/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/100824.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, August 24, 2010, Vol. 14, No. 234 Headlines 28TH LEGIS: Case Summary & 7 Largest Unsecured Creditors ADAM GROSSMAN: Case Summary & 15 Largest Unsecured Creditors AE BIOFUELS: Delays Filing of Form 10-Q for June 30 Quarter AEGIS MORTGAGE: Judge OKs Disclosure Statement, Asset Sale AFFINITY GROUP: Grace Period for Missed Payment Ends Mid-September ALL AMERICA: Delays Filing of Form 10-Q for June 30 Quarter ALMATIS BV: Lease Decision Period Extended Until November 26 ALMATIS BV: Exclusive Solicitation Period Extended Until Jan. 25 ALON USA: S&P Downgrades Corporate Credit Rating to 'B' AMCORE FINANCIAL: Files for Chapter 11 Protection AMCORE FINANCIAL: Case Summary & 15 Largest Unsecured Creditors AMERICAN APPAREL: Spokesman Dispels Bankruptcy Rumors AMERICAN INT'L: ILFC Unit Repays $3.9-Bil. Government Loan AMERICAN TONERSERV: Posts $1 Million Net Loss in Q2 Ended June 30 ANNALY BAY: Reorganization Case Dismissed for Bad Faith Filing ATLANTIC BANCGROUP: Earns $282,000 in Q2 Ended June 30 BANK OF AMERICA: Fitch Upgrades Individual Rating to C From C/D BISCAYNE BAY: Guarantors Can't Pursue Corus Bank Counterclaims BLOCKBUSTER INC: Douglas McHose Resigns as Senior Vice President BOCA BRIDGE: Involuntary Chapter 11 Case Summary BOSTON GENERATING: EBG to Pay $51 Million to Distrigas CAPITAL POWER: S&P Cuts Global Scale Issue-Level Rating to BB+ CAPITOL CITY BANCSHARES: Posts $505,400 Net Loss in Q2 2010 CAPRIUS INC: Posts $391,900 Net Loss in June 30 Quarter CARIBBEAN PETROLEUM: Proposes December 13 Auction for All Assets CARIBBEAN PETROLEUM: Puerto Rico Gov't Seeks Venue Transfer CARIBBEAN PETROLEUM: Gets Interim Nod for $10MM DIP Financing CDDM CORPORATION: Case Summary & 20 Largest Unsecured Creditors CELL THERAPEUTICS: Expects to Submit MAA in Second Half of 2010 CIRTRAN CORP: Delays Filing of Form 10-Q for June 30 Quarter CITY CAPITAL: Delays Filing of Form 10-Q for June 30 Quarter COLTS RUN: Hearing on PNC Plea for Ch11 Trustee Moved to Sept. 14 COLTS RUN: Files Full-Payment Reorganization Plan COMPLIANCE SYSTEMS: Busy With Acquisition, Delays Form 10-Q CONSPIRACY ENTERTAINMENT: Delays Form 10-Q for June 30 Quarter CRYOPORT INC: Form 10-Q Not Filed After Stock Placement Delayed CYTOMEDIX INC: Widens Net Loss to $1.8MM in 2nd Qtr. 2010 DELPHI CORP: Court Allows Retirees' Filing of Complaint DELPHI CORP: Wiegel Tool Asks for Wants Relief From Plan Order DENNY HECKER: May Be Evicted From Medina Home Under Accord EDUCATION MANAGEMENT: S&P Affirms 'BB-' Corporate Credit Rating EXTENDED STAY: Court Rejects $7.63MM Reimbursement for Starwood EXTENDED STAY: Proposes ESA Canada as Foreign Representative EXTENDED STAY: Wants Plan Filing Exclusivity Until Dec. 15 ECHO THERAPEUTICS: Incurs $535,600 Net Loss in Q2 Ended June 30 ECLIPS MEDIA: Posts $3.1 Million Net Loss in Q2 Ended June 30 ELEPHANT TALK: Posts $14.4MM Net Loss in Q2 Ended June 30 FORBES MEDI-TECH: Posts C$917,700 Net Loss in Q2 Ended June 30 FREDERICK BERG: Judge to Appoint Independent Trustee FUSION TELECOMMUNICATIONS: Posts $1.6 Million Net Loss in Q2 2010 GARLOCK SEALING: W.R. Grace Judge Takes Notice of Garlock Cases GENERAL DATACOMM: Scarce Funding Spurs Going Concern Doubt GENERAL GROWTH: Amends Plan for Potential Blackstone Participation GENERAL GROWTH: SEC Launches Probe on Possible Insider Trading GENERAL GROWTH: Units File 3rd Post-Confirmation Status Report GLEBE INC: Committee Taps Magee Goldstein as Bankruptcy Counsel GLEBE INC: U.S. Trustee Forms Five-Member Creditors Committee GOLDEN EAGLE: Delays Form 10-Q Due to Auditor Change GOODYEAR TIRE: S&P Affirms 'B+' Rating on Senior Unsecured Notes HAYES LEMMERZ: Reorganization Plan for Howell Declared Effective HYUN UM: Case Summary & 13 Largest Unsecured Creditors IMPERIAL CAPITAL: FDIC Opposes Plan Exclusivity Extension INTEGRATED HEALTHCARE: Posts $1.9MM Net Loss in June 30 Quarter INTERLINE BRANDS: Moody's Affirms 'B1' Corporate Family Rating INTERNATIONAL FUEL: Posts $468,000 Net Loss in Q2 Ended June 30 INFOLOGIX INC: June 30 Balance Sheet Upside-Down by $2.9 Million INNKEEPERS USA: Best Western Wants Decision on Membership Pact INNKEEPERS USA: Wins Nod for Moelis as Investment Banker INNKEEPERS USA: Wins OK to Hire Kirkland & Ellis as Counsel INNKEEPERS USA: Wins OK to Tap AP Services as Crisis Managers INT'L LEASE FINANCE: Repays $3.9-Bil. Government Loan JAMES JACKSON, JR.: Case Summary & 15 Largest Unsecured Creditors JESUS ORTIZ: Voluntary Chapter 11 Case Summary JOHN BROWNING: Case Summary & 20 Largest Unsecured Creditors JOHN DAVIS: Case Summary & 20 Largest Unsecured Creditors JTS CORP: 9th Cir. Says Director Was Good Faith Purchaser LANDRY'S RESTAURANTS: S&P Retains CreditWatch Negative on B Rating LAS VEGAS MONORAIL: Unsecureds to Recover Up to 80% of Claims LAS VEGAS SANDS: Moody's Raises Corporate Family Rating to 'B2' LEEWARD SUBDIVISION: Case Summary & 12 Largest Unsecured Creditors LEHMAN BROTHERS: BofA Files Lawsuit to Determine Assets Ownership LEHMAN BROTHERS: Court OKs Termination of Comvest Engagement LEHMAN BROTHERS: Proposes Sonnenschein as Real Estate Counsel LEHMAN BROTHERS: Wins Nod for Momo-O as Japanese Counsel LEHMAN BROTHERS: Wins Nod for Paul Hastings as Asset Mgt. Counsel LEHMAN BROTHERS: Judge Wants Witnesses to Appear in Person METRO-GOLDWYN-MAYER: Spyglass Presents Plan to Debt Holders MAX & ERMA'S: To Sell Assets to Blue Ribbon for $28 Million MCJUNKIN RED: S&P Downgrades Corporate Credit Rating to 'B' MEXICANA AIRLINES: 6 Investor Groups Interested in Buying Airline MEXICANA AIRLINES: Obtains Preliminary Injunction Order in U.S. MEXICANA AIRLINES: Suspends Some Services, To Return Planes MIDWEST BANC: Files for Chapter 11 Protection MOVIE GALLERY: Great American Auctions Office Equipment MOVIE GALLERY: Proposes Leach Travell as Insurance Counsel NATION ENERGY: Files 10-K for FY 2007; Going Concern Doubt Raised NEFF CORP: Selects Wayzata to Sponsor Plan of Reorganization NEOMEDIA TECHNOLOGIES: Earns $9.5 Million in Q2 Ended June 30 NOVADEL PHARMA: Posts $1.1 Million Net Loss in Q2 Ended June 30 OMNICRAFT WOODWORKING: Case Summary & 20 Largest Unsec Creditors ORLEANS HOMEBUILDERS: Wants to Surrender Life Insurance Policies PETER LAHNER: Case Summary & 14 Largest Unsecured Creditors PHILADELPHIA NEWSPAPERS: Pension Funds Agree to $1.5MM Settlement POWER EFFICIENCY: Posts $1.4 Million Net Loss in Q2 Ended June 30 PURADYN FILTER: Posts $436,200 Net Loss in Q2 Ended June 30 RANCHER ENERGY: Vander Ploeg Owns 5.9% of Common Stock REMOTEMDX INC: Posts $2.05MM Net Loss in June 30 Quarter RIDDHI SIDDHI: Case Summary & 5 Largest Unsecured Creditors ROTHSTEIN ROSENFELDT: Chapter 11 Trustee Probes Fla. Steakhouse ROYAL HOSPITALITY: Case Summary & 19 Largest Unsecured Creditors RUSSEL METALS: Moody's Raises Rating on Senior Notes to 'Ba1' SAINT VINCENTS: CRO Blocks Plan to Open Urgent-Care Clinic SARATOGA RESOURCES: Posts $8.4 Million Net Loss in Q2 2010 SBBA 2005: Voluntary Chapter 11 Case Summary SCHOLASTIC CORP: Credit Facility Change Won't Move Moody's Rating SEA ISLAND: Court Fixes December 14 as Claims Bar Date SEA ISLAND: Files Sale-Based Reorganization Plan SEA ISLAND: Taps Epiq as Claims, Noticing & Balloting Agent SEA ISLAND: Wants Oct. 11 Auction of Substantially All of Assets SECUREALERT INC: Files 10-Q; Posts $2.1MM Net Loss in FY 2010 Q3 SHIVAM, LLC: Case Summary & 6 Largest Unsecured Creditors SHUKAN, INC.: Case Summary & 9 Largest Unsecured Creditors SIERRA VIEW: Case Summary & 3 Largest Unsecured Creditors SMART & FINAL: S&P Affirms 'B-' Corporate Credit Rating SPENCER CREEK: Case Summary & 2 Largest Unsecured Creditors STERLING FINANCIAL: Fitch Puts 'C' Rating on Positive Watch SUNSHINE ENERGY: Dismissal Plea Filed by Former Owner Denied THOMAS PRICE: Case Summary & 13 Largest Unsecured Creditors THORNBURG MORTGAGE: Former Executives Win Access to D&O Benefits TITAN ENERGY: Posts $616,000 Net Loss in Q2 Ended June 30 TRIBUNE CO: Examiner Files Unredacted Copy of Report TRIBUNE CO: GreenCo Wins Nod to Settle With MediaNews Group TRIBUNE CO: Settlement With Creditors Fails, Talks Restart TURF WORKS: Case Summary & 20 Largest Unsecured Creditors US CONCRETE: Inks Plan Support Agreement with Put Option Parties UTILITY RISK: Case Summary & 20 Largest Unsecured Creditors VWR FUNDING: Raised by Moody's to 'SGL-2' on Cash Rise WASHINGTON MUTUAL: Equity Says Rule 2004 Exam Necessary WASHINGTON MUTUAL: Examiner's Work & Expenses Report Approved WASHINGTON MUTUAL: Texas GRP Wants Documents Produced WESTERN ALLIANCE: Moody's Assigns 'Ba3' Rating on Senior Bonds WHITE BIRCH: Plans to Sell Business by Early September WHOLE FOODS: S&P Raises Corporate Credit Rating to 'BB' WIZZARD SOFTWARE: Posts $1.1 Million Net Loss in Q2 Ended June 30 * More Older Americans File for Bankruptcy * Large Companies With Insolvent Balance Sheets ******** 28TH LEGIS: Case Summary & 7 Largest Unsecured Creditors -------------------------------------------------------- Debtor: The 28th Legis. District Comm. Dev. Corp. P.O. Box 4703 Chattanooga, TN 37405 Bankruptcy Case No.: 10-14804 Chapter 11 Petition Date: August 17, 2010 Court: United States Bankruptcy Court Eastern District of Tennessee (Chattanooga) Judge: Shelley D. Rucker Debtor's Counsel: Kyle R. Weems, Esq. WEEMS & RONAN 744 McCallie Avenue, Suite 520 Chattanooga, TN 37403 Tel: (423) 624-1000 E-mail: weemslaw@earthlink.net Scheduled Assets: $4,116,626 Scheduled Debts: $2,057,710 A list of the Company's seven largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/tneb10-14804.pdf The petition was signed by James A. Miller, chairman. ADAM GROSSMAN: Case Summary & 15 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Adam R. Grossman 5766 - 27th Avenue NE Seattle, WA 98105 Bankruptcy Case No.: 10-19817 Chapter 11 Petition Date: August 19, 2010 Court: U.S. Bankruptcy Court Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Matthew D. O'Conner, Esq. LAW OFFICE OF MATTHEW D. O'CONNER 8011 Greenwood Avenue N Seattle, WA 98103 Tel: (206) 782-0722 E-mail: pacer@mdolaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Debtor's 15 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wawb10-19817.pdf AE BIOFUELS: Delays Filing of Form 10-Q for June 30 Quarter ----------------------------------------------------------- AE Biofuels Inc. said it could not file its quarterly report on Form 10-Q for the period ended June 30, 2010, with the Securities and Exchange Commission because it has not completed its review of its financial statements. Cupertino, Calif.-based AE Biofuels, Inc. (OTC BB: AEBF) -- http://www.aebiofuels.com/-- is an international biofuels company focused on the development, acquisition, construction and operation of next-generation fuel grade ethanol and biodiesel facilities, and the distribution, storage, and marketing of biofuels. The Company currently operates a biodiesel manufacturing facility with a nameplate capacity of 55 million gallons per year (MGY) in Kakinada, India and has a next- generation integrated cellulose and starch ethanol demonstration facility in Butte, Montana. The Company's balance sheet as of March 31, 2010, showed $20.8 million in assets, $25.9 million of liabilities, and a stockholders' deficit of $5.2 million. The Company has experienced losses and negative cash flow since inception and currently has a working capital deficit and total stockholders' deficit. "These factors raise substantial doubt about our ability to continue as a going concern," management said in the Form 10-Q for the first quarter ended March 31, 2010. AEGIS MORTGAGE: Judge OKs Disclosure Statement, Asset Sale ---------------------------------------------------------- Bankruptcy Law360 reports that Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware approved the disclosure statement explaining Aegis Mortgage Corp.'s Chapter 11 liquidating plan. The judge, according to the report, also approved the sale of one of AMC's units that will see the Debtor pay more than $2.2 million to get rid of a raft of liabilities. About Aegis Mortgage Houston, Texas-based Aegis Mortgage Corporation -- http://www.aegismtg.com/-- offered mortgage loan products to brokers through its subsidiaries. AMC halted its loan origination business immediately prior to the bankruptcy filing. The Company together with 10 affiliates filed for Chapter 11 protection on Aug. 13, 2007 (Bankr. D. Del. Case No. 07-11119). AMC sold its loan servicing business to Selene Ventures LLC a month after the bankruptcy filing. Curtis A. Hehn, Esq., James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski, Stang, Ziehl, & Jones, L.L.P., serve as counsel to the Debtors. The Official Committee of Unsecured Creditors is represented by Landis Rath & Cobb LLP. In schedules filed with the Court, Aegis disclosed total assets of $138,265,342 and total debts of $4,125,470 as of the Petition Date. AFFINITY GROUP: Grace Period for Missed Payment Ends Mid-September ------------------------------------------------------------------ Affinity Group Holding Inc. issued on March 24, 2005, in a private placement, $88.2 million principal amount of its 10-7/8% senior notes due 2012 at a $3.2 million original issue discount. Interest on the AGHI Notes is payable semi-annually on February 15 and August 15 and the entire principal amount of the AGHI Notes is due in full on Feb. 15, 2012. As of June 30, 2010, $87.1 million, net of $1.1 million in unamortized original issue discount, remained outstanding on the AGHI Notes. The Company disclosed that as of August 16, 2010, it did not have sufficient funds to pay interest on the AGHI Notes then payable ($4.8 million) and such interest payment has not been made. "Under the terms of our senior secured credit facility, the company is not currently able to pay dividends or otherwise provide funds to AGHI to make such interest payment. Although AGHI's parent company has previously made capital contributions in an amount sufficient to discharge AGHI's interest obligations, AGHI's parent has indicated that it is not in a position, at this time, to make a capital contribution in order to fund the interest payable on August 16, 2010." Under the terms of the AGHI Notes, the Company is afforded a 30- day grace period from the interest payment date before non-payment constitutes an event of default under such notes. AGHI has entered into preliminary discussions with certain institutional holders of the AGHI Notes with a view to avoiding an event of default under the indenture pursuant to which the AGHI Notes were issued. No assurance can be given as to whether or not arrangements can be made that will avoid the occurrence of such event of default. If the interest payment is not made by the end of the grace period and no extension or other agreement is reached with the holders of the AGHI Notes, the trustee under the AGI Indenture can declare an event of default and the trustee must declare an event of default if the holders of 25% or more in principal amount of the AGHI Notes request that the trustee declare an event of default. The Company's secured debt of AGI, including the AGI Senior Credit Facility and the credit facility for its subsidiary, Camping World, Inc., and its subsidiaries, include cross-default provisions that would result in an event of default under those debt instruments if an event of default occurs under the AGHI Notes. About Affinity Group Ventura, Calif.-based Affinity Group Holding, Inc. is a holding company and the direct parent of Affinity Group, Inc. ("AGI"). The Company is an an indirect wholly-owned subsidiary of AGI Holding Corp ("AGHC"), a privately-owned corporation. The Company is a a member-based direct marketing organization targeting North American recreational vehicle ("RV") owners and outdoor enthusiasts. The Company's club members form a receptive audience to which the Company sells products, services, merchandise and publications targeted to their specific recreational interests. In addition, the Company is a specialty retailer of RV-related products. The Company operates through three principal lines of business, consisting of (i) club memberships and related products and services, (ii) subscription magazines and other publications including directories, and (iii) specialty merchandise sold primarily through its 78 Camping World retail stores, mail order catalogs and the Internet. * * * According to the Troubled Company Reporter on April 27, 2010, Moody's Investors Service concluded its review of Affinity Group Holdings Inc., confirmed its Caa2 corporate family rating and assigned B1 ratings to its subsidiary, Affinity Group Inc.'s new secured term loan. The new debt along with an unrated $22 million revolver refinances the previous secured debt at Affinity Group Inc. The ratings outlook is stable. This concludes the review of ratings for possible downgrade that was initiated on August 25, 2009. Standard & Poor's Ratings Services said it assigned its 'B-' issue-level rating (two notches above the corporate credit rating on parent Affinity Group Holding Inc.) to Affinity Group Inc.'s $144.3 million senior secured term loan due 2015. The recovery rating is '1,' indicating S&P's expectations of very high (90%- 100%) recovery in the event of a payment default. ALL AMERICA: Delays Filing of Form 10-Q for June 30 Quarter ----------------------------------------------------------- All America Group Inc. said it could not file its quarterly report on Form 10-Q with the Securities and Exchange Commission because it cannot, without undue hardship and expense, insure adequate disclosure of certain information required to be included in the report. About All American Group Elkhart, Indiana-based All American Group, Inc., formerly Coachmen Industries, Inc., (OTC:COHM.PK) says it is one of America's premier systems-built construction companies under the ALL AMERICAN BUILDING SYSTEMS(R), ALL AMERICAN HOMES(R), and MOD-U- KRAF(R) brands, as well as a manufacturer of specialty vehicles. At March 31, 2010, the Company had total assets of $86.574 million, total liabilities of $45.832 million, and a shareholders' equity of $40.742 million. * * * McGladrey & Pullen LLP, in Elkhart, Indiana, expressed substantial doubt about the Company's ability to continue as a going concern following the Company's 2009 results. The auditors noted that Coachmen has suffered recurring losses from operations and continues to operate in an industry where economic recovery has been very slow. ALMATIS BV: Lease Decision Period Extended Until November 26 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York gave the Debtors until November 26, 2010, to either assume or reject their unexpired non-residential real property leases. As of April 30, 2010, the Debtors are parties to seven unexpired non-residential real property leases, including leases for production facilities and office space in three different countries. The Leases are: Lessor Lessee Description ------ ------ ----------- The Buncher Co. Almatis Inc. Building No. 4 Pittsburgh, Pennsylvania Chapman Properties Almatis Inc. Office Lease Leetsdale, Pennsylvania Chapman Properties Almatis Inc. Production Plant Leetsdale, Pennsylvania Lease Port of Rotterdam Almatis B.V. Land Lease Rotterdam, Netherlands Nachbarschulte Gmbh Almatis Gmbh Building F12 Dorsten, Germany Vernal Asset Almatis Gmbh Office Headquarters Amsterdam, Netherlands Frankfurt BK Giulini Almatis Gmbh Land Lease Ludwigshafen, Germany The Debtors are planning to assume all of their Unexpired Leases in connection with the revised restructuring proposal arranged by Dubai International Capital LLC. The Debtors' current deadline to assume or reject those Leases, however, is set to expire before the hearing on the confirmation of the revised proposal, which is expected to take place by mid-August. The Debtors thus sought an extension of the Lease Decision Period. About Almatis Group Alamtis B.V., and its affiliates filed for Chapter 11 on April 30, 2010 (Bankr. S.D.N.Y. Lead Case No. 10-12308). Almatis B.V. estimated assets of US$500 million to US$1 billion and debts of more than US$1 billion as of the bankruptcy filing. Almatis, operationally headquartered in Frankfurt, Germany, is a global leader in the development, manufacture and supply of premium specialty alumina products. With nearly 900 employees worldwide, the company's products are used in a wide variety of industries, including steel production, cement production, non- ferrous metal production, plastics, paper, ceramics, carpet manufacturing and electronic industries. Almatis operates nine production facilities worldwide and serves customers around the world. Until 2004, the business was known as the chemical business of Alcoa. Almatis is now owned by Dubai International Capital LLC, the international investment arm of Dubai Holding. Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher LLP, serves as counsel to the Debtors in the Chapter 11 cases. Linklaters LLP is the special English and German counsel and De Brauw Blackstone Westbroek N.V. is Dutch counsel. Epiq Bankruptcy Solutions, LLC, serves as claims and notice agent. Bankruptcy Creditors' Service, Inc., publishes Almatis Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Almatis B.V., and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ALMATIS BV: Exclusive Solicitation Period Extended Until Jan. 25 ---------------------------------------------------------------- U.S. Bankruptcy Judge Martin Glenn issued an order extending the period during which only Almatis B.V. and its units can file a Chapter 11 plan and solicit votes from creditors on the plan. Judge Glenn moved the deadline for the Debtors' exclusive plan filing period through November 26, 2010, and the deadline for the Debtors' exclusive right for solicitation of votes on that plan through January 25, 2011. The Chapter 11 Plan Almatis filed a revised restructuring plan that would fully repay its senior lenders and enhance recoveries for junior lenders on August 6, 2010. The disclosure statement on the revised plan was filed with the Court on the same day. Dubai International Capital LLC, the company's owner, arranged the revised restructuring proposal after obtaining debt financing from a consortium composed by JP Morgan, Bank of America Merrill, GSO Capital Partners LP, GoldenTree Asset Management LP and Sankaty Credit Opportunities IV LP. Funding will also come from a $100 million equity contribution that DIC has already escrowed with JP Morgan. Almatis earlier withdrew the prepackaged restructuring plan proposed by Oaktree Capital Management L.P., the company's largest senior lender. It was previously rejected by mezzanine and second-lien lenders and was opposed by DIC as it threatened to wipe out the objectors' debt claims against and equity stake in Almatis. Parties-in-interest were given until August 16 to file any objections to the Disclosure Statement. Only Mr. Riches and his group submitted a letter objection to the Court to date. The adequacy hearing of the Almatis Disclosure Statement is slated for August 23. lmatis B.V. and its affiliated debtors filed with the U.S. Bankruptcy Court for the Southern District of New York on August 6, 2010, a revised restructuring plan that would fully repay their senior lenders and enhance recoveries for junior lenders. Almatis' owner, Dubai International Capital LLC, arranged the revised restructuring proposal after obtaining debt financing from a consortium composed by JP Morgan, Bank of America Merrill, GSO Capital Partners LP, GoldenTree Asset Management LP and Sankaty Credit Opportunities IV LP. Funding for the Revised Plan will also come from a $100 million equity contribution that DIC has already escrowed with JP Morgan. Almatis earlier withdrew the prepackaged restructuring plan proposed by Oaktree Capital Management L.P., the company's largest senior lender. The prepackaged plan was previously rejected by mezzanine and second-lien lenders and was opposed by DIC as it threatened to wipe out the objectors' debt claims against and equity stake in Almatis. Oaktree Capital, which owns 46% of Almatis' senior debt, has already agreed to support the Revised Plan and has proposed a settlement to the company. "All stakeholders now support a smooth refinancing process, which benefits all parties and the focus of attention will once more be Almatis' customers, employees and suppliers," DIC Chief Executive Anand Krishnan related in a statement. About Almatis Group Alamtis B.V., and its affiliates filed for Chapter 11 on April 30, 2010 (Bankr. S.D.N.Y. Lead Case No. 10-12308). Almatis B.V. estimated assets of US$500 million to US$1 billion and debts of more than US$1 billion as of the bankruptcy filing. Almatis, operationally headquartered in Frankfurt, Germany, is a global leader in the development, manufacture and supply of premium specialty alumina products. With nearly 900 employees worldwide, the company's products are used in a wide variety of industries, including steel production, cement production, non- ferrous metal production, plastics, paper, ceramics, carpet manufacturing and electronic industries. Almatis operates nine production facilities worldwide and serves customers around the world. Until 2004, the business was known as the chemical business of Alcoa. Almatis is now owned by Dubai International Capital LLC, the international investment arm of Dubai Holding. Michael A. Rosenthal, Esq., at Gibson, Dunn & Crutcher LLP, serves as counsel to the Debtors in the Chapter 11 cases. Linklaters LLP is the special English and German counsel and De Brauw Blackstone Westbroek N.V. is Dutch counsel. Epiq Bankruptcy Solutions, LLC, serves as claims and notice agent. Bankruptcy Creditors' Service, Inc., publishes Almatis Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Almatis B.V., and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ALON USA: S&P Downgrades Corporate Credit Rating to 'B' ------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on Dallas-based Alon USA Energy Inc. and Alon Refining Krotz Springs Inc. to 'B' from 'B+'. The outlook is stable. At the same time, S&P lowered the issue-level rating on Alon USA's term loan B to 'B+' (one notch above the corporate credit rating) from 'BB-'; the recovery rating remains '2' indicating S&P's expectation of a substantial (70%-90%) recovery in a payment default. S&P lowered the issue-level rating on Alon Krotz Springs' $216.5 million senior secured notes to 'B' (the same as the corporate credit rating) from 'B+'. The recovery rating on this debt remains '3', indicating S&P's expectation of meaningful (50%-70%) recovery. In the second quarter of 2010, Alon did not generate any EBITDA. Operational setbacks at the Krotz Springs refinery following an extended turnaround prevented the asset from generating any operating income in the second quarter when refining conditions were comparatively favorable. In addition, the asphalt segment has not performed as expected; volumes were lower by 37% from the second quarter of 2009. "The rating actions reflect the inability of Alon to benefit from the improved refining conditions in the second quarter of 2010," said Standard & Poor's credit analyst Aniki Saha-Yannopoulos. The downgrade also incorporates the weak refining conditions, high inventory levels of refined products, and S&P's concerns as to when the U.S. economy will recover and thus lead to better demand for refined products. The stable outlook reflects S&P's expectations that Alon Israel will continue to provide financial support to Alon USA and Alon Krotz Springs as it has done historically. The outlook also incorporates S&P's expectation that the company's third-quarter operations will improve compared with previous quarters. If the industry outlook worsens and liquidity gets tighter, or the company underperforms in the third quarter, S&P will consider a negative action for both Alon USA and Alon Krotz Springs. In addition, S&P could revisit the ratings of Alon Krotz Springs if S&P perceive that the parents' support toward Krotz Springs has weakened, either due to vulnerable operating conditions at the parents or an unexpected event at Krotz Springs. Given current industry conditions and company's performance S&P does not anticipate any positive rating actions in the near term. AMCORE FINANCIAL: Files for Chapter 11 Protection ------------------------------------------------- AMCORE Financial filed for Chapter 11 protection on August 19 in Chicago (Bankr. N.D. Ill. Case No. 10-37144). The Company said in documents attached to the petition that it had assets of $7.2 million against debts of $75.4 million as of the bankruptcy filing. Roughly $57 million owed to Wilmington Trust, as indenture trustee, on account of a junior subordinated debt due 2037. The Company's balance sheet as of December 31, 2009, showed $3.777 billion in assets, $3.741 billion of debts, and a $36.0 million stockholders' equity. George N. Panagakis, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, serves as counsel to the Debtor. Kurtzman Carson Consultants LLC serves as claims agent. Rockford, Ill.-based AMCORE Financial is a registered bank holding company for AMCORE Bank. However, on April 23, 2010, regulators closed the bank and appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Harris National Association to assume all of the deposits of AMCORE Bank, National Association. AMCORE FINANCIAL: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: AMCORE Financial, Inc. 200 South Wacker Drive, Suite 3100 Chicago, IL 60606 Bankruptcy Case No.: 10-37144 Chapter 11 Petition Date: August 19, 2010 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: George Panagakis, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 155 N. Wacker Drive, Suite 2700 Chicago, IL 60606 Tel: (312) 407-0638 Fax: (312) 407-0711 E-mail: gpanagak@skadden.com Debtor's Claims Agent: Kurtzman Carson Consultants LLC Listed Assets: $7.2 million as of Aug. 19, 2010 Listed Debts: $75.4 million as of Aug. 19, 2010. The petition was signed by Judith C. Sutfin, chief financial officer. Debtor's List of 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wilmington Ttrust Company Subordinated $57,481,699 as Trustee for AMCORE Capital Debenture Trust II Rodney Square NOrth 1100 North Market Street Wilmington, DE 19890 JPMorgan Chase Bank, N.A. Credit Agreement $11,933,955 10 S. Dearborn Street Mailcode IL 1-1415 Chicago, IL 60603 Ken Edge Deferred Comp. $2,067,893 12256 Leighton Drive Benefits and Caledonia, IL 61011 SERP Benefits Bob Meuleman SERP Benefits $1,289,522 5340 Winding Creek Drive Rockford, IL 61114 Jim Waddell Deferred Comp. $1,165,795 2657 Saxon Place Benefits and Rockford, IL 61114 SERP Benefits Federal Deposit Insurance -- $960,000 Corporation One Financial Way, Suite 312 Cincinnati, OH 45242 Milton Brown OPEB - Director $63,629 Emeritus Payments Robert "Bud" Doyle OPEB - Director $41,798 Emeritus Payments Gerald Waters Deferred Comp. $12,698 Benefits State Street Bank and Trust -- $810 Company CT Corporation System Contract $358 Curtis 100, Inc. Contract -- Data Dimensions Corporation Contract -- InterCall Contract -- Standard Insurance Contract -- AMERICAN APPAREL: Spokesman Dispels Bankruptcy Rumors ----------------------------------------------------- Dow Jones DBR Small Cap, citing Agence France-Presse, reports that American Apparel, the Made-in-Los-Angeles hipster casual company that built a global following and a fortune on the back of T- shirts and its founder's antics, has seen its financial health tank. The company, famous for its flashy multicolored t-shirts and clothes that are somewhere between sporty and clubby, was required to deliver its first quarter earnings to financial authorities by Monday at the latest or else its shares could be pulled out of trading in New York. The company has warned it is expecting losses for the first two quarters of this year in addition to those of 2009. But a company spokesman told AFP rumors of bankruptcy were untrue. The company has made its 100% Made in the USA motto a calling card when the norm is outsourcing production to Asia. And it doesn't plan to outsource to cut costs now, an American Apparel spokesman told AFP Monday. As reported by the Troubled Company Reporter on August 19, American Apparel filed with the Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $42.84 million on $121.81 million of revenue for the three months ended March 31, 2010, compared with a net loss of $10.56 million on $114.28 million of revenue for the same period of 2009. The Company recorded an impairment charge relating primarily to certain retail store leasehold improvements in the U.S. Retail, Canadian and International segments of $4.19 million and $356,000 for the three months ended March 31, 2010, and 2009, respectively. Loss from operations increased to $21.56 million for the three months ended March 31, 2010, against loss from operations of $3.90 million for the same period of 2009. For the three months ended March 31, 2010, cash used in operations was $4.84 million. For the three months ended March 31, 2009, cash used in operations was $3.61 million. The Company's balance sheet as of March 31, 2010, showed $295.74 million in total assets, $180.40 million in total liabilities, and a stockholders' equity of $115.34 million. As of March 31, 2010, the Company had (i) approximately $6.46 million in cash, (ii) $35.60 million available and $11.13 million outstanding under the BofA Credit Agreement, (iii) $66.68 million of borrowings outstanding under the Lion Credit Agreement, and (iv) $3.94 million available and $6.01 million outstanding under the Bank of Montreal Credit Agreement. The Company incurred a substantial loss from operations and had negative cash flows from operating activities for the three months ended March 31, 2010. The Company believes that it may not have sufficient liquidity necessary to sustain operations for the next 12 months, and that losses from operations are expected to continue through at least the third quarter of 2010. The Company also believes that it is probable that as of September 30, 2010, the Company will not be in compliance with the minimum Consolidated EBITDA covenant under its credit agreement with Wilmington Trust FSB, in its capacity as administrative agent and collateral agent, Lion Capital (Americas) Inc., as a lender, Lion/Hollywood L.L.C., as a lender, and other lenders from time to time party thereto. Noncompliance with covenants under the Lion Credit Agreement constitutes an event of default under its credit agreement with Bank of America, which, if not waived, could block the Company from making borrowings under the BofA Credit Agreement. In addition, all indebtedness under the BofA Credit Agreement and the Lion Credit Agreement could be declared immediately due and payable. "These factors, among others, raise substantial doubt that the Company will be able to continue as a going concern." A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6967 About American Apparel American Apparel, Inc. (NYSE Amex: APP) is a vertically integrated manufacturer, distributor, and retailer of branded fashion basic apparel based in downtown Los Angeles, California. As of August 15, 2010, American Apparel employed approximately 10,000 people and operated over 280 retail stores in 20 countries, including the United States, Canada, Mexico, Brazil, United Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan, South Korea, and China. American Apparel also operates a leading wholesale business that supplies high quality T-shirts and other casual wear to distributors and screen printers. In addition to its retail stores and wholesale operations, American Apparel operates an online retail e-commerce Web site at http://www.americanapparel.com/ AMERICAN INT'L: ILFC Unit Repays $3.9-Bil. Government Loan ---------------------------------------------------------- The Wall Street Journal's Serena Ng and Daniel Michaels report that International Lease Finance Corp., American International Group's airplane-leasing arm, repaid a $3.9 billion government loan ahead of schedule and now expects to fund itself without support from its bailed-out parent company. According to the Journal, ILFC on Friday completed a $4.4 billion sale of debt to institutional investors. Most of the money raised was used to repay a 2009 loan from the Federal Reserve Bank of New York to help ILFC meet obligations at the time. The Journal says the transaction represents the single largest repayment of taxpayer money by AIG since its September 2008 bailout. According to the Journal, it was a welcome relief for AIG and its debt-laden ILFC subsidiary, which earlier threatened to become a financial drag on AIG if the unit couldn't raise money on its own to refinance large debts. About ILFC International Lease Finance Corporation, headquartered in Los Angeles, California, is a major owner-lessor of commercial aircraft. * * * ILFC carries Moody's Investors Service's B1 corporate family rating. According to the Troubled Company Reporter on August 13, 2010, Moody's said ILFC's B1 CFR is based on strengths including its competitive positioning in the aircraft leasing industry, modern aircraft fleet and history of earnings growth. ILFC's rating also incorporates one notch of rating uplift associated with support from AIG. Constraints on the firm's rating and rating outlook concern operating pressures resulting from the economic downturn and its effect on lease rates, lease renewals and aircraft valuations, as well as Moody's view that AIG support will likely diminish over time. Moody's said that it will monitor ILFC's evolving operational and funding strategies and their effect on its credit profile, particularly in light of recent changes in the ILFC management team. ILFC has extended the maturity of $2.2 billion of its revolving bank facility to 2012 from 2011 and obtained additional covenant flexibility with respect to pledging assets for additional secured financings. ILFC carries Standard & Poor's "BBB-/Negative/--" corp. credit rating, and Fitch's 'BB' long-term issuer default rating. About AIG American International Group, Inc. -- http://www.aig.com/-- 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 are leading providers of 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. AIG almost collapsed under the weight of bad bets it made insuring mortgage- backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG has been working to protect and enhance the value of its key businesses, execute an orderly asset disposition plan, and position itself for the future. AIG has sold a number of its subsidiaries and other assets to pay down loans received from the U.S. government, and continues to seek buyers of its assets. AMERICAN TONERSERV: Posts $1 Million Net Loss in Q2 Ended June 30 ----------------------------------------------------------------- American TonerServ Corp. filed its quarterly report on Form 10-Q, reporting a net loss of $1.0 million on $8.4 million of revenue for the three months ended June 30, 2010, compared with a net loss of $568,452 on $7.4 million of revenue for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $17.1 million in total assets, $14.7 million in total liabilities, and a stockholders' equity of $2.4 million. As reported in the Troubled Company Reporter on April 16, 2010, Perry-Smith LLP, in Sacramento, Calif., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has suffered recurring losses from operations resulting in an accumulated deficit of $25.4 million, and its current liabilities exceed its current assets at December 31, 2009, by $4.3 million. In its latest 10-Q, the Company disclosed that cash flows from operations are insufficient to sustain the current level of operations, and that it will need to seek additional capital and funding sources to finance its operations. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6991 About American TonerServ Santa Ana, Calif.-based American TonerServ Corp. -- http://www.americantonerserv.com/-- markets compatible and original- equipment -manufactured toner cartridges for use in printers, copiers and fax machines. ANNALY BAY: Reorganization Case Dismissed for Bad Faith Filing -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of the Virgin Islands dismissed the Chapter 11 cases of Annaly Bay Corporation and Annaly Bay Development, LLC. Donald F. Walton, the U.S. Trustee for Region 21, and creditor DelrayLand, Inc., sought for the dismissal of the Debtors' cases because they were filed in bad faith. About Annaly Bay Corporation Glendale, California-based Annaly Bay Corporation and Annaly Bay Development, LLC, filed for Chapter 11 on April 11, 2010 (Bankr. D. VI Case No. 10-10003 and 10-10002). Benjamin A. Currence P.C. assisted the Debtors in their restructuring effort. The Debtors each estimated assets and debts ranging from $10 million to $50 million in their Chapter 11 petitions. ATLANTIC BANCGROUP: Earns $282,000 in Q2 Ended June 30 ------------------------------------------------------ Atlantic BancGroup, Inc., filed its quarterly report on Form 10-Q, reporting net income of $282,000 on $2.1 million of net interest income (before provision for loan losses) for the three months ended June 30, 2010, compared with net income of $65,000 on $1.7 million of net interest income (before provision for loan losses) for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $274.2 million in total assets, $264.2 million in total liabilities, and a stockholders' equity of $10.0 million. As reported in the Troubled Company Reporter on April 21, 2010, Mauldin & Jenkins, CPA's, LLC, in Albany, Ga., 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 the Company has suffered significant losses from operations and capital has been significantly depleted due to the economic downturn. The Company disclosed in its latest 10-Q, that although the contemplated merger with Jacksonville Bancorp, Inc., is expected to result in the Company's continued operation as a part of Jacksonville Bancorp, Inc. and The Jacksonville Bank, this transaction may prove to be insufficient due to the possible continued decline of the loan portfolio or other losses. If the Company is, or the surviving entity in the merger is, unable to return to profitability, and if the Company is unable to identify and execute a viable strategic alternative, the Company may be unable to continue as a going concern. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?69a8 About Atlantic BancGroup Jacksonville Beach, Fla.