/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/110125.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, January 25, 2011, Vol. 15, No. 24 Headlines 1804 SECOND: Case Summary & 20 Largest Unsecured Creditors A ONE MANAGEMENT: Court Voids Tenancies at 577 Warren Property ACCEPTANCE INSURANCE: Granite Re Entitled to Judgement Interest ALLEGIANCE HAWKS: Files Schedules of Assets and Liabilities ALLIED SECURITY: Moody's Puts Low-B Rating on Three Proposed Loans AMBAC FINANCIAL: Fails to Reach Deal on $7.3 BB NOLS Allocation AMBAC FINANCIAL: Objects to K. Veera Plea for Discovery AMBAC FINANCIAL: Commences Adv. Proceeding Against K. Veera AMBAC FINANCIAL: IRS Answers Lawsuit, Seeks to Withdraw Reference AMERICAN ACHIEVEMENT: S&P Puts 'B' Rating on $365MM 2nd Lien Notes AMERICAN INT'L: Benmosche to Stay for Next 12 to 18 Months AMR CORP: Board OKs 2011 Incentive Plan for American Airlines ANGIOTECH PHARMACEUTICALS: Common Stock Delisted from NASDAQ APPLESEED'S INTERMEDIATE: Files Pre-Negotiated Reorganization Plan APPLESEED'S INTERMEDIATE: Has Interim OK to Obtain DIP Financing APPLESEED'S INTERMEDIATE: Sec. 341(a) Meeting Set for Feb. 10 ATLANTIC BROADCASTING: Hires Media Services to Sell Stations BAKERS FOOTWEAR: Wells Fargo and Company Has 7.35% Equity Stake BATCH DEVELOPMENT: Properties Placed Into Receivership BCBG MAX: Moody's Notes of Aug. 10 Maturity of $110MM Loan BEEBE & SWEARINGEN: Voluntary Chapter 11 Case Summary BIOFUEL ENERGY: Registers Add'l Subscription Rights for Shares BLOCKBUSTER INC: Lenders Move Plan Filing Deadline to February 4 BLOCKBUSTER INC: Needs More Cash to Exit Bankruptcy BLOCKBUSTER INC: Plan Filing Exclusivity Extended Until March 21 BROWN & ASSOCIATES: Dist. Ct. Affirms Termination of PPM Lease CAPARRA HILLS: Fitch Assigns 'BB' Initial Issuer Default Rating CARGO TRANSPORTATION: Has Loan Plus Restructuring Officer CB HOLDINGS: Sees Remaining Restaurant Sales 'In Short Order' CELEBRITY RESORTS: Counsel Fees Slashed by $10K for Late Affidavit CENTER FOR JEWISH: Donors Give $30 Million for Debt Service CHARLES J KANE: Stewart Tilghman et al. Fraud Suit Goes to Trial CHEM RX: Lost $109 Million in 2008 and 2009 CITIGROUP INC: Treasury to Auction Off 465.1-Mil. Warrants Today COMMONWEALTH BIOTECHNOLOGIES: Files for Chapter 11 Reorganization COMMONWEALTH BIOTECHNOLOGIES: Case Summary & Creditors List CONSOLIDATED HORTICULTURE: May Lay Off 311 Workers in Early March COOPER COS: S&P Raises Corporate Rating to 'BB+', Outlook Stable CORNER DEVELOPMENT: Selling Assets to Pay Off Debts COSINE COMMUNICATIONS: To Deregister Common Stock CYTOMEDIX INC: Common Stock to Trade on OTC Bulletin Board DEEP MARINE: Court Subordinates Minority Shareholders' Claims DEEP DOWN: 1st to 3rd Quarter 2010 Reports to Be Restated DELTA AIR: Reports $19 Million Profit in Fourth Quarter DELTA AIR: Court Enters Final Decree Closing Chapter 11 Case DELTA AIR: Wins Modification of Plan Injunction as to Ga. Case DELTA AIR: Parties Stipulate on D. Smith Appeal Dismissal DELTA AIR: Files Objections to 19 Claims ECOSPHERE TECHNOLOGIES: Files Services Agreements ENCORE MARKETING: Case Summary & 20 Largest Unsecured Creditors EXTENDED STAY: Files 2nd Post-Confirmation Status Report EXTENDED STAY: Examiner Discharged From Duties EXTENDED STAY: Court Issues Ruling on Final Fee Applications EXTERRA ENERGY: Dismisses Malone Bailey as Accountant FAIRPOINT COMMUNICATIONS: Emerges from Chapter 11 With Lower Debt FGIC CORP: U.S. Trustee Questions Kirkland's & Curtis' Fees FIBREX INSULATION: Goes Into Receivership, Union to Help Workers FREDDIE MAC: 2011 Incentive Scorecards Okayed by FHFA FRITZ BLAU: Case Summary & 20 Largest Unsecured Creditors FUGITIVE RECOVERY: Case Summary & 20 Largest Unsecured Creditors GAMETECH INT'L: Receives Non-Compliance Notice From Nasdaq GLOBAL AIRCRAFT: N.D. Ill. Bankr. Ct. Dismisses Forreston Suit GRAND BEAR: Files for Chapter 11 in Chicago GRAND BEAR: Case Summary & 20 Largest Unsecured Creditors GRAY TELEVISION: Litespeed Management Holds 5.33% Equity Stake GULF FLEET: Can't Claim State Law Privilege Against M/V Gulf Tiger GULFSTREAM INT'L: Wins Approval to Sell Business to Victory Park HARBOR FREIGHT: S&P Gives 'B+' Rating; Biz Profile "Vulnerable" HARDAGE HOTELS: Case Summary & 3 Largest Unsecured Creditors HERON LAKE: Boulay Heutmaker Raises Going Concern Doubt HIGHLAND HOSPITALITY: Nears Deal to Restructure $1.8BB Debt ICOP DIGITAL: Files for Chapter 11 to Sell Assets ICOP DIGITAL: Case Summary & 20 Largest Unsecured Creditors IMEDICOR INC: Sold Shares in Exchange for Promissory Note IMPATH INC: Final Distribution to Holders on February 4 INDUSTRY CITY: Defaults on Loans Backing Bush Terminal Bldgs. INFOLOGIX INC: Merger Completed; Stanley Black Has 100% Ownership INNKEEPERS USA: Court Sets Timetable for Five Mile-Lehman Plan INNKEEPERS USA: Five Mile Offer Gives Is Benchmark for Valuation INNKEEPERS USA: Midland Loan Opposes Kirkland's Fees JAVO BEVERAGE: Files for Chapter 11 with Pre-Arranged Plan JAVO BEVERAGE: Case Summary & 25 Largest Unsecured Creditors JUDY INOK KIM: Court Says Fairfield Property Worth $1.5-Mil. JUMA TECHNOLOGY: Vision Capital Discloses 82.8% Equity Stake JUMA TECHNOLOGY: Inks $375,000 Note Pact with Vision Opportunity KINETIC CONCEPTS: Moody's Rates New $1.2-Bil. Credit at 'Ba1' KIRWOOD GENERAL: Omega Consulting's Suit Referred to Bankr. Court KRISPY KREME: Green Mountain Coffee Founder Acquires 5.1% Stake L&L FOOD CENTER: To Auction 3 Remaining Stores in February LAREDO PETROLEUM: S&P Puts 'CCC' Rating on $350MM Note Offering LEHMAN BROTHERS: Set To Reveal New Chapter 11 Plan LEHMAN BROTHERS: BNS Wants to Foreclose on Las Vegas Mall LEHMAN BROTHERS: LBI Trustee Reaches Settlement With CalPERS LEHMAN BROTHERS: Demands Additional $9 Mil. From Bank of America LEVEL 3 COMMS: Enters Into $305MM Notes Indenture with BNY Mellon LEVEL 3 COMMS: Calls for Redemption of $195.7-Mil. Conv. Notes LIBERTY FOOD: Case Summary & 10 Largest Unsecured Creditors LIFELINE PARTNERS: Case Summary & 16 Largest Unsecured Creditors MASJID AL RASOOL: Lerob Stay Relief Effective March 1 MEDCLEAN TECHNOLOGIES: Manatuck Hill Holds 12.6% Equity Stake MERIDIAN PARTNERSHIP: Case Summary & 20 Largest Unsec Creditors MESA AIR: Court Confirms Plan of Reorganization MESA AIR: Pilots Commit to Successful Emergence from Ch. 11 MESA AIR: Wins Approval to Assume Bombardier Purchase Agreement MESA AIR: BF Claims Holdings I Now Substantial Claimholder MEXICANA AIRLINES: Makes Two Test Flights, Hopes for Return MGM RESORTS: Dubai World Has 5.3% Equity Stake MILLER BROTHERS: Case Summary & 20 Largest Unsecured Creditors MIRALINK CORP: Case Summary & 20 Largest Unsecured Creditors MJR ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors MOLECULAR INSIGHT: Nasdaq to Delist Common Stock Effective Jan. 31 MOUNTAIN PROVINCE: Initiates Exploration at Kennady Project NEC HOLDINGS: Resolves Dispute With Gores on Adjustments NEUROLOGIX INC: Extends Ohio Research Pact Until November NEW DRAGON: Faces NYSE Delisting After No Stockholders' Meet NEXAIRA WIRELESS: Extends Expiry of 1.57MM Warrants to 2013 NEXAIRA WIRELESS: Issues Common Stock to Novatel to Settle Debt NORTH GENERAL: Plan Outline OK'd; Feb. 15 Confirmation Hearing Set OCEAN INVESTMENTS: Voluntary Chapter 11 Case Summary OVERSEAS SHIPHOLDING: S&P Revises Unsecured Recovery Rating to '3' P&M SPOKANE: Case Summary & Largest Unsecured Creditor PALMAS COUNTRY: Amended Plan Deletes 3rd Party Release Provision ROSELAND VILLAGE: Filed for Chapter 11 to Stop Foreclosure ROSELAND VILLAGE: Section 341(a) Meeting Scheduled for Feb. 11 ROSELAND VILLAGE: Taps DurretteBradshaw as Bankruptcy Counsel SATELITES MEXICANOS: To File for Pre-Pack Restructuring in U.S. SELIM AMERICA: Ch. 11 Trustee Wants Case Converted to Chapter 7 SENIOR HOUSING: Future Income Stream Constitutes Cash Collateral SENSIVIDA MEDICAL: Posts $663,200 Net Loss in November 30 Quarter SEVERN BANCORP: Swings to $3.3-Mil. Profit in Q4 of 2010 SHAILESH JAWALE: Case Summary & 15 Largest Unsecured Creditors SPANISH BROADCASTING: Beach Point Capital Has 6.32% Equity Stake SPEEDWAY MOTORSPORTS: S&P Puts 'BB' Rating on Proposed Notes STYRON CORP: Moody's Upgrades Rating on $1.3BB Term Loan to 'B1' TAWK DEV'T: Section 341(a) Meeting Scheduled for Feb. 17 TAWK DEV'T: Taps Gordon Silver as Bankruptcy Counsel TAWK DEV'T: Reaches Stipulation to Use Cash Collateral TEAMSTAFF INC: Receives Nasdaq Deficiency Notice TIGRENT INC: Settles "Acciard" & "Altimas" Lawsuits for $525,000 TM PROPERTIES: Case Summary & 6 Largest Unsecured Creditors TOWN SPORTS: John Warren Owns 4.06 Million Common Shares TOWNVIEW 56TH: Case Summary & 19 Largest Unsecured Creditors TP INC: Disc. Statement Approved; Confirmation Hearing Set Feb. 1 UNITED WESTERN: Chairman Says Seizure Could Force Bankruptcy URBAN BRANDS: Wants Until April 19 to Propose Chapter 11 Plan VANGUARD HEALTH: S&P Assigns 'B-' Rating on Proposed $375MM Notes VEBLEN EAST: Sale of Marshall Cty. Property to Agstar Confirmed WILDHORSE MEADOWS: In Chapter 11 to $4.6 Million Debt WILDHORSE MEADOWS: Case Summary & Largest Unsecured Creditor WOMAN'S CLUB: Case Summary & 13 Largest Unsecured Creditors W.R. GRACE: Amends Canadian ZAI Pact to Increase Contribution W.R. GRACE: Court OKs Settlement With CNA Financial W.R. GRACE: To Release Q4 Financial Results on Feb. 10 YRC WORLDWIDE: S&P Places 'CCC-' Corporate Rating on CreditWatch ZALE CORP: Breeden Entities Have 27.22% Equity Stake * CRE & Retail Are Most Troubled Sectors in 2011, Weil Survey Says * Barry Fishman Receives Honor at Bankruptcy Bar Association Event * Hahn & Hessen Names Partners in Bankruptcy & Litigation Groups * Three Vacancies Filled on California Bankruptcy Bench * Large Companies With Insolvent Balance Sheets ********* 1804 SECOND: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: 1804 Second Ave., NY, LLC 280 Madison Avenue, Room 808 New York, NY 10016 Bankruptcy Case No.: 11-10204 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court Southern District of New York (Manhattan) Judge: Stuart M. Bernstein Debtor's Counsel: Kim R. Lynch, Esq. FORMAN HOLT ELIADES & RAVIN LLC 80 Route 4 East, Suite 290 Paramus, NJ 07652 Tel: (201) 845-1000 Fax: (201) 845-9112 E-mail: klynch@formanlaw.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/nysb11-10204.pdf The petition was signed by Kenneth Birnbaum, managing member. A ONE MANAGEMENT: Court Voids Tenancies at 577 Warren Property -------------------------------------------------------------- Bankruptcy Judge Joel B. Rosenthal rules that the leases and tenancies of Keith James, Frank Rodriquez, Ronald Tantajulca, Jessica Gonzalez, Leidy Estevez, Fancisco Julca, Sergio Matos, Mohammed Siddiqi, and Estevez Martinez at 577 Warren Street, Brooklyn, New York, are void and without force and effect against Carnegie Hall Overlook, LLC -- the assignee of a mortgage covering the premises known as 577 Warren Street, Brooklyn, New York; and the proponent of the confirmed Chapter 11 plan of reorganization for A One Management I, Inc. -- and the Debtor. The Court will address the issues of contempt, sanctions, and damages, if any, at a later date. A copy of the Court's Jan. 18, 2011 decision and order is available at http://is.gd/ommiw9from Leagle.com. Brooklyn, New York-based A One Management I, Inc., filed for Chapter 11 protection on Sept. 24, 2009 (Bankr. E.D.N.Y. Case No. 09-48331). M. David Graubard, Esq., at Kera & Graubard, in New York -- zaidiekgh@aol.com -- serves as counsel to the Debtor. On October 18, 2010, the Court confirmed a bankruptcy-exit plan proposed by Carnegie Hall Overlook, LLC. On November 4, 2010, the Court denied the Debtor's request to revoke confirmation of the plan. ACCEPTANCE INSURANCE: Granite Re Entitled to Judgement Interest --------------------------------------------------------------- Granite Reinsurance Company, Ltd., a Barbados reinsurer, filed a proof of claim against Acceptance Insurance Companies, Inc., claiming AICI owed it $10.9 million, which was the balance of the premium due under the reinsurance contract plus interest. The Debtor objected on the basis that the reinsurance premium was due on an annual basis for coverage received in that year. Because it could no longer issue crop insurance policies, the Debtor contended that it no longer needed reinsurance coverage and was not obligated to continue making payments under the contract. Granite Re filed a complaint in the United States District Court for the District of Nebraska against AICI's wholly owned subsidiary, Acceptance Insurance Company, alleging AIC also was liable to Granite Re on the same contract. By consent, the District Court transferred Granite Re's proceeding against AIC to the Bankruptcy Court (Bankr. D. Neb. Adv. Pro. No. 06-8015). AICI initiated a separate adversary proceeding against Granite Re asserting a claim for unjust enrichment (Bankr. D. Neb. Adv. Pro. No. 06-8115). AICI asserted the contract lacked consideration, and that Granite Re had been unjustly enriched by the $6 million AICI paid to Granite Re for reinsurance Granite Re did not in fact provide. All issues associated with Granite Re's proof of claim asserted against AICI, Granite Re's adversary complaint against AIC, and AICI's adversary complaint against Granite Re were consolidated for discovery and trial. In May 2007, the Bankruptcy Court denied Granite Re's claim for the $9 million in premiums. On appeal, the Eighth Circuit's Bankruptcy Appellate Panel reversed that ruling in March 2008, finding the reinsurance contract to unambiguously state that its term was five years and its premium was $15 million payable over five years. The Acceptance entities "have the option of paying the contract premium in installments, but are not required to do so. The contract does not indicate that the installment payments are yearly renewal premiums or that the debtor may opt out of the contract to avoid paying any of the installments." In May 2009, the Eighth Circuit Court of Appeals affirmed that ruling. After the Circuit Court's opinion became final, Granite Re moved for entry of judgment in its favor in accordance with the appellate decision. It requested allowance of its claim in the principal amount of $9 million, plus pre-judgment interest at the contract rate of 1.5% per month from January 1, 2003, through entry of the B.A.P. judgment on March 14, 2008, plus post-judgment interest at the contract rate of 1.5% per month from March 14, 2008, through July 31, 2010, and per diem interest at the contract rate thereafter. The motion attracted opposition based on its request for interest. With regard to the matter of pre-judgment interest, the questions are: First, when does interest at the contractual rate begin to accrue? Is it on January 1, 2003, when the first of the three installment payments were due? Is it on May 5, 2003, when Acceptance allegedly repudiated the contract? Is it on the due dates for each of the payments? Second, what is the appropriate post-judgment interest rate? Is it the contractual rate or the federal statutory rate? Bankruptcy Judge Timothy J. Mahoney rules that Granite Re is entitled to payment on its claim for $9 million in premium payments. It is entitled to pre-judgment interest at the contract rate from the date each payment was due. Interest should be paid on the 2003 payment from January 1, 2003, through March 14, 2008. Interest should be paid on the 2004 payment from January 1, 2004, through March 14, 2008. Interest should be paid on the 2005 payment from January 1, 2005, through March 14, 2008. Granite Re is also entitled to post-judgment interest at the rate specified under 28 U.S.C. Sec. 1961 from March 15, 2008, until paid. Judge Mahoney directs the parties to confer and agree on the interest rates on the various components and prepare a judgment entry that includes the principal and accrued interest to a date certain and interest at a per diem amount thereafter. If the parties cannot agree, they may submit separate proposed judgments with an explanation of how they arrived at the figures contained therein. A copy of the Bankruptcy Court's January 20, 2011 Order is available at http://is.gd/OV9R6Ufrom Leagle.com. About Acceptance Insurance Headquartered in Council Bluffs, Iowa, Acceptance Insurance Companies, Inc. -- http://www.aicins.com/-- is a Delaware corporation established in 1968. The Company now only owns Acceptance Insurance Company, a Nebraska domestic insurance company. In late 1999 the Company began exiting the property and casualty business and in 2001 discontinued the issuance or renewal of policies other than crop insurance policies. In December 2002 the Company discontinued the issuance or renewal of crop insurance policies. The Company filed for Chapter 11 protection on Jan. 7, 2005 (Bankr. D. Nebr. Case No. 05-80059). The Debtor's affiliates -- Acceptance Insurance Services, Inc., and American Agrisurance, Inc. -- each filed Chapter 7 petitions (Bankr. D. Nebr. Case Nos. 05-80056 and 05-80058) on January 7, 2005. Jeffrey T. Wegner, Esq., Patrick B. Griffin, Esq., at Kutak Rock LLP, Lewis S. Wiener, Esq., at Sutherland, Asbill & Brennan, and Robert J. Bothe, Esq., at McGrath, North, Mullin & Kratz, PC, represent Acceptance Insurance Companies in its restructuring effort. As of May 31, 2010, the Debtor had total assets of $2,351,586 against total liabilities of $138,185,754. The Debtor converted its case to a Chapter 7 on September 7, 2010. ALLEGIANCE HAWKS: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Allegiance Hawks Creek Commercial, LP, filed with the U.S. Bankruptcy Court for the Eastern District of Texas its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $14,700,000 B. Personal Property $1,081,966 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $15,716,754 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $4,831,378 ----------- ----------- TOTAL $15,781,966 $20,548,132 Dallas, Texas-based Allegiance Hawks Creek Commercial, LP, filed for Chapter 11 bankruptcy protection on November 1, 2010 (Bankr. E.D. Tex. Case No. 10-43855). Mark A. Castillo, Esq., at The Curtis Law Firm, PC, represents the Debtor in its restructuring effort. The case is jointly administered with Affiliate Allegiance Commercial Development, LP, (Bankr. E.D. Tex. Case No. 10-43853). ALLIED SECURITY: Moody's Puts Low-B Rating on Three Proposed Loans ------------------------------------------------------------------ Moody's Investors Service assigned a Ba3 rating to the first lien credit facility and a B3 rating to the second lien term loan offered by Allied Security Holdings LLC. Concurrently, all existing ratings were affirmed, including the B1 Corporate Family Rating. The ratings outlook remains stable. Allied Security is seeking to refinance its existing $417 million senior secured term loan and $175 million of mezzanine debt with a $395 million first lien term loan, a $190 million second lien term loan and cash on hand. At the same time, the company intends to amend and extend its revolving credit facility and increase capacity to $75 million. The revolver is expected to be undrawn at close, though about $23 million of letters of credit will effectively reduce availability. Allied Security's B1 CFR incorporates the relatively recession- resistant nature of end market demand for security services. The company has grown revenue, enhanced margins and steadily generated higher cash flow since the LBO in August 2008, despite a difficult economic environment. Moody's views the proposed transaction favorably, as an expected reduction in interest expense should improve cash flow and interest coverage while extending debt maturities by about two years. The rating continues to reflect the company's good liquidity profile, the value of the AlliedBarton brand and its market position as one of the largest security firms in the US. The company's ratings remain constrained by high financial leverage and equity-friendly financial policies. As of September 30, 2010, financial leverage (total debt / EBITDA) was about 5.7 times using Moody's standard adjustment to capitalize off-balance sheet operating leases. Moody's views it unlikely that Allied Security will make voluntary debt reductions in the near term, given the August 2010 decision to distribute capital to shareholders. Nonetheless, the stable outlook reflects Moody's expectation that financial leverage may improve to some extent from modest organic revenue and earnings growth. While an upgrade is unlikely in the near term, the ratings or outlook could be raised if Allied Security permanently reduces debt such that financial leverage and free cash flow to debt can be sustained below 4 times and above 10%, respectively. Negative ratings pressure could result from incremental debt or a deterioration in earnings that causes financial leverage to remain above 5.5 times. Additionally, a negative rating action may be taken if liquidity declines or if free cash flow to debt and interest coverage fall below 4% and 1.7 times, respectively. Moody's assigned these ratings (and Loss Given Default point estimates, as noted): * $75 million proposed first lien revolving credit facility due 2016 -- Ba3 (LGD3, 33%) * $395 million proposed first lien term loan due 2017 -- Ba3 (LGD3, 33%) * $190 million proposed second lien term loan due 2018 -- B3 (LGD5, 86%) Moody's affirmed these ratings: * Corporate Family Rating -- B1 * Probability of Default Rating -- B1 * $66.5 million senior secured revolving credit facility due 2/2014 -- Ba3 (LGD3, 34%) -- to be withdrawn upon closing of the transaction and ensuing debt repayment * $417 (formerly $422) million senior secured term loan due 2/2015 -- Ba3 (LGD3, 34%) -- to be withdrawn upon closing of the transaction and ensuing debt repayment The principal methodologies used in this rating were Global Business & Consumer Service Industry Rating Methodology published in October 2010, and Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Allied Security Holdings LLC, headquartered in Conshohocken, Pennsylvania, is a leading provider of security services in the US. The company is privately-owned by affiliates of The Blackstone Group, institutional investors, and members of management. In the last twelve months ended September 30, 2010, Allied Security reported revenues of about $1.7 billion. AMBAC FINANCIAL: Fails to Reach Deal on $7.3 BB NOLS Allocation --------------------------------------------------------------- A lawyer for Ambac Financial Group, Inc., told Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York that the company has not yet reach a deal with regulators and lenders over the allocation of $7.3 billion in net operating losses, Tiffany Kary of Bloomberg News reported. Ms. Kary commented that AFG's Chapter 11 case has been delayed because a dispute in parent company Ambac Assurance Corporation's rehabilitation proceedings in Wisconsin prevented AFG from reaching a settlement that would form the backbone of its Chapter 11 plan. According to Bloomberg, the U.S. Internal Revenue Service has challenged claims by AFG and AAC relating to the tax deductions tied to the NOLs. Counsel to AFG, Todd Padnos, Esq., at Dewey & LeBoeuf LLP, in New York -- tpadnos@dll.com -- noted that a ruling remanding the dispute to state court may get the case moving again, unless the IRS appeals the decision, Bloomberg relayed. "So the bottom line is, we're just in a holding pattern for a while," Judge Chapman was quoted at a January 19, 2011 hearing. In other matters, Mr. Padnos told the Bankruptcy Court that AFG is in talks with the IRS on whether to oppose the agency's request to withdraw reference of an adversary proceeding commenced by the company against IRS to the U.S. District Court for the Southern District of New York. AAC Faces $700MM in Tax Claims With the impending IRS challenge, AAC might have to pay back a $700 million refund it collected because its credit default swap losses should not have been deducted from taxable income, according to Patrick McGee and Dan Seymour of The Bond Buyer. The IRS has argued that it has the right to collect taxes regardless of how the company restructures itself, The Bond Buyer related. A move by federal authorities to seize AAC's assets to satisfy tax claims would create a "catastrophic chain of events" for the company, the article noted. Sean Dilweg, who served as the Wisconsin insurance commissioner and rehabilitator of AAC, proposed a plan to prevent claims in a $114.7 billion structured finance insurance book from overwhelming the company's capital and ruining policies in its $223.2 billion municipal insurance book, The Bond Buyer noted. The state of Wisconsin placed about 1,000 of AAC's riskiest policies, with about $60 billion par value, in a walled-off account, the report pointed out. Claims in the separate account were temporarily frozen to stop AFG from hemorrhaging more than $150 million a month, the report added. Mr. Dilweg also proposed a rehabilitation plan for AAC which would give segregated account policyholders a quarter of their claims in cash and 75% in notes backed by the company's surplus. Nothing in the rehabilitation of the segregated account was expected to impair the municipal insurance book until October 28, 2010, when the IRS sent the company a "mild request," The Bond Buyer observed. AAC had submitted for and received a $700 million tax refund based on accounting methods the IRS was now questioning, the report relayed. The IRS asserted that if it determines AAC owes and cannot pay the $700 million in taxes, the government can declare a deficiency under which it places a levy on the company's liquid assets to satisfy the tax obligation, The Bond Buyer pointed out. A rehabilitation of AAC would thus trigger a technical default under many of its CDS contracts, and force the company to close out the swaps and pay whatever it owes, The Bond Buyer noted. As of the date AFG filed for voluntary bankruptcy petition, that amount was $3 billion, according to the article. Mr. Dilweg previously ordered any IRS claims into the segregated account, where they would be treated like any other claim: part in cash, part in IOU, the report stated. Mr. Dilweg also obtained a state court injunction prohibiting the IRS from commencing any actions in any state, federal or foreign court, against AAC, the segregated account, any subsidiary, and the rehabilitator, The Bond Buyer added. Mr. Dilweg argued that permitting the IRS to levy or attach on assets based on a disputed tax liability would circumvent the state insurance priority statute because it would allow the United States to get paid in full, ahead of policyholders, The Bond Buyer mentioned. The IRS, however, insisted that AAC is not in Wisconsin's custody, citing that the state is only rehabilitating the segregated account not the hundreds of billions of dollars in the rest of AAC, the report related. The IRS further pointed out that AAC's "tentative" tax refund was granted before the segregated account was created, and a corporate restructuring cannot escape its repayment. The dispute will be decided by the U.S. District Court for the Western District of Wisconsin in the Rehabilitation of Segregated Account of Ambac Assurance Corp. v. United States of America. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMBAC FINANCIAL: Objects to K. Veera Plea for Discovery ------------------------------------------------------- Karthikeyan V. Veera is a plaintiff in a proposed class action before the U.S. District Court for the Southern District of New York, captioned Veera v. Ambac Plan Administrative Committee, et al., No. 1:10-cv-4191. Mr. Veera commenced the Class Action on behalf of himself and other participants in the Ambac Financial Group, Inc. Savings Incentive Plan who have lost their retirement assets by investing in AFG common stock through the Plan. Mr. Veera has brought the claims against the fiduciaries of the Plan for violating the Employee Retirement Income Security Act, but has not named AFG as a defendant in the Class Action. Discovery is ongoing in the Class Action and Judge Harold Baer, the presiding judge in the Class Action, has set a June 30, 2011 deadline for fact discovery. Stephen J. Fearon, Jr., Esq., at Squitieri & Fearon, LLP, in New York -- stephen@sfclasslaw.com -- asserts that the defendants' counsel in the Class Action has represented that AFG controls the majority of the documents that Mr. Veera has sought from the defendants and that the automatic stay applies to almost all of the discovery that Mr. Veera seeks in the Class Action as well as to the witness whom Mr. Veera seek to depose. Mr. Fearon further notes that the defendants have argued that the Plaintiff must seek leave in AFG's Chapter 11 case for discovery. Against this backdrop, Mr. Veera asks the U.S. Bankruptcy Court for the Southern District of New York to enter: (i) a declaration that the automatic stay in the Debtor's case does not apply to his proposed discovery of AFG; or (ii) in the alternative, an order granting relief from the automatic stay to allow him to serve a subpoena on AFG and take all other actions necessary to obtain documents and Debtor Objects to Discovery, K. Veera Defends Request "The all-encompassing discovery Karthikeyan V. Veera seeks is precisely the kind of intrusive interference with the Debtor's Chapter 11 case that the automatic stay was designed to prevent," counsel to Ambac Financial Group, Inc., Peter A. Ivanick, Esq., at Dewey & LeBoeuf LLP, in New York, argues. Mr. Ivanick also contends that the discovery the Plaintiff seeks goes well beyond what is relevant to the claims and defenses in the action entitled Veera v. Ambac Plan Administrative Committee, et al., No. 10-cv-4191 (HB). "If that discovery is allowed, it would require the Debtor and its professionals to drop everything they are doing in order to produce hundreds of thousands of hardcopy documents, e-mails, and other electronic files," Mr. Ivanick points out. Although the Debtor is not a named party in the ERISA Action, he stresses, the Debtor and its estate have the most to lose if the Plaintiff somehow is to prevail on his claims. Against this backdrop, the Debtor discloses that it intends to file an adversary proceeding against the Plaintiff seeking, among other things, a declaration that the protections of the automatic stay are applicable. Even in the absence of an adversary proceeding, the automatic stay clearly applies to the Plaintiff's efforts to serve sweeping requests on the Debtor, Mr. Ivanick insists. In contrast, he maintains, lifting the automatic stay would not result in an expeditious resolution of the issues in the ERISA Action, rather, it would only bog down the proceedings with months and months of needless delay and discovery disputes. The Debtor thus asks the U.S. Bankruptcy Court for the Southern District of New York to deny Mr. Veera's Lift Stay Motion pending the outcome of the Debtor's intended adversary proceeding. If the Bankruptcy Court should grant Mr. Veera's request, the Debtor proposes that the discovery be narrowly tailored to minimize the burden and cost to its estate. The Official Committee of Unsecured Creditors supports and joins in the Debtor's objection to Mr. Veera's Lift Stay Motion. In addition, the Committee asks the Bankruptcy Court to enter an order providing that the Plaintiff may not engage in the discovery as it relates to the Debtor while the Debtor's Chapter 11 case is pending. In response, Mr. Veera alleges that the Debtor's Objection is simply an attempt by the Debtor and the Defendants in the ERISA Action to deprive him of the discovery he needs to properly pursue the ERISA claims for himself and the more than 400 other participants in the class who lost a significant portion of their retirement savings because of the breaches of duty by the Defendants. Insofar as the scope of the subpoena and timeframe to respond are concerned, Mr. Veera is willing to negotiate with the Debtor to limit the toll any search would have on the current officers and directors and the company's resources, counsel to Mr. Veera, Stephen J. Fearon, Jr., Esq., at Squitieri & Fearon, LLP, in New York, tells Judge Chapman. However, the scope of the subpoena cannot and will not be limited to the issues designated as relevant by the Debtor's counsel or counsel for the Defendants in the ERISA Action, Mr. Fearon insists. The issues are not limited to what actions the ERISA Defendants took to protect the plan -- rather, the issue is whether they took no action when they should have based on what they knew or should have known, Mr. Fearon emphasizes. Mr. Fearon also argues that Mr. Veera's subpoena is not subject to the automatic stay. Mr. Fearon points out that the Debtor is not a party to the ERISA Action, and the Plaintiff was free -- and in fact invited by the Defendants -- to serve his subpoena on AFG as a third party. Indeed, the Debtor's costs associated with third-party discovery outweigh the harm that will be delivered upon the hundreds of class members who have suffered a tragic loss to their retirement savings at the hands of the Non-debtor Defendants, Mr. Fearon asserts. In furtherance of Mr. Veera's reply, Mr. Fearon filed a declaration appending as exhibits copies of (i) a November 17, 2010 e-mail sent by counsel to the non-debtor Defendants in the ERISA Action; (ii) an amended draft rider to a subpoena that Mr. Veera wishes to serve on AFG; (iii) an amended draft rider with notations dealing all changes to a January 5, 2011 rider previously submitted to the Bankruptcy Court; and (iv) a stipulation governing production of documents and information approved by Judge Harold Baer on August 9, 2010. Full-text copies of the exhibits are available for free at: http://bankrupt.com/misc/Ambac_FearonExhibits.pdf About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMBAC FINANCIAL: Commences Adv. Proceeding Against K. Veera ----------------------------------------------------------- Ambac Financial Group, Inc., filed an adversary proceeding in the U.S. Bankruptcy Court for the Southern District of New York for a declaratory relief to confirm applicability of the automatic stay and for injunction against Karthikeyan V. Veera on Jan. 18, 2011. Several months back, in March 2010, Mr. Veera commenced a putative class action before the U.S. District Court in the Southern District of New York on behalf of himself and a putative class consisting of all participants in the Ambac Financial Group, Inc. Savings Incentive Plan for the period from October 1, 2006 to July 2, 2008, against numerous alleged Plan fiduciaries, including certain current and former directors of the Debtor, the Savings Plan Administrative Committee under the Debtor's Plan, the Savings Plan Investment Committee, and the Compensation Committee of the Debtor's Board of Directors. The class action alleges breach of the defendants' fiduciary duties under the Employment Retirement Income Security Act of 1974. Richard W. Reinthaler, Esq., at Dewey & LeBoeuf LLP, in New York -- rreinthaler@dl.com -- stresses that although the Debtor is not a named party to the ERISA Action, the Debtor and its estate have the most to lose if the Plaintiff in the ERISA Action were somehow to prevail on his claims. Mr. Reinthaler explains that the Committee Defendants lack independent legal status apart from the Debtor, and have no assets of their own. Likewise, the individual members of the Committee Defendants have common law, statutory and contractual rights of indemnification from the Debtor, which protect them from having to pay any judgment that may be entered against them in the ERISA Action, he elaborates. Any indemnification obligations the Debtor may be required to satisfy will, in turn, reduce the recoveries in this Chapter 11 case to other unsecured creditors, Mr. Reinthaler continues. Moreover, although the Individual Defendants have a Fiduciary Liability Policy, the amount Mr. Veera seeks to recover in the ERISA Action vastly exceeds the amount of potentially available coverage, Mr. Reinthaler stresses. "Thus, whether named as a defendant or not, the Debtor remains a real party-in-interest in the ERISA Action, and has a significant financial stake in its outcome," Mr. Reinthaler insists. Mr. Veera has acknowledged that he cannot effectively prosecute his claims in the ERISA Action without extensive discovery from the Debtor and its current directors, Mr. Reinthaler reminds the Bankruptcy Court, and thus to that end, Mr. Veera sought relief from the automatic stay to pursue that discovery. However, the discovery Mr. Veera seeks "would take months to complete, at a cost to the Debtor likely to exceed seven figures, and would require employees critical to the Debtor's reorganization to drop what they are doing and spend all of their time gathering, reviewing and explaining to outside counsel and Mr. Veera's counsel potentially hundreds of thousands, if not millions, of hard-copy documents, email and other electronic documents," Mr. Reinthaler tells Judge Chapman. For those reasons, allowing Mr. Veera to pursue the ERISA Action will only prejudice, unduly delay and adversely affect the Debtor's efforts to reorganize by diverting precious human and financial resources -- including, the eight current officers and directors of AFG who have been named as defendants in the ERISA Action -- away from those efforts at this critical juncture in the Debtor's Chapter 11 case, Mr. Reinthaler maintains. By this complaint, the Debtor asks Judge Chapman to enter: (a) a declaration that the automatic stay applies to the ERISA Defendants in the ERISA Action pursuant to Section 362(a) of the Bankruptcy Code; and (b) a preliminary and permanent injunction, barring the continued prosecution of the ERISA Action. Judge Chapman scheduled a pre-trial conference in the Veera Adversary Proceeding for February 16, 2011. Mr. Veera's answer to the complaint is due on February 22. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMBAC FINANCIAL: IRS Answers Lawsuit, Seeks to Withdraw Reference ----------------------------------------------------------------- The U.S. Internal Revenue Service denies allegations in the adversary complaint filed with the U.S. Bankruptcy Court for the Southern District of New York by Ambac Financial Group, Inc., against it. In the lawsuit, Ambac Financial seeks a declaratory judgment on whether the IRS can seize $700 million in tax refunds it has received. The IRS asserts these defenses against the Debtor: * The complaint should be dismissed to the extent the Bankruptcy Court lacks jurisdiction over the subject matter of the complaint; * Any judgment or injunction against the IRS is barred by sovereign immunity generally and also by Section 7421(a) of the Internal Revenue Code; and * The complaint should be dismissed to the extent it fails to state a claim upon which relief could be granted. "Preventing the IRS from taking any actions it rightfully may pursue to assess or collect any tax liability under the Internal Revenue Code without providing five days' advance notice to Debtor would fly in the face of the detailed statutory and regulatory framework under the IRC governing federal tax assessment and collection and subvert its very purpose," U.S. attorney and counsel to the IRS, Daniel P. Filor, Esq. -- Daniel.Filor@usdoj.gov -- argues in an accompanying memorandum. Mr. Filor asserts that resolution of the issue -- on whether AFG's method of accounting for credit default swaps was proper thus entitling it to recover the tax refunds of $700 million -- would require the court adjudicating the issue to wrestle with difficult and novel questions of tax law. Resolution of AFG's request for an injunction restraining the IRS from taking any enforcement action against AFG's non-debtor subsidiaries would also require a court to determine whether the injunction sought is barred by the doctrine of sovereign immunity, he notes. Similarly, the Debtor's view that the Bankruptcy Court's equitable powers can effectively override the statutory powers of the IRS under the Internal Revenue Code is a question involving substantial interpretation of federal non-bankruptcy law which Section 157 of Judiciary and Judicial Procedures Code mandates the district court decide, he contends. Against this backdrop, the relief sought by AFG in the Preliminary Injunction Motion is unprecedented and would violate the IRS' sovereign rights under the Internal Revenue Code, Mr. Filor insists. The Anti-Injunction Act provides that "no suit for the purpose of restraining the assessment or collection of any tax will be maintained in any court by any person," he points out. He further argues that the Anti-Injunction Act expressly prohibits injunctions against the IRS as to non-debtors. "The Anti-Injunction Act prohibits the relief sought by AFG, and because the IRS has specifically reserved its sovereign immunity to an injunction of that kind by carving that relief out of every other statutory waiver of sovereign immunity, the Bankruptcy Court does not have jurisdiction to issue the requested relief," he maintains. For the reasons indicated, the IRS asks the Bankruptcy Court to deny the Preliminary Injunction Motion. In the alternative, the IRS asks the Bankruptcy Court to withdraw reference of the Adversary Proceeding and the Preliminary Injunction Motion to the U.S. District Court for the Southern District of New York. Committee Seeks to Intervene The Debtor, the Official Committee of Unsecured Creditors and the IRS sought and obtained the Bankruptcy Court's approval of a stipulation permitting the Committee to intervene in the IRS Adversary Proceeding. The Committee asserts that it has an absolute right to intervene in the Adversary Proceeding pursuant to Rule 7024 of the Federal Rules of Bankruptcy Procedure and Section 1109(b) of the Bankruptcy Code. Unless directed by the Bankruptcy Court, the Committee represents that it will not seek discovery from either the IRS or the Debtor during the pendency of the Adversary Proceeding, but is in all other respects able to appear and be heard in the IRS Adversary Proceeding as a party-in-interest under Section 1109(b). Lawsuit vs. IRS As reported in the Nov. 12, 2010 edition of the Troubled Company Reporter, Ambac Financial Group, Inc., commenced an adversary complaint against the U.S. Internal Revenue Service seeking a declaratory judgment on whether the IRS can seize $700 million in tax refunds it has received. AFG received about $700 million in tax refunds from carrying back losses that resulted from its credit default swap contracts. The refunds were made in light of applications AFG filed with the IRS for refund entitlement for the tax years ending 2003 through 2008. The IRS specifically refunded AFG $11,470,930, $252,704,185 and $443,940,722 for tax years 2007 and 2008. AFG then distributed the Tax Refunds to its parent company, Ambac Assurance Corporation, pursuant to a 1991 tax sharing agreement among AFG and the subsidiaries in its consolidated tax group. However, by October 28, 2010, the IRS issued an information document request seeking detailed information on whether AAC received authorization for its CDS contracts and the basis for AFG's entitlement to the Tax Refunds it received. Absent that authorization, the IDR sought detailed information on the legal authority AAC relied on in (i) accounting for its CDS Contracts, and (ii) claiming refunds for tax years 2003 through 2007. The IRS also indicated to AFG that it was questioning the propriety of the Tax Refunds and was investigating whether to seek to recoup the Tax Refunds. Counsel to AFG, Peter A. Ivanick, Esq., at Dewey & LeBoeuf LLP, in New York, points out that the IRS may recover any abatement, credit, refund, or other payment erroneously allowed in connection with a tentative carryback adjustment application pursuant to Section 6411 of the Internal Revenue Code by, among other options, assessing the deficiency attributable to the adjustment as if it was due to a mathematical error without regard to the procedural restrictions on assessment. The IRS, Mr. Ivanick continues, may make an assessment related to a tentative carryback adjustment without providing the taxpayer with (i) a notice of deficiency; or (ii) an opportunity to challenge the assessment. The IRS, he adds, is not constrained to stay collection for the 60-day period pursuant to a tentative carryback adjustment assessment and may proceed to collect immediately on the assessment in any manner available under applicable law. "Should the IRS take steps to seize the Tax Refunds before the adjudication of the IRS' entitlement (or lack of entitlement) thereto, AFG's ability to reorganize successfully will be jeopardized or destroyed," Mr. Ivanick tells Judge Chapman. After the assessment, there is a threat that the IRS could immediately place a lien on the taxpayer's assets, Mr. Ivanick points out. Should the IRS levy assets of AAC or the other members of AFG's tax sharing group for a tax ultimately adjudicated not to be owing, the effect would destroy or seriously jeopardize AFG's ability to reorganize, he notes. Moreover, if the IRS takes enforcement actions against AAC, there is a significant risk the Commissioner of Insurance of the State of Wisconsin would quickly commence a rehabilitation of AAC's General Account, Mr. Ivanick cites. Rehabilitation of AAC's General Account, he elaborates, would result in massive losses of value at AAC that would impair AFG's ability to reorganize AAC's business platforms. Among other things, rehabilitation of AAC would lead to defaults by the issuers of $20-billion commercial asset-backed notes insured by AAC and result in significantly increased claims against AAC. Rehabilitation of the AAC General Account would also cause detrimental effects to one of AAC's affiliates, which would suffer losses, as municipal payment shortfalls would cause a mismatch for AAC's affiliate with respect to swaps it entered into with counterparties to hedge its exposure to the municipalities' positions, Mr. Ivanick adds. AFG calculates AAC's exposure to mark-to-market damage claims in respect of the Collateralized Loan Obligations book to be about $3 billion. Counterparties of CDS agreements generally have a right to assert mark-to-market termination claims in the event of a rehabilitation of AAC. The OCI recently sought and obtained from the Dane County Circuit Court in Wisconsin an expanded injunction to prevent the IRS from asserting liens against and levying upon the assets of AAC and its subsidiaries. If the OCI fails to restrain the assertion of those damages, this $3 billion in additional policyholder claims would dilute all other policyholder claims significantly and destroy AAC's residual value to AFG, Mr. Ivanick points out. Any IRS action taken against the other valuable non-debtor subsidiaries of AFG included within its consolidated tax group aimed at recapturing the Tax Refunds could have negative effects on AFG, he argues. Against this backdrop, Mr. Ivanick asserts that the U.S. Bankruptcy Court for the Southern District of New York has the power and authority to determine the amount and legality of the taxes underlying the prepetition Tax Refunds. AFG recently filed a voluntary Chapter 11 petition in the New York Bankruptcy Court on November 8, 2010. Resolution of AFG's tax liability as the common parent of its consolidated group will significantly facilitate the administration of AFG's Chapter 11 case, he says. "Given the very real danger posed to AFG's reorganization prospects if the Bankruptcy Court does not determine AFG's tax liability, and the likelihood that the IRS would attempt to deploy self-help in seizing assets of AFG's nondebtor subsidiaries, the prejudice to AFG is incontrovertible," Mr. Ivanick asserts. Accordingly, under its adversary complaint dated November 9, the Debtor asks the Bankruptcy Court to enter: (1) a declaration that the Debtor and the members of the consolidated group have no tax liability for that tax years 2003 through 2008 and that they are entitled to retain the full amount of the Tax Refunds; (2) a temporary restraining order and preliminary injunction, ordering the IRS to provide five days' prior written notice before taking any Enforcement Action contrary to the Wisconsin State Court Injunction, whether or not that injunction remains in effect. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in Manhattan (Bankr. S.D.N.Y. Case No. 10-15973) on November 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed $30.05 billion in total assets, $31.47 billion in total liabilities, and a $1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of ($394.5 million) and total liabilities of $1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about $1.62 billion. The Vanguard Group, Inc., holds 5.46% of the stock of Ambac and is its largest shareholder. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP represent the Debtor. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group Inc. (http://bankrupt.com/newsstand/or 215/945-7000) AMERICAN ACHIEVEMENT: S&P Puts 'B' Rating on $365MM 2nd Lien Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned Austin, Texas-based American Achievement Corp.'s $365 million senior secured second- lien notes due 2016 its issue-level rating of 'B'. S&P also assigned this debt a recovery rating of '4', indicating S&P's expectation of average (30% to 50%) recovery for noteholders in the event of a payment default. At the same time, S&P raised S&P's corporate credit rating for American Achievement and subsidiary AAC Group Holding Corp. to 'B' from 'B-'. S&P removed the rating from CreditWatch, where S&P placed it with positive implications Oct. 18, 2010. The rating outlook is stable. S&P also withdrew all ratings on the Company's previous capital structure following its completion of the refinancing transaction. "The rating upgrade reflects the improvement in American Achievement's liquidity after the refinancing was completed," said Standard & Poor's credit analyst Chris Valentine. "The Company used proceeds from the new second-lien notes to refinance its entire capital structure. The transaction relieved pressure from the Company's current near-term and medium-term maturities." The 'B' corporate credit rating reflects S&P's expectation that, while debt leverage will remain high and interest coverage will remain weak, the Company will no longer have refinancing risk in 2012. S&P characterizes American Achievement's business risk profile as weak because of the Company's focus on a single line of business in the niche market for yearbooks, class rings, and other graduation-related products, notwithstanding the nondeferrable and emotionally driven nature of these consumer purchases. S&P view the Company's financial risk profile as highly leveraged because of its high debt leverage and weak interest coverage. The school affinity related product market is a mature business with relatively high barriers to entry. American Achievement is one of three main players in this niche business due to its existing relationships with customers and strong product offerings. Moreover, because of students' strong emotional ties with their schools and with fellow students, purchase rates by students are fairly stable. Despite historical stability in purchase rates, weakness in the economy caused a shift by consumers to lower-priced metals for jewelry and affinity products, and S&P expect the weak economy will continue to restrain consumers' willingness to spend on these items. AMERICAN INT'L: Benmosche to Stay for Next 12 to 18 Months ---------------------------------------------------------- American International Group Inc. said Monday Robert H. Benmosche, its President and Chief Executive Officer, has received a health prognosis such that Mr. Benmosche is expected to be fully able to remain in his position at AIG on his previously announced timetable. "My doctors have given me an encouraging prognosis as I continue to undergo treatment for cancer," Mr. Benmosche said. "As we all know, nothing in life is certain, but given that I've responded very well to my treatment, my doctors believe I can continue to apply the same commitment and energy to AIG over the next twelve to 18 months. I feel good, and I am delighted to tell you that I remain absolutely committed to continue working with the wonderful team of people here at AIG on that timetable. We are all very focused on positioning AIG for future growth and enhanced profitability as we continue to make substantial progress on repaying all of our government obligations - and, we continue to believe, at a profit. Most likely, I'll return to my retirement sometime in 2012." Following a briefing by a physician fully aware of Mr. Benmosche's medical condition, test results, and prognosis, the AIG Board of Directors, while in matters of cancer circumstances can change, anticipates that Mr. Benmosche should be able to serve in his role as AIG President and CEO on his previously announced timetable. "Every member of the AIG Board of Directors is thrilled with Bob's news," said Robert S. "Steve" Miller, Chairman of the AIG Board of Directors. "Bob has worked as hard as ever over the last several months, and, with the management team, shepherded AIG through its latest success: completely repaying the Federal Reserve Bank of New York and vastly simplifying the government's investments in AIG. "We have a very strong management team," Mr. Miller said. "The Board of course has established a succession planning process, and we remain focused on taking all the right steps to ensure management continuity. The Board is conducting an active CEO succession planning process, and we are committed to effecting an orderly leadership transition at the appropriate time." The Board of Directors also has agreed that its CEO succession contingency plan remains the same as announced on October 27, 2010: in the event that Mr. Benmosche becomes unwilling or unable to continue to effectively serve in his current role, Mr. Miller would step in as interim CEO of AIG for as long as it takes to identify and select a long-term replacement for Mr. Benmosche. 