/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/100216.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, February 16, 2010, Vol. 14, No. 46 Headlines ACCREDITED HOME: Court OKs Sale of Loans & Property to West Coast AFC REALTY: Organizational Meeting to Form Panel on February 17 ALERIS INTERNATIONAL: German Unit Files to Restructure Debt ALERIS INTERNATIONAL: Plan Outline Hearing on March 12 ALERIS INTERNATIONAL: Wants Final Bar Date for Admin. Claims ALLIED CAPITAL: Shareholders Reject Prospect Capital Offer ALTURA COMMUNITIES: Files for Bankruptcy with $40.6-Mil. in Debt AMERICAN INT'L: Taps Major Banks for Hong Kong IPO of AIA Unit AMERICAN INT'L: New Incentive Scheme Won't Satisfy Regulators AMERICAN LOCKER: Paul Luber Elected by Board as Director AMERICAN LOCKER: President to Get $170,000 Annually for 3 Years AMIDEE CAPITAL: Has Interim Access to Lenders Cash Collateral AMIDEE CAPITAL: Taps Okin Adams to Handle Reorganization Case APPLETON PAPERS: Inks $100-Mil. 5-Year Revolver with Fifth Third APPLETON PAPERS: Issues $305 Million in New 10.50% Secured Notes ARLIE & CO: Has Interim Access to Prepetition Lenders Cash ARTHUR FEFFERMAN: Organizational Meeting to Form Panel on Feb. 17 ASAT HOLDINGS: Shareholders Push for Voluntary Winding Up ASI TECHNOLOGY: Reports $93,000 Net Loss in December Quarter ATCHLEY APPLIANCE: Files for Chapter 11 Bankruptcy in Florida AVERION INTERNATIONAL: Won't Be Able to Pay Notes Due October BAYARD SPECTOR: Court to Hear HWMG's Dismissal Motion on March 1 BCBG MAX: S&P Raises Corporate Credit Rating to 'B' BERNARD MADOFF: Brother, Sons Face Criminal Tax-Fraud Cases BIG WASH: Bankruptcy Case Transferred to Arizona BILLING SERVICES: Moody's Upgrades Rating on Senior Loan to 'Ba3' BLOCKBUSTER INC: Diamondback Funds Cut Stake to 2.63% BLOCKBUSTER INC: Dimensional Fund Holds 3.4% of Class A Shares BLOCKBUSTER INC: Goldman Sachs Holds 7.7 % of Class A Shares BLOCKBUSTER INC: Prentice Capital, Zimmerman Disclose Stake BLOCKBUSTER INC: Wellington Holds 5.80% of Class A Shares BOOMERANG SYSTEMS: Posts $1.68-Mil Net Loss in Qtr Ended Dec. 31 CANWEST GLOBAL: Union Wants to Be Appointed as Representative CAPMARK FINANCIAL: Proposes $8.8-Mil. Incentive Program CATALYST PAPER: Contests Application to BC Labour Board CATALYST PAPER: Letko Brosseau Reports 11.16% Equity Stake CELL THERAPEUTICS: Reports $27.4-Mil. Net Loss in 4th Quarter CHARTER COMMUNICATIONS: Has Indemnification Pacts With Execs. CHEMITEK 2006: Mortgagees Want Chapter 11 Case Dismissed CHINA LOGISTICS: Amends Q1 2009 Report; Net Loss at $2.98-Mil. CHRYSLER LLC: Names New Media Strategies as Media Firm CINCINNATI BELL: Board Approves $150 Million Stock Repurchase CITADEL BROADCASTING: R-Squared a Substantial Shareholder CLEAR CHANNEL: Moody's Upgrades Corporate Family Rating to 'Caa2' CLEVELAND ELECTRIC: Fitch Affirms Issuer Default Rating at 'BB+' COMMERCIAL VEHICLE: Issues 42,124 Units of 3rd Lien Senior Notes CRESCENT RESOURCES: U.S. Trustee Balks at $4-Mil. Bonuses DEATH ROW: Rapper Files Suit for Unpaid Royalties DELPHI CORP: Court to Hear Final Fee Applications March 18 DELPHI CORP: District Court Rules on OTRS, et al., Appeal DELPHI CORP: District Court Won't Review LDTC Non-Appointment DELPHI CORP: Wagner-Smith Wants Avoidance Claims Orders Vacated DIAMOND OAKS: Hartford's Motion for Relief from Stay Denied DUBAI WORLD: May Offer 60% Recovery to Creditors DUNE ENERGY: Amends Employee Severance Plan EAST CAMERON: Court Denies Committee's Motion to Convert Case EAST CAMERON: Wants Add'l Financing to Hasten Asset Sales EAST CAMERON: Wants to Sell Assets to Lender Group EASTMAN KODAK: Amends Prospectus for KKR Notes, Warrants EASTMAN KODAK: Gets Lenders' OK to Obtain $200MM in New Loans EASTMAN KODAK: Sees Digital Revenues to Grow Up to 9% This Year EASTMAN KODAK: Vanguard, Brandes, BlackRock Report Stake EBRO FOODS: Flawed Invoices Nixed Creditor's PACA Priority EDRA BLIXSETH: Porcupine Creek Asset for Sale at $75 Million ELEMENT 21 GOLF: December 31 Balance Sheet Upside-Down by $1.4-Mil EPICEPT CORP: Proposes to Issue Up to $15-Mil. in Shares EXPRESS LLC: S&P Raises Corporate Credit Rating to 'B+' FAIRPOINT COMMS: NNE Telephone Files Schedules & Statement FIRSTFED FINANCIAL: Terminates Cash Tender Offers & Solicitations FLAG INTERMEDIATE: Posts $35.7 Million Net Loss in 2009 FLYING J: Promises to Repay Most Debts in Ch. 11 Plan FORD MOTOR: BlackRock Pares Equity Interest to 4.92% FORD MOTOR: Evercore Trust Reports 8.23% Stake FORD MOTOR: State Street Reports 11.9% Equity Stake FORD MOTOR: Wellington Management Reports 5.33% Stake FREESCALE SEMICON: NY Appellate Court Lifts Trial Court Stay Order FREESTONE RESOURCES: Posts $115,000 Net Loss in Q2 Ended Dec. 31 GENERAL GROWTH: Equity Committee Gets Nod to Retain Saul Ewing GENERAL GROWTH: Reports Public Offering of Aliansce Stock GENERAL GROWTH: To Lower Miller Buckfire Cap to $30.2 Million GHOST TOWN: BB&T Wants Case Converted to Chapter 7 Liquidation GLOBAL CROSSING: Iridian Asset Management Reports 5.2% Stake GREEN DRAGON: Posts $29,000 Net Loss in December Quarter HEALTHSPRING INC: S&P Assigns 'B+' Rating on $350 Mil. Loan HHI HOLDINGS: S&P Assigns Corporate Credit Rating at 'B+' HIGH ROCK: Creditor Blackstone Wants Chapter 11 Trustee Appointed HSH DELAWARE: Organizational Meeting to Form Panel on Feb. 18 HSH DELAWARE: Taps Richards Layton as Bankruptcy Counsel HSH DELAWARE: Wants Barlow Lyde as United Kingdom Counsel HSH DELAWARE: Seeks to Hire Walkers as Cayman Islands Counsel INNOVATIVE COS: Wants Ch. 11 Plan Filing Extended Until June 13 INTEGRATED BIOPHARMA: Posts $996,000 Net Loss in Dec. Quarter INTEGRATED HEALTHCARE: Posts $1.8-Mil. Loss in Q3 Ended Dec. 31 IRVINE SENSORS: Balance Sheet Upside-Down by $4-Mil. at Dec. 27 ITC^DELTACOM INC: Moody's Affirms 'B3' Corporate Family Rating ITC DELTACOM: S&P Affirms Corporate Credit Rating at 'B' JOSEPH MILANOWSKI: Could Not Pay Creditors, Trustee Says KEMET CORP: Moody's Withdraws 'B2' Corporate Family Rating KEMET CORP: S&P Withdraws 'B' Corporate Credit Rating LANDMARK VALLEY: Wants to Sell Personal Property to Clark Knapp LBJ LAKEFRONT: Plan Proposes 50% Cash Payment of Unsecured Claims LEHMAN BROTHERS: Sues Soffer & Fontainebleau for $400 Million LEHMAN BROTHERS: District Court Remands Appeal on DNB Claim LEHMAN BROTHERS: Proposes Gibson Dunn as Special Counsel LEHMAN BROTHERS: Proposes O'Neil Group as Tax Services Provider LEHMAN BROTHERS: Trustee Has Transition Pact with Barclays LEHMAN BROTHERS: Wants to Enlarge Jones Day Work LEXINGTON PRECISION: Creditors Committee Members Down to 5 LIBERATOR INC: Gruber & Company Raises Going Concern Doubt LOWER BUCKS: Gets OK for SSG to Solicit Bids from Buyers MAGNA ENTERTAINMENT: Seeks Approval of Maryland Racetracks Sale MAMMOTH HENDERSON: Offers to Return 100% to Unsecureds in 7 Years MCGRATH'S PUBLICK: Taps Tonkon Torp as Bankruptcy Counsel MERCER INT'L: Earns EUR4.0 Million for December Quarter MOVIE GALLERY: Has Access to Cash Collateral Until March 1 MOVIE GALLERY: Sec. 341 Meeting Set for April 9 MOVIE GALLERY: U.S. Trustee Appoints Unsecured Creditors Committee MUZAK HOLDINGS: Chapter 11 Emergence Cues S&P to Withdraw Ratings NEENAH ENTERPRISES: Schedules Filing Deadline Moved to April 5 NEENAH ENTERPRISES: Court Okays Garden City as Claims Agent NEW CENTURY: Judge Carey Won't Tinker with Consumer Foreclosure NORTEL NETWORKS: Exploring Options for Intellectual Property NORTEL NETWORKS: Proposes $92.4-Mil. in Wind-Down Bonuses NORTHEAST BIOFUELS: Bankruptcy Judge Confirms Chapter 11 Plan NPC ACQUISITION: Creditors' Proofs of Claim Due March 15 OXBOW CARBON: Moody's Gives Positive Outlook; Affirms 'B1' Rating PALISADES PARK: Mortgagees Want Chapter 11 Case Dismissed PENTON BUSINESS: Plan Confirmation Hearing Set for March 5 PENTON BUSINESS: Moody's Cuts Probability of Default Rating to 'D' PENTON BUSINESS: S&P Downgrades Corporate Credit Rating to 'D' PETROHUNTER ENERGY: Posts $1.9-Mil. Loss in December Quarter PHOENIX COS: S&P Junks Counterparty Credit Rating From 'B-' PHOENIX FOOTWEAR: Board Approves 2010 Cash Bonus Plan PMI MORTGAGE: Arizona Dept. of Insurance Grants Waiver PRECISION DRILLING: S&P Retains 'BB' Rating With Stable Outlook PROFESSIONAL LAND: Wants Malka Issak as Bankruptcy Counsel RAINBOW UNITED: To Pay Creditors in Full Under Chapter 11 Plan RCN CORPORATION: Moody's Affirms 'B1' Corporate Family Rating SABINE PASS: S&P Affirms 'B+' Rating on $2.2 Bil. Senior Notes SALON MEDIA: Posts $1.7-Mil. Net Loss in Qtr Ended Dec. 31 SEVEN FALLS: Administrator Wants Case Dismissed or Converted SKILLSOFT PLC: S&P Puts 'BB-' Rating on CreditWatch Negative SPHERIS INC: Wants to Employ Young Conaway as Bankruptcy Counsel TODD FULCHER: Judge Doub Appoints Chapter 11 Trustee SOLAR ENERTECH: Posts $3.9 Million Net Loss in Qtr Ended Dec. 31 SPANSION INC: Posts $514.1 Million Net Loss in Fiscal 2009 SPANSION INC: Committee Seeks to Expand FTI Work SPANSION INC: Fee Applications Have No Objections SPANSION INC: Noteholders Want to Depose Silver Lake SPECTRUM BRANDS: Inks Merger Agreement With Russell Hobbs SPHERIS INC: Organizational Meeting to Form Panel on February 17 STATION CASINOS: GV Ranch Also Now in Chapter 11 TAYLOR BEAN: Creditors Seek Authority to Sue Farkas, Insiders TLC VISION: Lender Fights Charlesbank Deal TOLEDO EDISON: Fitch Corrects Feb. 11 Press Release, Keeps BB+ IDR TRAVELPORT LLC: Moody's Confirms 'B2' Corporate Family Rating TRAVELPORT LLC: S&P Affirms 'B-' Long-Term Corporate Credit Rating TRIBUNE CO: Creditors Panel's Bid to File LBO Suit Challenged TRIBUNE CO: Beatty's Dick Tracy Suit Survives Dismissal Bid TRIBUNE CO: Creditors Oppose WTC Bid for Examiner TRIMEDYNE INC: Posts $300,000 Net Loss in Q1 Ended December 31 TRUDY CORP: Posts $360,000 Net Loss in September Quarter VEOH NETWORKS: To Halt Operations, File for Chapter 7 Bankruptcy WASHINGTON MUTUAL: Gets Nod to Enlarge Quinn Emanuel Work WASHINGTON MUTUAL: Plan Exclusivity Extended Until March 26 WASHINGTON MUTUAL: Settles Payments to Media Vendors WASTE2ENERGY HOLDINGS: Dec 31 Balance Sheet Upside-Down by $5.3MM YRC WORLDWIDE: Inks Deal to Purchase $70 Mil. New Unsec. Notes ZAYAT STABLES: Taps Cole Schotz as Bankruptcy Counsel * SJB Raises $1.1 Billion to Acquire Seized US Lender * Improved Investor Appetite for Exit Loans Cues Cheaper Lending * Large Companies With Insolvent Balance Sheets ********* ACCREDITED HOME: Court OKs Sale of Loans & Property to West Coast ----------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorized Accredited Home Lenders Holding Co., et al., to sell certain mortgage loans and real property, free and clear of liens, claims, encumbrances and other interests to West Coast Realty Services, Inc., pursuant to the asset purchase agreement dated December 2, 2009. As reported in the Troubled Company Reporter on December 29, 2009, Bill Rochelle at Bloomberg News reported that West Coast offered to buy 10 parcels of land and 13 mortgages for $409,000. The Debtors relate that the APA constitutes the highest and best offer for the acquired assets, and will provide a greater recovery for the Debtors' bankruptcy estates. The sale is pursuant to Section 363 of the Bankruptcy Code. Accredited Home Lenders Holding Co. -- http://www.accredhome.com/ -- is a mortgage banker servicing U.S. markets for conforming and non-prime residential mortgage loans operating throughout the U.S. and in Canada. Founded in 1990, the company is headquartered in San Diego. The Company was acquired by Lone Star Funds for $300 million in October 2007. Lone Star also owns Bruno's Supermarkets LLC and Bi-Lo LLC, two grocery retailers in Chapter 11. Accredited Home and its affiliates filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Lead Case No. 09-11516). Gregory G. Hesse, Esq., Lynnette R. Warman, Esq., and Jesse T. Moore, Esq., at Hunton & William LLP, represent the Debtors as counsel. Laura Davis Jones, Esq., James E. O'Neill, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as Delaware counsel. Kurtzman Carson Consultants is the Debtors' claims agent. Andrew I Silfen, Esq., Schuyler G. Carroll, Esq., Robert M. Hirsch, Esq., at Arent Fox LLP in New York, and Jeffrey N. Rothleder, Esq., at Arent Fox LLP in Washington, DC, represent the official committee of unsecured creditors as co-counsel. Neil R. Lapinski, Esq., and Shelley A. Kinsella, Esq., at Elliott Greenleaf, represent the Committee as Delaware and conflicts counsel. According to its bankruptcy petition, Accredited Home's assets range from $10 million to $50 million and its debts from $100 million to $500 million. AFC REALTY: Organizational Meeting to Form Panel on February 17 --------------------------------------------------------------- Roberta A. DeAngelis, Acting United States Trustee for Region 3, will hold an organizational meeting on February 17, 2010, at 11:00 a.m. in the bankruptcy case of AFC Realty Capital, Inc. The meeting will be held at United States Trustee's Office, One Newark Center, 14th Floor, Room 1401, Newark, NJ 07102. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. AFC Realty filed for Chapter 11 on Jan. 15, 2010 (Bankr. D. N.J. Case No. 10-11083). Ben Becker, Esq., at Becker, Meisel LLC, represents the Debtor in its Chapter 11 effort. According to the petition, debts are between $1 million to $10 million while assets are $50,000 to $100,000. ALERIS INTERNATIONAL: German Unit Files to Restructure Debt ----------------------------------------------------------- Aleris Deutschland Holding GmbH filed with the U.S. Bankruptcy Court for the District of Delaware a petition under Chapter 11 of the Bankruptcy Code on February 5, 2010. ADH was organized under the laws of Germany on March 22, 2006, as a limited liability company and is a non-operating holding company. ADH is a direct wholly owned subsidiary of Aleris Recycling Holding B.V., a Netherlands limited liability company, and an indirect wholly owned subsidiary of Aleris International, Inc. ADH directly and indirectly owns stock of certain German and Belgium subsidiaries that produce rolled and extruded aluminum products. ADH has no employees, and its primary assets are its interests in its subsidiaries. ADH maintains a balance bank account at Key Bank, N.A., in Cleveland, Ohio. ADH is obligated as a borrower under that certain Term Loan Agreement, dated as of August 1, 2006, as amended, with various financial institutions and other persons from time to time as lenders, and Deutsche Bank, as administrative agent. Specifically, the Prepetition Term Loan Agreements provided ADH with a credit facility of EUR297 million, which is guaranteed by the U.S.-based Debtors and certain non-debtor international affiliates. As of February 12 2009, the Europeran Term Loan Facility was fully drawn. On the U.S. Petition Date, a "Conversion Event" under the Prepetition Term Loan Agreements was triggered, resulting in the outstanding loans under the European Term Loan Facility becoming approximately EUR56 million and $311 million based on the EUR297 million drawn. The U.S. Debtors have been engaged in negotiations with the holders of the European Term Loan Facility to restructure the European Term Loan Facility as part of their emergence from Chapter 11. In connection with that restructuring, ADH commenced its Chapter 11 case. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of December 31, 2008, the Debtors had total assets of US$4,168,700,000; and total debts of US$3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INTERNATIONAL: Plan Outline Hearing on March 12 ------------------------------------------------------ Aleris International, Inc., and its debtor affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware their joint plan of reorganization and the Disclosure Statement explaining the Plan on February 5, 2010. A hearing will be held before the Honorable Brendan L. Shannon, United States Bankruptcy Judge, at the United States Bankruptcy Court for the District of Delaware, 824 Market Street, 6th Floor, Courtroom No. 1, Wilmington, Delaware 19801 on March 12, 2010, at 9:30 a.m. (Prevailing Eastern Time) to consider the entry of an order finding, among other things, that the Disclosure Statement contains "adequate information" within the meaning of section 1125 of the Bankruptcy Code and approving the Disclosure Statement. Click below to view the documents: The Plan has substantial support from Aleris's creditors, as demonstrated by an Equity Commitment Agreement executed by certain investment funds managed by Oaktree Capital Management, L.P., affiliates of Apollo Management, L.P. and Sankaty Advisors, LLC, or "the Backstop Parties." Oaktree, Apollo, and Sankaty are three of the Debtors' largest lenders. Pursuant to the Equity Commitment Agreement, the Backstop Parties have committed to backstop a rights offering of equity and debt of up to approximately $690 million. The creditors hold over 67% of Aleris's U.S. Roll-up Term Loan. Proceeds of the rights offering will be used to provide working capital to the Company and to fund payments under the Plan, including repayment of the debtor-in-possession financing, payment of administrative expenses, and funding of distributions to prepetition creditors. "The filing of the Plan of Reorganization with this level of creditor support represents a major milestone in our ongoing efforts to position Aleris to emerge from chapter 11 with financial stability and an operationally sound and competitive foundation for the long term," said Steven J. Demetriou, Aleris chairman and chief executive officer. "Since our filing last February, we have made significant improvements to our operations worldwide, reducing overhead, manufacturing costs and global headcount, as well as achieving significant productivity and customer service improvements. When Aleris emerges from chapter 11, we will have eliminated all of our term loan and unsecured debt and will have a strong balance sheet, significantly reduced operating costs and greater financial flexibility. The strong financial support and equity ownership commitment from the Backstop Parties demonstrate confidence in Aleris's future." Mr. Demetriou continued, "As the economy recovers, and as our customers' businesses improve, we will be well-positioned to resume a path of growth and continue to build Aleris into a global aluminum enterprise for the long-term benefit of our customers, suppliers, business partners and employees. We greatly appreciate the continued support and hard work of our employees around the world during this restructuring process. Because of their commitment to the business, we have fully satisfied the needs of our existing customers without interruption while establishing relationships with new ones. We would like to thank both current and new customers, suppliers and other business partners for their continued loyalty during this process. While we remain cautious in the near term due to continued uncertainty in the global economic environment, our restructured balance sheet, enhanced liquidity, operational improvements, and cost control will position Aleris well for long-term growth." The Bankruptcy Court has set the hearing to consider approval of the Disclosure Statement for March 12, 2010, at 9:30 a.m. Following Bankruptcy Court approval of the Disclosure Statement and related voting solicitation procedures, the Company will solicit acceptances of the Plan and seek its confirmation by the Bankruptcy Court. Claims and Interest under the Plan The Plan designates 15 classes of Claims and Equity Interests: ten classes of Claims against and Equity Interests in the U.S. Debtors and five classes of Claims against and Equity Interests in Aleris Deutschland Holding GmbH. The U.S. Debtors classes consist of seven classes of Claims and three classes of Equity Interests. U.S. Debtors Class 8 represents Equity Interests in Aleris, U.S. Debtors Class 9 represents Equity Interests in certain of the U.S. Debtors which will be cancelled under the Plan, including Equity Interests in Wabash Alloys, L.L.C. and Aleris Aluminum U.S. Sales Inc., and U.S. Debtors Class 10 represents Equity Interests comprised of Equity Interests in the U.S. Debtors other than Aleris and the Dissolving U.S. Subsidiaries. The ADH classes consist of four classes of Claims and one class of Equity Interests in ADH. These classes take into account the differing nature and priority under the Bankruptcy Code of the various Claims and Equity Interests. The Plan contemplates that Reorganized Aleris will sell its assets to "OpCos," certain entities established for the purposes of acquiring those assets. These entities will, in turn, be owned, directly or indirectly, by IntermediateCo, which will be owned by HoldCo. Among other things, the common stock of HoldCo will be contributed to the OpCos, used by the OpCos as part of the consideration paid to Reorganized Aleris for its assets, and then distributed pursuant to the Plan. A full-text copy of the expected Organizational and Capital Structure of HoldCo, IntermediateCo, the Opcos, and the Reorganized Debtors, is available for free at: http://bankrupt.com/misc/Aleris_ReorgStructure.pdf Rights Offering Pursuant to the Plan, a holder of U.S. Roll-Up Term Loan Claims, European Roll-Up Term Loan Claims, and European Term Loan Claims who is either an "accredited investor" or not a "U.S. person" will have the right to participate in a rights offering for shares of New Common Stock and the IntermediateCo Notes. According to the Debtors, the Rights Offering is expected to generate cash proceeds of up to $690 million, which will be used to repay the DIP ABL Credit Facility and the New Money Term DIP Facility, to fund other Cash distributions required by the Plan, and to provide the Reorganized Debtors with sufficient operating cash. Subject to the terms of the Equity Commitment Agreement, the Backstop Parties have agreed to underwrite the full amount of the Rights Offering. The proposed capital structure for the Reorganized Debtors and their parent entities, including post-Effective Date financing arrangements that the Reorganized Debtors expect to enter into in order to meet the working capital needs for their ongoing business operations, are: -- Exit financing facility through an asset-based revolving credit facility with a commitment of at least $500 million. -- The equity in the Reorganized Debtors will be owned indirectly by holders of U.S. Roll-Up Term Loan Claims, European Roll-Up Term Loan Claims, European Term Loan Claims, participants in the Rights Offering, and the Backstop Parties, which, collectively, will own all of the New Common Stock outstanding as of the Effective Date. -- Subordinated, unsecured exchangeable notes distributed to participants in the Rights Offering and the Backstop Parties under the IntermediateCo Note Indenture in an aggregate principal amount equal to $45,000,000. -- Shares of IntermediateCo Preferred Stock, which will have an aggregate stated value of $5,000,000, will be sold by IntermediateCo to the Backstop Parties. Mr. Demetriou relates that the industry in which the Debtors operate is affected by numerous uncertainties. According to Mr. Demetriou, those uncertainties and other investment risks make it difficult to determine a precise value for the Debtors and the New Common Stock distributed under the Plan. Mr. Demetriou tells the Court that an Effective Date as late as October 31, 2010, will not materially affect these estimates or the underlying assumptions. The estimated recoveries are based on these assumptions: * The estimated enterprise value of the Debtors is $1 billion. * The estimated Plan Value, which is the estimated value of the equity of the Reorganized Debtors before giving effect to the Rights Offering, is $270.6 million. Plan Value may be higher if the amounts deducted from the enterprise value under the formulas set forth in the Plan are less than expected. The Plan Value, however, will not be lower than $221.7 million. * Of the Plan Value, $168.9 million is the estimated U.S. Plan Value, and $101.7 million is the estimated ADH Plan Value. The ADH Plan Value will be no less than $101.7 million, and a condition to the Plan provides that the U.S. Plan Value be no less than $120 million. * The amount of Cash required to be raised in the Rights Offering will be the Maximum Rights Offering Amount, $690 million. Aleris Deutschland Holding In order to facilitate the global restructuring of all of the debt on the Debtors' balance sheet, the Debtors simultaneously filed a voluntary petition for relief under Chapter 11 as well as a Plan of Reorganization for its German holding company subsidiary, Aleris Deutschland Holding GmbH, in the U.S. Bankruptcy Court in Delaware. ADH and its obligations are included as part of the overall Aleris Plan of Reorganization. ADH is a non-operating holding company and has no employees or operating assets and conducts no commercial business. Accordingly, ADH's filing will have no impact on the Debtors' operations in Germany or elsewhere in Europe, which continue to operate outside of the U.S. bankruptcy process, without interruption. Summary of Classification and Treatment of Claims and Interest A. Classification of Claims Class Designation ----- ----------- U.S. Debtors Class 1 Priority Non-Tax Claims U.S. Debtors Class 2 Other U.S. Secured Claims U.S. Debtors Class 3 U.S. Roll-Up Term Loan Claims U.S. Debtors Class 4 Convenience Claims U.S. Debtors Class 5 General Unsecured Claims other than Convenience Claims and Insured Claims U.S. Debtors Class 6 U.S. Affiliate Claims U.S. Debtors Class 7 Insured Claims U.S. Debtors Class 8 Aleris Equity Interests U.S. Debtors Class 9 Cancelled U.S. Equity Interests U.S. Debtors Class 10 Other U.S. Equity Interests ADH Class 1 German Tranche of U.S. DIP Loan Claims ADH Class 2 European Roll-Up Term Loan Claims ADH Class 3 European Term Loan Claims ADH Class 4 Other ADH Claims ADH Class 5 ADH Equity Interests B. Treatment of Claims Estimated Class Recovery Treatment ----- --------- --------- U.S. Debtors 100% Paid in full, in cash, on the later Class 1 of the Effective Date and as soon as practicable after the Priority Non- Tax Claim becomes allowed. U.S. Debtors 100% Reinstated or otherwise left Class 2 unimpaired U.S. Debtors 28% Pro Rata Share of one of the Class 3 following: 1. U.S. Roll-Up Stock and U.S. Subscription Rights; or 2. Cash equal to the U.S. Plan Value U.S. Debtors 25% to Paid Cash equal to 25% of Allowed Class 4 50% Amount of Allowed Convenience Claim on later of the Initial Distribution Date and as soon as practicable after the Convenience Claim becomes allowed. Eligible for an additional 25% payout on the Final Distribution Date if total Allowed Amount of Administrative Expenses under Section 503(b)(9) of the Bankruptcy Code is less than $6.5 million. U.S. Debtors 0.3% Pro Rata Share of $4 million in cash Class 5 U.S. Debtors 100% Reinstated or otherwise unimpaired Class 6 U.S. Debtors unknown The holder of an Insured Claim may Class 7 elect to: 1. remain in U.S. Debtors Class 7 and limit that holder's recovery on account of its Allowed Insured Claim to any Insurance Proceeds available for that Claim; 2. have its Insured Claim be treated under the Plan as a General Unsecured Claim in U.S. Debtors Class 5; or 3. have its Insured Claim be treated under the Plan as a Convenience Claim in U.S. Debtors Class 4 U.S. Debtors 0% Cancelled Class 8 U.S. Debtors Class 9 0% Cancelled U.S. Debtors Class 10 100% Reinstated ADH Class 1 100% Paid in full, in cash, on the Effective Date ADH Class 2 Option 1: Pro Rata Share of one of the 100% following: Option 2: 1. ADH Roll-Up Stock and the ADH 94% Roll-Up Subscription Rights, or 2. Cash equal to $25 million. ADH Class 3 21% Pro Rata Share of one of the following: 1. ADH Term Loan Stock and the ADH Term Loan Subscription Rights, or 2. Cash equal to the ADH Term Loan Value ADH Class 4 100% Reinstated or otherwise left unimpaired ADH Class 5 100% Reinstated U.S. Debtors Classes 1, 2, 6 and 10, and ADH Classes 1, 4 and 5 are unimpaired. U.S. Debtors Class 3, 4, 5, 7, 8 and 9, and ADH Classes 2 and 3 are impaired. U.S. Debtors Classes 1, 2, 6, 8, 9, 10, and ADH Classes 1, 4 and 5 are not entitled to vote. U.S. Debtors Classes 3, 4, 5, 7, and ADH Classes 2 and 3 are entitled to vote. Reorganization Value The Debtors have been advised by Moelis & Company LLC, their financial adviser, with respect to the estimated enterprise value of HoldCo on a going concern basis. Solely for purposes of the Plan, the analysis performed by Moelis indicates that the estimated enterprise value of HoldCo, excluding cash in excess of cash required to maintain appropriate liquidity, is within the range of $925 million to $1,195 billion as of an assumed Effective Date of June 1, 2010. In preparing its analysis of the estimated enterprise value of HoldCo, Moelis, among other analyses: (i) reviewed certain historical financial information of the Debtors for recent years and interim periods, including the most current financial results through October 31, 2009; (ii) reviewed certain internal financial and operating data of the Debtors, including financial projections prepared and provided by management relating to their business and their prospects; (iii) met with certain members of senior management of the Debtors to discuss the Debtors' operations and future prospects; (iv) reviewed publicly available financial data and considered the market value of public companies that Moelis deemed generally comparable to the operating business of the Debtors; (v) considered certain economic and industry information relevant to HoldCo and the Reorganized Debtors; and (vi) conducted other studies, analysis, inquiries, and investigations as it deemed appropriate. Liquidation Analysis The Debtors have prepared a Liquidation Analysis based on a hypothetical liquidation under Chapter 7 of the Bankruptcy Code. The Liquidation Analysis is a hypothetical exercise that has been prepared for the sole purpose of generating a reasonable good- faith estimate of the proceeds that would be realized if the Debtors were liquidated in accordance with Chapter 7 of the Bankruptcy Code. Full-text copies of the U.S. Debtors and ADH Liquidation Analysis as of September 30, 2009 are available for free at: http://bankrupt.com/misc/Aleris_LiquidationAnalysis.pdf Plan Must be Approved The Debtors believe that (i) through the Plan, creditors will obtain a substantially greater recovery from the Debtors' estates than the recovery that would be available if the Debtors' assets were liquidated under Chapter 7 of the Bankruptcy Code, and (ii) the Plan will afford them the opportunity and ability to continue in business as a viable going concern. The Debtors maintain that confirmation and implementation of the Plan is preferable to any other alternatives because it will provide the greatest recoveries to holders of claims. In addition, the Debtors add, other alternatives would involve significant delay, uncertainty, and substantial additional administrative costs. A full-text copy of the Plan is available for free at: http://bankrupt.com/misc/Aleris_Plan.pdf A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/Aleris_DS.pdf Solicitation Schedule The Debtors ask the Court to issue an order: (i) establishing procedures for the solicitation and tabulation of votes to accept or reject the Debtors' Joint Plan of Reorganization, dated February 5, 2010; (ii) approve the forms of ballots for voting on the Plan; (iii) establishing, for voting purposes only, a record date for the holders of claims; and (iv) approving a form of subscription form and procedures associated with the rights offering of stock and notes that is contemplated under the Plan. Pursuant to Section 1126 of the Bankruptcy Code and Rule 3018 of the Federal Rules of Bankruptcy Procedures, the Debtors will distribute solicitation materials with respect to the Plan to a broad range of creditors and equity security holders asserting claims against and holding interests in the Debtors, including Priority Non-Tax Claims, Other U.S. Secured Claims, U.S. Roll-Up Term Loan Claims, Convenience Claims, other General Unsecured Claims, U.S. Affiliate Claims, Insured Claims, Aleris Equity Interests, Wabash Alloys Equity Interests, Other U.S.Equity Interests, European Roll-Up Term Loan Claims, European Term Loan Claims, Other ADH Claims, and ADH Equity Interests. To give as broad as possible notice of the Plan and Disclosure Statement, the Debtors also intend to distribute Solicitation Packages to all parties to prepetition executory contracts and unexpired leases with the Debtors. To facilitate distribution of Solicitation Packages and the tabulation of votes, the Debtors have proposed voting procedures, a full-text copy of which is available for free at: http://bankrupt.com/misc/Aleris_VotingProcedures.pdf Some of the key features of the Voting Procedures are: (A) Roll-Up Election The Debtors will be soliciting votes from, among others, the holders U.S. Roll-Up Term Loan Claims, U.S. Term Loan Claims, European Roll-Up Term Loan Claims, and European Term Loan Claims. In addition, pursuant to the "9019 Settlement" that is part of the Plan, on the Effective Date, Oaktree and Apollo collectively will be deemed to have rolled up $25 million in principal amount of European Term Loan Claims and $242 million in principal amount of U.S. Term Loan Claims. (B) Debt Securities The Voting Procedures contain customary procedures for the distribution of Solicitation Packages to debt nominees and provide for either "prevalidation" of individual Beneficial Ballots or the compilation of Master Ballots by those Debt Nominees. If "prevalidated" Beneficial Ballots are not used, individual Beneficial Ballots will be summarized on a Master Ballot and then returned to the Special Voting Agent. (C) Equity Interests Under the Plan, no holders of Equity Interests in any of the Debtors are entitled to vote, and accordingly, Ballots will not be sent to any of those holders. (D) The Voting Agents The Debtors will be using two agents for the purposes of distributing Solicitation Packages and tabulating votes on the Plan. Kurtzman Carson Consultants LLC is the entity that developed the Debtors'computerized claims data base and will be responsible for the distribution of Solicitation Packages to, and tabulation of ballots received from, all entities other than the holders of Debt Securities. Financial Balloting Group LLC will be responsible for the distribution of Solicitation Packages to holders of Debt Securities and the tabulation of ballots received from holders of Debt Securities. (E) Aggregation of Multiple Unsecured Claims: Each entity that holds or filed more than one General Unsecured Claim against the U.S. Debtors will be treated as if that entity has only one General Unsecured Claim against all the U.S. Debtors, and the Unsecured Claims filed by that entity will be aggregated and the total dollar amount of that entity's General Unsecured Claims against the Debtors will be the sum of the aggregated General Unsecured Claims of that entity. A holder of Debt Securities will have one vote with respect to all series of Debt Securities held by it in an amount equal to the total amount of all Debt Securities. (F) Pending Objections Consistent with the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules, the Voting Procedures provide that the holders of claims that are the subject of objections that are pending as of the Voting Record Date are not entitled to vote on the Plan unless the Bankruptcy Court enters an order allowing their claims by the Voting Deadline. (G) Claimant's Voting Motion Any holder of a claim that is not entitled to vote because its claim is the subject of an objection pending before the Bankruptcy Court or is entitled to vote but seeks to challenge the amount of the allowed amount of the Claim for voting purposes may file a Claimant's Voting Motion. A Claimant's Voting Motion must be filed on or before the 15th day after the later of (i) service of the Confirmation Hearing Notice and (ii) service of the notice of an objection, if any, to that Claim. (H) Publication Notice The Debtors will cause the Publication Notice, which will include notice of the confirmation hearing and the opportunity to obtain a Solicitation Package, as well as notice of the Administrative Expense Bar Date, to be published once in The Wall Street Journal, and to the extent reasonably practicable, once in each of these publications: Arizona Republic, Louisville Courier Journal, Seattle Times, Dallas Morning News, Chicago Sun-Times, Richmond Times Dispatch, Raleigh News & Observer, Cleveland Plain Dealer, Columbus Dispatch, Terre Haute Tribune-Star, Tulsa World, Saginaw News, Elyria Chronicle-Telegram, Gloucester County Times, New Philadelphia Times Reporter, Wabash Plain Dealer, La Porte Herald Argus, Bowling Green Daily News, Marietta Times, Bedford Times-Mail, Gadsden Times, Buckhannon Record Delta, Loudon County News-Herald, Shelbyville Times-Gazette, Dickson Herald, Macedonia News Leader, Roxboro Courier-Times, Coldwater Daily Reporter, Tipton Tribune, Roane County News, Beloit Daily News, Coeur d'Alene Press Ashtabula Star Beacon and Hancock Clarion on a date or dates not less than 30 days prior to the Confirmation Hearing. The Debtors believe that the Voting Procedures provide for a fair and equitable voting process. The Debtors further believe that the proposed Voting Procedures embody an orderly and logical method for soliciting and tabulating the Ballots of those parties entitled to vote as is contemplated by the Bankruptcy Code and the Bankruptcy Rules. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of December 31, 2008, the Debtors had total assets of US$4,168,700,000; and total debts of US$3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALERIS INTERNATIONAL: Wants Final Bar Date for Admin. Claims ------------------------------------------------------------ Aleris International Inc. and its units ask the Court to (i) fix a final date for claimants to file requests for payment of certain administrative expenses that are entitled to priority under Sections 503(b) and 507)(a)(1) of the Bankruptcy Code in the U.S. Debtors' Chapter 11 cases, (ii) approve a proposed administrative expense claim form, and (iii) establish notice procedures. The U.S. Debtors ask the Court to enter an order directing that the Administrative Expense Bar Date will be on the date that is five business days after the date scheduled for the commencement of the hearing on confirmation of the plan of reorganization. The Debtors assert that because the amount of Administrative Expense Claims asserted against the U.S. Debtors must be factored into the calculation of Plan Value and because the Plan seeks to discharge all claims against the U.S. Debtors arising prior to the Effective Date, it is essential that the U.S. Debtors be able to ascertain the amount of Administrative Expenses prior to consummation of the Plan. The Debtors propose that only those persons or entities asserting any of these types of Administrative Expense Claims must file proof of that Administrative Expense by the Administrative Expense Bar Date: (a) Any Administrative Expense representing personal injury, property damage, or other tort claims against any of the U.S. Debtors; (b) Any Administrative Expense for breach of an obligation -- contractual, statutory or otherwise -- by any of the U.S. Debtors, including any environmental liability; (c) Any Administrative Expense for amounts incurred by any of the U.S. Debtors after the Petition Date in the ordinary course of the U.S. Debtors' business if payment of those amounts is alleged to be overdue by at least 60 days as of the Confirmation Date; (d) Any Administrative Expense incurred by the U.S. Debtors outside the ordinary course of business or on other than ordinary business terms, except to the extent the incurrence of that Administrative Expense was approved by the Bankruptcy Court or represents fees and expenses of professionals arising under Sections 330, 331, 503(b)(2)- (5) of the Bankruptcy Code; (e) Any Administrative Expense representing an employee claim against any of the U.S. Debtors, other than (i) a claim for wages, benefits, pension or retirement benefits or expense reimbursement by an employee who is employed by that Debtor as of the Administrative Expense Bar Date or (ii) a grievance claim under any collective bargaining agreement to which that Debtor is a party. All proofs of Administrative Expenses must be mailed, hand delivered, or delivered by courier service to: Aleris Claims Processing c/o Kurtzman Carson Consultants LLC 2335 Alaska Avenue, El Segundo, CA 90245 The Debtors further propose that if a holder of a Specified Administrative Expense Claim is required to file a proof of claim and fails to do so, then that Administrative Expense will be barred and discharged, and the holder of that Administrative Expense will have no right to assert that Administrative Expense against the U.S. Debtors, their estates, or any of the Reorganized Debtors. About Aleris International Aleris International, Inc., produces and sells aluminum rolled and extruded products. Aleris operates primarily through two reportable business segments: (i) global rolled and extruded products and (ii) global recycling. Headquartered in Beachwood, Ohio, a suburb of Cleveland, the Company operates over 40 production facilities in North America, Europe, South America and Asia, and employs approximately 8,400 employees. Aleris operates 27 production facilities in the United States with eight production facilities that provided rolled and extruded aluminum products and 19 recycling production plants. Aleris International, Inc., aka IMCO Recycling Inc., and various affiliates filed for bankruptcy on February 12, 2009 (Bankr. D. Del. Case No. 09-10478). The Hon. Brendan Linehan Shannon presides over the cases. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil, Gotshal & Manges LLP in New York, serve as lead counsel for the Debtors. L. Katherine Good, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A. In Wilmington, Delaware, serves as local counsel. Moelis & Company LLC, acts as financial advisors; Alvarez & Marsal LLC as restructuring advisors, and Kurtzman Carson Consultants LLC as claims and noticing agent for the Debtors. As of December 31, 2008, the Debtors had total assets of US$4,168,700,000; and total debts of US$3,978,699,000. Bankruptcy Creditors' Service, Inc., publishes Aleris International Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Aleris International, Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945- 7000) ALLIED CAPITAL: Shareholders Reject Prospect Capital Offer ---------------------------------------------------------- Allied Capital Corporation said its board of directors has rejected the latest merger offer of Prospect Capital Corporation because its terms are not "superior" to those provided in the Company's merger agreement with Ares Capital. In Prospect's offer, Allied shareholders would be receiving two components of value: the shares of your stock and the ongoing dividend stream. While Prospect's revised offer does provide a nominally higher initial premium, for a variety of reasons we remain very concerned and sensitive to the likelihood that this premium will be significantly reduced or even disappear. These reasons include: * The higher than what we believe to be an appropriate level of execution risk, in particular given Prospect would be acquiring a much larger, more complex organization and the lack of requisite management depth to appropriately manage the combined assets; * Prospect's lack of proven access to additional debt of any form, combined with a poor track record of raising equity through highly dilutive equity capital transactions; * The high likelihood of a near term reduction in Prospect's dividend, and the anticipated negative impact to Prospect' stock price as a result; and * The weak credit quality of the Prospect portfolio, especially following the acquisition of Patriot Capital Funding Ltd In this regard, the company noted that based on public information as of December 31, 2009, approximately 12.8% of Prospect's investment portfolio based on cost, and 5.6% based on fair value, representing a total of 17 portfolio investments, were on non- accrual status. A full-text copy of the Company's response to Prospect is available for free at http://ResearchArchives.com/t/s?52b2 Allied Capital (NYSE: ALD) - http://www.alliedcapital.com/-- is a business development company that is regulated under the Investment Company Act of 1940. Allied Capital has a portfolio of investments in the debt and equity capital of middle market businesses nationwide. Founded in 1958 and operating as a public company since 1960, Allied Capital has been investing in the U.S. entrepreneurial economy for 50 years. Allied Capital has a diverse portfolio of investments in 88 companies across a variety of industries. At September 30, 2009, the Company's consolidated balance sheets showed $2.840 billion in total assets, $1.639 billion in total liabilities, and $1.201 bilion in total shareholders' equity. Going Concern Doubt In its audit report on the Company's financial statements for the fiscal year ended December 31, 2008, KPMG LLP, the Company's independent registered public accounting firm, expressed substantial doubt about the Company's ability to continue as a going concern. Prior to the Company's debt restructure, certain events of default occurred under the Company's bank credit facility and the Company's private notes. These events of default provided the respective lenders the right to declare immediately due and payable unpaid amounts approximating $1.1 billion at June 30, 2009. With the completion of the comprehensive restructuring of the Company's private notes and bank facility during the third quarter of 2009, the factors that gave rise to the uncertainty about the Company's ability to continue as a going concern have been remediated. * * * As reported by the Troubled Company Reporter on January 26, 2010, Standard & Poor's Ratings Services kept its 'BB+' long-term counterparty credit rating and 'BB' senior unsecured debt rating on Allied Capital Corp. on CreditWatch with positive implications. S&P also kept its 'BBB' long-term counterparty credit rating on Ares Capital Corp. on CreditWatch with negative implications. ALTURA COMMUNITIES: Files for Bankruptcy with $40.6-Mil. in Debt ---------------------------------------------------------------- Altura Communities LLC filed for Chapter 11 bankruptcy with $40.6 million in debt, according to Citizen-Times.com. According to the source, the Company declared assets of only $13,000. Several creditors filed legal actions seeking collection of debts, the report relates. Altura Communities is a property developer. The Company said funding will be in place in the next few weeks to continue development of its community north of the Metropolitan Sewerage District treatment plant. AMERICAN INT'L: Taps Major Banks for Hong Kong IPO of AIA Unit -------------------------------------------------------------- Kennix Chim and Fiona Lau at Reuters, citing banking sources, report that American International Group has brought on board Citigroup; Credit Suisse; Goldman Sachs; BofA Merrill Lynch; UBS; CCB International; and ICBC International to underwrite the public listing of American International Assurance, its Asian life insurance unit, in Hong Kong. Sources told Reuters the IPO could raise more than $10 billion and could become Hong Kong's biggest IPO since 2006. Reuters says one source close to the AIA deal expects AIG to raise $10 billion to $15 billion. Others, according to Reuters, said the IPO proceeds could even go as high as $20 billion, depending on how much of the company is sold. Reuters says AIG had already chosen Deutsche Bank and Morgan Stanley as joint global coordinators for the offering. Reuters says investment bankers in Hong Kong have been anxiously awaiting the choice of underwriters as a $10 billion IPO, at a standard 3% charge, could generate around $300 million in fees. Reuters says AIA was slated to hold an analysts' presentation to its bookrunners on Friday and is eyeing an end-March listing hearing from the Hong Kong Stock Exchange. One of the sources told Reuters the IPO roadshow is expected to start in mid-April. About AIG 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. AMERICAN INT'L: New Incentive Scheme Won't Satisfy Regulators ------------------------------------------------------------- The Deal's Maria Woehr reports Maurice Toueg, a partner at Capstone Partnership, says that American International Group's new bonus-grading system may entice new talent to the firm, but it won't likely satisfy regulators. Citing The Wall Street Journal's Serena Ng and Joann S. Lublin, the Troubled Company Reporter on February 11, 2010, said AIG is revising its annual incentive pay scheme to employees -- moving away from the controversial retention bonuses based on length of service. According to the Journal's report, the new initiative, called a "forced distribution" system, is being pushed by Chief Executive Robert Benmosche. Under the new plan, thousands of AIG employees will be ranked on a scale of 1 to 4 based on their performance relative to their peers, and their annual variable compensation, which may include bonuses, will be determined by their rank. Individuals ranked in the top 10% will get far more relative to their peers. The Journal said Mr. Benmosche learned the method from an ex- General Electric executive when they worked at Chase Manhattan Bank in the 1970s, and implemented such a system at MetLife Inc. while he was CEO of the New York-based life insurer from 1998 to 2006. "I want to make sure we're paying the best people for their performance," he said in an interview Wednesday, according to the Journal. About AIG 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. AMERICAN LOCKER: Paul Luber Elected by Board as Director -------------------------------------------------------- The board of directors of American Locker Group Incorporated elected Paul B. Luber to serve as a director of the Company to serve until the next Annual Meeting of Stockholders of the Company and until his successor is duly elected and qualified. Mr. Luber's appointment fills an existing vacancy on the Company's board of directors. From 2000 through 2008, Mr. Luber served as CEO of The Jor-Mac Company. From 2008 until the present, he has served as President and CEO of The Jor-Mac Company. The Jor-Mac Company is a contract manufacturer of engineered metal fabrications that serves Fortune 1000 and middle market Original Equipment Manufacturers throughout the United States, Canada, Mexico and Brazil. Mr. Luber also serves as an active investor, board member, advisor and partner in other operating businesses and non-profit entities. He serves as a Regent at the Milwaukee School of Engineering. Mr. Luber earned a degree in Mechanical Engineering and Master of Business Administration from the University of Wisconsin -- Madison. AMERICAN LOCKER: President to Get $170,000 Annually for 3 Years --------------------------------------------------------------- American Locker Group Incorporated entered into a new Employment Agreement with its president Paul M. Zaidins. This Agreement is effective as of February 1, 2010. The agreement provides for an employment term of three years. Mr. Zaidins will receive a gross annual salary of $170,000 and he is also entitled to participate in all of the Company's employee benefit plans, subject to restrictions. If Mr. Zaidins terminates his employment for good reason, or if the Company terminates Mr. Zaidins' employment for any reason other than cause, death or disability, then Mr. Zaidins would be entitled to receive severance in an amount equal to his then current base salary for a period of twelve months. The Employment Agreement also includes provisions with respect to the protection of the Company's confidential and proprietary information and prohibits Mr. Zaidins from soliciting employees or customers and from engaging in certain competitive activities. About American Locker Group American Locker Group Incorporated (ALGI.PK) -- http://www.americanlocker.com/, http://www.canadianlocker.com; and http://www.securitymanufacturing.com-- is known for its proven reliability, durability and customer service. American Locker is the only locker company to operate a dedicated center to provide prompt and reliable service to their customers. American Locker is used by thousands of water parks, theme parks, ski resorts, retailers, law enforcement agencies, and health club operators around the world. According to the Troubled Company Reporter on February 27, 2009, the Company has warned that unless it is able to enter into an acceptable extension or forbearance agreement with the Bank and obtain additional financing, the Company might be forced to restructure its debts under the protection of Chapter 11 of the U.S. Bankruptcy Code. AMIDEE CAPITAL: Has Interim Access to Lenders Cash Collateral ------------------------------------------------------------- The Hon. Richard S. Schmidt of the U.S. Bankruptcy Court for the Sothern District of Texas authorized, on an interim basis, Amidee Capital Group, Inc., et al., to use cash collateral of Sterling Bank, Lone Star Bank, and National Guardian Life Insurance Company. A final hearing on the Debtors' cash collateral use will be held on February 23, 2010, at 2:00 p.m., in Corpus Christi. The Debtors are required to serve a proposed budget before February 17, 2010. Objections, if any, are due on February 19, 2010, at 5:00 p.m. (Central Standard Time.) As reported in the Troubled Company Reporter on January 26, 2010, the cash collateral consists of the postpetition receivables, rents and proceeds generated by the operation of the cash collateral properties -- the Commercial Acreage, the Rent Houses, Coastal Breeze, Park Place, Oak Pointe, Sylvanfield Office Building, and Harbour Glen. The Debtors would use the money to fund their Chapter 11 case, pay suppliers and other parties. As adequate protection for any diminution in value of the lenders' collateral, the Debtors will grant the prepetition lenders: (i) replacement liens; and (ii) superpriority administrative expense claims. As additional adequate protection to Lone Star Bank and Sterling Bank, on or before February 22, 2010, the Debtors will make payments to be applied to the balance due to the lenders. The Debtors will also continue to maintain insurance with respect to all prepetition and postpetition collateral, both real and personal property. Houston, Texas-based Amidee Capital Group, Inc., is a Texas corporation formed in 2003 to acquire, renovate, operate and resell real property. The Company filed for Chapter 11 bankruptcy protection on January 17, 2010 (Bankr. S.D. Tex. Case No. 10- 20041). The Company's affiliates -- Amidee 2006 Preferred Real Estate Income Program, Ltd., et al. -- filed separate Chapter 11 petitions. Matthew Scott Okin, Esq., at Okin Adams & Kilmer LLP assists the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. AMIDEE CAPITAL: Taps Okin Adams to Handle Reorganization Case ------------------------------------------------------------- Amidee Capital Group, Inc., et al., ask the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Okin Adams & Kilmer LLP as counsel. OAK will, among other things: a) advise the Debtors with respect to their rights, duties and powers in the Chapter 11 case; b) assist and advise the Debtors in their consultations relative to the administration of the case; and c) assist the Debtors in analyzing the claims of the creditors and in negotiating with the creditors; Matthew Scott Okin, Esq., a partner at OAK, tells the Court that OAK received a retainer of $25,000 and an additional retainer deposit of $50,000 on January 15, 2010. OAK applied $36,121 in fees and $11,616 in expenses to the retainer. After application to prepetition fees and expenses, the retainer balance is $27,262. Mr. Okin assures the Court that OAK is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Okin can be reached at: Okin Adams & Kilmer LLP 1113 Vine Street, Suite 201 Houston, TX 77002 Tel: (713) 228-4100 Fax: (888) 865-2118 Houston, Texas-based Amidee Capital Group, Inc., is a Texas corporation formed in 2003 to acquire, renovate, operate and resell real property. The Company filed for Chapter 11 bankruptcy protection on January 17, 2010 (Bankr. S.D. Tex. Case No. 10- 20041). The Company's affiliates -- Amidee 2006 Preferred Real Estate Income Program, Ltd., et al. -- filed separate Chapter 11 petitions. Matthew Scott Okin, Esq., at Okin Adams & Kilmer LLP assists the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. APPLETON PAPERS: Inks $100-Mil. 5-Year Revolver with Fifth Third ---------------------------------------------------------------- Appleton Papers Inc. on February 8, 2010, entered into a new revolving credit agreement provided by a syndicate of banks and other financial institutions, with Fifth Third Bank as administrative agent, swing line lender and L/C issuer. The Revolving Credit Facility consists of a five-year secured revolving credit facility of up to $100 million for revolving loans that includes: -- a letter of credit sub-facility of up to $25 million; and -- a swing line sub-facility of up to $5 million. In addition, the Revolving Credit Facility contains an uncommitted accordion feature that allows the Company to increase the size of the Revolving Credit Facility by up to $25 million if the Company can obtain commitments for the incremental amount. The Company's borrowings under the Revolving Credit Facility initially bear interest at the Company's option at either base rate plus 3.00% or LIBOR plus 4.00% per annum. Thereafter, the interest rate payable under the Revolving Credit Facility may be reduced based on measures of the Company's average monthly unused availability as defined in the Revolving Credit Facility. The borrowings under the Revolving Credit Facility are limited up to the sum of (a) 85% of the net amount of the Company's eligible accounts receivable and (b) the lesser of (i) 70% of the net amount of the Company's eligible raw materials and finished goods inventory or (ii) 85% of the net orderly liquidation value of such inventory. Appleton Papers Canada Ltd., PDC, each of PDC's existing and future wholly owned domestic and Canadian subsidiaries (other than the Company) and each other subsidiary of PDC that guarantees the Company's Senior Secured Notes guarantee the Company's obligations under the Revolving Credit Facility. The Revolving Credit Facility and the Revolver Guarantees are secured by (a) a senior first priority security interest in the RCF Priority Collateral, which also secures the Senior Secured Notes and the Note Guarantees on a junior first priority basis and (b) a junior first priority security interest in the Notes Priority Collateral, which also secures the Senior Secured Notes and the Note Guarantees on a senior first priority basis. The Revolving Credit Facility contains affirmative and negative covenants customary for similar credit facilities, which among other things, require that the Company meet a minimum fixed charge coverage ratio under certain circumstances and restrict the Company's ability and the ability of the Company's subsidiaries, subject to certain exceptions, to do the following: -- incur liens; -- incur or guarantee additional indebtedness; -- make restricted payments; -- engage in transactions with affiliates; and -- make investments. The Revolving Credit Facility contains customary events of default. A full-text copy of the Revolving Credit Facility is available at no charge at http://ResearchArchives.com/t/s?52b6 On February 8, 2010, the Company, PDC, American Plastics Company, Inc. and New England Extrusion Inc. entered into a guarantee and collateral agreement in favor of the Administrative Agent. The U.S. Grantors granted a senior first priority security interest in the RCF Priority Collateral and a junior first priority security interest in the Notes Priority Collateral to secure the prompt and complete payment, observance and performance of, among other things, their respective obligations under the Revolving Credit Facility. On February 8, 2010, Appleton Papers Canada Ltd. entered into a guarantee and collateral agreement in favor of the Administrative Agent. The Canadian Grantor granted a senior first priority security interest in the RCF Priority Collateral and a junior first priority security interest in the Notes Priority Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, its obligations under the Revolving Credit Facility. About Appleton Papers Appleton Papers Inc. -- http://www.appletonideas.com/-- headquartered in Appleton, Wisconsin, produces carbonless, thermal, security and performance packaging products. Appleton has manufacturing operations in Wisconsin, Ohio, Pennsylvania, and Massachusetts, employs approximately 2,200 people and is 100% employee-owned. As of October 4, 2009, Appleton had $830.1 million in total assets against total current liabilities of $151.1 million, long-term debt of $558.9 million, postretirement benefits other than pension of $45.7 million, accrued pension of $102.7 million, environmental liability of $38.1 million, other long-term liabilities of $9.8 million, redeemable common stock of $133.6 million, accumulated deficit of $114.1 million, and accumulated other comprehensive loss of $95.9 million. * * * Standard & Poor's Ratings Services assigned Appleton, Wisconsin- based Appleton Papers Inc.'s proposed $300 million first lien notes due 2015 its issue-level rating of 'B+' (one notch above S&P's 'B' corporate credit rating on the company). S&P assigned a '2' recovery rating to this debt, indicating its expectation of substantial (70% to 90%) recovery in the event of a payment default. At the same time, S&P affirmed all its ratings on the company, including the 'B' corporate credit rating. The rating outlook is stable. APPLETON PAPERS: Issues $305 Million in New 10.50% Secured Notes ---------------------------------------------------------------- Appleton Papers Inc. on February 8, 2010, issued $305,000,000 aggregate principal amount of new 10.50% Senior Secured Notes due 2015. The Senior Secured Notes were issued pursuant to an indenture, dated as of February 8, 2010, among the Company, each of the guarantors and U.S. Bank National Association, as trustee and collateral agent. The Senior Secured Notes mature on June 15, 2015. The Senior Secured Notes will accrue interest from the issue date at a rate of 10.50% per year and will be payable in cash semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2010. The Company's obligations under the Senior Secured Notes are guaranteed by Paperweight Development Corp. and certain of the Company's present and future subsidiaries. The Note Guarantees are senior secured obligations of the Note Guarantors. The Senior Secured Notes and the Note Guarantees rank senior in right of payment to all of the Company's and the Note Guarantors' existing and future subordinated indebtedness and equally in right of payment with all of the Company's and the Note Guarantors' existing and future senior indebtedness. In addition, the Senior Secured Notes and the Note Guarantees are effectively senior to the indebtedness and guarantees under the Company's revolving credit facility to the extent of the value of the Notes Priority Collateral securing such indebtedness and guarantees and are effectively subordinated to the indebtedness and guarantees under the Revolving Credit Facility to the extent of the value of the RCF Priority Collateral securing such indebtedness and guarantees. Appleton Papers on February 8, 2010, entered into a new revolving credit agreement provided by a syndicate of banks and other financial institutions, with Fifth Third Bank as administrative agent, swing line lender and L/C issuer. The Revolving Credit Facility consists of a five-year secured revolving credit facility of up to $100 million. The Senior Secured Notes and the Note Guarantees are secured by: (a) a senior first priority security interest in substantially all of the Company's and the Note Guarantors' existing and future fixed assets (principally consisting of equipment, owned real property and certain related intangible assets, in each case subject to limited exceptions), which also secures the Revolving Credit Facility on a junior first priority basis; and (b) a junior first priority security interest in substantially all of the Company's and the Note Guarantors' other existing and future assets, including cash, accounts receivable, deposit accounts, inventory, general intangible assets (consisting primarily of intellectual property) and the capital stock of the Company and the Note Guarantors (other than PDC), in each case subject to certain exceptions -- RCF Priority Collateral -- which also secures the Revolving Credit Facility on a senior first priority basis. The collateral securing the Senior Secured Notes is subject to certain permitted liens and does not include certain excluded assets, including: (i) assets over which the granting or perfection of a security interest in such assets would violate any applicable law or the provisions of the respective contract to be pledged (except to the extent applicable law renders such provisions unenforceable), (ii) leaseholds and (iii) certain other customary exceptions. On or prior to February 7, 2013, the Company may, subject to certain limitations, use the net cash proceeds from certain equity offerings to redeem up to 35% of the aggregate principal amount of the Senior Secured Notes, at 110.50% of the principal amount thereof, plus accrued and unpaid interest to the applicable redemption date. On or after February 8, 2013, the Company may redeem the Senior Secured Notes, in whole or in part, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest to the applicable redemption date. If the Company experiences specified change of control events, the Company must offer to repurchase the Senior Secured Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. If the Company sells certain assets, the Company may, under certain circumstances, be required to use a portion of the net proceeds therefrom to offer to repurchase the Senior Secured Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase. The Indenture governing the Senior Secured Notes contains covenants that, among other things, restrict the Company's and PDC's ability, and the ability of the Company's restricted subsidiaries, to: -- sell or lease certain assets or merge or consolidate with or into other companies; -- incur or guarantee additional debt; -- create liens; -- pay dividends or make other distributions; -- redeem subordinated debt or make other restricted payments and investments; -- place restrictions on the ability of certain of the Company's subsidiaries to pay dividends or other payments to the Company; -- enter into sale and leaseback transactions; -- amend particular agreements relating to the Company's transaction with the Company's former parent Arjo Wiggins Appleton Limited and the employee stock ownership plan; And -- enter into transactions with affiliates. The covenants are subject to important exceptions and qualifications set forth in the Indenture. The Indenture provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding Senior Secured Notes will become due and payable immediately without further action or notice. If any other event of default under the Indenture occurs and is continuing, the Trustee or holders of at least 25% in aggregate principal amount of the then outstanding Senior Secured Notes may declare all the Senior Secured Notes to be due and payable immediately. On February 8, 2010, the Company, PDC, American Plastics Company, Inc. and New England Extrusion Inc. entered into a collateral agreement in favor of the Collateral Agent. The U.S. Grantors granted a senior first priority security interest in the Notes Priority Collateral and a junior first priority security interest in the RCF Priority Collateral to secure the prompt and complete payment, observance and performance of, among other things, their respective obligations under the Indenture governing the Senior Secured Notes. On February 8, 2010, Appleton Papers Canada Ltd. entered into a collateral agreement in favor of the Collateral Agent. The Canadian Grantor granted a senior first priority security interest in the Notes Priority Collateral and a junior first priority security interest in the RCF Priority Collateral in order to secure the prompt and complete payment, observance and performance of, among other things, its obligations under the Indenture governing the Senior Secured Notes. About Appleton Papers Appleton Papers Inc. -- http://www.appletonideas.com/-- headquartered in Appleton, Wisconsin, produces carbonless, thermal, security and performance packaging products. Appleton has manufacturing operations in Wisconsin, Ohio, Pennsylvania, and Massachusetts, employs approximately 2,200 people and is 100% employee-owned. As of October 4, 2009, Appleton had $830.1 million in total assets against total current liabilities of $151.1 million, long-term debt of $558.9 million, postretirement benefits other than pension of $45.7 million, accrued pension of $102.7 million, environmental liability of $38.1 million, other long-term liabilities of $9.8 million, redeemable common stock of $133.6 million, accumulated deficit of $114.1 million, and accumulated other comprehensive loss of $95.9 million. * * * Standard & Poor's Ratings Services assigned Appleton, Wisconsin- based Appleton Papers Inc.'s proposed $300 million first lien notes due 2015 its issue-level rating of 'B+' (one notch above S&P's 'B' corporate credit rating on the company). S&P assigned a '2' recovery rating to this debt, indicating its expectation of substantial (70% to 90%) recovery in the event of a payment default. At the same time, S&P affirmed all its ratings on the company, including the 'B' corporate credit rating. The rating outlook is stable. ARLIE & CO: Has Interim Access to Prepetition Lenders Cash ---------------------------------------------------------- The Hon. Albert E. Radcliffe of the U.S. Bankruptcy Court for the District of Oregon authorized, on an interim basis, Arlie & Company to access cash collateral in which Bank of America, Century bank, Siuslaw Bank, Summit Bank, Umpqua Bank, and Washington Federal claim a security interest in. A final hearing on the Debtor's access to cash collateral will be held on March 1, 2010, at 10:00 a.m. at Courtroom No. 4, Wayne L. Morse Courthouse, 405 east 8th Avenue, Suite 1100, Eugene, Oregon. The Debtor would use the cash collateral to fund its Chapter 11 case, pay suppliers and other parties. As reported in the Troubled Company Reporter on February 4, 2010, in exchange for using the cash collateral, the Debtor will grant the prepetition lenders replacement security interest in and lien upon Debtor's property and revenue from each of Debtor's properties in which each respective lender held a valid and perfected prepetition lien and security interest. The lenders' replacement security interest and lien upon the assets from and after the petition date will be of the same category, kind, character, and description as were subject to perfected and valid security interest in existence on the petition date. The adequate protection lien granted to the lenders will not enhance or improve the position of any lender. Debtor believes the value of the real property securing the indebtedness owing to each lender exceeds the amount of the indebtedness to each lender. About Arlie & Company Eugene, Oregon-based Arlie & Company -- http://www.arlie.com/-- is a property developer. It is doing business as DHF Corp., and formerly dba Arlie Land and Cattle Company and Crescent Village Community Gardens, LLC. The Company filed for Chapter 11 bankruptcy protection on January 20, 2010 (Bankr. D. Ore. Case No. 10-60244). Albert N. Kennedy, Esq., at Tonkon Torp LLP in Portland, Oregon, assists the Company in its restructuring effort. The Company listed $100,000,001 to $500,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. ARTHUR FEFFERMAN: Organizational Meeting to Form Panel on Feb. 17 ----------------------------------------------------------------- Roberta A. DeAngelis, Acting United States Trustee for Region 3, will hold an organizational meeting on February 17, 2010, at 11:00 a.m. in the bankruptcy case of Arthur Fefferman. The meeting will be held at United States Trustee's Office, One Newark Center, 14th Floor, Room 1401, Newark, NJ 07102. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. Arthur Fefferman filed for chapter 11 bankruptcy protection on December 22, 2008 (Bankr. D. N.J. Case No. 10-11059). Judge Morris Stern presides over the case. The Debtors' general restructuring counsel is Cole, Schotz, Meisel, Forman & Leonard. When Mr. Fefferman filed for bankruptcy, the Debtors listed estimated assets of more than $1 million and estimated debts of $50 million to $100 million. ASAT HOLDINGS: Shareholders Push for Voluntary Winding Up --------------------------------------------------------- ASAT Holdings Limited said the shareholders have passed resolutions to the effect that the Company be placed into voluntary winding up and that Kris Beighton of KPMG be appointed joint voluntary liquidators of the Company. Since the Company is insolvent, the liquidators will be applying to the Grand Court of the Cayman Islands for court supervision over the liquidation process. About ASAT Holdings Limited ASAT Holdings Limited (OTC Bulletin Board: ASTTY) -- http://www.asat.com/-- is a global provider of semiconductor package design, assembly and test services. With 20 years of experience, the Company offers a definitive selection of semiconductor packages and world-class manufacturing lines. ASAT's advanced package portfolio includes standard and high thermal performance ball grid arrays, leadless plastic chip carriers, thin array plastic packages, system-in-package and flip chip. ASAT was the first company to develop moisture sensitive level one capability on standard leaded products. The Company has operations in the United States, Asia and Europe. The Company has suffered recurring losses from operations and is in breach of certain covenants of its 9.25% Senior Notes due 2011 issued through its indirect wholly owned subsidiary New ASAT (Finance) Limited and the Purchase Money Loan Agreement with certain lenders to the Company. In September 2009, the Company expanded the restructuring plan to incorporate strategic alternatives, including a possible sale of the whole Company or a partial sale or other form of financing. The Company has hired Macquarie Capital Partners to conduct the exercise, and several potential investors are currently engaged in the process of due diligence. ASI TECHNOLOGY: Reports $93,000 Net Loss in December Quarter ------------------------------------------------------------ ASI Technology Corporation reported a net loss of $93,339 on revenues of $14,335 for the three months ended December 31, 2009, compared with a net loss of $91,261 on revenues of $47,476 for the comparable three months of the year prior. The Company recognized direct lease financing income of $14,178 for the three months ended December 31, 2009, compared to $46,303 of interest and fees on real estate notes for the same period of the prior year. The reduction in interest and fee income was the result of the reduced balance of the direct financing lease compared to interest paying notes in the prior year's first quarter. At December 31, 2009, no real estate notes were outstanding and the Company's only current source of interest and fee income is from its direct financing lease. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $3,081,137 in total assets, $181,013 in total liabilities, and $2,900,124 in total stockholders' equity. 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?52c1 Going Concern Doubt The Company has incurred losses in each of the last two years primarily as a result of note losses and has limited funds and liquidity with which to operate. While management has reduced some operating costs due to reduced specialty finance activity, its operating plans will likely require additional funds. "There can be no assurance that any additional funds will be available." About ASI Technology Based in Henderson, Nevada ASI Technology Corporation (OTC BB: ASIT) -- http://www.asiplasma.com/--is a specialty finance company providing commercial and venture capital financing. The Company's limited other activity has been focused on the development of plasma technology for sterilization and decontamination. ATCHLEY APPLIANCE: Files for Chapter 11 Bankruptcy in Florida ------------------------------------------------------------- Atchley Appliance & TV filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida, according to news-journalonline.com. The Company, the report notes, said it aims to secure a court- approved financial reorganization plan. The Company said it owes $673,371 for stock purchases to Louis D. Atchley Revocable Trust; $578,710, Riverside National Bank; $392,000, GE Commercial Distribution Finance Corp.; for $386,146, Pinnacle Bank; $214,000, TFC Inventory Finance; $150,000, John Rupp; and $150,000, Nova Shoppes, report says. A meeting of creditors is set for March 17, 2010. Deadline to file claims against the company is slated for June 15, 2010, and mid-August for governmental units, report relates. Atchley Appliance & TV operates a retail appliance and electronics company. AVERION INTERNATIONAL: Won't Be Able to Pay Notes Due October ------------------------------------------------------------- Averion International Corp. reported net income of $471,000 on total revenue of $19.0 million for the three months ended September 30, 2009, compared with a net loss of $2.0 million on total revenue of $18.1 million for the same period of 2008. The change is primarily due to reductions in direct costs and SG&A expense. Net service revenue for the three months ending September 30, 2009, increased $1.4 million to $17.3 million as compared with $15.9 million for the three months ending September 30, 2008. The 2009 results include $2.1 million in previously deferred revenue recognized as a large contract was signed during July of 2009. Nine Months Results For the nine months ended September 30, 2009, the Company reported a net loss of $1.7 million on total revenue of $54.5 million, compared to a net loss of $5.4 million on total revenue of $56.7 million a year ago. Net service revenue for the nine months ending September 30, 2009, decreased $1.5 million to $48.9 million as compared with $50.3 million for the nine months ending September 30, 2008. The 2008 results include $3.3 million in previously deferred revenue recognized as a large contract was signed during June 2008. Direct expenses decreased by $3.0 million to $26.3 million for the nine months ended September 30, 2009 from $29.3 million for the nine months ended September 30, 2008. SG&A expenses for the nine months ended September 30, 2009, were $14.8 million or 30% of net service revenue, as compared to $18.3 million or 36% of net service revenue for the nine month period ended September 30, 2008. Balance Sheet At September 30, 2009, the Company's consolidated balance sheets showed $63.1 million in total assets and $64.7 million in total liabilities, resulting in a $1.6 million shareholders' deficit. The Company's consolidated balance sheets also showed strained liquidity with $24.8 million in total current assets available to pay $29.6 million in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?5263 Liquidity and Capital Resources Absent a material adverse change in the level of its new business bookings or contract cancellations, the Company believes that its existing capital resources together with cash flow from operations will be sufficient to meet its operating needs for the next twelve months. At September 30, 2009, the Company had cash and cash equivalents of $5.8 million as compared to $2.4 million at September 30, 2008, an increase of $3.4 million. The Company's expected primary cash needs on both a short and long-term basis are for working capital, payment of interest and principal on outstanding notes, expansion of services, capital expenditures, possible future acquisitions, geographic expansion, and other general corporate purposes. Net cash provided by operating activities was $2.2 million for the nine months ended September 30, 2009, an increase of $3.0 million from the corresponding 2008 period. The amount of non-cash charges included in net loss from operations during the nine months ended September 30, 2009, was $7.2 million as compared to $7.5 million during the nine months ended September 30, 2008. The change in net operating assets used $3.3 million in cash during the nine months ended September 30, 2009, primarily due to a reduction in customer deposits and accounts payable, partially offset by collections on unbilled accounts receivable and accounts receivable and an increase of compensation related accruals. The change in net operating assets used $2.9 million in cash during the nine months ended September 30, 2008, primarily due to a net increase in unbilled and billed accounts receivable as well as a reduction in accrued liabilities as the Company paid down expenses associated with the Hesperion acquisition. These uses of cash were partially offset by an increase in customer deposits during that same period. Approximately $2.0 million in operating cash was used during 2009 to pay interest on the Company's Senior Notes. Net cash used by investing activities was $323,000 during the nine months ended September 30, 2009, compared to $1.0 milion used in investing activities for the nine months ended September 30, 2008. Net cash used in investing activities during 2009 was comprised primarily of outlays for the purchase of capital equipment and was significantly lower as compared to the 2008 period due to the integration activities of the Hesperion acquisition during 2008. In addition, the Company was able to reduce balances on outstanding lease deposits which contributed to the favorable period over period variance. Net cash used by financing activities was $413,000 for the nine months ended September 30, 2009, compared with net cash used by financing activities of $3.2 million for the nine months ended September 30, 2008. The decrease was attributable to the payment of approximately $3.0 million to Cerep in January 2008, which represented a deferred portion of the purchase price related to the October 2007 acquisition of Hesperion, and $2.2 million in payments on the Company's Junior notes offset by a $2.0 debt issuance in June of 2008. The Company issued Senior Secured Notes in connection with the Hesperion financing transaction during October and November of 2007. The Senior Secured Notes have a principal amount at maturity of $26.0 million and interest is due and payable quarterly in arrears in the amount of 3% for the first year, 10% for the second year and 15% for the third year. The entire unpaid principal balance plus all accrued and unpaid interest is due and payable by October 31, 2010. The Company issued additional Senior Secured Notes in connection with a financing transaction during June of 2008. The additional Senior Secured Notes have a principal amount at maturity of $2.0 million and interest is due and payable quarterly in arrears in the amount of 3% for the first four months, 10% for the next twelve months and 15% for the final twelve months. The entire unpaid principal balance plus all accrued and unpaid interest is due and payable by October 31, 2010. May Not be Able to Repay Senior Secured Notes In October 2010 The Company relates that it currently does not have the funds necessary to enable it to repay the Senior Secured Notes when they come due in October of 2010, and the Company does not anticipate generating such funds through operations. If the Company (i) is unable to make any future interest payments as they may come due, or (ii) is unable to refinance the Senior Secured Notes or otherwise enter into another strategic transaction prior to the date on which the Senior Secured Notes become due and payable, then in each case the holders of such Senior Secured Notes will have the right to initiate liquidation proceedings against the Company and foreclose on the Company's assets. The Company is actively exploring strategic alternatives, including possible restructuring of its outstanding debt, raising additional capital, and ways to further decrease its operating expenses. To this end, the Company's Board of Directors has appointed a Special Committee of independent directors to assess the fairness of any negotiation with the Company's debt holders and to explore alternative strategic possibilities. About Averion International Headquartered in Southborough, Massachusetts, Averion International Corp. (OTC: AVRO) -- http://www.averionintl.com/-- is an international clinical research organization focused on providing its clients with global clinical research services and solutions throughout the drug development lifecycle. The Company serves a variety of clients in the pharmaceutical, biotechnology and medical device industries. Averion International Corp. was originally organized under the name Clinical Trials Assistance Corporation. The Company acquired IT&E International Corporation, a provider of staffing services to the life sciences industry, and changed the corporate name from Clinical Trials to IT&E International Group. On July 31, 2006, the Company acquired Averion Inc., a CRO that provided clinical research services for Phase I through Phase IV clinical trials, with a focus in medical devices, oncology, dermatology, nephrology and other complex medical conditions. On September 21, 2006, the Company changed its name to Averion International Corp. On October 3, 2007, the Company sold its former staffing services operating segment to members of management of that operating segment. On October 31, 2007, the Company acquired Hesperion AG, an international CRO based in Switzerland. BAYARD SPECTOR: Court to Hear HWMG's Dismissal Motion on March 1 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida will consider at a hearing March 11, 2010, at 2:30 p.m., HWMG Investments, LLC's motion to dismiss the Chapter 11 case of Bayard William Spector. The hearing will be held at Claude Pepper Federal Bldg., 51 SW First Ave., Room 1406, Miami Florida. HWMG loaned the Debtor $9,500,00 to fund the Debtor's development of its Dania Beach Property. Shutts & Bowen LLP, a representative of HWMG, asked for the dismissal of the Debtor's Chapter 11 case, relating that: -- based on the Debtor's substantial lack of equity in the real property, the Debtor's lack of any disposable income and the current economic conditions affecting the real estate market, the Debtor has no reasonable hope of reorganizing this property by refinancing it or selling it for a price that will satisfy the liens; -- the real property does not produce any cash flow to pay a market rate of interest on the obligation owed to HWMG or otherwise fund a Chapter 11 plan. In the alternative, HWMG sought complete relief from the automatic stay so that HWMG may pursue its in rem rights and remedies with respect to the loan documents including, without limitation, continuation of the Foreclosure Action through and including the sale of the property and the disbursement of the sale proceeds in accordance with applicable law. Miami, Florida-based Bayard William Spector -- aka Bayard W. Spector, Bayard William Bector, Bayard W. Bector, W Bayard Spector, and Spector Bayard -- filed for Chapter 11 bankruptcy protection on November 2, 2009 (Bankr. S.D. Fla. Case No. 09- 34183). The Debtor listed $50,000,001 to $100,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. BCBG MAX: S&P Raises Corporate Credit Rating to 'B' --------------------------------------------------- Standard & Poor's Ratings Services said that it raised its corporate credit rating on Vernon, California-based BCBG Max Azria Group Inc. to 'B' from 'B-' on improved performance and significantly better credit metrics expected at fiscal year-end 2009. In addition, S&P raised the issue-level rating on BCBG's term loan to 'B' from 'B-'. The recovery rating remains '4', indicating S&P's expectation for average (30%-50%) recovery of principal in the event of default. "The ratings on BCBG Max Azria Group Inc. reflect its participation in the highly competitive and fragmented apparel retailing industry and a very highly leveraged structure that results in thin cash flow protection measures," said Standard & Poor's credit analyst Jackie Oberoi. In terms of financial risk, the 2006 acquisition of Max Rave for about $46 million and the assumption of related leases resulted in a meaningful increase in debt leverage. For domestic operations alone, S&P expects debt to EBITDA for fiscal year 2009 to remain high at about 5.4x, but this shows significant improvement from leverage of more than 9x the prior year. S&P believes that leverage is somewhat higher when international operations are included. S&P expects similar improvement in interest coverage at year-end, with coverage of about 2x expected compared with just 1x one year ago. The metrics strengthened primarily because of EBITDA contribution by the company's wholesale division, which has been successful and for which there is a contract with Wal-Mart Stores. BCBG Max Azria, the core brand, historically has accounted for the majority of total revenues and earnings. It maintained satisfactory comparable-store sales growth until the third quarter of fiscal 2008, during which retail sales weakened and comparable- store sales turned negative. Trends remained weak during 2009 because of the poor U.S. economy. Profitability remains under pressure because of higher operating costs for brand and advertising development, costs associated with new store development, and an increase in BCBG's lower margin wholesale sales. Moreover, S&P believes the brand faces stiff competition from numerous other apparel names, both in the department store channel and at other specialty retailers. Max Rave, acquired in 2006, has had recent success with its wholesale line to Wal-Mart, which S&P expects to result in positive EBITDA for this division for the year. S&P expects Max Rave wholesale revenues to become a much larger part of BCBG's overall business going forward. Nevertheless, S&P is concerned that sustainability over the long term is uncertain because of the keen competition and the fickle nature of Max Rave's core teenage customers. BERNARD MADOFF: Brother, Sons Face Criminal Tax-Fraud Cases ----------------------------------------------------------- According to reports, federal prosecutors in Manhattan are pursuing criminal tax-fraud cases against Bernard Madoff's brother, Peter, and sons Mark and Andrew. Peter Madoff was the chief compliance officer of Bernard L. Madoff Investment Securities LLC. Mark and Andrew Madoff helped run the firm's market-making division, which was separate from the investment arm where Bernard Madoff perpetrated his multibillion- dollar Ponzi scheme. They all have denied knowledge of the fraud. The Wall Street Journal's Amir Efrati reports that lawyers for Peter Madoff, who is in his 60s, didn't respond to requests for comment about the tax-fraud probe. Martin Flumenbaum, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, lawyer for Mark, 45, and Andrew, 43, said in a statement that the sons had no prior knowledge of their father's crimes and contacted authorities immediately after their father told them of his fraud. The sons "continue to cooperate fully with the authorities in their ongoing investigations," he said. According to the Journal, the exact nature of the potential tax violations isn't clear. The Journal explains tax-fraud cases often involve the alleged failure to declare income or making false deductions, such as classifying personal expenses as deductible business costs. Some tax-fraud cases allege that fake investment losses are used to cancel out realized gains. On February 8, 2010, the Troubled Company Reporter said Irving H. Picard, the trustee for the liquidation of the estate of Bernard L. Madoff Investment Securities LLC, reached a settlement under which Mr. Madoff's sons agreed to restrict movement of their own personal assets, not incur debt beyond $1,000 and give a monthly accounting of their expenses. Peter Madoff and Shana Madoff Swanson, Bernard's niece, signed similar agreements with Mr. Picard. The Journal notes Peter, Mark and Andrew Madoff were tax clients of David Friehling, according to people familiar with the matter. Mr. Friehling pleaded guilty in 2009 to criminal charges of preparing false tax returns for Mr. Madoff and other unnamed Madoff investors and also admitted to signing off on sham audits of the Madoff firm. He has said he had no knowledge of the Ponzi scheme. The Journal says Mr. Friehling, who hasn't been sentenced, is now assisting prosecutors with the tax-fraud investigation, a person familiar with the probe said. His lawyer, Andrew Lankler, Esq., at Lankler & Carragher, declined to comment, as did a spokeswoman for the U.S. Attorney's office in Manhattan, which is handling the probe. The Journal also reports that Frank DiPascali, a Madoff employee who has been in jail since pleading guilty in August to aiding Mr. Madoff's fraud, was released Thursday on bail pending sentencing. Prosecutors have said he is helping them build cases against other individuals. "We are thrilled," said Marc Mukasey, Esq., at Bracewell & Giuliani LLP, Mr. DiPascali's lawyer. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert $64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.). BIG WASH: Bankruptcy Case Transferred to Arizona ------------------------------------------------ The Hon. C. Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia approved the transfer of Big Wash Investments, LLC's Chapter 11 case from this Court to the District of Arizona, Phoenix Division. BCP Management & Investment Company, Inc., a secured creditor, asked the Court to transfer the Debtor's Chapter 11 case, relating that: -- the Debtor's only assets are located in Maricopa County, Arizona; -- none of the Debtor's creditors are located in Georgia and all but one of them are located in Arizona; and -- the Arizona Court is a more convenient venue for the Debtor's creditors. Atlanta, Georgia-based Big Wash Investments, LLC, filed for Chapter 11 bankruptcy protection on November 25, 2009 (Bankr. N.D. Ga. Case No. 09-91279). Hugh O. Nowell, Esq., who has an office in Atlanta, Georgia, assist the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in liabilities. BILLING SERVICES: Moody's Upgrades Rating on Senior Loan to 'Ba3' ----------------------------------------------------------------- Moody's Investors Service upgraded to Ba3 from B1 the rating on Billing Services Group North America, Inc.'s senior secured term loan. This rating action reflects Moody's revised estimate of recovery value resulting from a $32.5 million permanent repayment of the facility's outstanding balance. At December 31, 2009, BSG had reduced the facility to $80 million from an original face amount in December 2007 of $112.5 million. Concurrently, Moody's affirmed the B1 Corporate Family and Probability of Default Ratings. Over the past two years, BSG has exhibited strong operating performance, exceeding original expectations, while steadily reducing debt and maintaining an adequate liquidity profile. Notably, financial leverage of two times and interest coverage of about five times at September 30, 2009, are considered very good for the rating category. However, BSG's ratings are constrained by high mandatory debt amortization of $11.25 million per year that limits the company's financial flexibility and has contributed to modestly negative free cash flow after consideration of all cash obligations. BSG does not have access to external liquidity, as it does not maintain a revolver, and part of the company's cash balance represents customer funds. The ratings are further constrained by an industry-wide deterioration in wireline call volumes (estimated by Moody's at 5-10% per year) and BSG's relatively small revenue size. The stable outlook reflects Moody's expectations that the company will continue to offset declining revenue from services related to traditional call volumes with growth in enhanced services volumes, while maintaining an adequate liquidity profile. Moody's upgraded this rating: * $80 (originally $112.5) million senior secured term loan due 2014, to Ba3 (LGD3, 41%) from B1 (LGD3, 42%) Moody's affirmed these ratings: * Corporate Family Rating, B1 * Probability of Default Rating, B1 The previous rating action for BSG occurred on December 21, 2007, when Moody's affirmed the B1 Corporate Family Rating and withdrew the rating on a proposed revolving credit facility that was not ultimately funded. Billing Services Group North America, Inc., is a leading provider of clearing, settlement, payment and financial risk management solutions to communication service providers in the United States. Headquartered in San Antonio, Texas, BSG reported approximately $150 million in revenues for the twelve months ended September 30, 2009. BLOCKBUSTER INC: Diamondback Funds Cut Stake to 2.63% ----------------------------------------------------- As of December 31, 2009, (i) Diamondback Master Fund, Ltd. beneficially owned 4,515,056 shares of common stock of Blockbuster Inc. and (ii) each of Diamondback Capital Management, LLC, and DBCM Partners, LLC, may be deemed to have been the beneficial owner of the 4,515,056 shares of Common Stock beneficially owned by Diamondback Master Fund, Ltd. As of February 12, 2010, (i) Diamondback Master Fund, Ltd. beneficially owns 1,893,807 shares of Common Stock and (ii) each of Diamondback Capital Management, LLC and DBCM Partners, LLC may be deemed to have beneficially owned the 1,893,807 shares of Common Stock beneficially owned by Diamondback Master Fund, Ltd. Diamondback Capital Management, LLC is the investment manager of Diamondback Master Fund, Ltd. DBCM Partners, LLC is the managing member of Diamondback Capital Management, LLC. Each of Chad Loweth, Lawrence Sapanski and Richard H. Schimel serve as managing members of DBCM Partners, LLC. Based on the Company's outstanding shares of Common Stock, (i) as of December 31, 2009, each of Diamondback Master Fund, Ltd., Diamondback Capital Management, LLC and DBCM Partners, LLC may be deemed to have beneficially owned 6.27% of the outstanding shares of Common Stock of the Company and (ii) as of February 12, 2010, each of Diamondback Master Fund, Ltd., Diamondback Capital Management, LLC and DBCM Partners, LLC may be deemed to beneficially own 2.63% of the outstanding shares of Common Stock of the Company. Dallas-based Blockbuster Inc. (NYSE: BBI, BBI.B) is a global provider of rental and retail movie and game entertainment. The Company provides its customers with convenient access to media entertainment anywhere and any way they want it -- whether in- store, by-mail, through vending and kiosks or digital download. With a highly recognized brand name and a library of over 125,000 movie and game titles, Blockbuster leverages its multi-channel presence to further build upon its leadership position in the media entertainment industry and to best serve the two million daily global customers and over 50 million annual global customers. The Company may be accessed worldwide at http://www.blockbuster.com/ As reported by the Troubled Company Reporter, Sept. 18, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Blockbuster to 'B-' from 'CCC'. The outlook is stable. The TCR on Oct. 6, 2009, said Moody's Investors Service upgraded Blockbuster's long term ratings, including its probability of default rating to 'Caa1' from 'Caa3' and its corporate family rating to 'Caa1' from 'Caa2'. The rating outlook is stable. BLOCKBUSTER INC: Dimensional Fund Holds 3.4% of Class A Shares -------------------------------------------------------------- Dimensional Fund Advisors LP disclosed that as of December 31, 2009, it held 4,153,882 shares or roughly 3.4% of the class A common stock of Blockbuster Inc. Dimensional Fund Advisors LP is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940. It furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. About Blockbuster Inc. Dallas-based Blockbuster Inc. (NYSE: BBI, BBI.B) is a global provider of rental and retail movie and game entertainment. The Company provides its customers with convenient access to media entertainment anywhere and any way they want it -- whether in- store, by-mail, through vending and kiosks or digital download. With a highly recognized brand name and a library of over 125,000 movie and game titles, Blockbuster leverages its multi-channel presence to further build upon its leadership position in the media entertainment industry and to best serve the two million daily global customers and over 50 million annual global customers. The Company may be accessed worldwide at http://www.blockbuster.com/ As reported by the Troubled Company Reporter, Sept. 18, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Blockbuster to 'B-' from 'CCC'. The outlook is stable. The TCR on Oct. 6, 2009, said Moody's Investors Service upgraded Blockbuster's long term ratings, including its probability of default rating to 'Caa1' from 'Caa3' and its corporate family rating to 'Caa1' from 'Caa2'. The rating outlook is stable. BLOCKBUSTER INC: Goldman Sachs Holds 7.7 % of Class A Shares ------------------------------------------------------------ The Goldman Sachs Group, Inc., and Goldman, Sachs & Co. disclosed that as of December 31, 2009, they may be deemed to own 9,414,451 shares or roughly 7.7 % of the class A common stock of Blockbuster Inc. Dallas-based Blockbuster Inc. (NYSE: BBI, BBI.B) is a global provider of rental and retail movie and game entertainment. The Company provides its customers with convenient access to media entertainment anywhere and any way they want it -- whether in- store, by-mail, through vending and kiosks or digital download. With a highly recognized brand name and a library of over 125,000 movie and game titles, Blockbuster leverages its multi-channel presence to further build upon its leadership position in the media entertainment industry and to best serve the two million daily global customers and over 50 million annual global customers. The Company may be accessed worldwide at http://www.blockbuster.com/ As reported by the Troubled Company Reporter, Sept. 18, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Blockbuster to 'B-' from 'CCC'. The outlook is stable. The TCR on Oct. 6, 2009, said Moody's Investors Service upgraded Blockbuster's long term ratings, including its probability of default rating to 'Caa1' from 'Caa3' and its corporate family rating to 'Caa1' from 'Caa2'. The rating outlook is stable. BLOCKBUSTER INC: Prentice Capital, Zimmerman Disclose Stake ----------------------------------------------------------- Prentice Capital Management, LP, disclosed that as of December 31, 2009, it may be deemed to beneficially own 11,820,683 shares or roughly 9.68% of the class A common stock of Blockbuster Inc. Michael Zimmerman disclosed that as of December 31, 2009, he may be deemed to beneficially own 12,166,983 shares or roughly 9.96% of the class A shares. Prentice Capital Management serves as investment manager to a number of investment funds -- including Prentice Capital Partners, LP, Prentice Capital Partners QP, LP, Prentice Capital Offshore, Ltd., Prentice Special Opportunities, LP, Prentice Special Opportunities Offshore, Ltd. and Prentice Special Opportunities Master, L.P. -- and manages investments for certain entities in managed accounts with respect to which it has voting and dispositive authority over the Shares. Mr. Zimmerman is the Managing Member of Prentice. He may be deemed to control Prentice and certain of the investment funds and therefore may be deemed to be the beneficial owner of the Blockbuster shares. Mr. Zimmerman has voting and dispositive authority over 19,000 Shares held by the Michael Zimmerman & Holly Zimmerman Family Foundation, Inc., 304,500 Shares held by Mrs. Zimmerman and 22,800 Shares held by his children. Dallas-based Blockbuster Inc. (NYSE: BBI, BBI.B) is a global provider of rental and retail movie and game entertainment. The Company provides its customers with convenient access to media entertainment anywhere and any way they want it -- whether in- store, by-mail, through vending and kiosks or digital download. With a highly recognized brand name and a library of over 125,000 movie and game titles, Blockbuster leverages its multi-channel presence to further build upon its leadership position in the media entertainment industry and to best serve the two million daily global customers and over 50 million annual global customers. The Company may be accessed worldwide at http://www.blockbuster.com/ As reported by the Troubled Company Reporter, Sept. 18, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Blockbuster to 'B-' from 'CCC'. The outlook is stable. The TCR on Oct. 6, 2009, said Moody's Investors Service upgraded Blockbuster's long term ratings, including its probability of default rating to 'Caa1' from 'Caa3' and its corporate family rating to 'Caa1' from 'Caa2'. The rating outlook is stable. BLOCKBUSTER INC: Wellington Holds 5.80% of Class A Shares --------------------------------------------------------- Wellington Management Company, LLP, in its capacity as investment adviser, may be deemed to beneficially own 7,079,933 shares or roughly 5.80% of the class A common stock of Blockbuster Inc., as of December 31, 2009. The shares are held of record by clients of Wellington Management. Dallas-based Blockbuster Inc. (NYSE: BBI, BBI.B) is a global provider of rental and retail movie and game entertainment. The Company provides its customers with convenient access to media entertainment anywhere and any way they want it -- whether in- store, by-mail, through vending and kiosks or digital download. With a highly recognized brand name and a library of over 125,000 movie and game titles, Blockbuster leverages its multi-channel presence to further build upon its leadership position in the media entertainment industry and to best serve the two million daily global customers and over 50 million annual global customers. The Company may be accessed worldwide at http://www.blockbuster.com/ As reported by the Troubled Company Reporter, Sept. 18, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Blockbuster to 'B-' from 'CCC'. The outlook is stable. The TCR on Oct. 6, 2009, said Moody's Investors Service upgraded Blockbuster's long term ratings, including its probability of default rating to 'Caa1' from 'Caa3' and its corporate family rating to 'Caa1' from 'Caa2'. The rating outlook is stable. BOOMERANG SYSTEMS: Posts $1.68-Mil Net Loss in Qtr Ended Dec. 31 ---------------------------------------------------------------- Boomerang Systems Inc. reported a net loss of $1,677,152 for the three months ended December 31, 2009, compared with a net loss of $1,524,725 for the same period of 2008. Revenues and cost of goods sold were $0 for both the quarter ended December 31, 2009, and the quarter ended December 31, 2008. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $1,650,711 in total assets and $3,206,535 in total liabilities, resulting in a $1,555,824 shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $1,398,454 in total current assets available to pay $1,722,840 in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?52bf Going Concern Doubt The Company sustained a substantial loss in fiscal 2009 of $9,693,734 which includes non-cash expenses of $184,150 for stock options and $3,635,992 for warrants that were issued during the fiscal year, and $41,290 for depreciation. For the first three months of fiscal 2010, the Company incurred a net loss of $1,677,152 which includes non-cash expenses of $138,104 for stock options, $100,619 for warrants and $12,130 for depreciation. The Company had negative cash flow from operations for the first three months of fiscal 2010 and during the year ended September 30, 2009, in the amount of $1,398,302 and $3,737,008, respectively. As of December 31, 2009, and September 30, 2009, the Company's liabilities exceeded its assets by $1,555,824 and $3,186,008, respectively. "These factors create uncertainty whether the Company can continue as a going concern." About Boomerang Systems Headquartered in Morristown, New Jersey, Boomerang Systems, Inc. (Pink Sheets: BMER) is engaged in the design, development, marketing and sale of automated racking and retrieval systems for automobile parking, automated racking and retrieval systems for self-storage units, robotic systems for automobile parking and robotic systems for self-storage systems. Four of its systems, considered by management to be pilot demonstration systems, have been built and are operating in Logan, Utah with two others currently being built. CANWEST GLOBAL: Union Wants to Be Appointed as Representative ------------------------------------------------------------- Communications, Energy and Paperworkers Union of Canada asks Madam Justice Pepall's to authorize it to continue to represent its current members, and appointing the Union to represent its former members, including pensioners, retirees, deferred vested participants and surviving spouses and dependents employed or formerly employed by the LP Entities. The Union asks the Court for authority to determine, file, advance or compromise any claims of its Current and Former Members which exist or may arise at law or equity or pursuant to any applicable collective agreement, which may be made against the LP Entities in the proceedings in connection with any issue or matter related to any recovery, compromise of rights or entitlements of the Current and Former Members. Moreover, the Union asks the Court to authorize the law firm CaleyWray Labour/Employment Lawyers to act as counsel for the Current and Former Members in the proceedings. The Union is the bargaining agent for employees working at the LP Entities' facilities in bargaining units at the Ottawa Citizen, the Windsor Star, the Montreal Gazette, the Edmonton Journal, the Calgary Herald, the Alberni Valley Times, the Nanaimo Daily News, College Printers, the Sun and Province in B.C., the Burnaby/Coquitlam Now-Royal City Record, Surrey Now, the Abbotsford Times, the Victoria Times Colonist, and the Campbell River Courier-Islander. The Union represents approximately 1,800 employees employed by the Applicants in 25 bargaining units, and has collective agreements with respect to these bargaining units. The Union has approximately 45 outstanding grievances at businesses of the Applicants including the Montreal Gazette, the Ottawa Citizen, the Windsor Star, College Printers, the Sun and Province, and the Victoria Times Colonist. Of these, approximately three are at arbitration. The LP Entities maintain two defined benefit plans (DB Plans) in Ontario and one DB Plan in British Columbia. They also maintain and contribute to three defined contribution plans (DC Plans) and several multi-employer pension plans. The DB Plans have a combined windup deficiency of C$106,349,581 as of the last valuation date which was on December 31, 2008. The total of the annual special payments made by the LP Entities in respect of the deficiencies in the DB Plans is C$18,566,666. The aggregate annual cash contribution in the year ended August 31, 2009, to provide postretirement/post-employment benefits for all former employees of the LP Entities was approximately C$3 million. The aggregate accrued benefit obligation relating to these benefits for all of the LP Entities former employees, as at the year ending August 31, 2009, totaled approximately C$64.8 million. According to Douglas J. Wray, Esq., at CaleyWray Labour/Employment Lawyers, in Toronto, Ontario, as a result of the recent economic decline it is expected that the next valuation of the DB Plans will reflect a significantly deteriorated financial position. Prior to the date of the Initial Order, a number of employees represented by the Union were permanently laid off and were in receipt of salary continuance payments. As of the date of the Initial Order, the LP Entities have ceased making all payments to those Former Members. Peter Murdoch, vice-president - media of the Communications, Energy and Paperworkers Union of Canada, avers that having the Union appointed as representative, and CaleyWray appointed as counsel, for the Current and Former Members provides a reliable source for information about the process for the Current and Former Members. The Union and counsel can speak on behalf of the Current and Former Members to the LP Entities and other stakeholders, and report back to the constituency through various means, including newsletters, local meetings and website updates. Mr. Murdoch says that the Union and CaleyWray can advocate on behalf of Current and Formers Members in the negotiation of a Plan of Arrangement and can address with the Court issues that may affect their interests. About Canwest Global Canwest Global Communications Corp. (TSX: CGS and CGS.A) -- http://www.canwest.com/-- an international media company, is Canada's largest media company. In addition to owning the Global Television Network, Canwest is Canada's largest publisher of English language daily newspapers and owns, operates and holds substantial interests in conventional television, out-of-home advertising, specialty cable channels, web sites and radio stations and networks in Canada, New Zealand, Australia, Turkey, Indonesia, Singapore, the United Kingdom and the United States. On October 6, 2009, Canwest Global, Canwest Media Inc., Canwest Television Limited Partnership (including Global Television, MovieTime, DejaView and Fox Sports World), The National Post Company and certain subsidiaries voluntarily entered into, and successfully obtained an Order from the Ontario Superior Court of Justice (Commercial Division) commencing proceedings under the Companies' Creditors Arrangement Act. The CMI Entities' commencement of these proceedings was undertaken in furtherance of a proposed recapitalization transaction that is supported by over 70% of holders of the 8% senior subordinated notes issued by CMI. On the same day, FTI Consulting Canada Inc., the Court-appointed Monitor in the CCAA proceedings, sought protection in the United States Bankruptcy Court under Chapter 15 of the United States Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 09-15994) for certain of the entities involved in Canwest's television business that filed for protection under the CCAA, including Canwest, Canwest Media Inc. and Canwest Global Broadcasting Inc./Radiodiffusion Canwest Global Inc. Judge Stuart M. Bernstein presides over the Chapter 15 cases. Evan D. Flaschen, Esq., at Bracewell & Giuliani LLP, in Hartford, Connecticut, serves as Chapter 15 Petitioner's counsel. The Chapter 15 Debtors disclosed estimated assets of $500 million to $1 billion and estimated debts of $50 million to $100 million. In a regulatory filing with the U.S. Securities and Exchange Commission, Canwest Media disclosed C$4,847,020,000 in total assets and C$5,826,522,000 in total liabilities at May 31, 2009. Bankruptcy Creditors' Service, Inc., publishes Canwest Bankruptcy News. The newsletter tracks the CCAA proceedings and Chapter 15 proceedings undertaken by Canwest Global Communications Corp. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). CAPMARK FINANCIAL: Proposes $8.8-Mil. Incentive Program ------------------------------------------------------- Reuters reports that Capmark Financial Group Inc. is seeking approval from the Bankruptcy Court to pay up to $8.8 million in incentives for certain "insider" employees and $2.4 million to "non-insider" employees. Capmark said payment of the incentives would be subject to the achievement of certain milestones, which include selling off certain assets and exiting bankruptcy protection. The Company redacted the names and designations of the insider employees from the document that was filed in the Court's docket. The Court will convene a hearing on March 4 to consider the proposed incentive payments. About Capmark Financial Based in Horsham, Pennsylvania, Capmark Financial Group Inc. -- http://www.capmark.com/-- is a diversified company that provides a broad range of financial services to investors in commercial real estate-related assets. Capmark has three core businesses: lending and mortgage banking, investments and funds management, and servicing. Capmark operates in North America, Europe and Asia. Capmark has 1,000 employees located in 37 offices worldwide. On October 25, 2009, Capmark Financial Group Inc. and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 (Bankr. D. Del. Case No. 09-13684) Capmark's financial advisors are Lazard Freres & Co. LLC and Loughlin Meghji + Company. Capmark's bankruptcy counsel is Dewey & LeBoeuf LLP. Richards, Layton & Finger, P.A. serves as local counsel. Beekman Advisors, Inc., is serving as strategic advisor. KPMG LLP is tax and accounting advisor. Epiq Bankruptcy Solutions, LLC, is the claims and notice agent. Capmark has total assets of US$20 billion against total debts of US$21 billion as of June 30, 2009. Bankruptcy Creditors' Service, Inc., publishes Capmark Financial Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Capmark Financial Group Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) CATALYST PAPER: Contests Application to BC Labour Board ------------------------------------------------------- Catalyst Paper said it will contest an application to the Labour Relations Board of British Columbia in Canada regarding certain post-retirement benefits for some retirees formerly employed by MacMillan Bloedel Limited, now doing business as Weyerhaeuser Company Ltd. Catalyst Paper said the Communications, Energy and Paperworkers Union of Canada Locals 1, 76, 592 and 686, representing hourly employees at Powell River and Port Alberni mills have applied to the Labour Relations Board of British Columbia for a declaration that Catalyst is responsible for certain post-retirement medical and extended health benefits for some retired employees who were represented by the Locals and who retired from MacMillan Bloedel Limited. Pacifica Papers Inc. acquired the Powell River and Port Alberni mills from MacMillan Bloedel Limited in 1998. At the time of that transaction, MacMillan Bloedel agreed to retain responsibility for any benefits for eligible employees who retired prior to the acquisition by Pacifica of the mills. Catalyst subsequently amalgamated with Pacifica in 2001. The Locals claim the contractual relationships between Catalyst, Pacifica and MacMillan Bloedel Limited do not absolve Catalyst from successorship provisions of the Labour Relations Code imposed on Pacifica at the time Pacifica acquired the mills. If the Locals' application is successful, Catalyst could incur additional costs of up to $4 million annually. Catalyst does not agree with the Locals' position and has been advised that a number of defences are available that are expected to eliminate or significantly reduce any financial exposure, including seeking indemnification from Weyerhaeuser. Proceedings are at a very early stage and a date for a hearing has not been set. About Catalyst Paper Headquartered in Richmond, British Columbia, Catalyst Paper Corporation (TSX:CTL) manufactures diverse specialty printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With six mills strategically located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 2.5 million tones. At September 30, 2009, the Company had C$2.20 billion in total assets against C$1.29 billion in total liabilities. At September 30, 2009, the Company had liquidity of C$192.9 million, comprised of C$90.6 million cash, and availability of C$102.3 million on the Company's asset-based loan facility. * * * DBRS in November 2009 downgraded the Issuer Rating of Catalyst Paper Corporation to B (low) from BB and the Senior Debt rating to CCC from BB, and placed the Company's ratings Under Review with Negative Implications. The downgrades reflect the Company's weak financial risk which is likely to weaken further in view of expected continuation of soft industry conditions and follows the Company's announcement on November 23, 2009, of its offer to exchange its outstanding 8 5/8% Senior Debt due June 15, 2011, with new 10% Senior Secured Notes due December 15, 2016, and shares of its common stock. CATALYST PAPER: Letko Brosseau Reports 11.16% Equity Stake ---------------------------------------------------------- Letko, Brosseau & Ass. Inc. disclosed that as of December 31, 2009, it may be deemed to beneficially own 42,521,204 shares or roughly 11.16% of the common stock of Catalyst Paper Corporation. Clients of Letko, Brosseau & Ass. Inc. have the right to receive or the power to direct the receipt of dividends from, or the proceeds from sale of, the common shares reported as beneficially owned by Letko, Brosseau & Ass. Inc. No clients of Letko, Brosseau & Ass. Inc. beneficially owns more than 5% of the Company's Common Shares. Headquartered in Richmond, British Columbia, Catalyst Paper Corporation (TSX:CTL) manufactures diverse specialty printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With six mills strategically located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 2.5 million tones. At September 30, 2009, the Company had C$2.20 billion in total assets against C$1.29 billion in total liabilities. At September 30, 2009, the Company had liquidity of C$192.9 million, comprised of C$90.6 million cash, and availability of C$102.3 million on the Company's asset-based loan facility. * * * DBRS in November 2009 downgraded the Issuer Rating of Catalyst Paper Corporation to B (low) from BB and the Senior Debt rating to CCC from BB, and placed the Company's ratings Under Review with Negative Implications. The downgrades reflect the Company's weak financial risk which is likely to weaken further in view of expected continuation of soft industry conditions and follows the Company's announcement on November 23, 2009, of its offer to exchange its outstanding 8 5/8% Senior Debt due June 15, 2011, with new 10% Senior Secured Notes due December 15, 2016, and shares of its common stock. CELL THERAPEUTICS: Reports $27.4-Mil. Net Loss in 4th Quarter ------------------------------------------------------------- Cell Therapeutics Inc. reported financial results for the fourth quarter and year ended December 31, 2009. December 31 ---------------------- 2009 2008 (In Thousands) ---------------------- Cash and cash equivalents & securities available-for-sale $37,811 $10,671 Restricted cash -- 6,640 Working capital (21,694) (14,141) Total assets 69,595 64,243 Convertible debt 62,142 142,373 Accumulated deficit (1,429,083) (1,312,320) Shareholders deficit (18,769) (132,061) "In 2009 we focused on streamlining our operations, improving our balance sheet and supporting our late stage product to position us for the potential commercialization of a CTI product," stated James A. Bianco, M.D., CEO of CTI. "We look forward to presenting the benefit-risk pixantrone data to the Oncologic Drugs Advisory Committee at the meeting which is being rescheduled especially in light of the completion of the updated study overall survival results." Financial Results For the quarter ended December 31, 2009, total net operating expenses were approximately $26.2 million, compared to $11.2 million for the same period in 2008. The increase in total net operating expenses was mainly a result of a non-cash equity based compensation expense of $11.7 million for the quarter ended December 31, 2009 and a $9.4 million gain on the sale of Zevalin to a 50/50 owned joint venture with Spectrum that was recognized in the quarter ended December 31, 2008. Research and development expenses decreased by 15% to $7.3 million compared to $8.6 million for the same period in 2008. Net loss attributable to common shareholders decreased by 34% to $27.4 million, compared to a net loss attributable to common shareholders of $41.3 million for the same period in 2008. The decrease in net loss for the quarter ended December 31, 2009 is mainly a result of the decrease in expenses associated with financings for the quarter ended December 31, 2009 compared to the expenses associated with financings incurred in the same period in 2008. For the year ended December 31, 2009, total net operating expenses decreased to $81.6 million, compared to $88.7 million for the same period in 2008. Research and development expenses decreased by 42% to $30.2 million compared to $51.6 million for the same period in 2008. Net loss attributable to common shareholders decreased 42% to $116.8 million, compared to a net loss attributable to shareholders of $202.9 million for the same period in 2008. The decrease in net loss for the year ended December, 31, 2009 compared to the same period in 2008 is mainly the result of a decrease in research and development expenses and expenses associated with financings. CTI had approximately $37.8 million in cash, cash equivalents and securities available-for-sale as of December 31, 2009. This does not include approximately $28.2 million in net proceeds, the Company received in January 2010 in connection with a registered offering of preferred stock and warrants. A full-text copy of the company's financial results is available for free at http://ResearchArchives.com/t/s?528c About Cell Therapeutics Headquartered in Seattle, Cell Therapeutics, Inc. (NASDAQ and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company that develops an integrated portfolio of oncology products aimed at making cancer more treatable. Subsequent to the closure of its Bresso, Italy operations in September 2009, CTI's operations are conducted solely in the United States. Bankruptcy Warning In its Form 10-Q report for the period ended September 30, 2009, filed with the Securities and Exchange Commission, the Company warned it does not expect it will have sufficient cash to fund planned operations through the second quarter of 2010, which raises substantial doubt about its ability to continue as a going concern. The Company said 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. CHARTER COMMUNICATIONS: Has Indemnification Pacts With Execs. ------------------------------------------------------------- Charter Communications Inc. said in a regulatory filing that it entered into revised indemnification agreements with certain executives on Feb. 11. The Indemnification Agreements, which were approved by the Company's Board of Directors following the Company's emergence from bankruptcy on November 30, 2009, provide that the Company will indemnify the contracting individuals in performance of their duties as officers and employees of the Company, to the fullest extent permissible under the General Corporation Law of the State of Delaware. The revised agreement includes a guaranty of the payment and performance of the Indemnification Agreements by one of the Company's indirect subsidiaries, CCH II, LLC. Exchange of Holdco Units The Company entered into an exchange agreement, with Charter Investment, Inc., Paul G. Allen and Charter Communications Holding Company, LLC on November 30, 2009, pursuant to which Mr. Allen and certain persons and entities affiliated with Mr. Allen, had certain rights and options, including, without limitation, at any time and from time to time on or before November 30, 2014, to exchange all or any portion of their membership units in Charter Holdco for $1,000 in cash and up to approximately 1.1 million shares of the Company's Class A common stock in a taxable transaction. As of November 30, 2009, there was an aggregate of 100 Holdco Units outstanding, of which 99 were held by the Company and one (1) was held by CII. As permitted by the Exchange Agreement, on December 28, 2009, CII exchanged 81% of its one (1) Holdco Unit for 907,698 shares of the Company's Class A common stock and $1,000 in cash. On February 8, 2010, the remaining 0.19 Holdco Unit was exchanged by Mr. Allen for an additional 212,923 shares of the Company's Class A common stock. As part of the exchange, CII merged with a subsidiary of the Company, became a wholly-owned subsidiary of the Company and continued to hold the 0.19 Holdco Unit. As a result of this transaction, Charter Holdco is now an indirect, wholly-owned subsidiary of the Company. About Charter Communications Based in St. Louis, Missouri, Charter Communications, Inc. (Pink OTC: CHTRQ) -- http://www.charter.com/-- is a broadband communications company and the fourth-largest cable operator in the United States. Charter provides a full range of advanced broadband services, including advanced Charter Digital Cable(R) video entertainment programming, Charter High-Speed(R) Internet access, and Charter Telephone(R). Charter Business(TM) similarly provides scalable, tailored, and cost-effective broadband communications solutions to business organizations, such as business-to-business Internet access, data networking, video and music entertainment services, and business telephone. Charter's advertising sales and production services are sold under the Charter Media(R) brand. Charter Communications and more than a hundred affiliates filed voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D.N.Y. Case No. 09-11435). As of March 31, 2009, the Debtors had total assets of $13,650,000,000, and total liabilities of $24,501,000,000. Pacific Microwave filed for bankruptcy April 20, 2009, disclosing assets of not more than $50,000 and debts of more than $1 billion. The Hon. James M. Peck presides over the cases. Richard M. Cieri, Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to the Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at Togut, Segal & Segal LLP in New York, serves as Charter Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost, Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel. Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the Debtors' independent auditor. The Debtors' valuation consultants are Duff & Phelps LLC; the Debtors' financial advisors are Lazard Freres & Co. LLC; and the Debtors' restructuring consultants are AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims agent is Kurtzman Carson Consultants LLC. Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York approved the Debtors' pre-arranged joint plan of reorganization in a bench ruling on October 15, 2009. A formal confirmation order was entered November 17, 2009. On November 30, 2009, Charter Communications announced that it has successfully completed its financial restructuring, which significantly improves the Company's capital structure by reducing debt by approximately 40%, or approximately $8 billion. CHEMITEK 2006: Mortgagees Want Chapter 11 Case Dismissed -------------------------------------------------------- PRIF II Chemtek, LLC, and P II River Vale GC Funding, LLC, have asked the Hon. Honorable Donald H. Steckroth of the U.S. Bankruptcy Court for the District of New Jersey to dismiss Chemitek 2006, LLC's Chapter 11 bankruptcy case, or, alternatively, grant relief from the automatic stay provisions of Section 362(d) of the U.S. Bankruptcy Code. The Mortgagees say that this dispute arises from two separate judicial foreclosure proceedings against the Debtors. According to the Mortgagees, it is those foreclosure proceedings which precipitated the bad faith filings by Debtors as a means to stonewall and delay the exercise of the Mortgagees' unequivocal right to foreclose. The Mortgagees say that in the event that the Court isn't inclined to dismiss the Debtors' bankruptcy petitions, at a minimum, cause exists to lift the automatic stay permitting them to proceed with the foreclosure and sale of the mortgaged property. The Mortgagees aver that, absent approval of their request, their security interest in the mortgaged property, which has already been materially diminished by the recent credit crisis and collapse in the real estate market, will be placed in further jeopardy. The outstanding mortgage debt is $21,132,339 as of February 1, 2010, which well exceeds the value of the mortgaged property. This deficiency will only continue to increase unless the Mortgagees are permitted to expeditiously proceed with their foreclosure and pursue a sale of the property at public auction. The Mortgagees also ask the Court to excuse the Receiver, which was appointed by the state court in connection with the PRIF Foreclosure Action, from compliance under Section 543(d) of the U.S. Bankruptcy Code and prohibiting, to the extent applicable, the Debtors from using the Mortgagees' cash collateral, namely rents and income, pursuant to Sections 363(c)(2) and (e) of the Bankruptcy Code. Judge Steckroth has set a March 17, 2010 hearing for PRIFF II and P II's motion, at 10:00 a.m. The hearing was initially scheduled for March 9, 2010, at 10:00 a.m. PRIFF II and P II are represented by Cole, Schotz, Meisel, Forman & Leonard, P.A. River Vale, New Jersey-based Chemitek 2006, LLC, dba River Vale Country Club, filed for Chapter 11 bankruptcy protection on February 5, 2010 (Bankr. D. N.J. Case No. 10-13393). Vincent F. Papalia, Esq., at Saiber, LLC, assists the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. CHINA LOGISTICS: Amends Q1 2009 Report; Net Loss at $2.98-Mil. -------------------------------------------------------------- China Logistics Group, Inc., has filed Amendment No. 2 to its quarterly report on Form 10-Q for the quarter ended March 31, 2009, as filed on May 20, 2009, to correct the accounting treatment previously accorded certain transactions and to restate the Company's consolidated balance sheets at March 31, 2009, and December 31, 2008, and the Company's consolidated statements of operations, and consolidated statements of cash flows for the three month period ended March 31, 2009, and add the Company's consolidated statement of changes in equity (deficit) for the year ended December 31, 2008, and the three month period ended March 31, 2009. The March 31, 2009 financial statements included in China Logistics Group, Inc.'s Form 10-Q/A filed on September 29, 2009, contained errors including the treatment of common stock purchase warrants as part of equity rather than as a derivative liability. Accordingly, the Company's consolidated balance sheet at March 31, 2009, has been restated to properly record the Company's common stock purchase warrants that were not indexed to the Company's stock as derivative liability. Restated Statement of Operations The Company reported net income of $2,977,168 on sales of $3,198,572 for the three months ended March 31, 2009, compared to net income of $327,538 on sales of $6,773,213 for the corresponding period of 2008. The increase in net income was primarily due to the non-cash gain from the change in fair value of derivative liability in the amount of $3,388,993. Excluding the impact of this non-cash gain the Company would have shown a net loss of $411,825 due to the overall decline in revenues and the Company's inability to cut costs in proportion to this decline. Restated Balance Sheet At March 31, 2009, the Company's consolidated balance sheets showed $6,786,119 in total assets and $7,918,307 in total liabilities, resulting in a $1,132,188 shareholders' deficit. A full-text copy of the Company's amended quarterly report on Form 10-Q/A is available at no charge at: http://researcharchives.com/t/s?52ad Going Concern Doubt The Company's ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due, to fund possible acquisitions, and to generate profitable operations in the future. "These matters, among others, raise substantial doubt about our ability to continue as a going concern." As a result of the weak global economy, the demand for exported Chinese products has also declined, resulting in a significant drop in the demand for the Company's freight and transport services. If China Logistics' cost reduction efforts are unsuccessful, the Company may need to raise additional working capital. The Company does not have any commitments for any additional capital and the terms of its 2008 Unit Offering which contain certain restrictive covenants and the overall softness of the capital markets could hinder its efforts. About China Logistics China Logistics Group, Inc. (OTC BB: CHLO) operates as an international freight forwarder and logistics management company in the People's Republic of China. It acts as an agent for international freight and shipping companies; and sells cargo space and arranges land, maritime, and air international transportation for clients seeking to import or export merchandise from or into the People's Republic of China. The Company's freight forwarding services include goods reception, space reservation, transit shipment, traffic consolidating, storage, multimodal transport, and export of mechanical equipment. It provides freight forwarding services for a range of merchandise, such as refrigerated merchandise, hazardous merchandise, and perishable agricultural products, as well as clothing and electronics products, and daily merchandise and hardware products. The Company was founded in 1997 and is based in Paramount, California. CHRYSLER LLC: Names New Media Strategies as Media Firm ------------------------------------------------------ BankruptcyData reports that Chrysler LLC announced that it has named New Media Strategies (NMS) as its social media marketing agency of record. In this capacity, NMS will develop and implement social media strategies that align with the Chrysler, Dodge, Jeep(R) and Ram Truck brands advertising and marketing programs. "Social media goes beyond traditional advertising by providing a two-way conversation between the consumer and each of our Chrysler, Dodge, Jeep and Ram Truck brands," said Olivier Francois, president and C.E.O.-Chrysler Brand and lead executive for marketing, Chrysler Group LLC. "Through our social media efforts each of the Chrysler Group brands are able to build a deeper connection with their customers, listen to what existing and potential customers are saying about the products and respond to the consumer directly." In 1999, NMS established the first online brand intelligence, protection and social media engagement firm. About Chrysler LLC 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) CINCINNATI BELL: Board Approves $150 Million Stock Repurchase ------------------------------------------------------------- Cincinnati Bell Inc. said that its board of directors has authorized the repurchase of its common shares in an amount up to $150 million. The Company expects to implement the share repurchase program through purchases made from time to time in either the open market or through privately negotiated transactions. About Cincinnati Bell Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE: CBB) -- http://www.cincinnatibell.com/-- provides integrated communications solutions-including local, long distance, data, Internet, and wireless services. In addition, the Company provides office communications systems as well as complex information technology solutions including data center and managed services. Cincinnati Bell conducts its operations through three business segments: Wireline, Wireless, and Technology Solutions. As of Sept. 30, 2009, the Company had $2.01 billion in total assets against $2.62 billion in total liabilities, resulting in $614.0 million in stockholders' deficit. Cincinnati Bell carries Fitch's 'B+' Issuer Default Rating. CITADEL BROADCASTING: R-Squared a Substantial Shareholder --------------------------------------------------------- R2 Investments LDC, a Cayman Islands limited duration company also known as "R-Squared", submitted to the Court a declaration informing that it has become substantial shareholder with respect to the common stock of Citadel Broadcasting Corporation. As of January 26, 2010, R2 has beneficial Ownership of 18,325,000 shares of Citadel Common Stock. About Citadel Broadcasting Citadel Broadcasting Corporation (OTC BB: CTDB) -- http://www.citadelbroadcasting.com/-- is the third largest radio group in the United States, with a national footprint reaching more than 50 markets. Citadel is comprised of 166 FM stations and 58 AM stations in the nation's leading markets, in addition to Citadel Media, which is one of the three largest radio networks in the United States. Citadel Broadcasting filed for Chapter 11 with 50 affiliates on Dec. 20, 2009, in Manhattan (Bankr. S.D.N.Y. Case No. 09-17422). The Company listed assets of $1.4 billion and debt of $2.5 billion in its Chapter 11 filing. Kirkland & Ellis LLP is serving as legal counsel and Lazard Freres & Co. LLC. As financial advisor for the restructuring. Kurtzman Carson Consultants is serving as claims and notice agent. Bankruptcy Creditors' Service, Inc., publishes Citadel Broadcasting Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Citadel Broadcasting Corp. and other affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) CLEAR CHANNEL: Moody's Upgrades Corporate Family Rating to 'Caa2' ----------------------------------------------------------------- Moody's Investors Service upgraded Clear Channel Communications, Inc.'s Corporate Family Rating to Caa2 from Caa3. Additionally, Moody's upgraded Clear Channel's bank credit facilities to Caa1 from Caa2 and its speculative grade liquidity rating to SGL-2 from SGL-4. Moody's also affirmed the Ca ratings of Clear Channel's senior notes due 2016 (issued in connection with the company's leverage buyout) and its legacy senior unsecured notes. The upgrades reflect Moody's expectation that while the company's capital structure remains unsustainable in the intermediate-term, a full restructuring or bankruptcy filing is no longer imminent. "In turn, recovery levels will likely improve moderately over time as compared to the low 2009 levels as cyclical pressures subside and valuation multiples and EBITDA increase, which is the primary driver for the upgrade," stated Neil Begley, a Moody's Senior Vice President. The outlook has been revised to stable. As expected, Moody's anticipates Clear Channel will remain in compliance with its 9.5x secured leverage covenant over the rating horizon. The refinancing of the $2.5 billion loan to Clear Channel Outdoor (B2 CFR) and significant cost reductions on top of the repayment of approximately $2 billion of Clear Channel's bank debt with proceeds from the issuance of senior notes at Clear Channel Worldwide Holdings, Inc., a CCO subsidiary, will provide ample covenant cushion. Additionally, the repayment of a portion of the company's bank credit facilities eliminated more than $1 billion of mandatory debt amortization through 2015 providing helpful liquidity to avoid cash shortfalls through 2013 and therefore extending the timeframe in which the company will be able to operate as a going concern. The additional repayment was used to reduce maturing bank debt in 2014 and 2016. The company's Caa2 CFR reflects the unsustainable nature of Clear Channel's long-term capital structure given extremely high debt- to-EBITDA leverage (15.2x at September 30, 2009-reported) and Moody's expectation that cash-on-hand and free cash flow generation will not adequately fund around $3.7 billion of debt maturities in 2014. The rating also incorporates Moody's expectation that Clear Channel's leverage metric will remain too high to attract refinancing of 2014 maturities and Clear Channel's enterprise value (8 to 9x EBITDA) will continue to be exceeded by the gross debt levels. As a result, Moody's projects that the company's debt (including its pro rata portion of CCO's debt) will exceed its enterprise value at the end of 2013 (before its large 2014 maturities come due), by between $4.7 and $6.5 billion. In Moody's view, this implies that a restructuring of its debt will be needed, with elimination (assuming higher than 50% average recovery) of between twenty to thirty percent of Clear Channel's debt required just to equalize the debt to value, and even more ($2 to $3 billion) to appropriately capitalize the company with equity and allow it to attract refinancing debt capital. The company may have some options to meet maturities and further delay a full restructuring in 2014, such as raising additional debt at CCO and using 89% of the proceeds to fund a dividend to Clear Channel, or selling assets such as up to 38% of Clear Channel's CCO stock (Clear Channel needs to maintain 51% ownership of CCO in order to sweep its operating cash flow). However, these liquidity enhancers would not relieve the pressure of the debt to value deficit. "Additional distressed exchanges of bonds, essentially a continuing gradual restructuring, are probable, particularly for the notes maturing beyond 2013," stated Begley. These would reduce the excess debt, but would not likely provide enough relief without restructuring the bank debt to meet the mountain of maturities in 2016. "The maturities of the legacy notes that mature through 2013 are likely to possess higher recoveries or be repaid in full to avoid bankruptcy -- the primary objective of the current equity owners," stated Begley. However, as is typical, Moody's rates to the entire class the same (Ca) due to the high probability of default and its low priority and recovery in default. The upgrade of Clear Channel's speculative grade liquidity rating predominately reflects an increased level of covenant cushion under the company's secured leverage covenant following the $2 billion reduction of secured debt. The repayment reduced Clear Channel's Q3 '09 secured leverage metric by more than a turn to 7.6x from 8.8x and looking forward, appears to provide adequate cushion short of a double dip recession. Moody's subscribers can find further details in the Clear Channel Credit Opinion published on Moodys.com Moody's has taken these rating actions: Issuer: Clear Channel Communications, Inc. * Corporate Family Rating -- Upgraded to Caa2 from Caa3 * Probability of Default Rating -- Affirmed Caa3 * Senior Secured Revolving Facility -- Upgraded to Caa1 (LGD 2, 19%) from Caa2 (LGD 3, 39%) * Senior Secured Tranche A Term Loan Facility -- Upgraded to Caa1 (LGD 2, 19%) from Caa2 (LGD 3, 39%) * Senior Secured Tranche B Term Loan Facility -- Upgraded to Caa1 (LGD 2, 19%) from Caa2 (LGD 3, 39%) * Senior Secured Tranche C Term Loan Facility -- Upgraded to Caa1 (LGD 2, 19%) from Caa2 (LGD 3, 39%) * Senior Secured Delayed Draw Term Loan 1 Facility -- Upgraded to Caa1 (LGD 2, 19%) from Caa2 (LGD 3, 39%) * Senior Secured Delayed Draw Term Loan 2 Facility -- Upgraded to Caa1 (LGD 2, 19%) from Caa2 (LGD 3, 39%) * Senior Cash Pay Notes due 2016 -- Affirmed Ca (to LGD 4, 57% from LGD 4, 69%) * Senior Toggle Notes due 2016 -- Affirmed Ca (to LGD 4, 57% from LGD 4, 69%) * Senior Unsecured Bonds -- Affirmed Ca (to LGD 5, 72% from LGD 6, 93%) * Speculative Grade Liquidity Rating -- Upgraded to SGL-2 from SGL-4 * Outlook -- To stable from negative Moody's last rating action was on March 9, 2009, when Moody's downgraded Clear Channel's CFR and PDR to Caa3 from B2. On September 3, 2009, Moody's revised Clear Channel's PDR to Caa3/LD. Clear Channel Communications, Inc. with its headquarters in San Antonio, Texas, is a global media and entertainment company specializing in mobile and on-demand entertainment and information services for local communities and premiere opportunities for advertisers. The company's businesses include radio and outdoor displays (via the company's 89% ownership of Clear Channel Outdoor Holdings Inc.). Clear Channel's revenues for the year ended September 30, 2009, was approximately $5.6 billion. CLEVELAND ELECTRIC: Fitch Affirms Issuer Default Rating at 'BB+' ---------------------------------------------------------------- Fitch Ratings has corrected a February 11, 2010 press release. It corrects the ratings for the Toledo Edison Co. Fitch Ratings has affirmed the ratings of FirstEnergy Corp. (Issuer Default Rating at 'BBB') and its subsidiaries, and Allegheny Energy, Inc. (IDR at 'BBB-') and subsidiaries following the announcement that the Board of Directors of the companies have reached a definitive agreement to merge in a stock-for-stock transaction. At the same time, the Rating Outlook on the AYE parent is revised to Positive from Stable. Fitch currently expects to equalize the ratings of FE and AYE should the two companies consummate their merger at FE's rating level. FE would represent approximately three quarters of consolidated assets and pro forma cash flows of the combined company. A full list of ratings is listed at the end of this release. The ratings for FE and AYE are currently: FE -- IDR at 'BBB'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and short-term debt at 'F2'. AYE -- IDR at 'BBB-'; -- Senior unsecured bank credit facility at 'BBB-'. Under the terms of the agreement, AYE shareholders would receive 0.667 shares of FE common stock in exchange for each share of AYE, valued as of February 10, 2010, close at $27.65 per share or $4.7 billion in aggregate. FE would also assume approximately $3.8 billion of AYE net debt (excluding tariff securitization debt of $0.5 billion). The transaction is subject to several state and federal approvals, as well as FE and AYE shareholder support. Assuming all necessary approvals are obtained in a timely manner, the transaction would be completed within the next 12-14 months. The combined company, which would operate under the FirstEnergy name, would increase in scale, with 10 regulated electric distribution companies in seven states (Ohio, Pennsylvania, Maryland, New York, New Jersey, Virginia and West Virginia) and approximately 24,000 MW of generating capacity. Fitch recognizes the strategic benefits of the transaction which would combine geographically contiguous and complementary regulated utilities and competitive businesses. FE's transition into the PJM Regional Transmission Organization (RTO) should enhance expected synergies in the combined companies' competitive generation businesses, although it is difficult to quantify the potential benefits. Fitch recognizes that there could be impediments to closing the transaction if regulators do not approve the transaction or ask for concessions that render the merger uneconomic. The competitive generation businesses face an uncertain economic environment; both FE and AYE have recently experienced pricing pressures and volume declines in their wholesale supply businesses; and the longer term outlook for the predominantly coal-fired generation mix will be impacted by future climate regulation or legislation. The ratings of FE and AYE subsidiaries have also been affirmed. The Rating Outlook for all the operating subsidiaries is Stable. FirstEnergy Solutions Corp. -- IDR at 'BBB'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and short-term debt at 'F2'. Ohio Edison Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and short-term debt at 'F2'. Pennsylvania Power Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior pollution control revenue bonds at 'BBB'. The Toledo Edison Co. -- IDR at 'BB+'; -- Senior secured debt at 'BBB-'; -- Senior pollution control revenue bonds at 'BBB'. The Cleveland Electric Illuminating Co. -- IDR at 'BB+'; -- Senior secured debt at 'BBB'; -- Senior unsecured debt at 'BBB-'. Jersey Central Power & Light Co. -- IDR at 'BBB'; -- Senior secured debt at 'A-'; -- Senior unsecured debt at 'BBB+'; -- Short-term IDR and commercial paper at 'F2'. Metropolitan Edison Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and commercial paper at 'F3'. Pennsylvania Electric Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and commercial paper at 'F3'. BVPS II Funding Corp. -- Senior secured debt at 'BBB'. PNPP II Funding Corp. -- Senior secured debt at 'BBB'. Allegheny Energy Supply Co., LLC -- IDR at 'BBB-'; -- Senior secured debt at 'BBB'; -- Senior unsecured debt at 'BBB-'; -- Senior unsecured term loan and bank credit facility at 'BBB-'. Allegheny Generating Co. -- IDR at 'BBB-'; -- Senior unsecured debt at 'BBB-'. Monongahela Power Co. d/b/a Allegheny Power -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB-'. The Potomac Edison Company d/b/a Allegheny Power -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'. West Penn Power Co. d/b/a Allegheny Power -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB-'. Penelec Capital Trust -- Preferred stock at 'BBB+'. Beaver Valley II Funding Corp -- Senior secured at 'BBB-'. Fitch intends to meet with the management of both FE and AYE to discuss other provisions of the merger agreement, business plans over the near term, and longer-term strategic plans for the integration and operation of AYE's businesses. Fitch expects to comment more fully on the transaction following these meetings and the review of more detailed information. FE is a diversified energy company whose subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. Its seven electric utility operating companies serve 4.5 million customers in Ohio, Pennsylvania and New Jersey. AYE is a diversified energy company whose subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity. Its electric utility companies serve 1.6 million customers in Pennsylvania, Maryland, West Virginia and Virginia. COMMERCIAL VEHICLE: Issues 42,124 Units of 3rd Lien Senior Notes ---------------------------------------------------------------- Commercial Vehicle Group Inc. has issued 42,124 units, consisting of $42.1 million in aggregate principal amount of the 11%/13% third lien senior secured notes due 2013, and warrants to purchase 745,000 shares of the Company's common stock, par value $0.01 per share. The units and the warrants were issued pursuant to a warrant and unit agreement dated August 4, 2009. The Company issued 372,905 shares of Common Stock upon the exercise of certain of the Warrants on February 5, 2010. The warrants were exercised on a cashless exercise basis as required under the warrant and unit agreement, and, accordingly, such shares of Common Stock were issued in reliance upon the exemption from registration set forth in Section 3(a)(9) of the Securities Act of 1933, as amended. About Commercial Vehicle Group New Albany, Ohio-based Commercial Vehicle Group, Inc., (Nasdaq: CVGI) supplies fully integrated system solutions for the global commercial vehicle market, including the heavy-duty truck market, the construction and agricultural markets, and the specialty and military transportation markets. The products include static and suspension seat systems, electronic wire harness assemblies, controls and switches, cab structures and components, interior trim systems (including instrument panels, door panels, headliners, cabinetry and floor systems), mirrors and wiper systems specifically designed for applications in commercial vehicles. The Company has facilities located in the United States in Arizona, Indiana, Illinois, Iowa, North Carolina, Ohio, Oregon, Tennessee, Virginia and Washington and outside of the United States in Australia, Belgium, China, Czech Republic, Mexico, Ukraine and the United Kingdom. At September 30, 2009, the Company had $275.3 million in total assets against $281.4 million in total liabilities, resulting in stockholders' deficit of $6.1 million. * * * In September 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Commercial Vehicle Group to 'CCC+' from 'SD' (selective default). S&P also raised its rating on the company's 8% senior unsecured notes to 'CCC' from 'D' (default). The recovery rating on this debt is unchanged at '5', indicating that lenders can expect modest (10% to 30%) recovery in the event of a payment default. In August 2009, Moody's changed Commercial Vehicle Group's probability of default rating to Caa2/LD following the company's exchange of roughly $52.2 million of 8.0% notes. Moody's considers this transaction a distressed exchange due to the nature of the capital restructuring as well as CVGI's weak credit profile. The LD designation signifies a limited default. The PDR will be changed to a Caa2 rating and the LD rating will be removed after three days. CRESCENT RESOURCES: U.S. Trustee Balks at $4-Mil. Bonuses --------------------------------------------------------- Law360 reports that the U.S. Trustee is objecting to Crescent Resources LLC's plan to grant $4 million in bonuses, calling the payments a retention plan for insiders. Crescent Resources s seeking approval from the Bankruptcy Court of a $4 million bonus program for all of its 218 employees in which $3.5 million is earmarked for executives. Bonuses for each participant will be capped at the lesser of $500,000 or twice an executive's base salary. Payment of the bonuses, if approved by the bankruptcy judge at a Feb. 19 hearing, will depend on whether the company meets cash-flow targets. About Crescent Resources Crescent Resources, LLC -- http://www.crescent-resources.com/-- is a land management and real estate development company with interests in 10 states in the southeastern and southwestern United States. Crescent Resources is a joint venture between Duke Energy and Morgan Stanley Real Estate Fund. Established in 1969, Crescent creates mixed-use developments, country club communities, single-family neighborhoods, apartment and condominium communities, Class A office space, business and industrial parks and shopping centers. Crescent Resources, LLC, and its debtor-affiliates filed for Chapter 11 protection on June 10, 2009, with the U.S. Bankruptcy Court for the Western District of Texas (Austin), lead case number 09-11507, before Judge Craig A. Gargotta. Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., is serves as the Debtors' bankruptcy counsel. Crescent Resources, LLC -- http://www.crescent-resources.com/-- is a land management and real estate development company with interests in 10 states in the southeastern and southwestern United States. Crescent Resources is a joint venture between Duke Energy and Morgan Stanley Real Estate Fund. Established in 1969, Crescent creates mixed-use developments, country club communities, single-family neighborhoods, apartment and condominium communities, Class A office space, business and industrial parks and shopping centers. Crescent Resources, LLC, and its debtor-affiliates filed for Chapter 11 protection on June 10, 2009, with the U.S. Bankruptcy Court for the Western District of Texas (Austin), lead case number 09-11507, before Judge Craig A. Gargotta. Eric J. Taube, Esq., at Hohmann, Taube & Summers, L.L.P., is serves as the Debtors' bankruptcy counsel. DEATH ROW: Rapper Files Suit for Unpaid Royalties ------------------------------------------------- Jacqueline Palank at Dow Jones' Daily Bankruptcy Review reports that rapper Dr. Dre -- given name, Andre Young -- is suing Death Row Records for allegedly re-releasing his critically acclaimed album "The Chronic" without his consent and not giving him a cut of the proceeds. The lawsuit was filed on Thursday before the U.S. Bankruptcy Court for the Central District of California. According to DBR, the lawsuit seeks more than $75,000 in royalties that Mr. Young says have gone unpaid for years. According to the suit, from 1996 -- when Mr. Young left the record label -- until Death Row's bankruptcy filing, "not a dime of royalties had been paid." "The Chronic" was released in November 1992. WIDEawake Entertainment acquired Death Row's music catalogue in a bankruptcy court-sanctioned sale in 2009. Lara Levi is the CEO of WIDEawake Entertainment. Howard E. King, Esq., at King Holmes Paterno & Berliner LLP, in Los Angeles, represents Mr. Young. "When it came to paying artist royalties and honoring limits on Dr. Dre recordings that could be released, the 'new' Death Row Records, to quote our client, 'forgot about Dre,'" Mr. King wrote in an e-mail Friday, citing one of Dr. Dre's tunes, according to Ms. Palank. "This lawsuit will make sure they remember." A call to WIDEawake's Toronto headquarters Friday wasn't returned, according to Ms. Palank. Headquartered in Compton, California, Death Row Records Inc. -- http://www.deathrowrecords.net/-- is an independent record producer. The company and its owner, Marion Knight, Jr., filed for chapter 11 protection on April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205 and 06-11187). Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, and Robert S. Altagen, Esq., represent the Debtors in their restructuring efforts. R. Todd Neilson serves as chapter 11 Trustee for the Debtors' estate. The U.S. Trustee for Region 17 appointed creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Pachulski Stang Ziehl & Jones as its counsel. When the Debtors filed for protection from their creditors, they listed total assets of $1,500,000 and total debts of $119,794,000. DELPHI CORP: Court to Hear Final Fee Applications March 18 ---------------------------------------------------------- At the Reorganized Delphi's request, the Court extended the time for professionals employed and retained in the Chapter 11 cases of the Reorganized Debtors to file final requests for fees and expenses from December 31, 2009, to February 1, 2010. Since the effective date of the Modified First Amended Joint of Reorganization occurred on October 6, 2009, the deadline for professionals to file their Final Fee Applications was December 31, 2009. Counsel to the Debtors, John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, told the Court that a number of professionals were not able to file their Final Fee Applications by the December 31, 2009 deadline. The Reorganized Debtors believe that there would be no prejudice to their estates if professionals were allowed to file Final Fee Applications by February 1, 2010. Judge Drain further ruled that any Professional who files its Final Fee Application after December 31, 2009, but on or prior to February 1, 2010, will be entitled to receive, in respect of fees and expenses for the seventh interim fee period, no more than the lesser of: (a) the amount of the fees and expenses ultimately approved by the Court; and (b) the amount of the fees and expenses estimated and reported to the Debtors in advance of the October 6, 2009 consummation of the Modified Plan. In light of the recent order, separate requests to extend deadline to file final fee applications asserted by Groom Law Group, Chartered, and O'Melveny & Myers LLP are moot, Judge Drain held. Prior to entry of the Court's ruling, Tom A. Jerman, Esq., at O'Melveny, reasoned that two of his firm's attorneys responsible for fee applications were unable to prepare and file the seventh and final fee application. He noted that O'Melveny was able to file the seventh and final fee application on January 8, 2010. Thus, O'Melveny asked the Court to extend the final fee application deadline and treat its final fee application filed on January 8 as timely filed. Similarly, Groom Law Group explained that it was able to prepare and file its final fee application on January 4, 2010. Groom Law asked the Court to extend the time within which it can file its final fee application and deem its final fee application filed on January 4 as timely filed. In another order, Judge Drain scheduled a hearing to consider the Final Fee Applications for March 18, 2010. Objections to any of the Final Fee Applications are due March 1, 2010. Replies to any objection to the Final Fee Applications must be filed on March 12, 2010. About Delphi Corp Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DELPHI CORP: District Court Rules on OTRS, et al., Appeal --------------------------------------------------------- The Teachers' Retirement System of Oklahoma, the Public Employees' Retirement System of Mississippi, Raffeisen Kapitalanlage- Gesellschaft m.b.H. and Stitchting Pensioenfonds ABP took an appeal on January 26, 2006 under 28 U.S.C. Section 158(a) from the United States Bankruptcy Court for the Southern District of New York's order overruling the Teachers' Retirement, et al's objection to the employment of Deloitte & Touche LLP as the Debtors' independent auditors and accountant. The Appellants contended that Judge Drain's order authorizing the employment of Deloitte entered on January 18, 2006, cannot be allowed to stand because Judge Drain's conclusions as to disinterestedness and competence were based on inferences drawn from an absence of information on the record. That absence was the result of Judge Drain's refusal to permit the Appellants to pursue the full scope of their proposed discovery, the Appellants alleged. The Appellants are lead plaintiffs in the consolidated securities class action entitled In re Delphi Corp. Securities Litigation, Master Case No. 05-md-1725 (GER) (E.D.Mich.). Judge Laura Taylor Swain of the United States District Court for the Southern District of New York opined that Judge Drain correctly determined the relevant standard for retention under Section 327 of the Bankruptcy Code and disinterestedness under Section 101(14) of the Bankruptcy Code. The Bankruptcy Court determined, over the Appellants' objection, that Deloitte met the disinterestedness requirements under Sections 327(a) and 101(14) focusing on the requirement that Deloitte does not "have an interest materially adverse to the interest of the estate," Judge Swain held. Judge Swain further noted that the Bankruptcy Court also considered the questions raised by the Appellants as to whether the retention application should be denied because Deloitte was incompetent to take in the engagement in light of Deloitte's prior work and the deficiencies alleged in the class action complaint and the fact that there was material restatement of the financials for prior years. The Bankruptcy Court went on to detail the evidence it had considered concerning the qualifications and roles of Deloitte and Delphi representatives who would be involved in the effort, Judge Swain acknowledged. In light of these factual conclusions and the Bankruptcy Court's application of the correct legal standard in evaluating the competency issue, any paucity of the record with respect to whether Delphi at any time considered Deloitte's past performance in connection with its determination to change auditors is insufficient to render erroneous the Bankruptcy Court's conclusion that the Debtors had met their burden of demonstrating that they used appropriate judgment in finding Deloitte competent to complete the 2005 financial statements, Judge Swain opined. Moreover, the Bankruptcy Court's conclusions are supported by the record and its determination that "this basis for objecting to Deloitte's employment is not sustained and that the Debtors have carried their burden of showing that first, they have exercised proper judgment in employing Deloitte for the 2005 audit, and that Deloitte meets the standard of disinterestedness and not holding an adverse interest under Section 327" does not constitute an abuse of discretion, Judge Swain found. Having considered the parties' arguments and Judge Drain's determinations, Judge Swain held that the Appellants have failed to carry their burden of demonstrating that the Bankruptcy Court abused its discretion in making the challenged discovery determinations. For these reasons, Judge Swain affirmed the January 18, 2006 Bankruptcy Court Order authorizing employment of Deloitte & Touche to perform audit of the Debtors' 2005 financial statements A full-text copy of the District Court Opinion and Order dated May 26, 2006, is available for free at: http://bankrupt.com/misc/Delphi_May26DCOrder.pdf About Delphi Corp Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DELPHI CORP: District Court Won't Review LDTC Non-Appointment ------------------------------------------------------------- Law Debenture Trust Company of New York notified the Bankruptcy Court that it took an appeal on February 17, 2006 to the United States District Court for the Southern District of New York of a February 8, 2006 Bankruptcy Court Order denying its request to be part of the Official Committee of Unsecured Creditors. In its appeal, Law Debenture insisted that the Bankruptcy Court erroneously applied the "abuse of discretion" standard in its review of the U.S. Trustee for Region 2's decision regarding the composition of the Committee. The Bankruptcy Court should have reviewed the decision de novo, Law Debenture asserted. Judge Denise Cote of the District Court, however, determined that the February 8 order does not merit District Court review. Although the Bankruptcy Court said that, "at least as to whether a particular member should be appointed to a committee, the U.S. Trustee's decision should be reviewed on an abuse-of discretion basis," the Bankruptcy Court made an independent determination of the merits of the U.S. Trustee's decision when ruling on Law Debenture's motion to be part of the Creditors' Committee, Judge Cote averred. Moreover, since Law Debenture has not shown that there is a controlling question of law at stake here, it is unnecessary to consider the remaining components of an inquiry under Section 1292(b) of the Bankruptcy Code, Judge Cote opined. Against this backdrop, Judge Cote denied an interlocutory appeal pursuant to Section 158(a)(3) of the Judiciary and Judicial Procedure. Similarly, Judge Cote found that the February 8 order is not reviewable under the collateral order doctrine. Judge Cote explained that the collateral order doctrine is a narrow exception to the general rule that interlocutory orders are not appellable as a matter of right. To fall within that exception, the order must: (i) conclusively determine the disputed question; (ii) resolve an important issue completely separate from the merits of the action; and (iii) be effectively unreviewable on appeal from a final judgment. In Law Debenture's context, the Bankruptcy Court's decision to allow the Creditors Committee to continue with its current composition is not sufficiently separable from the outcome of the bankruptcy action, Judge Cote stated. Indeed, Law Debenture's objective in petitioning for a seat on the Committee is to secure its direct participation in the Debtors' Plan of Reorganization that will ultimately result from the Debtors' bankruptcy cases, Judge Cote averred. Moreover, the substantive decisions made by the Committee will in many cases be subject to review by the Bankruptcy Court and ultimately, the District Court, Judge Cote opined. If circumstances change, Law Debenture may be granted a seat on the Committee, Judge Cote added. In this light, Judge Cote denied Law Debenture's motion for leave to appeal. A full-text copy of the District Court Opinion and Order dated July 5, 2006, is available for free at: http://bankrupt.com/misc/Delphi_Jul5DCOrder.pdf About Delphi Corp Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DELPHI CORP: Wagner-Smith Wants Avoidance Claims Orders Vacated --------------------------------------------------------------- Delphi Corp. and its units sought and obtained an order on August 16, 2007, establishing procedures for certain adversary proceedings, including those commenced by the Debtors under Section 541, 544, 545, 547, 548 or 553 of the Bankruptcy Code. At the Debtors' behest, the Court entered orders extending the deadline under Rule 4(m) of the Federal Rules of Civil Procedure, by which they would be required to serve process on March 28, 2008, April 30, 2008, and October 22, 2009. The Debtors filed an adversary complaint under seal against Wagner-Smith Company in September 2007, seeking to recover, pursuant to Sections 547 and 550, alleged preferential transfers made to the Defendant in the aggregate amount of $617,284. Counsel to Wagner-Smith, Andrew D. Gottfried, Esq., at Morgan, Lewis & Bockius LLP, in New York, relates that his client was served with the Complaint on or about December 21, 2009, over two years after the limitations period provided by Section 546(a) Expired on October 8, 2007. Consequently, Wagner-Smith asks to Court to: (i) vacate pursuant to Rule 60 of the Federal Rules of Civil Procedure and Rule 9024 of the Federal Rules of Bankruptcy Procedure, the Preservation of Estate Claims Order dated August 16, 2007, and the Extension Orders dated March 28, 2008, April 30, 2008 and October 22, 2009, with respect to its case; (ii) dismiss, with prejudice, the Adversary Proceeding against it, pursuant to Rule 12(b) of the Federal Rules of Civil Procedure and Rule 7012(b) of the Federal Rules of Bankruptcy Procedure because it is barred by the two-year statute of limitations imposed by Section 546(a) and thus, fails to state a claim upon which relief may be granted; or (iii) in the alternative, dismiss, with prejudice, the Adversary Proceeding against it on the ground that it is barred by judicial estoppel. "The combination of permitting the Debtors to file the Complaint under seal -- thus preventing Wagner-Smith from discovering that it had been sued -- while continually extending the Debtors' time to serve process in excess of two years past the expiration of the statute of limitations set forth in Section 546(a) -- also without notice to Wagner-Smith -- has resulted in a proceeding completely devoid of procedural due process," Mr. Gottfried contends. He further asserts that the fact that the Debtors are seeking to avoid allegedly preferential payments to Wagner-Smith was, thus, not "commercial information" that needed to be kept or should have been kept confidential under Section 107. Mr. Gottfried also insists that the Extension Orders should not have been entered as good cause did not exist to extend the time to serve process as a matter of law. Good cause generally exists under Civil Rule 4(m) when service is not completed on a named defendant within the required 120-day period, he explains. In this context, Wagner-Smith was entitled to rely, had no reason not to rely, and indeed relied, upon the policy of repose embedded within Section 546(a), having received no notice for more than two years after the statute of limitations had expired that it had been sued by the Plaintiffs, Mr. Gottfried contends. Moreover, the Complaint is barred by judicial estoppel, Mr. Gottfried points out. In two of the Debtors' requests to extend the Civil Rule 4(m) deadline, the Debtors asserted that of the 742 adversary proceedings commenced under seal, only the claims relating to Laneko Engineering Co., Wachovia Bank, National Association, Laneko Engineering Co. Inc., and their affiliates and subsidiaries were subject to the Preservation of Estate Claims Procedures Order. The Court adopted the Debtors' position in entering the Extension Orders. Thus, by serving the Complaint on Wagner-Smith, the Debtors are now attempting to reverse a legal position previously asserted in two of their requests and adopted by the Court, Mr. Gottfried maintains. About Delphi Corp Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represent the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DIAMOND OAKS: Hartford's Motion for Relief from Stay Denied ----------------------------------------------------------- Diamond Oaks Vineyards, Inc., is a Subchapter S corporation wholly owned by Dinesh Maniar. It owns the real properties located at 4500 St. Helena Highway, and 4531 St. Helena Highway, Calistoga, California. The properties are working vineyards which produce an annual crop. In February of 2007, title to the properties was held by Maniar. He refinanced them at that time with loans from Harford Life and Accident Insurance Company, which knew that Maniar conducted his businesses through several Subchapter S corporations but nonetheless made the loans to Maniar and insisted on a term in the loan agreements which forbade the transfer of the properties to another entity without its consent despite Maniar's attempt to negotiate more flexible terms. In February of 2009, Maniar defaulted on the loans and foreclosure proceedings commenced. In June of that year, Harford Life and Accident Insurance Company assigned its notes and deeds of trust to Hartford Life, Inc. On September 10, 2009, just days before foreclosure sale, Maniar deeded the properties to the debtor for no consideration. This Chapter 11 was commenced on September 14, 2009. Hartford has moved the court for relief from the automatic stay, arguing that this transfer and the bankruptcy filing were done in bad faith. The Honorable Alan Jaroslovsky says that Hartford is correct in arguing that stay relief should generally be granted if a pattern of conduct known as "new debtor syndrome" is demonstrated. Typically, the new debtor syndrome involves a transfer of distressed property into a newly created corporation on the eve of foreclosure for no consideration; the debtor has no assets other than the transferred property; the debtor has no or minimal unsecured debt and no employees or ongoing business and no means to service the debt. In re Duvar Apt., Inc., 205 B.R. 196, 200 (9th Cir. BAP 1996). But there are a few problems with Hartford's attempt to characterize this case as the classic example of the new debtor syndrome, Judge Jaroslovsky says. First of all, the debtor is not new; Hartford's predecessor in interest knew about it when the loan was made and contracted for the property to remain in Maniar's name notwithstanding Maniar's request that he be allowed to make a reasonable transfer to another entity. Secondly, the debtor has other assets, other debts, and employees. Lastly, it has an ongoing, revenue-earning business. Hartford's real argument is that Maniar has breached the terms of the loan agreements forbidding transfer of its collateral to another entity. There is certainly a confirmation issue as to whether this is the sort of default which can be cured pursuant to Sec. 1123(a)(5)(G) of the Bankruptcy Code. "While the debtor may not prevail on this issue, it is not bad faith to try," Judge Jaroslovsky says. The basic problem with Hartford's motion is its presumption that it is entitled to relief from the automatic stay if it demonstrates elements of new debtor syndrome. Hartford is entitled to relief it demonstrates bad faith. In this case, Hartford fully concedes that Maniar is very seriously, perhaps terminally, ill. It is clear that Maniar has not made the transfer to harm or defraud Hartford, but to place the debtor in a position to continue to carry on its business and reorganize without him in the event of his incapacitation or death. The new debtor syndrome can be evidence of bad faith. A good faith attempt to reorganize is not subject to summary dismissal or stay relief merely because some elements of new debtor syndrome may be present. Judge Jaroslovsky finds that this Chapter 11 case was commenced in good faith and for a proper purpose. Accordingly, Hartford's motion for relief from the automatic stay will be denied, without prejudice to its right to seek relief on other grounds. Counsel for the debtor shall submit an appropriate form of order. Calistoga, California-based Diamond Oaks Vineyards, Inc. operates a winery. The Company and Southland Thoroughbred Farms, Inc. filed for Chapter 11 (Bankr. N.D. Calif. Case Nos. 09-12995 and 09-12996) on Sept. 14, 2009. David N. Chandler, Esq. at the Law Offices of David N. Chandler represents the Debtors in their restructuring efforts. The Debtors estimated their assets and debts at $10 million to $50 million at the time of the chapter 11 filing. DUBAI WORLD: May Offer 60% Recovery to Creditors ------------------------------------------------ People familiar with the matter have told Zawya Dow Jones that Dubai World may offer creditors just 60% of the money they are owed as part of a deal to reschedule $22 billion in debt. According to Dow Jones Newswires' Mirna Sleiman, one potential offer being considered in Dubai World's debt-restructuring talks was a repayment offer of 60 cents on the dollar, paid back after seven years, and backed up by government guarantees. Sources told Dow Jones another proposal involves creditors receiving full payment, including 40% of their Dubai World debt in the form of assets in Nakheel -- Dubai World's real estate unit -- but with no government guarantee over the same seven-year period,. Dow Jones reports Dubai World isn't expected to offer a formal restructuring proposal until March or April. A spokeswoman for the Dubai finance department, which is spearheading the restructuring talks and providing financial support to the company during the negotiations, said Monday there have been no proposals floated by either the government or the company. According to Dow Jones, Dubai's main stock index eased 0.3% Monday, with analysts blaming uncertainty about the debt- restructuring talks at Dubai World. That followed a 3.5% drop Sunday. Dow Jones also reports that on Monday, the cost of insuring Dubai debt against default rose to its highest level since March 2009. Dubai's five-year credit-default-swap spread surged close to 0.25 percentage point to 6.52 percentage points Monday in London, according to CMA DataVision, a credit-pricing provider. Dow Jones explains the spread widening means it now costs around $652,000 a year to insure a notional $10 million of Dubai's sovereign debt against default for five years, up from around $627,000 at Friday's close. A month ago it cost $421,000. 6-Month Standstill In November 2009, the Troubled Company Reporter ran a story about Dubai World seeking a six-month standstill on its debt obligations. The government of Dubai said it would restructure Dubai World and has appointed Deloitte LLP to lead the restructuring effort, naming an executive at the consultancy as the group's "chief restructuring officer." Bloomberg News' Arif Sharif and Laura Cochrane said Dubai World has US$59 billion in liabilities. Bloomberg said Dubai accumulated US$80 billion of debt by expanding in banking, real estate and transportation before credit markets seized up last year. The Wall Street Journal said Standard & Poor's in an October report estimated Dubai World could be responsible for as much as 50% of Dubai's total government and corporate debt load of some US$80 billion to US$90 billion. Large Exposure As reported by the Troubled Company Reporter-Europe on Dec. 1, 2009, The Wall Street Journal's Chip Cummins, Dana Cimilluca and Sara Schaefer Munoz, citing a person familiar with the matter, said that U.K.'s Royal Bank of Scotland Group PLC, HSBC Holdings PLC, Barclays PLC, Lloyds Banking Group PLC, Standard Chartered PLC and ING Groep NV of the Netherlands, are among the international banks that have large exposure in Dubai World. RBS has lent roughly US$1 billion to Dubai World, another person said, according to the Journal. Sources also told the Journal Barclays's exposure to Dubai World is roughly US$200 million, and that exposure is effectively hedged. David Robertson at The (U.K) Times reported Credit Suisse has estimated that European banks could have EUR40 billion (GBP36 billion) in loans to Dubai and much of this could be at risk if the Gulf emirate defaults. The Journal, citing people familiar with the matter, said the banks with the greatest exposure to Dubai World are Abu Dhabi Commercial Bank and Emirate NBD PJSC, people familiar with the matter said. Dow Jones Newswires' Margot Patrick related that a report by the Emirates Banks Association said the top eight foreign banks in the United Arab Emirates by lending volume -- HSBC, Standard Chartered, Barclays, HSBC, Royal Bank of Scotland's ABN Amro, Citigroup Inc., BNP Paribas SA, Lloyds and Credit Agricole SA's Calyon, -- extended about US$36 billion in loans in 2008 throughout the federation, without breaking down the loans by emirate or type of borrower. About Dubai World Dubai World -- http://www.dubaiworld.ae/-- is Dubai's flag bearer in global investments. As a holding company it operates a highly diversified spectrum of industrial segments and plays a major role in the emirate's rapid economic growth. Dubai World's investment spans four strategic growth areas of 21st Century commerce namely, Transport & Logistics, Drydocks & Maritime, Urban Development and Investment & Financial Services. Dubai World's portfolio includes DP World, one of the largest marine terminal operators in the world; Drydocks World & Dubai Maritime City designed to turn Dubai into a major ship-building and maritime hub; Economic Zones World which operates several free zones around the world including Jafza and TechnoPark in Dubai; Nakheel the property developer behind iconic projects such as The Palm Islands and The World among others; Limitless the international real estate master planner with current development projects in various parts of the world; Leisurecorp a global sports and leisure investment group, reshaping the industry by unlocking value across investment, development and brand opportunities; Dubai World Africa which oversees the regional development and portfolio of investments in the African continent; and Istithmar World, the group's investment arm that has a global footprint in finance, capital, leisure, aviation and various other business ventures. The Sun Never Sets on Dubai World, its Web site says. DUNE ENERGY: Amends Employee Severance Plan ------------------------------------------- Dune Energy Inc. has amended its employee severance plan, which applies to all employees, other than those employed with the Company pursuant to the terms of specific employment contracts. The severance plan provides that upon the involuntary termination of a covered employee: * Officers would receive twelve months Base Salary plus their Target Bonus; * select employees would receive six months Base Salary plus 50% of their Target Bonus; and * other employees would receive three months Base Salary plus 25% of their Target Bonus. As amended, the plan eliminates Target Bonus as a component of a Covered Employee's severance, and now provides that upon an Involuntary Termination, Officers will receive six months Base Salary and all other Covered Employees will receive three months Base Salary. A full-text copy of the Company's employee severance plan is available free at http://ResearchArchives.com/t/s?5289 About Dune Energy Based in Houston, Texas, Dune Energy, Inc., is an independent energy company. Since May of 2004, it has been engaged in the exploration, development, acquisition and exploitation of natural gas and crude oil properties, with interests along the Louisiana/Texas Gulf Coast. Its properties cover 100,000 gross acres across 23 producing oil and natural gas fields. * * * According to the Troubled Company Reporter on Jan. 26, 2010, Standard & Poor's Ratings Services withdrew its 'CCC-' corporate credit and senior secured debt ratings on Dune Energy Inc. at the company's request. S&P also withdrew its '3' recovery rating on the company's $300 million of senior unsecured notes due 2012. EAST CAMERON: Court Denies Committee's Motion to Convert Case ------------------------------------------------------------- The Hon. Robert Summerhays of the U.S. Bankruptcy Court for the Western District of Louisiana denied the Official Committee of Unsecured Creditors' motion to convert East Cameron Partners, LP's case to one under Chapter 7, or to appoint trustee in the case. As reported in the Troubled Company Reporter on July 27, 2009, the Committee said that the Debtor grossly mismanaged its estate, wasted assets, and has recorded losses and shown preferential treatment of management's affiliates for each month of its operation. Based in Lafayette, Louisiana, East Cameron Partners, LP -- http://www.eastcameronpartners.com/-- is an independent oil and gas exploration and production company. The Company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. La. Case No. 08-51207). Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, represent the Debtor as counsel. Michael H. Piper, Esq., and William E. Steffes, Esq., at Steffes, Vingiello & McKenzie, L.L.C., represent the Official Committee of Unsecured Creditors as counsel. When the Debtor filed for protection from its creditors, it listed over $100 million each in assets and debts. EAST CAMERON: Wants Add'l Financing to Hasten Asset Sales --------------------------------------------------------- East Cameron Partners, LP, asks the U.S. Bankruptcy Court for the Western District of Louisiana to authorize an additional loan from Cheyne Special Situations Fund LP, Cheyne Vista Fund LP, Dupont Pension Trust, Camulos Master Fund LP and Plainfield Direct Inc. The lenders have significant vested interest in the Chapter 11 case, including having already provided $4 million in postpetition financing. The Debtor is in immediate need to obtain funds in order to meet its ongoing operational and administrative needs and to preserve the value of its estate pending the sale of substantially all of its assets. The lenders agreed to loan the Debtor an additional $490,000, in exchange for the grant of a superperiority administrative claim, priming of liens on any and all encumbered property, first liens on any and all unencumbered property, and perfected security interest in and liens of the highest available priority on the DIP collateral. The lenders advised the Debtor during negotiations that they will not consent to being primed by a superpriority lien granted to another third party lender. About East Cameron Partners Based in Lafayette, Louisiana, East Cameron Partners, LP -- http://www.eastcameronpartners.com/-- is an independent oil and gas exploration and production company. The Company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. La. Case No. 08-51207). Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, represent the Debtor as counsel. Michael H. Piper, Esq., and William E. Steffes, Esq., at Steffes, Vingiello & McKenzie, L.L.C., represent the Official Committee of Unsecured Creditors as counsel. When the Debtor filed for protection from its creditors, it listed over $100 million each in assets and debts. EAST CAMERON: Wants to Sell Assets to Lender Group -------------------------------------------------- East Cameron Partners, LP, asks the U.S. Bankruptcy Court for the Western District of Louisiana to approve an asset purchase agreement with Cheyne Special Situations Fund LP, Cheyne Vista fund LP, Dupont Pension Trust, Camulos Master Fund LP and Plainfield Direct Inc. The asset purchase agreement provides East Cameron's 11 U.S.C. Sec. 363 sale of certain assets to Cheyne, et al., provided that the group is not outbid by other parties. Cheyne, et al., are offering to retire their claims under a credit facility. The retirement of the debt will permit the Debtor to make distributions to administrative claimants and unsecured creditors under a plan of reorganization that the Debtor intends to file after the consummation of the sale. The APA includes these terms: Purchase Price: a) a credit bid in the amount of $4 million b) the aggregate amount of the assumed liabilities Acquired Assets: Include all rights, title and interest in the assets of the Debtor Excluded Assets Include, among other things: (i) cash; (ii) corporate books and records of seller; (iii) causes of action and equitable rights and remedies; and (iv) rights, title and interest of seller in and to all contracts that are not assigned contracts. Break-Up Fee: $100,000 Closing Date March 8, 2010, at the offices of the Debtor's counsel The Debtor proposes that the interested parties to bid on the acquired assets will attend the hearing on sale motion scheduled for March 2, 2010. The Debtor also asks the Court to schedule an auction and an auction hearing. Based in Lafayette, Louisiana, East Cameron Partners, LP -- http://www.eastcameronpartners.com/-- is an independent oil and gas exploration and production company. The Company filed for Chapter 11 relief on Oct. 16, 2008 (Bankr. W.D. La. Case No. 08-51207). Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard, represent the Debtor as counsel. Michael H. Piper, Esq., and William E. Steffes, Esq., at Steffes, Vingiello & McKenzie, L.L.C., represent the Official Committee of Unsecured Creditors as counsel. When the Debtor filed for protection from its creditors, it listed over $100 million each in assets and debts. EASTMAN KODAK: Amends Prospectus for KKR Notes, Warrants -------------------------------------------------------- Eastman Kodak Company filed with the Securities and Exchange Commission amendments to registration statements related to its issuance of: -- $300,000,000 10.50% Senior Notes due 2017; and -- Warrants to Purchase Shares of Common Stock and 40,000,000 Shares of Common Stock Underlying the Warrants As reported by the Troubled Company Reporter, Kodak in September 2009 completed its issuance to Kohlberg Kravis Roberts & Co. L.P.- managed investment vehicles of $300 million in aggregate principal amount of 10.50% Senior Secured Notes due 2017 and warrants to purchase 40 million shares of Kodak common stock. The KKR transaction, along with a separate private placement transaction of $400 million aggregate principal amount of Convertible Senior Notes due 2017, which closed on September 23, was part of an overall $700 million financing transaction designed to reinforce Kodak's strategic direction and strengthen the company's financial position. 10.50% Notes In September 2009, Kodak issued the 10.50% Notes in a private placement pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended. The prospectus supplement may be used by selling securityholders to resell their notes. Kodak will not receive any proceeds from the sale of the notes. The selling securityholders are KKR Jet Stream (Ireland) Corporation; 8 North America Investor (Cayman) Limited; and OPERF Co-Investment LLC. The notes bear cash interest at a rate of 10.00% per year and accrue PIK Interest at a rate of 0.50% per year. PIK Interest is interest paid by increasing the principal amount of the notes. Interest on the notes is payable on April 1 and October 1 of each year, beginning on April 1, 2010. The notes will mature on October 1, 2017. At any time and from time to time prior to October 1, 2013, Kodak may redeem the notes, in whole or in part, at a purchase price equal to 100% of the principal amount of the notes (including any increase in the principal amount reflecting PIK Interest) redeemed plus a make-whole premium plus accrued and unpaid interest to, but excluding, the redemption date. At any time and from time to time on and after October 1, 2013, Kodak may redeem the notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the notes (including any increase in the principal amount reflecting PIK Interest) redeemed plus accrued and unpaid interest to, but excluding, the redemption date. In addition, at any time and from time to time prior to October 1, 2012, Kodak may redeem up to 35% of the notes at a redemption price equal to 110.50% of the principal amount of the notes so redeemed plus accrued and unpaid interest to, but excluding, the redemption date, with proceeds from permitted sales of certain kinds of Kodak's capital stock. Upon the occurrence of a change of control or the sale of certain of Kodak's assets, Kodak may be required to repurchase some or all of the notes. The notes are fully and unconditionally guaranteed on a senior secured basis by each of Kodak's existing and future direct or indirect wholly owned domestic subsidiaries, subject to certain exceptions. The notes are secured by a second-priority lien on substantially all domestic assets of the issuer and any guarantors, subject to certain exceptions. There is currently no market for the notes. Kodak does not intend to list the notes on any national securities exchange. A full-text copy of the prospectus supplement is available at no charge at http://ResearchArchives.com/t/s?52bb Warrants In September 2009, Kodak issued warrants to purchase 40 million shares of its common stock in a private placement pursuant to the exemption from the registration requirements of the Securities Act of 1933, as amended. The prospectus supplement may be used by selling securityholders to resell their warrants and the common stock issuable upon exercise of the warrants. Kodak will not receive any proceeds from the sale of the securities. The warrants are exercisable at any time after the date of issuance at a per share exercise price of $5.50. The warrants expire on September 29, 2017. A holder of a warrant may pay the exercise price of the warrants in cash or by cashless exercise. The exercise price and number of shares of common stock underlying the warrants are subject to customary adjustments upon the occurrence of certain events. In addition, if a holder exercises a warrant in connection with a make whole adjustment event involving Kodak, the exercise price of the warrants will be decreased. The selling securityholders are 8 North America Investor (Cayman) Limited; OPERF Co-Investment LLC; and KKR JetStream LLC. A full-text copy of the prospectus supplement is available at no charge at http://ResearchArchives.com/t/s?52bc About Eastman Kodak Headquartered in Rochester, New York, Eastman Kodak Company (NYSE:EK) -- http://www.kodak.com/-- provides imaging technology products and services to the photographic and graphic communications markets. Kodak'S balance sheet at June 30, 2009, showed total assets of $7,106,000,000 and total liabilities of $7,215,000,000, resulting in shareholders' deficit attributable to Kodak of $112,000,000. The Troubled Company Reporter on September 22, 2009, said Fitch Ratings affirmed Kodak's Issuer Default Rating at 'B-'; Senior secured revolving credit facility at 'BB-/RR1'; and Senior unsecured debt at 'B-/RR4'. On Sept. 18, 2009, Standard & Poor's Ratings Services revised its recovery rating on Eastman Kodak's senior unsecured debt to '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default, from '5'. S&P lowered the issue- level rating to 'CCC' (two notches lower than the 'B-' corporate credit rating on the company) from 'CCC+', in accordance with S&P's notching criteria for a '6' recovery rating. EASTMAN KODAK: Gets Lenders' OK to Obtain $200MM in New Loans ------------------------------------------------------------- Eastman Kodak Company, Kodak Canada Inc. and certain subsidiaries of the Company on February 10, 2010, entered into Amendment No. 2 to the Amended and Restated Credit Agreement, dated March 31, 2009, among the Company, Kodak Canada Inc., the lenders party thereto, Citigroup Global Markets Inc. and Banc of America Securities LLC, as co-lead arrangers and co-bookrunners, Bank of America, N.A., as syndication agent, and Citicorp USA, Inc., as agent. Pursuant to the Amendment, the Company is permitted to incur additional Permitted Senior Debt of up to $200 million aggregate principal amount and may incur debt that refinances existing debt and Permitted Senior Debt so long as the refinancing debt meets certain requirements, including that the refinancing debt otherwise meets the definition of Permitted Senior Debt. Permitted Senior Debt and Permitted Refinancing Debt may be guaranteed by the guarantors under the Credit Agreement and may also be secured by a second priority lien on the assets of the Company and such guarantors, subject to an intercreditor agreement. At all times prior to the application of the net proceeds of Permitted Refinancing Debt to such refinancing, such proceeds must be deposited in one or more deposit accounts over which the Agent has a perfected security interest. The Amendment also permits the Company to use the net proceeds of (i) Permitted Refinancing Debt and (ii) Permitted Senior Debt issued or incurred prior to the effective date of the Amendment to prepay, redeem, purchase, defease or otherwise satisfy its public debt securities or Permitted Senior Debt. In connection with the Amendment, the Company reduced the commitments of its non-extending lenders by $125,250,000. The members of the lending consortium under AMENDMENT NO. 2 TO THE AMENDED AND RESTATED CREDIT AGREEMENT are: * Citicorp USA, INC., as Agent and Lender; * Bank of America, N.A.; * Lloyds TSB Bank PLC; * Citibank, N.A.-Secondary Trading; * Morgan Stanley Senior Funding, Inc.; * The Bank of New York Mellon; * PNC Bank, N.A.; * Commerzbank AG New York and Grand Cayman Branches; * Sumitomo Mitsui Banking Corporation; * Mizuho Corporate Bank, Ltd.; * Barclays Bank PLC; * Goldman Sachs Lending Partners LLC; * Pacific Investment Management Company LLC's PIMCO Floating Rate Strategy Fund; PIMCO Floating Rate Income Fund; and Loan Funding III (Delaware) LLC; * Credit Suisse AG, Cayman Islands Branch; * CIT Group/Business Credit, Inc.; * Wells Fargo Capital Finance, LLC; * The Bank of Nova Scotia; * Societe Generale; * Fifth Third Bank; * NATIXIS; * The Foothill Group, LLC; * DZ Bank AG, New York Branch; and * LightPoint CLO 2004-I, Ltd.; and Premium Loan Trust I, Ltd. A full-text copy of Amendment No. 2 is available at no charge at: http://ResearchArchives.com/t/s?52b7 About Eastman Kodak Headquartered in Rochester, New York, Eastman Kodak Company (NYSE:EK) -- http://www.kodak.com/-- provides imaging technology products and services to the photographic and graphic communications markets. The Troubled Company Reporter on September 22, 2009, said Fitch Ratings affirmed Kodak's Issuer Default Rating at 'B-'; Senior secured revolving credit facility at 'BB-/RR1'; and Senior unsecured debt at 'B-/RR4'. On Sept. 18, 2009, Standard & Poor's Ratings Services revised its recovery rating on Eastman Kodak's senior unsecured debt to '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default, from '5'. S&P lowered the issue- level rating to 'CCC' (two notches lower than the 'B-' corporate credit rating on the company) from 'CCC+', in accordance with S&P's notching criteria for a '6' recovery rating. EASTMAN KODAK: Sees Digital Revenues to Grow Up to 9% This Year --------------------------------------------------------------- Eastman Kodak Company this year expects revenues from its digital portfolio to grow by 5% to 9%. When combined with a more moderate decline in the company's traditional business, Kodak said this should result in an overall revenue growth of 0% to 1%. The Company made the disclosure at its annual strategy meeting with investors on February 4 in New York. At the meeting, Kodak detailed plans to build on the momentum generated in the second half of 2009 and accelerate profitable growth on the strength of its expertise in materials science and digital image science. According to Kodak, the digital growth will be driven on the consumer side (CDG) by an expanding portfolio of higher-margin digital cameras and devices, including the recently announced KODAK SLICE Touchscreen Camera, KODAK PLAYSPORT Video Camera, and the KODAK PULSE Digital Picture Frame. The company also expects continued significant revenue growth and earnings improvement from its revolutionary line of consumer inkjet products, which produced market share gains and doubled the installed base during 2009. During 2010, Kodak expects to continue to grow market share for its consumer inkjet printers and significantly expand sales of high-margin ink and media. On the commercial side, Kodak said GCG growth will be fueled by increased sales of digital plates and presses, workflow software, document scanners, and new product introductions, including the KODAK PROSPER Press Platform, a next-generation approach to continuous inkjet printing that provides offset-class quality, speed, reliability and increased productivity, and the recently commercialized KODAK FLEXCEL NX System, an innovative, flexible plate for the rapidly growing package printing market. As the commercial printing industry continues to transition from traditional to digital technology, Kodak believes it is uniquely positioned because it offers the broadest range of digital and traditional solutions to assist printers through each stage of their transition. As reported by the Troubled Company Reporter, Kodak in September 2009 completed its issuance to Kohlberg Kravis Roberts & Co. L.P.- managed investment vehicles of $300 million in aggregate principal amount of 10.50% Senior Secured Notes due 2017 and warrants to purchase 40 million shares of Kodak common stock. The KKR transaction, along with a separate private placement transaction of $400 million aggregate principal amount of Convertible Senior Notes due 2017, which closed on September 23, was part of an overall $700 million financing transaction designed to reinforce Kodak's strategic direction and strengthen the company's financial position. On January 28, 2010, Kodak reported fourth-quarter 2009 earnings from continuing operations of $430 million, or $1.36 per share, on sales of $2.582 billion. Fourth-quarter sales were $2.582 billion, a sequential increase of 45% from the third quarter of 2009 and a 6% increase from the year-ago quarter, including 4% of favorable foreign exchange impact. Revenue from digital businesses totaled $1.991 billion, a 12% increase from $1.779 billion in the prior-year quarter, resulting from the combination of an increase in non-recurring intellectual property licensing revenue and increased demand for consumer inkjet printer systems, kiosk media and digital plates. Revenue from the company's traditional business decreased 10% to $589 million for the fourth quarter. This revenue decline rate was significantly reduced compared to the first three quarters of 2009, reflecting sequentially improved demand across all traditional businesses, particularly Entertainment Imaging. For full-year 2009, the company reported a loss from continuing operations of $232 million, or $0.87 per share. This compares to a loss of $727 million, or $2.58 per share, in 2008. Full-year revenue totaled $7.606 billion, a 19% decline from 2008. Full-year digital revenue totaled $5.345 billion, a 17% decline from 2008, and traditional revenue totaled $2.257 billion, a 24% decline. These results reflect the recession's impact on demand, especially in the first half of 2009. The company expects that customer demand for its digital products will continue to grow, as the economy recovers. As of December 31, 2009, Kodak had $7.714 billion in total assets against $7.694 billion in total liabilities. At the investors' meeting, Kodak indicated that over the next three years it will leverage its expanding portfolio of digital and traditional businesses, and will continue its focus on operational efficiency, to deliver increased revenue, earnings, and cash flow. For 2010, on a continuing operations basis, Kodak expects: -- Segment earnings from operations of $350 million to $450 million on total company revenue of between $7.5 billion to $7.7 billion. This equates to GAAP earnings from continuing operations before interest expense, other income (charges), net and income taxes of $275 million to $375 million; -- 2010 GAAP earnings from continuing operations in the range of negative $50 million to positive $50 million; -- Digital revenue growth of 5% to 9%, and overall revenue growth of 0% to 1%; -- Positive cash generation before restructuring, and, on a GAAP basis, net cash provided by continuing operations from operating activities of $50 million to $150 million; -- A year-end cash balance of $1.8 billion to $2.0 billion, after taking into account all cash actions, including modest debt payments due during 2010. "Our strategy is working and we are on track toward sustained profitability," Antonio M. Perez, Kodak's Chairman and Chief Executive Officer, said on February 4. "We are successfully managing through one of the deepest global economic downturns in history, and we have emerged as a leaner, more competitive company. Today, Kodak is well-established in large markets, and we are gaining traction in new growth markets, with the broadest and most competitive portfolio of digital products in the company's history. We have solid liquidity and the financial flexibility necessary to fully implement our strategy. In 2010 and beyond, we will fully utilize the innovative thinking of Kodak people to drive sustainable, profitable growth and increase the value of this great company." According to Kodak, its Film, Photofinishing & Entertainment Group has maintained a strong market position in all of its key product categories, and continues to be a solid cash generator. The FPEG portfolio includes Entertainment Imaging products and services, traditional photofinishing, consumer and professional film capture and services, and products for industrial film markets. For 2010, the company expects stable performance and a continued solid cash contribution from its Entertainment Imaging business, and moderation in the industry decline rate across its traditional product lines. Kodak said it enters 2010 with a strong cash position, solid liquidity, and the financial flexibility to fully implement its strategy for profitable growth. The company's target business model assumes, on average, a compound annual growth rate for digital revenues of 7% to 9% from 2010 through 2012, and a total company compound annual revenue growth rate of approximately 3% during that period. Kodak's target model for 2012 includes a gross profit margin goal for its digital businesses of 30% and a total company gross profit margin goal of 28%. The company's goal for segment earnings from operations is 8% of revenue for the digital businesses and 7% of revenue for the total company. This total company goal equates to earnings from continuing operations before interest expense, other income (charges), net, and income taxes of 7% of revenue. "We are regaining our momentum, our strategy is paying off, and our customers are embracing our distinctive value propositions in our new growth markets," said Mr. Perez. "Kodak is a financially solid company with the broadest and most competitive digital product portfolio that we have ever had, a sustainable traditional business, a lean cost structure, leading intellectual property, and a well-respected brand. We expect customer demand for our digital products to continue to outpace the market, which positions us well for sustained profitability and increased shareholder value." A full-text copy of Kodak's statement on the investors' meeting is available at no charge at http://ResearchArchives.com/t/s?52b8 A full-text copy of Kodak's earnings release is available at no charge at http://ResearchArchives.com/t/s?52b9 A full-text copy of Kodak's financial discussion document is available at no charge at http://ResearchArchives.com/t/s?52ba About Eastman Kodak Headquartered in Rochester, New York, Eastman Kodak Company (NYSE:EK) -- http://www.kodak.com/-- provides imaging technology products and services to the photographic and graphic communications markets. The Troubled Company Reporter on September 22, 2009, said Fitch Ratings affirmed Kodak's Issuer Default Rating at 'B-'; Senior secured revolving credit facility at 'BB-/RR1'; and Senior unsecured debt at 'B-/RR4'. On Sept. 18, 2009, Standard & Poor's Ratings Services revised its recovery rating on Eastman Kodak's senior unsecured debt to '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default, from '5'. S&P lowered the issue- level rating to 'CCC' (two notches lower than the 'B-' corporate credit rating on the company) from 'CCC+', in accordance with S&P's notching criteria for a '6' recovery rating. EASTMAN KODAK: Vanguard, Brandes, BlackRock Report Stake -------------------------------------------------------- The Vanguard Group, Inc., said that as of December 31, 2009, it may be deemed to beneficially own 14,117,110 shares or roughly 5.26% of the common stock of Eastman Kodak Company. Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, is the beneficial owner of 616,281 shares or 0.23% of the Common Stock outstanding of the Company as a result of its serving as investment manager of collective trust accounts. VFTC directs the voting of these shares. Brandes Investment Partners, L.P.; Brandes Investment Partners, Inc.; Brandes Worldwide Holdings, L.P.; Charles H. Brandes; Glenn R. Carlson; and Jeffrey A. Busby disclosed that as of December 31, 2009, they may be deemed to beneficially own a de minimis 1,415 shares or common stock of Eastman Kodak Company. Brandes is an investment fund based in San Diego, California. BlackRock Inc. said that as of December 31, 2009, it may be deemed to beneficially own 17,162,071 shares or roughly 6.4% of the common stock of Eastman Kodak Company. About Eastman Kodak Headquartered in Rochester, New York, Eastman Kodak Company (NYSE:EK) -- http://www.kodak.com/-- provides imaging technology products and services to the photographic and graphic communications markets. The Troubled Company Reporter on September 22, 2009, said Fitch Ratings affirmed Kodak's Issuer Default Rating at 'B-'; Senior secured revolving credit facility at 'BB-/RR1'; and Senior unsecured debt at 'B-/RR4'. On Sept. 18, 2009, Standard & Poor's Ratings Services revised its recovery rating on Eastman Kodak's senior unsecured debt to '6', indicating S&P's expectation of negligible (0% to 10%) recovery in the event of a payment default, from '5'. S&P lowered the issue- level rating to 'CCC' (two notches lower than the 'B-' corporate credit rating on the company) from 'CCC+', in accordance with S&P's notching criteria for a '6' recovery rating. EBRO FOODS: Flawed Invoices Nixed Creditor's PACA Priority ---------------------------------------------------------- WestLaw reports that a produce supplier's failure to make the mandated disclosures regarding the extended payment terms on its invoices in compliance with the Perishable Agricultural Commodities Act, 7 U.S.C. Sec. 499a, et seq., barred the supplier from establishing a PACA trust claim. The supplier could not rely upon its purported substantial compliance with PACA to establish a trust claim. In re Ebro Foods, Inc., --- B.R. ----, 2010 WL 347997 (Bankr. N.D. Ill.) (Wedoff, J.). Ebro Foods, Inc. -- http://www.ebrofoods.com/-- is based in Chicago, Ill., and operates a food processing facility producing canned specialty foods. Ebro Foods sought chapter 11 protection (Bankr. N.D. Ill. Case No. 09-10101) on Mar. 24, 2009. Forrest L. Ingram, Esq., Patrick F. Lambe, Esq., Helena Milman, Esq., and Gautham Kaveti, Esq., at Forrest L. Ingram, P.C., in Chicago, represent the Debtor is its restructuring. At the time of the filing, Ebro Foods estimated its assets at less than $50,000, and its debts between $1 million and $10 million. EDRA BLIXSETH: Porcupine Creek Asset for Sale at $75 Million ------------------------------------------------------------ Kate McGinty at The Desert Sun reports that Edra Bixseth's 249- acre Porcupine Creek estate was placed for sale for $75 million. Edra D. Blixseth owns the Porcupine Creek Golf Club in Rancho Mirage and the Yellowstone Club in Montana. Ms. Blixseth filed for Chapter 11 bankruptcy protection on March 26, 2009 (Bankr. D. Mont. Case No. 09-60452). Gary S. Deschenes, Esq., at Deschenes & Sullivan Law Offices assists Ms. Blixseth in her restructuring efforts. The Debtor listed $100 million to $500 million in assets and $500 million to $1 billion in debts. The Hon. Ralph B. Kirscher of the U.S. Bankruptcy Court for the District of Montana converted Ms. Blixseth's Chapter 11 reorganization case to a Chapter 7 liquidation proceeding. ELEMENT 21 GOLF: December 31 Balance Sheet Upside-Down by $1.4-Mil ------------------------------------------------------------------ Element 21 Golf Company and subsidiaries' consolidated balance sheets at December 31, 2009, showed $3,134,826 in total assets and $4,588,774 in total liabilities, resulting in a $1,453,948 shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $3,100,998 in total current assets available to pay $4,187,980 in total current liabilities. For the six months ended December 31, 2009, the Company had revenue of $1,660,453, which includes non-cash barter revenue of $42,109, and incurred costs of sales of $867,380 and general and administrative expenses of $2,048,045, and interest income of $775, and interest expense of $106,804. Included in general and administrative expense is a non-cash charge of $887,118 representing the value of compensatory common stock and warrants for services provided by consultants. This resulted in a net loss of $1,361,001, as compared with the six months ended December 31, 2008, in which the Company had revenue of $985,907, incurred costs of sales of $635,047 and general and administrative expenses of $1,557,816, and interest income of $2,629, and interest expense of $41,591, offset by derivative income of $103,525, resulting in a net loss of $1,142,393. The increase in revenues was primarily a result of the launch of the fishing line in fiscal year 2008. For the three months ended December 31, 2009, the Company had revenue of $901,635. Net loss was $769,586. For the three months ended December 31, 2008, the Company had revenue of $430,651 and incurred a net loss of $503,587. 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?52c2 Going Concern Doubt The Company began generating revenues in fiscal 2005. Even with the generation of revenues from the sale of golf and fishing products now being produced and sold, the Company expects to incur expenses in excess of revenues for an indefinite period. During the six months ended December 31, 2009, the Company incurred a net loss of $1,361,001 and cash utilized in operations during this period was $526,144. For the fiscal year ended June 30, 2009, the Company realized a net loss of $1,593,160 and utilized cash of $96,224 from operations. "These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern." About Element 21 Headquartered in Toronto, Canada, Element 21 Golf Company (OTC: ETGF) http://www.e21golf.com/-- designs, develops and markets Scandium alloy golf and fishing products. EPICEPT CORP: Proposes to Issue Up to $15-Mil. in Shares -------------------------------------------------------- EpiCept Corporation has established an at-the-market program through which it may sell shares of its common stock having an aggregate offering price of up to $15 million. Maxim Group LLC is acting as sales agent on the program. Sales of EpiCept shares under the program, if any, may be made by means of ordinary brokers' transactions on The Nasdaq Capital Market or, to the extent allowable by law, the Nasdaq OMX Stockholm Exchange, at market prices. Additionally, under the terms of the sales agreement, the Company may also sell shares of its common stock through the sales agent, on the Nasdaq Capital Market or, to the extent allowable by law, the Nasdaq OMX Stockholm Exchange, or otherwise, at negotiated prices or at prices related to the prevailing market price. As sales agent, Maxim will not engage in any transactions that stabilize the Company's common stock. The Company intends to use any net proceeds it may receive from the offering to meet working capital needs and repay indebtedness, as well as for general corporate purposes. A full-text copy of the Company's equity distribution agreement is available for free at http://ResearchArchives.com/t/s?52ae Going Concern Doubt As reported by the Troubled Company Reporter-Europe on Nov. 17, 2009, EpiCept Corporation posted a net loss of $4,813,000 for the three months ended Sept. 30, 2009, from a net loss of $6,163,000 for the same period a year ago. The Company posted a net loss of $34,378,000 for the nine months ended September 30, 2009, from a net loss of $20,006,000 for the same period a year ago. Revenue was $116,000 for the three months ended September 30, 2009, from $78,000 for the same period a year ago. Revenue was $322,000 for the nine months ended September 30, 2009, from $169,000 for the same period a year ago. At September 30, 2009, the Company had $11,962,000 in total assets against $17,122,000 in total liabilities, resulting in $5,160,000 in stockholders' deficit. EpiCept's management believes that existing cash and cash equivalents will be sufficient to meet projected operating and debt service requirements into the second quarter of 2010. Additional funding for the Company's operations is anticipated to be derived from sales of Ceplene(R) in Europe, fees from the Company's strategic partners including a marketing partner for Ceplene(R) in Europe, strategic relationships for other product candidates including NP-1 or other financing arrangements. "We have devoted substantially all of our cash resources to research and development programs and selling, general and administrative expenses, and to date we have not generated any meaningful revenues from the sale of products. Since inception, we have incurred significant net losses each year. As a result, we have an accumulated deficit of $230.6 million as of September 30, 2009. Our recurring losses from operations and the accumulated deficit raise substantial doubt about our ability to continue as a going concern," the Company said in its quarterly report on Form 10-Q. About EpiCept Based in Tarrytown, New York, EpiCept Corporation (Nasdaq and OMX Nordic Exchange: EPCT) is focused on the development and commercialization of pharmaceutical products for the treatment of cancer and pain. The Company's lead product is Ceplene(R), which has been granted full marketing authorization by the European Commission for the remission maintenance and prevention of relapse in adult patients with Acute Myeloid Leukemia in first remission. The Company has two oncology drug candidates currently in clinical development that were discovered using in-house technology and have been shown to act as vascular disruption agents in a variety of solid tumors. The Company's pain portfolio includes EpiCeptTM NP-1, a prescription topical analgesic cream in late-stage clinical development designed to provide effective long-term relief of pain associated with peripheral neuropathies. EXPRESS LLC: S&P Raises Corporate Credit Rating to 'B+' ------------------------------------------------------- Standard & Poor's Ratings Services said it raised its corporate credit rating on Columbus, Ohio-based apparel retailer Express LLC to 'B+' from 'B'. S&P also revised the outlook on the company to stable from negative. The company's operating performance has been inconsistent. As part of Limited Brands, Express had early success in terms of sales and profits. At its peak in 1997, the chain had 1,297 units. However, the brand -- especially the men's business -- underperformed from 2002 to 2005 and has contracted to its current 573 units. The company's profitability bottomed in 2005, when it took heavy write-downs to clear inventory from its 2004 failed brand repositioning. "New management brought in during 2005 realigned pricing to better match customer expectations, increased inventory levels, and accelerated the migration of the store base toward the dual-gender format," said Standard & Poor's credit analyst Jackie E. Oberoi. This resulted in significant improvements in profitability from 2006 through the first half of 2008. The company had a difficult second half of 2008, because it was hurt by the U.S. recession. Same-store sales dropped 17% in the fourth quarter of 2008, and the operating margin eroded to 6.1% from 19.2% in the year-ago period. Despite same-stores sales declining at a double-digit rate in the first half of 2009, the company has expanded margins as a result of leaner inventories, fewer markdowns, and cost- reduction initiatives. "S&P expects positive same-store sales for the fourth quarter of 2009," added Ms. Oberoi, "and this, along with continued benefit from its expense-reduction initiatives and better inventory management in the second half of this year, is likely to lead to significantly improved margins and EBITDA for the year." S&P expects the company's operating margin to expand to about 21.0% in 2009 from 16.4% a year ago despite a slight decline in sales for the year. Still, the company's financial performance is vulnerable to swings in comparable-store sales because Express is not expanding its store base. FAIRPOINT COMMS: NNE Telephone Files Schedules & Statement ---------------------------------------------------------- A. Real Property $136,818,634 See http://bankrupt.com/misc/NNETO_SAL_A1.pdf B. Personal Property B.1 Cash on hand 0 B.2 Bank Accounts 0 See http://bankrupt.com/misc/NNETO_SAL_B2.pdf B.13 Business Interests and stocks See http://bankrupt.com/misc/NNETO_SAL_B13.pdf B.16 Accounts Receivable A/R Retail 95,515,616 A/R Wholesale 42,350,125 A/R Other 3,915,039 A/R NECA & USAC 607,970 Trade Payable Debit Balance Ciena Communications Inc. 61,854 Jasper Engine & Transmission 1,100 Rockingham Electrical Supply Co. Inc 660 Casella Waste Management Inc 562 Adtran Inc. 195 FW Webb Company 147 Maine Commercial Tire Inc 32 Napa Auto Parts 1 A/R Allowance (41,093,412) B.23 Licenses Undetermined See http://bankrupt.com/misc/NNETO_SAL_B23.pdf B.25 Vehicles 8,816,785 B.26 Boats, motors 44,124 B.28 Office equipment, furnishings and supplies Company Communication Equipment 25,665 Furniture 105,992 General Purpose Computers 7,974,874 B.29 Machinery Construction In Progress (Phone Plant) 93,233,626 Digital Switching and Circuit Equipment 277,784,283 Other Terminal Equipment 17,110,704 Outside Communication Equipment 617,756,925 Public Telephone Terminal Equipment 213 Tools and other work equipment 7,092,954 B.35 Other Personal Property Prepaid Maintenance 613,472 Prepaid Property Taxes 1,513,312 Prepaid Rent 12,444 Prepaid State Regulatory 373,244 TOTAL SCHEDULED ASSETS $1,120,637,140 ======================================================= C. Property Claimed as Exempt - D. Secured Claim Undetermined E. Unsecured Priority Claims $1,481,604 See http://bankrupt.com/misc/NNETO_SAL_E1.pdf F. Unsecured Non-priority Claims Trade Payables Comcast Phone 124,897 CRC Communications of Maine Inc 567,204 Glacial Energy of New England 575,416 Langille Construction Inc 115,828 Lightshop Telecom LLC 110,338 Lucas Tree Expert Co 159,805 McFarland Cascase For-Tek 426,736 MMSTV Associate 100,004 New Hampshire Electric Coop 596,764 On Target Utility Services 336,372 Oxford Networks 145,930 RH White Construction Inc. 157,820 Others 3,362,552 See http://bankrupt.com/misc/NNETO_SAL_F1.pdf Litigation & Insurance Liabilities 13,814 See http://bankrupt.com/misc/NNETO_SAL_F2.pdf Other Liabilities 0 See http://bankrupt.com/misc/NNETO_SAL_F3.pdf Intercompany Liabilities (84,919,018) Billing and Collection Liabilities 0 See http://bankrupt.com/misc/NNETO_SAL_F5.pdf TOTAL SCHEDULED LIABILITIES ($76,643,934) ======================================================= Statement of Financial Affairs Northern New England Telephone Operations LLC Senior Vice Lisa R. Hood reports that during the two years before the Petition Date, the Company income from employment and the operations of its business: Year Source Amount ---- ------ ------------ 01/01/09 - 09/30/09 Interstate Access Revenue $202,505,283 Intrastate Access Revenue 16,004,187 Local Service Revenue 238,967,868 Long Distance Revenue 33,594,814 Miscellaneous Revenue 23,352,591 01/01/08 - 12/31/08 Interstate Access Revenue $225,307,384 Intrastate Access Revenue 0 Local Service Revenue 286,324,821 Long Distance Revenue 45,630,991 Miscellaneous Revenue 30,718,049 01/01/07 - 12/31/07 ---- $0 NNE Telephone Operations also earned income from sources other than the operation of its business two years immediately before the Petition Date: Year Source Amount ---- ---------- ----------- 01/01/09 - 09/30/09 Other Income $541,438 Dividend Income 23,910 01/01/08 - 12/31/08 Other Income 366,663 Dividend Income 276 01/01/07 - 12/01/07 Other Income 0 Dividend Income 0 The Company didn't make any payments to creditors or insiders in the 90-day period before it filed for bankruptcy. Ms. Hood disclosed that within one year immediately preceding the Petition Date, NNE Telephone Operations was or is a party to several lawsuits and administrative proceedings, a list of which is available for free at: http://bankrupt.com/misc/NNETO_SOFA_4A.pdf The Company gave gifts or donations, totaling $333,651 to charitable institutions a year immediately before the Petition Date. A detailed list of the donations is available for free at: http://bankrupt.com/misc/NNETO_SOFA_7.pdf The Company also recorded a loss of $117,606 resulting from flooding at a call center located at 5 Davis Farm Road, in Maine, in October 2008. The Company's exposure to the damages is $100,000. NNE Telephone Operations closed six accounts at BNY Mellon for the period from March to October 2009. The Company also received several environmental-related notices from the U.S. Environmental Protection Agency and the New Hampshire Department of Environmental Services on certain landfill sites and some instances of groundwater and soil contamination. Ms. Hood disclosed certain inventory done by NNE Telephone Operations in 2009 with respect to their Portland, Maine Facility: Description Inventory Date Amount ----------- -------------- ----------- Central Office Inventory 08/24/09 $360,102 Plug-In Card Inventory 10/27/09 6,487,257 Poles and Cable Inventory 09/23/09 5,293,312 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 Oct. 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) FIRSTFED FINANCIAL: Terminates Cash Tender Offers & Solicitations ----------------------------------------------------------------- FirstFed Financial Corp. has terminated its cash tender offers and consent solicitations for its outstanding senior debt securities. The cash tender offers and consent solicitations were made pursuant to an Offer to Purchase and Consent Solicitation Statement, dated June 19, 2009, and the related Letter of Transmittal and Consent. None of the Securities were purchased in the cash tender offers and consent solicitations, and all Securities previously tendered and not withdrawn will be promptly returned to their respective tendering holders. Based in California, FirstFed Financial Corp. filed for Chapter 11 protection on Jan. 6, 2010 (Bankr. C.D. Calif. Case No. 10-10150). Jon L. Dalberg, Esq., at Landau Gottfried & Berger LLP, represents the Debtor in its restructuring efforts. In its petition, the Debtor listed assets of of between $1 million and $10 million, and debts of between $100 million and $500 million. FLAG INTERMEDIATE: Posts $35.7 Million Net Loss in 2009 ------------------------------------------------------- Flag Intermediate Holdings Corporation and subsidiaries reported a net loss of $35.7 million for the year ended December 31, 2009, compared to net income of $93.4 million for the year ended December 31, 2008. Flag Intermediate, its wholly owned subsidiary Metals USA, Inc. and the wholly owned subsidiaries of Metals USA are referred to collectively in the Company's annual report as the "Company." Net sales decreased $1.057 billion, or 49.0%, from $2.156 billion for the year ended December 31, 2008, to $1.099 billion for the year ended December 31, 2009. The decrease was primarily attributable to a 36.1% decrease in volumes for the Company's Flat Rolled and Non-Ferrous and Plates and Shapes Product Groups, in addition to a 22.5% decrease in average realized prices. The Company reported an operating loss of $22.1 million for 2009, from operating income of $207.0 million for 2008. The reversal was primarily a result of the decrease in net sales. During the year ended December 31, 2009, the Company purchased $48.7 principal amount of the 1 1/8% senior secured notes due 2015 (the "Metals USA Notes") in the open market, resulting in a pretax gain of $13.6 million (net of unamortized deferred financing costs) on debt extinguishment. Balance Sheet At December 31, 2009, Flag Intermediate Holdings Corporation and subsidaries' consolidated balance sheets showed total assets of $619.2 million, total liabilities of $478.1 million, and total stockholders' equity of $141.1 million. The Company's working capital decreased from $635.3 million at December 31, 2008, to $276.3 million at December 31, 2009. A full-text copy of the Company's 2009 annual report on Form 10-K is available at no charge at http://researcharchives.com/t/s?5262 Liquidity and Capital Resources The Company's primary sources of short-term liquidity are borrowings under the ABL facility and cash flow from operations. The Company believes these resources will be sufficient to meet its working capital and capital expenditure requirements for 2010. As of December 31, 2009, the Company had $75.0 million drawn on the ABL facility, borrowing availability was $122.9 million of which the Company could only borrow $77.9 million because the Fixed Charge Coverage Ratio ("FCCR") was less than 1.0 to 1.0 as of December 31, 2009, and the Company had cash of $5.5 million. At February 5, 2010, the Company had $78.0 million drawn on the ABL facility, borrowing availability was $125.8 million and the Company had cash of $5.3 million. The Company generally meets long-term liquidity requirements, the repayment of debt and investment funding needs, through additional borrowings under the ABL facility and the issuance of debt securities. At December 31, 2009, the Company's long-term debt consisted of $75.0 million of outstanding borrowings on the ABL facility, $226.3 million principal amount of the Metals USA Notes, an Industrial Revenue Bond with $5.7 million principal amount outstanding and approximately $100,000 in vendor financing and purchase money notes. The Company believes that cash flow from operations, supplemented by cash available under the ABL facility, will be sufficient to enable it to meet its debt service and operational obligations as they come due for at least the next twelve months. During the year ended December 31, 2009, net cash provided by operating activities was $248.9 million. This amount was primarily attributable to decreases in accounts receivable and inventories. Changes in working capital during 2009 reflect the change in the business environment that began during the fourth quarter of 2008, when the Company began reducing inventory purchases as a result of weaker demand and declining prices. The Company's accounts receivable decreased due to lower sales levels in 2009. Net cash used in investing activities was $7.8 million for the year ended December 31, 2009, and consisted of proceeds from sales of assets of approximately $500,000 offset by $4.1 million of capital expenditures and $4.2 million for the acquisition of VR Laser Services USA, Inc. For the year ended December 31, 2009, the most significant internal capital projects were expansion of the Company's plate processing machinery and equipment at the Company's Tulsa, Oklahoma and York, Pennsylvania Plates and Shapes facilities. Net cash used in financing activities was $328.6 million for the year ended December 31, 2009, and consisted primarily of net repayments on the ABL facility of $293.0 million, in addition to repayments of other long-term debt of $35.6 million. During the year ended December 31, 2008, net cash provided by operating activities was $92.0 million. Through the first three quarters of 2008, the Company generated significant profits as global steel prices rose to record highs. The Company's increased profitability was the primary contributor to the Company's cash flow from operations for 2008. During the fourth quarter of 2008, the Company began to decrease its inventories in response to slackening demand and decreasing prices. The Company's fourth quarter 2008 reduction in working capital also contributed to cash flow from operations for the year. Net cash used in investing activities was $7.7 million for the year ended December 31, 2008, and consisted of proceeds from sales of assets of $9.5 million offset by $12.2 million of purchases of assets and $5.0 million of contingent consideration paid during 2008 in connection with the May 2006 acquisition of Port City Metal Services. For the year ended December 31, 2008, the most significant internal capital project was the expansion of the Company's New Orleans Plates and Shapes facility. Net cash used in financing activities was $4.9 million for the year ended December 31, 2008, and consisted primarily of net borrowings on the ABL facility of $87.5 million, offset by dividends paid to Metals USA Holdings of $87.5 million, $2.4 million of repayments of long-term debt and $2.5 million of deferred financing costs. About Metals USA Headquartered in Fort Lauderdale, Florida, Metals USA, Inc. -- http://www.metalsusa.com/-- provides processed carbon steel, stainless steel, aluminum, and specialty metals, as well as manufactured metal components in the United States and Canada. It operates in three groups: Flat Rolled and Non-Ferrous Group, Plates and Shapes Group, and Building Products Group. All of Metals USA Inc.'s issued and outstanding common stock is held indirectly by Metals USA Holdings through Flag Intermediate Holdings Corporation, its wholly owned subsidiary. * * * As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services lowered its corporate credit ratings on Houston-based Metals USA Holdings Corp. and on its wholly owned subsidiary, Metals USA Inc., to 'CCC+' from 'B-'. At the same time, S&P lowered its rating on the senior secured notes and the senior unsecured pay-in-kind toggle notes to 'CCC-' from 'CCC'. The recovery rating remains at '6' on these issues, indicating negligible (0%-10%) recovery in the event of a payment default. The outlook is negative. All ratings are removed from CreditWatch, where they were placed with negative implications on March 18, 2009, due to the sharp deterioration in steel market conditions in North America over the past several months and S&P's expectation that operating conditions will remain challenging in the near-term. FLYING J: Promises to Repay Most Debts in Ch. 11 Plan ----------------------------------------------------- Flying J Inc. filed with the U.S. Bankruptcy Court for the District of Delaware a proposed plan of reorganization that contemplates the (i) sale of its travel center and trucking operations and other assets to Pilot Travel Centers LLC in exchange for cash, and (ii) the continuing operations of certain units as a going concern. Under the Plan, unsecured creditors and higher ranked claims will be paid in full though some of them may still be impaired. Holders of equity interests will retain their interests. Under the Plan, the reorganized Company will have: * a minority stake -- 11.6% -- in Pilot, which is in the travel center or highway hospitality business; * a 50% stake in Transportation Clearing House LLC, which is in the financial and fuel card services business; * the 30,000 barrel per day NSL Refinery in Utah; * a 100% ownership of the Transportation Alliance Bank, an FDIC-insured business that makes loans to the transportation Industry; and * real estate properties. A copy of the Plan is available for free at: http://bankrupt.com/misc/Flying_J_Plan.pdf A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Flying_J_DS.pdf About Flying J Based in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com/-- is among the 20 largest private companies in America, with 2007 sales exceeding $16 billion. The fully integrated oil company employs approximately 14,700 people in the U.S. and Canada through its interstate operations, transportation, refining and supply, exploration and production, as well as its financial services and communications, divisions. Flying J and six of its affiliates filed for bankruptcy on December 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Flying J sought Chapter 11 protections after a precipitous drop in oil prices and disruption in the credit markets brought to bear significant short-term pressure on the company's liquidity position. Attorneys at Kirkland & Ellis LLP represent the Debtors as counsel. Young, Conaway, Stargatt & Taylor LLP is the Debtors' Delaware Counsel. Blackstone Advisory Services L.P. is the Debtors' investment banker and financial advisor. Epiq Bankruptcy Solutions LLC is the Debtors' notice, claims and balloting agent. In its formal schedules submitted to the Bankruptcy Court, Flying J listed assets of $1,433,724,226 and debts of $640,958,656. An official committee of unsecured creditors has been appointed in the case. Pachulski Stang Ziehl & Jones LLP has been tapped as counsel for the creditors' panel. Magellan Midstream Partners LP was authorized by the Bankruptcy Court in July to buy Flying J's Longhorn pipeline that runs 700 miles from Houston to El Paso, Texas. FORD MOTOR: BlackRock Pares Equity Interest to 4.92% ---------------------------------------------------- BlackRock Inc. said as of January 29, 2010, it may be deemed to beneficially own 159,716,492 shares or roughly 4.92% of the common stock of Ford Motor Co. BlackRock Inc. said as of December 31, 2009, it may be deemed to beneficially own 168,514,166 shares or roughly 5.19% of Ford shares. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. At Sept. 30, 2009, the Company had US$203.106 billion in total assets against US$210.376 billion in total liabilities. On March 4, 2009, Ford deferred future interest payments on its 6.50% Junior Subordinated Convertible Debentures due January 15, 2032, beginning with the April 15, 2009 quarterly interest payment. As reported by the Troubled Company Reporter on Nov. 4, 2009, Moody's Investors Service upgraded the senior unsecured rating of Ford Motor Credit Company LLC to B3 from Caa1. This follows Moody's upgrade of Ford Motor Company's corporate family rating to B3 from Caa1, with a stable outlook. Ford Credit's long-term ratings remain on review for further possible upgrade. 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+'. Ford Motor Co. carries a long-term issuer default rating of 'CCC', with a positive outlook, from Fitch Ratings. FORD MOTOR: Evercore Trust Reports 8.23% Stake ---------------------------------------------- Evercore Trust Company, N.A., disclosed that as of December 31, 2009, it may be deemed to beneficially own 272,420,203 shares or roughly 8.23% of the common stock of Ford Motor Co. New York-based Evercore said it is a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. At Sept. 30, 2009, the Company had US$203.106 billion in total assets against US$210.376 billion in total liabilities. On March 4, 2009, Ford deferred future interest payments on its 6.50% Junior Subordinated Convertible Debentures due January 15, 2032, beginning with the April 15, 2009 quarterly interest payment. As reported by the Troubled Company Reporter on Nov. 4, 2009, Moody's Investors Service upgraded the senior unsecured rating of Ford Motor Credit Company LLC to B3 from Caa1. This follows Moody's upgrade of Ford Motor Company's corporate family rating to B3 from Caa1, with a stable outlook. Ford Credit's long-term ratings remain on review for further possible upgrade. 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+'. Ford Motor Co. carries a long-term issuer default rating of 'CCC', with a positive outlook, from Fitch Ratings. FORD MOTOR: State Street Reports 11.9% Equity Stake --------------------------------------------------- Boston-based State Street Corporation said that as of January 31, 2010, it may be deemed to beneficially own in the aggregate 386,301,461 shares or roughly 11.9% of the common stock of Ford Motor Co. State Street Bank and Trust Company said that as of January 31, 2010, it may be deemed to beneficially own 11.2% of Ford shares: -- 84,714,126 shares in various capacities; and -- 276,825,724 shares as trustee for the Ford Defined Contribution Plans Master Trust Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. At Sept. 30, 2009, the Company had US$203.106 billion in total assets against US$210.376 billion in total liabilities. On March 4, 2009, Ford deferred future interest payments on its 6.50% Junior Subordinated Convertible Debentures due January 15, 2032, beginning with the April 15, 2009 quarterly interest payment. As reported by the Troubled Company Reporter on Nov. 4, 2009, Moody's Investors Service upgraded the senior unsecured rating of Ford Motor Credit Company LLC to B3 from Caa1. This follows Moody's upgrade of Ford Motor Company's corporate family rating to B3 from Caa1, with a stable outlook. Ford Credit's long-term ratings remain on review for further possible upgrade. 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+'. Ford Motor Co. carries a long-term issuer default rating of 'CCC', with a positive outlook, from Fitch Ratings. FORD MOTOR: Wellington Management Reports 5.33% Stake ----------------------------------------------------- Wellington Management Company LLP in Boston disclosed that in its capacity as investment adviser, it may be deemed to beneficially own 172,665,315 shares or roughly 5.33% of the common stock of Ford Motor Co. which are held of record by clients of Wellington Management. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The company provides financial services through Ford Motor Credit Company. At Sept. 30, 2009, the Company had US$203.106 billion in total assets against US$210.376 billion in total liabilities. On March 4, 2009, Ford deferred future interest payments on its 6.50% Junior Subordinated Convertible Debentures due January 15, 2032, beginning with the April 15, 2009 quarterly interest payment. As reported by the Troubled Company Reporter on Nov. 4, 2009, Moody's Investors Service upgraded the senior unsecured rating of Ford Motor Credit Company LLC to B3 from Caa1. This follows Moody's upgrade of Ford Motor Company's corporate family rating to B3 from Caa1, with a stable outlook. Ford Credit's long-term ratings remain on review for further possible upgrade. 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+'. Ford Motor Co. carries a long-term issuer default rating of 'CCC', with a positive outlook, from Fitch Ratings. FREESCALE SEMICON: NY Appellate Court Lifts Trial Court Stay Order ------------------------------------------------------------------ The New York state appellate court vacated the stay of the trial court proceedings challenging the March 2009 issuance of incremental term loans under Freescale Semiconductor Inc.'s senior secured credit facility but denied the plaintiffs' motion to enjoin the proposed amendments to the Credit Facility and the issuance of senior secured notes to repay a portion of the Credit Facility. The appellate court's order does not bar the closing of the proposed Transactions which is expected to occur on Feb. 19, 2010. However, the plaintiffs have informed the company that they intend to seek to enjoin the proposed Transactions in the trial court at a hearing to be held Feb. 16, 2010. The Company believes the plaintiffs' application and all of their other claims are without merit, and intends to vigorously contest their application and the underlying litigation. According to the Troubled Company Reporter on Feb. 11, 2010, A group of lenders under the senior secured credit facility of Freescale Semiconductor Inc. asked the New York state appellate court to vacate the stay of trial court proceedings and to enjoin the company from continuing to amend the credit facility and issue secured notes to repay a portion of the facility until the group obtain a ruling on a temporary restraining order to be filed in the trial court if the stay is lifted. On Jan. 26, 2010, the New York state appellate court ordered the trial court proceedings stayed pending the disposition of the company's appeal from the denial of its motion to dismiss the case, which was denied by the trial court, provided that the plaintiffs could petition the appellate court to vacate the stay in the event that the company issues new debt. "We agreed to an expedited briefing process on plaintiffs' motion, with all briefing to be completed by Tuesday, February 9, 2010," says Dathan C. Voelter, assistant secretary of the company. "We do not know when the appellate court will rule on plaintiffs' motion, or, if the appellate court lifts the stay, when the trial court might rule on a temporary restraining order," Mr. Voelter says. "If a court enjoins us from pursuing the proposed transactions, we will be forced to delay or withdraw the proposed amendment to the Credit Facility and any offering of senior secured notes. We believe that all claims made by the lenders are without merit and we are vigorously defending this action," relates Mr. Voelter. On March 25, 2009, the group filed a complaint against the company challenging its issuance of incremental term loans under the credit facility. About Freescale Semiconductor Freescale Semiconductor -- http://www.freescale.com/-- is a global leader in the design and manufacture of embedded semiconductors for the automotive, consumer, industrial, networking and wireless markets. The privately held company is based in Austin, Texas, and has design, research and development, manufacturing or sales operations around the world. Freescale's corporate credit ratings from Standard & Poor's, Moody's and Fitch are 'B-', 'Caa1' and 'CCC', respectively. FREESTONE RESOURCES: Posts $115,000 Net Loss in Q2 Ended Dec. 31 ---------------------------------------------------------------- Freestone Resources, Inc. reported a net loss of $115,056 on revenue of $5,703 for the three months ended December 31, 2009, compared with a net loss of $22,884 on revenue of $33,030 in the same period in 2008. The increase in loss is mainly related to increased administrative expenses. For the six months ended December 31, 2009, net loss was $130,228 on revenue of $27,195, compared to a net loss of $282,396 on revenue of $69,292 for the six months ended December 31, 2008. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed total assets of $1,767,897, total liabilities of $702,033, and total shareholders' equity of $1,065,864. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $33,551 in total current assets available to pay $660,910 in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?5265 Going Concern Doubt Freestone incurred operating losses, and has a negative working capital position as of December 31, 2009. "The above factors raise substantial doubt about Freestone's ability to continue as a going concern." No commitments to provide additional funds have been made by management or other stockholders. About Freestone Resources Based in Dallas, Freestone Resources, Inc. (FNSR.OB) -- http://www.freestoneresourcesinc.com/-- is an oil and gas technology development company that focuses on innovative solutions for unconventional and conventional oil recovery in economic and environmentally responsible ways. The Company acquired 100% of the issued and outstanding stock of Earth Oil Services, Inc., a Nevada corporation, in a non-cash transaction on September 24, 2009. EOS owns certain exclusive, territorial, license agreements to a proprietary technology that is a chemical solvent that can separate, extract and recycle hydrocarbon contaminants from ground soils, tar sands, vessels and other materials. This technology is marketed under the name EncapSol. GENERAL GROWTH: Equity Committee Gets Nod to Retain Saul Ewing -------------------------------------------------------------- The Official Committee of Equity Security Holders in General Growth Properties Inc.'s Chapter 11 cases obtained the Court's authority to retain Saul Ewing LLP as its counsel, nunc pro tunc to September 9, 2009. As the Equity Committee's counsel, Saul Ewing will: (i) assist and advise the Equity Committee in its review, analysis of, and negotiations regarding the terms of one or more plans of reorganization for the Debtors and accompanying disclosure statements and related plan documents and with respect to valuation matters; (ii) represent the Equity Committee at all hearings and other proceedings before the Court, as necessary consistent with the interests of the Equity Committee; (iii) review and analyze motions, applications, orders, statements, operating reports and schedules filed with the Court affecting equity interests and advise the Equity Committee as to their propriety, and to the extent deemed appropriate by the Equity Committee support, join or object, as applicable; and (iv) perform other legal services as may be required or are deemed to be in the interests of the Equity Committee in accordance with the Equity Committee's powers and duties as set forth in the Bankruptcy Code, Bankruptcy Rules or other applicable law. The Debtors will pay the firm according to its professionals' customary hourly rates: Title Range per Hour ----- -------------- Partners $340 to $800 Special Counsel and Counsel $290 to $550 Associates $235 to $390 Paraprofessionals $140 to $265 These Saul Ewing professionals will have primary responsibility for providing services to the Equity Committee: Name Title Rate per Hour ---- ----- ------------- John J. Jerome Partner - Bankruptcy $800 and Restructuring Dept. Joyce A. Kuhns Partner - Bankruptcy $520 and Restructuring Dept. Edith K. Altice Associate - Bankruptcy $315 and Restructuring Dept. John F. Stoviak Partner - Litigation Dept. $700 Timothy Callahan Partner - Litigation Dept. $580 The Debtors will reimburse Saul Ewing for expenses incurred. John J. Jerome, Esq., at Saul Ewing, discloses that his firm represents RBC Capital Markets and Brookfield Asset Management in matters unrelated to the Debtors' Chapter 11 cases. Moreover, he says that Saul Ewing represented certain parties in matters unrelated to the Debtors' Chapter 11 cases, a list of which is available for free at: http://bankrupt.com/misc/ggp_saulewingformerclients.pdf Despite these disclosures, Mr. Jerome maintains that Saul Ewing represents no interest adverse to the Debtors, the Debtors' individual creditors or the Equity Committee. Accordingly, Saul Ewing is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. Prior to entry of the order, John J. Jerome, Esq., a member of Saul Ewing LLP, informed the Court that as of February 3, 2010, no objections were served to the Equity Committee's application to retain Saul Ewing as the Equity Committee's counsel. Saul Ewing has not received any informal objections to the Application, he added. About General Growth Properties Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Reports Public Offering of Aliansce Stock --------------------------------------------------------- General Growth Properties, Inc., announced that Aliansce Shopping Centers S.A. has completed an initial public offering of Aliansce's common shares on the Brazilian Stock Exchange, or BM&FBovespa. GGP did not sell any of its Aliansce shares in the offering and now has approximately a 31.4% ownership interest in Aliansce, which develops, owns and manages shopping centers in Brazil. The initial public offering involved 65,000,000 of Aliansce's common shares, with each share priced at R$9.00 (equivalent to approximately US$4.86). Aliansce sold 50,000,000 shares in the offering and selling shareholders other than GGP sold 15,000,000 shares. The securities were not registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. About General Growth Properties Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: To Lower Miller Buckfire Cap to $30.2 Million ------------------------------------------------------------- General Growth Properties Inc. and its units ask the Court to approve a third supplement to the engagement of Miller Buckfire & Co., LLC, as their financial advisor. The Debtors and Miller Buckfire wish to amend the terms of the engagement to fix the firm's fees at $30,250,000, thus lowering the total compensation payable to Miller Buckfire from the prior maximum of $33,000,000. The terms of the Third Supplement are: (a) At the request of General Growth Properties, Inc., Miller Buckfire will deliver a Fairness Opinion, for which Miller Buckfire will receive a fee of $3,000,000 upon delivery of the Fairness Opinion; provided, however, that 100% of the Opinion Fee will be credited against a Fixed Fee. (b) Miller Buckfire has agreed to forgo any Financing Fee in connection with its retention. The effect of this is (i) to eliminate any possible difference in fees for Miller Buckfire should the Debtors pursue one type of transaction over another, example, a financing rather than an M&A transaction, or vice versa, and (ii) more closely mirror the fee structure contemplated by UBS Securities LLC's retention. (c) The total amount of all fees actually paid to Miller Buckfire by the Debtors will be $30,250,000. Accordingly, upon consummation of a Transaction, Miller Buckfire will be paid $30,250,000, provided that all fees actually paid to Miller Buckfire by the Debtors will be credited against the fixed fee. This represents a reduction of $2,750,000 from the previous potential maximum fee of $33,000,000. This reduction was agreed to by Miller Buckfire in consideration of the Debtors' proposed employment of UBS. At the Debtors' behest, the Court shortened the notice period with respect to the amended engagement and scheduled a hearing on the amended engagement for February 22, 2010. Objections are due February 17. About General Growth Properties Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GHOST TOWN: BB&T Wants Case Converted to Chapter 7 Liquidation -------------------------------------------------------------- Branch Banking and Trust Company asks the U.S. Bankruptcy Court for the Western District of North Carolina to convert Ghost Town Partners, LLC's Chapter 11 case to on under Chapter 7. BB&T is the holder of a secured interest in certain property owned by the Debtor and is a party-in-interest in the Debtor's Chapter 11 case. BB&T relates that the Debtor: -- has not requested Court authority to use cash collateral; -- engaged in the unauthorized use of cash collateral, and violated the operating order; -- failed to file its monthly reports for the month of November and December 2009; -- failed to pay 2009 property taxes; and -- failed to file an application to employ Steve Shiver, an insider, or Global Management Services, his related company, despite being directed to do so by Judge J. Craig Whitley at a hearing held on August 19, 2009. Based in Waynesville, North Carolina, Ghost Town Partners, LLC, operates an amusement park. The Debtor filed for Chapter 11 protection on March 11, 2009 (Bankr. W. D. N.C. Case No. 09- 10271). David G. Gray, Esq., at Westall, Gray, Connolly & Davis, P.A., and William E. Cannon, Jr., at Brown, Ward & Haynes P.A., represent the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor listed total assets of $13,035,300 and total debts of $12,305,672. GLOBAL CROSSING: Iridian Asset Management Reports 5.2% Stake ------------------------------------------------------------ Iridian Asset Management LLC; David L. Cohen; and Harold J. Levy disclosed that as of December 31, 2009, they may be deemed to beneficially own in the aggregate 3,131,745 shares or roughly 5.2% of the common stock of Global Crossing Limited. Effective June 30, 2009, Messrs. Cohen and Levy indirectly acquired ownership and control of 100% of the equity interest of Iridian from BIAM (US) Inc., an indirect wholly owned subsidiary of The Governor and Company of the Bank of Ireland. Thus, on that date, Messrs. Cohen and Levy may be deemed to have acquired beneficially ownership of all shares of Common Stock beneficially owned by Iridian. Iridian is majority owned by Arovid Associates LLC, a Delaware limited liability company owned and controlled by the following: 12.5% by Mr. Cohen, 12.5% by Mr. Levy, 37.5% by LLMD LLC, a Delaware limited liability company, and 37.5% by ALHERO LLC, a Delaware limited liability company. LLMD LLC is owned 1% by Mr. Cohen, and 99% by a family trust controlled by Mr. Cohen. ALHERO LLC is owned 1% by Mr. Levy and 99% by a family trust controlled by Mr. Levy. About Global Crossing Based in Hamilton, Bermuda, Global Crossing Limited (NASDAQ: GLBC) and its subsidiaries are a global communications service provider, serving many of the world's largest corporations, government entities and many other telecommunications carriers, providing a full range of Internet Protocol and managed data and voice products and services. The Company's network delivers services to nearly 700 cities in more than 60 countries and six continents around the world. The Company operates as an integrated global services provider with operations in North America, Europe, Latin America and a portion of the Asia/Pacific region, providing services that support a migration path to a fully converged IP environment. Global Crossing reported a net loss of US$73 million for the three months ended September 30, 2009, from a net loss of US$72 million for the year ago period. Global Crossing reported a net loss of US$104 million for the nine months ended September 30, 2009, from a net loss of US$232 million for the year ago period. At September 30, 2009, Global Crossing had US$2,463,000,000 in total assets against US$2,796,000,000 in total liabilities, resulting in US$333,000,000 in stockholders' deficit. GREEN DRAGON: Posts $29,000 Net Loss in December Quarter -------------------------------------------------------- Green Dragon Wood Products, Inc., reported a net loss of $29,082 on revenue of $2,768,964 for the three months ended December 31, 2009, compared with a net loss of $148,020 on revenue of $3,217,503 for the same period of 2008. The decrease in net loss of $118,938 or 80.36% resulted primarily from an increase in gross profit and a decrease in overall general and administrative expenses. For the nine months ended December 31, 2009, the Company reported net income of $88,406 on revenue of $9,006,218, compared to net income of $36,357 on revenue of $11,709,476 for the same period a year ago. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $7,962,722 in total assets, $6,012,274 in total liabilities, and $1,950,448 in total stockholders' equity. 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?52b5 Going Concern Doubt For the nine months ended December 31, 2009, the Company incurred a negative operating cash flow of $273,840. The continuation of the Company as a going concern through December 31, 2010, is dependent upon the continuing financial support of its shareholders and credit facility from the banks. Also, the Company is currently pursuing the additional financing for its operations. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations. "These factors raise substantial doubt about the Company's ability to continue as a going concern." About Green Dragon Based in Kowloon, Hong Kong, Green Dragon Wood Products, Inc., was incorporated under the laws of the State of Florida on September 26, 2007. The Company, through its subsidiaries, mainly engages in re-sale and trading of wood logs, wood lumber, wood veneer and other wood products in Hong Kong. HEALTHSPRING INC: S&P Assigns 'B+' Rating on $350 Mil. Loan ----------------------------------------------------------- Standard & Poor's Ratings Services said that it assigned its 'B+' issue-level rating to HealthSpring Inc.'s new $350 million senior credit facilities, which consist of a five-year $175 million term loan and a four-year $175 million revolver. At the same time, Standard & Poor's withdrew its 'B+' issue-level ratings on HealthSpring's prior senior credit facilities which were originally scheduled to mature in October 2012. As part of the transaction, HealthSpring used funds borrowed under its new credit facilities, along with cash on hand, to pay down $237 million in outstanding term loans under the previous credit facilities. In addition, Standard & Poor's affirmed its 'B+' counterparty credit rating on the company. The outlook remains stable. The rating on HealthSpring reflects strengths such as its established niche market position in Medicare Advantage (MA) and Medicare Part D products, a good earnings profile based on historical and prospective operating margins, and a conservative, liquid investment portfolio. Conversely, rating weaknesses include the company's narrow product scope, limited geographic diversification, the historical level of capitalization at the regulated subsidiaries (which is improving), and large amount of goodwill and intangibles on the balance sheet. In addition, S&P remains concerned about the uncertainty regarding the government's long-term funding of the private Medicare market and the direction of prospective MA rate increases/cuts. HealthSpring's debt leverage and interest coverage metrics will improve as a result of the transaction. "S&P considers HealthSpring's credit metrics to be clearly supportive of the current rating, and S&P expects continued improvement based on the company's debt-reduction plan and earnings guidance for 2010," noted Standard & Poor's credit analyst James Sung. "If HealthSpring were to fully access its $175.0 million revolver, its credit ratios would remain consistent with the rating." S&P's stable outlook reflects its view that HealthSpring is well positioned to continue growing membership and generate stable margins in 2010 despite the weakened MA rate environment. However, S&P would consider an upgrade over the next 18 months if HealthSpring is able to meet key 2010 operational targets for membership, pretax income, and return on revenue as well as maintain a financial profile that exhibits sustained balance sheet deleveraging and improved statutory capitalization. S&P has historically viewed HealthSpring's statutory capitalization as a rating weakness, but to the extent that debt leverage remains below 20% and no double leverage adjustment is necessary in S&P's capital model, S&P's view of statutory capitalization could change and help drive an upgrade. Other rating considerations would likely include the 2011 MA rate announcement and any other any federal/regulatory movement affecting the private Medicare sector or broader health insurance industry. HHI HOLDINGS: S&P Assigns Corporate Credit Rating at 'B+' --------------------------------------------------------- Standard & Poor's Ratings Services said it has assigned its 'B+' corporate credit rating to Novi, Michigan-based automotive supplier HHI Holdings LLC. The outlook is stable. At the same time, S&P assigned a 'B+' issue-level rating and '4' recovery rating to HHI's proposed $240 million senior secured term loan. The '4' recovery rating indicates S&P's expectation that lenders would receive average (30% to 50%) recovery in the event of a payment default. "The ratings reflect what S&P considers to be HHI's weak business risk profile and aggressive financial risk profile," said Standard & Poor's credit analyst Gregg Lemos Stein. S&P's business risk assessment incorporates the multiple industry risks facing automotive suppliers, including volatile demand, high fixed costs, intense competition, and severe pricing pressures. In addition, S&P considers HHI's concentrated end-market customer base to be a key risk factor, as more than half of its backlog of future revenues is tied directly or indirectly to General Motors Co. GM is in the early stages, in S&P's view, of an uncertain recovery from its 2009 restructuring. Although GM's production has recently increased amid a broader stabilization of U.S. auto demand, S&P believes future production could remain highly volatile. In addition, the long-term direction of GM's market share is unknown, and S&P believes that any additional significant market share losses by GM would adversely affect HHI. S&P assumes that U.S. light-vehicle sales will increase to about 11.7 million units in 2010, a 12% increase over 2009 levels but still very weak by recent historical standards. S&P believes the year-over-year increase in vehicle production -- and hence supplier revenues -- could be slightly higher than this amount, following automakers' extensive reductions in dealer inventories in 2009. For 2011, S&P assumes that sales will recover to 13.7 million units. In S&P's opinion, HHI's EBITDA margins compare favorably with those of similarly rated auto suppliers, particularly given recent weak industry demand. Margins are fair for each of the three main business segments -- forging, wheel bearings, and timing systems - - S&P believes the company's market share in forging is higher than in its other segments, and that the remaining forging competitors are less formidable than those in bearings or timing systems. S&P believes HHI's fair margins partly reflect its focus on operational cost reductions and factory productivity, as well as favorable contract negotiations with key customers amid the downturn and the asset purchase process. The new entity has no legacy pension or other postemployment benefit expenses. It renegotiated labor contracts to allow for more cost flexibility and reduced job classifications. Still, S&P considers HHI's margins to be sensitive to future demand, given its high operating leverage. Although S&P believes the company purchased assets at attractive prices and has a management team experienced in the auto sector, its track record in its current form and financial risk profile are limited. In S&P's opinion, HHI will have sufficient liquidity following the proposed recapitalization. The stable outlook reflects S&P's belief that HHI can maintain positive free operating cash flow in the year ahead, given the relatively favorable trend for production in North America. However, visibility in the auto sector is notoriously limited. S&P believes economic sluggishness could keep sales levels low and cause a downturn in future production, particularly in light of recent robust production and inventory restocking. S&P also considers GM's ability to maintain its market share a key factor for HHI's performance. S&P could lower the rating if free operating cash flow generation turns negative for consecutive quarters, or if debt to EBITDA, including S&P's adjustments, exceeds 5x. For example, S&P estimates that debt to EBITDA could reach this threshold if HHI's gross margins excluding D&A fall by 300 basis points compared to 2009's level. A steep slide in GM's U.S. market share to 15% from the 20% level in 2009 could also result in a sufficient decline in EBITDA and cash flow to warrant a lower rating. S&P considers an upgrade highly unlikely over the next year based on S&P's current weak business risk assessment and HHI's concentrated ownership. HIGH ROCK: Creditor Blackstone Wants Chapter 11 Trustee Appointed ----------------------------------------------------------------- Creditor Blackstone Realty Investors, LLC, asks the U.S. Bankruptcy Court for the District of Nevada to appoint a Chapter 11 trustee in the Chapter 11 case of High Rock Holding, LLC. Blackstone relates that a Chapter 11 trustee is needed because: -- High Rock's manager, Michael Stewart's fraud and dishonesty in dealing with creditors on behalf of the entities he owns and controls, including High Rock, has been confirmed in the judgment for alter ego liability issued against him and High Rock in the American AgCredit Lawsuit; and -- Mr. Stewart's control over and comingling of the assets of his many entities, including High Rock, was at the heart of the alter ego judgment issued against him and High Rock. American AgCredit established that Mr. Stewart stripped many millions of dollars in assets out of the defendant entities that he controlled in order to avoid payment to a creditor, then tried to conceal his misconduct by, among other things, repeatedly testifying falsely in court. Blackstone adds that it is essential to have an independent trustee take over High Rock's financial affairs and assets during the course of the bankruptcy to prevent mismanagement, and abuses engage in by Mr. Stewart to advance his own interests at the expense of creditors. A hearing on the motion to appoint Chapter 11 trustee is scheduled for March 31, 2010 at 3:00 p.m. at GWZ-Courtroom 1, Young Bldg. Carson City, Nevada-based High Rock Holding, LLC, filed for Chapter 11 bankruptcy protection on November 8, 2009 (Bankr. D. Nev. Case No. 09-53989). Kenneth D. Sisco, Esq., at Sisco& Naramore assists the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. HSH DELAWARE: Organizational Meeting to Form Panel on Feb. 18 ------------------------------------------------------------- Roberta A. DeAngelis, Acting United States Trustee for Region 3, will hold an organizational meeting on February 18, 2010, at 2:00 p.m. in the bankruptcy case of HSH Delaware GP LLC. The meeting will be held at J. Caleb Boggs Federal Building, 844 King Street, Room 5209, Wilmington, DE 19801. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. About HSH Delaware HSH Delaware GP LLC, and six affiliates filed for Chapter 11 on January 21, 2010 (Bankr. D. Del. Case No. 10-10187). Nine HSH partnerships were created in 2006 to buy a 26% stake in HSH Nordbank AG, the world's largest shipping financier, from WestLB AG for about EUR1.25 billion ($1.76 billion). The partnerships received unsecured term and revolving loans of EUR375 million from ABN AMRO bank to fund the purchase of HSH Nordbank shares. In September 2009, creditors with claims aggregating $27.8 million filed a petition to send affiliate HSH Delaware LP to Chapter 7 liquidation (Bankr. D. Del. Case No. 09-13145). Commerzbank AG, Lloyds TSB Bank Plc, ABN Amro Bank NV, Calyon, Royal Bank of Scotland Plc and Landsbanki Islands HF filed the involuntary Chapter 7 petition. John Henry Knight, Esq., and Lee E. Kaufman, Esq., at Richards, Layton & Finger, P.A., represent HSH Delaware GP and its affiliates. McCarthy Tetrault LLP is the Canadian counsel. H Ronald Weissman is the chief restructuring officer. HSH, based in Wilmington, Delaware, listed as much as $500 million in both assets and debt in Chapter 11 documents filed in Bankruptcy Court. According to Reuters, people familiar with the bankruptcy said the partnerships had total assets of $680 million. HSH DELAWARE: Taps Richards Layton as Bankruptcy Counsel -------------------------------------------------------- HSH Delaware GP LLC, et al., have asked for permission from the U.S. Bankruptcy Court for the District of Delaware to employ Richards, Layton & Finger, P.A., as bankruptcy counsel, nunc pro tunc to the commencement date. RL&F will, among other things: a. prepare on behalf of the HSH entities all motions, applications, answers, orders, reports, and papers in connection with the administration of the HSH entities' estates; b. prepare the HSH entities' plan of reorganization; c. prepare the HSH entities' disclosure statement and any related documents and pleadings necessary to solicit votes on the HSH entities' plan of reorganization; and d. prosecute on behalf of the HSH entities the proposed plan of reorganization and see approval of transactions contemplated therein and in any amendments thereto. Mark D. Collins, a director of RL&F, says that the firm will be paid based on the hourly rates of its personnel: Mark D. Collins $675 Robert J. Stearn $600 John H. Knight $600 Lee E. Kaufman $315 Zachary I. Shapiro $290 Andrew C. Irgens $255 Cathy Greer $195 Mr. Collins assures the Court that RL&F is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. HSH Delaware GP LLC is based in Wilmington, Delaware. Nine HSH partnerships were created in 2006 to buy a 26% stake in HSH Nordbank AG, the world's largest shipping financier, from WestLB AG for about EUR1.25 billion ($1.76 billion). The partnerships received unsecured term and revolving loans of EUR375 million from ABN AMRO bank to fund the purchase of HSH Nordbank shares. As reported by the Troubled Company Reporter on September 9, 2009, creditors with claims aggregating $27.8 million filed a petition to send affiliate HSH Delaware LP to Chapter 7 liquidation (Bankr. D. Del. Case No. 09-13145). Commerzbank AG, Lloyds TSB Bank Plc, ABN Amro Bank NV, Calyon, Royal Bank of Scotland Plc and Landsbanki Islands HF filed the involuntary Chapter 7 petition. HSH Delaware filed for Chapter 11 bankruptcy protection on January 21, 2010 (Bankr. D. Delaware Case No. 10-10187). The Company listed $100,000,001 to $500,000,000 in assets and $100,000,001 to $500,000,000 in liabilities. HSH Delaware's affiliates -- HSH Delaware L.P.; HSH Luxembourg S.a.r.l.; HSH Luxembourg Coinvest S.a.r.l.; HSH Delaware GP LLC; HSH Alberta I L.P.; HSH Alberta II L.P.; HSH Alberta V L.P.; HSH Coinvest (Alberta) L.P.; JCF HSH (DE) GP LP; HSH Delaware L.P.; HSH Luxembourg S.a.r.l.; and HSH Luxembourg Coinvest S.a.r.l. -- also filed separate Chapter 11 petitions. HSH DELAWARE: Wants Barlow Lyde as United Kingdom Counsel --------------------------------------------------------- HSH Delaware GP LLC, et al., have asked for permission from the U.S. Bankruptcy Court for the District of Delaware to employ Barlow Lyde & Gilbert LLP as United Kingdom counsel, nunc pro tunc to the commencement date. BLG will advise the Debtors on any English law issues arising following the Debtors' commencement of the Chapter 11 cases including providing support in connection with ongoing proceedings. Timothy Simon Strong, a partner in BLG, says that the firm will be paid based on the hourly rates of its personnel: Timothy Strong GBP500 Dorothy Herman GBP375 Trainee Solicitor GBP135 Paralegal/Litigation Associate GBP135 Mr. Strong assures the Court that BLG is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. By separate applications, the Debtors are seeking to employ and retain Richards, Layton & Finger, P.A., as counsel to the Debtors; Walkers Global as Cayman Islands counsel to the Debtors; and McCarthy Tetrault as Canadian counsel to the Debtors. Due to the complexity and international nature of the Chapter 11 cases, the Debtors submit that it is essential to employ United Kingdom, Canadian and Cayman Islands counsel in order to fully protect the rights of the Debtors. The Chapter 11 cases follow disputes between the Debtors and various lenders under October 19, 2006 Credit Facility Agreements. The governing law of the Credit Facility Agreements is English law. The Debtors' rights and obligations under the agreements may be relevant to the Chapter 11 cases. HSH Delaware GP LLC is based in Wilmington, Delaware. Nine HSH partnerships were created in 2006 to buy a 26% stake in HSH Nordbank AG, the world's largest shipping financier, from WestLB AG for about EUR1.25 billion ($1.76 billion). The partnerships received unsecured term and revolving loans of EUR375 million from ABN AMRO bank to fund the purchase of HSH Nordbank shares. As reported by the Troubled Company Reporter on September 9, 2009, creditors with claims aggregating $27.8 million filed a petition to send affiliate HSH Delaware LP to Chapter 7 liquidation (Bankr. D. Del. Case No. 09-13145). Commerzbank AG, Lloyds TSB Bank Plc, ABN Amro Bank NV, Calyon, Royal Bank of Scotland Plc and Landsbanki Islands HF filed the involuntary Chapter 7 petition. HSH Delaware filed for Chapter 11 bankruptcy protection on January 21, 2010 (Bankr. D. Delaware Case No. 10-10187). The Company listed $100,000,001 to $500,000,000 in assets and $100,000,001 to $500,000,000 in liabilities. HSH Delaware's affiliates -- HSH Delaware L.P.; HSH Luxembourg S.a.r.l.; HSH Luxembourg Coinvest S.a.r.l.; HSH Delaware GP LLC; HSH Alberta I L.P.; HSH Alberta II L.P.; HSH Alberta V L.P.; HSH Coinvest (Alberta) L.P.; JCF HSH (DE) GP LP; HSH Delaware L.P.; HSH Luxembourg S.a.r.l.; and HSH Luxembourg Coinvest S.a.r.l. -- also filed separate Chapter 11 petitions. HSH DELAWARE: Seeks to Hire Walkers as Cayman Islands Counsel ------------------------------------------------------------- HSH Delaware GP LLC, et al., have sought permission from the U.S. Bankruptcy Court for the District of Delaware to employ Walkers Global as Cayman Islands counsel, nunc pro tunc to the commencement date. Walkers will, among other things: a. advise the Debtors in respect of any Cayman Islands law issues arising in the course of their Chapter 11 cases; and b. represent the Debtors' interests in any proceedings in the Cayman Islands. Leil Lupton, a partner of Walkers, says that the firm will be paid based on the hourly rates of its personnel: Rolf Lindsay $750 Colette Wilkins $750 Neil Lupton $750 Vahid Chittleborough $650 Lindsay Luttermann $625 Paraprofessionals $225 Ms. Lupton assures the Court that Walkers is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. By separate applications, the Debtors are seeking to employ and retain Richards, Layton & Finger, P.A., as general bankruptcy and reorganization counsel, McCarthy Tetrault LLP as Canadian counsel to the Debtors, and Barlow Lyde & Gilbert LLP as United Kingdom counsel to the Debtors. Due to the complexity and international nature of the Chapter 11 cases, the Debtors submit that it is essential to employ Canadian, Cayman Islands and United Kingdom counsel in order to fully protect the rights of the Debtor. HSH Delaware GP LLC is based in Wilmington, Delaware. Nine HSH partnerships were created in 2006 to buy a 26% stake in HSH Nordbank AG, the world's largest shipping financier, from WestLB AG for about EUR1.25 billion ($1.76 billion). The partnerships received unsecured term and revolving loans of EUR375 million from ABN AMRO bank to fund the purchase of HSH Nordbank shares. As reported by the Troubled Company Reporter on September 9, 2009, creditors with claims aggregating $27.8 million filed a petition to send affiliate HSH Delaware LP to Chapter 7 liquidation (Bankr. D. Del. Case No. 09-13145). Commerzbank AG, Lloyds TSB Bank Plc, ABN Amro Bank NV, Calyon, Royal Bank of Scotland Plc and Landsbanki Islands HF filed the involuntary Chapter 7 petition. HSH Delaware filed for Chapter 11 bankruptcy protection on January 21, 2010 (Bankr. D. Delaware Case No. 10-10187). The Company listed $100,000,001 to $500,000,000 in assets and $100,000,001 to $500,000,000 in liabilities. HSH Delaware's affiliates -- HSH Delaware L.P.; HSH Luxembourg S.a.r.l.; HSH Luxembourg Coinvest S.a.r.l.; HSH Delaware GP LLC; HSH Alberta I L.P.; HSH Alberta II L.P.; HSH Alberta V L.P.; HSH Coinvest (Alberta) L.P.; JCF HSH (DE) GP LP; HSH Delaware L.P.; HSH Luxembourg S.a.r.l.; and HSH Luxembourg Coinvest S.a.r.l. -- also filed separate Chapter 11 petitions. INNOVATIVE COS: Wants Ch. 11 Plan Filing Extended Until June 13 --------------------------------------------------------------- Innovative Companies LLC and its debtor-affiliates ask the Hon. Dorothy T. Eisenberg of the U.S. Bankruptcy Court for the Eastern District of New York to extend their exclusive period to file a Chapter 11 plan from March 15, 2010, to June 13, 2010, and to solicit acceptances of that plan from May 12, 2010, to August 10, 2010. The Debtors relate that as of the date of the hearing on this motion, they will have sold certain of their assets to either its current lender Woodside Agency Services, LLC, as agent for itself and Woodside Agency Services IV, LLC, Woodside Capital Partners IV QP, LLP, Woodside Capital Partners, V, LLC and Woodside Capital Partners VQ, PLLC, or a third party. The Debtors add that they will be left with certain, as yet not fully identified, assets which they will need to either liquidate, sell or reorganize. The Debtors will need additional time to finalize, discuss and negotiate with Woodside, as necessary, any plans, and facilitate the sale of some or all of the Debtors' remaining assets. The Debtors propose a hearing on the requested extensions on February 18, 2010, at 11:00 a.m. Headquartered in Hauppauge, New York, The Innovative Companies LLC and its affiliates filed for Chapter 11 protection on April 17, 2009 (Bankr. E.D.N.Y. Lead Case No. 09-72669). Leslie A. Berkoff, Esq., at Moritt Hock Hamroff Horowitz LLP, represents the Debtors in their restructuring efforts. David M. Banker, Esq., at Lowenstein Sandler PC, represents the official committee of unsecured creditors as counsel. In its petition, the Company listed between $10 million and $50 million each in assets and debts. INTEGRATED BIOPHARMA: Posts $996,000 Net Loss in Dec. Quarter ------------------------------------------------------------- Integrated BioPharma, Inc. reported a net loss applicable to common shareholders of $996,000 for the three months ended December 31, 2009, as compared to $8.2 million for the three months ended December 31, 2008. This decrease in net loss applicable to common shareholders of approximately $7.2 million is primarily the result of decreases in (i) operating losses from continuing operations of $420,000, (ii) income tax expense of $6.0 million; and (iii) net losses from discontinued operations of $717,000. Sales, net, for the three months ended December 31, 2009, and 2008, were $8.8 million and $11.2 million, respectively, a decrease of $2.4 million or 21.7%. The decrease in net sales is the result of decreased sales in the Company's branded proprietary Nutraceutical product line of approximately $2.5 million in part due to decreased sales to the club stores that the Company has been dependent on for sales for its products. In the three months ended December 31, 2009, the Company experienced increased competition in the market place for product placement in the club level stores. The remaining Nutraceutical product lines had net sales increases of approximately $100,000 compared to the prior period. Six Months Results Net loss applicable to common shareholders for the six months ended December 31, 2009, was $1.9 million as compared to $12.5 million for the six months ended December 31, 2008. Sales, net, for the six months ended December 31, 2009, and 2008, were $19.8 million and $20.5 million, respectively, a decrease of $754 or 3.7%. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $16.6 million in total assets and $19.1 million in total liabilities, resulting in a $2.4 million shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $12.3 million in total current assets available to pay $16.0 million in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?5287 Going Concern Doubt The Company has incurred recurring operating losses and negative operating cash flows for the three consecutive fiscal years ended in June 30, 2009, including a net loss attributable to common stockholders of $19.4 million and negative operating cash flows of $2.8 million for the year ended June 30, 2009. For the six months ended December 31, 2009, the Company had a net operating loss of $530,000 and a net loss of $1.9 million. At December 31, 2009, the Company had cash and cash equivalents of $1.5 million, a working capital deficit of $3.7 million, primarily attributable to the amended Notes Payable in the amount of $7.8 million, which were due on November 15, 2009, and an accumulated deficit of $46.3 million. As of February 12, 2010, the Company has not repaid its amended Notes Payable in the amount of $7.8 million, nor has it completed the negotiations of modified terms, including an extension or refinancing thereof. The Company also has not received any demand of payment from the amended Notes Payable holders nor have they exercised their rights to foreclose on substantially all of the assets of the Company, which were pledged as collateral for the Company's obligation under the amended Notes Payable. "These factors raise substantial doubt as to our ability to continue as a going concern." Assuming the Company is able to raise additional capital and/or refinance its Notes Payable, and it is not adversely affected by the current economic conditions, the Company believes that its available capital as of December 31, 2009, will enable it to continue as a going concern through the third quarter of the fiscal year ending June 30, 2011. There can be no assurance that the Company will be able to raise additional capital or successfully refinance the amended Notes Payable of at least $7.8 million, upon acceptable terms, nor that the current economic conditions will not negatively impact it. If the Company is unable to raise additional capital or successfully refinance its amended Notes Payable of at least $7.8 million upon acceptable terms, it would have a material adverse effect on the Company. About Integrated BioPharma Based in Hillside, N.J., Integrated BioPharma, Inc. (INBP.OB) -- -- http://www.ibiopharma.com/-- together with its subsidiaries, manufactures, distributes, markets, and sells vitamins and nutritional supplements in the United States. INTEGRATED HEALTHCARE: Posts $1.8-Mil. Loss in Q3 Ended Dec. 31 --------------------------------------------------------------- Integrated Healthcare Holdings, Inc., reported a net loss of $1.8 million for the three months ended December 31, 2009, compared to net income of $2.4 million for the same period in fiscal year 2009. Due to losses incurred during the nine months ended December 31, 2009, the Company fully reversed the income tax expense previously recorded during the three months ended June 30, 2009. This resulted in a tax benefit of $621,000 for the three months ended December 31, 2009. Net operating revenues for the three months ended December 31, 2009, decreased 5.7% compared to the same period in fiscal year 2009, from $100.3 million to $94.6 million. Net operating revenues for the three months ended December 31, 2009, included $2.3 million received by Pacific Coast Holdings Investment, LLC ("PCHI") in a settlement with a third party for additional back rent. Net operating revenues for the three months ended December 31, 2008, included a lump sum amendment to the California Medical Assistance Commission ("CMAC") agreement for $3.5 million. Essentially all net operating revenues come from external customers. The largest payers are the Medicare and Medicaid programs accounting for 57% and 56% of the net operating revenues for the three months ended December 31, 2009, and 2008, respectively. The operating income for the three months ended December 31, 2009, was $2.3 million compared to $6.7 million for the three months ended December 31, 2008, primarily due to a lump sum amendment to the CMAC agreement for $3.5 million in fiscal year 2009. This was partially offset by a $2.3 million settlement between PCHI and a third party for additional back rent received during the three months ended December 31, 2009. Nine Months Results Net operating revenues for the nine months ended December 31, 2009, decreased 0.1% compared to the same period in fiscal year 2009, from $289.3 million to $289.0 million. Net operating revenues for the nine months ended December 31, 2009, included $2.3 million received by PCHI in a settlement with a third party for additional back rent. Net operating revenues for the nine months ended December 31, 2008, included a lump sum amendment to the CMAC agreement for $3.5 million. During the nine months ended December 31, 2009, the Company recorded an impairment loss of $11.3 million relating to the amounts due from Medical Capital Corporation, the Company's Lender. The operating income for the nine months ended December 31, 2009, was $8.8 million compared to $5.2 million for the nine months ended December 31, 2008. Net loss for the nine months ended December 31, 2009 was $1.5 million compared to $5.1 million for the same period in fiscal year 2009. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $131.7 million in total assets and $177.4 million in total liabilities, resulting in a $45.7 million shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $77.4 million in total current assets available to pay $171.3 million in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?5264 Going Concern Doubt As of December 31, 2009, the Company has a working capital deficit of $93.8 million and accumulated total deficiency of $45.7 million. Medical Capital Corporation, the Company's Lender, collected and retained $11.3 million in excess of the amounts due to it, and the Lender is no longer advancing funds to the Company, under the $50 million Revolving Credit Agreement. As a result, the Company currently relies solely on its cash receipts from payers to fund its operations, and any significant disruption in such receipts could have a material adverse effect on the Company. At December 31, 2009, the Company was in not in compliance with all debt covenants and, as noted above, the Lender is in default of the $50 million Revolving Credit Agreement. As a result, the Company's noncurrent debt of approximately $81.0 million will continue to be classified as current in the Company's consolidated balance sheet as of December 31, 2009. Notwithstanding the uncured default by the Lender on the $50 million Revolving Credit Agreement, as of December 31, 2009, the Company has accrued, but not paid, interest totaling $4.2 million for the period from July 1 through December 31, 2009, which could give the Lender cause to place the debt in default. "These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern and indicate a need for the Company to take action to continue to operate its business as a going concern." About Integrated Healthcare Headquartered in Santa Ana, Calif., Integrated Healthcare Holdings, Inc. (IHHI) -- http://www.ihhioc.com/ -- owns and operates four acute care hospitals and ancillary health businesses in Orange County, California. IRVINE SENSORS: Balance Sheet Upside-Down by $4-Mil. at Dec. 27 --------------------------------------------------------------- Irvine Sensors Corporation reported assets of $5.23 million and $9.23 million, resulting to a $4.0 million stockholders' deficit at the end of the quarterly period ended Dec. 27, 2009. The Company incurred a $1.71 million net loss on $3.21 million total revenues for the 13 weeks ended Dec. 27, 2009, compared with a $2.11 million net loss on $2.74 million of total revenues for the 13 weeks ended Dec. 28, 2008. The company said was unable to file its Form 10-Q for the fiscal quarter ended Dec. 27, 2009, within the prescribed period because it has been engaged in negotiations regarding the settlement of extensive litigation. A full-text copy of the company's financial results is available for free at http://ResearchArchives.com/t/s?52b1 About Irvine Sensors Irvine Sensors Corporation -- http://www.irvine-sensors.com/-- headquartered in Costa Mesa, California, is a vision systems company engaged in the development and sale of miniaturized infrared and electro-optical cameras, image processors and stacked chip assemblies and sale of higher level systems incorporating such products and research and development related to high density electronics, miniaturized sensors, optical interconnection technology, high speed network security, image processing and low- power analog and mixed-signal integrated circuits for diverse systems applications. Optex Systems, Inc., a Texas corporation and a wholly owned subsidiary of Irvine Sensors, on September 21, 2009, filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court in California. * * * Grant Thornton LLP in Irvine, California, in a letter dated January 9, 2009, pointed out that the Company incurred net losses of $21.6 million, $22.1 million, and $8.4 million for the years ended September 28, 2008, September 30, 2007, and October 1, 2006, respectively, and the Company has a working capital deficit of $16.1 million at September 28, 2008. "These factors, among others, raise substantial doubt about the company's ability to continue as a going concern." ITC^DELTACOM INC: Moody's Affirms 'B3' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed the B3 corporate family rating, SGL-1 speculative grade liquidity rating and positive rating outlook of ITC^DeltaCom, Inc., following the company's decision to withdraw its senior notes offering due to weaker market conditions, which would have increased pricing 200 to 250 basis points compared to the company's original expectations. Moody's also withdrew ratings on the proposed senior notes and proposed revolving credit facility, because the transaction was never completed. The proposed offering would have lessened refinancing risk, given the July 2012 maturity of the existing $10 million revolver (approximately $9 million outstanding) and the July 2013 maturity of the existing term loan (approximately $224 million outstanding). However, Moody's February 2, 2010, outlook change to positive reflected DeltaCom's fundamental performance, demonstrated ability to maintain credit metrics during the economic downturn, and expectations that it would benefit from economic recovery in its markets. Furthermore, based on the existing capital structure, DeltaCom has slightly better credit metrics, including EBITDA coverage of interest of 2.8 times and debt-to-EBITDA of 3.9 times (compared to 2.6 times and 4.1 times, respectively, under the proposed transaction). The affirmation of the SGL-1 incorporates the substantial unrestricted cash balance (approximately $80 million as of September 30, 2009) and expectations for positive free cash flow, which mitigate the minimal external liquidity (given almost full draw of the revolver) and tightening financial covenants. Although the cushion will likely shrink over the next 12 months, DeltaCom could use cash to repay debt to enhance headroom. The B3 corporate family rating continues to reflect relatively high leverage for a CLEC, limited free cash flow, the challenging competitive environment, moderate scale, and some regulatory risk. DeltaCom's demonstrated ability to control costs, evidenced by improved EBITDA margins and stable leverage during the economic downturn, and its very good liquidity support the rating. While the company remains in a turnaround phase over the near term as it shifts its revenue mix towards growth products, Moody's believe that expansionary capital spending in recent years will drive overall revenue growth in an improving employment environment. Moody's would consider an upgrade if the company is successful in further transforming its revenue mix, with expectations for leverage sustained below 3.5x and free cash flow in excess of 5% of debt. The outlook could revert to stable with expectations that leverage would remain around 4 times or that free cash flow conversion would not improve. Leverage approaching 5 times, meaningful deterioration in liquidity, or adverse regulatory developments likely to result in reduced profitability could have negative ratings implications. A summary of the actions follows. ITC^DeltaCom, Inc. -- Affirmed B3 Corporate Family Rating -- Affirmed B3 Probability of Default Rating -- Affirmed SGL-1 Speculative Grade Liquidity Rating -- $30 million First Lien Senior Secured Revolving Credit Facility due 2015, Withdrawn, Ba3, LGD1, 2% -- $325 million First Lien Senior Secured Notes (Second to the RC) due 2016, Withdrawn, B3, LGD4, 51% -- Outlook, Positive Interstate Fibernet, Inc. -- $10 million First Lien Senior Secured Revolving Credit Facility due 2012, Affirmed B2 LGD3, 35% -- $225 million First Lien Senior Secured Term Loan due 2013, Affirmed B2, LGD3, 35% -- Outlook, Positive Moody's previous rating action for Deltacom occurred on February 2, 2010, when Moody's changed the ratings outlook to positive from stable and affirmed the B3 corporate family rating. A competitive local exchange carrier headquartered in Huntsville, AL, ITC^DeltaCom, Inc., serves small and medium-sized businesses in 45 markets in 8 states in the southeastern United States. Deltacom generated approximately $480 million in revenue for the twelve months ended September 30, 2009. ITC DELTACOM: S&P Affirms Corporate Credit Rating at 'B' -------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed both the 'B' corporate credit rating on competitive local exchange carrier ITC DeltaCom Inc. and the 'B-' issue rating on the company's funding unit's secured bank loan facilities. This follows the announcement by the company that it has withdrawn its proposed $325 million secured notes issue and new $30 million revolving credit due to significantly weaker market conditions, which affected the cost of capital for the deal. The outlook is stable. S&P has withdrawn the 'BB-' issue rating and '1' recovery rating on the revolving credit facility, and the 'B-' issue rating and '5' recovery rating on the notes. "While the proposed financing would have provided the company some benefits, including the removal of restrictive maintenance covenants and an improved maturity schedule," said Standard & Poor's credit analyst Catherine Cosentino, "the existing credit profile, including the current financial structure, still supports the 'B' corporate credit rating." In particular, while the existing term loan contains financial maintenance covenants that tighten in 2010 and provide the company limited flexibility to weather execution errors or an unforeseen drop in the base of business, S&P still expect it to continue to meet these covenants. Available cash balances, coupled with expectations that the company will be at least net free cash flow break-even in 2010, provide it flexibility to pay down debt to, and remain in compliance with, financial covenants. JOSEPH MILANOWSKI: Could Not Pay Creditors, Trustee Says -------------------------------------------------------- John G. Edwards at Las Vegas Review-Journal reports that a trustee informed creditors that former USA Capital President Joseph Milanowski's bankruptcy case would yield little or no recovery of losses suffered when USA Capital collapsed in 2006. Mr. Milanowski pleaded guilty to one count of wire fraud at USA Capital, Mr. Edwards says. Joseph Milanowski was forced to file for Chapter 11 bankruptcy by the Nevada State Bank and USA Capital entities but his case was converted to Chapter 7 liquidation to pay off creditors. KEMET CORP: Moody's Withdraws 'B2' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service has withdrawn all ratings previously assigned to KEMET Corporation, including the B2 corporate family rating, the B2 probability of default rating, the B2 rating to its proposed $275 million issuance of senior notes, and the SGL-2 speculative grade liquidity rating. This rating withdrawal is in response to yesterday's announcement from KEMET that the company has indefinitely postponed its intent to offer $275 million senior notes due 2018, as a result of unfavorable market conditions. Moody's most recent rating action for KEMET was on February 3, 2010, when Moody's assigned first-time ratings to the Company. KEMET Corporation, headquartered in Greenville, South Carolina, is a large manufacturer and supplier of passive electronic components, specializing in tantalum, multilayer ceramic, film, solid aluminum, electrolytic, and paper capacitors. KEMET CORP: S&P Withdraws 'B' Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services said it withdrew its 'B' corporate credit rating on Greenville, South Carolina-based Kemet Corp. and its 'B' rating on the company's planned issue of $275 million senior notes due 2018. S&P also withdrew its '4' recovery rating on the notes. The company had planned to repay the majority of its existing debt with proceeds from sale of the new notes. Kemet has announced its intention to indefinitely postpone its previously announced intent to offer $275 million in aggregate principal amount of senior notes due 2018. Kemet is a major supplier of capacitors, which are passive electronic components used to regulate the flow of electricity. They are used broadly across the global economy. LANDMARK VALLEY: Wants to Sell Personal Property to Clark Knapp -------------------------------------------------------------- Landmark Valley Homes, Inc., asks permission from the U.S. Bankruptcy Court for the Southern District of Texas to sell its 2006 Cadillac Escalade & 2004 Ford Ranger, free and clear of liens, pursuant to Section 363 of the Bankruptcy Code. The Debtor relates that the personal property vehicles are no longer needed by Debtor in its business. The Debtor also relates that the Debtor received a cash offer from Clark Knapp Honda to purchase the vehicles: (i) $10,254 for the Cadillac, and (ii) $3,000 for the Ranger. The Cadillac is subject to a first lien to GMAC, with a payoff amount of $10,254. The Ranger is paid off and the Debtor has the title in its possession. These are the best feasible offers Debtor received for the Cadillac and the Ranger. McAllen, Texas-based Landmark Valley Homes, Inc., owns and operates residential construction/real estate development business. The Company filed for Chapter 11 bankruptcy protection on January 4, 2010 (Bankr. S.D. Tex. Case No. 10-70013). John Kurt Stephen, Esq., at Cardena Whitis and Stephen, assists the Company in its restructuring effort. The Company has assets of $34,119,790, and total debts of $19,484,476. LBJ LAKEFRONT: Plan Proposes 50% Cash Payment of Unsecured Claims ----------------------------------------------------------------- LBJ Lakefront Inc. filed with the U.S. Bankruptcy Court Western District of Texas a Disclosure Statement explaining its Plan of Reorganization. The Debtors will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. According to the Disclosure Statement, the Plan proposes that the Debtor will convey the property subject to the liens of each of ABT and Compass by special warranty deed to ABT and Compass in full satisfaction of the indebtedness owed to each, and the notes and deeds of trust will be deemed fully paid and cancelled. Unsecured creditors will receive a cash payment equal to 50% of their allowed claim, payable 60 days after the effective date and a subsequent payment of the balance owed, without interest 60 days thereafter. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/LBJLakefront_DS.pdf Horseshoe Bay, Texas-based LBJ Lakefront Inc. filed for Chapter 11 bankruptcy protection on January 4, 2010 (Bankr. W.D. Texas Case No. 10-10023). Mark Curtis Taylor, Esq., at Hohmann, Taube & Summers, LLP, assists the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. LEHMAN BROTHERS: Sues Soffer & Fontainebleau for $400 Million ------------------------------------------------------------- Bloomberg News reports that Lehman Brothers Holdings Inc. sued Fontainebleau Resorts LLC and its principal, Jeffrey Soffer, seeking return of $315 million loaned to the developer. According to the report, Lehman alleges that Mr. Soffer and his Fontainebleau Resorts committed to three guarantees under a Lehman-led financing agreement to build the retail portion of the bankrupt Fontainebleau Las Vegas casino resort. A second lawsuit seeks to recover another $85 million in mezzanine financing for Lehman and other lenders. 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 US$639 billion in assets and US$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: District Court Remands Appeal on DNB Claim ----------------------------------------------------------- DnB NOR Bank ASA asked the Bankruptcy Court to allow its administrative expense claim in the sum of $2,411,681 against Lehman Brothers Holdings Inc. The administrative claim represents the diminution in currency value of the deposit, which DnB holds as collateral for the loan it provided to LBHI under their credit agreement dated March 1, 2008. The value of the collateral, which was worth $17,139,908 as of September 15, 2008, declined by nearly 14% or $2,411,681, according to DnB. The U.S. District Court for the Southern District of New York remanded the appeal filed by DnB NOR Bank ASA from Judge Peck's order denying DnB's motion for allowance and payment of its administrative claim. According to the District Court, the Debtors and DnB inked a settlement of the Appeal and other matters and asked for the Appeal to the remanded back to the Bankruptcy Court to enable it to consider the settlement in full. Judge Peck entered the order on September 15, 2009, and denied the motion for reasons stated on the record. Specifically, Judge Peck held that DnB NOR was not granted adequate protection until a status conference held on November 5, 2008, and noted that the Bank has failed to satisfy Section 507(b) of the Bankruptcy Code. Judge Peck also noted that the Bank did not satisfy the second prong of Section 507(b), that it has an administrative expense claim under Section 503(b), because the funds did not provide any real benefit to the estate. Having failed to meet the requirements of Section 507(b), Judge Peck ruled that the Bank is not entitled to setoff in relation to its asserted administrative claim. 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 US$639 billion in assets and US$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: Proposes Gibson Dunn as Special Counsel -------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek approval of the U.S. Bankruptcy Court for the Southern District of New York to employ Gibson Dunn & Crutcher LLP effective September 1, 2009. The Debtors tapped the firm to continue assisting them in their efforts to obtain control over the primary asset of LB RE Financing No. 3 Limited, a private limited company which is in administration in the United Kingdom. LBHI holds 98.1% of the claims against LB RE, which is the holder of EURO722,181,000 Class B Note due 2054 issued by Excalibur Funding No. 1 PLC, an orphan special purpose vehicle that LBHI created to issue real estate backed commercial debts. Gibson Dunn is also tasked to assist the Debtors in obtaining control over the assets of LB UK RE Holdings Ltd., a private limited company. LBHI is a primary creditor of LB UK, which is also in administration in U.K. Aside from those tasks, the firm will also advise the Debtors on other real estate financings and transactions. Gibson Dunn has previously performed legal services on behalf of the Debtors as an ordinary course professional pursuant to the Court's November 5, 2008 order. Its fees for services and expenses, however, already exceeded $1 million by September 2009, which prompted the Debtors to retain the firm as professional pursuant to section 327(e) of the Bankruptcy Code. Under the November 5 order, an ordinary course professional is required to file an employment application pursuant to sections 327 and 328 of the Bankruptcy Code in case payment to that professional exceeds $1 million for the period prior to the conversion, dismissal or entry of a confirmation in the Debtors' Chapter 11 cases. Gibson Dunn will be paid for its services at an hourly rate and will be reimbursed of any expenses incurred in connection with its employment. The firm's professionals who are expected to provide the services and their hourly rates are: Professional Hourly Rate ------------ ----------- Joulia Arnaoutova $470 Kelly Bohne $345 Carol Fabrizio $345 Amy Forbes $840 Joel Feuer $840 Jeremy Graves $400 Farshad E. More $570 Erika Randall $470 Jesse Shapiro $610 Jesse Sharf $890 Jeffrey Tyrell $495 Michael Weir GBP430 Victor Campbell GBP335 Niloufar Goharian GBP400 Wayne McArdle GBP625 Milena Radoycheva GBP355 Stephen Thompson GBP295 Jesse Sharf, Esq., a partner at Gibson Dunn, assures the Court that the firm does not represent or hold adverse interests with respect to matters on which it is to be employed. 