-based Atlantic BancGroup, Inc. (NasdaqCM: ATBC) is a publicly traded bank holding company. The Company is the parent company of Oceanside Bank, with four locations in the Jacksonville Beaches and East Jacksonville, Florida. BANK OF AMERICA: Fitch Upgrades Individual Rating to C From C/D --------------------------------------------------------------- Fitch Ratings has upgraded the Individual and Preferred Stock ratings of Bank of America Corporation and removed them from Rating Watch Positive: -- Individual to 'C' from 'C/D'; -- Preferred Stock to 'BBB-' from 'BB-'; -- Trust Preferred to 'BBB-' from 'BB'. Other ratings, including the long-term Issuer Default Rating of 'A+' and the short-term IDR of 'F1+', are affirmed at current levels. The Rating Outlook is Stable. The upgrades reflect BAC's efforts to boost common equity and liquidity combined with stable to improving asset quality trends in various portfolio categories. The ratings also recognize BAC's sizeable and diversified banking franchise as well as the resolution of management uncertainties since Fitch's last rating action in December 2009. The upgrades are tempered by BAC's remaining challenges, including a still high level of non-performing loans and exposure associated with mortgage repurchases for rep and warranty issues. Legal risk remains a significant concern, particularly litigation related to the Merrill and Countrywide acquisitions. These combined challenges are considerable yet are considered by Fitch to be well below the various asset quality challenges that BAC's successfully worked through during the last few years. Reps and warranties exposure primarily stems from BAC's acquisition of Countrywide, a major mortgage originator during the housing boom. Fitch anticipates a large inflow of new repurchase requests as the government sponsored entities and other institutions work through large amounts of troubled mortgages. Consequently, charges from reps and warranties have the potential to increase significantly. Among the major U.S. banks, Fitch believes BAC is the most susceptible to this risk given the scrutiny being placed on the legacy Countrywide mortgages. Costs associated with reps and warranties increased to $1.2 billion in 2Q'10 from approximately a $500 million run rate over the past few quarters. Beyond the rep and warranty issue, another area of concern is exposure to home equity loans, particularly BAC's portfolio of loans with a combined LTV greater than 100%. Fitch has incorporated notably higher losses associated with repurchase activity in Fitch's rating assumptions. Associated losses are expected to remain manageable in the context of BAC's large capital base and pre-provision operating income. BAC's accrued liability for reps and warranties totaled $3.9 billion at end-2Q'10, up from $3.5 billion at year-end 2009. BAC's Tier I common and TCE ratios are well above year ago levels due to capital raising efforts, improved internal capital generation and a reduction in risk assets. At mid-year 2010, BAC's Tier I common ratio stood at 8% compared with 6.9% a year ago. Fitch core capital to risk-weighted assets was 5.8%, up from 5.1% at year-end 2009. Fitch believes BAC will continue to improve its capital position going forward. Capacity to pay preferred dividends is significantly stronger, given the emergence of core profitability and far lower preferred dividend payments versus peak levels. Preferred dividend costs are now approximately $300 million per quarter compared with a peak level of $1.4 billion in 1Q09. Looking at 2H'10, Fitch anticipates that BAC's total loan loss provisions, particularly those not related to residential mortgage lending, have the potential to decline further given encouraging asset quality trends. When BAC's asset quality problems are resolved, its franchise gives it considerable earnings power. That said, recent legislative actions including the CARD Act, Regulation E and the Durbin Amendment will pressure consumer- related revenues. In addition, net interest income likely will be negatively affected by weak loan demand and efforts to reduce higher risk/higher spread loans and other assets. Over time, ratings could be positively affected if BAC attains a solid track record of core profitability and continues to improve its asset quality. Additional factors would be maintenance of its diverse franchise combined with solid liquidity and capital. Greater clarity regarding ultimate reps and warranties loss exposure in the mortgage business and resolution of various legal risks would provide additional comfort, although these could be protracted. Ratings, particularly the Individual rating, could be negatively affected if asset quality again deteriorates, which is not expected at least in the near term. Downward rating pressure could also emerge if reps and warranties losses escalate appreciably, particularly if costs result in operating losses and erosion of capital. BAC is one of the largest U.S. banks in terms of total deposits, loans, branches, mortgage originations/servicing and credit card issuance. Following its January 2009 merger with Merrill Lynch & Co., Inc., BAC became one of the top financial institutions in wealth management and investment banking. Fitch has taken these rating actions: Bank of America Corporation -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Preferred stock upgraded to `BBB-' from `BB-'; -- Short-term IDR affirmed at 'F1+'; -- Short-term debt affirmed at `F1+'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'; -- Long-term debt guaranteed by TLGP affirmed at `AAA'; -- Short-term debt guaranteed by TLGP affirmed at `F1+'. Bank of America N.A. -- Long-term deposits affirmed at `AA-'; -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Short-term IDR affirmed at 'F1+'; -- Short-term debt affirmed at `F1+'; -- Short-term deposits affirmed at `F1+'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'; -- Long-term debt guaranteed by TLGP affirmed at `AAA'; -- Short-term debt guaranteed by TLGP affirmed at `F1+'. Banc of America Securities Limited -- Long-term IDR affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'. Banc of America Securities LLC -- Long-term IDR affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'. B of A Issuance B.V. -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Support affirmed at '1'. Bank of America Georgia, N.A. Bank of America Oregon, National Association Bank of America California, National Association -- Long-term IDR affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'. Bank of America Rhode Island, National Association -- Long-term IDR affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'; -- Long-term deposits affirmed at `AA-'; -- Short-term deposits affirmed at `F1+'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'. FIA Card Services N.A. -- Long-term IDR affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'; -- Long-term deposits affirmed at `AA-'; -- Short-term deposits affirmed at `F1+'; -- Short-term debt affirmed at `F1+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'. MBNA Canada Bank -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Short-term IDR affirmed at 'F1+'. MBNA Europe Bank Ltd. -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Short-term IDR affirmed at 'F1+'; -- Individual remains `C/D' and on Rating Watch Positive. -- Support affirmed at `1'. LaSalle Bank Corporation -- Long-term IDR affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'. LaSalle Bank N.A. LaSalle Bank Midwest N.A. United States Trust Company N.A. Countrywide Bank FSB -- Long-term deposits affirmed at `AA-'; -- Short-term deposits affirmed at `F1+'. Merrill Lynch & Co., Inc. -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Preferred stock upgraded to `BBB-' from `BB-'; -- Short-term IDR affirmed at 'F1+'; -- Short-term debt affirmed at `F1+'; -- Individual upgraded to `C' from `C/D'; -- Support affirmed at '1'; -- Support Floor affirmed at `A+'. Merrill Lynch International Bank Ltd. -- Long-term IDR affirmed at 'A+'; -- Short-term IDR affirmed at `F1+'; -- Individual remains `C/D' and on Rating Watch Positive; -- Support affirmed at '1'. Merrill Lynch S.A. -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Support affirmed at '1'. Merrill Lynch & Co., Canada Ltd. -- Short-term IDR affirmed at 'F1+'; -- Short-term debt affirmed at `F1+'. Merrill Lynch Canada Finance -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'; -- Individual upgraded to `C' from 'C/D'; -- Support affirmed at '1'. Merrill Lynch Japan Finance Co., Ltd. -- Long-term IDR affirmed at `A+'; -- Long-term senior debt affirmed at `A+'; -- Short-term IDR affirmed at 'F1+'; -- Short-term debt affirmed at `F1+'; -- Support affirmed at '1'. Merrill Lynch Japan Securities Co., Ltd. -- Long-term IDR affirmed at 'A+'; -- Short-term IDR affirmed at `F1+'; -- Support affirmed at '1'. Merrill Lynch Finance (Australia) Pty LTD -- Short-term IDR affirmed at `F1+'; -- Commercial Paper affirmed at `F1+'. BankAmerica Corporation -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Preferred stock upgraded to `BBB-' from `BB-'. Countrywide Financial Corp. -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'. Countrywide Home Loans, Inc. -- Long-term senior debt affirmed at `A+'. FleetBoston Financial Corp -- Long-term subordinated debt affirmed at `A'. LaSalle Funding LLC -- Long-term senior debt affirmed at `A+'. MBNA Corp. -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'; -- Short-term debt affirmed at `F1+'. NationsBank Corp -- Long-term senior debt affirmed at `A+'; -- Long-term subordinated debt affirmed at `A'. NationsBank, N.A. -- Long-term senior debt affirmed at `A+'. NCNB, Inc. -- Long-term subordinated debt affirmed at `A'. BAC Capital Trust I - VIII BAC Capital Trust X - XV -- Trust preferred securities upgraded to `BBB-' from `BB'. BAC AAH Capital Funding LLC I - VII BAC AAH Capital Funding LLC IX - XIII BAC LB Capital Funding Trust I - II -- Trust preferred securities upgraded to `BBB-' from `BB'. BankAmerica Capital II, III BankAmerica Institutional Capital A, B BankBoston Capital Trust III-IV Barnett Capital Trust III Countrywide Capital III, IV, V Fleet Capital Trust II, V, VIII, IX MBNA Capital A, B, D, E NB Capital Trust II, III, IV -- Trust preferred securities upgraded to `BBB-' from `BB'. Merrill Lynch Preferred Capital Trust III, IV, and V Merrill Lynch Capital Trust I, II and III -- Trust preferred securities upgraded to `BBB-' from `BB'. BISCAYNE BAY: Guarantors Can't Pursue Corus Bank Counterclaims -------------------------------------------------------------- Bankruptcy Judge A. Jay Cristol holds that the causes of action asserted by Willy A. Bermello and Gustavo Miculitzki against Corus Bank N.A. by way of counterclaim are property of the estate of Biscayne Bay Lofts, LLC, a Chapter 7 Debtor, and can only be pursued by the Trustee. On February 9, 2010, a Chapter 7 involuntary bankruptcy proceeding was filed against Biscayne Bay Lofts. The Debtor is the developer for the condominium known as Onyx on the Bay, a 28-story condominium building in Miami. The Project is still under construction. The Units are subject to a mortgage granted by the Debtor to Corus Bank. In September 2009, Corus executed and delivered an assignment of the Mortgage to Hyperion Onyx Partners, LLC. The Mortgage secures the obligations of the Debtor to Corus and now Hyperion, pursuant to commercial promissory notes in excess of $44,000,000. As of the Petition Date, the balance due and owing to Hyperion under the Notes is $22,309,280.23. Prior to the Petition Date, Corus Bank filed a foreclosure suit in state court against the Debtor, and Willy A. Bermello, Luis Ajamil, and Gustavo Miculitzki, as guarantors. The Debtor and the Guarantors responded to the suit, alleging that: (a) Corus failed to disburse loan proceeds in accordance with the loan documents; (b) Corus breached the loan agreement; and (c) Corus failed to act in good faith in performing its obligations under the loan documents. On March 5, 2010, Hyperion filed a Notice of Removal and Removal of Action Under 28 U.S.C. Sec. 1452 removing the State Court Foreclosure Action to the Bankruptcy Court. Judge Cristol notes that no privity exists between the Guarantors and the Debtor and the causes of action asserted. The business organizational structure of the Debtor is as follows: BAP, LLC and GGM Developers, LLC are the equity holders of the Debtor, Biscayne Bay Lofts, LLC. In turn, the Guarantors are the individual equity holders of BAP, LLC that owns a 50% equity share of the Debtor. The Guarantors are twice removed from the Debtor. The equity owners of the Debtor (the LLC's) have never asserted any such claims or counterclaims. "A review of the counterclaim indicates that there is no independent cause of action for the Guarantors or BAP, LLC or GGM Developers, LLC, as the only transaction referenced therein is the underlying contract between the Debtor and Corus Bank. Thus, the causes of action asserted in the Guarantors counterclaims are those of the Debtor's estate and only presentable by the Trustee of Biscayne Bay Lofts, LLC," Judge Cristol wrote. A copy of the decision is available at: http://www.leagle.com/unsecure/page.htm?shortname=inbco20100819653 BLOCKBUSTER INC: Douglas McHose Resigns as Senior Vice President ---------------------------------------------------------------- Blockbuster Inc. reported that Douglas McHose has resigned as the Company's Senior Vice President, Domestic Store Operations, effective Aug. 20, 2010. The Company has hired Roger Dunlap as Senior Vice President North American Store Operations effective Aug. 16, 2010. In that capacity, Mr. Dunlap will oversee the Company's domestic store operations. Prior to joining the Company, Mr. Dunlap served in several senior operational roles for Movie Gallery Corporation and Hollywood Entertainment Corporation, most recently as Senior Vice President of North American Operations. About Blockbuster Inc. Blockbuster Inc. -- http://www.blockbuster.com/-- 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's balance sheet as of April 4, 2010, showed $1.319 billion in assets, $1.693 billion in liabilities, and 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. In February 2010, Blockbuster hired law firm Weil, Gotshal & Manges and investment bank, Rothschild Inc., to explore strategies for cutting the Company's $1 billion debt load. In March 2010, the Company said it was seeking to refinance its debt and could be forced into bankruptcy. Blockbuster has received from bondholders a series of moratoriums on payment of principal and interest, the latest of which expires September 30, 2010. According to Bloomberg News, Blockbuster received the latest one-month reprieve from creditors so it can prepare for a possible bankruptcy filing in September. BOCA BRIDGE: Involuntary Chapter 11 Case Summary ------------------------------------------------ Alleged Debtor: Boca Bridge LLC P.O. Box 273760 Boca Raton, FL 33427 Bankruptcy Case No.: 10-34538 Involuntary Chapter 11 Petition Date: August 19, 2010 Court: U.S. Bankruptcy Court Southern District of Florida (West Palm Beach) Judge: Paul G. Hyman, Jr. Debtor's Counsel: Pro Se Petitioners' Counsel: Harry J. Ross, Esq 6100 Glades Road, #211 Boca Raton, FL 33434 Tel: (561) 482-2400 E-mail: hross@hjrlaw.com Creditors who signed the Chapter 11 petition: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Lundy Shacter, P.A. -- $21,713 400 North Pine Island Road, #300 Plantation, FL 33324 Arrow Security Corp. -- $15,118 102 NW Spanish River Boulevard, Boca Raton, FL 33431 Sapphire Hospitality Inc -- $13,904 547 SW, 13th Street, Suite 3 Bend, OR 97702 RLC Architects P.A. -- $9,148 137 West Royal Palm Road Boca Raton, FL 33432 Brothers Bake Shop -- $5,923 1101 Holland Drive Boca Raton, FL 33487 Project Management Consultant, -- $4,481 Inc. 825 Towering Oak Way Apopka, FL 32712 O.D.A. Inc. -- $1,900 3333 South Dixie Highway Delray Beach, FL 33483 Communications Plus -- $1,406 6005 Stirling Road, #149 Davie, FL 33314 Cintas Corporation -- $1,131 97627 Eagle Way Chicago, IL 60678-9760 Always Perfect Marble and Granite -- $600 5366 Oakmont Village Circle Lake Worth, FL 33463 BOSTON GENERATING: EBG to Pay $51 Million to Distrigas ------------------------------------------------------ Warned that acting otherwise could lead to blackouts in Boston, a judge has allowed EBG Holdings LLC to pay nearly $51 million to natural gas supplier Distrigas of Massachusetts LLC and granted the vendor special creditor protections, according to Bankruptcy Law360. About Boston Generating Privately held Boston Generating, LLC, owns nearly 3,000 megawatts of mostly modern natural gas-fired power plants in the Boston area. It is an indirect subsidiary of US Power Generating Co., and considers itself as the third-largest fleet of plants in New England. Boston Generating, EBG Holdings LLC, and four other affiliates filed for Chapter 11 protection on August 18, 2010 (Bankr. S.D.N.Y. Case No. 10-14419). The Company estimated more than $1 billion in assets and debts in its Chapter 11 petition. Gregory K. Jones, Esq., at Latham & Watkins LLP, serves as counsel to the Debtors. The Debtors' investment banker is JP Morgan Securities, the financial advisor is Perella Weinberg Partners, LP, the regulatory counsel is Brown Rudnick LLP, the restructuring consultant is FTI Consulting, Inc., the conflicts counsel is Anderson Kill & Olick, P.C., and the claims agent is The Garden City Group, Inc. US Power Generating Co. is not among the Chapter 11 filers. CAPITAL POWER: S&P Cuts Global Scale Issue-Level Rating to BB+ -------------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its long-term corporate credit and senior unsecured debt ratings on Edmonton, Alta.-based Capital Power Income L.P. and its corporate credit rating on wholly owned subsidiary CPI Preferred Equity Ltd. to 'BBB' from 'BBB+'. The outlook is stable. At the same time, S&P lowered the issue-level rating on Curtis Palmer LLC's US$190 million senior notes due July 15, 2014, which CPI guarantees, to 'BBB' from 'BBB+'. S&P also lowered its global scale issue-level rating on CPI Preferred Equity's preferred shares to 'BB+' from 'BBB-' and its Canada-scale rating to 'P- 3(High)' from 'P-2(Low)'. "The downgrade reflects S&P's view that CPI's financial risk profile has weakened as a result of debt-financed growth and its expectation that improvement in the medium term is unlikely as the partnership continues to execute its growth plan," said Standard & Poor's credit analyst Greg Pau. The ratings on CPI and its subsidiaries reflect what S&P view as relatively stable revenue and cost profiles, which a diversified portfolio of generation assets, long-term contracts for most of its production, and predominantly investment-grade counterparties all support. S&P believes that offsetting these strengths are CPI's weakened financial risk profile as a result of increased leverage to finance growth, and the distribution commitment and execution risk associated with that. Notwithstanding long-term contracts, S&P believes that operating issues, low hydrology, input availability, and price fluctuations could affect the partnership's operating margins. S&P also believe that CPI's limited market position in each of the geographic region partially offsets the benefit of geographic diversification. CPI's 1,400-megawatt portfolio is diversified across several off- takers, jurisdictions, generating technologies, and fuel sources. The assets are geographically dispersed in Canada and the U.S., and are relatively small participants in the regional electricity markets where they operate. The stable outlook reflects S&P's view that CPI would continue to generate relatively stable revenue and cash flow from its diversified portfolio of 20 generating assets supported by power purchase agreements contracts largely with investment-grade offtakers and well-spread expiries. The outlook also reflects S&P's expectation that the partnership would maintain its financial risk profile consistent with (but toward the weaker end of) the intermediate category. S&P could consider lowering the ratings should CPI's cash flow or liquidity materially weaken, which might happen with a failure to renew one or more significant expiring PPAs or major disruption of operations due to equipment failure or fuel disruption. The rating could also face pressure if the partnership's adjusted funds from operations interest coverage fell below 3x or adjusted total debt to capital exceeded 60%. This is possible if CPI increases debt-financing for its growth and distribution should unfavorable equity market conditions prohibit the partnership from raising equity financing. S&P believes that an upgrade is highly unlikely because CPI's growth plan and distribution commitment would likely prevent any material deleveraging and improvement in its financial risk profile. CAPITOL CITY BANCSHARES: Posts $505,400 Net Loss in Q2 2010 ----------------------------------------------------------- Capitol City Bancshares, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $505,361 for the three months ended June 30, 2010, compared with a net loss of $398,830 for the same period of 2009. Net interest income was $1.70 million for the three month period ended June 30, 2010, compared to $1.73 million during the same period of 2009. A provision for loan losses of $220,000 was made during the three- month period ended June 30, 2010, as compared to a provision of $280,000 made during the three-month period ended June 30, 2009. The Company's balance sheet as of June 30, 2010, showed $313.2 million in total assets, $303.4 million in total liabilities, and a stockholders' equity of $9.8 million. As reported in the Troubled Company Reporter on April 16, 2010, Nichols, Cauley & Associates, LLC, in Atlanta, Ga., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has suffered significant losses from operations, which has resulted in declining levels of capital. In its latest 10-Q, the Company says that Capitol City Bank and Trust Company has not achieved the required capital levels mandated by the consent order from the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance. "The continuing level of problem loans as of the quarter ended June 30, 2010, and capital levels continuing to be in the "under capitalized" category of the regulatory framework for prompt corrective action as of June 30, 2010, continue to create substantial doubt about the Company's ability to continue as a going concern." A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?699c About Capitol City Bancshares Atlanta, Ga.-based Capitol City Bancshares, Inc. was incorporated on April 14, 1998, for the purpose of serving as a bank holding company for Capitol City Bank and Trust Company, a state banking institution chartered under the laws of the State of Georgia on June 30, 1994. The Bank operates a full-service banking business and engages in a broad range of commercial banking activities, including accepting customary types of demand and timed deposits, making individual, consumer, commercial, and installment loans, money transfers, safe deposit services, and making investments in U.S. government and municipal securities. CAPRIUS INC: Posts $391,900 Net Loss in June 30 Quarter ------------------------------------------------------- Caprius Inc. filed its quarterly report on Form 10-Q, reporting net loss of $391,973 on $152,964 of total revenues for the three months ended June 30, 2010, compared with net loss of $679,764 on $423,580 of total revenues for the same period a year earlier. The Company's balance sheet at June 30, 2010, showed $1.66 million in total assets, $5.87 million in total liabilities, and a $4.22 million stockholders' deficit. The Company was unable to file its quarterly report on time with the Securities and Exchange Commission because it is in the process of curing deliquencies in filing its report. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?696d About Caprius, Inc. Paramus, N.Y.-based Caprius, Inc., is engaged in the infectious medical waste disposal business, through its wholly-owned subsidiary M.C.M. Environmental Technologies, Inc., which developed, markets and sells the SteriMed and SteriMed Junior compact systems that simultaneously shred and chemically disinfect regulated medical waste, utilizing its proprietary, EPA registered, bio-degradable chemical known as Ster-Cid. Marcum LLP, in New York City, expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial results for fiscal 2009. The independent auditors noted of the Company's working capital deficiency and substantial recurring losses from operations. CARIBBEAN PETROLEUM: Proposes December 13 Auction for All Assets ---------------------------------------------------------------- Caribbean Petroleum Corp. and its units ask for authorization from the U.S. Bankruptcy Court for the District of Delaware to implement a sale process for substantially all of their assets. The Debtors ask for the Court's approval to enter into a stalking horse agreement by November 10, 2010, with one or more bidders for the purpose of establishing a minimum acceptable bid for the assets. The Debtors propose to provide any stalking horse bidder(s) with a breakup fee of up to 2% of the guaranteed cash purchase price, and expense reimbursement of up to $300,000. The Debtors propose a December 10, 2010 deadline for submitting initial bids by other parties; a December 13, 2010 auction if competing bids are received; a hearing to consider approval of the sale on January 10, 2010; and that a February 8, 2011 deadline to consummate the sale of the assets. According to the proposed bid procedures, bidders must submit a good faith deposit equal to at least 5% of the proposed purchase price. A prepetition secured lender may submit a credit bid for some or all of the assets. If the successful bidder(s) fails to timely consummate the purchase of the assets, or any part thereof, the next highest or otherwise best qualified bid may be designated by the Debtors, in consultation with the prepetition secured lender, as the successful bid, and the Debtors will be authorized, but not required, to consummate the sale of the assets to the qualified bidder that submitted the back-up bid. A copy of the proposed Bidding Procedures is available for free at http://bankrupt.com/misc/CARIBBEAN_PETROLEUM_biddingprocedures.pdf About Caribbean Petroleum San Juan, Puerto Rico-based Caribbean Petroleum Corporation, aka CAPECO, owns and operates certain facilities in Bayomon, Puerto Rico for the import, offloading, storage and distribution of petroleum products. Cribbean Petroleum filed for Chapter 11 protection (Bankr. D. Del. Case No. 10-12553) on August 12, 2010, nearly 10 months after a massive explosion at its major Puerto Rican fuel storage depot virtually shut down the company's operations. The Debtor estimated its assets at $100 million to $500 million and its debts at $500 million to $1 billion as of the Petition Date. Affiliates Caribbean Petroleum Refining, L.P., and Gulf Petroleum Refining (Puerto Rico) Corporation filed separate Chapter 11 petitions on August 12, 2010. Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., serves as counsel to the Debtors. The Debtors' co-counsel is Cadwalader, Wickersham & Taft LLP. The Debtors' financial advisor is FTI Consulting Inc. The Debtors' chief restructuring officer is Kevin Lavin of FTI Consulting Inc. CARIBBEAN PETROLEUM: Puerto Rico Gov't Seeks Venue Transfer ----------------------------------------------------------- Patrick Fitzgerald at Dow Jones Daily Bankruptcy Review reports that Puerto Rican officials want Caribbean Petroleum Corp.'s bankruptcy case moved from Delaware to San Juan, claiming the cleanup of environmental damage caused by a massive explosion at the company's storage facility is of the "highest public interest" to the island's citizens. According to Dow Jones, Puerto Rico's treasury secretary said Thursday that "the interests of justice and the convenience of the parties" support the transfer of the privately held oil-and-gas distributor's Chapter 11 case to Puerto Rico. "The healthy completion of the cleanup of the devastating effects of the explosions is a matter of the highest public interest in Puerto Rico," lawyers for the secretary of the Treasury said in a court filing Thursday, according to Dow Jones. Dow Jones notes a catastrophic explosion on Oct. 23, 2009, destroyed much of the company's Bayamon storage facility and rocked the San Juan area. According to the company's finance chief, the explosions dealt the company a blow from which it never recovered. The explosions also had a dramatic impact on Puerto Rico, leaving behind significant environmental damage and cleanup costs. The Environmental Protection Agency has barred the company from using its surviving facilities pending an inspection. Dow Jones says prior to the explosions, Caribbean Petroleum's pipelines delivered more than two-thirds of the jet fuel used at San Juan International airport as well as supplying the Puerto Rico Electric Power Authority, the government entity that provides electricity to the island's people. Moreover, more than 90% of the company's creditors are in Puerto Rico, according to court papers. Dow Jones notes the Debtor is also facing more than two dozen lawsuits in Puerto Rico for, among other claims, property damage and injuries. Caribbean Petroleum estimates that plaintiffs in these suits are seeking more than $455 million. "There is significant local interest in having such disputes resolved by a bankruptcy court in Puerto Rico," the officials said, according to Dow Jones. Dow Jones notes a lawyer for Caribbean Petroleum couldn't immediately be reached for comment. Dow Jones says Judge Kevin Gross will consider the request to move the case to Puerto Rico at a hearing Sept. 8. The Debtor is selling such assets as a network of Gulf-branded service stations, six pipelines and a deepwater dock in San Juan Harbor. The sales are being conducted without the benefit of a stalking horse, a lead bidder that sets a floor price for the assets on the block. Dow Jones notes the Debtor owes Banco Popular de Puerto Rico $137 million, and the bank holds a lien on virtually all the company's assets. Caribbean Petroleum said it will allow the bank to "credit bid" its secured debt, meaning the bank debt could serve as a de facto stalking-horse bid. About Caribbean Petroleum San Juan, Puerto Rico-based Caribbean Petroleum Corporation, aka CAPECO, owns and operates certain facilities in Bayomon, Puerto Rico for the import, offloading, storage and distribution of petroleum products. Cribbean Petroleum filed for Chapter 11 protection (Bankr. D. Del. Case No. 10-12553) on August 12, 2010, nearly 10 months after a massive explosion at its major Puerto Rican fuel storage depot virtually shut down the company's operations. The Debtor estimated its assets at $100 million to $500 million and its debts at $500 million to $1 billion as of the Petition Date. Affiliates Caribbean Petroleum Refining, L.P., and Gulf Petroleum Refining (Puerto Rico) Corporation filed separate Chapter 11 petitions on August 12, 2010. Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., serves as counsel to the Debtors. The Debtors' co-counsel is Cadwalader, Wickersham & Taft LLP. The Debtors' financial advisor is FTI Consulting Inc. The Debtors' chief restructuring officer is Kevin Lavin of FTI Consulting Inc. CARIBBEAN PETROLEUM: Gets Interim Nod for $10MM DIP Financing ------------------------------------------------------------- Caribbean Petroleum Corp., et al., sought and obtained interim authorization from the U.S. Bankruptcy Court for the District of Delaware to obtain postpetition secured financing from Banco Popular de Puerto Rico and to use cash collateral. The DIP Lender has committed to provide up to $10,000,000 non- revolving, multi-draw credit sub-facility. A copy of the DIP term sheet is available for free at: http://bankrupt.com/misc/CARIBBEAN_PETROLEUM_diptermsheet.pdf Mark D. Collins, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., explain that the Debtors need the DIP financing to fund the marketing for a sale of all or substantially all assets of the Debtors, rehabilitation, the DIP Lender's monthly interest, out-of-pocket costs, fees, and expenses related to the DIP Facility, employee wages and general corporate purposes, payment of professional fees of counsel and financial advisors to the Debtors and the statutory committee of unsecured creditors appointed in the Chapter 11 cases, adequate protection payments, adequate assurance deposit for the Debtors' utility providers, and payment of quarterly fees to the U.S. Trustee. The DIP facility will mature (i) 25 days after entry of interim order if the final dip order have not been entered by the court and the amendment have not been executed and delivered by the DIP borrowers to the postpetition lender; (ii) consummation of any consensual or nonconsensual chapter 11 plan or liquidation of or for the dip borrowers; or (iii) 180 days after the dip closing date. The DIP Facility will incur interest at 8.00% per annum, payable monthly in arrears not later than the first day of each calendar month and will be calculated on the basis of a 360-day year and actual days elapsed. In the event of default, the Debtors will pay an additional 2% default interest per annum. The DIP Facility will be afforded certain liens and claims, including limited priming liens and superpriority claims on property of the estate. The Debtors are authorized to use cash collateral, in addition to obtaining DIP financing. As adequate protection, the Debtors will grant the prepetition lender, among other things, additional replacement liens, superpriority claims, repayment from unencumbered assets, payment of all reasonable professional fees and expenses incurred by the prepetition lender in connection with the administration of the Chapter 11 cases, and the right to credit bid, payment of insurance proceeds. The Court has set a final hearing for September 8, 2010, at 12:30 p.m., Eastern Daylight Time, on the Debtors' request to be allowed to obtain DIP financing. About Caribbean Petroleum San Juan, Puerto Rico-based Caribbean Petroleum Corporation, aka CAPECO, owns and operates certain facilities in Bayomon, Puerto Rico for the import, offloading, storage and distribution of petroleum products. Cribbean Petroleum filed for Chapter 11 protection (Bankr. D. Del. Case No. 10-12553) on August 12, 2010, nearly 10 months after a massive explosion at its major Puerto Rican fuel storage depot virtually shut down the company's operations. The Debtor estimated its assets at $100 million to $500 million and its debts at $500 million to $1 billion as of the Petition Date. Affiliates Caribbean Petroleum Refining, L.P., and Gulf Petroleum Refining (Puerto Rico) Corporation filed separate Chapter 11 petitions on August 12, 2010. Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., serves as counsel to the Debtors. The Debtors' co-counsel is Cadwalader, Wickersham & Taft LLP. The Debtors' financial advisor is FTI Consulting Inc. The Debtors' chief restructuring officer is Kevin Lavin of FTI Consulting Inc. CDDM CORPORATION: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: CDDM Corporation 5910 S. Pennsylvania Avenue Lansing, MI 48911-5231 Bankruptcy Case No.: 10-10073 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Debtor's Counsel: Elias Theodore Xenos, Esq. ATTORNEY AT LAW 1963 Lexington Drive Troy, MI 48084 Tel: (313) 618-0604 E-mail: eliasxenos@hotmail.com Estimated Assets: $100,001 to $500,000 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/miwb10-10073.pdf The petition was signed by Derek Wroblewski, president. CELL THERAPEUTICS: Expects to Submit MAA in Second Half of 2010 --------------------------------------------------------------- Cell Therapeutics Inc. provided with the Securities and Exchange Commission financial information at CONSOB's request pursuant to Article 114, paragraph 5, of the Legislative Decree no. 58/1998. Cell Therapeutics said in the report that the validation of the Pediatric Investigation Plan for pixantrone is part of the PIP assessment process in which the European Medicines Agency reviews the PIP application and verifies that the PIP application is complete and the contents meet the EMEA's requirements for filing. The EMEA Pediatric Committee will review and comment or approve the contents of PIP. According to the general timeline of the EMEA's PIP review process, if the EMEA has comments to the PIP, CTI would anticipate receiving them 30 days after the EMEA's validation of the PIP application. Based on the EMEA's expected timeline, CTI would then expect the PDCO to reach an opinion 60 days after validation of the PIP application. If the PIP is approved, CTI would then submit the Marketing Authorization Application for pixantrone to the EMEA. CTI expects to be able to submit the MAA during the second half of 2010. About Cell Therapeutics Headquartered in Seattle, Washington, Cell Therapeutics, Inc. (NASDAQ and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company that develops an integrated portfolio of oncology products aimed at making cancer more treatable. Subsequent to the closure of its Bresso, Italy operations in September 2009, CTI's operations are conducted solely in the United States. Going Concern Doubt San Francisco-based Stonefield Josephson, Inc., has included an explanatory paragraph in their report on Cell Therapeutics, Inc.'s December 31, 2009, 2008 and 2007 consolidated financial statements regarding their substantial doubt as to the Company's ability to continue as a going concern. The independent auditors reported that the Company has sustained loss from operations over the audit periods, incurred an accumulated deficit, and has substantial monetary liabilities in excess of monetary assets as of December 31, 2009. Bankruptcy Warning In its Form 10-Q report for the period ended September 30, 2009, filed with the Securities and Exchange Commission, the Company warned it does not expect it will have sufficient cash to fund planned operations through the second quarter of 2010, which raises substantial doubt about its ability to continue as a going concern. The Company said if it fails to obtain capital when required, the Company said it may be required to delay, scale back, or eliminate some or all of its research and development programs and may be forced to cease operations, liquidate its assets and possibly seek bankruptcy protection. CIRTRAN CORP: Delays Filing of Form 10-Q for June 30 Quarter ------------------------------------------------------------ CirTran Corporation said it could not timely file its quarterly report on Form 10-Q for the period June 30, 2010, with the Securities and Exchange Commission because the management requires additional time to compile and verify the data required to be included in the report. West Valley City, Utah-based CirTran Corporation (OTC BB: CIRC) http://www.CirTran.com/-- and its subsidiaries provide turnkey manufacturing services using surface mount technology, ball-grid array assembly, pin-through-hole, and custom injection molded cabling in the United States and the People's Republic of China. CirTran Corporation incurred a net loss of $922,297 on $2.1 million of net sales in the three months ended March 31, 2010, compared with a net loss of $2.25 million on $1.9 million of net sales during the same period a year ago. The Company's balance sheet at March 31, 2010, showed $13.04 million in total assets, $19.9 million in total liabilities, and a stockholder's deficit of $6.88 million. CITY CAPITAL: Delays Filing of Form 10-Q for June 30 Quarter ------------------------------------------------------------ City Capital Corp. said it could not timely file its quarterly report on Form 10-Q for the period ended June 30, 2010, with the Securities and Exchange Commission. About City Capital Franklin, Tenn.-based City Capital is a professional management and diversified holding company engaged in leveraging investments, holdings and other assets to build value for investors and shareholders. After auditing the Company's financial results in 2008 and 2009, Spector & Associates LLP expressed substantial doubt about City Capital Corporation's ability as a going concern. The firm noted that the Company has recurring losses, substantial accumulated deficit and negative cash flows from operations. The Company's balance sheet at Dec. 31, 2009, showed $2,997,088 in total assets, $9,820,316 in total liabilities, and a stockholder's deficit of $6,674,519. COLTS RUN: Hearing on PNC Plea for Ch11 Trustee Moved to Sept. 14 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois has continued until September 14, 2010, at 10:30 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. As reported in the Troubled Company Reporter on July 2, 2010, secured creditor, PNC Bank, National Association, sought for the appointment of a Chapter 11 trustee, citing that 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 million to $50 million as of the Petition Date. COLTS RUN: Files Full-Payment Reorganization Plan ------------------------------------------------- Colts Run, LLC, submitted to the U.S. Bankruptcy Court for the Northern District of Illinois a proposed Plan of Reorganization and an explanatory Disclosure Statement. The Debtor will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. According to the Disclosure Statement, the Plan provides that distributions under the Plan will be made from cash deposits existing at the confirmation and from proceeds realized from the continued operation of the Debtor's business. The Debtor does not intend to liquidate any if its assets in order to make the payments. If necessary, at the point of the balloon payment coming due to PNC, the Debtor may borrow the funds sufficient to make the balloon payment. Under the Plan, the Debtor intends to treat claims as: 1. PNC Bank, National Association -- under Class 1 -- will receive or retain: a) its lien on the real and personal property owned by the Debtor, to the same extent and with the same validity as it had on the petition date, until the allowed Class 1 claims are paid in full; b) interest on its allowed claim until fully paid at the prepetition, non-defaulted contract rate, payable in 59 monthly installments; and c) payment of the unpaid balance of the allowed Class 1 claim. 2. GMAC Claim -- under Class 4 -- will be paid in full in cash. 3. Unsecured creditors -- under Class 5 -- will receive 100% of the allowed amount of their claims plus an interest of 5% per annum. 4. The Debtor's members (i) Ivan Djurin and (ii) The Teresa M. Baldwin Trust, will retain their respective equity interest in the Debtor after confirmation of the Plan. Holders of claims in Classes 1 and 5 are considered impaired and are required to vote on the Plan. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/ColtsRunDS.pdf The Debtor is represented by: David K. Welch, Esq. Arthur G. Simon, Esq. Scott R. Clar, Esq. Jeffrey C. Dan, Esq. Crane, Heyman, Simon, Welch & Clar 135 South LaSalle Street, Suite 3705 Chicago, IL 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 About Colts Run, LLC Lake Forest, Illinois-based Colts Run, LLC, owns and operates a residential apartment project located in Lexington, Kentucky, known as the 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 million to $50 million. COMPLIANCE SYSTEMS: Busy With Acquisition, Delays Form 10-Q ----------------------------------------------------------- Compliance Systems Corporation said it could not timely file its quarterly report on Form 10-Q for the period ended June 30, 2010, with the Securities and Exchange Commission. The company said it recently completed the acquisition of another business and has had preliminary discussions with a third company regarding a possible transaction not in the ordinary course of the Company's business. The need to integrate such acquired business' operations and administrative and accounting structure with the business and administrative and accounting structure of the company's ongoing operations and management structure, as well as the discussions with the other company, have caused the company's management to devote a portion of their time to such activities that otherwise would have been directed towards the timely filing of the company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010. Accordingly, the Company is unable to file the subject Form 10-Q on a timely basis without unreasonable effort and expense. The Company said it expects a net loss of about $580,000, on revenues of $317,000, for the fiscal quarter ended June 30, 2010, as compared to a net loss of $373,658, on revenues of $277,777, for the fiscal quarter ended June 30, 2009. About Compliance Systems Headquartered in Glen Cove, New York, Compliance Systems Corporation operates its principal businesses through two of its subsidiaries, Call Compliance, Inc. and Execuserve Corp. Call Compliance helps telemarketing operators ensure compliance in the highly regulated, strictly enforced Do-Not-Call and other telemarketing guidelines environment. Execuserve provides organizations, who are hiring employees, with tests and other evaluation tools and services to assess and compare job candidates. The Company's balance sheet at March 31, 2010, showed $1,715,885 in assets, $4,207,631 of liabilities, and a stockholders' deficit of $2,491,746. The Company has suffered continued losses from operations since its inception and incurred a net loss of $653,045 for the three months ended March 31, 2010. The Company had stockholders' deficiencies of $2,491,746 and $2,297,933 and working capital deficiencies of $3,615,564 and $2,147,255 at March 31, 2010, and December 31, 2009, respectively. "The prolonged trend of net losses incurred over the last six fiscal years raises substantial doubt about the Company's ability to continue as a going concern," Compliance Systems said in its Form 10-Q for the first quarter ended March 31, 2010. CONSPIRACY ENTERTAINMENT: Delays Form 10-Q for June 30 Quarter -------------------------------------------------------------- Conspiracy Entertainment Holdings Inc. said it could not timely file its quarterly report on Form 10-Q for the period ended June 30, 2010, with the Securities and Exchange Commission because the compilation, dissemination and review of the information required to be presented in the report for the relevant period has imposed time constraints. About Conspiracy Entertainment Holdings Based in Santa Monica, California, Conspiracy Entertainment Holdings, Inc., develops, publishes and markets interactive entertainment software. The Company currently publishes titles for many popular interactive entertainment hardware platforms, such as Sony's PlayStation, Nintendo 64 and Nintendo's Game Boy Color and Game Boy Advance as well as the next generation hardware platforms such as Sony's PlayStation 2, Sony's PSP, Nintendo GameCube, Nintendo's DS, Microsoft's Xbox, and also for the PC. * * * The Company's balance sheet at March 31, 2010, showed $4.1 million in total assets, $9.1 million in total liabilities, and a stockholders' deficit of $4.9 million. CRYOPORT INC: Form 10-Q Not Filed After Stock Placement Delayed --------------------------------------------------------------- Cryoport Inc. said it could not timely file its quarterly report on Form 10-Q for the period ended June 30, 2010, with the Securities and Exchange Commission. On Aug. 10, 2010, the Company signed agreements with various institutional investors and accredited investors for a private placement of common stock and warrants to purchase common stock with estimated net proceeds of approximately $3.0 million. Subsequent to the signing of the agreements but prior to the closing of the financing, the Company determined that certain anti-dilution provisions added to the form of purchase agreement and form of warrant at the request of certain institutional investors prior to their execution would trigger a default under the securities purchase agreements entered into by the Company in connection with its prior debenture financings in October 2007 and May 2008. Consequently, the Company has delayed the closing of the private placement while it negotiates an amendment to the terms of the private placement such that no default is triggered under the securities purchase agreements relating to the prior debenture financings. Because the private placement transaction constitutes a material subsequent event to the Company's quarterly financial statements for the period ended June 30, 2010, the Company is not able to timely file its Form 10-Q for the quarter ended June 30, 2010 pending the negotiation with, and execution by, the investors of the amendment. The Company expects the amendment to be finalized, and the closing of the private placement to occur, later this week. Going Concern KMJ Corbin & Company LLP expressed substantial doubt against CryoPort Inc.'s ability as a going concern. The firm noted that the Company has incurred recurring losses and negative cash flows from operations since inception. Although the Company has working capital of $1,994,934 and cash and cash equivalents balance of $3,629,886 at March 31, 2010, management has estimated that cash on hand, which include proceeds from the offering received in the fourth quarter of fiscal 2010, will only be sufficient to allow the Company to continue its operations only into the second quarter of fiscal 2011. About CryoPort Inc. Headquartered in Lake Forest, Calif., CryoPort, Inc. (OTC BB: CYRXD) -- http://www.cryoport.com/-- provides innovative cold chain frozen shipping system dedicated to providing superior, affordable cryogenic shipping solutions that ensure the safety, status and temperature of high value, temperature sensitive materials. The Company has developed a line of cost-effective reusable cryogenic transport containers capable of transporting biological, environmental and other temperature sensitive materials at temperatures below 0o Celsius. CYTOMEDIX INC: Widens Net Loss to $1.8MM in 2nd Qtr. 2010 --------------------------------------------------------- Cytomedix, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.8 million on $1.1 million of revenue for the three months ended June 30, 2010, compared with a net loss of $886,794 on $569,306 of revenue for the same period of 2009. The Company's balance sheet at June 30, 2010, showed $8.7 million in total assets, $5.9 million in total liabilities, and a shareholders' equity of $2.8 million. As reported in the Troubled Company Reporter on April 1, 2010, PricewaterhouseCoopers LLP, in McLean, Va., 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 of the Company's recurring losses from operations and insufficient liquidity. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?69a9 Rockville, Md.-based Cytomedix, Inc., is a biotechnology company that develops, sells, and licenses regenerative biological therapies, to primarily address the areas of wound care, inflammation, and angiogenesis. DELPHI CORP: Court Allows Retirees' Filing of Complaint ------------------------------------------------------- Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York confirmed that a second amended complaint filed by Dennis Black, Charles Cunningham, Kenneth Hollis, and the Delphi Salaried Retiree Association does not violate the Modified First Amended Joint Plan of Delphi Corp. and its debtor affiliates and the related July 30, 2009 confirmation order, the order on General Motors Company's Motion to Dismiss Complaint or any other order based on the representations made by the Salaried Retirees on the record at the hearing on the Amended Motion. The second amended complaint relates to the action commenced by the Salaried Retirees against Pension Benefit Guaranty Corporation before the U.S. District Court for the Eastern District of Michigan. The right of DPH Holdings Corp. and its affiliates to argue that the Salaried Retirees are judicially estopped from taking any action inconsistent with their representations at the hearing is fully preserved, as are the Reorganized Debtors' arguments concerning equitable mootness as to any reinstatement or restoration of the Salaried Plan to the Reorganized Debtors, Judge Drain averred. Similarly, the Salaried Retirees retain their right to defend against any estoppel or mootness arguments by the Reorganized Debtors except with respect to the representations or as waived by them at the Hearing or otherwise, Judge Drain added. Judge Drain ruled the stipulation between the Salaried Retirees and the Reorganized Debtors dated September 11, 2009, lifting the automatic stay in connection with the Michigan Action, remains in full force and effect, including the parties' rights under that stipulation. The parties protected by the injunction under the Modified Plan retain all of their rights to challenge any effort by any person to impose, directly or indirectly, any liability on any of the Protected Parties on account of or in connection with the Salaried Pension Plan, including all rights under any prior order of the Bankruptcy Court, any other applicable law, or at common law, Judge Drain said. Lawmakers Ask GAO to Probe Delphi Pension Matters U.S. Representative John Boehner and U.S. Senator Roger Wicker want the Government Accountability Office to conduct a non- partisan, independent analysis of the federal financial assistance provided to General Motors Corporation and its treatment of certain Delphi retirees, according to an August 9 public statement. In their request to Gene Dodaro, GAO's Acting Comptroller General, the lawmakers wrote, "In light of the complexity that not all Delphi retirees and the role of GM and the U.S. Department of the Treasury in the Delphi case, we are concerned that not all Delphi retirees were treated equitably and that the process lacked transparency." The GAO is expected to begin the report in the coming months. In response, GM said in a public statement, "We appreciate how difficult it is for Delphi salaried employees and retirees to have their pension taken over by PBGC. However, the new General Motors Company is not in a position to fund these pension liabilities a second time," Barry B. Burr of Pensions & Investments reports. GM further stated in its public statement that unlike the situation with the salaried pension plan, the Delphi hourly pension plan was not fully funded when Delphi became an independent company. GM continued that as part of required colletive bargaining, it committed to the UAW that it would guarantee the level of hourly pension benefits in the event the Delphi hourly pension plan became frozen or terminated. Chuck Young, GAO's managing director told Pensions & Investments that "it usually takes the GAO a few weeks to review the request and make a determination." To show his further support, U.S. Representative Christopher Lee disclosed recent steps he has undertaken to continue the fight for fair and equitable treatment for all Delphi workers and retirees, according to an August 4 public statement. Mr. Lee specifically participated in the U.S. House of Representative's Financial Services Subcommittee on Oversight and Investigations field hearing investigating the unfair treatment of Delphi workers and retirees on July 30, 2010. On the same day, the Washington Times published Mr. Lee's article calling on President Obama to "speak up for Delphi's retirees and help those who have been left aside during the restructuring of the American auto industry." Mr. Lee also introduced legislation in the House of Representatives on July 30, that requires the Auto Task Force, Pension Benefit Guaranty Corporation and the Treasury Department to provide all relevant information to the GAO on their decision regarding Delphi Salaried Retirees. Mr. Lee also sent a letter on August 3, 2010, to Neil Barofsky, special inspector general for the Troubled Asset Relief Program, asking him to "conduct an official investigation" into the suspect timing of the PBGC's involuntary resolution of Delphi's pension plans and subsequent expedited bankruptcy of GM, the PBGC's release of its liens on Delphi assets that could have helped bolster Delphi's salaried pension plan and other important issues. A report by the Dayton Daily News relates that U.S Representative Mike Turner supports Mr. Lee's request for investigation by the SIGTARP. Mr. Turner particularly questions (i) why certain Delphi assets were not liquidated to answer pension obligations; and (ii) why the federal government chose to treat certain classes of retirees differently, according to the news source. "They used taxpayer dollars to own 60% of GM and did it on the backs of the Delphi retirees," Mr. Turner was quoted by the Dayton Daily News as saying. Retirees Seek Help From U.S. Rep. Frank To rally more support for their cause, the Delphi salaried retirees tried to make their case for pension and health care to one of the most powerful men in Washington, U.S. Representative Barney Frank, according to Larry Ringler of the Tribune Chronicle. Bruce Gump, chairman of the Warren Legislative Group in the DSRA told Mr. Ringler, "It is important to use that we have the chance to speak with him and make some recommendations about how to use TARP funds in the future." Mr. Gump further noted that Retirees are also concerned about their health care through the federal Health Coverage Tax Credit, which will return to lower levels at year-end unless Congress acts, according to the report. Retirees attended the Democrat Party's annual Chairman's Dinner in Ohio, in which Mr. Frank was a speaker on August 12, 2010, the Tribune Chronicle notes. Mr. Frank, however, told the Delphi salaried retirees not to bank on government funding aid for their pensions, citing that their legal action against the PBGC is their only option, the Tribune Chronicle relates in a subsequent report. "Congress just voted to refuse any more expenditure out of the TARP. I don't think they'll find there's a majority in Congress to fund this. I'm afraid the court is their only option," Mr. Frank was quoted by Tribune Chronicle as saying. According to Mr. Frank, House Democrats in 2008 passed a bill that he believes would have been fairer to the salaried retirees, however, the Republican-controlled Senate objected to the bill because it paid employees too much, the Tribune Chronicle relates. In other news, about 125 DSRA members protested before GM's headquarters building in Detroit, Michigan, coinciding with President Obama's visit to the "Motor City" on July 30, 2010, according to the DSRA's Web site. The protestors asserted that "up to 70% of Delphi salaried pensions had been unfairly taken away by the government restructuring in bankruptcy and forced into the PBGC," DSRA noted in its Web site. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represented the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DELPHI CORP: Wiegel Tool Asks for Wants Relief From Plan Order -------------------------------------------------------------- In September 2007, Delphi Corp. and its units filed a complaint under seal against Wiegel Tool Works, Inc., seeking to recover alleged preferential transfers totaling $3,590,074. The Complaint against Wiegel was served on Wiegel on April 1, 2010, two and a half years later, Patrick J. Orr, Esq., at Klestadt & Winters, LLP, in New York -- porr@kledstadt.com -- tells the Court. To Wiegel's knowledge, only one of its contracts has been rejected under the Modified First Amended Joint Plan of Reorganization, Mr. Orr notes. The July 30, 2010 confirmation order to the Modified Plan ratified the cure claim amounts for contracts assumed under the Modified Plan. Notably, at the time the Debtors submitted their proposed cure amounts, they had already filed their lawsuit against Wiegel, but had not factored the amounts at issue in that lawsuit into their cure schedule, he points out. Against this backdrop, Wiegel asks the Court to grant it relief from the Plan Modification Order to allow it to assert an administrative expense claim in an amount equal to the transfers sought to be avoided by the Debtors under the Complaint that relate to the Assumed Contracts. The Plan Modification Order rendered the assumption of the Wiegel Contracts effective, and ratified the Debtors' proposed cure schedule for those contracts, without making any provision for the substantial, additional amounts that would be owed to Wiegel if the Debtors prevailed in the Complaint, Mr. Orr complains. Had Wiegel been apprised of the filing of the Complaint, Wiegel would have taken the appropriate steps to preserve these indemnification and reimbursement rights, Mr. Weigel contends. Wiegel would have objected to the Debtor's proposed cure schedule, and asked that any cure obligation include the amounts at issue in the Complaint, he asserts. Mr. Orr further argues that the Debtors' assumption of the Wiegel Contracts should preclude them from establishing the portion of their prima facie case against Wiegel pursuant to Section 547(b)(5) of the Bankruptcy Code. Payments made to Wiegel should not be recoverable as preferences because had those payments not been made and received prepetition, Wiegel would nevertheless have been entitled to those amounts as part of the approved cure amounts of the Assumed Contracts, Mr. Orr contends. About Delphi Corp. Based in Troy, Michigan, Delphi Corporation (PINKSHEETS: DPHIQ) -- http://www.delphi.com/-- was a global supplier of mobile electronics and transportation systems, including powertrain, safety, steering, thermal, and controls & security systems, electrical/electronic architecture, and in-car entertainment technologies. Delphi had approximately 146,600 employees and operates 150 wholly owned manufacturing sites in 34 countries with sales of $18.1 billion in 2008. The Company filed for Chapter 11 protection on October 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represented the Official Committee of Unsecured Creditors. As of June 30, 2008, the Debtors' balance sheet showed US$9,162,000,000 in total assets and US$23,742,000,000 in total debts. The Court confirmed Delphi's plan on January 25, 2008. The Plan was not consummated after a group led by Appaloosa Management, L.P., backed out from their proposal to provide US$2,550,000,000 in equity financing to Delphi. At the end of July 2009, Delphi obtained confirmation of a revised plan, build upon a sale of the assets to a entity formed by some of the lenders who provided $4 billion of debtor-in-possession financing, and General Motors Company. On October 6, 2009, Delphi Corp.'s Chapter 11 plan of reorganization became effective. A Master Disposition Agreement executed among Delphi Corporation, Motors Liquidation Company, General Motors Company, GM Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's business among three separate parties -- DPH Holdings LLC, GM Components, and DIP Holdco 3. Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings will remain responsible for the post-Effective Date administration and eventual closing of the Chapter 11 cases as well as the disposition of certain retained assets and payment of certain retained liabilities as provided under the Modified Plan. Bankruptcy Creditors' Service, Inc., publishes Delphi Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Delphi Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) DENNY HECKER: May Be Evicted From Medina Home Under Accord ---------------------------------------------------------- Melanie Cohen, writing for Dow Jones Newswires, reports that bankruptcy judge Robert Kressel on Wednesday endorsed an agreement between Denny Hecker's trustee, Randall Seaver, and former Hecker business partners Maurice Wagener and Palladium Holdings. The agreement calls for evicting Mr. Hecker from his Medina, Minn., home and putting the house up for sale while a lawsuit filed by Seaver last month against Wagener and Palladium proceeds, according to the Star Tribune. The report notes Mr. Wagener and his car dealership bought the property, worth about $1.8 million, out of foreclosure late last month and then transferred the title to Palladium, which is affiliated with Hecker investing partner Koch Group. Mr. Seaver wanted the court to get rid of that deal and instead put the house in Mr. Hecker's bankruptcy estate. According to the report, Mr. Hecker objected to the settlement, noting that he'd paid earlier in July an $861 judgment he owed to Palladium as interest. Because he paid that judgment, Mr. Hecker said, Palladium was no longer a creditor and had no right to take the property out of foreclosure. "None of the parties to the supposed settlement agreement has the immediate right to possession of the real property," Mr. Hecker said. The report also says Judge Kressel on Wednesday denied motions to dismiss a lawsuit brought by Mr. Seaver against Mr. Hecker in June. According to the Star Tribune, the suit portrayed Cornerstone Bank, Royal Jewelers and Richard Olson, who partially owns the companies, as insiders who got special treatment because Mr. Hecker is friends with Mr. Olson. The companies objected to the portrayal, but Judge Kressel rejected the claim. About Denny Hecker Dennis E. Hecker owned and operated dozens of auto dealerships, car rental franchises, and other businesses until 2009. He filed a voluntary chapter 7 petition (Bankr. D. Minn. Case No. 09-50779) on June 4, 2009, after his auto empire collapsed into bankruptcy. Chrysler Financial filed a dischargeability action (Bankr. D. Minn. Adv. Pro. No. 09-5019) on July 8, 2009. Chrysler Financial alleged that $83 million of $350 million owed is nondischargeable under 11 U.S.C. Sec. 523(a) because Mr. Hecker allegedly obtained it through the use of false pretenses, false representations, fraud, defalcation, and embezzlement. The Honorable Robert J. Kressel granted Chrysler Financial's motion for sanctions and ordered $83 million of the judgment against Mr. Hecker, together with accrued interest, not dischargeable in the Chapter 7 bankruptcy case. EDUCATION MANAGEMENT: S&P Affirms 'BB-' Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Pittsburgh, Pa.-based for-profit post-secondary school operator Education Management LLC. At the same time, S&P revised the rating outlook to stable from positive. All related issue-level and recovery ratings on the company's debt issues remain unchanged. The outlook revision to stable follows the notice of proposed rulemaking on gainful employment published by the U.S. Department of Education, recommending measures under which post-secondary educational programs would remain eligible for federal loans to students under Title IV funding. Among these conditions is a proposed requirement that post-secondary programs demonstrate federal student loan principal repayment rates at certain thresholds. On Aug. 13, 2010, the DoE published certain data on student loan repayment rates. Certain of Education Management's schools had repayment rates that fell below the threshold for retaining Title IV funding eligibility, based on the current measure of repayment rates and relevant thresholds proposed by the DoE. The company contends, among other things, that the formula for principal repayment proposed by the DoE excludes numerous alternative loan payment and deferment plans that permit borrowers to remain current on their federal student loans without making a principal payment. The DoE has indicated that after a comment period ending Sept. 9, 2010, it plans to finalize the new regulations by Nov. 1, 2010, with implementation beginning July 1, 2011. "Although the final DoE rules have not yet been determined, S&P acknowledge the possible intermediate-term impact on Education Management's enrollment and cash flow," noted Standard & Poor's credit analyst Deborah Kinzer. "S&P's outlook revision to stable also reflects a higher degree of regulatory risk in the rating than S&P had previously assumed." S&P's 'BB-' rating reflects Education Management's dependence on federal student loan programs, its good business position in the for-profit post-secondary education market, and declining debt leverage resulting from strong operating performance and debt repayment from the proceeds of its October 2009 IPO. Education Management operates 101 campuses in 31 states and one Canadian province, offering programs in career-oriented disciplines. Enrollment totaled about 139,000 as of July 2010. About 60% of students are enrolled in bachelor's, master's, and doctorate programs, while the rest are in associate's degree and certificate programs. EXTENDED STAY: Court Rejects $7.63MM Reimbursement for Starwood --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York junked a motion by Extended Stay Inc. to reimburse the Starwood Capital group as much as $7,629,504, for its expenses. The Starwood group was one of the bidders that proposed to fund the restructuring plan for ESI's 74 affiliates, but lost to a consortium of investors composed by Centerbridge Partners LP, Paulson & Co., and Blackstone Real Estate Associates VI L.P. An agreement, however, with the Starwood investors requires ESI to reimburse the group for its expenses in case the company accepts another bid. In a 2-page order, Judge James Peck said there was "lack of cause shown" for granting the proposed reimbursement. Judge Peck also said approval of the reimbursement would constitute a use of the trust which holds the cash collateral. ESI's $4.1 billion pre-bankruptcy mortgage loan is deposited in a trust administered by U.S. Bank. The proposed reimbursement earlier drew opposition from CWCapital Asset Management LLC, special servicer for U.S. Bank. CWCapital argued that only the winning bidder is entitled to reimbursement of expenses under the Court-approved bid process. In a related development, the Starwood group is set to take an appeal of the Bankruptcy Court's denial order. About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. Extended Stay had assets of $7.1 billion and debts of $7.6 billion as of the end of 2008. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). EXTENDED STAY: Proposes ESA Canada as Foreign Representative ------------------------------------------------------------ Extended Stay Inc. and its affiliated debtors ask U.S. Bankruptcy Judge James Peck to authorize ESA Canada Trustee Inc. as their foreign representative in Canada. The move came after U.S. Bank N.A. filed liens and security interests against Extended Stay's assets in Canada on account of the Bank's claims, which stemmed from a $4.1 million mortgage loan obtained by the Debtors prepetition. Extended Stay operates three hotels in Newfoundland and Ontario, which are being managed by HVM Canada Hotel Management ULC. If approved by the Bankruptcy Court, ESA Canada, one of Extended Stay's affiliated debtors, would apply to a Canadian court for recognition of their bankruptcy cases as "foreign main proceedings," according to Jacqueline Marcus, Esq., at Weil Gotshal & Manges LLP, in New York. Ms. Marcus says a recognition from the Canadian court of the proceedings is necessary for the implementation of Extended Stay's restructuring plan for its affiliated debtors. "In order to effectuate the terms of the Plan and comply with their obligations to the sponsors, the Debtors are required to deliver their Canadian assets free and clear of liens," Ms. Marcus says. Under Canada's Companies' Creditors Arrangement Act, once the recognition is granted, lawsuits are stayed and creditors are prevented from seizing the assets of a company that is seeking recognition. Ms. Marcus says the foreign representative would also seek an order from a Canadian court to enforce the Bankruptcy Court ruling, which confirmed the Plan in order to discharge liens on Extended Stay's properties in Canada. The Bankruptcy Court will consider approval of Extended Stay's request at the hearing scheduled for August 26, 2010. Deadline for filing objections is August 25. About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. Extended Stay had assets of $7.1 billion and debts of $7.6 billion as of the end of 2008. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). EXTENDED STAY: Wants Plan Filing Exclusivity Until Dec. 15 ---------------------------------------------------------- Extended Stay Inc. and its affiliated debtors ask the U.S. Bankruptcy Court for the Southern District of New York to extend the period during which only they can file a Chapter 11 plan and solicit votes for that plan. Extended Stay wants its exclusivity deadline extended through December 15, 2010, from the current deadline of September 16, 2010. The exclusivity extension, if approved, would give Extended Stay and sponsors of the Company's Chapter 11 Plan enough time to take all steps required for the Plan's effective date to occur, according to Jacqueline Marcus, Esq., at Weil Gotshal & Manges LLP, in New York. Extended Stay's Plan was confirmed by Judge James Peck on July 20, 2010, paving the way for the Company's 74 affiliated debtors to emerge from bankruptcy protection. The confirmed Plan provides for the sale of Extended Stay's chain of hotels to an investment consortium composed by Centerbridge Partners LP, Paulson & Co. and Blackstone Real Estate Associates VI L.P. It calls for the consortium to pay $3.925 billion for the ownership of Extended Stay's hotels and to contribute certificates representing interests in a $4.1 billion mortgage debt for the equity of Extended Stay's affiliated debtors. Proceeds from the sale will be used to pay down the pre- bankruptcy billion dollar mortgage debt. Extended Stay Inc. is not included in the sale block; its estate would be wound down pursuant to a liquidating plan or another arrangement to be agreed to by the Company, CWCapital Asset Management and the Official Committee of Unsecured Creditors. Ms. Marcus says the proposed exclusivity extension would also give enough time for CWCapital and the Creditors Committee to determine "how best to wind down the estate of [Extended Stay Inc]." CWCapital is the special servicer of U.S. Bank N.A., which administers the trust where Extended Stay's $4.1 billion pre- bankruptcy mortgage loan is deposited. Judge Peck will consider approval of the proposed extension at a hearing scheduled for September 23, 2010. Deadline for filing objections is September 17, 2010. About Extended Stay Extended Stay is the largest owner and operator of mid-price extended stay hotels in the United States, holding one of the most geographically diverse portfolios in the lodging sector with properties located across 44 states (including 11 hotels located in New York) and two provinces in Canada. As a result of acquisitions and mergers, Extended Stay's portfolio has expanded to encompass over 680 properties, consisting of hotels directly owned or leased by Extended Stay or one of its affiliates. Extended Stay currently operates five hotel brands: (i) Crossland Economy Studios, (ii) Extended Stay America, (iii) Extended Stay Deluxe, (iv) Homestead Studio Suites, and (v) StudioPLUS Deluxe Studios. Extended Stay Inc. and its affiliates filed for Chapter 11 on June 15, 2009 (Bankr. S.D.N.Y. Case No. 09-13764). Judge James M. Peck handles the case. Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, represents the Debtors. Lazard Freres & Co. LLC is the Debtors' financial advisors. Kurtzman Carson Consultants LLC is the claims agent. Extended Stay had assets of $7.1 billion and debts of $7.6 billion as of the end of 2008. Bankruptcy Creditors' Service, Inc., publishes Extended Stay Bankruptcy News. The newsletter provides gavel-to-gavel coverage of the Chapter 11 proceedings undertaken by Extended Stay Inc. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). ECHO THERAPEUTICS: Incurs $535,600 Net Loss in Q2 Ended June 30 --------------------------------------------------------------- Echo Therapeutics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $535,561 on $264,119 of revenue for the three months ended June 30, 2010, compared with a net loss of $6.8 million on $121,032 of revenue for the same period of 2009. During the three months ended June 30, 2009, the Company recorded a loss on extinguishment of debt in the amount of roughly $1.8 million relating to the retirement of Senior Secured Notes. Additionally, the Company recorded a loss on extinguishment of debt in the amount of $32,000 relating to the Senior Secured Notes. There was no loss on extinguishment of debt in the three months ended June 30, 2010. The derivative gain on warrants subject to "down round" provisions for the three months ended June 30, 2010, amounted to $375,948. The derivative loss on warrants subject to "down round" provisions for the three months ended June 30, 2009, amounted to $3.7 million. The Company's balance sheet as of June 30, 2010, showed $10.7 million in total assets, $2.4 million in total liabilities, and a stockholders' equity of $8.3 million. As reported in the Troubled Company Reporter on April 6, 2010, Wolf & Company, P.C., 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 the Company has suffered recurring losses from operations, has a significant accumulated deficit, has a significant working capital deficit and has been unable to raise sufficient capital to fund its operations. The Company acknowledges in its 10-Q that through June 30, 2010, it has not been able to generate sufficient revenues from operations to cover costs and operating expenses. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?699a Franklin, Mass.-based Echo Therapeutics, Inc. is a transdermal medical device company with deep expertise in advanced skin permeation technology that is initially focused on diabetes care and needle-free drug delivery. ECLIPS MEDIA: Posts $3.1 Million Net Loss in Q2 Ended June 30 ------------------------------------------------------------- EClips Media Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $3.1 million for the three months ended June 30, 2010, compared with a net loss of $695,692 for the same period of 2009. The Company had no revenues during the three months ended June 30, 2010, and 2009, respectively. The Company's balance sheet as of June 30, 2010, showed $1.7 million in total assets, $2.4 million in total liabilities, and a stockholders' deficit of $678,619. For the six months ended June 30, 2010, the Company had a net loss of $4.8 million and $373,820 of net cash used in operations. At June 30, 2010, the Company had a working capital deficiency of $1.7 million. Additionally at June 30, 2010, the Company had an accumulated deficit of $29.3 million. "These matters and the Company's expected needs for capital investments required to support operational growth raise substantial doubt about its ability to continue as a going concern." About EClips Media New York City-based EClips Media Technologies, Inc., through its wholly-owned subsidiary SD Acquisition Corp., a New York corporation, acquired on June 21, 2010, all of the business and assets and assumed certain liabilities of Brand Interaction Group, LLC, a New Jersey limited liability company. Brand Interaction Group operates as a sports entertainment and media business focused on promotion of fantasy league events through live events hosted in various venues such as Las Vegas, and online, which feature sports and media personalities, and the sale and marketing of various sports oriented products and services. ELEPHANT TALK: Posts $14.4MM Net Loss in Q2 Ended June 30 ---------------------------------------------------------- Elephant Talk Communications, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $14.4 million on $9.7 million of revenue for the three months ended June 30, 2010, compared with a net loss of $2.7 million on $11.3 million of revenue for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $41.4 million in total assets, $56.3 million in total liabilities, and a stockholders' deficit of $14.9 million. As reported in the Troubled Company Reporter on April 7, 2010, BDO Seidman, LLP expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year 2009. The independent auditors noted that the Company incurred a net loss of $17.4 million, used cash in operations of $5.4 million and had an accumulated deficit of $62.3 million. In its latest 10-Q, the Company discloses that if it is unable to secure additional capital, as circumstances require, or does not succeed in meeting its sales objectives it may not be able to continue operations. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?69a3 Based in Schiphol, The Netherlands, Elephant Talk Communications, Inc. is an international provider of business software and services to the telecommunications and financial services industry. Elephant Talk installs its operating software at the network operating centers of mobile carrier and receives a fee per month per cell phone subscriber on the network. Currently the subscribers are wholesale customers of Vizzavi (a subsidiary of the Vodafone group) in Spain and T-Mobile in the Netherlands. The Company also operates landline telephony services in nine European countries and Bahrain. FORBES MEDI-TECH: Posts C$917,700 Net Loss in Q2 Ended June 30 -------------------------------------------------------------- Forbes Medi-Tech Inc. reported on August 16, 2010, its consolidated financial statements for the second quarter ended June 30, 2010. The financial statements have been reviewed by the Company's auditors, KPMG LLP. The Company reported a net loss of C$917,675 on $1.7 million of revenue for the three month period ended June 30, 2010, compared with net income of C$113,029 on $1.0 million of revenue for the same period of 2009. The Company's balance sheet at June 30, 2010, showed $3.0 million in total assets, $2.3 million in total liabilities, and a stockholders' equity of $668,308. As reported in the Troubled Company Reporter on April 14, 2010, KPMG LLP, in Vancouver, B.C., 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 has an accumulated deficit as of December 31, 2009. The Company discloses in its Form 6-K that there are sufficient financial resources to finance operations only through the thrid quarter of 2010. A full-text copy of the Q2 financial statements for the period ended June 30, 2010, is available for free at: http://researcharchives.com/t/s?69a6 A full-text copy of the Q2 Management Discussion and Analysis for the period ended June 30, 2010, is available for free at: http://researcharchives.com/t/s?69a7 Based in Vancouver, British Columbia, Canada, Forbes Medi-Tech Inc. (OTC BB: FTMI) -- http://www.forbesmedi.com/-- is a life sciences company focused on evidence-based nutritional solutions. Forbes is a provider of value-added products and cholesterol- lowering ingredients for use in functional foods and dietary supplements. Forbes successfully developed and commercialized its Reducol(TM) plant sterol blend, which has undergone clinical trials in various matrices and has been shown to lower "LDL" cholesterol levels safely and naturally. FREDERICK BERG: Judge to Appoint Independent Trustee ---------------------------------------------------- Eric Pryne at The Seattle Times reports that a federal bankruptcy judge said an independent trustee will be appointed to take control of the bankruptcy case of Frederick Darren Berg's companies and personal assets. According to the report, investors asserted that there is compelling evidence of fraud and dishonesty by Mr. Berg. Investors cited that an entity created by Mr. Berg called CS Note Holdco raised more than $4 million last fall to buy mortgage- backed securities. Mr. Berg has retained control of his assets, including five bus companies, while under bankruptcy. Mr. Pryne, citing papers filed with the court, a trustee is needed because some of the $200 million they invested was used for purpose having nothing to do with the fund including a lavish lifestyle for Mr. Berg. About Frederick D. Berg Frederick D. Berg filed for Chapter 11 on July 27, 2010 (Bankr. W.D. Wash. Case No. 10-18668), estimating assets of more than $10 million, and liabilities of between $1 million and $10 million. The filing came after lawyers for one group of investors, armed with a court order and accompanied by sheriff's deputies, began seizing personal possessions at Berg's Mercer Island home and downtown Seattle condo. FUSION TELECOMMUNICATIONS: Posts $1.6 Million Net Loss in Q2 2010 ----------------------------------------------------------------- Fusion Telecommunications International, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $1.6 million for the three months ended June 30, 2010, compared with a net loss of $3.0 million for the same period of 2009. The Company reported consolidated revenues of $9.7 million for the quarter ended June 30, 2010, an increase of 12.8% when compared to revenues of $8.6 million for the second quarter of 2009. Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "I am very pleased that the second quarter of 2010 showed further progress in achieving the financial objectives we have set for reaching profitability. Our gross margin, SG&A expenses, and adjusted EBITDA performance all continued to improve. We believe that future revenue and margin growth in both business segments, coupled with ongoing expense management, will position us well for continued improvement in financial results." The Company's balance sheet as of June 30, 2010, showed $6.3 million in total assets, $13.0 million in total liabilities, and a stockholders' deficit of $6.7 million. As reported in the Troubled Company Reporter on March 29, 2010, Rothstein, Kass & Company, P.C., in Roseland, N.J., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted that the Company has had negative working capital balances, incurred negative cash flows from operations and net losses since inception, and has limited capital to fund future operations. In its latest 10-Q at June 30, 2010, the Company acknowledges that it its current cash resources are not adequate to fund its operations for the remainder of the year. At June 30, 2010, the Company had a working capital deficit of $8.5 million and an accumulated deficit of approximately $142.3 million. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?699d A full-text copy of the earnings release is available for free at: http://researcharchives.com/t/s?699e Headquartered in New York, Fusion Telecommunications International, Inc. Fusion (OTC BB: FSNN) provides IP-based digital voice and data communications services to carriers and corporations. GARLOCK SEALING: W.R. Grace Judge Takes Notice of Garlock Cases --------------------------------------------------------------- Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, which is handling W.R. Grace's bankruptcy cases, took judicial notice of the Chapter 11 filing of Garlock Sealing Technologies LLC pursuant to Rule 201 of the Federal Rules of Evidence and Rule 9017 of the Federal Rules of Bankruptcy Procedure. Garlock, along with certain of its affiliates, sought Chapter 11 protection on June 5, 2010, in the United States Bankruptcy Court for the Western District of North Carolina. Judge Fitzgerald's order is at the behest of David T. Austern, the Court-appointed legal representative for future asbestos personal injury claimants and the Official Committee of Asbestos Personal Injury Claimants in Grace's Chapter 11 case. Under Rule 201 of the Federal Rules of Evidence, a court may take "judicial notice of adjudicative facts" that are "not subject to reasonable dispute in that [they are] either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Federal Rule 201 provides that "[a] court [will] take judicial notice if requested by a party and supplied with the necessary information." It is appropriate for the Court to take judicial notice of facts contained in public records, according to Messrs. Phillips and Hurford, citing Maritime Elec. Co. v. United Jersey Bank, 959 F.2d 1194, 1200 n.3 (3d Cir. 1991). Garlock has objected to the confirmation of the Chapter 11 Plan of Reorganization of Grace complaining that identifying Grace in the Asbestos PI Channeling Injunction is not fair and equitable because contribution demand holders receive no benefit from Grace's trust contributions. Garlock has asserted that Grace must prove that its Plan will treat its co-defendants fairly and equitably, in the same way the Plan will treat plaintiffs fairly and equitably. Garlock is a defendant in lawsuits where asbestos personal injury claimants allege that Garlock's products contributed to their injuries. The same claimants also named Grace as a defendant and alleged that Grace's products contributed to their asbestos injuries as well. A majority of the individuals who claim to hold Asbestos PI Claims against Grace have asserted claims against Garlock alleging that Garlock contributed to their injuries as well. Garlock asserts indirect claims for contribution and indemnity for asbestos personal injury claims against Grace. In a July 22 investor call, Grace CEO Alfred Festa disclosed that he has no information to forecast the timing of the confirmation order of Grace's Plan but stated that the company is spending the time preparing for emergence, so that it may "exit as soon as it can." About Garlock Sealing Headquartered in Palmyra, NY, Garlock Sealing Technologies LLC is an EnPro Industries, Inc. company (NYSE: NPO). For more than a century, Garlock has been helping customers efficiently seal the toughest process fluids in the most demanding applications. On June 5, Garlock filed a voluntary Chapter 11 petition (Bankr. W. D. N.C. Case No. 10-31607) in Charlotte to establish a trust to resolve all current and future asbestos claims against Garlock under Section 524(g) of the U.S. Bankruptcy Code. The Debtor estimated $500 million to $1 billion in assets and up to $500 million in debts as of the Petition Date. Affiliates The Anchor Packing Company and Garrison Litigation Management Group, Ltd., also filed for bankruptcy. The filing covers only Garlock operations in Palmyra, New York and Houston, Texas. Garlock Rubber Technologies, Garlock Helicoflex, Pikotek, Technetics, Garlock Europe and Garlock operations in Canada, Mexico or Australia are not affected by the filing, nor is EnPro Industries or any other EnPro operating subsidiary. Albert F. Durham, Esq., at Rayburn Cooper & Durham, P.A., represents the Debtor in its Chapter 11 effort. Garland S. Cassada, Esq., at Robinson Bradshaw & Hinson, serves as counsel for Asbestos matters. Bankruptcy Creditors' Service, Inc., publishes Garlock Sealing Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Garlock Sealing Technologies LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring effort. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace and its debtor affiliates, with the support of the Official Committee of Asbestos Personal Injury Claimants, the Asbestos PI Future Claimants' Representative and the Official Committee of Equity Security Holders, have submitted a proposed Chapter 11 plan of reorganization. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. The Plan confirmation hearing wrapped up on January 25. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL DATACOMM: Scarce Funding Spurs Going Concern Doubt ---------------------------------------------------------- General DataComm Industries, Inc.'s balance sheet at June 30, 2010, showed total assets of $5,443,000, total liabilities of $48,668,000 and a stockholders' deficit of $43,025,000. For three months ended June 30, the Company posted net loss of $959,000 compared with net loss of $1,056,000 for the same period ended June 2009. For nine months ended June 30, the Company posted net loss of $3,205,000 compared with net loss of $4,217,000 for the same period ended 2009. The Company related that the financial statements for three and nine months ended June 30, were not reviewed by an independent public accounting firm due to its inability to pay for the review. The Company noted that it has no current ability to borrow additional funds except as may be provided pursuant to a receivable sales agreement with a related party. It must, therefore, fund operations from cash balances, cash generated from operating activities including the sale of its accounts receivable and any cash that may be generated from the sale of non-core assets as real estate and other assets. In addition, at June 30, the Company had a working capital deficit of approximately $41,200,000, including debentures in the principal amount of $19,400,000, together with accrued interest thereon ($13,200,000), which matured on October 1, 2008. "These conditions raise substantial doubt about the Company's ability to continue as a going concern," according to the Form 10- Q. To continue operations, the management responded by entering into a receivable sales agreement with a related party to provide liquidity and by implementing operational changes, including closing its foreign offices, reducing certain salaries, restructuring the sales force, increasing factory and office shutdown time, constraining expenses and reducing the employee workforce. The Company also continues to pursue the sale or lease of its headquarters' land and building in Naugatuck, Connecticut. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?6951 About General DataComm Based in Naugatuck, Connecticut, General DataComm Industries Inc., (OTC: GNRD) -- http://www.gdc.com/-- is a provider of networking and telecommunications products, services and solutions. The Company designs, develops, assembles, markets, sells, installs and maintains products that enable telecommunications common carriers, corporations, and governments to build, improve and more cost effectively manage their global telecommunications networks. The Company's products and services are marketed worldwide through a combination of direct sales and distribution channels. GENERAL GROWTH: Amends Plan for Potential Blackstone Participation ------------------------------------------------------------------ General Growth Properties, Inc., and its 125 debtor affiliates submitted to Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York their Second Amended Joint Plan of Reorganization and accompanying Disclosure Statement on August 17, 2010. A list of the Plan Debtors is available for free at http://bankrupt.com/misc/ggp_Aug17PlanDebtors.pdf The 2nd Amended Plan incorporates modifications to the Investment Agreements, treatment of Rouse Bonds, and other updates to address objections to the Disclosure Statement filed by the Official Committee of Unsecured Creditors and several other parties. A hearing to consider the adequacy of the Disclosure Statement was set on August 19, 2010. The Court approved the Disclosure Statement at the hearing. Potential Blackstone Participation As contemplated in the Investment Agreements, REP Investments LLC, an affiliate of Brookfield Asset Management, Fairholme Capital Management and Pershing Square Capital will provide $8.55 billion aggregate committed capital, including a $6.3 billion of new equity capital at a value of $10.00 per share of New GGP and $250 million for 5.25 million shares of Spinco Common Stock, which the Investors may fund with Cash or the conversion into equity of Allowed Claims of the Investors or their affiliates. In connection, the 2nd Amended Plan states that Blackstone Real Estate Partners VI L.P. has entered into agreements with the Investors, whereby Blackstone agreed to subscribe at closing for about 7.6% of the New GGP Common Stock and Spinco Common Stock allocated to each of the Investors and receive an allocation of each Investor's New GGP Warrants and Spinco Warrants. Blackstone will pay an aggregate purchase price of about $500 million for these shares of New GGP Common Stock and Spinco Common Stock. Blackstone's agreements with the Investors, however, do not relieve the Investors of their obligations prior to closing and the Investors will be obligated to provide all of the funding specified in the Investment Agreements in the event Blackstone does not fund its portion of the purchase price at closing, Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges LLP, in New York, relates. GGP requires $8.395 billion to consummate the 2nd Amended Plan, which includes the reinstatement of 5.375% Rouse Notes, 6.75% Rouse Notes and 7.20% Rouse Notes for $1.345 billion in the aggregate, or the issuance of New Rouse Notes. The Plan Debtors expect to file a motion seeking, among others, to engage underwriters and issue a guarantee in connection to the offering of New GGP Mandatorily Pre-Emergence Notes as part of the funding of the Plan. Under the 2nd Amended Plan, the number of shares of New GGP common stock that Fairholme will purchase under the warrants is modified from 42,587,143 to 42,857,143, with an initial exercise price of $10.50 per share. Ms. Goldstein further notes that Fairholme and Pershing Square have informed GGP that they hold, and expect to tender under the Investment Agreements as payment for New GGP Common Stock, Allowed Claims in an amount that is greater than half of the purchase price for the New GGP Common Stock to be sold to them on the Closing Date. The Allowed Claims the Investors may tender as payment for New GGP Common Stock will include principal plus accrued interest at the non-default rate but will not give effect to any "make-whole" premiums or other amounts unless otherwise paid to the relevant Class. Fairholme held this principal debt as of June 30, 2010: * Rouse 6.75% Notes totaling $28,100,000, * Rouse 7.20% Notes totaling $65,946,000, * 2006 Bank Loan totaling $876,763,346, and * Exchangeable Notes totaling $858,364,000. Pershing Square has advised that it held this principal debt as of June 30, 2010: * Rouse 3.625% Notes totaling $ 56,900,000, * Rouse 5.375% Notes totaling $68,547,000, * Rouse 6.75% Notes totaling $99,365,000, * Rouse 7.20% Notes totaling $43,000,000, and * Exchangeable Notes totaling $167,007,000. The Investors do not hold any TRUPS Junior Subordinated Notes, Ms. Goldstein says. Management Updates of New GGP and Spinco The 2nd Amended Plan also discloses the addition of these officers to serve in the executive management of New GGP: * Executive Vice President: Michael McNaughton * Vice Chairman: Robert Michaels * Executive Vice President of Finance: Hugh Zweig The 2nd Amended Plan clarifies that Edmund Hoyt will serve as New GGP's vice president and chief accounting officer, instead of interim chief financial officer as previously reported. As to Spinco, its interim management will be composed of: * Chief Executive Officer: David Arthur * Chief Financial Officer: Rael Diamond * Chief Operating Officer: Steven Ganeless As other Spinco matters, the 2nd Amended Plan states that after the time as Pershing Square beneficially owns less than 10% of the Spinco Common Stock, Pershing will no longer have the right to designate directors for election to the Spinco Board. Modified Claims Treatment Class 4.4 Rouse 8.00% Note Claims will be allowed and paid in Cash for $200,000,000, in principal, plus accrued interest in the modified amount from $30,667,000, to $32,472,000, as of September 30, 2010, for a total, as of September 30, 2010, of $232,472,000. Similarly, Class 4.5 Rouse 3.625% Note Claims will be allowed and paid in cash in the amount of $395,000,000 in principal, plus accrued interest in the modified amount of $29,866,000, instead of $29,234,000, as of September 30, 2010, for a total, as of September 30, 2010, of $424,866,000. Holders of Class 4.6 Rouse 5.375%, 4.7 Rouse 6.75% and 4.8 Rouse 7.20% Note Claims are entitled to: (a) be cured and reinstated in accordance with Section 1124 of the Bankruptcy Code and paid applicable interest in cash; or (b) may elect to receive, in satisfaction of their claims, $1,000 in principal amount of a New Class 4.6 Rouse Note, a New Class 4.7 Rouse Note, or a New Class 4.8 Rouse Note for each $1,000 principal amount of Unmatured Rouse Notes held by the holder; or (c) at the Plan Debtors' option, may receive other treatment other than cure and reinstatement so as to be unimpaired pursuant to Section 1124. To allow the Holders of Unmatured Rouse Notes to make an election as the New Rouse Notes, Classes 4.6, 4.7, 4.8 and 4.10 will receive an Election Form for the purpose of making an election as to payment and treatment. Holders of Classes 4.4, 4.7, 4.8 and 4.10 who do not make the election will, collectively, receive, at the Plan Debtors' option, the treatment as applicable to those holders. For the avoidance of doubt, in the event the Plan Debtors determine that the holders will receive treatment other than cure and reinstatement subsequent to a holder of a Claim making the election for cure and reinstatement, that election will not be binding on that holder. In addition, regardless of which election is made by a holder of the Claim, the Plan Debtors will pay in cash any related outstanding reasonable Indenture Trustee Fee Claim. The Unmatured Rouse Notes are assumed to be reinstated, Ms. Goldstein explains. Under the 2nd Amended Plan, Class 4.9 2006 Bank Loan Claims will be allowed and satisfied in full: (I) in cash in the aggregate principal amount of $590,000,000 plus accrued interest in the modified amount from $15,178,000 to $15,364,000 as of September 30, 2010, for a total, as of September 30, 2010, of $605,364,000. In addition, the holders of Allowed 2006 Bank Loan Revolver Claims shall receive interest, in Cash, on account of the outstanding principal amount of the Allowed 2006 Bank Loan Revolver Claims at a per diem rate of $28,000 from and after September 30, 2010, until the date of payment and (II) the 2006 Bank Loan Term Claims will be Allowed and satisfied in full in Cash in the aggregate principal amount of $1,987,500,000 plus accrued interest in the modified amount from $52,214,000 to $52,870,000 as of September 30, 2010 for a total, as of September 30, 2010, of $2,040,370,000. In response to the 2006 Lenders assertion that they are entitled to compound interest of $3,300,000 as of September 30, 2010, the Plan Debtors do not dispute that the Allowed Claim of the 2006 Lenders includes compound interest, however, they are still reviewing the appropriate calculations. Class 4.10 Exchange Note Claims will also be cured and reinstated by payment in cash of $124,567,000, instead of $120,810,000 as originally stated in the Plan. Class 4.11 TRUPS Claim will be cured and reinstated by payment of cash of $6,732,000, instead of $6,732,000. The Plan Debtors are soliciting all of the holders of Hughes Heirs Obligations and are not limiting solicitation to the CSA Representatives, Ms. Goldstein clarifies. If the Bankruptcy Court determines that the CSA Representatives have authority to accept or reject the Plan on or behalf of the other holders of Hughes Heirs Obligations then the Plan Debtors will tabulate the votes accordingly, she notes. Ms. Goldstein also assures the Court that based on the assumptions for reinstatement of the Rouse Notes, Exchangeable Notes, TRUPS Junior Subordinated Notes, GGP/Ivanhoe, Inc. Affiliate Partner Notes, GGP/Homart II, L.L.C. Partner Notes, and interest calculations on the 2006 Bank Loan Claims set forth in the Sources and Uses of Cash under the 2nd Amended Plan, the Debtors have adequate liquidity. If one or more of those assumptions should prove incorrect, the Debtors believe they will be able to obtain adequate liquidity through, for example, asset sales or additional capital sources, including through the issuance of additional shares of common equity, she says. In other modifications, objections to the amount of Allowed Claims or other related amounts set forth in the Plan will be filed with the Bankruptcy Court. The Plan Debtors further say if any portion of an Administrative Expense Claim or Claim is disputed, they will make a distribution or payment on the effective date of the 2nd Amended Plan. Nothing in the 2nd Amended Plan or in any related confirmation order will be deeded to limit, waive, modify or otherwise impact a creditors' contractual or statutory right of setoff, netting or recoupment, if any, Ms. Goldstein relates. In the same way that nothing in the 2nd Amended Plan will waive the obligation, if any, of a Plan Debtor to pay any cure obligations owed under contracts to be assumed under the 2nd Amended Plan, she adds. Similarly, nothing in the 2nd Amended Plan or the Confirmation Order will (i) alter the rights and obligations of the Plan Debtors or the insurers under the insurance policies; or (ii) modify the coverage under those policies, and all of the Insurance Policies will continue in full force and effect according to their terms and conditions. Nothing in the Plan will constitute or be deemed a waiver of (i) any cause of action that the Plan Debtors may hold against any entity, including the insurer, under any of the Insurance Policies; (ii) any defense by the insurer against any entity; or (iii) any claim by the insurer against any non-Plan Debtor party other than the persons identified in the 2nd Amended Plan. SEC Investigation on Insider Trading In other disclosures, GGP said it received notice in July 2010 that pursuant to an April 21, 2010 order, the U.S. Securities and Exchange Commission is conducting a formal, non-public investigation into possible violations of proscriptions on insider trading under the federal securities laws by certain current and former officers and directors. The formal investigation is the continuation of an informal inquiry that the SEC initiated in October 2008. GGP intends to continue to cooperate fully with the SEC with respect to the investigation, Ms. Goldstein notes. While GGP cannot predict the outcome of this investigation with certainty, based on the information currently available to it, the company believes that the outcome of the investigation will not have a material adverse effect on its financial condition or results of operations, she clarifies. Updates on Litigation The 2nd Amended Plan also contains updated information relating to the Debtors' Chapter 11 cases, including the filing of the Motion to Issue Indemnities and Guaranties, and class action litigation. In class action litigation, GGP and certain individual directors and defendants entered into settlement agreements in connection with a (i) class action lawsuit under Employment Retirement Income and Security Act filed by Dana Kaminske, Barak Zable, and Jay Barnes before the U.S. District Court for the Northern District of Illinois in November 2008; and (ii) a shareholder class action lawsuit filed by Sharankisor Desai in the Illinois District Court in January 2009. Any funds owing to GGP's plaintiffs pursuant to the settlement agreements have been or will be paid by GGP's insurance providers, says Ms. Goldstein. In addition, a shareholder derivative class action filed by Catherine Austin in the Circuit Court of Cook County, Illinois County Department, Chancery Division was dismissed with prejudice on January 7, 2010. Moreover, a shareholder derivative lawsuit filed by James Young in the Circuit Court of Cook County was stayed by the Bankruptcy Court on March 24, 2010, and as a result, the action was placed on the suspense docket of the Illinois District Court, in which the action is pending. Full-text copies of the 2nd Amended Plan and Disclosure Statement dated August 17, 2010, are available for free at: http://bankrupt.com/misc/ggp_Aug172ndAmPlan.pdf http://bankrupt.com/misc/ggp_Aug172ndAmDS.pdf Blacklined copies of the 2nd Amended Plan and Disclosure Statement dated August 17, 2010, are available for free at: http://bankrupt.com/misc/ggp_Aug172ndAmPlan_blacklined.pdf http://bankrupt.com/misc/ggp_Aug17DS_blacklined.pdf Creditors' Committee, et al., Block Approval of Disclosure Statement Before filing of the 2nd Amended Plan and Disclosure Statement, several parties complain that the Disclosure Statement fails to provide adequate information to make an informed decision about the First Amended Joint Plan of Reorganization: * the Creditors' Committee * Halcyon Master Fund LP * Eurohypo AG, New York Branch * Ivanhoe Capital LP * CSA Representatives * ACE American Insurance Company and ESIS, Inc. * Constellation NewEnergy, Inc. 