/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/100702.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 2, 2010, Vol. 14, No. 181 Headlines ABC LEARNING: Creditor Protection Continued Until Aug. 9 ABITIBIBOWATER INC: Bowater Hires Jones Day as Conflicts Counsel ABITIBIBOWATER INC: Wins Nod for Togut as Conflicts Counsel ABITIBIBOWATER INC: Wins Nod to Pay Union Advisors' Fees ADANAC MOLYBDENUM: CCAA Protection Extended to October 29 ADVANTA CORP: Court to Hear Claims Objections on August 12 AEI SERVICES: S&P Raises Corporate Credit Rating to 'BB-' AMERICAN INT'L: Reconsidering Sale of Two Japanese Units ALEGRIA HIPOLITO: Case Summary & 3 Largest Unsecured Creditors ANF ASBURY: Gets Approval to Access PA Asbury Cash Collateral ARROW AIR: Case Summary & 20 Largest Unsecured Creditors ATRINSIC INC: Receives NASDAQ Notice of Non-Compliance BEAR ISLAND: Has October 1 Extension for Plan Filing BLACK CROW: Wants More Exclusivity; GECC Drops Appeal BLOCKBUSTER INC: To Be Delisted After Conversion Plan Blocked BLOCKBUSTER INC: Wins Forbearance; Delays $42.4MM Bond Payment BLOCKBUSTER INC: CEO Keyes Wins Contract Extension BP PLC: Bankruptcy Can Rid of "Perpetual" Liability, Experts Say BRIER CREEK: Files List of 20 Largest Unsecured Creditors BRITTWOOD CREEK: Chapter 11 Reorganization Case Dismissed BOSQUE POWER: S&P Withdraws 'D' Rating at Company's Request BROWN SHOE: S&P Affirms Corporate Credit Rating at 'B' BUCYRUS COMMUNITY: Can Incur DIP Facility to Operate Business CARIS DIAGNOSTICS: S&P Gives Negative Outlook; Keeps 'B+' Rating CATHOLIC CHURCH: Wilmington Parishes Lose $75 Million Ruling CELESTICA INC: Fitch Upgrades Issuer Default Rating to 'BB' CHELSEA HEIGHTS: Wants to Hire Ryan Swanson as Gen. Bankr. Counsel CHIRON PROPERTIES: Files for Chapter 11 Bankruptcy Protection CITIGROUP INC: Treasury Unloads Shares; Keeps 18% Stake For Now CITY OF CENTRAL FALLS: Moody's Maintains 'B3' Rating on Bonds CLEARPOINT BUSINESS: Meeting to Form Creditors Committee July 8 CMP SUSQUEHANNA: Moody's Upgrades Corp. Family Rating to 'Caa1' CMR MORTGAGE: Gets OK to Incur Unsecured Loan from Greg Abrams CMR MORTGAGE: Reorganization Plan Confirmation Set for August 4 COLT DEFENSE: Moody's Downgrades Corporate Family Rating to 'B2' COLTS RUN: Cash Collateral Hearing Continued Until August 4 COLTS RUN: PNC Bank Sees Fraud, Wants Chapter 11 Trustee Appointed CONKLIN LLC: Case Summary & 3 Largest Unsecured Creditors CORUS BANKSHARES: U.S. Trustee Forms 5-Member Creditors Committee COURTYARD APARTMENTS: Case Summary & 4 Largest Unsecured Creditors COWLITZ BANCORPORATION: Submits to Hearing Before Nasdaq Panel CRUCIBLE MATERIALS: PBGC Reaches Settlement Deal on ERISA Dispute DBSI INC: Beazer Buys $6.45 Million in Lots DELPHI FINANCIAL: Moody's Affirms Junior Debt Ratings at 'Ba1' DONALD KELLAND: Gets Bankruptcy Court Approval to Sell Property DREIER LLP: Client Loses Bid to Stay Blackstone Settlement DYNAMIC BUILDERS: Can Sell Property to D & K for $6.7 Million EATON MOERY: Case Summary & 20 Largest Unsecured Creditors EVAN ALLRED: Voluntary Chapter 11 Case Summary FAIRFIELD RESIDENTIAL: Files Third Amended Reorganization Plan FAIRPOINT COMMS: Appoints Ajay Sabherwal as its New CFO FAIRPOINT COMMS: Maine Regulators Approve Bankruptcy Plan FAIRPOINT COMMS: Reports $75,591,000 Net Loss for Q1 2010 FAIRPOINT COMMS: Verizon Wants Indemnification Provisions Retained FEDERAL-MOGUL: Files 2009 401(k) Investment Program Report FEDERAL-MOGUL: Files 2009 Employee Investment Plan Report FEDERAL-MOGUL: To Hold 2nd Quarter Fin'l Results Call on July 29 FIDELITY NATIONAL: Fitch Affirms 'BB+' Issuer Default Ratings FIDELITY NATIONAL: Moody's Confirms 'Ba1' Corporate Family Rating FINLAY ENTERPRISES: Modified Plan of Liquidation Confirmed FLEXTRONICS INT'L: Fitch Raises Issuer Default Rating From BB FLYING J: Completes Merger With Pilot Travel Centers FLYING J: FTC Requires Divestitures for $2-Bil. Deal With Pilot FORD MOTOR: Moody's Maintains 'B1' Corporate Family Rating FOXWOOD VILLAGE: Case Summary & 3 Largest Unsecured Creditors FUTURA EDUCATION: School Leaders Sued for Tuition Payments FUWEI FILMS: Receives Nasdaq Notice of Bid Price Deficiency GENERAL EMPLOYMENT: Gets NYSE AMEX Notice on Listing Standards GENERAL GROWTH: Wants Plan Filing Exclusivity Until Oct. 18 GENERAL GROWTH: Execs. Miss June 30 Exit Target, Won't Get $10MM GENERAL GROWTH: 27 Units' Chapter 11 Plans Declared Effective GENERAL GROWTH: Seeks Estimation of Hughes Heirs' Claims GLIMCHER REALTY: Completes Refinancing of Grand Central Mall GLOUCESTER ENGINEERING: Wants to Obtain Up to $6MM DIP Financing GOOD SAMARITAN: Moody's Downgrades Ratings on Bonds to 'Ba1' IMAGE ENTERTAINMENT: Recurring Losses Cue Going Concern Doubt INDEPENDENT BANK CORP: Receives Nasdaq Notification INNOVATIVE CONSULTING: Blair County Ends Bridge Inspection Deal INSMED INCORPORATED: Gets Deficiency Notice on Minimum Bid Price INTERNATIONAL COMMERCIAL: Posts $75,100 Net Loss in Q1 2010 INTRALINKS INC: S&P Gives Positive Outlook; Affirms 'B' Rating JABIL CIRCUIT: Fitch Upgrades Issuer Default Rating From 'BB+' JACKSON HEWITT: Receives Notice Regarding NYSE Listing Criteria JAPAN AIRLINES: Expects to Move Into The Black One Year Earlier JAPAN AIRLINES: May Need US$1.1 Bil. More in Restructuring Aid JAPAN AIRLINES: To Sell Hotel Operations to Hotel Okura JDA SOFTWARE: S&P Gives Stable Outlook; Affirms 'BB-' Rating JOE MIRANDA: Case Summary & 20 Largest Unsecured Creditors KINETIC CONCEPTS: S&P Raises Corporate Credit Rating to 'BB+' L-3 COMM: Moody's Ratings Unmoved By Unit's Gov't Contract Halt LAZARE KAPLAN: Receiving a Notice From NYSE Amex LLC LEHMAN BROTHERS: Expands Jones Day Work for Fifth Time LEHMAN BROTHERS: Gets Go Signal to Hire Dechert as Special Counsel LEHMAN BROTHERS: Proposes Reed Smith as Special Counsel LEHMAN BROTHERS: Receives OK for Sotheby's as Auction House LEHMAN BROTHERS: Judge Offers Hope to BNY Appeal LEHMAN BROTHERS: Creditor Group Wants Substantive Consolidation LEUCADIA NAT'L: Moody's Gives Stable Outlook; Keeps Low-B Ratings LIMITED BRANDS: Fitch Upgrades Ratings on Senior Notes to 'BB+' LINCOLN NATIONAL: Fitch Upgrades Ratings on Junior Debt From 'BB+' MAGNETEK INC.: Gets NYSE Notice for Falling Below Standards MASHANTUCKET PEQUOT: July 13 Bank Debt Payment Looms MARK MARTIN: Voluntary Chapter 11 Case Summary MEDICAL STAFFING: Prepack Filing Deadline Now July 2 MER TELEMANAGEMENT: Receives NASDAQ Notice of Non-Compliance MOBILE MINI: S&P Affirms Corporate Credit Rating at 'BB-' NATIONAL ENVELOPE: Cenveo Bids to Acquire Assets for $140 Million NEW ORIENTAL: Weinberg & Company Raises Going Concern Doubt NORTEL NETWORKS: Court Approves $22 Million in Fees NORTEL NETWORKS: Files Bankruptcy Rule 2015.3 Reports NORTEL NETWORKS: Seeks Canada OK to Sell Certain Assets to 7522312 NXT ENERGY: Posts C$2.4 Million Net Loss for 2009 ORCHARD SUPPLY: Moody's Affirms Ratings; Gives Negative Outlook PFF BANCORP: Seeks to Knock Out PBGC's Claims Entirely PHH CORPORATION: Moody's Affirms 'Ba2' Corporate Family Rating PIONEER NATURAL: Moody's Gives Stable Outlook; Keeps 'Ba1' Ratings POLYONE CORPORATION: Moody's Upgrades Corp. Family Rating to 'Ba3' PROGEN PHARMACEUTICALS: Gets Delisting Notification From Nasdaq PROTOSTAR LTD: Committee Opposes Longer Plan Exclusivity QIMONDA AG: Int'l Trade Proceedings Continue in Bankruptcy REOSTAR ENERGY: Killman Murrell Raises Going Concern Doubt SANMINA-SCI CORPORATION: Fitch Lifts Issuer Default Rating to 'B+' SEMINOLE TRIBE: Fitch Downgrades Issuer Ratings to 'BB' SEMINOLE TRIBE: S&P Assigns Ratings on CreditWatch Negative SMURFIT-STONE CONTAINER: Moody's Removes 'B2' Rating on Loan SMURFIT-STONE: S&P Gives 'BB-' Corporate to Emerged Company SMURFIT-STONE: Has Intent to Distribute Reserve Amount to Claims SMY MEDIA: Case Summary & 20 Largest Unsecured Creditors SOMERSET PARTNERS: Case Summary & 4 Largest Unsecured Creditors SPECIALTY PRODUCTS: Insurers Want Coverage Appeal Finished SPECIALTY PRODUCTS: RPM Faces Criticism for 2 Units' Filing SPRINGBOK SERVICES: Asks for Court OK to Obtain DIP Financing TAYLOR BEAN: Freddie Mac Fights BofA's Examination Bid TEXAS RANGERS: Lists Assets at $79.6 Million THANH HOANG: Case Summary & 19 Largest Unsecured Creditors TOT ENERGY: Posts $1.8 Million Net Loss in Q3 Ended December 31 TRUVO USA: Files for Ch. 11; Mulls Sale of Assets to Creditors TUPPERWARE BRANDS: S&P Raises Corporate Credit Rating From 'BB+' UNIVAR INC: S&P Puts 'B' Corp. Rating on CreditWatch Positive URANIUM RESOURCES: To Transfer to NASDAQ Capital Market US STEEL: Fitch Affirms Issuer Default Rating at 'BB+' VISTEON CORP: Seeks Exclusive Plan Rights Until October 15 WARREN STEARNS: Case Summary & 20 Largest Unsecured Creditors WAYNE POWELL: Voluntary Chapter 11 Case Summary ZAYAT STABLES: Court Approves Settlement Agreement With Bank * Foreclosure Sales Account for 31% of All Residential Sales * GE Capital Joint Leads $650MM Exit Financing for Smurfit-Stone * BOOK REVIEW: The Executive Guide to Corporate Bankruptcy ********* ABC LEARNING: Creditor Protection Continued Until Aug. 9 -------------------------------------------------------- Bill Rochelle at Bloomberg News reports that the bankruptcy judge held a hearing on June 24 and scheduled another hearing on August 9 on whether ABC Learning Centres Ltd. qualifies for bankruptcy protection in the U.S. under Chapter 15, which governs cross-border insolvencies. RCS Capital Development LLC, the holder of a $47 million jury verdict against ABC Learning, objected to the Chapter 15 petition, saying the proceedings in Australia aren't sufficiently controlled by a court to qualify for U.S. protection. The U.S. bankruptcy judge in Delaware continued the halt on lawsuits in the U.S. until July 8 "or termination by court order." About ABC Learning Based in Australia, ABC Learning Centers Limited (ASX: ABS) -- http://www.childcare.com.au/-- provides childcare services and education in more than 1,200 centers in Australia, New Zealand, the United States and the United Kingdom. The Company's subsidiaries include A.B.C. Developmental Learning Centers Pty Ltd., A.B.C. Early Childhood Training College Pty Ltd., Premier Early Learning Centers Pty Ltd., A.B.C. Developmental Learning Centers (NZ) Ltd., A.B.C. New Ideas Pty Ltd., A.B.C. Land Holdings (NZ) Limited and Child Care Centers Australia Ltd. On January 26, 2007, it acquired La Petite Holdings Inc. On February 2, 2007, it acquired Forward Steps Holdings Ltd. On March 23, 2007, it acquired Children's Gardens LLP. In September 2007, the Company purchased the Nursery division (Leapfrog Nurseries) from Nord Anglia Education PLC. In June 2008, the Company completed the sale of a 60% stake in its United States business to Morgan Stanley Private Equity. In November 2008, ABC Learning Centers Limited appointed Peter Walker and Greg Moloney of Ferrier Hodgson as voluntary administrators of the company and a number of its subsidiaries. Subsequent to the appointment of administrators, the company's banking syndicate appointed Chris Honey, Murray Smith and John Cronin of McGrathNicol as receivers. The Company filed its Chapter 15 petition in Wilmington Delaware, (Bankr. D. Del. Case No. 10-11711) on May 26, 2010. Joel A. Waite, Esq., at Young, Conaway, Stargatt & Taylor, represents the Debtor in the Chapter 15 case. ABC listed debts and assets of US$100 million to US$500 million. An affiliate, A.B.C. USA Holdings Pty Ltd., filed a separate Chapter 15 petition, also listing assets and debts of at least US$100 million. ABITIBIBOWATER INC: Bowater Hires Jones Day as Conflicts Counsel ---------------------------------------------------------------- AbitibiBowater Inc. and its units sought and obtained permission from U.S. Bankruptcy Judge Kevin Carey to hire Jones Day as Bowater Inc.'s conflicts counsel, nunc pro tunc to June 2,2010. The Debtors have tapped the services of Jones Day in light of an apparent intercompany conflict between Bowater and its wholly owned subsidiary, Bowater Canada Finance Corporation. Bowater organized BCFC as an unlimited liability company under Nova Scotia law. BCFC issued notes in the principal amount of $600 million pursuant to that certain indenture for the 7.95% notes due 2011 dated as of October 31, 2001, among BCFC as issuer, Bowater as guarantor, and the Bank of New York, as trustee. The BCFC Notes remain outstanding. BCFC is a financing vehicle with no material operations. Sean T. Greecher, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that in the event of a winding up, BCFC may have a wind up claim against Bowater pursuant to Section 135 of the Companies Act (Nova Scotia) for BCFC's liabilities, as well as other potential claims in with respect to the BCFC Notes -- which present a potential conflict of interest between BCFC and Bowater. As Bowater's conflicts counsel, Jones Day is expected to: (a) for only the matters Jones Day is handling, advise Bowater regarding its powers and duties as a debtor-in-possession; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (c) prepare on Bowater's behalf motions, objections, applications, adversary proceedings, answers, orders, reports and papers necessary to the matters Jones Day is handling; and (d) perform other necessary legal services as may be requested and provide other necessary legal advice to Bowater in connection with the Chapter 11 cases. Jones Day will ensure that the services it performs for Bowater will not duplicate the duties of other professionals in the Debtors' cases. Bowater proposes to pay for Jones Day's services in accordance with these hourly rates: Title Hourly Rate ----- ----------- Partners $650 to $950 Counsel $525 to $625 Associates $325 to $675 Para-professionals/Law clerks $250 to $325 The highest billing rate that will be charged by any Jones Day attorney for services rendered to Bowater will be $925 per hour. The Firm will also be reimbursed for out-of-pocket expenses. Paul D. Leake, Esq., a partner at Jones Day, in New York, assures Judge Carey that his Firm is a "disinterested person" as that term is defined under Section 101(14) of the Bankruptcy Code. About AbitibiBowater AbitibiBowater produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 22 pulp and paper facilities and 26 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of Sept. 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes AbitibiBowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Wins Nod for Togut as Conflicts Counsel ----------------------------------------------------------- AbitibiBowater Inc. and its units won permission from U.S. Bankruptcy Judge Kevin Carey for Bowater Canada Finance Corporation to employ Togut, Segal & Segal LLP as conflicts counsel, nunc pro tunc to April 30, 2010. The Debtors seek the employment of Togut Segal in light of an apparent intercompany conflict between BCFC and its parent, Bowater Incorporated, that they identified. BCFC is a wholly owned subsidiary of Bowater organized as an 'unlimited liability company' under Nova Scotia law. A ULC creates a "hybrid" pass through structure where the ULC's shareholders may be liable pursuant to Nova Scotia law for the ULC's liabilities upon its winding up, even though the ULC takes the form of a corporation. BCFC issued notes in the principal amount of $600 million pursuant to that certain indenture for the 7.95% notes due 2011 dated as of October 31, 2001 among BCFC as issuer, Bowater as guarantor, and the Bank of New York as trustee. The BCFC Notes remain outstanding. In this light, the Debtors believe that engaging a conflict counsel at this time to represent BCFC in connection with any claims BCFC may have against Bowater from the BCFC Notes is in the best interests of the Debtors' estates. As conflicts counsel, Togut Segal is expected to: (1) for only the matters the Togut Firm is handling, advise BCFC regarding its powers and duties as a debtor-in- possession in those matters; (2) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (3) prepare on BCFC's behalf proofs of claim, motions, applications, adversary proceedings, answers, orders, reports and papers necessary to the matters the Togut Firm is handling; (4) appear before the Court and any appellate courts and protect the interests of BCFC's estate before the Courts; and (5) perform other necessary legal services as may be requested and provide other necessary legal advice to BCFC in connection with these Chapter 11 Cases. The Togut Firm will perform these duties to BCFC on matters which may arise where Paul Weiss Rifkind Wharton & Garrison LP or the Debtors' other retained professionals cannot perform such services. The Debtors are mindful of the need to avoid duplication of services and thus, assure the Court that appropriate procedures will be implemented to ensure that there is minimal duplication of effort as a result of Togut Segal's role as conflicts counsel. The primary members of the Togut Firm who will be handling the matter and their current standard hourly rates are: Partners $800 to $935 Associates & Counsel $275 to $720 Paralegals & Law Clerks $155 to $285 The Debtors propose to pay the Togut Firm according to the firm's customary fees and reimburse the firm for its necessary expenses. Albert Togut, Esq., a senior member of the Togut Firm, assures the Court that his firm is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. About AbitibiBowater AbitibiBowater produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 22 pulp and paper facilities and 26 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of Sept. 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes AbitibiBowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ABITIBIBOWATER INC: Wins Nod to Pay Union Advisors' Fees -------------------------------------------------------- AbitibiBowater Inc. and its U.S. units obtained permission from the Bankruptcy Court to pay the United Steelworkers' legal, actuarial, financial, investment banking and other professionals and consultants in connection with the Debtors' bankruptcy cases pursuant to the terms of a Memorandum of Understanding between the Debtors and the USW. Approximately 7% of the Debtors' employees are represented by bargaining units. The USW predominantly represents the Debtors' unionized employees in the United States. The USW has hired, among others, investment banking firm Potok and Co. The USW has also hired Cohen Weiss and Simon LLP and The Segal Company. Pursuant to the MOU, the outside consultant fees and expenses will be subject to an overall cap of $50,000 for the investment banker and an overall cap of $250,000 for the other outside consultants. About AbitibiBowater AbitibiBowater produces a wide range of newsprint, commercial printing papers, market pulp and wood products. It is the eighth largest publicly traded pulp and paper manufacturer in the world. AbitibiBowater owns or operates 22 pulp and paper facilities and 26 wood products facilities located in the United States, Canada and South Korea. Marketing its products in more than 90 countries, the Company is also among the world's largest recyclers of old newspapers and magazines, and has third-party certified 100% of its managed woodlands to sustainable forest management standards. AbitibiBowater's shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board under the stock symbol ABWTQ. The Company and several of its affiliates filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 16, 2009 (Bankr. D. Del. Lead Case No. 09-11296). Judge Kevin J. Carey presides over the case. The Company and its Canadian affiliates commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Quebec Superior Court Commercial Division the next day. Alex F. Morrison at Ernst & Young, Inc., was appointed CCAA monitor. Paul, Weiss, Rifkind, Wharton & Garrison LLP, serves as the Debtors' U.S. bankruptcy counsel. Stikeman Elliot LLP, acts as the Debtors' CCAA counsel. Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serves as the Debtors' co-counsel, while Troutman Sanders LLP in New York, serves as the Debtors' conflicts counsel in the Chapter 11 proceedings. The Debtors' financial advisors are Advisory Services LP, and their noticing and claims agent is Epiq Bankruptcy Solutions LLC. The CCAA Monitor's counsel is Thornton, Grout & Finnigan LLP, in Toronto, Ontario. Abitibi-Consolidated Inc. and various Canadian subsidiaries filed for protection under Chapter 15 of the U.S. Bankruptcy Code on April 17, 2009 (Bankr. D. Del. 09-11348). Judge Carey also handles the Chapter 15 case. Pauline K. Morgan, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, represent the Chapter 15 Debtors. As of Sept. 30, 2008, the Company had $9,937,000,000 in total assets and $8,783,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes AbitibiBowater Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings and parallel proceedings under the Companies' Creditors Arrangement Act in Canada undertaken by Abitibibowater Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ADANAC MOLYBDENUM: CCAA Protection Extended to October 29 --------------------------------------------------------- Adanac Molybdenum Corporation disclosed that its application of June 30, 2010, to the Supreme Court of British Columbia for an Order under the Companies' Creditors Arrangement Act to extend its creditor protection has been successful, allowing the Company to continue to restructure and continue to stay all claims and actions against the Company and its assets. The June 30, 2010 Order extends the stay period under CCAA until October 29, 2010, at which time the matter will be reviewed by the Court. Further information can be found on the website of KPMG Inc., the court- appointed Monitor, at http://www.kpmg.ca/adanac. Adanac Molybdenum Corporation is listed on the TSX and Frankfurt exchanges and owns the Ruby Creek Project in northern British Columbia. The Company has advanced the project through feasibility studies, a production decision and has previously ordered long- lead equipment, completed permitting for construction, constructed a road to the site and secured US$80 million in bridge financing. ADVANTA CORP: Court to Hear Claims Objections on August 12 ---------------------------------------------------------- American Bankruptcy Institute reports that Advanta Corp. is set to head to court on Aug. 12 as it seeks to throw out certain claims filed against it. About Advanta Corp. Advanta Corp. -- http://www.advanta.com/-- has had a 59-year history of being a leading innovator in the financial services industry and of providing great value to its stakeholders, including its senior retail note holders and shareholders, prior to the recent reversals. It has also been a major civic and charitable force in the communities in which it is based, particularly in the Greater Philadelphia area. In June 2009, the Federal Deposit Insurance Corporation placed significant restrictions on the activities and operations of Advanta Bank Corp., a wholly owned subsidiary of the Company, as the Bank's capital ratios were below required regulatory levels. On November 8, 2009, Advanta Corp. filed for Chapter 11 (Bankr. D. Del. Case No. 09-13931). Attorneys at Weil, Gotshal & Manges LLP, and Richards, Layton & Finger, P.A., serve as bankruptcy counsel. Alvarez & Marsal serves as financial advisor. The Garden City Group, Inc., serves as claims agent. The filing did not include Advanta Bank Corp. The petition says that Advanta Corp.'s assets totaled $363,000,000 while debts totaled $331,000,000 as of September 30, 2009. AEI SERVICES: S&P Raises Corporate Credit Rating to 'BB-' --------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit ratings on emerging markets energy infrastructure company AEI Services LLC to 'BB-' from 'B+'. The revision follows AEI's ability to improve and sustain its financial performance during the past three years. The outlook is stable. As of March 31, 2010, AEI had about $1.07 billion in rated parent-level debt. Although AEI's financial performance has surpassed S&P's expectation, new risks have emerged that mute any upward momentum. S&P's concern particularly stems from large generation construction projects. Also, while a well executed business plan in 2008-2009 is reflected in the outlook, S&P notes that the current market environment still poses a challenge for AEI's financing needs. S&P will also monitor AEI's construction projects to see if they progress satisfactorily without cost and schedule delays. S&P could lower the ratings if AEI's liquidity becomes weaker. Geopolitical uncertainties in its markets could detract from credit and could influence the rating. AMERICAN INT'L: Reconsidering Sale of Two Japanese Units -------------------------------------------------------- The Wall Street Journal's Serena Ng, Leslie Scism, and Anupreeta Das report that people familiar with the matter said American International Group Inc. is reconsidering a sale of two Japanese life insurance companies -- AIG Star Life Insurance Co. and AIG Edison Life Insurance Co. -- for roughly $5 billion. AIG last year sought to sell the units. But after AIG's chief executive Robert Benmosche's visit to Japan in October 2009, AIG announced it planned to retain the pair of companies "for the foreseeable future" in part to help stabilize their businesses. One source told the Journal the two units' performance, along with the deal-financing environment, have improved since then. The source said continued interest from potential buyers may also have prompted AIG to revisit the idea of selling the two units. The Journal relates Angelo Graci, managing director at Chapedaine Credit Partners in New York, estimates the two Japanese businesses could be worth $4 billion to $6 billion in a sale, based on their book values. The Journal also says analysts have long considered Prudential Financial Inc., the big insurer based in Newark, N.J., to be a logical buyer of the two companies. Prudential has large operations in Japan and it has publicly stated its interest in expanding there. Analysts widely view Prudential as having strong expertise in the Japanese market. The Journal says Prudential declined to comment on any possible acquisition activity related to the AIG properties. An AIG spokeswoman also declined to comment. Meanwhile, the Journal's Ms. Ng, Ms. Das and Joann S. Lublin relate that Mr. Benmosche and outside Chairman Harvey Golub have agreed to try to resolve their differences and work together on AIG's restructuring, after a rift between the men emerged following a high-profile deal failure, according to people familiar with the matter. At a board meeting last Friday, Mr. Benmosche said he wanted Mr. Golub to leave or he himself would quit, the people said. The resignation threat came after AIG's board several weeks ago voted down the sale of AIA Group Ltd., that Mr. Benmosche supported. About AIG Inc. Based in New York, American International Group, Inc., is an international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies provide life insurance and retirement services around the world. AIG 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. In September 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. ALEGRIA HIPOLITO: Case Summary & 3 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Alegria Vicencio Hipolito 14317 La Rinconada Drive Los Gatos, CA 95032 Bankruptcy Case No.: 10-56688 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: Kenneth R. Graham, Esq. Law Office of Kenneth R. Graham 171 Mayhew Way #208 Pleasant Hill, CA 94523 Tel: (925) 932-0170 E-mail: krg@elaws.com Estimated Assets: $50,001 to $100,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 3 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/canb10-56688.pdf The petition was signed by Alegria Vicencio Hipolito. ANF ASBURY: Gets Approval to Access PA Asbury Cash Collateral ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized ANF Asbury Park, LLC, to use the cash collateral of PA Asbury, LLC. The Debtor would use the cash collateral to finance its operations postpetition. As reported in the Troubled Company Reporter on April 26, 2010, the Debtor is the owner of 234-unit apartment building community Asbury Park Apartments in Miami Gardens, Florida. The property is subject to numerous lease agreements which provide the Debtor rental income, which are cash collateral. The cash collateral use is contingent upon: a. The lender is adequately protected by continued monthly payments of interest, taxes and insurance. b. The lender is further protected by the Debtor's ongoing operations. c. The lender's interests are adequately protected by replacement liens on Debtor's postpetition rents, cash, and the proceeds thereof. d. The cash collateral is intended for the necessary costs of maintaining the lender's underlying collateral. e. The Debtor will provide the lender with information to monitor the use of cash collateral, thereby providing an additional measure of "adequate protection." f. The equities of the case mandate approval of the motion. g. The policy of reorganization calls for granting the motion. The Debtor is represented by: Michael G. Spector, Esq. Vicki L. Schennum, Esq. Law Offices of Michael G. Spector 2677 North Main Street, Suite 800 Santa Ana, CA 92705 Tel: (714) 835-3130 Fax: (714) 558-7435 E-mail: vschennum@msn.com About ANF Asbury Park Irvine, California-based ANF Asbury Park, LLC, filed for Chapter 11 bankruptcy protection on March 5, 2010 (Bankr. C.D. Calif. Case No. 10-12819). The Company estimated its assets and liabilities at $10,000,001 to $50,000,000. ARROW AIR: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Arrow Air, Inc. dba Arrow Cargo 1701 NW 63rd Avenue, Building 712 Miami, FL 33126 Bankruptcy Case No.: 10-28831 Chapter 11 Petition Date: June 30, 2010 Court: U.S. Bankruptcy Court Southern District of Florida (Miami) Judge: A. Jay Cristol Debtor's Counsel: Jordi Guso, Esq. 200 S Biscayne Boulevard #1000 Miami, FL 33131 Tel: (305) 755-9500 E-mail: jguso@bergersingerman.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $100,000,001 to $500,000,000 The petition was signed by Doug Yakola, chief restructuring officer. Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ St. Aerospace Services Co. PTE Ltd Trade debt $774,456 8191 NW 12th Street Miami, FL 33126 Miami Leasing, Inc. Aircraft lease $520,396 291 NW 72 Avenue rent Miami, FL 33172 AMB Inst Alliance Fund III, L.P. Rent $451,252 P.O. Box 6156 Hicksville, NY 11802-6156 ANAC Trade debt $411,032 Brasilia International Airport Department of Utilities, Lot 5 CEP 71608-900 Brazil Cargo Force Trade debt $404,566 6705 Red Road, Suite 700 Coral Gables, FL 33143 Aero Miami II LLC Rent $329,831 U.S. Bank Trust National Assoc. Lockbox Serv. Cm 9705 St. Paul, MN 55108 Office Natl. De L'Aviation Civile Trade debt $291,303 P.O. Box 1346 Port-Au-Prince Haiti Tesoro Nacional Aerocivil - GOG Trade Debt $240,984 Avenida El Dorado #96-50 Colombia Awas Aviation Acquisitions Limited Engine lease $234,781 rent Aviation Brake Service, Inc. Trade debt $172,510 Miami Tech Line Maintenance Trade debt $165,430 Rolls Royce Finance Engine lease $153,081 rent Swissport Brasil Ltda. Trade debt $141,757 Fuerza Aerea Argentina Trade debt $134,484 Unitpool, Uld Trade debt $130,558 Servicio De Rantas Internas Trade debt $121,925 Aircraft 235 LLC Engine lease $85,192 rent Primeair Holding Corp. Trade debt $79,782 Ga Telesis Cr Group Trade debt $78,850 Southeast Marine & Aviation Trade debt $58,975 ATRINSIC INC: Receives NASDAQ Notice of Non-Compliance ------------------------------------------------------ Atrinsic, Inc., was notified by the NASDAQ Staff that it does not comply with the minimum $1.00 bid price requirement set forth in Listing Rule 5450(a)(1). As a result, the Company's common stock is subject to delisting from The NASDAQ Stock Market unless the Company requests a hearing before a NASDAQ Listing Qualifications Panel. Atrinsic intends to timely request a hearing before a Panel, which will automatically stay the delisting of the Company's common stock until the Panel issues its decision following the hearing. At the hearing, the Company will present its plan to regain compliance. Under NASDAQ's Listing Rules, the Panel may, in its discretion, decide to continue the Company's listing pursuant to an exception to the Rule for a maximum of 180 calendar days from the date of the Staff's notification or through December 20, 2010. However, there can be no assurances that the Panel will do so. About Atrinsic Atrinsic, Inc., is a leading Internet-focused marketing company. The company combine the power of the Internet with traditional direct response marketing techniques to sell entertainment and lifestyle subscription products directly to consumers. The company also leverage its media network and marketing expertise to provide lead generation and search related marketing services to our corporate and advertising clients. BEAR ISLAND: Has October 1 Extension for Plan Filing ---------------------------------------------------- Bill Rochelle at Bloomberg News reports that the bankruptcy judge gave Bear Island Paper Co. LLC an extension until Oct. 1 of the exclusive right to propose a reorganization plan. According to the report, the bankruptcy judge also extended, last week, the time for the creditors' committee to investigate the validity of pre-bankruptcy secured claims until July 9. About Bear Island White Birch is the second-largest newsprint producer in North America. As of December 31, 2009, the WB Group held a 12% share of the North American newsprint market and employed roughly 1,300 individuals (the majority of which reside in Canada). Additionally, for the 12 months ended December 31, 2009, the WB Group maintained an annual production capacity of roughly 1.3 million metric tons of newsprint and directory paper, up to 50% of which consists of recycled content, and achieved net sales of roughly $667 million. Bear Island's assets are almost exclusively located in the U.S. Bear Island Paper Company, L.L.C., filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia on February 24, 2010. The company's parent, White Birch Paper Company, filed for bankruptcy protection under Canada's Companies' Creditors Arrangement Act, before the Superior Court for the Province of Quebec, Commercial Division, Judicial District of Montreal, Canada. White Birch and five other affiliates -- F.F. Soucy Limited Partnership; F.F. Soucy, Inc. & Partners, Limited Partnership; Papier Masson Ltee; Stadacona Limited Partnership; and Stadacona General Partner, Inc. -- also sought bankruptcy protection under Chapter 15 of the U.S. Bankruptcy Code. Jonathan L. Hauser, Esq., at Troutman Sanders LLP, in Virginia Beach, Virginia; and Richard M. Cieri, Esq., Christopher J. Marcus, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, serve as counsel to White Birch, as Foreign Representative. Kirkland & Ellis and Troutman Sanders also serve as Chapter 11 counsel to Bear Island. AlixPartnes LLP serves as financial/restructuring advisor to Bear Island, and Lazard Freres & Co., serves as investment banker. Chief Judge Douglas O. Tice, Jr., handles the Chapter 11 and Chapter 15 cases. BLACK CROW: Wants More Exclusivity; GECC Drops Appeal ----------------------------------------------------- Black Crow Media Group LLC is seeking a three-month extension, until November 8, of the exclusive period to propose a Chapter 11 plan. Black Crow says a second extension is necessary because its time has been consumed because of an ongoing dispute with General Electric Capital Corp., the secured lender owed $38.9 million at the outset. To recall, Black Crow won bankruptcy court approval on May 28 for a $1.5 million loan, over objection from prepetition secured lender GECC. GECC then appealed the order approving the new financing, but the bankruptcy judge, then later the district judge, denied a stay pending appeal. Bill Rochelle at Bloomberg News notes that bankruptcy law requires obtaining a stay pending appeal to overturn financing approval. GECC therefore withdrew the financing appeal this week, saying it was unlikely to be given significant relief even if it won the appeal. About Black Crow Daytona Beach, Florida-based Black Crow Media Group, LLC, owns and operates 17 FM and 5 AM radio stations in Daytona Beach, Live Oak, Valdosta, Huntsville, Alabama, and Jackson, Tennessee. The Company filed for Chapter 11 bankruptcy protection on January 11, 2010 (Bankr. M.D. Fla. Case No. 10-00172). The Company's affiliates -- Black Crow Media, LLC, et al. -- also filed separate Chapter 11 petitions. Mariane L. Dorris, Esq., and R Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, assist the Company in its restructuring effort. The Company listed $10,000,001 to $50,000,000 in assets and $50,000,001 to $100,000,000 in liabilities. BLOCKBUSTER INC: To Be Delisted After Conversion Plan Blocked ------------------------------------------------------------- Blockbuster Inc. on Thursday unveiled the preliminary tabulation figures received from the inspector of election for the company's 2010 annual meeting show that while the company's proposal to convert each outstanding share of Class B common stock into Class A common stock and the company's reverse stock split proposal each received the overwhelming approval of votes cast, due to a low vote turnout, the proposals did not receive the required affirmative vote of the majority of the votes of the outstanding Class A and Class B shares voting as a single class. Of the approximately 289.9 million total votes outstanding, the conversion proposal received approximately 141.2 million votes in favor (or approximately 48.7%) and the reverse stock split proposal received approximately 126.1 million votes in favor (or approximately 43.4%). The proposal to effect the reverse stock split was made in part to allow the company to take action to facilitate regaining compliance with the continued listing criteria of the NYSE, on which both the Class A and Class B common stock currently trade. Among such criteria is the requirement that common stock maintain a $1.00 minimum average closing price. In November 2009, Blockbuster was notified by the NYSE that its Class A common stock did not satisfy the NYSE's continued listing standard that requires the average closing price of a listed security to be no less than $1.00 per share over a consecutive 30- trading-day period. Under the NYSE's rules, Blockbuster had through the date of the annual meeting within which to cure this deficiency. Because the reverse stock split proposal was not approved by the requisite number of votes, the NYSE has informed the company that it intends to begin the process to delist both the Class A and Class B common stock. Dow Jones Newswires' Maxwell Murphy reports that Blockbuster shares were suspended and delisted by the New York Stock Exchange, effective next Wednesday, after it failed to address its lack of compliance with NYSE listing standards. According to Dow Jones, Blockbuster's secretary and general counsel, Rod McDonald, said in an interview Thursday that a low voter turnout, coupled with nonvotes thanks to new rules on broker discretionary votes, caused the reverse split and share combination to narrowly miss approval. Though Blockbuster was able to get a quorum of around 55% of its shares voted, at the final tally only 49% of all shares were cast in favor of combining the classes of stock and just over 43% were in favor of the reverse stock split. Dow Jones says trading in both classes of the company's stock was halted Thursday through the close of trading, with Blockbuster A shares at 23 cents, down one cent, and the B shares at 19 cents, off six cents. Blockbuster also said that at the annual meeting each of the company's director nominees was elected, the company's "say-on- pay" proposal was approved, and the ratification of PricewaterhouseCoopers LLP to serve as the company's independent registered public accounting firm for fiscal 2010 was approved. A full-text copy of the revised meeting results is available at no charge at http://ResearchArchives.com/t/s?65c0 About Blockbuster Inc. Blockbuster Inc. is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. The company may be accessed worldwide at http://www.blockbuster.com/ Blockbuster's quarterly report on Form 10-Q showed a net loss of $65.4 million on $939.4 million of revenue for the 13 weeks ended April 4, 2010, compared with net income of $27.7 million on $1.086 billion of revenue for the 13 weeks ended April 5, 2009. The Company's balance sheet as of April 4, 2010, showed $1.319 billion in assets and $1.693 billion of liabilities, for a stockholders' deficit of $374.2 million. PricewaterhouseCoopers LLP, in Dallas, expressed substantial doubt about the Company's ability to continue as a going concern following Blockbuster's 2009 results. BLOCKBUSTER INC: Wins Forbearance; Delays $42.4MM Bond Payment -------------------------------------------------------------- Blockbuster Inc. has entered into a Forbearance Agreement with certain of its senior secured noteholders that provides the Company with additional time and flexibility as it continues to engage in productive discussions with certain of these noteholders and strategic parties regarding various recapitalization opportunities. Blockbuster's Forbearance Agreement is with noteholders who have, collectively, represented that they hold approximately 70% of the Company's 11.75% senior secured notes due 2014. Pursuant to the Forbearance Agreement, the noteholders executing it have agreed, through August 13, 2010, from exercising certain rights and remedies they may have under the indenture and related collateral documents arising from the failure by Blockbuster to make the payments owing by it under the senior secured notes on July 1, 2010. The Forbearance Agreement provides that the parties may extend the forbearance period upon written agreement. Given the terms of the Forbearance Agreement, Blockbuster has determined that it will not make the payments due on the senior secured notes on July 1, 2010, constituting a $23.9 million amortization payment (inclusive of a 6.0% redemption premium) and an $18.5 million interest payment. By taking this action, Blockbuster will preserve $42.4 million in incremental liquidity. Dow Jones Newswires' Maxwell Murphy reports that there are about $630 million outstanding of the 11.75% notes due 2014, and they last traded Wednesday afternoon at 64 cents on the dollar, according to MarketAxess. Jim Keyes, Chairman and Chief Executive Officer of Blockbuster Inc., stated, "We appreciate the ongoing support of our senior secured noteholders and other parties involved in our ongoing exploration of recapitalization opportunities. The Company determined that entering into the Forbearance Agreement and not making the payments at this time are in the best long-term interests of the Company and our stakeholders. The agreement provides us with additional time and flexibility as we continue to take steps to implement a more appropriate capital structure to support the Company's strategies for long-term growth and enhanced financial performance as we pursue a balance sheet recapitalization. While we are making progress in our recapitalization efforts and are in the process of negotiating term sheets with these parties, these are complex multiparty negotiations and take time. We currently expect any recapitalization to significantly reduce our debt and increase our financial flexibility." "We continue to manage the business towards maximizing cash and liquidity and monitoring cost reduction opportunities and operational efficiencies," Mr. Keyes continued. "At the same time, we remain squarely focused on providing our customers with day-and-date availability of new releases any way and anywhere they want them." About Blockbuster Inc. Blockbuster Inc. is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. The company may be accessed worldwide at http://www.blockbuster.com/ Blockbuster's quarterly report on Form 10-Q showed a net loss of $65.4 million on $939.4 million of revenue for the 13 weeks ended April 4, 2010, compared with net income of $27.7 million on $1.086 billion of revenue for the 13 weeks ended April 5, 2009. The Company's balance sheet as of April 4, 2010, showed $1.319 billion in assets and $1.693 billion of liabilities, for a stockholders' deficit of $374.2 million. PricewaterhouseCoopers LLP, in Dallas, expressed substantial doubt about the Company's ability to continue as a going concern following Blockbuster's 2009 results. BLOCKBUSTER INC: CEO Keyes Wins Contract Extension -------------------------------------------------- Blockbuster Inc. said Thursday its Board of Directors recently approved an extension of Jim Keyes' contract to continue his service as Chairman and CEO. Mr. Keyes said, "I have reaffirmed to the Board and our management team my commitment to facilitate the recapitalization and to continue the business transformation of Blockbuster." Mr. Keyes has held those positions since 2007. Dow Jones Newswires' Maxwell Murphy notes Mr. Keyes' employment contract had run through Thursday. The Troubled Company Reporter on April 8, 2010, reported that Mr. Keyes received $1,150,000 in total compensation for 2009. The 2009 pay includes Mr. Keyes' base salary of $750,000 and a cash bonus of $400,000. In 2008, Mr. Keyes was paid $1,154,188, which includes his $750,000 base salary, $402,500 in non-equity incentive plan compensation, and $1,688 in perquisites that consisted primarily of executive physical costs, car allowance and costs for auto insurance. In 2007, Mr. Keyes was paid $17,703,257, which included $346,154 in base pay, $254,700 in cash bonuses, $3,000,000 in stock awards, $14,082,403 in option awards, and $20,000 in allowances. Mr. Keyes' fiscal 2009 compensation was principally established by the terms of his employment agreement, which were recommended by the Compensation Committee and approved by the Board in connection with Mr. Keyes' hiring in 2007. Blockbuster indicated in a regulatory filing that Mr. Keyes' compensation package was compared to compensation packages of executives at other companies, which included Barnes & Noble, Inc., Borders Group, Inc., Dollar General, Family Dollar Stores, Inc., Foot Locker, Inc., GameStop, Limited Brands, Inc., Movie Gallery, Netflix, Inc., Office Depot, Inc., RadioShack Corporation, The TJX Companies, Inc. and YUM! Brands, Inc. About Blockbuster Inc. Blockbuster Inc. is a global provider of rental and retail movie and game entertainment. It has a library of more than 125,000 movie and game titles. The company may be accessed worldwide at http://www.blockbuster.com/ Blockbuster's quarterly report on Form 10-Q showed a net loss of $65.4 million on $939.4 million of revenue for the thirteen weeks ended April 4, 2010, compared with net income of $27.7 million on $1.086 billion of revenue for the thirteen weeks ended April 5, 2009. Blockbuster's quarterly report on Form 10-Q showed a net loss of $65.4 million on $939.4 million of revenue for the 13 weeks ended April 4, 2010, compared with net income of $27.7 million on $1.086 billion of revenue for the 13 weeks ended April 5, 2009. PricewaterhouseCoopers LLP, in Dallas, expressed substantial doubt about the Company's ability to continue as a going concern following Blockbuster's 2009 results. BP PLC: Bankruptcy Can Rid of "Perpetual" Liability, Experts Say ---------------------------------------------------------------- Experts looking at a hypothetical bankruptcy filing by BP PLC on an ABI media teleconference on June 29 said that BP has several options to explore in dealing with the worst environment disaster in U.S. history, but the oil giant may consider bankruptcy if it faces a never-ending flow of claims. About BP Plc BP Plc -- http://www.bp.com/-- is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products for everyday items. Bloomberg's Businessweek notes BP represents 5.6% of the FTSE 100 Index, the second biggest weighting of the top U.K.