/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/110817.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, August 17, 2011, Vol. 15, No. 227 Headlines 3900 BISCAYNE: Creditor BB&T Wants Disclosure Statement Denied 3900 BISCAYNE: Court Approves Goldstein Schecter as Accountant ABCLD HOLDINGS: Hiring Franklin Skierski as Chapter 11 Lawyer AIRPARK VILLAGE: Obtains Dismissal of Chapter 11 Case ALTRA INDUSTRIAL: S&P Raises Corporate Credit Rating to 'BB-' AMBAC FINANCIAL: Committee Wins OK to Retain Whyte Hirschboeck AMBAC FINANCIAL: AAC Releases 1st Quarter 2011 Results ARCHBROOK LAGUNA: Judge OKs $25 Million Sale to Gordon Brothers ARCHBROOK LAGUNA: Files Schedules of Assets and Liabilities ASCENDIA BRANDS: Court Approves Avoidance Action Settlements BEAZER HOMES: BNP Paribas Discloses 6.4% Equity Stake BERNARD L MADOFF: 2nd Cir. Says Picard Can Disregard Fake Profits BILLMYPARENTS INC: Posts $4.3 Million Net Loss in June 30 Quarter BLUEGREEN CORP: Incurs $26.7 Million Net Loss in Second Quarter BORDERS GROUP: Wins Approval of IP & Lease Sale Bid Procedures BORDERS GROUP: U.S. Trustee Appoints Consumer Privacy Ombudsman BORDERS GROUP: Court OKs Withdrawal of Claims Transfer Rules BR SUMMERLIN: Sept. 12 Confirmation Hearing on Competing Plans Set BROADCAST INT'L: Reports $442,000 Net Profit in Second Quarter BROTHER SONNY: Files Schedules of Assets & Liabilities CAPITOL BANCORP: Files Form 10-Q, Incurs $17.5-Mil. Loss in Q2 CAPMARK FIN'L: Ends Talks to Sell Majority Stake in Bank CARGO TRANSPORTATION: Comerica Wants Add'l Adequate Protection CARGO TRANSPORTATION: GE Capital Wants to Take Over Collateral CAVIATA ATTACHED: Sec. 341 Creditors' Meeting on Aug. 29 CENGAGE LEARNING: S&P Gives 'Negative' Outlook on Weak Results CENTAUR LLC: Wins Permission for Litigation Trust and Adviser CENTRAL FALLS: Pays More Than $1.2 Million in Professional Fees CENTURION PROPERTIES: Elsaesser to Mediate GECC Dispute CHINA DU KANG: Delays Filing of Quarterly Report on Form 10-Q CIRCLE ENTERTAINMENT: Borrows $1 Million from Directors, et al. CLAUDIO OSORIO: InnoVida Trustee Not Consenting to Plan COMPOSITE TECHNOLOGY: Court Approves LKP Global as Special Counsel COMPOSITE TECHNOLOGY: Court Approves Knobbe as Litigation Counsel COMPOSITE TECHNOLOGY: Court Approves Mentor as Valuation Advisor COMPOSITE TECHNOLOGY: Can Tap Winthrop Couchot as General Counsel CONTESSA PREMIUM: Court OKs Ernst & Young as Advisors CORDIA IP: Cordia Comms. Unit Files Chapter 11 in New York CROWNROCK LP: S&P Assigns 'CCC+' on Weak Liquidity CRYSTAL CATHEDRAL: Creditors Committee Wants Plan Outline Denied CUI GLOBAL: Board Revises Code of Ethics of Audit Committee CUMULUS MEDIA: Form S-4 Registration Statement Declared Effective CUMULUS MEDIA: Reports $1.3 Million Net Income in Second Quarter CUMULUS MEDIA: To Issue Up to 28.8 Million of Securities DELTA AIR: S&P Assigns Preliminary 'BB' Rating to Class B Certs. DESTINATION MATERNITY: S&P Raises Corp. Credit Rating to 'B+' DRYSHIPS INC: General Meeting of Shareholders Set for Sept. 13 DUKE AND KING: Unsecureds to Get B/N 19% to 38% Under Amended Plan DUNE ENERGY: Incurs $13.9 Million Net Loss in Second Quarter DWELLING HOUSE SAVINGS: Harris Gets 9-Year Jail Sentence DYNAMIC BUILDERS: Stipulates with Lenders on Lugo Property Sale EAST COAST: Hires Saieed, Washburn & Morrison as Brokers EAST COAST: Hearing on Continued Cash Access Tomorrow EATON MOERY: Landlord Wants to Take Over Commercial Property EDGEN MURRAY: Incurs $3.8 Million Net Loss in Second Quarter EDIETS.COM INC: Incurs $851,000 Net Loss in Second Quarter ESTERLINE TECH: S&P Affirms 'BB' Rating on Unsecured Debt EVERGREEN SOLAR: Case Summary & 20 Largest Unsecured Creditors FALLS AT TOWNE: Court Approves Ravich Meyer as Attorney FIRST DATA: Files Form 10-Q, Incurs $128.2 Million Net Loss in Q2 FIRST MARINER: Files Form 