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, serve 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: SEC Launches Probe on Possible Insider Trading -------------------------------------------------------------- General Growth Properties, Inc.'s Second Amended Joint Plan of Reorganization dated August 17, 2010, that the U.S. Securities and Exchange Commission is conducting a formal, non-public investigation into possible violations of proscriptions on insider trading under the federal securities laws by certain current and former officers and directors of the company. The formal investigation is the continuation of an informal inquiry that the SEC initiated in October 2008, according to the Plan. According to Kris Hudson of The Wall Street Journal, in September and the early part of October 2008, 10 GGP executives and directors sold shares valued at a cumulative $118.6 million, citing Thomson Reuters data. Foremost among those selling shares to cover margin calls was former Chief Financial Officer Bernie Freibaum, who owned one the largest percentages of the Company's stock held by an individual, Mr. Hudson relates. Mr. Freibaum ultimately was forced to sell his entire stake to meet margin calls, Mr. Hudson continues. Moreover, in 2008, former Chief Executive John Bucksbaum loaned Mr. Freibaum $90 million from his family trust to cover those margin calls -- a move that led to Mr. Bucksbaum's replacement as CEO because he did not inform the board of the loans, Mr. Hudson notes. Subsequently, GGP's board dismissed Mr. Freibaum in October 2008 after he sold shares to meet margin calls during a period when GGP executives were prohibited from selling because the Company's third-quarter earnings announcement was imminent, Mr. Hudson states. According to Thomson Reuters, Mr. Bucksbaum, current Chief Executive Officer Adam Metz, and President and Chief Financial Officer Thomas Nolan did not sell any stock during the fall of 2008. 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, serve 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: Units File 3rd Post-Confirmation Status Report -------------------------------------------------------------- Debtor-affiliates of General Growth Properties Inc. that have receive confirmation of their Chapter 11 plans of reorganization filed with the Bankruptcy Court on August 17, 2010, their third post-confirmation status report detailing the actions they have taken and the progress they made toward consummation of their Joint Plan of Reorganization since April 15, 2010. A list of the reporting Plan Debtors is available for free at http://bankrupt.com/misc/ggp_ReportingDebtors.pdf Since the filing of the Second Post-Confirmation Report dated April 15, 2010, the Court has confirmed the Plan for four Plan Debtors with loans of about $991 million in debt, namely: * Fashion Show Mall LLC * Oakwood Shopping Center Limited Partnership * Phase II Mall Subsidiary, LLC * Rouse-Oakwood Shopping Center, LLC As of August 17, 2010, the Court has confirmed the Plan for 262 Plan Debtors to restructure 108 loans totaling about $14.8 billion in secured project-level indebtedness, James H.M. Sprayregen, Esq., a member of James H.M. Sprayregen, P.C., which in turn is a partner of Kirkland & Ellis, LLP, in New York, relates. Since the filing of the Second Post-Confirmation Report, 40 Plan Debtors have also consummated their Plans, a schedule of which is available for free at: http://bankrupt.com/misc/ggp_ConsummatedPlanDebtors.pdf As of August 17, 2010, 260 of 262 Plan Debtors have consummated their Plans and emerged from bankruptcy, restructuring 107 loans totaling $14.7 billion in secured project-level indebtedness. A list of the Emerged Plan Debtors is available for free at: http://bankrupt.com/misc/ggp_EmergedDebtors.pdf Mr. Sprayregen informs the Court that Oakwood Shopping Center Limited Partnership and Rouse-Oakwood Shopping Center, LLC continue to work towards consummating their Plans. The Plan Debtors are analyzing and reconciling the outstanding claims filed against them, Mr. Sprayregen tells the Court. Post-Confirmation Order for 4 Add'l Entities In light of the confirmation of the Joint Plan of Reorganization as to four Debtors on April 29, 2010, and May 20, 2010, Judge Gropper issued a post-confirmation order on August 17, 2010, directing the Plan Debtors' compliance with the Court's January 21, 2010 Post-Confirmation Order. Under the January 21 Post-Confirmation Order, the Plan Debtors were directed to inform the Court of the progress made toward: (i) consummation of the Plan under Section 1101(2) of the Bankruptcy Code; (ii) entry of a final decree under Rule 3022 of the Federal Rules of Bankruptcy Procedure; and (iii) Chapter 11 case closing under Section 350 of the Bankruptcy Code. Judge Gropper ordered the Four Plan Debtors to file the first periodic status report on or before August 30, 2010. The Plan Debtors subject to this August 17 Post-Confirmation Order are: * Fashion Show Mall LLC * Oakwood Shopping Center Limited Partnership * Rouse-Oakwood Shopping Center, LLC * Phase II Mall Subsidiary, LLC 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, serve 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) GLEBE INC: Committee Taps Magee Goldstein as Bankruptcy Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors of The Glebe, Inc., asks the U.S. Bankruptcy Court for the Western District of Virginia for permission to employ Magee Goldstein Lasky & Sayers, P.C. as its counsel. MGLS will represent the Committee at the Debtor's meeting of creditors and at hearings that may affect unsecured creditors. To the best of the Committee's knowledge, MGLS is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: A. Carter Magee, Jr., Esq. Garren R. Laymon, Esq. MAGEE GOLDSTEIN LASKY & SAYERS, P.C. P.O. Box 404 Roanoke, VA 24003-0404 Tel: (540) 343-9800 Fax: (540) 343-9898 E-mail: cmagee@mglspc.com glaymon@mglspc.com About The Glebe, Inc. Daleville, Virginia-based The Glebe, Inc., filed for Chapter 11 bankruptcy protection on June 28, 2010 (Bankr. W.D. Va. Case No. 10-71553). Michael E. Hastings, Esq., at Leclair Ryan, assists the Company in its restructuring effort. The Company estimated assets at $10 million to $50 million and liabilities at $50 million to $100 million as of the Petition Date. GLEBE INC: U.S. Trustee Forms Five-Member Creditors Committee ------------------------------------------------------------- W. Clarkson McDow, Jr., the U.S. Trustee for Region 4, appointed five members to the official committee of unsecured creditors in the Chapter 11 cases of The Glebe, Inc. The Creditors Committee members are: 1. Joy McNabb 205 Fincastle Court Daleville, VA 24083 2. M. Caldwell Butler 200 The Glebe Blvd, Apt. 1024 Daleville, VA 24083 3. Richard Coar 4727 Afton Lane Roanoke, VA 24012 4. Leon Jennings 200 The Glebe Blvd, Apt. 3000 Daleville, VA 24083 5. Max Bertholf 200 The Glebe Blvd, Apt. 3010 Daleville, VA 24083 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtor's expense. They may investigate the Debtor's business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Daleville, Virginia-based The Glebe, Inc., filed for Chapter 11 bankruptcy protection on June 28, 2010 (Bankr. W.D. Va. Case No. 10-71553). Michael E. Hastings, Esq., at Leclair Ryan, assists the Company in its restructuring effort. The Company estimated assets at $10 million to $50 million and liabilities at $50 million to $100 million in its Chapter 11 petition. GOLDEN EAGLE: Delays Form 10-Q Due to Auditor Change ---------------------------------------------------- Golden Eagle International Inc. said it could not timely file its quarterly report on Form 10-Q for the period ended June 30, 2010, with the Securities and Exchange Commission due to a change in the company's auditor within the past 10-day period, which has adversely affected the financial review of the Company's 10-Q. Going Concern Chisholm, Bierwolf, Nilson & Morrill, in Bountiful, Utah, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has a significant working capital deficit, has incurred significant losses since inception, and is dependent of financing to continue operations. Based in Salt Lake City, Golden Eagle International, Inc. Golden Eagle International, Inc. (OTC BB: MYNG) was previously focused on minerals exploration and mining and milling operations in Bolivia through its Bolivian-based wholly-owned subsidiary, Golden Eagle International, Inc. (Bolivia). However, in late 2008 the Company suspended these operations, and in March 2010 transferred control of its Bolivian assets and operations to an unaffiliated third party. The Company expects to transfer ownership of those assets and operations during the second quarter of 2010, although there can be no assurance that it will be able to complete the transactions with the purchaser. GOODYEAR TIRE: S&P Affirms 'B+' Rating on Senior Unsecured Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services said that it has affirmed its 'B+' issue-level rating on Akron, Ohio-based The Goodyear Tire & Rubber Co.'s issuance of $100 million in 8.25% senior unsecured notes due Aug. 15, 2020. At the same time, S&P affirmed its recovery rating of '5' to the notes, indicating its expectation that lenders would receive modest recovery (10%-30%) in the event of a payment default. These notes are an add-on to the company's recently issued $900 million 8.25% senior unsecured notes due Aug. 15, 2020. The $100 million proposed notes will be treated as a single series with the $900 million senior unsecured notes under the indenture and have the same terms. Net proceeds of this offering, together with cash and cash equivalents, will be used to repay the company's outstanding balance of $260 million 9.0% senior notes due July 1, 2015, at 104.5% of the principal amount, plus accrued and unpaid interest. The notes are senior unsecured obligations of Goodyear Tire and the guarantors, ranking equal in right of payment with other unsubordinated debt. The notes will also be effectively subordinated to all existing and future secured debt of the company and subsidiary guarantors to the extent of the collateral securing the debt. The rating on Goodyear Tire reflects the company's high leverage and the substantial competition in both the replacement and original equipment tire markets. Ratings List The Goodyear Tire & Rubber Co. Corporate Credit Rating BB-/Negative/-- Ratings Affirmed $1 bil 8.25% senior unsec notes B+ Recovery Rating 5 HAYES LEMMERZ: Reorganization Plan for Howell Declared Effective ---------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware said that Hayes Lemmerz International - Howell, Inc., consummated the Plan of Reorganization and the Plan became effective with respect to Howell. As reported in the Troubled Company Reporter on July 20, 2010, the Court confirmed Hayes Lemmerz's Plan, as adjusted, with respect to Howell. About Hayes Lemmerz Originally founded in 1908, Hayes Lemmerz International, Inc. (NasdaqGM: HAYZ) is a worldwide producer of aluminum and steel wheels for passenger cars and light trucks and of steel wheels for commercial trucks and trailers. The Company is also a supplier of automotive powertrain components. The Company has global operations with 23 facilities, including business, sales offices and manufacturing facilities, located in 12 countries around the world. The Company sells products to every major North American, Asian and European manufacturer of passenger cars and light trucks and to commercial highway vehicle customers throughout the world. The Company and certain affiliates filed for bankruptcy on May 11, 2009 (Bankr. D. Del. Case No. 09-11655) after reaching agreements with lenders holding a majority of the Company's secured debt. The Company's principal bankruptcy attorneys are Skadden, Arps, Slate, Meagher & Flom, LLP. Lazard Freres & Co., LLC, serves as the Company's financial advisors. AlixPartners, LLP, serves as the Company's restructuring advisors. The Garden City Group, Inc., serves as the Debtors' claims and notice agent. As of January 31, 2009, the Debtors had total assets of $1,336,600,000 and total debts of $1,405,200,000. This is the Company's second trip to the bankruptcy court, dubbed a Chapter 22, which was precipitated by an unprecedented slowdown in industry demand and a tightening of credit markets. HYUN UM: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------ Joint Debtors: Hyun J. Um Jin S. Um P.O. Box 1915 Tacoma, WA 98401 Bankruptcy Case No.: 10-41789 Chapter 11 Petition Date: August 17, 2010 Court: United States Bankruptcy Court Western District of Washington (Tacoma) Judge: Paul B. Snyder Debtor's Counsel: Noel P. Shillito, Esq. SHILLITO & GISKE PS 1919 N Pearl St., Suite C2 Tacoma, WA 98406 Tel: (253) 572-4388 E-mail: shillito@callatg.com Estimated Assets: $0 to $50,000 Estimated Debts: $100,000,001 to $500,000,000 Joint Debtors' List of 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Centrum Financial $46,795,000 12505 Bl Red Road Ste 200 Bellevue, WA 98005 Intervest Mortgage $46,312,000 5005 SW Meadows Rd Ste 400 Lake Oswego, OR 97035 First Independent Bank $35,964,000 1220 Main Street Suite 1 Vancouver, WA 98660 Frontier Bank $16,671,000 332 SW Everett Mall Way Bldg 2, Floor 3 Everett, WA 98204 WF Capital $11,500,000 9709 Third Ave NE Ste 110 Seattle, WA 98115 Umpqua Bank $7,900,000 One SW Columbia St Ste 900 Portland, OR 97258 First Citizens Bank $6,767,000 PO Box 970 Dupont, WA 98327 East West Bank $6,350,000 9709 Third AVe NE, Suite 110 Seattle, WA 98115 Soundbuilt Northwest $5,990,916 12815 Canyon Road East Puyallup, WA 98373 ABC Homes $2,294,000 PO Box 688 Vancouver, WA 98666 Velocity Capital $2,000,000 41800 SW Meadows #300 Lake Oswego, OR 97035 ABK, LLC $1,600,000 4748 E Mercer Way Mercer Island, WA 98040 Horizon/Washington Federal $1,287,000 2211 Rimland Drive, Suite 230 Bellingham, WA 98226 IMPERIAL CAPITAL: FDIC Opposes Plan Exclusivity Extension --------------------------------------------------------- The Federal Deposit Insurance Corporation is opposing Imperial Capital Bancorp's request for a third extension of its exclusive period to file a Chapter 11 Plan and solicit acceptances thereof, BankruptcyData.com reports. According to the FDIC, Imperial Capital Bancorp has not shown meaningful progress has been made during the first and second extension periods, nor does the FDIC believe that the Debtors has demonstrated that it is has the ability to propose a viable Chapter 11 Plan -- even if the additional extension is granted. About Imperial Capital La Jolla, California-based Imperial Capital Bancorp, Inc., filed for Chapter 11 bankruptcy protection on December 18, 2009 (Bankr. S.D. Calif. Case No. 09-19431). Gregory K. Jones, Esq., at Stutman, Treister & Glatt, P.C., assists the Company in its restructuring effort. The Company estimated $10 million to $50 million in assets and up to $100 million in debts in its Chapter 11 petition. INTEGRATED HEALTHCARE: Posts $1.9MM Net Loss in June 30 Quarter --------------------------------------------------------------- Integrated Healthcare Holdings, Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $1,913,000 on $93,919,000 revenues for the three months ended June 30, 2010, compared with a net income of $1,148,000 on $93,012,000 revenues for the same period a year ago. As of June 30, 2010, the Company has a working capital deficit of $4,184,000 and accumulated total deficiency of $39,799,000. During the three months ended June 30, 2010, the Company incurred a net loss of $1,913,000. "These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern," the Company's management acknowledged in the Form 10-Q. The Company's balance sheet at June 30, 2010, showed $128,157,000 in total assets, $167,956,000 in total liabilities, and a $39,799,000 stockholders' deficit. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?69b1 About Integrated Healthcare Headquartered in Santa Ana, Calif., Integrated Healthcare Holdings, Inc. (IHHI) -- http://www.ihhioc.com/-- owns and operates four acute care hospitals and ancillary health businesses in Orange County, California. INTERLINE BRANDS: Moody's Affirms 'B1' Corporate Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed Interline Brands, Inc.'s B1 Corporate Family Rating, B1 Probability of Default Rating and B3 rating assigned to the senior subordinated notes due 2014. In a related rating action, Moody's upgraded the rating of the senior secured bank credit facility to Ba2 from Ba3. The outlook is stable. These ratings/assessments were affected by this action: * Corporate Family Rating affirmed at B1; * Probability of Default Rating affirmed at B1; * $254 million (originally $330 million) senior secured bank credit facility upgraded to Ba2 (LGD2, 28%) from Ba3 (LGD3, 32%); and, * $151 million (originally $200 million) senior subordinated notes due 2014 affirmed at B3 (LGD5, 80%). Ratings Rationale The change in outlook to stable from negative is driven by Interline's improved margins and lower debt burden, resulting in improved leverage and coverage credit metrics. The upgrade in the company's senior secured bank credit facility results from the repayment of approximately $61 million in term loan outstandings over the past eighteen months. Interline's B1 Corporate Family Rating reflects the company's exposure to cyclical end markets, potential for pricing pressure from manufacturers, and competition from large warehouse stores. Additionally, Moody's believes that Interline may pursue acquisitions by using either cash on hand or leverage as part of its growth strategy which currently constrains the rating. Offsetting these weaknesses are Interline's leading market position within the highly fragmented facilities MRO market and its wide customer base in different industries. The company's diverse customer base partially offsets the risk of decline in any specific end market, assisting the company to contend with economic uncertainties. Additionally, Interline's cost reduction actions appear to be resulting in improved operating efficiencies. Its adjusted EBITA margin has improved to 8.8% for 2Q10 versus 7.3% for 2Q09. Moody's anticipates further margin improvement. The company's debt leverage characteristics appear manageable, as EBIT-to-interest coverage stood at 2.8 times for LTM 2Q10 and debt-to-EBITDA was 4.1 times (as adjusted by Moody's). A rating upgrade over the intermediate term appears unlikely until market conditions improve. However, signs of improvement in Interline's operating performance that result in debt-to-EBITDA approaching 3.5 times or EBIT-to-interest expense near 4.0 times (all ratios adjusted per Moody's methodology) could result in positive rating actions. Additionally, Interline would need to increase availability under its revolving credit facility in order to support higher ratings. Factors which might pressure the ratings include erosion in the company's financial performance, debt financed acquisitions or a deteriorating liquidity profile, resulting in debt-to-EBITDA sustained above 4.5 times or EBIT-to-interest expense trending downward towards 1.5 times (all ratios adjusted per Moody's methodology). The last press release was on June 18, 2009, at which time Moody's affirmed Interline's Corporate Family Rating, but changed the outlook to negative from stable. Interline Brands, Inc., headquartered in Jacksonville, FL, is a national distributor and direct marketer of maintenance, repair and operations products. Revenues for the latest twelve months through June 25, 2010, totaled approximately $1.0 billion. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, public information, confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer satisfactory for the purposes of maintaining a credit rating. Moody's Investors Service adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from reliable sources; however, Moody's Investors Service does not and cannot in every instance independently verify, audit or validate information received in the rating process. INTERNATIONAL FUEL: Posts $468,000 Net Loss in Q2 Ended June 30 --------------------------------------------------------------- International Fuel Technology, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $468,049 on $175,395 of revenue for the three months ended June 30, 2010, compared with a net loss of $985,260 on $14,738 of revenue for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $4.3 million in total assets, $3.9 million in total liabilities, and a stockholders' equity of $357,362. As reported in the Troubled Company Reporter on April 7, 2010, BDO Seidman, LLP, in Chicago, expressed substantial doubt about the Company's ability to continue as a going concern after auditing the Company's financial statements for the year 2009. The independent auditors noted that the Company has suffered recurring losses from operations, has a working capital deficit at December 31, 2009, and has cash obligations and outflows from operating activities. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?69a0 St. Louis, Mo.-based International Fuel Technology, Inc. is a technology company that has developed a range of liquid fuel additive formulations that enhance the performance of petroleum- based fuels and renewable liquid fuels. INFOLOGIX INC: June 30 Balance Sheet Upside-Down by $2.9 Million ---------------------------------------------------------------- InfoLogix Inc.'s balance sheet at June 30, 2010, showed total assets of $38,068,000, total liabilities of $40,945,000 and a stockholder's deficit of $2,877,000. For three months ended June 30, 2010, the Company reported net income of $567,000 compared with net loss of $4,781,000 for the same period ended June 2009. For six months ended June 30, the Company posted net loss of $2,251,000 compared with net loss of $9,451,000 for the same period ended June 2009. The Company related that as a result of its capital and debt structure and recurring losses, it has substantial near-term liquidity requirements related to the repayment of a seller note that becomes due on September 30, the revolving line of credit that comes due on May 19, 2011, and earn out payments for past acquisitions. The Company does not currently expect to generate sufficient cash flow from operations to fund those obligations. The Company related that these factors raise substantial doubt as to its ability to continue as a going concern. About InfoLogix Inc. Based in Hatboro, Pennsylvania, InfoLogix, Inc. (NASDAQ: IFLG) -- http://www.infologix.com/-- provides end-to-end solutions for electronic medical record and supply chain implementation and mobilization, with experience in over 2,200 hospitals and businesses nationwide. InfoLogix assists its healthcare and commercial customers by implementing and optimizing EMR and SCM systems, offers mobility to caregivers and workforces by making data accessible directly at the point of care or point of activity, and manages operations with services to improve clinical and financial performance and supply chain with services to drive greater efficiency. Going Concern Doubt McGladrey & Pullen, LLP, in Blue Bell, Pennsylvania, 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, has negative working capital and an accumulated deficit as of December 31, 2009. INNKEEPERS USA: Best Western Wants Decision on Membership Pact -------------------------------------------------------------- Best Western International, Inc., asks the Court to limit the time within which Debtors Grand Prix Floating Lessee, LLC, and Grand Prix IHM, Inc., must decide whether to assume or reject a prepetition membership agreement. Best Western is a non-profit corporation organized under the laws of the state of Arizona and operates as a membership organization consisting of individually owned and operated hotels. Michael G. Helms, Esq., at The Helms Law Firm, P.L.C., in Phoenix, Arizona -- mghelms@mghlawfirm.com -- relates that upon approval of the Membership Agreement, Best Western West Palm Beach Airport Inn, which the Grand Prix Debtors own and operate, became affiliated with Best Western and the Membership Agreement became the contract controlling the relationship between the, Grand Prix Debtors and Best Western. According to Mr. Helms, the Grand Prix Debtors continue to use the Best Western trademarks, service marks, logos and membership marks, and the services provided by Best Western, and continues to hold themselves out to the traveling public as an affiliated Best Western hotel. He notes that the Membership Agreement and its Rules and Regulations establish various requirements, including minimum standard scores for facility quality that each member must meet to maintain membership. As a result, consumers worldwide associate the Best Western Marks with high quality in the hotel/motel industry. Because of the Grand Prix Debtors' bankruptcy filing and imposition of the automatic stay, Best Western is unable to enforce the terms and conditions of the Membership Agreement and the Rules and Regulations, or to protect its Best Western trademarks, service marks, logos and membership marks from use by the Grand Prix Debtors, or to assure the traveling public of receiving the high quality of service and lodging the public has come to expect from Best Western affiliated hotels, Mr. Helms contends. Best Western, hence, asks the Court to limit the time within which the Grand Prix Debtors may assume the Membership Agreement to a period of 60 days, and that failure to seek approval for the assumption of the Membership Agreement within that time will be deemed a rejection of the Membership Agreement. The Court will convene a hearing on August 26, 2010, to consider the request. Objections are due August 19. About Innkeepers USA Trust Innkeepers USA Trust is a self-administered Maryland real estate investment trust with a primary business focus on acquiring premium-branded upscale extended-stay, mid-priced limited service, and select-service hotels. Innkeepers, through its indirect subsidiaries, owns and operates an expansive portfolio of 72 upscale and mid-priced extended-stay and select-service hotels, consisting of approximately 10,000 rooms, located in 20 states across the United States. Apollo Investment Corporation acquired Innkeepers in June 2007. Innkeepers USA Trust and a number of affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Attorneys at Kirkland & Ellis LLP, serve as counsel to the Debtors. AlixPartners is the restructuring advisor and Marc A. Beilinson is the chief restructuring officer. Moelis & Company is the financial advisor. Omni Management Group, LLC, is the claims and notice agent. The petition estimated assets and debts of more than $1 billion. In 2009, Innkeepers' consolidated revenues were approximately $292 million and adjusted EBITDA were approximately $85 million. The Company's consolidated assets for 2009 totaled approximately $1.5 billion. As of July 19, 2010, the Company and its affiliates have incurred approximately $1.29 billion of secured debt. Bankruptcy Creditors' Service, Inc., publishes Innkeepers USA Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Innkeepers USA Trust and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). INNKEEPERS USA: Wins Nod for Moelis as Investment Banker -------------------------------------------------------- Innkeepers USA Trust and its 91 debtor affiliates received the Court's final approval to employ Moelis & Company LLC as their financial advisor and investment banker, nunc pro tunc to the Petition Date. As financial advisor, Moelis will: a. undertake, in consultation with members of management of the Debtors, a comprehensive business and financial analysis of the Debtors; b. evaluate the Debtors' debt capacity and assist in the determination of an appropriate capital structure for the Debtors; c. as deemed desirable by the Debtors, identify, initiate, review, negotiate, and evaluate any Restructuring Transaction, and, if directed, develop and evaluate alternative proposals for a Restructuring Transaction; d. assist the Debtors in developing strategies to effectuate any Restructuring Transaction; e. advise and assist the Debtors in the course of their negotiation of any Restructuring Transaction and participate in those negotiations, as requested; f. evaluate indications of interest and proposals regarding any Restructuring Transaction from current or potential lenders, equity investors, or strategic partners; g. determine and evaluate the risks and benefits of considering, initiating, and consummating any Restructuring Transaction; h. determine values or ranges of values (as appropriate) for the Debtors and any securities that the Debtors offer or propose to offer in connection with a Restructuring Transaction; i. be available at the Debtors' request to meet with Debtors' management, board of directors/trustees/managers, creditor groups, equity holders, any official committees appointed in the Chapter 11 Cases to discuss any Restructuring Transaction and provide such parties with information about the Debtors' assets, properties, or businesses as may be appropriate and acceptable to the Debtors, subject to customary business confidentiality agreements in form and substance approved by the Debtors; j. assist the Debtors in the development, preparation, and distribution of selected information, documents, and other materials to facilitate the consummation of any Restructuring Transaction; k. if requested by the Debtors, participate in hearings before the Court and provide relevant testimony; and l. other financial advisory and investment banking services as may be agreed upon by Moelis and the Debtors, and that is within the scope of the Engagement Letter. The Debtors will pay Moelis in accordance with an agreed-upon Fee Structure: a. Monthly Fee: $200,000 in cash for each of the first five monthly payments due under the Engagement Letter and a cash fee of $175,000 per month during the remainder of the term of the Engagement Letter. Fifty percent of all Monthly Fees will be credited against the Restructuring Fee. b. Restructuring Fee: A cash fee of $6,000,000 to be paid immediately upon the consummation of a Restructuring Transaction. The Debtors will also reimburse Moelis for all reasonable expenses incurred in connection with the Engagement Letter, up to a $300,000 aggregate expense cap. Under the terms of the Engagement Letter, the Debtors have agreed to indemnify and hold harmless Moelis and its divisions, directors, officers, and employees under certain circumstances specified in the Engagement Letter. William Q. Derrough, Managing Director of Moelis, discloses that during the 90 days prior to the Petition Date, Moelis received approximately $851,370 for professional services performed and expenses incurred. Mr. Derrough assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Midland Loan Objection Midland Loan Services, Inc., filed an objection, citing that the Application is premature and the proposed compensation, particularly the "Restructuring Fee," is unreasonable. Its lawyer, Lenard Parkins, Esq., at Haynes and Boone, LLP, in New York, says the provision in the Application outlining a proposed $6 million fee for a "Restructuring Transaction" should be clarified regarding whether that fee would be payable if the plan described in the declaration of Dennis M. Craven, Innkeepers USA Trust's chief financial officer, and the proposed plan support agreement is confirmed, Mr. Parkins contends. Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1, and U.S. Bank National Association, as Trustee for the registered holders of ML- CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass- Through Certificates, Series 2006-4, join in Midland's objection. * * * The Court authorized the Debtors to employ Moelis as financial advisor and investment banker. Objections to the application are resolved as set forth in the order. Moelis will be compensated in accordance with the terms of the Engagement Letter, as modified by the Order. In particular, all of Moelis's fees and expenses in the cases, including the Monthly Fee, the Restructuring Fee, and the indemnification, contribution and reimbursement provisions of the Engagement Letter, are approved pursuant to Section 328(a) of the Bankruptcy Code. Except for the fees and expenses of Moelis's attorneys, all compensation and reimbursement of expenses payable to Moelis pursuant to the Engagement Letter, as modified, will be subject to review only pursuant to the standards set forth in Section 328(a) and will not be subject to the standard of review set forth in Section 330 of the Bankruptcy Code, provided that the U.S. Trustee alone retains all rights to respond or object to Moelis's interim and final applications for compensation and reimbursement of expenses on all grounds, including reasonableness pursuant to Section 330. Moelis will file fee applications for interim and final allowance of compensation and reimbursement of expenses pursuant to the procedures set forth in Sections 330 and 331 of the Bankruptcy Code and the Bankruptcy Rules and procedures as may be fixed by order of the Court, provided that (i) all of Moelis' restructuring personnel, who provide services to or on behalf of the Debtors, with the exception of administrative and support personnel, will keep contemporaneous summary time records of the services they have performed in one-half hour increments, and (ii) Moelis will not be required to provide or conform to any schedule of hourly rates. If at any time Moelis increases the rates for its services, Moelis will file a supplemental affidavit with the Court describing those increases and provide notice of increases to the U.S. Trustee. Subject to the Order's provisions, the Debtors are authorized to indemnify, and will indemnify, the Indemnified Persons in accordance with the Engagement Letter and to the extent permitted by applicable law, for any claim arising from, related to, or in connection with Moelis's performance of the services described in the Engagement Letter. About Innkeepers USA Trust Innkeepers USA Trust is a self-administered Maryland real estate investment trust with a primary business focus on acquiring premium-branded upscale extended-stay, mid-priced limited service, and select-service hotels. Innkeepers, through its indirect subsidiaries, owns and operates an expansive portfolio of 72 upscale and mid-priced extended-stay and select-service hotels, consisting of approximately 10,000 rooms, located in 20 states across the United States. Apollo Investment Corporation acquired Innkeepers in June 2007. Innkeepers USA Trust and a number of affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Attorneys at Kirkland & Ellis LLP, serve as counsel to the Debtors. AlixPartners is the restructuring advisor and Marc A. Beilinson is the chief restructuring officer. Moelis & Company is the financial advisor. Omni Management Group, LLC, is the claims and notice agent. The petition estimated assets and debts of more than $1 billion. In 2009, Innkeepers' consolidated revenues were approximately $292 million and adjusted EBITDA were approximately $85 million. The Company's consolidated assets for 2009 totaled approximately $1.5 billion. As of July 19, 2010, the Company and its affiliates have incurred approximately $1.29 billion of secured debt. Bankruptcy Creditors' Service, Inc., publishes Innkeepers USA Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Innkeepers USA Trust and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). INNKEEPERS USA: Wins OK to Hire Kirkland & Ellis as Counsel ----------------------------------------------------------- Innkeepers USA Trust and its 91 debtor affiliates received final approval from the U.S. Bankruptcy Court's permission to employ Kirkland & Ellis LLP as their attorneys in connection with their Chapter 11 cases, nunc pro tunc to the Petition Date and in accordance with that certain engagement letter dated as of March 29, 2010. As counsel, K&E has agreed to: (a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; (b) advise the Debtors on the conduct of the cases, including all of the legal and administrative requirements of operating in Chapter 11; (c) attend meetings and negotiate with the representatives of creditors and other parties-in-interest; (d) prosecute actions on the Debtors' behalf, defend any action commenced against them and represent their interests in negotiations concerning litigation in which they are involved, including objections to claims filed against the bankruptcy estates; (e) prepare pleadings in connection with the cases, including motions, applications, answers, orders, reports and papers necessary or otherwise beneficial to the administration of the estates; (f) represent the Debtors in connection with obtaining postpetition financing; (g) advise the Debtors in connection with any potential sale of assets; (h) appear before the Court and any appellate courts to represent the interests of the estates before those courts; (i) advise the Debtors regarding tax matters; (j) assist the Debtors in obtaining approval of a disclosure statement and confirmation of a Chapter 11 plan and all related documents; and (k) perform all other necessary legal services for the Debtors in connection with the prosecution of the cases, including analyzing the Debtors' leases and contracts and analyzing the validity of liens against the Debtors. The Debtors will compensate K&E in its standard hourly rates: Billing Category Range ---------------- ----- Partners $550 - $995 Of Counsel $500 - $965 Associates $320 - $660 Paraprofessionals $155 - $280 The Debtors expect these professionals to have primary responsibility for providing services to the Debtors: Professional Rate ------------ ---- James H.M. Sprayregen, P.C. $995 Paul M. Basta $955 Anup Sathy, P.C. $895 Marc J. Carmel $735 K&E will also be reimbursed for identifiable, non-overhead expenses incurred in connection with the Debtors' cases that would not have been incurred except for the representation of the Debtors. Dennis M. Craven, Innkeepers USA Trust's chief financial officer, informs the Court that on March 31, 2010, the Debtors paid $1,000,000 to K&E as a classic retainer. On July 14, 2010, the Debtors paid to K&E an additional classic retainer of $95,588. Paul M. Basta, Esq., a partner at K&E, assures the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Midland Loan Objection Midland Loan Services, Inc., filed an objection, complaining that the disclosure of the relationships of Kirkland & Ellis LLP and Apollo Investment Corporation are incomplete in that they do not include a corporate chart reflecting the relationship of the various Apollo entities that K&E represents along with the principal officers of each. "That will provide a more complete disclosure to better understand the relationships -- particularly given Apollo's multiple relationships in these cases and the firm's late supplemental disclosure," Lenard Parkins, Esq., at Haynes and Boone, LLP, in New York, asserts. * * * The Court authorized the Debtors to employ K&E as their attorneys in accordance with the terms and conditions set forth in the application and in the Engagement Letter, as modified by the representations set forth in the Basta Declarations, effective nunc pro tunc to the Petition Date. Judge Chapman noted that objections to the requested relief have been resolved as set forth in the order. Judge Chapman opined that approval of K&E's retention is pursuant to the representations made in the Supplemental Declaration with respect to: (a) compliance with provisions of the Court's order regarding interim compensation to professionals; (b) providing specific disclosure in the applicable monthly fee statement of any across-the-board billing rate increase; (c) not charging a markup to the Debtors with respect to fees billed by contract attorneys or non-attorneys, who are hired by K&E to provide services to the Debtors; and (d) ensuring that any Contract Professionals are subject to conflict checks and disclosures in accordance with the requirements of the Bankruptcy Code. Judge Chapman maintained that the Order will neither authorize the Debtors to use any cash collateral nor prejudice any entities' rights with respect to any request by the Debtors to use cash collateral. She added that nothing in the Order will affect in any way the Interim Cash Collateral Order, or any special servicer's right to object to the use of its cash collateral to fund all or part of the fees and expenses of professionals compensated from the Debtors' bankruptcy estates. About Innkeepers USA Trust Innkeepers USA Trust is a self-administered Maryland real estate investment trust with a primary business focus on acquiring premium-branded upscale extended-stay, mid-priced limited service, and select-service hotels. Innkeepers, through its indirect subsidiaries, owns and operates an expansive portfolio of 72 upscale and mid-priced extended-stay and select-service hotels, consisting of approximately 10,000 rooms, located in 20 states across the United States. Apollo Investment Corporation acquired Innkeepers in June 2007. Innkeepers USA Trust and a number of affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Attorneys at Kirkland & Ellis LLP, serve as counsel to the Debtors. AlixPartners is the restructuring advisor and Marc A. Beilinson is the chief restructuring officer. Moelis & Company is the financial advisor. Omni Management Group, LLC, is the claims and notice agent. The petition estimated assets and debts of more than $1 billion. In 2009, Innkeepers' consolidated revenues were approximately $292 million and adjusted EBITDA were approximately $85 million. The Company's consolidated assets for 2009 totaled approximately $1.5 billion. As of July 19, 2010, the Company and its affiliates have incurred approximately $1.29 billion of secured debt. Bankruptcy Creditors' Service, Inc., publishes Innkeepers USA Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Innkeepers USA Trust and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). INNKEEPERS USA: Wins OK to Tap AP Services as Crisis Managers ------------------------------------------------------------- Innkeepers USA Trust and its 91 debtor affiliates received the U.S. Bankruptcy Court's permission to employ AP Services, LLC, as crisis managers to provide interim management and restructuring services, nunc pro tunc to the Petition Date. The Debtors also ask the Court to designate Nathan J. Cook of AlixPartners LLP as their interim chief financial officer, nunc pro tunc to the Petition Date. As provided in the Debtors and Mr. Cook's Engagement Letter, APS has agreed that he will serve as the Debtors' interim CFO. Working collaboratively with the Debtors' senior management team and board of directors, as well as the Debtors' other professionals, Mr. Cook will assist the Debtors in evaluating and implementing strategic and tactical options through the restructuring process. APS has agreed to provide certain temporary staff to assist Mr. Cook and the Debtors in their restructuring efforts. The Debtors anticipate that during their bankruptcy cases, Mr. Cook and the Temporary Staff will perform a broad range of services, including: -- Lead the Debtors' financial and treasury functions; -- Develop and implement cash management strategies, tactics and processes; -- Prepare and monitor financial reports for internal and external use, in consultation with the Debtors' chief executive officer, chief restructuring officer, general counsel and other senior management; -- Assist in communication and negotiation with outside constituents, including the banks and their advisors, as appropriate; -- Have primary responsibility for the preparation, and to the extent required certification/attestation, of regular reports and information required by the Court and to be provided to stakeholders, which are customarily issued by the Debtors' CFO, as well as providing assistance in those areas as testimony before the Court on matters that are within APS' expertise; -- Serve as officers of subsidiaries as deemed necessary or advisable by the Debtors; and -- Assist with other matters as may be required that fall within APS' expertise and that are mutually agreeable. The Debtors tell Judge Chapman that all of the services that APS will provide to them will be appropriately directed so as to avoid duplicative efforts among the other professionals retained in the cases, and performed in accordance with applicable standards of the profession. The Engagement Letter contains standard indemnification language with respect to APS' services, including an agreement by the Debtors to indemnify APS, its affiliates and its officers and employees from and against all claims and actual damages arising out of or in connection with the engagement of APS. Accordingly, as part of the application, the Debtors ask the Court to approve the indemnification provisions as set forth in the Engagement Letter. If APS finds it desirable to augment its Temporary Staff with independent contractors: (a) APS will file, and require each Independent Contractor to file, declarations indicating that the Independent Contractor has reviewed the list of the interested parties in the cases, disclosing the Independent Contractor's relationships, if any, with the interested parties, and indicating that the Independent Contractor is disinterested; (b) each Independent Contractor will remain disinterested during the time that APS is involved in providing services on behalf of the Debtors; and (c) the Independent Contractor will represent that he/she will not work for the Debtors or other parties-in-interest during the time APS is involved in providing services to the Debtors. APS' standard practice is to charge for an Independent Contractor's services at the APS rate for a professional of comparable skill and experience, which rate typically exceeds the compensation provided by APS to the Independent Contractor, Dennis M. Craven, Innkeepers USA Trust's chief financial officer, tells the Court. Mr. Cook will be paid $100,000 per month for his full time commitment as interim CFO. The Debtors will pay these temporary staffs in their standard hourly rates: Name Description Rate Commitment ---- ----------- ---- ---------- Todd Brents Bankruptcy Preparation $760 As needed Services Raymond Adams Bankruptcy Preparation $580 Full Time and Management Services APS will file monthly staffing reports to identify any additional Temporary Staff. The Debtors will reimburse APS, upon receipt of periodic billings, for all reasonable and necessary expenses incurred in connection with its retention. Mr. Craven informs the Court that APS typically works for compensation that includes base fee and contingent incentive compensation earned upon achieving meaningful results. In this case, the Debtors and AlixPartners have agreed not to include a success fee as compensation. The Debtors paid APS an initial retainer of $250,000 on June 10, 2010. Pursuant to the Engagement Letter, invoiced amounts have been recouped against the Retainer, and payments on the invoices have been used to replenish the Retainer. During the 90 days prior to the Petition Date, the Debtors paid APS a total of $478,733 incurred in providing services to the Debtors in contemplation of, and in connection with, prepetition restructuring activities. Due to the ordinary course and unavoidable reconciliation of fees and submission of expenses immediately prior to, and subsequent to, the Petition Date, APS has incurred but not billed fees and reimbursable expenses, which relate to the prepetition period. Hence, APS seeks the Court's approval to apply the Retainer to these amounts and any further prepetition fees and expenses APS becomes aware of during its ordinary course billing review and reconciliation. Upon the proposed applications of the Retainer, Mr. Craven says that the Debtors would not owe APS any sums for prepetition services. Mr. Cook, a