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/raid1/www/Hosts/bankrupt/TCR_Public/091110.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, November 10, 2009, Vol. 13, No. 311 Headlines ADVANTA CORP: Files to Reorganize Under Chapter 11 A.K.S. ENTERPRISES INC: Voluntary Chapter 11 Case Summary ALL LAND INVESTMENTS: Files Schedules of Assets & Liabilities ALL LAND INVESTMENTS: Taps Maschmeyer Karalis as Lead Counsel ALL LAND INVESTMENTS: Wants Rawle as Local Bankruptcy Counsel AMERICAN INT'L: Taps $4.2BB from Govt for ILFC, Mortgage Insurer ANUP SINGH: Case Summary & 20 Largest Unsecured Creditors ARIZONA EQUIPMENT: Gets Interim Nod for G&K as Bankruptcy Counsel ARMANDO ORTIZ: Case Summary & 20 Largest Unsecured Creditors ARRAY BIOPHARMA: September 30 Balance Sheet Upside-Down by $82.5MM BARLOW PROJECTS: Settles With Harrisburg for $5.4 Million BEN CATLIN: Files for Bankruptcy Under Chapter 11 BIOJECT MEDICAL: Reports $210,000 Q3 2009 Operating Loss BLACK EAGLE FARM: Financial Woes Cue Chapter 11 Filing BRIDGEVIEW AEROSOL: Sec. 341 Meeting Set for December 7 BRIDGEVIEW AEROSOL: Wants Filing of Schedules Moved to Dec. 2 CAL INVESTMENTS: Sec. 341 Meeting Set for December 9 CARITAS HEALTH: Court Approves Real Estates Sale to Joshua Guttman CATHOLIC CHURCH: 80 Delaware Priest Abuse Suits Stayed CELESTICA'S INC: Moody's Upgrades Corp. Family Rating to 'Ba3' CELL THERAPEUTICS: Posts $35 Mil. Net Loss for 3rd Quarter 2009 CENTENNIAL COMMUNICATIONS: Fitch Upgrades Issuer Rating From 'B' CHARLES BOWEN: Case Summary & 20 Largest Unsecured Creditors CHRYSLER LLC: Gov't Won't Recoup Auto Investments, Says GAO Report CHRYSLER LLC: New Chrysler Not Losing Money, Says Marchionne CHRYSLER LLC: Proposes Funding Arrangement for WindDown of Estate CHRYSLER LLC: Proposes to Assign Crown Group Sublease CIT GROUP: Gets Interim Nod to Honor Federal Reserve Agreement CIT GROUP: Proposes Injunction Against Utility Providers CIT GROUP: Sec. 341 Meeting of Creditors Set for December 2 CIT GROUP: Summary of Prepackaged Chapter 11 Plan CIT GROUP: Gets Nod to Maintain Prepetition Employee Programs CIT GROUP: Wants to Pay Vendors in Ordinary Course CITADEL BROADCASTING: Says It May Have to File for Chapter 11 CLEM CARINALLI: Can Sell 2 Assets; Faces Fraud Allegations COEUR D'ALENE MINES: S&P Raises Rating on Senior Notes to 'B-' COHARIE HOG FARM INC: Case Summary & 20 Largest Unsec. Creditors COMFORCE CORP: Posts Lower Q3 2009 Net Income of $1,056,000 COMSTOCK HOMEBUILDING: Annual Stockholders' Meeting on Dec. 15 CORE MANUFACTURING: To Sell Assets to Esmark for $3.5 Million CROCS INC: Swings to $22,068,000 Net Income for Q3 2009 DAMIEN GILLIAMS: Files for Bankruptcy to Fend Off Foreclosure DEL HARBOR: Moody's Assigns 'Ba1' Rating on $25 Mil. Revenue Bonds DELTA PETROLEUM: Posts $100.9 Mil. Net Loss for 3rd Quarter 2009 DIAMOND GROUP: Voluntary Chapter 11 Case Summary DONALD DELLE BOVI: Case Summary & 11 Largest Unsecured Creditors DRYSHIPS INC: Reaches Waiver Deal With Commerzbank & WestLB EINSTEIN NOAH: Q3 2009 Net Income Widens to $60,861,000 ELECTRONIC ARTS: Mulls 1,500 Job Cuts After Wider Q2 Loss ERIC HUBBARD: Voluntary Chapter 11 Case Summary ERICKSON RETIREMENT: Can File Schedules Until Dec. 18 ERICKSON RETIREMENT: PNC, et al, Air Concerns on Deposits' Escrow ERICKSON RETIREMENT: Proposes to Pay Severance Obligations ERNIE LEE: Sec. 341 Meeting Set for December 14 ERNIE LEE: List of 20 Largest Unsecured Creditors EWG CORPORATION: Files for Chapter 11 Bankruptcy in Virginia FAIRPOINT COMMS: Gets Nod to Pay Prepetition Taxes & Fees FAIRPOINT COMMS: Has Interim Nod for Compensation Programs FAIRPOINT COMMS: Proposes Injunction Against Utilities FERRO CORPORATION: Moody's Affirms Corporate Family Rating at 'B1' FILENE'S BASEMENT: Court Approves $70 Million Settlement FIRST NATIONAL: Posts $12.7 Million Net Loss in Q3 2009 FORD MOTOR: S&P Assigns 'CCC' Rating on $2.5 Mil. Senior Notes GALLEON MANAGEMENT: SEC Charges 13 More in Insider Trading Case GENERAL MOTORS: U.S. Aid Can Be Used to Fix Opel GENESCO INC: Sports Fan-Attic Deal Won't Affect S&P's 'B+' Rating GLEN ROSE: Posts $279,004 Net Loss in First Quarter Ended June 30 GPX INTERNATIONAL: Hits Former Employees With Trade Secrets Suit GREEKTOWN HOLDINGS: Addresses Plan Confirmation Objections GREEKTOWN HOLDINGS: Committee, et al., Oppose Detroit Settlement GREEKTOWN HOLDINGS: Confirmation Hearing Moved to Nov. 16 GREEKTOWN HOLDINGS: Files 3rd Amended Plan & Disc. Statement HAMPSHIRE GROUP: Swings to $572,000 Net Loss for Q3 2009 HAWAIIAN TELCOM: Creditors Committee, Others Object to Plan HAWAIIAN TELCOM: Files Documents on Post-Bankr. Incentive Plans HAWAIIAN TELCOM: Majority of Creditors Vote to Accept Plan HAWAIIAN TELCOM: Parties File Pleas to Preclude Plan Testimony IMAX CORP: Swings to $1,062,000 Net Income for Q3 2009 IMAX CORP: Wachovia, EDC Pledge New $75 Million Credit Facility JCT WHOLESALE: Voluntary Chapter 11 Case Summary JOEL KRON: Bankruptcy Court Confirms Amended Chapter 11 Plan KIEBLER SLIPPERY: Files Schedules of Assets and Liabilities LE JARDIN: Court Approved Dismissal of Chapter 11 Cases LEAR CORP: Completes Reorganization; New Share Begin Trading LEE FOOD SERVICE: Case Summary & 20 Largest Unsec. Creditors LEHMAN BROTHERS: Arc Capital Placed Into Administration LEHMAN BROTHERS: FSA Helps Investors of Structured Products LEHMAN BROTHERS: HKMA October 23 Report on Progress of Probe LEHMAN BROTHERS: To Delay Filing 10-Q for Third Quarter LEHMAN BROTHERS: UK Appeals Court Shuns PwC Plan for Lehman Assets LIFE SCIENCES: Posts Lower Q3 2009 Net Income of $1,058,000 LYONDELL CHEMICAL: Al-Waha Joint Venture Starts Up Dubai Plant LYONDELL CHEMICAL: Cadwalader Bills Lyondell $17M For Summer Work LYONDELL CHEMICAL: Wins Nod of Omnibus Motion for Agreements MARANI BRANDS: Posts Restated Net Loss of $3.4 Million in FY2008 MICHAELS STORES: S&P Affirms 'B-' Corporate Credit Rating MICROMET INC: Posts Wider Q3 2009 Net Loss of $19,892,000 MONTGOMERY REALTY: Court Sets November 24 Plan Voting Deadline MORRIS PUBLISHING: Moves Deadline to Commence Exchange Offer NATURAL HEALTH: Won't Appeal Nasdaq Delisting Notice NEDAK ETHANOL: Posts $3 Million Net Loss in Q3 2009 NEXCEN BRANDS: Has $416,000 Q2 Net Loss; In Talks with Lender NORTEL NETWORKS: Canada Court OKs GSM Business Auction NORTEL NETWORKS: Ericsson Exec Says Sale to Close Soon NORTEL NETWORKS: To Auction Ethernet Nov. 13; Nokia Mulls Bid NORTEL NETWORKS: Wins Court Nod to Sell Packet Assets to Hitachi NORTHEAST BIOFUELS: Disclosure Statement Approved NPS PHARMACEUTICALS: Posts Lower Q3 2009 Net Loss of $7,766,000 NTK HOLDINGS: Proposes AlixPartners as Advisors NTK HOLDINGS: Proposes Ernst & Young as Tax Advisor NTK HOLDINGS: Proposes to Employ Ordinary Course Professionals P&R REALTY: Chapter 11 Case Summary & Unsecured Creditor PACIFIC RESOURCES: Gets Three Bids for Abandoned Alaska Assets PEAK FLOW OPERATING: Voluntary Chapter 11 Case Summary PEOPLE AGAINST DRUGS': Court Confirms Modified 3rd Amended Plan PHILIP SPENCER: Case Summary & 20 Largest Unsecured Creditors PRECISION DRILLING: S&P Gives Stable Outlook, Affirms 'BB' Rating QUEST RESOURCE: Swings to $16,724,000 Net Loss for Q3 2009 RAINIER PACIFIC: Receives Non-Compliance Notice From NASDAQ READER'S DIGEST: Reveals New Global Marketing Organization READER'S DIGEST: Files First Amended Reorganization Plan READER'S DIGEST: Proposes to Implement Employee Talent Plan READER'S DIGEST: U.S. Trustee Objects to "Overly Broad" Releases RETICEL INTERIORS: Sec. 341 Meeting Set for December 8 R.H. DONNELLEY: Blackstone Charges $437,500 for 2.5 Months Work R.H. DONNELLEY: Law Firms File Securities Class Suits SAJID KHAN: Voluntary Chapter 11 Case Summary SAVANNAH GATEWAY: Sec. 341 Meeting Set for November 30 SCOLR PHARMA: May Seek Bankruptcy, Wind Up Business SEMCAN INC: Naston Calls in Pococks to Assist on Restructuring SEQUENOM INC: Net Loss Widens to $14,875,000 at Sept. 30 Quarter SILVER DEVELOPMENTS: Voluntary Chapter 11 Case Summary SINCLAIR BROADCAST: Moody's Upgrades Corp. Family Rating to 'B2' SIX FLAGS: Opposes Termination of Plan Exclusivity SIX FLAGS: Proposes to Enter Into $800 Mil. Exit Financing SIX FLAGS: Reaches Consensus With Noteholders, Amends Plan SIX FLAGS: Reports $137.9 Mil. Net Income for Third Quarter SJ REALTY: Files for Bankruptcy to Restructure Under Chapter 11 SMART BALANCE: S&P Raises Corporate Credit Rating to 'B' SPECIALIZED TECHNOLOGY: S&P Raises Corp. Credit Rating to 'B+' SPRINT NEXTEL: To Let Go of Up to 2,500 Employees to Save $350MM SUNCAL COS: Buys 1,000 Lots from Kimbal Hill for $20.1 Million SUPERIOR BOAT WORKS: Voluntary Chapter 11 Case Summary SW ACQUISITIONS: S&P Assigns Corporate Credit Rating at 'BB-' TARRAGON CORP: Court Extends Plan Solicitation Until November 19 TELKONET INC: Receives Delisting Notice From NYSE Amex TETON ENERGY: Files for Reorganization Under Chapter 11 TISHMAN SPEYER: Seeks Special Servicer for PCV/ST Loan TRITON EP LLC: Voluntary Chapter 11 Case Summary TRUMP ENTERTAINMENT: Plan Confirmation Hearing Set on January 20 UNIVERSAL AMERICAN: S&P Gives Outlook to Stable, Affirms Ratings VISTEON CORP: Court Partly Approves Incentive Program VISTEON CORP: Files Chrysler Accommodation Pact Under Seal VISTEON CORP: Seeks to Enter Chartis Insurance Program VISTEON CORP: To Auction Two Plants on Nov. 11 & 12 VYTERIS INC: Inks Amendment & Waiver to Registration Rights Deal WAIGHTSTILL MOUNTAIN: Sec. 341 Meeting Set for December 16 WELLINGTON PARK: Loan Default Prompts Chapter 11 Filing * Tennenbaum Capital Closes $330 Million DIP Financing Fund * Large Companies with Insolvent Balance Sheets ********* ADVANTA CORP: Files to Reorganize Under Chapter 11 -------------------------------------------------- Advanta Corp. filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Although Advanta Corp. has close to $100 million in cash and equivalents on hand, over time it would not be able to meet all of its existing obligations. The filing at this time is intended to address that shortfall in an orderly way that benefits stakeholders most fairly. The company is reviewing both existing and potential business opportunities in connection with the reorganization. Advanta Corp. has about $138 million of senior retail investment notes outstanding and the filing is expected to preserve the value of Advanta Corp.'s assets which will, among other things, maximize recoveries of the senior retail note holders. Advanta Bank Corp., a wholly owned subsidiary of Advanta Corp, is not included in the Chapter 11 filing. It has been one of the nation's largest issuers of credit cards for small business. It is currently collecting its $2.7 billion portfolio of managed receivables from 360,000 customers but the cards are not open to new charges. The Chapter 11 proceeding will not have any impact on outstanding credit card balances and customer payment obligations will continue on normal schedules. Advanta Bank Corp.'s capital is, however, below regulatory capital requirements and over time Advanta Bank Corp. may be turned over to an FDIC receivership. Again that should not affect its customers. The parent corporation consciously decided not to fund the capital deficiency in order to preserve value for the senior retail note holders and other Advanta. Corp. stakeholders. "The economic debacle over the last two years devastated Advanta's small business customers and Advanta itself," said Dennis Alter, Chairman and CEO, who is waiving his salary and any bonus during this process. In May of this year Advanta Corp. and Advanta Bank Corp. initiated a plan to limit their losses and add substantial value through the acquisition of Class A bonds issued by the Advanta Business Card Master Trust. However, the FDIC, after initially clearing the Plan, ultimately decided not to allow it to proceed. After that Advanta Bank Corp. proposed a second plan to enable the Company to preserve value for its stakeholders and provide capital both for the Company and the Bank. However, an essential component of that plan recently also failed to secure FDIC approval leading to the Chapter 11 filing. About Advanta Corp. Advanta Corp. -- http://www.advantareorg.com/-- has had a 59-year history of being a leading innovator in the financial services industry and of providing great value to its stakeholders, including its senior retail note holders and shareholders, prior to the recent reversals. It has also been a major civic and charitable force in the communities in which it is based, particularly in the Greater Philadelphia area. As of Sept. 30, 2009, the Company had $2,497,897 in assets against total liabilities of $2,465,936. As reported by the Troubled Company Reporter on August 12, 2009, Advanta said its ability to continue as a going concern may depend on the successful implementation of a plan for new business opportunities. The Federal Deposit Insurance Corporation has placed significant restrictions on the activities of Advanta Corp.'s bank subsidiary, Advanta Bank Corp. Advanta Bank is required to maintain a total risk-based capital ratio of at least 10% and a tier I leverage capital ratio of at least 5%. One of the regulatory agreements with the FDIC also requires Advanta Bank to terminate its deposit-taking activities and deposit insurance after payment of its existing deposits, unless it submits a plan approved by the FDIC. A.K.S. ENTERPRISES INC: Voluntary Chapter 11 Case Summary --------------------------------------------------------- Debtor: A.K.S. Enterprises, Inc. 2206 West 79th Terrace Prairie Village, KS 66208 Bankruptcy Case No.: 09-51062 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Western District of Missouri (St. Joseph) Judge: Jerry W. Venters Debtor's Counsel: Ronald S. Weiss, Esq. Berman DeLeve Kuchan & Chapman 911 Main St., Suite 2230 Kansas City, MO 64105 Tel: (816) 471-5900 Fax: (816) 842-9955 Email: rweiss@bdkc.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 Richard A. Kochuyt, vice president/secretary of the Company. ALL LAND INVESTMENTS: Files Schedules of Assets & Liabilities ------------------------------------------------------------- All Land Investments, LLC filed with the U.S. Bankruptcy Court for the District of Delaware, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $20,160,193 B. Personal Property 110 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $14,125,865 E. Creditors Holding Unsecured Priority Claims 25,973 F. Creditors Holding Unsecured Non-priority Claims 8,644,701 ----------- ------------ TOTAL $20,160,303 $22,796,539 Newark, Delaware-based All Land Investments, LLC, operates a real estate business. The Company filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. D. Delaware Case No. 09- 13790). Gary F. Seitz, Esq., at Rawle & Henderson LLP assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. ALL LAND INVESTMENTS: Taps Maschmeyer Karalis as Lead Counsel ------------------------------------------------------------- All Land Investments, LLC, has sought the approval of the U.S. Bankruptcy Court for the District of Delaware to hire Maschmeyer Karalis P.C. as lead bankruptcy counsel. MK will, among other things: -- advise and assist the Debtor in the negotiation and documentation of the use of cash collateral and/or debtor- in-possession financing, debt restructuring and related transactions; -- review and advise the Debtor on the nature and validity of agreements on the Debtor's business as well as the nature and validity of liens asserted against the Debtor; -- advise the Debtor concerning the actions it might take to collect and recover property for the benefit of its estate; and -- counsel the Debtor in connection with the formulation, negotiation, and promulgation of a plan of reorganization and related documents. Aris J. Karalis, Esq., an attorney and shareholder of MK, says that the firm will be paid based on the hourly rates of its professionals: Professional Rate ------------ ---- Shareholder $425 Associates $230-$360 Paralegals $105-$120 Mr. Karalis assured the Court that MK doesn't have interests adverse to the interest of the Debtors' estates or of any class of creditors and equity security holders. Mr. Karalis maintains that MK is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Newark, Delaware-based All Land Investments, LLC, operates a real estate business. The Company filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. D. Delaware Case No. 09- 13790). The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. ALL LAND INVESTMENTS: Wants Rawle as Local Bankruptcy Counsel ------------------------------------------------------------- All Land Investments, LLC, has asked for permission of the U.S. Bankruptcy Court for the District of Delaware to hire Rawle & Henderson LLP as local bankruptcy counsel. RH will: -- file necessary and appropriate applications, motions, pleadings, orders, notices, petitions, schedules, and other documents on behalf of the Debtor; -- attend required court appearances on behalf of the Debtors; and -- perform other legal services for and on behalf of the Debtor, which may be necessary or appropriate in the administration of the Debtor's Chapter 11 bankruptcy case. Gary F. Seitz, Esq., a partner of RH, said that the firm will be paid based on the hourly rates of its professionals: Professional Rate ------------ ---- Partners $400 Associates $200-$400 Paralegals $100-$200 Mr. Seitz assured the Court that RH doesn't have interests adverse to the interest of the Debtors' estates or of any class of creditors and equity security holders. Mr. Seitz maintains that RH is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Newark, Delaware-based All Land Investments, LLC, operates a real estate business. The Company filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. D. Delaware Case No. 09- 13790). The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. AMERICAN INT'L: Taps $4.2BB from Govt for ILFC, Mortgage Insurer ---------------------------------------------------------------- According to Bloomberg News, American International Group Inc., which has already obtained loans from the U.S. government to avert collapse, tapped the Treasury Department for another $4.2 billion to help restructure its money-losing mortgage guarantor and International Lease Finance Corporation, the plane unit it's trying to sell. As of September 30, 2009, AIG had drawn down $3.2 billion, including approximately $2.06 billion on August 13, 2009, from $29.8 billion available under the Series F Preferred Stock Department of the Treasury Commitment, which was provided as part of its fourth bailout from the U.S. government. AIG said in its Form 10-Q filed with the Securities and Exchange Commission that on November 6, 2009, it delivered a notice of an additional drawdown of approximately $2.1 billion under the Department of the Treasury Commitment related primarily to the intercompany purchase of ILFC common shares. AIG expects to receive the funds on November 13, 2009. "It shows that they're still having trouble getting cash to continue to run their operations" without government support, said Sandler O'Neill Partners LP analyst Paul Newsome, according to the Bloomberg report. "That's despite the fact you've had some really favorable things happen, like the credit markets getting better." AIG says in a statement reporting its third quarter results that it continues to make progress on its disposition plan. During the first nine months of 2009 and through October 31, 2009, AIG entered into agreements to sell or completed the sale of operations and assets that are expected to generate a total of approximately $5.6 billion in net after-tax proceeds that will be available to repay outstanding borrowings and reduce the amount of the FRBNY Facility upon closing. AIG continues to engage in productive discussions with potential buyers for a number of its other businesses. AIG reported a net loss of $15 million for the three months ended September 30, 2009, from a net loss of $24.7 billion for the same quarter a year ago. AIG posted a net loss of $3.3 billion for the nine months ended September 30, 2009, from a net loss of $37.8 billion for the same period a year ago. Total revenues were $26.0 billion for the three months ended September 30, 2009, from $898 million for the same period a year ago. Total revenues were $76.0 billion for the nine months ended September 30, 2009, from $34.8 billion for the same period a year ago. As of September 30, 2009, AIG had $844.3 billion in total assets, including $4.9 billion in cash and $637.9 billion in securities investments, against $766.6 billion in total liabilities and $1.1 billion in redeemable noncontrolling interest in partially owned consolidated subsidiaries. AIG results in the third quarter 2009 included an operating loss before net realized capital gains (losses) of $1.3 billion, compared to a $1.6 billion loss in the third quarter of 2008. This lower operating loss was primarily the result of lower unallocated corporate expenses partially offset by restructuring expenses. A copy of the press release announcing the third quarter results is available for free at http://researcharchives.com/t/s?48ea A copy of the Form 10-Q filed with the SEC is available for free at http://researcharchives.com/t/s?48eb About American International Group Based in New York, American International Group, Inc., is the leading international insurance organization with operation in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Ireland and Tokyo. In September 2008, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. On September 16, 2008, the Federal Reserve Bank created an $85 billion credit facility to enable AIG to meet increased collateral obligations consequent to the ratings downgrade, in exchange for the issuance of a stock warrant to the Fed for 79.9% of the equity of AIG. The credit facility was eventually increased to as much as $182.5 billion. AIG has sold a number of its subsidiaries and other assets to pay down loans received from the U.S. government, and continues to seek buyers of its assets. AIG reported a net loss of $3.3 billion on revenue of $52.63 billion for nine months ended Sept. 30, 2009, compared with a net loss of $37.83 billion on revenue of $63.49 billion in the same period in 2008. ANUP SINGH: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Joint Debtors: Anup Singh Ritu Singh 5724 North Woodland Point Kansas City, MO 64152 Bankruptcy Case No.: 09-51063 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Western District of Missouri (St. Joseph) Judge: Jerry W. Venters Debtor's Counsel: Ronald S. Weiss, Esq. Berman DeLeve Kuchan & Chapman 911 Main St., Suite 2230 Kansas City, MO 64105 Tel: (816) 471-5900 Fax: (816) 842-9955 Email: rweiss@bdkc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtors' petition, including a list of their 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/mowb09-51063.pdf The petition was signed by the Joint Debtors. ARIZONA EQUIPMENT: Gets Interim Nod for G&K as Bankruptcy Counsel ----------------------------------------------------------------- Arizona Equipment Rental I, LLC, sought and secured the interim approval of the U.S. Bankruptcy Court for the District of Arizona to hire Gallagher & Kennedy, P.A., as general bankruptcy and restructuring counsel. G&K will, among other things: -- prepare on behalf of the Debtor necessary applications, motions, answer, orders, reports and other legal papers; -- appear in Court and protect the interests of the Debtor; -- represent the Debtor with loan work outs and with the collection and disposition of the Debtor's assets, by sale or otherwise; and -- assist the Debtor in preparing and seeking the Court's confirmation of a Chapter 11 plan. G&K will be paid based on the hourly rates of its professionals: Professional Rate ------------ ---- John R. Clemency $490 Lindsi M. Weber $250 Shareholders $325-$525 Associates $200-$250 Paralegals $165-$200 John R. Clemency, a shareholder of G&K, assured the Court that G&K doesn't have interests adverse to the interest of the Debtors' estates or of any class of creditors and equity security holders. Mr. Clemency maintains that G&K is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Tucson, Arizona-based Arizona Equipment Rental I, LLC, filed for Chapter 11 bankruptcy protection on October 30, 2009 (Bankr. D. Ariz. Case No. 09-27946). The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. ARMANDO ORTIZ: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Joint Debtors: Armando Luis Ortiz Tania Karen Ortiz 9213 Delemar Ct. Wellington, FL 33414 Bankruptcy Case No.: 09-34521 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Southern District of Florida (West Palm Beach) Judge: Paul G. Hyman, Jr. Debtor's Counsel: David L. Merrill, Esq. 7777 Glades Rd # 400 Boca Raton, FL 33434 Tel: (561) 477-7800 Email: dlmerrill@sbwlawfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $1,754,412, and total debts of $3,207,027. 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/flsb09-34521.pdf The petition was signed by the Joint Debtors. ARRAY BIOPHARMA: September 30 Balance Sheet Upside-Down by $82.5MM ------------------------------------------------------------------ Array BioPharma Inc. reported last week financial results for the first quarter of fiscal 2010. At September 30, 2009, the Company's consolidated balance sheets showed $110.1 million in total assets and $192.6 million in total liabilities, resulting in a $82.5 million shareholders' deficit. Array reported revenue of $7.9 million for the first quarter of fiscal 2010, compared to revenue of $5.7 million for the same period in fiscal 2009. Array invested $19.2 million in proprietary research and development during the quarter to advance its seven wholly-owned drugs in clinical development and select discovery programs. This compares to $24.5 million invested in research and development during the first quarter of fiscal 2009. Array reported a net loss of $24.8 million, or ($0.52) per share, for the first quarter, compared to a net loss of $33.7 million, or ($0.71) per share, for the first quarter in fiscal 2009. Array ended the first quarter of fiscal 2010 with $77.3 million in cash, cash equivalents and marketable securities. "We are excited about the rapid progress we made in our proprietary pipeline during the quarter while we tightened our spending and secured additional capital," said Robert E. Conway, chief executive officer. "Following our success with our glucokinase activator ARRY-403 in a single ascending dose trial, we initiated a multiple ascending dose trial in type 2 diabetic patients. We've also finished enrolling the first two cohorts of advanced cancer patients in an escalating dose trial with ARRY- 162, our lead MEK inhibitor." A full-text copy fo the Company's consolidated financial statements for the first quarter of fiscal 2010 is available for free at http://researcharchives.com/t/s?48c3 Liquidity The Company has incurred operating losses and has an accumulated deficit primarily as a result of ongoing research and development spending. As of September 30, 2009, the Company had an accumulated deficit of $438.0 million. The Company had net losses of $24.8 million and $33.7 million for the three months ended September 30, 2009, and 2008, respectively. The Company had net losses of $127.8 million, $96.3 million and $55.4 million for the fiscal years ended June 30, 2009, 2008 and 2007, respectively. The Company has historically funded its operations through revenue from its collaborations, the issuance of equity securities and through debt provided by its credit facilities. Until the Company can generate sufficient levels of cash from its operations, which the Company does not expect to achieve in the foreseeable future, the Company will continue to utilize its existing cash, cash equivalents and marketable securities that were generated primarily from these sources. The Company currently uses approximately $21 million per quarter to fund its operations. The Company believes that its existing cash, cash equivalents and marketable securities, excluding the value of the auction rate securities it holds, will enable it to continue to fund its operations at this level for the next 12 months assuming the Company obtains additional sources of funding as anticipated and/or reduces its current level of spending. The Company also plans to satisfy its interest payment obligations under the credit facilities with Deerfield either through the issuance of shares of common stock to Deerfield in accordance with the facility agreements with Deerfield or with the proceeds from sales of its common stock pursuant to the Equity Distribution Agreement with Piper Jaffray & Co. If the Company is unable to obtain additional funding from these or other sources to the extent, or when needed, it will be necessary to significantly reduce its current rate of spending through further reductions in staff and delaying, scaling back or stopping certain research and development programs. Insufficient funds may also require the Company to relinquish greater, or all, rights to product candidates at an earlier stage of development or on less favorable terms to it or its stockholders than the Company would otherwise choose in order to obtain funding for further development and/or up-front license fees needed to fund its operations. If the Company is unable to continue to fund its ongoing operations from such sources, its ability to continue as a going concern will be in substantial doubt. Moreover, if sufficient funds from up-front fees under new collaboration agreements are not received within approximately the next nine months, the Company will not be in compliance with certain covenants under its credit facilities with Deerfield and its loan with Comerica Bank, which require the Company to maintain certain levels of cash, cash equivalents and marketable securities. In this event, Deerfield and Comerica would have the right to accelerate the Company's payment obligations to them, which it could not repay. About Array BioPharma Based in Boulder, Colo., Array BioPharma Inc. (Nasdaq: ARRY) -- http://www.arraybiopharma.com/-- is a biopharmaceutical company focused on the discovery, development and commercialization of targeted small-molecule drugs to treat patients afflicted with cancer, inflammatory diseases, pain and metabolic diseases. The Company's proprietary drug development pipeline includes clinical candidates that are designed to regulate therapeutically important target proteins and are aimed at significant unmet medical needs. BARLOW PROJECTS: Settles With Harrisburg for $5.4 Million --------------------------------------------------------- The Harrisburg Authority has agreed to a $5,425,000 settlement of a federal lawsuit against Barlow Projects Inc., the company blamed for the botched retrofit of Harrisburg incinerator, pennlive.com, citing Dan Miller of Patriot News. According to the report, the authority, which owns the incinerator, sued Barlow Projects to recover damages stemming from its role in retrofitting the trash-to-steam plant to make it compliant with federal air-quality regulations. Based in Amarillo, Texas, Barlow Projects Inc. -- http://www.barlowprojects.com/-- develops renewable energy projects world-wide. The company and its affiliate, Barlow Projects Harrisburg LLC filed for Chapter 11 protection on Aug. 27, 2007 (Bankr. N.D. Tex. Lead Case No. 07-20412). Roger S. Cox, Esq., at Sanders, Baker & Jesko, P.C., represents the Debtors. In their petition, the Debtors listed assets of between $100,000 and $1 million, and debts of between $1 million and $100 million. BEN CATLIN: Files for Bankruptcy Under Chapter 11 ------------------------------------------------- Ben Catlin has filed bankruptcy reorganization with debts between $50 million and $100 million, including about $27 million in guaranteed bank loans, according to Sacrament Business Journal. The full list of Mr. Catlin's assets was not reported in the Chapter 11 petition but it is estimated in court documents to be worth between $1 million and $10 million, the report relates, citing papers filed with the Court. Ben Catlin is a commercial real estate developer. BIOJECT MEDICAL: Reports $210,000 Q3 2009 Operating Loss -------------------------------------------------------- Bioject Medical Technologies Inc., for the quarter ended September 30, 2009, reported revenues of $1.5 million, compared to $1.7 million reported in the comparable year ago quarter. Third quarter 2009 product sales were $1.4 million compared to $1.5 million in the third quarter of the prior year. License and technology fees for the 2009 quarter were $105,000, compared to $139,000 in the year-ago quarter. Operating expenses for the third quarter of 2009 were $1.7 million, compared to $2.2 million in the comparable 2008 period, a 20% decrease from the year-ago period. The Company reported a third quarter 2009 operating loss of $210,000, compared to an operating loss of $525,000 in the prior year period, a 60% decrease. Included in the current quarter operating loss of $210,000 is $228,000 of non-cash charges comprised of non-cash compensation expense related to the fair value of stock-based awards, warrants and stock funding of $65,000 and depreciation and amortization of $163,000. The Company reported a third quarter 2009 net loss allocable to common shareholders of $187,000, compared to net loss allocable to common shareholders of $1.1 million in the comparable year-ago quarter. At September 30, 2009, the Company reported cash and cash equivalents of $0.9 million. Basic and diluted net loss per common share for the quarter ended September 30, 2009 were $0.01 per share on 17.2 million weighted average shares outstanding, compared to a net loss of $0.07 per share on 16.0 million weighted average shares outstanding for the same period last year. For the nine months ended September 30, 2009, Bioject reported a net loss allocable to common shareholders of $737,000 on revenues of $5.2 million. This compares to a net loss allocable to common shareholders of $2.8 million on revenues of $5.1 million for the same period last year. Basic and diluted net loss per share for the nine months ended September 30, 2009 were $0.04 per share on 16.9 million weighted average shares outstanding compared to a net loss of $0.18 per share on 15.7 million weighted average shares outstanding for the comparable period last year. "Bioject continues to carefully manage operations, delivering a 60% reduction in operating loss for the third quarter of 2009 and a 75% reduction in operating loss for the first nine months of 2009 as compared to the respective prior year periods," said Ralph Makar, Bioject's President and CEO. "Although our cash operating loss has decreased significantly, payments on our debt obligations have significantly impacted our cash reserves. Due to our limited financial reserves, managing cash continues to be a priority, as well as working to grow the business and secure new deals in a timely manner. While all of our efforts to date have allowed us to maintain cash on hand at about the same level as at the end of the third quarter of 2008, it is important that we secure additional financing for the Company's future. We believe the transaction contemplated by the recently signed term sheet with Signet Healthcare Partners, regarding our Series G Preferred Stock financing. will give us additional time to try to secure financing or explore other strategic alternatives by providing Bioject with additional capital and removing a significant amount of debt," said Mr. Makar. A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48e6 Bioject Medical Technologies Inc. (OTCBB: BJCT) -- http://www.bioject.com/-- based in Portland, Oregon, is an innovative developer and manufacturer of needle-free injection therapy systems. The Company is focused on developing mutually beneficial agreements with leading pharmaceutical, biotechnology, and veterinary companies. Going Concern Doubt As of June 30, 2009, the Company had $5.6 million in total assets; $3.2 million in total current liabilities, $1.3 million in deferred revenues, and $373,000 in other long-term liabilities; and $636,000 in stockholders' equity. At June 30, 2009, cash and cash equivalents totaled $1.3 million and accumulated deficit is $121.6 million. In its Form 10-Q report filed August 13, the Company noted that due to its limited amount of additional committed capital, recurring losses, negative cash flows and accumulated deficit, the report of its independent registered public accounting firm for the year ended December 31, 2008 expressed substantial doubt about our ability to continue as a going concern. The Company said it continues to monitor its cash and has taken measures to reduce expenditure rate, delay capital and maintenance expenditures and restructure its debt. However, even if it is able to defer, convert or restructure debt, the Company expects needing to do one or more of the following to provide additional resources in the third quarter of 2009: -- secure additional short-term debt financing; -- secure additional long-term debt financing; -- secure additional equity financing; -- secure a strategic partner; or -- reduce operating expenditures. BLACK EAGLE FARM: Financial Woes Cue Chapter 11 Filing ------------------------------------------------------ Black Eagle Farm, a 2,000-plus acre farm in Nelson County valued at $15.5 million, was sent to bankruptcy by its owners a day before its was set for public auction at Lovingston courthouse, according to newsadvance.com. The farm, report relates, was being foreclosed because it failed to pay $5.29 million loan from a Charlottesville bank. In addition, The farm owes $56,000 in local taxes. The report, citing court documents, says the farm incurred expenses to expand in 2008 and suffered lower profits due to the recession. A bankruptcy judge allowed the farm to continue operating the business, the report notes. Black Egal Farm -- http://www.blackeaglefarm.com/-- produces eggs and pasture-raised beef, cattle and goats. Andrew Goldstein, Esq., represents the farm in its Chapter 11 effort. BRIDGEVIEW AEROSOL: Sec. 341 Meeting Set for December 7 ------------------------------------------------------- The U.S. Trustee for Region 11 will convene a meeting of Bridgeview Aerosol, LLC's creditors on December 7, 2009, at 1:30 p.m. at 219 South Dearborn, Office of the U.S. Trustee, 8th Floor, Room 802, Chicago, Illinois 60604. This is the first meeting of creditors required under Section 341(a) of the U.S. 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. About Bridgeview Aerosol Bridgeview, Illinois-based Bridgeview Aerosol, LLC is in the custom aerosol specialty products industry. BVA provides a wide array of services relating to aerosol products including initial product formulation, testing, manufacturing, packaging and distribution. BVA primarily manufactures, packages and distributes household cleaning and automotive products. Affiliate AeroNuevo owns the real property on which BVA operates. USAerosols is the parent company of BVA and AeroNuevo. Bridgeview Aerosol filed for Chapter 11 bankruptcy protection on October 30, 2009 (Bankr. N.D. Ill. Case No. 09-41021). Steven B. Towbin, Esq., at Shaw Gussis et al assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. BRIDGEVIEW AEROSOL: Wants Filing of Schedules Moved to Dec. 2 ------------------------------------------------------------- Bridgeview Aerosol, LLC, et al., have asked the U.S. Bankruptcy Court for the Northern District of Illinois to extend the deadline for the filing of schedules of assets and liabilities and statement of financial affairs extended until December 2. The current deadline for the filing of schedules is November 16, 2009. The Debtors are asking for an extension to accurately and completely prepare the Schedules. The Debtors will be required to assemble information from various books and records, reports, agreements, tax returns and other sources. Given the size, scope and complexity of the Debtors' business operations, this task will be quite time consuming. A hearing on the Debtors' request is set for November 12, 2009 at 10:00 a.m. About Bridgeview Aerosol Bridgeview, Illinois-based Bridgeview Aerosol, LLC is in the custom aerosol specialty products industry. BVA provides a wide array of services relating to aerosol products including initial product formulation, testing, manufacturing, packaging and distribution. BVA primarily manufactures, packages and distributes household cleaning and automotive products. Affiliate AeroNuevo owns the real property on which BVA operates. USAerosols is the parent company of BVA and AeroNuevo. Bridgeview Aerosol filed for Chapter 11 bankruptcy protection on October 30, 2009 (Bankr. N.D. Ill. Case No. 09-41021). Steven B. Towbin, Esq., at Shaw Gussis et al assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. CAL INVESTMENTS: Sec. 341 Meeting Set for December 9 ---------------------------------------------------- The U.S. Trustee for Region 17 will convene a meeting of Cal Investments, Inc.'s creditors on December 9, 2009, at 11:30 a.m. at San Jose Room 130. This is the first meeting of creditors required under Section 341(a) of the U.S. 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. Soquel, California-based Cal Investments, Inc., filed for Chapter 11 bankruptcy protection on October 30, 2009 (Bankr. N.D. Calif. Case No. 09-59405). Scott J. Sagaria, Esq., and Patrick Calhoun, Esq., at the Law Offices of Scott J. Sagaria assist the Company in its restructuring efforts. The Company listed in its bankruptcy petition $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. According to the schedules, the Company has assets of at least $13,957,842, and total debts of $22,913,609. CARITAS HEALTH: Court Approves Real Estates Sale to Joshua Guttman ------------------------------------------------------------------ The Hon. Carla E. Craig of the U.S. Bankruptcy Court for the Eastern District of New York authorized Caritas Health Care Inc. and its debtor-affiliates to sell the Mary Immaculate and St. John's Campuses to Joshua Guttman. Stessa Corporation is the next highest bidder for the real estate. Previously, the Debtors entered into a stalking horse agreement with Stessa Corp. for the purchase of the Mary Immaculate Campus. The Debtors elected not to enter into a stalking horse agreement for the purchase of the St. John's Campus. Pursuant to an agreement with Stessa, the purchase price for the Mary Immaculate Campus is $4,200,000. The purchase price for the St. John's Campus will be no less than $13,500,000. The sale, pursuant to Section 363 of the Bankruptcy Code, will be free and clear of all liens, claims and interests and all liabilities. CB Richard Ellis, Inc., the Court-appointed broker, may be paid its $399,375 commission upon the Closing and approval of the Broker's final fee application. About Caritas Health Care Inc. Caritas Health Care Inc. is the owner of Mary Immaculate Hospital and St. John's Queens Hospital. Caritas, created by Wyckoff Heights Medical Center, purchased the two hospitals in a bankruptcy sale in early 2007 from St. Vincent Catholic Medical Centers of New York. St. John's has 227 generate acute-care beds while Mary Immaculate has 189. Caritas Health Care and eight of its affiliates filed for Chapter 11 on February 6, 2009 (Bankr. E.D. N.Y., Lead Case No. 09-40901). Adam T. Berkowitz, Esq., at Proskauer Rose LLP, has been tapped as counsel. JL Consulting LLC is the Debtors' restructuring advisors. Caritas in its bankruptcy petition estimated assets of $50 million to $100 million, and debts of $100 million to $500 million. CATHOLIC CHURCH: 80 Delaware Priest Abuse Suits Stayed ------------------------------------------------------ Law360 reports that the Catholic Diocese of Wilmington Inc. has reportedly agreed to turn over information about priests accused of sex abuse to plaintiffs in return for the stay of about 80 lawsuits against its nonbankrupt co-defendants, which include individual churches and priests. The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. It is the seventh U.S. diocese to file for bankruptcy since allegations erupting seven years ago against Catholic clergy in Boston. The Diocese filed for Chapter 11 on Oct. 19 (Bankr. D. Del. Case No. 09-13560). The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. CELESTICA'S INC: Moody's Upgrades Corp. Family Rating to 'Ba3' -------------------------------------------------------------- Moody's Investors Service upgraded Celestica's Inc.'s ratings (corporate family to Ba3 from B1) and affirmed its speculative grade liquidity rating (SGL-1). The outlook is stable. Moody's has withdrawn the ratings on Celestica's 7.875% senior subordinated notes due 2011 following their recent redemption, funded from the company's cash balance. These ratings were upgraded: -- Corporate Family Rating to Ba3 from B1 -- Probability of Default Rating to Ba3 from B1 -- $223 Million (originally $250 Million) 7.625% Senior Subordinated Notes due July 2013 to B2 (LGD-6, 93%) from B3 (LGD-5, 85%) This rating was affirmed: -- Speculative Grade Liquidity Rating - SGL-1 The upgrade reflects Celestica's sizeable reduction in financial leverage, a function of its strong internal liquidity and solid free cash flow generation. Moody's expect fairly material improvement in leverage and credit metrics following the company's retirement of its $339 million senior subordinated notes. Pro forma leverage (as of September 30, 2009) as measured by debt/LTM EBITDA improves to 1.5x from 2.5x (Moody's adjusted) and EBIT/interest expense increases to 5.7x from 3.4x (Moody's adjusted). Importantly, the upgrade reflects Moody's expectation that leverage (including any debt-financed acquisitions) will be sustained at or under 2.0x (Moody's adjusted) going forward. The stable rating outlook reflects Moody's expectation that Celestica's operating performance, cash flow generation and market share will continue to demonstrate stable-to-improving results due to good execution on customer penetration, cost reductions and working capital management, as well as an improved demand environment. The stable outlook also anticipates the resumption of revenue growth as customer demand returns, and gross margin and cash flow expansion will be supported by improving product mix, cost savings and higher capacity utilization levels. The Ba3 CFR is also supported by Celestica's status as a Tier 1 EMS provider, strong liquidity position as evidenced by its $906 million in pro forma cash (as of September 2009, which adjusts for cash used to redeem the $339 million subordinated notes) and good internal execution on operating performance and cost savings initiatives. The rating considers the company's recent success in demonstrating operating margin expansion by cutting fixed costs and focusing on more profitable customer programs, despite a 23% year-over-year contraction in nine-month revenues (for the period ended September 2009). Celestica's improved cost position and operational efficiencies have resulted in good FCF generation helping to alleviate the impact of revenue declines from slowing customer demand. The rating is constrained by the company's smaller size compared to its larger EMS peers as well as the historical volatility in operating performance. The Ba3 rating also reflects Celestica's limited demand visibility, especially in the current challenging economic environment, and rising customer concentration. In addition, it reflects Moody's expectation of some near-term margin pressure in Celestica's enterprise communications and telecom segments as global demand recovers slowly and remains weak relative to historical levels, Asian competition increases and OEM consolidation negatively impacts volumes. Finally, the Ba3 rating captures Moody's concern that Celestica may pursue small-to-mid sized debt-funded/cash acquisitions over the near-to-intermediate term that would allow it to increase scale and/or add vertical integration capabilities, enabling it to compete more effectively with larger EMS rivals. The last rating action was on May 28, 2009 when Moody's affirmed Celestica's CFR and revised the outlook to positive. Headquartered in Toronto, Canada, Celestica is a global provider of electronics manufacturing services to original equipment manufacturers in the information technology and communications industry. For the twelve months ended September 30, 2009, the company generated revenues and EBITDA (Moody's adjusted) of $6.4 billion and $352 million, respectively. CELL THERAPEUTICS: Posts $35 Mil. Net Loss for 3rd Quarter 2009 --------------------------------------------------------------- Cell Therapeutics, Inc., said net loss attributable to CTI was $35,024,000 for the three months ended September 30, 2009, compared to a net loss of $45,589,000 for the same period a year ago. Net loss attributable to CTI was $68,018,000 for the nine months ended September 30, 2009, compared to a net loss of $141,776,000 for the same period a year ago. Cell Therapeutics reported total revenues of $20,000 on license and contract revenue for the three months ended September 30, 2009, compared to total revenues of $2,600,000 consisting of product sales and license and contract revenue for the same quarter a year ago. Cell Therapeutics reported total revenues of $60,000 on license and contract revenue for the nine months ended September 30, 2009, compared to total revenues of $8,884,000 consisting of product sales and license and contract revenue for the same period a year ago. As of September 30, 2009, the Company had $87,299,000 in total assets against $96,828,000 in total liabilities. The Company's September 30 balance sheet also showed strained liquidity: the Company had $59,497,000 in total current assets, including $54,992,000 in cash and cash equivalents, against $72,882,000 in total current liabilities. "The condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve month period following the date of these financials. However, we have incurred losses since inception and we expect to generate losses from operations through 2010 primarily due to research and development costs for pixantrone, OPAXIO and brostallicin. Our available cash and cash equivalents are approximately $55.0 million as of September 30, 2009 and we do not expect that we will have sufficient cash to fund our planned operations through the second quarter of 2010, which raises substantial doubt about our ability to continue as a going concern," the Company said in its Form 10-Q filing with the Securities and Exchange Commission. "We have achieved cost saving initiatives to reduce operating expenses, including the reduction of employees related to Zevalin operations and the closure of our operations in Italy . . . and we continue to seek additional areas for cost reductions. However, we will also need to raise additional funds and are currently exploring alternative sources of equity or debt financing. We may seek to raise such capital through public or private equity financings, partnerships, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources." The Company, however, cautioned additional funding may not be available on favorable terms or at all. If additional funds are raised by issuing equity securities, substantial dilution to existing shareholders may result. If it fails to obtain capital when required, the Company said it may be required to delay, scale back, or eliminate some or all of its research and development programs and may be forced to cease operations, liquidate its assets and possibly seek bankruptcy protection. Closure of Italy Operations In September 2009, CTI closed its Bresso, Italy operations. These operations were used primarily for pre-clinical research and were underutilized due to its current focused business model on the development of late-stage compounds and their commercialization. CTI has recorded restructuring charges related to this closure. In May 2009, CTI entered into a severance agreement with the unions representing the employees of its Bresso, Italy operations. This severance agreement relates to a reduction in force of 56 positions at the Bresso facility. Employee separation costs associated with the reduction in force primarily relate to severance payments that CTI is paying over 42 months, with the majority of these payments made through the first 15 months. For the three and nine months ended September 30, 2009, CTI recorded approximately $200,000 and $2.6 million in employee termination benefits related to these Bresso employees. Additionally, CTI has sent notices of termination to the six managers of the Bresso facility and is negotiating separate severance agreements with these managers, which have been accrued for as of September 30, 2009. CTI may have adjustments to its employee termination benefit expense related to its estimate of amounts due under Italian labor laws. While CTI cannot predict additional amounts, if any, CTI does not expect to have material adjustments to this expense. In connection with the closure of the Bresso operations, CTI had certain contract termination and clean-up charges related to the Bresso facility's laboratories. For the three and nine months ended September 30, 2009 we recorded $0 and $1.4 million for these charges. CTI also had certain laboratory equipment related to the Bresso facility that CTI sold in connection with the closure of the facility. CTI recognized a $300,000 gain on the sale of these assets which is included in restructuring charges and related gain on sale of assets, net for the three and nine months ended September 30, 2009. 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?48cb A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48cc Registration Statement CTI on Friday filed with the Securities and Exchange Commission a registration statement to register 45,500,000 shares issuable under the Cell Therapeutics, Inc. 2007 Equity Incentive Plan and Cell Therapeutics, Inc. 2007 Employee Stock Purchase Plan. A full-text copy of the registration statement is available at no charge at http://ResearchArchives.com/t/s?48cd About Cell Therapeutics Cell Therapeutics, Inc., focuses on the development, acquisition and commercialization of drugs for the treatment of cancer. CTI's principal business strategy is focused on cancer therapeutics; an area with significant market opportunity that it believes is not adequately served by existing therapies. Subsequent to the closure of its Bresso, Italy operations in September 2009, CTI's operations are conducted solely in the United States. During 2008, CTI had one approved drug, Zevalin(R) (ibritumomab tiuxetan), or Zevalin, which it acquired in 2007, generating product sales. CTI contributed Zevalin to a joint venture, RIT Oncology, LLC, upon its formation in December 2008 and in March 2009 CTI finalized the sale of its 50% interest in RIT Oncology to the other member, Spectrum Pharmaceuticals, Inc. All of CTI's current product candidates, including pixantrone, OPAXIO and brostallicin are under development. CENTENNIAL COMMUNICATIONS: Fitch Upgrades Issuer Rating From 'B' ---------------------------------------------------------------- Fitch Ratings has upgraded these ratings of Centennial Communications Corp. and its subsidiaries subsequent to AT&T's Inc. announcement that it had completed the acquisition of CYCL on Nov. 6, 2009. Certain ratings will also be withdrawn. CYCL -- Issuer Default Rating upgraded to 'A' from 'B'; -- Senior unsecured notes upgraded to 'A' from 'CCC+/RR6'. Centennial Cellular Operating Co. -- IDR upgraded to 'A' from 'B'; -- Senior secured credit facility upgraded to 'A' from 'BB/RR1' and the rating withdrawn; -- Senior unsecured notes upgraded to 'A' from 'BB/RR1'. The Rating Outlook is Stable. The upgrade reflects Fitch's view that the acquisition by AT&T, which has an IDR of 'A', will significantly improve CYCL's financial and business profile. As of Sept. 3, 2009, approximately $500 million was outstanding under CYCL's term loan. CYCL had no borrowings under its $150 million revolving credit facility. AT&T has called for redemption all of CYCL's outstanding long-term debt with principal amount of approximately $1.4 billion and has terminated CYCL's existing credit facility. Consequently, when the unsecured notes are fully redeemed, the issue and IDR ratings will be withdrawn. Since AT&T has terminated CYCL's credit facility at the close of the transaction, the credit facility ratings will be withdrawn. CHARLES BOWEN: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Charles E. Bowen, Jr. 1680 Westview Drive SW Atlanta, GA 30310 Bankruptcy Case No.: 09-89758 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Northern District of Georgia (Atlanta) Judge: Joyce Bihary Debtor's Counsel: J. Robert Williamson, Esq. Ashley Reynolds Ray, Esq. Scroggins and Williamson 1500 Candler Building 127 Peachtree Street, N.E. Atlanta, GA 30303 Tel: (404) 893-3880 Email: rwilliamson@swlawfirm.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/ganb09-89758.pdf The petition was signed by Charles E. Bowen, Jr. CHRYSLER LLC: Gov't Won't Recoup Auto Investments, Says GAO Report ------------------------------------------------------------------ The U.S. Treasury Department is unlikely to recoup all of its investment in Chrysler Group LLC and General Motors Corp, according to a report released by the Government Accountability Office. "Treasury is unlikely to recover the entirety of its investment in Chrysler or GM, given that the companies' values would have to grow substantially above what they have been in the past," GAO said in its 41-page report. The Treasury provided $81.1 billion aid to the U.S. auto industry, of which $62 billion was provided to Chrysler Group and GM to help the auto makers in their restructuring. In return, the government agency received 9.85% equity in Chrysler, 60.8% equity and $2.1 billion in preferred stock in GM, and $13.8 billion in debt obligations between the auto makers. GAO estimated that the equity value of Chrysler Group necessary to recoup investment must be $54.8 billion while GM would need to be worth $66.9 billion. The agency also assumed that $5.4 billion that was lent to Chrysler and $986 million to GM would not be repaid. In June, the Congressional Budget Office estimated that the government would recoup only 27% of its initial investment in the auto industry. In the case of Chrysler and GM, which had poor credit ratings and significant debts prior to bankruptcy, the average projected repayment is only 27 cents on the dollar. GAO recommended that the Treasury ensure the expertise needed to monitor its investment in Chrysler and GM remains in place, report to Congress on its general approach for monitoring the auto makers' performance, and have a plan for evaluating the method and timing for divesting its stake. The report also disclosed the production requirements imposed by the U.S. government on Chrysler and GM. Chrysler is required to either manufacture 40% of its U.S. sales volume in the U.S. or its domestic production volume must be at least 90% of last year's figure. Meanwhile, GM agreed to use its "commercially reasonable best efforts" to ensure that its U.S. production volume is consistent with at least 90% of the level envisioned in its business plan, according to the report. A full-text copy of the report is available without charge at: http://bankrupt.com/misc/ChryslerGAOReport.pdf About Chrysler LLC Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Mopar(R) and Global Electric Motors (GEM) brand vehicles and products. With the resources, technology and worldwide distribution network required to compete on a global scale, the alliance builds on Chrysler's culture of innovation -- first established by Walter P. Chrysler in 1925 -- and Fiat's complementary technology -- from a company whose heritage dates back to 1899. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Dodge Ram. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30 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: New Chrysler Not Losing Money, Says Marchionne ------------------------------------------------------------ Chrysler Group LLC's CEO, Sergio Marchionne, said the auto maker is making an operating profit and building cash contrary to many people's belief that it is losing money, according to a report by Reuters. Chrysler generated about $200 million of operating earnings in the third quarter which it closed out with $5.7 billion in cash, Mr. Marchionne said before a group of reporters and analysts as he presented the auto maker's five-year business plan last November 4, 2009. The Detroit-based auto maker had only $4 billion in cash at the end of June. Prior to its bankruptcy, the auto maker was burning more than $2 billion in cash a month. "Most of you underestimated the substantial reduction in fixed costs that was carried out by the old Chrysler. The new Chrysler is being incredibly parsimonious," Reuters quoted Mr. Marchionne as saying. The chief executive said Chrysler was profitable on an operating basis in September because of cost controls, Bloomberg reported. It was the first time Chrysler officials disclosed their plans for the auto maker's finances and prospects for paying back government loans since it underwent restructuring. Chrysler's restructuring was funded by a $12 billion loan from the U.S. Treasury Department, which was drawn from the Troubled Asset Relief Program. Prior to disclosure of the five-year business plan, dealers have started to get impatient for details about the plan. Many complained that calls to Chrysler headquarters have gone unreturned or they were told to wait as the chief executive tries to keep his plans secret until November 4, DelawareOnline reported. Chrysler spokeswoman Kathy Graham said the auto maker could not provide details because the plan just received board approval. Aaron Bragman, an auto industry analyst with IHS Global Insight, commented that the silence was troubling and a sign that Fiat was unprepared to take over the Detroit-based auto maker. "This is a company that has been given a lot of taxpayer money and hasn't said a thing," DelawareOnline quoted Mr. Bragman as saying. Unlike General Motors Corp. which is "shouting from the rooftops" that it is here to stay and has new vehicles on the way, Chrysler has just shut itself away, Mr. Bragman complained. GM has run a new ad campaign that touts quality and held online "town hall" meetings to update customers on its progress. Chrysler, on the other hand, has merely provided its dealers vague assurances of seeing a redesigned Jeep Grand Cherokee in the spring and a new Chrysler 300 large sedan sometime next year, DelawareOnline reported. Financial Targets Richard Palmer, Chrysler's chief finance officer, said the auto maker would break even on an operating profit basis by next year and break even on a net profit basis by 2011, Reuters reported. Mr. Palmer said Chrysler's revenue would grow about 20% per year over the next five years and reach $67.5 billion by 2014, when the auto maker expects to report an operating profit in the range of $4.7 billion to $5.2 billion. He also said the auto maker's capex spend would average $4.5 billion during the five year turnaround, according to the report. Mr. Palmer further said Chrysler would pay back all the loans it availed from the U.S. government in 2014, but with $2 billion in debt to the U.S. Department of Energy, Reuters reported. Dan Knott, Chrysler's purchasing chief, said the auto maker would save $2.9 billion over the next five years through shared parts purchasing with Italy-based automaker Fiat S.p.A., starting with $500 million in net savings in 2010, according to a Bloomberg report. Chrysler also plans to issue public stock after 2010, the report said. Automotive News said Chrysler will begin reporting some financial results in early 2010 for transparency. The auto maker did not say how detailed the results will be. Fiat, which owns 20% of Chrysler after acquiring most of its assets, is not required by law or European financial regulations to disclose detailed financial information about the automaker. The Securities and Exchange Commission, meanwhile, has no jurisdiction over it since there is no publicly traded Chrysler stock. International Sales Chrysler expects to double its global sales from 1.3 million cars and trucks in 2009 to 2.8 million in 2014. The auto maker predicted its U.S. market share will rise from about 6% in 2009 to 11% in 2014, The Wall Street Journal reported. Jeep CEO Mike Manley said in the presentation that they plan to boost Chrysler's global sales of its Jeep brand 60% to 800,000 by 2014 and that the Jeep brand would start to offer more derivatives of its Wrangler SUV, according to a Bloomberg report. Major changes to each model in the lineup within the next year would be made while the brand's Commander sport-utility vehicle would be scrapped, Mr. Manley also said. Dodge brand CEO Ralph Gilles, meanwhile, said the brand will have 11 new or restyled models by 2014, with the first all-new model -- a seven-passenger SUV -- to come out in late 2010. He said the Nitro SUV will also be restyled as more of a city-cruising model aimed at younger buyers. Mr. Gilles said Dodge also will get an all-new midsize sedan to replace the Dodge Avenger in 2012 or 2013 as well as a subcompact hatchback and a compact sedan, which will have the best fuel economy of any car the automaker has ever made, Bloomberg reported. Chrysler Group LLC plans to end production of the PT Cruiser after 2010 and the Dodge Dakota truck in 2011, the report said. Mr. Marchionne said half of Chrysler's cars would be built on platforms developed by Fiat and 40% would have engines supplied by the Italy-based automaker, according to another Reuters report. He said the auto makers' businesses are now "inextricably intertwined" and would provide Chrysler access to fuel-saving and engine technology it could not have developed on its own. Mr. Marchionne also serves as chief executive of Fiat, which acquired most of the assets of old Chrysler in June. Chrysler officials did not reveal any models while discussing many new vehicles during the presentation, according to Bloomberg. Dealership Network Consolidation Chrysler plans to complete in 2011 the consolidation of its dealership network. The auto maker says it plans to invest $500 million into dealerships in the next five years including $120 million in 2010, Bloomberg reported. Peter Grady, vice president of network and fleet development, said changes that would be made include special areas in dealerships for the Fiat 500 subcompact which would have a dedicated sales staff and management. The vehicle would be sold mainly in metro markets, he said. Mixed Reactions Industry analysts who attended the presentation said Chrysler's survival still depends on whether the U.S. economy bounces back and car sale rises from its current low levels, WSJ reported. "Everything is in the market -- that's the big kahuna. Next year is critical," WSJ quoted David Cole, chairman of Michigan-based Center for Automotive Research, as saying. Mr. Cole said the auto maker would fare well if the local market returns to annual sales of 12 million vehicles next year. He also noted that Chrysler does not have many new products coming out in 2010. AutoNation Inc. Chief Executive Michael Jackson was impressed, however, by the plan and expressed interest in acquiring more Chrysler stores. "AutoNation is a buyer as of tomorrow," WSJ quoted Mr. Jackson as saying. Don Metzner, president of Armory Automotive, a dealer in New York, said he was encouraged to hear that Chrysler has positive cash flow. "It's the essential ingredient needed to bring the exciting new product pipeline to fruition. My confidence in Chrysler is greatly enhanced," WSJ quoted Mr. Metzner as saying. It had taken five months for Mr. Marchionne and his management team to develop the business plan for Chrysler. Mr. Marchionne was joined in by 24 top managers during the presentation on Wednesday, which ran for over eight hours. The rollout of Chrysler's 2010-2014 Business Plan is available without charge at: http://researcharchives.com/t/s?4858 http://researcharchives.com/t/s?4859 http://researcharchives.com/t/s?485a http://researcharchives.com/t/s?485b http://researcharchives.com/t/s?485c http://researcharchives.com/t/s?485d http://researcharchives.com/t/s?485e http://researcharchives.com/t/s?485f http://researcharchives.com/t/s?4860 http://researcharchives.com/t/s?4861 http://researcharchives.com/t/s?4862 http://researcharchives.com/t/s?4863 http://researcharchives.com/t/s?4864 http://researcharchives.com/t/s?4865 http://researcharchives.com/t/s?4866 http://researcharchives.com/t/s?4867 About Chrysler LLC Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Mopar(R) and Global Electric Motors (GEM) brand vehicles and products. With the resources, technology and worldwide distribution network required to compete on a global scale, the alliance builds on Chrysler's culture of innovation -- first established by Walter P. Chrysler in 1925 -- and Fiat's complementary technology -- from a company whose heritage dates back to 1899. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Dodge Ram. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30 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: Proposes Funding Arrangement for WindDown of Estate ----------------------------------------------------------------- Chrysler LLC, now known as Old CarCo LLC, and its units have been authorized to obtain postpetition financing on a secured and superpriority basis pursuant to the terms and conditions set forth in the Second Lien Secured Priming Superpriority Debtor-in- Possession Credit Agreement dated as of May 5, 2009, among Old Carco, as borrower, and the United States Department of the Treasury and Export Development Canada, as lenders, up to a maximum aggregate amount of $4.96 billion. As part of the DIP Credit Agreement and the DIP Financing Order, the DIP Lenders received adequate protection, including senior liens on certain of the Debtors' assets as set forth in the DIP Financing Order. The Debtors' obligations under the DIP Credit Agreement are secured by first priority perfected lien and security interests on (i) certain liquidation funds, and (ii) the DIP Collateral. The Debtors currently are in possession of cash that is DIP Collateral and expect to generate additional cash proceeds from the sale or other disposition of other DIP Collateral, all of which constitute cash collateral of the DIP Lenders within the meaning of Section 363(a) of the Bankruptcy Code. Under the Court's final order on cash collateral, the Debtors were authorized to use certain cash collateral that secured their obligations under the Amended and Restated First Lien Credit Agreement, dated as of November 29, among Carco Intermediate Holdco II LLC, Old Carco, the lenders party, and JPMorgan Chase, N.A., as administrative agent. Pursuant to the Cash Collateral Order, the Official Committee of Unsecured Creditors reserved certain rights with respect to, among other things, Sections 506(c) and 552(b) of the Bankruptcy Code, including the rights to challenge the liens with respect to the approximately 7,600 Chrysler-, Dodge- and Jeep-branded vehicles owned by the Debtors as of the Closing Date of the Fiat Transaction that previously were designated for use for various company purposes and the proceeds thereof. The Debtors' rights to use cash collateral under the Cash Collateral Order terminated on July 3, 2009. In furtherance of the Debtors' winddown efforts, the parties agreed that an amount of not less than $260 million of the DIP Financing would be maintained to fund the winddown of the Debtors' bankruptcy estates, including the consummation of a plan of liquidation under Chapter 11 of the Bankruptcy Code. Winddown Funds in the amount of $113 million were deposited in two designated accounts with KeyBank National Association and JPMorgan Chase Bank N.A. to satisfy certain tax liabilities, and the remainder of the Winddown Funds has been held in KeyBank. In addition to the Winddown Funds, $42 million from the DIP Financing -- the "Prefunded Amount" -- were deposited in dedicated accounts at KeyBank. The Prefunded Amount and the Winddown Funds, which total approximately $302 million, are collectively referred as the "Liquidation Funds." From and after the Closing Date, with the approval of the DIP Lenders, the Debtors have used certain of the Liquidation Funds to pay the costs of administering their estates. The Debtors note that Liquidation Funds will be used to, among other things, satisfy certain sales and use taxes, Michigan business tax and other taxes owed to state and local taxing authorities in the United States of America in respect of any of the Debtors and not covered by the Sale Order. A copy of the schedule of sources and uses of Liquidation Funds can be obtained for free at: http://bankrupt.com/misc/Chrysler_Sked_LiquidationFunds.pdf Following the Closing Date, the Debtors have been engaged in discussions with their key stakeholders, including the DIP Lenders, the First Lien Agent, the Creditors Committee and other key stakeholders to reach agreements that would facilitate the financing of an orderly winddown of the Debtors' remaining assets and the completion of the Chapter 11 process, Corinne Ball, Esq., at Jones Day, in New York, informs Judge Gonzalez. Discussions with the U.S. Treasury have focused on the use of the Liquidation Funds and the resolution of related matters. In connection with the negotiations, Ms. Ball reveals that the U.S. Treasury indicated that the DIP Lenders did not intend to fund the Debtors' activities to preserve and liquidate the First Lien Collateral. Hence, she notes, the Debtors devoted time to separate negotiations with the First Lien Agent regarding the use of the First Lien Lenders' cash collateral to fund activities relating to the First Lien Collateral. The negotiations have resulted in the two proposed agreed orders that have been filed concurrently with the Court: (a) the proposed agreed order authorizing the Debtors to use cash collateral of the Prepetition Secured Lenders in support of the administration and disposition of their collateral, pursuant to which the First Lien Lenders agree to the use of their cash collateral to fund the preservation and liquidation of the First Lien Collateral, subject to certain terms and conditions; and (b) the proposed agreed order approving winddown funding for the Debtors' estates. In two separate requests, the Debtors ask the Court to enter and approve the Proposed Winddown Order and the Proposed First Lien Winddown Order. Copies of the Proposed Winddown Orders are available for free at: * http://bankrupt.com/misc/Chrysler_1stLien_WinddownOrder.pdf * http://bankrupt.com/misc/Chrysler_Proposed_WinddownOrder.pdf Ms. Ball contends that the Proposed Winddown Order, in conjunction with the Proposed First Lien Winddown Order, promotes a global resolution among the Debtors' key constituents and establishes a comprehensive funding arrangement with respect to the orderly liquidation of the bankruptcy estates. Specifically, she points out, the Proposed Winddown Order establishes the terms under which the DIP Lenders will permit the ongoing use of the Liquidation Funds to fund a plan of liquidation and related activities. The proposed Winddown Order, on the other hand, resolves obstacles remaining to the completion of the Debtors' winddown and the eventual confirmation of a plan. In separate filings, the Debtors sought and obtained a Court order shortening the notice and objection periods of their requests. The Court will convene a hearing on November 19, 2009, to consider the requests. Objections are due November 16. About Chrysler LLC Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Mopar(R) and Global Electric Motors (GEM) brand vehicles and products. With the resources, technology and worldwide distribution network required to compete on a global scale, the alliance builds on Chrysler's culture of innovation -- first established by Walter P. Chrysler in 1925 -- and Fiat's complementary technology -- from a company whose heritage dates back to 1899. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Dodge Ram. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30 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: Proposes to Assign Crown Group Sublease ----------------------------------------------------- Chrysler LLC, now known as Old CarCo LLC, and its units seek the Court's authority, pursuant to Section 365 of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, to assume and assign to Chrysler Group LLC a Sublease Agreement dated as of January 1, 2008, between The Crown Group, Inc., and Old Carco LLC, formerly known as Chrysler LLC. The Debtors also ask, by agreement with New Chrysler and the Sublessor, that the assumption and assignment be deemed effective as of October 1, 2009. Pursuant to the terms of the Sublease, the Sublessor leases to the Debtors warehousing spaces located in two buildings in the city of Detroit, in Wayne County, Michigan. The Sublease provides for a base monthly rent of $38,000, and its term extends through December 31, 2010. In connection with the Fiat Transaction, the Debtors and New Chrysler entered into a Transition Services Agreement, dated as of June 10, 2009. Pursuant to the TSA, the Debtors agreed to assume the Sublease and grant to New Chrysler a net license to use the Detroit Axle Warehouse, among other premises. In consideration of the receipt of the Net License, New Chrysler agreed to satisfy all obligations under the Sublease. After entering into the TSA, New Chrysler determined that it would like to seek certain amendments to the Sublease and assume the Sublease, rather than receive a license from the Debtors. As a result, New Chrysler requested that the Debtors delay in assuming the Sublease. Pursuant to the Court's order extending the Debtors' time to assume or reject unexpired leases of nonresidential real property, including the Sublease, the deadline to assume or reject the Sublease will be on November 26, 2009. Corinne Ball, Esq., at Jones Day, in New York, relates that New Chrysler now has completed negotiations with the Sublessor with respect to the Sublease, and the parties have agreed to the Amendments, which include, among other items, a reduction in the base rent and minimum space requirements. The Debtors submit that the Sublease is an unexpired lease within the meaning of Section 365 of the Bankruptcy Code, eligible for assumption by the Debtors and assignment to New Chrysler. Ms. Ball notes that the Sublessor has agreed to the Amendments and the Debtors' assumption and concurrent assignment of the Sublease to New Chrysler. She adds that New Chrysler has indicated to the Debtors its desire to take an assignment of the Sublease subject to the Amendments, and that New Chrysler and the Debtors have agreed to amend the TSA to effectuate the assumption and assignment of the sub-lease. A full-text copy of the proposed amendment to the TSA is available for free at: http://bankrupt.com/misc/Chrysler_TSA_AmendmentNo2_110509.pdf About Chrysler LLC Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Mopar(R) and Global Electric Motors (GEM) brand vehicles and products. With the resources, technology and worldwide distribution network required to compete on a global scale, the alliance builds on Chrysler's culture of innovation -- first established by Walter P. Chrysler in 1925 -- and Fiat's complementary technology -- from a company whose heritage dates back to 1899. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Dodge Ram. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30 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) CIT GROUP: Gets Interim Nod to Honor Federal Reserve Agreement -------------------------------------------------------------- CIT Group Inc. and CIT Funding Company of Delaware LLC sought, and obtained interim nod, to honor a written agreement, dated August 12, 2009, by and between CIT Group, Inc., and Federal Reserve Bank of New York. To the extent applicable to CIT Group, Inc., the Debtors also seek the Court's authority to abide by orders to cease and desist issued on July 16, 2009, by each of the Federal Deposit Insurance Corporation and the Utah Department of Financial Institutions against CIT Bank, in which CIT Group Inc. holds 100% equity interest. Due to CIT Group Inc.'s financial uncertainty and concerns that the uncertainty may lead to unsafe or unsound banking practices at CIT Bank, the FDIC and the UDFI monitored CIT Group Inc. and CIT Bank closely. Upon the financial deterioration of CIT Group Inc., the Regulators entered into the Written Agreement and the Cease and Desists Orders with CIT Group Inc. and CIT Bank to monitor the conditions at CIT Group Inc. and CIT Bank and to limit certain activities. Under the terms of the Cease and Desist Orders, the FDIC and the UDFI have imposed, among other matters, additional restrictions on CIT Bank's ability to enter into transactions with affiliates and to make dividend payments. In compliance with the Cease and Desist Orders, CIT Bank submitted a contingency plan providing for and ensuring the continuous and satisfactory servicing of all loans held by CIT Bank, which was accepted as satisfactory by the FDIC. The Cease and Desist Orders further restrict CIT Bank from increasing its level of brokered deposits and restricts the ability of CIT Bank to originate new business. Under the terms of the Written Agreement, CIT Group Inc. must provide the Federal Reserve Bank of New York with (i) a corporate governance plan, focusing on strengthening internal audit, risk management, and other control functions, (ii) a credit risk management plan, (iii) a written program to review and revise, as appropriate, its program for determining, documenting and recording the allowance for loan and lease losses, (iv) a capital plan for CIT Group Inc. and CIT Bank, (v) a liquidity plan, including meeting short term funding needs and longer term funding needs, without relying on governments programs or Section 23A waivers, and (vi) a business plan for the remainder of 2009 and 2010. The Written Agreement also prevents CIT Group Inc., without prior approval of the Federal Reserve Bank of New York, from paying dividends, paying interest on subordinated debt, incurring or guaranteeing debt outside of the ordinary course of business, or purchasing or redeeming CIT Group Inc. stock. Under the Written Agreement, CIT Group Inc. must comply with certain procedures and restrictions on appointing or changing the responsibilities of any senior officer or director, restricting the provision of indemnification to officers and directors, and restricting the payment of severance to employees. After the Petition Date, CIT Group Inc. and CIT Bank will be obligated to continue to meet the requirements of the Written Agreement with respect to CIT Group Inc. and the Cease and Desist Orders with respect to CIT Bank, as well other regulatory obligations imposed on CIT Bank by the FDIC. CIT Group Inc. also anticipates that, in the event CIT Group Inc. does not comply with the Written Agreement and CIT Bank does not comply with the Cease and Desist Orders, the FDIC, the UDFI and the Federal Reserve Bank of New York will exercise their statutory and regulatory remedies and rights against CIT Group Inc. and CIT Bank, potentially resulting in seizure, receivership or liquidation of CIT Bank, or at least the levying of additional regulatory enforcement orders against CIT Group Inc. and CIT Bank. Accordingly, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New York, asserts that adherence to the Written Agreement, the Cease and Desist Orders and other regulatory obligations imposed on CIT Bank by the FDIC is critical to preserve the Debtors' opportunity to realize the fair value of CIT Bank to maximize recovery to the Debtors' creditors. Failure to comply would put CIT Bank, a non-debtor in these cases, at risk of government seizure, liquidation, and/or the appointment of a receiver, he points out. As a result, any equity value CIT Group Inc. has in CIT Bank may be permanently lost if compliance does not continue, he tells the Court. The Debtors believe that the value of their estate will be maximized by preserving CIT Bank, preventing the seizure of CIT Bank stock or assets, and avoiding the liquidation of the stock or assets at "fire sale" prices. At the same time, the Debtors recognize the need to maintain a strong relationship with the FDIC, the Federal Reserve Bank of New York, and the UDFI, Mr. Galardi states. Therefore, the Debtors seek to reassure the FDIC, the Federal Reserve Bank of New York, and the UDFI that they intend to continue to timely satisfy any requirements under the Written Agreement and the Cease and Desist Orders, and any other regulatory obligations in a manner consistent with maximizing the value of their estate. Judge Gropper will consider final approval of the Debtors' request on November 23, 2009, at 2:30 p.m. (prevailing Eastern Time). Objections, if any, must be filed by November 19. About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC announced a Chapter 11 filing on November 1, 2009 (Bankr. D. Del. Case No. 09-16565). Evercore Partners, Morgan Stanley and FTI Consulting are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan. Sullivan & Cromwell is legal advisor to CIT's Board of Directors. CIT Group on November 1 announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company's debt and streamline its capital structure. None of CIT's operating subsidiaries, including CIT Bank, a Utah state bank, were ncluded in the filings. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. Bankruptcy Creditors' Service, Inc., publishes CIT Group Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of CIT Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) CIT GROUP: Proposes Injunction Against Utility Providers -------------------------------------------------------- In connection with the operation of their businesses, CIT Group Inc. and CIT Funding Company of Delaware LLC, obtained utility products and services like water, natural gas, electricity, and telecommunications from certain utility companies, a list of which is available for free at: http://bankrupt.com/misc/CIT_UtilityCompanies.pdf Section 366(b) of the Bankruptcy Code requires a debtor to furnish what it considers to be adequate assurance of payment. Section 366(c)(1)(A) defines "assurance of payment" to include, among other things, "a prepayment of utility consumption." Based on the estimated monthly cost of the Utility Services, the Debtors estimate that the aggregate Utility Prepayment will be approximately $1 million, Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, discloses. By this motion, the Debtors propose to pay each Utility Company, along with the actual monthly bill, a prepayment amount equal to the last invoice received from the Utility Company. The Debtors project that they will have sufficient cash on hand to timely pay all undisputed postpetition obligations owed to the Utility Companies accruing during their Chapter 11 cases, which the Debtors intend to pay in a timely manner, according to Mr. Galardi. The Debtors contend that the Utility Prepayment, in conjunction with the Debtors' ability to pay for future utility services in the ordinary course of business, constitutes "adequate assurance of payment" for the purposes of Section 366(b) of the Bankruptcy Code. Mr. Galardi further notes that the Debtors will promptly file amendments to the Utility Service List upon identification of additional Utility Companies. Any Subsequently Identified Utility Company to make additional assurance requests that must: (i) be made in writing; (ii) set forth the type of Utility Services and the location for which the services are provided; (iii) include a summary of the Debtors' payment history relevant to the affected accounts, including any deposits and other security held by the Utility Company; (iv) set forth why the Subsequently Added Utility Company believes the Proposed Adequate Assurance is not sufficient adequate assurance of future payment; and (v) be served later than 10 days after service of the Utility Order. Upon the Debtors' timely receipt of an Additional Assurance Request, the Debtors will have the greater of (i) 14 days from the receipt of the Request, or (ii) 90 days from the Petition Date to negotiate with the Subsequently Identified Utility Company and resolve the Request. The Debtors further seek permission to resolve any Additional Assurance Request by mutual agreement with the requesting Subsequently Identified Utility Company, without further order of the Court. Moreover, in connection with any agreement reached, the Debtors intend to provide a Subsequently Identified Utility Company with additional adequate assurance of future payment, including, but not limited to, cash deposits, prepayments and other forms of security, without further Court order. If the Debtors determine that a timely received Additional Assurance Request is not reasonable, and absent an alternative resolution with the Subsequently Identified Utility Company during the Resolution Period, the Debtors will seek the Court's determination of the adequacy of the assurances of payment during a hearing, pursuant to Section 366(c)(3) of the Bankruptcy Code. Pending determination relating to the Request, the Debtors ask the Court to prohibit any Subsequently Identified Utility Company from altering, refusing, or discontinuing service to the Debtors on account of unpaid charges for prepetition services, the chapter 11 cases, or any objections to the adequacy of the Proposed Adequate Assurance. The Proposed Adequate Assurance will be deemed adequate assurance of payment for any Subsequently Identified Utility Company that fails to make a timely Additional Assurance Request. Mr. Galardi relates that if the Utility Companies refuse or discontinue the Utility Services, even for a brief period, the Debtors' business operations would be severely disrupted. Accordingly, the Proposed Adequate Assurance Procedures "balance the protections afforded the Utility Companies under Section 366 of the Bankruptcy Code and the Debtors' need for continuous and uninterrupted Utility Services," Mr. Galardi points out. About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC announced a Chapter 11 filing on November 1, 2009 (Bankr. D. Del. Case No. 09-16565). Evercore Partners, Morgan Stanley and FTI Consulting are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan. Sullivan & Cromwell is legal advisor to CIT's Board of Directors. CIT Group on November 1 announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company's debt and streamline its capital structure. None of CIT's operating subsidiaries, including CIT Bank, a Utah state bank, were ncluded in the filings. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. Bankruptcy Creditors' Service, Inc., publishes CIT Group Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of CIT Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) CIT GROUP: Sec. 341 Meeting of Creditors Set for December 2 ----------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, will convene a meeting of the creditors of CIT Group, Inc., and CIT Funding Company of Delaware LLC, on December 2, 2009, at 2:00 p.m., prevailing Eastern Time., at 80 Broad Street, 4th Floor, in New York. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtors' bankruptcy cases. Attendance by the Debtor's creditors at the meeting is welcome, but not required. The Sec. 341(a) meeting offers the creditors a one-time opportunity to examine the Debtor's representative under oath about the Debtor's financial affairs and operations that would be of interest to the general body of creditors. About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC announced a Chapter 11 filing on November 1, 2009 (Bankr. D. Del. Case No. 09-16565). Evercore Partners, Morgan Stanley and FTI Consulting are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan. Sullivan & Cromwell is legal advisor to CIT's Board of Directors. CIT Group on November 1 announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company's debt and streamline its capital structure. None of CIT's operating subsidiaries, including CIT Bank, a Utah state bank, were ncluded in the filings. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. Bankruptcy Creditors' Service, Inc., publishes CIT Group Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of CIT Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) CIT GROUP: Summary of Prepackaged Chapter 11 Plan ------------------------------------------------- CIT Group Inc. and CIT Funding Company of Delaware LLC, submitted to the U.S. Bankruptcy Court for the Southern District of New York a notice -- for distribution to the creditors in the Chapter 11 cases -- embodying the terms of their Prepackaged Plan of Reorganization. In summary, the Plan contemplates these exchanges, pursuant to which: (i) holders of Canadian Senior Unsecured Note Claims will receive their pro rata share of Series B Notes, equal to a distribution in the amount of 100% of that holder's Allowed Canadian Senior Unsecured Note Claim if that Class 7 votes to accept the Plan; (ii) electing Long-Dated Senior Unsecured Note Claims and holders of Senior Unsecured Note Claims and, if Class 7 does not vote to accept the Plan and the Plan is nonetheless confirmed, Canadian Senior Unsecured Note Claims on account of CIT Group Inc.'s guarantee of the Canadian Senior Unsecured Notes, will receive their pro rata share of (a) Series A Notes and (b) New Common Interests; (iii) holders of Senior Unsecured Term Loans Claims and Senior Unsecured Credit Agreement Claims will receive their pro rata share of (a) indebtedness under credit facilities of Reorganized CIT on substantially the same terms as the Series A Notes in lieu of a distribution of Series A Notes, or Series A Notes, at each such holder's election, if those Classes vote to accept the Plan, or Series A Notes if those Classes do not vote to accept the Plan, and (b) New Common Interests; and (iv) holders of Senior Subordinated Note Claims and Junior Subordinated Note Claims will receive specified percentages of New Common Interests if Class 12 and Class 13 vote to accept the Plan, as applicable, and Contingent Value Rights, in full satisfaction and settlement of the Claims and Interests. Moreover, the Plan contemplates the issuance of Contingent Value Rights to holders of Senior Subordinated Note Claims, Junior Subordinated Note Claims and Old Preferred Interests. The Plan also contemplates the Cash Collateralization of the Letter of Credit Facility with JPMorgan Chase Bank, N.A. Votes on the Plan were solicited prior to the Petition Date, with these voting results: Class Description Treatment ----- ----------- --------- Class 1 Other Priority Claims Unimpaired. Deemed to accept. Est. Recovery: 100% Class 2 Other Secured Claims Unimpaired. Deemed to accept. Est. Recovery: 100% Class 3 Other Unsecured Debt Unimpaired. Deemed to Claims and Guarantee accept. Claims Est. Recovery: 100% Class 4 Intercompany Claims Unimpaired. Deemed to accept. Est. Recovery: 100% Class 5 General Unsecured Claims Unimpaired. Deemed to accept. Est. Recovery: 100% Class 6 JPM L/C Facility Claims Impaired. Accepted. Est. Recovery: 100% Class 7 Canadian Senior Impaired. Pending; voting Unsecured Note Claims deadline is 11:59 p.m. (prevailing Eastern Time) on Nov. 5, 2009. Est. Recovery: 100% Class 8 Long-Dated Senior Entitled to vote. Impaired if holders vote to accept the Plan; Unimpaired if holders reject or do not vote on the Plan. Pending; voting deadline is 11:59 p.m. (prevailing Eastern Time) on Nov. 13, 2009. Class 9 Senior Unsecured Impaired. Accepted. Note Claims Est. Recovery: 94.2% Class 10 Senior Unsecured Impaired. Accepted. Term Loan Claim Est. Recovery: 94.2% Class 11 Senior Unsecured Impaired. Accepted. Credit Agreement Claims Est. Recovery: 94.2% Class 12 Senior Subordinated Impaired. Accepted. Note Claims Est. Recovery: 50% Class 13 Junior Subordinated Impaired. Accepted. Note Claims Est. Recovery: 15.4% Class 14 Subordinated Impaired. Deemed to reject. 510(b) Claims Est. Recovery: 0% Class 15 Old Preferred Interests Impaired. Deemed to reject. Est. Recovery: 0% Class 16 Old Common Interests Impaired. Deemed to reject. Est. Recovery: 0% Class 17 Old Delaware Unimpaired. Deemed to Funding Interests accept. Est. Recovery: 100% Class 18 Other Equity Impaired. Deemed to reject. Interests, if any Est. Recovery: 0% The Debtors believe that through the Plan, holders of Allowed Claims will obtain a substantially greater recovery from the Debtors' estates than the recovery they would receive if the Debtors filed Chapter 11 petitions without prior approval of the Plan by a majority of their creditors, or if the Debtors filed for Chapter 7 protection. The Plan will afford the Debtors the opportunity and ability to continue their business as viable going concerns and preserve ongoing employment for their employees, the Debtors aver. A combined hearing to consider the adequacy of the Disclosure Statement and confirmation of the Plan is scheduled for December 8, 2009, at 11:00 a.m. (prevailing Eastern time). Any objections to the approval of the Disclosure Statement, adequacy of the Disclosure Statement, or confirmation of the Plan must be filed so as to be actually received no later than 4:00 p.m. (prevailing Eastern Time) on December 1, 2009. Board of Directors of Reorganized CIT Upon the Effective Date of the proposed Plan, the Board of Directors of CIT Group Inc. will be comprised of 13 members, consisting of: * five individuals who were serving as directors on November 1, 2009; * four nominees proposed to the Nominating and Governance Committee of the Board of CIT by the Steering Committee of Lenders; * three nominees proposed to the Nominating and Governance Committee of the Board of CIT by CIT noteholders owning more than 1% of the aggregate outstanding principal amount of outstanding CIT bonds and unsecured bank debt claims; and * CIT's Chief Executive Officer. The deadline for the One-Percent Holders to propose a Debtholder Nominee is 4:00 p.m. (prevailing Eastern Time) on November 20, 2009. Any One-Percent Holder that desires to propose a Debtholder Nominee should contact CIT Group Inc.; and the Debtors' counsel. Any One-Percent Holders proposing a Debtholder Nominee will be required to (i) certify that as of October 29, 2009 such One- Percent Holders held more than 1% of the outstanding bonds and unsecured bank debt claims of CIT, and (ii) provide, on a confidential basis, a list of such One-Percent Holders' holdings. A full-text copy of the amended offering memorandum, disclosure statement, and solicitation of acceptances of a prepackaged plan of reorganization, dated October 23, 2009, is available for free at http://ResearchArchives.com/t/s?477c About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC announced a Chapter 11 filing on November 1, 2009 (Bankr. D. Del. Case No. 09-16565). Evercore Partners, Morgan Stanley and FTI Consulting are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan. Sullivan & Cromwell is legal advisor to CIT's Board of Directors. CIT Group on November 1 announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company's debt and streamline its capital structure. None of CIT's operating subsidiaries, including CIT Bank, a Utah state bank, were ncluded in the filings. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. Bankruptcy Creditors' Service, Inc., publishes CIT Group Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of CIT Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) CIT GROUP: Gets Nod to Maintain Prepetition Employee Programs ------------------------------------------------------------- CIT Group, Inc., and CIT Group Funding Company of Delaware LLC, sought and obtained interim authority from the Court to pay, in their discretion, any obligations arising under the Employee Programs, which were accrued or earned but unpaid as of the Petition Date; provided that payments with respect to Employee compensation will not exceed $10,950 per individual Employee. The Debtors also sought and obtained interim confirmation from the Court of their right to continue each of the Employee Programs in the ordinary course of business during the Chapter 11 cases to the extent that the Employee Programs were in effect immediately prior to the Petition Date. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, asserted that the Debtors' success in their bankruptcy cases hinges in large part on the morale and continued efforts of the Employees. Through the payment of the Prepetition Employee Obligations, the Debtors seek to motivate and encourage the Employees to continue to support the Debtors' restructuring efforts, he said. The Employee Programs include, without limitation these plans, programs, policies and agreements: (A) Wages, salaries, ordinary course holiday and vacation pay, sick leave pay and other accrued compensation, consisting of (i) an estimated accrued but unpaid amount of $2 million for the Debtors' Employees; and (ii) less than $5,000 in outstanding checks to Employees, as of Oct. 31, 2009. The amount owed to any Employee on account of wages and salaries does not exceed $10,950 for the pay period ending November 3, 2009. (B) Other Compensation for Paid Time Off policies, overtime pay, reimbursement of business, travel, educational, relocation, and other reimbursable expenses, as well as Ordinary Course Severance Programs, on which the Debtors are currently obligated to pay approximately $3.2 million in severance to their Employees terminated prior to the Petition Date. Payments of approximately $825,000, $192,000, and $192,000 will become due during the months of November and December 2009, and January 2010. (C) Bonus and Incentive Programs, for which the Debtors have accrued approximately $19 million as of October 31, 2009, in unpaid Discretionary Bonuses. (D) Employee Benefit Plans, consisting of (i) medical, vision, COBRA insurance, and prescription drug coverage, (ii) dental insurance, (iii) flexible spending accounts, (iv) an employee assistance program, (v) life and accidental death and dismemberment insurance, (vi) disability benefits, and (vii) miscellaneous other benefits. (E) Savings and Retirement Plans, consisting of: * The CIT Group Inc. Savings Incentive Plan, or the 401(k) Plan managed by Fidelity Investments, which costs the Debtors approximately $170,000 a month for employer contributions on behalf of their Employees. The Debtors also offer Flexible Retirement Contribution under the 401(k) Plan, which costs them approximately $70,000 annually in employer contributions. * The CIT Group Inc. Retirement Plan, which the Debtors fund $28.8 million annually * New Executive Retirement Plan, which is designed to provide company-funded retirement annuity to participants, costing the Debtors approximately $357m00 per month on account of 34 Employees or spouses. The Debtors are also required to make a lump sum payment to one former Employee in the amount of $810,000 in mid- November 2009. * The Supplemental Retirement Plan, which is a non- qualified plan designed to provide retirement benefits mirroring those provided under the Retirement Plan for compensation in excess of applicable limits imposed by the Internal Revenue Service. The Debtors' unfunded liability as of the Petition Date is approximately $4.9 million. * The Supplemental Savings Plan is a legacy arrangement that covers certain existing Retirement Plan participants who opted to remain under the Retirement Plan's "traditional plan" formula. There are currently three Debtor Employee participants in the SSP, with an unfunded liability of approximately $50,000. * The Deferred Compensation Plan offers certain senior executives the opportunity to defer payment of a portion of their base salary and incentive compensation as a means of saving for retirement or other purposes. Approximately nine of the Debtors' Employees currently participate in the DCP with an aggregate balance of approximately $3,000,000. Payments under the DCP are due to be paid in December 2009 and the first quarter of 2010. (F) Benefits to Retirees, consisting of: * Retiree Welfare Plans that provide life, medical and dental insurance benefits pursuant to several different retiree plans through United Healthcare Insurance Company and Prudential Life Insurance. Medical and dental insurance under the Retiree Benefit Plans for both the Debtors and their non-Debtor affiliates costs approximately $400,000 per month, while life insurance costs approximately $37,000 per month. (G) Other Benefits, which include: * The Transportation Reimbursement Incentive Plan and Dependent Flexible Spending Account benefits administrated by ADP, Inc., for which the Debtors remit Employee contributions totaling approximately $90,000 per month. * Tuition Reimbursement Program, through which all full- time employees are eligible to receive a maximum of $7,500 in tuition reimbursement per calendar year for undergraduate coursework or programs. All full-time Employees are eligible to receive a maximum of $10,000 per calendar year in tuition reimbursement payments for graduate coursework or programs. In order to efficiently deliver Employee Benefits, the Debtors contract with several vendors or Benefit Administrators. The Benefit Administrators include, among others, Buck Consulting for Retirement Administration, Focused Health, Staywell, TALX and Mercer. Specifically, the Debtors pay administrative fees for the Medical Plans, Dental Plan, Flex Benefits, and COBRA for the Debtors' Employees cost the Debtors approximately $150,000 per month. In conjunction with the Debtors' continuation of their Employee Programs, the Debtors sought and obtained interim Court authority to: -- continue to pay fees for the Benefit Administrators on a postpetition basis, including any claims for prepetition services rendered by those Administrators and any claims for reimbursement based on any prepetition disbursements made by the Benefit Administrators on behalf of the Debtors; -- continue to use the services and pay their third-party payroll vendor ADP, Inc., with an estimated monthly cost of $79,000 for services of related to payroll processing and Human Resource Information Systems; and -- to pay any outstanding amounts owed to Adecco Group that supplies the Debtors with staff workers that are necessary for the Debtors' business and continue the Employee Benefits postpetition. The Debtors pay the Master Temp Agency and the Other Temp Agencies approximately $2,000,000 a month. The Court, at the Debtors' behest, authorizes and directs banks to (i) receive, process, honor and pay all of the Debtors' prepetition checks and fund transfers on account of any Prepetition Employee Obligations, and (ii) issue new postpetition checks or effect new postpetition fund transfers on account of the Prepetition Employee Obligations to replace any prepetition checks or fund transfer requests that may be dishonored or rejected. Mr. Galardi averred that payment of the Employee Withholdings or payment of garnished wages will not prejudice the Debtors' estates because those Withholdings are held in trust for the benefit of the related payees and, thus, do not constitute property of the Debtors' estates under Section 541 of the Bankruptcy Code. With respect to both Employees of the Debtors and the non-Debtors, until the earlier of confirmation of the Plan of Reorganization or further order of the Court, the Debtors are not authorized to make any payments related to the Guaranteed Bonuses, the Discretionary Bonuses, the Employee Severance Plan, the Legacy Severance Plan, the NERP, the Supplemental Plan, the SSP, or the DCP. The Debtors are also not authorized to make further contributions into the Retirement Plan until the earlier of confirmation of the Plan. The Debtors are authorized to pay (i) all local, state and federal withholding and payroll-related taxes, and (ii) third parties and all amounts for garnishments, benefit plans, insurance programs, and other similar programs. The Debtors are also authorized to continue each of the Retired Employee Benefits. A hearing will be held on November 23, 2009, to consider final approval of the request. Objections are due November 19. About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC announced a Chapter 11 filing on November 1, 2009 (Bankr. D. Del. Case No. 09-16565). Evercore Partners, Morgan Stanley and FTI Consulting are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan. Sullivan & Cromwell is legal advisor to CIT's Board of Directors. CIT Group on November 1 announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company's debt and streamline its capital structure. None of CIT's operating subsidiaries, including CIT Bank, a Utah state bank, were ncluded in the filings. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. Bankruptcy Creditors' Service, Inc., publishes CIT Group Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of CIT Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) CIT GROUP: Wants to Pay Vendors in Ordinary Course -------------------------------------------------- CIT Group, Inc., and CIT Group Funding Company of Delaware LLC, contend that a fundamental aspect of their efforts to minimize disruption during their Chapter 11 cases is their ability to maintain the many relationships with parties who supply them with goods and services to the Debtors, which are critical to the continued operation of the Debtors' businesses during and after their bankruptcy cases. By this motion, the Debtors seek the Court's authority, but not direction, to pay, as they come due in the ordinary course of business, the unimpaired prepetition ordinary course claims of providers and vendors of goods and services who agree to continue to provide their goods and services on the customary credit terms that existed within 120 days prior to the Petition Date, or on other terms and conditions as are acceptable to the Debtors. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, explains that the Ordinary Course Claims may include, but are not limited to, claims of the Debtors': (i) providers of supplies, equipment and services necessary to the Debtors' business operations; (ii) advertisers; (iii) rent and utility service providers; (iv) external data and technology support service providers; (v) consultants, legal advisors, except for those professionals subject to filing fee applications, and auditors that are not addressed in other first day motions; and (vi) other general operational expenses. Based on the Debtors' books and records, the Debtors estimate that the total amount of Ordinary Course Claims to be paid to the Vendors will be approximately $20 million dollars, Mr. Galardi discloses. The Debtors propose that all payments be subject to these conditions: (1) The Debtors, in their sole discretion, will determine which Ordinary Course Claims. (2) A creditor that accepts payment is deemed to have agreed to continue to provide goods and services to the Debtors -- on terms that are as good or better than the customary terms and conditions, including credit terms, that existed 120 days prior to the Petition Date -- during the pendency of the Chapter 11 cases. (3) If a creditor accepts payment and thereafter does not continue to provide goods and/or services on the Customary Terms, then (i) any payment on a prepetition Claim received by that creditor will be deemed to be an unauthorized voidable postpetition transfer under Section 549 of the Bankruptcy Code, and recoverable by the Debtors in cash upon written request. Upon recovery by the Debtors, the Prepetition Claim will be reinstated as if the payment had not been made. (4) A creditor may contest if the Debtors seek to recover a payment from it due to a discontinued provision of goods and services to the Debtors on at least the Customary Terms during the pendency of the Chapter 11 cases. (5) Prior to making a payment to satisfy an Ordinary Course Claim, the Debtors may, in their absolute discretion, settle all or some of the prepetition claims of a creditor for less than their face amount without further notice or hearing. In order to effectuate the purposes of their request, the Debtors also ask the Court to authorize and direct all banks and other financial institutions to receive, process, honor, and pay any and all checks, drafts, wires or automated clearing house transfers issued or presented prior to or after the Petition Date, upon reliance on the representations of the Debtors as to which Disbursements are authorized to be paid. Mr. Galardi clarifies that the Debtors are not seeking to give priority to so-called "critical vendors." Rather, the Debtors are seeking to pay the Vendors' Ordinary Course Claims consistent with and in the spirit of the Prepackaged Plan of Reorganization, which proposes to pay those holders in full. Furthermore, until the Court approves the Debtors' request on a final basis, the Debtors seek the authority to pay up to $10 million in Ordinary Course Claims. Mr. Galardi reiterates that payment of the Ordinary Course Claims in the ordinary course of business will not affect relative distributions to creditors under the Plan, because the Plan provides for the payment in full of all General Unsecured Claims. According to Mr. Galardi, payment of the Ordinary Course Claims under Section 363(b) of the Bankruptcy Code mitigates certain risks to the Debtors' business, and is necessary to preserve their ability to continue their operations without interruption. "Any short term disruption could generate instability and would damage the "business as usual" message on which the [Plan] is predicated and undermine the Debtors' efforts to repair customer confidence," Mr. Galardi tells Judge Gropper. About CIT Group CIT Group Inc. (NYSE: CIT) -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC announced a Chapter 11 filing on November 1, 2009 (Bankr. D. Del. Case No. 09-16565). Evercore Partners, Morgan Stanley and FTI Consulting are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the restructuring plan. Sullivan & Cromwell is legal advisor to CIT's Board of Directors. CIT Group on November 1 announced that, with the overwhelming support of its debtholders, the Board of Directors voted to proceed with the prepackaged plan of reorganization for CIT Group Inc. and a subsidiary that will restructure the Company's debt and streamline its capital structure. None of CIT's operating subsidiaries, including CIT Bank, a Utah state bank, were ncluded in the filings. As of June 30, 2009, CIT Group had total assets of $71,019,200,000 against total debts of $64,901,200,000. Bankruptcy Creditors' Service, Inc., publishes CIT Group Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of CIT Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) CITADEL BROADCASTING: Says It May Have to File for Chapter 11 ------------------------------------------------------------- Citadel Broadcasting Corp. reported a net loss of $21.25 million on total revenues of $183.8 million for three months ended Sept. 30, 2009, compared with a net income of $27.99 million on net revenue of $213.89 million during the same period in 2008. On June 12, 2007, Citadel Broadcasting, to effectuate a merger with The Walt Disney Company unit ABC Radio Holdings, Inc., entered into a new credit agreement with several lenders to provide debt financing to the Company in connection with the payment of a special distribution on June 12, 2007 immediately prior to the closing of the Merger in the amount of $2.4631 per share to all pre-merger holders of record of Company common stock as of June 8, 2007, the refinancing of Citadel Broadcasting's existing senior credit facility, the refinancing of the ABC Radio Debt and the completion of the Merger. This senior credit and term agreement provided for $200 million in revolving loans through June 2013, $600 million term loans maturing in June 2013 ("Tranche A Term Loans"), and $1,535 million term loans maturing in June 2014 ("Tranche B Term Loans"). The Senior Credit and Term Facility contains certain financial and nonfinancial covenants. On March 26, 2009, the Company entered into the Fourth Amendment to the Senior Credit and Term Facility, dated as of June 12, 2007, as previously amended, among the Company and several lenders. The Fourth Amendment modified various terms of the Senior Credit and Term Facility, including suspending certain financial covenants through 2009 while imposing new monthly covenants for 2009. As of September 30, 2009, the balance outstanding under the Senior Credit and Term Facility was $2,056.2 million. As of September 30, 2009, the Company was in compliance with the terms of the Senior Credit and Term Facility and expects to remain in compliance with these terms through 2009. However, the Fourth Amendment added additional covenants for 2010, which the Company does not expect to meet. The Fourth Amendment requires the Company to have at least $150 million of available cash as of January 15, 2010 and that the remaining convertible subordinated notes be amended by January 15, 2010 to provide for a maturity date on or after September 30, 2014, among other things. Additionally, as of the quarter ended March 31, 2010, the Company would be required to comply with the financial leverage covenant required prior to the Fourth Amendment under section 13.1 of the Senior Credit and Term Facility at a rate of 7.75 to 1.0, reducing to 7.25 to 1.0 on June 30, 2010, and further reducing to 6.75 to 1.0 on December 31, 2010. The Fourth Amendment also requires that if the Company's cash exceeds $30,000,000 at any time, then the Company must put the amount in excess of $30,000,000 into a cash collateral account for the benefit of the Company's lenders. The Company will not have access to the cash collateral account to operate its business, fulfill its obligations, or to otherwise meet its liquidity needs without the consent of the lenders. As of September 30, 2009, approximately $4.0 million of Excess Cash is included in prepaid expenses and other current assets on the Company's accompanying consolidated condensed balance sheet. "Based on the current economic conditions and capital markets, the Company does not expect to meet its covenant requirements under the Senior Credit and Term Facility as of January 15, 2010. In May 2009, the Company hired a financial advisor to assist in the evaluation of the Company's financial options, including a possible refinancing and restructuring of its capital structure and debt," Citadel said in its Form 10-Q filed with the Securities and Exchange Commission. "The Company is currently in discussions with its lenders regarding this matter, including the possibility of seeking relief through a Chapter 11 filing under the U.S. Bankruptcy Code; however, there can be no assurance that any definitive agreement shall be reached. As of September 30, 2009, discussions with lenders were ongoing, and they remain ongoing as of the filing of the report in which these financial statements appear. Should the Company default under our Senior Credit and Term Facility and under the terms of our convertible subordinated notes, our indebtedness may be accelerated, we would not be able to satisfy these obligations, and the Company would likely need to seek relief through a Chapter 11 filing under the U.S. Bankruptcy Code." A copy of the third quarter report filed on Form 10-Q is available for free at http://researcharchives.com/t/s?48e9 About Citadel Broadcasting Citadel Broadcasting Corporation is the third largest radio broadcasting company in the United States based on net broadcasting revenue. The Company owns and operates radio stations and holds Federal Communications Commission licenses in 27 states and the District of Columbia. In addition to owning and operating radio stations, the Company also owns and operates Citadel Media, which was formerly identified as ABC Radio Network, which produces and distributes a variety of news and news/talk radio programming and formats. The Radio Network is a leading radio network and syndicator with approximately 4,000 station affiliates and 8,500 program affiliations. The Company has assets of $1.40 billion against debts of $2.48 billion as of Sept. 30, 2009. CLEM CARINALLI: Can Sell 2 Assets; Faces Fraud Allegations ---------------------------------------------------------- Nathan Halverson at The Press Democrat reports that Clem Carinalli has sought and secured approval from U.S. Bankruptcy Judge Alan Jaroslovsky to sell two assets for a combined $3.45 million -- a property at 2425 Mendocino Avenue that houses City Life Community Center for $2.75 million, with some of that money going to pay the real estate broker and a bank that loaned money on the property; and a 50% stake in the vineyard land and buildings that house De La Montanya Winery, priced at $700,000. Meanwhile, Mr. Carinalli, according to The Press Democrat, has amended his bankruptcy documents to indicate that he has $196 million in assets, an increase of $12 million from the original amount disclosed. The Press Democrat states that Mr. Carinalli also subtracted $5 million from his total debts, now at $191 million. SSU Foundation Might Have to Return Loan Payment Sonoma State University executives had previously stated that the seven loans made to Mr. Carinalli were secured with property, including the two that were outstanding as of this spring. Citing SSU spokesperson Susan Kashack, The Press Democrat states that executives initially thought the loan was secured but discovered sometime between June 30 and July 9 that it was not. According to the report, Ms. Kashack said, "As soon as we discovered that, we contacted Mr. Carinalli. He subsequently paid off the loan." The report says that under bankruptcy law, the SSU foundation might have to return the $232,500 if it is determined that it received preferential treatment. Ms. Kashack said that the foundation might have to take out a loan to come up with the money that would go back into Mr. Carinalli's bankrupt estate, the report states. SSU wasn't pursuing why the loan was unsecured and "we don't have any plans to pursue legal actions against Mr. Carinalli," the report quoted Ms. Kashack as saying. Mr. Carinalli, The Press Democrat relates, will be in court again on November 23 for a hearing on plans to use cash received from his rental properties. Fraud Allegations The Press Democrat reports that Mr. Carinalli is being accused of fraud by lenders, who claimed that he used loan documents that inflated the value of properties and overstated his own fortune, increasing the amount of money he was able to borrow. According to The Press Democrat, Mr. Carinalli failed to repay the loans and it left Napa Community Bank and the pension fund of a Santa Rosa lumber company holding rights to land that is valued at a fraction of its value at the time Mr. Carinalli borrowed the money. The Press Democrat says that Napa Community Bank and a group of investors, including Mead Clark Lumber Co., claimed that lenders were intentionally misled when they sank a combined $5 million into two land deals in 2006 and 2007. "I don't believe I've created any fraud or done anything wrong," the report quoted Mr. Carinalli as saying. Kevin McCallum at The Press Democrat adds that investors were unaware that Mr. Carinalli had steered their millions into the hands of convicted swindler Jay Soderling. According to The Press Democrat, the Soderling loans are a small portion of the $165 million Mr. Carinalli owes creditors. About Clem Carinalli The U.S. Bankruptcy Judge Alan Jaroslovsky converted the Chapter 7 liquidation case of Clem Carinalli and his wife, Ann Marie, into Chapter 11 reorganization, at the behest of the Debtors. As reported by the TCR on September 17, 2009, a group of investors claiming that they are owed almost $1 million by Mr. Carinalli filed a petition to force him into Chapter 7 bankruptcy in the U.S. Bankruptcy Court in Santa Rosa. Mr. Carinalli owes creditors some $150 million. Exchange Bank President William Schrader said that the involuntary bankruptcy could delay loan payments to the bank and other institutions. Mr. Carinalli said that he was hoping to avert bankruptcy and instead negotiate privately with investors, as that would increase the odds of paying creditors back. Mr. Carinalli hired debt restructuring consultant Steve Huntley to negotiate with creditors. COEUR D'ALENE MINES: S&P Raises Rating on Senior Notes to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its issue- level rating on Coeur D'Alene Mines Corp.'s (B-/Positive/--) senior unsecured notes due 2024 and 2028 to 'B-' (the same as the corporate credit rating) from 'CCC+'. At the same time, Standard & Poor's revised the recovery rating on the notes to '4' from '5', indicating S&P's expectation of average (30%-50%) recovery in the event of a payment default. The upgrade of the issue-level rating follows S&P's latest assessment of the company's net enterprise value using its recovery rating methodology. Factoring in the combination of the value S&P believes is now attributable to the fully permitted Kensington mine and the improved reserve profile at Palmarejo, the company's net enterprise value at the time of default will likely be higher than S&P previously expected. S&P's revised recovery ratings also incorporate the impact of the company's new $45 million term loan facility at its Coeur, Alaska, subsidiary as well as the proposed revolving credit facilities, totaling $30 million, at the Mexican subsidiary. It is S&P's understanding that these facilities are secured obligations of the respective subsidiaries. Therefore, S&P has considered these facilities to constitute priority debt within the capital structure relative to the company's existing senior unsecured obligations, including the notes due 2024 and 2028. The ratings on Idaho-based Coeur D'Alene Mines Corp. reflect the company's vulnerable business risk profile as a small, capital- intensive precious metal company with a modest scope of operations. The ratings are also based on the company's political and environmental risks, relatively high-cost operations, and exposure to volatile precious metal prices. Ratings List Coeur D'Alene Mines Corp. Corporate credit rating B-/Positive/-- Ratings Raised Coeur D'Alene Mines Corp. To From -- ---- Senior unsecured notes B- CCC+ Recovery rating 4 5 COHARIE HOG FARM INC: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Coharie Hog Farm, Inc. 300 Westover Road Clinton, NC 28328 Case No.: 09-09737 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: Terri L. Gardner, Esq. Nelson Mullins Riley & Scarborough, LLP 4140 Parklake Avenue, Suite 200 Raleigh, NC 27612 Tel: (919) 329-3882 Fax: (919) 329-3799 Email: terri.gardner@nelsonmullins.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Dennis D. Rippe, the company's chief restructuring officer. Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Adm. Animal Health $113,274 & Nutrition AG Provision LLC $148,567 c/o G. Thompson Ajinomoto Heartland LLC $106,062 Bunge North America (East) $348,792 c/o Connie Brown Post Office Box 789300 Saint Louis, MO 63179 Cargill Incorporated $172,737 c/o Adam Thompson Daniel Hall $125,235 Derrick Russ $117,345 Doug Hill $145,460 Evans & Sons Inc. $105,447 Griffin Industries, Inc. $152,310 Ivey Farms $164,781 M.N. Herndon & Sons $113,526 Farms Inc. Newsham Choice Genetics $307,345 c/o James Flood 5058 Grand Ridge Drive, Suite 200 West Des Moines, IA 50265 Oran Young $172,401 Ray Sutton $93,455 Samsppon County Tax $180,821 c/o G. Spell Stephen Grady, Jr. $133,535 Steve Grady $125,192 Swinging Tail Cattle Co $163,194 William Stephens $130,705 COMFORCE CORP: Posts Lower Q3 2009 Net Income of $1,056,000 ----------------------------------------------------------- COMFORCE Corporation reported lower net income of $1,056,000 for the three months ended September 27, 2009, from net income of $1,347,000 for the quarter ended September 28, 2008. COMFORCE posted lower net income of $1,810,000 for the nine months ended September 27, 2009, from net income of $3,938,000 for the same period ended September 28, 2008. COMFORCE booked net sales of services of $139,710,000 for the three months ended September 27, 2009, from net sales of services of $149,435,000 for the quarter ended September 28, 2008. The Company recorded net sales of services of $419,428,000 for the nine months ended September 27, 2009, from net sales of services of $452,401,000 for the nine-month period ended September 28, 2008. As of September 27, 2009, COMFORCE had $178,254,000 in total assets, including $3,819,000 in cash and cash equivalents, against $180,030,000 in total liabilities, resulting in $1,776,000 in stockholders' deficit. John Fanning, Chairman and CEO of COMFORCE commented, "We had indicated that 2009 would be a demanding year and it has been. However we believe our results, albeit not at the level we would like, demonstrate the flexibility of our management team, the validity of our business plan and our commitment to containing costs, even as we look to grow our business. We were pleased to report a sequential improvement in PRO's revenues of 2.6% over the second quarter." Mr. Fanning continued, "We, like other companies in our industry, are continuing to be negatively impacted by the current economic environment and weak labor markets. Even though the rate of job losses has decreased in recent months, job losses continue and we still have no visibility as to when this might translate into a real recovery in our business. "[Last] week, we announced that COMFORCE has amended our revolving credit facility to extend our maturity date from July 2010 to November 2012. The confidence our bankers have shown in our management team validates our business plan and financial discipline." Mr. Fanning concluded "We remain confident in COMFORCE's prospects and we continue to work to weather the current environment and to position COMFORCE for future growth as the economy improves." Convertible Related Party Note The Company's 8.0% Subordinated Convertible Note due December 2, 2009, is convertible into common stock at $1.70 per share (or, in certain circumstances, into a participating preferred stock which in turn would be convertible into common stock at the same effective rate). The holder of the Convertible Note is a related party, Fanning CPD Assets, LP, a limited partnership in which John C. Fanning, the Company's chairman and chief executive officer, holds an 82.4% economic interest. The Company intends to repay the Convertible Note in cash on its maturity date on December 2, 2009, using funds available under the Company's revolving line of credit. Under the terms of the Convertible Note, interest is payable either in cash or in-kind at the Company's election. Debt service costs associated with the Convertible Note have been satisfied through additions to principal through June 1, 2009 (the most recent semi-annual interest payment date). Additional principal is convertible into common stock on the same basis as other amounts outstanding under the Convertible Note, which provides for conversion into common stock at the rate of $1.70 per share. As a result of its election to pay interest in-kind under the Convertible Note, the Company recognized beneficial conversion features of $14,000 during 2008, which resulted in an increase in deferred financing costs and paid-in capital. There were no beneficial conversion features recorded in 2009 since the conversion price of $1.70 was greater than the closing price on the in-kind interest payment date. The Convertible Note may be prepaid in whole or in part, provided that the market value of the Company's common stock exceeds $2.13 per share for a specified period of time. The holder has 10 days to convert the Convertible Note following notice of prepayment. Revolving Line of Credit At September 27, 2009, COMFORCE, COMFORCE Operating, Inc., and various of their operating subsidiaries, as co-borrowers and guarantors, were parties to a Revolving Credit and Security Agreement with PNC Bank, National Association, as a lender and administrative agent, and other financial institutions participating as lenders to provide for a revolving line of credit with available borrowings based, generally, on 87.0% of the Company's accounts receivable aged 90 days or less, subject to specified limitations and exceptions. COI is a wholly owned subsidiary of COMFORCE formed for the purpose of facilitating certain of the Company's financing transactions in November 1997. On November 2, 2009, the PNC Credit Facility was amended and restated, and various terms were modified. The term was extended from July 24, 2010 to November 2, 2012, and, at the Company's request, the maximum availability under the facility was reduced from $110.0 million to $95.0 million. In addition, reflective of current credit markets, the interest rate was increased. Prior to the effective date of the amendment, borrowings bore interest, at the Company's option, at a per annum rate equal to (1) the higher of the federal funds rate plus 0.5% or the base commercial lending rate of PNC as announced from time to time, or (2) LIBOR plus a specified margin, ranging from 1.5% to 2.5% based upon the Company's fixed charged ratio. Beginning on the effective date of the amendment, the existing as well as new borrowings under the PNC Credit Facility bear interest, at the Company's option: -- for loans denominated as domestic rate loans, at a per annum rate equal to 1.75% plus the highest of: (1) the federal funds open rate plus 0.5%, (2) the base commercial lending rate of PNC as announced from time to time, or (3) one-month LIBOR, as published each business day in The Wall Street Journal, adjusted to take into account any changes in the Federal Reserve requirements for bank eurocurrency fundings, plus 1.0%; or -- for loans denominated as eurodollar rate loans, at a per annum rate equal to 2.75% plus the higher of: (1) LIBOR, as it appears at a specified time each business day on Bloomberg Page BBAM1, adjusted to take into account any changes in the Federal Reserve requirements for bank eurocurrency fundings, or (2) 1.50%. The PNC Credit Facility also provides for a commitment fee of 0.375% (0.25% prior to the effective date of the amendment) of the unused portion of the facility. The obligations under the PNC Credit Facility are collateralized by a pledge of the capital stock of certain operating subsidiaries of the Company and by security interests in substantially all of the assets of the Company. The PNC Credit Facility contains various financial and other covenants and conditions, including, but not limited to, a prohibition on paying cash dividends and limitations on engaging in affiliate transactions, making acquisitions and incurring additional indebtedness. The PNC Credit Facility also limits capital expenditures to $6.0 million annually. Under the PNC Credit Facility, the Company had outstanding $3.8 million of standby letters of credit, principally as security for the Company's obligations under its workers compensation insurance policies and had remaining availability of $18.5 million as of September 27, 2009 based upon the borrowing base as defined in the loan agreement. The Company was in compliance with all financial covenants under the PNC Credit Facility at September 27, 2009. Members of the lending syndicate are: Lender Commitment Percentage ------ --------------------- PNC Bank, National Association as Lender and Administrative Agent 52.631578947% Webster Business Credit Corporation as Documentation Agent and Lender 21.052631579% RBS Business Capital, a Division of RBS Asset Finance, Inc., as Lender 26.315789474% 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?48c8 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48c9 A full-text copy of the Amended and Restated Revolving Credit and Security Agreement dated as of November 2, 2009 among the Company, PNC Bank, National Association, as lender and administrative agent, and other named lenders, is available at no charge at: http://ResearchArchives.com/t/s?48ca About COMFORCE Based in Woodbury, New York, COMFORCE Corporation (NYSE Amex: CFS) provides outsourced staffing management services that enable Fortune 1000 companies and other large employers to consolidate, automate and manage staffing, compliance and oversight processes for their contingent workforces. The Company also provides specialty staffing, consulting and other outsourcing services to Fortune 1000 companies and other large employers for their healthcare support services, technical and engineering, information technology, telecommunications and other staffing needs. In addition, the Company provides funding and back office support services to independent consulting and staffing companies. COMSTOCK HOMEBUILDING: Annual Stockholders' Meeting on Dec. 15 -------------------------------------------------------------- The Annual Meeting of Stockholders of Comstock Homebuilding Companies, Inc., will be held at 10:00 a.m., local time, on December 15, 2009, at 11465 Sunset Hills Rd, Reston, Virginia, for these purposes: 1. To elect three directors to serve for a three-year term expiring at the 2012 Annual Meeting or until their successors are duly elected and qualified or until their earlier resignation or removal; 2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company's for the fiscal year ending December 31, 2009; and 3. To transact such other business as may properly come before the meeting or any adjournment thereof. Stockholders of record at the close of business on November 1, 2009, are entitled to notice of and to vote at the meeting. A full-text copy of the proxy statement is available at no charge at http://ResearchArchives.com/t/s?48ce Forbearance, Releases from M&T Bank As reported by the Troubled Company Reporter on October 1, 2009, Comstock Homebuilding entered a series of agreements with Manufacturers Traders and Trust Company with respect to two projects located in Virginia. The projects, Belmont Bay located in the Belmont Bay community in Woodbridge, Virginia, and Potomac Square located in the Cascades community in Sterling, Virginia originally had loans secured by the developments of $17.3 million originated in October 2006 and $9.2 million originated in July 2004. As a result of the agreements, the Belmont Loan, with a current balance of $7.0 million will be released in its entirety and the Cascades Loan, with a current balance of $1.1 million, will be extended through January 31, 2011. Under the terms of the agreements, M&T Bank agreed to release the Company from its obligations and guarantees relating to the Belmont Loan and the Company agreed to cooperate with M&T Bank with respect to its foreclosure on the remaining portion of the Belmont Bay Project which includes 19 partially completed condominium units and 84 condominium building lots. The Company also entered into a non-interest bearing subordinated promissory note in connection with the Belmont Loan in the amount of $496,000 with a three year maturity secured by the Cascades Project. Further, under the terms of the agreements, M&T Bank agreed to extend the maturity date of the Cascades Loan by forbearing on enforcing its rights with respect to collection of the debt until January 31, 2011. All unpaid interest incurred prior to the effective date plus a non-refundable $50,000 extension and forbearance fee shall be added to the current principal amount due of $1.1 million and shall be due at the new maturity date The Company also agreed to commence current payment of interest due M&T Bank related to the current principal balance of the Cascades Loan. The Cascades Project contains a total of 191 condominium units with the first phase of the Cascades Project (88 units) being completed by the Company in 2007. About Comstock Homebuilding Established in 1985, Comstock Homebuilding Companies, Inc. (Nasdaq: CHCI) is a publicly traded, diversified real estate development firm with a focus on a variety of for-sale residential products. The company currently actively markets its products under the Comstock Homes brand in the Washington, D.C. and Raleigh, N.C. metropolitan areas. Comstock Homebuilding Companies, Inc. trades on NASDAQ under the symbol CHCI. For more information on the Company or it projects please visit http://www.comstockhomebuilding.com/ Comstock Homebuilding had total assets of $105,329,000 against total debts of $104,904,000 as of June 30, 2009. CORE MANUFACTURING: To Sell Assets to Esmark for $3.5 Million ------------------------------------------------------------- Keith Gushard of the Meadville Tribune relates that portions of Core Manufacturing Inc. will be sold to Esmark Inc. of Chicago for $3.5 million, absent higher and better bids. "The sale is as a going concern -- those businesses will continue to operate and, hopefully, grow again as the economy continues to improve, Mr. Gushard quoting Guy Fustine, the U.S. Bankruptcy Court trustee handling the CORE Manufacturing case, as stating. Mr. Fustine said bidding would start at $3.5 million and the next bid would have to be $3.65 million plus the additional $100,000 for fees, Mr. Gushard relates. CORE Manufacturing Inc. -- http://core-mfg.com/-- through its affiliates designs and makes machining and plasting injection molders. The Company filed for bankruptcy in January 2009, citing more than $17 million owed to creditors and vendors. CROCS INC: Swings to $22,068,000 Net Income for Q3 2009 ------------------------------------------------------- Crocs Inc. swung to a net income of $22,068,000 for the three months ended September 30, 2009, from a net loss of $147,980,000 for the same period in 2008. For the nine months ended September 30, 2009, Crocs booked lower net loss of $30,630,000 from a net loss of $150,374,000 for the same period a year ago. Crocs booked revenues of $177,141,000 for the September 30, 2009 quarter from revenues of $174,187,000 for the same period a year ago. Crocs had $509,756,000 in revenues for the nine months ended September 30, 2009, from revenues of $595,497,000 for the same period a year ago. As of September 30, 2009, Crocs had total assets of $442,973,000 against total liabilities of $150,329,000. "Our third quarter results were driven by the continuing strength of our consumer-direct businesses and the favorable effects of our cost reduction programs," said John Duerden, President and Chief Executive Officer. "While we are encouraged by our top-line growth and return to profitability in the quarter, the normal seasonality of our business will make it difficult to maintain profitability in the fourth quarter. However, future wholesale bookings for the spring 2010 line are strong in all regions. When coupled with the launch of our new, targeted marketing programs, this provides us with increased confidence that we will return to profitability during 2010. In the meantime, we will continue to invest in the products, systems, processes and customer relationships necessary to deliver the best long-term results." In its Form 10-Q filing with the Securities and Exchange Commission, Crocs said due to deteriorating economic conditions, lessened demand for its products and difficulty marketing its expanded product line, Crocs' sales moderated in the first half of 2008 and declined during the last half of 2008. Crocs continued to be affected by many of the same issues during the first nine months of 2009. The Company's total revenues declined 14.4% during the nine months ended September 30, 2009, compared to the same period in the previous year. In 2008 and the first nine months of 2009, the Company incurred various one-time cash and non-cash restructuring and impairment costs as the Company took steps to right-size its production and distribution capacity to be more in line with demand for its product. The Company said it may incur additional losses through the remainder of 2009 and in the future. Crocs also said continued declines in revenues could have a material adverse effect on the Company's operating results, cash flow and its ability to raise capital. The Company cannot fully anticipate future conditions given the substantial uncertainties in the credit markets and the economy in general. The Company may have unexpected costs and liabilities including costs related to further restructuring and right-sizing should that be necessary; revenue and cash provided by operations may decline; economic conditions may continue to weaken; and competitive pressures may increase, resulting in difficulty maintaining adequate liquidity. At September 30, 2009, the Company had $76.0 million in cash and cash equivalents. On August 3, 2009, the Company fully repaid its remaining obligation on its revolving credit facility with Union Bank of California, N.A., prior to its September 30, 2009 maturity date. The Revolving Credit Facility had an outstanding balance of $17.3 million as of June 30, 2009. The Revolving Credit Facility was effectively terminated upon full repayment. The Company did not incur any penalties for the early payment and termination of the Revolving Credit Facility. On September 25, 2009, the Company entered into a revolving credit agreement with PNC Bank, N.A. The Credit Agreement provides for an asset-backed revolving credit facility of up to $30.0 million in total. Borrowings under the Credit Agreement may be used to fund working capital needs and reimburse drawings under letters of credit. The Credit Agreement will provide the Company with additional flexibility with respect to its ongoing cash needs. The Company has an effective Form S-3 shelf registration statement on file with the SEC to allow additional flexibility in exploring financing options. There can be no assurance that the Company will be able to secure additional debt or equity financing and, accordingly, the Company's liquidity and ability to timely pay its obligations when due could be adversely affected. As the Company continues to re-evaluate its operating plans for 2009 and beyond, it has undertaken certain restructuring and right-sizing activities to address the potential for continued decreases in revenues. The Company's ability to continue as a going concern is dependent upon achieving a cost structure which supports the levels of revenues the Company is able to achieve. There can be no assurance that any actions taken by the Company will result in a return to profitability. A full-text copy of Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?48cf A full-text copy of Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48d0 About Crocs Inc. Based in Niwot, Colorado, Crocs Inc. (NASDAQ: CROX) designs and sells a broad offering of footwear, apparel, gear and accessories that utilize proprietary closed cell-resin, called Croslite. The Company sells Crocs-branded products throughout the U.S. and in 128 countries, through domestic and international retailers and distributors and directly to end-user consumers through its webstores, Company-operated retail stores, outlets and kiosks. DAMIEN GILLIAMS: Files for Bankruptcy to Fend Off Foreclosure ------------------------------------------------------------- Nadia Vanderhoof of TCPlam reports that Damien Gilliams made a voluntary filing under Chapter 11 in the