/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090817.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 17, 2009, Vol. 13, No. 227 Headlines ABITIBIBOWATER INC: ACI Receipts Exceed Forecast by 19% in June ABITIBIBOWATER INC: Files Redacted Version of Rejected Call Pact ABITIBIBOWATER INC: Has $510 Million Net Loss in Second Quarter ABITIBIBOWATER INC: Proposes Smurfit-Stone Proceeds Sharing Pact ALLIANCE ONE: S&P Affirms 'B+' Rating on $100 Mil. Add-On Notes ALL AMERICAN TITLE: Case Summary 40 Largest Unsecured Creditors ALTRA NEBRASKA: Case Summary & 10 Largest Unsecured Creditors ANTHRACITE CAPITAL: Posts $105M Loss; May Not Meet Paydown Needs AVIS BUDGET: Bank Debt Trades at 10% Off in Secondary Market BABUSKI LLC: Arrested Owner Gets Passport Back BANK OF AMERICA: Names Loli Wu Infrastructure Investment Chief BASIN WATER: Nasdaq Removes Stock From Trading Effective Today BAY MEDICAL: Moody's Extends Review on 'Ba1' Bond Rating BERNARD MADOFF: Massachusetts Dumps Fairfield's Settlement Offer BLOCKBUSTER INC: Bank Debt Trades at 16% Off in Secondary Market BROOKE CORP: District Court Tosses Out Fraud Lawsuit Against Co. BRUCE JENNINGS: Case Summary 12 Largest Unsecured Creditors CALIFORNIA STATE: To Stop Issuing IOUs Sept. 4 on Spending Cuts CARAUSTAR INDUSTRIES: Posts $1-Million Net Loss in June 30 Qtr CARAUSTAR INDUSTRIES: To Issue $85 Mil. Sr. Secured Notes Due 2014 CEMEX SAB: Extends Maturity of US$15 Billion Loan Until Feb. 2014 CENTRAL ILLINOIS: Moody's Upgrades Issuer Ratings From 'Ba1' CERUS CORPORATION: Posts $6MM Net Loss in Quarter Ended June 30 CHIEF CONSOLIDATED: Incurs $2.79 Mil. Net Loss for 2008 CHRYSLER LLC: Creditors Committee Can Pursue Claims vs. Daimler CHRYSLER LLC: Old CarCo Has $2.52 Billion in Real Property CHRYSLER LLC: Old CarCo Transferred $8.58BB 90 Days Before Filing CHRYSLER LLC: Old CarCo Wants Plan Deadline Moved to Nov. 30 CHRYSLER LLC: Old CarCo Wants UGL Equis as Real Estate Brokers CLAIRE'S STORES: Bank Debt Trades at 33% Off in Secondary Market COLONIAL BANCGROUP: BofA Has Court Nod to Freeze $1-Bil. of Assets COLONIAL BANCGROUP: BB&T Takes Banks; Claims vs BancGroup Excluded COLONIAL BANK, MONTGOMERY: Closed; BB&T Assumes All Deposits COMMUNITY BANK, ARIZONA: MidFirst Oklahoma Assumes All Deposits COMMUNITY BANK, NEVADA: DINB Created to Assume Deposits CONSECO INC: Swings to $27.6 Mil. Net Income for June 30 Quarter COYOTES HOCKEY: NHL Ordered to Produce Docs. on Team Relocations CRUSADER ENERGY: Has Equity Value of $100MM, Shareholders Say DAILEY FARM: Case Summary & 4 Largest Unsecured Creditors DANA HOLDING: Bank Debt Trades at 24% Off in Secondary Market DECODE GENETICS: June 30 Balance Sheet Upside-Down by $244 Million DELAWARE HOME: Case Summary & 20 Largest Unsecured Creditors DEX MEDIA EAST: Bank Debt Trades at 23% Off in Secondary Market DEX MEDIA INC: Earns $42.9 Million in 3 Months Ended June 30 DISH DBS: Fitch Assigns 'BB-' Rating on $1 Bil. Notes Offering DOUBLEDOWN MEDIA: Ch. 7 Trustee Selling Global Publishing Rights DWELLING HOUSE SAVINGS: PNC Bank of Pittsburgh Assumes Deposits EDDIE BAUER: Executives Accept Employment from Asset Buyer EL CENTRO ACRES: Voluntary Chapter 11 Case Summary ELLEN TRACY: Faces Involuntary Ch. 7 Petition from 3 Creditors ENERGY PARTNERS: Expects "Significant" Net Loss for 2nd Quarter ESCADA AG: U.S. Unit Files for Chapter 11 in New York ESCADA (USA) INC: Case Summary & 20 Largest Unsecured Creditors FANNIE MAE: 77,876 Loans in July in Obama's Fannie/Freddie Program FAIRPOINT COMMS: Posts $17.82MM Q2 Loss, Hints Possible Bankr. FORD MOTOR: Boosts Production Plans for Rest of 2009 FRASER PAPERS: Proofs of Claim Due by Sept. 30, 2009 FREDDIE MAC: 77,876 Loans July in Obama's Fannie/Freddie Program FRONTIER AIRLINES: Expects to Exit Bankruptcy Protection Sept. 17 FRONTIER AIRLINES: Seniority Issues Doomed Southwest's Bid FRONTIER AIRLINES: Greater Orlando Wants Set Off of Mutual Debts FRONTIER INSURANCE: Rehabilitator Asks Court to Set Bar Date GENERAL GROWTH: NY Comptroller Wants Adequate Protection GENERAL GROWTH: Proposes Calvo & Clark for Calif. Tax Case GENERAL GROWTH: Proposes Silverstein for Calif. Tax Issues GENERAL GROWTH: Second Quarter Report Filed With SEC GENERAL GROWTH: Taps Grant Thornton for Recovery of Tax Refunds GENERAL MOTORS: Seeks Aid Pledge for Magna's Revised Opel Bid GENMAR HOLDINGS: To File for Reorganization Plan by Sept. 29 GENMAR HOLDINGS: Wants to Sell Three Parcels of Real Estate GEORGIA GULF: Bank Debt Trades at 4% Off in Secondary Market GETRAG TRANSMISSION: Walbridge Aldinger Objects to Plan GRAPHIC PACKAGING: Moody's Assigns 'B3' Rating on $180 Mil. Notes GRAPHIC PACKAGING: S&P Gives Positive Outlook, Affirms 'B+' Rating HANOVER INSURANCE: AM Best Assigns BB+ Rating to Jr. Debentures HAYES LEMMERZ: Committee Wants Court to Appoint Examiner HAYES LEMMERZ: UAW, USW Protest Employee Incentive Plans HCA INC: Bank Debt Trades at 5% Off in Secondary Market HEALTHSOUTH CORP: Bank Debt Trades at 3.5% Off in Secondary Market HERBST GAMING: Ballots to Proposed Chapter 11 Plan due Sept. 15 HERBST GAMING: Swings to $4.4 Mil. Net Income for June 30 Quarter HERTZ CORP: Bank Debt Trades at 4% Off in Secondary Market HUNTSMAN ICI: Bank Debt Trades at 6% Off in Secondary Market HYSKY COMMUNICATIONS: Voluntary Chapter 11 Case Summary IDEARC INC: Posts $142 Million Net Income for Second Quarter INSIGHT MIDWEST: Bank Debt Trades at 4% Off in Secondary Market ISP CHEMCO: Bank Debt Trades at 5% Off in Secondary Market ISTAR FINANCIAL: Moody's Downgrades Senior Unsec. Ratings to 'Ca' JACK STARKE: Case Summary & 20 Largest Unsecured Creditors JARDEN CORP: Seeks 3-Year Extension on $600 Million Term Loans JHRE PROPERTIES: Case Summary & 21 Largest Unsecured Creditors JEFFERSON COUNTY: Alabama Senate Approves New Occupational Tax JIM SLEMONS: Files for Chapter 11 Bankruptcy Protection JLY PROPERTIES: Case Summary & 4 Largest Unsecured Creditors KMART CORP: Ex-CEO Verdict on Defrauding Investors Thrown Out LAS VEGAS SANDS: Bank Debt Trades at 22% Off in Secondary Market LAS VEGAS SANDS: Amends $3.3-Bil. Macau Credit Facility LEAR CORP: Has Plan to Pay $1.6 Bil. Debt With Term Loan & Equity LEAR CORP: Bank Debt Trades at 22% Off in Secondary Market LINDA KRAUS: Case Summary & 2 Largest Unsecured Creditors LITTLE TRAVERSE: Moody's Downgrades Corp. Family Rating to 'Ca' LIZ CLAIBORNE: Moody's Downgrades Corporate Family Rating to 'B2' LRC BATTERY: Section 341(a) Meeting Scheduled for September 18 LUMINENT MORTGAGE: Cancels Registration of Common Shares M & M REAL ESTATE: Voluntary Chapter 11 Case Summary MACC PRIVATE EQUITIES: Has Going Concern Doubt Despite Refinancing MAGNA ENT: Hearing on Plea to Sell Ocala Property on Aug. 26 MARK TAYLOR: Case Summary & 12 Largest Unsecured Creditors MERCANTILE BANCORP: Defers Payments on Trust Preferred Shares METALS USA: Names Will Smith II as VP and General Counsel METALS USA: Swings to $10.9 Million Net Loss for June 30 Quarter METRO-GOLDWYN MAYER: Bank Debt at 42% Off in Secondary Market MICHAEL VICK: Gets Two-Year Deal With Philadelphia Eagles MICHAELS STORES: Bank Debt Trades at 10% Off in Secondary Market MI DEVELOPMENTS: Releases 2Q & 6-Mo. Results, MEC Bankr. Update MIDWEST BANC: Breach of Covenant Raises Going Concern Doubt MIKE YOUNG: Files for Chapter 11, Wants Emergency Hearing MILACRON INC: Will Cut 10% of Workforce in North America MILACRON INC: Asks Court's Nod to Change Names Upon Sale Closing MOMENTIVE PERFORMANCE: Bank Debt Trades at 20% Off MXENERGY HOLDINGS: S&P Cuts CCR to 'SD', Then Withdraws Rating NACIO SYSTEMS: Chapter 11 Plan Functioned as Security Agreement NEXIENT LEARNING: Global Knowledge to Buy Assets & Operations NORANDA ALUMINUM: S&P Downgrades Rating on Senior Debt to 'D' NORTEL NETWORKS: Canada to Limit Sale Probe on Existing Safeguards NORTEL NETWORKS: Files 2nd Quarter Report With SEC NORTEL NETWORKS: In Talks for Sale of Remaining Asset, Says E&Y NORTEL NETWORKS: Proposes Entry Into New Lease With Prudential NORTEL Networks: Wants Monitor to Lead Sale of Remaining Assets NORTH MIAMI: U.S. Trustee Sets Meeting of Creditors for Sept. 2 NORTHFIELD LABS: Sept. 4 Voting Deadline for Liquidation Plan Set NV BROADCASTING: Section 341(a) Meeting Set for August 28 NV BROADCASTING: Files Schedules of Assets and Liabilities OLIN CORP: Moody's Assigns 'Ba1' Rating on $150 Million Notes OLIN CORP: S&P Downgrades Corporate Credit Rating to 'BB-' OSHKOSH CORP: S&P Raises Long-Term Corporate Credit Rating to 'B+' OSAGE EXPLORATION: Posts $340,000 Net Loss in Qtr. Ended June 30 PALISADES MEDICAL: Moody's Affirms 'Ba2' Rating on $40.1 Mil. Debt PENNSYLVANIA MUNICIPALITIES: State Considers Takeover of Pensions POLAROID CORP: Wants to Sell Foreign Unit Stock to Frontier PHILADELPHIA NEWSPAPERS: Lenders Want to Compete With Insider Plan PUNTO VERDE: S&P Downgrades Rating on $40 Mil. Notes to 'B' RAINBOWS UNITED: Can Initially Hire Kere Noel as Accountant RAINBOWS UNITED: Can Initially Hire Redmond & Nazar as Counsel RAINBOWS UNITED: Section 341(a) Meeting Scheduled for September 4 RAINBOWS UNITED: Taps Foulston Siefkin on Employment & Tax Matters RAN-DEL LLC: Voluntary Chapter 11 Case Summary RED BRIDGE GREENS: Case Summary & 20 Largest Unsecured Creditors RH DONNELLEY: Files Schedules of Assets & Liabilities RH DONNELLEY: Paid $46 Mil. to Creditors 90 Days Prior to Filing RH DONNELLEY: Proposes to Collect Judgements From Customers RH DONNELLEY: Wants to Assume Lone Tree, Colorado Lease RICHARD MONAGLE: Voluntary Chapter 11 Case Summary ROTECH HEALTHCARE: Moody's Gives Stable Outlook on 'Caa2' Rating SCO GROUP: Inks Change in Control Agreement with CFO Nielsen SEAQUEST DIVING: Limited Partner's Claim is Subordinated SEITEL INC: Posts $28.0 Million Net Loss for Second Quarter 2009 SIRIUS XM: Moody's Assigns 'Caa2' Rating on $250 Mil. Senior Notes SIRIUS XM: S&P Raises Corporate Credit Rating to 'B-' From 'CCC+' SOTHEBY'S CORPORATION: Poor Performance Won't Affect S&P's Rating STARFIRE SYSTEMS: Files for Chapter 11 Bankruptcy Protection STARFIRE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors STATION CASINOS: Posts $65 Million Second-Quarter Loss STOLLE MACHINERY: Moody's Withdraws 'B2' Corporate Family Rating STUART PROPERTY: Oakton Estate to be Auctioned on September 10 SWIFT TRANSPO: Bank Debt Trades at 21% Off in Secondary Market TARGA RESOURCES: Bank Debt Trades at 1.6% Off in Secondary Market TEHAMA SECURED: Voluntary Chapter 11 Case Summary TEUFEL NURSERY: Textron Demands Payment of $5.3MM, Sues Co. & CFO TRIBUNE CO: Bank Debt Trades at 60% Off in Secondary Market TXCO RESOURCES: Swings to $54.6 Million Net Loss for June 30 Qtr UBS AG: Client to Plead Guilty to Failing to File Tax Report UNION BANK, GILBERT: MidFirst Oklahoma City Assumes All Deposits VENETIAN MACAU: Bank Debt Trades at 10% Off in Secondary Market VERSO TECHNOLOGIES: Amends Various Registration of Securities VESTIN REALTY: Taberna OKs Compromise Trust Preferred Obligations VIJAY TANEJA: Potomac Maryland Property to be Auctioned on Sept 17 WESTHAMPTON COACHWORKS: Owner Arrested for Larceny YANKEE CANDLE: Bank Debt Trades at 7% Off in Secondary Market YE HYUNG CHOI: Case Summary & 2 Largest Unsecured Creditors YOUTH & FAMILY: Moody's Changes Outlook on 'B2' Rating to Negative * 5 Banks Shuttered; Year's Failed Banks Now 77 * Bankruptcies Rise 35% in Quarter Ended June 2009 From 2008 * Florida Dirt-Bond Distress Hits 105 Districts * NHB Establishes Los Angeles Office & Adds Five New Professionals * BOND PRICING -- For the Week From August 10 to 14, 2009 ********* ABITIBIBOWATER INC: ACI Receipts Exceed Forecast by 19% in June --------------------------------------------------------------- In its thirteenth report dated August 7, 2009, Ernst & Young, Inc., the Court-appointed monitor in the Canadian proceedings of the CCAA Applicants, apprised the Honorable Mr. Justice Clement Gascon, J.S.C., of the Superior Court Commercial Division for the District of Montreal in Quebec, of: -- an update with respect to the overview of the current market conditions in the forest products industry; -- the CCAA Applicants' four-week cash flow results for the period from June 29, 2009 to July 26, 2009; -- the receipts and disbursements of the CCAA Applicants for the Reporting Period; and -- the current liquidity and revised cash flow forecasts of the Applicants for the 13-week period ending October 25, 2009. E&Y Vice President Alex Morrison reports that mill operating rates for June 2009, according to the Pulp & Paper Week Report, was 64%. In June 2008, the rate was 94%. Total demand has also fallen by approximately 25% on a year over year basis. Until mill operating rates rise above 90%, it is not likely that newsprint prices will move upward, he noted. Although pulp does not form a significant proportion business for the Applicants, it should be noted that pulp prices have begun to rise over the last several months, Mr. Morrison said. He said the Abitibi-Consolidated, Inc. Group's total receipts for the Reporting Period were $42.0 million or 19% higher than projected in the ACI Forecast, and disbursements were $72.2 million or 41% higher than projected in the ACI Forecast. Overall, the ending cash balance was $15.1 million or 19% lower, and available liquidity was $9.9 million or 8% lower, than the ACI Forecast. Bowater Canada Forest Products, Inc.'s total receipts for the Reporting Period were $2.4 million or 3% lower than forecasted, and disbursements and financing expenses were $0.4 million or 1% higher than the BCFPI Forecast. Overall, the ending cash balance was $2.7 million or 51% lower than the BCFPI Forecast, Mr. Morrison said. Pursuant to a 13-week forecast ended October 25, 2009, as of July 26, 2009, the ACI Group had cash on hand of $64.9 million. In addition to this amount, the undrawn portion of the ACI Debtor- in-possession facility was $55.2 million. However, pursuant to the ACI DIP Facility, $12.5 million of this amount must remain undrawn, thereby resulting in net available liquidity under the ACI DIP Facility of $42.7 million. Accordingly, the total liquidity of the ACI Group was $107.6 million as of July 26. On the other hand, BCFPI had cash on hand of $2.6 million as of July 26, 2009. BCFPI's forecast liquidity for the 13 weeks ended October 25, 2009, which includes intercompany funding from BI in the amount of $2.0 million, reflects significant increase in projected liquidity due to the projected receipt of an estimated $25.2 million from BCFPI's interest in the sale of certain timberlands, which are being sold by Smurfit-Stone Container Canada Inc. A full-text copy of E&Y's 13th Monitor's Report is accessible at the SEC at http://ResearchArchives.com/t/s?41ce 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: Files Redacted Version of Rejected Call Pact ---------------------------------------------------------------- AbitibiBowater Inc. and its affiliates previously asked the U.S. Bankruptcy Court for the District of Delaware for authority to reject a certain call agreement, whose related motion was redacted due to "a confidentiality provision that prohibits unilateral disclosure concerning the transactions contemplated therein." The Debtors intend to reject the Amended and Restated Call Agreement, as amended, by and between Abitibi-Consolidated Sales Corporation and Abitibi-Consolidated Inc., and Woodbridge International Holdings Limited, Woodbridge International Holdings S.A., the Woodbridge Company Limited. Under the Amended and Restated Call Agreement, ACSC was granted the right to purchase all of the common and preferred shares of Augusta Newsprint Inc. from WIHL and WIHSA on or before Dec. 31, 2009, at an undisclosed purchase price determined by reference to a formula. ACSC and ANI jointly own Augusta Newsprint, a Georgia general partnership that operates a newsprint mill in Augusta, Georgia. ACSC owns 52.5% of the Partnership and is the managing partner. ANI, a direct subsidiary of WIHL and WIHSA and an indirect subsidiary of Woodbridge, owns the remaining 47.5% interest. If, however, ACSC does not exercise the Call Option, each of (i) ACSC and (ii) WIHL and WIHSA, has the right for a period of one year, to solicit and complete (x) the sale of the Partnership as a going concern, (y) the sale of all or substantially all of the consolidated assets of the Partnership, or (z) a merger or other business combination involving the ANI, Patrick A. Jackson, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates. Specifically, ACSC has one year to solicit and complete a Transaction. If a Transaction is not completed within that time period, the right to solicit and complete a Transaction reverts to WIHL and WIHSA. In this regard, the Call Option "is out of the money," and imposes a substantial burden on the estates by requiring that proceeds from a Transaction in an amount far in excess of the value of ANI's 47.5% interest be paid to WIHL and WIHSA, Mr. Jackson tells the Court. Supporting the Debtors' request, Pierre Rougeau, executive vice- president for Operations and Sales of AbitibiBowater, explains that it is "impractical and unfeasible for ACSC to exercise the [Call] Option." Mr. Rougeau also noted that contrary to the assertions of the Woodbridge Entities, the Amended and Restated Call Agreement is not a constituent part of, or integrated with a certain Partnership Agreement entered into by the same parties to the Call Agreement. Mr. Rougeau added that he was responsible for negotiating the Amended and Restated Call Agreement, and intentionally structured its new provisions "to keep the economics of the Agreements completely separate." Mr. Rougeau maintains that failure to reject the Amended and Restated Call Agreement would enable Woodbridge Entities to consummate a forced sale and retain all equity in ANI. He further reiterates that the Call Agreement can be rejected without rejecting the Partnership Agreement because the two Agreements are entirely separate, and were entered into at different times for different purposes. Against this backdrop, the Debtors seek the Court's authority to reject the Call Agreement as it confers no benefit on their estates and should be rejected to preserve substantial value for their estates. Debtors Reiterate Need to File Agreement Under Seal "The [Call] Agreement contains a confidentiality provision that prohibits unilateral disclosure concerning the transactions it contemplates, and should therefore be filed under seal, along with its exhibits," Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, emphasizes. While the Debtors seek that the Confidential Materials remain under seal, they intend to publicly file redacted versions of the Confidential Materials, Mr. Greecher notes. The Debtors intend to provide an unredacted copy of the Confidential Materials 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 approve. 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: Has $510 Million Net Loss in Second Quarter --------------------------------------------------------------- AbitibiBowater, Inc., filed with the U.S. Securities and Exchange Commission on August 11, 2009, its financial results for the three months ended June 30, 2009. The Company previously informed the SEC of its inability to timely complete its financial report for the first quarter of 2009. AbitibiBowater reported decreased sales of $660 million, or 38.9%, from $1.69 billion in the second quarter of 2008 to $1.03 million in the second quarter of 2009. The Company also reported increased operating loss totaling $222 million from $63 million in the second quarter of 2008 to $285 million in the second quarter of 2009. Net loss attributable to AbitibiBowater Inc in the second quarter of 2009 was $510 million, or $8.84 per common share, an increase in net loss of $259 million, or $4.48 per common share, compared to the second quarter of 2008. William G. Harvey, AbitibiBowater's executive vice president and chief financial officer, stated that in the second quarter of 2009, all of AbitibiBowater's paper and pulp product lines experienced significant demand declines due to trends in the newsprint industry and global economic conditions. North American newsprint consumption continued to decline in the second quarter of 2009 due to a significant decline in circulation and advertising, according to Mr. Harvey. Demand for coated mechanical papers continued to decline in the second quarter of 2009 primarily due to sharp declines in advertising. The industry on specialty papers experienced declines in North American demand for standard uncoated mechanical papers, lightweight or directory grades and super-calendered high gloss papers. The decrease in global demand for market pulp during the second quarter of 2009 was primarily due to decreased demand from offshore markets, particularly Western Europe. The wood products segment continues to be negatively impacted by lower demand due to a weak U.S. housing market, Mr. Harvey said. Following the Chapter 11 bankruptcy filings and the commencement of proceedings under Canada's Companies Creditors' Arrangement Act of AbitibiBowater and its affiliates, the primary sources of liquidity and capital resources of the Company were cash-on-hand, cash provided by operations, and external sources comprised of (i) the Bowater Debtor-in-possession Agreement, (ii) the Abitibi DIP Agreement, and (iii) the Second Amended and Restated Accounts Receivable Securitization Program. Non-core asset sales have been and may continue to be a source of additional liquidity, subject to the approval of the U.S. Bankruptcy Court and the Canadian Court. All other previous external sources of liquidity prior to the Creditor Proceedings are no longer available, Mr. Harvey notes. In March 2009, the Company entered into a non-binding agreement in principle for the sale of their interest in Manicouagan Power Company for approximately C$615 million or US$529 million. AbitibiBowater periodically reviews timberland holdings and sell timberlands as a source of additional liquidity. The Company has targeted approximately $750 million in asset sales by the end of 2009, including our interest in Manicouagan Power Company, other hydroelectric sites, timberlands, sawmills and other assets. As of July 31, 2009, about 54,698,206 shares of AbitibiBowater Inc. common stock are outstanding. Employee and Union-Related Disclosures Mr. Harvey disclosed that as of June 30, 2009, AbitibiBowater employed approximately 13,500 people, of whom approximately 9,700 were represented by bargaining units. The unionized employees are represented predominantly by the Communications, Energy and Paperworkers Union in Canada and predominantly by the United Steelworkers Union in the U.S. "As we develop and implement our reorganization plan and respond to the need to further reduce capacity in some product lines, we expect to have some decline in employment. [Hence], on August 4, 2009, we announced a corporate headcount reduction of approximately 25%, as part of our plan to implement and continue to work on selling, general and administrative austerity measures," according to Mr. Harvey. A significant number of AbitibiBowater's collective bargaining agreements with respect to their paper operations in Eastern Canada expired at the end of April 2009. Negotiations for renewal have not begun, Mr. Harvey added. While negotiations with the unions in the past have resulted in collective agreements being signed, the Company noted that it may not be able to negotiate acceptable new agreements, which could result in strikes or work stoppages by affected employees. Renewal of collective bargaining agreements could also result in higher wage or benefit costs. Thus, the Company said it could experience a disruption of their operations or higher ongoing labor costs. The Company anticipates negotiations with both major unions to occur in late 2009, Mr. Harvey stated. Legal Proceedings AbitibiBowater is involved in various legal proceedings relating to contracts, commercial disputes, taxes, environmental issues, employment and workers' compensation claims and other matters. The Company periodically reviews the status of those proceedings with both inside and outside counsel. The Company avers that it continues to work to resolve matters relating to the expropriation of its assets in the Province of Newfoundland and Labrador in Canada. AbitibiBowater is in a position to submit a notice of arbitration pursuant to the relevant NAFTA provisions now that the mandatory 90-day waiting period following the filing of its notice of intent to arbitrate has passed. The filing of the notice of arbitration may be delayed to provide additional time for settlement opportunities, Mr. Harvey said. Although the final outcome of the litigations is subject to many variables and cannot be predicted with any degree of certainty, AbitibiBowater states it has established reserves for a matter when it believes an adverse outcome is probable and the amount can be reasonably estimated. The ultimate disposition of the litigation matters will not have a material adverse effect on our financial condition, but it could have a material adverse effect on the Company's results of operations in any given quarter or year. A full-text copy of AbitibiBowater, Inc.'s 10-Q filing for the quarter period ended June 2009 is available for free at: http://ResearchArchives.com/t/s?41c7 ABITIBIBOWATER, INC. Unaudited Consolidated Balance Sheets As of June 30, 2009 ASSETS Current Assets: Cash and cash equivalents $479,000,000 Accounts receivable, net 669,000,000 Inventories, net 664,000,000 Assets held for sale 409,000,000 Other current assets 112,000,000 ---------------- Total Current Assets 2,333,000,000 Fixed assets, net 4,369,000,000 Goodwill 53,000,000 Amortization intangible assets, net 464,000,000 Other assets 556,000,000 ---------------- Total Assets $7,775,000,000 ================ LIABILITIES AND DEFICIT Liabilities not subject to compromise: Current Liabilities: Accounts payable and accrued liabilities $403,000,000 Debtor-in-possession financing 236,000,000 Short-term bank debt 672,000,000 Current portion of long-term debt 633,000,000 Liabilities associated with assets held for sale 60,000,000 ---------------- Total Current Liabilities 2,004,000,000 Long-term debt, net of current portion 35,000,000 Pension & other postretirement projected benefit obligations 79,000,000 Other long-term benefits 129,000,000 Deferred income taxes 165,000,000 ---------------- Total Liabilities Not Subject to Compromise 2,412,000,000 Liabilities Subject to Compromise 6,424,000,000 ---------------- Total Liabilities 8,836,000,000 Commitments and Contingencies Deficit: AbitibiBowater, Inc. shareholders' deficit: Common stock, $1 par value, 54.7 shares outstanding as of June 30, 2009 55,000,000 Exchangeable shares at no par value, 3.0 shares outstanding as of June 30, 2009 173,000,000 Additional paid-in capital 2,521,000,000 Deficit (3,566,000,000) Accumulated other comprehensive loss (384,000,000) ---------------- Total AbitibiBowater shareholders' deficit (1,201,000,000) Non-controlling interests 140,000,000 ---------------- Total Deficit (1,061,000,000) Total Liabilities and Deficit $7,775,000,000 ================ ABITIBIBOWATER, INC. Unaudited Consolidated Statements of Operations Three Months Ended June 30, 2009 Sales $1,036,000,000 Cost and expenses: Cost of sales 784,000,000 Depreciation, amortization and cost of timber 148,000,000 Distribution costs 119,000,000 Selling and admin. expenses 31,000,000 Closure costs, impairment & other charges 240,000,000 Net gain on disposition of assets (1,000,000) ---------------- Operating loss (285,000,000) Interest expense (143,000,000) Other (expense) income, net (30,000,000) ---------------- Loss before reorganization items and income taxes (458,000,000) Reorganization items, net (89,000,000) ---------------- Loss before income taxes (547,000,000) Income tax benefit (provision) 34,000,000 ---------------- Net loss including non-controlling interests (513,000,000) Net loss (income) attributable to non-controlling interests 3,000,000 ---------------- Net loss attributable to AbitibiBowater ($510,000,000) ================ ABITIBIBOWATER, INC. Unaudited Consolidated Statements of Cash Flow Six Months Ended June 30, 2009 Cash Flows from Operating Activities: Net loss including non-controlling interests ($723,000,000) Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities: Share-based compensation 3,000,000 Depreciation, amortization and cost of timber 314,000,000 Closure costs, impairment and other charges 270,000,000 Write-downs of mill stores inventory 12,000,000 Deferred income taxes 10,000,000 Net pension contributions (188,000,000) Net gain on disposition of assets (53,000,000) Gain on extinguishment of debt 0 Amortization of debt discount (premium), net 48,000,000 Loss (gain) on translation of foreign currency debt 6,000,000 Non-cash reorganization items, net 46,000,000 DIP financing costs 29,000,000 Changes in working capital: Accounts receivable 148,000,000 Inventories 37,000,000 Income taxes receivable and payable (25,000,000) Accounts payable & accrued liabilities 78,000,000 Other, net 51,000,000 ---------------- Net cash (used in) provided by operating activities 63,000,000 Cash Flows from Investing Activities: Cash invested in fixed assets (53,000,000) Dispositions of assets 69,000,000 Decrease (Inc.) in L/C deposit requirements, net 39,000,000 Cash received in monetization of derivative financial instruments 5,000,000 ---------------- Net cash provided by (used in) investing activities 60,000,000 Cash Flows from Financing Activities: Cash dividends to non-controlling interests (7,000,000) DIP financing 236,000,000 DIP financing costs (27,000,000) Term loan financing 0 Term loan repayments 0 Short-term financing, net (24,000,000) Issuance of long-term debt 0 Payments of long-term debt (5,000,000) Payments of financing and bank credit facility fees (9,000,000) Payment of equity issuance fees on Convertible Notes 0 ---------------- Net cash provided by (used in) financing activities 164,000,000 ---------------- Net decrease in cash & cash equivalents 287,000,000 Cash & cash equivalents: Beginning of period 192,000,000 ---------------- End of period $479,000,000 ================ 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 Smurfit-Stone Proceeds Sharing Pact ---------------------------------------------------------------- By this motion, AbitibiBowater Inc. and its affiliates seek permission from Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware to honor and perform their obligations under these agreements: (1) A Letter Agreement dated September 30, 2008, with Smurfit- Stone Container Enterprises, Inc., and its wholly owned Canadian subsidiary, Smurfit-Stone Container Canada Inc., relating to a proceeds sharing arrangement from the sale of certain Quebec timberlands; and (2) Related Agreements, specifically: * A Wood Fiber Supply Agreement by and between Bowater Canada Forest Products, Inc. CFPI, Abitibi-Consolidated Inc., and Smurfit; * A Waiver and Release Agreement between BCFPI and SSC Canada; * An Indemnity Agreement by and between SSC Canada and BCFPI; and * A Termination Agreement by and between SSC Canada, BCFPI and ACI. Under the Letter Agreement, the Debtors will receive about 50% -- or about C$28 million -- of the net proceeds Smurfit will realize from its pending sale of the timberlands to the Quebec government, as condition upon the consummation of the Related Agreements. The Quebec Timberlands constitute the largest privately owned harvestable land located between the Saguenay-Lac-St-Jean and Mauricie regions in the south central portion of the Province of Quebec, comprising of continuous blocks of timberlands located north/northeast and east of the Gouin Reservoir, or the Optioned Lands, William G. Harvey, executive vice-president and chief financial officer of AbitibiBowater, Inc., related in a declaration filed with the Court. BCFPI has "a right of first refusal," among other things, on the Optioned Land, which represents approximately 98% of the total surface area of the Timberlands, according to Mr. Harvey. In 2008, Smurfit initiated discussions with the Debtors regarding the possibility of BCFPI waiving the Right of Refusal in consideration of a Proceeds Sharing Arrangement. Subsequently, Smurfit and BCFPI entered into the Letter Agreement which provides that: (i) BCFPI would waive its Right of Refusal in connection with any sale of the Optioned Land for a period of two years; (ii) Smurfit would promptly undertake a marketing process for the Timberlands; (iii) In the event of a Sale of the Optioned Land, Smurfit would agree to share with BCFPI 50% of the net proceeds from the Sale; and (iv) In the event the Net Proceeds are less than C$50 per acre, Smurfit would pay BCFPI only the portion of the proceeds exceeding C$25 per acre. In accordance with the terms of the Letter Agreement, Smurfit retained Scotia Capital Inc. to commence marketing of the Timberlands and certain related Timberland assets. After a comprehensive multi-step process, SSC Canada and Societe Generale de Financement du Quebec signed a Purchase Agreement LA Tuque Timberland Assets, to which Smurfit will sell the Timberland Assets for C$60.4 million. The Optioned Land represents 98.27% of the Timberland Assets being sold under the Timberlands APA. Therefore, Mr. Harvey says, the purchase price attributable to the Optioned Land amounts to C$59,355,000, subject to customary closing adjustments, including property taxes. Transaction costs are estimated to total C$2.5 million to C$3.5 million. Pursuant to, and as a condition of, the Letter Agreement, the parties also entered into a Wood Fiber Supply Agreement pursuant to a term sheet, which essentially provides that BCFPI and ACI, as suppliers, agree to sell to Smurfit, undisclosed oven-dried metric tons of jack pine wood chips from the La Tuque Region, to be delivered at the La Tuque Mill. To address a condition that Smurfit must satisfy under the Timberlands APA, the Debtors also ask the Court to allow them to terminate existing Harvesting and Existing Supply Contracts by and among Smurfit and BCFPI or ACI. The Debtors assert that the Harvesting Contracts and Existing Supply Contracts contain unfavorable pricing terms for their mills and thus, the contract rejection will benefit their estates. The Wood Fiber Supply Agreement, on the other hand, ensures a minimum volume output of wood fiber for the term of the Agreement, in addition to creating a favorable pricing scheme for the Debtors' wood fiber, Kelley A. Cornish, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, in New York, tells the Court. Ms. Cornish emphasizes that the Debtors will realize C$28 million from their interests in Smurfit's timberlands, which provides immediate cash infusion into the Debtors' estates. In addition, the Proceed Sharing Arrangement establishes a wood fiber supply agreement that provides the Debtors' mills with a minimum annual production volume of wood fiber at market prices, on otherwise favorable terms, for a seven-year period. The Debtors aver that their entry into the Letter Agreement and its related agreements, as well as the Wood Fiber Supply Agreement, replaces several previous agreements that contained less favorable terms. Debtors Seek to File Documents Under Seal Ms. Cornish relates that publicly disclosing certain documents related to the Proceed Sharing Agreements, which contain information on the pricing and volume of wood fiber to be sold by Smurfit, will harm the Debtors, their creditors and counterparties to the Agreements. In this light, the Debtors ask Judge Carey to allow them to file redacted versions of the Proceed Sharing Agreements. The Court will convene a hearing on September 2, 2009, to consider the Debtors' request. Objections, if any, must be filed by August 26. 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). ALLIANCE ONE: S&P Affirms 'B+' Rating on $100 Mil. Add-On Notes --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' issue-level rating on Alliance One International Inc.'s 10% senior unsecured notes due 2016 following the company's $100 million add-on note issue. This transaction increases the aggregate amount of the company's June 2009 $570 million 10% senior unsecured notes issue to $670 million. The notes were issued under Rule 144A and subject to the same indenture. The recovery rating is '4', indicating S&P's expectation of average (30%-50%) recovery for lenders in the event of a payment default. S&P expects that net proceeds from the new transaction will be used to reduce outstanding short-term seasonal foreign lines of credit. Following the prior financing, which included $115 million of convertible subordinated notes due 2014, S&P estimate pro forma leverage for the 12 months ended June 30, 2009, to be in the 5x area. The ratings on Alliance One reflect the challenging business environment in which the company operates, marked by global competition, political unrest in certain leaf-tobacco producing countries, exposure to foreign currency volatility (particularly a weak U.S. dollar), and declining cigarette consumption in most mature markets, including the U.S. and Western Europe. In addition, there is customer concentration risk and relatively high debt leverage. Alliance One benefits from its position as one of the two leading independent leaf tobacco merchants; its sourcing diversification; and solid, long-standing customer relationships with the leading cigarette manufacturers. Ratings List Add-On Notes Alliance One International Inc. Senior Unsecured debt rating $100 mil 10% notes due 2016 B+ ALL AMERICAN TITLE: Case Summary 40 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: All American Title Agency, LLC, Debtor 601 N. Hicks Road Palatine, IL 60067 Bankruptcy Case No.: 09-29704 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: David R. Herzog, Esq. Herzog & Schwartz PC 77 W Washington Suite 1717 Chicago, IL 60602 Tel: (312) 977-1600 Email: drhlaw@mindspring.com Total Assets: $1,216,439 Total Debts: $1,240,291 A list of the Company's 40 largest unsecured creditors is available for free at: http://bankrupt.com/misc/ilnb09-29704.pdf The petition was signed by Christy J. Jepson, managing member of the Company. ALTRA NEBRASKA: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Altra Nebraska, LLC PO Box 967 Healdsburg, CA 95448 Case No.: 09-42348 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court District of Nebraska (Lincoln Office) Debtor's Counsel: Robert J. Bothe, Esq. McGrath, North, Mullin & Kratz, PC Suite 3700 First National Tower, 1601 Dodge St. Omaha, NE 68102 Tel: (402) 341-3070 Fax: (402) 341-0216 Email: rbothe@mnmk.com Robert P. Diederich, Esq. McGrath, North, Mullin & Kratz, PC Suite 3700 First National Tower, 1601 Dodge St. Omaha, NE 68102 Tel: (402) 341-3070 Fax: (402) 341-0216 Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $50,000,001 to $100,000,000 The petition was signed by David Traversi. Debtor's List of 10 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Air Resource Specialists $10,078 Inc. Black Hills Energy Natural Gas $175,945 Transmission Gemma Power Systems $89,801 Gibson Dunn & Crutcher LLC Professional Services $853,416 333 Southy Grand Avenue Los Angeles, CA 90071 Koley Jessen P.C. Professional Services $111,486 Pryor Cashman LLP Professional Services $45,804 Puritan Manufacturing, Inc. $14,596 Stetson Building Products $61,488 Inc. Stoel Rivers, LLP Personal Services $195 Terracon Consultants, Inc. $11,185 ANTHRACITE CAPITAL: Posts $105M Loss; May Not Meet Paydown Needs ---------------------------------------------------------------- Anthracite Capital, Inc., posted a net loss of $105.58 million for the three months ended June 30, 2009, compared with a net income of $33.31 million for the same period in 2008. For the six months ended June 30, 2009, the Company posted a net loss of $80.00 million compare with a net income of $87.21 million for the same period in 2008. At June 30, 2009, the Company's balance sheet showed total assets of $2.74 billion, total liabilities of $2.24 billion and stockholders' equity of $504.67 million. Pursuant to amendments to its secured facilities with Bank of America, Deutsche Bank and Morgan Stanley which closed in May 2009, the Company is required to make payments to reduce the principal balances under the facilities by certain specified amounts as of the end of each quarter, commencing for the quarter ended September 30, 2009. The Company's current projections show that the Company will not be able to meet the principal paydown requirements for certain secured lenders on September 30, 2009. If the Company does not satisfy these paydown requirements, the Company has 90 days to cure such shortfall or an event of default would occur. However, the Company may not have the liquidity to cure such shortfall, if it were to occur, while meeting the Company's other obligations after September 30, 2009, and the Company then would not be able to continue as a going concern. The Company continues to seek ways to refinance or restructure its unsecured indebtedness, thereby reducing its interest expense and improving liquidity. These efforts include the debt-for-equity exchange and junior unsecured subordinated debt restructurings. The Company will endeavor to complete additional debt-for-equity exchanges to reduce the $4,056,000 interest payment due on the convertible notes on September 1, 2009, thereby increasing the funds available to meet the secured lenders principal paydowns due by September 30, 2009. No assurance can be given that this endeavor will be successful, the Company said. In addition, financings through collateralized debt obligations, which the Company historically utilized, are no longer available. A full-text copy of the Company's Form 10-Q filed with the Securities and Exchange Commission is available for free at http://ResearchArchives.com/t/s?41e0 A copy of the Company's press release explaining its second quarter results is available for free at: http://researcharchives.com/t/s?41f3 Restructuring of Secured Credit Facilities During the second quarter of 2009, the Company amended each of its secured credit facilities with Bank of America, Deutsche Bank and Morgan Stanley. The facilities have been amended to provide similar terms which, among other things, extend the maturities of all facilities to September 30, 2010 and eliminate all mark-to- market provisions. In addition to eliminating outstanding margin calls and the right to make future margin calls, existing scheduled amortization payments were replaced with cash management requirements as described below. The new interest rate on the facilities is the greater of 30-day LIBOR plus 3.50% or 5.50%. The Secured Creditors continue to hold the same primary collateral consisting of U.S. and non-U.S. denominated commercial real estate loan assets. All cash received from these assets will first be used to pay interest and then to reduce the respective lender's principal balance. The Company has agreed that the principal balance for each Secured Creditor will be reduced through this process by an agreed upon amount, measured on a cumulative basis, at the end of each quarter starting with the period ending September 30, 2009. If such required reduction is not satisfied, the Company has 90 days to cure such shortfall or an event of default would occur. In addition, the Secured Creditors received a security interest in all unencumbered assets of the Company as well as a subordinated second lien on each other's primary collateral. The cash flows generated by the bulk of the formerly unencumbered assets will be deposited monthly into a cash management account that will be available for use by the Company for its operations pursuant to a prescribed budget subject to (i) no defaults under the facilities and (ii) the cure of any outstanding deficiency in the required reductions of the principal balance of any Secured Creditor. In the event of an uncured event of default, the cash management account proceeds must be used to pay down the relevant lender's debt until the deficiency has been cured. The existing financial covenants were modified and apply to the Company under each facility as follows: * Tangible net worth (as defined in each applicable facility) cannot fall below $400 million (plus 75% of any equity offering proceeds) at any quarter end, and cannot fall (with certain exclusions) by more than 20% in any one quarter or more than 40% in any four quarter period; * Debt service coverage ratio must (as defined in each applicable facility) be at least 1.40; and * Total recourse debt to tangible net worth ratio may not exceed 2.5. The Company also agreed to certain other terms which establish (i) certain required quarterly operating earnings, (ii) restrictions or conditions on the incurrence or restructuring of any indebtedness and the payment of fees and other amounts to BlackRock Financial Management, Inc. and its affiliates, (iii) limits on acquiring new assets and (iv) required minimum quarterly operating earnings for each quarter of the extended term, commencing with the quarter ended June 30, 2009. In addition, certain definitions, including an event of default, under each facility were made substantially uniform among the facilities. The maturity date for each facility may be further extended to March 30, 2011 at the discretion of the respective Secured Creditor. However, if certain conditions are met, the decision by a lender to not extend may result in such lender losing the benefit of certain new collateral received under the restructuring. In addition, the waiver of covenant breach under the Company's secured credit facility with Holdco 2 related to the failure of the Company to repay certain borrowings due under such facility has been extended through October 22, 2009. Restructuring of Unsecured Debt In May and July 2009, the Company restructured a significant portion of its trust preferred securities and junior subordinated notes. Pursuant to an exchange agreement with certain holders of the Company's $135 million in trust preferred securities and ?50 million junior subordinated notes, the Company issued $168.75 million and EUR62.5 million principal amount of new junior subordinated notes in exchange for those securities. The exchanges closed on May 29, 2009. The new notes bear a fixed interest rate of 0.75% per year until the earlier of May 29, 2013 and the date on which the Company's senior secured credit facilities with Bank of America, Deutsche Bank and Morgan Stanley have all been paid in full (the "Modification Period"). The interest rates on those securities were, as of the date of the exchanges, 7.50%, 7.73% and 7.77% per year on the trust preferred securities and EURIBOR plus 2.60% per year on the junior subordinated notes. After the Modification Period, the new notes bear interest at the same rates as the securities for which they were exchanged. The new notes are contractually senior to the Company's remaining trust preferred securities. The new notes otherwise generally have the same terms, including maturity dates and capital structure priority, as the securities for which they were exchanged. The coupons that were due on April 30, 2009 on certain of the securities being exchanged were satisfied by payments at the new lower rate of 0.75% per year on the increased principal amounts. On July 22, 2009, the Company issued $31,250 aggregate principal amount of junior unsecured subordinated notes (the "Notes") in exchange for $25,000 aggregate liquidation amount of trust preferred securities of Anthracite Capital Trust I (the "Exchanged Securities"). The Notes bear a fixed interest rate of 0.75% per year until the earlier of (i) July 22, 2013 and (ii) the date on which all of the existing senior secured loans under the Company's senior secured credit facilities with Bank of America, Deutsche Bank and Morgan Stanley are fully amortized, including certain deferred restructuring fees. After the July 22 Modification Period, the Notes bear interest at the same rate as the Exchanged Securities. Interest payments are payable quarterly, commencing on July 30, 2009. The first interest payment due on July 30, 2009 under the Notes is for the interest period from April 30, 2009. All obligations under the Exchanged Securities, including accrued and unpaid interest thereunder, were accordingly fully discharged and satisfied. The Notes are contractually senior to the Company's remaining trust preferred securities, and otherwise generally have the same terms, including maturity date, as the Exchanged Securities. As a result of the restructuring, during the Modification Period and the July 22 Modification Period, the Company is subject to limitations on its ability (i) to pay cash dividends on shares of its common stock or preferred stock, or redeem, purchase or acquire any equity interests and (ii) to create, incur, issue or otherwise become liable for new debt other than trade debt, similar debt incurred in the ordinary course of business or debt in exchange for or to provide the funds necessary to repurchase, redeem, refinance or satisfy the Company's existing secured and senior unsecured debt. In addition, during such periods, the cure period for a default in the payment of interest when due is three days. On May 27, 2009, in a privately negotiated exchange transaction with a holder of Anthracite's 11.75% Convertible Senior Notes due 2027, the Company issued 850,000 shares of common stock in exchange for $4 million principal amount of the notes. On July 1, 2009, in a privately negotiated exchange transaction with a holder of Anthracite's 11.75% Convertible Senior Notes due 2027, the Company issued 900,000 shares of common stock in exchange for $3 million principal amount of the notes. On July 29, 2009, the Company issued 1,317,000 shares of its common stock in exchange for $3,951 aggregate principal amount of its 11.75% Convertible Senior Notes due 2027 in a privately negotiated exchange with a holder of such notes. The Company estimates that the effect of the combined unsecured restructurings and exchanges will result in cash savings of over $13 million per year during the period that the lower coupons are in effect. The Company intends to use cash from these savings for general corporate purposes and to reduce indebtedness under its senior secured credit facilities. About Anthracite Capital Anthracite Capital, Inc., is a specialty finance company focused on investments in high yield commercial real estate loans and related securities. Anthracite is externally managed by BlackRock Financial Management, Inc., which is a subsidiary of BlackRock, Inc., one of the largest publicly traded investment management firms in the United States with roughly $1.307 trillion in global assets under management at December 31, 2008. BlackRock Realty Advisors, Inc., another subsidiary of BlackRock, provides real estate equity and other real estate-related products and services in a variety of strategies to meet the needs of institutional investors. Anthracite Capital reported net income of $25.5 million for the three months ended March 31, 2009, compared to $53.9 million for the same period in 2008. Going Concern Doubt After auditing the Company's 2008 report on Form 10-K, the Company's independent registered public accounting firm issued an opinion saying that the uncertainty relating to the outcome of the Company's ongoing negotiations with its lenders have raised substantial doubt about the Company's ability to continue as a going concern. The Company obtained agreements from its secured credit facility lenders on March 17, 2009, that the going concern reference in the independent registered public accounting firm's opinion to the consolidated financial statements was waived. AVIS BUDGET: Bank Debt Trades at 10% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which Avis Budget Car Rental LLC is a borrower traded in the secondary market at 89.58 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.58 percentage points from the previous week, The Journal relates. The loan matures on April 1, 2012. The Company pays 125 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's CCC+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Based in Parsippany, New Jersey, Avis Budget Group, Inc., provides car and truck rentals and ancillary services to businesses and consumers in the United States and internationally. As reported by the Troubled Company Reporter on April 30, 2009, Standard & Poor's Ratings Services assigned a '6' recovery rating to Avis Budget Car Rental LLC's (CCC+/Developing/--) unsecured notes, indicating expectations of negligible (0%-10%) recovery of principal in the event of a payment default. Avis Budget Car Rental LLC is a subsidiary of Avis Budget Group, Inc. (CCC+/Developing/--). BABUSKI LLC: Arrested Owner Gets Passport Back ---------------------------------------------- Babuski LLC owner Jamal Eljwaidi, aka Jean Marc El Jwaidi and who was arrested on his return to Las Vegas from London on July 29 for allegedly scamming millions of dollars from senior citizens, got his passport back, Mary Manning at Las Vegas Sun reports. Mr. Eljwaidi, along with employees, called potential investors to offer them high interest payments if they would invest in short- term loans for a shopping center project on 9.23 acres of land near Russell Road and the 215 Beltway in the southwest Las Vegas Valley, The Sun states, citing investigators with Secretary of State Ross Miller's office. Mr. Eljwaidi, according to The Sun, alleged took investors' money for real estate developments but used it in personal expenses. Mr. Miller said that the shopping center, which was scheduled to be completed in October 2009, is still an empty lot, The report says. Mr. Eljwaidi had to pay $200,000 to get the passport back, The Sun states. The Sun relates that Mr. Eljwaidi planned to leave for France on Saturday. The Sun notes that he will forfeit money and be arrested again if he breaches the terms of the agreement reached for his passport. A hearing in the bankruptcy court is set for August 19, The Sun reports. Mr. Eljwaidi's preliminary hearing will be on October 16, according to the report. Steve Green at Las Vegas Sun relates that Babuski filed for bankruptcy to weeks before Mr. Eljwaidi's arrest to block foreclosure proceedings by creditor Vestin Mortgage, involving land that Babuski said it is developing at Russell Road and the 215 Beltway. Babuski LLC is one of real estate investment companies owned by Jean Marc El Jwaidi. The Company filed for bankruptcy in order to block foreclosure proceedings by creditor Vestin Mortgage involving land Babuski said it is developing at Russell Road and the 215 Beltway. Las Vegas, Nevada-based Babuski LLC filed for Chapter 11 on June 29, 2009 (Bank. D. Nev. Case No. 09-21360). In its petition, the Debtor said it has assets and debts ranging from $10 million to $50 million. BANK OF AMERICA: Names Loli Wu Infrastructure Investment Chief -------------------------------------------------------------- Bank of America Merrill Lynch on August 12 announced that Loli Wu has been appointed managing director and head of Americas transportation and infrastructure investment banking. Mr. Wu, who will begin in October, will be based in New York and report to John Pratt, global head of aerospace and defense, autos, capital goods and transportation corporate and investment banking. Mr. Wu will be responsible for leading the firm's transactions in the transportation and infrastructure sectors, including shipping, railroads, ports, trucking, logistics and airlines. "Loli is considered one of the top bankers in the transportation and infrastructure sector with nearly 20 years of experience in the sector and a deep transactional track record," said Mr. Pratt. "We look forward to working closely with Loli to leverage his knowledge and leadership as we continue strengthening our transportation and infrastructure practice to meet our clients' evolving needs." "Bank of America Merrill Lynch is a global leader in transportation and infrastructure corporate and investment banking. Loli's addition enhances our deeply talented team and will position us to gain even greater market share," said Purna Saggurti, global head of industrials, energy and power, and real estate, gaming and lodging corporate and investment banking. Mr. Wu was most recently at Citigroup where he spent more than 12 years, most recently as head of surface transportation and logistics investment banking. Prior to that, he served as a management consultant at A.T. Kearney focused on merger and acquisition advisory and privatization advisory for the transportation industry. He began his career as a reporter for the Journal of Commerce, an influential logistics and shipping industry publication. Mr. Wu received a bachelor's degree in East Asian Studies and Political Science from Yale University in 1989 and a Masters of Business Administration from The Wharton School at the University of Pennsylvania in 1994. BofA Ends Arbitration Practice Robin Sidel at The Wall Street Journal reports that BofA dropped a rule that forced clients into arbitration to settle disputes, allowing consumers to go to court to resolve disagreements over credit-card charges, auto and boat loans, and bank accounts. The Journal quoted a BofA spokesperson as saying, "We think arbitration is a very fair way to resolve the issue. A lot of our customers did not feel the same way, so we decided to make a change." BofA, says The Journal, will still require mandatory arbitration for disputes involving its securities businesses and wealthiest clients. 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. BASIN WATER: Nasdaq Removes Stock From Trading Effective Today -------------------------------------------------------------- Basin Water, Inc., reports that The Nasdaq Stock Market, Inc., has determined to remove from listing the Company's common stock, effective at the opening of the trading session today, August 17, 2009. Based on a review of the information provided by the Company, Nasdaq Staff determined that the Company no longer qualified for listing on the Exchange pursuant to Listing Rules 5100, 5110(b), and IM-5100-1. The Company was notified of the Staffs determination on July 16, 2009. The Company did not appeal the Staff determination to the Hearings Panel, and the Staff determination to delist the Company became final on July 27, 2009. Based in Rancho Cucamonga, California, Basin Water, Inc. -- http://www.basinwater.com/-- aka Basin Water Technology Group, Inc. designs, builds and implements systems for the treatment of contaminated groundwater, industrial process water and air streams from municipal and industrial sources. Basin Water and its affiliate, Basin Water-MPT, Inc., filed for Chapter 11 on July 16, 2009 (Bankr. D. Del. Case No. 09-12526) Jaime Luton, Esq., and Michael R. Nestor, Esq. at Young Conaway Stargatt & Taylor represent the Debtors in their restructuring efforts. The Debtors listed total assets of $50,599,051 and total debts of $14,235,275. BAY MEDICAL: Moody's Extends Review on 'Ba1' Bond Rating -------------------------------------------------------- Moody's Investors Service is extending the Watchlist review period for the Ba1 bond rating of Bay Medical Center. The rating remains on Watchlist for potential downgrade. This rating action affects the Series 2007A and 2007B variable rate demand obligations ($126.4 million outstanding). The Series 2007A & B bonds are jointly supported by Bay Medical Center and a direct Letter of Credit from Regions Bank. The extension of the Watchlist review period reflects BMC's imminent plans and current negotiations to refinance a portion of the outstanding bonds. Management expects to finalize its debt structure and financing terms within the next three months. Moody's expects to complete its review when the final plans are determined. The last rating action was on May 1, 2009, when the rating was downgraded to Ba1 from Baa3 and placed on Watchlist for possible further downgrade. BERNARD MADOFF: Massachusetts Dumps Fairfield's Settlement Offer ---------------------------------------------------------------- The Associated Press reports Massachusetts Secretary of State William Galvin's office has rejected investment firm Fairfield Greenwich Group's proposal to repay almost $6 million to state investors who were victims of Bernard Madoff's Ponzi scheme. The AP relates that Brian McNiff, Mr. Galvin's spokesperson, said that the agency refused the full refund to almost a dozen investors in the state because officials are still trying to identify all the affected investors. According to The AP, Mr. Galvin sued Fairfield Greenwich, one of the "feeder funds" for Mr. Madoff, in April 2009 on allegations that its officials were coached by Mr. Madoff on how to answer federal investigators' questions and that they misrepresented how much they knew. Fairfield Greenwich was also sued in May 2009 by the trustee overseeing the liquidation of Mr. Madoff's assets. The trustee was seeking the return of about $3.5 billion to pay off claims from burned investors and claiming that the firm ignored clear warning signs of fraud by Mr. Madoff, the report says. Fairfield Greenwich has denied the accusations, the report states. Mr. Galvin, The AP relates, said that Fairfield Greenwich invested more than 95% of its Sentry Funds' $7.2 billion in assets in Bernard L. Madoff Investment Securities. Fairfield Greenwich said that it made clear to investors that Mr. Madoff held substantially all of the Sentry funds' assets, The AP reports. A hearing has been set for September by the secretary of state's securities division, according to The AP. The AP states that Fairfield Greenwich spokesperson Thomas Mulligan said that the firm wants to settle the Massachusetts case so it can focus on more significant legal action that it's facing. Citing Mr. Mulligan, The AP relates that Fairfield Greenwich's proposed deal includes provisions to repay other Massachusetts investors who are identified later, but not at the full refund the firm is offering the investors that are already identified. "It would be irresponsible for Fairfield to devote any more time or resources to a case involving at most a dozen people with losses of $6 million, when Fairfield is facing litigation involving thousands of investors and hundreds of millions of dollars elsewhere," the report quoted Mr. Mulligan as saying. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on December 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Mr. Madoff's fraud were allegedly at least US$50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors. BLOCKBUSTER INC: Bank Debt Trades at 16% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Blockbuster, Inc., is a borrower traded in the secondary market at 84.40 cents-on- the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.40 percentage points from the previous week, The Journal relates. The loan matures Aug. 20, 2011. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B1 rating and Standard & Poor's CCC+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Blockbuster, Inc., headquartered in Dallas, Texas, is a leading global provider of in-home movie and game entertainment with approximately 7,400 stores throughout the Americas, Europe, Asia, and Australia. Revenues are about $5.3 billion. As reported by the Troubled Company Reporter, in April 2009, Moody's Investors Service downgraded Blockbuster's Probability of Default Rating to Caa3 from Caa1 and its Corporate Family Rating to Caa2 from Caa1. In addition, Moody's affirmed Blockbuster's speculative grade liquidity rating at SGL-4 and it secured bank credit facilities rating at B1. Moody's also rated the proposed $250 million revolving credit facility, which expires in September 2010, a senior secured rating of B1. The rating outlook is stable. Standard & Poor's Ratings Services lowered its corporate credit rating on Blockbuster to 'CCC' from 'B-'. S&P removed the ratings from CreditWatch with negative implications, where they were placed on March 4, 2009. At the same time, S&P lowered the issue- level ratings on both its secured debt to 'CCC+' from 'B' and its subordinated debt to 'CC' from 'CCC'. The outlook is negative. Fitch Ratings affirmed Blockbuster's long-term Issuer Default Rating at 'CCC' and said it expects to rate the amended $250 million bank credit facility at 'B/RR2'. In addition, Fitch took these rating actions ($450 million bank credit facility upgraded to 'B/RR2' from 'CCC+/RR3'; $100 million term A loan upgraded to 'B/RR2' from 'CCC+/RR3'; $550 million term B loan upgraded to 'B/RR2' from 'CCC+/RR3'; and $300 million senior subordinated notes downgraded to 'C/RR6' from 'CC/RR6'. The Rating Outlook is Stable. The company had approximately $818 million of debt outstanding as of Jan. 4, 2009. BROOKE CORP: District Court Tosses Out Fraud Lawsuit Against Co. ---------------------------------------------------------------- U.S. District Judge Carlos Murguia has dismissed a lawsuit filed by insurance agents against Brooke Corp. and its financing arm Aleritas Capital Corp., saying that the claims aren't specific enough. The lawsuit "contains broad and conclusory language insufficient to give defendants notice of the specific conduct alleged," The Associated Press quoted Judge Murguia as saying. According to The AP, the agents accused Brooke and Aleritas of racketeering and fraud in April, claiming that the firms inflated the price of insurance agencies they sold to the plaintiffs around the country and tacked on fees for services they never provided. The AP relates that the agents also included six banks as defendants, alleging that they took over Aleritas' loans to the agents and directed that they receive the agents' commissions. The plaintiffs could fix the problems and resubmit the case, but the banks won't be included in the suit, as the plaintiffs' claims were conclusory and not linked to Aleritas, The AP states, citing Judge Murguia. Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) -- http://www.brookebanker.com/-- is an insurance agency and finance company. The Company owns 81% of Brooke Capital. The majority of the Company's stock was owned by Brooke Holding Inc., which, in turn was owned by the Orr Family. A creditor of the family, First United Bank of Chicago, foreclosed on the BHI stock. The Company's revenues are generated from sales commissions on the sales of property and casualty insurance policies, consulting, lending and brokerage services. Brooke Corp. and its affiliate, Brooke Capital Corp. filed for Chapter 11 protection on October 28, 2008 (Bankr. D. Kan. Case No. 08-22786). Angela R. Markley, Esq., is the Debtors' in-house counsel. Richard A. Wieland, the U.S. Trustee for Region 20, appointed seven creditors to serve on an Official Committee of Unsecured Creditors for the Debtors' Chapter 11 cases. Albert A. Riederer was appointed Chapter 11 Trustee. Husch Blackwell Sanders LLP in Kansas City, Missouri, represents the Chapter 11 Trustee. The Debtors listed assets of $512,855,000 and debts of $447,382,000. BRUCE JENNINGS: Case Summary 12 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Bruce G. Jennings dba Victorella Farm dba Victorella Properties dba Sunapee Springs Water Company 66 West Court Road Sunapee, NH 03782 Bankruptcy Case No.: 09-13097 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court District of New Hampshire Live Database (Manchester) Debtor's Counsel: Alan L. Braunstein, Esq. Riemer & Braunstein 3 Center Plaza Boston, MA 02108 Tel: (617) 880-3516 Fax: (617) 880-3456 Email: abraunstein@riemerlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 12 largest unsecured creditors is available for free at: http://bankrupt.com/misc/nhb09-13097.pdf The petition was signed by Mr. Jennings. CALIFORNIA STATE: To Stop Issuing IOUs Sept. 4 on Spending Cuts --------------------------------------------------------------- Controller John Chiang said that California would stop issuing IOUs on September 4, instead of on October 2, as the state's revised budget would replenish its coffers, Stu Woo at The Wall Street Journal. As reported by the Troubled Company Reporter on July 16, 2009, the Golden State began issuing the IOUs (called "registered warrants" by California) on July 2 to certain individuals and entities, including citizens who were entitled to a tax refund or vendors who were entitled to payments. The IOUs were obligations of the State of California that were negotiable, and bore interest. The staff's view that the IOUs are securities didn't affect California's right to issue or repay the IOUs. According to The Journal, California said that it would repay the IOUs with interest when it had sufficient funds. The TCR reported on July 29, 2009, that Gov. Arnold Schwarzenegger signed a plan to close California's $24 billion budget shortfall. Gov. Schwarzenegger used his line-item veto powers to cut about $500 million in spending, in addition to $15.6 billion in reductions approved by legislators. The new cuts mostly hit health and children's programs. The Journal notes that state officials will be able to secure a $1.5 billion interim loan before August 28 to pay off the IOUs. The Journal relates that the state has issued about 327,000 or $1.95 billion in IOUs. The Journal states that those who received or who purchased the IOUs can redeem them through the treasurer's office starting September 4. According to the report, the warrants pay a 3.75% annualized interest rate -- a $1,000 IOU would pay about $6.70 in interest at most. Officials could issue IOUs again this year if the state's economic plight worsened, The Journal states, citing Mr. Chiang. According to The Journal, economists said that state finance officials have been using old data, so revenue projections in the budget revision might be too optimistic. Treasurer Bill Lockyer said on Thursday that California would borrow a total of $10.5 billion from Wall Street to meet cash needs for the fiscal year, The Journal relates. CARAUSTAR INDUSTRIES: Posts $1-Million Net Loss in June 30 Qtr -------------------------------------------------------------- Caraustar Industries, Inc., and its subsidiaries narrowed its net loss to $1,044,000 for the three months ended June 30, 2009, from a net loss of $3,602,000 for the same period a year ago. During the six months ended June 3, 2009, the Debtors posted $5,441,000, higher compared to $3,439,000 net loss for the same period in 2008. As of June 30, 2009, the Debtors had $364,205,000 in total assets; and $56,187,000 in total current liabilities, $218,750,000 in liabilities subject to compromise, $8,200,000 in long-term debt, less current maturities, $73,954,000 in pension liability, and $15,032,000 in other liabilities; resulting in $7,918,000 in shareholders' deficit. 