managing director of AlixPartners and an authorized representative of APS, assures Judge Chapman that APS is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Midland Loan Objection The hourly rate professionals of AP Services, LLC, as the Debtors' crisis managers, should be treated as any other professional and paid through the fee procedures where they submit their time, it is reviewed and then payment is made in the absence of objection, Midland Loan Services, Inc., asserts. Lenard Parkins, Esq., at Haynes and Boone, LLP, in New York, on behalf of Midland Loan, complains that Section 8 of the "General Terms and Conditions" addendum to AP Services' engagement agreement includes arbitration provisions that, as a matter of policy, are inappropriate in an engagement by a Chapter 11 debtor. He asserts that all fee issues and disputes should be addressed in the Court rather than being deferred to another forum, particularly if the Debtors intend to use any of Midland's Cash Collateral to fund payments to AP Services. Wells Fargo Bank, N.A., as Trustee for the registered holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2007-C1, and U.S. Bank National Association, as Trustee for the registered holders of ML- CFC Commercial Mortgage Trust 2006-4, Commercial Mortgage Pass- Through Certificates, Series 2006-4, join in Midland's objection. Nathan J. Cook submitted a supplemental declaration in support of the application. Mr. Cook is a managing director of AlixPartners, LLP, and is associated with AP Services, LLC. * * * The Court approved the application. Objections to the application have been resolved as set forth in the order. Judge Chapman required APS and its personnel to maintain contemporaneous time records in tenth of an hour increments, and conform to any schedule of hourly rates contained in the Engagement Letter. APS is not required to submit fee applications pursuant to Sections 330 and 331 of the Bankruptcy Code, but will instead submit monthly invoices to the Debtors, and the Debtors are hereby authorized to pay, in the ordinary course of its business, all reasonable amounts invoiced by APS for fees and expenses. Notwithstanding anything in the Application, the Cook Declaration, or the Engagement Letter, the Debtors will only indemnify those APS employees serving as executive officers of the Debtors on the same terms as provided to the Debtors' other officers and directors under the Debtors' by-laws and applicable state law, along with insurance coverage under the Debtors' directors' and officers' insurance policies, and the indemnification provisions of the Engagement Letter will not apply to APS. Notwithstanding anything in the Application or the Cook Declaration, the last paragraph of Section 7 and the "Limit of Liability" paragraph of Section 11 of the General Terms and Conditions attached to the Engagement Letter are deleted in their entirety and will be replaced by this paragraph: "Limit of Liability. Neither APS, AlixPartners nor its subsidiary affiliates nor their respective managing directors, officers or employees shall be liable to the Debtors or any party asserting claims on behalf of the Debtors except for actual or punitive damages found in a final judicial determination to be the direct result of the gross negligence, bad faith, self-dealing or intentional misconduct of APS or AlixPartners. This provision shall be limited in its application by any applicable state law governing the exculpation of executive officers." The Court will retain jurisdiction to resolve all disputes with respect to the Application, notwithstanding the provisions related to the potential arbitration of disputes contained in the Engagement Letter. About Innkeepers USA Trust Innkeepers USA Trust is a self-administered Maryland real estate investment trust with a primary business focus on acquiring premium-branded upscale extended-stay, mid-priced limited service, and select-service hotels. Innkeepers, through its indirect subsidiaries, owns and operates an expansive portfolio of 72 upscale and mid-priced extended-stay and select-service hotels, consisting of approximately 10,000 rooms, located in 20 states across the United States. Apollo Investment Corporation acquired Innkeepers in June 2007. Innkeepers USA Trust and a number of affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Attorneys at Kirkland & Ellis LLP, serve as counsel to the Debtors. AlixPartners is the restructuring advisor and Marc A. Beilinson is the chief restructuring officer. Moelis & Company is the financial advisor. Omni Management Group, LLC, is the claims and notice agent. The petition estimated assets and debts of more than $1 billion. In 2009, Innkeepers' consolidated revenues were approximately $292 million and adjusted EBITDA were approximately $85 million. The Company's consolidated assets for 2009 totaled approximately $1.5 billion. As of July 19, 2010, the Company and its affiliates have incurred approximately $1.29 billion of secured debt. Bankruptcy Creditors' Service, Inc., publishes Innkeepers USA Bankruptcy News. The newsletter tracks the chapter 11 restructuring proceedings commenced by Innkeepers USA Trust and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). INT'L LEASE FINANCE: Repays $3.9-Bil. Government Loan ----------------------------------------------------- The Wall Street Journal's Serena Ng and Daniel Michaels report that International Lease Finance Corp., American International Group's airplane-leasing arm, repaid a $3.9 billion government loan ahead of schedule and now expects to fund itself without support from its bailed-out parent company. According to the Journal, ILFC on Friday completed a $4.4 billion sale of debt to institutional investors. Most of the money raised was used to repay a 2009 loan from the Federal Reserve Bank of New York to help ILFC meet obligations at the time. The Journal says the transaction represents the single largest repayment of taxpayer money by AIG since its September 2008 bailout. According to the Journal, it was a welcome relief for AIG and its debt-laden ILFC subsidiary, which earlier threatened to become a financial drag on AIG if the unit couldn't raise money on its own to refinance large debts. About ILFC International Lease Finance Corporation, headquartered in Los Angeles, California, is a major owner-lessor of commercial aircraft. * * * ILFC carries Moody's Investors Service's B1 corporate family rating. According to the Troubled Company Reporter on August 13, 2010, Moody's said ILFC's B1 CFR is based on strengths including its competitive positioning in the aircraft leasing industry, modern aircraft fleet and history of earnings growth. ILFC's rating also incorporates one notch of rating uplift associated with support from AIG. Constraints on the firm's rating and rating outlook concern operating pressures resulting from the economic downturn and its effect on lease rates, lease renewals and aircraft valuations, as well as Moody's view that AIG support will likely diminish over time. Moody's said that it will monitor ILFC's evolving operational and funding strategies and their effect on its credit profile, particularly in light of recent changes in the ILFC management team. ILFC has extended the maturity of $2.2 billion of its revolving bank facility to 2012 from 2011 and obtained additional covenant flexibility with respect to pledging assets for additional secured financings. ILFC carries Standard & Poor's "BBB-/Negative/--" corp. credit rating, and Fitch's 'BB' long-term issuer default rating. About AIG American International Group, Inc. -- http://www.aig.com/-- 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 are leading providers of 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. AIG almost collapsed under the weight of bad bets it made insuring mortgage- backed securities. The Company, however, was bailed out by the Federal Reserve, but even after an initial infusion of $85 billion, losses continued to grow. The later rescue packages brought the total to $182 billion, making it the biggest federal bailout in U.S. history. AIG has been working to protect and enhance the value of its key businesses, execute an orderly asset disposition plan, and position itself for the future. 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. JAMES JACKSON, JR.: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: James Robert Jackson, Jr. dba Stonewall Farms aka James R. Jackson, Jr. Jim Jackson 1181 Neptune Road Ashland City, TN 37015 Bankruptcy Case No.: 10-08723 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court Middle District of Tennessee (Nashville) Judge: Marian F. Harrison Debtor's Counsel: Steven L. Lefkovitz, Esq. LAW OFFICES LEFKOVITZ & LEFKOVITZ 618 Church Street, Suite 410 Nashville, TN 37219 Tel: (615) 256-8300 Fax: (615) 255-4516 E-mail: slefkovitz@lefkovitz.com Scheduled Assets: $339,055 Scheduled Debts: $2,547,921 A list of the Debtor's 15 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/tnmb10-08723.pdf JESUS ORTIZ: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Jesus G. Castillo Ortiz P.O. Box 680 Corozal, PR 00783 Bankruptcy Case No.: 10-07474 Chapter 11 Petition Date: August 17, 2010 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Wigberto Lugo Mender, Esq. LUGO MENDER & CO. Centro Internacional De Mercadeo Carr 165 Torre 1, Suite 501 Guaynabo, PR 00968 Tel: (787) 707-0404 E-mail: wlugo@lugomender.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. JOHN BROWNING: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: John Browning 5377 S. Ten Mile Meridian, ID 83642 Bankruptcy Case No.: 10-02634 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court District of Idaho (Boise) Judge: Terry L. Myers Debtor's Counsel: Kelly I. Beeman, Esq. 708 1/2 W. Franklin Boise, ID 83702 Tel: (208) 345-3045 E-mail: jerri@beemangroup.org Scheduled Assets: $361,303 Scheduled Debts: $10,458,621 A list of the Debtor's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/idb10-02634.pdf JOHN DAVIS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Joint Debtors: John A. Davis Jill M. Davis 4902 194th Street SW Lynnwood, WA 98145 Bankruptcy Case No.: 10-19729 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtors' Counsel: Larry B. Feinstein, Esq. VORTMAN & FEINSTEIN 500 Union Street, Suite 500 Seattle, WA 98101 Tel: (206) 223-9595 E-mail: feinstein2010@gmail.com Scheduled Assets: $2,897,821 Scheduled Debts: $2,332,072 A list of the Joint Debtors' 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wawb10-19729.pdf JTS CORP: 9th Cir. Says Director Was Good Faith Purchaser --------------------------------------------------------- Jack Tramiel, a member of the JTS Corporation board of directors, purchased real property from JTS Corporation for $10 million to assist the company in raising funds. The sale closed in September 1996. Still struggling, JTS liquidated other property acquired from a prior merger with Atari Corp. Despite these and other efforts, JTS was unable to recover and in November 1998, was forced into bankruptcy through an involuntary petition. Later, JTS filed a Chapter 11 petition, scheduling assets of $4.2 million and liabilities of $136 million. In 1999, the case converted to Chapter 7. In 2003, Chapter 7 trustee Suzanne L. Decker filed a complaint against JTS's directors (including Mr. Tramiel), its attorneys, and a shareholder, alleging fraudulent conveyance and other claims. In 2004, Mr. Tramiel's co-defendants settled for $4.5 million. The bankruptcy court issued an order approving the settlement and trial proceeded against only Mr. Tramiel. In 2005, the bankruptcy court held that the sale of the real property to Mr. Tramiel was avoided as a constructive fraudulent conveyance under 11 U.S.C. Sec. 544(b) of the Bankruptcy Code and California Civil Code Sec. 3439.04. The bankruptcy court also held Mr. Tramiel was a good faith transferee under California Civil Code Sec. 3439.08(d)(3). Mr. Tramiel filed a motion in bankruptcy court to amend the judgment to grant him a settlement credit under California Civil Procedure Code Sec. 877. The bankruptcy court amended its judgment and held that Mr. Tramiel was entitled to a settlement credit against his liability in the amount paid by the settling defendants to the bankrupt estate, i.e., $4.5 million. Because this settlement credit exceeded Mr. Tramiel's liability, the bankruptcy court held that Ms. Decker could not recover any amount from Mr. Tramiel. On appeal, the district court affirmed the bankruptcy court's determination that Mr. Tramiel was liable for constructive fraudulent conveyance under Sec. 544(b) and Sec. 3439.04(a). The district court held, however, that the fair market value of the real property was $15,760,000 and the rents were $1,387,185, creating a total fair market value of $17,147,185 for the real property. Unlike the bankruptcy court, the district court concluded that the appropriate measure of liability is the fair market value. The district court affirmed the bankruptcy court's determination that Mr. Tramiel was a good faith transferee under California Civil Code Sec. 3439.08(d)(3) and thus reduced his liability by $10,432,815, i.e., the $10 million purchase price and value of the repurchase option, $432,815. The district court held that Mr. Tramiel's liability was $6,714,370. The district court reversed the bankruptcy court's holding that Mr. Tramiel was entitled to a settlement credit of the $4.5 million paid by his co-defendants. The district court held that Mr. Tramiel was liable for the fraudulent conveyance in the amount of $6,714,370. Judges Procter Hug, Jr., Pamela Ann Rymer, and M. Margaret McKeown, of the United States Court of Appeals for the Ninth Circuit affirmed. The Ninth Circuit held that the district court erred in holding that the fair market value which it fixed at $17,147,185 was determinative. The bankruptcy court's finding that the reasonably equivalent value was $11,820,000 was not clearly erroneous. The bankruptcy court found that the fair market value of the property was $15,760,000 without applying quick and bundled sale reductions. "We hold that Tramiel's liability for the constructive fraudulent conveyance is $11.8 million, that this amount is reduced by $10,432,815 million because Tramiel is a good faith transferee under California Civil Procedure Code Sec. 3439.08, and that Tramiel is entitled to a settlement credit of $4.5 million under California Civil Code Sec. 877. Thus, Tramiel has no liability to the trustee for the conveyance." A copy of the decision is available at: http://www.leagle.com/unsecure/page.htm?shortname=infco20100810143 JTS Corporation was formed in 1994 to design, manufacture, and market hard disks for personal computers. By 1996, after termination of a key contract, JTS needed additional working capital to continue. Unable to obtain adequate loans or investments in the public markets, JTS agreed to merge with Atari Corporation. Through the merger, JTS received $15 million in cash, $55 million in intellectual property, eight separate real properties located in California and Texas, and a $25 million loan which JTS hoped would carry it through September 1996. By July 1996, JTS Corporation's debts exceeded its assets by $23 million. In Sept. 1996, the real property sale closed. Still struggling, JTS liquidated other property acquired from the merger. Despite these and other efforts, JTS was unable to recover and in Nov. 1998, was forced into bankruptcy through an involuntary petition (Bankr. N.D. Calif. Case No. 98-_____). Later, JTS filed a voluntary Chapter 11 petition, scheduling assets of $4.2 million and liabilities of $136 million. In 1999, the case converted to a Chapter 7 liquidation, and Suzanne L. Decker was appointed as the Chapter 7 Trustee. LANDRY'S RESTAURANTS: S&P Retains CreditWatch Negative on B Rating ------------------------------------------------------------------ Standard & Poor's Ratings Services said that that its 'B' corporate credit rating on the Houston-based Landry's Restaurants Inc. remains on CreditWatch, where it was placed with negative implications on Sept. 9, 2009. Once the company completes the settlement in its shareholder lawsuit and it the proposed acquisition of Landry's by its CEO, Tilman Fertitta, is completed, S&P expects to affirm the corporate credit rating and assign a stable outlook. "Based on the planned financing for the acquisition, S&P believes that credit protection measures will deteriorate only slightly, and remain appropriate for the rating category," said Standard & Poor's credit analyst Charles Pinson-Rose. At the same time, S&P assigned a 'B' corporate credit rating to Landry's Holdings Inc. with a stable outlook; and assigned its 'CCC+' issue level rating to Holdco's $110 million senior secured note issue, with a '6' recovery rating, indicating S&P's expectation of negligible (0-10%) recovery in the event of default. Holdco is the subsidiary of an entity wholly owned by Mr. Fertitta, CEO and majority shareholder of Landry's. The proceeds of the debt issuance may be used to finance part of Mr. Fertitta's offer to purchase all outstanding stock he does not own, and provide additional liquidity for the consolidated company if the transaction is completed. In rating the Holdco entity and the new notes, S&P assumed shareholders will approve the current offer and the transactions close in the fourth quarter of this year. S&P's 'B' rating primary reflects Landry's highly leveraged capital structure and participation in the highly competitive restaurant and hospitality industries. Upon successful completion of the settlement of the shareholder lawsuits, shareholder approval, and closing of the going private transaction, S&P expects to affirm all ratings, with a stable rating outlook on the corporate credit ratings of Landry's and Holdco. If the settlement is not completed or if the transaction does not close for any reason, S&P will reassess management's financial policies and business strategies prior to any rating action. LAS VEGAS MONORAIL: Unsecureds to Recover Up to 80% of Claims ------------------------------------------------------------- Las Vegas Monorail Company submitted to the U.S. Bankruptcy Court for the District of Nevada a proposed Plan of Reorganization and an explanatory Disclosure Statement. The Debtor will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. According to the Disclosure Statement, the primary objective of the reorganization and restructuring under the Plan is to maximize returns to creditors. The Debtor will, among other things, restructure the financing agreement, the 1st Tier Note, and certain other debt obligations of the Debtor. Pursuant to the Plan, the Debtor has until 2019 to renew negotiations on a new operation and maintenance agreement with Bombardier Transportation, Inc. The Debtor contracted Bombardier to operate and maintain the Monorail trains, automatic train controls, and other control subsystems. The monorail has three tiers of debt totaling $648 million. Under the plan it filed with the bankruptcy court, the Company wants to eliminate two tiers nearly $200 million then reduce its first tier debt to $18.5 million from $450 million. Under the Plan, the Debtor intends to treat claims as: Class Treatment ----- --------- Class 1: Other Priority Claims Paid in full in cash. Class 2: Other Secured Claims Paid in full in cash. Class 3: General Unsecured Claims Each holder will receive 80% of its allowed claim not to exceed $175,000. Class 4: 1st Tier Bond Secured Claims Amended and restated 1st Tier Note for $7,500,000 delivered to the director. Class 5: 1st Tier Bond Unsecured Additional Payment Claims Obligation Note for $11,000,000 delivered to the director. Class 6: 2nd tier Bond Claims Subordinated to payment in full of 1st Tier Bond Claims. No distribution. Class 7: 3rd Tier Bond Claims Subordinated to payment of in full of 1st and 2nd Tier Bond Claims. No distribution. Class 8: Director Claims Participation in 1st Tier Bond Claims as provided for in amended and restated financing agreement and 1st and 2nd Tier Indenture. Class 9: Subordinated Claims No distribution. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/LASVEGASMONORAIL_DS.pdf The Debtor is represented by: Gerald M. Gordon, Esq. William M. Noall, Esq. Eric J. Van, Esq. GORDON SILVER 3960 Howard Hughes Parkway, 9th Floor Las Vegas, Nevada 89169 Tel: (702) 796-5555 Fax: (702) 369-2666 E-mail: ggordon@gordonsilver.com wnoall@gordonsilver.com evan@gordonsilver.com About Las Vegas Monorail Las Vegas, Nevada-based Las Vegas Monorail Company, organized by the State of Nevada in 2000 as a nonprofit corporation, owns and manages the Las Vegas Monorail. The Monorail is a seven-stop, elevated train system that travels along a 3.9-mile route near the Las Vegas Strip. LVMC has contracted with Bombardier Transit Corporation to operate the Monorail. Though it benefits from its tax-exempt status due to being a nonprofit entity, LVMC claims to be the first privately-owned public transportation system in the nation to be funded solely by fares and advertising. LVMC says it receives no governmental financial support or subsidies. The Company filed for Chapter 11 bankruptcy protection on January 13, 2010 (Bankr. D. Nev. Case No. 10-10464). Gerald M. Gordon, Esq., at Gordon Silver, assists the Company in its restructuring effort. Alvarez & Marsal North America, LLC, is the Debtor's financial advisor. Stradling Yocca Carlson & Rauth is the Debtor's special bond counsel. Jones Vargas is the Debtor's special corporate counsel. The Company disclosed $395,959,764 in assets and $769,515,450 in liabilities as of the Petition Date. In May 2010, Ambac Assurance Corp. lost its bid to stay the bankruptcy case while a district court considers whether the bankruptcy court wrongly rejected Ambac's argument that Monorail was a municipality and thus ineligible to be a Chapter 11 debtor. LAS VEGAS SANDS: Moody's Raises Corporate Family Rating to 'B2' --------------------------------------------------------------- Moody's Investors Service raised the ratings of Las Vegas Sands Corp. Moody's maintains the positive rating outlook. LVSC has an SGL-2 Speculative Grade Liquidity rating. Las Vegas Sands Corp. ratings upgraded: * Corporate Family Rating to B2 from B3 * Probability of Default Rating to B2 from B3 * 6.375% senior notes to B2 (LGD 4, 51%) from B3 (LGD 4, 50%) Venetian Macao Limited ratings upgraded: * Senior secured term loans to B2 (LGD 4, 51%) from B3 (LGD 4, 50%) * Senior secured revolver to B2 (LGD 4, 51%) from B3 (LGD 4, 50%) Ratings Rationale The upgrade is in response to the continued strong performance and favorable growth prospects of LVSC's Asian gaming assets, the amendment and extension of the company's U.S. subsidiary (unrated) bank credit facilities that became effective August 17 2010, and Moody's expectation that the company will achieve and sustain consolidated debt/EBITDA below 6 times over the longer-term. "Although faced with continued challenges at its Las Vegas casino subsidiary, LVSC consolidated results are benefitting substantially from the company's foray into the Asian gaming market, which Moody's expect will continue to experience strong and growing visitation and consumer demand trends," stated Keith Foley, Senior Vice President at Moody's. "The strong performance of LVSC's Macau casinos combined with the progressive opening of Marina Bay Sands through the beginning of 2011 should result in a continued deleveraging of the consolidated entity." Combined, LVSC's Macau casinos and Marina Bay Sands integrated resort in Singapore now account for about 75% of the company's consolidated net revenue and property-level EBITDA. LVSC recently released its June 30, 2010 second quarter earnings which showed a substantial increase in year-over-year EBITDA at and Venetian Macau, Sands Macau, and Four Seasons Macau. "Second quarter results also include the EBITDA contribution from Marina Bays Sands in Singapore which partially opened on April 27, 2010, and continues to exceed Moody's initial expectations in terms of revenue and EBITDA performance," added Foley. The upgrade also considers that the recent amendment and extension of LVSC's U.S. restricted group (unrated) bank credit facilities substantially reduces Moody's concerns regarding that subsidiary's significant debt burden, covenant compliance, and debt maturity profile. The amend and extend: (1) reduced the revolver commitment and extended its expiration date to 2014 from 2012; (2) extended a significant portion of its remaining term debt to 2016 from 2015; (3) resulted in the repayment of $1 billion of term loan debt, and (4) relaxed the consolidated total leverage requirement. The B2 Corporate Family Rating continues to acknowledge LVSC's high consolidated leverage. Despite the significant improvement in consolidated operating results and the repayment of $1 billion of term debt, gross debt/EBITDA remains high at about 9 times after accounting for Moody's standard analytical adjustments). The positive rating outlook indicates that LVSC's ratings could improve further if Marina Bay Sands continues to ramp up at a pace that will facilitate a further and significant reduction in leverage. The positive outlook also considers LVSC's improved cost structure which should benefit the company's consolidated earnings profile going forward, and the recent implementation approval of table games in Pennsylvania which will benefit its Bethlehem, Pennsylvania facility. Ratings could be upgraded if Moody's become comfortable that Marina Bay Sands can generate a rate of return that enables LVSC to materially reduce its consolidated debt burden further. Quantitatively, a higher rating requires that LVSC be able to sustain consolidated debt/EBITDA below 5 times. The company would also need to adhere to a more conservative long-term financial policy that is consistent with a higher rating. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service's information. Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of maintaining a credit rating. Moody's Investors Service adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from reliable sources; however, Moody's Investors Service does not and cannot in every instance independently verify, audit or validate information received in the rating process. LEEWARD SUBDIVISION: Case Summary & 12 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Leeward Subdivision Partners LLC 1020 Geneva Street Bellingham, WA 98229 Bankruptcy Case No.: 10-19794 Chapter 11 Petition Date: August 19, 2010 Court: U.S. Bankruptcy Court Western District of Washington (Seattle) Judge: Marc Barreca Debtor's Counsel: Larry B. Feinstein, Esq. VORTMAN & FEINSTEIN 500 Union Street, Suite 500 Seattle, WA 98101 Tel: (206) 223-9595 E-mail: feinstein2010@gmail.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 12 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wawb10-19794.pdf The petition was signed by John-Paul R. Cox, member. LEHMAN BROTHERS: BofA Files Lawsuit to Determine Assets Ownership ----------------------------------------------------------------- Bank of America N.A. brought a complaint against Lehman Brothers Special Financing Inc. and two other firms to restrain them from suing the bank over a series of payments it made under a 2006 indenture. The move came after LBSF warned Bank of America that it will hold the bank liable if it distributes the proceeds in their 2007 swap transaction. LBSF argued that the assets held by the bank are property of its bankruptcy estate and distribution of the proceeds is a violation of the automatic stay, an injunction that halts actions by creditors against a company in bankruptcy protection. LBSF entered into a credit default swap in March 2007 with ESP Funding I Ltd., a party to the 2006 indenture administered by Bank of America. The swap is one of the assets held by the bank as part of a pool of collateral for certain notes issued by ESP Funding pursuant to the indenture. Defendants BNP Paribas and Natixis Financial Products LLC are both holders of the notes. LBSF allegedly defaulted under the swap after the company and Lehman Brothers Holdings Inc., which serves as its credit support provider, filed for bankruptcy protection. The early termination of the swap entitles LBSF to payment in the sum of $8,689,600 from ESP Funding. While Bank of America has not paid the termination fees to LBSF, it has continued to pay counterparties to the credit default swap and other obligations of ESP Funding in compliance with the 2006 indenture. Michael Johnson, Esq., at Alston & Bird LLP, in New York, says that as trustee, Bank of America is permitted to continue the distribution of the proceeds and that such move does not violate the automatic stay. The U.S. Bankruptcy Court for the Southern District of New York will hold a pretrial conference on September 16, 2010. Defendants have until September 5, 2010, to file a motion or reply to the complaint. Bank of America is a wholly owned subsidiary of BANA Holding Corp., whose stock is indirectly owned by Bank of America Corp., a publicly traded company. 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: Court OKs Termination of Comvest Engagement ------------------------------------------------------------ Before the Petition Date, Lehman Brothers Inc. entered into an engagement letter with ComVest Investment Advisors LLC -- Adviser -- whereby LBI was to act as the exclusive global placement agent to sell interests in ComVest Investment Partners III L.P. -- Fund. James W. Giddens, Trustee for Lehman Brothers Inc., has determined that it would be in the best interests of LBI and its estate that the Agreement be terminated by the LBI estate subject to the payment to the LBI Trustee of an amount in cash equal to $2,200,000. The LBI Trustee and the Adviser obtained approval of a stipulation whereby: (1) Fund agrees to pay the Termination Fee to the LBI Trustee in immediately available funds: (i) $1,100,000 within five days upon approval of the stipulation, and (ii) $1,100,000 on the first anniversary of the First Payment. Payment will be made by wire transfer to: Union Bank, N.A. ABA No. 122000496 A/C No. 37130196431 TRUSDG James W. Giddens, Trustee, LBI Funds Account, Account No. 6711860101 (2) Upon timely payment to and receipt by the LBI Trustee of the full Termination Fee, the Agreement will be terminated without need for further action by any of the Parties, without the need for any further Court approval and, without any further obligation or liability and pursuant to that termination, Section 7 of the Agreement will no longer be operative and will be deemed waived regardless of the Agreement. (3) Upon timely payment to and receipt by the LBI Trustee of the full Termination Fee, the LBI Trustee will be deemed to have fully, finally and forever waived, settled, and released the Fund and Adviser from all claims arising from the Agreement. Similarly, the Fund and Adviser are deemed to have fully, finally and forever waived, settled, and released the LBI Trustee and the Securities Investor Protection Corporation from all claims arising from the Agreement. 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 Sonnenschein as Real Estate Counsel ------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors seek the Court's authority to employ Sonnenschein Nath & Rosenthal LLP as their special counsel effective January 1, 2010. Sonnenschein 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, Sonnenschein will continue to represent the Debtors with respect to various real estate transactions including loan sales, real estate equity investments, real estate financings, among others. Sonnenschein will be paid for its services on an hourly basis and will be reimbursed for its expenses. The hourly billing rates for the firm's professionals range from $500 to $935 for partners, $265 to $610 for associates, and $140 to $335 for paraprofessionals. In a declaration, Linda White, Esq., a member of Sonnenschein, assures the Court that the firm does not represent or hold any interest adverse to the Debtors or their 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: Wins Nod for Momo-O as Japanese Counsel -------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors received court authority to employ Momo-o Matsuo & Namba as special counsel effective February 1, 2010. The Debtors tapped the firm to provide them legal assistance in connection with the civil rehabilitation proceedings of Lehman Brothers Holdings Japan Inc., Lehman Brothers Commercial Mortgage, Inc., and Sunrise Finance Inc. at the Tokyo District Court. Prior to the proposed employment, MMN worked as "ordinary course" professional for the Debtors, providing them advice in connection with the civil rehabilitation cases of the Japan-based Lehman units. The firm's fees and expenses, however, exceeded the $1 million compensation cap for ordinary course professionals, prompting the Debtors to retain the firm as a professional pursuant to Sections 327 and 328 of the Bankruptcy Code. MMN will be paid for its services on an hourly basis and will be reimbursed for its expenses. The firm's hourly rates are: Professionals Hourly Rates ------------- ------------ Partners JPY35,000 - JPY60,000 Senior Associates JPY30,000 - JPY35,000 Associates JPY20,000 - JPY30,000 In a declaration, Junya Naito, Esq., a partner at MMN, assures the Court that the firm does not represent or hold interest adverse to the Debtors and their 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: Wins Nod for Paul Hastings as Asset Mgt. Counsel ----------------------------------------------------------------- Lehman Brothers Holdings Inc. and its affiliated debtors received the Court's authority to employ Paul Hastings Janofsky & Walker LLP as their special counsel effective March 1, 2010. Paul Hastings 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, Paul Hastings will continue to provide the services including asset management and negotiation of commercial real estate lease transactions. The firm will also represent the Debtors in mediation and litigation in connection with their derivative trades and render other services where the Debtors' general bankruptcy counsel and Jones Day have conflicts. Paul Hastings will be paid for its services on an hourly basis and will be reimbursed for its expenses. The hourly billing rates for the firm's professionals in the United States range from $640 to $990 for partners and counsel, $345 to $715 for associates, and $115 to $460 for paraprofessionals. Meanwhile, the hourly billing rates for Paul Hastings' professionals in London range from $779 to $983 for partners and counsel, $310 to $817 for associates, and $151 to $303 for paraprofessionals. The rates of Paul Hastings' professionals in London will vary depending on the exchange rate in effect on the date of the invoice, according to Richard Krasnow, Esq., at Weil Gotshal & Manges LLP, in New York. In a declaration, Robert Keane Jr., Esq., a partner at Paul Hastings, assures the Court that the firm does not represent or hold any interest adverse to the Debtors or their 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: Judge Wants Witnesses to Appear in Person ---------------------------------------------------------- Joseph Checkler, writing for Dow Jones Daily Bankruptcy Review, reports that Judge James Peck, who's presiding over Lehman Brothers' multibillion-dollar lawsuit against Barclays, on Monday advised lawyers for both sides to stop showing video testimony of witnesses that work in New York, even though the two sides have agreed it's okay. Dow Jones relates that after Barclays lawyer David Boies, Esq., at Boies, Schiller & Flexner played recorded testimony from Lazard Freres & Co. managing director Barry Ridings -- Lehman's investment banker in the sale -- Judge Peck was asked to rule on whether he'd accept video deposition from another Barclays witness, Shari Leventhal, the New York Federal Reserve's general counsel. Lehman thought the line of questioning would be irrelevant. According to Dow Jones, Judge Peck told both sides, "The system is really designed for searching the truth from witnesses that are appearing live." He added, "I'm not really happy having to spend the afternoon looking at Mr. Ridings' video rather than looking at Mr. Ridings." According to Dow Jones, Judge Peck said that he "loves" seeing live witnesses when the public is present and "testimony really counts." "I don't want to see video when there's a witness who can be here in person," Judge Peck said. "I don't like it. I prefer that you don't do it. It appears tactical, and it's not going to help you." Dow Jones relates Mr. Boies said Barclays would hold off on the video and call Ms. Leventhal to testify in person. Lehman is suing Barclays in bankruptcy court, alleging that the British bank finagled a "secret" discount price of $45 billion for Lehman broker-dealer assets that were worth about $50.6 billion. The trial reconvened this week in the U.S. Bankruptcy Court in Manhattan after a nearly two-month break. 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 was the 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 was appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court 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) METRO-GOLDWYN-MAYER: Spyglass Presents Plan to Debt Holders ----------------------------------------------------------- Ben Fritz, writing for The Los Angeles Times, reported that Spyglass Entertainment and the Metro-Goldwyn-Mayer leading debtors subcommittee last week hammered out all the details of a mutually agreeable plan, according to two people familiar with the situation. On Wednesday, those leading debt owners, which include Anchorage Advisors and Highland Capital, presented the Spyglass plan to MGM's more than 100 debt owners on a conference call, in hopes that they will endorse it. According to the LA Times, the proposal calls for: -- Spyglass chiefs Gary Barber and Roger Birnbaum to take over a significantly slimmed down MGM following a pre-packaged bankruptcy; -- MGM would produce several movies per year, including a "James Bond" movie and two planned pictures based on "The Hobbit," and outsource theatrical distribution to one of the six major studios per year; -- Messrs. Barber and Birnbaum would get an ownership stake of 4% to 5% in the new MGM; -- About 15 movie titles owned by Messrs. Barber and Birnbaum, such as "The Sixth Sense" and "Seabiscuit," would be folded into MGM's catalog of 4,000 movies; and -- Spyglass would remain a separate company producing its own films. According to the LA Times, the full group of debt owners must now consider the Spyglass plan and conduct due diligence. It remains to be seen whether it will approve the proposal or request changes. The LA Times said if the group can't reach a final agreement with Messrs. Barber and Birnbaum, Lions Gate Entertainment is believed to remain eager to move in with its rival merger proposal. The LA Times also noted that Time Warner has a $1.5-billion acquisition offer on the table for MGM, though several top debt owners believe that values MGM at too low a price. The LA Times noted that a Spyglass executive could not be reached for comment. About Metro-Goldwyn-Mayer Metro-Goldwyn-Mayer, Inc., is an independent, privately held motion picture, television, home video, and theatrical production and Distribution Company. The Company owns the world's largest library of modern films, comprising approximately 4,000 titles, and over 10,400 episodes of television programming. An investor consortium, comprised of Providence Equity Partners, TPG Capital, Sony Corporation of America, Comcast Corporation, DLJ Merchant Banking Partners and Quadrangle Group, owns MGM. MGM is grappling with $3.7 billion in debt. In July 2010, MGM received a sixth forbearance from its bondholders and lenders, wherein the lenders extended the period during which MGM won't have to pay principal and interest on its bank debt, including a revolving credit facility, until September 15. As reported by the Troubled Company Reporter on August 12, 2010, sources told The Wall Street Journal that MGM hopes to file a "prepackaged" bankruptcy sometime in mid-September, when the latest waiver on debt payments expires. J.P. Morgan Chase & Co., a major MGM creditor, is working on providing between $150 million and $200 million in debtor-in-possession financing to steer the studio through bankruptcy, one of the sources told the Journal. MGM tried to sell itself in March 2010 but received low bids. MGM has hired investment bank Moelis & Company and the law firm Skadden, Arps, Slate, Meagher & Flom. In August 2009, it hired the restructuring expert Stephen F. Cooper to help lead the company. MAX & ERMA'S: To Sell Assets to Blue Ribbon for $28 Million ----------------------------------------------------------- Business First of Columbus reports that a federal bankruptcy judge approved the sale of Max & Erma's Restaurant Inc. to Blue Ribbon Holdings LLC for $28 million. Concept Development Partners LLC, which made a $26.4 million for the Company's assets, was named back-up bidder. Concept Development would purchase the assets if Blue Ribbon fails to consummate the sale. The deal is expected to be completed Aug. 31, 2010, report relates. About Max & Erma's Max & Erma's owns a chain of 106 restaurants located in Pennsylvania, Ohio, and Michigan, with a few in Chicago, Washington, Atlanta, and Kentucky. About 79 are company-owned and operated, while 27 belong to franchisees. Max & Erma's is owned by G&R Acquisitions, North Side. The chain started operating in 1972, taking the Max & Erma's name from two owners of a bar. Max & Erma's Restaurant, Inc., sought chapter 11 protection (Bankr. W.D. Pa. Case No. 09-27807) in Oct. 2009. At the time of the filing, the Debtor estimated its assets and debts at less than $10 million. MCJUNKIN RED: S&P Downgrades Corporate Credit Rating to 'B' ----------------------------------------------------------- Standard & Poor's Ratings Services said it lowered its corporate credit rating on McJunkin Red Man Corp. to 'B' from 'B+'. The rating outlook is negative. At the same time, S&P lowered the issue-level rating on the company's ABL facility to 'BB-' (two notches above the corporate credit rating) from 'BB'. The recovery rating remains '1', indicating S&P's expectation of very high (90% to 100%) recovery in the event of a payment default. Also, S&P lowered the issue- level rating on the company's $1 billion senior secured notes to 'B-' from 'B'. The recovery rating remains '5', indicating S&P's expectation of modest (10% to 30%) recovery in the event of a payment default. The downgrade reflects S&P's assessment that McJunkin's near-term operating performance will continue to be negatively impacted by a slower-than-expected recovery in some of its end markets, particularly the North American midstream and downstream markets. Anemic customer spending compared with historical standards are affecting those markets. In addition, in S&P's view, margins are being hurt by the combination of rising steel costs (which are negatively affecting reported results as S&P calculate them on a last-in/first-out basis) and the highly competitive market environment. The negative rating outlook reflects S&P's view that weakness in the company's end markets will likely continue to pressure operating performance in the near term resulting in a highly leveraged financial risk profile. Specifically, S&P expects reported EBITDA of around $150 million in 2010, improving to around $230 million in 2011. As such, S&P expects leverage to remain well above 6x through 2011, a level S&P would still consider to be somewhat weak for the rating given that S&P views the company's business risk profile as weak. In addition, the potential for a covenant violation under the bank facility at its Canadian subsidiary could constrain the company's overall liquidity position. "S&P would consider lowering the rating if operating performance seems to be tracking materially lower than S&P's current expectations or if the company breaches the covenant on its Canadian facility or fails to refinance its Transmark facility before it matures in December 2010," said Standard & Poor's credit analyst Sherwin Brandford. S&P could revise the outlook to stable if operating performance exceeds expectations in the near term, resulting in adjusted debt leverage trending to below 6x during the next several quarters and the company maintains or improves its overall liquidity position through improved borrowing availability or improved covenant cushion. MEXICANA AIRLINES: 6 Investor Groups Interested in Buying Airline ----------------------------------------------------------------- Lizette Clavel Sanchez, head of the Mexican Aviation Stewards Union Association, said Wednesday at least six investor groups had expressed interest in buying Mexicana Airlines, reports Xinhua News Agency. However, Ms. Sanchez said in a press conference Mexicana had scared some investors away by producing unreliable information, saying the company has accumulated a debt of 5.5 billion dollars in the first quarter of this year, not its published figure of 1.25 million dollars, notes the report. "It is not that they are not reporting information, but they are not giving information with the speed and transparency needed," Xinhua quoted Mr. Sanchez as saying. These statements came one day after the Mexican Airline Pilots Association said it received a concrete offer from venture capital firm Advent International for $49 million. ASPA's purported deal with Advent International provides that the cash Advent would invest in Mexicana would depend on government willingness to temporarily supply free fuel and allow a deferral on payments due for using the country's airspace, Reuter said. The potential investment was about half of what the airline's management says is needed to keep it operating, Reuters added. But ASPA spokesman Antonio Vargas Echegoyen subsequently disclosed in a press conference that Advent only wants to fly 30 airliners, 39 planes less than those at present, according to Xinhua. Ms. Sanchez also pointed out in a separate radio interview the offer would be helpful, yet 100 million dollars are needed for Mexicana to survive in the long term. Ms. Sanchez told Radio Formula that other financial institutions would be welcomed into the talks, but so far Advent is the only one that has committed cash, Reuters says. "This is a first step, by showing there are serious investors looking at the airline," Ms. Sanchez said, notes the report. Mr. Vargas said the unions are optimistic that Mexicana Airlines will emerge from bankruptcy under the same brand name but new management. He further added that reductions in operations, fleet size and crew staff will be necessary as the company "owes more or less six times its value," Dow Jones reported. Goldman Sachs Group Inc. and Credit Suisse Group AG have been cited by media as potential investors in the airline. About Mexicana Airlines Compania Mexicana de Aviacion or Mexicana Airlines -- http://www.mexicana.com/-- is a privately held airline and a subsidiary of Nuevo Grupo Aeronautico. Founded in 1921, Mexicana is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City. Grupo Mexicana de Aviacion is the parent of Compania Mexicana. Two other units are Aerovias Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link). Compania Mexicana de Aviacion or Mexicana Airlines, Mexico's largest airline, filed for bankruptcy in the U.S. and Mexico on August 2, 2010. In the U.S., the company filed in the U.S. Bankruptcy Court in Manhattan for Chapter 15 bankruptcy protection (case no. 10-14182), and in Mexico, it filed for the equivalent of Chapter 11. Maru E. Johansen, foreign representative of Compania Mexicana, estimated in the Chapter 15 petition that the company has assets of US$500 million to US$1 billion and debts of more than US$1 billion. William C. Heuer, Esq., at Duane Morris LLP, serves as counsel to Ms. Johansen. Mexicana de Aviacion stated that despite its bankruptcy filing, it expects to continue to operate normally, and that such filings Bankruptcy Creditors' Service, Inc., publishes Mexicana Airlines Bankruptcy News. The newsletter tracks the chapter 11 proceedings and the ancillary proceedings undertaken by Compania Mexicana de Aviacion and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MEXICANA AIRLINES: Obtains Preliminary Injunction Order in U.S. --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has granted a preliminary injunction barring anyone from taking legal actions against Compania Mexicana de Aviacion, S.A. de C.V. Mexicana Airlines sought preliminary injunction to prevent creditors and leasing companies from seizing its assets or terminating their contracts while it is awaiting the Bankruptcy Court's recognition of its insolvency case in Concurso, Mexico, as the main proceeding. In a 10-page order issued August 18, 2010, Judge Martin Glenn said that Mexicana Airlines "may suffer immediate and irreparable injury" without the injunction, pointing out that its assets could be subject to potential actions by creditors in the U.S. "Such acts could interfere with and cause harm to Mexicana's efforts to administer its estate pursuant to the Concurso proceeding and the Mexican Court's administration of the Concurso proceeding," Judge Glenn said. A copy of the preliminary injunction order is available for free at http://bankrupt.com/misc/Mexicana_Orderpreliminjunction.pdf Mexicana Airlines has already received several notices of default under its various aircraft and spare engine leases as well as notices to terminate those leases and ground the aircraft. Many of its aircraft were also seized in Canada and there were similar attempts made in other areas. Pursuant to the August 18 order, creditors or any concerned party in the U.S. may only be allowed to take actions against the company or its U.S.