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. AMR CORP: Board OKs 2011 Incentive Plan for American Airlines ------------------------------------------------------------- On January 18, 2011, the Compensation Committee of the AMR Corporation Board of Directors approved the 2011 Annual Incentive Plan for American Airlines, Inc., a wholly-owned subsidiary of the Company. All U.S. based employees of American are eligible to participate in the AIP -- including the Company's executive officers. The AIP is American's annual bonus plan and provides for the payment of awards in the event certain financial and customer service metrics are satisfied, as further described in the AIP. A full-text copy of the AIP is available for free at: http://ResearchArchives.com/t/s?7273 About AMR Corporation Headquartered in Forth Worth, Texas, AMR Corporation (NYSE: AMR) operates with its principal subsidiary, American Airlines Inc. -- http://www.aa.com/-- a worldwide scheduled passenger airline. At the end of 2006, American provided scheduled jet service to about 150 destinations throughout North America, the Caribbean, Latin America, including Brazil, Europe and Asia. American is also a scheduled airfreight carrier, providing freight and mail services to shippers throughout its system. Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two regional airlines, American Eagle Airlines Inc. and Executive Airlines Inc., and does business as "American Eagle." American Beacon Advisors Inc., a wholly owned subsidiary of AMR, is responsible for the investment and oversight of assets of AMR's U.S. employee benefit plans, as well as AMR's short-term investments. The Company's balance sheet at Sept. 30, 2010, showed $25.36 billion in total assets, $8.94 billion in total liabilities, $9.01 in billion of long-term debts, $503.0 million in obligations under capital lease, $7.41 billion pension and post-retirement benefits, $3.14 billion in other liabilities, and a stockholders' deficit of $3.64 billion. For all of 2010, AMR recorded a net loss of $471 million compared to a loss of $1.5 billion in 2009. * * * AMR carries a 'CCC' issuer default rating from Fitch Ratings. It has 'Caa1' corporate family and probability of default ratings from Moody's. It has 'B-' corporate credit rating from Standard & Poor's. In November 2010, Standard & Poor's Ratings Services revised its outlook on AMR Corp. and its major operating subsidiary, American Airlines Inc., to stable from negative, based on AMR's improved operating performance, which has bolstered credit quality. S&P also affirmed its 'B-' corporate credit rating and most issue ratings on the two companies and lowered selected ratings on American's enhanced equipment trust certificates. ANGIOTECH PHARMACEUTICALS: Common Stock Delisted from NASDAQ ------------------------------------------------------------ In a Form 25 filing with the Securities and Exchange Commission on January 21, 2011, Angiotech Pharmaceuticals Inc. notified the Commission of the removal from listing or registration of its common stock under the NASDAQ Stock Market LLC pursuant to Section 12(b) of the Securities Exchange Act of 1934. About Angiotech Pharmaceuticals Based in Vancouver, British Columbia, in Canada, Angiotech Pharmaceuticals, Inc. (NASDAQ: ANPI; TSX: ANP) -- http://www.angiotech.com/-- is a global specialty pharmaceutical and medical device company. Angiotech discovers, develops and markets innovative treatment solutions for diseases or complications associated with medical device implants, surgical interventions and acute injury. The Company's balance sheet at Sept. 30, 2010, showed US$326.80 million in total assets, US$60.30 million in current liabilities, and US$622.16 million in non-current liabilities and a stockholders' deficit of US$355.67 million. In early December 2010, Angiotech said it has reached an agreement with the holders of 76% of its 7.75% Senior Subordinated Notes to extend certain deadlines outlined in their Recapitalization Support Agreement dated October 29, 2010. Seventy-three% of the holders of the Subordinated Notes executed the Initial Support Agreement and presently, 85% of the holders of the Subordinated Notes have consented to the Initial Support Agreement. On November 29, 2010, Angiotech and the Trustee, at the direction of a majority of the holders of its Subordinated Notes, extended the grace period applicable to interest payments due on the Subordinated Notes before an event of default occurs, with such grace period applicable to the $9.7 million semi-annual interest payment that was due on the Subordinated Notes on October 1, 2010 extended until December 30, 2010. In November 2010, Moody's Investors Service downgraded the probability of default rating of Angiotech to Ca/LD from Ca and affirmed the Corporate Family Rating at Ca. The company's other existing debt ratings were affirmed. The outlook is developing. The assignment of the Ca/LD is the conclusion of the 30-day grace period in which the company missed the original interest payment of $9.7 million on its 7.75%, $250 million senior subordinated notes due Oct. 1, 2010. Moody's treats the failure to meet the original contractual terms as a limited default. APPLESEED'S INTERMEDIATE: Files Pre-Negotiated Reorganization Plan ------------------------------------------------------------------ Appleseed's Intermediate Holdings LLC, et al., have filed a Joint Plan of Reorganization and disclosure statement with the U.S. Bankruptcy Court for the District of Delaware. Before filing for bankruptcy protection, Appleseed reached an agreement with over 80% of its first lien secured lenders and 100% of its second lien secured lenders on the terms of a reorganization that will eliminate approximately $420 million of indebtedness (over 55%) to approximately $310 million, and improve the Company's operating flexibility. The Debtors will seek approval of the Disclosure Statement at a hearing on March 1, 2011, at 3:30 p.m. The Plan provides for the reorganization of the Debtors as a going concern and contemplates satisfying claims through these sources: a. a senior secured asset-based revolving facility, referred to in the Plan as the "New ABL Facility," of up to a principal amount of $80 million (approximately $46.2 million of which will be drawn on the Effective Date), which will be used to fund the Debtors' ongoing operations post-emergence and to satisfy any amount outstanding under the DIP Facility Tranche A; b. a new senior secured term loan, referred to in the Plan as the "New Senior Term Loan," in the principal amount of $35 million; c. a new first lien secured term loan referred to in the Plan as the "New First Lien Term Loan," in the principal amount of $200 million; d. a new junior secured term loan referred to in the Plan as the "New Junior Term Loan," in the principal amount of $43 million; e. cash on hand to make any payments provided for in the Plan; and f. shares of stock in Reorganized Debtor, referred to in the Plan as the "New Common Stock." The Plan contemplates these distributions to the Debtors' claim holders, among other recoveries: a. DIP Facility Tranche A Lenders will receive payment in full, in Cash; b. DIP Facility Tranche B Lenders will receive a pro rata share of the New Senior Term Loan; c. First lien lenders will receive a pro rata share of (i) the New First Lien Term Loan, (ii) the New Junior Term Loan and (iii) 95% of the New Common Stock in the form of Class A Common Stock (subject to dilution on account of the Management Equity Incentive Program); d. Second lien lenders will receive a pro rata share of 5% of the New Common Stock in the form of Class B Common Stock (subject to dilution on account of the Management Equity Incentive Program); and e. Holders of qualified unsecured trade claims will be paid in accordance with the terms of the qualified vendor support agreement between the applicable Debtor and the holder of an allowed qualified unsecured trade claim. The Plan contemplates that holders of general unsecured claims and holders of AIH Note Claims will not receive any distribution on account of such Claims, and Holders of Interests in the Debtor won't receive any distribution on account of such Interests. Copies of the Plan and the Disclosure Statement are available for free at: http://bankrupt.com/misc/APPLESEEDS_INTERMEDIATE_plan.pdf http://bankrupt.com/misc/APPLESEEDS_INTERMEDIATE_ds.pdf Plan Support Agreement The Debtors and certain of the Secured Lenders have entered into the Plan Support Agreement. The Support Agreement binds the Consenting Lenders to support the Plan if the Debtors are successful in taking the steps necessary to meet the milestone deadlines included therein, and also provides the "backstop" that a Sale will be triggered if certain deadlines are not met. In addition to negotiating the Plan, the Debtors' management and Moelis & Company LLC, the Debtors' financial advisor, also engaged in a process to market substantially all of the Debtors' assets in October and November 2010. The Debtors and Moelis contacted over 25 potential purchasers, but only a handful of indicative offers were received and none of the offers presented a clear path forward on an expedited basis. Failure to meet any one of these milestone deadlines could trigger initiation of the Sale process: a. objections to the Disclosure Statement are due 28 days after the Petition Date (or a later date agreed to by the Debtors and a third party, in consultation with the parties specified in the DIP Credit Agreement and the Plan Support Agreement); b. a hearing on the Disclosure Statement is to be held seven days after the deadline to object to the Disclosure Statement (subject to the Court's availability); c. the solicitation period with respect to votes to accept or reject the Plan is to begin within five days after the order approving the Disclosure Statement is entered; d. the deadlines to object to the Plan and vote on the Plan are to be no later than 35 days after the commencement of the solicitation period; e. the Confirmation Hearing is to be held 14 days after the deadline to vote on the Plan (subject to the Court's availability); f. the Confirmation Order is to be entered no later than 90 days after the Petition Date; and g. the Effective Date of the Plan must occur within 15 days after the entry of the confirmation order. About Orchard Brands Based in Beverly, Massachusetts, Appleseed's Intermediate Holdings LLC, aka Appleseed's Intermediate Holdings, Inc., aka Orchard Brands sells clothing to people 55 and older. Orchard Brands has 17 brands including Appleseed's, Draper's & Damon's, Gold Violin, Haband and Norm Thompson. It publishes catalogs and has stores under its Appleseed's and Draper's & Damon's brands. It has annual sales of about $1 billion and earnings before interest, taxes, depreciation and amortization are about $50 million, sources said told Bloomberg. Appleseed's is owned by Golden Gate Capital Corp., which also hold stakes in retailers Express Inc., Eddie Bauer Holdings Inc. and Zale Corp. Appleseed's Intermediate and its affiliates filed for Chapter 11 bankruptcy protection on January 19, 2011 (Bankr. D. Del. Lead Case No. 11-10160). Richard M. Cieri, Esq., Joshua A. Sussberg, Esq., at Brian E. Schartz, at Kirkland & Ellis LLP, serves as the Debtors' bankruptcy counsel. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, serves as local counsel to the Debtors. Moelis & Company LLC is the Debtors' investment banker and financial advisor. Alvarez & Marshal North America, LLC, is the Debtors' restructuring advisor. Pricewaterhousecoopers LLP is the Debtors' independent auditor. Kurtzman Carson Consultants LLC is the Debtors' notice and claims agent. Appleseed's Intermediate estimated assets at $100 million to $500 million and debts at $500 million to $1 billion in its Chapter 11 petition. APPLESEED'S INTERMEDIATE: Has Interim OK to Obtain DIP Financing ---------------------------------------------------------------- Appleseed's Intermediate Holdings LLC, et al., sought and obtained interim authorization from the U.S. Bankruptcy Court for the District of Delaware to obtain postpetition secured financing from a syndicate of lenders led by UBS AG, Stamford Ranch, as administrative agent for the Tranche A Lenders, and by Ableco Finance LLC, as administrative agent for the Tranche B Lenders. The DIP lenders have committed to provide up to $140 million, comprised of these facilities: (i) a senior secured first-out revolving credit facility equal to the lesser of (a) $100 million or (b) the Tranche A borrowing base; and (ii) a senior secured term loan in the initial amount of $35 million and a delayed draw amount of $5 million available under certain circumstances. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, explained that the Debtors need the money to fund their Chapter 11 case, pay suppliers and other parties. A copy of the DIP financing agreement is available for free at: http://ResearchArchives.com/t/s?7274 The DIP facility will mature four months after the closing date. As a condition to closing the DIP Facility, the Debtors must pay all indebtedness and expenses under the prepetition asset-backed lending facility, subject to challenge by third parties, including any statutory committee of unsecured creditors. The DIP Credit Agreement includes milestones, including confirmation of a Chapter 11 plan within 90 days of the Petition Date, or the sale of substantially all of the Debtors' assets, to be completed within 125 days of the Petition Date, subject to intermediate milestones. The DIP facility will incur interest that is the sum of (i) either the Alternate Base Rate (with a floor of 3.50% for Tranche A loans and 5.50% for Tranche B loans) or Adjusted LIBOR Rate (with a floor of 1.50% for Tranche A loans and 3.50% for Tranche B loans) plus (ii) the Applicable Margin, which will be: Alternate Base Rate Loans Adjusted LIBOR Rate Loans ------------------------- ------------------------- Tranche A 3.00% 4.00% Tranche B 8.50% 10.50% The DIP Agents are granted valid, binding, continuing, enforceable, fully perfected and unavoidable first-priority senior priming security interests in and liens upon all prepetition and postpetition assets of the Debtors. The DIP Lenders are granted superpriority administrative claims. The DIP lien is subject to a $1,500,000 carve-out for U.S. Trustee and Clerk of Court fees, fees payable to professional employed in the Debtors' case, and fees of the committee in pursuing actions challenging the DIP Lenders' lien. The Debtors are required to pay: (i) a commitment fee on the unused amounts under the Tranche A DIP Facility of 0.25% per annum (payable monthly in arrears); (ii) a Tranche A DIP Facility closing fee equal to 0.75%; (iii) a commitment fee for the Tranche B DIP Facility equal to 1.00%; and (iv) letter of credit fees payable by the Debtors to (A) the issuing bank, including a fronting fee equal to 0.125% and (b) the Tranche A Lenders letter of credit participation fees equal to the Applicable Margin for Adjusted LIBOR Rate Loans under the Tranche A DIP Facility. Cash Collateral Use The Court also authorized the Debtors to use the cash collateral. As of December 2010, the Debtors have outstanding secured and unsecured indebtedness totalling approximately $725.1 million, which includes: a. $38.4 million outstanding under the ABL credit agreement with American Capital Strategies, Ltd., and UBS Securities LLC, as joint lead arrangers and joint bookrunners, American Capital Financial Services, Inc., as syndication agent, UBS Loan Finance LLC, as swingline lender and UBS AG, Stamford Branch, as issuing bank, administrative agent and co-collateral agent, and Wells Fargo Bank, National Association, as successor to Wells Fargo Retail Finance, LLC, as co- collateral agents and the lenders party thereto from time to time; b. $324.1 million outstanding under the first lien credit agreement with American Capital Strategies, Ltd., and UBS Securities LLC, as joint lead arrangers and joint bookmanagers, UBS Securities LLC, as syndication agent, Wilmington Trust FSB as successor to American Capital Financial Services, Inc., as administrative agent and the lenders party thereto from time to time; c. $289.3 outstanding under the second lien purchase agreement with American Capital Strategies, Ltd., as sole lead arranger and bookmanager, American Capita, Ltd., as documentation agent and administrative agent; and d. with respect to AIH only, $73.3 outstanding under the AIH note purchase agreement with American Capital, Ltd., as administrative agent and American Capital Strategies, Ltd., as sole lead arranger and bookrunner, and the purchasers party thereto from time to time. The Prepetition Agents are granted, as adequate protection, replacement liens on the prepetition collateral and the DIP collateral. The Prepetition ABL Lenders' replacement liens will be junior to the senior prepetition ABL permitted liens with respect to the ABL priority collateral, junior to the senior prepetition term loan permitted liens with respect to the term loan priority collateral and senior to any other liens. The Prepetition ABL Lenders' replacement liens will be junior and subordinate only to the Carve-Out and (i) the senior prepetition ABL permitted liens with respect to the ABL priority collateral and (ii) the senior prepetition term loan permitted liens with respect to the term loan priority collateral. The Prepetition ABL Agent is granted an allowed administrative claim, to the extent that the Prepetition ABL Lenders' replacement liens don't adequately protect the diminution in the value of the Prepetition ABL Lenders' interests in the prepetition collateral from the Petition Date. As additional adequate protection, the Prepetition ABL Agent will be entitled to ongoing payment of the prepetition ABL agreement expenses. The Prepetition First Lien Term Loan Lenders' replacement liens will be junior and subordinate only to the Carve-out, the DIP Facility liens, the Prepetition ABL Lenders' replacement liens with respect to the ABL priority collateral, the Prepetition ABL Lenders' replacement liens with respect to the term priority collateral other than to the extent that they secure the payment of subject prepetition ABL agreement expenses (i) and the senior prepetition ABL permitted liens with respect to the ABL priority collateral and (ii) the senior prepetition term loan permitted liens with respect to the term loan priority collateral. The Prepetition First Lien Term Loan Lenders' replacement liens and liens of the prepetition first lien term loan secured parties will be senior to the Prepetition ABL Lenders' replacement liens with respect to the term priority collateral to the extent that they secure the payment of subject prepetition ABL agreement expenses. The First Lien Term Loan Agent is granted an allowed administrative claim, to the extent that the Prepetition First Lien Term Loan Lenders' replacement liens don't adequately protect the diminution in the value of the Prepetition First Lien Term Loan Lenders' interests in the prepetition collateral from the Petition Date. As additional adequate protection, the Prepetition First Lien Term Loan Administrative Agent will be entitled to the ongoing payment of the first lien term loan expenses. The Prepetition Second Lien Term Loan Lenders' replacement liens will be junior and subordinate only to the Carve-out, the DIP facility liens, the Prepetition ABL Lenders' replacement liens with respect to the ABL priority collateral, the Prepetition ABL Lenders' replacement liens with respect to the term priority collateral other than to the extent that they secure the payment of subject prepetition ABL agreement expenses and (i) the Prepetition First Lien Term Loan Lenders' replacement liens and the senior prepetition ABL permitted liens with respect to the ABL priority collateral and (ii) the Prepetition First Lien Term Loan Lenders' replacement liens and the senior prepetition term loan permitted liens with respect to the term loan priority collateral. The Prepetition Second Lien Term Lenders' replacement liens and the lines of the prepetition second lien term loan secured parties will be senior to the Prepetition ABL Lenders' replacement liens with respect to the term priority collateral to the extent that they secure the payment of subject prepetition ABL agreement expenses. The Second Lien Term Loan Agent is granted an allowed administrative claim, to the extent that the Prepetition Second Lien Term Loan Lenders' replacement liens don't adequately protect the diminution in the value of the Prepetition Second Lien Term Loan Lenders' interests in the prepetition collateral from the Petition Date. As additional adequate protection, the Prepetition Second Lien Term Loan Administrative Agent will be entitled to the ongoing payment of the second lien term loan expenses. Final Hearing The Court has set a final hearing for the DIP financing and the cash collateral use on February 11, 2011, at 3:00 p.m. (Prevailing Eastern Time). About Orchard Brands Based in Beverly, Massachusetts, Appleseed's Intermediate Holdings LLC, aka Appleseed's Intermediate Holdings, Inc., aka Orchard Brands sells clothing to people 55 and older. Orchard Brands has 17 brands including Appleseed's, Draper's & Damon's, Gold Violin, Haband and Norm Thompson. It publishes catalogs and has stores under its Appleseed's and Draper's & Damon's brands. It has annual sales of about $1 billion and earnings before interest, taxes, depreciation and amortization are about $50 million, sources said told Bloomberg. Appleseed's is owned by Golden Gate Capital Corp., which also hold stakes in retailers Express Inc., Eddie Bauer Holdings Inc. and Zale Corp. Appleseed's Intermediate and its affiliates filed for Chapter 11 bankruptcy protection on January 19, 2011 (Bankr. D. Del. Lead Case No. 11-10160). Richard M. Cieri, Esq., Joshua A. Sussberg, Esq., at Brian E. Schartz, at Kirkland & Ellis LLP, serves as the Debtors' bankruptcy counsel. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, serves as local counsel to the Debtors. Moelis & Company LLC is the Debtors' investment banker and financial advisor. Alvarez & Marshal North America, LLC, is the Debtors' restructuring advisor. Pricewaterhousecoopers LLP is the Debtors' independent auditor. Kurtzman Carson Consultants LLC is the Debtors' notice and claims agent. Appleseed's Intermediate estimated assets at $100 million to $500 million and debts at $500 million to $1 billion in its Chapter 11 petition. APPLESEED'S INTERMEDIATE: Sec. 341(a) Meeting Set for Feb. 10 ------------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of Appleseed's Intermediate Holdings LLC's creditors on February 10, 2011, at 9:30 a.m. The meeting will be held at J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, Wilmington, Delaware 19801. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Orchard Brands Based in Beverly, Massachusetts, Appleseed's Intermediate Holdings LLC, aka Appleseed's Intermediate Holdings, Inc., aka Orchard Brands sells clothing to people 55 and older. Orchard Brands has 17 brands including Appleseed's, Draper's & Damon's, Gold Violin, Haband and Norm Thompson. It publishes catalogs and has stores under its Appleseed's and Draper's & Damon's brands. It has annual sales of about $1 billion and earnings before interest, taxes, depreciation and amortization are about $50 million, sources said told Bloomberg. Appleseed's is owned by Golden Gate Capital Corp., which also hold stakes in retailers Express Inc., Eddie Bauer Holdings Inc. and Zale Corp. Appleseed's Intermediate and its affiliates filed for Chapter 11 bankruptcy protection on January 19, 2011 (Bankr. D. Del. Lead Case No. 11-10160). Richard M. Cieri, Esq., Joshua A. Sussberg, Esq., at Brian E. Schartz, at Kirkland & Ellis LLP, serves as the Debtors' bankruptcy counsel. Domenic E. Pacitti, Esq., at Klehr Harrison Harvey Branzburg LLP, serves as local counsel to the Debtors. Moelis & Company LLC is the Debtors' investment banker and financial advisor. Alvarez & Marshal North America, LLC, is the Debtors' restructuring advisor. Pricewaterhousecoopers LLP is the Debtors' independent auditor. Kurtzman Carson Consultants LLC is the Debtors' notice and claims agent. Appleseed's Intermediate estimated assets at $100 million to $500 million and debts at $500 million to $1 billion in its Chapter 11 petition. ATLANTIC BROADCASTING: Hires Media Services to Sell Stations ------------------------------------------------------------ Elaine Rose, staff writer at The Press of Atlantic City, reports that that the U.S. Bankruptcy Court in Camden, New Jersey, has authorized Atlantic Broadcasting to hire media brokerage firm Media Services Group to sell five radio stations. According to the report, Media Services Group, with 10 locations around the country and specializing in the sale of radio and television stations, said it will put the stations on the market immediately. "I'm expecting a lot of interest in the stations. They're good stations," said managing director George Reed of the Jacksonville, Fla., office, who will broker the deal along with R. Thomas McKinley of the New York office. "It's a very desirable market." The five radio stations up for sale are: WTKU-FM 98.3, playing classic hits, classic rock station WMGM-FM 103.7, Spanish station WBSS-AM 1490, News-talk station WOND-Am 1400 and Top 40 station WWAC-FM 102.7. About Atlantic Broadcasting Atlantic Broadcasting, based in Linwood, New Jersey, operates five stations that cover Atlantic City and Cape May, New Jersey. The business was purchased in 2008 by Northwood Ventures LLC which retains 88% of the stock. Atlantic Broadcasting of Linwood filed for Chapter 11 protection on Dec. 20, 2010 (Bankr. D. N.J. Case No. 10-49149). Joshua T. Klein, Esq., at Fox, Rothschild LLP, in Philadelphia, serves as counsel to the Debtor. The Debtor estimated assets and debts of $1 million to $10 million in its chapter 11 petition. Secured lender Sun National Bank is owed $6.3 million. There are $1.2 million in unsecured claims, according to a court filing. BAKERS FOOTWEAR: Wells Fargo and Company Has 7.35% Equity Stake --------------------------------------------------------------- In an amended Schedule 13G filing with the Securities and Exchange Commission on January 20, 2011, Wells Fargo and Company disclosed that it beneficially owns 678,029 shares of common stock of Bakers Footwear Group Inc. representing 7.35% of the shares outstanding. As of December 4, 2010, there were 9,228,916 shares issued and outstanding of the Company. Affiliated entity Wells Capital Management Incorporated owns 641,061 shares or 6.95%, while Wells Fargo Funds Management, LLC owns 535,768 or 5.80%. About Bakers Footwear St. Louis, Mo.-based Bakers Footwear Group, Inc. (OTC Bulletin Board: BKRS.OB) is a national, mall-based, specialty retailer of footwear and accessories for young women. The Company's merchandise includes private label and national brand dress, casual and sport shoes, boots, sandals and accessories. As of October 30, 2010, the Company operated 236 stores, including 220 Bakers stores and 16 Wild Pair stores located in 35 states. The Company's balance sheet at October 30, 2010, showed $51.17 million in total assets, $62.42 million in total liabilities, and a stockholders' deficit of $11.25 million. As reported in the Troubled Company Reporter on May 4, 2010, Ernst & Young LLP, in St. Louis, Mo., expressed substantial doubt about the Company's ability to continue as a going concern, following its results for the fiscal year ended January 30, 2010. The independent auditors noted that the Company has incurred substantial losses from operations in recent years and has a significant working capital deficiency. Bakers Footwear reported a net loss of $9.1 million on $185.4 million of revenue for the fiscal year ended January 30, 2010, compared with a net loss of $15.0 million on $183.7 million of revenue for the year ended January 31, 2009. BATCH DEVELOPMENT: Properties Placed Into Receivership ------------------------------------------------------ Anya Litvak at Pittsburgh Business Times reports that a property management company owned by Steelers backup quarterback Charlie Batch has had 25 Homestead-area properties placed into receivership after defaulting on a $1.15 million mortgage. According to the report, Dollar Bank, which gave Batch Development Co. the loan in 2008, alleged in court records that Batch's company was "insolvent and has little or no funds with which to operate the mortgaged properties." The report relates that the documents also claimed that the Munhall-based firm has been delinquent in its local tax payments. BCBG MAX: Moody's Notes of Aug. 10 Maturity of $110MM Loan ---------------------------------------------------------- Moody's Investors Service revised the ratings outlook of BCBG Max Azria Group, Inc., to developing from positive, reflecting concerns over significant near term maturities and deteriorating covenant cushion under the company's first lien term loan agreement. Moody's also affirmed all ratings, including the Caa1 Corporate Family Rating. The developing outlook incorporates heightened liquidity pressures stemming from the August 10, 2011 maturity of its $110 million first lien term loan, as well as some uncertainty regarding the company's ability to meet a January 30, 2011 leverage ratio covenant. Furthermore, BCBG's ABL revolver contains a springing maturity that would trigger a June 2011 maturity if the company has not paid off or refinanced its first lien term loan 45 days prior to the first lien maturity. Moody's believes BCBG relies heavily upon this revolver for seasonal working capital needs. Finally, the company will also need to address refinancing of its second lien term loan, which matures on March 30, 2012. BCBG Max Azria Group, Inc. * Senior Secured First Lien Term Loan, Affirmed B3, LGD adjusted to LGD3, 37% from LGD3, 41% * Outlook, Changed To Developing From Positive * Affirmed Caa1 Corporate Family Rating * Affirmed Caa1 Probability of Default Rating The Caa1 Corporate Family Rating continues to reflect operational volatility associated with the underperformance of BCBG's Max Rave business, as well as weak liquidity, including a substantial current debt load of approximately $265 million coming due though August 2011. Furthermore, BCBG's high leverage poses challenge for operating in a business sensitive to both economic cycles and fashion trends. BCBG's well recognized brands and signs of stability in the core BCBG business support the rating. Subsequent rating actions will be predicated upon the company's ability to address the near term maturities in its capital structure. Inability to execute on an extension of maturities in the very near term, or further sustained losses from the Max Rave business, would likely negatively impact the ratings. Conversely, resolution of the developing outlook could occur if BCBG can demonstrate a sustained track record of operational stability, including evidence of a credible plan to eliminate operating losses at the Max Rave retail business. A favorable resolution of the developing outlook would also require expectations for BCBG to sustain an adequate liquidity profile, including extension of maturities. BCBG Max Azria Group, Inc., headquartered in Vernon, California designs, markets, distributes and licenses women's apparel, footwear and accessories. Revenue for the twelve months ended October 30, 2010, approximated $1.1 billion. The company is wholly owned by Max and Lubov Azria. BEEBE & SWEARINGEN: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: Beebe & Swearingen LLC 41500 Whitehouse Fork Road Bay Minette, AL 36507 Bankruptcy Case No.: 11-00220 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court Southern District of Alabama (Mobile) Debtor's Counsel: Geraldine S. Lester, Esq. LAW OFFICE OF DON A. MCGRIFF 101 N. Section Street Fairhope, AL 36532 Tel: (251) 928-7074 E-mail: glester022@gmail.com Estimated Assets: $1,000,001 to $10,000,000 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 Thomas C. Swearingen, president. BIOFUEL ENERGY: Registers Add'l Subscription Rights for Shares -------------------------------------------------------------- Biofuel Energy Corp. filed with the Securities and Exchange Commission on January 20, 2011, a registration statement on Form S-1 with respect to the registration of 1,948 additional subscription rights to purchase depositary shares, additional depositary shares representing interests in series A non-voting convertible preferred stock and additional shares of common stock, $0.01 par value per share, of BioFuel Energy Corp., pursuant to Rule 462(b) under the Securities Act of 1933, as amended, as a result of the rounding up of fractional subscription rights as described in the Company's Registration Statement on Form S-1, as amended, initially filed by the Company on October 18, 2010 and declared effective by the Securities and Exchange Commission on December 17, 2010. In a Form S-1 filing with the Securities and Exchange Commission on October 18, 2010, the Company said that it is distributing at no charge to the record holders of its common stock, non- transferable subscription rights to purchase depositary shares representing an aggregate of 2,000,000 shares of the Series A Non- Voting Convertible Preferred Stock. About Biofuel Energy Denver, Colo.-based BioFuel Energy Corp. (Nasdaq: BIOF) -- http://www.bfenergy.com/-- aims to become a leading ethanol producer in the United States by acquiring, developing, owning and operating ethanol production facilities. It currently has two 115 million gallons per year ethanol plants in the Midwestern corn belt. The Company's balance sheet at September 30, 2010, showed $329.7 million in total assets, $274.6 million in total liabilities, and stockholders' equity of $55.1 million. As reported in the Troubled Company Reporter on March 31, 2010, Grant Thornton LLP, in Denver, 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 experienced declining liquidity and has $16.5 million of outstanding working capital loans that mature in September 2010. "If we are unable to raise sufficient proceeds from the rights offering, the LLC's concurrent private placement, or from other sources, we may be unable to continue as a going concern, which could potentially force us to seek relief through a filing under the U.S. Bankruptcy Code," the Company said in its Form 10-Q for the third quarter of 2010. BLOCKBUSTER INC: Lenders Move Plan Filing Deadline to February 4 ---------------------------------------------------------------- Blockbuster Inc., its "subsidiary guarantors", and the lenders to its Senior Secured, Super-Priority Debtor-in-Possession Revolving Credit Agreement and Wilmington Trust FSB, as agent, agreed to further amend the parties' DIP Credit Agreement, effective as of January 14, 2011, to extend the date prior to which Blockbuster will have filed a Conforming Plan of Reorganization from Jan. 14 to February 4, according to a Form 8-K filing with the U.S. Securities and Exchange Commission dated January 18. "Subsidiary Guarantors" refer to each of Blockbusters' U.S.-based subsidiary other than Blockbuster 2009 Trust. The Debtors' original Plan Filing Deadline under the DIP Credit Agreement was November 30, 2010, and was subsequently moved to December 15, 2010, and January 14, 2011. PSA Amendment As previously reported, Blockbuster entered into a Plan Support Agreement with certain subsidiaries and beneficial owners or advisors, nominees or investment managers for the beneficial owners of those 11.75% Senior Secured Notes due 2014 issued by the company. According to the regulatory filing, effective as of January 14, 2011, Blockbuster, the PSA Subsidiaries, and certain Consenting Noteholders agreed to further amend the Plan Support Agreement to extend the date prior to which: (a) Blockbuster will have filed a Plan and Disclosure Statement from January 14, 2011, to February 4, 2011; (b) a Supermajority of Consenting Noteholders will have approved a Business Plan from January 15, 2011, to February 4, 2011; and (c) Blockbuster will have employed a chief executive officer, who is acceptable to, and whose terms of employment and compensation are acceptable to, and whose employment and compensation will have been approved by, a Supermajority of Consenting Noteholders from January 14, 2011, to February 4, 2011. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- 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. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. The Official Committee of Unsecured Creditors has retained Cooley LLP as its counsel. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BLOCKBUSTER INC: Needs More Cash to Exit Bankruptcy --------------------------------------------------- Blockbuster Inc. has requested for around $200 million to $250 million from its bondholders to be able to get out of bankruptcy protection, The Wall Street Journal's Mike Spector and Joann S. Lublin reports, citing people familiar with the matter. The report says the move prompted a debate among bondholders about whether to invest further in the struggling video chain or put it up for sale. The discussions among the bondholders, which are led by billionaire Carl Icahn and hedge-fund Monarch Alternative Capital LP, on the sought additional funds have just begun and the two sides have not determined a "hard number" for the desired amount, the Journal reports. As previously reported, Blockbuster failed to file a conforming plan of reorganization by the January 14, 2011 deadline set by the Debtors' DIP Credit Agreement. Blockbuster subsequently disclosed through a regulatory filing with the U.S. Securities and Exchange Commission that the plan filing deadline has been extended to February 4, 2011. "Everyone knows they need to get out of bankruptcy, but all lenders aren't of one mind," The Dallas Morning News quoted an unnamed source close to the situation. "Not all apparently are as bullish about Blockbuster's future as Icahn," the source added. Maria Halkias of the Dallas Morning News also reports that Mr. Icahn wants to invest as much as $250 million in Blockbuster after it emerges from bankruptcy. That is the amount that the company may take to be converted into a digital competitor less dependent on brick-and-mortar storefronts, the report says, citing the unnamed source. Blockbuster chief executive officer, Jim Keyes, however, says he is not going anywhere yet. "We are making good progress and, as promised, I am staying long enough to see the process through," Mr. Keyes said in an e-mail, notes Dallas Morning News. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- 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. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. The Official Committee of Unsecured Creditors has retained Cooley LLP as its counsel. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BLOCKBUSTER INC: Plan Filing Exclusivity Extended Until March 21 ---------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York extended through: (a) March 21, 2011, Blockbuster Inc. and its units' time to exclusively file a Chapter 11 plan of reorganization; and (b) May 20, 2011, their time to solicit acceptances of the Plan, without prejudice to their right to seek further extension of the Exclusive Periods. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (Pink Sheets: BLOKA, BLOKB) -- 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. Blockbuster said it had assets of $1,017,035,832 and debts of $1,464,939,759 as of August 1, 2010. Blockbuster Inc. and 12 U.S. affiliates initiated Chapter 11 bankruptcy proceedings with a pre-arranged reorganization plan in Manhattan on September 23, 2010 (Bankr. S.D.N.Y. Case No. 10-14997). Martin A Sosland, Esq., and Stephen Karotkin, Esq., at Weil, Gotshal & Manges, serve as counsel to the Debtors. Rothschild Inc. is the financial advisor. Alvarez & Marsal is the restructuring advisor with A&M managing director Jeffery J. Stegenga as chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. A steering group of senior secured noteholders is represented by James P. Seery, Esq., and Paul S. Caruso, Esq., at Sidley Austin LLP. U.S. Bank National Association as trustee and collateral agent for the senior secured notes is represented by David McCarty, Esq., and Kyle Mathews, Esq., at Sheppard Mullin Richter & Hampton LLP. BDO Consulting is the financial advisor for U.S. Bank. Lenders led by Wilmington Trust FSB are providing the DIP financing. The DIP Agent is represented by Peter Neckles, Esq. and Alexandra Margolis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York. The Official Committee of Unsecured Creditors has retained Cooley LLP as its counsel. Blockbuster's non-U.S. operations and its domestic and international franchisees, all of which are legally separate entities, were not included in the filings and are not parties to the Chapter 11 proceedings. Bankruptcy Creditors' Service, Inc., publishes BLOCKBUSTER BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Blockbuster Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000) BROWN & ASSOCIATES: Dist. Ct. Affirms Termination of PPM Lease -------------------------------------------------------------- District Judge Laurie Smith Camp affirmed a bankruptcy court ruling denying Positive Property Management, LLC's request for summary judgment in the lawsuit filed by Brown & Associates, Ltd. Maple, Inc., d/b/a Sparks Computerized Car Care, leased property from PPM. Brown was the principal shareholder of Maple, Inc. and a guarantor of the lease. PPM sued Maple and Brown in Douglas County District Court for damages resulting from an alleged breach of the lease, the termination by Maple. PPM requested damages for the remaining lease amounts, less mitigation, plus repairs and utilities, in the approximate amount of $75,000. Brown then filed for Chapter 11 case and removed the state court action to the bankruptcy court. The matter involves the interpretation of a restrictive use paragraph in the lease. Bankruptcy Judge Timothy J. Mahoney denied PPM's motion for summary judgment because material factual matters were in dispute. Trial was held, and Judge Mahoney determined that PPM breached the lease, and the breach was material therefore allowing Maple to terminate the lease. He did not award monetary damages. A copy of the District Court's January 18, 2011 Memorandum Opinion is available at http://is.gd/CtpFL5from Leagle.com. Brown & Associates, Ltd., filed for Chapter 11 bankruptcy (Bankr. D. Neb. Case No. 09-08003) in 2009. CAPARRA HILLS: Fitch Assigns 'BB' Initial Issuer Default Rating --------------------------------------------------------------- Fitch Ratings assigned an initial Issuer Default Rating of 'BB' to Caparra Hills Inc. (Caparra Hills). Fitch has also assigned a rating of 'BBB-' to the company's US$51 million secured bonds. The Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority issued the secured bonds in August 2002. The secured bonds are payable solely from payments made to AFICA by Caparra Hills. AFICA serves solely as an issuing conduit for local qualified borrowers for purpose of issuing bonds pursuant a trust agreement between AFICA and a trustee. The secured bonds are not guaranteed by AFICA, not constitute a charge against the general credit of AFICA; and, not constitute an indebtedness of the Commonwealth of Puerto Rico or any of its political subdivisions. The Rating Outlook is Stable. The ratings reflect the stable cash flow generated by the company's lease portfolio, which passes the vast majority of its operating expenses on to its tenants. Caparra Hills' properties have low vacancy rates and solid collateral values backing its secured debt. The ratings are also supported by the company's manageable debt maturity schedule, adequate cash position of US$6.7 million, and stable EBITDA margins of over 60% during the last five years ended Sept. 30, 2010, which result in adequate debt service coverage ratios. Also factored in the ratings is Caparra Hills' capacity to generate consistently positive free cash flow during the last several years. The rating of the secured bonds (BBB-) positively incorporates the collateral support included in the transaction structure as the payments of the bonds are secured by a first mortgage on the company's real estate properties and an assignment of leases. The Stable Outlook reflects Caparra Hills' consistent and stable operating performance and its track record of maintaining stable credit metrics during the last several years. Fitch expects Caparra Hills will continue its commitment to maintain an adequate capital structure. Stable and Predictable Results: The ratings incorporate Caparra Hills' stable revenues stream from its lease portfolio and adequate credit profile of its main tenants. The lease revenues are predominately fixed in nature and also provide for the pass-through of ongoing maintenance and operating expenses for the company's properties, which lowers business risk. The company's revenues for the fiscal years ending 2008, 2009, and 2010 and the LTM period ended in September 2010 were US$11.7 million, US$11.9 million; US$12.1 million, and US$11.9 million, respectively. The company's lease portfolio has an adequate maturity profile with staggered expirations of 9.5% and 16.1% of company's rental income expiring in the next 12 and 24 months, respectively; about 43% of the company's rental income contracts have expiration dates over the next 24-48 months, and 31.9% of the portfolio expires beyond 48 months. Caparra Hills' revenues structure is mostly based on fixed rent, which represent about of 60% total revenues, making the company's revenues very predictable. The other significant component in company's revenue structure is tenant reimbursements, which represent about of 25% of total revenues, covering costs associated with property management and taxes. Incorporated in the ratings is the company's tenant concentration risk. Caparra Hills' five most important anchor tenants are University of Phoenix, Banco Santander, General Electric Consumer Fin., United Surety & Indemnity Co, and Kimberly Clark Corp. These tenants generate annual revenues of about US$6.4 million and represent approximately 60% of the company's total annual rent revenues. Despite a challenging operating environment during the last two years, Caparra Hills' operating metrics indicated resilience to the economic slowdown. During the last two years, the company's vacancy rates were in the 4%-5% range. At June 30, 2010, the company had occupancy level of 96.5%. As of Sept. 30, 2010, the company's occupancy level was 89.9% due to the early termination of the lease with one tenant. The company has already leased the area occupied by the former tenant to two new tenants that began to pay rent in December 2010 and January 2011, bringing the company's occupancy level to 95.8% by January 2011. Caparra Hills's rental rate and revenue per square foot have remained stable during the last several years. During the two years ended June 30, 2010 and 2009, the company's average revenue per square foot was US$25.80. Solid Liquidity Expected to Continue: Caparra Hills' liquidity position is solid resulting from its capacity to consistently generate cash flow from operations and its good credit access. During the last three years, the company's CFFO reached an annual average of US$4 million. By the end of September 2010, the company's cash position was US$6.7 million, including US$5.6 million in certificates of deposits, representing approximately 56% of the company's LTM revenue (US$11.9 million) and 3.4 times (x) the company's short-term debt (US$2.03 million). In addition, the company maintains US$1 million available in unused committed bank credit facility. The ratings incorporate the view that the company will maintain a solid liquidity, with a cash position above 30% the company's revenue and more than 2x its short-term debt on a consistent basis. A Positive Free Cash Flow Business: The ratings factor in a continued trend in the company's free cash flow, which has been positive during the last five years. For the LTM period ended September 2010, fiscal year ended June 2010, and fiscal year ended June 2009, Caparra Hills' free cash flow was positive at levels of US$2.1 million, US$2.1 million , and US$2 million, respectively. Caparra Hills' free cash flow is expected to continue to be positive during the next following years due to the company's stable cash flow from operations, low level of capital expenditures, and level of dividends of approximately US$1.5 million the company is planning to distribute per year. Factored into the ratings is the view that Caparra Hills does not plan to execute any major investments that could place additional pressure in its cash flow. Leverage Not Expected to Increase, Manageable Debt Schedule A Positive: By the end of September 2010, the company's total debt was US$51 million, and it was US$51.9 million and US$52.9 million by the end of June 2009 and June 2008, respectively. By the end of September 2010, Caparra Hills' debt was composed entirely by US$51 million secured bonds. The company does not maintain any off-balance debt associated with operating leases obligations. The company's EBITDA margin was 63% by the end of September 2010, which has been in line with the company's average EBITDA margin for the last three years (2010-2008) of 62%. The company's net leverage, as measured by net debt/EBITDA, was 5.9x by the end of September 2010, similar to the levels of 6.1x and 6.6x the company reached by the end of June 2009 and June 2008, respectively. The ratings incorporate the expectation that the company's net leverage will be in the 6.0X to 5.75x range during the next three fiscal years ending June 2013. Positively factored into the ratings is the company's manageable debt maturity schedule. The company's debt amortization schedule is well distributed with only 4% concentrated in the short term. Main Credit Concerns: The ratings are constrained by the negative business environment and the concentration risk affecting Caparra Hills' operations. The ratings incorporate the negative business environment affecting the economy of Puerto Rico, which has been in recession since the fourth quarter of fiscal year 2006. Additionally, the ratings factor the concentration risk in the company's operations related to three contiguous properties, which limits the company's diversification and growth strategies. Further, Caparra Hills' operations are highly dependent from its main tenants, with five tenants representing approximately 60% of the company's total revenues. The concentration risk is counter balanced by the adequate credit profile of Caparra Hills' main tenants and the company's good track-record of maintaining adequate occupancy levels. Negatively incorporated in the ratings is Caparra's high dividend payout ratio. During the last five years, Caparra has distributed more than US$4.8 million in dividends, and the company expects to maintain a dividend payout ratio of around 80% over its excess of cash flow for the next years. The ratings incorporates Fitch's expectations that Caparra Hills will maintain current leverage and liquidity levels. Caparra Hills conducts its operations in Puerto Rico, which Fitch views as a positive in terms of enforceability of the company's secured debt in the event of default. The relationship between the United States and Puerto Rico is referred to as commonwealth status. Puerto Rico's constitutional status is that of a territory of the United States, and, pursuant to the territorial clause of the U.S. Constitution, the ultimate source of power over Puerto Rico is the U.S. Congress. CARGO TRANSPORTATION: Has Loan Plus Restructuring Officer --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Cargo Transportation Services Inc. received interim permission from the bankruptcy judge on Jan. 21 to use cash representing collateral for the $7.9 million claim of the secured lender Comerica Bank. The bank said it was "marginally" oversecured, meaning that the collateral is worth more than the debt. In addition to allowing the use of cash, Comerica agreed to make a $2 million loan on the condition that CTS hire a chief restructuring officer acceptable to the bank. The final hearing on financing will be held Feb. 9. About Cargo Transportation Sunrise, Florida-based Cargo Transportation Services, Inc., provides transportation services to clients nationwide, including customized consolidation, distribution, logistics and warehousing services. It has 140 employees and averages $100,000,000 in gross revenue per year. Cargo Transportation filed for Chapter 11 bankruptcy protection on January 12, 2011 (Bankr. M.D. Fla. Case No. 11-00432). Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets at $50 million to $100 million and debts at $10 million to $50 million. CB HOLDINGS: Sees Remaining Restaurant Sales 'In Short Order' ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the owner of Charlie Brown's Steakhouse said it will submit a motion in "short order" to set up sale procedures for the remaining 32 restaurant locations. Mr. Rochelle notes that the $2.5 million loan for the Chapter 11 case established deadlines for selling everything. Originally, the DIP loan required an auction for the other stores by Jan. 24, with sale approval not later than Feb. 3. New York-based CB Holding Corp. owns and operates 20 Charlie Brown's Steakhouse and 12 Bugaboo Creek Steak House. As reported in yesterday's Troubled Company Reporter, CB Holding sold its The Office Beer Bar and Grill restaurant chain as part of its bankruptcy, to winning bidder Villa Enterprises Ltd. for $4.68 million. The Company and its affiliates filed for Chapter 11 bankruptcy protection on November 17, 2010 (Bankr. D. Del. Case No. 10-13683). Christopher M. Samis, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., assist the Debtors in their restructuring effort. The Garden City Group, Inc., is the Debtors' notice, claims and solicitation agent. Jeffrey N. Pomerantz, Esq., Jason S. Pomerantz, Esq., and Bradford J. Sandler, Esq., at Pachulski Stang Ziehl & Jones LLP, represent the Official Committee of Unsecured Creditors. CB Holding estimated its assets at $100 million to $500 million and debts at $50 million to $100 million. CELEBRITY RESORTS: Counsel Fees Slashed by $10K for Late Affidavit ------------------------------------------------------------------ Bankruptcy Judge Arthur B. Briskman awarded R. Scott Shuker and the law firm of Latham, Shuker, Eden & Beaudine, LLP $522,571 in fees plus $18,443 in costs, for a total of $541,014, as an allowed administrative expense pursuant to 11 U.S.C. Sections 503(b) and 507(a)(2), for legal services performed as counsel to Celebrity Resorts, LLC, and all of its debtor-affiliates. The firm's final fee application is unopposed. The firm seeks in its Final Application payment of fees of $532,571 and expenses of $18,443, for a total of $551,014, for the period March 5, 2010 through December 22, 2010. The total amount of $551,014 contains the amount of $77,259 awarded from Applicant's First Interim Fee Application, but held back pursuant to the Order entered on October 4, 2010. The Court reduced the firm's fees by $10,000 for its failure to timely file the Debtors' Affidavit in Support of Confirmation. The Court explained that a Chapter 11 debtor is required to file a confirmation affidavit setting forth the factual bases upon which the debtor relies in establishing that each of the requirements of 11 U.S.C. Section 1129 are met. The Court had directed the Debtors to file a confirmation affidavit within four day of the Confirmation hearing. The Affidavit of Jared M. Meyers was filed on December 21, 2010 -- one day prior to the confirmation hearing on December 22, 2010. "The confirmation affidavit is of critical importance to the Court and the parties in interest, particularly in a case of this complexity, in understanding the issues surrounding confirmation, whether confirmation is contested, and whether the confirmation elements of 11 U.S.C. Section 1129 have been met," Judge Briskman said. A copy of Judge Briskman's January 19, 2011 Order is available at http://is.gd/yDztqdfrom Leagle.com. About Celebrity Resorts Orlando, Florida-based Celebrity Resorts, LLC, and 35 affiliates filed for Chapter 11 bankruptcy protection on March 5, 2010 (Bankr. M.D. Fla. Lead Case No. 10-03550). R. Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, assists the Debtor in its restructuring effort. The Company estimated assets and debts at $10 million to $50 million in its Chapter 11 petition. The Court confirmed the Debtors' Amended Joint Plan of Reorganization, as modified, on December 28, 2010. As reported by the Troubled Company Reporter on January 5, 2011, Celebrity Resorts has emerged from Chapter 11 bankruptcy protection, according to the Orlando Sentinel. CENTER FOR JEWISH: Donors Give $30 Million for Debt Service ----------------------------------------------------------- Miriam Kreinin Souccar, writing for Crain's New York Business, reports that The Center for Jewish History, a nonprofit that houses the largest repository of Jewish history outside the state of Israel, said Monday it has raised $30 million to pay off its longstanding debt. "The Center for Jewish History has emerged from a difficult financial situation stronger than ever, thanks to the donors who recognized the significance of this essential institution," said Bruce Slovin, chairman and founder of the Center, according to Crain's. Crain's notes the debt was accrued 10 years ago when the Center built its home on West 16th Street, in New York. The organization had been paying around $1.5 million in debt service costs each year, but in September 2009, at the height of the economic downturn, their letter of credit expired, and renewing would have meant signing up for a higher interest rate. The report notes the board decided to launch a capital campaign to knock out the debt in one blow and skip paying some of long-term interest costs. Led by trustees William Ackman and Joseph Steinberg, it raised the money in less than 18 months with the help of the Fairholme Foundation, which gave nearly $6.8 million, and 19 other donors. Crain's says the organization, which operates on a $5.5 million annual budget and has a $10 million endowment, is now financially sound and can get back to focusing on its mission. CHARLES J KANE: Stewart Tilghman et al. Fraud Suit Goes to Trial ---------------------------------------------------------------- Bankruptcy Judge Erik P. Kimball denied motions and cross-motions for summary judgment filed by both plaintiffs and defendants in the cases: -- Stewart Tilghman Fox & Bianchi, P.A., William C. Hearon, P.A. and Todd S. Stewart, P.A., v. Charles J. Kane, (Bankr. S.D. Fla. Adv. Pro. No. 09-01838); and -- Stewart Tilghman Fox & Bianchi, P.A., William C. Hearon, P.A. and Todd S. Stewart, P.A., v. Harley N. Kane, (Bankr. S.D. Fla. Adv. Pro. No. 09-01839) The Court held that there remain material facts in dispute and so summary judgment is not appropriate. Stewart Tilghman Fox & Bianchi, P.A., William C. Hearon, P.A., and Todd S. Stewart, P.A., allege that defendants Charles J. Kane and Harley N. Kane received more than $4 million between 2004 and 2008 and that the Debtors dissipated most of these funds with the actual intent to hinder, delay or defraud the Plaintiffs themselves. The Plaintiffs also allege that the individual Debtors caused the law firm Kane & Kane to make improper distributions to the individual Debtors, caused Kane & Kane to pay excessive salary to the individual Debtors and members of their family, and caused Kane & Kane to make other transfers to their family members. The Debtors argue that some of the transfers in question were transfers from Kane & Kane to the individual Debtors themselves and that these transfers did not deplete the partnership assets because, they argue, the partnership assets include the net assets of the individual Debtors as general partners. A copy of the Court's January 18, 2011 Order Denying Motions for Summary Judgment is available at http://is.gd/r7pT70from Leagle.com. Charles J. Kane and Harley N. Kane filed for Chapter 11 bankruptcy (Bankr. S.D. Fla. Case Nos. 08-27457 and 08-27460) on November 17, 2008. The cases were dismissed by orders entered March 20, 2009, along with a case filed by their law firm, In re Kane & Kane, a general partnership, Case No. 08-27452. In 2009, Charles J. Kane and Harley N. Kane filed for Chapter 7 bankruptcy (Bankr. S.D. Fla. Case Nos. 09-15557 and 09-15558). The partnership also filed for Chapter 7, In re Kane & Kane, Case No. 09-15556. CHEM RX: Lost $109 Million in 2008 and 2009 ------------------------------------------- The Courier-Journal, in Louisville, Kentucky, reports that PharMerica Corp. said in a regulatory filing that Chem Rx lost $109 million in 2008 and 2009. Accoridng to Louisville-based PharMerica, Chem Rx, however, showed improvement over that span. Its loss narrowed to $24 million in 2009 compared with $85 million the year before, while sales rose 8 percent to $354 million. Abut Chem RX Corp. Long Beach, N.Y.-based Chem RX Corporation, aka Paramount Acquisition Corp. -- http://www.chemrx.net/-- is a major institutional pharmacy serving the New York City metropolitan area, as well as parts of New Jersey, upstate New York, Pennsylvania and Florida. The Company and five affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 10-11567) on May 11, 2010. Dennis A. Meloro, Esq., and Scott D. Cousins, Esq., at Greenberg Traurig, LLP, represent the Company in its restructuring. Cypress Holdings, LLC, is the Company's financial advisor. RSR Consulting, LLC, is the Company's chief restructuring officer. Brunswick Group LLP is the Company's public relations consultant. Grant Thornton LLP is the Company's independent auditor. Lazard Middle Market LLC is the Company's investment banker. Eichen & Dimeglio PC is the Company's tax advisor. Kurtzman Carson Consultants is the Company's claims and notice agent. The Company disclosed $169,690,868 in assets and $178,281,128 in debts as of February 28, 2010. Chem Rx changed its name to CRC Parent Corp. following the sale of its business to PharMerica Corp. at a bankruptcy court-sanctioned auction. PharMerica paid $70.6 million and assumed specified liabilities. The deal enabled PharMerica to move into the New York and New Jersey markets. CITIGROUP INC: Treasury to Auction Off 465.1-Mil. Warrants Today ---------------------------------------------------------------- The Associated Press reports that the U.S. government said it will sell 465.1 million warrants it holds from Citigroup Inc. in an auction on Tuesday. Sale of the warrants gives the holder the right to buy Citigroup common stock at a fixed price. The AP says the warrant sales will add to the $12 billion profit that the U.S. Treasury says the government has realized from its bailout of Citigroup. The AP notes the Treasury released that estimate in December when it completed the remaining sales of Citigroup common stock that the government held. The AP says the government will announce the results of Tuesday's warrant auction on Wednesday. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. The U.S. Treasury and the Federal Deposit Insurance Corporation agreed to provide protection against the possibility of unusually large losses on an asset pool of roughly $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup also received $45 billion in bailout aid. Citigroup sold assets to repay the bailout funds. About Citigroup Inc. Based in New York, Citigroup Inc. (NYSE: C) -- is a global diversified financial services holding company whose businesses provide a broad range of financial services to consumer and corporate customers. COMMONWEALTH BIOTECHNOLOGIES: Files for Chapter 11 Reorganization ----------------------------------------------------------------- Commonwealth Biotechnologies, Inc., has filed for reorganization under Chapter 11 bankruptcy in order to complete its planned divestment of assets and subsequent identification of a merger partner in an orderly and efficient way. The process could take up to 12 to 18 months to complete. Dr. Richard J. Freer, CEO of CBI said, "This step is the result of the confluence of timing pressures and the actions of secured creditors seeking to collect on debt owed. While bankruptcy sometimes carries a negative connotation, the company believes this is the best way for the company to satisfy all debt, not just secured debt. Our ultimate goal remains unchanged from previous communications to the market, that is, to emerge from this filing debt free with the ability to return shareholder value as well." Commonwealth Biotechnologies offers cutting-edge peptide research and development products and services to the global life sciences industry. CBI now operates through its Australian subsidiary, Mimotopes, Pty Ltd. COMMONWEALTH BIOTECHNOLOGIES: Case Summary & Creditors List ----------------------------------------------------------- Debtor: Commonwealth Biotechnologies, Inc. 718 Grove Road Midlothian, VA 23114 Bankruptcy Case No.: 11-30381 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court Eastern District of Virginia (Richmond) Judge: Kevin R. Huennekens Debtor's Counsel: Paula S. Beran, Esq. TAVENNER & BERAN, PLC 20 North Eighth Street, Second Floor Richmond, VA 23219 Tel: (804) 783-8300 Fax: (804) 783-0178 E-mail: pberan@tb-lawfirm.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/vaeb11-30381.pdf The petition was signed by Richard J. Freer, Ph.D., CEO. CONSOLIDATED HORTICULTURE: May Lay Off 311 Workers in Early March ----------------------------------------------------------------- Melanie Turner, staff writer at the Sacramento Business Journal, reports that Hines Nurseries LLC has notified the state of California that it may lay off 311 workers in early March, including as many as 70 at the Company's operation in Winters. About Hines Nurseries Irvine, California-based Consolidated Horticulture Group LLC, doing business as Hines Nurseries LLC -- http://www.hineshorticulture.com/-- operates nursery facilities located in Arizona, California, Oregon and Texas. Through its affiliate, the company produces and distributes horticultural products. Black Diamond Capital Management LLC purchased Hines Nurseries Inc. in a bankruptcy sale in January 2009. The resulting reorganization plan, confirmed in January 2009, paid secured creditors in full on their $35.9 million in claims while providing as much as $12 million toward debt owing to suppliers both before and after the bankruptcy filing. The business bought by Black Diamond was renamed to Consolidated Horticulture. Consolidated Horticulture and its affiliates filed for Chapter 11 protection on October 12, 2010 (Bankr. D. Del. Lead Case No. 10-13308). Laura Davis Jones, Esq. and Timothy P. Cairns, Esq. at Pachulski Stang Ziehl & Jones LLP, serve as Delaware counsel to the Debtors. Attorneys at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., serve as bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the claims agent. Consolidated Horticulture estimated $100 million to $500 million in assets and $50 million to $100 million in debts in the Chapter 11 petition. COOPER COS: S&P Raises Corporate Rating to 'BB+', Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Cooper Cos. Inc. to 'BB+' from 'BB'; the rating outlook is stable. In addition, S&P are raising S&P's rating on the Company's senior unsecured debt to 'BB+' from 'BB', although S&P expects this debt to be repaid in February 2011. "The rating on Pleasanton, Calif.-based Cooper Cos. Inc. reflects its fair business risk profile, given its dependence on soft contact lenses and the need to compete against much larger players," said Standard & Poor's credit analyst Cheryl Richer. The Company's Cooper Vision (CVI) business unit is exposed to technology changes, as evidenced by its late entry into silicone hydrogel (SiH) lens manufacturing. However, the Company has entered this market successfully as a result accelerated investment to manufacture, and ramp up production of, various lines of SiH soft contact lenses. S&P expects continued sales growth will be driven by industry demand, new product launches, expanded capacity, and pending entry into the Japanese market with SiH lenses. The Company's intermediate financial risk profile and strong liquidity reflect relatively low use of debt leverage (adjusted debt to total capital of 31% at Oct. 31, 2010) and increasing free cash flow generation. Only modest revenue diversification is provided by Cooper Surgical (CSI), which manufactures women's health care products used primarily by obstetricians and gynecologists (16% of total sales). Cooper continues to increase market share despite competitive pressures. Global industry contact lens growth, although dampened, has remained positive, as reported by Cooper, despite the recession. CVI has a No. 3 position (roughly 16% global market share) in the $6 billion global soft contact lens industry. The Company's dependence on CVI's contact lens product line (84% of total sales) exposes it to challenges from dominant industry players, such as the Vision Care division of Johnson & Johnson, which has a global market share of more than 40%. Other big competitors are CIBA Vision (owned by Novartis AG) and Bausch & Lomb Inc., which has a market share slightly trailing Cooper's. These rivals have much greater financial resources that could be applied to marketing or R&D. Still, customer switching between contact lens brands is typically low. The Company's global footprint provides diversity for the otherwise narrowly focused business; in fiscal 2010, 45% of CVI sales were derived in the Americas, 36% in Europe/Middle East, and 19% in Asia-Pacific. Cooper uses foreign-exchange hedges to offset the currency risk. CORNER DEVELOPMENT: Selling Assets to Pay Off Debts --------------------------------------------------- Matthew Frank at the Missoula Independent, in Montana, reports that The Corner Development, LLC, and its owner are in Chapter 11 protection with a goal of selling assets to pay off debts. "We're going to try to sell things in an orderly manner to hopefully pay everybody off," Harold Dye, Esq., at Dye & Moe, said. "That's the general goal." Corner Development developed "The Corner," the posh condos on the corner of South Higgins Avenue and Brooks Street that. The Company is owned by Eric Hefty, an architect. Corner Development filed for Chapter 11 protection in Butte, Montana on Jan. 13, 2011 (Bankr. D. Mont. Case No. 11-60040). Harold V. Dye, Esq., at Dye & Moe, PLLP, in Missoula, Montana, represents the Debtor. The Debtor estimated up to $50,000 in assets and liabilities in excess of $10 million. Mr. Hefty filed for Chapter 11 protection on Jan. 12, 2011 (Bankr. D. Mont. Case No. 11-60039). The Missoula Independent reports that Mr. Dye says both The Corner and the adjacent University Apartments on Roosevelt Street, also owned by Mr. Hefty, are implicated in the filings. Mr. Hefty found himself in a "foreclosure situation" with primary creditor Mountain West Bank, Dye says, and was forced into an emergency bankruptcy filing to protect his assets from the bank's "imminent action." COSINE COMMUNICATIONS: To Deregister Common Stock ------------------------------------------------- CoSine Communications, Inc. filed with the Securities and Exchange Commission, on January 20, 2011, a Post-Effective Amendment relating to the following Registration Statements on Form S-8: (a) 25,535,979 shares of CoSine Communications, Inc. common stock, par value $0.0001 per share, for the CoSine Communications, Inc. 1997 Stock Plan, the CoSine Communications, Inc. 2000 Stock Plan, the CoSine Communications, Inc. 2000 Employee Stock Purchase Plan and the CoSine Communications 2000 Director Option Plan; (b) 17,225,190 shares of Common Stock the CoSine Communications, Inc. 2002 Stock Plan, the CoSine Communications, Inc. 2000 Stock Plan, the CoSine Communications, Inc. 2000 Employee Stock Purchase Plan and the CoSine Communications 2000 Director Option Plan. The Company intends to deregister its Common Stock under Sections 12(g) of the Securities Exchange Act of 1934, as amended, through the filing of a Form 15. Because the Company will no longer be filing reports pursuant to the Exchange Act, the Company is deregistering the remaining securities registered but unsold under the Registration Statements, if any, in accordance with an undertaking made by the Company in Part II of the Registration Statements to remove from registration, by means of a post- effective amendment, any of the securities that had been registered for issuance that remain unsold at the termination of the offering. About Cosine Communications Los Gatos, California-based CoSine Communications, Inc. (Pink Sheets:COSN.pk) was founded in 1998 as a global telecommunications equipment supplier. As of December 31, 2006, CoSine had ceased all its product and customer service related operations. CoSine's strategic plan is to redeploy its existing resources to identify and acquire, or invest in, one or more operating businesses with the potential for generating taxable income or capital gains. The Company's balance sheet at Sept. 30, 2010, showed $21.84 million in total assets, $189.0 thousand in liabilities, all current, and stockholders' equity of $21.65 million. Burr Pilger Mayer Inc. of San Jose, California, which audited the Company's annual report for 2009, said that that the CoSine Communications' actions in September 2004 in connection with its ongoing evaluation of strategic alternatives to terminate most of its employees and discontinue production activities in an effort to conserve cash, raise substantial doubt about its ability to continue as a going concern. CYTOMEDIX INC: Common Stock to Trade on OTC Bulletin Board ---------------------------------------------------------- Cytomedix, Inc. disclosed that beginning with the opening of trading on or about January 25, 2011, the Company's common stock is expected to be quoted on the OTC Bulletin Board, and will cease trading on the NYSE Amex. The Company also expects to be issued a new trading symbol for quotation on the OTC Bulletin Board and will announce the new ticker symbol once it has been assigned. As previously announced, on November 19, 2010, Cytomedix received notice from the staff of the NYSE Amex that the Company had failed to regain compliance with the stockholders' equity requirement for continued listing and, accordingly, the Company's securities were subject to delisting proceedings. The Company appealed the determination to a Listing Qualifications Panel. However, the Company withdrew its appeal on January 20, 2011. "While we were not able to meet certain stockholder's equity compliance requirements needed to maintain our NYSE Amex listing, our core business remains strong and we continue to see positive market reaction to both of our platelet rich plasma products," commented Martin P. Rosendale, President and Chief Executive Officer of Cytomedix. "We are nearing the completion of a very robust dossier for submission to the Centers for Medicare & Medicaid Services to reconsider reimbursement of our AutoloGel(TM) System in wound healing, and are confident that our strong clinical data will provide a compelling case for a positive determination." While its common stock is expected to be quoted on the OTC Bulletin Board, the Company plans to continue to file all periodic reports with the SEC pursuant to the requirements of the Securities Exchange Act of 1934, as amended. About Cytomedix Inc. Gaithersburg, Maryland, Cytomedix, Inc. (NYSE Amex: GTF) -- http://www.cytomedix.com/-- develops, sells and licenses regenerative biological therapies primarily for wound care, inflammation and angiogenesis. The Company markets the AutoloGel(TM) System, a device for the production of platelet rich plasma (PRP) gel derived from the patient's own blood for use on a variety of exuding wounds; the Angel(R) Whole Blood Separation System, a blood processing device and disposable products used for the separation of whole blood into red cells, platelet poor plasma (PPP) and PRP in surgical settings; and the activAT(R) Autologous Thrombin Processing Kit, which produces autologous thrombin serum from PPP. The activAT(R) kit is sold exclusively in Europe and Canada, where it provides a completely autologous, safe alternative to bovine-derived products. The Company's restated balance sheet at December 31, 2009, showed $2,645,083 in total assets, $1,669,032 in total liabilities, and stockholders' equity of $976,051. PricewaterhouseCoopers LLP, in McLean, Va., expressed substantial doubt about Cytomedix, Inc.'s ability to continue as a going concern, following the Company's 2009 results. The independent auditors noted that the the Company has suffered recurring losses from operations and has insufficient liquidity to fund its ongoing operations. DEEP MARINE: Court Subordinates Minority Shareholders' Claims ------------------------------------------------------------- FLI Deep Marine LLC, Bressner Partners Ltd., Logan Langberg, Harley Langberg, and Deepwork, Inc., on January 19, 2010, filed Claim Nos. 99, 100, 101 and 102 against Deep Marine Holdings, Inc., or its affiliates for $7,500,000 each, based on a prepetition lawsuit against FLI Deep, et al., initiated in the Delaware Court of Chancery. The Defendants are former minority shareholders in Deep Marine Technology Incorporated. The Defendants filed the Delaware Lawsuit on October 26, 2009, alleging that DMTI's majority shareholders confiscated the Defendants' DMTI shares through a short form merger with NKOC, Inc. The Official Committee of Unsecured Creditors filed a complaint on March 8, 2010, seeking subordination of the Defendants' Claims below those of general unsecured creditors pursuant to 11 U.S.C. Sec. 510(b). The Committee argues that subordination is appropriate because the Defendants' Claims arise from "the purchase or sale" of the Defendants' DMTI shares. The Committee acknowledges that at least some of Defendants' Claims involve tortious conduct not directly related to the "purchase" or "sale" of DMTI shares. Nevertheless, the Committee argues that subordination pursuant to Sec. 510(b) is mandatory when the claim at issue is "causally linked" to the purchase or sale of a security. The Defendants objected, arguing that the short form merger did not constitute the "sale" of their DMTI shares and Defendants "therefore cannot be suing the Debtors [in the Delaware Litigation] for rescission of a sale." The Defendants also argue that "even if somehow shares confiscated in a short form merger could be construed to be a sale of stock, the core of Defendants' claims in the Delaware case relate to events that occurred in the years before the [m]erger." Bankruptcy Judge Marvin Isgur finds that Sec. 510(b)'s breadth includes the causes of action alleged in the Delaware Litigation. Accordingly, the Court grants the Committee's Motion for Summary Judgment and subordinates the Defendants' Claims pursuant to Sec. 510(b). The case is Official Committee Of Unsecured Creditors, v. FLI Deep Marine LLC, et al., Adv. Pro. No. 10-03116 (Bankr. S.D. Tex.). A copy of the Court's January 19, 2011 Memorandum Opinion is available at http://is.gd/sN5OaSfrom Leagle.com. About Deep Marine Headquartered in Houston, Texas, Deep Marine Technology Inc. -- http://www.deepmarinetech.com/-- is an independent subsea service provider to the Offshore Oil and Gas Industry. Deep Marine Holdings, Inc., filed for Chapter 11 bankruptcy protection (Bankr. D. S.D. Tex. Case No. 09-39314) on December 4, 2009. Affiliates Deep Marine Technology Inc., Deep Marine 1, LLC, Deep Marine 2, LLC, Deep Marine 3, LLC, and Deep 4 Marine, LLC, also sought bankruptcy protection. The Debtors are represented by Bracewell & Guiliani, L.L.P. In its schedules, DMTI scheduled $91,060,850 in assets and $64,091,137 in debts. DEEP DOWN: 1st to 3rd Quarter 2010 Reports to Be Restated --------------------------------------------------------- In conjunction with an internal review meeting of Flotation Technologies, Inc., a wholly owned subsidiary of Deep Down, Inc., management of the Company reviewed the status of one of its long- term fixed price contracts that was entered into by the Company in November of 2008 and is scheduled to be completed in the third quarter of 2011. As a result of this review, Management determined that the percentage of completion accounting model it uses to determine the amount of revenue to recognize in the Company's financial statements contained errors with respect to the labor and burden rates applied to project costs and that the estimate to complete the work for this Contract was not updated on a timely basis. Management promptly notified KPMG LLP, the Company's independent registered public accounting firm, and the Audit Committee of the Company's Board of Directors. The Audit Committee and KPMG discussed the matter and Management continues to work to quantify the effects of these errors. On January 14, 2011, the Audit Committee concluded, based on recommendations from Management, that, as a result of these errors, the Company's unaudited interim financial statements for the quarterly periods ended March 31, 2010, June 30, 2010 and September 30, 2010 should no longer be relied on and should be restated. The Company expects to record an adjustment that will result in a decrease to cumulative revenues recognized under the Contract since its inception in the range of $1,900,000 to $2,300,000. Since the costs related to work performed under the Contract were recorded correctly, the adjustment will also reduce the cumulative net income on the project reported by the Company in the same range. Based on the analysis performed to date, the Company currently believes that the portion of this adjustment which relates to the year ended December 31, 2009 will decrease revenues and net income for that year by approximately $750,000 to $1,000,000. At this time, the Company has concluded that the overstatement of revenues and net income resulting from these errors attributable to 2009 are not material to the 2009 financial statements. Therefore, the Company will not restate the financial statements included in the Form 10-K and the Form 10-Q's for fiscal 2009. However, Management has not completed its review procedures and the amount of the adjustment is subject to change. Additionally, the Company believes that based on current estimates to complete the work under this Contract that the project will be at breakeven at its completion which is scheduled in mid-2011. On December 31, 2010, substantially all the assets of Flotation were contributed to Cuming Flotation Technologies, LLC, as part of a joint venture transaction. Work under the Contract that included the manufacturing of buoyancy is being performed by Flotation. The Company intends to file an amended Form 10-Q/A for each of the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010. The Company expects to complete the filings as soon as practicable but no later than March 31, 2011. In addition to the impact of the restatement on the Company's previously issued financial statements, the Company will also evaluate whether the errors were the result of a material weakness in internal control over financial reporting and will include the results of this evaluation in the Form 10-Q/A's. It is the Company's view that, based on the restatement to the Company's previously issued financial statements, the Company will not be in compliance with the financial covenants under the Company's credit facility as of September 30, 2010. However, based on the Company's initial review, even after the restatement, it appears that the Company will be in compliance with such covenants for the period ended December 31, 2010. The Audit Committee has discussed the matters with PricewaterhouseCoopers LLP, the Company's previous independent registered public accounting firm, and KPMG, the Company's current independent registered public accounting firm since July 8, 2010. About Deep Down Deep Down, Inc. -- http://www.deepdowncorp.com/-- is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down's services include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, distributed and drill riser buoyancy, ROVs and tooling, marine vessel automation, control, and ballast systems. The Company's primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. The Company's balance sheet at Sept. 30, 2010, showed $49.31 million in total assets, $14.72 million in total liabilities, and stockholders' equity of $34.58 million. The Company's working capital declined by $1.7 million to negative $554,000 at September 30, 2010 from $1.2 million at December 31, 2009 primarily as a result of reclassifying $2.5 million of its long-term debt to current liabilities. All of the debt from one of the Company's lenders in the amount of $3.2 million is due April 15, 2011. As of September 30, 2010, the Company was in compliance with all financial covenants associated with this debt. The Company is currently in discussions with several lenders who have expressed interest in refinancing the Company's debt. Deep Down reported a net loss of $3.36 million after a $4.5 million non-cash impairment of goodwill, on revenues of $11.4 million for three months ended Sept. 30, 2010, compared with a net loss of $2.09 million on revenues of $8.4 million during the same quarter last year. DELTA AIR: Reports $19 Million Profit in Fourth Quarter ------------------------------------------------------- Delta Air Lines reported financial results for the December 2010 quarter. Key points include: * Delta's net income for the December 2010 quarter was $158 million, or $0.19 per diluted share, excluding special items. This is a $383 million improvement year over year. * Delta's GAAP net income was $19 million, or $0.02 per diluted share, for the December 2010 quarter. * Delta's net income for 2010 was $1.4 billion, excluding special items. Including $851 million in special items, * Delta's net income for 2010 was $593 million. * 2010 results include $313 million in profit sharing expense, including $38 million in the December quarter, in recognition of Delta employees' achievements toward meeting the company's financial targets. * Delta's adjusted net debt at the end of 2010 was $15.0 billion, a $2.0 billion reduction from prior year. * Delta ended 2010 with $5.2 billion in unrestricted liquidity. "Our 2010 results are among the best in Delta's history. They would not have been possible without the dedication and determination of Delta employees worldwide and we are pleased we will pay more than $300 million in profit sharing for 2010," said Richard Anderson, Delta's chief executive officer. "These results are a direct reflection of the success of our merger, cost discipline and debt reduction strategy and give us momentum to deal with the rising fuel prices we face in 2011." Revenue Environment Total operating revenue for the December 2010 quarter was $7.8 billion, an increase of $1.0 billion, or 14%, compared to the same period last year. * Passenger revenue increased 15%, or $889 million, compared to the prior year period on 7% higher capacity. Passenger unit revenue (PRASM) increased 8%, driven by a 9% improvement in yield. * Cargo revenue decreased 7%, or $17 million, due to the elimination of freighter operations, partially offset by higher volume and yield. * Other, net revenue increased 14%, or $112 million, primarily due to higher SkyMiles revenue and revenues from ancillary products and services. Comparisons of revenue-related statistics are as follows: Increase(Decrease) 4Q10 versus 4Q09 ------------------------------- Change Unit Passenger Revenue 4Q10 ($M) YOY Revenue Yield Capacity ----------------------------------------- Domestic 2,927 11% 5% 5% 6% Atlantic 1,226 21% 8% 10% 12% Pacific 721 47% 24% 26% 18% Latin America 364 13% 19% 18% (5)% ------- Total mainline 5,238 17% 8% 9% 8% Regional 1,430 9% 9% 10% 0% ------- Consolidated 6,668 15% 8% 9% 7% "Through the momentum we built in 2010, we expect to maintain our March quarter margins year over year despite more than $350 million in higher costs from the recent steep run-up in fuel prices," said Ed Bastian, Delta's president. "Industry-wide fare increases, combined with growth in Delta's ancillary products and services, will provide a more long-term, revenue-based solution to addressing the high fuel environment." Cost Performance In the December 2010 quarter, operating expense increased $644 million year over year due to higher fuel price, volume- and revenue-related expenses, and profit sharing expense, which were partially offset by incremental merger cost synergies. Consolidated unit cost (CASM[2]), excluding fuel, profit sharing and special items, decreased 2% in the December 2010 quarter on a year-over-year basis, on 7% higher capacity. Consolidated CASM, including fuel, profit sharing and special items, increased 2%. Non-operating expense excluding special items decreased $67 million due to benefits from Delta's debt reduction initiatives. Including special items, non-operating expense was $36 million lower than in the December 2009 quarter. Fuel Price and Related Hedges Delta hedged 58% of its fuel consumption for the December 2010 quarter for an average fuel price(3) of $2.47 per gallon. The table below represents 2011 fuel hedges in place as of Jan. 14, 2011: 1Q11 2Q11 3Q11 4Q11 -------------------------- Call options 15% 26% 20% 15% Collars 19% 9% 12% 0% Swaps 15% 6% 4% 2% -------------------------- Total 49% 41% 36% 17% Average crude call strike $84 $87 $86 $87 Average crude collar cap 90 84 89 - Average crude collar floor 75 73 76 - Average crude swap 85 91 83 89 Liquidity Position As of Dec. 31, 2010, Delta had $5.2 billion in unrestricted liquidity, including $3.6 billion in cash and short-term investments, and $1.6 billion in undrawn revolving credit facilities. During the December 2010 quarter, operating cash flow was $318 million, driven by the company's profitability partially offset by the normal seasonal decline in advance ticket sales. Free cash flow was $52 million in the December 2010 quarter and $1.6 billion for the full year. Cash used in investing during the quarter was $266 million, which included $178 million for investments in aircraft, parts and modifications, as the company began the previously announced investment in its fleet, including winglets, flat-bed seats and enhanced in-seat entertainment. Debt payments in the December 2010 quarter were $1.3 billion and the company issued $987 million of debt, primarily to refinance a portion of its aircraft debt maturities. During the quarter, Delta completed a $474 million debt offering and received $270 million in proceeds. The remaining $204 million will be held in escrow until additional aircraft are refinanced, including 10 aircraft in Delta's 2001-1 enhanced equipment trust certificates, which mature in September 2011. At Dec. 31, Delta's adjusted net debt was $15.0 billion, a $2.0 billion reduction from Dec. 31, 2009. "Through the hard work of the Delta team, we ended 2010 with flat non-fuel unit costs and a $2 billion reduction in adjusted net debt, meeting two of our key financial commitments for the year," said Hank Halter, Delta's chief financial officer. "To mitigate the pressure on our business from higher fuel prices in 2011, we remain committed to maintaining a competitive cost structure and paying down debt." Company Highlights Delta has a strong commitment to employees, customers and the communities it serves. Key accomplishments in 2010 include: * Accruing more than $300 million in employee profit sharing, in recognition of the achievements of all Delta employees toward meeting the company's financial targets; * Taking major steps toward resolving remaining representation issues, as Delta employees in five elections voted to keep the direct relationship and culture that Delta has maintained over the decades; * Implementing a more than $2 billion investment -- Delta's largest product investment in a decade -- in improved products, services and airport facilities through 2013, including an expanded international terminal in New York- JFK; full flat-bed seats in BusinessElite and individual in-seat entertainment throughout both cabins on all transoceanic aircraft; expanding Wi-Fi to all two-class jets; and improving fuel efficiency by adding winglets to 44 more aircraft in Delta's fleet; * Celebrating the 10th anniversary of SkyTeam; welcoming Vietnam Airlines and TAROM, Romania's flag carrier, into SkyTeam; and supporting the applications of China Eastern, Aerolineas Argentinas' and Garuda Indonesia to join SkyTeam; * Extending Delta's reach through alliance and codeshare partnerships, including the addition of Alitalia to Delta's industry-leading joint venture with Air France- KLM; signing a new codeshare agreement with Hawaiian Airlines that will offer Delta's customers access to connecting flights within the Hawaiian Islands; and announcing plans to codeshare with GOL airlines, a Brazilian carrier; * Expanding Delta's network to offer customers the routes they want worldwide by announcing more frequencies between Delta's U.S. gateways and London-Heathrow; new service to Tokyo-Haneda and the Pacific island of Palau; and increased service to Africa, Shanghai, Manila, Beijing, Guangzhou and Reykjav�k, Iceland; * Launching a dedicated customer service channel enabling customers to contact Delta in real-time through @DeltaAssist on Twitter; and * Furthering Delta's commitment to the communities it serves by raising $1 million in donations for Martin Luther King Jr. National Memorial in Washington, D.C.; pledging $1 million to Atlanta's National Center for Civil and Human Rights and $2 million to Grady Health Foundation in Atlanta; and building houses with Habitat for Humanity in nine U.S. states and Chile. Special Items Delta recorded special items totaling $139 million in the December 2010 quarter, including: * $88 million in merger-related expenses; * $31 million from a loss on extinguishment of debt; and * $20 million in costs related to the consolidation of operations at Cincinnati/Northern Kentucky International Airport. Delta recorded special items totaling a net $200 million credit in the December 2009 quarter, including: * $121 million in primarily merger-related expenses; and * $321 million non-cash tax benefit related to the impact of fuel hedges in other comprehensive income. March 2011 Quarter Guidance Following are Delta's projections for the March 2011 quarter. 1Q 2011 Forecast ---------------- Operating margin 1 ? 3% Fuel price, including taxes and hedges $2.60 Capital expenditures $375 million Total liquidity at end of period $5.3 billion 1Q 2010 Forecast (compared to 1Q 2010) --------------------- Consolidated unit costs ? excluding fuel expense Flat ? up 2% System capacity Up 5 ? 7% Domestic Flat ? up 2% International Up 12 ? 14% Mainline capacity Up 6 ? 8% Domestic Flat ? up 2% International Up 12 ? 14% Other Matters DELTA AIR LINES, INC. Unaudited Consolidated Statement of Operations Three Months Ended Dec. 31, 2010 Operating Revenue: Passenger: Mainline $5,238,000,000 Regional carriers 1,430,000,000 --------------- Total passenger revenue 6,668,000,000 Cargo 236,000,000 Other, net 885,000,000 --------------- Total operating revenue 7,789,000,000 Operating Expense: Aircraft fuel and related taxes 1,928,000,000 Salaries and related costs 1,708,000,000 Contract carrier arrangements 1,180,000,000 Aircraft maintenance mat./outside repairs 395,000,000 Contracted services 393,000,000 Depreciation and amortization 372,000,000 Passenger commissions/other selling expenses 364,000,000 Landing fees and other rents 313,000,000 Passenger service 180,000,000 Aircraft rent 82,000,000 Profit sharing 38,000,000 Restructuring and merger-related items 108,000,000 Other 434,000,000 --------------- Total operating expense 7,495,000,000 --------------- Operating Income 294,000,000 Other (Expense) Income: Interest expense (224,000,000) Amortization of debt discount, net (46,000,000) Interest income 5,000,000 Loss on extinguishment of debt (31,000,000) Miscellaneous, net 23,000,000 --------------- Total other expense, net (273,000,000) --------------- Income (Loss) Before Income Taxes 21,000,000 Income Tax (Provision) Benefit (2,000,000) --------------- Net Income (Loss) $19,000,000 =============== DELTA AIR LINES, INC. Unaudited Consolidated Statement of Operations Year Ended Dec. 31, 2010 Operating Revenue: Passenger: Mainline $21,408,000,000 Regional carriers 5,850,000,000 --------------- Total passenger revenue 27,258,000,000 Cargo 850,000,000 Other, net 3,647,000,000 --------------- Total operating revenue 31,755,000,000 Operating Expense: Aircraft fuel and related taxes 7,594,000,000 Salaries and related costs 6,751,000,000 Contract carrier arrangements 4,305,000,000 Aircraft maintenance mat./outside repairs 1,569,000,000 Contracted services 1,549,000,000 Depreciation and amortization 1,511,000,000 Passenger commissions/other selling 1,509,000,000 expenses Landing fees and other rents 1,281,000,000 Passenger service 673,000,000 Aircraft rent 387,000,000 Profit sharing 313,000,000 Restructuring and merger-related items 450,000,000 Other 1,646,000,000 --------------- Total operating expense 29,538,000,000 --------------- Operating Income 2,217,000,000 Other (Expense) Income: Interest expense (1,004,000,000) Amortization of debt discount, net (216,000,000) Interest income 35,000,000 Loss on extinguishment of debt (391,000,000) Miscellaneous, net (33,000,000) --------------- Total other expense, net (1,609,000,000) --------------- Income (Loss) Before Income Taxes 608,000,000 Income Tax (Provision) Benefit (15,000,000) --------------- Net Income (Loss) $593,000,000 =============== DELTA AIR LINES, INC. Unaudited Selected Balance Sheet Data As of Dec. 31, 2010 Cash and cash equivalents $2,892,000,000 Short-term investments 718,000,000 Restricted cash, cash equivalents & short-term investments (short-term and long-term) 447,000,000 Total assets 43,184,000,000 Total debt and capital leases, including current maturities 15,252,000,000 Total stockholders' equity 611,000,000 A replay of Delta's conference call and webcast discussing its Fourth Quarter 2010 financial results may be accessed for free at http://researcharchives.com/t/s?3a2c The replay of the webcast is available until Feb. 18, 2011. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Court Enters Final Decree Closing Chapter 11 Case ------------------------------------------------------------ At the behest of Delta Air Lines and its units, Judge Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York issued: (i) a final decree, pursuant to Section 350(a) of the Bankruptcy Code and Rule 3022 of the Local Bankruptcy Rules for the Southern District of New York, closing the remaining: -- Chapter 11 case of Delta, Case No. 05-17923 (CGM), and -- Chapter 11 case of Comair, Case No. 05-17924 (CGM); (ii) an order (a) deeming any distributions allocable to any Holders of Allowed Claims that remain unclaimed as of March 31, 2011, as "undeliverable distributions" and void ab initio, and (b) authorizing and directing that all Undeliverable Distributions and any residual shares of Delta stock remaining in the Final Reserve after resolution of all disputed claims will revert to Reorganized Delta to be transferred to the Delta Employee and Retiree Care Fund -- a non-profit 501(c)(3) charitable organization -- with each corresponding Allowed Claim being automatically discharged and forever barred. The Remaining Chapter 11 Cases are closed for all purposes -- including for purposes of calculating U.S. Trustee fees -- pursuant to Section 350(a) of the Bankruptcy Code and Rule 3022 of the Federal Rules of Bankruptcy Procedure, ruled Judge Morris. The Court held that, as of March 31, 2011, all Claims relating to Undeliverable Distributions be automatically discharged and forever barred against the "Releasees" under the Reorganized Debtors' confirmed Joint Plan of Reorganization; all persons or entities who have held, hold or may hold a Claim relating to Undeliverable Distributions are permanently enjoined from (a) commencing or continuing in any manner any action or other proceeding of any kind with respect to any such Claim against the Releasees or property of any Releasees, (b) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against the Releasees or property of any Releasees, (c) creating, perfecting or enforcing any Lien or encumbrance of any kind against the Releasees or against the property or interests in property of the Releasees or (d) asserting any right of set-off, subrogation or recoupment of any kind against any obligation due from the Releasees or against the property or interests in property of the Releasees, with respect to any such Claim. The Reorganized Debtors are not required to file with the Court or serve on the U.S. Trustee a Final Report, Judge Morris said. Prior to the court's entry of the Final Decree, Timothy E. Graulich, Esq., at Davis Polk & Wardwell LLP, in New York, informed the Court that no objections were filed to the Debtors' request, save for a response for reservation of rights filed by BlueMountain Capital Management LLC. BlueMountain stated that it does not oppose the relief sought by the Debtors in their motion to close, but that it wanted to preserve its right to object in the event a motion filed by the Reorganized Debtors to estimate claims for reserve and distribution purposes is denied or modified in a manner that is not acceptable to BlueMountain. Delta: May Estimate Claims For Reserve/Distribution The Reorganized Debtors' Claims Reserve Motion sought the creation of (i) a reserve of Delta Shares equal to $1,148,575 for ratable payment of 17 outstanding claims against Reorganized Debtor Delta and (ii) a reserve of Comair Shares equal to $1,325,593 for payment of one outstanding claim against Reorganized Comair: I. Comair Final Reserve Estimated Amount Filed of Allowed Claimant Claim No. Amount Unsecured Claim -------- --------- ------ --------------- Linda Landers 8369 $1,325,593 $1,325,593 --------------- Comair Final Reserve: $1,325,593 II. Delta Final Reserve Estimated Amount Filed of Allowed Claimant Claim No. Amount Unsecured Claim -------- --------- ------ --------------- Diamond Lease 3982 $74,287 $74,287 (U.S.A.), Inc. 3983 74,287 74,287 John C. Marshall 4864 Unspecified -- Class proof of 6815 100,000,000 -- claim of Dennis Smith, et al. United Airlines Inc. 7292 2,974,200 800,000 Banc One Equipment 8268 Unspecified 200,000 Finance, Inc. First Chicago 5174 Unspecified 200,000 Leasing 5175 Unspecified 200,000 Corporation 8267 Unspecified 200,000 8482 120,000 200,000 8490 120,000 200,000 Wilmington Trust 5478 Unspecified 200,000 Company 5479 Unspecified 200,000 Wilmington Trust 6224 Unspecified -- Company 7094 Unspecified -- 7220 Unspecified -- Various Aircraft 5335 Unspecified -- Finance Parties --------------- Delta Final Reserve: $1,148,575 Counsel for the Reorganized Debtors, Timothy E. Graulich, Esq., at Davis Polk & Wardwell LLP, in New York, explained to the Court that the Remaining Claims represent less than 0.02% of the total dollar amount of filed claims and unmatched schedules, and that virtually all of the Remaining Claims are in the process of being consensually resolved. BlueMountain agreed with the Reorganized Debtors that the amounts are de minimis in the context of the Chapter 11 Cases. Accordingly, Judge Morris approved the Claims Reserve Motion in its entirety. Two sets of parties: First Chicago Leasing Corporation and Banc One Equipment Finance, Inc.; and Dennis Smith, the proposed class representative and a participant in the Delta Family-Care Savings Plan, on behalf of himself, the Savings Plan, and a class of all others similarly situated, tried to block approval of the Debtors' request to estimate. Chicago and Banc One filed an objection purely for protective purposes, in the unlikely event that pending settlement discussions fail to achieve a final settlement of the Claims. Mr. Smith, on the other hand, asked that certain language be included in any order entered by the Court to reflect that the relief granted for an order modifying the plan injunction with respect to a pending action in a non-bankruptcy forum related to Claim No. 6815 is not compromised. Mr. Smith previously filed an appeal of the Bankruptcy Court's order subordinating Claim No. 6815. He and the Reorganized Debtors, thereafter, negotiated a consensual resolution of the Appeal, which included the withdrawal of the Appeal with prejudice and the filing of the Consent Motion leading to the entry of an Order Modifying the Plan Injunction. In her 5-page ruling, Judge Morris ruled that the relief granted by the Estimation Order will be construed with the order modifying the Plan injunction with respect to the pending action in non- bankruptcy forum related to Claim No. 6815 entered in connection with the Consent Motion filed on October 30, 2010, which Order Modifying Plan Injunction and the rights afforded thereby are not changed, amended, impacted or modified. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Wins Modification of Plan Injunction as to Ga. Case -------------------------------------------------------------- Reorganized Delta Air Lines and its units sought and obtained an order from Judge Cecelia Morris of the United States Bankruptcy Court for the Southern District of New York modifying the injunction under their Confirmed Plan of Reorganization to permit a claimant to prosecute an action in Georgia. On August 17, 2009, the Reorganized Debtors filed a motion to subordinate a class proof of claim, Claim No. 6815, filed by Dennis Smith, on behalf of himself, the Delta Family-Care Savings Plan and a putative Class of All Others Similarly Situated. The Bankruptcy Court subsequently entered an order subordinating the Smith Claim, without consideration of the underlying merits of the Smith Claim. No determination has been made with respect to the merits of the Smith Claim. Mr. Smith filed a Notice of Appeal of the Subordination Order. The Appeal was assigned to the Honorable Robert W. Sweet, U.S.D.J., of the United States District Court for the Southern District of New York. The Claimant and the Reorganized Debtors have now determined to settle the issues raised in the Appeal by agreeing that: (1) upon entry of the Reorganized Debtors' Proposed Order as a final order, the Appeal will be dismissed with prejudice; (2) Claimant may prosecute Smith v. Delta Air Lines, Inc., et al., Case No. 04-cv-2592, pending in the United States District Court for the Northern District of Georgia against the Reorganized Debtor party to that case; and (3) any final judgment in the Georgia District Court Action against the Reorganized Debtor or the payment of the portion of any settlement therein allocable to the Reorganized Debtor will be limited to collection from the proceeds of the liability insurance coverage maintained by certain Reorganized Debtors under Executive Protection Portfolio Policy No. 8107-9526 and other excess policies to the extent that coverage exists under the Insurance Policies and to the extent of the available limits of liability. Judge Morris held that the modification of the Injunction will not be deemed an agreement by the Reorganized Debtors to provide assistance to or to cooperate in any way in the efforts of Mr. Smith to prosecute the Georgia District Court Action. The Reorganized Debtors will not knowingly take any action with intent to impair or otherwise negatively affect whether or not the Smith Claim is a covered claim under the Insurance Policies. Prior to Judge Morris' signing of the Order, Timothy E. Graulich, Esq,. at Davis Polk & Wardwell LLP, in New York, declared that there were no responses or objections to the Debtors' request to modify the Plan injunction with respect to Claim No. 6815. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Parties Stipulate on D. Smith Appeal Dismissal --------------------------------------------------------- Dennis Smith, on behalf of himself, the Delta Family-Care Savings Plan and a putative class of all others similarly situated, and Delta Air Lines, entered into a stipulation approved by Judge Robert W. Smith of the United States District Court for the Southern District of New York, dismissing Mr. Smith's appeal related to the subordination of Claim No. 6815. The Parties determined to settle the issues raised in the Appeal by agreeing that: (1) the Appeal will be dismissed with prejudice upon entry by the Bankruptcy Court of a non-appealable order modifying plan injunction with respect to pending action in non- bankruptcy forum related to Claim No. 6815; (2) Mr. Smith may prosecute "Smith v, Delta Air Lines, Inc., et al., Case No. 04-cv-2592," pending in the United States District Court for the Northern District of Georgia against the Reorganized Debtor party thereto; and (3) collection or enforcement with respect to any final judgment in the Georgia District Court Action against the Reorganized Debtor party thereto or the portion of any settlement allocable to the Reorganized Debtor will be limited to the proceeds of Insurance Policies3 to the extent that coverage exists under the Insurance Policies and to the extent of the available limits of liability. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. DELTA AIR: Files Objections to 19 Claims ---------------------------------------- Reorganized Delta Air Lines and its units ask the Bankruptcy Court to disallow, expunge or liquidate 19 claims in their entirety: Claim No. Claimant Claim Amount --------- -------- ------------ 4822 Linda Landers $1,325,593 8352 Linda Landers 1,325,593 404 Arkansas Dept. of Finance & Admin. 154,446 3939 New York City Dept. of Finance 121,985 804 New York City Dept. of Finance 79,188 438 Ohio Department of Taxation 30,900 33 NYS Department of Labor Unspecified 185 Ohio Department of Taxation Unspecified 429 State of New Jersey Unspecified 763 SBC Global Unspecified 1363 Vermont Department of Taxes Unspecified 1771 Canon Financial Services, Inc. Unspecified 2223 Schindler Elevator Corp. Unspecified 2468 Aquent, LLC Unspecified 2544 Yellow Airport Limousine Services Unspecified 4104 R&B Realty Group Unspecified 4352 Missouri Department of Revenue Unspecified 7375 Illinois Department of Revenue Unspecified 6564 Missouri Department of Labor & Industrial Relations Unspecified Timothy E. Graulich, Esq., at Davis Polk & Wardwell LLP, in New York, tells the Court that none of the claims with unspecified amounts is reflected in the books and records of the Debtor against which the Claims were filed. He asserts that after a review of the Unspecified Claims and the supporting documentation accompanying those Claims, the Reorganized Debtors have determined that they have not engaged in any transactions with the claimants and have no liability for the Unspecified Claims. Mr. Graulich further contends that none of the holders of the Unspecified Claims have contacted the Reorganized Debtors in respect of the Unspecified Claims in the approximate three and a half years that have elapsed since the entry of the orders granting the Reorganized Debtors' omnibus objections to the allowance of claims. The Reorganized Debtors ask the Court to: -- disallow Linda Landers' two claims because Claim No. 8352 duplicates another claim, and Claim No. 4822 has been amended and superseded by her later-filed claims; -- disallow New York City Department of Finance's Claim Nos. 804 and 3939 because Claims were asserted in amounts in excess of the amounts reflected in the Reorganized Debtors' books and records; -- reduce Arkansas Department of Finance and Administration's Claim No. 404 to $60,000 because the claim was asserted in an amount in excess of the amount reflected in the Reorganized Debtors' books and records; and -- reduce Ohio Department of Taxation's Claim No. 438 to zero and expunge it in its entirety because it was asserted in excess of the amount reflected in the Reorganized Debtors' books and records. Timothy E. Graulich, Esq,. at Davis Polk & Wardwell LLP, in New York, declared that as of November 15, 2010, there were no responses or objections to the Debtors' objections to: -- Claim Nos. 33, 185, 429, 763, 1363, 1771, 2223, 2468, 2544, 4104, 4352, 6564 and 7375; -- Claim Nos. 4822 and 8352; and -- Claim Nos. 404 and 438 * * * In separate orders, the Court: -- reduced Claim No. 404 to a priority claim amounting $60,000 and disallowed Claim No. 438 with prejudice; -- disallowed and expunged Claim Nos. 33, 185, 429, 763, 1363, 1771, 2223, 2468, 2544, 4104, 4352, 6564 and 7375; -- disallowed and expunged Claim Nos. 4822 and 8352. The Reorganized withdrew their objections as to Claim Nos. 804 and 3939. About Delta Air Lines Atlanta, Georgia-based Delta Air Lines (NYSE: DAL) -- http://www.delta.com/or http://www.nwa.com/-- provides scheduled air transportation for passengers and cargo throughout the United States, and around the world. The Company's route network is centered on the hub system it operate at airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo- Narita. The hub operations include flights, which gather and distribute traffic from markets in the geographic region surrounding the hub to domestic and international cities and to other hubs. The network is supported by a fleet of aircraft, which is varied in terms of size and capabilities. On December 31, 2009, the Company's wholly owned subsidiary Northwest Airlines, Inc., merged with and into Delta. The wholly owned subsidiary of the Company is Northwest Airlines Corporation. Northwest and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). On May 21, 2007, the Court confirmed the Northwest Debtors' amended plan. That amended plan took effect May 31, 2007. Delta and 18 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represented the Delta Debtors in their restructuring efforts. On April 25, 2007, the Court confirmed the Delta Debtors' plan. That plan became effective on April 30, 2007. (Bankruptcy Creditors Service Inc. publishes Delta Air Lines Bankruptcy News, http://bankrupt.com/newsstand/or 215/945-7000). * * * Delta Air Lines and Northwest Airlines carry a 'B/Stable/--' corporate ratings from Standard & Poor's. They also continue to carry 'B2' corporate family ratings from Moody's and "B-" LT Issuer Default rating from Fitch. ECOSPHERE TECHNOLOGIES: Files Services Agreements ------------------------------------------------- On January 20, 2011, Ecosphere Technologies, Inc., filed an amended Form 10-Q for the quarterly period ended June 30, 2010, to include exhibits that were amended and includes the certifications previously filed and furnished. Full-text copies of the Southwestern Energy Services Agreement and Newfield Exploration Services Agreement are available for free at: http://ResearchArchives.com/t/s?7268 http://ResearchArchives.com/t/s?7269 About Ecosphere Technologies Stuart, Fla.-based Ecosphere Technologies, Inc. (OTC BB: ESPH) -- http://www.ecospheretech.com/-- is a diversified water engineering and environmental services company. Ecosphere Technologies provides environmental services and technologies for use in large-scale and sustainable applications across industries, nations and ecosystems. The Company's balance sheet at September 30, 2010, showed $9.7 million in total assets, $7.1 million in total liabilities, $1.1 million in redeemable convertible cumulative preferred stock series A, $2.7 million in redeemable convertible cumulative preferred stock series B, and a stockholders' deficit of $1.18 million. During the nine months ended September 30, 2010, the Company incurred a loss from operations of approximately $18.9 million, and used cash in operations of approximately $1.1 million. At September 30, 2010, the Company had a working capital deficiency of approximately $3.9 million, a stockholders' deficit of approximately $1.2 million and had outstanding convertible preferred stock that is redeemable under limited circumstances for approximately $3.9 million (including accrued dividends). As reported in the Troubled Company Reporter on April 6, 2010, Salberg & Company, P.A., in Boca Raton, Fla., expressed substantial doubt about the Company's ability to continue as a going concern, following its 2009 results. The independent auditors noted of the Company's net loss for 2009, and working capital, stockholders' and accumulated deficits at December 31, 2009. ENCORE MARKETING: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Encore Marketing Group, Inc. 260 South Churton Street, Suite 204 Hillsborough, NC 27278 Bankruptcy Case No.: 11-80116 Chapter 11 Petition Date: January 22, 2011 Court: U.S. Bankruptcy Court Middle District of North Carolina (Durham) Debtor's Counsel: Jason L. Hendren, Esq. BRADY, NORDGREN,MORTON, & MALONE, PLLC 2301 Sugar Bush Road, Suite 450 Raleigh, NC 27612 Tel: (919) 573-1422 Fax: (919) 573-1430 E-mail: jhendren@hendrenmalone.com Scheduled Assets: $87,917 Scheduled Debts: $3,150,126 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ncmb11-80116.pdf The petition was signed by Craig J. Stapel, president and chief executive officer. EXTENDED STAY: Files 2nd Post-Confirmation Status Report -------------------------------------------------------- Extended Stay Inc. filed with the U.S. Bankruptcy Court for the Southern District of New York on January 13, 2011, a second post- confirmation report on the status of its debtor affiliates. ESI's debtor affiliates emerged from bankruptcy on October 8, 2010, having restructured approximately $7.4 billion in debt. The Debtor Affiliates obtained confirmation of their Fifth Amended Plan of Reorganization on July 20, 2010. Under the Report, ESI disclosed that since November 1, 2010, the Plan Debtors have continued to coordinate with the plan administrator and the litigation trustee regarding the analysis and reconciliation of outstanding claims filed against them. Following talks with the plan administrator and the litigation trustee, the Plan Debtors sought and obtained a Court order extending the deadlines for filing objections to the allowance of claims, the Report revealed. The Report also disclosed that the professionals retained by the Plan Debtors, the Official Committee of Unsecured Creditors and the examiner filed their final fee applications and obtained Court approval of those applications. As of January 13, 2011, the plan administrator has disbursed $21,141,095 in accordance with the order granting the final fee applications. Moreover, the Plan Debtors continue to perform certain administrative tasks associated with the wind down of their Chapter 11 cases, the Report stated. 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. Extended Stay Inc. in October successfully emerged from Chapter 11 protection. An investment group including Centerbridge Partners, L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI, L.P. has purchased 100 percent of the Company for $3.925 billion in connection with the Plan of Reorganization confirmed by the Bankruptcy Court in July. 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: Examiner Discharged From Duties ---------------------------------------------- Bankruptcy Judge James Peck issued an order discharging the court- appointed bankruptcy examiner and his team of professionals from further duties in the bankruptcy cases of Extended Stay Inc and its debtor affiliates. In a five-page order, Judge Peck discharged Ralph Mabey and the professionals Mr. Mabey retained from further duties related to the investigation of the Debtors' bankruptcy cases other than those enumerated in the August 31, 2010 Court order. The August 31 Order was issued by Judge Peck to authorize the implementation of a process in connection with the conclusion of Mr. Mabey's investigation. It provides a means for the orderly transition of the documents collected by the examiner during the investigation to a "neutral third-party vendor" and a procedure governing any requests for future discovery. Mr. Mabey and his professionals may participate in future meetings and provide additional services at the request of the litigation trustee. They will be paid for their fees and reimbursed for their expenses from the litigation trust, the Court clarified. The Examiner Discharge Order also approved a process governing the payment of fees and expenses from the litigation. Under the process, the examiner and each of the professionals are required to serve a statement requesting payment on or before the 25th day of each month following the month for which compensation is sought. The statement must be detailed, must indicate the nature of the services rendered, and must be calculated in accordance with the billing rates employed by the examiner and his professionals during the Debtors' Chapter 11 cases. The statement should also reflect the hourly rates of the examiner and his professionals then in effect at the time that the statement is rendered. Each party that receives a statement has 15 days to review the document. If a particular party does not serve and file an objection to the fees and expenses requested in the statement within the deadline, those fees and expenses will be paid by the litigation trust not later than 30 days after receipt of the statement by both the litigation trustee and its counsel. If there is an objection, a written notice must be served and filed with the Court by the objecting party within 15 days after receiving the statement. Any potential objection to a statement will be forever waived and barred unless it is served and filed in accordance with the Court-approved process and within the deadline. If an objection is served and filed, the litigation trustee will withhold the payment of that portion of the statement to which the objection is directed. The objecting party and the examiner or his professionals may resolve the objection by mutual agreement. If the objection is resolved by mutual agreement, the litigation trustee will pay that portion of the statement that is no longer subject to an objection. All objections that are not otherwise resolved by mutual agreement of the parties will be preserved and presented to the Court at the next scheduled omnibus hearing. 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. Extended Stay Inc. in October successfully emerged from Chapter 11 protection. An investment group including Centerbridge Partners, L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI, L.P. has purchased 100 percent of the Company for $3.925 billion in connection with the Plan of Reorganization confirmed by the Bankruptcy Court in July. 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: Court Issues Ruling on Final Fee Applications ------------------------------------------------------------ Judge James Peck issued an order approving the applications of nine bankruptcy professionals for final allowance of fees and reimbursement of expenses they incurred for the period June 15, 2009 to October 8, 2010. Professional Fees Expenses ------------ ---------- -------- Weil, Gotshal & Manges LLP $8,966,432 $305,769 Lazard Freres & Co. L.L.C. $15,610,729 $129,161 Covington & Burling LLP $2,417,094 $95,063 PKF Consulting $104,747 $11,092 Ernst & Young LLP $640,249 $2,878 Hahn & Hessen LLP $4,330,399 $113,698 Jefferies & Company, Inc. $4,712,580 $77,131 Jones Lang LaSalle Hotels $335,050 $16,901 Ralph R. Mabey $219,625 $15,134 In the same order, Judge Peck also approved the interim fee applications of these bankruptcy professionals for the period from July 1 to October 8, 2010: Professional Fees Expenses ------------ ---------- -------- Weil, Gotshal & Manges LLP $1,014,262 $37,509 Lazard Freres & Co. L.L.C. $13,304,063 $28,676 Covington & Burling LLP $1,099,418 $50,229 Hahn & Hessen LLP $2,031,666 $56,663 Jefferies & Company, Inc. $2,382,580 $7,576 Ralph R. Mabey $6,825 $914 Stutman, Treister & Glatt $68,171 $2,265 Professional Corporation Alvarez & Marsal Dispute $40,421 $10,318 Analysis Forensic Services Judge Peck ordered Capstone Advisory Group LLC, the administrator under the Fifth Amended Joint Chapter 11 Plan of Reorganization, to pay the professionals their fees and expenses. Copies of tables detailing the Approved Fees and Expenses is available for free at: http://bankrupt.com/misc/ESI_ORDFinalFees_JuntoOct2010.pdf Earlier, Tracy Hope Davis, the U.S. Trustee for Region 2, filed a statement with the Court, saying that she has no objections to the final allowance of fees and expenses of Weil Gotshal and Hahn & Hessen after both firms agreed to reduce their requested fees. Weil Gotshal agreed to reduce its fees by $26,000 while Hahn & Hessen agreed to a $7,000 reduction. The U.S Trustee did not oppose the reimbursement of expenses sought by the members of the Official Committee of Unsecured Creditors as well as the allowance of fees and expenses of the other bankruptcy professionals. 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. Extended Stay Inc. in October successfully emerged from Chapter 11 protection. An investment group including Centerbridge Partners, L.P., Paulson & Co. Inc. and Blackstone Real Estate Partners VI, L.P. has purchased 100 percent of the Company for $3.925 billion in connection with the Plan of Reorganization confirmed by the Bankruptcy Court in July. 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). EXTERRA ENERGY: Dismisses Malone Bailey as Accountant ----------------------------------------------------- On January 17, 2010, Exterra Energy Inc. dismissed Malone Bailey LLP as its independent registered public accounting firm. The decision was approved by the Audit Committee of the Company's Board of Directors. The reports of Malone Bailey on the Company's financial statements for the fiscal years ended December 31, 2009 and 2008, did not contain an adverse opinion or disclaimer of opinion and were not modified as to uncertainty, audit scope, or accounting principles, except the report did contain an explanatory paragraph related to the Company's ability to continue as a going concern. During the Company's fiscal years ended December 31, 2009 and 2008, and the subsequent period through January 19, 2011, there were (i) no disagreements with Malone Bailey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Malone Bailey would have caused Malone Bailey to make reference to the subject matter of the disagreements in connection with its report, and (ii) no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S-K. On December 22, 2010, the Company engaged Anton & Chia, LLP, as its new independent registered public accounting firm. The appointment of Anton & Chia, LLP was approved by the Audit Committee of the Company's Board of Directors. About Exterra Energy Amarillo, Tex.-based Exterra Energy, Inc., is an independent oil and gas exploration and development company focused on building and revitalizing a diversified portfolio of oil and gas assets located in the State of Texas. In addition to exploration, the Company seeks to acquire existing production, as well as underperforming oil and gas assets that it believes it can revitalize in a short period of time. The Company's balance sheet at November 30, 2010, showed $5.15 million in total assets, $6.77 million in total liabilities, and a $1.62 million stockholders' deficit. As reported in the Troubled Company Reporter on September 20, 2010, MaloneBailey LLP, in Houston, Tex., expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal year ended May 31, 2010. The independent auditors noted that the Company has incurred losses since inception and had defaulted on certain outstanding notes payable. FAIRPOINT COMMUNICATIONS: Emerges from Chapter 11 With Lower Debt ----------------------------------------------------------------- FairPoint Communications, Inc. has successfully completed its balance sheet restructuring and has emerged from Chapter 11 with significantly lower debt. As a result of the restructuring, FairPoint has reduced its outstanding debt by approximately 64%, from approximately $2.8 billion (including interest rate swap liabilities and accrued interest) to approximately $1.0 billion. In addition, the Company has a $75 million revolving credit facility available for working capital and general corporate purposes. The company believes it is now well positioned for future growth in northern New England after having expanded the availability of high-speed Internet service and making systems and process improvements. The company also announced that it has completed the VantagePoint(SM) core network build in northern New England, brought broadband to many unserved or underserved communities in northern New England, and completed the upgrade of the Maine School and Library Network. "This is an important day for FairPoint. We are emerging as a stronger company, focused on our customers, vendors and employees," said Paul Sunu, FairPoint's chief executive officer. "Our mission is to provide reliable communication services with outstanding customer support across the 18 states we serve," Mr. Sunu said. "On behalf of our management team, I would like to thank our customers and vendors for their patience and our employees for their dedication during this entire process." In connection with FairPoint's restructuring, the company announced a new Board of Directors whose members include Edward D. Horowitz (chairman), Todd Arden, Dennis J. Austin, Michael J. Mahoney, Michael K. Robinson, Paul H. Sunu (CEO), David Treadwell and Wayne Wilson, each of whom shares a depth of experience that will help take FairPoint to the next level. The U.S. Bankruptcy Court for the Southern District of New York confirmed the Company's plan of reorganization on January 13, 2011. The plan became effective and was substantially consummated on January 24, 2011. The Federal Communications Commission and the Public Utilities Commissions in all required states in which the Company provides voice, Internet and data services have each provided their requisite approvals. As previously disclosed, holders of shares of FairPoint's old common stock will not receive or retain any distribution under the plan. Old common stock, which until recently traded over-the- counter under the ticker FRCMQ, was cancelled and does not convert into new common stock. FairPoint has received approval to list its common stock with the Nasdaq Stock Market and has reserved the ticker symbol FRP. Trading is expected to commence shortly. About FairPoint Communications FairPoint Communications, Inc. (NYSE: FRP) -- http://www.fairpoint.com/-- owns and operates local exchange companies in 18 states offering advanced communications with a personal touch, including local and long distance voice, data, Internet, television and broadband services. FairPoint is traded on the New York Stock Exchange under the symbols FRP and FRP.BC. FairPoint and its affiliates filed for Chapter 11 protection on October 26, 2009 (Bankr. S.D.N.Y. Case No. 09-16335). Rothschild Inc. is acting as financial advisor for the Company; AlixPartners, LLP as the restructuring advisor; and Paul, Hastings, Janofsky & Walker LLP is the Company's counsel. BMC Group is claims and notice agent. As of June 30, 2009, FairPoint reported $3.24 billion in total assets, $321.41 million in total current liabilities, $2.91 billion in total long-term liabilities, and $1.23 million in stockholders' equity. Andrews Kurth is counsel to the Official Committee of Unsecured Creditors. Altman Vilandrie is the operational consultant to the Creditors' Committee. Verrill Dana is the Creditors' Committee's special regulatory counsel. Jeffries serves as the Creditors' Committee's financial advisor. FGIC CORP: U.S. Trustee Questions Kirkland's & Curtis' Fees ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Trustee filed objections to Kirkland & Ellis LLP's request for payment of $550,000 in fees and expenses for representing FGIC Corp. over the four months ended Nov. 30. The U.S. Trustee found that $150,000 in time records were too vague. On another $65,000 in time records, the U.S. Trustee found evidence of so-called lumping, where a lawyer puts several chores together in one entry. According to the report, the U.S. Trustee also raised objections to the fee request by Curtis, Mallet-Prevost, Colt & Mosle LLP, the conflicts counsel for FGIC, which has billed $190,000 for the same period. The U.S. Trustee claims that Curtis Mallet violated the lumping prohibition on $55,000 in time records and wants a 20% reduction. The U.S. Trustee also wants a 30% reduction on $157,000 spent on a preference issue, citing that time spent was not reasonable in view of the number of lawyers who worked on the project. Mr. Rochelle says that the U.S. Trustee went through Kirkland's fee application with a fine-tooth comb, noting that the bankruptcy watchdog for the U.S. Justice Department objected to $17.78 for secretarial overtime and $135 in reimbursement for buying "binders, tabs, indexes and dividers." About FGIC Corp New York-based FGIC Corporation is a privately held insurance holding company. FGIC Corp's main business interest lies in the holdings of the bond insurer Financial Guaranty Insurance Company -- http://www.fgic.com/-- and it depends on dividend payments by FGIC for sustaining its operations. FGIC had stopped paying dividends to parent FGIC Corp. since January 2008. FGIC Corp. filed for Chapter 11 bankruptcy protection on August 3, 2010 (Bankr. S.D.N.Y. Case No. 10-14215). The bond insurer subsidiary did not file for bankruptcy. Paul M. Basta, Esq., Brian S. Lennon, Esq., and Patrick J. Nash, Jr., Esq., at Kirkland & Ellis LLP, serve as counsel to the Debtor. Garden City Group, Inc., is the Debtor's claims and notice agent. The Official Committee of Unsecured Creditors tapped Morrison & Foerster LLP as its counsel. The Company disclosed $11,539,834 in assets and $391,555,568 in liabilities as of the Petition Date. In August 2010, FGIC filed a plan of reorganization and disclosure statement. The Plan negotiated between FGIC and its key creditors and shareholders would allow the FGIC to cancel debt obligations in the aggregate amount of $391.5 million. Holders of general unsecured claims against FGIC Corp. -- which include holders of outstanding debt under FGIC Corp.'s prepetition revolving credit facility and holders of FGIC Corp.'s 6% Senior Notes due 2034 -- would receive substantially all of its $11.5 million in cash and the common stock in Reorganized FGIC Corp. The three largest common shareholders of FGIC Corp., representing over 90% of its common stock, have agreed to the cancellation of their equity interests pursuant to the Plan and waive general unsecured claims against the estate in the aggregate amount of $7.2 million. As agreed upon with FGIC Corp.'s major creditors, Reorganized FGIC Corp. would be capitalized with no more than $400,000 to fund its business needs and continue to operate as an insurance holding company after the Effective Date. FIBREX INSULATION: Goes Into Receivership, Union to Help Workers ---------------------------------------------------------------- Shawn Jeffords at The Observer, in Sarnia, Ontario, reports that Fibrex Insulation has been sent to receivership. The Company's Scott Road facility was closed and Alvarez and Marsal Canada Inc. was appointed receiver by the Ontario Superior Court of Justice. According to the report, the union representing 140 local workers left jobless when Fibrex Insulation went into receivership said it's moving to help its members. Canadian Auto Workers Local 456 Representative Rick Garrant is hopeful a buyer will look at the facility, according to the report. FREDDIE MAC: 2011 Incentive Scorecards Okayed by FHFA ----------------------------------------------------- On January 18, 2011, the Federal Housing Finance Agency approved the 2011 Short-Term Incentive Scorecard and 2011 Long-Term Incentive Scorecard of Freddie Mac. Under the terms of Freddie Mac's Executive Management Compensation Program, the Deferred Base Salary and Target Incentive Opportunity components, respectively, of compensation for Covered Officers will be based on the Compensation Committee's determination of the company's level of achievement against the company's STI scorecard (for Deferred Base Salary) and LTI scorecards (for Target Incentive Opportunities), along with other relevant internal and external factors and non- scorecard developments that affect the company's condition and mission fulfillment; and achievement of significant accomplishments beyond the scorecard objectives or adverse developments. Covered Officers under the Executive Management Compensation Program are the chief executive officer, chief operating officer, chief financial officer, executive vice presidents and senior vice presidents. About Freddie Mac Based in McLean, Virginia, the Federal Home Loan Mortgage Corporation, known as Freddie Mac (OTCBB: FMCC) -- http://www.FreddieMac.com/-- was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters. Freddie Mac is under conservatorship and is dependent upon the continued support of Treasury and the Federal Housing Finance Agency acting as conservator to continue operating its business. FRITZ BLAU: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Fritz Blau Industries, Inc. aka Bridgeport Harley-Davidson fka Bridgeport Harley-Davidson, Inc. 155 Research Drive Stratford, CT 06615 Bankruptcy Case No.: 11-50080 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court District of Connecticut (Bridgeport) Judge: Alan H.W. Shiff Debtor's Counsel: Myles H. Alderman, Jr., Esq. Ryan N. English, Esq. ALDERMAN & ALDERMAN 20 Church Street Hartford, CT 06103 Tel: (860) 249-0090 Fax: (888) 802-9992 E-mail: myles.alderman@alderman.com ryan.english@alderman.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/ctb11-50080.pdf The petition was signed by William F. Blau, III, president. FUGITIVE RECOVERY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Fugitive Recovery Investigations, Inc. Calle 1 SE, Esq. Calle 30 SE P.O. Box 270089 San Juan, PR 00927-0089 Bankruptcy Case No.: 11-00336 Chapter 11 Petition Date: January 20, 2011 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Alexis Fuentes Hernandez, Esq. FUENTES LAW OFFICES P.O. Box 9022726 San Juan, PR 00902-2726 Tel: (787) 722-5216 Fax: (787) 722-5206 E-mail: alex@fuentes-law.com Scheduled Assets: $4,138,091 Scheduled Debts: $2,903,712 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/prb11-00336.pdf The petition was signed by Girald R. Setien, president. GAMETECH INT'L: Receives Non-Compliance Notice From Nasdaq ---------------------------------------------------------- On January 14, 2011, GameTech International, Inc. received a written notice from the Nasdaq Stock Market indicating that the Company is not in compliance with the minimum stockholders' equity requirement for continued listing on the Nasdaq Global Market. Under Listing Rule 5450(b)(1)(A), companies listed on the Nasdaq Global Market are required to maintain a minimum of $10,000,000 in stockholders' equity for continued listing. The Company reported stockholders' equity of $9,805,000 as of August 1, 2010 in its Form 10-Q for its third fiscal quarter of 2010. The Company has until February 28, 2011 to either (i) provide Nasdaq with a specific plan to regain compliance or (ii) apply to transfer the Company's securities to the Nasdaq Capital Market. The Company intends to apply to transfer its securities to the Nasdaq Capital Market and is in the process of completing this application. About GameTech International Based in Reno, Nevada, GameTech develops and manufactures gaming entertainment products and systems. GameTech holds a significant position in the North American bingo market with its interactive electronic bingo systems, portable and fixed-based gaming units, and complete hall management modules. It also holds a significant position in select North American VLT markets, primarily Montana, Louisiana, and South Dakota, where it offers video lottery terminals and related gaming equipment and software. It also offers Class III slot machines and server-based gaming systems. The Company's balance sheet at August 1, 2010, showed $47.5 million in total assets, $37.7 million in total liabilities, and $9.8 million in stockholders' equity. GameTech has a forbearance agreement from lenders that expires January 31, 2011. Under the agreement, lenders agreed to forbear from exercising certain rights and remedies under the Company's senior secured credit facility as a result of certain defaults existing as of June 21, 2010. The Company said that while it does not expect to have adequate cash to make the requisite payments on January 31, the Company is involved in ongoing negotiations with its Lenders to further extend the forbearance period, obtain waivers, or otherwise reach a satisfactory agreement. Absent an extension, all amounts outstanding under the current credit facility becoming immediately due and payable, which could lead to the financial and operational failure of the Company, according to a regulatory filing. GLOBAL AIRCRAFT: N.D. Ill. Bankr. Ct. Dismisses Forreston Suit -------------------------------------------------------------- Forreston State Bank, v. Hamilton Aerospace Technologies, Inc., Adv. Pro. No. 10-cv-07817 (N.D. Ill.), alleges Forreston had a valid, perfected security interest in an airplane owned by the Leading Edge Group, LLC, and that its interest was damaged by HAT when HAT, who had stored the airplane for LEG between 2006 and 2009, sold the airplane at a foreclosure sale on August 6, 2009, for back rent without notice to the Plaintiff and without paying any of the sale proceeds to the Plaintiff. The complaint was originally filed in the Eastern Division of the Northern District, but was transferred intradistrict to the Western Division on December 14, 2010, where the case was reassigned to Judge Reinhard and referred to Magistrate Judge Mahoney. The Plaintiff concedes HAT was a debtor in a Chapter 11 bankruptcy pending in the District of Arizona at the time of the sale and that the sale was conducted by the Chapter 11 Trustee appointed to administer the case. HAT filed its bankruptcy petition on January 30, 2009, but the Plaintiff contends that, since the Defendant's Chapter 11 bankruptcy plan was confirmed on February 2, 2010, the Defendant is no longer a debtor-in-possession and the Arizona bankruptcy court no longer has continuing jurisdiction over the matter. On January 12, 2010, the Defendant filed a Notice of Removal in the District Court and in Northern District of Illinois Bankruptcy Court, purportedly pursuant to 28 U.S.C. Sec. 1452(a) and Rule 9027 of the Federal Rules of Bankruptcy Procedure. The Defendant also filed a Motion to Transfer Venue with the Illinios Bankruptcy Court, pursuant to 28 U.S.C. Secs. 1404 and 1412 and Federal Rules of Bankruptcy Procedure 7087, asking that the Court transfer venue to the Bankruptcy Court for the District of Arizona, where the Defendant's bankruptcy case was filed and where the airplane had been stored and sold. However, because the Court finds that 28 U.S.C. Sec. 1452(a) provides no authority to remove a case from a Federal District Court to a Federal Bankruptcy Court within that district, the Court finds that the Defendant's Notice of Removal was void and of no effect, and the Motion to Transfer Venue will be denied for lack of jurisdiction by the Bankruptcy Court. Accordingly, the Court entered an order dismissing the proceeding for lack of jurisdiction, dismissing pending motions as moot, and directing the parties to proceed further before the District Court. A copy of Judge Barbosa's January 19, 2011 Memorandum Opinion is available at http://is.gd/iAbuRyfrom Leagle.com. About Global Aircraft Solutions Headquartered in Tucson, Arizona, Global Aircraft Solutions -- http://www.globalaircraftsolutions.com/-- was the holding company for Hamilton Aerospace Technologies Inc., World Jet Corp. and Hamilton Aerospace Mexico. Global provided parts support and maintenance, repair and overhaul services for large passenger jet aircraft to scheduled and charter airlines and aviation leasing companies. HAT and World Jet operated from adjacent facilities comprising about 25 acres located at Tucson International Airport. Global Aircraft filed for Chapter 11 bankruptcy protection on January 30, 2009 (Bankr. D. Ariz. Case No. 09-01655). Mary B. Martin, Esq., at Lane & Nach, P.C., assisted the company in its restructuring effort. The Company listed $12 million in debts and $4.6 million in assets. Inside Tucson Business Newspaper reported that Judge James M. Marlar on November 5, 2009, approved Global's reorganization plan, pursuant to which Victory Park Capital would acquire Global's major assets; $4.25 million for HAT and $1 million for the part subsidiary World Jet. The acquired business was renamed Ascent Aviation Services Corp. Victory Park was Global's major creditor, claiming more than $7 million in the bankruptcy. GRAND BEAR: Files for Chapter 11 in Chicago ------------------------------------------- Lockport, Illinois-based Grand Bear Lodge, LLC, filed for Chapter 11 protection in Chicago on Jan. 21, 2011 (Bankr. N.D. Ill. Case No. 11-02321), estimating assets of up to $50,000 and debts of $10 million to $50 million. The decision to file was due to the Company's inability to get a loan extension from its primary lender, according to the LaSalle News Tribune. GRAND BEAR: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Grand Bear Lodge, LLC dba Grizzly Jack's Grand Bear Resort 15811 Annico Drive, Suite 4 Lockport, IL 60491 Bankruptcy Case No.: 11-02321 Chapter 11 Petition Date: January 21, 2011 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtor's Counsel: William J. Factor, Esq. Sara E. Lorber, Esq. THE LAW OFFICE OF WILLIAM J. FACTOR, LTD 1363 Shermer Road, Suite 224 Northbrook, IL 60062 Tel: (847) 239-7248 Fax: (847) 574-8233 E-mail: wfactor@wfactorlaw.com slorber@wfactorlaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb11-02321.pdf The petition was signed by Joseph Hook, manager. GRAY TELEVISION: Litespeed Management Holds 5.33% Equity Stake -------------------------------------------------------------- In a Schedule 13G filing with the Securities and Exchange Commission on January 21, 2011, each of Litespeed Management, LLC, Litespeed Master Fund, Ltd. and Jamie Zimmerman disclosed beneficial ownership of 2,740,944 shares of common stock of Gray Television, Inc., representing 5.33% of the shares outstanding. As of October 31, 2010, there were 51,386,313 shares of the Company's common stock outstanding. About Gray Television Formerly known as Gray Communications System, Atlanta, Georgia- based Gray Television, Inc., is a television broadcast company. Gray currently operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS (17 stations), NBC (10 stations), ABC (8 stations) or FOX (1 station). In addition, Gray currently operates 38 digital second channels including 1 ABC, 4 Fox, 7 CW, 16 MyNetworkTV and 1 Universal Sports Network affiliates plus 8 local news/weather channels and 1 "independent" channel in certain of its existing markets. Gray Television carries 'CCC' issuer credit ratings from Standard & Poor's and 'Caa1' corporate family rating from Moody's. The Company's balance sheet at Sept. 30, 2010, showed $1.25 billion in total assets, $1.10 billion in total liabilities, and stockholders' equity of $111.81 million. GULF FLEET: Can't Claim State Law Privilege Against M/V Gulf Tiger ------------------------------------------------------------------ Gulf Fleet Holdings, Inc., v. M/V Gulf Tiger, In Rem, and Thoma- Sea Boat Builders, L.L.C., as Purported Owner, Adv. Pro. No. 10-05044, (Bankr. W.D. La.), seeks a determination by the court that it has an enforceable state law privilege against the M/V Gulf Tiger under Louisiana Civil Code article 3237(8). Thoma-Sea seeks dismissal of the complaint on the grounds that Gulf Fleet has failed to state a claim for which relief may be granted. The complaint alleges that Gulf Fleet entered into a contract with Thoma-Sea in 2007 for the construction of the M/V Gulf Tiger, an offshore supply vessel. Gulf Fleet subsequently transferred its rights and obligations under the construction contract to one of its affiliates, Gulf Fleet Tiger Acquisitions, LLC. Gulf Fleet contends that it "provided materials, workmen and other services in connection with the construction of the M/V Gulf Tiger in the total amount of $1,047,138.83 for equipment, materials, workmen, and other services" following the assignment of the construction contract to Gulf Fleet Tiger. Gulf Fleet alleges that Thoma-Sea has since held itself out as the owner of the M/V Gulf Tiger. Bankruptcy Judge Robert Summerhays ruled that, based on the allegations currently in the complaint, Gulf Fleet cannot, as a matter of law, claim the state law privilege set forth in article 3237(8). Judge Summerhays granted Thoma-Sea's motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, and gave Gulf Fleet an opportunity to amend the complaint within 30 days. In all other respects, Thoma-Sea's motion to dismiss is denied. A copy of Judge Summerhays' January 19, 2011 Memorandum Ruling is available at http://is.gd/lvvC6efrom Leagle.com. About Gulf Fleet Lafayette, Louisiana-based Gulf Fleet Holdings, Inc. -- along with affiliates Star Marine, LLC; Gulf Wind, LLC; Gulf Service, LLC; Gulf Worker, LLC; Hercules Marine, LLC; Gulf Fleet, LLC; Gulf Fleet Marine, Inc.; Gulf Fleet Management, LLC; Gulf Fleet Offshore, LLC; and Gulf Ocean Marine Services, LLC -- sought Chapter 11 protection (Bankr. W.D. La. Case No. 10-50713) on May 14, 2010. Gulf Fleet estimated $100 million to $500 million in assets and $50 million to $100 million in debts in its Chapter 11 petition. Benjamin W. Kadden, Esq., Christopher T. Caplinger, Esq., and Stewart F. Peck, Esq., at Lugenbuhl, Wheaton, Peck, Rankin & Hubbard in New Orleans, La., represent the Debtors. A creditors' committee has been appointed, and the Debtor is operating under the terms of cash collateral agreements with lenders led by Comerica Bank and Brightpoint Capital Partners Master Fund, L.P. GULFSTREAM INT'L: Wins Approval to Sell Business to Victory Park ---------------------------------------------------------------- Bankruptcy Judge John K. Olson on Jan. 20 entered an order authorizing Gulfstream International Group Inc. to sell its business to an affiliate of Chicago-based Victory Park Capital Advisors LLC. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that to keep the airline flying, the judge is allowing the sale to be completed without awaiting the usual 10 days for appeal. Mr. Rochelle relates that Victory Park is buying Gulfstream in return for financing it provided the Chapter 11 case. In addition, Victory Park is paying Raytheon Aircraft Credit Co. $18.7 million to buy the 21 Beechcraft 1900 D aircraft that Gulfstream operates. Raytheon also will be paid arrears on the aircraft leases. Victory Park will pick up specified expenses of the Chapter 11 case while setting aside a $600,000 fund to pay professional fees. Victory Park is also allowing the creation of a $100,000 fund to finance lawsuits. Mr. Rochelle notes that a prior bankruptcy court order said there will be a "structured dismissal" of the Chapter 11 case within 30 days of the completion of the sale. About Gulfstream International Fort Lauderdale, Florida-based Gulfstream International Airlines (NYSE Amex: GIA) operated a fleet of turboprop Beechcraft 19000 aircraft, and specialized in providing travelers with access to niche locations not typically covered by major carriers. GIA operated more than 150 scheduled flights per day, serving nine destinations in Florida, 10 destinations in the Bahamas, five destinations from Continental Airline's hub under the Department of Transportation's Essential Air Service Program and supports charter service to Cuba through a services agreement with Gulfstream Air Charter, Inc., an entity otherwise unrelated to the Debtors. GIA operated as a Continental Connection carrier, as well as for United Airlines, Northwest Airlines and Copa Airlines, through code share agreements. GIA has 620 employees, including 530 working full-time. Gulfstream International Group, Inc., and its units including Gulfstream International Airline, Inc., filed for Chapter 11 bankruptcy protection on November 4, 2010 (Bankr. S.D. Fla. Case No. 10-44131). Brian K. Gart, Esq., at Berger Singerman, P.A., serves as the Debtors' bankruptcy counsel. Jetstream Aviation Capital, LLC and Jetstream Aviation Management, LLC, serve as financial advisors to the Debtors. Robert A. Schatzman, Esq., Steven J. Solomon, Esq., and Frank P. Terzo, Esq., at GrayRobinson, P.A., in Miami, Florida, serve as counsel to the Official Committee of Unsecured Creditors. Gulfstream International Airlines disclosed $15,967,096 in assets and $25,243,099 in liabilities in its Schedules of Assets and Liabilities. HARBOR FREIGHT: S&P Gives 'B+' Rating; Biz Profile "Vulnerable" --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Calabasas, Calif.-based Harbor Freight Tools USA Inc. (HFT). The outlook is stable. At the same time, S&P assigned a 'B+' issue-level rating and '4' recovery rating to HFT's $675 million senior secured bank facilities, consisting of a $25 million revolver and a $650 million term loan. The Company used the proceeds, along with available cash, to refinance existing debt and pay about $235 million dividend to its shareholders. "The ratings reflect HFT's vulnerable business profile characterized by its still relatively weak market position in the intensely competitive and fragmented tools and equipment retailing industry," said Standard & Poor's credit analyst Mariola Borysiak, "as well as its vulnerability to commodity prices, and our expectation that sales growth will decelerate in the near term." "In our opinion," added Ms. Borysiak, "the proposed debt-financed $235 million dividend is indicative of a very aggressive financial policy, which results in increased leverage and weaker cash flow protection measures." HARDAGE HOTELS: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Hardage Hotels VIII, LLC, A Delaware Limited Liability Company 12691 High Bluff Drive, Suite 300 San Diego, CA 92130 Bankruptcy Case No.: 11-10210 Chapter 11 Petition Date: January 21, 2011 Court: U.S. Bankruptcy Court District of Delaware (Delaware) Judge: Brendan Linehan Shannon Debtor's Counsel: Bruce Grohsgal, Esq. PACHULSKI, STANG, ZIEHL YOUNG & JONES 919 N. Market Street, 16th Floor Wilmington, DE 19899-8705 Tel: (302) 778-6403 Fax: (302) 652-4400 E-mail: bgrohsgal@pszyj.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A list of the Company's three largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/deb11-10210.pdf The petition was signed by Samuel A. Hardage, president. HERON LAKE: Boulay Heutmaker Raises Going Concern Doubt ------------------------------------------------------- Heron Lake BioEnergy, LLC, filed on January 21, 2011, its annual report on Form 10-K for the fiscal year ended October 31, 2010. At October 31, 2010, the Company was out of compliance with the minimum fixed charge ratio provisions of the master loan agreement. In addition, the Company anticipates that one or more of the covenants will not be met as of the end of fiscal year 2011 unless amended. Boulay, Heutmaker, Zibell & Co. P.L.L.P., in Minneapolis, Minn., expressed substantial doubt about Heron Lake BioEnergy's ability to continue as a going concern, following the Company's results for the fiscal year ended October 31, 2010. The independent auditors noted that the Company has incurred negative operating cash flows of roughly $600,000 for the fiscal year ending October 31, 2010, and was also out of compliance of its master loan agreement and reclassified the long term debt related to this agreement to current liabilities. The independent auditors added that if the right to accelerate the maturity of the debt outstanding under the master loan agreement or the line of credit were to be exercised, the Company will not have adequate available cash to repay the amounts currently outstanding. The Company reported net income of $1.7 million on $110.4 million of revenue for fiscal 2010, compared with a net loss of $11.3 million on $88.3 million of revenue for fiscal 2009. For the year ended October 31, 2010, the Company sold roughly 53.4 million gallons of ethanol at an average price of $1.70 per gallon, compared to sales of roughly 46.4 million gallons of ethanol at an average price of $1.52 per gallon for the year ended October 31, 2009. Income from operations for fiscal year 2010 totaled $5.5 million compared to a loss from operations for fiscal year 2009 of roughly $7.1 million. The Company's balance sheet at October 31, 2010, showed $109.5 million in total assets, $64.1 million in total liabilities, and members' equity of $45.4 million. Amended Forbearance Agreement with AgStar On December 30, 2010, the Company entered into an amended forbearance agreement with AgStar gStar Financial Services, PCA, relating to its covenant violation at October 31, 2010. Under that amended forbearance agreement, AgStar agreed it will not declare a default under the loan documents or enforce any of the remedies available to it for the period of December 30, 2010, to the earlier of an event of default (as defined under the amended forbearance agreement) or March 1, 2011. Without an amendment to the covenants, improved financial performance or the addition of significant working capital, the Company anticipates that it will again be in violation of one or more covenants of the master loan agreement at October 31, 2011. Further, the amended forbearance agreement requires the Company to raise at least $4.5 million in additional equity investments by March 1, 2011, and failure to comply with this obligation of the amended forbearance agreement would constitute an event of default. Also on December 30, 2010, AgStar agreed to extend the maturity of the Company's line of credit to March 1, 2011. As of October 31, 2010, $3.5 million was outstanding on the line of credit. The Company intends to seek an extension of the maturity date of its line of credit beyond March 1, 2011, but such an extension cannot be assured. A full-text copy of the Form 10-K is available for free at: http://researcharchives.com/t/s?726e Heron Lake, Minn.