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?41e8 As reported by the Troubled Company Reporter, the Bankruptcy Court on August 4, 2009, entered an order confirming the Debtors' First Amended Joint Plan of Reorganization dated June 30, 2009, as supplemented by the Plan Supplement dated and filed July 17, 2009, and the Annex to the Plan Supplement dated and filed July 29, 2009. Copies of the Debtors' First Amended Joint Plan of Reorganization dated June 30, 2009, the Plan Supplement and the Annex to the Plan Supplement are available at no charge at: -- First Amended Joint Plan of Reorganization dated June 30, 2009. See http://ResearchArchives.com/t/s?41ea -- Plan Supplement to Debtors' First Amended Joint Plan of Reorganization. See http://ResearchArchives.com/t/s?41eb -- Annex to the Plan Supplement to Debtors' First Amended Joint Plan. See http://ResearchArchives.com/t/s?41ec On the date all of the conditions precedent to confirmation and consummation of the Plan are satisfied or waived, the Company will emerge from bankruptcy as a private company controlled by the Senior Noteholders. The Debtors expect the Plan to become effective August 19, 2009. The Quarterly Report was filed late. On August 10, Caraustar explained that the report wont' be filed within the prescribed time period due the failure of its independent accounting firm to timely complete certain administrative steps regarding the voluntary bankruptcy proceeding. The Accounting Firm's failure adversely impacted its ability to complete its review, Caraustar said. The Quarterly Report was filed August 14. About Caraustar Industries Headquartered in Austell, Georgia, Caraustar Industries, Inc. -- http://www.caraustar.com/-- is one of North America's largest integrated manufacturers of 100% recycled paperboard and converted paperboard products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores; folding cartons; gypsum facing paper and specialty paperboard products. Caraustar reached an agreement with holders of roughly 83% of its 7-3/8% Senior Notes maturing June 1, 2009, and 91% of its 7-1/4% Senior Notes maturing May 1, 2010, on the terms of a cooperative financial restructuring that would reduce the Company's debt obligations by roughly $135 million. The Company and its domestic subsidiaries filed voluntary Chapter 11 petitions along with a pre-negotiated Plan of Reorganization in the United States Bankruptcy Court for the Northern District of Georgia on May 31, 2009 (Bankr. N.D. Ga. Lead Case No. 09-73830). James A. Pardo, Jr., Esq., and Mark M. Maloney, Esq., at King & Spalding represent the Debtors on their restructuring efforts. The Debtors listed $50 million to $100 million in assets and $100 million to $500 million in debts. CARAUSTAR INDUSTRIES: To Issue $85 Mil. Sr. Secured Notes Due 2014 ------------------------------------------------------------------ Caraustar Industries, Inc., filed with the Securities and Exchange Commission a Form T-3 for Application for Qualification of Indenture under the Trust Indenture Act of 1939. The Company will issue, pursuant to the terms of the Company's First Amended Joint Plan of Reorganization, $85,000,000 aggregate principal amount of Senior Secured Notes due 2014, on a pro rata basis to each holder of an Allowed Senior Notes Claim, on the later of the Plan Effective Date and the date of the qualification of the Indenture pursuant to the Application for Qualification. The Company expects that the Effective Date and the consummation of the transactions contemplated by the Plan will occur on or about August 19, 2009 -- the date upon which the Plan becomes effective. On the Plan Effective Date, among other things, the Company will change its domicile from North Carolina to Delaware through a merger with a subsidiary formed under the laws of the State of Delaware. A full-text copy of the Form T-3 is available at no charge at: http://ResearchArchives.com/t/s?41ed A full-text copy of the Indenture is available at no charge at: http://ResearchArchives.com/t/s?41ee About Caraustar Industries Headquartered in Austell, Georgia, Caraustar Industries, Inc. -- http://www.caraustar.com/-- is one of North America's largest integrated manufacturers of 100% recycled paperboard and converted paperboard products. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores; folding cartons; gypsum facing paper and specialty paperboard products. Caraustar reached an agreement with holders of roughly 83% of its 7-3/8% Senior Notes maturing June 1, 2009, and 91% of its 7-1/4% Senior Notes maturing May 1, 2010, on the terms of a cooperative financial restructuring that would reduce the Company's debt obligations by roughly $135 million. The Company and its domestic subsidiaries filed voluntary Chapter 11 petitions along with a pre-negotiated Plan of Reorganization in the United States Bankruptcy Court for the Northern District of Georgia on May 31, 2009 (Bankr. N.D. Ga. Lead Case No. 09-73830). James A. Pardo, Jr., Esq., and Mark M. Maloney, Esq., at King & Spalding represent the Debtors on their restructuring efforts. The Debtors listed $50 million to $100 million in assets and $100 million to $500 million in debts. CEMEX SAB: Extends Maturity of US$15 Billion Loan Until Feb. 2014 ----------------------------------------------------------------- CEMEX, S.A.B. de C.V. disclosed that it has completed its refinancing of the majority of the Company's outstanding debt. The refinancing plan extends the maturities of roughly US$15 billion in syndicated and bilateral obligations with roughly 75 banks and private placement noteholders, providing for a semi- annual amortization schedule, with a final maturity of February 14, 2014. Final documentation has been signed and all conditions precedent have been satisfied in full Key components of the refinancing plan include: * A revised maturity schedule running through February 2014, paying LIBOR plus 450bps to its bank creditors and a fixed rate of 8.91% to its private placement creditors that represent US$895 million of the total refinancing package, subject to adjustments, with semi-annual amortizations prior to that date. * A covenant package, including revised financial covenants, mandatory prepayment obligations, and other limitations. * A security package comprised of security over stock in certain subsidiaries of the company and guarantees from most of the guarantors under the existing debt facilities joining the refinancing plan. * The company intends to meet the amortization requirements prior to final maturity using funds from a variety of sources, including free cash flow from operations and net cash proceeds from non-core asset sales as well as capital market transactions. Lorenzo H. Zambrano, Chairman and CEO of CEMEX said: "We are pleased with the outcome of this refinancing, as it significantly improves our debt maturity profile while providing the Company with greater flexibility and the ability to diversify sources of financing. As a result, CEMEX is in a much stronger financial position to regain our financial flexibility and, eventually, our investment-grade capital structure." Lazard acted as CEMEX's exclusive financial advisor in this transaction. About Cemex, S.A.B. CEMEX, S.A.B. de C.V. is a Mexican corporation, a holding company of entities which main activities are oriented to the construction industry, through the production, marketing, distribution and sale of cement, ready-mix concrete, aggregates and other construction materials. CEMEX is a public stock corporation with variable capital (S.A.B. de C.V.) organized under the laws of the United Mexican States, or Mexico. * * * As reported in the Troubled Company Reporter-Latin America on August 14, 2009, Standard & Poor's Ratings Services revised its CreditWatch listing on Cemex S.A.B. de C.V.'s 'B-' long-term corporate credit rating -- as well as its national scale ratings, and senior unsecured debt and perpetual debentures, and on its subsidiaries -- to developing from negative, where they were placed on March 10, 2009, reflecting S&P's concerns about the timely refinancing of its bank loan maturities in 2009. CENTRAL ILLINOIS: Moody's Upgrades Issuer Ratings From 'Ba1' ------------------------------------------------------------ Moody's Investors Service upgraded the ratings of Central Illinois Public Service Company (AmerenCIPS; Issuer Rating to Baa3 from Ba1); Central Illinois Light Company (AmerenCILCO, Issuer Rating to Baa3 from Ba1); Illinois Power Company (AmerenIP, Issuer Rating to Baa3 from Ba1) and CILCORP Inc. (senior unsecured to Ba1 from Ba2). The Corporate Family Rating, Probability of Default rating and all loss given default ratings of the CILCORP have been withdrawn. Moody's affirmed the ratings of Ameren Corporation (Ameren, Baa3 senior unsecured), Union Electric Company (AmerenUE, Baa2 Issuer Rating), and AmerenEnergy Generating Company (Genco, Baa3 senior unsecured). The rating outlook of Ameren and all of its subsidiaries is stable. "The upgrade of Ameren's Illinois utilities is prompted by the recent execution of new bank credit facilities and the improved political and regulatory environment for utilities in Illinois," said Michael G. Haggarty, Vice President and Senior Credit Officer. The new two year bank facility provides $800 million of credit and liquidity support for Ameren, AmerenCIPS, AmerenCILCO, and AmerenIP. Although it replaces $1 billion of credit facilities with a longer tenor, bank and credit market conditions have made it more difficult and expensive for utilities to enter into facilities at previous amounts and with longer maturities. Moody's believes this new facility provides adequate liquidity support considering lower usage of the facility in 2009 and going forward, Ameren's anticipated continued ability to access the capital markets for long-term debt financings. Moody's notes that CILCORP is not a borrower under the new facility and will rely on Ameren's money pool or other arrangements to maintain adequate liquidity. Moreover, the upgrade also reflects positive developments in Illinois since rate freeze legislation was passed by the Illinois House of Representatives in 2007. Following a comprehensive settlement agreement on electric rates and power procurement issues reached in the state in August 2007, Ameren's Illinois utilities received a reasonably supportive delivery service rate case outcome in September 2008 in their first rate proceeding after the settlement. The newly created Illinois Power Agency's first power procurement RFP process during the first half of 2009 was executed successfully and resulted in somewhat lower electric rates for residential customers. In addition, legislation was recently passed providing Illinois utilities with a bad debt rider. Although the southern Illinois economy continues to face recessionary conditions, which could make future regulatory proceedings more challenging, Moody's believes the utilities should be able to obtain sufficient regulatory relief to maintain their investment grade credit quality. Ratings upgraded and assigned a stable outlook include: * Central Illinois Public Service Company's senior secured debt to Baa1 from Baa2, Issuer Rating to Baa3 from Ba1, and preferred stock to Ba2 from Ba3; * CILCORP Inc.'s senior unsecured debt to Ba1 from Ba2; * Central Illinois Light Company's senior secured debt to Baa1 from Baa2; and Issuer Rating to Baa3 from Ba1; * Illinois Power Company's senior secured debt to Baa1 from Baa2, Issuer Rating to Baa3 from Ba1, and preferred stock to Ba2 from Ba3. Ratings affirmed with a stable outlook include: * Ameren's Baa3 Issuer Rating and Prime-3 short-term rating for commercial paper; * Union Electric Company's A3 senior secured, Baa2 Issuer Rating, Baa3 subordinated, Ba1 preferred stock, and Prime-3 short-term rating for commercial paper; * Ameren Energy Generating Company's Baa3 senior unsecured debt. Ratings withdrawn: * CILCORP's Corporate Family Rating and Probability of Default Rating. The last rating action on Central Illinois Public Service Company, Illinois Power Company and Union Electric Company was on August 3, 2009, when their senior secured debt ratings were upgraded one notch. The last rating action on CILCORP was on January 29, 2009, when its rating was affirmed and its rating outlook was changed to stable from positive, as was also the case for Central Illinois Public Service Company, Central Illinois Light Company, and Illinois Power Company. The last rating action on Ameren was on February 16, 2009 when its rating was affirmed. The last rating action on Ameren Energy Generating Company was on August 13, 2008, when its rating was downgraded. Ameren Corporation is a public utility holding company headquartered in St. Louis, Missouri. It is the parent company of Union Electric Company (AmerenUE), Central Illinois Public Service Company (AmerenCIPS), CILCORP Inc., Central Illinois Light Company (AmerenCILCO); Illinois Power Company (AmerenIP), and AmerenEnergy Generating Company. CERUS CORPORATION: Posts $6MM Net Loss in Quarter Ended June 30 --------------------------------------------------------------- Cerus Corporation posted a net loss of $6.21 million for three months ended June 30, 2009, compared with a net loss of $8.94 million for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $13.60 million compared with a net loss of $14.88 million for the same period in 2008. At June 30, 2009, the Company's balance sheet showed total assets of $34.56 million, total liabilities of $12.96 million and stockholders' equity of about $21.60 million. At June 30, 2009, the Company had cash, cash equivalents and short-term investments of $12.90 million. Working capital decreased to $17.00 million at June 30, 2009, from $29.1 million at Dec. 31, 2008, due to lower cash, cash equivalents, short-term investments, inventory and accounts receivable balances. The Company said that its available cash balances will be sufficient to meet its capital requirements into 2010, although its independent registered public accountants have indicated that substantial doubt exists as to its ability to continue as a going concern. The Company may borrow additional capital from institutional and commercial sources to fund future growth on terms that may include restrictive covenants, including covenants that restrict the operation of its business, liens on assets, high effective interest rates and repayment provisions that reduce cash resources and limit future access to capital markets. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?41e3 Cerus Corporation (NASDAQ:CERS) is a biomedical products company focused on commercializing the INTERCEPT Blood System to enhance blood safety. The INTERCEPT system is designed to inactivate blood-borne pathogens in donated blood components intended for transfusion. The Company markets the INTERCEPT system for both platelets and plasma in Europe and the Middle East. Cerus is also pursuing regulatory approvals in the United States and other countries. The INTERCEPT red blood cell system is in clinical development. CHIEF CONSOLIDATED: Incurs $2.79 Mil. Net Loss for 2008 ------------------------------------------------------- For the year ended Dec. 31, 2008, Chief Consolidated Mining Company posted a net loss of $2,790,709 compared with a net loss of $172,203 in 2007. Chief Consolidated's balance sheet at Dec. 31, 2008, showed total assets of $2,405,862, total liabilities of $62,028,695, resulting in a stockholders' deficit of $59,622,833. The Company's substantial debt is caused by an EPA settlement obligation of $60,533,576. In the event the Company completes all of its obligations under the consent decree, the Environmental Protection Agency has agreed to file a Release of Notice of Federal Lien in the office of the Juab County Recorder whereby the Company would then be relieved of the $60 million liability, resulting in a gain in such future period. The judgment amount of $60 million represents the future value of the Company's share of site clean up costs when the terms of the consent decree are to be satisfied on February 9, 2019, Hansen, Barnett & Maxwell, P.C., at Salt Lake City, Utah, independent auditor, pointed out that the Company has a working capital deficiency and a capital deficiency, has suffered significant losses from operations, has used cash in its operating activities and has significant reclamation and EPA settlement obligations and environmental contingencies that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. A copy of the Company's Form 10-K is available for free at: http://researcharchives.com/t/s?41f4 The Company filed on August 7, its Form 10-Qs for the first, second, and third quarters of 2008. * A full-text copy of the Company's Form 10-Q for quarter ended March 31, 2008, is available for free at http://ResearchArchives.com/t/s?41c3 * A full-text copy of the Company's Form 10-Q for quarter ended June 30, 2008, is available for free at http://ResearchArchives.com/t/s?41c4 * A full-text copy of the Company's Form 10-Q for quarter ended Sept. 30, 2008, is available for free at http://ResearchArchives.com/t/s?41c5 About Chief Consolidated Headquartered in Eureka, Utah, Chief Consolidated Mining Company (NASD: CFCM.PK) -- http://www.chiefmines.com/-- owns or controls approximately 16,000 acres of mining land in Utah and Juab counties in Utah. These properties include the Burgin Mine, whose mining rights are owned by the company's subsidiary Tintic Utah Metals LLC, a Colorado limited liability company, and the Trixie Mine, owned by the company's subsidiary Chief Gold Mines Inc., a Delaware corporation. Of these 16,000 acres, approximately 6,000 acres are subject to being sold, pursuant to a Consent Decree with the Environmental Protection Agency. CHRYSLER LLC: Creditors Committee Can Pursue Claims vs. Daimler --------------------------------------------------------------- For reasons stated in open court, Judge Arthur Gonzalez authorized the Official Committee of Unsecured Creditors of Old CarCo LLC, formerly known as Chrysler LLC, to pursue certain claims on behalf of the Debtors' bankruptcy estates against Daimler AG, as well as against two Daimler affiliates and four former directors of the Debtors. The Court also granted the Creditors Committee (i) leave to file a complaint substantially similar to its proposed complaint in its own name on behalf of the estate of Old CarCo, and (ii) the exclusive right to prosecute and settle the claims on behalf of the CarCo estate. Judge Gonzalez, however, ruled that the Creditors Committee will not utilize the United States Department of Treasury's cash collateral in connection with the prosecution of the suit. The Court further granted the Creditors Committee's amended request to file under seal the request to pursue complaint and its accompanying documents. Daimler AG and its affiliates Daimler North America Corporation and Daimler Investments US Corporation asked Judge Gonzalez to deny the request saying the Creditors Committee can assert no viable claims against Daimler or its related individuals. The U.S. Treasury also filed a response, and the Debtors raised issues concerning the wind-down budget. In response, the Creditors Committee filed a redacted reply, pursuant to which the Creditors Committee announced the modification of the terms of its engagement of Susman Godfrey LLP and Stutzman, Bromberg, Esserman & Plifka, which will jointly prosecute the Proposed Complaint. Among other things, the Creditors Committee asserted in its reply that under the revised retention agreement, the Creditors Committee will not pay the $2 million flat fee, but instead, the Creditors Committee will be responsible only for the reimbursement of expenses, plus a contingent fee with slightly increased percentages. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, previously said the Creditors Committee's investigation has confirmed that the Debtor's estate possesses claims against Daimler and related parties that, in the Creditors Committee's view, are meritorious and have enormous potential value to the bankruptcy estates. The claims set forth in the Proposed Complaint arise out of a series of transactions engineered by Daimler in 2007, which stripped Chrysler of its most valuable assets for grossly inadequate consideration, Mr. Mayer argues. Daimler, the German car manufacturer, had acquired Chrysler in 1998. Mr. Mayer asserts that the Creditors Committee seeks to hold Daimler responsible for the billions of dollars of damages for the assets stripped from Chrysler. "The Proposed Complaint asserts claims against Daimler and two of its affiliates for intentional and constructive fraudulent transfer, as well as claims against Daimler and four former Chrysler directors for breach of fiduciary duty," Mr. Mayer told the Court. He notes that the Creditors Committee's determination that the claims have merit and should be pursued has been corroborated by the independent judgment of the Susman Godfrey and Stutzman Bromberg firms. He points out, among other things, that the Proposed Complaint amply satisfies the requirements set forth by the Second Circuit in In re STN Enterprises, 779 F.2d 901 (2d Cir. 1985). About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20 percent equity interest in Chrysler Group. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Old CarCo Has $2.52 Billion in Real Property ---------------------------------------------------------- A. Real Property Lands and buildings $2,203,600,672 Others 520,069,998 B. Personal Property B.1 Cash on Hand - B.2 Bank Accounts JPMorgan Chase 971,281,753 Other banks 666,230,689 B.3 Security Deposits Blue Cross Health Insurance Co. 9,533,496 General Electric Aircrafts 8,900,000 Liberty Mutual 7,486,400 State of Florida contracts escrow 7,462,754 Others 8,065,950 B.4 Household goods - B.5 Book, artwork and collectibles - B.6 Wearing apparel - B.7 Furs and jewelry - B.8 Firearms and other equipment - B.9 Insurance Policies - B.10 Annuities - B.11 Interests in an education IRA - B.12 Interests in pension plans 401(k) Plan - B.13 Stock and Interests Unknown B.14 Interests in partnerships/joint ventures Unknown B.15 Government and corporate bonds City of Fenton series bond 400,012,551 United States Treasury Bills 100,179,344 Others 181,491,814 B.16 Accounts Receivable 270,783,380 B.17 Alimony - B.18 Other Liquidated Debts Owing Debtor Interco Receivable Balance 2,699,480,645 Chrysler CA Lease Depositor LLC Note 1,025,150,984 Daimler-Chrysler tax indemnification 705,274,108 Others 1,733,103,767 B.19 Equitable or future interests - B.20 Interests in estate death benefit plan - B.21 Other Contingent and Unliquidated Claims Unknown B.22 Patents, copyrights, and others Unknown B.23 Licenses, franchises & other intangibles Unknown B.24 Customer lists or other compilations Unknown B.25 Vehicles - B.26 Boats, motors and accessories - B.27 Aircraft and accessories - B.28 Office Equipment, furnishings & supplies 81,106,911 B.29 Equipment and Supplies for Business 7,817,121,540 B.30 Inventory 1,145,143,542 B.31 Animals - B.32 Crops - B.33 Farming equipment and implements - B.34 Farm supplies, chemicals, and feed - B.35 Other Personal Property 462,667,944 TOTAL SCHEDULED ASSETS $21,024,148,246 ========================================================== C. Property Claimed None D. Creditors Holding Secured Claims JP Morgan Chase First Lien Credit $6,916,458,541 JP Morgan Chase Second Lien Credit 2,110,926,198 U.S. Department Of Treasury 4,285,371,805 E. Creditors Holding Unsecured Priority Claims Unknown F. Creditors Holding Unsecured Nonpriority Claims 13,546,026,447 See http://bankrupt.com/misc/Chrysler_ScheduleF_1.pdf http://bankrupt.com/misc/Chrysler_ScheduleF_2.pdf TOTAL SCHEDULED LIABILITIES $26,858,782,991 ========================================================== *** The Company said estimate lists were "prepared with data as of a time period as near as possible to the petition date." In its bankruptcy petition, Chrysler said it had $39,336,000,000 in assets and $55,233,000,000 in debts as of December 31, 2008. Chrysler had $1.9 billion in cash at that time. A full-text copy of Old Chrysler's Schedule of Assets and Liabilities is available for free at: http://bankrupt.com/misc/Chrysler_SAL_081209.pdf About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20 percent equity interest in Chrysler Group. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Old CarCo Transferred $8.58BB 90 Days Before Filing ----------------------------------------------------------------- Old Carco LLC, formerly known as Chrysler LLC, discloses that within two years immediately preceding the commencement of their Chapter 11 cases, it generated income from business operations. Year Amount ---- ------ 2009 to date $7,501,560,002 2008 $44,233,017,965 2007 $60,480,419,297 Ronald E. Kolka, Old Chrysler's chief executive officer, also disclosed that Old Chrysler received income from other sources: Year Amount ---- ------ 2009 to date $1,164,048,053 2008 $258,357,712 2009 $116,129,127 Mr. Kolka relates that within 90 days prior to the Petition Date, Old Chrysler paid or transferred certain property aggregating $8,586,751,444, which are not primarily consumer debts. He adds that Old Chrysler also paid, within a year prior to the Petition Date, $875,039,685 to certain creditors, who were or are insiders. Old Chrysler is also a party to numerous ongoing and resolved lawsuits, a year immediately preceding the Petition Date. Among the complaints against Old Chrysler are related to warranty claims, risk management, intellectual property, product liability and dealer relations. Old Chrysler has incurred losses aggregating $1,811,263 from fire, theft, other casualty or gambling within a year prior to, and since the Petition Date, Mr. Kolka says. He further reveals that within a year before its bankruptcy filing, Old Chrysler paid $36,138,010 for consultation concerning debt consolidation, relief under the bankruptcy law or preparation of a petition in bankruptcy. Mr. Kolka also reveals that within 90 days preceding the commencement of its bankruptcy case, certain creditors made set- offs against a debt or deposit of Old Chrysler, the largest of which include: Creditor Setoff Amount -------- ------------- Daimler AG $53,251,976 Noble Metal Processing 5,601,465 Cosma - Montezuma 2,253,212 Veltri Canada Limited 5,335,849 Martinrea (Tk Fabco) Corp. 3,009,216 Karmann USA, Inc. 4,000,000 Estampados Magna De Mexico 2,311,343 A full-text copy of Old Chrysler's Statement of Financial Affairs can be obtained for free at: http://bankrupt.com/misc/Chrysler_SOFA_081209.pdf About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20 percent equity interest in Chrysler Group. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Old CarCo Wants Plan Deadline Moved to Nov. 30 ------------------------------------------------------------ Chrysler LLC, now known as Old CarCo, and its affiliated debtors ask the U.S. Bankruptcy Court for the Southern District of New York to give them additional time to file their Chapter 11 plan and solicit votes for that plan. The Debtors want the deadline for filing their Chapter 11 plan extended to November 30, 2009, and for soliciting votes from creditors stretched out to January 29, 2010. Pursuant to Section 1121(b) of the Bankruptcy Code, a debtor has the exclusive right to file a plan of reorganization during the first 120 days after the commencement of a Chapter 11 case. If a debtor files a plan during this exclusive filing period, Section 1121(c)(3) of the Bankruptcy Code grants an additional 60 days during which the debtor may solicit acceptances of that plan and no other party-in-interest may file a competing plan. Attorney for the Debtors, Corinne Ball, Esq., at Jones Day, in New York, says they need more time to prepare the plan given the complexity of the Debtors' bankruptcy cases, and that the proposed extension is justified given the progress made in addressing issues concerning the Debtors' estate and creditors. Since their bankruptcy filing on April 30, 2009, the Debtors have devoted their time and efforts to preparing and consummating the deal they made with Fiat S.p.A. for the sale of most of their assets to the Italy-based automaker, Ms. Ball says. The Debtors, she says, have also started developing and implementing a plan to administer their remaining assets and complete the winddown of their estates. "In light of the Debtors' substantial progress in these cases in the weeks since the commencement of these cases, an extension is warranted," Ms. Ball says. "Such an extension will provide the Debtors and their professionals with the time needed to continue working with their constituents and complete the tasks necessary to develop, file and seek confirmation of a Chapter 11 plan." Ms. Ball assures the Court that the proposed extension would not harm creditors or other concerned parties and would not result in a delay of the plan process. A hearing to consider approval of the Debtors' request is scheduled for August 27, 2009. Creditors and other concerned parties have until August 24, 2009, to file their objections. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20 percent equity interest in Chrysler Group. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CHRYSLER LLC: Old CarCo Wants UGL Equis as Real Estate Brokers -------------------------------------------------------------- Chrysler LLC, now known as Old CarCo, and its affiliated debtors seek the Court's authority to employ UGL Equis Corporation as their real estate brokers, nunc pro tunc to the Petition Date. The Debtors determined that they require the assistance of experienced professionals to assist them in the disposition of certain real property assets that were excluded from the sale of substantially all of their assets to Fiat S.p.A. The Debtors submit that Equis' services are necessary to assist them in making important financial decisions regarding the disposition of the real property assets and to maximize the assets' value. Equis previously provided service to the Debtors before the Petition Date. Accordingly, the Debtors selected Equis because of its (a) long-standing business relationship with the Debtors and intimate knowledge of the Debtors' real estate assets and real estate needs, and (b) extensive knowledge and experience in providing real estate brokerage services. Because of Equis' historical knowledge and familiarity with the Debtors' business and real estate portfolio, Equis is the most qualified broker to provide the services required, the Debtors tell the Court. As the Debtors' broker, Equis will provide these services: A. Transaction Services Equis will provide a variety of transaction services to the Debtors, including documentation and decision support in form and content reasonably acceptable to the Debtors. Upon the Debtors' designation, in a writing delivered to Equis by the Debtors, in the Debtors' sole and absolute discretion, Equis will provide these services, in conformity with the Services Agreement, with respect to the Properties: a. Property Dispositions i. Property Evaluation Equis will assist the Debtors in the evaluation of properties to determine their highest and best use. ii. Strategy Development Equis will develop the maximum number of qualified prospects for the Debtors in the shortest possible period of time. Equis' strategy will establish and identify all appropriate marketing theme and time- frame for successful project execution. Depending on the nature of the assignment and its location, a listing agent may be retained by Equis to assist in the process. iii. Implementing Strategy All potential prospects will be contacted, qualified and, when interest arises, led in an orderly manner to successful conclusion. During the process, there will be an ongoing review of each prospect along with updates indicating status or changes affecting the outcome versus the targets. iv. Finalize Transactions Equis will coordinate the contract process between the Debtors, the buyers and their counsel. b. Post-Transaction Memorandum Within a reasonable time after the completion of a transaction or the furnishing of services to the Debtors with respect to a specific Property, Equis will furnish a written summary of the same in the form of a post- transaction memorandum or other similar document. Upon the closing of the sale of any Property, Equis will be deemed to have earned, and the Debtor will pay to Equis, a commission based on the sale price of the Property as of the closing date reduced by any concessions or credits given to the buyer of a Property at closing; provided, however, that this reduction of the Gross Sale Price will not include amounts for the payment of real property taxes, transfer taxes, assessments, liens, commissions, prorations, title insurance premiums and costs, third party reports, recordation fees and other closing costs typically incurred in connection with the sale of real property. Commissions will be paid to Equis in accordance with this sliding scale structure: Gross Sale Price Commission Percentage ---------------- --------------------- $0 - $249,999 8.0% $250,000 - $499,000 6.0% $500,000 - $999,000 5.0% $1 million to $3.9 million 4.0% $4 million and over 3.0% If the proceeds of any sale are insufficient to pay the entire Commission as calculated after payment of closing costs, Equis will be deemed to have waived any right to the remainder of its Commission. The Compensation Structure assumes that Equis will pay any commission owing to a buyer's broker on account of a disposed Property from its Commission. In the event Equis is the sole broker on the sale of any Property, Equis will be entitled to 75% of the Commission. The Debtors submit that the Compensation Structure is consistent with Equis' normal and customary billing practices. Because Equis' proposed compensation is based on Commissions to be achieved through the sale of the Debtors' real estate assets without regard to hours worked or services rendered, Equis has proposed that it will not circulate monthly fee statements or file interim fee applications with the Court with respect to the amounts. Moreover, because the Court's prior "De Minimis Sale Order" authorizes, among other things, the Debtors to pay brokers' commissions on the sales of assets valued under $10 million at closing, Equis likewise proposes that it will not file a final fee application with regard to Commissions earned under the Services Agreement on the sale of any Properties valued under $10 million. If Equis becomes entitled to payment of a Commission on the sale of a Property valued greater than $10 million, either (a) the Debtors will seek approval of the payment of the Large Asset Commission in connection with the motion seeking authority to sell the Property under Section 363 of the Bankruptcy Code, or (b) Equis will file a final fee application with the Court. The Equis Fee Application will not contain detailed time entries, but instead will describe the services rendered and the associated compensation. Until the Court approves and authorizes the payment of any Large Asset Commission, the compensation will be considered interim and subject to disallowance. The Debtors and Equis executed an indemnification agreement in connection with Equis' engagement, pursuant to which the Debtors agreed to indemnify Equis against all losses, damages, and expenses in the performance of its services. David W. Montross, the chief executive officer of Equis, assures the Court that his company is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- manufactures Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan, and Australia. In 2007, Cerberus Capital Management LP acquired an 80.1% stake in Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake. On April 30, Chrysler LLC and 24 affiliates sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20 percent equity interest in Chrysler Group. Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Chrysler LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CLAIRE'S STORES: Bank Debt Trades at 33% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Claire's Stores is a borrower traded in the secondary market at 66.75 cents-on-the- dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.54 percentage points from the previous week, The Journal relates. The loan matures on May 29, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating while it carries Standard & Poor's B- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Claire's Stores, Inc. -- http://www.clairestores.com/-- operates as a specialty retailer of fashion accessories and jewelry for preteens and teenagers, as well as for young adults in North America and internationally. It offers jewelry products that comprise costume jewelry, earrings, and ear piercing services; and accessories, including fashion accessories, hair ornaments, handbags, and novelty items. Based in Pembroke Pines, Florida, Claire's Stores operates under two brands: Claire's(R), which operates worldwide and Icing(R), which operates only in North America. As of Jan. 31, 2009, Claire's Stores, Inc., operated 2,969 stores in North America and Europe. Claire's Stores, Inc., also operates through its subsidiary, Claire's Nippon, Co., Ltd., 213 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 198 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. At May 2, 2009, Claire's Stores has $2,877,264,000 in assets, $212,884,000 in current liabilities and $2,743,540,000 in long- term liabilities (for $2,956,424,000 in total liabilities). COLONIAL BANCGROUP: BofA Has Court Nod to Freeze $1-Bil. of Assets ------------------------------------------------------------------ Matthias Rieker at The Wall Street Journal reports that U.S. District Judge Adalberto Jordan in Miami has granted Bank of America Corp. a temporary restraining order to freeze $1 billion of Colonial BancGroup Inc. assets. BofA sued Colonial to protect its claim on the loans, The Journal relates. BofA said in court documents that Colonial received from Freddie Mac proceeds in excess of $1 billion from loans funded with the help of BofA and that Colonial refused to turn over the proceeds or underlying loans, exposing the other entities to losses if Colonial is seized by banking regulators. BofA, says the report, acted as trustee for parties that provided funding for Colonial's mortgage business, which is deeply entangled with Taylor, Bean & Whitaker Mortgage Corp. The TCR reported on August 12, 2009, Colonial was informed by the U.S. Department of Justice on August 6, 2009, that it was the target of a federal criminal investigation relating to the Company's mortgage warehouse lending division and related alleged accounting irregularities. The Company was 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. Colonial believes that the consolidated statements of income would reflect a net loss for the three and six months ended June 30, 2009, and as a result of uncertainties associated with the Company's ability to increase its capital levels to meet regulatory requirements, management concluded that there is substantial doubt about its ability to continue as a going concern. Citing BofA's lawyers, The Journal states that the Federal Deposit Insurance Corp. ordered Colonial to "cease and desist its independent banking operations." The language used by BofA in its filing is "overly broad. It is not correct . . . . No such decision" about Colonial's fate has been communicated to the bank by Alabama's top regulator, The Journal reports, citing Mark King at Jones, Walker, Waechter, Poitevent, Carrere & Denegre LLP who represents Colonial. Finding that BofA "has met its burden in this case," Judge Jordan ordered Colonial not to sell or move the assets, The Journal says. "And to the extent that the interests of the public are implicated in this case, they weigh in favor of requiring Colonial to honor its contractual obligations and avoiding what would amount to a billion-dollar bank heist," The Journal quoted Judge Jordan as saying. According to The Journal, Alabama banking regulators canceled a meeting set for Wednesday to discuss Colonial. 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 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: BB&T Takes Banks; Claims vs BancGroup Excluded ------------------------------------------------------------------ BB&T Corporation said August 14 that it has acquired the banking operations of Colonial Bank of Montgomery, Alabama. BB&T has acquired $22 billion in assets and assumed $20 billion in deposits in the transaction. The FDIC and BB&T have entered into a loss sharing agreement covering substantially all acquired loans and securities. The announcement follows a decision by Alabama regulators to close Colonial Bank and name the FDIC as receiver. Under the terms of the agreement, BB&T has assumed all of Colonial Bank's deposit accounts, whether or not insured by the FDIC. BB&T will not acquire any of the assets or assume any obligations of Colonial's holding company or select assets and liabilities of Colonial Bank, including any relating to Taylor, Bean and Whitaker Mortgage Corporation. Also excluded are assets and liabilities the FDIC determines are related to fraudulent or criminal activities. BB&T is indemnified by the FDIC for any liabilities not expressly assumed in the transaction, including those related to fraudulent, criminal or inappropriate activities of Colonial. BB&T was advised in the transaction by Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Wachtell, Lipton, Rosen & Katz. BB&T participated in a previous FDIC-aided transaction in December when it paid $112,000 to assume $515 million in deposits from the former Haven Trust Bank of Duluth, Georgia. It also received $55 million in assets consisting primarily of cash and marketable securities in that deal. With $152.4 billion in assets, Winston-Salem, N.C.-based BB&T Corporation was the nation's 10th largest financial holding company by assets and operated more than 1,500 financial centers in 11 states and Washington, D.C., at June 30. More information about the company is available at BBT.com. FDIC Probe & Going Concern Doubt As reported by the Troubled Company Reporter on August 12, 2009, Colonial BancGroup was informed by the U.S. Department of Justice on August 6, 2009, that it is the target of a federal criminal investigation relating to the Company's mortgage warehouse lending division and related alleged accounting irregularities. BancGroup's management and board of directors are assessing the impact of the events on the Company's financial position and results of operations, and as a result, BancGroup has been unable to file its Quarterly Report on Form 10-Q for the period ended June 30, 2009 within the prescribed time period. BancGroup believes that the consolidated statements of income will reflect a net loss for the three and six months ended June 30, 2009 and as a result of uncertainties associated with BancGroup's ability to increase its capital levels to meet regulatory requirements, management has concluded that there is substantial doubt about its ability to continue as a going concern. The net loss is due primarily to increased credit costs and noncash charges related to a deferred tax asset valuation allowance and goodwill impairment. About Colonial BancGroup The Colonial BancGroup, Inc., is a financial services company that provides diversified services, including retail and commercial banking, wealth management services, mortgage banking and insurance products. The principal activity of the BancGroup wass to supervise and coordinate the business of its subsidiaries. The BancGroup derived substantially all of its income from Colonial Bank, N.A (Colonial Bank) its banking subsidiary. The BancGroup's subsidiary Colonial Brokerage, Inc. provides full service, and discount brokerage services and investment advice. As of December 31, 2008, Colonial Bank had a total of 347 branches, with 197 branches in Florida, 90 branches in Alabama, 19 branches in Georgia, 21 branches in Texas and 20 branches in Nevada. COLONIAL BANK, MONTGOMERY: Closed; BB&T Assumes All Deposits ------------------------------------------------------------ Colonial Bank, Montgomery, Alabama, was closed August 14 by the Alabama State Banking Department, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Branch Banking and Trust, Winston-Salem, North Carolina, to assume all of the deposits of Colonial Bank. Colonial Bank's 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen under normal business hours and operate as branches of BB&T. Depositors of Colonial Bank will automatically become depositors of BB&T. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until BB&T can fully integrate the deposit records of Colonial Bank. "The past 18 months have been a very trying period in the financial services arena, but the FDIC and its staff have performed as Congress envisioned when it created the corporation more than 75 years ago," said FDIC Chairman Sheila C. Bair. Ms, Blair said in an August 14 news release, "Today, after protecting almost $300 billion in deposits since the current financial crisis began, the FDIC's guarantee is as certain as ever. Our industry funded reserves have covered all losses to date. In fact, losses from the failures are lower than had been projected. I commend our staff for their excellent work in assuring once again a smooth transition for bank customers with these resolutions. The FDIC continues to stand by the nation's insured deposits with the full faith and credit of the U.S. government. No depositor has ever lost a penny of their insured deposits." Customers who have questions about the transaction can call the FDIC toll-free at 1-800-405-8739. Interested parties can also visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/colonial-al.html As of June 30, 2009, Colonial Bank had total assets of $25 billion and total deposits of approximately $20 billion. BB&T will purchase approximately $22 billion in assets of Colonial Bank. The FDIC will retain the remaining assets for later disposition. The FDIC and BB&T entered into a loss-share transaction on approximately $15 billion of Colonial Bank's assets. BB&T will share in the losses on the asset pools covered under the loss- share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement is also expected to minimize the disruptions for loan customers. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $2.8 billion. BB&T's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Colonial Bank is the 74th FDIC-insured institution to fail in the nation this year, and the first in Alabama. The last FDIC-insured institution to be closed in the state was Birmingham FSB, Birmingham, on August 21, 1992. COMMUNITY BANK, ARIZONA: MidFirst Oklahoma Assumes All Deposits --------------------------------------------------------------- Community Bank of Arizona, Phoenix, Arizona, was closed August 14 by the Arizona Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MidFirst Bank, Oklahoma City, Oklahoma, to assume all of the deposits of Community Bank of Arizona. The four branches of Community Bank of Arizona will reopen today, Monday, as branches of MidFirst Bank. Depositors of Community Bank of Arizona will automatically become depositors of MidFirst Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until MidFirst Bank can fully integrate the deposit records of Community Bank of Arizona. As of June 30, 2009, Community Bank of Arizona had total assets of $158.5 million and total deposits of approximately $143.8 million. In addition to assuming all of the deposits of the failed bank, MidFirst Bank agreed to purchase approximately $125.5 million of assets. The FDIC will retain the remaining assets for later disposition. The FDIC and MidFirst Bank entered into a loss-share transaction on approximately $55.1 million of Community Bank of Arizona's assets. MidFirst Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-913-3058. Interested parties can also visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/community-az.html The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $25.5 million. MidFirst Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Community Bank of Arizona is the 76th FDIC-insured institution to fail in the nation this year, and the first in Arizona. The last FDIC-insured institution to be closed in the state was NextBank, Phoenix, on February 7, 2002. COMMUNITY BANK, NEVADA: DINB Created to Assume Deposits ------------------------------------------------------- Community Bank of Nevada, Las Vegas, Nevada, was closed August 14 by the State Commissioner, by Order of the Nevada Financial Institutions Division, which then appointed Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC created the Deposit Insurance National Bank of Las Vegas, which will remain open for roughly 30 days to allow depositors access to their insured deposits and time to open accounts at other insured institutions. At the time of closing, the receiver immediately transferred to the DINB all insured deposits of Community Bank of Nevada, except for brokered deposits, certificates of deposit and individual retirement accounts. The receiver also transferred to the DINB all secured public unit deposits. Nevada State Bank will provide operational management of the DINB under a contract with the FDIC. The main office and all branches of Community Bank of Nevada will open on Monday. Banking activities, such as direct deposit and writing checks, ATM and debit cards, can continue normally for former customers of Community Bank of Nevada during the 30-day transition period. It is also important to note that Community Bank of Nevada official checks will continue to clear and will be issued to customers closing accounts. All insured depositors of Community Bank of Nevada are encouraged to transfer their insured funds to other banks. They may do so by asking their new bank to electronically transfer their deposits from the DINB or by writing checks for the amount in their accounts. The FDIC will mail checks at the end of the transition period to the address of record for depositors who have not closed or transferred their accounts during the transition period. Brokered deposits, CDs and IRAs were not transferred to the DINB. The FDIC will mail checks directly to deposit customers with CDs and IRAs. The FDIC will pay the brokered deposits directly to the brokers for the amount of their insured funds. Customers with brokered deposits should contact their brokers directly for information concerning their money. Under the FDI Act, the FDIC may create a deposit insurance national bank to ensure that depositors have continued access to their insured funds where no other bank has agreed to assume the insured deposits. The DINB allows for uninterrupted direct deposits and automated payments from customers' accounts for customers with checking and NOW accounts and allows them time to find another institution with which to do business. As of June 30, 2009, Community Bank of Nevada had total assets of $1.52 billion and total deposits of about $1.38 billion. At the time of closing, there were approximately $4.2 million in insured deposits that potentially exceeded the insurance limits. Uninsured deposits were not transferred to the DINB. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers. Customers with accounts in excess of $250,000 should contact the FDIC toll-free at 1-800-331-6306 to set up an appointment to discuss their deposits. Customers who would like more information on the transaction should visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/community-nv.html Beginning Monday, August 17, 2009, depositors of Community Bank of Nevada with more than $250,000 at the bank may visit the FDIC's Web page "Is My Account Fully Insured?" at http://www2.fdic.gov/dip/Index.aspto determine their insurance coverage. The FDIC as receiver will retain all the assets from Community Bank of Nevada for later disposition. Loan customers should continue to make their payments as usual. The cost to the FDIC's Deposit Insurance Fund is estimated to be $781.5 million. Community Bank of Nevada is the 77th bank to fail this year and the third in Nevada. The last bank to be closed in the state was Great Basin Bank, Elko, on April 17, 2009. CONSECO INC: Swings to $27.6 Mil. Net Income for June 30 Quarter ---------------------------------------------------------------- Conseco, Inc., has released results for the second quarter of 2009. "We are pleased to report that Conseco's second quarter results are at the high end of the preliminary earnings range we announced last week," CEO Jim Prieur said. "Core sales remain strong in a declining market, and our Bankers Life business, which had record agent recruitment, reported excellent results both over the seasonally weak first quarter and over the prior year's second quarter. Our Colonial Penn business also reported good results in the quarter, while Conseco Insurance Group's results declined slightly, as it focuses on more profitable products." Second Quarter 2009 Results: -- $86.7 million of income before net realized investment losses, corporate interest and taxes, up 47%, compared to $59.0 million in 2Q08 -- Net operating income of $40.8 million, up 62%, compared to $25.2 million in 2Q08 -- Net operating income per diluted share: 22 cents, up 69%, compared to 13 cents in 2Q08 -- Net income of $27.6 million, compared to a net loss of $488.5 million in 2Q08 (including $13.2 million of net realized investment losses in 2Q09 vs. $513.7 million of net realized investment losses, valuation allowance for deferred tax assets and losses related to discontinued operations in 2Q08) -- Net income per diluted share of 15 cents, compared to a net loss per diluted share of $2.65 in 2Q08 (including 7 cents of net realized investment losses in 2Q09 vs. $2.78 of net realized investment losses, valuation allowance for deferred tax assets and losses related to discontinued operations in 2Q08) -- Total New Annualized Premium excluding Private-Fee-For- Service: $91.8 million, down 1% from 2Q08 -- Bankers NAP excluding PFFS: $63.1 million, up 6% from 2Q08 -- PFFS NAP (sold through a marketing agreement with Coventry): $6.3 million in 2Q09 compared to ($6.8) million in 2Q08, reflecting a change in sales recognition policy Six-Month 2009 Results: -- $159.0 million of EBIT, up 47%, compared to $108.4 million in the first six months of 2008 -- Net operating income of $72.2 million, up 59%, compared to $45.3 million in the first six months of 2008 -- Net operating income per diluted share: 39 cents, up 56%, compared to 25 cents in the first six months of 2008 -- Net income of $52.1 million, compared to a net loss of $495.7 million in the first six months of 2008 (including $20.1 million of net realized investment losses in the first six months of 2009 vs. $541.0 million of net realized investment losses, valuation allowance for deferred tax assets and losses related to discontinued operations in the first six months of 2008) -- Net income per diluted share of 28 cents, compared to a net loss per diluted share of $2.68 in the first six months of 2008 (including 11 cents of net realized investment losses in the first six months of 2009 vs. $2.93 of net realized investment losses, valuation allowance for deferred tax assets and losses related to discontinued operations in the first six months of 2008) -- Total NAP excluding PFFS: $179.3 million, up 1% from the first six months of 2008 -- Bankers NAP excluding PFFS: $123.5 million, up 7% from the first six months of 2008 -- PFFS NAP: $40.3 million, down 30%, from the first six months of 2008 reflecting changes in consumer preference Financial Strength at June 30, 2009: -- Book value per common share, excluding accumulated other comprehensive income (loss), was $18.72, up 2%, compared to $18.41 at December 31, 2008 -- Debt-to-total capital ratio, excluding accumulated other Comprehensive income (loss), was 26.7%, compared to 27.8% at December 31, 2008 Conseco's financial statements show compliance, as of June 30, 2009, with all covenants in its credit agreement including those related to combined insurance subsidiary capital, the combined risk-based capital ratio of its insurance subsidiaries, the Company's debt to capital ratio and the Company's interest coverage ratio. The combined risk-based capital ratio increased by 16 percentage points to 247% at June 30, 2009. As of June 30, 2009, the Company had $29.4 billion in total assets and $27.0 billion in total liabilities. Conseco said in its Form 10-Q filing with the Securities and Exchange Commission that its current aggregate risk-based capital ratio of 247% is below the level required to meet the future covenant requirement and the levels of margin between the other future requirements and its current financial status are small. Conseco said management is taking several actions to increase the aggregate risk-based capital ratio and other key financial covenant measures. While successful execution can not be assured, management believes that the Company will remain in compliance with the current and future financial covenant requirements. "If we are unable to demonstrate our ability to comply with the future loan covenants with adequate margins for adverse deviation prior to March 31, 2010 (the date by which we are required to provide audited financial statements to the lenders under the Second Amended Credit Facility), management would conclude there is substantial doubt about the Company's ability to continue as a going concern," Conseco said. "Further, the audit opinion that we would receive from our independent registered public accounting firm would include an explanatory paragraph regarding the Company's ability to continue as a going concern. Such an opinion would be in breach of the covenants in the Second Amended Credit Facility. If that were to occur, it is highly probable that we would not have sufficient liquidity to repay our bank indebtedness in full or any of our other indebtedness which could also be accelerated as a result of the default." As of June 30, 2009, the aggregate principal amount of the Company's outstanding debentures was $293 million. Holders of the Debentures have the right to require the Company to repurchase their Debentures for cash on September 30, 2010. Conseco said the amendment in March 2009 to its Second Amended Credit Facility prohibits it from redeeming or purchasing the Debentures with cash from certain sources. As a result, without a further amendment of the Second Amended Credit Facility or a waiver from the lenders, the Company will not be able to make any payments to the holders of the Debentures on September 30, 2010 -- assuming the holders of the Debentures elect to exercise their right to require the Company to repurchase their Debentures for cash on that date. The amendment permits the Company to amend, modify or refinance the Debentures so long as such new indebtedness complies with certain restrictions. The Company has had discussions with certain holders of the Debentures regarding an exchange of the Debentures for a combination of new senior, unsecured debt or convertible debt maturing after October 2014 and shares of the Company's common stock. The Company expects to have additional discussions with holders of the Debentures regarding an exchange of the Debentures. The exchanges may be in one-off transactions or pursuant to an exchange offer and may involve other forms of consideration. Conseco said there can be no assurance that any discussions will be successful. "There is a significant risk that we will be unable to pay holders of the Debentures who exercise their right to require the Company to purchase their Debentures for cash on September 30, 2010 or unable to refinance the Debentures. If we are unable to refinance or otherwise address liquidity issues with respect to the Debentures prior to March 31, 2010 (the date by which we are required to provide audited financial statements to the lenders under the Second Amended Credit Facility), management would conclude there is substantial doubt about the Company's ability to continue as a going concern," Conseco continued. While successful execution cannot be assured, management believes that it will be able to address the issue with respect to the September 30, 2010 put right of the Debenture holders by completing an exchange offer or other transactions permitted under the Second Amended Credit Facility. If it is not able to do so, it would have a material adverse effect on our business, results of operations and financial position. A full-text copy of Conseco's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?41db On August 5, 2009, Conseco issued additional financial information related to the Company's financial and operating results for the quarter ended June 30, 2009, a copy of which is available at no charge at: http://ResearchArchives.com/t/s?41dc http://ResearchArchives.com/t/s?41dd About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- http://www.conseco.com/-- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * The current financial strength ratings of Conseco's primary insurance subsidiaries from A.M. Best Company, S&P and Moody's Investor Services, Inc., are "B (Fair)", "BB-" and "Ba2", respectively. COYOTES HOCKEY: NHL Ordered to Produce Docs. on Team Relocations ---------------------------------------------------------------- Andrew Bagnato at The Associated Press reports that the Hon. Redfield T. Baum did not include Richard Peddie, owner of Toronto Maple Leafs, in the list of entities that will give depositions in connection with the sale of the Phoenix Coyotes. According to The AP, Judge Baum named officials who will give depositions in the Chapter 11 bankruptcy case. Jim Balsillie and Jerry Moyes intended to present for deposition Richard Peddie over what role his company, Toronto Maple Leafs, might play in the proposed relocation of Phoenix Coyotes to Hamilton, Ontario. The National Hockey League contends that the relocation issue is moot because its board of governors rejected Mr. Balsillie as owner of the Phoenix Coyotes. Judge Baum, The AP relates, however, has ordered the National Hockey League to provide numerous documents related to relocation. NHL must produce any league study of expansion into the Hamilton market in the past 10 years, and it must disclose all expansion and relocation fees it has charged since 1999, the report states, citing Judge Baum. Mr. Balsillie's lawyers said that the documents are necessary for their client's bid to proceed, the report says. The AP relates that NHL commissioner Gary Bettman and deputy commissioner Bill Daly, Boston Bruins owner Jeremy Jacobs, and Minnesota Wild owner Craig Leipold will answer questions. Mr. Balsillie also will be deposed, along with his aide Richard Rodier and Mr. Moyes, The AP states. The report says that Judge Baum also authorized a deposition from "an unnamed, but to be disclosed, NHL representative regarding the impossibility of relocating the Coyotes for the current season." The AP reports that Judge Baum has set up bid procedures and a schedule leading up to the September 10 auction. Interested parties have until Friday to submit offers to keep Phoenix Coyotes in Glendale, says the report. The AP states that Judge Baum also denied a motion by the Goldwater Institute, on behalf of eight Glendale taxpayers, to file a conditional bid objection, saying that they "do not have a direct financial stake in the outcome of this case." The Goldwater Institute had argued that the taxpayers have a right to know the details of Glendale's arena lease renegotiations with Reinsdorf's group. 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. CRUSADER ENERGY: Has Equity Value of $100MM, Shareholders Say ------------------------------------------------------------- An ad hoc group of holders of common stock issued by Crusader Energy Group Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the Northern District of Texas to appoint an official committee of equity security holders in the Debtors' chapter 11 cases. According to the Committee, the appointment of an equity committee in the Chapter 11 cases is clearly justified and "absolutely necessary" to assure adequate representation of the Debtors' equity security holders' interests. The Debtors have substantial equity value based on their cash flow potential and intrinsic values underlying their oil and gas assets, the Ad Hoc Committee asserts. It cited (i) the application of 24-month NYMEX futures strip pricing to the Debtors' existing production levels, which reflect equity value in the $25 million to $50 million range, and (ii) the Debtors' "shut in" reserves, which would produce an additional equity value in the $30 million to $60 million range. Hence, the Debtors' equity value could very well be in excess of $100 million, the Group says. The Ad Hoc Committee says that it does not need to show that the Debtors are solvent or that there is in fact substantial equity value; instead, they need only show that the Debtors are not "hopelessly insolvent". By any measure, whether from existing cash flow, projected cash flow, equity trading value, balance sheet, or otherwise, the Debtors appear to be solvent and are not in any sense "hopelessly insolvent". The Ad Hoc Committee relates that the Debtors are not taking appropriate steps to serve the interests of shareholders but instead have been acted solely for the benefit of creditors without regard to preserving or maximizing equity value. The creditor constituents are forcing a sale process, which the Debtors have effectively acquiesced to, at a time when third party offers may very well not reflect the true intrinsic value of the Debtors and their assets. The terms of the use of cash collateral require the Debtors to consummate a transaction within an extremely short timeframe, including filing plan documents by the end of this month, the Ad Hoc Committee points out. The Ad Hoc Committee asserts that appointment of an Equity Committee is necessary to provide shareholders with an appropriate voice in the reorganization process. Otherwise, any reasonable prospect for preserving equity value and obtaining a shareholder recovery will be lost because creditors are forcing a process which is focused on achieving recovery as quickly as possible, without regard for the impact on shareholders and whether reasonable alternatives might yield greater value over time, the Ad Hoc Committee concludes. Kaye Scholer LLP and Kelly Hart & Hallman LLP represent the Ad Hoc Committee. About Crusader Energy Based in Oklahoma City, Oklahoma, Crusader Energy Group Inc. -- http://www.ir.crusaderenergy.com/-- explores, develops and acquires oil and gas properties, primarily in the Anadarko Basin, Williston Basin, Permian Basin, and Fort Worth Basin in the United States. It has working interests in more than 1,000 wells. Crusader Energy and its affiliates filed for Chapter 11 protection on March 30, 2009 (Bankr. N.D. Tex. Lead Case No. 09-31797). The Debtors' financial condition as of September 30, 2008, showed total assets of $749,978,331 and total debts of $325,839,980. Beth Lloyd, Esq., Richard H. London, Esq., and William Louis Wallander, Esq., at Vinson & Elkins, L.L.P., represent the Debtors as counsel. Holland N. Oneil, Esq., Michael S. Haynes, Esq., and Richard McCoy Roberson, Esq., at Gardere, Wynne & Sewell, represent the official committee of unsecured creditors as counsel. DAILEY FARM: Case Summary & 4 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Dailey Farm, L.L.C. 19 East Market Street Leesburg, VA 20176 Case No.: 09-01813 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Northern District of West Virginia (Martinsburg) Debtor's Counsel: David A. Camilletti, Esq. Campbell Miller Zimmerman, P.C. 201 North George Street, Suite 202 Charles Town, WV 25414 Tel: (304) 725-5325 Fax: (304) 724-8009 Email: dcamilletti@cmzlaw.com Total Assets: $10,934,927 Total Debts: $8,207,206 The petition was signed by Herbert Jonkers, the company's member/manager. Debtor's List of 4 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Jerald A. Wilks Sums Loaned $40,000 Oakland United Methodist Parcels of Land $3,600,000 Church pursuant to Joint 70 Oakland Terrace Venture Agreements Charles Town, WV 25414 Orange & Martorelli Lp Accounting Services $1,313 William H. Gordon Engineering Services $4,481 Associates, Inc. DANA HOLDING: Bank Debt Trades at 24% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Dana Holding Corporation is a borrower traded in the secondary market at 75.29 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.80 percentage points from the previous week, The Journal relates. The loan matures on Jan. 31, 2015. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa1 rating and Standard & Poor's B rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. About Dana Holding Based in Toledo, Ohio, Dana Holding Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. Dana Corp. and its affiliates filed for Chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP, served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC, served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. Judge Burton Lifland confirming the Plan, as thrice amended, on Dec. 26, 2007. The Plan was declared effective Jan. 31, 2008. Upon emergence, the Company was renamed as Dana Holding Corporation. As reported in the Troubled Company Reporter on June 9, 2009, Moody's Investors Service lowered the Corporate Family Rating of Dana Holding Corporation to Caa2, raised the Probability of Default Rating to Caa1, and adjusted the ratings of certain debt instruments. The company's Speculative Grade liquidity Rating of SGL-3 was affirmed, and the company's rating outlook is negative. The positioning of Dana's PDR at Caa1 reflects ongoing pressures the company faces from the continued erosion in the global automotive and commercial vehicle markets. These conditions have resulted in significant deterioration in the company's sales and operating performance through the first quarter of 2009 and are expected to continue to pressure the company's performance into 2010. The pressures have also resulted in 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. DECODE GENETICS: June 30 Balance Sheet Upside-Down by $244 Million ------------------------------------------------------------------ deCODE genetics Inc.'s balance sheet at June 30, 2009, showed total assets of $69.85 million and total liabilities of $313.92 million, resulting in a stockholders' deficit of $244.07 million. For three months ended June 30, 2009, the Company posted a net loss of $13.19 million compared with a net loss of $18.35 million for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $25.83 million compared with a net loss of $45.01 million for the same period in 2008. At June 30, 2009, the Company had cash and cash equivalents of $3.80 million, compared to $3.70 million at Dec. 31, 2008. In early 2009 deCODE sold its ARS for $11.3 million in cash, and in April it signed licensing agreements with Celera Corporation under which it received an upfront payment and will receive royalties on sales of Celera testing products and services incorporating deCODE genetic risk markers. deCODE states it has sufficient resources to fund operations only into the latter half of the third quarter. The Company is simultaneously pursuing several options to ensure sufficient funding to take it to the execution of strategic options that can support the near- and longer-term viability of our core business. Regardless, deCODE's planned operations require immediate additional liquidity substantially in excess of the amounts, raising substantial doubt about deCODE's ability to continue as a going concern. In deCODE's ongoing strategic review, deCODE was evaluating and pursuing various alternatives aimed at focusing its business and underpinning ongoing product development and commercialization in its core business, including the sale of some or all of deCODE's US medicinal chemistry and structural biology units. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?41e2 About deCODE Genetics deCODE genetics Inc. (Nasdaq: DCGN) -- http://www.decode.com/-- operates as a biopharmaceutical company that applies discoveries in human genetics to develop drugs and diagnostics for common diseases. The company serves pharmaceutical companies, biotechnology firms, pharmacogenomics companies, government institutions, universities, and other research institutions primarily in the United States, Europe, and internationally. The company was founded in 1996 and is headquartered in Reykjavik, Iceland. DELAWARE HOME: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Delaware Home Furnishings, LLC dba Drexel Heritage Delaware 3060 Brandywine Parkway Wilmington, DE 19803 Bankruptcy Case No.: 09-12867 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court District of Delaware (Delaware) Judge: Christopher S. Sontchi Debtor's Counsel: Shannon D. Leight, Esq. Ciardi Ciardi & Astin One Commerce Square, Suite 1930 2005 Market Street Philadelphia, PA 19103 Tel: (215) 557-3550 Fax: (215) 557-3551 Email: sleight@ciardilaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/deb09-12867.pdf The petition was signed by Barbara Cresswell, president of the Company. DEX MEDIA EAST: Bank Debt Trades at 23% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Dex Media East LLC is a borrower traded in the secondary market at 76.57 cents-on- the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.72 percentage points from the previous week, The Journal relates. The loan matures on Nov. 8, 2009. The Company pays 200 basis points above LIBOR to borrow under the facility. Moody's has withdrawn its rating on the bank debt while Standard & Poor's has assigned a default rating on the bank debt. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. About Dex Media Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. Dex Media East, LLC is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) DEX MEDIA INC: Earns $42.9 Million in 3 Months Ended June 30 ------------------------------------------------------------ Dex Media, Inc. reported a net income of $42.95 million for three months ended June 30, 2009, compared with a net loss of $246.84 million for the same period in 2008. For six months ended June 30, 2009, the Company reported a net income of $48.47 million compared with a net loss of $1.56 billion for the same period in 2008. The Company's balance sheet showed total assets of $8.41 billion, total liabilities of $6.94 billion and stockholders' equity of $1.47 billion. The Company's management said that there is substantial doubt as to whether the Company will be able to continue as a going concern for a reasonable period of time. The assessment of its ability to continue as a going concern was made by management considering, among other factors: (i) its Chapter 11 bankruptcy filing on May 28, 2009; (ii) the current global credit and liquidity crisis; (iii) the significant negative impact on our operating results and cash flows from the overall downturn in the global economy and an increase in competition and more fragmentation in the local business search market; (iv) that certain of its credit ratings have been downgraded; and (v) that R.H. Donnelley Corporation's common stock ceased trading on the New York Stock Exchange on Dec. 31, 2008, and is now traded over-the-counter on the Pink Sheets. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4196 About Dex Media Inc. Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc. and Local Launch, Inc. are the company's only direct wholly owned subsidiaries. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) DISH DBS: Fitch Assigns 'BB-' Rating on $1 Bil. Notes Offering -------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to DISH DBS Corporation's $1 billion offering of 7.875% senior unsecured notes due 2019. The notes were placed under the Securities and Exchange Commission's rule 144A. DDBS is a wholly owned subsidiary of DISH Network Corporation (DISH, Fitch Issuer Default Rating 'BB-'). Proceeds from the offering are expected to be used for general corporate purposes. As of June 30, 2009, DISH had approximately $5.1 billion of debt outstanding. The Rating Outlook is Negative. From Fitch's perspective, the issuance will improve DISH's somewhat constrained liquidity position (relative to a historical perspective), and Fitch believes that DISH's credit profile has sufficient flexibility to accommodate a modest increase in leverage. Cash balances as of June 30, 2009 totaled approximately $113 million. Additional liquidity can be derived from nearly $838 million of variable rate demand notes held by DISH. Fitch notes that DISH does not maintain a revolver to support its liquidity position. Cash balances have been depleted to some extent due to large cash requirements during 2008 related to the spin-off of Echostar Corporation, acquisition of 700-megahertz wireless spectrum, the redemption of senior notes and subordinated debt, and the cash payment to Tivo, Inc., related to ongoing litigation. While Fitch expects DISH will continue to generate material amounts of free cash flow during the ratings horizon, the company's liquidity position will remain a rating issue given the uncertain cash requirements related to the litigation with Tivo. DISH's leverage on a latest twelve month basis as of June 30, 2009, was 1.75 times (x), and is expected to increase to 2.1x on a pro forma basis considering the new debt issuance. Overall, Fitch's ratings reflect the operating leverage derived from DISH's size and scale as the third-largest multichannel video programming distributor in the U.S., and Fitch's expectation for continued free cash flow generation. The Negative Outlook reflects DISH's deteriorating operating profile and eroding competitive position in an increasing competitive environment. DISH reported a subscriber churn rate of 1.73% marking a 14 basis point year over year decline. The 2009 second quarter churn rate was the first year over year decline since June of 2007. In comparison, DIRECTV Group, Inc.'s U.S. segment churn during the second quarter was 22 basis points lower at 1.51%. The higher churn rate continues to be driven by a combination of economic, competitive and operational factors, including piracy and fraud. In Fitch's opinion, some of these factors, such as higher non-pay disconnects and decreased customer satisfaction, appear to require longer-term fixes, and churn may remain elevated for an extended period of time, reflecting the company's relatively weak competitive position. Net additions during the second quarter were approximately 26,000 marking the first quarter of positive net subscriber additions since the first quarter of 2008. While the second quarter subscriber additions metrics were positive, net subscriber additions during the first half of 2009 were negative. Factors that could contribute to a stabilization of the Rating Outlook include a determination that DISH's liquidity position is balanced with cash requirements, free cash flow expectations, capital market access, further clarity surrounding potential cash requirements related to the Tivo litigation and wireless network strategy, and sustainable positive trends in operating results, particularly subscriber churn. Key considerations that could lead to a downgrade of DISH's ratings include, but are not limited to, DISH's inability to reverse the negative operating trends and improve its competitive positioning, a sustained erosion of DISH's free cash flow generation and further deterioration of DISH's liquidity profile. DOUBLEDOWN MEDIA: Ch. 7 Trustee Selling Global Publishing Rights ---------------------------------------------------------------- Robert L. Geltzer, Chapter 7 trustee for the Doubledown Media, LLC, is offering for sale the global publishing rights, trademark (brand), database of subscribers, respective url or .com, web archives, print archives and a listing of vendors who advertised in the publications Trader Monthly, Dealmaker, Private Air, Corporate Leader and the Cigar Report. For additional information, contact Marc P. Yaverbaum at (347) 273-1258 or http:www.myccorp.com Doubledown Media LLC is a New York-based publisher of Trader Monthly, Dealmaker, Private Air, Corporate Leader, and the Cigar Report, magazines that cater to Wall Street bankers and traders. Doubledown Media LLC filed for Chapter 7 liquidation on February 25, 2009 (Bankr. S.D.N.Y. Case No. 09-10857). Court documents say that Doubledown Media has between $10 million and $50 million each in assets and liabilities. The Company ceased operations after a key financial backer withdrew financing. DWELLING HOUSE SAVINGS: PNC Bank of Pittsburgh Assumes Deposits --------------------------------------------------------------- Dwelling House Savings and Loan Association, Pittsburgh, Pennsylvania, was closed August 14 by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with PNC Bank, National Association, Pittsburgh, Pennsylvania, to assume all of the deposits of Dwelling House Savings and Loan Association. The sole branch of Dwelling House Savings and Loan Association will reopen on Monday as a branch of PNC Bank, National Association. Depositors of Dwelling House Savings and Loan Association will automatically become depositors of PNC Bank, National Association. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both institutions should continue to use the existing branches until PNC Bank, National Association can fully integrate the deposit records of Dwelling House Savings and Loan Association. As of March 31, 2009, Dwelling House Savings and Loan Association had total assets of $13.4 million and total deposits of approximately $13.8 million. In addition to assuming all of the deposits of the failed bank, PNC Bank, National Association agreed to purchase approximately $3 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-760-3639. Interested parties can also visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/dwelling.html The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $6.8 million. PNC Bank, National Association's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Dwelling House Savings and Loan Association is the 73rd FDIC-insured institution to fail in the nation this year, and the first in Pennsylvania. The last FDIC-insured institution to be closed in the state was Metropolitan Savings Bank, Pittsburgh, on February 2, 2007. EDDIE BAUER: Executives Accept Employment from Asset Buyer ---------------------------------------------------------- Eddie Bauer Holdings, Inc., reports that upon the closing of the sale of its assets on August 3, 2009, all of the executive officers of the Company, including McNeil Fiske, the Company's President and Chief Executive Officer, Marv Toland, the Company's Senior Vice President and Chief Financial Officer and the Company's other named executive officers, accepted employment with an affiliate of Golden Gate Capital and, with certain limited exceptions, resigned from their positions with the Company. Mr. Toland and Ms. Freya Brier will continue with the Company in limited roles during a brief transition period. In addition, effective as of the completion of the Sale on August 3, Mr. Fiske resigned from the Company's Board of Directors. As reported by the Troubled Company Reporter, Eddie Bauer and substantially all of the Company's subsidiaries on July 29, 2009, entered into a First Amendment to the Asset Purchase Agreement dated as of July 17, with an affiliate of Golden Gate Capital. The Amendment primarily concerns the date of determination of the working capital and capital expenditure adjustments to the purchase price payable by the Buyer, and includes related changes to definitions contained in the Asset Purchase Agreement. The Company and its affiliates do not have any material relationships with the Buyer or its affiliates, other than in respect of the Asset Purchase Agreement and the transactions contemplated thereby. A full-text copy of the Amendment is available at no charge at: http://ResearchArchives.com/t/s?41f5 The aggregate gross purchase price for the Sale was $286 million in cash, subject to certain adjustments relating principally to the level of working capital and capital expenditures as of closing, and the Buyer assumed certain liabilities from the Sellers associated with the purchased assets. $11.0 million of the proceeds received in the Sale have been allocated to the Canadian subsidiaries of the Company and paid to the CCAA Monitor in the Canadian Bankruptcy Proceeding. In addition, the Company paid a break-up fee of $5,057,500 in cash to an affiliate of CCMP Capital Advisors upon the closing of the Sale pursuant to the terms of the Company's Asset Purchase Agreement with CCMP dated as of June 16, 2009, which was terminated on July 22. The Sale resulted in the payment of certain amounts due under the Company's Key Employee Incentive Program and Key Manger Incentive Program, which resulted in a one-time cash compensation charge of roughly $2.6 million. The KEIP and the KMIP were approved by the Bankruptcy Court on July 22. On August 4, the Company said it was unable in good faith to make a determination of an estimate of the amount or range or amounts expected to be incurred in connection with the Sale and the Bankruptcy Proceedings, both with respect to each major type of costs associated therewith and with respect to the total cost, or an estimate of the amount or range of amounts that will result in future cash expenditures for the transaction. On August 3, 2009, the Company filed with the Delaware Secretary of State a Certificate of Amendment to the Certificate of Incorporation of Eddie Bauer Holdings, amending its Certificate of Incorporation, effective immediately, to change the name of the Company from "Eddie Bauer Holdings, Inc." to "EBHI Holdings, Inc." The Charter Amendment was required by the terms of the Asset Purchase Agreement and was made pursuant to Section 303 of the General Corporation Law of the State of Delaware and pursuant to an order of the Bankruptcy Court issued in connection with the Bankruptcy Proceeding. Stockholder approval of the Charter Amendment was not required. About Eddie Bauer Established in 1920 in Seattle, Washington, Eddie Bauer is a specialty retailer that sells outerwear, apparel and accessories for the active outdoor lifestyle. The Eddie Bauer brand is a nationally recognized brand that stands for high quality, innovation, style and customer service. Eddie Bauer products are available at 371 stores throughout the United States and Canada, through catalog sales and online at http://www.eddiebauer.com/. Eddie Bauer participates in a joint venture in Japan and has licensing agreements across a variety of product categories. Eddie Bauer, Inc., was a subsidiary of Spiegel, Inc. Eddie Bauer Inc. emerged from Spiegel's 2003 Chapter 11 case as a separate, reorganized entity under the control and ownership of Eddie Bauer Holdings, Inc. Eddie Bauer Holdings, Inc., and eight affiliates filed for bankruptcy on June 17, 2009 (Bankr. D. Del. Lead Case No. 09-12099). Judge Mary F. Walrath presides over the case. David S. Heller, Esq., Josef S. Athanas, Esq., and Heather L. Fowler, Esq., at Latham & Watkins LLP, serve as the Debtors' general counsel. Kara Hammond Coyle, Esq., and Michael R. Nestor, Esq., at Young Conaway Stargatt & Taylor LLP, serve as local counsel. The Debtors' restructuring advisors are Alvarez and Marsal North America LLC. Their financial advisors are Peter J. Solomon Company. Kurtzman Carson Consultants LLC acts as claims and notice agent. As of April 4, 2009, Eddie Bauer had $525,224,000 in total assets and $448,907,000 in total liabilities. Eddie Bauer Canada, Inc., and Eddie Bauer Customer Services filed for protection from their creditors in Canada on June 17, 2009, the same day the U.S. Debtors filed for protection from their creditors. The Canadian Debtors have obtained an initial order of the Canadian Court staying the proceedings against the Canadian Debtors and their property in Canada. RSM Richter Inc. was appointed as monitor in the Canadian proceedings. EL CENTRO ACRES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: El Centro Acres "1127", Ltd. A California Limited Partnership 2855 Las Flores Ave. Riverside, CA 92503 Bankruptcy Case No.: 09-28442 Chapter 11 Petition Date: August 11, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Thomas B. Donovan Debtor's Counsel: Dennis Baranowski, Esq. Law Offices of Dennis R. Baranowski 10700 Civic Center Dr Suite 100C Rancho Cucamonga, CA 91730 Tel: (909) 481-4500 Fax: (909) 481-4381 Email: dennis@baranowskilaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company says it does not have unsecured creditors who are non insiders when they filed their petition. The petition was signed by Byung Ho Kwon, general partner of the Company. ELLEN TRACY: Faces Involuntary Ch. 7 Petition from 3 Creditors -------------------------------------------------------------- According to Tiffany Kary at Bloomberg, three China-based creditors of Ellen Tracy LLC, filed an bankruptcy petition to send the Company to Chapter 7 liquidation. The Company is facing an involuntary petition from Shanghai K&J Apparel Co., Chinamine Trading and Excellent Jade Ltd. owed a total of $3.8 million from the company. The petition was filed in Manhattan (Bankr. S.D.N.Y. Case No. 09-14994). According to Bloomberg, retailers that have filed for bankruptcy this year amid consumer spending hurt by the economic decline include Eddie Bauer Holdings Inc., the outdoor clothing retailer; Escada AG, the German luxury dress maker; and Filene's Basement, which sells discounted designer goods. Ellen Tracy LLC is a New York-based maker of women's dresses, eyewear and luggage which started as a blouse company in 1949, selling a dozen shirts for $36. In February 2008, Liz Claiborne Inc. sold the Ellen Tracy brand to investors including former Bloomingdale's Chairman Marvin Traub and Barry Sternlicht, the real-estate investor who heads Starwood Capital Group LLC. The buyers paid $27.3 million in cash, and agreed to pay another $15 million, depending on Ellen Tracy's performance through 2012. The purchasers also include Radius Partners LLC and Windsong Brands LLC's William Sweedler. ENERGY PARTNERS: Expects "Significant" Net Loss for 2nd Quarter --------------------------------------------------------------- Energy Partners, Ltd., has not filed its Quarterly Report on Form 10-Q for the quarters ended March 31, 2009, and June 30, 2009. The Company said its bankruptcy filing, the subsequent confirmation of its plan of reorganization, and current talks for exit financing diverted resources and caused a delay in the process for completing the preparation of quarterly financial statements. "We have . . . been unable to finalize our books and records for the quarter ended March 31, 2009 or the quarter ended June 30, 2009. For all of these reasons, and because our efforts have been, and continue to be, focused on the Chapter 11 Cases, we have not been able to complete our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, within the prescribed time period," the Company said. Energy Partners Ltd. on July 31, 2009, filed its second amended joint plan of reorganization, as modified, with the Bankruptcy Court. On August 3, the Bankruptcy Court held a hearing and entered an order confirming the Plan. The Company's emergence from Bankruptcy remains subject to several conditions, including the successful closing of exit financing. Energy Partners Ltd. has been engaged in negotiations and other matters related to the Chapter 11 Cases, including negotiations with the Minerals Management Service and with potential lenders with regard to exit financing. Additionally, Energy Partners Ltd. filed its 2008 Annual Report on August 5 and it dedicated substantial resources to the completion of the report. The Company anticipates significant changes in its results of operations for the quarter ended June 30, 2009, as compared to its results of operations for the quarter ended June 30, 2008, and for the six months ended June 30, 2009, as compared to the six months ended June 30, 2008. The Company has not yet finalized its condensed consolidated financial statements for the quarter ended June 30, 2009 or the six months ended June 30, 2009. Its independent registered public accounting firm, KPMG LLP, has not completed its review procedures on its condensed consolidated financial statements for the quarter ended June 30, 2009, or the six months ended June 30, 2009. The Company expects its operating results for the quarter ended June 30, 2009 compared to the quarter ended June 30, 2008 to reflect significantly lower average selling prices for the Company's oil and natural gas. The Company estimates that it will report a significant consolidated net loss for the quarter ended June 30, 2009. For the quarter ended June 30, 2008, the Company reported net income of $4.0 million, or $0.12 per diluted share. The Company estimates revenue for the quarter ended June 30, 2009, will be significantly lower than revenue of $125.7 million reported for the quarter ended June 30, 2008, due primarily to the impact of oil and natural gas selling price declines. The Company expects to report a decline in oil production, offset by an increase in natural gas production, for the for the quarter ended June 30, 2009, as compared to the quarter ended June 30, 2008, resulting in expected total Boe production levels for the quarter ended June 30, 2009, that are roughly the same as total Boe production levels reported for the quarter ended June 30, 2008. The Company expects exploration expenditures, dry hole costs and impairments to decline in the quarter ended June 30, 2009, as compared to $5.3 million reported for the quarter ended June 30, 2008. The Company expects general and administrative expenses to increase in the quarter ended June 30, 2009, compared to general and administrative expenses of $13.5 million for the quarter ended June 30, 2008, primarily as a result of legal and financial advisory fees associated with its balance sheet restructuring efforts and the Chapter 11 Cases. The Company expects interest expense to decline in the quarter ended June 30, 2009, compared to interest expense of $11.4 million for the quarter ended June 30, 2008, primarily because it discontinued recording interest expense related to its Senior Unsecured Notes and 8.75% Senior Notes due 2010 as of May 1, 2009, the date on which it filed the Chapter 11 Cases. The Company estimates gain (loss) on derivative instruments for the quarter ended June 30, 2009 will be significantly reduced as compared to the loss of $36.5 million reported for the quarter ended June 30, 2008. The loss on derivative instruments reported in the quarter ended June 30, 2008, resulted primarily from the impact of a steep increase in oil and natural gas selling prices during the 2008 period. The Company estimates the effective tax rate on the tax benefit related to its expected net loss for the quarter ended June 30, 2009 will be less than the statutory tax rate, and could be zero, due to the expectation that we will provide a valuation allowance against any net deferred tax assets generated during the quarter ended June 30, 2009. The effective tax rate was roughly 37% for the quarter ended June 30, 2008. The Company also expects to report cash and cash equivalents of roughly $22 million as of June 30, 2009, as compared to roughly $2 million as of December 31, 2008. As of June 30, 2009, the outstanding balance under the Company's bank credit facility was $83 million and its total debt was $537.5 million, compared to $497.5 million of total debt at December 31, 2008, which included $43 million of bank credit facility borrowings. The borrowing base under the Company's bank credit facility was reduced to $45 million, resulting in a borrowing base deficiency of $38 million. The Company is not able to make future borrowings under its bank credit facility. The Company expects operating results for the six months ended June 30, 2009 compared to the six months ended June 30, 2008 to reflect significantly lower average selling prices for oil and natural gas. The Company estimates reporting a significant consolidated net loss for the six months ended June 30, 2009. For the six months ended June 30, 2008, it reported net income of $6.3 million, or $0.20 per diluted share. It estimates revenue for the six months ended June 30, 2009, will be significantly lower than revenue of $223.2 million reported for the six months ended June 30, 2008, due primarily to the impact of oil and natural gas selling price declines. It expects to report a decline in oil production, offset by an increase in natural gas production, for the for the six months ended June 30, 2009 as compared to the six months ended June 30, 2008, resulting in expected total Boe production levels for the six months ended June 30, 2009, that are roughly the same as total Boe production levels reported for the six months ended June 30, 2008. The Company expects exploration expenditures, dry hole costs and impairments to decline significantly in the six months ended June 30, 2009, as compared to $28.5 million reported for the six months ended June 30, 2008. It expects general and administrative expenses to increase in the six months ended June 30, 2009, compared to general and administrative expenses of $22.9 million for the six months ended June 30, 2008, primarily as a result of legal and financial advisory fees associated with its balance sheet restructuring efforts and the Chapter 11 Cases. It reported a gain on sale of assets of $6.6 million in the six months ended June 30, 2008. It doesn't expect to report any significant gains or losses on asset sales in the six months ended June 30, 2009. It expects interest expense to decline significantly in the six months ended June 30, 2009, compared to interest expense of $23.4 million for the six months ended June 30, 2008, primarily because it discontinued recording interest expense related to its Senior Unsecured Notes and 8.75% Senior Notes due 2010 as of May 1, 2009, the date on which it filed the Chapter 11 Cases. It estimates gain (loss) on derivative instruments for the six months ended June 30, 2009, will be significantly reduced as compared the loss of $44.8 million reported for the six months ended June 30, 2008. The loss on derivative instruments reported in the six months ended June 30, 2008, resulted primarily from the impact of a steep increase in oil and natural gas selling prices during the 2008 period. The Company estimates the effective tax rate on the tax benefit related to its expected net loss for the six months ended June 30, 2009, will be less than the statutory tax rate, and could be zero, due to the expectation that it will provide a valuation allowance against any net deferred tax assets generated during the six months ended June 30, 2009. Its effective tax rate was roughly 37% for the six months ended June 30, 2008. The material terms of the Plan as confirmed by the Bankruptcy Court include, among other things, that: -- each holder of the Senior Unsecured Notes and the 8.75% Senior Notes due 2010 would receive, in exchange for their total claim (including principal and interest), their pro rata share of 95% of the common stock to be issued pursuant to the Plan in the Company upon its emergence from bankruptcy; -- each holder of common stock interests would receive, in exchange for their total claim, their pro rata share of 5% of the New EPL Common Stock; -- upon the Effective Date, the Company must have in place an exit working capital credit facility in form and substance acceptable to the Company and a majority in interest of the Consenting Holders; -- the Company may adopt the 2009 Long Term Incentive Plan under which it may issue shares of Restricted New EPL Common Stock and new EPL stock options to certain of its employees and certain members of management; and -- following the effective date of the reorganization, the sole equity interests in the Company would consist of (1) New EPL Common Stock issued to the holders of the Company's Senior Unsecured Notes, the 8.75% Senior Notes due 2010, and holders of its common stock interests, (2) Restricted New EPL Common Stock issued to certain members of its management, if any, and (3) new EPL stock options to be issued to certain key employees pursuant to the 2009 Long Term Incentive Plan, if any, which would be exercisable for New EPL Common Stock. Collectively, the Restricted New EPL Common Stock issued and the shares reserved for the exercise of new EPL stock options would in no event exceed 3% of the New EPL Common Stock on a fully diluted basis. "If we are unable to successfully negotiate definitive documentation for the Exit Facility or unable to satisfy the conditions to closing of the Exit Facility, we would be unable to consummate the Plan and may consequently have to liquidate," the Company said. Under the Confirmation Order, if the Company is unable to successfully comply with all conditions of the Plan by the later of (1) September 10, 2009, (2) September 25, 2009, with its approval and the approval of the Majority Consenting Holders, or (3) any later date approved by the Bankruptcy Court, the Confirmation Order will be vacated and it will not be able to proceed with the execution of the Plan. About Energy Partners Ltd. 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. ESCADA AG: U.S. Unit Files for Chapter 11 in New York ----------------------------------------------------- Escada USA, a unit of the German luxury clothing maker Escada AG, filed Chapter 11 bankruptcy protection on August 14 in the U.S., a day after its parent was put under court protection in Munich. Following a combination of sharp declines in sales over the past two years, weakened demand for luxury goods as a result of the global financial crisis and unsuccessful efforts to restructure its indebtedness out-of-court, Escada AG filed a petition to commence an insolvency proceeding in Munich District Court, Germany on August 13, 2009, to continue operations and effect a restructuring of the Escada Group businesses either through an insolvency plan under German insolvency law or by a structured sales process of Escada Group's assets. Dr. jur. Christian Gerloff -- appointed by the Munich Court as preliminary insolvency administrator, following a meeting with Escada's board of management -- said August 14, "My first impression is that ESCADA AG is very well prepared for insolvency proceedings. From today's perspective these careful preparations would suggest that there are chances to maintain the going concern." To alleviate disruption to the ESCADA business as a result of the insolvency filing of Escada AG, and as part of the implementation of the Escada Group global restructuring and investor process, Escada US determined to file the Chapter 11 case. The Chapter 11 petition filed in the U.S. Bankruptcy Court for the Southern District of New York, in Manhattan, listed US$50 million to US$100 million in assets and US$100 million to US$500 million in debts. Another Court filing said Escada US had total assets of US$61,702,500 against total debts of US$82,398,500 as of July 2009. The debts do not include the EUR200,000,000 in senior notes issued by Escada AG and EUR13,000,000 owed by Escada AG to Bayerische Hypo-und Vereinsbank-led lenders. The senior notes and the bank debt are guaranteed by subsidiaries, including Escada US. In Escada US's list of 20 largest unsecured creditors, the three largest were Bank of New York Mellon Corp., as indenture trustee for the senior notes, with its EUR200,000,000 ($285.7 million) claim on account of the guaranty, Bayerische Hypo-und Vereinsbank AG EUR13,000,000 (US$18.4 million) on account of the bank debt guaranty, and the U.S. Customs and Border Protection with its US$13,711,000 trade claim. A copy of Escada US's Chapter 11 petition and list of largest unsecured creditors is available for free at http://bankrupt.com/misc/sdny09-15008.pdf The meeting of creditors of Escada US pursuant to Section 341 of the Bankruptcy Code has been scheduled for Thursday, September 24, 2009 at 3:00 p.m. (EST). All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Within the next 30 days, Escada US expects cash receipts to be US$6,082,058 and cash disbursements at US$7,068,562 for a net cash deficit of US$986,504. Escada US expects to pay employees a total of US$726,000 and officers a total of US$156,000 within the next 30 days. Road to Bankruptcy ESCADA Group suffered a net loss of approximately US$130 million in the six months ended April 30, 2009, and a net loss of US$99.5 million in the fiscal year ended October 31, 2008, Escada US suffered a net loss of approximately US$22.6 million in the six months ended April 30, 2009, and a net loss of US$23.97 million in the fiscal year ended October 31, 2008. These losses were due primarily to the sharp declines in sales of the Escada Group's products over the past two years, due in part to lower than expected market acceptance of the Escada Group's collections in recent fiscal years and weaker demand for luxury apparel resulting from the deep recession in the Escada Group's key markets. In December 2008, Escada Group launched a restructuring plan involved in refocusing operations on the ESCADA brand, reducing costs and improving the liquidity position for the Escada Group. In addition, other measures to improve liquidity were taken generating a total of approximately EUR42 million (US$60 million) in cash, including sales of property owned by Escada AG and certain subsidiaries, the amendment of Escada US's lease for its flagship store on New York's Fifth Avenue, the sale of certain receivables of ESCADA AG and the sale of certain trademarks and future receivables. As a material part of the restructuring effort to decrease indebtedness and increase liquidity, in June 2009, Escada AG launched an offer to exchange EUR200 million in senior notes for (a) 10% Senior Secured Cash-Pay Notes due 2014, (b) 17.5% Senior Secured PIK Notes due 2016, (c) 10 shares of Escada AG per approximately EUR1,000 (US$1,416) of debt tendered and (d) certain cash consideration. The exchange offer expired August 11, 2009 with Escada AG failing to obtain the minimum tender condition of at least 80% of the aggregate principal amount of senior notes. This derailed a plan to obtain to issue new shares to raise at least EUR29 million, and a Dec. 31, 2009 extension to a EUR13 million existing guarantee facility. Following the opening of preliminary insolvency proceedings of ESCADA AG, Aschheim / Germany, on August 13, 2009, its wholly owned US subsidiary ESCADA (USA) Inc., today filed a voluntary petition seeking relief under chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. "The Chapter 11 filing is intended to be seamless to ESCADA's customers, who will continue to enjoy shopping in ESCADA stores and purchasing ESCADA merchandise at luxury department stores in the United States. ESCADA's employees and management team remain focused on providing its customers with luxury women's apparel and fashion accessories consistent with the exceptional service and attention expected. ESCADA plans to promptly obtain bankruptcy court authority to continue honoring customer programs, and paying vendors and employees in the ordinary course of business," the Company said in a statement. "The global financial crisis caused a steep decline in demand for luxury apparel and has had a negative impact on ESCADA Group's liquidity and its ability to execute an out-of-court restructuring of its obligations. The commencement of insolvency proceedings in Germany and the relief and protection afforded by Chapter 11 will allow ESCADA to continue serving its customers while at the same time allowing it to stabilize its business. The filing is a proactive step. ESCADA intends to proceed quickly and emerge from the proceedings with greater flexibility as a result of an improved balance sheet. ESCADA is restructuring its entities in the U.S., the U.K., Japan, and Hong Kong. Escada follows German companies including 128-year-old retailer Arcandor AG and porcelain maker Rosenthal AG into bankruptcy. More than 2,200 workers are affected by the collapse of what was once the world's largest maker of women's fashion, says Bloomberg News. About Escada AG The ESCADA Group -- http://www.escada.com/-- is an international fashion group for women's apparel and accessories, which is active on the international luxury goods market. It has pursued a course of steady expansion since its founding in 1976 by Margaretha and Wolfgang Ley and today has 182 own shops and 225 franchise shops/corners in more than 60 countries. As of August 10, 2009 the Escada Group operated 176 owned stores and so-called shop in shops, of which 26 owned stores are located in the United States and operated by Escada (USA) Inc. and 2 stores are planned to be opened in the United States before year end. Escada Group products are also sold in 163 stores worldwide which are operated by franchisees. Escada Group had total assets of EUR322.2 million against total liabilities of 338.9 million as of April 30, 2009. ESCADA AG filed of an insolvency petition in Munich, Germany, on August 13, 2009. The competent Municipal Court of Munich has appointed Dr. jur. Christian Gerloff as preliminary insolvency administrator. Wholly owned subsidiary Escada (USA) Inc. filed for Chapter 11 on August 14, 2009 (Bankr. S.D.N.Y. Case No. 09-15008). O'Melveny & Myers LLP has been tapped as bankruptcy counsel. Kurtzman Carson Consultants serves as claims and notice agent. Judge Stuart M. Bernstein handles the case. ESCADA (USA) INC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Escada (USA) Inc. aka ESCADA Company Stores aka ESCADA The Americas aka ESCADA Sport aka ESCADA Retail Inc. aka ESCADA (USA) Retail Inc. 1412 Broadway New York, NY 10018 Bankruptcy Case No.: 09-15008 Type of Business: The Debtor owns a fashion house offering coordinated apparel, accessories and fragrance collections for day, weekend, evening and sport. See http://www.escada.com/ Chapter 11 Petition Date: August 14, 2009 Court: Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtor's Counsel: Gerald C. Bender, Esq. gbender@omm.com Shannon Lowry Nagle, Esq. snagle@omm.com O'Melveny & Myers LLP Times Square Tower 7 Times Square New York, NY 10036 Tel: (212) 326-2000 Fax: (212) 326-2061 Claims and Noticing Agent: Kurtzman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 Estimated Assets: $50 million to $100 million Estimated Debts: $100 million to $500 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ The Bank of New York Guaranty EUR200,000,000 One Canada Square $285,700,000 London EI4 5AL United Kingdom Tel: 44-020-7964-8790 Fax: 44-020-7964-2336 Bayerische Hypo-und Guaranty EUR13,000,000 Vereinsbank, as Agent $18,400,000 HVB Banque Luxembourg Societe Anonyme $ 18,400,000.003 4, rue Alphonse Weicker L-272 1 Luxembourg Tel: 089/378-3 1773 Fax: 089/378-31885 U.S. Customs and Border Trade $13,711,412 Protection Building 77 Jamaica , NY 11430 Tel: (718) 487-5110 Deutsche Bank AG EUR3,500,000 60 Wall Street, 25th Fl. $4,840,950 New York, NY 10005 Tel: (212) 250-9639 Fax: 797-4420 United Healthcare Trade $177,566 Retail Portfolio Solutions Trade $25,000 Century Direct Trade $20,000 ACR Paper Products Trade $19,000 Gruen Associates Trade $15,409 UPS Supply Chain Solutions Trade $12,179 One Stop Facilities Trade $11,259 Maintenance Corp. Roth Bros, Inc. Trade $8,533 Schaeffer Trans, Inc. Trade $7,892 Carlos E. Florat Trade $6,250 Specialty Transport Solutions Trade $5,280 Mangia Trade $4,818 Savino Del Bene USA, Inc. Trade $4,691 Gibson Dunn & Crutcher LLP Trade $3,909 Atmosphere Group F12 Trade $3,412 A-llntemational, Inc. Trade $3,313 The petition was signed by Christian D. Marquez, EVP, chief financial officer, and treasurer. FANNIE MAE: 77,876 Loans in July in Obama's Fannie/Freddie Program ------------------------------------------------------------------ Fannie Mae and Freddie Mac refinanced more than 2.9 million mortgage loans in 2009 through July of this year. Since the inception of the Making Home Affordable Refinance Program in April, Fannie Mae and Freddie Mac refinanced almost 1.9 million mortgage loans through July. The numbers were announced August 13 by James B. Lockhart, Director of the Federal Housing Finance Agency, in the first monthly report on Enterprises' refinance volumes and the Administration's Making Home Affordable Refinance Program. "This report shows that more than 190,000 homeowners that are current in their mortgage payments have been assisted through the GSE streamlined refinance process," said Mr. Lockhart. "Borrowers refinancing their loans are enjoying significant interest rate reductions refinancing through the GSE streamlined refinance process with an average rate reduction of 1.3 percent. Importantly, over 60,000 borrowers with mortgage loans that exceed 80 percent of the house value up to 105 percent have been refinanced. We are now seeing significant results from the HARP and the Home Affordable Modification Program (HAMP), but much more work needs to be done. I commend the Fannie Mae and Freddie Mac teams for helping drive this effort." Under HARP, borrowers whose loan-to-value (LTV) ratio is above 80 percent up to 105 percent are able to refinance without added mortgage insurance requirements, a previous key barrier to refinancing. Through July, Fannie Mae had refinanced 1.7 million loans. Of that total, approximately 138,000 loans were refinanced under the company's DU Refi Plus and Refi Plus flexibilities that were put in place to support the HARP. Approximately 32,000 of the loans refinanced through July had LTVs above 80 percent up to 105 percent. Freddie Mac refinanced 1.2 million loans through July. Of that total, approximately 53,000 loans were refinanced under the company's Relief Refinance program that was put in place to support HARP. Freddie Mac had refinanced approximately 29,000 loans with LTVs above 80 percent up to 105 percent. The Federal Housing Finance Agency recently announced the expansion of HARP to allow borrowers with LTVs up to 125 percent to participate. Fannie Mae will begin accepting deliveries of refinanced loans with LTVs over 105 percent up to 125 percent as of September 1. Freddie Mac will begin accepting deliveries of these loans on October 1. About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. As of March 31, 2009, Fannie Mae had $919,638,000,000 in total assets and $938,567,000,000 in total liabilities, resulting in Fannie Mae stockholders' deficit of $19,066,000,000. At March 31, 2009, Fannie Mae had $137,000,000 in non-controlling interest, resulting in total deficit of $18,929,000,000. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government-sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. FAIRPOINT COMMS: Posts $17.82MM Q2 Loss, Hints Possible Bankr. -------------------------------------------------------------- FairPoint Communications, Inc., has released its financial results for the three and six months ended June 30, 2009. FairPoint reported $17.82 million net loss in the quarter ended June 30, 2009, compared with a $23.11 million net income in the same period last year. The Company reported $26.60 million net loss in the six months ended June 30, 2009, compared with a $32.66 million net income in the same period last year. "Operationally, we continued to make steady progress during the second quarter," stated David Hauser, Chairman and CEO of FairPoint. "The issues experienced with the systems cutover are continuing to improve and most of them are behind us. Going forward, we will be focusing on three primary areas: improving customer service, growing business and broadband revenue and reducing costs." "Financially, while we were pleased with the successful completion of the exchange offer with our bondholders in July, this represented only the first step in a more comprehensive debt restructuring. While the exchange offer provides us with additional time, we remain fully committed to permanently deleveraging our current capital structure. Once completed, we will be able to focus all of our attention toward profitably growing the business," concluded Mr. Hauser. Second Quarter Results Revenue for the second quarter of 2009 totaled $299.6 million, a decline of $12.0 million, or 3.9%, compared to the first quarter of 2009 reflecting the continued decrease in access line equivalents and the weak economic environment. Operating expenses, excluding depreciation, for the second quarter of 2009 totaled $220.7 million, a decline of $16.9 million, or 7.1%, compared to the first quarter of 2009. Cutover related costs totaled $8.7 million in the second quarter of 2009, a decline of $26.6 million from the first quarter which included costs under the transition services agreement with Verizon. Excluding cutover related costs, operating expenses increased by $9.7 million in the second quarter of 2009. Adjusted EBITDA totaled $99.9 million for the three months ended June 30, 2009, compared with $123.2 million for the first quarter of 2009. The decline in Adjusted EBITDA primarily reflects the reduced level of revenue and higher operating expenses incurred for services that were previously covered under the transition services agreement with Verizon, as well as higher bad debt expenses and costs related to the exchange offer. Operating Metrics Total access line equivalents were 1,650,372 at June 30, 2009, compared with 1,820,307 at June 30, 2008, a decline of 9.3%. During the second quarter, total access line equivalents declined by 3.0% compared with a decline of 1.6% during the first quarter of 2009 (normalizing for a previously reported one-time first quarter adjustment to access lines identified during the systems cutover). HSD subscribers totaled 296,107 as of June 30, 2009, a decrease of 1.6% compared with 300,882 at March 31, 2009 and an increase of 0.6% compared with 294,412 at June 30, 2008. HSD subscribers increased by 3.4% in Legacy FairPoint during the second quarter, while declining by 3.3% in the northern New England operations. We believe the decline in northern New England reflects the absence of promotional activity during the first half of 2009 as a result of cutover related issues. Total HSD penetration was 21.9% as of June 30, 2009, compared with 21.5% at March 31, 2009, and 19.3% at June 30, 2008. Long distance subscribers totaled 605,468 at June 30, 2009, down 2.9% from 623,497 as of March 31, 2009, and down 7.8% compared with a year ago. Long distance penetration was 44.7% at June 30, 2009, compared with 44.5% as of March 31, 2009, and 43.0% a year ago. Cash Flow and Liquidity For the six months ended June 30, 2009, operating cash flow totaled $28.1 million. Cash flow from operations for the first six months of 2009 was negatively impacted by $43.9 million of expenses related to the systems cutover activities and an increase in accounts receivable, before allowance for uncollectibles, of $29.1 million, largely resulting from cutover related issues. Excluding the impact of these cutover related items, cash flow from operations would have been $101.1 million. The Company also made cash interest payments totaling $107.3 million during the six months ended June 30, 2009 which reduced cash flow from operations. Capital expenditures totaled $90.5 million for the first half of 2009. During the second quarter, the Company repurchased $12.0 million aggregate principal amount of its senior notes for $4.2 million in cash. The Company has a highly leveraged capital structure and has essentially fully drawn all borrowings available under its credit facility. In the future, the Company expects that the primary sources of liquidity will be cash flow from operations and cash on hand. Because of systems cutover issues that have prevented the Company from executing fully on its operating plan for 2009, revenue has continued to decline. In addition, cash collections have remained below pre-cutover levels and the Company has incurred significant incremental costs as a result of the cutover issues in its northern New England operations, causing further stress on the Company's liquidity position. Cash and cash equivalents at June 30, 2009, totaled $81.0 million and $2.4 million remained available under the Company's revolving credit facility. As of June 30, 2009, after giving effect to the conversion of a portion of the Company's cash interest expense to non-cash as a result of the exchange offer, the Company was in compliance with all of the financial covenants contained in its credit facility. The Company currently believes that the reduction in its cash interest expense resulting from the consummation of the exchange offer may not be sufficient to prevent a breach of the interest coverage ratio maintenance covenant for the measurement period ending September 30, 2009. In addition, the Company currently expects that it may exceed the leverage ratio maintenance covenant limit contained in its credit facility as early as the measurement period ending September 30, 2009. As a result, the Company has initiated discussions with its bondholders regarding a more comprehensive and permanent restructuring of its current capital structure to reduce its indebtedness and debt service obligations. As of June 30, 2009, Fairpoint reported $3.24 billion in total assets, $321.41 million in total current liabilities, $2.91 billion in total long-term liabilities, and $1.23 million in total stockholders' equity. The Company's financial statements are available at: http://ResearchArchives.com/t/s?41de FairPoint Communications CEO David Hauser said in a filing with the U.S. Securities and Exchange Commission, "Now turning to our operating results for the second quarter, which continued to be impacted by the issues related to the systems cutover as well as the weak economic environment. The rate of decline in access line equivalent increased to 3% in the second quarter compared with a 1.6% decline in the first quarter. While we are certainly disappointed with these results, the good news is that our internal analysis is indicating that the actual number of gross disconnects is well below the levels experienced over the past several quarters. "We believe this is reflective, at least in part, of the lack of promotional activity and as a result we have not added as many new customers as we have in the past. Once our marketing campaigns are fully in place we believe that we can meaningfully reduce the declining trend in our overall access lines. "Adjusted EBITDA was $99.9 million for the quarter compared to $123.2 million in the first quarter. The decrease reflects both the continued reduction in revenue as well as an increase in certain of our operating costs. I will go into that in more detail in a few moments. "Now the exchange offer and restructuring. In July, we successfully completed an exchange offer in which nearly 83% of our outstanding senior notes were tendered. This exchange offer, among other things, allows us to issue new notes as payment for interest during the second and third quarters of this year. This will reduce our cash interest expense for the second and third quarters of 2009 by approximately $28.8 million. "While we were pleased with the successful completion of the exchange offer, this represented only a first step in a more comprehensive debt restructuring. We have initiated discussions with our bondholders regarding a second step, which will likely involve a complete equitization of our senior notes. This step will result in a permanent reduction in our indebtedness and our ongoing debt service obligations. Once completed, we will be able to focus all of our attention towards profitability and growing the business in the future. "That said, I expect that these will be difficult negotiations and consequently, we cannot be sure that we will reach a satisfactory agreement with the senior bondholders. If we are not successful in these negotiations, and if we do fall out of compliance with the covenants in our bank credit facility, it is possible that we will need to file for protection under Chapter 11 of the Bankruptcy Code. "So let me conclude my comments by leaving you with a few final thoughts. First I firmly believe there are opportunities, both on the revenue side to grow the business and through cost reductions, to make FairPoint a vibrant company. I would not have taken the CEO role if I didn't believe that. About Fairpoint Communications Fairpoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- is a provider of communication services to residential and business customers in rural and small urban communities in the United States. Its services include traditional telephone services, as well as other services, such as local and long distance voice, data, Internet, television, and broadband enabled services. FairPoint Communications is headquartered in Charlotte, North Carolina. As reported by the Troubled Company Reporter on August 5, 2009, Standard & Poor's Ratings Services said it reassigned a 'CC' corporate credit rating, with a negative outlook to Charlotte, North Carolina-based incumbent local exchange carrier FairPoint Communications Inc., from the previous 'SD'. S&P also raised the rating to 'C' from 'D' on the approximate $90 million of aggregate principal amount remaining on the company's unsecured notes that did not participate in its exchange offer. The recovery rating on the notes is '6', representing negligible (0%-10%) recovery prospects in the event of a payment default. According to the TCR on August 4, 2009, Fitch Ratings downgraded FairPoint Communications, Inc.'s Issuer Default Rating to 'RD' from 'C'. Fitch's downgrade reflects the company's July 30, 2009 announcement of the successful consummation of a private exchange offer of approximately $458 million of 13.25% senior notes due April 2, 2018 (New Notes) for approximately $440 million, or approximately 83%, of its 13.125% senior notes due April 1, 2018 (Old Notes), of which there was approximately $531.1 million outstanding. In Fitch's view, the exchange has elements of a coercive debt exchange under Fitch's policy. Under the policy, the IDR is being downgraded to 'RD' before the rating is raised to reflect the company's prospects. FORD MOTOR: Boosts Production Plans for Rest of 2009 ---------------------------------------------------- Jeff Bennett at The Wall Street Journal reports that Ford Motor Co. has increased production plans for the rest of the year. For the third quarter 2009, Ford will increase production to 495,000 new vehicles, mainly due to the demand for the Ford Focus and Escape, The Journal states. According to The Journal, Ford will build 6,000 more Focus vehicles during the third quarter -- 18% higher than the same period a year earlier -- through overtime and Saturday shifts. Ford said that it will also build 570,000 vehicles in the fourth quarter, about 33% above the year-earlier levels and 15% higher than planned third-quarter output, The Journal relates. The Journal notes that clunkers program, which provides consumers as much as $4,500 to trade in their old vehicles and buy new, more fuel-efficient models, has created an unexpected demand among car buyers. The clunkers program could generate as much as 750,000 in new vehicle sales for the industry, The Journal says, citing Ford's chief economist, Ellen Hughes-Cromwick. The Department of Transportation, according to The Journal, a total of 338,659 vehicle sales qualified for the clunkers program as of Thursday morning. The Journal notes that more than $1.42 billion of the $3 billion allocated for the program has been spent. Ms. Hughes-Cromwick said that the program could run out of money within the next three weeks, The Journal states. The Journal reports that Ford's European executives said that they are negotiating with different governments to continue similar clunkers programs. Russia said on Wednesday that it too will start a "scrappage offer", The Journal relates. Ford sales chief George Pipas said that he doesn't think Ford will be left with too much inventory once the program ends, according to The Journal. 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. FRASER PAPERS: Proofs of Claim Due by Sept. 30, 2009 ---------------------------------------------------- The Superior Court of Justice of Ontario has directed PricewaterhouseCoopers Inc., the Court-appointed Monitor of the Companies' Creditors Arrangement Act proceedings involving Fraser Papers Inc., FPS Canada Inc., Fraser Papers Holdings Inc. Fraser Timber Ltd., Fraser Papers Limited and Fraser N.H. LLC, to send Proof of Claim Document Packages to all Known Creditors as part of the Court-approved claims process. The Claims Order, the Proof of Claim Document Package, additional Proof of Claim forms and related materials are available on the Monitor's Web site at http://www.pwc.com/car-fraserpapersor by contacting: Ms. Mona Law PricewaterhouseCoopers Inc. Monitor of Fraser Papers Inc., et al. 77 King Street West, Suite 3000 Royal Trust Tower, TD Centre P.O. Box 82 Toronto, ON M5K 1G8 CANADA Telephone: 877-332-1688 Fax: 416-814-3219 E-mail: FPclaims@ca.pwc.com Any person who believes that they have a Claim against any of the CCAA Parties or their former or current Directors that existed as at the date of June 18, 2009, must send a Proof of Claim to the Monitor to be received before 5:00 p.m. (Eastern Standard Time) on September 30, 2009. Any person who believes that they have a Restructuring Claim against any of the CCAA Parties or Directors arising out of the restructuring, repudiation or termination after June 18, 2009, of any contract, lease or other agreement, whether oral or written, by any of the Applicants must send a Proof of Claim to the Monitor to be received before 5:00 p.m. (Eastern Standard Time) on the date which is the earlier of 30 calendar days after the event giving rise to the Restructuring Claim or seven calendar days prior to the date fixed by the Court for voting on a Plan. Fraser Papers -- http://www.fraserpapers.com/-- is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The Company has operations in New Brunswick, Maine, New Hampshire and Quebec. On June 18, 2009, citing continued operating losses, weak markets for pulp and lumber, impending debt repayments and significant pension funding obligations, the Company and its subsidiaries filed for protection under the Companies Creditors Arrangement Act (Ont. Super. Ct. J. Ct. File No. CV-09-8241-00CL) in Toronto and Chapter 15 (Bankr. D. Del. Case No. 09-12123) of the U.S. Bankruptcy Code. Fraser is represented by Michael Barrack, Esq., Robert I. Thornton, Esq., and D.J. Miller, Esq., at ThorntonGroutFinnigan LLP, in Toronto, and Derek C. Abbott, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Del. With adequate financing to support continuing operations, Fraser says it is developing a restructuring plan to present to its creditors -- hopefully by Oct. 16, 2009 -- with the objective of emerging with a sustainable and profitable specialty papers business. FREDDIE MAC: 77,876 Loans July in Obama's Fannie/Freddie Program ---------------------------------------------------------------- Fannie Mae and Freddie Mac refinanced more than 2.9 million mortgage loans in 2009 through July of this year. Since the inception of the Making Home Affordable Refinance Program in April, Fannie Mae and Freddie Mac refinanced almost 1.9 million mortgage loans through July. The numbers were announced August 13 by James B. Lockhart, Director of the Federal Housing Finance Agency, in the first monthly report on Enterprises' refinance volumes and the Administration's Making Home Affordable Refinance Program. "This report shows that more than 190,000 homeowners that are current in their mortgage payments have been assisted through the GSE streamlined refinance process," said Mr. Lockhart. "Borrowers refinancing their loans are enjoying significant interest rate reductions refinancing through the GSE streamlined refinance process with an average rate reduction of 1.3 percent. Importantly, over 60,000 borrowers with mortgage loans that exceed 80 percent of the house value up to 105 percent have been refinanced. We are now seeing significant results from the HARP and the Home Affordable Modification Program (HAMP), but much more work needs to be done. I commend the Fannie Mae and Freddie Mac teams for helping drive this effort." Under HARP, borrowers whose loan-to-value (LTV) ratio is above 80 percent up to 105 percent are able to refinance without added mortgage insurance requirements, a previous key barrier to refinancing. Through July, Fannie Mae had refinanced 1.7 million loans. Of that total, approximately 138,000 loans were refinanced under the company's DU Refi Plus and Refi Plus flexibilities that were put in place to support the HARP. Approximately 32,000 of the loans refinanced through July had LTVs above 80 percent up to 105 percent. Freddie Mac refinanced 1.2 million loans through July. Of that total, approximately 53,000 loans were refinanced under the company's Relief Refinance program that was put in place to support HARP. Freddie Mac had refinanced approximately 29,000 loans with LTVs above 80 percent up to 105 percent. The Federal Housing Finance Agency recently announced the expansion of HARP to allow borrowers with LTVs up to 125 percent to participate. Fannie Mae will begin accepting deliveries of refinanced loans with LTVs over 105 percent up to 125 percent as of September 1. Freddie Mac will begin accepting deliveries of these loans on October 1. About Freddie Mac The Federal Home Loan Mortgage Corporation (FHLMC) NYSE: FRE -- http://www.freddiemac.com/-- commonly known as Freddie Mac, is a stockholder-owned government-sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. FRONTIER AIRLINES: Expects to Exit Bankruptcy Protection Sept. 17 ----------------------------------------------------------------- Bloomberg News reported that Frontier Airlines expects to exit bankruptcy protection on September 17. As reported by the TCR on August 14, Republic Airways Holdings, Inc. has been declared the winning bidder in the auction to acquire Frontier, beating Southwest Airlines. Southwest Airlines formally submitted on August 10, 2009, a bid of more than $170 million in cash to take over Frontier Airlines -- at least $56 million more than it initially offered and $61 million more than what rival bidder Republic Airways Holdings had proposed prior to the auction. Frontier said Republic submitted the highest and best bid at the auction, which included Republic waiving distributions on its $150 million prepetition unsecured claim, which is expected to result in a 94% increase in the distribution to Frontier's general unsecured creditors. The Chapter 11 plan sent to creditors for voting was built upon the sale of the Debtors' assets to Republic or to the winning bidder at the auction. Meanwhile, Frontier Airlines Holdings said it will not be able to timely file its Quarterly Report on Form 10-Q for the three months ended June 30, 2009. It says that the Quarterly Report won't be filed on time because of its pending Chapter 11 cases. 