-based assets if there is an approval from the Bankruptcy Court or the Mexican Court and if there is consent from Maru Johansen, the company's foreign representative. The court order, however, does not enjoin anyone from commencing or continuing any action outside of the U.S. involving the company or its assets. If any person obtains judicial relief from a foreign court and wants to obtain the same from the Bankruptcy Court, that relief may only be granted upon prior notice to the foreign representative. The order also established Ms. Johansen as the representative of Mexicana Airlines and gave her authority to administer the company's assets in the U.S. Both the company and its representative were granted full protections and rights available under Section 1519(a)(1)-(3) of the Bankruptcy Code. Ms. Johansen and Mexicana Airlines were authorized to perform their obligations in accordance with the Industry Agreements, pursuant to which they are required to (i) honor and pay outstanding claims arising in the ordinary course of business, and (ii) to process customary payments or transfers and to honor customary transfer requests made by Mexicana Airlines and other participants. The Industry Agreements include interline agreements, clearinghouse agreements and billing and settlement agreements administered by the International Air Transport Association, the IATA Clearing House, the Airlines Clearing House Inc. and Universal Air Travel Plan Inc. The injunction will remain in effect until Mexicana Airlines' insolvency case is recognized by the Bankruptcy Court as foreign main proceeding. Prior to the Court's entry of its Order, various groups including leasing companies and lenders filed objections and motions for relief from preliminary injunction. These groups include: A. C.I.T. Leasing, et al. C.I.T. Leasing Corporation and CIT Aerospace International earlier blocked the approval of Mexicana Airlines' application for preliminary injunction in a bid to seize the aircraft it leased out to the company. Mexicana Airlines allegedly breached its lease contracts with the CIT entities after it failed to pay as much as $5.1 million for its use of the aircraft. The contracts had either expired or had been terminated by the CIT entities after the company defaulted under the contracts. The CIT entities argued that the company "had no continuing possessory interest" in the aircraft when it filed its petitions, and, thus, would not be harmed if forced to return the aircraft. Only two of the eight aircraft being leased are expected to be returned soon to the CIT entities in accordance with the lease termination agreements the group reached with Mexicana Airlines. B. Allied Aviation Allied Aviation Fueling Company of San Antonio Inc. filed a motion for relief from the temporary restraining order so that it could suspend or discontinue its "fuel storage and into-plane fuel services" to Mexicana Airlines. Allied Aviation expressed concern that Mexicana Airlines may not be able to meet its postpetition payment obligations in light of the filing of its insolvency case. C. Banco Mercantil Banco Mercantil del Norte S.A. filed an objection seeking relief from the preliminary injunction and demanding protection in exchange for Mexicana Airlines' continued use of its cash collateral. Banco Mercantil is a lender of the company and is one of those lenders exempted from the injunction granted earlier by the Mexican Court. In its objection, Banco Mercantil demanded the company to account for the use of its cash collateral held in the bank's two deposit accounts during the pendency of its insolvency case; to use the cash in accordance with a budget agreeable to the bank; grant the bank replacement liens and superpriority administrative priority claims, among other things. Mexicana Airlines owes Banco Mercantil about US$123.6 million under an April 17, 2008 credit agreement. Its obligations to the bank are secured by the deposit accounts pledged in favor of its collateral agent, Inter National Bank, as well as by their proceeds. Federico Santos Cernuda, legal director of Banco Mercantil, said that Mexicana Airlines does not have equity in the funds since the value of the cash collateral is well below what is owed by the company to the bank. D. Flying Food Flying Food Catering Inc. sought a court ruling holding that the injunction does not bar it from either discontinuing its postpetition services to Mexicana Airlines or requiring the company to pay cash in advance for those services. Flying Food provides the company catering and garbage removal services at the O'Hare International Airport in Illinois. E. GE Capital Aviation GE Capital Aviation Services Limited and its affiliates objected to the scope of the TRO and the preliminary injunction, saying it is "too broad" and exceed the purpose of Chapter 15 of the Bankruptcy Code. GE Capital is particularly opposed to the application of the injunction to actions taken pursuant to orders of the Mexican Courts that do not affect the U.S.-based assets of Mexicana Airlines, and are not lawfully enjoined in its insolvency case. F. Menzies Aviation Menzies Aviation (USA) Inc. filed a motion seeking relief from the TRO and demanding Mexicana Airlines to either assume or reject their standard ground handling agreements or to provide adequate assurance of future performance like changed terms for payment. Menzies Vice-President for Commercial and Corporate Services Philip Harnden said Mexicana Airlines has failed and refused to make payments due under the SGHA, and is in default under the agreement. G. Integrated Airline Integrated Airline Services Inc. objected to the imposition of the injunction because it does not require Mexicana Airlines to pay its ramp and passenger services under an agreement dated October 1, 2009. IAS asked the Bankruptcy Court to issue a ruling that the TRO or any injunction does not prevent IAS from exercising its rights under an agreement with Mexicana Airline. H. Aviation Port Aviation Port Services LLC, another supplier of Mexicana Airlines, expressed concern that the injunction would require it to continue performing under a 2009 standard ground handling agreement without receiving advance payment or adequate assurance of payment for its services. I. Aircraft Service Aircraft Service International Inc. complained that its interest is not sufficiently protected as required under bankruptcy law. Aircraft Service asked the Bankruptcy Court either to deny Mexicana Airlines' request for preliminary injunction or to require the company to provide a US$300,000 security deposit or cash-in-advance payment terms. J. The Greater Orlando Aviation Authority, et al. The Greater Orlando Aviation Authority, and a consortium of airport authorities represented by New York-based Edwards Angell Palmer & Dodge LLP, complained over the lack of notification about Mexicana Airlines' request to insert provisions with respect to the treatment of postpetition claims against the company or the treatment of passenger facility charge trust funds. They sought a court ruling providing them postpetition protections and benefits provided to other service providers and counterparties to the contracts. K. Servisair Mexicana and Servisair LLC, Servisair USA Inc, Servisair & Shell Fuel Services LLC are parties to several International Air Transportation Association Standard Ground Handling Agreements. However, Servisair clarifies that no agreement has been negotiated or signed and thus, this service has been provided as an accommodation only. Servisair notes that the cancellation of Mexicana flights has adversely affected its ability to continue to meet the cost of its labor forces and equipment expenses. Servisair is doubtful that Mexicana will have enough money to pay it and similar service providers who remain obligated under Court Order to continue providing services. Servisair, hence, filed a motion for relief from the TRO and ask the Court to hold that it is allowed to discontinue the services or in the alternative, for the Court to compel Mexicana to provide adequate assurance of future performance like pre- payment, or deposits for the benefit of the creditor. John R. Guest, Servisair vice president and general counsel, filed a declaration in support of the request. L. EAST Trust EAST Trust-Sub 12 filed a motion for relief from the TRO arguing that a lease agreement between it and Mexicana was validly terminated prior to Mexicana's Concurso Proceeding, and therefore, any automatic stay is inapplicable to it. L. Others International Lease Finance Corp., Whitney Ireland Leasing Limited and Calliope Limited filed a supplemental memorandum and a declaration in support of their motion for relief from the TRO. Both documents further address the issues over whether Mexicana Airlines' possession of the aircraft makes the aircraft property of its bankruptcy estate; whether the aircraft is property of the estate under Mexican law, among other issues. Court Addresses Objections Pursuant to the August 18 court order, the Court held that Allied Aviation, Flying Food, Menzies, Integrated Airline, Aviation Port, Aircraft Service and the Servisair entities can discontinue their services unless Mexicana Airlines meets certain conditions that will provide sufficient protection to its suppliers. These conditions include maintaining the company's insurance coverage, payment for postpetition goods and services, among other things. In response to GE Capital's objection, the Bankruptcy Court inserted a provision stating that the order does not enjoin anyone from commencing or continuing any judicial, administrative or other action outside of the U.S. involving Mexicana or its assets. The Bankruptcy Court, meanwhile, denied the motion by East Trust-Sub 12 for relief from preliminary injunction. The injunction does not apply to or does not enjoin Banco Mercantil from exercising its rights and remedies against Mexicana Airlines' U.S.-based assets arising under their agreements, which include (i) the Credit Agreement dated April 17, 2008, among Banorte, Mexicana, as an obligor, and certain non-debtor affiliates of Mexicana parties (ii) Deposit Account Security Agreement dated June 16, 2008, among Inter National Bank, as collateral agent, Mexicana and Aerovias Caribe, S.A. de C.V., as grantors, and (iii) the Collateral Agency Agreement dated June 16, 2008, between Banorte and INB, the order stated. INB will remain subject to the court order, except to the extent acting on instructions given to it by Banorte Mercantil consistent with those agreements. The court order does not relieve any party's obligation to perform under the (i) June 12, 2002 agreement between U.S. Bank N.A. and Mexicana Airlines, and (ii) the Terms and Conditions for Worldwide Acceptance of the American Express Card By Airlines among Mexicana Airlines and Aerovias Caribe S.A. de C.V., Grupo Mexicana de Aviacion S.A. de C.V. and American Express Travel Related Services Company Inc. dated May 10, 2006. Nothing in the Bankruptcy Court's August 2 and 18 orders to Show Cause with TRO, or in Section 362 of the Bankruptcy Code enjoins or prevents Marco Aircraft Leasing Ltd., Wells Fargo Bank Northwest N.A., AFT Trust-Sub I, Celestial Aviation Trading 43 Ltd., Celestial Aviation Trading 68 Ltd., Celestial Aviation Trading 69 Ltd., International Lease Finance Corp., Calloipe Ltd., Sierra Leasing Ltd. and Whitney Ireland Leasing Ltd. from exercising their rights or remedies with respect to certain assets. A list of these assets is available for free at: http://bankrupt.com/misc/Mexicana_ListAssets.pdf With respect to the objection of the airport authorities, the Court held that the order does not prohibit Mexicana Airlines from remitting fees and taxes that are not property of the estate. Mexicana has already confirmed to the Bankruptcy Court that it recognizes and will fulfill all of its obligations including its obligations to remit fees and taxes, and to segregate and remit passenger facility charges to U.S. airports. The hearing to consider the objection of Wells Fargo Bank, Marco Aircraft and AeroTurbine with respect to certain spare parts and engines owned by Aeroturbine as well as the objection of the CIT entities was adjourned per agreement with Mexicana Airlines. The date of the hearing has not yet been determined. Meanwhile, Pacific Fuel Trading Corp. withdrew its motion for relief from the temporary restraining order after it reached an agreement with Mexicana Airlines to resolve the motion. Recognition of Concurso Proceeding The hearing to consider Mexicana Airlines' motion for recognition of its insolvency case as foreign main proceeding has been set for September 8, 2010, at 11:00 a.m. Deadline for filing objections or responses is September 1, 2010, at 4:00 p.m. About Mexicana Airlines Compania Mexicana de Aviacion or Mexicana Airlines -- http://www.mexicana.com/-- is a privately held airline and a subsidiary of Nuevo Grupo Aeronautico. Founded in 1921, Mexicana is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City. Grupo Mexicana de Aviacion is the parent of Compania Mexicana. Two other units are Aerovias Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link). Compania Mexicana de Aviacion or Mexicana Airlines, Mexico's largest airline, filed for bankruptcy in the U.S. and Mexico on August 2, 2010. In the U.S., the company filed in the U.S. Bankruptcy Court in Manhattan for Chapter 15 bankruptcy protection (case no. 10-14182), and in Mexico, it filed for the equivalent of Chapter 11. Maru E. Johansen, foreign representative of Compania Mexicana, estimated in the Chapter 15 petition that the company has assets of US$500 million to US$1 billion and debts of more than US$1 billion. William C. Heuer, Esq., at Duane Morris LLP, serves as counsel to Ms. Johansen. Mexicana de Aviacion stated that despite its bankruptcy filing, it expects to continue to operate normally, and that such filings Bankruptcy Creditors' Service, Inc., publishes Mexicana Airlines Bankruptcy News. The newsletter tracks the chapter 11 proceedings and the ancillary proceedings undertaken by Compania Mexicana de Aviacion and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MEXICANA AIRLINES: Suspends Some Services, To Return Planes ----------------------------------------------------------- Mexicana Airlines said it is returning some aircraft and is suspending some services offered by its low-cost and regional units, according to an August 18, 2010, report by Dow Jones. Adolfo Crespo, senior vice-president of customer service and corporate communications, said the company is set to return eight aircraft to leasing companies by the end of the week. Mexicana Airlines had already handed back seven aircraft, Dow Jones reported. An earlier report by Aviation Week, a trade publication, said that Mexicana Airlines had agreed to return 27 Airbus aircraft to leasing companies, including 12 to the General Electric Co.'s aircraft leasing arm. Mexicana has an operational fleet of 64 planes, but three had already been grounded by their owners. In another development, Grupo Mexicana, which controls the company, said in a statement that flights operated by all three of the group's airlines would be subject to changes from midnight on August 18, 2010. No destinations, however, would be canceled as a result of the changes although fewer flights would be available on certain routes, according to the statement. Passengers are advised to visit www.cmainforms.com, www.mexicana.com or contact Mexicana Airlines through twitter @mexicanaair for further information. About Mexicana Airlines Compania Mexicana de Aviacion or Mexicana Airlines -- http://www.mexicana.com/-- is a privately held airline and a subsidiary of Nuevo Grupo Aeronautico. Founded in 1921, Mexicana is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City. Grupo Mexicana de Aviacion is the parent of Compania Mexicana. Two other units are Aerovias Caribe S.A. de C.V. (Mexicana Click) and Mexicana Inter S.A. de C.V. (Mexicana Link). Compania Mexicana de Aviacion or Mexicana Airlines, Mexico's largest airline, filed for bankruptcy in the U.S. and Mexico on August 2, 2010. In the U.S., the company filed in the U.S. Bankruptcy Court in Manhattan for Chapter 15 bankruptcy protection (case no. 10-14182), and in Mexico, it filed for the equivalent of Chapter 11. Maru E. Johansen, foreign representative of Compania Mexicana, estimated in the Chapter 15 petition that the company has assets of US$500 million to US$1 billion and debts of more than US$1 billion. William C. Heuer, Esq., at Duane Morris LLP, serves as counsel to Ms. Johansen. Mexicana de Aviacion stated that despite its bankruptcy filing, it expects to continue to operate normally, and that such filings Bankruptcy Creditors' Service, Inc., publishes Mexicana Airlines Bankruptcy News. The newsletter tracks the chapter 11 proceedings and the ancillary proceedings undertaken by Compania Mexicana de Aviacion and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MIDWEST BANC: Files for Chapter 11 Protection --------------------------------------------- Midwest Banc Holdings, Inc. filed for chapter 11 protection in Chicago on August 20 (Bankr. N.D. Ill. Case No. 10-37319). Midwest Banc Holdings is the holding company for Midwest Bank and Trust Company. The bank, however, became subject to FDIC receivership this May. netDockets recounts that on May 14, 2010, Midwest Bank was closed by regulators in May and most of its deposits were assumed by FirstMerit Bank, N.A. of Akron, Ohio. Midwest Banc disclosed assets of $9,690,937 and debts of $144,746,169 as of the bankruptcy filing. The Company's balance sheet as of March 31, 2010, showed $3.182 billion in total assets and $3.232 billion in total liabilities, and a stockholders' deficit of $49.5 million. William J. Connelly, Esq., at Hinshaw & Culbertson LLP, serves as counsel to the Debtor. MOVIE GALLERY: Great American Auctions Office Equipment ------------------------------------------------------- Movie Gallery, Inc., intends to have the contents of its corporate offices in Wilsonvile, Oregon, completely disposed through a public auction to be conducted by Great American Group, Inc., a provider of asset disposition, valuation and appraisal services. The Wilsonville offices of Movie Gallery is a 100,000 square foot facility. The sale features a very large selection of quality office furnishings, computers, servers, and other business machines, a kitchen/cafeteria with professional-grade equipment, consumer electronics, and a wide variety of motion picture and video game memorabilia, promotional materials, toys, and other collectible items. The public auction was conducted live, on-site, last August 17, 2010, in a traditional outcry sale platform with a simultaneous internet webcast to allow for dynamic, competitive, online bidding. "This auction offers commercial and industrial buyers a chance to acquire some very nice furniture and equipment at what may represent significant savings over brand new merchandise," commented Mark Weitz, President of Great American Group's Wholesale and Industrial Services. "Many of the movie and game- related items are promotional, out-of-print, or hard-to-find, and potentially of great interest to memorabilia collectors," Mr. Weitz continued. About Movie Gallery Based in Wilsonville, Ore., Movie Gallery, Inc., is the second largest North American video and game rental company, operating stores in the U.S. and Canada under the Movie Gallery, Hollywood Video and Game Crazy brands. Movie Gallery first filed for Chapter 11 on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Kirkland & Ellis LLP and Kutak Rock LLP represented the Debtors. The Company emerged from bankruptcy on May 20, 2008, with private-investment firms Sopris Capital Advisors LLC and Aspen Advisors LLC as its principal owners. William Kaye was appointed plan administrator and litigation trustee. Movie Gallery returned to Chapter 11 protection on February 3, 2009 (Bankr. E.D. Va. Case No. 10-30696). Attorneys at Sonnenschein Nath & Rosenthal LLP and Kutak Rock LLP represent the Debtors in their second restructuring effort. Kurtzman Carson Consultants serves as claims and notice agent. Bankruptcy Creditors' Service, Inc., publishes Movie Gallery Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Movie Gallery Inc. and its various affiliates (http://bankrupt.com/newsstand/or 215/945-7000). MOVIE GALLERY: Proposes Leach Travell as Insurance Counsel ---------------------------------------------------------- Movie Gallery Inc. and its units seek the Court's authority to employ Leach Travell Britt pc as their special counsel pursuant to an engagement letter dated August 9, 2010. The Debtors note that various issues and concerns have been raised by Liberty Mutual Insurance Company and its affiliates, with whom the Debtors maintained various insurance policies, in the Chapter 11 cases. Both Kutak Rock LLP and Sonnenschein Nath & Rosenthal LLP, the Debtors' regular counsels, have pre-Commencement Date client relationships with Liberty Mutual, so that those firms and the Debtors have determined that the Debtors should employ special counsel to handle all matters relating to the Policies. The Debtors say that they chose Leach Travell because of, among other things, Leach Travell's experience and expertise in the field of business reorganizations under Chapter 11 of the Bankruptcy Code, the Firm's experience and expertise in representing debtors-in-possession, and the Firm's ability to respond promptly and efficiently to the legal issues that may arise in connection with the Debtors' relationship with Liberty Mutual or other matters. As the Debtors' special counsel, Leach Travell will be (a) acting as conflicts counsel to the Debtors in connection with matters that cannot be appropriately handled by Sonnenschein Nath or Kutak Rock because of a conflict of interest or otherwise; and (b) performing all other necessary or otherwise beneficial legal services for the Debtors in connection with the prosecution of the Chapter 11 cases. Leach Travell will be paid based on its hourly rates and will be reimbursed for its necessary out-of-pocket expenses: Principal $415 Associates $300 Paraprofessionals $100 Stephen E. Leach, Esq., a principal of Leach Travell, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Movie Gallery Based in Wilsonville, Ore., Movie Gallery, Inc., is the second largest North American video and game rental company, operating stores in the U.S. and Canada under the Movie Gallery, Hollywood Video and Game Crazy brands. Movie Gallery first filed for Chapter 11 on Oct. 16, 2007 (Bankr. E.D. Va. Case Nos. 07-33849 to 07-33853). Kirkland & Ellis LLP and Kutak Rock LLP represented the Debtors. The Company emerged from bankruptcy on May 20, 2008, with private-investment firms Sopris Capital Advisors LLC and Aspen Advisors LLC as its principal owners. William Kaye was appointed plan administrator and litigation trustee. Movie Gallery returned to Chapter 11 protection on February 3, 2009 (Bankr. E.D. Va. Case No. 10-30696). Attorneys at Sonnenschein Nath & Rosenthal LLP and Kutak Rock LLP represent the Debtors in their second restructuring effort. Kurtzman Carson Consultants serves as claims and notice agent. Bankruptcy Creditors' Service, Inc., publishes Movie Gallery Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Movie Gallery Inc. and its various affiliates (http://bankrupt.com/newsstand/or 215/945-7000). NATION ENERGY: Files 10-K for FY 2007; Going Concern Doubt Raised ----------------------------------------------------------------- Nation Energy, Inc., filed on August 16, 2010, its annual report on Form 10-K for the year ended March 31, 2007. Stark, Winter, Schenkein & Co, LLP, in Denver, Colo., 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, has no current source of operating revenues, and needs to secure financing to remain a going concern. The Company reported a net loss of $217,672 on $263,651 of revenue for the fiscal 2007, compared with a net loss of $488,771 on $511,500 of revenue for fiscal 2006. The Company's balance sheet as of March 31, 2007, showed $1.5 million in total assets, $1.7 million in total liabilities, and a stockholders' deficit of $242,113. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?69a2 About Nation Energy Vancouver, Canada-based Nation Energy Inc. has existed as a shell corporation and has conducted no business since the sale of all of its oil and gas operations effective June 1, 2008. The Company is currently reviewing new business opportunities in the resource sector. NEFF CORP: Selects Wayzata to Sponsor Plan of Reorganization ------------------------------------------------------------ BankruptcyData.com reports that Neff Corp. announced that it had selected an affiliate of Wayzata Investment Partners as the successful bidder to sponsor Neff's Plan of Reorganization at a U.S. Bankruptcy Court-approved auction conducted as a part of Neff's prearranged reorganization proceedings. Neff also announced that it had designated a bid submitted by a group composed of an affiliate of Odyssey Investment Partners and certain of Neff's second lien lenders as the backup bid submitted at the auction. Neff has also filed with the Court a Second Amended Joint Plan to incorporate the terms of Wayzata's successful bid. As a result of the auction, cash recoveries available to Neff's second lien lenders have increased from $10 million to $73 million. In addition, first lien term loan lenders may elect to receive payment in full in cash or participate in a rights offering for up to $181.6 million. The rights offering is fully backstopped by Wayzata. "I am pleased with the auction results and the additional value for our stakeholders generated by the auction. I look forward to working with Wayzata Investment Partners to build long term value for Neff and its stakeholders," said Graham Hood, Neff's chief executive officer. The deadline to vote on Neff's Plan is September 1, 2010, with Neff's confirmation hearing scheduled to occur on September 14, 2010. About Neff Corp. Privately held Neff Corp., doing business as Neff Rental, provides construction companies, golf course developers, industrial plants, the oil industry, and governments with reliable and quality equipment that is delivered on time where it is needed. With more than 1,000 employees operating from branches coast to coast, Neff Rental is ranked by Rental Equipment Register (RER) magazine as one of the nation's 10 largest equipment rental companies. Neff Corp. and its units, including Neff Rental Inc. filed for Chapter 11 on May 17, 2010 (Bankr. S.D.N.Y. Case No. 10-12610). Based in Miami, Neff has assets of $299 million and debt of $609 million, according to the disclosure statement explaining the plan. Funded debt totals $580 million. Revenue in 2009 was $192 million. NEOMEDIA TECHNOLOGIES: Earns $9.5 Million in Q2 Ended June 30 ------------------------------------------------------------- NeoMedia Technologies, Inc., filed its quarterly report on Form 10-Q, reporting net income of $9.5 million on $221,000 of revenue for the three months ended June 30, 2010, compared with net income of $78.1 million on $136,000 of revenue for the same period of 2009. For the three months ended June 2010 and 2009, respectively, the Company's loss from operations increased to $1.8 million, from $1.5 million. The Company's balance sheet as of June 30, 2010, showed $9.0 million in total assets, $58.3 million in total liabilities, $8.6 million in Series C convertible preferred stock, $2.5 million in Series D convertible preferred stock, and a stockholders' deficit of $60.4 million. As reported in the Troubled Company Reporter on April 1, 2010, Kingery & Crous, P.A., in Tampa, Fla., 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 the Company has suffered recurring losses from operations and has ongoing requirements for additional capital investment. The Company discloses in its latest 10-Q that it currently does not have sufficient cash to sustain it for the next twelve months. "Should our lender YA Global Investments, L.P. choose not to provide us with capital financing, or if we do not find alternative sources of financing to fund our operations, or if we are unable to generate significant product revenues, we only have sufficient funds to sustain our current operations through approximately September 15, 2010. We do not have a commitment for any additional financing." A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?6992 About NeoMedia Technologies Atlanta, Ga.-based NeoMedia Technologies, Inc., provides mobile barcode scanning solutions. The Company's technology allows mobile devices with cameras to read 1D and 2D barcodes and provide "one click" access to mobile content. NOVADEL PHARMA: Posts $1.1 Million Net Loss in Q2 Ended June 30 --------------------------------------------------------------- NovaDel Pharma Inc. filed its quarterly report on Form 10-Q, reporting a net loss of $1.1 million on $66,000 of revenue for the three months ended June 30, 2010, compared with a net loss of $1.7 million on $67,000 revenue for the same period of 2009. As of June 30, 2010, the Company had cash and cash equivalents of $3.1 million, negative working capital of $2.0 million, and an accumulated deficit was $85.2 million. For the quarter ended June 30, 2010, the loss from operations was $1.3 million as compared to $1.5 million for the quarter ended June 30, 2009. Steven B. Ratoff, Chairman and CEO said, "I am pleased with the progress made during the second quarter in managing our expenses as we move forward with the development of Duromist(TM). Our pilot pharmacokinetic trial for Duromist(TM) was initiated on July 31, 2010. We also look forward to the commercialization of NitroMist(R) and Zolpimist(TM) by our licensees, which we expect later this year." The Company's balance sheet as of June 30, 2010, showed $3.6 million in total assets and $9.5 million in total liabilities, and a stockholders' deficit of $5.8 million. As reported in the Troubled Company Reporter on April 6, 2010, J.H. Cohn LLP, in Roseland, 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 of the Company's recurring losses from operations and negative cash flows from operating activities. The Company acknowledges in its latest 10-Q that based on its operating plan, it expects that its existing cash and cash equivalents, along with the milestone payments it expects to receive under its existing license agreements, will fund its operations only through December 31, 2010. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?699b Bridgewater, N.J.-based NovaDel Pharma Inc. (OTC BB: NVDL) -- http://www.novadel.com/-- is a specialty pharmaceutical company developing oral spray formulations for a broad range of marketed pharmaceuticals. OMNICRAFT WOODWORKING: Case Summary & 20 Largest Unsec Creditors ---------------------------------------------------------------- Debtor: Omnicraft Woodworking, LLC 29 Broadway New York, NY 10006 Bankruptcy Case No.: 10-14398 Chapter 11 Petition Date: August 17, 2010 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: Martin Glenn Debtor's Counsel: Avrum J. Rosen, Esq. THE LAW OFFICES OF AVRUM J. ROSEN, PLLC 38 New Street Huntington, NY 11743 Tel: (631) 423-8527 Fax: (631) 423-4536 E-mail: ajrlaw@aol.com Scheduled Assets: $901,883 Scheduled Debts: $2,982,714 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nysb10-14398.pdf The petition was signed by Walter Pliszak, member. ORLEANS HOMEBUILDERS: Wants to Surrender Life Insurance Policies ---------------------------------------------------------------- BankruptcyData.com reports that Orleans Homebuilders filed with the U.S. Bankruptcy Court a motion seeking an order, pursuant to Bankruptcy Code Section 363, for the authority to surrender certain life insurance policies in exchange for their cash surrender value. According to the motion, as of July 31, 2010, the policies had a cash surrender value of $3.9 million. A hearing on the matter is scheduled for September 8, 2010. About Orleans Homebuilders Orleans Homebuilders, Inc. -- aka FPA Corporation, OHB, Parker & Lancaster, Masterpiece Homes, Realen Homes and Orleans -- develops, builds and markets high-quality single-family homes, townhouses and condominiums. From its headquarters in suburban Philadelphia, the Company serves a broad customer base including first-time, move-up, luxury, empty-nester and active adult homebuyers. The Company currently operates in these 11 distinct markets: Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North Carolina; Richmond and Tidewater, Virginia; Chicago, Illinois; and Orlando, Florida. The Company's Charlotte, North Carolina operations also include adjacent counties in South Carolina. Orleans Homebuilders employs approximately 300 people. The Company filed for Chapter 11 bankruptcy protection on March 1, 2010 (Bankr. D. Del. Case No. 10-10684). Cahill Gordon & Reindell LLP is the Debtor's bankruptcy and restructuring counsel. Curtis S. Miller, Esq., and Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, are the Debtor's Delaware and restructuring counsel. Blank Rome LLP is the Debtor's special corporate counsel. Garden City Group Inc. is the Debtor's claims and notice agent. The Company estimated assets and debts at $100 million to $500 million. PETER LAHNER: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------- Joint Debtors: Peter G. Lahner Brenda M. Lahner 1056 Tahoe Boulevard Incline Village, NV 89451 Bankruptcy Case No.: 10-53281 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtors' Counsel: Stephen R. Harris, Esq. BELDING, HARRIS & PETRONI, LTD 417 W. Plumb Lane Reno, NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 E-mail: steve@renolaw.biz Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Joint Debtors' 14 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nvb10-53281.pdf PHILADELPHIA NEWSPAPERS: Pension Funds Agree to $1.5MM Settlement ----------------------------------------------------------------- Philadelphia Inquirer staff writer Andrew Maykuth reports that the employee pension plans at Philadelphia Newspapers L.L.C. have agreed to accept $1.5 million to settle their claims against the bankrupt media company, resolving an issue that had hung over the company's reemergence under new ownership. As reported by the Troubled Company Reporter on July 12, 2010, Chief Bankruptcy Judge Stephen Raslavich denied a request by employee pension plans to put Philadelphia Newspapers' reorganization on hold while the pension plans appeal the bankruptcy plan in U.S. District Court. The funds oppose the reorganization because the new owners will be absolved of responsibility for funding pension shortfalls. According to Mr. Maykuth, seven union pension plans had said they were owed $12 million to cover funding shortfalls that had accrued since the company -- owner of The Inquirer, the Philadelphia Daily News, and Philly.com -- filed for bankruptcy in February 2009. The company's lenders are in the process of taking possession of the company, which they plan to rename Philadelphia Media Network Inc. Mr. Maykuth reports that as part of the settlement, the pension plans agreed to drop their appeals of the reorganization plan, which absolves the new owners of responsibility for keeping the pensions funded in the future. The pension funds and the newspaper's owners agreed to "fully and finally" settle the issues rather than engage in a protracted legal battle, according to papers filed with the U.S. Bankruptcy Court. The company asked the court on Friday to schedule a hearing for Thursday to accept the settlement. According to Mr. Maykuth, the position of the pension plans was weakened in July when Judge Raslavich denied their request to delay the reorganization pending appeal. Under a reorganization plan that Judge Raslavich confirmed in June, the Debtor is being sold for $139 million to 16 financial institutions that were among its senior lenders. The report relates that after meeting privately with labor and management representatives last week Tuesday, Judge Raslavich said he was "encouraged" to learn that most of the unions had reached contract agreements with the new owners, removing some of the last impediments to an ownership transfer. The report says Judge Raslavich offered to act as a mediator to resolve the unsettled contracts. "I'm hopeful the parties will reach an amicable resolution of those issues," he said. According to Mr. Maykuth, the new owners have received concessions from the unions, including wage reductions, furloughs, longer workweeks, and changes in work rules. Rather than contributing to the pension plans, the company will offer union members a 50 percent match for up to 6 percent of pay contributed to a company- sponsored 401(k). The company's largest union, the Newspaper Guild, has agreed to a three-year pact that includes a 2% across-the-board pay cut and 10 unpaid furlough days a year, equivalent to an additional 4% cut. The Guild, which represents journalists and advertising and circulation staff, has scheduled a ratification vote for today, August 24. The TCR, citing Dow Jones, reported that the Chapter 11 plan provides a slight recovery for some lower classes of creditors, despite the fact that the senior secured lenders, which fall ahead in the line to be paid, are owed $318 million, far more than their $135 million offer will cover. Certain holders of pre-bankruptcy mezzanine debt and unsecured creditors are slated to share in a liquidation trust containing proceeds from avoidance actions, and the holders of mezzanine claims will see 2.3% of equity in the new company as well. The lenders will be repaid with their choice of equity in the new company or a cash distribution. Philadelphia Newspapers' plan also contemplates a $39.3 million bankruptcy exit loan from a group of lenders led by Bank of Utah. The money will help pay for the costs accrued since Feb. 22, 2009, when the Debtors filed for bankruptcy protection, and provide the company with working capital moving forward. The reorganized company will be known as Philadelphia Media Network Inc. and led by publisher and Chief Executive Greg Osberg, a former president and publisher of Newsweek, and chief operating chief Bob Hall, who was once publisher of the Inquirer and Daily News. Bruce Meier, an executive with restructuring firm Alvarez & Marsal, who had served as a consultant for Philadelphia Newspapers, will serve as its chief financial officer. About Philadelphia Newspapers Philadelphia Newspapers -- http://www.philly.com/-- owns and operates numerous print and online publications in the Philadelphia market, including the Philadelphia Inquirer, the Philadelphia Daily News, several community newspapers, the region's number one local Web site, philly.com, and a number of related online products. The Company's flagship publications are the Inquirer, the third oldest newspaper in the country and the winner of numerous Pulitzer Prizes and other journalistic recognitions, and the Daily News. Philadelphia Newspapers and its debtor-affiliates filed for Chapter 11 bankruptcy protection on February 22, 2008 (Bankr. E.D. Pa. Case No. 09-11204). Mark K. Thomas, Esq., and Paul V. Possinger, Esq., at Proskauer Rose LLP in Chicago, Illinois; and Lawrence G. McMichael, Esq., Christie Callahan Comerford, Esq., and Anne M. Aaronson, Esq., at Dilworth Paxson LLP, in Philadelphia, Pennsylvania, serve as bankruptcy counsel. The Debtors' financial advisor is Jefferies & Company Inc. The Garden City Group, Inc., serves as claims and notice agent. Ben Logan, Esq., at O'Melveny & Myers LLP in Los Angeles, California; and Gary Schildhorn, Esq., at Eckert Seamans Cherin & Mellott, LLC in Philadelphia, represent the Official Committee of Unsecured Creditors. Fred S. Hodara, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP in New York, represent the Steering Group of Prepetition Secured Lenders. Philadelphia Newspapers estimated $100 million to $500 million in both assets and debts its bankruptcy petition. POWER EFFICIENCY: Posts $1.4 Million Net Loss in Q2 Ended June 30 ----------------------------------------------------------------- Power Efficiency Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $1.4 million on $125,575 of revenue for the three months ended June 30, 2010, compared with a net loss of $359,594 on $75,393 of revenue for the same period of 2009. The Company's balance sheet as of June 30, 2010, showed $6.6 million in total assets, $1.4 million in total liabilities, and a stockholders' equity of $5.2 million. As reported in the Troubled Company Reporter on April 6, 2010, Sobel & Co., LLC, in Livingston, N.J., 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 the Company has experienced a deficiency of cash from operations. The Company discloses in its latest 10-Q that it experienced a $1.1 million deficiency of cash from operations for the six months ended June 30, 2010, and expects significant cash deficiencies from operations until the Company's sales and gross profit grow to exceed its cash needs. About Power Efficiency Las Vegas, Nev.-based Power Efficiency Corporation (OTC BB: PEFF) -- http://www.powerefficiency.com/-- is a clean technology company focused on efficiency technologies for electric motors. PURADYN FILTER: Posts $436,200 Net Loss in Q2 Ended June 30 ----------------------------------------------------------- Puradyn Filter Technologies Incorporated filed its quarterly report on Form 10-Q, reporting a net loss of $436,223 on $761,341 of revenue for the three months ended June 30, 2010, compared with a net loss of $450,978 on $729,131 of revenue for the same period of 2009. Sales to two customers accounted for $342,981, or 45% of net sales for the three-months ended June 30, 2010. For the three-months ended June 30, 2009, sales to two customers accounted for 59% of net sales. The Company's balance sheet as of June 30, 2010, showed $1.8 million in total assets, $8.0 million in total liabilities, and a stockholders' equity of $6.2 million. As reported in the Troubled Company Reporter on April 24, 2010, Webb and Company, P.A., in Boynton Beach, Fla., 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 the Company has suffered recurring losses from operations, its total liabilities exceed its total assets, and it has relied on cash inflows from an institutional investor and current stockholder. About Puradyn Filter Boynton Beach, Fla.-based Puradyn Filter Technologies Incorporated (OTC BB: PFTI) -- http://www.puradyn.com/-- designs, manufactures, markets and distributes worldwide the puraDYN(R) bypass oil filtration system for use with substantially all internal combustion engines and hydraulic equipment that use lubricating oil. RANCHER ENERGY: Vander Ploeg Owns 5.9% of Common Stock ------------------------------------------------------ Andrew P. Vander Ploeg, currently a Trader with Wilson Davis & Co., discloses that as of August 13, 2010, he may be deemed to beneficially own 7,000,000, or 5.9%, of Rancher Energy Corp.'s $0.00001 par value common stock. A full-text copy of Mr. Vander Ploeg's Schedule 13D is available for free at http://researcharchives.com/t/s?6999 About Rancher Energy Denver, Colo.-based Rancher Energy Corp. (OTC BB: RNCHQ) -- http://www.rancherenergy.com/-- is an independent energy company that explores for and develops produces, and markets oil and gas in North America. The Company operates four fields in the Powder River Basin, Wyoming, which is located in the Rocky Mountain region of the United States. The Company was formerly known as Metalex Resources, Inc. and changed its name to Rancher Energy Corp. in 2006. Rancher Energy Corp. was incorporated in the State of Nevada on February 4, 2004. Rancher Energy filed for Chapter 11 bankruptcy protection on October 28, 2009 (Bankr. D. Colo. Case No. 09-32943). Herbert A. Delap, Esq., who has an office in Denver, Colorado, assists the Debtor in its restructuring efforts. In its petition, the Company estimated assets and debts of between $10 million and $50 million each. On May 26, 2010, the Company filed its second motion to extend exclusive period to file a reorganization plan through August 24, 2010 and the exclusive period to solicit acceptance of a plan through October 22, 2010. The motion is currently under consideration by the Bankruptcy Court. The Company's balance sheet as of June 30, 2010, showed $18.37 million in total assets, $15.23 million in total liabilities, and a stockholders' equity of $3.14 million. REMOTEMDX INC: Posts $2.05MM Net Loss in June 30 Quarter -------------------------------------------------------- RemoteMDx, Inc., now known as SecureAlert, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report for period ended June 30, 2010. For three months ended June 30, 2010, the Company posted net loss of $2,054,238 compared with net loss of $5,032,308 for the same period ended June 31, 2009. For nine months ended June 30, the Company posted net loss of $11,084,874 compared with net loss of $14,037,457 for the same period ended June 2009. The Company's balance sheet at June 30, 2010, showed total assets of $12,344,022, total liabilities of $8,474,692 and a stockholder's equity of $3,869,330. The Company related that its is unable to finance its business solely from cash flows from operating activities. During the nine months ended June 30, it supplemented cash flows to finance its business from the issuance of debt and equity securities, providing net cash proceeds from financing activities of $7,507,554. As of June 30, the Company had unrestricted cash of $1,879,955 and a working capital deficit of $3,831,420, compared to unrestricted cash of $602,321 and a working capital deficit of $16,476,897 as of September 2009. The improvement in working capital deficit is due to the conversion of $16,910,753 in debt in exchange for shares of its Series D Preferred stock. For the nine months ended June 30, its operating activities used cash of $4,484,573, compared to $6,705,204 of cash used in operating activities for the nine months ended June 2009. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?694f About RemoteMDx Inc. Headquartered in Sancy, Utah, RemoteMDx Inc. (OTCBB: RMDX), http://www.remotemdx.com/-- markets and deploys offender management programs, combining patented GPS tracking technologies, fulltime 24/7/365 intervention-based monitoring capabilities and case management services. Going Concern Doubt Hansen, Barnett & Maxwell, P.C., in Salt Lake City, expressed substantial doubt about RemoteMDx, Inc., and subsidiaries' ability to continue as a going concern after auditing the Company's consolidated financial statements as of and for the years ended September 30, 2009, and 2008. The independent public accounting firm reported that the Company has incurred losses and has an accumulated deficit. RIDDHI SIDDHI: Case Summary & 5 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Riddhi Siddhi, LLC 10870 Crain Highway Faulkner, MD 20632 Bankruptcy Case No.: 10-28919 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: Richard M. McGill, Esq. LAW OFFICES OF RICHARD M. MCGILL P.O. Box 358 5303 West Court Drive Upper Marlboro, MD 20773 Tel: (301) 627-5222 E-mail: mcgillrm@aol.