bankruptcy court, halting a $1.85 million foreclosure sale on his Flagship Marina. According to the court, several documents were missing from the filing -- including a statement of financial affairs, payment archives, a statement of Mr. Gilliam's monthly income and other disclosures. Mr. Gilliam's could be dismissed if he failed to file the documents by November 20, Ms. Vanderhoof quoting papers filed with the Court. Leon Nichols represents the Mr. Gilliams, the report notes. Damien Gilliams owns Flagship Marina. DEL HARBOR: Moody's Assigns 'Ba1' Rating on $25 Mil. Revenue Bonds ------------------------------------------------------------------ Moody's Investors Service has assigned a Ba1 rating and stable outlook to the $25 million Revenue Bonds (Harbor Regional Center Project), Series 2009, issued by Del Harbor Foundation through the California Municipal Finance Authority for the benefit of Harbor Regional Center. Proceeds of the bonds will be used to finance the purchase of office facilities for lease by the foundation to the Harbor Regional Center, and to finance capitalized interest through a portion of 2010, as well as to fund a debt service reserve for the bonds. The Ba1 rating reflects the high reliance of HRC on funding from the State of California, currently with a general obligation rating of Baa1. Credit Strengths * Essential services provided by HRC to over 10,000 clients and families in a service area of over 2 million, as evidenced by legal statute and state court decision which mandates provision of services. * A history of strong financial support from the State of California for services, even in years when the state is experiencing budgetary stress. * Satisfactory legal and structural elements of the lease, financing agreement and other bond documents with solid debt service coverage derived from lease revenues and lease payments flowing from HRC directly to the trustee. * Debt service reserve funded at maximum annual debt service Challenges * High reliance on funding from the State of California (rated Baa1, stable), leaving HRC vulnerable to potential funding reductions or delays. * Low placement of state payments to regional centers on state's ranking of "priority" and "non-priority" payments caused regional centers to receive IOUs in July 2009 and place regional centers at risk in possible future state cash crises. * Risk of abatement of the lease (mitigated by rental interruption insurance). * Thin cushion to absorb potential challenges given very modest financial resources. Security For The Bonds The security for the bonds is a security interest in the gross revenues of the Del Harbor Foundation, which is primarily derived from lease payments from Harbor Regional Center. Essentially all of HRC's revenues are contracted payments from the state for services provided to the developmentally disabled population in its service area. HRC's service area includes over 20 cities covering more than 125 square miles of the southwestern quadrant of the County of Los Angeles. The Series 2009 bonds are being issued by Del Harbor Foundation, an affiliated support organization of HRC, which will purchase and own two buildings that will be leased to HRC under the terms of a 30-year lease. The bonds are secured by a deed of trust of the buildings and security interest in the gross revenues of the foundation, which is primarily derived from lease revenues from Harbor Regional Center. Lease revenues from HRC to the foundation are secured through a pledge of gross revenues of the foundation, which are essentially the lease revenues received from HRC. Payments under the lease and financing agreements are to be made directly from HRC to the Trustee. There is a fully cash-funded debt service reserve fund sized to maximum annual debt service, and Del Harbor Foundation covenants in the Loan Agreement to charge rents for the facility equal to at least 1.25 times maximum annual debt service coverage. The rents charged are designed to provide over 1.7 times coverage or MADS. Essential Service Provided By Regional Centers The essential nature of services provided by Harbor Regional Center, as the sole agency under contract with the Department of Developmental Services for state-funded services for the developmentally disabled in HRC's service area, which includes over 20 cities covering more than 125 square miles of the southwestern quadrant of the County of Los Angeles, provides the fundamental credit strength for the Ba1 rating, coupled with expectations of continued financial support from the State of California (rated Baa1, stable outlook). In years of state financial stress, the state has continued to appropriate money to the regional centers without large cuts, due to the essential nature of the services provided and the statutory mandate that the state provide these services. The state's budget for fiscal year 2010 contains growth of 1% in appropriations for regional centers. The Lanterman Developmental Disabilities Services Act (Section 4500 et seq. of the Welfare and Institutions Code) is a state statute which mandates the provision of services to persons with, or at risk of having, a developmental disability throughout the state. A developmental disability is defined as mental retardation, cerebral palsy, epilepsy, autism or other similar conditions, which occur before 18 years of age. The act created a network of 21 regional centers throughout the state, of which the Harbor Regional Center is one, to coordinate the provision of services for the state. Harbor Regional Center And Del Harbor Foundation Harbor Regional Center, a California nonprofit corporation, was created in 1977 as one of 21 regional centers contracting with the Department of Developmental Services as the exclusive provider of state-funded services to the developmentally disabled in the Torrance, Harbor, Bellflower and Long Beach districts of Los Angeles County. For fiscal year 2009, total contracted revenues from the state to HRC were over $123 million, of which over $20 million are allocated for the operations of the organization. The foundation was established in 2009 as an independent nonprofit public benefit corporation to support HRC and its mission, including real estate development, acquisition, and management on behalf of HRC. Reliance on The State Of California HRC's contract with DDS is of a five-year term that is subject to renewal; the current contract expires in 2014. However, the contract is not open to competitive bid. Although potential loss of the DDS contract is a concern, Moody's believe HRC's long- standing contractual relationship since 1977, with the effective management of the Center, mitigates the potential risk. Contracted revenues from DDS were $106 million for fiscal year 2007, $116 million in fiscal 2008, over $123 million in 2009, and have been budgeted at over $123 million for fiscal year 2010. For fiscal year 2009, $20.6 million of contracted revenues were allocated for the operations of the organization and pledged for security on the lease and finance payments; the balance of HRC's revenues represent pass-through funding for purchase of services provided to consumers. HRC determines eligibility for services, performs ongoing assessment of client needs, develops service plans that authorize direct services, and monitors services provided to assure client outcomes are achieved. The treatment and provision of direct services are accomplished through subcontracts with qualified area providers. The DDS contract provides that 25% of the funds allocated to HRC is available to HRC at the beginning of each fiscal year. Each month, after service providers are paid, HRC submits a claim to DDS and receives reimbursement. Near the end of each fiscal year, DDS offsets HRC's monthly claims using the money advanced in the beginning of such fiscal year. Following the end of each fiscal year HRC retains funds from the annual advance payment to pay any late invoices from service providers. Each February, DDS and HRC reconcile the previous fiscal year's advance and claims and return unspent funds to the State that HRC may not retain under the DDS contract. Recent State Cash Crisis Highlights Risk to Regional Centers Funding for the regional centers is subject to annual appropriation by the state legislature. Once the appropriation is made, the state's payments to the regional centers fall to a low level in the state's ranking of "priority payments" and "non- priority payments." Priority payments are defined as those that must be made even in cash flow crises, and include payments for education, debt service, payroll, and pension contributions. In total, priority payments make up over 50% of the state's total spending. Payments to the regional centers are considered non- priority payments, and in a situation of limited liquidity, the state controller can determine that non-priority payments must be made with registered warrants in order to preserve cash for priority payments. In July 2009, in the midst of a state cash flow crisis, the state controller began issuing individual registered warrants (IOUs) in lieu of certain payments to private businesses, local governments, taxpayers receiving income tax refunds and owners of unclaimed property. The IOU is a promise to pay, with interest, which is issued by the state when there is not enough cash to meet all of the state's payment obligations. The interest rate, set by the Pooled Money Investment Board on July 2, 2009, was 3.75% per year. HRC received $15.8 million in IOUs from July 7, 2009 to August 10, 2009. HRC deposited and cashed its registered warrants with City National Bank. City National Bank held HRC's registered warrants until they were called for payment by the State Treasurer. The last rating action with respect to the State of California was on November 2, 2009, when a rating of Baa1 with a stable outlook was applied to State of California Various Purpose General Obligation Bonds (Federally Taxable Build America Bonds). Outlook The stable outlook reflects the outlook on the State of California, which is stable at this time, as well as Moody's expectations that Harbor Regional Center will continue to receive stable levels of governmental support and increased funding that will cover the lease and finance payments to the foundation serving as pledged revenues and providing adequate debt service coverage. What could change the rating -- UP * Rating upgrade of the State of California * Material increase in liquidity and growth in financial resources, with no additional borrowing or capital plans that may stress balance sheet profile What could change the rating -- DOWN * Downgrade of state rating * Material reduction or delay in state funding or unexpected expense pressures, resulting in imbalanced operating performance and failure to make scheduled lease and finance payments to foundation * State cash crisis that leads to paying HRC in IOUs, with no offer of bank to honor the IOUs DELTA PETROLEUM: Posts $100.9 Mil. Net Loss for 3rd Quarter 2009 ---------------------------------------------------------------- Delta Petroleum Corporation swung to a net loss of $100,973,000 for the three months ended September 30, 2009, from net income of $48,651,000 for the same period a year ago. Delta Petroleum posted a net loss of $310,889,000 for the nine months ended September 30, 2009, from net income of $4,274,000 for the same period a year ago. As of September 30, 2009, Delta had total assets of $1,595,028,000 against total current liabilities of $273,364,000 and total long- term liabilities of $588,216,000. As of September 30, 2009, Delta had accumulated deficit of $904,925,000 and total equity of $733,448,000. Delta has finished completion efforts on the Gray well. While all zones encountered significant high pressure, they flowed primarily water with minor amounts of non-commercial associated gas. Additional testing was performed in the basalt section of the well with a similar outcome, and therefore the Gray well has been expensed as a dry hole in the Company's third quarter financial statements. Delta's Columbia River Basin team has reviewed available data in order to provide possible explanations regarding the lack of commercial gas from the Wenatchee sands of the Gray well. One of the challenges generally experienced in the industry is the fact that fresh water and hydrocarbons are almost indistinguishable on electric logs. Therefore the gas shows and over-pressured reservoir seen in the Gray well during drilling suggested a gas reservoir with some associated water; however, completion results instead revealed that the reservoir is a fresh water reservoir with some associated natural gas. John Wallace, the Company's President and COO said, "We are extremely disappointed with the results of the Gray well, but exploration drilling carries with it significant risks. We continue to believe that the Roslyn formation, which has produced elsewhere in the Columbia River Basin, has significant potential and should be tested. In addition, data obtained during the drilling of the Gray well has allowed for better seismic interpretation that can now be applied to the Company's leasehold in the basin. A more accurate representation of the structural configuration below the basalt section, including the Roslyn formation, will help direct us to more precise geologic prospects and potential future well locations." "While much attention was paid to the drilling and completion of the Gray well, we want to highlight to our stockholders where the intrinsic value lies within Delta. Delta's operational strength in the Rockies and go forward strategy focused on lower-risk development projects will allow the Company to realize consistent, efficient reserve and production growth in the Piceance Basin, once natural gas prices recover. We believe that we have the track record, experience and assets that will allow us to execute this strategy." Dan Taylor, the Company's Chairman stated, "Delta will continue to strive to deliver value to our shareholders through the development of our core assets and the execution of our cost control strategy. I concur with John on the underlying value of Delta being our proved and probable reserves in the Piceance Basin, which are not adequately reflected in our current share price." Going Concern At December 31, 2008, the Company was not in compliance with the current ratio and accounts payable covenants under its credit agreement. Pursuant to a redetermination made as of February 1, 2009, the borrowing base under the Company's credit agreement was reduced to $225.0 million upon completion of the Company's underwritten public offering on May 13, 2009 of 172.5 million shares of the Company's common stock at $1.50 per share for net proceeds of $247.2 million, net of underwriting commissions and related offering expenses. The proceeds were used to reduce amounts outstanding under the Company's credit agreement and to pay accounts payable. Pursuant to another regularly scheduled redetermination, as of October 30, 2009 the borrowing base under the Company's credit agreement was further reduced to $185.0 million, of which $20.0 million of required availability must be maintained, effectively limiting the credit capacity to $165.0 million. The Company experienced a net loss attributable to Delta common stockholders of $294.7 million for the nine months ended September 30, 2009, and at September 30, 2009 had a working capital deficiency of $127.4 million, including $83.3 million outstanding under the credit agreement of DHS Drilling Company, the Company's 49.8% subsidiary, which raises substantial doubt about the Company's ability to continue as a going concern. On October 30, 2009, the Company and its senior lenders completed the borrowing base re-determination under the Company's revolving credit facility. As part of the redetermination, the Company and its lenders entered into an amendment to the credit facility pursuant to which the lenders provided waivers from the December 31, 2009 and March 31, 2010 current ratio and consolidated secured debt to EBITDAX ratio covenants, and the borrowing base was reduced from $225.0 million to $185.0 million. The amendment requires that Delta maintain minimum availability of $20.0 million essentially reducing Delta's availability under the credit facility. In addition, capital expenditures will be limited to $10.0 million for the quarter ended December 31, 2009, $10.0 million for the quarter ended March 31, 2010, and $5.0 million for the quarter ended June 30, 2010, provided that any excess of the limitation over the amount of actual expenditures may be carried forward from an earlier quarter to a subsequent quarter. The next scheduled re-determination is March 1, 2010. At September 30, 2009, the Company was in compliance with its quarterly financial ratio covenants under its credit agreement and received a waiver of its capital expenditures limitation of the three months ended September 30, 2009. In addition, in conjunction with the October 30, 2009 borrowing base redetermination, the Company was granted waivers of its current ratio and senior secured debt to EBITDAX ratio for the quarters ending December 31, 2009 and March 31, 2010. The next scheduled borrowing base redetermination under the Company's credit agreement is to be effective March 1, 2010. DHS Noncompliance At September 30, 2009, DHS was in not in compliance with its obligation to provide to Lehman Commercial Paper, Inc., by March 31 of each year audited financial statements reported on without a going concern qualification or exception by the independent auditor and DHS's previous forbearance agreement with LCPI expired on June 15, 2009. In addition, DHS was not in compliance with its various financial covenants as of September 30, 2009. Although DHS is in ongoing negotiations with LCPI to modify the terms of the existing DHS credit facility, there can be no assurance that DHS will be able to renegotiate the terms of its debt agreement. The DHS facility is non-recourse to Delta. While the May 2009 public equity offering has substantially funded the Company's near term liquidity needs, the Company continues to pursue other potential capital raising activities, such as joint ventures, or other industry partnerships, or non-core asset dispositions. The Company continues to limit its capital expenditure program and agreed in conjunction with the October 30, 2009 borrowing base redetermination described to limit capital expenditures to $10.0 million in the quarter ending December 31, 2009, $10.0 million in the quarter ending March 31, 2010, and $5.0 million in the quarter ending June 30, 2010. In addition, the Company has implemented additional cost saving measures, including reductions in force during the first half of 2009 that have reduced the Company's total number of employees by approximately 50%. Depending on changes in commodity prices, the outcome of the Company's borrowing base redetermination scheduled for March 1, 2010 and developments related to the timing of receipt of the Company's remaining offshore litigation award, the Company will evaluate the need to raise additional capital. There can be no assurance that the actions undertaken by the Company will be sufficient to repay the obligations under the credit agreement when due, or, if not sufficient, or if additional defaults occur, that the lenders will be willing to waive the defaults or amend the agreement. In addition, there can be no assurance that cash flow from operations and other sources of liquidity, including asset sales or joint venture or other industry partnerships, will be sufficient to meet contractual, operating and capital obligations. Wallace Resignation The Company also announced that one of the members of its board of directors, James B. Wallace, has decided to resign from the board of Delta Petroleum. Mr. Wallace offered his resignation without any conflict or disagreement with the Company's direction or management. Dan Taylor commented, "Jim has been a significant contributor to the Company's board for the past eight years. His expertise and knowledge from having over 50 years of experience in the industry has been of tremendous value to our board and management team. His insight and advice will be greatly missed." Mr. Wallace's resignation was effective November 4, 2009. 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?48d1 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48d2 About Delta Petroleum Delta Petroleum Corporation (NASDAQ Global Market: DPTR) is an oil and gas exploration and development company based in Denver, Colorado. The Company's core areas of operations are the Rocky Mountain and Gulf Coast Regions, which comprise the majority of its proved reserves, production and long-term growth prospects. DIAMOND GROUP: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: The Diamond Group, Inc. dba Beverage Transportation, Inc. dba H&K Equipment Co., Inc. dba E&M Express, Inc. dba Blue Diamond Co. 6354 Lincoln Highway West P.O. Box 3 Thomasville, PA 17364 Bankruptcy Case No.: 09-08704 Chapter 11 Petition Date: November 7, 2009 Court: United States Bankruptcy Court Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsel: Lawrence V. Young, Esq. CGA Law Firm 135 North George Street York, PA 17401 Tel: (717) 848-4900 Fax: (717) 843-9039 Email: lyoung@cgalaw.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 John Keagel, president of the Company. DONALD DELLE BOVI: Case Summary & 11 Largest Unsecured Creditors ---------------------------------------------------------------- Joint Debtors: Donald Delle Bovi Joanne Delle Bovi 4 Tanglewild Place Chappaqua, NY 10514 Bankruptcy Case No.: 09-24094 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Southern District of New York (White Plains) Debtor's Counsel: Douglas J. Pick, Esq. Pick & Zabicki LLP 369 Lexington Avenue, 12th Floor New York, NY 10017 Tel: (212) 695-6000 Fax: (212) 695-6007 Email: dpick@picklaw.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Company has assets of $1,188,463, and total debts of $2,291,609. A full-text copy of the Debtors' petition, including a list of their 11 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nysb09-24094.pdf The petition was signed by the Joint Debtors. DRYSHIPS INC: Reaches Waiver Deal With Commerzbank & WestLB ----------------------------------------------------------- DryShips Inc. has signed an agreement with Commerzbank and West LB on waiver terms for $70 million of its outstanding debt. This agreement is subject to customary documentation. George Economou, Chairman and Chief Executive Officer, commented: "We are pleased to have reached an agreement with Commerzbank and West LB. We are now left with two facilities with aggregate outstanding debt of $117.5 million, where waiver agreements are close to finalization". On October 27, 2009, the Company filed its Management's Discussion and Analysis of Financial Condition and Results of Operation and the unaudited interim condensed consolidated financial statements and related information and data as of and for the period ended September 30, 2009. A full-text copy of the document is available at no charge at http://ResearchArchives.com/t/s?48d3 About DryShips Inc. DryShips Inc. -- http://www.dryships.com/-- based in Greece, is an owner and operator of drybulk carriers and offshore oil deep water drilling that operate worldwide. As of the day of this release, DryShips owns a fleet of 39 drybulk carriers comprising 7 Capesize, 30 Panamax and 2 Supramax, with a combined deadweight tonnage of over 3.4 million tons, 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships. DryShips Inc.'s common stock is listed on the NASDAQ Global Market where trades under the symbol "DRYS". EINSTEIN NOAH: Q3 2009 Net Income Widens to $60,861,000 ------------------------------------------------------- Einstein Noah Restaurant Group, Inc., reported wider net income of $60,861,000 for the 13 weeks ended September 29, 2009, from net income of $4,537,000 for the 13 weeks ended September 30, 2008. Einstein Noah reported wider net income of $69,177,000 for the 39 weeks ended September 29, 2009, from net income of $15,293,000 for the 39 weeks ended September 30, 2008. Einstein Noah said total revenues were $100,046,000 for the 13 weeks ended September 29, 2009, from $100,895,000 for the 39 weeks ended September 30, 2008. Total revenues were $304,827,000 for the 39 weeks ended September 29, 2009, from $309,573,000 for the 39 weeks ended September 30, 2008. As of September 29, 2009, Einstein Noah had total assets of $213,792,000 against $155,494,000 in total liabilities. The September 29 balance sheet showed strained liquidity: the Company had $36,262,000 in total current assets against $69,956,000 in total current liabilities. As of June 30, 2009, the Company had $172.9 million in total assets; and $186.5 million in total liabilities; resulting in $13.6 million stockholders' deficit. "The primary reason we are in a deficit position in our working capital is the classification of our Series Z as a current liability as it is mandatorily redeemable. As of July 1, 2008, the Series Z became a current liability because of its redemption date of June 30, 2009. The Company and the Holder of the Series Z have agreed that the Company will redeem all remaining outstanding shares of Series Z on June 30, 2010," the Company said. In the fourth quarter of 2009, the Company anticipates the opening of three new company-owned Einstein Bros. restaurants, one to three additional franchised restaurants, and up to 13 additional Einstein Bros. licensed restaurants. Jeff O'Neill, Chief Executive Officer and President of Einstein Noah, stated, "System-wide comparable store sales and transaction performance reflect substantial improvement from the beginning of the year when our current marketing and merchandising initiatives were implemented. These efforts are ongoing, and are intended to serve as a foundation for sustainable long-term growth as we've previously stated. Despite the challenges of the current economic environment, we remain confident that our progress to build awareness, trial, and frequency will continue to gain momentum and position Einstein Noah for improved performance as we move toward 2010." Mr. O'Neill continued, "In addition to our pipeline of new products, including healthier options, we are also at the forefront of menu innovation. In combination with other corporate initiatives, we expect our efforts will build brand equity, facilitate strategic unit expansion, and create long term value for shareholders." The Company said the terms of its Series Z preferred stock required redemption of $57.0 million on June 30, 2009. However, on May 28, 2009, the Company and the Holder of the Series Z agreed that the Company will redeem shares as follows: (1) $20 million to redeem 20,000 shares of Series Z on June 30, 2009; (2) $3 million to redeem shares of Series Z on December 31, 2009; and (3) $5 million to redeem shares of Series Z on March 31, 2010. The first payment was made on June 30, 2009, which reduced the outstanding balance to $37.0 million. The second and third payments will include an additional redemption amount as of the dates of redemption of shares of the Series Z redeemed after June 30, 2009. The additional redemption amount is based on a rate that is 250 bps higher than the highest rate paid on the Company's funded indebtedness, as provided in the Certificate of Designations for the Series Z. In addition, the Company has agreed to redeem all remaining outstanding shares of Series Z on June 30, 2010. The Company may also increase the amount and frequency of the redemption payments at any time. Shares shall be redeemed subject to the legal availability of funds. The parties have also agreed that, if the Company completes an equity offering, the Company shall pay any proceeds of the offering, in excess of amounts payable under the credit facility, to the Holder to redeem any outstanding Series Z. In addition, in the event of a merger or change of control, the outstanding Series Z shall be immediately mandatorily redeemable and the provisions of the Certificate shall control. In the event of bankruptcy, the provisions of the Certificate shall control. In exchange, the Holder has agreed not to enforce certain provisions of the Certificate. To increase flexibility for raising funds to redeem the Series Z, the Company amended its existing credit facility on May 28, 2009, to permit: (i) the incurrence of subordinated debt provided that the replacement subordinated debt is not payable prior to December 31, 2012 (which is approximately six months after the due date of the credit facility); (ii) the incurrence of replacement equity in the form of another issue of mandatorily redeemable preferred stock, provided that the replacement preferred stock is not redeemable prior to December 28, 2012; and (iii) payment of an increased additional redemption amount at a rate up to 450 bps higher than the highest rate on the Company's funded indebtedness for any unredeemed shares of Series Z after June 30, 2010. In addition, the amendment to the credit agreement permits commodity forward purchasing contracts in the ordinary course of business. The Company held a conference call on November 5, 2009. These points were discussed during the call: -- System-wide comparable store sales for October were at similar levels as the third quarter of 2009. -- The Company believes that its fourth quarter 2009 gross profit margins will be the same as they were in the prior year. -- The Company plans to open the following locations in fiscal 2010: * 10 - 12 company-owned restaurants * 12 - 16 franchised locations * 30 - 45 licensed locations 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?48d4 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48d5 A full-text copy of the Company's SEC disclosure reconciling U.S. generally accepted accounting principles income and GAAP earnings per share to the adjusted net income and adjusted earnings per share discussed on the conference call, is available at no charge at http://ResearchArchives.com/t/s?48d5 Based in Lakewood, Colorado, Einstein Noah Restaurant Group Inc. (Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a a retail chain of quick casual restaurants in the United States, specializing in foods for breakfast and lunch. The Company operates locations primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brands and primarily franchises locations under the Manhattan Bage(R) brand. The Company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. ELECTRONIC ARTS: Mulls 1,500 Job Cuts After Wider Q2 Loss --------------------------------------------------------- Video-game publisher Electronic Arts Inc. is planning to eliminate 1,500 jobs and close several facilities after reporting its 11th straight quarterly loss. Electronic Arts reported its second-quarter loss widened to $391 million, or $1.21 a share a share, from a loss of $310 million, or 97 cents, a year earlier. Excluding some items, Redwood City, California-based Electronic Arts posted a profit of 6 cents in the period ended Sept. 30, missing the 10-cent average estimate of 18 analysts surveyed by Bloomberg. Non-GAAP net revenue for the quarter was a record $1.147 billion, up 2 percent as compared with $1.126 billion for the prior year. Revenues were above street expectations. Sales were driven by the launches of FIFA 10, Madden NFL 10, The Beatles(TM): Rock Band(R), Need for Speed(TM) SHIFT and NCAA Football 10. Non-GAAP net income was $19 million as compared with a non-GAAP net loss of $20 million a year ago. Non-GAAP diluted earnings per share was $0.06 as compared with a non-GAAP diluted loss per share of $0.06 for the prior year. EA has a plan to narrow its product portfolio to provide greater focus on titles with higher margin opportunities. This action will result in the closure of several facilities and a headcount reduction of approximately 1,500 positions, of which 1,300 are included in a restructuring plan. The majority of these actions will be completed by March 31, 2010. This plan will result in annual cost savings of at least $100 million and restructuring charges of $130 to $150 million. "EA is performing well, with quality, sales and segment share up so far this year," said John Riccitiello, Chief Executive Officer. "We are making tough calls to cut cost in targeted areas and investing more in our biggest games and digital businesses." "We met our second quarter expectations and delivered a record quarter for revenue," said Eric Brown, Chief Financial Officer. "Today we are announcing a significant cut in our operating expenses and the acquisition of a leader in social games, Playfish." For fiscal year ended March 31, 2009, EA forecasts Non-GAAP net revenue of $4.2 to $4.4 billion. Non-GAAP diluted earnings per share is expected to be between $0.70 and $1.00 and EA expects to be profitable in both Q3 and Q4. A full-text copy of the earnings release is available at http://researcharchives.com/t/s?48e5 About Electronic Arts Electronic Arts Inc. (EA), headquartered in Redwood City, California, is a leading global interactive entertainment software company. Founded in 1982, the Company develops, publishes, and distributes interactive software worldwide for video game systems, personal computers, wireless devices and the Internet. Electronic Arts markets its products under four brand names: EA SPORTS(TM), EA(TM), EA Mobile(TM) and POGO(TM). In fiscal 2009, EA posted GAAP net revenue of $4.2 billion and had 31 titles that sold more than one million copies. EA's homepage and online game site is http://www.ea.com/ ERIC HUBBARD: Voluntary Chapter 11 Case Summary ----------------------------------------------- Joint Debtors: Eric Hubbard Tiffany Hubbard 2497 Damie Lane Lehi, UT 84043 Bankruptcy Case No.: 09-32416 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court District of Utah (Salt Lake City) Debtor's Counsel: Charles Todd Wright, Esq. Piet & Wright 825 North 300 West, Suite 160 Salt Lake City, UT 84111-2241 Tel: (801) 938-7030 Fax: (702) 566-4833 Email: todd@pietwright.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtors did not file a list of their 20 largest unsecured creditors when they filed their petition. The petition was signed by the Joint Debtors. ERICKSON RETIREMENT: Can File Schedules Until Dec. 18 ----------------------------------------------------- Erickson Retirement Communities LLC and its debtor-affiliates obtained a ruling from the U.S. Bankruptcy Court for the Northern District of Texas extending, until Dec. 18, 2009, the period within which they can file their schedules of assets and liabilities, and statements of financial affairs. The requested extension, the Debtors say, will provide sufficient time to prepare and file the schedules and statements. About Erickson Retirement The Baltimore, Maryland-based Erickson Retirement Communities LLC owns 20 continuing care retirement communities in 11 states. Among Erickson's 20 communities, eight are completed, 11 are open although in construction, and one is in development. They have 23,000 residents in total. Erickson, along with affiliates, filed for Chapter 11 on Oct. 19, 2009 (Bankr. N.D. Tex. Case No. 09-37010). DLA Piper LLP (US) serves as counsel to the Debtors. BMC Group Inc. serves as claims and notice agent. Houlihan, Lokey, Howard & Zoukin, Inc., is also serving as investment and financial consultant. Alvarez & Marsal is serving as restructuring adviser. As of September 30, 2009, on a book value basis, ERC had approximately $2.7 billion in assets, including $2.2 billion of property and equipment, and $3.0 billion in liabilities. Liabilities include $195.8 million on the revolving credit, $347.5 million on construction credit, $64 million in accounts payable, $47.8 million in subordinate debt, and $475 million in purchase option deposits. Bankruptcy Creditors' Service, Inc., publishes Erickson Retirement Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Erickson Retirement Communities LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ERICKSON RETIREMENT: PNC, et al, Air Concerns on Deposits' Escrow ----------------------------------------------------------------- Erickson Retirement Communities LLC and its units have filed a motion to escrow initial entrance deposits made by residents in their retirement communities. The Initial Entrance Deposits range from $100,000 to $600,000 depending on the type of unit the resident selects. The Debtor Landowners collected $375,661,590 in Initial Entrance Deposits in 2008 and collected $381,025,637 in Initial Entrance Deposits in 2007. Vincent P. Slusher, Esq., at DLA Piper LLP, in Dallas, Texas, relates that to fund the working capital deficits of the NFPs, the Debtor Landowners provide a working capital loan to the NFPs. To secure their obligations under the Working Capital Loan, the NFPs grant the Debtor Landowners a security interest in all assets of that NFP, including the Residence and Care Agreements and the Initial Entrance Deposits. The Initial Entrance Deposits are transferred from the Debtor Landowners' collateral accounts to pay down principal and interest on the Construction Loans. The Debtors seek the Court's authority to escrow all Initial Entrance Deposits collected postpetition to provide assurance to new residents that the Debtor Landowners' Chapter 11 cases will not affect the residents' rights to a refund. The Debtor Landowners propose to escrow the Initial Escrow Deposits pending confirmation of a plan of reorganization in the Debtors' Chapter 11 cases. Responses In separate filings, PNC Bank National Association, Bank of America, N.A., Capmark Finance, Inc., Wells Fargo Bank National Association, and Ziegler Companies, Inc. informed the Court that they oppose the Debtors' escrow request of the Initial Entrance Deposits. PNC Bank is the administrative agent of the Debtors' Senior Secured Project Loan Lenders. PNC Bank points out that the Initial Entrance Deposits are a critical pillar of the Senior Secured Project Loan Lenders' collateral packages and are the primary source of repayment of the Senior Secured Project Loans. PNC Bank thus argues that by the Motion to Escrow, the Debtors drastically alter the rights and securities of the Senior Secured Project Loan Lenders. "The Debtors do not even say what form an escrow would take, the identity of the escrow agent, the location of the escrow account or the terms of an escrow agreement," PNC Bank complains. PNC Bank further asserts that the Debtors have not stated why their vague "escrow" will provide any assurance to retiree residents. Prospective residents may protect themselves by simply reading the Residence and Care Agreement that they will be requested to sign, PNC Bank insists. "At best, the Motion to Escrow is really just a thinly disguised attempt to part Initial Entrance Deposits from the Senior Secured Project Loan Lenders, thus stripping them of valuable collateral," PNC Bank maintains. The Debtors have not even offered any adequate protection to the Senior Secured Project Loan Lenders, PNC Bank adds. BofA is the administrative agent for Debtor Dallas Campus, LP senior secured prepetition revolving lenders, and Capmark Finance is administrative agent for Debtor Littleton Campus, LLC's senior secured prepetition revolving lenders. BofA and Capmark do not object to the Debtors' request to escrow the IEDs. The Agents, however, object to the Motion to Escrow because the form of the escrow, the release triggers for the IEDs from escrow and the proposed release of the IEDs to Dallas Campus are vague, overly broad and impair the rights of the Agents and the Prepetition Revolving Lenders in the IEDs. The Agents thus ask the Court to clarify that any order approving the Motion to Escrow should state that: * The Debtors and the Agents confer and designate an independent escrow agent immediately after entry of an order approving the Motion to Escrow, to receive and hold in trust the IEDs in an escrow account, subject to release only as provided in that Order. * BofA and Capmark will have a continuing first priority lien against the IEDs, subject to the rights of the residents in those IEDs. * Should any transaction involving Dallas Campus or Littleton Campus occur that results in a closure of care continuing retirement communities in Dallas or Wind Crest, the IEDs in the Escrow Account will be returned by the Escrow Agent to the applicable residents without further Court order. Wells Fargo seeks clarification that there is no effort to escrow IEDs generated by the associated Not-for-Profit Organizations for the Linden Ponds, Inc. Facility, the Monarch Landing, Inc. Facility or the Sedgebrook, Inc. Facility. Wells Fargo is the indenture trustee for a $178,745,000 Illinois Finance Authority Revenue Bonds Monarch Landing, Inc. Facility Series 2007A and Series 2007B. Moreover, Manufacturers and Traders Trust Company objects to the Debtors' request to the extent that the Motion to Escrow impairs its rights and liens in the IEDs relating to the Ann's Choice Facility. M&T Trust is the indenture trustee for the Ann's Choice, Inc. Facility, the Linden Ponds, Inc. Facility and the Sedgebrook, Inc. Facility Bonds. Wells Fargo and M&T Bank ask the Court to rule that any order granting the Motion to Escrow contain an explicit reservation of rights of non-debtors under relevant transaction documents with respect to the IEDs, including rights under Section 365(e). Ziegler complains that based on the information given in the Motion to Escrow, it cannot discern the request in the Motion to Escrow and how that request will affect it. "The Debtors have not explained how escrowing postpetition IEDs will preserve their business," Ziegler says. It appears that through the Motion to Escrow, the Debtors seek to alter the treatment of a substantial portion of their revenues, in excess of $375 million by way of non-descript and conflicting motion, Ziegler asserts. An official committee of unsecured creditors should be permitted to weigh in on the Motion to Escrow prior to entry of a final order, Ziegler proposes. Debtors File Revised Proposed Order Vincent P. Slusher, Esq., at DLA Piper LLP, in Dallas, Texas, relates that the Debtors modified the proposed order to the Motion to Escrow to clarify these issues: * A procedure has been developed for establishing the appropriate escrow accounts; * The Motion to Escrow only applies to Debtor entities and does not apply to entities not in bankruptcy; * The Debtors will provide appropriate lenders with an accounting of the escrow accounts bi-weekly; * The prepetition agent will retain a lien on the Initial Entrance Deposits, subject to the superpriority lien of the DIP Lender; * The triggers regarding the release of the Initial Entrance Deposits are clarified; and * With respect to the Ann's Choice campus, the Initial Entrance Deposits will be processed through the "waterfalls" system provided in the bond indentures and trust agreements and the balance of the Initial Entrance Deposits will be escrowed. With the exception of PNC Bank's objection, the Debtors believe that the Revised Proposed Order resolves all objections to their escrow request. With respect to PNC Bank's Objection, Mr. Slusher asserts that escrow of the IEDs as proposed by the Debtors will not only preserve any interest the objecting party may have in and to the IEDs, it will also help ensure that the Debtors continue as a going concern. He points out that no regulatory agencies have objected to the escrow arrangements proposed by the Debtors and the only alternative proposed by PNC Bank is likely to face significant opposition from regulators. "The proposed escrow of Initial Entrance Deposits is essential to preserving the status quo and providing residents assurance that the bankruptcy process will not place their deposits at risk," Mr. Slusher maintains. Thus, the Debtors ask the Court to authorize the escrow, during the pendency of their Chapter 11 cases, all IEDs received postpetition pending further order of the Court and to overrule all objections to their escrow request. Judge Jernigan previously scheduled a October 29, 2009 hearing for the Motion to Escrow. No order from the Bankruptcy Court has been issued as of press time. About Erickson Retirement The Baltimore, Maryland-based Erickson Retirement Communities LLC owns 20 continuing care retirement communities in 11 states. Among Erickson's 20 communities, eight are completed, 11 are open although in construction, and one is in development. They have 23,000 residents in total. Erickson, along with affiliates, filed for Chapter 11 on Oct. 19, 2009 (Bankr. N.D. Tex. Case No. 09-37010). DLA Piper LLP (US) serves as counsel to the Debtors. BMC Group Inc. serves as claims and notice agent. Houlihan, Lokey, Howard & Zoukin, Inc., is also serving as investment and financial consultant. Alvarez & Marsal is serving as restructuring adviser. As of September 30, 2009, on a book value basis, ERC had approximately $2.7 billion in assets, including $2.2 billion of property and equipment, and $3.0 billion in liabilities. Liabilities include $195.8 million on the revolving credit, $347.5 million on construction credit, $64 million in accounts payable, $47.8 million in subordinate debt, and $475 million in purchase option deposits. Bankruptcy Creditors' Service, Inc., publishes Erickson Retirement Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Erickson Retirement Communities LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ERICKSON RETIREMENT: Proposes to Pay Severance Obligations ---------------------------------------------------------- Erickson Retirement Communities LLC and its debtor-affiliates currently employ 794 employees, of which 723 are full-time salaried employees, 65 are full-time hourly employees and 6 are temporary hourly employees. The Debtors have engaged in significant efforts to cut corporate costs and close down divisions in response to economic conditions necessitating in the business model. To that end, the Debtors have gone through multiple reductions in force resulting in 450 laid-off employees. In the ordinary course of business, the Debtors pay their employees severance upon termination. As of the Petition Date, the Debtors estimate that about $1,789,298 in unpaid severance benefits was owing to certain laid-off employees, a list of which is available for free at: http://bankrupt.com/misc/ERC_LaidoffEmployees.pdf Thus, the Debtors seek the Court's authority to honor their severance obligations by paying, in the ordinary course, any prepetition amounts owed to the Laid-Off Employees up to the $10,950 priority limit on account of prepetition severance obligations under Section 507(a)(4) of the Bankruptcy Code. Vincent P. Slusher, Esq., at DLA Piper LLP, in Dallas, Texas, discloses that each Laid-Off Employee got terminated within 180 days of the Petition Date. Within 180 days of the Petition Date, they signed a severance agreement releasing all claims against the Debtors and agreeing to continue working for a period set forth in the agreement. In return, the Debtors agreed to pay an agreed sum. Thus, the Laid-Off Employees earned their severance within 180 days of the Petition Date. Although the Debtors' management has stated that further reductions in the workforce are not planned, key management staff is anxious and continues to seek new positions, Mr. Slusher tells the Court. If the current staff is advised that the Debtors cannot comply with the severance agreements with the Laid-Off Employees, this will only increase Employee uncertainty about the company's ability to meet its obligations, he asserts. More importantly, he points out that the proposed sale to Redwood Capital Investment, LLC, and its affiliates contemplates a $50 million facility for future construction, which will be necessary to stabilize the developing communities. If Debtors are unable to retain or hire back employees due to lack of confidence on the part of the employees, the ability to conduct that future development essential to Redwood, as potential purchaser, and the National Senior Campuses, Inc. Board which holds the management contracts, is put at risk, Mr. Slusher cites. "In this light, payment of the prepetition severance obligations is critical and essential to the morale of the remaining Employees and the Debtors' future business needs," Mr. Slusher maintains. About Erickson Retirement The Baltimore, Maryland-based Erickson Retirement Communities LLC owns 20 continuing care retirement communities in 11 states. Among Erickson's 20 communities, eight are completed, 11 are open although in construction, and one is in development. They have 23,000 residents in total. Erickson, along with affiliates, filed for Chapter 11 on Oct. 19, 2009 (Bankr. N.D. Tex. Case No. 09-37010). DLA Piper LLP (US) serves as counsel to the Debtors. BMC Group Inc. serves as claims and notice agent. Houlihan, Lokey, Howard & Zoukin, Inc., is also serving as investment and financial consultant. Alvarez & Marsal is serving as restructuring adviser. As of September 30, 2009, on a book value basis, ERC had approximately $2.7 billion in assets, including $2.2 billion of property and equipment, and $3.0 billion in liabilities. Liabilities include $195.8 million on the revolving credit, $347.5 million on construction credit, $64 million in accounts payable, $47.8 million in subordinate debt, and $475 million in purchase option deposits. Bankruptcy Creditors' Service, Inc., publishes Erickson Retirement Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Erickson Retirement Communities LLC and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ERNIE LEE: Sec. 341 Meeting Set for December 14 ----------------------------------------------- The U.S. Trustee for Region 5 will convene a meeting of Ernie Lee Jacobsen's creditors on December 14, 2009, at 1:00 p.m. at Cochran U.S. Bankruptcy Courthouse. This is the first meeting of creditors required under Section 341(a) of the U.S. 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. Ernie Lee Jacobsen filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. N.D. Miss. Case No. 09-15667). Craig M. Geno, Esq., at Harris Jernigan & Geno, PLLC, assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. ERNIE LEE: List of 20 Largest Unsecured Creditors ------------------------------------------------- Ernie Lee Jacobsen filed with the U.S. Bankruptcy Court for the Northern District of Mississippi a list of its 20 largest unsecured creditors. A full-text copy of the Debtor's list of creditors is available for free at http://bankrupt.com/misc/missnb09-15667.pdf Ernie Lee Jacobsen filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. N.D. Miss. Case No. 09-15667). Craig M. Geno, Esq., at Harris Jernigan & Geno, PLLC, assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. EWG CORPORATION: Files for Chapter 11 Bankruptcy in Virginia ------------------------------------------------------------ Newsadvance.com reports that E.W.G. Corporation filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court Western District of Virginia in Lynchburg, citing assets of between $10 million and $50 million, and debts of $1 million and $10 million. The Company said the filing was prompted by financial problems from the steep decline of the economy, the report says. "Because of the collapse of the credit markets and pressure on margins caused by the downturn in the economy, the company became financially distressed," the report quoting company president Ralph Glatt. The Company owes about $1 million to Hershey Equipment Co. in Lancaster, Pennsylvania, and $50,000 in taxes to the Internal Revenue Service, the report notes. The company also owes Nelson County $45,000 in back real estate taxes and more than $3,000 in back personal property taxes, the report adds. EWG Corporation is a private company categorized under sheep raising farm in Piney River, Virgian. FAIRPOINT COMMS: Gets Nod to Pay Prepetition Taxes & Fees --------------------------------------------------------- Fairpoint Communications Inc. sought and obtained the Court's permission, on an interim basis, to pay, in their sole discretion, taxes and fees relating to assessments made by governmental authorities for period before the Petition Date. In the ordinary course of businesses, the Debtors: -- collect general sales taxes from their customers for remittance to the applicable taxing authorities in the States and municipalities in which they do business; -- incur use taxes from the purchase of goods and equipment for future remittance to state taxing authorities; -- collect state and/or federal excise taxes on telephone service from their customers for ultimate remittance to the applicable state or federal taxing authorities; -- pay permit and licensing fees to operate their businesses; -- pay various regulatory fees and taxes to governmental agencies that regulate telephone service, including the Federal Communications Commission and the public utility commissions and public service commissions for the various States in which they operate; -- pay various franchise fees to local authorities for the use of public rights-of-way that they utilize for the infrastructure of their public switched telephone network; and -- remit public service company taxes for regulated local telephone services to various state taxing authorities. Among the mandatory Regulatory Fees the Debtors pay to FCC and PUCs are: (1) Universal Service Fund Fees, which the FCC use to subsidize telephone service for low-income households, rural areas, schools and libraries. (2) Telecommunications Relay Service, which the States, the FCC and the PUCs use to fund services for hearing-impaired subscribers. (3) PUC Fees, which the PUCs use to fund their regulatory and administrative activities. (4) FCC Fees, which the FCC use to fund its regulatory and administrative activities. (5) North American Numbering Plan, which refers to fee paid to the agency responsible for dispensing telephone numbers throughout North America. (6) Emergency 911 Fees, which the City and County Authorities throughout the United States use to pay for 911 emergency services. The Debtors pay the Sales Taxes, Excise Taxes, Use Taxes, and Fees to the respective federal, state and local authorities, a list of which is available for free at: http://bankrupt.com/misc/FairPt_TaxingAuthoritiesList.pdf The Debtors estimate that the total amount of Prepetition Taxes and Fees owing to the various Authorities will not exceed $10.4 million. As of the Petition Date, they estimate owing these specific taxes and fees: Sales and Use Taxes $940,000 State Excise Taxes $1,700,000 Federal Excise Taxes $630,000 USF Fees $5,700,000 PUC Fees $985,000 911 Fees $436,000 Franchise Fees $14,000 Luc A. Despins, Esq., at Paul Hastings Janofsky & Walker LLP, in New York, relates that many of the Taxes and Fees are held in trust by the Debtors for the benefit of the Authorities. Thus, those taxes do not constitute property of the Debtors' estates. In addition, Mr. Despins notes, payment of the prepetition Taxes and Fees is critical to the Debtors' efforts to preserve enterprise value. Non-payment of these obligations may cause the Authorities to take precipitous action, including preventing the Debtors from conducting business in the applicable jurisdictions, imposing new, onerous regulatory restrictions, seeking to lift the automatic stay, and perhaps attempting to file liens -- all of which would disrupt the Debtors' day-to-day operations. Failing to pay the amounts could also trigger unwarranted governmental action in the form of increased audits, he adds. The banks and financial institutions of the Debtors are also authorized to receive, process, honor and pay all checks and electronic transfers related to the Prepetition Taxes and Fees. A final hearing on the Debtors' request will be conducted on November 18, 2009. Objections, if any, are due no later than November 11. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- is an industry leading provider of communications services to communities across the country. FairPoint owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbols FRP and FRP.BC. Fairpoint and its affiliates filed for Chapter 11 on October 26, 2009 (Bankr. D. Del. Case No. 09-16335). Rothschild Inc. is acting as financial advisor for the Company; AlixPartners, LLP as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP is the Company's counsel. BMC Group is claims and notice agent. 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. Bankruptcy Creditors' Service, Inc., publishes Fairpoint Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fairpoint Communications Inc. and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FAIRPOINT COMMS: Has Interim Nod for Compensation Programs ---------------------------------------------------------- Fairpoint Communications Inc. sought and obtained, on an interim basis, the Court's authority to (i) continue, in their sole discretion, their workers' compensation and insurance programs that were in effect on or prior to the Petition Date and (ii) pay, in their sole discretion, all undisputed prepetition obligations for the Insurance Programs, including premiums and other fees related to insurance obligations. Luc A. Despins, Esq., at Paul, Hastings, Janofsky and Walker, LLP, in New York, told the Court that the Insurance Programs provide the Debtors with insurance coverage for liabilities pertaining to, inter alia, commercial general liability, property damage, automobile liability, professional liability, directors' and officers' liability, fiduciary liability, crime, employers' liability, excess umbrella, and various other property and casualty liabilities, the continuation of which is essential to the continued functioning of their businesses. The annual premiums for the Insurance Programs amount to approximately $5.2 million, according to Mr. Despins. The Debtors are also required to pay deductibles and self-insured retention amounts under certain of the Insurance Programs for claims asserted under those policies. As of the Petition Date, the Debtors are not aware of any premiums that have not been paid. Moreover, in certain of the states in which they conduct business, the Debtors are required by law to maintain workers' compensation coverage for their employees. The Debtors' obligations for the Workers Compensation Program arise under three different policies: 1. For claims of employees in the majority of states where they operate, the Debtors maintain a workers' compensation policy with Indemnity Insurance Company of North America or the "ACE Policy." 2. To cover claims of employees located in Washington State, the Debtors participate in Washington's workers' compensation program. Washington is a "monopolistic state" that does not allow for private workers' compensation insurance. Thus, the Debtors pay premiums directly to the Washington State Department of Labor & Industries. The Debtors pay the Washington State Department of Labor & Industries approximately $12,700 per quarter for workers' compensation coverage in the State of Washington. 3. For employees located in Ohio, also a monopolistic state, the Debtors remit insurance premiums directly to the Ohio Bureau of Workers Compensation. Although some of the premiums are paid to the Ohio Bureau of Workers Compensation through payroll funding, making it difficult to estimate the amounts paid for workers' compensation coverage in Ohio, the Debtors estimate they pay more than $7,000 per quarter. The Debtors aver that the continuation of their Insurance Programs on an uninterrupted basis is essential to the functioning of their business. If any of the Insurance Programs are permitted to lapse, the Debtors could face significant liability for personal or property damage, which, in turn, could harm all parties-in-interest, Mr. Despins stressed. The Debtors thus must make all payments with respect to the Insurance Programs. The Workers Compensation Program is also vital to the Debtors' continued operations, Mr. Despins added. Failure by the Debtors to pay the premiums and deductibles associated with their Workers Compensation Program would jeopardize coverage and expose the Debtors to substantial liability in fines by various state workers' compensation boards. In addition, the risk that eligible workers' compensation claimants will not receive timely payments for prepetition employment-related injuries could have a devastating effect on the financial well-being and morale of the Debtors' current employees. Departures by employees at this critical time may result in a severe disruption of the Debtors' businesses with a substantially adverse impact on the Debtors, the value of their assets and businesses, and their ability to reorganize, Mr. Despins asserted. Judge Lifland authorized the Debtors in their sole discretion to maintain their Insurance Programs without interruption in accordance with the practices and procedures as were in effect before the Petition Date. The Debtors are permitted, but not required, to pay, in their sole discretion, all premiums, and fees arising under the Insurance Programs that become due and payable between the Petition Date and the entry of a final order approving the Insurance Program Motion. Employees who hold claims under the Workers Compensation Programs are authorized, at the Debtors' direction, to proceed with their workers' compensation claims in the appropriate judicial or administrative forum under the Workers Compensation Program, the Court ruled. Moreover, the applicable Banks are directed to honor all checks drawn or electronic fund transfers that the Debtors request pertaining to the Insurance Programs or the Insurance Obligations. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- is an industry leading provider of communications services to communities across the country. FairPoint owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbols FRP and FRP.BC. Fairpoint and its affiliates filed for Chapter 11 on October 26, 2009 (Bankr. D. Del. Case No. 09-16335). Rothschild Inc. is acting as financial advisor for the Company; AlixPartners, LLP as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP is the Company's counsel. BMC Group is claims and notice agent. 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. Bankruptcy Creditors' Service, Inc., publishes Fairpoint Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fairpoint Communications Inc. and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FAIRPOINT COMMS: Proposes Injunction Against Utilities ------------------------------------------------------ In connection with the operation of their businesses and management of their properties, the Debtors obtain electricity, natural gas, water, sewer and other similar services from a number of utility companies or their brokers in the ordinary course of business. A list of the Debtors' Utility Providers is available for free at: http://bankrupt.com/misc/FRP_utilitieslist.pdf To the extent the Debtors identify additional Utility Companies, they intend to promptly file amendments to the Utility Services List and will serve copies on the newly identified Utility Companies. Luc A. Despins, Esq., at Paul, Hastings, Janofsky & Walker LLP, in New York, relates that on the average, the Debtors spend approximately $2 million each month for Utility Services. The Debtors aver that to the best of their knowledge, there are few, if any, defaults or arrearages of any significance with respect to their undisputed invoices for Utility Services, other than payment interruption that may be caused by the commencement of their Chapter 11 cases. Section 366(c)(2) of the Bankruptcy Code provides that a utility may alter, refuse, or discontinue a debtor's utility service if that utility does not receive "adequate assurance of payment" for postpetition utility services from the debtor or the trustee within 30 days of the commencement of that debtor's chapter 11 case. Section 366 also protects debtors by prohibiting utilities from altering, refusing, or discontinuing services solely on account of unpaid prepetition amounts for a period of 30 days after the Chapter 11 filing. To ensure the uninterrupted supply of Utility Services critical to their businesses, the Debtors ask the Court to prohibit the Utility Companies from altering, refusing or discontinuing service to, or discrimination against, them solely on the basis of the commencement of their Chapter 11 cases or a debt that is owed by the Debtors for services rendered before the Petition Date. The Debtors tell the Court that they intend to pay timely all postpetition obligations owed to the Utility Companies. The Debtors also expect their cash on hand and cash flow from operations will be more than sufficient to pay all those obligations. Nevertheless, to provide additional adequate assurance of payment for future services to the Utility Companies, the Debtors propose to deposit an amount equal to the estimated aggregate cost for two weeks of Utility Services, calculated from the historical average cost of Utility Services over the past 12 months, into a newly created, segregated, interest-bearing account for the Utility Companies. The Debtors further seek that upon confirmation of any plan of reorganization in their Chapter 11 cases, without further Court order, the Utility Deposit Account will be closed and all amounts in it will be immediately returned to the Debtors. Mr. Despins asserts that the Adequate Assurance Deposit, together with the Debtors' ability to pay for future Utility Services in the ordinary course of business, constitute sufficient adequate assurance to the Utility Companies. The Debtors further seek that upon entry of the Utility Order, the Court find that any Utility Company that has failed to file an objection to the Motion will be deemed to have been provided with adequate assurance of payment as required by Section 366 and will be prohibited from discontinuing, altering, or refusing to provide Utility Services, including as a result of unpaid charges for Prepetition Utility Services. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- is an industry leading provider of communications services to communities across the country. FairPoint owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbols FRP and FRP.BC. Fairpoint and its affiliates filed for Chapter 11 on October 26, 2009 (Bankr. D. Del. Case No. 09-16335). Rothschild Inc. is acting as financial advisor for the Company; AlixPartners, LLP as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP is the Company's counsel. BMC Group is claims and notice agent. 