations or Adequate Protection Liens; provided, however, that the Term Lender Steering Group may waive in writing any Termination Event. The Prepetition Agent and the Prepetition Lenders are granted certain liens and other rights pursuant to Sections 361, 362, 363, and 364 of the Bankruptcy Code with respect to the use of Cash Collateral granted under the Prepetition Credit Agreement. The Debtors' authority to use the Cash Collateral will automatically terminate upon the occurrence of a Termination Event, all without further order or relief from the Court. All of the rights, remedies, benefits, and, protections provided to the Prepetition Secured Parties under the Third Interim Order will survive the Termination Event. From and after the Petition Date, all proceeds of the Collateral, including all of the Debtors' existing or future cash and Cash Collateral, will not be used to pay expenses of the Debtors or to make debt payments except for those debt payments, expenses or disbursements that are expressly permitted under the Order and are consistent with the Budget. The Prepetition Secured Parties are granted a valid and perfected replacement security interest in, and lien on the Collateral, which Adequate Protection Liens will be senior to any liens on the Collateral including any statutory Liens that may exist under Nevada law, provided, that any Adequate Protection Liens resulting from use of Cash Collateral under the First Interim Order and Second Interim Order will not have priority under Section 364(d) and will instead have the priority set forth in those Orders. U. S. Bank National Association, in its capacity as successor indenture trustee under the Second Mortgage Indenture is granted, a valid and perfected replacement security interest in and lien on the Collateral that is subordinated in all respects to the Liens securing the Prepetition Term Obligations and the Adequate Protection Obligations and which is subject in all respects to the rights of the Prepetition Agent and Term Lenders under the Intercreditor Agreement. The Adequate Protection Liens will not be (i) subject or junior to any Lien that is avoided and preserved for the: benefit of the Debtors' estates under Section 551 of the Bankruptcy Code, or (ii) subordinated to or made pari passu with any other Lien, whether under Section 364(d) or otherwise. The Adequate Protection Liens are deemed to be valid, enforceable, and perfected liens, effective as of the Petition Date. The Prepetition Secured Parties are granted in each of the Debtors' Cases an allowed, superpriority administrative expense claim under Section 507(b) of the Bankruptcy Code with respect to the Adequate Protection Obligations. Each Debtor and each of its affiliates will forever release, waive, and discharge the Prepetition Agent and each Prepetition Term Lender from any claims or defenses as to the extent, validity, priority, or perfection of the Prepetition Liens or the Prepetition Term Obligations, or any actions, claims, or defenses under Chapter 5 of the Bankruptcy Code. The Prepetition Term Lenders and Turnberry West Construction, Inc., but not the Debtors, have agreed that the releases, waivers and discharges of the Prepetition Agent and each Prepetition Term Lender will not apply to any Claims and Defenses that have been asserted in a complaint filed against the Prepetition Agent or Prepetition Term Lenders by Turnberry in the Court on July 14, 2009. Any objections to the Motion that have not been previously resolved or withdrawn are overruled on their merits provided, that the Court will, based on supplemental briefs to be filed no later than August 10, 2009, by the Debtors, the Term Lender Steering Group, and the Mechanic's and Materialsmen's Lienholders, issue a separate ruling regarding whether it has jurisdiction over the M&M Lienholders to impose the deadline and grant the releases. The Debtors will, on or before August 20, 2009, at 4:00 p.m., serve copies of the Cash Collateral Motion, the Third Interim Order, and a notice of the Final Hearing or a further interim hearing to be held on August 27, 2009, at 2:00 p.m., to consider entry of the Final Order or interim order, as the case may be, on the Interim Notice Parties. Objections are due on August 25, 2009 at 4:00 p.m. A full-text copy of the Third Interim Cash Collateral Order and the Amended Third Interim Cash Collateral Order is available for free at: http://bankrupt.com/misc/FB_CashColl_3rdInterimOrd.pdf http://bankrupt.com/misc/FB_CashColl_A3rdInterimOrd.pdf The Third Interim Cash Collateral Order was amended solely to correct the objection deadline. About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU: Court OKs Rejection of Employment & Sales Pacts -------------------------------------------------------------- The Bankruptcy Court has authorized Fontainebleau Las Vegas Holdings LLC to reject 33 employment contracts and group sales contracts. Any proof of claim for damages arising from the rejections must be filed with the Court on or before August 29, 2009. Pursuant to Section 365(a) of the Bankruptcy Code, the Debtors asked the Court to issue an order authorizing Debtor Fontainebleau Las Vegas, LLC to reject 11 employment contracts of its former employees, and 21 group sales executory contracts. A list of the Contracts to be rejected is available for free at: http://bankrupt.com/misc/FB_Reject_11EC.pdf http://bankrupt.com/misc/FB_Reject_21GSC.pdf Due to Fontainebleau Las Vegas's financial situation, each of the employees was terminated as of the term date and is no longer employed by Fontainebleau Las Vegas. Accordingly, to limit any potential administrative obligations associated with the Employment Contracts during the Chapter 11 Cases, the Debtors seek authority for Fontainebleau Las Vegas to reject the Employment Contracts. Each employee had entered into an Employment Contract with Fontainebleau Las Vegas prepetition. The Group Sales Contracts relate to certain conventions that are scheduled to occur at the Project on or before June 2010. With the construction on hold at the present time, the Project will not be completed by the scheduled convention date for each Group Sales Contract which Fontainebleau Las Vegas seeks to reject. Therefore, the request is necessary because Fontainebleau Las Vegas is no longer in a position to fulfill the obligations set forth in the Group Sales Contracts in the timeframe required by each contract. About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU: Turnberry Agrees to 6 Mos.' License Suspension ------------------------------------------------------------- Turnberry West Construction Inc., the general contractor for the "Fontainebleau Las Vegas" casino hotel resort project, has settled a complaint filed by the Nevada State Contractors Board by agreeing to a six-month suspension of its license, according to Las Vegas Sun. The report says that the settlement, approved by the Contractors Board July 23, relates to a subcontractors' claim that it's owed millions of dollars for work on the Project. The report adds that the settlement with the Contractors Board involves contracts between Turnberry and F. Rodgers Corp., which says it is owed $4.022 million on two contracts with Turnberry in connection wit the Project. The suspension will still allow Turnberry to continue work on its current projects but is prohibited from taking on new jobs. Las Vegas Sun says that Turnberry agreed to resolve undisputed outstanding claims against its license with the Contractors Board. Turnberry also agreed to provide the board a current financial statement for all cash accounts supporting its license limit. If the statement does not support the currently unlimited license limit, the limit may be lowered, the report adds. About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FONTAINEBLEAU: Wants to Scrap TB Realty Marketing Agreement ----------------------------------------------------------- Fontainebleau Las Vegas Holdings LLC ask the Bankruptcy Court to allow Debtor Fontainebleau Las Vegas, LLC to reject a Marketing and Sales Agreement, which is executory in nature, dated June 6, 2007, by and between Fontainebleau Las Vegas and TB Realty, Inc., a Nevada corporation. The Agreement appointed TBR as sales manager for the marketing of planned condominium/hotel units at the Debtors' Project. Pursuant to the Agreement, TBR was to (i) develop and implement a marketing and advertising campaign for the purpose of selling the Condo/Hotel Units at the Project, (ii) maintain a sales center to accommodate prospective purchasers of Condo/Hotel Units, and (iii) cooperate with Fontainebleau Las Vegas' agents in coordinating all closing arrangements for any sales of Condo/Hotel Units. Since the construction of the Project is presently on hold and market conditions are so highly unfavorable in respect of sales of condominium/hotel units at the present time, the Debtors aver that there is no current need for marketing and sales services in regard to the Condo/Hotel Units. About Fontainebleau Las Vegas Fontainebleau Las Vegas Holdings, LLC -- http://www.fontainebleau.com/-- is constructing a luxury resort, Fontainebleu Las Vegas, on the northern end of the Las Vegas Strip. Fontainebleau Las Vegas Holdings, LLC, Fontainebleau Las Vegas, LLC, Fontainebleau Las Vegas Capital Corp. filed for Chapter 11 protection on June 9, 2009 (Bankr. S.D. Fla. Lead Case No. 09-21481). Judge A. Jay Cristol presides over the Debtors' cases. Scott L Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtors in their restructuring efforts. The Debtors' Financial Advisor are Moelis & Company LLC and Citadel Derivatives Group LLC. The Debtors' Special Litigation Counsel is David M. Friedman, Esq., at Kasowitz, Benson, Torres & Friedman LLP and the Debtors' Special Counsel is Jack J. Kessler, Esq., and Alan Rubin, Esq., at Buchanan Ingersoll & Rooney PC. The Debtors' Claims Agent is Kurtzman Carson Consulting LLC. An official committee of unsecured creditors has been appointed in the Chapter 11 cases. As of June 9, 2009, Fontainebleau Las Vegas LLC listed more than $1 billion in debt and a similar amount in assets, while each of Fontainebleau Las Vegas Capital Corp. and Fontainebleau Las Vegas Holdings, LLC, listed less than $50,000 in assets and more than $1 billion in debts. Bankruptcy Creditors' Service, Inc., publishes Fontainebleau Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fontainebleau Las Vegas Holdings, LLC, and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FORD MOTOR: DBRS Confirms Issuer Rating at 'CCC' ------------------------------------------------ DBRS has confirmed the ratings of Ford Motor Company (Ford or the Company), including Ford's Issuer Rating at CCC (high). Ford's Senior Secured Credit Facilities and Long-Term Debt are confirmed at B (low) and CCC, respectively. Ford Motor Credit Company LLC and Ford Credit Canada Limited's short- and long-term debt have also been confirmed at B (low) and R-5, respectively. (This confirmation reflects the maintenance of the one-notch rating differential between the parent company and the credit company.) The trend of the ratings has been changed from Stable from Negative. The trend change reflects the Company's recent progress in lowering its cash burn and in firming its market share in the key North American and European markets. Ford is developing positive product momentum, as evidenced by favorable results in recent quality surveys. The Company also appears to have benefited from the difficulties of General Motors Corporation (GM) and Chrysler Group LLC (Chrysler), both of which have lost market share through their respective bankruptcy proceedings. DBRS notes, however, that Ford's ratings continue to reflect very weak automotive industry conditions, particularly in North America and Europe. In addition, although the Company's use of cash appears to have moderated significantly from very high levels in 2008, DBRS notes that Ford does continue to burn cash, with liquidity remaining a concern over the medium term; this remains consistent with the currently assigned ratings. The Company's 2009 second quarter results revealed further losses. However, DBRS notes that Ford's losses narrowed considerably relative to prior periods, with its cash balances remaining essentially unchanged. Ford's consolidated pre-tax loss for the quarter totaled $424 million, with the automotive operations incurring a loss of $1.019 billion that was partially offset by pre-tax earnings of $595 million from the financial services business. Results of the automotive operations continue to be dominated by North America, which incurred a pre-tax loss of $851 million. Including special items, the Company's net income for the second quarter was $2.3 billion, although this incorporates a gain on debt reduction of $3.4 billion associated with Ford's recent debt restructuring. Significantly, the Company's cash balances as of June 30, 2009, totaled $21.0 billion, effectively unchanged from the $21.3 billion total as of March 31, 2009. (DBRS notes that as the secured revolver was fully drawn in early 2009, Ford's cash balances represent its primary source of liquidity.) The constant cash balances are a function of two items. First, Ford's operating-related cash burn in the second quarter amounted to $1.0 billion, a significant improvement from the $3.7 billion use of cash in Q1 2009, and a sharp reduction from the $7.2 billion in cash burned in the last quarter of 2008. Second, the Company raised approximately $1.6 billion through a public offering of 345 million common shares. These two items essentially offset each other such that, along with minor additional changes in gross cash, Ford's cash balances remained essentially constant as of the end of Q2 2009. The existing cash balances and decreasing use of cash suggest that the Company has readily sufficient liquidity through the end of 2009. However, despite this recent improvement, Ford's financial profile and liquidity position remain weak and continue to reflect the assigned ratings. The Company still faces strong headwinds in its turnaround. Should the automotive downturn continue well into 2010 with depressed industry volumes, liquidity could come under pressure in the second half of next year, although DBRS considers this scenario as rather unlikely. With respect to additional sources of liquidity, given its successful common share offering in May and in light of the improving performance in recent months, in DBRS's opinion Ford could potentially tap the equity markets again in the near to medium term. The Company would appear to have little room to raise additional debt as most of its assets are already encumbered in association with the secured financings executed in late 2006. Ford is looking to sell its Volvo Cars unit, although the Company has not given any indication with respect to specific timing. DBRS believes that the U.S. government-supported restructurings of GM and Chrysler through bankruptcy could potentially be to the detriment of Ford. While the Company was able to reduce total debt by approximately $10 billion through its debt exchange completed in Q2 2009, DBRS notes that this did not match concessions achieved by GM and Chrysler from their creditors. GM and Chrysler have also been more aggressive in rationalizing their dealer networks. Furthermore, these two companies were able to fully exchange their respective Voluntary Employee Beneficiary Association (VEBA) obligations with equity, while Ford has thus far negotiated the use of stock for up to 50% of its VEBA obligations, with $6.6 billion in cash obligations remaining. Ford must also recommence negotiations with the United Auto Workers and the Canadian Auto Workers to more closely align its respective union agreements with those more recently obtained by GM and Chrysler. DBRS notes that Ford has consistently maintained that it would not be disadvantaged by the concessions achieved by GM and Chrysler through bankruptcy. While DBRS acknowledges that Ford has been largely successful in substantially revamping its cost structure outside of bankruptcy, it remains to be seen whether these advances will essentially match those achieved by its two Detroit rivals. However, Ford's differentiation from GM and Chrysler does appear to have generated some goodwill among consumers. DBRS notes that Ford's recent sales momentum in North America is impressive. In its native U.S. market, Ford increased its share as of Q2 2009 to 16.4%, a sharp improvement of 2.5 percentage-point change relative to its first quarter performance of 13.9%. Additionally, in July, Ford was one of only two original equipment manufacturers (OEMs) in the U.S. market to post a year-over-year sales increase, as the Company benefited from the Car Allowance Rebate System (CARS) that was implemented near the end of the month. In Canada, Ford was the market leader for the month of June and was able to repeat that achievement in July. Furthermore, demonstrated improvements in product quality and a favorable product cadence over the medium term suggest that Ford should be able to continue its relatively positive sales performance going forward, although its Detroit Three peers, particularly GM, are expected to be stronger competitors in the medium term. The Stable trend on the ratings reflects DBRS's view that the severe liquidity pressures that recently faced Ford have now abated considerably in light of the Company's improving results and decreasing use of cash. Additionally, the Company is well positioned to benefit from an eventual recovery in the U.S. market, where a material rebound (i.e., total industry sales in the range of twelve to thirteen million units) from the prevailing very weak conditions could lead to Ford approaching profitability. Further positive rating implications could result in the event that Ford's momentum persists and operating results continue to improve, strengthening its liquidity position and credit profile. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The Company provides financial services through Ford Motor Credit Company. The Company has operations in Japan in the Asia Pacific region. In Europe, the Company maintains a presence in Sweden, and the United Kingdom. The Company also distributes its brands in various Latin-American regions, including Argentina and Brazil. As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services said it raised its ratings on Ford Motor Co. and related entities, including the corporate credit rating, to 'CCC+' from 'SD-'. The ratings on Ford Motor Credit Co. are unchanged, at 'CCC+', and the ratings on FCE Bank PLC, Ford Credit's European bank, are also unchanged, at 'B-', maintaining the one-notch rating differential between FCE and its parent Ford Credit. S&P said that the outlook on all entities is negative. Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently-approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FRONTIER AIRLINES: Southwest Submits Bid of More Than $170 Million ------------------------------------------------------------------ Southwest Airlines confirmed Monday that the carrier submitted its binding cash offer of more than $170 million to acquire Frontier Airlines, which will be sold at auction as part of Frontier's bankruptcy case. The bid was submitted to Frontier in accordance with the procedures established in the U.S. Bankruptcy Court for the Southern District of New York. Over the next week, Southwest will discuss its offer with the various interested parties. The auction is expected to commence on Thursday, Aug. 13. Once the auction is concluded, the bankruptcy court must still approve the selection of the winning bidder. From there, the bid will undergo review by the United States Department of Justice, which is normal and customary when one airline is purchasing another. Southwest said that, at this point, it is premature to release complete details of its offer, which may change during the auction process before a winning bid is approved by the bankruptcy court. The offer contemplates that Southwest acquire approximately 80 percent of Frontier's existing Airbus fleet, which translates into about 40 aircraft, plus all of Lynx. Initially, Frontier would operate its Airbus aircraft as it does today, with a planned retirement of the Airbus fleet and transition to Southwest's Boeing 737s over a period of approximately 24 months. Despite the initial reduction in the fleet, Southwest intends to maintain all existing markets, as well as add new nonstop routes from Denver that are not served by either Southwest or Frontier today. "We believe our bid ultimately should be seen as the strongest offer by all interested parties, including Frontier, its creditors, Employees, and Customers," said Gary Kelly, Southwest's Chairman of the Board, President, and CEO. "Southwest is a financially stable Company, and through this acquisition, will continue to provide Denver its historically low fares into the future. Frontier is up for sale. The bankruptcy process will lead to change at Frontier in any scenario. Given Southwest's history and track record of running a successful airline, we believe that our bid is the best option on the table for Frontier, Southwest, and the traveling public. A successful acquisition of Frontier Airlines by Southwest will expand a network of legendary low fares to additional cities, add jobs into Southwest through growth, and strengthen low-fare competitive pressure in Denver and other cities." Southwest submitted its initial indication of interest to acquire Frontier Airlines on July 30, 2009, which gave the carrier an opportunity to engage with Frontier in the due diligence required to determine the scope of a binding proposal. About Frontier Airlines Holdings Frontier Airlines Holdings, Inc. (Pink Sheets: FRNTQ) -- http://www.FrontierAirlines.com/-- is the parent company of Denver-based Frontier Airlines. Currently in its 15th year of operations, Frontier Airlines is the second-largest jet service carrier at Denver International Airport, employing approximately 5,000 aviation professionals. Frontier Airlines' mainline operation has 51 aircraft with one of the youngest Airbus fleets in North America. In conjunction with a fleet of 10 Bombardier Q400 aircraft operated by Lynx Aviation -- a subsidiary of Frontier Airlines Holdings, Inc. -- Frontier offers routes to more than 50 destinations in the U.S., Mexico and Costa Rica. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D.N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. The Debtors' exclusive period to file a plan of reorganization will expire on October 9, 2009. Their exclusive period to solicit and obtain acceptances of that plan will expire December 9, 2009. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Has Pact With Teamsters on Concessions --------------------------------------------------------- Frontier Airlines and Teamsters Local 961 have entered into a consensual, long-term labor agreement and a comprehensive settlement of the company's litigation under Section 1113 of the Bankruptcy Code. The agreement modifies the wage and benefit reductions Frontier obtained from its International Brotherhood of Teamster- represented employees under a Bankruptcy Court order last November. The new agreement's modified wage and benefit reductions are comparable to the consensual reductions Frontier has obtained from its other employee groups. The settlement, if ratified, also will resolve the ongoing appeals of last year's Bankruptcy Court order. The proposed agreement, which is endorsed and supported by Local 961 leadership, will be put before Frontier's maintenance employees for a ratification vote. The Local anticipates it will hold the ratification vote on the agreement and count ballots by Aug. 20. "Frontier and the IBT worked together to negotiate an agreement that takes into account the best interests of Frontier, the IBT and, most importantly, all of our maintenance employees," said Frontier President and CEO Sean Menke. "I applaud the IBT leadership for working with us to reach this agreement. It provides us with cost assurances and labor certainty as we proceed with the upcoming auction process and our anticipated emergence from bankruptcy." "The Teamsters Union and its members understand the importance to our members and to Frontier of this agreement," said Matthew Fazakas, President and Principal Officer of Teamsters Local 961. "On behalf of the IBT leadership, we fully endorse this agreement and will work to achieve ratification as promptly as possible." Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico. About Frontier Airlines Holdings Frontier Airlines Holdings, Inc. (Pink Sheets: FRNTQ) -- http://www.FrontierAirlines.com/-- is the parent company of Denver-based Frontier Airlines. Currently in its 15th year of operations, Frontier Airlines is the second-largest jet service carrier at Denver International Airport, employing approximately 5,000 aviation professionals. Frontier Airlines' mainline operation has 51 aircraft with one of the youngest Airbus fleets in North America. In conjunction with a fleet of 10 Bombardier Q400 aircraft operated by Lynx Aviation -- a subsidiary of Frontier Airlines Holdings, Inc. -- Frontier offers routes to more than 50 destinations in the U.S., Mexico and Costa Rica. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D.N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. The Debtors' exclusive period to file a plan of reorganization will expire on October 9, 2009. Their exclusive period to solicit and obtain acceptances of that plan will expire December 9, 2009. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Committee Retains Halperin as Conflicts Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in General Growth Properties Inc.'s cases seeks the Court's authority to retain Halperin Battaglia Raicht, LLP, as conflicts counsel, nunc pro tunc to June 18, 2009. The Debtors' cases are very large and complex and significant motion practice and issues on substantive matters will likely arise, sometimes with tight timeframes that will impact the rights of unsecured creditors, states David Poland, associate general counsel of Capital Ventures International, a tri-chair of the Creditors' Committee. The Committee, he adds, has determined that, in certain circumstances, its primary counsel, Akin Gump Strauss Hauer & Feld LLP, may have potential or actual conflicts of interest on matters that arise in the Debtors' bankruptcy cases, and the Committee requires the full panoply of professionals it believes are necessary to ensure it is able it to effectively participate in the cases and discharge its duties to unsecured creditors. To ensure that it receives seamless legal representation to the extent any legal conflicts arise, the Committee has asked HBR to represent it as conflicts counsel during the pendency of the Debtors' Chapter 11 cases. HBR will be paid according to its current hourly rates: Attorneys $475 to $175 Law Clerks $150 to $140 Paraprofessionals $135 to $75 HBR will also be reimbursed for any necessary out-of-pockets expenses it incurs in connection with its services. To ensure the seamless representation required by the Committee, and thereby ensure that the interests of the unsecured creditors that it represents were protected, HBR commenced work on its retention on June 18, 2009. Accordingly, the Committee asks that HBR's retention be approved nunc pro tunc to June 18, 2009. Alan D. Halperin, Esq., at a member at Halperin Battaglia Raicht, LLP, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Committee, the Debtors, and their estates. Mr. Halperin further discloses that: (a) HBR has represented La Cienega Partners Limited Partnership and Rich-Taubman Associates in the KP Fashion Company case in the U.S. District of New York. These entities are Taubman affiliates, and Taubman is listed as a competitor of the Debtors. (b) HBR formerly served as local counsel from time to time for CBL Associates in SDNY cases; however, HBR no longer represents CBL Associates and has not for approximately two years. CBL Associates is listed as a competitor of the Debtors. (c) HBR represented (i) Wilmington Trust Company NA as Administrative Agent and as Collateral Agent and (ii) Wilmington Trust FSB as Indenture Trustee in an intercreditor litigation in NY state court. Wilmington Trust Company NA is listed as one of the largest unsecured creditors and as a Committee member. (d) HBR is counsel to WBE, LLC, formerly known as Everything But Water, LLC, a specialty retailer that filed for Chapter 11 in Delaware. The Debtors are lessor to WBE. WBE's assets have been sold pursuant to Section 363 of the Bankruptcy Code, and the buyer is approaching the end of a 60-day lease designation period. Upon information and belief, the Debtors and WBE's buyer have agreed on the terms for a consensual assumption of leases. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly ] 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Committee Retains FTI as Financial Advisors ----------------------------------------------------------- The Official Committee of Unsecured Creditors in General Growth Properties Inc.'s cases seeks the Court's authority to retain FTI Consulting, Inc., as financial advisors nunc pro tunc to April 27, 2009. As financial advisors, FTI will: (a) assist the Creditors' Committee in its review of financial disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; (b) assist with a review of any proposed key employee incentive, severance and other critical employee benefit programs; (c) assist with a review of the Debtors' performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts and leases; (d) assist in the review of the Debtors' cash management procedures and inter-company transactions, especially as it relates to the transfer of property, including cash, between entities; (e) assist the Committee in the analysis of the Debtors' project level assets, including leases, lease amendments and other asset specific issues; (f) assist in the assessment of various tax issues, including, but not limited to, the review of tax implications related to potential asset sales and components of the plan of reorganization, the examination of all REIT-related tax issues and the review of potential tax issues associated with the taxable REIT subsidiaries; (g) assist in the review of financial information distributed by the Debtors to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; (h) assist and advise the Committee with respect to the Debtors' evaluation of property-specific issues, including the identification of profitable business assets and the disposition of business assets; (i) assist in the evaluation of the present level of operations and identification of areas of potential cost savings, including corporate overhead rationalization and operating expense reductions and efficiency improvements; (j) assist in the review and preparation of information and analysis necessary for the confirmation of a plan of reorganization in the Debtors' Chapter 11 proceedings; (k) assist in the review of the claims reconciliation process and estimation and evaluate the priority of claims; (l) assist in the coordination of information flow with AlixPartners, LLP, the Debtors' restructuring advisors; (m) attend meetings and assist in discussions with the Debtors, potential investors, banks, other secured lenders, the Committee and any other official committees organized in the Debtors' Chapter 11 proceedings, the U.S. Trustee, and other parties-in-interest and professionals; (n) render other general business consulting or other assistance as the Committee or its counsel may deem necessary that is consistent with the role of a financial advisor and not duplicative of services provided by other professionals in the bankruptcy proceedings. The customary hourly rates, subject to periodic adjustments, charged by FTI professionals anticipated to be assigned to the Debtors' bankruptcy cases are: Senior Managing Directors $710-$825 Directors/Managing Directors $520-$685 Consultants/Senior Consultants $255-$480 Administration/Paraprofessionals $105-$210 Steven Simms and Cynthia Nelson, professionals from FTI, are expected to have primary responsibility for providing services to the Committee. In addition, and as necessary, other FTI professionals will provide services to the Committee. In addition to the payment of hourly fees, and as a material part of the consideration for the agreement of FTI to furnish services to the Committee, FTI asks that these indemnification provisions be approved: (a) The Debtors will indemnify FTI for any claim arising from, related to or in connection with FTI's performance of the services to the Committee. (b) FTI will not be entitled to indemnification, contribution or reimbursement for services other than those services provided under the terms of the retention application, unless those services and the indemnification, contribution or reimbursement is approved by the Court. (c) The Debtors will have no obligation to indemnify FTI for any claim or expense that is either (i) judicially determined to have arisen primarily from FTI's bad faith, gross negligence or willful misconduct, or (ii) settled prior to a judicial determination as to FTI's bad faith, gross negligence or willful misconduct, but determined by the Court, after notice and a hearing to be a claim or expense for which FTI is not entitled to receive indemnity under the terms of the Retention Application. (d) If, before the earlier of (i) the entry of an order confirming a chapter 11 plan of reorganization, and (ii) the entry of an order closing the Chapter 11 cases, FTI believes that it is entitled to the payment of any amounts by the Debtors on account of the Debtors' indemnification obligations, including, without limitation, the advancement of defense costs, FTI must file an application therefore in the Court, and the Debtors may not pay any of those amounts to FTI before the entry of an order by the Court approving the payment. Steven Simms, a senior managing director with FTI Consulting, Inc., assures the Court that his firm does not represent any interest adverse to the Committee, the Debtors and their estates, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly ] 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Hires Cushman & Wakefield as Appraisers ------------------------------------------------------- General Growth Properties Inc. and its affiliates sought and obtained the Court's authority to employ Cushman & Wakefield, Inc., as appraisers, nunc pro tunc to April 16, 2009. On or about May 6, 2009, the Debtors' bankruptcy counsel, Weil, Gotshal & Manges LLP engaged C&W to appraise the market value of certain General Growth properties for purposes of the Chapter 11 cases and perform other services as may be required at the direction of the counsel. The general scope of work to be provided by C&W, pursuant to an engagement letter dated May 6, 2009, includes (i) appraisals; (ii) consulting services as required; and (iii) expert testimony as determined to be appropriate. Pursuant to the terms of the Engagement Letter, if and when requested by Counsel, the Valuation Services Group of C&W and its affiliates will develop an appraisal of each identified property, on a property-by-property basis, in conformance with the Uniform Standards of Professional Appraisal Practice and the Code of Ethics and Certification Standards of the Appraisal Institute. Specifically, C&W will perform its services in two phases: (a) Phase I will include preliminary valuation services, including inspections of certain property to adequately identify the real estate, research relevant market data to the extent necessary to provide credible appraisal results, establish market leasing assumptions, and consider and develop appraisal approaches relevant and applicable to a particular property appraisal. (b) Phase II will include the preparation of the appraisals, which may include a report that complies with the requirements of Rule 26 of the Federal Rules of Civil Procedure and consistent with USPAP guidelines. The scope of C&W's assignment may also include certain consulting services related to the provision of additional valuation advice and possible testimony and other litigation services in connection with the appraisal work. Those litigation services may include expert testimony, attendance at meetings or conferences, reviews of opposing experts' reports or testimony, preparation of rebuttal reports, forensic real property investigations, additional research or financial modeling, document reviews, assistance in preparing cross-examination, preparation for testimony, preparation of trial exhibits and assistance in preparing pre- or post-trial memoranda. Subject to Court approval, the Debtors will compensate C&W for its appraisal services and reimburse its expenses in accordance with the terms and conditions specified in the Engagement Letter. The total cap on the possible amount of fees for Phase I Services and Phase II Services combined for all 320 properties is limited to $3,748,000, not including update fees. A determination will be made on a property-by-property basis whether or not C&W will conduct Phase I Services or Phase II Services, and the Debtors will only be charged fees for properties for which Counsel request that C&W engage in Phase I Services or Phase II Services. In addition, the Debtors have agreed to pay out-of-pocket expenses including travel expenses and state appraisal licensing fees not to exceed a cap of $75,000. The Debtors paid C&W a non-refundable retainer of $500,000 prior to the Petition Date and have agreed to pay C&W an additional non-refundable retainer of $1 million upon the Court's approval of C&W's retention. Any fees and expenses owed to C&W will be charged against those retainers. The $1.5 million non-refundable retainer represents the minimum fee the Debtors will pay C&W for the engagement. The Engagement Letter contemplates fees involved in updating the real estate appraisals prepared under the Engagement Letter and provides that any fees, if incurred, will be based on the length of time that elapses between the original analyses and the time the update is needed. Specifically, where six months have elapsed since the time of the original analyses, the fee for an updated appraisal will be 25% of the Phase I Services fee for an update to Phase I work product and 25% of the total fee for an update of the Phase II work product. Similarly, between 6 months and 12 months the fee for an updated appraisal will be 33% of the Phase I Services fee for an update to Phase I work product and 33% of the total fee for an update of the Phase II work product, and between 12 months to 24 months the fee for an updated appraisal will be 50% of the Phase I Services fee for an update to Phase I work product and 50% of the total fee for an update of the Phase II work product. Pursuant to Section 328(a) of the Bankruptcy Code, the Debtors further ask the Court to approve the retention of C&W at an hourly rate for certain consulting services related to the provision of additional valuation advice and possible testimony in connection with the appraisal work. Any fees incurred for litigation support services will be billed in six-minute increments at hourly rates detailed in the Engagement Letter, and will be described in periodic invoices prepared by C&W. Richard Latella, senior managing director of Cushman & Wakefield, Inc., assures the Court that his firm does not hold any interest materially adverse to the Debtors, their estates, and their creditors, and is a "disinterested party" as the term is defined in Section 101(14) of the Bankruptcy Code. Mr. Latella, however, discloses that two affiliate companies, Cushman & Wakefield of Maryland, Inc., and Cushman & Wakefield of Illinois, Inc., have filed proofs of claims in the Debtors' for $182,778 for brokerage services and $10,750 for appraisal services, respectively. With respect to the claim for brokerage services from Cushman & Wakefield of Maryland, Inc., the Debtors do not dispute the amount of the claim, Mr. Latella tells the Court. He says the Debtors intend to resolve the claim by making a direct payment of the claim or by providing the tenant involved with the claim a rent reduction or credit and then requiring the tenant to pay the brokerage commission. With respect to the claim for appraisal services from Cushman & Wakefield of Illinois, Inc., Mr. Latella says C&W and Cushman & Wakefield of Illinois, Inc., have agreed to waive the claim. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly ] 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Proposes Assessment Tech. as Tax Consultants ------------------------------------------------------------ General Growth Properties Inc. and its affiliates seek the Court's authority to employ Assessment Technologies, Ltd., as property tax consultants, nunc pro tunc to June 15, 2009. As property tax consultants, Assessment Technologies will: (a) Review targeted tax assessments on certain property owned or leased by the Debtors, including supporting data, calculations and assumptions produced by the appropriate appraisal/assessing authority and information provided by the Debtors; (b) Analyze the economic feasibility of attaining a reduced assessment/tax; (c) Represent the Debtors before the appropriate tax assessing/collecting and/or court authorities using all reasonable, appropriate and available means provided by statute or within the Bankruptcy Code to adjust the assessment, unclaimed tax or claimed tax amount; and (d) Utilize any and all local, state or federal remedies that Assessment Technologies deems necessary and appropriate in furtherance of its plan, in its discretion, subject to any required approval of the Court. The Debtors will compensate Assessment Technologies in accordance with the terms and conditions of the Service Agreement, which provides for a contingent fee structure. Specifically, the Debtors have agreed to pay Assessment Technologies these fees for each tax year: (a) 20% of all net tax savings for savings generated by Assessment Technologies through an informal administrative appeal process; and (b) 40% of all net tax savings for savings generated through the pending Bankruptcy Court proceedings, or other formal administrative appeal process, including but not limited to appraisal review board hearings or state judicial proceedings. The Debtors will also reimburse Assessment Technologies' expenses, including special property tax counsel fees, third party appraisal fees, travel expenses and any other external costs and expenses incurred by Assessment Technologies in pursuing property tax savings under the Service Agreement. James Hausman, Esq., president of Assessment Technologies, Ltd., assures the Court that his firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, and does not represent any interest adverse to the Debtors or their estates. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly ] 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Targets Public Offering by July 2010 ---------------------------------------------------- General Motors Company, the new automaker majority-owned by the U.S. Treasury, said it intends to make an initial public offering of stock by July 2010, the one-year anniversary of the U.S. government's purchase of key assets of bankrupt General Motors Corp. General Motors specifically said in a filing with the Securities and Exchange Commission that it intends to have an IPO within the year of the date of its stockholders agreement. The Company, through certain of its subsidiaries, acquired substantially all of the assets of the bankrupt estates of General Motors Corporation on July 10, 2009, in a sale transaction completed pursuant to Section 363(b) of the Bankruptcy Code and the Bankruptcy Court's sale order dated July 5, 2009. In connection with the closing of the 363 Sale, GM issued 304,131,356 shares of its common stock to the US Trustee, 58,368,644 shares of its common stock to Canada Holdings, 87,500,000 shares of our common stock to the New VEBA and 50,000,000 shares of its common stock to Motors Liquidation Co., the bankrupt estates that sold assets to New GM. On July 10, 2009, GM, the US Trustee, the New VEBA and 7176384 Canada Inc. (Canada Holdings), a corporation organized under the laws of Canada, entered into a Stockholders Agreement. The Stockholders Agreement provides that GM's Board of Directors will be composed of 13 members. Its initial Board of Directors will consist of 10 members who are designated by the UST, one member who is designated by the New VEBA, one member who is designated by Canada Holdings and our Chief Executive Officer. At least two- thirds of the directors must be determined by the Board of Directors to be independent within the meaning of New York Stock Exchange (NYSE) rules. The Stockholders Agreement also provides that the UST and Canada Holdings will use their reasonable best efforts to exercise their demand registration rights under the Equity Registration Rights Agreement and cause an initial public offering to occur within one year of the date of the Stockholders Agreement, unless GM is already taking steps and proceeding with reasonable diligence to effect an initial public offering. Pursuant to the Stockholders Agreement, until the initial public offering, so long as Canada Holdings beneficially owns at least 5% of the outstanding common stock, GM may not, without the prior written consent of Canada Holdings, take any action to effectuate: (1) a sale of all or substantially all of our assets; (2) any voluntary liquidation, dissolution or winding up by GM; or (3) an issuance of common stock at a price per share less than fair market value, as determined in good faith by the Board of Directors, other than pursuant to an employee benefit plan. A full-text copy of the Form 8-K filed with SEC is available at: http://researcharchives.com/t/s?4145 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Pre-Bankruptcy Stock Have No Value -------------------------------------------------- The board of directors of Motors Liquidation Company on August 4, 2009, amended the Company's Bylaws to permit the Board to provide that shares of capital stock of the Company would no longer be required to be represented by share certificates. From and after the effectiveness of such amendment, transfers of shares of the common stock of the Company would be recorded by means of book entry. A marked copy of the Bylaws of the Company, reflecting the amendment, is available at http://researcharchives.com/t/s?4144 "It is the Company's strong belief that there will be no value at all for common stockholders in the bankruptcy liquidation process, even under the most optimistic of scenarios," Motors Liquidation said in the SEC filing. 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: RHJ to Sweeten Bid for Opel/Vauxhall Operations --------------------------------------------------------------- Dana Cimilluca at The Wall Street Journal reports that RHJ International plans to sweeten its bid for General Motors Co.'s Opel/Vauxhall operations. Citing people familiar with the matter, the WSJ discloses RHJ is developing a revised bid for GM's European unit that would lower the amount of German taxpayer-funded loan guarantees required from EUR3.8 billion (US$5.38 billion) to as little as EUR3.6 billion. According to the WSJ, that would be EUR900 million below the amount of state aid envisioned in a rival offer from car-parts maker Magna International Inc. The WSJ said one of the people said as part of any sweetened offer, RHJ could boost its EUR275 million equity component. The proposal, the WSJ states, also envisions the elimination of 10,000 jobs. Coventry Telegraph reports RHJ said it has no plans to close Vauxhall's two UK plants or drop the brand. Coventry Telegraph relates Leonhard Fischer, the chief executive of RHJ, told the Sunday Times, "We are very strong supporters of both these plants and of the Vauxhall brand. We want to keep a strong industrial and brand footprint in the UK". On July 31, 2009, the Troubled Company Reporter-Europe, citing Bloomberg News, reported that while the Merkel government's preferred buyer is Magna, John F. Smith, GM's chief negotiator for the sale of Opel, has said a rival bid by RHJ is the simpler solution. Bloomberg disclosed in an online blog July 27, Mr. Smith said the U.S. automaker hasn't specified a preference, although he wrote RHJ's bid "would represent a much simpler structure and would be easier to implement". 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 US$6.0 billion, including special items, in the first quarter of 2009. This compares with a reported net loss of US$3.3 billion in the year-ago quarter. As of March 31, 2009, GM had US$82.2 billion in total assets and US$172.8 billion in total liabilities, resulting in US$90.5 billion in stockholders' deficit. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GLOBAL MOTORSPORT: Files Chapter 11 Plan of Liquidation ------------------------------------------------------- Global Motorsport Group, Inc. and its affiliates have filed with the U.S. Bankruptcy Court for the District of Delaware a plan of liquidation under Chapter 11 of the Bankruptcy Code. A disclosure statement explaining the Plan has yet to be filed with the Bankruptcy Court. Prepetition lenders will retain all distributions made prior to the Plan's effective date in full and final satisfaction of said claims. The distributions will be deemed indefeasibly paid in full and not subject to disgorgement. All other Lender Group Claims will be waived. Other secured claims will receive either (i) the net liquidation proceeds from the assets of the Debtors upon which it holds a lien senior to the lien of Ableco Finance or (ii) the Debtors or the Liquidating Debtors will abandon the collateral in full and complete satisfaction of said other secured claims. General unsecured claims will receive a pro rata share of the assets recovered by a trust. Equity Interests will be cancelled and will receive no distribution under the Plan. Following the Plan's effective date, the liquidating Debtors will wind up their affairs and dissolve. Distributions under the Plan will be sourced from Cash on hand, the Agent Contribution and Causes of Action. The Plan places the various claims against and interests in the Debtors into 6 classes: Class Status Voting Rights ----- ------ ------------- Class 1 - Priority Claims Impaired Entitled to Vote Class 2 - Lender Group Claims Impaired Entitled to Vote Class 3 - Other Secured Claims Impaired Entitled to Vote Class 4 - General Unsecured Claims Impaired Entitled to Vote Class 5 - Intercompany Claims Impaired Not Entitled to Vote Class 6 - Equity Interests Impaired Not Entitled to Vote A full-text copy of the Debtors' Chapter 11 plan of liquidation is available for free at: http://bankrupt.com/misc/global.chapter11plan.pdf About Global Motorsport Headquartered in Morgan Hill, California, Global Motorsport Group Inc. -- http://www.gmgracing.com/-- is a dealer of European model sports cars. The Company is also known as Global Motorsport Parts Inc. The Company and three of its affiliates filed for protection on January 31, 2008 (Bankr. D. Del. Lead Case No. 08-10192). Laura Davis Jones, Esq., James O'Neill, Esq., and Joshua Fried, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as counsel to the Debtors. T. Scott Avil, Esq., at CRG Partners Group LLC, is the Debtors' restructuring services provider. Federico G.M. Mennella, Esq., at Lincoln International Advisors, LLC, is the Debtors' investment banker. The Debtors selected Epiq Bankruptcy Solution LLC as their claims agent. The U.S. Trustee for Region 3 has appointed five creditors to serve on an Official Committee of Unsecured Creditors. Fox Rothschild LLP and Andrews Kurth LLP serve as the Committee's counsel. Edward T. Gavin, CTP, at NachmanHaysBrownstein, Inc., is the Committee's financial advisor. Adam Harris, Esq., and David Hillman, Esq., at Schulte Roth & Zabel LLP, serve as counsel to the prepetition and postpetition secured lenders. When the Debtors filed for protection from their creditors, they listed assets of between $50 million and $100 million and debts of between $100 million and $500 million. GMAC INC: Biz. Capital Group Sr. Managers Join Mountain Funding --------------------------------------------------------------- Mountain Funding LLC has absorbed the 14 senior management and real estate professionals from the REO asset management group of GMAC-ResCap's Business Capital Group. Mountain Funding completed this transaction through its asset management affiliate, Mountain Special Servicing, LLC. As part of the transaction, GMAC-ResCap has engaged Mountain Funding to provide asset servicing and other consulting services for ResCap-BCG's residential development real estate owned (REO) and non-performing loan (NPL) assets nationally. This servicing arrangement covers a portion of the portfolio of ResCap's Business Capital Group, including residential housing development REO properties. ResCap continues to provide mortgage servicing and sub-servicing for a portfolio of approximately 2.6 million mortgage loans, and is the fifth largest mortgage servicer in the nation. "We have been pursuing this expansion for several months and are very excited to have completed it," said Peter J. Fioretti, CEO of Mountain Funding and its affiliated management company. "Mountain Special Servicing has become one of the leading asset managers of residential development REO and NPL assets for institutional lenders in the country. As importantly, Mountain Funding will be able to utilize its asset management staff to efficiently underwrite and bid on distressed debt portfolios, an area in which we expect to be a major player for the next three years." Joining Mountain Special Servicing as managing director will be GMAC-ResCap's former head of ResCap-BCG REO management, Joel Kaul, who will head up the company's residential asset management group. The commercial asset and fractured condo management group continues to be led by Mountain's Brett Peterson. In addition to its Charlotte headquarters, Mountain's asset managers are located in the following offices, servicing all major markets nationally: Atlanta; Los Angeles; Minneapolis; Washington, D.C.; Scottsdale, Ariz.; and Richmond, Va. "With close to 30,000 residential lots under management and hands- on knowledge of most active markets in the U.S., we believe we are uniquely positioned to assist lenders holding distressed assets to preserve and enhance their portfolios, and maximize cash recovery in the shortest period of time," said Mr. Kaul. "Our staff has long and extensive relationships with builders and developers located throughout the United States, allowing us to manage and dispose of assets effectively and efficiently. Our assignment at GMAC-ResCap required us to develop expertise in all areas of asset management and preservation, including entitlement review, cost control, engineering review, HOA representation, reporting, and creative disposition techniques." Combined with its existing portfolio, Mountain Special Servicing has approximately 90 assets under management, totaling over $1 billion in unpaid principal balance. The assets are diversified over 20 states and include the following property types: residential land development, residential lot development/sale, housing construction/sale, commercial land development, sub-performing retail centers, fractured condos, apartments, and resort development. Mountain Special Servicing intends to pursue additional asset management business for portfolios of distressed assets owned by REIT's, hedge funds, and other institutional lenders. In addition to its capability to provide asset management services for third party lenders with distressed assets, Mountain Funding is capitalized to invest $1 billion over the next few years in distressed debt and property for its own account. "The key to successfully and smartly bidding NPL portfolios lies in the strength of the underwriting team," said Arthur G. Nevid, Mountain Funding's chief investment officer. "With the addition of these experienced former GMAC-ResCap professionals to our existing team, we are extremely well positioned to bid these portfolios. There are few locations or asset types that our people are not experienced with as managers or underwriters, and we have sophisticated underwriting models in place to expedite the process." "We are ready for a very exciting and opportunistic leg of this cycle," summarized Mr. Fioretti. "Mountain Funding was created in the early '90s during the Savings & Loan crisis and developed significant experience in the management and resolution of distressed real estate. We hope to leverage that skill set and experience today." About GMAC GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of December 31, 2008, the company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services maintains its CCC/Negative/C rating on GMAC LLC despite the Company's announcement that it entered into an agreement with Chrysler Financial Services Americas LLC to provide future automotive financing products and services to Chrysler dealers and customers. GMAC INC: To Provide Lease Financing on 2009, 2010 Models --------------------------------------------------------- Tess Stynes at The Wall Street Journal relates that GMAC Financial will provide lease financing on various 2009 and 2010 models in 45 states and will consider expanding the program to other vehicles. The program, the report says, excludes Ohio, Michigan, New York, Connecticut, and New Jersey. GMAC, The Journal reports, said that it will initially offer leases on 2009 models -- the Cadillac CTS, the Chevrolet Malibu, and Traverse models -- and the 2010 vehicles -- including the Buick Enclave, LaCrosse, the Chevorlet Equinox, and GMC Acadia. According to The Journal, GMAC President Bill Muir said that the Company doesn't expect leasing "to return to its hey-dey levels across all models, but it remains an attractive financing tool for certain segments" particularly new models and some luxury models. General Motors Co. and Chrysler Group LLC pulled out of leasing in August 2008 amid a steady drop in vehicle resale values, a sales slump, and troubles at their respective lending affiliates. Citing The Journal, Mr. Muir said that the decision to re-enter the market was based on increased funding flexibility, the completion of its GM's massive restructuring, and increasing used- car values. About GMAC GMAC Financial Services -- http://www.gmacfs.com/-- formerly General Motors Acceptance Corporation, is a bank holding company with operations in North America, South America, Europe and Asia- Pacific. GMAC specializes in automotive finance, real estate finance, insurance, commercial finance and online banking. As of December 31, 2008, the company had $189 billion in assets and serviced 15 million customers around the world. GMAC is the biggest lender to GM's 6,500 dealers nationwide, most of which get the financing they need to operate and buy vehicle inventory from the automaker, CNNMoney.com notes. GMAC Financial Services is wholly owned by GMAC LLC. Cerberus Capital Management LP led a group of investors that bought a 51% stake in GMAC LLC from General Motors Corp. in December 2006 for $14 billion. On December 24, 2008, GMAC Financial Services' application to become a bank holding company under the Bank Holding Company Act of 1956, as amended, was approved by the Board of Governors of the Federal Reserve System. In addition, GMAC Bank received approval from the Utah Department of Financial Institutions to convert to a state bank. * * * As reported in the Troubled Company Reporter on May 5, 2009, Standard & Poor's Ratings Services maintains its CCC/Negative/C rating on GMAC LLC despite the Company's announcement that it entered into an agreement with Chrysler Financial Services Americas LLC to provide future automotive financing products and services to Chrysler dealers and customers. GREAT ATLANTIC: Moody's Affirms 'B3' Corporate Family Rating ------------------------------------------------------------ Moody's Investors Service raised The Great Atlantic and Pacific Tea Company's Speculative Grade Liquidity Rating to SGL -2 from SGL-3. The company's B3 Corporate Family Rating and B3 Probability of Default Rating were affirmed along with its long- term debt ratings. The rating outlook remains negative. The upgrade reflects A&P's improved liquidity following the issuance of $260 million of senior secured notes and $175 million of preferred equity which closed earlier this week. Proceeds were used to repay borrowings under the revolving credit facility and enhance cash balances. The affirmation reflects A&P's slim operating margins, weak credit metrics, geographic concentration, and the intensely competitive nature of the supermarket industry. The ratings are supported by the company's adequate liquidity and good regional market position. The negative rating outlook reflects concerns that A&P's already thin operating margins may be further reduced by the continuing trend of negative same store sales. This could jeopardize already weak credit metrics and cash flow. Ratings affirmed and LGD point estimates adjusted: * Corporate Family Rating at B3 * Probability of Default Rating at B3 * Senior convertible notes at Caa1 (LGD 5, 78%) * Senior unsecured notes at Caa1 (LGD 5, 78%) * Senior secured notes at B3 (LGD3, 46%) from B3 (LGD 3, 45%) * Senior unsecured shelf at (P)Caa1 * Subordinated shelf at (P)Caa2 * Junior subordinated shelf at (P)Caa2 * Preferred shelf at (P)Caa2 (LGD 6, 98%) Ratings raised: * Speculative Grade Liquidity Rating to SGL-2 from SGL-3 The last rating action for A&P occurred on July 24, 2009, when Moody's assigned a B3 to the company's $225 million senior secured notes. The Great Atlantic and Pacific Tea Company, headquartered in Montvale, N.J., operates 435 grocery stores in the Northeast US with particular concentration in the NY/NJ/PA markets. The company generates annual net revenue of approximately $9.5 billion. GREEKTOWN HOLDINGS: Court OKs March-May Fee Applications -------------------------------------------------------- In separate orders, the Bankruptcy Court granted the interim fee applications of these professionals retained and employed in the Chapter 11 cases of Greektown Holdings Inc. for work performed the March to May 2009 quarter period: A. Debtors' Professionals Firm Role Fees Expenses ---- ---- -------- -------- Honigman Miller Special $720,062 $15,448 Scwartz & Cohn LLP Counsel Moelis & Company LLC Investment 450,000 77,106 Banker Ernst & Young Accountant 149,639 669 Jackier Gould PC Special 29,167 230 Counsel Floyd E. Allen & Counsel 20,137 622 Associates B. Committee's Professional XRoads Solutions Financial 232,138 175 Group LLC Advisor Moelis & Company previously notified the Court that it has reduced its expense request for the March to May 2009 period by $173 from $77,279 to $77,106. 4 or visit http://www.greektowncasino.com About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC, and its affiliates -- http://www.greektowncasino.com/-- operates world-class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The Company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. Bankruptcy Creditors' Service, Inc., publishes Greektown Casino Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Greektown Casino and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GREENBRIER COMPANIES: Moody's Cuts Corp. Family Rating to 'Caa1' ---------------------------------------------------------------- Moody's Investors Service has lowered the ratings of The Greenbrier Companies Inc., Corporate Family Rating to Caa1 from B3, and senior unsecured notes to Caa2 from Caa1. The ratings outlook is negative, and the company has a Speculative Grade Liquidity Rating of SGL-4. Greenbrier's Corporate Family Rating was lowered to Caa1 to reflect expectations for continued weak credit metrics, due primarily to soft rail car demand anticipated through 2010. Also, concerns about revenue visibility are heightened by the diminishing backlog for new rail car orders, exacerbated by the lack of progress in its discussions with General Electric Railcar Services Corporation -- an important customer whose has stated its intent to cancel or substantially reduce rail car deliveries from Greenbrier. The ratings also take into account the impact of recent financial restructuring and changes to the company's board. The recent infusion of capital from WL Ross & Co. and the amended covenant agreements will improve liquidity over the near term. However, Moody's believes that the company's risk profile is heightened by the possibility of strategic changes or financial restructuring that may involve the repurchase of debt at a discount to par. Greenbrier's liquidity rating of SGL-4 reflects Moody's assessment that the company maintains a weak liquidity profile, although certain aspects of the company's liquidity have recently improved. Proceeds from the $75 million investment by WL Ross has bolstered the company's cash balance and repaid drawings outstanding under Greenbrier's North American revolving credit facility. At the same time, the company has amended its credit facility to provide for looser financial covenants, substantially reducing the risk of covenant breach over the near term. Moody's expects that the company will remain in compliance with the amended financial covenant levels through FY 2010, although room under these covenants may tighten if operating performance does not improve over this period. Also, although the North American revolver has been substantially reduced as a result of the amendments, Moody's views the approximately $130 million of revolving credit facilities (including European facilities) as adequate for the companies global operations. However, Moody's believes that Greenbrier's liquidity profile will be challenged by the continued negative impact that the weak operating outlook in the rail car sector will have on the financial performance of the company. Further reductions in rail car deliveries would likely result in free cash flow turning negative over the next 12-18 months, possibly draining cash balances while reducing the availability under the borrowing-based revolving credit facility. The negative outlook reflects Moody's expectations that operating margins, manufacturing in particular, and over all credit metrics will remain weak for the next 12-18 months in anticipation of continued soft railcar demand 2010. With capital spending and investments in working capital curtailed through the downturn, it is expected that the company will at best generate only modest amounts of free cash flow over this period. The ratings could be downgraded if demand levels continue to deteriorate through 2010, particularly if the company encounters operating losses over a prolonged period, or if deteriorating operating performance results in the reduced access to liquidity due to tightness to financial covenants under the bank credit facility. Ratings could also be lowered if Greenbrier undertakes a change in strategic focus that negatively impacts the company's risk profile, or if the company endeavors to purchase debt at a substantial discount to par, which could be deemed a distressed exchange. Leverage (Debt/EBITDA) sustained above 10 times or EBIT/Interest coverage below 0.5 times for a prolonged period may also prompt a ratings downgrade. The outlook could be stabilized if Greenbrier demonstrates an ability to sustain EBIT to Interest above 1.0 time while generating modestly positive free cash flow generation throughout the industry cycle. Outlook stabilization would also require evidence of a modest recovery in demand and improvement in backlog through FY 2010, suggesting a near term recovery in revenue levels and profitability. Downgrades: Issuer: Greenbrier Companies, Inc. (The) -- Probability of Default Rating, Downgraded to Caa1 from B3 -- Corporate Family Rating, Downgraded to Caa1 from B3 -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Caa2 from Caa1 -- Senior Unsecured Regular Bond/Debenture, Downgraded to Caa2 from Caa1 The last rating action was on March 10, 2009 when the corporate family rating was lowered to B3 from B1. The Greenbrier Companies Inc. manufactures railroad freight cars, is a the leading producer of intermodal flat cars, and also repairs railroad freight cars and provide wheels and various car parts. Greenbrier owns a portfolio of 9,000 railcars, which it leases to third parties, and provides a range of management services for approximately 137,000 other railcars. HERBST GAMING: Sr. Lenders Won't Recover 100% on $500M Value ------------------------------------------------------------ Herbst Gaming Inc., et al., filed on August 7, 2009, a second amended disclosure statement explaining their first amended joint plan of organization, which was filed with the U.S. Bankruptcy Court for the District of Nevada on July 22, 2009. Summary of Plan Terms The allowed claims of holders of the Senior Credit Facility Claims totalled roughly $847,363,0000 in principal plus accrued interest of $29,103,000 for a total of $876,466,000 as of the petition date. The Debtors have determined that the enterprise value of their assets, consisting of the casino business and slot route business ranges from $500,000,000 to $600,000,000. Holders of Senior Credit Facility Claims, thus, will not be paid in full. Holders of Senior Credit Facility Claims will receive, indirectly through the ownership of Herbst Gaming LLC, 100% ownership of the Reorganized Debtors and $350,000,000 of restructured debts. In view of the contractual subordination of the 7% Senior Subordinated Notes Due November 15, 2014, and the 8.125% Senior Subordinated Notes Due June 1, 2012, to the Senior Credit Facility Claims, the Senior Subordinated Note Claims will not receive anything under the Plan. Holders of Allowed General Unsecured Claims will be paid in full. The Debtors intend to assume and honor all slot route contracts. Equity Interests in Herbst Gaming will be canceled and holders thereof will not receive anything under the Plan. Herbst Gaming will contribute all of its interests, including the Intercompany Interests in the Reorganized Debtors, to Reorganized Herbst Gaming in exchange for 100% of the Reorganized Herbst Gaming New Common Equity and the notes evidencing the Reorganized Herbst Gaming Senior Loan. Herbst Gaming will then transfer the Herbst Gaming New Commmon Equity and the notes evidencing the Reorganized Herbst Gaming Senior Loan to holders of Class 3 Senior Credit Facility Claims on a pro rata basis in accordance with the Plan. Classification of Claims and Interests The Plan places the various claims against and interests in the Debtors into nine classes. The distributions under the Plan are summarized below: Claims/Interest Class Treatment Total Amount ----- --------- ------------ Class 1 Other Priority Claims Unimpaired. Paid $1,050,803 in full in Cash Class 2 Other Secured Claims Unimpaired. Paid $128,111 in full in Cash or otherwise left unimpaired. Class 3 Senior Credit Facility Impaired. Pro $847,466,000 Claims Rata Share of Reorganized Herbst Gaming New Common Equity, and any remaining value from the Debtors' assets. Class 4 General Unsecured Unimpaired. Paid $5,897,121 Claims in full in cash or otherwise left unimpaired. Class 5 Senior Subordinated Impaired. No $362,570,000 Note Claims distribution. Class 6 Section 726(a)(4) Impaired. No $4,183,250 Claims distribution. Class 7 Intercompany Claims Impaired. Reinstated or discharged at the option of Reorganized Herbst Gaming, subject to reasonable acceptance by a Requisite Majority. Class 8 Equity Interests in Impaired. No n/a Herbst Gaming distribution. Class 9 Intercompany Interests Unimpaired. n/a Interests remain unaltered. The Debtors are soliciting votes only from holders of Senior Credit Facility Claims under Class 3 and Intercompany Claims under Class 7. Senior Subordinated Note Claims under Class 5, Section 726(a)(4) Claims under Class 6, and Equity Interests in Herbst Gaming under Class 8 are deemed to have voted against the Plan. A full-text copy of the Debtors' second amended disclosure statement and first amended joint plan of organization is available for free at http://bankrupt.com/misc/herbst.DS.pdf Headquartered in Reno, Nevada, Herbst Gaming Inc. -- http://www.herbstgaming.com/-- is a diversified gaming company. The Company and its subsidaries focuses on two business lines, slot route operations and casino operations. The slot route business involves the exclusive installation and operation of slot machines in non-casino locations, such as grocery stores, drug stores, convenience stores, bars and restaurants throughout Nevada. As of March 31, 2009, the slot route Debtors operated approximately 6,900 slot machines machines through Nevada. The casino business consists of 12 casinos in Nevada, and two in Missouri and one in Iowa. As of the petition date, the Nevada casinos had an aggregate of roughly 5,082 hotel rooms, 329 recreational vehicle spaces/hookups, 6,800 slot machines and 138 table games. As of the petition date, the non-Nevada casinos had an aggregate of roughly 2,300 slot machines and 47 table games. The Iowa casino also offers roughly 60 all-suite hotel rooms and 65 RV spaces with utility hookups. The Company and 17 of its affiliates filed for Chapter 11 protection on March 22, 2009 (Bankr. D. Nev. Lead Case No. 09-50752). Thomas H. Fell, Esq., and Gerald M. Gordon, Esq., at Gordon Silver, represent the Debtors in their restructuring efforts. Herbst Gaming had $919.1 million in total assets; and $33.5 million in total liabilities not subject to compromise and $1.24 billion in liabilities subject to compromise, resulting in $361.0 million in stockholders' deficiency as of March 31, 2009. HSP GAMING: S&P Assigns Corporate Credit Rating at 'B-' ------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to HSP Gaming L.P. The rating outlook is negative. At the same time, S&P assigned a 'B-' issue-level rating to HSP's proposed $180 million senior secured credit facilities, with a recovery rating of '3', indicating S&P's expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default. The ultimate borrower of the proposed financing is a yet to be named, wholly owned subsidiary of HSP. Upon the determination of the borrower name, S&P will be removing the corporate credit rating from HSP and transferring the rating to the named borrower. The company plans to use proceeds to fund the construction costs of the SugarHouse Casino in Philadelphia, Pa., as well as for general corporate purposes. "The 'B-' corporate credit rating reflects the vulnerability of new gaming projects to uncertain demand and difficulties in managing initial costs, often leading to poor profitability in the first several months of operations," said Standard & Poor's credit analyst Michael Listner. "We are concerned that the interest reserve account in this case does not provide sufficient cushion against a slow ramp-up of the property." In addition, the rating reflects: * The risk of construction delays and cost overruns (a guaranteed maximum price contract is not yet finalized, although the company has indicated that one will be in place by the closing of the proposed financing), * HSP's limited diversity as an operator of a single property, and * An expectation for heightened competition over the intermediate term from additional gaming capacity from the proposed Foxwoods Casino in Philadelphia. The property does, however, benefit from a sizable population base in the greater Philadelphia metropolitan area and solid slot machine revenue metrics generated by the company's closest competitors, Philadelphia Park and Chester Downs, located within a 20-mile radius of the casino site. In addition, while the owners have contributed a substantial amount of equity to the project, it is in the form of preferred interests on which a return accrues. While the credit agreement restricts cash distributions to the equity holders, the form of preferred equity appears to contemplate a future cash-out transaction, in S&P's view. Given its private ownership status, HSP will not be publicly disclosing its financial information. HUNTSMAN CORPORATION: Moody's Cuts Corporate Family Rating to 'B1' ------------------------------------------------------------------ Moody's Investors Service lowered the Corporate Family Ratings for Huntsman Corporation and Huntsman International LLC, a subsidiary of Huntsman, to B1 from Ba3, and lowered other ratings as shown in the ratings list below. Moody's also assigned a B1 rating to HI's existing $600 million of 5.5% senior unsecured notes due June of 2016. The ratings on recently redeemed debt have been withdrawn. This concludes the rating review of the companies that was initiated in June of 2007 after Huntsman's announcement that it had entered into a definitive agreement to be purchased. The outlook for Huntsman's ratings is stable. Huntsman's CFR was lowered to B1 as the company is expected to continue, over the intermediate term, to face significant negative margin pressure resulting from declining sales volumes across virtually all businesses units. Moody's expect that this pressure will result in cash flow and credit metrics that, in the intermediate term, are more consistent with a rating in the low end of the B category. The B1 rating and stable outlook reflect Huntsman's announced plan to use the cash proceeds of recent legal settlements, net of reductions in debt, including the committed revolver, to maintain an initial liquidity balance of between $800 million to $1 billion. "The stable outlook reflects Huntsman's enhanced liquidity profile evidenced by the lack of sizeable near term debt maturities until 2013. However if its cash balance becomes depleted before sales volumes recover, there would be negative pressure on the outlook and/or ratings." said Moody's analyst Bill Reed. This summarizes the ratings activity: Rating Assigned: Issuer: Huntsman International LLC -- Senior Unsecured Regular Bond/Debenture, Rated B1, LGD4, 55% Ratings Lowered: Issuer: Huntsman Corporation -- Corporate Family Rating, Downgraded to B1 from Ba3 Issuer: Huntsman International LLC -- Corporate Family Rating, Downgraded to B1 from Ba3 -- Probability of default, Downgraded to B1 from Ba3 -- Senior Secured Bank Credit Facility, Downgraded to Ba2 from Ba1, LGD2, 20% -- Senior Subordinated Regular Bond/Debenture, Downgraded to B3 from B2, LGD5, 88% Outlook Actions: Issuer: Huntsman Corporation -- Outlook, Changed to Stable from rating under review down Issuer: Huntsman International LLC -- Outlook, Changed to Stable from rating under review down The downgrade of Huntsman's CFR reflects the greater than anticipated decline in business performance over the last three quarters and the expectation for a slow recovery in several of Huntsman's key end markets. The decline is evidenced by a 40% drop in adjusted LTM EBITDA to $391 million. This level of EBITDA results in gross debt/EBITDA of close to 13X (including pension and lease adjustments to debt of $725 million and $288 million respectively). This unusually high leverage is offset by a substantial amount of liquidity and the potential for additional cash receipts. In total, Huntsman has received some $2,732 million in legal settlement proceeds in the form of $1,382 million of cash and $1,350 million in incremental debt obligations with favorable terms relative to current markets. To date some $500 million in debt has been repaid and Moody's believe that a further amount, at least another $300 - $400 million of debt (aided by an insurance settlement), could be repaid with a combination of insurance settlements and cash on the balance sheet. In connection with an ongoing insurance claim related to an April 2006 Port Arthur, Texas fire, Huntsman has received partial insurance proceeds to date of $365 million and has claimed an additional $243 million plus interest. Moody's expect that the settlement of insurance claims will continue during 2009 and that arbitration to settle these claims is expected to occur in November of 2009. Any additional anticipated recoveries are expected to be used to repay secured debt. The ratings take into account Huntsman's strong competitive position in key businesses and significant competitive barriers, including process know-how and requirements for world scale production capabilities. The ratings are nevertheless tempered by very high leverage at this point in the chemical cycle, exposure to rising prices in some feedstocks, and weakness in many key end markets, notably automotive and housing. The stable outlook reflects Moody's expectation that Huntsman's substantial liquidity will enable it to withstand the current downturn. Furthermore it incorporates Moody's current expectation that excess cash on the balance sheet combined with the paydown of additional secured debt should enable Huntsman to avoid a potential financial covenant problem until demand returns to more normal volumes in 2010. The notching of the senior secured credit facilities at Ba2, two levels above the CFR, reflects the combination of anticipated debt reduction at the secured level along with the benefit of a substantial cushion of subordinated debt. Moody's most recent announcement concerning the ratings for was on June 19, 2008 when Moody's reiterated that the debt ratings and the corporate family ratings for Huntsman and HI remained under review for possible downgrade following the announcement by Hexion Specialty Chemicals and Apollo in which Hexion/Apollo claimed they would not be required to consummate the previously announced merger agreement between the two companies. Huntsman Corporation is a global manufacturer of differentiated and commodity chemical products. Huntsman's products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non- durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining and synthetic fiber industries. Huntsman had revenues of $8.3 billion for the LTM period ending June 30, 2009. IMAX CORP: Reports $2.6 Million Net Income for June 30 Quarter -------------------------------------------------------------- IMAX Corporation reported net income of $2.6 million, or $0.05 per diluted share for the second quarter ended June 30, 2009, compared to a net loss of $12.2 million, or $0.29 per diluted share for the second quarter of 2008. Total revenues increased 94% to $41.0 million, compared to total revenues of $21.2 million last year. The Company generated operating income of $6.5 million, a turnaround of over $14.0 million compared to an operating loss of $7.7 million in the year-ago period. As of June 30, 2009, the Company had $270.4 million in total assets and $288.5 million in total liabilities, resulting in $18.1 million in stockholders' deficit. IMAX Chief Executive Officer Richard L. Gelfond stated, "We are very pleased with our second quarter financial results. The strategic and operational groundwork laid over the last two years came together in the second quarter and resulted in a significantly larger theatre network and strong film slate, which drove our return to profitability. While one quarter does not make a trend, we believe this quarter is an early indication of the benefits of our new business model and that the pieces are in place to continue to deliver revenue growth and profitability for fiscal 2009." Included in the Company's second quarter 2009 financial results are several notable items, including a $3.4 million increase in share-based compensation expense primarily due to the Company's increased stock price over the course of the second quarter and its impact on variable stock-based compensation such as stock appreciation rights; $1.0 million in fees associated with the early termination of a service contract; a favorable foreign exchange translation adjustment of $2.5 million; and a one-time gain of $400,000 due to the early retirement of debt. The net impact of these items was a $1.5 million reduction in net income, or roughly $0.03 per diluted share. At the end of the second quarter, the Company's cash position was $49.0 million, compared to $27.0 million as of December 31, 2008. During the second quarter, the Company raised $76.3 million in net proceeds through a common stock offering of 11,270,000 common shares. A portion of the proceeds was used to repurchase $44.3 million aggregate principal amount of its 9.625% Senior Notes due December 2010 which resulted in a one-time gain of $0.4 million due to the early retirement of debt. Offsetting the Company's cash position were investments related to its joint revenue sharing digital projection systems, which amounted to approximately $5.7 million in the second quarter compared to $3.6 million a year ago. Subsequent to quarter-end, the Company repurchased an additional $6.0 million of aggregate principal amount of its 9.625% Senior Notes. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4158 About IMAX Corporation IMAX Corporation is one of the world's leading entertainment technology companies, specializing in immersive motion picture technologies. The worldwide IMAX network is among the most important and successful theatrical distribution platforms for major event Hollywood films around the globe, with IMAX theatres delivering the world's best cinematic presentations using proprietary IMAX, IMAX(R) 3D, and IMAX DMR(R) technology. IMAX DMR is the Company's groundbreaking digital re-mastering technology that allows it to digitally transform virtually any conventional motion picture into the unparalleled image and sound quality of The IMAX ExperienceO. The IMAX brand is recognized throughout the world for extraordinary and immersive entertainment experiences for consumers. As of June 30, 2009, there were 394 IMAX theatres (273 commercial, 121 institutional) operating in 44 countries. JEFFERSON COUNTY: Governor Riley Calls Special Session ------------------------------------------------------ Alabama Governor Bob Riley called lawmakers back for a special session of the Legislature starting August 10 to deal with the financial crisis in Jefferson County. Governor Riley said, in a statement, "This special session is necessary to develop a solution to Jefferson County's financial crisis, one that threatens not only the future of Jefferson County but also the economic stability of our entire state. It's in the best interest of all Alabamians for this special session to be a success, and I'm calling on legislators to return to Montgomery with an attitude of compromise so this problem can be solved." The TCR on August 5, 2009, citing Bloomberg News, reported that Alabama lawmakers were scheduled to meet August 4 to resume work on a bill to restore Jefferson County's occupational tax. Governor Bob Riley, a Republican, said he will call a special session of the Legislature to vote on a new occupational tax only if lawmakers agree to a bill beforehand, Bloomberg reported. After state lawmakers failed to agree on a new occupational tax in May, Jefferson County put more than 900 employees, or about 30% of its workforce, on unpaid leave, in order to cut costs. As a result, according to County Commission President Bettye Fine Collins, the county's 640,000 residents are enduring long lines and delays in county services as a result of the cuts. Bloomberg related that the county's occupational tax problems have superseded a sewer debt crisis that began last year when interest rates on $3 billion of sewer debt soared as high as 10% amid Wall Street's credit crunch. Banks, including JPMorgan Chase & Co. and Bank of America Corp., have granted the county forbearance agreements on its sewer debt. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. The Birmingham firm of Bradley Arant Rose & White, represents Jefferson County. Porter, White & Co. in Birmingham is the county's financial adviser. A bankruptcy by Jefferson County stands to be the largest municipal bankruptcy in U.S. history. It could beat the record of $1.7 billion, set by Orange County, California in 1994. As reported by the TCR on July 24, 2009, Moody's Investors Service has affirmed the Caa3 rating and negative outlook on Jefferson County's (Alabama) outstanding $3.2 billion sewer revenue bonds. Moody's underlying Caa3 rating reflects the likelihood of eventual repayment by the county of principal, irrespective of outside enhancement through bond insurance. It does not reflect the claims paying ability of Syncora, which is rated Ca and failed to fulfill its obligation to make a July 1 Bank Bond principal payment JER INVESTORS: Cuts Deals With Three Trust Preferred Shareholders ----------------------------------------------------------------- During the quarter ended June 30, 2009, JER Investors Trust Inc. entered into an agreement with two holders of its outstanding trust preferred securities (TRUPs) with an aggregate liquidation amount of $56.3 million to exchange the TRUPs for: (a) $70.3 million aggregate principal amount of junior subordinated notes due in 2037; (b) the issuance of 307,203 unregistered shares of common stock; and (c) certain unspecified cash payments. Additionally, JER entered into an agreement with a third holder of TRUPs with an aggregate liquidation amount of $3.7 million to exchange those trust preferred securities for 541,906 unregistered shares of common stock and certain unspecified cash payments. JER reports that an aggregate of $60.0 million of TRUPs have been cancelled through August 1, 2009, in conjunction with these exchanges, and all interest payment obligations on the TRUPs through the July 31, 2009, interest payment date have been satisfied. The New Notes issued to the two TRUPs Holders will bear interest at a rate of 0.5% annually through April 29, 2012, or such earlier date as JER may elect. Thereafter, JER will pay interest at a variable rate equal to LIBOR plus 2.25% annually. JER estimates these swap transactions will reduce cash interest payments from approximately $1.1 million per quarter on the TRUPs to approximately $100,000 per quarter on the junior subordinated notes through April 2012. Additionally, JER amended certain note payable obligations to reduce monthly payments from approximately $400,000 to $75,000 from July through September 2009, and amended a management agreement to reduce cash basis monthly base management fees JER's June 30, 2009, balance sheet showed $261 million in assets and $241 million in liabilities. JER Investors Trust Inc. (OTC Bulletin Board: JERT) -- http://www.jer.com/-- is a specialty finance company that invests in commercial real estate structured finance products. JER's target investments include commercial mortgage backed securities, mezzanine loans and B-Note participations in mortgage loans, commercial mortgage loans and net leased real estate investments. JER Investors Trust Inc. is organized and conducts its operations so as to qualify as a real estate investment trust ("REIT") for federal income tax purposes. JOURNAL REGISTER: Emerges From Chapter 11 Bankruptcy ---------------------------------------------------- Journal Register Co.'s pre-negotiated plan of reorganization has become effective and the Company has successfully emerged from Chapter 11 bankruptcy protection in less than six months from commencing the case. The Company has also closed on its exit financing consisting of a $150 million Tranche A Term Loan Agreement with JPMorgan Chase Bank, N.A., as administrative agent, a $75 million Tranche B Term Loan Agreement with Wells Fargo Bank, N.A., as administrative agent, and a revolving credit facility with Wachovia Bank, National Association. "Over the last six months everyone at the Company has stayed focused on successfully reorganizing the business in order to create a strong financial base on which to build a new dynamic company that is well equipped to compete in today's challenging economic environment. We would like to thank our employees, lenders and advisors for their hard work and many sacrifices to bring the reorganization to a successful conclusion. We would also like to thank our loyal advertisers, suppliers and subscribers for their ongoing support during this difficult process. In the future, we look forward to delivering the high quality, hyper-local content that is the hallmark of Journal Register Company through our traditional print media products and the vast new media opportunities available to the Company," said Robert P. Conway, the Company's interim Chief Executive Officer. By agreement with the Company's secured lenders, the allowed claims of the Company's pre-petition continuing trade creditors will be paid in full in cash. In accordance with the Plan, the other unsecured creditors will be entitled to a pro rata share of a fixed dollar settlement fund based on the amount of their allowed claims. The Company is now privately held by the Company's pre-petition secured lenders who have been issued the new common stock of the Company. The common stock of the Company that was issued pre-petition was cancelled with no distribution to the holders. The Company has appointed a new four-member board of directors. Joining the Board as Chairman is Joseph A. Ripp, the former Chief Financial Officer for Time Warner, Inc. and Vice Chairman of America Online Inc., Michael Diament, a former portfolio manager for Q Investments, Peter H. Glusker, the Head of Business Development and International Operations for Gilt Groupe Inc. and John Paton, the Chairman and Chief Executive Officer of impreMedia, LLC. "We are pleased to welcome these accomplished individuals to the Board and we anticipate that their diverse new media and traditional media backgrounds will be a tremendous asset to the Company," said Mr. Conway. About Journal Register Yardley, Pennsylvania-based Journal Register Company (PINKSHEETS: JRCO) -- http://www.JournalRegister.com/-- owns 20 daily newspapers, more than 180 non-daily publications and operates over 200 individual Web sites that are affiliated with the Company's daily newspapers, non-daily publications and its network of employment Web sites. All of the Company's operations are strategically clustered in six geographic areas: Greater Philadelphia; Michigan; Connecticut; Greater Cleveland; and the Capital-Saratoga and Mid-Hudson regions of New York. The Company also owns JobsInTheUS, a network of 20 employment Web sites. Journal Register, along with its affiliates, filed for Chapter 11 bankruptcy protection on February 21, 2009 (Bankr. S.D.N.Y. Case No. 09-10769). Marc Abrams, Esq., Rachel C. Strickland, Esq., Shaunna D. Jones, Esq., and Jennifer J. Hardy, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors as counsel. William M. Silverman, Esq., Scott L. Hazan, Esq., and Jeanette A. Barrow- Bosshart, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the official committee of unsecured creditors as counsel. Conway, Del Genio, Gries & Co., LLC, provides restructuring management services to the Debtors. Robert P. Conway is the Company's chief restructuring officer. At the time of the filing, the Company listed $100 million to $500 million in total assets and $500 million to $1 billion in total debts. KEATING CHEVROLET: Files for Chapter 11 in Texas ------------------------------------------------ Keating Chevrolet Inc. -- doing business as Mike Young Motor Co., Mike Young Chevrolet and Mike Young Chrysler Dodge Jeep -- filed for Chapter 11 before the U.s. Bankruptcy Court for the Eastern District of Texas, in Beumont. Keating's petition says that assets and liabilities are in the range of $10 million to $50 million. Keating estimates that funds will be available for distribution to unsecured creditors. It says that it has less than 200 creditors. The Company filed for Chapter 11 on August 7 (Bankr. E.D. Tex. Case No. 09-10438). KINGSLEY CAPITAL: Confirmation Hearing to be Held on August 12 -------------------------------------------------------------- The hearing for consideration of Kingsley Capital Inc.'s second amended chapter 11 plan of reorganization will be held on August 12, 2009, at 10:00 a.m. The U.S. Bankruptcy Court for the District of Colorado approved the adequacy of the Debtor's third amended disclosure statement accompanying the Plan on June 5, 2009. Under the Plan, unsecured creditors will receive distributions of 80% of available cash not used to pay or reserved for allowed administrative claims, professional fee claims, allowed priority non-tax claims, and allowed priority unsecured tax claims, pro rata. All payments will be applied first to interest and then to principal. Holders of Interests will remain unimpaired. A full-text copy of Kingsley's second amended chapter 11 plan is available at http://bankrupt.com/misc/kingsley.ch11plan.pdf A full-text copy of Kingsley's third amended disclosure statement is available for free at: http://bankrupt.com/misc/kingsley.3rdamendedds.pdf As reported in the TCR on March 10, 2009, Kingsley Capital filed with the Court a second amended disclosure Statement explaining its amended plan of reorganization. The Plan anticipates the orderly collection of the College Partnership assets, the ordinary course sale or refinancing of the Ramona Property, and the ordinary course development and sale of the minerals, for distribution to creditors pursuant to the priority provisions of the Bankruptcy Code. The Plan segregates the various claims against and interests in the Debtors into 10 classes: Class 1 San Diego Secured Claim Class 2 Fidelity Secured Claim Class 3 National Legal Secured Claim Class 4 John Grace/New Horizons Secured Claim Class 5 Burg Simpson Secured Claim Class 6 Priority Non-Tax Claims Class 7 General Unsecured Claims Class 8 Insider General Unsecured Claims Class 9 New Horizon Claims Class 10 Interests Denver, Colorado-based Kingsley Capital Inc. was created in January 2005 as a wholly owned subsidiary of Chartwell International, Inc., a printing and publishing company incorporated in the State of Nevada in 1984. After January 2005, Chartwell transferred all of its assets, consisting of real estate, mineral claims, and its stock holdings in and other claims against College Partnership, Inc., together will all liabilities, to Kingsley Capital, Inc. In January 2008, the Company transferred its mineral rights to Good Earth Mineral, LLC, a Colorado limited liability company, in order to create a potential vehicle for investment and development of the gypsum. The Company owns 90% of Good Earth Minerals. The other three members are New Horizons, LLC, Alice Gluckman and William Willard. The Company filed for Chapter 11 relief on May 23, 2008 (Bankr. D. Colo. Case No. 08-17152). Christian C. Onsager, Esq., David M. Rich, Esq., and Michael J. Guyerson, Esq., at Onsager, Staelin & Guyerson LLC, represent the Debtor as counsel. The Debtor filed on June 9, 2008, its schedules of assets and schedules, disclosing total assets of $10,356,146 and total liabilities of $5,028,840. KIRK PIGFORD: Court Dismisses Chapter 11 Proceeding --------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina has dismissed the Chapter 11 proceeding of Kirk Pigford Construction, Inc. The Debtor told the Court that it has been unable to formulate a plan of reorganization, and desires to negotiate with its creditors outside of the Chapter 11 proceeding. The Debtor said the dismissal of its case is in the best interest of all parties in interest. About Kirk Pigford Based in Wrightsville Beach, N.C., Kirk Pigford Construction Inc. -- http://www.kirkpigfordconstruction.com/-- is engaged in the construction of residential homes primarily in the New Hanover County, North Carolina areas. The Company filed for Chapter 11 relief on Oct. 14, 2008 (Bankr. E.D.N.C. Case No. 08-07139). Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represents the Debtor as counsel. In its schedules, the Debtor listed total assets of $13,960,930 and total debts of $14,930,779. LA PLACITA: Shopping Center Rents Constitute Cash Collateral ------------------------------------------------------------ Under Texas law, WestLaw reports, the ambiguities in a deed of trust and assignment contemporaneously executed by a lender and a shopping center operator as to whether the operator's assignment of rents was intended to be an absolute assignment, as provided by the assignment, or a collateral assignment, as indicated by the deed of trust, had to be construed against the lender as the drafter of the deed of trust and assignment. Therefore, the deed of trust and the assignment, taken together, created a collateral assignment, such that the operator owned fee to the rents and the lender held a security interest therein. Consequently, the rents constituted cash collateral in the operator's Chapter 11 case. In re Las Torres Development, L.L.C., --- B.R. ----, 2009 WL 2225806 (Bankr. S.D. Tex.). In their jointly administered Chapter 11 cases, Las Torres Development, L.L.C., and La Placita Shopping Center, L.L.C., requested permission to use the shopping center's $47,000 monthly stream of rental income, also pledged cash to secure repayment of $3.2 million owed to MetroBank, N.A., to pay both debtors' continuing obligations during the pendency of their Chapter 11 cases. MetroBank objected, contending that rents were not estate property under the terms of a Deed of Trust and Security Agreement and an Absolute Assignment of Rents. The Honorable Jeff Bohm held that: (1) the deed of trust and assignment were ambiguous under Texas law as to whether assignment of rents was intended to be absolute assignment or collateral assignment; (2) the deed of trust and assignment, taken together, created a collateral assignment, such that the debtor owned fee to rents and creditor held security interest therein; (3) the rents derived from the shopping center were estate property; and (4) the debtor's physical possession of rents made those rents estate property even if, under state law, the rents were absolutely assigned to the lender. Las Torres Development, L.L.C. (Bankr. S.D. Tex. Case No. 09- 33872) and La Placita Shopping Center, L.L.C. (Bankr. S.D. Tex. Case No. 09-33885) sought chapter 11 protection on June 1, 2009, are represented by Christopher Adams, Esq., at Okin Adams & Kilmer LLP, in Houston, and estimate their assets and debts are between $1 million and $10 million. LANDAMERICA FIN'L: Waterstone Has 8.06% Equity Stake ---------------------------------------------------- In separate regulatory filings with the Securities and Exchange Commission, these entities disclose the number of shares of LandAmerica Financial Group, Inc.'s common stock they may be deemed to beneficially own: LFG Stock Beneficially Equity Stake Entity Owned in LFG ------ ------------ ------------ Waterstone Asset 1,356,381 8.06% Management, LLC, Waterstone Market Neutral Master Fund, Ltd., Waterstone Capital Offshore Advisors, LP, Dimensional Fund 1,303,663 8.43% Advisors LP AQR Capital 498,295 3.3% Management, LLC Perry Corp. and 0 0% Richard C. Perry Advisory Research, Inc. 0 0% Waterstone Asset Management and Waterstone Capital Offshore Advisors may be deemed to be the beneficial owner of the securities by virtue of their role as general partners of the investment manager of the investment fund which owns the securities. Dimensional Fund, an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. Perry Corp. is also an investment adviser registered under Section 203 of the Investment Advisers Act of 1940. Mr. Perry is a control person of Perry Corp. AQR Capital and Advisory Research are investment Advisors in accordance with Section 240.13d-1(b)(1)(ii)(E) of the Securities Exchange Act of 1934. 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) LEHMAN BROTHERS: Alvarez & Marsal Bills $42MM for March-May Work ---------------------------------------------------------------- Alvarez & Marsal North America LLC filed its third quarterly compensation report for work performed in Lehman Brothers Holdings Inc.'s Chapter 11 cases for the period March 1 to May 31, 2009. The report showed that the firm received these amounts for payment of fees and reimbursement of expenses during the period: Compensation Period Professional Fees Expenses -------------------- ----------------- -------- 03/01/09 to 03/31/09 $18,290,516 $630,089 04/01/09 to 04/30/09 $18,078,638 $708,372 05/01/09 to 05/31/09 $15,858,826 $649,211 Lehman Brothers hired A&M's Bryan P. Marsal as its chief restructuring officer, as required under the terms of the $450,000,000 DIP Facility. Lehman Brothers tapped the services of Mr. Marsal and other employees of Alvarez & Marsal North America LLC, in New York, in connection with its restructuring. Meanwhile, in accordance with the fee protocol approved by the May 26, 2009 court order, the Fee Committee filed in the U.S. Bankruptcy Court for the Southern District of New York an initial report with respect to the panel's review of first interim fee applications of the professionals retained in the Debtors' cases. The report was unanimously approved by the Fee Committee members. A full-text copy of the Report is available without charge at http://bankrupt.com/misc/LehmanReportFeeCommittee.pdf About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for $2 dollars plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: FSA's Issues on JPMorgan Account Resolved ---------------------------------------------------------- Financial Security Assurance Inc. and Lehman Brothers Inc., as successor to Lehman Government Securities Inc., are parties to a Guaranty Agreement dated February 1, 1992, a Custody Agreement dated February 1, 1992, and certain agreements associated with the two agreements. On December 17, 2008, the Court entered a stipulation and order modifying the automatic stay to permit FSA to liquidate and apply proceeds of pledge securities relating to certain securities that were pledged to FSA by LBI to secure LBI's obligations under the Guaranty Agreement, the Custody Agreement and related documents. During the period beginning on the entry of the stipulation and ending on December 17, 2008, certain funds in the aggregate amount of $1,685,966 were received on account of certain distributions of principal of and interest on the Original Collateral and credited to an LBI account held by JP Morgan Chase Bank, N.A., which Chase then further credited to a suspense account maintained by Chase. FSA claims that it holds a continuing first priority perfected security interest in the Distributions, as proceeds of the Original Collateral and, consistent therewith, has filed its proof of claim in LBI's SIPA Liquidation Case. James Giddens, the Trustee for the SIPA Proceeding, claims that the Distributions were released from FSA's security interest by the terms of the Custody Agreement and that the Distributions are LBI's property free and clear of FSA's security interest. FSA and the Trustee have negotiated in good faith concerning the rights of the parties with respect to the Distributions credited to the Chase Account and wish to resolve the issues raised without the considerable expense and delay of adjudicating the matter. Accordingly, the parties agree that: (a) Provided that funds on deposit in the Chase Account equal or exceed the Distribution Amount, FSA is entitled to the Distributions in the amount of $1,100,000. (b) FSA and the SIPA Trustee jointly direct and authorize Chase to transfer to FSA funds from the Chase Account in the amount of the FSA Payment by wire transfer to an account with The Bank of New York. (c) Following the transfer of the FSA Payment, all Distributions, together with accrued interest, if any, remaining in the Chase Account will be the property of the Trustee, free and clear of any interest of FSA. FSA and the Trustee jointly direct and authorize Chase to transfer to the Trustee, immediately following the transfer of the FSA Payment, any and all funds remaining in the Chase Account to an account with Union Bank, N.A. (d) Provided that funds on deposit in the Chase Account equal or exceed the Distribution Amount, and upon receipt by each of FSA and the Trustee of the funds relating to the FSA Payment and the Trustee Payment transferred by Chase, FSA and the Trustee will be deemed to have waived and released any and all claims known or unknown, contingent, unliquidated or otherwise each might have against the other with respect to the Distributions, the Original Collateral, or arising under or otherwise relating to the Guaranty Agreement, the Custody Agreement and the related documents and agreements. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for $2 dollars plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: HK Lawmakers Question Minibonds Settlement ----------------------------------------------------------- Hong Kong legislators questioned whether the settlement entered into among the The Securities and Futures Commission (SFC), the Hong Kong Monetary Authority (HKMA) and 16 banks, including Bank of East Asia, Bank of China, Bank of Communications and Industrial, and Commercial Bank of China, returns enough money to around 30,000 people who bought $1.8 billion in failed Lehman Brothers-backed derivatives and whether it punishes the banks that sold them, the Associated Press reported. In a legislative hearing on August 3, 2009, Hong Kong lawmakers questioned why regulators didn't pressure the banks to return the principals in full, the report said. Several dozen investors, according to AP, chanted "100 percent compensation" outside the legislature building in Hong Kong's financial district before Securities and Futures Commission Chief Executive Martin Wheatley testified who said the commission doesn't have the legal power to order banks to return a certain amount and had to accept what the banks offered. "We have all along sought to reach an agreement that can see rapid return of a significant part of investors' capital, rather than a very complex and drawn-out set of procedures through the courts with no certainty as to the ultimate outcome," the AP cited Mr. Wheatley as saying. The Settlement The SFC, the HKMA and 16 distributing banks on July 22 jointly announced that they have reached an agreement in relation to the repurchase of Lehman Brothers Minibonds from eligible customers. The Banks have agreed with the SFC and the HKMA without admission of liability that: * each of the Banks will make an offer to repurchase from each eligible customer all outstanding Minibonds at a price equal to 60% of the nominal value of the original investment for customers below the age of 65 or at 70% of the nominal value for customers aged 65 or above as at 1 July 2009. Customers will be entitled to retain any coupon payments received to date; * once the underlying collateral is recovered and paid to the Banks, each of them will make a further payment of initially up to 10% (depending on recoveries) of the nominal value of the Minibonds to eligible customers below the age of 65 and, if recoveries exceed 70%, the Banks will pay the entire excess amount to eligible customers who have accepted the repurchase offer; * each Bank will make available an amount equivalent to the amount of commission income received by it as a distributor of the outstanding Minibonds to the trustee of the Minibonds to assist in the recovery of the underlying collateral for each outstanding series of Minibonds; * each of the Banks will immediately implement special enhanced complaints handling procedures to resolve, in a fair and reasonable manner, all complaints in relation to the sale and distribution of other structured products; and * to demonstrate their commitment in serving the investing public with the highest standards of conduct, each of the Banks: (i) will engage an independent reviewer, to be approved by the SFC and the HKMA, to review its systems and processes relating to the sale of structured products, to report to the SFC and the HKMA and will commit to the implementation of all recommendations by the independent reviewer; and (ii) will engage a qualified third party, as approved by the SFC and the HKMA, to review and enhance complaints handling procedures, and will commit to the implementation of all recommendations by such third party. People who have previously reached settlement with the Banks in relation to Minibonds will not qualify for the repurchase offer. However, the Banks have undertaken to the HKMA to make ex gratia payments to those customers that have already entered into settlements with the Banks and who would have been eligible to receive the repurchase offer where those customers have received settlement amounts less than they would have received under this agreement. The intention is to bring those customers in line with eligible customers under this agreement. In consideration of the agreement, the SFC will discontinue its investigations into the sale and distribution of Minibonds by the Banks. The HKMA has also informed the Banks that as the agreement contains detailed arrangements for the settlement of claims and the implementation of robust systems for selling unlisted structured products and dealing with related customer complaints in future, it is not its intention to take any enforcement action against the Banks in relation to Minibond cases that involve eligible customers who accept the offer. The SFC considers that this agreement meets the SFC's criteria for resolution under section 201 of the Securities and Futures Ordinance for the following reasons: * The repurchase scheme should ensure that eligible customers who accept the repurchase offer will, subject to the recovery and distribution of the underlying collateral, receive a total amount that is equal to or greater than what they would otherwise recover if they were simply paid the current market value of the collateral. * The agreement takes into account that the recoverable value of the collateral is not certain. Even if the recoverable value of the collateral is below the values estimated by experts engaged by the Hong Kong Association of Banks in late 2008, the proposal will still deliver a return for the eligible customers that is equal to or exceeds 60% of their investment (or 70% for customers aged 65 or above). * The agreement includes a commitment by the Banks, as noteholders, to take reasonable steps to expedite the return of the collateral. It is important that any claim on the collateral that might reduce its recoverable value is negotiated robustly. * The agreement represents an opportunity to resolve outstanding investigations involving 16 banks in a way that will bring benefits to nearly all holders of outstanding Minibonds. * The agreement includes special measures in which the Banks will investigate and resolve in a fair and reasonable manner all complaints involving the sale and distribution of other structured products. * The agreement also remediates the Banks' systems and processes to meet the highest standards that will provide enhanced protection to the investing public in the future and give the investing public an assurance that the parties are determined to ensure these events are not repeated. * The SFC and the HKMA believe that the repurchase offer by the Banks is a reasonable one and is in the public interest. "Strong markets, like Hong Kong's, need strong regulations. This agreement will provide substantial benefits for the vast majority of customers holding Minibonds that would not otherwise be received by them and, given the number of Banks and customers involved, the agreement is a watershed in the regulation of financial services in Hong Kong," said the SFC's Chief Executive Officer, Mr. Martin Wheatley. "Specifically, the agreement paves the way for customers who hold Minibonds to receive a substantial return of their capital. Secondly, the financial support of the Banks, using the commission income received in the sale of Minibonds, will expedite the return of the underlying collateral to Hong Kong Minibond holders. This aligns the interests of the Banks and customers holding Minibonds. Thirdly the agreement provides the framework for the Banks to develop higher standards of practice in the future and to resolve complaints in relation to other structured products. For these reasons, the SFC firmly believes it is an appropriate resolution of the Minibond issue with these banks," remarked Mr. Wheatley. Mr. Y K Choi, Deputy Chief Executive of the HKMA, said: "The HKMA welcomes and supports the repurchase scheme and considers it to be practical, reasonable and in the interests of the great majority of Minibond investors. The HKMA encourages eligible customers to consider the repurchase offer by the Banks." Dr The Hon Sir David Li Kwok Po, Chairman and Chief Executive of The Bank of East Asia, Ltd, said on behalf of the Banks: "The Banks are pleased to have reached this agreement with the SFC and the HKMA which we believe will benefit Hong Kong as an international financial centre. It evidences our joint effort to assist the Minibond investors in Hong Kong who have been impacted by the sudden collapse of the Lehman Brothers Group, and to reinforce public confidence in Hong Kong's banking, financial and regulatory systems. This agreement demonstrates our unwavering commitment to the good of Hong Kong and the welfare of our customers. We will continue to work with the SFC and the HKMA to maximise the confidence of our customers in Hong Kong's banks, and to ensure that the standards maintained by Hong Kong's banks will be in line with international best practice." The SFC acknowledges the substantial assistance of the HKMA in the investigation of these cases. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for $2 dollars plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: SONICblue Estate to Pay $1.3MM LBI Claim --------------------------------------------------------- Lehman Brothers Holdings Inc., James Giddens, as trustee for the liquidation proceedings of Lehman Brothers, Inc., and SONICblue Incorporated, Diamond Multimedia Systems, Inc., ReplayTV, Inc., and Sensory Science Incorporated, ask the Court to approve a stipulation providing that LBI will be entitled to receive distributions on account of its Scheduled Claim in SONICblue's bankruptcy cases. SONICblue scheduled "Lehman Brothers" as holding a non- contingent, undisputed, and liquidated claim in the SONICblue Bankruptcy Proceeding of $1,327,188. The stipulation further provides that LBI Trustee is authorized to execute any document and take any other action necessary to allow the SONICblue Plan Administrator to make distributions on the Allowed Lehman Brothers Claim in accordance with the terms of the stipulation. The stipulation is also filed in the liquidation proceedings of Lehman Brothers, Inc. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008, (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for $2 dollars plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: Stipulations on Return of Erroneous Transfers -------------------------------------------------------------- Lehman Brothers Holdings Inc. and JPMorgan Chase Bank, N.A., sought and obtained the Court's approval of a stipulation requiring LBHI to immediately return $1,385,000 to JPMorgan. The amount was erroneously wired to LBHI (UK) at Bank of America account number 6550161536. JPMorgan has informed LBHI that the Transfer was made in error and has asked for a return of the Misdirected Funds. Following receipt from JPM of information concerning the Transfer, and having conducted an internal review and investigation, LBHI has determined that the Misdirected Funds should be returned to JPM. Meanwhile, James Giddens, trustee for Lehman Brothers Inc., obtained the Court's approval of the stipulations he entered into with these parties concerning the return of funds erroneously transferred to LBI's bank accounts: Parties Amount ------- ----------- RCG Endeavour LLC $4,589,104 Florence Mildred Terry Ttee $110,000 Cadbury PLC GBP54,533 Paradise Enterprises Limited $130,000 Mr. Giddens is awaiting the Court's approval of the stipulation he entered into with James and Ann Marie Corner JTWROS to return $150,000. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for $2 dollars plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: To Assign Visteon Loan to Pentwater ---------------------------------------------------- Lehman Brothers Holdings, Inc., Lehman Commercial Paper, Inc., and their debtor affiliates, and Pentwater Capital Management, LP, dispute whether LCPI may seek to assume the trade of a $3 million term loan of borrower Visteon Corporation as a trade with Pentwater and whether the Visteon Trade is enforceable against Pentwater. Pentwater, informed LCPI that it wished to acquire the Visteon Debt from LCPI through a "total return swap" with Deutsche Bank AG, New York Branch. Consistent with industry practice, LCPI prepared a written LSTA Par/Near Par Trade Confirmation for signature by DB, in its capacity as purchaser. The Debtors submit that the effort by LCPI to accommodate Pentwater's TRS financing does not in any way release Pentwater from its obligations to LCPI with respect to the trade. LCPI believes that a binding oral agreement was reached with Pentwater with respect to the Visteon Trade and that the Visteon Trade is enforceable against Pentwater. Pentwater denies that it was ever obligated to purchase the Visteon Debt. To avoid protracted litigation over the dispute, Pentwater and the Debtors have agreed that LCPI may assume the Visteon Trade and that the Parties will settle the Visteon Trade at a reduced price. The Official Committee of Unsecured Creditors has consented to LCPI's assumption of the Visteon Trade and to settlement of the Visteon Trade at that price. The parties further agree that: (a) Subject to the terms of a letter agreement between LCPI and Pentwater, dated July 30, 2009, Pentwater is the counterparty to the Visteon Trade and the Visteon Trade is enforceable against Pentwater. (b) The Parties agree that the purchase rate by which the Parties will calculate the amount payable to LCPI upon settlement of the Visteon Trade will be reduced from the purchase rate set forth in the original Visteon Trade as set forth in the Letter Agreement. In addition, LCPI has agreed to increase the amount of Visteon Debt that will be sold to Pentwater under the Visteon Trade to $3,349,351. (c) Pentwater agrees to forego all further objection with regard to the Visteon Trade, with prejudice and without reservation of rights. (d) The Parties agree to use commercially reasonable efforts to settle the Visteon Trade, and further agree that the Visteon Trade will settle in accordance with the LSTA Standard Terms, including adjustments to pricing. (e) Pentwater and LCPI mutually waives all claims against each other relating to the Visteon Trade and the September 4th Trade and releases any other setoff, recoupment, or counterclaims relating to the Visteon Trades, with the exception of claims that may arise hereunder, under the Letter Agreement, or under the documents executed in connection with the closing of the Visteon Trade. (f) Pentwater will not be entitled to assert or take any action to exercise a right to set off any claim that it might have against LCPI or any of LCPI's affiliates against Pentwater's obligation to make payment to LCPI pursuant to the Visteon Trade. The Court has already approved a stipulation among Lehman Brothers Holdings Inc., R3 Capital Management LLC and BLT-39 LLC. The stipulation authorizes LBHI to terminate five trade confirmations with R3 and one trade confirmation with BLT-39. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for $2 dollars plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LENNY DYKSTRA: Creditor Wants Case Converted to Chapter 7 --------------------------------------------------------- Mike Fish at ESPN.com reports that Index Investors' lawyers have filed a motion in the U.S. Bankruptcy Court asking that Lenny Dykstra be replaced as trustee of the estate and the case be converted to Chapter 7 liquidation from Chapter 11 reorganization. A hearing on the motion is set for August 11, ESPN.com states. Index Investors made two separate loans totaling $770,000 in 2008 secured against the Thousand Oaks estate home Mr. Dykstra bought from Wayne Gretzky for $18.5 million in 2007. The loans, ESPN.com relates, entitle Index Investors to the second and third secured interest in the property. The report says that the first lien is held by JP Morgan Chase as security against a $12 million loan on the home. The property is his most valuable property asset, ESPN.com states. Index Investors, according to ESPN.com, claimed that Mr. Dykstra induced them into making the loans by offering financials that represented his net worth in excess of $58 million. Court documents say that Mr. Dykstra initially wanted the money to cover past-due attorney fees and to purchase an engine for his Gulfstream jet, which he said would then be sold and the proceeds used to cover the initial loan. Dykstra, according to court documents, never made a payment on either of the two loans. According to ESPN.com, Index Investors accused Mr. Dykstra of having "engaged in fraudulent and deceitful acts". ESPN.com says that Mr. Dykstra misrepresented in July 2008 that he had insured the home. ESPN.com states that attorneys for his creditors discovered that Mr. Dykstra had presented them a policy that had been canceled after he failed to pay the $7,800 premium. Citing Index Investors' attorneys, ESPN.com relates that Mr. Dykstra isn't qualified to manage the estate during bankruptcy. The lawyers described Mr. Dykstra as "an individual whose fortunes have soured, and whose abilities are suspect," and said that his "post-petition conduct mirrors his pre-petition conduct [which has resulted in numerous lawsuits being filed against him]," ESPN.com states. Westlake Village, California-based Lenny Dykstra is a former Major League Baseball All-Star. He was center fielder for the New York Mets and Philadelphia Phillies. He filed for Chapter 11 bankruptcy protection on July 7, 2009 (Bankr. C.D. Calif. Case No. 09-18409). M Jonathan Hayes, Esq., at the Law Office of M Jonathan Hayes in Northridge, California, assists the Debtor in his restructuring efforts. The Debtor listed up to $50,000 in assets and $10,000,001 to $50,000,000 in debts. LINN ENERGY: Asset Sale Deals Won't Affect Moody's 'B1' Rating -------------------------------------------------------------- Moody's commented that Linn Energy, LLC's announcement that it had signed two agreements to purchase assets in the Permian Basin located in West Texas for $118 million in cash would have no immediate impact on Linn's B1 corporate family rating or B3 (LGD 6; 91%) senior unsecured note rating. The transactions will expand Linn's operation base with only a small increase in its leverage metrics, which remain with the current rating range. The outlook is stable. The transaction is expected to close before October 1, 2009. Moody's last rating action for Linn dates from May 12, 2009, at which time Moody's assigned a B3 (LGD 6; 91%) rating to Linn's proposed senior unsecured notes and affirmed its existing B1 Corporate Family Rating, B1 Probability of Default Rating, and existing B3 (LGD 6; though the point estimate was changed from 92% to 91%) senior unsecured note ratings. The SGL-3 Speculative Grade Liquidity Rating was also affirmed. Linn Energy is a Houston, TX based independent energy company engaged in the development, production, acquisition, and exploitation of long life crude oil and natural gas properties in the United States. The company's reserves and production are located in California and Mid- Continent regions. LOWER BUCKS: Moody's Junks Rating on $27 Mil. Series 1992 Bonds --------------------------------------------------------------- Moody's Investors Service has downgraded to Caa3 from B3 the rating assigned to Lower Bucks Hospital's outstanding Series 1992 bonds ($27 million outstanding) issued by Langhorne Manor Higher Education and Health Authority. The rating downgrade is attributable to a very thin liquidity position, growing operating losses and material decline in volumes, and Moody's belief that the likelihood of payment default or bankruptcy filing is higher now than in past reviews. At this time Moody's are removing the rating from Watchlist; the rating outlook is negative. Legal Security: Gross Revenue pledge of LBH with a negative mortgage lien. 1.10 times maximum annual debt services rate covenant required in the 1992 Series Bond Loan and Security Agreement. Fully funded debt service reserve intact. Interest Rate Derivatives: None Challenges * Material decline in liquidity to $4.5 million or 14 days cash on hand as of May 31, 2009, down 45% since the end of FY 2008 when unrestricted cash stood at $8.2 million or 24 days cash on hand; no line of credit available to LBH * Continued escalation in losses with an operating deficit of $8.3 million (-8.0% deficit margin) through the first eleven months of FY 2009, nearly double the loss of $4.5 million (-3.6% deficit margin) in FY 2008; management is uncertain at this time if it will make its rate covenant * Continued decline in admissions, which are down 12.7% through May 31, 2009 compared to the prior year period, surgery cases are down 3.9% through the same period due to physician and hospital competition and an eight-day closure of the operating suites in January after a sprinkler malfunction * LBH is applying for "distressed status" designation by the Pension Benefit Guaranty Corporation because it is unable to make current pension payments, another indication of a very weak financial position * State fiscal pressures, which may reduce or eliminate any future state appropriations for indigent care to LBH ($1.25 million received in FY 2009, down from $4.3 million in FY 2008) Recent Developments/Results The downgrade to Caa3 follows the receipt of eleven-month (unaudited) fiscal year 2009 statements showing a continuation of large operating losses and a very thin unrestricted cash position. The downgrade is also based on Moody's belief that the likelihood of bankruptcy is higher than Moody's last review three months ago based on a very weak liquidity position, the seeking of "distressed status" designation by the Pension Benefit Guaranty Corporation by LBH, and Moody's belief that LBH's viable alternatives to restoring liquidity to meet debt service payments and operating needs are limited. LBH continues to face financial challenges. Cash has declined to a very thin $4.5 million or 14 days cash on hand as of May 31, 2009, down from $8.2 million or 24 days at the end of FY 2008. The hospital has no line of credit for working capital needs; at this time vendors are not on C.O.D. payments. LBH has frozen the pension plan and is seeking a "distressed status" designation by the Pension Benefit Guaranty Corporation because management has stated that the hospital cannot afford