-based Heron Lake BioEnergy, LLC, was organized as a Minnesota limited liability company on April 12, 2001, under the name "Generation II, LLC." In June 2004, the Company changed its name to Heron Lake BioEnergy, LLC. The Company operates a dry mill, coal fired ethanol plant in Heron Lake, Minnesota. It's subsidiary, Lakefield Farmers Elevator, LLC, has grain facilities at Lakefield and Wilder, Minnesota. At nameplate, the Company's ethanol plant has the capacity to process roughly 18.0 million bushels of corn each year, producing roughly 50 million gallons per year of fuel-grade ethanol and roughly 160,000 tons of distillers' grains with soluble ("DGS"). HIGHLAND HOSPITALITY: Nears Deal to Restructure $1.8BB Debt ----------------------------------------------------------- The Wall Street Journal's Mike Spector and Kris Hudson report that people familiar with the matter said Highland Hospitality Corp. is nearing a deal with creditors, including Ashford Hospitality Trust, Prudential Financial Inc., Barclays PLC and Blackstone Group LP, to restructure debt outside of bankruptcy court. According to the Journal, Highland carries about $1.8 billion in debt divided into several tranches. Highland defaulted on $868 million in junior debt in August. -- $700 million mortgage note; and -- $868 million split into nine groups of so-called mezzanine debt (below the mortgage note): * Ashford and Prudential hold close to $300 million of debt split among three lower mezzanine tranches, including some portions bought in July to get better positioning to control Highland's restructuring. * Blackstone owns about 75% of the three most senior classes of mezzanine debt, which carry a cumulative face value of $402 million. Blackstone purchased its portion of that senior mezzanine debt at steep discounts from Wachovia Corp. in early 2010. Barclays owns the other 25% of this debt. According to the report, people familiar with the situation said that under the plan being negotiated: (a) Ashford and Prudential will convert that debt to nearly all the equity in the restructured Highland; (b) Ashford and Prudential are expected to add around $170 million of new money to pay off a chunk of the $700 million mortgage note; (c) Blackstone and Barclays would keep that debt, but move the maturity by five years at an interest rate of 8% or 9%; (d) more than $600 million in debt would be eliminated; and (e) JER will likely be wiped out in the deal. The Journal says Blackstone stands to make out well in the deal, nabbing a higher interest rate on debt it purchased at a discount. The Journal also relates separate affiliates of Morgan Stanley and Goldman Sachs Group Inc.,, which each own Highland's most junior debt in different $86.2 million slugs, are expected to be wiped out. Morgan Stanley and Goldman declined to comment. According to the Journal, the sources cautioned that the talks remain fluid and a deal isn't expected to be finished before February at the earliest. The deal could still fall apart, the sources said. The Journal says JER declined to comment. According to the Journal, Highland is being represented by law firm Weil, Gotshal & Manges and investment bank Lazard Ltd. Highland Hospitality Corp. owns 28 upscale hotels. It is owned by real-estate mogul Joseph E. Robert Jr.'s investment firm, JER Partners. ICOP DIGITAL: Files for Chapter 11 to Sell Assets ------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that ICOP Digital Inc., the developer of mobile video systems for law enforcement, filed a Chapter 11 petition to sell its assets. The proposed buyer of the business, Safety Vision LLC, is offering to provide $500,000 in financing for the Chapter 11 effort. Lenexa, Kansas-based ICOP Digital filed for Chapter 11 protection in Kansas City (Bankr. D. Kan. Case No. 11-20140) on Jan. 21, 2011. In its Schedules of Assets and Liabilities, the Debtor disclosed assets of $1.67 million and debt of $2.74 million. The balance sheet as of Sept. 30 had assets on the books for $6.7 million and total liabilities of $4.3 million, according to Mr. Rochelle. Joanne B. Stutz, Esq., at Evans & Mullinix PA, in Shawnee, Kansas, represents the Debtor. The Kansas City Star reports that Icop Digital laid off its employees and suspended operations in December after running out of cash. The Company listed hundreds of companies and individuals with claims, including police departments and former employees. Founded in 2002, ICOP Digital Inc. sells surveillance equipment for law enforcement agencies. ICOP DIGITAL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: ICOP Digital, Inc. 16801 West 116th Street Lenexa, KS 66219 Bankruptcy Case No.: 11-20140 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court District of Kansas (Kansas City) Judge: Robert D. Berger Debtor's Counsel: Joanne B. Stutz, Esq. EVANS & MULLINIX PA 7225 Renner Road Ste 200 Shawnee, KS 66217 Tel: (913) 962-8700 E-mail: jbs@evans-mullinix.com Scheduled Assets: $1,672,036 Scheduled Debts: $2,738,160 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ksb11-20140.pdf The petition was signed by David C. Owen, chairman/CEO. IMEDICOR INC: Sold Shares in Exchange for Promissory Note --------------------------------------------------------- On December 31, 2010, Imedicor, Inc. sold, in a private placement made in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended, to an accredited investors 11 shares of Series "B" Preferred Stock of the Company and 24,918,128 shares of Common Stock of the Company in exchange for a Unsecured Promissory Note, dated June 30, 2008, issued by the Company to the investor with an aggregate value of $2,096,725 which includes the original principal amount of the Note and accrued Interest from the date of issuance of the Note. The purchase price was $100,000 for one share of Series "B" Preferred Stock and $0.04 for one share of common stock. The total reduction in debt to the company is $2,096,725. Each share of Series "B" Preferred Stock represents a 1% ownership interest in the Company on a non-dilutive basis and is convertible into shares of the Company's Common Stock after the 12 month anniversary of the issuance of such share of Series "B" Preferred Stock. Each share of Series "B" Preferred Stock also carries a quarterly dividend of 4.5% of the original purchase price for the first two quarters after the issuance of such share and a 2.5% quarterly dividend thereafter, payable in the Company's Common Stock or cash, at the Company's option. About iMedicor Inc. Nanuet, N.Y.-based iMedicor, Inc., formerly Vemics, Inc., builds portal-based, virtual work and learning environments in healthcare and related industries. The Company's focus is twofold: iMedicor, the Company's web-based portal which allows Physicians and other healthcare providers to exchange patient specific healthcare information via the internet while maintaining compliance with all Health Insurance Portability and Accountability Act of 1996 ("HIPAA") regulations, and; recently acquired ClearLobby technology, the Company's web-based portal adjunct which provides for direct communications between pharmaceutical companies and physicians for the dissemination of information on new drugs without the costs related to direct sales forces. The Company's solutions allow physicians to use the internet in ways previously unavailable to them due to HIPAA restrictions to quickly and cost- effectively exchange and share patient medical information and to interact with pharmaceutical companies and review information on new drugs offered by these companies at a time of their choosing. The Company's balance sheet at Sept. 30, 2010, showed $4.62 million in total assets, $8.78 million in total liabilities, and a stockholders' deficit of $4.15 million. Demetrius & Company, L.L.C., in Wayne, N.J., expressed substantial doubt about the Company's ability to continue as a going concern following the Company's 2009 results. The independent auditors noted that the Company has incurred operating losses since its inception and has a net working capital deficit IMPATH INC: Final Distribution to Holders on February 4 ------------------------------------------------------- The Post-Dissolution Trustee of Impath Inc. has disclosed the final distribution to holders of Impath Bankruptcy Liquidating Trust Class A Beneficial Interests will be in the aggregate of $1,602,489 or equal to $0.096 per Class A unit. The record date for the distribution will be February 4, 2011 and the distribution date will be February 10, 2011. This distribution represents the final distribution of assets to Holders by the Trustee who has completed the collection of the remaining income tax refund receivables. About Impath Inc. Headquartered in New York, New York, Impath Inc., together with its subsidiaries, is in the business of improving outcomes for cancer patients by providing patient-specific diagnostic and prognostic services to pathologists and oncologists, providing products and services to biotechnology and pharmaceutical companies, and licensing software to hospitals, laboratories, and academic medical centers. The company and its affiliates filed for chapter 11 protection on Sept. 28, 2003 (Bankr. S.D.N.Y. Case No. 03-16113). George A. Davis, Esq., at Weil, Gotshal & Manges LLP represents the Debtors in their restructuring efforts. When the company filed for protection from its creditors, it listed $192,883,742 in total assets and $127,335,423 in total debts. On March 22, 2005, the Court confirmed the Debtors' Third Amended Joint Plan of Liquidation. INDUSTRY CITY: Defaults on Loans Backing Bush Terminal Bldgs. ------------------------------------------------------------- Marine Cole, writing for Crain's Business, reports that two loans backing 16 buildings in Bush Terminal near the waterfront in Sunset Park, Brooklyn, have been transferred to special servicers following a default by the owners, according to Fitch Ratings. The total value of the credits is $300 million. According to Crain's, the master servicers are Wells Fargo and Midland Loan Services, while LNR Partners is the special servicer. The loans, one for $250 million and the other for $50 million, were originated by Goldman Sachs in September 2007 with a maturity date of September 2017. The borrowers, 1-10 Industry Associates and 19-20 Industry City Associates, have been delinquent on the 6.28% interest-only loans for at least 30 days. Crain's says the two loans were made on buildings built at the beginning of the last century. One of them is the 686,000-square- foot building 148-168 39th St., wherein the New York City Department of Archives is one of the main tenants. Another is across the street, the 664,000-square-foot building at 147-167 41st St., where the NYC Law Department is one of the main tenants. Crain's says the owner, Industry City Associates, declined to comment. INFOLOGIX INC: Merger Completed; Stanley Black Has 100% Ownership ----------------------------------------------------------------- In an amended Schedule 13D filing with the Securities and Exchange Commission on January 20, 2011, Stanley Black & Decker, Inc. disclosed that it beneficially owns 100 shares of common stock of InfoLogix, Inc. representing 100% of the shares outstanding. The merger of Iconic Merger Sub, Inc., a direct wholly owned subsidiary of Stanley Black & Decker, with and into InfoLogix with InfoLogix surviving the merger as a wholly owned subsidiary of Stanley Black & Decker was completed on January 18, 2011. At the effective time of the Merger: (i) each outstanding share of the Common Stock was cancelled and converted automatically into the right to receive $4.75 in cash, without interest, except for shares (A) in respect of which appraisal rights were properly exercised under Delaware law and (B) owned by InfoLogix or any of its wholly owned subsidiaries or by Stanley Black & Decker or any of its wholly owned subsidiaries; (ii) holders of the Common Stock immediately prior to the effective time of the Merger ceased to have any rights as stockholders of the Company, other than the right to receive the merger consideration; (iii) each share of common stock, par value $0.00001 per share, of Merger Sub issued and outstanding immediately before the effective time of the Merger was automatically converted into and became one fully paid and non-assessable share of common stock, par value $0.00001 per share, of InfoLogix, making InfoLogix a wholly owned subsidiary of Stanley Black & Decker; (iv) the certificate of incorporation of InfoLogix was amended and restated in its entirety as set forth in Exhibit 3.1 to InfoLogix's Current Report on Form 8-K filed with the SEC on January 18, 2011; (v) the bylaws of InfoLogix were amended and restated in their entirety as set forth in Exhibit 3.2 to the Form 8-K; and (vi) each of the directors and officers of Merger Sub immediately before the effective time of the Merger became the directors and officers, respectively, of InfoLogix. As a result of the Merger, Stanley Black & Decker is the sole stockholder of InfoLogix, holding 100 shares of the common stock, par value $0.00001 per share, of InfoLogix, and has sole voting and sole dispositive power over such shares. About Infologix Hatboro, Pa.-based InfoLogix, Inc. (OTC QB: IFLG) -- http://www.infologix.com/-- provides enterprise mobility solutions for the healthcare and commercial markets. Infologix's balance sheet as of September 30, 2010, showed $31.7 million in total assets, $34.7 million in total liabilities, and a stockholders' deficit of $3.0 million. As reported in the Troubled Company Reporter on April 21, 2010, McGladrey & Pullen, LLP, in Blue Bell, Pa., expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's 2009 results. 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: Court Sets Timetable for Five Mile-Lehman Plan -------------------------------------------------------------- U.S. Bankruptcy Judge Shelley C. Chapman has set a timetable in connection with the March 8 and 9 hearings to approve agreements outlining a reorganization structure for Innkeepers USA Trust. At the hearing, Judge Chapman will also consider approval of an auction process to test whether anyone will top the stalking-horse bid by Five Mile Capital Partners and Lehman Ali Inc. to bankroll Innkeepers' exit and turn the Company over to creditors. Pursuant to the timetable, preliminary, non-binding, objections to the Five Mile-Lehman proposal are due Jan. 26. Deposition notices must be served by Jan. 27. Documents must be produced by Feb. 8, with examinations of witnesses under oath from Feb. 9 to 18. Final objections are due Feb. 25, with replies by March 3. As reported in the Jan. 19 edition of the Troubled Company Reporter, according to Bill Rochelle, the bankruptcy columnist for Bloomberg News, the Lehman Ali and Five Mile-sponsored Plan will reduce debt by $400 million. Mr. Rochelle relates that under the Plan: * Five Mile and Lehman Ali, together will provide $174.1 million of equity capital and convert $200.3 million of debt into equity. Five Mile is the provider of $53 million in secured financing for the Chapter 11 case, and Lehman is the holder of $238 million in floating-rate mortgages on 20 of Innkeepers' 72 properties. * Midland Loan Services Inc., as servicer for $825 million of fixed-rate mortgage debt on 45 properties, will emerge from Chapter 11 with mortgages for $622.5 million on revised terms. * Lehman is to receive 50% of the new equity plus $26.2 million cash in exchange for all its debt. The $70.5 million in secured loans for the Chapter 11 case will be paid in full. Midland is supplying debt financing for Lehman's commitment. * Unsecured creditors are being offered $2.5 million cash if the class votes for the plan. Secured lenders' deficiency claims will not participate in the distribution to unsecured creditors. Also, preference suits against unsecured creditors will be waived. * Holders of the 8% preferred stock are offered $5.9 million cash plus the right to be co-investors for 2% of the new equity. * Holders of mortgages on 69 of 72 properties will be paid in full or have the mortgages modified consensually. Lehman Ali is a subsidiary of Lehman Brothers Holdings Inc. and holds $238 million in floating-rate mortgages on 20 of Innkeepers' 72 properties. 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 91 affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Paul M. Basta, Esq., at Kirkland & Ellis LLP, in New York; Anup Sathy, P.C., Esq., Marc J. Carmel, Esq., at Kirkland & Ellis in Chicago; and Daniel T. Donovan, Esq., at Kirkland & Ellis in Washington, DC, 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. Attorneys at Morrison & Foerster, LLP, represent the Official Committee of Unsecured Creditors. 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. INNKEEPERS USA: Five Mile Offer Gives Is Benchmark for Valuation ---------------------------------------------------------------- Innkeepers USA Trust filed a motion on January 14, 2011 seeking authority from the Court presiding over the Company's pending chapter 11 cases to enter into a commitment letter for a stalking horse bid submitted by Five Mile Capital II Pooling REIT LLC / Lehman ALI Inc. The Stalking Horse Bid contemplates an enterprise-level transaction involving the Company's entire portfolio and is valued at $1.14 billion (including approximately $790.5 million of debt financing and approximately $348.2 million of equity). The Court has scheduled a hearing for March 8, 2011, to consider approval of: (1) the Stalking Horse Bid, (2) bidding procedures governing an auction at which overbids to the Stalking Horse Bid will be solicited, and (3) a break-up fee to Five Mile / Lehman if the Company completes a transaction other than the Stalking Horse Bid (and certain other conditions are satisfied). The Stalking Horse Bid includes $622.5 million of mortgage debt provided by an existing creditor. This creditor has agreed to make this debt available to other bidders at the auction that want to use it and that meet certain conditions. "We are pleased with the progress of our restructuring process thus far. The bid submitted by Five Mile and Lehman provides both baseline recoveries for Innkeepers' constituents and a benchmark for the valuation of our portfolio," said Marc Beilinson, the Company's Chief Restructuring Officer. "The Company can and will continue to fully consider all other value-maximizing restructuring proposals it may receive, whether for enterprise-based transactions, asset pools or individual assets," said Mr. Beilinson. "Our process is ongoing and we are actively soliciting interest, both in advance of the March hearing and afterward, in accordance with the bid procedures (if approved at the hearing). As such, we encourage interested parties to submit bids at any time for enterprise-based transactions or for individual or collections of assets." Moelis & Company LLC ("Moelis") has been retained by Innkeepers to represent the Company as its exclusive financial advisor in connection with a potential transaction. Interested parties who have not already done so, are encouraged to reach out to Steve Moore at Moelis -- steve.moore@moelis.com -- for further information involving the marketing process and accessing detailed financial and operational information on the Company and its assets. The chapter 11 cases are pending in the United States Bankruptcy Court for the Southern District of New York. The description of the Stalking Horse Bid and the other matters discussed above are qualified by reference to the motion for approval of the Stalking Horse Bid, and the exhibits to the motion, filed with the Court on January 14, 2011. 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 91 affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Paul M. Basta, Esq., at Kirkland & Ellis LLP, in New York; Anup Sathy, P.C., Esq., Marc J. Carmel, Esq., at Kirkland & Ellis in Chicago; and Daniel T. Donovan, Esq., at Kirkland & Ellis in Washington, DC, 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. Attorneys at Morrison & Foerster, LLP, represent the Official Committee of Unsecured Creditors. 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. INNKEEPERS USA: Midland Loan Opposes Kirkland's Fees ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Midland Loan Services Inc. -- as servicer for $825 million of fixed-rate mortgages on 45 properties -- objected to a portion of the more than $860,000 in fees and expenses requested by Kirkland & Ellis LLP for its November work in Innkeepers USA Trust's case. According to the report, Midland said it couldn't understand why Kirkland ran up $37,600 on a motion for approval of an insurance financing agreement. Midland also questioned $41,800 in fees for monitoring a dispute where Innkeepers wasn't involved. Midland also thinks $116,000 was too much to spend in one month on a motion to hire counsel to represent a special board committee. 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 91 affiliates filed for Chapter 11 on July 19, 2010 (Bankr. S.D.N.Y. Case No. 10-13800). Paul M. Basta, Esq., at Kirkland & Ellis LLP, in New York; Anup Sathy, P.C., Esq., Marc J. Carmel, Esq., at Kirkland & Ellis in Chicago; and Daniel T. Donovan, Esq., at Kirkland & Ellis in Washington, DC, 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. Attorneys at Morrison & Foerster, LLP, represent the Official Committee of Unsecured Creditors. 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. JAVO BEVERAGE: Files for Chapter 11 with Pre-Arranged Plan ---------------------------------------------------------- Javo(R) Beverage Company, Inc. (OTC BB: JAVO) filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on Jan. 24 (Bankr. D. Del. Case No. 11-10212). In conjunction with the filing, the Company entered into a binding Plan Commitment Letter Agreement with Coffee Holdings, LLC, its largest investor, to co-sponsor a prearranged plan of reorganization that the parties intend to file by February 7, 2011. The restructuring transaction embodied in the Plan will significantly deleverage the Company's capital structure and provide the working capital the Company needs to continue to service its customers and build its business. Coffee Holdings will provide debtor-in-possession financing of up to $3.15 million allowing the Company to continue its operations, and additional exit financing to properly capitalize the Company. Javo also has filed for the Bankruptcy Court's consideration several "first day" motions on an expedited basis, concerning its employees, critical vendors, and customer pricing and other programs in order to be able to continue to operate in the ordinary course through the bankruptcy proceeding. "This is an unfortunate but necessary means of right sizing our balance sheet and capitalization so that our underlying business can thrive. We want to assure all of the customers, suppliers and business partners who have supported us to this point that we intend to continue to supply quality products and, in general, operate the business in a normal fashion during the bankruptcy proceedings." said Stan Greanias, CEO of Javo Beverage Company. The Company expects confirmation of the plan of reorganization by May 1, 2011. Exit Financing The Letter Agreement with Coffee Holdings provides that upon emergence from bankruptcy, Holdings will provide (or arrange) an exit financing facility of up to $2.86 million to provide post- emergence working capital and sufficient funds to satisfy administrative and priority expenses of the bankruptcy case and other obligations due on the effective date of the Plan. Under the Plan, upon its effectiveness, the reorganized company will be a "private" company and will not be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Coffee Holdings is the beneficial owner of the Company's Senior Subordinated 12% Notes issued pursuant to that certain Securities Purchase Agreement, dated November 17, 2009 and Senior Subordinated 10% Notes issued pursuant to that certain Securities Purchase Agreement dated April 6, 2009. The amount outstanding to Coffee Holdings under the Notes as of January 21, 2011 is approximately $18 million. Coffee Holdings is also the beneficial owner of approximately 23% of the Company's outstanding common stock. In addition, Coffee Holdings provided prepetition secured financing of $500,000 pursuant to a revolving secured promissory note as described in the Company's Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on January 13, 2011. Pursuant to the terms of the Agreement, the Revolving Note will be rolled up into the DIP Facility. A copy of the Letter Agreement is available for free at http://is.gd/WlLieT Road to Chapter 11 Richard Gartrell, chief financial officer of Javo, relates that since commencing production in late 2003, the Company has regularly suffered from a lack of sufficient working capital resources and has conducted capital raises in some form in every year since 2003 except for 2007. Despite yearly growth in revenue and strong gross profit margins, the Company's primary business of dispensed coffee products is a niche market. While the Company has helped develop this market, this process has required substantial capital investment into liquid dispensers in order to fuel growth. To date, the Company has yet to be profitable and cash inflows from operations have been insufficient to cover the Company's expenditures and substantial principal and interest payments. Beginning in 2010, the Company began to have additional liquidity constraints. Having issued and outstanding Common Stock very close to its total authorized common stock, at its annual meeting in June 2010, the Company's shareholders approved an increase in its authorized Common Stock to 400 million shares, which allowed the Company the necessary stock to use the $3.5 million PIK commitment from Coffee Holdings and permit it further alternatives to raise additional capital. Cost saving measures included, beginning in September 2010, voluntary 15% to 20% salary cuts for the executives and reallocation of duties in response to the loss of certain employees rather than replacement of those employees. In October 2010, the Company retained Valcor Consulting LLC as its financial advisor to advise and assist it in analyzing its debt capacity relative to the Company's enterprise value and in renegotiating its debt obligations to levels appropriate to its debt capacity. The findings of Valcor indicated that the value and debt capacity of the enterprise was substantially exceeded by its overall debt obligations and it became evident that a restructuring under the Bankruptcy Code might be the Company's only practical alternative. About Javo Beverage Based in Vista, California, Javo (R) Beverage Company (OTC BB: JAVO) -- http://www.javobeverage.com/-- makes coffee and tea- based dispensed beverages, drink mixes and flavor systems. The Company has successfully commercialized a proprietary brewing technology that yields fresh brewed coffees and teas that are flavorful, concentrated and stable, with broad applications in the foodservice, food manufacturing and beverage industries. The Company's balance sheet a Sept. 30, 2010, showed $16.47 million in assets and $26.25 million in liabilities. Javo reported a net loss of $8.00 million on $19.65 million of revenue for nine months ended Sept. 30, 2010, compared with a net loss of $10.41 million on $18.28 million of revenue for the same period in 2009. JAVO BEVERAGE: Case Summary & 25 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Javo Beverage Company, Inc. aka La Jolla Fresh Squeezed Coffee Co., Inc. 1311 Specialty Drive Vista, CA 92081 Bankruptcy Case No.: 11- 10212 Type of Business: Javo Beverage Company, Inc., manufactures coffee and tea-based dispensed beverages, drink mixes and flavor systems. Chapter 11 Petition Date: January 24, 2011 Bankruptcy Court: U.S. Bankruptcy Court District of Delaware Bankruptcy Judge: Brendan Linehan Shannon Debtor's Counsel: Debra A. Riley, Esq. ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP 501 W. Broadway, 15th Fl. San Diego, CA 92101-3541 Tel: (619) 233-1155 Fax: (619) 233-1158 E-mail: driley@allenmatkins.com Debtor's Co-Counsel: Robert J. Dehney, Esq. Matthew B. Harvey, Esq. MORRIS, NICHOLS, ARSHT & TUNNELL LLP 1201 N. Market St., 18th Fl. PO Box 1347 Wilmington, DE 19899-1347 Tel: (302) 658-9200 Fax: (302) 658-3989 E-mail: rdehney@mnat.com mharvey@mnat.com Debtor's Special Counsel: GOODWIN PROCTER, LLP Debtor's Financial Advisor: VALCOR CONSULTING LLC Debtor's Claims Agent: KURTZMAN CARSON CONSULTANTS LLC 2335 Alaska Ave. El Segundo, CA 90245 Total Assets: $14,659,681 Total Debts: $26,705,755 The petition was signed by Richard A. Gartrell, chief financial officer. Debtor's List of 25 Largest Unsecured Creditors: Entity/Person Nature of Claim Claim Amount ------------- --------------- ------------ Janice H. Baker Note $2,080,000 3 Lochmar Lane Newport Beach, CA 92660 Marc Javo II LLC Note $1,040,000 55 East Jackson Boulevard 5th Floor Chicago, IL 60604 Marc Javo III LLC Note $624,000 55 East Jackson Boulevard 5th Floor Chicago, IL 60604 Jaffy Living Trust Dtd 9-1983 Note $520,000 30 Burning Tree Road Newport Beach, CA 92660 ML Asset Management Inc. Note $520,000 3535 E. Coast Highway #224 Corona Del Mar, CA 92625 Roger L. Levander Note $520,000 1452 Foxtrotter Road Norco, CA 92860 The Robertson Family Trust Note $416,000 UDT 12/3/71 1221 W. Coast Highway, Apt. 510 Newport Beach, CA 92663 Curci Investments LLC Note $416,000 717 Lido Park Drive Newport Beach, CA 92663 Mostero Family Rev Trust Note $312,000 Dtd 12/19/97 505 Chiswick Road Palos Verdes, CA 90274 Marc Javo LLC Note $312,000 55 East Jackson Boulevard 5th Floor Chicago, IL 60604 T & J Rielly Revocable Trust Note $312,000 160 Newport Center Drive Suite 240 Newport Beach, CA 92660 The Cruse Trust Note $261,685 Dtd 05/07/99 37 Burning Tree Road Newport Beach, CA 92660 Serengeti Trading Company Note $251,082 19100 Hamilton Pool Road Dripping Springs, TX78620 The Peter N. Delanoy and Note $208,000 Maxine Delanoy Living Trust Richard J. Kofoed Note $208,000 RRA Investment Group LLC Note $208,000 Steven C. & Jennifer I. Walton Note $208,000 Maggard Investments LLC Note $208,000 Foodbuy, LLC Note $145,179 Mitsui Foods Note $142,719 711 Note $140,000 Niagara International Note $129,250 Capital Limited Gregory Sackos Note $124,850 Speedway Superamerica, LLC Note $123,728 Robert E & Paula B Boyer Note $114,800 JUDY INOK KIM: Court Says Fairfield Property Worth $1.5-Mil. ------------------------------------------------------------ Bankruptcy Judge Alan Jaroslovsky rules that Judy Kim's 16,800- square foot commercial building at 299 Campus Court, Fairfield, California, carries a $1.5 million value. Ms. Kim has introduced expert testimony that the Fairfield property is worth $1.86 million. The senior deed of trust holder on the property, BMR Funding, LLC, asserts that the property is worth $1.4 million and would bring about $1.2 million in a forced or foreclosure sale. Judge Jaroslovsky says BMR, however, produced evidence of an unaccepted offer to purchase the property by a third party for $1.5 million. Given this testimony, which amounts to an admission against interest, the Court cannot see its way clear to find a lesser value. BMR also held a junior deed of trust on Ms. Kim's residence at 4000 Jameson Canyon Rd., American Canyon, California, securing the same debt. The obligation came due in 2009, and Ms. Kim was unable to refinance, forcing her bankruptcy filing. Ms. Kim's plan of reorganization, which the Court confirmed in September, calls for valuation of the two properties. BMR is to receive amortized payments on two notes, one secured by each property. A copy of the Court's January 20, 2011 Memorandum on Valuation of Fairfield Property is available at http://is.gd/fHX2wpfrom Leagle.com. Judy Inok Kim filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 09-13736) on November 6, 2009. JUMA TECHNOLOGY: Vision Capital Discloses 82.8% Equity Stake ------------------------------------------------------------ In an amended Schedule 13D filing with the Securities and Exchange Commission on January 20, 2011, Adam Benowitz disclosed that he beneficially owns 218,178,806 shares of common stock of Juma Technology Corporation. The shares held by Mr. Benowitz represent 82.8% of the total shares outstanding. Vision Capital Advisors, LLC also disclosed that it beneficially owns 218,178,806 shares. As of November 8, 2010, there were 46,468,945 shares of common stock of the company outstanding. On January 13, 2011, Juma Technology entered into a Note and Warrant Purchase Agreement with Vision Opportunity Master Fund, Ltd. Under the Purchase Agreement, the Company executed and delivered to the Master Fund (a) a 10% bridge note in the aggregate principal amount of $375,000 and (b) a Series A Warrant to purchase an aggregate of 2,500,000 shares of the Company common stock. The principal amount of the Note is payable within five days after demand. The Note accrues interest at 10% per annum from the date of issuance, which interest is payable in cash within five days after demand. The Note does not contain any conversion provisions. The Warrant is exercisable into shares of Common Stock at any time at the option of the Master Fund at an initial exercise price of $0.15 per share, provided that it cannot be exercised or converted to the extent that after giving effect thereto the beneficial ownership of the Master Fund, Vision Capital Advantage Fund, L.P. and their affiliates would exceed 4.99% of the Company's outstanding Common Stock. The term of the Warrant expires March 31, 2015. Concurrently with the Purchase Agreement, the Company has entered into an Acknowledgement and Waiver of Anti-Dilution Adjustments. Under the Acknowledgement, the Company acknowledged that the price protection provisions of the Series B Preferred Stock were triggered; provided, however, that the Master Fund and VCAF agreed to waive the price protections of the Series B Preferred Stock. Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund, L.P., collectively, (i) own 1,116,705 shares of Common Stock, (ii) have the ability to acquire an additional 217,062,101 shares of Common Stock through the exercise or conversion of derivative securities and (iii) thus beneficially own 218,178,806 shares of Common Stock, representing 82.8% of all of the Company's outstanding Common Stock. The Investment Manager and Mr. Benowitz may each be deemed to beneficially own the shares of Common Stock beneficially owned by the Master Fund and VCAF. Each disclaims beneficial ownership of such shares. The foregoing is based on 46,468,945 shares of Common Stock outstanding as of November 8, 2010, as reported on the Company's Form 10-Q filed on November 10, 2010. About Juma Technology Farmingdale, N.Y.-based Juma Technology Corp. is a highly specialized convergence systems integrator with a complete suite of services for the implementation and management of an entity's data, voice and video requirements. The Company's balance sheet at Sept. 30, 2010, showed $4.29 million in total assets, $22.01 million in total liabilities, and a stockholders' deficit of $17.72 million. As reported in the Troubled Company Reporter on April 5, 2010, Seligson & Giannattasio, LLP, in White Plains, N.Y., 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 incurred significant recurring losses. JUMA TECHNOLOGY: Inks $375,000 Note Pact with Vision Opportunity ---------------------------------------------------------------- On January 13, 2011, Juma Technology Corp. entered into a Note and Warrant Purchase Agreement with Vision Opportunity Master Fund, Ltd. Under the Note Purchase Agreement, the Company executed and delivered to the Purchaser (a) the Company's $375,000 principal amount, 10% Bridge Note and (b) a Series A Warrant to purchase an aggregate of 2,500,000 shares of the Company's common stock. The Company anticipates that the proceeds of $375,000 from the sale of the Note and Warrant, net of professional fees of approximately $2,220 incurred in connection with the negotiation, execution, and delivery of the Note Purchase Agreement and Warrant, will be used for general corporate purposes. The sale of the Note and Warrant was made in reliance upon an exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended. In this regard, the Company relied on the representations of the Purchaser contained in the Note Purchase Agreement. The Note accrues interest at 10% per annum from the date of issuance, which interest is payable in cash at the maturity date, which is the fifth day after demand. The Note does not contain any conversion provisions. The Note contains various events of default such as failing to make a payment of principal or interest when due, which if not cured, would require the Company to repay the holder immediately the outstanding principal sum of and any accrued interest on the Note. The Note requires the Company to prepay the Note if certain "Triggering Events" or "Major Transactions" occur while the particular security is outstanding. The Purchaser was issued a Series A Warrant by the Company for no additional consideration. The Warrant entitles the holder thereof to purchase 2,500,000 shares of the Company's common stock at an exercise price of $0.15 per share; the term of the Warrant expires March 31, 2015. The applicable exercise price of the Warrant is subject to adjustment. The holder of the Warrant has agreed to restrict its ability to exercise the Warrant and receive shares of the Company's common stock such that the number of shares of common stock held by the holder and its affiliates in the aggregate after such exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The holder of the Series A Warrant has been granted certain piggyback registration rights under the Note Purchase Agreement and Warrant. In addition to the Note Purchase Agreement, Note, and Warrant, the Company has entered into an Acknowledgement and Waiver of Anti- Dilution Adjustments. Under the Acknowledgement, the Company acknowledged that the price protection provisions of the Series B Preferred Stock were triggered by the issuance of the Series A Warrant. By agreement, Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund, LP, as applicable, agree to waive the price protections of the Series B Preferred Stock. About Juma Technology Farmingdale, N.Y.-based Juma Technology Corp. is a highly specialized convergence systems integrator with a complete suite of services for the implementation and management of an entity's data, voice and video requirements. The Company's balance sheet at Sept. 30, 2010, showed $4.29 million in total assets, $22.01 million in total liabilities, and a stockholders' deficit of $17.72 million. As reported in the Troubled Company Reporter on April 5, 2010, Seligson & Giannattasio, LLP, in White Plains, N.Y., 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 incurred significant recurring losses. KINETIC CONCEPTS: Moody's Rates New $1.2-Bil. Credit at 'Ba1' ------------------------------------------------------------- Moody's Investors Service affirmed the long-term ratings of Kinetic Concepts Inc. including the Ba2 Corporate Family Rating and Ba2 Probability of Default Rating. Concurrently Moody's assigned a Ba1 rating to the new $1.2 billion credit facility, including a $550 million Term Loan A and a $650 million revolver, both maturing in January 2016. Also, Moody's assigned a Speculative Grade Liquidity Rating of SGL-1 to KCI, reflecting Moody's expectation for very good liquidity over the next twelve months. The outlook remains stable. Ratings affirmed: * Corporate Family Rating, Ba2 * Probability of Default Rating, Ba2 Ratings assigned: * $650 million Senior Secured Revolving Credit Facility due 2016, Ba1, LGD2, 26% * $550 million Senior Secured Term Loan A due 2016, Ba1, LGD2, 26% * Speculative Grade Liquidity Rating of SGL-1 Ratings withdrawn due to repayment and termination of prior credit facility: * $300 million Senior Secured Revolving Credit Facility due 2013, Baa3, LGD2, 21% * $565 million Senior Secured Term Loan A due 2013, Baa3, LGD2, 21% The ratings outlook is stable. The Ba2 Corporate Family Rating reflects KCI's considerable scale and leading competitive position in the wound care market, as well as the company's moderate financial policies and history of debt repayment. The ratings are also supported by the proven clinical efficacy of the V.A.C. product for use in intractable wounds, and the large addressable markets of KCI's wound care and regenerative medicine products. The ratings are constrained by KCI's product concentration risk, as well as risks associated with the increasing competitive and reimbursement pressures that the V.A.C. franchise is facing. "The new capital structure should give KCI considerably more flexibility and liquidity to pursue acquisitions in order to grow and diversify. Barring a significant increase in leverage, we would likely view a prudent acquisition strategy favorably as product concentration risk has been the main constraint to the ratings," said Jessica Gladstone, Vice President -- Senior Analyst. Moody's said, "If, over time, the company maintains a conservative financial profile, including adjusted debt to EBITDA below 2.5 times, and diversifies its revenue through new product introductions, international expansion and acquisitions, there could be upward rating pressure. Greater than expected competitive or pricing/reimbursement pressures impacting the V.A.C. franchise would be the main driver for downward rating pressure. While the company has flexibility at the current rating level, debt-funded acquisitions or share repurchases that exceed our expectations, such that if adjusted leverage were expected to be sustained above 3.5 times, could cause a downward rating action." The principal methodologies used in this rating were Global Medical Products & Device Industry published in October 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Kinetic Concepts, Inc. (NYSE: KCI), headquartered in San Antonio, Texas, is a global medical technology company with leadership positions in advanced wound care, regenerative medicine and therapeutic support systems. The company's advanced wound care systems incorporate proprietary V.A.C. technology. KCI reported revenues of approximately $2.0 billion for the twelve months ended September 30, 2010. KIRWOOD GENERAL: Omega Consulting's Suit Referred to Bankr. Court ----------------------------------------------------------------- District Judge Patrick J. Duggan granted Kirwood General Hospital's request to refer a lawsuit by Omega Consulting to the United States Bankruptcy Court for the Eastern District of Michigan pursuant to Eastern District of Michigan Local Rule 83.50. The Thurswell Law Firm P.L.L.C. assigned its claim against Kirwood to Omega on July 29, 2010. Omega sued Kirwood August 13, 2010, seeking damages for Kirwood's alleged failure to wind up its affairs. Omega seeks to recover damages totaling $754,503,14. On September 20, 2010, the court clerk entered a default judgment against Kirwood. Kirwood claims that it was never properly served. On September 22, 2010, Omega filed a request for a writ of garnishment, seeking to obtain funds held for Kirwood by the State of Michigan's Unclaimed Property Division. The court clerk issued the writ of garnishment the same day, and the Unclaimed Property Division mailed a copy of the writ of garnishment to Kirwood on September 29, 2010. Kirwood filed an objection with the District Court on October 7, 2010, arguing that the unclaimed property funds are part of the bankruptcy estate. Kirwood maintains that these funds should be distributed to its creditors in accordance with the confirmed liquidation plan. Kirwood requested that the Court stay garnishment proceedings until its bankruptcy case could be reopened, so that the bankruptcy court could supervise distribution of the unclaimed property funds. On October 13, 2010, the bankruptcy court granted Kirwood's motion to reopen its case. The parties later agreed to stay garnishment proceedings, and the District Court entered a Stipulated Order to that effect on November 8, 2010. The case Omega Consulting, v. Kirwood General Hospital, Case No. 10-13231 (E.D. Mich.). A copy of Judge Duggan's December 28, 2010 Opinion and Order is available at http://is.gd/1UWvgAfrom Leagle.com. About Kirwood General Hospital Kirwood General Hospital filed a voluntary Chapter 11 bankruptcy petition (Bankr. E.D. Mich. Case No. 85-03590) on October 17, 1985. The bankruptcy court issued an order confirming Kirwood's liquidation plan on January 22, 1987. Kirwood's bankruptcy case was closed on January 10, 1990. At Kirwood's behest, the case has been reopened as Case No. 85-43590 and is pending before Judge Thomas J. Tucker. KRISPY KREME: Green Mountain Coffee Founder Acquires 5.1% Stake --------------------------------------------------------------- Shira Ovide, writing for The Wall Street Journal, reports that Robert P. Stiller, the founder and chairman of Green Mountain Coffee, has disclosed acquiring 5.1% of Krispy Kreme Doughnuts' stock. Ms. Ovide, citing a regulatory filing, says Mr. Stiller owns 12.1% of Green Mountain Coffee's outstanding shares. He also holds a nearly 20% stake in Italian-restaurant chain Noble Roman's Inc. Ms. Ovide says Mr. Stiller made the disclosure in a Securities and Exchange Commission filing reserved for so-called passive investors, or those who don't intend to have influence over how companies operate. Ms. Ovide also reports that: -- a spokeswoman for Green Mountain Coffee didn't respond to voicemail messages and e-mails seeking comment; -- Mr. Stiller didn't return a message left at his Green Mountain Coffee office; and -- a Krispy Kreme spokesman didn't return a voice message left after business hours Monday. About Krispy Kreme Based in Winston-Salem, North Carolina, Krispy Kreme Doughnuts Inc. (NYSE: KKD) -- http://www.KrispyKreme.com/-- is a retailer and wholesaler of doughnuts. The Company, which began in 1937, also derives revenue from franchise and development fees and royalties from franchisees. Additionally, the Company sells doughnut mix, other ingredients and supplies and doughnut-making equipment to franchisees. The Company has a 25% interest in Kremeworks, LLC, and has guaranteed 20% of the outstanding principal balance of certain of Kremeworks' bank indebtedness, which originally matured in January 2009 and subsequently was refinanced with the lender through July 2010. During the third quarter of fiscal 2010, Kremeworks completed an amendment to its debt agreement which, among other things, waived certain defaults related to the failure to comply with the financial covenants and extended the maturity of the indebtedness until July 2010. In connection with that amendment, during fiscal 2010, the Company and the majority owner of Kremeworks -- which also is a guarantor of the indebtedness -- made capital contributions to Kremeworks in the aggregate amount of $1 million -- of which the Company's contribution was $250,000 -- the proceeds of which were used to prepay a portion of the indebtedness as required by the amendment. In the second quarter of fiscal 2011, Kremeworks' lender granted a one-month extension of the maturity of the bank indebtedness to August 31, 2010 in connection with an expected refinancing by the lender. During the third quarter of fiscal 2011, Kremeworks refinanced its debt agreement which extended the maturity of the indebtedness until October 2011. The aggregate amount of such indebtedness was approximately $5.3 million at October 31, 2010. * * * Krispy Kreme carries a 'B-' corporate credit rating from Standard & Poor's. In September 2009, S&P said, "While the sales pressure will continue, S&P expects the declines to decelerate and profitability to somewhat stabilize or, at the very least, allow the company to remain covenant compliant in the current and next fiscal year." L&L FOOD CENTER: To Auction 3 Remaining Stores in February ---------------------------------------------------------- Lansing State Journal, in Michigan, reports that the L&L Food Center grocery chain has been operating under receivership since mid-December because it was unable to obtain financing to keep operating and couldn't pay back $2.47 million in loans to Flint- based Citizens Bank. The report adds that Sheldon Stone of Birmingham-based Amherst Partners, the court-appointed receiver, said that the three remaining stores in East Lansing, Okemos and on Martin Luther King Boulevard in Lansing could go to auction on Feb. 1, with bids due January 28. Mr. Stone will seek approval from the Ingham County Circuit Court to auction the stores. According to the report, Mr. Stone said that 15 grocers have expressed an interest in buying all or some of the existing L&L stores. All but one are based in Michigan. Lansing State Journal relates that the L&L Food Center grocery store in Haslett was scheduled to close mid-January this year. Since last November, L&L has closed four stores. LAREDO PETROLEUM: S&P Puts 'CCC' Rating on $350MM Note Offering --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Laredo Petroleum Inc. Standard & Poor's also assigned a 'CCC' senior unsecured and '6' recovery rating to the Company's $350 million senior unsecured note offering due 2019. The recovery rating indicates the expectation of negligible (0% to 10%) recovery of principal in the event of a payment default. The ratings on Laredo Petroleum reflect its vulnerable business risk profile characterized by its small and geographically concentrated reserve base, its high percentage of proved undeveloped reserves (PUDs), its meaningful exposure to weak natural gas prices, its limited operating history, its highly leveraged financial risk profile, negative cash flow generation, and, relative to some of its peers, lower priced hedge position. These risks are somewhat offset by the Company's success in growing its reserve base primarily through its drilling program. "We view Laredo's reserve base as relatively small with a high percentage of PUDs, with limited geographic diversity," said Standard & Poor's credit analyst Patrick Jeffrey. Laredo has a proved reserve base of 461 billion cubic foot equivalent (Bcfe) as of Sept. 30, 2010. "While this represents a significant increase from 45 Bcfe as of Dec. 31, 2007, it is relatively low when compared to other exploration and production companies." Standard & Poor's views Laredo's financial risk profile as highly leveraged, and its liquidity as less than adequate. The outlook is stable. S&P expects Laredo will maintain high leverage of over 4x in the near term as it funds its drilling program," said Mr. Jeffrey. S&P would consider a positive rating action if the Company is able to continue to grow its reserve base, maintain adequate liquidity, and maintain debt leverage in the low 3x area. S&P would consider a negative rating action if the Company faces material liquidity issues that limit its access to capital to fund its growth." LEHMAN BROTHERS: Set To Reveal New Chapter 11 Plan -------------------------------------------------- Lehman Brothers Holdings Inc. is set to unveil a new plan this week to begin paying out billions of dollars to creditors later this year, according to a January 23, 2011 report by the Financial Times. The failed company will present a new plan under which it will start paying out in the fourth quarter of this year the $60.1 billion in assets that it has collected against $322 billion in claims, the report said. "Lehman is at a fork in the road," Financial Times quoted Stephen Lubben, a professor of bankruptcy law at Seton Hall University, as saying. "The bankruptcy has been moving along at a reasonable pace, given the nature of it. But if it gets bogged down in fighting about the plan, it could take a lot longer," Mr. Lubben said. Lehman initially filed a restructuring plan early last year, under which payouts would range from about 15 cents on the dollar to 44 cents. Senior bondholders would get 17.4 cents, some commercial paper holders would receive 44.2 cents while Lehman Brothers Special Financing Inc. would pay 24.1 cents. The initial plan drew opposition from a group of senior bondholders led by Paulson & Co. Inc. because it allegedly pits creditors of the various estates against each other and that some creditors would get paid twice. Last month, the group filed a rival plan to pool all of Lehman's assets and pay creditors roughly equally. When Lehman said its new plan might move in that direction, lawyers for its London- based European affiliate told the bankruptcy court that they were ready to file yet another plan that preserved the larger pay-out, Financial Times reported. They are said to have the support of derivatives claimants such as Goldman Sachs and other big bank, which have claims for $40 billion from contracts terminated as a result of the bankruptcy, according to the report. Meanwhile, some creditors are hoping Lehman will revise its plan to monetize its remaining assets including the properties of apartment complex owner Archstone. Last year, Lehman created an asset management company called LAMCo. Lehman planned to retain bankers by taking on third-party clients and creating a viable business that could offer them equity stakes. The company said talks with potential clients are ongoing, Financial Times reported. Neufeld Opposes Bondholders' Rival Plan A creditor of Lehman Brothers Holdings Inc. has opposed the approval of the competing restructuring plan proposed by an ad hoc group of Lehman creditors. In a court filing, Linda Neufeld, who claims she is a Class 5 creditor of LBHI, says the disclosure statement describing the restructuring plan will "breach the contractual obligations of Class 5 subordinated noteholders to Class 3 senior noteholders." "Class 5's contract is with LBHI and so I think that Class 5's contractual obligation to Class 3 senior noteholders is only against the estate assets of LBHI," Ms. Neufeld says, pointing out that ad hoc group's disclosure statement consolidates the assets of certain affiliated debtors into LBHI on paper only. "If the ad hoc group's disclosure statement was based on a true substantive consolidation which legally consolidated the affiliated debtors into LBHI then I would not think that a breach of contract will occur," she says. Ms. Neufeld says it is questionable that Class 3 has contractual right to the pro rata share of distributions made to Class 5 from the estate assets of affiliated debtors which will not be legally consolidated into LBHI, and will continue to exist as separate legal entities since both classes could only have contractually filed claims against LBHI. According to Ms. Neufeld, the disclosure statement, based on a "deemed substantive consolidation," also provides for creditors of affiliated debtors "to make monetary compromises of goodwill" for the benefit of Classes 3 & 4 and yet no monetary compromises of goodwill are made to Class 5 from Class 3. Ms. Neufeld also complains that the subordinated noteholders' indenture trustee, The Bank of New York Mellon, has not communicated with them since LBHI's bankruptcy filing. She says it is not clear if BNY Mellon is carrying out its fiduciary duties and adequately representing its constituency in good faith. 