-listed companies behind London-based bank HSBC Holdings Plc. BP also represents the biggest portion of the FTSE 350 Oil & Gas Producers Index at 31%, and the MSCI EAFE/Energy Index at 16%. BRIER CREEK: Files List of 20 Largest Unsecured Creditors --------------------------------------------------------- Brier Creek FC, LLC, filed with the U.S. Bankruptcy Court for the Southern District of Indiana a list of its largest unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ LC Investors, LLC Loan $3,000,000 6467 Holiday Dr. East Indiapolis, IN 46260 Cort Furniture, Inc. Trade Debt $18,628 1905 New Hope Church Road Raleigh, NC 27609 American Asset Corporation, Trade Debt $17,903 Inc. 3700 Arco Corporate Drive Suite 350 Charlotte, NC 28273 Roto Rooter Trade Debt $8,007 CTI Property Services, Inc. Trade Debt $3,652 Valet Waste. LLC Utility $3,548 North American Lawn & Landscape, LLC Trade Debt $3,355 Wilmer Industries, Inc. Trade Debt $3,203 East Coast Fire Protection Trade Debt $3,046 Appliance Warehouse of America Trade Debt $2,660 Consumer Source, Inc. Trade Debt $2,188 HD Supply Facilities Trade Debt $2,092 Barnes & Thornburg LLP Legal Fees $1,179 For Rent Media Solutions Trade Debt $1,004 Economy Exterminators, Inc. Trade Debt $875 Net Communications, Inc. Trade Debt $710 Carolina Solar Control, Inc. Trade Debt $707 Automated Patrol Systems Trade Debt $175 Capitol Coffee Systems Trade Debt $135 Cintas Location 205 Trade Debt $82 About Brier Creek FC Indianapolis, Indiana-based Brier Creek FC, LLC, dba The Exchange at Brier Creek, filed for Chapter 11 bankruptcy protection on April 20, 2010 (Bankr. S.D. Ind. Case No. 10-05645). The Company estimated its assets and debts at $10,000,001 to $50,000,000. BRITTWOOD CREEK: Chapter 11 Reorganization Case Dismissed --------------------------------------------------------- The Hon. Jacqueline P. Cox of the U.S. Bankruptcy Court for the Northern District of Illinois dismissed the Chapter 11 case of Brittwood Creek, LLC. As reported in the Troubled Company Reporter on April 30, 2010, secured lender Bridgeview Bank Group sought for the dismissal, arguing that the Debtor doesn't have any prospect for a reorganization. The bank also pointed out that the Chapter 11 filing was made to delay a foreclosure by the secured lender. Burr Ridge, Illinois-based Brittwood Creek LLC filed for Chapter 11 bankruptcy protection on April 9, 2010 (Bankr. N.D. Ill. Case No. 10-15776). Michael J. Davis, Esq., at Springer, Brown, Covey, Gaetner & Davis, assisted the Company in its restructuring effort. The Company estimated its assets and debts at $10,000,001 to $50,000,000. BOSQUE POWER: S&P Withdraws 'D' Rating at Company's Request ----------------------------------------------------------- Standard & Poor's Ratings Services said it withdrew at the company's request its rating on U.S. electricity generator Bosque Power Co. LLC's senior debt. On March 26, 2010, S&P lowered its rating on the senior debt to 'D' from 'B'. Bosque filed for bankruptcy on March 24, 2010 in the U.S. Bankruptcy Court of the Western district of Texas. Rated debt consisted of $412.5 million (about $400 million outstanding) senior secured debt facilities issued on Jan. 16, 2008. The facilities include a five-year, $25 million senior secured revolving credit facility due January 2013 and a seven- year, $387.5 million senior secured term facility due January 2015. The term facility includes $203 million for construction- related expenses and $65 million to cash-collateralize letters of credit Bosque uses to secure its commitments under gas contracts. Ratings List Rating Withdrawn Bosque Power Co. LLC To From -- ---- Senior Secured NR D/--/-- Recovery Rating NR 3 BROWN SHOE: S&P Affirms Corporate Credit Rating at 'B' ------------------------------------------------------ Standard & Poor's Ratings Services said that it revised its recovery rating on St. Louis, Mo.-based footwear retailer Brown Shoe Co. Inc.'s senior unsecured notes to '3', indicating a meaningful (50%-70%) expectation of recovery, from '4'. At the same time, S&P affirmed all other ratings on the company, including the 'B' corporate credit rating. The revision reflects an increase in S&P's estimated valuation under a discreet asset analysis, based on higher recovery of revolver over- collateralization. The positive rating outlook reflects S&P's expectation that recent improved performance trends are likely to continue over the near term resulting from greater consumer spending and increases in wholesale purchases by other retailers and department stores. "The speculative-grade ratings on Brown Shoe reflect S&P's analysis of the company's participation in the mature, competitive, and fragmented wholesale and retail footwear business; inconsistent operating performance; low operating margins relative to those of its peers; and highly leveraged capital structure with thin credit protection metrics," said Standard & Poor's credit analyst David Kuntz. Despite this adverse environment, competition in the footwear industry remains fragmented and intense. Brown Shoe competes against other specialty footwear retailers, department stores, mass-market discounters, and other wholesalers. An increasing number of footwear retailers are competing on the basis of price, which has pressured Brown Shoe to keep selling prices low. The company had robust sales growth during the first quarter with total revenues increasing by 10.9%. Same-store sales jumped 15.5% at Famous Footwear and 16.2% at the Specialty Retail segment. Famous Footwear benefitted from an increase in both prices and traffic. Wholesale division sales increased a more modest 3.5%. Margins benefitted from lower provisions for customer allowances, reduced markdowns, shifts in product mix, and positive operating leverage. Operating margins increased to 11.7% for the 12 months ended May 1, 2010, compared with 10.0% for the prior period in 2009. In S&P's view, it is likely these trends will continue over the near term, helping push margins higher to about 12%. However, despite the improvement, margins remain the lowest of all rated footwear retailers. The company's wholesale operations play some role in lower relative margins, but S&P believes it also is a result of lower store efficiency. BUCYRUS COMMUNITY: Can Incur DIP Facility to Operate Business ------------------------------------------------------------- The Hon. Russ Kendig of the U.S. Bankruptcy Court for the Northern District of Ohio authorized Bucyrus Community Hospital, Inc., to obtain postpetition financing from SHF. The Debtor was unable to obtain financing on a more favorable term other than SHF. The Debtor would use the funding to operate its business postpetition. As adequate protection for any diminution in value of the lenders' collateral, the Debtors will grant SHF security interests in the accounts receivable of Bucyrus Community Hospital and a superpriority administrative expense claim status. As adequate protection on behalf of United and Lancaster Pollard Mortgage Company, the Debtors will place the first $524,000 borrowed under the DIP Facility in an escrow account. The Debtors will also make adequate protection payment amounting $100,000 per month to Lancaster Pollard, or its assignee. About Bucyrus Community Hospital, Inc. Bucyrus, Ohio-based Bucyrus Community Hospital, Inc., filed for Chapter 11 bankruptcy protection on March 19, 2010 (Bankr. N.D. Ohio Case No. 10-61078). The Company estimated its assets and debts at $10,000,001 to $50,000,000. The Company's affiliate, Bucyrus Community Physicians, Inc., filed a separate Chapter 11 petition (Case No. 10-61081) on March 19, 2010, estimating its assets and debts at $500,000 to $1 million. CARIS DIAGNOSTICS: S&P Gives Negative Outlook; Keeps 'B+' Rating ---------------------------------------------------------------- Standard & Poor's Rating Services said that it revised its rating outlook on Caris Diagnostics Inc. to negative from stable, and affirmed its 'B+' corporate credit rating. Caris raised capital through a $185 million senior secured term loan and a $35 million revolving credit facility in January 2010. Results for the quarter ending March 31, 2010 were below budget, principally associated with challenges in the company's dermatopathology and hematopathology segments, causing EBITDA to fall below budget. Although Caris is currently in compliance with its financial covenants, its cushion is small. Moreover, covenant pressure will persist, as covenants tighten to more rigorous thresholds later this year. "S&P's speculative-grade ratings reflect Caris' narrow operating focus, early-stage status, relatively small scale, potential for reimbursement pressure, and the near-term risks associated with its large expansion projects," said Standard & Poor's credit analyst Jack Harcourt. Caris is an early stage company, and its first quarter 2010 performance reflects the uneven results that are frequently associated with ramping-up immature operations. The principal problems were in the dermatopathology and hematopathology segments, where the recruitment and deployment of staff were not well synchronized with operations and market development, leading to a shortfall in first quarter revenue and EBITDA. Some of these shortcomings have already been corrected, and certain performance metrics over the past three months, particularly in dermatopathology, indicate a rebound is underway in overall performance. Caris' "weak" business risk profile overwhelmingly reflects the company's narrow operating focus and relatively small scale. Notwithstanding Caris' solid niche position as a diagnostic services provider to the gastroenterology and dermatopathology markets (with a small presence in hematopathology), the company is much smaller and its offerings are much less diverse than those of competitors like Quest Diagnostics Inc. and Laboratory Corp. of America Holdings. In addition, Caris must compete in its highly fragmented markets with smaller providers. Caris has a relatively short track record of competing effectively with larger competitors through its expertise in its subsectors, relationships with referring physicians, and recruitment and retention of pathologists. Caris' organic growth has averaged more than 40% over the last five years on a pro forma basis. S&P believes it will be very difficult for Caris to maintain this growth rate given its now larger revenue base and the potential for reimbursement pressure. CATHOLIC CHURCH: Wilmington Parishes Lose $75 Million Ruling ------------------------------------------------------------ Bill Rochelle at Bloomberg News reports that U.S. Bankruptcy Judge Christopher Sontchi issued a 44-page opinion that $75 million held by the Catholic Diocese of Wilmington Inc. was part of the bankruptcy estate, thus can be distributed to sexual abuse claimants and other creditors. The Diocese has claimed that the money was held in trust for parishes and schools. Bloomberg recounts that the Diocese maintained a pooled investment account holding $120 million belong to the diocese and 31 organizations. The statutory creditors committee, mostly representing abuse claimants, commenced an adversary proceeding in December, seeking a determination that there was not a valid trust so all the money could be used for creditors' claims. According to Mr. Rochelle, after mediation failed to produce a consensual resolution, Judge Sontchi held a four-day trial, and issued a ruling that while there was a valid trust, he said that the parishes and schools failed "to meet their burden of tracing those funds." Consequently, the parishes and schools became unsecured creditors for their $75 million and will be paid alongside sexual-abuse claimants. About the Diocese of Wilmington The Diocese of Wilmington covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. The Delaware diocese is the seventh Roman Catholic diocese to file for Chapter 11 protection to deal with lawsuits for sexual abuse. Previous filings were by the dioceses in Spokane, Washington; Portland, Oregon; Tucson, Arizona; Davenport, Iowa, Fairbanks, Alaska; and San Diego, California. The bankruptcy filing automatically stayed eight consecutive abuse trials scheduled in Delaware scheduled to begin October 19. There are 131 cases filed against the Diocese, with 30 scheduled for trial. The Diocese filed for Chapter 11 on Oct. 18, 2009 (Bankr. D. Del. Case No. 09-13560). Attorneys at Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Diocese. The Ramaekers Group, LLC is the financial advisor. The petition says assets range $50,000,001 to $100,000,000 while debts are between $100,000,001 to $500,000,000. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CELESTICA INC: Fitch Upgrades Issuer Default Rating to 'BB' ----------------------------------------------------------- Fitch Ratings has taken these rating actions on Celestica Inc.'s. Issuer Default Rating and outstanding debt ratings: -- Long-term IDR upgraded to 'BB' from 'BB-'; -- Senior Secured Credit Facility affirmed at 'BB+'; -- Senior subordinated debt affirmed at 'BB-'. Fitch has subsequently withdrawn all ratings as well. The ratings upgrade reflects these considerations: -- Celestica retired its remaining debt in March 2010; -- Celestica's EBITDA margins have improved significantly over the past several years, from a low of 1.7% in early 2007 to 4.4% for the LTM period ending March 2010. The company's EBITDA margins remained largely steady through 2009 despite a 20% decline in revenue over the prior period; -- Fitch expects Celestica to generate modest free cash flow based on revenue growth estimates of 10% in 2010 and mid- single digits thereafter. A stable EBITDA margin in the mid- 4% range and effectively no interest expense are significant drivers of the expectation for positive free cash flow generation, in addition to continued successful management of working capital requirements. Rating strengths include: -- Celestica typically generates significant cash from reduced working capital during a downturn, as typical for businesses with significant working capital needs; -- Fitch believes that a long-term trend of increased outsourcing of manufacturing across multiple economic sectors will benefit the EMS industry in general; -- Celestica remains one of the largest global EMS providers with a blue chip customer base. Ratings concerns include: -- Celestica's lack of vertical integration could inhibt growth and/or profitability going forward versus competitors which typically offer varying degrees of vertical integration. However, Celestica's model provides more financial flexibility than its competitors, particularly in a downturn; -- Celestica has significant customer concentration, as is typical for the EMS industry, with the top 10 customers representing approximately 70% of revenue in 2009 including 1 customer that represented 17% of total revenue. As of March 31, 2010, liquidity was solid and consisted of $712 million of cash and a fully available $200 million senior secured revolving credit facility which matures April 2011. Celestica also utilizes an off-balance sheet account receivable sales facility for additional liquidity purposes and had $220 million of available borrowing capacity. Celestica had no debt outstanding as of March 31, 2010, and $30 million outstanding against its aforementioned off-balance sheet account receivable sales facility. CHELSEA HEIGHTS: Wants to Hire Ryan Swanson as Gen. Bankr. Counsel ------------------------------------------------------------------ Chelsea Height LLC has asked for authorization from the U.S. Bankruptcy Court for the Western District of Washington to employ Ryan, Swanson & Cleveland, PLLC, as general bankruptcy counsel. RSC assists the Debtor in its restructuring effort. Prium Tumwater Buildings LLC paid a $25,000 advance fee deposit to RSC on the Debtor's behalf for services in the bankruptcy case about June 17, 2010. Prium Tumwater and the Debtor are owned directly or indirectly by Prium Companies LLC. To the best of the Debtor's knowledge, RSC is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Tacoma, Washington-based Chelsea Heights LLC filed for Chapter 11 bankruptcy protection on June 18, 2010 (Bankr. W.D. Wash. Case No. 10-44959). The Company estimated its assets and debts at $10,000,001 to $50,000,000. CHIRON PROPERTIES: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------------- Business Journal of Boston reports that Chiron Properties -- and a related company Vestcision LLC -- filed for Chapter 11 bankruptcy protection, listing both assets and debts of between $1 million and $10 million. John M. McAuliffe, Esq., at McAulife & Associates, represents the Company. Chiron Properties makes pharmaceutical preparations. CITIGROUP INC: Treasury Unloads Shares; Keeps 18% Stake For Now --------------------------------------------------------------- Dow Jones Newswires' Meena Thiruvengadam reports that the U.S. Treasury has sold a second tranche of Citigroup Inc. common stock, bringing the government's profit from sales of the bank's shares to more than $2 billion and reducing its ownership stake in the company to about 18%. According to Dow Jones, with the latest sale of 1.1 billion shares, the Treasury has sold a total of 2.6 billion shares of Citigroup stock, or about one-third of its holdings, at an average price of $4.03 a share. The Treasury paid $3.25 a share to acquire the stock as part of a deal to provide Citigroup with billions of dollars in aid through the Troubled Asset Relief Program. Citigroup received $45 billion in government bailout money. Dow Jones notes the Treasury earned less on its latest sale of Citi shares than it did in the first sale. Those shares fetched $4.13 each, while the second sale fetched about $3.89 a share. Dow Jones says the Treasury still holds 5.1 billion Citigroup shares and plans to continue selling them "in an orderly fashion" once a blackout related to Citigroup's second-quarter earnings release ends. That blackout period began Thursday, and the Treasury said in May that it intended to sell as many as 1.5 billion shares before then. "We are pleased that Treasury has profitably sold a third of its common shares in Citi, adding to the substantial return for taxpayers realized last year," said Jon Diat, a spokesman for Citigroup, according to Dow Jones. About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- is a global diversified financial services holding company whose businesses provide a broad range of financial services to consumer and corporate customers. Citigroup has roughly 200 million customer accounts and does business in more than 140 countries. Citigroup's businesses are aligned in three reporting segments: (i) Citicorp, which consists of Regional Consumer Banking (in North America, EMEA, Asia, and Latin America) and the Institutional Clients Group (Securities and Banking, including the Private Bank, and Transaction Services); (ii) Citi Holdings, which consists of Brokerage and Asset Management, Local Consumer Lending, and a Special Asset Pool; and (iii) Corporate/Other. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. The U.S. Treasury and the Federal Deposit Insurance Corporation agreed to provide protection against the possibility of unusually large losses on an asset pool of roughly $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup, the third-biggest U.S. bank, received $45 billion in bailout aid. Other bailed-out banks, including Bank of America Corp., Wells Fargo & Co., have pledged to repay TARP money. JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, repaid TARP funds in June. Citigroup is selling assets to repay the bailout funds. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITY OF CENTRAL FALLS: Moody's Maintains 'B3' Rating on Bonds ------------------------------------------------------------- Moody's has received confirmation that the City of Central Falls RI has repaid in full and on time its $4 million tax anticipation note, due June 30, 2010. Given the city's strained cash position and the magnitude of the payment Moody's had previously noted the heightened risk of payment default on the TAN. The city is currently in the process of transitioning from a court appointed receiver to state oversight following the recent adoption (June 14) of state legislation establishing a roadmap for aiding municipalities in fiscal distress. It has yet to be determined which stage of the oversight process Central Falls would fall under; however state receivership remains a possibility. Moody's maintains a B3 rating, affecting approximately $17.1 million in unlimited tax general obligation outstanding debt. The rating remains on review reflecting the possibility for further downgrade. Further assessment of the city's financial position and liquidity levels, as well as the level and form of state oversight, will be factored into Moody's assessment of the city's credit quality. The city had been projecting a $3 million shortfall (17% of revenues) for the 2010 fiscal year and projected a $5 million budget gap for fiscal 2011, a sizable 28% of operations. The next debt service payment date is scheduled for July 15, 2010. The last rating action with respect to the City of Central Falls (RI), was on May 25, 2010, when a rating of B3 was assigned and the city was placed under review of possible downgrade. CLEARPOINT BUSINESS: Meeting to Form Creditors Committee July 8 --------------------------------------------------------------- Roberta A. DeAngelis, Acting United States Trustee for Region 3, will hold an organizational meeting on July 8, 2010, at 11:00 a.m. in the bankruptcy case of ClearPoint Business Resources, Inc., et al. 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. ClearPoint Business Resources and ClearPoint Resources filed for Chapter 11 protection on June 23, 2010 (Bankr. D. Del. Lead Case No. 10-12037). ClearPoint is represented by Jamie Lynne Edmonson of Bayard. Based in Chalfont, Pennsylvania, ClearPoint Business Resources, Inc., is a workplace management solutions provider. Prior to year 2008, ClearPoint provided various temporary staffing services as both a direct provider and as a franchisor. During the year ended December 31, 2008, ClearPoint transitioned its business model from a temporary staffing provider through a network of branch-based offices or franchises to a provider that manages clients' temporary staffing needs through its open Internet portal-based iLabor network. Under the new business model, ClearPoint acts as a broker for its clients and network of temporary staffing suppliers using iLabor. CMP SUSQUEHANNA: Moody's Upgrades Corp. Family Rating to 'Caa1' --------------------------------------------------------------- Moody's Investors Service upgraded CMP Susquehanna Corporation's Corporate Family Rating and Probability of Default Rating, each to Caa1 from Caa3. Additionally, CMP's senior secured credit facilities ($95.4 million revolver due May 2012 and $618 million term loan due 2013) were upgraded to Caa1 from Caa3 and its 9.875% Senior Subordinated Notes due 2014 were upgraded to Caa3 from Ca. CMP's speculative grade liquidity rating has been revised to SGL-3 from SGL-4. The rating outlook is stable. This concludes the review initiated on April 28, 2010. The upgrades follow last year's distressed debt exchange and ensuing reduction in leverage and debt service costs, and further reflect a more pronounced rebound in advertising spending across CMP's large market stations than previously expected, which should translate into at least mid-to-high single-digit revenue growth in 2010 and a corresponding reduction in debt-to-EBITDA leverage from 10.6x (incorporating Moody's standard adjustments) at March 31, 2010 to less than 9.0x by year end (approximately 8.0x based on a net debt calculation). Of note, the maximum leverage ratio financial maintenance covenant is expected to continue to track closely to performance, but is now deemed unlikely to be violated. Despite CMP's improved operating performance during the first half of 2010, leverage continues to remain high and in line with the Caa rating category. Refinancing of debt facilities would be challenging if the company were not able to further reduce leverage. CMP's SGL-3 speculative grade liquidity rating reflects the company's deemed adequate liquidity profile and Moody's expectation that covenant cushion, while improving over the next twelve months, may still fall to approximately 10% in the first half of 2011 as the total leverage covenant continues to step- down. Moody's has taken these rating actions: Issuer -- CMP Susquehanna Corporation * Corporate Family Rating -- to Caa1 from Caa3 * Probability of Default Rating -- to Caa1 from Caa3 * Senior secured credit facilities due 2012 / 2013 -- to Caa1 (LGD 3, 48%) from Caa3 (LGD 3, 48%) * Senior subordinated notes due 2014 -- to Caa3 (LGD 6, 96%) from Ca (to LGD 6, 96%) * Speculative Grade Liquidity Rating -- to SGL-3 from SGL-4 The rating outlook is stable. CMP's Caa1 CFR reflects a still very highly leveraged balance sheet, with debt-to-EBITDA of 9.5x incorporating Moody's standard adjustments and subtracting cash balances. Also weighing on the rating is the company's substantial revenue concentration in two markets (San Francisco and Dallas/Fort Worth), concern about its small, but improving, cushion under the maximum leverage covenant, as well as the maturity and inherent cyclicality of the radio industry. The rating does consider the company's 6.2% revenue growth realized during the fiscal quarter ending March 2010, along with additional growth as expected for the remainder of the year. EBITDA/Interest coverage of 2.6x improved with the exchange offer given an approximate $16.7 million reduction in annual interest expense to the current annual run rate of $27 million reflecting an average 3.6% interest rate. The term loan and revolver notably remain attractively priced at LIBOR + 2.0% and LIBOR + 2.25%, respectively. Refinancing in the current market would likely materially increase interest rates above these levels. Total funded debt of $737 million as of March 31, 2010 is down $205 million from reported debt of $942 million at December 31, 2008, due largely to the exchange which closed on May 2009 resulting in a net debt reduction of $161 million as well as $39 million in term loan repayments over this period. With the recent revolver pay down leaving $50 million outstanding under the $95.4 million commitment, cash balances remain adequate at more than $40 million. Moody's expects the company to generate sufficient cash flow to reduce revolver outstandings to zero prior to its May 2012 maturity. The last rating action on CMP occurred on April 28, 2010, when Moody's placed CMP's ratings under review for possible upgrade. CMP Susquehanna Corp., headquartered in Atlanta, Georgia, is a wholly-owned subsidiary of Cumulus Media Partners LLC, the private partnership formed by Cumulus Media, Inc., and a consortium of private equity sponsors. CMP Susquehanna Corp. owns and operates 32 radio stations in nine metropolitan markets in the U.S. The company's reported revenues of $171 million for the twelve months ended March 31, 2010. CMR MORTGAGE: Gets OK to Incur Unsecured Loan from Greg Abrams -------------------------------------------------------------- The Hon. Thomas E. Carlson of the U.S. Bankruptcy Court for the Northern District of California authorized CMR Mortgage Fund II, LLC, et al., to incur debt and obtain an unsecured loan from Greg Abrams for $200,000 at the rate of 10% per annum payable monthly; provided, however, that there will be no additional default interest. The Debtors' obligation to repay the loans is allowed as an administrative expense under Bankruptcy Code Section 503(b)(1). San Francisco, California-based CMR Mortgage Fund II, LLC, is a limited liability company organized for the purpose of making or investing in business loans secured by deeds of trust or mortgages on real properties located primarily in California. The Company previously funded lending activities through loan pay downs or pay offs, as well as by selling its membership interests, and by selling all or a portion of interests in the loans to individual investors. The Company commenced operations in February 2004. The Company ceased accepting new members in the third quarter of 2006. The Company and CMR Mortgage Fund III, LLC, filed for Chapter 11 protection on March 31, 2009 (Bankr. N. D. Calif. Case No. 09- 30788 and 09-30802). Robert G. Harris, Esq., at the Law Offices of Binder and Malter, represents the Debtor as counsel. The Debtor listed between $10 million and $50 million each in assets and debts. CMR MORTGAGE: Reorganization Plan Confirmation Set for August 4 --------------------------------------------------------------- The Hon. Thomas E. Carlson of the U.S. Bankruptcy Court for the Northern District of California will consider on August 4, 2010, at 9:30 a.m., the confirmation of CMR Mortgage Fund II, LLC, et al.'s Plan of Reorganization. The hearing will be held at Courtroom 23, 235 Pine Street, San Francisco, California. Objections, if any, are due on July 28, at 6:00 p.m., Pacific Daylight Time. Ballots must be received not later than 5:00 p.m. on July 28. As reported in the Troubled Company Reporter on May 4, the Plan provides for the substantive consolidation of the Debtors' Chapter 11 cases. The Plan also utilizes the wind-down trust, under the overall management of the wind-down trustee, to liquidate all assets of the consolidated estate, for the benefit of claimants and interest holders, and otherwise administer the Chapter 11 cases. On the effective date, all assets, including litigation claims as assets, of the consolidated estate will be placed in the wind-down trust. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/CMRMortgage_DS624.pdf About CMR Mortgage Fund II San Francisco, California-based CMR Mortgage Fund II, LLC, is a limited liability company organized for the purpose of making or investing in business loans secured by deeds of trust or mortgages on real properties located primarily in California. The Company previously funded lending activities through loan pay downs or pay offs, as well as by selling its membership interests, and by selling all or a portion of interests in the loans to individual investors. The Company commenced operations in February 2004. The Company ceased accepting new members in the third quarter of 2006. The Company and CMR Mortgage Fund III, LLC, filed for Chapter 11 protection on March 31, 2009 (Bankr. N. D. Calif. Case No. 09- 30788 and 09-30802). Robert G. Harris, Esq., at the Law Offices of Binder and Malter, represents the Debtor as counsel. The Debtor listed between $10 million and $50 million each in assets and debts. COLT DEFENSE: Moody's Downgrades Corporate Family Rating to 'B2' ---------------------------------------------------------------- Moody's Investors Service has downgraded Colt Defense LLC's corporate family rating to B2 from B1. The rating outlook is stable. The downgrade reflects a weakened 2010 performance outlook from deferral of a large, foreign military M4 carbine order, and less certainty that production rates, beyond 2010, will return to 2008/2009 levels. This action concludes the review for possible downgrade of Colt's ratings that began April 2, 2010. The B2 corporate family rating encompasses customer/product concentration, high leverage and less clear prospect of M4 production rates, against a large cash balance and Colt's incumbency on the M4. In January 2010 Colt's largest customer, the U.S. Army, conducted a Market Survey for an M4 modification kit to improve the weapon's performance. As well, in May 2010 the Army conducted a Sources Sought for a new carbine competition. These developments could signal less satisfaction with the M4 as the U.S. military's standard issue carbine of the future. If the U.S. military were to move away from the M4, Colt's long-term foreign sales prospects could also become more vulnerable. To date Colt has produced about 500,000 M4 carbine's for the U.S. military but production rates for the U.S. military have declined of late with the modification kit development. Colt's 12-month backlog is likely sufficient to maintain a low but still positive profitability level. The stable outlook reflects several positives that should support the B2 rating despite expectation of weak 2010 credit metrics. The outlook recognizes potential for the large foreign military order deferred in 2010 to occur in 2011 and for Colt to realize 2011 revenues from M4 modification kits -- either of these developments could help materially improve earnings from current levels. Moreover, the company holds a large cash balance that offers flexibility to weather a prolonged period of soft production. According to Moody's Assistant Vice President, Bruce Herskovics, "Although credit metrics will considerably weaken in 2010 and greater challenges to the M4's long-term growth trajectory may be surfacing, production capacity, ownership of the M4 technical data package, and the M16/M4 family's historical resilience, add weight to the likelihood of rating stability." The stable outlook considers that even if the U.S. military opted for a new standard issue carbine, deliveries would probably not commence for about three years. Downward rating pressure would mount if an earnings rebound in 2011 appears unlikely, or if liquidity profile adequacy comes into question. Since ongoing access to the company's $50 million revolving credit facility will require amended covenant compliance terms that have not yet been arranged, the large cash balance alone currently sustains liquidity profile adequacy. Upward rating pressure would grow with expectation of a higher, more stable revenue base, and a debt to EBITDA ratio below 3.5 times; the foregoing would likely coincide with greater clarity of the U.S. Army's long-term carbine plan and a backlog approaching $300 million. The ratings: -- Corporate family and probability of default ratings, to B2 from B1 -- $250 million senior unsecured notes due 2017, to B3 LGD4, 58% from B2 LGD4, 58% Moody's last rating action on Colt occurred April 2, 2009 when the B1 corporate family rating was placed under review for possible downgrade. Colt Defense LLC, headquartered in West Hartford, CT, manufactures small arms including the M4 carbine and M16 rifle for the U.S. military, U.S. law enforcement agencies, and foreign allied militaries. COLTS RUN: Cash Collateral Hearing Continued Until August 4 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois has continued until August 4, 2010, at 10:00 a.m., the hearing on Colts Run, L.L.C.'s request for access to PNC Bank, National Association's cash collateral. The hearing will be held at Courtroom 644, 219 South Dearborn, Chicago, Illinois. As reported in the Troubled Company Reporter on May 6, PNC Bank asserts a senior position mortgage lien and claim against the Debtor's residential apartment project in Lexington, Kentucky, known as Colts Run Apartments, which purportedly secures a senior mortgage indebtedness of roughly $19,000,000. Residential apartment units at the Property lease for rentals ranging from $799 to $1,399. The current occupancy rate at the property is 88.9% and is generally increasing. The Bank also asserts a junior mortgage lien and claim. The Debtor will use the cash collateral to fund its Chapter 11 case, pay suppliers and other parties. As adequate protection for any diminution in value of the lenders' collateral, the Debtors will allow the bank to inspect, upon reasonable notice, within reasonable hours, the Debtor's books and records. The Debtor will maintain and pay premiums for insurance to cover its assets from fire, theft and water damage. The Debtor will, upon reasonable request, make available to the Bank evidence of that which purportedly constitutes its collateral or proceeds. The Debtor will also maintain the property in good repair and properly manage the property. About Colts Run, LLC Lake Forest, Illinois-based Colts Run, LLC, owns and operates a residential apartment project located in Lexington, Kentucky, known as Colts Run Apartments. The Company filed for Chapter 11 bankruptcy protection on April 23, 2010 (Bankr. N.D. Ill. Case No. 10-18071). David K. Welch, Esq., at Crane Heyman Simon Welch & Clar, assists the Company in its restructuring effort. The Company estimated its assets and debts at $10,000,001 to $50,000,000. COLTS RUN: PNC Bank Sees Fraud, Wants Chapter 11 Trustee Appointed ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Illinois has continued until August 4, 2010, at 10:00 a.m., the hearing on the motion to appoint a Chapter 11 trustee in the case of Colts Run, LLC. The hearing will be held at Courtroom 644 219 South Dearborn, Chicago, Illinois. Secured creditor, PNC Bank, National Association, sought for the appointment of a Chapter 11 trustee because the Debtor: a. failed to pay real estate taxes, requiring PNC to pay those taxes to avoid the imposition of a tax lien; b. withdrew funds from the security deposit accounts, in violation of applicable law; c. failed to make any payment on account of its indebtedness to PNC from February 1, through the petition date; and d. notwithstanding the foregoing, made a distribution to holders of equity interests. According to PNC, these derelictions of the Debtor's responsibilities constitute incompetence, or gross mismanagement; more likely, they evidence fraud and dishonesty. About Colts Run, LLC Lake Forest, Illinois-based Colts Run, LLC, owns and operates a residential apartment project located in Lexington, Kentucky, known as Colts Run Apartments. The Company filed for Chapter 11 bankruptcy protection on April 23, 2010 (Bankr. N.D. Ill. Case No. 10-18071). David K. Welch, Esq., at Crane Heyman Simon Welch & Clar, assists the Company in its restructuring effort. The Company estimated its assets and debts at $10,000,001 to $50,000,000. CONKLIN LLC: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Conklin, LLC P.O. Box 775 Belvidere, IL 61008 Bankruptcy Case No.: 10-73217 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtor's Counsel: Bernard J. Natale, Esq. Law Office of Bernard J. Natale, Ltd. 6833 Stalter Drive Suite 201 Rockford, IL 61108 Tel: (815) 964-4700 Fax: (815) 227-5532 E-mail: natalelaw@bjnatalelaw.com Scheduled Assets: $523,692 Scheduled Debts: $1,230,905 A list of the Company's 3 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-73217.pdf The petition was signed by Joey Sanfilippo, manager. Debtor-affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Courtyard Apartments, LLC 10-73219 06/28/10 Foxwood Village Apartments, LLC 10-73221 06/28/10 Somerset Partners, LLC 10-73224 06/28/10 CORUS BANKSHARES: U.S. Trustee Forms 5-Member Creditors Committee ----------------------------------------------------------------- William T. Neary, the U.S. Trustee for Region 11, appointed five members to the official committee of unsecured creditors in the Chapter 11 cases of Corus Bankshares, Inc. The Creditors Committee members are: 1. U.S. Bank, N.A. as Indenture Trustee for Corus Statutory Trusts I, III & V Attn: James H. Byrnes 2. The Bank of New York, Mellon Trust Company, N.A. as Indenture Trustee for Corus Statutory Trust II, IV, VI, VIII & IX Attn: J. Chris Matthews 3. Wilmington Trust Company as Indenture Trustee for Corus Statutory Trusts VII, X & XIII Attn: Steven Cimalore 4. Wells Fargo Bank, N.A. as Indenture Trustee for Corus Statutory Trust XII Attn: James R. Lewis 5. Bank of America, N.A. as Indenture Trustee Trustee for Corus Statutory Trust XI Attn: Michael D. Messersmith About Corus Bankshares Chicago, Illinois-based Corus Bankshares, Inc., is a bank holding company. Its lone operating unit, Corus Bank, N.A., closed September 11, 2009, by regulators and the Federal Deposit Insurance Corporation was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of Corus Bank. The Company filed for Chapter 11 bankruptcy protection on June 15, 2010 (Bankr. N.D. Ill. Case No. 10-26881). David R. Seligman, Esq., at Kirkland & Ellis LLP, assists the Company in its restructuring effort. Kinetic Advisors is the Company's restructuring advisor. Plante & Moran is the Company's auditor and accountant. 4 As of June 15, 2010, the Company listed $314,145,828 in assets and $532,938,418 in liabilities. COURTYARD APARTMENTS: Case Summary & 4 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Courtyard Apartments, LLC P.O. Box 775 Belvidere, IL 61008 Bankruptcy Case No.: 10-73219 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtor's Counsel: Bernard J. Natale, Esq. Law Office of Bernard J. Natale, Ltd. 6833 Stalter Drive Suite 201 Rockford, IL 61108 Tel: (815) 964-4700 Fax: (815) 227-5532 E-mail: natalelaw@bjnatalelaw.com Scheduled Assets: $3,166,825 Scheduled Debts: $6,275,333 A list of the Company's 4 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-73219.pdf The petition was signed by Joey Sanfilippo, manager. Debtor-affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Conklin, LLC 10-73217 06/28/10 Foxwood Village Apartments, LLC 10-73221 06/28/10 Somerset Partners, LLC 10-73224 06/28/10 COWLITZ BANCORPORATION: Submits to Hearing Before Nasdaq Panel -------------------------------------------------------------- Cowlitz Bancorporation disclosed that its hearing before the Nasdaq Stock Market Hearings Panel was held on June 24, 2010. At the hearing, the Company presented an updated plan to regain compliance with two Nasdaq Listing Rules with which it is not in compliance and requested a 90-day exception to the continued listing standards. The Company is actively seeking capital and is in discussions with several potential investors. The additional time was requested to allow the Company to remain listed on Nasdaq while continuing in its efforts to complete a capital transaction. The Company previously announced that on May 12, 2010, it received a delisting determination letter from Nasdaq due to the Company not being in compliance with the minimum 500,000 publicly held shares requirement set forth in Listing Rule 5550(a)(4). For Nasdaq purposes, the number of publicly held shares is equal to total shares outstanding less any shares held by officers, directors or beneficial owners of more than 10 percent of the total shares outstanding. The Company also received notice from Nasdaq on May 18, 2010 that the Company's total stockholders' equity reported as of March 31, 2010 fell below the required minimum of $2.5 million for continued listing under Listing Rule 5550(b)(1). The Company requested a hearing before the Panel to appeal the delisting determination. Such request stayed the suspension of trading and delisting of the Company's common shares from The Nasdaq Capital Market pending the Panel's decision after the hearing. Under Nasdaq's Listing Rules, the Panel may, in its discretion, grant an exception to the continued listing standards for a maximum of 180 calendar days from the date of the delisting determination, or through November 8, 2010. However, there can be no assurances that the Panel will grant such exception. The Panel has up to 30 days from the date of the hearing to make its decision. In the event the Company's stock is ultimately delisted after the appeals process, the Company anticipates that its common stock would be eligible to trade on the OTC Bulletin Board or in the "Pink Sheets." However, securities may become eligible for such trading only if a market maker makes application to register and quote the security in accordance with SEC Rule 15c2-11, and such application is cleared. Only a market maker may file such application. CRUCIBLE MATERIALS: PBGC Reaches Settlement Deal on ERISA Dispute ----------------------------------------------------------------- The Pension Benefit Guaranty Corp. has reached a settlement with Crucible Materials Corp. and its committee of unsecured creditors over funding for the now-defunct metal supplier's six pension plans, Bankruptcy Law360 reports. According to Law360, the debtor filed a motion Tuesday asking the U.S. Bankruptcy Court for the District of Delaware to approve the settlement, which reduces the PBGC's claims against Crucible by $87 million. About Crucible Materials Based in Syracuse, New York, Crucible Materials Corporation -- aka Crucible Specialty Metals, Crucible Service Centers, Crucible Compaction Metals, Crucible Research and Trent Tube -- http://www.crucible.com/-- makes stainless and alloy steel for use in the aircraft, automotive, petrochemical, and other industries. The Company was employee-owned prior to its bankruptcy filing. The Company and its affiliate, Crucible Development Corporation, filed for Chapter 11 protection on May 6, 2009 (Bankr. D. Del. Lead Case No. 09-11582). Mark Minuti, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. The Debtors engaged Duff & Phelps Securities LLP as investment banker; RAS Management Advisors LLC as business advisor; and Epiq Bankruptcy Solutions LLC as claims agent. Roberta A. DeAngelis, United States Trustee for Region 3, appointed five creditors to serve on the Official Committee of Unsecured Creditors. The Debtors listed assets and debts both ranging from $100 million to $500 million. From four asset sales under 11 U.S.C. Sec. 363, Crucible generated $14.4 million after secured lenders were fully paid on $64.5 million in claims outstanding at the outset of the Chapter case. DBSI INC: Beazer Buys $6.45 Million in Lots ------------------------------------------- Bill Rochelle at Bloomberg News reports that the Chapter 11 trustee for DBSI Inc. received authorization to sell 232 lots in Maricopa Country, Arizona, for $6.45 million to a subsidiary of Beazer Homes USA Inc. The price worked out to $27,800 for each lot. Headquartered in Meridian, Idaho, DBSI Inc. and its affiliates were engaged in numerous commercial real estate and non-real estate projects and businesses. On November 10, 2008, and other subsequent dates, DBSI and 180 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Case No. 08-12687). Lawyers at Young Conaway Stargatt & Taylor LLP represent the Debtors as counsel. The Official Committee of Unsecured Creditors tapped Greenberg Traurig, LLP, as its bankruptcy counsel. Kurtzman Carson Consultants LLC is the Debtors' notice claims and balloting agent. When the Debtors sought protection from their creditors, they estimated assets and debts between $100 million and $500 million. Joshua Hochberg, a former head of the Justice Department fraud unit, served as an Examiner and called the seller and servicer of fractional interests in commercial real estate an "elaborate shell game" that "consistently operated at a loss" in his report released in Oct. 2009. On Sept. 11, 2009, the Honorable Peter J. Walsh entered an Order (Doc. 4375) appointing James R. Zazzali as Chapter 11 trustee for the Debtors' estates. DELPHI FINANCIAL: Moody's Affirms Junior Debt Ratings at 'Ba1' -------------------------------------------------------------- Moody's Investors Service has affirmed the ratings of Delphi Financial Group, Inc. (senior debt at Baa3) and its operating companies: Reliance Standard Life Insurance Company (Reliance Standard, insurance finance strength rating at A3) and Safety National Casualty Corporation (Safety National, IFS rating at A3). The outlook for the companies was changed to stable from negative. Moody's commented that the rating affirmation is based primarily on the company's solid, stable operating earnings and the established market position of its wholly-owned primary life insurance company, Reliance Standard, in the group employee benefits market, as well as Delphi's ownership of Safety National, an excess worker's compensation insurer. In addition, Reliance Standard is well positioned in the small to medium size case group employee benefits market and its solid underwriting discipline is demonstrated by its consistently strong combined ratio for this business. According to Moody's Senior Vice President Scott Robinson, "The change in outlook to stable largely reflects Delphi's solid operating performance, and the improvement in financial flexibility and regulatory capital." Commenting on Delphi's improved financial flexibility, the rating agency noted the company's issuance of $250 million of senior notes, which were used to repay the $222 million outstanding on its bank credit facility at the beginning of first quarter 2010. This increases interest costs, but quells potential refinancing risk associated with the credit facility. In addition to an improvement in Delphi's capital structure, Moody's analysis indicates that in a severe downside scenario -- Moody's stress case -- Delphi's regulatory capital levels at its operating subsidiaries remain relatively robust. That said, Moody's notes that Safety National remains subject to catastrophic losses and a portion of its capital consists of lower quality affiliated investments. According to Moody's, a downgrade of Delphi's ratings could occur if: 1) investment losses were anticipated to exceed $200 million in 2010; 2) the consolidated NAIC RBC ratio fell below 250% at Reliance Standard or 170% at Safety National; or 3) consolidated adjusted financial leverage of Delphi rose above 30%. Conversely, the rating could be moved up if 1) investment losses are anticipated to be less than $50 million for 2010, 2) the adjusted financial leverage is maintained below 30%, and 3) cash coverage is increased to 5x. These ratings were affirmed with a stable outlook: * Delphi Financial Group, Inc. -- senior unsecured debt at Baa3, junior subordinate debt at Ba1; * Reliance Standard Life Insurance Company -- insurance financial strength rating at A3; * Safety National Casualty Corp. -- insurance financial strength rating at A3; * Reliance Standard Life Global Funding -- senior secured rating at A3; * Delphi Funding L.L.C. -- preferred shelf at (P)Ba1 The last rating action on Delphi Financial was taken on January 13, 2010 when Moody's assigned a Baa3 (negative outlook) debt rating to the $250 million of fixed rate senior unsecured notes, maturing in January 2020 issued by Delphi Financial Group, Inc. Delphi Financial Group, Inc., has its operations headquartered in New York, New York. At March 31, 2010, it held $7.1 billion in assets and shareholders' equity was $1.4 billion. Moody's insurance financial strength ratings are opinions of the ability of insurance companies to punctually pay senior policyholder claims and obligations. DONALD KELLAND: Gets Bankruptcy Court Approval to Sell Property --------------------------------------------------------------- The Hon. Redfield T. Baum, Sr., of the U.S. Bankruptcy Court for the District of Arizona authorized Donald Kelland and Noel Kelland to sell their property free and clear of liens and encumbrances. Phoenix, Arizona-based Donald Kelland and Noel Kelland filed for Chapter 11 bankruptcy protection on Nov. 15, 2009 (Bankr. D. Ariz. Case No. 09-29392). Berry & Branch, PLLC, assists the Debtors in their restructuring efforts. The Company listed $10,000,001 to $50,000,000 in assets and $10,000,001 to $50,000,000 in liabilities. DREIER LLP: Client Loses Bid to Stay Blackstone Settlement ---------------------------------------------------------- A judge on Wednesday denied former Dreier LLP client Paul Gardi's request to stay a settlement involving the defunct law firm and a Blackstone Group affiliate that invested in an illegal scheme allegedly run by the firm's disgraced founder, Marc S. Dreier, according to Bankruptcy Law360. Judge Stuart M. Bernstein issued a ruling from the bench in the U.S. Bankruptcy Court for the Southern District of New York denying Gardi's request to stay the initial approval, Law360 says. About Dreier LLP Marc Dreier founded New York-based law firm Dreier LLP -- http://www.dreierllp.com/-- in 1996. On December 8, 2008, the U.S. Securities and Exchange Commission filed a suit, alleging that Mr. Dreier made fraudulent offers and sales of securities in several cities, selling fake promissory notes to hedge and other private investment funds. The SEC asserted that Mr. Dreier also distributed phony financial statements and audit opinions, and recruited accomplices in connection with that scheme. Mr. Dreier has been charged by the U.S. government for conspiracy, securities fraud and wire fraud before the U.S. District Court for the Southern District of New York (Manhattan) (Case No. 09-cr-00085-JSR). Dreier LLP sought chapter 11 protection (Bankr. S.D.N.Y. Case No. 08-15051) on Dec. 16, 2008. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison LLP, has been retained as counsel. The Debtor listed assets between $100 million and $500 million, and debts between $10 million and $50 million in its filing. Wachovia Bank National Association, Sheila M. Gowan as trustee for Dreier LLP's Chapter 11 Estate, and Steven J. Reisman as post- confirmation representative of the bankruptcy estate of 360networks (USA) Inc. signed a petition that put Mr. Dreier into bankruptcy under Chapter 7 on January 26, 2009 (Bankr. S.D.N.Y. Case No. 09-10371). DYNAMIC BUILDERS: Can Sell Property to D & K for $6.7 Million ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Dynamic Builders, Inc., to sell its interest in a commercial property located at 1151 S. Boyle Avenue, Los Angeles, California to D & K Properties, LLC, or its assignee for $6,718,000. The Debtor is also authorized to employ Lee & Associates Commerce, Inc. to assist in the sale of the property and to pay a 5.5% commission to Lee & Associates from the sale proceeds, of which 3% will go to the cooperating broker. All net proceeds after payment of commissions, closing costs, prorated taxes and similar items will be paid to City National Bank to apply to and reduce its secured claim. The Debtor is represented by: Todd C. Ringstad, Esq. E-mail: todd@ringstadlaw.com Nanette D. Sanders, Esq. E-mail: nanette@ringstadlaw.com Ringstad & Sanders, LLP 2030 Main Street, Suite 1200 Irvine, CA 92714 Tel: (949) 851-7450 Fax: (949) 851-6926 About Dynamic Builders Inc. Los Angeles, California-based Dynamic Builders Inc. owns a commercial real estate. The Company filed for Chapter 11 bankruptcy protection on March 31, 2010 (Bankr. C.D. Calif. Case No. 10-14151). Nanette D Sanders, Esq., at Ringstad & Sanders, assists the Company in its restructuring effort. The Company estimated its assets and debts at $100,000,001 to $500,000,000. EATON MOERY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Eaton Moery Environmental Services, Inc. dba Delta Environmental Services, Inc. 1784 Highway 1 North Wynne, AR 72396 Bankruptcy Case No.: 10-14713 Chapter 11 Petition Date: June 30, 2010 Court: U.S. Bankruptcy Court Eastern District of Arkansas (Helena) Judge: James G. Mixon Debtor's Counsel: James F. Dowden, Esq. James F. Dowden, P.A. 212 Center Street, 10th Floor Little Rock, AR 72201 Tel: (501) 324-4700 Fax: (501) 374-5463 E-mail: jfdowden@swbell.net Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 According to the schedules, the Debtor says that assets total $10,037,800 while debts total $6,759,640. The petition was signed by Glen Eaton, president. Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Environmental Specialists Intl -- $233,000 7943 Pecue Lane, Suite A Baton Rouge, LA 70809 Delta Disposal Inc -- $151,067 P.O. Box 2502 Jonesboro, AR 72402 Evans Petree Bogatin -- $147,600 1661 International Place #300 Memphis, TN 38120 Santeck Enviro of Arkansas -- $136,500 Internal Revenue Service -- $135,000 Special Procedures Craighead Co Solid Waste -- $81,259 ADEQ -- $75,000 Hertz Equip Rental -- $66,565 Jones & Company LTD -- $66,017 Crittendon Co Sanitation -- $60,634 Helena/West Helena Landfill -- $60,247 Bryan Moery -- $60,000 Hudson Cisne -- $40,400 B&B Disposal -- $22,891 Locke Lord Bissell Liddell LLP -- $22,655 Jackson Co Landfill -- $14,975 NEA Regional Solid Waste -- $14,726 Glen Eaton -- $10,000 Downing Sales & Svc -- $6,104 Dayhelp LLC -- $5,000 EVAN ALLRED: Voluntary Chapter 11 Case Summary ---------------------------------------------- Joint Debtors: Evan LaDell Allred Vickie Lynette Allred 3701 State Route 208 Wellington, NV 89444 Tel: (775) 532-8088 Bankruptcy Case No.: 10-52518 Chapter 11 Petition Date: June 26, 2010 Court: U.S. Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Illyssa I. Fogel, Esq. P.O. BOX 437 25 N. US Highway 95 S. McDermitt, NV 89421 Tel: (775) 532-8088 Fax: (775) 532 8099 E-mail: ifogel@iiflaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtors did not file a list of creditors together with its petition. The petition was signed by the Joint Debtors. FAIRFIELD RESIDENTIAL: Files Third Amended Reorganization Plan -------------------------------------------------------------- Fairfield Residential LLC, et al., filed with the U.S. Bankruptcy Court for the District of Delaware a Plan of Reorganization, amended as of June 14, 2010. As reported in the Troubled Company Reporter on March 12, the Plan contemplates and is predicated upon transfer of the Liquidating Assets and certain of the Debtors' liabilities, including Claims, into the Fairfield Trust. Newco will be formed on or before the effective date by the New Money Investors and Management as a new entity, which will purchase and subsequently hold, directly or indirectly, all of the Reorganized Fairfield Assets. Fairfield will receive 10% of the membership interests. According to the amended Plan, the New Money Investors will provide an aggregate commitment of $100 million for investment in multifamily acquisitions; pursuant to the terms and conditions of the Definitive New Money Documents. The New Money Investors are comprised of Brookfield Asset Management, Inc., or Brookfield and California State Teachers' Retirement System. A full-text copy of the Blacklined Plan of Reorganization is available for free at: http://bankrupt.com/misc/FAIRFIELDRESIDENTIAL_BlackilinedDS.pdf The Debtors are represented by: Richards, Layton & Finger, P.A. Daniel J. DeFranceschi, Esq. Paul N. Heath, Esq. 920 North King Street Wilmington, DE 19801 Tel: (302) 651-7700 Fax: (302) 651-7701 Paul, Hastings, Janofsky & Walker LLP Richard A. Chesley, Esq. Kimberly D. Newmarch, Esq. 191 North Wacker Drive, 30th Floor Chicago, IL 60606 Tel: (312) 499-6000 Fax: (312) 499-6100 About Fairfield Residential San Diego, California-based Fairfield Residential LLC is a fully integrated multifamily housing company that through its various subsidiaries provides a diverse mix of services to a wide range of investors, joint venture partners and clients. FFR either directly or indirectly acts as a general partner or managing member of, and owns varying stakes in, a number of project level operating companies. The Company and its affiliates -- FF Development, Inc., et al. -- filed for Chapter 11 bankruptcy protection on December 13, 2009 (Bankr. D. Delaware Case No. 09-14378). Daniel J. DeFranceschi, Esq.; Lee E. Kaufman, Esq.; Paul Noble Heath, Esq.; and Travis A. McRoberts, Esq., at Richards, Layton & Finger, P.A., assist the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Brett H. Miller, Esq., Stefan W. Engelhardt, Esq., and Melissa A. Hager, Esq., at Morrison & Foerster LLP; and William E. Chipman Jr., Esq., Kerri K. Mumford, Esq., and Kimberly A. Brown, Esq., at Landis Rath & Cobb LLP. Fairfield Residential listed $100,000,001 to $500,000,000 in assets and more than $1,000,000,000 in liabilities. Dow Jones says Fairfield listed assets worth $958 million and liabilities of nearly $835 million. FAIRPOINT COMMS: Appoints Ajay Sabherwal as its New CFO ------------------------------------------------------- BankruptcyData.com reports that FairPoint Communications said that it appointed Ajay Sabherwal as its new chief financial officer, effective July 19, 2010. Sabherwal, 44, is the chief financial officer of Mendel Biotechnology and previously held the same title at Aventine Renewable Energy. He has 16 years of experience in the telecommunications industry, including as C.F.O. at Choice One Communications. 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. FAIRPOINT COMMS: Maine Regulators Approve Bankruptcy Plan --------------------------------------------------------- The Maine Public Utilities Commission approved under Maine law, the regulatory settlement which is a component of FairPoint's bankruptcy reorganization plan. In a two-to-one vote, the Commission approved FairPoint's request to modify the timing and extent of their broadband plan expansion which had been originally adopted as part of the January 2008 merger approval - the Commission's decision which lead to FairPoint's take-over of the Verizon telecommunications network. Commission Chair Sharon Reishus and Commissioner Jack Cashman approved the entire package of regulatory changes presented by FairPoint: "FairPoint's financial restructuring and shedding of $1.7 billion in debt is certainly in the interests of Maine ratepayers -- the company will emerge a healthier, more stable company able to service Maine telephone customers," stated Commission Chair Sharon Reishus. "We have concerns about the proposed reductions in scope and implementation of the promised broadband expansion and pricing. However Maine ratepayers will be best served by FairPoint's successful emergence from bankruptcy and the protection of the broadband commitments that remain." Commissioner Cashman added, "In a bankruptcy, everyone gives up something. In this agreement the tools for maintaining service quality and for enforcement remain untouched." Commissioner Vafiades voted against approving the changes requested by FairPoint: "FairPoint has made promises to this Commission and to Maine consumers. The Company is using the bankruptcy process to reneg on broadband commitments which were a central aspect of approving the FairPoint takeover of the Verizon phone network. These changes were not required by bankruptcy court and are a disservice to rural customers." FairPoint had specifically requested the following changes to the conditions set forth in the 2008 Merger Order: a delay from April to December 2010 of the completion deadline for the first phase of the Company's broadband expansion project; authorization to reduce by 3% of the percentage of lines that will be capable of carrying broadband upon completion of the five-year broadband expansion project; relief from pricing restrictions for unregulated broadband service, and certain prospective restrictions on the overall level of the company's indebtedness. The Company had also requested a delay of three months in the payment to ratepayers of the rebate for service quality failures in the previous year. The Commission held expert witness hearings on FairPoint's petition for a change of ownership under Maine law and the proposed regulatory changes on May 5th and 6th. The Order finalizing the Commission decision will be publicly available shortly. Background: In January 2008, the Commission granted FairPoint the authority to buy Verizon's phone network and operations, in part, because Verizon -- despite having more financial resources-- had demonstrated a general unwillingness to invest in its northern New England network particularly with respect to increasing the geographic areas in which it offered broadband service. FairPoint agreed to invest substantially in infrastructure upgrades and expansion of broadband in Maine and the region. Starting with the service quality problems originating with the February 2009 "cut- over" of phone network from Verizon to FairPoint, the Commission has closely monitored FairPoint's efforts to reach "business as usual" operations. In October 2009, FairPoint filed for voluntary Chapter 11 bankruptcy in federal bankruptcy court in New York. The Commission retained special legal counsel to participate in the bankruptcy proceedings in order to ensure that the Commission retains authority over FairPoint rate-making and service quality regulation. FairPoint continues to provide bi-weekly updates on progress toward date-specific milestones for service improvements in customer call response, number of new service orders pending and number of bills with known errors. 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) FAIRPOINT COMMS: Reports $75,591,000 Net Loss for Q1 2010 --------------------------------------------------------- FairPoint Communications, Inc., delivered to the U.S. Securities and Exchange Commission on June 18, 2010, its first quarter financial results report for the period ended March 31, 2010. FairPoint Senior Vice President and Corporate Controller Lisa R. Hood relates that the Company's revenues decreased $24.1 million to $275.2 million in the first quarter of 2010 compared to 2009. According to Ms. Hood, among the main factors that contributed FairPoint's decreased revenues for the first quarter of 2010 are: -- A decrease of $14.4 million in local calling services to 108.4 million. This decrease is due to a 12.4% decline in total voice access lines in service at March 31, 2010, mainly because of the effects of competition and technology substitution; -- Access to revenues that increased $4.3 million to $97.4 million during the first quarter of 2010 compared to the same period in 2009. Of this increase, $5.8 million is attributable to an increase in interstate access revenues, partially offset by a $1.5 million decrease in interstate access revenues; -- Long distance service revenues that decreased $12.5 million to $30.9 million in the first quarter of 2010 compared to the same period in 2009. The decrease was primarily attributable to a decrease in the number of subscriber lines from March 31, 2009 to March 31, 2010; -- Data and Internet services revenues that decreased $1.1 million to $27.1 million in the first quarter of 2010 compared to the same period in 2009. This decrease is primarily due to a 4.8% decline in high-speed data subscribers at March 31, 2010 compared to March 31, 2009; -- Cost of services and sales decreased $18.8 million to $130.6 million in the first quarter of 2010 compared to the same period in 2009; -- Selling, general and administrative expenses increased $6.8 million to $95.1 million in the first quarter of 2010 compared to the same period in 2009. The increase is primarily attributable to a $3.4 million increase in bad debt expense; -- Depreciation and amortization expense increased $2.5 million to $70.3 million in the first quarter of 2010 compared to the same period in 2009, due primarily to increased gross plant asset balances, including capitalized software placed into service upon termination of the Transition Services Agreement between Verizon Communications Inc. and Northern New England Telephone Operations Inc. The Company reported a net loss for the three months ended March 31, 2010, at $75.6 million compared to net loss of $22.3 million for the same period in 2009. As of May 31, 2010, there were 89,989,144 shares of FairPoint's common stock outstanding. A full-text copy of FairPoint Communications' 2010 First Quarter Results is available for free at the SEC: http://ResearchArchives.com/t/s?657b FairPoint Communications, Inc., and Subsidiaries Consolidated Unaudited Balance sheets As of March 31, 2010 Assets: Current Assets Cash $146,862,000 Restricted Cash 2,311,000 Accounts receivable, net 137,029,000 Materials and Supplies 22,223,000 Other 29,219,000 Deferred income tax, net 73,694,000 -------------- Total current assets 411,338,000 Property, plant and equipment, net 1,931,916,000 Intangible assets, net 206,176,000 Prepaid pension, asset 9,225,000 Debt issue costs, net 1,317,000 Restricted cash 1,565,000 Other assets 20,056,000 Goodwill 595,120,000 -------------- Total Assets $3,176,713,000 ============== Liabilities and Stockholders' Deficit: Liabilities not subject to compromise: Accounts payable 81,899,000 Accrued interest payable 55,000 Other accrued liabilities 56,107,000 ------------- Total current liabilities 138,061,000 Accrued pension obligation 53,600,000 Employee benefit obligation 268,377,000 Deferred income taxes 117,944,000 Unamortized investment tax credits 4,659,000 Other long-term liabilities 14,347,000 ------------ Total long-term liabilities 458,927,000 Total liabilities not subject to compromise 596,988,000 Liabilities subject to compromise 2,872,002,000 ------------- Total liabilities 3,468,990,000 Stockholders' equity (deficit): Common stock 900,000 Additional paid-in capital 725,551,000 Retained earnings (deficit) (895,306,000) Accumulated other comprehensive loss (123,422,000) --------------- Total stockholders' equity (deficit) (292,277,000) --------------- Total liabilities and stockholders' equity $3,176,713,000 =============== FairPoint Communications, Inc., and Subsidiaries Consolidated Unaudited Statement of Operations For the Three Months Ended March 31, 2010 Revenues $275,166,000 Operating Expenses: Cost of services and sales, excluding depreciation and amortization 130,626,000 Selling general and administrative expense, including depreciation and amortization 95,090,000 Depreciation and amortization 70,345,000 --------------- Total operating expenses 296,061,000 --------------- Income (loss) from Operations (20,895,000) --------------- Other income (expense): Interest expense (34,630,000) Gain (loss) on derivative instruments - Gain on early retirement of debt - Other 26,000 --------------- Total other expense (34,604,000) --------------- Income (loss) before reorg items, income taxes (55,499,000) Reorganization items (16,591,000) ---------------- Loss before income tax (72,090,000) Income tax (expense) benefit (3,501,000) ---------------- Net Income (Loss) ($75,591,000) ================ FairPoint Communications, Inc., and Subsidiaries Consolidated Unaudited Statements of Cash Flows Three months Ended March 31, 2010 Cash flows from operating activities: Net (loss) income ($75,591,000) --------------- Adjustments to reconcile net income to net cash provided by operating activities excluding impact of acquisitions: Deferred income taxes 3,207,000 Provision for uncollectible revenue 8,931,000 Depreciation and amortization 70,345,000 Post-retirement accruals 9,283,000 Gain on derivative instruments - Gain of early retirement of debt - Non-cash reorganization costs 977,000 Other non cash items 2,862,000 Changes in assets and liabilities arising from operations: Accounts receivable 8,136,000 Prepaid other assets (8,517,000) Accounts payable and accrued liabilities 31,904,000 Accrued interest payable 33,810,000 Other assets and liabilities, net (6,783,000) --------------- Total adjustments 154,155,000 --------------- Net cash provided by operating activities 78,564,000 Cash flows from investing activities: Net capital additions (45,117,000) Net proceeds from sales of investments and other assets 8,000 --------------- Net cash used in investing activities (45,109,000) Cash flows from financing activities: Loan origination costs (1,100,000) Proceeds from issuance of long-term debt 5,513,000 Repayments of long-term debt - Restricted cash 160,000 Repayment of capital lease obligations (521,000) Dividends paid to stockholders - --------------- Net cash provided by financing activities 4,052,000 --------------- Net increase in cash 37,507,000 Cash beginning of period 109,355,000 -------------- Cash, end of period $146,862,000 ============== 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) FAIRPOINT COMMS: Verizon Wants Indemnification Provisions Retained ------------------------------------------------------------------ Verizon Communications Inc., in a June 11, 2010 filing, told the Court that it objects to FairPoint Communications' Modified Second Amended Plan of Reorganization to the extent that it purports to strip indemnification provisions from any of the Verizon Contracts being assumed upon confirmation of the Plan, and not have the Reorganized Debtors succeed to the Debtors' indemnification obligations under those contracts in full and without condition. Verizon and the Debtors are parties to numerous executory contracts, many of which contain provisions that require the Debtors to indemnify Verizon and hold it harmless from various types of claims. Verizon, however, notes that the Debtors promulgated under Section 11.4 of the Plan that as of the Plan Effective Date, the Reorganized Debtors will have no continuing indemnification obligations under any of its executory contracts. Verizon is also against the Litigation Trust Agreement provided under the Modified Plan, the primary purpose of which is to investigate and possibly pursue potential causes of action against Verizon. The LTA, according to Verizon, contains a number of provisions that would materially and improperly prejudice its rights and interests, both immediately upon confirmation of the Modified Plan and in the event that Verizon is thereafter compelled to defend itself against any claims prosecuted by the Trust. Verizon argued that is against the overly broad release, exculpation, and injunction provisions contained in the LTA. 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) FEDERAL-MOGUL: Files 2009 401(k) Investment Program Report ---------------------------------------------------------- Federal-Mogul Corporation filed its 401(k) Investment Program annual report for the year ended December 31, 2009, on June 29, 2010. Federal-Mogul sponsors the 401(k) Plan, which is a defined contribution plan that provides eligible salaried employees of the company with a program for making voluntary pre-tax, after-tax and Roth contributions. All domestic salaried employees of the company and subsidiaries are eligible to participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act. Effective December 27, 2007, Federal-Mogul hired United States Trust Company, National Association, which is part of Bank of America, National Association's Special Fiduciary Services, as the named fiduciary and investment manager for the assets of the Plan that consist of the Company warrants, and any Company Class A Common Stock acquired upon the exercise of the warrants, within the Plan. The independent fiduciary has the authority to continue, restrict or terminate these investments within the Plan. Effective June 1, 2009, Evercore Trust Company replaced U.S. Trust as the named fiduciary and investment manager as the result of the sale of the Bank of America's Special Fiduciary Services business to Evercore LP. A full-text copy of Federal-Mogul's 2009 Annual 401(k) Plan, filed on Form 11-K with the U.S. Securities and Exchange Commission Report, is available for free at: http://researcharchives.com/t/s?6596 Federal-Mogul Corporation 401(k) Investment Program Statements of Net Assets Available for Plan Benefits December 31 ---------------------------- 2009 2008 ------------ ------------ ASSETS Receivables: Company contributions $128 $33,932 Participant contributions 528 195,480 Participant loan interest 46 4,212 ------------ ------------ Total receivables 702 233,624 Investments at fair value Investments with registered investment companies 226,552,819 - Common collective trusts 66,840,187 - Cash and cash equivalents 6,289,078 - Participant loans 6,100,895 6,298,120 Brokerage account 5,963,389 - Company warrants 26,396 - Investments in Master Trust - 283,025,078 ------------ ------------ Total investments at fair value 311,772,764 289,323,198 ------------ ------------ Total Assets $311,773,466 $289,556,822 ============ ============ LIABILITIES Forfeited accounts owed to the company $50,731 $7,800 ------------ ------------ Net assets at fair value 311,722,735 289,549,022 Adjustments from fair value to contract value 610,347 3,736,974 ------------ ------------ Net assets available for plan benefits $312,333,082 $293,285,996 ============ ============ Federal-Mogul Corporation 401(k) Investment Program Statements of Changes in Net Assets Available for Plan Benefits Year Ended December 31 ----------------------------- 2009 2008 ------------- ------------- ADDITIONS Dividends and interest $8,967,320 $19,039,684 Participant contributions 16,553,093 22,021,604 Company contributions 2,931,985 3,667,375 ------------- ------------- Total Additions 28,452,398 44,728,663 DEDUCTIONS Benefits paid to participants 63,733,061 42,525,934 Administrative expenses 49,691 42,971 Portion of company contribution account forfeited on withdrawal of members 162,631 137,437 ------------ ------------- Total Deductions 63,945,383 42,706,342 Net realized/unrealized appreciation/(depreciation) in fair value of investments 55,315,379 (114,419,208) Net transfer (to)/from other company plans (775,308) 11,175,350 ------------ ------------- Net increase/(decrease) 19,047,086 (101,221,537) Net assets available for plan benefits at beginning of period 293,285,996 394,507,533 ------------ ------------- Net assets available for plan benefits at end of period $312,333,082 $293,285,996 ============ ============= About Federal-Mogul Federal-Mogul Corporation is a supplier of powertrain, chassis and as safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy- duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Federal-Mogul was founded in Detroit in 1899. The Company is headquartered in Southfield, Michigan, and employs nearly 41,000 people in 33 countries. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Attorneys at Sidley Austin Brown & Wood, and Pachulski, Stang, Ziehl & Jones, P.C., represented the Debtors in their restructuring effort. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Attorneys at The Bayard Firm represented the Official Committee of Unsecured Creditors. The Debtors' Reorganization Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14, 2007. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Federal-Mogul Corp. to 'B+' from 'BB-'. "The ratings reflect Federal-Mogul's weak business risk profile as a major participant in the highly competitive global auto industry, and its aggressive financial risk profile," S&P said. Moody's Investors Service in April 2009, lowered corporate family rating of Federal-Mogul to B1 from Ba3. At that time, Moody's said the downgrade "reflects the company's weakened credit metrics as a result of the dramatic decline of global automotive production and the impact of the global recessionary environment on consumer spending." The ratings have remained the same at present. FEDERAL-MOGUL: Files 2009 Employee Investment Plan Report --------------------------------------------------------- Federal-Mogul Corporation filed an annual report on its Employee Investment Program for the year ended December 31, 2009, with the U.S. Securities and Exchange Commission on June 29, 2010. The Plan is a defined contribution plan, which provides eligible hourly employees of the company with a program for making voluntary pre-tax, after-tax and Roth contributions. Substantially all domestic hourly employees of the company and subsidiaries are eligible to participate in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act. Effective December 27, 2007, Federal-Mogul hired United States Trust Company, National Association, which is part of Bank of America, National Association's Special Fiduciary Services, as the named fiduciary and investment manager for the assets of the Plan that consist of the Company warrants, and any Company Class A Common Stock acquired upon the exercise of the warrants, within the Plan. The independent fiduciary has the authority to continue, restrict or terminate these investments within the Plan. As of June 1, 2009, Evercore Trust Company replaced U.S. Trust as the named fiduciary and investment manager as the result of the sale of the Bank of America's Special Fiduciary Services business to Evercore LP. Prior to November 20, 2009, assets of the Plan, and the Federal- Mogul Corporation 401(k) Investment Program, were administered under the terms of a trust agreement between Federal-Mogul and Fidelity Management Trust Company. The agreement provided, among other things, that the trustee safe keep all investments, and accounts for all investments, receipts, disbursements, benefit payments, and other transactions. Plan net assets, net investment income and gains and losses were not allocated from the Master Trust, but were tracked separately for the Plan by Fidelity Investments. Plan assets totaling $219,368,809 transferred from Fidelity Investments to T. Rowe Price on November 20, 2009. On that date, T. Rowe Price became the trustee and record keeper for the Plan and the Master Trust was dissolved in conjunction with the change of trustee. A full-text copy of Federal-Mogul's 2009 Annual Report on its Employees Investment Plan is available for free at: http://researcharchives.com/t/s?6597 Federal-Mogul Corporation 401(k) Investment Program Statements of Net Assets Available for Plan Benefits December 31 ---------------------------- 2009 2008 ------------ ------------ ASSETS Receivables: Company contributions $125,669 $107,658 Participant contributions 141,520 181,171 Participant loan interest 10,128 20,883 ------------ ------------ Total receivables 277,317 309,712 Investments at fair value Investments with registered investment companies 138,772,164 - Common collective trusts 64,646,928 - Cash and cash equivalents 10,348,409 11,243,955 Participant loans 6,176,800 - Brokerage account 1,221,950 - Company warrants 17,733 - Investments in Master Trust - 190,059,331 ------------ ------------ Total investments at fair value 221,183,984 201,303,286 ------------ ------------ Total Assets $221,461,301 $201,612,998 ============ ============ LIABILITIES Forfeited accounts owed to the company $16,836 $32,975 ------------ ------------ Net assets at fair value 221,444,465 201,580,023 Adjustments from fair value to contract value 657,593 3,305,848 ------------ ------------ Net assets available for plan benefits $222,102,058 $204,885,871 ============ ============ Federal-Mogul Corporation 401(k) Investment Program Statements of Changes in Net Assets Available for Plan Benefits Year Ended December 31 ----------------------------- 2009 2008 ------------- ------------- ADDITIONS Dividends and interest $6,700,229 $13,062,900 Participant contributions 7,975,896 10,720,972 Company contributions 1,571,425 2,063,966 Company pension contributions 2,034,797 2,681,362 ------------- ------------- Total Additions 18,282,347 28,529,200 DEDUCTIONS Benefits paid to participants 31,824,886 28,696,958 Administrative expenses 129,574 127,239 Portion of company contribution account forfeited on withdrawal of participants 302,461 230,095 ------------ ------------- Total Deductions 32,256,921 29,054,292 Net realized/unrealized appreciation/(depreciation) in fair value of investments 30,415,453 (60,400,576) Net transfer (to)/from other company plans 775,308 (140,790) ------------ ------------- Net increase/(decrease) 17,216,187 (61,066,458) Net assets available for plan benefits at beginning of period 204,885,871 265,952,329 ------------ ------------- Net assets available for plan benefits at end of period $222,102,058 $204,885,871 ============ ============= About Federal-Mogul Federal-Mogul Corporation is a supplier of powertrain, chassis and as safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy- duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Federal-Mogul was founded in Detroit in 1899. The Company is headquartered in Southfield, Michigan, and employs nearly 41,000 people in 33 countries. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Attorneys at Sidley Austin Brown & Wood, and Pachulski, Stang, Ziehl & Jones, P.C., represented the Debtors in their restructuring effort. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Attorneys at The Bayard Firm represented the Official Committee of Unsecured Creditors. The Debtors' Reorganization Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14, 2007. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Federal-Mogul Corp. to 'B+' from 'BB-'. "The ratings reflect Federal-Mogul's weak business risk profile as a major participant in the highly competitive global auto industry, and its aggressive financial risk profile," S&P said. Moody's Investors Service in April 2009, lowered corporate family rating of Federal-Mogul to B1 from Ba3. At that time, Moody's said the downgrade "reflects the company's weakened credit metrics as a result of the dramatic decline of global automotive production and the impact of the global recessionary environment on consumer spending." The ratings have remained the same at present. FEDERAL-MOGUL: To Hold 2nd Quarter Fin'l Results Call on July 29 ---------------------------------------------------------------- Federal-Mogul Corporation (NASDAQ: FDML) announced that the company's second quarter 2010 financial results conference call and audio Web cast will be held on Thursday, July 29, 2010, at 10:00 a.m., EST. To participate in the call: Domestic calls: 888-680-0869 International calls: 617-213-4854 Pass code I.D. # 83016680 To facilitate rapid connection the morning of the call, click here [https://www.theconferencingservice.com/prereg/key.process?key=PVV DG8CBA] to pre-register. The live audio Web cast will be available in the Investor Relations section of the corporate Web site by clicking here [http://www.federalmogul.com/investors]on July 29, 2010. An audio replay of the call will be available two hours following the call and will be accessible until August 29, 2010 at: Domestic calls: 888-286-8010 International calls: 617-801-6888 Pass code I.D. # 22012625 The second quarter press release can be downloaded on Thursday, July 29 at 7:30 a.m., EST, by clicking here [http://federalmogul.mediaroom.com/]. Investor Relations Contact: David Pouliot (248) 354-7967 David.Pouliot@federalmogul.com About Federal-Mogul Federal-Mogul Corporation is a supplier of powertrain, chassis and as safety technologies, serving the world's foremost original equipment manufacturers of automotive, light commercial, heavy- duty, agricultural, marine, rail, off-road and industrial vehicles, as well as the worldwide aftermarket. Federal-Mogul was founded in Detroit in 1899. The Company is headquartered in Southfield, Michigan, and employs nearly 41,000 people in 33 countries. The Company filed for Chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Attorneys at Sidley Austin Brown & Wood, and Pachulski, Stang, Ziehl & Jones, P.C., represented the Debtors in their restructuring effort. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Attorneys at The Bayard Firm represented the Official Committee of Unsecured Creditors. The Debtors' Reorganization Plan was confirmed by the Bankruptcy Court on November 8, 2007, and affirmed by the District Court on November 14, 2007. Federal-Mogul emerged from Chapter 11 on December 27, 2007. (Federal-Mogul Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported by the TCR on June 5, 2009, Standard & Poor's Ratings Services said it has lowered its corporate credit rating on Federal-Mogul Corp. to 'B+' from 'BB-'. "The ratings reflect Federal-Mogul's weak business risk profile as a major participant in the highly competitive global auto industry, and its aggressive financial risk profile," S&P said. Moody's Investors Service in April 2009, lowered corporate family rating of Federal-Mogul to B1 from Ba3. At that time, Moody's said the downgrade "reflects the company's weakened credit metrics as a result of the dramatic decline of global automotive production and the impact of the global recessionary environment on consumer spending." The ratings have remained the same at present. FIDELITY NATIONAL: Fitch Affirms 'BB+' Issuer Default Ratings ------------------------------------------------------------- Fitch Ratings has removed Fidelity National Information Services, Inc. from Rating Watch Negative and affirmed the company's Issuer Default Rating at 'BB+'. Additionally, Fitch has downgraded these ratings for FIS: -- $900 million secured revolving credit facility to 'BB+' from 'BBB-'; -- Senior secured term loan A to 'BB+' from 'BBB-'. Fitch has also rated FIS' proposed new senior secured term loan B at 'BB+'. In anticipation of the company's refinancing of its existing senior secured term loan B, which is an obligation of the company's Metavante Technologies Inc. subsidiary, Fitch expects to withdraw Metavante's IDR and senior secured ratings. Fitch currently rates Metavante: -- IDR 'BB+'; -- $800 million senior secured term loan B 'BBB-'. The Rating Outlook for all ratings is Stable. The ratings and Outlook reflect these considerations: -- Fitch expects revenue growth in the low single digits over the next several years. Revenue growth could exceed expectations if FIS is successful in realizing cross selling opportunities across the combined customer base of FIS and Metavante. Conversely, changes to financial regulations or economic factors that negatively impact small and medium sized financial institutions could result in revenue growth lagging expectations. -- Fitch expects EBITDA growth of 10%-plus to materially exceed revenue growth in 2010 and to a lesser degree in 2011 as FIS benefits from operational cost savings resulting from its integration of Metavante. -- Fitch expects free cash flow of approximately $700 million to $800 million annually over the next several years which reflects cash outflows of approximately $300 million in annual capital expenditures plus the company's current $75 million dividend program. Fitch expects FIS to use a portion of its free cash flow to pay the required annual amortization on existing and proposed term loans. -- Fitch estimates leverage (total debt / operating EBITDA) pro forma for the debt issuance to be 3.7 times which reflects pro forma results to include EBITDA contributions from Metavante for the full LTM period. This is an increase from 2.3x (pro forma for Metavante) at the end of 2009. Fitch expects leverage to decline to below 3x in 2011 through both principal amortization and EBITDA growth. Fitch estimates interest coverage (EBITDA to Gross Interest Expense) to be 5.6x in 2010, pro forma for the increased debt balance, and expects this to increase to above 6x in 2011. -- Fitch expects FIS to utilize free cash flow to fund additional share repurchases and potential acquisitions. Following the debt issuance and term loan extension, FIS will have minimal near-term debt maturities with approximately $500 million due in 2012. While it is anticipated that the proposed senior unsecured notes will have a restricted payment basket, Fitch does expect the company to continue to focus on shareholder returns. -- Inherent in the ratings is Fitch's assumption that proposed changes to financial regulations will have no material impact on FIS' business in the near-term although how changes in regulations may ultimately impact banks behavior over the longer-term is unknown. A key consideration of FIS' ratings is its free cash flow conversion rate and relative free cash flow to debt. FIS (excluding Metavante) historically has had a low conversion rate of EBITDA to free cash flow (34% in 2008). While this figure improved in 2009, when compared to other issuers in the 'BB' and 'BBB' category and adjusted for leverage (free cash flow plus interest expense to EBITDA), FIS' free cash flow conversion rate is on par with the median figures for all 'BB' issuers (53%) and below that of all 'BBB' issuers (60%). Given that FIS has minimal working capital requirements, Fitch would expect its free cash flow conversion to be at the high-end of its rating category. Fitch believes that the company's capitalization of software development costs may negatively impact its conversion rate relative to peers. A more aggressive capitalization policy would tend to exaggerate EBITDA on a relative basis. To compensate for this potential discrepancy, Fitch places greater emphasis on evaluating FIS' leverage on a cash flow basis relative to peers. Fitch estimates FIS' cash flow leverage (FFO less capex and dividends to total debt) at 15.2% for 2010 which is above the median figure for 'BB' issuers at 11% but below 'BBB' issuers at 18%. The downgrade of the secured debt reflects Fitch's reduced expectations that FIS' IDR will be upgraded to investment grade in the foreseeable future (prior to the recapitalization announcement, the rating outlook was Positive). While the company's steady operating model and sufficient cash flow generation reflect positively on the credit relative to other investment grade issuers, management's historical predisposition for debt financed acquisitions and investor friendly actions, including its strong consideration of an LBO, limit upside to the ratings. In fact, the stability of the company's cash flows combined with no meaningful financial and operational rationale for maintaining an investment grade rating, effectively limit the ratings given the company's current size as Fitch would expect any attempt to delever the company to be met by existing shareholder and outsider interest in using leverage to purchase a portion or potentially a majority of shares. Positive rating action is currently limited by the company's size and potential for additional debt financed acquisitions and shareholder friendly actions. Negative rating action could occur if the company were to pursue additional debt financed share repurchases resulting in funds from operation less capital spending and dividends falling below 10% of total debt outstanding. Additionally, negative rating action could occur if the company's primary customer base, small and mid-tier financial institutions, were negatively impacted by regulatory changes or severe economic events. Rating strengths include these: -- Stable end demand for core processing services from financial institutions; -- Strong customer diversification, with increasing international diversification although highly dependent on small and mid-tier banks; and -- High switching costs and long-term contracts positively impact customer retention and minimize potential competitive threats. Rating concerns include: -- History of debt financed M&A and shareholder friendly actions; -- High fixed expense cost structure could drive volatility in profitability if revenue declined materially; -- Minimal business need to maintain ratings above the 'BB' category; -- Potential regulatory changes which could disrupt the business of FIS' customer base; and -- Increasing competition from non-traditional competitors such as IBM and Oracle which have greater resources and scale. FIS is planning to issue $2.6 billion incremental debt to repurchase shares through a Dutch Auction tender offer. This follows discussions with a group of private equity firms regarding a LBO of the company. In conjunction with the new debt issuance, FIS has extended the maturity of approximately $800 million of its $900 million secured RCF to July 2014 with the remaining amount expiring January 2012. Similarly, FIS has extended the maturity of approximately $1.4 billion of its secured term Loan A to July 2014 with the remaining approximately $400 million maturing January 2012. FIS will repay in its entirety an $800 million Term Loan B which is an obligation of its subsidiary Metavante. To finance the share repurchase and debt refinancing, FIS is planning to issue a $1.4 billion secured term loan B with a six- year maturity and has increased the size of its term loan