to make the required pension contributions. If received, the PBGC will take over the required pension funding. Management has strictly limited capital spending to equipment replacement and patient safety issues to preserve cash. LBH remains on time with debt payments with principal paid every July and interest paid semiannually. The debt service reserve fund is fully funded and management has stated its intention not to tap it. Operating losses are escalating with a loss of $8.3 million through the first eleven months of FY 2009, compared to $3.8 million loss through the comparable prior year period. Operating cash flow is currently negative. Management reports that the month of June showed positive operating income. With expense adjustments, the hospital expects to show positive cash flow on a monthly basis. Management is uncertain as to whether it will meet its rate covenant at this time (1.10 times maximum annual debt services as defined in the 1992 Series Bond Loan and Security Agreement). LBH received $1.25 million in state appropriations in FY 2009, down from $4.3 million in FY 2008. Through its board members, LBH has good political connections with the state, as evidenced by a history of securing such funding. Moody's caution that these funds are annually appropriated and there is no guarantee of future funding especially as the state is under severe fiscal pressure and is late in passing its budget. Management is anticipating another $4 million-$5 million will be received in FY 2010 and continues to cut expenses through FTE reductions and a hiring freeze. Volume declines are sizable and concerning. Through eleven months of FY 2009, admissions declined by 12.8% from the prior year comparable period due to consumer preference for other competing inpatient and ambulatory facilities. To date, attempts to find a capital partner have not been successful. The board of LBH has decided it will not close inpatient services which Moody's believe may be an impediment to finding a partner. Outlook The negative rating outlook reflects the deteriorating financial position of LBH and Moody's belief that if LBH files for bankruptcy a lower rating may be warranted based on the estimated recovery value of the bonds. What would change the rating -- UP A rating upgrade is highly unlikely in the short-term; over the longer-term, a rating upgrade would be considered if LBH makes and sustains substantial operating improvement, rebuilds cash and stems volume losses to demonstrate long-term viability What could change the rating -- DOWN * Payment default or bankruptcy filing Rated Debt (as of June 30, 2008): * Series 1992: $27 million outstanding The last rating action taken with respect to Lower Bucks Hospital's revenue bond rating was on March 26, 2009, at which time Moody's affirmed the B3 rating and negative outlook. LYONDELL CHEMICAL: Court Approves J. Gallogly Employment Pact ------------------------------------------------------------- Lyondell Chemical Co. and its affiliates obtained approval from Judge Robert Gerber of an employment agreement they entered into with James L. Gallogly, whereby Mr. Gallogly will serve (i) as manager and chief executive officer of the board of managers of Debtor LyondellBasell AFGP S.a.r.l., and (ii) as chief executive of Debtor Lyondell Chemical Company. LBI GP is a general partner of Debtor and parent LyondellBasell Industries AF S.C.A. Pursuant to the employment agreement between James L. Gallogly and the Debtors, Debtors' emergence from Chapter 11 and any transactions directly and indirectly related to the emergence, prior to or after the emergence, does not trigger the enhanced change in control payments, Judge Gerber said. George A. Davis, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates that Mr. Gallogly succeeds Volker Trautz who retired as chief executive officer of LBI. He discloses that the Supervisory Board was tasked with overseeing the selection process of a new CEO. After a multiple-stage screening process, including follow-up interviews, consulting with references and conducting thorough due diligence of the candidates, the Debtors determined that Mr. Gallogly was the most qualified of the Candidates to assume the roles of Manager and CEO of the Board of Managers of SARL and CEO of LCC, he notes. Mr. Davis notes that the Employment Agreement is to take effect as of May 14, 2009. If the Debtors' emergence has not occurred on or before December 31, 2011, the Employment Agreement will expire on December 31, 2011, unless Mr. Gallogly agrees to allow the Employment Agreement to continue in accordance with the initial term. Pursuant to the Employment Agreement, Mr. Gallogly will be paid in these terms: (a) a base salary of $1,500,000 per year; (b) a signing bonus of $2,500,000, payable within five days after the approval date; (c) an annual cash bonus based on the attainment of performance targets to be agreed in advance each year between Mr. Gallogly and the Board of Directors, which will range from $0 to 200% of Base Salary, depending on the level of achievement of the applicable performance criteria established. For 2009, the bonus will be 200% of the Base Salary earned from the Effective Date to the end of December 31, 2009 on a prorated basis; (d) entitlement to participate in an incentive plan with other members of Lyondell's senior management team, in an amount as may be determined by the Board of Directors, whereby 1.1% to 2.0% of Lyondell's Consolidated EBITDAR, during each of the first three years after emergence, or another amount as may be determined by the Board of Directors in consultation with Mr. Gallogly on an annual basis, will be allocated for senior management bonuses, to be paid out over time as established by the Board of Directors; (e) after Emergence, LBI will issue Mr. Gallogly restricted shares of its common stock valued at $25 million consistent with the valuation of LBI's common stock shares in a reorganization plan and confirmed by the Court and options to purchase an additional number of shares equal to 1% of the shares of Common Stock to be outstanding pursuant to the Reorganization Plan at the time of Emergence. The Emergence Restricted Stock will vest on the fifth anniversary of the Effective Date, provided that Mr. Gallogly remains employed by Lyondell through that date. The Emergence Options will vest and become exercisable on a schedule that is equivalent to five equal annual installments commencing on the first anniversary of the Effective Date, provided that Mr. Gallogly remains employed by Lyondell through each applicable vesting date. The exercise price of the Emergence Options will be equal to the value per share of the Common Stock in the Reorganization Plan and the Emergence Options will be exercisable for a period of seven years after the date of the grant, including if Mr. Gallogly's employment ends at or after the expiration of the Employment Agreement; and (f) entitlement to participate in or receive benefits under any pension plan, profit sharing plan, stock option plan, stock purchase plan or arrangement, health, disability and accident plan or any other employee benefit plan or arrangement made available now or in the future to senior executives of Lyondell Chemical. In addition, Mr. Gallogly will be entitled to perquisites and prompt reimbursement, for all reasonable expense related to his duties under the Employment Agreement. Mr. Gallogly's employment may be terminated under certain provisions of the Employment Agreement, a full-text copy of which is available for free at: http://bankrupt.com/misc/Lyondell_GalloglyEmploymentPact.pdf Mr. Davis stresses that the hiring of Mr. Gallogly was a critical step to prevent customer defections and promote confidence among the Debtors' suppliers. He maintains that appointment of Mr. Gallogly as CEO will help the Debtors move forward with their business plan and emerge successfully from Chapter 11 in a timely fashion through their use of Mr. Gallogly's extensive experience in the energy, chemicals and polymers industries. If the Debtors are without a permanent CEO for a prolonged period, the Debtors and their creditors would be harmed through a significant lack of leadership, he argues. About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. On January 6, 2009, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc. filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09- 10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately $8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a $6.5 billion term loan, which comprises a $3.25 billion in new loans and a $3.25 billion roll-up of existing loans; and a $1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009, in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MAMMOTH SAN JUAN: Sec. 341(a) Meeting Continued to August 19 ------------------------------------------------------------ Mammoth San Juan Capistrano I, LLC, gives notice that the meeting of creditors previously scheduled for August 7, 2009, at 2:00 p.m. has been continued to August 19, 2009, at 10:00 a.m. As reported in the TCR on July 30, 2009, the U.S. Trustee for Region 16 will convene a meeting of creditors in Mammoth San Juan Capistrano I LLC's Chapter 11 case on August 7, 2009, at 2:00 p.m. San Juan Capistrano, California-based Mammoth San Juan Capistrano I LLC operates a real estate business. The Company filed for Chapter 11 on July 8, 2009 (Bankr. C. D. Calif. Case No. 09-16836). Thomas Corcovelos, Esq., at Corcovelos Law Group represents the Debtor in its restructuring efforts. The Debtor listed between $10 million and $50 million each in assets and debts. MECACHROME INTERNATIONAL: Creditors Meeting to be Hld on August 26 ------------------------------------------------------------------ In a legal notice dated August 10, 2009, Ernst & Young Inc. and Samson Belair/Deloitte & Touche Inc., co-monitors appointed by the Superior Court of the Province on Quebec under the Companies' Creditors Arrangement Act, announces that further to the initial order dated December 12, 2008, issued by the Court, Mecachrome International Inc., Mecachrome Canada Inc., Mirabel-Mecachrome Inc., Mecachrome Montreal-Nord Inc. and Mecachrome Technologies Inc. have filed with the Court a plan of arrangement and compromise pursuant to the CCAA and Section 191 of the Canada Business Corporations Act. The stay period under the initial order has been extended from time to time by the Court until August 31, 2009. The observation period under the safeguard procedure in France has been extended by the French Court until December 12, 2009. The meeting of Affected Creditors will be held in the Salon Jolliet of Hotel Fairmont Le Reine Elizabeth, located at 900 Rene- Levesque West, Montreal, Quebec, Canada at 2:00 p.m., on August 26, 2009, for the purposes of: (i) considering and voting on the Plan as prepared by the Companies or as it will be changed or modified by them up to and during the meeting; and (ii) transacting such other business as may properly come before the Creditors' Meeting. To have the right to assist at the Creditors' Meeting and vote on the Plan, affected creditors must have submitted proofs of claim and proven their claims in the manner and within the time specified in the Claims Procedure Order, dated March 20, 2009, and in the Creditors' Meeting Order, dated August 4, 2009, that are available on the Web site http://www.ey.com/ca/mecachrome/ No other person will be entitled to attend or vote at the Creditors' Meeting. The Monitor sent to all Companies' affected creditors (except Noteholders of Mecachrome International Inc.), by regular mail, on August 6, 2009, the Meeting Materials including, a Notice to Creditors, a copy of the Plan, a Form of Proxy, Vote and Election Notice, including creditors instructions and a copy of the Creditors' Meeting Order, dated August 4, 2009. The Noteholders of Mecachrome International Inc. will be contacted directly by their brokers and/or nominees and they will have access to the Beneficial Noteholders' Meeting Materials via the following website http://www.ey.com/ca/mecachrome/ Affected Creditors who have not received their copy of these materials or who wish to obtain additional information or public documents concerning this affair may consult the website or contact the Monitor by telephone at (514) 879-3557 or by telecopier at (514) 395-4933. As reported in the TCR on December 15, 2008, Mecachrome International Inc. has obtained court protection under the Companies' Creditor Arrangement Act in Canada, and that its French subsidiaries have obtained similar protection under the safeguard procedure in France. These filings were made in the context of the Board's ongoing review of Mecachrome's strategic alternatives to improve Mecachrome's liquidity and financial position and reduce its financing costs. In addition, Mecachrome is in advanced discussions with potential lenders in order to conclude a secured debtor-in-possession financing to support it during the restructuring. "Our goal is to allow Mecachrome to continue to operate as a going concern for the benefit of all those affected, including our many loyal employees, customers and suppliers. We believe that the steps we are taking today, combined with the financing we are in the process of finalizing, will provide us with the ability to protect the value of the business for our stakeholders" said Mr. Christian Jacqmin, Mecachrome's president and CEO. Mr. Jacqmin added: "[Fri] ay's filings are the result of industry-wide challenges in our business segments, combined with Mecachrome's leverage and its inability to raise capital in the current market environment. The steps we initiated today will allow Mecachrome to make the necessary changes to ensure its longterm viability." While under CCAA protection, Mecachrome's Board of Directors maintains its usual role and its management remains responsible for the day-to-day operations of Mecachrome. Mecachrome has retained RBC Capital Markets to act as its financial advisor and Ernst & Young Inc. will serve as Court-appointed monitor during the CCAA process in order to assist Mecachrome throughout the restructuring. While under the CCAA protection, Mecachrome will continue its efforts to recapitalize. About Mecachrome International Headquartered in Quebec, Canada, Mecachrome International Inc. (TSX:MCH) -- http://www.mecachrome.com/-- designs, engineers, manufactures and assembles complex precision-engineered components for aircraft and automotive applications, including aerostructural and aircraft engine components, high-end automobile engine components and motor racing engines. The company currently operates principally in France and Canada. Mecachrome International Inc., et al filed for Chapter 15 with the U.S. Bankruptcy Court for the Central District of California in Los Angeles on June 5, 2009 (Case No. 09-24076). The Hon. Richard M. Neiter presides over the case. Daniel H. Slate, Esq., at Buchatler Nemer, reprepresents the Chapter 15 Debtors as counsel. In its petition, the Debtors listed between $100 million and $500 million in assets, and between $500 million and $1 billion in debts. MERIDIAN AUTOMOTIVE: Voluntary Chapter 7 Case Summary ----------------------------------------------------- Debtor: Meridian Automotive Systems, Inc. aka American Bumper & Mfg. Co. fka Meridian Automotive Systems, Inc. fka Meridian Automotive Systems (Delaware), Inc. 999 Republic Drive Allen Park, MI 48101 Bankruptcy Case No.: 09-12806 Debtor-affiliates filing separate Chapter 7 petitions: Entity Case No. ------ -------- Meridian Automotive Systems - Angola Operations 09-12807 Meridian Automotive Systems - Composites Operation 09-12808 Meridian Automotive Systems - Construction, Inc. 09-12809 Meridian Automotive Systems - Detroit Operations 09-12810 Meridian Automotive Systems - Grand Rapids Operation 09-12812 Meridian Automotive Systems - Heavy Truck Operation 09-12813 Meridian Automotive Systems - Mexico Operations 09-12814 Meridian Automotive Systems - Shreveport Operation 09-12816 Type of Business: Meridian supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. See http://www.meridianautosystems.com/ Chapter 11 Petition Date: August 7, 2009 Court: District of Delaware (Delaware) Judge: Mary F. Walrath Debtors' Counsel: John D. McLaughlin, Jr., Esq. Young, Conaway, Stargatt & Taylor LLP The Brandywine Bldg., 17th Floor 1000 West Street P.O. Box 391 Wilmington, DE 19899-0391 Tel: (302)-571-6600 Fax: (302) 576-3316 E-mail: bankfilings@ycst.com Debtors' Co-Counsel: Foley & Lardner LLP Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million A copy of Meridian's schedules of assets and liabilities and statement of financial affairs, filed simultaneous to its bankruptcy petition is available for free at: http://bankrupt.com/misc/MERIDIAN_SALS.pdf http://bankrupt.com/misc/MERIDIAN_SOFA.pdf Meridian's petition was signed by Richard E. Newsted, president and chief executive officer. FRONTIER AIRLINES: Southwest Submits Bid of More Than $170 Million ------------------------------------------------------------------ Southwest Airlines confirmed Monday that the carrier submitted its binding cash offer of more than $170 million to acquire Frontier Airlines, which will be sold at auction as part of Frontier's bankruptcy case. The bid was submitted to Frontier in accordance with the procedures established in the U.S. Bankruptcy Court for the Southern District of New York. Over the next week, Southwest will discuss its offer with the various interested parties. The auction is expected to commence on Thursday, Aug. 13. Once the auction is concluded, the bankruptcy court must still approve the selection of the winning bidder. From there, the bid will undergo review by the United States Department of Justice, which is normal and customary when one airline is purchasing another. Southwest said that, at this point, it is premature to release complete details of its offer, which may change during the auction process before a winning bid is approved by the bankruptcy court. The offer contemplates that Southwest acquire approximately 80 percent of Frontier's existing Airbus fleet, which translates into about 40 aircraft, plus all of Lynx. Initially, Frontier would operate its Airbus aircraft as it does today, with a planned retirement of the Airbus fleet and transition to Southwest's Boeing 737s over a period of approximately 24 months. Despite the initial reduction in the fleet, Southwest intends to maintain all existing markets, as well as add new nonstop routes from Denver that are not served by either Southwest or Frontier today. "We believe our bid ultimately should be seen as the strongest offer by all interested parties, including Frontier, its creditors, Employees, and Customers," said Gary Kelly, Southwest's Chairman of the Board, President, and CEO. "Southwest is a financially stable Company, and through this acquisition, will continue to provide Denver its historically low fares into the future. Frontier is up for sale. The bankruptcy process will lead to change at Frontier in any scenario. Given Southwest's history and track record of running a successful airline, we believe that our bid is the best option on the table for Frontier, Southwest, and the traveling public. A successful acquisition of Frontier Airlines by Southwest will expand a network of legendary low fares to additional cities, add jobs into Southwest through growth, and strengthen low-fare competitive pressure in Denver and other cities." Southwest submitted its initial indication of interest to acquire Frontier Airlines on July 30, 2009, which gave the carrier an opportunity to engage with Frontier in the due diligence required to determine the scope of a binding proposal. About Frontier Airlines Holdings Frontier Airlines Holdings, Inc. (Pink Sheets: FRNTQ) -- http://www.FrontierAirlines.com/-- is the parent company of Denver-based Frontier Airlines. Currently in its 15th year of operations, Frontier Airlines is the second-largest jet service carrier at Denver International Airport, employing approximately 5,000 aviation professionals. Frontier Airlines' mainline operation has 51 aircraft with one of the youngest Airbus fleets in North America. In conjunction with a fleet of 10 Bombardier Q400 aircraft operated by Lynx Aviation -- a subsidiary of Frontier Airlines Holdings, Inc. -- Frontier offers routes to more than 50 destinations in the U.S., Mexico and Costa Rica. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D.N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. The Debtors' exclusive period to file a plan of reorganization will expire on October 9, 2009. Their exclusive period to solicit and obtain acceptances of that plan will expire December 9, 2009. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Has Pact With Teamsters on Concessions --------------------------------------------------------- Frontier Airlines and Teamsters Local 961 have entered into a consensual, long-term labor agreement and a comprehensive settlement of the company's litigation under Section 1113 of the Bankruptcy Code. The agreement modifies the wage and benefit reductions Frontier obtained from its International Brotherhood of Teamster- represented employees under a Bankruptcy Court order last November. The new agreement's modified wage and benefit reductions are comparable to the consensual reductions Frontier has obtained from its other employee groups. The settlement, if ratified, also will resolve the ongoing appeals of last year's Bankruptcy Court order. The proposed agreement, which is endorsed and supported by Local 961 leadership, will be put before Frontier's maintenance employees for a ratification vote. The Local anticipates it will hold the ratification vote on the agreement and count ballots by Aug. 20. "Frontier and the IBT worked together to negotiate an agreement that takes into account the best interests of Frontier, the IBT and, most importantly, all of our maintenance employees," said Frontier President and CEO Sean Menke. "I applaud the IBT leadership for working with us to reach this agreement. It provides us with cost assurances and labor certainty as we proceed with the upcoming auction process and our anticipated emergence from bankruptcy." "The Teamsters Union and its members understand the importance to our members and to Frontier of this agreement," said Matthew Fazakas, President and Principal Officer of Teamsters Local 961. "On behalf of the IBT leadership, we fully endorse this agreement and will work to achieve ratification as promptly as possible." Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico. About Frontier Airlines Holdings Frontier Airlines Holdings, Inc. (Pink Sheets: FRNTQ) -- http://www.FrontierAirlines.com/-- is the parent company of Denver-based Frontier Airlines. Currently in its 15th year of operations, Frontier Airlines is the second-largest jet service carrier at Denver International Airport, employing approximately 5,000 aviation professionals. Frontier Airlines' mainline operation has 51 aircraft with one of the youngest Airbus fleets in North America. In conjunction with a fleet of 10 Bombardier Q400 aircraft operated by Lynx Aviation -- a subsidiary of Frontier Airlines Holdings, Inc. -- Frontier offers routes to more than 50 destinations in the U.S., Mexico and Costa Rica. Frontier Airlines and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008 (Bankr. S.D.N.Y. Case No. 08-11297 thru 08-11299). Benjamin S. Kaminetzky, Esq., and Hugh R. McCullough, Esq., at Davis Polk & Wardwell, represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. The Debtors' exclusive period to file a plan of reorganization will expire on October 9, 2009. Their exclusive period to solicit and obtain acceptances of that plan will expire December 9, 2009. Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Frontier Airlines Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MICHELLE SHEPHERD: Bankruptcy Auction on August 19 -------------------------------------------------- The Bankruptcy Auction concerning Michelle Shepherd of Ashe County, NC will be held at 209 Kemp Drive in West Jefferson, NC on Wednesday, August 19 at 11 a.m. Michelle Shepherd pleaded guilty to 16 felony counts of embezzlement and 11 counts of obtaining property by false pretense. She was sentenced to 15 to 20 years in the NC Department of Corrections. Shepherd's case is the largest proven embezzlement and fraud case in the history of the state of NC by a single lawyer. The items up for auction include a Jerry Bickel Drag Racing Car, Car Hauler, Tractor, Lexus SUV, Camper, Tools and much more. The auction marketing firm of Iron Horse Auction Company, Inc. has been ordered by the US Bankruptcy Court to conduct their auction. Bill Lilly of Iron Horse Auction Company, Inc. states, "The assets in this case are of the best quality and in excellent condition. We are very pleased to be able to assist the courts on this important matter." The auction will be broadcast live over the Internet in addition to the live auction being conducted on site. Photos and a complete listing are available at http://www.ironhorseauction.com/ For additional information, call (910) 997-2248. Interview contact: Bill Lilly bill@ironhorseauction.com http://www.ironhorseauction.com/ Office: (910) 997-2248 MICROMET INC: Posts $13.9 Million Net Loss for June 30 Quarter -------------------------------------------------------------- Micromet Inc. posted a net loss of $13.9 million for the three months ended June 30, 2009, from a net loss of $8.62 million for the same period a year ago. For the six months ended June 30, 2009, Micromet posted a net loss of $14.2 million from a net loss of $14.4 million for the same period a year ago. As of June 30, 2009, the Company had $69.8 million in total assets; and $30.5 million in total current liabilities, $7.31 million in deferred revenue, and $2.05 million in other non- current liabilities; and $29.9 million stockholders' equity. The Company had $212.4 million in accumulated deficit as of June 30, 2009. On August 4, after the completion of the second quarter, Micromet closed a public offering of its common stock with gross proceeds of $80.5 million, which included the full exercise of the underwriters' over-allotment option. The net proceeds from this offering, after underwriting discount and offering expenses payable by Micromet, were approximately $75.0 million. The net proceeds of the offering, together with Micromet's existing cash, cash equivalents and short-term investments, are expected to fund operations for at least two years. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?415f About Micromet Inc. Micromet Inc. (Nasdaq: MITI) -- http://www.micromet-inc.com/-- is a biopharmaceutical company developing novel, proprietary antibodies for the treatment of cancer, inflammation and autoimmune diseases. Four of its antibodies are currently in clinical trials, while the remainder of the product pipeline is in preclinical development. Going Concern Doubt In its annual report on Form 10-K for the year ended December 31, 2008, Micromet said that as of December 31, it had an accumulated deficit of $198,200,000, and it expects to continue to incur substantial, and possibly increasing, operating losses for the next several years. "The conditions create substantial doubt about our ability to continue as a going concern," the Company said. However, Ernst & Young LLP, in McLean, Virginia, the Company's independent accountants, did not include a going concern language in its March 16, 2009 audit report. NII HOLDINGS: Moody's Assigns Corporate Family Rating at 'B2' ------------------------------------------------------------- Moody's Investors Service assigned first time ratings to NII Holdings, Inc., including a B2 corporate family rating, B2 probability of default rating, and SGL-1 liquidity rating indicating good liquidity. Additionally, Moody's rated B1 (LGD3, 39%) the company's anticipated $500 million senior unsecured note offering expected to be issued through NII Capital Corp, a subsidiary of NII, and to be used for general corporate purposes including expansion of the company's wireless network. The outlook is stable. NII's B2 corporate family rating reflects the company's relatively strong operating performance in recent years, moderately leveraged capital structure (approximately 2.9x Moody's adjusted and pro forma for the new issuance as of the LTM period ended Q2'09) and a liquidity profile that offers the company financial flexibility to pursue strategic objectives despite the challenging macroeconomic environment. However, the B2 rating also reflects NII's small size and market position across its operating regions, the presence of substantially larger, better funded competitors capable of disrupting NII's niche market positions, and ongoing technology risk associated with the company's dependence on Motorola Inc.'s integrated Digital Enhanced Network technology. Moody's believes the current macroeconomic environment will likely prove to be a particularly important test of the quality of the NII brand and the importance its subscribers place on access to Push-to-Talk services. Moody's notes that NII's post-pay plans are typically more expensive than those found in the pre-pay market (ARPU levels exceed $50 on average) and are likely to face significant downward pricing pressure should regional economies perform worse than anticipated. These ratings were assigned: NII Holdings Inc. * Corporate family rating: B2 * Probability of default rating: B2 * Speculative grade liquidity rating: SGL-1 NII Capital Corp * $500 million (proposed) senior note offering due 7years, B1 (LGD3, 39%) The individual debt instrument rating was determined using Moody's Loss Given Default Methodology and reflects the expected size and positioning of the issuance within NII's capital structure. This is the first time that Moody's has rated NII. NII's credit metrics and liquidity position are consistent with higher rated Telecom peers; however Moody's believes these metrics are intermediate in nature. The company is close to completing network expansion activities in its core markets but will likely opportunistically pursue spectrum acquisitions to develop new services and expand into new regions in an attempt to capitalize on the healthy growth opportunities in the region. In addition, Moody's is concerned that the company may reengage shareholder- friendly financial policies should growth prospects diminish. The stable outlook is based on Moody's expectation that NII will continue to face ongoing macroeconomic pressure but will manage through the downturn supported by its financial resources and the relatively favorable characteristics of the company's operating regions. With headquarters in Reston, Virginia, NII is an international wireless operator with subscribers in Mexico, Brazil, Argentina, Peru, and Chile. NII had approximately 6.7 million largely post- pay, business subscribers in those four countries and generated $4.2 billion in revenue for the LTM period ended Q2'09. NII HOLDINGS: S&P Assigns Corporate Credit Rating at 'B+' --------------------------------------------------------- Standard & Poor's Rating Services said it assigned its 'B+' corporate credit rating to Reston, Virginia-based wireless carrier NII Holdings Inc. S&P expects total debt outstanding to be about $2.8 billion. The outlook is stable. Additionally, S&P assigned a 'BB-' issue-level rating to intermediate holding company NII Capital Corp.'s proposed $500 million senior notes due 2016, one notch above the corporate credit rating on NII. The recovery rating is '2', indicating expectations for substantial (70-90%) recovery in the event of payment default. Although numerically S&P's analysis indicates recovery in the 90%-100% range, S&P has capped the recovery rating at '2' based on S&P's assessment of the "creditor-friendliness" of the insolvency regimes for countries in which the company conducts its operations. The notes are being issued under rule 144A with registration rights and proceeds will be used for general corporate purposes, including the funding of expansion projects in Latin America and potential spectrum acquisitions. S&P also assigned a 'B+' issue-level rating to NII's $1.2 billion senior unsecured convertible notes due 2012 and $350 million senior unsecured convertible notes due 2025. The recovery rating is '4' for both issues, indicating expectations for average (30%- 50%) recovery in the event of payment default. "The ratings reflect competitive wireless industry conditions, and exposure to sovereign, regulatory, and foreign exchange risks, which could hurt financial performance," said Standard & Poor's credit analyst Allyn Arden. They also reflect technology risk associated with the company's dependence on Motorola Inc.'s (BB+/Stable/--) unique integrated digital enhanced network as well as expectations for negative net free cash flow over the next year because of aggressive expansion plans. Tempering factors include NII's niche business focused on high average revenue per user and low churn corporate customers, some geographic diversity, adequate liquidity, and moderate leverage. NORTEL NETWORKS: CEO Zafirovski Steps Down Following Assets Sale ---------------------------------------------------------------- Nortel Networks Corporation (NNC) [OTC: NRTLQ] on August 10 announced a number of leadership changes and a new organizational structure designed to work towards the completion of the sales of the company's businesses and other restructuring activities with a continued focus on maximizing value while preserving Nortel's innovative technology platforms and employment to the greatest extent possible. "Since filing for creditor protection, the company has been successfully stabilizing its businesses and maintaining customer commitments and innovation platforms. Results for the second quarter demonstrate solid financial performance over the first quarter, while customer metrics remain strong," said Nortel President and CEO Mike Zafirovski. Mr. Zafirovski continued, "We have taken many steps. We have completed the organizational moves of Nortel's businesses to vertically integrated, standalone business units, and on June 19th, we announced that we would work to maximize value through the sale of these businesses. We have sales agreements with Ericsson for US$1.13 billion regarding the CDMA/LTE Access business, including preserving 80% of the jobs associated with that business. We also have a stalking horse agreement for the sale of our Enterprise Solutions business and we are in active discussions for our other businesses. The direction has been set and we are now at a natural transition point as we continue to service customers, maximize value through sales and continue restructuring activities." "The Board of Directors has reviewed the status of the sales process for the businesses and the go-forward plans for the transition and corporate services groups . . . and are confident these are the right plans at the right time with the right leaders going forward." Executive Leadership and Board of Directors For the reasons highlighted, the Nortel Board of Directors and President and CEO Mike Zafirovski believe the company has reached a natural transition point. Effective August 10, President and CEO Mike Zafirovski will step down. The Boards of Directors of NNC and Nortel Networks Limited also will be reduced from nine to three members: John A. MacNaughton, Jalynn H. Bennett and David Richardson, with Mr. Richardson serving as Chairperson. These individuals will also serve as members of NNC's and NNL's audit committees. "We've reached a logical departure point," said Harry Pearce, Chairman of Nortel's Board of Directors. "Mike made a commitment to see the process through the stabilization of the company, sale of its largest assets and the right plans and people to continue operating our business and serving customers. He has done so. I appreciate the commitment and passion he brought to this company since day one, including his guidance through the extremely difficult decisions we faced since filing for creditor protection. I also wish to recognize the enormous commitment and dedication of the departing members of the Board who really believed in and worked hard for Nortel." "Mike came to Nortel to transform this company. He made great progress on many fronts including addressing significant accounting and related legal issues; improving the quality of Nortel products and the company's cost structure. His ambitious vision helped shift the economic center of the company from legacy to growth investments. It was unfortunate the transformation was derailed by a deteriorating economic climate and the company's legacy cost structure. The operating improvements and strategic investments made during his tenure significantly contributed to the fact that Nortel's businesses are so attractive to potential buyers today," added Mr. Pearce. "Although the past several months have been challenging, Mike has been a tireless champion for Nortel, its customers and partners. His belief in Nortel people and technology was always paramount. He always strove to do what was best for the company and its stakeholders, and Nortel's high customer service levels are strong proof of that. As a substantial creditor and Nortel's largest supplier, I appreciate his efforts," said Mike McNamara, CEO of Flextronics which entity is chair of Nortel's Official Committee of Unsecured Creditors. Mr. Zafirovski commented, "I am extremely proud to have been associated with this company. The Board members and I came to Nortel because we really believed in the value of Nortel's people and technology. Although solid progress was made in many areas, at the end, the capital structure and legacy costs coupled with the economic downturn proved too difficult to surmount. I have tremendous respect for the Board of this company and the process we went through to initially transform the company, and since filing, to work to maximize the value of our businesses while preserving employment and customer commitments to the greatest extent possible. The value created through Nortel innovation is now clearly visible in the active interest for its businesses and intellectual property. Maximizing the value through the sale of Nortel's businesses is the best outcome for creditors, customers and employees. Mr. Zafirovski continued: "Most importantly, I really want to thank our dedicated employees for their commitment and professionalism throughout a very challenging time. I will miss them and I am proud to have been associated with them and to know that so many of them will carry on their innovative work under new banners." Proposed Enhanced Role of Monitor and U.S. Principal Officer In connection with the announcements, the Company will be seeking Canadian court approval for Ernst & Young Inc., the company's Monitor, to take on an enhanced role with respect to the oversight of the business, sales processes and other restructuring activities under the Companies' Creditors Arrangement Act (CCAA) proceedings. Further, the Company is in the process of identifying a principal officer for the Nortel companies in U.S. Chapter 11 proceedings who will work in conjunction with the U.S. Creditors' Committee (UCC), ad hoc bondholders group, and the Monitor, which appointment will be subject to U.S. court approval. New Organizational Structure Concurrent with the announcement, Nortel is establishing a streamlined structure that will enable the company to effectively continue to serve its customers, and also facilitate the sales of its businesses and integration processes with acquiring companies as well as to continue with its restructuring activities. * The company's business units - Wireless Networks, Enterprise Solutions, Metro Ethernet Networks, Carrier VoIP and Application Solutions and the LG-Nortel joint venture - will report to the Chief Restructuring Officer, Pavi Binning. * The company's mergers and acquisitions teams will continue their work under the Chief Strategy Officer, George Riedel. * Nortel Business Services (NBS) will continue to serve the transitional operations needs of Nortel businesses as they are sold to ensure customer and network service levels are maintained throughout the sale and integration processes. NBS will continue to be led by Joe Flanagan. * A core Corporate Group is being established that will be primarily responsible for the management of ongoing restructuring activities during the sales process as well as post business dispositions. This group will be lead by John Doolittle, formerly Nortel's Treasurer. * These leaders will report to the NNC and NNL Boards of Directors, the Monitor and the proposed U.S. principal officer. "There is still much work to be done. I believe we have the right team and the right structure in place to ensure continuity in our efforts to maximize the value of the businesses, while preserving Nortel's innovative technology platforms and employment to the greatest extent possible. I look forward to working with these experienced leaders to continue the important work remaining," said David Richardson, Chairman elect of the NNC and NNL Boards of Directors. "This is a new, but also highly critical phase for the company. From servicing existing customers to completing the sales process, we must effectively manage the remaining work so that we continue to see high service levels for customers while maximizing value for creditors and providing clarity for customers and employees," said Pavi Binning, Nortel Chief Restructuring Officer. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Posts 25% Revenue Drop, $274 Mil. Net Loss in Q2 ----------------------------------------------------------------- Nortel Networks Corporation [OTC: NRTLQ] on August 10 announced its results for the second quarter 2009. Results were prepared in accordance with United States generally accepted accounting principles (GAAP) in U.S. dollars. Commenting on the results of the second quarter of 2009, Nortel President and Chief Executive Officer Mike Zafirovski said, "While we continue to be impacted by the economic environment and the Creditor Protection Proceedings, we have successfully stabilized the business since filing for creditor protection. Despite these challenges, our revenue is up quarter over quarter by 14% overall while our corresponding operating costs are down 15% resulting in strong margins. At the same time, our customer service levels remain strong. These operating and customer results are a real tribute to the professionalism and dedication of the Nortel employees and the outstanding support from our customers, partners and suppliers for which I'm deeply appreciative." Mr. Zafirovski continued, "Throughout this process, we remain focused on serving our customers. We are pleased with the feedback we have received from our customers and we continue to remain focused on maintaining the high service/product performance levels that customers are accustomed to." 2009 Financial Summary Nortel's overall financial performance in the second quarter of 2009 continued to be impacted by ongoing negative economic conditions and the uncertainty created by the Company's Creditor Protection Proceedings, which resulted in a decrease in customers' spending levels. * Revenues in the second quarter of $1.972 billion, decreased by 25% year over year, with declines in all segments and regions and increased by 14% from the previous quarter * Gross margin of 38.2% in the quarter, a decrease of 4.9 percentage points from the year ago quarter, and an increase of 2.1 percentage points from the previous quarter, includes charges related to workforce and other cost reduction activities that historically would have been recorded in special charges. Excluding these charges, gross margin in the second quarter of 2009 would have been 40.4 percent. * Although costs have been significantly reduced across the Company, the revenue declines and gross margin pressure resulted in Management Operating Margin (a) in the second quarter of $16 million or 0.8 percent, a decrease of $98 million or 3.5 percentage points year over year and an increase of $260 million from the previous quarter, resulting from revenue declines and gross margin pressure, partially offset by lower operating expenses. Excluding $101 million related to workforce and other cost reduction activities that historically would have been recorded in special charges, management operating margin for the second quarter of 2009 would have been 5.9% (b) of revenues. * Cash balance at June 30, 2009, of $2.56 billion, compared to $2.48 billion at March 31, 2009 Revenues Revenues were $1.972 billion for the second quarter of 2009 compared to $2.622 billion for the second quarter of 2008, reflecting a reduction of 25% due to declines across all business segments. The reduction was primarily a result of the continuing economic downturn and the uncertainty created by the Creditor Protection Proceedings. Revenues B/(W) Q2 2009 YoY QoQ ------- --- --- Carrier Networks $920 (20%) 25% Enterprise Solutions $465 (28%) 18% Metro Ethernet Networks $333 (27%) (8%) LGN $199 (37%) 6% Other $55 (8%) 4% ---- ---- --- Total $1,972 (25%) 14% CN revenues in the second quarter of 2009 were $920 million, a decrease of 20% compared with the year ago quarter with declines in the GSM and UMTS solutions and Circuit packet voice solutions businesses, while the CDMA solutions business was essentially flat. The wireless segment benefited in the second quarter from the network expansion of a certain customer, however, in addition to the factors above, was negatively impacted by a reduction in spending by certain customers as a result of their change in technology migration plans. ES revenues in the second quarter of 2009 were $465 million, a decrease of 28% compared with the year ago quarter as a result of the factors noted, namely decreased customer spending due to the economic conditions and the uncertainty created from the Company's Creditor Protection Proceedings. ES had strong growth sequentially due to increased spending by customers compared to the first quarter of 2009 when delays in spending were experienced and an increase in the recognition of deferred revenues in the second quarter of 2009. MEN revenues in the second quarter of 2009 were $333 million, a decrease of 27% compared with the year ago quarter with impacts across all businesses. In addition to the factors above, revenues from certain customers in the second quarter of 2008 that did not repeat to the same extent in the second quarter of 2009 also impacted the year over year decline. LGN revenues in the second quarter of 2009 were $199 million, a decrease of 37% compared with the year ago quarter. In addition, a majority of the decline was in LGN Carrier, primarily due to the recognition of certain deferred revenues in the second quarter of 2008 not repeated in the second quarter of 2009 and high sales volumes related to the Company's 3G wireless products in the second quarter of 2008 not repeated to the same extent in the second quarter of 2009, as well as a significant foreign exchange impact due to the devaluation of the Korean WON against the US dollar. The decrease was partially offset by the completion of network expansions related to certain customers in the second quarter of 2009. Deferred Revenues Deferred revenues balances decreased by $205 million during the second quarter of 2009 compared to a decrease of $314 million in the second quarter of 2008. Gross Margin Gross margin was 38.2% of revenues in the second quarter of 2009. Excluding charges related to workforce and other cost reduction activities that historically would have been recorded in special charges, gross margin in the second quarter of 2009 would have been 40.4% of revenues. This compared to gross margin of 43.1% for the second quarter of 2008. Compared to the second quarter of 2008, in addition to the items already noted, gross margin declined primarily as a result of the unfavorable impact of foreign exchange fluctuations and the unfavorable impacts of product mix and price erosion, partially offset by a decrease in warranty costs. Operating Expenses B/(W) Q2 2009 YoY QoQ ------- --- --- SG&A $437 24% 17% R&D $301 32% 12% ---- --- --- Total Operating Expenses $738 27% 15% A focus on reducing costs resulted in lower operating expenses compared to the year ago quarter. Operating expenses were $738 million in the second quarter of 2009. This compares to operating expenses of $1.016 billion for the second quarter of 2008 and $869 for the first quarter of 2009. SG&A expenses were $437 million in the second quarter of 2009, compared to $575 million for the second quarter of 2008. Excluding charges related to workforce and other cost reduction activities that historically would have been recorded in special charges, SG&A expenses for the second quarter of 2009 would have been $393 million. Compared to the second quarter of 2008, in addition to the items already noted, SG&A was favorably impacted primarily by headcount reductions and lower spending levels across all categories including a reduction in sales and marketing investment in maturing technologies. R&D expenses were $301 million in the second quarter of 2009, compared to $441 million for the second quarter of 2008. Excluding charges related to workforce and other cost reduction activities that historically would have been recorded in special charges, R&D expenses for the second quarter of 2009 would have been $286 million. Compared to the second quarter of 2008, in addition to the items already noted, R&D was favorably impacted primarily by headcount reductions and the cancellation of certain R&D programs. Management Operating Margin Management operating margin was 0.8% of revenues in the second quarter of 2009 compared to 4.3% for the second quarter of 2008, a decrease of 354 basis points. The decline was due to lower gross margin and a decline in revenues that outpaced reductions in operating expenses. Excluding $101 million related to workforce and other cost reduction activities that historically would have been recorded in special charges, management operating margin for the second quarter of 2009 would have been 5.9% of revenues. Net Loss The Company reported a net loss in the second quarter of 2009 of $274 million, or $0.55 per common share on a basic and diluted basis, compared to net loss of $113 million, or $0.23 per common share on a basic and diluted basis, in the second quarter of 2008. The net loss in the second quarter of 2009 of $274 million included reorganization costs of $130 million related to the Creditor Protection Proceedings and the application of American Institute of Certified Public Accountants Statement of Position (SOP) No. 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code", Other expense - net of $14 million, comprised in part of a currency exchange loss of $8 million, interest expense of $74 million, $62 million in income tax expense and an expense of $11 million for earnings attributable to non- controlling interests (formerly minority interests). The net loss in the second quarter of 2008 of $113 million included interest expense of $76 million, special charges of $67 million for headcount and other cost reduction activities, $61 million in income tax expense, an expense of $55 million for earnings attributable to non-controlling interests (formerly minority interests) and Other income- net of $3 million, comprised primarily of a gain of $34 million due to changes in foreign exchange rates partially offset by a loss of $21 million from mark-to-market gains on interest rate swaps. Cash Cash balance at the end of the second quarter of 2009 was $2.56 billion, up from $2.48 billion at the end of the first quarter of 2009. The increase in cash was primarily due to cash from investing activities of $75 million, mainly due to proceeds from the sale of the Calgary facility, and the net favorable foreign exchange impacts of $109 million, partially offset by cash used in operating activities of $59 million and cash used in financing activities of $42 million. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Has Protocol for Prompt Payment to Ex-Employees ---------------------------------------------------------------- Nortel Networks Corporation and its four Canadian affiliates sought and obtained permission from the Ontario Superior Court of Justice to implement a mechanism for making immediate payment of claims of cash-strapped ex-employees. NNC made the move to help former employees who are in financial hardship due to illness and ineligibility for pension or employment insurance benefits. "These employees have or likely have claims against the [companies]. However, distributions under any plan of compromise or arrangement will not occur for some indefinite time, and therefore such distributions will not alleviate the financial hardship being experienced by these former employees, at least not in the near future," NNC Treasurer John Doolittle said in court papers. The maximum amount being made available for payments to employees is $750,000. Payments made are considered advances against future distributions based on the claims of the employees. A copy of the summary of eligibility requirements and procedures for payment applications is available for free at: http://bankrupt.com/misc/NortelPaymentApplication.pdf About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Interim Supplier Pacts Extended to Sept. 9 ----------------------------------------------------------- Nortel Networks Corporation and four of its Canadian affiliates sought and obtained approval from Ontario Superior Court of Justice to extend the terms of their group supplier protocol agreement through September 9, 2009. The GSPA dated January 14, 2009, were signed by NNC and the administrator of its units in Europe, Middle East and Africa so that they could continue their intercompany trade while they are hammering out a long-term group supplier protocol agreement. Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Nortel Networks (CALA) Inc. filed for Chapter 11 on July 14, 2009 (Bankr. D. Del. Case No. 09-12515). Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Proposes $1.3 Million Settlement With Synnex ------------------------------------------------------------- Nortel Networks Inc. and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a claims settlement they entered into with Synnex Corporation. Under the deal, Synnex is required to pay $1,340,519, to NNI within five days after Synnex receives a copy of the Court order approving the Settlement. The parties also agree to exchange mutual releases of all claims and causes of action. NNI's claim stemmed from the January 28, 2003 Stocking Distributor Agreement it inked with Synnex, whereby Synnex was obliged to purchase products from Nortel, stock those products in inventory and distribute those products to qualified or certified value-added resellers. The Contract expired on December 31, 2008. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NPS PHARMACEUTICALS: Inks Equity Line of Credit Pact with Azimuth ----------------------------------------------------------------- NPS Pharmaceuticals, Inc., on August 5, 2009, entered into an equity line of credit arrangement with Azimuth Opportunity Ltd. The terms of the arrangement are set forth in a Common Stock Purchase Agreement entered into by the Company and Azimuth which provides that, upon the terms and subject to the conditions set forth therein, Azimuth is committed to purchase up to $40,000,000 of NPS common stock over the 18-month term of the Purchase Agreement, subject to an aggregate limit on the NPS common stock sold of 9,511,760 shares, which represents one share less than 20% of the issued and outstanding shares of NPS common stock as of August 5, 2009. From time to time during the term of the Purchase Agreement, and at the Company's sole discretion, NPS may present Azimuth with draw down notices that require Azimuth to purchase NPS common stock over 10 consecutive trading days or such other period mutually agreed upon by the Company and Azimuth. Each draw down is subject to limitations based on the price of NPS common stock and Azimuth can not be required to purchase an amount of NPS common stock in any single draw down that exceeds 2.5% of NPS's market capitalization at the time of such drawdown or more than $7,250,000 in value, excluding shares under any call option. The Company is able to present Azimuth with up to 24 draw down notices during the term of the Purchase Agreement, with a minimum of five trading days required between each draw down period. Only one draw down is allowed in each draw down pricing period, unless otherwise mutually agreed upon by the Company and Azimuth. Once presented with a draw down notice, Azimuth is required to purchase a pro rata portion of the dollar amount of shares specified in the notice for each trading day during the pricing period on which the daily volume weighted average price for NPS common stock exceeds the threshold price specified by NPS in its draw down notice. The per share purchase price for the shares sold on any particular trading day during the pricing period will equal the daily volume weighted average share price of NPS common stock for that day, less a discount ranging from approximately 3.25% to 5.0%. The amount of the discount varies based on the threshold price specified by NPS in its draw down notice. If the daily volume weighted average price of NPS common stock falls below the threshold price on any trading day during a draw down period, the Purchase Agreement provides that Azimuth will not be required to purchase the pro-rata portion of shares of NPS common stock allocated to that day. However, at its election, Azimuth may buy the pro-rata portion of shares allocated to that day at the threshold price less the discount. The total number of shares sold to Azimuth pursuant to each draw down notice will equal the sum of the number of shares required and/or elected to be purchased on each day of the pricing period. The Purchase Agreement also provides that from time to time and at its sole discretion NPS may grant Azimuth the right to exercise one or more options to purchase additional shares of NPS common stock up to an aggregate amount specified by NPS during each draw down pricing period. Upon Azimuth's exercise of the option, the Company would sell to Azimuth the shares of NPS common stock subject to the option at a price equal to the greater of the daily volume weighted average price of NPS common stock on the day Azimuth notifies the Company of its election to exercise its option or the threshold price for the option determined by the Company, less a discount calculated in the same manner as for the fixed amount of the draw down notices. The issuance of any shares of common stock to Azimuth pursuant to the Purchase Agreement is registered for offer and sale on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended by the Company's Registration Statement on Form S-3 (File No. 333-159321). The Registration Statement will also cover the sale of those shares from time to time by Azimuth to the public. Azimuth is an "underwriter" within the meaning of Section 2(a)(11) of the Securities Act. Azimuth has informed NPS that it will use an unaffiliated broker- dealer to effectuate all sales, if any, of NPS common stock that it may purchase pursuant to the Purchase Agreement. Azimuth is responsible for the payment of all fees and commissions paid to such broker-dealer. Azimuth also will pay all other expenses associated with the sale by it or by such unaffiliated broker- dealer of the NPS common stock it acquires pursuant to the Purchase Agreement. Azimuth has agreed that during the term and for a period of 90 days after the termination of the Purchase Agreement, neither Azimuth nor any of its affiliates will, directly or indirectly, sell any of the Company's securities except for the shares that it owns or has the right to purchase pursuant to the provisions of a draw down notice. Azimuth has agreed that during the period described neither it nor any of its affiliates will enter into a short position with respect to shares of NPS common stock except that Azimuth may sell shares that it is obligated to purchase under a pending draw down notice but has not yet taken possession of so long as Azimuth covers any such sales with the shares purchased pursuant to such draw down notice. Azimuth has further agreed that during the period described above it will not grant any option to purchase or acquire any right to dispose or otherwise dispose for value of any shares of NPS common stock or any securities convertible into, or exchangeable for, or warrants to purchase, any shares of NPS common stock, or enter into any swap, hedge or other agreement that transfers, in whole or in part, the economic risk of ownership of NPS common stock, except for the sales permitted by the prior two sentences. The Company has agreed to indemnify and hold harmless Azimuth, any unaffiliated broker-dealer and each person who controls Azimuth or any unaffiliated broker-dealer against certain liabilities, including certain liabilities under the Securities Act. The Company has agreed to pay up to an aggregate of $35,000 of Azimuth's reasonable attorneys' fees and expenses -- exclusive of disbursements and out-of-pocket expenses -- incurred in connection with the preparation, negotiation, execution and delivery of the Purchase Agreement, legal due diligence of the Company and other legal transaction fees. The Company has also agreed to pay up to $12,500 of any legal fees and expenses incurred by Azimuth in connection with ongoing due diligence of the Company for any calendar quarter during the term of the Purchase Agreement in which Azimuth does not purchase NPS common stock. In addition, the Company has agreed that if it issues a draw down notice and fails to deliver the shares to Azimuth on the applicable settlement date, and such failure continues for ten trading days, it will pay Azimuth liquidated damages in cash or restricted shares of NPS common stock, at the option of Azimuth. Azimuth has agreed to indemnify and hold harmless NPS and each of its directors, officers and persons who control NPS against certain liabilities, including certain liabilities under the Securities Act that may be based upon written information furnished by Azimuth to the Company for inclusion in a prospectus or prospectus supplement related to this transaction. Upon each sale of NPS common stock to Azimuth under the Purchase Agreement, the Company has also agreed to pay Reedland Capital Partners, an Institutional Division of Financial West Group, member FINRA/SIPC, a placement fee equal to 0.75% of the aggregate dollar amount paid to us for common stock purchased by Azimuth. NPS has also agreed to indemnify and hold harmless Reedland against certain liabilities under the Securities Act. A full-text copy of the Common Stock Purchase Agreement between NPS Pharmaceuticals and Azimuth Opportunity, dated August 5 2009, is available at no charge at http://ResearchArchives.com/t/s?415a About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing specialty therapeutics company for gastrointestinal and endocrine disorders with high unmet medical need. The Company is currently advancing two late-stage programs. Teduglutide, a proprietary analog of GLP-2, is in Phase 3 clinical development for intestinal failure associated with short bowel syndrome as GATTEX(TM) and in preclinical development for gastrointestinal mucositis and necrotizing enterocolitis. As of June 30, 2009, the Company had $144.9 million in total assets; and $364.7 million in total liabilities, resulting in $219.8 million in stockholders' deficit. NPS PHARMACEUTICALS: Posts $2.6 Million Net Income in Q2 2009 ------------------------------------------------------------- NPS Pharmaceuticals, Inc., reported net income of $2.6 million, or $0.05 per diluted share, for the second quarter ended June 30, 2009, as compared to net income of $1.2 million, or $0.03 per diluted share, for the second quarter of 2008. As of June 30, 2009, the Company had $144.9 million in total assets; and $364.7 million in total liabilities, resulting in $219.8 million in stockholders' deficit. The company's cash, cash equivalents and short- and long-term investments totalled $92.0 million at June 30, 2009 versus $106.1 million at December 31, 2008. NPS used $8.5 million in cash during the second quarter of 2009 (excluding changes in the carrying value of auction-rate securities or ARS investments). The company's cash burn guidance for 2009 remains unchanged at $55 to $65 million and, consistent with prior periods, excludes potential changes in the estimated fair value of the company's ARS investments. The company's auction-rate securities or ARS investments have experienced failed auctions since the latter part of 2007 due to liquidity issues in the global credit and capital markets. While all of the company's ARS continue to pay interest, the severity and the duration of the decline in fair value have resulted in the company recognizing "other than temporary" changes in the fair value of its ARS investments. There was no impairment charge in the second quarter of 2009 versus an impairment charge of $456,000 in the second quarter of 2008. "We continue to be proactive in managing the business to ensure we deliver on our stated objectives," said Francois Nader, M.D., president and chief executive officer of NPS Pharmaceuticals. "Our timelines for completing enrollment in the STEPS and REPLACE studies before the end of the first quarter of 2010 are on track as are our preparations for regulatory review and commercialization of these product candidates. In addition, we are aggressively managing our burn and our cash position remains strong. We are actively evaluating multiple opportunities to further strengthen our balance sheet and the financing facility we announced today adds to our potential suite of options for raising new capital." A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4159 About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing specialty therapeutics company for gastrointestinal and endocrine disorders with high unmet medical need. The Company is currently advancing two late-stage programs. Teduglutide, a proprietary analog of GLP-2, is in Phase 3 clinical development for intestinal failure associated with short bowel syndrome as GATTEX(TM) and in preclinical development for gastrointestinal mucositis and necrotizing enterocolitis. NPS PHARMACEUTICALS: To Raise $100,000,000 by Issuing Securities ---------------------------------------------------------------- NPS Pharmaceuticals Inc. filed a prospectus on Form 424B5 in connection with its planned offering of up to $100,000,000 of securities. NPS will offer the securities in amounts, at prices and on terms is be determined at the time of the offering. NPS may from time to time offer common stock, preferred stock, depositary shares, debt securities or warrants together or separately. The prospectus describes the general terms of the securities and the general manner in which NPS will offer them. NPS will provide the specific terms of the securities in supplements to this prospectus. The prospectus supplements will also describe the specific manner in which NPS will offer the securities and may also supplement, update or amend information contained in this prospectus. A full-text copy of the prospectus is available at no charge at: http://ResearchArchives.com/t/s?415b About NPS Pharmaceuticals Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing specialty therapeutics company for gastrointestinal and endocrine disorders with high unmet medical need. The Company is currently advancing two late-stage programs. Teduglutide, a proprietary analog of GLP-2, is in Phase 3 clinical development for intestinal failure associated with short bowel syndrome as GATTEX(TM) and in preclinical development for gastrointestinal mucositis and necrotizing enterocolitis. As of June 30, 2009, the Company had $144.9 million in total assets; and $364.7 million in total liabilities, resulting in $219.8 million in stockholders' deficit. NV BROADCASTING: To End WKTV Weekday Newscast September 21 ---------------------------------------------------------- Andrea Wood at Business Journal Daily reports that NV Television, LLC's Youngstown, Ohio management said that it will eliminate one newscast effective September 21. Dave Coy, general manager of the three TV stations, said that WYTV's 5 p.m. weekday newscast will be replaced with a syndicated version of "Are You Smarter Than a 5th Grader," Business Journal Daily relates. Citing Mr. Coy, the report says that WYTV will continue to broadcast a local news program at 5:30 p.m. Mr. Coy said that no newsroom jobs will be lost, nor has employee compensation been cut, the report states. According to Business Journal Daily, the programming decision includes the new 4:00 p.m. WYTV program "Dr. Oz", a medical and lifestyle advice show with Dr. Mehmot Oz, professor of surgery at Columbia University. Mr. Coy, Business Journal Daily states, said that WYTV and WKBN will stop competing for news viewers at 5:00 p.m. The report says that viewers seeking local news at 5:00 p.m. can watch WKBN's program and those who look for local news at 5:30 p.m. can watch WYTV. Business Journal Daily relates that NV Broadcasting received the approval of the U.S. Bankruptcy Court for the District of Delaware to expedite hearings on its consensual reorganization plan. The report says that NV Broadcasting's disclosure statement stipulates how the Company will give its lenders almost 100% of the equity and pay back about $52 million in term loans by the close of fiscal 2013. As reported by the Troubled Company Reporter on August 6, 2009, NV Broadcasting, et al., filed a disclosure statement to accompany their joint Chapter 11 plan of reorganization, dated as of July 31, 2009. A hearing set for September 10 to confirm the restructuring of $400 million in debt, Business Journal Daily states. NV Broadcasting, LLC, is a wholly owned subsidiary of NV Television, LLC, which in turn is wholly owned by NV Media, LLC, whose parent is New Vision Television, LLC, who is not a debtor in these cases. PBC Television Holdings is a privately-held limited liability company that owns 100% of PBC Broadcasting, LLC. Todd Parkin owns 100% of the issued and outstanding limited liability company units of PBC Television Holdings. The NV Debtors own and operate 11 television stations that are affiliated with major networks, together with several satellite stations and additional low power television stations that retransmit the signals of the affiliated television stations, and through joint sales or share services agreements, provide sales, operational, and other services to two major network affiliated stations owned by the PBC Debtors. The NV and PBC stations are located in nine diverse markets across the southern, midwestern and nortwestern United States. The NV Debtors and the PBC Debtors filed separate petitions for Chapter 11 relief on July 13, 2009 (Bankr. D. Del. Lead Case No. 09-12473). In its petition, NV Broadcasting, LLC, listed between $10 million and $50 million in assets, and between $100 million and $500 million in liabilities. Locke Lord Bissell & Liddell LLP is the proposed counsel for the NV Debtors. Polsinelli Shughart PC is the proposed Delaware counsel fpr the NV Debtors. The PBC Debtors selected Womble Carlyle Sandridge & Rice, PLLC, as their counsel. Moelis & Company is the proposed financial advisor and investment banker to the Debtors. BMC Group Inc. is the Debtors' claims, noticing and balloting agent. OSCIENT PHARMACEUTICALS: Panels Taps Mesirow as Financial Advisor ----------------------------------------------------------------- BankruptcyData.com reports that the official committee of unsecured creditors of Oscient Pharmaceutical Corporation asks the Bankruptcy Court for permission to retain Mesirow Financial Consulting as financial advisor The report notes the firm's hourly rates: Designation Hourly Rate ----------- ----------- senior managing director, managing director and director $700-$750 senior vice president $610-$670 vice president $510-$570 senior associate $410-$470 associate $220-$350 paralegal $100-$195. Based in Waltham, Massachusetts, Oscient Pharmaceuticals Corporation -- http://www.antararx.com/and http://www.factive.com/-- markets two FDA-approved products in the United States: ANTARA(R) (fenofibrate) capsules, a cardiovascular product and FACTIVE(R) (gemifloxacin mesylate) tablets, a fluoroquinolone antibiotic. ANTARA is indicated for the adjunct treatment of hypercholesterolemia (high blood cholesterol) and hypertriglyceridemia (high triglycerides) in combination with diet. FACTIVE is approved for the treatment of acute bacterial exacerbations of chronic bronchitis and community- acquired pneumonia of mild to moderate severity. ANTARA accountsi for over 80% of the Debtors' 2008 revenues. The Debtors also have a late-stage antibiotic candidate, Ramoplanin, for the treatment of Clostridium difficile-associated disease. As of December 31, 2008, the Debtors' audited consolidated financial statements reflected total assets of $174 million and total liabilities of $255 million. Oscient Pharmaceuticals Corporation together with an affiliate filed for Chapter 11 on July 13, 2009 (Bankr. D. Mass. Case No. 09-16576). Judge Henry J. Boroff presides over the case. Charles A. Dale III, Esq., at K&L Gates LLP, represents the Debtors. The Debtors also hired Ropes & Gray LLP as special litigation counsel, and Broadpoint Capital Inc. as financial advisor. In its petition, Oscient listed assets ranging from $50,000,001 to $100,000,000, and debts ranging from $100,000,001 to $500,000,000. PARADIGM MEDICAL: March 31 Balance Sheet Upside-Down by $4 Mil. --------------------------------------------------------------- Paradigm Medical Industries, Inc.'s balance sheet at March 31, 2009, showed total assets of $1,166,000 and total liabilities of 4,765,000, resulting in a stockholders' deficit of $3,599,000. For three months ended March 31, 2009, the Company posted a net loss of $282,000 compared with the net loss of $546,000 for the same period in 2008. As of March 31, 2009, the Company had accounts payable of $582,000, a significant portion of which was over 90 days past due, compared to accounts payable of $416,000 as of March 31, 2008. The Company contacted many of the vendors or companies of payables past due in an effort to delay payment, negotiate settlement payment, or establish a longer term payment plan. While some companies have been willing to renegotiate the outstanding amounts, others have demanded payment in full. In addition to the accounts payable noted above, the Company also has operating lease obligations that require the payment of approximately $110,000 in 2009, and $110,000 in 2008. The Company leases office and warehouse space under a month-to-month operating lease agreement. A full-text copy of the Company's Form 10-Q/A is available for free at http://ResearchArchives.com/t/s?4143 Going Concern Doubt On May 15, 2008, Chislom, Bierwolf & Nilson LLC expressed substantial doubt about Paradigm Medical Industries, Inc.'s ability to continue as a going concern after auditing the company's financial statement for the fiscal year Dec. 31, 2007. The firm reported the the company has a working capital deficit and suffered recurring operating losses. On April 10, 2009, Chisholm, Bierwolf, Nilson & Morrill, LLC in Bountiful, Utah raised substantial doubt about its ability to continue as a going concern after auditing the Company's financial statements for the fiscal years ended Dec. 31, 2008, and 2007. The auditor noted that the Company incurred substantial losses from operations, negative working capital, and recurring negative cash flows from operations. The Company also related that historically, it has not demonstrated the ability to generate sufficient cash flows from operations to satisfy its liabilities and sustain operations, and the Company incurred significant losses. The Company added that it continuation as a going concern is dependent on its ability to generate sufficient income and cash flow to meet its obligations on a timely basis and/or obtain additional financing as may be required. The Company is actively seeking options to obtain additional capital and financing. About Paradigm Medical Headquartered in Salt Lake City, Paradigm Medical Industries Inc. (OTC BB: PMED) -- http://www.paradigm-medical.com/-- develops, manufactures, and markets diagnostic and surgical equipment for the ophthalmic market. The Company specializes in powerful, easy-to-use, value-driven equipment capable of providing the experienced practitioner exceptional value while being affordable for doctors starting new practices or opening up satellite offices. PAULA DORF: Wants New Lender, Files for Chapter 11 Bankruptcy ------------------------------------------------------------- Paula Dorf Cosmetics, Inc., will file for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, listing $1,512,257 in total assets and $3,874,442 in debts owed to more than 50 creditors. Crain's New York reports that Paula Dorf Cosmetics' creditors include: -- Macy's, owed over $40,000; -- Home Shopping Network, owed $32,000; and -- Mana Products Inc., which Paula Dorf Cosmetics owes over $21,000. Paula Dorf Cosmetics CEO Sandy DeKovnick, who runs the firm with his wife Paula Dorf, insisted that the Chapter filing wasn't related to market conditions and was primarily due to the Company's desire for a new lender. Crain's says that Mr. DeKovnick declined to disclose the new bank. The report quoted Mr. DeKovnick as saying, "We certainly weren't put into this, we're in the midst of expansion." Paula Dorf Cosmetics is growing into Asia and is already in Europe, the report says, citing Mr. DeKovnick. According to Crain's, experts attribute at least some current shopping conditions to Paula Dorf Cosmetics' bankruptcy filing, as many women trade down or stop purchasing. Sales of prestige make- up products dropped 3% to $8.4 billion for the first time in 2008, compared to 2007, NPD Group Inc. said. Industry experts said that Ms. Dorf hasn't released any innovative items recently, Crain's states. Crain's relates that Ms. Dorf has also increased inventory at a time when beauty firms should be editing their assortments and producing only what's selling. The report quoted Mirror Mirror CEO Jeanine Recckio as saying, "She has too many colors, too many shades, and that takes up a lot of real estate." Paula Dorf Cosmetics is constantly evaluating its product mix, Crain's reports, citing Mr. DeKovnick. New York-based Paula Dorf Cosmetics, Inc., sells at upscale retailers like department stores Henri Bendel and Macy's, and make-up marketplace Sephora. Owner Paula Dorf is known within the industry for her "Transformers" products, a clear liquid placed over eyeshadow or lipstick to maintain color all day. PENN NATIONAL: S&P Assigns 'BB-' Rating on $250 Mil. Senior Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its issue- level and recovery ratings to Wyomissing, Pennsylvania-based Penn National Gaming Inc.'s proposed $250 million senior subordinated notes due 2019. S&P rated the notes 'BB-' (at the same level as the corporate credit rating on the company) with a recovery rating of '4', indicating its expectation of average (30%-50%) recovery for noteholders in the event of a payment default. Proceeds from the proposed notes, along with cash on hand or draws under the revolving credit facility, will be used to repay a portion of the term loan A bank facility and to repurchase outstanding 6.875% senior subordinated notes pursuant to a recently announced cash tender offer. (These ratings are based upon preliminary terms and conditions.) At the same time, S&P affirmed its issue-level rating on Penn National's outstanding senior subordinated notes at 'BB-' (the same as the corporate credit rating). The recovery rating on these loans remains at '4', indicating its expectation of average (30%-50%) recovery for noteholders in the event of a payment default. S&P also affirmed its issue-level rating on the company's senior secured credit facilities at 'BB+' (two notches higher than the 'BB-' corporate credit rating). The recovery rating on these loans remains at '1', indicating its expectation of very high (90%-100%) recovery for lenders in the event of a payment default. "The rating on Penn National reflects a relatively aggressive growth strategy, a portfolio which consists of several properties that are not market leaders in competitive markets, and high debt leverage," said Standard & Poor's credit analyst Ben Bubeck. The company's geographically diverse portfolio, an experienced management team with a solid operating track record, and a strong liquidity position somewhat temper these factors. PEOPLES COMMUNITY: To File for Ch. 11 on Bank Closing, Foiled Sale ------------------------------------------------------------------ Peoples Community Bancorp, Inc., said in a filing with the U.S. Securities and Exchange Commission that it is insolvent and will be filing a voluntary petition to liquidate its assets under Title 11 of the U.S. Bankruptcy Code. Peoples Community's management and board of directors will also be tendering their resignations after the filing of the bankruptcy petition. On August 3, 2009, Fred Darlington tendered his resignation as the Senior Vice President and General Counsel of both Peoples Community Bancorp, Inc., and its wholly-owned banking subsidiary, Peoples Community Bank, with such resignation effective immediately. On May 15, 2009, Peoples Community and its wholly-owned subsidiary, Peoples Community Bank (the Bank), entered into a Purchase and Assumption Agreement, as amended May 27, 2009, with First Financial Bank, N.A. (the Buyer), the wholly owned subsidiary of First Financial Bancorp. The Purchase Agreement provided for the purchase of certain of the Bank's assets including 17 of the Bank's branch offices located in southwestern Ohio and southeastern Indiana, approximately $260 million of certain business and consumer loans and other assets, as well as the assumption by the Buyer of approximately $310 million of the Bank's deposits and certain other liabilities. As of June 30, 2009, the Company had approximately $15 million Floating Rate Junior Subordinated Deferrable Interest Debentures outstanding pursuant to an Indenture, dated as of June 30, 2005, between the Company and Wilmington Trust Company, a Delaware banking corporation, as debenture trustee. The July 31, 2009 appointment of the FDIC as receiver constitutes a triggering event, also termed an "Event of Default," under the Indenture. Under the Indenture, an Event of Default occurs if, among other things, the Company or any substantial part of its property, including the Bank, is taken possession by a receiver. Upon such Event of Default, the principal amount of the debentures, together with any premium and interest accrued but unpaid, becomes due upon an Event of Default only after the trustee or holders of not less than 25% in aggregate principal amount of the debentures then outstanding, by notice in writing to the Company (and to the trustee if given by the holders of the debentures), declare such principle and accrued interest immediately due and payable. As of June 30, 2009, the Company had $17.5 million of principal plus accrued interest and fees outstanding under a line of credit with Integra Bank, N.A., which was due and payable on June 30, 2008. In connection with the Purchase Agreement, the Company received a written consent from Integra to, among other things, forbear and refrain from initiating or prosecuting any action in any court to exercise any rights with respect to the Bank's common stock, which is pledged to Integra to secure the Company's line of credit, or exercise any other rights or remedies available to Integra. The Consent terminated upon the termination of the Purchase Agreement. On July 31, 2009, the Office of Thrift Supervision closed the Bank and appointed the Federal Deposit Insurance Corporation as receiver. On the same date, the Bank received written notice from the Buyer that pursuant to Section 25(g) of the Purchase Agreement it was terminating the Purchase Agreement and abandoning the transactions contemplated thereby, effective immediately. Under Section 25(g) of the Purchase and Assumption Agreement, the Buyer had the option to terminate the Purchase Agreement upon the commencement of an insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors or similar proceeding with respect to the Bank or the Company. Peoples Community said that on August 5, 2009, it received written notification from The Nasdaq Stock Market advising the Company that trading in the Company's common stock will be suspended at the opening of business on August 14, 2009, and a Form 25-NSE will be filed with the SEC which will remove the Company's common stock from listing and registration on The NASDAQ Stock Market. "The letter from NASDAQ advised us that the Company's common stock will not be immediately eligible to trade on the OTC Bulletin Board or in the 'Pink Sheets'," Peoples Community said. 