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 disclosed 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: BNS Wants to Foreclose on Las Vegas Mall --------------------------------------------------------- Bank of Nova Scotia New York Agency asked the Bankruptcy Court to lift the automatic stay so that it could foreclose its mortgage to obtain ownership of the Town Square Mall in Las Vegas, Nevada. The Town Square Mall is owned by Turnberry/Centra Sub LLC, which owes $449 million to BNS on account of the loan it availed from the bank and other lenders to finance the construction of the shopping mall. Repayment of the loan is secured by the mortgage on the shopping mall and other collateral posted by its owner. Lehman Brothers Holdings Inc. holds a claim for "unjust enrichment" against Turnberry/Centra on account of the $72 million loan it made to Jeffrey and Jacquelyn Soffer under a $95 million loan agreement to fund their equity investments in Turnberry/Centra as well as to finance the project improvements with respect to the shopping mall. LBHI filed the claim in response to the lawsuit Turnberry/Centra and the Soffers filed against the company to avoid repayment of the $72 million loan. The Soffers complained over LBHI's alleged failure to provide up to $625 million of take-out financing to repay the loans. BNS' lawyer, Matthew Olsen, Esq., at Katten Muchin Rosenman LLP, in New York -- matthew.olsen@kattenlaw.com -- says the bank's proposed action to foreclose its mortgage and to obtain title to the Town Square Mall should not be subject to the automatic stay since the shopping mall is not property of LBHI's estate. "Lehman has no property interest in the Town Square Mall and neither the Soffers nor Lehman allege otherwise," Mr. Olsen says in court papers. BNS previously commissioned Cushman & Wakefield of Oregon Inc. to conduct an appraisal of the shopping mall. The appraisal showed that the property's market value was $415 million as of May 24, 2010, far from the $449 million still owed to the bank. The bank recently asked Cushman & Wakefield to update the appraisal which, although not yet completed, is expected to reflect a further deterioration in the market value of the property, according to Mr. Olsen. The Court will hold a hearing on February 16, 2011, to consider approval of the motion. The deadline for filing objections is February 9, 2011. 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 disclosed 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: LBI Trustee Reaches Settlement With CalPERS ------------------------------------------------------------ Pursuant and subject to the Securities Investor Protection Act of 1970, James W. Giddens was duly appointed and authorized to liquidate the business of Lehman Brothers Inc., including the unwind, close-out and reduction to cash the amounts due the LBI Estate with respect to certain transactions between LBI and The California Public Employees' Retirement System. Prior to the Petition Date, LBI and CalPERS entered into (i) securities lending transactions, where UAM Trust Company acted as the agent for CalPERS under a Master Securities Loan Agreement dated as of November 5, 2001, between LBI and UAM Trust Company, and (ii) Japanese foreign exchange trades. As of the Petition Date, amounts were due or were accrued in favor of LBI with respect to the Transactions in the aggregate. The LBI Trustee and CalPERS agree that it would be in the best interests of the LBI Estate, its customers and creditors that the outstanding Transactions be closed out subject to the payment to the LBI Trustee of $12,104,489, which amount includes interest. Under their stipulation, the Parties acknowledge that CalPERS has paid the LBI Trustee the Closeout Amount in immediately available funds, and that the Transactions have been fully and finally closed without the need for any further Court approval or other action by the Parties. Each of the Parties expressly reserves all of his or its rights and defenses with respect to any other claims each might have against the other, other than any claims in respect of or in connection with the Transactions. 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 disclosed 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: Demands Additional $9 Mil. From Bank of America ---------------------------------------------------------------- Lehman Brothers Holdings Inc. is demanding that Bank of America return an additional $9 million, according to a report by Reuters. LBHI's lawyer, Peter Isakoff, Esq., at Weil Gotshal & Manges LLP, in Washington, D.C., said BofA also seized about $7 million in four smaller Lehman accounts, now worth almost $9 million counting foreign currency appreciation. Earlier, Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York ordered BofA to return $500 million that it seized from LBHI in violation of the "automatic stay" provisions in bankruptcy law. He also ordered the bank to pay interest, bringing the total to about $595 million. BofA said the smaller accounts were not part of the bankruptcy judge's original order and should be argued separately, Reuters reported. Judge Peck told the attorneys for both sides to submit written briefs on how the smaller accounts should be handled, according to the report. LBHI Not Seeking Damages Beyond Fees LBHI has said it won't seek damages from BofA beyond the costs incurred from litigating its case against the bank to recover the $500 million deposit, Bloomberg News reported. LBHI is demanding $1.3 million in lawyers' fees, or a quarter of its legal costs up to $5 million, for litigating the case plus $8.8 million in other funds taken by the bank, according to the report. BofA, in a written brief to Judge Peck, said it should not be required to pay damages greater than $1.3 million of LBHI's costs for litigating the case. BofA asserts that LBHI is not entitled to punitive damages because it can't prove BofA acted maliciously, Bloomberg News reported. Judge Peck advised LBHI to consider whether it is wasting time and money in pursuing "relatively" small sums. "I don't want to make the tail of the case into the dog," Bloomberg quoted the bankruptcy judge as saying. 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 disclosed 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) LEVEL 3 COMMS: Enters Into $305MM Notes Indenture with BNY Mellon ----------------------------------------------------------------- On January 19, 2011, Level 3 Communications, Inc., entered into an indenture with The Bank of New York Mellon Trust Company, N.A., as trustee, in connection with the Company's issuance of $305,000,000 in aggregate principal amount of its 11.875% Senior Notes due 2019. A portion of the net proceeds from the offering will be used to redeem all of the Company's outstanding 5.25% Convertible Senior Notes due 2011, as further described below. The remaining net proceeds from the offering will be used for general corporate purposes, including working capital, capital expenditures and potential repurchases, redemptions or refinancing of the Company's and its subsidiaries' existing indebtedness from time to time. The Senior Notes are senior unsecured obligations of the Company, ranking equal in right of payment with all other senior unsecured obligations of the Company. The Senior Notes are not guaranteed by any of the Company's subsidiaries. The Senior Notes will mature on February 1, 2019. Interest on the Senior Notes will be payable on April 1 and October 1 of each year, beginning on April 1, 2011. The Senior Notes will be subject to redemption at the option of the Company, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice: (i) prior to February 1, 2015, at 100% of the principal amount of the Senior Notes so redeemed plus (A) the applicable make-whole premium set forth in the Indenture, as of the redemption date and (B) accrued and unpaid interest thereon (if any) up to, but not including, the redemption date; and (ii) on and after February 1, 2015, at the redemption prices set forth below, plus accrued and unpaid interest thereon up to, but not including, the redemption date. The redemption price for the Senior Notes if redeemed during the twelve months beginning (i) February 1, 2015 is 105.938%, (ii) February 1, 2016 is 102.969% and (iii) February 1, 2017 and thereafter is 100.000%. At any time or from time to time on or prior to February 1, 2014, the Company may redeem up to 35% of the original aggregate principal amount of the Senior Notes at a redemption price equal to 111.875% of the principal amount of the Senior Rate Notes so redeemed, plus accrued and unpaid interest thereon up to, but not including, the redemption date, with the net cash proceeds contributed to the capital of the Company from one or more private placements to persons other than affiliates of the Company or underwritten public offerings of common stock of the Company resulting, in each case, in gross proceeds of at least $100 million in the aggregate; provided, however, that at least 65% of the original aggregate principal amount of the Senior Notes would remain outstanding immediately after giving effect to such redemption. Any such redemption must be made within 90 days following such private placement or public offering upon not less than 30 nor more than 60 days' prior notice. The offering of the Senior Notes was not registered under the Securities Act of 1933, as amended, and the Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Senior Notes were sold to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933, as amended, and non- U.S. persons outside the United States under Regulation S under the Securities Act of 1933, as amended. On January 19, 2010, the Company and the initial purchasers of the Senior Notes entered into a registration agreement regarding the Senior Notes pursuant to which the Company agreed, among other things, to file an exchange offer registration statement with the Securities and Exchange Commission. About Level 3 Communications Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and Internet backbones. The Company's balance sheet at Sept. 30, 2010, showed $8.36 billion in total assets, $8.45 billion in total liabilities, and a stockholders' deficit of $86.0 million. Level 3 Communications carries a 'Caa1' corporate family rating, and 'Caa2' probability of default rating, with negative outlook from Moody's, a 'B-' issuer default rating from Fitch, and 'B-' long term issuer credit ratings from Standard & Poor's. LEVEL 3 COMMS: Calls for Redemption of $195.7-Mil. Conv. Notes -------------------------------------------------------------- Level 3 Communications, Inc. announced that it called for redemption all of its outstanding $195,702,000 aggregate principal amount of 5.25% Convertible Senior Notes due 2011 at a price equal to 100.75% of the principal amount thereof. These notes mature on December 15, 2011. The redemption date is February 18, 2011. Additional information regarding the redemption of the notes is available from The Bank of New York Mellon, the trustee with respect to the notes. The company intends to fund the redemption of the notes using a portion of the net proceeds of the sale of Level 3 Communications, Inc.'s newly issued 11.875% Senior Notes due 2019. About Level 3 Communications Headquartered in Broomfield, Colorado, Level 3 Communications, Inc., is a publicly traded international communications company with one of the world's largest communications and Internet backbones. The Company's balance sheet at Sept. 30, 2010, showed $8.36 billion in total assets, $8.45 billion in total liabilities, and a stockholders' deficit of $86.0 million. Level 3 Communications carries a 'Caa1' corporate family rating, and 'Caa2' probability of default rating, with negative outlook from Moody's, a 'B-' issuer default rating from Fitch, and 'B-' long term issuer credit ratings from Standard & Poor's. LIBERTY FOOD: Case Summary & 10 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Liberty Food Store, Inc. aka Risoldis Great Valu, Foods 3100 Quakerbridge Road Mercerville, NJ 08619 Bankruptcy Case No.: 11-11725 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court District of New Jersey (Trenton) Judge: Raymond T. Lyons Jr. Debtor's Counsel: Lance D. Brown, Esq. THE BROWN DEPINTO LAW FIRM, LLC 1 AAA Drive, Suite 205 Robbinsville, NJ 08691 Tel: (609) 587-5100 Fax: (609) 587-6030 E-mail: lancebrownlaw@gmail.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 10 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/njb11-11725.pdf The petition was signed by Sabatino A. Risoldi, Jr., president. LIFELINE PARTNERS: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: LifeLine Partners, Inc. 1825 Tibbetts-Wick Rd. Girard, OH 44420 Bankruptcy Case No.: 11-40169 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Melissa M. Macejko, Esq. SUHAR & MACEJKO, LLC 29 E. Front St., 2nd Floor P.O. Box 1497 Youngstown, OH 44501-1497 Tel: (330) 744-9007 Fax: (330) 744-5857 E-mail: mmacejko@suharlaw.com Scheduled Assets: $483,138 Scheduled Debts: $1,010,575 A list of the Company's 16 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ohnb11-40169.pdf The petition was signed by Kathleen Burgdorf, president. MASJID AL RASOOL: Lerob Stay Relief Effective March 1 ----------------------------------------------------- Bankruptcy Judge Charles Novack amended his January 19, 2011 order granting LEROB, LLC's relief from the automatic stay under 11 U.S.C. Sec. 362(d)(2) to proceed with the non-judicial foreclosure of Masjid Al Rasool, Inc.'s real property. Judge Novack explained relief from the automatic stay was granted based on the mistaken belief that no notice of default had yet been recorded against the property. This understanding was based on the court's review of Lerob's Relief from Stay Cover Sheet which failed to disclose that Lerob previously posted both a notice of default and a notice of trustee's sale. In light of the court's now correct understanding and to provide the Debtor an opportunity for an orderly transition, the automatic stay will remain in place through February 28, 2011. Relief from stay is granted effective March 1, 2011. Masjid Al Rasool is a non-profit religious organization. It filed a Chapter 11 bankruptcy petition (Bankr. N.D. Calif. Case No. 10-55967) on June 8, 2010, to prevent the imminent foreclosure of its real property commonly known as 400 Budd Avenue, Campbell, California. The Property is improved with a single story structure built around 1960. In March 2005, the Debtor financed its purchase of the Property through a two year $430,500 loan from Borel Private Bank & Trust Company at 7.25% per annum. The loan was secured with a first deed of trust recorded against the Property. The note was re-newed six times to extend the note's maturity date, ultimately to December 23, 2009. Despite the extensions, the Debtor defaulted when it failed to repay the note balance upon final maturity. On May 13, 2010, Borel assigned its rights under the note and deed of trust to Lerob, its wholly owned subsidiary. As of August 17, 2010, the Debtor owed $434,942.95 in principal, interest and other charges. Interest continues to accrue at $100.43 per day. In its petition, the Debtor scheduled the Property's fair market value at $700,000. Lerob valued the Property at only $324,000. In granting relief from the automatic stay, the Court held that the Debtor has not offered any competent evidence that it has a reasonable prospect for reorganizing, whether by keeping, refinancing or selling the Property. A copy of the Court's January 20, 2011 Amended Memorandum Decision and Order is available at http://is.gd/BBheMNfrom Leagle.com. MEDCLEAN TECHNOLOGIES: Manatuck Hill Holds 12.6% Equity Stake ------------------------------------------------------------- In an amended Schedule 13D filing with the Securities and Exchange Commission on January 20, 2011, Manatuck Hill Partners, LLC disclosed that it beneficially owns 106,619,669 shares of common stock of MedClean Technologies, Inc. representing 12.6% of the shares outstanding as of November 21, 2010, based upon the company's quarterly report on Form 10-Q for the quarter ended September 30, 2010. Such beneficial ownership assumes the issuance of 34,167,225 shares of Common Stock issuable upon the exercise of certain warrants owned by Manatuck Hill Scout Fund, L.P., Manatuck Hill Mariner Master Fund, L.P. and Manatuck Hill Navigator Master Fund, L.P. As of November 12, 2010, there were 809,743,450 shares outstanding of the Company's common stock. About MedClean Technologies Based in Bethel, Connecticut, MedClean Technologies, Inc., provides solutions for managing medical waste on site including designing, selling, installing and servicing on site (i.e. "in- situ") turnkey systems to treat regulated medical waste. The Company's balance sheet at Sept. 30, 2010, showed $1.67 million in total assets, $2.26 million in total liabilities, and a stockholders' deficit of $590,291. As reported in the Troubled Company Reporter on March 8, 2010, Child, Van Wagoner & Bradshaw, PLLC, 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 of the Company's substantial recurring losses. MERIDIAN PARTNERSHIP: Case Summary & 20 Largest Unsec Creditors --------------------------------------------------------------- Debtor: Meridian Partnership Management, Inc. 1501 Fourth Ave., Suite 1900 Seattle, WA 98101 Bankruptcy Case No.: 11-10636 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtor's Counsel: George S. Treperinas, Esq KARR TUTTLE CAMPBELL 1201 3rd Ave Ste 2900 Seattle, WA 98101-3028 Tel: (206) 223-1313 E-mail: gtreperinas@karrtuttle.com Scheduled Assets: $150,000 Scheduled Debts: $1,571,218 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wawb11-10636.pdf The petition was signed by Diana K. Carey, president. Debtor-affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Frederick Darren Berg 10-18668 07/27/10 MESA AIR: Court Confirms Plan of Reorganization ----------------------------------------------- Judge Martin Glenn of the U.S Bankruptcy Court for the Southern District of New York entered a final order confirming the Third Amended Joint Plan of Reorganization of Mesa Air Group, Inc., and its debtor affiliates on January 20, 2011, after finding that the Plan satisfies the requirements for confirmation as set forth in Section 1129 of the Bankruptcy Code. Mesa Air Group expects to emerge from bankruptcy next month as a private company, according to reports by Bloomberg News and Reuters. The reorganized company will issue new notes, common stock and warrants to creditors. The hearing to consider confirmation of the Plan was held on January 14, 2011. An Unusual Case, Judge Glenn Says Judge Glenn, in a memorandum of opinion, said the Debtors' bankruptcy case is an unusual case -- the Debtors include a U.S. air carrier, having been issued a certificate of public convenience and necessity by the U.S. Department of Transportation and an Air Operator Certificate by the Federal Aviation Administration. Accordingly, the Debtors are required to comply with the United States Transportation Code, in addition to the requirements of the Bankruptcy Code. The Court noted that the Transportation Code requires that United States "citizens," as the term is defined in the Transportation Code, hold 75% of the voting interest of the Debtors. The Debtors' Plan, of necessity, must comply with both the Bankruptcy Code and the Transportation Code through the operation of various corporate governance mechanisms proposed by the Debtors. Under the Plan, unsecured creditors that are U.S. Citizens will receive a combination of New Notes and New Common Stock, while unsecured creditors that are Non-U.S. Citizens will receive a combination of New Notes and New Warrants. The New Warrants to be distributed to Non-U.S. Citizens are transferable penny warrants that can only be exercised by U.S. Citizens. The formulation of this unique distribution scheme, Judge Glenn said, was necessary to ensure compliance with the Transportation Code because a large amount of General Unsecured Claims are held by foreign creditors. To assure compliance with the Transportation Code, the Debtors must be able to monitor the distribution of voting rights as between U.S. Citizens and Non-U.S. Citizens. The fact that the Debtors are required to comply with two concurrent regulatory schemes and will distribute New Common Stock and New Warrants to General Unsecured Creditors as the post-Effective Date claims resolution process takes place makes this an unusual framework within which the Court considers the merits of the Objection, according to the Court. Judge Glenn related that, at the confirmation hearing, he heard testimony from Michael Lotz, the president and chief financial officer of the Debtors, and Marc Bilbao, the Debtors' financial advisor, regarding the corporate governance mechanisms that were established by the Debtors in consultation with the Official Committee of Unsecured Creditors. At the hearing, the Court raised concerns that the effect of the Corporate Governance Documents was a long-term (approximately five-six years) separation of ownership and control. The Debtors, after consultation with the Creditors' Committee and U.S. Airways, then proposed a further amendment to the Bylaws to provide that the term of office of all three classes of directors will expire at the third annual meeting of the shareholders, which will occur between 36 and 39 months following the Effective Date. A copy of Judge Glenn's Memorandum of Opinion dated January 20, 2011 is available for free at http://is.gd.63Gnni Debtors Satisfied Sec. 1129 Requirements The Court found that the Debtors have met their burden of proving the elements of Sections 1129(a) and (b) of the Bankruptcy Code by a preponderance of the evidence. The Plan also complies fully with the requirements of Sections 1122 and 1123 of the Bankruptcy Code as well as with all other applicable provisions of Bankruptcy Code, thereby satisfying Section 1129(a)(1) of the Bankruptcy Code. The Debtors have also satisfied the provisions of Section 365 of the Bankruptcy Code with respect to the assumption and rejection of executory contracts and unexpired leases pursuant to the Plan. Any remaining disputed Assumption Obligations identified in the Assumption Schedule will be heard on January 26, 2011, and will be determined by separate order. The issuance of the New Common Stock and the New Notes is or was in exchange for Claims against the Debtors within the meaning of Section 1145(a)(1) of the Bankruptcy Code. The Court also found that the releases by the Debtors set forth in the Plan represent a valid exercise of the Debtors' business judgment and are appropriate under Section 1123(b)(3)(A) of the Bankruptcy Code. These releases are deemed consented to by creditors who submitted ballots and did not elect to opt out of the releases, as permitted by the ballots. Creditors and Interest holders who were not entitled to vote and Creditors who submitted ballots that elected to opt out of the releases are deemed to have opted out of the releases. Implementation of Plan Without further Court order or authorization, the Debtors, the Post-Effective Date Debtors, and their successors are authorized and empowered to make all modifications to all Plan Documents that are consistent with the Plan, including any modifications to Exhibit K to the Plan Supplement -- Assumption Schedule -- necessitated subsequent to the hearing on pending objections to Assumption Obligations. Pursuant to Bankruptcy Rule 3019, modifications or alterations to the Plan that do not materially adversely affect or change the treatment of any Claims of Interests do not require additional disclosure under Section 1125 of the Bankruptcy Code or re- solicitation of votes under Section 1126 of the Bankruptcy Code, nor do they require that holders of Claims or Interests be afforded an opportunity to change previously cast acceptance or rejections of the Plan. All rights of the Debtors and Post-Effective Date Debtors to seek to reclassify Claims are expressly reserved. Except as provided in the Plan, upon the Effective Date, all existing Claims against and Interests in the Debtors will be, and will be deemed to be, discharged and terminated. All holders of the Claims and Interests will be precluded and enjoined from asserting against the Reorganized Debtors, their successors or assignees, or any of their assets or properties any other or further Claim or Interest based upon any act or omission, transaction, or other activity of any kind or nature that occurred before the Effective Date, whether or not the holder has filed a proof of claim or proof of interest and whether or not the facts or legal bases were known or existed before the Effective Date. Except as otherwise set forth in the Plan and the US Airways Tenth Amendment, upon the Effective Date, the Debtors and the Reorganized Debtors will be discharged from all Claims or other debts that arose at any time before the Effective Date, and all debts of the kind specified in Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code. As of the Effective Date, all entities that have held, currently hold or may hold a Claim or other debt or liability that is discharged or any other right that is terminated under the Bankruptcy Code or the Plan are permanently enjoined, to the full extent provided under Section 524(a) of the Bankruptcy Code, from "the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability" of the Debtors or the Reorganized Debtors, except as otherwise set forth in this Plan. All distributions pursuant to the Plan will be made in accordance with Article 6 of the Plan, and the methods of distribution are approved. All Plan distributions made to Creditors holding Allowed Claims in any Class are intended to be and will be in full and final satisfaction of the Debtors' obligations under the Plan. Executory contracts and unexpired leases not listed on Exhibit K to the Plan Supplement are deemed rejected, however, all executory contracts and unexpired leases that have been assumed by the Debtors pursuant to orders entered by the Court before the Effective Date will not be deemed rejected. The Assumption Obligations listed on the Assumption Schedule -- Schedule K to the Pan Supplement -- will be satisfied by the Debtors making a cash payment in the manner provided in the Plan or as otherwise permitted by Section 365(b)(1)(B) of the Bankruptcy Code, equal to the amount specified in the Assumption Schedule. Claims arising out of the rejection of an executory contract or an unexpired lease must be filed with the Court and served upon the Debtors or the Reorganized Debtors no later than 35 days after the Effective Date of the Plan. Otherwise, the claimant will be forever barred from asserting the claim against the Debtors, the Reorganized Debtors, the Liquidating Debtors, or the Estate Assets, and from sharing in any distribution under the Plan. Each Collective Bargaining Agreement will be deemed assumed, effective as of the Effective Date. The Assumption Obligations for each of the Collective Bargaining Agreements will be satisfied by the Reorganized Debtors paying in the ordinary course all obligations arising under the agreements. Each Key Employment Agreement will also be deemed assumed along with the guarantees by the other Reorganized Debtors, each as modified pursuant to terms agreed upon between the Debtor, the Official Committee of Unsecured Creditors, and the affected employee, effective as of the Effective Date. The United Code-Share Agreement will be deemed assumed, effective as of the Effective Date, subject to the Reorganized Debtors' satisfaction of the Assumption Obligations with respect to the Code-Share Agreement. Upon the Effective Date, title to all remaining Estate Assets of the Debtors will vest in the Post-Effective Date Debtors for the purposes contemplated under the Plan, and will no longer constitute property of the Debtors' Estates. To the maximum extent provided by Section 1145 of the Bankruptcy Code and applicable non-bankruptcy law, the issuance under the Plan of the New Common Stock, New Warrants, and the New Notes will be exempt from registration under the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder and any state or local law requiring registration before the offering, issuance, distribution, or sale of securities. The issuance of New Common Stock pursuant to the Management Equity Pool and related employment agreements, if any, will be exempt from registration pursuant to Section 4(2) of the Securities Act. All injunctions or stays arising under or entered during the Chapter 11 Cases under Section 105 or 362 of the Bankruptcy Code, or otherwise, that are in existence on the Confirmation Date will remain in full force and effect until the Effective Date, provided, however, that no injunction or stay will preclude enforcement of parties' rights under the Plan and the related documents. On the Effective Date, the Creditors' Committee will be dissolved and the members of the Committee will be released and discharged from any further authority, duties, responsibilities or liabilities related to or arising from these Chapter 11 cases. The Creditors' Committee will continue in existence and have standing and capacity to prepare and prosecute fee applications of its professionals and any motions or actions seeking enforcement or implementation of the Plan, or pending appeals of orders in these cases. On the Effective Date, a Post-Effective Date Committee will be formed. Its duties will be limited to the oversight of certain actions of the Reorganized Debtors. The Post-Effective Date Committee may employ, without further Court order, professionals to assist it in carrying out its duties. In the event that, on the Effective Date, an objection to any Claim by the Committee is pending, the Post-Effective Date Committee will have the right to continue prosecution of the objection. The Post-Effective Date Debtors are authorized to pay compensation for professional services rendered and to reimburse expenses incurred after the Effective Date in the ordinary course and without the need for Court approval. All Objections to the Plan have been withdrawn, overruled, mooted, or resolved by stipulation or otherwise denied as set forth in the record of the Confirmation Hearing. All withdrawn objections, if any, are deemed withdrawn with prejudice. A full-text copy of the Confirmation Order is available at no charge at: http://bankrupt.com/misc/Mesa_3rdAmPlanConfirmationOrd012011.pdf In the alternative, copies of the Confirmation Order, the Plan, and related documents are available for inspection in the office of the Bankruptcy Clerk at the Bankruptcy Court, or can be viewed for free at the website of the Debtors' claims agent, Epiq Bankruptcy Solutions, LLC at http://dm.epiq11.com/mesa To obtain a hard copy of the Confirmation Order or the Plan, one may contact Epiq at (646) 282-2400. The Plan and its provisions are binding on the Debtors, the Post- Effective Date Debtors, any entity acquiring or receiving property or a distribution under the Plan, and any holder of a Claim against of Interest in the Debtors, including all governmental entities, and the holder's successors and assigns, whether or not the Claim or Interest of that holder is impaired under the Plan or whether or not the holder has voted to accept the Plan. BF Holdings' Objection Overruled BF Claims Holdings I LLC objected to the confirmation of the Debtors' Plan of Reorganization arguing that the Plan is not confirmable because it violates (i) Section 1129(a)(1) of the Bankruptcy Code because it fails to comply with Sections 1123(a)(4), 1123(a)(6), 1123(a)(7) and 1129(a)(5)(A); and (ii) the Section 119(a)(3) "good faith" requirement as a result of post-emergence corporate governance mechanisms proposed by the Debtors. BFCH or BF Holdings also argued that changes made to the Plan after creditor voting -- changes designed to address some of BF Holdings' objections -- are material adverse changes in violation of Section 1127 of the Bankruptcy Code and Rule 3019 of the Federal Rules of Bankruptcy Procedure, requiring re-solicitation and balloting. In response to BF Holdings' objection, the Debtors argued that it "lacks standing to object to the Plan since it acquired its claims without complying with the transfer notice requirements of the Bankruptcy Rules and a trading order in place in these [C]hapter 11 cases." Several other parties also raised formal or informal objections to the Plan, which were either resolved by modification or stipulation, or overruled at the Confirmation Hearing. According to Judge Martin Glenn, although BF Holdings may disagree with the corporate governance provisions proposed by the Debtors with the agreement of the Official Committee of Unsecured Creditors, it has not set forth any evidence that the Plan was not negotiated and proposed with honesty and good intentions. The Court, after hearing arguments from all parties-in-interest during the January 14 confirmation hearing, concludes that the Plan complies with all sections required for confirmation. BF Holdings' objection is overruled for lack of standing and on the merits. In holding that BF Holdings lack standing to raise the objection, Judge Glenn notes that Kitty Hawk Onshore Fund LP, Kitty Hawk Master Fund Ltd., Kitty Hawk Master Fund II Ltd., and Brigade Leveraged Capital Structures Fund Ltd. -- the "Brigade Affiliates" -- transferred certain claims -- "BF Claims" -- to BF Holdings sometime between December 23, 2010 and the Confirmation Hearing without filing the appropriate transfer notices and claims acquisition notices in contravention of Rule 3001(e)(2) and the order set in the Debtors' cases governing the trading in claims and equity securities. BF Claims Holdings argued that the eleventh hour modification to the Plan that the Shareholders' Agreement applied to all Class 3 creditors, rather than just those receiving 5% or more of the New Common Stock, was a material modification that required resolicitation. The Court, concurring with the Debtors, concluded that those modifications were not material modifications that require resolicitation, noting, among other things, that the modification affects a small number of creditors that will be entitled to receive New Common Stock. On BF Holdings' objection that the Debtors have not satisfied Section 1129(a), the Court held, among others things, that: -- while the Shareholders' Agreement does in fact raise legitimate concerns regarding a shareholder's ability to participate in the future corporate governance of the post-emergence Debtors, the purpose and intent of the Shareholders' Agreement was not to disenfranchise voting; -- the Official Committee of Unsecured Creditors describes in detail the process by which the proposed Board was selected, including solicitation of nominations from members of the Creditors Committee, appointment of a board composition sub-committee and consideration of approximately 30 potential candidates, and eventually selecting six members, all of whom were ratified by the full Creditors' Committee; and -- BF Claims Holdings has not cited any cases, and the Court was unable to locate any, where a plan was not confirmed because members of a proposed board failed to have an economic interest in the success of the company. Based on the facts of the Debtors' unique case where: (1) the Debtors are subject to both the Transportation Code and the Bankruptcy Code; and (2) have developed a distribution scheme that provides for distribution of New Common Stock to U.S. Citizens and New Warrants to Non-U.S. Citizens while the claims resolution process takes place, the Debtors have met their burden of proving all elements of Section 1129 necessary for confirmation of the Plan, the Court ruled. For the reasons stated, BF Holdings' Plan Confirmation Objection is overruled. A copy of Judge Glenn's Memorandum of Opinion dated January 20, 2011 is available for free at http://is.gd.63Gnni About Mesa Air Group Mesa currently operates 130 aircraft with approximately 700 daily system departures to 127 cities, 41 states, Canada, and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go! Mokulele. This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 3,500 employees. Mesa Air Group Inc. and its units filed their Chapter 11 petitions Jan. 5 in New York (Bankr. S.D.N.Y. Case No. 10-10018), listing assets of $976 million against debt totaling $869 million as of Sept. 30, 2009. Richard M. Pachulski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as local counsel to the Debtors. Imperial Capital LLC is the investment banker. Epiq Bankruptcy Solutions is claims and notice agent. Brett Miller, Esq., Lorenzo Marinuzzi, Esq., and Todd Goren, Esq., at Morrison & Foerster LLP, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes Mesa Air Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Mesa Air Group Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MESA AIR: Pilots Commit to Successful Emergence from Ch. 11 ----------------------------------------------------------- First Officer Marcin Kolodziejczyk, chairman of the Mesa Air Group (MAG) unit of the Air Line Pilots Association, Int'l (ALPA), issued the following statement after the announcement today that the U.S. Bankruptcy Court confirmed MAG's Plan of Reorganization. The company is expected to emerge from bankruptcy as a stand-alone airline as early as February 2011. "Mesa Air Group pilots welcome the announcement that the U.S. Bankruptcy Court has approved our airline's reorganization plan. We look forward to continuing to work tirelessly together with our management to ensure that MAG gains financial strength and sustainability while at the same time recognizes the pilots' contribution and commitment to our airline. "Once MAG emerges from bankruptcy, we may face challenges in achieving our common goal of making Mesa a strong airline in a competitive market, but our company has a powerful edge--its people. Despite the uncertainties of the past year, MAG has continued to provide excellent service to our partners and passengers; this is a direct result of the hard work, focus, and dedication of our pilots and the other employees. We are proud of our achievements and the accolades we have received from our partners. We hope management also recognizes our contributions throughout this challenging process. "Just 12 short months ago, MAG filed for bankruptcy protection and began the process to restructure its fleet and debt to meet the flying needs of our partners and the opportunities for future business. Bankruptcy was a painful process, resulting in, among other things, nearly 500 of our pilots being furloughed. The confirmation of MAG's plan is the first step toward emerging from bankruptcy, rebuilding our company, and bringing our pilots back to work. "There's still much work to be done, and we hope that the company will be able to implement the confirmation order and emerge from bankruptcy in relatively short order. The union took an active role throughout the bankruptcy process, and we will remain vigilant to protect our pilots' rights. We look forward to building a first-rate regional airline with a company that values its employees and provides exceptional service to its partners and passengers." ALPA represents nearly 53,000 pilots at 38 airlines in the United States and Canada, including the nearly 1,400 pilots--and 494 who are on furlough--at Mesa Air Group. Mesa Air Group includes Mesa Airlines, Freedom Airlines, and go!, the company's interisland carrier in Hawaii. Pilots fly as United Express, US Airways Express, and go!. About Mesa Air Group Mesa currently operates 130 aircraft with approximately 700 daily system departures to 127 cities, 41 states, Canada, and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go! Mokulele. This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 3,500 employees. Mesa Air Group Inc. and its units filed their Chapter 11 petitions Jan. 5 in New York (Bankr. S.D.N.Y. Case No. 10-10018), listing assets of $976 million against debt totaling $869 million as of Sept. 30, 2009. Richard M. Pachulski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as local counsel to the Debtors. Imperial Capital LLC is the investment banker. Epiq Bankruptcy Solutions is claims and notice agent. Brett Miller, Esq., Lorenzo Marinuzzi, Esq., and Todd Goren, Esq., at Morrison & Foerster LLP, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes Mesa Air Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Mesa Air Group Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MESA AIR: Wins Approval to Assume Bombardier Purchase Agreement --------------------------------------------------------------- Mesa Air Group Inc. and its affiliated debtors received approval from the Bankruptcy Court (i) to assume, as amended, the Master Purchase Agreement 497, dated May 18, 2001, between Mesa Air Group, Inc., and Bombardier Inc., (ii) to settle certain claims of the Debtors and Bombardier arising under the Master Purchase Agreement, and (iii) to settle certain claims of Bombardier Capital Inc. and Bombardier Services Corporation against the Debtors. Bombardier Inc. is the manufacturer of the aircraft currently in the Debtors' fleet. The Master Purchase Agreement is one of the key agreements governing the parties' relationship. It governed the purchase of Canadian Regional Jets models 700 and 900. Since 2001, the Debtors have purchased 38 CRJ-900 aircraft and 20 CRJ- 700 aircraft pursuant to the Master Purchase Agreement. As of the Petition Date, the Debtors were still obligated to purchase 10 additional CRJ-700 under the terms of the Master Purchase Agreement. The Bombardier Claims are: Claimant Debtor Claim No. Claim Amount -------- ------ --------- ------------ Bombardier Inc. Mesa Air Group 1079 $310,838,819 Bombardier Inc. Mesa Airlines 1082 - Bombardier Inc. Mesa Air Group 1080 15,865,000 Bombardier Inc. Mesa Airlines 1083 15,865,000 BCI Mesa Airlines 1100 28,777,601 BCI Mesa Air Group 1076 28,777,601 BCI Mesa Airlines 1074 186,053 BSC Mesa Airlines 1077 31,244,506 BSC Mesa Air Group 1078 31,244,506 BSC Mesa Airlines 1089 392,387 In connection with the assumption of the Master Purchase Agreement, the Debtors and Bombardier executed a term sheet containing the salient terms of the proposed amendment to the agreement. According to John W. Lucas, Esq., at Pachulski Stang Ziehl & Jones LLP, in New York, the assumption of the Master Purchase Agreement includes a settlement of the outstanding rights and obligations between the Debtors and Bombardier under the Master Agreement, and an agreement to work in good faith to resolve additional claims asserted against the Debtors by Bombardier. The Court has also authorized the Debtors to file under seal an unredacted copy of the term sheet containing the salient terms of the proposed amendment to the agreement. The Debtors will make the unredacted Term Sheet and the unredacted change order 24 relating to the Master Purchase Agreement available to the Court, the U.S. Trustee, and to the professionals of the Official Committee of Unsecured Creditors. The effectiveness of the Term Sheet and the enforceability of Change Order 24 against the Debtors are expressly conditioned on the satisfaction of the Pre-Effective Date Conditions and the Conditions to Continued Effectiveness contained in the Term Sheet. The limited releases set forth in the Term Sheet, as will amend the Master Purchase Agreement, are also approved. As a result of the amendment to the Master Purchase Agreement, Bombardier will have an allowed non-priority, general unsecured claim against Mesa Air Group, Inc., for $74,500,000 and will be treated in accordance with the distributions under the Plan for Class 3(a), subject to confirmation of the Plan. Claim No. 1100 filed by BCI against Mesa Airlines, Inc., for $23,555,825, and Claim No. 1076 filed by Mesa Air Group, for $23,555,825, each amended by the agreement, are allowed and not subject to further objection by any party-in-interest and will be treated in accordance with the distributions under the Plan for Classes 3(a) and 3(e), as applicable, subject to confirmation of the Plan. Pursuant to Section 553(a) of the Bankruptcy Code, Mesa Air Group and Bombardier are also authorized to set off any outstanding obligations under the Master Purchase Agreement, as provided by the Term Sheet. These amounts and the set-off will not be subject to reduction, disgorgement or avoidance of any kind. However, Bombardier will not set off any obligations that it owes Mesa Air Group under the Master Purchase Agreement, as amended by the Term Sheet, against the General Unsecured Claim. As a result of the set-off, Claim Nos. 1080 and 1083 are expunged and disallowed. BSC is authorized to set off the BSC Security Deposit in the amount of $1,001,773, and this amount and the set-off will not be subject to reduction, disgorgement or avoidance of any kind. After giving effect to the set-off, Claim No. 1077 for $7,300,351 and Claim No. 1078 for $7,300,351, each amended by the agreements, are allowed and not subject to further objection by any party-in-interest, and will be treated in accordance with the distributions under the Plan for Classes 3(a) and 3(e), subject to Plan confirmation. These claims are also allowed and are not subject to further objection by any party-in-interest. These claims will be treated in accordance with the distributions under the Plan for Class 3(a), subject to Plan confirmation. * Claim No. 1074, $186,053; and * Claim No. 1089, $392,387. These claims are not affected: * Claim Nos. 1080, 1083, 1084, 1147 and 1148, each in an unliquidated amount, filed by Bombardier; * Claim Nos. 1075, 1099 and 1428, in an aggregate amount of $21,656,318, filed by BCI; * Claim Nos. 1446 and 1453 filed by BSC in an approximate aggregate amount of $3,100,000; and * Claim Nos. 1087 and 1088 filed by Investissement Quebec, each in an unliquidated amount. About Mesa Air Group Mesa currently operates 130 aircraft with approximately 700 daily system departures to 127 cities, 41 states, Canada, and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go! Mokulele. This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 3,500 employees. Mesa Air Group Inc. and its units filed their Chapter 11 petitions Jan. 5 in New York (Bankr. S.D.N.Y. Case No. 10-10018), listing assets of $976 million against debt totaling $869 million as of Sept. 30, 2009. Richard M. Pachulski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as local counsel to the Debtors. Imperial Capital LLC is the investment banker. Epiq Bankruptcy Solutions is claims and notice agent. Brett Miller, Esq., Lorenzo Marinuzzi, Esq., and Todd Goren, Esq., at Morrison & Foerster LLP, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes Mesa Air Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Mesa Air Group Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MESA AIR: BF Claims Holdings I Now Substantial Claimholder ---------------------------------------------------------- BF Claims Holdings I LLC notified that Court that it has become a substantial claimholder with respect to claims against Mesa Air Group, Inc., and its debtor affiliates. As of January 4, 2011, BFCH or BF Holdings beneficially owns claims in the aggregate principal amount of $47,618,273 against the Debtors. About Mesa Air Group Mesa currently operates 130 aircraft with approximately 700 daily system departures to 127 cities, 41 states, Canada, and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, respectively, and independently as Mesa Airlines and go! Mokulele. This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 3,500 employees. Mesa Air Group Inc. and its units filed their Chapter 11 petitions Jan. 5 in New York (Bankr. S.D.N.Y. Case No. 10-10018), listing assets of $976 million against debt totaling $869 million as of Sept. 30, 2009. Richard M. Pachulski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, serve as local counsel to the Debtors. Imperial Capital LLC is the investment banker. Epiq Bankruptcy Solutions is claims and notice agent. Brett Miller, Esq., Lorenzo Marinuzzi, Esq., and Todd Goren, Esq., at Morrison & Foerster LLP, serve as counsel to the Official Committee of Unsecured Creditors. Bankruptcy Creditors' Service, Inc., publishes Mesa Air Bankruptcy News. The newsletter tracks the Chapter 11 proceedings undertaken by Mesa Air Group Inc. and its units. (http://bankrupt.com/newsstand/or 215/945-7000). MEXICANA AIRLINES: Makes Two Test Flights, Hopes for Return ----------------------------------------------------------- Paul Kiernan at Dow Jones Newswires reports that Compania Mexicana de Aviacion or Mexicana Airlines carried out two test flights in what authorities hope to be a harbinger of the company's eventual relaunch. According to the report, Labor Minister Javier Lozano said two Airbus A320s, operated by Mexicana, flew to Acapulco from Mexico City and back to re-certify their engines. "Next week there will be more Mexicana flights for the company's certification," Dow Jones quoted Mr. Lozano as saying. Mexicana Airlines, the report notes, grounded in August after filing for bankruptcy protection, missed an initial goal to fly again by December. Since then, Dow Jones relates that Mr. Lozano and his counterparts at the Communications and Transportation Ministry have set -- and subsequently pushed back -- new deadlines for Mexico's former leading airline group to resume operations. Dow Jones recounts authorities last year approved of a restructuring plan for Mexicana presented by PC Capital, a local private equity firm. Under the plan, the report relates, Mexicana Airline would reduce its fleet to a fraction of the former size, exclusively fly Airbus A320 aircraft, and focus only on profitable, high-traffic routes. As reported in the Troubled Company Reporter-Latin America on January 10, 2011, The Latin America Herald said that Mexicana Airlines is nearing an agreement with its creditors. Fifty-one percent of them -- including state-owned bank Bancomext, Banorte and government-owned Aeropuertos y Servicios Auxiliares, which oversees Mexico's airports -- have expressed a willingness to sign a restructuring agreement, Mr. Trevino said, according to Latin America Herald. 