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: Seniority Issues Doomed Southwest's Bid ---------------------------------------------------------- Capt. Carl Kuwitzky, president for the Southwest Airlines Pilots Association, said, "It appears, as we suspected, that the lack of an agreement between the two pilots unions on an integration plan caused the court to not deem the Southwest Airlines bid as qualified. However, it should be noted that Frontier also said that Republic's bid was the 'highest and best.' So it wasn't solely about labor." As reported by the TCR on August 14, Republic Airways Holdings, Inc. has been declared the winning bidder in the auction to acquire Frontier, beating Southwest Airlines. Southwest Airlines formally submitted on August 10, 2009, a bid of more than $170 million in cash to take over Frontier Airlines -- at least $56 million more than it initially offered and $61 million more than what rival bidder Republic Airways Holdings had proposed prior to the auction. Frontier said Republic submitted the highest and best bid at the auction, which included Republic waiving distributions on its $150 million prepetition unsecured claim, which is expected to result in a 94 percent increase in the distribution to Frontier's general unsecured creditors Southwest said that in the August 13 auction, it was not willing to remove the need for the two Pilot Unions to reach agreement. Southwest said, "culture and relationships with its employees are too important to compromise." One of the contingencies in Southwest's proposal was that labor groups from the two airlines would need to reach an agreement on how the two Pilot Unions would work together. Despite a good faith and diligent effort by all involved, including the top leadership of SWAPA and the Frontier Airlines Pilots Association (FAPA), who labored long into the night, the two unions were not able to come to an agreement before the auction deadline. As a result, Southwest's bid was deemed unacceptable. "We felt [Frontier Pilots] would have been a good fit for our culture and operation. The offer that we presented FAPA representatives on Wednesday night addressed three of their four stated needs; allowing pay protections for their pilots which would have given roughly a 40 percent raise for their First Officers, providing domicile protection for their Denver-based pilots, and guaranteeing that all of their 650+ pilots would be placed on our seniority list including their furloughed pilots," SWAPA's Mr. Kuwitzky said in the union's August 14 statement. "While they chose to not entertain placing their seniority list below ours, we felt protecting their pay and home domicile while providing a job security was an extremely fair offer. In the end, the Frontier bankruptcy lawyers allowed only a few hours to negotiate an integration agreement that historically takes months or years to accomplish," Mr. Kuwitzky added. Southwest Airlines, according to SWAPA, chose to include a labor contingency in their bid for Frontier Airlines. That contingency guaranteed no drawn-out labor integration battle that is seen in so many other mergers and acquisitions. 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: Greater Orlando Wants Set Off of Mutual Debts ---------------------------------------------------------------- Prior to the Petition Date, Frontier Airlines Holdings Inc. and Greater Orlando Aviation Authority, a public body existing under the laws of the State of Florida charged with operating the Orlando International Airport, entered into a Space/Use Agreement and an accompanying Non-Signatory Operating Agreement relating to the Airport. The Debtors have used the Airport's facilities in the operation of their businesses by, among other things: -- causing passenger aircraft to land and take off from the Airport; -- using the Airport's terminal space, including gates, offices, baggage and ramp areas; -- using non-terminal space, including cargo area and aircraft parking spaces; and -- using the Airport's common use baggage handling equipment and check-in equipment. According to Richard S. Kanowitz, Esq., at Cooley Godward Kronish LLP, in New York, the Debtors owe GOAA not less than $172,513 for services provided by GOAA pursuant to the Operating Agreement. Pursuant to the Operating Agreement, the Debtors are required to provide GOAA with a bond to guarantee the payment of amounts that may come due under the Agreement. The amount of the bond submitted to GOAA by the Debtor prepetition is $62,849. By this motion, GOAA asks the Court to lift the automatic stay imposed by Sections 553 and 362 of the Bankruptcy Code to allow set-off of the mutual obligations. "The right of set-off allows entities that owe each other money to apply their mutual debts against each other, thereby avoiding 'the absurdity of making A pay B when B owes A.'," Mr. Kanowitz contends, citing Citizens Bank of Maryland v. Stumpf, 516 U.S. 16, 18, 116 S.Ct. 286, 289, 133 L.Ed.2d 258 (1995). The right of setoff is preserved in bankruptcy by Section 553 of the Bankruptcy Code. Mr. Kanowitz points out that lifting the Stay to permit the Set- off will not prejudice the Debtors, as it will aid them in their efforts to emerge from their Chapter 11 cases. Judge Drain will convene a hearing on, August 26, 2009, to consider the request. Objections, if any, must be filed by August 21. 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 INSURANCE: Rehabilitator Asks Court to Set Bar Date ------------------------------------------------------------ On July 21, 2009, Kermit J. Brooks, acting superintendent of the Insurance of the State of New York, as rehabilitator of Frontier Insurance Company, filed a verified petition with the Supreme Court of the State of New York, County of Albany, to establish: (a) a Terramar Notice Date as the last date on which a notice regarding any insurance policy or insurance or reinsurance contract issued by Terramar Insurance Company, Terramar Insurance Agency, Advanced Risk International, Ltd. or Terramar General Agency may be submitted to the rehabilitator; (b) a bond bar date as the last date on which a notice regarding any bond issued by the Company, including any surety bond or other bond or guaranty identified in New York Insurance Law Sections 1113(16) or 6801, may be filed with the rehabilitator; and (c) a bond cutoff date after which Frontier will be longer incur liability for future occurrences under its bonds, helping to remove an important cause of Frontier's insolvency. According to the rehabilitator, Terramar was an insurance agency operating in Houston, Texas, which was affiliated with Frontier through common ownership, and that Terramar ceased operations in February 2001, providing Frontier with limited explanation or documentation of its business activities. The rehabilitator requests that the Terramar Notice Date and the bond bar date be established 120 days after entry of the Court's order granting the petition, and the bond cutoff date be established 60 days before the bond bar date. In its verified petition, the rehabilitator said that Terramar sold Frontier policies and insurance contracts, but Frontier possesses few records relating to such policies and contracts and so cannot, at present, identify or quantify its liabilities, as it must in order to formulate a plan. To quantify its Terramar liabilities, the rehabilitator must gather information regarding the Terramar Policies and cut off liabilities for any Terramar Policies that are not disclosed. Likewise the rehabilitator also lacks information concerning Frontier's obligations under bonds and so cannot identify the universe of potential bond claimants or quantify its bond liabilities. Objections to the petition with supporting documentation must be served upon the rehabilitators no later that the October 2, 2009. Service on the rehabilitator must be made by first class mail at: The Superintendent of Insurance of the State of New York as Rehabilitator of Frontier Insurance Company 123 William Street New York, NY 10038-3889 (Attention: Andrew J. Lorin, Esq.) The Liquidator has posted the petition on its Web site: http://www.nylb.org/Frontier.htm Frontier Insurance Company is a property and casualty insurer domiciled in the State of New York. The company was placed in rehabilitation and the New York Superintendent of Insurance was appointed as Rehabilitator on October 15, 2001, by order of the Supreme Court of the State of New York, New York County. Since 2001, Frontier has settled roughly 12,000 claims, paid roughly $750 million in losses, and reduced its insolvency on a statutory accounting basis from an estimated $170 million in 2001 to $90.6 million as of December 31, 2008. GENERAL GROWTH: NY Comptroller Wants Adequate Protection -------------------------------------------------------- In mid-July 2009, Debtor GGP Limited Partnership is expected to receive a quarterly distribution from non-debtor GGP/Homart II, L.L.C., in the approximate amount of $12 million. The Debtor and the New York Common Retirement Fund each own 50% of the membership interests in Homart II. The anticipated distribution to the Debtor from Homart II represents cash collateral pledged by the Debtor to CRF to secure the Debtor's obligation to CRF in the outstanding principal amount of $245,115,000 as of the Petition Date, which is growing with the accrual of postpetition interest, attorneys' fees and other expenses. In April 2009, the Debtor received a distribution from Homart II in the amount of $11,918,578, which also represents collateral pledged to CRF. Despite its receipt of the large sum, the Debtor, according to CRF, decided not to pay CRF a quarterly interest payment on the Note in the amount of $3,727,109 that otherwise would have been due on June 1, 2009, but for the Debtor's bankruptcy filing. The Debtor, alleges Andrew C. Gold, Esq., at Herrick, Feinstein LLP, in New York, apparently intends to continue to collect and expend the anticipated mid-July 2009 distribution and future distributions from Homart II without providing any adequate protection to CRF. By this motion, the Comptroller of the State of New York as Trustee of CRF, asks the Court to compel the Debtor to provide, as adequate protection of CRF's security interest in the distribution from Homart II: (a) $3,727,109 immediately after entry of an order granting the motion, and going forward, the amount of quarterly payments that would have been due under the Note at the non-default rate, had the Note not been accelerated by the Debtors' bankruptcy filing, when those payments would have been due; (b) reimbursement of all costs of collection, including reasonable attorneys' fees; (c) administrative priority status under Section 503(b)(1)(A) of the Bankruptcy Code of all amounts owed to CRF; (d) first priority replacement liens, to the extent of any diminution in value of CRF's collateral following the Petition Date, on any and all assets or property that the Debtor may acquire or receive after the Petition Date; and (e) replacement lien on the funds and cash collateral to be deposited in a segregated account solely for those funds. 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 Calvo & Clark for Calif. Tax Case ---------------------------------------------------------- Since 2007, Calvo & Clark LLP has jointly represented Debtor Bakersfield Mall, LLC, along with Silverstein & Pomerantz LLP, in pursuing claims and litigation against the California Franchise Tax Board and in challenging the constitutionality of the limited liability company fee, which California levies pursuant to Section 17942 of the California Revenue & Tax Code. Under the terms and conditions of a Joint Representation Agreement, dated August 10, 2005, Calvo & Clark and Silverstein & Pomerantz agreed to jointly represent Bakersfield Mall in an action challenging the LLC Fee and to share equally in any attorney's fees recovered with respect to Bakersfield Mall. By this application, the Debtors seek the Court's authority to employ, nunc pro tunc to the Petition Date, Calvo & Clark as special litigation counsel in connection with the California Tax Litigation. In connection with the California Tax Litigation, Calvo & Clark has agreed to: (a) Assist in the preparation of administrative filings, including protests and claims for refund, necessary to preserve the Bakersfield Mall's rights to a refund; (b) Represent Bakersfield Mall when it becomes necessary to file a tax refund lawsuit in the California Superior Court, including filing all necessary documents, appearing in trial court and, if necessary, representing Bakersfield Mall on appeal; and (c) Represent Bakersfield Mall in independent or related matters that might arise, subject to Bakersfield Mall and Calvo & Clark entering into a new agreement. The Debtors have agreed to pay Calvo & Clark and Silverstein & Pomerantz 15% of General Growth Properties, Inc.'s and Bakersfield Mall's total savings and refunds for all years ending on or before the date that the outcome in the California Tax Litigation becomes final. If there is no award or recovery of fees or costs, Bakersfield Mall will not be liable for attorneys' fees or costs, unless Bakersfield Mall discharges Calvo & Clark or Silverstein & Pomerantz without cause. In accordance with the terms and conditions of the Joint Representation Agreement, Calvo & Clark and Silverstein & Pomerantz will share equally in any recovery, after satisfying all costs, in connection with Bakersfield Mall or any client engaged subsequent to the execution date of the Joint Representation Agreement in any matter related to the California Tax Litigation. Calvo & Clark has not shared or agreed to share any of its compensation in connection with this matter with any other non-affiliated person. Arne D. Wagner, Esq., a partner at Calvo & Clark 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 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 GROWTH: Proposes Silverstein for Calif. Tax Issues ---------------------------------------------------------- General Growth Properties Inc. and its affiliates seek the Court's authority to employ Silverstein & Pomerantz LLP, nunc pro tunc to the Petition Date, to represent the Debtors in a litigation involving California tax issues. Silvertein & Pomerantz and Calvo & Clark LLP will jointly represent the Debtors in the California Tax Litigation. As special litigation counsel, Siverstein & Pomerantz has agreed to: (a) Assist in the preparation of administrative filings, including protests and claims for refund, necessary to preserve the Debtors' rights to a refund; (b) Represent the Debtors when it becomes necessary to file a tax refund lawsuit in the California Superior Court, including filing all necessary documents, appearing in trial court and, if necessary, representing the Debtors on appeal; and (c) Represent the Debtors in independent or related matters that might arise, subject to the Debtors and Silverstein & Pomerantz entering into a new agreement. The Debtors have agreed to pay Silverstein & Pomerantz: (a) $3,000 toward the legal fees and expenses incurred by Silverstein & Pomerantz in the California Tax Litigation, which will be deposited in a client trust account and withdrawn only as Silverstein & Pomerantz earns fees based on its normal hourly billing rates and pays fees, costs or expenses incurred in connection with the California Tax Litigation; and (b) 15% of the Debtors' total savings and refunds for all years ending on or before the date that the outcome in the California Tax Litigation becomes final. Except to the extent of the $3,000 retainer, the Debtors are not obligated to reimburse Silverstein & Pomerantz for any costs or expenses incurred in connection with performing the services described in the Engagement Letter. Silverstein & Pomerantz's normal hourly billing rates are: Partner $400 Associate $250 Paralegal $125 In accordance with the terms and conditions of the Joint Representation Agreement, Silverstein & Pomerantz and Calvo & Clark will share equally in any recovery, after satisfying all costs, in connection with Bakersfield Mall or any client engaged subsequent to the execution date of the Joint Representation Agreement in any matter related to the California Tax Litigation. Silverstein & Pomerantz has not shared or agreed to share any of its compensation in connection with this matter with any other non-affiliated person. Amy L. Silverstein, Esq., a partner at Silverstein & Pomerantz LLP, assures the Court that her 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 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 GROWTH: Second Quarter Report Filed With SEC ---------------------------------------------------- General Growth Properties, Inc., with the Securities and Exchange Commission their financial results for the quarter ended June 30, 2009, on Form 10-Q, a full-text copy of which is accessible for free at http://ResearchArchives.com/t/s?419a General Growth Properties, Inc. Consolidated Balanced Sheets As of March 31, 2009 (In thousands) Assets: Investment in real estate: Land $3,363,208,000 Buildings and equipment 23,389,898,000 Less accumulated depreciation (4,548,134,000) Developments in progress 958,298,000 --------------- Net property and equipment 23,163,270,000 Investment in and loans to/from Unconsolidated Real Estate Affiliates 1,932,356,000 Investment property and property held for development and sale 1,723,556,000 --------------- Net investment and real estate 26,819,182,000 Cash and cash equivalents 622,844,000 Accounts and notes receivable, net 396,252,000 Goodwill 211,540,000 Deferred expenses, net 332,011,000 Prepaid expenses and other assets 738,428,000 --------------- Total assets $29,120,257,000 =============== Liabilities and equity: Mortgages, notes and loans payable $3,040,250,000 Investment in and loans to/from Unconsolidated Real Estate Affiliates 32,282,000 Deferred tax liabilities 860,378,000 Accounts payable and accrued expenses 967,423,000 --------------- Liabilities not subject to compromise 4,900,333,000 Liabilities subject to compromise 22,393,495,000 --------------- Total liabilities 27,293,828,000 Equity: Common stock 3,138,000 Additional paid-in capital 3,792,212,000 Retained earnings (accumulated deficit) (2,043,067,000) Accumulated other comprehensive loss (32,216,000) Less common stock in treasury (76,752,000) --------------- Total stockholders' equity 1,643,315,000 Noncontrolling interests in consolidated real estate affiliates 24,188,000 --------------- Total equity 1,667,503,000 --------------- Total liabilities and equity $29,120,257,000 =============== General Growth Properties, Inc. Consolidated Statements of Cash Flows Three Months Ended June 30, 2009 (In thousands) Cash flows from operating activities: Net (loss) income ($562,780,000) Adjustments to reconcile net (loss) income to net cash provided by operating activities: Equity in income of Unconsolidated Real Estate Affiliates (23,877,000) Provision for doubtful accounts 19,179,000 Distributions received from Unconsolidated Real Estate Affiliates 20,605,000 Depreciation 365,636,000 Amortization 25,451,000 Amortization of deferred finance costs and debt market rate adjustments 18,825,000 Non-cash interest expense on Exchangeable Senior Notes 13,449,000 Non-cash interest expense resulting from termination of interest rate swaps (18,675,000) Loss (gain) on dispositions 55,000 Provisions for impairment 413,480,000 Participation expense pursuant to Contingent Stock Agreement (1,793,000) Land/residential development and acquisitions expenditures (29,811,000) Cost of land sales 18,667,000 Straight-line rent amortization (18,694,000) Amortization of intangibles other than in-place leases 1,308,000 Glendale Matter deposit 67,054,000 Non-cash reorganization items 31,176,000 Net changes: Accounts and notes receivable (11,537,000) Prepaid expenses and other assets (7,062,000) Deferred expenses (16,408,000) Accounts payable and accrued expenses and deferred tax liabilities 184,708,000 Other, net 8,923,000 ------------ Net cash provided by operating activities 497,879,000 ------------ Cash flows from investing activities: Acquisitions/development of real estate and property additions/improvements (127,584,000) Proceeds from sales of investment properties 6,409,000 Increase in investments in Unconsolidated Real Estate Affiliates (76,067,000) Distributions received from Unconsolidated Real Estate Affiliates in excess of income 50,244,000 Loans from (to) Unconsolidated Real Estate Affiliates, net (9,666,000) Decrease in restricted cash 10,620,000 Other, net (2,061,000) ------------ Net cash used in investing activities (148,105,000) ------------ Cash flows from financing activities: Proceeds from issuance of mortgages, notes and loans payable - Proceeds from issuance of the DIP Facility 400,000,000 Principal payments on mortgages, notes and loans payable (295,406,000) Deferred financing costs (2,176,000) Cash distributions paid to common stockholders - Cash distributions paid to holders of Common Units (625,000) Cash distributions paid to holders of perpetual and convertible preferred units - Proceeds from issuance of common stock, including common stock plans 43,000 Other, net 2,241,000 ------------ Net cash (used in) provided by financing activities 104,077,000 ------------ Net change in cash and cash equivalents 453,851,000 Cash and cash equivalents at beginning of period 168,993,000 ------------ Cash and cash equivalents at end of period $622,844,000 ============ 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: Taps Grant Thornton for Recovery of Tax Refunds --------------------------------------------------------------- General Growth Properties Inc. and its affiliates seek the Court's authority to employ Grant Thornton LLP, nunc pro tunc to April 16, 2009, to serve as their tax advisors for the purpose of recovering certain tax refunds. As tax advisors, Grant Thornton has agreed to: (a) conduct a detailed review of the Debtors' California Limited Liability Company fee filings for all years open under the relevant statute of limitations as of June 25, 2009, and the Debtors' California franchise tax filings for the tax periods ending on December 31, 2004, through 2007 and all tax years prior to 2004 that are open under the California statute of limitations as of June 25, 2009; (b) identify opportunities to obtain California savings through the filing of refund claims and related schedules to monitor the processing of the claims; (c) identify refund opportunities and assist the Debtors in preparing and filing the appropriate franchise tax Refund Claims, and monitor the processing of those claims by the FTB; and (d) assist the Debtors in protesting any denials of refund claims by the California Franchise Tax Board in coordination with the California law firm Silverstein & Pomerantz LLP, and in protesting any denials of refund claims by the FTB. Grant Thornton may also render additional consulting services with respect to state tax return filing positions and state tax audit related activity as requested by the Debtors. The Debtors will pay Grant Thornton in accordance with the terms and conditions of the Agreements, which provide, in relevant part, for both an hourly and contingent fee structure. In connection with any Tax Consulting Services, including state tax return filing positions and state tax audit related activity, Grant Thornton will be paid on an hourly basis at a 20% discount from its standard hourly rates: Standard Professional Hourly Rate Discounted Rate ------------ ----------- --------------- Partner $620 $496 Executive Director $570 $456 Senior Manager $530 $424 Senior Manager $515 $412 Senior Associate $360 $288 For services related to the California LLC Fee Review, the Debtors will pay Grant Thornton an amount equal to 5% of the economic value generated by the filing of the Refund Claims or reduction of other assessments received by the Debtors from the FTB with respect to relevant tax years. For services related to the California Franchise Tax Review, the Debtors will pay Grant Thornton an amount equal to 25% of the Economic Value generated by the filing of the Refund Claims or reduction of other assessments received by the Debtors from the FTB. In addition to compensation for services rendered, the Debtors have agreed to pay all of Grant Thornton's reasonable, documented out-of-pocket expenses. The Debtors also agreed to indemnify Grant Thornton and its employees for any claim from, related to, or in connection with services to be rendered to the Debtors. Stephen Ryan, a partner at Grant Thornton 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 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: Seeks Aid Pledge for Magna's Revised Opel Bid ------------------------------------------------------------- Laurence Frost and Ryan Chilcote at Bloomberg News report that General Motors Co. has received a revised bid from Magna International Inc. and Russia's Sberbank. Bloomberg relates Christopher Preuss, a spokesman for GM, said the U.S. carmaker requested an "outline of the financing package" that Germany and other European governments are prepared to offer under the revised proposal. According to Bloomberg, Siegfried Wolf, co-chief executive officer of Magan, said Thursday the the Canadian car-parts manufacturer and Sberbank are offering to pay about EUR500 million (US$714 million) for a combined 55% stake in Opel. Bloomberg says each of the partners would own 27.5%, leaving GM with 35% and Opel workers holding the remaining 10%. Mr. Wolf, as cited by Bloomberg said Magna's revised bid addresses cooperation with GM's Chevrolet division and answers any intellectual property questions. Bloomberg notes Mr. Wolf and GM officials stressed that the Detroit-based carmaker's board hasn't yet decided on a buyer for Opel, which has headquarters near Frankfurt. Once the government aid pledges have been outlined, "the options for Opel will be discussed with GM's board of directors," Bloomberg quoted the U.S. manufacturer as saying in a statement. 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) GENMAR HOLDINGS: To File for Reorganization Plan by Sept. 29 ------------------------------------------------------------ Frank Wallis at The Baxter Bulletin reports that Genmar Holdings, Inc., is expected to emerge from Chapter 11 bankruptcy protection after filing on September 29 its reorganization plan in the U.S. Bankruptcy Court for the District of Minnesota. According to The Bulletin, Irwin Jacobs, a partner in Genmar Holdings Inc., said in a letter to dealers on Tuesday, "As a result of your continuing new boat orders, most of our factories are operational today and will be for the foreseeable future." The stronger, predictable order backlogs boost Genmar's business plan and strategies for exiting Chapter 11, the report states, citing Mr. Jacobs. Mr. Jacobs said that Genmar's reorganization now includes sales or agreements to sell various surplus assets and non-core assets that aren't essential to the production of the Company's product lines, and proceeds will be used to cut debt and position the Company for new refinancing opportunities, The Bulletin reports. The Bulletin, citing Mr. Jacobs, states that Genmar's plan of reorganization will also engage investment banking firm Houlihan Lokey Howard & Zukin Capital, Inc., to serve as the Company's strategic advisers. Pulaski, Wisconsin-based Carver Italia, LLC, and its affiliates, including Genmar Holdings, Inc. -- http://www.genmar.com/-- manufacture recreational boats. The Debtors filed for Chapter 11 bankruptcy protection on June 1, 2009 (Bankr. D. Minn. Case No. 09-33773, and 09-43537). James L. Baillie, Esq., and Ryan Murphy, Esq., at Fredrikson & Byron, PA, assist the Debtors in their restructuring efforts. The Debtors listed $10 million to $50 million in assets and $100 million to $500 million in debts. GENMAR HOLDINGS: Wants to Sell Three Parcels of Real Estate ----------------------------------------------------------- Genmar Holdings Inc. and its affiliates asked the U.S. Bankruptcy Court in St. Paul, Minnesota, for permission to sell three parcels of real property free and clear of all liens and other interests, Carla Main at Bloomberg News reported. Genmar, according to the report, wants to sell properties in Sarasota, Florida, at 1651 Whitfield Ave., 1715 67th Ave. East and 7150 15th Ave. The properties "had been used to manufacture various brands of boats" and their use ceased after manufacturing operations were consolidated, according to papers. The Court will convene a hearing to consider the proposal on Sept. 3. Pulaski, Wisconsin-based Carver Italia, LLC, and its affiliates, including Genmar Holdings, Inc. -- http://www.genmar.com/-- manufacture recreational boats. The Debtors filed for Chapter 11 bankruptcy protection on June 1, 2009 (Bankr. D. Minn. Case No. 09-33773, and 09-43537). James L. Baillie, Esq., and Ryan Murphy, Esq., at Fredrikson & Byron, PA, assist the Debtors in their restructuring efforts. Carver Italia listed $10 million to $50 million in assets and $100 million to $500 million in debts. GEORGIA GULF: Bank Debt Trades at 4% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which Georgia Gulf Corporation is a borrower traded in the secondary market at 95.90 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.00 percentage points from the previous week, The Journal relates. The loan matures on Oct. 3, 2013. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B2 rating and Standard & Poor's C rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Georgia Gulf Corporation is a manufacturer and international marketer of two integrated chemical product lines, chlorovinyls and aromatics. The Company's primary chlorovinyls products are chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl resins and vinyl compounds. Its aromatics products are cumene, phenol and acetone. The Company has four business segments: chlorovinyls; window and door profiles, and moldings products; outdoor building products, and aromatics. At March 31, 2009, the Company had $1.56 billion in total assets and $1.66 billion in total liabilities, resulting in $97.3 million stockholders' deficit. As reported in the Troubled Company Reporter on June 19, 2009, Standard & Poor's Ratings Services lowered its issue rating on Georgia Gulf Corp.'s $100 million 7.125% senior notes due 2013 to 'D' from 'C' and retained the '6' recovery rating, indicating S&P's expectation of negligible recovery (0%-10%) on the notes. At the same time, S&P kept its corporate credit rating on Georgia Gulf at 'D'. S&P had lowered its corporate credit rating and these issue ratings on Georgia Gulf to 'D' on May 21, 2009, following a missed interest payment of $34.5 million on these notes. As reported by the TCR on Aug. 3, Moody's Investors Service upgraded the Corporate Family Rating of Georgia Gulf Corporation to B2 from Caa2 as a result of the completion of the private debt- for-equity exchange offer and an amendment to its credit facility that substantially improves the company's liquidity. GETRAG TRANSMISSION: Walbridge Aldinger Objects to Plan ------------------------------------------------------- Getrag Transmission Manufacturing LLC is facing an objection to its reorganization plan, Bloomberg's Carla Main said. Walbridge Aldinger Co. asked that Getrag's case be kept open, citing issues related to a dispute over a Tipton, Indiana, manufacturing facility, according to the report. Getrag has filed a liquidating Chapter 11 plan. The disclosure statement explaining the Liquidating Plan says unsecured creditors don't stand to see anything aside from recovery from lawsuits. Getrag listed unsecured creditors with claims totaling $483 million. Getrag Transmission asserts claims against Chrysler. Getrag sued Chrysler LLC in a dispute over a dual clutch transmission plant the two companies were building in Tipton, Indiana. Prepetition, Getrag Transmission and Chrysler agreed to the construction of a $530 million dual clutch transmission plant in Tipton County, Indiana. According to Bloomberg, Chrysler agreed to reimburse Getrag $305 million and agreed that the plant would be sole source for the product until 2020. Chrysler, however, later sued Getrag Transmission in the state court of Michigan, claiming that the Company couldn't secure the needed financing, and the Company abandoned the project before it filed for bankruptcy. Getrag, in response, filed for Chapter 11 and sued Chrysler in bankruptcy court. The bankruptcy court has been automatically stayed by Chrysler's own Chapter 11 filing. Getrag Transmission has a pending agreement to sell its real property to secured lenders in exchange for a $13 million reduction in debt. A full-text copy of the Debtor's combined plan of liquidation and disclosure statement, dated June 3, 2009, is available at: http://bankrupt.com/misc/getrag.liquidationplan.pdf About GETRAG Transmission Headquartered in Sterling Heights, Michigan, GETRAG Transmission Manufacturing LLC -- http://www.getrag.de/-- designs and makes dual clutch transmission its facility in Tipton, Indiana. The company filed for Chapter 11 relief on November 17, 2008 (Bankr. E.D. Mich. Case No. 08-68112). Jayson Ruff, Esq., Jeffrey S. Grasl, Esq., and Stephen M. Gross, Esq., at McDonald Hopkins, represent the Debtor as counsel. Matthew Wilkins, Esq., at Brooks Wilkins Sharkey & Turco PLLC, represents the unsecured creditor's committee as counsel. In its schedules, the Debtor listed total assets of $690,071,505 and total debts of $582,208,616. Getrag Transmission is a unit of Germany's Getrag Group. Based in Untergruppenbach, Germany, GETRAG Corporate Group is an independent automotive transmission manufacturer with 12,400 employees at 23 locations worldwide. GRAPHIC PACKAGING: Moody's Assigns 'B3' Rating on $180 Mil. Notes ----------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Graphic Packaging International, Inc.'s (Graphic Packaging) proposed $180 million senior notes due 2017. The notes are being offered as additional notes under the June 16, 2009 indenture to which the company issued $245 million of its 9.5% senior notes due 2017. Moody's also affirmed the B1 corporate family rating and the company's other existing debt ratings. The proceeds from the proposed note offering will be used to redeem the existing 8.50% senior notes due 2011 and pay related fees and expenses. In addition, Moody's affirmed the company's SGL-3 speculative grade liquidity rating and the outlook remains negative. The ratings assignment and affirmation reflects Graphic Packaging's leading position in folding consumer cartons, coated unbleached kraft paperboard, coated recycled boxboard, and multi- wall bag. In addition to extensive customer relationships, the ratings are supported by continued focus on cost improvements and margin stability. The ratings also consider the company's adequate liquidity profile, consisting of a $161 million cash balance with no near-term debt maturities after the completion of the recent refinancing transactions. Moody's believes the extension of the debt maturities and the company's ability to access the capital markets help support the corporate family rating. Nonetheless, the ratings and negative outlook consider Graphic Packaging's high leverage, weak demand trends in the paperboard sector, weak debt protection metrics, and exposure to potentially high input costs. Moody's anticipates continued weak demand trends within the folding carton packaging sector and a slow recovery of overall market conditions in 2009. Graphic Packaging's financial leverage remains high after the merger with Altivity Packaging and credit protection measures are not expected to improve significantly from recently observed levels. When the ratings were first assigned in March of 2008, Moody's expected positive supply trends in the paperboard sector, favorable pricing, and cost savings and synergies to improve margins, generate solid free cash flow, and significantly reduce debt to support the ratings. However, the decline in demand levels within the paperboard sector has negatively impacted operating results and may affect pricing and the company's ability to sustain margin improvements. Although Graphic Packaging operates in the more stable food and beverage end market and has recently benefited from the alternative fuel tax credit, overall demand has declined and is expected to remain weak over the rating horizon. Furthermore, Moody's believes the company's highly-leveraged capital structure increases refinancing risk within the credit profile. Moody's last rating action was on June 1, 2009, when Moody's assigned ratings to the company's senior notes due 2017. Ratings Assigned: Issuer: Graphic Packaging International, Inc. -- Senior unsecured notes, B3 (LGD5, 78%) Graphic Packaging International, Inc., located in Marietta, Georgia, is a provider of paperboard packaging solutions. GRAPHIC PACKAGING: S&P Gives Positive Outlook, Affirms 'B+' Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Marietta, Georgia-based Graphic Packaging International Inc. to positive from stable. At the same time, S&P affirmed all of its ratings on the company, including the 'B+' corporate credit rating. Standard & Poor's also assigned its 'B-' issue-level rating (two notches lower than the corporate credit rating) and '6' recovery rating to GPK's proposed $180 million senior unsecured notes due 2017 based on preliminary terms and conditions. The company will issue the notes under SEC Rule 144a with registration rights. The '6' recovery rating indicates S&P's expectation for negligible (0%-10%) recovery in the event of a payment default. GPK will use the net proceeds from the notes primarily to repay its 8.50% senior notes due August 2011. "The outlook revision reflects the progress that GPK has made to improve its operating margins, despite a weak U.S. economy, and S&P's expectations that earnings should further improve if the economy exits the recession over the next several quarters as S&P currently believe," said Standard & Poor's credit analyst Pamela Rice. Although the company's credit measures remain aggressive for the current ratings, with adjusted debt to EBITDA over 7x as of June 30, 2009, S&P believes leverage could improve to the mid- 6x area over the next few quarters based on S&P's expectations that the company will reduce debt further and could generate earnings that are 15% higher than the amount reported for the 12 months ended June 30, 2009. S&P would consider raising GPK's corporate credit rating over the next few quarters to 'BB-' if S&P believed the company could sustain leverage in the 5x to 6x range. HANOVER INSURANCE: AM Best Assigns BB+ Rating to Jr. Debentures --------------------------------------------------------------- A.M. Best Co. has assigned a debt rating of "bb+" to $165 million series B 8.207% junior subordinated deferrable interest debentures due February 3, 2027 issued in exchange for the AFC Capital Trust I same debentures, which were outstanding as of July 30, 2009 of The Hanover Insurance Group, Inc. (THG) (Worcester, MA) [NYSE: THG]. The outlook for the rating is stable. Concurrently, A.M. Best has withdrawn the debt rating of "bb+" on AFC Capital Trust I's $309 million aggregate principal amount of series B junior subordinated deferrable interest debentures due February 3, 2027 of THG. On July 30, 2009, THG terminated AFC Capital Trust I and issued the new debentures. In addition, THG repurchased $77 million of senior debt, which has resulted in financial and debt leverage ratios well below A.M. Best's tolerance levels. HAYES LEMMERZ: Committee Wants Court to Appoint Examiner -------------------------------------------------------- The Official Committee of Unsecured Creditors of Hayes Lemmerz International Inc. asks the U.S. Bankruptcy Court to appoint an examiner in regards to the structuring and negotiation of a Chapter 11 plan, and the debtor-in-possession financing, among other things. According to BankruptcyData.com, the Creditors Committee also want the examiner to investigate whether the Debtors' estates have any claims against the directors and officers and prepetition lenders relating to the commencement of the Chapter 11 cases. The Committee wants the deadline to challenge the prepetition lenders' liens from Aug. 20, 2009, to provide for a reasonable opportunity to review the examiner's findings. Hayes filed a proposed Chapter 11 plan on July 2, 2009. The hearing to approve the disclosure statement to the Plan was originally scheduled for July 30, 2009. The three-week adjournment will allow the Company additional time to continue negotiations with creditors and other constituents with respect to the final Plan. The Company already has the overwhelming support of its senior secured lenders regarding the reorganization contemplated by the Plan. The Plan reflects the terms of an agreement reached with a majority of their prepetition secured lenders shortly prior to the Petition Date. Under the Plan, certain of the Debtors' prepetition secured lenders agreed to fund the operations of the Debtors through a $100 million of debtor-in-possession financing in exchange for majority ownership of the reorganized Company upon emergence from chapter 11. The remaining equity of the Debtors will be distributed to the Debtors' other prepetition secured lenders and their noteholders in exchange for elimination of their debt claims. Holders of certain other general unsecured claims will share pro rata in $250,000 provided that they vote to accept the Plan. About Hayes Lemmerz Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC, serves as the Company's financial advisors. AlixPartners, LLP, serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22, which was precipitated by an unprecedented slowdown in industry demand and a tightening of credit markets. The Company plans to reduce its debt and restructure its balance sheet. Hayes Lemmerz and its direct and indirect domestic subsidiaries and one subsidiary in Mexico first filed for bankruptcy in December 2001 before the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens, according to Mr. Clawson, who also served as chairman and chief executive officer at that time. The Court confirmed the Company's reorganization plan in May 2003, allowing the Company to exit bankruptcy in June 2003. In accordance with the 2003 Plan, approximately $2.1 billion in pre-petition debt and other liabilities were discharged. The Plan provided for holders of prepetition secured claims to receive $478.5 million in cash and 53.1% of the reorganized company common stock. Holders of senior note claims were to receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims were to receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. HAYES LEMMERZ: UAW, USW Protest Employee Incentive Plans -------------------------------------------------------- Law360 reports that two labor unions have objected to Hayes Lemmerz International Inc.'s bid for approval of employee incentive plans they say could mean millions in payouts for executives, claiming that those programs could poison negotiations over Hayes Lemmerz's proposed cutbacks on retiree benefits. The United Steelworkers union lodged an objection in the U.S. Bankruptcy Court for the District of Delaware asking the court to deny Hayes Lemmerz's bid for an order approving the KEIP, the report says. About Hayes Lemmerz Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC, serves as the Company's financial advisors. AlixPartners, LLP, serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22, which was precipitated by an unprecedented slowdown in industry demand and a tightening of credit markets. The Company plans to reduce its debt and restructure its balance sheet. Hayes Lemmerz and its direct and indirect domestic subsidiaries and one subsidiary in Mexico first filed for bankruptcy in December 2001 before the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 filings were precipitated by declining market conditions and the Company's excessive debt burdens, according to Mr. Clawson, who also served as chairman and chief executive officer at that time. The Court confirmed the Company's reorganization plan in May 2003, allowing the Company to exit bankruptcy in June 2003. In accordance with the 2003 Plan, approximately $2.1 billion in pre-petition debt and other liabilities were discharged. The Plan provided for holders of prepetition secured claims to receive $478.5 million in cash and 53.1% of the reorganized company common stock. Holders of senior note claims were to receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims were to receive 2% of the New Common Stock. Hayes Lemmerz' prior common stock and securities were cancelled as of June 3, 2003. HCA INC: Bank Debt Trades at 5% Off in Secondary Market ------------------------------------------------------- Participations in a syndicated loan under which HCA, Inc., is a borrower traded in the secondary market at 94.88 cents-on-the- dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.68 percentage points from the previous week, The Journal relates. The loan matures on Nov. 6, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's BB rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Headquartered in Nashville, Tennessee, HCA Inc. -- http://www.hcahealthcare.com/-- is the nation's leading provider of healthcare services. As of June 30, 2008, HCA operated 169 hospitals and 107 freestanding surgery centers, including eight hospitals and eight freestanding surgery centers operated through equity method joint ventures. As reported by the TCR on August 4, 2009, Moody's Investors Service assigned a Ba3 (LGD3, 32%) rating to HCA Inc.'s proposed offering of $750 million of first lien senior secured notes. Moody's also affirmed the existing ratings of HCA, including the B2 Corporate Family and Probability of Default Ratings. The outlook for the ratings is stable. HEALTHSOUTH CORP: Bank Debt Trades at 3.5% Off in Secondary Market ------------------------------------------------------------------ Participations in a syndicated loan under which HealthSouth Corporation is a borrower traded in the secondary market at 96.50 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.57 percentage points from the previous week, The Journal relates. The loan matures on March 10, 2013. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Based in Birmingham, Alabama, HealthSouth Corporation -- http://www.healthsouth.com/-- is the nation's largest provider of inpatient rehabilitative healthcare services. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellites, and home health agencies. Healthsouth carries a 'B2' long term corporate family rating from Moody's and a 'B' long term foreign issuer credit rating from Standard & Poor's. HERBST GAMING: Ballots to Proposed Chapter 11 Plan due Sept. 15 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Nevada entered on August 10, 2009, an order approving a second amended disclosure statement related to the first amended joint plan of reorganization filed by Herbst Gaming, Inc., and certain of its subsidiaries. The Court will hold a hearing to consider confirmation of the Plan on October 28, 2009, at 10:00 a.m. (PDT), and October 29. The Debtors mailed the Disclosure Statement, the Plan and ballots on August 12. The deadline for submitting ballots has been established as September 15, 2009. As reported by the Troubled Company Reporter on August 11, 2009, 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. The Allowed Claims of Holders of the Senior Credit Facility Claims totaled roughly $847,363,000 in principal plus accrued interest of $29,103,000 for a total of $876,466,000 as of the Petition Date. The 7% Senior Subordinated Notes Due November 15, 2014 and 8.125% Senior Subordinated Notes Due June 1, 2012, are contractually subordinated to the Senior Credit Facility Claims and are not entitled to any distribution from the Estates until the Senior Credit Facility Claims are paid in full. In light of the enterprise value of the Assets, regardless of whether the Senior Credit Facility Claims are fully or partially Secured Claims, by virtue of the contractual subordination of the Senior Subordinated Note Claims to the Senior Credit Facility Claims, the Senior Subordinated Note Claims are not entitled to, and will not receive, anything under the Plan because the Holders of Senior Credit Facility Claims are not being paid in full 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. 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 debt. Equity Interests in Herbst Gaming will be canceled and equity holders will not receive anything under 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 second amended disclosure statement is available for free at http://ResearchArchives.com/t/s?41e7 About Herbst Gaming 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. HERBST GAMING: Swings to $4.4 Mil. Net Income for June 30 Quarter ----------------------------------------------------------------- Herbst Gaming Inc. swung to a $4,469,000 net income for the three months ended June 30, 2009, from a net loss of $62,329,000 for the same period a year ago. Herbst Gaming posted a net loss of $28,377,000 for the first half of 2009, from a net loss of $78,853,000 for the same period in 2008. As of June 30, 2009, Herbst Gaming had $931,931,000 in total assets; and $41,641,000 in total liabilities not subject to compromise and $1,246,822,000 in liabilities subject to compromise; resulting in $356,532,000 in stockholders' deficiency. Herbst Gaming paid $2,958,000 in professional fees during the three months ended June 30, 2009, and $3,294,000 for the first half of the year. It paid $43,000 in trustee fees during the period. 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?41e8 About Herbst Gaming 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. HERTZ CORP: Bank Debt Trades at 4% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which The Hertz Corporation is a borrower traded in the secondary market at 95.75 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.41 percentage points from the previous week, The Journal relates. The loan matures on Dec. 21, 2012. The Company pays 150 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba1 rating and S&P's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc.(NYSE: HTZ), based in Park Ridge, New Jersey, is the world's largest general use car rental brand, operating from approximately 8,000 locations in 147 countries worldwide. Hertz also operates one of the world's largest equipment rental businesses, Hertz Equipment Rental Corporation, through more than 375 branches in the United States, Canada, France, Spain and China. In July, Fitch Ratings downgraded Hertz Corporation's Issuer Default Rating to 'BB-' from 'BB', and Moody's Investors Service lowered Hertz's Corporate Family Rating and Probability of Default to 'B1' from 'Ba3'. HUNTSMAN ICI: Bank Debt Trades at 6% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which Huntsman ICI is a borrower traded in the secondary market at 93.40 cents-on-the- dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.77 percentage points from the previous week, The Journal relates. The loan matures on April 23, 2014. The Company pays 150 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba1 rating and Standard & Poor's B+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Huntsman Corp. -- http://www.huntsman.com/-- is a global manufacturer and marketer of differentiated chemicals. Its operating companies manufacture products for a variety of global industries, including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging. Originally known for pioneering innovations in packaging and, later, for rapid and integrated growth in petrochemicals, Huntsman has more than 12,000 employees and operates from multiple locations worldwide. The Company had 2008 revenues exceeding $10 billion. As reported by the Troubled Company Reporter on April 20, 2009, Huntsman International LLC, a wholly owned subsidiary of Huntsman Corporation, entered into a waiver to its $650 million revolving credit facility dated August 16, 2005, with Deutsche Bank AG New York Branch, as administrative agent, and the financial institutions party thereto as lenders. The waiver relaxes the senior secured leverage ratio covenant from 3.75 to 1.00 to 5.00 to 1.00 for the period measured June 30, 2009, through June 30, 2010. The waiver, among other things, also modifies the definition of Consolidated EBITDA and permits Huntsman International LLC to add back any lost profits attributable to Hurricanes Gustav and Ike that occurred in 2008. Additionally, the amount of Permitted Non-Cash Impairment and Restructuring Charges was increased from $100 million to $200 million. HYSKY COMMUNICATIONS: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: Hysky Communications, LLC 131455 Noel Road, Suite 300 Dallas, TX 75240 Bankruptcy Case No.: 09-35340 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Keith Miles Aurzada, Esq. Bryan Cave LLP 2200 Ross Avenue, Suite 3300 Dallas, TX 75201 Tel: (214) 721-8041 Fax: (214) 721-8100 E-mail: keith.aurzada@bryancave.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,001 to $500,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Deane Baron, chief executive officer of the Company. IDEARC INC: Posts $142 Million Net Income for Second Quarter ------------------------------------------------------------ Idearc, Inc.'s balance sheet at June 30, 2009, showed total assets of $1.8 billion and total liabilities of $10.2 billion, resulting in a stockholders' deficit of $8.4 billion. For three months ended June 30, 2009, the Company reported a net income of $142.0 million compared with a net income of $76.0 million for the same period in 2008. Operating income during the quarter was $216 million, compared with $279 million in the second quarter of 2008. For six months ended June 30, 2009, the Company posted a net loss of $101.0 million compared with a net income of $187.0 million for the same period in 2008. The loss was due to $405 million in reorganization expenses for 2009. Operating income, which excludes reorganization items, was $401 million in six months ended June 30, 2009. The Company stated that the U.S. Bankruptcy Court for the Northern District of Texas is scheduled to review its Plan of reorganization and disclosure statement on Aug. 26, 2009. However, there can be no assurance at this time that the Plan will be confirmed by the Bankruptcy Court or that any the plan will be implemented successfully and on a timely basis. The Company added that the confirmed Plan could result in holders of Idearc's liabilities or securities, including common stock, receiving no distribution and cancellation of their holdings. Due to these uncertainties, the value of Idearc's liabilities and securities, including its common stock, is highly speculative. Appropriate caution would be exercised with respect to existing and future investments in any of the liabilities and securities of Idearc. At this time, there is no assurance the Company will be able to restructure as a going concern or successfully implement the Plan in a timely basis. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4198 Headquartered in DFW Airport, Texas, Idearc, Inc. (NYSE: IAR) -- http://www.idearc.com/-- formerly known as Directories Disposition Corporation, provides yellow and white page directories and related advertising products in the United States and the District of Columbia. Products include print yellow pages, print white pages, Superpages.com, Switchboard.com and LocalSearch.com, the company's online local search resources, and Superpages Mobile, their information directory for wireless subscribers. Idearc is the exclusive official publisher of Verizon print directories in the markets in which Verizon is currently the incumbent local exchange carrier. Idearc uses the Verizon brand on their print directories in their incumbent markets, well as in their expansion markets. Idearc and its affiliates filed for Chapter 11 protection on March 31, 2009 (Bankr. N. D. Tex. Lead Case No. 09-31828). Toby L. Gerber, Esq., at Fulbright & Jaworski, LLP, represents the Debtors in their restructuring efforts. The Debtors have tapped Moelis & Company as their investment banker; Kurtzman Carson Consultants LLC as their claims agent. William T. Neary, the United States Trustee for Region 6, appointed six creditors to serve on an official committee of unsecured creditors of Idearc, Inc., and its debtor-affiliates. The Committee selected Mark Milbank, Tweed, Hadley & McCloy LLP, as counsel, and Haynes and Boone, LLP, co-counsel. The Debtors' financial condition as of December 31, 2008, showed total assets of $1,815,000,000 and total debts of $9,515,000,000. INSIGHT MIDWEST: Bank Debt Trades at 4% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Insight Midwest Holdings, LLC, is a borrower traded in the secondary market at 95.14 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.93 percentage points from the previous week, The Journal relates. Insight Midwest Holdings, LLC pays interest at 200 points above LIBOR. The bank loan matures on April 3, 2014. The bank loan carries Moody's B1 rating and Standard & Poor's B+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Insight Midwest Holdings is a unit of Insight Communications Company, Inc., a domestic cable television multiple system operator serving approximately 674,000 basic video subscribers, mainly in Kentucky and in parts of Indiana and Ohio. Insight Communications maintains its headquarters in New York. ISP CHEMCO: Bank Debt Trades at 5% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which ISP Chemco, LLC, is a borrower traded in the secondary market at 94.10 cents-on- the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.15 percentage points from the previous week, The Journal relates. The loan matures on May 23, 2014. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. ISP Chemco, LLC, headquartered in Wayne, New Jersey, manufactures specialty chemicals and industrial chemicals and is part of a group of companies which is a beneficially owned by Samuel Heyman. Revenues for the twelve months ending April 5, 2009, were $1.3 billion. As reported by the Troubled Company Reporter on Aug. 6, 2009, Moody's Investors Service revised the ratings outlook to stable from negative and affirmed the Ba3 ratings on the guaranteed senior secured credit facilities of ISP Chemco LLC (Ba3 Corporate Family Rating), a wholly owned subsidiary of International Specialty Holdings LLC. The change in outlook to stable signals that even after significant dividends and the effects of the global downturn Chemco's credit metrics have remained relatively stable. The Ba3 ratings reflect the relatively heavy debt burden at Chemco that has resulted in weak credit metrics along with the historic dividends going up to the parent. Moody's concern over such event risk from Chemco's controlling member has served to keep Chemco's ratings at the lower end of the Ba category. A further concern is the lack of SEC financials which has limited the level of disclosure provided. Chemco's financial statements, while audited, (with an unqualified opinion from Ernst & Young), provide less detail than Moody's receive from other issuers with public filings. ISTAR FINANCIAL: Moody's Downgrades Senior Unsec. Ratings to 'Ca' ----------------------------------------------------------------- Moody's Investors Service downgraded the senior unsecured ratings of iStar Financial to Ca from Caa1. The outlook remains negative. The rating action is based on the REIT's challenged liquidity and the limited visibility surrounding its ability to meet its short- term obligations. The REIT has $290 million of unsecured bonds maturing and expected remaining funding commitments of $525 million through year-end 2009. In early 2010, iStar has approximately $500 million of unsecured bonds maturing. iStar expects its funding needs to be met through asset repayments and assets sales, but the pace of these cash flows has been slow and has become increasingly more unpredictable given the lack of liquidity in the real estate debt markets and declining property values. Moody's believes that the probability of iStar defaulting on its near-term obligations is high, given the lack of clarity surrounding its funding sources. The Ca rating reflects the potential loss severity to iStar's bondholders. The negative outlook continues to reflect the risks surrounding asset repayments, asset sales, and resolution of its non- performing assets in the face of continued challenges in the real estate debt capital markets. A rating downgrade would result if Moody's existing loss severity assumptions were to grow as a result of further deterioration of the unencumbered asset pool. Moody's stated that a return to stable outlook would be predicated upon iStar's demonstrated ability to meet its funding needs over the next twelve months. These ratings were downgraded with a negative outlook: * iStar Financial, Inc. -- Senior unsecured debt to Ca from Caa1; preferred stock to C from Caa3; senior debt shelf to (P)Ca from (P)Caa1; subordinated debt shelf to (P)C from (P)Caa2; preferred stock shelf to (P)C from (P)Caa3. Moody's last rating action with respect to iStar Financial Inc. was on May 11, 2009 when Moody's downgraded the senior unsecured ratings to Caa1 from B2. The rating outlook was negative. iStar Financial Inc. is a property finance company that elects REIT status. iStar provides structured mortgage, mezzanine and corporate net lease financing. iStar Financial is headquartered in New York City, and had assets of $14.1 billion and equity of $2.1 billion as of June 30, 2009. iStar Financial'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 iStar's core industry and the company's ratings are believed to be comparable to those of other issuers of similar credit risk. JACK STARKE: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Joint Debtors: Jack Edward Starke Kim Rose Starke 4222 Guiness Court Hollister, CA 95023 Bankruptcy Case No.: 09-56702 Chapter 11 Petition Date: August 12, 2009 Court: United States Bankruptcy Court Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtors' Counsel: Scott J. Sagaria, Esq. Law Offices of Scott J. Sagaria 333 W San Carlos, St. #1625 San Jose, CA 95110 Tel: (408) 279-2288 Email: sjsagaria@sagarialaw.com Patrick Calhoun, Esq. Law Offices of Scott J. Sagaria 333 W San Carlos, St. #1625 San Jose, CA 95110 Tel: (408) 279-2288 Total Assets: $1,112,426 Total Debts: $2,091,261 A full-text copy of the Debtors' petition, including a list of their 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/canb09-56702.pdf The petition was signed by the Joint Debtors. JARDEN CORP: Seeks 3-Year Extension on $600 Million Term Loans -------------------------------------------------------------- Jarden Corp., asked lenders to extend $600 million of its existing bank debt by three years in exchange for a higher interest rate, Bloomberg News reported, citing a person familiar with the deal. Deutsche Bank AG is leading the negotiations with lenders, who would get an interest rate that is 3.25 percentage points more than the London interbank offered rate, Bloomberg said, citing the same person, who declined to be named because negotiations are private. Jarden is proposing to extend portions of three term loans due Jan. 24, 2012, according to the person. Jarden owes $1.38 billion on its term loans, according to data compiled by Bloomberg. Two of the term loans, with $789 million outstanding, bear interest at 1.75 percentage points more than Libor; the third portion has $589 million outstanding and a spread of 2.50 percentage points, Bloomberg data show. The company repaid $283 million of its credit facility debt with proceeds from a $300 million sale of 8 percent notes in April. On August 4, 2009, Jarden entered into an Extended Revolving Credit Sub-Commitment Agreement pursuant to the terms of that certain Credit Agreement, dated as of January 24, 2005, among the Company, as borrower, the lenders and letter of credit issuers party thereto from time to time, Deutsche Bank AG New York Branch, as administrative agent for the lenders and letter of credit issuers, Citicorp USA, Inc., as syndication agent for the lenders and letter of credit issuers and Bank of America, N.A., National City Bank of Indiana and SunTrust Bank, as co-documentation agents for the lenders and letter of credit issuers. Pursuant to the terms of the Sub-Commitment Agreement, the Company extended the maturity date to January 24, 2012 of revolving loans under the Credit Agreement in an aggregate amount of $100.0 million. In connection therewith, the Company permanently reduced its existing revolver loan commitments under the Credit Agreement in an amount equal to $184.0 million. About Jarden Corp. Jarden Corporation provides a range of consumer products. The Company operates in three business segments: Outdoor Solutions, Consumer Solutions and Branded Consumables. Its segments manufacture or source, market and distribute a number of brands, including Outdoor Solutions, Abu Garcia, Adio, Berkley, Campingaz, Coleman, Fenwick, Gulp!, JT, K2, Marker, Marmot, Mitchell, Penn, Planet Earth, Rawlings, Shakespeare, Sevylor, Stearns, Stren, Trilene, Ugly Stik and Volkl; Consumer Solutions, Bionaire, Crock- Pot, FoodSaver, Health o meter, Holmes, Mr. Coffee, Oster, Patton, Rival, Seal-a-Meal, Sunbeam and VillaWare, and Branded Consumables, such as Ball, Bee, Bicycle, Crawford, Diamond, Dicon, First Alert, Forster, Hoyle, Java-Log, Kerr, Lehigh, Leslie-Locke, Loew-Cornell and Pine Mountain. As of June 30, 2009, Jarden had $5,874,000,000 in assets against $4,210,000,000 in liabilities. In May 2009, Moody's affirmed Jarden Corp.'s Corporate family rating at B1, and Probability of default rating at B1. Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Jarden Corp. JHRE PROPERTIES: Case Summary & 21 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: JHRE Properties, LLC 4912 State Street East St. Louis, IL 62205 Bankruptcy Case No.: 09-32098 Chapter 11 Petition Date: August 12, 2009 Court: United States Bankruptcy Court Southern District of Illinois (East St Louis) Judge: Kenneth J. Meyers Debtor's Counsel: Stephen R. Clark, Esq. 104 S Charles St Belleville, IL 62220-2223 Tel: (618) 233-5900 Fax: (618) 234-8028 Email: info@ccalawfirm.com Total Assets: $1,070,530 Total Debts: $1,339,207 A full-text copy of the Debtor's petition, including a list of its 21 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilsb09-32098.pdf The petition was signed by Eddie Joshway, managing partner of the Company. JEFFERSON COUNTY: Alabama Senate Approves New Occupational Tax -------------------------------------------------------------- Martin Z. Braun at Bloomberg News reports that Alabama's Senate approved, 12-9, a measure authorizing a new occupational tax for Jefferson County, which is on the brink of insolvency. Accordingly, Alabama Governor Bob Riley signed the tax legislation, which authorizes a 0.45% levy on businesses in the county and a referendum on the tax in 2012. If voters reject the levy, it will be phased out by 2016. Mr. Riley also signed a companion bill that would create a county manager. As reported by the TCR on August 13, 2009, Alabama's House of Representatives earlier approved the occupational tax by a 17 to 15 vote during a special session called by Governor Bob Riley. Alabama Governor Bob Riley called lawmakers back for a special session to deal with the financial crisis in Jefferson County. 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 relates 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. JIM SLEMONS: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------- Jim Slemons Hawaii, Inc., has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Hawaii. Erika Engle at Starbulletin.com reports that Jim Slemons listed $600,000 in assets and liabilities consisting of $225,000 in disputed back rent as well as almost $4,100 in insurance costs for a lease on three acres at 98-085 Kamehameha Highway. Citing Jim Slemons' lawyer Anthony Locricchio, the report states that one building houses a "car stereo place, Lava Motors, which is the used-car operation ... it's like a strip mall". According to the report, Jim Slemons subleases half the property to Tony Hawaii Automotive Group Ltd. The report quoted Mr. Locricchio as saying, "He's [Mr. Slemons] got a lease for nine more years and he built the building on that property ... and that building would be taken down to make way for rail transit ... so he was forced into bankruptcy." According to Starbulletin.com, Pearl City, after the final environmental impact statement is published and the Federal Transportation Administration gives the city its decision, will attempt to negotiate with landowners for purchases of affected real estate. Mr. Locricchio said that Jim Slemons will petition "the city to expedite his condemnation review . . . to have the city give him his condemnation money and then he can take care of past rents," Starbulletin.com relates. The FTA will have final say over landowners' and tenants' acquisition awards and relocation assistance, Starbulletin.com says. Starbulletin.com relates that Jim Slemons leases the land from Continental Investment Co., led by Ronald Fujikawa. Citing Mr. Fujikawa, the report states that the back rent "started to build after May of this year." Mr. Fujikawa, according to Starbulletin.com, said that Continental won't seek an expedited negotiation with the city, but the bankruptcy "shuts off all of our cash flow. Fortunately we have some funds that will help Continental through this period of the filing of this bankruptcy and we'll see where it goes." Hawaii-based Jim Slemons Hawaii, Inc., is led by former Hawaii automobile dealer Jim Slemons. JLY PROPERTIES: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: JLY Properties, Inc., 4544 S Pinemont Dr., Suite 220 Houston, TX 77041 Bankruptcy Case No.: 09-35936 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Southern District of Texas (Houston) Debtor's Counsel: Leonard H. Simon, Esq. Pendergraft & Simon L.L.P. 2777 Allen Parkway, Suite 800 Houston, TX 77019 Tel: (713) 737-8207 Fax: (832) 202-2810 Email: lsimon@pendergraftsimon.