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. PHOENIX FOOTWEAR: Forbearance Period Extended Until September 30 ---------------------------------------------------------------- Effective July 31, 2009, Phoenix Footwear and its subsidiaries together with Wells Fargo Bank, National Association entered into a First Amendment to Forbearance Agreement and Second Amendment to Credit and Security Agreement. The Amendment amends and modifies certain terms of the Credit and Security Agreement dated June 10, 2008, as amended by the Forbearance Agreement and First Amendment to Credit and Security Agreement dated July 7, 2009, among Phoenix Footwear and its subsidiaries and Wells Fargo. Under the terms of the Amendment, these changes were made to the Credit Agreement and Forbearance Agreement: -- The maximum availability under the line of credit being changed to $9.0 million -- subject to a borrowing base limit -- and, effective September 1, 2009, reduced to $7.0 million (subject to a borrowing base limit); -- Certain changes to the borrowing base limits (including inventory and concentrated receivables sublimits) to reflect the change in the size of the Company's business as result of the two divestitures during fiscal 2009; -- An acceleration of the maturity date for the revolving line of credit debt to September 30, 2009; and -- New financial covenants being added that require the Company achieve weekly minimum net sales and net cash flows during the extended forbearance agreement. Under the Amendment, Wells Fargo agreed, during a forbearance period, to refrain from exercising any rights and remedies which it is or may become entitled to as a result of the existing past financial covenant defaults. Also, the Amendment provides for Wells Fargo to continue making advances under the line of credit, subject to the conditions of the Credit Agreement, excluding, however, the Specified Events of Default. The forbearance period began on July 9, 2009, and ends on September 30, 2009, subject to earlier termination at the election of Wells Fargo in the event of an occurrence of any event of default under the Credit Agreement other than the Specified Events of Default, and subject to automatic termination in the event of the occurrence of certain insolvency proceedings involving Phoenix Footwear or its subsidiaries. The Amendment provides that the continuing forbearance by Wells Fargo is conditioned upon Phoenix Footwear's continuing engagement of a financial turnaround consulting firm (which has occurred) to provide specified financial consulting services and the repayment in full of all indebtedness owed to Wells Fargo on or before September 30, 2009. The Amendment requires Phoenix Footwear to pay a $15,000 accommodation fee on October 1, 2009 unless Phoenix Footwear repays the indebtedness in full on or before September 30, 2009. As of August 3, 2009, the Company had $4.7 million outstanding under the Credit Agreement with remaining availability of $155,000. The Company is engaged in discussions with several different financing sources to provide the Company with proceeds to repay in full its revolving line of credit debt on or before September 30, 2009. There is no assurance, however, that the Company will be able to obtain such a facility on acceptable terms and covenants or when and if the Company will be able to repay its current facility in full. If the Company is unable to complete a financing transaction prior to September 30, 2009, the Company plans to seek a second extension of the forbearance period so that it may complete such a financing. There is no assurance that it will be granted or the terms and conditions thereof. If such a request is not granted, Wells Fargo may accelerate the Company's indebtedness or foreclose on its assets. A full-text copy of the First Amendment to Forbearance Agreement and Second Amendment to Credit and Security Agreement dated July 31, 2009 among Phoenix Footwear Group, Inc. and its subsidiaries and Wells Fargo Bank, National Association, is available at no charge at http://ResearchArchives.com/t/s?415e About Phoenix Footwear Headquartered in Carlsbad, California, Phoenix Footwear Group, Inc. (AMEX: PXG) -- http://www.phoenixfootwear.com/-- designs, develops and markets a diversified selection of men's and women's dress and casual footwear, belts, and other accessories. The Company's moderate-to-premium priced brands and licenses include the Tommy Bahama Footwear(R), Trotters(R), SoftWalk(R), Strol(R), H.S. Trask(R), and Altama(R) footwear lines, Chambers Belts(R)and Wrangler(R). PILGRIM'S PRIDE: 43 Trade Creditors Transfer $2.44 Mil. in Claims ----------------------------------------------------------------- During the period July 9 to August 3, 2009, 43 trade creditors transferred their claims against Pilgrim's Pride Inc. and its affiliates totaling $2,438,072: Transferee Total Claim Amount ---------- ------------------ Argo Partners $343,232 ASM Capital, L.P. 84,390 ASM Capital III, L.P. 7,862 Blue Heron Micro Opportunities Fund LLP 5,120 Contrarian Funds, LLC 1,549,066 Fair Harbor Capital, LLC 154,626 Liquidity Solutions, Inc. 55,975 U.S. Debt Recovery 237,801 U.S. Debt Recovery withdrew the notice of transfer of Bobby Lockhart's $76 claim. Fair Harbor Capital also withdrew the notice of transfer of two proof of claim from Accutech Water Dynamics. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. 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. PILGRIM'S PRIDE: Incurs $53.24MM Loss for Quarter Ended June 27 --------------------------------------------------------------- Pilgrim's Pride Corporation Consolidated Unaudited Balance Sheets As of June 27, 2009 ASSETS Cash and cash equivalents $101,179,000 Restricted cash and cash equivalents 6,677,000 Investment in available-for-sale- securities 5,902,000 Trade accounts and other receivables 291,207,000 Inventories 798,846,000 Income taxes receivable 23,645,000 Current deferred income taxes 18,297,000 Prepaid expenses and other current assets 45,326,000 -------------- Assets held for sale - Current assets of discontinued business - -------------- Total current assets 1,291,079,000 Investment in available-for-sale securities 60,181,000 Other assets 88,663,000 Identified intangible assets, net 59,725,000 Property, plant and equipment, net 1,531,582,000 -------------- Total Assets $3,031,230,000 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities not subject to compromise: Accounts payable $171,578,000 Accrued expenses 303,052,000 Short-term notes payable - Current maturities of long-term debts - Liabilities of discontinued business 1,470,000 -------------- Total current liabilities 476,100,000 Long-term debt, less current maturities 42,133,000 deferred income taxes 40,826,000 Other long-term liabilities 89,952,000 -------------- Liabilities not subject to compromise 649,011,000 Liabilities subject to compromise 2,264,932,000 Common stock 740,000 Additional paid-in capital 646,824,000 Accumulated deficit (551,602,000) Accumulated other comprehensive income 21,325,000 -------------- Total stockholders' equity 117,287,000 -------------- Total liabilities and stockholders' equity $3,031,230,000 ============== Pilgrim's Pride Corporation Consolidated Unaudited Statement of Operations Three Months Ended June 27, 2009 Net sales $1,776,813,000 Cost of sales 1,593,399,000 -------------- Gross profit (loss) 183,414,000 Selling, general and administrative expenses 74,818,000 Restructuring items, net - -------------- Total costs and expenses 1,668,217,000 Operating income (loss) 108,596,000 Other expense (income): Interest expense 38,843,000 Interest income (488,000) Miscellaneous, net (332,000) ------------- Total other expense, net 38,023,000 Income from continuing operations before reorganization items and income taxes 70,573,000 Reorganization items 16,779,000 -------------- Loss from continuing operations before income taxes 53,794,000 Income tax expense (benefit) 555,000 -------------- Loss from continuing operations 53,239,000 Income from operations of discontinued business, net of tax - -------------- Net Income ($53,239,000) ============== Pilgrim's Pride Corporation Consolidated Unaudited Statement of Cash Flows For Six Months Ended June 27, 2009 Cash flows from operating operations: Net loss ($234,306,000) Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 177,832,000 Asset impairment 5,409,000 Gain on property disposals (20,893,000) Deferred income tax benefits - Changes in operating assets and liabilities: Accounts and other receivables (121,375,000) Inventories 250,905,000 Prepaid expenses and other current assets 24,131,000 Account payable and accrued expenses (133,721,000) Income taxes receivable, net 898,000 Other (1,889,000) -------------- Cash used in operating activities (53,009,000) Cash flows from investing activities: Acquisitions of property, plant and equipment (65,605,000) Purchase of investment securities (16,088,000) Proceeds from sale or maturity of investment securities 12,244,000 Change in restricted cash and cash equivalents (12,931,000) Proceeds from property disposals 78,225,000 -------------- Cash used in investing activities (4,155,000) Cash flows from financing activities: Proceeds from short-term notes payable 430,817,000 Payments on short-term notes payable (430,817,000) Proceeds from long-term debt 831,250,000 Payments on long-term debt (719,740,000) Change in outstanding cash management obligations (11,172,000) Cash dividends paid - Other (808,000) -------------- Cash provided by financing activities 99,530,000 Effect of exchange rate changes on cash and cash equivalents (2,740,000) Increase (decrease) in cash and cash equivalents 39,626,000 Cash and cash equivalents, beginning of period 61,553,000 -------------- Cash and cash equivalent, end of period $101,179,000 ============== A full-text copy of Pilgrim's Pride's 2009 First Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?3c9f About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. 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. POLAROID CORP: C2 Invested $2.6MM to Acquire 5% Interest -------------------------------------------------------- C2 Global Technologies Inc. discloses that in May 2009, it invested $2.6 million to indirectly acquire an approximate 5% interest in Polaroid Corporation, pursuant to a Chapter 11 reorganization in a U.S. bankruptcy court. C2's interest will be managed by Knight's Bridge Capital Management L.P., an affiliate of C2's parent, Counsel Corporation. C2's primary business is the development and licensing of its patents, which include two foundational patents in VoIP technology. C2 is also involved in the acquisition and disposition of distressed and surplus assets through its interest in Counsel RB Capital. About Polaroid Corporation Polaroid Corporation -- http://www.polaroid.com/-- makes and sells films, cameras, and other imaging products. The Company and 20 of its affiliates first filed for bankruptcy protection on October 12, 2001 (Bankr. D. Del. Lead Case No. 01-10864). Skadden, Arps, Slate, Meagher & Flom LLP represented the Debtors in their previous restructuring efforts. At that time, the Company blamed steep decline in its revenue and the resulting impact on its liquidity. On June 28, 2002, the U.S. Bankruptcy Court for the District of Delaware approved the purchase of substantially all of Polaroid's business by One Equity Partners. The bid provides for cash consideration of $255 million plus a 35% interest in the new company for unsecured creditors. Polaroid Corp., together with 11 affiliates, filed its second voluntary petition for Chapter 11 on December 18, 2008 (Bankr. D. Minn., Lead Case No. 08-46617). Judge Gregory F. Kishel handles the Chapter 22 case. George H. Singer, Esq., James A. Lodoen, Esq., and Sandra S. Smalley-Fleming, Esq., at Lindquist & Vennum P.L.L.P, are counsel to the Debtors. Cass Weil, Esq., James A. Rubenstein, Esq., and Sarah E. Doerr, Esq., at Moss & Barnett, have been tapped as special counsel. The law firms of Baker & McKenzie and C&A Law represent the Debtors as special foreign legal counsel. Paul Hastings, Janofsky & Walker LLP, and Faegre & Benson LLP represent the Committee. According to the Company, the financial structuring process and the second bankruptcy filing are the result of events at Petters Group Worldwide, which has owned Polaroid since 2005. REPUBLIC STORAGE: Disc Statement OK'd; Sept 3 Voting Deadline Set ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio has approved the disclosure statement for the plan of liquidation of The Belden Locker Company, formerly Republic Storage Systems Company, Inc., dated June 16, 2009. The voting record date will be August 4, 2009, and the voting deadline will be 5:00 p.m. on September 3, 2009. The deadline for filing objections to confirmation of the Plan will be 5:00 p.m. on September 3, 2009. The Court has set the confirmation hearing for September 10, 2009, at 2:00 p.m. Summary of Plan Terms The Plan contemplates the liquidation and distribution of all remaining assets of the Debtor's estate. The Plan incorporates settlements with Pension Benefits Guarantee Corporation and Ohio Bureau of Workers Compensation, which allow a distribution to unsecured creditors of roughly 3.5%. Equity interests in Class 6 will not receive a distribution under the Plans and are thus deemed to have rejected the Plan. The claim of Pension Benefit Guaranty Corporation in Class 3, the claim of the Ohio Bureau of Workers' Compensation in Class 4, and general unsecured claims under Class 5 are impaired, and entitled to vote on the Plan. Secured claims in Class 1 and priority unsecured tax claims in Class 2 are unimpaired under the Plan, and are deemed to have accepted the Plan. The Debtor's assets consist solely of the remaining cash realized in the amount of $1,078,228 by the Debtor from the sale of its assets to Buckeye RSS, LLC, which closed shortly after the order of the Court on April 28, 2008, as amended on May 11, 2006. It is the Debtor's belief that all secured claims have been satisfied or assigned and assumed by Buckeye RSS, LLC. A full-text copy of the disclosure statement for the plan of liquidation of The Belden Locker Company, formerly Republic Storage Systems Company, Inc., is available for free at: http://bankrupt.com/misc/belden.ds.pdf Based in Canton, Ohio, Republic Storage Systems Company Inc. nka The Belden Locker Company -- http://www.republicstorage.com/-- manufactured several lines of shelving and storage products including lockers, industrial storage products, custom designed mezzanine systems and engineered storage systems. The Company filed for Chapter 11 protection on March 14, 2006 (Bankr. N.D. Ohio Case No. 06-60316). James Michael Lawniczak, Esq., Karen A. Visocan, Esq., Lisa M. Yerrace, Esq., Nathan A. Wheatley, Esq., and Laura McBride, Esq, at Calfee, Halter & Griswold LLP, represent the Debtor in its restructuring efforts. Dov Frankel, Esq., Harry W. Greenfield, Esq., at Buckley King, LPA; and Wanda Borges, Esq., at Borges Donovan Attorneys at Law, LLC, represent the official committee of unsecured creditors. When the Debtor filed for protection from its creditors, it listed between $10 million and $50 million in assets and debts. RESIDENTIAL CAPITAL: Business Capital Group Joins Mountain Funding ------------------------------------------------------------------ Mountain Funding LLC has absorbed the 14 senior management and real estate professionals from the REO asset management group of GMAC-ResCap's Business Capital Group. Mountain Funding completed this transaction through its asset management affiliate, Mountain Special Servicing, LLC. As part of the transaction, GMAC-ResCap has engaged Mountain Funding to provide asset servicing and other consulting services for ResCap-BCG's residential development real estate owned (REO) and non-performing loan (NPL) assets nationally. This servicing arrangement covers a portion of the portfolio of ResCap's Business Capital Group, including residential housing development REO properties. ResCap continues to provide mortgage servicing and sub-servicing for a portfolio of approximately 2.6 million mortgage loans, and is the fifth largest mortgage servicer in the nation. "We have been pursuing this expansion for several months and are very excited to have completed it," said Peter J. Fioretti, CEO of Mountain Funding and its affiliated management company. "Mountain Special Servicing has become one of the leading asset managers of residential development REO and NPL assets for institutional lenders in the country. As importantly, Mountain Funding will be able to utilize its asset management staff to efficiently underwrite and bid on distressed debt portfolios, an area in which we expect to be a major player for the next three years." Joining Mountain Special Servicing as managing director will be GMAC-ResCap's former head of ResCap-BCG REO management, Joel Kaul, who will head up the company's residential asset management group. The commercial asset and fractured condo management group continues to be led by Mountain's Brett Peterson. In addition to its Charlotte headquarters, Mountain's asset managers are located in the following offices, servicing all major markets nationally: Atlanta; Los Angeles; Minneapolis; Washington, D.C.; Scottsdale, Ariz.; and Richmond, Va. "With close to 30,000 residential lots under management and hands- on knowledge of most active markets in the U.S., we believe we are uniquely positioned to assist lenders holding distressed assets to preserve and enhance their portfolios, and maximize cash recovery in the shortest period of time," said Mr. Kaul. "Our staff has long and extensive relationships with builders and developers located throughout the United States, allowing us to manage and dispose of assets effectively and efficiently. Our assignment at GMAC-ResCap required us to develop expertise in all areas of asset management and preservation, including entitlement review, cost control, engineering review, HOA representation, reporting, and creative disposition techniques." Combined with its existing portfolio, Mountain Special Servicing has approximately 90 assets under management, totaling over $1 billion in unpaid principal balance. The assets are diversified over 20 states and include the following property types: residential land development, residential lot development/sale, housing construction/sale, commercial land development, sub-performing retail centers, fractured condos, apartments, and resort development. Mountain Special Servicing intends to pursue additional asset management business for portfolios of distressed assets owned by REIT's, hedge funds, and other institutional lenders. In addition to its capability to provide asset management services for third party lenders with distressed assets, Mountain Funding is capitalized to invest $1 billion over the next few years in distressed debt and property for its own account. "The key to successfully and smartly bidding NPL portfolios lies in the strength of the underwriting team," said Arthur G. Nevid, Mountain Funding's chief investment officer. "With the addition of these experienced former GMAC-ResCap professionals to our existing team, we are extremely well positioned to bid these portfolios. There are few locations or asset types that our people are not experienced with as managers or underwriters, and we have sophisticated underwriting models in place to expedite the process." "We are ready for a very exciting and opportunistic leg of this cycle," summarized Mr. Fioretti. "Mountain Funding was created in the early '90s during the Savings & Loan crisis and developed significant experience in the management and resolution of distressed real estate. We hope to leverage that skill set and experience today." About ResCap Headquartered in Minneapolis, Minnesota, Residential Capital LLC -- http://www.rescapholdings.com/-- is the home mortgage unit of GMAC Financial Services, which is in turn wholly owned by GMAC LLC. * * * As reported by the Troubled Company Reporter on May 28, 2009, Standard & Poor's Ratings Services affirmed its 'CCC/C' counterparty credit ratings on GMAC LLC and Residential Capital LLC, its mortgage subsidiary. The outlooks on the ratings for both GMAC LLC and Residential Capital LLC are revised to developing from negative. As reported in the Troubled Company Reporter on December 3, 2008, Dominion Bond Rating Service placed all ratings of Residential Capital, LLC, including its Issuer and Long-Term Debt rating of C, Under Review with Negative Implications. RIO VISTA ENERGY: Warns of Bankruptcy if Unit's Sale Fails ---------------------------------------------------------- Rio Vista Energy Partners L.P. says if the sale of its wholly owned subsidiary, Regional Enterprises Inc., is not consummated, Rio Vista may seek to sell Regional to other parties or may elect to continue to operate Regional. Rio Vista currently has a deficit in working capital and a loss from continuing operations. If the amount of proceeds raised from the sale of Regional or the existing cash flow generated from continuing to operate Regional are not sufficient to satisfy Rio Vista's obligations, Rio Vista would likely be required to seek other alternatives which could include protection under the U.S. bankruptcy laws. Rio Vista Energy had entered into a non-binding letter of intent on July 29, 2009, to sell Regional to an undisclosed buyer. The purchase price to the Buyer to acquire 100% of the outstanding stock of Regional held by Rio Vista will be $5,000,000, less certain adjustments as described in the LOI and less deposits of $250,000 received from Buyer in connection with the LOI. The Buyer will assume all the obligations of Regional, except for obligations of Regional to Rio Vista or any of its affiliates, totaling roughly $2,500,000 at June 30, 2009 (Affiliate Obligations) for which a portion of the purchase price will be applied for payment of the Affiliate Obligations by Regional at closing. The closing is to occur no later than September 28, 2009, unless extended as a result of permitted delays as prescribed in the LOI (Permitted Delays). The Permitted Delays generally consist of Rio Vista's requirement to deliver financial statements of Regional to Buyer by August 21, 2009, Rio Vista's decision to seek a satisfactory fairness opinion for the transaction, Rio Vista's decision to seek the necessary unitholder approval for the transaction, delays associated with Regional's collateralized lender to approve and finalize the required consent for Buyer to assume such obligation, or any other condition which Rio Vista believes is required to consummate the transaction. The LOI is non-binding and an actual closing as prescribed in the LOI is subject to many conditions and uncertainties related to both the Buyer or Rio Vista. In the event that the sale of Regional takes place as prescribed in the LOI, Rio Vista believes that the amount of cash received from Buyer will be sufficient for Rio Vista to satisfy all of its obligations to its creditors. Upon the sale of Regional to the Buyer, Rio Vista would no longer have any operating assets and Rio Vista estimates that there will be minimal remaining cash. Rio Vista would not have any other current sources of additional cash flow. Based in Brownsville, Texas, Rio Vista Energy Partners L.P. is a master limited partnership engaged in liquid bulk storage, transloading and transportation of chemicals and petroleum products through its assets and operations in Hopewell, Virginia. Penn Octane Corporation owns 75% of Rio Vista GP LLC, the general partner of Rio Vista. SEMGROUP LP: Applicants' CCAA Stay Extended Until October 1 ----------------------------------------------------------- At the behest of SemCanada Crude Company; SemCAMS ULC; SemCanada Energy Company; A.E. Sharp, Ltd.; CEG Energy Options, Inc.; 319278 Nova Scotia Company; and 1380331 Alberta ULC; the Honorable Madame Justice Romaine in the Court of Queen's Bench of Alberta, in the Judicial District of Calgary, Canada, extended the stay period prohibiting creditors and parties-in-interest from commencing or continuing any action against the CCAA Applications, through and including October 1, 2009. To facilitate the orderly implementation of the Debtors' Second Amended Joint Plan of Reorganization, SemCanada Energy's Consolidated Plan of Distribution and SemCAMS' Plan of Arrangement and Reorganization, a condition precedent for the implementation of each Plan is that the other Plans take effect the same day. SemCAMS, SemCanada Crude and the SemCanada Energy are scheduled to apply before the Honourable Court on August 5, 2009, seeking a Canadian Creditors' Meetings order. The proposed Canadian Creditors' Meetings order is to seek the Honourable Court's acceptance of the filing of the CCAA Plans and to authorize SemCAMS, SemCanada Crude and the SemCanada Energy Companies to each call, hold and conduct a meeting of certain of their respective creditors to consider and vote on a resolution to approve the CAMS Plan, the Crude Plan and the Energy Plan, as the case may be on or about September 10, 2009. If the US Plan is approved by the US Bankruptcy Court and the CCAA Plans are sanctioned by the Honourable Court at confirmation hearing, the Restructuring Debtors and the SemCanada Energy Companies anticipate implementing the Plans on or about October 1, 2009. Similarly, 13880331 Alberta ULC is liquidating its assets and would need an extension of the Stay Period until October 1, 2009, for procedural convenience. About SemGroup L.P. SemGroup, L.P. -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on November 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SEMGROUP LP: Examiner Discharged From Chapter 11 Probe Duties ------------------------------------------------------------- The Bankruptcy Court granted a request by Louis J. Freeh, Esq., the appointed examiner of the Chapter 11 cases of SemGroup L.P., for discharge from his Chapter 11 probe duties. The Examiner asked Judge Brendan Linehan Shannon of the U.S. Bankruptcy Court the District of Delaware for a discharge from his obligations as Examiner, and for the Court to address certain procedural issues pertaining to the termination of his examination of the Debtors. The Examiner asserted that he has fulfilled his duties and obligations as the Court-appointed Examiner, in accordance with the terms of his appointment. The Examiner filed with the Court his report on March 24, 2009, culminating his duties under the Examiner order. The Examiner Report disclosed Mr. Freeh's findings on the circumstances surrounding the Debtors' trading strategy, insider transactions, and potential improper use of funds, among others. The Examiner further asked the Court to: -- prohibit discovery that the Examiner expects will be propounded on him and his professionals; -- provide for his exculpation and those of his professionals, in a manner consistent with the exculpation of professionals in a typical Chapter 11 reorganization plan; and -- establish deadlines for the submissions, objections filing, and hearing on the final fee applications for his professionals. At a July 14, 2009 hearing, the Court suggested bifurcating the Examiner's request and directed the Examiner and certain parties that have conveyed objections to the proposal to confer and submit a proposed order. Westback Purchasing Co., LLC, Harvest Fund Advisors LLC, Gregory C. Wallace, and Thomas L. Kivisto were the objecting parties. The revised proposed order, as agreed by the parties, will not constitute a determination that any information or material provided to or of the Examiner is confidential, protected, privileged and the rights of any creditor, party-in-interest, or third party to challenge any designation in the Court are reserved. The revised proposed order also sets these dates: Aug. 31, 2009 -- filing of final fee applications of the Examiner and his professionals Sept. 28, 2009 -- filing of objections to the final fee applications of the Examiner and his professionals Oct. 8, 2009 -- hearing to consider the final fee applications of the Examiner and his professionals About SemGroup L.P. SemGroup, L.P., -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08-11525). John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on November 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SIX FLAGS: Committee Proposes Solomon as Financial Advisor ---------------------------------------------------------- The Official Committee of Unsecured Creditors in Six Flags Inc.'s cases seeks the Court's authority to retain Peter J. Solomon Company, L.P., and its affiliate Peter J. Solomon Securities Company, LLC, as restructuring and financial advisor. According to Creditors' Committee co-chair, William Kaye of the Coca-Cola Company, the Creditors' Committee intends to employ PJSC because the firm's services are necessary to enable the Creditors' Committee to assess and monitor the efforts of the Debtors and their professional advisors to maximize the value of their estates and to reorganize successfully. PJSC is well qualified and able to represent the Creditors' Committee in a cost-effective and timely manner, Mr. Kaye relates. The Creditors' Committee and its legal advisors anticipate PJSC to provide consulting and advisory services in order to advise them in the course of the Debtors' Chapter 11 cases. The Creditors' Committee also expects PJSC's to assist the Creditors Committee: (a) in reviewing and analyzing the financial performance of, and strategies for, the Debtors; (b) in reviewing and analyzing the business plans and financial pro and financial projections prepared by the Debtors; (c) in evaluating the Debtors and their assets and liabilities, including valuations proposed by any interested party; (d) regarding restructuring of the Company's existing indebtedness; (e) in reviewing the Debtors' weekly cash flow forecasts, liquidity and adequacy of financing and financing options; (f) in reviewing the Debtors' weekly cash flow forecasts, liquidity and adequacy of financing and financing options; (g) in the course of any negotiations with the Debtors and their creditor constituencies; (h) in developing, evaluating, structuring and negotiating the terms and conditions of any potential plans of reorganization; (i) regarding any sales of the Debtors' assets of lines of businesses; PJSC will be paid on a fixed monthly rate of $175,000 and a completion fee of $1,200,000, and reimbursed of actual and necessary expenses incurred by PJSC in representing the Creditors' Committee in the Debtors' Chapter 11 cases. The Completion Fee will be considered earned and payable upon confirmation of a Plan of Reorganization or other resolution of the Debtors' bankruptcy not later than June 30, 2010, which will be earned in full, provided that a majority of the voting Committee members votes in its role as a Committee member in favor of or does not actively oppose the Plan of Reorganization or other resolution notwithstanding any non-material objection filed against the Plan. If a confirmation hearing has commenced on or prior to June 30, 2010, and, due to the Court's scheduling, the hearing has not concluded by June 30, 2010, the deadline will be deemed extended by up to 30 days to accommodate the Court's schedule. Mr. Kaye points out that PJSC will make every effort to coordinate with the other professionals retained by the Creditors' Committee in this case in order to eliminate unnecessary duplication of overlap of work. Mr. Kaye also informs the Court that the Debtors have agreed to indemnify and hold PJSC harmless from any losses or claims proceedings arising out of (i) information provided by the Debtors to any persons, (ii) failure to act by the Debtors or by PJSC at the company's request, or (iii) the engagement of PJSC under the indemnification agreement. Anders J. Maxwell, managing director of Peter J. Solomon Company, assures the Court that PJSC does not represent or hold adverse interest in connection with the Debtors' cases. The Court will convene a hearing to consider this motion on August 13, 2009, at 1:00 p.m. Prevailing Eastern Time. Objections are due by August 6. About Six Flags Inc. Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Committee Sets Information Access Protocol ----------------------------------------------------- The Official Committee of Unsecured Creditors in Six Flags Inc.'s asks the Court to approve producers to ensure the Committee's compliance with Section 1102(b)(3) of the Bankruptcy Code, including the establishment of a Committee Web site. According to Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, the Information Procedures will allow the Creditors' Committee to satisfy its statutory obligations to provide access to information to the Debtors' general unsecured creditors, and to solicit, receive and respond to Information Procedures and to fulfill its statutory obligations in an efficient and effective manner. In connection with the establishment of a Committee Web site, the Creditors' Committee seeks the Court's authority to retain Kurtzman Carson Consultants LLC, as its Web site Administration Agent nunc pro tunc to June 26, 2009. The Committee Web site will (i) serve as an access point for unsecured creditors to receive certain non-Confidential Information and non-Privileged Information, and (ii) allow the Creditors' Committee to solicit and receive comments from Unsecured Creditors regarding the Debtors and their Chapter 11 cases. The information available in the Committee Web site are: * General information regarding the chapter 11 cases; * Contact information for the Debtors, and any information hotlines that they establish, the Debtors' counsel and the Official Committee's counsel; * The date by which Unsecured Creditors must file their proofs of claims; * The voting deadline with respect to any chapter 11 plan of reorganization filed in the chapter 11 cases; * The claims docket, as established by the Debtors and Kurtzman; * A general overview of the chapter 11 process; * The Debtors' monthly operating reports; * A list of upcoming omnibus hearing dates and the calendar of matters on such hearing dates; * Answers to frequently asked questions; * Links to other relevant websites, like the Debtors' corporate Web site, the website of the Debtors' notice, claims and soliciting agent, Kurtzman, the Bankruptcy Court website and the website of the U.S. Trustee. The reasonable fees and expenses of Kurtzman will be payable by the Debtors in the ordinary course and treated as administrative expenses pursuant to Section 503(b). Since Kurtzman is already serving as the Debtors' notice, claims and soliciting agent, the Creditors' Committee says having Kurtzman serve as its Web site Administration Agent will create efficiencies in disseminating information to Unsecured Creditors and cost savings to the estates. In addition to establishing the Committee Web site, the Creditors' Committee will establish an e-mail address to allow unsecured creditors to send questions and comments concerning the chapter 11 cases. If an Unsecured Creditor submits a written request by electronic mail or otherwise for the Creditors' Committee to disclose information, the Committee will, within 20 days after receiving the Information Request, respond to the Unsecured Creditor through whatever means deemed reasonable under the circumstances, including providing access to the information requested, or the reasons why the Committee cannot comply with the Information Request. The Creditors' Committee will not be required to provide access to information to any entity that has not demonstrated to the satisfaction of the Creditors' Committee that it holds claims of the kind described in Section 1102(b)(A)(3). If the Creditors' Committee denies the Information Request because it believes that (a) the Information Request implicates Confidential of Privileged Information which need not be disclosed; or (b) the Information Request is unduly burdensome, the Unsecured Creditor may, after a good faith effort to meet and confer with an authorized representative of the Creditors' Committee, seek an order from the Court by a noticed motion, compelling the Creditors' Committee to disclose certain information for cause, provided further that nothing will be deemed to preclude an Unsecured Creditor from requesting that the Court conduct an in camera review of any information specifically responsive to the Unsecured Creditor's request that the Creditors' Committee or the Debtors claim is Confidential or Privileged Information. Within five business days of the creation of the Committee Web site, the Creditors' Committee will provide a notice of the Information Procedures to Kurtzman, for service on those parties listed in the Debtors' creditor matrix maintained by Kurtzman. The Unsecured Creditor Notice will advise creditors of the entry of the Order, the address of the Committee Website, and the Committee E-mail Address. About Six Flags Inc. Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Seeks Bankruptcy Court's Nod to Pay Foreign Vendors -------------------------------------------------------------- Six Flags Inc. ask the Bankruptcy Court for additional authority to pay in their sole discretion and in the ordinary course of business, as and when due, prepetition claims owing to foreign vendors, service providers, regulatory agencies, and governments. The Debtors also seek the Court's authority to pay claims for payment for direct and indirect materials and services provided to the Debtors, as well as import tax obligations. As earlier reported, on June 15, 2009, the Court authorized the Debtors to pay $559,224 of prepetition claims then due and owing to Foreign Vendors. Since that date, additional outstanding Foreign Claims have come to light. The Debtors' estimated prepetition amount that remains due to Foreign Vendors is approximately $150,000. Katherine L. Good, Esq., at Richards, Layton & Finger, P.A. in Wilmington, Delaware, relates that if the Foreign Claims are not paid, the Foreign Vendors might refuse to do business with the Debtors. The cumulative impact of these events could have a catastrophic adverse effect on the Debtors' operations, particularly on the ability of the Debtors to continue to maintain a postpetition business as usual atmosphere, Ms. Good tells the Court. The Debtors propose to condition the payment of Foreign Claims on agreement of the individual Foreign Vendor to continue supplying goods and services to the Debtors on terms that are consistent with the historical and customary trade terms between the parties. The Debtors propose that the Customary Trade Terms between the parties apply for the remaining terms of the Foreign Vendor's agreement with the Debtors, as long as the Debtors agree to pay for the goods in accordance with the terms. If a Foreign Vendor accepts a payment on account of a prepetition obligation of the Debtors and thereafter fails to provide the Debtors with the requisite Customary Trade Terms, then: (a) any Foreign Payment received by the Foreign Vendor will be deemed an unauthorized postpetition transfer that the Debtors may either (i) recover from the Foreign Vendor in cash or goods, or (ii) at the Debtors' option, apply against any outstanding administrative claim held by the Foreign Vendor; and (b) upon recovery of any Foreign Payment, the prepetition claim of the Foreign Vendor will be reinstated in the amount recovered by the Debtors, less the Debtors' reasonable costs to recover the amounts. The Debtors also seek the Court's authority to obtain a written direct verification before issuing payment to a Foreign Vendor that the Foreign Vendor will continue to provide goods and services to the Debtors on Customary Trade Terms for the remaining terms of the Foreign Vendor's agreement with the Debtors, provided that the absence of the written verification will not limit the Debtors' rights sought in this Motion. Further, the Debtors ask the Court to direct all banks to honor and pay all checks presented for payment and to honor all electronic payment requests made by the Debtors related to the prepetition obligations. The Debtors have sufficient cash reserves to pay all prepetition Foreign Vendor obligations on an ongoing basis and in the ordinary course of the Debtors' business. The Court will convene a hearing to consider this motion on August 13, 2009. Objections were due August 6, 2009. About Six Flags Inc. Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Court Allows Committee Members to Trade in Securities ---------------------------------------------------------------- Judge Christopher Sontchi granted a motion by the Official Committee of Unsecured Creditors in Six Flags Inc.'s case to allow its members trade securities issued by the Debtors: -- 8-7/8% senior unsecured notes due 2010; -- 9-3/4% convertible notes due 2013; -- 9 5/8% senior unsecured notes due 2014; -- 4-1/2% convertible notes due 2015 issued by Six Flags, Inc.; -- 12-1/4% senior unsecured notes due 2016 issued by Six Flags Operations Inc.; or -- preferred or common stock of the Debtors or their affiliates. Judge Sontchi also ruled that trading of securities by Committee personnel will be subject to an "ethical wall". The Ethical Wall Procedures provide, among others, that the Committee Personnel will not share non-public Committee information with any other employees of the Ethical Wall Entity other than in compliance with the Ethical Wall procedures. Committee Personnel will keep non-public information generated from Committee activities in files inaccessible to other employees. The Ethical Wall Entity will (a) provide to the United States Trustee an initial certification of the amount and types of its claims against the Debtors and (b) update this information through quarterly reports submitted to the United States Trustee. The Order will apply to an Ethical Wall Entity only if it is engaged in trading of Securities as a regular part of its business from the date of its appointment to the Creditors' Committee, Judge Sontchi ruled. About Six Flags Inc. Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SMITHFIELD FOODS: Moody's Affirms 'Ba3' Rating on Senior Notes -------------------------------------------------------------- Moody's Investors Service affirmed Smithfield Foods, Inc.'s Ba3 rating on its senior secured notes due in 2014, following a proposed $225 million add-on to the existing $625 million of 2014 Notes. Moody's affirmed Smithfield's other long-term ratings, including its corporate family rating and probability of default rating of B2. The company's speculative grade liquidity rating is upgraded to SGL-3 from SGL-4. The rating outlook remains stable. Ratings Affirmed, and certain LGD percentages revised: -- Senior secured notes to be upsized from $625 million to $850 million due 2014 at Ba3 (LGD2, 24%) -- Corporate family rating at B2 -- Probability of default rating at B2 -- Senior unsecured debt ratings at Caa1 (LGD5); LGD percentage to 84% from 83% Rating upgraded: -- Speculative grade liquidity rating to SGL-3 from SGL-4 Smithfield's B2 corporate family rating incorporates the volatility in its operating performance, as well as low margins given the commodity nature of its products. Resulting weak credit metrics have not been offset by the long-term benefits from its market position as the world's largest hog and pork producer. An oversupply of live hogs, reduced demand for pork as a result of a lingering global recession and the temporary effects of the April 2009 outbreak of influenza A(H1N1), and foreign government-imposed restrictions on pork imports in major export markets have precluded earnings improvement. Market prices of U.S. live hogs at the end of July 2009 were $43.40 per hundredweight and have been trading at less than $45 per hundredweight since the start of 2009, well below domestic raising costs. Although the company recently announced plans to reduce its herd by 27,000 sows, more aggressive herd reduction may be required before live hog prices can improve to profitable levels. Nonetheless, credit metrics are expected to improve modestly over the intermediate term with moderated grain costs, higher pork retail prices resulting from industry capacity reductions and cost cuts providing upward support to earnings. The 2014 Notes are guaranteed by material domestic subsidiaries and will benefit from security. The notes have a first lien on tangible and intangible personal property of the borrower and guarantors and certain fixed assets. The notes have a 2nd lien on the collateral pledged to a new $1 billion domestic asset based revolving credit facility. This security is shared with Smithfield's $200 million term loan. The Ba3 rating assigned to the 2014 Notes reflects their structural advantages over Smithfield's senior unsecured debt. The upgrade in the company's speculative grade liquidity rating to SGL-3 reflects the improvements made to Smithfield's capital structure, including the replacement of its straight domestic revolving credit agreement with a $1 billion "ABL" and the additional liquidity represented by the upsizing in the senior secured bonds. Moody's anticipates that Smithfield will rely on its external sources of cash in order to cover capital expenditures, working capital requirements, and scheduled debt maturities until profit margins and internal cash flow generation strengthen. External available liquidity at May 3, 2009 was robust, at $1.1 billion. Senior debt due in October 2009, aggregating $241 million, can thus be repaid from operating cash flow, proceeds from its 2014 Notes and/or by drawings under Smithfield's ABL. The company's only maintenance covenant will be a fixed charge coverage ratio under the ABL. This covenant will be tested only if usage exceeds a high threshold. Moody's does not expect this covenant to be tested in the next twelve months. Moody's most recent rating action for Smithfield on June 25, 2009 lowered the company's corporate family rating and probability of default rating to B2. Smithfield Foods, Inc., headquartered in Smithfield, Virginia, is the world's largest pork producer and processor. Sales for the fiscal year ended May 3, 2009, excluding the revenues of the discontinued beef business, were approximately $12.5 billion. SMITHFIELD FOODS: S&P Assigns 'B+' Rating on $225 Mil. Add-On Debt ------------------------------------------------------------------ Standard & Poor's Ratings Services said that it assigned its issue-level and recovery rating to Smithfield Foods Inc.'s planned $225 million add-on debt issue to its previous $625 million senior secured note offering due 2014. The notes are rated 'B+' (two notches higher than the 'B-' corporate credit rating on the company). The recovery rating is '1', which indicates its expectation for very high (90%-100%) recovery of principal plus six months of pre-petition interest in the event of a payment default. Similar to the previous offering, these notes will be issued pursuant to Rule 144A pursuant to Regulation S under the Securities Act of 1933. Proceeds from the offering will be used to repay other outstanding debt. On August 7, 2009, S&P lowered all of the existing ratings on Smithfield Foods Inc., including the corporate credit rating to 'B-' from 'B'. The ratings on Smithfield Foods Inc. reflect the continued very weak operating performance in the company's hog production segment, volatility of feed costs, cyclicality of the swine industry, and very high debt leverage. Ratings List Smithfield Foods Inc. Corporate credit rating B-/Negative/-- Assigned rating Smithfield Foods Inc. Senior secured debt rating B+ SMITHFIELD FOODS: S&P Downgrades Corporate Credit Rating to 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Smithfield Foods Inc. to 'B-' from 'B'. The outlook is negative. S&P also lowered the senior secured debt rating on the company to 'B+' from 'BB-' and the senior unsecured debt rating to 'B-' from 'B'. "Given the challenging environment in the pork industry, S&P don't expect Smithfield to meet its previous EBITDA expectations," said Standard & Poor's credit analyst Patrick Jeffrey. "Moreover, the company's liquidity is pressured by high debt leverage and encumbered assets." The weak economy continues to impact pricing in Smithfield's hog production segment as the flu outbreak and worldwide recession has hurt demand and held down prices. Therefore, S&P expects the company will find it difficult to improve its very weak operating performance in the near term. Although the company has improved its liquidity through the recent U.S. asset backed loan revolver and a $625 million senior secured note offering, debt leverage was 15.7x for fiscal 2009 and S&P does not expect improvement in this measure until at least the second half of fiscal 2010. This rating action also assumes that Smithfield will refinance existing indebtedness that matures through 2010 and is taking near-term action to eliminate quarterly financial covenants. Approximately $3 billion of debt was outstanding as of May 3, 2009. The ratings on Smithfield Foods Inc. reflect the continued very weak operating performance in the company's hog production segment, volatility of feed costs, cyclicality of the swine industry, and very high debt leverage. Although the company benefits from its position as the leading producer, processor, and marketer of fresh and processed pork in the U.S., Smithfield faced a very challenging operating environment in fiscal 2009 as an oversupply of hogs; high feed costs; and the A(H1N1) virus, which has affected consumer buying patterns and resulted in a significant earnings decline. The company has reduced its hog production capacity, but S&P believes the weak economy and swine flu threat will keep pricing trends uncertain in the near term. S&P also believes that other pork producers in the industry will need to reduce livestock numbers to stabilize hog prices. In fiscal 2009, the company hedged feed costs in anticipation of continued increases but then incurred significant losses as feed costs dropped well below Smithfield's hedged positions. However, S&P believes Smithfield's feed costs should materially decline in fiscal 2010 as its higher cost hedge positions roll off in the first quarter. In addition, Smithfield has implemented a restructuring of its pork operations that is expected to result in cost savings of about $55 million in fiscal 2010 and $125 million in fiscal 2011 (does not include depreciation). The outlook is negative. As a result of very weak operations in fiscal 2009, total debt to EBITDA was very weak for the rating at 15.7x. S&P expects at least the first half of fiscal 2010 to remain weak due to the continuing impact of the A(H1N1) virus and the effects of the weak economy on the company's hog production operations. S&P also remained concerned about the company's ability to meet its quarterly financial covenants under its Euro $300 revolving credit facility in the near term and will continue to monitor the company's progress in eliminating all of its quarterly financial covenants. S&P could lower the rating further over the near term if the company's liquidity is materially pressured due to Smithfield's inability to stabilize its operations. S&P would consider a stable outlook if the company reduces debt leverage to the 8x area, maintains adequate liquidity, and demonstrate sustained improvement in its hog production operations. SPANSION INC: Key Parties Object to Formation of Equity Committee ----------------------------------------------------------------- Spansion Inc., an ad hoc group of holders of floating rate notes issued by Spansion, the Official Committee of Unsecured Creditors and the U.S. Trustee ask the Court to deny a request by Philip Mathers for an appointment of an equity security holders committee. The Debtors relate that while they recognize the right of Dr. Mathers and other equity holders to participate in the Chapter 11 cases, the Debtors believe that an Equity Committee is neither necessary nor advisable at this time. The Debtors note that their liabilities exceed a fair valuation of their asset thus, equity holders are likely to receive little recovery. The Debtors assert that the appointment of an Equity Committee at this time would lead to the further proliferation of professionals compensated by the Debtors' estates and complicate and prolong the already complex Chapter 11 cases. Moreover, the Debtors tell the Court, the interest of equity holders are already adequately represented by an active Board of Directors of Spansion Inc., and senior management team who are complying with their fiduciary duties under Delaware law as well as by the official and unofficial committees that are already active. In support of the Debtors' objection, John P. Brincko, chief restructuring consultant to the Debtors, says the differences between the Debtors' schedules of assets and liabilities and Spansion Inc.'s Annual Report on Form 10-K for the fiscal year ended December 28, 2008, which it filed with the U.S. Securities and Exchange Commission are attributable to different reporting requirements; Generally Acceptable Accounting Principles requirements; the different reporting dates and the inclusion or non-inclusion of the Debtors' foreign subsidiaries. Mr. Brincko informs the Court that both the Creditors Committee and the Ad Hoc Consortium have been vigilant in monitoring the Debtors' activities to ensure that the Debtors' are making sound business judgments and complying with their obligations as debtors-in- possession under the Bankruptcy Court. The Ad Hoc Consortium asserts that Dr. Mathers has not come close to satisfying his heavy burden of establishing that there is substantial likelihood that there will be an equity recovery or that the Debtors' stockholders are not adequately represented. Under the circumstances where Dr. Mathers has not introduced evidence that there is substantial likelihood of a meaningful distribution to equity holders, the Official Committee of Unsecured Creditors says it will adequately represent the interests of the equity security holders without the incurrence of the additional cost and expense of another official committee to the Debtors' estates. Relying on the "adequate representation" language of Section 1102(a)(2) of the Bankruptcy Code, Roberta A. DeAngelis, the Acting U.S. Trustee for Region 3, relates that courts which have considered appointing an official equity security holders committee have concluded that appointment is not necessary in those cases where a debtor's equity security holders are "hopelessly insolvent." Ms. DeAngelis notes that the Debtors appear to be hopelessly insolvent with respect to the position of equity. She relates that subsequent to the Petition Date, the Debtors retained independent auditors, Ernst & Young, to conduct audit and KPMG LLP to conduct impairment analysis. The impairment analysis, Ms. DeAngelis says, included impairment charges totaling approximately $1.6 billion, with goodwill then being value at zero. HSBC Bank USA, National Association, as successor Indenture Trustee under the Indenture, dated as of May 18, 2007, by and among Spansion LLC, as issuer, the Guarantors, and Wells Fargo Bank, National Association, as predecessor Indenture Trustee, pursuant to which the Issuer issued $625 million aggregate principal amount of its Senior Secured Floating Rate Notes Due 2013, concurs with and joins the Objection of the Ad Hoc Consortium. In a certification of counsel, Dr. Mathers advised the Court that that he was struck down with H1N1 Swine Flu symptoms and was unfit to travel to the United States for the scheduled hearing on July 23, 2009. Dr. Mathers requested that the hearing be continued at a later date. Copnsequently, the Court granted Dr. Mathers' request and held that the hearing will be rescheduled only after Dr. Mathers has submitted to the Court a note from his doctor, a public health official, or an airport authority declaring that he is fit to travel to the United States. 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 US$3,840,000,000, and total debts of US$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 US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. SPANSION INC: Latham & Watkins Bills $4.1MM for March to June Work ------------------------------------------------------------------ Pursuant to Sections 330 and 331 of the Bankruptcy Code, various professionals in Spansion Inc. and its affiliates' Chapter 11 cases seek payment of their fees and reimbursement of their expenses: A. Debtors' Professionals Professional Period Fees Expenses ------------ ------ ---- -------- Latham & Watkins LLP 03/02/09 to 05/31/09 $3,219,767 $90,268 Latham & Watkins 05/01/09 to LLP 05/31/09 1,026,584 23,905 Latham & Watkins LLP 06/01/09 to 06/30/09 919,602 10,147 KPMG LLP 03/01/09 to 05/31/09 1,542,516 105,939 KPMG LLP 05/01/09 to 05/31/09 905,817 44,507 KPMG LLP 06/01/09 to 06/30/09 148,411 5,811 Ernst & Young LLP 03/01/09 to 05/31/09 615,030 1,829 Ernst & Young LLP 05/01/09 to 05/31/09 191,810 520 Ernst & Young LLP 06/01/09 to 06/30/09 141,575 371 Baker & McKenzie LLP 03/01/09 to 05/31/09 404,763 6,326 Morgan Stanley & 03/01/09 to Co. Incorporated 05/31/09 400,000 123,655 Morgan Stanley & 05/01/09 to Co., Incorporated 05/31/09 100,000 8,448 Morgan Stanley & 06/01/09 to Co. Incorporated 06/30/09 100,000 5,425 Duane Morris LLP 03/01/09 to 05/31/09 280,923 12,037 Duane Morris LLP 06/01/09 to 06/30/09 68,753 1,937 Wilson Sonsini Goodrich & Rosati, PC 03/01/09 to 05/31/09 125,914 591 Gordian Group, LLC 03/01/09 to 05/31/09 225,000 46,687 Brincko Associates 05/01/09 to Inc. 05/31/09 162,420 30,638 Brinkco Associates 06/01/09 to Inc. 06/30/09 155,000 14,596 Baker & McKenzie LLP 05/01/09 to 05/31/09 87,223 970 Baker & McKenzie LLP 06/01/09 to 06/30/09 104,800 2,066 Gordian Group LLC 05/01/09 to 05/31/09 75,000 7,075 Gordian Group LLC 06/01/09 to 06/30/09 75,000 12,764 Sitrick and Company 03/02/09- Inc. 05/31/09 49,542 1,057 Sitrick and Company 05/01/09 to Inc. 05/31/09 5,373 11 Sitrick and Company 06/01/09 to Inc. 06/30/09 907 0 Latham & Watkins and Baker & McKenzie are the Debtors' counsel. KPMG LLP, Gordian Group and Morgan Stanley are the Debtors' financial advisors. Sitrick and Company is the Debtors' corporate communications consultants. Ernst & Young is the Debtors' independent auditors. Brincko Associates is the Debtors' restructuring advisors. Wilson Sonsini serves as special counsel to the Debtors. The Debtors had submitted with the Court certifications of no objections as to the monthly fee applications of their professionals. Pursuant to the order of the Court Establishing Procedures for Interim Compensation, the Court held that the Debtors may pay 80% of the fees and 100% of expenses of these professionals: Professional 80% Fees 100% Expenses ------------ -------- ------------- Morgan Stanley & Co. Incorporated $80,000 $49,390 Morgan Stanley & Co. Incorporated 80,000 8,448 Duane Morris LLP 82,774 2,887 Brincko Associates Inc. 125,050 22,755 Brincko Associates Inc. 165,404 30,147 Brincko Associates Inc. 129,936 30,638 Sitrick and Company Inc. 4,299 11 Latham & Watkins, LLP 821,267 23,905 Baker & McKenzie LLP 69,778 970 Ernst & Young LLP 153,448 520 KPMG LLP 724,654 44,507 Gordian Group, LLC 60,000 7,075 After informal communication with the Office of the U.S. Trustee, Brincko is voluntarily reducing its expenses for the period from March 1, 2009, through March 31 by $395 and for the period from April 1, 2009, through April 30 by $512. B. Professionals of the Official Committee of Unsecured Creditors Professional Period Fees Expenses ------------ ------ ---- -------- FTI Consulting, Inc. 03/12/09 to 05/31/09 $440,000 $21,263 FTI Consulting, Inc. 05/01/09 to 05/31/09 150,000 5,550 FTI Consulting, Inc. 06/01/09 to 06/30/09 150,000 11,904 Young Conaway Stargatt 03/13/09 to & Taylor, LLP 03/31/09 67,848 8,100 Young Conaway Stargatt 04/01/09 to & Taylor, LLP 05/31/09 45,381 7,735 Young Conaway Stargatt 06/01/09 to & Taylor, LLP 06/30/09 4,976 4,784 Committee Members 03/12/09 to 04/30/09 - 5,564 Committee Members 05/01/09 to 06/30/09 - 698 Young Conaway is the Committee's co-counsel. FTI is the Committee's financial advisor. The Committee said it has received no objections with respect its professionals' fee applications. Pursuant to the order of the Court Establishing Procedures for Interim Compensation, the Court held that the Debtors may pay 80% of the fees and 100% of expenses of these professionals:: Professional 80% Fees 100% Expenses ------------ -------- ------------- FTI Consulting, Inc. $120,000 $5,550 Young Conaway Stargatt & Taylor LLP 36,304 7,735 Committee Members - 5,472 The Committee said that Electron Limited, one of its members, sought reimbursement of $241 for a dinner on March 12, 2009, which has been voluntarily reduced to $150 based on informal comments from the Debtors. The Committee originally sought reimbursement of $5,564. 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 US$3,840,000,000, and total debts of US$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 US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. SPANSION INC: Tessera Wants Probe for Infringement Claims --------------------------------------------------------- Tessera, Inc., asks the Bankruptcy Court to enter an order pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure compelling (i) examination of a designee of Spansion Inc. and its affiliates pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure, and (ii) for production of documents. In late 2005, Tessera filed a complaint against the Debtors in the Northern District of California for infringement of its patents. In April 2007, Tessera filed a complaint against Spansion Inc., and Spansion LLC for infringement of two of the five patents asserted in the California Action in the International Trade Commission. The California court stayed the California Action until determination of the ITC. Tessera avers that Spansion has continued to infringe its patents. Tessera relates it has repeatedly sought information from the Debtors regarding their apparent infringement in violation of the U.S. Patent Law and the ITC Orders, but the Debtors have refused to answer its questions informally. Thus, Tessera asks the Court to compel the Debtors to produce information and certain documents. A list of the requested documents is available for free at: http://bankrupt.com/misc/Spansion_TesseraRFP.pdf 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 US$3,840,000,000, and total debts of US$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 US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. SPECTRUM BRANDS: Sales Down to $589MM; To Exit Ch. 11 This Month ---------------------------------------------------------------- Spectrum Brands reported its results of operations and filed its Form 10-Q with the U.S. Securities and Exchange Commission for the quarter ended June 28, 2009, which is the Company's third quarter of fiscal 2009. As of June 28, 2009, Spectrum Brands reported $2.03 billion in assets, $2.15 billion in total liabilities, and $1.23 billion in total shareholders' deficit. The Company's consolidated net sales for the third quarter were $589.4 million as compared to $638.8 million for the third quarter of fiscal 2008. Reported net sales exclude the Company's growing products division, which is being accounted for as discontinued operations. Net sales, excluding a $35.9 million negative impact due to foreign exchange in the third quarter of 2009, decreased 2.1% from the same quarter last year. Consolidated adjusted EBITDA, a non-GAAP measurement which the Company believes is a useful indicator of the operating health of the business and its trajectory, was $102.0 million for the quarter, up 19.0% over the same quarter of last year. Adjusted EBITDA for the third quarter of 2009 included a negative impact of foreign exchange of $3.8 million. The Company reported a net loss per fully diluted share of $0.71 per share for the quarter. Excluding certain items which management believes are not indicative of the Company's on-going normalized operations, the Company generated adjusted diluted earnings per share of $0.47, a non-GAAP number. These excluded items, net of tax, include: -- Reorganization costs associated with the Company's Chapter 11 filing of $40.6 million, or $0.77 cents per share; -- Net tax adjustments of $17.2 million, or $0.33 per share, to exclude the effect of certain adjustments made to the valuation allowance against net deferred taxes and other tax related items; -- Restructuring and related charges of $2.1 million, or $0.04 per share; and -- Net loss from discontinued operations of $2.0 million, or $0.04 per share related to the Company's growing products portion of its Home and Garden business. During the third quarter of fiscal year 2008, the Company reported a net loss per fully diluted share of $5.58. Gross profit and gross margin for the quarter were $230.3 million and 39.1%, respectively, versus $242.4 million and 37.9% for the same period in fiscal year 2008. Cost of goods sold during the fiscal 2008 third quarter included restructuring and related charges of approximately $14 million related to the shutdown of the Company's battery manufacturing facility in Ningbo, China and various cost cutting initiatives throughout the Company. With tight budget controls and some ongoing organizational streamlining, Selling, General and Administrative (SG&A) expenses were $137.5 million, or 23.3% of sales for the quarter, a $43.1 million reduction from the same quarter last year when SG&A was 28.3% of sales. During the third quarter of 2009, SG&A expenses also benefited from favorable foreign exchange impacts of $11.0 million versus the prior year. Third Quarter Segment Results Global Batteries and Personal Care Continuing the positive trends experienced in recent quarters, the Company's Global Batteries and Personal Care segment reported its tenth consecutive quarter of year-over-year improvement in adjusted EBITDA as a direct result of continued market share growth in many product categories and successful cost cutting initiatives. Net sales for the segment for the third quarter were $296.8 million compared with $344.4 million for the same period last year, a difference of $47.6 million, of which $31.4 million represents the impact of negative foreign exchange. Adjusted EBITDA for the Global Batteries and Personal Care segment was $43.3 million for the quarter, which is up 14.1% over the same quarter of last year as this business continues to benefit from the successful implementation of numerous cost savings initiatives and the decision to exit targeted segments of its private label, lower margin business, particularly in European markets. Excluding $4.6 million of negative foreign exchange impacts during the third quarter of fiscal year 2009, adjusted EBITDA was up 26.2% compared to the same period last year. Profitability for this segment also improved this quarter to $37.3 million, up 12.3% over last year's level. Global battery sales for the quarter were $185.6 million, down $31.9 million from last year due to a negative foreign exchange impact of $19.5 million as well as slower sales in the Latin American market due to a slow-down in consumer spending and inventory de-stocking at retailers driven by economic conditions. In North America, RayovacR branded products are experiencing an outstanding year demonstrated by the Nielson survey results, which continue to show RayovacR outpacing competitors in both dollar share and dollar sales growth. The Company believes that its value positioning is resonating with today's cost conscious consumer. Overall battery sales in North America were up 9.8% over the same period last year with sales of alkaline batteries up 14.9%. European battery sales for the quarter were $73.0 million, down $18.1 million from last year primarily due to a negative foreign exchange impact of $13.0 million and the decision to exit targeted segments of the Company's private label, lower margin business. Latin American battery sales for the quarter were $35.5 million, down from $56.1 million last year. Foreign exchange negatively impacted this quarter's results by $6.0 million, while the slowdown in several economies in that region and de-stocking of inventory at retailers also contributed to slower sales. Global sales of RemingtonR branded products were very stable for the quarter with $93.4 million in sales, including a negative foreign exchange impact of $10.5 million. Last year sales for the same period were $104.8 million. According to a recent Nielson survey dated July 11, 2009, Remington continues to be the fastest growing or top selling product in many of its product categories including men's shaving, women's hair care, personal groomers and women's electric shaving and grooming. Global Pet Supplies The Global Pet Supplies Segment reported net sales of $144.6 million down from $148.6 million in the same period of last year due to $4.4 million of negative foreign exchange impacts this quarter. With strong growth in North America, led by the performance of the Company's DingoR branded products, companion animal sales grew 7.4% for the quarter. For the Company's aquatics products, sales of consumables, such as fish food, remained robust worldwide while sales of larger equipment lagged due to weak economic conditions. Overall aquatics sales for the quarter were down 7.5% with stable year-over-year sales in North America and the Pacific Rim regions, offset by weaker sales in Europe as negative foreign exchange and a shorter than anticipated pond season due to poor weather conditions in early spring, which tempered results there. Benefiting from global cost reduction initiatives, adjusted EBITDA for the Global Pet Supplies segment was $24.9 million for the quarter compared to $22.4 million for the same period last year. Foreign exchange did not have a significant impact on Global Pet Supplies adjusted EBITDA. Segment profitability for Global Pet Supplies for the quarter was $19.2 million compared to $16.8 million for the same period last year. Home and Garden With the prime bug and pest season underway, the Company's Home and Garden Business segment's net sales, which included sales of brands such as CutterR, RepelR, Hot ShotR, and SpectracideR, were $148.0 million, as compared with $145.8 million for the same period last year. Benefiting from successful cost cutting measures as well as positive sales results for the quarter, adjusted EBITDA for the Home and Garden segment for the quarter improved $7.3 million, or 21.6%, over the same period last year to $41.3 million. Segment profitability for the quarter was $38.7 million for the Home and Garden business as compared with $31.3 million in the same period last year. Corporate Expenses and Interest Expense Corporate expenses were $8.2 million for the quarter as compared with $12.4 million in corporate expenses during the third quarter of last year. This decrease was primarily due to the non- recurring $4.5 million charge incurred in the third quarter of fiscal 2008 to write off professional fees incurred in connection with the termination of a purchase contract for the Global Pet Supplies business. Interest expense was $48.7 million compared to $57.1 million in the same period last year, primarily due to the Company's discontinuation of the accrual of $24 million in interest for the quarter on its Senior Subordinated Notes. In accordance with generally accepted accounting principles, as of February 3, 2009, the date of the Company's Chapter 11 filing, the Company ceased accruing interest on its Senior Subordinated Notes. These notes are expected to be cancelled upon the effective date of the Company's Plan of Reorganization, which is expected to occur later this month. This non-accrual of interest was partially offset by default interest accrued on the Company's senior term loans and a change in the required accounting treatment on its interest rate derivative contracts as a result of the Company's Chapter 11 filing. Financial Restructuring Update: Exit From Chapter 11 Expected This Month As previously disclosed, on February 3, 2009, the Company announced a proposed financial restructuring and filed a pre- negotiated Plan of Reorganization with the U.S. Bankruptcy Court that would, if confirmed, significantly reduce the Company's outstanding debt, which management believes will put the Company in a stronger financial position for the future. Under the terms of the Plan, existing common stock will be extinguished, and no distributions will be made to holders of the current equity. In addition, allowed claims with respect to the Senior Subordinated Notes will be refinanced with new common stock and new senior subordinated notes to be issued by the Company. Holders of the allowed claims with respect to the existing notes will receive their pro rata share of approximately 27 million shares of new common stock as well as their pro rata share of approximately $218 million in principal amount of the new subordinated notes. On July 15, 2009, the Honorable Judge King of the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, entered an order confirming the Company's Plan. The official equity committee appointed in the Company's chapter 11 cases has appealed the confirmation and the Fifth Circuit Court of Appeals has imposed a stay pending certain elements of this appeal. While there can be no assurances, the Company believes that the record demonstrates that the Bankruptcy Court reached the correct decision and, accordingly, that the confirmation will be upheld. The Company expects to exit from Chapter 11 protection later this month. Once implemented, on the effective date, the confirmed Plan would reduce the Company's subordinated debt by approximately $840 million, significantly strengthening the Company's balance sheet and overall financial position. In connection with the implementation of the confirmed Plan, the Company expects to close on the effective date an exit financing facility of up to $242 million. The Company's financial statements are available at: http://ResearchArchives.com/t/s?413b About Spectrum Brands Based in Cibolo, Texas, Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- supplies consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products, and portable lighting. Spectrum Brands' business is operated in three reportable segments: (a) Global Batteries and Personal Car; (b) Global Pet Supplies; and (c) Home and Garden. Spectrum Brands has roughly 5,960 employees worldwide, with about 2,700 of those employees working within the United States. In addition, Spectrum Brands holds a 50% interest in a domestic entity; minority interests (less than 25% each) in a domestic entity and a foreign entity; a limited partnership interest in a foreign entity; and a 100% interest in a foreign trust. Spectrum Brands, Inc., and 13 subsidiaries filed separate Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead Case No. 09-50455). The Hon. Ronald B. King presides over the cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr., Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B. Kingman, Esq., in San Antonio, serve as the Debtors' counsel. Sutherland Asbill & Brennan LLP acts as special counsel; Perella Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as tax consultant; and Logan & Company Inc. as claims and noticing agent. As of September 30, 2008, Spectrum Brands had $2,247,479,000 in total assets and $3,274,717,000 in total liabilities. An official committee of equity security holders -- composed of Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and the Peter and Karen Locke Living Trust -- was appointed by the U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009. The Equity Committee has tapped Alston & Bird LLP as its bankruptcy counsel. Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spectrum Brands Inc. and its various subsidiaries. (http://bankrupt.com/newsstand/or 215/945-7000) SPORTS ROCK: Fails to Pay Drink Tax, Files for Chapter 11 Bankr. ---------------------------------------------------------------- Sports Rock Cafe, Inc., and Matrix Night Club have filed for Chapter 11 bankruptcy protection, ThePittsburghChannel.com reports. Sports Rock filed for bankruptcy in the U.S. Bankruptcy Court for the Western District of Pennsylvania, listing $100,000 to $1,000,000 in liabilities against $10,000 to $100,000 in assets. ThePittsburghChannel.com relates that Allegheny County Treasurer John Weinstein said on Friday that he asked sheriff's deputies to padlock the entrances to Sports Rock and Matrix, hours before they would have started serving their usual large summer weekend crowds. According to the report, not all of the bars and restaurants that are required to pay Allegheny County's drink tax have been doing it and the county said that Sports Rock and Matrix are among the worst offenders with a combined $200,000 owed. Citing Mr. Weinstein, the report states that the county took Matrix and Sports Rock to court and gave them a few weeks to pay but they didn't. According to ThePittsburghChannel.com, Sports Rock and Matrix said that they chose not to add on the drink tax to customers when it went into effect in January 2008, instead choosing to pay the tax out of existing drink prices and revenues. Matrix and Sports Rock said in a statement, "Since that time, we have tried our best and did in fact pay some of the drink taxes and have made some payments on the arrearages. Certainly we intend to pay every penny that is owed to Allegheny County and will stay current on the drink tax payments." Citing Mr. Weinstein, ThePittsburghChannel.com states that Sports Rock owes more than $100,000 in drink taxes. Matrix Night Club and Sports Rock Caf‚, Inc., are owned by Thomas Jayson. STANDARD MOTOR: Plans to Raise $75 Million by Issuing Securities ---------------------------------------------------------------- Standard Motor Products, Inc., filed on August 6, 2009, a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission to register the offer and sale from time to time of up to an aggregate of $75 million of securities, which may consist of common stock, preferred stock, debt securities, warrants, depositary shares, stock purchase contracts or units consisting of any of the foregoing. The terms of any offering under the shelf registration statement will be determined at the time of offering. The shelf registration is intended to give the Company flexibility to take advantage of financing opportunities when market conditions are favorable to the Company. The Company intends to use the net proceeds from any subsequent offerings to repay a portion of its outstanding indebtedness under its revolving credit facility. The Company then intends from time to time to borrow funds from its revolving credit facility for general corporate purposes, such as working capital, capital expenditures and acquisitions. A full-text copy of the shelf registration statement is available at no charge at http://researcharchives.com/t/s?414a About Standard Motor Standard Motor Products, Inc. (NYSE: SMP), headquartered in Long Island City, New York, is a manufacturer and distributor of replacement parts for the automotive aftermarket industry. The company is organized into two principal divisions: (i) Engine Management (ignition and emission parts; ignition wires; battery cables; and fuel system parts) and (ii) Temperature Control (air conditioning compressors; other air conditioning parts; and heater parts). Standard Motor's annualized revenues currently approximate $775 million. * * * As reported by the Troubled Company Reporter on July 17, 2009, Moody's Investors Service withdrew all ratings of Standard Motor Products' after the only rated debt having been redeemed upon maturity. Ratings withdrawn include the Corporate Family Rating at Caa1, and $32 million convertible subordinated debentures due July 2009 at Caa2. The last rating action occurred on June 30, 2009, when its CFR was upgraded to Caa1 from Caa2. On June 23, the TCR said Standard & Poor's Ratings Services withdrew its 'CC' corporate credit rating and other debt ratings on Standard Motor Products at the company's request. There is a small amount of rated debt remaining after the recently completed exchange offer. STANDARD MOTOR: Posts $5.31MM Net Earnings for June 30 Quarter -------------------------------------------------------------- Standard Motor Products, Inc., posted net earnings of $5.31 million for the three months ended June 30, 2009, compared to a net loss of $1.09 million for the same period a year ago. For the six months ended June 30, 2009, the Company posted net earnings of $5.84 million compared to net earnings of $11.9 million for the same six-month period a year ago. As of June 30, 2009, the Company had $538.4 million in total assets and $368.6 million in total liabilities. The Company said consolidated net sales for the second quarter of 2009 were $197.5 million, compared to consolidated net sales of $215.3 million during the comparable quarter in 2008. The Company said consolidated net sales for the six month period ended June 30, 2009, were $369.7 million, compared to consolidated net sales of $423.4 million during the comparable period in 2008. Commenting on the results, Mr. Lawrence I. Sills, Standard Motor Products' Chairman and Chief Executive Officer, stated, "We are pleased with our second quarter results as our earnings from continuing operations were substantially ahead of 2008, excluding one time items in both periods. The Company said the most significant event of the period was redeeming the remaining 6.75% convertible bonds and reaching an agreement with banks to extend their agreement for an additional year to March 2013. "We were able to accomplish this by reducing our total debt by 50% or $137.8 million, primarily through working capital improvement over the last 12 months -- an outstanding achievement in these difficult times. We acknowledge the hard work and sacrifice of so many of our people from all areas of our Company," Standard Motor said in a news statement. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4149 About Standard Motor Standard Motor Products, Inc. (NYSE: SMP), headquartered in Long Island City, New York, is a manufacturer and distributor of replacement parts for the automotive aftermarket industry. The company is organized into two principal divisions: (i) Engine Management (ignition and emission parts; ignition wires; battery cables; and fuel system parts) and (ii) Temperature Control (air conditioning compressors; other air conditioning parts; and heater parts). Standard Motor's annualized revenues currently approximate $775 million. * * * As reported by the Troubled Company Reporter on July 17, 2009, Moody's Investors Service withdrew all ratings of Standard Motor Products' after the only rated debt having been redeemed upon maturity. Ratings withdrawn include the Corporate Family Rating at Caa1, and $32 million convertible subordinated debentures due July 2009 at Caa2. The last rating action occurred on June 30, 2009, when its CFR was upgraded to Caa1 from Caa2. On June 23, the TCR said Standard & Poor's Ratings Services withdrew its 'CC' corporate credit rating and other debt ratings on Standard Motor Products at the company's request. There is a small amount of rated debt remaining after the recently completed exchange offer. STANT PARENT CORP: U.S. Trustee Appoints 5-Member Creditors' Panel ------------------------------------------------------------------ The United States Trustee for Region 3 appointed five members to the Official Committee of Unsecured Creditors in the bankruptcy cases of Stant Parent Corp. The Committee members are: -- Masters Machine Co., Inc.; -- Jackson Spring & Mfg. Co.; -- Quality Mold Shop, Inc.; -- Nstar Electric Company; and -- Jasper Rubber Products, Inc. Stant Corp. and five affiliated companies filed for Chapter 11 bankruptcy protection on July 27, 2009 (Bankr. D. Del 09-12647). In its petition, Stant Corp. listed $50 million to $100 million in debts against $50 million to $100 million in assets. According to Bloomberg News, Stant said it is seeking to sell its assets in bankruptcy, citing the global economic decline, high debt levels, and the bankruptcies of General Motors Corp. and Chrysler LLC. HIG Capital LLC bought Stant from Tomkins PLC in June 2008. Pricing, contracting, and budgeting errors at the time of the purchase contributed to Stant overestimating its expected future earnings, leaving the company overleveraged, Bloomberg says, citing Philip Fitzpatrick, chief financial officer of HIG Capital. According to the report, Mr. Fitzpatrick blamed the errors on a lack of internal controls at the Company. Mr. Fitzpatrick said in court documents that Stant has lined up $11 million in debtor-in-possession financing from HIG and GMAC Commercial Finance LLC. Sandra G.M. Selzer, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, in Wilmington, Delaware, serve as the Debtors' counsel. STEEL NETWORK: Can Use BofA's Cash Collateral Until August 21 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of North Carolina authorized, on an interim basis, The Steel Network, Inc., and Applied Science International, LLC, to: -- use cash securing repayment of loan from Bank of America, N.A., until Aug. 21, 2009; and -- grant the bank adequate protection for the bank's interests in the Debtors' use of cash collateral. A second interim hearing on the cash collateral motion is set for 9:30 a.m. on August 18, 2009, in Courtroom 1 of the U.S. Bankruptcy Court, 101 S. Edgeworth Street, Greensboro, North Carolina. The Debtors require access to, and use of, their cash, prepetition accounts receivable and related proceeds in order to pay ordinary operating expenses to generate additional postpetition accounts receivable. The Debtors related that their accounts receivable and inventory are valued at $5,805,889 and their total assets on which the Bank claims a security interest total over $12,614,369, whereas the Bank is owed substantially less -- about $2,340,000 as of the petition date. The Debtors added that they granted the bank a security interest in substantially all of its assets pursuant to a security agreement dated Dec. 6, 2007. As further adequate protection for the use of the bank's cash collateral, the bank is granted and allowed (i) a replacement lien on all postpetition accounts and inventory to the extent that prepetition cash collateral of the Bank is used by TSN, and (ii) a superpriority administrative expense claim. Durham, North Carolina-based The Steel Network, Inc., operates a steel industry. The Company and Applied Science International, LLC filed for Chapter 11 on July 24, 2009 (Bankr. M. D. N.C. Case No. 09-81230.) Katherine J. Clayton, Esq., represents the Debtors in their restructuring efforts. In their petition, the Debtors listed assets and debts both ranging from $10,000,001 to $50,000,000. STERLING MINING: Sunshine Precious Asks Court to Dismiss Case ------------------------------------------------------------- Creditor Sunshine Precious Metals, Inc., and stockholder American Reclamation Inc. ask the court for an order dismissing Sterling Mining Company's Chapter 11 case. Sunshine and American Reclamation tell the Court that the filing of the Sterling petition was an ultra vires act of a sole officer/director, not an act approved or authorized by a properly constituted Sterling board of directors. They state that the Court is obligated to lift the automatic stay, vacate, without prejudice, any orders which have been entered and dismiss the pending Chapter 11 petition because, "if the District Court finds that those who purport to act on behalf of the corporation have not been granted authority by local law to institute the proceedings, it has no alternative but to dismiss the petition." About Sterling Mining Based in Coeur d'Alene, Idaho, Sterling Mining Company (OTCBB:SRLM and FSE:SMX) -- http://www.SterlingMining.com/-- is a mineral resource development and exploration company. The company has a long term lease on the Sunshine Mine in North Idaho's Coeur d'Alene Mining District. The Sunshine Mine is comprised of 5,930 patented and unpatented acres, and historically produced over 360 million ounces of silver from 1884 until its closure in early 2001. Sterling Mining leased the Sunshine Mine in June 2003, along with a mill, extensive mining infrastructure and equipment, a large land package, and a database encompassing a long history of exploration, development and production. As of September 30, 2008, Sterling Mining had $31.9 million in total assets, and $13.2 million in total current liabilities and $1.6 million in total long-term liabilities. In its schedules, the Debtor listed total assets of $11,706,761 and total debts of $14,159,010. Sterling Mining filed for bankruptcy protection on March 3, 2009 (Bankr. D. Idaho Case No. 09-20178). Bruce A. Anderson, Esq., at Elsaesser Jarzabek Anderson Marks Elliott & McHugh, Chartered represents the Debtor as counsel. STOLLE MACHINERY: S&P Withdraws 'B+' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its ratings on Centennial, Colorado-based Stolle Machinery Co. LLC, including the 'B+' corporate credit rating. The company does not file financial statements with the SEC, and S&P does not expect to receive the requisite information to maintain the rating. SYNTAX-BRILLIAN: Greenberg Traurig Wants $6 Million in Fees ----------------------------------------------------------- Greenberg Traurig LLP wants to take home more than $6 million for its work representing Syntax-Brillian Corp., which left bankruptcy about a month ago, while other professionals also are set to cash in, according to Law360. In its final fee application filed with the U.S. Bankruptcy Court for the District of Delaware, the firm requested roughly $5.8 million in compensation and $300,000 in expenses, the report says. Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq: BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated debtors, Syntax-Brillian SPE, Inc., and Syntax Groups Corp. design, develop, and distribute high-definition televisions (HDTVs) utilizing liquid crystal display (LCD) and, formerly, liquid crystal (LCoS) technologies. The Debtors sell their HDTVs under the Olevia brand name. SBC is also the sole shareholder of Vivitar Corp., a supplier of film cameras and a line of digital imaging products, including digital cameras. The Debtors filed separate petitions for Chapter 11 relief on July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A. Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at Greenberg Traurig LLP in New York, represent the Debtors as counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in Wilmington, Delaware, represents the Debtors as Delaware counsel. Five members compose the official committee of unsecured creditors. Pepper Hamilton, LLP, represents the Committee as counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' balloting, notice, and claims agent. When the Debtors filed for protection from their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. TITLEMAX HOLDINGS: To Avoid $164MM Interest Payment, Lenders Say ---------------------------------------------------------------- TitleMax Holdings Inc. may have a hard time securing a requested four-month extension now that secured lenders contend the company is merely trying to avoid paying interest on a matured $164 million credit facility, according to Law360. Merrill Lynch Mortgage Capital Inc. spoke out against TitleMax's bid for more time to file a plan, contending the debtor is seeking to prolong its stay in bankruptcy, according to the report. About Titlemax Holdings Savannah, Georgia-based Titlemax Holdings LLC dba TitleMax, TitleBucks, US TitlePawn, American Title, and CheckMax is a closely held title-lending company with about 550 locations in seven states -- Georgia, South Carolina, Tennessee, Mississippi, Missouri, Virginia and Illinois. It holds customers' vehicle titles in exchange for cash. The Company was founded in 1998 and has 1,800 employees. The Company and its affiliates filed for Chapter 11 protection on April 20, 2009 (Bankr. S. D. Ga. Lead Case No. 09-40805). DLA Piper LLP represents the Debtors in its restructuring efforts. The U.S. Trustee for Region 21 appointed seven creditors to serve on the official committee of unsecured creditors. Titlemax has assets and debts both ranging from $100 million to $500 million. TRUMP ENTERTAINMENT: Incurs $581MM Net Loss on Impairment Charges ----------------------------------------------------------------- Trump Entertainment Resorts Inc. filed its second quarter report on Form 10-Q, disclosing a net loss of $581,075,000 on $255,938,000 in revenues for the quarter ended June 30, 2009. This compares to a net loss of $39,674,000 on $294,674,000 of revenues for the same period in 2008. Loss from operations for the second quarter of 2009 was $566,107,000, primarily due to $556,733,000 in intangible and other asset impairment charges. The impairment charges relate to Trump Plaza's and Trump Marina's long-lived assets. As of June 30, 2009, assets total $1,432,390,000 while debts total $2,070,998,000. As reported by the TCR on August 6, 2009, Trump Entertainment Resorts Inc. filed a Chapter 11 plan built around the proposed sale of the company to shareholder Donald Trump. Under the agreement reached with the Company, Donald J. Trump and BNAC, Inc., an affiliate of Beal Bank Nevada, will invest $100 million cash in the newly private company and become its owners. Beal Bank and Beal Bank Nevada to amend and restate a prepetition credit agreement with the partnership subsidiary of the Company in order to restructure approximately $486 million in debt. Under the amendment, the debt will be assumed by the reorganized company post-emergence and the maturity period for the repayment is extended until December 2020 from the existing maturity of 2012. Under the Plan, only Beal Bank will have recovery, and lower ranked creditors would receive nothing. According to the disclosure statement explaining the Plan, Beal Bank will recover 94% of its claims. The Plan is subject to confirmation by the Bankruptcy Court. "At this time, it is not possible to predict with certainty the effect of the Chapter 11 Case on our business or various creditors, or when we will emerge from these proceedings," the Debtor said in the 10-Q filing. A copy of the Form 10-Q filed with the Securities and Exchange Commission is available for free at: http://researcharchives.com/t/s?4160 About Trump Entertainment Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The Company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the Company and, as its non- executive Chairman, is not involved in the daily operations of the Company. The Company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC, and other affiliates filed for Chapter 11 on February 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of December 31, 2008. Trump Hotels & Casino Resorts, Inc., filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Trump Hotels' obtained the Court's confirmation of its Chapter 11 plan on Apr. 5, 2005, and in May 2005, it exited from bankruptcy under the name Trump Entertainment Resorts Inc. UBS AG: Settlement Talks Continue, Drafting Pact Needs More Time ---------------------------------------------------------------- Carrick Mollenkamp at The Wall Street Journal reports that UBS AG and the U.S. and Swiss governments are continuing settlement talks, as the parties try to structure a deal that will likely result in UBS handing over client information on thousands of accounts tied to U.S. citizens. As reported by the Troubled Company Reporter on August 3, 2009, UBS, along with the Swiss government, reached a settlement agreement with U.S. authorities regarding a tax-evasion probe. The Journal relates that a final round of negotiations the past week was aimed at completing the settlement with the Justice Department. Katharina Bart at The Journal reports that the talks were reportedly stalled over when and how Switzerland transfers client-account data, which is protected by strict bank-secrecy laws. UBS clients' lawyers, according to The Journal, said that the delays are partly tied to the extent the Internal Revenue Service will be allowed to pursue claims against at other Swiss bank clients. The Journal says that department attorney Stuart Gibson told the court on Friday that more time is needed. Switzerland's justice department said in a statement, "We will continue to strive for a solution which is in the interests of both countries." The Journal states that a teleconference is scheduled for Wednesday to update U.S. District Judge Alan Gold, who is overseeing the case. Katharina Bart at The Journal reports that the Swiss cabinet held an extraordinary meeting on UBS's problems with U.S. tax authorities. Switzerland could be trying to make arrangements ensuring any concessions made to U.S. authorities as part of a settlement can be met, which might include a faster administrative process for handing over the date to the IRS, The Journal states, citing analysts. Based in Zurich, Switzerland, UBS AG (VTX:UBSN) -- http://www.ubs.com/-- is a global provider of financial services for wealthy clients. UBS's financial businesses are organized on a worldwide basis into three Business Groups and the Corporate Center. Global Wealth Management & Business Banking consists of three segments: Wealth Management International & Switzerland, Wealth Management US and Business Banking Switzerland. The Business Groups Investment Bank and Global Asset Management constitute one segment each. The Industrial Holdings segment holds all industrial operations controlled by the Group. Global Asset Management provides investment products and services to institutional investors and wholesale intermediaries around the globe. The Investment Bank operates globally as a client-driven investment banking and securities firm. The Industrial Holdings segment comprises the non-financial businesses of UBS, including the private equity business, which primarily invests UBS and third-party funds in unlisted companies. As reported in the Troubled Company Reporter-Europe, UBS has amassed more than US$53 billion in writedowns and losses since the credit crisis began. The bank expects to post a loss in the second quarter of 2009. The bank's net loss for full-year 2008 widened to CHF19.697 billion from of CHF5.247 million in the prior year. Net losses from continuing operations totaled CHF19.327 billion, compared with losses of CHF5.111 billion in the prior year. UBS attributed the losses to negative revenues in its fixed income, currencies and commodities (FICC) area. For the 2008 fourth quarter, UBS incurred a net loss of CHF8.100 billion, down from a net profit of CHF296 million. Net loss from continuing operations was CHF7.997 billion compared with a profit of CHF433 million. The Investment Bank recorded a pre-tax loss of CHF7.483 billion, compared with a pre-tax loss of CHF2.748 billion in the prior quarter. This result was primarily due to trading losses, losses on exposures to monolines and impairment charges taken against leveraged finance commitments. An own credit charge of CHF1.616 billion was recorded by the Investment Bank in fourth quarter 2008, mainly due to redemptions and repurchases of UBS debt during this period. UBS said it will further reduce its headcount to 15,000 by the end of the year. UBS's personnel numbers reduced to 77,783 on December 31, 2008, down by 1,782 from September 30, 2008, with most staff reductions at its investment banking unit. UNIVERSAL MARKETING: Can Access TD Bank's Cash Until August 17 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania authorized, on an interim basis Universal Marketing, Inc., to: -- use cash securing repayment of loan with TD Bank, N.A. until Aug. 17, 2009; and -- provide adequate protection to TD Banks' interest in the cash collateral. A further interim hearing on the Debtor's use of cash collateral is set for August 17, 2009, at 11:00 a.m. before Hon. Eric L. Frank, in Courtroom No. 1, Robert N. C. Nix Sr. Federal Building, 900 Market Street, Philadelphia, Pennsylvania. The Debtor is authorized to use TD Bank's cash collateral to pay expenses related to the operation of its business, in accordance with the budget. The Debtor owed, as of the petition date, TD Bank $7,000,000 pursuant to a line of credit. The Debtor has other unliquidated debts of $15,921,533 due to numerous trade creditors. The Debtor will grant, as adequate protection, a postpetition replacement lien upon, and security interest in all of the assets of the Debtor. Philadelphia, Pennsylvania-based Universal Marketing, Inc., runs an advertising and marketing business. The Company filed for Chapter 11 on July 23, 2009 (Bankr. E. D. Penn. Case No. 09- 15404). Aris J. Karalis, Esq., at Maschmeyer Karalis P.C. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. UNIVERSAL MARKETING: Schedules Filing Extended Until August 24 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Pennsylvania extended until August 24, 2009, Universal Marketing, Inc.'s time to file its schedules of assets and liabilities and statement of financial affairs. Philadelphia, Pennsylvania-based Universal Marketing, Inc., runs an advertising and marketing business. The Company filed for Chapter 11 on July 23, 2009 (Bankr. E. D. Penn. Case No. 09- 15404). Aris J. Karalis, Esq., at Maschmeyer Karalis P.C. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. UNUM GROUP: Net Income Rises to $267MM in Quarter Ended June 30 --------------------------------------------------------------- Unum Group disclosed in a filing with the Securities and Exchange Commission that its external auditors stated there was substantial doubt about the company's ability to continue as a going concern if the automotive industry's financial problems were not resolved soon. At June 30, 2009, the Company's balance sheet showed total assets of $51.33 billion, total liabilities of $43.86 billion and stockholders' equity of $7.47 billion. For three months ended June 30, 2009, the Company reported at net income of $267.20 million compared with a net income of $240.30 million for the same period in 2008. For six months ended June 30, 2009, the Company reported a net income of $432.10 million compared with a net income of $403.4 million for the same period in 2008. During the first six months of 2009, the Company recognized an impairment loss of $19.5 million on securities issued by a U.S. automotive parts company. The majority of the company's revenues are generated by sales to a single domestic automobile manufacturer. Due to the weak economy, automobile production has decreased in recent quarters, with the expectation of further production cuts in future quarters. The U.S. government has made available a $5 billion credit facility to several automotive parts companies to help maintain automotive supplier liquidity. However, with their largest customer likely to undergo a major financial restructuring or bankruptcy filing, the company faces increased challenges. The also company obtained covenant relief from its banks and has no major debt payments due until 2011, in March 2009. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4141 Headquartered in Chattanooga, Tennessee, Unum Group (NYSE:UNM) and its insurance and non-insurance subsidiaries, operate in the United States, the United Kingdom, and, to a limited extent, in certain other countries around the world. The principal operating subsidiaries in the United States are Unum Life Insurance Company of America, Provident Life and Accident Insurance Company, The Paul Revere Life Insurance Company, and Colonial Life and Accident Insurance Company, and in the United Kingdom, Unum Limited. The Company operates in three business segments: Unum US, Unum UK and Colonial Life. VERSACOLD INTERNATIONAL: S&P Keeps 'B' Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said it kept its ratings, including its 'B' long-term corporate credit rating, on Vancouver- based Versacold International Corp. (formerly Eimskip Holdings Inc.) on CreditWatch with developing implications, where they were placed November 6, 2008. A CreditWatch placement of developing means that S&P could raise, lower, or affirm the ratings. S&P had placed the ratings on CreditWatch to reflect both the financial uncertainty that Hf. Eimskipafelag Islands (EI; not rated), the ultimate parent, faces and the announcement that EI started a formal sale process to dispose of its stake in Versacold. On June 30, 2009, EI announced the sale of its 49% interest in Eimskip Tango ehf (direct parent of Versacold) to The Yucaipa Companies, LLC, with an option to acquire the remaining 51% interest currently owned by EI. Yucaipa also owns Americold Realty Trust (not rated), the largest public refrigerated warehouse operator in the U.S. S&P understands that Versacold and Americold would operate independently and there is no imminent plan of combining or consolidating the two companies' operations. The ratings on Versacold reflect the company's stand-alone credit standing with no expectation of any financial support from the parent. "The ratings on Versacold are constrained, in S&P's view, by the company's very high debt level relative to its operating cash flow, resulting in what S&P considers a highly leveraged financial risk profile," said Standard & Poor's credit analyst Greg Pau. "Under the current financial structure, Versacold's credit standing is unlikely to materially improve because its operating cash flow will only allow moderate deleveraging in the medium term," Mr. Pau added. Despite Versacold's market-leading position, S&P believes the public refrigerated warehousing market and related logistic services are fragmented, with low barriers to entry and customers' strong bargaining position over PRW operators. As a result, the industry exhibits a stable but thin EBITDA margin and S&P don't expect material improvement. Notwithstanding the aforementioned concerns, Standard & Poor's believes Versacold's core PRW business operates in an industry with relatively stable demand as the volume of goods requiring PRW and related logistic services is driven by food consumption. The successful sale of Versacold's interests to Yucaipa could, in S&P's view, reduce its earlier concerns that Versacold's business risk and financial risk profiles could be adversely affected by the financially distressed EI. S&P's rating assessment would involve evaluating Yucaipa's credit standing, as well as Versacold's business, operational, and financial strategy after the acquisition. S&P will likely resolve the CreditWatch placement in the next three months. VONAGE HOLDINGS: Posts $2.28 Mil. Net Income for June 30 Quarter ---------------------------------------------------------------- Vonage Holdings Corp. reported record adjusted earnings before interest, taxes, depreciation and amortization of $31 million for the second quarter ended June 30, 2009, up from $12 million in the year ago quarter and $21 million sequentially. Vonage said this is the seventh consecutive quarter of positive and increasing adjusted EBITDA and reflects the Company's continued focus on cost management and the deliberate reduction in marketing spend as it develops and launches its new marketing campaign and eliminates redundant spending. Vonage reported positive income from operations of $15 million, up from a loss of $2 million the prior year and income of $5 million sequentially. Revenue of $220 million was down 3% year-over-year, and 2% sequentially. Vonage said "for the first time ever" it generated net income of $1 million or $0.01 per share excluding the benefit of a $1 million derivative liability adjustment related to the Company's convertible notes. This is an improvement from a loss of $7 million or $0.04 in the second quarter of 2008. GAAP net income was $2 million or $0.01 per share. In its Form 10-Q filed with the Securities and Exchange Commission, Vonage said it booked net income of $2.28 million for the three months ended June 30, 2009, from a net loss of $6.88 million for the same period a year ago. For the six months ended June 30, 2009, Vonage posted net income of $7.55 million from a net loss of $15.8 million for the same period a year ago. As of June 30, 2009, Vonage had $333.5 million in total assets; and $442.0 million in total liabilities; resulting in $108.4 million in stockholders' deficit. Marc Lefar, Vonage Chief Executive Officer, said, "We generated record level adjusted EBITDA as well as increased free cash flow, underscoring our strong financial performance in the quarter. The cost reduction initiatives introduced over the last twelve months are generating important benefits for our company. We achieved a significant milestone, generating positive net income excluding adjustments for the first time in Company history." "While our financial performance was strong, our subscriber base did not grow at expected levels due in part to the challenges of the current economy and the increasing impact of wireless substitution. During the quarter, we launched our new marketing campaign, which we anticipate will drive new customer acquisition over time. Over the coming weeks and months, we will roll out new products and plans that provide significant additional value to customers. These new products will capitalize on growth opportunities in both mobile and international markets while leveraging the technology that delivers Vonage services today." Vonage said during the second quarter 2009 it lost 89,000 net subscriber lines, finishing the quarter with 2.5 million lines in service. Churn rose to 3.2% from 3.0% in the prior year's quarter and 3.1% sequentially. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?414b About Vonage Headquartered in Holmdel, New Jersey, Vonage Holdings Corp. (NYSE: VG) -- http://www.vonage.com/-- provides broadband telephone services with roughly 2.5 million subscriber lines. Its technology enables anyone to make and receive phone calls with a touch tone telephone almost anywhere a broadband Internet connection is available. Vonage's service is sold on the web and through national retailers including Best Buy and Wal-Mart Stores Inc. and is available to customers in the U.S., Canada and the United Kingdom. WESTMORELAND COAL: WML Unit in Default of Leverage Ratio Covenant ----------------------------------------------------------------- Westmoreland Coal Company said at June 30, 2009, its WML operations were in default with a leverage ratio covenant in its debt agreement as a result of customer outages. One of the outages ended in July, and the Company resumed its coal deliveries. The remaining outage, at one of the Company's largest customers, is expected to continue into the fourth quarter of 2009. The Company is currently in discussions with its WML lenders regarding resolution and expects the process of obtaining a waiver to take 60 to 90 days. In addition, WML's default could potentially trigger future cross defaults under the Company's other debt agreements. As a result of the non-compliance, the lenders could require additional fees, the accelerated payment of a portion or the entire debt, or an increase in interest rates. Under these circumstances, the Company has classified a total of $139.2 million of outstanding debt formerly classified as noncurrent as current liabilities. The Company projects it will only be able to meet its projected cash requirements through December 2009. The Company is pursuing these alternatives to remedy its liquidity issues and to continue to improve its overall cash flows: -- The Company is currently in discussions with its lenders about amending covenants, increasing its revolving lines of credit, term debt, and the amount of operating subsidiary dividends available to the Parent; -- The Company is evaluating its mining operation's significant upcoming capital investments for deferral; -- The Company is looking at the potential sale of one or more of its assets. There can be no assurance that any sale could be completed on a timely basis or on terms acceptable to the Company; -- The Company is pursuing alternatives to meet future reclamation bond requirements with reduced amounts of cash collateral as it enters new mining areas; -- The Company is attempting to improve its liquidity by improving the operating performance of its mines. The Company believes that improvements in productivity and a continued focus on cost control at its mining operations during 2009 and 2010 should improve its liquidity; -- The Company froze its pension plan on July 1, 2009, and made stock contributions in the second quarter, both of which will reduce immediate cash expenditures; and -- The Company continues to explore ways to eliminate portions of, as well as reduce its heritage health benefit costs. There can be no assurance that the Company will be successful in completing any of the contemplated transactions on terms acceptable to it, or at all, or that the other actions the Company contemplates will be successful in improving its cash flows or its liquidity. Westmoreland Coal Company (NYSE Amex:WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The Company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. WORLDSPACE INC: Asks Court to Extend Plan Filing Until Dec. 31 -------------------------------------------------------------- Chris Forrester at Rapid TV News reports that Worldspace Inc. has asked the U.S. Bankruptcy Court for the District of Delaware to extend the period of its Chapter 11 bankruptcy until December 31. According to Rapid TV, the original period that the Court granted ended on July 31. Worldspace said in court documents that it has been too busy to compile its reorganization plan. Court documents state that neither Worldspace, nor the other parties involved can prepare a reorganization plan until company founder Noah Samara's Yenura firm hands over its cash. Rapid TV notes that there are doubts whether Mr. Samara can come up with his much-promised cash. Yenura agreed to buy Worldspace's assets for about $28 million, but "has yet to consummate" the deal, Rapid TV states. According to court documents, Yenura was continuing, "to make efforts to . . . raise the necessary capital to consummate the sale". The Court already approved the sale on March 18. The Court requires that the purchase be consummated "promptly", Rapid TV says. Based in the Washington, DC metropolitan area, WorldSpace, Inc. (WRSPQ.PK) -- http://www.1worldspace.com/-- provides satellite- based radio and data broadcasting services to paying subscribers in 10 countries throughout Europe, India, the Middle East, and Africa. 1worldspace(TM) satellites cover two-thirds of the earth and enable the Company to offer a wide range of services for enterprises and governments globally, including distance learning, alert delivery, data delivery, and disaster readiness and response systems. 1worldspace(TM) is a pioneer of satellite-based digital radio services. The Debtors and their affiliates operate two geostationary satellites, AfriStar and Asia Star, which are in orbit over Africa and Asia. The Debtor and two of its affiliates filed for Chapter 11 bankruptcy protection on October 17, 2008 (Bankr. D. Del., Case No. 08-12412 - 08-12414). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors as counsel. The U.S. Trustee for Region 3 appointed creditors to serve on an official committee of unsecured creditors. Neil Raymond Lapinski, Esq., and Rafael Xavier Zahralddin-Aravena, Esq., at Elliot Greenleaf, represent the Committee as counsel. When the Debtors filed for bankruptcy, they listed total assets of $307,382,000 and total debts of $2,122,904,000. XERIUM TECHNOLOGIES: Swings to $7.84MM Net Loss in First Half 2009 ------------------------------------------------------------------ Xerium Technologies, Inc., posted a net loss of $7.84 million for the six months ended June 30, 2009, compared net income of $9.4 million a year ago. Xerium booked net income for the second quarter 2009 of $1.6 million or $0.03 per diluted share, compared to net income of $14.1 million or $0.31 per diluted share for the second quarter of 2008. The decrease is primarily a result of lower sales volumes in the second quarter of 2009 as compared with the second quarter of 2008, and the increase in interest expense in the second quarter of 2009 due to the effect of the mark to market gains of $13.7 million in the second quarter of 2008 based on the loss of hedge accounting, partially offset by lower operating expenses in the second quarter of 2009 as compared with the second quarter of 2008. Net sales for the 2009 second quarter were $120.8 million, a 29.1% decrease from net sales for the 2008 second quarter of $170.4 million. Excluding currency effects, second quarter 2009 net sales decreased 20.0% from the second quarter of 2008, with a decline of 16.8% in the clothing segment and a decline of 25.7% in the roll covers segment. As of June 30, 2009, the Company had $771.8 million in total assets; $150.8 million in total current liabilities, $560.3 million in long-term debt, $13.0 million in deferred and long-term taxes, $66.3 million in pension and other postretirement and postemployment obligations, and $4.62 million in other long- term liabilities, resulting in $26.3 million in stockholders' deficit. The Company had $226.7 million in accumulated deficit as of June 30, 2009. Cash on hand at June 30, 2009 was $20.4 million, compared to $34.7 million at December 31, 2008, and $25.4 million at June 30, 2008. Total bank debt at June 30, 2009 increased to $618.7 million from $609.3 million at March 31, 2009 primarily due to currency effects, partially offset by long-term debt principal payments of approximately $7.5 million. The balance at June 30, 2009 includes $28 million borrowed under the Company's line of credit in the first quarter of 2009. Capital expenditures during the second quarter of 2009 were $4.1 million, compared to $8.8 million in capital expenditures in the second quarter of 2008. The Company forecasts 2009 capital expenditures to be roughly $27 million and that capital expenditure levels in 2010 will be comparable to those for 2009. On July 8, 2009, the Company announced that it was notified by the New York Stock Exchange that because its closing price and average share price for the 30 days ended June 29, 2009 was above $1.00, the Company is no longer considered to be below the $1.00 continued listing criterion of the NYSE. However, the Company's stock price has since varied above and below $1.00 and, should the Company fall out of compliance again, the Company would have six months to regain compliance. "We believe we are approaching the bottom of the market, as our customers shed inventory in advance of a recovery that we believe is likely to build momentum by mid-2010," said Stephen R. Light, President, Chief Executive Officer and Chairman. "While we look forward to when the global economy slowly begins to mend, we remain aggressive in our efforts to reduce costs and advance our three-step strategy to remake our company into one with less debt, exciting new products, and a high performing workforce. Through breakthrough enhancements such as our SMART Technology(TM), we are building a stronger and better operating company based on industry-leading innovations and solid execution. We are realistic about the significant challenges we, and our paper producing customers, face. But we also continue to believe that we will exit 2009 stronger than when we entered it, as we work with our customers to bolster our market leadership position." A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?414c About Xerium Technologies Xerium Technologies, Inc. (NYSE: XRM) is a manufacturer and supplier of two types of consumable products used primarily in the production of paper: clothing and roll covers. The Company, which operates around the world under a variety of brand names, utilizes a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 32 manufacturing facilities in 13 countries around the world, Xerium has roughly 3,300 employees. XERIUM TECHNOLOGIES: Warns of Covenant Breach in Sept. 30 Quarter ----------------------------------------------------------------- Xerium Technologies, Inc., disclosed that absent a significant recovery in revenue resulting from an economic revival in the paper industry, the Company anticipates it will not be in compliance with certain of its financial covenants for the period ending September 30, 2009. Xerium said it intends to seek an amendment to its senior credit facility agreement with the lenders prior to the date when an event of default would occur due to the Company's failure to demonstrate compliance with the financial covenants for the period ending September 30, 2009. The Company has begun work toward this amendment, initiating contact with its lenders, although no assurances can be given that the Company will successfully obtain the lenders' consent to amend the credit facility on this timetable or at all, or amend covenants in a manner sufficient to adequately reduce the risk of default. In light of this risk, and as part of its ongoing focus on enterprise risk management, the Company is continuing to evaluate market conditions and plan for contingencies, including, without limitation, exploring strategic initiatives to reduce its debt, which may include, among other things, an issuance of equity or other securities to repay a portion of its outstanding debt. There can be no assurance that the Company will be able to complete any such strategic initiatives on satisfactory terms, and any such strategic initiatives involving issuances of equity are likely to be highly dilutive to its existing stockholders. Xerium has created a steering committee of the Board of Directors to lead this activity and has retained AlixPartners LLC as its financial advisor to assist in this process. "Our principal liquidity requirements are for debt service, working capital and capital expenditures. We plan to use cash generated by operations as our primary source of liquidity as well as borrowings, if necessary, under the revolving portion of the credit facility and the utilization of certain bank overdraft facilities to meet normal operating requirements for at least the next twelve months. We may have difficulty making additional borrowings under our revolver in light of the anticipated non- compliance with certain financial covenants in our senior credit facility for the period ending September 30, 2009. If expected revenue and profits are not realized in 2009, we may not be able to generate enough cash to meet our obligations. In addition, should the current conditions in the global paper market continue, we may not have sufficient cash to fund our operations or meet our other liquidity requirements," Xerium said in a Form 10-Q filing with the Securities and Exchange Commission last week. As of June 30, 2009, the Company was in compliance with all of the covenants under its senior credit facility. Terms of Credit Facility Xerium's credit facility provides for a $50 million senior secured revolving credit facility and for term loans that had a total principal amount of $650 million as of May 2005. Because the term loans include portions denominated in Euros and Canadian dollars, in addition to a U.S. Dollar denominated portion, the aggregate outstanding principal on the term loans is affected by the Company's currency exchange rates as well as principal repayments. The revolving credit facility matures on November 19, 2011, and the term loans mature on May 19, 2012. The credit facility is secured by substantially all of the Company's assets and the assets of most of its subsidiaries, subject to legal and tax considerations and requirements. The credit facility provides for scheduled quarterly principal payments of the term loans: Currency ------------------------------------ US$ Euro C$ ---------- ---------- ---------- 2009 2,458,174 1,392,040 584,489 2010 3,318,535 1,879,254 789,059 2011 4,055,987 2,296,865 964,406 2012 (first quarter only) 4,916,348 2,784,080 1,168,976 The credit facility requires Xerium to observe and perform numerous affirmative and negative covenants, including certain financial covenants. The financial covenants per the amended credit facility are: (A) Minimum Interest Coverage Ratio -- The ratio of four quarter Adjusted EBITDA to interest expense. Four Fiscal Quarters Ending Ratio --------------------------- ----- March 31, 2009 to March 31, 2010 2.00:1.00 June 30, 2010 to March 31, 2011 2.25:1.00 June 30, 2011 to December 31, 2011 2.50:1.00 March 31, 2012 2.75:1.00 (B) Minimum Fixed Charge Coverage Ratio -- The ratio of four quarter Adjusted EBITDA to fixed charges (interest expense, scheduled principal payments, and cash taxes). Four Fiscal Quarters Ending Ratio --------------------------- ----- June 30, 2009 to March 31, 2012 1.20:1.00 (C) Maximum Leverage Ratio -- The ratio of outstanding debt to four quarter Adjusted EBITDA. Four Fiscal Quarters Ending Ratio --------------------------- ----- June 30, 2009 and September 30, 2009 5.25:1.00 December 31, 2009 5.00:1.00 March 31, 2010 and June 30, 2010 4.75:1.00 September 30, 2010 4.50:1.00 December 31, 2010 and March 31, 2011 4.25:1.00 June 30, 2011 to March 31, 2012 4.00:1.00 For the four fiscal quarters ended June 30, 2009, the Company's interest coverage ratio was 2.24:1, its fixed charge coverage ratio was 1.43:1 and its leverage ratio was 4.82:1. The credit facility defines consolidated capital expenditures for a particular fiscal year as all expenditures required under GAAP to be included in "purchase of property and equipment" or similar items. The credit facility limits the amount of the Company's consolidated capital expenditures in any given fiscal year to an amount not exceeding $50 million for fiscal year 2008 and $35 million for each of fiscal years 2009, 2010, and 2011, exclusive of capital expenditures paid with net insurance and condemnation proceeds; provided that the maximum amount of consolidated capital expenditures permitted in each fiscal year will be increased by 50% of the amount below the maximum not spent in the prior fiscal year (determined without reference to any carryover amount); and provided, further, that solely for fiscal year 2008, the maximum amount that may be carried forward to fiscal year 2009 will equal 100% of the first $10 million of any permitted consolidated expenditures not expended in fiscal year 2008 plus 50% of any remaining expenditures not expended in fiscal year 2008. As of June 30, 2009, there was a $581.4 million balance of term loans outstanding under the Company's senior credit facility. During the first half of 2009, the Company made scheduled principal payments of $9.5 million and mandatory principal repayment of $18.7 million. In addition, as of June 30, 2009, it had an aggregate of $28.0 million outstanding under its current revolving lines of credit, including the revolving credit facility under its senior credit facility and lines of credit in various foreign countries that are used to facilitate local short-term operating needs and an aggregate of $21.8 million available for additional borrowings under these revolving lines of credit. The Company had cash and cash equivalents of $20.4 million at June 30, 2009, compared to $34.7 million at December 31, 2008. The Company booked restructuring expenses of $1.0 million during the second quarter of 2009, consisting almost entirely of headcount reductions. The Company reduced its workforce by 79 employees during the second quarter of 2009, having reduced it by roughly 270 employees in the first quarter of 2009 and nearly 100 employees in the 2008 fiscal year. The Company expects to incur additional restructuring expenses of roughly $3 million during 2009, primarily related to a continuation of streamlining its operating structure. About Xerium Technologies Xerium Technologies, Inc. (NYSE: XRM) is a manufacturer and supplier of two types of consumable products used primarily in the production of paper: clothing and roll covers. The Company, which operates around the world under a variety of brand names, utilizes a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 32 manufacturing facilities in 13 countries around the world, Xerium has roughly 3,300 employees. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total holders Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ ------- ------- ABSOLUTE SOFTWRE ABT CN 107 (7) 24 ACCO BRANDS CORP ABD US 1,100 (107) 135 AFC ENTERPRISES AFCE US 131 (33) 2 AMER AXLE & MFG AXL US 1,920 (736) (1,119) AMR CORP AMR US 24,138 (3,000) (3,129) ARBITRON INC ARB US 220 0 2 ARRAY BIOPHARMA ARRY US 108 (54) 31 ARVINMERITOR INC ARM US 2,627 (846) 3 AUTOZONE INC AZO US 5,296 (45) (527) AVATAR HOLDINGS AVTR US 585 0 N.A. BLOUNT INTL BLT US 474 (36) 151 BOARDWALK REAL E BEI-U CN 2,318 (5) N.A. BOARDWALK REAL E BOWFF US 2,318 (5) N.A. BP PRUD BAY-RTU BPT US 9 8 0 BURCON NUTRASCIE BU CN 4 3 2 CABLEVISION SYS CVC US 9,307 (5,284) (198) CARDTRONICS INC CATM US 468 (10) (50) CENTENNIAL COMM CYCL US 1,455 (948) 180 CENVEO INC CVO US 1,459 (231) 186 CHENIERE ENERGY CQP US 1,920 (436) 27 CHOICE HOTELS CHH US 357 (141) (22) CINCINNATI BELL CBB US 2,029 (638) (147) CLOROX CO CLX US 4,576 (175) (757) DEXCOM DXCM US 65 1 37 DISH NETWORK-A DISH US 7,063 (1,666) (422) DOMINO'S PIZZA DPZ US 461 (1,372) 113 DUN & BRADSTREET DNB US 1,623 (719) (147) DYAX CORP DYAX US 68 (37) 32 EASTMAN KODAK EK US 7,105 (109) 1,100 EINSTEIN NOAH RE BAGL US 150 (4) (47) ENERGY COMPOSITE ENCC US 0 0 0 ENGLISH LANGUAGE ELLG US 2 1 1 EPICEPT CORP EPCT SS 16 (3) 0 EXELIXIS INC EXEL US 333 (123) 29 EXTENDICARE REAL EXE-U CN 1,719 (38) 111 FEMALE HEALTH FHCO US 13 9 8 FIRST IND REALTY FR US 3,198 0 N.A. FORD MOTOR CO F US 204,327 (9,418) 10,625 FORD MOTOR CO F BB 204,327 (9,418) 10,625 FX ENERGY INC FXEN US 38 7 7 GENCORP INC GY US 1,015 1 (8) GENTEK INC GETI US 430 (8) 102 GLG PARTNERS INC GLG US 494 (271) 166 GLG PARTNERS-UTS GLG/U US 494 (271) 166 GOLD RESOURCE CO GORO US 9 9 7 HALOZYME THERAPE HALO US 68 3 52 HEALTHSOUTH CORP HLS US 1,888 (662) (77) HERMAN MILLER MLHR US 767 8 167 HUMAN GENOME SCI HGSI US 670 (55) 117 IDENIX PHARM IDIX US 82 (4) 34 IMAX CORP IMX CN 270 (18) 55 IMAX CORP IMAX US 270 (18) 55 IMMUNOMEDICS INC IMMU US 59 0 7 IMS HEALTH INC RX US 2,030 (22) 318 INCYTE CORP INCY US 159 (291) 101 INSULET CORP PODD US 99 (3) 63 INTERMUNE INC ITMN US 165 (80) 110 IPCS INC IPCS US 553 (34) 68 ISTA PHARMACEUTI ISTA US 82 (17) 31 JAZZ PHARMACEUTI JAZZ US 179 (38) 3 JUST ENERGY INCO JE-U CN 457 (652) (369) KNOLOGY INC KNOL US 639 (44) 37 LIN TV CORP-CL A TVL US 781 (187) 14 LINEAR TECH CORP LLTC US 1,421 (266) 963 LIONS GATE LGF US 1,667 (8) (819) LOGMEIN INC LOGM US 47 7 1 MANNKIND CORP MNKD US 267 (19) 0 MAP PHARMACEUTIC MAPP US 65 1 24 MAXLIFE FUND COR MXFD US 0 0 0 MEAD JOHNSON-A MJN US 1,707 (897) 380 MEDIACOM COMM-A MCCC US 3,700 (463) (281) MEDIDATA SOLUTIO MDSO US 72 (13) (17) MODAVOX INC MDVX US 5 3 (1) MOODY'S CORP MCO US 1,873 (749) (404) NATIONAL CINEMED NCMI US 604 (514) 89 NAVISTAR INTL NAV US 9,656 (1,447) 1,784 NPS PHARM INC NPSP US 144 (219) 80 OCH-ZIFF CAPIT-A OZM US 1,854 (157) N.A. ONCOGENEX PHARMA OGXI US 7 3 4 OSIRIS THERAPEUT OSIR US 129 2 64 OVERSTOCK.COM OSTK US 129 (3) 33 PALM INC PALM US 643 (108) 11 PDL BIOPHARMA IN PDLI US 217 (306) 140 PENN REIT PEI US 3,457 0 N.A. PERMIAN BASIN PBT US 10 0 9 PETROALGAE INC PALG US 5 (23) (7) POTLATCH CORP PCH US 916 0 N.A. QWEST COMMUNICAT Q US 20,226 (1,051) 260 REGAL ENTERTAI-A RGC US 2,563 (246) (78) RENAISSANCE LEA RLRN US 58 0 (6) REVLON INC-A REV US 797 (1,074) 87 SALLY BEAUTY HOL SBH US 1,464 (645) 420 SANDRIDGE ENERGY SD US 2,364 (91) 114 SEMGROUP ENERGY SGLP US 354 (126) 27 SENIOR HOUSING SNH US 2,560 0 N.A. SIGA TECH INC SIGA US 8 (13) (4) SONIC CORP SONC US 828 (22) 75 STANDARD PARKING STAN US 230 4 (13) STEREOTAXIS INC STXS US 43 (10) (3) SUCCESSFACTORS I SFSF US 165 (10) 1 SUN COMMUNITIES SUI US 1,197 (5) N.A. SYNERGY PHARMACE SGYP US 0 (68) (1) TALBOTS INC TLB US 999 (1) (28) TAUBMAN CENTERS TCO US 2,858 (184) N.A. TENNECO INC TEN US 2,767 (289) 240 THERAVANCE THRX US 206 (263) 144 UAL CORP UAUA US 18,805 (159) (2,345) UNITED RENTALS URI US 3,918 (2,628) 316 US AIRWAYS GROUP LCC US 7,857 (46) (548) VECTOR GROUP LTD VGR US 683 (336) 44 VENOCO INC VQ US 725 5 (3) VERIFONE HOLDING PAY IT 843 (165) 299 VERIFONE HOLDING PAY US 843 (14) 299 VERIFONE HOLDING VF2 GR 843 (14) 299 VIRGIN MOBILE-A VM US 323 (281) (141) WARNER MUSIC GRO WMG US 3,988 (142) (680) WEIGHT WATCHERS WTW US 1,085 (792) (309) WESTERN ALLIANCE WAL US 5 0 N.A. WR GRACE & CO GRA US 3,815 (351) 977 ZYMOGENETICS INC ZGEN US 271 (14) 85 ********* 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. Danilo Munnoz, Joseph Medel C. Martirez, Denise Marie Varquez, Philline Reluya, 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 **