A by $560 million (the incremental Term Loan A borrowings will mature July 2014). FIS expects to raise the remaining funds necessary for its financing through various expected unsecured note offerings and senior secured revolving credit facility borrowings. Total debt as of March 31, 2010 was $3.1 billion and consisted principally of $1.8 billion outstanding under a senior secured term loan A issued at FIS and maturing January 2012; $339 million drawn on FIS' senior secured revolving credit facility; $50 million outstanding under a senior secured term loan C maturing January 2012 and $793 million remaining under Metavante's senior secured term loan B maturing November 2014. Total debt pro forma for the offerings is expected to be $5.6 billion and consist principally of i) $2.4 billion outstanding under a senior secured term loan A, approximately $400 million of which matures January 2012 with the remainder maturing July 2014; ii) $1.4 billion under a senior secured term loan B maturing July 2016; and iii) approximately $1.9 billion outstanding under various expected unsecured note offerings and senior secured revolving credit facility borrowings, yet to be determined. Total liquidity as of March 31, 2010, was $1.2 billion consisting principally of $561 million available under FIS' $900 million senior secured revolving credit facility expiring January 2012, approximately $464 million in cash and $145 million available on an asset-backed securitization program expiring November 2013. Pro forma for the new bank agreements, FIS added $140 million of additional capacity to its secured revolving credit facility raising the size of the total facility to approximately $1,036 million. Approximately $933 million of this facility expires July 2014 and $103 million expires January 2012. FIDELITY NATIONAL: Moody's Confirms 'Ba1' Corporate Family Rating ----------------------------------------------------------------- Moody's Investors Service confirmed FIS' (formerly Fidelity National Information Services, Inc.) corporate family rating and probability of default rating at Ba1 concluding a review for possible downgrade initiated on May 26, 2010. Concurrently, Moody's confirmed the Ba1 rating on the company's existing senior secured credit facility (term loan A and revolving credit facility) and the $145 million receivable-backed revolver. In addition, Moody's assigned a Ba1 rating to the company's proposed $1.4 billion senior secured term loan B due 2016. As part of the transaction, FIS has amended and extended its current senior secured credit facility. The rating outlook is stable. Moody's had placed the FIS' Ba1 ratings on review for possible downgrade following the company's announcement on May 25, 2010, that the company will repurchase up to $2.5 billion of its common stock. FIS' Board of Directors authorized a leveraged recapitalization plan in which FIS will repurchase up to $2.5 billion of its common stock at a price range of between $29.00 - $31.00 per share through a modified "Dutch auction" tender offer. The amendment of the existing credit facility, which totals $3.4 billion in the aggregate, includes $2.0 billion of term loan A and $933 million of revolving loan capacity that will mature in July 2014, as well as $397 million of term loan A and $103 million of revolving loan capacity that will mature in January 2012. The amended agreement provides FIS with approximately $560 million of incremental proceeds from the term loan A and approximately $140 million of additional revolver capacity. The proceeds from the additional extended term loan A and the new term loan B will be used to refinance FIS' existing term loan B, assumed in the acquisition of Metavante Technologies, Inc., and to partially fund the proposed stock buyback. The Ba1 CFR is supported by FIS' leading market position (along with Fiserv, Inc. -- rated Baa2) in payment and bank processing services, the company's recurring transaction-fee-based model secured by long-term contracts, the high switching costs of its core banking software and services, and the favorable outlook for electronic payments industry growth. At the same time, the rating reflects FIS' high initial financial leverage from the new debt, the company's aggressive financial policies with regards to acquisitions and share repurchases, and limited growth opportunities in domestic core bank processing. Pro forma for the leverage recap, the company's leverage will be about 4x, not including the full benefit of anticipated cost savings from its recent acquisition of Metavante (completed October 1, 2009). The acquisition expands FIS' core processing services and payment capabilities while increasing market coverage (i.e., from large banks to regional and community banks) and geographic reach. Notwithstanding the higher interest expense associated with increased debt from the leveraged recap transaction, FIS should continue to improve its margins and cash flow generation over time as global scale is achieved, cost redundancies are eliminated, and relative competitive advantages are shared. With prior acquisitions, the company has demonstrated the ability to de-leverage according to plan. As such, Moody's Ba1 rating anticipates the company will focus on debt reduction and will reduce its leverage to under 3x (Moody's adjusted debt to EBITDA) by the end of 2011. The stable outlook reflects Moody's expectation the company will continue to generate low single digit organic revenue growth and consistent free cash flow. Despite the slow economic recovery, Moody's expects the company's performance to remain steady over the intermediate term given its recurring revenue stream and ongoing customer demand for its core processing services and electronic payment capabilities. The outlook assumes that the company will use its solid free cash flow to meaningfully reduce debt. Ratings confirmed/assessments revised: * Corporate Family Rating - Ba1 * Probability of Default Rating -- Ba1 * $2.4 billion Senior Secured Term Loan A due 2012 and 2014 - Ba1, LGD 3, 38% from 47% * $1 billion Senior Revolving Credit Facility due 2012 and 2014 - Ba1, LGD 3, 38% from 47% * $145 million receivables-backed revolver due 2103 - Ba1, LGD 3, 38% from 47% Ratings/assessments assigned: * $1.4 billion Senior Secured Term Loan B due 2016 at Ba1, LGD 3, 38% Ratings to be withdrawn: Metavante Corporation -- * $800 million Senior Secured Term Loan B due 2014 - Ba1, LGD 3, (47%) Rating affirmed: * Speculative Grade Liquidity rating of SGL-1 The latest rating action for FIS was taken on May 26, 2010, at which time FIS' Ba1 ratings (corporate family rating, probability of default rating, and senior secured credit facility ratings) were placed on review for possible downgrade following the announcement that the company will repurchase up to $2.5 billion of its common stock. FIS, headquartered in Jacksonville, Florida, provides card issuing, core bank processing, and online bill payment services to financial institutions. FINLAY ENTERPRISES: Modified Plan of Liquidation Confirmed ---------------------------------------------------------- BankruptcyData.com reports that the U.S. Bankruptcy Court confirmed Finlay Enterprises' Modified Plan of Liquidation. Plan documents explain, "The Plan contemplates the liquidation of the Debtors' remaining assets by a Plan Administrator. On the Effective Date of the Plan, all of the Debtors' remaining assets will vest in the Post Effective Date Debtors, and the assets will be liquidated by the Plan Administrator. After payment of all Allowed Administrative Expense Claims, Allowed Priority Tax Claims, Allowed Professional Compensation and Reimbursement Claims, Allowed Other Priority Claims, and Allowed Second Lien Claims (if any), proceeds of all assets will be distributed to the holders of the allowed Third Lien Claims either by the Plan Administrator or by HSBC Bank USA, National Association, as trustee and collateral agent on behalf of holders of Third Lien Note Claims. Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P., as a significant holder of Third Lien Note Claims, has agreed to allocate and contribute the first $7 million it would otherwise be entitled to receive in its capacity as a holder of Third Lien Note Claims for the benefit of general unsecured creditors, in exchange for a full release of all claims against it, including claims that the official committee of unsecured creditors appointed in these chapter 11 cases articulated against Harbinger, Wilmington Trust FSB, and HSBC." Finlay Enterprises, Inc. (OTC Bulletin Board: FNLY) through its wholly owned subsidiary, Finlay Fine Jewelry Corporation, is a retailer of fine jewelry operating luxury stand-alone specialty jewelry stores and licensed fine jewelry departments in department stores throughout the United States and achieved sales of $754.3 million in fiscal 2008. The number of locations at the end of the second quarter ended August 1, 2009, totaled 182, including 67 Bailey Banks & Biddle, 34 Carlyle and four Congress specialty jewelry stores and 77 licensed departments with The Bon Ton. The Company and seven affiliates filed for Chapter 11 on August 5, 2009 (Bankr. S. D. N.Y. Case No. 09-14873). Weil, Gotshal & Manges LLP, serves as bankruptcy counsel. Alvarez & Marsal North America, LLC, is engaged as restructuring advisor in the Chapter 11 case, and the firm's David Coles is appointed as chief restructuring officer. Epiq Bankruptcy Solutions, LLC, serves as claims and notice agent. Judge James Peck presides over the case. In its bankruptcy petition, Finlay Enterprises disclosed assets of $331,824,000 against debts of $385,476,000 as of July 4, 2009. As of the petition date, Finlay owes $38 million outstanding under a first lien credit agreement, $24.7 million under second lien notes, $176.6 million outstanding under third lien notes (in addition to $17.5 million to secured vendors), and $40.6 million under remaining unsecured obligations under the senior notes. FLEXTRONICS INT'L: Fitch Raises Issuer Default Rating From BB ------------------------------------------------------------- Fitch Ratings has upgraded these ratings for Flextronics International Ltd.: -- Issuer Default Rating to 'BBB-' from 'BB+'; -- Senior unsecured credit facility to 'BBB-' from 'BB+'; -- Senior subordinated notes to 'BBB-' from 'BB+'. The Rating Outlook is Stable. The upgrade and Stable Outlook reflect Fitch's estimates and considerations: -- Revenue growth in excess of 10% in fiscal 2011 (end March 2011) and mid-single digits beyond that, or roughly 2 times global GDP growth. Fitch expects Flextronics to outgrow its served end-markets over the next 12 months as the company capitalizes on the secular trend of increased outsourcing of manufacturing, additional market share gains and new customer program wins. -- EBITDA margins to remain near or slightly above 4%. Upside to profit expectations could result from higher margin engagements in non-traditional sectors, a higher mix of vertically integrated customer engagements and modest operating leverage. However, confidence in continued profitability improvements is tempered by the sector's history of significant price competition which has typically capped profitability near current levels. Conversely, Fitch would expect margins to fall back to roughly 3% in a cyclical downturn. -- Free cash flow will likely be modestly positive in fiscal 2011 although significant working capital requirements to support revenue growth could possibly result in modestly negative free cash flow. In a normal growth environment (mid- single digits), Fitch would expect free cash flow to be approximately $400 million. Fitch expects funds from operations to reach 3% of revenue by fiscal 2012, which is an important milestone given that Flextronics typically spends upwards of 1.5% of revenue annually on capital expenditures. That results in cash flow equal to roughly 1.5% of revenue to fund working capital expansion. Net working capital, adjusted for off-balance-sheet accounts receivable sales, is roughly 7% to 8% of revenue, which means Flextronics should be able to grow revenue by 15% or more in a given year and still produce enough cash flow to support working capital increases and maintain positive free cash flow. The counter-cyclical nature of working capital historically has meant that electronics manufacturing services companies produced negative free cash flow during periods of growth. Fitch believes that the ability to produce free cash flow through most of the business cycle would be further evidence of a change in the overall industry dynamics and supportive of an investment grade rating. -- Uses of cash flow and excess cash will principally go to fund organic growth, working capital needs and potential small acquisitions. While the potential for large acquisitions is more of a credit risk at Flextronics than other EMS providers given the company's historically aggressive acquisition strategy, Fitch does not expect a consolidation play similar to the acquisition of Solectron in the foreseeable future. Flextronics nearest maturity is a $240 million note due in August 2010 which the company can redeem through existing cash although Fitch would expect this to be refinanced, consistent with the company's target of maintaining leverage near 2x. -- Fitch expects leverage (total debt to total operating EBITDA) to decline and then remain near 2.0x going forward and approximately 3x when adjusted for off-balance-sheet accounts receivable securitizations and operating leases. On a cash flow basis, Fitch expects Flextronics to produce funds from operations less capital expense and dividends equal to approximately 15% of total debt outstanding (note Flextronics currently does not pay any dividends). Interest coverage (EBITDA to total interest expense) is expected to exceed 9.0x in fiscal 2011. Fitch estimates current leverage at 2.4x (3.7x on an adjusted basis) and interest coverage at 5.8x. Fitch believes that the EMS sector has reached a significant inflection point in the evolution of the industry which should lead to greater stability and profitability of leading market participants. Leading EMS providers, such as Flextronics and Jabil, are increasingly strategic to the business operations and strategy of their customers given their role in product design consultation, component sourcing, manufacturing and fulfillment logistics. In addition, after-market services, such as product repair, are becoming a larger part of the overall customer engagement. While services offerings from Flextronics and Jabil help to differentiate from smaller competitors, the global manufacturing base and scale these companies offer has been increasingly important to servicing global OEM customers, including the ability to manufacture product in or near the geographic end-market. No longer is the EMS industry driven largely by lowest labor cost but rather the services and total cost behind end-to-end product fulfillment. Fitch expects these trends to lead to greater stability in customer engagements and profitability. Whereas the industry has been susceptible to irrational pricing from competitors with excess manufacturing capacity, deeper customer engagements lessen the risk of losing a program over manufacturing costs. In addition, higher margin service offerings may eventually grow large enough as a component of revenue to provide further upside to current EBITDA margins, although this has been a long-running and largely unfulfilled goal of EMS providers. Rating strengths include: -- Significant advantage in scale and scope of operations as the second largest provider of electronics manufacturing services in the world; -- Very strong track record of execution as evidenced by peer- leading return on invested capital and cash conversion cycle days; -- Blue chip customer base with strong exposure to faster growing market segments, particularly in the computing and consumer space; -- High working capital provides an additional source of liquidity in a market downturn. Ratings concerns include these: -- Flextronics has historically had an aggressive acquisition growth strategy in an industry with significant execution risk with minimal room for execution missteps due to the relatively low profit margin inherent in the business model; -- A difficult competitive environment which has pressured profitability across the industry; -- Flextronics has customer concentration risk, although at the low end of the range typical for the EMS industry, with its top 10 customers accounting for approximately 47% of revenue in fiscal 2010 (end March 2010). Liquidity as of March 31, 2010, was solid with $1.9 billion in cash and a fully available $2 billion senior unsecured revolving credit facility which expires in May 2012. Additionally, Fitch expects Flextronics to produce strong free cash flow, even in the current environment with minimal working capital requirements and reduced capital spending plans. Fitch estimates that Flextronics has produced average annual free cash flow in excess of $500 million each of the past three years. Flextronics utilizes an accounts receivable securitization facility as well as accounts receivable sales agreements for additional liquidity purposes. Total debt as of March 31, 2010, was $2.3 billion and consisted primarily of $1.7 billion outstanding under a senior unsecured term loan facility, of which approximately $500 million is due in October 2012 with the remainder due in October 2014; $240 million in 1% convertible subordinated notes due August 2010; and $300 million in 6.25% senior subordinated notes due November 2014. Flextronics also has approximately $417 million outstanding under its accounts receivable securitization facilities and $164 million outstanding under various accounts receivable sales agreements. FLYING J: Completes Merger With Pilot Travel Centers ---------------------------------------------------- Linda Thomson at Desert News reports that Flying J Inc. and Pilot Travel Centers finished a merger that will make it the largest operator of interstate travel centers in North America. The merger firm is expected to employ about 20,000 people. About Flying J Inc. 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 Young Conaway Stargatt & Taylor LLP, and Kirkland & Ellis LLP, represent the Debtors in their Chapter 11 effort. 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. FLYING J: FTC Requires Divestitures for $2-Bil. Deal With Pilot --------------------------------------------------------------- Bankruptcy Law360 reports that the Federal Trade Commission said Wednesday that Pilot Travel Centers LLC's $1.8 billion acquisition of Flying J Inc.'s travel center network would reduce competition for certain long-haul trucking fleets, and that it is therefore requiring Pilot to make divestitures. Under a settlement agreement, Law360 says, Pilot will sell 26 locations -- which provide diesel, food, parking and other amenities for truckers -- to Love's Travel Stops & Country Stores. About Flying J Inc. 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 Young Conaway Stargatt & Taylor LLP, and Kirkland & Ellis LLP, represent the Debtors in their Chapter 11 effort. 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. FORD MOTOR: Moody's Maintains 'B1' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service is maintaining its ratings of Ford Motor Company, Corporate Family Rating at B1, and Ford Motor Credit Company, Senior Unsecured at Ba3, following the company's announced plans to repay an incremental $4.0 billion of debt over the near term. In conjunction with the $3.0 billion repayment of the revolving credit facility outstandings on April 6th, Ford will have reduced balance sheet debt about $7.0 billion. This will contribute to a $470 million reduction in annual interest expense. Ford continues to benefit from strong operating performance in North America due to a competitive product lineup, a disciplined pricing and production strategy, and a significantly reduced breakeven level. Consequently, as automotive demand in North America continues to recover, the company's free cash generation should improve significantly. Ford is highly focused on utilizing this expanding cash generation to strengthen its balance sheet through ongoing debt reductions. Moody's believes that the incremental debt repayment will accelerate the improvement in Ford's credit metrics that was anticipated in Moody's upgrade of Ford's ratings to B1 on May 18, 2010. While Ford will utilize a portion of its cash holdings in repaying debt, the company's Speculative Grade Liquidity rating is also maintained at SGL-2. Ford's continued strong operating performance and cash generation should enable it to fund additional debt repayments and also maintain a strong liquidity profile during the coming twelve months. The last rating action on Ford was an upgrade of the company's Corporate Family Rating to B1 on May 18, 2010. The last rating action on Ford Credit was an upgrade of the firm's senior unsecured rating to Ba3 May 18, 2010. Ford Motor Company, headquartered in Dearborn Michigan, is a leading global manufacturer of automobiles. Ford Motor Credit Company LLC is the Dearborn, Michigan-based captive finance arm of Ford Motor Company. FOXWOOD VILLAGE: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Foxwood Village Apartments, LLC P.O. Box 775 Belvidere, IL 61008 Bankruptcy Case No.: 10-73221 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtor's Counsel: Bernard J. Natale, Esq. Law Office of Bernard J. Natale, Ltd. 6833 Stalter Drive Suite 201 Rockford, IL 61108 Tel: (815) 964-4700 Fax: (815) 227-5532 E-mail: natalelaw@bjnatalelaw.com Scheduled Assets: $1,936,777 Scheduled Debts: $3,230,629 A list of the Company's 3 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-73221.pdf The petition was signed by Joey Sanfilippo, manager. Debtor-affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Conklin, LLC 10-73217 06/28/10 Courtyard Apartments, LLC 10-73219 06/28/10 Somerset Partners, LLC 10-73224 06/28/10 FUTURA EDUCATION: School Leaders Sued for Tuition Payments ---------------------------------------------------------- Jacqueline Palank at Dow Jones Daily Bankruptcy Review reports that parents and students at the Montecito Fine Arts School, a California fine-arts school, have sued the school's president and vice president, Edgar Kuckelkorn and Trisha Ying Zi Zhang, who stand accused of defrauding the families by collecting tuition payments upfront before abruptly shutting down and filing for bankruptcy protection. The Los Angeles Times says 77 parents and students filed the suit on Tuesday in Los Angeles County Superior Court. An L.A. Fox television affiliate reported last August that the school's campuses in the California cities of Monrovia, Arcadia and Brea closed without notifying students and their families. Dow Jones says the civil suit further accuses Mr. Kuckelkorn and Ms. Zhang of targeting Chinese immigrants who spoke little English and who also didn't grasp how U.S. school systems work. According to Southern California Public Radio, the plaintiffs are seeking to recover $1.5 million in tuition payments. Dow Jones notes Futura Education Inc. is the entity that's liquidating in bankruptcy and which ran the Montecito High School of Arts and the Montecito Fine Arts College of Design in addition to the Montecito Fine Arts School. Futura's bankruptcy attorney, Majid Foroozandeh, Esq., blamed the bankruptcy filing on the economic downturn, which he said caused enrollment to take a nosedive and led to more parents making late tuition payments. "The schools went out of business simply for one reason and one reason only -- because of the economic times," he said, according to Dow Jones. "Parents have a right to be upset . . . But when there is no money, you have difficulty operating the school." FUWEI FILMS: Receives Nasdaq Notice of Bid Price Deficiency ----------------------------------------------------------- Fuwei Films (Holdings) Co., Ltd., received a Nasdaq Staff Deficiency Letter indicating that it is not in compliance with the minimum bid price requirement for continued listing set forth in Listing Rule 5550(a)(2) which requires listed securities to maintain a minimum bid price of $1.00 per share. Fuwei's management is looking into various options available to it in order to regain compliance and ensure its continued listing on the Nasdaq. The Company intends to actively monitor the bid price for its common stock between now and the end of the grace period. According to the letter from the Nasdaq, Fuwei has been given a grace period of 180 calendar days, starting June 24, 2010, to regain compliance with the minimum bid price requirement. Fuwei can regain compliance if, at any time before the grace period ends, the bid price of its common stock closes at or above $1.00 per share for a minimum of ten consecutive business days. If Fuwei cannot demonstrate compliance by the end of the grace period, the Nasdaq's staff will notify the Company that its common stock is subject to delisting. Fuwei may then be eligible for an additional 180 day grace period if it meets the Nasdaq Capital Market's initial listing standards with the exception of the minimum bid price requirement. During the grace period (as may be extended) Fuwei's common stock will continue to trade on the Nasdaq Capital Market under the symbol "FFHL". About Fuwei Films Fuwei Films conducts its business through its wholly owned subsidiary, Fuwei Films (Shandong) Co., Ltd. ("Fuwei Shandong"). Fuwei Shandong develops, manufactures and distributes high-quality plastic films using the biaxial oriented stretch technique, otherwise known as BOPET film (biaxially oriented polyethylene terephthalate). Fuwei Fimls' BOPET film is widely used to package food, medicine, cosmetics, tobacco, and alcohol, as well as in the imaging, electronics, and magnetic products industries. GENERAL EMPLOYMENT: Gets NYSE AMEX Notice on Listing Standards -------------------------------------------------------------- General Employment Enterprises, Inc., received a letter from NYSE Amex LLC indicating that the Company does not meet certain of the Exchange's continued listing standards as set forth in the NYSE Amex Company Guide. Specifically, the Letter provides notice that the Company is not in compliance with Section 1003(a)(i) of the Company Guide, because it has stockholders' equity of less than $2,000,000 and losses from continued operations and net losses in two out of its three most recent fiscal years. In order to maintain its listing on the Exchange, the Company is required to submit a plan by July 16, 2010, advising the Exchange how it intends to return to compliance with Section 1003(a)(i) of the Company Guide by December 16, 2011 (the "Plan"). The Company intends to prepare the Plan and submit it to the Exchange by July 16, 2010. The Company anticipates that it will be able to return to compliance with Section 1003(a)(i) of the Company Guide by continuing to execute its previously disclosed plan to build a national human resource outsourcing company with multiple product lines. If the Exchange determines that the Company has made a reasonable demonstration of its ability to return to compliance with the continued listing standards, the Exchange will accept the Plan and the Company may continue its listing during the Plan period, during which time the Company will be subject to periodic reviews by the Exchange. If the Exchange does not accept the Plan, the Company will be subject to delisting proceedings. If the Plan is accepted, but the Company is not in compliance with all the continued listing standards of the Company Guide by December 16, 2011, or if the Company does not make progress consistent with the Plan during the Plan period, the Exchange may initiate delisting proceedings. The Company may appeal a determination by the Exchange to initiate delisting proceedings in accordance with Section 1010 and Part 12 of the Company Guide. There can be no assurance that the Company's Plan will be accepted by the Exchange, or that, if accepted, the Company will be able to successfully implement the Plan and return to compliance with the Exchange's continued listing standards within the required time period. The Company's common stock continues to trade on the NYSE Amex under the symbol "JOB", but will become subject to the trading symbol extension "BC" to denote non-compliance with the Exchange's continued listing standards. About General Employment General Employment provides professional staffing services and specializes in information technology, accounting and engineering placements. GENERAL GROWTH: Wants Plan Filing Exclusivity Until Oct. 18 ----------------------------------------------------------- General Growth Properties, Inc., informs Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York that it expects to file its reorganization plan and related disclosure statement for its top-level entities -- TopCo -- on or around July 9, 2010. TopCo is composed of GGP, GGP Limited Partnership, GGPLP LLC, The Rouse Company LP, and a number of parent holding companies. The filing of GGP's plan and disclosure statement will enable the company to maintain its schedule to emerge from bankruptcy with a disclosure statement approval hearing in August 2010 and confirmation hearing in October 2010, Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, in New York, relates. GGP previously intended to select a final proposal it will consummate on July 2, 2010, and targeted to file a Chapter 11 plan and disclosure statement incorporating that final proposal on the same day. In a related request, GGP and its debtor affiliates ask the Court to extend their exclusive periods to: (i) file a Chapter 11 plan to October 18, 2010; and (ii) solicit acceptances to that plan to December 16, 2010. GGP's Exclusive Plan Filing Period will expire on July 15 and its Exclusive Solicitation Period will end on September 15. In March 2010, GGP engaged in an intense bidding process to procure a plan sponsorship or whole-company offer that would maximize the value of its estate. Indeed, GGP entered into Court-approved Investment Agreements, as amended, with REP Investments LLC, Fairholme Capital Management, LLC, and Pershing Square Capital Management, L.P., to facilitate the company's emergence process. Specifically, the Investment Parties committed to invest an aggregate of $7 billion, including $500 million to backstop an equity raise transaction, to facilitate the recapitalization of GGP and enable GGP to emerge from bankruptcy on a standalone basis. Mr. Youngman says the Investment Agreements are designed to form the basis of GGP's forthcoming plan of reorganization. Under the Investment Agreements, GGP may replace significant portions of the Investment Parties' commitments without giving rise to termination of the Investment Agreements, he notes. In this light, GGP is pursuing a process to raise other capital to complement and potentially replace certain portions of the Investment Parties' capital commitments, he discloses. This comprehensive process includes both private and public markets components, and GGP remains open to full-company bids from interested participants, he relates. In the event that GGP secures those investments, it may, depending upon the type of and results of other potential investments, submit a new or amended plan of reorganization, which would incorporate that improved or additional capital commitments aiming to augment the already impressive returns for shareholders expected under the current plan process, Mr. Youngman says. "It is precisely for this reason that GGP seeks an extension of the Exclusive Periods," Mr. Youngman tells the Court. Mr. Youngman stresses that the opportunity for GGP to continue to explore alternatives to improve upon the terms of the Investment Agreements is necessary to realizing the bargain for which the company negotiated when it agreed to issue warrants to certain of the Investment Parties. "This benefit should be preserved to its fullest by keeping exclusivity -- and the focus on the value maximizing process -- in place without the distractions that might ensue if other competing processes are allowed to detract from this goal," he emphasizes. Mr. Youngman further assures the Court that GGP has made extensive progress toward reorganization, including: (a) GGP confirmed plans of reorganization for 262 property- level Debtors, restructuring $14.895 billion in secured mortgage debts. (b) GGP has entered into the Investment Agreements, designed to form the basis of a viable plan that provides full satisfaction of creditors and significant returns for shareholders. (c) GGP has worked and continues to work diligently on a number of time-consuming tasks necessary to the administration of these Chapter 11 cases, including the task of analyzing the validity of outstanding scheduled and filed claims. GGP has identified about 2,600 further claim objections, asserting $130 billion. About 3,400 remaining claims require GGP's further review. (d) GGP has continued to restructure its property-level debt since obtaining a second extension of its Exclusive Periods. During that period, GGP confirmed plans of reorganization for 43 property-level entities. GGP has now substantially completed its property-level reorganization process. Mr. Youngman clarifies that GGP seeks an extension of the Exclusive Periods to maintain control of the plan process through the conclusion of its alternative capital raise, rather than to pressure creditors to accede to the company's demands. An extension of exclusivity is necessary to enable GGP to execute the endgame of its restructuring strategy and is not an excuse for GGP to delay or unnecessarily extend the reorganization process, he points out. He adds that GGP is paying its bills as they become due. The Court will consider the Debtors' request on July 22, 2010. Objections are due July 16. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Execs. Miss June 30 Exit Target, Won't Get $10MM ---------------------------------------------------------------- Forty-seven executives of General Growth Properties, Inc., will not share a $10 million incentive pool as they missed a June 30, 2010 or earlier target for the company to emerge from bankruptcy. As previously reported, GGP established a Key Employee Incentive Plan for the company's 47 active executives who are deemed essential to the Debtors' reorganization. The KEIP provides a $5 million incentive pool to the GGP executives if the company exits bankruptcy July 1, 2010 to September 30, 2010. If GGP emerges from Chapter 11 on October 1, 2010, or later, the executives will not receive any incentive, the KEIP provides. GGP is yet to file a reorganization plan and disclosure statement on or around July 9, 2010, with confirmation expected to occur in October 2010. The Wall Street Journal said the executives must settle for sharing another bonus: an estimated $145 million payout based on how well GGP's unsecured creditors and shareholders fared in the bankruptcy. The report noted that Adam Metz, chief executive officer of GGP, and Thomas H. Nolan, president and chief operating officer of GGP, will receive 20% and 17% of that amount. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: 27 Units' Chapter 11 Plans Declared Effective ------------------------------------------------------------- Twenty-seven debtor affiliates of General Growth Properties, Inc. exited Chapter 11 on June 18, 2010, based on a notice filed with the Court. The Plan Debtors that emerged are: (1) Price ASG L.L.C. (2) Birchwood Mall, LLC (3) Cache Valley, LLC (4) Colony Square Mall, L.L.C. (5) GGP-Columbiana Trust (6) GGP-Foothills L.L.C. (7) Mall of the Bluffs, LLC (8) Mayfair Mall, LLC (9) Mondawmin Business Trust (10) North Plains Mall, LLC (11) North Town Mall, LLC (12) Oakwood Hills Mall, LLC (13) The Rouse Company at Owings Mills, LLC (14) Owings Mills Limited Partnership (15) OM Borrower, LLC (16) Pierre Bossier Mall, LLC (17) Rouse Portland, LLC (18) Pioneer Office Limited Partnership (19) Pioneer Place Limited Partnership (20) Sierra Vista Mall, LLC (21) Silver Lake Mall, LLC (22) Southwest Denver Land L.L.C. (23) Southwest Plaza L.L.C. (24) Spring Hill Mall L.L.C. (25) Fallen Timbers Shops, LLC (26) Westwood Mall, LLC (27) White Mountain Mall, LLC Accordingly, the Plan Debtors' Joint Plan of Reorganization is deemed effective as of June 18, 2010. Counsel to GGP, James H.M. Sprayregen, P.C., at Weil, Gotshal & Manges LLP, in New York, told Judge Gropper that each of the conditions precedent to consummation of the Plan has been satisfied or waived in accordance with the Plan. After the Effective Date, and without the need for further Court approval, the Plan Debtors may (a) cause any or all of the Plan Debtors to be merged into or contributed to one or more of the Plan Debtors or non-Debtor Affiliates, dissolved or otherwise consolidated or converted, (b) cause the transfer of assets between or among the Plan Debtors or non-Debtor Affiliates or (c) engage in any other transaction in furtherance of the Plan. The Plan provides for 100% recovery to all holders of Claims against, and Interests in, the Plan Debtors. The order confirming the Plan on December 15, 2009, the second order confirming the Plan on December 23, 2009, the third order confirming the Plan on January 20, 2010, the fourth order confirming the Plan on February 16, 2010, the fifth order confirming the Plan on March 3, 2010, the sixth order confirming the Plan on March 18, 2010, the seventh order confirming the Plan on March 26, 2010, the eighth order confirming the Plan on April 29, 2010, the ninth order confirming the Plan on May 20, 2010, and the Plan establish certain deadlines by which holders of Claims must take certain actions. Full-text copies of the Confirmation Orders dated December 15, and 23, 2009, January 20, 2010, February 16, 2010, and March 3, 18 and 26, 2010, April 29, 2010 and May 20, 2010 are available for free at: http://bankrupt.com/misc/ggp_Dec15ConfirmationOrder.pdf http://bankrupt.com/misc/ggp_Dec23ConfOrd.pdf http://bankrupt.com/misc/ggp_Jan20ConfOrder.pdf http://bankrupt.com/misc/ggp_Feb16ConfOrder.pdf http://bankrupt.com/misc/ggp_Mar3ConfOrder.pdf http://bankrupt.com/misc/ggp_Mar18ConfOrder.pdf http://bankrupt.com/misc/ggp_Mar26ConfOrder.pdf http://bankrupt.com/misc/ggp_Apr29ConfOrder.pdf http://bankrupt.com/misc/ggp_May20ConfOrder.pdf About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL GROWTH: Seeks Estimation of Hughes Heirs' Claims -------------------------------------------------------- General Growth Properties Inc. and its units ask the Court to estimate seven unliquidated and duplicative claims filed by these parties: Claimant Claim Nos. -------- ---------- "Hughes Heirs" 7054, 7635, 7635, 7692 and 7892 Harold Morse 5266 James Lpatton, Jr 6524 The Hughes Heirs refer to representatives and holders, including Messrs. Morse and Lpatton, under a 1996 Contingent Stock Agreement executed by General Growth Properties, Inc., as successor to The Rouse Company. The Hughes Heirs Claims primarily relate to Summerlin, a master planned community. Although the Debtors have attempted to negotiate a resolution of the Hughes Heirs Claims, the parties have not reached a consensual resolution, Adam P. Strochak, Esq., at Weil, Gotshal & Manges LLP, in New York, discloses. Thus, the Debtors' Motion is necessary to resolve a value allocation issue important to the plan of reorganization process, he stresses. Against this backdrop, the Debtors ask the Court to determine the value of Summerlin as of December 31, 2009, and conduct the estimation of the claims under this proposed timeline: July 22 to August 13, 2010 Fact Discovery August 16, 2010 Deadline for exchange of appraisal reports Week of August 23, 2010 Depositions of expert appraisers Week of September 13, 2010 Estimation Hearing The Debtors believe that the value of Summerlin is the key determinant of the portion of GGP equity value to which the Hughes Heirs are entitled. Mr. Strochak asserts that the existence of the unliquidated Hughes Heirs Claims is an obstacle to the plan of reorganization process and a key issue that must be resolved to allow the Debtors to complete their Chapter 11 cases. Once the value allocable to the Hughes Heirs is known, the Court can determine the ratable share of equity value to which the Hughes Heirs are entitled and confirm appropriate reorganization plan treatment, he says. Mr. Strochak asserts that the Court is the correct forum to decide the value of Summerlin and estimation of the Hughes Heirs Claims is far more appropriate than arbitration as proposed by the Hughes Heirs. Proceeding with a panel appraisal would require retention of a third appraiser who would have to start from scratch, he points out. In contrast, the Debtors' proposed timeline for estimation would likely conclude the entire matter before a third appraiser even would finish its valuation, he contends. The Court will consider the Debtors' request on July 22, 2010. Objections are due July 16. About General Growth Based in Chicago, Illinois, General Growth Properties, Inc. -- http://www.ggp.com/-- is the second-largest U.S. mall owner, having ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company's portfolio totals roughly 200 million square feet of retail space and includes more than 24,000 retail stores nationwide. General Growth is a self- administered and self-managed real estate investment trust. The Company's common stock is trading in the pink sheets under the symbol GGWPQ. General Growth Properties Inc. and its affiliates filed for Chapter 11 on April 16, 2009 (Bankr. S.D.N.Y., Case No. 09-11977). Marcia L. Goldstein, Esq., Gary T. Holtzer, Esq., Adam P. Strochak, Esq., and Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, have been tapped as bankruptcy counsel. Kirkland & Ellis LLP is co-counsel. Kurtzman Carson Consultants LLC has been engaged as claims agent. The Company also hired AlixPartners LLP as financial advisor and Miller Buckfire Co. LLC, as investment bankers. The Debtors disclosed $29,557,330,000 in assets and $27,293,734,000 in debts as of December 31, 2008. Bankruptcy Creditors' Service, Inc., publishes General Growth Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Growth Properties Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GLIMCHER REALTY: Completes Refinancing of Grand Central Mall ------------------------------------------------------------ Glimcher Realty Trust recently closed on a ten-year, $45 million mortgage loan secured by Grand Central Mall located in Parkersburg, West Virginia. The new loan has a fixed interest rate of 6.05% and was originated by Goldman Sachs Commercial Mortgage Capital, L.P. The loan is structured to be sold into the CMBS market. Loan proceeds were used to retire the $39.3 million of secured mortgage debt that was scheduled to mature in February 2012 which previously encumbered the mall. The remainder of the loan proceeds was used to reduce outstanding borrowings on the company's credit facility. "This refinancing represents our third CMBS loan since the market reemerged earlier this year," stated Mark E. Yale, Executive Vice President and CFO of Glimcher. "With all of our scheduled 2010 debt maturities already addressed, we viewed this as an opportunity to secure attractively priced capital to replace shorter-term, recourse financing that was in place on the property," added Yale. About Glimcher Realty Trust Headquartered in Columbus, Ohio, Glimcher Realty Trust (NYSE: GRT) is a real estate investment trust, which owns, manages, acquires and develops regional and super-regional malls. The company is a component of both the Russell 2000(R) Index, representing small cap stocks, and the Russell 3000(R) Index, representing the broader market. * * * As reported in the Troubled Company Reporter on May 2, 2010, Standard & Poor's Ratings Services affirmed its 'CCC+' rating to the 8.125% series G cumulative redeemable preferred stock issued by Glimcher Realty Trust after the company's $75.3 million add-on. GLOUCESTER ENGINEERING: Wants to Obtain Up to $6MM DIP Financing ---------------------------------------------------------------- Gloucester Engineering Co., Inc., seeks authority from the U.S. Bankruptcy Court for the District of Massachusetts to obtain postpetition secured financing from Blue Wolf Equipment Holdings, LLC. The DIP lenders have committed to provide up to $6,000,000. The DIP loan commitment is for a non-amortizing loan facility in the amount of up to $6,000,000 and contemplates an initial tranche of $3,000,000 to be disbursed to the Debtor upon interim approval of the DIP Loan. Andrew G. Lizotte, Esq., at Hanify & King, P.C., the attorney for the Debtor, explains that the Debtor needs the money to fund its Chapter 11 case, pay suppliers and other parties. The DIP facility will mature 90 days from the petition date. The DIP facility will incur interest at 15% per annum. In the event of default, the Debtors will pay an additional 2% default interest per annum. The Debtors' obligations under the DIP facility are secured by a first priority lien against the Debtor's assets. Blue Wolf shall also have an allowed superpriority administrative expense for all amounts advanced under the DIP Loan, except for the Carve Out. The DIP lien is subject to an up to $30,000 carve-out for U.S. Trustee and Clerk of Court fees, fees payable to professional employed in the Debtors' case, and fees of the committee in pursuing actions challenging the DIP Lenders' lien. The Debtors are required to pay these fees to Blue Wolf: -- commitment fee of $200,000; -- loan servicing fee equal to $10,000 per month; -- non-refundable unused commitment fee equal to 50 basis points per annum. The Debtor may repay all or a portion of the Loan Agreements with the proceeds of the DIP Loan. The Debtor may reduce the commitment under the DIP Loan on five business days' notice, with each reduction being in an amount of $100,000 or multiples of $50,000 in excess thereof. The DIP loan has mandatory prepayments of 100% of insurance and condemnation proceeds and tax refunds and the sale of any assets outside of the ordinary course of business, other than the contemplated sale of machinery and equipment. Blue Wolf will receive the following adequate protection on its loan agreements: administrative expense priority status; replacement liens on postpetition assets, to the extent of any diminution in value of any prepetition collateral and the use of cash collateral, junior only to the liens on account of the DIP loan; and interest on all principal owed on the loan agreements. Debtor also requests authority to use cash collateral, including the proceeds of any accounts receivable collections, during the interim period. Cash collateral proceeds will be applied first to any operating expenses, and the Debtor will draw on the DIP loan facility only to the extent cash collateral is not adequate to fund expenses as set forth in the budget, a copy of which is available for free at: http://bankrupt.com/misc/GLOUCESTER_budget.pdf Battenfeld Gloucester Engineering Co., Inc (BGE) objected to the Debtor's request to obtain DIP financing on a first secured basis, grant senior lien and superpriority administrative expense status, and to use cash collateral. In October 2007, BGE and the Debtor entered into a purchase agreement for the sale of BGE's 100 units in Battenfeld Gloucester, LLC to the Debtor for $12,500,000. In conjunction with the sale, BGE entered into a subordination agreement with Silicon Valley Bank, the Debtor's senior secured lender, which sets forth, inter alia, the respective rights and obligations of