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 US$639 billion in assets and US$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: Proposes O'Neil Group as Tax Services Provider --------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek court approval to employ The O'Neil Group as their tax services provider effective January 6, 2010. As tax services provider, The O'Neil Group is tasked to prepare Form 5471, 8865 and 8858 tax returns and assist with the state and local tax filing for 2009. The firm will also provide additional services to the Debtors, if necessary. The job will be supervised by Jacqueline O'Neil, the firm's managing director, along with 6 to 20 employees. The Debtors attorney, Richard Krasnow, Esq., at Weil Gotshal & Manges LLP, in New York, says the firm is qualified for the job given its "extensive tax expertise," adding that some of its key personnel also provided international and state income tax compliance services for the Debtors last year, as members of Huron Consulting Group. Huron Consulting was employed by the Debtors in January 2009 to assist them with the filing of their 2008 tax returns. The firm, however, will no longer be providing tax services to the Debtors this year. The O'Neil Group will be paid for its services at a single blended rate of $180 per hour and will be reimbursed of its expenses. Any additional tax services beyond those that had been agreed will be paid at these hourly rates: Tax Managing Director $325 Tax Senior Director $225 Tax Managers $165 Tax Associates $125 In case the Debtors require additional services beyond the tax return preparation and outside the scope of The O'Neil Group's tax services, the firm and the Debtors will agree in writing on the scope of those services and these hourly rates will apply: Managing Director $325 - $450 Director $225 - $350 Manager $165 - $250 Associate $125 - $185 In a declaration, Ms. O'Neil assures the Court that her firm neither holds nor represents interest adverse to the Debtors or their estates with respect to the matters on which it is to be employed. 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 US$639 billion in assets and US$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: Trustee Has Transition Pact with Barclays ---------------------------------------------------------- James W. Giddens, as trustee for the liquidation under the Securities Investor Protection Act of the business of Lehman Brothers, Inc., asks the Court to approve a transition services agreement it entered into with Barclays Capital Inc. The TSA provides the Trustee with services that are critical in aiding him and his professionals in, among other things, evaluating claims asserted in the liquidation and to carry out the liquidation of the business. Certain services can only be provided by Barclays, as purchaser of certain LBI assets, and the resulting TSA thereby is reasonable, fair and appropriate for the LBI estate, its customers, creditors and other parties-in- interest, the Trustee tells the Court. Among the services to be provided under the TSA are finance, treasury, front office, operations and IT infrastructure services. The TSA also provides that the Trustee and his professionals' access to Barclays information systems will continue until March 16, 2011. The TSA supersedes all prior services agreements entered into between the Trustee and Barclays. A full-text copy of the executed copy of TSA is available for free at http://bankrupt.com/misc/lehm_barcltsa.pdf Oracle USA, Inc., reserves its right regarding the TSA or other contemplated interim use, to the extent that the TSA contemplates ongoing use of Oracle's software by any entity other than the authorized user(s) under the applicable license and related agreements' terms. Specifically, Oracle objects to the TSA to the extent that it may grant both the Trustee and Barclays the right to simultaneous use of, and access to, the Oracle software. 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 US$639 billion in assets and US$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: Wants to Enlarge Jones Day Work ------------------------------------------------ Lehman Brothers Holdings Inc. and its units seek the Court's authority to expand the scope of Jones Day's employment as their special counsel, nunc pro tunc to November 13, 2009. The Debtors have a commercial loan portfolio of about $13.2 billion and a private equity/principal investments portfolio of about $2.3 billion. By this supplemental application, the Debtors seek to modify the scope of Jones Day's employment to include these legal services: (a) representation of the Debtors in connection with the workout or restructuring of certain loans/investments in the Loan Portfolio/Investment Portfolio involving Greenbriar Minerals LLC; and (b) other matters relating to the Loan Portfolio/Investment Portfolio, as requested by the Debtors and agreed to by Jones Day. Jayant W. Tambe, Esq., a member at Jones Day, maintains that Jones Day does not represent or hold any interest adverse to the Debtors or their estates with respect to the Additional Matters. 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 US$639 billion in assets and US$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) LEXINGTON PRECISION: Creditors Committee Members Down to 5 ---------------------------------------------------------- Diana G. Adams, U.S. Trustee for Region 2, amended the members of the official committee of unsecured creditors in the Chapter 11 cases of Lexington Precision Corp. and Lexington Rubber Group Inc. The Creditors Committee now consists of: 1. Wilmington Trust Company Attn: James J. McGinley 1100 North Market Street Wilmington, Delaware 19890 Tel: (212) 415-0522 2. Valhalla Capital Partners, LLC Attn: Ramond P. Mercherle 2527 Nelson Miller Pkwy., Suite 207 Louisville, KY 40223 Tel: (502) 301-8400 ext. 14 3. Momentive Performance Materials, Inc. Attn: Janelle Wendorf c/o Janette Wendorf 260 Hudson River Road Waterford, NY 12188 Tel: (518) 233-5608 4. Environmental Products & Services of Vermont, Inc. Attn: Michael J. Lawler 532 State Fair Blvd. Syracuse, NY 13204 Tel: (315) 451-6666 ext. 213) 5. Sandler Capital Management Attn: Douglas E. Schimmel 711 5th Ave New York, NY 10122 Tel: (212) 754-8100 Jefferies High Yield Trading and Wilfrid Aubrey, LLC were in the previous list of committee members. Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also Attnempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Lexington Precision Headquartered in New York, Lexington Precision Corp. -- http://www.lexingtonprecision.com/-- and its wholly-owned subsidiary Lexington Rubber Group, Inc. conduct their operations through two operating groups, the Rubber Group and the Metals Group. The business of the Rubber Group is conducted by LRGI while the business of the Metals Group is conducted by LPC. The Rubber Group is a manufacturer of tight-tolerance, molder rubber componets that are sold to customers who supply the automotive aftermarket, to customers who supply the automotive original-equipment manufacturers ("OEMs"), and to manufacturers of medical devices. The Metals Group manufactures a variety of high- volume components that are machined from aluminum, brass, steel, and stainless steel bars and blanks. The components produced by the Metals Group include airbag inflator components, solenoids for transmissions, fluid handling couplings, hydraulic valve blocks, power steering components, and wiper-system components, primarily for use by the automotive OEMs. The Company and its affiliate, Lexington Rubber Group Inc., filed for Chapter 11 protection on April 1, 2008 (Bankr. S.D.N.Y. Lead Case No.08-11153). Christopher J. Marcus, Esq., and Victoria Vron, Esq., at Weil, Gotshal & Manges, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems - Bankruptcy Solutions LLC as claims agent. The U.S. Trustee for Region 2 appointed six creditors to serve on an official committee of unsecured creditors. Paul N. Silverstein, Esq., and Jonathan Levine, Esq., at Andrews Kurth LLP, represent the Committee as counsel. On June 30, 2008, the Debtors filed with the Bankruptcy Court a plan of reorganization. Before this third amended plan, it was amended twice, on August 8, 2008, and then on December 17, 2008. LIBERATOR INC: Gruber & Company Raises Going Concern Doubt ---------------------------------------------------------- Gruber & Company, LLC, in Lake Saint Louis, Missouri, expressed substantial doubt about Liberator, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements as of and for the years ended June 30, 2009, and 2008. Gruber said conditions exist that raise substantial doubt about the Company's ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its financing requirements and attain profitable operations. The Company incurred a net loss of $3,754,982 and $153,113 for the years ended June 30, 2009, and 2008, respectively, and as of June 30, 2009, the Company has a stockholders' deficit of $15,965 and a working capital deficit of $106,124. The Company reported a net loss of $3,754,982 on net sales of $10,260,552 for the fiscal year ended June 30, 2009, compared to a net loss of $153,113 on net sales of $11,750,832 for fiscal 2008. Direct sales, which consists of consumer sales through the Company's three websites and, to a lesser extent, the Company's factory store, decreased from approximately $6.7 million in the twelve months ended June 30, 2008 to approximately $5.1 million in the twelve months ended June 30, 2009, a decrease of approximately 23%. Expenses related to the merger with OneUp Innovations, Inc. during fiscal 2009 total $2,273,495. Balance Sheet At June 30, 2009, the Company's consolidated balance sheets showed $4,093,874 in total assets and $4,109,839 in total liabilities, resulting in a $15,965 shareholders' deficit. The Company's consolidated balance sheets at June 30, 2009, also showed strained liquidity with $2,958,357 in total current assets available to pay $3,064,481 in total current liabilities. A full-text copy of the Company's annual report for fiscal 2009 is available at no charge at http://researcharchives.com/t/s?52be About Liberator Inc. Headquartered in Atlanta, Georgia, Liberator, Inc. through its wholly owned subsidiary OneUp Innovations, Inc. participates in the rapidly growing worldwide market of sexual wellness. OneUp currently manufactures approximately 1,200 products and purchases for resale an additional 400 products. LOWER BUCKS: Gets OK for SSG to Solicit Bids from Buyers -------------------------------------------------------- John George, staff writer at Philadelphia Business Journal, says the Bankruptcy Court authorized Lower Bucks Hospital to employ (i) SSG Capital Advisors of West Conshohocken, Pennsylvania, to help the hospital identify and solicit bids from potential buyers; and (ii) Executive Sounding Board Associates of Philadelphia to provide management consulting services. Lowe Bucks will also continue to have Saul Ewing represent the medical center during the bankruptcy proceedings. According to report, the firms have been paid in excess of $1 million in retainer and hourly fees for services provided either prior to or since the bankruptcy filing. About Lower Bucks Bristol, Pennsylvania-based Lower Bucks Hospital is a nonprofit hospital based in Bristol, Pennsylvania. The Hospital is currently licensed to operate 183 beds. Together with affiliates Advanced Primary Care Physicians and Lower Bucks Health Enterprises, Inc., Lower Bucks owns a 36-acre campus with several medical facilities. The Hospital's emergency room serves approximately 30,000 patients annually. For the fiscal year ending June 30, 2009, Lower Bucks had $114 million in consolidated revenues. The Hospital filed for Chapter 11 bankruptcy protection on January 13, 2010 (Bankr. E.D. Pa. Case No. 10-10239). The Hospital's affiliates -- Lower Bucks Health Enterprises, Inc, and Advanced Primary Care Physicians also filed Chapter 11 petitions. Jeffrey C. Hampton, Esq., and Adam H. Isenberg, at Saul Ewing LLP, assist the Hospital in its restructuring effort. Donlin, Recano & Company, Inc., is the Hospital's claims and notice agent. The Hospital listed $50,000,001 to $100,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. MAGNA ENTERTAINMENT: Seeks Approval of Maryland Racetracks Sale --------------------------------------------------------------- Although it has not yet found a stalking horse bidder, Magna Entertainment Corp. is looking to go forward later in February with the sale of its Maryland racetracks, including the Pimlico Race Course, home of the Preakness Stakes Triple Crown race, according to Law360. Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a 50% interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. Mark D. Collins, Esq., L. Katherine Good, Esq., and Maris J. Finnegan, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC is the Debtors' investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent for the Debtors. Magna Entertainment Corp. had total assets of $1.054 billion and total liabilities of $947.3 million based on unaudited consolidated financial statements as of December 31, 2008. MAMMOTH HENDERSON: Offers to Return 100% to Unsecureds in 7 Years ----------------------------------------------------------------- Mammoth Henderson II, LLC, filed with the U.S. Bankruptcy Court for the Central District of California a Disclosure Statement explaining its Plan of Reorganization. The Debtors will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. According to the Disclosure Statement, the Debtor seeks to accomplish payments under the Plan by restructuring one note held by U.S. Bank and converting mechanics liens to deeds of trust. Secured creditors of the estate will be paid the present value of their claim at a market interest rate over a 24 month to 84 month period, excepting that their claims may be paid in full prior to the seventh year through a sale or refinance of the Mammoth Property. The effective date targeted for the proposed Plan is October 19, 2010. Secured creditor U.S. Bank will be paid in full on or before the 84th month after the effective date, The Clark County Tax Collector will be paid in full on or before the 72nd month after the effective date, secured creditor New Life Carpets will be paid in full on or before the 84th month after the effective date, secured creditor American Constructors Inc., will be paid in full on or before the 84th month after the effective date. Allowed Class 5 General Unsecured Claims ($26,319) may elect to receive a one-time lump sum payment equal to 50% of their allowed claim as payment in full on the 13th month after the effective date or 100% of their allowed claim as payment in full on or before the 84th month after the effective date. On or before the effective date, the Debtor will execute a promissory note with each holder of a Class 5 Claim. The Note will provide that, commencing on the 25th month after the effective date of the Plan, the obligations evidenced by the promissory note will accrue interest at the rate of 3%. Commencing on the 15th day of each month thereafter through the 84th month after the effective date, the Reorganized Debtor will make equal monthly payments of interest to the Class 5 Claimant. The distributions under the Plan will be made from available cash and net sale proceeds. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/MAMMOTHHENDERSON_DS.pdf San Juan Capistrano, California-based Mammoth Henderson II LLC filed for Chapter 11 bankruptcy protection on November 5, 2009 (Bankr. C.D. Calif. Case No. 09-22234). Thomas C. Corcovelos, Esq., who has an office in Manhattan Beach, California, assists the Company in its restructuring efforts. According to the schedules, the Company has assets of $24,002,100, and total debts of $20,895,296. MCGRATH'S PUBLICK: Taps Tonkon Torp as Bankruptcy Counsel --------------------------------------------------------- McGrath's Publick Fish House, Inc., has sought permission from the U.S. Bankruptcy Court for the District of Oregon to employ Tonkon Torp LLP as bankruptcy counsel. Tonkon Torp will, among other things: a. advise the Debtor concerning, and prepare necessary applications, motions, memoranda, responses, complaints, answers, orders, notices, reports and other papers, and review all financial and other reports required from the Debtor in connection with administration of this Chapter 11 case; b. advise the Debtor with respect to, and assist in the negotiation and documentation of, financing agreements, debt and cash collateral orders, and related transactions; c. advise the Debtor regarding (1) its ability to initiate actions to collect and recover property for the benefit of its estate; (2) any potential property dispositions; and (3) executory contract and unexpired lease assumptions, assignments and rejections, and lease restructuring and recharacterizations; and d. negotiate with creditors concerning a plan of reorganization; prepare the plan of reorganization, disclosure statement and related documents; take the steps necessary to confirm and implement a plan of reorganization, including, if needed, negotiations for financing the plan. The hourly rates of Tonkon Torp's personnel are: Leon Simson, of Counsel $450 Timothy J. Conway, Partner $400 Vicki Ballou, Partner $375 Haley B. Bjerk, Associate $210 Laura Lindberg, Paralegal $185 Leon Simson at Tonkon Torp assures the Court that Tonkon Torp is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. McGrath's Fish House -- http://www.mcgrathsfishhouse.com/-- operates eight restaurants in Oregon, three in Washington and one in Idaho. Salem, Oregon-based McGrath's Publick Fish House, Inc., fdba McGrath's Properties LLC, filed for Chapter 11 bankruptcy protection on February 3, 2010 (Bankr. D. Ore. Case No. 10-60500). The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. MERCER INT'L: Earns EUR4.0 Million for December Quarter ------------------------------------------------------- Mercer International Inc. said it earned EUR4.0 million net income on EUR165.1 million total revenues for the three months ended Dec. 31, 2009, compared with EUR$69.9 million net loss on EUR171.9 million total revenues for the same period a year ago. The Company reported EUR1.0 billion in total assets and EUR997.8 million in total liabilities resulting to a EUR85.9 million stockholders' equity as of Dec. 31, 2009. A full-text copy of the company's 2009 financial results is available for free at http://ResearchArchives.com/t/s?528b About Mercer International Vancouver-based Mercer International Inc. (Nasdaq: MERC, TSX: MRI.U) -- http://www.mercerint.com/-- is a global pulp manufacturing company. At September 30, 2009, Mercer had EUR1,085,649,000 in total assets against EUR1,005,232,000 in total liabilities. As of September 30, 2009, the Mercer consolidated group had EUR1,085,649,000 in total assets against EUR1,005,232,000 in total liabilities, resulting in EUR80,417,000 in shareholders' equity. Mercer's unrestricted subsidiaries as of September 30, 2009, had EUR603,065,000 in total assets against EUR721,858,000 in total liabilities, resulting in EUR118,793,000 in shareholders' deficit. * * * As reported by the Troubled Company Reporter on February 2, 2010, Standard & Poor's Ratings Services revised its outlook on Mercer International to positive from negative. S&P affirmed its ratings on the company, including the 'CCC+' corporate credit rating. "The outlook revision reflects S&P's view that Mercer's liquidity has improved as a result of the completion of its recent exchange offer for about $15 million of its remaining $17 million convertible subordinated notes due October 2010 for a like amount of new notes due January 2012," said Standard & Poor's credit analyst Andy Sookram. S&P thinks that the recent debt exchange will provide the company with greater financial flexibility through extended debt maturities and increased liquidity in the near term. Although Mercer's liquidity has improved, S&P is concerned about the sustainability of the recently improved pulp market conditions. Several pulp producers have announced plans to restart production at certain facilities in the near future. If this leads to a supply/demand imbalance, S&P believes there could be some reversal of the price increases S&P has seen in the last several months. Still, S&P currently does not expect selling prices to decline to the levels S&P saw in the first half of 2009, when prices averaged around $660 per ton compared with $840 per ton in 2008, because S&P thinks it is likely that demand for paper and packaging products will be modestly higher in 2010. In addition, S&P believes that the weak U.S. dollar against the euro and the Canadian dollar will continue to partly offset some of the benefits of price increases in the near term. MOVIE GALLERY: Has Access to Cash Collateral Until March 1 ---------------------------------------------------------- Movie Gallery Inc. and its units seek the Court's authority, first on an interim basis and ultimately on a final basis, to use their cash on hand to finance the operation of their businesses during the pendency of the Chapter 11 cases. Peter J. Barrett, Esq., at Kutak Rock LLP in Richmond, Virginia, relates that the Cash is collateral for three separate prepetition credit facilities under which the Debtors are either borrowers or guarantors: (a) the Prepetition First Lien Revolving Credit Facility, (b) the Prepetition First Lien Term Credit Facility, and (c) the Prepetition Second Lien Term Credit Agreement. The Prepetition First Lien Revolving Credit Facility and the Prepetition First Lien Term Credit Facility share a joint first lien on substantially all of the assets of the Debtors, including their cash on hand. However, pursuant to the credit documents governing those two facilities, the Prepetition First Lien Revolving Credit Facility is granted a priority right of repayment over the Prepetition First Lien Term Credit Facility, and is entitled to recover its full outstanding principal balance of $100 million, together with certain fees and expenses, before any repayment is made on account of the outstanding obligations under the Prepetition First Lien Term Credit Facility. In addition, the credit documents governing these two facilities provide that, following an "Event of Default" under either facility, the lenders under the Prepetition First Lien Revolving Credit Facility are entitled to "sweep" from the Debtors and apply to their outstanding loan obligations all of the Debtors' cash in excess of $100 million. The terms and conditions of the Prepetition First Lien Revolving Credit Facility and the Prepetition First Lien Term Credit Facility -- including the intercreditor provisions -- were expressly approved by the bankruptcy court as part of its Order confirming MG I's 2008 Plan, notes Mr. Barrett. The current outstanding obligations under the Prepetition First Lien Revolving Credit Facility are approximately $100 million, while the outstanding obligations under the Prepetition First Lien Term Credit Facility are approximately $370 million. The Debtors believe that the total value of the collateral securing the outstanding obligations under both facilities is more than $100 million, but significantly less than $470 million. Consequently, the Debtors believe that the First Lien Revolving Credit Facility -- which has a repayment priority for the first $100 million of proceeds of collateral -- is fully secured, while the Prepetition Secured First Lien Term Facility is significantly undersecured. Through extensive, arm's-length negotiations with the lender under the First Lien Revolving Credit Facility, the Debtors secured the Revolver Lender's consent to the Debtors' use of its Cash Collateral on terms which the Debtors submit are favorable to the Debtors, and which will provide the Debtors estates with access to adequate cash to fund their ongoing business, including the costs of liquidating a significant number of currently operating stores. In return for the Revolver Lender's consent to the Debtors' use of its cash collateral, the Debtor has agreed, inter alia, that the Revolver Lender (a) will be paid cash interest at its contract rate, (b) may sweep the Debtors' cash in excess of $50 million weekly, beginning on the first Monday that is at least 30 days after the Cash Collateral Order is entered, until the Revolver Lender has received and applied to its outstanding obligations a total of $50 million from the Debtors on account of the cash sweeps, and (c) will be granted certain replacement liens and certain superpriority claims against the Debtors. The Debtors will then be authorized to utilize their cash on hand to fund continuing operations pursuant to an agreed budget approved by the Revolver Lender until the earlier of the termination of the Cash Collateral Order or an event of default under that order. The Debtors submit that the terms of their agreed use of the Revolver Lender's cash collateral are fair and reasonable to the Debtors, and provide adequate protection to the Revolver Lender, as well as to the lenders under the Prepetition First Lien Term Credit Facility who also have an interest in the same collateral. Moreover, the Debtors have an absolute and urgent need to access that cash collateral to fund their ongoing business operations. * * * The Court issued an interim order on February 3, 2010, holding that during the interim period of Feb. 3 until (i) March 1, 2010, and (ii) the date on which the Requisite Lenders under the Prepetition First Lien Revolving Credit Agreement give, or cause to be given, to the Debtors notice that an Event of Default has occurred and is continuing, the Debtors are authorized to use Cash Collateral, for general corporate purposes and related costs and expenses, in accordance with a 13-week cash forecast. The final hearing on the Cash Collateral Motion will occur on February 22, 2010, at 10:00 a.m. (prevailing Eastern Time). About Movie Gallery Based in Wilsonville, Ore., Movie Gallery, Inc. is the second largest North American video and game rental company, operating stores in the U.S. and Canada under the Movie Gallery, Hollywood Video and Game Crazy brands. Movie Gallery first filed for Chapter 11 on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Kirkland & Ellis LLP and Kutak Rock LLP represented the Debtors. The Company emerged from bankruptcy on May 20, 2008, with private-investment firms Sopris Capital Advisors LLC and Aspen Advisors LLC as its principal owners. William Kaye was appointed plan administrator and litigation trustee. Movie Gallery returned to Chapter 11 protection on February 3, 2009 (Bankr. E.D. Va. Case No. 10-30696). Attorneys at Sonnenschein Nath & Rosenthal LLP and Kutak Rock LLP represent the Debtors in their second restructuring effort. Kurtzman Carson Consultants serves as claims and notice agent. MOVIE GALLERY: Sec. 341 Meeting Set for April 9 ----------------------------------------------- W. Clarkson McDow, Jr., the United States Trustee for Region 4, has scheduled a meeting of creditors in the Chapter 11 cases of Movie Gallery, Inc. and its four debtor affiliates on April 9, 2010, at 10:00 a.m., Prevailing Eastern Time, at the Office of the United States Trustee, 701 East Broad Street, Room 4300, in Richmond, Virginia. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtor's bankruptcy cases. Attendance by the Debtors' 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 Movie Gallery Based in Wilsonville, Ore., Movie Gallery, Inc. is the second largest North American video and game rental company, operating stores in the U.S. and Canada under the Movie Gallery, Hollywood Video and Game Crazy brands. Movie Gallery first filed for Chapter 11 on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Kirkland & Ellis LLP and Kutak Rock LLP represented the Debtors. The Company emerged from bankruptcy on May 20, 2008, with private-investment firms Sopris Capital Advisors LLC and Aspen Advisors LLC as its principal owners. William Kaye was appointed plan administrator and litigation trustee. Movie Gallery returned to Chapter 11 protection on February 3, 2009 (Bankr. E.D. Va. Case No. 10-30696). Attorneys at Sonnenschein Nath & Rosenthal LLP and Kutak Rock LLP represent the Debtors in their second restructuring effort. Kurtzman Carson Consultants serves as claims and notice agent. MOVIE GALLERY: U.S. Trustee Appoints Unsecured Creditors Committee ------------------------------------------------------------------ W. Clarkson McDow, Jr., the United States Trustee for Region 4, appoints nine members to the Official Committee of Unsecured Creditors in the Chapter 11 cases of Movie Gallery, Inc., and its debtor affiliates. The Creditors' Committee members are: (1) Warner Home Video Attn: Wyne M. smith 4000 Warner Blvd. Bldg. 156, Room 5158 Burbank, CA 91522 Tel: (818)954-6007 Fax: (818)954-5434 E-mail: wayne.smith@warnerbros.com (2) Sony Pictures Home Entertainment Attn: Michael Schillo 10202 W. Washington Blvd. SPP 2414 Culver City, CA 90232 Tel: (310)244-8596 Fax: (310-244-0188 E-mail: michael_schillo@spe.sony.com (3) Twentieth Century Fox Home entertainment Attn: Al Leonard 2121 Avenue of the Stars, #2500 Los Angeles, CA 90067 Tel: (310)369-7289 Fax: (310)369-4713 E-mail: al.leonard@fox.com (4) Universal Studios Home Entertainment Attn: John Roussey 100 Universal City Plaza 1440 Building, 16th Floor Universal City, CA 91608 Tel: (818)777-7601 Fax: (818)866-2314 E-mail: john.roussey@nbcuni.com (5) Paramount Home Entertainment Attn: Andi Marygold 5555 Melrose Ave. Bluhdom #213 Hollywood, CA 90038 Tel: (323)956-5489 Fax: (323)862-1183 E-mail: andi_marygold@paramount.com (6) Realty Income corporation Attn: Michael Pfeiffer 600 La Terraza Boulevard Escondido, CA 92025 Tel: (760)741-2111 Fax: (760)841-2235 E-mail: mpfeiffer@realtyincome.com (7) RR Donnelley & Sons Attn: Dan Pevonka 3075 Highland Parkway Downers Grove, IL 60515 Tel: (630)322-6931 Fax: (630-322-6052 E-mail: dan.pevonka@rrd.com (8) Weingarten Realty Investors Attn: Jenny J. Hyun 2600 Citadel Plaza Dr., Suite 125 Houston, TX 77008 Tel: (713)866-6000 Fax: (713)880-6146 E-mail: jhyun@weingarten.com (9) Regency Centers LP Attn: Ernst Bell One Independent Drive, Suite 114 Jacksonville, FL 32202 Tel: (904)598-7685 Fax: (904)354-6094 E-mail: ernstbell@regencycenters.com About Movie Gallery Based in Wilsonville, Ore., Movie Gallery, Inc. is the second largest North American video and game rental company, operating stores in the U.S. and Canada under the Movie Gallery, Hollywood Video and Game Crazy brands. Movie Gallery first filed for Chapter 11 on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Kirkland & Ellis LLP and Kutak Rock LLP represented the Debtors. The Company emerged from bankruptcy on May 20, 2008, with private-investment firms Sopris Capital Advisors LLC and Aspen Advisors LLC as its principal owners. William Kaye was appointed plan administrator and litigation trustee. Movie Gallery returned to Chapter 11 protection on February 3, 2009 (Bankr. E.D. Va. Case No. 10-30696). Attorneys at Sonnenschein Nath & Rosenthal LLP and Kutak Rock LLP represent the Debtors in their second restructuring effort. Kurtzman Carson Consultants serves as claims and notice agent. MUZAK HOLDINGS: Chapter 11 Emergence Cues S&P to Withdraw Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on Muzak Holdings LLC and its wholly owned subsidiary, Muzak LLC. The ratings withdrawal follows Muzak's recent emergence from bankruptcy. The company had previously filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court in the District of Delaware on Feb. 10, 2009. In conjunction with the company's recently completed financial restructuring and bankruptcy emergence, Muzak eliminated more than half of its previously rated debt through repayment, partial repayment, or conversion of debt into equity. Muzak designs and installs sound systems and other equipment to a variety of clients in the retail, hospitality, and restaurant industries. Ratings List Not Rated Action Muzak Holdings LLC To From -- ---- Corporate Credit Rating NR D/--/-- Senior Unsecured NR D Recovery Rating NR 6 Muzak LLC To From -- ---- Corporate Credit Rating NR D/--/-- Senior Unsecured NR D Recovery Rating NR 5 Subordinated NR D Recovery Rating NR 6 NR -- Not rated. NEENAH ENTERPRISES: Schedules Filing Deadline Moved to April 5 -------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware extended, at the behest of Neenah Enterprises, Inc., et al., the filing of schedules of assets and liabilities and statements of financial affairs by an additional 30 days until April 5, 2010. The Debtors have more than 200 creditors. Due to the size and complexity of the Debtors' businesses, the number of the Debtors and their potential creditors, and the numerous burdens the reorganization efforts will impose on the Debtors, particularly in the early days of the Chapter 11 cases, the Debtors may not be able to complete the schedules on the initial 30-day deadline. Headquartered in Neenah, Wisconsin, Neenah Enterprises, Inc. -- http://www.nfco.com/-- is the indirect parent holding company of Neenah Foundry Company. Neenah Foundry Company and its subsidiaries manufacture and market a wide range of iron castings and steel forgings for the heavy municipal market and selected segments of the industrial markets. Neenah is one of the largest independent foundry companies in the United States, with substantial market share in the municipal and various industrial markets for gray and ductile iron castings and forged steel products. The Company filed for Chapter 11 bankruptcy protection on February 3, 2010 (Bankr. D. Delaware Case No. 10-10360). Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., assist the Company in its restructuring effort. The Company had $286,611,000 in total assets against total liabilities of $449,435,000, resulting in stockholder's deficit of $162,824,000. The Company's affiliates -- NFC Castings, Inc.; Neenah Foundry Company; Cast Alloys, Inc.; Neenah Transport, Inc.; Advanced Cast Products, Inc.; Gregg Industries, Inc.; Mercer Forge Corporation; Deeter Foundry, Inc.; and Dalton Corporation -- filed separate Chapter 11 petitions. NEENAH ENTERPRISES: Court Okays Garden City as Claims Agent ----------------------------------------------------------- Neenah Enterprises, Inc., et al., sought and obtained permission from the Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware to employ The Garden City Group, Inc., as the official claims, noticing and balloting agent. GCG will, among other things: a. perform certain noticing functions; b. assist the Debtors in analyzing and reconciling proofs of claim filed against the Debtors' estates; c. assist the Debtors in balloting in connection with any proposed Chapter 11 plan; and d. docket claims filed and maintain the official claims register on behalf of the Clerk and providing to the Clerk an exact duplicate thereof. Karen B. Shaer, general counsel and executive vice president of GCG, says that the firm will be compensated based on its agreement with the Debtor. A copy of the agreement is available for free at http://bankrupt.com/misc/NEENAH_ENTERPRISES_gcgpact.pdf Ms. Shaer assured the Court that GCG is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Neenah, Wisconsin, Neenah Enterprises, Inc. -- http://www.nfco.com/-- is the indirect parent holding company of Neenah Foundry Company. Neenah Foundry Company and its subsidiaries manufacture and market a wide range of iron castings and steel forgings for the heavy municipal market and selected segments of the industrial markets. Neenah is one of the largest independent foundry companies in the United States, with substantial market share in the municipal and various industrial markets for gray and ductile iron castings and forged steel products. The Company filed for Chapter 11 bankruptcy protection on February 3, 2010 (Bankr. D. Delaware Case No. 10-10360). Edmon L. Morton, Esq., and Kenneth J. Enos, Esq., assist the Company in its restructuring effort. The Company had $286,611,000 in total assets against total liabilities of $449,435,000, resulting in stockholder's deficit of $162,824,000. The Company's affiliates -- NFC Castings, Inc.; Neenah Foundry Company; Cast Alloys, Inc.; Neenah Transport, Inc.; Advanced Cast Products, Inc.; Gregg Industries, Inc.; Mercer Forge Corporation; Deeter Foundry, Inc.; and Dalton Corporation -- filed separate Chapter 11 petitions. NEW CENTURY: Judge Carey Won't Tinker with Consumer Foreclosure --------------------------------------------------------------- WestLaw reports that a mortgagor's claims against, inter alia, the Chapter 11 debtor-mortgage lender, a state court, and the sheriff who conducted the judicial sale of the mortgaged property, which included claims for fraud, cancellation of the note and mortgage, the imposition of a constructive trust, and violations of state and federal racketeering laws, were inextricably intertwined with the issues adjudicated by the state court in the mortgage foreclosure proceeding, in that granting the relief requested would negate the state court's judgments. Therefore, the Rooker- Feldman doctrine applied to bar the bankruptcy court's subject matter jurisdiction over the claims. In re New Century TRS Holdings, Inc., --- B.R. ----, 2010 WL 422948 (Bankr. D. Del.) (Carey, J.). Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- <http://www.ncen.com/>http://www.ncen.com/-- is a real state investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. New Century Financial and its affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Court confirmed the Debtors' second amended joint Chapter 11 plan on July 15, 2008. NORTEL NETWORKS: Exploring Options for Intellectual Property ------------------------------------------------------------ Nortel Networks Corp. said it is exploring "strategic alternatives" for its intellectual property, as it continues the sale of its businesses. Nortel Networks said in a statement that it has worked with its advisors and stakeholders to conduct the sales of businesses and other restructuring matters in a fair, efficient and responsible manner in order to maximize value for its creditors, and in almost all matters, resolution has been reached on a consensual basis. These activities have been and continue to be monitored closely by the courts, the court appointed Monitor in Canada, the U.K. Joint Administrators, the U.S. Unsecured Creditors' Committee (UCC), the Ad Hoc Bondholders Group and other creditor groups. "The Board of Directors of Nortel and the management team recognize the very difficult circumstances of the numerous and varying stakeholders of Nortel. We have been and continue to be focused on maximizing the value of the Company's assets and securing the best possible outcome for our creditors, from employee groups to bondholders," said David Richardson, Chairman, Nortel. "The company continues to deal in the most equitable way possible with its stakeholders as a whole, while operating under creditor protection in Canada, the U.S., Europe and elsewhere." Since determining in June 2009 that selling Nortel's businesses was the best path forward, more than US$2 billion in net proceeds have been generated through the completed sales of businesses. Additional net proceeds of approximately US$1 billion are expected upon the completion of the previously announced sales of Nortel's Optical Networking and Carrier Ethernet (MEN), GSM/GSM-R and Carrier VoIP and Application Solutions (CVAS) businesses. To date, auctions for sale of four businesses have yielded US$1.2 billion more in proceeds than initially set out in 'stalking horse' sale agreements. Through the sales completed or announced to date, Nortel has preserved 13,000 jobs for Nortel employees with the buyers of these businesses. As recently announced, Nortel completed an agreement that will provide for the funding by Nortel Networks Inc, a U.S. subsidiary, of the Company's continuing work in Canada through the remainder of the creditor protection proceedings. Nortel has also resolved outstanding transfer pricing with Canadian and U.S. tax authorities for the taxation years 2001 through 2005 and settled the US$3 billion claim of the United States Internal Revenue Service for US$37.5 million. In addition, Nortel has restructured certain intercompany indebtedness of its Asia Pacific affiliates to facilitate their ability to continue to operate and participate in global asset sales. The Company most recently announced on February 8 th that Nortel reached a settlement agreement with former and disabled Canadian employee representatives, on certain employment related matters regarding former Canadian Nortel employees, including Nortel's Canadian registered pension plans and benefits for Canadian pensioners and Nortel employees on long term disability. Corporate Group and Nortel Business Services (NBS) While numerous milestones have been met, significant work remains to be completed. Nortel's Corporate Group is focused on a number of key actions including the completion of announced sales and the sale of remaining businesses and assets, as well as exploring strategic alternatives to maximize the value of the Company's intellectual property. The Corporate Group is also responsible for ongoing restructuring matters including the creditor claims process, planning toward conclusion of the CCAA and Chapter 11 process and distributions to creditors. The Corporate Group also continues to provide administrative and management support to the Nortel affiliates around the world. The NBS Group continues to provide global transitional services to purchasers of Nortel's businesses, in fulfillment of contractual obligations under Transitional Service Agreements. These services include maintenance of customer and network service levels during the integration process, and providing the expertise in finance, supply chain management, information technology, R&D, human resources and real estate necessary to the orderly and successful transition of businesses to purchasers over a period of 12 to 24 months. NBS is also focused on maximizing the recovery of Nortel's accounts receivables, inventory and real estate assets. Nortel is seeking approval of the U.S. and Canadian courts of an employee plan that is designed to retain personnel at all levels of Corporate Group and NBS critical to complete the remaining work. The plan was developed in consultation with independent expert advisors taking into account the availability of more stable and competitive employment opportunities available to these employees elsewhere. The plan is supported by the Monitor, UCC and Ad Hoc Bondholders Group. Koskie Minsky LLP, representative counsel to Canadian former employees, has been advised of the plan. Approximately 88 percent of the plan's costs is being funded by the purchasers of Nortel businesses, pursuant to the terms of the sales agreements. The purchasers have required that Nortel retain key employees around the world to ensure that the transition to them of the acquired businesses is as effective and efficient as possible. "The scope and complexity of the work to date and that remains to be completed requires the efforts of our specialized employees around the world," said Mr. Richardson. "In order to meet our restructuring objectives, bring the process to conclusion and to fulfill our obligations to provide transitional services to purchasers of our businesses, it is essential that we retain the personnel with the required skills, experience and institutional knowledge. Accordingly, Nortel has developed a plan designed to incentivize these key employees to remain with Nortel until our work is completed." Mr. Richardson continued, "The employees being offered participation in the plan were instrumental in the work completed to date and are critical to fulfilling the remaining tasks including carrying out the Company's global fiduciary duties, selling and transitioning businesses, unwinding partnerships, addressing claims and analyzing thousands of contracts. The loss of these key employees at this time would create significant delays in our activities and place the achievement of our objectives at risk. In short, we believe the plan is in the best interests of our creditors and other stakeholders, and of the process itself." 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 the Company's 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: Proposes $92.4-Mil. in Wind-Down Bonuses --------------------------------------------------------- Steven Church at Bloomberg News reports that Nortel Networks Corp. is seeking approval of a new round of bonuses of up to $92.4 million for certain employees over the next two years, including $4.5 million set-aside for three executives. The payments are proposed for 1,475 workers needed to wind down the company's businesses, which are being sold as part of the bankruptcy to pay creditors. If approved, the proposal would raise the maximum amount of the Company's bonuses authorized by courts in the U.S. and Canada in to $137.4 million. 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 the Company's 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: Bankruptcy Judge Confirms Chapter 11 Plan ------------------------------------------------------------- The Bankruptcy Court has confirmed Northeast Biofuels LP's Chapter 11 liquidation plan. As the result of a settlement with the secured lenders, unsecured creditors with claims of as much as $7 million will split up $400,000 to $600,000 for a recovery from 3% to 9%. The secured lenders, owed $170 million, are to expect a recovery up to 10%, according to the explanatory disclosure statement. 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. NPC ACQUISITION: Creditors' Proofs of Claim Due March 15 -------------------------------------------------------- An Order entered on February 9, 2010, by the U.S. Bankruptcy Court for the District of New Jersey set March 15, 2010 as the deadline for all creditors, except governmental units, to file proof of claims against NPC Acquisition Inc. that arose before the Petition Date. The deadline to file proofs of claim for governmental units is July 31, 2010. The Bankruptcy Court has also set the Claims Bar Date of March 15, 2010 as the deadline for all creditors and parties in interest to file requests for payment for administrative expenses against the Debtor or the Debtor's bankruptcy estate under Bankruptcy Code Section 503, except such administrative expenses arising under Bankruptcy Code Section 503(b)(2), that arose after Petition Date. Administrative Expense Claims include pursuant to Bankruptcy Code Section 503(b)(9), but are not limited to, claims based on goods delivered to the Debtor within the 20-day period immediately preceding the Petition Date that were sold to the Debtor in the ordinary course of the Debtor's business. The March 15, 2010 deadline set in the Bankruptcy Court's February 9, 2010, Order as the Claims Bar Date supersedes the later deadline originally set in the Notice of Chapter 11 Bankruptcy Case, Meeting of Creditors, & Deadlines dated January 12, 2010. The deadline in the Chapter 11 Notice for filing proofs of claims is no longer valid. IF YOU HAVE A PRE-PETITION CLAIM AGAINST THE DEBTOR, YOU MUST SUBMIT THAT CLAIM BY THE MARCH 15, 2010, CLAIMS BAR DATE IN ORDER FOR THAT CLAIM TO BE CONSIDERED TIMELY FILED (except for governmental units, which must file proofs of claim by the Governmental Claims Bar Date). NPC Acquisition Inc. is a Newark, New Jersey-based manufacturer of corrugated packaging and displays. NPC was created from a $25.5 million acquisition in late 2006. Revenue of $53.5 million in 2008 declined to $44 million in 2009. Mannkraft Corp. is another Newark-based packaging maker with the same controlling shareholders as NPC. NPC Acquisition filed for Chapter 11 protection on Jan. 12, 2010, (Bankr. D. N.J. Case No. 10-10702). Gregory S. Kinoian, Esq., and Paul S. Hollander, Esq., at Okin, Hollander & DeLuca, LLP, in Fort Lee, N.J., represent the debtor. NPC estimated its assets at less than $10 million and its debts at more than $10 million at the time of the filing. OXBOW CARBON: Moody's Gives Positive Outlook; Affirms 'B1' Rating ----------------------------------------------------------------- Moody's Investors Services changed Oxbow Carbon LLC's rating outlook to positive from stable and affirmed the company's B1 corporate family rating and B1 probability of default rating. At the same time Moody's affirmed the B1 ratings on the company's $350 million secured revolving credit agreement and its $674 million secured term loan B. The positive outlook reflects Moody's expectation that Oxbow will continue to evidence good earnings and cash generation performance over the next twelve to fifteen months. The outlook also incorporates the progress that the company has made in reducing debt levels and Moody's expectation that further debt reduction will be accomplished in 2010 from free cash flow generation. Moody's believe that the U.S. coal operations will again perform well in 2010, that the anode grade calcined petroleum coke business will show an improving volume profile as production in the aluminum industry improves, and that the distribution business will also evidence improved earnings and cash flow generation, particularly for petcoke. The B1 corporate family rating reflects the volatility inherent in the fuel grade petcoke, CPC and aluminum markets. However, Oxbow exhibits relatively stable operating margins given the operating construct of earnings being on a net spread basis. Moody's also considers the operational risks inherent to Oxbow's single coal mining site in Colorado. Although Moody's view the anode grade coke business, where the company enjoys a leading global position, as a significant earnings contributor, the diversity provided by its three primary business legs, which in addition to anode grade coke include coal and distribution, served it well in 2009. Strong performance in both the coal segment, given the contract nature of this business, and the distribution business mitigated the sharp contraction in anode grade coke as volumes declined in line with lower production levels in the aluminum industry. However, this segment remained profitable as margins continued acceptable given its margin on metal construct, which limits the degree of deterioration on the downside. The company's broad marketing base and coal operations should support performance as the CPC business continues to improve in 2010. Despite a weak operating environment in 2009, the company remained free cash flow generative, continued to reduce debt and maintained sound coverage ratios. Leverage improved meaningfully to about 2.2x on a LTM basis to September 30, 2009, notwithstanding a contraction in EBITDA. The last rating action on Oxbow was in April 2007 when the ratings were first assigned. Headquartered in West Palm Beach, Florida, Oxbow had revenues of roughly $2.7 billion in the twelve month period to September 30, 2009. Oxbow is a subsidiary of Oxbow Carbon & Minerals Holdings, Inc., a private company controlled by William I. Koch, with private equity and strategic investors holding the balance. Oxbow is a leading supplier of calcined petroleum coke, is the world's largest distributor of petroleum coke (largely industrial grade but also anode grade) and is also a distributor of other solid fuels, principally steam coal. Oxbow handles approximately 13.2 million tons of fuel grade petroleum coke, currently accounting for roughly 19% of the global petcoke market. PALISADES PARK: Mortgagees Want Chapter 11 Case Dismissed --------------------------------------------------------- PRIF II Chemtek, LLC, and P II River Vale GC Funding, LLC, have asked the U.S. Bankruptcy Court for the District of New Jersey to dismiss the bankruptcy case of Palisades Park Plaza North, Inc. According to the Mortgagees, the dispute arises from two separate judicial foreclosure proceedings against the Debtors. The Mortgagees say that it is those foreclosure proceedings which precipitated the bad faith filings by Debtors as a means to stonewall and delay the exercise of the Mortgagees' unequivocal right to foreclose. The Debtors filed their Chapter 11 petitions a few hours before the subject property was scheduled for a Sheriff's sale. In the event the Court isn't inclined to dismiss the Debtors' bankruptcy petitions, at a minimum, cause exists to lift the automatic stay permitting the Mortgagees to proceed with the foreclosure and sale of the mortgaged property. Absent this relief, the Mortgagees' security interest in the mortgaged property, which has already been materially diminished by the recent credit crisis and collapse in the real estate market, will be placed in further jeopardy. The outstanding mortgage debt is $21,132,339 as of February 1, 2010, which well exceeds the value of the mortgaged property. The Mortgagees say that this deficiency will continue to increase unless the Mortgagees are permitted to expeditiously proceed with their foreclosure and pursue a sale of the property at public auction. The Mortgagees ask the Court to dismiss the Debtor's Chapter 11 petitions as bad faith filings. The Mortgagees also ask the Court to excuse the Receiver, which was appointed by the state court in connection with the PRIF Foreclosure Action, from compliance under Section 543(d) of the U.S. Bankruptcy Code and prohibiting, to the extent applicable, the Debtors from using the Mortgagees' cash collateral, namely rents and income. A hearing on the Mortgagees' motion for the dismissal of the Debtor's Chapter 11 case will be held on March 17, 2010, at 10:00 a.m. The hearing had been set for March 9, 2010, at 10:00 a.m. PRIF II and P II are represented by Cole, Schotz, Meisel, Forman & Leonard, P.A. River Vale, New Jersey-based Palisades Park Plaza North, Inc., filed for Chapter 11 bankruptcy protection on February 5, 2010 (Bankr. D. N.J. Case No. 10-13394). Vincent F. Papalia, Esq., at Saiber, LLC, assists the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. PENTON BUSINESS: Plan Confirmation Hearing Set for March 5 ---------------------------------------------------------- Penton Business Media Holdings Inc. and its units will seek approval of their prepackaged Chapter 11 plan of reorganization from the Bankruptcy Court at a confirmation hearing on March 5. Once finalized, the restructuring will result in the elimination of $270 million of the Company's debt. In addition, certain of Penton's existing shareholders have agreed to make a significant new investment in the Company, which will provide additional working capital to fund operations and improve Penton's overall liquidity. The restructuring agreement also provides for an extension of the maturity on the Company's senior secured credit facility through 2014. The Plan has been approved by the requisite number of the Company's lenders and is subject to approval by the Court. The Company is seeking to emerge from Chapter 11 within 30 to 45 days. About Penton Media, Inc. As a leading, independent, business-to-business media company, Penton -- http://www.penton.com/-- knows business and how to create and disseminate the vital content that moves markets. Penton serves the information needs of more than six million business professionals every month in industries ranging from Agriculture and Aviation to Electronics, Natural Products, and Information Technology. Headquartered in New York City, the privately held company is owned by MidOcean Partners and U.S. Equity Partners II, an investment fund sponsored by Wasserstein & Co., LP, and its co-investors. Penton Media and its operating subsidiaries filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code on Feb. 10, 2010 (Bankr. S.D.N.Y. Case No. 10-10689). Attorneys at Jones Day serve as bankruptcy counsel. Kurtzman Carson Consultants LLC serves as claims and notice agent. The petition says that assets are $500 million to $1 billion while debts exceed $1 billion. PENTON BUSINESS: Moody's Cuts Probability of Default Rating to 'D' ------------------------------------------------------------------ Moody's Investors Service downgraded Penton Business Media Holdings, Inc.'s Probability of Default Rating to D from Caa2, Corporate Family Rating to Ca from Caa2, the first lien credit facility rating to Caa3 from Caa1, and the second lien credit facility rating to C from Caa3. This action follows Penton's announcement on February 10, 2010 that the company and its operating subsidiaries have filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code. Penton has received acceptance of its prepackaged Plan of Reorganization by the requisite number of first and second lien lenders. In accordance with the terms of the Plan, the restructuring would result in the elimination of $270 million of debt (all of the second lien facility). The restructuring agreement also provides for an eighteen month extension in maturity of the first lien facility and the injection of additional equity from certain of Penton's existing shareholders. The Caa3 rating on the first lien facility and the C rating on the second lien facility reflect Moody's expected recovery rates on these instruments in connection with the reorganization. Moody's downgraded these ratings of Penton Business Media Holdings, Inc.: * Corporate Family Rating -- to Ca from Caa2 * Probability of Default Rating -- to D from Caa2 Moody's downgraded these ratings of Penton Media Inc.: * $80 million first lien revolving credit facility -- to Caa3 (LGD3, 33%) from Caa1 (LGD3, 34%) * $603 (originally $620) million first lien term loan -- to Caa3 (LGD3, 33%) from Caa1 (LGD3, 34%) * $266 million second lien term loan -- to C (LGD5, 86%) from Caa3 (LGD5, 87%) Subsequent to the actions, all of Penton's ratings will be withdrawn because the company has entered bankruptcy. Please refer to Moody's withdrawal policy on moodys.com. The last rating action occurred on February 26, 2009, when Moody's downgraded Penton's Corporate Family Rating to Caa2 from B3. Penton's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected financial and operating performance of the company over the near-to-intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Penton's core industry and Penton's ratings are believed to be comparable to those of other issuers of similar credit risk. Penton Business Media Holdings, Inc., is a business-to-business media company. Headquartered in New York City, the company reported revenue of $338 million for the in the twelve months ended September 30, 2009. PENTON BUSINESS: S&P Downgrades Corporate Credit Rating to 'D' -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on New York City-based Penton Business Media Holdings Inc. and related entities to 'D'. The rating action reflects the company's announcement that it has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code. The global recession and secular challenges facing print advertising in light of competition from Internet-based media contributed to the company's weak operating performance in 2009. The weak operating performance raised leverage, weakened interest coverage, and reduced liquidity. S&P believes these factors contributed to the company's decision to file for bankruptcy protection. S&P is reevaluating its recovery ratings Penton's first- and second-lien senior secured facilities. The lenders have agreed on a plan which would eliminate $270 million of the company's debt and extend the maturity of the senior secured facilities through 2014. S&P analyzes Penton Business Media Holdings on a consolidated basis with Penton Business Media Inc. and Penton Media Inc. PETROHUNTER ENERGY: Posts $1.9-Mil. Loss in December Quarter ------------------------------------------------------------ PetroHunter Energy Corporation incurred a net loss of $1.9 million during the quarter ended December 31, 2009, as compared to a net loss of $15.5 million during the quarter ended December 31, 2008. For the three months ended December 31, 2009, oil and gas revenue was $0.0 as compared to $123,000 for the corresponding period in 2008. The decrease in revenue relates to the sale of the Company's only producing wells effective December 1, 2008. During the three months ended December 31, 2008, the Company recognized impairment of oil and gas properties of $10.3 million. There was corresponding impairment expense for 2009. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $5.4 million in total assets and $70.5 million in total liabilities, resulting in a $65.1 million shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $3.4 million in total current assets available to pay $70.5 million in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?5266 Going Concern As reported in the Troubled Company Reporter on January 18, 2010, Eide Bailly LLP, in Greenwood Village, Colorado, expressed substantial doubt about PetroHunter Energy Corporation'a ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended September 30, 2009, and 2008. The independent public accounting firm reported that the Company has an accumulated deficit of $279.2 million and net loss of $129.7 million for the year ending September 30, 2009, and as of that date has a working capital deficit of $64.9 million. The Company has an accumulated deficit of $281.1 million and a working capital deficit of $67.2 million as of December 31, 2009. About PetroHunter Energy Based in Denver, Colorado, PetroHunter Energy Corporation formerly Digital Ecosystems Corp.is an oil and gas exploration and production company, which currently holds oil and gas interests located in the Piceance Basin of Western Colorado, and in the Beetaloo Basin in the Northern Territory in Australia. PetroHunter currently owns a 25% working interest in four exploration permits covering 7 million acres in Australia, including one well (known as the Beetaloo Basin Project), and a 100% working interest in leases covering 20,000 acres and ten wells in the Piceance Basin in Western Colorado. These oil and gas wells have not yet commenced oil and gas production. PHOENIX COS: S&P Junks Counterparty Credit Rating From 'B-' ----------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its counterparty credit rating on Phoenix Cos. Inc. to 'CCC+' from 'B-'. At the same time, S&P lowered its counterparty credit and financial strength ratings on PNX's operating subsidiaries -- Phoenix Life Insurance Co., PHL Variable Insurance Co., and AGL Life Assurance Co. -- to 'BB-' from 'BB'. The outlook on PNX, Phoenix Life Insurance Co., and PHL Variable Insurance Co. is negative. The ratings on AGL Life Assurance Co. are on CreditWatch with developing implications. "The downgrade follows Phoenix's release of its fourth-quarter 2009 results, which showed that its statutory surplus and asset valuation reserve decreased by $26.2 million in the quarter, or a 4% decline, and $279.1 million for the full year, or a 33% drop," said Standard & Poor's credit analyst Adrian Pask. "The company also reported a GAAP operating loss of $34.2 million." The decline in surplus stemmed from increases in reserves for discontinued group accident and health business and credit losses. "The operating company ratings reflect a capital deficiency relative to S&P's expectation for the ratings," said Mr. Pask. "S&P believes that the deficiency is greater than two years of operating company earnings." Statutory earnings also were below expectations for the rating in 2009, reduced by reserve strengthening, investment losses, and higher-than-expected mortality claims in the companies' universal life and variable universal life (VUL) products. The fourth-quarter losses stemmed from additional reserve strengthening from discontinued group accident and health reinsurance exposure, which Standard & Poor's believed was substantially resolved in the second quarter of 2009, and a decrease in mortality margins on the companies' UL and VUL policies. Standard & Poor's remains concerned about the uncertainty surrounding future liabilities from the discontinued reinsurance exposures and potential erosion in UL and VUL mortality margins. Standard & Poor's believes that mortality margins on UL and VUL policies could remain depressed because of either the nature of the business issued or possible antiselection by policyholders in reaction to Phoenix's weakening credit profile. PHOENIX FOOTWEAR: Board Approves 2010 Cash Bonus Plan ----------------------------------------------------- The Compensation Committee of the Board of Directors of Phoenix Footwear Group, Inc., approved a 2010 Cash Bonus Plan for the Company's executives, including its Chairman, Chief Executive Officer and Chief Financial Officer. The Bonus Plan provides performance criteria based upon meeting predetermined fiscal year 2010 operating income targets. If the Company's operating income exceeds the minimum targets in the Bonus Plan, the participating executives may receive cash incentive bonus payments equal to a percentage of the executives' eligible base salary. With respect to the Named Executive Officers, once the minimum operating income is reached, the bonus percentage ranges of their eligible base salaries are as follows: Chairman 0% to 30% CEO 5% to 45% CFO 3% to 20% With respect to the other executives, specific to their position, the bonus percentage ranges are 4% to 35% of their eligible base salaries. If the Company's operating income exceeds the highest target in the Bonus Plan, the participating executives may share in an additional cash incentive bonus pool equal to 12.5% of the incremental change in operating income over that of the highest target. Going Concern Doubt The Company has incurred net losses for the last two fiscal years and the first nine months of fiscal 2009. In June 2008, the Company and its subsidiaries entered into a Credit and Security Agreement with Wells Fargo Bank, N.A. for a three year revolving line of credit and letters of credit collateralized by all the Company's assets and those of its subsidiaries. Under the facility, the Company could have borrowed up to $17.0 million (subject to a borrowing base which included eligible receivables and eligible inventory less availability reserves set by Wells Fargo). The Wells Fargo credit facility includes various financial and other covenants with which the Company has to comply to maintain borrowing availability and avoid an event of default and penalties and other remedies available to Wells Fargo. The Company has been in continuing default under its Wells Fargo credit facility since September 27, 2008, by failing to meet the financial covenant for income before income taxes. Since July 2009, the Company has entered into four forbearance agreements with Wells Fargo pursuant to which, among other things, Wells Fargo agreed, subject to certain conditions, to refrain from exercising remedies based on the specified past financial covenant defaults until October 23, 2009, with various automatic extensions that defer the maturity to November 30, 2009, provided the Company adheres to certain conditions. The Company undertook restructuring activities to raise cash to enable it to repay its bank debt. In the Company's most recent 10-Q filing, management of the Company said it is engaged in discussions with several different financing sources to provide the Company with proceeds to repay in full its revolving line of credit debt on or before November 30, 2009. The conditions raise substantial doubt about the Company's ability to continue as a going concern. At September 30, 2009, the Company's consolidated balance sheets showed $13.2 million in total assets, $9.8 million in total liabilities, and $3.4 million in shareholders' equity. Subsequent Events As reported in the Troubled Company Reporter on December 7, 2009, the Company, together with its subsidiaries, entered into an Accounts Receivable and Inventory Security Agreement on December 4, 2009, with First Community Financial, a division of Pacific Western Bank, for a two-year revolving credit facility collateralized by all of its personal property and those of its subsidiaries. Under the facility, the Company can borrow up to $4.5 million (subject to a borrowing base which includes Eligible Accounts Receivable and Eligible Inventory). The Eligible Inventory sublimit included in the borrowing base, currently capped at $1.5 million, shall be reduced by $200,000 per month beginning on January 15, 2010, until such amount is reduced to $300,000. Concurrently with the execution of the Accounts Receivable and Inventory Security Agreement, the Company made an initial borrowing thereunder in the amount of $2.0 million, which was used to pay in full the outstanding balances of $1.7 million owed to its then lender, Wells Fargo. About Phoenix Footwear Phoenix Footwear Group, Inc. (NYSE Amex: PXG) headquartered in Carlsbad, California, designs, develops and markets men's and women's footwear and accessories. Phoenix Footwear's brands include Trotters(R), SoftWalk(R) and H.S. Trask(R). These brands are primarily sold through department stores, specialty retailers, mass merchants and catalogs. PMI MORTGAGE: Arizona Dept. of Insurance Grants Waiver ------------------------------------------------------ The PMI Group, Inc.'s principal operating subsidiary, PMI Mortgage Insurance Co. (MIC), disclosed that the Arizona Department of Insurance, its primary state regulator, exercised discretion to permit MIC to continue writing new mortgage insurance business in the event it falls below Arizona capital requirements. The Department's waiver remains in effect until December 31, 2011. The Department may withdraw the waiver at any time if the facts and circumstances warrant such action. The Department issued the waiver following a comprehensive examination of PMI's operations, financial condition, capital/liquidity position, and its present and future business prospects. In the letter granting the waiver, the Department concluded that MIC currently has sufficient capital and resources to fulfill its current and projected policyholder obligations. L. Stephen Smith, Chairman and CEO of PMI, said, "The Department's action reflects the importance for MIC to continue to write new mortgage insurance in support of the U.S. housing recovery, and affirms our view that MIC has the financial resources to pay its policyholder obligations during a very challenging economic environment. PMI's continued ability to write new mortgage insurance will enable qualified low-down-payment borrowers to purchase a home, fostering sustainable homeownership that strengthens communities across the nation." About PMI Mortgage PMI Mortgage Insurance Co. is headquartered in Walnut Creek, CA and provides credit enhancement solutions that expand homeownership while supporting our customers and the communities they serve. Through its wholly and partially owned subsidiaries, PMI offers residential mortgage insurance and credit enhancement products. PRECISION DRILLING: S&P Retains 'BB' Rating With Stable Outlook --------------------------------------------------------------- Standard & Poor's Rating Services said that Precision Drilling Trust's (BB/Stable/--) announcement of its intention to convert back to a corporate structure has no immediate effect on S&P's ratings and outlook on the company. Although S&P generally believe the income trust structure limits an entity's financial flexibility, Precision Drilling's financial policies have emphasized internally funded growth rather than maximum distributions to unitholders. Furthermore, the leverage it incurred to acquire Grey Wolf Inc. heavily influenced S&P's initial ratings on the trust in October 2008. S&P believes Precision Drilling's ability to reduce leverage to a moderate level, which S&P views as appropriate for the highly volatile oilfield services sector, will have a more meaningful effect on its prospective credit profile. PROFESSIONAL LAND: Wants Malka Issak as Bankruptcy Counsel ---------------------------------------------------------- Professional Land Development, LLC, has asked for permission from the U.S. Bankruptcy Court for the Middle District of Florida to employ Malka Issak, Esq., as bankruptcy counsel. Ms. Issak will, among other things: a. give the Debtor legal advice with respect to its duties and powers as Debtor; b. take necessary steps to set aside preferential transfers; c. prepare on behalf of the Debtor the necessary motions, notices, pleadings, petitions, answers, orders, reports and other legal papers required in the Debtor's Chapter 11 case; and d. assist the Debtor in taking legally appropriate steps to effectuate the continued operations of the Debtor. Ms. Isaak was paid by a third party a $50,000 pre-petition retainer. In additional to retainer, the Debtor has also agreed to pay a reasonable attorney's fee which will be subject to approval by the Court. The Debtor assures the Court that Ms. Issak is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Tampa, Florida-based Professional Land Development, LLC, filed for Chapter 11 bankruptcy protection on February 5, 2010 (Bankr. M.D. Fla. Case No. 10-02569). The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. RAINBOW UNITED: To Pay Creditors in Full Under Chapter 11 Plan -------------------------------------------------------------- Josh Heck at Wichita Business Journal reports that Rainbows United Inc. filed a reorganizational plan that: * calls for all its creditors to be repaid in full within eight years. * repay more than $2.3 million in back taxes to the Internal Revenue Service and nearly $50,000 to the Kansas Department of Revenue within five years. The reorganization plan outlines Rainbows' works to emerge from bankruptcy and pay off its nearly $6 million debt. "The community has been so good to Rainbows United, so we feel it is our duty to pay back our creditors," the report quotes as saying Deb Voth, the organization's chief operating officer, who is overseeing day-to- day operations, as stating. About Rainbows United Headquartered in Wichita, Kansas, Rainbows United, Inc. -- http://www.rainbowsunited.org/-- is a Wichita nonprofit agency that serves children with special needs and their families. Rainbows United serves more than 2,600 children aged birth through 5, including more than 2,300 with special needs. The organization, which has 435 full- and part- time employees, serves primarily Sedgwick and Butler counties. Rainbows United filed for Chapter 11 bankruptcy protection on July 30, 2009 (Bankr. D. Kan. Case No. 09-12457). Edward J. Nazar, Esq., at Redmond & Nazar, L.L.P., assists the Company in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. RCN CORPORATION: Moody's Affirms 'B1' Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service affirmed the B1 Corporate Family Rating, B2 Probability of Default Rating and B1 senior secured bank debt ratings for RCN Corporation, and raised the company's speculative grade liquidity rating to SGL-2 from SGL-3. The upgrade of the SGL rating reflects the perceived improvement in RCN's liquidity profile and financial flexibility based on maintenance of excess cash balances combined with stability and potential improvement of the recent transition to positive free cash flow as capital spending relative to revenue generation moderates and this specific corporate objective is managed to realize free cash flow growth. Historical concerns about prospective compliance with ongoing tightening of the company's financial maintenance leverage covenant have also somewhat abated given the improving profile of internally generated cash sources. The rating outlook is stable. Upgrades: Issuer: RCN Corporation -- Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3 Affirmations: Issuer: RCN Corporation -- Corporate Family Rating, Affirmed at B1 -- Probability of Default Rating, Affirmed at B2 -- Senior Secured Credit Facility, Affirmed at B1 (LGD3-33%) RCN's B1 CFR continues to reflect the significant competitive threats from larger incumbent cable providers and regional bell operating companies, and management's shareholder-oriented fiscal policies as evidenced by historical debt-financed dividends and acquisitions. These risks, however, are partially offset by RCN's moderate debt-to-EBITDA leverage, strong operating capabilities including improved EBITDA margins and the company's deemed high quality network infrastructure. The SGL-2 speculative grade liquidity rating reflects RCN's ability to service its required debt payments from existing cash and short-term investments (about $84 million as of 9/30/09) and approximately $40 million or more of projected free cash flow in 2010. The good free cash flow generation is supported by RCN's relatively stable EBITDA and a flat capital program with an expected reduction in the Resi/SMB segment following the completion of the company's Analog Crush project, offset by higher investment in RCN Metro. In addition, RCN's sizable cash and short-term investment balance affords flexibility to pay down debt and ensure ongoing compliance with scheduled reductions in the financial maintenance debt-to-EBITDA covenant as stipulated in the bank credit agreement. The last rating action was on February 11, 2009, when Moody's affirmed RCN's ratings and lowered its speculative grade liquidity rating to SGL-3 from SGL-2 on concerns about prospective compliance with tightening financial maintenance covenants. Based in Herndon, Virginia, RCN is a facilities-based competitive provider of bundled cable, high-speed Internet and phone services to residential customers in the high-density northeast and Chicago markets. RCN also serves a growing base of commercial customers through RCN Business Services, which serves as a provider of bulk video, broadband Internet access and voice services to small- and medium-sized business customers, and RCN Metro Optical Networks, which is a facilities-based provider of high capacity data transport services to large enterprise and carrier customers. SABINE PASS: S&P Affirms 'B+' Rating on $2.2 Bil. Senior Notes -------------------------------------------------------------- Standard & Poor's Ratings Services said it affirmed its 'B+' rating on midstream energy company Sabine Pass LNG L.P.'s approximate $2.2 billion of senior secured notes. The outlook is stable. At the same time, S&P revised S&P's recovery rating to '3', indicating meaningful recovery of principal (50%-70%) in the event of a payment default, from '4' (30% to 50% recovery). The updated recovery ratings primarily reflect the project's enhanced capacity following the completion of Phase II of the project. Sabine Pass, an indirectly owned, 91.6% subsidiary of Cheniere Energy Inc. (CCC+/Stable/--), the Houston-based liquefied natural gas project developer, consists of a 4 billion cubic feet/day regasification terminal. "With construction now complete, the project structure and contractual foundation of Sabine Pass are consistent with an investment-grade credit profile on a stand-alone basis," said Standard & poor's credit analyst Mark Habib. However, S&P caps the ratings differential between the two entities because S&P think Cheniere's deteriorating financial condition could also harm asset quality at Sabine Pass. Sabine Pass' ratings are higher than Cheniere's due to strong ring- fencing protections that S&P believes insulate the credit quality of Sabine Pass from the rest of the Cheniere organization and allow for the maximum three-notch rating differential under S&P's project finance criteria. The stable outlook on Sabine Pass is tied to Cheniere's outlook and is based on the construction of Sabine Pass being complete and the company maintaining a stable liquidity position. Cheniere's financial risk profile has also improved slightly following reduced debt and interest expense associated with paying down some of the convertible senior unsecured notes. A higher rating could be warranted if Cheniere's liquidity position experiences sustained improvement to the point its unrestricted cash balance can meet interest payments longer into the future than current expectations and is also expected to increase each quarter. Notably higher ratings would require Cheniere Marketing to produce significant incremental cash flows for Cheniere to reduce its parent-level debt and markedly improve its financial risk profile. S&P could lower the rating if Cheniere raises additional debt at the parent level, its unrestricted cash balance experiences a material decline, or if additional shares of its common stock are repurchased with cash on hand. SALON MEDIA: Posts $1.7-Mil. Net Loss in Qtr Ended Dec. 31 ---------------------------------------------------------- Salon Media Group Inc. reported a net loss of $1.7 million on net revenues of $1.4 million for the three months ended December 31, 2009, compared to a net loss of $1.1 million on net revenues of $1.8 million for the same period of 2008. Advertising revenues decreased 25% to $1.1 million for the three months ended December 31, 2009, from $1.5 million for the three months ended December 31, 2008. For the nine months ended December 31, 2009, the Company had a net loss of $4.0 million on net revenues of $3.4 million, compared to a net loss of $3.0 million on net revenues of $5.7 million for the corresponding period a year ago. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed $2.1 million in total assets and $8.2 million in total liabilities, resulting in a $6.1 million shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $1.4 million in total current assets available to pay $5.1 million in total current liabilities. A full-text copy of the Company's quarterly report is available at no charge at http://researcharchives.com/t/s?528a Going Concern Doubt Burr, Pilger & Mayer LLP, Salon's independent accountants for the year ended March 31, 2009, has included a paragraph in its report indicating that substantial doubt exists as to Salon's ability to continue as a going concern because of Salon's recurring operating losses, negative cash flow and accumulated deficit. Salon has incurred significant net losses and negative cash flows from operations since its inception. As of December 31, 2009, Salon had an accumulated deficit of $105 million. These losses have been funded primarily through the issuance of common stock from Salon's initial public offering in June 1999, issuances of preferred stock and convertible notes, bank debt, and advances from related parties. About Salon Media Based in San Francisco, Salon Media Group Inc. (OTC: SLNM.OB) -- http://www.salon.com/-- is an online news and social networking company and an Internet publishing pioneer. SEVEN FALLS: Administrator Wants Case Dismissed or Converted ------------------------------------------------------------ Times-News staff writer James Shea says U.S. Bankruptcy Administrator Alexandria Kenny asked the Bankruptcy Court to dismiss the Chapter 11 case of Seven Falls Golf and River Club LLC or convert their reorganization case to liquidation under Chapter 7. According to the administrator, the Company's developer Keith Vinson failed to file require status reports in one of his bankruptcy cases, is unlikely to propose a feasible plan to reorganize his business and emerge from bankruptcy and is not represented by a disinterested attorney. A hearing is set on Wednesday to consider the administrator's request, Mr. Shea says. Seven Falls is a private golf and river club located in the Blue Ridge Mountains near Hendersonville and Asheville in Western North Carolina. The company filed for bankruptcy protection on Dec. 23, 2009, listing assets of between $100,000 and $500,000, and liabilities of between $1 million and $10 million. SKILLSOFT PLC: S&P Puts 'BB-' Rating on CreditWatch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services said it placed its ratings, including the 'BB-' corporate credit rating, on Nashua, New Hampshire-based SkillSoft PLC on CreditWatch with negative implications. This action follows the company's announcement earlier that it has agreed to be acquired by a group of private investors, including Berkshire Partners, Advent International, and Bain Capital for $1.1 billion in cash. While SkillSoft's existing $200 million term loan has about $85 million outstanding, the proposed interim capital structure includes a $40 million revolving credit facility, a $325 million term loan, and a $240 million unsecured interim loan. "S&P believes that when this leveraged deal is completed, it will weaken the company's credit metrics," said Standard & Poor's credit analyst Joseph Spence. S&P will resolve the CreditWatch when more information regarding the final form of the transaction becomes available and S&P can assess the effects on SkillSoft's capital structure and operating prospects. If the existing loan is repaid and the new debt is not rated, S&P would expect to withdraw its ratings. SPHERIS INC: Wants to Employ Young Conaway as Bankruptcy Counsel ---------------------------------------------------------------- Spheris Inc., et al., have asked for permission from the U.S. Bankruptcy Court for the District of Delaware to employ Young Conaway Stargatt & Taylor, LLP, as bankruptcy counsel, nunc pro tunc to the Petition Date. Young Conaway will, among other things: a. provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their business and management of their properties; b. pursue confirmation of a Chapter 11 Plan, or, if necessary, an alternative plan of reorganization, and approval of the corresponding solicitation procedures and disclosure statement; c. appear in Court and protect the interests of the Debtors before the Court; and d. perform other legal services for the Debtors which may be necessary and proper in the proceedings. Young Conaway will be paid based on the hourly rates of its personnel: Robert S. Brady, Partner $660 Matthew B. Lunn, Partner $425 Maris Finnegan, Associate $335 Ryan Bartley, Associate $285 Michael Girello, Paralegal $220 Matthew B. Lunn, a partner in Young Conaway, assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Franklin, Tennessee-based Spheris Inc. -- http://www.spheris.com/ -- dba Spheris Holdings, LLC; dba Spheris Holding Inc.; and dba Total eMed, Inc., is a global provider of clinical documentation technology and services to more than 500 health systems, hospitals and group practices throughout the U.S. Founded by doctors, Spheris solutions address the needs of practitioners, health information directors, IT directors and administrators. The Company filed for Chapter 11 bankruptcy protection on February 3, 2010 (Bankr. D. Delaware Case No. 10-10352). The Company listed $50,000,001 to $100,000,000 in assets and $100,000,001 to $500,000,000 in liabilities. The Company's affiliates -- Spheris Canada Inc.; Spheris Holding II, Inc.; Spheris Leasing LLC; Spheris Operations LLC; and Vianeta Communications -- filed separate Chapter 11 petitions. TODD FULCHER: Judge Doub Appoints Chapter 11 Trustee ---------------------------------------------------- Branch Banking and Trust Company asked the Honorable Randy D. Doub to appoint a chapter 11 trustee to oversee the restructuring of Todd Fulcher, LLC. Judge Doub held a hearing on Feb. 4 and 5, 2010, and ordered the appointment of John Bircher, Esq., of New Bern, N.C., as the Chapter 11 Trustee pursuant to 11 U.S.C. Sec. 1104. "The Debtor, Todd A. Fulcher, and any employees of the Debtor shall fully cooperate with the Chapter 11 Trustee, including but not limited to, timely providing relevant documents, corporate books and records, bank statements, insurance binders, or any other information as requested by the Chapter 11 Trustee," Judge Doub says. Todd Fulcher, LLC, sought Chapter 11 protection (Bankr. E.D.N.C. Case No. 10-00174) on Jan. 11, 2010. A copy of the Debtor's chapter 11 petition is available at no charge at: http://bankrupt.com/misc/nceb10-00174.pdf SOLAR ENERTECH: Posts $3.9 Million Net Loss in Qtr Ended Dec. 31 ---------------------------------------------------------------- Solar EnerTech Corp. announced Friday financial results for the first quarter ended December 31, 2009. Net loss for the first quarter of fiscal 2010 was $3.9 million, or negative $0.04 per basic and diluted share compared to a net loss of $3.8 million, or negative $0.04 per basic and diluted shares in the same period in fiscal 2009. In the first quarter of fiscal 2010, the Company recorded a non-cash gain totaling $1.0 million associated with a change in the fair market value of warrant liability and a change in the fair market value of compound embedded derivative liability compared to a total non-cash gain of $2.1 million for these two same items in the first quarter of fiscal 2009. Excluding non-cash items, on a non-GAAP basis, the first quarter 2010 net loss was $4.9 million compared to a net loss of $5.9 million in the prior year period. Both the compound embedded derivative and warrant liabilities were recorded in conjunction with the convertible notes transaction entered into by the Company in March 2007. Total module shipments increased 448% in the first fiscal quarter 2010, compared to the first fiscal quarter of the prior year. Revenue increased 248% to $17.7 million compared to $5.1 million in the first fiscal quarter of the prior year. Revenue for fiscal 2010 first quarter was comprised of approximately $15.3 million in solar modules sales, of which more than 95% were sold to Europe and Australia, and $2.4 million in solar cell sales. The first fiscal quarter 2010 gross profit increased to positive $1.9 million, compared to negative $2.3 million in the first quarter in the prior year period. First quarter 2010 gross margin was positive at 11% of total sales compared to negative 46% of total sales in the prior year period. Total operating expenses for the fiscal 2010 first quarter were $2.3 million, or 13% of total net sales, which included an approximate $600,000 non-cash stock compensation credit related to the restructuring of the management team. Excluding these non- cash items, the operating expense for the fiscal 2010 first quarter was $1.7 million, or 10% of total net sales. This compares with the 2009 first quarter total operating expense of $3.2 million, or 63% of total sales, which included $1.4 million of non-cash stock compensation charges related to the hiring and retention of key executives and $310,000 non-cash charges for loss on debt extinguishment. The increase in operating expenses in the fiscal 2010 first quarter compared to fiscal 2009 first quarter was primarily due to increase shipping rates and volume. Mr. Leo S. Young, Chief Executive Officer of Solar EnerTech commented, "Fiscal first quarter result indicates a significant accomplishment for Solar EnerTech during the past six months since we made a strategic adjustment to focus on supplying superior products to our customers. We are pleased to see continued strong top-line growth in the quarter - our main product shipment increased four times and revenue increased nearly 250% compared to the same period last year. As our capacity has increased and the quality of our solar cells becomes further recognized in the industry, we now have the opportunity to focus on advancing our brand name recognition." "While we have been experiencing volatile market conditions for the last several months, the entire management team is up to the challenge. Our focus on product quality, coupled with our efforts in support services, has provided satisfaction among our major customers in Europe and Australia, and that in turn enabled us to acquire new customers. We are encouraged with the demand trends we're seeing in our business and believe the quality of our products differentiate Solar EnerTech from many of other players in the global PV business," concluded Mr. Young. Financial Position As of December 31, 2009, the Company had $1.6 million in cash, $8.4 million of accounts receivables, $629,000 of prepayment primarily for purchase of raw materials, $5.8 million of inventories on hand, $705,000 of deferred financing cost associated to the convertible notes and $1.1 million of VAT and other receivables. Additionally, as of December 31, 2009, the Company had $9.9 million of accounts payable, customer advance payment and accrued liabilities, $5.7 million of accrued liability due to related party, $74,000 of derivative liabilities and $11.6 million in principal of convertible notes outstanding, which are recorded at carrying value at $6.8 million. On January 7, 2010, the Company entered into a Series A Notes and Series B Notes Conversion Agreement with the holders holding over 75% of the outstanding principal amounts owed under the Series A and Series B Notes to modify the terms of the notes. Pursuant to the terms of the Conversion Agreement, the notes were automatically converted into shares of the Company's common stock at a conversion price of $0.15 per share and amended to eliminate the maximum ownership percentage restriction prior to such conversion. In addition, the Company and the holders of over 50% of each of the outstanding Series A, Series B and Series C Warrants (collectively the "PIPE Warrants") entered into an Amendment to the Series A, B and C Warrants in conjunction with the Conversion Agreement. Pursuant to the terms of the Warrant Amendment, the PIPE Warrants were amended to reduce their exercise prices from $1.21, $0.90 and $1.00, respectively, to $0.15. The PIPE Warrants were also amended to (a) waive the anti-dilution provisions of the PIPE Warrants that would increase the number of shares issuable pursuant to the PIPE Warrants in inverse proportion to the reduction in the exercise price, (b) waive all anti-dilution protections as to future transactions and (c) eliminate maximum ownership percentage restrictions. Balance Sheet At December 31, 2009, the Company's consolidated balance sheets showed total assets of $29.9 million, total liabilities of $23.5 million, and total shareholders' equity of $6.4 million. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $18.3 million in total current assets available to pay $22.4 million in total current liabilities. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://researcharchives.com/t/s?52b0 Going Concern Doubt The Company has incurred significant net losses and has had negative cash flows from operations during each period from inception through December 31, 2009, and has an accumulated deficit of approximately $72.2 million at December 31, 2009. For the three months ended December 31, 2009, the Company had operating cash flows of $138,000 and incurred a net loss of approximately $3.9 million. As of December 31, 2009, the Company had outstanding convertible notes with a principal balance of $11.6 million consisting of $2.5 million in principal amount of Series A Convertible Notes and $9.1 million in principal amount of Series B Convertible Notes, which were recorded at carrying amount at $6.8 million. These Notes bear interest at 6% per annum and are due on March 7, 2010. The Company only had approximately $1.6 million in cash and cash equivalents on hand as of December 31, 2009. "The conditions described raise substantial doubt about the Company's ability to continue as a going concern." On January 7, 2010, the terms of the Notes and the warrants issued in conjunction with the Notes were amended. The Company believes that if the Company is able to execute on its business plan, the successful completion of the conversion, along with the Company's existing cash resources and the cash expected to be generated from operations during fiscal year 2010 will be sufficient to meet the Company's projected operating requirements at least through September 30, 2010, and enable it to continue as a going concern. About Solar EnerTech Solar EnerTech Corp. (OTC BB: SOEN) is a photovoltaic solar energy cell manufacturing enterprise incorporated in the United States with its corporate office in Mountain View, California. The Company has established a sophisticated 67,107-square-foot manufacturing facility at Jinqiao Modern Technology Park in Shanghai, China. The Company currently has two 25MW solar cell production lines and a 50MW solar module production facility. Solar EnerTech has also established a Joint R&D Lab at Shanghai University to develop higher efficiency cells and to put the results of that research to use in its manufacturing processes. SPANSION INC: Posts $514.1 Million Net Loss in Fiscal 2009 ---------------------------------------------------------- Spansion Inc. reported a net loss of $514.1 million on net sales of $1.411 billion for the fiscal year ended December 27, 2009, compared with a net loss of $2.4 million on net sales of $2.282 billion for fiscal 2008. Total net sales in fiscal 2009 decreased 38% compared to total net sales in fiscal 2008. The decrease in total net sales was primarily attributable to a 34% decrease in unit shipments. The Company recorded an impairment charge of approximately $12.5 million in the fourth quarter of fiscal 2009 primarily due to impairment of the Company's equity investment in and loan to an investee. The Company recorded an impairment charge of approximately $1.653 billion in the fourth quarter of fiscal 2008. Reduced unit demand resulted in factory underutilization, lower prices, negative margins and together these effects resulted in a lower fair value for the Company's plant and equipment than their then current carrying value. Furthermore, the Company determined that the carrying values of goodwill and intangible assets from the Saifun acquisition exceeded fair value. The impairment charges were comprised of impairments of property, plant and equipment (approximately $1.578 billion), goodwill (approximately $20.8 million) and intangible assets (approximately $53.5 million). Reorganization items totaled $391.4 million for fiscal 2009 and were comprised of a provision for expected allowed claims of approximately $354.9 million related primarily to rejection or repudiation of executory contracts and leases and the effects of approved settlements and approximately $37.1 million for professional fees. No such charges were incurred in fiscal 2008 and fiscal 2007. The Company recorded income tax expense of $597,000 in fiscal 2009 compared to approximately $62.9 million in fiscal 2008. Balance Sheet At December 27, 2009, the Company's consolidated balance sheets showed $1.438 billion in total assets and $2.296 billion in total liabilities, resulting in a $857.7 million shareholders' deficit. A full-text copy of the Company's fiscal 2009 annual report is available at no charge at http://researcharchives.com/t/s?52b3 Bankruptcy Update On March 1, 2009, Spansion Inc., Spansion Technology LLC, Spansion LLC, Spansion International, Inc., and Cerium Laboratories LLC each filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 cases are being jointly administered under Case No. 09-10690 (KJC). Spansion's second amended disclosure statement and its plan of reorganization were approved by the U.S. Bankruptcy Court on December 22, 2009. Pursuant to the Plan of Reorganization, allowed administrative claims and priority tax claims would be paid in full in cash or cash equivalents. Other allowed secured claims would be reinstated, paid in full in cash or have the collateral securing such claims returned to the secured creditor. Allowed unsecured convenience claims (in amount equal to, less than or reduced to $2,000) would be paid in full in cash. Any remaining value would be distributed on a pro rata basis, subject to any applicable subordination agreements, to holders of allowed unsecured claims (other than certain claims, including claims based on non- compensatory damages and penalties and intercompany claims) in the form of new Spansion common stock. Under the Plan of Reorganization, the Company's current stockholders will not be entitled to any recovery, making such shares of common stock valueless. The confirmation hearing in the U.S. Bankruptcy Court is scheduled to begin on February 24, 2010. If the U.S. Bankruptcy Court confirms the Plan of Reorganization, the Debtors expect to emerge from Chapter 11 shortly thereafter. Spansion Japan On February 10, 2009, Spansion Japan Limited, a wholly-owned subsidiary of Spansion LLC (Spansion Japan), filed a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from Spansion Japan's creditors (the Spansion Japan Proceeding), and the Tokyo District Court approved the filing of the Spansion Japan Proceeding on March 3, 2009, and appointed the incumbent representative director of Spansion Japan as trustee. As a result, and in accordance with U.S. GAAP, the financial results of Spansion Japan Limited are no longer included in the consolidated financial results of Spansion Inc. after March 3, 2009. On January 8, 2010, the Company reached an agreement in principle (the Settlement) with its former subsidiary, Spansion Japan, to (i) acquire Spansion Japan's distribution business; (ii) obtain foundry services, including wafer and sort services, from Spansion Japan; and (iii) resolve the Company's dispute with Spansion Japan relating to pricing of wafers purchased for the period beginning February 9, 2009, through October 27, 2009 (the Disputed Period). The Settlement remains subject to the completion of definitive agreements. On January 29, 2010, the U.S. Bankruptcy Court and on February 1, 2010, the Tokyo District Court approved the Settlement. The Company expects the definitive agreements implementing the Settlement to be executive in February 2010. Cash Flows The Company ended fiscal 2009 with $324.9 million in cash, compared to $116.4 million at the end of fiscal 2008. The Company generated $236.5 million in cash from operating activities in fiscal 2009, due to significant non-cash items and changes in operating assets and liabilities. Non-cash items primarily consisted of $168.4 million of depreciation and amortization, $14.0 million of asset impairment charges, $19.8 million of provisions for doubtful accounts,, and $12.4 million of stock compensation costs, and the $30.1 million of gain from the deconsolidation of Spansion Japan. The net changes in operating assets and liabilities in fiscal 2008 consisted primarily of an increase in accounts payable and accrued liabilities of $629.4 million, a decrease in inventories of $180.6 million and an increase in receivables of $284.4 million. The Company generated $262.6 million in cash from operating activities in fiscal 2008, due to significant non-cash items and changes in operating assets and liabilities. Non-cash items included in the net loss consisted primarily of approximately $644.5 million of depreciation and amortization, and in-process research and development write-off, approximately $1.7 billion of asset impairment charges, and approximately $21.6 million in stock compensation costs. The net changes in operating assets and liabilities in fiscal 2008 consisted primarily of a decrease in accounts receivables of approximately $141.2 million due to a decline in net sales as a result of the adverse market conditions and a decrease in inventory of approximately $204.7 million. Net cash used in investing activities was approximately $62.8 million in fiscal 2009, primarily comprised of cash reduction of approximately $52.1 million related to the deconsolidation of Spansion Japan, capital expenditures of approximately $29.7 million, decrease in cash of $10.4 million related to the sale of the Suzhou assembly and test facility, and a loan (investment) of approximately $5.3 million made to an investee in January 2009 pursuant to terms of an existing contractual obligation, partially offset by proceeds of $14.8 million from redemptions of auction rate securities (ARS) and proceeds of $15.5 million from the sale of the Company's Suzhou assembly and test facility. Net cash used in investing activities in fiscal 2008 was approximately $331.7 million, which consisted of approximately $430.8 million of capital expenditures used to purchase property, plant and equipment, principally related to the Company's investment in 300-millimeter equipment at the manufacturing facility in Japan and in the Company's Submicron Development Center offset by a cash inflow of approximately $133.7 million from the maturities and sale of ARS. Net cash provided by financing activities in fiscal 2009 was primarily comprised of approximately $117.8 million from borrowings mainly under the UBS AG Loan and the Spansion Japan 2007 Revolving Credit Facility, offset in part by approximately $79.9 million in repayments of debts, primarily the Senior Secured Revolving Credit Facility, UBS Loan Secured by ARS, and certain capital lease obligations. Net cash provided by financing activities was approximately $8.8 million in fiscal 2008. This amount included approximately $250.6 million of borrowing proceeds primarily from the Company's Spansion Japan 2007 Revolving Credit Facility, Spansion Japan 2007 Credit Facility and Senior Secured Revolving Credit Facility, offset by approximately $241.8 million in repayments on debt (primarily under the Spansion Japan 2007 Revolving Credit Facility and Spansion Japan 2007 Credit Facility) and capital lease obligations. About Spansion Inc. Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/-- is a Flash memory solutions provider. Spansion is a former joint venture of AMD and Fujitsu. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Committee Seeks to Expand FTI Work ------------------------------------------------ The Official Committee of Unsecured Creditors seeks the Court's authority to expand the scope of services provided by FTI Consulting, Inc., as its financial advisors, nunc pro tunc to November 23, 2009. The Committee seeks to include additional services related to the analysis of intercompany transfer from Spansion, LLC to Spansion Japan Limited within the one-year period prior to the Petition Date. According to the Committee, the expanded services have been, and are, necessary to permit it to make an informed decision regarding settlement proposals between Spansion, LLC and Spansion Japan. By mid-November 2009, the Debtors were working towards a negotiated settlement with Spansion Japan Limited. The settlement would resolve a dispute between the Debtors and Spansion Japan related to wafers purchased pursuant to a prepetition foundry agreement. At the request of the Committee, as part of evaluating the proposed settlement with Spansion Japan, FTI undertook the majority of the analysis relating to intercompany transfers from Spansion, LLC to Spansion Japan within one year prior to the Petition Date. The Committee asserts that while FTI's original scope of services included assistance in the evaluation and analysis of avoidance actions including fraudulent conveyances and preferential transfers, the Committee requested that FTI take the lead rather than merely review the Debtors' high-level summary analysis of the Transfers. The Committee clarifies that FTI will continue to perform all of its original scope of services and will continue to be entitled to receive the original compensation as approved by the Court. FTI's compensation in connection with the Expanded Scope will be on an hourly basis and will be based on the actual hours worked and on these billing rates: Senior Managing Directors $725-$885 Managing Directors $635-$725 Directors $585-$655 Senior Consultants/Consultants $290-$515 Administration/Paraprofessionals $105-$225 About Spansion Inc. Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/-- is a Flash memory solutions provider. Spansion is a former joint venture of AMD and Fujitsu. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Fee Applications Have No Objections ------------------------------------------------- Spansion Inc. certified to the Court that no objections were filed as to retained professionals' monthly fee applications. Accordingly, the Debtors are now authorized to pay 80% of fees and 100% of expenses: Professional Period 80% Fees 100% Expenses ------------ ------ -------- ------------- Ernst & Young LLP 11/01/09- 11/30/09 $52,425 $0 Brincko Associates, Inc. 12/01/09- 12/31/09 90,114 4,245 Warren H. Smith & 12/01/09- Associates, P.C. 12/31/09 20,078 299 Duane Morris LLP 09/01/09- 11/30/09 324,200 8,212 Latham & Watkins LLP 09/01/09- 11/30/09 3,136,350 55,400 King & Spalding LLP 09/01/09- 11/30/09 4,580,416 125,357 Morrison & Foerster LLP 09/01/09- 11/30/09 484,109 41,364 Ernst & Young LLP 09/01/09- 11/30/09 76,929 93 K&L Gates LLP 09/01/09- 11/30/09 217,111 288,574 Sitrick and Company Inc. 09/01/09- 11/30/09 4,897 0 B. Professionals of the Official Committee on Unsecured Creditors Professional Period Fees Expenses ------------ ------ ---- -------- Young Conaway Stargatt & 09/01/09- Taylor, LLP 11/30/09 $157,533 $9,476 Young Conaway Stargatt 12/01/09- & Taylor, LLP 12/31/09 140,503 16,951 FTI Consulting, Inc. 09/01/09- 11/30/09 450,000 11,211 FTI Consulting, Inc. 12/01/09- 12/31/09 150,000 3,376 Paul, Hastings, Janofsky 09/01/09- & Walker LLP 09/30/09 257,234 3,416 Landis Rath & Cobb LLP 12/01/09- 12/31/09 13,132 72 Young Conaway serves as the Committee's co-counsel. FTI Consulting acts as the Committee's financial advisor. Young Conaway is the Committee's co-counsel. Paul Hastings serves as the Committee's counsel. Landis Rath serves as conflicts counsel to the Committee. In a separate filing, the Committee notifies the Court that no objections were filed as to Landis Rath & Cobb LLP's monthly application for the period from December 1 through December 31, 2009. Accordingly, the Debtors are now authorized to pay the firm 80% of fees or $10,505 and 100% of the requested reimbursement or $72. Fee Auditor's Report Warren H. Smith & Associates, P.C., in its capacity as fee auditor in the Debtors' bankruptcy cases, submitted with the Court a final report regarding the second interim fee application of Latham & Watkins LLP, and the other interim fee applications of the Debtors' professionals: Recommended Recommended Professional Period Fees Expenses ------------ --------- ----------- ----------- Latham & Watkins LLP 06/01/09- 08/31/09 $2,862,069 $59,383 Gordian Group, LLC 06/01/09- 08/31/09 225,000 24,120 Ernst & Young LLP 06/01/09- 08/31/09 465,960 694 K&L Gates LLP 06/01/09- 08/31/09 583,380 202,774 Duane Morris, LLP 06/01/09- 08/31/09 261,839 5,361 FTI Consulting, Inc. 06/01/09- 08/31/09 450,000 12,997 Timothy Gray 03/02/09- 10/31/09 75,553 0 KPMG LLP 06/01/09- 08/31/09 232,193 6,434 Committee Members 03/01/09- 06/30/09 - 698 Sitrick & Co., Inc. 06/01/09- 08/31/09 1,903 0 Wilson Sonsini Goodrich 06/01/09- & Rosati, P.C. 08/31/09 45,754 0 Young Conaway Stargatt & 06/01/09- Taylor, LLP 08/31/09 20,612 5,831 Baker & McKenzie LLP 06/01/09- 08/31/09 333,088 2,707 Paul, Hastings, Janofsky 03/12/09 & Walker LLP 06/30/09 1,313,065 49,499 Morrison & Foerster LLP 06/01/09- 08/31/09 797,479 50,467 Morgan Stanley & Co., 03/01/09 Inc. 08/31/09 700,000 130,618 Baker & McKenzie's recommended fees reflect a reduction by $26,288. Ernst & Young's recommended fees represent a reduction by $7,140 and its recommended expenses has been reduced by $.25. Gordian Group's recommended expenses reflect a reduction by $1,311. K&L Gates' recommended fees reflect a reduction by $58,710 and its recommended expense reimbursement reflects a reduction by $6,344. Paul Hasting's recommended fees represent a reduction by $3,216. Paul Hasting's recommended expenses reflect a reduction by $150. Morrison & Foerster's recommended fees reflect a reduction by $675. Morgan Stanley's recommended expense reimbursement reflect a reduction by $33,917. About Spansion Inc. Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/-- is a Flash memory solutions provider. Spansion is a former joint venture of AMD and Fujitsu. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPANSION INC: Noteholders Want to Depose Silver Lake ---------------------------------------------------- The Ad Hoc Committee of Convertible Noteholders informed the Court that it was scheduled to take the deposition of Silver Lake Sumeru L.P., last February 4, 2010, at the offices of Simpson Thacher located at 2550 Hanover Street, Palo Alto. The deposition was to be taken before a disinterested, duly qualified Notary Public or some other officer authorized by law to administer oaths. The deposition was to be recorded by stenographic or video means. Under Rule 30(b)(6) of the Federal Rules of Civil Procedure, the Deponent was required to designate one or more representatives to testify regarding: (1) All communications and negotiations with Debtors, their counsel, consultants or financial advisors regarding the Backstop Rights Purchase Agreement and Backstop Commitment; (2) All analysis performed by Silver Lake concerning the Backstop Agreement; (3) All analysis performed by Silver Lake concerning the value of the shares that Deponent may receive under the Backstop Agreement; (4) Deponent's ownership interest in any debt or equity instruments of Debtors; and (5) The historical relationship between Silver Lake or any of the principals of the Deponent and any members of Debtors' management. Moreover, the Deponent was directed to produce copies of these documents: * Copies of all documents related to any communications between Silver Lake, or any of its representatives, and Debtors related to the Backstop Commitment. * All documents related to any analysis performed by Silver Lake or any of its representatives concerning the Backstop Agreement. * All documents related to any analysis performed by Silver Lake or any of its representatives concerning the value of the shares that Deponent may receive under the Backstop Agreement. * Documents sufficient to identify any ownership interest by Silver Lake in any debt or equity instruments of Debtors from January 1, 2009, to the present. About Spansion Inc. Spansion Inc. (Pink Sheets: SPSNQ) -- http://www.spansion.com/-- is a Flash memory solutions provider. Spansion is a former joint venture of AMD and Fujitsu. Spansion Inc., Spansion LLC, Spansion Technology LLC, Spansion International, Inc., and Cerium Laboratories LLC filed voluntary petitions for Chapter 11 on March 1, 2009 (Bankr. D. Del. Lead Case No. 09-10690). On February 9, 2009, Spansion's Japanese subsidiary, Spansion Japan Ltd., voluntarily entered into a proceeding under the Corporate Reorganization Law (Kaisha Kosei Ho) of Japan to obtain protection from its creditors as part of the company's restructuring efforts. None of Spansion's subsidiaries in countries other than the United States and Japan are included in the U.S. or Japan filings. Michael S. Lurey, Esq., Gregory O. Lunt, Esq., and Kimberly A. Posin, Esq., at Latham & Watkins LLP, have been tapped as bankruptcy counsel. Michael R. Lastowski, Esq., at Duane Morris LLP, is the Delaware counsel. Epiq Bankruptcy Solutions LLC, is the claims agent. The United States Trustee has appointed an official committee of unsecured creditors in the case. As of September 30, 2008, Spansion disclosed total assets of US$3,840,000,000, and total debts of US$2,398,000,000. Spansion Japan Ltd. filed a Chapter 15 petition on April 30, 2009 (Bankr. D. Del. Case No. 09-11480). The Chapter 15 Petitioner's counsel is Gregory Alan Taylor, Esq., at Ashby & Geddes. It said that Spansion Japan had US$10 million to US$50 million in assets and US$50 million to US$100 million in debts. Bankruptcy Creditors' Service, Inc., publishes Spansion Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Spansion Inc. and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000) SPECTRUM BRANDS: Inks Merger Agreement With Russell Hobbs --------------------------------------------------------- Spectrum Brands, Inc., disclosed in a regulatory filing Friday, that on February 9, 2010, the Company entered into an Agreement and Plan of Merger with Russell Hobbs, Inc., a Delaware corporation, SB/RH Holdings, Inc., a Delaware corporation, Battery Merger Corp., a Delaware corporation and a direct wholly-owned subsidiary of SB/RH, and Grill Merger Corp., a Delaware corporation and a direct wholly-owned subsidiary of SB/RH. Under the Merger Agreement, (i) Battery Merger Corp. will merge with and into Spectrum Brands, with Spectrum Brands as the surviving corporation, and (ii) Grill Merger Corp. will merge with and into Russell Hobbs, with Russell Hobbs as the surviving corporation. SB/RH is a newly formed holding company. Harbinger Capital Partners Master Fund I, Ltd. and two of its affiliates currently own 100% of the outstanding common and preferred stock of Russell Hobbs and approximately 40% of the common stock of Spectrum Brands. The Board of Directors of Spectrum Brands approved the Merger Agreement and the mergers based on the recommendation of a special committee of independent directors. Upon the closing of the mergers, stockholders of Spectrum Brands will receive one share of the common stock of SB/RH for each share they hold in Spectrum Brands. The Russel Hobbs stock converts to SB/RH common stock in accordance with the terms of the Merger Agreement and is based on a $675 million enterprise value of Russell Hobbs, subject to various adjustments set forth in the Merger Agreement, and a $31.50 per share valuation of Spectrum common stock. Furthermore, as part of the transaction, the Harbinger parties have agreed to convert their existing approximately $158 million aggregate principal amount of Russell Hobbs' term debt into SB/RH common stock at a price of $31.50 per share, which is included in the $675 million enterprise value of Russell Hobbs. As a result of the mergers, the stockholders of Spectrum Brands (other than the Harbinger parties) are expected to own approximately 36.3% of SB/RH, and the Harbinger Parties are expected to own approximately 63.7% of SB/RH (assuming that shares of Special RH Preferred Stock (defined below) are not issued to the Harbinger Parties by Russell Hobbs). In addition, under certain circumstances set forth in the Harbinger Support Agreement described below, Spectrum Brands can require the Harbinger Parties to invest up to an additional $100 million prior to the closing in Russell Hobbs through the purchase of a newly issued series of Russell Hobbs Preferred Stock (the "Special RH Preferred Stock"). If the Harbinger parties invest in the Special RH Preferred Stock, holders of Spectrum common stock at the record date for determining stockholders entitled to vote on the Merger Agreement, will also be entitled to purchase SB/RH common stock at $27.00 per share. Each share of Special RH Preferred Stock would convert into shares of SB/RH common stock at an exchange ratio equal to the price per share paid for the Special RH Preferred Stock divided by $27.00. Commitments for approximately $1.8 billion in financing have been obtained to refinance Spectrum Brands' existing senior debt and a portion of Russell Hobbs' existing senior debt through a combination of new term loans, new senior notes and a new $300 million ABL revolving facility. Consummation of the mergers, which is currently anticipated to occur by the end of the third or fourth quarter of Spectrum Brands' fiscal year 2010, is subject to certain conditions, including, among others, closing of the new financing, adoption of the Merger Agreement by holders of a majority of the Spectrum common stock not owned by the Harbinger parties, required regulatory approvals, and other customary closing conditions. It is anticipated that the SB/RH common stock and the Spectrum common stock will be listed on the NYSE or other national securities exchange, and in the case of the Spectrum common stock, such listing is to occur prior to the record date for Spectrum Brands' stockholders to vote on the Spectrum merger. If the Spectrum common stock is not so listed prior to such record date, then the parties have agreed to restructure the manner of combining Spectrum Brands and Russell Hobbs so that Spectrum Brands acquires Russell Hobbs by means of a merger of a subsidiary of Spectrum Brands into Russell Hobbs. Immediately following the mergers, the Board of Directors of SB/RH will be divided into three classes and will be comprised of ten individuals. Initially, six directors will be designated by Russell Hobbs, three will be designated by Spectrum Brands, and one will be the Chief Executive Officer of SB/RH. In connection with the mergers, SB/RH's Certificate of Incorporation and By-laws will be amended, and the Harbinger parties and SB/RH entered into a Stockholder Agreement which will be effective as of the effective time of the mergers, to provide for certain protective provisions in favor of minority stockholders, including selection of three independent directors by a special nominating committee, preemptive rights for certain eligible stockholders, limitations on transactions with affiliates of significant stockholders, limitations on going private transactions, and tag along rights. The Merger Agreement contains (i) customary representations and warranties of the parties, including, among others: corporate organization, capitalization, corporate authority and absence of conflicts, third party and governmental consents and approvals, reports and regulatory matters, financial statements, compliance with law and legal proceedings, absence of certain changes, taxes, employee matters, intellectual property, real property, outstanding litigation, insurance and certain material and interested party contracts, (ii) covenants of the parties to conduct their respective businesses in the ordinary course until the Mergers are completed and (iii) covenants not to take certain actions during this interim period. The Merger Agreement contains a 45-day "go-shop" provision pursuant to which Spectrum Brands has the right to solicit and engage in discussions and negotiations with respect to Alternative Proposals through March 25, 2010. After that date, Spectrum Brands may continue discussions with any Excluded Party, generally defined in the Merger Agreement as a party from whom Spectrum Brands has received an Alternative Proposal during the go-shop period that the Spectrum Board (consistent with the recommendation of the Special Committee) determines constitutes, or would reasonably be expected to result in, a Superior Proposal. Except with respect to Excluded Parties, after March 25, 2010, Spectrum Brands is subject to a "no-shop" restriction on its ability to solicit third-party proposals or provide information or engage in discussions with third parties. However, if after such date Spectrum Brands receives an Alternative Proposal from a third party that the Spectrum Brands' Board of Directors (acting through, or consistent with the recommendation of the Special Committee) determines constitutes, or would reasonably be expected to result in, a Superior Proposal, Spectrum Brands may engage in discussions and negotiations with such third party so long as certain notice and other procedural requirements are satisfied. Spectrum Brands' Board of Directors (consistent with the recommendation of the Special Committee) may withdraw or change its recommendation to the Spectrum Brands stockholders with respect to the Spectrum Merger or any Superior Proposal if the Board determines that to do otherwise would be inconsistent with its fiduciary duties due to an Intervening Event or Superior Proposal. In addition, subject to certain procedural requirements (including the ability of Russell Hobbs to revise its offer) and payment of the termination fee and expense reimbursement discussed below, Spectrum Brands may terminate the Merger Agreement and enter into an agreement with a third party who makes a Superior Proposal. In connection with the termination of the Merger Agreement under specified circumstances generally related to a change in the recommendation by Spectrum Brands' Board of Directors or a termination in connection with a Superior Proposal, Spectrum Brands may be required to pay Russell Hobbs a termination fee of $1 million (or $10 million in specified circumstances) and reimburse Russell Hobbs for certain expenses related to the Merger Agreement up to an aggregate amount of $10 million (or in some cases expense reimbursement will not be capped). In connection with the termination of the Merger Agreement due to the failure to obtain the debt financing, Russell Hobbs may be required to pay Spectrum Brands a reverse termination fee of $1 million and reimburse Spectrum Brands for certain expenses related to the Merger Agreement up to an aggregate amount of $10 million. The Merger Agreement requires Spectrum Brands to commence a consent solicitation to seek the consent of the holders of Spectrum Brands' outstanding 12% Senior Subordinated Toggle Notes due 2019 (the "PIK Notes") to modify certain provisions of its Indenture dated as of August 28, 2009, governing the PIK Notes. This consent is not required to consummate the mergers. If Spectrum Brands fails to obtain the requisite consents necessary to amend the indenture, the Harbinger parties have agreed to invest up to $100 million in Russell Hobbs through the purchase of RH Special Preferred Stock, as discussed above. Harbinger Master Fund has agreed to guarantee, up to a maximum of $50 million, the obligations of Russell Hobbs to pay (i) a reverse termination fee to Spectrum Brands under the Merger Agreement and (ii) monetary damages awarded to Spectrum Brands in connection with any willful and material breach by Russell Hobbs of the Merger Agreement. Harbinger Master Fund has also agreed to indemnify Russell Hobbs, SB/RH and their subsidiaries for out-of- pocket costs and expenses above $3 million in the aggregate that become payable after the closing of the Mergers and that relate to certain litigation. Prior to any termination of the Merger Agreement, the only remedy that either party may pursue is specific performance. Following termination, the parties' sole remedy will be the termination fees (if payable), except in the case of a willful and material breach, in which case the aggregate amount of damages of either party may not exceed $50 million. Money damages payable by the Harbinger Parties and their affiliates under the Merger Agreement and the other transaction documents following a termination of the Merger Agreement are limited to $50 million in the aggregate. SB/RH has granted certain registration rights with respect to its common stock to the Harbinger parties and the Avenue Parties (as defined below). The Harbinger parties have various relationships with Spectrum Brands, including among others, ownership of Spectrum Brands common stock and PIK Notes, registration rights agreements, and seats on the Spectrum Brands Board of Directors. Harbinger Support Agreement On February 9, 2010, Spectrum Brands entered into a support agreement with the Harbinger parties. Under the support agreement, the Harbinger parties agree to vote their shares of Spectrum common stock in favor of the mergers and against any Alternative Proposal that would impede the mergers, and agree to waive any rights of appraisal with respect to the mergers. In the event that the Merger Agreement is terminated by Spectrum Brands in connection with a Superior Proposal involving all or substantially all of Spectrum Brands' assets or stock before its stockholders approve the Merger Agreement, the Harbinger parties agree to vote sufficient Spectrum common stock to cause the Superior Proposal to be approved if the Superior Proposal values the Spectrum Common Stock at no less than $34.65 per share and at least two-thirds of the Spectrum common stock not held by the Harbinger parties or their affiliates is voted in favor of such Superior Proposal. In addition, the Harbinger parties agree, among other things, not to require Spectrum Brands to acquire their PIK Notes in connection with the change of control (as defined in the PIK Notes indenture) of Spectrum Brands as a result of the Mergers and to consent to certain amendments to the PIK Notes indenture in connection with the Spectrum consent solicitation. Avenue Support Agreement On February 9, 2010, Spectrum Brands entered into a support agreement with Avenue International Master, L.P. and certain of its affiliates that own Spectrum common stock (the "Avenue Parties"). Under the support agreement, the Avenue Parties agree to vote their shares of Spectrum common stock in favor of the mergers and against any Alternative Proposal that would impede the mergers, and agree to waive any rights of appraisal with respect to the mergers. The obligation of the Avenue Parties to so support the mergers will terminate on the first to occur of (i) the closing of the mergers, (ii) the date on which the Merger Agreement is terminated, (iii) 15 business days following the date on which the Spectrum Brands' Board of Directors changes its recommendation of the mergers or the Special Committee recommends to the Spectrum Brands' Board that it change such recommendation, and (iv) August 12, 2010. In addition, the Avenue Parties agree, among other things, not to require Spectrum Brands to acquire their PIK Notes in connection with the change of control of Spectrum Brands as a result of the mergers and to consent to certain amendments to the PIK Notes indenture in connection with the Spectrum consent solicitation. Amendment to Lumley Employment Agreement On February 8, 2010, Spectrum Brands entered into an amendment to the employment agreement of David R. Lumley, its co-chief operating officer and president of its Global Batteries and Personal Care segment, which amendment is described in more detail in Spectrum Brands' quarterly Report on Form 10-Q filed with the SEC on February 10, 2010. A full-text copy of the Agreement and Plan of Merger dated February 9, 2010, is available at no charge at: http://researcharchives.com/t/s?525c A full-text copy of the Harbinger Support Agreement is available at no charge at http://researcharchives.com/t/s?525e A full-text copy of the Avenue Support Agreement is available at no charge at http://researcharchives.com/t/s?525d A full-text copy of the Form of Restate Certificate of Incorporation of SB/RH Holdings, Inc. is available at no charge at http://researcharchives.com/t/s?525f A full-text copy of the Form of Amended and Restated Bylaws of SB/RH Holdings, Inc. is available at no charge at: http://researcharchives.com/t/s?5260 A full-text copy of the Stockholder Agreement, dated as of February 9, 2010, is available at no charge at: http://researcharchives.com/t/s?5261 About Russell Hobbs Russell Hobbs, Inc., located in Miramar, Florida, markets and distributes a wide range of branded small housing appliances, pet and pest products, water products and personal care products. Russell Hobb's brand portfolio includes Black & Decker(R), George Foreman(R), Russell Hobbs(R), LitterMaid(R), Farberware(R), Juiceman(R), Breadman(R) and Toastmaster(R). About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands, Inc. (OTC: SPEB) -- http://www.spectrumbrands.com./-- is a global consumer products company and a leading supplier of batteries, shaving and grooming products, personal care products, specialty pet supplies, lawn & garden and home pest control products, personal insect repellents and portable lighting. Its brand portfolio includes Rayovac(R), Remington(R), Varta(R), Tetra(R), Marineland(), Nature's Miracle(R), Dingo(R), 8-in-1(R), Spectracide(R), Cutter(R), Repel(R), and HotShot(R). * * * As reported in the TCR on February 12, 2010, Moody's Investors Service placed the ratings of Spectrum Brands on review for possible upgrade following its recent announcement that it had signed a definitive merger agreement with Russell Hobbs, Inc. These ratings are placed under review: * Corporate family rating at B3; * Probability of default rating at B3; * $1.3 billion senior secured term loan due June 2012 at B3 (LGD 3, 49%); * $218 senior subordinated notes due 2013 at Caa2 (LGD 6, 92%); and * The LGD assessments are not on review, but are subject to change. The last rating action was on October 6, 2009, when Moody's assigned a B3 CFR and PDR with a stable outlook. SPHERIS INC: Organizational Meeting to Form Panel on February 17 ---------------------------------------------------------------- Roberta A. DeAngelis, Acting United States Trustee for Region 3, will hold an organizational meeting on February 17, 2010 at 10:00 a.m. in the bankruptcy case of Spheris Inc. The meeting will be held at J. Caleb Boggs Federal Building, 844 King Street, Room 5209, Wilmington, DE 19801. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. About Spheris Based in Franklin, Tennessee, Spheris Inc. -- http://www.spheris.com/-- is a global provider of clinical documentation technology and services. Spheris Inc., along with five affiliates, filed for Chapter 11 on Feb. 3, 2010 (Bankr. D. Del. Case No. 10-10352). Matthew Barry Lunn, Esq., and Ryan M. Bartley, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their Chapter 11 effort. The petition says that assets range from $50,000,001 to $100,000,000 while debts range from $100,000,001 to $500,000,000. STATION CASINOS: GV Ranch Also Now in Chapter 11 ------------------------------------------------ Arnold M. Knightly at Casino City Times reports that GV Ranch Station Inc., a subsidiary of Station Casinos, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court in Reno, listing asset of between $100 million and $500 million, and debts of between of $10 million and $50 million. Station Casinos said the filing is part of its planned reorganization. GV Ranch will remain open during the reorganization, Mr. Knightly says. GV Ranch Station is a subsidiary of Station Casinos. About Station Casinos Station Casinos, Inc., is a gaming and entertainment company that currently owns and operates nine major hotel/casino properties (one of which is 50% owned) and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. Station Casinos Inc., together with its affiliates, filed for Chapter 11 on July 28, 2009 (Bankr. D. Nev. Case No. 09-52477). Station Casinos has hired Milbank, Tweed, Hadley & McCloy LLP as legal counsel in the Chapter 11 case; Brownstein Hyatt Farber Schreck, LLP, as regulatory counsel; and Lewis and Roca LLP as local counsel. The Debtor is also hiring Lazard Freres & Co. LLC as investment banker and financial advisor. Kurtzman Carson Consultants LLC is the claims and noticing agent. In its bankruptcy petition, Station Casinos said that it had assets of $5,725,001,325 against debts of $6,482,637,653 as of June 30, 2009. About 4,378,929,997 of its liabilities constitute unsecured or subordinated debt securities. Bankruptcy Creditors' Service, Inc., publishes Station Casinos Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Station Casinos Inc. and its debtor-affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TAYLOR BEAN: Creditors Seek Authority to Sue Farkas, Insiders ------------------------------------------------------------- Creditors of Taylor Bean & Whitaker Mortgage Corp. are asking a bankruptcy judge for authority to sue company insiders, including former leader Lee Farkas, according to ABI. Taylor, Bean & Whitaker Mortgage Corp. is a 27-year-old company that grew from a small Ocala-based mortgage broker to become one of the largest mortgage bankers in the United States. In 2009, Taylor Bean was the country's third largest direct-endorsement lender of FHA-insured loans of the largest wholesale mortgage lenders and issuer of mortgage backed securities. It also managed a combined mortgage servicing portfolio of approximately $80 billion. The company employed more that 2,000 people in offices located throughout the United States. Taylor Bean filed for Chapter 11 on August 24 (Bankr. M.D. Fla. Case No. 09-07047). Taylor Bean has more than $1 billion of both assets and liabilities, and between 1,000 and 5,000 creditors, according to the bankruptcy petition. TLC VISION: Lender Fights Charlesbank Deal ------------------------------------------ One of TLC Vision Corp.'s prepetition lenders has launched a challenge to the eye care company's asset purchase agreement with Charlesbank Capital Partners LLC, arguing that the debtors should ditch the deal in favor of a "superior" offer by a unit of private investment firm H.I.G. Capital, Law360 reports. TLCVision -- http://www.tlcvision.com/-- is North America's premier eye care services company, providing eye doctors with the tools and technologies needed to deliver high-quality patient care. Through its centers' management, technology access service models, extensive optometric relationships, direct to consumer advertising and managed care contracting strength, TLCVision maintains leading positions in Refractive, Cataract and Eye Care markets. TLC Vision (USA) Corporation, and two of its corporate affiliates filed petitions for Chapter 11 on Dec. 21, 2009 (Bankr. D. Del. Case No. 09-14473). The petition says assets and debts are $100 million to $500 million. The Company's lead U.S. restructuring counsel is the law firm of Proskauer Rose LLP and Canadian restructuring counsel is the law firm of Torys LLP. The Company's financial advisor is Conway Del Genio Gries & Co., LLC. Epiq Bankruptcy Solutions is claims and notice agent. TOLEDO EDISON: Fitch Corrects Feb. 11 Press Release, Keeps BB+ IDR ------------------------------------------------------------------ Fitch Ratings has corrected a February 11, 2010 press release. It corrects the ratings for the Toledo Edison Co. Fitch Ratings has affirmed the ratings of FirstEnergy Corp. (Issuer Default Rating at 'BBB') and its subsidiaries, and Allegheny Energy, Inc. (IDR at 'BBB-') and subsidiaries following the announcement that the Board of Directors of the companies have reached a definitive agreement to merge in a stock-for-stock transaction. At the same time, the Rating Outlook on the AYE parent is revised to Positive from Stable. Fitch currently expects to equalize the ratings of FE and AYE should the two companies consummate their merger at FE's rating level. FE would represent approximately three quarters of consolidated assets and pro forma cash flows of the combined company. A full list of ratings is listed at the end of this release. The ratings for FE and AYE are currently: FE -- IDR at 'BBB'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and short-term debt at 'F2'. AYE -- IDR at 'BBB-'; -- Senior unsecured bank credit facility at 'BBB-'. Under the terms of the agreement, AYE shareholders would receive 0.667 shares of FE common stock in exchange for each share of AYE, valued as of February 10, 2010, close at $27.65 per share or $4.7 billion in aggregate. FE would also assume approximately $3.8 billion of AYE net debt (excluding tariff securitization debt of $0.5 billion). The transaction is subject to several state and federal approvals, as well as FE and AYE shareholder support. Assuming all necessary approvals are obtained in a timely manner, the transaction would be completed within the next 12-14 months. The combined company, which would operate under the FirstEnergy name, would increase in scale, with 10 regulated electric distribution companies in seven states (Ohio, Pennsylvania, Maryland, New York, New Jersey, Virginia and West Virginia) and approximately 24,000 MW of generating capacity. Fitch recognizes the strategic benefits of the transaction which would combine geographically contiguous and complementary regulated utilities and competitive businesses. FE's transition into the PJM Regional Transmission Organization (RTO) should enhance expected synergies in the combined companies' competitive generation businesses, although it is difficult to quantify the potential benefits. Fitch recognizes that there could be impediments to closing the transaction if regulators do not approve the transaction or ask for concessions that render the merger uneconomic. The competitive generation businesses face an uncertain economic environment; both FE and AYE have recently experienced pricing pressures and volume declines in their wholesale supply businesses; and the longer term outlook for the predominantly coal-fired generation mix will be impacted by future climate regulation or legislation. The ratings of FE and AYE subsidiaries have also been affirmed. The Rating Outlook for all the operating subsidiaries is Stable. FirstEnergy Solutions Corp. -- IDR at 'BBB'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and short-term debt at 'F2'. Ohio Edison Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and short-term debt at 'F2'. Pennsylvania Power Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior pollution control revenue bonds at 'BBB'. The Toledo Edison Co. -- IDR at 'BB+'; -- Senior secured debt at 'BBB-'; -- Senior pollution control revenue bonds at 'BBB'. The Cleveland Electric Illuminating Co. -- IDR at 'BB+'; -- Senior secured debt at 'BBB'; -- Senior unsecured debt at 'BBB-'. Jersey Central Power & Light Co. -- IDR at 'BBB'; -- Senior secured debt at 'A-'; -- Senior unsecured debt at 'BBB+'; -- Short-term IDR and commercial paper at 'F2'. Metropolitan Edison Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and commercial paper at 'F3'. Pennsylvania Electric Co. -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB'; -- Short-term IDR and commercial paper at 'F3'. BVPS II Funding Corp. -- Senior secured debt at 'BBB'. PNPP II Funding Corp. -- Senior secured debt at 'BBB'. Allegheny Energy Supply Co., LLC -- IDR at 'BBB-'; -- Senior secured debt at 'BBB'; -- Senior unsecured debt at 'BBB-'; -- Senior unsecured term loan and bank credit facility at 'BBB-'. Allegheny Generating Co. -- IDR at 'BBB-'; -- Senior unsecured debt at 'BBB-'. Monongahela Power Co. d/b/a Allegheny Power -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB-'. The Potomac Edison Company d/b/a Allegheny Power -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'. West Penn Power Co. d/b/a Allegheny Power -- IDR at 'BBB-'; -- Senior secured debt at 'BBB+'; -- Senior unsecured debt at 'BBB-'. Penelec Capital Trust -- Preferred stock at 'BBB+'. Beaver Valley II Funding Corp -- Senior secured at 'BBB-'. Fitch intends to meet with the management of both FE and AYE to discuss other provisions of the merger agreement, business plans over the near term, and longer-term strategic plans for the integration and operation of AYE's businesses. Fitch expects to comment more fully on the transaction following these meetings and the review of more detailed information. FE is a diversified energy company whose subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. Its seven electric utility operating companies serve 4.5 million customers in Ohio, Pennsylvania and New Jersey. AYE is a diversified energy company whose subsidiaries and affiliates are involved in the generation, transmission and distribution of electricity. Its electric utility companies serve 1.6 million customers in Pennsylvania, Maryland, West Virginia and Virginia. TRAVELPORT LLC: Moody's Confirms 'B2' Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service confirmed Travelport LLC's B2 Corporate Family Rating, and the ratings of all debt instruments. The outlook is stable. The rating confirmation follows the company's announcement that it has decided not to proceed with its planned IPO to raise c.US$2 billion in proceeds, the bulk of which was to be used to pay down debt. The company has also terminated its bond tender offer. The B2 corporate family rating reflects Travelport's high leverage as a result of the Blackstone led LBO in August 2006, the debt- financed acquisition of Worldspan in August 2007 and the slowdown in travel demand arising from the more recent global recession. The rating is supported by Travelport's ability to generate cash flow through economic cycles via effective cost controls and its entrenched position as a leading player in the global distribution system market. The rating further benefits from the stability of the company's long-term contracts with all of the major U.S. carriers, despite pricing concessions during the last renewal, and the lack of any significant debt maturities until 2013. While Moody's continue to believe that the company's earnings remain exposed to the volatile travel sector, Moody's also note IATA's forecasts of a recovery in passenger numbers in international air travel in 2010, albeit with yields remaining depressed. This should be beneficial for Travelport, whose earnings profile is more exposed to passenger transaction volumes than yields. In Moody's view leverage remains high for the current rating category. On an LTM basis, the company's gross debt/EBITDA as of September 2009 was at 6.4x (as adjusted by Moody's), from which Moody's have excluded the PIK notes issued by Travelport Limited Holdings Corp. (c.US$600 million). Including the PIK notes, Moody's adjusted leverage would be in the range of 7.4x. The stable outlook reflects Moody's expectation that the travel industry, in particular air travel, is expected to see some resumption in growth in 2010 in terms of volumes, which is a key driver for Travelport's earnings. At this time Moody's believe that credit metrics, in particular gross leverage, remains high for the rating. Hence Moody's stable outlook assumes that in the course of 2010, the company will be able to reduce gross leverage towards 6.5 times (including the PIK notes). If there is not a clear trajectory in this respect this could be negative for the rating or outlook, which implies limited flexibility at the current rating level. Although Moody's do not expect it in the medium term, if industry conditions were to enable the company to sustain leverage below 5.5x, this could be positive for the rating or outlook. Travelport's liquidity remains satisfactory. It benefits from US$235 million of cash as of September 2010 and from an undrawn RCF of US$270 million maturing in 2012. Moody's note that covenants headroom tightened as a result of weaker earnings in 2009, and continued accessibility will remain part of Moody's liquidity assessment. The company's liquidity is also supported by its general ability to generate positive, albeit variable, free cash flows (before dividends), as well as its 48% stake in Orbitz (B2, negative outlook). Finally, the company has negligible near- term debt maturities until its credit facilities expire in 2013. Ratings affected by the rating action include: -- Corporate Family Rating of B2 confirmed; -- Ba3 senior secured ratings; B3 senior unsecured ratings; and Caa1 senior subordinate ratings confirmed. The last rating action for Travelport LLC was on 19 January 2010, when all ratings were placed under review for possible upgrade following the announcement of a planned IPO. Headquartered in New York, Travelport is a leading provider of transaction processing services to the travel industry through its two main business networks, the global distribution system business, which includes the Group's airline information technology solutions business, and the Gullivers Travel Associates business. In the 12 months to September 2009 the company generated revenues of c.US$2.2 billion. TRAVELPORT LLC: S&P Affirms 'B-' Long-Term Corporate Credit Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said it affirmed its 'B-' long- term corporate credit ratings on U.S.-based travel services provider Travelport LLC and its indirect parent Travelport Holdings Ltd. At the same time, all of the ratings were removed from CreditWatch where they were placed with positive implications on Jan. 19, 2010. "The rating actions follow the announcement that Travelport has terminated its debt tender offer and decided against proceeding with an IPO and listing on the main market of the London Stock Exchange," said Standard & Poor's credit analyst Eve Greb. "The ratings on Travelport Holdings and its indirect primary operating subsidiary Travelport reflect S&P's view of Travelport's highly leveraged financial profile, limited access to capital, and the seasonal and cyclical nature of the travel industry." The ratings also incorporate Travelport's major position in travel distribution, strong cash flows typical of the travel business, and modest debt maturities through 2011. As of Sept. 30, 2009, Travelport had $3.7 billion of on-balance-sheet debt. S&P believes that Travelport will continue to benefit from its cost-reduction program, under which it has achieved $355 million of cost savings to date, including synergies from combining the reservation systems Galileo and Worldspan. However, given the full effect of the decline in travel demand, which began in late 2008 and continued well into 2009, S&P believes Travelport's credit measures (adjusted for the PIK debt) are likely to have weakened by year-end 2009. Nevertheless, S&P believes that revenues and EBITDA will recover modestly in 2010. S&P also expects moderate economic growth, which should result in somewhat improved credit metrics. Although all of Travelport's assets are pledged to a secured credit facility, it has minimal debt maturities ($20 million- $25 million a year) through 2011. "The outlook is stable because S&P expects Travelport to recover somewhat in 2010 on the back of stronger demand," said Ms. Greb. "However, S&P believes Travelport's credit metrics will likely remain constrained because of Travelport Holdings' PIK debt, which S&P consolidates into its ratios. As a result, S&P expects consolidated debt to EBITDA to remain at about 7x through 2010, despite a possible earnings recovery." TRIBUNE CO: Creditors Panel's Bid to File LBO Suit Challenged ------------------------------------------------------------- Michael Oneal at Chicago Tribune reports Tribune Co. and a group of Tribune's senior creditors ask U.S. Bankruptcy Judge Kevin Carey to block an attempt by junior creditors to challenge the legality of Sam Zell's 2007 leveraged buyout of the Company. According to the report, senior creditors told the Court "the bankruptcy equivalent of World War III" might break out if junior creditors bring the complaint. The senior creditors informed the Court that "vigorous settlement negotiations are ongoing. There is not a single reason to unleash the hounds of litigation right now, with all the irreversible attendant costs and consequences." As reported by the Troubled Company Reporter on February 10, 2010, the Official Committee of Unsecured Creditors in Tribune's cases sought leave from the Court for authority, on behalf of the Debtors' estates, to commence, prosecute and settle claims and counterclaims arising out of or in connection with the Debtors' 2007 leveraged buyout transaction. In 2006, Tribune Company's board of directors began to focus on a potential recapitalization or transaction with respect to the Debtors' businesses in response to urging from the Debtors' largest shareholders. Despite a failed auction process and a declining publishing business, Tribune Company nevertheless approved a LBO transaction in which the Debtors became obligated on a massive amount of debt and paid billions of dollars to shareholders to take the Company private, argued Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, special counsel to the Committee. To finance the LBO, the Debtors became obligated on more than $10 billion in debt under a Senior Credit Facility and a Bridge Facility. The LBO debt was not secured other than through stock pledges, but was made structurally superior to Tribune Company's preexisting debt -- consisting of almost $1.3 billion of publicly held non-subordinated debt as well as trade and contractually subordinated debt -- by obtaining guarantees of the LBO Debt from many of Tribune Company's subsidiaries. The Creditors' Committee believes there is substantial evidence that: (i) the LBO Debt was fraudulently incurred and should be avoided; (ii) the Claims should be equitably subordinated and disallowed; and (iii) related transfers should be avoided and recovered, including: (a) fees paid relating to the LBO and the Facilities; (b) principal and interest repaid on the LBO Debt prior to the Petition Date; and (c) payment at closing to satisfy preexisting debt. The Creditors' Committee alleges that JPMorgan Chase Bank, N.A., as Administrative Agent for the Senior Credit Facility, and Merrill Lynch Capital Corporation, as Administrative Agent for the Bridge Facility, are liable to the Debtors for damages relating to breaches of fiduciary duty in connection with the LBO Debt. Chicago Tribune reports that if the committee was able to prove its charges, the judge could wipe out more than $8.6 billion in claims owned by the senior creditors who financed the deal, leaving a much bigger pie for junior creditors further down the claims hierarchy. "Both Tribune Co. and the senior group have obvious reasons to try to stave off a fraudulent conveyance case. Tribune managers, who have been trying to broker a settlement between junior and senior creditors for more than a year, want to exit bankruptcy as soon as possible. And senior creditors might lose leverage in negotiations if their junior adversaries are allowed to proceed with an official fraudulent conveyance complaint," according to Mr. Oneal. The Debtors' counsel, Patrick J. Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., in Wilmington, Delaware, has indicated in earlier court filings that the Debtors are working towards filing their plan of reorganization prior to February 28, 2010. Mr. Oneal also reports that a group of Tribune's most junior bondholders has said the creditors committee wasn't pressing the fraudulent conveyance charges forcefully enough. The group has asked the court to appoint a separate examiner to investigate the LBO, and, failing that, the right to join the junior creditors' case (if it goes forward) so it could have the opportunity to beef it up. According to Mr. Oneal, Wilmington Trust Co., the trustee for the group, said evidence currently under seal shows that Mr. Zell and Tribune's board knew the LBO was overly risky and that the banks abetted them in breeching their fiduciary duty. Tribune and all of the other creditor groups have opposed Wilmington's motion. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Beatty's Dick Tracy Suit Survives Dismissal Bid ----------------------------------------------------------- Law360 reports that a federal judge has rejected Tribune Media Services Inc.'s bid to dismiss Warren Beatty's lawsuit over ownership of the movie and television rights to detective character Dick Tracy, but refused the actor's request for sanctions against the media company. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Creditors Oppose WTC Bid for Examiner ------------------------------------------------- The Official Committee of Unsecured Creditors in Tribune Co.'s cases is opposing a bid by bondholder trustee Wilmington Trust Co. to appoint an examiner to look into a 2007 leveraged buyout that saddled news organization Tribune Co. with more than $10 billion in debt. BankruptcyData reports that the Creditors Committee says that with respect to the request for examiner, pursuant to Section 1104 (c) of the Bankruptcy Code, the issue should be examined against the backdrop of the Committee's work to date in investigating and now actively pursuing these claims, including most notably the recent filing of the Committee's Motion for Entry of an Order Granting Leave, Standing and Authority to Commence, Prosecute and Settle Claims and Counterclaims of the Debtors' Estates." In a separate Court filing by the official committee of unsecured creditors, the committee gave its support to the Debtors' motion for an order further extending the exclusive periods within which to file a Chapter 11 plan and solicit acceptances thereof through and including June 8, 2010 and August 6, 2010, respectively. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on Dec. 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIMEDYNE INC: Posts $300,000 Net Loss in Q1 Ended December 31 -------------------------------------------------------------- Trimedyne, Inc., reported a net loss of $300,000 on net revenues of $1,654,000 for the three months ended December 31, 2009, compared with a net loss of $445,000 on net revenues of $1,610,000 for the same period in 2008. At December 31, 2009, the Company's consolidated balance sheets showed total assets of $6,525,000, total liabilities of $1,564,000, and total stockholders' equity of $4,961,000. 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?52c0 Liquidity/Going Concern Doubt At December 31, 2009, the Company had working capital of $3,483,000 compared to $3,772,000 at the end of the fiscal year ended September 30, 2009. Cash decreased by $490,000 to $1,131,000 from $1,621,000 at the fiscal year ended September 30, 2009. During the three month period ended December 31, 2009, net cash used in operating activities was $399,000. Net cash used in investing activities was $25,000 for the purchase of equipment. Net cash used in financing activities during the same three month period was $66,000, which was the result of payments on debt incurred for the servicing of loans for equipment and certain insurance policies. The Company has depleted working capital and incurred losses from operations for the past two years. There can be no assurance that the Company will be able to maintain or achieve sales growth to offset these deficiencies, or that the Company will be profitable at all. Based on current cash flow projections, the Company believes that existing cash flows are sufficient enough to fund operations through September 30, 2010. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. However, management is unsure if the Company's liquidity and anticipated revenues will be sufficient to meet its obligations as they become due for the next 12 months from the balance sheet date. "This raises substantial doubt about the Company's ability to continue as a going concern." About Trimedyne Inc. Headquartered in Lake Forest, Calif., Trimedyne, Inc. (TMED.OB) -- http://www.trimedyne.com/--is engaged in the development, manufacturing and marketing of 80 and 30 watt Holmium "cold" pulsed lasers and a variety of disposable and reusable, fiber optic laser energy delivery devices for use in a broad array of medical applications. The Company's lasers, fibers, needles and tips have been cleared for sale by the U.S. Food and Drug Administration for use in orthopedics, urology, ear, nose and throat surgery, gynecology, gastrointestinal surgery, general surgery and other medical specialties. TRUDY CORP: Posts $360,000 Net Loss in September Quarter -------------------------------------------------------- Trudy Corporation reported a net loss of $360,456 for the quarter ended September 30, 2009, compared to a net loss of $136,620 for the comparable prior quarter. Net sales of $1,308,381 for the second quarter of fiscal 2010 decreased 17.0% versus the comparable quarter's sales of $1,577,235 of the year prior. Sales of Disney-licensed products as a percentage of total Company sales decreased from 60.0% to 35.5% for the quarter versus the comparable quarter a year ago. Smithsonian-licensed product sales increased from 25.1% of Company sales to 47.0% as a result of a significant increase in orders for Smithsonian licensed products from a television home shopping customer. Six Months Eended September 30, 2009 The Company's net loss for the six months ended September 30, 2009, was $562,342 compared to a net loss of $355,176 for the comparable six month period in the prior year. Net sales decreased 22.3% to $2,420,023 for the six months ended September 30, 2009, from $3,116,519 the prior year. The Company's net loss for the six months ended September 30, 2009, was $562,342 compared to a net loss of $355,176 for the comparable six month period in the prior year. Balance Sheet At September 30, 2009, the Company's consolidated balance sheets' showed $3,758,737 in total assets and $5,654,150 in total liabilities, resulting in a $1,895,413 shareholders' deficit. The Company's consolidated balance sheets at September 30, 2009, also showed strained liquidity with $2,668,543 in total current assets available to pay $5,654,150 in total current liabilities. Subsequent Event On December 18, 2009, the Company entered into a definitive Asset Purchase Agreement whereby Trudy would sell substantially all of its assets to MMAC, LLC, which also would assume certain liabilities of Trudy. Under the terms of the agreement, MMAC will assume substantially all of the secured and unsecured liabilities of Trudy with the exception of $2.7MM of personal debt owed to the principal shareholder and Chairman of Trudy, William W. Burnham. In consideration of the sale of substantially all of its assets, at closing, Trudy will receive a note from MMAC to Trudy in the principal amount of $225,000 and an equity interest in MMAC, not to exceed 33%, determined in accordance with the net asset value of Trudy at closing. In addition, loans from an affiliate of MMAC to Trudy, estimated to be $600,000 at closing, will be assumed by MMAC at closing. Substantially simultaneously with the closing, Trudy will transfer the note and the equity interest in MMAC to William W. Burnham in consideration of the cancellation by Mr. Burnham of the personal debt owed by Trudy to Mr. Burnham, with the exception of up to $50,000 of debt owed to Mr. Burnham which will remain outstanding and which will be repaid to Mr. Burnham one year following the closing if and to the extent Trudy has not spent the $50,000 of cash it will retain at the closing for general corporate purposes. Holders of Trudy's common stock will not receive any payment or distribution with respect to their shares pursuant to the sale of substantially all the assets to MMAC. Trudy's senior management intends to recommend to its Board of Directors that, after closing, Trudy dissolve or enter into a transaction whereby the Trudy corporate shell may be sold. There is no assurance that a sale of the shell can be arranged. 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?52c3 Going Concern Doubt The Company has suffered recurring losses from operations and has a deficiency in net assets. "Such factors raise substantial doubt about the Company's ability to continue as a going concern." About Trudy Corporation Headquartered in Norwalk, Conn., Trudy Corporation (OTC: TRDY) publishes educational story books, read along audiobooks and plush toy manipulatives under licenses with the Smithsonian Institution, American Veterinary Medical Association and the African Wildlife Foundation. It also holds "edutainment" novelty book and audiobook licenses with Disney Publishing Worldwide, Inc, and Sesame Workshop. On December 18, 2009, the Company executed an Asset Purchase Agreement whereby it would sell substantially all of its assets to MMAC, LLC, which also would assume certain liabilities of the Company. VEOH NETWORKS: To Halt Operations, File for Chapter 7 Bankruptcy ---------------------------------------------------------------- Video-sharing Web site Veoh Networks Inc., said on Thursday it is closing and would liquidate under bankruptcy protection. "The distraction of the legal battles, and the challenges of the broader macro-economic climate have led to our Chapter 7 bankruptcy," Dmitry Shapiro, the company's founder and chief executive, wrote on his personal site, according to the Wall Street Journal. "This chapter of our lives has come to an end." A spokesperson for Veoh didn't immediately return a call seeking comment. In September 2009, Veoh won a legal battle with Vivendi SA's Universal Music Group. The Journal recalls Universal had accused Veoh of infringing on its copyrights by distributing online videos that featured music from its artists, but a federal judge ruled the Digital Millennium Copyright Act protected Veoh. According to the Journal, Mr. Shapiro at the time said the site wasn't yet profitable but expected to be in the second quarter of 2010. Last year, the company had informal talks with a number of companies to explore a sale or investment, according to two people familiar with the talks. The Journal notes Veoh Networks Inc., based in San Diego, California, founded in 2004, was one of many promising video- sharing start-ups and attracted funding from investors, including the venture-capital operations of Goldman Sachs Group Inc., Time Warner Inc., and Intel Corp. Veoh also received funding from Tornante Co., Michael Eisner's investment vehicle. The site, which had tried for years to carve out a niche by offering both user-generated content and professional shows, was eclipsed by rivals like Google Inc.'s YouTube and Apple Inc.'s iTunes. Veoh said it attracted more than 28 million unique users per month world-wide. WASHINGTON MUTUAL: Gets Nod to Enlarge Quinn Emanuel Work --------------------------------------------------------- The Bankruptcy Court authorized Washington Mutual Inc. and its units to expand the services of Quinn Emanuel Urquhart Oliver & Hedges, LLP, which serves as their special litigation and conflicts counsel, nunc pro tunc to April 3, 2009. Under its amended retention and employment agreement, Quinn Emanuel will assist the Debtors in, among other things, (i) objecting to claims asserted against the Debtors' estates by certain ad hoc groups of holders of notes issued by the Debtors' primary operating subsidiary, Washington Mutual Bank in Henderson, Nevada, in coordination with Weil, Gotshal & Manges LLP, as the Debtors' general counsel, and (ii) the Seattle U.S. Attorney's investigation into certain Debtor attorney-client privilege issues. The Debtors certified to the Court that they did not receive objections to their request. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Plan Exclusivity Extended Until March 26 ----------------------------------------------------------- Bankruptcy Judge Mary Walrath further extended the exclusive periods within which Washington Mutual, Inc., and WMI Investment Corp. may (i) file a plan of reorganization through March 26, 2010; and (ii) solicit acceptances for that plan through May 26, 2010. The Debtors averred that the complexities at issue in their Chapter 11 cases, the "unresolved contingencies," relating to the ownership of assets, and the unique challenges arising from the reconciliation of claims warrant an extension of their Exclusive Periods. The Debtors certified that they received no objections to their request. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Settles Payments to Media Vendors ---------------------------------------------------- Prior to the Petition Date, Washington Mutual Bank and TBWA Worldwide Inc., doing business as TBWA\Chiat\Day entered into an Advertising Agency Agreement dated October 17, 2007. Under the Agency Agreement, TBWA was the agent for and on behalf of WMB, who placed advertising directly with certain media vendors. TBWA also engaged MediaSpace Solutions to provide newspaper planning, buying and placement with respect to WMB advertising. During the 90-day period prior to the Petition Date, TBWA received payments from WMB with respect to WMB advertising related to amounts outstanding to Media Vendors and MediaSpace. TBWA was supposed to use the WMB Payments to satisfy the Vendors' claims. TBWA, however, has not made the full payments because TBWA is not certain whether the WMB Payments might be subject to a preferential transfer action or any other action under Chapter 5 of the Bankruptcy Code. Consequently, notwithstanding the fact that WaMu is not liable to the Media Vendors for outstanding amounts, certain Media Vendors, have filed proofs of claim against WaMu. They are: Vendor Claim No. ------ --------- Cox Radio Houston 80 Cox Radio Inc. 262 The Tampa Tribune 508 Antelope Valley Press 698 BRV Inc., dba Ventura County Star 701 Denver Newspaper LLP 894 California Newspapers 965 Cape Publications Inc. dba Florida Today 1026 Southcoast Newspapers Inc. dba North County Times 1132 KFOG Radio San Francisco 1259 LaFromboise Newspapers hlC dba The Chronicle 1563 The Dallas Morning News 2622 To resolve the Identified Claiming Vendors' claims, WaMu assured TBWA comfort that WaMu will not seek avoidance of the WMB Payments and therefore, TBWA should release the Funds to the Vendors. Accordingly, the parties entered into a settlement agreement, which essentially provides that WaMu (i) acknowledges that the WMB Payments do not represent transfers of the Debtors' property; and (ii) agrees not to pursue any action against TBWA seeking disgorgement of the funds, in exchange for TBWA's agreement to pay to the Vendors all outstanding amounts and, assist WaMu with obtaining claim withdrawals from the Identified Claiming Vendors. Since the WMB Payments do not constitute transfers of WaMu's property or transfers of interests in those property, the Payments are not recoverable assets of the estate. In this regard, the release provided by WaMu in the Settlement Agreement and TBWA's payment of outstanding amounts owed to the Media Vendors and MediaSpace from the funds constituting the WMB Payments, will not adversely impact the pool of assets available for distribution to WaMu creditors. Approval of the Settlement Agreement will inure to the benefit of WaMu's estate. By requiring TBWA to obtain claim releases from the Identified Claiming Vendors, the Debtors will avoid the needless expense of filing objections to any of the Identified Claiming Vendors' claims against WaMu, thereby reducing unnecessary drains on their estates. The parties ask Judge Walrath to approve their Settlement Agreement. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASTE2ENERGY HOLDINGS: Dec 31 Balance Sheet Upside-Down by $5.3MM ----------------------------------------------------------------- Waste2Energy Holdings Inc.'s consolidated balance sheets at December 31, 2009, showed $1,936,540 in total assets and $7,219,664 in total liabilities, resulting in a $5,283,124 shareholders' deficit. The Company's consolidated balance sheets at December 31, 2009, also showed strained liquidity with $1,508,142 in total current assets available to pay $7,219,664 in total current liabilities. The Company reported contract revenues of $67,872 and a net loss of $2,423,555 for the three months ended December 31, 2009, compared to contract revenues of $976,131 and a net loss of $1,503,444 for the same period of 2008. The decrease in contract revenue was due to the progress toward completion of the Dargavel contract, which is being accounted for using percentage of completion accounting. For the nine months ended December 31, 2009, the Company had contract revenues of $1,247,089 and a net loss of $7,366,587, compared to revenues of $2,678,556 and a net loss of $4,010,848 for the same period ended December 31, 2008. 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?52bd Going Concern Doubt The Company incurred a net loss from continuing operations of $7,375,178 and used $3,966,343 of cash in continuing operations for the nine months ended December 31, 2009. At December 31, 2009, the Company had a working capital deficit of $5,711,522 and a $26,098,936 accumulated deficit. "These conditions raise substantial doubt about the Company's ability to continue as a going concern." About Waste2Energy Holdings Greenville, S.C.-based Waste2Energy Holdings Inc. (OTC BB: WTEZE) -- http://www.waste2energy.com/-- through its subsidiary, Waste2Energy, Inc., designs, builds and installs waste-to-energy plants that are scalable, modular, environment friendly and robust enough to operate in remote environments. The Company was formerly known as Maven Media Holdings, Inc. and changed its name to Waste2Energy Holdings, Inc., on July 22, 2009. YRC WORLDWIDE: Inks Deal to Purchase $70 Mil. New Unsec. Notes -------------------------------------------------------------- YRC Worldwide Inc. has entered into definitive agreements with investors who have agreed to purchase $70 million in new unsecured convertible notes in a private placement. The company will use the proceeds from the issuance of these new notes to satisfy its remaining 2010 note obligations, with any excess proceeds available to be used for general corporate purposes. The new notes have a term of four years with an interest rate of 6%, which is initially payable in shares of the company's common stock. The company expects the transaction to be fully funded into an escrow at closing to satisfy each of the company's two maturity obligations in 2010. The closing of the sale of the new notes is subject to a number of conditions, including the conversion of the company's preferred stock into common stock. The company expects that the closing would occur shortly after shareholder approval to increase the company's authorized shares to permit the preferred stock conversion. The company is seeking this approval at the upcoming special shareholder meeting on February 17, 2010. Upon approval, the company would issue the new notes in two tranches. The first tranche, $49.8 million, will be issued and funded out of the escrow at closing. The proceeds of the first tranche will fully satisfy the remaining maturity of the 8-1/2% Guaranteed Notes due April 15, 2010. The timing of the issuance and funding of the second $20.2 million tranche is conditioned upon the conclusion of the litigation involving the disputed put rights for the outstanding 5% and 3.375% contingent convertible notes that were not tendered in the recently completed debt-for-equity exchange. The company intends to continue to vigorously pursue removal of the put rights, and, if the company is successful, the remaining $20.2 million will become available to the company from the escrow for working capital purposes; otherwise, the escrow will fund the proceeds to satisfy the 5% contingent convertible notes that exercise a put right on August 8, 2010. "We are pleased to announce this important step in our comprehensive plan to satisfy our remaining 2010 note obligations," stated Bill Zollars, Chairman and CEO of YRC Worldwide. "Upon the closing of this funding, our management team will be able to focus on operational improvements without the financial overhang related to these debt maturities that have concerned our customers in recent months. Both the company and our customers will be able to put this distraction behind us with the completion of this financing." The new notes will be convertible into shares of common stock at an initial conversion price of $0.43, reflecting a premium to the common stock price implied by the volume weighted average price of the company's Class A Preferred Stock over the last ten days and since its inception. Under certain conditions, the company may, at its election, force early conversion of the notes into common stock. Furthermore, upon any conversion of the notes, the company will make an additional payment amount in shares of the company's common stock equal to the value of the remaining interest payments calculated through maturity. The maximum number of shares of common stock that can be issued upon conversion, for restricted interest, for make whole premiums or otherwise is limited to no more than 19.9% of the company's common stock as of the date the company first issues the notes. To the extent any shares of common stock are restricted from being issued to holders in respect of this limitation, they will not receive any cash or other consideration in lieu of shares. A full-text copy of the company's agreement is available for free at http://ResearchArchives.com/t/s?5288 About YRC Worldwide YRC Worldwide Inc., a Fortune 500 company headquartered in Overland Park, Kan., -- http://yrcw.com/-- is one of the largest transportation service providers in the world and the holding company for a portfolio of successful brands including YRC, YRC Reimer, YRC Glen Moore, YRC Logistics, New Penn, Holland and Reddaway. YRC Worldwide has the largest, most comprehensive network in North America with local, regional, national and international capabilities. Through its team of experienced service professionals, YRC Worldwide offers industry-leading expertise in heavyweight shipments and flexible supply chain solutions, ensuring customers can ship industrial, commercial and retail goods with confidence. At September 30, 2009, the Company had $3.281 billion in total assets against total current liabilities of $1.687 billion, long- term debt, less current portion of $892.0 million, deferred income taxes, net of $131.4 million, pension and post retirement of $384.9 million, and claims and other liabilities of $410.2 million, resulting in shareholders' deficit of $225.5 million. ZAYAT STABLES: Taps Cole Schotz as Bankruptcy Counsel ----------------------------------------------------- Zayat Stables, LLC, has asked for permission from the U.S. Bankruptcy Court for the District of New Jersey to employ Cole, Schotz, Meisel, Forman & Leonard, P.A., as bankruptcy counsel, nunc pro tunc to the Petition Date. Cole Schotz will, among other things: (a) prepare administrative and procedural applications and motions as may be required for the sound conduct of the case; (b) review and object to claims; (c) advise the Debtor concerning, and assisting in the negotiation and documentation of, the use of the pre- petition lenders' cash collateral; and (d) review the nature and validity of agreements relating to the Debtor's business and property and advise the Debtor in connection therewith, and review the nature and validity of liens asserted against the Debtor and advise as to the enforceability of the liens. Michael D. Sirota, a shareholder of Cole Schotz, says that the firm will be paid based on the hourly rates of its personnel: Members $355-$725 Special Counsel $335-$415 Associates $195-$415 Paralegals $140-$230 Mr. Sirota assures the Court that Cole Schotz is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Hackensack, New Jersey-based Zayat Stables, LLC, owns of 203 thoroughbred horses. The Company filed for Chapter 11 bankruptcy protection on February 3, 2010 (Bankr. D. N.J. Case No. 10-13130). The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. * SJB Raises $1.1 Billion to Acquire Seized US Lender ----------------------------------------------------- Bloomberg News' Jonathan Keehner in New York reports that billionaire investor Stephen Ross and two partners raised about $1.1 billion from investors to help their SJB National Bank acquire a seized U.S. lender. A person with knowledge of the matter told Bloomberg that Mr. Ross and his partners in real estate firm Related Cos., Jeff Blau and Bruce Beal Jr., got the funds in a private placement managed by Deutsche Bank AG. That source said the talks are private. Bloomberg's source said the investors include David Einhorn's Greenlight Capital Inc.; and New York hedge-fund firm Elliott Management Corp. "Investment funds are looking for a quick way to enter the market for failed-banks," said Chip MacDonald, a partner with Jones Day in Atlanta who specializes in deals among lenders, according to Bloomberg. "SJB did a great job of demonstrating their management team and that's shown in the money they raised." Bloomberg relates SJB was established by the Related executives in 2009 as a bank without operations. In October, SJB won approval from the Federal Deposit Insurance Corp. to bid on failing institutions. Bloomberg also notes buyout firms including Blackstone Group LP, WL Ross & Co. and J.C. Flowers & Co. have participated in deals to acquire failed banks following the financial crisis. Related owns real estate assets valued at more than $12 billion. Its operating portfolio includes more than 3.5 million square feet of retail space, 19 luxury rental buildings with 4,700 units and about 13,000 affordable housing apartments in the U.S. Bloomberg says the closely held firm won't have any stake in SJB, according to a notice on the U.S. Office of the Comptroller of the Currency's Web site. The FDIC had 552 banks with $345.9 billion in assets on its confidential problem list as of Sept. 30, a 33% increase from 416 lenders with $299.8 billion in assets the previous quarter. * Improved Investor Appetite for Exit Loans Cues Cheaper Lending ---------------------------------------------------------------- Kristen Haunss and Pierre Paulden at Bloomberg News report that Six Flags Inc. and Smurfit-Stone Container Corp. became the latest companies to tap investor appetite for loans financing emergence from bankruptcy, as demand drives down borrowing costs for the neediest companies. Corporations will need $25 billion of exit loans this year, Mark Cohen, head of restructuring and workout at Deutsche Bank AG in New York, said, according to the Bloomberg report. "With improved investor appetite for leveraged loans, companies that were capital constrained over 2008-2009 will now have access to cheaper lending and on more flexible terms," Mr. Cohen said. "This is a critical phase of economic recovery as this capital will now fuel capital expansion and job growth." According to Bloomberg, Lyondell Chemical Co. and Tribune Co., two of the largest leveraged takeovers in history that failed during the financial crisis, also plan to exit bankruptcy this year. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Total Share- Total Working Holders' Assets Capital Equity Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ ------- -------- ACCO BRANDS CORP ABD US 1,078.00 217.20 (102.90) ADVANCED BIOMEDI ABMT US 0.15 (1.24) (1.16) AFC ENTERPRISES AFCE US 115.70 (0.30) (22.90) AFFYMAX INC AFFY US 144.93 7.14 (2.73) AGA MEDICAL HOLD AGAM US 332.79 28.51 (47.64) AMER AXLE & MFG AXL US 1,986.80 71.10 (559.90) AMERICAS ENERGY AENY US 0.60 0.59 (0.01) AMR CORP AMR US 25,754.00 (1,448.00) (2,859.00) ARTIO GLOBAL INV ART US 280.40 - (33.37) ARTIO GLOBAL INV A1I GR 280.40 - (33.37) ARVINMERITOR INC ARM US 2,499.00 98.00 (1,112.00) AUTOZONE INC AZO US 5,385.82 (186.44) (483.96) BLOUNT INTL BLT US 487.85 29.49 (22.15) BLUEKNIGHT ENERG BKEP US 316.83 (4.27) (133.64) BOARDWALK REAL E BEI-U CN 2,405.68 - (36.79) BOARDWALK REAL E BOWFF US 2,405.68 - (36.79) CABLEVISION SYS CVC US 10,128.00 (111.68) (5,193.36) CARDTRONICS INC CATM US 460.40 (47.34) (1.29) CENTENNIAL COMM CYCL US 1,480.90 (52.08) (925.89) CENVEO INC CVO US 1,601.19 203.42 (178.97) CHENIERE ENERGY CQP US 1,918.95 28.24 (472.03) CHOICE HOTELS CHH US 340.04 (3.94) (114.21) CINCINNATI BELL CBB US 2,011.20 22.00 (614.00) CONEXANT SYS CNXT US 273.75 65.77 (66.65) CYTORI THERAPEUT CYTX US 25.00 11.37 (1.42) DELCATH SYSTEMS DCTH US 6.77 (4.98) (4.94) DEXCOM DXCM US 53.96 25.84 (9.10) DISH NETWORK-A DISH US 8,658.74 710.57 (1,381.37) DOMINO'S PIZZA DPZ US 443.74 106.68 (1,350.12) DUN & BRADSTREET DNB US 1,600.30 (181.70) (720.30) DYAX CORP DYAX US 51.59 23.57 (49.20) ENERGY COMPOSITE ENCC US - (0.01) (0.01) EPICEPT CORP EPCT SS 11.96 5.79 (5.16) EXELIXIS INC EXEL US 421.10 91.53 (142.77) EXTENDICARE REAL EXE-U CN 1,655.19 126.26 (47.76) FORD MOTOR CO F US 205,896.00 (9,751.00) (7,270.00) FORD MOTOR CO F BB 205,896.00 (9,751.00) (7,270.00) GENCORP INC GY US 935.70 111.20 (289.10) GLG PARTNERS-UTS GLG/U US 466.58 168.33 (277.14) GRAHAM PACKAGING GRM US 2,067.56 243.77 (869.60) GREAT ATLA & PAC GAP US 3,025.43 248.68 (358.47) HEALTHSOUTH CORP HLS US 1,754.40 35.90 (534.50) HOVNANIAN ENT-A HOV US 2,024.58 1,261.10 (316.31) IMS HEALTH INC RX US 2,110.52 230.86 (42.68) INCYTE CORP INCY US 472.82 358.38 (199.36) INTERMUNE INC ITMN US 157.15 92.82 (83.36) IPCS INC IPCS US 559.20 72.11 (33.02) JAZZ PHARMACEUTI JAZZ US 102.17 (8.97) (82.44) JUST ENERGY INCO JE-U CN 1,387.06 (386.96) (356.53) KNOLOGY INC KNOL US 643.99 20.90 (41.94) LIBBEY INC LBY US 797.79 146.46 (66.91) LIN TV CORP-CL A TVL US 772.71 6.57 (188.41) LINEAR TECH CORP LLTC US 1,512.83 673.47 (114.33) MANNKIND CORP MNKD US 247.40 8.81 (59.22) MEAD JOHNSON MJN US 1,964.30 502.30 (697.50) MEDIACOM COMM-A MCCC US 3,721.86 (253.93) (434.75) MOODY'S CORP MCO US 2,003.50 (225.90) (1,043.60) NATIONAL CINEMED NCMI US 607.80 85.00 (504.50) NAVISTAR INTL NAV US 10,027.00 1,563.00 (1,739.00) NPS PHARM INC NPSP US 154.65 72.04 (222.37) OCH-ZIFF CAPIT-A OZM US 1,976.06 - (88.36) OSIRIS THERAPEUT OSIR US 110.80 48.53 (3.29) OVERSTOCK.COM OSTK US 144.38 34.09 (3.10) PALM INC PALM US 1,326.92 61.03 (151.17) PDL BIOPHARMA IN PDLI US 264.45 (16.23) (242.39) PETROALGAE INC PALG US 3.23 (6.62) (40.14) PRIMEDIA INC PRM US 241.09 (14.36) (110.72) PROTECTION ONE PONE US 628.12 29.11 (83.27) QWEST COMMUNICAT Q US 20,225.00 766.00 (1,031.00) REGAL ENTERTAI-A RGC US 2,512.50 (13.60) (258.50) REVLON INC-A REV US 802.00 105.40 (1,043.40) RURAL/METRO CORP RURL US 275.41 35.16 (105.29) SALLY BEAUTY HOL SBH US 1,529.70 360.62 (580.19) SANDRIDGE ENERGY SD US 2,310.97 1.42 (190.99) SIGA TECH INC SIGA US 8.17 (4.07) (11.49) SINCLAIR BROAD-A SBGI US 1,629.15 (17.99) (132.17) STEREOTAXIS INC STXS US 40.48 1.36 (15.27) SUN COMMUNITIES SUI US 1,189.20 - (95.46) TALBOTS INC TLB US 839.70 (3.95) (190.56) TAUBMAN CENTERS TCO US 2,606.85 - (474.75) TEAM HEALTH HOLD TMH US 940.95 17.39 (92.33) THERAVANCE THRX US 181.39 146.82 (188.99) UAL CORP UAUA US 18,347.00 (2,111.00) (2,645.00) UNISYS CORP UIS US 2,956.90 308.60 (1,271.70) UNITED RENTALS URI US 3,859.00 244.00 (19.00) US AIRWAYS GROUP LCC US 7,454.00 (458.00) (355.00) VENOCO INC VQ US 715.17 (13.00) (169.00) VERMILLION INC VRMLQ US 7.15 (2.96) (24.87) VIRGIN MOBILE-A VM US 307.41 (138.28) (244.23) VIRNETX HOLDING VHC US 4.30 (0.14) (0.07) WARNER MUSIC GRO WMG US 3,934.00 (599.00) (97.00) WEIGHT WATCHERS WTW US 1,076.72 (329.14) (748.21) WORLD COLOR PRES WC CN 2,641.50 479.20 (1,735.90) WORLD COLOR PRES WC/U CN 2,641.50 479.20 (1,735.90) WR GRACE & CO GRA US 3,968.20 1,134.00 (290.50) ZYMOGENETICS INC ZGEN US 319.30 110.05 (3.96) ********* 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. Marites Claro, Joy Agravante, Rousel Elaine Tumanda, 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 2010. 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 ***