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. Bankruptcy Creditors' Service, Inc., publishes Fairpoint Communications Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Fairpoint Communications Inc. and its debtor- affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) FERRO CORPORATION: Moody's Affirms Corporate Family Rating at 'B1' ------------------------------------------------------------------ Moody's Investors Service affirmed the long term debt ratings (Corporate Family Rating of B1) of Ferro Corporation and the outlook was changed to stable from negative given the receipt of approximately $205 million from the common equity issuance (net realized after fees) and the subsequent debt reduction and changes to the company's revolver and term loan agreements. The company's Speculative Grade Liquidity Rating was raised to SGL-3 from SGL-4. Moody's review also changed the Convertible Noted Loss Given Default point estimate to 66% from 69%. "Even though Moody's don't expect Ferro's performance in the next two quarters to be as strong as it was in the third quarter, the substantial increase in equity combined with the debt reduction and amendments to the credit agreement have resolved Moody's liquidity concerns," said John Rogers, Moody's Senior Vice President. Ferro's B1 rating incorporates the expectation that leverage will remain above 4.0x over the next twelve months and that cash flow metrics will remain weaker than its leverage metric would imply due to on-going restructuring actions to improve profitability. It also reflects a relatively slow recovery in demand in its major end markets -- electronics, coatings, ceramics and construction. Moody's stable outlook anticipates a slow recovery in financial performance in 2010 aided by higher demand in Asia and a meaningful reduction in interest expense. However, if Ferro's banks release the cash collateral for its metal leases or leverage falls below 4.0x in 2010, Moody's could assess the appropriateness of a higher rating. Additionally, there is no negative pressure on the ratings at this time due to the substantial improvement in liquidity. Ferro's Speculative Grade Liquidity was changed to SGL-3 from SGL- 4 as a result of the amendment to the credit facility, the extension of the revolver and term loan maturity and the higher level of cash available to spend on projects that should have a further positive impact on profitability over the next two years. Proforma for the equity issuance, Ferro should have minimal outstandings under its downsized $200 million revolver. Moody's expect LTM EBITDA to remain above $110 million, thus Ferro should have adequate room under its covenants through the end of 2010. If management is able to negotiate the release of the precious metals cash collateral Moody's would promptly consider an upgrade to the SGL rating as it would increase Ferro's cash cushion and provide greater financial flexibility with regards to debt maturities in 2012. Ratings Affirmed: -- Corporate Family Rating, B1 -- $172.5 million Senior Unsecured Convertible 6.5% Notes due 2013, B2 LGD4, (point estimate changed to 66% from 69%) Ratings Upgraded: -- Speculative Grade Liquidity Rating, SGL-3 from SGL-4 The last rating action on Ferro was on February 3, 2009, when Moody's changed Ferro's outlook to negative. Ferro Corporation, headquartered in Cleveland, Ohio, is a global producer of an array of specialty chemicals including coatings, enamels, pigments, plastic compounds, and specialty chemicals for use in industries ranging from construction, and telecommunications. Revenues were $1.6 billion for the LTM ended September 30, 2009. FILENE'S BASEMENT: Court Approves $70 Million Settlement -------------------------------------------------------- Law360 reports that a judge has given the green light to a $70 million stipulation agreement among several parties in the Filene's Basement Inc. Chapter 11 case that had faced objections by Fendi SRL because it threatened to limit how much the luxury company could recover in its counterfeiting lawsuit against the discount retailer. Massachusetts-based Filene's Basement, also called The Basement, is the oldest off-price retailer in the United States. The Basement focuses on high-end goods and is known for its distinctive, low-technology automatic markdown system. Filene's Basement first filed for Chapter 11 bankruptcy protection in August 1999. Filene's Basement was bought by a predecessor of Retail Ventures, Inc., the following year. Retail Ventures in April 2009 transferred the unit to Buxbaum. Filene's Basement, Inc. and its affiliates filed for Chapter 22 on May 4, 2009, (Bankr. D. Del. Case No. 09-11525). James E. O'Neill, Esq., Laura Davis Jones, Esq., Mark M. Billion, Esq., Michael Seidl, Esq., and Timothy P. Cairns, Esq. at Pachulski Stang Ziehl & Jones LLP, represent the Debtors in their restructuring effort. The Debtors listed $50,000,001 to $100,000,000 in assets and $100,000,001 to $500,000,000 in debts. The Debtor is now formally named FB Liquidating Estate, following the sale of all of its assets to Syms Corp. in June 2009. FIRST NATIONAL: Posts $12.7 Million Net Loss in Q3 2009 ------------------------------------------------------- First National Bancshares, Inc., disclosed October 30, 2009, results for the third quarter ended September 30, 2009. First National Bancshares posted a loss of $12.7 million for the third quarter of 2009. The Company recorded a $9.2 million non- cash provision for loan losses for the third quarter of 2009. The Company said the remainder of the loss is attributable to extraordinary levels of charges for increased costs for FDIC insurance, OCC regulatory assessments, and expenses associated with remediating non-performing assets. Total quarterly deposits increased to $683.8 million on September 30, 2009, up from $646.8 million, as of December 31, 2008, which management believes provides the bank with a strong funding base. With the bank's conservative cash management, liquidity stands at approximately $137 million, providing stability to depositors and investors, and the bank's loan-to- deposit ratio is 83.6%. "With a new CEO, our leadership intensifies First National's focus on the core basics of successful banking - Capital, Credit Quality, and Confidence in our Brand. First National's emphasis on fundamentals- demonstrating leadership by growing deposits and fee income, decreasing expenses, sustaining excess liquidity, and improving asset quality- has proven fruitful," C. Dan Adams, chairman of First National Bancshares, said. "We continue to take measures to improve our capital ratios by reducing assets and have increased our loan loss provisions. Our dedicated Special Assets group has resolved $39.3 million in assets this year." During the quarter, J. Barry Mason was elected president and chief executive officer of First National Bancshares and First National Bank of the South. Mr. Mason joined First National from Arthur State Bank, where he was executive vice president, chief lending officer and a member of the ASB board of directors. The Company disclosed that Mr. Mason was part of the executive team at Arthur State Bancshares that helped grow the Company from $88 million in assets, $25 million in loans outstanding, and four branches in 1995 to $663 million in assets, a $548 million loan portfolio, and 23 branches today. "Excluding elevated FDIC premiums and OCC regulatory assessments, First National's year-to-year quarterly operating expenses continue to decline, and we will continue to evaluate prudent investments in areas with the greatest potential for growth," Mason said. "Going forward, First National expects to continue to make loans, attract deposits, and prudently grow our community investments." At September 30, 2009, the Company's consolidated total assets were $785.8 million, consolidated total loans were $571.6 million (including mortgage loans held for sale of $1.4 million), consolidated total deposits were $683.8 million, and total shareholders' equity was approximately $7.2 million. A full-text copy of the Company's consolidated financial statements for the three months ended September 30, 2009, is available for free at http://researcharchives.com/t/s?48c1 Going Concern Doubt As reported in the Troubled Company Reporter on May 6, 2009, Elliott Davis LLC, in Greenville, South Carolina, expressed substantial doubt about First National Bancshares, Inc. and subsidiary's ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended December 31, 2008 and 2007. The auditors said that that the Company's nonperforming assets have increased to $75.5 million related primarily to deterioration in the credit quality of its acquisition and development loans. The level of nonperforming assets has caused the Company to be out of compliance with certain covenants for its line of credit. The uncertainty that the lender may declare an event of default under the line of credit, revoke the line of credit or attempt to foreclose on the stock of the subsidiary that is pledged as collateral, raises substantial doubt about the Company's ability to continue as a going concern. On August 26, 2009, the Company announced that it had reached an agreement in principle to modify the holding company's loan agreement with the Company's lender. The modifications to the loan agreement would include revisions to the financial covenants which would cure existing covenant violations and eliminate the uncertainty surrounding the lender's intention to continue granting quarterly waivers of the covenant defaults. While there can be no assurances that the Company will be able to reach a definitive agreement with its lender, the Company believes that it will be able to do so. About First National Bancshares First National Bancshares, Inc. (NASDAQ: FNSC) -- http://www.fnbwecandothat.com/-- is a $785.8-million asset bank holding company, based in Spartanburg, South Carolina. It provides a wide range of financial services to consumer and commercial customers through its wholly owned banking subsidiary, First National Bank of the South, which has 13 full-service branches in six South Carolina counties. First National Bancshares was incorporated in 1999 to conduct general banking business through its wholly owned bank subsidiary, First National Bank of the South. FORD MOTOR: S&P Assigns 'CCC' Rating on $2.5 Mil. Senior Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said it has assigned its 'CCC' issue-level rating and '6' recovery rating to Ford Motor Co.'s $2.5 billion senior unsecured convertible notes due 2016. The '6' recovery rating indicates S&P's expectation that lenders would receive negligible (0 to 10%) recovery in the event of a payment default. Underwriters of the offering have an option to increase the convertible note offering by $375 million. S&P expects Ford to use proceeds to improve liquidity, including paying down a portion of the $10.2 billion drawn under its secured revolving credit facility due 2011. Ford recently announced plans to seek an amendment from its secured lenders that would reduce commitments to the revolving facility by up to 25% while extending the maturity of that facility to 2013. Ford also plans to issue up to $1 billion in common equity. On Nov. 3, 2009, S&P raised the corporate credit ratings on Ford Motor Co. and Ford Motor Credit Co. LLC to 'B-' from 'CCC+'. The upgrades reflected, among other factors, Ford's announcement of better-than-expected third-quarter results, including a return to positive free operating cash flow in its global automotive operations. The upgrades also reflected Ford's announcement that it would seek an extension and reduction of the revolving credit facility. Taken together, S&P believes these developments reduce the risk of Ford's liquidity falling below dangerously low levels in the next few years. However, S&P believes demand in automotive markets will remain weak in 2010; S&P expects Ford's financial results to remain highly sensitive to future industry sales, actions by competitors, and other factors beyond its direct control. Ratings List Ford Motor Co. Corporate Credit Rating B-/Stable/-- New Ratings Ford Motor Co. Senior Unsecured US$2.5 bil. sr. convertible notes due 2016 CCC Recovery Rating 6 GALLEON MANAGEMENT: SEC Charges 13 More in Insider Trading Case --------------------------------------------------------------- The Securities and Exchange Commission announced last week additional charges in its insider trading enforcement action against billionaire Raj Rajaratnam and Galleon Management LP by charging 13 additional individuals and entities, including three hedge fund managers, three professional traders at New York-based Schottenfeld Group, and a senior executive at Atheros Communications, a California-based developer of networking technologies. The SEC's amended complaint, filed in federal court in Manhattan, names sources for the confidential insider tips to Rajaratnam and identifies others who traded on the basis of non-public information in a scheme that cumulatively generated more than $33 million in illicit gains. The SEC previously brought charges against Rajaratnam, Galleon and six others on October 16. "When Wall Street professionals or others exploit inside information for an illegal tip-and-trade binge, they undermine the level playing field that is fundamental to our capital markets," said Robert Khuzami, Director of the Division of Enforcement. "These defendants thought the rules that apply to all investors did not apply to them, but the one rule they cannot avoid is the rule of law. Now they face financial penalties, industry bars, and possible jail time for their indiscretions." Additional Materials The SEC's amended complaint additionally charges: * Roomy Khan of Fort Lauderdale, Fla. - hedge fund consultant -- Obtained inside information about earnings announcements at Polycom and Google from unnamed sources, and about takeover announcements of Hilton and Kronos from Deep Shah. Khan then traded on such information and allegedly provided some or all of this information to Rajaratnam, who used it to trade on behalf of Galleon. * Deep Shah of Mumbai, India - former analyst at Moody's -- Illegally tipped Khan about takeover announcements of Hilton and Kronos. * Choo-Beng Lee of San Jose, Calif. - co-founder and managing partner at Far & Lee and Spherix Capital -- Obtained inside information about an earnings announcement at Google from the same unnamed source as Khan, and then shared it with Ali Far. Lee and Far then traded on the inside information on behalf of Far & Lee LLC. * Ali Far of Saratoga, Calif. - co-founder and managing partner at Far & Lee and Spherix Capital -- Traded on inside information provided by Lee about an earnings announcement at Google. -- Far also obtained inside information about an earnings pre-announcement and earnings announcement at Atheros from Ali Hariri. Far then tipped Lee, and they both then traded on the inside information on behalf of a Spherix Capital fund. * Far & Lee, LLC - California-based trading entity -- Involved in Far and Lee's insider trading. * Spherix Capital - California-based hedge fund -- Involved in Far and Lee's insider trading. * Ali Hariri of San Francisco, Calif. - vice president at Atheros Communications -- Tipped Far with inside information about an earnings pre-announcement and earnings announcement at Atheros. * Gautham Shankar of New Canaan, Conn. - former proprietary trader at Schottenfeld -- Received inside information from an unnamed person identified in the SEC's complaint as Tipper X about earnings announcements at Google and takeover announcements at Hilton and Kronos. Shankar traded on this information and tipped some of it to his Schottenfeld colleagues. * Zvi Goffer of New York, N.Y. - former proprietary trader at Schottenfeld -- Received inside information from Shankar about takeover announcements at Hilton and Kronos. Goffer then traded on this inside information. * David Plate of New York, N.Y. - former proprietary trader at Schottenfeld -- Received inside information from Shankar about a takeover announcement at Kronos. Plate then traded on this inside information. * Schottenfeld Group LLC - New York-based proprietary trading firm -- Involved in insider trading by several accounts including accounts managed by Shankar, Goffer and Plate. * Steven Fortuna of Westwood, Mass. - co-founder and principal of S2 Capital -- Received inside information from Danielle Chiesi (charged on Oct. 16) relating to Akamai Technologies and then traded on that information on behalf of S2 Capital Management LP. * S2 Capital Management LP - New York-based hedge fund -- Involved in Fortuna's insider trading. The SEC's complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, except for Shah, Kumar, Moffat, Goffer and Plate, with violations of Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill- gotten gains plus prejudgment interest, and ordering them to pay financial penalties. The complaint also seeks to permanently prohibit Goel, Moffat and Hariri from acting as an officer or director of any registered public company. The SEC acknowledges the ongoing assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation. The SEC's investigation is continuing. About Galleon Management Galleon Group, which managed $7 billion at its peak last year, operates five hedge funds. Raj Rajaratnam, founder of Galleon Group, 52, was ranked No. 559 by Forbes magazine this year among the world's wealthiest billionaires, with a $1.3 billion net worth. As reported by the TCR on Oct. 27, 2009, Galleon Group said it will wind down its funds, less than a week after hedge-fund management firm and its founder were charged by the Securities and Exchange Commission of insider trading. Raj Rajaratnam, founder of Galleon Group, sent a letter to investors saying he will now "explore various alternatives for our business" GENERAL MOTORS: U.S. Aid Can Be Used to Fix Opel ------------------------------------------------ ABI reports that General Motors Co.'s top executive said that the automaker could tap some of its $50 billion in U.S. government aid to help restructure GM's European Opel unit. Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- as 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). 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. 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, serves as the Chief Executive Officer for Motors Liquidation Company. 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. 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). GENESCO INC: Sports Fan-Attic Deal Won't Affect S&P's 'B+' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that Nashville-based Genesco Inc.'s (B+/Stable/--) recent acquisition of Sports Fan- Attic, a retailer of licensed, sports headwear, apparel, accessories, and novelties, and conversion has no immediate impact on its rating or outlook. Nor does the redemption of $29.8 million of its 4.125% convertible subordinated debentures due June 15, 2023. Sports Fan-Attic currently has 37 stores in seven states with revenues of approximately $30 million for the 12 months ended Sept. 30, 2009. The debentures were converted into common stock in two separate transactions, one for $5.00 million on Nov. 2, 2009, and another for $16.04 million on Nov. 5, 2009. The balance of about $8.8 million of the debentures will be redeemed on Dec. 3, 2009. Pro forma for the acquisition and debt exchange and redemption, S&P estimates that credit metrics will improve slightly, but this enhancement will not have an immediate impact on the company's rating or outlook. GLEN ROSE: Posts $279,004 Net Loss in First Quarter Ended June 30 ----------------------------------------------------------------- Glen Rose Petroleum Corporation reported a net loss of $279,004 on oil and gas sales of $35,210 for the three months ended June 30, 2009, compared with a net loss of $658,792 on oil and gas sales of $15,209 in the same period of 2008. Loss from operations decreased from $658,043 for the three months ended June 30, 2008, to $277,540 for the three months ended June 30, 2009. This change in loss from operations is primarily attributable to a decrease in consulting and stock compensation expenses as well as increases in oil sales. At June 30, 2009, the Company's consolidated balance sheets showed $6,277,701 in total assets, $3,369,694 in total liabilities, and $2,908,007 in total shareholders' equity. The Company's consolidated financial statements also showed strained liquidity with $203,490 in total current assets available to pay $3,144,216 in total current liabilities. The Company's working capital deficit increased $237,974 or approximately 9%, from a working capital deficit of $2,702,752 at March 31, 2009, to $2,940,726 at June 30, 2009. The increase in working capital deficit resulted primarily from the increase in current liabilities due to increases in development and production costs during the quarter ending June 30, 2009. A full-text copy of the Company's consolidated financial statements for the three months ended June 30, 2009, is available for free at http://researcharchives.com/t/s?48c4 Amendment to March 31, 2007 Annual Report On November 2, 2009, the Company filed amendment no. 1 to its annual report for the year ended March 31, 2007, which was filed with the Securities and Exchange Commission on July 16, 2007. This amendment revises the loss from operations on page F-5 of the financial statements and related disclosure in the Management Discussion and Analysis. A loss on the sale of oil and gas assets was moved from below the operating expense line up to be included in operating expenses. The amendment has no impact on the Company's net income of loss. A full-text copy of the amendment to the Company's annual report for the year ended March 31, 2007, is available for free at: http://researcharchives.com/t/s?48c5 A full-text copy of the Company's original annual report for the year ended March 31, 2007, is available for free at: http://researcharchives.com/t/s?48c6 Going Concern Doubt Jonathon P. Reuben CPA expressed substantial doubt about Glen Rose Petroleum Corporation and subsidiaries' ability to continue as a going concern after auditing the Company's consolidated financial statements as of and for the year ended March 31, 2009. The auditing firm pointed to the Company's negative working capital, significant losses and accumulated deficit of $48,432,770 as of March 31, 2009. About Glen Rose Petroleum Dallas-based Glen Rose Petroleum Corp. (NasdaqCM: GLRP) -- http://www.glenrosepetroleum.com/-- owns UHC Petroleum Corporation, a Texas corporation, and licensed operator with the Texas Railroad Commission. UHC Petroleum is an independent producer of natural gas and crude oil based in Dallas, Texas. UHC Petroleum operates the Wardlaw Field, located approximately 28 miles west of Rocksprings in Edwards County, Texas. UHC Petroleum has a gross working interest of 100% and a net revenue interest of 75% of the Wardlaw Field production. The original lease term was extended by a period of 90 days each time a well was drilled; therefore, based on prior drilling, the primary lease term is currently extended to 2014. GPX INTERNATIONAL: Hits Former Employees With Trade Secrets Suit ---------------------------------------------------------------- According to Law360, GPX International Tire Corp. has sued two former employees, accusing them of misappropriating confidential information related to the auction of the bankruptcy estate's solid tire assets in order to gain an unfair advantage in the bidding process. As reported by the TCR on November 9, 2009, GPX International Tire sought and obtained the approval of the U.S. Bankruptcy Court for the District of Massachusetts to conduct a public auction of its: (a) North American operations related to the manufacture and sale of solid and semi-solid off-the-road tire products, including its interests in its Gorham, Maine, Red Lion, Pennsylvania manufacturing facilities, and (b) stock in Starbright Group Inc., a Cayman Islands holding company, and the parent and sole stockholder of Hebei StarbrightTire Co., Ltd., the owner of a tire manufacturing facility in Hebei Province, China (the "Solid Tire Assets"). The Debtor's other primary business is its off highway and tire truck business. The Debtor proposes to sell the OTRJTruck Unit in its entirety to two separate purchasers in two separate, but interrelated, private sales, absent higher and better offers. Alliance Tire Co. (1992) USA Ltd. would acquire the Debtor's U.S. OTRJTruck Unit operations, including its assets, customer relationships, warehouse footprint, Galaxy and Primex brands and Aeolus medium radial truck tire distribution license. The Debtor has also entered into an agreement with 2220753 Ontario Inc., an entity that was formed by Allegro Rubber International Inc. and Robert Sherkin and Peter Koszo, who are managers of the Debtor's indirect subsidiary, Dynamic Tire Corp., and interest holders in the Debtor, and therefore insiders as that term is defined in Section 101(31) of the Bankruptcy Code. Ontario has agreed to purchase the Debtor's stock interest in Dynamic, which (pursuant to a Supply and Distribution Agreement with the purchaser of the Alliance Assets) will continue the sale and distribution in Canada of the Galaxy and Primex brand off-the-road tires as well as the sale and distribution of medium radial truck and passenger car tires and private label sourcing. The proposed sale of Dynamic will be accomplished through the sale, free and clear of liens claims and interests, of the stock of Dynamic's parent, 2082320 Ontario Inc., a wholly owned subsidiary of the Debtor, along with certain other assets. To permit interested parties to make counter-offers for any or all of the Alliance Assets, the Dynamic Assets and the Solid Tire Assets, the Debtor has requested that the Court establish the same schedule for the Private Sales and the Public Auction. Competing bids for the Assets are due December 2. Bids may be submitted for either the Alliance Assets, the Dynamic Assets, the Solid Tire Assets or any combination of those assets. A bid for the Alliance Assets must in cash in amount not less than $35,230,000 and assumed liabilities of not less than $5,300,000. A bid for the Dynamic Assets must be not less than $24,665,000. A bid for the Solid Tire Assets must be at a minimum value of $9,000,000. The public auction for the Solid Tire Assets will be on December 7, at a time prior to the sale hearing, with bids due December 2. The Court has set a hearing on the sale motions for December 7, 2009, at 10:00 a.m. About GPX International GPX International Tire Corporation is one of the largest independent global providers of specialty "off-the-road" tires for the agricultural, construction, materials handling and transportation industries. GPX is a worldwide company, headquartered in Malden, Massachusetts, with operations in North America, China, Canada, and Germany. A third generation family- owned business, GPX and its predecessor companies have been in business since 1922. GPX International filed for Chapter 11 on Oct. 26, 2009 (Bankr. D. Mass. Case No.: 09-20170). GPX is represented in U.S. Bankruptcy Court by attorneys Harry Murphy of Hanify & King, P.C. and Peggy Farrell of Hinckley Allen & Snyder LLP as corporate counsel. TM Capital Corp. serves as investment banker to GPX in connection with these transactions and Argus Management Corporation serves as restructuring advisor to GPX. The petition says assets and debts range from $100 million to $500 million. GREEKTOWN HOLDINGS: Addresses Plan Confirmation Objections ---------------------------------------------------------- In response to objections filed against their Plan, Greektown Holdings LLC and its units, and Merrill Lynch Capital Corporation, as Plan Proponents, reiterate that their Joint Chapter 11 Plan meets each requirement set forth under Section 1129 of the Bankruptcy Code, including the "cramdown" provisions of Section 1129(b). Daniel J. Weiner, Esq., at Schafer and Weiner PLLC, in Bloomfield Hills, Michigan, on behalf of the Debtors, asserts that the discretionary components of the Plan are reasonable and appropriate and therefore, should be approved. The Plan enables the Debtors to emerge from Chapter 11 with a healthy and robust balance sheet and well-positioned to succeed, Mr. Weiner contends. However, he says that certain out-of-the- money creditor constituents have embarked on a scorched-earth policy throughout the Plan confirmation process whose objections reflect the classic strategy of an out-of-the-money investor seeking to extort holdup value from the Debtors' estates and the Secured Lenders, embarking on burdensome and time-consuming fishing expeditions cloaked as "discovery," and objecting on every conceivable ground, no matter how specious, with the ultimate goal of delay and hope that one or more arguments will "stick" or generate the impression that the Plan is somehow unconfirmable. He argues that each of their objections is without merit and the Court should overrule them and confirm the Plan. As previously reported, several parties filed objections to the Plan, which include: * The Official Committee of Unsecured Creditors, * Deutsche Bank Trust Company Americas, as Indenture Trustee, * MFC Global Investment Management (U.S.) LLC, * Sault Ste. Marie Tribe of Chippewa Indians, * The Kewadin Casinos Gaming Authority, * Luna Greektown LLC and Plainfield Asset Management LLC, * Dimitrios Papas, Viola Papas, Pegasus Greektown Inc., Dionysis LLC, Helicon Development LLC d/b/a Helicon Holdings, Ted and Maria Gatzaros * National City Bank * Jenkins/Skanska Venture LLC * International Union, UAW. Amidst all the objections, the Plan Proponents maintain, in general, that: -- Their Plan is fair and equitable with respect to each Class of Claims and Interests pursuant to Section 1129(b); -- Their Plan does not discriminate unfairly among similarly situated creditors; -- Their Plan is not a substantive consolidation plan; -- Their Plan was submitted in good faith; -- Their Plan meets the "best interest of creditors test;" -- Their Plan is feasible; -- Their Plan will be amended to revise third party release provisions; and -- Any delay between the Confirmation Date and the Effective Date is necessary and justified, as one of the conditions precedent to the Effective Date is obtaining the necessary regulatory approvals from the Michigan Gaming and Control Board, which is out of the Plan Proponents' control. The Plan Proponents relate that they continue to work to resolve objections and in this light, certain modifications may be made to the Plan. A chart providing detailed information on the Objecting Parties' objections and the Plan Proponents' response is available for free at http://bankrupt.com/misc/GrktnConfObjRsp.pdf Meanwhile, the City of Detroit filed an objection to reserve its rights to challenge the Second Amended Joint Plans of Reorganization filed by the Debtors and Merrill Lynch Capital Corporation if a settlement between the Plan Proponents and the City is not effectuated. Cezar M. Froelich, Esq., at Shefsky & Froelich Ltd., in Chicago, Illinois, notes that the Development Agreement is a necessary contract to permit the Plan Proponents to operate a casino in the City of Detroit but the Plan fails to adequately address the consent required of the City to (i) the assignment, transfer, or modification of the current Revised Development Agreement, or (ii) transfer of equity ownership in the Greektown Debtors to the prepetition lenders, or (iii) a sale. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC, and its affiliates -- http://www.greektowncasino.com/-- operates world-class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The Company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. Clark Hill PLC serves as counsel to the Official Committee of Unsecured Creditors. Greektown Holdings listed assets and debts of $100 million to $500 million in its bankruptcy petition. Bankruptcy Creditors' Service, Inc., publishes Greektown Casino Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Greektown Casino and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GREEKTOWN HOLDINGS: Committee, et al., Oppose Detroit Settlement ---------------------------------------------------------------- Greektown Holdings LLC, Merrill Lynch Capital Corporation, as administrative agent for the prepetition lenders and the DIP lenders, and the City of Detroit have asked the Bankruptcy Court to approve a settlement agreement that aims to resolve issues among them. Daniel J. Weiner, Esq., at Schafer and Weiner PLLC, in Bloomfield Hills, Michigan, relates that the parties' Settlement provides a global resolution of all of the outstanding issues of dispute between the Debtors and the City, including disputes relating to the Development Agreement, the Tax Rollback and the City's objections to the Debtors' Chapter 11 Plan of Reorganization. The Official Committee of Unsecured Creditors, Deutsche Bank Trust Company Americas, as indenture trustee for senior notes due 2013 issued by Greektown Holdings and Greektown Holdings II, and MFC Global Investment Management (U.S.) LLC, however, ask the Court to deny approval of the settlement. The Joint Objectors argue that the Request constitutes a breach of fiduciary duty by the Debtors to maximize value to all creditors and should not be approved in its present form. Joel D. Applebaum, Esq., at Clark Hill PLC, in Detroit, Michigan, contends that the Settlement does not meet the statutory "fair and reasonable" requirements of Rule 9019 of the Federal Rules of Bankruptcy Procedure because it was designed by the Prepetition Lenders and the Debtors to favor their current Joint Plan and disadvantage any other plan that may be proposed. "[The Settlement] is a complete abdication of the Debtors' fiduciary obligations toward their unsecured creditors," he asserts. Confirmation of the Debtors and Lenders' Joint Plan is a condition precedent of the Settlement, Mr. Applebaum points out. Therefore, the Settlement is essentially an effort by the Debtors to prevent the proposal of alternative plans that provide more value to the Debtors' estates than the Joint Plan, he maintains. "It is an inexcusable breach of fiduciary duty for the Debtors to have insisted that the City take sides in the Plan confirmation process in a manner adverse to the maximization of value for all creditors," Mr. Applebaum insists. Council Rejects Settlement The Detroit City Council has voted to reject the Settlement after a group of local investors like Arthur Blackwell argued that investors deserve some form of payment in the Debtors' Chapter 11 cases, Detroit Free Press reports. However, the report noted, Detroit City Mayor Dave Bing said he will ask the council to reconsider its vote because he thinks that it is an attempt to force the Court to make payments to a small group of investors which violates bankruptcy rules. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC, and its affiliates -- http://www.greektowncasino.com/-- operates world-class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The Company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. Clark Hill PLC serves as counsel to the Official Committee of Unsecured Creditors. Greektown Holdings listed assets and debts of $100 million to $500 million in its bankruptcy petition. Bankruptcy Creditors' Service, Inc., publishes Greektown Casino Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Greektown Casino and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GREEKTOWN HOLDINGS: Confirmation Hearing Moved to Nov. 16 --------------------------------------------------------- The plan confirmation hearing in the cases of Greektown Casino has been adjourned to Nov. 16, 2009, according to a Nov. 5 report by The Detroit Free Press. "The parties are exploring the potential of a consensual plan among several parties to clear the path for a successful exit from Chapter 11," The Detroit Free Press quoted Greektown Casino's counsel, Daniel J. Weiner, Esq., of Schafer and Weiner, as saying. Before the Court are two Chapter 11 plans: the first plan was jointly filed by the Debtors and secured lender Merrill Lynch Capital Corporation, which values Greektown Casino for $540 million, while the second plan was jointly filed by MFC Global and a group of Noteholders, which values the Casino at $600 million. Debtors: Noteholder Plan, a Delaying Tactic Greektown Holdings LLC was scheduled to present its Chapter 11 plan for confirmation on November 3 until a group of noteholders surfaced with a competing plan designed to pay secured creditors 100 cents on the dollar in cash. MFC Global Investment Management (U.S.) and certain noteholders presented to the U.S. Bankruptcy Court for the Eastern District of Michigan on November 2, 2009, an alternative plan and disclosure statement for the restructuring process of Greektown Holdings LLC and its debtor affiliates. However, after discussions and a closer examination of the Noteholder Alternative Plan, the Debtors and Merrill Lynch asserted that the Noteholder Plan is not feasible and has been proposed in an effort to delay the Confirmation Hearing. Moreover, Mr. Weiner reminded the Court that it went through the same exercise of putting the Debtors' Plan on hold so that the Luna Plan can "catch up" with the confirmation process. The Debtors should not be forced to put their Plan on hold again so that the Noteholders can play "catch up," too, he maintained. The Noteholders could have filed their own Plan as early as February 2009 when exclusivity had terminated and no plan was pending, Mr. Weiner asserted. Mr. Weiner also pointed out that the Noteholder Plan Proponents' Request is replete with statements regarding the superiority of the Noteholder Plan and the alleged defects of the Debtors' Plan. The statements, he contended, constitute an improper solicitation of the Noteholder Plan. Gatzaros Trying to Buy Greektown Casino In other news, Crain's Detroit Business related October 29, 2009 that Ted Gatzaros wants to purchase Greektown Casino by forming a coalition of unsecured investors who are likely to lose money in Greektown Casino's Chapter 11 proceedings. Chris Jackson, a Detroit City Council member, in an interview with Crain's, revealed that Mr. Gatzaros has been meeting with 10 other minority investors to put together a plan. Cid Froelich, Esq., at Shefsky & Froelich Ltd, in Chicago, Illinois, confirmed that Mr. Gatzaros talked to him about a plan recently. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC, and its affiliates -- http://www.greektowncasino.com/-- operates world-class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The Company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. Clark Hill PLC serves as counsel to the Official Committee of Unsecured Creditors. Greektown Holdings listed assets and debts of $100 million to $500 million in its bankruptcy petition. Bankruptcy Creditors' Service, Inc., publishes Greektown Casino Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Greektown Casino and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GREEKTOWN HOLDINGS: Files 3rd Amended Plan & Disc. Statement ------------------------------------------------------------ Greektown Holdings LLC and its debtor affiliates, together with Merrill Lynch Capital Corporation, as administrative agent for the Prepetition and DIP Lenders, submitted to the Court their Third Amended Chapter 11 Plan of Reorganization and Disclosure Statement on October 30, 2009. The Third Amended Plan includes these modifications: * Deletion of all reference to the alternative Chapter 11 Plan of Reorganization submitted by Luna Greektown LLC and Plainfield Asset Management LLC and its affiliates; * Inclusion of a settlement agreement between the Debtors and the City of Detroit; * Deletion of certain provisions regarding post-confirmation sales of any assets; and * Addition of language regarding the later litigation of bond avoidance action claims. Attached as exhibits to the Third Amended Plan are the drafts of these documents: 1. Amended and Restated Limited Liability Company Agreement; 2. Board Service Agreement; 3. Casino Operating Agreement; and 4. Credit Agreement among Greektown Holdings LLC as the borrower, Greektown Casino LLC, Contract Builders Corporation and Realty Equity Company, Inc. as subsidiary guarantors, various financial institutions as lenders, and Bank of America N.A. as issuer and administrative agent. The Debtors, however, note that they are still in consultation with the Michigan Gaming Control Board and continue to refine the ownership and management structures of Reorganized Greektown and accordingly, the ownership and management structures and the related documents under the Plan Exhibits are subject to change. A clean copy of the Third Amended Plan with the Exhibits is available for free at http://bankrupt.com/misc/Grktn3AmPlan.pdf A redlined copy of the Third Amended Plan is available for free at http://bankrupt.com/misc/Grktn3AmPlanRed.pdf A redlined copy of the Limited Liability Company Agreement is available for free at http://bankrupt.com/misc/GrktnCoAgmt.pdf About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC, and its affiliates -- http://www.greektowncasino.com/-- operates world-class casino gaming facilities located in Detroit's historic Greektown district featuring more than 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The Company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08-53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC as claims, noticing, and balloting agent. Clark Hill PLC serves as counsel to the Official Committee of Unsecured Creditors. Greektown Holdings listed assets and debts of $100 million to $500 million in its bankruptcy petition. Bankruptcy Creditors' Service, Inc., publishes Greektown Casino Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Greektown Casino and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAMPSHIRE GROUP: Swings to $572,000 Net Loss for Q3 2009 -------------------------------------------------------- Hampshire Group, Limited, reported a net loss of $572,000 for the three months ended September 26, 2009, from net income of $2,712,000 for the quarter ended September 27, 2008. The Company reported a net loss of $16,790,000 for the nine months ended September 26, 2009, from net income of $6,084,000 for the nine months ended September 27, 2008. Hampshire Group booked net sales of $50,869,000 for the three months ended September 26, 2009, from $80,962,000 for the quarter ended September 27, 2008. It recorded net sales of $100,914,000 for the three months ended September 26, 2009, from $153,622,000 for the nine months ended September 27, 2008. At September 26, 2009, the Company had total assets of $99,108,000 against total liabilities of $51,101,000. In a news statement, the Company said on September 26, 2009, cash and cash equivalents totaled $1.5 million compared with $400,000 on September 27, 2008. The Company's working capital related to continuing operations was $45.9 million at September 26, 2009 compared with $71.0 million at September 27, 2008. As of September 26, 2009, the Company had no outstanding borrowings from its credit facility with approximately $41.2 million of availability and was in compliance with all covenants of its amended credit facility. On November 4, 2009, the Company announced that it renewed its licensing agreement for three years with Geoffrey Beene LLC for the design, production and distribution of men's sweaters under the Geoffrey Beene(R) brand. Commenting on the results, Heath L. Golden, President and CEO of Hampshire Group, remarked, "We have made significant progress in streamlining our cost structure and realigning our operations to better position the business for long-term success. In the third quarter, we remained focused on our restructuring efforts, decentralized our sourcing operations, and recruited Howard Zwilling, most recently the Group Chief Executive Officer of Jones Apparel Group's Moderate Sportswear business, to revitalize our women's businesses. While the full impact of our actions will not be felt for a few quarters, the third quarter, while difficult, was in-line with our expectations. We believe we now have the right structure and team in place to drive growth across the business and achieve our financial objectives." The Company said it is on track to complete the final phase of its 2009 restructuring plan by the end of 2009. Restructuring charges for the three months ended September 26, 2009 were $800,000 compared with $100,000 for the same period last year and consisted primarily of termination benefits. The increase in the current period was the result of a plan initiated in April 2009 that eliminated positions at all levels and consolidated certain locations as compared to the same period last year. Restructuring charges for the nine months ended September 26, 2009 were $4.2 million compared with $500,000 for the same period last year and consists primarily of termination benefits and lease exit costs. The Company anticipates incurring additional restructuring costs of approximately $200,000 during the remainder of 2009. The Company believes that the 2009 and 2008 restructuring activities will result in annualized savings from selling, general and administrative expenses of $10.0 million and $3.1 million, respectively. During July 2009, the Company initiated the final phase of its 2009 restructuring plan, which included executive level organizational changes and the consolidation of its Asian operations. As a result of this consolidation, the Company will reduce its global workforce by an additional 29%, bringing total 2009 personnel reductions to approximately 50% of first quarter 2009 staffing levels. Mr. Golden concluded, "While our financial results for 2009 will no doubt reflect a challenging year, we are confident that we are taking the appropriate steps to re-position the business to maximize shareholder value. We are beginning to gain traction on some of the initiatives put in place earlier this year, as demonstrated by initial positive response to the launches of JOE Joseph Abboud(R) and Alexander Julian Colours(R). Further, we see opportunities ahead as we look to build upon our solid foundation by exploring international markets and new distribution channels including shop-at-home as well as category extensions with existing brands." 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?48e0 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48df Last week, the Company filed a Registration Statement on Form S-8 to register 880,000 shares of the Company's common stock, par value $0.10 per share, which may be issued under the Company's 2009 Stock Incentive Plan. A full-text copy of the Registration Statement is available at no charge at http://ResearchArchives.com/t/s?48e1 About Hampshire Group Hampshire Group, Limited is a U.S. provider of women's and men's sweaters, wovens and knits, and a designer and marketer of branded apparel. Its customers include leading retailers such as JC Penney, Kohl's, Macy's, Belk's and Dillard's, for whom it provides trend-right, branded apparel. Hampshire's owned brands include Spring+Mercer(R), its "better" apparel line, Designers Originals(R), Hampshire's first brand and still a top-seller in department stores, as well as Mercer Street Studio(R), Requirements(R), and RQT(R). Hampshire also licenses the Geoffrey Beene(R) and Dockers(R) labels for men's sweaters, both of which are market leaders in their categories, and licenses JOE Joseph Abboud(R) for men's sportswear and Alexander Julian Colours(R) for men's tops. HAWAIIAN TELCOM: Creditors Committee, Others Object to Plan ----------------------------------------------------------- A number of parties expressed their opposition to the confirmation of Hawaiian Telcom Communications Inc.'s Amended Joint Chapter 11 Plan of Reorganization in separate filings. The Objection Parties include: -- the Official Committee of Unsecured Creditors, -- U.S. Bank National Association, -- Deutsche Bank National Trust Company, -- the United States Trustee for Region 15, -- the State of Hawaii, and -- certain contract counterparties. A. Committee The Committee alleges that the Amended Plan is the product of the concerted efforts of the Debtors and their Prepetition Lenders to deliver to the Prepetition Lenders ownership of the Debtors by any means necessary. Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLLC, in Honolulu, Hawaii, asserts that the Amended Plan is based on flawed conclusions that provides a de minimis recovery to unsecured creditors, whose taken distributions -- in the face of their collective $500 million contribution to the Debtors -- pale in comparison to the windfalls being provided to the Prepetition Lenders and the Debtors' management. However, he asserts, under a proper framework, the Lenders' secured claim equals only the value of the Debtors' assets in which they do have a security interest of $530 million, not the entire value of the Debtors of $682 million. Moreover, using the Committee's expert's estimate of net distributable value of $682.4 million, the value to which the unsecured creditors are entitled to is $139.3 million, Mr. Muzzi insists. Similarly, the Committee alleges that the Debtors and the Prepetition Lenders have grossly undervalued the Debtors' unsecured real estate holdings by improperly valuing those assets on a liquidation basis. Using the Committee's expert valuations, Mr. Muzzi points out, the Debtors' total unencumbered assets are worth $99.4 million - three times the value ascribed in the Amended Plan. The Committee also argues that the Amended Plan unfairly discriminates between the Senior Noteholders and the Subordinated Noteholders by providing the Senior Noteholders with warrants of speculative value, while unsecured creditors receive cash and straight equity grants. Based on the Amended Plan value, the warrants have an intrinsic value of only $2.6 million, even if the Debtors recognize that their estates hold unencumbered assets with a value of at least $10 million, Mr. Muzzi discloses. "Essentially, the Amended Plan deprives the unsecured creditors of the value of their valid claims, and is neither fair nor equitable," Mr. Muzzi stresses. The Committee also complains that the Management Equity Incentive Plan under the Amended Plan, which will distribute within just three years, 10% or more of the Debtors' equity to a management group that held 0.2% of the Debtors' prepetition equity, are excessive and insulting in light of the near 0% distribution to general unsecured claims. Against this backdrop, the Court should deny confirmation of the Amended Plan, the Committee asserts. B. U.S. Bank U.S. Bank is the trustee under a May 2, 2005 Indenture for (i) senior floating rate notes in the aggregate principal amount of $150 million due 2013, and (ii) senior fixed rate notes in the aggregate principal amount of $200 million due 2013. Ronald K. Kotoshirodo, Esq., at Honolulu, Hawaii, points out that additional representations and protections are required to preserve any value of the New Warrants as set forth in the New Warrant Agreement under the Amended Plan: * The new common stock of the Debtors that will be received upon the exercise of the New Warrants must be freely transferable without restriction; * The Reorganized Debtors must be also authorized to issue any additional shares of New Common Stock as required to satisfy any obligation to issue shares of New Common Stock upon exercise of the New Warrants; * The right to jury trial to resolve disputes regarding the issuance of warrants should be preserved; and * Any order confirming the Modified Plan must clarify that the New Warrant Agreement does not supersede the provisions of the Amended Plan that require distributions to Senior Noteholders to flow through U.S. Bank, including those provisions that provide for the appointment of a New Warrant Agent. U.S. Bank further asserts that the Amended Plan should provide for payment of its fees and expenses. U.S. Bank maintains that it has provided the Debtors' estates with a necessary and fundamental service, integral to the Debtors' Chapter 11 process. Mr. Kotoshirodo also clarifies that the Amended Plan should not name U.S. Bank as trustee under an indenture for 12.5% Senior Subordinated Notes due 2015, because U.S. Bank already resigned as trustee and was succeeded by Deutsche Bank National Trust Company. Moreover, U.S. Bank joins in the Committee's objection as to the value of the New Warrants. Absent the sought clarifications in this objection, and the resolution of the issues raised by the Committee, U.S. Bank insists that the Amended Plan cannot satisfy Sections 1122 and 1129(a)(8). C. Deutsche Bank Deutsche Bank contends that the Amended Plan ignores nearly $161 million in claims that are due and owing by the Debtors to Subordinated Noteholders, and fails to implement the subordination provisions of the Indenture. Deutsche Bank is trustee for an indenture with respect to 12 1/2% Senior Subordinated Notes due 2015, dated May 2, 2005. Alexis M. McGinness, Esq., at Case Lombardi & Pettit, in Honolulu, Hawaii, argues that the treatment of the Subordinated Notes under the Amended Plan is not in accordance with Section 510(a). The subordination provisions of the Indenture, he asserts, do not eliminate the Debtors' obligations to make distributions with respect to the Subordinated Notes to Deutsche Bank regardless of how the distributions will ultimately be disposed of. "Vis-a-vis the Debtors, each of the holders of the Senior Notes claims and the Subordinated Notes claims must be viewed as equal creditors that are entitled to share pari passu in dividends from the Debtors," Mr. McGinness insists. Deutsche Bank also complains that the Amended Plan fails to provide for the payment of the Debtors' contractual postpetition obligation to its fees, expenses, disbursements, advances, and all other amounts due to it. "By improperly denying any distribution on account of the Subordinated Notes Claims, the Amended Plan improperly reorders the priority distribution scheme provided for in the Indenture in an obvious attempt avoid its postpetition administrative obligations to pay the Indenture Trustee Fees and Expenses," Mr. McGinness says. As a supplement to its plan objection, Deutsche Bank filed with the Court a chart comparing requirements under the Indenture for the Subordinated Notes with provisions contained in the Plan. D. U.S. Trustee Tiffany Carroll, acting United States Trustee for Region 15, urges the Court to deny approval of the exculpation provision under the Amended Plan since it constitutes a prohibited release by third parties against non-debtors. Ms. Carroll points out that the fresh start that Section 524(e) of the Bankruptcy Code provides to debtors is not intended to absolve non-debtor parties from any negligent conduct that occurred during the course of bankruptcy. However, she points out, the exculpation provision would release non-debtor entities for any prepetition or postpetition acts taken relating to the reorganization. She adds that the releases were not consented to, or negotiated by the releasing parties. Similarly, Ms. Carroll asserts that the permanent injunction under the Amended Plan would enjoin all entities from asserting claims based on any act of omission that occurred before the Effective Date against not only the Debtors but also their employees and agents. Ms. Carroll believes that the injunction is tantamount to a release against non-debtor entities, which injunction has not been consented to or negotiated among the parties. Thus, if the Court allows the exculpation and injunctive relief for non-debtors, it should limit the protections, which apply only to postpetition acts of the protected person or entity, Ms. Carroll proposes. Any exculpation and injunctive protections should carve out exceptions for negligence and willful misconduct, she maintains. Ms. Carroll does not oppose clarification that makes clear that the Amended Plan does not alter any Creditors Committee member's immunity provided under Section 1103(c) of the Bankruptcy Code. E. State of Hawaii Jerrold K. Guben, Esq., in Honolulu, Hawaii, attorney general for the state of Hawaii, points out that a condition precedent to the consummation of the Amended Plan and the establishment of an Effective Date is for the Reorganized Debtors to obtain the required regulatory approval of the Hawaii Public Utilities Commission with an expected time frame of six to nine months. Mr. Guben notes that the Court has recognized the HPUC's obligation to protect the public interest. In this light, the State seeks recognition of the general and plenary jurisdiction of the HPUC to review and approve the Reorganized Debtors and the confirmed plan, in a regular HPUC docket, to be opened after the confirmation of the Amended Plan. F. Contract Parties 1. AT&T AT&T Corp. does not object to the assumption of its agreements with the Debtors under the Plan, provided that the Debtors must pay $108,423 as outstanding amounts due under the AT&T Agreements. Moreover, AT&T seeks clarification from the Debtors as to the specific agreements the Debtors intend to assume and assign for AT&T to assess the appropriate cure amounts. 2. Pacific Lightnet Pacific Lightnet, Inc., a Hawaii-based competitive local exchange carrier offering local dial tone, high-speed internet, and other services, asserts that the Debtors' proposed rejection of a telecommunications interconnection agreement it entered into with the Debtors, raises issues regarding the authority to modify HPUC's and Federal Communications Commission's restrictions on the Debtors' business. For one, interconnection agreements were part of an integrated HPUC regulatory process that takes them out of the realm of executory contracts that could be subject to rejection, Susan Tius, Esq., in Rush Moore LLP, in Honolulu Hawaii, points out. Even if the interconnection agreements were divisible from the HPUC regulatory process, she notes that the Debtors would still not be able to reject them for lack of any justification. Pacific Lightnet says that if it is unable to reach agreement with the Debtors on the Debtors' interconnection obligations, it asks the Court to delay any decision on confirmation of the Amended Plan until the Debtors fully brief their intentions with respect to the Interconnection Agreement. 3. Verizon Verizon Business Global LLC does not oppose the assumption of its telecommunications agreements with the Debtors under the Amended Plan, provided that the Debtors pay $534,980 to Verizon as the proper cure amount due under the Verizon Agreements. 4. Cisco Systems Cisco Systems, Inc., does not object to the assumption and assignment of its agreements with the Debtors. Cisco, however, asks the Debtors to furnish it with more information to agreements they intend to assume and assign. Moreover, Cisco asks the Court to require the Debtors to (i) cure all defaults under the Cisco Agreements, and (ii) provide adequate assurance of future performance. 5. State of Hawaii The State of Hawaii, on behalf of its departments, agencies and independent commissions, including the Department of Transportation asks the Court for a hearing pursuant to Rules 9014 and 6006 of the Federal Rules of Bankruptcy Procedure and Rule 6001-1 of the Local Rules of Bankruptcy Procedure for the District of Hawaii, on the alleged executory contracts between the Debtors and the Department of Transportation to be rejected under the Amended Plan. Debtors Defend Amended Plan Throughout their Chapter 11 cases, the Debtors have worked hard to maintain stability in their operations and to pursue their strategic business plan, Theodore D.C. Young, Esq., at Cades Schutte LLP, in Honolulu, Hawaii, tells the Court. The Debtors are now ready to emerge from Chapter 11, better positioned to provide first-class telecommunications services to the State of Hawaii, he says. Mr. Young reminds the Court that pursuant to the Amended Plan, the Prepetition Lenders will receive the vast majority of the equity in the Reorganized Debtors and holders of the Debtors' senior unsecured fixed rate and floating rate notes will obtain minority ownership rights through the issuance of cashless warrants. Contrary to the Committee's objections, Mr. Young asserts that the vast majority of $460 million in distributable value under the Amended Plan to the Prepetition Lenders in the form of (i) common stock of the Reorganized Debtors, and (ii) a $300 million new term loan, is consistent in light of the Prepetition Lenders' liens on the Debtors' income-producing assets. In developing the Amended Plan, he points out, the Debtors diligently analyzed their unencumbered assets and determined that value to be $33.1 million, about 27% of the total distributable of $460 million. The Debtors structured the Amended Plan to allocate more value to unsecured creditors than they are legally entitled to on account of the value of the Unencumbered Assets, Mr. Young asserts. "In this light, the Committee offers a grossly inflated enterprise valuation." Mr. Young also argues that the Warrants are "in the money," meaning that immediately upon emergence, the exercise price of the warrants will be less than the anticipated market value of the Reorganized Debtors' common stock. He emphasizes that distribution of common stock to the Senior Noteholders will result in the loss of tens of millions of dollars of tax benefits for the Debtors, whereas distributing warrants to the Senior Noteholders preserves the Debtors' tax attributes while delivering more than sufficient value to the Senior Noteholders. The Amended Plan does not unfairly discriminate between holders of the Senior Notes and Subordinated Notes, Mr. Young contends, because the Amended Plan gives effect to the subordination provisions. Moreover, the Amended Plan does not discriminate unfairly between holders of Allowed Senior Notes Claims and Allowed General Unsecured Claims even though holders of Allowed Senior Notes Claims stand to receive warrants and holders of Allowed General Unsecured Claims stand to receive cash, he adds. Thus, he assures the Court, the Amended Plan satisfies all of the requirements for confirmation under Section 1129. Accordingly, the Debtors ask the Court to confirm the Amended Plan and overrule the objections against the Plan. The Debtors sought and obtained the Court's authority to file a memorandum of law in support of their Amended Plan of up to 85 pages. In a supporting declaration, Mr. Young said that the additional pages are necessary, reasonable and appropriate because of the numerous issues to be addressed at the Confirmation Hearing. In a separate order, the Court also permitted the Debtors to exceed the page limitation set for their Omnibus Reply Memorandum to the nine separate objections related to the Plan. Parties Testify in Support of the Amended Plan In separate written direct testimony filed on November 2, 2009, nine individuals expressed their support to the Debtors' Amended Joint Plan of Reorganization: 1. Eric K. Yeaman, president and chief executive officer 2. Michael F. Edl, senior vice president for network services 3. Keith Yoshino, director of regulatory accounting, reporting and cost analysis for the Debtors 4. Kevin Nystrom, chief operating officer of the Debtors 5. Robert F. Reich, senior vide president, chief financial officer and treasurer of the Debtors 6. Suneel Mandava, director at Lazard Freres & Co., LLC, the Debtors' financial advisor 7. J. Nicholas Melton, managing director at Lazard Freres 8. Robert C. Hastings, principal and president of Hastings 9. Conboy, Braig & Associates, Ltd., the expert employed by the Debtors about their unencumbered assets 10. Howard Tucker, partner at Ernst & Young LLP, the Debtors' tax advisor Mr. Yeaman asserted that the Amended Plan is fair and reasonable and essential for the Debtors, their employees, and the State of Hawaii. Despite the Debtors' efforts to reach a consensus on disputed issues with the Prepetition Lenders and the Committee, those parties did not reach a settlement. While it is disappointing that a consensual plan was not developed, that does not change that the Plan as proposed is the best option for the Debtors to move forward, successfully emerge from bankruptcy and maintain their role as essential and leading provider of communication services in the State of Hawaii, Mr. Yeaman maintained. Messrs. Edl and Yoshino said that Steve Turner of FTI Consulting, Inc., the Committee's valuation expert, utilized the forward- looking Federal Communications Commission Synthesis Model from 2000 to build up investment costs as a starting point for his determination of the value of the Debtors' network assets. Messrs. Edl and Yoshino pointed out that the FCC Synthesis Model does not actually look at the equipment within the Debtors' network, it does not calculate the real costs of adding network equipment in Hawaii, and it does not account for the services the Debtors' network provides that are not regulated by the FCC under the Universal Service program. While the Committee may not need to develop a value of the encumbered network assets and equipment, Mr. Turner's approach is unreliable and not accurate, Messrs. Edl and Yoshino declared. Mr. Nystrom, also a managing director at Zolfo Cooper LLC, opined that the Amended Plan's injunction is necessary to effectuate the releases and to protect the Reorganized Debtors from any potential litigation from prepetition creditors as they implement the provisions of the Amended Plan after the Effective Date. Similarly, the scope of the exculpation under the Amended Plan is appropriately limited to the exculpated parties' participation in the Debtors' Chapter 11 cases; has no effect on has no effect on liability resulting from gross negligence or willful misconduct; and does not apply any acts or omissions set forth in and preserved by the Amended Plan, he maintained. The Amended Plan would not have materialized if the negotiating parties had not known they would be protected from liability, other than for willful misconduct or gross negligence, Mr. Nystrom added. Mr. Reich disclosed that as result of their analysis, the Debtors determined that the Prepetition Lenders' liens cover substantially all of the Debtors' assets. More importantly, he told the Court that a key component of the Debtors' restructuring efforts has been to reduce their debt service obligations to allow them to be a viable going forward. Thus, if the Amended Plan is confirmed, the less leveraged Reorganized Debtors will be better able to implement strategic measures and improve operating performance, Mr. Reich aid. Specifically, negotiations with their Prepetition Lenders have resulted in a $300,000,000 New Term Loan that is part of the Amended Plan, he disclosed. The New Term Loan and the Amended Plan's equity distributions will result in a capital structure with a debt-to-equity ratio of 65% to 35% for the Reorganized Debtors. Mr. Mandava opined that the under the Amended Plan and the allocation methodology proposed by the Debtors, unsecured creditors will receive $12.8 million, which is greater than what the unsecured creditors would receive under a traditional waterfall plan. The Debtors determined that the estimated fair market value of their Unencumbered Assets is between $28.9 million and $37.3 million, with a midpoint of $33.1 million. Starting with the midpoint of the total distributable value as determined by Lazard Freres, then applying the waterfall structure, including appropriate priority to administrative claims, priority claims, and secured claims, the unsecured creditors would be entitled to $10.1 million to $11.2 million, with a midpoint value of $10.6 million. Based on the well- accepted Black-Scholes valuation formula, the warrants provided to the Senior Noteholders under the Amended Plan have a value of $12.3 million, Mr. Mandava related. Mr. Melton determined that the Debtors' total enterprise value ranges from $350 million to $425 million, which yields a total distributable value of between $422 million to $497 million and a midpoint estimate of $460 million. He explained that total distributable value is calculated by adding $52 million of cash on hand after administrative expenses and $20 million of non-core assets. He pointed out that the errors of FTI in applying each methodology resulted to the inflation of FTI's calculation of the total enterprise value of the Debtors. Mr. Hastings said that the Debtors have 16,000 to 18,000 separate easements and 1,763 easements reviewed constitute 10% of the total easements. He opined that the Debtors' easement rights have no value because of legal, technical, and economic considerations. Without any market demand for the easements, the easements cannot have market value, he stressed. Thus, he disagreed with Arnold Tesh's opinion, as appraisal expert of the Creditors Committee, that the easements have a value of $55 million. Mr. Tucker told the Court that the Interest Haircut Rule or Section 382(1)(5) of the Internal Revenue Code requires a corporation to reduce its net operating losses or NOLs by the amount of interest deductions on any indebtedness that is exchanged for stock, to the extent that the deductions have been claimed during the year of emergence from bankruptcy and three preceding taxable years. As a result of the Interest Haircut Rule, Ernst & Young previously advised the Debtors that if they utilize the Section 382(1)(5) exception: (i) they will be required to reduce their NOLs by the amount of interest deductions claimed with respect to the senior bank debt that will be exchanged for equity in their Chapter 11 cases; (ii) this would result in a corresponding increase in the tax basis reduction; and (iii) if the Debtors' Senior Notes were exchanged for stock, no matter how minimal in amount that stock may be, the Debtors would be required to reduce their tax basis by an additional amount of $90 million. Mr. Tucker further disclosed that Ernst & Young also advised the Debtors that the issuance of stock to the Senior Noteholders could result in an estimated tax cost of up to $36 million. Ernst & Young previously advised the Debtors that one alternative of the interest haircut is issuing warrants that do not qualify as stock under tax law, he added. Prepetition Lenders Support Amended Plan On behalf of the Prepetition Lenders, James N. Duca, Esq., at Lyons Brandt Cook & Hiramatsu, in Honolulu, Hawaii, notes that the Debtors have proposed a plan of reorganization whereby they will continue to use the Prepetition Lenders' collateral to operate their businesses. He says that since the Secured Lenders hold a lien and security interest in the primary assets of the Debtors' businesses, particularly the income-producing assets, the value of the Prepetition Lenders' collateral -- and the value to which they are entitled under the Amended Plan -- is properly determined by: -- calculating the total enterprise value of the Debtors' businesses or "TEV," -- adding the estimated cash on hand, if any, and the value of the Debtors' non-core assets in which the Prepetition Lenders have a lien, and -- subtracting out the assets on which the Prepetition Lenders do not have a lien or "TDV." "This methodology for valuing the secured claims is the only methodology that provides the Prepetition Lenders the benefit of their bargain and is consistent with Section 506 of the Bankruptcy Code," Mr. Duca asserts. The absurdity of the Committee's valuation of the Debtors' business, Mr. Duca points out, is most apparent in ascribing an astronomical value of $54.5 million to certain partial interests in limited use easements that were determined to have no value by leading Hawaiian real estate experts. Given that the Prepetition Lenders' lien covers everything other than the miscellaneous tangible property constituting the Unencumbered Assets, any value inherent in the Debtors' continued operation as a telecommunications company is appropriately awarded to the Prepetition Lenders -- not to the Committee's unsecured constituents, he asserts. Mr. Duca contends that if the Court accepts the Committee's methodology and the Committee's valuation of the hard collateral but agreed with the Debtors' or Secured Lenders' conclusions regarding the Debtors' total enterprise value, the Prepetition Lenders would be entitled to all of the value under the Amended Plan and the Debtors would be administratively insolvent. Even if the Court is to choose a value that is the midpoint of the Prepetition Lenders' and the Committee's TDVs for $560 million, the Debtors would still be administratively insolvent, as the Prepetition Lenders would be entitled to all but $9.2 million of value, he points out. The Committee also fails to acknowledge that if the TDV is what the Committee says it is, then the Warrants that are being provided under the Amended Plan are worth significantly more than $12.3 million in value, Mr. Duca asserts. For these reasons, the Prepetition Lenders believe that the allocation for their secured claim under the Amended Plan is appropriate and fair. The Prepetition Lenders thus ask the Court to confirm the Amended Plan. In furtherance of the Prepetition Lenders' support of the Amended Plan, Brian S. Rosen, Esq.; Christopher Wilson; James E. Hallstrom, Jr.; Jeffrey N. M. Higashi; and Merleen Lee filed declarations. Mr. Rosen of Weil, Gotshal & Manges LLP, counsel to the Prepetition Lenders, appended in his declaration copies of excerpts from deposition of (i) Arnold S. Tesh, taken October 21, 2009; (ii) James E. Hallstrom, president of The Hallstrom Group Inc., taken October 22, 2009; (iii) Robert C. Hastings, Jr., taken October 23, 2009; (iv) Steven E. Turner, taken October 27, 2009; and (v) Luke Schaeffer, valuation expert of the Committee, taken October 27, 2009. Mr. Rosen's declaration also appended a copy of the transcript of the Disclosure Statement hearing held on August 27, 2009. A full-text copy of the Rosen Declaration is available for free at: http://bankrupt.com/misc/HawTel_RosenDeclaration.pdf Mr. Wilson, a managing director and head of Media & Telecommunications Group of Houlihan Lokey Howard & Zukin Capital, Inc., investment advisor to Weil Gotshal, disclosed that Houlihan Lokey prepared a report setting forth the market value of the Debtors as of September 30, 2009. Houlihan Lokey concluded that the Debtors' distributable value falls within the range of $375 million to $465 million, with a midpoint of $420 million. Mr. Hallstrom, president of The Hallstrom Group Inc., real estate consulting firm engaged by Weil Gotshal as real estate appraiser, disclosed that upon review of 79 unencumbered real properties of the Debtors, the aggregate fair market value of the unencumbered real properties, excluding easements, is $19,110,800. He further opined that the easements whether owned exclusively by the Debtors or shared by the Debtors with another entity, have zero fair market value. Mr. Hallstrom disagrees with Mr. Tesh's opinion that the easements have a value of $55 million. Mr. Higashi, senior vice president of First Hawaiian Bank, disclosed that as of the Petition Date, the Debtors owed FHB $5.4 million under a June 1, 2007 Credit Agreement. As of November 2, 2009, the Debtors specifically owed FHB $5,468,712 under the Credit Agreement, including a paid-in-kind interest of $80,712. He also said that as of the Petition Date, FHB held certain deposit accounts in name of Hawaiian Telcom, Inc. FHB Hawaiian Telcom Deposit Account with an account number ending in 7435 has a total balance of $6,238,617 as of the Petition Date. As of November 2, 2009, FHB Hawaiian Telcom Deposit Account No. 7435 had a total balance of $8,313,032. In addition, FHB Hawaiian Telcom Deposit Account having an account number ending in 9825, as of November 2, 2009, had $1,052,261 in total balance. Ms. Lee, vice president and special assets officer of Bank of Hawaii, disclosed that the Debtors owed BOH, as a prepetition lender, $1,796,000 as of the Petition Date. As of November 2, 2009, the Debtors owed BOH $1,822,878 under the Prepetition Credit Agreement. BOH held deposit accounts in the name of Hawaiian Telcom, Inc. She stated that BOH Hawaiian Telcom deposit account having an account number that ends in 1267 had a total balance of $1,338,155 as of the Petition Date. The total balance of BOH Hawaiian Telcom Deposit Account No. 1267 was $997,088 as of November 2, 2009. Moreover, BOH holds a certificate of deposit for Hawaiian Telcom having an account number ending 4686, with a total balance, as of November 2, 2009, of $11,875. In a related request, the Prepetition Lenders sought and obtained the Court's authority to exceed the page length and word limitations of a brief or memorandum of law under Bankruptcy Local Rule 7.5. The Prepetition Lenders maintained that in light of the Committee's dispute addressed in their memorandum of law supporting the Amended Plan, the request is reasonable, necessary, and justified. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The Company and seven of its affiliates filed for Chapter 11 protection on December 1, 2008 (Bankr. D. Del. Lead Case No. 08-13086). As reported by the TCR on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed and is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of September 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc., and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAWAIIAN TELCOM: Files Documents on Post-Bankr. Incentive Plans --------------------------------------------------------------- Hawaiian Telcom Communications, Inc., and its debtor affiliates filed with the U.S. Bankruptcy Court for the District of Hawaii on October 26, 2009, certain exhibits to their Amended Joint Chapter 11 Plan of Reorganization. The Exhibits include details of a management equity incentive plan, detail of a performance compensation plan, the identities of the members of the senior management team, a list of contracts and leases to be rejected, a copy of the liquidating trust agreement, amended by-laws and certificates of incorporation. Hawaiian Telcom Holdco, Inc., reorganized ultimate parent corporation of the Debtors, will be governed by its amended and restated bylaws, a full-text copy of which is available for free at http://bankrupt.com/misc/HawTel_HawaiianTelcomHoldcoByLaws.pdf The Debtors also submitted a certificate of incorporation of Hawaiian Telcom Holdco, Inc., a full-text copy of which is available for free at: http://bankrupt.com/misc/HawTel_CertofIncorporation.pdf Management Equity Incentive Plan The Debtors' counsel, Nicholas C. Dreher, Esq., at Cades Schutte LLP, in Honolulu, Hawaii, relates that the Debtors' 2009 Equity Incentive Plan will be administered by a committee consisting of one or more members of the Board of Directors. The Debtors will reserve a certain percentage of their common stock shares on a fully diluted basis on emergence for equity grants, with 10% of Hawaiian Telcom Communications' common stock shares on a fully diluted basis reserved for grants to officers and employees of the Debtors. Awards under the Equity Incentive Plan are: (a) Amount of Emergence Grants. A minimum of 68% of the Equity Pool will be issued to Management as Emergence Grants within 30 days of the effective date of the Amended Plan on these terms: * At least 30% of the Emergence Grants will be in the form of restricted stock units with the remaining grants to be in the form of non-qualified stock options. If awards are made to employees below the level of Vice President, at least 50% of the Emergence Grant will be in the form of RSUs, with the remaining grants to be in the form of Options; and * The Debtors' Board of Directors has the explicit right, but not the obligation, to award and allocate additional equity grants in addition to the Emergence Grants at its discretion on terms to be determined by the Board of Directors; (b) Future Grants. All shares remaining in the Management's portion of the Equity Pool will be granted to the Management within three years of emergence on terms to be determined by the Board of Directors; (c) Vesting of Emergence Grants. Each Option and RSU component of the Emergence Grant will vest in equal annual installments on each of the first, second and third anniversaries of the date of grant; (d) Accelerated Vesting of Emergence Grants. For employees at or above the level of Vice President, vesting of Emergence Grants will accelerate in full upon the occurrence of any of these events: (i) a change in control, if the employee is continuously employed by the Debtors through that date; (ii) the participant's death or disability while employed; and (iii) the termination of the participant's employment by the Debtors without "cause" or by the participant for "good reason." For all other employees, vesting of Emergence Grants will accelerate as determined by the Board of Directors. Shares underlying vested RSUs will be delivered within 30 days following vesting. Upon a termination of employment, the participant generally will have a 90-day period to exercise vested Options. Moreover, upon a termination of employment either for Cause or without Good Reason, the participant generally will have a 30-day period to exercise vested Options. Upon a termination of employment by reason of death or disability, the participant generally will have a period of one year to exercise vested Options. Unvested awards will be forfeited upon a termination for any reason. A full-text copy of the Equity Incentive Plan is available for free at http://bankrupt.com/misc/HawTel_EquityPlan.pdf Performance Compensation Plan The Debtors' 2009 Performance Compensation Plan is based on the achievement of the Debtors' financial goals and the individual employee's performance goals. The Debtors' financial goals will be allocated 40% on revenue, 40% on adjusted EBITDA, and 20% on cash flow, which allocations are similar to the 2008 performance compensation. The individual performance goals are determined by the individual's direct supervisor and are aligned to driving the successful execution of the Debtors' core strategies in their Strategic Plan. Performance weighting between the Debtors Financial and Individual Performance Goals depends on these job levels: Corporate Individual Performance Performance Employment Category Weighting Weighting ------------------- ----------- ----------- CEO, SVP & VP less than 75% 0% to 25% Exec. Director/Director 60% to 75% 25% to 40% Senior Manager/Senior Technical 50% to 60% 40% to 50% Manager/Tech/Professional 40% to 50% 50% to 60% Union Employee 20% to 40% 60% to 80% The Performance Compensation Plan calculations will be based on audited financial results. Since the Debtors are in Chapter 11 and there are significant aspects of the process that are beyond management's control, the potential impact of unanticipated restructuring items, if any, are excluded from the 2009 performance compensation calculation. Individual payouts are contingent upon the individual obtaining a "meet expectations" or better performance evaluation. The total expected performance compensation pool, assuming no staff turnover or reductions, is $9.5 million at the target level, $7.1 million at the threshold level and $11.4 million at the maximum level. A full-text copy of the Performance Compensation Plan is available for free at: http://bankrupt.com/misc/HawTel_PerformanceCompPlan.pdf In a filing dated November 6, 2009, the Debtors' Prepetition Secured Lenders aver that they intend to work constructively with the Court and counsel for the Debtors during the Confirmation Hearing to resolve any difference with respect to the 2009 Bonus Plan described in the Plan Supplement. Nevertheless, the Prepetition Lenders reserve all of their rights in relation to the 2009 Bonus Plan. Senior Management Team Pursuant to Section 1129(a)(5)(B) of the Bankruptcy Code, on the Plan Effective Date, the Debtors will continue to employ their senior management team according to the officers' existing annual base salary: Annual Name Title Base Salary ---- ----- ----------- William G. Chung Vice President of $175,000 Human Resources & Labor Relations John K. Duncan Vice President of $149,250 Finance and Controller Michael F. Edl Senior Vice President $300,000 - Network Services Rose M. Hauser Senior Vice President $300,000 and Chief Information Officer Craig T. Inouye Senior Vice President $275,000 - Sales John T. Komeiji Senior Vice President $312,000 and General Counsel Geoffrey W.C. Loui Senior Vice President $300,000 - Strategy and Marketing Francis K. Mukai Vice President, Associate General Counsel $185,000 and Secretary Robert F. Reich Senior Vice $312,000 President, Chief Financial Officer and Treasurer Eric K. Yeaman President, Chief Executive $600,000 Officer and Director A full-text copy of the Management Employment Agreements is available for free at: http://bankrupt.com/misc/HawTel_MgtEmpPacts.pdf Pursuant to the Amended Plan, the Debtors will reject certain executory contracts and unexpired leases, a schedule of which is available for free at: http://bankrupt.com/misc/HawTel_ContractsforRejection.pdf The Debtors will retain certain causes of action under the Amended Plan, a list of which is available for free at: http://bankrupt.com/misc/HawTel_RetainedActions.pdf The Debtors also prepared a draft of an agreement governing the establishment of a liquidating trust. A full-text copy of the Litigation Trust Agreement is available for free at: http://bankrupt.com/misc/HawTel_LitigationTrustPact.pdf The Debtors have yet to file a copy of a new term loan. Subsequently, the Debtors presented to the Court on October 28, 2009, a draft of a common stock warrant agreement between Hawaiian Telcom Holdco and a warrant agent. Under the Warrant Agreement, Class 5 of the Amended Plan are to be issued warrants exercisable until the expiration date to purchase certain shares of Hawaiian Telcom's common stock, par value $0.01 per share at an exercise price of $14 per share of common stock. A full-text copy of the Warrant Agreement is available for free at: http://bankrupt.com/misc/HawTel_WarrantAgreement.pdf The Chapter 11 Plan Hawaiian Telcom and the opposition are in the middle of pre-trial discovery leading up to a contested confirmation hearing scheduled to begin November 9. Hawaiian Telcom's plan provides for these terms: -- Senior secured creditors will recover 75% to 80% of their claims through the conversion of $590 million of senior secured debt into a $300 million secured term loan and all of the new stock. -- Senior noteholders, owed $350 million, would recover 2% to 3% though warrants for 12.75% of the new stock and subscription rights to buy as much as $50 million more. -- Subordinated noteholders owed $150 million are to receive nothing while existing stock is to be canceled. -- General unsecured creditors with claims aggregating up to $40 million are to receive a cash recovery amounting to 1% to 2%. Hawaiian Telcom had said that in a Chapter 7 liquidation, administrative claimants who will recover 100% of their claims under the Plan will recover as low as 84 cents, senior secured creditors will only recover 56% to 65% of their claims, while unsecured creditors will recover only 0% to 0.6% of their allowed claims. About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The Company and seven of its affiliates filed for Chapter 11 protection on December 1, 2008 (Bankr. D. Del. Lead Case No. 08-13086). As reported by the TCR on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed and is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of September 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc., and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HAWAIIAN TELCOM: Majority of Creditors Vote to Accept Plan ---------------------------------------------------------- Kurtzman Carson Consultants LLC and Financial Balloting Group, LLC, submitted to the Court on November 4, 2009, a tabulation of votes received for Hawaiian Telcom Communications, Inc.'s Amended Joint Plan of Reorganization. Ten claim classes were entitled to vote on the Amended Plan. As gathered from the report, nine out of ten Classes voted in favor of the Amended Plan, while Class 5 voted to reject the Amended Plan. FBG and KCC presented to the Court a summary of the voting results: # of Ballots # of Ballots Amount Amount Accepting Rejecting Accepting Rejecting Description/ (% of Num. (% of Num. (% of Amt. (% of Amt. Class Voted) Voted) Voted) Voted) ---------- ------------ ----------- ---------- ---------- Senior Secured Claims 148 0 $468,119,907 $0 Class 3 (100.00%) (0.00%) (100.00%) (0.00%) Senior Notes Claims 45 61 $68,446,000 $241,413,000 Class 5 (42.45%) (57.55%) (24.20%) (75.80%) Hawaiian Telcom Communications, Inc. General Unsecured Claims 40 3 $17,623,837 $629,471 Class 7 (93.02%) (6.98%) (96.55%) (3.45%) Hawaiian Telcom Holdco, Inc. General Unsecured Claims 2 0 $2 $0 Class 8 (100.00%) (0.00%) (100.00%) (0.00%) Hawaiian Telcom, Inc. General Unsecured Claims 107 11 $1,443,373 $685,052 Class 9 (90.68%) (9.32%) (67.81%) (32.19%) Hawaiian Telcom Services Company, Inc. General Unsecured Claims 16 2 $181,212 $12,200 Class 10 (88.69%) (11.11%) (93.69%) (6.31%) Hawaiian Telcom IP Service Delivery Investment, LLC General Unsecured Claims 1 0 $1 $0 Class 11 (100.00%) (0.00%) (100.00%) (0.00%) Hawaiian Telcom IP Service Delivery Research LLG General Unsecured Claims 1 0 $1 $0 Class 12 (100.00%) (0.00%) (100.00%) (0.00%) Hawaiian Telcom IP Video Investment, LLC General Unsecured Claims 1 0 $1 $0 Class 13 (100.00%) (0.00%) (100.00%) (0.00%) Hawaiian Telcom IP Video Research, LLC General Unsecured Claims 1 0 $1 $0 Class 14 (100.00%) (0.00%) (100.00%) (0.00%) KCC related that it did not include eight ballots in the tabulation of votes because those ballots did not indicate a vote to accept or reject the Plan, or were not timely filed. A schedule of the Invalid Ballots is available for free at: http://bankrupt.com/misc/Hawtel_InvalidBallots.pdf HAWAIIAN TELCOM: Parties File Pleas to Preclude Plan Testimony -------------------------------------------------------------- In separate filings, Hawaiian Telcom Communications Inc., the prepetition lenders and the Official Committee of Unsecured Creditors in Hawaiian Telcom Communications Inc. asserted motions in limine, seeking to preclude the testimony of certain individuals pursuant to Rule 702 of the Federal Rules of Evidence in relation to the ongoing confirmation process. A. Debtors The Debtors ask the Court to preclude any testimony of Arnold S. Tesh, the appraisal expert of the Committee, as to value of the Debtors' unencumbered easements. The Debtors' counsel, Theodore D.C. Young, Esq., at Cades Schutte LLP, in Honolulu, Hawaii, asserts that Mr. Tesh used a "cost approach" to real estate appraisal that is inappropriate for valuing the Debtors' easements. Mr. Tesh does not even properly apply the cost approach, Mr. Young stresses. Mr. Young points out that Mr. Tesh provides no support for the costs that he uses to calculate a $55 million value for the Debtors' easements. Mr. Young further notes that Mr. Tesh's expert report and rebuttal report do not contain a basis for the underlying costs. Mr. Tesh's use of an "assemblage factor" to double his overall cost estimate is improper, Mr. Young argues. Mr. Tesh took of all the costs he estimated and then doubled them to arrive at a $55 million valuation. Thus, Mr. Tesh's methodology and his application of that methodology fall well short of the minimum standards for expert testimony established by Rule 702, in In re Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993), and subsequent applicable case law, Mr. Young maintains. In support of the Debtors' Motion in Limine, Eliot A. Adelson, Esq., partner at Kirkland & Ellis LLP, counsel to the Debtors, appended in his declaration copies of, among others, (i) expert report of Robert C. Hastings, Jr., principal and president of Hastings, Conboy, Braig & Associates, Ltd.; (ii) rebuttal expert report of Mr. Hastings; (iii) portions of the transcript from the deposition of Mr. Tesh, taken on Oct. 21, 2009; (iv) excerpts from The Appraisal Institute; (v) expert report of James E. Hallstrom, Jr., president of The Hallstrom Group Inc., dated October 2009; (vi) expert report of Mr. Tesh dated October 7, 2009; (vii) letter from Lorenzo Marinuzzi, Esq., counsel for the Committee, to Christopher W. Keegan, Esq., partner at Kirkland & Ellis regarding the status of discovery in the Debtors' Chapter 11 cases; and (viii) portions of the transcript from the deposition of Steven E. Turner, taken on October 27, 2009. A full-text copy of the Adelson Declaration is available for free at: http://bankrupt.com/misc/HawTel_AdelsonDeclaration.pdf The Prepetition Lenders join in the Debtors' Motion in Limine. The Prepetition Lenders add that Mr. Tesh's methodology is not reliable, accurate or credible, thus he should be precluded from testifying in the Debtors' Chapter 11 cases. Subsequently, the Debtors filed a supplemental memorandum of law in support of their motion in limine on November 5, 2009. The Debtors assert that the Tesh testimony also violated the Court's October 2, 2009 scheduling order as Mr. Tesh's report exceeded the scope of the reports allowed by the Court and that realizing the flawed methodology used, Mr. Tesh now claims that he used the "development approach" to value the Debtors' easements. However, that approach is not the one used by Mr. Tesh in his expert reports and thus, Mr. Tesh should not be allowed to testify about it, the Debtors insist. The Prepetition Lenders also noted that they join the Debtors' arguments under the Supplemental Support Memorandum to the request of precluding Mr. Tesh's testimony in Support B. Prepetition Lenders The Prepetition Lenders ask the Court to exclude any testimony of Luke Schaeffer, valuation expert of the Committee, as to the proper framework for distribution of value to creditors under the Amended Plan. On behalf of the Prepetition Lenders, Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, notes that in Mr. Schaeffer's expert report dated October 7, 2009, Mr. Schaeffer opined that the Debtors' proposed framework for distribution of value to creditors in the Debtors' Chapter 11 cases is not appropriate. Instead, Mr. Schaeffer said that the proper framework is one where the Prepetition Lenders receive only the value of the assets in which they have a perfected security interest, and that the remaining value should be shared ratably among the unsecured creditors. Mr. Rosen further discloses that in his deposition taken October 22, 2009, Mr. Schaeffer indicated that his October 7 Report is the first time he has rendered a written report opinion as to the proper or appropriate framework for the distribution of value between creditors and lenders in a restructuring case. Mr. Rosner explains that Rule 702 does not authorize the admission of expert testimony on questions of law or on the application of law to the facts. In this context, Mr. Rosner argues that Mr. Schaeffer's testimony proposes an ultimate legal conclusion, which is not a proper subject of expert testimony under Rule 702. In a supporting declaration, Mr. Rosen filed with the Court a copy of excerpts from the October 22, 2009 deposition of Mr. Schaeffer, which copy is available for free at: http://bankrupt.com/misc/HawTel_SchaefferDeposition.pdf In a separate filing, the Debtors join in the Prepetition Lenders' Motion in Limine, citing that the topic of Mr. Schaeffer's testimony is not appropriate for an expert. C. Creditors Committee The Committee seeks to preclude Keith Yoshino, director of regulatory accounting, reporting and cost analysis for the Debtors, from testifying regarding the valuation of the Debtors' network equipment, including valuation or the appropriateness of the use of the Federal Communications Commission's Synthesis Model to value the Debtors' network equipment. The Committee's counsel, Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLLC, in Honolulu, Hawaii, discloses that Steve Turner of FTI Consulting, Inc., as an expert on the valuation of the Debtors' network equipment opined that the economic value of the Debtors' Network is $260.9 million. In rebuttal, the Debtors proffered as an expert one of their employees, Mr. Yoshino. However, Mr. Yoshino admitted that he is not an expert on network valuation pursuant to his deposition testimony taken on November 2, 2009. Similarly, Mr. Yoshino's education and experience are insufficient to qualify him as an expert on network valuation, as required under Rule 702 and in In re Daubert case law, Mr. Muzzi asserts. In a supporting declaration, Mr. Muzzi presented to the Court pertinent portions of the transcript of Mr. Yoshino's Nov. 2 deposition. A full-text copy of the excerpts of Mr. Yoshino's Nov. 2 deposition is available for free at: http://bankrupt.com/misc/HawTel_YoshinoDeposition.pdf Judge King will consider the Motions in Limine on November 9, 2009. Responses to the Motions in Limine The Debtors maintain that they offer the expert testimony of Keith Yoshino for the limited purpose of rebutting Steven Turner's testimony estimating an "economic value" of Hawaiian Telcom's network equipment. The Debtors clarify that Mr. Yoshino's rebuttal testimony is not an independent valuation of Hawaiian Telcom's network equipment or offered as one. Rather, the Debtors elaborate, Mr. Yoshine is an expert on the design, use and application of forward-looking cost models and his rebuttal opinion properly focuses on the flaws in Mr. Turner's use of a forward-looking cost model to estimate a network value. In any case, the Debtors relate that Mr. Turner's report may be questionable as he has no experience in using forward-looking cost models to estimate network value. In support of the Debtors' response, the Debtors' counsel submitted to the Court copies of the written testimony of Keith Yoshino and portions of the October 27, 2009 deposition of Steve Turner. Parties Submit Witness & Exhibit Lists The Debtors informed the Court that they will present these persons as witnesses during the confirmation hearing on Nov. 9, 2009: 1. Michael Edl, senior vice president of network services of Hawaiian Telcom Communications 2. Robert C. Hastings, principal and president of Hastings, Conboy, Braig & Associates, Ltd. 3. Suneel Mandava, director of Lazard Freres & Co., LLC 4. James Sean McGuire, senior managing consultant of Kurtzman Carson Consultants LLC 5. Nick Melton, managing director of Lazard Freres & Co., LLC 6. Kevin Nystrom, chief operating officer of Hawaiian Telcom 7. Robert Reich, chief financial officer of Hawaiian TelCom 8. Jane Sullivan, executive director of Financial Balloting Group, LLC 9. Howard Tucker of Ernst & Young LLP 10. Eric Yeaman, chief executive officer of Hawaiian Telcom 11. Keith Yoshino, director of regulatory accounting, reporting and cost analysis The Committee also informed the Court that it will present Steven J. Joffe, Luke Schaeffer, Arnold S. Tesh and Steven E. Turner, as witnesses at the Confirmation Hearing. The Prepetition Lenders also plan to call on these individuals as witnesses at the Confirmation Hearing: 1. James E. Hallstrom, Jr., president of The Hallstrom Group Inc. 2. Jeffrey M.N. Higashi, senior vice president of First Hawaiian Bank 3. Merleen Lee, vice president and special assets officer of Bank of Hawaii 4. Christopher Wilson, managing director and head of the Media & Telecommunications Group of Houlihan Lokey Howard & Zukin Capital, Inc. The Debtors submitted to the Court an exhibit list for the Confirmation Hearing, a schedule of which is available for free at http://bankrupt.com/misc/HawTel_DebtorsExhibitList.pdf The Prepetition Lenders also filed with the Court a list of exhibits for the Confirmation Hearing, copies of which are available for free at: http://bankrupt.com/misc/HawTel_LendersTrialExhibits.pdf The Creditors Committee also presented to the Court an amended exhibit list, a copy of which is available for free at: http://bankrupt.com/misc/HawTel_CommitteeExhibitList.pdf About Hawaiian Telcom Based in Honolulu, Hawaii, Hawaiian Telcom Communications, Inc. -- http://www.hawaiiantel.com/-- operates a telecommunications company, which offers an array of telecommunications products and services including local and long distance service, high-speed Internet, wireless services, and print directory and Internet directory services. The Company and seven of its affiliates filed for Chapter 11 protection on December 1, 2008 (Bankr. D. Del. Lead Case No. 08-13086). As reported by the TCR on December 30, 2008, Judge Peter Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the transfer of the Chapter 11 cases to the U.S. Bankruptcy Court for the District of Hawaii before Judge Lloyd King (Bankr. D. Hawaii Lead Case No. 08-02005). Richard M. Cieri, Esq., Paul M. Basta, Esq., and Christopher J. Marcus, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard Freres & Co. LLC as investment banker; Zolfo Cooper Management LLC as business advisor; Deloitte & Touche LLP as independent auditors; and Kurztman Carson Consultants LLC as notice and claims agent. An official committee of unsecured creditors has been appointed and is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC, in Honolulu, Hawaii. When the Debtors filed for protection from their creditors, they listed total assets of $1,352,000,000 and total debts of $1,269,000,000 as of September 30, 2008. Bankruptcy Creditors' Service, Inc., publishes Hawaiian Telcom Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Hawaiian Telcom Communications, Inc., and seven of its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) IMAX CORP: Swings to $1,062,000 Net Income for Q3 2009 ------------------------------------------------------ IMAX Corporation swung to a $1,062,000 net income for the three months ended September 30, 2009, from a net loss of $2,107,000 for the same period a year ago. The Company also reported net income of $982,000 for the nine months ended September 30, 2009, from a net loss of $24,559,000 for the same period a year ago. Total revenues were $43,643,000 for the three months ended September 30, 2009, from $32,868,000 for the same period a year ago. Total revenues were $117,678,000 for the nine months ended September 30, 2009, from $76,423,000 for the same period a year ago. At September 30, 2009, the Company had $308,965,000 in total assets against $268,730,000 in total liabilities. As of June 30, 2009, the Company had $270,400,000 in total assets and $288,500,000 in total liabilities, resulting in $18,100,000 in stockholders' deficit. IMAX Chief Executive Officer Richard L. Gelfond stated, "We are pleased with our financial momentum, which reflects the continued positive impact that our growing theatre network and new business model are having on the Company. In addition, we are very pleased to announce that we have received a commitment letter from Wachovia with the participation of Export Development Canada, for a $75 million credit facility which, when finalized, will increase our borrowing capacity. We also announced today that we intend to redeem our remaining senior notes by year-end. We look forward to building on our year-to-date success in the fourth quarter, continue to expect full year profitability for 2009 and believe we are well-positioned to deliver increased earnings in 2010." 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?48d6 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48d7 About IMAX Corporation IMAX Corporation (NASDAQ:IMAX; TSX:IMX) is one of the world's leading entertainment technology companies, specializing in immersive motion picture technologies. The worldwide IMAX network is among the most important and successful theatrical distribution platforms for major event Hollywood films around the globe, with IMAX theatres delivering the world's best cinematic presentations using proprietary IMAX, IMAX(R) 3D, and IMAX DMR(R) technology. IMAX DMR is the Company's groundbreaking digital re-mastering technology that allows it to digitally transform virtually any conventional motion picture into the unparalleled image and sound quality of The IMAX ExperienceO. The IMAX brand is recognized throughout the world for extraordinary and immersive entertainment experiences for consumers. As of June 30, 2009, there were 394 IMAX theatres (273 commercial, 121 institutional) operating in 44 countries. As reported by the Troubled Company Reporter on July 6, 2009, Standard & Poor's Rating Services revised its rating outlook on IMAX to positive from stable. S&P affirmed the existing ratings on the company, including the 'CCC+' corporate credit rating. IMAX CORP: Wachovia, EDC Pledge New $75 Million Credit Facility --------------------------------------------------------------- IMAX Corporation on November 4, 2009, entered into a commitment letter with Wachovia Capital Finance Corporation (Canada) pursuant to which Wachovia, with the participation of Export Development Canada, has committed to provide the Company with up to a $75.0 million senior secured credit facility. The Credit Facility, with a scheduled maturity of October 31, 2013, will consist of revolving loans of up to $40.0 million, subject to a borrowing base calculation, and a term loan of $35.0 million. Under the terms of the Commitment Letter, the Company will amend and restate its prior credit agreement with Wachovia and enter into related security arrangements. Certain of the Company's subsidiaries will serve as guarantors of the Company's obligations under the Proposed Credit Facility and enter into related security arrangements. The revolving portion of the Proposed Credit Facility will permit maximum aggregate borrowings equal to the lesser of: (i) $40.0 million, and (ii) a collateral calculation based on the percentages of the book values of the Company's net investment in sales-type leases, financing receivables, certain trade accounts receivable, finished goods inventory allocated to backlog contracts and the appraised values of the expected future cash flows related to operating leases and the Company's owned real property, reduced by certain accruals and accounts payable and subject to other conditions, limitations and reserve right requirements. The revolving portion of the Proposed Credit Facility will bear interest, at the Company's option, at either (i) LIBOR plus a margin of 2.75% per annum, or (ii) Wachovia's prime rate plus a margin of 1.25% per annum. The term loan portion of the Proposed Credit Facility will bear interest, at the Company's option, at either (i) LIBOR plus a margin of 3.75% per annum, or (ii) Wachovia's prime rate plus a margin of 2.25% per annum. The revolving portion of the Proposed Credit Facility will include a sub-limit of $20.0 million for letters of credit. The Proposed Credit Facility, which will be collateralized by a first priority security interest in all of the current and future assets of the Company, will provide that so long as the term loan remains outstanding, the Company will be required to maintain: (i) a ratio of funded debt (to be defined in the Proposed Credit Agreement) to EBITDA (to be defined in the Proposed Credit Agreement) of not more than 2:1 through December 31, 2010, and (ii) a ratio of funded debt to EBITDA of not more than 1.75:1 thereafter. If the Company will have repaid the term loan in full, it will remain subject to such ratio requirements only if Excess Availability is less than $10.0 million or Cash and Excess Availability (to be defined in the Proposed Credit Agreement) is less than $15.0 million. The Company will also be required to maintain a Fixed Charge Coverage Ratio (to be defined in the Proposed Credit Agreement) of not less than 1.1:1.0; provided, however, that if the Company will have repaid the term loan in full, it will remain subject to such ratio requirement only if Excess Availability is less than $10.0 million or Cash and Excess Availability is less than $15.0 million. At all times, under the terms of the Proposed Credit Facility, the Company will be required to maintain minimum Excess Availability of not less than $5.0 million and minimum Cash and Excess Availability of not less than $15.0 million. The Proposed Credit Agreement will contain typical affirmative and negative covenants, including covenants that limit or restrict the ability of the Company and the guarantors to: incur certain additional indebtedness; make certain loans, investments or guarantees; pay dividends; make certain asset sales; incur certain liens or other encumbrances; conduct certain transactions with affiliates and enter into certain corporate transactions. Wachovia's obligations under the Commitment Letter, which expire December 31, 2009, are subject to various conditions including the negotiation of legal documentation and the satisfaction of customary conditions precedent for financings of this type and expire on December 31, 2009. The Company has agreed to reimburse Wachovia for reasonable costs and out-of-pocket expenses incurred by it in connection with its due diligence, approval, documentation, syndication and closing of the Proposed Credit Facility. On October 2, 2009, the Company called $75 million of its Senior Notes for redemption on December 1, 2009. The Company intends to redeem the remaining $29.4 million of its Senior Notes by year- end. "This proposed new facility, combined with the redemption of our remaining senior notes, are very important steps toward creating a capital structure that will enable the Company to further realize the growth potential for the IMAX brand," said Richard L. Gelfond, Chief Executive Officer of IMAX Corporation. "We believe our progress throughout this year to strengthen our balance sheet and enhance our financial flexibility is reflective of the early success we have achieved with our new business model and our entry in the digital arena." About IMAX Corporation IMAX Corporation (NASDAQ:IMAX; TSX:IMX) is one of the world's leading entertainment technology companies, specializing in immersive motion picture technologies. The worldwide IMAX network is among the most important and successful theatrical distribution platforms for major event Hollywood films around the globe, with IMAX theatres delivering the world's best cinematic presentations using proprietary IMAX, IMAX(R) 3D, and IMAX DMR(R) technology. IMAX DMR is the Company's groundbreaking digital re-mastering technology that allows it to digitally transform virtually any conventional motion picture into the unparalleled image and sound quality of The IMAX ExperienceO. The IMAX brand is recognized throughout the world for extraordinary and immersive entertainment experiences for consumers. As of June 30, 2009, there were 394 IMAX theatres (273 commercial, 121 institutional) operating in 44 countries. As reported by the Troubled Company Reporter on July 6, 2009, Standard & Poor's Rating Services revised its rating outlook on IMAX to positive from stable. S&P affirmed the existing ratings on the company, including the 'CCC+' corporate credit rating. JCT WHOLESALE: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: JCT Wholesale Inc. dba Kawasaki Superstore Goodyear 540 N Bullard Ave. #13 - #17 Goodyear, AZ 85338 Bankruptcy Case No.: 09-28664 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Debtor's Counsel: Ronald J. Ellett, Esq. Ellett Law Offices, P.C. 2999 North 44th Street, Suite 330 Phoenix, AZ 85018 Tel: (602) 235-9510 Fax: (602) 235-9098 Email: rjellett@ellettlaw.phxcoxmail.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 Chris Rice, director and secretary of the Company. JOEL KRON: Bankruptcy Court Confirms Amended Chapter 11 Plan ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida confirmed on August 11, 2009, Joel Kron's amended Chapter 11 plan of reorganization, dated February 20, 2009. The Plan provides that the Class 1 Claim of Sherry Kron will receive payments through September 10, 2014, for the Debtor's children's tuition at the Unity School. The Plan also provides that the Class 3 claim of Chevy Chase Bank will receive equal payaments over a period of 60 months to cure the prepetition and postpetition arrages. The Debtor is also obligated to stay current on his mortgage with Chevy Chase Bank. Plan Summary The Debtor's Plan provides that the Debtor will utilize his income to pay the arrearages on all allowed secured claims in full over a period of five (5) years, with the ability to prepay these amounts prior to the conclusion of the five year period. Allowed administrative claims and payments due to the U.S. Trustee will be paid in full on the Plan's Effective Date. Plan Funding Except as otherwise provided in the Plan, on the Plan's Effective Date, all assets of the Debtor shall be vested in the Reorganized Debtor. The Debtor shall fund the Plan using the following income sources: 1) the Debtor's profit from the sale of vintage Rolex watches, estimated at approximately $15,000 per month; 2) the Debtor's net income from rental of the Investment Property, estimated at $5,000 per month; 3) the Debtor's income from his 50% interest in the Cheeburger Cheeburger franchise, estimated at approximately $10,000 per month; 4) anticipated tax refunds in the amount of $23,664; 5) any income realized on the sale of the Debtor's Homestead Property; 6) any funds collected from the $80 million owed by CGR investments, Inc., De La Forge Trust, Charles F. Schwab and Jean Francois Vanderschmitt. Classification and Treatment of Claims Class Type of Claim Impairment ----- ------------------------- ---------- 1 Priority Claim of Sherry Unimpaired Kron 2 Secured Claim of Capri Unimpaired Neighborhood Association, Inc. 3 Secured Claim of Chevy Impaired Chase Bank 4 Secured Claim of Unimpaired U.S. Bank N.A. 5 Allowed Secured Claim of Unimpaired DaimlerChrysler Financial Services Americas, LLC 6 Allowed Secured Claim of Unimpaired VW Credit, Inc. 7 Allowed Priority Tax Impaired Claims 8 Allowed Unsecured Claims Impaired The Debtor disputes the unsecured Claims of David Rascoe, Dan Kron, U.S. Bank N.A. and Daimler under Class 8 and will be filing objections to said claims. In the event that U.S. Bank N.A. and/or Daimler's prepetition arrearage claims are allowed, Daimler's prepetition claim will be paid in in full within 10 days of the Plan's Effective Date and U.S. Bank N.A.'s prepetition arrearage claim will be paid in sixty (60) monthly installments of $76.38 in satisfaction of said claim. A full-text copy of Joel Kron's amended Chapter 11 plan of reorganization, dated February 20, 2009, is available for free at: http://bankrupt.com/misc/joelkron.amendedplan.pdf About Joel Kron Based in Delray Beach, Florida, Joel Kron is an individual and a self-employed seller of vintage Rolex watches. He operates his business out of his home. The Debtor also holds a 50% ownership interest in a Cheeburger Cheeburger franchise in Boca Raton, Florida. The Debtor filed for Chapter 11 protection on Sept. 10, 2008 (Bankr. S.D. Fla. Case No. 08-23147). Bradley S. Shraiberg, Esq., and John E. Page, Esq., at Kluger Peretz Kaplan & Berlin, When the Debtor filed for protection from his creditors, he listed total assets of $82,203,991 and total debts of $2,717,117. KIEBLER SLIPPERY: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Kiebler Slippery Rock LLC filed with the U.S. Bankruptcy Court for the Northern District of Ohio its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $18,180,000 B. Personal Property $883,173 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $36,181,345 E. Creditors Holding Unsecured Priority Claims $308,383 F. Creditors Holding Unsecured Non-priority Claims $487,449 ----------- ----------- TOTAL $19,063,173 $36,977,177 Chardon, Ohio-based Kiebler Slippery Rock LLC filed for Chapter 11 on Sept. 25, 2009 (Bankr. N.D. Ohio Case No. 09-19087). Andrew L. Turscak Jr., Esq., Mark A. Weintraub, Esq., and Robert C. Folland, Esq., at Thompson Hine LLP represent the Debtor in its restructuring effort. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. LE JARDIN: Court Approved Dismissal of Chapter 11 Cases ------------------------------------------------------- The Hon. Joyce Bihary of the U.S. Bankruptcy Court for the Northern District of Georgia granted the motions of Security Real Estate Services, Inc., and Security Bank of Gwinnett County to dismiss the Chapter 11 cases of Le Jardin, LLC, and its debtor- affiliates. The Debtors entered into a settlement agreement with SRES and Security/Gwinnett, secured creditors, pursuant to which, the Debtors have: -- consented to relief from automatic stay to enable lenders to foreclose real property securing the Debtors' loan obligations; and -- consented to the dismissal of the Chapter 11 cases upon the consummation of the foreclosure sale. On April 8, 2009, the Court approved the foreclosure of the property and on May 5, 2009, the foreclosure sale was consummated. Atlanta, Georgia-based Le Jardin, LLC, is a real estate corporation. The company and its affiliates filed for Chapter 11 protection on Aug. 29, 2008 (Bankr. N.D. Ga. Case No. 08-77019). John A. Moore, Esq., at The Moore Law Group, LLC, represents the Debtors in their restructuring efforts. The Debtors listed assets between $10 million and $50 million and liabilities between $10 million and $50 million when they filed for bankruptcy. LEAR CORP: Completes Reorganization; New Share Begin Trading ------------------------------------------------------------ Lear Corporation announced November 9 that it has successfully emerged from its court-supervised financial reorganization with a strong and flexible balance sheet, positive operating results in the Third Quarter, a growing sales backlog and a robust competitive profile. The Company also announced that its new common stock will be listed on the New York Stock Exchange under its historical NYSE stock symbol "LEA" and will begin trading on a "when issued" basis (LEA WI). The Company expects its common shares to begin "regular way" trading within several days thereafter. "We have moved through the financial restructuring process without missing a beat operationally. We have continued to win new business globally, strengthened our industry-leading global capabilities and the spirit of the Lear team has never been more positive," said Bob Rossiter, Lear's Chairman, Chief Executive Officer and President. "Our customer relationships remain the best in the industry, allowing us to continue winning new business in every region of the world." Lear said its present net sales backlog totals $1.4 billion for 2010 to 2012, which is approximately 25% higher than the prior status, despite lower industry production levels. The new backlog also represents continued diversification of Lear's sales, with 40% in its Seating business and 60% in its growing Electrical and Electronic business. Moreover, more than half of Lear's new business comes from outside North America. As a result of the financial reorganization, Lear has reduced its debt obligations by approximately $2.8 billion and emerged with a strong and flexible balance sheet. With over $1 billion in cash, Lear has available liquidity to support its global operating needs and growth plans. Upon exit, Lear has less than $1 billion of debt at competitive interest rates and no near-term maturities. "Moving forward, we are committed to maintaining a disciplined financial profile and an investment grade focus that will enable us to continue investing in new products and technologies globally, as well as growth in emerging markets," Mr. Rossiter said. "As a result of our multi-year business transformation, we have streamlined our global cost footprint and improved our operating efficiency in every region of the world. Going forward, we have a focused overall plan to drive further sales growth and improved margins." Mr. Rossiter concluded, "Thanks to the hard work and dedication of our employees, we moved through our financial restructuring expeditiously and without compromising the fundamentals that make Lear a global industry leader - our unrelenting focus on quality, our unwavering commitment to customer satisfaction, and the most talented team in the business. When you add to that our strong balance sheet, competitive cost structure, and focused growth strategy, we are ideally positioned to continue our business momentum and to benefit from an industry recovery." Investor Conference Call Lear will webcast a conference call to review the Company's third- quarter 2009 financial results and related matters on Wednesday, November 11, 2009, at 1:00 p.m. eastern time through the Investor Relations link at http://www.lear.com/ In addition, the conference call can be accessed by dialing 1-800-789-4751 (domestic) or 1-973-200-3975 (international). Audio replays will be available two hours following the call at 1-800-642-1687 (domestic) or 1-706-645-9291 (international) and will be available until November 25, 2009, with a Conference I.D. of 38924117. About Lear Corp. 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) LEE FOOD SERVICE: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------ Debtor: Lee Food Service, Inc. 1887 Rte 764, PO Box 279 Duncansville, PA 16635 Bankruptcy Case No.: 09-71329 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Western District of Pennsylvania (Johnstown) Debtor's Counsel: David J. Novak, Esq. Spence Custer Saylor Wolfe & Rose 400 U.S. Bank Building P.O. Box 280 Johnstown, PA 15907 Tel: (814) 536-0735 Email: dnovak@spencecuster.com James R. Walsh, Esq. Spence Custer Saylor Wolfe & Rose 400 U.S. Bank Building P.O. Box 280 Johnstown, PA 15907 Tel: (814) 536-0735 Fax: (814) 539-1423 Email: jwalsh@spencecuster.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/pawb09-71329.pdf The petition was signed by Robert Donaldson, president/secretary/treasurer of the Company. LEHMAN BROTHERS: Arc Capital Placed Into Administration ------------------------------------------------------- Arc Capital and Income plc has announced that it is going into administration. The firm focused on delivering structured investment products to retail investors, including Lehman-backed structured products. This announcement follows an extensive Financial Services Authority review of structured products and subsequent discussions with the firms. The FSA's review looked at the UK structured products market, including those backed by Lehman, and as part of this review examined the firm's systems and controls and marketing literature. As a result, the FSA asked the firm to assess its financial position in relation to potential claims by investors with Lehman-backed structured products. As this firm is now in administration, consumers who had invested in Lehman-backed products with the firm may be entitled to compensation from the Financial Services Compensation Scheme. The firm's administrators, Robin Davis, Melvyn Carter and John Alexander of Carter Backer Winter LLP will shortly contact all customers who bought products through this firm, setting out what they need to do next. The FSA's Moneymadeclear website provides further information on what this means for consumers who bought Lehman-backed structured products and other products from ACI. Further information on the FSA's structured products review can be found on the Wider Implications website. The FSA will publish the full findings of its review later this month. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: FSA Helps Investors of Structured Products ----------------------------------------------------------- The Financial Services Authority has announced tough and wide- ranging action to help investors who received unsuitable advice or misleading promotional material when they bought a Lehman-backed structured product, as well as measures to address issues in the wider structured products market. This follows an FSA review of the marketing and distribution of structured products, particularly those backed by Lehman Brothers, to achieve the best outcome for all investors who were affected by the insolvency of the firm. The FSA found significant advice failings on Lehman-backed products in most of the financial advice firms sampled, as well as serious deficiencies in the marketing literature provided by a number of the plan managers selling these products. As a result, the FSA is taking direct action to address the detriment this has caused for investors with Lehman-backed products and robust steps to ensure all future structured products investors are treated fairly, including: Lehman-backed structured products * following the FSA's review of their promotional material and its subsequent discussions with the firms, three plan managers that packaged and marketed Lehman-backed structured products -- NDF Administration (NDFA), Defined Returns Limited (DRL) and Arc Capital and Income plc (ACI) -- have gone into administration. As a result, investors who purchased Lehman-backed structured products through these firms may be entitled to compensation from the Financial Services Compensation Scheme (FSCS). The firms' administrators are contacting investors with information on how this affects them; * issuing all firms that gave advice to investors on Lehman- backed structured products with a template they should use to deal with customer complaints -- it outlines the criteria the FSA expects them to use to assess the advice they gave to ensure investors are treated fairly and consistently; * writing to all remaining investors that will not be contacted as a result of the plan managers' administration, and publishing guidance, to help investors consider what steps to take, including making a complaint, if they believe they were misled by product literature or received unsuitable advice; * referring three advice firms to enforcement for giving unsuitable advice, and instructing other advisers it looked at to review past sales of Lehman-backed structured products and pay redress where appropriate; * providing clear guidance to all firms advising on structured products (both those backed by Lehman Brothers and other firms) on the standards it expects them to meet, including examples of good and poor practice it identified during its review; Wider structured products market (non Lehman-backed) * writing to the largest sellers of other structured products, asking them to examine how they have sold these products in the past against the standards reiterated by the FSA and, if necessary, to review past sales and provide investor redress where appropriate, as well as change their approach for future advice and sales; * in the course of 2010 the FSA will undertake follow-up assessments to ensure that firms are meeting its advice standards; and * following-up with plan managers where the FSA had concerns about their marketing of non Lehman-backed structured products, to assess whether firms' current literature meets its requirements, and setting out the standards it expects firms to meet when designing and marketing structured products. Dan Waters, the FSA's director of conduct risk, said: "We are committed to ensuring that retail financial services markets deliver fair outcomes for consumers. The focus of our review has been to achieve the best possible outcome for as many people as possible that invested in structured products backed by Lehman Brothers. This is a hugely complex area given the number of different firms involved, and there is no one-size-fits-all solution for these investors." "However, given the failings we have come across in the marketing and selling of these products, today we are setting out a package of robust measures to help those who have lost money. We are also taking decisive action to address issues in the wider structured products market to ensure that all future investors will be treated fairly -- and we will not hesitate in taking action if firms do not take sufficient steps to respond to our concerns." About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: HKMA October 23 Report on Progress of Probe ------------------------------------------------------------ The Hong Kong Monetary Authority announced that there are currently 610 Lehman-Brothers-related non-minibond cases under disciplinary consideration. These are cases which have gone through detailed investigation by the HKMA. Up till now, the HKMA has referred a total of 334 Lehman- Brothers-related non-minibond cases to the Securities and Futures Commission (SFC) for further action. These cases have been reviewed by the HKMA, which has determined that there are sufficient grounds for referring them to the SFC to facilitate its investigations into banks. The HKMA has, up to 22 October 2009, received 21,729 complaints concerning Lehman-Brothers-related products, of which 7,767 relate to non-minibond products. Of the Lehman-Brothers-related non- minibond complaints, 7,720 cases have gone through the preliminary assessment process and, as a result, the HKMA is currently investigating 3,177 cases and seeking further information on 1,625 cases. A total of 2,308 Lehman-Brothers-related non-minibond complaints have been closed as there was not sufficient prima facie evidence found after the preliminary assessment process or no sufficient grounds and evidence found after detailed investigations. Of the minibond complaints, 12,898 cases are eligible for the Lehman-Brothers Minibonds Repurchase Scheme or the voluntary offer made by the distributing banks to customers with whom they had reached settlements before the Scheme was introduced. One thousand and three minibond complaints involving customers who are not eligible for, or have indicated that they do not accept, the repurchase offer under the Scheme or whose cases require clarification from the banks will continue to be handled by the HKMA if the complaints cannot be resolved by the enhanced complaint handling system introduced by the distributing banks as agreed by the regulators. Since 7 August 2009, 16 minibond distributing banks have begun the issue of repurchase offer letters to eligible customers (about 25,000 customers) under the Scheme. Up to 21 October 2009, 24,329 customers have responded to the repurchase offers, of whom 24,102 customers or 99.1% have accepted the offers. As of 15 October 2009, for customers who had accepted the offer, 99% of them already received payment from the banks concerned, while the remaining payments will be settled soon (in any case no later than 30 days after having received the duly completed acceptance forms from these customers). Separately, about 4,800 customers who had reached settlements with the banks prior to the introduction of the Scheme are eligible to the voluntary offer made by the banks, with a view to bringing them in line with the eligible customers who accept the repurchase offer under the Scheme. For customers whose previous settlement amount was less than 60% (for customers aged below 65) or 70% (for customers aged 65 or above) of the principal invested, 97% of them already received top-up payments from the banks concerned as of 15 October 2009. "The repurchase offer has begun to expire since 6 October 2009. Customers who are still eligible to the offer should consider carefully the terms of the offer and his or her personal circumstances before deciding whether to accept the offer from the distributing banks," added the HKMA spokesperson. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: To Delay Filing 10-Q for Third Quarter ------------------------------------------------------- Lehman Brothers Holdings, Inc., stated in an NT 10-Q filed with the U.S. Securities and Exchange Commission that it won't timely file its Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2009, because: (1) of its Chapter 11 filing on September 15, 2008; (2) the commencement of various administrative or civil rehabilitation proceedings of subsidiaries comprising significant parts of the company's European and Asian businesses; (3) the sale since September 15, 2008, of the company's business; and (4) the completion on May 4, 2009, of the transfer to Neuberger Berman Group LLC of the company's investment management business. As a result of these developments, LBHI is currently unable to complete the preparation of its consolidated financial statements for such period in as much as it currently has neither access to major components of its internal systems nor the ability to prepare its consolidated financial statements and the remainder of the report, with all the required disclosures, to have them properly certified by its current executive officers, and have them reviewed by its independent auditors. LBHI anticipates, based on the information currently available to it, that results of operations for the third quarter ended August 31, 2009, will be significantly different from those for the corresponding period for the last fiscal year due to significant developments in the business over the past year. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LEHMAN BROTHERS: UK Appeals Court Shuns PwC Plan for Lehman Assets ------------------------------------------------------------------ A British appellate court has rejected PricewaterhouseCoopers' plan to speed up the unwinding of Lehman Brothers Holdings Inc.'s European branch and distribute the assets to creditors, upholding a decision by a lower court. As matters currently stand, the Court of Appeal's ruling means that the proposed scheme of arrangement cannot be implemented in its current form, PwC said. Whether or not they appeal, the Joint Administrators will continue to develop alternative proposals that would also assist with the return of client assets. In that regard, work on the "Contractual Solution" detailed in our update of 5 October 2009 continues and further updates will be posted to this website in due course. It remains the intention of the Joint Administrators to put a contractual solution to creditors by the end of November 2009. Steven Pearson, Joint Administrator, commented, "I am disappointed by this ruling as it restricts the options available to the Administrators for the return of client assets and, in particular, the degree of protection afforded to clients who receive assets back from the Company. However, following the original judgment we recognised that the proposed scheme was at risk and in the meantime have worked with the creditors' committee of LBIE to develop a credible alternative approach in order to return assets to clients using approximately the same framework of rules and timeline as was contained in the proposed scheme. These alternative proposals were outlined to affected clients during October and will be formally launched in an offer circular in the coming weeks." Mr. Pearson cautioned, "Unlike the proposed scheme, the alternative arrangements will only bind those clients who positively elect to sign-up. In order to benefit from these arrangements it is vital that affected clients take the time to understand what is now being are proposed and, by the end of the year, sign up to their terms." In order to keep all options open, the Joint Administrators and LBIE have made an application to the Court of Appeal for permission to appeal to the Supreme Court of the United Kingdom. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy September 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition listed $639 billion in assets and $613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. On September 19, 2008, the Honorable Gerard E. Lynch, Judge of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI The Bankruptcy Court has approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. International Operations Collapse Lehman Brothers International (Europe), the principal UK trading company in the Lehman group, was placed into administration, together with Lehman Brothers Ltd, LB Holdings PLC and LB UK RE Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and Mike Jervis, partners at PricewaterhouseCoopers LLP, have been appointed as joint administrators to Lehman Brothers International (Europe) on September 15, 2008. The joint administrators have been appointed to wind down the business. Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LIFE SCIENCES: Posts Lower Q3 2009 Net Income of $1,058,000 ----------------------------------------------------------- Life Sciences Research, Inc., reported lower net income of $1,058,000 for the three months ended September 30, 2009, from $2,068,000 for the same period a year ago. The Company posted net income of $11,022,000 for the nine months ended September 30, 2009, from net income of $16,087,000 for the same period a year ago. Life Sciences Research booked net revenues of $49,361,000 for the three months ended September 30, 2009, from $63,560,000 for the same period a year ago. Life Sciences Research booked net revenues of $142,656,000 for the nine months ended September 30, 2009, from $191,117,000 for the same period a year ago. Life Sciences Research had total assets of $186,983,000 as of September 30, 2009, against total liabilities of $191,893,000, resulting in $4,910,000 in stockholder's deficit. The September 30 balance sheet showed strained liquidity: The Company had $69,956,000 in total current assets against $75,128,000 in total current liabilities. On July 8, 2009, the Company entered into the Agreement and Plan of Merger with Lion Holdings, Inc. -- Parent -- and Lion Merger Corp. -- Lion -- a wholly owned subsidiary of Parent. Each of Parent and Lion was formed for the purpose of consummating the transactions contemplated by the Merger Agreement, and each of such entities is controlled by Andrew Baker, Chairman and CEO of the Company. The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Lion will merge with and into the Company, with the Company continuing as the surviving company and a wholly owned subsidiary of Parent following the Merger. A Special Committee consisting of the Company's independent directors was charged with evaluating strategic alternatives for the Company and unanimously recommended the approval of the Merger. Based upon this recommendation, the Board of Directors of the Company (with Andrew Baker and Brian Cass abstaining) approved the Merger and resolved to recommend that LSR stockholders approve the Merger. The Special Committee was advised by independent counsel and an independent financial advisor who provided a fairness opinion to the Special Committee. The Merger Agreement provides that, upon consummation of the Merger, each share of common stock, par value $0.01 per share, of the Company issued and outstanding immediately prior to the effective time of the Merger, other than shares owned by Parent, Lion or their affiliates, will be converted into the right to receive $8.50 in cash. Based upon the latest information available to the Company, Mr. Baker beneficially owns approximately 17.7% of the shares. No stockholder has any statutory right to demand and receive payment of the fair value of his, her or its shares in connection with the Merger. Consummation of the Merger is subject to a number of conditions, including without limitation: (i) the approval of the Merger by (A) the holders of at least a majority of the outstanding shares entitled to vote on the Merger at a stockholders' meeting duly called and held for such purpose and (B) a majority of the votes cast by holders of outstanding shares entitled to vote on the Merger at a stockholders' meeting duly called and held for such purpose, excluding any votes cast by Parent, Lion, Andrew Baker or any other "interested party"; (ii) the absence of any "company material adverse effect"; and (iii) other closing conditions set forth in the Merger Agreement. Each of the Company and Parent has the right to terminate the Merger Agreement under certain circumstances, which may require the payment of a termination fee. A special meeting of stockholders has been scheduled for November 23, 2009 for purposes of allowing stockholders to vote on the Merger. 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?48d8 Life Sciences Research on November 6 said RiskMetrics Group (formerly Institutional Shareholder Services), a proxy advisory firm, has recommended that LSR stockholders vote "FOR" the approval of the merger of LSR and Lion Merger at the upcoming special meeting of stockholders. LSR encourages all stockholders to vote their shares promptly by phone, Internet or by mailing their proxy card. The Board of Directors and the independent Special Committee of the Board each recommended that stockholders vote "FOR" the approval of the merger. About Life Sciences Research Life Sciences Research, Inc. (NYSE Arca: LSR) is a global contract research organization providing product development services to the pharmaceutical, agrochemical and biotechnology industries. LSR operates research facilities in the United States (the Princeton Research Center, New Jersey) and the United Kingdom (Huntingdon and Eye, England). LYONDELL CHEMICAL: Al-Waha Joint Venture Starts Up Dubai Plant -------------------------------------------------------------- Al-Waha Petrochemical Company has successfully started up its new complex in Al-Jubail Industrial City which includes a 450 KT per year polypropylene plant based on LyondellBasell's Spherizone process technology. Al-Waha was formed in 2006 and is a joint venture between Sahara Petrochemicals Company (75%) and LyondellBasell (25%). "By joining forces, we have developed a world-class complex with integrated Middle East-advantaged production costs and a highly competitive mix of polypropylene products in close proximity to our target markets of KSA, Asia, Europe, Africa and the Middle East," said Omar Bahobail, president of Al-Waha. "With LyondellBasell's advanced polypropylene technology and its global marketing capabilities, this joint venture will maintain a robust and profitable operation in an increasingly challenging industry." World's Largest Spherizone Process Plant The largest of its kind in the world, Al-Waha's Spherizone polypropylene plant will supply customers with products exhibiting a range of properties and performance attributes unmatched in the industry. "Our joint venture brings global benchmark LyondellBasell polypropylene grades to our target markets offering significant performance advantages," explained Mitchell Killeen, Divisional vice president of LyondellBasell polypropylene and polyethylene business for Africa, Middle East and Indian sub-continent. "Spherizone process resins will enable our customers to access new applications and markets with products that deliver superior value." Applications to be targeted include tapes to produce woven fabrics, injection molded products, and film. At a later stage, Al-Waha will also supply grades used in fiber and nonwoven applications, and a wide range of random copolymers used in consumer and packaging applications. Pipe producers also will benefit from industry-leading Spherizone polypropylene resins used in high-performance pipe applications. Supply From Local Sources Al-Waha's polypropylene resins will be marketed globally by LyondellBasell, including a firm commitment to the Middle East market for value added products. This joint venture enables the global polyolefins leader to supply heterophasic and random copolymers to the Middle East from local assets for the first time. "Al-Waha's Middle East production assets, coupled with LyondellBasell's existing marketing network in United Arab Emirates, Egypt, India and North Africa, demonstrate our commitment to growth in the Middle East and Asia as well as Europe," said Mr. Killeen. About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. On January 6, 2009, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc. filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09- 10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately US$8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a US$6.5 billion term loan, which comprises a US$3.25 billion in new loans and a US$3.25 billion roll-up of existing loans; and a US$1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009, in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Cadwalader Bills Lyondell $17M For Summer Work ----------------------------------------------------------------- Law360 reports that Cadwalader Wickersham & Taft LLP, which represents Lyondell Chemical Co. in its Chapter 11 proceedings, is seeking more than $17 million in fees and expenses for its work over the summer, as the firm tries to bring the chemical producer out of bankruptcy by early 2010. LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. On January 6, 2009, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc. filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09- 10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately US$8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a US$6.5 billion term loan, which comprises a US$3.25 billion in new loans and a US$3.25 billion roll-up of existing loans; and a US$1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009, in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LYONDELL CHEMICAL: Wins Nod of Omnibus Motion for Agreements ------------------------------------------------------------ Pursuant to Section 365 of the Bankruptcy Code, Lyondell Chemical Co. and its units sought and obtained a Court order approving certain agreements (i) effectuating the consensual disposition of certain prepetition executory contracts and (ii) compromising claims between and among certain Debtors and the counterparties to the Agreements, effective as of August 11, 2009. In connection with the conduct of their businesses, the Debtors are parties to thousands of contracts with various vendors, suppliers and customers. The business relationships between the Debtors and many of their Counterparties are complex, with the Debtors and Counterparties acting as both suppliers and customers to each other or their affiliates, Andrew M. Troop, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, related. The Debtors are in the process of reviewing their numerous contracts, leases and other agreements, and the associated relationships with their Counterparties. As part of this process, the Debtors have entered into negotiations with numerous Counterparties to make their ongoing contractual relationships more advantageous for the estates, and to compromise with Counterparties in ways that are also beneficial and fair to the estates, according to Mr. Troop. Specifically, the Court has approved these Agreements: (a) Agreement dated as of July 17, 2009, by and among Lyondell Chemical Company, Equistar Chemicals, LP, Millennium Petrochemicals, Inc., Houston Refining, LP, Basell USA, Inc., and TNT Crane & Rigging, LP -- the TNT Agreement; and (b) Agreement dated as of July 16, 2009, by and among Lyondell, Equistar, and Tauber Petrochemical Company. According to Mr. Troop, the key aspects of the TNT Agreement include: (1) Each of Lyondell, Equistar, MPI, and Houston Refining will, with the consent of TNT, reject under Section 365 that certain prepetition executory contract dated June 1, 2007, between and among certain of the Debtors and TNT, whereby TNT provided, among other things, certain operated and maintained crane services to the parties. The Debtors and TNT have agreed to continue their business relationship pursuant to a new, ordinary course postpetition agreement, on similar or better commercial terms than the Prepetition TNT Contract. (2) The TNT Agreement resolves certain claims between the Debtors and TNT. TNT has agreed to compromise its asserted mechanics' and materialmens' liens in an aggregate amount of roughly $252,020, against the Debtors' (i) Corpus Christi Equistar Plant, (ii) Bayport Polyolefins Plant, (iii) Channelview Complex, and (iv) LaPorte Complex. In consideration of the Debtors' agreement to continue their relationship with TNT pursuant to a new postpetition agreement, TNT has agreed, among other things, to (i) waive its asserted mechanics' and materialmens' liens and (ii) accept general unsecured claims against the estates of Equistar and Houston Refining in the approximate amounts of $108,757 and $135,400, respectively. TNT will release any other claims in respect of the Prepetition TNT Contract. A full-text copy of the TNT Agreement is available for free at http://bankrupt.com/misc/Lyondell_OrdTNTAgreement081109.pdf According to Mr. Troop, the key aspects of the Tauber Agreement include: (1) Tauber supplied certain commodities to Lyondell and Equistar pursuant to a certain prepetition contract. Lyondell, Equistar, and Tauber have terminated the Prepetition Tauber Contract by mutual consent. The Debtors and Tauber have agreed to continue their business relationship pursuant to a new, ordinary course postpetition agreement on similar or better terms that the Prepetition Tauber Contract. (2) The Tauber Agreement resolves certain claims between Tauber and the Debtors in respect of the Prepetition Tauber Contract and related obligations. In consideration of the Debtors' entry into a new postpetition agreement with Tauber, Tauber has agreed, among other things, to release any claims -- including its asserted $20,913 claim for goods provided to the Debtors -- related to unpaid amounts, the Prepetition Tauber Contract and related obligations. A full-text copy of the Tauber Agreement can be accessed for free at http://bankrupt.com/misc/Lyondell_OrdTauberAgreement081109.pdf About Lyondell Chemical LyondellBasell Industries is one of the world's largest polymers, petrochemicals and fuels companies. It is the global leader in polyolefins technology, production and marketing; a pioneer in propylene oxide and derivatives; and a significant producer of fuels and refined products, including biofuels. Through research and development, LyondellBasell develops innovative materials and technologies that deliver exceptional customer value and products that improve quality of life for people around the world. Headquartered in The Netherlands, LyondellBasell -- http://www.lyondellbasell.com/-- is privately owned by Access Industries. Basell AF and Lyondell Chemical Company merged operations in 2007 to form LyondellBasell Industries, the world's third largest independent chemical company. LyondellBasell became saddled with debt as part of the US$12.7 billion merger. On January 6, 2009, LyondellBasell Industries' U.S. operations and one of its European holding companies -- Basell Germany Holdings GmbH -- filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code to facilitate a restructuring of the company's debts. The case is In re Lyondell Chemical Company, et al., Bankr. S.D.N.Y. Lead Case No. 09-10023). Seventy-nine Lyondell entities, including Equistar Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals Inc., and Wyatt Industries, Inc. filed for Chapter 11. In May 2009, one of the cases was dismissed -- Case No. 09-10068 -- because it is duplicative of Case No. 09- 10040 relating to Debtor Glidden Latin America Holdings. The Hon. Robert E. Gerber presides over the case. Deryck A. Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, serves as the Debtors' bankruptcy counsel. Evercore Partners serves as financial advisors, and Alix Partners and its subsidiary AP Services LLC, serves as restructuring advisors. AlixPartners' Kevin M. McShea acts as the Debtors' Chief Restructuring Officer. Clifford Chance LLP serves as restructuring advisors to the European entities. Lyondell Chemical estimated that consolidated assets total US$27.12 billion and debts total US$19.34 billion as of the bankruptcy filing date. Lyondell has obtained approximately US$8 billion in DIP financing to fund continuing operations. The DIP financing includes two credit agreements: a US$6.5 billion term loan, which comprises a US$3.25 billion in new loans and a US$3.25 billion roll-up of existing loans; and a US$1.57 billion asset-backed lending facility. Luxembourg-based LyondellBasell Industries AF S.C.A. and another affiliate were voluntarily added to Lyondell Chemical's reorganization filing under Chapter 11 on April 24, 2009, in order to seek protection against claims by certain financial and U.S. trade creditors. On May 8, 2009, LyondellBasell Industries added 13 non-operating entities to Lyondell Chemical Company's reorganization filing under Chapter 11 of the U.S. Bankruptcy Code. All of the entities are U.S. companies and were added to the original Chapter 11 filing for administrative purposes. The filings will have no impact on current business or operations as none of the entities manufactures or sells products. Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lyondell Chemical Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) MARANI BRANDS: Posts Restated Net Loss of $3.4 Million in FY2008 ---------------------------------------------------------------- Marani Brands, Inc., filed with the Securities and Exchange Commission on November 3, 2009, Amendment No. 1 to its annual report for the fiscal year ended June 30, 2008. This amendment mainly reflects changes to the Company's financial statements for fiscal 2008 as a result of the application of reverse merger accounting, rather than purchase method accounting to the April 2008 merger transaction between the Company and Margrit Enterprises International, Inc. The following financial statements line items were affected by the restatement: As Originally Stated As Restated ---------- ----------- Current Assets $2,567,631 $2,567,631 Property & Equipment $5,510 $5,510 Deposits $35,255 $35,255 Goodwill aand Intangibles $3,861,280 $0 Total Assets $6,469,676 $2,608,396 Total Current Liabilities $435,452 $435,452 Total Non-Current Liabilities $249,816 $249,816 Total Liabilities $685,268 $685,268 Total Stockholders' Equity $5,784,408 $1,923,128 Total Liabilities & Stockholders' Equity $6,469,676 $2,608,396 Sales $168,058 $168,058 Cost of Sales $48,809 $48,809 Gross Profit $119,249 $119,249 Operating Expenses $3,513,683 $3,659,959 Operating Income (Loss) ($3,394,434) ($3,540,710) Total Other Income (Expense) ($46,526) ($11,826,103) Net Income (Loss) Before Income Taxes ($3,440,960) ($15,366,813) Provision for Income Taxes - - Net Income (Loss) ($3,440,960) ($15,366,813) A full-text copy of the Company's amended annual report for the fiscal year ended June 30, 2008, is available for free at: http://researcharchives.com/t/s?48c7 Going Concern Doubt Gruber & Company, LLC, in Saint Louis, Missouri, audited Marani Brands, Inc., and subsidiaries' consolidated financial statements as of and for the years ended June 30, 2008, and 2007. The auditing firm said that the Company's viability is dependent upon its ability to obtain future financing and the success of its future operations. The auditing firm said these factors raise substantial doubt as to the Company's ability to continue as a going concern. About Marani Brands Based in North Hollywood, Calif., Marani Brands, Inc. (OTC BB: MRIB) primarily engages in the distribution of wine and spirit products manufactured in Armenia. The Company's signature product is Marani Vodka, a premium vodka which is manufactured exclusively for the Company in Armenia. MICHAELS STORES: S&P Affirms 'B-' Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its ratings outlook on the Irving, Texas-based-Michaels Stores Inc. This action comes after the company amended its senior secured credit facility so that $1 billion of the currently outstanding $2.285 billion now matures in 2016. Michaels agreed to pay a higher interest rate margin on the extended portion of the term loan; the LIBOR margin increased to 4.5% from 2.25%. "Leverage is unaffected as a result of the transaction and operating lease-adjusted debt to EBITDA was 8.8x at the end of the second quarter (ended Aug. 1, 2009)," said Standard & Poor's credit analyst Charles Pinson-Rose. Operating lease-adjusted EBITDA interest coverage weakens modestly to 1.5x from 1.6x on a pro forma basis as a result of the higher interest costs. "Despite the higher interest rate margin, S&P still expect that the company should generate meaningful free cash flow in the future," added Mr. Pinson-Rose. MICROMET INC: Posts Wider Q3 2009 Net Loss of $19,892,000 --------------------------------------------------------- Micromet, Inc., posted wider net loss of $19,892,000 for the three months ended September 30, 2009, from a net loss of $12,891,000 for the same period a year ago. The Company posted a net loss of $34,169,000 for the nine months ended September 30, 2009, from a net loss of $27,384,000 for the same period a year ago. Total revenues were $4,021,000 for the three months ended September 30, 2009, from $7,038,000 for the same period a year ago. Total revenues were $16,414,000 for the nine months ended September 30, 2009, from $21,414,000 for the same period a year ago. As of September 30, 2009, the Company had $132,944,000 in total assets against total current liabilities of $34,752,000, deferred revenue, net of current portion of $7,413,000, other non-current liabilities of $2,352,000. The Company had $0 in long-term debt obligations. As of September 30, 2009, the Company had accumulated deficit of $232,337,000 and stockholders' equity of $88,427,000. "We expect that operating losses and negative cash flows from operations will continue for at least the next several years and we will need to generate additional funds to achieve our strategic goals. If necessary, we may raise substantial funds through the sale of our common stock and common stock warrants, or through debt financing or through establishing additional strategic collaboration agreements. We do not know whether additional financing will be available when needed, or whether it will be available on favorable terms, or at all. Based on our capital resources [to date] and the proceeds received from the sale of common stock in August 2009, we believe that we have adequate resources to fund our operations for at least 24 months, without considering any potential future milestone payments that we may receive under our current or any new collaborations we may enter into in the future, any future capital raising transactions or any draw downs from our committed equity financing facility, or CEFF, with Kingsbridge Capital Limited," the Company said. On October 29, Micromet announced that it had entered into a collaboration and license agreement with sanofi-aventis to develop a BiTE antibody against an undisclosed solid tumor target. Under the terms of the agreement, Micromet will be responsible for the discovery, research and development of the BiTE antibody through the completion of phase 1 clinical trials, at which point sanofi- aventis will assume full control of the development and commercialization process. Micromet will receive an initial payment of EUR8.0 million (approximately $12 million), and is eligible for development and regulatory milestone payments of up to EUR162 million (approximately $241 million), plus performance- based sales milestones of up to EUR150 million (approximately $224 million) and royalties on worldwide product sales. On November 5, Micromet announced that it has entered into an agreement with MedImmune, LLC to buy out MedImmune's option to reacquire the right to commercialize blinatumomab in North America, and to terminate the collaboration agreement signed in 2003 under which MedImmune had been granted the right to develop and commericalize blinatumomab in North America. As a result of this termination agreement, Micromet now controls global rights to develop and commercialize blinatumomab. Micromet will make upfront, milestone, and royalty payments to MedImmune related to the development and North American net sales of blinatumomab. 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?48e2 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48e3 On Friday, the Company filed a Post-Effective Amendment No. 1 to the Registration Statement on Form S-4 on Form S-8 it filed relating to 1,922,971 shares of common stock, par value $0.00004 per share. All of the Common Shares are issuable pursuant to the Micromet, Inc. 2006 Equity Incentive Award Plan. The 2006 Plan was assumed by the Company, pursuant to the Agreement and Plan of Merger and Reorganization, dated as of January 5, 2006, as amended on March 16, 2006, by and among the Company, Carlsbad Acquisition Corporation -- Merger Sub -- Micromet Holdings, Inc. and Micromet AG, upon the completion of the merger of Merger Sub with and into Holdings on May 5, 2006. Upon completion of the merger, the 366,472 shares of common stock of Holdings reserved for issuance under the 2006 Plan were converted into options to purchase the 1,922,971 Common Shares of the Company based on the exchange ratio in the merger, and the Company amended its Certificate of Incorporation changing its corporate name to Micromet, Inc. All of the Common Shares registered were previously registered on the Company's registration statement on Form S-4, as amended (File No. 333-131817) and are being transferred to this registration statement on Form S-8 by way of Post-Effective Amendment No. 1 to the Form S-4. The Registration Statement also includes any additional shares that may hereafter become issuable in accordance with the adjustment provisions of the 2006 Plan. A full-text copy of the Registration Statement is available at no charge at http://ResearchArchives.com/t/s?48e4 Going Concern Doubt In its annual report on Form 10-K for the year ended December 31, 2008, Micromet said that as of December 31, it had an accumulated deficit of $198,200,000, and it expects to continue to incur substantial, and possibly increasing, operating losses for the next several years. "The conditions create substantial doubt about our ability to continue as a going concern," the Company said. However, Ernst & Young LLP, in McLean, Virginia, the Company's independent accountants, did not include a going concern language in its March 16, 2009 audit report. MONTGOMERY REALTY: Court Sets November 24 Plan Voting Deadline -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California has preliminarily approved the disclosure statement with respect to Montgomery Realty Group Inc.'s amended Chapter 11 plan of reorganization dated October 19, 2009, subject to reconsideration at the confirmation hearing. The Court has scheduled the confirmation hearing for December 2, 2009, at 9:30 a.m. The deadline for the submission of ballots accepting or rejecting the Plan is November 24, 2009. Written objections to the Plan must be submitted no later than November 24, 2009. The confirmation hearing will constitute a status and scheduling conference with respect to any such objection. The Debtor believes that it in a Chapter 7 liquidation, there would be no distribution to unsecured creditors. If the Trustee did sell any of the properties, and achieved sales prices materially in excess of the appraised values, it says that the net recovery would just be absorbed by the fees and expenses of the Trustee and her professionals. Thus, the Debtor believes that in a liquidation, there would be no distribution to unsecured creditors. Treatment of Claims With the exception of the allowed secured claim of the City and County of San Francisco under Class 710-A and the allowed claims entitled to priority under Section 507 of the Bankruptcy Code under Class PRI, all other claims are impaired under the Plan. Unsecured creditors who are owed less than $10,000 under Class UNS-A or are willing to accept a maximum distribution of $2,500 will receive 25% of their claims in full satisfaction and will receive their distribution before all other general unsecured creditors. After the Class UNS-A creditors have received their discounted payments, net cash flow will be dedicated to paying all other allowed unsecured claims under Class UNS-B in full. After all unsecured claims have been satisfied, net cash flow will be dedicated to cashing out the minority shareholders (Class EQT- A) at $0.50 per share. There are 435,000 shares held by minority shareholders. After the Interests of minority shareholders have been satisfied, the Debtor may use its cash freely. Dinesh Maniar and his family and affiliates (Class EQT-B) will retain their interests in the Debtor, subject to the requirements of the Plan. The debt secured by the first deed of trust (Class 710-B) on the Debtor's single-tenant office building located at 710 Sansone Street, San Francisco, will be restructured as a 7-year note at 5.25% interest and a 30-year amortization. The debt secured by second deed of trust (Class 710-C) will be restructured as a 5-year note at 7.5% interest and a 30-year amortization. The debt secured by the first deed of trust (Class 447-B) on the Debtor's multi-tenant, 3 story office building located at 447 Battery Street, San Francisco, will be restructured as a 7-year note at 5.25% interest and a 30-year amortization. The second deed of trust (Class 447-C) secures an obligation of the majority shareholder and was given in March of 2009 "for free". The Debtor will seek avoidance of that deed of trust as a fraudulent transfer. If the Debtor is unsuccessful in that lawsuit, it may surrender the property to foreclosure by the secured creditors. The Debtor will transfer its property known as Glen Oaks Apartments located at 1007 E. Rundberg St., Austin, Texas, together with a Hawaii Condo previously owned by its majority shareholder, to the holder of the second deed of trust. The automatic stay respecting the Glen Oaks Apartments will dissolve, and all creditors holding liens against the Glen Oaks Apartments will be free to enforce them. The Debtor owns the only membership interest in Montgomery Realty Group, LLC, a Debtor in a related Chapter 11 case, which owns the Concord Park & Shop. The Debtor hopes to retain ownership of the property through the LLC, but anticipates that all cash flow for the foreseeable future will be dedicated to the payment of the LLC's creditors. Full-text copies of the Chapter 11 Plan and disclosure statement is available for free at: http://bankrupt.com/misc/montgomery.Chapter11plan.pdf http://bankrupt.com/misc/montgomery.DS.pdf About Montgomery Realty Based in San Francisco, Montgomery Realty Group, Inc. filed for Chapter 11 relief on July 6, 2009 (Bankr. C.D. Calif. Case No. 09-31879. Montgomery leases and operates improved properties. Michael St. James, Esq., at St. James Law, represents the Debtor as counsel. When the Debtor filed for protection from its creditors, it listed total assets of between $10 million and $50 million each in assets and debts. MORRIS PUBLISHING: Moves Deadline to Commence Exchange Offer ------------------------------------------------------------ Morris Publishing Group, LLC and Morris Publishing Finance Co., as issuers, and all other subsidiaries of Morris Publishing, as subsidiary guarantors, and the holders, or investment advisors or managers, of over 72% of the outstanding $278,478,000 aggregate principal amount of Morris Publishing's 7% Senior Subordinated Notes Due 2013, on October 30, 2009, entered into a Restructuring Support Agreement regarding the exchange of the Existing Notes, including accrued and unpaid interest, for $100 million of new notes. The Restructuring Support Agreement required Morris Publishing to commence the exchange offer solicitation no later than November 6, 2009. On November 6, 2009, Morris Publishing and the requisite number of Holders required to effectuate an amendment entered into an Amendment to the Restructuring Support Agreement extending the deadline to commence the exchange offer solicitation until November 17, 2009. On Friday, Morris Publishing and the Holders of over 75% of the outstanding aggregate principal amount of the Existing Notes entered into Amendment No. 17 to the Forbearance Agreement, dated as of February 26, 2009, with respect to the indenture to the Existing Notes. Amendment No. 17 amended the definition of a Forbearance Termination Event as defined in the Forbearance Agreement to eliminate the requirement that Morris Publishing commence the exchange offer solicitation no later than 5:00 p.m. EDT on November 6, 2009, and to include the termination of the Restructuring Support Agreement as a Forbearance Termination Event. Other terminating events include an acceleration of the maturity of Morris Publishing's obligations under the Amended and Restated Credit Agreement, dated as of October 15, 2009, the occurrence of any other default under the Indenture, or if Morris Publishing files for bankruptcy protection or breaches its covenants under the Forbearance Agreement. Yesterday's Troubled Company Reporter disclosed the terms of the Restructuring Support Agreement. Morris Publishing Group, LLC -- http://www.morrisrestructures.com/ -- is a privately held media company based in Augusta, Ga. Morris Publishing currently owns and operates 13 daily newspapers as well as nondaily newspapers, city magazines and free community publications in the Southeast, Midwest, Southwest and Alaska. NATURAL HEALTH: Won't Appeal Nasdaq Delisting Notice ---------------------------------------------------- Natural Health Trends Corp. has decided not to pursue a costly appeal of a delisting notice it received from The Nasdaq Stock Market on November 2, 2009. This decision was reached as part of the Company's overall strategy to improve cost-effectiveness and focus its resources on revenue-generation activities and support for member activities. The Company's planned revenue-generating and support activities include product introductions in its wellness, beauty and lifestyle categories, as well as new incentive programs and exciting events to offer a platform for reward and recognition for the Company's members. The Company is committing its management, support and capital to activities designed to drive revenue, new member acquisition and existing member retention. On November 2, 2009, the Company received a letter from the staff of The Nasdaq Stock Market advising the Company that it will be delisted from the Nasdaq Capital Market because it no longer complies with Listing Rule 5550(b), which requires the Company to have a minimum of $2.5 million in stockholders' equity or $35.0 million market value of listed securities or $500,000 of net income from continuing operations for the most recently completed fiscal year or two of the three most recently completed fiscal years. After considering a number of factors, including the expenditure of resources necessary to regain compliance with Nasdaq's Listing Rule within Nasdaq's timeframe and then maintaining its Nasdaq listing, the Company has decided not to appeal Nasdaq's delisting determination or undertake expensive or dilutive attempts to regain compliance with Nasdaq's minimum equity rule. "Our decision is not taken lightly," said Chris Sharng, President of Natural Health Trends Corp. "After extensive cost reductions and restructuring, the Company's business is well positioned to benefit from the excitement and growth that we're seeing in our international markets. We recently hosted a highly successful grand opening event in Moscow, generating great momentum for our nascent Russian business. Our Korean business is on an upswing, and we are about to commemorate a milestone anniversary at our 8th Anniversary Celebration event in Hong Kong." "We are looking at substantial opportunities that will require us to focus our cash on the business. Because there are alternative trading markets that can provide liquidity for the Company's common stock, we believe that, maintaining the Nasdaq listing, while desirable, does not rank as high in priority as taking advantage of these opportunities and supporting our members who drive the business. We may consider re-applying for a Nasdaq listing at a future date when market conditions and the size of our company warrant the expense." As a result of the delisting notice, beginning November 11, 2009, the Company's common stock will no longer be traded on the Nasdaq Capital Market, but will continue to be quoted on the Pink Sheets, a centralized electronic quotation service run by Pink OTC Markets Inc., for over-the-counter securities. Because the Company intends to continue filing current, quarterly and annual reports with the Securities and Exchange Commission, it believes it qualifies for listing on the OTCQX, which is the premier tier of the over-the-counter market run by Pink OTC Markets, Inc. The Company is presently evaluating a listing on the OTCQX, and until a listing application is filed and accepted, the Company's common stock will be quoted on the Pink Sheets Current Information Tier under the ticker symbol "BHIP." About Natural Health Trends Corp. Natural Health Trends Corp. -- http://www.naturalhealthtrendscorp.com/-- is an international direct-selling and e-commerce company operating through its subsidiaries throughout Asia, North America, and Europe. The company markets premium quality personal care products under the NHT Global brand. NEDAK ETHANOL: Posts $3 Million Net Loss in Q3 2009 --------------------------------------------------- Nedak Ethanol, LLC, reported a net loss of $3.0 milion on revenues of $20.3 million for the three months ended September 30, 2009, compared with a net loss of $1.1 million in the same period of 2008. The Company did not generate any revenue in 2008. The Company sold approximately 10.7 million gallons of ethanol for the quarter ended September 30, 2009. The Company sold approximately 61,000 tons of wet distiller's grains and 11.3 tons of dried distiller's grains for the the quarter ended September 30, 2009. Cost of goods sold as a percentage of revenues was 106% for the three months months ended September 30, 2009. Nine Months Results For the nine months ended September 30, 2009, the Company reported a net loss of $11.3 million on revenues of $45.6 million. The Company reported a net loss of $2.6 million and zero revenue in the same period in the previous year. For the nine months ended September 30, 2009, the Company received approximately 88% of its revenue from the sale of ethanol and approximately 12% of its revenue from the sale of distiller's grains. Cost of goods sold as a percentage of revenues was 114% for the nine months ended September 30, 2009. Balance Sheets At September 30, 2009, the Company's consolidated balance sheets showed $90.7 million in total assets, $57.1 million in total liabilities, and $33.6 million in total members' equity. The Company's consolidated balance sheets at September 30, 2009, also showed strained liquidity with $10.1 million in total current liabilities available to pay $7.1 million in total current liabilities. A full-text copy of the Company's consolidated financial statements for the three and nine months ended September 30, 2009, are available for free at http://researcharchives.com/t/s?48be Going Concern Issues/Possible Bankruptcy The Company's unaudited interim condensed financial statements have been prepared assuming the Company will continue as a going concern. However, as of September 30, 2009, the Company remained in default of its credit agreement for a senior secured credit facility with AgCountry Farm Credit Services, FLCA and tax increment financing (TIF) loan. For these reasons, the Company has reclassified amounts owing under these loans as current liabilities. Because of these events and market conditions, the Company believes there is an increased level of uncertainty with respect to its ability to obtain sufficient cash flows from operations or debt or equity financing sufficient to cover the liquidity needed for ongoing operations. On September 30, 2009, the Company executed the Fifth Supplement and Forbearance Agreement with AgCountry Farm Credit Services, FLCA, which (i) extended the payment dates of the Company's restructuring fees, (ii) extended the first principal payment until April 1, 2010, (iii) provided AgCountry will release $2,000,000 of restricted cash for the purchase of corn, and (iv) requires the Company to fund a loan reserve account with $2,000,000 of cash if the Company receives the USDA Business and Industries Guaranteed Loan. The Company said it is actively conducting further discussions with AgCountry to modify the financial covenants under the loan documents. Until the Company is able to comply with said covenants, AgCountry may take a variety of actions, including immediately accelerating the repayment of all outstanding debt under the loan documents. The Company said that the such acceleration could entitle AgCountry to liquidate all of its assets, and would likely lead to its bankruptcy, reorganization or winding up of its affairs. About Nedak Ethanol Nedak Ethanol, LLC was formed in 2003 to construct and operate an ethanol plant in the Company's 73-acre site located near Atkinson, Nebraska. The Company began producing ethanol and distiller's grains at the plant in December 2008. NEXCEN BRANDS: Has $416,000 Q2 Net Loss; In Talks with Lender ------------------------------------------------------------- NexCen Brands, Inc., significantly lowered its net loss for the second quarter ended June 30, 2009, to $416,000 from a net loss of $195,849,000 for the same period in 2008. The Company posted a net loss of $1,281,000 for the six months ended June 30, 2009, from a net loss of $201,154,000 for the same period in 2008. NexCen filed its second quarterly report last week. NexCen booked total revenues of $11,781,000 for the second quarter ended June 30, 2009, from $11,924,000 for the same period in 2008. NexCen booked total revenues of $23,741,000 for the six months ended June 30, 2009, from $22,149,000 for the same period in 2008. At June 30, 2009, the Company had $109,667,000 in total assets against $157,199,000 in total liabilities, resulting in $157,199,000 in stockholders' deficit. As of June 30, 2009, NexCen had a total of roughly $8 million of cash on hand. As of June 30, 2009, NexCen also had long-term restricted cash of $700,000, used to secure letters of credit issued as security deposits on the Company's leased facilities. "We anticipate that cash generated from operations will provide us with sufficient liquidity to meet the expenses related to ordinary course operations, including our debt service obligations, for at least the next twelve months. Nonetheless, market and economic conditions may worsen and negatively impact our franchisees and our ability to sell new franchises. As a result, our financial condition and liquidity raise substantial doubt about our ability to continue as a going concern," NexCen said. NexCen said it is highly leveraged and has no additional borrowing capacity under its credit facility with BTMU Capital Corporation. The BTMUCC Credit Facility also imposes restrictions on its ability to freely access the capital markets. In addition, the BTMUCC Credit Facility imposes various restrictions on the use of cash generated by operations. "Accordingly, we continue to have uncertainty with respect to our ability to meet non-ordinary course expenses or expenses beyond certain total annual limits, which are not permitted to be paid out of cash generated from operations under the terms of the BTMUCC Credit Facility, but instead must be paid out of cash on hand. These limits do not apply to certain expenses associated with our manufacturing facility such as cost of goods. If we are not able to generate sufficient cash from operations to pay our debt service obligations and our expenses, we would defer, reduce or eliminate certain expenditures, which may negatively impact our operations. Alternatively, we would seek to restructure or refinance our debt, but there can be no guarantee that BTMU Capital Corporation would agree to any further restructuring or refinancing plans," NexCen said. "Our current projections indicate that we may exceed the expense limits noted above prior to our December 31, 2009 year end. We are in discussions with BTMUCC to increase the 2009 expense limits. However, if our lender declines to increase our expense limits, we may be required to defer payment of some 2009 expenses until the expense limits reset in January 2010 and/or use some or all of our available cash on hand in December to cover expenses," NexCen added. 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?48db A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48dc In a news statement, Kenneth J. Hall, Chief Executive Officer, stated, "We are pleased with our performance during the second quarter. This is the second consecutive quarter in which we generated operating income and positive cash flow from operations since we implemented our strategic plan to turn around our business. We maintained revenues at prior-year levels, despite the dramatic drop in mall traffic and retail spending. We also realized improvements in our financial results by right-sizing our operating expenses and improving efficiencies in our business. We are heartened that our strategic plan is yielding a positive impact on our results." Mr. Hall concluded, "NexCen Brands is operating as a fundamentally stronger business than a year ago. We believe that through the execution of our turnaround plan, we have been able to weather both the downturn in the economy and the internal challenges that have impacted our Company. In 2009, we have continued to improve our operations and make investments in our business and brands, while significantly reducing expenses. We also have completed key hires to bolster our management team. Further, we have continued to enhance our offerings to franchisees, such as opening a new `Innovation Lab' with additional capabilities to produce new ice cream, cookies and pretzels products for each of our QSR franchised brands. Despite our progress to date, we recognize that the continued difficult macroeconomic environment, including the lack of readily available financing for franchisees, has affected our business and our financial results, and may continue to do so. As such, we will maintain a conservative approach to managing our expenses, while at the same time, strive to capitalize on innovation and expansion opportunities. We also understand that we must further bolster our financial condition and address our debt level. In short, we are encouraged by our financial performance through the first half of 2009, but not complacent." The 2009 Annual Meeting of Stockholders of NexCen will be held on December 1, 2009, at 10:30 a.m. Eastern Standard Time at its franchise operations facility, NexCen Franchise Management, 1346 Oakbrook Drive, Suite 170, in Norcross, Georgia. At the Annual Meeting, stockholders will act upon these matters: 1. Election of five directors to hold office until the 2010 Annual Meeting of Stockholders or until their successors are elected and qualified; and 2. Ratification of the appointment of KPMG LLP as NexCen's independent registered public accounting firm for the fiscal year ending December 31, 2009. A full-text copy of the proxy statement is available at no charge at http://ResearchArchives.com/t/s?48dd About NexCen Brands Based in New York, NexCen Brands, Inc. (PINK SHEETS: NEXC.PK) is a strategic brand management company with a focus on franchising. It owns a portfolio of franchise brands that includes two retail franchise concepts: TAF(TM) and Shoebox New York(R) as well as five quick service restaurant franchise concepts: Great American Cookies(R), MaggieMoo's(R), Marble Slab Creamery(R), Pretzelmaker(R) and Pretzel Time(R). The brands are managed by NexCen Franchise Management, Inc., a subsidiary of NexCen Brands. NORTEL NETWORKS: Canada Court OKs GSM Business Auction ------------------------------------------------------ The Ontario Superior Court of Justice approved the proposed bidding process to govern the sale of the global operations of Nortel Networks Ltd. and other units using the Global System for Mobile communications standard. NNL's U.S.-based units, Nortel Networks Inc. and its affiliated debtors, have already obtained authority from the U.S. Bankruptcy Court for the District of Delaware to implement the bidding process. Under the bidding process, interested parties are given until November 16, 2009, to submit their bids for the GSM business. An auction will be held on November 20 if Nortel receives bids for the assets, to be followed by a hearing on December 2 on the sale of the GSM business to the winning bidder. Creditors and other concerned parties have until November 25 to file any objection to the proposed sale. Nortel Networks Inc. and its debtor affiliates plan to sell by "open auction" substantially all of their global operations using the Global System for Mobile communications standard. In court papers, NNI seeks approval of the U.S. Bankruptcy Court for the District of Delaware to sell its GSM business as well as those of Nortel Networks Ltd., Nortel Networks UK Ltd. and Nortel Networks SA. The Debtors will also be selling their GSM for Railways, which provides a communications system for railways operators. The Nortel units are suppliers of GSM, a widely deployed wireless technology standard for mobile phone networks, to operators globally and have worked with those operators to implement the GSM family of access technologies. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. 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 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: Ericsson Exec Says Sale to Close Soon ------------------------------------------------------ A senior executive at Ericsson says the Sweden-based company expects to close its acquisition of Nortel Networks Corp.'s assets soon, according to Reuters. "We don't expect to see any hiccups. I think it will be closed very soon," Reuters quoted Hakan Eriksson as saying. Ericsson was the winning bidder at the July auction for Nortel's Code Division Multiple Access (CDMA) business and Long Term Evolution (LTE) access assets. It offered to acquire the assets for US$1.13 billion, outbidding Nokia Siemens Networks' $1.032 billion offer, which served as the stalking horse bid. The deal, which is still being reviewed by the U.S. Department of Justice, raises Ericsson's market share in wireless network equipment in North America to about 50%, Reuters reported. Eriksson said taking over Nortel's strong position in the CDMA business would place it in a good position when CDMA operators look for next-generation networks, most likely LTE, according to the report. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. 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 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: To Auction Ethernet Nov. 13; Nokia Mulls Bid ------------------------------------------------------------- Nortel Networks Ltd. and its affiliates obtained authority from the Ontario Superior Court of Justice to implement a bidding process for the sale of their optical networking and carrier ethernet business to Ciena Corp. or to any company that offers a better bid for the assets. NNL's U.S.-based units, Nortel Networks Inc. and its affiliated debtors, have already obtained permission from the U.S. Bankruptcy Court for the District of Delaware to implement the bidding process. Under the court-approved bidding process, parties interested to acquire the Optical Networking and Carrier Ethernet business are required to submit their bids by November 9, 2009, to be followed by an auction on November 13 if more than one qualified bid are received. Ciena's US$390 million offer will serve as the "stalking horse" bid or the lead bid at the auction. In the event Ciena is not selected as the winning bidder or the Ciena Asset Sale Agreement with NNI is terminated, the Nortel units are required to pay the company a break-up fee of up to US$10.7 million and reimburse as much as US$3.6 million for its expenses. Full-text copies of the Ciena Asset Sale Agreement and amendment to the agreement between Ciena and Nortel are available for free at: http://bankrupt.com/misc/NortelAgreementCiena.pdf http://bankrupt.com/misc/NortelAmAgreementCiena.pdf In connection with the sale, NNI seeks permission from the Bankruptcy Court to file under seal a set of documents including a disclosure schedule, which contain what it calls "sensitive commercial information" about its business, intellectual property and others. NNI also seeks to assume and assign certain executory contracts to Ciena or to the winning bidder in relation to the proposed sale. Objections, if any, to the assumption and assignment of the contracts must be filed in Court no later than November 6, 2009. Any party to a contract designated for assumption and assignment that wishes to obtain information about the bidders is required to notify NNI on or before November 6, 2009. The party submitting a timely notice will be provided non-confidential information related to adequate assurance that NNI received from the bidders on November 12, 2009. The assumption and assignment of the contracts will take effect upon completion of the sale. Nokia Mulls Making Bid Nokia Siemens Networks is considering making a bid for Nortel Networks Corp.'s optical-network unit, the Wall Street Journal reported, citing a person familiar with the matter. The source said it is not yet clear, however, whether Nokia Siemens actually will make a bid and that there have also been a number of companies looking at the business but their intent is not yet known, according to the report. Nokia Siemens, a joint venture between Nokia Corp. and Siemens AG (SI), participated at the July 2009 auction for Nortel's Code Division Multiple Access (CDMA) business and Long Term Evolution (LTE) access assets. Its $1.032 billion offer, however, lost to Telefonaktiebolaget LM Ericsson's US$1.13 billion offer, which emerged as the winning bidder. Jan Ihrfelt, a Swedbank AB analyst, said the acquisition of Nortel's wireless assets by Nokia Siemens just might be the thing for Nokia Siemens to make "a real footprint in the U.S." Revenue at Nortel's Metro Ethernet unit, which accounts for most of what is being sold in the auction, fell 27% in the second quarter to $333 million, Bloomberg News reported. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. 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 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: Wins Court Nod to Sell Packet Assets to Hitachi ---------------------------------------------------------------- Nortel Networks Inc. and Nortel Networks Ltd. obtained court approval to sell to Hitachi Ltd. the assets of their Carrier Networks business associated with the development of Next Generation Packet Core network components. The U.S. Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice issued the sale approval on October 28, 2009, just two days after NNI chose the $10 million offer of Hitachi, a Japanese multinational corporation, as the winning bid for the Packet Core Assets. Assets that will be sold under the deal include software to support the transfer of data over existing wireless networks and the next generation of wireless communications technology like non-patent intellectual property, equipment, non-exclusive license of certain patents and other intellectual property. The sale does not include legacy packet core components for Nortel's third-generation Universal Mobile Telecommunications System (UMTS) and Global System for Mobile (GSM) businesses, according to a report by the Canadian Press. Completion of the sale is subject to regulatory and other customary conditions. The deal is expected to be completed before the year ends. A full-text copy of the Agreement governing the Packet Core Asset Sale is available without charge at: http://bankrupt.com/misc/NortelTransactionAgreementHitachi.pdf Ernst & Young Inc., the firm appointed to monitor the assets of NNL and its Canadian affiliates under their Canadian restructuring proceedings, supports the sale of the Packet Core business to Hitachi. In its 26th monitor report submitted to the Canadian Court, Ernst & Young said that Hitachi's offer "constitutes fair consideration" and "represents the best transaction" for the sale of the business. Judge Kevin Gross, the bankruptcy judge who oversees the Chapter 11 cases of NNI and its debtor affiliates, is also convinced that Hitachi's offer is the highest and best offer received by NNI for the Packet Core Assets. "The purchase price constitutes fair consideration and fair value for the purchased assets," Judge Gross said in his 12-page order. The Bankruptcy Court's ruling does not provide for the assumption, assignment or rejection of the Nortel units' agreements with Motorola Inc., Oracle USA Inc., SNMP Research International Inc. and OSS Nokalva Inc. These companies earlier filed objections in the Bankruptcy Court, disapproving the assignment of their respective contracts to the winning bidder. Judge Gross overruled all other objections, including the objection filed by a group of buyers of Nortel Networks Corporation's securities. The group asked for the establishment of protocols for the protection of records and other documents that may be transferred as part of the sale, which may be relevant to the claims the group asserts in the securities class action it filed against Nortel's former chief executive in a New York district court. In connection with the sale of assets to Hitachi, NNI sought and obtained permission from the Bankruptcy Court to file under seal a set of documents containing "sensitive commercial information" about the business. The documents include a disclosure schedule containing a list of contracts, employee benefit plans and other information. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for our customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. 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 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) NORTHEAST BIOFUELS: Disclosure Statement Approved ------------------------------------------------- The Bankruptcy Court has approved Northeast Biofuels LLP's disclosure statement and has given creditors until Dec. 2 to vote on the plan, Law360 reported. The plan provides for very little recovery for creditors. NEB has received bankruptcy court approval for a sale of its ethanol production facility in Oswego County, New York. Sunoco purchased the plant out of bankruptcy in an April 2009 auction for $8.5 million, and the purchase was finalized June 15. Northeast Biofuels, LP, is a limited partnership formed to develop, own and operate an ethanol facility in Fulton, New York. NEB is 100% owned by an intermediate holding company, NEB Holdings, LP, which is in turn 85% owned by Permolex International, L.P., and 15% by other project developers. The Company and two of its affiliates filed for Chapter 11 protection on January 14, 2009 (Bankr. N.D. N.Y. Lead Case No. 09- 30057). Jeffrey A. Dove, Esq., at Menter, Rudin & Trivelpiece, P.C., represents the Debtors in their restructuring efforts. Blank Rome LLP will serve as the Debtors' counsel. The U.S. Trustee for Region 2 appointed creditors to serve on an Official Committee of Unsecured Creditors. Sara C. Bond, Esq., and Stephen A. Donato, Esq., Bond, Schoeneck & King, PLLC, represent the Committee. When the Debtors filed for protection from their creditors, they listed assets and debt between $100 million to $500 million each. NPS PHARMACEUTICALS: Posts Lower Q3 2009 Net Loss of $7,766,000 --------------------------------------------------------------- NPS Pharmaceuticals, Inc., reported lower net loss of $7,766,000 for the quarterly period ended September 30, 2009, from a net loss of $11,359,000 for the same period a year ago. The Company posted lower net loss of $15,885,000 for the nine months ended September 30, 2009, from a net loss of $23,249,000 for the same period a year ago. The Company had total revenues of $20,119,000 for the quarterly period ended September 30, 2009, from $26,075,000 for the same period a year ago. The Company had total revenues of $62,097,000 for the nine months ended September 30, 2009, from $78,214,000 for the same period a year ago. At September 30, 2009, the Company had $154,654,000 in total assets, including $22,226,000 in cash and cash equivalents, against $377,021,000 in total liabilities, resulting in $222,367,000 in stockholders' deficit. In a news statement, the Company said its cash, cash equivalents and short- and long-term investments totaled $88.0 million at September 30, 2009 versus $106.1 million at December 31, 2008. The Company's net cash burn was $22.2 million for the nine months ended September 30, 2009. NPS is reducing its 2009 cash burn guidance to a range of $43 million to $50 million, versus its previous guidance of $55 million to $65 million. The decrease in the Company's 2009 cash burn from previous guidance is principally due to (i) the shifting of certain expenses from 2009 to 2010, (ii) improvements in working capital, and (iii) higher-than- anticipated royalty revenue on REGPARA(R) (cinacalcet HCl). The Company's reported cash burn and cash burn guidance exclude changes in the estimated fair value of the company's ARS investments and proceeds from external financing activities. "We continue to aggressively manage our cash burn," said Francois Nader, M.D., president and chief executive officer of NPS Pharmaceuticals. "Additionally, we have made strong progress advancing the STEPS study for teduglutide in short bowel syndrome and continue to expect full enrollment by the end of next quarter. We also held a pre-IND meeting with FDA to discuss a path forward for developing teduglutide for chemotherapy-induced gastrointestinal mucositis. 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?48d9 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48da Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing specialty therapeutics company for gastrointestinal and endocrine disorders with high unmet medical need. The Company is currently advancing two late-stage programs. Teduglutide, a proprietary analog of GLP-2, is in Phase 3 clinical development for intestinal failure associated with short bowel syndrome as GATTEX(TM) and in preclinical development for gastrointestinal mucositis and necrotizing enterocolitis. NTK HOLDINGS: Proposes AlixPartners as Advisors ----------------------------------------------- NTK Holdings Inc. and its units seek the Court's permission, pursuant to Sections 327(a) of the Bankruptcy Code and Rule 2014(a) of the Federal Rules of Bankruptcy Procedure, to employ AlixPartners, LLP, as restructuring advisors, nunc pro tunc to the Petition Date. As a result of the prepetition work performed on behalf of the Debtors, AlixPartners acquired significant knowledge of the Debtors and their businesses and is now familiar with the Debtors' financial affairs, capital structure, operations, and related matters. Likewise, in providing prepetition services to the Debtors, AlixPartners' professionals have worked closely with the Debtors' management and their other advisors. The Debtors and AlixPartners inked a prepetition engagement letter, dated July 23, 2009. As restructuring advisors, AlixPartners will render restructuring advisory services, including: (a) coordinating and providing administrative support for the Debtors' prepackaged Chapter 11 bankruptcy proceeding; (b) assisting the Debtors with the preparation of reports required by the Court including but not limited to the 13- week rolling cash forecast, as well as providing assistance in those areas as testimony before the Court on matters that are within AlixPartners' areas of expertise as necessary; (c) assisting the Debtors with other matters as may be requested that fall within AlixPartners' expertise and that are mutually agreeable; (d) assisting the Debtors in negotiations with stakeholders and their representatives as requested; and (e) assisting the Debtors in communication or negotiations with outside constituents including the banks and their advisors as requested. The Engagement Letter contains standard indemnification language with respect to AlixPartners' services including an agreement by the Debtors to indemnify AlixPartners, its affiliates, and employees against all claims and liabilities arising out of or in connection with the engagement of AlixPartners that is the subject of the Engagement Letter. The Debtors also ask the Court approve the indemnification provisions as set forth in the Engagement Letter. AlixPartners says it may augment its professional staff, if it is desirable, with independent contractors. AlixPartners, however, says it does not currently intend to use Independent Contractors in the Chapter 11 proceeding. The Debtors will pay and reimburse AlixPartners for fees and out- of-pocket expenses it incurred while rendering the services in the Debtors' Chapter 11 cases. The customary hourly rates charged by AlixPartners professionals anticipated to be assigned to the Cases are: Professionals Hourly Rate ------------- ----------- Managing Directors $685 - 995 Directors $510 - 685 Vice Presidents $395 - 505 Associates $260 - 365 Administration / Analysts $235 - 260 Paraprofessionals $180 - 200 AlixPartners typically works for compensation that includes base fee and contingent incentive compensation earned upon achieving meaningful results. AlixPartners, however, is not seeking contingent incentive compensation in the Cases. The Debtors do not owe AlixPartners any amount for services performed or expenses incurred prior to the Petition Date; thus, AlixPartners is not a prepetition creditor of the Debtors. However, according to the books and records of AlixPartners, during the 90 days prior to commencement of the Chapter 11 cases, AlixPartners received $581,774 for professional services performed and expenses incurred. In addition, AlixPartners estimated fees for the period immediately prior to the Petition Date in the amount of $50,000. AlixPartners applied an advance retainer of $100,000 received on July 27, 2009 to the estimated fees leaving a balance of $50,000. Robert Dangremond, managing director of AlixPartners, LLP, tells the Court that AlixPartners (i) has no connection with the Debtors, their creditors, or other parties in interest in this case, that would adversely affect the firm's disinterestedness, (ii) does not hold any interest adverse to the Debtors' estates, and (iii) is a "disinterested person" as defined by section 101(14) of the Bankruptcy Code. AlixPartners, LLP, is located at 40 West 57th Street, in New York, and can be reached at telephone no. (212) 490-2500. A full-text copy of the Engagement Letter is available for free at http://bankrupt.com/misc/NTK_AlixPartnersEngagementLetter.pdf About NTK Holdings NTK Holdings Inc., the parent company of Nortek Holdings and Nortek Inc., is a diversified global manufacturer of branded residential and commercial ventilation, HVAC and home technology convenience and security products. NTK Holdings and Nortek offer a broad array of products including range hoods, bath fans, indoor air quality systems, medicine cabinets and central vacuums, heating and air conditioning systems, and home technology offerings, including audio, video, access control, security and other products. As reported by the TCR on Sept. 4, 2009, NTK Holdings, Inc., and Nortek, Inc., entered into a restructuring and lockup agreement with bondholders to effectuate a comprehensive restructuring of the Company's debt under Chapter 11. When concluded, the Agreement will eliminate approximately $1.3 billion in total indebtednes by, among other things, exchanging debt to bondholders for equity in the Company. NTK Holdings Inc., together with affiliates, including Nortek International, Inc., and Nortek Holdings, Inc., filed for Chapter 11 with a prepackaged plan accepted by all impaired creditors on October 21, 2009 (Bankr. D. Del. Case No. 09-13611). The Company has tapped Blackstone Group and Weil, Gotshal & Manges to aid in its restructuring effort. Mark D. Collins, Esq., at Richards Layton & Finger P.A., serves as local counsel. Epiq Bankruptcy Solutions is claims and notice agent. An Ad Hoc Committee of Nortek noteholders is being represented by Andrew N. Rosenberg, Esq., and Brian N. Hermann, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP; and William Derrough, Esq., and Adam Keil, Esq., at Moelis & Company. NTK Holdings and its units have assets of $1,655,200,000, against debts of $2,778,100,000 as of July 4, 2009. Bankruptcy Creditors' Service, Inc., publishes NTK Holdings Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Nortek Holdings Inc., Nortek Internationa Inc., and their affiliates (http://bankrupt.com/newsstand/or 215/945-7000). NTK HOLDINGS: Proposes Ernst & Young as Tax Advisor --------------------------------------------------- Pursuant to Sections 327(a) and 328(a) of the Bankruptcy Code, Rules 2014 and 2016 of the Federal Rules of Bankruptcy Procedure and Local Rule 2014-1, NTK Holdings Inc. and its units seek the Court's permission to employ Ernst & Young LLP as Nortek, Inc.'s auditor and tax advisor in connection with the Debtors' chapter 11 cases, nunc pro tunc to the Petition Date, pursuant to certain Engagement Letters. The Engagement Letters consist of: (a) an Audit engagement letter, dated October 19, 2009; (b) a Master Tax Services Agreement, dated October 19, 2009; (c) a Routine On-Call Advisory Services Statement of Work, dated October 19, 2009; and (d) a Chapter 11 Tax Advisory Services Statement of Work, dated October 19, 2009. During the Chapter 11 cases, E&Y will provide these audit and tax compliance services to Nortek, Inc., in accordance with the terms of the Engagement Letters: (a) Audit * Audit and report on the consolidated financial statements of the Company for the year ended December 31, 2009; and * Review the Company's unaudited interim financial information before the Company files its Form 10-Qs. (b) Routine On-Call Advisory Tax Services * Routine tax advice and assistance concerning issues as requested by the Company when the projects are not covered by a separate statement of work and do not involve any significant tax planning or projects. The projects may include assistance with tax issues, assistance with transaction issues, or assisting the Company in connection with its dealings with tax authorities. (c) Chapter 11 Tax Advisory Services * Develop an understanding of the tax issues and options related to the Company's bankruptcy filing; * Assist the Company in developing an understanding of the tax implications of its bankruptcy restructuring alternatives and post-bankruptcy operations, including research and analysis of the Internal Revenue Code, Treasury regulations, case law and other relevant U.S. federal, state and non-U.S. tax authorities, as applicable; * As required, assist and advise in securing rulings from the Internal Revenue Service or applicable state and local, or non-U.S. tax authorities; * Understand the reorganization or restructuring alternatives the Company is evaluating with its existing bondholders and other creditors that may result in a change in the equity, capitalization or ownership of the shares of the Company or its assets; * Prepare calculations related to historic changes in the ownership of the Company's stock, including a determination if the shifts in stock ownership may have caused an ownership change that will restrict the use of tax attributes and the amount of any limitations; * Provide advice with respect to availability, limitations and preservation of tax attributes like net operating losses, tax credits, stock and asset basis as a result of the application of the federal and state cancellation of indebtedness provisions, including the preparation of calculations to determine the amount of tax attribute reduction related to debt cancellation; * Provide advice with respect to tax analysis and research related to tax efficient domestic restructurings, possible international or non-U.S. restructurings, including assistance regarding stock based computations, local country income and non-income tax consequences and formulating tax basis of assets and tax basis of subsidiary balance sheets for purposes of evaluating transactions; * Analyze historic tax returns, tax positions, and Company records for the application of relevant consolidated tax return rules; * Analyze the federal, state and local tax treatment governing the timing and deductibility of expenses incurred before and during the bankruptcy period; * Analyze the federal, state, local and foreign tax consequences of internal restructurings and the rationalization of inter-company accounts; * Analyze the federal, state, local and foreign tax consequences of material bad debt and worthless stock deductions, including tax return disclosure and presentation; * Analyze the federal, state, local and foreign tax consequences of material changes or additions to employee benefit plans; * Provide advice with respect to any material tax issues arising in the ordinary course of business while in bankruptcy, including to assistance with the IRS or state and local tax examinations, sales and use taxes, property taxes, state and local franchise taxes and employment taxes; * Provide advice concerning the tax aspects with respect to the validity and amount of material bankruptcy tax claims and assessments, including, but not limited to income taxes, franchise taxes, sales taxes, use taxes, employment taxes and property taxes; * Provide advice with respect to securing tax refunds, including but not limited to income taxes, franchise taxes, sales taxes, use taxes, employment taxes and property taxes; and * Document, as appropriate or necessary, of tax analysis, opinions, recommendations, conclusions and correspondence for any proposed restructuring alternative, bankruptcy tax issue, or other tax matter. The Debtors will pay and reimburse E&Y for fees and out-of-pocket expenses it incurred while rendering the services in the Debtors' Chapter 11 cases. E&Y LLP will charge Nortek for the Services rendered in the Chapter 11 cases based on these hourly rates for services: (a) Audit Services National/Senior Partners $700 - $750 Principals/Partners/Directors $475 - $525 Senior Managers $375 - $475 Managers $300 - $375 Seniors $225 - $300 Staff $150 - $225 (b) Tax Services Principals/Partners $700 - $800 Executive Directors $650 - $750 Senior Managers $625 - $725 Managers $600 - $650 Seniors $350 - $425 Staff $150 - $200 As of the Petition Date, the Debtors owed E&Y approximately $30,000 for services provided prior to the Petition Date. Upon approval of E&Y's Application, E&Y will waive its right to receive any fees incurred on the Debtors' behalf prior to the Petition Date only. During the 90 days immediately preceding the Petition Date, the Company paid to E&Y a total of $1,370,215, $400,000 of which constituted initial advancements of funds to retainer accounts held by E&Y, and another $382,500 of which constituted payments made to replenish the Retainers after E&Y drew from those Retainers to compensate for prepetition services that were provided to the Company after the Retainers were funded. As of the Petition Date, the balance of the Retainers was $180,000, which Retainers will be applied by E&Y in payment of compensation and reimbursement of expenses incurred postpetition, subject to the procedures established by the Court. Joseph X. Bruno, a partner of Ernst & Young LLP, discloses that certain entities that are parties-in-interest in the Chapter 11 cases, including Barclays Bank; PNC Bank, N.A.; Wachovia Bank N.A.; and Wells Fargo Bank, N.A., are lenders participating in E&Y LLP's Revolving Credit Program. In addition, Travelers Insurance Company, Fidelity & Deposit Company of Maryland, and Westchester Fire Insurance Company, provide services to, are lenders to, or otherwise has relationships with, E&Y LLP. Mr. Bruno however assures the Court that his firm (a) is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, (b) does not hold or represent an interest adverse to the Debtors' estates, and (c) has no connection to the Debtors, their creditors, or their related parties. Ernst & Young LLP has an office at 40 Westminster St., in Providence, Rhode Island. The office can be reach at telephone no. (401) 457-3700. Full-text copies of the Engagement Letters is available for free at http://bankrupt.com/misc/NTK_E&YEngagementLetters.pdf About NTK Holdings NTK Holdings Inc., the parent company of Nortek Holdings and Nortek Inc., is a diversified global manufacturer of branded residential and commercial ventilation, HVAC and home technology convenience and security products. NTK Holdings and Nortek offer a broad array of products including range hoods, bath fans, indoor air quality systems, medicine cabinets and central vacuums, heating and air conditioning systems, and home technology offerings, including audio, video, access control, security and other products. As reported by the TCR on Sept. 4, 2009, NTK Holdings, Inc., and Nortek, Inc., entered into a restructuring and lockup agreement with bondholders to effectuate a comprehensive restructuring of the Company's debt under Chapter 11. When concluded, the Agreement will eliminate approximately $1.3 billion in total indebtednes by, among other things, exchanging debt to bondholders for equity in the Company. NTK Holdings Inc., together with affiliates, including Nortek International, Inc., and Nortek Holdings, Inc., filed for Chapter 11 with a prepackaged plan accepted by all impaired creditors on October 21, 2009 (Bankr. D. Del. Case No. 09-13611). The Company has tapped Blackstone Group and Weil, Gotshal & Manges to aid in its restructuring effort. Mark D. Collins, Esq., at Richards Layton & Finger P.A., serves as local counsel. Epiq Bankruptcy Solutions is claims and notice agent. An Ad Hoc Committee of Nortek noteholders is being represented by Andrew N. Rosenberg, Esq., and Brian N. Hermann, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP; and William Derrough, Esq., and Adam Keil, Esq., at Moelis & Company. NTK Holdings and its units have assets of $1,655,200,000, against debts of $2,778,100,000 as of July 4, 2009. Bankruptcy Creditors' Service, Inc., publishes NTK Holdings Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Nortek Holdings Inc., Nortek Internationa Inc., and their affiliates (http://bankrupt.com/newsstand/or 215/945-7000). NTK HOLDINGS: Proposes to Employ Ordinary Course Professionals -------------------------------------------------------------- NTK Holdings Inc. and its units seek the Court's authority to employ and compensate professionals that they employ in the ordinary course of business effective as of the Petition Date, without the (i) submission of separate employment applications or (ii) issuance of separate retention orders for each individual professional. A list of the Debtors' current OCPs is available for free at http://bankrupt.com/misc/NTK_OCPList1030.pdf The Debtors seek the continued employment of the OCPs to render a wide variety of professional services to their estates in the same manner and for the same purposes as the Ordinary Course Professionals were retained before the Petition Date. In the past, these professionals have provided professional services relating to various litigation, regulatory, general corporate counseling, intellectual property, tax and accounting issues as well as other services relating to issues that have a direct and significant impact on the Debtors' day-to-day operations. To avoid disruption of the Debtors' normal business operations, it is essential that the Debtors be permitted to continue to employ these Ordinary Course Professionals, many of whom already are familiar with the Debtors' businesses and financial affairs, Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts. The Debtors propose that they be permitted to pay each OCP, without a prior application to the Court, 100% of the fees and disbursements incurred, upon the submission to, and approval by, the Debtors of an appropriate invoice setting forth in reasonable detail the nature of the services rendered and disbursements actually incurred; provided, however, that these Fee Limits apply to: (a) Ordinary Course Professionals other than Reinhart Boerner Van Deuren S.C., Hogan & Hartson LLP, and Caturano and Company, P.C. (i) In the aggregate, fees and disbursements to an Ordinary Course Professional, other than the Excluded Ordinary Course Professionals, will not exceed a total of $35,000 per month on a "rolling basis." (ii) Paying fees on a "rolling basis" would mean that an Ordinary Course Professional, other than the Excluded Ordinary Course Professionals, whose fees and disbursements were less than $35,000 in any month would be eligible to apply the difference between $35,000 and the amount billed in that month to any subsequent month in which fees and disbursements exceed $35,000; provided, however, that the payment to any OCP in any subsequent month will not exceed $45,000; and (b) Excluded Ordinary Course Professionals -- In the aggregate, fees and disbursements to an Excluded Ordinary Course Professional will not exceed a total of $60,000 per month. In the event that an OCP seeks compensation in excess of the applicable Fee Limit, the OCP, together with the Debtors, will submit a statement setting forth the additional compensation sought to (i) the U.S. Trustee and (ii) counsel for the Ad Hoc Committee, Paul, Weiss, Rifkind, Wharton & Garrison LLP and Young Conaway Stargatt & Taylor, LLP. The Reviewing Parties will have 15 days following the date of the Fee Statement to notify the Debtors' counsel of any objection to payment to the OCP in excess of the applicable Fee Limit. Service of any objection must be made upon (i) the Debtors' attorneys, (ii) the U.S. Trustee; and (iii) the Ordinary Course Professional, so that any objection is received by the Fee Statement Objection Deadline. If no timely objection is received, the Debtors seek authority to pay those amounts set forth in the Fee Statement. If a timely objection is received, the Debtors will not pay the amounts set forth in the Fee Statement without Court approval, and the OCP will be required to file a fee application for the full amount of its fees and disbursements for that month. Within 30 days after the later of (i) the entry of the Proposed Order granting the request and (ii) the date on which each retained OCP commences services for the Debtors, each OCP will provide to the Debtors' attorneys: (a) an affidavit, certifying that the professional does not represent or hold any interest adverse to the Debtors or their estates with respect to the matter on which the professional is to be employed; and (b) a completed retention questionnaire. The Reviewing Parties will have 15 days following the date of service to notify Debtors' counsel of any objection to the retention based on the contents of the Ordinary Course Professional Affidavit and the Retention Questionnaire. If no objection is filed and served before the Retention Objection Deadline, the retention, employment, and compensation of the OCP will be deemed approved without further order from the Court. The OCP may be paid 100% of fees and 100% of expenses incurred, without the need to file a fee application, based upon the submission of the invoice. The Debtors reserve their right to supplement the list of Ordinary Course Professionals from time to time, as needed. Mr. Holtzer argues that the request will save the estates the substantial expenses associated with applying separately for the employment of each Ordinary Course Professional. Further, the request will avoid the incurrence of additional fees relating to the preparation and prosecution of fee applications for each Ordinary Course Professional. Likewise, the fee procedures will relieve the Court, the Office of the United States Trustee for the District of Delaware and any committees appointed in the Cases of the burden of reviewing numerous fee applications involving relatively small amounts of fees and expenses. About NTK Holdings NTK Holdings Inc., the parent company of Nortek Holdings and Nortek Inc., is a diversified global manufacturer of branded residential and commercial ventilation, HVAC and home technology convenience and security products. NTK Holdings and Nortek offer a broad array of products including range hoods, bath fans, indoor air quality systems, medicine cabinets and central vacuums, heating and air conditioning systems, and home technology offerings, including audio, video, access control, security and other products. As reported by the TCR on Sept. 4, 2009, NTK Holdings, Inc., and Nortek, Inc., entered into a restructuring and lockup agreement with bondholders to effectuate a comprehensive restructuring of the Company's debt under Chapter 11. When concluded, the Agreement will eliminate approximately $1.3 billion in total indebtednes by, among other things, exchanging debt to bondholders for equity in the Company. NTK Holdings Inc., together with affiliates, including Nortek International, Inc., and Nortek Holdings, Inc., filed for Chapter 11 with a prepackaged plan accepted by all impaired creditors on October 21, 2009 (Bankr. D. Del. Case No. 09-13611). The Company has tapped Blackstone Group and Weil, Gotshal & Manges to aid in its restructuring effort. Mark D. Collins, Esq., at Richards Layton & Finger P.A., serves as local counsel. Epiq Bankruptcy Solutions is claims and notice agent. An Ad Hoc Committee of Nortek noteholders is being represented by Andrew N. Rosenberg, Esq., and Brian N. Hermann, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP; and William Derrough, Esq., and Adam Keil, Esq., at Moelis & Company. NTK Holdings and its units have assets of $1,655,200,000, against debts of $2,778,100,000 as of July 4, 2009. Bankruptcy Creditors' Service, Inc., publishes NTK Holdings Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Nortek Holdings Inc., Nortek Internationa Inc., and their affiliates (http://bankrupt.com/newsstand/or 215/945-7000). P&R REALTY: Chapter 11 Case Summary & Unsecured Creditor -------------------------------------------------------- Debtor: P&R Realty, Inc. 286 Beverly Drive NE Concord, NC 28025 Bankruptcy Case No.: 09-52276 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Middle District of North Carolina (Winston-Salem) Judge: Bankruptcy Judge William L. Stocks Debtor's Counsel: Brian Hayes, Esq. P.O. Box 444 Concord, NC 28026-0444 Tel: (704) 788-3211 Email: bphafd@fspa.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 According to the schedules, the Company has assets of $1,055,000 and total debts of $626,847. The Debtor identified William Mills/Kimberly Herrick with attorney fees debt claim for $5,000 as its largest unsecured creditor. A full-text copy of the Debtor's petition, including a list of its largest unsecured creditor, is available for free at: http://bankrupt.com/misc/ncmb09-52276.pdf The petition was signed by Neva Jo Roberts, president of the Company. PACIFIC RESOURCES: Gets Three Bids for Abandoned Alaska Assets -------------------------------------------------------------- Lawyers for Pacific Energy Resources Ltd. said the company had received three "qualifying bids," including the one from Cook Inlet Energy, Petroleum News, citing a November 4 legal notice. The report says the second bid came from Stellar Energy LLC and the third one came from Ramshorn, which both objected to the proposed asset sale to Cook Inlet. The report relates that Stellar was willing to pay $1.25 million, and Ramshorn was also willing to pay $1.5 million for the assets. According to the report, Miller Petroleum Inc. of Tennessee said it might end up with the. Miller Petroleum said that if Cook Inlet succeeded in acquiring the properties out of the bankruptcy court, Miller Petroleum would in turn buy them from Cook Inlet for $875,000. Headquartered in Long Beach, California, Pacific Energy Resources Ltd. -- http://www.pacenergy.com/-- engages in the acquisition and development of oil and gas properties, primarily in the United States. The Company and seven of its affiliates filed for Chapter 11 protection on March 8, 2009 (Bankr. D. Del. Lead Case No. 09-10785). Attorneys at Pachulski Stang Ziehl & Jones LLP, represent the Debtors as counsel. The Debtors proposed Rutan & Tucker LLP as special corporation and litigation counsel; Schully, Roberts, Slattery & Marino, PLC, as special oil and gas and transactional counsel; Devlin Jensen as special Canadian counsel; Scott W. Winn, at Zolfo Cooper Management, LLC, as chief restructuring officer; Lazard Freres & Co. LLC as investment banker; and Albrecht & Associates, Inc., as agent for the Debtors in the sale of their oil and gas properties. Omni Management Group, LLC, is the claims, balloting, notice and administrative agent for the Debtors. When the Debtors filed for protection from their creditors, they listed between $100 million and $500 million each in assets and debts. PEAK FLOW OPERATING: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Peak Flow Operating & Drilling, LP 15455 Dallas Parkway, Suite 600 Addison, TX 75001 Bankruptcy Case No.: 09-37668 Chapter 11 Petition Date: November 7, 2009 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Judge: Stacey G. Jernigan Debtor's Counsel: Richard G. Grant, Esq. Roberts & Grant, PC 7018 Primrose Lane Colleyville, TX 76034 Tel: (214) 210-2929 Fax: (214) 224-0198 Email: rgrant@robertsandgrant.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 Garry B. Smith. PEOPLE AGAINST DRUGS': Court Confirms Modified 3rd Amended Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas Dallas Divison confirmed on October 14, 2009, People Against Drugs' Affordable Public Housing Agency's modified third amended plan of reorganization dated October 6, 2009. The Debtor filed the modified third amended plan of reorganization in order to resolve the confirmation objections of the Debtor's creditors. Impaired classes under 3, 4, 6, 7, and 8 all voted to accept the Plan. Milo H. Segner, Jr. was appointed Liquidating Trustee and will report to the Reorganized Debtor's board. Mr. Segner will be compensated as a Chapter 7 trustee pursuant to Section 326 of the Bankruptcy Code. As reported in the Troubled Company Reporter on June 22, 2009, the Bankruptcy Court approved on June 5, 2009, the disclosure statement with respect to the Debtor's 2nd amended plan of reorganization, dated June 4, 2009. Pursuant to the Plan, Country Creek Apartments will be sold pursuant to Section 363 of the Bankruptcy Code free and clear of all liens, claims and encumbrances to the Texas nonprofit organization, Texas Educational Opportunity Fund (NewCo). The Class 3 claim of Nexbank will be treated as a fully secured claim in the amount of $359,417.78. NexBank's allowed claim will be paid in full by (a) the payment in full of any rents received by the rental or lease of the real property securing the NexBank allowed claim and (b) payment of funds received upon the close of the sale of the encumbered North Carolina property. The Class 4 claim claim of Wells Fargo will be deemed allowed and treated as a fully secured claim in the approximate amount of $11,011,542. Wells Fargo's allowed claim will be paid in full as provided in the prepetition loan douments between the Debtor and Wells Fargo, with certain modifications. General unsecured claims under Class 8 will be paid their pro rata share of: 1) the net proceeds of the sale of the North Carolina property following payment of customary closing costs, sales expenses and payment of NexBank in full; 2) payment from any tax refunds that the Debtor receives, including any refunds from State sales taxing authorities; and 3) any recovery from the resolution, by settlement or otherwise, of the Causes of Actions. The Debtor said it is working with a professional to estimate the possible recovery on account of sales tax refunds; however, it says that at this time, it is unable to estimate the amount of said returns. A full-text copy of the Debtor's modified third amended plan is available at no cost at http://researcharchives.com/t/s?48ee About People Against Drugs Garland, Texas-based People Against Drugs Affordable Public Housing Agency -- http://www.peopleagainstdrugs.org/-- is a nonprofit charitable corporation which was formed in 1991, and acquired a certificate of authority to do business in Texas in 1992. The Debtor owns an apartment complex, Country Creek Apartments, located in Garland, Texas. Country Creek has 296 apartment units and offers sliding scale rents depending on the tenant's income. County Creek Apartments are managed by Pace Realty Corporation. Until February 2009, the Company offered transitional housing for individuals in recovery from addictions, also providing them with the transportation needed to work, buy medification and foods, and attend important appointments that would enable them to start rebuilding their lives. The funds for these operations were derived from the profit realized upon the operation of Country Creek Apartments. The Company filed for Chapter 11 protection on September 17, 2008 (Bankr. N.D. Tex. Case No. 08-34696). Christina Walton Stephenson, Esq., Gerrit M. Pronske, Esq., Rakhee V. Patel, Esq., and Vickie L. Driver, Esq., at Pronske & Patel, P.C., represent the Debtor as counsel. In its schedules, the Debtor listed total assets of $12,516,289 and total debts of $12,615,708. PHILIP SPENCER: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Philip A. Spencer 832 St. Rte 1018 Dayton, PA 16222 Bankruptcy Case No.: 09-28284 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: James R. Walsh, Esq. Spence Custer Saylor Wolfe & Rose 400 U.S. Bank Building P.O. Box 280 Johnstown, PA 15907 Tel: (814) 536-0735 Fax: (814) 539-1423 Email: jwalsh@spencecuster.