the Debtor's secured lenders, including the subordination of the Debtor's indebtedness to BGE to the payment in full of all of the Debtor's obligations to Silicon, other than the payment of regularly scheduled interest payments to BGE. The amount currently owing to BGE as a result of the sale is approximately $11,490,000. BGE hasn't received any regularly scheduled interest payment from the Debtor since July 6, 2009. BEG says that the Debtor's seeking post-petition financing will necessarily increase the aggregate principal amount of such senior obligations as contemplated by the subordination agreement to well in excess of the $6,500,000 debt threshold. BGE states that the Debtor and Blue Wolf haven't sought its consent. About Gloucester Engineering Since its inception in 1961, Gloucester Engineering Company has been a global leader in advancing quality and production limits in the plastics extrusion and converting market. GEC offers a range of innovative system and component solutions, for both new lines and retrofits, that provide customers a competitive edge in applications that include bag making, foam and sheet extrusion, blown and cast film extrusion, and extrusion coating. GEC manufactures its equipment from its headquarters in Gloucester, MA, USA and through its joint-venture company in Damman, India, Kabra Gloucester Engineering. Gloucester Engineering's Chapter 7 case -- filed on March 23, 2010 -- was converted to Chapter 11 bankruptcy protection on June 25, 2010 (Bankr. D. Mass. Case No. 10-12967). GOOD SAMARITAN: Moody's Downgrades Ratings on Bonds to 'Ba1' ------------------------------------------------------------ Moody's Investors Service has downgraded to Ba1 from Baa2 the ratings assigned to Good Samaritan Hospital's (PA) bonds, removing the ratings from Watchlist. The rating outlook remains negative at the lower rating level. The rating downgrade follows material operating losses in FY 2009 that continue, unabated, through nine months of FY 2010 and the negative outlook reflects Moody's concern that cashflow will be insufficient to meet operating needs resulting in a thinning of already weak balance sheet measures. The rating action affects $68.4 million of rated debt as listed at the conclusion of this report. Legal Security: The bonds are on parity and secured by a pledge of gross revenues of the obligated group which is comprised of the Good Samaritan Hospital. All parity obligations are secured by a mortgage lien on the hospital, related parking areas, and by a security interest in the gross revenues of the members of the obligated group. Interest Rate Derivatives: None Challenges * Second consecutive year of exceptionally weak financial performance resulting in leverage measures that are stressed * Liquidity remains weak at 70 days cash and 46% cash to debt as of March 31, 2010; with weak cashflow and large pension funding these measures could deteriorate rapidly * Inpatient volume decline is marked through the nine month period of FY 2010 at 18%; though partially explained by a shift to observation stays * GSH faces heavy competition in its secondary service area, which has resulted in modest declines in market share in recent years * Strategy to increase physician employment and competing physician owned surgery center are indicative of intense entrepreneurial activity and physician alignment challenges * Leveraged profile with 17.7 times debt-to-cash flow and 1.7 times MADS coverage at FYE 2009 * Pension contributions ($4.0 in FY 2010 and $2.0 in FY 2011) will stress already weak cashflow and strain already weak liquidity * Weak demographic profile of the service area poses significant fundamental concern regarding enterprise growth Strengths * GSH is the sole inpatient provider in its primary service area with 61% market share * GSH maintains a favorable 9.9 years average age of plant with no major debt plans in the near future * GSH has a conservative debt structure with all fixed rate debt and no derivative exposure Recent Developments/Results As the sole inpatient provider in the county, GSH's 61% lead market share in Lebanon County remains a key credit factor. Initiatives have been implemented to stem the high percentage of clinical outmigration to tertiary providers, though the effort carries the cost of employing physicians which has resulted in a marked deterioration of system financial performance in FY 2009 and FY 2010. Given the service area characteristics, Moody's believes the need to employ physicians to execute the clinical strategies is indicative of the difficulty the hospital has attracting professionals to this area. Despite its status as the sole inpatient provider in the county, GSH faces formidable competition in the secondary service area in the form of the Hershey Medical Center, which retains 25% market share, A2 rated Pinnacle Health, Aa3 rated Reading Hospital, and Aa3 rated Lancaster General Hospital, all located within a 30 mile radius. Despite initiatives, inpatient volumes has fallen by 6.6% in FY 2009 and an additional 18% in the nine month period of FY 2010, with only 59% of the decline in FY 2009 and 35% of the decline in year to date FY 2010 attributable to a shift to observations. Additionally, the expiration of a physician joint venture ambulatory surgery center in FY 2007 and the subsequent opening of a new physician owned surgery center, indicates a more challenging physician environment. Hospital based outpatient surgeries declined by 43% in FY 2009, with outpatient surgical volume softening further through the nine months of FY 2010. The weak demographics of Lebanon give rise to Moody's concern that GSH's enterprise wide growth will be challenging. According to Moody's Economy.com, the recession has ended in Lebanon, though the metro area's labor market has yet to show any significant improvement and the area's per capita income lags State and National medians. Longer term, the metro area will experience subpar growth as businesses are deterred by an older and less- educated workforce. Employment growth will be below the state and national averages throughout the forecast horizon. For the second consecutive year the health system is incurring a sizable operating loss that reflects a marked miss from budget. The system recorded a $7.6 million operating deficit (-4.4% margin) in FY 2009, more than a doubling of the loss incurred in FY 2008 ($3.1 million operating deficit; -1.9% margin). Performance was impacted by shift in volumes from admissions into observation stays, as well as loss of outpatient surgical volumes to a local surgery center. Expense growth outpaced revenue growth for the second year, growing 7.6%. Salaries and benefits increased 3.6% while supplies expense increased over 13%. As a result, operating cash flow declined by more than 43% to just $6.8 million (4.0% margin) in FY 2009, down from $12 million (7.3% margin) in FY 2008. Moody's adjusted maximum annual debt service coverage weakened to 1.7 times in FY 2009, down from 2.8 times in FY 2008 and debt-to-cash flow increased to a very high (unfavorable) 17.7 times in FY 2009, up from 7.5 times in FY 2008. Through nine months of FY 2010, the system's operating loss of $5.7 million (-4.2%) compares unfavorably to the loss of $4.6 million (-3.5%) in the comparable period of FY 2009. Exacerbating thinning cash flow is the near doubling of pension funding with management reporting an aggregate of $4.0 million in FY 2010 and $2.0 million in FY 2011. Management has budgeted for better then break even performance in FY 2010, which Moody's view as optimistic given current financial performance. Cash balances remain weak and leveraged. Unrestricted cash and investments of $34 million (70 days) at March 31, 2010, provides modest coverage of debt 46% cash-to-debt, indicative of a leveraged liquidity profile that is likely to weaken with thin cashflow and demands on cash for pension funding. GSH maintains an investment allocation of 60% equities and 40% cash and fixed income, with the equity exposure diversified across four funds. Management reports no debt plans at this time. Outlook With operating losses continuing unabated, the negative rating outlook at the Ba1 rating level reflects Moody's concern that cashflow will be insufficient to meet operating needs resulting in a thinning of already weak balance sheet measures What could change the rating -- UP A material increase and sustained growth in all operating measures and cash flow generation, allowing for continued de-leveraging and strengthening of balance sheet and leverage indicators; reversal of current inpatient demand trajectory What could change the rating -- DOWN Inability to reverse current operating trajectory; decline in cash, increase in debt (or debt equivalents in the form of capital leases) without commensurate increases in cash flow, or continued declines in volumes Key Indicators Assumptions & Adjustments: -- Based on financial statements for The Good Samaritan Health Services Foundation and Subsidiaries -- First number reflects audit year ended June 30, 2008 -- Second number reflects audit year ended June 30, 2009 -- Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 10,405; 9,722 * Total operating revenues: $164.9 million; $171.3 million * Moody's-adjusted net revenue available for debt service: $14.4; $8.6 million * Total debt outstanding: $75.3; $74.5 million * Maximum annual debt service (MADS): $5.08 million; $5.08 million * MADS Coverage with reported investment income: 2.8 times; 1.0 times * Moody's-adjusted MADS Coverage with normalized investment income: 2.8 times; 1.7 times * Debt-to-cash flow: 7.5 times; 17.7 times * Days cash on hand: 81 days; 69 days * Cash-to-debt: 46%; 43% * Operating margin: -1.9%; -4.4% * Operating cash flow margin: 7.3%; 4.0% Rated Debt (debt outstanding as of June 30, 2009) -- Series 2002, fixed rate bonds, rated Ba1 -- Series 2004, fixed rate bonds, rated Ba1 The last rating action with respect to GSH was on March 2, 2010, when the municipal finance scale rating of Baa2 rating was placed on Watchlist for downgrade. That rating was subsequently recalibrated to a global scale rating on May 7, 2010. IMAGE ENTERTAINMENT: Recurring Losses Cue Going Concern Doubt ------------------------------------------------------------- Image Entertainment, Inc., filed on June 29, 2010, its annaul report on Form 10-K for the year ended March 31, 2010. BDO Seidman LLP, in Los Angeles, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and negative cash flows, Image Entertainment, Inc., reported a net loss of $5.9 million on $93.1 million of revenue for the three months ended March 31, 2010, compared with a net loss of $1.8 million on $130.7 million of revenue for the same period of 2009. The Company's balance sheet at March 31, 2010, showed $67.4 million in assets, $51.3 million of liabilities, $6.0 million of Series B preferred stock, and $10.9 million of Series C convertible preferred stock, for a stockholders' deficit of $861,000. A full-text copy of the annual report is available for free at: http://researcharchives.com/t/s?65a2 Chatsworth, Calif.-based Image Entertainment, Inc. (Other OTC: DISK) -- http://www.image-entertainment.com/-- is an independent licensee and distributor of entertainment programming in North America. The Company releases its library of exclusive content on a variety of formats and platforms, including DVD, Blu-ray Disc(R) (or Blu-ray), digital (video-on-demand (or VOD), electronic sell- through and streaming), broadcast television, cable or satellite (including VOD and pay-per-view), theatrical and non-theatrical (airplanes, libraries, hotels and cruise ships) exploitation. INDEPENDENT BANK CORP: Receives Nasdaq Notification --------------------------------------------------- Independent Bank Corporation was notified by The Nasdaq Stock Market that the Company no longer meets the minimum $1.00 per share requirement for continued listing on The Nasdaq Global Select Market under Listing Rule 5450(a)(1). This notice does not result in the immediate delisting of the Company's common stock from The Nasdaq Global Select Market because the Company has a grace period of 180 calendar days under the listing rules, or until December 20, 2010, in which to regain compliance with the minimum bid price rule. The deficiency letter, dated June 23, 2010, states that, if at any time by December 20, 2010, the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide the Company written confirmation of compliance and the matter will be closed. If the Company does not regain compliance by December 20, 2010, Nasdaq will notify the Company that its securities are subject to delisting, which delisting determination could be appealed by the Company. Alternatively, the Company may be eligible for an additional grace period if it meets the initial listing standards, with the exception of bid price, of The Nasdaq Capital Market and the Company applies to transfer the listing of its common stock to The Nasdaq Capital Market. The Company is evaluating its options following receipt of this notification and, where possible and deemed in the best interests of the Company and its shareholders, currently intends to take appropriate actions in order to retain the listing of its common stock on the Nasdaq stock market. Such actions may include the implementation of a 1-for-10 reverse stock split, which was earlier approved by the Company's shareholders. About Independent Bank Independent Bank Corporation is a Michigan-based bank holding company with total assets of approximately $2.9 billion. Founded as First National Bank of Ionia in 1864, Independent Bank Corporation now operates over 100 offices across Michigan's Lower Peninsula through one state-chartered bank subsidiary. This subsidiary (Independent Bank) provides a full range of financial services, including commercial banking, mortgage lending, investments and title services. Independent Bank Corporation is committed to providing exceptional personal service and value to its customers, stockholders and the communities it serves. INNOVATIVE CONSULTING: Blair County Ends Bridge Inspection Deal --------------------------------------------------------------- William Kibler at AltoonaMirror reports that Blair County commissioners ended a bridge inspection contract with Innovative Consulting Group because the Company has not fulfilled its inspection responsibilities. Based in Altoona, Pennsylvania, Innovative Consulting Group Inc. filed for Chapter 11 bankruptcy protection on March 19, 2010 (Bankr. W.D. Penn. Case No. 10-70294). James R. Walsh, Esq., at Spence Custer Saylor Wolfe & Rose, represents the company. The company listed both assets and debts of between $1 million and $10 million. INSMED INCORPORATED: Gets Deficiency Notice on Minimum Bid Price ---------------------------------------------------------------- Insmed Incorporated received a NASDAQ Staff Deficiency Letter from The NASDAQ Stock Market. The NASDAQ Letter states that for the last 30 consecutive business days, the closing bid price per share for the Company's common stock has been below the $1.00 minimum per share requirement for continued inclusion under NASDAQ Marketplace Rule 5550(a)(2). In accordance with NASDAQ Marketplace Rule 5810(c)(3)(A), Insmed will be provided 180 calendar days, or until December 15, 2010, to regain compliance by maintaining a closing bid price per share of $1.00 or higher for a minimum of 10 consecutive business days. If the Company is unsuccessful in meeting the minimum bid requirement during this initial compliance period, Insmed will receive written notification from NASDAQ that its securities are subject to delisting, and at that time the Company may appeal the delisting determination to a Hearing's Panel. Alternatively, Insmed may be eligible for an additional grace period of 180 calendar days if the Company meets the initial listing standards, with the exception of bid price, for The NASDAQ Capital Market. The NASDAQ Letter received on June 18, 2010, has no effect on the listing of the Company's common stock at this time. The Company will seek to regain compliance within this cure period and is considering appropriate business measures to address compliance with the continued listing standards of The NASDAQ Stock Market. About Insmed Inc. Insmed Inc. -- http://www.insmed.com.-- is a biopharmaceutical company with unique protein development experience and a proprietary protein platform aimed at niche markets with unmet medical needs. INTERNATIONAL COMMERCIAL: Posts $75,100 Net Loss in Q1 2010 ----------------------------------------------------------- International Commercial Television Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $75,128 on $1,325,913 of revenue for the three months ended March 31, 2010, compared with a net loss of $114,269 on $2,893,204 of revenue for the same period of 2009. The Company's balance sheet at March 31, 2010, showed $1,329,798 in assets and $1,695,701 of liabilities, for a stockholders' deficit of $365,903. As reported in the Troubled Company Reporter on June 25, 2010, Amper, Politziner & Mattia LLP, in Edison, N.J., expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year ended December 31, 2009. The independent auditors noted that of the Company's recurring losses from operations and negative cash flows. A full-text copy of the quarterly report is available for free at: http://researcharchives.com/t/s?65b0 Bainbridge Island, Wash.-based International Commercial Television Inc. produces long-form infomercials and short-form advertising spots and sell its proprietary brands of advertised products directly to its viewing audience. In addition, the Company sells products via televised shopping networks, the internet, and retail distribution channels. INTRALINKS INC: S&P Gives Positive Outlook; Affirms 'B' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on New York City-based IntraLinks Inc. to positive from stable. At the same time, S&P affirmed the 'B' corporate credit rating on the company. S&P also affirmed the 'B+' senior secured bank facility rating (with a recovery rating of '2') and the 'CCC+' second-lien term loan rating (with a recovery rating of '6'). "The outlook revision reflects S&P's view that the company has been able to gain traction in sourcing alternate markets for its service," said Standard & Poor's credit analyst Jennifer Pepper. "The company also recently filed for an IPO, which if successful, could have positive implications for the rating." S&P expects the company will use a significant portion of the expected $150 million of proceeds to reduce debt, in particular to redeem approximately $95 million of high coupon pay-in-kind debt. A going-public transaction would also convert to common approximately $175 million of preferred stock, which S&P treats as debt for analytical purposes. The combination of these two factors would significantly reduce adjusted leverage from the current 11.0x area. S&P also believes that an IPO would clarify the company's financial policy and provide an exit strategy for sponsors that in S&P's view, does not impair credit quality. The rating reflects IntraLinks Inc.'s high leverage, declining, but still notable, reliance on activity in the debt capital markets and M&A for a significant portion of its revenue and challenges in organic expansion into new markets. A material recurring revenue base and stable EBITDA margins attributed in part to solid cost management partially offset those risk factors. IntraLinks provides virtual datarooms used to exchange and manage time-sensitive, confidential information. Many firms in the financial services sector have adopted the company's Web-based platform for document distribution in place of traditional methods such as mail, courier, fax, and email. The company grew rapidly during periods of strong debt issuance and M&A activity, but revenues stabilized in 2009 as capital market activity waned. The company is growing revenues outside the financial sector and is also expanding its debt capital market and M&A businesses into Asia and Europe. These initiatives are gaining traction and were an offset to revenue declines in the domestic debt capital markets and M&A from mid 2008 through mid 2009. The outlook is positive. The IPO, if successful, along with demonstrated traction in new enterprise markets, could lead to a much improved financial profile and a better business position. S&P would consider stabilizing the outlook if the company does not complete its planned IPO by the end of 2010, leaving leverage at the 11.0x area. S&P could raise the rating if the IPO is completed in the next two quarters, leading to reduced leverage and enhanced liquidity, and if the company's operations remain stable with growth in enterprise markets offsetting softness in debt capital markets and M&A. JABIL CIRCUIT: Fitch Upgrades Issuer Default Rating From 'BB+' -------------------------------------------------------------- Fitch Ratings has upgraded the Issuer Default Rating and outstanding debt ratings for Jabil Circuit, Inc.: -- Long-term IDR to 'BBB-' from 'BB+'; -- Senior unsecured revolving credit facility to 'BBB-' from 'BB+'; -- Senior unsecured debt to 'BBB-' from 'BB+'. The Rating Outlook is Stable. The change in ratings reflects Fitch's estimates and considerations: -- Revenue growth of mid-single digits beyond fiscal 2010 (end Aug-2010), or roughly 2 times global GDP growth, as Jabil benefits from the secular trend of increased outsourcing of manufacturing, particularly in non-traditional sectors such as industrial, medical equipment and alternative energy technology. While revenue growth in fiscal 2010 of approximately 15% will be far in excess of global GDP growth, Fitch believes this largely reflects gains in market share and new program wins rather than core organic growth; -- EBITDA margins to remain in the range of 5% to 6%. Upside to profit expectations could result from higher margin engagements in non-traditional sectors, increased demand for Jabil's, albeit limited, vertical integration capabilities and modest operating leverage. However, confidence in continued profitability improvements is tempered by the sector's history of significant price competition which has typically capped profitability near current levels. Conversely, Fitch would expect margin to fall back to roughly 4% in a cyclical downturn; -- Free cash flow will likely be negative in fiscal 2010 due to significant working capital and capital expenditure increases to support 15% revenue growth, but should be in excess of $300 million annually in fiscal 2011 and 2012 (roughly 2% of revenue) based on revenue growth expectations in the mid- single digits. Fitch expects funds from operations to reach 4% of revenue in fiscal 2011 which is an important milestone given expectations that capital spending and dividends will be equal to approximately 2% of revenue going forward. That results in cash flow equal to roughly 2% of revenue to fund working capital expansion. Net working capital is upwards of 5% of revenue which means Jabil should be able to grow revenue by upwards of 20% annually and still produce positive free cash flow (note that capital expense will increase as a percentage of revenue during periods of high growth). The counter-cyclical nature of working capital historically has meant that EMS companies produced negative free cash flow during periods of growth. Fitch believes that the ability to produce free cash flow through most of the business cycle would be further evidence of a change in the overall industry dynamics and supportive of an investment grade rating; -- Uses of cash flow and excess cash will principally go to fund organic growth and working capital needs. Fitch does not expect Jabil to further reduce debt beyond current levels. The company's next maturity is its $360 million term loan in 2012 which Fitch would expect to be refinanced. The potential for acquisitions remains although Fitch does not expect any substantial acquisitions activity akin to Jabil's roughly $800 million purchase of Taiwan Greenpoint in 2007 and would be unlikely to result in a material leverage event. Fitch also does not expect Jabil to pursue any material share repurchase activity without a change to its dividend policy; -- Fitch expects leverage (total debt to total operating EBITDA) to remain below 2x going forward and under 3x when adjusted for off-balance sheet accounts receivable securitization and operating leases. On a cash flow basis, Fitch expects Jabil to produce funds from operations less capital expense and dividends equal to approximately 10% of total debt outstanding. Interest coverage (EBITDA to total interest expense) is expected to exceed 9x in fiscal 2010. Fitch estimates current leverage at 1.7x (2.6x on an adjusted basis) and interest coverage at 7x. Fitch believes that the EMS sector has reached a significant inflection point in the evolution of the industry which should lead to greater stability and profitability of leading market participants. Leading EMS providers, such as Jabil and Flextronics, are increasingly strategic to the business operations and strategy of their customers given their role in product design consultation, component sourcing, manufacturing and fulfillment logistics. In addition, after-market services, such as product repair, are becoming a larger part of the overall customer engagement. While services offerings from Jabil and Flextronics help to differentiate from smaller competitors, the global manufacturing base and scale these companies offer has been increasingly important to servicing global OEM customers, including the ability to manufacture product in or near the geographic end-market. No longer is the EMS industry driven largely by lowest labor cost but rather the services and total cost behind end-to-end product fulfillment. Fitch expects these trends to lead to greater stability in customer engagements and profitability. Whereas the industry has been susceptible to irrational pricing from competitors with excess manufacturing capacity, deeper customer engagements lessen the risk of losing a program over manufacturing costs. In addition, higher margin service offerings may eventually grow large enough as a component of revenue to provide further upside to current EBITDA margins, although this has been a long-running and largely unfulfilled goal of EMS providers. The ratings are supported by these considerations: -- Strong management team with a track record of delivering best in class execution with a disciplined approach to growing the business; -- Advantages in scale as one of the largest of the tier 1 EMS vendors with a balanced global manufacturing footprint, including a strong mix of facilities in low-cost regions; -- Significant working capital balance provides an alternate source of liquidity during business downturns. Rating concerns include these: -- Need for vertical integration represents an on-going strategic shift and could lead to additional debt financed acquisitions; -- Industry pricing pressure, driven by excess manufacturing capacity as well as struggling competitors, has driven profitability levels below expectations for all tier one North American EMS providers over the past several years; -- Significant execution risks in managing a large global manufacturing operation are compounded by the inherently low profit margins in the business model. Liquidity as of May 31, 2010, was solid consisting primarily of $600 million in cash and a fully available $800 million senior unsecured revolving credit facility which expires in July 2012. Jabil also utilizes two accounts receivable securitization facilities for additional liquidity purposes, including an on- balance sheet $100 million committed foreign receivables facility and an off balance sheet $200 million North American receivables securitization facility, both expiring in March 2011 after being recently renewed. Total debt as of May 31, 2010, was $1.1 billion and consisted primarily of: -- $5 million in 5.875% senior unsecured notes due July 2010; -- $360 million senior unsecured term loan due July 2012; -- $400 million in 8.25% senior unsecured notes due March 2019; -- $300 million in 7.75% senior unsecured notes due July 2016; and -- $60 million outstanding under the aforementioned foreign receivables facility. Jabil also had approximately $220 million outstanding under its off-balance sheet North American receivables securitization facility and accounts receivable sales facility, combined, which is included in Fitch's adjusted debt calculation. JACKSON HEWITT: Receives Notice Regarding NYSE Listing Criteria --------------------------------------------------------------- Jackson Hewitt Tax Service Inc. has been notified by the New York Stock Exchange Regulation, Inc., that it had fallen below compliance with the New York Stock Exchange, Inc.'s continued listing standards. Jackson Hewitt is considered below criteria established by the NYSE for continued listing standards because its average global equity market capitalization fell below $50 million on a trailing 30 consecutive trading-day period, and because its stockholders' equity was below $50 million in its most recent 10-Q filed with the Securities and Exchange Commission on March 17, 2010, for the period ended January 31, 2010. Jackson Hewitt intends to notify the NYSE that it will submit a plan within 45 days from the receipt of the NYSE notice that demonstrates its ability to regain compliance within 18 months. Upon receipt of the plan, the NYSE has 45 calendar days to review and determine whether Jackson Hewitt has made a reasonable demonstration of its ability to come into conformity with the relevant standards within the 18-month period. The NYSE will either accept the plan, at which time Jackson Hewitt will be subject to ongoing monitoring for compliance with this plan, or the NYSE will not accept the plan and Jackson Hewitt will be subject to suspension and delisting proceedings. During the 18- month cure period, Jackson Hewitt's shares will continue to be listed and traded on the NYSE, subject to its compliance with other NYSE continued listing standards. About Jackson Hewitt Jackson Hewitt Tax Service Inc., with more than 6,300 franchised and company-owned offices throughout the United States in the 2010 tax season, is an industry leader providing full service individual federal and state income tax return preparation. Most offices are independently owned and operated. Jackson Hewitt also offers Jackson Hewitt(R) Online, an online tax preparation product available at www.jacksonhewittonline.com. JAPAN AIRLINES: Expects to Move Into The Black One Year Earlier --------------------------------------------------------------- For the first time in three years, Japan Airlines Corp. anticipates movement into the black on a consolidated basis, one year earlier than the initial plan, and even predicted an operating profit of JPY22 billion, Kyodo news reported on June 5. JAL's expected movement will be its main stake to draw more loans from banks for its financial restructuring and when it presents its reorganization plan to the Tokyo District Court by the end of August. JAL's restructuring strategy includes the implementation of drastic measures like employee reduction and flight route cuts to various destinations, Kyodo news said. About Japan Airlines Japan Airlines Corporation -- http://www.jal.co.jp/-- is a Japan-based company mainly engaged in the provision of air transport services. The Company is active in five business segments through its 203 subsidiaries and 83 associated companies. JAL International Co. Ltd. is a wholly owned operating subsidiary of Japan Airlines Corporation. Japan Airlines Corporation, Japan Airlines International Co., Ltd. and JAL Capital Co., Ltd., on January 19, 2010, filed the petitions to commenced corporate reorganization proceedings with the Tokyo District Court. The Court appointed the Enterprise Turnaround Initiative Corporation of Japan and Eiji Katayama, Esq., as reorganization trustees. Japan Airlines Corp. filed for reorganization January 19 in the Tokyo District Court and filed a Chapter 15 petition in New York (Bankr. S.D.N.Y. Case No. 10-10198). The Company said debt is $28 billion. Bankruptcy Creditors' Service, Inc., publishes Japan Airlines Bankruptcy News. The newsletter tracks the Chapter 15 proceedings and the bankruptcy proceedings in Tokyo undertaken by Japan Airlines Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) JAPAN AIRLINES: May Need US$1.1 Bil. More in Restructuring Aid -------------------------------------------------------------- As distressed Japan Airlines is preparing to present its plan to rehabilitate itself from bankruptcy, there's probability that it will seek JPY100 billion, or roughly US$1.1 billion, more in financial assistance as it anticipates higher losses from asset write-downs, Dow Jones reported citing a person familiar with the matter. The airline, which is expected to submit its restructuring plan to the Tokyo District Court by end of August, is desperate of cash assistance that will make certain its survival amid financial troubles, Dow Jones said. However, the report added, that lenders are reluctant to release their funds unless they are convinced that the company is implementing solid moves that would guarantee survival. The outline of JAL's original plan was to seek a debt waiver amounting to JPY730 billion while its state-back restructuring promoter agreed to put up JPY300 billion to turn round the airline's negative net worth of JPY870 billion. The plan also forecasts a fiscal year 2010 loss of JPY33.7 billion and an operating profit of JPY49.7 billion for the fiscal year through 2012, Dow Jones related. To achieve this end, JAL said it will cut 15 unprofitable routes and 30 domestic destinations this fiscal year. JAL is currently considering to end the employment of 19,300 workers through 2012. In March, JAL had solicited the early retirements of about 3,300 workers, which include 670 pilots, about 570 cabin crew members, 560 aircraft maintenance workers and about 980 other employees. As part of JAL's cost-cutting measures, the airline also decided to freeze the training of 130 would-be pilots for seven years and to close its pilot training facility in the United States. The plan, which was originally scheduled for submission in June, was moved to August at JAL's behest because it was still in the process of implementing cost cutting measures in order to gain the lenders' confidence that it can survive. JAL and the Enterprise Turnaround Initiative Corporation are planning to raise the airliner's concerns about raising the extra JPY100 billion with Japan's main creditors which are the Development Bank of Japan; Mizuho Corporate Bank, the wholesale banking arm of Mizuho Financial Group Inc.; Bank of Tokyo- Mitsubishi UFJ, the core banking unit of Mitsubishi UFJ Financial Group Inc.; and Sumitomo Mitsui Banking Corp., a unit of Sumitomo Mitsui Financial Group Inc. A June 29, 2010 news release from Bloomberg News reported that JAL is planning to ask its creditors banks to waive more than JPY400 billion in debt, more than JPY40 billion above the JPY358.50 billion waiver it earlier requested. The ETIC, the state-backed restructuring provider, is expected to raise its JPY300 billion capital contribution to the airline to turn around the airline's negative net worth. In other news, Japan Today, citing people familiar with the matter, said JAL has presented a plan to its major lender-banks, to apportion an aggregate of more than JPY1 trillion to finance its restructuring programs. The report said JAL intends to use the amount to cover the budget for premium severance pay for its employees who wish to avail of the company's early retirement scheme as well as its planned disposal of large-scale aircraft for replacement of smaller ones. About Japan Airlines Japan Airlines Corporation -- http://www.jal.co.jp/-- is a Japan-based company mainly engaged in the provision of air transport services. The Company is active in five business segments through its 203 subsidiaries and 83 associated companies. JAL International Co. Ltd. is a wholly owned operating subsidiary of Japan Airlines Corporation. Japan Airlines Corporation, Japan Airlines International Co., Ltd. and JAL Capital Co., Ltd., on January 19, 2010, filed the petitions to commenced corporate reorganization proceedings with the Tokyo District Court. The Court appointed the Enterprise Turnaround Initiative Corporation of Japan and Eiji Katayama, Esq., as reorganization trustees. Japan Airlines Corp. filed for reorganization January 19 in the Tokyo District Court and filed a Chapter 15 petition in New York (Bankr. S.D.N.Y. Case No. 10-10198). The Company said debt is $28 billion. Bankruptcy Creditors' Service, Inc., publishes Japan Airlines Bankruptcy News. The newsletter tracks the Chapter 15 proceedings and the bankruptcy proceedings in Tokyo undertaken by Japan Airlines Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) JAPAN AIRLINES: To Sell Hotel Operations to Hotel Okura ------------------------------------------------------- As part of its restructuring efforts, Japan Airlines plans to sell all hotel operations of the JAL group to Hotel Okura for about JPY5 to JPY6 billion, but the airline has yet to discuss the matter with Hotel Okura in order to strike the deal, sources familiar with the matter told Kyodo News. About Japan Airlines Japan Airlines Corporation -- http://www.jal.co.jp/-- is a Japan-based company mainly engaged in the provision of air transport services. The Company is active in five business segments through its 203 subsidiaries and 83 associated companies. JAL International Co. Ltd. is a wholly owned operating subsidiary of Japan Airlines Corporation. Japan Airlines Corporation, Japan Airlines International Co., Ltd. and JAL Capital Co., Ltd., on January 19, 2010, filed the petitions to commenced corporate reorganization proceedings with the Tokyo District Court. The Court appointed the Enterprise Turnaround Initiative Corporation of Japan and Eiji Katayama, Esq., as reorganization trustees. Japan Airlines Corp. filed for reorganization January 19 in the Tokyo District Court and filed a Chapter 15 petition in New York (Bankr. S.D.N.Y. Case No. 10-10198). The Company said debt is $28 billion. Bankruptcy Creditors' Service, Inc., publishes Japan Airlines Bankruptcy News. The newsletter tracks the Chapter 15 proceedings and the bankruptcy proceedings in Tokyo undertaken by Japan Airlines Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) JDA SOFTWARE: S&P Gives Stable Outlook; Affirms 'BB-' Rating ------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook on Scottsdale, Ariz.-based JDA Software Group Inc. to stable from positive. Ratings on the company, including the 'BB-' corporate credit rating, were affirmed. "The outlook revision reflects JDA's potentially weakened financial flexibility following a lawsuit verdict ruled against the company for about $246 million in damages," explained Standard & Poor's credit analyst Philip Schrank. "The rating affirmation reflects S&P's opinion that the company currently has the liquidity and debt capacity at the current rating to absorb the full cash settlement without affecting its creditworthiness." If the entire settlement was debt financed, pro forma leverage would rise to about the mid-3x area from the current 2x level. However, the company does generate good free cash flow, averaging about $75 million over the past three years, and has $168 million of cash as of March 31, 2010. JDA said it is reviewing the decision and will seek to have it reversed. Although the appeals process could take years to resolve and could be substantially less in total value, if the verdict is upheld, it could limit rating upside potential and the company's ability to pursue its growth objectives. The 'BB-' rating reflects JDA's second-tier presence in a highly competitive and consolidating industry, niche product offerings, and risk associated with switching its product development initiatives to a new technology platform, along with a $246 million jury verdict against the company. A solid base of recurring revenues and currently moderate leverage for the rating partially offset these fundamental business characteristics and the potential future payment. JDA is a provider of software applications offering a comprehensive suite of products, specializing in enterprise resource planning, supply and demand chain optimization, and analytics. The acquisition of I2 Technologies Inc. expanded JDA's customer base and product capabilities into the discrete manufacturing market, provided additional scale, and should help JDA realize cost synergies through higher utilization and rationalization of the combined sales, product development, and service organizations. Revenues are about $617 million, with about $216 million of that amount coming from recurring annual service and subscription fees. Since the rating incorporates Standard & Poor's expectation for continued acquisitive growth, the company's established track record of integrating operations helps temper acquisition-related risk concerns. JOE MIRANDA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Joint Debtors: Joe Ortaliz Miranda Imelda Vicencio Miranda 14317 La Rinconada Drive Los Gatos, CA 95023 Bankruptcy Case No.: 10-56690 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of California (San Jose) Judge: Arthur S. Weissbrodt Debtor's Counsel: Kenneth R. Graham, Esq. Law Office of Kenneth R. Graham 171 Mayhew Way #208 Pleasant Hill, CA 94523 Tel: (925) 932-0170 E-mail: krg@elaws.com Estimated Assets: $50,001 to $100,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/canb10-56690.pdf The petition was signed by Joe Ortaliz Miranda and Imelda Vicencio Miranda. KINETIC CONCEPTS: S&P Raises Corporate Credit Rating to 'BB+' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its corporate credit rating on San Antonio, Texas-based Kinetic Concepts Inc. to 'BB+' from 'BB'. The outlook is stable. At the same time, S&P raised its senior secured debt rating on KCI to 'BBB' from 'BBB-' and raised its senior unsecured debt rating on the company to 'BB-' from 'B+'. S&P's recovery ratings on the company remain unchanged. "The rating action reflects KCI's improved financial risk profile, which S&P now view as intermediate," said Standard & Poor's credit analyst Jesse Juliano. This is based on the company's adjusted debt to EBITDA of 2.3x and adjusted funds from operations to debt of 31% as of March 31, 2010. "S&P also believe that the company is more likely to make smaller, bolt-on acquisitions, rather than large debt-financed acquisitions that would significantly alter S&P's view of the company's financial risk profile," added Mr. Juliano. The rating on Kinetic Concepts Inc. reflects the company's still- significant dependence on its vacuum-assisted closure device for hard-to-heal wounds, which subjects the company to competitive technological developments and potential third-party pricing pressure. These issues are only partly offset by the well- entrenched market position and cash flow related to the VAC device, product diversification from LifeCell Corp., and the company's ability to avoid an aggressive financial risk profile while executing its acquisition strategy. KCI's fair business risk profile continues to reflect the company's reliance on VACs and related products, which contributed 71% of its total revenues in 2009. This is down from 74% in 2008 because of the LifeCell acquisition. Notwithstanding the addition of LifeCell's regenerative therapies and revenue contribution from KCI's specialty hospital surfaces, the VAC is still extremely important to the company. Standard & Poor's believes the VAC could continue to benefit from its strong clinical results and improving market awareness. Also, the company is broadening its offering of negative pressure products to address the healing of closed wounds and home use. However, S&P sees three potential threats that could slow the company's growth: increased competition, pricing pressures, and patent expiration. Although the VAC's success has contributed to the company's improving credit profile over the years, KCI's product concentration and acquisition strategy temper the potential for further upgrades. Although S&P expects KCI to use free cash flow to pay down debt in the near term, S&P also believes the company will use cash flows (in the medium to long term) and borrowing capacity to further diversify product offerings through acquisitions. S&P expects KCI to continue operating within an intermediate financial risk profile, a profile that would be consistent with its upper-end speculative-grade rating. The ratings on KCI could be lowered if the company assumes a more aggressive financial profile through debt-financed acquisitions. This could occur if S&P believed that debt leverage would remain above 3x for a sustained period. Also, in the unexpected event that competitors meaningfully erode KCI's market share and undermine profitability, S&P could lower the rating on prospects of declining revenues and a margin contraction of 500 basis points. Conversely, if the company successfully diversifies its product offerings through a controlled acquisition strategy over time, and at least retains its VAC market share, S&P could raise the rating. L-3 COMM: Moody's Ratings Unmoved By Unit's Gov't Contract Halt --------------------------------------------------------------- Moody's Investors Service said recent disclosures by L-3 Communication Holdings Corporation that a unit of the company has been temporarily suspended from receiving additional U.S. Government contracts do not affect the Baa3 senior unsecured rating at this time. The last rating action was on May 18, 2010, at which time L-3's long-term rating was upgraded to Baa3 from Ba1. L-3 Communications Holdings, Inc., is a prime contractor in aircraft modernization and maintenance, C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, and government services. In addition, L-3 provides high technology products, systems and subsystems. Revenues in 2009 were approximately $15.6 billion. In May 2010, Moody's raised the ratings on L-3 Communications Holdings, Inc's. (L-3) and L-3 Corp.'s subordinated obligations to Ba1 from Ba2. LAZARE KAPLAN: Receiving a Notice From NYSE Amex LLC ---------------------------------------------------- Lazare Kaplan International Inc. disclosed that by letter dated June 18, 2010, the staff of the NYSE Amex LLC notified the Company of the Exchange's intent to strike the common stock of the Company from the Exchange by filing a delisting application with the Securities and Exchange Commission, pursuant to Section 1009 of the NYSE Amex Company Guide. As previously disclosed by the Company, it was notified by the Staff by letter dated September 16, 2009 that the Company was not in compliance with Sections 134 and 1101 of the Company Guide due to its failure to file its Form 10-K for the year ended May 31, 2009. The Company's inability to file the Form 10-K stemmed from its inability to resolve a material uncertainty concerning (a) the collectability and recovery of certain assets, and (b) the Company's potential obligations under certain lines of credit and a guaranty (all of which, the "Material Uncertainties"). As the Company has been unable to resolve the Material Uncertainties, through ongoing negotiations and/or the initiation of lawsuits with certain of the relevant parties (also as previously disclosed by the Company), the Company is unable to assess the potential effect the ultimate resolution of these matters will have on its financial position and results of operations, or to