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A list of the Company's 4 largest unsecured creditors is available for free at: http://bankrupt.com/misc/txsb09-35936.pdf The petition was signed by James J. Zou, president of the Company. KMART CORP: Ex-CEO Verdict on Defrauding Investors Thrown Out ------------------------------------------------------------- Examiner.com reports that former Kmart Corp. CEO Chuck Conaway has asked U.S. Magistrate Judge Steven Pepe to throw out the jury's verdict that convicted Mr. Conaway of misleading investors in the months leading up to the Company's Chapter 11 bankruptcy filing, or start a new trial. The jury didn't carefully consider key points, Ed White at The Associated Press reports, citing Scott Lassar, Mr. Conaway's lead attorney. A jury said last month that Charles Conaway misled Wall Street about the retailer's health before it filed for bankruptcy in 2002. The AP says that as a result, the U.S. Securities and Exchange Commission is seeking $22.5 million from Mr. Conaway. According to The AP, the trial centered on a conference call with analysts and Kmart's quarterly report to regulators in November 2001, wherein the SEC accused Conaway of failing to disclose an ill-timed purchase of $800 million in merchandise and that Kmart was delaying payments to suppliers to save cash. The AP states that Mr. Conaway testified that he didn't write or read the report and instead blamed his chief financial officer and others, but the jury found that he acted "with intent to defraud or with reckless disregard for the truth." Citing the jury, The AP says that delaying payments to vendors was a "material liquidity deficiency," and should have been publicly reported. SEC lawyer Robert Dodge said that Kmart was required to talk about financial liquidity in its quarterly report, and it disclosed "nothing," The AP relates. The instructions misstated the law and made it too easy for jurors to find Mr. Conaway liable in a highly technical case pressed by the SEC, attorney Hille Sheppard said in court documents. The AP notes that any financial penalty won't be settled until Judge Pepe handles post-trial objections from Mr. Conaway's legal team. According to The AP, Judge Pepe acknowledged that the jury instructions may have been flawed "in some regard", but they must be "sufficiently flawed" to scratch an entire verdict. A hearing on Mr. Conaway's financial penalty will be held September 16 if Judge Pepe upholds the verdict, The AP states. Kmart Corporation is a predecessor operating company of Kmart Holding. In January 2002, Kmart Corp. and 37 of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the federal bankruptcy laws. The Debtors emerged from bankruptcy on May 6, 2003, pursuant to the terms of an Amended Joint Plan of Reorganization. Kmart completed its merger with Sears, Roebuck and Co. on March 24, 2005. LAS VEGAS SANDS: Bank Debt Trades at 22% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Las Vegas Sands is a borrower traded in the secondary market at 77.67 cents-on-the- dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.63 percentage points from the previous week, The Journal relates. The loan matures on May 1, 2014. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Meanwhile, Participations in a syndicated loan under which Venetian Macau US Finance Co. LLC is a borrower traded in the secondary market at 89.50 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.08 percentage points from the previous week, The Journal relates. The loan matures on May 25, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B- rating. The debt is also one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Venetian Macau is a wholly owned subsidiary of Las Vegas Sands. VML owns the Sands Macau in the People's Republic of China Special Administrative Region of Macau and is also developing additional casino hotel resort properties in Macau. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As reported by the TCR on Aug. 4, 2009, Moody's Investors Service has placed Las Vegas Sands, Corp.'s ratings, including its B3 Corporate Family Rating, on review for possible downgrade. The review for possible downgrade reflects LVSC's weak fiscal 2009 second quarter operating results and Moody's heightened concern regarding the company's ability to maintain an adequate liquidity profile, reduce leverage, and remain in compliance with its financial covenants. LAS VEGAS SANDS: Amends $3.3-Bil. Macau Credit Facility ------------------------------------------------------- Las Vegas Sands Corp. has completed an amendment to its $3.3 billion Macau credit facility (Credit Facility). On August 12, 2009, two subsidiaries of Las Vegas Sands, VML US Finance LLC (the Borrower) and Venetian Macau Limited (VML), and The Bank of Nova Scotia (the Administrative Agent), entered into a Second Amendment to the Credit Agreement, dated as of May 25, 2006, and amended as of March 5, 2007, among the Borrower, VML, the lenders party thereto and the Administrative Agent. The Amendment modifies certain terms of Las Vegas Sands' Macao subsidiaries' $3.3 billion Credit Agreement. Among other things, the Amendment changes the definition of "Change of Control" in the Credit Agreement to require the Company to own, directly or indirectly, 50.1% of the common equity ownership interest in VML (and no longer requires the Company to own, directly or indirectly, 100% of the common equity ownership interest of VML) following the occurrence of a Permitted Equity Sale (as such term is defined in the Amendment). Following the closing of any Permitted Equity Sale, an amount equal to the lesser of (x) the net proceeds from such Permitted Equity Sale and (y) $500.0 million must be applied to prepay all classes of loans outstanding under the Credit Agreement on a pro rata basis (with a concurrent permanent reduction in the revolving loan commitments equal to the amount of revolving loans prepaid). In addition, the Amendment: (i) permits the issuance by VML or its restricted subsidiaries of up to $1.0 billion of senior secured notes ranking pari passu with the loans outstanding under the Credit Agreement, provided that the net proceeds from the issuance of such notes are applied to prepay the loans outstanding under the Credit Agreement; (ii) permits the issuance by VML or its restricted subsidiaries of up to $500.0 million of senior unsecured notes or senior secured notes ranking junior to the loans outstanding under the Credit Agreement, provided that the consolidated leverage ratio is not greater than 3.0X after giving pro forma effect to the issuance of such notes and the maturity date of such notes is outside the final maturity date of the Credit Agreement; (iii) modifies the maximum consolidated leverage ratios for the fiscal quarters ending September 30, 2009, thru December 31, 2010; (iv) provides for an uncommitted delayed start revolving loan facility which the Borrower may establish on or after the termination date of the existing revolving loan facility in an amount not to exceed the outstanding revolving loan commitments under the Credit Agreement as of the termination of the existing revolving loan facility, subject to certain conditions; (v) amends the definition of "Consolidated Adjusted EBITDA" to provide for the inclusion of certain identifiable cost savings in the calculation of Consolidated Adjusted EBITDA for the fiscal quarters ending September 30, 2009, December 31, 2009, and March 31, 2009, in an amount not to exceed $40.0 million, $19.0 million, and $12.0 million, respectively, to the extent that such cost savings are not fully reflected in the applicable four quarter period; and (vi) amends the definition of "Permitted Liens" to permit certain liens on assets in connection with the issuance of certain permitted debt contemplated by clauses (i) and (ii). The Amendment increases the applicable interest rate margins for all classes of loans outstanding under the Credit Agreement by 3.25% per annum, until an amount equal to $500.0 million has been applied to prepay the loans under the Credit Agreement upon consummation of one or more Permitted Equity Sales, and by 2.25% per annum after such prepayment, in each case, from the applicable interest rate margins that were in place immediately prior to the effectiveness of the Amendment. Certain of the agents and lenders under the Credit Agreement and their respective affiliates have from time to time provided investment banking, commercial banking and other financial services to the Company or its affiliates, for which they received customary fees and commissions. The agents and lenders under the Credit Agreement and their respective affiliates may also provide these services to the Company or its affiliates from time to time in the future. The amendment provides the Company with important advantages, including the ability to sell a minority interest in its Macau operations, six quarters of covenant relief, and, subject to certain limitations, the ability to issue senior secured or unsecured notes in Macau. The amendment increases the maximum leverage ratio covenant under the Credit Facility in Macau by 1.0X for the four quarters beginning July 1, 2009, and by 0.5X for the two quarters beginning July 1, 2010. The amendment increases the interest rate for the loans under the Credit Facility to LIBOR + 5.5% per year. If the Company successfully completes the sale of a minority interest in its Macau operations and prepays $500 million of outstanding loans, the interest rate will drop to LIBOR + 4.5% per year. Mr. Sheldon G. Adelson, Las Vegas Sands' chairman and chief executive officer, stated, "We have now received the approval of our Macau lenders and completed the amendment of our Macau Credit Facility. This action represents an important step forward in our plan to maintain and improve liquidity. The amendment significantly increases our financial flexibility and permits us to pursue a potential listing of a minority interest in our Macau operations on an Asian stock exchange. We remain confident that the continued execution of our strategy, and the opening of Marina Bay Sands in the first quarter of 2010, will contribute to the successful de-leveraging of the company and will position us to resume our growth strategy in the years ahead." About Las Vegas Sands Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As reported by the TCR on Aug. 4, 2009, Moody's Investors Service placed Las Vegas Sands, Corp.'s ratings, including its B3 Corporate Family Rating, on review for possible downgrade. The review for possible downgrade reflects LVSC's weak fiscal 2009 second quarter operating results and Moody's heightened concern regarding the company's ability to maintain an adequate liquidity profile, reduce leverage, and remain in compliance with its financial covenants. LEAR CORP: Has Plan to Pay $1.6 Bil. Debt With Term Loan & Equity ----------------------------------------------------------------- Lear Corporation and its debtor-affiliates delivered their Joint Plan of Reorganization to the U.S. Bankruptcy Court for the Southern District of New York on August 14, 2009. Under the plan, lenders will convert $1.6 billion in prepetition secured claims into new term loans and preferred and common equity in the Reorganized Debtors. Holders of general unsecured claims - - including lenders' deficiency claim in the amount of $737 million and the unsecured Notes Claims in the amount of $1.3 billion -- will be converted, in part, into common equity in the Reorganized Debtors and warrants to acquire common equity in the Reorganized Debtors. A full text copy of the Plan and explanatory disclosure statement is available for free at: http://bankrupt.com/misc/LearCorp_DS_Plan.pdf Lear Corporation and its affiliates filed for Chapter 11 on July 7, 2009 (Bankr. S.D.N.Y. Case No. 09-14326). Affiliates part of the Chapter 11 filing include Lear South Africa Limited, Lear Corporation (Germany) Ltd., Lear Corporation Canada Ltd., Lear Mexican Holdings Corporation, and Lear South American Holdings Corporation. Attorneys at Kirkland & Ellis LLP, serve as the Debtors' bankruptcy counsel. McCarthy Tetrault LLP has been engaged as CCAA counsel. Bodman LLP has been hired as special Michigan counsel. Winston & Strawn LLP and Brooks Kushman P.C. have also been tappes as special counsel. Alvarez & Marsal North America LLC, is the Debtors' restrcturing advisors. Ernst & Young LLP is the Debtors' auditors and tax advisors. Kurtzman Carson Consultants LLC is the Debtors' claims and notice agent. Simpson Thacher & Bartlett LLP represents JP Morgan, as admin. agent for senior secured lenders and DIP lenders. As of May 30, 2009, Lear has assets of US$1,270,800,000 against debts of US$4,536,000,000. Bankruptcy Creditors' Service, Inc., publishes Lear Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Lear Corp. (http://bankrupt.com/newsstand/or 215/945-7000) LEAR CORP: Bank Debt Trades at 22% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which Lear Corp. is a borrower traded in the secondary market at 77.95 cents-on-the- dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.83 percentage points from the previous week, The Journal relates. The loan matures on March 29, 2012. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's and Standard & Poor's. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Lear Corporation -- http://www.lear.com/-- is one of the world's leading suppliers of automotive seating systems, electrical distribution systems and electronic products. The Company's products are designed, engineered and manufactured by a diverse team of 80,000 employees at 210 facilities in 36 countries. Lear's headquarters are in Southfield, Michigan, and Lear is traded on the New York Stock Exchange under the symbol [LEA]. Outside the United States, Lear has subsidiaries in Germany, Luxembourg, Sweden, Singapore, China, India and Mexico, among others. Lear Corporation and its affiliates filed for Chapter 11 on July 7, 2009 (Bankr. S.D.N.Y. Case No. 09-14326). Affiliates part of the Chapter 11 filing include Lear South Africa Limited, Lear Corporation (Germany) Ltd., Lear Corporation Canada Ltd., Lear Mexican Holdings Corporation, and Lear South American Holdings Corporation. Attorneys at Kirkland & Ellis LLP, serve as the Debtors' bankruptcy counsel. McCarthy Tetrault LLP has been engaged as CCAA counsel. Bodman LLP has been hired as special Michigan counsel. Winston & Strawn LLP and Brooks Kushman P.C. have also been tapped as special counsel. Alvarez & Marsal North America LLC, is the Debtors' restructuring advisors. Ernst & Young LLP is the Debtors' auditors and tax advisors. Kurtzman Carson Consultants LLC is the Debtors' claims and notice agent. Simpson Thacher & Bartlett LLP represents JP Morgan, as admin. agent for senior secured lenders and DIP lenders. As of May 30, 2009, Lear has assets of $1,270,800,000 against debts of $4,536,000,000. Bankruptcy Creditors' Service, Inc., publishes Lear Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Lear Corp. (http://bankrupt.com/newsstand/or 215/945-7000) LINDA KRAUS: Case Summary & 2 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Linda Kay Kraus dba J & L Homes 23837 State Road 37 N. Noblesville, IN 46060 Bankruptcy Case No.: 09-11820 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Southern District of Indiana (Indianapolis) Judge: Frank J. Otte Debtor's Counsel: Mark S. Zuckerberg, Esq. Law Office of Mark S. Zuckerberg, P.C. 333 N Pennsylvania St., Suite 100 Indianapolis, IN 46204 Tel: (317) 687-5157 Fax: (317) 687-5151 Email: filings@mszlaw.com Sally J. O'Connor, Esq. Law Office of Mark S. Zuckerberg, P.C. 333 N Pennsylvania St., Suite 100 Indianapolis, IN 46204 Tel: (317) 687-0000 Total Assets: $1,205,791 Total Debts: $1,244,280 A full-text copy of Ms. Kraus' petition, including a list of her 2 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/insb09-11820.pdf The petition was signed by Ms. Kraus. LITTLE TRAVERSE: Moody's Downgrades Corp. Family Rating to 'Ca' --------------------------------------------------------------- Moody's Investors Service downgraded Little Traverse Bay Bands of Odawa Indians' corporate family rating to Ca from Caa2 and probability of default rating to Ca from Caa1. The rating of the 10.25% senior unsecured notes due 2014 was also lowered to Ca from Caa2. The outlook remains negative. The ratings downgrade and negative outlook follow LTBB's announcement that it does not intend to make the scheduled August 17, 2009, $6.3 million interest payment on its $122 million 10.25% senior unsecured notes due 2014, even though it has the liquidity to do so. Reportedly, LTBB has commenced the process of negotiating a consensual restructuring with the holders of a majority of its senior unsecured notes. Faced with very challenging economic conditions, the operating performance of LTBB's Odawa Casino Resort has been pressured and its liquidity profile has eroded. The debt restructuring is expected to restore financial flexibility in the context of continued economic challenges. The notes indenture provides for a 30-day grace period to pay interest before becoming an event of default. As per Moody's definition of default, should LTBB fail to pay its interest before the expiration of the grace period, or complete a restructuring, which would be considered a distressed exchange, the probability of default rating would be lowered to Ca/LD. The last rating action was made on May 26, 2009, when Moody's lowered LTBB's corporate family rating to Caa2 from Caa1. These ratings were downgraded: -- Corporate family rating to Ca from Caa2 -- Probability of default rating to Ca from Caa1 -- Senior unsecured notes to Ca (LGD4, 66%) from Caa2 (LGD4, 66%) LTBB is a federally-recognized Indian tribe with approximately 4,000 enrolled members. LTBB owns and operates Odawa Casino Resort, based in Petoskey, Michigan, which started its gaming operations in June 2007, replacing the former Victories Casino. LIZ CLAIBORNE: Moody's Downgrades Corporate Family Rating to 'B2' ----------------------------------------------------------------- Moody's Investors Service lowered Liz Claiborne Inc's Corporate Family Rating and Probability of Default Rating to B2 from Ba3. The company's EUR 350 million senior unsecured notes were lowered to Caa1 (LGD 5, 83%) from B2 (LGD 5, 85%). All of the company's ratings were placed on review for further possible downgrade. LGD assessments are subject to change. The two-notch downgrade reflects the substantial decline in the Liz's fiscal 2009 second quarter operating results. It also considers the company's updated outlook for the second half of the year. Liz now indicates it expects operating earnings in the second half of 2009 that are materially below its previous indications. As a result, debt/EBITDA (incorporating Moody's standard adjustments) is expected to rise considerably, and could reach or exceed 8 .0 times by the end of 2009. Liz continues to face challenges from weak consumer spending, which is evident in the performance of its premium priced brands such as Juicy Couture and Lucky Brand Jeans. Moody's believes the company's problems extend beyond the weak economy, as it also faces the need to stabilize the performance of two of its largest brands, its heritage Liz Claiborne brand and Mexx. These brands continue to lose market share and the challenges to stabilizing these businesses remain significant. Additionally, while Liz has significantly reduced its cost structure in recent years -- new plans were announced to realize a further $100 million of cost savings by 2010 -- it is not yet evident these reductions will be sufficient to enable the company to return to profitability absent the stabilization of revenues and gross margins. The review for further possible downgrade reflects Moody's concerns regarding the company's near-term ability to stabilize the performance of its Liz Claiborne and Mexx brands and to right- size operating expenses for the appropriate revenue levels. The review also considers that Liz may be challenged to meet the fixed charge covenant contained in its asset-based loan agreement absent an improvement in performance from current levels, or some form of amendment to this agreement. The fixed charge covenant goes into effect as of fiscal July 2010. Moody's review will focus on Liz's ability to mitigate, to the degree possible, further revenue declines, and maintain uninterrupted access to its asset based lending facility beyond July 2010. Key to the review process will be the evaluation of the company's spring 2010 wholesale orders which Moody's believes will provide further indications of the company's ability to stabilize performance. These ratings were downgraded and remain under review for further possible downgrade: * Corporate Family Rating to B2 from Ba3 * Probability of Default rating to B2 from Ba3 * EUR350 million senior unsecured notes to Caa1 (LGD 5, 83%) from B2 (LGD 5, 85%) Moody's last rating action on Liz Claiborne was on April 7, 2009, when the rating on the company's EUR 350 million senior unsecured notes was lowered to B2. Liz Claiborne Inc. is a designer and distributor of apparel and related accessories. Annual revenues total about $3.4 billion. LRC BATTERY: Section 341(a) Meeting Scheduled for September 18 -------------------------------------------------------------- The U.S. Trustee for Region 4 will convene a meeting of creditors in LRC Battery Creek, LLC's Chapter 11 case on Sept. 18, 2009, at 10:00 a.m. The meeting will be held at King and Queen Building, 145 King Street, Room 225, Charleston, South Carolina. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Selinsgrove, Pennsylvania-based LRC Battery Creek, LLC, operates a real estate business. The Company filed for Chapter 11 on July 31, 2009 (Bankr. D. S.C. Case No. 09-05663). G. William McCarthy Jr., Esq., represents the Debtor in its restructuring efforts. In its petition, the Debtor listed total assets of $16,881,382 and total debts of $9,299,236. LUMINENT MORTGAGE: Cancels Registration of Common Shares -------------------------------------------------------- Cobalt Holdings Group LLC, formerly Luminent Mortgage Capital, Inc., filed with the Securities and Exchange Commission a Form 15 certification and notice of termination of registration under Section 12(g) of the Securities Exchange Act of 1934 or suspension of duty to file reports under Sections 13 and 15(d) of the Securities Exchange Act of 1934, with respect to its Common Stock, $0.001 par value. As reported by the Troubled Company Reporter on July 20, 2009, Luminent Mortgage said that its second amended joint plan of reorganization became effective and it has emerged from Chapter 11 protection. The U.S. Bankruptcy Court for the District of Maryland confirmed the Debtor's plan on June 30, 2009. The TCR said July 7, 2009, that the Plan treats claims against, and interests in, the Debtor in this manner: i) holders of administrative claims, priority tax claims and priority non-tax claims will be paid in full in cash; ii) holders of Arco secured claims will receive 46% of the equity in the reorganized company; iii) holders of other secured claims will be paid in full; iv) holders of general unsecured claims will receive distributions from a general unsecured distribution fund, a share of a subsequent unsecured distribution amount and 29% of the equity in the reorganized company; v) holders of general unsecured opt-out claims, convenience opt-out claims, TRUPs opt-out claims and interests in the Company will receive no distribution; vi) holders of convenience claims will receive a share of a convenience class fund; and vii) holders of subordinated TRUPs claims will receive distributions from a general unsecured distribution fund, a share of a subsequent unsecured distribution amount and 29% of the equity in the reorganized company, provided, however, that the distributions to these creditors will be paid directly to the senior indenture trustee for further distribution to the holders of senior note claims to the extent necessary to comply with the contractual subordination provisions in the subordinated TRUPS indenture or senior notes indenture. In addition, a share of 5% of the reorganized equity units will be distributed directly to the subordinated TRUPs trustees for distribution to holders of the subordinated TRUPS and not subject to contractual subordination, the report relates. A full-text copy of the disclosure statement explaining the Debtors' Second Amended Plan is available at: http://bankrupt.com/misc/luminent.2ndAmendedDS.pdf A full-text copy of Debtors' Second Amended Joint Plan of Reorganization is available at: http://bankrupt.com/misc/luminent.2ndAmendedPlan.pdf About Luminent Mortgage Luminent Mortgage Capital, Inc. (OTCBB: LUMCE), is a real estate investment trust, or REIT, which, together with its subsidiaries, has historically invested in two core mortgage investment strategies. Under its Residential Mortgage Credit strategy, the company invests in mortgage loans purchased from selected high- quality providers within certain established criteria as well as subordinated mortgage-backed securities and other asset-backed securities that have credit ratings below AAA. Under its Spread strategy, the company invests primarily in U.S. agency and other highly-rated single-family, adjustable-rate and hybrid adjustable- rate mortgage-backed securities. Luminent and nine subsidiaries filed on September 5, 2008, for relief under Chapter 11 of the U.S Bankruptcy Code in the United States Bankruptcy Court for the District of Maryland, Baltimore Division (Lead Case No. 08-21389). Immediately prior to the filing, the Debtor executed a Plan Support and Forbearance Agreement with secured creditor Arco Capital Corp., Ltd., WAMU Capital Corp. and convertible noteholders representing 100% of the outstanding principal amount of its convertible notes. Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler, represents the Debtors as counsel. The U.S. Trustee for Region 4 appointed creditors to serve on an Official Committee of Unsecured Creditors. Jeffrey Neil Rothleder, Esq., at Arent Fox LLP, represents the Creditors Committee as counsel. In its operating report for the month of September 2008, Luminent Mortgage Capital, Inc., reported $1,960,516 in total assets and $374,868,632 in total liabilities, resulting in a $372,908,116 stockholders' deficit. M & M REAL ESTATE: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: M & M Real Estate Holdings, Inc. 721 Route 113 Souderton, PA 18964 Bankruptcy Case No.: 09-16071 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Debtor's Counsel: Steven D. Usdin, Esq. Cohen Seglias Pallas Greenhall & Furman United Plaza, 30 South 17th Street, 19th Floor Philadelphia, PA 19103 Tel: (215) 564-1700 Fax: (215) 238-4408 Email: susdin@cohenseglias.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Marcia Geraci, president of the Company. MACC PRIVATE EQUITIES: Has Going Concern Doubt Despite Refinancing ------------------------------------------------------------------ MACC Private Equities Inc. on August 14, 2009, announced its preliminary results of operations from the third quarter of its fiscal year 2009, ended June 30, 2009, which are subject to adjustment upon completion of its annual audit. For the third quarter of fiscal 2009, MACC recorded total investment income of $152,445, as compared to total investment income of $281,861 for the third quarter of fiscal 2008. The decrease in investment income was the net effect of a $14,998 increase in interest income and $144,414 decrease in dividend income. Total operating expenses for the third quarter of fiscal 2009 were $252,557, as compared to $362,021 for the third quarter of fiscal 2008. The decrease in total operating expenses is the net effect of a $15,766 decrease in interest expense, a $34,068 decrease in management fees, a $29,393 decrease in professional fees, and a $30,237 decrease in other expenses. Net investment expense for the third quarter of fiscal 2009 was $100,112, as compared to a net investment expense of $80,160 in the third quarter of fiscal 2008. MACC had a net realized loss of $1,240,803 for the third quarter of fiscal 2009, as compared with the net realized gain of $686,047 for the third quarter of fiscal 2008. During the third quarter of fiscal 2009, MACC recorded a net change in unrealized appreciation/depreciation on investments of $165,280, as compared to a net change in unrealized appreciation/depreciation on investments of ($34,322) during the third quarter of fiscal 2008. These items resulted in a net decrease in net assets from operations at the end of the third quarter of fiscal 2009 of $1,175,635, as compared to a net increase in net assets from operations at the end of the third quarter of fiscal 2008 of $530,937. MACC net asset value at June 30, 2009 was $8,057,000 as compared to $10,823,000 at June 30, 2008. MACC's net asset value per share decreased from $4.39 at June 30, 2008, to $3.27 at June 30, 2009. MACC's current operating losses have been funded from the sale of portfolio companies and its bank line of credit. MACC's note payable and line of credit, with June 30, 2009 balances of $4,314,022 and $330,000, respectively, are due August 31, 2009. "MACC has received notice that its lender, Cedar Rapids Bank & Trust Company, has approved modification of the terms of the bank line of credit and note payable to extend the maturity date until March 31, 2010. These changes will not be effective until reflected in amendments to MACC's loan documents, which we cannot be assured of, but which we expect to execute prior to August 31," the Company said. However, even with the refinancing of these credit facilities there is substantial doubt as to its ability to continue to operate as a going concern, MACC added. MACC Private Equities Inc. (Nasdaq: MACC) is a business development company in the business of making investments in small businesses in the United States. MACC common stock is traded on the Nasdaq Capital Market under the symbol "MACC." MAGNA ENT: Hearing on Plea to Sell Ocala Property on Aug. 26 ------------------------------------------------------------ On August 4, 2009, Magna Entertainment Corp. and its affiliates filed a motion with the Court seeking authorization to sell, subject to higher and better offers, certain real property located in Ocala, Florida, for $5.75 million to an entity related with Fair Enterprise Limited. Pursuant to the motion, all valid liens of the MID Lender will attach to the proceeds of the sale of the Ocala property. A hearing on the motion is scheduled for August 26, 2009. MEC's Chapter 11 filing contemplates MEC selling all or substantially all of its assets through an auction process and using the proceeds from the asset sales to repay its creditors, including the MI Developments Inc. lender. On the Petition Date, and subject to Court approval, MID entered into an agreement with MEC to purchase MEC's relevant interests associated with certain assets (the Stalking Horse Bid). However, on April 20, 2009, in response to objections raised by a number of parties in the MEC Chapter 11 process and with the intent of expediting that process, MID and MEC terminated the Stalking Horse Bid. MID, through a wholly-owned subsidiary (the MID Lender), is the largest secured creditor of MEC. At the petition date, the balance of MID's existing loans to MEC, including accrued interest, was approximately $372 million, comprised of $171 million under the Gulfstream Park project financing, $23 million under the Remington Park project financing, $125 million under the 2007 MEC Bridge Loan and $53 million under the 2008 MEC Loan. At June 30, 2009, approximately $386 million (including accrued interest subsequent to the Petition Date) was outstanding under these loan facilities. All of these loans are secured. In addition, the Company owned approximately 54% of MEC's total equity, representing approximately 96% of the total votes attached to MEC's outstanding stock. On May 11, 2009, the Court approved the bid procedures for MEC's interests associated with the following assets (the Bid Procedures Assets): Santa Anita Park (including MEC's joint venture interest in the Shops at Santa Anita); Remington Park; Lone Star Park; Thistledown; Portland Meadows; StreuFex(TM); vacant lands located in Ocala, Florida; and vacant lands located in Dixon, California. Initial expressions of interest for the Bid Procedures Assets were submitted on May 27, 2009, by interested parties. On or prior to the July 31, 2009 deadline, additional expressions of interest and definitive bids were received by MEC in relation to certain of the Bid Procedures Assets and MEC is currently in discussions with various third parties regarding potential stalking horse bids for several of such assets. MID has stated that it does not intend to submit a bid for any of the Bid Procedures Assets; provided, however, that MID intends to preserve the value of its secured loans to MEC and will take all available steps to prevent fire sales of the Bid Procedures Assets. On July 31, 2009, the Court approved the Debtors' motion for authorization to sell for 6.5 million euros the assets of one of MEC's non-debtor Austrian subsidiaries, which assets include Magna Racino(TM) and surrounding lands, to an entity affiliated with Fair Enterprise Limited, a company that forms part of an estate planning vehicle for the Stronach family, certain members of which are trustees of the Stronach Trust, MID's controlling shareholder. On August 4, 2009, the Debtors filed a motion with the Court seeking authorization to sell, subject to higher and better offers, certain real property located in Ocala, Florida for $5.75 million to an entity related with Fair Enterprise Limited. Pursuant to the motion, all valid liens of the MID Lender will attach to the proceeds of the sale of the Ocala property. A hearing on the motion is scheduled for August 26, 2009. On August 12, 2009, the Debtors filed a motion with the Court seeking authorization to sell, subject to higher and better offers, Remington Park for $80.25 million to a third party. Pursuant to the motion, all valid liens of the MID Lender will attach to the proceeds of the sale of Remington Park. A hearing on the motion has been requested for August 26, 2009. MEC has advised the Court that it is continuing to explore all alternatives with respect to its remaining assets, and although the Stalking Horse Bid has been terminated, MID is continuing to evaluate whether to bid on MEC assets during the course of MEC's Chapter 11 sales process (subject to the outcome of the OSC hearing. There can be no assurance given as to the treatment the MID Lender's claims will receive in the Debtors' Chapter 11 proceedings, although, as a general matter, secured creditors are entitled to priority over unsecured creditors to the extent of the value of the collateral securing such claims. Subject to the uncertainties of MEC's Chapter 11 process, MID management believes that the MID Lender's claims are adequately secured and therefore has no reason to believe that the amount of the MEC loan facilities with the MID Lender is impaired. However, on July 21, 2009, the MID Lender was named as a defendant in an action commenced by the Official Committee of Unsecured Creditors (the Committee) in connection with MEC's Chapter 11 proceedings. The Committee's action seeks, among other things, recharacterization as equity of the MID Lender's claims in relation to the indebtedness previously advanced to MEC and its subsidiaries, equitable subordination of the MID Lender's claims against the debtors in the Chapter 11 proceedings and the avoidance of allegedly fraudulent transfers to the MID Lender, including fees, interest and principal repayments received prior to the initiation of the Chapter 11 process. In addition, the Committee has sought leave of the Court to pursue a separate action against MID, the MID Lender and additional parties, including Mr. Frank Stronach, that alleges, among other things, breach of fiduciary duty owed to MEC and its creditors. Although MID and the MID Lender believe that the Committee's claims are without merit and intend to contest them vigorously, MID can provide no assurance as to the ultimate outcome of the Committee's action. DIP Loan In connection with the Debtors' Chapter 11 filing, MID (through the MID Lender) originally agreed to provide to MEC the DIP Loan in the amount of up to $62.5 million and with a term of six months. On April 20, 2009, the DIP Loan was amended to, among other things, (i) extend the maturity from September 6, 2009, to November 6, 2009, in order to allow for a longer marketing period in connection with MEC's asset sales and (ii) reduce the principal amount available from $62.5 million to $38.4 million, with the reduction attributable to the fact that interest on the pre- petition loan facilities between MEC and the MID Lender will accrue during the Chapter 11 process rather than being paid currently in cash. At June 30, 2009, $20.8 million was due under the DIP Loan. Subsequent to June 30, 2009, an additional $7.0 million has been drawn under the DIP Loan. The DIP Loan is secured by liens on substantially all assets of MEC and its subsidiaries (subject to prior ranking liens), as well as a pledge of capital stock of certain guarantors. Deconsolidation of MEC As a result of the MEC Chapter 11 filing, the Company has concluded that, under GAAP, it ceased to have the ability to exert control over MEC on or about the Petition Date. Accordingly, the Company's investment in MEC has been deconsolidated from the Company's results beginning on the Petition Date. GAAP requires the carrying values of any investment in, and amounts due from, a deconsolidated subsidiary to be adjusted to their fair value at the date of deconsolidation. In light of the significant uncertainty as to whether MEC shareholders, including MID, will receive any recovery following MEC's reorganization, the carrying value of MID's equity investment in MEC was reduced to zero. Upon deconsolidation of MEC, the Company recorded an aggregate $46.7 million reduction to the carrying values of its investment in, and amounts due from, MEC, which is included in the Company's consolidated statement of income (loss) for the six months ended June 30, 2009. Included in this aggregate amount is a $0.5 million reduction in the carrying values of the MEC loan facilities with the MID Lender at the Petition Date. Although, subject to the uncertainties of MEC's Chapter 11 process, MID management believes that the MID Lender's claims are adequately secured and therefore has no reason to believe that the amount of the MEC loan facilities with the MID Lender is impaired, the $0.5 million reduction in the carrying values of the MEC loan facilities was required under GAAP, reflecting the fact that certain of the MEC loan facilities bear interest at a fixed rate of 10.5% per annum, which is not considered to be reflective of the market rate of interest that would have been used had such facilities been established on the Petition Date. The deconsolidation of MEC affects virtually all of the Company's reported revenue, expense, asset and liability balances, thus significantly limiting the comparability from period to period of the Company's consolidated statements of income (loss), consolidated statements of cash flows and consolidated balance sheets. As a result, the remaining content of this press release focuses solely on the operating results, financial condition, cash flows and liquidity of the Real Estate Business. Ontario Securities Commission Hearing On August 11, 2009, MID announced that, at the request of certain MID Class A shareholders, the OSC has called a hearing regarding MID's ability to rely on certain exemptions from the requirements to obtain minority shareholder approval and formal valuations under Multilateral Instrument 61- 101 - Protection of Minority Security Holders in Special Transactions in respect of transactions with MEC. MID believes that the application of the MID Class A shareholders is without merit and MID will vigorously defend against the application. The hearing will commence on September 9, 2009. About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty% interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. Magna Entertainment Corp. had total assets of US$1.054 billion and total liabilities of US$947.3 million based on unaudited consolidated financial statements as of December 31, 2008. MARK TAYLOR: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Mark Taylor 11452 Morning Grove Drive Las Vegas, NV 89135 Bankruptcy Case No.: 09-24738 Chapter 11 Petition Date: August 12, 2009 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsel: C Andrew Wariner, Esq. 823 Las Vegas Blvd SO, Suite 280 Las Vegas, NV 89101 Tel: (702) 380-4176 Email: awariner@hotmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of Mr. Taylor's petition, including a list of his 12 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-24738.pdf The petition was signed by Mr. Taylor. MERCANTILE BANCORP: Defers Payments on Trust Preferred Shares ------------------------------------------------------------- Mercantile Bancorp, Inc., decided in June 2009 to defer regularly scheduled interest payments on its outstanding junior subordinated notes relating to its trust preferred securities. The terms of the junior subordinated notes and the trust documents allow the Company to defer payments of interest for up to 20 consecutive quarterly periods without default or penalty. During the deferral period. The respective trusts will likewise suspend the declaration and payment of dividends on the trust preferred securities. During the deferral period, the Company may not, among other things and with limited exceptions, pay cash dividends on or repurchase its common stock nor make any payment on outstanding debt obligations that rank equally with or junior to the junior subordinated notes. Mercantile Bancorp had $61.9 million of junior subordinated debentures outstanding as of June 30, 2009, and an equivalent amount of repackaged trust preferred securities. The Company believes that the deferral of interest payments on the junior subordinated notes and the suspension of cash dividend payments on its common stock will generate approximately $5.6 million per year in additional cash flow and will serve to strengthen its capital ratios and those of its subsidiary banks until those banks return to a sufficient level of profitability. Mercantile Bancorp's June 30, 2008, balance sheet showed $1,699,576,000 in assets and $1,647,790,000 in liabilities. Mercantile Bancorp, Inc. -- http://www.mercbanx.com/-- is a Quincy, Illinois-based bank holding company with majority-owned subsidiaries consisting of three banks in Illinois, and one bank in each of, Missouri, Kansas and Florida, where the company conducts full-service commercial and consumer banking business, engages in mortgage banking, trust services and asset management, and provides other financial services and products. The company also operates a full-service Mercantile Bank branch in Indiana. In addition, the company has minority interests in eight community banks in Missouri, Georgia, Florida, Colorado, California, and Tennessee. METALS USA: Names Will Smith II as VP and General Counsel --------------------------------------------------------- Metals USA Holdings Corp. said William "Will" A. Smith II has joined the Company as Vice President and General Counsel effective August 10, 2009. Lourenco Goncalves, the Company's Chairman, President and CEO remarked: "We believe Will shares our commitment to excellence, as well as our doing more with less mentality. We are excited Will has joined our team as we prepare for the next phase of our remarkable journey." Mr. Smith is a graduate of Georgetown University Law Center with significant experience in corporate and securities law. Prior to joining the Company, Mr. Smith was Senior Vice President and General Counsel at Cross Match Technologies, Inc., and a Partner with DLA Piper in their Corporate & Securities Practice Group. On May 14, 2009, John A. Hageman resigned from his position as Senior Vice President and Chief Legal Officer of Metals USA Holdings Corp., Flag Intermediate Holdings Corporation and Metals USA, Inc., effective as of the same date. About Metal USA Metals USA Holdings Corp. -- http://www.metalsusa.com/-- provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, non-ferrous metals, and building products markets. * * * As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services lowered its corporate credit ratings on Houston-based Metals USA Holdings Corp. and on its wholly owned subsidiary, Metals USA Inc., to 'CCC+' from 'B-'. At the same time, S&P lowered its rating on the senior secured notes and the senior unsecured pay-in-kind toggle notes to 'CCC-' from 'CCC'. The recovery rating remains at '6' on these issues, indicating negligible (0%-10%) recovery in the event of a payment default. The outlook is negative. All ratings are removed from CreditWatch, where they were placed with negative implications on March 18, 2009, due to the sharp deterioration in steel market conditions in North America over the past several months and S&P's expectation that operating conditions will remain challenging in the near-term. METALS USA: Swings to $10.9 Million Net Loss for June 30 Quarter ---------------------------------------------------------------- Metals USA Holdings Corp. swung to a net loss of $10.9 million for the three months ended June 30, 2009, from net income of $44.4 million for the same period a year ago. Net sales for the second quarter 2009 were $267.8 million, lower compared to $593.1 million for the same period a year ago. For the six months ended June 30, 2009, Metals USA posted a net loss of $31.5 million from net income of $54.0 million for the same period a year ago. Net sales for the second quarter 2009 were $598.0 million, lower compared to $1.082 billion for the same period a year ago. As of June 30, 2009, the Company had $698.1 million in total assets and $552.1 million in total liabilities. 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?41da About Metal USA Metals USA Holdings Corp. -- http://www.metalsusa.com/-- provides a wide range of products and services in the heavy carbon steel, flat-rolled steel, non-ferrous metals, and building products markets. * * * As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services lowered its corporate credit ratings on Houston-based Metals USA Holdings Corp. and on its wholly owned subsidiary, Metals USA Inc., to 'CCC+' from 'B-'. At the same time, S&P lowered its rating on the senior secured notes and the senior unsecured pay-in-kind toggle notes to 'CCC-' from 'CCC'. The recovery rating remains at '6' on these issues, indicating negligible (0%-10%) recovery in the event of a payment default. The outlook is negative. All ratings are removed from CreditWatch, where they were placed with negative implications on March 18, 2009, due to the sharp deterioration in steel market conditions in North America over the past several months and S&P's expectation that operating conditions will remain challenging in the near-term. METRO-GOLDWYN MAYER: Bank Debt at 42% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Metro-Goldwyn- Mayer, Inc., is a borrower traded in the secondary market at 58.04 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 0.71 percentage points from the previous week, The Journal relates. The loan matures April 8, 2012. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt is not rated by either Moody's or S&P. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Metro-Goldwyn-Mayer, Inc., is an independent, privately-held motion picture, television, home video, and theatrical production and distribution company. The Company owns the world's largest library of modern films, comprising approximately 4,000 titles, and over 10,400 episodes of television programming. MGM is owned by an investor consortium comprised of Providence Equity Partners, TPG Capital, Sony Corporation of America, Comcast Corporation, DLJ Merchant Banking Partners and Quadrangle Group. The Troubled Company Reporter said May 22 that Metro-Goldwyn-Mayer hired Moelis & Co. to help refinance $3.7 billion debt and was in talks with a steering committee of 140 creditors led by JPMorgan Chase & Co. as part of the process. Sue Zeidler at Reuters said the studio "was exploring options for optimizing its capital structure and has begun talks with a steering committee of its lenders as part of the process." Ms. Zeidler said bankers estimate MGM is paying north of $250 million a year in interest on debt due in 2012. Sources told Reuters MGM was potentially seeking a way to make the loan due later, or reduce it in size. Comcast paid about $5 billion in debt and equity in September 2004 to buy MGM from majority owner Kirk Kerkorian. According to Reuters, merger specialists have said MGM could be worth $2 billion to $2.5 billion. MGM, however, has reiterated its commitment to staying independent. MICHAEL VICK: Gets Two-Year Deal With Philadelphia Eagles --------------------------------------------------------- Michael Vick has signed a two-year deal with the Philadelphia Eagles. Michael Vick has inked a one-year accord with the Philadelphia Eagles with an option for the team to extend it for another 12 months. The deal is worth $1.6 million in the first year and $5.2 million if Mr. Vick stays for another season, various reports say. CNN states that the Eagles will play against Mr. Vick's former team, the Falcons, in Atlanta on December 6. Mason Levinson and Nancy Kercheval at Bloomberg reported that Michael Vick said at a news conference in Philadelphia that he gained new understanding about the importance of protecting animals while serving time in prison and pledged not to waste his second opportunity in the National Football League after joining the Eagles. "As we all know, in the past I've made some mistakes, done some terrible things, made a horrible mistake, and now I want to be part of the solution and not the problem." Mr. Vick stated. The Pennsylvania Society for the Prevention of Cruelty to Animals said in a statement that it was "incredibly disappointed" at the news of Mr. Vick's signing. Mr. Vick was convicted by a U.S. federal district court in 2007 of criminal conspiracy resulting from felonious dog fighting and was sentenced to serve 23 months in prison. The National Football League had suspended Mr. Vick indefinitely after he pleaded guilty to a federal charge of bankrolling a dogfighting operation at a home he owned in Virginia. Mr. Vick was freed from prison in May 2009 and he returned to his home to serve the last two months of his 23-month sentence in home confinement. In July 2009, the NFL reinstated Mr. Vick on a conditional basis. The NFL said in a statement that Mr. Vick "will be considered for full reinstatement and to play in regular-season games by Week 6 based on the progress he makes in his transition plan." Citing the league, CNN relates that Mr. Vick may participate in practices, workouts, and meetings, and may play in his club's final two preseason games under the conditions of his reinstatement. According to CNN, the Humane Society of the United States said that Mr. Vick offered to work with the organization on anti- dogfighting campaigns. About Michael Vick Michael Dwayne Vick is a professional American football quarterback for the Philadelphia Eagles of the National Football League. He previously played for the Atlanta Falcons for 6 seasons before serving 18 months of a 23-month sentence in prison for his involvement in an illegal dog fighting ring. In April 2007, Vick was implicated in an extensive and unlawful interstate dogfighting ring that operated over a period of five years. He pleaded guilty and was sentenced to 23 months in federal prison. With loss of his NFL salary and product endorsement deals, combined with previous financial mismanagement, Vick filed for Chapter 11 bankruptcy in July 2008. Mr. Vick filed a Chapter 11 petition on July 7, 2008 (Bankr. E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the Debtor in his restructuring efforts. Mr. Vick listed assets of $10 million to $50 million. Vick was released from prison to home confinement on May 20, 2009. On July 27 2009, NFL Commissioner Roger Goodell conditionally reinstated Mr. Vick. To pay off his debts, Mr. Vick has filed a proposed Chapter 11 plan that proposes to give up a portion of his future income over six years. The plan assumed that he's reinstated by the National Football League and signs a new contract in order to repay unsecured creditors owed in excess of $19 million. MICHAELS STORES: Bank Debt Trades at 10% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Michael's Stores, Inc., is a borrower traded in the secondary market at 89.29 cents- on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.24 percentage points from the previous week, The Journal relates. The loan matures on Oct. 31, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Headquartered in Irving, Texas, Michael's Stores, Inc., is the largest arts and crafts specialty retailer in North America. As of March 9, 2009, the company operated 1,105 "Michaels" retail stores in the United States and Canada and 161 Aaron Brothers Stores. As of Jan. 31, 2009, Michaels Stores had $1.62 billion in total assets and $4.51 billion in total liabilities resulting in a $2.88 billion in stockholders' deficit. For fiscal year 2008 -- ended Jan. 31, 2009 -- the Company posted a $5 million net loss on $3.81 billion in net sales. MI DEVELOPMENTS: Releases 2Q & 6-Mo. Results, MEC Bankr. Update --------------------------------------------------------------- MI Developments Inc. released its results for the three and six months ended June 30, 2009. REAL ESTATE BUSINESS(1) Three months Six months (in thousands, ended June 30, ended June 30, except per share figures) 2009 2008 2009 2008 Revenues $ 55,161 $ 55,299 $ 108,980 $ 109,334 Net income attributable to MID $ 31,329 $ 26,250 $ 56,490 $ 57,138 Funds from operations ("FFO")(2) $ 41,459 $ 37,606 $ 76,386 $ 79,541 Diluted FFO per share(2) $ 0.89 $ 0.81 $ 1.64 $ 1.70 MID CONSOLIDATED(1) Three months Six months (in thousands, ended June 30, ended June 30, except per share figures) 2009(3) 2008 2009(3) 2008 Revenues Real Estate Business $ 55,161 $ 55,299 $ 108,980 $ 109,334 Magna Entertainment Corp. ("MEC")(3),(4) - 166,281 152,935 395,766 Eliminations(3) - (8,643) (9,636) (16,751) ------------ ------------ ------------ ------------ $ 55,161 $ 212,937 $ 252,279 $ 488,349 ------------ ------------ ------------ ------------ Net income (loss) attributable to MID Real Estate Business $ 31,329 $ 26,250 $ 56,490 $ 57,138 MEC - continuing operations(3) - (12,794) (54,763) (19,789) Eliminations(3) - 54 (107) 320 ------------ ------------ ------------ ------------ Income from continuing operations 31,329 13,510 1,620 37,669 MEC - discontinued operations(3),(5) - 4,973 864 (12,307) ------------ ------------ ------------ ------------ $ 31,329 $ 18,483 $ 2,484 $ 25,362 ------------ ------------ ------------ ------------ Diluted earnings attributable to MID per share from continuing operations $ 0.67 $ 0.29 $ 0.03 $ 0.80 Diluted earnings attributable to MID per share $ 0.67 $ 0.40 $ 0.05 $ 0.54 (1) The Company adopted United States generally accepted accounting principles (U.S. GAAP) as its primary basis of financial reporting commencing January 1, 2009, on a retrospective basis. In conjunction with the adoption of U.S. GAAP, the Company also adopted the definition of FFO prescribed in the United States effective January 1, 2009 on a retrospective basis. The results of operations for the three and six months ended June 30, 2008, have been restated to reflect the adoption of U.S. GAAP and the definition of FFO prescribed in the United States. (2) FFO and diluted FFO per share are measures widely used by analysts and investors in evaluating the operating performance of real estate companies. However, FFO does not have a standardized meaning under GAAP and therefore may not be comparable to similar measures presented by other companies. (3) On March 5, 2009, MEC and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. As a result of the MEC Chapter 11 filing, the Company has concluded that, under generally accepted accounting principles (GAAP), it ceased to have the ability to exert control over MEC on or about March 5, 2009. Accordingly, the Company's investment in MEC has been deconsolidated from the Company's results beginning on March 5, 2009. The Company's results of operations for the three months ended June 30, 2009, do not include the results of MEC and for the six months ended June 30, 2009, include MEC's results of operations for the period up to March 5, 2009. Transactions between the Real Estate Business and MEC have not been eliminated in the presentation of each segment's results of operations. However, the effects of transactions between these two segments prior to March 5, 2009, are eliminated in the consolidated results of operations of the Company. (4) Excludes revenues from MEC's discontinued operations. (5) Discontinued operations represent MEC's discontinued operations, net of certain related consolidation adjustments. MEC's discontinued operations for the six months ended June 30, 2009, and for the three and six months ended June 30, 2008, include the operations of Remington Park, Thistledown, Portland Meadows and Magna Racino(TM). In addition, MEC's discontinued operations for the three and six months ended June 30, 2008, include the operations of Great Lakes Downs, which was sold in July 2008. Real Estate Business Financial Results for Quarter Ended June 2009 Revenues were $55.2 million in the second quarter of 2009 compared to $55.3 million in the second quarter of 2008. The $0.1 million reduction in revenues is due to a $4.6 million reduction in rental revenues, partially offset by a $4.5 million increase in interest and other income earned from MEC. Rental revenues for the second quarter of 2009 were $42.0 million as compared to $46.7 million in the prior year period. The decrease in rental revenues is primarily due to foreign exchange, which had a $4.7 million negative impact as the U.S. dollar strengthened against the foreign currencies (primarily the Canadian dollar and the euro) in which the Real Estate Business operates. Property vacancies and lease replacements and renewals also had a negative impact, reducing revenue for the quarter by $0.4 million compared to the prior year period. These negative contributions to rental revenues were partially offset by contractual rent adjustments, which increased revenues by $0.5 million, primarily due to cumulative CPI-based increases (being increases that occur every five years or once a specified cumulative increase in CPI has occurred) and fixed contractual rent adjustments implemented since the second quarter of fiscal 2008. Interest and other income earned from MEC in the second quarter of 2009 was $13.1 million as compared to $8.6 million in the prior year period. The increase in interest and other income earned from MEC is primarily due to (i) $1.8 million of interest and fees earned under a loan established in November 2008 (the "MEC 2008 Loan"), (ii) $1.2 million of interest and fees earned under a debtor-in- possession loan (the "DIP Loan") established in March 2009, (iii) a $0.9 million increase in interest and fees earned under the bridge loan established in September 2007 (the "2007 MEC Bridge Loan") as a result of the increased level of borrowings and arrangement fees incurred and (iv) $0.9 million of accretion of the fair value adjustment recorded upon the deconsolidation of MEC. These increases in interest and other income earned from MEC were partially offset by a $0.3 million decrease in arrangement fees recognized under the Gulfstream Park project financing. FFO for the second quarter of 2009 was $41.5 million ($0.89 per share) compared to $37.6 million ($0.81 per share) in the prior year period, representing an increase of 10%. This $3.9 million increase in FFO is due to reductions of $2.0 million in general and administrative expenses, $0.7 million in foreign exchange losses and $1.5 million in income taxes, as well as a $0.5 million write-down of long-lived assets in the prior year period. These increases to FFO were partially offset by a $0.1 million reduction in revenues and a $0.7 million increase in net interest expense. General and administrative expenses decreased to $7.5 million for the second quarter of 2009 from $9.5 million in the prior year period. The decrease over the prior year period is primarily due to a decrease in advisory and other costs, of which $1.4 million was incurred in connection with evaluating MID's relationship with MEC, including MID's involvement in MEC's Chapter 11 process and matters before the Ontario Securities Commission, whereas such expenses for the prior year period include $4.3 million of advisory and other costs related to the March 2008 reorganization proposal. This reduction in advisory and other costs was partially offset by increased costs related to (i) the Company's Non-Employee Director Share-Based Compensation Plan resulting from a greater change in the Company's share price during the second quarter of 2009 as compared to the prior year period and (ii) increased insurance premiums. The Real Estate Business' income tax expense for the second quarter of 2009 was $3.2 million, representing an effective tax rate of 9.2%, compared to income tax expense of $4.7 million and an effective tax rate of 15.1% for the second quarter of 2008. Excluding the $1.4 million of costs incurred in the second quarter of 2009 in connection with evaluating MID's relationship with MEC, including MID's involvement in MEC's Chapter 11 process and matters before the OSC, the $4.3 million of costs associated with the March 2008 reorganization proposal incurred in the prior year period and the related tax impact of both items, the Real Estate Business' effective tax rate was 10.5% in the second quarter of 2009 compared to 16.4% for the second quarter of 2008. As the jurisdictions in which the Real Estate Business operates have different rates of taxation, income tax expense is influenced by the proportion of income earned in each particular country. This 5.9% reduction in the adjusted effective tax rate is primarily due to changes in the mix of taxable income earned in the various countries in which the Real Estate Business operates, as well as increased interest and other income from MEC, which is taxed in jurisdictions that have lower rates of taxation than the Real Estate Business' overall effective tax rate. The Real Estate Business reported net income of $31.3 million for the second quarter of 2009 compared to $26.3 million in the prior year period. The $5.0 million increase in net income is due to reductions of $2.0 million in general and administrative expenses, $1.5 million in income tax expense, $1.2 million in depreciation and amortization (due primarily to the impact of foreign exchange) and $0.7 million in foreign exchange losses, as well as a $0.5 million write-down of long-lived assets in the prior year period. These increases to net income were partially offset by a $0.7 million increase in net interest expense and a $0.1 million reduction in revenues. Six Months Ended June 30, 2009 Revenues were $109.0 million in the first six months of 2009 compared to $109.3 million in the first six months of 2008. The $0.4 million reduction in revenues is due to a $10.2 million reduction in rental revenues, partially offset by a $9.8 million increase in interest and other income earned from MEC. Rental revenues for the first six months of 2009 were $82.4 million as compared to $92.6 million in the prior year period. The decrease in rental revenues is primarily due to foreign exchange, which had a $10.3 million negative impact as the U.S. dollar strengthened against the foreign currencies (primarily the Canadian dollar and the euro) in which the Real Estate Business operates. Property vacancies and lease replacements and renewals also had a negative impact, reducing revenue for the first six months of 2009 by $1.0 million compared to the prior year period. These negative contributions to rental revenues were partially offset by contractual rent adjustments, which increased revenues by $1.2 million, primarily due to cumulative CPI-based increases (being increases that occur every five years or once a specified cumulative increase in CPI has occurred) and fixed contractual rent adjustments implemented since the first quarter of fiscal 2008. Interest and other income earned from MEC in the first six months of 2009 was $26.6 million as compared to $16.8 million in the prior year period. The increase in interest and other income earned from MEC is primarily due to (i) $4.6 million of interest and fees earned under the MEC 2008 Loan, (ii) a $3.6 million increase in interest and fees earned from the 2007 MEC Bridge Loan as a result of the increased level of borrowings and arrangement fees incurred, (iii) a $1.3 million increase in arrangement fees recognized under the Gulfstream Park project financing, (iv) $1.3 million of interest and fees earned under the DIP Loan and (v) $1.2 million of accretion of the fair value adjustment recorded upon the deconsolidation of MEC. The increase in interest and other income earned from MEC was partially offset by a $2.4 million reduction to the carrying value of the MEC loan facilities at the Petition Date, reflecting the fact that certain of the MEC loan facilities bear interest at a fixed rate of 10.5% per annum, which is not considered to be reflective of the market rate of interest that would have been used had such facilities been established on the Petition Date. FFO for the first six months of 2009 was $76.4 million ($1.64 per share) compared to $79.5 million ($1.70 per share) in the prior year period, representing a decrease of 4%. This $3.2 million reduction in FFO is due to a $0.4 million reduction in revenues, increases of $5.4 million in general and administrative expenses and $0.9 million in net interest expense, the $0.5 million adjustment to the carrying values of the MEC loan facilities on deconsolidation of MEC and $3.9 million of other gains in the prior year period. These reductions to FFO were partially offset by reductions of $0.7 million in foreign exchange losses and $6.7 million in income tax expense, as well as a $0.5 million write-down of long-lived assets in the prior year period. General and administrative expenses increased to $19.4 million for the first six months of 2009 from $14.0 million in the prior year period. The increase over the prior year period is primarily due to $8.4 million of advisory and other costs incurred in connection with the November 2008 reorganization proposal and evaluating MID's relationship with MEC, including MID's involvement in MEC's Chapter 11 process, the Stalking Horse Bid and the DIP Loan and matters before the OSC, whereas expenses for the prior year period include $4.3 million of advisory and other costs related to the March 2008 reorganization proposal. The additional increase in general and administrative expenses is due to increased costs related to (i) the Company's Non-Employee Director Share-Based Compensation Plan resulting from a greater change in the Company's share price during the second quarter of 2009 as compared to the prior year period and (ii) increased insurance premiums. The Real Estate Business' income tax expense for the first six months of 2009 was $6.4 million, representing an effective tax rate of 10.2%, compared to income tax expense of $13.1 million and an effective tax rate of 18.7% for the first six months of 2008. Excluding the $8.4 million of costs incurred in the first six months of 2009 in connection with the November 2008 reorganization proposal and evaluating MID's relationship with MEC, including MID's involvement in MEC's Chapter 11 process and matters before the OSC, the $4.3 million of costs associated with the March 2008 reorganization proposal incurred in the prior year period, the $3.9 million lease termination fee received in the prior year period and the related tax impact of these items, the Real Estate Business' effective tax rate was 12.8% in the first six months of 2009 compared to 17.9% for the first six months of 2008. As the jurisdictions in which the Real Estate Business operates have different rates of taxation, income tax expense is influenced by the proportion of income earned in each particular country. This 5.1% reduction in the adjusted effective tax rate is primarily due to changes in the mix of taxable income earned in the various countries in which the Real Estate Business operates, as well as increased interest and other income from MEC, which is taxed in jurisdictions that have lower rates of taxation than the Real Estate Business' overall effective tax rate. The Real Estate Business reported net income of $56.5 million for the first six