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mdb10-28919.pdf The petition was signed by Hement Vaidya, managing member. ROTHSTEIN ROSENFELDT: Chapter 11 Trustee Probes Fla. Steakhouse --------------------------------------------------------------- Jacqueline Palank at Dow Jones Daily Bankruptcy Review reports that Herbert Stettin -- the Chapter 11 trustee overseeing the bankruptcy estate of Scott Rothstein's Rothstein Rosenfeldt Adler PA law firm -- last week filed court papers with the U.S. Bankruptcy Court in Fort Lauderdale, Fla., directing a representative of the Florida Capital Grille steakhouse chain to appear for a deposition on Sept. 7. Mr. Stettin also wants the Capital Grille to turn over any documents it has related to the law firm's bank accounts, canceled checks, debt and credit advices, deposit slips and details. The documents he's seeking stretch back to 2005. The report notes the restaurant was the site of a fundraiser sponsored by Levinson Jewelers in Plantation, Fla., which counted Mr. Rothstein as one of its biggest -- and one of its most problematic -- customers. Mr. Rothstein and wife Kimberly were guests at the 2008 event, which raised more than $16,000 for Operation Iraqi Children and featured appearances by actors Gary Sinise and Stephen Baldwin. The restaurant was where Mr. Rothstein was spotted sipping a martini last fall upon his return to the U.S. after a suspicious and abrupt trip to Morocco. The Broward-Palm Beach New Times sat down with Mr. Rothstein and his attorney there, where the lawyer pledged to fix his mistakes -- referring, of course, to the Ponzi scheme that bilked investors out of more than $1 billion. His lawyer also insisted that Mr. Rothstein wasn't working with federal investigators. But Mr. Rothstein's appearance at his regular spot, according to Dow Jones, was more than a chance to drown his sorrows in a drink as federal agents seized his belongings. It was a bid to show that nothing was amiss -- because Mr. Rothstein was, in fact, cooperating with the feds. His undercover work, the Sun-Sentinel reported, allowed him to gather enough evidence to bring down a reputed Mafia figure before his Dec. 1 arrest. About Rothstein Rosenfeldt Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler PA, has been suspected of running a $1.2 billion Ponzi scheme. U.S. authorities claimed in a civil forfeiture lawsuit filed November 9, 2009, that Mr. Rothstein, the firm's former chief executive officer, sold investments in non-existent legal settlements. Mr. Rothstein pleaded guilty to five counts of conspiracy and wire fraud on January 27, 2010. Creditors of Rothstein Rosenfeldt Adler signed a petition sending the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No. 09-34791). The petitioners include Bonnie Barnett, who says she lost $500,000 in legal settlement investments; Aran Development, Inc., which said it lost $345,000 in investments; and trade creditor Universal Legal, identified as a recruitment firm, which said it is owed $7,800. The creditors alleged being owed money invested in lawsuit settlements. Herbert M. Stettin, the state-court appointed receiver for Rothstein Rosenfeldt, was officially carried over as the Chapter 11 trustee in the involuntary bankruptcy case. On June 10, 2010, Mr. Rothstein was sentenced to 50 years in prison. ROYAL HOSPITALITY: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Royal Hospitality LLC dba Comfort Suites 1533 State Route 9 Lake George, NY 12845 Bankruptcy Case No.: 10-13090 Chapter 11 Petition Date: August 19, 2010 Court: U.S. Bankruptcy Court Northern District of New York (Albany) Judge: Robert E. Littlefield Jr. Debtor's Counsel: Richard L. Weisz, Esq. HODGSON RUSS LLP 677 Broadway Albany, NY 12207 Tel: (518) 465-2333 E-mail: Rweisz@hodgsonruss.com Scheduled Assets: $13,432,001 Scheduled Debts: $11,154,770 The petition was signed by Marilyn E. Stark, member. Debtor's List of 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lumberjack Pass Amusements, LLC Claim for breach $1,070,000 4 Fisher Street of contract, loss Greenwich, NY 12834 of income Choice Hotels International Franchise Fee $20,790 P.O. Box 99992 Chicago, IL 60696-7792 Great Escape Ticket Sales - $15,825 P.O. Box 511 Lake George, NY 12845 John H. Richards, Esq. Attorneys' Fees $11,543 Warren County Treasurer Occupancy Tax $8,451 Choice Hotels International Travel Agent $5,847 Travel Agent Program Commissions Leland Paper Company, Inc. Supplies $2,501 American Hotel Register Company Supplies $1,393 Autocrat, Inc. Coffee, Supplies $1,333 U.S. Food Service, Inc. Food $1,172 American Lawn Landscape Landscaping $971 Mead's Nursery Services $853 Simplex Grinnell Security Services $600 Lake George Regional Chamber Membership $550 Services, Dues Oreck Commercial Sales Vacuum Cleaners $359 Ormondo S. Leombruno, CPA, PC Accounting Services $255 North Country Janitorial, Inc. Janitorial Services $154 NYS Department of Labor Audit Pending $1 NYS Department Taxation & Finance Audit Pending $1 RUSSEL METALS: Moody's Raises Rating on Senior Notes to 'Ba1' ------------------------------------------------------------- Moody's Investors Service raised the rating for Russel Metals' US$175 million of 6.375% senior unsecured notes to Ba1 from Ba2, and affirmed the company's corporate family rating and probability of default rating at Ba1. The rating outlook is stable. The upgrade of the senior unsecured notes to Ba1, equal to the corporate family rating, follows a recent review of Russel Metals' debt capitalization and its non-debt liabilities, and the application of Moody's loss-given-default assumptions. The upgrade recognizes the senior unsecured notes' higher seniority position and priority of payment in the company's capital structure in relation to the C$175 million of senior convertible unsecured subordinated debentures, which in the event of default would disproportionately absorb creditor losses. Ratings Rationale The Ba1 corporate family rating reflects Russel Metals' solid market position in the Canadian metal service center industry, its size and scale, a history of stable cash flow generation, relatively low leverage, counter-cyclical working capital investment that enhances liquidity in down markets, and a disciplined and successful acquisition track record. However, the rating also reflects the company's exposure to highly volatile end-markets and pricing, and, therefore, volatile earnings generation as evidenced in 2009 and 2010. End-market demand has improved in all of Russel Metals' segments in the first half of 2010 compared to 2009, although conditions remain at historically low levels. Excluding inventory write- downs/reversals, the company has been able to generate positive operating profit and improve margins. In Moody's view, Russel Metals should be able to continue recording year-over-year operating and financial improvements for the remainder of 2010 and into 2011 as industry conditions slowly and gradually stabilize. Given current weakened conditions in the company's end-markets of steel and energy, upward pressure on the ratings is unlikely in the near future. Additionally, the secured nature of Russel Metals' credit facility is an impediment to an upgrade since Moody's believes that a capital structure with sizable secured debt, and therefore multiple classes of creditors, is incompatible with an investment grade rating profile. Should the company's credit metrics remain weak for a prolonged period of time, namely if adjusted debt to EBITDA remains above 3.0x, and EBIT interest coverage below 4.0x, negative rating pressure could develop. Upgrades: Issuer: Russel Metals, Inc. -- Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1, LGD4, 58% from Ba2, LGD5, 74% Moody's previous rating action for Russel Metals was on March 20, 2006, when its corporate family rating was raised to Ba1 from Ba2, the rating for its senior unsecured notes was raised to Ba2 from Ba3, and the rating outlook was changed to stable from under review for a possible upgrade. Russel Metals' ratings have been assigned by evaluating factors that Moody's believe are relevant to the company's risk profile, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside Russel Metals' core industry; Russel Metals' ratings are believed to be comparable to those of other issuers with similar credit risk. Russel Metals, headquartered in Mississauga, Ontario, is a leading metal distributor in North America, operating in three distinct metal distribution segments: Metals Service Centers, Energy Tubular Products, and Steel Distributors. In the twelve months ended June 30, 2010, the company generated approximately C$1.9 billion in revenues. SAINT VINCENTS: CRO Blocks Plan to Open Urgent-Care Clinic ---------------------------------------------------------- Anemona Hartocollis at The New York Times reports that negotiations to open an urgent-care center at the St. Vincent's Hospital have been stalled by a dispute over financial terms and by demands by former officials of the Roman Catholic hospital that birth control not be made available there, officials close to the negotiations said on Thursday. According to the NY Times, the officials said the North Shore-Long Island Jewish Health System, the Long Island-based hospital organization that has a $9.4 million state grant to run the urgent-care center, staffed by medical workers from Lenox Hill Hospital, had hoped to open the urgent-care center by the end of this month. The report says the plan was for North Shore-Long Island Jewish Health System to temporarily put the clinic in the former emergency room of St. Vincent's Hospital until the building was sold or a permanent site could be found. The NY Times further relates that two officials close to the negotiations, who spoke on the condition of anonymity because of the sensitivity of the talks, said the plan had been blocked by the demands of St. Vincent's restructuring officers. They said that those officers were asking for higher-than-market rent and for a huge financial penalty if the urgent-care center failed to move out immediately if a buyer were found for the hospital building. The NY Times says Mark E. Toney, the chief restructuring officer at St. Vincent's, did not return a call for comment Thursday. The report notes Veronica Sullivan, a spokeswoman for the hospital, said that any lease agreement would need the approval of the hospital's creditors and the bankruptcy court. She added that because the property is linked to a Catholic organization, the clinic would have to "adhere to Catholic directives." About Saint Vincent Catholic Medical Centers Saint Vincent Catholic Medical Centers -- http://www.svcmc.org/-- is anchored by St. Vincent's Hospital Manhattan, an academic medical center located in Greenwich Village and the only emergency room on the Westside of Manhattan from Midtown to Tribeca, St. Vincent's Westchester, a behavioral health hospital in Westchester County, and continuing care services that include two skilled nursing facilities in Brooklyn, another on Staten Island, a hospice, and a home health agency serving the Metropolitan New York area. Its behavioral health services also provide supportive housing programs for people with mental illness throughout the Metropolitan area. Saint Vincent's is the designated provider for the New York and New Jersey region of the US Family Health Plan sponsored by the US Department of Defense. Saint Vincent's serves as the academic medical center of New York Medical College in New York City. The healthcare organization is sponsored by the Roman Catholic Bishop of Brooklyn and the president of the Sisters of Charity of New York. Saint Vincent Catholic Medical Centers of New York and six of its affiliates filed for Chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' Chapter 11 cases. On September 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represented the Official Committee of Unsecured Creditors. As of April 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. The Court confirmed the Debtors' Chapter 11 plan on July 27, 2007. St. Vincent Catholic Medical Centers and its affiliates returned to the bankruptcy court by filing another Chapter 11 petition on April 14, 2010 (Bankr. S.D.N.Y. Case No. 10-11963). The new petition listed assets of $348 million against debt totaling $1.09 billion. Adam C. Rogoff, Esq., and Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, assist the Debtors in their restructuring effort. The Debtors' special counsel is Garfunkel Wild, P.C., while their Crisis Management Team is led by Grant Thornton LLP. The Debtors' Chief Restructuring Officer is Mark E. Toney. SARATOGA RESOURCES: Posts $8.4 Million Net Loss in Q2 2010 ---------------------------------------------------------- Saratoga Resources, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $8.4 million on $13.7 million of revenue for the three months ended June 30, 2010, compared with a net loss of $7.2 million on $11.7 million of revenue for the same period of 2009. The Company's balance sheet at June 30, 2010, showed $155.8 million in total assets, $156.4 million in total liabilities, and a stockholders' deficit of $594,618. The Company discloses in its latest 10-Q that while it exited from Chapter 11 in May 2010, the realization of assets and satisfaction of liabilities, without substantial adjustments and changes in ownership, are subject to uncertainty. "Accordingly, there is substantial doubt about the current financial reporting entity's ability to continue as a going concern." A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?69ab About Saratoga Resources Saratoga Resources, Inc. -- http://www.saratogaresources.net/-- is an independent exploration and production company with offices in Houston, Texas, and Covington, Louisiana with 30 full-time employees, supplemented by field-based contract operations personnel. Principal holdings cover 33,625 gross (32,527 net) acres, mostly held-by-production, located in the state waters offshore Louisiana. Saratoga's stock currently trades on the OTC Bulletin Board under the symbol "SROE". Saratoga Resources, Inc., and certain operating subsidiaries filed on March 31, 2009, voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Western District of Louisiana in Lafayette, Louisiana. Saratoga is being advised by its legal counsel, Adams & Reese LLP; its investment banker, Pritchard Capital Partners LLC; and its financial advisor, Ambrose Consulting LLC. The case is In Re Harvest Oil and Gas, LLC (Bankr. W.D. La. Lead Case No. 09-50397). Robin B. Cheatham, Esq., at Adams & Reese LLP, represented the Debtors in their restructuring effort. The Debtors each estimated between $100 million and $500 million in assets and debts in their Chapter 11 petitions. On April 19, 2010, the U.S. Bankruptcy Court entered an order confirming the Modified Third Amended Plan and, on May 14, 2010, the Company satisfied all of the conditions set forth in the Modified Third Amended Plan of Reorganization, the Modified Third Amended Plan became effective and the Company exited from bankruptcy. SBBA 2005: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: SBBA 2005 LLC 14803 15th Avenue NE, Suite 200 Shoreline, WA 98155 Bankruptcy Case No.: 10-19788 Chapter 11 Petition Date: August 19, 2010 Court: U.S. Bankruptcy Court Western District of Washington (Seattle) Judge: Samuel J. Steiner Debtor's Counsel: Justin Elsner, Esq. ELSNER LAW FIRM LLC 14803 15th Avenue NE, Suite 201 Shoreline, WA 98155 Tel: (206) 447-1425 Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Steven Hartley, member. SCHOLASTIC CORP: Credit Facility Change Won't Move Moody's Rating ----------------------------------------------------------------- Moody's Investors Service said Scholastic Corporation's Ba2 Corporate Family Rating and positive rating outlook are not affected by the amendment to its credit facility providing additional restricted payments flexibility. However, Moody's believes the amendment suggests a cash distribution to shareholders is being contemplated, and a sizable distribution could prompt a return of the rating outlook to stable if funded largely with debt instead of cash and free cash flow. The last rating action was on February 26, 2010, when Moody's changed Scholastic's rating outlook to positive from stable and affirmed the Ba2 CFR as well as the company's other ratings. Scholastic's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (iii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside Scholastic's core industry and believes Scholastic's ratings are comparable to those of other issuers with similar credit risk. Scholastic, headquartered in New York, N.Y., is a publisher and distributor of children's books, classroom and professional magazines, educational technology, and instructional materials, with operations in the United States, Canada, the United Kingdom, Australia, New Zealand and Southeast Asia. Revenue for the FY ended May 31, 2010 was $1.9 billion. SEA ISLAND: Court Fixes December 14 as Claims Bar Date ------------------------------------------------------ The Hon. John S. Dalis of the U.S. Bankruptcy Court for the Southern District of Georgia has established December 14, 2010, as the deadline for filing proofs of claim and for approval of bar date notice and procedures of Sea Island Company, et al. Each person or entity that asserts a claim against the Debtors that arose prior to Petition Date may file a written proof of claim: if by regular mail: Sea Island Company Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC FDR Station, P.O. Box 5286 New York, NY 10150-5286 if by messenger or overnight delivery: Sea Island Company Claims Processing Center c/o Epiq Bankruptcy Solutions, LLC 757 Third Avenue, 3rd Floor New York, NY 10017 St. Simons Island, Georgia-based Sea Island Company -- http://www.seaisland.com/-- aka Sea Island Shooting School, Sea Island Yacht Club, Sea Island Stables, and Cabin Bluff, is a private resort and real estate development company founded in 1926. Sea Island Company owns and operates Sea Island Resorts, featuring two of the world's most exceptional destinations: the Forbes Five-Star Cloister at Sea Island and The Lodge at Sea Island. Sea Island is filing a Chapter 11 plan based upon an agreement to sell substantially all of its assets to Sea Island Acquisition LP, a limited partnership formed by investment funds managed by the global investment firms Oaktree Capital Management, L.P., and Avenue Capital Group. Sea Island filed for Chapter 11 protection on August 10, 2010 (Bankr. S.D. Ga. Case No. 10-21034). Sarah R. Borders, Esq.; Harris Winsberg, Esq.; Sarah L. Taub, Esq.; and Jeffrey R. Dutson, Esq., at King & Spalding LLP, assists the Debtor in its restructuring effort. Robert M. Cunningham, Esq., at Gilbert, Harrell, Sumerford & Martin PC, is the Debtor's co-counsel. FTI Consulting, Inc., is the Debtor's restructuring advisor. EPIQ Bankruptcy Solutions, LLC, is the Debtor's claims and notice agent. The Debtor estimated its assets and debts at $500 million to $1 billion as of the Petition Date. Affiliates Sea Island Coastal Properties, LLC; Sea Island Services, Inc.; Sea Island Resort Residences, LLC; Sea Island Apparel, LLC; First Sea Island, LLC; and Sical, LLC, filed separate Chapter 11 petitions on August 10, 2010. SEA ISLAND: Files Sale-Based Reorganization Plan ------------------------------------------------ Sea Island Company, et al., have filed a joint plan of reorganization and disclosure statement with the U.S. Bankruptcy Court for the Southern District of Georgia. The Debtors request that the Court establish these dates with respect to the approval of the Disclosure Statement and the confirmation of the Plan: Disclosure Statement Objections Deadline 9/14/10 Hearing to Approve Disclosure Statement 9/14/10 Ballot Submission Deadline 10/22/10 Confirmation Hearing 11/04/10 The Plan is premised on a sale of substantially all of the Debtors' assets through a court-approved auction process. The Debtors have received offers from several reputable potential purchasers and have signed an Asset Purchase Agreement with Sea Island Acquisition LP, as Stalking Horse Bidder. The Stalking Horse will pay to the Debtors' estates a cash purchase price of $197,500,000 and assume certain liabilities of the Debtors, absent higher and better offers. The Debtors anticipate that the Stalking Horse Agreement will yield gross proceeds to the estates in the amount of over $172,000,000 after payment of approximately $20,000,000 in Administrative Claims, DIP Facility Claims, Priority Tax Claims and Other Priority Claims. The Debtors further anticipate that they will have approximately $0 of cash on hand as of the closing. The purchase proceeds plus cash on hand will be used to make a distribution to holders of secured claims against the Debtors of approximately $170,000,000. The Plan also provides for a distribution to the holders of unsecured prepetition claims of their Pro Rata share of the General Unsecured Creditors Fund. The Plan also provides for a distribution to the holders of Accepting Unsecured Claims of their Pro Rata share of the Accepting Unsecured Creditors Fund, provided that (a) Classes 5 and 6 vote to accept the Plan and (b) an allocation of proceeds from the Sale under the Stalking Horse Agreement between encumbered and unencumbered property that is acceptable to the Secured Lenders. Copies of the Plan and disclosure statement are available for free at: http://bankrupt.com/misc/SEA_ISLAND_plan.pdf http://bankrupt.com/misc/SEA_ISLAND_ds.pdf Treatment of Claims Classification Treatment -------------- --------- Unclassified - Administrative Unimpaired; holders will receive Claims in full satisfaction, settlement, release, and extinguishment of the claim the amount of the unpaid allowed claim in cash Unclassified - DIP Facility 100% recovery Claims Unclassified - Priority Tax Unimpaired; 100% recovery Claims Class 1 - Miscellaneous Secured Unimpaired; 100% recovery Claims Class 2 - Secured Lender Claims Impaired; a holder will receive, in full satisfaction, settlement, release, and extinguishment of the claim its share of an amount equal to (i) the portion of the purchase price under the Stalking Horse Agreement allocated to the collateral in which the Secured Lender has a Lien, less (ii) certain amounts required to be paid by the Debtors under the Stalking Horse Agreement, less (iii) provided that (a) Classes 5 and 6 vote to accept the Plan and (b) an allocation of proceeds from the Sale under the Stalking Horse Agreement between encumbered and unencumbered property by the Debtors that is acceptable to the Secured Lenders, the Accepting Unsecured Creditor Fund, less (iv) an Amount necessary to pay Administrative Claims, the DIP Facility Claims, the Priority Tax Claims, Other Priority Claims, and Miscellaneous Secured Claims, to be distributed in accordance with the Prepetition Restructuring Agreement Class 3 -- Other Priority Unimpaired; 100% recovery Claims Class 4 - Accepting Unsecured Impaired; a holder will receive Claims its Pro Rata share of the Accepting Unsecured Creditors Fund (provided that (a) Classes 5 and 6 vote to accept the Plan and (b) an allocation of proceeds from the Sale under the Stalking Horse Agreement between encumbered and unencumbered property that is acceptable to the Secured Lenders, the Accepting Unsecured Creditor Fund). To the extent that the Allowed Accepting Unsecured Claims are not satisfied through The distribution of the Accepting Unsecured Creditors Fund, the remaining portion of the Allowed Accepting Unsecured Claims will be treated as Other General Unsecured Claims Class 5 - Other General Impaired; a holder will receive Unsecured Claims its Pro Rata Distribution of the General Unsecured Creditors Fund. On each subsequent Distribution Date or as soon thereafter as is reasonably practicable, the Liquidation Trustee will continue to make Pro Rata Distributions to the holders of any available funds in the General Unsecured Creditors Fund until the Consummation Date. Class 6 - Convenience Claims Impaired; a holder will receive, in full satisfaction, settlement, release, and extinguishment of the claim, cash in an amount equal to an agreed upon percentage of the allowed claim from the General Unsecured Claims Fund. Any holder of the claim in excess of the Convenience Class Cap may elect to reduce its claim to the Convenience Class Cap. Class 7 - Interests in the Impaired; 0% recovery Debtors About Sea Island St. Simons Island, Georgia-based Sea Island Company -- http://www.seaisland.com/-- aka Sea Island Shooting School, Sea Island Yacht Club, Sea Island Stables, and Cabin Bluff, is a private resort and real estate development company founded in 1926. Sea Island Company owns and operates Sea Island Resorts, featuring two of the world's most exceptional destinations: the Forbes Five-Star Cloister at Sea Island and The Lodge at Sea Island. Sea Island is filing a Chapter 11 plan based upon an agreement to sell substantially all of its assets to Sea Island Acquisition LP, a limited partnership formed by investment funds managed by the global investment firms Oaktree Capital Management, L.P., and Avenue Capital Group. Sea Island filed for Chapter 11 protection on August 10, 2010 (Bankr. S.D. Ga. Case No. 10-21034). Sarah R. Borders, Esq.; Harris Winsberg, Esq.; Sarah L. Taub, Esq.; and Jeffrey R. Dutson, Esq., at King & Spalding LLP, assists the Debtor in its restructuring effort. Robert M. Cunningham, Esq., at Gilbert, Harrell, Sumerford & Martin PC, is the Debtor's co-counsel. FTI Consulting, Inc., is the Debtor's restructuring advisor. EPIQ Bankruptcy Solutions, LLC, is the Debtor's claims and notice agent. The Debtor estimated its assets and debts at $500 million to $1 billion as of the Petition Date. Affiliates Sea Island Coastal Properties, LLC; Sea Island Services, Inc.; Sea Island Resort Residences, LLC; Sea Island Apparel, LLC; First Sea Island, LLC; and Sical, LLC, filed separate Chapter 11 petitions on August 10, 2010. SEA ISLAND: Taps Epiq as Claims, Noticing & Balloting Agent ----------------------------------------------------------- Sea Island Company, et al., ask for authorization from the U.S. Bankruptcy Court for the Southern District of Georgia to employ Epiq Bankruptcy Solutions, LLC, as claims, noticing, and balloting agent. Epiq will, among other things: (a) serve as the Debtors' noticing agent to mail certain notices to certain of the Debtors' creditors and other parties-in-interest; (b) provide computerized claims, schedule preparation and balloting database services; and (c) provide expertise and consultation and assistance in claim and ballot processing and with the dissemination of other administrative information related to the Debtors' Chapter 11 cases. Epiq will be compensated based on its pricing schedule, a copy of which is available for free at: http://bankrupt.com/misc/SEA_ISLAND_pricingsched.pdf Daniel C. McElhinney, Epiq's executive director, assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. St. Simons Island, Georgia-based Sea Island Company -- http://www.seaisland.com/-- aka Sea Island Shooting School, Sea Island Yacht Club, Sea Island Stables, and Cabin Bluff, is a private resort and real estate development company founded in 1926, Sea Island Company owns and operates Sea Island Resorts, featuring two of the world's most exceptional destinations: the Forbes Five-Star Cloister at Sea Island and The Lodge at Sea Island. Sea Island is filing a Chapter 11 plan based upon an agreement to sell substantially all of its assets to Sea Island Acquisition LP, a limited partnership formed by investment funds managed by the global investment firms Oaktree Capital Management, L.P., and Avenue Capital Group. Sea Island filed for Chapter 11 protection on August 10, 2010 (Bankr. S.D. Ga. Case No. 10-21034). Sarah R. Borders, Esq.; Harris Winsberg, Esq.; Sarah L. Taub, Esq.; and Jeffrey R. Dutson, Esq., at King & Spalding LLP, assists the Debtor in its restructuring effort. Robert M. Cunningham, Esq., at Gilbert, Harrell, Sumerford & Martin PC, is the Debtor's co-counsel. FTI Consulting, Inc., is the Debtor's restructuring advisor. The Debtor estimated its assets and debts at $500 million to $1 billion as of the Petition Date. Affiliates Sea Island Coastal Properties, LLC; Sea Island Services, Inc.; Sea Island Resort Residences, LLC; Sea Island Apparel, LLC; First Sea Island, LLC; and Sical, LLC, filed separate Chapter 11 petitions on August 10, 2010. SEA ISLAND: Wants Oct. 11 Auction of Substantially All of Assets ---------------------------------------------------------------- Sea Island Company and its units ask for authorization from the U.S. Bankruptcy Court for the Southern District of Georgia to sell substantially all of their assets through an auction. On August 4, 2010, the Debtors executed an Asset Purchase Agreement where Sea Island Acquisition LP, as stalking horse purchaser, will buy all assets for $197,500,000, absent higher and better offers. Under the agreement, the Stalking Horse Purchaser will assume from the Debtors all trade payables owed to trade vendors and service providers incurred in the ordinary course of business, all cure costs payable under assumed contracts, post- closing liabilities under assumed contracts, certain pre- and post-closing liabilities and obligations relating to the Debtors' employees, all of the Debtors' obligations to honor customer reservations, gift certificates and gift cards, all sales and use taxes and certain pro-rated costs, expenses and liabilities. A copy of the Asset Purchase Agreement is available for free at: http://bankrupt.com/misc/SEA_ISLAND_apa.pdf The Debtors propose that an auction be held on October 11, 2010, beginning at 10:00 a.m. local time. In the event that the Debtors don't choose the Stalking Horse Bidder, the Debtors will pay the Stalking Horse Bidder a breakup fee of $5,925,000. Any third party, other than the Stalking Horse Purchaser, that is interested in acquiring the Assets must submit an initial overbid in conformance with the bid procedures by not later than 5:00 p.m. local time in Brunswick, Georgia on October 4, 2010. Initial overbids must provide for a cash purchase price in an amount equal to or greater than the sum of the Stalking Horse Bid, the Breakup Fee, and $2,500,000. After the conclusion of the auction and the solicitation of votes with respect to the Plan, the Debtors will ask the Court to confirm the Plan and approve the Plan Sale at the Confirmation Hearing. No date has been set for the hearing. About Sea Island St. Simons Island, Georgia-based Sea Island Company -- http://www.seaisland.com/-- aka Sea Island Shooting School, Sea Island Yacht Club, Sea Island Stables, and Cabin Bluff, is a private resort and real estate development company founded in 1926, Sea Island Company owns and operates Sea Island Resorts, featuring two of the world's most exceptional destinations: the Forbes Five-Star Cloister at Sea Island and The Lodge at Sea Island. Sea Island is filing a Chapter 11 plan based upon an agreement to sell substantially all of its assets to Sea Island Acquisition LP, a limited partnership formed by investment funds managed by the global investment firms Oaktree Capital Management, L.P., and Avenue Capital Group. Sea Island filed for Chapter 11 protection on August 10, 2010 (Bankr. S.D. Ga. Case No. 10-21034). Sarah R. Borders, Esq.; Harris Winsberg, Esq.; Sarah L. Taub, Esq.; and Jeffrey R. Dutson, Esq., at King & Spalding LLP, assists the Debtor in its restructuring effort. Robert M. Cunningham, Esq., at Gilbert, Harrell, Sumerford & Martin PC, is the Debtor's co-counsel. FTI Consulting, Inc., is the Debtor's restructuring advisor. EPIQ Bankruptcy Solutions, LLC, is the Debtor's claims and notice agent. The Debtor estimated its assets and debts at $500 million to $1 billion as of the Petition Date. Affiliates Sea Island Coastal Properties, LLC; Sea Island Services, Inc.; Sea Island Resort Residences, LLC; Sea Island Apparel, LLC; First Sea Island, LLC; and Sical, LLC, filed separate Chapter 11 petitions on August 10, 2010. SECUREALERT INC: Files 10-Q; Posts $2.1MM Net Loss in FY 2010 Q3 ---------------------------------------------------------------- SecureAlert, Inc., filed on August 16, 2010, its quarterly report on Form 10-Q, reporting a net loss of $2.1 million on $3.1 million of revenue for the three months ended June 30, 2010, compared with a net loss of $5.0 million on $3.2 million of revenue for the same period ended June 30, 2009. As of June 30, 2010, the Company had unrestricted cash of $1.9 million and a working capital deficit of $3.8 million, compared to unrestricted cash of $602,321 and a working capital deficit of $16.5 million as of September 30, 2009. For the nine months ended June 30, 2010, operating activities used cash of $4.5 million, compared to $6.7 million of cash used in operating activities for the nine months ended June 30, 2009. The Company's balance sheet as of June 30, 2010, showed $12.3 million in total assets, $8.5 million in total liabilities, and a stockholders' equity of $3.9 million. As reported in the Troubled Company Reporter on January 18, 2010, Hansen, Barnett & Maxwell, P.C., in Salt Lake City, expressed substantial doubt about RemoteMDx, Inc., and subsidiaries' ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended September 30, 2009, and 2008. The independent public accounting firm reported that the Company has incurred losses and has an accumulated deficit. The Company discloses in its latest 10-Q that if it is unable to increase cash flows from operating activities or obtain additional financing, it will be unable to continue the development of its products and may have to cease operations. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?694f About SecureAlert Inc. Headquartered in Sandy, Utah, SecureAlert, Inc. (formerly RemoteMDx, Inc.) (OTC BB: SCRA) -- http://www.securealert.com/-- markets and deploys offender management programs, combining patented GPS (Global Positioning System) tracking technologies, full-time 24/7/365 intervention-based monitoring capabilities and case management services. SHIVAM, LLC: Case Summary & 6 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Shivam, LLC 10870 Crain Highway Faulkner, MD 20632 Bankruptcy Case No.: 10-28921 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Richard M. McGill, Esq. LAW OFFICES OF RICHARD M. MCGILL P.O. Box 358 5303 West Court Drive Upper Marlboro, MD 20773 Tel: (301) 627-5222 E-mail: mcgillrm@aol.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's six largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mdb10-28921.pdf The petition was signed by Hement Vaidya, managing member. SHUKAN, INC.: Case Summary & 9 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Shukan, Inc. 10870 Crain Highway Faulkner, MD 20632 Bankruptcy Case No.: 10-28924 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court District of Maryland (Greenbelt) Judge: Paul Mannes Debtor's Counsel: Richard M. McGill, Esq. LAW OFFICES OF RICHARD M. MCGILL P.O. Box 358 5303 West Court Drive Upper Marlboro, MD 20773 Tel: (301) 627-5222 E-mail: mcgillrm@aol.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's nine largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/mdb10-28924.pdf The petition was signed by Hement Vaidya, managing member. SIERRA VIEW: Case Summary & 3 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Sierra View Mobile Home Park Corporation 10 Club View Lane Rolling Hills Estates, CA 90274 Bankruptcy Case No.: 10-44781 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Robert M. Yaspan, Esq. LAW OFFICES OF ROBERT M. YASPAN 21700 Oxnard Street, Suite 1750 Woodland Hills, CA 91367 Tel: (818) 905-7711 Fax: (818) 501-7711 E-mail: court@yaspanlaw.com Scheduled Assets: $2,062,250 Scheduled Debts: $2,545,345 A list of the Company's three largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb10-44781.pdf The petition was signed by Abram Tavera, chairman of the board. Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. Petition Date ------ -------- ------------- Muscle Improvement-Commerce, Inc. 10-12756 01/26/10 Muscle Improvement-Hawthorne, Inc. 10-12743 01/26/10 Muscle Improvement, Inc. 10-12736 01/26/10 Abram and Ruth Tavera 10-12765 01/26/10 Muscle Training Corporation 10-13087 01/26/10 Muscle Improvement Holdings Corp. 10-13094 01/26/10 SMART & FINAL: S&P Affirms 'B-' Corporate Credit Rating ------------------------------------------------------- U.S. grocery store operator Smart & Final amended its second-lien credit facility with an extended maturity and an increased the interest rate margin. The higher interest rate margin affects interest coverage modestly. S&P is affirming its ratings on the company, including its 'B-' corporate credit rating. S&P's rating outlook remains stable. Standard & Poor's Ratings Services affirmed all ratings on Commerce, Calif.-based Smart & Final Holdings Corp., the holding company of Smart & Final Stores LLC. The outlook is stable. This action comes after the company completed an amendment of its second-lien term loan. The amendment extended the maturity of the facility by two years to 2016. The effective cash interest rate margin is now 875 basis points over LIBOR; previously it was 675 bps. The facility no longer accrues pay-in-kind (PIK) interest, and the company also agreed to pay 50% of the accrued PIK interest now and will pay the remaining 50% in a year. The ratings on Commerce, Calif.-based Smart & Final reflect its highly leveraged capital structure and S&P's view of the company's vulnerable business risk profile characterized by its participation in the highly competitive retail grocery and food service distribution industries. Smart & Final experienced sales deceleration and margin contraction in its second quarter, which was a negative change in the trends relative to previous quarters. Given the competitive nature of the food retail industry and weak economic conditions, S&P anticipates that trend and profitability pressures continuing over the near term. Over the past year, many food retailers have invested aggressively in price and sacrificed sales and gross margin to maintain market share. Smart & Final, positioned as a low priced non-membership warehouse store, has generally outperformed the industry over the past year and a half and has seen comparable store sales in the mid single digit area and expanded operating margins. However in the second quarter, the performance trend changed and same-stores sales increased only slightly, while operating margins contracted measurably. The profitability declines were notable, but not to the magnitude of other food retailers. S&P expects this trend to continue for the balance of 2010, since economic conditions are particularly weak in Southern California, where many of the company's stores are located. Consequently, S&P envision EBITDA declining about 10% during 2010, and by the end of the year S&P sees operating lease adjusted leverage of about 8.0x and adjusted EBITDA coverage of interest of 1.8x, which are both weaker from second quarter past-12-month metrics of 7.6x and 2.2x, respectively. S&P view Smart & Final's liquidity as adequate. Despite the performance declines, S&P expects the company's operating income to adequately fund cash interest costs, taxes and capital spending and also expect the company to generate a modest amount of free cash flow in 2010. The company has considerable excess cash and ample availability on its asset based revolving credit facility. The company has no term maturities, though Smart & Final does have a CMBS loan due in 2012, and S&P will monitor the company's ability to refinance or extend the maturity of that loan. Smart & Final's asset-based revolving credit facility is rated 'B+', two notches higher than the corporate credit rating and has a '1' recovery rating, indicating S&P's expectation of very high (90%-100%) recovery in the event of default. Smart & Final's first-lien term loan is rated 'B', one notch higher than the corporate credit rating on the company, with a recovery rating of '2', indicating the expectation of substantial (70%-90%) recovery of principal in the event of payment default. The $140 million second-lien term loan is rated 'CCC' (two notches less than the corporate credit rating on the company) with a recovery rating of '6', reflecting the expectation of negligible (0-10%) recovery of principal in the event of payment default. S&P's rating outlook on Smart & Final is stable, reflecting S&P's belief that the company will maintain adequate liquidity in the near term. S&P would likely consider a lower rating if the company was cash flow negative, which S&P estimate could occur if EBITDA declined about 25%. Given the company's highly leveraged capital structure and likely performance, S&P does not expect a positive rating action in the near term. SPENCER CREEK: Case Summary & 2 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Spencer Creek Properties P.O. Box 218460 Nashville, TN 37221-8460 Bankruptcy Case No.: 10-08732 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court Middle District of Tennessee (Nashville) Judge: George C. Paine, II Debtor's Counsel: Elliott Warner Jones, Esq. 1600 Division Street, Suite 675 Nashville, TN 37203 Tel: (615) 916-5264 E-mail: elliott@elliottwarnerjones.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's two largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/tnmb10-08732.pdf The petition was signed by J. Greg Jones, president. STERLING FINANCIAL: Fitch Puts 'C' Rating on Positive Watch ----------------------------------------------------------- Fitch Ratings has placed some ratings for Sterling Financial Corporation and its principal banking subsidiary, Sterling Savings Bank, including the long-term Issuer Default Rating of 'C' on Rating Watch Positive following the company's announcement of a definitive agreement to raise $730 million of new capital from private equity as well as other investors. The capital infusion is expected to close on or about Aug. 26, 2010. Separately, Fitch has downgraded the Individual Rating of STSA and Sterling Savings Bank to 'F' from 'E' indicating Fitch's opinion that STSA would have defaulted if it had not received some form of external support namely the capital infusion and the U.S. Treasury's willingness to convert its $303 million of preferred stock issued under its Capital Purchase Program into common shares on a discounted basis to facilitate the acquisition. As per Fitch's Global Financial Institutions Rating Criteria, the 'F' Individual Rating is retrospective in character and financial institutions at this rating level will be re-rated on the basis of their supported financial strength after at least one month. STSA's largely new management team has been working to raise equity over the last few quarters in order to rebuild tangible and regulatory capital levels following its October 2009 FDIC agreement. Under this directive STSA is required to achieve, among other things, a minimum bank level Tier 1 leverage ratio of 10%. Fitch believes that the expected recapitalization is sized to address regulatory capital concerns. STSA's capital issues stem from losses, particularly in its large construction portfolios. Even with the recapitalization, STSA will still have lofty Non-Performing Assets (NPA; including restructured loans), levels of $1 billion or 10% of total assets at June 30, 2010. Fitch anticipates resolving the Rating Watch and reassessing the Individual Rating following the completion of the capital raise in addition to completing a review of the adequacy of new capital levels relative to remaining problem assets levels and the company's prospects for returning to profitability. Fitch expects to withdraw the preferred stock rating following the close of the transaction, as this rating only applies to the CPP issuance. Headquartered in Spokane, Washington, STSA operates 178 branches in five Western states. As of June 30, 2010, STSA had $9.7 billion in assets, $6.4 billion in loans and $7.2 billion in deposits. Fitch has placed these ratings on Rating Watch Positive: Sterling Financial Corporation -- Long-term IDR 'C'; -- Short-term IDR 'C'. Sterling Savings Bank -- Long-term IDR 'C'; -- Long-term deposits 'CC/RR3'; -- Short-term IDR 'C'; -- Short-term deposits 'C'; Fitch has downgraded these ratings: Sterling Financial Corporation -- Individual downgraded to 'F' from 'E'. Sterling Savings Bank -- Individual downgraded to 'F' from 'E'. Fitch has affirmed these ratings: Sterling Financial Corporation -- Support at '5'; -- Support floor at 'NF'. -- Preferred stock at 'C/RR6'. Sterling Savings Bank -- Support at '5'; -- Support floor at 'NF'. SUNSHINE ENERGY: Dismissal Plea Filed by Former Owner Denied ------------------------------------------------------------ Convenience Store News, citing report from TimesNews.net, reports that a federal bankruptcy judge denied a request to dismiss the Chapter 11 bankruptcy case of APPCO sought by the Company's former owner Jim MacLean who owns 28 of the Company's 47 stores properties. A state court granted Mr. MacLean the right to take back the additional stores. APPCO's parent Sunshine Energy thus filed for Chapter 11 to stay the repossession of the stores. The bankruptcy judge, however, does not see the case as an abuse of the Chapter 11 process, according to the report. Sunshine Energy KY I, LLC, filed for Chapter 11 on July 28, 2010 (Bankr. E.D. Tenn. Case No. 10-51942). Mark S. Dessauer, Esq., at Hunter, Smith & Davis, in Kingsport, Tennessee, serves as counsel to the Debtor. The Debtor estimated assets and debts of $1 million to $10 million in its Chapter 11 petition. THOMAS PRICE: Case Summary & 13 Largest Unsecured Creditors ----------------------------------------------------------- Joint Debtors: Thomas W. Price Patricia A. Price P.O. Box 1701 Tacoma, WA 98401 Bankruptcy Case No.: 10-46732 Chapter 11 Petition Date: August 17, 2010 Court: United States Bankruptcy Court Western District of Washington (Tacoma) Judge: Brian D. Lynch Debtor's Counsel: Noel P. Shillito, Esq. SHILLITO & GISKE PS 1919 N Pearl St., Suite C2 Tacoma, WA 98406 Tel: (253) 572-4388 E-mail: shillito@callatg.com Estimated Assets: $0 to $50,000 Estimated Debts: $100,000,001 to $500,000,000 Joint Debtors' List of 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Centrum Financial $46,795,000 12505 Bel Red Road Ste 200 Bellevue, WA 98005 Intervest Mortgage $46,312,000 5005 SW Meadows Rd Ste 400 Lake Oswego, OR 97035 First Independent Bank $35,964,000 1220 Main Street Suite 1 Vancouver, WA 98660 Frontier Bank $16,671,000 332 SW Everett Mall Way Bldg 2, Floor 3 Everett, WA 98204 WF Capital $11,500,000 9709 Third Ave NE Ste 110 Seattle, WA 98115 Umpqua Bank $7,900,000 One SW Columbia St Ste 900 Portland, OR 97258 First Citizens Bank $6,767,000 PO Box 970 Dupont, WA 98327 East West Bank $6,350,000 9709 Third AVe NE Ste 110 Seattle, WA 98115 Soundbuilt Northwest $5,990,916 12815 Canyon Road East Puyallup, WA 98373 ABC Homes $2,294,000 PO Box 688 Vancouver, WA 98666 Velocity Capital $2,000,000 41800 SW Meadows #300 Lake Oswego, OR 97035 ABK, LLC $1,600,000 4748 E Mercer Way Mercer Island, WA 98040 Horizon/Washington Federal $1,287,000 2211 Rimland Drive, Suite 230 Bellingham, WA 98226 THORNBURG MORTGAGE: Former Executives Win Access to D&O Benefits ---------------------------------------------------------------- Bankruptcy Law360 reports that Judge Duncan W. Keir issued an order in the U.S. Bankruptcy Court for the District of Maryland on Tuesday allowed two former executives of Thornburg Mortgage Inc. to seek insurance coverage for contract suits brought against them over allegations that they siphoned assets away from the ailing company to secretly launch a new business venture. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- was a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable rate mortgages. It originated, acquired, and retained investments in adjustable and variable rate mortgage assets. Its ARM assets comprised of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. Thornburg Mortgage, Inc., and its four affiliates filed for Chapter 11 on May 1, 2009 (Bankr. D. Md. Lead Case No. 09-17787). Thornburg has changed its name to TMST, Inc. Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, has been tapped as counsel. Orrick, Herrington & Sutcliffe LLP is employed as special counsel. Jim Murray, and David Hilty, at Houlihan Lokey Howard & Zukin Capital, Inc., have been tapped as investment banker and financial advisor. Protiviti Inc. has also been engaged for financial advisory services. KPMG LLP is the tax consultant. Epiq Systems, Inc., is claims and noticing agent. Thornburg listed total assets of $24.4 billion and total debts of $24.7 billion, as of January 31, 2009. On October 28, 2009, the Court approved the appointment of Joel I. Sher as the Chapter 11 Trustee for the Company, TMST Acquisition Subsidiary, Inc., TMST Home Loans, Inc. and TMST Hedging Strategies, Inc. TITAN ENERGY: Posts $616,000 Net Loss in Q2 Ended June 30 --------------------------------------------------------- Titan Energy Worldwide, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $616,046 on $4.0 million of revenue for the three months ended June 30, 2010, compared with a net loss of $312,865 on $2.1 million of revenue for the same period ended June 30, 2009. The Company's balance sheet as of June 30, 2010, showed $6.7 million in total assets, $5.1 million in total liabilities, and a stockholders' equity of $1.6 million. As reported in the Troubled Company Reporter on April 7, 2010, UHY LLP, in Southfield, Mich., 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 and accumulated deficit. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?69a1 Brighton, Mich.