finalize its (a) financial statements for Fiscal 2009 and obtain an unqualified opinion thereon from its auditors necessary in order to file its Form 10-K, and (b) financial statements for each of the first three fiscal quarters of 2010 or timely file its Form 10-Q's for those quarters. In response to the September Letter, the Company submitted a Plan of Compliance to the Staff on October 7, 2009 (the "Plan"), advising the Exchange of action it has taken, or will take, to bring the Company into compliance with Sections 134 and 1101 of the Company Guide. The Company received a second Deficiency Letter from the Staff dated October 20, 2009, relating to the Company's failure to timely file its Quarterly Report on Form 10-Q for the quarter ended August 31, 2009. On November 11, 2009, the Exchange notified the Company that it accepted the Plan and granted the Company an extension until December 31, 2009 to regain compliance with the Exchange's continued listing standards. On December 31, 2009, the Company submitted to the Staff a supplement to the Plan, requesting an extension of the Exchange's delisting deadline to May 31, 2010. On January 25, 2010, the Company received a letter from the Staff (the "January Letter"), granting the extension, and advising the Company that the Staff would initiate delisting proceedings if the Company was not in compliance with all of the requirements of the Exchange's continued listing standards at the end of the Plan period, as so extended. Additionally, the January Letter also related to the Company's failure to timely file its Quarterly Report on Form 10-Q for the quarter ended November 30, 2009. The Company received an additional Deficiency Letter from the Staff dated April 26, 2010, relating to the Company's failure to file its Quarterly Report on Form 10-Q for the quarter ended February 28, 2010. According to the Notice, as the Company has not filed any of its delinquent SEC reports, and due to the prolonged absence of reliable financial information and the uncertainty of when the Company will make its required SEC filings, the Staff has determined that a further listing extension would be inconsistent with applicable Exchange standards. Based on the foregoing, the Staff concluded that it is appropriate to initiate immediate delisting proceedings. Additionally, the Notice also related to the Company's failure to hold an annual meeting of its stockholders during its fiscal year ended May 31, 2010, due to the Company being precluded from holding an annual meeting since Rule 14a-3(b) promulgated under the Securities Exchange Act of 1934, as amended, requires that a proxy statement for an annual meeting to elect directors be accompanied by or preceded by an annual report with audited financial statements for the three most recent fiscal years. In accordance with Sections 1203 and 1009(d) of the Company Guide, the Company has a limited right to appeal the Decision by requesting an oral hearing or a hearing based on a written submission before a Listing Qualifications Panel. If the Company elects not to appeal the Decision by June 25, 2010, it will become final. The Staff will then suspend trading in the Company's common stock on the Exchange and file an application to the SEC to strike the Company's common stock from listing and registration on the Exchange in accordance with Section 12 of the Exchange Act and the rules promulgated thereunder. The Company has determined not to appeal the Exchange's Decision, and expects for its common stock to be quoted on a tier of the Pink Sheets marketplace subsequent to the delisting. Nevertheless, the Company intends to continue to work as expeditiously as possible to resolve the Material Uncertainties so that the Company can file all of its delinquent SEC reports. Upon filing all such reports, the Company presently expects to reapply to the Exchange for its common stock to again be listed on the Exchange. About Lazare Kaplan Lazare Kaplan International Inc. sells its diamonds and jewelry products through a worldwide distribution network. The Company is noted for its ideal cut diamonds, which it markets internationally under the brand name, Lazare Diamonds(R). LEHMAN BROTHERS: Expands Jones Day Work for Fifth Time ------------------------------------------------------ By a fifth supplemental application, Lehman Brothers Holdings Inc. and its units sought and obtained approval to modify the scope of Jones Day's employment as special counsel to include legal services with respect to certain additional matters, nunc pro tunc to certain engagement dates: (a) March 17, 2010 for the representation of the Debtors in connection with the joint representation of Lehman Brothers Holdings Inc. and these entities know as the "Funds": * PCCP Mezzanine Recovery Partners II, L.P.; * Lehman Brothers Real Estate Partners II, L.P., Lehman Brothers Real Estate Partners III, L.P.; * Lehman Brothers Real Estate Fund III, L.P., Trilantic Capital Partners III L.P.; and * Trilantic Capital Partners IV L.P. with respect to the Barclays Fund Litigation, including representing the estates with respect to claims asserted against the Debtors arising in or in connection with the Barclays Fund Litigation; and (b) other dates agreed to by the Debtors and Jones Day for other matters relating to Barclays. In the Barclays Fund Litigation, Barclays has filed a complaint that alleges that the defendant-Funds failed to pay Barclays certain fees associated with the pre-Commencement Date placement of investors in the Funds by the Private Investment Management business unit and other related post-Commencement Date services allegedly provided by Barclays to the Funds. The Debtors note that although they are not named as defendants in Barclays' complaint, they, nonetheless, believe it is appropriate to retain counsel with respect to matters relating to the Barclays Fund Litigation. First, LBHI indirectly owns general partnership interests in some, but not all, of the defendant- Funds. The Barclays Fund Litigation also involves matters directly relating to the Purchase Agreement and the so-called "Clarification Letter" and certain of the Funds have asserted that Lehman is obligated to indemnify the Funds against the claims asserted by Barclays in the Barclays Fund Litigation. The Debtors assert that Jones Day's representation of the Funds is limited to the joint defense of the Funds in the Barclays Fund Litigation, and it is expressly understood that if at any time a conflict arises between the Funds and LBHI, requiring that the parties obtain separate representation with respect to the Barclays Fund Litigation, the Funds agree that Jones Day may withdraw from the joint representation of the Funds and continue to represent LBHI or LBHI's interests in the Barclays Fund Litigation and in other LBHI matters, except that Jones Day may not appear in the Barclays Fund Litigation or other LBHI matters on behalf of LBHI adverse to the Funds. Jones Day is currently representing the Debtors with respect to certain other matters involving Barclays. Accordingly, the Debtors believe that Jones Day is both well qualified and uniquely able to provide services relating to the Additional Matters, and that its retention would be in the best interest of the Debtors' estates, their creditors and other parties-in- interest. Since the Debtors are seeking to engage Jones Day with respect to the Additional Matter, the Debtors ask entry of an order, pursuant to Section 327(e) of the Bankruptcy Code, Rule 2014(a) of the Federal Rules of Bankruptcy Procedure, and Rule 2014-1 of the Local Rules of Bankruptcy Procedure for the Southern District of New York, expanding the scope of Jones Day's retention as special counsel for the Debtors, effective as of the Engagement Dates, with respect to the Additional Matters. Robert C. Micheleto, Esq., a member of Jones Day, assures the Court that his firm does not represent or hold any interest adverse to the Debtors or the Debtors' 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) LEHMAN BROTHERS: Gets Go Signal to Hire Dechert as Special Counsel ------------------------------------------------------------------ Lehman Brothers Holdings Inc. and their affiliated debtors received court approval to employ Dechert LLP as their special counsel effective to March 1, 2010. Dechert has served as one of the Debtors' "ordinary course" professionals. The firm's fees for its services, however, exceeded $1 million prompting the Debtors to seek court approval to employ the firm as their special counsel. Pursuant to the Court's prior order, an ordinary course professional is required to file an application to be employed as a professional in accordance with Sections 327 and 328 of the Bankruptcy Code if payment to that professional exceeds $1 million while the Debtors are still in bankruptcy. As special counsel, Dechert will continue to render those services it provided to the Debtors while still an ordinary course professional as well as represent them in connection with other real estate financings and transactions. The Debtors propose to pay Dechert on an hourly basis and reimburse the firm for any expenses incurred in connection with its employment. All fees and expenses of the firm that were incurred on or after March 1, 2010, will be subject to court approval upon application by the firm. In a declaration, Katherine Burroughs, Esq., a partner at Dechert LLP, assures the Court that the firm does not hold or represent interest adverse to the Debtors' estates. 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 Reed Smith as Special Counsel ------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek court approval to employ Reed Smith LLP as special counsel. The Debtors tapped the firm to give them advice concerning their directors' and officers' liability insurance coverage. Specifically, Reed Smith is tasked to: (1) advise the Debtors regarding potential insurance recovery under the D&O insurance policies issued to them in connection with claims made against directors and officers; (2) prepare court papers as necessary with regard to potential D&O insurance recovery for claims made against the Directors and officers; and (3) appear and represent the Debtors' interests with respect to issues concerning D&O insurance recovery. Reed Smith will be paid for its services on an hourly basis and will also be reimbursed for its expenses. The hourly rates for the firm's professionals range from $475 to $790 for partners, $240 to $620 for associates and counsel, and $130 to $340 for paraprofessionals. In a declaration, Carolyn Rosenberg, Esq., a member of Reed Smith, assures the Court that the firm does not hold interest adverse to the Debtors' estates. 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: Receives OK for Sotheby's as Auction House ----------------------------------------------------------- Lehman Brothers Holdings Inc. and its units received approval of the U.S. Bankruptcy Court for the Southern District of New York to employ Sotheby's Inc. as their auction house. The Debtors tapped the firm to conduct a public auction of about 50 works from their corporate art collection estimated to be worth less than $300,000, or to arrange a private sale in case the items are not sold at the auction. The auction is expected to be held sometime in September of this year. Under an agreement with Sotheby's, the Debtors will not pay the auction house for its services or reimburse its expenses. Sotheby's' commission will solely consist of the amount that it charges the buyer on each lot sold and retains for its account. This buyer's premium will be added to the hammer price and is payable by the purchaser as part of the total price. The buyer's premium will be assessed as follows: 25% of the hammer price up to $50,000; 20% of any amount in excess of $50,000 up to $1 million; and 12% of any amount in excess of $1 million. Sotheby's will shoulder all expenses from the sale of the items. For art that is sold at the auction, the Debtors will receive the sale proceeds after deducting the buyer's premium. In addition to receiving 100% of the hammer price, the Debtors will also receive a fee for consignment, which will be paid from the buyer's premium. Sotheby's has also agreed to pay an introductory commission to the Debtors' art consultant, Kelly Mathew Wright, from the buyer's premium. Mr. Wright will receive 2% of the hammer price of the property collected and received by Sotheby's up to $5 million and 1% of the hammer price in excess of $5 million. In a declaration, Richard Buckley, executive vice-president at Sotheby's, assures the Court that the firm does not hold or represent interest adverse to the Debtors. In a revised proposed order, the Debtors propose to employ Sotheby's as its auction house provided that notwithstanding anything contained in the agreement with Sotheby's to the contrary, LBHI will not indemnify the auction house to the extent any applicable claim, action, damages, loss, liability or expense arises from the auction house's bad faith, self-dealing, breach of fiduciary duty, negligence, willful misconduct, criminal conduct or the disclosure of confidential information. 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: Judge Offers Hope to BNY Appeal ------------------------------------------------ Bankruptcy Law360 reports that a bankruptcy judge has offered hope to Bank of New York Mellon Corp. in its so-far stymied efforts to appeal a ruling preserving a Lehman Brothers Holdings Inc. affiliate's priority rights to $70 million in swap collateral. 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: Creditor Group Wants Substantive Consolidation --------------------------------------------------------------- Bill Rochelle at Bloomberg News reports that an ad hoc group of the creditors with $15.5 billion in claims against Lehman Brothers Holdings Inc. said that substantive consolidation of 23 Lehman affiliates would increase recoveries for holding company creditors "by billions." Lehman has filed a Chapter 11 plan that proposes that creditors of each of the Lehman companies are treated according to the claims against the particular affiliate and the assets of the entity in question. According to the report, the ad hoc group also said that the "purported settlement" in Lehman's plan regarding some guarantee claims is "illusory." The creditor group, Bloomberg relates, wants the bankruptcy judge to hold a status conference on July 14 to address how disputes over the disclosure statement should be handled. The group includes California Public Employees' Retirement System, Canyon Capital Advisors LLC, Fortress Credit Opportunities Advisors LLC, Owl Creek Asset Management LP and Paulson & Co. 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) LEUCADIA NAT'L: Moody's Gives Stable Outlook; Keeps Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service changed Leucadia National Corporation rating outlook to stable from negative and affirmed the company's B1 corporate family and probability of default ratings, B1 senior unsecured notes ratings, as well as the B3 rating on the company's senior subordinated and junior subordinated notes. The change in the ratings outlook to stable from negative reflects the combination of an improvement in the performance and outlook for its operating companies, the improved valuation of its investments and associated companies, and the sizeable liquidity position that allows the company to finance its weaker operations if necessary. Management's successful investment track record along with a willingness to divest and a conservative approach to investing additional capital in the weaker operations also supports the stable ratings outlook. Leucadia's B1 CFR considers the current and anticipated performance of its operating companies, portfolio value versus its direct and indirect indebtedness, as well as its liquidity position. The rating reflects the low levels of profitability at various operating units and a strategy for shareholder wealth creation that is based to a large degree on asset price appreciation. The rating considers that the company's strategy may prove more difficult to execute in a weak economic and capital market environment. Additionally, Leucadia's portfolio does not provide current cash flow from operating activities. Furthermore, although the company has a long and successful track record of purchasing companies and investments that build equity over time, the current economic environment and capital markets are not as supportive of this type of strategy. The company also has significant investments in the common stock of four public companies including a full service investment bank and an independent auto finance company. As publicly traded companies, Leucadia can use these investments as a source of capital if necessary to support its liquidity or new investments. The company also has dozens of investments in companies that are not publicly traded that are therefore not very liquid. Outlook Actions: Issuer: Leucadia National Corporation -- Outlook, Changed To Stable From Negative LGD Changes: Issuer: Leucadia National Corporation -- Senior Subordinated Conv./Exch. Bond/Debenture, Changed to LGD6, 93% from LGD6, 92% -- Senior Unsecured Regular Bond/Debenture, Changed to LGD4, 56% from LGD4, 51% The last rating ratings action was on June 12, 2009, when Leucadia's corporate family rating was downgraded to B1 from Ba3 and the outlook changed to negative. Leucadia National Corp, headquartered in New York, New York, is a diversified holding company engaged in a variety of businesses, including manufacturing, telecommunications, land based contract oil and gas drilling, property management and services, gaming entertainment, real estate activities, medical product development and winery operations. The company also has significant investments in four public companies and owns equity interests in operating businesses and investment partnerships which are not publicly traded. LIMITED BRANDS: Fitch Upgrades Ratings on Senior Notes to 'BB+' --------------------------------------------------------------- Fitch Ratings has upgraded these ratings on Limited Brands, Inc.: -- Senior secured bank credit facility to 'BBB-' from 'BB+'; -- Senior unsecured guaranteed notes to 'BB+' from 'BB'. Fitch has also affirmed these Issuer Default Ratings and outstanding debt ratings: -- Long-term IDR at 'BB+'; -- Short-term IDR at 'B'; -- Senior unsecured notes at 'BB'; -- Commercial Paper at 'B'. Additionally, Fitch has revised Limited Brands' Rating Outlook to Stable from Negative. As of May 1, 2010, Limited Brands had $2.5 billion of debt outstanding. The upgrades of the secured and guaranteed issue ratings recognize the improvement in Limited Brands' credit profile and changes to its capital structure over the past year. The upgrade on the senior secured credit facility, representing 27% of Limited Brands' debt structure on a fully drawn basis, reflects the facility's first-priority security interests in substantially all tangible and intangible assets of Limited Brands and its domestic subsidiaries including receivables, inventory, equipment and intellectual property. The upgrade on the senior unsecured guaranteed notes, which represent 26% of the debt structure, reflects the guarantees by the subsidiaries that guarantee the senior credit facility. The guarantors represent substantially all of the revenues and assets of the domestic subsidiaries. The Outlook revision to Stable reflects the sequential improvement in Limited Brands' comparable store sales over the past four quarters to 10% in the first quarter of fiscal 2010 from 1% in the fourth quarter, -2% in the third quarter, and -9% in the second quarter of fiscal 2009. The Outlook revision also reflects Limited Brands' ability to improve operating margins resulting in a strengthening in credit metrics in the last twelve months (LTM) ending May 1, 2010, and Fitch's expectation of positive mid single-digit comparable store sales growth and continued operating EBIT margin expansion driving stronger operating results and credit metrics in fiscal 2010. The ratings continue to reflect Limited Brands' strong brand recognition and dominant market positions in intimate apparel and personal care and beauty products, solid cash flow generation and strong liquidity. The ratings also consider Limited Brands' track record of shareholder-friendly activities and increasingly competitive landscape. Despite a challenging retail environment in 2009, Limited Brands increased its operating EBIT to $862 million in fiscal 2009 from $695 million in fiscal 2008 as comparable store sales improved and ultimately turned positive in the fourth quarter of fiscal 2009. The improvement in profitability stemmed from Limited Brands' aggressive management of inventory, which resulted in less promotional activity. With inventory per selling square foot decreasing 10% while sales declined 4.5% in fiscal 2009, gross margin improved 190 basis points to 35.1% compared to fiscal 2008 and continued to improve in the first quarter of fiscal 2010 to 35.9%. In addition, Limited Brands' prudent management of its cost structure resulted in LTM SG&A as a percentage of sales decreasing to approximately 25%. The improvement in operating profit in the LTM period combined with a debt reduction of $374 million resulted in leverage decreasing to 3.6 times from 4.5x in fiscal 2008. Fitch expects operating results and credit metrics to remain stable in fiscal 2010 and beyond based on mid single-digit revenue growth and modest improvement in operating margins. Limited Brands has strong liquidity that is supported by $1.2 billion of cash and cash equivalents and $847 million of availability under its $927 million senior unsecured credit facility as of May 1, 2010. In addition, Limited Brands generated $519 million of free cash flow due to a decrease in capital expenditures from historical levels. While capital expenditures are expected to increase from 2009, Fitch expects Limited Brands to continue to generate positive free cash flow and end with cash of approximately $1.5 billion in fiscal 2010. Longer term, Fitch expects Limited Brands to maintain strong liquidity although it could use a portion of its cash balance to return capital to shareholders. With the limitation on restricted payments in the credit facility covenants lifted, Limited Brands declared a special dividend totaling $325 million and approved a $200 million share repurchase program in March 2010. Fitch expects this share repurchase program to be completed this year and funded with excess cash. More significant debt-financed share repurchase activity could be a concern to the rating. LINCOLN NATIONAL: Fitch Upgrades Ratings on Junior Debt From 'BB+' ------------------------------------------------------------------ Fitch Ratings has upgraded the long-term ratings of Lincoln National Corporation and removed them from Rating Watch Positive. Fitch has also assigned a Stable Outlook and withdrawn its rating on LNC's perpetual preferred securities. Key actions are with a full list of rating actions and ratings at the end of this release: Fitch has upgraded these LNC ratings: -- Issuer Default Rating to 'A-' from 'BBB+'; -- Senior debt to 'BBB+' from 'BBB'; -- Junior subordinated debt to 'BBB-' from 'BB+'. In addition, Fitch has withdrawn this: -- $950 million perpetual preferred securities 'BB+'. The ratings actions follow LNC's announcement that it has repurchased all of the $950 million of preferred shares issued to the U.S. Treasury under its Capital Purchase Program in June 2009. LNC used proceeds from its recent equity and debt offerings, as well as existing cash, for the repurchase. On June 3, 2010, Fitch placed LNC's long-term holding company ratings on Rating Watch Positive. At that time, Fitch said it would resolve the Rating Watch Positive and consider a return to standard notching between the holding company IDR rating and the insurance company IFS rating once LNC repays outstanding CPP funding. Overall, Fitch views the replacement of CPP funds with more permanent capital market financing as marginally positive in that it demonstrates an overall improved financial position and increased access to capital markets. Although having the CPP capital on hand provided LNC an additional capital cushion for near-term uncertainties, ultimately, repayment should favorably reduce the potential negative impact to LNC's business position, franchise value and management team that are concerns for companies that operate long-term under federal government support and related restrictions. Fitch's ratings and Stable Outlook reflect its view that LNC has taken important steps to enhance financial flexibility and reduce liquidity concerns at the holding company. Concerns about LNC's liquidity and financial flexibility were a major factor behind Fitch's expanded holding company notching in April 2009 and arguably LNC's $950 million participation in CPP. While LNC continues to face challenges, primarily related to asset risk, refinancing risk and operating performance, Fitch believes they are manageable within the context of the ratings. However, LNC's ratings could be under pressure if the company were unable to meet certain rating expectations including, but not limited to: -- A traditional financial leverage ratio at or below 25% (1Q'10 leverage was 20%); -- The preservation of holding company cash in the range of 12- 18 months of annual interest, common stock dividends and debt maturities; -- The ability to execute on long-term solutions for life insurance reserve financing; -- A minimum RBC of 400% at the insurance company during normal economic cycles; -- Investment losses within Fitch's base case loss expectations; and -- The maintenance of solid operating performance and competitive positions. Lincoln National Corp., headquartered in Radnor, PA, markets a broad range of insurance and asset accumulation products and financial advisory services primarily to the affluent market segment. The company's consolidated assets were $181.6 billion, and common equity was $12.4 billion at March 31, 2010. Fitch upgrades these ratings of LNC with a Stable Outlook: Lincoln National Corporation -- Long-term IDR to 'A-' from 'BBB+'; -- 6.2% senior notes due Dec. 15, 2011 to 'BBB+' from 'BBB'; -- 5.65% senior notes due Aug. 27, 2012 to 'BBB+' from 'BBB'; -- 4.75% senior notes due Jan. 27, 2014 to 'BBB+' from 'BBB'; -- 4.75% senior notes due Feb. 15, 2014 to 'BBB+' from 'BBB'; -- 4.3% senior notes due June 2015 to 'BBB+' from 'BBB'; -- 7% senior notes due March 15, 2018 to 'BBB+' from 'BBB'; -- 8.75% senior notes due July 1, 2019 to 'BBB+' from 'BBB'; -- 6.25% senior notes due Feb. 15, 2020 to 'BBB+' from 'BBB'; -- 6.15% senior notes due April 7, 2036 to 'BBB+' from 'BBB'; -- 6.3% senior notes due Oct. 9, 2037 to 'BBB+' from 'BBB'; -- 7% senior notes due June 2040 to 'BBB+' from 'BBB'; -- 6.75% junior subordinated debentures due April 20, 2066 to 'BBB-' from 'BB+'; -- 7% junior subordinated debentures due May 17, 2066 to 'BBB-' from 'BB+'; -- 6.05% junior subordinated debentures due April 20, 2067 to 'BBB-' from 'BB+'. Lincoln National Capital VI -- Trust preferred securities to 'BBB-' from 'BB+'. Fitch withdraws this rating: Lincoln National Corporation -- Cumulative Perpetual Preferred Stock 'BB+'. Fitch's current short-term ratings for LNC are: Lincoln National Corporation -- Short-term IDR 'F2'; -- CP 'F2'. Fitch's current ratings for LNC's insurance subsidiaries are with a Stable Outlook: Lincoln National Life Insurance Company Lincoln Life & Annuity Company of New York First Penn-Pacific Life Insurance Company -- Insurer Financial Strength 'A+'. MAGNETEK INC.: Gets NYSE Notice for Falling Below Standards ----------------------------------------------------------- Magnetek, Inc., disclosed that, on June 21, 2010, the Company received notification from NYSE Regulation of being below the continued listing standards of the New York Stock Exchange. The Company is considered below criteria established by the NYSE because the Company's average market capitalization has been less than $50 million over a consecutive 30 trading-day period and its last reported shareholders' equity was less than $50 million. In accordance with NYSE procedures, the Company has 45 days from the receipt of the notice to submit a business plan to the NYSE demonstrating how it intends to regain compliance with the NYSE's continued listing standards within 18 months. Magnetek intends to develop and submit such a business plan within the required time frame. The Listings and Compliance Committee of the NYSE (the "Committee") will then review the business plan for final disposition. In the event the Committee accepts the plan, the Company will be subject to quarterly monitoring for compliance with the business plan and the Company's stock will continue to trade on the NYSE during the plan period, subject to the Company's compliance with other NYSE continued listing requirements. In the event the Committee does not accept the business plan, the Company will be subject to suspension by the NYSE and delisting procedures. The Committee may, at its discretion, accept the Company's business plan but choose to truncate the usual 18 month plan period, given the recurrence of having fallen below the continued listing standards. In November 2008, the Company was notified by NYSE Regulation that it was not in compliance with the continued listing standards of the NYSE, and the Company subsequently submitted a business plan and regained compliance with the listing standards as of the end of that initial 18 month plan period in May 2010. About Magnetek Inc Magnetek, Inc. manufactures digital power and motion control systems used in material handling, people moving and energy delivery. The Company is headquartered in Menomonee Falls, Wis. in the greater Milwaukee area and operates manufacturing facilities in Pittsburgh, Pa., Canonsburg, Pa. and Mississauga, Ontario, Canada as well as Menomonee Falls. The Company reported revenues of $98 million for its 2009 fiscal year, which ended June 28, 2009. MASHANTUCKET PEQUOT: July 13 Bank Debt Payment Looms ---------------------------------------------------- The Wall Street Journal's Mike Spector reports that the Mashantucket Pequot Tribal Nation, which owns and operates Foxwoods Resort Casino in Ledyard, Conn., is in talks with banks and bondholders about how best to restructure more than $2 billion in debt that it can no longer afford. A mid-July deadline for a big payment to lenders looms, and, according to the Journal, people familiar with the matter said the tribe wants bondholders to wipe out a significant portion of its roughly $1.3 billion in bond debt, in some cases paring the tribe's obligations by at least half. The bondholders are working on a counteroffer that could include small cuts in the debt and would ease the repayment terms, sources told the Journal. The bondholders haven't yet coalesced around one approach, these people said. The Journal says the deadline involves a $700 million revolving credit facility the tribe tapped from banks led by Bank of America Corp.'s Merrill Lynch. The facility matures on July 13 and the tribe would need to pay off the entire credit line on that day, though it is likely to seek an extension because of the slow progress of the talks. The Pequots breached a covenant on that debt in the fall and have received several waivers on that breach since. According to the Journal, negotiations between the tribe and its bondholders have been going on since December, when the Pequots made their offer, and have taken on a new urgency with the credit line coming due. The Pequots also have proposed a "reset" in which they would pay back more of the debt should business improve, said one of the people familiar with the matter. The tribe and Bank of America declined to comment. The result of the Pequot restructuring "is going to really send a message -- either way -- to the lending community," the Journal quotes Keith Foley, a senior vice president at Moody's Investors Service, as saying. "If the creditors take a haircut and it appears [the tribe] got the upper hand and came out much better than the creditors did, that could be a real problem." The Journal relates Moody's recently stopped rating the Pequots amid a dearth of information about the tribe's finances. The Pequots have gone "radio silent," Mr. Foley said. The Journal notes that investors over the years paid little attention to the federal protections for tribes that can complicate relations with creditors. Tribes are sovereign nations and because they are the only ones that can operate casinos on tribal land, lenders can't foreclose on the assets and sell them off as they would do with other defaulting borrowers. Nor can the tribe file for bankruptcy, according to most analysts. The Journal also relates that the Pequots, like some other tribes, use proceeds from the casino to fund a fully functioning government and society, including a post office, police force and community center. The tribe also pays out dividend-like checks -- known as "distribution" or "incentive" payments -- to its members from the casino's revenue. Those individual payments have totaled as much as $120,000 for some members, according to some estimates, and became something of a lightning rod in restructuring negotiations. The tribal council forced out its chairman, Michael Thomas, last fall after he suggested payments to tribal members would come before those to creditors, a move that unnerved lenders. The Journal says distributions to tribal members have been pared, though by how much remains unclear. The tribe declined to comment on its distributions. MARK MARTIN: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Mark Steven Martin 510 Happy Valley Rd Pleasanton, CA 94566 Bankruptcy Case No.: 10-47335 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of California (Oakland) Judge: Leslie J. Tchaikovsky Debtor's Counsel: Scott J. Sagaria, Esq. Law Offices of Scott J. Sagaria 333 W San Carlos St. #1700 San Jose, CA 95110 Tel: (408) 279-2288 E-mail: sjsagaria@sagarialaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Mark Steven Martin. MEDICAL STAFFING: Prepack Filing Deadline Now July 2 ---------------------------------------------------- The deadline for Medical Staffing Network Holdings Inc. to file a prepackaged Chapter 11 reorganization was moved back to July 2 from June 28. On June 28, 2010, the Company and all of its wholly owned subsidiaries, including Medical Staffing Network, Inc. and Medical Staffing Holdings, LLC, entered into a Third Amendment to Forbearance Agreement with General Electric Capital Corporation, as administrative agent, and with the required percentage of the first lien lenders under the Company's Amended and Restated Credit Agreement dated March 12, 2009. Under the Amendment, GECC, as agent, and the first lien lenders have agreed to forbear from exercising default related rights and remedies with respect to the first lien debt until July 2, 2010, unless a "Forbearance Default," as defined in the Second Forbearance Agreement, Limited Waiver and Amendment to Amended and Restated Credit Agreement entered into between the above-named parties effective as of April 7, 2010 occurs prior to that date. The Amendment also increases from $7 million to $9 million (at any one time outstanding) the amount that GECC may make available to the Company for additional revolving loans if the Company needs liquidity assistance to meet its obligations as they come due (based on a cash flow schedule approved between the Company, GECC, as agent, and the first lien lenders). The Company continues to have discussions with its lenders about the restructuring contemplated by the Restructuring Support Agreement among the Company and its subsidiaries, GECC, as administrative agent, all of the first lien lenders under the First Lien Credit Agreement and more than 90% of the second lien lenders under the Company's Amended and Restated Second Lien Credit Agreement, dated March 12, 2009. In that regard, it is currently anticipated that the definitive terms of the restructuring will be more completely documented in a proposed Asset Purchase Agreement and in a definitive credit agreement providing for a $15 million debtor-in-possession credit facility to be provided by GECC and the first lien lenders, which definitive agreements are expected to be entered into between the effective date of the RSA and the date on which the Company files its voluntary petition under Chapter 11 (currently expected to be filed on July 2, 2010). As previously disclosed, the RSA provides a number of grounds on which the RSA may be terminated, in which event GECC and the first lien lenders and second lien lenders will no longer be obligated to support the restructuring of the Company's indebtedness, to provide the DIP Facility, or to proceed with the acquisition transaction. Further, the sale of the Company's assets and business to the first lien lenders pursuant to the APA and the terms of the DIP Facility will be subject to approval by the Bankruptcy Court. As a result, while the Company expects the restructuring to be completed in accordance with the terms of the RSA, there can be no assurance that the definitive agreements referred to above will be entered into or that the restructuring will be successfully completed. A copy of the Third Amendment is available for free at: http://researcharchives.com/t/s?65b9 About Medical Staffing Boca Raton, Fla.-based Medical Staffing Network Holdings, Inc. (OTC QX: MSNW) is one of of the largest diversified healthcare staffing companies in the United States. The Company provides per diem nurse staffing services and travel, allied health and vendor managed services. The Company's balance sheet as of March 28, 2010, showed $87.7 million in assets and $140.8 million of debts, for a stockholders' deficit of $53.1 million. MER TELEMANAGEMENT: Receives NASDAQ Notice of Non-Compliance ------------------------------------------------------------ Mer Telemanagement Solutions Ltd. has received a notice from The NASDAQ Stock Market stating that the minimum market value of publicly held shares was below $1,000,000 for 30 consecutive business days and that the Company was therefore not in compliance with NASDAQ Listing Rule 5550(a)(5). The notification letter has no effect at this time on the listing of the Company's ordinary shares on The NASDAQ Capital Market. The Company's ordinary shares will continue to trade on The NASDAQ Capital Market under the symbol MTSL. The notification letter states that the Company will be afforded 180 calendar days, or until December 27, 2010, to regain compliance with the rule. To regain compliance, the Company's market value of publicly held shares must meet or exceed $1,000,000 for at least ten consecutive business days. If the Company does not regain compliance by December 27, 2010, NASDAQ will provide written notification to the Company that the Company's ordinary shares are subject to delisting. At that time, the Company may appeal NASDAQ's delisting determination to a NASDAQ Listing Qualifications Panel, and may submit a plan for regaining compliance with the rule. The Company intends to consider available options to resolve the deficiency and regain compliance with the NASDAQ rule. About MTS Mer Telemanagement Solutions Ltd. (MTS) is a worldwide provider of innovative solutions for comprehensive telecommunications expense management (TEM) used by enterprises, and for business support systems (BSS) used by information and telecommunication service providers. MOBILE MINI: S&P Affirms Corporate Credit Rating at 'BB-' --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Tempe, Ariz.-based portable storage units and mobile office units leasing company Mobile Mini Inc. S&P also affirmed the 'B+' rating on the senior unsecured notes, one notch below the corporate credit rating. The '5' recovery rating indicates S&P's expectations that lenders would receive a modest (10% to 30%) recovery in a payment default scenario. As of March 31, 2010, Mobile Mini had about $1 billion of lease-adjusted debt. The ratings on Mobile Mini reflect its aggressive financial profile and exposure to cyclicality in certain end markets. The company's leading market position and its ability to significantly curtail capital spending in periods of weak demand somewhat offset these weaknesses. The outlook is stable. S&P expects that over the near-term, the company will maintain its financial profile and mitigate near-term earnings and cash flow pressures by keeping capital spending at significantly reduced levels and cutting costs. "If there is a substantial change in the company's financial profile, due to worse-than-expected earnings pressures, causing funds flow from operations to total debt to fall to the high- single-digit percent area for a sustained period, S&P could lower the ratings," said Standard & Poor's credit analyst Funmi Afonja. S&P expects that financial measures will improve in 2011 and beyond. "S&P could upgrade the company if this improvement is stronger than S&P expected, resulting in funds from operations to total debt rising into the high-teens percent area," she continued. NATIONAL ENVELOPE: Cenveo Bids to Acquire Assets for $140 Million ----------------------------------------------------------------- Reuters reports Cenveo made a $140 million offer for the assets of NEC Holdings Corp., and asked the U.S. Bankruptcy Court for the District of Delaware to void any agreement that prevents NEC from seeking competing offer, saying an open sale process is the surest way to guarantee that creditors receive as much as possible for their claims. About National Envelope Corporation Uniondale, New York-based National Envelope Corporation -- http://www.nationalenvelope.com/-- is the largest manufacturer of envelopes in the world with 14 manufacturing facilities and 2 distribution centers and approximately 3,500 employees in the U.S. and Canada. The company is an environmental leader in the paper and envelope converting industries with certifications from the Forest Stewardship Council (FSC), Rainforest Alliance, Sustainable Forestry Initiative (SFI), Programme for the Endorsement of Forest Certification (PEFC), Chlorine Free Products Association, and Green Seal. NEC Holdings Corp., together with affiliates, including National Envelope Inc., filed for Chapter 11 on June 10, 2010 (Bankr. D. Del. Lead Case No. 10-11890). Kara Hammond Coyle, Esq., at Young Conaway Stargatt & Taylor LLP, serves as bankruptcy counsel. David S. Heller, Esq., at Josef S. Athanas, Esq., and Stephen R. Tetro II, Esq., at Latham & Watkins LLP, serve as co-counsel. The Garden City Group is the claims and notice agent. The U.S. Trustee has appointed seven creditors to server in an official committee of unsecured creditors. NEC Holdings' petition says assets and debts range from $100,000,001 to $500,000,000. NEW ORIENTAL: Weinberg & Company Raises Going Concern Doubt ----------------------------------------------------------- New Oriental Energy & Chemical Corp. filed on June 29, 2010, its annual report on Form 10-K for the year ended March 31, 2010. Weinberg & Company, P.A., in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year ended March 31, 2010. The independent auditors noted that the Company incurred a net loss of $12,800,854 and has negative cash flows from operations of $7,511,738 for the year ended March 31, 2010, and has a working capital deficit of $44,151,502 at March 31, 2010. The Company reported a net loss of $12,800,854 on $32,463,882 of revenue for the year ended March 31, 2010, compared to a net loss of $3,729,007 on $52,545,647 of revenue for the year ended March 31, 2009. The Company's balance sheet at March 31, 2010, showed $62,182,646 in assets, $60,957,166 of liabilities, and $1,225,480 of stockholders' equity. A full-text copy of the annual report is available for free at: http://researcharchives.com/t/s?65b2 About New Oriental New Oriental Energy & Chemical Corp. (NASDAQ: NOEC) -- http://www.neworientalenergy.com/-- was incorporated in the State of Delaware on November 15, 2004. The Company, through the operations of Henan Jinding Chemical Co., Ltd., has been engaged in in the manufacture and distribution of fertilizer and chemical products. The products are distributed to markets in the Peoples' Republic of China. The Company's primary business is the manufacture and sale of urea, a chemical used as fertilizer for crops and in certain manufacturing processes, including the manufacture of resin, plastic and medicine. The Company is headquartered in Henan Province, in The Peoples's Republic of China. NORTEL NETWORKS: Court Approves $22 Million in Fees --------------------------------------------------- U.S. Bankruptcy Judge Kevin Gross issued an order allowing the interim payment of fees and reimbursement of expenses of 20 professionals in the Chapter 11 cases of Nortel Networks covering the period January to April 2010. Of the 20 professionals, 14 are retained by the Debtors while six are retained by the Creditors Committee. Among the Debtors' professionals are Chilmark Partners LLC, Cleary Gottlieb Stein & Hamilton LLP, Crowell & Moring LLP, Ernst & Young LLP, Huron Consulting Group, Jackson Lewis LLP, John Ray, Linklaters LLP, Lazard Freres & Co., Mercer (US) Inc., Morris Nichols Arsht & Tunnell LLP, Palisades Capital Advisors LLC, Punter Southall LLC, and Shearman & Sterling LLP. The total amount of fees and expenses allowed for the Debtors' professionals for various periods between January to April 2010 is approximately US$22,200,000 and GBP459,000. A copy of the table summarizing the Debtors' professionals and their corresponding approved fees and expenses for the January to April 2010 interim period is available for free at: http://bankrupt.com/misc/Nortel_AllowedInterimFees4.pdf Among the Creditors' Committee's professionals are Akin Gump Strauss Hauer & Feld LLP, Ashurst LLP, Capstone Advisory Group LLC, Fraser Milner Casgrain LLP, Jefferies & Company Inc., and Richards Layton & Finger P.A. The total amount of fees and expenses allowed for the Committee's professionals for various periods between February to April 2010 is approximately US$5,800,000, GBP181,000 and C$1,500,000. A copy of the table summarizing the Committee's professionals and their corresponding approved fees and expenses for the February to April 2010 interim period is available for free at: http://bankrupt.com/misc/Nortel_AllowedInterimFees3.pdf About Nortel Networks Nortel Networks (OTC BB: 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 was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (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 the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Certain of Nortel's European subsidiaries 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 US$11.6 billion and consolidated liabilities of US$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 US$9 billion and liabilities of US$3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about US$4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Files Bankruptcy Rule 2015.3 Reports ----------------------------------------------------- Nortel Networks Inc. and its affiliated debtors filed with the Bankruptcy Court a report on the value, operations and profitability of entities in which their estates hold a substantial or controlling interest as of December 31, 2009, as required under Rule 2015.3 of the Federal Rules of Bankruptcy Procedure. The Rule 2015.3 report shows that the estates of NNI, Nortel AltSystems Inc., Sonoma Systems, and Nortel Networks (NNCI) Inc. hold a substantial or