months of 2009 compared to $57.1 million in the prior year period. The $0.6 million decrease in net income is due to increases of $5.4 million in general and administrative expenses and $0.9 million in net interest expense, the $3.9 million of other gains in the prior year period, the $0.5 million adjustment to the carrying values of the MEC loan facilities on deconsolidation of MEC and a $0.4 million reduction in revenues. These reductions to net income were partially offset by reductions of $6.7 million in income tax expense, $2.5 million in depreciation and amortization (due primarily to the impact of foreign exchange) and $0.7 million in foreign exchange losses, as well as a $0.5 million write-down recorded in the prior year period. At June 30, 2009, the Real Estate Business had 27.3 million square feet of leaseable area, with annualized lease payments of $170.7 million, representing a return of 10.9% on the gross aggregate carrying value of the Company income-producing portfolio. MEC Chapter 11 Filing & Process On March 5, 2009, MEC and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware and were granted recognition of the Chapter 11 proceedings from the Ontario Superior Court of Justice under section 18.6 of the Companies' Creditors Arrangement Act in Canada. MID, through a wholly-owned subsidiary (the MID Lender), is the largest secured creditor of MEC. At the Petition Date, the balance of MID's existing loans to MEC, including accrued interest, was approximately $372 million, comprised of $171 million under the Gulfstream Park project financing, $23 million under the Remington Park project financing, $125 million under the 2007 MEC Bridge Loan and $53 million under the 2008 MEC Loan. At June 30, 2009, approximately $386 million (including accrued interest subsequent to the Petition Date) was outstanding under these loan facilities. All of these loans are secured. In addition, the Company owned approximately 54% of MEC's total equity, representing approximately 96% of the total votes attached to MEC's outstanding stock. There can be no assurance given as to the treatment the MID Lender's claims will receive in the Debtors' Chapter 11 proceedings, although, as a general matter, secured creditors are entitled to priority over unsecured creditors to the extent of the value of the collateral securing such claims. Subject to the uncertainties of MEC's Chapter 11 process, MID management believes that the MID Lender's claims are adequately secured and therefore has no reason to believe that the amount of the MEC loan facilities with the MID Lender is impaired. However, on July 21, 2009, the MID Lender was named as a defendant in an action commenced by the Official Committee of Unsecured Creditors (the Committee) in connection with MEC's Chapter 11 proceedings. The Committee's action seeks, among other things, recharacterization as equity of the MID Lender's claims in relation to the indebtedness previously advanced to MEC and its subsidiaries, equitable subordination of the MID Lender's claims against the debtors in the Chapter 11 proceedings and the avoidance of allegedly fraudulent transfers to the MID Lender, including fees, interest and principal repayments received prior to the initiation of the Chapter 11 process. In addition, the Committee has sought leave of the Court to pursue a separate action against MID, the MID Lender and additional parties, including Mr. Frank Stronach, that alleges, among other things, breach of fiduciary duty owed to MEC and its creditors. Although MID and the MID Lender believe that the Committee's claims are without merit and intend to contest them vigorously, MID can provide no assurance as to the ultimate outcome of the Committee's action. DIP Loan In connection with the Debtors' Chapter 11 filing, MID (through the MID Lender) originally agreed to provide to MEC the DIP Loan in the amount of up to $62.5 million and with a term of six months. On April 20, 2009, the DIP Loan was amended to, among other things, (i) extend the maturity from September 6, 2009, to November 6, 2009, in order to allow for a longer marketing period in connection with MEC's asset sales and (ii) reduce the principal amount available from $62.5 million to $38.4 million, with the reduction attributable to the fact that interest on the pre- petition loan facilities between MEC and the MID Lender will accrue during the Chapter 11 process rather than being paid currently in cash. At June 30, 2009, $20.8 million was due under the DIP Loan. Subsequent to June 30, 2009, an additional $7.0 million has been drawn under the DIP Loan. The DIP Loan is secured by liens on substantially all assets of MEC and its subsidiaries (subject to prior ranking liens), as well as a pledge of capital stock of certain guarantors. MEC Asset Sales MEC's Chapter 11 filing contemplates MEC selling all or substantially all of its assets through an auction process and using the proceeds from the asset sales to repay its creditors, including the MID Lender. On the Petition Date, and subject to Court approval, MID entered into an agreement with MEC to purchase MEC's relevant interests associated with certain assets (the Stalking Horse Bid). However, on April 20, 2009, in response to objections raised by a number of parties in the MEC Chapter 11 process and with the intent of expediting that process, MID and MEC terminated the Stalking Horse Bid. On May 11, 2009, the Court approved the bid procedures for MEC's interests associated with the following assets (the Bid Procedures Assets): Santa Anita Park (including MEC's joint venture interest in the Shops at Santa Anita); Remington Park; Lone Star Park; Thistledown; Portland Meadows; StreuFex(TM); vacant lands located in Ocala, Florida; and vacant lands located in Dixon, California. Initial expressions of interest for the Bid Procedures Assets were submitted on May 27, 2009, by interested parties. On or prior to the July 31, 2009 deadline, additional expressions of interest and definitive bids were received by MEC in relation to certain of the Bid Procedures Assets and MEC is currently in discussions with various third parties regarding potential stalking horse bids for several of such assets. MID has stated that it does not intend to submit a bid for any of the Bid Procedures Assets; provided, however, that MID intends to preserve the value of its secured loans to MEC and will take all available steps to prevent fire sales of the Bid Procedures Assets. On July 31, 2009, the Court approved the Debtors' motion for authorization to sell for 6.5 million euros the assets of one of MEC's non-debtor Austrian subsidiaries, which assets include Magna Racino(TM) and surrounding lands, to an entity affiliated with Fair Enterprise Limited, a company that forms part of an estate planning vehicle for the Stronach family, certain members of which are trustees of the Stronach Trust, MID's controlling shareholder. On August 4, 2009, the Debtors filed a motion with the Court seeking authorization to sell, subject to higher and better offers, certain real property located in Ocala, Florida for $5.75 million to an entity related with Fair Enterprise Limited. Pursuant to the motion, all valid liens of the MID Lender will attach to the proceeds of the sale of the Ocala property. A hearing on the motion is scheduled for August 26, 2009. On August 12, 2009, the Debtors filed a motion with the Court seeking authorization to sell, subject to higher and better offers, Remington Park for $80.25 million to a third party. Pursuant to the motion, all valid liens of the MID Lender will attach to the proceeds of the sale of Remington Park. A hearing on the motion has been requested for August 26, 2009. MEC has advised the Court that it is continuing to explore all alternatives with respect to its remaining assets, and although the Stalking Horse Bid has been terminated, MID is continuing to evaluate whether to bid on MEC assets during the course of MEC's Chapter 11 sales process (subject to the outcome of the OSC hearing. Deconsolidation of MEC As a result of the MEC Chapter 11 filing, the Company has concluded that, under GAAP, it ceased to have the ability to exert control over MEC on or about the Petition Date. Accordingly, the Company's investment in MEC has been deconsolidated from the Company's results beginning on the Petition Date. GAAP requires the carrying values of any investment in, and amounts due from, a deconsolidated subsidiary to be adjusted to their fair value at the date of deconsolidation. In light of the significant uncertainty as to whether MEC shareholders, including MID, will receive any recovery following MEC's reorganization, the carrying value of MID's equity investment in MEC was reduced to zero. Upon deconsolidation of MEC, the Company recorded an aggregate $46.7 million reduction to the carrying values of its investment in, and amounts due from, MEC, which is included in the Company's consolidated statement of income (loss) for the six months ended June 30, 2009. Included in this aggregate amount is a $0.5 million reduction in the carrying values of the MEC loan facilities with the MID Lender at the Petition Date. Although, subject to the uncertainties of MEC's Chapter 11 process, MID management believes that the MID Lender's claims are adequately secured and therefore has no reason to believe that the amount of the MEC loan facilities with the MID Lender is impaired, the $0.5 million reduction in the carrying values of the MEC loan facilities was required under GAAP, reflecting the fact that certain of the MEC loan facilities bear interest at a fixed rate of 10.5% per annum, which is not considered to be reflective of the market rate of interest that would have been used had such facilities been established on the Petition Date. The deconsolidation of MEC affects virtually all of the Company's reported revenue, expense, asset and liability balances, thus significantly limiting the comparability from period to period of the Company's consolidated statements of income (loss), consolidated statements of cash flows and consolidated balance sheets. As a result, the remaining content of this press release focuses solely on the operating results, financial condition, cash flows and liquidity of the Real Estate Business. Ontario Securities Commission Hearing On August 11, 2009, MID announced that, at the request of certain MID Class A shareholders, the OSC has called a hearing regarding MID's ability to rely on certain exemptions from the requirements to obtain minority shareholder approval and formal valuations under Multilateral Instrument 61- 101 - Protection of Minority Security Holders in Special Transactions in respect of transactions with MEC. MID believes that the application of the MID Class A shareholders is without merit and MID will vigorously defend against the application. The hearing will commence on September 9, 2009. About MID MID -- http://www.midevelopments.com/-- is a real estate operating company focusing primarily on the ownership, leasing, management, acquisition and development of a predominantly industrial rental portfolio for Magna and its subsidiaries in North America and Europe. MID also acquires land that it intends to develop for mixed-use and residential projects. MID holds a controlling interest in MEC, North America's number one owner and operator of horse racetracks, based on revenue, and one of the world's leading suppliers, via simulcasting, of live horse racing content to the growing inter-track, off-track and account wagering markets. As reported by the Troubled Company Reporter on March 11, 2009, Moody's Investors Service placed the senior debentures of MI Developments Inc. (Ba1) on review for possible downgrade. Moody's rating action reflects the persistent financial issues causing Magna Entertainment Corp. to file for Chapter 11 bankruptcy protection on March 5, 2009 and the accelerated pressures in the automotive sector. MID has a 54% equity stake and controls 96% of the votes of MEC. MID's cash flows are derived from long-term triple-net leases, substantially all of them to MID's former parent, Magna International, Inc. (unrated), from which MID was spun off in 2003. MIDWEST BANC: Breach of Covenant Raises Going Concern Doubt ----------------------------------------------------------- Midwest Banc Holdings, Inc., said in its quarterly report for the period ended June 30, 2009, that there is substantial doubt about its ability to continue as a going concern. The Company decided not to make the principal payment, suspend the dividend on its Series A Preferred Stock and defer the dividends on its Series T preferred stock and interest payments on its trust preferred securities, to retain cash and preserve liquidity and capital at the holding company. The revolving line of credit matured on July 3, 2009, and the Company did not pay to the lender all of the aggregate outstanding principal on the revolving line of credit. On July 8, 2009, the lender advised the Company that the failure to make the required $5 million principal payment constituted a continuing event of default under the loan agreements. The lender also notified the Company that, as of July 8, the interest rate on the revolving line of credit increased to the default interest rate of 7.25%, and the interest rate under the term loan agreement increased to the default interest rate of 30 day LIBOR plus 455 basis points. The Company stated that upon the occurrence of an event of default, the lender may, among other remedies, (1) cease permitting the Company to borrow further under the line of credit, (2) terminate any outstanding commitment and (3) seize the outstanding shares of the Bank's capital stock held by the Company which have been pledged as collateral for borrowings under the loan agreements. The Company's balance sheet showed total assets of $3.56 billion, total liabilities of $3.34 billion and stockholders' equity of about $219.6 million. For three months ended June 30, 2009, the Company posted a net loss of $76.46 million compared with a net income of $2.42 million for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $81.78 million compared with a net loss of $2.98 million for the same period in 2008. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?41df Midwest Banc Holdings, Inc. (NASDAQ:MBHI) is a community-based bank holding company. Through its wholly-owned subsidiaries, the Company provides a range of services, including traditional banking services, personal and corporate trust services, and insurance brokerage and retail securities brokerage services. The Company's principal operating subsidiary is Midwest Bank and Trust Company, an Illinois state bank that operates 27 banking centers in the Chicago metropolitan area. The Company operates in the community banking business segment, providing a range of services to individual and corporate customers. MIKE YOUNG: Files for Chapter 11, Wants Emergency Hearing --------------------------------------------------------- Bill Leger at KFDM News reports that Mike Young Motors has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Beaumont. KFDM relates that Robert Barron, Mike Young's lawyer, said that he will file motions for an emergency hearing. According to KFDM, Mike Young was at the center of a KFDM probe in May 2009. Reports say that former Mike Young clients complained of misleading and deceptive practices by the dealership, which in turn blamed many of the problems on sales people it described as inexperienced. Mike Young's financial problems were due to Hurricane Ike, Chapter 11 filings by GMAC and Chrysler, and a delay in the government's Cash for Clunkers program, Mr. Barron said in a statement. Citing Mr. Barron, KFDM relates that it's too early to know how claims will be handled for customers who purchased extended warranties backed by Mike Young, and that will be part of the reorganization. Mr. Barron said that manufacturer warranties remain in effect, the report states. KFDM reports that GMAC spokesperson Michael Stoller said that the lender had attempted last week to reclaim vehicles it considers collateral on the Mike Young lot. Mr. Barron said that he and the attorneys for GMAC and Chrysler have been working together, and he expects talks to continue in a court hearing this week, KFDM relates. Mike Young Motors is a Winnie car dealership. MILACRON INC: Will Cut 10% of Workforce in North America -------------------------------------------------------- Bill Bregar at Plastics News reports that Milacron Inc. said that it will lay off 130 employees, or 10% of workforce, across its North American businesses. Plastics News says that Milacron awaits a sale that will bring it out of Chapter 11 bankruptcy. The court approved Milacron's sale to investor groups Avenue Capital Group and DDJ Capital Management LLC. A Milacron spokesperson said that the sale could be final by the end of this month, Plastics News relates. Milacron said in a statement, "The changes were made to size our business appropriately for current business levels. These steps not only lower our overhead costs, they streamline our organization -- driving decision-making closer to customers and making us more agile and responsive to customers' evolving requirements." Herb Hutchison sent an e-mail to business contacts on August 11 saying that Milacron has eliminated his director of international business development for Extrusion Systems Division position, Plastics News states. Headquartered in Batavia, Ohio, Milacron Inc. (Pink Sheets: MZIAQ) supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron also manufactures synthetic water-based industrial fluids used in metalworking applications. The Company and six of its affiliates filed for protection on March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). On the same day, the Company filed an ancillary proceeding for reorganization of its Canadian subsidiary under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. The petitions include the Company and its U.S. and Canadian subsidiaries and its non-operating Dutch holding company subsidiary only, and do not include any of the Company's operating subsidiaries outside the U.S. and Canada. Kim Martin Lewis, Esq., Tim J. Robinson, Esq., and Patrick D. Burns, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. Conway, Del Genio, Gries Co., LLC, is the Debtors' financial advisor. Rothschild Inc. is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the noticing, balloting and disbursing agent for the Debtors. Paul, Hastings, Janofsky & Walker LLP, represents DIP Lender General Electric Capital Corp. Taft Stettinius & Hollister LLP is counsel for the Official Committee of Unsecured Creditors. At April 30, 2009, the Company had $527,497,000 in total assets and $809,732,000 in total liabilities. MILACRON INC: Asks Court's Nod to Change Names Upon Sale Closing ---------------------------------------------------------------- Milacron, Inc., et al., ask the U.S. Bankruptcy Court for the Southern District of Ohio, for authority to change their names upon the closing of the sale of substantially all of their assets to MI 363 Bid LLC, as set forth below: Debtor Entities New Name --------------- -------- Milacron Inc. MI 2009 Inc. Cimcool Industrial Products, Inc. CIP 2009 Inc. Milacron Marketing Company MMC 2009 Inc. Milacron Plastics Technology Group MPTG 2009 Inc. D-M-E Company, Inc. EMD 2009 Inc. Milacron Canada Limited 1787230 Ontario Limited Milacron Capital Holdings B.V. MCH 2009 B.V. On June 30, 2009, the Bankruptcy Court approved the sale of substantially all of the Debtors' assets to MI 363 Bid LLC for roughly $175 million. Pursuant to the pursuant agreement, the purchaser requested that the Debtors discontinue using each of their respective names. About Milacron Inc. Headquartered in Batavia, Ohio, Milacron Inc. (Pink Sheets: MZIAQ) supplies plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. First incorporated in 1884, Milacron also manufactures synthetic water-based industrial fluids used in metalworking applications. The Company and six of its affiliates filed for protection on March 10, 2009 (Bankr. S.D. Ohio Lead Case No. 09-11235). On the same day, the Company filed an ancillary proceeding for reorganization of its Canadian subsidiary under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. The petitions include the Company and its U.S. and Canadian subsidiaries and its non-operating Dutch holding company subsidiary only, and do not include any of the Company's operating subsidiaries outside the U.S. and Canada. Kim Martin Lewis, Esq., Tim J. Robinson, Esq., and Patrick D. Burns, Esq., at Dinsmore & Shohl LLP, represent the Debtors in their restructuring efforts. Conway, Del Genio, Gries Co., LLC, is the Debtors' financial advisor. Rothschild Inc. is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the noticing, balloting and disbursing agent for the Debtors. Paul, Hastings, Janofsky & Walker LLP, represents DIP Lender General Electric Capital Corp. Taft Stettinius & Hollister LLP is counsel for the Official Committee of Unsecured Creditors. At June 30, 2009, the Company had $528,548,000 in total assets and $818,577,000 in total liabilities. MOMENTIVE PERFORMANCE: Bank Debt Trades at 20% Off -------------------------------------------------- Participations in a syndicated loan under which Momentive Performance Materials, Inc., is a borrower traded in the secondary market at 79.36 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.93 percentage points from the previous week, The Journal relates. The loan matures on Dec. 5, 2013. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B1 rating and Standard & Poor's CCC- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Momentive Performance Materials, Inc., is a producer of silicones and silicone derivatives, and is engaged in the development and manufacture of products derived from quartz and specialty ceramics. As of Dec. 31, 2008, the Company had 25 production sites located worldwide, which allows it to produce the majority of its products locally in the Americas, Europe and Asia. Momentive's customers include companies in industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L'Oreal, BASF, The Home Depot and Lowe's. As of March 29, 2009, Momentive had $3.42 billion in total assets on $4.08 billion in total liabilities, resulting in $662.8 billion in stockholders' deficit. The Troubled Company Reporter said on June 17, 2009, that Standard & Poor's Ratings Services lowered its corporate credit rating on Momentive Performance Materials to 'SD' from 'CC' and its senior unsecured and subordinated debt ratings on the company to 'D' from 'C' following the completion of what S&P considers to be a distressed exchange offer. In addition S&P has removed the ratings from CreditWatch, where they were placed with negative implications on March 17, 2009. All S&P's other ratings on Momentive and its subsidiaries remain unchanged. Moody's Investors Service also deemed the recently concluded notes exchange offer which included issuance of secured second lien notes to be a distressed exchange, and lowered the Probability of Default Rating of Momentive Performance Materials to Ca/LD from Caa3. Moody's also changed some of Momentive's other ratings to reflect the occurrence of a distressed exchange. The ratings on Momentive's senior unsecured notes and senior subordinated notes were changed to Ca from Caa2 and Caa3, respectively, reflecting the low applicable clearing price resulting from the exchange offer. Moody's affirmed Momentive's Corporate Family Rating at Caa1, its senior secured first lien debt (revolver and term loan) at B1 and its Speculative Grade Liquidity Rating at SGL-3. The rating outlook is negative. MXENERGY HOLDINGS: S&P Cuts CCR to 'SD', Then Withdraws Rating -------------------------------------------------------------- Standard & Poor's Ratings Services on August 12 said it lowered its long-term corporate credit rating on natural gas retail marketer MXEnergy Holdings Inc. to 'SD' from 'CC'. In addition, we lowered the rating on the company's approximate $165 million of senior unsecured notes due 2011 to 'D' from 'C'. The recovery rating on MXEnergy's notes is unchanged at '6', which indicates that lenders can expect negligible (0% to 10%) recovery in the event of a payment default. "We are taking the rating action due to the pending completion of the company's exchange offer, which has already received sufficient note tenders to institute the exchange offer. We also expect to withdraw the company's rating in the very near future at the company's request. We have not changed the '6' recovery rating, which reflects our expectations for the small quantity of notes that have not been tendered. We expect negligible recovery (0-10%) upon default due to the senior claims of the company's secured credit facilities," S&P said. The company launched the current exchange offer in June 2009 and is required to deliver evidence that at least 90% of the senior noteholders have validly tendered and not withdrawn their senior notes in the exchange offer before Aug. 28, 2009. As of July 28, 2009, about $159 million (or slightly over 95%) of the notes have been tendered in the exchange offer and consented to the proposed amendments in the consent solicitation. As per the exchange offer, for each $1,000 principal amount of notes exchanged, an eligible holder will receive a cash payment of $138.15, $393.33 principal amount of a new series of the company's 13% senior secured notes due 2014, and 188.91 shares of the company's common stock. "According to our rating definitions, we assign a 'D' rating when we believe that any default will be a general default and that the obligor will fail to pay all or substantially all of its obligations as they come due. Our default definition includes payment defaults on both rated and unrated financial obligations. In addition, under our criteria, we treat distressed exchange offers to restructure debt obligations as equivalent to a default on the part of the issuer, even though, technically, investors may accept such an offer voluntarily and no legal default occurs. We assign an 'SD' rating when we believe that the obligor has selectively defaulted on a specific issue or class of obligations but it will continue to meet its payments on other issues or classes of obligations in a timely manner," S&P explained. Ratings Withdrawn Standard & Poor's Ratings Services said August 13 it withdrew its 'SD' corporate credit rating and 'D' senior unsecured rating on natural gas retail marketer MXEnergy Holdings Inc. at the issuer's request. "We lowered the company's corporate credit and senior unsecured ratings yesterday to 'SD' and 'D' due to the pending completion of the company's exchange offer, which has already received sufficient note tenders to institute the exchange offer." NACIO SYSTEMS: Chapter 11 Plan Functioned as Security Agreement --------------------------------------------------------------- WestLaw reports that a Chapter 11 reorganization plan which a debtor had signed, and which manifested an intent by the debtor to grant a security interest in substantially all of its assets to the creditor funding the debtor's performance of its plan, was sufficient under California law to function as a security agreement. A bankruptcy judge in California noted that a Chapter 11 reorganization plan resembles a consent decree and should be construed basically as a contract. In re Nacio Systems, Inc., --- B.R. ----, 2009 WL 2430818 (Bankr. N.D. Cal.). Nacio Systems, Inc., sought protection under chapter 11 in 2002, and emerged under a plan of reorganization in 2003. Nacio Systems, Inc. -- http://www.nacio.com/-- filed a second chapter 11 petition (Bankr. N.D. Calif. Case No. 08-10078) on January 18, 2008; is represented by Craig K. Welch, Esq., at Welch and Olrich, L.L.P., in Petaluma, Calif.; and estimates its assets and debts at less than $10 million. NEXIENT LEARNING: Global Knowledge to Buy Assets & Operations ------------------------------------------------------------- Nexient Learning Inc. has entered into an agreement through which Global Knowledge will purchase certain assets and operations of Nexient Learning, subject to court approval. This completes the marketing and sale process Nexient initiated on June 26 with the filing of CCAA protection and enables Nexient's business to continue without disruption. Financial terms of the transaction were not disclosed. "Nexient is delighted to join forces with Global Knowledge to offer our clients an expanded learning portfolio and to deliver our learning products in the international marketplace. Global Knowledge's international reputation as a leader in the training industry as well as their management and financial strength will provide the needed support to secure our position as market leader in Canada," said Nexient's President and Chief Executive Officer, Donna de Winter. "We look forward to becoming a part of the Global Knowledge team." "We view the Canadian training marketplace as having significant growth potential and the chance to acquire Nexient's operations presented a rare opportunity to expand in this important market," Brian Branson, CEO and President of Global Knowledge said. "We are excited to let the customers of both companies know that they will not only experience the same great service they've been receiving from Nexient and Global Knowledge, but that our combined learning portfolios of technical and soft skills will address an even wider array of their talent management needs." The business will continue to operate under the Nexient brand for an undetermined period. About Global Knowledge Global Knowledge -- http://www.globalknowledge.com-- is the worldwide leader in IT and business training. Global Knowledge delivers via training centers, private facilities, and the Internet, enabling its customers to choose when, where, and how they want to receive training programs and learning services. The company's more than 700 courses span foundational and specialized training and certifications. Founded in 1995, Global Knowledge employs more than 1,200 people worldwide and is headquartered in Cary, N.C. The company is owned by New York-based investment firm Welsh, Carson, Anderson, and Stowe. About Nexient Learning Inc. Nexient Learning Inc. -- http://www.nexientlearning.com-- is the largest corporate training and talent development company in Canada. Nexient delivers industry-recognized curricula in information technology, business process improvement and leadership business solutions. With 12 locations across Canada, Nexient offers innovative learning solutions in both classroom and online formats. Nexient is traded on the NEX as "NXL.H". NORANDA ALUMINUM: S&P Downgrades Rating on Senior Debt to 'D' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level rating on Noranda Aluminum Holding Corp.'s (CCC+/Developing/--) and Noranda Aluminum Acquisition Corp.'s senior unsecured debt issues to 'D' from 'CCC-'. The recovery rating on these note issues remains '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. "The ratings actions follow the company's disclosure that they had repurchased, at a substantial discount to par, some of the outstanding note issues during the second quarter ended June 30, 2009," said Standard & Poor's credit analyst Sherwin Brandford. The company had also made about $200 million of note repurchases in the first quarter ended March 31, 2009. Standard & Poor's views these repurchases as being tantamount to default, given the company's highly leveraged capital structure and very weak operating performance. S&P will continue to rate the note issues referenced, however, S&P expects the issue-level ratings on these note issues to remain 'D' until S&P has made a determination that no further distressed repurchases will be completed. Ratings List Noranda Aluminum Holding Corp. Corporate Credit Rating CCC+/Developing/-- Downgraded Noranda Aluminum Holding Corp. To From -- ---- Senior Unsecured D CCC- Recovery Rating 6 6 Noranda Aluminum Acquisition Corp. To From -- ---- Senior Unsecured D CCC- Recovery rating 6 6 NORTEL NETWORKS: Canada to Limit Sale Probe on Existing Safeguards ------------------------------------------------------------------ Canada Prime Minister Stephen Harper said he will not succumb to pressure to change the country's foreign investment safeguards to keep Nortel's assets in Canadian hands, according to an Aug. 12, 2009 report by the Toronto Star. Sweden-based Telefonaktiebolaget LM Ericsson recently won the bid to acquire Nortel's Code Division Multiple Access or CDMA business and Long Term Evolution or LTE assets for $1.13 billion. Speaking at a news conference in Panama City, Mr. Harper said Ottawa will examine the acquisition of Nortel's assets by Ericsson under the Investment Canada Act to ensure it is in Canada's national interest, the Toronto Star related. The Investment Canada Act triggers a review of foreign takeovers valued at more than $312 million, to determine if the deal is in Canada's interests or threatens national security. The news source quoted Mr. Harper as saying that the Nortel- Ericsson deal will be examined in accordance with existing Canadian law, but that the Canadian government doesn't foresee the creation of "any [new] kind of legislation to increase protectionism in terms of foreign investment in Canada." Mr. Harper noted that Canada supports the concept of global open markets and believed that increased foreign investment protectionism would hamper that goal. The Nortel-Ericsson transaction has elicited strong reactions from various groups who said the sale of Nortel's assets to a foreign-owned corporation is not in Canada's interests. Among them are Research In Motion, the manufacturers of the BlackBerry mobile phone; Ontario Finance Minister Dwight Duncan; and Liberal Industry Critic Marc Garneau. RIM co-CEO Mike Lazaridis said selling the Nortel assets to a foreign company would be as damaging to Canada as allowing the AVRO Arrow project to fail 50 years ago, according to an August 13, 2009 report by the Edmonton Sun. RIM previously related that it made a bid for the Nortel assets, but was ignored by the Company. Liberal Industry Critic Marc Garneau sent a letter to Canada Industry Minister Tony Clement dated August 12, 2009, insisting that the Ericsson sale be subject to careful review under the Investment Canada Act to determine if it is of "net benefit" to Canada. Mr. Garneau also urged the government to look into the plight of the Nortel pensioners as part of the review. He added that the Liberal Party supports the proposal of RIM's co-CEO for an "immediate discussion of principal players" of the sale under the guidance of the government. Ontario Finance Minister Dwight Duncan also demanded the federal government to intervene in the Ericsson sale, contending that "Nortel has benefited from tax credits to develop its technology and that any assets should stay in Canadian hands," the Edmonton Sun added. Nortel executive George Riedel, however, said his company has not used tax credits in the last 10 years to subsidize its research and development and that the company's book value is closer to $150 million which should exempt it from a government review, Edmonton Sun noted. Verizon Contracts In a separate filing, Nortel has notified the Court that it is withdrawing the proposed assumption and assignment of certain of its contracts with Verizon Wireless in connection with the sale of its Code Division Multiple Access (CDMA) business and Long Term Evolution (LTE) assets to Ericsson. 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: Files 2nd Quarter Report With SEC -------------------------------------------------- Nortel Networks Corporation announced its results for the second quarter 2009. NORTEL NETWORKS CORPORATION Unaudited Consolidated Balance Sheets As of June 30, 2009 ASSETS Current assets Cash and cash equivalents $2,562,000,000 Short-term investments 6,000,000 Restricted cash and cash equivalents 110,000,000 Accounts receivable-net 1,521,000,000 Inventories-net 1,128,000,000 Deferred income taxes-net 17,000,000 Other current assets 535,000,000 Assets held for sale 248,000,000 --------------- Total current assets 6,127,000,000 Investments 138,000,000 Plant and equipment-net 1,066,000,000 Goodwill 131,000,000 Intangible assets-net 123,000,000 Deferred income taxes-net 13,000,000 Other assets 253,000,000 --------------- Total assets $7,851,000,000 =============== LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Trade and other accounts payable $334,000,000 Payroll and benefit-related liabilities 423,000,000 Contractual liabilities 144,000,000 Restructuring liabilities 87,000,000 Other accrued liabilities 1,694,000,000 Long-term debt due within one year 3,000,000 Liabilities held for sale 333,000,000 --------------- Total current liabilities 3,018,000,000 Long-term liabilities Long-term debt 93,000,000 Deferred income taxes-net 9,000,000 Other liabilities 736,000,000 --------------- Total long-term liabilities 838,000,000 Liabilities subject to compromise 7,967,000,000 --------------- Total liabilities $11,823,000,000 SHAREHOLDERS' DEFICIT Common shares, without par value - Authorized shares: unlimited; Issued and outstanding shares: 497,941,038 as of June 30, 2009 35,597,000,000 Additional paid-in capital 3,645,000,000 Accumulated deficit (43,144,000,000) Accumulated other comprehensive loss (892,000,000) --------------- Total NNC shareholders' deficit (4,794,000,000) Non-controlling interests 822,000,000 --------------- Total shareholders' deficit (3,972,000,000) --------------- Total liabilities & shareholders' deficit $7,851,000,000 =============== NORTEL NETWORKS CORPORATION Unaudited Consolidated Statements of Operations For the Three Months Ended June 30, 2009 Revenues: Products $1,703,000,000 Services 269,000,000 --------------- Total revenues 1,972,000,000 Cost of revenues: Products 1,075,000,000 Services 143,000,000 --------------- Total cost of revenues 1,218,000,000 --------------- Gross profit 754,000,000 Selling, general & admin expense 437,000,000 Research and development expense 301,000,000 Amortization of intangible assets 11,000,000 Goodwill impairment - Special charges - Gain on sales of businesses and assets (15,000,000) Other operating expense (income)-net 4,000,000 --------------- Operating earnings (loss) 16,000,000 Other income (expense)-net (14,000,000) Interest and dividend income - Interest expense: Long-term debt (74,000,000) Other - --------------- Loss from operations before reorganization items, income taxes and equity in net earnings of associated companies (72,000,000) Reorganization items-net (130,000,000) --------------- Loss from operations before income taxes and equity in net earnings of associated companies (202,000,000) Income tax expense (62,000,000) --------------- Loss from operations before equity in net earnings of associated companies (264,000,000) Equity in net earnings of associated companies-net of tax 1,000,000 --------------- Net loss ($263,000,000) =============== Income attributable to noncontrolling interests (11,000,000) Net loss attributable to Nortel Networks Corporation ($274,000,000) =============== NORTEL NETWORKS CORPORATION Unaudited Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2009 Cash flows from (used in) operating activities: Net loss attributable to NNC ($781,000,000) Adjustments to reconcile net loss to net cash from (used in) operating activities: Amortization and depreciation 157,000,000 Goodwill impairment 48,000,000 Non-cash portion of cost reduction activities 5,000,000 Equity in net earnings of associated companies-net of tax (1,000,000) Share-based compensation expense 101,000,000 Deferred income taxes 20,000,000 Pension and other accruals 83,000,000 Loss (gain) on sales and write downs of investments, businesses & assets-net (28,000,000) Income attributable to non-controlling interests-net of tax 37,000,000 Reorganization items-non cash 124,000,000 Other-net 18,000,000 Change in operating assets & liabilities 360,000,000 --------------- Net cash from (used in) operating activities 143,000,000 Cash flows from (used in) investing activities: Expenditures for plant & equipment (26,000,000) Proceeds on disposals of plant & equipment 87,000,000 Change in restricted cash & cash equivalents (69,000,000) Decrease in short & long-term investments 40,000,000 Acquisitions of investments & businesses-net of cash acquired - Proceeds from the sales of investments & businesses & assets-net 25,000,000 --------------- Net cash from (used in) investing activities 57,000,000 Cash flows from (used in) financing activities: Dividends paid including paid by subsidiaries to noncontrolling interests (7,000,000) Capital repayment to noncontrolling interests (29,000,000) Increase in notes payable 30,000,000 Decrease in notes payable (76,000,000) Proceeds from issuance of long-term debt - Repayments of long-term debt - Debt issuance costs - Repayments of capital lease obligations (8,000,000) --------------- Net cash used in financing activities (90,000,000) --------------- Effect of foreign exchange rate changes on cash and cash equivalents 55,000,000 Net increase (decrease) in cash & cash equivalents 165,000,000 --------------- Cash & cash equivalents, beginning 2,397,000,000 --------------- Cash & cash equivalents, end $2,562,000,000 =============== A full-text copy of Nortel Networks' Second Quarter 2009 Financial Results filed on Form 10-Q is available at the U.S. Securities and Exchange Commission at: http://ResearchArchives.com/t/s?4199 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: In Talks for Sale of Remaining Asset, Says E&Y --------------------------------------------------------------- Ernst & Young Inc., the court-appointed monitor of Nortel Networks Corporation and its four Canadian affiliates, delivered to the Ontario Superior Court of Justice its 19th monitor report to provide updates on the status of the Applicants' restructuring initiatives, changes in their corporate governance and the proposed expansion of the firm's duties in their insolvency cases. In its report dated August 11, 2009, Ernst & Young related that the Applicants' continue to make progress in the implementation of their restructuring strategies. The firm cited the sale of the Applicants' Code Division Multiple Access (CDMA) business and Long Term Evolution (LTE) assets to Telefonaktiebolaget LM Ericsson for US$1.13 billion, and the proposed sale of their Enterprise Solutions business to Avaya Inc. for US$475 million or to another company that would offer a better bid. Ernst & Young also reported that the Applicants and the other Nortel units continue to engage in talks with companies interested to acquire their other businesses, and assess other restructuring alternatives for their businesses in case they fail to maximize value through a sale of their assets. Changes in Applicants' Corporate Governance The Monitor's Report also disclosed some changes in the Applicants' corporate governance, including the resignation of their chief executive officer effective August 10, 2009, and a reduction in the size of NNC and Nortel Networks Limited's Board of Directors from nine members to three. As a result of additional responsibilities being assumed by the three remaining directors, their compensation will be increased to $225,000 per director per annum. Meanwhile, the fee for the Chairman of the Board will increase to $325,000 per annum, according to the report. Ernst & Young said the changes will not affect the level of customer service and supplier relationships on an "on-going, day- to-day, operational basis." The Monitor further said that in connection with the changes, the Applicants are seeking approval from the Canadian Court to expand the powers and duties of the firm with respect to the oversight of their business, sales processes and other restructuring activities. The Applicants, the Monitor added, are also in the process of identifying a principal officer for the bankrupt U.S.-based Nortel units, who will work with the Official Committee of Unsecured Creditors, the bondholders group and Ernst & Young to protect the interests of creditors of the U.S.-based Nortel units. 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: Proposes Entry Into New Lease With Prudential -------------------------------------------------------------- Nortel Networks Inc. and its affiliated debtors seek approval of the U.S. Bankruptcy Court for the District of Delaware to enter into a new lease agreement with The Prudential Insurance Company of America. The Agreement will replace the parties' current lease, which will be rejected effective August 12, 2009. The new lease permits the Debtors to continue using a facility in Santa Clara, California, for their business operations. The facility is being used to house the Debtors' research and development laboratories for their Enterprise Solutions business, which is presently up for sale. Under the New Lease Agreement, the Debtors will be using a smaller space and is required to pay $1,840,678 as security. The New Lease will not become effective until the current lease is rejected. The New Lease Agreement is set to expire on May 31, 2014. As part of the consideration conveyed to the Debtors for entering into the New Lease Agreement, Prudential Insurance agreed to waive any claim it has against the Debtors in connection with the rejection or termination of their current lease. The hearing to consider approval of the Debtors' request is scheduled for August 18, 2009. Creditors and other concerned parties have until August 17, 2009, to file their objections. 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: Wants Monitor to Lead Sale of Remaining Assets --------------------------------------------------------------- Nortel Networks Corporation and its four Canadian affiliates ask the Ontario Superior Court of Justice to expand the duties of Ernst & Young Inc. in their insolvency proceedings. Ernst & Young was appointed by the Canadian Court to monitor the properties and the conduct of business of NNC, Nortel Networks Limited, Nortel Networks Global Corporation, Nortel Networks International Corporation and Nortel Networks Technology Corporation. The Nortel companies filed for creditor protection under the Companies' Creditors Arrangement Act. The Applicants ask the Canadian Court to further authorize Ernst & Young to, among other things: (1) conduct, supervise and direct the sale of the Applicants' properties or business, and any process for the allocation and distribution of the sale proceeds; (2) cause the Applicants to administer their business, affairs and operations, which Ernst & Young considers necessary to complete any transaction for the sale of their business; (3) administer the Applicants' claims process and other claims bar or resolution process approved by the Canadian Court within their insolvency proceedings; (4) cause the Applicants to propose a plan of compromise or arrangement; (5) employ assistants and advisors, or cause the Applicants to employ those personnel, if necessary; (6) apply for orders necessary or advisable to carry out its powers and obligations; (7) coordinate with the chief restructuring officer of the Applicants or any person holding similar position; (8) cause the Applicants to exercise their authority as shareholders of their subsidiaries; (9) meet and consult with the Applicants' board of directors; (10) meet with and direct management of the Applicants with respect to operational and restructuring matters, among other things; and (11) coordinate with the principal officer of Nortel Networks Inc. or any successor or assign of that entity with respect to operational and restructuring matters. "At this critical transition point in the proceedings, the expansion of the role of the monitor is an important step to facilitate the applicants' ongoing goal of maximizing value for the businesses as well the conduct of the claims process and other matters related to the CCAA proceedings," says Gordon Davies, chief legal officer of NNC. 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) NORTH MIAMI: U.S. Trustee Sets Meeting of Creditors for Sept. 2 --------------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of creditors in North Miami Shopping Center Venture's Chapter 11 case on Sept. 2, 2009, at 2:30 p.m. The meeting will be held at Room 100-B, 501 East Polk St., (Timberlake Annex), Tampa, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Clearwater, Florida-based North Miami Shopping Center Venture filed for Chapter 11 on Aug. 2, 2009 (Bankr. M. D. Fla. Case No. 09-16991). Joel S. Treuhaft Law Offices represents the Debtor in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. NORTHFIELD LABS: Sept. 4 Voting Deadline for Liquidation Plan Set ----------------------------------------------------------------- On August 11, 2009, the U.S. Bankruptcy Court for the District of Delaware approved the disclosure statement explaining Northfield laboratories Inc.'s amended plan of liquidation, as containing adequate information within the meaning of Section 1125 of the Bankruptcy Code. The Court has set September 4, 2009, at 4:00 p.m. as the voting deadline by which ballots accepting or rejecting the Plan must be received. On September 11, 2009 at 10:00 a.m., a hearing will be held before the Honorable Brendan L. Shannon in the Bankruptcy Court, 824 North Market Street, 6th Floor, Wilmington, Delaware 19801 to consider confirmation of the Plan. Objections, if any, to the Bankruptcy Court's confirmation of the Plan, including any supporting memoranda, must be filed together with proof of service on or before September 8, 2009 at 4:00 p.m. A copy of the disclosure statement, which includes the Plan as Appendix A thereto, is available for free at: http://researcharchives.com/t/s?41e6 Summary of Plan Terms Upon the Effective Date of the Plan, all of the assets of the Debtor will be transferred to a liquidating trust. The Liquidation Trust will seek to finish the wind-down of the Company's business, liquidate the Company's assets and pursue causes of action, including avoidance actions, with the purpose of maximizing the recovery for the beneficiaries of the Liquidation Trust, including the holders of allowed Claims and, if possible, equity holders. As of the Effective Date, the Debtor shall cease to exist and be deemed dissolved pursuant to applicable state law. To maximize the value that can be realized from its assets, the Company contemplated, among other things, (i) marketing and sale of its Mt. Prospect, Illinois, plant; (ii) marketing and sale of its intellectual property assets; (iii) sale of all other remaining assets; and (iv) preservation of its value through the mitigation of administrative claims and other wind-down costs to the extent possible. Each holder of an allowed Class 2 general unsecured claim will receive a pro rata distribution of any available liquidation proceeds or such lesser amount that would result in the holder receiving or retaining aggregate distibutions of a value, as of the Effective Date, equal to the allowed amount of such claim. Class 2 is impaired and holders thereof are entitled to vote to accept or reject the Plan. On each distribution date, each holder of an allowed Class 3 Securities Claim will receive a pro rata distribution, together with allowed Class 4 Interests, of any available liquidation proceeds that remain after the payment and satisfaction of allowed Class 2 general unsecured claims. Holders of Class 3 Securities Claims are deemed to have rejected the Plan and will not be entitled to vote. Class 4 Interests will be deemed cancelled and extinguished as of the Effective Date. Class 4 Interests are deemed to have rejected the Plan and will not be entitled to vote. Headquartered in Evanston, Illinois, Northfield Laboratories Inc. -- http://www.northfieldlabs.com/-- was founded and incorporated under the laws of the State of Delaware in June 1985 to commercialize the scientific development of a hemoglobin-based oxygen-carrying red blood cell substitute (PolyHeme). The Company financed its research and development and other activities through the sale of public and private securities and, to a lesser extent, the license of product rights. In 1994, the Company completed an initial public offering and its shares were publicly traded on NASDAQ under the ticker symbol "NFLD" from that time until trading was suspended on June 11, 2009. The Company's shares were subsequently de-listed effective July 13, 2009. The Company completed its Biologic License Application for PolyHeme and submitted it to the U.S. Food & Drug Administration on October 29, 2008. On April 30, 2009, the FDA informed the Company that it completed its review of the Company's BLA and found "that the information and data submitted are inadequate for final approval action." The Company thereafter concluded it unlikely that sufficient additional capital could be raised to support such further product development. Thus, the Company expeditiously began winding-down its operations. Northfield Laboratories Inc. filed for Chapter 11 on June 1, 2009 (Bankr. D. Del. Case No. 09-11924). Ian Connor Bifferato, Esq., Kevin G. Collins, Esq., and Thomas F. Driscoll, III, Esq., at Bifferato LLC, serve as co-counsel. Lucian Borders Murley, Esq., and Mark Minuti, Esq., and Robyn F. Pollack, Esq., at Saul Ewing LLP, represent the official committee of unsecured creditors as counsel. The Debtor's schedules of assets and liabilities disclosed $9,453,720 in assets against debts of $1,793,115. NV BROADCASTING: Section 341(a) Meeting Set for August 28 --------------------------------------------------------- Roberta A. DeAngelis, U.S. Trustee for Region 3, will convene a meeting of creditors of NV Broadcasting LLC and its debtor- affiliates on Aug. 28, 2009, at 11:00 a.m., J. Caleb Boggs Federal Building, 2nd Floor, Room 2112 in Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the Debtors' financial affairs and operations that would be of interest to the general body of creditors. 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. NV BROADCASTING: Files Schedules of Assets and Liabilities ---------------------------------------------------------- NV Broadcasting LLC filed with U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------------ ------------ A. Real Property B. Personal Property $57,262,943 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $322,562,396 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Non-priority Claims $26,937,702 ------------ ------------ TOTAL $57,262,943 $349,500,09 A copy of NV Broadcasting schedules is available at http://ResearchArchives.com/t/s?41c8 Thirty of the Debtors' affiliates also filed separate schedules of assets and liabilities with the Court. 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. OLIN CORP: Moody's Assigns 'Ba1' Rating on $150 Million Notes ------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Olin Corporation's proposed $150 million senior unsecured notes due 2019. Proceeds from the notes will be used to improve liquidity and pre-fund a debt maturity in 2011. The outlook remains stable. "While Moody's don't usually encourage companies to take on additional debt, commodity chemical companies entering a down- cycle are always better off with additional cash on the balance sheet, rather than trying to fund cash deficits or upcoming maturities at the bottom of the cycle" stated John Rogers Senior Vice President at Moody's. Moody's also assigned ratings to the company's shelf registration that had previously been filed with the SEC. Additionally, Moody's affirmed Olin's Ba1 Corporate Family Rating and its other senior unsecured debt ratings. Moody's noted that Olin has a $75 million debt maturity in 2011. Olin's Ba1 CFR reflects the concentration of profitability in a single commodity chemical product line (chlor alkali and derivatives), a sizable dividend relative to earnings in the bottom of the cycle, and significant environmental liabilities relative to the size of the company. The rating is supported by unusually strong credit metrics through most of the business cycle (LTM June 30, 2009 Net Debt/EBITDA of less than 2x), its position as the third largest chlor alkali producer in North America and the largest producer in the Eastern half of the US, as well as the expectation that Olin will remain more profitable in the upcoming trough (2010 and 2011) than is past troughs. Moody's believes that this is largely due to its greatly expanded production of chlor alkali derivatives (primarily bleach, potassium hydroxide and hydrochloric acid), and to a lesser degree, the better profitability in its Winchester business (small caliber munitions). Despite Moody's projections for the start of a trough in the cycle to begin in the current quarter of 2009, the outlook remains stable due to the company's unusually large cash balance (proforma June 30, 2009, of over $340 million) and the expectation that management will resolve any potential 2010 or 2011 financial covenant compliance issues in their revolver prior to year-end 2009. A substantial decline in the company's cash balance (below $100 million) or the failure to remedy potential financial covenant issues well in advance of potential problems, could prompt a negative outlook or rating action. Moody's could consider a positive outlook if financial metrics do not deteriorate to the extent expected in the upcoming trough (i.e., Net Debt/EBITDA remains above 4x and Retained Cash Flow/Debt remains above 15%). Ratings assigned: Olin Corporation * $150 million of senior unsecured notes due 2019 at Ba1, LGD4/62% * Senior unsecured shelf at (P) Ba1 * Senior subordinated shelf at (P) Ba2 * Preferred stock at (P) Ba3 Ratings affirmed: Olin Corporation * Corporate Family Rating at Ba1 * Probability of Default Rating at Ba1 * Senior unsecured notes at Ba1, LGD4/62%* * Senior unsecured industrial revenue bonds at Ba1, LGD/62% * Please note that the LGD point estimates have changed to 62% from 59% Moody's last rating action for Olin was on September 5, 2007, when Moody's lowered Olin's senior unsecured ratings to Ba1 from Baa3 due to the acquisition of the Pioneer Companies, Inc. Olin Corporation is a producer of commodity chemicals and small caliber munitions. Olin reported revenues of $1.7 billion on an LTM basis ending June 30, 2009. The company is the third largest producers of chlor alkali in the US and has a leading market position in bleach and an established brand name in ammunition (Winchester). OLIN CORP: S&P Downgrades Corporate Credit Rating to 'BB-' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Clayton, Missouri-based Olin Corp. to 'BB-' from 'BB+'. The outlook is stable. In addition, S&P lowered its issue-level rating on the company's existing senior notes to 'B' from 'BB+', two notches lower than the corporate credit rating on the company. S&P revised the recovery rating on this debt to '6' from '4', indicating expectations of negligible (0% to 10%) recovery in the event of a payment default. S&P also assigned a 'B' issue-level rating to the company's proposed $150 million senior unsecured note issuance to address the likelihood of reduced recovery prospects among senior unsecured noteholders as additional debt is incurred, and also to allow for the potential that Olin's unsecured revolving credit facility may have to be amended because of prospective financial covenant concerns. S&P assigned a '6' recovery rating, indicating expectations of negligible (0% to 10%) recovery. At the same time, S&P lowered its preliminary senior secured debt (to 'BB-' from 'BB+') along with S&P's senior unsecured and subordinated debt (to 'B' from 'BB-') ratings on Olin's shelf registration filed Dec. 12, 2008. The shelf registration covers an indeterminate amount of senior and subordinated debt securities, preferred stock, common stock, and warrants. "The two-notch downgrade on Olin reflects an acute decline in the company's core chlor-alkali end markets, along with S&P's view that operating results and credit measures are likely to undergo meaningful compression during the next year," said Standard & Poor's credit analyst James Siahaan. Olin's earnings are considerably exposed to commodity markets that are subject to changes in economic conditions and to the balance between supply and demand for its key products, which constrains credit quality prospects. If weak demand and pricing characteristics persist into 2011 and take longer to recover and credit measures continue to deteriorate, then S&P could revise the outlook to negative or lower S&P's ratings. S&P believes that business conditions could deteriorate such that Olin's FFO to debt ratio could approach the 15% area by the end of 2010. If a recovery in economic conditions stimulates chlor-alkali demand and ECU pricing to recover during 2010, then this could fortify Olin's business performance and, in turn, could prompt a positive outlook. OSHKOSH CORP: S&P Raises Long-Term Corporate Credit Rating to 'B+' ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its long-term corporate credit rating on Oshkosh Corp. to 'B+' from 'B'. S&P removed the ratings from CreditWatch, where S&P had placed them with positive implications on Aug. 6, 2009. The outlook is stable. The upgrade follows the company's completion of a common stock offering. Oshkosh used the proceeds of roughly $358 million to repay term loan borrowings. The repayment equates to about 15% of the company's debt and improves headroom under covenants. In addition, the company should benefit from more than $2 billion in delivery orders from the U.S. government to build 3,944 M-ATV (Mine Resistant Ambush Protected All Terrain Vehicles), which has meaningfully improved near-term operating prospects. The ratings continue to reflect Oshkosh's aggressive financial profile, which more than offsets its leading business positions in key segments of the specialty vehicle market and good product and end-market diversity. While most of Oshkosh's end-markets remain weak, S&P expects the company's debt reduction and the effect from the M-ATV awards to improve credit measures meaningfully from current levels. "We could take a positive rating action if, for instance, end markets recover more quickly than S&P expected, and S&P believes the company can maintain improved credit measures of less than 4x adjusted debt to EBITDA and more than 15% funds from operations to adjusted debt," said Standard & Poor's credit analyst Dan Picciotto. Alternatively, S&P could take a negative rating action if a prolonged downturn or poor execution hurts operating performance and causes covenants to again be a concern. "For instance, if the company does not make further meaningful debt repayments and EBITDA does not improve over the course of the next 12 months, S&P would expect adjusted debt to EBITDA to remain at more than 6x, which could result in a negative rating action," he continued. OSAGE EXPLORATION: Posts $340,000 Net Loss in Qtr. Ended June 30 ---------------------------------------------------------------- Osage Exploration and Development, Inc., posted a net loss of $339,963 for three months ended June 30, 2009, compared with a net loss of $840,211 for the same period in 2008. For six months ended June 30, 2009, the company posted a net loss of $2,067,294 compared with a net loss of $2,131,108 for the same period in 2008. June 30, 2009, the Company's balance sheet showed total assets of $3,224,001, total liabilities of $264,305 and stockholders' equity of $2,959,696. The Company said that its ability to continue as a going concern is in substantial doubt and is dependent upon achieving a profitable level of operations and obtaining additional financing. The Company incurred significant losses and negative cash flow in the last three years well as the six months ended June 30, 2009, and has an accumulated deficit of $8,223,010 at June 30, 2009, and $6,155,716 at Dec. 31, 2008. Substantial portions of the losses are attributable to asset impairment charges, stock based compensation expense, professional fees and interest expense. Management of the Company has undertaken steps to improve and sustain its operations for the next twelve months and beyond. The steps include (a) increasing its current production, (b) controlling overhead and expenses and (c) raising additional capital and obtaining financing. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?41c2 Osage Exploration & Development, Inc. is an oil and natural gas exploration and production company with proved reserves and existing production in the country of Colombia and the state of Oklahoma. The Company focuses on country of Colombia. PALISADES MEDICAL: Moody's Affirms 'Ba2' Rating on $40.1 Mil. Debt ------------------------------------------------------------------ Moody's Investors Service has affirmed Palisades Medical Center's Ba2 bond rating. The outlook remains negative. The rating applies to $40.1 million of rated debt listed below. The negative outlook reflects Moody's concern with pressures on liquidity due to the defined benefit pension plan as well as the ability of the organization to stabilize inpatient volumes that are declining. Legal Security: Gross receipts pledge of the obligated group, comprised of Palisades Medical Center (PMC) and the Harborage (Palisades General Care, Inc.), a long term care provider on its campus. A mortgage of PMC and the Harborage is also provided as bondholder security. Interest Rate Derivatives: None Strengths * Improvement in operating performance in FY 2008 with an operating deficit of $448 thousand (-0.1% operating margin) and operating cash flow of $7.8 million (5.3% operating cash flow margin) compared to an operating deficit of $5.7 million (-3.9% operating margin) and operating cash flow of $3.0 million (2.1% operating cash flow ) in FY 2007 * Reduction in Medicare length of stay (LOS) due to reorganization of its case managers and social workers from 6.7 days to 6.1 days from FY 2007 through FY 2008 * Harborage, the nursing home located adjacent to PMC, continues to be profitable and offsets annual operating losses incurred at the hospital. * Successful negotiations with commercial payors included double digit rate increases from two of its largest commercial payors * Successful negotiations with union which included changes to the defined benefit pension plan and more modest wage increases Challenges * Pension funding requirements will continue to stress balance sheet indicators in the near term despite significant changes made to the plan including a hard freeze in benefit obligations and changes made to the benefit formula * Decline in unrestricted cash balances at FYE 2008 to $26.7 million (68.6 days cash on hand) from $33.0 million (83.5 days cash on hand) at FYE 2007 which weakened cash to debt ratio to 58.9% at FYE 2008 from 73.0% at FYE 2007 * Continued decline in inpatient admissions in FY 2008 which declined to 9,306 admissions from 9,766 admissions in FY 2007 and has declined slightly through six months of FY 2009 to 4,792 admissions from 4,801 through the same period last year * Payer mix is skewed toward governmental (56% Medicare and 14% Medicaid) and self pay, limiting opportunities for cost shifting. Recent Developments/Results After three consecutive years of material operating deficits, Palisades Medical Center reported near break even operating performance in fiscal year 2008. PMC reported an operating deficits of $448 thousand (-0.3% operating margin) and operating cash flow margin of $7.8 million (5.3% operating cash flow margin) in FY 2008 compared to an operating deficit of $5.7 million (-3.9% operating margin) and operating cash flow of $3.0 million (2.1% operating cash flow margin) in FY 2007. Despite a 4.7% decline in inpatient admissions to 9,306 admissions in FY 2008, revenues grew 1.7% driven in part, by initiatives to improve coding which led to an increase in Medicare CMI to 1.31 from 1.21 and a designation by the New Jersey Department of Health as a Tier 1 essential hospital which qualified PMC for an increase of $1 million in charity care funding. The bulk of the improvement in performance in FY 2008 was driven by various expense reduction initiatives which led to a 1.7% decline in expenses which included a reduction of 24 FTEs, increased monitoring of supplies expense, increased collection cash collection efforts, and initiatives to reduce length of stay which has declined to 4.7 days in FY 2008 from 5.4 days in FY 2007. As a result of the improved operations, debt coverage levels improved in FY 2008 with debt to cash flow declining to 6.8 times from 17.8 times in FY 2007 and MADS coverage increasing to 2.11 times from 1.12 times. Through the first half of FY 2009, operations have continued to improve with an operating income of $1.4 million (1.8% operating margin) and operating cash flow of $5.4 million (7.0% operating cash flow margin) compared to an operating income of $591 thousand (0.8% operating margin) and operating cash flow of $4.9 million (6.5% operating cash flow margin) for the comparable 2008 period. The continued positive performance through the first half of FY 2009 was driven by the addition of 54 physicians since FY 2008 which is starting to yield dividends and led to improved surgical volumes which increased to 3,054 surgeries through June 30, 2008 from 2,659 surgeries through the same period last year and continued expense reduction initiatives including a change in purchasing to yield supply savings ($733 thousand in annualized savings) and an additional reduction of 17 FTEs. For the remainder of FY 2009, management expects additional growth in revenues from rate increases from its commercial payors ($2.0 million annualized revenue impact) including double digit rate increases from its two of its largest commercial payors. With the above mentioned revenue growth and expense reduction initiatives, management expects the medical center to at least break even by year end. While Moody's note the improvement to date over the comparable period, Moody's also note that the favorable six-month results were reversed during the second half the fiscal 2008 and so are hesitant to project the current year to date results forward. PMC's unrestricted cash and investment position decreased to $26.7 million (68.6 days cash on hand) at fiscal year end (FYE) 2008 from 33.0 million (83.5 days cash on hand) at FYE 2007. The decrease in cash was largely due to investment losses (60% invested in equities) and a $6.6 million contribution to the defined benefit pension plan. As of June 30, 2009, PMC's cash balance has increased to $27.8 million (69.3 days cash on hand). Despite the improvement in operations, PMC's increased pension expense and contribution to the plan will mitigate any improvement in operations and growth in liquidity. Despite a soft freeze in the pension plan in FY 2006, pension expense increased materially (66% increase) in FY 2008 and is expected to increase another 39% in FY 2009. As a result, management and the union agreed that all benefits earned through December 31, 2009 will be frozen and compensation will not be inflated from December 31, 2009 through retirement. In addition, there will be a pension accrual moratorium for 1. 