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. Spencer's petition, including a list of his 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/pawb09-28284.pdf The petition was signed by Mr. Spencer. PRECISION DRILLING: S&P Gives Stable Outlook, Affirms 'BB' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Precision Drilling Trust to stable from negative. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on the trust. Standard & Poor's also assigned its 'BB' debt rating and its '3' recovery rating to subsidiary Precision Drilling Corp.'s C$175 million 10% senior unsecured debt. The '3' recovery rating indicates an expectation of average (50%-70%) recovery in the event of default. S&P also affirmed its 'BBB-' issue-level rating on PDC's US$336 million term loan A, US$464 million term loan B, and US$260 million secured revolving credit facility. The recovery rating on the facilities is unchanged at '1', indicating S&P's expectation of very high (90%-100%) recovery in the event of default. Finally, S&P withdrew its ratings on Grey Wolf Inc., which the trust acquired in December 2008. "S&P's outlook revision follows the trust's successful efforts to strengthen its balance sheet by both reducing debt and increasing its equity base," said Standard & Poor's credit analyst Michelle Dathorne. "In addition, Precision's ability to adjust its cost basis at cyclical troughs and maintain fairly stable profit margins remains a positive credit factor. Despite the dramatic reduction in consolidated revenues and cash flows, the trust's EBITDA margins remain fairly strong, in S&P's opinion," Ms. Dathorne added. In S&P's view, the ratings on Precision reflect the diminished cash flow generation profile associated with the current weak outlook for natural gas exploration and production, the financial policy constraints inherent in the income trust structure, and the trust's levered pro forma capital structure. Offsetting these factors, which hamper the trust's overall credit profile, are its good cost management, the size and expanded geographic diversification of its drilling and service rig fleet, and the large number of rigs with deep drilling capabilities in the U.S. and Western Canadian Sedimentary Basin markets. Precision is headquartered in Calgary, Alta., and operates in Canada's principal oil and gas basin, the WCSB. The trust also has land rigs positioned in several high-growth markets in the U.S. With 390 drilling, 229 service, and 29 snubbing rigs, it now has one of North America's largest land drilling rig fleets. The stable outlook reflects Standard & Poor's expectations that Precision will meet its capital spending and financial obligations during S&P's 12-month forecast period without compromising its financial risk profile. The ratings and outlook incorporate a pro forma capital structure based on the trust's actual Sept. 30, 2009, capital structure, with adjustments for 2010 operating performance. Despite the oilfield services downturn, which S&P expects will continue to affect operating performance in 2010, S&P believes Precision should be able to maintain a fairly stable to moderately improved financial risk profile. If the trust is able to improve its leverage and cash flow protection measures further, increasing funds from operations-to-debt to at least 40% and debt- to-EBITDA of 2.0x or less, a positive rating action could occur. As Standard & Poor's believes there is limited potential for further industry deterioration, a negative rating action during S&P's forecast period appears unlikely. QUEST RESOURCE: Swings to $16,724,000 Net Loss for Q3 2009 ---------------------------------------------------------- Quest Resource Corporation swung to a net loss of $16,724,000 for the three months ended September 30, 2009, from net income of $154,356,000 for the same period a year ago. Quest Resource posted a net loss of $126,294,000 for the three months ended September 30, 2009, from net income of $14,881,000 for the same period a year ago. The Company booked total revenues of $23,962,000 for the three months ended September 30, 2009, from $57,043,000 for the same period a year ago. The Company booked total revenues of $77,733,000 for the nine months ended September 30, 2009, from $158,550,000. At September 30, 2009, the Company had $459,572,000 in total assets against total current liabilities of $69,894,000, long-term derivative financial instrument liabilities of $5,294,000, asset retirement obligations of $6,346,000 and notes payable of $302,535,000. At September 30, 2009, the Company had accumulated deficit of $383,423,000, total stockholders' deficit before non- controlling interests of $84,263,000, non-controlling interests of $159,766,000 and total equity of $75,503,000. Going Concern The Company has incurred significant losses from 2003 through 2008 and into 2009, mainly attributable to operations, legal restructurings, financings, the current legal and operational structure and, to a lesser degree, the cash expenditures resulting from the investigation related to certain unauthorized transfers, repayments and re-transfers of funds to entities controlled by its former chief executive officer. The Company has determined that there is substantial doubt about its ability to continue as a going concern. QRCP is almost exclusively dependent upon distributions from its partnership interests in Quest Energy Partners, L.P., and Quest Midstream Partners, L.P. for cash flow. Quest Midstream has not paid any distributions on any of its units since the second quarter of 2008, and Quest Energy suspended its distributions on its subordinated units starting with the third quarter of 2008 and all units starting with the fourth quarter of 2008. QRCP does not expect to receive any distributions from Quest Energy or Quest Midstream for the remainder of 2009 and is unable to estimate at this time when such distributions may be resumed. Although QRCP is not currently receiving distributions from Quest Energy or Quest Midstream, it continues to require cash to fund general and administrative expenses, debt service requirements, capital expenditures to develop and maintain its undeveloped acreage, drilling commitments and payments to landowners necessary to maintain its oil and gas leases. Recombination Given the liquidity challenges facing the Company, Quest Midstream and Quest Energy, each entity has undertaken a strategic review of its assets and has evaluated and continues to evaluate transactions to dispose of assets to raise additional funds for operations or to repay indebtedness. On July 2, 2009, QRCP, Quest Midstream, Quest Energy and other parties thereto entered into an Agreement and Plan of Merger pursuant to which, following a series of mergers and an entity conversion, QRCP, Quest Energy and the successor to Quest Midstream will become wholly-owned subsidiaries of PostRock Energy Corporation, a new, publicly traded corporation. On October 2, 2009, the Merger Agreement was amended to, among other things, reflect certain technical changes as the result of an internal restructuring. On October 6, 2009, PostRock filed with the SEC a registration statement on Form S-4, which included a joint proxy statement/prospectus, relating to the Recombination. "While we are working toward the completion of the Recombination before the end of 2009, it remains subject to the satisfaction of a number of conditions, including, among others, the arrangement of one or more satisfactory credit facilities for PostRock and its subsidiaries, the approval of the transaction by our stockholders and the unitholders of QELP and QMLP, and consents from each entity's existing lenders. There can be no assurance that these conditions will be met or that the Recombination will occur," the Company said. Upon completion of the Recombination, the equity of PostRock would be owned approximately 44% by current QMLP common unit holders, approximately 33% by current QELP common unit holders (other than QRCP), and approximately 23% by current QRCP stockholders. Cash and Capital Resources On September 11, 2009, QRCP amended and restated its credit agreement to add an additional $8 million revolving credit facility, which will be used to finance QRCP's drilling program in the Appalachian Basin, general and administrative expenses, working capital and other corporate expenses. Management believes that the new revolving credit facility will provide QRCP with sufficient liquidity to satisfy its obligations, including general and administrative expenses, capital expenditures and debt service requirements through June 30, 2010. The total amount due on July 11, 2010, by QRCP under its credit agreement is estimated to be approximately $21 million. As a result, QRCP will need to raise a significant amount of equity capital during the first half of 2010 to pay this amount and further fund its drilling program. QRCP (or PostRock if the Recombination is completed) may not be able to raise a sufficient amount of equity capital for these purposes at the appropriate time due to market conditions or its financial condition and prospects or may have to issue shares at a significant discount to the market price. The Company, through its subsidiaries Quest Energy and Quest Cherokee LLC, is party to a Second Lien Senior Term Loan Agreement originally due and maturing on September 30, 2009. "We have obtained amendments to extend the maturity date of the loan through November 16, 2009. While we are currently negotiating further extensions to this loan, there can be no assurance that such negotiations will be successful or that we will be able to repay amounts due under the Second Lien Senior Term Loan Agreement in accordance with the terms of the agreement," the Company said. RBC Loan QRCP and Royal Bank of Canada were parties to an Amended and Restated Credit Agreement, as amended, dated as of July 11, 2008, for a $35 million term loan, due and maturing on July 11, 2010. QRCP entered into a Second Amended and Restated Credit Agreement with RBC on September 11, 2009. The Credit Agreement contemplates the Recombination and provides that the closing of the Recombination will not be an event of default. No additional amendments to the Credit Agreement are contemplated prior to the closing of the Recombination or in connection therewith. The Credit Agreement includes a term loan with a current outstanding principal balance of $28.3 million and an $8 million revolving line of credit. In addition, there are also four promissory notes that have been issued under the Credit Agreement: an $862,786 interest deferral note dated June 30, 2009 (representing outstanding due and unpaid interest on the term loan), a $924,332 interest deferral note dated September 30, 2009 (representing outstanding due and unpaid interest on the term loan), a $282,500 payment-in-kind note dated May 29, 2009 (representing a 1% amendment fee payable by QRCP in connection with the fourth amendment to the Original Credit Agreement), and a second $25,000 payment-in-kind note dated June 30, 2009 (representing an amendment fee payable by QRCP in connection with the fifth amendment to the Original Credit Agreement). Quarterly principal payments of $1.5 million on the term loan due September 30, 2009, December 31, 2009, March 31, 2010 and June 30, 2010 will be deferred until July 11, 2010, at which time all $6 million will be due. Thereafter, QRCP will be required to make a principal repayment of $1.5 million at the end of each calendar quarter until maturity. The maturity date of the term loan is January 11, 2012. The maturity date of the revolving line of credit, the interest deferral notes and the two payment-in-kind notes is July 11, 2010. The revolving line of credit, term loan, the two interest deferral notes and the two payment-in-kind notes may be prepaid at any time without any premium or penalty. On July 11, 2010, the total amount due by QRCP under the Credit Agreement (assuming the facility fee reduction conditions are all satisfied on that date) would be approximately $21 million. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?48de About Quest Resource Quest Resource Corporation -- http://www.qrcp.net/, http://www.qelp.net/, and http://www.qmlp.net/-- is a fully integrated E&P company that owns producing properties and acreage in the Appalachian Basin of the northeastern United States; 100% of the general partner and a 57% limited partner interest in Quest Energy Partners, L.P.; and 85% of the general partner and a 36.4% of the limited partner interests in the form of subordinated units in Quest Midstream Partners, L.P. Quest Resource operates and controls Quest Energy Partners and Quest Midstream Partners through its ownership of their general partners. As reported by the Troubled Company Reporter on June 23, 2009, the report of UHY LLP, in Houston, Texas, the Company's independent registered public accounting firm, on its financial statements for the fiscal year ended December 31, 2008, includes an explanatory paragraph regarding the Company's ability to continue as a going concern. The factors contributing to this concern include QRCP's recurring losses from operations, stockholders' accumulated deficit, and inability to generate sufficient cash flow to meet its obligations and sustain its operations. RAINIER PACIFIC: Receives Non-Compliance Notice From NASDAQ ----------------------------------------------------------- Rainier Pacific Financial Group, Inc., on November 5 received notice from the Nasdaq Stock Market stating that the minimum bid price of the Company's common stock was below $1.00 per share for 30 consecutive business days and that the Company was therefore not in compliance with Marketplace Rule 5450(a)(1). The notification letter states that the Company has until May 5, 2010 to regain compliance with the minimum closing bid price requirement. To regain compliance, the closing bid price of the Company's common stock must meet or exceed $1.00 per share for at least ten consecutive business days. Nasdaq may, in its discretion, require the Company's common stock to maintain a bid price of at least $1.00 per share for a period in excess of ten consecutive business days, but generally no more than 20 consecutive days, before determining that the Company has demonstrated an ability to maintain long-term compliance. If the Company does not regain compliance by May 5, 2010, Nasdaq will provide written notification to the Company that the Company's common stock will be delisted. At that time, the Company may appeal Nasdaq's delisting determination to a Nasdaq Listing Qualifications Panel. Alternately, the Company could apply to transfer its common stock to The NASDAQ Capital Market prior to that date if it satisfies all of the requirements, other than the minimum bid price requirement, for initial listing on The NASDAQ Capital Market set forth in Marketplace Rule 5505. If the Company were to elect to apply for such transfer and if it satisfies the applicable requirements and its application is approved, the Company would have an additional 180 days to regain compliance with the minimum bid price rule while listed on The NASDAQ Capital Market. Rainier Pacific Financial Group, Inc. -- http://www.rainierpac.com/-- is the bank holding company for Rainier Pacific Bank, a Tacoma, Washington-based state-chartered savings bank operating 14 full-service locations in the Tacoma- Pierce County and City of Federal Way market areas. READER'S DIGEST: Reveals New Global Marketing Organization ---------------------------------------------------------- The Reader's Digest Association, Inc., disclosed a new Global Marketing organization as part of RDA's initiative to accelerate its business transformation as it prepares to emerge from pre- arranged Chapter 11 bankruptcy protection early in 2010. The announcement was made by Amy J. Radin, Senior Vice President and Global Chief Marketing Officer. Among a number of assignments in a global realignment of the marketing function, Radin announced four key appointments to the new Global Marketing team, which bring together under one banner the Consumer Marketing and digital teams: -- Lisa Karpinski, Chief Marketing Officer, RDA Milwaukee, becomes U.S. Chief Marketing Officer, responsible for U.S. marketing and promotion. Karpinski will help translate affinity and brand objectives into marketing strategies, promotion, and innovation across all direct marketing channels. All of the U.S. magazines, books, music and Weekly Reader marketing team members will report to Karpinski and her Milwaukee-based team. -- Cara Schlanger, Vice President, Global Consumer Marketing/Magazines, will move to a new role as Vice President, International Marketing and Promotion, unifying all marketing and promotion efforts focused on International businesses. Schlanger will be responsible for promoting smart practices including multi-channel marketing and promotion, enhanced use of RDA's database assets, and adoption of effective digital marketing and development practices. -- Kate Gutman, most recently Vice President of Digital Business Development and Operations at Rodale, joins RDA as Vice President, Digital Revenue, succeeding Jonathan Hills, who earlier became General Manager, readersdigest.com. Ms. Gutman will be responsible for helping to accelerate digital revenue growth globally, including providing leadership on RDA's content syndication strategy, advancing the New Global Web Platform (a Web platform that is providing Web capabilities to RDA's businesses worldwide), and contributing to the company's e-commerce strategy. -- Rob Hilliard, Vice President, Digital Operations, assumes expanded responsibilities as Vice President, Global Data Sciences and Solutions, bringing together U.S. and International database activities. "Global Marketing is dedicated to achieving growth through marketing leadership and innovation," Mr. Radin said. "We are committed to supporting the company's goals to grow business through all channels, especially accelerating our transformation from a direct mail-driven business to a multi-channel direct marketing-driven business. We will measure progress against our ability to establish, retain and build deep, profitable and enduring relationships with our customers worldwide. We will continue to align with the strategies and goals of each of the businesses, and will emphasize developing opportunities for the talent within our organization." RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded websites generating 22 million unique visitors per month, and sells approximately 40 million books, music and video products across the world each year. Global headquarters are in Pleasantville, New York. About Reader's Digest Headquartered in Pleasantville, New York, The Reader's Digest Association, Inc, -- http://www.rda.com-- is a global publisher and direct marketer of products including magazines, books, recorded music collections and home videos. Products include Readers Digest magazine, which is published in 50 editions and 21 languages. Annual revenues approximate US$2.4 billion. The company has offices in Australia, Hong Kong, Malaysia, Taiwan, Philippines and Singapore. READER'S DIGEST: Files First Amended Reorganization Plan -------------------------------------------------------- The Reader's Digest Association, Inc., and its debtor affiliates delivered to Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York their First Amended Joint Plan of Reorganization on November 3, 2009, and a Disclosure Statement for that Plan on November 2. The First Amended Plan, among other things, modifies the proposed rights offering and subscription process, and adds sections on pension obligations of certain foreign affiliates and the preservation of certain rights of action. As provided in the original Plan, the consummation of the financial restructurings contemplated by the Plan will significantly de-lever the Debtors' capital structure, leaving the Reorganized Debtors with approximately $555 million in funded debt. With a sustainable capital structure aligned with the Debtors' revised Business Plan, the Reorganized Debtors will be better positioned to compete more effectively in the competitive media and marketing industries. The First Amended Plan provides that as a result of the proposed restructuring transactions, the Debtors will reduce their annual interest carrying costs by approximately $63 million. Because borrowings under the Exit Credit Agreement and Second Priority Term Loan may be paid down at any time, the Debtors will be able to take advantage of potential refinancing opportunities, which are likely to be more available as a result of the improved capital structure. As a result of the restructuring transactions contemplated by the Plan, the Debtors' senior secured lenders under the Prepetition Credit Agreement will own substantially all the New Common Stock in Reorganized Holdings, subject to dilution by shares of the New Common Stock issued in connection with: (a) Management Equity Plan. The Plan provides that the New Board will grant equity awards in the form of restricted stock, options or warrants for 7.5% of the New Common Stock, on a fully diluted basis, to continuing employees and directors of the Reorganized Debtors, provided that the equity grants will not include more than 2.5% in the form of restricted New Common Stock; and (b) Rights Offering. The Plan provides that any Holder of a Senior Subordinated Note Claim as of the Record Date that is an Accredited Investor or Qualified Institutional Buyer has the right to purchase, at a share price based on Plan Equity Value, shares of New Common Stock up to, and solely to the extent of, its Pro Rata share of up to $50 million, representing approximately 8% of Plan Equity Value, of the New Common Stock to be issued under the Plan. Proceeds from the Rights Offering, if any, will be used for general corporate purposes. Clean and blacklined copies of the Plan and Disclosure Statement are available for free at: http://bankrupt.com/misc/RDA_1stAmended_Plan.pdf http://bankrupt.com/misc/RDA_1stAmended_Plan_Blacklined.pdf http://bankrupt.com/misc/RDA_1stAmended_DS.pdf http://bankrupt.com/misc/RDA_1stAmended_DS_Blacklined.pdf Disclosure Statement Hearing The Disclosure Statement hearing is adjourned to November 20, 2009. Objections to the Disclosure Statement must be filed on or before November 16. The Debtors, the Official Committee of Unsecured Creditors, and The Readers' Digest Retiree Group entered into an agreed order establishing a discovery protocol and schedule in connection with the Plan and Disclosure Statement and agreed, in good faith, to adjourn the Disclosure Statement hearing and related objection deadline. The Disclosure Statement hearing was previously set to start November 5. In the event the Disclosure Statement is approved on or before November 30, 2009, the Confirmation Hearing will commence on January 13, 2010. All briefs filed with respect to confirmation of the Plan and all significant contract provisions will be submitted to the Court in both Portable Document Format and in Microsoft Word or Microsoft WordPerfect format. These deadlines will apply to all discovery relating to the Plan: (a) all demands for written discovery and deposition notices for fact and expert witnesses must be served by November 13, 2009; (b) all parties will exchange expert reports and provide available dates of experts for depositions no later than November 25, 2009; (c) all depositions of fact witnesses must be completed by December 14, 2009; (d) all depositions of expert witnesses must be completed by December 18, 2009; (e) Parties will not prepare or exchange rebuttal expert reports; and (f) all parties will exchange exhibit lists, final witness lists and deposition designations by January 8, 2010. Under the discovery protocol, all depositions will be taken by one lead examining attorney, to be determined in the first instance by those Parties seeking the depositions. In the event the Parties are unable to designate a lead examiner, the Court will make the designation. The other Party seeking to examine the witnesses will be afforded an opportunity to ask follow-up questions regarding specific areas not addressed by the lead examiner. Unless otherwise ordered by the Court, all depositions will be limited to no more than a total of seven hours per witness and will, to the extent practicable, be limited to one day. If information subject to attorney-client privilege or work product immunity is inadvertently or mistakenly produced, the production will in no way prejudice or otherwise constitute a waiver of or estoppel as to any claim of privilege or work-product immunity. Upon notice to the recipient Party, all copies of inadvertently or mistakenly produced documents will be destroyed, and any document, material, or information reflecting the contents of the inadvertently produced information will be expunged. The Parties will confer in good faith over any disagreement in connection with this Discovery Order before claiming non- compliance to the Court or any third party. The Debtors may designate discovery materials as "Confidential Information," which for purposes of this Discovery Order, will constitute any Discovery Material produced in response to a discovery request that the Debtors believe contains confidential or proprietary information concerning the Debtors or their Chapter 11 cases, including proprietary or confidential trade secrets. "Confidential Information" will not include any information that (i) is or becomes generally available to the public other than as a result of a breach of the Discovery Order by any Party or its representatives or through discovery, (ii) was already in a Party's files on a non-confidential basis prior to being furnished, (iii) information that becomes available to a Party on a non-confidential basis from a source other than the undersigned, provided such source was not, to the best of a receiving Party's knowledge, subject to any prohibition against transmitting the information, or (iv) independently developed by the Creditors Committee without use of Confidential Information. The Discovery Order applies to any non-Parties that are served with subpoenas in connection with the Confirmation Hearing or who otherwise produce documents or are noticed for deposition in connection with the Confirmation Hearing. Those non-parties are entitled to the protection afforded in the Discovery Order upon express agreement to be bound by the Order's terms, provided that any deadlines to which third parties are subject will be negotiated among the Parties and the non-Parties. Claims Classification & Treatment The First Amended Plan of Reorganization modifies the estimated aggregate amounts of claims in the Classes, as well as their recoveries: Estimated Estimated % Recovery Aggregate -------------------- Class Description Claims Plan Liquidation ----- ----------- --------- ---- ----------- Class 1 Other Priority $0 - $1 100% 0-19% Claims Million Class 2 Other Secured 0 100% 100% Claims Class 3 Prepetition $1.645 53%-63% 13%-17% Credit Agreement Million Claims Class 4 Unsecured Claims $20-$25 100% 0% Related to Million Operations Class 5 Other General $110-$120 2.5%-2.7% 0% Unsecured Million Claims Class 6 Senior $628 0% 0% Subordinated Million Note Claims Class 7 Section 510(b) 0 0% 0% Claims Class 8 Equity Interests 0 0% 0% Class 9 Intercompany 0 N/A N/A Class 10 Intercompany $70 N/A N/A Claims Million About The Reader's Digest Association RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded Web sites generating 22 million unique visitors per month, and sells 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y. Reader's Digest said that as of June 30, 2009, it had total assets of $2.2 billion against total debts of $3.4 billion. Reader's Digest, together with its 47 affiliates, filed for Chapter 11 on August 24 (Bankr. S.D.N.Y. Case No. 09-23529). Kirkland & Ellis LLP has been engaged as general restructuring counsel. Mallet-Prevost, Colt & Mosle LLP has been tapped as conflicts counsel. Ernst & Young LLP is auditor. Miller Buckfire & Co, LLC, is financial advisor. AlixPartners, LLC, is restructuring consultant. Kurtzman Carson Consultants is notice and claims agent. The Official Committee of Unsecured Creditors is tapping BDO Seidman, LLP, as financial advisor, Trenwith Securities, LLP, as investment banker and Otterbourg, Steindler, Houston & Rosen, P.C., as counsel. Bankruptcy Creditors' Service, Inc., publishes Reader's Digest Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Reader's Digest and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) READER'S DIGEST: Proposes to Implement Employee Talent Plan ----------------------------------------------------------- The Reader's Digest Association, Inc., and its debtor affiliates seek the Court's authority, pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code, to implement an employee bonus plan and make certain bonus payments to encourage the retention of and performance by certain of the Debtors' non-insider, rank and file employees, who the Debtors have determined are necessary to their reorganization efforts. Due to prepetition restructuring initiatives and a thorough review of their compensation plans, the Debtors have eliminated their historic bonus programs, which were generally applicable to all levels of employees. As a result, the Talent Plan Employees are no longer eligible to receive bonus payments for fiscal year 2010 under the Debtors' historic bonus programs. The Talent Plan Employees consist of certain individual employees of the Debtors at level 8 or below, who provide a wide variety of functions critical to the Debtors' ongoing operations and restructuring efforts, including in the areas of accounting, financial analysis, editing, human resources, legal and operations. Eligible participants in the Talent Plan have been selected by the Debtors based on their unique skills, responsibilities, performance and value to the Debtors' operations. Because the Talent Plan Employees provide essential services to the Debtors that are necessary both during and after the Debtors' reorganization, the Debtors believe the Talent Plan is necessary and appropriate to improve morale, prevent attrition and maximize enterprise value. The Talent Plan provides for bonus payments in an aggregate amount not to exceed $500,000 to a maximum of 100 employees, with individual bonus payments representing 3% to 6% of a participant's annual base salary. The maximum total expenditure of $500,000 is contemplated by the Debtors' business plan and is included in the operating expenses reflected in the cash flow projections set forth in the disclosure statement that has been filed with the Court. The first proposed payment under the Talent Plan is scheduled for November 23, 2009, at which time the Talent Plan Employees will receive 25% of their total bonus payment, with the remaining 75% payable upon emergence from Chapter 11. Because the first payment is due during the course of the Debtors' Chapter 11 cases, the Debtors are seeking the Court's authorization to implement the plan at this time. The Debtors expect that aggregate payments to be made on November 23 will be $86,950, and that the remaining payments will be made post-emergence. The Debtors believe that the requested investment in their human capital is cost-effective, reasonable and will aid in the preservation of enterprise value. James H.M. Sprayregen P.C., Esq., at Kirkland & Ellis LLP, in New York, says the Talent Plan Employees possess indispensable institutional knowledge, experience and relationships and have been identified as critical to the Debtors' operations and successful restructuring. He contends that payment of the bonus payments under the Talent Plan will provide those employees with a greater sense of financial security, and encourage them to remain focused on their work during this critical period rather than seek other employment. The Debtors believe that the Talent Plan bonus payments will be a key to preserving and bolstering employee morale and loyalty at a time when employee support is critical and certain employees are likely to seek alternate employment, perhaps with the Debtors' competitors. Mr. Sprayregen points out that the loss of valuable employees, with the resulting loss of institutional knowledge and the need to identify and recruit new employees, would be distracting and costly at this critical time. About The Reader's Digest Association RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded Web sites generating 22 million unique visitors per month, and sells 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y. Reader's Digest said that as of June 30, 2009, it had total assets of $2.2 billion against total debts of $3.4 billion. Reader's Digest, together with its 47 affiliates, filed for Chapter 11 on August 24 (Bankr. S.D.N.Y. Case No. 09-23529). Kirkland & Ellis LLP has been engaged as general restructuring counsel. Mallet-Prevost, Colt & Mosle LLP has been tapped as conflicts counsel. Ernst & Young LLP is auditor. Miller Buckfire & Co, LLC, is financial advisor. AlixPartners, LLC, is restructuring consultant. Kurtzman Carson Consultants is notice and claims agent. The Official Committee of Unsecured Creditors is tapping BDO Seidman, LLP, as financial advisor, Trenwith Securities, LLP, as investment banker and Otterbourg, Steindler, Houston & Rosen, P.C., as counsel. Bankruptcy Creditors' Service, Inc., publishes Reader's Digest Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Reader's Digest and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) READER'S DIGEST: U.S. Trustee Objects to "Overly Broad" Releases ---------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, complains that the Disclosure Statement explaining the Debtors' Plan of Reorganization is deficient and fails to meet the standards of containing "adequate information" set forth in Section 1125(a) of the Bankruptcy Code. "The Disclosure Statement should not be approved because it does not adequately describe and provide a legal justification for the overly broad release provisions that the Debtors will seek to have approved upon confirmation of the Plan," Ms. Adams tells Judge Drain. "In addition, the Disclosure Statement inappropriately classifies statutory fees nor does it provide for the bonding of any distribution agent chosen by the Debtors to facilitate distributions under the Plan," she asserts. Ms. Adams also reserves her rights under Section 503(c)(3) of the Bankruptcy Code to object to the Debtors' proposed Management Compensation Programs. Absent further disclosure and explanation, Ms. Adam urges the Court to deny the approval of the Disclosure Statement. About The Reader's Digest Association RDA is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it markets books, magazines, and music, video and educational products reaching a customer base of 130 million in 78 countries. It publishes 94 magazines, including 50 editions of Reader's Digest, the world's largest-circulation magazine, operates 65 branded Web sites generating 22 million unique visitors per month, and sells 40 million books, music and video products across the world each year. Its global headquarters are in Pleasantville, N.Y. Reader's Digest said that as of June 30, 2009, it had total assets of $2.2 billion against total debts of $3.4 billion. Reader's Digest, together with its 47 affiliates, filed for Chapter 11 on August 24 (Bankr. S.D.N.Y. Case No. 09-23529). Kirkland & Ellis LLP has been engaged as general restructuring counsel. Mallet-Prevost, Colt & Mosle LLP has been tapped as conflicts counsel. Ernst & Young LLP is auditor. Miller Buckfire & Co, LLC, is financial advisor. AlixPartners, LLC, is restructuring consultant. Kurtzman Carson Consultants is notice and claims agent. The Official Committee of Unsecured Creditors is tapping BDO Seidman, LLP, as financial advisor, Trenwith Securities, LLP, as investment banker and Otterbourg, Steindler, Houston & Rosen, P.C., as counsel. Bankruptcy Creditors' Service, Inc., publishes Reader's Digest Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Reader's Digest and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) RETICEL INTERIORS: Sec. 341 Meeting Set for December 8 ------------------------------------------------------ The U.S. Trustee for Region 9 will convene a meeting of Recticel Interiors North America, LLC's creditors on December 8, 2009, at 2:00 p.m. at Room 315 E, 211 W. Fort St. Bldg. Detroit 341. This is the first meeting of creditors required under Section 341(a) of the U.S. 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. Clarkston, Michigan-based Recticel Interiors North America, LLC, filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. E.D. Mich. Case No. 09-73419). The Company's affiliate, Recticel North America, Inc., also filed for bankruptcy (Case No. 09-73411). Robert S. Hertzberg, Esq., who has an office in Detroit, Michigan, assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $100,000,001 to $500,000,000 in liabilities. R.H. DONNELLEY: Blackstone Charges $437,500 for 2.5 Months Work --------------------------------------------------------------- Bankruptcy professionals in R.H. Donnelley Corp.'s Chapter 11 cases filed applications for allowance of fees and reimbursement of expenses for these periods: Professional Period Fees Expenses ------------ --------- ---------- -------- Blackstone Advisory 06/16 to 08/31/09 437,500 36,340 Services L.P. Deloitte Tax LLP 06/23 to 08/31/09 157,039 183 Young Conaway 05/28 to 08/31/09 134,510 26,272 Stargatt & Taylor LLP 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) R.H. DONNELLEY: Law Firms File Securities Class Suits ----------------------------------------------------- In separate press releases, The Brualdi Law Firm P.C., The Rosen Law Firm P.A., and Gainey & McKennas on October 26, 2009 that they have filed lawsuits in the United States District Court for the District of Delaware against R.H. Donnelley Corporation, on behalf of purchases of RHD's stock during the period between July 26, 2007, through May 28, 2009 for violations of the federal securities law. The Press Releases reveal that no class has yet been certified in the Action and until a class is certified, Stockholders are not represented by counsel unless they retain one. If Stockholders wish to move the court for appointment of lead plaintiff, Stockholders must do so by December 22, 2009. The lead plaintiff will be selected from among applicants claiming the largest loss from investment in RHD during the Class Period. The Complaints allege that during the Class Period, RHD issued materially false and misleading statements regarding the its business and financial results and caused RHD to fail to properly account for its bad debt expense and timely write down its impaired goodwill. The Plaintiffs relate that as a result of RHD's false and misleading statements, RHD's stock traded at artificially inflated prices during the Class Period, trading as high as $66.67 in July 2007. However, beginning in February 2008, RHD began to acknowledge problems in its operations and with its financial results. On March 12, 2009, RHD announced that it had retained a financial advisor to assist in the evaluation of its capital structure, including various balance sheet restructuring alternatives. Then, on May 29, 2009, RH Donnelley filed for bankruptcy. 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) SAJID KHAN: Voluntary Chapter 11 Case Summary --------------------------------------------- Joint Debtors: Sajid Khan aka Sajid S. Khan Shabana Sajid 14951 Bellows Falls Lane, #922 Humble, TX 77396 Bankruptcy Case No.: 09-38554 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Southern District of Texas (Houston) Judge: Jeff Bohm Debtor's Counsel: Calvin C. Braun, Esq. Orlando & Braun LLP 3401 Allen Parkway, Suite 101 Houston, TX 77019 Tel: (713) 521-0800 Fax: (713) 521-0842 Email: calvinbraun@orlandobraun.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,001 to $500,000 The Debtors did not file a list of their 20 largest unsecured creditors when they filed their petition. The petition was signed by the Joint Debtors. SAVANNAH GATEWAY: Sec. 341 Meeting Set for November 30 ------------------------------------------------------ The U.S. Trustee for Region 21 will convene a meeting of Savannah Gateway West, LLC's creditors on November 30, 2009, at 10:00 a.m. at Orlando, FL (6-60) - 135 West Central Blvd., 6th Floor, Suite 600. This is the first meeting of creditors required under Section 341(a) of the U.S. 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. Orlando, Florida-based Savannah Gateway West, LLC, operates a real estate business. The Company filed for Chapter 11 bankruptcy protection on October 30, 2009 (Bankr. M.D. Fla. Case No. 09- 16576). R Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. SCOLR PHARMA: May Seek Bankruptcy, Wind Up Business --------------------------------------------------- SCOLR Pharma, Inc., disclosed that based on its current operating plan, it anticipate that its existing cash and cash equivalents, together with expected royalties from third parties, will be sufficient to fund its operations through February 2010, unless unforeseen events arise that negatively impact its liquidity. In the event it is unsuccessful generating additional revenues or raising additional funds, it will have to substantially reduce its operations to preserve capital or seek bankruptcy protection or otherwise wind up its business. The company had approximately $1.9 million in cash and cash equivalents, and $473,711 in restricted cash as of September 30, 2009. In addition to its efforts to enter into alliances and licensing agreements, it plans to continue to seek access to the capital markets to fund our operations. The company filed a shelf registration statement in the amount of $40 million which was declared effective by the Securities and Exchange Commission on November 25, 2008 under which we may offer from time-to-time, one or more offerings of securities up to an aggregate public offering price of $40 million. However, the financial markets have been very difficult for companies at its development stage and financial condition and financing may not be available on favorable terms or at all. Additionally, it received notice from the NYSE Amex that it is not in compliance with continued listing requirements. The company's inability to maintain listing of its common stock on the NYSE Amex may further limit its ability to access the capital markets. Any issuance of additional securities could be dilutive to our existing stockholders. The company reported financial results for the three and nine months ended September 30, 2009. Stephen J. Turner, SCOLR Pharma's President and CEO, said, "We continue to advance discussions related to licensing our 12-hour ibuprofen formulation. Several potential partners have committed significant resources in time, personnel and external resources as they evaluate the potential commercial and/or licensing opportunity. In the nutraceutical area, we have increased our sales and marketing efforts and are optimistic we will be able to expand our existing revenue streams from extended release supplements. Royalties received from Perrigo continue to improve on a quarterly basis, and we expect to see further increases as we expand the reach of our products to new customers. In addition, we have made significant strides in support of our recent marketing efforts on new product offerings outside of the Perrigo relationship both within the US and abroad. We expect to be able to introduce newly formulated products in 2010 based on our meetings with numerous international, national and regional retailers and potential partners. We continue to make progress in reducing our operating expenses including reductions in salary and rent expenses. We renegotiated the lease for our corporate facility to reduce the amount of leased space to 15,615 square feet from 20,468 square feet and reduce our rental payments. In addition, effective November 1, 2009, the Company will be allowed to pay up to $18,000 of its monthly rent for twelve months through draw downs on the letter of credit which secures the lease. In addition, we eliminated one executive position and reduced base salaries for two executive officers. These additional savings will provide us the opportunity to preserve our capital and improve our position for the future." Total revenues, which consist of royalty revenue from our collaboration agreements, increased 11%, or $25,343 to $261,651 for the three months ended September 30, 2009, compared to $236,308 for the same period in 2008. Total revenues decreased 15%, or $117,223 to $664,212 for the nine months ended September 30, 2009, compared to $781,435 for the same period in 2008. Royalty revenues result from our relationship with Perrigo and reflect changes in the level of sales by Perrigo. Marketing and selling expenses decreased 53%, or $62,489 to $54,351 for the three months ended September 30, 2009, compared to $116,840 for the same period in 2008 and decreased 63%, or $345,177 to $200,402 for the nine months ended September 30, 2009, compared to $545,579 for the same period in 2008. These decreases are due to a reduction in personnel related expenses due to reduction in personnel and lower advertising and tradeshow expenses. Research and development expenses decreased 75%, or $1.7 million to $572,189 for the three months ended September 30, 2009, compared to $2.3 million for the same period in 2008 and decreased 50%, or $2.2 million to $2.2 million for the nine months ended September 30, 2009, compared to $4.4 million for the same period in 2008. These decreases were primarily due to our decision to defer development activities on certain projects pending additional funding and a reduction in personnel related expenses due to personnel reductions. General and administrative expenses increased 29%, or $273,061 to $1.2 million for the three months ended September 30, 2009, compared to $947,684 for the same period in 2008, and increased 3%, or $104,665, to $3.3 million for the nine months ended September 30, 2009, compared to $3.2 million for the same period in 2008. These increases were primarily due to severance costs associated with the resignation of our former CEO, and increased investment banker activities. These increases were offset by decreases in non-cash share based compensation expense director's and shareholder relations expenses and insurance premiums. In May 2008, we entered an agreement to terminate the lease for our former corporate facility for consideration of $4.1 million which was recogn ized as a reduction to operating expense in September 2008. Under the terms of the agreement, we received $1.0 million upon execution of the agreement and the remaining $3.1 million in September 2008, at the time we vacated the premises. We incurred costs of $116,867 related to relocation to our new facility and the lease buyout which were recognized in operating expense in September 2008. Other income decreased 98%, or $41,608 to $948 for the three months ended September 30, 2009, compared to $42,556 for the comparable period in 2008, and decreased 96%, or $186,746 to $8,548 for the nine months ended September 30, 2009, compared to $195,294 of net income for the same period in 2008. These decreases were due to a decrease in interest income due to lower cash balances. Net loss increased $2.5 million to $1.6 million for the three months ended September 30, 2009, compared to $890,371 of net income for the same period in 2008, and the net loss for the nine months ended September 30, 2009, increased 57%, or $1.8 million to $5.1 million, compared with a net loss of $3.2 million for the same period in 2008. The increased net loss reflects the net impact of the non-recurring $4.0 million income recognized in the prior year for the facility lease buyout." About SCOLR Pharma Based in Bothell, Washington, SCOLR Pharma, Inc. -- http://www.scolr.com/-- is a specialty pharmaceutical company. SCOLR Pharma's corporate objective is to combine its formulation expertise and its patented CDT platform to develop novel pharmaceutical, over-the-counter (OTC), and nutritional products. Our CDT drug delivery platforms are based on multiple issued and pending patents and other intellectual property for the programmed release or enhanced performance of active pharmaceutical ingredients and nutritional products. SEMCAN INC: Naston Calls in Pococks to Assist on Restructuring -------------------------------------------------------------- Semcan Inc. disclosed that its United Kingdom subsidiary, Naston Limited, has engaged Pococks Chartered Accountants to assist with the restructuring and possible sale or winding-up of Naston. In early December 2009, Naston will be presenting a plan to its creditors under which the company could enter into a Company Voluntary Arrangement under UK law. Certain of its projects would be completed over the next two years, the net proceeds of which would be for the benefit of Naston's creditors. At the end of 2008, Semcan made the decision to divest itself of Naston, and wrote down the investment during the period ended June 30, 2009. The company anticipates a final non cash write down of $375,000 for the quarter ended 30th September 2009. Semcan also announces the successful integration of the ZMI Portec operations into its Milton facility -- the financial effect of which result in approximately $600,000 of annual cost savings. The full effect of these savings will be felt in fiscal year 2010. In addition, the corporate office located at 365 Adelaide Street East, Toronto has now closed and the functions transferred to Stanco Projects Ltd at 8485 Parkhill Drive, Milton, Ontario, resulting in further annual cost savings in excess of $100,000. Semcan confirms that it has retired all term debt due to Toronto Dominion Commercial Bank and that the company's sole indebtedness to TD is its revolving operating line with a limit of $1.5 million. Because of the low borrowings the company no longer meets the criteria set by the National Accounts Division of TD and have therefore transferred the management of the account to the bank's Financial Restructuring Group, an intermediate step before a possible transfer of the account to a regional centre of TD. About Semcan Inc. Semcan is a worldwide supplier of industrial processes and environmental solutions with specific emphasis on water remediation and emission control systems. SEQUENOM INC: Net Loss Widens to $14,875,000 at Sept. 30 Quarter ---------------------------------------------------------------- Sequenom, Inc.'s net loss for the three months ended September 30, 2009, widened to $14,875,000 compared to a net loss of $10,371,000 for the same period a year ago. The Company also posted wider net loss of $52,609,000 for the nine months ended September 30, 2009, from a net loss of $28,741,000 for the same period a year ago. Sequenom's total revenues dropped to $9,220,000 for the recent quarter from $11,570,000 for the year ago quarter. Sequenom also booked lower total revenues of $27,077,000 for the nine months ended September 30, 2009, from $34,990,000 for the same period a year ago. As of September 30, 2009, the Company had total assets of $101,942,000 against total current liabilities of $18,489,000, deferred revenue, less current portion of $384,000, other long- term liabilities of $3,693, and long-term portion debt and obligations of $2,141,000. Sequenom said it has a history of recurring losses from operations and has an accumulated deficit of $578.9 million as of September 30, 2009. Sequenom's capital requirements to sustain operations, including research and development projects, have been and will continue to be significant. As of September 30, 2009, Sequenom had available cash, cash equivalents and current marketable securities totaling $50.1 million and working capital of $53.3 million. Sequenom also has approximately $5.7 million of ARS investments classified as noncurrent assets at September 30, 2009. In April 2009, Sequenom announced that it reduced its genetic analysis employee workforce in accordance with its initiative to reduce costs and restructure its workforce. Sequenom said the beginning balance for facilities costs prior to the April 2009 reduction in workforce consisted of a $400,000 in accrued facility exit costs associated with exiting its lease commitments for the Boston, Massachusetts facility. This facility was initially leased in conjunction with the acquisition of Gemini Genomics, plc in 2001. The reduction in workforce included the closure of Sequenom's leased facility near Boston, Massachusetts, with a lease expiration on December 31, 2010, as well as the closure of its office located in New Delhi, India during the second quarter of 2009. Moreover, the Company said Paul V. Maier has been appointed interim chief financial officer, effective November 10, 2009. Mr. Maier brings financial executive experience in roles from small private companies to Fortune 500 organizations, including nearly 15 years at Ligand Pharmaceuticals as senior vice president and chief financial officer. Prior to Ligand Pharmaceuticals, Mr. Maier spent six years in various management and finance positions at ICN Pharmaceuticals. 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?48e7 A full-text copy of the Company's earnings release is available at no charge at http://ResearchArchives.com/t/s?48e8 About Sequenom Inc. Sequenom, Inc. (NASDAQ:SQNM) is a diagnostic testing and genetics analysis company. The Company is focused on providing products, services, diagnostic testing, applications and genetic analysis products that translate the results of genomic science into solutions for biomedical research, translational research, molecular medicine applications, and agricultural, livestock and other areas of research. The Company added that there is substantial doubt about its ability to continue as a going concern. Although the Company related that its cash, cash equivalents and current marketable securities will be sufficient to fund its operating expenses and capital requirements through 2010, it will require significant additional financing in the future to fund its operations. SILVER DEVELOPMENTS: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Silver Developments LLC 4341 North 24th St., #101 Phoenix, AZ 85016 Bankruptcy Case No.: 09-28630 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Judge: Eileen W. Hollowell Debtor's Counsel: Donald W. Powell, Esq. Carmichael & Powell, P.C. 7301 N. 16th St., #103 Phoenix, AZ 85020 Tel: (602) 861-0777 Fax: (602) 870-0296 Email: d.powell@cplawfirm.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 Avraham Hassid, managing member of the Company. SINCLAIR BROADCAST: Moody's Upgrades Corp. Family Rating to 'B2' ---------------------------------------------------------------- Moody's Investors Service upgraded Sinclair Broadcast Group, Inc.'s Corporate Family Rating to B2 from Caa2, Probability-of- Default Rating to B2 from Caa3 and speculative grade liquidity rating to SGL-2 from SGL-4. Moody's also assigned Sinclair Television Group Inc. (Sinclair's subsidiary) definitive ratings of Ba2 on its $466 million amended and restated senior secured credit facility and B2 on its $500 million senior secured second lien notes. Associated debt ratings were upgraded as detailed below and loss given default assessments were updated to reflect the current debt mix and convergence of Sinclair's CFR and PDR. The rating actions conclude the review for upgrade initiated on October 9, 2009. The rating outlook is stable. Upgrades: Issuer: Sinclair Broadcast Group, Inc. -- Corporate Family Rating, Upgraded to B2 from Caa2 -- Probability of Default Rating, Upgraded to B2 from Caa3 -- Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-4 -- Senior Subordinated 4.875% Notes, Upgraded to Caa1, LGD6 - 94% from Caa3, LGD4 - 59% Issuer: Sinclair Television Group, Inc -- Senior Secured Revolver (Maturing June 2011), Upgraded to Ba2, LGD2 - 11% from B1, LGD1 - 5% -- 8% Senior Subordinated Notes (Maturing March 2012), Upgraded to Caa1, LGD5 - 84% from Caa2, LGD3 - 31% Assignments: Issuer: Sinclair Television Group, Inc -- Senior Secured Revolver (Maturing December 2013), Assigned Ba2, LGD2 - 11% (was (P)Ba3, LGD2 - 14%) -- Senior Secured Term Loan B (Maturing October 2015), Assigned Ba2, LGD2 - 11% (was (P)Ba3, LGD2 - 14%) -- Senior Secured Second Lien Notes, Assigned B2, LGD3 - 48% (was (P)B3, LGD4 - 53%) Outlook Actions: Issuer: Sinclair Broadcast Group, Inc. -- Outlook, Changed To Stable From Rating Under Review Issuer: Sinclair Television Group, Inc -- Outlook, Changed To Stable From Rating Under Review Withdrawals: Issuer: Sinclair Television Group, Inc -- Senior Secured Term Loan A and A-1, Withdrawn, previously rated B1, LGD1 - 5% The CFR upgrade to B2 reflects significant improvement in Sinclair's liquidity position and meaningfully reduced near-term default risk resulting from the November 2009 refinancing, the amendment to the terms of Sinclair's local marketing agreement with Cunningham Broadcasting Corporation, and the extension of Cunningham's bank facility maturity to July 2012. STG is utilizing the net proceeds from the amended credit agreement and second lien notes to fund the tender offer for Sinclair's $294 million 3% and $144 million 4.875% million convertible notes in May 2010 and January 2011, respectively, and to replace its prior credit facility. STG also amended the financial maintenance covenants in its credit facility to permit the refinancings and provide additional headroom. Moody's believes the transactions (i) reduce the risk that Sinclair will not be able to fund the puts, (ii) result in additional cash outflows related to Cunningham that are manageable within Sinclair's cash generation, and (iii) provide covenant cushion to manage through the advertising downturn. The B2 CFR is one notch above Moody's prior preliminary indication of October 13, 2009, that the aforementioned transactions would result in a CFR upgrade to B3. The improvement reflects a moderate upward revision to Moody's estimate of Sinclair's 2009 and 2010 operating results based on current advertising trends and Sinclair's cost actions, and a review of the financial maintenance covenants in the final amended credit facility. Moody's now anticipates STG will maintain at least a 10% EBITDA cushion to its financial maintenance covenant levels in 2010 based on a downside operating projection. The B2 CFR reflects the good margins and unlevered cash flow generated from the sizable and diverse television station group, tempered by the company's high leverage and vulnerability to cyclical advertising spending. The suspension of the dividend in 2009 mitigates the material increase in cash interest expense resulting from the refinancing, which will help Sinclair continue to generate free cash flow. Debt-to-EBITDA leverage (projected in a high 7x range for FY 2009 incorporating Moody's standard adjustments) is high but will decline in 2010 as the economy recovers and Olympics and election-year political revenues provide a boost to revenue. The stable rating outlook reflects Moody's view that the company now has sufficient liquidity to manage through the advertising downturn and that Sinclair's weak leverage and interest coverage will improve to levels consistent with the B2 CFR as the economy recovers. Sinclair has placed into escrow funds sufficient to retire any untendered 3.0% and 4.875% convertible notes on the respective put dates. The escrow funds can only be released to retire the putable notes. However, the escrow account is part of the credit facility collateral package. In the event of a credit facility default, the administrative agent could take control of the escrow account. Moody's believes the November 2009 transactions reduce the risk of default prior to the put dates and anticipates in the rating that any untendered notes will be retired at the put dates. Moody's is also withdrawing the ratings on the prior term loans that were refinanced with the new credit facility, and will withdraw the ratings on the 4.875% convertible notes if they are retired through the tender offer. The last rating action was on October 13, 2009, when Moody's assigned a rating of (P)Ba3 to STG's proposed credit facility and (P)B3 to STG's new second lien notes. Sinclair, headquartered in Baltimore, Maryland, is a television broadcaster, operating 58 stations in 35 markets primarily through STG and its local marketing agreement with Cunningham. The company generated revenue of $669 million for the LTM 9/30/09 period. SIX FLAGS: Opposes Termination of Plan Exclusivity -------------------------------------------------- An informal committee of holders of 12.25% Senior Notes Due 2016 issued by Debtor Six Flags Operations, Inc., is asking Bankruptcy Judge to terminate the Debtors' exclusive periods to file a plan of reorganization and solicit acceptances of the plan. The Noteholders want exclusivity terminated so that it can file an alternative plan. Resilient Capital Management LLC, which holds an undisclosed number of Six Flags, Inc.'s redeemable shares, told the Bankruptcy Court that preferred shareholders have a proposed reorganization plan for Six Flags that is more superior than the plan being proposed by management and noteholders. It joins in calls for termination of the plan exclusivity. The Debtors ask the Court to deny the Informal Committee of SFO Noteholders' emergency motion to terminate the Debtors' exclusive period to file a plan of reorganization arguing that the SFO Noteholders have failed to show cause to warrant termination of the Exclusive Periods. The Debtors deny, as wholly without merit, the SFO Noteholders' allegation that the Debtors are interested exclusively in the retention and enrichment of management to the detriment of all creditor constituencies. The Debtors' goal throughout this process has been to reach the broadest possible consensus in support of a plan of reorganization, Daniel J. DeFrancheschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, contends. According to Mr. DeFrancheschi, the Debtors proactively have engaged potential lending resources in order to garner financing in support of a revised plan of reorganization. The Revised Plan will provide committed exit financing, rights offering subscription, and recoveries equal to, or greater than those offered in an alternative plan set forth by the SFO Noteholders, he points out. The Revised Plan is expected to build substantially upon the features already set forth in the Alternative Plan, plainly indicating that the Debtors share the SFO Noteholders' reasonable desire to ensure the maximum possible recovery for the Debtors' stakeholders, Mr. DeFrancheshi further points out. Moreover, the Debtors are unwilling to adopt wholesale the Alternative Plan without further investigation, Mr. DeFrancheschi tells the Court. Despite repeated requests, the SFO Noteholders have not provided a business plan, an identification of the proposed new management team, or an explanation of the financial assumptions made by the Alternative Plan, or any information that would indicate that their plan is fully financed, Mr. DeFrancheschi states. Debtors to Take Depositions of Eight Witnesses The Debtors inform the Court that they will take depositions of knowledgeable parties regarding the SFO Noteholders' emergency motion. The depositions will be conducted at the offices of Paul, Hastings, Janofsky & Walker LLP, in 75E 55th Street, First Floor, in New York. The parties the Debtors request for deposition are: Name Date and Time ---- ------------- Nate Van Duzer 11/02/09 11:00 a.m. Marc Lasry 11/02/09 4:00 p.m. Alexander Weber, Jr. 11/03/09 9:00 a.m. Michael Elkins 11/03/09 11:00 a.m. Mark Shapiro 11/03/09 1:00 p.m. H Partners Management LLC 11/03/09 3:00 p.m. Mendy R. Haas 11/03/09 5:00 p.m. Jonathan Wood 11/04/09 11:00 a.m. Creditors' Committee Responds The Official Committee of Unsecured Creditors tells the Court that as part of its fiduciary duty to creditors, it is giving serious consideration to feasible alternatives to the Debtors' First Amended Plan of Reorganization. The Creditors' Committee believes that the SFO Noteholders' Joint Plan of Reorganization may present that alternative, says Laura Davis Jones, Esq., at Pachulski Stang, Zeihl & Jones LLP, in Wilmington, Delaware. In an effort to determine which plan is, or can be made to be fair and equitable to all general unsecured creditors, the Committee's professionals are currently engaged in a complex analysis of the economic and legal issues raised by both proposed plans, Ms. Jones relates. While progress is being made, the Creditors' Committee asserts that it would be in the best interest of its creditor constituents and the estates for the Court to force all parties to slow down and maintain the status quo while diligence and negotiations continue. A brief delay would enable the Court to defer a decision on whether to lift the Exclusivity Period, as the SFO Noteholders seek, which would be a decision with broader consequences, or to extend the period for another 90 days, as the Debtors seek, which would effectively foreclose the possibility of an alternative plan, Ms. Jones contemplates. It would be premature to foreclose the possibility of a competing plan by granting the Debtors' Exclusivity Extension Motion, Ms. Jones avers. A brief adjournment of both the SFO Noteholders' Committee's Exclusivity Termination Motion and the Debtors' Exclusivity Extension Motion, while exclusivity remained in place, would be a far less restrictive alternative, one which would allow the negotiation process to continue on a more level playing field, she contends. Accordingly, the Creditors' Committee asked the Court to continue the Noteholders' emergency motion to the next scheduled omnibus hearing after the November 5, 2009 hearing. The Debtors' counsel, Zachary Shapiro, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, says in a court filings that the hearing on the issue, including the Committee's response, is moved to a time and date still to be determined. Debtors & SFO Noteholders Agree on Confidentiality The Debtors and the SFO Noteholders jointly sought and obtained the Court's approval of a confidentiality agreement, pursuant to which the Debtors have agreed to provide Confidential Information to parties-in-interest, on matters concerning the Debtors' business, financial condition, operations, prospects, projections, plans, assets and liabilities of the Debtors, claims of the Debtors against third parties or any other matters relevant to the Debtors' Chapter 11 cases, or matters relevant to the formulation of one or more Chapter 11 plans. The Debtors have determined that entry into the Confidentiality Agreement with parties-in-interest could facilitate negotiations toward a consensual plan of reorganization. A full-text copy of the Agreement is available for free at http://bankrupt.com/misc/SixF_InfComm_ConfiAgreement.pdf Prior to the entry of the order approving the Confidentiality Agreement, the Ad Hoc Committee of Six Flags Noteholders filed with the Court a limited objection stating that to permit the Debtors to continue the closed-door negotiations only with the SFO Noteholders and to the exclusion of the SFI Noteholders and other stakeholders will only further divide the various creditor constituencies and set the stage for an increased amount of litigation in these Chapter 11 cases and will not result in a "consensual" plan as the Debtors suggest. About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Proposes to Enter Into $800 Mil. Exit Financing ---------------------------------------------------------- Exit financing is a necessary and integral component of the Debtors' strategy for emergence from Chapter 11, Paul E. Harner, Esq., Paul, Hastings, Janofsky & Walker, LLP, in Chicago, Illinois, tells the Court. The Debtors require exit financing to, among other things, fund Plan distributions and finance the Debtors' post-emergence operating expenses and other working capital needs, he adds. To that end, he says the Debtors' proposed Plan of Reorganization will predicate the Plan's effectiveness on the satisfaction or waiver of all conditions precedent to exit financing arrangements and the Debtors' access to funds under those arrangements. By this motion, Debtors ask Judge Christopher S. Sontchi of the United States Bankruptcy Court for the District of Delaware for authority to enter into: (a) a commitment letter dated October 26, 2009, by and among the Debtors and the "Commitment Parties," led by JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc., Bank of America, N.A. and Bank of America Securities, under which the Commitment Parties will extend to the Debtors an $800 million exit financing facility; and (b) a commitment letter dated October 29, 2009, by and among certain of the Debtors and TW-SF LLC, a subsidiary of Time Warner, Inc., under which TW-SF will extend a $150 million multi-draw term loan facility to several non-debtor affiliates of Six Flags, Inc. JPM/BOA Facilities The salient provisions of the credit facilities that will be created pursuant to the JPMorgan/Bank of America Commitment Letter are: * The Reorganized Six Flags Theme Park stands as the Borrower. * The entities that stand as guarantors for the Exit Financing commitment are Reorganized Six Flags, Inc., Reorganized Six Flags Operations and each of the current direct and indirect subsidiaries of Reorganized Six Flags Theme Park; provided that to the extent Reorganized SFTP acquires a non- wholly owned direct or indirect subsidiary after the Closing Date, that subsidiary will not be required to be a guarantor of the Exit Facility Loans. * The principal amount for the Exit Financing commitment is $800,000,000, comprised of a $150,000,000 revolving loan facility and a $650,000,000 term loan facility. * The Exit Revolving Loans will mature five years from the closing date and the maturity of the Exit Term Loan is six years from the closing date. * The interest on the Exit Term Loan is computed as LIBOR + 4.25% with a LIBOR floor of 2% and a 1.50% commitment fee on the Exit Revolving Loans. * The Exit Facility Loan Documents will contain restrictive covenants that limit, among other things, the ability of the Exit Financing Loan Parties to incur indebtedness, create liens, engage in mergers, consolidations and other fundamental changes, make investments of loans, engage in transactions with affiliates, pay dividends, make capital expenditures and repurchase capital stock. * The Commitment Parties' commitment is subject to certain customary conditions and market "flex" provisions as well as confirmation of the Plan and the retention of the existing senior management of the Debtors continuing as the senior management of the SFI after the consummation of the Plan. * The exit Facility Loans will be secured by first priority liens upon substantially all existing and after-acquired assets of the Exit Facility Loan Parties. * Any material changes to the Exit Facility Loans will be subject to the approval of a group of majority backstop purchasers. A full-text copy of the Commitment Letter is available for free at http://bankrupt.com/misc/SixF_JPMBOA_ExitFin_Commitltr.pdf Simpson Thacher & Bartlett represents the Administrative Agent and the Lead Arrangers to the proposed Exit Financing. New Time Warner Loan The principal amount for the New TW Loan is a $150,000,000 multi- draw loan facility. The principal amount of the New TW Loan borrowed on each Funding Date will be due and payable five years from the Funding Date. Borrowers under the New TW Loan are non-Debtors SFOG Acquisition A, Inc., and SFOG Acquisition B, L.L.C. -- "GA Acquisition Companies;" and SFOT Acquisition I, Inc.; and SFOT Acquisition II, Inc. -- "TX Acquisition Companies." The New TW Loan Facility will be unconditionally guaranteed on a joint and several and senior unsecured basis by (i) Six Flags, Inc., (ii) Six Flags Theme Parks, Inc., (iii) Six Flags Operations, Inc., and (iv) each of the current and future direct and indirect subsidiaries of SFI who are or in the future become guarantors of the SFTP Senior Term Credit Facility or SFTP Senior Revolving Credit Facility. The interest for the New TW Loan will be computed at a rate equal to (i) the greater of (a) LIBOR and (b) 2.50% plus (ii) the then "Applicable Margin" under the Exit Term Loan or under any successor