controlling interest in these entities: NNI Interest Entities of the Estate -------- --------------- Nortel Networks India International Inc. 100.00% Nortel Ventures LLC 100.00% Bay Networks do Brasil Ltda. 99.50% Nortel Networks Technology Ltd. 100.00% Bay Networks Redes de Dados para Sistemas Infonnaticos Lda. 100.00% Clarify Limited 100.00% Penril Datacormn Limited 100.00% Nortel Networks Eastern Mediterranean Ltd. 100.00% Nortel Technology Excellence Centre Private Limited 99.01% Nortel Networks Japan 100.00% Nortel Networks Technology K.K. 100.00% Nortel Networks Southeast Asia Pte Ltd. 100.00% Nortel Networks Technology (Thailand) Ltd. 99.94% Limited Partnership Investment Fund 22.84% AltSystems Interest Entities of the Estate -------- --------------- Nortel AitSystems International Limited 100.00% Nortel AitSystems AB 100.00% Sonoma Interest Entities of the Estate -------- --------------- Sonoma Systems Europe Limited 100.00% Sonoma Limited 100.00% NNCI Interest Entities of the Estate -------- --------------- Nortel Networks de Guatemala, Ltda. 98.00% Nortel Trinidad and Tobago Limited 100.00% NNI also filed balance sheets and other financial documents for those entities it held and those held by Nortel AltSystems, Sonoma and NNCI. Full-text copies of those documents are available for free at: http://bankrupt.com/misc/NortelRule2015.3ReportsDec3109.pdf About Nortel Networks Nortel Networks (OTC BB: 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 was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (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 the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Certain of Nortel's European subsidiaries 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 US$11.6 billion and consolidated liabilities of US$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 US$9 billion and liabilities of US$3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about US$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: Seeks Canada OK to Sell Certain Assets to 7522312 ------------------------------------------------------------------ Nortel Networks Ltd. and Nortel Networks Technology Corp. seek permission from the Ontario Superior Court of Justice to sell their assets to 7522312 Canada Inc. The assets to be sold include the Nortel Entities' non-patent intellectual property and tangible assets related to the wireless backhaul and multi-hop digital repeater or relay research and development program. The Program is an aspect of the Nortel Entities' research and development efforts that focus on developing Intelligent Digital Repeaters that enhance wireless networks with increased coverage at lower deployment costs. Under the deal, 7522312 Canada agreed to acquire the assets for US$600,000, on an "as is, where is" basis. The buyer won't assume any liabilities of NNTC and NNL since there is no business associated with the assets. The deal also provides that 7522312 Canada won't have any license or right to use the name "Nortel" or any other trademarks owned by NNTC, NNL or any of their affiliates. The closing of the sale is conditioned on the execution of a license termination agreement among NNTC, NNL and other Nortel units confirming the termination of their respective licenses on non-patent intellectual property that is included in the sale block. In connection with the sale, NNL and 7522312 Canada will also enter into an "intellectual property license agreement" to provide 7522312 Canada with a fully paid-up license to certain non-patent intellectual property associated with the Program. The deal has been formalized in a 16-page agreement, a copy of which is available for free at: http://researcharchives.com/t/s?6580 In its 49th monitor report, Ernst & Young Inc., the firm appointed to monitor the assets of NNL and its Canadian affiliates, has recommended the approval of the proposed sale, saying the purchase price for the assets is "fair and reasonable." About Nortel Networks Nortel Networks (OTC BB: 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 was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (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 the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Certain of Nortel's European subsidiaries 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 US$11.6 billion and consolidated liabilities of US$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 US$9 billion and liabilities of US$3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about US$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) NXT ENERGY: Posts C$2.4 Million Net Loss for 2009 ------------------------------------------------- NXT Energy Solutions Inc. filed its annual report on Form 20-F, reporting a net loss of C$2,405,125 on C$3,684,323 of revenue for 2009, compared with a net loss of C$1,141,291 on C$2,955,062 of revenue for 2008. The Company's balance sheet at December 31, 2009, showed C$6,005,640 in assets, C$972,323 of liabilities, and C$5,033,317 of stockholders' equity. The Company is in the early stages of commercializing its SFD(R) survey technology following a long history of generating losses. As at December 31, 2009, the Company's deficit was CDN$55,040,931 consisting of accumulated net losses of CDN$47,638,207 incurred prior to fiscal 2006 and accumulated net losses of CDN$7,402,724 since 2006. The losses incurred prior to 2006 related to the development and industry validation of the Company's SFD(R) technology. During this period the Company derived no direct revenue from its SFD(R) technology. In 2006 the Company commenced offering its SFD(R) survey services to third parties on a fee-for- service basis. In the period from 2005 through to the present, in aggregate, the Company earned SFD(R) survey revenue of CDN$13,885,923. The Company says its ability to generate cash flow from operations will depend on its ability to continue to service its existing clients through new survey contracts and develop new clients for its services. Management recognizes that this early commercialization phase can last for several years. Consistent with this early stage of commercialization the Company has a significant economic dependency on a few clients. While the Company is in this early stage of commercialization, the Company's financial position is materially impacted by the loss or gain of any one client. The Company's ability to continue operations is dependent on attracting future clients through demonstrating the value that the company can bring to their exploration activities. "Until we can demonstrate our ability to continue to service existing clients and develop new clients for our SFD(R) services over a longer period of time, we cannot be certain that we are in a position to continue operating indefinitely." A full-text copy of the annual report is available for free at: http://researcharchives.com/t/s?65af Calgary-based NXT Energy Solutions Inc. (TSX: SFD; OTC BB: NSFDF) -- http://www.nxtenergy.com/-- owns a proprietary technology called Stress Field Detection. SFD(R) is a remote sensing airborne survey system that is designed to identify areas with oil and natural gas reserve potential. ORCHARD SUPPLY: Moody's Affirms Ratings; Gives Negative Outlook --------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Orchard Supply Hardware Corp., and changed the rating outlook to negative from stable. The negative outlook reflects concerns that Orchard Supply may have difficulty refinancing its $120 million CMBS debt maturing in December 2010 on favorable terms. Ratings could be downgraded if the company does not refinance this debt at reasonable terms in advance of maturity, or if a refinancing reduces the company's liquidity or financial or operating flexibility. The rating of the term loan could also be negatively impacted if new debt detracts from the value supporting the secured term loan. The B2 Corporate Family Rating and B2 secured term loan rating were both affirmed, reflecting Orchard Supply's high leverage, its relatively small scale, and its geographic concentration in the economically-challenged California market, as well as the company's strong position as a smaller-scale alternative to the home improvement superstores. These ratings are affirmed and point estimates adjusted: * Corporate Family Rating at B2 * Probability of Default Rating at B2 * Senior secured term loan maturing in 2013 at B2 (LGD 4, 55% from LGD 4, 53%) The last rating action for Orchard Supply Hardware Corp. was the downgrade of the company's Corporate Family Rating to B2 from B1, Probability of Default rating to B2 from Ba3 and the downgrade of the senior secured term loan to B2 from B1 on December 23, 2008. Orchard Supply Hardware, headquartered in San Jose, California, operates 88 hardware stores in California, and generates annual revenue of approximately $700 million. PFF BANCORP: Seeks to Knock Out PBGC's Claims Entirely ------------------------------------------------------ Bill Rochelle at Bloomberg News reports that PFF Bancorp Inc., the holding company for a failed bank, is hoping to eliminate all the claims filed by the Pension Benefit Guaranty Corp. related to pension plans for bank employees. Bloomberg relates that even though the pension plan hasn't been terminated, the PBGC filed three claims against each of the five PFF companies in Chapter 11. Ten of the claims for funding contributions and premiums don't assert a specified amount. The last five claims each are for $4.2 million, claiming entitlement to a priority requiring payment in full if the pension plans are terminated. PFF, according to the report, contends that that there is no liability on the pension plan because the bank was the sponsor. PFF asserts that an affiliate is liable on a terminated pension plan if it was part of the so-called control group when the plan is taken over. Because the plans were transferred when the bank was taken over, PFF said neither it nor any affiliates would be members of the control group at the time of a takeover in the future. About PFF Bancorp PFF Bancorp Inc. -- http://www.pffbank.com/-- was a non- diversified unitary savings and loan holding company within the meaning of the Home Owners' Loan Act with headquarters formerly located in Rancho Cucamonga, California. Bancorp is the direct parent of each of the remaining Debtors. Prior to filing for bankruptcy, Bancorp was also the direct parent of PFF Bank & Trust, a federally chartered savings institution, and said bank's subsidiaries. PFF Bancorp Inc. and its affiliates sought Chapter 11 protection on December 5, 2008 (Bankr. D. Del. Case No. 08-13127 to 08- 13131). Chun I. Jang, Esq., and Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. Kurtzman Carson Consultants LLC serves as the Debtors' claims agent. Jason W. Salib, Esq., at Blank Rome LLP, represents the official committee of unsecured creditors as counsel. PHH CORPORATION: Moody's Affirms 'Ba2' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed PHH's corporate family and senior unsecured Ba2 ratings. Additionally, PHH's rating outlook was changed to stable from negative. The affirmation of the company's ratings and change in outlook to stable from negative reflects the progress the company has made in regards to renewing and obtaining new secured funding facilities for its fleet leasing and mortgage activities. At one point in the midst of the credit crisis PHH was left without any committed funding for additional fleet leasing and relied upon the Term Asset-Backed Securities Loan Facility. However, the company has recently been able to issue non-TALF debt backed by its lease assets and currently has $500 million in excess committed capacity for fleet leasing. Additionally, the company has renewed or obtained new committed residential mortgage facilities in excess of its current level of originations. However, Moody's notes that the vast majority of these facilities begin amortizing or mature in one year or less. The affirmation and outlook change anticipate that PHH will be able to access the unsecured debt markets in the medium term and that the company will maintain appropriate contingent liquidity through committed revolving credit capacity and/or excess cash. An upgrade to the company's ratings would require a return of fleet management profitability to historical levels and evidence of consistent profitability in mortgage activities. Additionally, a reduction in the company's use of secured funding, and funding of a longer term, would support an upgrade. A downgrade to the rating could result if the company is unable to replace/extend key credit facilities or reduces its capital levels. The last rating action on PHH was March 2, 2009, when its corporate family and senior unsecured ratings were downgraded to Ba2 from Ba1 with a negative outlook. PHH Corporation, headquartered in Mount Laurel, NJ, reported assets of $8.2 billion at March 31, 2010. Outlook Actions: Issuer: PHH Corporation -- Outlook, Changed To Stable From Negative PIONEER NATURAL: Moody's Gives Stable Outlook; Keeps 'Ba1' Ratings ------------------------------------------------------------------ Moody's Investors Service changed Pioneer Natural Resources Company's outlook to stable from negative. Moody's also affirmed its Ba1 Corporate Family Rating, Ba1 Probability of Default Rating, and its existing senior unsecured note rating of Ba1 (LGD 4, 53%). The move to a stable outlook reflects improvements anticipated by the recently announced joint venture with Reliance Industries Ltd. (rated Baa2). These benefits include a growing production trend, improving leverage metrics, and better capital discipline. Moody's views the RIL JV as a de-leveraging transaction. Besides providing liquidity through cash and a capex carry, the JV should help to reduce Pioneer's F&D costs and provide better future returns. The stable outlook assumes that the company will continue to demonstrate consistent production growth trends while maintaining a manageable cost structure and operating within its cashflow. As a result Moody's anticipate Pioneer's leverage on production will continue to decline. However, Pioneer's stable outlook is highly sensitive to any leveraging event, including share repurchases, acquisitions or outspending cash flow. "This transaction provides a window to the considerable asset value held by Pioneer", said Francis Messina, VP-senior analyst. "Moody's anticipate this transaction will spur a reduction to Pioneer's leverage and enhance capital productivity." Pioneer will sell a 45% interest in 212,000 net acres of the Eagle Ford Shale play to RIL for $1.15 billion. Under the agreement Pioneer will receive a $266 million initial cash payment and $879 million for 75% of Pioneer's drilling expenses over the next six years. RIL will also have an option to acquire an additional 45% interest from Pioneer in new acreage from a defined area of mutual interest, of which 9,500 net acres of the 212,000 net acres already are within the AMI. The transaction includes current production of 28 mmcfd of gas equivalent from five horizontal wells. Pioneer's Ba1 CFR reflects its overall scale and underlying long- lived asset base. Pioneer has a meaningful and growing exposure to crude oil production, which Moody's consider to have a near- term positive fundamental pricing outlook compared to weaker fundamentals of the North American natural gas market. Pioneer's 2010 first quarter production of approximately 114 mboepd, a 7% increase from Q4 2009, reflects successful drilling results primarily in the Spraberry. The production increase was achieved despite a heavily reduced 2009 capex budget. Moody's expects an approximate 10% production increase from Q42009 to Q42010. And leverage, while continuing to remain relatively high, has improved to $25.7m/Boe of average daily production at March 31, 2010, from close to $31m/Boe at the year-end 2008. Additionally, Pioneer's rating is supported by a large inventory of drilling locations providing ample opportunity for organic growth. Pioneer holds over 310,000 acres of undeveloped Eagle Ford shale in South Texas, which presents a second core area of growth opportunity after the Spraberry trend. Pioneer's rating is constrained by the company's continued high leverage particularly as measured by debt/average daily production, which is among the highest in the Ba peer group, and its historically weak capital productivity as indicated by relatively high F&D cost compared to its peers. Concurrently, over the past five years the company has repurchased approximately $1.7 billion of shares outstanding to increase shareholder returns rather than debt reduction. The last rating action was on November 9, 2009, at which time Moody's assigned a Ba1 rating to Pioneer's proposed $300 million senior unsecured notes due 2020 and affirmed with a negative outlook its Ba1 CFR, PDR, and existing senior unsecured note rating. Pioneer Natural Resources headquartered in Irving, Texas, operates primarily in North America with over 98% of its proved reserves and just over 90% of its production concentrated in the United States. Core production holdings are: the Spraberry trend oil field (West Texas), the Raton Basin coal bed methane natural gas field (Southern Colorado), the Hugoton and West Panhandle natural gas and liquid fields (Kansas and the Texas Panhandle, respectively) and the Edwards Trend natural gas holdings (South Texas). POLYONE CORPORATION: Moody's Upgrades Corp. Family Rating to 'Ba3' ------------------------------------------------------------------ Moody's upgraded PolyOne's Corporate Family Rating, and its senior unsecured ratings to Ba3 from B1 and changed its outlook to stable from positive. The upgrade to a Ba3 CFR reflects the propsect of a continuing, sustainable, and significant improvement in operating income generated by PolyOne's Specialty and Performance and other businesses over the next several years. This view of improved performance is supported by the improved performance in the past two quarters ending March 31, 2010, relative to the similar period in late 2008 and 2009; the significant increase in the total gross margin (up roughly 46%) from its businesses in the last two public quarters relative to the first half of 2009; and the meaningful improvement in Funds From Operations rising to $79 million -- an increase of 108% (defined as Cash Flow From Operations less the change in working capital) over the same time period. Moody's expects that in 2010 PolyOne will again generate enough FFO, excluding dividends from SunBelt and its other joint ventures, to cover capital spending. Moody's currently projects that PolyOne's 2010 FFO will be $40-60 million above capex in 2010. PolyOne's improved performance was aided by a successful restructuring program and cash was generated despite weak economic conditions in the US and Europe. "It appears that PolyOne has turned the corner on a sustainable basis in regards to the profitability of its wholly owned operations," stated Bill Reed, Vice President at Moody's. "In addition, the cash generated in 2010 will continue to improve its financial flexibility in managing a significant debt maturity in 2012." Ratings Upgraded: Issuer: PolyOne Corporation (includes predecessor companies MA Hanna Company and Geon Company) * Corporate Family Rating to Ba3 from B1 * Probability of Default Rating to Ba3 from B1 * Senior Unsecured Regular Bond/Debenture to Ba3 LGD4, 57% from B1 LGD4, 57% * Outlook Actions: PolyOne Corporation (includes predecessor companies MA Hanna Company and Geon Company) Issuer: PolyOne Corporation * Outlook, Changed to Stable From Positive Despite a Net Debt/EBITDA of roughly 3x in 2006 and 2007, PolyOne's CFR remained at B1 due to concern about the volatility in the earnings stream from the company's joint ventures (their share of OxyVinyls was divested in the third quarter of 2007) and the weak cash flow generated by its wholly owned operations. As PolyOne has demonstrated improved margins in its Specialty businesses and generated Retained Cash Flow/Net Debt of more than 30%, (above Moody's target of 15%), through the last two quarters, Moody's feels the Ba3 CFR is appropriate. An important consideration in the upgrade is management's commitment to a 2x Net Debt/EBITDA ratio through most of the cycle, with temporary increases due to acquisitions of no more than 3x. The last rating action on PolyOne was on November 10, 2009, when Moody's changed the outlook to positive, PolyOne Corporation, headquartered in Avon Lake, Ohio, is a custom compounder of thermoplastic resins (formulated resin systems that include additives, colorants, fillers, etc) and formulated systems (pre-blended additives and color primarily for resins and inks). PolyOne is also a leading North American distributor of resins; their distribution segment constitutes roughly 30% of total sales. The company also owns a 50% share of SunBelt Chlor Alkali Partnership. Revenues were $2.2 billion for the LTM ended March 31, 2010. PROGEN PHARMACEUTICALS: Gets Delisting Notification From Nasdaq --------------------------------------------------------------- Progen Pharmaceuticals Limited received notice from the Nasdaq Stock Market that its securities will be delisted due to a minimum bid price deficiency under Nasdaq Listing Rule 5500(a)(2). The notice states that trading in the Company's securities will be suspended at the opening of business on July 2, 2010, at which time a form 25-NSE will be filed with the Securities and Exchange Commission which will remove the Company's securities from listing and registration on the Nasdaq Stock Market. This is not unexpected and Progen is currently seeking advice and will provide an update to the market at a later stage. About Progen Pharmaceuticals Progen Pharmaceuticals Limited -- www.progen-pharma.com -- is a biotechnology company committed to the discovery, development and commercialization of small molecule pharmaceuticals primarily for the treatment of cancer. Progen has built a focus and strength in anti-cancer drug discovery and development. Progen targets the multiple mechanisms of cancer across its three technology platforms of angiogenesis, epigenetics and cell proliferation. P rogen has operations in Australia and the United States of America. PROTOSTAR LTD: Committee Opposes Longer Plan Exclusivity -------------------------------------------------------- Bill Rochelle at Bloomberg News reports that the Official Committee of Unsecured Creditors for ProtoStar Ltd. is opposing an extension of the exclusive right for ProtoStar to propose a Chapter 11 plan. A hearing on ProtoStar's third exclusivity motion is scheduled for July 7. To recall, the Debtors sought an extension, saying they need additional time to consensually resolve certain issues with regard to, and to file one or more Chapter 11 Plans in the near future with respect to the remaining ProtoStar entities or all of the ProtoStar entities. The Committee is currently pursuing against secured lenders to invalidate their lien on the ProtoStar I satellite. The Committee, according to the Bloomberg report, said June 25, that the case is "in a state of limbo" with no settlement "imminent." The Committee contends that a longer exclusivity period "would likely retard efforts to reach a global settlement." About ProtoStar Ltd. Hamilton, HM EX, Bermuda-based ProtoStar Ltd. is a satellite operator formed in 2005 to acquire, modify, launch and operate high-power geostationary communication satellites for direct-to- home satellite television and broadband internet access across the Asia-Pacific region. The Company and its affiliates filed for Chapter 11 on July 29, 2009 (Bankr. D. Del. Lead Case No. 09-12659). The Debtor selected Pachulski Stang Ziehl & Jones LLP as Delaware counsel; Law Firm of Appleby as their Bermuda counsel; UBS Securities LLC as financial advisor & investment banker and Kurtzman Carson Consultants LLC as claims and noticing agent. The Debtors have tapped UBS Securities LLC as investment banker and financial advisor. Also on July 29, 2009, ProtoStar and its affiliates, including ProtoStar Development Ltd., commenced a coordinated proceeding in the Supreme Court of Bermuda. John C. McKenna of Finance & Risk Services Ltd. as liquidator of the Bermuda Group. In their Chapter 11 petition, the Debtors listed between US$100 million and US$500 million each in assets and debts. As of December 31, 2008, ProtoStar's consolidated financial statements, which include non-debtor affiliates, showed total assets of US$463,000,000 against debts of US$528,000,000. QIMONDA AG: Int'l Trade Proceedings Continue in Bankruptcy ---------------------------------------------------------- Bill Rochelle at Bloomberg News reports that U.S. District Judge T.S. Ellis III ruled on June 28, reversing the bankruptcy court, that although begun by the owner of a patent, a proceeding before the International Trade Commission to halt the importation of goods that infringe patents is exempt from the so-called automatic stay as an exercise by the government of its policy or regulatory power. Bloomberg recounts that U.S. Bankruptcy Judge Robert G. Mayer in Alexandria, Virginia, ruled in February that proceedings in the ITC aren't police or regulatory actions and thus are automatically halted when a defendant files for bankruptcy. He saw the automatic stay as applicable because the patent holder, not the ITC, controlled litigation and settlement. Bloomberg continues that District Judge Ellis disagreed with Judge Mayer's understanding of federal law regarding the ITC. He saw the proceedings as initiated by the agency and ultimately controlled by the government, thus making ITC proceedings a police or regulatory action not barred by the automatic stay. The Appeal Insisting that Section 337 investigations are regulatory actions excluded from automatic stays, the U.S. International Trade Commission challenged a bankruptcy judge's decision to halt the agency's probe of Qimonda AG in the wake of the semiconductor maker's Chapter 15 filing, according to Law360. About Qimonda AG Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The Company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The Company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG commenced insolvency proceedings with a local court in Munich, Germany, on January 23, 2009. On June 15, 2009, QAG filed a petition for relief under Chapter 15 of the Bankruptcy Code (Bankr. E.D. Virginia Case No. 09-14766). Qimonda North America Corp., an indirect and wholly owned subsidiary of QAG, is the North American sales and marketing subsidiary of QAG. QNA is also the parent company of Qimonda Richmond LLC. QNA and QR filed for Chapter 11 on February 20 (Bankr. D. Del. Lead Case No. 09-10589). Mark D. Collins, Esq., Michael J. Merchant, Esq., and Maris J. Finnegan, Esq., at Richards Layton & Finger PA, represents the Debtors as counsel. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an official committee of unsecured creditors. Jones Day and Ashby & Geddes represent the Committee. In its bankruptcy petition, Qimonda Richmond, LLC, listed more than US$1 billion each in assets and debts. The information was based on Qimonda Richmond's financial records which are maintained on a consolidated basis with Qimonda North America Corp. REOSTAR ENERGY: Killman Murrell Raises Going Concern Doubt ---------------------------------------------------------- ReoStar Energy Corporation filed on June 29, 2010, its annual report on Form 10-K for the year ended March 31, 2010. Killman, Murrell & Company, P.C., in Odessa, Texas, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the the Company has a working capital deficit of $9,195,946 due to default on loan covenants and borrowing base requirements of their lender. The Company reported a net loss of $3,121,170 on $3,533,722 of revenue for the year ended March 31, 2010, compared with a net loss of $2,003,834 on $7,034,439 of revenue for the year ended March 31, 2009. The Company's balance sheet at March 31, 2010, showed $21,485,933 in assets, $15,536,536 of liabilities, and $5,949,397 of stockholders' equity. A full-text copy of the annual report is available for free at: http://researcharchives.com/t/s?65b3 Fort Worth, Tex.-based ReoStar Energy Corporation is engaged in the exploration, development and acquisition of oil and gas properties, primarily located in the state of Texas. At year-end 2010, the Company owned approximately 9,000 acres of leasehold, which includes 5,000 acres of exploratory and developmental prospects as well as 4,000 acres of enhanced oil recovery prospects. ReoStar was incorporated in Nevada on November 29, 2004 under the name Goldrange Resources, Inc. In February of 2007 the Company changed its name to ReoStar Energy Corporation. SANMINA-SCI CORPORATION: Fitch Lifts Issuer Default Rating to 'B+' ------------------------------------------------------------------ Fitch Ratings has upgraded these ratings for Sanmina-SCI Corporation: -- Issuer Default Rating to 'B+' from 'B'; -- Senior secured credit facility to 'BB+/RR1' from 'BB/RR1'; -- Senior unsecured notes to 'BB+/RR1' from 'BB/RR1'; -- Senior subordinated debt to 'B+/RR4' from 'B/RR4'. The Rating Outlook is Stable. The ratings upgrade reflects these considerations: -- Sanmina has reduced debt by $190 million since March 2009 to $1.3 billion, a 13% reduction. While operating results bottomed during 2009 reflecting the economic downturn, quarterly results over the past two quarters have produced significant top-line growth and solid EBITDA margin expansion. Specifically, revenue in fiscal 2Q'10 (ended April 3, 2010) was up 28% over the prior year period while EBITDA margins of 5% are higher than any period over the past five- plus years. Principally as a result of debt reduction, leverage has declined to 5.3 times from 6.2x in the prior year period. However, when measured using fiscal 2Q'10 EBITDA run rate, leverage is closer to 4.1x. -- Sanmina has seemingly successfully refocused its corporate strategy over the past several years in an effort to differentiate itself from larger competitors and target more niche market opportunities. The company has a historical strength in complex, low-volume, high-mix manufacturing operations and has right-sized operations and rationalized the cost basis of its manufacturing base to target these opportunities. Fitch believes that the company could produce EBITDA margins in excess of its peers with this strategy as recent results have demonstrated. The ratings and Outlook reflect Fitch's estimates and considerations: -- Fitch expects revenue growth in the mid-single digits in fiscal 2011 (ending September) and beyond following approximately 15% revenue growth in fiscal 2010. Revenue growth expectations reflect the continued secular trend towards increased outsourcing of manufacturing partially mitigated by macro economic weakness. Sanmina's revenue declined nearly 30% in fiscal 2009 over the prior year period, and while Fitch believes that decline was exacerbated by market share losses and strategic refocusing, the above average volatility in its end-market demand negatively impacts the ratings. Of note, Sanmina's revenue decline in the latest 12 month period ending March 2010 was materially less than its peers for the first time in years, which Fitch believes is further evidence of stabilization in its business. -- Fitch expects EBITDA margins to be in the range of 4% to 5% going forward. While recent results have demonstrated upside to this range, the company's historically volatile and below peer average margin performance suggests the company needs to establish a track record of achieving and maintaining higher profitability before being reflected in the ratings. -- Fitch expects free cash flow to be modestly positive beyond fiscal 2010 although susceptible to swings in working capital requirements. Funds from operations are expected to be approximately 2.5% of revenue with capital expenditures equal to nearly 1.5% of revenue leaving minimal cash flow to absorb working capital outflows. -- Fitch expects leverage (total debt to operating EBITDA) to decline to 4.8x by the end of fiscal 2010 versus 8.5x at the end of fiscal 2009. Interest coverage is expected to increase to 2.5x from 1.4x over the same periods. Funds from operations less capital spending and dividends is expected to represent 5.2% of total debt at the end of fiscal 2010 which is consistent with the median for 'B' rated peers. -- Fitch expects Sanmina to use existing cash to fund organic growth, working capital needs and potentially small acquisitions. The company has undertaken small share repurchase programs in recent years which are another potential use of excess cash but Fitch would not expect this to contribute to additional debt. Continued modest debt reduction is another potential use of cash although the company has no near-term maturities. Rating strengths include: -- Sanmina's position as one of the larger global electronics manufacturing services providers with higher than industry average exposure to complex manufacturing services which tend to be more stable and less prone to competitive threats; -- Countercyclical nature of working capital cash flows inherent in the EMS industry which tend to provide a significant source of liquidity during business downturns; and -- Fitch believes that the long-term opportunity for revenue growth in non-traditional markets for Sanmina including industrial, defense and medical supplies, should enable the company to grow revenue in excess of global GDP and continue to improve EBITDA margins. Rating concerns include Fitch's expectation that the EMS market will remain highly competitive with continued pressure on profitability across all North American tier one competitors. In addition, Sanmina has downsized its business considerably over the past several years through restructuring and divestitures to a point where the remaining business is significantly smaller than leading tier one service providers in a market where scale is of significant importance. However, Sanmina's focus on the low- volume, high-mix market segment at least partially mitigates its disadvantage in scale. Liquidity as of April 3, 2010, was solid with $673 million in cash, $62 million of availability on a $135 million senior secured revolving credit facility which expires November 2013, and $215 million available under an off-balance sheet accounts receivable sales facility which expires June 2010. Sanmina increased the size of its revolving credit facility in April to $235 million. The reduced availability under the revolver at the end of the most recent quarter reflects the borrowing base calculation rather than borrowings under the facility. The increase in facility size is also expected to increase the borrowing base calculation. Total debt as of April 3, 2010, is $1.3 billion and consists principally of $257 million of senior unsecured floating rate notes due June 2014; $400 million 6.75% senior subordinated notes due February 2013; and $600 million 8.125% senior subordinated notes due March 2016. SEMINOLE TRIBE: Fitch Downgrades Issuer Ratings to 'BB' ------------------------------------------------------- Fitch Ratings downgrades the ratings assigned to the Seminole Tribe of Florida: -- Issuer rating to 'BB' from 'BBB-'; -- Special obligation bonds, series 2007A & B, series 2008 A to 'BB' from 'BBB-'; -- Gaming division bonds, series 2005A & B to 'BB+' from 'BBB'; -- Term loan facility, series 2007 B-1, B-2 & B-3 to 'BB+' from 'BBB'. The Rating Outlook is Stable. The downgrade reflects STOF's inability to resolve the tribal government's long track record of weak internal controls with respect to financial and accounting practices, which ultimately resulted in the June 3, 2010 issuance of a Notice of Violation from the National Indian Gaming Commission. Fitch believes that STOF will be able to resolve the violations without a significant financial impact to the tribe, and there is a very low likelihood that NIGC would issue a temporary closure order following on the NOV. However, Fitch believes the inability to correct internal control deficiencies since the NIGC began its review in 2005 reflects weak governance practices that are inconsistent with an investment grade rating. Although the NIGC began its review in 2005, which Fitch cited when assigning its initial ratings, the internal control issues date back to even earlier periods. Fitch gains comfort that debt agreements require that payments for debt obligations are paid prior to any distributions to the tribe, and there are no material weaknesses of internal controls at the gaming enterprise. For a Fitch's view of the impact of Native American gaming governance practices on credit ratings, please read 'Evaluating Governance Practices: The Native American Tribal Perspective', dated Aug. 14, 2008, available on Fitch's website at 'www.fitchratings.com'. A return to an investment grade credit profile will depend upon the tribe demonstrating a considerable track record of bolstering its financial controls and adhering to regulatory guidelines and its own ordinances. Fitch believes the nature of the improvement would need to be sustained, which limits positive rating action in the near-term and supports the Stable Outlook. Likewise, Fitch is not anticipating further negative rating actions and believes the current ratings encompass governance concerns, while the operating and financial profile is strong relative to the 'BB' issuer rating. The 'BB' issuer rating and the Stable Outlook are supported by the strong cash flows and the geographic diversification of the gaming enterprise, whose operations weathered the recession well relative to other gaming credits in Fitch's rated portfolio. The rating and the Outlook also take into account the Class III state gaming compact that was ratified by the Florida legislature in April 2010 and is expected to be recorded in the Federal Register within approximately a week. The main compact components, including the exclusivity, permitted games, and revenue sharing provisions, are within the scope of Fitch's expectations relative to the previous terms under which the tribe was already operating and do not have a material impact on the ratings. The 2010 compact confirms the tribe's ability to operate table games at most of its facilities but limits the authorized period for table games to five years, after which the tribe has to seek reauthorization. The revenue share provision of the 2010 compact relative to the 2007 compact under which the tribe had been operating are not substantially different. Importantly, the Tampa Hard Rock, which generates roughly half of the EBITDA for the gaming enterprise, should not see considerable slots competition at least until 2030, which Fitch views as a positive. Fitch, however, expects that the tribe's Broward County operations (including its two casinos in Hollywood and one in Coconut Creek) will continue to be pressured by the developing competition stemming from the pari-mutuels in the Broward and Miami-Dade Counties. There are a total of four pari-mutuels in Broward County and four in the Miami-Dade County permitted to operate slot machines, with about 5,600 machines currently operational out of a total of the potential 16,000. With the tax on slot machines reduced to 35% from 50% effective July 1, 2010, Fitch believes that the pari-mutuels could ramp up their investment in their slot operations, which is already being felt by STOF's facilities in the area. Since October 2009, two pari-mutuels (Magic City Casino and Calder Race Course) added a total of approximately 2,000 slot machines. Fitch believes that the competitive pressures on the enterprise level will be offset somewhat by STOF's ability to further develop its highly successful Tampa facility and to further expand table games across its the facilities. STOF's gaming division liquidity profile is strong, characterized by robust cash flow generation prior to distributions to the tribe and a limited capital project pipeline. Although much of STOF's debt has level debt service, it does face a $773 million term loan maturity coming due in fiscal 2014, which Fitch believes will need to be refinanced. The one-notch distinction between the 'BB' transaction rating on the special obligation bonds and the 'BB+' transaction rating on the gaming revenue bonds and term loan reflects the special obligation bondholders' subordinated interest in the cash flows of the gaming division. Debt service on the special obligation bonds is payable from gaming division cash flows after debt service requirements on the gaming revenue bonds and term loan are met. STOF has entered into a distribution agreement with the trustee, pursuant to which it covenants that debt service on the special obligation bonds will be paid before the residual gaming revenues are used for any governmental purposes, including per capita payments to members. SEMINOLE TRIBE: S&P Assigns Ratings on CreditWatch Negative ----------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'BBB' issuer credit rating, for the Seminole Tribe of Florida on CreditWatch with negative implications. At the same time, S&P also placed its ratings on Tribe affiliates Seminole Hard Rock Entertainment Inc. and Seminole Hard Rock International LLC, including the 'BB' issuer credit rating, on CreditWatch with negative implications. "The CreditWatch listings reflect heightened governance concerns following recent issues regarding financial controls at the Tribe, including those identified in a notice of violation from the National Indian Gaming Commission earlier this month," said Standard & Poor's credit analyst Ben Bubeck. The notice from the NIGC identified improper uses of gaming revenues by certain tribal members, including members of the tribal council. It is S&P's expectation that the Tribe will address the violations identified by the NIGC within the 60-day time frame that has been allowed. While the Tribe has taken meaningful steps over the past several years to improve its internal controls, weaknesses in governance, such as those recently identified, are not typical for entities carrying investment-grade ratings. That said, as S&P considers the extent to which credit quality has been affected, S&P will also take into account the Tribe's progress in addressing other control issues in recent years, as well as the strength and stability of its gaming operations, particularly following the recently ratified compact with the State of Florida. In resolving the CreditWatch listings, S&P will monitor the Tribe's progress in addressing the recently identified governance issues, and will determine the extent to which credit quality has been affected. Given the investment-grade rating on the Tribe, Standard & Poor's expects a prompt resolution of these issues. At this time, S&P does not anticipate that these issues will impact the economic incentives underlying S&P's expectation that, within certain limitations, the Seminole Tribe of Florida would support its wholly owned affiliates Seminole Hard Rock Entertainment Inc. and Seminole Hard Rock International LLC. This support currently translates into a two-notch higher issuer credit rating than the affiliates would otherwise be assigned. In addition, because the relationship between the Tribe and these affiliates is one of support and not linkage, largely due to their operational independence, a downgrade of the rating on the Tribe may not result in a downgrade of S&P's rating on these affiliates. SMURFIT-STONE CONTAINER: Moody's Removes 'B2' Rating on Loan ------------------------------------------------------------ Moody's removed the provisional designation on Smurfit-Stone Container Enterprises, Inc.'s B2 term loan, corporate family and probability of default ratings. The outlook for the ratings remains stable. The provisional ratings were assigned pending the emergence from bankruptcy and the closing of the exit financing. The last rating action on SSCE was on January 20, 2010, when Moody's rated the exit financing. Headquartered in Creve Coeur, MO, Smurfit-Stone Container Corporation operates through a wholly-owned subsidiary company, Smurfit-Stone Container Enterprises, Inc. The company is an integrated producer of containerboard and corrugated containers (paper-based industrial packaging) and is a large collector, marketer, and exporter of recycled fiber. SMURFIT-STONE: S&P Gives 'BB-' Corporate to Emerged Company ----------------------------------------------------------- Standard & Poor's Ratings Services raised the corporate credit rating on Creve Coeur, Mo.