5 years and the pension benefit formula was changed for benefits earned after December 31, 2009, which will yield a reduction in pension expense of $3.8 million and a reduction in pension funding of $2.8 million in FY 2010. In addition to successfully negotiating changes to the pension that will decrease pension expense, management also negotiated smaller wage increases with the union to be made periodically through March 2011. Outlook The negative outlook reflects Moody's concern with pressures on liquidity due to the defined benefit pension plan as well as the ability of organization to stabilize inpatient volumes given the competitive service area. What could change the rating -- UP Significant improvement in liquidity measures and continued trend of profitable operating performance What could change the rating -- DOWN Additional debt, significant reduction in cash, continued decline in operating performance, continued decline in patient volumes, downturn in performance at the Harborage. Key Indicators Assumptions & Adjustments: -- Based on financial statements for Palisades Medical Center, Inc. and Palisades General Care, Inc. -- First number reflects audit year ended December, 31, 2007 -- Second number reflects audit year ended December, 31, 2008 -- Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 9,766; 9,306 * Total operating revenues: $144.9 million; $147.3 million * Moody's-adjusted net revenue available for debt service: $5.0 million; $9.4million * Total debt outstanding: $45.2 million; $46.1 million * Maximum annual debt service (MADS): $4.5 million; $4.5 million * Moody's-adjusted MADS Coverage with normalized investment income: 1.12 times; 2.11 times * Debt-to-cash flow: 17.8 times; 6.8 times * Days cash on hand: 83.5 days; 68.6 days * Cash-to-debt: 73.0%; 57.9% * Operating margin: -3.9%; -0.1% * Operating cash flow margin: 2.1%; 5.3% Outstanding Bonds (as of December 31, 2008): -- Series 1999: $11.5 million outstanding; Ba2 -- Series 2002: $28.6 million outstanding; Ba2 The last rating action was on November 4, 2008, when the rating of Palisades Medical Center was downgraded to Ba2 from Ba1 and the outlook was revised to negative from stable. PENNSYLVANIA MUNICIPALITIES: State Considers Takeover of Pensions ----------------------------------------------------------------- According to Bloomberg's Carla Main, the state of Pennsylvania is considering a state takeover of poorly funded local pension systems in Pittsburgh and about 30 other communities. Under the plan, municipalities with less than half the assets needed to cover their pension obligations would turn over the retirement plans. The state would set up a new program limiting benefits for current employees and imposing less generous provisions on new hires, James McAneny, executive director of the Pennsylvania Public Employee Retirement Commission, told a Senate committee Aug. 12. Without action, "we're going to have a lot of municipalities defaulting on their payments," Mr. McAneny said. Legislators became concerned in July that requirements under current law to cover investment losses will force local governments to double or triple their pension payments next year, which could bankrupt communities, according to Amy Sturges, director of government affairs for the Pennsylvania League of Cities and Municipalities, Bloomberg reports. The Pennsylvania Municipal Retirement System, Bloomberg relates, would operate the new program. Local officials would lose the power to set benefits for employees in these plans. POLAROID CORP: Wants to Sell Foreign Unit Stock to Frontier ----------------------------------------------------------- Polaroid Corp., now known as PBE Corp., asks the U.S. Bankruptcy Court for the District of Minnesota for permission to sell its stock in a foreign subsidiary free of all liens and other claims, Bloomberg's Carla Main reported. PBE, according to the report, wants to sell Nippon Polaroid Kabushiki Kaisha to Frontiers Corp., a Japanese company owned by Yuta Ito, its current manager. Nippon Polaroid was one of the assets excluded from PBE's April 16 bankruptcy auction. The Debtor needs to sell the excluded assets "as promptly and efficiently as possible in order to maximize the value of the bankruptcy estate." The Court will consider the proposal at a hearing on August 27. 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. Polaroid has obtained Court approval to liquidate its primary business operations and majority of its assets. PLR Acquistion LLC, a joint venture composed of Hilco Consumer Capital L.P. and Gordon Brothers Brands LLC, acquired all of the assets, including the Polaroid brand and trademarks. The sale closed on May 7, 2009. Debtor Polaroid Corp. was renamed to PBE Corp. following the sale. PHILADELPHIA NEWSPAPERS: Lenders Want to Compete With Insider Plan ------------------------------------------------------------------ Senior lenders of Philadelphia Newspapers LLC ask the Bankruptcy to allow them to submit their own reorganization Plan for the Company. The Company in early August asked the Bankruptcy Court to extend until October 30 its exclusive period to propose a Chapter 11 plan. The Company said the requested extension is precautionary as it is "shortly" filing a plan. However, the steering group of prepetition secured lenders and Citizens Bank of Pennsylvania, in its capacity as administrative agent and collateral agent under a Credit and Guaranty Agreement, dated June 29, 2006, with Citizens, and certain other lender parties in the original principal amount of $295,000,000, want the plan exclusivity terminated, noting that the Company not only has failed to file a plan but also has not engaged in any meaningful negotiations with prepetition lenders. The lenders' proposal is scheduled for hearing on August 28. The Steering Group members are Angelo Gordon & Co., CIT Syndicated Loan Group, Credit Suisse Candlewood Special Situations Master Fund LTD., Eaton Vance Management, GECC, and Wells Fargo Foothill. Philadelphia Newspapers is pursuing a plan of reorganization with their prepetition equity holders. On behalf of Citizens Bank, Andrew J. Flame, Esq., at Drinker Biddle & Reath LLP, says the details of the Insider Plan remained entirely a mystery, but depositions revealed that the Debtors remain beholden to their prepetition equity investors who, together with certain "new" investors, apparently intend to make new equity financing available to the Debtors as part of a plan of reorganization through which those investors would acquire approximately 95% of the equity of the reorganized Debtors. The Insider Plan, according to Mr. Flame, does not reflect any progress having been made by the Debtors in moving these cases towards a consensual-or even a non-consensual confirmable- reorganization; to the contrary, the details of the Insider Plan, revealed only under compulsion of the discovery process, establish that its filing will be nothing but a prelude to additional litigation as the Debtors' prepetition equity investors fight to salvage value from their investment, all at the expense of the Debtors' prepetition secured and unsecured creditors. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, on behalf of the Steering Group, points out the Debtors have failed to engage in any meaningful discussions with the senior lenders concerning issues that will be determinative of the Debtors' future business prospects, including the negotiation of their collective bargaining agreements with approximately 74% of the Debtors' workforce, virtually all of which expire at the end of this month, and the details of the Debtors' financial performance and long-term business plan. Instead, the Debtors have been focused on retaining control and salvaging value for their insiders by pursuing the Insider Plan. The Debtors purport by the Insider Plan to transfer approximately 95% of the equity of the reorganized Debtors to their insiders and to certain new investors, and to emerge from chapter 11 without reinstating any of the Prepetition Lenders' secured debt, leaving the Prepetition Lenders with a nominal recovery consisting of a cash payment and certain real estate. Such a massive transfer of value from the Prepetition Lenders to the Debtors' prepetition equity investors and certain purported "new money" investors is not the basis for a good faith plan of reorganization proposal particularly when devoid of a supporting total-enterprise-value opinion from the Debtors' own investment banker, the Steering Group asserts. Steering Group's Plan The Steering Group and the official committee of unsecured creditors formed in the Chapter 11 cases have met to discuss the terms of a plan of reorganization. The parties continue to be engaged in productive discussions regarding the terms of the Plan. The Steering Group Plan provides the Prepetition Lenders with a combination of (a) restructured term debt of the reorganized company, and (b) equity in the reorganized company. In addition, pursuant to the Plan, the Debtors' unsecured mezzanine debt holders will receive, among other things and subject to certain limitations, (a) a pro-rata share of 4.75% of fully diluted new common equity in the form of shares in the reorganized company, and (b) a pro-rata share of 15.0% of fully diluted common equity in the reorganized company in the form of warrants. Each of the Debtors' unsecured creditors that do not hold mezzanine debt will receive a pro rata share of $500,000 in cash, subject to a maximum 10% recovery on each such allowed unsecured claim. The Plan further provides already-arranged exit financing in the amount of $25 million. Attorneys for Citizens Bank of Pennsylvania, as Agent, on behalf of the Prepetition Secured Lenders, may be reached at: Andrew J. Flame Andrew C. Kassner Andrew J. Flame DRINKER BIDDLE & REATH LLP One Logan Square 18th & Cherry Streets Philadelphia, PA 19103-6996 Telephone: (215) 988-2700 Facsimile: (215) 988-2757 E-mail: andrew.kassner @dbr.com E-mail: andrew.flame@dbr.com Attorneys for the Steering Group of Prepetition Secured Lenders, may be reached at: Fred S. Hodara Abid Qureshi Alexis Freeman AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, NY 10036 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 About Philadelphia Newspapers Philadelphia Newspapers -- http://www.philly.com/-- owns and operate numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its debtor-affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa. Case No. 09-11204). Proskauer Rose LLP is the Debtors' bankruptcy counsel, while Lawrence G. McMichael, Esq., at Dilworth Paxson LLP is the local counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Garden City Group, Inc. serves as claims and notice agent. Philadelphia Newspapers listed assets and debts of $100 million to $500 million in its bankruptcy petition. PUNTO VERDE: S&P Downgrades Rating on $40 Mil. Notes to 'B' ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Punto Verde Grantor Trust 2006-1's $40 million secured tax-exempt class A notes to 'B' from 'BB'. At the same time, S&P removed the rating from CreditWatch with negative implications, where it was placed on July 24, 2009. The rating on the class A notes is dependent on the lower of the rating on the two underlying securities: (i) Morgan Stanley ACES SPC's 6.92% notes series 2006-19 due Aug. 2, 2021 ('B'); and (ii) Fannie Mae's $6.47 million interest strip due May 15, 2021. The interest strip is an interest payment that has been stripped from Fannie Mae's $4.25 billion global notes due May 15, 2029 ('AAA'). The rating action reflects the Aug. 7, 2009, lowering of S&P's rating on Morgan Stanley ACES SPC's 6.92% notes series 2006-19 to 'B' from 'BB' and its removal from CreditWatch negative, where it was placed on July 20, 2009. RAINBOWS UNITED: Can Initially Hire Kere Noel as Accountant ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas authorized, on an interim basis, Rainbows United, Inc. to employ Kere Noel, CPA as its accountant. Headquartered in Wichita, Kansas, Rainbows United, Inc. -- http://www.rainbowsunited.org/-- is a Wichita nonprofit agency that serves children with special needs and their families. Rainbows United serves more than 2,600 children aged birth through 5, including more than 2,300 with special needs. The organization, which has 435 full- and part- time employees, serves primarily Sedgwick and Butler counties. Rainbows United filed for Chapter 11 bankruptcy protection on July 30, 2009 (Bankr. D. Kan. Case No. 09-12457). Edward J. Nazar, Esq., at Redmond & Nazar, L.L.P., assists the Company in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. RAINBOWS UNITED: Can Initially Hire Redmond & Nazar as Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Kansas authorized, on an interim basis, Rainbows United, Inc., to employ the law firm of Redmond & Nazar, L.L.P. as its insolvency counsel. Redmond & Nazar is expected to: a) advise the Debtor of its rights, powers and duties as a debtor-in-possession, including those with respect to the continued operation and management of its business and property; b) advise the Debtor concerning and assisting in the negotiation and documentation of financing agreements, cash collateral orders and related transactions; c) investigate into the nature and validity of liens asserted against the property of the Debtor, and advise the Debtor concerning the enforceability of said liens; d) investigate and advise the Debtor concerning and taking action as may be necessary to collect income and assets in accordance with applicable law, and recover property for the benefit of the Debtor's estate; e) prepare on behalf of the Debtor applications, motions, pleadings, orders, notices, schedules and other documents as may be necessary and appropriate, and reviewing the financial and other reports to be filed herein; f) advise the Debtor concerning and preparing responses to applications, motions, pleadings, notices and other documents which may be filed and served herein; g) counsel the Debtor in connection with the formulation, negotiation and promulgation of plan or plans of reorganization and related documents; and, h) perform other legal services for and on behalf of the Debtor as may be necessary or appropriate in the administration of the case. The hourly rates of Redmond & Nazar's personnel are: Edward J. Nazar $275 Martin R. Ufford $210 W. Thomas Gilman $210 Nicholas R. Grillot $150 Aaron K. Johnstun $140 Redmond & Nazar received a $30,000 general retainer for services to be rendered in connection with the Chapter 11 case. To the best of the Debtor's knowledge, Redmond & Nazar is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Redmond & Nazar, L.L.P. 245 North Waco, Suite 402 Wichita, KS 67202 Tel: (316) 262-8361 Fax: (316) 263-0610 About Rainbows United, Inc. Headquartered in Wichita, Kansas, Rainbows United, Inc. -- http://www.rainbowsunited.org/-- is a Wichita nonprofit agency that serves children with special needs and their families. Rainbows United serves more than 2,600 children aged birth through 5, including more than 2,300 with special needs. The organization, which has 435 full- and part- time employees, serves primarily Sedgwick and Butler counties. Rainbows United filed for Chapter 11 bankruptcy protection on July 30, 2009 (Bankr. D. Kan. Case No. 09-12457.) In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. RAINBOWS UNITED: Section 341(a) Meeting Scheduled for September 4 ----------------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of creditors in Rainbows United, Inc.'s Chapter 11 case on Sept. 4, 2009, at 9:00 a.m. The meeting will be held at 167 U.S. Courthouse, 401 North Market Room 150, Wichita, Kansas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Wichita, Kansas, Rainbows United, Inc. -- http://www.rainbowsunited.org/-- is a Wichita nonprofit agency that serves children with special needs and their families. Rainbows United serves more than 2,600 children aged birth through 5, including more than 2,300 with special needs. The organization, which has 435 full- and part- time employees, serves primarily Sedgwick and Butler counties. Rainbows United filed for Chapter 11 bankruptcy protection on July 30, 2009 (Bankr. D. Kan. Case No. 09-12457). Edward J. Nazar, Esq., at Redmond & Nazar, L.L.P., assists the Company in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. RAINBOWS UNITED: Taps Foulston Siefkin on Employment & Tax Matters ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Kansas authorized, on an interim basis, Rainbows United, Inc., to employ Foulston Siefkin LLP as its special counsel. Foulston Siefkin is expected to represent the Debtor in the employment law matters, general corporate business, and negotiations with the Internal revenue Service for unpaid taxes. Foulston Siefkin received a $20,000 retainer, $16,011 was applied to prepetition activity that occurred within 10 days prior to the petition date. The balance of $3,989 will be retained for the postpetition period. To the best of the Debtors' knowledge, Foulston Siefkin is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Foulston Siefkin LLP 1551 N. Waterfront Parkway, Suite 100 Wichita, KS 67206-4466 Tel: (800) 267-6371 Fax: (316) 267-6345 About Rainbows United, Inc. Headquartered in Wichita, Kansas, Rainbows United, Inc. -- http://www.rainbowsunited.org/-- is a Wichita nonprofit agency that serves children with special needs and their families. Rainbows United serves more than 2,600 children aged birth through 5, including more than 2,300 with special needs. The organization, which has 435 full- and part- time employees, serves primarily Sedgwick and Butler counties. Rainbows United filed for Chapter 11 bankruptcy protection on July 30, 2009 (Bankr. D. Kan. Case No. 09-12457). Edward J. Nazar, Esq., at Redmond & Nazar, L.L.P., assists the Company in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. RAN-DEL LLC: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Ran-Del, LLC 115 W. Yakima Ave. Yakima, WA 98902 Bankruptcy Case No.: 09-04525 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Eastern District Of Washington (Spokane/Yakima) Judge: Frank L. Kurtz Debtor's Counsel: Robert J. Reynolds, Esq. 514 N 1st Street, Suite A Yakima, WA 98901 Tel: (509) 453-0313 Fax: (509) 453-0314 Email: reynoldsrobertrj@qwestoffice.net Total Assets: $1,500,000 Total Debts: $1,089,848 The Company says it does not have unsecured creditors who are non insiders when they filed their petition. The petition was signed by Del Matthews. RED BRIDGE GREENS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Red Bridge Greens EPC, LLC 411 Nichols Road, Suite 225 Kansas City, MO 64112 Bankruptcy Case No.: 09-43929 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Western District of Missouri (Kansas City) Debtor's Counsel: Alan Jeffrey Misler, Esq. McDowell Rice Smith & Buchanan, PC 605 W 47th Street #350 Kansas City, MO 64112-1905 Tel: (816) 753-5400 Fax: (816) 753-9996 Email: jmisler@mcdowellrice.com Jonathan A. Margolies, Esq. McDowell Rice Smith & Buchanan, PC 605 W 47th Street #350 Kansas City, MO 64112-1905 Tel: (816) 753-5400 Fax: (816) 753-9996 Email: jmisler@mcdowellrice.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mowb09-43929.pdf The petition was signed by Terence P. O'Leary, member of the Company. RH DONNELLEY: Files Schedules of Assets & Liabilities ----------------------------------------------------- A. Real Property - B. Personal Property B.1 Cash on hand - B.2 Financial accounts Deutsche Bank $6,414,676 Bank of America (17,902) B.4 Household goods 3,246,071 B.9 Interests in insurance 3,119,278 See http://bankrupt.com/misc/RHDCorpInsur.pdf B.13 Stocks and Interests - See http://bankrupt.com/misc/RHDCorpStokInts.pdf B.16 Accounts Receivable Intercompany accounts Dex Media, Inc. 26,691,059 R.H. Donnelley, Inc. 17,580,232 Business.Com, Inc. 16,110,813 B.18 Other Liquidated Debts Intercompany note receivable 300,000,000 Misc. receivable 515,871 B.22 Intellectual Property - See http://bankrupt.com/misc/RHDCorpPatents.pdf B.27 Aircraft Net Jet - Hawker 800XP 1,156,458 Net Jet (Excel) 448,385 B.28 Office Equipment 1,883,588 B.35 Other Personal Property Prepaid rent 237,460 Prepayment Call Genie USA, Inc. 477,500 Advantage Human Resourcing 200,000 Werner Value Added Services 100,000 Prudential Relocation 64,968 Advantage IQ 35,000 Distribution Data, Inc. 25,000 Carlson Wagonlit Travel 3,500 TOTAL SCHEDULED ASSETS $378,291,960 ===================================================== C. Property Claimed as Exempt Not applicable D. Secured Claims Deutsche Bank Trust Company Americas $1,434,684,107 E. Unsecured Priority Claims Unknown See http://bankrupt.com/misc/RHDCorpSkedE.pdf F. Unsecured Non-priority Claims 3,221,438,711 TOTAL SCHEDULED LIABILITIES $4,656,122,818 ====================================================== About R.H. Donnelley Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc., and Local Launch, Inc., are the company's only direct wholly owned subsidiaries. Dex Media East, LLC, is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RH DONNELLEY: Paid $46 Mil. to Creditors 90 Days Prior to Filing ---------------------------------------------------------------- Mark W. Hianik, R.H. Donnelley Corp.'s senior vice-president, general counsel, and corporate secretary, relates that the Debtor earned income other than operation of its business: Period Amount Source ------ ------ ------ 01/01/09 to 05/28/09 $11,055,766 Interest income 01/01/08 to 12/31/08 26,891,331 Interest income 01/01/07 to 12/31/07 7,812,308 Interest income With regard to debts that are not primary consumer debts, the Debtor paid $46,076,675 to various creditors within 90 days before it filed for bankruptcy protection. A list of the payments is available for free at: http://bankrupt.com/misc/RHDCS3b.pdf Within one year before the Petition Date, the Debtors paid $844,202 for the benefit of creditors who are or were insiders. A list of the payments is available for free at: http://bankrupt.com/misc/RHDCS3.pdf Mr. Hianik tells the Court that the Debtor was a party to seven lawsuits in various courts. Two of the cases are still active. A list of the cases is available for free at: http://bankrupt.com/misc/RHDCS4a.pdf Within one year before the Petition Date, the Debtor gave gifts aggregating $54,424 to various charitable institutions, like Triangle United Way, N.C. State Foundation, Haven of Rest Rescue Mission, Sheltering Hands, Colorado Choir and Chorus Organization, First Born Community Development Center, Hampton University Alumni - Raleigh Chapter, Hampton University, and the Porter Family. With regard to consultation concerning debt consolidation, relief under the bankruptcy law or preparation of a petition within one year before the Petition Date, the Debtor disbursed an aggregate of $14,736,658 to certain professionals. A list of the professionals and their payments is available for free at: http://bankrupt.com/misc/RHDCS9.pdf Within one year before the Petition Date, the Debtor closed an account in Bank of America. KPMG LLP has audited the Debtors' books from March 31, 2006, to the present. Within two years before the Petition Date, the Debtors' books were held by: Officer Title Period ------- ----- ------ Steven Blondy Chief Financial Mar. 2002 - present Officer Sylvester Johnson Controller Apr. 2009 - Present Robert Bush Controller Nov. 2008 - Apr. 2009 Barry Sauder Controller Jan. 2008 - Nov. 2008 Karen Palczuk Interim Jun. 2007 - Jan. 2008 Controller About R.H. Donnelley Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc., and Local Launch, Inc., are the company's only direct wholly owned subsidiaries. Dex Media East, LLC, is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RH DONNELLEY: Proposes to Collect Judgements From Customers ----------------------------------------------------------- R.H. Donnelley Corp. and its affiliates seek the Court's authority to pursue collection activities, including prosecuting lawsuits, and enforcing and collecting judgments against parties owing money to the Debtors. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, relates that there are many customers who fail to honor payment obligations, which prompt the Debtors to do collection activities, including the filing of lawsuits in state courts. He notes that as of the Petition Date, the Debtors were plaintiffs in approximately 800 lawsuits in 70 jurisdictions. Subsequent to the Petition Date, however, some state courts have effectively prevented the Debtors from prosecuting pending lawsuits, and enforcing and collecting upon judgments previously entered in favor of the Debtors, Mr. Conlan tells the Court. He contends that the situation is a result of confusion over the proper application of the automatic stay. While the Debtors disagree with the decision of the state courts that have stayed the Debtors' prosecution of certain suits against Defaulting Customers, rather than incurring the costs and fees involved with appealing multiple state court decisions, the Debtors ask the Court for an order clarifying the Debtors' rights with respect to initiate and prosecute lawsuits during the pendency of their Chapter 11 cases. RH DONNELLEY: Wants to Assume Lone Tree, Colorado Lease ------------------------------------------------------- R.H. Donnelley Corp. and its affiliates seek the Court's authority to assume an unexpired non-residential lease of a facility at 9380 Station Street, in Lone Tree, Colorado, entered into between Debtor Dex Media, Inc., as tenant and Lincoln Station Phase One, as landlord. DMI's obligations under the Real Property Lease are guaranteed by Debtor R.H. Donnelley Corporation. The Real Property Lease, dated October 1, 2008, has an initial term of 11 years, and is currently scheduled to expire on September 30, 2019. DMI remains a party to the Real Property Lease, which remains unexpired and RHD remains obligated as a guarantor of DMI's obligations. The Property is one of the largest facilities the Debtors occupy, consisting of approximately 143,315 square feet of office space. The Property houses approximately 370 of the Debtors' employees who perform numerous functions including sales, sales support, advertising, senior leadership, and administrative support. According to James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, the Debtors endeavored, prior to expiration of the initial period to assume or reject unexpired non-residential property leases, to explore potential cost savings across their portfolio of leased properties. To that end, the Debtors initiated and conducted arm's-length, good faith negotiations with the Landlord regarding the Real Property Lease, which culminated in the parties agreeing to, and executing, a Second Amendment to the Lease. Upon its effectiveness, the Second Amendment will decrease the lease costs under the Real Property Lease by approximately $1.5 million annually, Mr. Conlan relates. He also notes that, the Second Amendment will shorten the term of the Real Property Lease by seven years but will provide for an option to extend the lease at the end of its initial term for an additional three years at prevailing market rates. As of the Petition Date, the Debtors were current on all of their obligations under the Real Property Lease and have timely honored all obligations subsequent to the Petition Date, Mr. Conlan tells the Court. Because the Property is necessary to the Debtors' business operations and because of the significant cost savings to be achieved under the Second Amendment, the Debtors have determined in their business judgment that the Real Property Lease, as amended by the Second Amendment, is beneficial to their reorganization efforts and should be assumed. About R.H. Donnelley Based in Cary, North Carolina, R.H. Donnelley Corp., fka The Dun & Bradstreet Corp. (NYSE: RHD) -- http://www.rhdonnelley.com/-- publishes and distributes print and online directories in the U.S. It offers print directory advertising products, such as yellow pages and white pages directories. R.H. Donnelley Inc., Dex Media, Inc., and Local Launch, Inc., are the company's only direct wholly owned subsidiaries. Dex Media East, LLC, is a publisher of the official yellow pages and white pages directories for Qwest Communications International Inc. (Qwest) in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota, and South Dakota. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC, and Dex Media Inc., filed for Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09- 11833 through 09-11852), after missing a $55 million interest payment on its senior unsecured notes due April 15. James F. Conlan, Esq., Larry J. Nyhan, Esq., Jeffrey C. Steen, Esq., Jeffrey E. Bjork, Esq., and Peter K. Booth, Esq., at Sidley Austin LLP, in Chicago, Illinois represent the Debtors in their restructuring efforts. Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' financial advisor is Deloitte Financial Advisory Services LLP while its investment banker is Lazard Freres & Co. LLC. The Garden City Group, Inc., is claims and noticing agent. As of March 31, 2009, the Company had $929,829,000 in total assets and $1,023,526,000 in total liabilities, resulting in $93,697,000 in total shareholders' deficit. Bankruptcy Creditors' Service, Inc., publishes R.H. Donnelley Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of R.H. Donnelley Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) RICHARD MONAGLE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Richard J. Monagle aka Ricky Monagle dba RJM Development 83 West St. Medford, MA 02155 Bankruptcy Case No.: 09-17724 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: Nina M. Parker, Esq. Parker & Associates 10 Converse Place Winchester, MA 01890 Tel: (781) 729-0005 Fax: (781)729-0187 Email: nparker@ninaparker.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Mr. Monagle. ROTECH HEALTHCARE: Moody's Gives Stable Outlook on 'Caa2' Rating ---------------------------------------------------------------- Moody's Investors Service changed the ratings outlook on Rotech Healthcare, Inc., to stable from negative. At the same time, Moody's affirmed the Caa2 Corporate Family Rating and the Caa2 Probability of Default Rating. The stabilization of the outlook reflects Rotech's ability to offset the impact of the 2009 Medicare reimbursement cuts with changes to the business model, cost cutting initiatives and increased volumes. As such, Moody's believes that Rotech should have adequate liquidity over the next twelve months to maintain operations and service its debt. The Caa2 rating reflects Moody's concerns about the potential for debt impairment and refinancing risk (the first maturity is September 2011). Further, the company operates in an industry which has faced significant Medicare reimbursement cuts in the past and there is continued uncertainty around the impact that healthcare reform could have on oxygen equipment providers. Ratings Affirmed: * Corporate Family Rating, Caa2 * Probability of Default Rating, Caa2 * $300 million face amount senior subordinated notes, due 2012, to Caa3 (LGD5, 79%) from Caa3 (LGD4, 67%) The outlook is stable. Moody's last rating action on Rotech was on September 29, 2006 when Moody's affirmed the CFR and withdrew the bank loan ratings. Rotech'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 of tolerance for risk. These attributes were compared against other issuers both within and outside of Rotech's core industry and Rotech's ratings are believed to be comparable to those other issuers of similar credit risk. Rotech, headquartered in Orlando, Florida, is one of the largest providers of home medical equipment and related products and services in the US, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. Rotech provides equipment and services in 48 states through approximately 450 operating centers located primarily in non-urban markets. For the twelve months ended June 30, 2009 Rotech reported revenue of approximately $496 million. SCO GROUP: Inks Change in Control Agreement with CFO Nielsen ------------------------------------------------------------ The SCO Group, Inc., on August 3, 2009, entered into a Change in Control Agreement with Kenneth R. Nielsen, Chief Financial Officer of the Company. Other than the name of Mr. Nielsen and the address of Mr. Nielsen, the Agreement is substantially identical to the Change in Control Agreements entered into with other executive officers of the Company. Pursuant to the terms of the Agreement, Mr. Nielsen agrees that he will not voluntarily leave the employ of the Company in the event any individual, corporation, partnership, company or other entity takes certain steps to effect a Change in Control of the Company, until the attempt to effect a Change in Control has terminated, or until a Change in Control occurs. If Mr. Nielsen is still employed by the Company when a Change in Control occurs, any stock, stock option or restricted stock granted to Mr. Nielsen by the Company that would have become vested upon continued employment by Mr. Nielsen will immediately vest in full and become exercisable notwithstanding any provision to the contrary of such grant and shall remain exercisable until it expires or terminates in accordance with its terms. Mr. Nielsen will be solely responsible for any taxes that arise or become due pursuant to the acceleration of vesting that occurs pursuant to the Agreement. On July 27, 2009, the U.S. Bankruptcy Court for the District of Delaware held a hearing and took evidence on cross-motions consisting of (a) the Debtors' request to sell property outside the ordinary course of business free and clear of interest and for approval of assumption and assignment of executory contracts and unexpired leases in conjunction with sale; and (b) the requests of Novell, IBM and the Office of the United States Trustee for conversion of Debtors' reorganization under Chapter 11 to a liquidation proceeding under Chapter 7 of the Bankruptcy Code. As reported by the Troubled Company Reporter, the Bankruptcy Court issued its Memorandum Opinion on August 5, 2009, and denied all of the Conversion Motions and the Sale Motion. Instead, the Court opted to appoint a Chapter 11 Trustee, and entered an Order directing the Office of the United States Trustee to do so. Pursuant to the Order, the Office of the United States Trustee will select, and the Bankruptcy Court shall thereafter consider and approve, a Chapter 11 Trustee. Pursuant to the Bankruptcy Code, and subject to the supervision and approval of the Bankruptcy Court, the Chapter 11 Trustee will have, upon appointment, authority over the Debtors' assets and affairs and the future course of the Debtors' litigation against Novell, IBM, et al. A full-text copy of the Memorandum Opinion is available at no charge at http://ResearchArchives.com/t/s?41f0 About SCO Group Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company has office locations in Australia, Austria, Argentina, Brazil, China, Japan, Poland, Russia, the United Kingdom, among others. The Company and its affiliate, SCO Operations Inc., filed for Chapter 11 protection on September 14, 2007 (Bankr. D. Del. Lead Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur Spector, Esq., at Berger Singerman P.A., represent the Debtors in their restructuring efforts. James O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the Debtors' Delaware and conflicts counsels. Epiq Bankruptcy Solutions LLC, acts as the Debtors' claims and noticing agent. The United States Trustee failed to form an Official Committee of Unsecured Creditors in the Debtors' cases due to insufficient response from creditors. As of January 31, 2009, the Company had $8.78 million in total assets and $13.2 million in total liabilities, resulting in $4.51 million in stockholders' deficit. SEAQUEST DIVING: Limited Partner's Claim is Subordinated -------------------------------------------------------- WestLaw reports that a claim asserted by a former limited partner in a Chapter 11 debtor-partnership, seeking to recover sums awarded by a state court pursuant to settlement resolving a dispute between the limited partner and the holders of the other partnership interests, had to be subordinated to the claims of unsecured creditors as one "arising from the rescission of a purchase or sale of a security of the debtor." The settlement effected a rescission of the prior limited partnership agreement between the parties by requiring the return of assets contributed by the limited partner and compensation for his other contributions to the limited partnership, such as a place to conduct partnership business. To determine whether the proof of claim filed by the former limited partner was subject to mandatory subordination, the court could look behind the state court judgment to determine whether underlying claim on which it was based was one "arising from the rescission of a purchase or sale of a security of the debtor." In re Seaquest Diving LP, --- F.3d ----, 2009 WL 2450680, http://is.gd/2hYti(5th Cir.). SeaQuest Diving, L.P. -- http://seaquestdivinglp.com/-- is a privately held commercial diving services that performs underwater emergency response services, sonar imaging, salvage and abandonment operations, site surveys and debris removal, and underwater inspection and construction services. The Limited Partnership and SeaQuest General Holdings, LLC, filed chapter 11 petitions (Bankr. S.D. Tex. Case Nos. 07-32068 and 07-32070) on March 29, 2007, estimating their assets and debts in the range of $1 million to $100 million. Rodney L. Poirot, Esq., at Cavazos Hendricks & Poirot, P.C., in Dallas, represents the debtors. In their initial papers delivered to the bankruptcy court, the Debtors listed S&J Diving, Inc., and Stan Jones as their largest unsecured creditor, owed $2,742,015. The Fifth Circuit's ruling says this claim won't be paid unless and until all general unsecured creditors' claims are paid in full. SEITEL INC: Posts $28.0 Million Net Loss for Second Quarter 2009 ---------------------------------------------------------------- Seitel, Inc., posted a net loss of $28.0 million for the second quarter ended June 30, 2009, from last year's net loss of $20.4 million. The increase in the net loss resulted from the $22.3 million decrease in revenue, offset in part by an $8.1 million reduction in data amortization expense, a $3.5 million improvement in operating expenses, and $1.6 million of income tax benefits as compared to a tax expense of $900,000 in 2008. For the six month period, the net loss of $50.5 million increased as compared to $38.8 million for the equivalent period of 2008, reflecting the Company's lower revenue. As of June 30, 2009, the Company had $564.3 million in total assets and $489.2 million in total liabilities. The Company had $201.7 million in retained deficit as of June 30, 2009. The Company said as of June 30, 2009, it is in compliance with all of the covenants of its $25.0 million U.S. revolving credit facility except the cash margin covenant. Revenue Drops 50% The Company said revenue of $22.4 million for the second quarter ended June 30, 2009, decreased by $22.3 million or 50% as compared to the second quarter of 2008, primarily driven by a $17.2 million or 57% retrenchment in total resales from the Company's library, that reflected a $25.4 million decrease in cash resales and $2.4 million lower selections from library cards, offset by lower deferred revenue. Acquisition revenue fell by 33% or $4.2 million with the reduction split evenly between the U.S. and Canada. The reduction reflected the completion of Seitel's programs in Canada and cuts to data creation plans in the U.S. Solutions revenue at $1.1 million was 44% lower than in 2008. Revenue for the six month period was $57.2 million as compared to $92.1 million in 2008. The 38% drop in revenue resulted primarily from $29.2 million lower total library resales and a $4.6 million decrease in acquisition revenue. Solutions revenue of $2.5 million was $1.2 million lower than in 2008. Cash resales for the quarter were $7.2 million as compared to $32.7 million for the second quarter of last year. The 78% drop in cash resales reflected decreases throughout all of the Company's geographical areas, with both large and small clients curtailing their expenditures on data from the Company's library. The absence of large licensing deals and the low number of library card contracts continued to hurt the Company's licensing revenue. Cash resales fell as compared to 2008 by 79% and 74% in the U.S. and Canada, respectively. For the six month period, Seitel's cash resales were $17.3 million, down $35.2 million or 67% as compared to 2008. Cash EBITDA, defined as cash resales and solutions revenue less cash operating expenses (excluding various non-recurring items), was $3.3 million for the second quarter of 2009, as compared to $26.3 million in the same quarter of 2008. This $23.0 million reduction was driven by a $26.3 million reduction in cash revenue offset by a $3.3 million decrease in cash operating expenses to $5.0 million for the quarter. The reduction in cash operating expenses reflected primarily a drop in cash compensation and other personnel costs of $2.5 million. For the first half of 2009, Cash EBITDA was $8.5 million as compared to $39.1 million in 2008, as a $36.4 million decrease in cash revenue for the period was offset by a $5.8 million reduction in recurring cash operating expenses. "We believe that the drop in our cash resales has been driven by weak prices for natural gas, further exacerbated by the economic uncertainty and tough credit markets that have triggered a sharp reduction in exploration spending in the U.S. and Canada," commented Rob Monson, president and chief executive officer. "Despite a 40% annual reduction in land drilling activity, we believe that production of natural gas has only fallen marginally and continues to exceed current demand. We have seen no indications at this point that our industry environment will improve materially in the near term or that our resales will increase. "Nonetheless, we expect that lower drilling activity will have an impact on natural gas production in the medium term, and that drilling and production costs in North America will continue to fall," stated Mr. Monson. "The resulting tighter natural gas storage and improved returns for our customers should stimulate drilling activity and improve our licensing revenue to levels more in line with historical results." Depreciation and amortization expense for the second quarter of 2009 was $36.1 million compared to $44.3 million for the same period in 2008. For the second quarter of 2009, 19% of total resales were for fully amortized data, in line with the same quarter of 2008. Selling, general and administrative expenses were $6.4 million for the second quarter of 2009 as compared to $9.8 million in the second quarter of last year. The sharp decrease in expenses was primarily driven by salary and workforce reductions as well as by a significant decline in the amortization of option expenses related to employee incentives. The decreases were offset by $400,000 of non-recurring expenses related to the workforce reductions. The Company's cash balances at the end of the second quarter were $28.7 million. Cash consumption during the second quarter was $13.5 million. Cash EBITDA of $3.3 million was offset by net cash capital expenditures for the quarter of $4.8 million and higher working capital requirements of $11.2 million. The cash consumption from working capital accounts essentially reflected significant progress on new surveys for which underwriting revenue was already collected in prior quarters. Cash balances on August 11, 2009, were $28.7 million. Gross capital expenditures for the second quarter of 2009 were $10.5 million, as compared to $22.5 million for the prior year. Acquisition capital expenditures decreased by $6.1 million reflecting reductions to our investment plan for 2009. Traded data fell by $5.1 million as compared to last year when the Company had significant trades associated with the shooting of new surveys. For the six month period, gross capital expenditures decreased to $34.5 million in 2009 from $59.4 million last year, a 42% decline. Acquisition capital expenditures fell by $11.7 million or 27% with both Canada and the U.S. contributing. Underwriting revenue for the six month period reached 82% of gross investment as compared to 71% in 2008. Data trades were $13.1 million lower than last year. Net cash capex for the period was $10.0 million as compared to $20.3 million in 2008. Covenant Default As a result of its non-compliance with the covenant, an event of default has occurred which prohibits the Company from borrowing under the credit facility without the lender's consent. The event of default has not been waived and is continuing. At June 30, there was no outstanding balance under the facility and there was $21.6 million of borrowing base capacity which is not accessible to the Company due to the event of default. The facility expires on February 14, 2010. The borrowing base is determined from time to time based on the lesser of: -- $25.0 million, -- 75% of the Company's trailing 12 months' U.S. cash margin (defined as cash resales and Solutions revenue, plus gain on sale of seismic data, less cash cost of sales and cash SG&A expenses, before depreciation and amortization expense), or -- the sum of (1) 85% of eligible U.S. short term accounts (defined as accounts that are not long term accounts and within 90 days of invoice date), plus (2) the lesser of (a) 50% of eligible U.S. long term accounts (defined as accounts with contracts for periods of performance from one month to 18 months, where the account debtor makes payments over the term of the contract) and (b) $7.5 million, plus (3) $15.0 million. Full Year 2009 Outlook The Company's forecast net cash capital expenditures for the full year 2009 have decreased to $20.0 million from $21.5 million, as the Company has continued to work with customers and suppliers to reduce the cost of capital expenditures for 2009. The Company maintains its focus on growth in areas that have generated significant cash returns over the past several quarters, including the Horn River basin in British Columbia and the Haynesville shale in East Texas. It has currently recovered over 95% of the costs related to these surveys. 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?41d9 About Seitel Inc. Seitel Inc. provides seismic data to the oil and gas industry in North America. Seitel's data products and services are critical for the exploration for, and development and management of, oil and gas reserves by oil and gas companies. Seitel has ownership in an extensive library of proprietary onshore and offshore seismic data that it has accumulated since 1982 and that it licenses to a wide range of oil and gas companies. Seitel believes that its library of onshore seismic data is one of the largest available for licensing in the United States and Canada. Seitel's seismic data library includes both onshore and offshore 3D and 2D data. Seitel has ownership in over 41,000 square miles of 3D and roughly 1.1 million linear miles of 2D seismic data concentrated in the major active North American oil and gas producing regions. Seitel serves a market which includes over 1,600 companies in the oil and gas industry. * * * In July 2009, Moody's Investors Service downgraded Seitel's Corporate Family Rating to Caa3 from B3, its Probability of Default Rating to Caa3 from B3, its senior unsecured notes rating to Caa3 (LGD 4, 54%) from B3 (LGD 4, 56%), and its Speculative Liquidity Rating to SGL-4 from SGL-3. The rating outlook is negative. The downgrade reflects the increased pressure on Seitel's liquidity and earnings. SIRIUS XM: Moody's Assigns 'Caa2' Rating on $250 Mil. Senior Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Caa2 rating to Sirius XM Radio Inc.'s proposed $250 million senior secured notes due 2015. Sirius XM plans to utilize the proceeds from the offering to repay the $250 million outstanding under Sirius XM's term loan agreement with Liberty Media Corporation. Moody's believes the offering modestly improves the intermediate-term liquidity profile by reducing interest expense by approximately $10 million per year, pushing out the final maturity from 2012 to 2015, and eliminating quarterly amortization that would have begun in 2010. The notes are secured by a pledge of substantially all of Sirius XM's assets and are guaranteed by all of Sirius XM's wholly-owned domestic subsidiaries, including its FCC license subsidiary; notably, however, the liens on Sirius XM's senior secured credit facility will have priority over the liens securing the notes. Sirius XM's Ca Corporate Family Rating and Caa3 Probability of Default Rating are not affected due to ongoing concerns regarding the long-term cash sustainability of the business model within the existing capital structure. Loss given default assessments were updated to reflect the current debt mix. The rating outlook remains positive. Assignments: Issuer: Sirius XM Radio Inc. -- Senior Secured Bonds, Assigned a Caa2, LGD3 - 34% Upgrades: Issuer: Sirius XM Radio Inc. -- Senior Secured Bank Credit Facility, Upgraded to B3, LGD2 - 10% from Caa1, LGD2 - 26% Downgrades: Issuer: XM Satellite Radio Inc. -- Senior Secured Bonds, Downgraded to Caa2, LGD3 - 34% from Caa1 LGD2 - 26% Loss Given Default Updates Issuer: Sirius XM Radio Inc. -- Senior Unsecured Bonds, Changed to LGD5 - 77% from LGD5 - 76% (no change to Ca rating) Issuer: XM Satellite Radio Inc. -- Senior Unsecured Bonds, Changed to LGD5 - 77% from LGD5 - 76% (no change to Ca rating) The positive rating outlook is bolstered by the fact that the company has addressed its near term maturities, which provides additional time to combine the XM and Sirius operations and realize the cost saving benefits from the July 2008 merger between Sirius and XM Satellite Radio Holdings Inc. The company's earnings and cash flow performance has improved since the merger, including positive EBITDA generation for three consecutive quarters, but Moody's nevertheless remains concerned that recent royalty surcharges will negatively affect subscriber churn, which along with slowing new customer additions could challenge the company's ability to sustain positive free cash flow. The rating for Sirius XM's $246 million senior secured term loan was upgraded to B3 from Caa1 to reflect the payment priority of the lien over the liens securing the proposed notes. The rating for XM Satellite Radio Inc.'s $525 million of 2013 notes was lowered to Caa2 from Caa1 to reflect the recent reduction in junior debt when the company repurchased $179 million of 10% convertible notes due December 2009, and the expected retirement of the remaining $48 million of 10% convertible notes at maturity using existing cash. The last rating action was on June 23, 2009 when Moody's upgraded the company's speculative grade liquidity rating to SGL-3 from SGL-4 and assigned a Caa1 rating to XM Satellite's 2013 notes. Sirius XM's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Sirius XM's core industry and believes Sirius XM's ratings are comparable to those of other issuers with similar credit risk. Sirius XM Radio Inc., headquartered in New York, NY, is a provider of subscription-based satellite radio services. Annual revenue is approximately $2.5 billion. SIRIUS XM: S&P Raises Corporate Credit Rating to 'B-' From 'CCC+' ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Sirius XM Radio Inc. and XM Satellite Radio Holdings Inc. (which S&P analyze on a consolidated basis) to 'B-' from 'CCC+'. The rating outlook is stable. In addition, S&P revised the recovery rating on Sirius XM's senior unsecured and subordinated debt to '5', indicating S&P's expectation of modest (10% to 30%) recovery for debtholders in the event of a payment default, from '6'. S&P raised the issue-level rating on this debt to 'CCC+' (one notch lower than the 'B-' corporate credit rating on the company) from 'CCC-', in accordance with S&P's notching criteria for a '5' recovery rating. The revision of the recovery rating reflects an increase in S&P's estimate of enterprise value at the time of the simulated default within S&P's recovery analysis. S&P also raised the rest of its issue-level ratings on Sirius XM, XM Satellite Radio Holdings, and XM Satellite Radio Inc. by one notch, in conjunction with the one-notch upgrade of the corporate credit rating. The recovery ratings on these remaining debt issues remain unchanged. At the same time, S&P assigned Sirius XM Radio's proposed $250 million senior secured notes due 2015 S&P's issue-level rating of 'B+' (two notches higher than the 'B-' corporate credit rating). S&P also assigned the notes a recovery rating of '1', indicating S&P's expectation of very high (90% to 100%) recovery for noteholders in the event of a payment default. The notes will be privately placed under Rule 144A. The company plans to use proceeds to refinance the $250 million 15% term loan facility due 2012 provided by Liberty Media Corp. New York City-based satellite radio operator Sirius XM had total debt outstanding of $3.34 billion as of June 30, 2009, pro forma for the July repurchase of $179 million of XM's $227 million secured discount convertible notes due Dec. 1, 2009 with excess cash. "The ratings upgrade reflects S&P's increased comfort with Sirius XM's near-term liquidity following several debt refinancings, and the achievement of positive EBITDA and discretionary cash flow for the last three quarters since the July 2008 acquisition of XM Satellite Radio Holdings Inc.," said Standard & Poor's credit analyst Hal Diamond. The 'B-' rating reflects the company's substantial debt load, dependence on slumping U.S. automotive sales, and modest--albeit increasing--EBITDA and discretionary cash. The operating synergies and cost savings arising from the XM acquisition are modest positives that do not offset these risks. In the first quarter of 2009, Liberty Media Corp. (BB+/Watch Neg/- -) made a $530 million investment in Sirius XM and its subsidiaries in the form of a loan, which will be fully repaid with the proposed issue proceeds and a 40% equity interest. Standard & Poor's attributes no credit support from Liberty Media. SOTHEBY'S CORPORATION: Poor Performance Won't Affect S&P's Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that the recent poor performance and resulting significant deterioration of New York City-based Sotheby's (BB-/Negative/--) operating and credit metrics would have no immediate impact on its rating or outlook. Credit and operating metrics have declined substantially from year-ago levels because of the significant downturn in the art auction market in the second half of 2008, coupled with a weaker year-over-year performance during the first half of 2009. S&P expects Sotheby's metrics and operations to demonstrate some recovery on a trailing 12-month basis in the second half of 2009 as the company laps the weak third and fourth quarters from 2008. However, this is unlikely to take effect in the third quarter because of the limited scheduled auction activity. While S&P recognize that the art auction market is difficult to predict, the company has recently maintained some revenue stability, albeit at lower levels, and S&P anticipates this trend will continue over the near term. Furthermore, the increase in auction commission margins to 20.8% for the quarter ended June 30, 2009 from 14.7% for the prior period in 2008 coupled with the cost savings from restructuring initiatives is likely to result in margins rebounding from the recent dip. Overall, S&P expects leverage likely will end the year at or below 6.5x and that interest coverage will remain under 2.0x. S&P could lower the rating if performance is worse than S&P's already- lowered estimates, with sales declining more than 5% or if margins deteriorate an additional 100 basis points. At that time, leverage would be in the upper-6.0x range. STARFIRE SYSTEMS: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------ Starfire Systems Inc. has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Albany, listing $2.7 million in assets and $3.6 million in debts. Adam Sichko at The Business Review reports that Starfire's creditors include: -- United Step I, a landlord in Troy that sued the Company in state Supreme Court in Rensselaer County. United Step alleged that it is owed $355,000 in rent; -- Albany-Colonie Regional Chamber of Commerce, owed about $100,000; -- The Research Foundation of SUNY, the state university system, owed about $10,000; -- law firm Whiteman Osterman & Hanna LLP, owed about $41,000; and -- Troy Boiler Works Inc., owed about $10,600 The Business Review quoted Starfire's co-CEO, Herb Armstrong, as saying, "We've had to wrestle with an intractable landlord. It's unfortunate it came to that." According to The Business Review, Starfire isn't profitable, with an annual revenue of $4.3 million. The Business Review states that Starfire laid off about 19 workers in November 2008, almost half of its work force, to generate cash. Then-CEO Richard Saburro resigned in December 2008, while two other company executives were laid off, the report says. According to court documents, nine entities hold liens on Starfire's assets. Starfire Systems Inc., is a manufacturer in Malta, New York, serving the aerospace and automotive industries. Starfire was founded 21 years ago. The Company develops polymers used in the automotive, motorcycle, and aerospace industries. The Company's manufacturing operation is in the Saratoga Technology + Energy Park in Malta. STARFIRE SYSTEMS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Starfire Systems, Inc. Malta Commons Business Park 100 Saratoga Village Boulevard, Suite 20 Malta, NY 12020 Bankruptcy Case No.: 09-12989 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Northern District of New York (Albany) Judge: Chief Judge Robert E. Littlefield Jr. Debtor's Counsel: Richard L. Weisz, Esq. Hodgson Russ LLP 677 Broadway Albany, NY 12207 Tel: (518) 465-2333 Email: Rweisz@hodgsonruss.com Total Assets: $2,699,546 Total Debts: $3,597,277 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nynb09-12989.pdf The petition was signed by Herb Armstrong, chief executive officer of the Company. STATION CASINOS: Posts $65 Million Second-Quarter Loss ------------------------------------------------------ Station Casinos, Inc., on August 14 announced the results of its operations for the second quarter ended June 30, 2009. The Company's net revenues for the second quarter ending June 30, 2009, were approximately $267.2 million, a decrease of 21% compared to the prior year's second quarter. The Company reported Adjusted EBITDA for the quarter of $79.2 million, a decrease of 38% compared to the prior year's second quarter. For the second quarter, the Company reported a net loss of $65.3 million as compared to net earnings of $18.6 million in the prior year's second quarter. During the second quarter, the Company incurred $0.6 million in write-downs and other charges, which included losses on asset disposals and severance expense. The Company also incurred $0.6 million in costs to develop new gaming opportunities, $2.7 million of expense related to equity-based awards, $1.4 million of preopening expenses, $4.5 million in legal fees related to the proposed debt restructuring and other non-recurring costs, and a gain of $1.5 million related to its deferred compensation plan. The Company's second quarter earnings from its Green Valley Ranch joint venture were $5.6 million, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the second quarter, Green Valley Ranch generated Adjusted EBITDA before management fees of $15.2 million, a decrease of 31% compared to the same period in the prior year. Green Valley Ranch reported a net loss of $3.8 million for the second quarter as compared to a net loss of $1.2 million in the same period in the prior year. A copy of the Company's Form 10-Q filed with the Securities and Exchange Commission is available for free at: http://researcharchives.com/t/s?41f2 Las Vegas Market Results For the second quarter, net revenues from the Major Las Vegas Operations, excluding Green Valley Ranch and Aliante Station, were $245.9 million, a 20% decrease compared to the prior year's second quarter, while Adjusted EBITDA from those operations decreased 33% to $71.0 million from $106.1 million in the same period in the prior year. The Major Las Vegas Operations reported a net loss of $15.6 million for the second quarter as compared to net income of $1.6 million in the same period in the prior year. Adjusted EBITDA is not a generally accepted accounting principle ("GAAP") measurement and is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance in the gaming industry and is a principal basis for the valuation of gaming companies. EBITDA and Adjusted EBITDA are further defined in footnote 1. Balance Sheet and Capital Expenditures Long-term debt was $5.7 billion as of June 30, 2009. Total capital expenditures were $17.1 million for the second quarter which consisted primarily of maintenance capital purchases and other projects. Equity contributions to joint ventures during the second quarter were $14.0 million. Chapter 11 Update Station Casinos and its affiliates continue to conduct their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Company remains in discussions with its lenders and the holders of the Notes regarding a possible reorganization of its capital structure. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No. 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. Bankruptcy Creditors' Service, Inc., publishes Station Casinos Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Station Casinos Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) STOLLE MACHINERY: Moody's Withdraws 'B2' Corporate Family Rating ---------------------------------------------------------------- Moody's Investors Service has withdrawn all the ratings for Stolle Machinery Company LLC. The ratings have been withdrawn because Moody's believes it lacks adequate information to maintain a rating. These ratings will be withdrawn: * B2 corporate family rating withdrawn * B2 probability of default rating withdrawn * B1 (LGD 3; 37%) on senior secured revolver withdrawn * B1 (LGD 3; 37%) on senior secured term loan withdrawn * Negative outlook withdrawn The prior rating action was on August 7, 2008, when Stolle was assigned a corporate family rating of B2. Stolle Machinery Company LLC, headquartered in Centennial, Colorado, is a leading provider of capital equipment, spare parts, tooling and dies, and services to the beverage and food can industries. Stolle sells its machinery and services on a global basis. Stolle is majority-owned by investment funds managed by GSO Capital Partners LP and its affiliates. STUART PROPERTY: Oakton Estate to be Auctioned on September 10 -------------------------------------------------------------- Tranzon Fox will conduct an auction of Stuart Property, LLC's 15,300+/- square foot limestone luxury estate located in 11215 Stuart Mill Road, in Oakton, Virginia, on September 10, 2009, at 11:00 a.m. The 5 bedroom, 5 full bath, 3 half bath home is situated on a 3.11 +/- acre site and was built in 2005. For more information, please contact Jeff Stein at (703) 539-8111. Oakton, Va.-based Stuart Property, LLC filed for Chapter 11 relief on March 16, 2009 (Bankr. E.D. Va., Case No. 09-11907). Christopher S. Moffitt, Esq., at the Law Offices of Christopher S. Moffitt, P.C., represents the Debtor as counsel. In its petition, the Debtor listed between $1 million and $10 million each in assets and debts. SWIFT TRANSPO: Bank Debt Trades at 21% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Swift Transportation Co., Inc., is a borrower traded in the secondary market at 78.35 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.35 percentage points from the previous week, The Journal relates. The loan matures on March 15, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Swift Transportation Co., Inc. -- http://www.swifttrans.com/-- hauls freight such as building materials, paper products, and retail merchandise throughout the US and in Mexico. The Company operates a fleet of about 18,000 tractors and 48,000 trailers from a network of about 40 terminals. Its services include dedicated contract carriage, in which drivers and equipment are assigned to a customer long-term. Besides standard dry vans, Swift's fleet includes refrigerated, flatbed, and other specialized trailers, as well as about 5,800 intermodal containers. Chairman and CEO Jerry Moyes owns the company, which he founded in 1966, took public, and took private again in 2007. TARGA RESOURCES: Bank Debt Trades at 1.6% Off in Secondary Market ----------------------------------------------------------------- Participations in a syndicated loan under which Targa Resources, Inc., is a borrower traded in the secondary market at 98.40 cents- on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.75 percentage points from the previous week, The Journal relates. The loan matures on Oct. 31, 2012. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank debt is not rated by either Moody's or S&P. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Targa Resources, Inc. -- http://www.targaresources.com/-- is a provider of midstream natural gas and natural gas liquid services in the United States. The Company provides these services through its integrated platform of midstream assets. Its gathering and processing assets are located in the Permian Basin in west Texas and southeast New Mexico, the Louisiana Gulf Coast primarily accessing the offshore region of Louisiana, and, through Targa Resources Partners LP, the Fort Worth Basin/ Bend Arch in north Texas, the Permian Basin in west Texas and the onshore region of the Louisiana Gulf Coast. Its NGL logistics and marketing assets are located primarily at Mont Belvieu and Galena Park near Houston, Texas and in Lake Charles, Louisiana, with terminals and transportation assets across the United States. As reported by the TCR on July 30, 2009, Moody's Investors Service affirmed the ratings of both Targa Resources, Inc., and Targa Resources Partners LP following the announcement that Partners has agreed to acquire the natural gas liquids logistics and marketing business from TRI for $530 million, consisting of $397.5 million of debt and $132.5 million of limited partnership units issued to TRI. Partners' ratings affirmed are the Ba3 Corporate Family Rating and Probability of Default Rating, the B2 senior unsecured rating with a loss given default of LGD 5 (84% changed from 87%), and the SGL- 3 Speculative Grade Liquidity Rating. TRI's ratings affirmed are the B1 Corporate Family Rating and Probability of Default Rating, the B3 senior unsecured rating with a loss given default of LGD 5 (81% changed from 85%), and the SGL-2 Speculative Grade Liquidity Rating. The outlook for both companies is stable. TEHAMA SECURED: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Tehama Secured Investments, LLC PO Box 491870 Redding, CA 96049 Bankruptcy Case No.: 09-37116 Chapter 11 Petition Date: August 13, 2009 Court: United States Bankruptcy Court Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: James M. Underwood, Esq. PO Box 493164 Redding, CA 96049 Tel: (530) 222-3157 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by James M. Underwood, authorized agent of the Company. TEUFEL NURSERY: Textron Demands Payment of $5.3MM, Sues Co. & CFO ----------------------------------------------------------------- Jeff Manning at The Oregonian reports that Textron Financial Corp., whom Teufel Nursery Inc. owes $5.3 million, has sued the Debtor and its chief financial officer Donald Hauenstein, seeking for repayment of the debt. According to The Oregonian, Textron Financial accused Mr. Hauenstein of fabricating financial records of non-existent receivables so that Teufel Nursery could borrow more money from the complainant before the bankruptcy. The Oregonian says that Teufel Nursery's president and majority shareholder, Larry Teufel, called Textron Financial's allegations as "ridiculous" and Mr. Hauenstein denied the claims, which could make the Debtors' already frustrating search for alternative financing more difficult. Mr. Tuefel has called on 23 different lenders so far, the report states, citing Teufel Nursery. The report quoted Mr. Teufel as saying, "The lenders we are working with, they're all nervous. We're lumped in with the rest of the construction industry. And everyone is concerned about us being viable." Teufel Nursery is profitable and the operation will survive, The Oregonian relates, citing Mr. Teufel. Headquartered in Portland, Oregon, Teufel Nursery, Inc. -- http://www.teufel.com/-- aka Teufel Landscape offers lawn and gardening services. The Company filed for Chapter 11 on June 24, 2009, (Bankr. D. Ore. Case No. 09-34880) Robert J. Vanden Bos, Esq., at Vanden Bos & Chapman represents the Debtor in its restructuring efforts. The Debtor has assets and debts both ranging from $10 million to $50 million. TRIBUNE CO: Bank Debt Trades at 60% Off in Secondary Market ----------------------------------------------------------- Participations in a syndicated loan under which Tribune Co. is a borrower traded in the secondary market at 40.10 cents-on-the- dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 1.61 percentage points from the previous week, The Journal relates. The loan matures May 17, 2014. Tribune pays 300 basis points above LIBOR to borrow under the facility. Moody's has withdrawn its rating on the bank debt, while it is not rated by Standard & Poor's. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TXCO RESOURCES: Swings to $54.6 Million Net Loss for June 30 Qtr ---------------------------------------------------------------- TXCO Resources Inc. swung to a net loss of $54,661,000 for the three months ended June 30, 2009, from net income of $10,129,000 for the same period a year ago. For the six months ended June 30, 2009, TXCO Resources reported a net loss of $101,222,000 from net income of $14,382,000 for the same period a year ago. As of June 30, 2009, TXCO Resources had $397,933,000 in total assets and $344,118,000 in total liabilities, resulting in $53,815,000 in stockholders' equity. At June 30, 2009, the Company had a working capital deficiency of $300.0 million, including liabilities subject to compromise. It had $66.1 million in prepetition trade payables at June 30, 2009, of which roughly $51.4 million was 60 days or more past due. Prepetition trade payables will be addressed in a Plan of Reorganization for the Company. "Our inability to reach accommodations with our vendors regarding the timing of payment in light of our limited liquidity resulted in liens filed against our properties and withdrawal of trade credit by certain vendors, which in turn limits our ability to conduct operations on properties. While we examined alternatives to improve our liquidity and cash resources, our inability to improve our liquidity and cash resources has caused us to experience continued material adverse business consequences and resulted in the bankruptcy filing," TXCO Resources said. The Company incurred roughly $2.7 million in restructuring costs during second-quarter 2009. A full-text copy of TXCO Resources' quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?41ef TXCO Resources Inc. is an independent oil and gas enterprise with interests in the Maverick Basin, the onshore Gulf Coast region and the Marfa Basin of Texas, and the Midcontinent region of western Oklahoma. TXCO's business strategy is to acquire undeveloped mineral interests and internally developing a multi-year drilling inventory through the use of advanced technologies, such as 3-D seismic and horizontal drilling. It accounts for its oil and gas operations under the successful efforts method of accounting and trades its common stock on Nasdaq's Global Select Market under the symbol "TXCO." The Company and its affiliates filed for Chapter 11 protection on May 17, 2009 (Bankr. W.D. Tex. Case No. 09-51807). The Debtors hired Deborah D. Williamson, Esq., and Lindsey D. Graham, Esq., at Cox Smith Matthews Incorporated, as general restructuring counsel; Fulbright and Jaworski, L.L.P., as corporate counsel & conflicts counsel; Albert S. Conly as chief restructuring officer and FTI Consulting Inc. as financial advisor; Goldman, Sachs & Co. as financial advisor for assets sale; Global Hunter Securities, LLC, as financial advisors and investment bankers; and Administar Services Group LLC as claims agent. Gardere Wynne Sewell LLP represents the Committee. As reported in Troubled Company Reporter on July 6, 2009, in their schedules of assets and liabilities, the Debtors have $357,855,952 in total assets and $331,422,792 in total liabilities. UBS AG: Client to Plead Guilty to Failing to File Tax Report ------------------------------------------------------------ David Voreacos and Carlyn Kolker at Bloomberg News report that John McCarthy, a California client of UBS AG, will plead guilty to a charge of failing to file a tax report for an offshore bank account holding more than $1 million. Mr. McCarthy opened a Swiss account in 2003 under Hong Kong-based COGS Enterprises Ltd. Court documents say that Mr. McCarthy failed to file a Foreign Bank and Financial Accounts report. Citing prosecutors, Bloomberg states that Mr. McCarthy signed a plea agreement and will make an initial appearance on September 14. According to Bloomberg, the plea agreement says that while banking with UBS in the Cayman Islands, Mr. McCarthy's bankers told him, "a lot of United States' clients don't report their income and just take it off the top." The plea agreement also says that Mr. McCarthy admitted that: -- with the help of UBS representatives and his Swiss lawyers, he took money from his U.S. business into a domestic bank account in 2003 to transfer it into his COGS account in Switzerland; -- he met with UBS bankers and his Swiss lawyers over the next five years to discuss UBS accounts, wherein his Swiss lawyer advised him to set up a Liechtenstein foundation or a Panamanian or Hong Kong corporation to "create an extra layer of privacy" and help hide his identity; -- last year, former UBS employees, together with his Swiss lawyer, helped him move his funds from UBS to another, unnamed Swiss bank to continue to conceal his accounts from U.S. authorities. Mr. McCarthy agreed to cooperate with prosecutors and will pay a penalty totaling 50% of the highest amount of his COGS account since 2003, prosecutors said in a statement. 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. UNION BANK, GILBERT: MidFirst Oklahoma City Assumes All Deposits ---------------------------------------------------------------- Union Bank, National Association, Gilbert, Arizona, was closed August 14 by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MidFirst Bank, Oklahoma City, Oklahoma, to assume all of the deposits of Union Bank, National Association, excluding those from brokers. The sole office of Union Bank, N.A. will reopen on Monday, August 17, 2009, as a branch of MidFirst Bank. Depositors of Union Bank, N.A. will automatically become depositors of MidFirst Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until MidFirst Bank can fully integrate the deposit records of Union Bank, N.A. As of June 12, 2009, Union Bank, N.A. had total assets of $124 million and total deposits of approximately $112 million. In addition to assuming all of the deposits of the failed bank, MidFirst Bank agreed to purchase approximately $11 million of assets. The FDIC will retain the remaining assets for later disposition. MidFirst Bank will purchase all deposits, except about $88 million in brokered deposits, held by Union Bank, N.A. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-640-2538. Interested parties can also visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/union-az.html The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $61 million. MidFirst Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Union Bank, N.A. is the 75th FDIC- insured institution to fail in the nation this year, and the second in Arizona. The last FDIC-insured institution to be closed in the state was Community Bank of Arizona, Phoenix, also August 14. VENETIAN MACAU: Bank Debt Trades at 10% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which Venetian Macau US Finance Co. LLC is a borrower traded in the secondary market at 89.50 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.08 percentage points from the previous week, The Journal relates. The loan matures on May 25, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Meanwhile, Participations in a syndicated loan under which Las Vegas Sands is a borrower traded in the secondary market at 77.67 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.63 percentage points from the previous week, The Journal relates. The loan matures on May 1, 2014. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B- rating. The debt is also one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Venetian Macau is a wholly owned subsidiary of Las Vegas Sands. VML owns the Sands Macau in the People's Republic of China Special Administrative Region of Macau and is also developing additional casino hotel resort properties in Macau. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As reported by the TCR on Aug. 4, 2009, Moody's Investors Service has placed Las Vegas Sands, Corp.'s ratings, including its B3 Corporate Family Rating, on review for possible downgrade. The review for possible downgrade reflects LVSC's weak fiscal 2009 second quarter operating results and Moody's heightened concern regarding the company's ability to maintain an adequate liquidity profile, reduce leverage, and remain in compliance with its financial covenants. VERSO TECHNOLOGIES: Amends Various Registration of Securities ------------------------------------------------------------- Verso Technologies, Inc. -- in 11 separate filings with the Securities and Exchange Commission on August 6, 2009 -- filed Post-Effective Amendment No. 1 to amend: 1. the Registration Statement on Form S-8, Registration No. 333-74258, which was filed and became effective on November 30, 2001. The Registration Statement registered 1,084,041 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the Telmate.Net Software, Inc. 1999 Stock Incentive Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 2. the Registration Statement on Form S-8, Registration No. 333-74264, which was filed and became effective on November 30, 2001. The Registration Statement registered 1,000,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1999 Stock Incentive Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 3. the Registration Statement on Form S-8, Registration No. 333-59372, which was filed and became effective on April 23, 2001. The Registration Statement registered 979,379 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the Cereus Technology Partners 1997 Stock Option Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 4. the Registration Statement on Form S-8, Registration No. 333-92337, which was filed and became effective on December 8, 1999. The Registration Statement registered 200,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1999 Employee Stock Purchase Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 5. the Registration Statement on Form S-8, Registration No. 333-85107, which was filed and became effective on August 13, 1999. The Registration Statement registered 1,100,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1999 Employee Stock Purchase Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 6. the Registration Statement on Form S-8, Registration No. 333-80501, which was filed and became effective on June 11, 1999. The Registration Statement registered 500,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1998 Stock Incentive Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 7. the Registration Statement on Form S-8, Registration No. 333-26015, which was filed and became effective on April 28, 1997. The Registration Statement registered 378,640 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1995 and 1997 Stock Incentive Plans, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 8. the Registration Statement on Form S-8, Registration No. 333-124037, which was filed and became effective on April 13, 2005. The Registration Statement registered 500,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1999 Stock Incentive Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 9. the Registration Statement on Form S-8, Registration No. 333-124038, which was filed and became effective on April 13, 2005. The Registration Statement registered 200,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1999 Employee Stock Purchase Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 10. the Registration Statement on Form S-8, Registration No. 333-139319, which was filed and became effective on December 14, 2006. The Registration Statement registered 3,500,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 1999 Stock Incentive Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; 11. the Registration Statement on Form S-8, Registration No. 333-150279, which was filed and became effective on April 17, 2008. The Registration Statement registered 10,000,000 shares of the Company's common stock, par value $0.01 per share, for sale pursuant to the 2007 Stock Incentive Plan, as amended -- as adjusted for the Company's one-for-five reverse stock split effective October 11, 2005; The Company said the offering pursuant to the Registration Statements has been terminated. On August 5, 2009, Arnall Golden Gregory LLP, on behalf of the Company, filed requests for withdrawal on Form RW with the SEC to apply for an order granting immediate withdrawal of the Post- Effective Amendments to various Registration Statements on Form S-8. The Post-Effective Amendments were originally filed on August 4. The firm has been appointed as the Trustee under the Plan. Arnall Golden said the Post-Effective Amendments were filed using an incorrect EDGAR filer header code. "We are requesting the withdrawal so that the Post-effective Amendments may be filed again using the corrected code. No securities were sold or will be sold pursuant to the Post-Effective Amendments," the firm said. The firm said the request is consistent with, and filed under the authority granted by, the Company's Second Amended Joint Plan of Liquidation. The U.S. Bankruptcy Court for the Northern District of Georgia confirmed on June 4, 2009, an amended joint plan of liquidation propounded by Verso Technologies, Inc., et al., and the Official Committee of Unsecured Creditors appointed in the Debtors' cases. During the course of their bankruptcy cases, the Debtors have sold substantially all of their assets pursuant to a court-approved sales process. Under the revised Plan, on the Plan's Effective Date, the holders of unsecured claims will receive a pro-rata distribution of any liquidation proceeds that remain in the estate after the payment and satisfaction of administrative claims (Class 1), tax claims (Class 2), priority claims (Class 3) and secured claims (Class 6). The plan proponents have anticipated making an initial distribution of no less than 5% to holders of unsecured claims on the Plan's Effective Date. About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The Company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga. Lead Case No. 08-67659). J. Robert Williamson, Esq., at Scroggins and Williamson; James R. Sacca, Esq., and John D. Elrod, Esq., at Greenberg Traurig, LLP; and Windy a. Hillman, Esq., at Wargo & French LLP, represent the Debtors as counsel. The Debtors selected Logan and Company Inc. as their claims agent. Darryl S. Laddin, Esq., Michael F. Holbein, Esq., and Stephen M. Dorvee, Esq., at Arnall Golden Gregory LLP represent the Official Committee of Unsecured Creditors as counsel. When the Debtors filed for protection from their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VESTIN REALTY: Taberna OKs Compromise Trust Preferred Obligations ----------------------------------------------------------------- On June 25, 2009, Vestin Realty Mortgage II, Inc. (Nasdaq: VRTB) entered into a letter agreement with Taberna Capital Management, LLC, that sets forth a mechanism for the potential retirement of Vestin's remaining outstanding trust preferred securities. The letter agreement provides that Vestin may tender replacement securities in exchange for trust preferred securities at a ratio which provides for a discount of 50% from the face amount of the trust preferred securities. In July 2009, Vestin tendered replacement securities which it had acquired for approximately $10 million, in exchange for $20 million face amount of trust preferred securities. On August 11, Vestin deposited an additional $4 million for the purchase of replacement securities which will be exchanged for $8 million face value of the trust preferred securities. Under the letter agreement, Vestin have until August 31, 2009, to deposit additional cash for the purchase of replacement securities. "No assurance can be given that we will have the funds available to complete the retirement of the remaining trust preferred securities," Vestin cautions. Upon execution of the June 25, 2009 letter agreement, Vestin made a nonrefundable payment of $326,500 to Taberna to cover its cost related to the exchanges. As of August 14, 2009, Vestin had approximately $16.3 million in trust preferred securities and $27,000 of common trust securities outstanding and was in compliance with all covenants of the trust preferred securities. Vestin's current compliance, however, is the result of waivers and modifications to the original agreements over the past nine months. On November 7, 2008, Vestin entered into a First Supplemental Indenture with Taberna, in its capacity as collateral manager for certain collateral debt obligation vehicles that are the holders of the junior subordinated notes, providing for an amendment of a tangible net worth covenant. On December 31, 2008, Vestin was not in compliance with the revised tangible net worth covenant and the debt to tangible net worth covenant in the First Supplemental Indenture. On March 25, 2009, Vestin entered into a letter agreement with Taberna providing for a waiver of all financial covenants effective from December 31, 2008, through June 30, 2009. Vestin made a nonrefundable payment of $200,000 to Taberna to cover its costs related to the 2008 waiver and exchange arrangement. Vestin Realty Mortgage II, Inc., is a real estate investment trust that invests in commercial real estate loans. As of June 30, 2009, Vestin Realty Mortgage II, Inc., had assets of approximately $161.2 million, and liabilities totaling $51.6 million. Vestin Realty Mortgage II, Inc. is managed by Vestin Mortgage, Inc., which is a subsidiary of Vestin Group, Inc., which is engaged in asset management, real estate lending and other financial services through its subsidiaries. Since 1995, Vestin Mortgage Inc. has facilitated more than $2.0 billion in lending transactions. VIJAY TANEJA: Potomac Maryland Property to be Auctioned on Sept 17 ------------------------------------------------------------------ Tranzon Fox will auction on September 17, 2009, at 11:00 a.m., an approximately 21,500 square-foot, luxury home located at 9034 Bronson Road, in Potomac, Maryland. The residential property is situated just off River Road on an approximately 2.3-acre site roughly a mile from the Congressional Country Club. The property is offered for sale by H. Jason Gold, the Court- appointed trustee in Vijay Taneja's Chapter 11 bankruptcy case. For more information, contact Jeff Stein at (703) 539-8111. Fairfax, Virginia-based Vijay K. Taneja is a real estate developer. NRIinternet.com reports that Mr. Taneja immigrated to the United States at age 10 when his diplomat father was posted here. He established Fairfax, Virginia-based Financial Mortgage, Inc. in 1990. Mr. Taneja filed for Chapter 11 relief on June 9, 2008 (Bankr. E.D. Va. Case No. 08-13293). Robert M. Marino, Esq., at Redmon Peyton & Braswell, LLP, represents the Debtor as counsel. Attorneys at McGuireWoods LLC and Leach Travell Britt PC represent the official committee of unsecured creditors as counsel. In his schedules, Mr. Taneja listed $30,374,690 in total assets, and $104,309,562 in total liabilities. Financial Mortgage, Inc. filed for bankruptcy on June 9, 2008. (Bankr. E.D. Va. Case No. 08-13287). Non-resident Indian Vijay K. Taneja was sentenced in January 2009 for defrauding banks of $33 million. According to NRIinternet.com, it was one of the largest bank fraud scams in Virgina state's history. He defrauded the banks by creating fictitious loans and mortgages, and then selling them to investors. WESTHAMPTON COACHWORKS: Owner Arrested for Larceny -------------------------------------------------- Jessica DiNapoli at 27east reports that Westhampton Coachworks and Manhattan Motorcars founder and owner Richard Rubio and his son, Barry, were arrested on Tuesday last week after the Suffolk County district attorney's office charged them of stealing $160,000 from the sale of a 2006 Lamborghini that was supposed to have been sold on consignment. The police, according to 27east, said that the Rubios were hired by Dr. Bleecher in May 2008 to sell the Lamborghini and, in return, were to collect $5,000 in commission fees. 27east relates that the sports car was sold in August 2008, eight months before Mr. Rubio filed for Chapter 11 bankruptcy. Mr. Clifford said that the Rubios had agreed to sell a 2006 Lamborghini Gallardo SE owned by Dr. Bleecher in 2008 for a $5,000 commission, 27east relates. Dr. Bleecher purchased the Lamborghini from the Rubios two years ago. The Rubios sold the car for about $160,000 in August 2008, the report says, citing Dr. Bleecher. Dr. Bleecher, according to the report, said that he has called the Rubios every month to inquire about when they would forward him the proceeds of the sale, but the Rubios didn't have the resources to pay him what he was owed. 27east states that the Rubios were charged with second-degree grand larceny by the DA's office. The Rubios are accused of never giving the bulk of the proceeds from the sale of a 2006 Lamborghini to its original owner, Dr. Charles Bleecher of St. James, 27east states, citing District Attorney Thomas Spota's spokesperson, Bob Clifford. Messrs. Richard and Barry Rubio were arraigned in Westhampton Beach Village Justice Court on Tuesday, says 27east. They both pleaded not guilty to the charges and were released on their own recognizance, according to the report. 27east, citing Mr. Clifford, states that the Rubios, if convicted, could receive a maximum of five to 15 years in state prison. Westhampton Coachworks and Manhattan Motorcars filed for Chapter 11 bankruptcy protection on April 29, 2009 (Bankr. E.D. N.Y. Case No. 09-73008). Kenneth A. Reynolds, Esq., at McBreen & Kopko, assists the Debtors in their restructuring efforts. YANKEE CANDLE: Bank Debt Trades at 7% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which The Yankee Candle Company, Inc., is a borrower traded in the secondary market at 92.65 cents-on-the-dollar during the week ended Friday, Aug. 14, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.24 percentage points from the previous week, The Journal relates. The loan matures on Feb. 6, 2014. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 14, among the 128 loans with five or more bids. Based in South Deerfield, Massachusetts, The Yankee Candle Company, Inc., designs, manufactures, and is a wholesaler and retailer of premium scented candles. Yankee has a 39-year history of offering distinctive products and marketing them as affordable luxuries and consumable gifts. The Company sells its products through a North American wholesale customer network of 19,689 store locations, a growing base of Company owned and operated retail stores (491 located in 43 states as of Jan. 3, 2009, including 28 Illuminations stores), direct mail catalogs, and its Internet Web sites: http://www.yankeecandle.com http://www.illuminations.com http://www.aromanaturals.com Outside of North America, the Company sells its products primarily through its subsidiary, Yankee Candle Company (Europe), Ltd., which has an international wholesale customer network of 2,994 store locations and distributors covering approximately 23 countries. Yankee Holding Corp. is a holding company formed in connection with the Company's Merger with an affiliate of Madison Dearborn Partners, LLC, on February 6, 2007, and is now the parent company of The Yankee Candle Company, Inc. Yankee Holding Corp. and subsidiaries had $1.372 billion in total assets, and $1.375 billion in total liabilities, resulting in $2.82 million in stockholders' deficit as of Jan. 3, 2009. YE HYUNG CHOI: Case Summary & 2 Largest Unsecured Creditors ----------------------------------------------------------- Joint Debtors: Ye Hyung Choi Jong Nim Choi 5125 Harold way #307 Los Angeles, Ca 90027 Bankruptcy Case No.: 09-31252 Chapter 11 Petition Date: August 12, 2009 Court: United States Bankruptcy Court Central District of California (Los Angeles) Judge: Samuel L. Bufford Debtors' Counsel: Thomas Suh, Esq. 601 S Figueroa St., Suite 40285 Los Angeles, CA 90017 Tel: (213) 670-0068 Fax: (213) 596-3824 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including a list of their 2 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-31252.pdf The petition was signed by the Joint Debtors. YOUTH & FAMILY: Moody's Changes Outlook on 'B2' Rating to Negative ------------------------------------------------------------------ Moody's Investors Service changed the rating outlook of Youth & Family Centered Services, Inc., to negative from stable. At the same time, Moody's affirmed YFCS' ratings, including the B2 Corporate Family Rating and the Probability of Default Rating of B2. Lower than expected revenue and EBITDA growth in 2009 has heightened Moody's concern about the company's ability to maintain compliance with its leverage covenant as required levels become more restrictive, particularly in the quarter ending March 2010. Further, while Moody's expect YFCS to continue to generate positive free cash flow, Moody's expects that YFCS' cash balance could be substantially reduced as it repays debt in order to maintain covenant compliance. The negative outlook reflects the reduced operating flexibility and ability to absorb any negative event during this period of weakened liquidity. YFCS' Corporate Family Rating is B2, reflecting its small scale, revenue concentration risk by state and facility, exposure to Medicaid reimbursement and event risk due to the sensitive nature of YFCS' patients. The B2 Corporate Family Rating is supported by YFCS' leading competitive position in its markets, moderate financial leverage, and good cash flow generation. Ratings affirmed/LGD assessments revised: * Corporate Family Rating, B2 * Probability of Default Rating, B2 * $25 million senior secured revolving credit facility due 2012, to B1 (LGD3, 37%) from B1 (LGD3, 41%) * $120 million senior secured Term Loan B due 2013, to B1 (LGD3, 37%) from B1 (LGD3, 41%) The outlook for the ratings is negative. Moody's last rating action on YFCS was on September 29, 2006, when the ratings on the company's senior secured credit facilities were upgraded to B1 from B2. YFCS' 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 of tolerance for risk. These attributes were compared against other issuers both within and outside of YFCS' core industry and YFCS' ratings are believed to be comparable to those other issuers of similar credit risk. YFCS provides medical, behavioral health, education and long-term support needs for abused and neglected infants, children and adolescents. The company's services include inpatient acute care programs, residential treatment programs, programs for the developmentally disabled, foster care, group homes, home and community based services, outpatient and accredited private and charter schools. The company generated revenues of about $199 million for the twelve months ended June 30, 2009. * 5 Banks Shuttered; Year's Failed Banks Now 77 ----------------------------------------------- Five banks -- Colonial Bank, Montgomery, AL; Union Bank, National Association, Gilbert, AZ; Community Bank of Nevada, Las Vegas, NV; Community Bank of Arizona, Phoenix, AZ; Dwelling House Savings and Loan Association, Pittsburgh, PA -- were closed August 14 by regulators, which appointed the Federal Deposit Insurance Corporation as receiver. This year's closed banks have risen to 77. To protect depositors, the FDIC created the Deposit Insurance National Bank of Las Vegas (DINB), which will assume all insured deposits of Community Bank of Nevada. The FDIC was able to locate buyers for the four other banks. Of the five banks, Colonial bank is the largest with total assets of $25 billion and total deposits of approximately $20 billion as of June 30, 2009, followed by Community Bank of Nevada with total assets of $1.52 billion and total deposits of about $1.38 billion. In accordance with Federal law, allowed claims against failed financial institutions will be paid, after administrative expenses, in this order of priority: 1. Depositors 2. General Unsecured Creditors 3. Subordinated Debt 4. Stockholders According to Bloomberg News, regulators have seized the most U.S. banks this year since 1993. The Summer 2009 issue of Supervisory Insights released by the FDIC on June 16, 2008, said the U.S. financial services industry experience a crisis in 2008, with these challenges continuing during the first half of 2009. In 2008, U.S. financial regulatory agencies extended $6.8 trillion in temporary loans, liability guarantees and asset guarantees in support of financial services. By the end of the first quarter of 2009, the maximum capacity of new government financial support programs in place, or announced, exceeded $13 trillion. Bear Stearns was the first large investment bank to be acquired by a bank holding company during 2008. Of the other four largest investment banks in the United States, one would fail and the others would be acquired by, or become, bank holding companies. In 2008, 25 banks with total assets of $372 billion failed. IndyMac Bank, FSB, was closed by the Office of Thrift Supervision on July 11, and the FDIC was named conservator. At the time it was closed, IndyMac's assets of $32 billion made it the second largest bank failure in FDIC history. By the end of the first quarter of 2009, the maximum capacity of new government financial support programs in place, or announced, exceeded $13 trillion. A copy of the Supervisory Insights is available for free at: http://bankrupt.com/misc/FDIC_SI_Summer2009.pdf 2009 Failed Banks List The FDIC was appointed as receiver for the closed banks. To protect the depositors, the FDIC entered into a purchase and assumption agreement with various banks that agreed to assume the deposits of most of the closed banks: Buyer's FDIC Cost Assumed to Insurance Deposits Fund Closed Bank Buyer (millions) (millions) ----------- ---- -------- ----- Colonial Bank BB&T, Winston-Salem $20,000.0 $2,800.0 Union Bank, N.A. MidFirst Bank $14.0 $61.0 Community Bank Nev FDIC-Created DINB $1,375.8 $781.5 Community Bank Ariz MidFirst Bank $143.8 $25.5 Dwelling House PNC Bank, N.A. $13.8 $6.8 First State Bank Stearns Bank, N.A. $379.0 $116.0 Community National Stearns Bank, N.A. $93.0 $24.0 Community First Home Federal Bank, Nampa $151.0 $45.0 Integrity Bank Stonegate Bank, Fla. $102.0 $46.0 Mutual Bank United Central, Tex. $1,600.0 $696.0 First BankAmericano Crown Bank, Brick, NJ $157.0 $15.0 First State, Altus Herring Bank, Amarillo, Tex. $98.2 $25.2 Peoples Community First Financial Bank, Ohio $598.2 $129.5 Waterford Village Evans Bank, N.A. $58.0 $5.6 SB - Gwinnett State Bank and Trust $292.0 } SB - North Fulton State Bank and Trust $191.0 } SB - Jones County State Bank and Trust $387.0 } $807.0 SB - Houston County State Bank and Trust $320.0 } SB - North Metro State Bank and Trust $212.0 } SB - Bibb County State Bank and Trust $1,000.0 } Temecula Valley First-Citizen Bank $996.0 $391.0 Vineyard Bank Calif. Bank, San Diego $1,456.0 $579.0 BankFIrst, Sioux Alerus Financial, N.A. $254.0 $91.0 First Piedmont First American Bank $109.0 $29.0 Bank of Wyoming Central Bank & Trust $59.0 $27.0 John Warner Bank State Bank of Lincoln $64.0 $10.0 1st State Winchest. First Nat'l Beardstown $34.0 $6.0 Rock River Bank Harvard State Bank $75.8 $27.6 Elizabeth State Galena State Bank $50.4 $11.2 1st Nat'l Danville First Financial $147.0 $24.0 Founders Bank PrivateBank and Trust $848.9 $188.5 Millennium State State Bank of Texas $115.0 $47.0 Mirae Bank Wilshire State Bank $362.0 $50.0 Metro Pacific Bank Sunwest Bank, Tustin $67.0 $29.0 Horizon Bank Stearns Bank, N.A. $69.4 $33.5 Neighborhood Comm CharterBank, West Point $191.3 $66.7 Community Bank -- None -- - - First National Bank Bank of Kansas $142.5 $32.2 Cooperative Bank First Bank, Troy, N.C. $717.0 $217.0 Southern Community United Community $307.0 $114.0 Bank of Lincolnwood Republic Bank, Chicago $202.0 $83.0 Citizens National Morton Community $200.0 $106.0 Strategic Capital Midland States Bank $471.0 $173.0 BankUnited FSB WL Ross-Led Investors $8,300.0 $4,900.0 Westsound Bank Kitsap Bank $295.1 $108.0 America West Cache Valley Bank $284.1 $119.4 Citizens Community N.J. Community Bank $43.7 $18.1 Silverton Bank -- No Buyer -- - $1,300.0 First Bank of Id US Bank, Minneapolis $261.2 $191.2 First Bank of BH -- No Buyer -- - $394.0 Heritage Bank Level One Bank $101.7 $71.3 American Southern Bank of North Georgia $55.6 $41.9 Great Basin Bank Nevada State Bank $221.4 $42.0 American Sterling Metcalf Bank, Lee Summit $171.9 $42.0 New Frontier Bank -- No Buyer -- - $670.0 Cape Fear Bank First Federal, Charleston $403.0 $131.0 Omni National -- No Buyer -- - $290.0 TeamBank, N.A. Great Southern Bank $474.0 $98.0 Colorado National Herring Bank, Amarillo, TX $82.7 $9.0 FirstCity Bank -- No Buyer -- - $100.0 Freedom Bank Nat'l Georgia Bank, Lavonia $161.0 $36.2 Security Savings Bank of Nevada, L.V. $175.2 $59.1 Heritage Community MB Financial Bank, N.A. $218.6 $41.6 Silver Falls Citizens Bank $116.3 $50.0 Pinnacle Bank Washington Trust Bank $64.0 $12.1 Corn Belt Bank Carlinville Nat'l Bank $142.4 $100.0 Riverside Bank TIB Bank $281.4 $201.5 Sherman County Heritage Bank $85.1 $28.0 County Bank Westamerica Bank $1,300.0 $135.0 Alliance Bank California Bank & Trust $951.0 $206.0 FirstBank Regions Bank $279.0 $111.0 Ocala National CenterState Bank $205.2 $99.6 Suburban Federal Bank of Essex $302.0 $126.0 MagnetBank -- No Buyer -- - $119.4 1st Centennial First California Bank $302.1 $227.0 Bank of Clark Umpqua Bank $523.6 $120-145 Nat'l Commerce Republic Bank of Chicago $402.1 $97.1 A complete list of banks that failed since 2000 is available at: http://www.fdic.gov/bank/individual/failed/banklist.html 305 Banks in Problem List No advance notice is given to the public when a financial institution is closed. The FDIC has a "problem list" of banks, although the list is not divulged to the public. The FDIC said on May 27 that the number of banks and savings institutions in its "Problem List" increased to 305 from 252 at the end of 2008. The 305 banks and thrifts have combined assets of $220 billion, according to the FDIC's quarterly banking profile. The 252 insured institutions with combined assets of $159 billion on the FDIC's "Problem List" as of year-end was already the largest since the middle of 2005. The Problem List had 171 institutions with $116 billion in assets at the end of the third quarter, and 76 institutions with $22 billion in assets at the end of 2007. "Problem" institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. They are rated by the FDIC or Office of the Thrift Supervision as either a "4" or "5", based on a scale of 1 to 5 in ascending order of supervisory concern. The Problem List is not divulged to the public. No advance notice is given to the public when a financial institution is closed. Problem Institutions Failed Institutions -------------------- ------------------- Year Number Assets (Mil) Number Assets (Mil) ---- ------ ------------ ------ ------------ Q1'09 305 $220,047 21 $9,498 2008 252 159,405 25 371,945 2007 76 22,189 3 2,615 2006 50 8,265 0 0 2005 52 6,607 0 0 2004 80 28,250 4 170 A copy of the FDIC's Quarterly Banking Profile for the first quarter of 2009 is available for free at: http://bankrupt.com/misc/FDIC_Mar3109_QBP.pdf * Bankruptcies Rise 35% in Quarter Ended June 2009 From 2008 ------------------------------------------------------------ The Administrative Office of the U.S. Courts says that in the 12- month period ended June 30, 2009, there were 1,306,315 bankruptcy cases filed, a 35% increase compared to filings for the 12-month period ended June 30, 2008, when cases totaled 967,831. The filings include both business and non-business entities for the 12-month period ended June 30, 2009 Business and Non-Business Filings Years Ended June 30, 2005-2009 Year Total Non-Business Business 2009 1,306,315 1,251,294 55,021 2008 967,831 934,009 33,822 2007 751,056 727,167 23,889 2006 1,484,570 1,453,008 31,562 2005 1,637,254 1,604,848 32,406 Business and Non-Business Filings Non-business filings for the 12-month period ended June 30, 2009, totaled 1,251,294, up 34% from the 934,009 non-business filings for June 30, 2008. Business filings totaled 55,021, up 63% from the 33,822 filings reported in June 30, 2008. Filings by Chapter, 12-month Period Ending June 30 In the 12-month period ended June 30, 2009, increased filings were seen in all bankruptcy chapters. Total Bankruptcy Filings by Bankruptcy Chapter Years Ended June 30, 2005-2009 Chapter Year 7 11 12 13 2009 907,603 13,951 422 384,187 2008 615,748 7,293 314 344,421 2007 450,332 5,586 386 294,693 2006 1,164,815 6,224 360 313,085 2005 1,196,212 6,703 290 433,945 Chapter 7 filings totaled 907,603, up 47% from the 615,748 Chapter 7 filings in the 12-month period ending June 30, 2008. Chapter 13 filings totaled 384,187, up 12% from the 344,421 filings in the same time period in June 2008. Chapter 11 filings totaled 13,951, up 91% from the 7,293 filings during the 12-month period ending June 30, 2008. Chapter 12 filings rose 34% to 422, from the 314 Chapter 12 bankruptcies filed as of June 30, 2008. The Judiciary's Third Quarter Filings Third quarter filings, the 3-month period ended June 30, 2009, totaled 381,073. Filings for the June quarter are the highest of any quarter in fiscal year 2009 (October 1, 2008 - September 30, 2009). First quarter filings totaled 301,317 and second quarter filings totaled 330,477. Bankruptcy filings increased 15% to 381,073 in the second quarter, from the first three months of 2009, and up 38% from 2008, according to the Administrative Office of the U.S. Courts. Andy Sullivan and Tom Hals at Reuters quoted Georgia State University College of Law professor Jack Williams as saying, "I think what we're seeing is a significant increase in Chapter 11 filings in the small business area, among businesses that would have traditionally weathered the economic storm." According to Reuters, Mr. Williams said that he expects total filings to reach 1.4 million this year, which would be the highest since 2005, when there was a surge of consumer filings ahead of legal changes. Bankruptcy filings tend to lag an economic rebound by up to a year, and with an increasing number of state governments cutting workers, the filings could increase and "we may be about to see another significant spike," Reuters states, citing Mr. Williams. The five states having the highest bankruptcy filings, according to Reuters, are: 1) Tennessee (the highest among all the states) 2) Nevada 3) Alabama, 4) Georgia, and 5) Indiana. Reuters lists these states as having the fewest number of bankruptcy filings: 1) Alaska 2) the District of Columbia, 3) Wyoming, 4) Hawaii, and 5) Texas. Period Filings Period Filings Period Filings 2009 June 30 381,073 March 31 330,477 June 30, 2004 421,110 Sept. 30, 1999 323,550 2008 Dec. 31 301,317 March 31, 2004 407,572 June 30, 1999 345,956 Sept. 30 292,291 Dec. 31, 2003 393,348 March 31, 1999 330,784 June 30 276,510 Sept. 30, 2003 412,989 Dec. 31, 1998 353,108 March 31 245,695 June 30, 2003 440,257 Sept. 30, 1998 361,205 * Florida Dirt-Bond Distress Hits 105 Districts ----------------------------------------------- Florida's housing decline pushed 105 community development districts to default on bonds or to draw on reserves, affecting $3.2 billion in securities, Bloomberg News reported, citing the Distressed Debt Securities Newsletter. Florida has about 600 such districts, which sell tax-exempt debt known as dirt bonds to fund construction of infrastructure for new real-estate developments. According to the report, until new homes are sold, developers are required to pay tax assessments on the land; if they can't, the bonds are at risk of default. The foreclosure and land-sale process many districts face makes the debt harder to value, driving the gap between what bond buyers will pay and what sellers will accept into "fairy land," wrote Jack Colombo in Distressed Debt Securities, a monthly newsletter in Miami Lakes, Florida. * NHB Establishes Los Angeles Office & Adds Five New Professionals ------------------------------------------------------------------ NachmanHaysBrownstein, Inc., has appointed Gary Adelson in the Los Angeles office. Mr. Adelson also heads up the new Media & Telecommunications Services Group. In addition, M. Jacob Renick has been named as Managing Director in its New York Office, Ross Waetzman as Senior Consultant in its Dallas office, Randhir N. Lakavathu as Senior Consultant in its New York Office, and Teresa Dorr as Senior Consultant in NHB's Florida satellite office. Gary Adelson is a Managing Director of NachmanHaysBrownstein, Inc., in the Los Angeles office, and leads the new Media & Telecommunications Services Group. He has over 25 years experience in all areas of the media, entertainment and sports and gaming businesses. He has held roles as Chairman, CEO, and Managing Director at entertainment and media companies, venture capital firms, and investment banks and has experience in a range of media verticals such as new media technologies, broadcast, distribution, syndication, production, cable, telecommunications, and online gaming, among others. Prior to joining NHB, Mr. Adelson was a Managing Director of the Media, Sports, and Entertainment (MSE) Group at Houlihan Lokey, the largest middle market investment bank in America where the MSE Group advised on such transactions as the acquisition of MGM by Sony, Comcast, and various private equity groups, NBC's acquisition of Vivendi Universal, and the sale of Media Defender. The first two were named Media Deals of the Year by various trade publications. Previously, Mr. Adelson was principal and co- founder of Media Connect Partners which provided financial and operating advisory services to media, sports, entertainment and communications companies. Media Connect Partners was acquired by Houlihan Lokey. M. Jacob Renick has over 40 years experience in public accounting and as a consultant specializing in corporate restructuring, bankruptcy and forensic accounting. He brings extraordinary experience to his clients and their legal counsel, addressing their needs in an innovative and effective manner. Mr. Renick has worked extensively in the restructuring of financially distressed entities, both in and out of bankruptcy, as well as with chapter 7 and 11 Trustees and creditor committees. He has been a court- appointed Examiner, Litigation and Liquidation Trustee, Plan Administrator, Fiduciary of Trusts for the benefit of creditors, and Receiver. Prior to joining NHB, he was the Director of Bankruptcy & Restructuring Services at Eisman Zucker Klein & Ruttenberg LLP, a Westchester County, NY-based accounting and consulting firm. Previously, he was a Director in the corporate restructuring and bankruptcy group at Eisner LLP, and was a senior bankruptcy specialist in the business investigations group at Weiser LLP. Ross Waetzman has over ten years of professional service experience advising corporations, as well as their lenders and equity owners, on matters of financial and strategic significance. He has extensive experience in corporate finance. He has advised companies in a wide range of M&A advisory engagements, including public and private equity transactions, cross-border transactions, privatizations, and distressed sales. In addition, Mr. Waetzman has provided fairness opinions, valuations, and financial damage calculations in litigation. He is also experienced in obtaining debt financing on behalf of his clients to meet a variety of needs. Prior to joining NHB, Mr. Waetzman was a Vice President at Barrier Advisors in Dallas, where he provided restructuring and M&A advisory services. His past work experience also includes working in Credit Suisse First Boston's Investment Banking Department (M&A and debt financing assignments), with A.T. Kearney (strategy and operations projects), and with Ernst & Young's Corporate Finance Group (M&A and financial restructuring assignments). Randhir Lakavathu specializes in forecasting, valuation, business plan evaluation, financial planning, and mergers and acquisitions. Mr. Lakavathu has assisted clients across a broad range of industries, including homebuilding, gas and electric utilities, exploration and production, and pharmaceutical. Prior to joining NHB, Mr. Lakavathu worked in corporate restructuring at XRoads Solutions Group and Capstone Advisory Group. In those positions, among other engagements, he advised a private homebuilder in Los Angeles, where he developed cash flow projections for numerous projects, performed liquidation analyses and helped raise $250 million in capital. He also advised junior lien bondholders of Calpine Corporation, supporting expert testimony regarding valuation and damages associated with the bonds. Mr. Lakavathu also provided solvency analysis regarding Enron Corporation, and performed valuation and goodwill impairment analysis of Allied Defense Group and The Topps, Inc. Teresa M. Dorr is a Senior Consultant in NachmanHaysBrownstein, Inc.'s Florida satellite office, and part of its Fiduciary Services Group. Ms. Dorr has extensive experience representing plaintiffs and defendants in preference actions, and conducting analyses for both the prosecution and defense of such actions. She has conducted claim analyses and prepared and prosecuted claims objections in several cases. Ms. Dorr's trial experience includes denying discharge and dismissal of petitions for bad faith. Prior to joining NHB, Ms. Dorr practiced as an attorney at Fox Rothschild, LLP and Buchanan Ingersoll & Rooney PC for almost ten years. Her practice focused on the area of financial restructuring and creditors' rights, representing Chapter 11 debtors, creditors' committees and trustees in both Chapter 11 and Chapter 7 bankruptcies in New Jersey, Pennsylvania and Delaware. About NachmanHaysBrownstein NachmanHaysBrownstein, Inc., is one of the country's leading turnaround and crisis management firms, having been included among the ten or so "Outstanding Turnaround Firms" in Turnarounds & Workouts for the past fourteen consecutive years. NHB demonstrates leadership in corporate renewal by creating value and preserving capital through turnaround and crisis management, financial advisory, investment banking and fiduciary services to financially challenged companies throughout America, as well as through their investors, lenders and trade creditors. NHB focuses on producing lasting performance improvement, and maximizing the business' value to stakeholders by providing the leadership and credibility required to reconcile the client's objectives, economic reality and available alternatives to establish an achievable goal. NHB professionals have assisted businesses in nearly every industry, and provides services for out-of-court turnarounds and workouts, crisis and interim management, sale of businesses, refinancing, recapitalization, and restructuring, litigation support and expert testimony, and -- where necessary -- bankruptcy planning and reorganization advisory and management services. NHB's clients have ranged from a few million dollars in sales to nearly $2 billion, and have included both publicly held and privately owned companies, however most clients are middle market businesses with sales between $25 million and $500 million. NHB professionals consist of seasoned executives who have in-depth experience in diverse fields including finance, operations, engineering and systems. Every NHB engagement is led by one of the Principals of NHB, and NHB's practice takes its professionals throughout North America and abroad. NHB's referral sources consist of the top lenders, equity and venture firms, and law firms in the country. Headquartered in Philadelphia, NHB also maintains offices in Dallas, Boston, New York, Los Angeles and Wilmington, DE. * BOND PRICING -- For the Week From August 10 to 14, 2009 --------------------------------------------------------- Company Coupon Maturity Bid Price ------- ------ -------- --------- 155 E TROPICANA 8.75% 4/1/2012 19.90 ABITIBI-CONS FIN 7.88% 8/1/2009 8.00 ACCURIDE CORP 8.50% 2/1/2015 18.00 ADVANTA CAP TR 8.99% 12/17/2026 20.25 ALERIS INTL INC 10.00% 12/15/2016 1.58 AMBAC INC 9.38% 8/1/2011 50.00 AMBASSADORS INTL 3.75% 4/15/2027 33.90 AMER GENL FIN 3.05% 6/15/2010 60.50 AMER GENL FIN 3.40% 10/15/2009 92.25 AMER GENL FIN 3.85% 9/15/2009 92.65 AMER GENL FIN 4.00% 11/15/2009 92.10 AMER GENL FIN 4.20% 8/15/2009 98.11 AMER GENL FIN 4.25% 10/15/2010 59.00 AMER GENL FIN 4.30% 9/15/2009 90.02 AMER GENL FIN 4.35% 3/15/2010 82.00 AMER GENL FIN 4.50% 8/15/2010 72.40 AMER GENL FIN 4.60% 11/15/2009 91.78 AMER GENL FIN 4.60% 10/15/2010 45.00 AMER GENL FIN 4.75% 8/15/2010 62.10 AMER GENL FIN 5.00% 9/15/2009 95.00 AMER GENL FIN 5.00% 9/15/2010 70.16 AMER GENL FIN 5.00% 10/15/2010 65.00 AMER GENL FIN 5.10% 9/15/2009 96.50 AMER GENL FIN 5.25% 4/15/2011 60.00 AMER GENL FIN 8.75% 9/15/2012 38.00 AMER MEDIA OPER 8.88% 1/15/2011 52.13 AMR CORP 10.40% 3/10/2011 43.20 AMR CORP 10.45% 3/10/2011 47.00 ANTHRACITE CAP 11.75% 9/1/2027 14.40 ANTHRACITE CAP 11.75% 9/1/2027 14.77 APPLETON PAPERS 9.75% 6/15/2014 38.00 ARCO CHEMICAL CO 10.25% 11/1/2010 29.00 BANK NEW ENGLAND 8.75% 4/1/1999 10.56 BANK NEW ENGLAND 9.88% 9/15/1999 10.56 BANKUNITED FINL 3.13% 3/1/2034 6.00 BARRINGTON BROAD 10.50% 8/15/2014 33.50 BELL MICROPRODUC 3.75% 3/5/2024 50.50 BLOCKBUSTER INC 9.00% 9/1/2012 48.50 BOWATER INC 6.50% 6/15/2013 13.00 BOWATER INC 9.00% 8/1/2009 17.00 BOWATER INC 9.38% 12/15/2021 17.25 BOWATER INC 9.50% 10/15/2012 16.70 BROOKSTONE CO 12.00% 10/15/2012 41.40 CALLON PETROLEUM 9.75% 12/8/2010 33.00 CAPMARK FINL GRP 7.88% 5/10/2012 23.50 CAPMARK FINL GRP 8.30% 5/10/2017 23.50 CARAUSTAR INDS 7.25% 5/1/2010 50.38 CCH I LLC 9.92% 4/1/2014 0.75 CCH I LLC 10.00% 5/15/2014 2.00 CCH I LLC 13.50% 1/15/2014 1.38 CCH I/CCH I CP 11.00% 10/1/2015 12.50 CCH I/CCH I CP 11.00% 10/1/2015 13.50 CHAMPION ENTERPR 2.75% 11/1/2037 14.08 CHARTER COMM HLD 10.00% 5/15/2011 1.00 CHARTER COMM HLD 13.50% 1/15/2011 1.00 CHARTER COMM INC 6.50% 10/1/2027 41.88 CHENIERE ENERGY 2.25% 8/1/2012 39.00 CIT GROUP INC 3.85% 11/15/2009 59.00 CIT GROUP INC 3.95% 12/15/2009 58.50 CIT GROUP INC 4.00% 9/15/2009 83.00 CIT GROUP INC 4.05% 2/15/2010 60.00 CIT GROUP INC 4.13% 11/3/2009 72.02 CIT GROUP INC 4.25% 2/1/2010 56.38 CIT GROUP INC 4.25% 9/15/2010 50.00 CIT GROUP INC 4.30% 3/15/2010 56.00 CIT GROUP INC 4.30% 6/15/2010 28.00 CIT GROUP INC 4.35% 6/15/2010 48.00 CIT GROUP INC 4.40% 9/15/2009 80.50 CIT GROUP INC 4.45% 5/15/2010 46.50 CIT GROUP INC 4.60% 8/15/2010 48.25 CIT GROUP INC 4.63% 11/15/2009 60.00 CIT GROUP INC 4.75% 12/15/2010 62.38 CIT GROUP INC 4.80% 12/15/2009 55.00 CIT GROUP INC 4.85% 12/15/2009 63.25 CIT GROUP INC 4.85% 3/15/2010 49.00 CIT GROUP INC 4.85% 12/15/2011 46.50 CIT GROUP INC 4.90% 3/15/2010 46.25 CIT GROUP INC 4.90% 12/15/2010 52.00 CIT GROUP INC 4.90% 3/15/2011 48.00 CIT GROUP INC 5.00% 11/15/2009 63.50 CIT GROUP INC 5.00% 11/15/2009 65.33 CIT GROUP INC 5.00% 11/15/2009 67.13 CIT GROUP INC 5.00% 12/15/2010 56.00 CIT GROUP INC 5.00% 3/15/2011 44.00 CIT GROUP INC 5.00% 3/15/2011 50.50 CIT GROUP INC 5.00% 12/15/2011 47.75 CIT GROUP INC 5.00% 3/15/2012 42.50 CIT GROUP INC 5.05% 11/15/2009 34.00 CIT GROUP INC 5.05% 2/15/2010 50.15 CIT GROUP INC 5.05% 3/15/2010 58.00 CIT GROUP INC 5.05% 11/15/2010 53.00 CIT GROUP INC 5.05% 12/15/2010 51.75 CIT GROUP INC 5.05% 3/15/2011 52.50 CIT GROUP INC 5.15% 2/15/2010 51.50 CIT GROUP INC 5.15% 3/15/2010 55.00 CIT GROUP INC 5.15% 2/15/2011 53.12 CIT GROUP INC 5.15% 2/15/2011 50.00 CIT GROUP INC 5.15% 4/15/2011 44.25 CIT GROUP INC 5.15% 2/15/2012 48.00 CIT GROUP INC 5.20% 11/3/2010 62.00 CIT GROUP INC 5.20% 9/15/2011 44.00 CIT GROUP INC 5.25% 5/15/2010 45.04 CIT GROUP INC 5.25% 9/15/2010 46.50 CIT GROUP INC 5.25% 11/15/2010 60.00 CIT GROUP INC 5.25% 11/15/2010 50.25 CIT GROUP INC 5.25% 11/15/2010 55.00 CIT GROUP INC 5.25% 12/15/2010 57.00 CIT GROUP INC 5.25% 11/15/2011 40.00 CIT GROUP INC 5.25% 11/15/2011 49.58 CIT GROUP INC 5.25% 11/15/2011 46.88 CIT GROUP INC 5.25% 2/15/2012 49.30 CIT GROUP INC 5.30% 6/15/2010 51.00 CIT GROUP INC 5.35% 6/15/2011 50.50 CIT GROUP INC 5.35% 8/15/2011 48.60 CIT GROUP INC 5.45% 8/15/2010 46.50 CIT GROUP INC 5.50% 8/15/2010 55.00 CIT GROUP INC 5.60% 4/27/2011 60.60 CIT GROUP INC 5.75% 8/15/2012 42.75 CIT GROUP INC 5.80% 7/28/2011 61.00 CIT GROUP INC 6.25% 9/15/2009 91.75 CIT GROUP INC 6.25% 9/15/2009 81.05 CIT GROUP INC 6.25% 12/15/2009 65.50 CIT GROUP INC 6.25% 2/15/2010 58.00 CIT GROUP INC 6.50% 12/15/2009 65.10 CIT GROUP INC 6.50% 2/15/2010 55.00 CIT GROUP INC 6.50% 3/15/2010 55.55 CIT GROUP INC 6.50% 12/15/2010 56.00 CIT GROUP INC 6.50% 1/15/2011 53.00 CIT GROUP INC 6.50% 3/15/2011 45.00 CIT GROUP INC 6.60% 2/15/2011 51.50 CIT GROUP INC 6.75% 3/15/2011 49.25 CIT GROUP INC 6.88% 11/1/2009 71.98 CIT GROUP INC 7.00% 2/15/2012 47.00 CIT GROUP INC 7.25% 2/15/2012 47.00 CIT GROUP INC 7.25% 3/15/2012 50.00 CIT GROUP INC 12.00% 12/18/2018 23.88 CITADEL BROADCAS 4.00% 2/15/2011 17.50 CLEAR CHANNEL 4.40% 5/15/2011 46.03 CLEAR CHANNEL 4.50% 1/15/2010 86.00 CLEAR CHANNEL 5.00% 3/15/2012 44.00 CLEAR CHANNEL 5.50% 9/15/2014 30.25 CLEAR CHANNEL 5.75% 1/15/2013 32.25 CLEAR CHANNEL 6.25% 3/15/2011 57.25 CLEAR CHANNEL 7.65% 9/15/2010 72.00 CLEAR CHANNEL 10.75% 8/1/2016 29.00 CLEAR CHANNEL 10.75% 8/1/2016 42.50 COLONIAL BANK 9.38% 6/1/2011 10.00 COMPREHENS CARE 7.50% 4/15/2010 75.25 COMPUCREDIT 3.63% 5/30/2025 35.13 COOPER-STANDARD 7.00% 12/15/2012 30.00 COOPER-STANDARD 8.38% 12/15/2014 6.00 CREDENCE SYSTEM 3.50% 5/15/2010 55.33 DAYTON SUPERIOR 13.00% 6/15/2009 32.75 DECODE GENETICS 3.50% 4/15/2011 11.00 DECODE GENETICS 3.50% 4/15/2011 7.50 DELPHI CORP 6.50% 8/15/2013 0.50 DEX MEDIA INC 8.00% 11/15/2013 20.25 DEX MEDIA INC 9.00% 11/15/2013 20.25 DEX MEDIA INC 9.00% 11/15/2013 20.00 DEX MEDIA WEST 9.88% 8/15/2013 22.00 DOWNEY FINANCIAL 6.50% 7/1/2014 6.00 DUNE ENERGY INC 10.50% 6/1/2012 48.00 EDDIE BAUER HLDG 5.25% 4/1/2014 12.00 FAIRPOINT COMMUN 13.13% 4/1/2018 19.13 FAIRPOINT COMMUN 13.13% 4/1/2018 18.75 FCX-CALL08/09 6.88% 2/1/2014 103.44 FIBERTOWER CORP 9.00% 11/15/2012 52.00 FLEETWOOD ENTERP 14.00% 12/15/2011 30.25 FORD MOTOR CRED 5.10% 8/20/2009 99.40 FORD MOTOR CRED 5.75% 1/20/2010 78.74 FORD MOTOR CRED 7.50% 8/20/2010 71.86 FRANKLIN BANK 4.00% 5/1/2027 0.00 GENERAL MOTORS 7.13% 7/15/2013 14.14 GENERAL MOTORS 7.40% 9/1/2025 14.25 GENERAL MOTORS 7.70% 4/15/2016 14.00 GENERAL MOTORS 8.10% 6/15/2024 14.03 GENERAL MOTORS 8.25% 7/15/2023 14.00 GENERAL MOTORS 8.38% 7/15/2033 16.25 GENERAL MOTORS 8.80% 3/1/2021 15.25 GENERAL MOTORS 9.40% 7/15/2021 14.25 GENERAL MOTORS 9.45% 11/1/2011 8.00 GEORGIA GULF CRP 7.13% 12/15/2013 21.00 GEORGIA GULF CRP 10.75% 10/15/2016 12.50 GMAC LLC 5.00% 8/15/2009 99.75 GMAC LLC 5.10% 8/15/2009 99.60 GMAC LLC 5.25% 8/15/2009 99.80 GMAC LLC 7.00% 1/15/2010 88.50 GMAC LLC 7.13% 8/15/2009 99.79 GMAC LLC 7.20% 8/15/2009 99.50 HAIGHTS CROSS CO 12.50% 8/15/2011 7.25 HAIGHTS CROSS OP 11.75% 8/15/2011 43.00 HAWAIIAN TELCOM 9.75% 5/1/2013 1.75 HERBST GAMING 7.00% 11/15/2014 1.65 HERBST GAMING 8.13% 6/1/2012 1.45 IDEARC INC 8.00% 11/15/2016 6.40 INN OF THE MOUNT 12.00% 11/15/2010 45.00 INTCOMEX INC 11.75% 1/15/2011 41.50 INTL LEASE FIN 3.75% 8/15/2009 99.25 INTL LEASE FIN 4.00% 8/15/2009 99.03 INTL LEASE FIN 4.05% 9/15/2009 97.00 INTL LEASE FIN 4.25% 9/15/2009 94.50 INTL LEASE FIN 4.38% 8/15/2009 99.71 INTL LEASE FIN 4.55% 9/15/2009 96.10 INTL LEASE FIN 5.35% 8/15/2009 99.00 ISTAR FINANCIAL 5.13% 4/1/2011 54.00 ISTAR FINANCIAL 5.15% 3/1/2012 42.14 ISTAR FINANCIAL 5.38% 4/15/2010 82.00 ISTAR FINANCIAL 5.50% 6/15/2012 44.00 ISTAR FINANCIAL 5.65% 9/15/2011 54.00 ISTAR FINANCIAL 5.80% 3/15/2011 58.25 ISTAR FINANCIAL 6.00% 12/15/2010 59.60 JOHN HANCOCK LIF 3.65% 8/15/2009 99.30 KAISER ALUM&CHEM 12.75% 2/1/2003 4.00 KEYSTONE AUTO OP 9.75% 11/1/2013 32.13 KNIGHT RIDDER 7.13% 6/1/2011 46.00 KNIGHT RIDDER 7.15% 11/1/2027 23.00 LANDAMERICA 3.13% 11/15/2033 22.50 LANDAMERICA 3.25% 5/15/2034 22.50 LASALLE FNDG LLC 4.00% 8/15/2009 99.63 LAZYDAYS RV 11.75% 5/15/2012 15.00 LEHMAN BROS HLDG 2.00% 10/31/2012 11.46 LEHMAN BROS HLDG 4.00% 8/3/2009 9.00 LEHMAN BROS HLDG 4.38% 11/30/2010 17.00 LEHMAN BROS HLDG 4.50% 7/26/2010 17.00 LEHMAN BROS HLDG 4.50% 8/3/2011 12.84 LEHMAN BROS HLDG 4.70% 3/6/2013 6.95 LEHMAN BROS HLDG 4.80% 3/13/2014 18.25 LEHMAN BROS HLDG 4.80% 6/24/2023 11.00 LEHMAN BROS HLDG 5.00% 1/14/2011 18.08 LEHMAN BROS HLDG 5.00% 1/22/2013 11.25 LEHMAN BROS HLDG 5.00% 2/11/2013 11.50 LEHMAN BROS HLDG 5.00% 3/27/2013 6.95 LEHMAN BROS HLDG 5.00% 8/3/2014 9.00 LEHMAN BROS HLDG 5.00% 5/28/2023 10.00 LEHMAN BROS HLDG 5.00% 5/30/2023 11.88 LEHMAN BROS HLDG 5.00% 6/17/2023 11.88 LEHMAN BROS HLDG 5.10% 1/28/2013 10.00 LEHMAN BROS HLDG 5.10% 2/15/2020 11.35 LEHMAN BROS HLDG 5.20% 5/13/2020 9.00 LEHMAN BROS HLDG 5.25% 2/6/2012 18.50 LEHMAN BROS HLDG 5.25% 1/30/2014 8.23 LEHMAN BROS HLDG 5.25% 2/11/2015 12.00 LEHMAN BROS HLDG 5.25% 3/5/2018 7.00 LEHMAN BROS HLDG 5.25% 9/14/2019 9.00 LEHMAN BROS HLDG 5.25% 5/20/2023 10.50 LEHMAN BROS HLDG 5.35% 2/25/2018 11.50 LEHMAN BROS HLDG 5.35% 3/13/2020 7.75 LEHMAN BROS HLDG 5.35% 6/14/2030 11.88 LEHMAN BROS HLDG 5.38% 5/6/2023 10.50 LEHMAN BROS HLDG 5.40% 3/6/2020 11.75 LEHMAN BROS HLDG 5.40% 3/20/2020 12.13 LEHMAN BROS HLDG 5.40% 3/30/2029 10.40 LEHMAN BROS HLDG 5.40% 6/21/2030 10.51 LEHMAN BROS HLDG 5.45% 3/15/2025 11.25 LEHMAN BROS HLDG 5.45% 4/6/2029 10.40 LEHMAN BROS HLDG 5.45% 2/22/2030 12.38 LEHMAN BROS HLDG 5.45% 7/19/2030 12.38 LEHMAN BROS HLDG 5.45% 9/20/2030 11.88 LEHMAN BROS HLDG 5.50% 4/4/2016 17.25 LEHMAN BROS HLDG 5.50% 2/4/2018 10.00 LEHMAN BROS HLDG 5.50% 2/19/2018 12.38 LEHMAN BROS HLDG 5.50% 11/4/2018 12.00 LEHMAN BROS HLDG 5.50% 2/27/2020 10.75 LEHMAN BROS HLDG 5.50% 3/14/2023 12.38 LEHMAN BROS HLDG 5.50% 4/8/2023 8.78 LEHMAN BROS HLDG 5.50% 4/15/2023 11.30 LEHMAN BROS HLDG 5.50% 4/23/2023 8.00 LEHMAN BROS HLDG 5.50% 8/5/2023 11.88 LEHMAN BROS HLDG 5.50% 10/7/2023 11.00 LEHMAN BROS HLDG 5.50% 1/27/2029 11.88 LEHMAN BROS HLDG 5.50% 2/3/2029 11.24 LEHMAN BROS HLDG 5.50% 8/2/2030 9.75 LEHMAN BROS HLDG 5.55% 2/11/2018 12.38 LEHMAN BROS HLDG 5.55% 3/9/2029 9.25 LEHMAN BROS HLDG 5.55% 1/25/2030 11.30 LEHMAN BROS HLDG 5.55% 9/27/2030 12.38 LEHMAN BROS HLDG 5.55% 12/31/2034 11.35 LEHMAN BROS HLDG 5.60% 1/22/2018 11.88 LEHMAN BROS HLDG 5.60% 9/23/2023 9.00 LEHMAN BROS HLDG 5.60% 2/17/2029 10.50 LEHMAN BROS HLDG 5.60% 2/24/2029 10.40 LEHMAN BROS HLDG 5.60% 3/2/2029 11.88 LEHMAN BROS HLDG 5.60% 2/25/2030 11.24 LEHMAN BROS HLDG 5.60% 5/3/2030 9.00 LEHMAN BROS HLDG 5.63% 1/24/2013 19.00 LEHMAN BROS HLDG 5.63% 3/15/2030 11.35 LEHMAN BROS HLDG 5.65% 11/23/2029 12.38 LEHMAN BROS HLDG 5.65% 8/16/2030 11.35 LEHMAN BROS HLDG 5.65% 12/31/2034 8.00 LEHMAN BROS HLDG 5.70% 1/28/2018 11.50 LEHMAN BROS HLDG 5.70% 2/10/2029 11.88 LEHMAN BROS HLDG 5.70% 4/13/2029 11.88 LEHMAN BROS HLDG 5.70% 9/7/2029 12.38 LEHMAN BROS HLDG 5.70% 12/14/2029 12.50 LEHMAN BROS HLDG 5.75% 4/25/2011 18.55 LEHMAN BROS HLDG 5.75% 7/18/2011 17.50 LEHMAN BROS HLDG 5.75% 5/17/2013 16.85 LEHMAN BROS HLDG 5.75% 1/3/2017 0.01 LEHMAN BROS HLDG 5.75% 3/27/2023 11.35 LEHMAN BROS HLDG 5.75% 10/15/2023 9.19 LEHMAN BROS HLDG 5.75% 10/21/2023 12.38 LEHMAN BROS HLDG 5.75% 11/12/2023 12.38 LEHMAN BROS HLDG 5.75% 11/25/2023 10.55 LEHMAN BROS HLDG 5.75% 12/16/2028 12.00 LEHMAN BROS HLDG 5.75% 12/23/2028 12.00 LEHMAN BROS HLDG 5.75% 8/24/2029 9.20 LEHMAN BROS HLDG 5.75% 9/14/2029 9.00 LEHMAN BROS HLDG 5.75% 10/12/2029 12.38 LEHMAN BROS HLDG 5.75% 3/29/2030 9.00 LEHMAN BROS HLDG 5.80% 9/3/2020 12.38 LEHMAN BROS HLDG 5.80% 10/25/2030 11.88 LEHMAN BROS HLDG 5.85% 11/8/2030 8.75 LEHMAN BROS HLDG 5.88% 11/15/2017 17.00 LEHMAN BROS HLDG 5.90% 5/4/2029 11.88 LEHMAN BROS HLDG 5.90% 2/7/2031 10.00 LEHMAN BROS HLDG 5.95% 12/20/2030 8.50 LEHMAN BROS HLDG 6.00% 7/19/2012 18.13 LEHMAN BROS HLDG 6.00% 12/18/2015 8.06 LEHMAN BROS HLDG 6.00% 2/12/2018 11.50 LEHMAN BROS HLDG 6.00% 1/22/2020 11.75 LEHMAN BROS HLDG 6.00% 2/12/2020 10.00 LEHMAN BROS HLDG 6.00% 1/29/2021 9.91 LEHMAN BROS HLDG 6.00% 10/23/2028 12.38 LEHMAN BROS HLDG 6.00% 11/18/2028 12.38 LEHMAN BROS HLDG 6.00% 5/11/2029 11.59 LEHMAN BROS HLDG 6.00% 7/20/2029 9.20 LEHMAN BROS HLDG 6.00% 3/21/2031 8.06 LEHMAN BROS HLDG 6.00% 4/30/2034 8.00 LEHMAN BROS HLDG 6.00% 7/30/2034 12.38 LEHMAN BROS HLDG 6.00% 2/21/2036 11.50 LEHMAN BROS HLDG 6.00% 2/24/2036 12.38 LEHMAN BROS HLDG 6.00% 2/12/2037 11.88 LEHMAN BROS HLDG 6.05% 6/29/2029 11.00 LEHMAN BROS HLDG 6.10% 8/12/2023 12.38 LEHMAN BROS HLDG 6.15% 4/11/2031 11.50 LEHMAN BROS HLDG 6.20% 9/26/2014 18.50 LEHMAN BROS HLDG 6.20% 6/15/2027 12.41 LEHMAN BROS HLDG 6.20% 5/25/2029 11.24 LEHMAN BROS HLDG 6.25% 2/5/2021 11.10 LEHMAN BROS HLDG 6.25% 2/22/2023 12.00 LEHMAN BROS HLDG 6.40% 10/11/2022 12.41 LEHMAN BROS HLDG 6.50% 7/19/2017 0.01 LEHMAN BROS HLDG 6.50% 2/28/2023 10.00 LEHMAN BROS HLDG 6.50% 3/6/2023 11.00 LEHMAN BROS HLDG 6.50% 10/18/2027 9.00 LEHMAN BROS HLDG 6.50% 10/25/2027 11.25 LEHMAN BROS HLDG 6.50% 11/15/2032 9.45 LEHMAN BROS HLDG 6.50% 1/17/2033 10.76 LEHMAN BROS HLDG 6.50% 2/13/2037 12.00 LEHMAN BROS HLDG 6.50% 6/21/2037 11.88 LEHMAN BROS HLDG 6.50% 7/13/2037 12.00 LEHMAN BROS HLDG 6.60% 10/3/2022 10.26 LEHMAN BROS HLDG 6.63% 1/18/2012 18.00 LEHMAN BROS HLDG 6.63% 7/27/2027 9.00 LEHMAN BROS HLDG 6.75% 12/28/2017 0.03 LEHMAN BROS HLDG 6.75% 7/1/2022 12.38 LEHMAN BROS HLDG 6.75% 11/22/2027 9.00 LEHMAN BROS HLDG 6.75% 3/11/2033 10.25 LEHMAN BROS HLDG 6.75% 10/26/2037 12.00 LEHMAN BROS HLDG 6.80% 9/7/2032 8.00 LEHMAN BROS HLDG 6.85% 8/16/2032 10.13 LEHMAN BROS HLDG 6.85% 8/23/2032 9.00 LEHMAN BROS HLDG 6.88% 5/2/2018 18.88 LEHMAN BROS HLDG 6.88% 7/17/2037 0.01 LEHMAN BROS HLDG 6.90% 9/1/2032 5.55 LEHMAN BROS HLDG 7.00% 4/16/2019 12.50 LEHMAN BROS HLDG 7.00% 5/12/2023 11.00 LEHMAN BROS HLDG 7.00% 10/4/2032 9.00 LEHMAN BROS HLDG 7.00% 7/27/2037 10.51 LEHMAN BROS HLDG 7.00% 9/28/2037 10.26 LEHMAN BROS HLDG 7.00% 12/28/2037 9.00 LEHMAN BROS HLDG 7.00% 1/31/2038 11.50 LEHMAN BROS HLDG 7.00% 2/1/2038 9.37 LEHMAN BROS HLDG 7.00% 2/7/2038 9.00 LEHMAN BROS HLDG 7.00% 2/8/2038 12.50 LEHMAN BROS HLDG 7.00% 4/22/2038 11.00 LEHMAN BROS HLDG 7.05% 2/27/2038 11.38 LEHMAN BROS HLDG 7.10% 3/25/2038 9.00 LEHMAN BROS HLDG 7.25% 4/29/2038 9.00 LEHMAN BROS HLDG 7.35% 5/6/2038 12.13 LEHMAN BROS HLDG 7.88% 8/15/2010 15.00 LEHMAN BROS HLDG 8.00% 3/5/2022 7.75 LEHMAN BROS HLDG 8.50% 8/1/2015 17.00 LEHMAN BROS HLDG 8.50% 6/15/2022 8.00 LEHMAN BROS HLDG 8.75% 12/21/2021 11.00 LEHMAN BROS HLDG 8.75% 2/6/2023 7.00 LEHMAN BROS HLDG 8.80% 3/1/2015 16.50 LEHMAN BROS HLDG 8.92% 2/16/2017 12.00 LEHMAN BROS HLDG 9.00% 12/28/2022 11.00 LEHMAN BROS HLDG 9.50% 12/28/2022 11.88 LEHMAN BROS HLDG 9.50% 1/30/2023 11.00 LEHMAN BROS HLDG 9.50% 2/27/2023 11.88 LEHMAN BROS HLDG 10.00% 3/13/2023 12.25 LEHMAN BROS HLDG 10.38% 5/24/2024 7.50 LEHMAN BROS HLDG 11.00% 10/25/2017 10.50 LEHMAN BROS HLDG 11.00% 6/22/2022 8.19 LEHMAN BROS HLDG 11.00% 7/18/2022 10.50 LEHMAN BROS HLDG 11.50% 9/26/2022 13.38 LEINER HEALTH 11.00% 6/1/2012 2.00 LOCAL INSIGHT 11.00% 12/1/2017 25.00 LTX-CREDENCE 3.50% 5/15/2011 40.64 M&I MARS & ISL 2.90% 8/18/2009 99.70 MAJESTIC STAR 9.50% 10/15/2010 61.75 MAJESTIC STAR 9.75% 1/15/2011 8.88 MCCLATCHY CO 15.75% 7/15/2014 46.13 MERISANT CO 9.50% 7/15/2013 12.00 MERRILL LYNCH 0.00% 3/9/2011 94.25 METALDYNE CORP 11.00% 6/15/2012 2.31 MILLENNIUM AMER 7.63% 11/15/2026 7.00 MORRIS PUBLISH 7.00% 8/1/2013 8.00 NCI BLDG SYSTEMS 2.13% 11/15/2024 87.75 NEFF CORP 10.00% 6/1/2015 8.00 NETWORK COMMUNIC 10.75% 12/1/2013 42.50 NEW PLAN EXCEL 7.40% 9/15/2009 85.45 NEW PLAN REALTY 6.90% 2/15/2028 18.00 NEW PLAN REALTY 7.68% 11/2/2026 20.00 NEW PLAN REALTY 7.97% 8/14/2026 18.55 NEWPAGE CORP 10.00% 5/1/2012 47.50 NEWPAGE CORP 12.00% 5/1/2013 32.50 NORTH ATL TRADNG 9.25% 3/1/2012 25.00 NTK HOLDINGS INC 0.00% 3/1/2014 5.25 OSCIENT PHARM 12.50% 1/15/2011 32.20 PAC-WEST TELECOM 13.50% 2/1/2009 4.00 PACKAGING DYNAMI 10.00% 5/1/2016 31.50 PANOLAM INDUSTRI 10.75% 10/1/2013 5.00 PLY GEM INDS 9.00% 2/15/2012 37.00 PMI CAPITAL I 8.31% 2/1/2027 14.88 POPE & TALBOT 8.38% 6/1/2013 1.00 PRIMUS TELECOM 8.00% 1/15/2014 11.75 PRTL-RESTR07/09 14.25% 5/20/2011 63.00 QUALITY DISTRIBU 9.00% 11/15/2010 58.75 QUANTUM CORP 4.38% 8/1/2010 61.00 RADIO ONE INC 6.38% 2/15/2013 33.25 RADIO ONE INC 8.88% 7/1/2011 42.63 RAFAELLA APPAREL 11.25% 6/15/2011 26.00 RATHGIBSON INC 11.25% 2/15/2014 35.50 RAYOVAC CORP 8.50% 10/1/2013 36.00 READER'S DIGEST 9.00% 2/15/2017 6.00 REALOGY CORP 12.38% 4/15/2015 41.00 REALOGY CORP 12.38% 4/15/2015 38.00 RESIDENTIAL CAP 8.00% 2/22/2011 59.00 RESIDENTIAL CAP 8.38% 6/30/2010 73.60 RESIDENTIAL CAP 8.50% 6/1/2012 55.00 RH DONNELLEY 6.88% 1/15/2013 7.00 RH DONNELLEY 6.88% 1/15/2013 6.00 RH DONNELLEY 6.88% 1/15/2013 7.00 RH DONNELLEY 8.88% 1/15/2016 6.00 RH DONNELLEY 8.88% 10/15/2017 6.00 ROTECH HEALTHCA 9.50% 4/1/2012 5.00 SALEM COMM HLDG 7.75% 12/15/2010 70.63 SECURITY BENEFIT 7.45% 10/1/2033 8.50 SECURITY BENEFIT 8.75% 5/15/2016 10.50 SILVERLEAF RES 8.00% 4/1/2010 73.50 SIX FLAGS INC 4.50% 5/15/2015 10.25 SIX FLAGS INC 9.63% 6/1/2014 11.25 SIX FLAGS INC 9.75% 4/15/2013 10.50 SPHERIS INC 11.00% 12/15/2012 41.25 STALLION OILFIEL 9.75% 2/1/2015 34.75 STANLEY-MARTIN 9.75% 8/15/2015 25.25 STATION CASINOS 6.00% 4/1/2012 31.25 STATION CASINOS 6.50% 2/1/2014 2.50 STATION CASINOS 6.63% 3/15/2018 2.25 STATION CASINOS 6.88% 3/1/2016 1.50 TEKNI-PLEX INC 12.75% 6/15/2010 58.15 THORNBURG MTG 8.00% 5/15/2013 2.00 TIMES MIRROR CO 6.61% 9/15/2027 5.00 TIMES MIRROR CO 7.25% 3/1/2013 5.00 TIMES MIRROR CO 7.50% 7/1/2023 8.00 TOUSA INC 9.00% 7/1/2010 5.00 TOUSA INC 9.00% 7/1/2010 9.00 TOUSA INC 10.38% 7/1/2012 0.10 TOYOTA-CALL08/09 5.50% 8/21/2017 99.65 TRANSMERIDIAN EX 12.00% 12/15/2010 6.75 TRIBUNE CO 4.88% 8/15/2010 5.25 TRIBUNE CO 5.25% 8/15/2015 7.13 TRIBUNE CO 5.67% 12/8/2008 5.00 TRONOX WORLDWIDE 9.50% 12/1/2012 17.00 TRUMP ENTERTNMNT 8.50% 6/1/2015 8.88 UAL CORP 4.50% 6/30/2021 47.34 UAL CORP 5.00% 2/1/2021 55.00 USFREIGHTWAYS 8.50% 4/15/2010 39.55 VERASUN ENERGY 9.38% 6/1/2017 13.88 VERENIUM CORP 5.50% 4/1/2027 22.50 VICORP RESTAURNT 10.50% 4/15/2011 0.01 VION PHARM INC 7.75% 2/15/2012 36.75 VISTEON CORP 7.00% 3/10/2014 5.06 VITESSE SEMICOND 1.50% 10/1/2024 59.00 WASH MUT BANK FA 5.13% 1/15/2015 0.13 WASH MUT BANK FA 5.65% 8/15/2014 0.22 WASH MUT BANK FA 6.88% 6/15/2011 0.50 WASH MUT BANK NV 5.50% 1/15/2013 0.35 WASH MUT BANK NV 5.55% 6/16/2010 24.00 WASH MUTUAL INC 8.25% 4/1/2010 67.20 WCI COMMUNITIES 4.00% 8/5/2023 1.56 WCI COMMUNITIES 6.63% 3/15/2015 4.00 WCI COMMUNITIES 7.88% 10/1/2013 1.00 WII COMPONENTS 10.00% 2/15/2012 46.00 WILLIAM LYON 7.63% 12/15/2012 35.00 WILLIAM LYONS 7.50% 2/15/2014 35.00 WILLIAM LYONS 7.63% 12/15/2012 36.50 WILLIAM LYONS 10.75% 4/1/2013 41.25 WIMAR OP LLC/FIN 9.63% 12/15/2014 0.06 WISE METALS GRP 10.25% 5/15/2012 47.00 YELLOW CORP 5.00% 8/8/2023 29.00 YOUNG BROADCSTNG 10.00% 3/1/2011 2.00 ********* 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 **