term facility plus (iii) 1.00%. In the event that any of the loan parties issue corporate bonds or other public debt, the "Applicable Margin" will be adjusted based on the applicable default swap spread then in effect, subject to a fixed cap. TW's commitment is subject to certain customary conditions as well as confirmation of the Plan and the retention of the existing senior management of the Debtors continuing as the senior management or SFI following consummation of the Plan. In addition the New TW Commitment Papers would be subject to the Court's approval. Any material changes to the New TW Loan will be subject to the approval of the Majority Backstop Purchasers. Proceeds from the New TW Loan Facility will be used by the Borrowers solely to purchase Units (as defined in the "GA Overall Agreement" and the "TX Overall Agreement") pursuant to any Liquidity Put. The Acquisition Subsidiaries, on May 15, 2009, entered into a promissory note with TW-SF, pursuant to which TW-SF loaned approximately $53 million to the Subsidiaries, which are obligated to fund the "put" obligations related to the their parks. A full-text copy of the New TW Loan Commitment Letter is available for free at: http://bankrupt.com/misc/SixF_TW_SF_Commitltr.pdf Mr. Harner tells the Court that obtaining a cost-effective financing facility to facilitate the Debtors' exit from Chapter 11 is critical to the success of the overall restructuring efforts of the Debtors. The Debtors believe that they have obtained favorable terms for the exit financing, based on negotiations and consultation with their advisors. Furthermore, the Debtors believe that the relief requested will allow the Debtors to emerge successfully from these Chapter 11 cases and maximize value for the benefit of their estates and creditors, Mr. Harner asserts. The Debtors ask the Court to convene a hearing to consider this motion on November 20, 2009, at 2:00 p.m., Eastern Standard Time. The Debtors also ask the Court that objections be submitted not later than November 13. About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Reaches Consensus With Noteholders, Amends Plan ---------------------------------------------------------- Six Flags, Inc., and its debtor affiliates have agreed to further modify its plan of reorganization and accompanying disclosure statement after ultimately reaching a consensus with members of an informal committee of holders of senior unsecured notes. The new Plan further enhances creditor recoveries and the Debtors' long-term business prospects and enterprise value, the Debtors said in court papers. The Informal Committee is led by Avenue Capital Management. Six Flags said in a regulatory filing with the U.S. Securities and Exchange Commission that it filed the Second Amended Plan of Reorganization and accompanying Disclosure Statement on November 7, 2009, with the U.S. Bankruptcy Court for the District of Delaware. Six Flags, according to Tom Hals of Reuters, said it realized it had to modify its reorganization plan after discussions with creditors, and as financial markets improved. The "stabilization and loosening of the credit markets has created financing opportunities that did not exist at the times these cases were filed and the original plan was formulated," Six Flags said in a court filing. The new plan is based on proposals by the Noteholders and includes selling $450 million in new stock to increase the money available for creditors, Reuters related. The new plan does not propose changing Six Flags senior management, which is headed by Mark Shapiro, a former ESPN executive, Reuters said. Reuters further related that in the New Plan, holders of one class of unsecured bonds with claims of $420 million now stand to get up to 47.1% of Six Flags. Six Flags originally proposed giving them 7%. Another class of unsecured bondholders with claims of $1.3 billion now stand to get as much as 4.8% of the company, compared to the original plan that offered 1%, the report said. While Six Flags said the new plan had broad support, Mr. Hal opined the new plan may face objections. A junior class of bondholders led by Stark Investments said the company and senior bondholders had excluded them from negotiations. Preferred equity holders, led by Resilient Capital Management, have also suggested a separate plan that focused on cutting expenses and maintaining cash flow to provide a recovery for all creditors and some equity holders. In August, a group of Six Flags' former top executives offered to manage the company. Judge Christopher Sontchi has adjourned to November 20, 2009, at 2:00 p.m. (EST), the hearing to consider the adequacy of Six Flags' disclosure statement explaining its reorganization plan. Hearing on the Disclosure Statement was previously scheduled for November 5. About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SIX FLAGS: Reports $137.9 Mil. Net Income for Third Quarter ----------------------------------------------------------- Six Flags, Inc., announced its consolidated operating results for the third quarter and nine months ended September 30, 2009. Three Month Results Total revenues of $457.0 million decreased 7% from the prior-year quarter's total of $489.3 million, primarily reflecting reduced attendance and guest spending. Attendance for the quarter was 12.0 million, down 1% comparing to 12.2 million in the third quarter of 2008. Although the Company benefited from increased single-day ticket and season pass attendance, this was more than offset by a decline in group sales, reflecting cutbacks in outings by companies, schools and other organizations, and reduced complimentary and free promotional tickets. Per capita guest spending decreased 5% to $36.93 from $38.67 in the third quarter of 2008, reflecting reduced in-park spending and admissions. Included in the lower guest spending is the impact of a weaker Mexican peso and Canadian dollar in the current-year quarter, affecting U.S. dollar translated results for the parks in Mexico City and Montreal. Exchange rates accounted for approximately one percentage point, or $0.45, of the guest spending per capita decline for the quarter compared to the prior year quarter. Revenues for the quarter also were affected by a decline in sponsorship, licensing and other fees of $5.5 million compared to the prior-year quarter, primarily driven by lower international licensing fees. Cash operating expenses for the quarter of $232.5 million were down 1% from $234.6 million in the third quarter of 2008, reflecting reduced cash-based incentive compensation, favorable currency impacts at the Mexico City and Montreal parks, decreased consulting and outside services and lower cost of sales reflecting reduced in-park sales, partially offset by increased advertising expenses due to the timing of expenditures and higher park labor costs primarily reflecting increased minimum wage rates. Non-cash operating expenses of depreciation, amortization, stock- based compensation and loss on disposal of assets decreased $8.9 million, or 19%, in the current-year quarter to $37.0 million, compared with $45.9 million in 2008, primarily driven by decreased loss on disposal of assets. The Company's results from continuing operations in the third quarter of 2009 decreased to $165.8 million compared to $166.5 million in the prior-year quarter. The decrease of $0.7 million was driven by a $21.3 million reduction in income from operations due primarily to reduced revenues partially offset by lower expenses, as well as a $28.7 million decrease in interest expense reflecting the cessation of interest accruals on the Company's debt subject to compromise as a result of the chapter 11 filing on June 13, 2009 (see Recent Developments below) and lower effective rates, partially offset by $7.0 million in reorganization costs associated with the chapter 11 filing. Adjusted EBITDA for the quarter decreased by $25.9 million, or 11%, to $209.7 million compared to $235.6 million for the prior- year quarter, reflecting the impact of reduced revenues partially offset by lower third party interest in the EBITDA of certain operations and reduced cash operating expenses. Nine Month Results For the nine months ended September 30, 2009, total revenues decreased $92.2 million, or 10%, to $811.0 million from $903.2 million in the prior-year period, primarily reflecting reduced attendance and guest spending. Attendance for the first nine months of 2009 was 21.2 million, down 5% from 22.2 million in the same period of 2008, benefiting from increased single-day tickets and season pass attendance, but more than offset by reductions in group sales along with decreased complimentary and free promotional tickets. Guest spending per capita of $36.72 in the first nine months of 2009 was down 5% from the prior-year period's guest spending per capita of $38.58, reflecting decreases in in-park spending and admissions. Included in the reduced guest spending is the impact of a weaker Mexican peso and Canadian dollar in the current-year period, affecting the U.S. dollar translated results for the parks in Mexico City and Montreal. Exchange rates accounted for approximately two percentage points, or $0.63, of the guest spending per capita decline for the first nine months of 2009 compared to the prior-year period. Revenues for the nine months were also impacted by a decline in sponsorship, licensing and other fees of $12.3 million compared to the prior-year period, primarily driven by lower international licensing fees, partially offset by increased sponsorship revenue. The overall negative macroeconomic environment impacted the first nine months of 2009. In addition, attendance in Mexico and Texas was adversely affected by the second quarter outbreak of the Swine flu. Also contributing to the first nine months attendance decline was the impact of adverse weather compared to the prior- year period. Cash operating expenses for the first nine months of 2009 were down 3% to $578.0 million from $596.1 million in the same period of 2008, reflecting favorable exchange rate impacts at the Mexico City and Montreal parks, lower cost of sales due to decreased in- park revenues, reduced cash-based incentive compensation, lower consulting and outside service costs, decreased insurance expenses and lower marketing expenses due in part to the timing of expenditures, partially offset by higher labor costs at the park primarily reflecting increased minimum wages. Non-cash operating expenses of depreciation, amortization, stock- based compensation and loss on disposal of assets decreased $9.6 million, or 8%, in the first nine months of 2009 to $115.7 million, compared with $125.3 million in the 2008 period, driven by decreased loss on disposal of assets, as well as decreased stock-based compensation and employee benefit expenses. The Company incurred a loss from continuing operations of $74.8 million in the current-year period compared to income from continuing operations of $147.3 million in the same period of 2008. The decrease of $222.1 million was driven by the prior- year debt extinguishment gain of $107.7 million, $85.8 million of reorganization items associated with the current-year chapter 11 filing, $64.5 million of reduced income from operations due primarily to reduced revenues partially offset by lower expenses, increased other expense of $17.2 million reflecting the termination of an interest rate swap, and $49.6 million of reduced net interest expense reflecting the cessation of interest accruals on the Company's debt subject to compromise as a result of the chapter 11 filing, the write-off of discounts, premiums and deferred financing costs and lower effective interest rates. Adjusted EBITDA for the first nine months of 2009 was $205.0 million, a decrease of $65.1 million from the Adjusted EBITDA of $270.1 million for the first nine months of 2008, reflecting the impact of reduced revenues partially offset by lower cash operating expenses and lower third party interest in the EBITDA of certain operations. Full-Year Forecast The Company is forecasting to finish 2009 with an Adjusted EBITDA of approximately $190 million, reflecting an Adjusted EBITDA loss of approximately $15 million in the fourth quarter of 2009 compared to a positive Adjusted EBITDA of $5.2 million in the fourth quarter of 2008. Driving the year-over-year change for the fourth quarter is the impact of declines in in-park guest spending and decreased revenues due to adverse weather conditions during October, especially on the east coast, which has led to a loss of approximately 450,000 in attendance, compared to October 2008, as well as reduced international licensing fees. The Company also anticipates slightly higher cash operating expenses, reflecting the timing of specific promotional and repairs and maintenance programs. Recent Developments On June 13, 2009, Six Flags, Inc., Six Flags Operations Inc., Six Flags Theme Parks Inc. and certain of SFTP's domestic subsidiaries filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. As a result, the financial statements reflect the Company's status as debtor in possession since that date. As of September 30, 2009, the Company had unrestricted cash of $262.1 million available to pay administrative claims as well as liabilities from before the filing date that have been approved for payment by the Court. Based on the final orders by the Court with respect to the use of cash, the Company does not currently expect it will require debtor in possession financing during the chapter 11 proceedings. It is expected that the Company's existing common and preferred stockholders as well as certain unsecured creditors will have their claims compromised by order of the Court. As a result of this expected compromise, interest accruing after the filing date will not be recognized as interest expense, except for interest on the Company's Senior Secured Credit Facility dated May 25, 2007, which is not expected to be compromised. Six Flags, Inc. Balance Sheet Data As of Sept. 30, 2009 Assets: Cash and cash equivalents $262,126,000 Total Assets 3,075,739,000 Current portion of long-term debt 305,448,000 Long-Term debt (excluding current portion) 843,905,000 Redeemable non-controlling interests 373,469,000 Mandatory redeemable preferred stock 0 Total stockholders' deficit ($482,708,000) Six Flags, Inc. Statement of Operations For the Three Months Ended Sept. 30, 2009 Revenue $457,035,000 Costs and expenses 232,521,000 Depreciation 36,949,000 Amortization 229,000 Stock-based compensation 521,000 Loss (gain) on disposal of assets (723,000) ------------ Income (loss) from operations 187,538,000 Interest expense (net) 16,061,000 Equity in (income) loss from operations of partnerships (1,521,000) Net (gain) on debt extinguishment - Other expense 148,000 Income (loss) from continuing operations before reorganization items and income taxes 172,850,000 Reorganization items 7,038,000 Income (loss) from continuing operations before income taxes 165,812,000 Income tax benefit (expense) (8,378,000) ------------- Income (loss) from continuing operations 157,434,000 Discontinued operations 3,442,000 ------------- Net income (loss) 160,876,000 Less: Net income attributable to non- controlling interests (17,536,000) ------------- Net income (loss) attributable 143,340,000 to Six Flags, Inc. Net income (loss) applicable to Six Flags, Inc. common stockholders $137,927,000 ============= Six Flags, Inc. Statement of Free Cash Flow For the Three Months Ended Sept. 30, 2009 Net income (loss) $160,876,000 Discontinued operations (3,442,000) Income tax (benefit) expenses 8,378,000 Reorganization items 7,038,000 Other expense 148,000 Net (gain) on debt extinguishment - Equity in income(loss) from operations of partnerships (1,521,000) Interest expense (net) 16,061,000 Loss (gain) on disposal of assets (723,000) Amortization 229,000 Depreciation 36,949,000 Stock-based compensation 521,000 Third party interest in EBITDA of certain operations (14,852,000) ------------ Adjusted EBITDA 209,662,000 Cash Paid for interest (net) and debt issuance costs (12,444,000) Capital expenditures (net) (6,806,000) Cash dividends and taxes (1,171,000) ------------ Free Cash Flow $189,241,000 ============ About Six Flags Headquartered in New York City, Six Flags, Inc., is the world's largest regional theme park company with 20 parks across the United States, Mexico and Canada. Six Flags filed for Chapter 11 protection on June 13, 2009 (Bankr. D. Del. Lead Case No. 09-12019). Paul E. Harner, Esq., Steven T. Catlett, Esq., and Christian M. Auty, Esq., at Paul, Hastings, Janofsky & Walker LLP in Chicago, Illinois, act as the Debtors' lead counsel. Daniel J. DeFranceschi, Esq., and L. Katherine Good, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, act as local counsel. Cadwalader Wickersham & Taft LLP, serves as special counsel. Houlihan Lokey Howard & Zukin Capital Inc., serves as financial advisors, while KPMG LLC acts as accountants. Kurtzman Carson Consultants LLC serves as claims and notice agent. As of March 31, 2009, Six Flags had $2,907,335,000 in total assets and $3,431,647,000 in total liabilities. Bankruptcy Creditors' Service, Inc., publishes Six Flags Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Six Flags Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000). SJ REALTY: Files for Bankruptcy to Restructure Under Chapter 11 --------------------------------------------------------------- SJ Realty Group LLC and its affiliate, DRSRJ Development LLC, filed a bankruptcy in U.S. Bankruptcy Court for the Middle District of Florida, seeking to reorganize under Chapter 11, according to Tampa Bay Business Journal. The Company, the report says, estimates its assets at less than $50,000, and liabilities at less than $100,000. The report notes that Buddy Ford represents the companies. SJ Realty Group LLC aka Tampa Truck Stop and Citgo Auto/Truck Plaza operates the 301 Truck Stop at 6503 U.S. 19 N., Tampa. SMART BALANCE: S&P Raises Corporate Credit Rating to 'B' -------------------------------------------------------- Standard & Poor's Ratings Services said it raised its corporate credit rating on Paramus, New Jersey-based Smart Balance Inc. to 'B' from 'B-'. The outlook is stable. Immediately thereafter, S&P withdrew all ratings at the company's request. "The ratings actions follow the company's recently announced credit facility refinancing, whereby it entered into a new $55 million term loan maturing 2013 and a $45 million revolving credit facility ($5.6 million currently outstanding) maturing 2013," explained Standard & Poor's credit analyst Christopher Johnson. Proceeds from the transaction and available cash were used to prepay the company's now terminated $140 million first- lien term loan maturing 2014 ($54.5 million outstanding as of Sept. 30, 2009) and $40 million second-lien term loan maturing 2014 ($10 million outstanding as of Sept. 30, 2009). The refinancing reduced debt by about $4 million. "It is S&P's opinion that the company's continue improvement in operating performance, together with the terms of the new facility, has improved the company's covenant cushion and overall liquidity position," continued Mr. Johnson. S&P estimates that the current EBITDA cushion on the new facilities for the 2.75x maximum leverage covenant will be well over 30% by fiscal year-end 2009. Although S&P expects annual interest expense to double to closer to $3 million under the new credit facility, EBITDA coverage is likely to remain well in excess of the new credit facility's minimum 2x debt service coverage covenant. SPECIALIZED TECHNOLOGY: S&P Raises Corp. Credit Rating to 'B+' -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Enfield, Connecticut-based Specialized Technology Resources Inc., a wholly owned subsidiary of STR Holdings Inc., including raising the corporate credit rating to 'B+' from 'B'. The rating outlook is stable. At the same time, S&P raised the issue-level rating on the company's second-lien bank term loan to 'B+' (the same as the corporate credit rating) from 'B-'. S&P revised the recovery rating on the second-lien bank loan to '4', indicating S&P's expectation of average (30% to 50%) recovery in the event of a payment default, from '5'. "The ratings upgrade reflects STR's improvement in operating performance in the last three quarters on a sequential basis, primarily a result of higher demand for its services in combination with cost-reduction efforts," said Standard & Poor's credit analyst Andy Sookram. The rating actions also take into account S&P's expectation that STR's earnings growth will continue because of increased demand for solar power panel encapsulants due to an improving economy and better credit market conditions. In addition, S&P expects credit measures to improve modestly due to the company's recent IPO of its common stock. Pro forma for the repayment of about $15 million (or a 5% reduction) of first-lien debt with a portion of the proceeds from the IPO, S&P expects adjusted debt to EBITDA to improve to 3.4x from 3.6x at Sept. 30, 2009. Given S&P's expectation for higher earnings over the next several quarters, S&P think the company will further improve its credit measures, with debt to EBITDA falling to about 3x by the end of 2010. Likewise, S&P expects interest coverage to improve to about 5x from the current 4x over the same time frame. S&P expects operating performance will improve over the next few quarters because of stronger demand for the solar business as a result of green energy initiatives and better credit market conditions for financing alternative energy projects. As a result, S&P expects STR's credit measures will be in line with the 'B+' rating, with adjusted debt to EBITDA of slightly under 3.5x and EBITDA coverage of interest of over 4x. S&P could raise the ratings if operating performance improves more than S&P is currently forecasting, which would result from stronger-than- expected demand for the company products and services. Given the company's vulnerable business risk profile, this could occur if revenues increase by approximately 15% and operating margins increase to over 35% on a sustained basis, resulting in a debt to EBITDA ratio of 2.5x. While less likely in the near term, S&P could lower the rating if STR experiences a significant decline in operating performance due to competitive pressures, an intensified competitive environment, or a significant change in financial policy, including acquisitions or aggressive shareholder returns. Specifically, a ratings downgrade could occur if leverage increases to more than 4x-4.5x on a sustained basis. SPRINT NEXTEL: To Let Go of Up to 2,500 Employees to Save $350MM ---------------------------------------------------------------- Sprint Nextel Corp. announced November 9 that it will take actions in the fourth quarter of 2009 to reduce internal and external labor costs by at least $350 million on an annualized basis. The actions include the elimination of 2,000 to 2,500 positions within the company. The impact on geographic locations will vary, and many impacted positions will be eliminated by December 31, 2009. The reduction impacts positions companywide, including those previously announced this month in the Wholesale organization, as well as a reduction in contractor and other outside labor. The company is taking this action in a careful manner to ensure that there is no impact on the improved customer experience that has been reflected in much higher levels of satisfaction in customer surveys and in independent performance tests. Sprint has pledged to not waver on the company's commitment to quality service and products. Sprint has seen a notable reduction in calls per subscriber to customer care and increased customer satisfaction resulting from customer service improvements for seven sequential quarters. In this period, the company has been able to discontinue the use of 27 call centers as call volume has decreased in the wake of service improvements. Furthermore, the company's networks continue to operate with current best-ever metrics and has resulted in Sprint being named by PC World Magazine as having the most reliable network. The labor cost reductions are the latest action in the company's efforts to make its cost structure more competitive in the industry and to remain financially secure in a challenging economic environment. At the end of the third quarter 2009, the company had a balance of $5.9 billion in cash, cash equivalents and short-term investments, and said that it expects to continue to generate positive Free Cash Flow during the fourth quarter of 2009. Sprint will provide severance benefits and outplacement services for impacted employees. The company expects to recognize a charge of approximately $60 million to $80 million during the fourth quarter of 2009 for severance and related costs associated with the reduction. About Sprint Nextel Corporation Overland Park, Kansas-based Sprint Nextel Corporation is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses and government subscribers. Sprint Nextel is the third largest wireless communications company in the United States based on the number of wireless subscribers. Sprint Nextel is also one of the largest providers of wireline long distance services and one of the largest carriers of Internet traffic in the nation. Sprint Nextel carries Moody's Investors Service's Ba1 corporate family rating. Standard & Poor's Ratings Services said its rating on Sprint Nextel (BB/Negative/--) is not affected by the company's definitive agreement to acquire iPCS Inc. SUNCAL COS: Buys 1,000 Lots from Kimbal Hill for $20.1 Million -------------------------------------------------------------- SunCal Cos., owner of Marblehead development and 21 other projects, has managed to buy bargain property from Illinois-based developer Kimbal Hill Homes, Jeff Collins of OCregister reports . Mr. Collins relates that SunCal paid $20.1 million for 1,100 lots in 11 developments in Las Vegas and Henderson, Nevada. The deal includes 639 finished lots and 433 partially finished lots. The purchase was an all-cash deal financed through D.E. Shaw Group, who acted as both a lender and partner in the deal, according to SunCal spokesman. The transaction closed escrow on October 21, with SunCal acting through a subsidiary called Vegas Valley KHI Acquisition, Mr. Colline notes. About SunCal Companies SunCal Companies -- http://www.suncal.com/-- has more than 250,000 residential lots and 10 million square feet of commercial space in various stages of development throughout California, Arizona, Nevada and New Mexico. Some of SunCal's communities include Amerige Heights in Fullerton, Lincoln Crossing near Sacramento and Terra Lago and Fairway Canyon near Palm Springs. SunCal Companies recently added an active-adult, commercial, homebuilding, multifamily and urban divisions; and expanded to Florida, Texas and Washington, D.C. Irvine, California-based Palmdale Hills Property, LLC, develops real estate property. It filed for Chapter 11 protection on Nov. 6, 2008 (Bankr. C. D. Calif. Case No. 08-17206). Affiliates who also filed separate Chapter 11 petitions include: SunCal Beaumont Heights, LLC; SunCal Johannson Ranch, LLC; SunCal Summit Valley, LLC; SunCal Emerald Meadows LLC; SunCal Bickford Ranch, LLC; SunCal Communities I, LLC; SunCal Communities III, LLC; and SJD Development Corp. Paul J. Couchot, Esq., at Winthrop Couchot PC represents Plamdale Hills in its restructuring effort. The company listed assets of $100 million to $500 million and debts of $100 million to $500 million. SUPERIOR BOAT WORKS: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Superior Boat Works, Inc. P.O. Drawer 8 Greenville, MS 38702 Bankruptcy Case No.: 09-15836 Chapter 11 Petition Date: November 6, 2009 Court: United States Bankruptcy Court Northern District of Mississippi (Aberdeen) Judge: Neil P. Olack Debtor's Counsel: William R. Armstrong Jr., Esq. 1675 Lakeland Drive, Suite 308 Jackson, MS 39216 Tel: (601) 981-9696 Email: warmstrong_1@bellsouth.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Collins Brent, president of the Company. SW ACQUISITIONS: S&P Assigns Corporate Credit Rating at 'BB-' ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating and stable outlook to SW Acquisitions Co. Inc., a company formed by Blackstone Capital Partners V L.P., to acquire Busch Entertainment Corp. The rating outlook is stable. At the same time, S&P assigned issue-level and recovery ratings to the company's $1.175 billion of senior secured credit facilities, consisting of a $125 million revolving credit facility due 2014 and a $1.05 billion term loan B due 2016. S&P rated the credit facilities 'BB+' (two notches higher than the 'BB-' corporate credit rating on the company), with a recovery rating of '1', indicating S&P's expectation of substantial (90% to 100%) recovery for lenders in the event of a payment default. Pro forma total debt was $1.45 billion as of Sept. 30, 2009. "The 'BB-' rating reflects some geographic concentration in EBITDA, cyclical and seasonal operating performance, and management's plan to increase capital spending over the next two years, which may reduce discretionary cash flow," said Standard & Poor's credit analyst Hal Diamond. "Busch Entertainment's position as the second-largest U.S. theme park company and its moderate debt leverage do not offset these factors." Busch Entertainment owns and operates 10 parks in six metropolitan markets. The portfolio is a mix of regional and destination parks, which partially insulates the company from cyclical demand for leisure travel. Local and nearby visitation accounts for nearly two-thirds of attendance. These visitors have shorter stays and spend less that out-of-region U.S. and international visitors. There is some EBITDA concentration, as the five largest parks (three SeaWorld and two Busch Garden parks) contribute roughly 80% of total EBITDA. Nearly half of EBITDA is derived from three parks in Orlando, which together make the company a distant third-place player after market leader Walt Disney World and Universal Orlando. Disney's dominant brand, scale, and marketing in Orlando and its success in selling multiday passes have restricted the company's ability to gain market share. Still, Busch Entertainment offers a differentiated product appealing to a diverse target audience. The company successfully opened a new water park in 2008 adjacent to its existing Orlando parks. Pro forma for the transaction, including Blackstone's monitoring fee at 1.5% of EBITDA, lease-adjusted debt to EBITDA was moderate, at 4.3x for the 12 months ended Sept. 30, 2009. Leverage reflects the 6.7x EBITDA multiple paid for the company and Blackstone's large $975 million common equity contribution. Lease-adjusted EBITDA coverage of interest was adequate at 3.0x. Discretionary cash flow for the 12 months ended Sept. 30, 2009, pro forma for the company's interest expense, amounted to roughly one-fourth of EBITDA, partly as a result of reduced capital spending. S&P expects discretionary cash flow to be moderate in 2010, in light of the company's higher capital spending plans to develop new rides and attractions. TARRAGON CORP: Court Extends Plan Solicitation Until November 19 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey, in its bridge order, extended until Nov. 19, 2009, Tarragon Corp. and its debtor-affiliates' exclusive period to solicit acceptances to the Chapter 11 Plan of Reorganization. The Debtors asked for a Dec. 8, 2009, extension. The Debtors' exclusive right to solicit acceptances expired on Nov. 5, 2009. The Court is set to continue hearing on the Debtors' motion on Nov. 19, 2009. Objections, if any are due on Nov. 12, 2009. Based in New York City, Tarragon Corporation (NasdaqGS:TARR) -- http://www.tarragoncorp.com/-- is a leading developer of multifamily housing for rent and for sale. Tarragon's operations are concentrated in the Northeast, Florida, Texas, and Tennessee. Tarragon and its affiliates filed for Chapter 11 protection on January 12, 2009 (Bankr. D. N.J. Case No. 09-10555). The Hon. Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., Warren A. Usatine, Esq., and Felice R. Yudkin, Esq., at Cole Schotz Meisel Forman & Leonard, P.A. TELKONET INC: Receives Delisting Notice From NYSE Amex ------------------------------------------------------ Telkonet, Inc., disclosed that on November 3, 2009, it received notice from NYSE Amex, LLC that a Listing Qualifications Panel of the Exchange's Committee on Securities had affirmed the Exchange's Listing Qualifications Department staff's determination to delist the Company's common stock from the Exchange. By way of background, as previously reported in the Company's Current Reports on Form 8-K (filed on May 21, 2009 and September 2, 2009), the Company previously received notices from the Exchange regarding the delisting of its common stock because the Company was not in compliance with Section 1003(a)(iv) of the Exchange's Company Guide in that it had sustained losses which were so substantial in relation to its overall operations or its existing financial resources, or its financial condition had become so impaired that it appeared questionable, in the opinion of the Exchange, as to whether the Company would be able to continue operations and/or meet its obligations as they mature. After considering the costs to the Company of compliance with the continued listing requirements of the Exchange and other factors, the Company determined that it was not in the best interest of the Company and its shareholders to appeal the delisting of the Company's securities from the Exchange and approved the voluntary delisting of the securities. The Company intends to file a Form 25 with the Securities and Exchange Commission and anticipates that the delisting will be effective 10 days after the date of filing of the Form 25. Upon delisting from the Exchange, the Company intends to have its common stock quoted on the OTC Bulletin Board. Jason Tienor, Chief Executive Officer of Telkonet, commented, "This decision by the Exchange, while disappointing, was not completely unexpected. More importantly, this decision has no effect on Telkonet's day-to-day operations. Notwithstanding the Exchange's decision, we remain optimistic about our business for the longer term and will continue to focus on growing our core business regardless of any transition from the NYSE Amex to the OTCBB." About Telkonet Germantown, Maryland-based Telkonet Inc. -- http://www.telkonet.com/-- provides integrated, centrally-managed energy management and Smart Grid networking solutions that improve energy efficiency and reduce the demand for new energy generation. TETON ENERGY: Files for Reorganization Under Chapter 11 ------------------------------------------------------- Teton Energy Corporation (Nasdaq: TEC) on November 9 announced that it and each of its subsidiaries have filed voluntary Chapter 11 petitions and a proposed plan of reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The plan of reorganization provides for the emergence of Teton from bankruptcy as a reorganized entity, and contemplates the re- vesting of Teton's assets in the reorganized Teton free and clear of any liens, encumbrances or other interests, and the funding of Teton's obligations under the plan through a transfer of its assets pursuant to a Court approved auction process. To facilitate this sale, Teton has entered into an agreement with Rise Energy Partners II, LLC, a Delaware limited liability company, whereby Rise has agreed to fund Teton's emergence from the reorganization proceedings. Under the proposed plan of reorganization and agreement with Rise, if confirmed by the Bankruptcy Court, Rise, if the highest bidder in the auction process, will acquire 100% of the membership interests of the reorganized Teton, which will be a limited liability company. In exchange, Rise has agreed to contribute $18.7 million, of which $11.7 million will be contributed in cash and $7 million will be contributed in the form of a loan. The funds will be used to pay off Teton's creditors. Teton remains in possession of its assets, and will continue to manage and operate its business and properties in the ordinary course throughout the reorganization process while seeking confirmation of its plan of reorganization under the jurisdiction of the Bankruptcy Court. The Chapter 11 filing and the plan of reorganization have been designed to protect the integrity of Teton's operations and the value of its assets. In addition to the filing of the Chapter 11 cases, Teton has filed for the Bankruptcy Court's consideration several "first day" motions on an expedited basis, concerning its employees, vendors and other service providers in order to be able to continue to operate normally. Generally, the Federal bankruptcy laws prohibit a debtor from paying outstanding obligations that arose prior to the filings under Chapter 11 of the Bankruptcy Code. These obligations will be provided for under the direction of the Bankruptcy Court. The plan of reorganization is subject to confirmation by the Bankruptcy Court and the approval of certain creditors. The Company expects confirmation of the plan of reorganization during January 2010. Teton would like to inform investors that it believes it is likely that there will be no value for its common stockholders in the bankruptcy process. Teton does not contemplate its stockholders receiving any recovery absent it receiving a substantially higher and better offer for the membership interests in the reorganized company. Stockholders of a company in chapter 11 generally receive value only if all claims of the company's secured and unsecured creditors are fully satisfied. In this case, the expected proceeds from the sale are substantially less than the amount Teton's secured and unsecured creditors are owed. Therefore, Teton's management strongly believes all such claims will not be fully satisfied, leading to its belief that its common stock will have no value. About Teton Energy Teton Energy Corporation -- http://www.teton-energy.com/-- is an independent oil and gas exploration and production company focused on the acquisition, exploration and development of North American properties. The Company's current operations are concentrated in the prolific Rocky Mountain and Mid-continent regions of the U.S. Teton has leasehold interests in the Central Kansas Uplift, eastern Denver-Julesburg Basin in Colorado and the Big Horn Basin in Wyoming. Teton is headquartered in Denver, Colorado. The Company's balance sheet at June 30, 2009, showed total assets of $60.00 million, total liabilities of $50.90 million and stockholders' equity of about $9.10 million TISHMAN SPEYER: Seeks Special Servicer for PCV/ST Loan ------------------------------------------------------ Fitch Ratings does not expect to take any negative rating actions following the transfer of the Peter Cooper Village/Stuyvesant Town (PCV/ST) loan to special servicing November 6. The $3 billion A- Note was transferred to CWCapital, as special servicer, due to the sponsors' request for relief. Details of the request for relief by Tishman Speyer Properties, LP and Blackrock Realty are not immediately available. Fitch expected the transfer of the loan to special servicing as cash flow generated by the property remains insufficient to service the debt. Debt service reserves are expected to be depleted by the end of December. Fitch downgraded U.S. commercial mortgage backed security (CMBS) transactions containing portions of the PCV/ST loan on Aug. 28, 2009 and Oct. 30, 2009 based on the expected default of the loan and Fitch's estimate of value. Fitch believes there will be many factors involved in the workout and ultimate recovery of the loan, including a possible modification, potential legislative changes to rent stabilization laws, commitment of the loan sponsors, the remaining seven-year term of the loan, and the low loan per unit ($267,213). (See Fitch Downgrades 3 CMBS Deals on Higher Peter Cooper/Stuy Town Losses, Oct. 30, 2009, available at 'www.fitchratings.com'.) Fitch will continue to monitor the workout of the loan and adjust its modeled recognized losses as details become available. Pieces of the $3 billion pari passu PCV/ST loan are securitized in the following transactions: --WBCMT 2007-C30; --COBALT 2007-C2; --ML-CFC 2007-5; PCV/ST comprises 56 multi-story buildings, situated on 80 acres, and includes a total of 11,227 apartments. The loan sponsors, Tishman Speyer Properties, LP and BlackRock Realty, acquired the property with the intent of converting rent-stabilized units to market rents as tenants vacated the property; however, the conversion of units has since been determined to be illegal by the New York State Court of Appeals. In addition to the $3 billion securitized balance, there is an additional $1.5 billion of mezzanine debt held outside the trust. TRITON EP LLC: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Triton EP, LLC 15455 Dallas Parkway, Suite 600 Addison, TX 75001 Bankruptcy Case No.: 09-37667 Chapter 11 Petition Date: November 7, 2009 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Richard G. Grant, Esq. Roberts & Grant, PC 7018 Primrose Lane Colleyville, TX 76034 Tel: (214) 210-2929 Fax: (214) 224-0198 Email: rgrant@robertsandgrant.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 Garry B. Smith, manager of the Company. TRUMP ENTERTAINMENT: Plan Confirmation Hearing Set on January 20 ---------------------------------------------------------------- The Hon. Judith H. Wizmur of the U.S. Bankruptcy Court for the District of New Jersey approved the disclosure statements of Trump Entertainment Resorts Inc., et.al., and of the ad hoc group of holders of 8-1/2% Senior Secured Notes due 2015. The confirmation hearing will be held at 10:00 a.m. (prevailing Eastern Time) on Jan. 20, 2010; and will be continued on Jan. 21-22, 2010, and Jan. 26-27, 2010, if necessary. Objections, if any are due Jan. 11, 2010, at 5:00 p.m. (prevailing Eastern Time.) Replies by the Debtors or the Ad Hoc Committee to any objections will be filed no later than 9:30 a.m. (prevailing Eastern Time) on Jan. 19, 2010. As reported by the TCR on Aug. 6, 2009, Trump Entertainment Resorts Inc. filed a Chapter 11 plan built around the proposed sale of the company to shareholder Donald Trump. Under the original plan, Donald J. Trump and BNAC, Inc., an affiliate of Beal Bank Nevada, will invest $100 million cash in the newly private company and become its owners. The original plan provides for a 94% recovery for Beal Bank, the secured creditor, and a wipe out for lower ranked creditors. The Ad Hoc Committee of Holders of the 8.5% Senior Secured Notes Due 2015 filed a competing plan, which originally offered a capital contribution of $175 million in new equity capital in the form of a rights offering backstopped by certain holders of the Senior Secured Notes. That plan would allow second lien noteholders and general unsecured claimants to receive their pro rata share of (a) 5% of the common stock of the reorganized Debtors, and (b) subscription rights to acquire 95% of the New Common Stock. The second lien noteholders are offering $225 million through a rights offering while selling one of the three casinos for $75 million to Coastal Marina LLC, a company controlled by Richard T. Fields. The second lien noteholders' plan would pay the first- lien debt in full by giving them new debt plus proceeds from the Marina sale and cash from the rights offering. The second lien noteholders and allowed general unsecured creditors would receive 95% of the new stock. The participants in the $225 million rights offering will receive 75% of the new stock while the noteholders who will backstop the offering will receive 25% of the new stock as backstop fee. The Court has also set Dec. 28, 2009, at 5:00 p.m. (New York City time) as the deadline for the actual receipt of ballots to accept or reject the Plan. Votes for the Plan must be delivered to: The Garden City Group, Inc. Trump Entertainment Resorts, Inc. P.O. Box 9000 No. 6517 Merrick, New York 11566-9000 Tel: (866) 396-9680 A full-text copy of the Ad Hoc Committee's Third Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/TrumpEntertainment_3rdAmendedDS.pdf A full-text copy of the Ad Hoc Committee's Third Amended Joint Plan of Reorganization is available for free at: http://bankrupt.com/misc/TrumpEntertainment_3rdAmendedPlan.pdf Based in Atlantic City, New Jersey, Trump Entertainment Resorts Inc. (NASDAQ: TRMP) -- http://www.trumpcasinos.com/-- owns and operates three casino hotel properties in Atlantic City, New Jersey, which include Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino, and Trump Marina Hotel Casino. The Company conducts gaming activities and provides customers with casino resort and entertainment. Donald Trump is a shareholder of the Company and, as its non- executive Chairman, is not involved in the daily operations of the Company. The Company is separate and distinct from Mr. Trump's privately held real estate and other holdings. Trump Entertainment Resorts, TCI 2 Holdings, LLC, and other affiliates filed for Chapter 11 on February 17, 2009 (Bankr. D. N.J., Lead Case No. 09-13654). The Company has tapped Charles A. Stanziale, Jr., Esq., at McCarter & English, LLP, as lead counsel, and Weil Gotshal & Manges as co-counsel. Ernst & Young LLP is the Company's auditor and accountant and Lazard Freres & Co. LLC is the financial advisor. Garden City Group is the claims agent. The Company disclosed assets of $2,055,555,000 and debts of $1,737,726,000 as of December 31, 2008. Trump Hotels & Casino Resorts, Inc., filed for Chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Trump Hotels' obtained the Court's confirmation of its Chapter 11 plan on April 5, 2005, and in May 2005, it exited from bankruptcy under the name Trump Entertainment Resorts Inc. UNIVERSAL AMERICAN: S&P Gives Outlook to Stable, Affirms Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services said it revised its outlook on Universal American Corp. and its core insurance operating subsidiaries to stable from negative. At the same time, S&P affirmed all of its ratings on the companies. "The outlook revision reflects Universal American's operating performance through the first three quarters of 2009, which has been in line with S&P's expectations for the current rating, as well as its ultimately successful integration of MemberHealth Inc.," said Standard & Poor's credit analyst Jon Reichert. In the first three quarters of 2009, pretax GAAP operating earnings increased 11% over the same period in 2008. The insurance companies also maintained capital redundancy at the 'A' level, as measured by Standard & Poor's capital model. Leverage at the holding company also remains supportive of the ratings, with financial leverage of less than 25% as of Sept. 30, 2009, and fixed-charge coverage of more than 8x as of year-end 2008. The 'BBB+' financial strength ratings continue to reflect Universal American's good competitive position, very good earnings, and strong capitalization. The company has successfully grown in the senior market. But, as a result of this growth, in conjunction with its exit from the life/annuity market, its competitive position is now concentrated in the Medicare Advantage and Medicare Part D lines of business. In 2009, Universal American began launching its Medicare Advantage preferred provider organization products as it faces the challenge of Medicare private fee-for-service deeming ending in 2011. VISTEON CORP: Court Partly Approves Incentive Program ----------------------------------------------------- Bankruptcy Judge Christopher Sontchi signed an order regarding an amended incentive program for Visteon and Corp. and its units The Court's order (i) denied the Debtors' request to pay up to $8.1 million in Key Employee Incentive Plan bonuses to 12 of their board elected officers, and (ii) approved the Debtors' request to honor the Long-Term Incentive Plan and make payments pursuant to that Plan of up to $3.3 million. The Court ruled on an amended version of the Debtors' Incentive Programs. It consists of a KEIP and a LTIP and is a scaled-down program as compared to the Original Incentive Program. The Amended Program provides for incentive payments, aggregating $11.4 million, to 95 employees. The Original Incentive Program was met with much opposition. Similarly, before the entry of Court's oral ruling on the Amended Program, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America and Roberta A. DeAngelis, the U.S. Trustee for Region 3, filed responses to the Revised Incentive Program Motion. The UAW wanted the Incentive Program denied, while the U.S. Trustee said she does not object to the Motion to the extent that it seeks approval of the LTIP for non-insiders. The UAW argued that the KEIP is a retention plan that violates the terms of Section 503(c)(1) of the Bankruptcy Code and asserted that the Debtors failed to establish that the Plan is fair and reasonable, given that it lavishes bonus money on the handful of individuals who control the Company, at a time when the Company is seeking to eliminate all employer-provided welfare benefits for Visteon retirees. The UAW added that the Incentive Motion gives no indication that the Debtors' compensation advisor, Towers, Perrin, Forster & Crosby, Inc., performed due diligence showing that the proposed bonuses are consistent with current standards in the severely distressed automotive industry. In a separate filing, IUE-CWA filed a joinder the UAW's objection. IUE-CWA represents approximately 2,100 retirees and dependents who are owed medical and life insurance benefits pursuant to the provisions of applicable collective bargaining agreements, plan documents, and summary plan descriptions. IUE- CWA contended that the Incentive Plan is not justified within the meaning of Section 503(c)(3) because (i) it fails to establish that bonuses provide a true incentive; (ii) it limits bonuses to a small group of top-level officers; (iii) it is not consistent with the standards in the automotive industry; and (iv) the Debtors have not established that they or their compensation consultants performed due diligence in formulating the Incentive Plan. For her part, the U.S. Trustee maintain that while the Debtors have reduced the proposed amount payable under the Amended Incentive Program, the criteria for payment remain essentially the same. She noted that the primary change appears to be that the Debtors removed lower level executives and rank and file employees from the Incentive Plan so that the insiders will still receive bonuses. The U.S. Trustee thus averred that her objections to the Original Program remain -- the Debtors have not satisfied their burden to demonstrate that the KEIP payments are not insider retention payments, that the KEIP is justified by the circumstances of the Debtors' cases, and that the KEIP represents necessary costs of preserving the estates. The Debtors also had their say to the objections. On the Debtors' behalf, Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, emphasized that Section 503(c)(3) is not applicable because the KEIP is largely an ordinary course program. She reiterated that the KEIP unequivocally incentivizes the Key Employees to work to improve the Debtors' financial performance and expeditiously exit bankruptcy. She added that the cost of the KEIP is reasonable in light of the size of the Debtors' business and that the scope of the KEIP is fair and reasonable. The KEIP, she noted, only applies to those Key Employees that are necessary to achievement of the KEIP metrics. Ms. Jones informed the Court that to ensure that the target KEIP awards are competitive and market-based, the Debtors performed considerable due diligence and analyzed competitive compensation data for the Key Employees. Furthermore, she noted, each of the Key Employees were chosen to participate in the KEIP after a careful evaluation process based on whether the employee's role is critical to accomplish the KEIP metrics. The Debtors thus asserted that the KEIP is not only justified and reasonable, but also critical to the successful outcome of their Chapter 11 cases and the long-term viability of their business. About Visteon Corp Visteon continues to win new business despite the difficult economic environment. During the first nine months of 2009, Visteon won more than $400 million in incremental new business. On a regional basis, Asia and North America each accounted for 41 percent of the total, with Europe accounting for the remaining 18 percent. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Files Chrysler Accommodation Pact Under Seal ---------------------------------------------------------- Visteon Corp. and its units seek the Court's authority to enter into a customer accommodation agreement with Chrysler Group LLC, providing for the re-sourcing and transition of certain Chrysler lines of business; the sale of inventory, equipment, and tooling related to those lines of business, accommodations for retained business; and other related benefits, as well as a related access and security agreement. Before the Petition Date, pursuant to various purchase orders issued by Chrysler and accepted by Visteon, Chrysler has ordered from Visteon certain component parts, service parts and assembled goods. The Debtors tell the Court that they executed the Accommodation Agreement in order to address their liquidity needs, exit lines of business that no longer fit into their strategic business plan, and maintain a business relationship with Chrysler with respect to other significant lines of business. Meanwhile, the Debtors ask the Court for permission to file under seal an Accommodation Agreement with Chrysler Group LLC. The Debtors assert that the Accommodation Agreement contains certain specific component parts pricing and program information that, if revealed to their competitors, may give those competitors an advantage in negotiating terms with Chrysler to the Debtors' detriment. Furthermore, the Debtors note, the Accommodation Agreement itself prohibits them from publicly disclosing the subject information. In place of previously filed exhibit, the Debtors provide a revised version of the redacted Accommodation Agreement with Chrysler, a copy of which is available for free at: http://bankrupt.com/misc/Visteon_RevisedChryslerAccommodation.pdf Reko Tool Objects to Pact Creditor Reko Tool & Mould, (1987) Inc., asks the Court to deny the Debtors' Accommodation Motion until: (a) it is provided with full information on the tooling to be sold and the sale prices; and (b) it is paid in full amount it is owed from the Debtors under the purchase orders between Reko and the Debtors for any Reko Tooling proposed to be transferred to Chrysler Group LLC. Reko relates that although the Accommodation Motion and Accommodation Agreement do not provide specifics, it knows that certain of its tooling sold to the Debtors and for which it possesses continuing liens is used for the production of component parts for Chrysler vehicles. About Visteon Corp Visteon continues to win new business despite the difficult economic environment. During the first nine months of 2009, Visteon won more than $400 million in incremental new business. On a regional basis, Asia and North America each accounted for 41 percent of the total, with Europe accounting for the remaining 18 percent. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Seeks to Enter Chartis Insurance Program ------------------------------------------------------ Visteon Corp. and its units seek the Court's authority to enter into an insurance program with Chartis, Inc., to provide them with workers' compensation liability insurance, automobile liability insurance, and commercial general liability insurance. As part of operating their businesses, the Debtors maintain certain insurance policies and programs. Before the Petition Date, the Debtors purchased an insurance program from Liberty Mutual Insurance Company to provide insurance coverage for workers' compensation liability, automobile liability, and commercial liability pursuant to various insurance policies and related documentation. The Liberty Mutual Insurance Program expired on October 15, 2009. The Debtors, through their insurance broker AON Risk Services Central, inc., thus contacted insurance companies to replace the Liberty Mutual Program, effective October 15, 2009, for one year. Due to the commencement of their Chapter 11 cases and the misperception by certain insurance companies of their financial situation, the Debtors note that many insurance companies were unwilling to offer administrative services and insurance coverage to them. In fact, the Debtors note, even though AON approached numerous insurers, the insurance broker was only able to obtain proposals from a limited number of service providers. Subsequently, the Debtors determined that the Chartis proposal is the best bet they have on the table. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, tells the Court that Chartis' willingness to enter into the Insurance Program is conditioned on the Debtors' agreement (i) to deposit $593,000 into a pooled cash account maintained by Chartis, and (ii) to provide an escrow funded with $7,000 as security for all of the Debtors' obligations to Chartis that arise between the Petition Date and the expiration of the Insurance Program and any renewal. Chartis agree to provide credit to the Debtors for interest accrued for the quarter on the daily cash balances held in the cash account, calculated at a rate equal to the three-month United States Constant Maturity yield as of the date of deposit. The Debtors must also pay a premium for $577,073 in order to maintain insurance coverage under the Insurance Program. Out of abundance of caution, Chartis is requiring that the Debtors obtain an order of the Court authorizing their entry into the Insurance Program on or before November 30, 2009. As part of that condition, Chartis is requesting the Debtors to obtain entry of that order containing these provisions: (a) The Debtors are authorized and agree to execute all documentation reasonably necessary to enter into the Chartis Insurance Program. (b) The Debtors are authorized to enter into further renewals of the Chartis Insurance Program without further order of the Court and the order approving the Motion will govern those renewals. (c) The Debtors are authorized and directed to pay their obligation under the Chartis Insurance Program, including premium and losses, in the ordinary course of business in accordance with the relevant terms of the Insurance Program, without further order of the Court. (d) In the event of default by the Debtors under the Insurance Program, Chartis may exercise all contractual rights in accordance with the terms of the Insurance Program as may be modified by the order approving the Motion solely with respect to obligations of the Debtors' estates which arise from and after May 28, 2009, without further order of the Court, including without limitation, its right to: (i) cancel the Insurance Program; (ii) foreclose on the Collateral provided under the Insurance Program, in part or in full, in which it has a security interest; and (iii) receive and apply the unearned or returned payments under the Insurance Program to the Debtors' outstanding obligations to Chartis. (e) The reimbursement obligations and any other obligations under the Insurance Program arising on or after the Petition Date will be deemed administrative expenses under Section 503(b) of the Bankruptcy Code. (f) The Collateral given to Chartis on account of the Insurance Program and all prior payments to Chartis under the Insurance Program are approved; and Chartis is authorized to retain and use that Collateral, or any additional or replacement collateral or security that may be provided to Chartis, in accordance with the terms of the Insurance Program solely with respect to obligations of the Debtors' estates which arise from and after May 28, 2009 until the expiration of the Insurance Program. (g) Chartis may adjust, settle and pay insured claims, utilized funds provided for that purpose, and otherwise carry out the terms and conditions of the Insurance Program without further Court order. (h) The Insurance Program may not be altered by any plan of reorganization filed in the Debtors' Chapter 11 cases, without the written consent of Chartis, and will survive any plan of reorganization filed by the Debtors. (i) The Debtors' rights against all Collateral held by Chartis on account of the Insurance Program, in whatever form, will be governed by the terms of the Insurance Program and the related security documentation, and the Debtors will not take any action against Chartis on account of the Insurance Program in the Bankruptcy Court that is inconsistent with the terms of that documentation, including, without limitation, actions for turnover or estimation. About Visteon Corp Visteon continues to win new business despite the difficult economic environment. During the first nine months of 2009, Visteon won more than $400 million in incremental new business. On a regional basis, Asia and North America each accounted for 41 percent of the total, with Europe accounting for the remaining 18 percent. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: To Auction Two Plants on Nov. 11 & 12 --------------------------------------------------- Visteon Corp., will auction two of its closed plants in Ohio and Missouri on November 11 and November 12, 2009, PlasticsNews.com reported. Visteon has been shutting down operations including the plants in Springfield, Ohio and Eureka, Missouri, as part of its restructuring efforts. According to the report, the sale covers robots, a material handling silo system, ultrasonic welders, tool making equipment and compressed air dryers. The auctions will be conducted by GoIndustry DoveBid, the report added. About Visteon Corp Visteon continues to win new business despite the difficult economic environment. During the first nine months of 2009, Visteon won more than $400 million in incremental new business. On a regional basis, Asia and North America each accounted for 41 percent of the total, with Europe accounting for the remaining 18 percent. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VYTERIS INC: Inks Amendment & Waiver to Registration Rights Deal ---------------------------------------------------------------- Vyteris, Inc., reports that on October 30, 2009, the Company, as part of its strategy to restructure its balance sheet, entered into an Amendment and Waiver to Registration Rights Agreement dated September 29, 2004 among Vyteris, Inc. (fka Treasure Mountain Holdings, Inc.), Spencer Trask Ventures, Inc., Rodman & Renshaw, LLC, and various shareholders. Pursuant to Section 6(f) of the Registration Rights Agreement, the terms of the Agreement, including Section 2(b) thereof, may be amended by the holders of a majority in interest of the holders of Registerable Securities under the Registration Rights Agreement. The Amendment requires the Company to compensate investors for registration rights penalties and interest incurred of approximately $2.6 million under Section 2(b) of the Agreement. The Company will issue up to 1,250,000 restricted shares of its common stock and warrants to purchase up to 1,250,000 restricted shares of its common stock at an exercise price of $0.75 per share with a term of up to three years in order to settle the approximately $2.6 million of accrued liquidated damages. On October 30, 2009, the Company issued 3,000,000 shares of its common stock and 3,000,000 warrants to purchase its common stock to an investor for a purchase price of $600,000 in a transaction exempt from registration under Section 4(2) of the Securities Act of 1933 (which means that all securities issued are restricted as to resale unless there is a valid registration statement or an exemption to registration available). The warrants are exercisable into shares of the Company's common stock at an exercise price of $0.20 per share, and bear a term of five years from the date of closing. The warrants shall contain a cashless exercise provision and contain "full ratchet" anti-dilution provisions. The Company paid $81,500 in fees in connection with the private placement. About Vyteris Vyteris, Inc., holds approximately 50 U.S. patents relating to the delivery of drugs across the skin using a mild electric current and operates in one business segment. The Company is pursuing peptide and small molecule opportunities through, among other things, drug development partnerships. As of June 30, 2009, the Company had $1,051,443 in total assets and $35,151,494 in total liabilities, resulting in $34,100,051 in stockholders' deficit. The Company said the report of the independent registered public accounting firm relating to the audit of the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph expressing uncertainty regarding the Company's ability to continue as a going concern because of its operating losses and its continuing need for additional capital. The Company said failure to obtain financing will require management to substantially curtail, if not cease, operations, which will result in a material adverse effect on the financial position and results of operations of the Company. WAIGHTSTILL MOUNTAIN: Sec. 341 Meeting Set for December 16 ---------------------------------------------------------- The U.S. Trustee for Region 4 will convene a meeting of Waightstill Mountain, LLC's creditors on December 16, 2009, at 1:00 p.m. at 1-Asheville 341 Meeting Room. This is the first meeting of creditors required under Section 341(a) of the U.S. 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. Asheville, North Carolina-based Waightstill Mountain, LLC, filed for Chapter 11 bankruptcy protection on October 29, 2009 (Bankr. W.D. N.C. Case No. 09-11197). Gene B. Johnson, Esq., at Johnson Law Firm, P.A., assists the Company in its restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in liabilities. WELLINGTON PARK: Loan Default Prompts Chapter 11 Filing ------------------------------------------------------- Wellington Park Pointe LLC filed for bankruptcy in U.S. Bankruptcy Court in Tacoma to restructure a loan from Regal Financial Bank of Seattle, Warren Kagarise of Issaquah press.com. The company, Mr. Kagarise relates, failed to make payments on a loan from the bank and defaulted $12 million in June. The company held $29 million in assets, but owes about $15 million, he notes. The filing halted a foreclosure auction of the company's Tiger Mountain land at the King County Administration Building, Mr. Kagarise says. Wellington Park Pointe LLC is a real estate developer. * Tennenbaum Capital Closes $330 Million DIP Financing Fund ----------------------------------------------------------- Tennenbaum Capital Partners, LLC, a private investment firm with extensive experience in distressed investing, announced the second closing of Tennenbaum DIP Opportunity Fund, LLC, an over $330 million fund focused on debtor-in-possession financing. "With the closing of this Fund, the first of our funds to exclusively focus on DIP financing, TCP will be able to assist companies severely affected by this downturn," said Howard Levkowitz, Managing Partner of TCP. "TCP will partner with management teams and other parties to provide loans to enable debtors sufficient time to reorganize properly." The Fund will lead, structure, agent and participate in DIPs and DIP refinancings, using TCP's unique experience with distressed investing to guide debtors through their restructurings. Debtor-in-possession financing, or DIP financing, is a special form of financing provided to assist companies under Chapter 11 bankruptcy protection. DIP financing is generally senior to other debt, equity, and any other securities issued by a company. DIP loans are generally put into place at the beginning of bankruptcy cases to provide immediate cash as well as ongoing working capital to allow a company to reorganize. DIP financing assists companies by restoring vendor and customer confidence in the company's ability to maintain its liquidity. The Fund targets DIP loans of a minimum $10 million. TCP has extensive experience working with companies in energy and power, manufacturing, media and business services, retail and consumer services, real estate, technology, telecom, and transportation, but will consider loans in all industries. "This new DIP fund, comprised primarily of large institutional investors, puts us among the handful of firms that are willing and able to provide DIP financing," said David Hollander, a Partner with TCP. "In the recent past, companies who otherwise would have been able to reorganize in Chapter 11 have instead had to restructure before they have time to reorganize properly or liquidate due to a lack of available financing. DIP Financing is an unprecedented market opportunity." "TCP has deep experience not only in DIP financing, but also other forms of distressed investing, and over the years has shown the flexibility to invest up and down the capital structure. This Fund builds on TCP's history of providing financing in complicated situations or when financing is in short supply to help distressed companies emerge from difficult circumstances and achieve future success," Mr. Hollander continued. About Tennenbaum Capital Partners Tennenbaum Capital Partners(TM) -- http://www.tennenbaumcapital.com/-- is a Santa Monica, California-based private investment firm. The firm's investment strategy is grounded in a long-term, value approach, and it assists -- both financially and operationally -- transitional middle market companies in such industries as technology, healthcare, energy, aerospace, business services, retail and general manufacturing. TCP's core strengths include in-depth knowledge of equity and debt financing vehicles in the public and private markets, as well as a thorough understanding of special situations. These situations may include legal, operational or financial challenges; turnarounds, restructurings and bankruptcies; corporate divestitures and buyouts; and complex ownership changes. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total holders' Working Assets Equity Capital Company Ticker ($ in MM) ($ in MM) ($ in MM) ------- ------ --------- --------- --------- AUTOZONE INC AZO US 5,318 (433) (145) DUN & BRADSTREET DNB US 1,600 (720) (182) BOEING CO-CED BA AR 58,667 (877) (1,822) CLOROX CO CLX US 4,598 (47) (665) BOEING CO BA US 58,667 (877) (1,822) MEAD JOHNSON-A MJN US 1,964 (698) 502 BOARDWALK REAL E BEI-U CN 2,377 (22) N/A BOARDWALK REAL E BOWFF US 2,377 (22) N/A NAVISTAR INTL NAV US 9,384 (1,294) 180 BOEING CO BAB BB 58,667 (877) (1,822) TAUBMAN CENTERS TCO US 2,607 (467) N/A CHOICE HOTELS CHH US 353 (133) (13) UNISYS CORP UIS US 2,741 (1,146) 187 WEIGHT WATCHERS WTW US 1,086 (791) (310) LINEAR TECH CORP LLTC US 1,466 (164) 993 CABLEVISION SYS CVC US 10,128 (5,193) (112) IPCS INC IPCS US 559 (33) 72 MOODY'S CORP MCO US 1,874 (648) (306) WR GRACE & CO GRA US 3,937 (312) 1,095 IMS HEALTH INC RX US 2,111 (43) 231 AFFYMAX INC AFFY US 145 (3) 7 TALECRIS BIOTHER TLCR US 1,337 (38) 657 PETROALGAE INC PALG US 7 (33) (17) DISH NETWORK-A DISH US 7,266 (1,520) (240) HEALTHSOUTH CORP HLS US 1,754 (535) 36 OVERSTOCK.COM OSTK US 144 (3) 34 SUCCESSFACTORS I SFSF US 181 (3) 3 THERAVANCE THRX US 183 (175) 124 NATIONAL CINEMED NCMI US 604 (500) 91 TENNECO INC TEN US 2,940 (217) 233 VENOCO INC VQ US 715 (169) (13) JUST ENERGY INCO JE-U CN 1,378 (350) (392) INTERMUNE INC ITMN US 157 (83) 108 OCH-ZIFF CAPIT-A OZM US 1,976 (88) N/A REGAL ENTERTAI-A RGC US 2,647 (228) (40) CHENIERE ENERGY CQP US 1,921 (436) 28 PALM INC PALM US 794 (454) (269) REVLON INC-A REV US 802 (1,043) 105 KNOLOGY INC KNOL US 644 (42) 21 CARDTRONICS INC CATM US 457 (8) (42) SANDRIDGE ENERGY SD US 2,311 (191) 1 WORLD COLOR PRES WC CN 2,641 (1,736) 479 SONIC CORP SONC US 849 (4) 85 BLOUNT INTL BLT US 488 (22) 165 UNITED RENTALS URI US 3,895 (18) 312 WORLD COLOR PRES WC/U CN 2,641 (1,736) 479 TALBOTS INC TLB US 856 (207) (25) CENTENNIAL COMM CYCL US 1,481 (926) (52) SEMGROUP ENERGY SGLP US 315 (132) (12) AFC ENTERPRISES AFCE US 143 (27) 13 PDL BIOPHARMA IN PDLI US 218 (307) 140 ARVINMERITOR INC ARM US 2,627 (846) 3 EXTENDICARE REAL EXE-U CN 1,655 (38) 126 FORD MOTOR CO F US 205,896 (7,270) 17,755 CENVEO INC CVO US 1,460 (231) 186 SALLY BEAUTY HOL SBH US 1,465 (645) 420 DOMINO'S PIZZA DPZ US 444 (1,350) 107 DEXCOM DXCM US 54 (9) 26 INCYTE CORP INCY US 473 (199) 358 AMER AXLE & MFG AXL US 1,953 (740) 33 SIGA TECH INC SIGA US 8 (13) (5) UAL CORP UAUA US 18,347 (2,645) (2,111) JAZZ PHARMACEUTI JAZZ US 102 (82) (9) EXELIXIS INC EXEL US 421 (143) 92 PROTECTION ONE PONE US 632 (82) 8 OSIRIS THERAPEUT OSIR US 111 (3) 49 ACCO BRANDS CORP ABD US 1,078 (103) 217 WARNER MUSIC GRO WMG US 3,989 (142) (680) EPICEPT CORP EPCT SS 16 (3) 8 MANNKIND CORP MNKD US 289 (2) 35 ZYMOGENETICS INC ZGEN US 243 (22) 59 AMR CORP AMR US 25,754 (2,859) (1,448) SELECT COMFORT C SCSS US 82 (39) (69) NYMOX PHARMACEUT NYMX US 1 (1) (0) CELLDEX THERAPEU CLDX US 48 (2) 14 BIOTIME INC BTIM US 6 (1) 0 LIN TV CORP-CL A TVL US 773 (188) 7 MEDIACOM COMM-A MCCC US 3,722 (435) (254) FORD MOTOR CO F BB 205,896 (7,270) 17,755 ISTA PHARMACEUTI ISTA US 85 (78) 25 EASTMAN KODAK EK US 7,483 (651) 935 HOVNANIAN ENT-A HOV US 2,285 (74) 1,525 STEREOTAXIS INC STXS US 40 (15) 1 SINCLAIR BROAD-A SBGI US 1,606 (149) (342) VIRGIN MOBILE-A VM US 321 (257) (126) QWEST COMMUNICAT Q US 20,225 (1,031) 766 DYAX CORP DYAX US 52 (49) 24 US AIRWAYS GROUP LCC US 7,744 (260) (552) GLG PARTNERS-UTS GLG/U US 467 (277) 168 ********* 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. Howard C. Tolentino, 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 **