-based Smurfit-Stone Container Corp. to 'BB-' from 'D'. S&P also assigned a 'BB+' (two notches above the corporate credit rating) issue-level rating with a recovery rating of '1', indicating very high (90% to 100%) recovery of principal in a payment default scenario, to SSCC's senior secured debt. The rating outlook is stable. At the same time, S&P withdrew its ratings on all of the pre- petition debt outstanding at Smurfit and its subsidiaries. "The 'BB-' corporate credit rating reflects S&P's view of SSCC's fair business risk profile derived from its participation as the second-largest North American producer in the cyclical and competitive market for containerboard and corrugated packaging; limited product diversity; and exposure to volatile raw material and energy costs," said Standard & Poor's credit analyst Pamela Rice. Partially offsetting these characteristics are greatly improved market conditions that S&P believes should continue over the next year or so, and good end-market and customer diversity. The stable rating outlook is supported by S&P's expectations for improved earnings over the next year or so and sufficient liquidity for the 'BB-' rating level. Specifically, S&P expects adjusted leverage to be less than 4x and FFO to debt to be greater than 15%. S&P could consider a higher rating if favorable market conditions continue such that SSCC's free cash flow generation and accumulated cash balances are meaningfully higher than S&P currently expect when it faces the potential ramp up of pension contributions. Specifically, S&P would need to believe that the company would be able to generate at least break-even free cash flow even during cyclical downturns and that credit measures would remain near the levels S&P expects in the near term, specifically adjusted debt to EBITDA around 3.5x and adjusted FFO to debt around 20%. S&P could lower the rating if SSCC's operating performance deteriorates rather than improves from first-quarter 2010 results such that S&P expects substantially lower free cash flow generation and weaker-than-expected credit measures. Specifically, if S&P believed adjusted leverage would reach 5x and FFO to debt would fall to 10%. Factors that could contribute to such a scenario include a faltering U.S. economy that leads to oversupply and falling prices or rampant cost inflation. S&P could also consider a lower rating if the company develops a financial policy that S&P would deem to be more consistent with a highly leveraged financial risk profile. SMURFIT-STONE: Has Intent to Distribute Reserve Amount to Claims ---------------------------------------------------------------- On March 2010, Smurfit-Stone Container Corp. and its units filed the "Notice of SSCE Distribution Reserve Amount with Respect to Certain Disputed, Unliquidated and Putative Rejection Claims." Thereafter, American Premier Underwriters, Inc., filed an objection to the Reserve Notice and filed a request to allow or, in the alternative, estimate the unliquidated portion of its claim. James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, tells the U.S. Bankruptcy Court for the District of Delaware that after the filing of the Objection and Motion, the Parties worked together and came up with a revised proposed order resolving the various issues between them. The Revised Proposed Order provides that pursuant to the Debtors' Chapter 11 Plan of Reorganization, the SSCE Distribution Reserve Amount with respect to Claim Nos. 11774 and 11775 filed by APU will be $2,500,000. APU's rights to comment on, contest or challenge any settlement between the Debtors and the United States Department of Justice/EPA regarding "the Sauer Dump site" are expressly reserved. The Court subsequently entered the Revised Proposed Order. About Smurfit-Stone Smurfit-Stone Container Corp. -- http://www.smurfit-stone.com/-- is one of the leading integrated manufacturers of paperboard and paper-based packaging in North America and one of the world's largest paper recyclers. The Company operates 162 manufacturing facilities that are primarily located in the United States and Canada. The Company also owns roughly one million acres of timberland in Canada and operates wood harvesting facilities in Canada and the United States. The Company employs roughly 21,250 employees, 17,400 of which are based in the United States. For the quarterly period ended September 30, 2008, the Company reported roughly US$7.450 billion in total assets and US$5.582 billion in total liabilities on a consolidated basis. Smurfit-Stone and its U.S. and Canadian subsidiaries filed for Chapter 11 protection on January 26, 2009 (Bankr. D. Del. Lead Case No. 09-10235). Certain of the company's affiliates, including Smurfit-Stone Container Canada Inc., a wholly owned subsidiary of SSCE, and certain of its affiliates, filed to reorganize under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice in Canada. Smurfit-Stone joined pulp- and paper-related bankruptcies as rising Internet use hurts magazines and newspapers. Corporacion Durango SAB, Mexico's largest papermaker, sought U.S. bankruptcy in October. Quebecor World Inc., a magazine printer and Pope & Talbot Inc., a pulp-mill operator, also sought cross-border bankruptcies for their operations in the U.S. and Canada. James F. Conlan, Esq., Matthew A. Clemente, Esq., Dennis M. Twomey, Esq., and Bojan Guzina, Esq., at Sidley Austin LLP, in Chicago, Illinois; and Robert S. Brady, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor in Wilmington, Delaware, serve as the Debtors' bankruptcy counsel. PricewaterhouseCoopers LLC, serves as the Debtors' financial and investment consultants. Lazard Freres & Co. LLC acts as the Debtors' investment bankers. Epiq Bankruptcy Solutions LLC acts as the Debtors' notice and claims agent. The company's Plan of Reorganization, which was confirmed by the U.S. Bankruptcy Court on June 21, 2010, and recognized by a Canadian court order, became effective July 1. The Plan provides that 2.25% of the new Smurfit-Stone common stock pool will be distributed pro rata to the Company's previous preferred stockholders and 2.25% percent of the New Smurfit-Stone common stock pool will be distributed pro rata to the Company's previous common stockholders. SMY MEDIA: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: SMY Media, Inc. 211 E. Ontario St., #900 Chicago, IL 60611 Bankruptcy Case No.: 10-28793 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtor's Counsel: Scott R. Clar, Esq. Crane Heyman Simon Welch & Clar 135 S Lasalle Suite 3705 Chicago, IL 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 E-mail: sclar@craneheyman.com Estimated Assets: $0 to $50,000 Estimated Debts: $500,001 to $1,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-28793.pdf The petition was signed by Gerald Grant III, company's executive vice president. SOMERSET PARTNERS: Case Summary & 4 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Somerset Partners, LLC P.O. Box 775 Belvidere, IL 61008 Bankruptcy Case No.: 10-73224 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtor's Counsel: Bernard J. Natale, Esq. Law Office of Bernard J. Natale, Ltd. 6833 Stalter Drive Suite 201 Rockford, IL 61108 Tel: (815) 964-4700 Fax: (815) 227-5532 E-mail: natalelaw@bjnatalelaw.com Scheduled Assets: $661,077 Scheduled Debts: $1,345,075 A list of the Company's 4 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-73224.pdf The petition was signed by Joey Sanfilippo, manager. Debtor-affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Conklin, LLC 10-73217 06/28/10 Courtyard Apartments, LLC 10-73219 06/28/10 Foxwood Village Apartments, LLC 10-73221 06/28/10 SPECIALTY PRODUCTS: Insurers Want Coverage Appeal Finished ---------------------------------------------------------- Bill Rochelle at Bloomberg News reports that three insurers are asking the bankruptcy court to lift the stay to allow an appeal by RPM International Inc. to continue. RPM was appealing a losing lawsuit when non-operating subsidiaries Specialty Products Holding Corp. and Bondex International Inc. filed Chapter 11 petitions at the end of May to create a trust taking over liability for asbestos claims. A hearing on the request is scheduled for July 14. According to Bloomberg, the U.S. District Court in Ohio ruled in late 2008 that the policies were exhausted by payments that the insurers made on asbestos claims. RPM appealed to the U.S. Court of Appeals in Cincinnati. The insurance companies argue it's important to have a ruling from the Court of Appeals to know whether any additional insurance money will be available to fund a trust under the contemplated Chapter 11 plan. The insurance companies wanting the appeal to be completed are Continental Casualty Co., Columbia Casualty Co. and Century Indemnity Co. About Specialty Products Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection on May 31, 2010 (Bankr. D. Del. Case No. 10-11780). Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co-counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100,000,001 to $500,000,000. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100,000,001 to $500,000,000. They filed for bankruptcy to deal with 10,000 asbestos claims. SPECIALTY PRODUCTS: RPM Faces Criticism for 2 Units' Filing ----------------------------------------------------------- A plan by RPM International, Inc., to put two nonoperating units into bankruptcy in order to resolve thousands of asbestos claims filed by mesothelioma lawyers has come under criticism by the U.S. Trustee assigned to monitor the bankruptcy. RPM, a manufacturer of specialty chemicals and paints, faces in excess of 10,000 asbestos lawsuits that have been filed against it or one of its subsidiaries. On May 31, two of the company's units, Specialty Products Holding Corp. and Bondex International Inc., filed for protection under Chapter 11 of the bankruptcy code. RPM had planned to use the two holding companies to create a fund to resolve the asbestos cases. Similar claims had already cost RPM as much as $82 million a year since 2005. Under U.S. bankruptcy law, a bankrupt company can force all of its asbestos lawsuits to be settled by an adequately funded trust. In one example of this strategy, Federal-Mogul Corp., the maker of Champion spark plugs, used a trust to resolve up to $9.4 billion in asbestos claims. But the trustee, Richard Schepacarter, told U.S. Bankruptcy Judge Kevin Carey in Wilmington, the District of Delaware, that "there needs to be a hard look at [this] case." He told the court that RPM's plan appears to conflict with previous bankruptcy court rulings involving asbestos trusts. RPM is not the only company to place units in bankruptcy in an attempt to resolve asbestos lawsuits. Less than a week after its Chapter 11 filing, EnPro Industries, Inc., another manufacturer facing thousands of asbestos claims, saw its Garlock Sealing Technologies subsidiary file for Chapter 11 protection. Garlock, too, is planning to create a trust to pay claims. Asbestos exposure -- long linked to diseases like lung cancer and mesothelioma, a nearly always fatal cancer of the protective lining covering many internal organs -- remains a tremendous health concern as the deadly conditions often develop decades after individuals come in contact with the material or, even more worrisome, inhale dangerous asbestos particles. Even if parts no longer contain asbestos, the problems -- and fears -- remain, because it is exposure from many years past that is triggering many of the asbestos lawsuits now pending. While mesothelioma lawyers have been successful in obtaining large -- often multimillion-dollar -- settlements and verdicts from manufacturers like RPM and Garlock, these are bittersweet victories for the claimants, who invariably face a grim future. In the RPM bankruptcy case, Judge Carey issued a 14-day moratorium on asbestos lawsuits pending against the company. During that period, a panel is to be created to represent individuals who developed asbestos related illnesses, like mesothelioma, related to materials produced by an RPM company. Judge Carey set a hearing on June 15th to determine whether to continue or rescind that temporary restraining order. Schepacarter's concern as a trustee focused on the nonoperating status of the two RPM units. "Because they are holding companies with no operations, he questioned whether the companies are eligible to use bankruptcy to set up an asbestos trust". Judge Carey said the question was legitimate and required an answer before the case went much further. Attorneys representing the RPM units have requested the judge to bar any asbestos lawsuits from proceeding during the time that the trust is being created and funded under bankruptcy court supervision. That request was opposed by Natalie Ramsey, the attorney representing the law firms that have filed asbestos lawsuits against RPM on behalf of thousands of asbestos victims. Ramsey and the other mesothelioma lawyers contend that the bankruptcy case might have been improperly filed. According to the company attorney for RPM "in order for the trust to comply with bankruptcy law, it must be supported by 75 percent of the people who currently have asbestos claims against the two RPM units." About Specialty Products Cleveland, Ohio-based Specialty Products Holdings Corp., aka RPM, Inc., is a wholly owned subsidiary of RPM International Inc. The Company is the holding company parent of Bondex International, Inc., and the direct or indirect parent of certain additional domestic and foreign subsidiaries. The Company claims to be a leading manufacturer, distributor and seller of various specialty chemical product lines, including exterior insulating finishing systems, powder coatings, fluorescent colorants and pigments, cleaning and protection products, fuel additives, wood treatments and coatings and sealants, in both the industrial and consumer markets. The Company filed for Chapter 11 bankruptcy protection on May 31, 2010 (Bankr. D. Del. Case No. 10-11780). Gregory M. Gordon, Esq., Dan B. Prieto, Esq., and Robert J. Jud, Esq., at Jones Day, serve as bankruptcy counsel. Daniel J. DeFranceschi, Esq., and Zachary I. Shapiro, Esq., at Richards Layton & Finger, serve as co-counsel. Logan and Company is the Company's claims and notice agent. The Company estimated its assets and debts at $100,000,001 to $500,000,000. The Company's affiliate, Bondex International, Inc., filed a separate Chapter 11 petition on May 31, 2010 (Case No. 10-11779), estimating its assets and debts at $100,000,001 to $500,000,000. They filed for bankruptcy to deal with 10,000 asbestos claims. SPRINGBOK SERVICES: Asks for Court OK to Obtain DIP Financing ------------------------------------------------------------- Springbok Services, Inc., seeks authority from the U.S. Bankruptcy Court for the District of Colorado to obtain postpetition secured financing from _______ National Association. Duncan E. Barber, Esq., at Bieging Shapiro & Burrus, LLP, the attorney for the Debtor, explains that the Debtor has determined that it will need approximately $1,100,000 in working capital from the Petition Date through September 12, 2010, to be used to fund operations and bankruptcy expenses, as set forth in the budget, a copy of which is available for free at: http://bankrupt.com/misc/SPRINGBOK_budget.pdf The DIP lenders have committed to provide up to $1,056,000, which is a term loan with multiple advances. The Debtor can draw up to an aggregate of $1,056,000 an as-needed basis, but amounts repaid cannot be re-borrowed. The DIP facility will incur interest at Prime plus 6%, calculated from the date of each advance. The Debtors' obligations under the DIP facility are secured by first priority security interest in all assets of the Debtor that are not subject to pre-petition liens, including avoidance actions, and junior lien on all assets subject to pre-petition liens in order of priority as determined by applicable non- bankruptcy law. The Debtors are required to pay KeyBank $24,000 in fees. More information is available for free at: http://bankrupt.com/misc/SPRINGBOK_dipfinancingmotion.pdf Englewood, Colorado-based Springbok Services, Inc., fka The Best Present Company, Inc.; and fdba Springbok Card Processing Services, fka Springbok Card Processing Services, Inc., filed for Chapter 11 bankruptcy protection on June 18, 2010 (Bankr. D. Colo. Case No. 10-25285). Duncan E. Barber, Esq., who has an office in Denver, Colorado, assists the Company in its restructuring effort. The Company estimated its assets and debts at $10,000,001 to $50,000,000. TAYLOR BEAN: Freddie Mac Fights BofA's Examination Bid ------------------------------------------------------ Bankruptcy Law360 reports that Freddie Mac is fighting Bank of America NA's request that it submit to more detailed examination regarding its business relationship with Taylor Bean & Whitaker Mortgage Corp., saying it has already made "extensive and time- consuming efforts" to respond to the probe. 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 filed under Chapter 11 three weeks after federal investigators searched its offices. The day following the search, the Federal Housing Administration, Ginnie Mae and Freddie Mac prohibited the company from issuing new mortgages and terminated servicing rights. 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. TEXAS RANGERS: Lists Assets at $79.6 Million -------------------------------------------- Bill Rochelle at Bloomberg News reports that Texas Rangers Baseball Partners has filed its schedules of assets and liabilities. The schedules showed property worth $79.6 million against debt totaling $173.7 million. Secured claims were listed for $93.5 million. The lists of property didn't put a value on the franchise from Major League Baseball. Mr. Rochelle also reports that the schedule of financial affairs says that the team's income from the business was $149.5 million in 2008 and $167.4 million in 2009. Through May 31, income in 2010 was $54.9 million. Meanwhile, the Texas Rangers was told by the bankruptcy judge at a hearing June 28 to produce documents for the secured lenders relating to the bids for the team, the valuation of the bids, and the reasons for filing in Chapter 11. The lenders, who oppose the sale and the team's reorganization plan, in turn were required to produce documents for the team. The confirmation hearing for approval of the plan is scheduled for July 9 in U.S. Bankruptcy Court in Fort Worth, Texas. The Plan provides for the sale of substantially all of the assets of TRBP -- including the Texas Rangers Major League Baseball Club -- to Rangers Baseball Express LLC, an entity controlled by Chuck Greenberg and Nolan Ryan, through the Prepackaged Plan. Although the lenders are owed $525 million in total, they receive only $75 million directly from the team because that's the limit of the secured debt the team itself guaranteed. About Texas Rangers Texas Rangers Baseball Partners owns and operates the Texas Rangers Major League Baseball Club, a professional baseball club in the Dallas/Fort Worth Metroplex. TRBP is a Texas general partnership, in which subsidiaries of HSG Sports Group LLC own a 100% stake. Controlled by Thomas O. Hicks, HSG also indirectly wholly-owns Dallas Stars, L.P., which owns and operates the Dallas Stars National Hockey League franchise. The Texas Rangers have had five owners since the club moved to Arlington in 1972. Mr. Hicks became the fifth owner in the history of the Texas Rangers on June 16, 1998. In its petition, Texas Rangers Baseball Partners said it had both assets and debt of less than $500 million. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtor. Forshey & Prostok LLP serves as conflicts counsel. Parella Weinberg Partners LP serves as financial advisor. Lenders to the Texas Rangers sought to force the baseball team's equity owners -- Rangers Equity Holdings, L.P. and Rangers Equity Holdings GP, LLC -- into bankruptcy court protection (Bankr. N.D. Tex. Case No. 10-43624 and 10-43625). The lenders, a group that includes investment funds Monarch Alternative Capital and Kingsland Capital Management, filed an involuntary bankruptcy petition on May 28 against the two companies. The two companies were not included in the May 24 Chapter 11 filing of TRBP. THANH HOANG: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Thanh Thuy Thi Hoang 35110 Arbordale Ct. Fremont, CA 94536 Bankruptcy Case No.: 10-47314 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of California (Oakland) Judge: Randall J. Newsome Debtor's Counsel: Drew Henwood, Esq. Law Offices of Drew Henwood 41 Sutter St. #621 San Francisco, CA 94104 Tel: (415) 362-7412 E-mail: dfhenwood@aol.com Scheduled Assets: $766,054 Scheduled Debts: $1,394,345 A list of the Company's 19 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/canb10-47314.pdf The petition was signed by Thanh Thuy Thi Hoang. TOT ENERGY: Posts $1.8 Million Net Loss in Q3 Ended December 31 --------------------------------------------------------------- TOT Energy, Inc., filed on June 29, 2010, its quarterly report on Form 10-Q, reporting a net loss of $1,764,551 for the three months ended December 31, 2009, compared to a net loss of $6,328,588 for the three months ended December 31, 2008. The Company's balance sheet at December 31, 2009, showed $3,471,684 in assets, $1,933,355 of liabilities, and $1,538,329 of stockholders' equity. "Several factors raise significant doubt as to our ability to continue operating as a going concern. These factors include our history of net losses and that we have recently commenced operations and, until the second quarter of 2008, have earned minimal revenues, as well as the termination of TOT-SIBBNS first contract and the decision to unwind the TOT-SIBBNS joint venture. We are dependent upon TGR Energy, LLC or Mike Zoi (as a result of his controlling interest in TGR and the Company's dependence on the Subscription Agreement with TGR) to fund our operations." Daszkal Bolton LLP, in Boca Raton, Florida, expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year ended March 31, 2009. The independent auditors noted that the Company has experienced recurring losses and has a working capital deficit at March 31, 2009. A full-text copy of the quarterly report is available for free at: http://researcharchives.com/t/s?65b1 Based in Miami, Fla., TOT Energy, Inc. (OTC BB: TOTY) -- http://www.totenergy.com/-- operates as a diversified oil services company primarily in central Asia and Europe. It primarily engages in the acquisition, exploration, development, production, and marketing of crude oil and natural gas primarily in Kazakhstan and Russia. The Company, through a joint venture, TOT-SIBBNS, provides oil exploration and consulting services to companies in and around Novosibirsk, Russia. TOT-SIBBNS owns and operates four oil drilling rigs for drilling exploratory wells, as well as provides engineering services and well remediation services. In addition, TOT Energy, through a joint venture with Korlea Invest Holding AG of Switzerland, focuses on marketing oil assets sourced by other TOT-Energy companies and contacts. TRUVO USA: Files for Ch. 11; Mulls Sale of Assets to Creditors -------------------------------------------------------------- Kristina Doss at Dow Jones Daily Bankruptcy Review reports that Truvo USA LLC filed for bankruptcy protection (Bankr. S.D.N.Y. Case No. 10-13513) on July 1, 2010, after striking a deal with senior lenders holding 70% of the company's outstanding loans in a debt-for-equity swap, according to court papers. According to Dow Jones, Chief Financial Officer Marc C. F. Goegebuer said in court papers Thursday that the operating subsidiaries have been changing their focus from print-centric directory businesses to the Internet. But revenues generated by the subsidiaries' online products have not been "sufficient" to offset declines in their print business and the company's debt. The privately owned company and its operating subsidiaries, known as the Truvo Group, are "highly leveraged," with $1.9 billion of "total external financial debt," Mr. Goegebuer said, according to Dow Jones. "The debtors believe that a Chapter 11 restructuring, combined with a sale of TUSA . . . to a newly formed entity to be owned by certain of the debtors' creditors, will position the Truvo Group as a viable long-term provider of printed, online and mobile products," he said. Dow Jones says Truvo USA listed having between $500 million and $1 billion in assets and more than $1 billion in debt in its bankruptcy petition filed Thursday with the U.S. Bankruptcy Court in Manhattan. Four other holding companies -- Truvo Parent Corp., Truvo Intermediate LLC, Truvo Subsidiary Corp., and Truvo Acquisition Corp. -- have also filed for bankruptcy protection. Judge Arthur J. Gonzalez handles the cases. Truvo USA LLC publishes print and online directories through its operating subsidiaries. The operating subsidiaries have not sought protection under Chapter 11 protection or any other insolvency regime, according to Goegebuer. Dow Jones notes the Truvo debtors are owned Truvo Luxembourg S.a.r.l, which is not a debtor in these Chapter 11 proceedings. Substantially all of the equity in Truvo Luxembourg is owned by funds advised by Apax Partners and Cinven Group Ltd. TUPPERWARE BRANDS: S&P Raises Corporate Credit Rating From 'BB+' ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Orlando, Fla.-based Tupperware Brands Corp., including the corporate credit rating, to 'BBB-' from 'BB+'. At the same time S&P removed all ratings from CreditWatch, where they were placed with positive implications on Feb. 22, 2010, reflecting improved operating performance and better credit measures. S&P also affirmed its 'BBB' issue rating on the company's senior secured debt. S&P has withdrawn its '1' recovery rating on the senior secured debt because S&P does not maintain recovery ratings on investment-grade entities. The affirmation of the senior secured debt reflects that lenders to the senior facilities continue to benefit from priority security interest in the pledged collateral of the company. The outlook is stable. Tupperware had about $435 million of reported debt outstanding as of March 31, 2010. The ratings upgrade reflects Tupperware's continued operating performance improvement and better credit measures. Adjusted EBITDA has steadily improved on a sequential quarterly basis over the past year, and trailing 12-month discretionary cash flow has exceeded $100 million over this period. This has allowed the company to make significant debt prepayments, which totaled $141.8 million in fiscal 2009, and improve credit measures. S&P estimate that adjusted debt to EBITDA for the 12 months ended March 31, 2010, declined to 1.5x compared with a ratio of 2.4x for the same prior year period, and funds from operations (FFO) to total debt increased to 52.1% from 34% for the same two respective periods. These credit measures are strong for the 'BBB' rating category. The ratings on Tupperware reflect the company's moderate financial policies, geographic diversity, well-known brand name, and premium product position in the mature molded-plastic storage category. Still, S&P believes the company's product offerings are somewhat concentrated within houseware products and the highly competitive cosmetics industry, in which the company has a modest competitive position globally. Therefore, S&P's investment grade ratings are based on its expectations for credit measures to remain somewhat better than medians for the 'BBB' rating category. UNIVAR INC: S&P Puts 'B' Corp. Rating on CreditWatch Positive ------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed all its ratings, including the 'B' corporate credit rating, on Redmond, Wash.-based Univar Inc. on CreditWatch with positive implications. The CreditWatch listing follows Univar's S-1 filing indicating that the company plans to issue common stock. The company intends to use the net proceeds from the offering to repay a portion of its outstanding debt. "The expected debt reduction, together with a continuation of favorable operating results, could result in enough improvement to the financial risk profile to support a modest upgrade," said Standard & Poor's credit analyst Henry Fukuchi. "S&P could affirm the ratings following S&P's review if business conditions weaken, S&P concludes that the expected debt reduction is not meaningful, or if the transaction does not proceed due to external factors." The ratings on Univar reflect its highly leveraged capital structure and low operating margin associated with the fragmented and competitive nature of the chemical distribution industry. Offsetting factors are the company's leading market positions; satisfactory product, customer, supplier, and geographic diversity; and a flexible cost structure, with margin stability during economic downturns. As of March 31, 2010, Univar's capital structure is highly leveraged. Total adjusted debt was approximately $2.2 billion, resulting in a ratio of debt to EBITDA of 4.9x. The ratio of funds from operations to total adjusted debt is about 10.5% as of March 31, 2010, consistent with S&P's expectations at the current ratings of approximately 10%. S&P expects key credit metrics to improve after the anticipated debt reduction from the proposed IPO, assuming that business conditions do not deteriorate. Univar is a leading global chemical distributor with annual sales of approximately $7.2 billion. We'll resolve the CreditWatch listing after a review of the proposed equity offering and S&P's assessment of the implications for credit quality. S&P could raise the ratings modestly if the debt reduction resulting from the transaction improves the financial risk profile. If debt is not reduced meaningfully or if the transaction is not completed as expected, an affirmation of the ratings is likely. URANIUM RESOURCES: To Transfer to NASDAQ Capital Market ------------------------------------------------------- Uranium Resources, Inc., disclosed that the NASDAQ Stock Market, LLC, has approved URI's application to transfer its stock listing to The NASDAQ Capital Market. The transfer will be effective at the opening of the market on Friday, July 2, 2010. The Company's stock symbol "URRE" will not change as a result of the transfer and it has no impact on the ability of investors to trade the stock. The NASDAQ Capital Market is a continuous trading market that operates in the same manner as The NASDAQ Global Market, and it includes the securities of approximately 450 companies. All companies listed on The NASDAQ Capital Market must meet certain financial requirements and adhere to NASDAQ's corporate governance standards. In accordance with NASDAQ Marketplace Rules, the Company has been granted until January 4, 2011, to demonstrate compliance with the minimum $1.00 bid price requirement of The NASDAQ Capital Market. If compliance with the $1.00 bid price requirement is not regained in the 180-day time period, NASDAQ will notify the Company of its determination to delist the Company's common shares, which decision may be appealed to a NASDAQ Listing Qualifications Panel. "The transfer to the Capital Market allows our investors to continue to benefit from our shares being listed on the NASDAQ Stock Market including visibility with the investment community, liquidity and pricing efficiency while we continue to pursue strategic opportunities and advance projects in New Mexico and Texas," noted Don Ewigleben, Uranium Resources' President and CEO. The transfer is in response to the notice the Company received from NASDAQ on January 8, 2010, stating that for 30 consecutive days the bid price for the Company's common stock had closed below the minimum $1.00 per share as required by Marketplace Rule 5550(a)(1) for continued listing on the NASDAQ Global Market. About Uranium Resources Uranium Resources Inc. explores for, develops and mines uranium. Since its incorporation in 1977, URI has produced over 8 million pounds of uranium by in-situ recovery (ISR) methods in the state of Texas where the Company currently has ISR mining projects. URI also has 183,000 acres of uranium mineral holdings and 101.4 million pounds of in-place mineralized uranium material in New Mexico, as well as a NRC license to produce up to 1 million pounds of uranium. The Company acquired these properties over the past 20 years along with an extensive information database of historic mining logs and analysis. None of URI's properties is currently in production. URI's strategy is to fully exploit its resource base in New Mexico and Texas, expand its asset base both within and outside of New Mexico and Texas, partner with larger mining companies that have undeveloped uranium or with junior mining companies that do not have the mining experience of URI, as well as provide restoration expertise to those that require the capability or lack the proficiency. US STEEL: Fitch Affirms Issuer Default Rating at 'BB+' ------------------------------------------------------ Fitch Ratings has affirmed the Issuer Default Rating and outstanding debt ratings of United States Steel Corporation's securities: -- Long-term IDR at 'BB+'; -- Senior secured credit facility at 'BBB-'; -- Senior unsecured notes at 'BB+'. The Rating Outlook is Stable. The Stable Outlook reflects Fitch's view that U.S. Steel's liquidity is sufficient to support operations should the recovery remain weak for the next 12-to-18 months. Fitch believes that free cash flow will be negative for 2010 following negative free cash flow of $191 million for the quarter ended March 31, 2010, and $736 million in 2009. Operating EBITDA was $110 million for the quarter ended March 31, 2010, and a loss of $1.1 billion for 2009. Debt at March 31, 2010 was $3.7 billion. Cash on hand at quarter-end was $1.4 billion; the $750 million revolver was available up to the amount above which the fixed charges coverage ratio requirement is applicable ($637.5 million), as was the $500 million accounts receivable facility. The revolver expires May 11, 2012, and the receivables facility expires Sept. 24, 2010. The revolver has a 1.10:1.00 fixed charge coverage ratio requirement only at such times as availability under the facility is less $112.5 million. Following the repayment of the term loans in 2009 and the USSK revolver in 2010, scheduled maturities of debt are: -- $15 million in 2010; -- $218 million in 2011; -- $20 million in 2012; and -- $300 million in 2013 Capital expenditure guidance for 2010 is $530 million. Fitch expects interest expense in the range of $230 million to $240 million. Fitch expects U.S. Steel to generate positive EBITDA in 2010. A review of the ratings and Outlook would be warranted should liquidity deteriorate or if results are much weaker than expected. VISTEON CORP: Seeks Exclusive Plan Rights Until October 15 ---------------------------------------------------------- Bill Rochelle at Bloomberg News reports that Visteon Corp. is asking the Court to extend its exclusive period to propose a Chapter 11 until October 15. A hearing on the requested extension of the period within which no competing plan can be filed by another party is scheduled for July 15. Visteon Corp. has already filed a Chapter 11 plan. The explanatory disclosure statement was approved by the Court on June 28. The bankruptcy judge has scheduled a 10-day confirmation hearing to begin Sept. 28. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The Company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of US$4,561,000,000 and debts of US$5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) WARREN STEARNS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Warren Charles Stearns 175 Old Sutton Road Barrington Hills, IL 60010 Bankruptcy Case No.: 10-28803 Chapter 11 Petition Date: June 28, 2010 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: Pamela S. Hollis Debtor's Counsel: Richard N. Golding, Esq. The Golding Law Offices, P.C. The Boyce Building 500 North Dearborn Street, Second Floor Chicago, IL 60654 Tel: (312) 832-7885 Fax: (312) 755-5720 E-mail: rgolding@goldinglaw.net Scheduled Assets: $312,474 Scheduled Debts: $2,602,034 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb10-28803.pdf The petition was signed by Warren Charles Stearns. WAYNE POWELL: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Wayne L. Powell 392 North Street White Plains, NY 10605 Bankruptcy Case No.: 10-23306 Chapter 11 Petition Date: June 28, 2010 Court: U.S. Bankruptcy Court Southern District of New York (White Plains) Judge: Robert D. Drain Debtor's Counsel: Dana Patricia Brescia, Esq. Alter, Goldman & Brescia, LLP 550 Mamaroneck Avenue Harrison, NY 10528 Tel: (914) 670-0030 Fax: (914) 670-0031 E-mail: altergold@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of creditors together with its petition. The petition was signed by the Debtor. Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Strait Gate Church, Inc. 09-23954 10/16/09 ZAYAT STABLES: Court Approves Settlement Agreement With Bank ------------------------------------------------------------ Bloodhorse.com, citing report from Daily Racing Form, says a federal judge approved the settlement agreement between Zayat Stables and Fifth Third Bank, wherein the bank will vote to approve the Company's Chapter 11 plan of reorganization plan in a court hearing July 15. The settlement ends legal battles and will pave way for the company to begin operating stable under the terms of the plan. According to Bill Rochelle at Bloomberg News, the settlement modifies Fifth Third's treatment under the plan. In the revised plan, the bank's loan will be fully paid by the end of 2014. The current principal balance of $28.2 million will be paid down by at least $3.23 million to $4 million a year, with a balloon payment due at the end of 2014. Going forward, interest will be three percentage points higher than the London interbank borrowed rate. The bank will also share in part of the proceeds from the sale of horses, with payments applied against the annual minimums. Accrued interest of $623,000 will be paid June 30. Other creditors aren't adversely affected, Zayat say in court papers, according to Bloomberg. Under the Plan: * Unsecured creditors, with $1.2 million in claims, are to be paid in full without interest over two years. * Ahmed Zayat will retain ownership. A $2.45 million loan from a Zayat family member used to finance the Chapter 11 case will be forgiven. About Zayat Stables Headquartered in Hackensack, New Jersey, Zayat Stables owns of 203 thoroughbred horses. The horses, which are collateral for the bank loan, are worth $37 million, according an appraisal mentioned in a court paper. Ahmed Zayat said in a court filing that he personally invested $40 million in the business. 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. * Foreclosure Sales Account for 31% of All Residential Sales ------------------------------------------------------------ RealtyTrac(R) released its first U.S. Foreclosure Sales Report(TM), which shows that foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process. A total of 232,959 U.S. properties in some stage of foreclosure - default, scheduled for auction or bank-owned (REO) - sold to third parties in the first quarter, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales. "First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts," said James J. Saccacio, chief executive officer of RealtyTrac. "As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration." The average sales prices on properties in some stage of foreclosure decreased 23 percent from 2006 to 2009 while the average discounts on foreclosure purchases steadily increased from 21 percent in 2006 to 27 percent in the first quarter of 2010. Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common. Foreclosure sales increase 2,500 percent from 2005 to 2009 More than 1.2 million U.S. properties in some stage of foreclosure sold to third parties in 2009, an increase of 25 percent from 2008 and an increase of nearly 327 percent from 2007. Total foreclosure sales in 2009 were up more than 1,100 percent from 2006 and up more than 2,500 percent from 2005. Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and up from 6 percent in 2007. The average sales price of properties that sold while in some stage of foreclosure in 2009 was 25 percent below the average sales price of properties not in the foreclosure process. That was up from an average discount of 22 percent in 2008 but down from an average discount of 26 percent in 2007. The average foreclosure discount in 2005 was 35 percent, driven by a nearly 50 percent discount on REOs; however, the discount on pre-foreclosures trended up slightly over the same five-year period, from nearly 12 percent in 2005 to 15 percent in 2008 and 2009. Foreclosure Sales by Type in First Quarter A total of 144,503 bank-owned (REO) properties sold to third parties in the first quarter, down 13 percent from the previous quarter and down 27 percent from the first quarter of 2009. REO sales accounted for 19 percent of all sales in the first quarter, up from nearly 16 percent in the previous quarter but down from 21 percent of all sales in the first quarter of 2009. REOs sold for an average discount of 34 percent, up from an average discount of nearly 32 percent in both the previous quarter and the first quarter of 2009. A total of 88,456 pre-foreclosure properties - in default or scheduled for auction - sold to third parties in the first quarter, down 15 percent from the previous quarter and down nearly 41 percent from the first quarter of 2009. Pre-foreclosure sales accounted for nearly 12 percent of all sales, up from nearly 10 percent in the previous quarter but down from 16 percent in the first quarter of 2009. Pre-foreclosures, which are often short sales, sold for an average discount of nearly 15 percent, up from nearly 14 percent in the previous quarter but down from 16 percent in the first quarter of 2009. Nevada, California, Arizona Post Highest Percentage of Foreclosure Sales in Q1 Foreclosure sales accounted for 64 percent of all sales in Nevada in the first quarter, the highest percentage of any state, although Nevada's percentage was down from 65 percent of all sales in the previous quarter and 75 percent of all sales in the first quarter of 2009. California posted the second highest percentage, with foreclosure sales accounting for 51 percent of all sales there in the first quarter - up slightly from 50 percent in the previous quarter but down from 70 percent of all sales in the first quarter of 2009. Foreclosure sales as a percentage of all sales were also down in Arizona from the first quarter of 2009, but the state still posted the third highest percentage in the first quarter, with foreclosure sales accounting for 50 percent of all sales. Other states where foreclosure sales accounted for at least one- third of all sales were Massachusetts, Rhode Island, Florida, Michigan, Georgia, Illinois, Idaho and Oregon. Ohio, Kentucky, Illinois Post Highest Foreclosure Discounts The average sales price of properties that sold while in some stage of foreclosure in the first quarter was 39 percent below the average sales price of properties not in the foreclosure process in Ohio, Kentucky and Illinois - the states with the three highest average foreclosure discounts. The average overall foreclosure discount was at least 35 percent in California, Tennessee, Pennsylvania, DC and New Jersey. The biggest discount on bank-owned properties was in New York, where the average sales price for REOs was 52 percent below the average sales price for properties not in foreclosure. The biggest discount on pre-foreclosure properties was in Rhode Island, where the average sales price for properties in default or scheduled for auction was 33 percent below the average sales price for properties not in foreclosure. Report Methodology The RealtyTrac U.S. Foreclosure Sales Report is produced by matching national address-level sales deed data against RealtyTrac's foreclosure database of pre-foreclosure, auction and bank-owned properties. A property is considered a foreclosure sale if a sales deed is recorded for the property while it was actively in some stage of foreclosure or bank-owned. The foreclosure discount is calculated by comparing the percentage difference between the average sales price of properties not in foreclosure to the average sales price of properties in some stage of foreclosure or bank-owned. States without sufficient foreclosure sales data to calculate average prices are not included in the report. About RealtyTrac Inc. RealtyTrac -- http://www.realtytrac.com/-- is the leading online marketplace of foreclosure properties, with more than 1.5 million default, auction and bank-owned listings from over 2,200 U.S. counties, along with detailed property, loan and home sales data. Hosting more than 3 million unique monthly visitors, RealtyTrac provides innovative technology solutions and practical education resources to facilitate buying, selling and investing in real estate. RealtyTrac's foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures. * GE Capital Joint Leads $650MM Exit Financing for Smurfit-Stone ---------------------------------------------------------------- GE Capital, Restructuring Finance announced it is co-collateral agent in a $650 million asset-based credit facility to Smurfit- Stone Container Corporation, a leading integrated containerboard and corrugated packaging producer and recycler. The loan supports the company's exit from bankruptcy protection under a Plan of Reorganization. GE Capital Markets served as joint lead arranger. Headquartered in Chicago, IL, and Creve Coeur, MO, Smurfit-Stone Container Corporation is a leading manufacturer of paperboard and paper-based packaging and one of the world's largest paper recyclers. The company operates approximately 145 facilities with over 17,000 employees in the United States, Canada, Mexico and Asia. "The combination of GE's experience with paper and packaging companies and expertise in turnaround finance helped us advance our reorganization," said Tim Griffith, vice president and treasurer of Smurfit-Stone. "We value our relationship with GE and their ability to continue to make significant financial commitments." "We're dedicated to meeting the restructuring finance needs of mid-sized and large companies," said Rob McMahon, managing director of GE Capital, Restructuring Finance. "Providing businesses with the critical liquidity to execute their objectives is our specialty." About GE Capital GE Capital, Restructuring Finance is a leading provider of senior secured loans to distressed companies supporting Chapter 11 filings, plan-of-reorganizations and out-of-court restructurings. * BOOK REVIEW: The Executive Guide to Corporate Bankruptcy ---------------------------------------------------------- Authors: Thomas J. Salerno; Craig D. Hansen; Jordan A. Kroop Publisher: Beard Books Hardcover: 728 pages List Price: $174.95 The newly revised edition of The Executive Guide To Corporate Bankruptcy is perfectly timed. As the global economy continues to deteriorate, more and more companies are sinking into insolvency with executives at their helm who need a crash course in bankruptcy realities. This excellent book will quickly get both the seasoned executive and the uninitiated lawyer up to speed on the bankruptcy process. Salerno, Kroop and Hansen understand that the reorganization process can be intimidating, puzzling, and generally unpleasant. They penetrate the opaque gloom that some lawyers tend to perpetuate. Each chapter of this book addresses a different aspect of the reorganization process, beginning with an overview of the origins and purpose of US bankruptcy laws and ending with a debunking of common myths about reorganization. In between, they discuss each chapter of the bankruptcy code; discussing the gamut from liquidations through Chapter 11 sales and full-blown reorganizations. The authors' ability to distill the bankruptcy code's complex language into comprehensible and manageable blocks of information makes the book extremely readable. The Executive Guide is full of pragmatic advice. After laying out the essential elements and key players in the restructuring process, the authors get down to the nitty gritty of navigating a distressed company through reorganization. They realistically assess the challenges that an executive should expect to face in Chapter 11. They discuss how to assuage and balance the concerns of employees and key vendors, address the inevitable creditor dissatisfaction with executive compensation, deal with members of their professional team and work effectively as an executive whose actions will be constantly scrutinized and second-guessed. The authors also provide the cautionary note that "executives preparing to embark on a reorganization are usually too preoccupied with business emergencies to think about the personal toll that the process will exact." One common flaw in books that try to be accessible while dealing with technical topics is that they fall short in providing the reader with a substantive understanding of the subject matter. The Executive Guide to Corporate Bankruptcy avoids this pitfall. The book's fourth and fifth chapters provide in-depth analysis of the strategic decisions and steps that should be taken during the restructuring process. The authors explain the importance that venue can have a case, the intricacies of first day motions and how to prepare for confirmation. There is a detailed discussion of the sale of assets during the course of a Chapter 11 restructuring and the importance of making sure that major constituencies are a part of the decision-making process. They also walk the reader through the specifics of a plan of a reorganization, explaining the dynamics of the negotiation process, especially how to understand and appreciate the needs of your constituents and how to get a plan confirmed. The icing on the cake for this book is the excellent appendix. The final section of the book includes a user-friendly glossary of commonly used bankruptcy terms and a reorganization timeline. It also includes sample documents such as debtor-in-possession (DIP) financing agreements, operating reports, first day motions and orders, management severance agreements, and more. The summary of management incentive stock plans implemented in recent restructuring transactions is particularly informative. This is a terrific book. While geared to the non-lawyer executive, it will also be a useful resource for any lawyer who wants to gain practical familiarity with the bankruptcy process. This should be a best seller in today's environment, though it may need to be delivered to most executives in a brown paper wrapper. ********* 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 ***