-based Titan Energy Worldwide, Inc., is a provider of onsite power generation, energy management and energy efficiency products and services. TRIBUNE CO: Examiner Files Unredacted Copy of Report ---------------------------------------------------- Kenneth N. Klee, Esq., the Court-appointed Examiner, notified parties-in-interest on August 4, 2010, regarding the availability of transcripts and exhibits to his report. According to Mr. Klee, the Debtors' claims and noticing agent, Epiq Bankruptcy Solutions, LLC, has electronically posted the Report, the Exhibits and the Transcripts on Epiq's Web site at: http://dm.epiq11.com/TRB About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: GreenCo Wins Nod to Settle With MediaNews Group ----------------------------------------------------------- GreenCo, Inc., a debtor-affiliate of Tribune Co., received the U.S. Bankruptcy Court's authority to enter into a settlement with MediaNews Group, Inc., formerly known as Affiliated Media, Inc. GreenCo and Garden State Newspapers, Inc., a predecessor-in- interest to MediaNews, on January 30, 1998, entered into an Option Purchase Agreement, which, among other terms, granted GreenCo an irrevocable option to purchase all of the assets and business operations of the L.A. Daily News, in consideration of a payment by GreenCo to MediaNews at the closing of $2,400,000. Under the Option Agreement, GreenCo hold the right to exercise the Option upon not less than 60 days' notice and not more than 90 days' notice at any time from January 30, 2003, until January 30, 2010, whereupon the Option expired. Pursuant to the Option Agreement, if GreenCo were to fail to exercise the Option before it expired, the Option Cancellation Amount would be due to GreenCo. Specifically, the Option Agreement provides that the Option Cancellation Amount is $8,400,000 and an additional amount derived from, among other things, the EBITDA of the L.A. Daily News over a particular time period. Prior to November 30, 2009, GreenCo advised MediaNews that it did not intend to exercise the Option. Consistent with that position, GreenCo did not, in fact, exercise the Option prior to its expiration on January 30, 2010. GreenCo initially made a demand upon MediaNews at the time it advised MediaNews that it did not intend to exercise the Option for payment of the Option Cancellation Amount, which GreenCo asserted was in the amount not less than $8,400,000. MediaNews responded to GreenCo's demand by disputing the amount claimed by GreenCo, and asserting that GreenCo was liable to MediaNews under the Option Agreement to pay the Option Cancellation Amount for not less than $55,600,000. Through subsequent correspondence, GreenCo disputed MediaNew's claim, reiterated its own claim, and sought further information from MediaNews necessary to calculate the final Option Cancellation Amount, while MediaNews continued to dispute GreenCo's claim and to assert its own claim. MediaNews, on January 22, 2010, filed a voluntary petition under Chapter 11 of the Bankruptcy Code and sought confirmation of a prepackaged plan of reorganization. GreenCo objected to confirmation of MediaNews's prepackaged plan for the limited purpose of ensuring that its claim against MediaNews for the Option Cancellation Amount was preserved unaffected by MediaNews's plan, which MediaNews confirmed on the record at the confirmation hearing on its plan. MediaNews, on March 1, 2010, filed a proof of claim in GreenCo's Chapter 11 case for amounts it alleged were owed to it under the Option Agreement in the face amount of $55,780,199, which proof of claim was assigned Claim No. 6394. GreenCo disputes the Proof of Claim on numerous grounds, including timeliness and the bases asserted by MediaNews for the amounts sought in the Proof of Claim. Notwithstanding the claims and defenses asserted by each party, in an effort to avoid arbitration, counsel for MediaNews and GreenCo have discussed a potential resolution of the parties' claims under the Option Agreement. As a result of these discussions, the parties have entered into a stipulation to resolve all of their potential claims and causes of action against each other relating to the Option Agreement. The Settlement Stipulation is available for free at: http://bankrupt.com/misc/Tribune_MediaNewsStip.pdf Pursuant to the Settlement, MediaNews will pay GreenCo $500,000. MediaNews and GreenCo agree that the Option Agreement is terminated, with no further force and effect. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Settlement With Creditors Fails, Talks Restart ---------------------------------------------------------- The settlement in Tribune Company and its debtor affiliates' proposed plan of reorganization and their big creditors' attempt to negotiate a deal without the Debtors' participation fell apart. In the wake of the failed negotiations, the Debtors intend to file an amended plan that reflects management's own best estimate of what is a fair deal for everybody, James F. Conlan, Esq., at Sidley Austin LLP, in Chicago, Illinois, attorney for the Debtors, told Judge Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware. Mr. Conlan said the Debtors would launch litigation over claims central to the case that a 2007 leveraged buyout led by Sam Zell rendered the company insolvent if the Plan could not win the support of enough creditors. "The debtor has tried mightily to bring the parties together," the Los Angeles Times quoted Mr. Conlan saying. "That hasn't happened." Judge Carey, to give time for parties to settle the negotiations, puts on hold all deadlines set forth in the Second Amended Deadline Order for filings or discovery in the Chapter 11 case of Tribune Company and its debtor affiliates. Each of the deadlines is continued to dates to be further announced by the Court. There are series of deadlines related to confirmation of the Debtors' Plan that commenced August 16, 2010, which is the deadline for objections to the entry of a preliminary pre-trial scheduling order for the plan confirmation hearing, and continue through the confirmation hearing scheduled in early October. Given the state of the negotiations between the Debtors and parties-in-interest, the Debtors told the Court that it would be imprudent to hold the dates currently scheduled for confirmation- related matters. The Debtors asked that each of the deadlines set forth in the Second Amended Deadline Order and the dates related to the Contours Motion be extended to dates to be determined by the Court. Pursuant to the Second Amended Deadline Order, the voting deadline for the Plan was August 20, 2010. In order to avoid confusion among the parties entitled to vote on the Plan, concurrently, the Debtors told the Court that they are serving the notice on all voting parties. The notice informs those parties that the voting deadline will be extended and that there is no need to cast their ballots by the previously established deadline of August 20, 2010. Thomas Lauria, Esq., at White & Case, in Miami, Florida, who represents holders of some $900 million worth of Tribune bridge loans, told Dow Jones Newswire that several camps of creditors are weighing the possibility of floating their own Chapter 11 proposals. "I'm not sure the debtor is going to be able to retain control of this case," Dow Jones quoted Mr. Lauria as saying. Wilmington Trust Company, successor indenture trustee for the Exchangeable Subordinated Debentures due 2029 in the aggregate principal amount of $1.2 billion, told the Court that it did not have advance knowledge of the Debtors' Extension Motion and, therefore, prepared a lengthy pleading in anticipation of the scheduled "contours" hearing on August 20, 2010. Wilmington Trust does, however, supported the relief requested in the Extension Motion. Accordingly, Wilmington Trust told Judge Carey that it will not file the substantive responsive it had prepared so as not to disrupt fruitful settlement discussions. EGI-TRB LLC Objects to Plan Sam Zell's personal investment vehicle investment company, EGI- TRB LLC, filed with the Court a conditional objection to confirmation of the Debtors' Amended Joint Plan of Reorganization. Mr. Zell is the Chairman of Tribune's board of directors and former chief executive officer. Kenneth N. Klee said in his August 3, 2010 Report that: * EGI-TRB engaged in good faith arms-length bargaining and there is no reasonable basis to subordinate or avoid its rights to recovery under the EGI-TRB Initial Note or EGI-TRB Exchangeable Note; and * under several recovery scenarios, EGI-TRB or the Bank of Montreal Trust Company as trustee for certain securities -- the PHONES Securities -- are entitled to recovery on their claims against the Debtors. "Because EGI-TRB has clear contractual priority over the PHONES Securities, EGI-TRB filed this Conditional Objection to the Debtors' Plan to place the Court and other parties-in-interest on notice that if the Plan provides or is amended to provide any recoveries for the holders of the PHONES Securities, then EGI- TRB's claims must be paid in full," says David Carickhoff, Esq., at Blank Rome LLP, in Wilmington, Delaware, counsel for EGI-TRB, LLC. EGI-TRB and Tribune entered into the Subordinated Promissory Note -- the EGI-TRB Note -- on December 20, 2007. In a Subordination Agreement, EGI-TRB subordinated its right to payment on the EGI- TRB Note to "all Senior Obligations." The EGI-TRB Agreement defines "Senior Obligations" as "all obligations, indebtedness and other liabilities of [Tribune] other than (i) any such obligations, indebtedness or liabilities that by their express terms rank pari passu or junior to [Tribune's] obligations under the [Note]." Given EGI-TRB's priority over the PHONES Securities, the Debtors' Plan must provide that EGI-TRB will be paid in full before any distribution is made on account of the PHONES Securities in order to comply with the absolute priority rule and Section 1129(b)(2)(B) of the Bankruptcy Code, Mr. Carickhoff asserts. EGI-TRB may be entitled to get back some $315 million that Mr. Zell invested in the 2007 leveraged buyout of Tribune, according to http://www.rbr.com/ New York Dept. of Taxation Also Objects to Plan The New York State Department of Taxation and Finance objects to confirmation of the Debtors' Amended Joint Plan of Reorganization. DTF has filed claims against several of the Debtors. The claims assert various assessments for corporation income taxes, sales taxes, withholding taxes and real estate transfer taxes owing by these companies to the State of New York. DTF objects to confirmation of the Plan because: (a) the release and exculpation provisions of the Plan would preclude DTF from pursuing non-debtor individuals who are potentially liable under the New York State Tax Law for unpaid sales taxes and withholding taxes; (b) the Plan fails to include a default provision; (c) the Plan improperly attempts to cut off DTF's rights of setoff and recoupment; and (d) the Plan does not clearly indicate the rate of interest which will apply to DTF's priority tax claims. Moreover, DTF complains that the Plan fails to provide priority tax creditors with an adequate remedy in the event the Debtors default in making the required payments. The DTF asserts that the Plan should provide that if there is a default in payments, DTF can pursue its state law remedies if the default continues after reasonable notice and the expiration of a reasonable cure period. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TURF WORKS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Turf Works Supply, LLC 13191 M-96 Augusta, MI 49012 Bankruptcy Case No.: 10-10063 Chapter 11 Petition Date: August 18, 2010 Court: U.S. Bankruptcy Court Western District of Michigan (Grand Rapids) Judge: James D. Gregg Debtor's Counsel: Cody H. Knight, Esq. Steven L. Rayman, Esq. RAYMAN & STONE 141 East Michigan Avebue, Suite 301 Kalamazoo, MI 49007 Tel: (269) 345-5156 E-mail: courtmail@raymanstone.com Scheduled Assets: $706,029 Scheduled Debts: $1,109,267 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/miwb10-10063.pdf The petition was signed by Kevin M. Boucher, president. US CONCRETE: Inks Plan Support Agreement with Put Option Parties ---------------------------------------------------------------- On August 16, 2010, U.S. Concrete, Inc. entered into a Support Agreement among the Company and affiliates of Monarch Alternative Capital LP, York Credit Opportunities Domestic Holdings, LLC, and Whitebox Advisors, LLC (collectively, the "Put Option Parties") pursuant to which the Put Option Parties have granted the Company a put option. If the Company exercises the Put Option, each of the Put Option Parties will be obligated to purchase an aggregate principal amount of convertible secured notes equal to 33.3% multiplied by the difference between (i) $55.0 million and (ii) the aggregate amount of Convertible Notes that have been subscribed for by eligible holders of the Existing Notes. The terms of the Convertible Notes will be on terms set forth in the purchase letter dated July 22, 2010, among the Company, Monarch Alternative Capital, L.P., Whitebox Advisors, LLC and York Capital Management Global Advisors, LLC. Each Put Option Party's commitment is subject to certain conditions including, among other things, (1) the entry of an order, not later than August 18, 2010, by the Bankruptcy Court in the Debtors' cases, in form and substance reasonably satisfactory to the Put Option Parties, (i) approving the Purchase Letter and (ii) otherwise authorizing the Debtors to execute, perform and incur their obligations under the Purchase Letter; and (2) the Confirmation Order of the Bankruptcy Court having become a final order; the Plan having been consummated on the terms and conditions set forth in the Plan, as amended and in effect as of the date of the Confirmation Order. A full-text copy of the Support Agreement dated August 16, 2010, is available for free at http://researcharchives.com/t/s?6997 About U.S. Concrete Houston, Tex.-based U.S. Concrete, Inc. -- http://www.us- concrete.com/ -- is a major producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. The Company has 125 fixed and 11 portable ready-mixed concrete plants, seven precast concrete plants and seven producing aggregates facilities. The Company filed for Chapter 11 bankruptcy protection on April 29, 2010 (Bankr. D. Del. Case No. 10-11407). Patrick J. Nash Jr., Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis LLP, assist the Company in its restructuring effort as bankruptcy counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, is the Company's co-counsel. Epiq Bankruptcy Solutions is the Company's claims agent. The Company scheduled assets of $389,160,000 and debts of $399,351,000 as of the Petition Date. The Debtor's affiliates, Alberta Investments, Inc., et al., filed separate Chapter 11 petitions on April 29, 2010. The Company's balance sheet as of June 30, 2010, showed $403.2 million in total assets, $451.7 million in total liabilities, and a stockholders' deficit of $48.5 million. As reported in the Troubled Company Reporter on August 2, 2010, the Bankruptcy Court has confirmed the Company's Plan of Reorganization. As previously announced, the Company's Plan provides for the conversion of approximately $285 million of principal amount of 8.375% Senior Subordinated Notes due 2014 into equity of the reorganized company. Trade creditors are currently being paid in full in the ordinary course and are unaffected by the restructuring. The Company currently expects to emerge from Chapter 11 by the end of August 2010. UTILITY RISK: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Utility Risk Management Corporation LLC 2038 Mountain Road Stowe, VT 05672 Tel: (267) 254-6107 Bankruptcy Case No.: 10-11086 Chapter 11 Petition Date: August 17, 2010 Court: United States Bankruptcy Court District of Vermont (Rutland) Judge: Colleen A. Brown Debtor's Counsel: Ross Andrew Feldmann, Esq. GRAVEL & SHEA 76 St. Paul St. P.O. Box 369 Burlington, VT 05402-0369 Tel: (802) 658-0220 Fax: (802) 658-1456 E-mail: rfeldmann@gravelshea.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/vtb10-11086.pdf The petition was signed by Adam Rousselle, chief executive officer. VWR FUNDING: Raised by Moody's to 'SGL-2' on Cash Rise ------------------------------------------------------ Moody's Investors Service raised the Speculative Grade Liquidity Rating of VWR Funding, Inc., to SGL-2 from SGL-3, reflecting Moody's expectation for good liquidity over the next twelve months. There are no changes to any other ratings or the stable outlook. The improvement in the liquidity rating reflects the significant increase in cash over the last year, now at $136 million and up from $43 million at March 31, 2009. The company's cash flow has benefited over the last year from its election to PIK and capitalize certain interest payments, as well as lower variable interest rates. In addition, the company's working capital management, reduced capital spending and cost cutting initiatives have also contributed to free cash flow. While Moody's does not expect some of these benefits to repeat over the next twelve months, Moody's do expect the company to generate excess free cash flow above mandatory debt amortization. Further, the liquidity profile is supported by over $200 million in availability on the company's revolving credit facility and the lack of financial maintenance covenants in the credit agreement. Despite the company's large scale and leading worldwide market position, VWR's B3 Corporate Family Rating reflects the company's very high leverage of just under 8.0 times. The significant debt burden limits free cash flow generation and interest coverage. Moody's view VWR's business as relatively stable, given good diversity by customer and end user market, and the consumable nature of a significant portion of the revenues which leads to a recurring revenue stream. However, organic revenue growth has been constrained by the weak economy, significant consolidation and laboratory closures of large pharmaceutical customers, and general cost curtailment efforts on the part of customers resulting in slower R&D spending. Further, VWR has a large presence in Europe, where Moody's expect growth to be constrained due to economic headwinds. Conversely, it has a relatively small presence in Asia, where much of the growth in the industry is expected to occur over the next several years. The last rating action was July 9, 2009, when Moody's affirmed VWR's ratings following the announcement of its PIK election. VWR's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the company versus others within its industry, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, and iv) management's track record of tolerance for risk. These attributes were compared against other issuers both within and outside of VWR's core industry and VWR's ratings are believed to be comparable to those other issuers of similar credit risk. VWR Funding, Inc., headquartered in West Chester, Pennsylvania, is a global leader in the distribution of laboratory scientific supplies, with a highly diversified spectrum of products and services: Products include chemicals, glassware, equipment, instruments, protective clothing, production supplies and other laboratory products. Services include technical services, onsite storeroom services and laboratory and furniture design, supply and installation. The company serves customers in the pharmaceutical, biotechnology, medical device, chemical, technology, food processing and consumer product industries, as well as governmental agencies, universities and research institutes, and environmental organizations. For the twelve months ended June 30, 2010, VWR reported revenues of $3.6 billion. WASHINGTON MUTUAL: Equity Says Rule 2004 Exam Necessary ------------------------------------------------------- In an omnibus brief filed with the Bankruptcy Court, the Official Committee of Equity Security Holders of Washington Mutual Inc. emphasized the need for discovery of the Debtors, JPMorgan Chase Bank, N.A., and the Federal Deposit Insurance Corp. Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure, the Equity Committee asks Judge Mary F. Walrath to direct the Debtors, JPMorgan and the FDIC to, among other things, (i) produce documents responsive to its documents requests; and (ii) respond to certain interrogatories and deposition notices. The information sought by the Equity Committee concerns claims and potential claims that the Debtors intend to release in the proposed Global Settlement Agreement with JPMorgan Chase and the FDIC, among other parties, William P. Bowden, Esq., at Ashby & Geddes, P.A., in Wilmington, Delaware, reveals. The Equity Committee informs the Court that it has attempted to investigate the viability of certain business tort claims based on alleged misconduct by JPMorgan Chase leading up to its September 2008 acquisition of Washington Mutual Bank. "These potential claims are among the most valuable assets of the estate, and are of particular significance to equity holders because they represent the lost value of the multi-billion dollar Washington Mutual banking enterprise -- value that should have accrued to equity holders as the corporation's owners," Mr. Bowden notes. Accordingly, JPMorgan Chase's efforts to respond to the requests made by the Debtors and the Equity Committee are crucial to the analysis of those claims, Mr. Bowden says. The FDIC, for its part, has rejected any request for any pre-WMB seizure documents, including documents that might explain the process that led to the FDIC and the Office of Thrift Supervision's decision to put WMB into receivership and that might provide detail about the sale of WMB, Mr. Bowden tells Judge Walrath. The requested documents, he says, are plainly relevant, and potentially crucial, to the Equity Committee's and the Debtors' efforts to evaluate the business tort claims related to the collapse, seizure, and sale of WMB. The Debtors still have not produced swaths of requested materials, the Equity Committee adds. Moreover, the material that the Debtors have produced so far has been done in cumbersome and inefficient manners, the Equity Committee complains. The Debtors' production falls into work product and non-work product categories, each of which "suffers from major infirmities," Mr. Bowden says. The Equity Committee also sought the Parties' production of other documents that would permit it to examine the value of the claims that are proposed to be settled by the Debtors. Instead of responding specifically to those requests, however, the Debtors are making available documents in a document repository, the Equity Committee complains. This repository, however, initially did not allow any search or indexing, and makes it impossible to figure out the scope the Debtors' current production and what remains lacking, according to Mr. Bowden. Because the document production could be a significant volume, the Debtors' failure to provide any analysis of the Requested Documents suggests that nothing has ever been done or that the Debtors are refusing to provide it, Mr. Bowden maintains. Against this backdrop, the Equity Committee asks the Court to require Parties to provide the requested discovery responses. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment estimated assets of $500,000,000 to $1,000,000,000 with zero debts. Peter Calamari, Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP, served as legal counsel to WMI with responsibility for the litigation. Brian Rosen, Esq., at Weil, Gotshal & Manges LLP served as legal counsel to WMI with responsibility for the Chapter 11 case. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Examiner's Work & Expenses Report Approved ------------------------------------------------------------- Joshua R. Hochberg, Esq., as examiner in the Chapter 11 cases of Washington Mutual, Inc., and WMI Investment Corp., sought and obtained approval from Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware of his proposed work and expenses plan/report. Mr. Hochberg was appointed by Roberta A. DeAngelis, the U.S. Trustee for Region 3, in consultation with the Debtors; the Official Committee of Unsecured Creditors; the Official Committee of Equity Security Holders; JPMorgan Chase Bank, N.A.; the Federal Deposit Insurance Corporation; Trust Preferred Holders; the WaMu Noteholders Group; Appaloosa Management, L.P., et al.; and Nantahala Capital Partners, LP and Blackwell Partners, LP. Judge Walrath approved the examiner appointment on July 28, 2010. The Examiner is directed to investigate: (1) claims and assets that may be property of the Debtors' estates that are proposed to be conveyed, released or otherwise compromised and settled under the Debtors' Chapter 11 Plan of Reorganization, as amended, and the Global Settlement Agreement, including all Released Claims, as defined under the Global Settlement, and the claims and defenses of third parties, or the "Settlement Component;" and (2) other claims, assets, and causes of actions, which will be retained by the Debtors or related proceeds, if any, distributed to creditors or equity interest holders pursuant to the Plan, and the claims and defenses of third parties -- the "Retained Asset Component" -- without prejudice to the Court modifying the scope of the Investigation in the event that it deems appropriate. In connection with the Court's directive, the Examiner Work Plan "include[s] a good faith estimate of the fees and expenses to be incurred by or on behalf of the Examiner in connection with the Investigation and a status report detailing the Examiner's efforts to date." The Examiner disclosed that he has reviewed publicly available documents regarding the proposed Investigation, and has arranged conference calls and meetings with the Debtors, the Equity Committee, the Creditors' Committee, the TPS Consortium, JPMorgan Chase, the Washington Mutual Noteholders Group and a group of noteholders represented by Fried Frank. The Parties pledged to cooperate with the Examiner. Counsel to the Examiner, Henry F. Sewell, Jr., Esq., at McKenna Long & Aldridge, LLP, in Atlanta, Georgia, particularly noted that: -- the Equity Committee provided a summary of the issues it believed required investigation as well as possible sources of documents and investigative materials; -- the Debtors agreed to provide complete access to a document database maintained by their lead counsel, Weil, Gotshal & Manges LLP, which includes the Debtors' existing work product analyses with respect to the Settlement Component and the Retained Assets Component; -- the Creditors' Committee agreed to provide certain documents and materials including its work product analysis of the issues to be investigated; -- the TPS Consortium provided a summary of its position and documents related to the Examination; -- JPMorgan Chase provided detailed information concerning its position with respect to the Global Settlement, as the Examiner has begun the process of identifying additional information and documents to identify possible witnesses; and -- the Noteholders provided their thoughts regarding the Investigation. Areas of Investigation Judge Walrath approved the proposed scope of investigation to be conducted by the Examiner. Specifically, the Examiner will evaluate these items: (a) The work completed to date by the Debtors and other parties, and issues related to the Settlement Component as they pertain to JPMorgan Chase, including: * business tort claims and other possible claims and theories of recovery; * competing claims to Tax Refunds, as defined under the Global Settlement, totaling $6 billion; and * several categories of disputed assets, as defined under the Global Settlement, which are to be allocated between the Debtors and JPMorgan Chase, including rights to approximately $4 billion in deposit accounts. (b) Issues related to the Federal Deposit Insurance Corporation, including the rights, duties and obligations by and between the Debtors, JPMorgan Chase and the FDIC relating to the takeover of Washington Mutual Bank. (c) Significant transfers of funds were made between WaMu and WMB, within one year of the Chapter 11 cases, to determine whether they are avoidable and, if so, from whom they are recoverable and the consequences of avoiding those Transfers to the Debtors' estates. (d) Competing claims to approximately $4 billion of securities, to which JPMorgan is entitled under the terms of the Global Settlement. (e) Potential claims and causes of action -- the Retained Asset Component -- which may exist against third parties and require further investigation, to possibly provide for further recoveries in the Debtors' Chapter 11 cases. The Examiner averred that he will focus his investigation on claims against parties involved in the sale and marketing of the Debtor prior to seeking bankruptcy protection, the failure and seizure of WMB, and conduct which has taken place since the Petition Date. Work Plan and Estimate of Fees The Examiner noted that his consultations with parties-in- interest have confirmed that the scope of the proposed Investigation is large and that it will require significant factual and legal analysis of many complex issues. Several parties-in-interest, the Examiner adds, have made clear that they encourage him to conduct an expeditious examination. In this regard, the Examiner has determined that the most efficient manner in which to conduct the Investigation is to establish teams to investigate discrete areas. The Examiner has chosen professionals at McKenna Long & Aldridge, LLP, to assist him in the Investigation. The Examiner revealed that MLA is staffing the Examination with a large number of professionals because of the significant amount of analysis that is necessary to review prior litigation, evaluate the legal and factual issues and to further investigate those these issues. A team leader or MLA partner will be appointed for each team and regular meetings between team leaders and the Examiner will be held to coordinate the activities of the teams. The teams established by the Examiner, their duties and hourly rates are: Team Task Focus Hourly Rate ---- ---------- --------------- FDIC Team Merits of the Settlement Partner $450 Component with respect to, Associates $325 and causes of action against, the FDIC JPMorgan Settlement claims, potential Partner $750 Chase Team claims and causes of action Associates $375 and business tort issues to $450 Avoidance Avoidance actions and matters Partner $575 and Asset relating to disputes over assets Associates $320 Claims between the Debtors and JPMorgan to $480 Chase Consultant $450 Tax Issues Tax aspects of the settlement Partner $620 between the Debtors, the FDIC Associate $350 and JPMorgan Chase Third Potential claims against Partner $495 Party third parties Associate $350 Claims TPS Status of TPS issues and their Partner $615 Securities impact on the Global Settlement Associate $350 Bankruptcy Assist the Examiner in Partner $495 Issues and coordinating the Examination and to $480 Overall addressing administrative issues Associate $325 Each of the investigating teams will report to the Examiner who will direct and coordinate the activities of their own team. The number of teams may be expanded as the Investigation continues to address specific issues. The Examiner will outline in his preliminary report the status of the Investigation. The Examiner anticipates spending at least 180 hours per month on the Investigation for August and September. The Examiner also expect that the 18 MLA professionals will work on the Investigation on a full time basis at 180 hours per month in August and most likely throughout the month of September. The Examiner anticipates that the blended hourly rate for MLA professionals working on the Investigation matter will be below $500 per hour, but for purposes of providing an estimate of fees will assume a blended rate of $500 per hour. As of July 31, 2010, the Examiner and MLA had incurred fees of approximately $220,000, Mr. Sewell disclosed. In addition, the firm Cole, Schotz, Meisel, Forman & Leonard, P.A., will incur fees in serving as the Examiner's Delaware counsel. Based on the estimates, the Examiner and professional fees of $2,000,000 for each of August and September will be incurred pursuant to the Work Plan, excluding estimates for any financial consultants or advisors to be retained, for which the Examiner will seek the Court's permission. The Examiner estimates that his fees and related professional fees pursuant to the Court-directed WaMu Investigation could total $4 million or more through September 30, 2010. The Examiner also anticipates about $200,000 in out-of-pocket expenses to be incurred per month. Production of Documents In connection with the Investigation, the Examiner sought and obtained the Court's authority, without further order, to demand and compel by way of subpoena: (a) the production of documents that may be relevant to the Investigation or lead the Examiner to information that is relevant to the Investigation; (b) the oral examination, under oath, of persons who may have knowledge of facts related to the Investigation. The Examiner noted that the Debtors, the Equity Committee, the Creditors' Committee and other parties-in-interest have significant attorney work product and privileged documents and information. The Examiner anticipates that he will use the Work Product of the subject parties in his report, without attribution to the source of the Work Product and will, at the conclusion of the Investigation, destroy or return the Work Product to the party which produced it. The Court encouraged the parties to turn over their Work Product to the Examiner. The Court also clarified, at the Examiner's behest, that the voluntarily production and delivery of privileged or work product materials to the Examiner by parties-in-interest will not constitute a waiver of attorney-client privilege, attorney work product protection, confidentiality or any other applicable privilege, protection, immunity, or confidentiality by the party producing those Materials. To ensure that no disruption to the Investigation process occurs, Judge Walrath prohibits any party from propounding any discovery of any kind upon the Examiner during the pendency of the Investigation. The Examiner is expected to file his Preliminary Report by September 7, 2010, and his Final Report by October 8, 2010. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment estimated assets of $500,000,000 to $1,000,000,000 with zero debts. Peter Calamari, Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP, served as legal counsel to WMI with responsibility for the litigation. Brian Rosen, Esq., at Weil, Gotshal & Manges LLP served as legal counsel to WMI with responsibility for the Chapter 11 case. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WASHINGTON MUTUAL: Texas GRP Wants Documents Produced ----------------------------------------------------- American National Insurance Company, American National Property and Casualty Company, Farm Family Life Insurance Company, Farm Family Casualty Insurance Company and National Western Life Insurance Company, collectively known as the Texas Group, asks the Court to compel the Debtors to produce certain documents. Michael P. Migliore, Esq., at Smith, Katzenstein & Furlow LLP, in Wilmington, Delaware, relates that the Texas Group owns claims in a lawsuit brought against JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A. The Texas Litigation is pending before the U.S. District Court for the District of Columbia. The Debtors purport to extinguish the Texas Group's claims in the Texas Litigation by way of releases contained in the proposed Chapter 11 Plan of Reorganization. The Texas Group filed objections to the Disclosure Statement explaining the Plan and partially supported the Debtors' efforts to establish discovery protocols. As a party-in-interest in the Debtors' cases, the Texas Group asserts that it is entitled to obtain discovery under Rules 26 and 34 of the Federal Rules of Civil Procedure, made applicable by Rules 9014, 7026 and 7034 of the Federal Rules of Bankruptcy Procedure. Accordingly, the Texas Group is seeking to conduct discovery on the Debtors "in order to have a meaningful opportunity to oppose the Debtors' Plan." The Debtors, however, have refused to provide the Texas Group with any discovery, asserting that unless the Texas Group has a claim against the Debtors, it is not entitled to obtain discovery, Mr. Migliore notes. Mr. Migliore argues that the Debtors cannot preclude the Texas Group from exercising its rights to take discovery as to the reasonableness of the Plan, the Global Settlement embodied in the Plan, and the releases of the Texas Group's claims that are proposed in the Plan. Texas Group's participation in discovery, he contends, ensures protection of its financial interest and claims in the Texas Litigation, which are threatened by the Plan releases. According to Mr. Migliore, the Texas Group served formal requests for production of responsive documents on the Debtors in June 2010. At the general meet-and-confer held in these Chapter 11 cases, the Debtors stated that they would allow all interested parties access to an electronic discovery depository which was to be made available on June 30, 2010. Because the Debtors were primarily concerned that parties-in- interest would be using the information contained in the Depository only for the instant case, all parties -- including the Texas Group -- were made to sign a confidentiality agreement before access to the Depository was granted. The Texas Group specified that it agreed to (i) maintain the confidentiality of all materials produced by the Debtors and other parties in the Debtors' cases, and (ii) use the Materials only for prosecution of its objection to confirmation of the Plan. In July 2010, however, the Debtors made it clear that they would produce no documents to the Texas Group. The Debtors stated that they did not believe that the Texas Group is entitled to access to the Depository because the Group does not hold a claim against them and thus, is not a party-in-interest in their bankruptcy cases. The Debtors conveniently ignored the fact that their proposed Plan and Settlement Agreement purport to release, settle and otherwise extinguish the Texas Group's valuable property right, in the form of its claims in the Texas Litigation, Mr. Migliore argues. The Debtors further ignore that it was their actions -- obtaining consideration for "settling" the Texas Litigation -- that necessitated the Texas Group's involvement in this case, he contends. For these reasons, the Texas Group asks the Court to allow it immediate access to the Depository, and to grant it full rights to participate in all discovery related to the Debtors' cases. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment estimated assets of $500,000,000 to $1,000,000,000 with zero debts. Peter Calamari, Esq., and David Elsberg, Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP, served as legal counsel to WMI with responsibility for the litigation. Brian Rosen, Esq., at Weil, Gotshal & Manges LLP served as legal counsel to WMI with responsibility for the Chapter 11 case. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WESTERN ALLIANCE: Moody's Assigns 'Ba3' Rating on Senior Bonds -------------------------------------------------------------- Moody's Investors Service assigned a rating of Ba3 to the senior unsecured obligation of Western Alliance Bancorporation (issuer Ba3). Western Alliance is the holding company of Bank of Nevada (bank financial strength D+, long-term deposits Ba1), its lead banking subsidiary. The rating outlook is stable. Assignments: Issuer: Western Alliance Bancorporation -- Senior Unsecured Regular Bond/Debenture, Assigned Ba3 Ratings Rationale Bank of Nevada's financial strength rating of D+ reflects its healthy capital metrics and good base of core deposits as well as its significant concentration in commercial real estate (CRE) which is a large concentration risk, amounting to approximately 2.9 times tangible common equity. Moody's last rating action on Western Alliance was on April 6, 2009, when the rating agency downgraded the issuer rating to Ba3 from Baa3 and the financial strength rating of its subsidiary, Bank of Nevada, to D+ from C-. Regulatory Disclosures Information sources used to prepare the credit rating are these: parties involved in the ratings, parties not involved in the ratings, public information ,and confidential proprietary Moody's Investors Service's information Moody's Investors Service considers the quality of information available on the issuer or obligation satisfactory for the purposes of assigning a credit rating. Moody's Investors Service adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from reliable sources; however, Moody's Investors Service does not and cannot in every instance independently verify, audit or validate information received in the rating process. The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. WHITE BIRCH: Plans to Sell Business by Early September ------------------------------------------------------ American Bankruptcy Institute reports that White Birch Paper Co. plans to sell itself by early September, with a group of the newsprint company's senior lenders in the lead position to buy up its assets. About White Birch White Birch Paper Company -- http://www.whitebirchpaper.com/-- is the second largest newsprint manufacturer in North America with operations in both Canada and the United States. The Company filed for Chapter 15 on February 24, 2010 (Chapter 15 E.D. Va. Case No. 10-31234.) White Birch's assets range from $100,000,001 to $500,000,000 and liabilities range from $500,000,001 to $1,000,000,000. Its debtor-affiliate, Bear Island Paper Company, L.L.C., filed for Chapter 11 (Bankr. Case No. 10-31202). In its petition, Bear Island estimated assets of $100 million to $500 million and debts ranging from $500 million to $1 billion. WHOLE FOODS: S&P Raises Corporate Credit Rating to 'BB' ------------------------------------------------------- Standard & Poor's Ratings Services said it raised its corporate credit rating on the Austin, Texas-based retail grocer Whole Foods Markets Inc. to 'BB' from 'BB-'. The outlook is stable. The rating on Whole Foods reflects the company's aggressive financial risk profile, the increasingly competitive nature of the food retail industry, and S&P's opinion that a large portion of the company's product offerings are discretionary in nature and thus vulnerable to weak economic conditions. The company's recent rebound in operating performance and its position as the leader in the natural and organic food retailing sector only partly offsets these risks. "Whole Foods' recent rebound in operating performance during 2010 marked by high-single-digit increases in identical-store sales and roughly 20% higher EBITDA has exceeded S&P's expectations," said Standard & Poor's credit analyst Charles Pinson-Rose. As a result of the recent performance trends, S&P expects similar high-single- digit increase over the next two quarters. By the company's second quarter of 2011, S&P believes favorable comparisons will be much more difficult to achieve. Consequently, S&P expects the identical-store sales trends to decelerate to the low- to mid- single-digit area. Furthermore, Whole Foods has planned store openings that will also lead to revenue and sales and profit growth. WIZZARD SOFTWARE: Posts $1.1 Million Net Loss in Q2 Ended June 30 ----------------------------------------------------------------- Wizzard Software Corporation filed its quarterly report on Form 10-Q, reporting a net loss of $1.1 million on $1.3 million of revenue for the three months ended June 30, 2010, compared with a net loss of $2.2 million on $1.2 million of revenue for the same period in 2009. The Company's balance sheet as of June 30, 2010, showed $22.5 million in total assets, $2.4 million in total liabilities, and a stockholders' equity of $20.1 million. As reported in the Troubled Company Reporter on April 6, 2010, Gregory & Associates, LLC, in Salt Lake City, 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 the Company has not yet established profitable operations and has incurred significant losses since its inception. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?699f About Wizzard Software Pittsburgh, Pa.-based Wizzard Software Corporation provides software products and services for the speech recognition and text-to-speech technology. It operates in three segments: Software, Healthcare, and Media Services. The Software segment engages in the development, sale, and service of custom and packaged computer software products. The Media Services segment provides podcast hosting, content management tools, and advertising services. The Healthcare segment provides home healthcare and healthcare staffing services in Wyoming and Montana. * More Older Americans File for Bankruptcy ------------------------------------------ A study released in the September issue of the ABI Journal found that Americans ages 55 and older are filing for bankruptcy at an increasing rate. The study, "Aging and Bankruptcy Revisited," was written by John Golmant and James Woods at the Administrative Office of the U.S. Courts to update a 2002 study that examined the degree to which bankruptcy filings are a function of age. While the bulk of bankruptcies are filed by middle-aged Americans, the percentage of filers ages 55 and over grew 61% from 2002 to 2007, according to Messrs. Golmant and Woods. "This significant demographic uptick in older bankruptcy filers has outstripped the aging of the general population as a whole," Messrs. Golmant and Woods wrote. The study found that the median age for bankruptcy filers increased to 44.9 years of age in 2007, from 37.7 years of age in 1994 and 41.4 years of age in 2002. The demographic that experienced the largest percentage drop in bankruptcy filings were Americans under 25 years old; they accounted for only 1.7% of filers in 2007, as compared to 4% in 2002 and 11% in 1994. Messrs. Golmant and Woods updated their study to determine whether the age trends examined in their previous study continued after the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The authors analyzed samples of 2007 national bankruptcy filing data and compared it with data from 1994 and 2002. "Baby Boomers" (born between 1946-1964) accounted for 42% of all filers in 2007. "The recent housing crisis has worsened the already precarious financial condition of many older Americans," the study said. States that experienced decreases in the home price index had a 118% increase in bankruptcy filings, showing that the collapse of the housing bubble left many Baby Boomers with little or no home equity. The study also found that one of the effects of BAPCPA has been an increase in the percentage of chapter 13 filings, but that it was difficult to gauge whether BAPCPA itself is causing the trend. "Another possibility is that, due to the mortgage crisis, more debtors were trying to postpone foreclosure on their homes by filing chapter 13," according to the study. To obtain a copy of "Aging and Bankruptcy Revisited," please contact John Hartgen at 703-894-5935 or via email at jhartgen@abiworld.org ABI -- http://www.abiworld.org/-- is the largest multi- disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 12,600 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Total Share- Total Working Holders' Company Ticker Assets Capital Equity ------- ------ ------ ------- -------- AUTOZONE INC AZO US 5,452.8 (293.1) (462.0) LORILLARD INC LO US 3,140.0 1,654.0 (54.0) DUN & BRADSTREET DNB US 1,632.5 (475.7) (783.9) MEAD JOHNSON MJN US 2,032.0 357.5 (509.3) NAVISTAR INTL NAV US 8,940.0 1,251.0 (1,198.0) BOARDWALK REAL E BEI-U CN 2,364.5 - (64.6) BOARDWALK REAL E BOWFF US 2,364.5 - (64.6) TAUBMAN CENTERS TCO US 2,560.9 - (510.5) CHOICE HOTELS CHH US 390.2 (291.4) (97.0) WEIGHT WATCHERS WTW US 1,090.1 (344.4) (693.5) SUN COMMUNITIES SUI US 1,167.4 - (123.0) TENNECO INC TEN US 2,980.0 286.0 (47.0) WR GRACE & CO GRA US 4,053.3 1,257.7 (229.5) CABLEVISION SYS CVC US 7,631.6 3.8 (6,183.6) IPCS INC IPCS US 559.2 72.1 (33.0) UNISYS CORP UIS US 2,714.4 366.1 (1,080.1) MOODY'S CORP MCO US 1,957.7 (134.2) (491.9) UAL CORP UAUA US 20,134.0 (1,590.0) (2,756.0) PETROALGAE INC PALG US 6.1 (8.9) (47.4) CABLEVISION SYS CVY GR 7,631.6 3.8 (6,183.6) VECTOR GROUP LTD VGR US 850.0 288.8 (19.6) DISH NETWORK-A DISH US 9,031.0 608.6 (1,580.3) CHENIERE ENERGY CQP US 1,769.5 37.3 (503.5) HEALTHSOUTH CORP HLS US 1,756.1 112.5 (429.9) VENOCO INC VQ US 709.1 14.1 (118.6) NATIONAL CINEMED NCMI US 725.5 90.2 (381.7) PROTECTION ONE PONE US 562.9 (7.6) (61.8) OTELCO INC-IDS OTT-U CN 333.3 25.6 (1.2) OTELCO INC-IDS OTT US 333.3 25.6 (1.2) EXPRESS INC EXPR US 718.1 38.4 (81.8) THERAVANCE THRX US 232.4 180.2 (126.0) CARDTRONICS INC CATM US 472.6 (25.3) (2.1) ARVINMERITOR INC ARM US 2,817.0 313.0 (909.0) DISH NETWORK-A EOT GR 9,031.0 608.6 (1,580.3) JUST ENERGY INCO JE-U CN 1,780.6 (470.0) (279.3) DOMINO'S PIZZA DPZ US 418.6 88.0 (1,263.1) REGAL ENTERTAI-A RGC US 2,575.0 (219.7) (283.5) KNOLOGY INC KNOL US 648.0 48.7 (13.5) UNITED RENTALS URI US 3,574.0 24.0 (50.0) BOSTON PIZZA R-U BPF-U CN 110.2 2.3 (117.7) INCYTE CORP INCY US 493.7 340.3 (104.8) GRAHAM PACKAGING GRM US 2,096.9 228.4 (612.2) TEAM HEALTH HOLD TMH US 828.2 80.0 (37.8) SUPERMEDIA INC SPMD US 3,261.0 522.0 (22.0) FORD MOTOR CO F US 183,156.0 (23,512.0) (3,541.0) WORLD COLOR PRES WC CN 2,641.5 479.2 (1,735.9) LIBBEY INC LBY US 794.2 144.4 (11.7) WORLD COLOR PRES WCPSF US 2,641.5 479.2 (1,735.9) WORLD COLOR PRES WC/U CN 2,641.5 479.2 (1,735.9) REVLON INC-A REV US 776.3 76.9 (1,011.8) AFC ENTERPRISES AFCE US 114.5 (0.2) (4.0) INTERMUNE INC ITMN US 161.4 84.7 (46.5) JAZZ PHARMACEUTI JAZZ US 97.3 (24.2) (16.3) COMMERCIAL VEHIC CVGI US 276.9 111.2 (10.4) ALASKA COMM SYS ALSK US 627.4 15.0 (11.3) US AIRWAYS GROUP LCC US 8,131.0 (220.0) (168.0) FORD MOTOR CO F BB 183,156.0 (23,512.0) (3,541.0) BLUEKNIGHT ENERG BKEP US 297.3 (431.2) (149.9) AMER AXLE & MFG AXL US 2,027.7 31.7 (520.4) SALLY BEAUTY HOL SBH US 1,517.1 345.6 (523.9) CENTENNIAL COMM CYCL US 1,480.9 (52.1) (925.9) EPICEPT CORP EPCT SS 11.4 3.3 (10.2) RURAL/METRO CORP RURL US 286.2 38.7 (100.9) MORGANS HOTEL GR MHGC US 774.4 50.5 (4.3) HALOZYME THERAPE HALO US 51.5 38.3 (14.1) AMR CORP AMR US 25,885.0 (2,015.0) (3,930.0) SINCLAIR BROAD-A SBGI US 1,539.8 52.1 (170.4) CENVEO INC CVO US 1,553.4 199.9 (183.8) RSC HOLDINGS INC RRR US 2,690.2 (120.0) (33.8) LIONS GATE LGF US 1,592.9 (783.4) (1.6) CC MEDIA-A CCMO US 17,286.8 1,240.8 (7,209.3) NPS PHARM INC NPSP US 193.8 129.0 (179.5) MANNKIND CORP MNKD US 239.6 11.0 (137.7) ACCO BRANDS CORP ABD US 1,064.0 242.5 (125.6) PALM INC PALM US 1,007.2 141.7 (6.2) QWEST COMMUNICAT Q US 18,959.0 (424.0) (1,241.0) PDL BIOPHARMA IN PDLI US 271.5 (66.5) (434.9) IDENIX PHARM IDIX US 77.2 38.1 (7.3) PLAYBOY ENTERP-A PLA/A US 189.0 (12.4) (27.6) VIRGIN MOBILE-A VM US 307.4 (138.3) (244.2) GENCORP INC GY US 963.4 140.3 (241.2) PLAYBOY ENTERP-B PLA US 189.0 (12.4) (27.6) CONSUMERS' WATER CWI-U CN 887.2 3.2 (258.0) LIN TV CORP-CL A TVL US 783.5 28.7 (156.5) WARNER MUSIC GRO WMG US 3,655.0 (546.0) (174.0) GLG PARTNERS INC GLG US 400.0 156.9 (285.6) GLG PARTNERS-UTS GLG/U US 400.0 156.9 (285.6) SANDRIDGE ENERGY SD US 3,128.7 (109.4) (118.5) ARQULE INC ARQL US 118.5 53.9 (4.1) HOVNANIAN ENT-A HOV US 2,029.1 1,358.9 (137.0) EASTMAN KODAK EK US 6,791.0 1,423.0 (208.0) STEREOTAXIS INC STXS US 50.9 (0.2) (0.8) EXELIXIS INC EXEL US 419.7 12.8 (214.7) MAGMA DESIGN AUT LAVA US 122.1 14.4 (4.3) ********* 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 ***