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 did not affect the operations of Click Mexicana and Mexicana Link, which are independent companies from Mexicana de Aviacion. MGM RESORTS: Dubai World Has 5.3% Equity Stake ---------------------------------------------- Dubai World said it beneficially owns 26,048,738 shares of MGM Resorts International common stock representing 5.3% of the shares outstanding. At November 1, 2010, there were 482,369,501 shares of the Company outstanding. Other affiliates of Dubai World also own shares of common stock of the Company: Shares Equity Beneficially Owned Stake ------------------ ------ Infinity World Investments LLC 14,548,738 3.0% Infinity World Cayman Investments Corp. 14,548,738 3.0% Infinity World (Cayman) L.P. 26,048,738 5.3% Infinity World (Cayman) Holding 26,048,738 5.3% Infinity World Holding Ltd. 26,048,738 5.3% Effective as of December 12, 2010, the Board of Directors of Dubai World has been replaced by the following individuals: -- Sheikh Ahmed bin Saeed Al Maktoum is the Chairman of Dubai World. Mr. Maktoum is also a member of the Board of Directors of Dubai World. Mr. Maktoum is a resident and citizen of United Arab Emirates. -- Mohammed Ibrahim Al Shaibani is a member of the Board of Directors of Dubai World. Mr. Shaibani is also the Director General of H.H. The Ruler's Court, Dubai, whose address is Ruler's Court in Bur Dubai, United Arab Emirates. Mr. Shaibani is a resident and citizen of United Arab Emirates. -- Ahmed Humaid Al Tayer is a member of the Board of Directors of Dubai World. Mr. Tayer is also the Governor of Dubai International Financial Centre, whose address is DIFC, The Gate, 14th Floor, Dubai, United Arab Emirates. Mr. Tayer is a resident and citizen of United Arab Emirates. -- Abdulrahman Al Saleh is a member of the Board of Directors of Dubai World. Mr. Saleh is the Director General of the Department of Finance in Dubai, whose address is Ruler's Court in Bur Dubai, United Arab Emirates. Mr. Saleh is a resident and citizen of United Arab Emirates. -- Hamad Mubarak Buamim is a member of the Board of Directors of Dubai World. Mr. Buamim is also the Director General of the Dubai Chamber of Commerce & Industry, whose address is Baniyas Road, Deira, PO Box 115522, Dubai, United Arab Emirates. Mr. Buamim is a resident and citizen of United Arab Emirates. -- Saadi Abdulrahin Hassan Al Rais is a member of the Board of Directors of Dubai World. Mr. Rais is also a Partner and Managing Director at Rais Hassan Saadi Group, whose address is Rais Hassan Saadi Building, Mankhool Road, Dubai, United Arab Emirates. Mr. Rais is a resident and citizen of United Arab Emirates. -- Soon Young Chang is a member of the Board of Directors of Dubai World. Dr. Chang is also the Chairman of MIDAS International Asset Management Company, whose address is Hana Securities Building, Yoido Dong, Seoul, Korea. Dr. Chang is a resident and citizen of Korea. About MGM Resorts MGM Resorts International (NYSE: MGM) -- http://www.mgmresorts.com/-- has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. The Company's balance sheet at Sept. 30, 2010, showed $19.14 billion in total assets, $1.32 billion in total current liabilities, $2.40 billion in deferred income taxes, $12.62 billion in long-term debt, $252.21 million in other long-term obligations, and stockholders' equity of $2.54 billion. * * * As reported by the Troubled Company Reporter on October 18, 2010, Standard & Poor's Ratings Services revised its rating outlook on MGM Resorts to stable from developing. At the same time, S&P affirmed all of its existing ratings on MGM, including the 'CCC+' corporate credit rating. The 'CCC+' corporate credit rating reflects MGM's significant debt burden, S&P's expectation for meaningful declines in cash flow generation in 2010, and the company's weak liquidity position. While MGM maintains a leading presence on the Las Vegas Strip, 2010 will be another challenging year for the Strip, and prospects for a meaningful rebound in 2011 are uncertain. The recent pricing of the primary offering of common stock has bolstered liquidity; however, the company's ability to weather the current downturn and continue to service its debt obligations over the longer term relies on continued progress toward addressing its challenging debt maturity schedule, as well as a substantial rebound in cash flow generation. The TCR also reported that Fitch Ratings revised the Rating Outlook for MGM Resorts to Positive following the company's equity issuance. In addition, Fitch affirmed the Issuer Default Rating at 'CCC'. MGM's 'CCC' IDR continues to reflect a credit profile with substantial credit risk. MGM's probability of default still displays a high sensitivity to an uninterrupted recovery in the Las Vegas market, significant reliance on a favorable refinancing and capital markets environment due to its heavy debt maturity schedule, a highly leveraged balance sheet despite potential debt reduction from the equity issuance, and a weak near-term free cash profile. In addition, MGM's obligation under the CityCenter completion guarantee continues to escalate, and Fitch believes the company is currently under-investing in its properties, which will likely impact asset quality. MILLER BROTHERS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Miller Brothers Ltd. LLC 3207 Paces Ferry Place NW Atlanta, GA 30305 Bankruptcy Case No.: 11-51665 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court Northern District of Georgia (Atlanta) Debtor's Counsel: Paul Reece Marr, Esq. PAUL REECE MARR, P.C. 300 Galleria Parkway, N.W., Suite 960 Atlanta, GA 30339 Tel: (770) 984-2255 Fax: (770) 984-0044 E-mail: pmarr@mindspring.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/ganb11-51665.pdf The petition was signed by Gregory S. Miller, co-manager. MIRALINK CORP: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: MiraLink Corporation 6835 SE 78th Ave Portland, OR 97206 Bankruptcy Case No.: 11-30404 Chapter 11 Petition Date: January 20, 2011 Court: United States Bankruptcy Court District of Oregon Judge: Elizabeth L. Perris Debtor's Counsel: Albert N. Kennedy, Esq. TONKON TORP LLP 888 SW 5th Ave #1600 Portland, OR 97204 Tel: (503) 802-2013 E-mail: al.kennedy@tonkon.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/orb11-30404.pdf The petition was signed by Ronald D. McCabe, president, chief executive officer. MJR ELECTRICAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: MJR Electrical Ltd. 2517 E. Turkeyfoot Lake Uniontown, OH 44685 Bankruptcy Case No.: 11-50189 Chapter 11 Petition Date: January 20, 2011 Court: United States Bankruptcy Court Northern District of Ohio (Akron) Judge: Marilyn Shea-Stonum Debtor's Counsel: David A. Mucklow, Esq 4882 Mayfair Rd North Canton, OH 44720 Tel: (330) 896-8190 Fax: (330) 896-8201 E-mail: davidamucklow@yahoo.com Scheduled Assets: $1,143,529 Scheduled Debts: $742,900 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ohnb11-50189.pdf The petition was signed by Michael J. Rathbun, president. MOLECULAR INSIGHT: Nasdaq to Delist Common Stock Effective Jan. 31 ------------------------------------------------------------------ The Nasdaq Stock Market, LLC, in a Form 25-NSE filing dated January 21, 2011, reports that it has determined to remove from listing the common stock of Molecular Insight Pharmaceuticals, Inc., effective at the opening of the trading session on January 31, 2011. Based on review of information provided by the Company, Nasdaq Staff determined that the Company no longer qualified for listing on the Exchange pursuant to Listing Rules 5101, 5110(b), and IM-5101-1. The Company was notified of the Staff's determination on December 10, 2010. The Company did not appeal the Staff determination to the Hearings Panel, and the Staff determination to delist the Company became final on December 21, 2010. On December 10, 2010, the Company received notification from Nasdaq that due to its filing of a petition for protection under Chapter 11 of the U.S. Bankruptcy Code, trading of the Company's common stock will be suspended at the opening of business on December 21, 2010, and that the Company's common stock will be delisted from the Nasdaq Stock Market that same day pursuant to Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1. About Molecular Insight Cambridge, Massachusetts-based Molecular Insight Pharmaceuticals, Inc., is a clinical-stage biopharmaceutical company that provides services on the detection and treatment of various forms of cancer and other life-threatening diseases. The Debtor disclosed $36,453,000 in total assets and $198,829,000 in total debts as of September 30, 2010. Molecular Insight filed for Chapter 11 bankruptcy protection on December 9, 2010 (Bankr. D. Mass. Case No. 10-23355). Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP, serves as the Debtor's local Massachusetts counsel. Kramer Levin Naftalis & Franklin LLP serves as the Debtor's lead bankruptcy counsel. Foley & Lardner LLP is the Debtor's bankruptcy counsel. CRT Capital Group LLC is the Debtor's financial advisor. Tatum LLC, a division of SFN Professional Services LLC, is the Debtor's financial consultant. Omni Management Group, LLC, is the claims, and balloting agent. MOUNTAIN PROVINCE: Initiates Exploration at Kennady Project ----------------------------------------------------------- Mountain Province Diamonds Inc. announced plans for work to be completed on the Company's 100%-owned Kennady North Project, which is located immediately to the north and west of the Gahcho Kue Project, a joint venture between Mountain Province and De Beers Canada Inc. The Kennady North Project consists of five mining leases and eight mineral claims, an area of approximately 30,374 acres. The property hosts the Kelvin, Faraday and Hobbes kimberlites, which were discovered approximately ten years ago and are located between 7 km and 12 km northeast of the Gahcho Kue kimberlite cluster. The land package falls within the boundaries of the original AK claims staked in 1992 that originally comprised 520,000 acres. Since 2006, when Mountain Province recovered a 100% interest in the Kennady North Project, no further exploration activity has taken place. During that period the Company's primary focus has been on the advancement of the Gahcho Kue Project. A desktop study is currently underway to compile and review all of the previous work completed on Kennady North. The comprehensive database will allow Mountain Province to fast track and fine tune its future exploration plans in an efficient and cost effective manner. The results will be used to design and implement an exploration program on the Kennedy North Project, which is expected to commence in the coming months. Once confirmed, details of these activities will be announced. Located in Canada's Northwest Territories, Gahcho Kue is one of the largest new diamond projects under development globally. The project consists of a cluster of kimberlites, three of which have an indicated resource of approximately 30.2 million tonnes grading at 1.67 carats per tonne (approximately 50.5 million carats) and an inferred resource of approximately 6 million tonnes grading at 1.73 carats per tonne (approximately 10.3 million carats). Mineral resources that are not mineral reserves do not have demonstrated economic viability. Results of an independent feasibility study of the Gahcho Kue Project were announced on December 7, 2010, and the Gahcho Kue EIS was filed on December 23, 2010. About Mountain Province Headquartered in Toronto, Canada, Mountain Province Diamonds Inc. (TSX: MPV, NYSE AMEX: MDM) -- http://www.mountainprovince.com/-- is a Canadian resource company in the process of permitting and developing a diamond deposit (the "Gahcho Kue Project" located in the Northwest Territories of Canada. The Company's primary asset is its 49% interest in the Gahcho Kue Project. The Company's balance sheet as of June 30, 2010, showed C$95.8 million in total assets, C$13.9 million in total liabilities, and stockholders' equity of C$81.9 million. * * * In its Management's Discussion and Analysis of the Company's interim consolidated financial statements for the three months ended June 30, 2010, the Company said its ability to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities is dependent on the discovery of economically recoverable mineral reserves, the ability of the Company to obtain necessary financing to fund its operations, and the future production or proceeds from developed properties. However, the Company adds that there is no certainty that the Company will be able to obtain financing to fund its operations. As a result, the Company says, there is substantial doubt as to its ability to continue as a going concern. NEC HOLDINGS: Resolves Dispute With Gores on Adjustments -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that National Envelope Corp. and Gores Group LLC, the purchaser of NEC's business, settled most of their disputes over a working capital adjustment following the sale. According to the report, as part of the deal, from the $14 million held in escrow from the purchase price, NEC will receive $5.1 million while $5.4 million goes to the buyer. They will try to resolve disputes over the remaining $3.5 million that relates to intellectual property. If there is no settlement, a bankruptcy judge will rule on whether he or an arbitrator should decide who is entitled to the remainder in the escrow fund. Mr. Rochelle recounts that NEC alleged last month that Gores was attempting to "massively reduce" the purchase price and in the process eliminate a recovery by unsecured creditors. Gores filed a cross-motion saying the dispute should be submitted to arbitration. The contract had a sticker price of $208 million, including cash of $149.85 million. About NEC Holdings Uniondale, New York-based National Envelope Corporation was the largest manufacturer of envelopes in the world with 14 manufacturing facilities and 2 distribution centers and approximately 3,500 employees in the U.S. and Canada. NEC Holdings Corp., together with affiliates, including National Envelope Inc., filed for Chapter 11 on June 10, 2010 (Bankr. D. Del. Lead Case No. 10-11890). Kara Hammond Coyle, Esq., at Young Conaway Stargatt & Taylor LLP, serves as bankruptcy counsel to the Debtors. David S. Heller, Esq., at Josef S. Athanas, Esq., and Stephen R. Tetro II, Esq., at Latham & Watkins LLP, serve as co- counsel. The Garden City Group is the claims and notice agent. Bradford J. Sandler, Esq., and Robert J. Feinstein, Esq., at Pachuiski Stang Ziehl & Jones LLP, represent the Official Committee of Unsecured Creditors. Morgan Joseph & Co., Inc., is the financial advisor to the Committee. NEC Holdings estimated assets and debts of $100 million to $500 million in its Chapter 11 petition. In September 2010, National Envelope's key assets were bought in a roughly $208 million deal by The Gores Group LLC, a West Coast private equity firm that manages about $2.9 billion of capital. NEUROLOGIX INC: Extends Ohio Research Pact Until November --------------------------------------------------------- On January 18, 2011, Neurologix, Inc. entered into a Fourth Amendment to its Master Sponsored Research Agreement, dated as of May 10, 2006, with The Ohio State University Research Foundation, on behalf of Ohio State University, as amended by the Amendment to Master Sponsored Research Agreement, dated as of May 29, 2008, the Second Amendment to Master Sponsored Research Agreement, dated as of October 29, 2008, and the Third Amendment to Master Sponsored Research Agreement, dated as of September 24, 2009. The Fourth Amendment, among other things, extends the term of the Research Agreement to November 10, 2011. A full-text copy of the Fourth Amendment is available for free at: http://ResearchArchives.com/t/s?726b About Neurologix, Inc. Fort Lee, N.J.-based Neurologix, Inc. (OTC Bulletin Board: NRGX) -- http://www.neurologix.net/-- is a clinical-stage biotechnology company dedicated to the discovery, development, and commercialization of gene transfer therapies for serious disorders of the brain and the central nervous system. The Company's current programs address such conditions as Parkinson's disease, epilepsy, depression and Huntington's disease, all of which are large markets not adequately served by current therapeutic options. The Company's balance sheet at June 30, 2010, showed $5.8 million in total assets, $7.9 million in total liabilities, and a stockholders' deficit of $2.1 million. * * * BDO Seidman, LLP, in New York, 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, expects to incur future losses for the foreseeable future and has a net capital deficiency. NEW DRAGON: Faces NYSE Delisting After No Stockholders' Meet ------------------------------------------------------------ New Dragon Asia Corporation received a letter from NYSE Amex LLC indicating that it is below certain of the Exchange's continued listing standards because it failed to hold an annual meeting of its stockholders during 2010 as set forth in Section 704 of the NYSE Amex Company Guide. The Company was afforded the opportunity to submit a plan of compliance to the Exchange by February 17, 2011 to demonstrate the Company's ability to regain compliance with Section 704 of the Company Guide by July 18, 2011. If the Company does not submit a plan or if the plan is not accepted by the Exchange, the Company will be subject to delisting procedures as set forth in Section 1010 and part 12 of the Company Guide. The Company intends to submit a plan to the Exchange and to hold its annual meeting of stockholders to regain compliance with the Exchange's listing standards. The Company's ability to hold its 2010 annual meeting of stockholders is subject to clearance by the Securities and Exchange Commission of the Company's preliminary proxy statement on Schedule 14A relating to the 2010 annual meeting of stockholders. About NWD New Dragon Asia Corp., a Florida corporation, is headquartered in Shandong Province, China and is engaged in the milling, sale and distribution of flour and related products, including instant noodles and soybean-derived products, to retail and commercial customers. As the fourth largest instant noodle manufacturer in China, New Dragon Asia markets its well-established Long Feng brand through a network of more than 200 key distributors and 16 regional offices in 27 Chinese provinces with an aggregate production capacity of approximately 195,000 tons of flour and more than 1.1 billion packages of instant noodles per year. NEXAIRA WIRELESS: Extends Expiry of 1.57MM Warrants to 2013 ----------------------------------------------------------- On January 14, 2011, Nexaira Wireless Inc. agreed to extend the expiry date of 1,575,000 warrants from January 15, 2011 to January 15, 2013. The warrants were originally issued on September 29, 2009 in connection with the closing of the share exchange agreement with our wholly-owned subsidiary, Westside Publishing Ltd., an Ontario corporation, NexAira Inc., NexAira's wholly-owned subsidiary, NexAira, Inc., the shareholders of NexAira as set out in Schedule 1 to the share exchange agreement, 0793296 B.C. Ltd., and 885084 Alberta Inc. Also on January 14, 2011, the Company issued 1,129,034 warrants to a company wholly owned by one of our directors, entitling it to purchase 1,129,034 common shares of the company at an exercisable price of US$0.20 per share at any time until January 15, 2013. The Company issued the warrants to one non-U.S. person as that term is defined in Regulation S of the Securities Act of 1933, as amended in an offshore transaction relying on Regulation S or Section 4(2) of the Act. About NexAira Wireless Headquartered in Vancouver, B.C., Nexaira Wireless Inc. (OTC BB: NXWI) -- http://www.nexaira.com/-- does business through its San Diego based operating subsidiary Nexaira, Inc. Nexaira, Inc., develops and delivers third and fourth generation (3G/4G) Wireless Routing Solutions that offer speed, reliability and security to carriers, mobile operators, service providers, value added resellers (VARS) and enterprise customers. The Company's balance sheet as of July 31, 2010, showed US$1.8 million in total assets, US$3.6 million in total liabilities, and a stockholders' deficit of US$1.8 million. As reported in the Troubled Company Reporter on February 1, 2010, BDO Seidman, LLP, in San Diego, expressed substantial doubt about the Company's ability to continue as a going concern, following its results for the fiscal year ended October 31, 2009. The independent auditors noted of the Company's losses from operations, negative cash flow from operations, and working capital and net capital deficits. NEXAIRA WIRELESS: Issues Common Stock to Novatel to Settle Debt --------------------------------------------------------------- On January 13, 2011, Nexaira Wireless Inc. entered into a debt settlement and subscription agreement with Nexaira, Inc., the Company's wholly owned subsidiary and Novatel Wireless, Inc. and the company issued shares of its common stock to Novatel in settlement of $621,481 debt owing by its subsidiary to Novatel. The Company issued 1,500,000 shares of its common stock at a deemed price of $0.10 per share and 2,357,406 shares of its common stock at a deemed price of $0.20 per share. The Company issued the shares to one U.S. person, who was an accredited investor. About NexAira Wireless Headquartered in Vancouver, B.C., Nexaira Wireless Inc. (OTC BB: NXWI) -- http://www.nexaira.com/-- does business through its San Diego based operating subsidiary Nexaira, Inc. Nexaira, Inc., develops and delivers third and fourth generation (3G/4G) Wireless Routing Solutions that offer speed, reliability and security to carriers, mobile operators, service providers, value added resellers (VARS) and enterprise customers. The Company's balance sheet as of July 31, 2010, showed US$1.8 million in total assets, US$3.6 million in total liabilities, and a stockholders' deficit of US$1.8 million. As reported in the Troubled Company Reporter on February 1, 2010, BDO Seidman, LLP, in San Diego, expressed substantial doubt about the Company's ability to continue as a going concern, following its results for the fiscal year ended October 31, 2009. The independent auditors noted of the Company's losses from operations, negative cash flow from operations, and working capital and net capital deficits. NORTH GENERAL: Plan Outline OK'd; Feb. 15 Confirmation Hearing Set ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved on January 13, 2011, the disclosure statement explaining North General Hospital and its affiliated debtors' Plan of Liquidation, dated January 10, 2011. The Plan provides for payment in full of Administration and Priority Claims. Class 1, Secured Claims, consists of two (2) subclasses: (i) Dormitory Authority of the State of New York, who is undersecured and Impaired and, therefore entitled to vote on the Plan and (ii) the New York City Water Board, which is oversecured and unimpaired, and the PBGC, which is undersecured and Impaired. There are no Class 2, Priority Tax Claimants. The two (2) subclasses of Class 3, General Unsecured Claims are Impaired and entitled to vote on the Plan. There will be no distribution to Class 4, Membership Interests. The Voting Deadline will be on February 10, 2011, at 5:00 p.m. The Debtors may extend the Voting Deadline, if necessary, without further order of the Court, to a date that is no later than two days before the Confirmation Hearing by publishing on http://dm.epiqll.com/NGHan announcement of the extension. On or before January 28, 2011, at 5:00 p.m., the Debtors will file and serve a Plan Supplement, which will contain the identity of the Liquidation Trustee and information concerning the Liquidating Trust Agreement, the Liquidation Trustee Employment Agreement, and the mediation procedures for resolution of medical malpractice claims. The Confirmation Hearing will be held at 10:00 a.m. on February 15, 2011. Objections to confirmation of the Plan or proposed modifications to the Plan, if any, must be filed, together with proof of service, with the Court electronically in accordance with the Case Management Order and served on the parties listed in the Confirmation Hearing Notice, on or before February 10, 2011 at 5:00 p.m. No later than February 13, 2011, at 3:00 p.m., the Debtors will file: (a) any consolidated reply to any objections to the Plan; and (b) the vote tabulation certification. A copy of the amended order approving the Revised Second Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/NorthGeneral.AmendedDSOrder.pdf A copy of the Revised Second Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/NorthGeneral.AmendedDS.pdf About North General New York-based North General Hospital is a not-for-profit 200-bed community hospital in upper Manhattan that has serviced the communities of East and Central Harlem since the 1970s. The Hospital filed for Chapter 11 bankruptcy protection on July 2, 2010 (Bankr. S.D.N.Y. Case No. 10-13553). Charles E. Simpson, Esq., at Windels, Marx, Lane & Mittendorf, LLP, assists the Debtor in its restructuring effort. Garfunkel Wild, P.C., is the Debtor's special healthcare and regulatory counsel. Healthcare Management Solutions, LLC, is the Debtor's financial and healthcare reimbursement manager. Alston & Bird, LLP, serves as the Official Committee of Unsecured Creditors' counsel. NHB Advisors, Inc., is the financial advisor to the Committee. The Company disclosed $67 million in assets and $293 million in liabilities as of the Petition Date. OCEAN INVESTMENTS: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Ocean Investments, Inc. 1001 Fairview Avenue N, Suite 1400 Seattle, WA 98109 Bankruptcy Case No.: 11-10628 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court Western District of Washington (Seattle) Debtor's Counsel: Jerome Shulkin, Esq. SHULKIN HUTTON INC PS 7525 SE 24th St Ste 330 Mercer Island, WA 98040 Tel: (206) 623-3515 E-mail: mepelbaum@shulkin.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by D.P. Mickelson, registered agent & agent. OVERSEAS SHIPHOLDING: S&P Revises Unsecured Recovery Rating to '3' ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its recovering rating on New York City-based Overseas Shipholding Group Inc.'s (OSG) senior unsecured debt to '3' from '4', indicating S&P's expectation that lenders will receive a meaningful (50%-70%) recovery in a payment default scenario. The 'B' long-term corporate rating and the 'B' rating on the Company's senior unsecured debt remain unchanged. The outlook is stable. "The ratings on OSG reflect the Company's highly leveraged financial profile, the competitive nature of the shipping industry, and the Company's historically aggressive financial policy, with substantial share repurchases during 2007 and 2008," said Standard & Poor's credit analyst Funmi Afonja. Positive credit factors include adequate liquidity, a relative strong point in the Company's financial profile, and a well-established market position in the ocean transportation of crude oil and petroleum products. S&P characterizes OSG's business profile as weak and its financial risk profile as highly leveraged. OSG is one of the world's leading liquid bulk shipping companies, engaged primarily in the ocean transportation of crude oil and petroleum products in the international market and the domestic U.S. flag trade. As of Oct. 31, 2010, the Company operated a fleet of 111 vessels (63 owned, 48 chartered-in), totaling about 12.2 million deadweight tons. In addition to its current operating fleet, the Company will take delivery of 13 vessels (three chartered-in under operating leases and 10 newbuilds) through 2013, bringing the total operating and newbuild fleet to 124 vessels. P&M SPOKANE: Case Summary & Largest Unsecured Creditor ------------------------------------------------------ Debtor: P&M Spokane Properties, LLC 820 A Street, Suite 300 Tacoma, WA 98402 Bankruptcy Case No.: 11-00243 Chapter 11 Petition Date: January 20, 2011 Court: United States Bankruptcy Court Eastern District of Washington (Spokane/Yakima) Debtor's Counsel: Dan Orourke, Esq. SOUTHWELL & OROURKE 421 W Riverside Avenue, Suite 960 Spokane, WA 99201 Tel: (509) 624-0159 Fax: (509) 624-9231 E-mail: dorourke@southwellorourke.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 In its list of 20 largest unsecured creditors, the Company identified only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Green Johnny, LLC $32,739 P.O. Box 48542 Spokane, WA 99208 The petition was signed by William Stegeman. PALMAS COUNTRY: Amended Plan Deletes 3rd Party Release Provision ---------------------------------------------------------------- Palmas Country Club, Inc., on January 7, 2011, filed an amended plan of reorganization with the U.S. Bankruptcy Court for the District of Puerto Rico, in compliance with the Court's December 22, 2010 order requiring it to file an amended Plan of Reorganization deleting the discharge language conforming it to 11 U.S.C. Section 1141, and deleting the third-party release provision. Under the original plan, the Plan was to be funded by by a contribution of $198,000 from Palmas del Mar Properties, Inc., the Debtor's parent company, in exchange for the entry of releases and permanent injunctions in favor of TDF and PCCI, their successors, assigns, shareholders, parents and affiliates, agents and their directors, officers and employees. The releases and injunctions, if entered, would have limited the rights of holders of claims against the Released Parties. If the Amended Plan complies with the above, that is, deletes the discharge language, deletes the third party releases, and is sufficiently funded to pay all priority claims, including CRIM, utilities, taxes, and deposits (if found to have a priority status), the Court said the plan may then be confirmed without further hearing. Should the plan be insufficiently funded on account of a decision by the court finding that the (membership) deposits enjoy priority status, then confirmation will be denied and the court will enter an order converting the case to Chapter 7. Pursuant to the Plan, all of the Debtor's Secured Creditors under Class 3, except the amounts owed pursuant to the TDF Loan Agreement, will be deemed to have been paid in full out of the proceeds from the sale of substantially all of the Debtor's assets to TDF. TDF's Class 4 secured claims under the TDF Loan Agreement will be paid through the surrender of any remaining cash collateral that is not transferred to TDF at the closing of the Sale in one lump sum payment to be made on or before thirty (30) days after the Effective Date of the Plan. Any resulting Deficiency Claim will be deemed an unsecured claim in Class 6. TDF, however, has voluntarily elected to forgo any dividend for its Deficiency Claim. Unsecured Creditors under Class 6 will be paid on or before thirty (30) days after the Effective Date of the Plan their pro rata share of the remaining funds from the TDF Contribution after payment in full of Class 1 and Class 2. Unsecured Creditors with no executory contract have claims totaling roughly $760,613. Parent Company Loans under Class 8 will not receive a distribution under the Debtor's Plan. Holders of Equity Interests in Class 9 will not receive a distribution under Debtor's Plan and will be deemed canceled as of the Effective Date of the Plan. The funds for the payment to Debtor's creditors will originate from the $150,000 to be contributed to the Plan by TDF. A copy of the Chapter 11 Plan, as amended, is available for free at http://bankrupt.com/misc/PalmasCountry.AmendedPlan.pdf About Palmas Country Club, Inc. Humacao, Puerto Rico-based Palmas Country Club, Inc., owns certain real estate facilities located in Palmas del Mar, Humacao, Puerto Rico, consisting of an 18 hole championship golf course known as the Flamboyan Course, an 18 hole golf course known as Palm Course, a 22,200 square feet golf clubhouse, a 5,600 square feet beach club house, a tennis club, and other related facilities. Palmas filed for Chapter 11 bankruptcy protection on August 4, 2010 (Bankr. D. P.R. Case No. 10-07072). Alexis Fuentes- Hernandez, Esq., at Fuentes Law Offices, assists the Debtor in its restructuring effort. The Debtor disclosed $23,973,011 in assets and $58,546,398 in liabilities as of the Petition Date. ROSELAND VILLAGE: Filed for Chapter 11 to Stop Foreclosure ---------------------------------------------------------- Gwen Sadler at Chesterfield Observer, citing Richmond BizSense, reports that Roseland Village LLC filed for Chapter 11 bankruptcy after its financing was not renewed by lenders. "We are faced with the decision of either having this syndicate of banks seize the property as collateral for the loan or petition the court for approval of a long-term plan that facilitates the timely and orderly development of infrastructure on this important piece of property," George Sowers Jr., manager and member of Roseland Village, was quoted as stating. Midlothian, Virginia-based Roseland Village, LLC, filed for Chapter 11 bankruptcy protection on January 13, 2011 (Bankr. E.D. Va. Case No. 11-30223). Bruce E. Arkema, Esq., at Durrettebradshaw, PLC, serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets at $10 million to $50 million. ROSELAND VILLAGE: Section 341(a) Meeting Scheduled for Feb. 11 -------------------------------------------------------------- The U.S. Trustee for Region 4 will convene a meeting of Roseland Village, LLC's creditors on February 11, 2011, at 9:00 p.m. The meeting will be held at the Office of the U.S. Trustee, 701 East Broad Street, Suite 4300, Richmond, Virginia. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Midlothian, Virginia-based Roseland Village, LLC, filed for Chapter 11 bankruptcy protection on January 13, 2011 (Bankr. E.D. Va. Case No. 11-30223). Bruce E. Arkema, Esq., at Durrettebradshaw, PLC, serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets at $10 million to $50 million. ROSELAND VILLAGE: Taps DurretteBradshaw as Bankruptcy Counsel ------------------------------------------------------------- Roseland Village, LLC, asks for authorization from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ DurretteBradshaw PLC, a Professional Limited Liability Company, as bankruptcy counsel. DurretteBradshaw will render general legal services to the Debtor as needed throughout the course of the Chapter 11 case, including bankruptcy and restructuring, finance, litigation, and tax assistance and advice. DurretteBradshaw will be paid based on the rates of its professionals: Bruce E. Arkema, Partner $325 Kevin J. Funk, Associate $225 Beth McMillen, Legal Secretary $75 Bruce E. Arkema, Esq., a principal at DurretteBradshaw, assures the Court that the firm is a "disinterested person" as that term defined in Section 101(14) of the Bankruptcy Code. Midlothian, Virginia-based Roseland Village, LLC, filed for Chapter 11 bankruptcy protection on January 13, 2011 (Bankr. E.D. Va. Case No. 11-30223). The Debtor estimated its assets at $10 million to $50 million. SATELITES MEXICANOS: To File for Pre-Pack Restructuring in U.S. --------------------------------------------------------------- Satelites Mexicanos SA has reached an agreement for a pre-packaged restructuring in the U.S., according to an e-mailed statement to Bloomberg News. Bloomberg's Crayton Harrison said Satmex reached an agreement with the holders of two-thirds of the company's second-priority bonds and the company will be under Mexican majority control after the restructuring. Satmex will issue $325 million in new debt and sell up to $96 million of equity to second-priority noteholders, according to the statement. About Satmex SAB Satelites Mexicanos, S.A. de C.V., (Satmex) is a Mexico-based satellite service provider in Latin America. Satmex's fleet offers hemispheric and regional coverage throughout the Americas. Satmex balance sheet a June 30, 2010, showed US$438.29 million in assets, US$516.55 million in liabilities, and a US78.26 million shareholders' deficit. Satmex had a net loss of US$6.12 million on US$53.06 million of revenue for the six months ended June 30, 2010, compared with a net loss of US$8.81 million on US$50.35 million of revenue for six months ended June 30, 2009. Satmex has a 'C' issuer rating and 'Ca' long term corporate family rating, with negative outlook, from Moody's Investors Service. SELIM AMERICA: Ch. 11 Trustee Wants Case Converted to Chapter 7 --------------------------------------------------------------- Howard M. Ehrenberg, the Chapter 11 trustee in the cases of Selim America, Inc., and Selim Textile, Inc., asks the U.S. Bankruptcy Court for the Central District of California to convert the Debtors' cases to that under Chapter 7 of the Bankruptcy Code. Avi E. Muhtar, Esq., counsel to the Chapter 11 trustee, says the continuation of the Chapter 11 cases serves no further purpose and the administrative costs associated with continuing to proceed under Chapter 11 would only diminish the estate. He notes that the Debtors' have no ongoing operations abd substantially all of the Debtors' assets have been sold. About Selim America Los Angeles, California-based Selim America Inc., a New York corporation, is engaged in the business of importing a variety of textile goods (i.e., yarns and fabrics) from foreign suppliers and re-selling them to customers within the United States. The Company filed for Chapter 11 protection on August 23, 2010 (Bankr. C.D. Calif. Case No. 10-45503). Monica Y. Kim, Esq., who has an office in Los Angeles, California, represents the Debtor. The Debtor disclosed $21,936,200 in assets and $53,897,673 in liabilities as of the Chapter 11 filing. SENIOR HOUSING: Future Income Stream Constitutes Cash Collateral ---------------------------------------------------------------- Bernard Global Investors, Ltd., seeks to prohibit Senior Housing Alternatives, Inc.'s use of cash and for relief from the automatic stay. The Debtor, meanwhile, seeks a determination that the cash is free and clear of Bernard's lien or, alternatively, to use cash collateral if it is subject to Bernard's lien. The principal issue for decision at this time is whether the postpetition income stream generated by the Debtor's business constitutes "cash collateral" within the meaning of Sec. 363 of the Bankruptcy Code. Bernard argues that the cash is not cash collateral because all rights to the income generated by the Debtor's business were "absolutely" assigned prepetition to Bernard's predecessor in interest. The Debtor argues that it retained some rights in the property even after the assignment and thus the cash is simply cash collateral that the Debtor may use in its bankruptcy case so long as Bernard's interest is adequately protected. Bankruptcy Judge John C. Cook rules that the postpetition cash generated from the Debtor's business does constitute cash collateral within the meaning of Sec. 362. Judge Cook holds that the Debtor at the commencement of the bankruptcy case held an equitable interest in the future income stream generated by the business, that interest is property of the Debtor's bankruptcy estate, and the postpetition income constitutes cash collateral within the meaning of Sec. 363(a) of the Bankruptcy Code. The Court denies Bernard's request to prohibit the Debtor from using the income stream due to Bernard's ownership and denies without prejudice Bernard's request for relief from the automatic stay on the ground that the Debtor may not use any of the rents. The Court will leave to the parties' agreement or further proceedings the issue of whether the Debtor can provide adequate protection of Bernard's interest in the income stream such that the Debtor may use the cash collateral. A copy of the Court's January 19, 2011 Memorandum is available at http://is.gd/00M5aGfrom Leagle.com. Senior Housing Alternatives, Inc., dba Summit View, filed for Chapter 11 bankruptcy (Bankr E.D. Tenn. Case No. 10-15930) on October 6, 2010. In its schedules filed together with its petition, the Debtor listed $161,730 in assets and $5,135 in liabilities. A copy of the petition is available at http://bankrupt.com/misc/tneb10-15930.pdf The Debtor is represented by: Jerrold D. Farinash, Esq. KENNEDY, KOONTZ & FARINASH 320 N. Holtzclaw Avenue Chattanooga, TN 37404 Telephone: (423) 622-4535 Facsimile: (423) 622-4583 SENSIVIDA MEDICAL: Posts $663,200 Net Loss in November 30 Quarter ----------------------------------------------------------------- SensiVida Medical Technologies, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $663,219 for the three months ended November 30, 2010, compared with a net loss of $309,743 for the same period a year ago. The Company had no revenues during the three months ending November 30, 2010, and November 30, 2009. The Company's balance sheet at November 30, 2010, showed $2.57 million in total assets, $3.14 million in total liabilities, all current, and a stockholders' deficit of $571,910. As reported in the Troubled Company Reporter on June 21, 2010, Morison Cogen LLP, in Bala Cynwyd, Pa., expressed substantial doubt about SensiVida Medical's ability to continue as a going concern, following the Company's results for the fiscal year ended February 28, 2010. The independent auditors noted that the Company has no revenues, incurred significant losses from operations, has negative working capital and an accumulated deficit. A full-text copy of the Form 10-Q is available for free at: http://researcharchives.com/t/s?726d About SensiVida Medical Based in West Henrietta, New York, SensiVida Medical Technologies, Inc. (formerly Mediscience Technology Corp.) focuses on the automation of analysis and data acquisition for allergy testing, glucose monitoring, blood coagulation testing, new tuberculosis testing, and cholesterol monitoring. SEVERN BANCORP: Swings to $3.3-Mil. Profit in Q4 of 2010 -------------------------------------------------------- Severn Bancorp, Inc., parent company of Severn Savings Bank, FSB, announced net income of $607,000 for the fourth quarter, an increase of $3.3 million compared to a net loss of $2.7 million for the fourth quarter of 2009. Net income was $1.2 million, or ($.06) per share for the year ended December 31, 2010, compared to a net loss of $15.2 million, or ($1.68) per share for the year ended December 31, 2009. Earnings per share is calculated using net income available for common shareholders, which is net income less preferred stock dividends. At December 31, 2010, Severn also continued its trend of regulatory capital ratios exceeding the levels required to be considered "well capitalized" under applicable federal banking regulations, including its core (leverage) ratio of approximately 12.3% compared to the regulatory requirement of 5% for "well capitalized" status. "We are happy to report a year over year increase in earnings, and while we remain cautious about the slow economic recovery, we are encouraged by positive economic signs, and are pleased with the results we are seeing with our continued shift toward being a full-service relationship bank. Going forward we see particular opportunity in our ability to assist local businesses on their road to recovery with our increased emphasis on commercial lending," said Alan J. Hyatt, president and chief executive officer. Mr. Hyatt continued "We will continue our hard work and our commitment to our vision of being recognized as the premier community bank by Anne Arundel County residents and businesses." About Severn Savings Bank Founded in 1946, Severn Savings Bank, FSB -- http://www.severnbank.com/-- is a full-service community bank offering a wide array of personal and commercial banking products as well as residential and commercial mortgage lending. It has assets of nearly $1 billion and four branches located in Annapolis, Edgewater and Glen Burnie. The bank specializes in exceptional customer service and holds itself and its employees to a high standard of community contribution. Severn Bancorp, Inc., (Nasdaq: SVBI) is the parent company of Severn Savings Bank. As reported by the TCR on November 25, 2009, Annapolis, Maryland- based Severn Bancorp along with its Bank unit, has entered into supervisory agreements with the Office of Thrift Supervision, the Bank's primary federal regulator. The agreements set forth steps being taken in response to regulatory concerns with its operating results and effects of the current economic environment facing the financial services industry. SHAILESH JAWALE: Case Summary & 15 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Shailesh Jawale, D.D.S., A Dental Corp dba Pleasant Dental 928 Pleasant Grove Boulevard, Suite 100 Roseville, CA 95678 Bankruptcy Case No.: 11-21476 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court Eastern District of California (Sacramento) Judge: Christopher M. Klein Debtor's Counsel: John David Maxey, Esq. DUDUGJIAN & MAXEY 13 SierraGate Plaza, #B Roseville, CA 95678 Tel: (916) 786-7272 Scheduled Assets: $92,418 Scheduled Debts: $1,237,045 A list of the Company's 15 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/caeb11-21476.pdf The petition was signed by Shailesh Jawale, president/agent for service. Debtor-affiliate filing separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Shailesh Jawale 10-52340 12/10/10 SPANISH BROADCASTING: Beach Point Capital Has 6.32% Equity Stake ---------------------------------------------------------------- In an amended Schedule 13G filing with the Securities and Exchange Commission on January 21, 2011, each of Beach Point Capital Management LP and Beach Point GP LLC disclosed beneficial ownership of 2,632,418 shares of Class A common stock of Spanish Broadcasting System, Inc. representing 6.32% of the shares outstanding. As of November 8, 2010, 41,639,805 shares of Class A common stock, par value $0.0001 per share, 23,403,500 shares of Class B common stock, par value $0.0001 per share and 380,000 shares of Series C convertible preferred stock, $0.01 par value per share, which are convertible into 7,600,000 shares of Class A common stock, were outstanding. About Spanish Broadcasting Headquartered in Coconut Grove, Florida, Spanish Broadcasting System, Inc. -- http://www.spanishbroadcasting.com/-- owns and operates 21 radio stations targeting the Hispanic audience. The Company also owns and operates Mega TV, a television operation with over-the-air, cable and satellite distribution and affiliates throughout the U.S. and Puerto Rico. Its revenue for the twelve months ended September 30, 2010, was approximately $140 million. In November 2010, Moody's Investors Service upgraded the corporate family and probability of default ratings for Spanish Broadcasting System, Inc., to Caa1 from Caa3 based on improved free cash flow prospects due to better than anticipated cost cutting and the expiration of an unprofitable interest rate swap agreement. Moody's said Spanish Broadcasting's Caa1 corporate family rating incorporates its weak capital structure, operational pressure in the still cyclically weak economic climate, generally narrow growth prospects (though Spanish language is the strongest growth prospect) given the maturity and competitive pressures in the radio industry, and the June 2012 maturity of its term loan magnify this challenge. In July 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Miami, Fla.-based Spanish Broadcasting System Inc. to 'B-' from 'CCC+', based on continued improvement in the company's liquidity position. The rating outlook is stable. "The rating action reflects S&P's expectation that, despite very high leverage, SBS will have adequate liquidity over the intermediate term to meet debt maturities, potential swap settlements, and operating needs until its term loan matures on June 11, 2012," said Standard & Poor's credit analyst Michael Altberg. SPEEDWAY MOTORSPORTS: S&P Puts 'BB' Rating on Proposed Notes ------------------------------------------------------------ Standard & Poor's Ratings Services assigned Speedway Motorsports Inc.'s (SMI) proposed $150 million senior notes due 2019 S&P's issue-level rating of 'BB' (at the same level as the corporate credit rating on the Company). S&P also assigned this debt a recovery rating of '3', indicating S&P's expectation of meaningful (50% to 70%) recovery for noteholders in the event of a payment default. The proceeds from the proposed notes issue will be used to partly finance a tender offer for SMI's existing $330 million 6.75% subordinated notes due June 2013. At the same time, S&P affirmed S&P's 'BB' corporate credit rating on SMI. The rating outlook is negative. In the preliminary offering memorandum for the notes, the Company states that it is currently engaged in negotiations with lenders regarding a new credit facility (which would also partly finance a tender offer for SMI's existing notes due 2013) to replace its existing $300 million revolving credit facility. "Our ratings are based on the expectation that Speedway will be able to execute a new credit facility approximating the terms outlined in the offering memorandum of an up to $250 million four- year facility, comprising a $100 million revolving credit facility and $150 million amortizing term loan," noted Standard & Poor's credit analyst Michael Listner. "If this transaction is not accomplished, the ratings on the planned and outstanding senior notes could be lowered." The 'BB' corporate credit rating reflects SMI's reliance on its event-driven business model and the revenue and earnings volatility that can result from the discretionary nature of ticket sales to racing events. Additionally, while the Company derives a significant portion of its revenue (about 32% of 2009 total revenue) from a television broadcasting agreement negotiated by the National Association of Stock Car Auto Racing (NASCAR), the current agreement expires in 2014. Although the contract expiration is several years away, given declines in television ratings and admissions in recent years, the potential exists that a renegotiation of this agreement may result in less favorable terms, absent a rebound in viewership and event attendance. Finally, under S&P's current assumptions, S&P expects that the Company will experience further declines in revenue and EBITDA in 2011, causing the cushion relative to the Company's proposed total leverage covenant to thin by year-end, leading to S&P's belief that a future amendment could be necessary over the coming year. Partially offsetting these risks are the Company's strong EBITDA margin, good market position in the motorsports industry, and high barriers to entry. STYRON CORP: Moody's Upgrades Rating on $1.3BB Term Loan to 'B1' ---------------------------------------------------------------- Moody's raised the Corporate Family Rating of Styron Corp. to B1 from B2. Moody's also raised the ratings on Styron's expanded $1.3 billion senior secured first lien term loan due 2017 and its $240 million revolver due 2016 to B1 from B2. These actions reflects Styron's stronger than anticipated performance in the third quarter and the availability of audited financial statements, which indicate that leverage will remain relatively low despite the increase in debt. Proceeds from the new term loan will be used to refinance existing debt and provide a $370 million dividend to shareholders. The rating outlook is stable. "Styron should continue to perform well due to continued growth in latex volumes and a tight market for butadiene over the next 12-18 months," stated John Rogers, Senior Vice President at Moody's. "While Bain's special dividend is a credit negative, we believe that pro forma metrics should solidly support its B1 ratings." Styron's B1 CFR reflects its narrow portfolio of quasi-commodity and commodity products, substantial exposure to volatile feedstock prices, its limited history as an independent company and a limited amount of cash equity subsequent to the cash dividend. As a result of this transaction, Bain will have less than $300 million of cash equity remaining in the company. Styron's credit profile is supported by relatively strong pro forma credit metrics, leading market positions in three of its four product lines, relatively stable volume demand in its emulsion polymers business, and an experienced management team. Roughly 80% of Styron's revenues and capacity are in North America and Europe. Styron's pro forma credit metrics on an LTM September 30, 2010 basis (adjusted to reflect its status as a stand-alone entity and including Moody's standard adjustments to financial statements) are estimated be roughly 4.0x Debt/EBITDA, 14% Retained Cash Flow/Debt and EBITDA/Interest of 3.1x. Moody's Standard Adjustments to Financial Statements include additional debt of over $200 million due to operating leases and pension liabilities. Moody's adjustments also add roughly $16 million to pro forma 2009 EBITDA. The B1 rating assumes that credit metrics will strengthen in 2011 with Debt/EBITDA falling near 3.5x and Retained Cash Flow/Debt rising above 15%. The stable outlook reflects the positive impact from low leverage and strong credit metrics somewhat offset by its limited operating history and the potential for increased volatility in both benzene and butadiene prices due to tight markets. There is limited downside to the ratings at the current time in absence of a sizable acquisition or other unanticipated event. There is also limited upside to the rating due to the expectation that the sponsor may increase Styron's leverage if the company outperforms current expectations. Styron's liquidity has strengthened with the addition of a $160 million accounts receivable facility. The amendment to the credit facility will allow several other European affiliates to participate in the program, which should enable the company to maximize its use of the facility. The increase in the accounts receivable facility should reduce borrowing under the credit facility leaving revolver to fund working capital requirements. The principal methodologies used in this rating were Global Chemical Industry published in December 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Ratings upgraded: Styron Corp. * Corporate Family Rating upgraded to B1 from B2 * Probability of Default Rating upgraded to B1 from B2 * $240 million Guaranteed Senior Secured 1st lien revolver due 2015 upgraded to B1 (LGD3, 49%) from B2 (LGD3, 46%) * $1.3 billion Guaranteed Senior Secured 1st lien term loan due 2016 upgraded to B1 (LGD3, 49%) from B2 (LGD3, 46%) Styron Corp. is the world's largest producer of styrene butadiene (SB) latex and polystyrene, the largest European producer of synthetic rubber, and a leading producer of polycarbonate resins and blends. Styron had revenues of roughly $4.9 billion for the LTM ending September 30, 2010. TAWK DEV'T: Section 341(a) Meeting Scheduled for Feb. 17 -------------------------------------------------------- The U.S. Trustee for Region 17 will convene a meeting of Tawk Development, LLC's creditors on February 17, 2011, at 1:00 p.m. The meeting will be held at 300 Las Vegas Blvd., South, Room 1500, Las Vegas, NV 89101. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Las Vegas, Nevada-based Tawk Development, LLC, owns and operates a 198-unit resort style apartment complex known as Falcon Landing, which is located at 5067 Madre Mesa Drive in Las Vegas. It filed for Chapter 11 bankruptcy protection on January 14, 2011 (Bankr. D. Nev. Case No. 11-10584). Talitha B. Gray, Esq., at Gordon & Silver, Ltd., serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets and debts at $10 million to $50 million. TAWK DEV'T: Taps Gordon Silver as Bankruptcy Counsel ---------------------------------------------------- Tawk Development, LLC, asks for authorization from the U.S. Bankruptcy Court for the District of Nevada to employ Gordon Silver as bankruptcy counsel, nunc pro tunc to the Petition Date. GS will: a. prepare motions, applications, answers, orders, reports, and other papers in connection with the administration of the Debtor's estate; b. take necessary or appropriate actions in connection with a plan or plans of reorganization and related disclosure statement(s) and all related documents, further actions as may be required in connection with the administration of the Debtor's estate; c. take necessary actions to protect and preserve the estate of the Debtor, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the Debtor, the negotiation of disputes in which the Debtor is involved, and the preparation of objections to claims filed against the Debtor's estate; and d. perform all other necessary legal services in connection with the prosecution of the Debtor's Chapter 11 case. GS will be paid based on the rates of its professionals: Paraprofessionals $130-$175 Associates $185-$350 Shareholders $455-$700 Gerald M. Gordon, Esq., shareholder at GS, assures the Court that the firm is a "disinterested person" as that term defined in Section 101(14) of the Bankruptcy Code. Las Vegas, Nevada-based Tawk Development, LLC, owns and operates a 198-unit resort style apartment complex known as Falcon Landing, which is located at 5067 Madre Mesa Drive in Las Vegas. It filed for Chapter 11 bankruptcy protection on January 14, 2011 (Bankr. D. Nev. Case No. 11-10584). The Debtor estimated its assets and debts at $10 million to $50 million. TAWK DEV'T: Reaches Stipulation to Use Cash Collateral ------------------------------------------------------ Tawk Development, LLC, asks the U.S. Bankruptcy Court for the District of Nevada to approve a stipulation the Debtor reached with Aviva Real Estate Investors, LLC, on the use of cash collateral until March 2011. The Debtor and the Lender stipulate and agree to the Debtor's use of cash collateral and disputed cash collateral. On April 10, 2007, the Debtor entered into a construction loan agreement with the Lender, pursuant to which the Lender made a loan in the original principal amount of $20 million. On April 12, 2007, the Debtor executed the secured promissory note in favour of the Lender in the principal sum of $20 million, together with accruing interest. As of the Petition Date, the Debtor's principal obligation outstanding under the Note was $19,935,848.74 on account of principal, and $755,768.04 on account of contract interest. Gerald M. Gordon, Esq., at Gordon Silver, explains that the Debtor needs the money to fund its Chapter 11 case, pay suppliers and other parties. The Debtor will use the collateral pursuant to a weekly budget, a copy of which is available for free at: http://bankrupt.com/misc/TAWK_DEVT_budget.pdf In exchange for the use of cash collateral, the Lender will have a valid and perfected security interest and lien in all of the Debtor's now-owned or after-acquired real and personal property. As additional adequate protection of Lender's interests in the collateral and the Debtor's use of the collateral, commencing on April 14, 2011, and continuing on the first business day that is 10 business days following the end of each monthly period thereafter, as additional adequate protection of Lender's interests in the collateral, and Debtor's use of the collateral, Debtor will pay to Lender a payment of $71,741.16. The Debtor will pay all undisputed postpetition taxes when they come due in respect of the Property, maintain insurance as required by the Loan Documents, and maintain the value of the Property consistent with the obligations set forth in the loan documents. The Debtor will collect all cash collateral and disputed cash collateral generated by the Debtor's property. Unless and until new procedures are established pursuant to an order of the Court, the Debtor is authorized and directed to maintain its prepetition cash management system and bank account system in effect on the date of the Stipulation. The Debtor will maintain an accounting of the disputed cash collateral. Notwithstanding that the disputed cash collateral will continue to be maintained in the prepetition accounts and not segregated from the cash collateral, neither the Debtor nor the Lender will be entitled to argue that because the disputed cash collateral and the cash collateral are maintained in the same account that either has lost its character, and the rights of Debtor and Lender are reserved with respect to any claims to the disputed cash collateral. The Debtor will provide Lender with monthly reports no later than 10 business days after the conclusion of the prior monthly period. About Tawk Development Las Vegas, Nevada-based Tawk Development, LLC, owns and operates a 198-unit resort style apartment complex known as Falcon Landing, which is located at 5067 Madre Mesa Drive in Las Vegas. It filed for Chapter 11 bankruptcy protection on January 14, 2011 (Bankr. D. Nev. Case No. 11-10584). Talitha B. Gray, Esq., at Gordon & Silver, Ltd., serves as the Debtor's bankruptcy counsel. The Debtor estimated its assets and debts at $10 million to $50 million. TEAMSTAFF INC: Receives Nasdaq Deficiency Notice ------------------------------------------------ TeamStaff, Inc. received a notice from the Listing Qualifications Department of The Nasdaq Stock Market notifying it that the Company is not in compliance with Nasdaq Listing Rule5250(c)(1), Obligation to File Periodic Financial Reports, because it did not timely file its Annual Report on Form 10-K for the fiscal year ended September30, 2010 with the Securities and Exchange Commission. As previously announced in the Company's press release dated January13, 2011, the Company determined that it needs to delay the filing of its Annual Report on Form 10-K for the fiscal year ended September 30, 2010. The Company has been provided an initial grace period of 60 calendar days, or until March 15, 2011, to submit a plan to regain compliance and if Nasdaq accepts the Company's plan, an additional grace period of up to 180 calendar days from the original due date, or until July 12, 2011, can be provided to regain compliance. In the event Nasdaq determines that the Company's plan is not sufficient to regain compliance, Nasdaq staff will send written notice that the Company's common stock will be subject to delisting. At that time, the Company may appeal the delisting determination to a Nasdaq hearings panel. The Company is working diligently on this matter and intends to file its Annual Report on Form 10-K as soon as practicable. About TeamStaff Inc. TeamStaff Inc. -- http://www.teamstaff.com/-- serves clients and their employees throughout the United States as a full-service provider of logistics and healthcare support services. TeamStaff specializes in providing high quality healthcare, logistics, and technical services to Federal agencies and the Department of Defense. TIGRENT INC: Settles "Acciard" & "Altimas" Lawsuits for $525,000 ---------------------------------------------------------------- On January 13, 2011, Tigrent Inc. and its subsidiaries Tigrent Group Inc. and Tigrent Learning Inc. entered into a Mediation Settlement Agreement which settled all claims against the Company and the Tigrent Subsidiaries arising in the two litigation cases pending in the United States District Court for the Middle District of Florida captioned Glenn Acciard, et al. versus Russell Whitney, et al. and Thomas L. Altimas, et al. versus Russell Whitney, et al. The Mediation Settlement Agreement also settled the claims arising in such cases against Russell A. Whitney for which the Company could have had continuing obligations to advance defense costs and indemnify Mr. Whitney. Other claims against Mr. Whitney and the other defendants who are unrelated to the Company, including Gulfstream Development Group and other companies affiliated with Mr. Whitney, remain unsettled and pending. Pursuant to the terms of the Mediation Settlement Agreement, the plaintiffs -- approximately 83 individuals -- granted a full general release of all claims they had or could have brought against the Company and the Tigrent Subsidiaries and a partial general release of the specific claims they may have had or could have brought against Mr. Whitney. In exchange, and without admitting any liability, the Company and the Tigrent Subsidiaries granted full general releases of all claims they had or could have brought against the plaintiffs and agreed to make payments aggregating $525,000 to the plaintiffs in accordance with the following schedule: January 31, 2011 $225,000 April 30, 2011 $80,000 July 31, 2011 $80,000 October 21, 2011 $70,000 January 31, 2012 $70,000 About Tigrent Inc. Cape Coral, Fla.-based Tigrent Inc. (OTC BB: TIGE) -- http://www.tigrent.com/-- is a provider of practical, high- quality and value-based training, conferences, publications, technology-based tools and mentoring to help customers become financially literate. The Company provides customers with comprehensive instruction and mentoring in the topics of real estate and financial instruments investing and entrepreneurship in the United States, the United Kingdom, and Canada. The Company's balance sheet as of June 30, 2010, showed $43.8 million in total assets, $80.7 million in total liabilities, and a stockholders' deficit of $36.9 million. In its Form 10-Q report for the quarter ended June 30, 2010, the Company said it continues to incur a negative cash flow -- totaling $5.9 million for the period ending June 30, 2010 -- due to the on-going challenges with sales of products. "We have insufficient working capital to meet operating needs, raising substantial doubt about the ability of the Company to continue as a going concern," the Company said. In addition to the shift in strategic emphasis from live course offerings to digitally-delivered programs, the Company said it continues to implement reductions in staff to align with anticipated sales level, decreased occupancy costs, and reduced operating costs in all areas. The Company is also in current discussions with some of larger creditors to negotiate amounts owed. The Company said it if cannot generate the required revenues to sustain operations or obtain additional capital on acceptable terms, it will need to substantially revise its business plan, file for bankruptcy, sell assets or cease operations and investors could suffer the loss of a significant portion or all of their investment in the Company. TM PROPERTIES: Case Summary & 6 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: TM Properties, LLC 2465 S. M-139 Benton Harbor, MI 49022 Bankruptcy Case No.: 11-00517 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court Western District of Michigan (Grand Rapids) Judge: Scott W. Dales Debtor's Counsel: James M. Keller, Jr., Esq. KELLER & ALMASSIAN PLC 2810 East Beltline Ln, NE Grand Rapids, MI 49525 Tel: (616) 364-2100 E-mail: ecf@kalawgr.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 six largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/miwb11-00517.pdf The petition was signed by Ted Smith, member. TOWN SPORTS: John Warren Owns 4.06 Million Common Shares -------------------------------------------------------- In a Form 3 filing with the Securities and Exchange Commission on January 20, 2011, John R. Warren disclosed that he beneficially owns 4,060,082 shares of common stock of Town Sports International Holdings Inc. The securities are owned directly by Farallon Capital Partners, L.P., Farallon Capital Institutional Partners, L.P., Farallon Capital Institutional Partners II, L.P., Farallon Capital Institutional Partners III, L.P. and Farallon Capital Offshore Investors II, L.P. All such securities were previously reported by the Partnerships, Farallon Partners, L.L.C. and related individuals on a Form 3 filed on April 1, 2010, Forms 4 filed on March 8, 2010, and a Form 3 filed on July 8, 2010. There have been no transactions in such securities by any such entities or individuals since the filing of the Prior Filings. FPLLC, as the general partner of each of the Partnerships, may be deemed to be a beneficial owner of the Company's securities held by the Partnerships. Effective as of January 1, 2011, John R. Warren became a managing member of FPLLC with the power to exercise investment discretion and, as such, may be deemed to be a beneficial owner of the Company's securities held by the Partnerships. About Town Sports Town Sports International Holdings, Inc. -- http://www.mysportsclubs.com/-- owns and operates fitness clubs in the Northeast and mid-Atlantic regions of the United States and, through its subsidiaries, operated 161 fitness clubs as of March 31, 2010, comprising 109 New York Sports Clubs, 25 Boston Sports Clubs, 18 Washington Sports Clubs (two of which are partly-owned), six Philadelphia Sports Clubs, and three clubs located in Switzerland. These clubs collectively served approximately 495,000 members. The Company's balance sheet at Sept. 30, 2010, showed $467.39 million in total assets, $476.11 million in total liabilities, and a stockholders' deficit of $8.72 million. TOWNVIEW 56TH: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Townview 56th Street, LLC 338-360 Gest Street Cincinnati, OH 45203 Bankruptcy Case No.: 11-10289 Chapter 11 Petition Date: January 21, 2011 Court: United States Bankruptcy Court Southern District of Ohio (Cincinnati) Judge: Jeffery P. Hopkins Debtor's Counsel: Richard Boydston, Esq. 2800 Chemed Center 255 East Fifth Street Cincinnati, OH 45202 Tel: (513) 455-7663 E-mail: rb2@gdm.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 19 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ohsb11-10289.pdf The petition was signed by Lawrence E. Fiedler, president of Townview LPJ, LLC. TP INC: Disc. Statement Approved; Confirmation Hearing Set Feb. 1 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina has granted conditional approval to the disclosure statement explaining TP, Inc.'s Chapter 11 Plan of Reorganization dated September 24, 2010. The Court fixed January 28, 2011, as the last day for filing and serving written objections to the disclosure statement. If no objections or requests to modify the disclosure statement are filed on or before that date, the conditional approval of the disclosure statement will become final. The Court has set the hearing on confirmation of the plan for February 1, 2011, at 2:00 p.m., at Room 208, 300 Fayetteville Street, in Raleigh, North Carolina. The Court also fixed January 28, 2011, as the last day for filing written acceptances or rejections of the plan. Ballots should be completed and filed with the plan proponent on or before that date. January 28, 2011, is fixed as the last day for filing and serving written objections to confirmation of the Plan. The plan proponent must prepare and file a summary report on the votes, with a copy of each ballot attached, with the Court at or before the hearing on the plan on February 1, 2011. The Debtor filed an amended plan with the U.S. Bankruptcy Court on December 8, 2010. The Plan calls for (i) the liquidation of the Debtor's business assets over a period of 12 months from the Effective Date of the Plan (instead of 18 months as per the original plan; (ii) the payment of secured and unsecured claims from the net liquidation proceeds; and (iii) payment of priority tax claims. The Debtor will pay its administrative costs in full within 30 days of the Effective Date, or by other mutually agreeable terms as the parties may agree. If sufficient funds do not exist for payment of administrative claims in Class I, the proceeds from unencumbered net sales will be used to pay this class prior to any distribution to the unsecured creditors. All liabilities of the Debtor will also be paid. The Debtor will pay non-insider general unsecured creditors the residual net proceeds from the sale of the Debtor's real estate assets, following payment of secured claims, administrative claims and priority claims. The aggregate amount of non-insider general unsecured claims is roughly $12,836,586. Payment will be allocated pro-rata among the holders of allowed claims. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/TPInc_DS.pdf A full-text copy of the First Amended Plan is available at for free at http://bankrupt.com/misc/TPInc.firstamendedplan.pdf About TP, Inc. Boone, North Carolina-based TP, Inc., is in the business of property development and owns a large number of tracts of real estate in Mecklenburg County, North Topsail and Topsail Beach, and Surf City, North Carolina. The Company filed for Chapter 11 protection on March 1, 2010 (Bankr. E.D. N.C. Case No. 10-01594). David J. Haidt, Esq., at Ayers, Haidt & Trabucco, P.A., represents the Debtor. The Company estimated assets and liabilities at $10 million to $50 million. UNITED WESTERN: Chairman Says Seizure Could Force Bankruptcy ------------------------------------------------------------ Eric Morath, writing for Dow Jones' Daily Bankruptcy Review, reports that United Western Bancorp Chairman Guy Gibson said he was surprised by federal regulators' seizure of United Western Bancorp's subsidiary bank because the holding company had $149 million in committed funding toward a $200 million capital raising need to meet regulators' requirements. DBR notes Mr. Gibson said in a statement the regulators' seizure could push the Company into bankruptcy and scuttled an attempt to save the bank without using government funds. "This precipitous action" by federal bank regulators "will ultimately cause an unnecessary loss to the Deposit Insurance Fund, since our private market solution was near at hand," Mr. Gibson said, according to DBR. As reported by the Troubled Company Reporter on January 24, 2011, United Western Bank of Denver, Colo., was closed on January 21, 2011, by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company of Raleigh, N.C., to assume all of the deposits of United Western Bank. As of September 30, 2010, United Western Bank had around $2.05 billion in total assets and $1.65 billion in total deposits. First-Citizens Bank & Trust Company did not pay the FDIC a premium for the deposits of United Western Bank. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank & Trust Company agreed to purchase essentially all of the assets. The FDIC and First-Citizens Bank & Trust Company entered into a loss-share transaction on $1.11 billion of United Western Bank's assets. First-Citizens Bank & Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. The FDIC estimates that the cost to the Deposit Insurance Fund will be $312.8 million. Compared to other alternatives, First- Citizens Bank & Trust Company's acquisition was the least costly resolution for the FDIC's DIF. United Western Bank is the seventh FDIC-insured institution to fail in the nation this year, and the first in Colorado. The last FDIC-insured institution closed in the state was Southern Colorado National Bank, Pueblo, on October 2, 2009. DBR says Mr. Gibson didn't return a call seeking comment Monday. DBR also relates the OTS said United Western Bank was "undercapitalized and in an unsafe and unsound condition to transact business." According to DBR, spokesman William Ruberry said Monday "The OTS does not take lightly a decision to close an institution." He added, "When a proposal is made to rescue a failing institution, the OTS always carefully considers the prospects of the proposal successfully returning the institution to a safe-and-sound standing." DBR relates FDIC spokesman Greg Hernandez said Monday that United Western Bank had suffered "significant losses" on real-estate related holdings, including on its construction and development loan portfolio and its mortgaged-backed securities. As reported by the TCR on January 18, 2011, United Western Bancorp and Equi-Mor Holdings, Inc., a direct subsidiary of the Company, entered into a Sixth Forbearance and Amendment Agreement with JPMorgan Chase Bank, N.A. The terms of the Sixth Forbearance Agreement provide, among other things, that (i) JPMorgan agrees to forbear from exercising its rights and remedies under the Loan Documents on account of the Sixth Forbearance Disclosed Defaults provided the Company and the Pledgor satisfy all obligations set forth in the Sixth Forbearance Agreement and the Loan Documents until the earlier of: (i) the end of business on February 15, 2011; or (ii) the occurrence of a default, other than the Sixth Forbearance Disclosed Defaults, under any of the Loan Documents, the Sixth Forbearance Agreement or any other agreement required to be entered into by the Sixth Forbearance Agreement. The forbearance by JPMorgan is conditioned upon, among other things, the Company entering into an investment agreement with at least two anchor investors on or before October 31, 2010, with such investment agreement providing for the investment by such anchor investors of no less than $91 million and collectively, an investment of approximately $200 million of new money capital in the Company. The Company entered into an investment agreement on October 28, 2010, with Oak Hill Capital Partners III, L.P. and Oak Hill Capital Management Partners III, L.P., Lovell Minnick Equity Partners III LP and Lovell Minnick Equity Partners III-A LP, Legent Group, LLC and Henry C. Duques. Pursuant to the Investment Agreement, the Company will seek to raise in the aggregate at least $200,000,000 but not more than $205,000,000, and the Lead Anchor Investors will each purchase 117,500,000 shares of common stock, par value $0.0001 per share, of the Company for $0.40 per share, for a total investment of $94,000,000. The Legent Group will purchase 7,500,000 shares of Common Stock for $0.40 per share, for a total investment of $3,000,000, and Duques will purchase 15,000,000 shares of Common Stock for $0.40 per share, for a total investment of $6,000,000. In addition, each Anchor Investor will each receive warrants to purchase 10.0% of the number of shares of Common Stock that they purchased under the Investment Agreement. About United Western Denver, Colorado-based United Western Bancorp, Inc. (NASDAQ: UWBK) -- http://www.uwbancorp.com/-- is a holding company whose principal subsidiary, United Western Bank, is a community bank focused on Colorado's Front Range market and selected mountain communities. United had $2.21 billion in assets and debts of $2.1 billion as of June 30, 2010. URBAN BRANDS: Wants Until April 19 to Propose Chapter 11 Plan ------------------------------------------------------------- Urban Brands, Inc., et al., ask the U.S. Bankruptcy Court for the District of Delaware to extend their exclusive periods to file and solicit acceptances of their proposed chapter 11 plan until April 19, 2011, and June 20, respectively. The Debtor relate that they need additional time to pursue an orderly wind-down of the Debtors' remaining affairs in a prompt and efficient manner. The Debtors propose a hearing on their requested exclusivity extensions on February 16, at 3:00 p.m. (E.T.). Objections, if any, are due February 2, at 4:00 p.m. About Urban Brands Urban Brands, Inc., operated as a women's specialty retailer. It sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 10-13005) on September 21, 2010. The Company estimated assets of $10 million to $50 million and debts of $100 million to $500 million in its Chapter 11 petition. Chun I Jang, Esq., Mark D. Collins, Esq., and Paul N. Heath, Esq., at Richards, Layton Finger, P.A., in Wilmington, Delaware, serve as counsel to the Debtors. BMC Group, Inc., is the claims and notice agent. The DIP Lender is represented by Donald E. Rothman, Esq., at Riemer & Braunstein LLP. As reported by the Troubled Company Reporter on October 29, 2010, Urban Brands received Court permission to sell its business for $16.67 million to an affiliate of Gordon Brothers Group LLC. Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that Gordon Brothers told the judge it would operate at least 175 of the 210 stores. Gordon Brothers would serve as Urban Brands' agent to run going-out-of-business sales at the locations it won't buy. Mr. Rochelle said the price to be paid by Gordon Brothers is subject to downward adjustment. The ultimate price can't be less than $6 million plus the amount necessary to pay off funding for the Chapter 11 case. The Debtor has been renamed UBI Liquidating Corp., et al., following the sale. In October 2010, the U.S. Trustee appointed seven entities to the Committee of Unsecured Creditors -- Angel Made in Heaven, Inc.; Natural Collection Corp.; Signsource, Inc.; Rosenthal & Rosenthal, Inc.; GGP Limited Partnership; Simon Property Group, Inc.; and International Inspirations, Ltd. The Committee is represented by Cooley LLP as lead counsel and Loughlin Meghji + Company as financial advisor. VANGUARD HEALTH: S&P Assigns 'B-' Rating on Proposed $375MM Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Vanguard Health System Inc. The rating outlook is stable. In addition, S&P assigned a 'B-' issue-level rating to proposed $375 million senior notes due 2019. These notes will be issued by Vanguard Health Holding Co. II LLC, and Vanguard Holding Company II as co-borrowers. These issuers are subsidiaries of Vanguard Health Systems Inc. The recovery rating on this debt issues is '5', which indicates S&P's expectation for modest (10% to 30%) recovery in the event of payment default. S&P also assigned a 'CCC+' issue-level rating to proposed $375 million senior discount notes. These notes will be issued by Vanguard Health Systems. The recovery rating on the debt is '6', which indicates S&P's expectation for negligible (0 to 10%) recovery in the event of payment default. "The low speculative-grade ratings on Nashville, Tenn.-based Vanguard Heath Systems Inc. reflect its highly leveraged financial profile and relatively undiversified portfolio of hospitals. The recent addition of the eight-hospital Detroit Medical Center (DMC) added another major market to San Antonio and Phoenix, and now is Vanguard's largest market based on revenue" said Standard & Poor's credit analyst David Peknay. However, S&P still views the business profile as weak even though Vanguard will now generate virtually all of its earnings from three markets instead of two. The Detroit market presents several risks. DMC is a large urban hospital system with low operating margins and a payor mix that includes Medicaid as a large revenue source. It also has substantial capital investment needs that will constrain Vanguard's cash flow for several years. Additionally, S&P includes in S&P's weak business risk assessment the competitive nature of these markets, the Company's vulnerability to local economic circumstances, and the reimbursement risk tied to ongoing third-party payor efforts to limit health care cost increases. S&P views Vanguard's financial risk profile as highly-leveraged even though it has maintained margins in the 10% to 11% range for the past several years, and has increased its lease-adjusted EBITDA by 29% between 2005 and 2010 despite chronic reimbursement pressure. Despite the absence of acquisition activity for several years, Vanguard's leverage peaked at 6.5x in 2008 as significant capital spending exceeded operating cash flow for the previous three years. Vanguard did reduce leverage to 6.0x by the end of fiscal 2010, but then re-entered the acquisition market in a big way with the acquisition of DMC. The debt issued in 2010 to help finance the acquisition, coupled with the pending debt issues to boost liquidity and fund shareholder dividends will, based on S&P's estimate, increase lease adjusted debt to EBITDA to about 6.6x in fiscal 2012. This includes a full year ownership of DMC and the treatment of DMC's unfunded pension fund liability and other unfunded insurance liabilities as debt, consistent with S&P's rating criteria. VEBLEN EAST: Sale of Marshall Cty. Property to Agstar Confirmed --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Dakota has granted the motion of Chapter 11 trustee Lee Ann Pierce for the confirmation of her sale to Veblen East Dairy Acquisition, LLC, of all of Veblen East Dairy Limited Partnership and the bankruptcy estate's right, title, and interest in the dairy cattle and personal property and in the real property located in Marshall County, South Dakota, and the dairy facility located thereon, free and clear of all liens and other encumbrances, with any liens or other encumbrances transferred and attached to the sale proceeds in the order of their priority. Veblen East Dairy Acquisition, LLC, is the assignee of secured creditor, AgStar Financial Services, PCA, and FLCA. The credit bid was in the amount of $16,000,000.00 for the facility, including the real estate, plus $800.00 per cow. At the in-court auction on September 15, 2010, Vista Family Dairies, LLC, submitted the highest bid of $21,300,000. The bid was for $800.00 per head per cow and $17,300,000 for the facility. Whetstone Valley Dairy, LLC, submitted a backup bid which was approved by the Court. The Court also approved the Chapter 11 trustee's motion allowing for the sale of the assets to Veblen East Dairy Acquisition, in the event that neither Vista Family Dairies nor Whetstone Valley Dairy closed on the sale in a timely manner. Despite all conditions precedent to closing having been satisfied by the Chapter 11 trustee, and contrary to the terms of its bid at the in-court auction, Vista Family Dairies advised the Chapter 11 trustee it will not close on the sales transaction. On October 28, 2010, Whetstone Valley Dairy withdrew its back-up bid. About Veblen East Veblen, South Dakota-based Veblen East Dairy Limited Partnership operates a operates a "large calf-raising dairy business" in South Dakota. The Company filed for Chapter 11 bankruptcy protection on July 2, 2010 (Bankr. D. S.D. Case No. 10-10146). Fite & Pierce Law Office represents Chapter 11 trustee Lee Ann Pierce as bankruptcy counsel. The Debtor estimated its assets and debts at $50 million to $100 million. The Company's affiliate, Veblen West Dairy, LLP, filed a separate Chapter 11 petition on April 7, 2010 (Bankr. D. S.D. Case No. 10-10071). Veblen West operates a 4,000-cow milking facility. The two cases are not being jointly administered. WILDHORSE MEADOWS: In Chapter 11 to $4.6 Million Debt ----------------------------------------------------- Wildhorse Meadows, LLC, filed for Chapter 11 protection on Jan. 20, 2011 (Bankr. D. Ore. Case No. 11-30415). Alicia Inns at KTVZ reports that Wildhorse Meadows, owner of the land at Aspen Lakes Golf Course in Sisters, Oregon, hopes to restructure $4.6 million in debt in Chapter 11. "We got caught like everyone else in the nation, and we've got excessive debt for what we can afford to cover. This allows us an opportunity to work with our lender and to restructure our debt," the report quotes Wildhorse Meadows and Aspen Lakes Co-Owner Matt Cyrus as saying. The Wildhorse Meadows owners, according to the report, said they expect to file a plan of reorganization and exit Chapter 11 by mid-summer. WILDHORSE MEADOWS: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------ Debtor: Wildhorse Meadows, LLC 16900 Aspen Lakes Dr. Sisters, OR 97759 Bankruptcy Case No.: 11-30415 Chapter 11 Petition Date: January 20, 2011 Court: United States Bankruptcy Court District of Oregon Judge: Elizabeth L. Perris Debtor's Counsel: Albert N. Kennedy, Esq. TONKON TORP LLP 888 SW 5th Ave #1600 Portland, OR 97204 Tel: (503) 802-2013 E-mail: al.kennedy@tonkon.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 In its list of 20 largest unsecured creditors, the Company identified only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Keeton-King Construction general contractor $229,692 18159 Hwy 126 services Sisters, OR 97759 The petition was signed by Matt Cyrus, president. WOMAN'S CLUB: Case Summary & 13 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: The Woman's Club of Hollywood, California 1749 No. La Brea Avenue Los Angeles, CA 90046 Bankruptcy Case No.: 11-12572 Chapter 11 Petition Date: January 20, 2011 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Barry Russell Debtor's Counsel: Michael Jay Berger, Esq. LAW OFFICES OF MICHAEL JAY BERGER 9454 Wilshire Boulevard, 6th Floor Beverly Hills, CA 90212-2929 Tel: (310) 271-6223 Fax: (310) 271-9805 E-mail: michael.berger@bankruptcypower.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,001 to $500,000 A list of the Company's 13 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb11-12572.pdf The petition was signed by Nina Van Tassell, president. W.R. GRACE: Amends Canadian ZAI Pact to Increase Contribution ------------------------------------------------------------- W.R. Grace & Co. and its debtor affiliates and the Canadian Zonolite Attic Insulation Claimants notified the U.S. Bankruptcy Court for the District of Delaware that they have agreed to modify the terms of the Canadian ZAI Settlement after the settlement became null and void. The settlement, originally filed on September 2008, provided that, unless otherwise agreed to by the parties, in the event the U.S. Court does not enter an order confirming the Debtors' Joint Plan of Reorganization on or before December 31, 2010, the settlement will be considered null and void. The settlement also provided for, among other things, additional compensation to be paid by Grace to the Canadian ZAI PD Claims Fund for the benefit of Canadian ZAI Claimants, including an additional C$500,000 if the U.S. Confirmation Order was not entered by June 30, 2010. The settlement originally requires the Debtors to contribute C$6,500,000, less any amounts the Debtors paid for the Canadian ZAI Claimants' fees, to a Canadian ZAI PD Claims Fund. In the recently amended settlement, the Debtors' contribution to the Fund will be increased to C$8,595,632 in the event the U.S. Confirmation Order is entered by the U.S. Court on or before January 31, 2011; and C$9,095,632 in the event that the U.S. Confirmation Order is entered by the U.S. Court after January 31, 2011, but on or before July 31, 2011. On December 20, 2010, the U.S. Court advised the parties that it did not expect to issue a ruling on Confirmation of the Joint Plan on or before December 31, 2010, but did expect to issue a ruling by January 2011. As a result, the Court asked the parties to discuss an extension of the deadline set forth in the settlement, the Debtors relate in court papers. The parties thereafter agreed to the modifications as outlined in the amendment, a full-text copy of which is available for free at http://bankrupt.com/misc/graceccaazai0111.pdf The Debtors said that, on behalf of the Canadian ZAI Claimants, CCAA Representative Counsel will, in any future vote, vote in favor of the First Amended Joint Plan incorporating the Amended Canadian ZAI Settlement provided that the U.S. Confirmation Order is entered on or before July 31, 2011. On January 17, 2011, the CCAA Court entered an Order approving the Amendment. About W.R. Grace & Co. 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) W.R. GRACE: Court OKs Settlement With CNA Financial --------------------------------------------------- Judge Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware, on Jan. 10, 2011, heard arguments, granted the motion for approval, and requested for several modifications to W.R. Grace & Co.'s proposed order approving their settlement with CNA Financial Corp. and its affiliates. The modifications were to clarify that definitions in the Debtors' Joint Plan of Reorganization govern the scope of the Asbestos PI Channeling Injunction, to make clear that the Settlement Agreement is between only the Debtors and CNA Companies, and to clarify that three insurance policies specifically identified by BNSF Railway Corporation are not subject policies for purposes of the settlement agreement. Accordingly, the Debtors drafted a modified proposed order, a full-text copy of which is available for free at http://bankrupt.com/misc/grace26088propord.pdfand circulated it to counsel for the Libby Claimants, BNSF, CNA, the Asbestos Personal Injury Future Claims Representative and the Official Committee of Asbestos-related Personal Injury Claimants. The draft order incorporated the changes requested by the Court. The Libby Claimants, according to the Debtors, requested one revision to the Proposed Order, which go well beyond the Court's requested revisions. As the Debtors' counsel conveyed to the Libby Claimants' counsel, the Debtors, as well as CNA, the Asbestos PI FCR and the ACC, cannot agree to the Libby Claimants' proposed additional sentences, for several reasons, including that the Court did not direct the Debtors to include in the Approval Order language modifying the Asbestos PI Channeling Injunction with respect to "derivative" claims. The Debtors further relate that Grace and CNA tried unsuccessfully to reach agreement with BNSF on the modification requested by the Court that the Approval Order be clear that the three policies identified by BNSF in its objection not be deemed "Subject Policies." About W.R. Grace & Co. 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) W.R. GRACE: To Release Q4 Financial Results on Feb. 10 ------------------------------------------------------ W. R. Grace & Co. (NYSE:GRA) announced that it will release its fourth quarter 2010 financial results and its financial outlook for 2011 at 6:00 a.m. ET on Thursday, February 10, followed by a company hosted conference call and webcast at 12:00 p.m. ET later that day. During the call, Fred Festa, Chairman, President and Chief Executive Officer, and Hudson La Force, Senior Vice President and Chief Financial Officer, will review fourth quarter and full year 2010 results and Grace's financial outlook for 2011. A question and answer session will follow the prepared remarks. Access to the live webcast and the accompanying slides will be available through the Investor Information -- Investor Presentations section of the company's Web site, http://www.grace.com/ Those without access to the internet can listen to the remarks and Q&A by dialing +1.866.700.7101 (U.S.) or +1.617.213.8837 (International). The conference call ID is 29552181. Investors are advised to dial into the call at least ten minutes early in order to register. An audio replay will be available at 3:00 p.m. ET on February 10. The replay will be accessible by dialing +1.888.286.8010 (U.S.) or +1.617.801.6888 (International) and entering conference call ID 41593400. About W.R. Grace & Co. 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) YRC WORLDWIDE: S&P Places 'CCC-' Corporate Rating on CreditWatch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC-' corporate credit rating on YRC Worldwide Inc. (YRCW) on CreditWatch developing. At the same time, S&P is withdrawing the existing issue level ratings on Yellow Corp.'s senior unsecured debt, given the negligible amounts outstanding. "The ratings on Overland Park, Kan.-based YRCW reflect its near- term liquidity challenges, meaningful off-balance-sheet contingent obligations related to multiemployer pension plans, as well as its participation in the competitive, capital-intensive, and cyclical trucking industry," said Standard & Poor's credit analyst Anita Ogbara. "YRCW's substantial (albeit deteriorating) market position in the less-than-truckload (LTL) sector, which has high barriers to entry, partially offsets these characteristics. We characterize YRCW's business profile as weak, financial profile as highly leveraged, and liquidity as weak." S&P will monitor developments regarding YRCW's liquidity position, capital structure, and operating prospects to resolve the CreditWatch. S&P could take further interim rating actions as more information becomes available, in advance of a resolution of the CreditWatch review. ZALE CORP: Breeden Entities Have 27.22% Equity Stake ---------------------------------------------------- In an amended Schedule 13D filing with the Securities and Exchange Commission on January 21, 2011, Richard C. Breeden disclosed that he beneficially owns 8,743,836 shares of common stock of Zale Corporation representing 27.22% of the shares outstanding. As of November 30, 2010, 32,123,875 shares of Zale Corporation's Common Stock, par value $0.01 per share, were outstanding. Other affiliates of Mr. Breeden also disclosed beneficial ownership of shares of the Company: Shares Equity Beneficially Owned Stake ------------------ ------ Breeden Capital Management LLC 8,731,354 27.18% Breeden Partners (California) L.P. 4,882,668 15.20% Breeden Partners L.P. 1,233,658 3.84% Breeden Partners (California) II L.P. 743,657 2.31% Breeden Partners (New York) I L.P. 256,343 0.8% Breeden Partners Holdco Ltd. 1,615,028 5.03% Breeden Partners (Cayman) Ltd. 1,615,028 5.03% Breeden Capital Partners LLC 7,116,326 22.15% About Zale Corporation Based in Dallas, Texas, Zale Corporation (NYSE: ZLC) -- http://www.zalecorp.com/-- is a specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,900 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at http://www.zales.com/, http://www.zalesoutlet.com/, http://www.gordonsjewelers.com/and http://www.pagoda.com/ The Company's balance sheet at Oct. 31, 2010, showed $1.28 billion in total assets, $438.51 million in total current liabilities, $450.45 million in long-term debt, $176.31 million in other liabilities, and stockholders' investment of $213.06 million. Zale reported a net loss of $93.67 million on $1.62 billion of revenues for the year ended July 31, 2010, compared with a net loss of $166.35 million on $1.78 billion of revenues for the same period a year ago. As reported by the Troubled Company Reporter on February 10, 2010, The Deal.com's Sara Behunek reported that analysts said bankruptcy looms for Zale if it fails to restructure its debt and put in place a solid merchandising strategy. * CRE & Retail Are Most Troubled Sectors in 2011, Weil Survey Says ------------------------------------------------------------------ Weil, Gotshal & Manges's Bankruptcy Blog has unveiled its first reader survey in which 125 respondents, including financial and turnaround pros, predicted the 2011 bankruptcy and restructuring climate. The Blog was launched in October. Most of the respondents expect not much happening in any direction this year. Majority of the respondents expects less than 10 cases by companies with more than $1 billion in assets. The survey says respondents believe the top five sectors to face financial distress in 2011 will be: Commercial Real Estate 71.4% Retail 52.9% Homebuilding 49.6% Media/Communications 32.8% Banking and Finance 30.3% Rachel Feintzeig, writing for Dow Jones' Daily Bankruptcy Review, reports that Adam Strochak, a partner in Weil, Gotshal & Manges' LLP's restructuring practice said in an interview Monday, the survey results point to a slowdown in major Chapter 11 filings, a slow but steady bumping up of interest rates and a decline in corporate debt defaults. * Barry Fishman Receives Honor at Bankruptcy Bar Association Event ------------------------------------------------------------------ Barry S. Fishman, Managing Partner of Shapiro and Fishman LLP, will be honored at the Bankruptcy Bar Association's "Forty in the Field," a recognition of more than 40 years in the legal community practicing bankruptcy law. The BBA Southern District of Florida dinner is to be held Tuesday, January 25 at 6:00 p.m. with cocktails and dinner at the Mandarin Oriental Miami which is located at 500 Brickell Key Drive in Miami, Florida. Mr. Fishman is among several honorees at the evening's gala, including bankruptcy judges the Honorable A. Jay Cristol and the Honorable Raymond B. Ray. As managing partner of Shapiro and Fishman, Barry Fishman oversees real estate litigation and bankruptcies. Mr. Fishman has lectured in the field of bankruptcy law, real estate litigation and foreclosures. The firm has offices in Boca Raton, Tampa, and Miami. Mr. Fishman is a member of the Bar Association of Florida, California, and Illinois. He is also a member of the Mortgage Bankers Association of America and the Mortgage Bankers Association of Florida. Mr. Fishman is married to Meredith Porte Fishman. Their daughter Janna Stern is an attorney in New York. * Hahn & Hessen Names Partners in Bankruptcy & Litigation Groups ---------------------------------------------------------------- The law firm of Hahn & Hessen LLP is pleased to announce that Janine M. Cerbone and Robert J. Malatak have been made partners in the Firm, effective January 1, 2011. Ms. Cerbone was formerly a senior associate and Mr. Malatak formerly served as special counsel with the Firm. "We are delighted to have Janine and Rob join the partnership ranks," said Managing Partner, Mark S. Indelicato. "Janine has developed an incredible depth of knowledge in all aspects of our bankruptcy practice. Rob, with his financial expertise, analytical skill and business acumen, has become an integral part of our litigation department. The addition of Janine and Rob to the partnership reinforces the Firm's leadership in its traditional areas of service to our clients." Malatak represents corporate entities, financial institutions, unsecured creditor committees, and trustees in a wide range of complex commercial disputes in federal, state, surrogate's and bankruptcy courts throughout the country. He has litigated issues involving bankruptcy, business torts, commercial leases, contracts, employment, ERISA, fraud, insurance, securities, trust and estates, and the UCC. Rob graduated from St. John's University School of Law in 1994, where he was an Assistant Editor of the St. John's Law Review. Prior to attending law school, he practiced as a Certified Public Accountant at one of the "Big Four" accounting firms. Cerbone represents creditors' committees, creditors, and trustees in all aspects of financial restructuring and insolvency, and has been involved in some of the nation's largest subprime mortgage bankruptcies including New Century and ResMAE. She is a member of the Board of Directors of the New York Chapter of the Turnaround Management Association and serves on the Unsecured Trade Creditors' Committee of the American Bankruptcy Institute. Prior to joining the firm in 2002, Janine graduated cum laude from Brooklyn Law School where she was the Business and Production Editor of the Brooklyn Journal of International Law and a member of the Executive Board of the Moot Court Honor Society. Founded in 1931, Hahn & Hessen LLP is among the nation's leading law firms focusing on representation of financial institutions and creditors in matters encompassing all phases of the commercial credit cycle, including documentation and workout, enforcement and litigation, bankruptcy and reorganization, with related corporate, real estate, securities and tax competencies. * Three Vacancies Filled on California Bankruptcy Bench ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that three bankruptcy lawyers were named to fill vacancies in the U.S. Bankruptcy Court for the Central District of California. The appointments were announced last week by the U.S. Court of Appeals in San Francisco. According to the report, Scott C. Clarkson and Mark S. Wallace were named to fill temporary judgeships. They will have chambers in Santa Ana. Wayne E. Johnson will sit in Riverside. Mr. Johnson was appointed to the seat left vacant by the retirement of Samuel Bufford in August. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Total Share- Total Working Holders' Assets Capital Equity Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ ------- -------- ABRAXAS PETRO AXAS US 178.1 (5.2) (1.7) ABSOLUTE SOFTWRE ABT CN 124.2 (6.0) (6.2) ACCO BRANDS CORP ABD US 1,097.3 261.9 (97.3) AEGERION PHARMAC AEGR US 2.9 (29.5) (27.3) ALASKA COMM SYS ALSK US 624.8 2.6 (15.3) AMER AXLE & MFG AXL US 2,071.4 61.9 (469.1) AMR CORP AMR US 25,357.0 (2,102.0) (3,643.0) ANACOR PHARMACEU ANAC US 20.4 (1.6) (8.2) ARQULE INC ARQL US 94.1 45.1 (9.7) ARVINMERITOR INC ARM US 2,879.0 331.0 (1,023.0) AUTOZONE INC AZO US 5,640.5 (584.3) (817.2) BLUEKNIGHT ENERG BKEP US 296.0 (427.8) (152.8) BOARDWALK REAL E BOWFF US 2,343.6 - (100.8) BOARDWALK REAL E BEI-U CN 2,343.6 - (100.8) BOSTON PIZZA R-U BPF-U CN 111.3 5.0 (116.3) BRAVO BRIO RESTA BBRG US 162.8 (28.9) (61.5) CABLEVISION SY-A CVC US 7,501.6 (157.7) (6,222.8) CAMPUS CREST COM CCG US 327.5 - (60.7) CC MEDIA-A CCMO US 17,393.5 1,410.4 (7,219.6) CENTENNIAL COMM CYCL US 1,480.9 (52.1) (925.9) CENVEO INC CVO US 1,393.6 220.0 (332.5) CHENIERE ENERGY CQP US 1,797.0 30.3 (521.9) CHENIERE ENERGY LNG US 2,616.5 (137.1) (431.0) CHOICE HOTELS CHH US 403.3 (11.5) (75.5) CLEVELAND BIOLAB CBLI US 11.9 (9.7) (10.0) COMMERCIAL VEHIC CVGI US 289.3 114.0 (5.7) CUMULUS MEDIA-A CMLS US 324.1 (2.5) (349.3) DENNY'S CORP DENN US 312.7 (10.7) (102.4) DISH NETWORK-A DISH US 9,292.9 733.1 (1,416.5) DISH NETWORK-A EOT GR 9,292.9 733.1 (1,416.5) DOMINO'S PIZZA DPZ US 425.7 104.1 (1,241.9) DUN & BRADSTREET DNB US 1,727.3 (612.4) (717.4) EASTMAN KODAK EK US 6,929.0 1,406.0 (213.0) ENERCARE INC ECI CN 869.7 9.9 (263.6) EPICEPT CORP EPCT SS 6.7 (1.1) (14.2) EXELIXIS INC EXEL US 372.9 (11.8) (217.6) FORD MOTOR CO F US 180,330.0 (18,558.0) (1,740.0) FORD MOTOR CO F BB 180,330.0 (18,558.0) (1,740.0) GENCORP INC GY US 981.8 150.8 (224.9) GLG PARTNERS INC GLG US 400.0 156.9 (285.6) GLG PARTNERS-UTS GLG/U US 400.0 156.9 (285.6) GRAHAM PACKAGING GRM US 2,840.3 259.1 (580.3) HEALTHSOUTH CORP HLS US 1,796.9 124.3 (394.9) HICKS ACQUISITIO HKACU US 0.8 (0.8) (0.1) HOVNANIAN ENT-A HOV US 1,817.6 1,101.9 (337.9) HOVNANIAN ENT-B HOVVB US 1,817.6 1,101.9 (337.9) HUGHES TELEMATIC HUTC US 111.4 1.9 (42.1) IBIO INC IBIO US 4.6 (4.7) (0.8) IDENIX PHARM IDIX US 63.1 24.0 (21.3) INCYTE CORP INCY US 464.6 305.0 (128.9) INTERMUNE INC ITMN US 143.9 10.2 (67.7) IPCS INC IPCS US 559.2 72.1 (33.0) ISTA PHARMACEUTI ISTA US 112.2 8.8 (71.8) JAZZ PHARMACEUTI JAZZ US 108.0 (13.3) (0.8) JUST ENERGY GROU JE CN 1,834.1 (578.0) (497.2) KNOLOGY INC KNOL US 658.7 53.5 (5.3) LIGAND PHARM-B LGND US 112.6 (1.4) (1.1) LIGHTING SCIENCE LSCG US 60.0 28.3 (122.4) LIN TV CORP-CL A TVL US 782.4 21.2 (146.9) LORILLARD INC LO US 3,504.0 1,665.0 (38.0) MAINSTREET EQUIT MEQ CN 399.4 - (8.5) MANNKIND CORP MNKD US 305.1 76.5 (181.4) MEAD JOHNSON MJN US 2,217.6 414.5 (415.7) MOODY'S CORP MCO US 2,348.2 508.8 (297.6) MORGANS HOTEL GR MHGC US 759.1 47.0 (42.1) MPG OFFICE TRUST MPG US 3,267.4 - (897.2) NATIONAL CINEMED NCMI US 836.1 40.5 (340.8) NAVISTAR INTL NAV US 9,730.0 2,246.0 (924.0) NEWCASTLE INVT C NCT US 3,760.1 - (591.2) NORTH AMERICAN G NMGL US 0.0 (0.1) (0.1) NPS PHARM INC NPSP US 228.8 147.8 (149.8) NYMOX PHARMACEUT NYMX US 0.9 (1.0) (1.8) OTELCO INC-IDS OTT US 331.6 27.5 (3.5) OTELCO INC-IDS OTT-U CN 331.6 27.5 (3.5) PALM INC PALM US 1,007.2 141.7 (6.2) PDL BIOPHARMA IN PDLI US 257.5 26.1 (304.5) PETROALGAE INC PALG US 5.9 (8.2) (51.6) PLAYBOY ENTERP-A PLA/A US 165.8 (16.9) (54.4) PLAYBOY ENTERP-B PLA US 165.8 (16.9) (54.4) POWERWAVE TECH PWAV US 408.5 185.7 (4.8) PRIMEDIA INC PRM US 215.5 (5.8) (97.8) PRIMO WATER CORP PRMW US 29.0 (29.4) (9.6) PROTECTION ONE PONE US 562.9 (7.6) (61.8) QUALITY DISTRIBU QLTY US 284.3 26.9 (132.9) QUANTUM CORP QTM US 459.6 127.8 (83.7) QUEPASA CORP QPSA US 3.4 2.0 (3.3) QWEST COMMUNICAT Q US 18,959.0 (1,163.0) (1,425.0) REGAL ENTERTAI-A RGC US 2,670.3 114.1 (267.3) REVLON INC-A REV US 794.8 86.9 (991.8) RIGNET INC RNET US 93.2 9.5 (11.6) RSC HOLDINGS INC RRR US 2,736.4 (175.7) (37.5) RURAL/METRO CORP RURL US 293.7 46.4 (95.1) SALLY BEAUTY HOL SBH US 1,589.4 387.1 (460.3) SINCLAIR BROAD-A SBGI US 1,536.2 37.8 (156.0) SINCLAIR BROAD-A SBTA GR 1,536.2 37.8 (156.0) SMART TECHNOL-A SMA CN 559.1 201.9 (63.2) SMART TECHNOL-A SMT US 559.1 201.9 (63.2) STEREOTAXIS INC STXS US 47.5 (6.2) (5.3) SUN COMMUNITIES SUI US 1,164.1 - (131.0) SWIFT TRANSPORTA SWFT US 2,666.1 101.3 (826.2) SYNERGY PHARMACE SGYP US 2.7 (2.3) (1.8) TAUBMAN CENTERS TCO US 2,529.7 - (541.1) TEAM HEALTH HOLD TMH US 886.9 4.7 (18.2) THERAVANCE THRX US 212.6 161.1 (141.1) UAN CULTURAL & C GHBAU US 1.0 (0.4) (0.2) UNISYS CORP UIS US 2,840.1 472.1 (1,034.2) UNITED CONTINENT UAL US - (1,186.0) (2,206.0) UNITED RENTALS URI US 3,744.0 188.0 (15.0) VECTOR GROUP LTD VGR US 859.0 245.3 (37.7) VENOCO INC VQ US 766.2 20.4 (94.8) VIRGIN MOBILE-A VM US 307.4 (138.3) (244.2) VONAGE HOLDINGS VG US 362.4 (0.1) (111.4) WARNER MUSIC GRO WMG US 3,779.0 (592.0) (211.0) WEIGHT WATCHERS WTW US 1,103.1 (377.9) (708.2) WORLD COLOR PRES WC CN 2,641.5 479.2 (1,735.9) 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) WR GRACE & CO GRA US 4,209.6 1,333.7 (175.1) YRC WORLDWIDE IN YRCW US 2,673.1 (288.2) (121.7) ZOGENIX INC ZGNX US 55.0 (0.9) (34.5) ********* 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 by e-mail. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases by individuals and business entities estimating assets and debts or disclosing assets and liabilities at less than $1,000,000. The list includes links to freely downloadable images of the small-dollar business-related 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. Jhonas Dampog, 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 2011. 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 ***