10-Q, Incurs $11-Mil. Net Loss in Q2 GARY PHILLIPS: Can Use Creditors' Cash Collateral Until Sept. 23 GENTIVA HEALTH: S&P Lowers Corporate Credit Rating to 'B' GERALD CHAMPION: Files Petition Under Chapter 11 GIORDANO'S ENTERPRISES: Fifth Third Bank Seeks Sanctions GM PINE: Court Approves Crocker Law Group PLLC as Counsel GM PINE: Files Schedules of Assets & Liabilities GM PINE: Court Approves Robert S. Simon as Special Counsel GRAHAM PACKAGING: Incurs $26.6 Million Net Loss in Second Quarter GREAT ATLANTIC: Strikes Deal with OfficeMax Over Poaching Suit GRIFFON CORP: S&P Affirms 'BB-' Corporate Credit Rating HAMPTON ROADS: Incurs $18.6 Million Net Loss in Second Quarter HENNIGES AUTOMOTIVE: S&P Withdraws 'B' Corporate Credit Rating HOTEL AIRPORT: Creditors' Meeting on Sept. 12; Claims Due Dec. 12 HOTEL AIRPORT: Status Conference Set for Sept. 27 HUNTSMAN CORPORATION: Moody's Affirms 'B1' Corporate Rating INSIGHT COMMUNICATIONS: Moody's Reviews 'B1' Corporate for Upgrade JACKSON HEWITT: Completes Restructuring, Emerges from Chapter 11 JAMESTOWN MALL: Looking for New Owner of Shopping Center J.C. EVANS: Court Approves Cash Use & $2.5MM Safeco DIP Loan J.C. EVANS: Sec. 341 Creditors' Meeting Set for Aug. 30 J.C. EVANS: Schedules Filing Deadline Moved to Sept. 7 J.C. EVANS: Plans to Sell Cobra Stone to Pay Lender JEFFERSON, AL: Extends Creditor Talks After Rejecting Deal JIANGBO PHARMACEUTICALS: Cohen Milstein Investigates Firm KEVEN A MCKENNA: U.S. Trustee Seeks Dismissal Due to False Oath KOPPERS INC: S&P Affirms Corporate at 'BB-'; Outlook Positive KT SPEARS: First Savers Bank Seeks to Foreclose on SC Property K-V PHARMACEUTICAL: Incurs $174 Million Net Loss in Fiscal 2011 LAX ROYAL: Court Grants Stay Relief to West Century Limited LEHMAN BROTHERS: LBI Trustee Has Deals For Return of $263-Mil. LEHMAN BROTHERS: US Bank Wins OK to Foreclose on Hawaii Land LEHMAN BROTHERS: NY Court Trims Class Claims in Securities Suit LEHMAN BROTHERS: U.K. High Court OKs "Flip Clauses" in Dante Notes LEHMAN BROTHERS: Bundesbank Loses Bid for Control of $4.1BB Notes LIFE UNIVERSITY: Moody's Affirms Ba3 Rating on Series 2008 Bonds LOS ANGELES DODGERS: Can Make Payments to Players and Announcers LOUISIANA HOUSING: S&P Raises Rating on Revenue Bonds From 'B+' MAJESTIC CAPITAL: Committee Wins OK for Jager Smith as Counsel MAJESTIC CAPITAL: Committee Hires J.H. Cohn as Financial Advisor MANISTIQUE PAPERS: Wins Cash Collateral Lifeline MANISTIQUE PAPERS: Closed Paper Mill in Chapter 11 MARK PHILLIPS: Beaconlight Guesthouse Set for Oct. 20 Auction MARMC TRANSPORTATION: Court OKs Stipulation to Pay Sale Proceeds MERIT GROUP: Morgan Joseph Managed Sale to Centre Lane Partners MIDCONTINENT COMMUNICATIONS: Moody's Affirms B1 Corporate MOHAWK INDUSTRIES: S&P Affirms 'BB+' Ratings on Senior Notes MOMENTIVE PERFORMANCE: Incurs $10-Mil. Net Loss in 2nd Quarter MOMENTIVE SPECIALTY: Posts $63-Mil. Net Income in Second Quarter MOSS LUMBER: Files for Chapter 7 Bankruptcy MUNICIPAL MORTGAGE: Frederick Puddester Appointed Director NEBRASKA BOOK: S&P Retains 'D' Corporate Credit Rating NEWPAGE CORP: S&P Cuts Corp. Credit & Rating to 'CCC' NEW VISION: Receives Foreclosure Notice From Beach Business Bank NEWLEAD HOLDINGS: Seeks Waivers to Covenants From Lenders OLDE PRAIRIE: Landmark and Winner's to Take Control After Exit OMEGA NAVIATION: Taps Jefferies & Company as Investment Banker ORDWAY RESEARCH: Creditors to Sue Execs. for Mismanagement PACIFIC JET: Judge Throws Malpractice Suit Against Shearman PHILADELPHIA ORCHESTRA: Fight with Musicians on Gifts Ongoing PICHI'S INC: Status Conference Set for Oct. 6 PICHI'S INC: Creditors' Meeting on Sept. 12; Claims Due Dec. 12 PICHI'S INC: Hiring Charles Alfred Cuprill as Bankruptcy Counsel PICHI'S INC: Hiring Luis R. Carrasquillo as Financial Consultant PIEDMONT CENTER: Sent to Ch. 11 After Owner Charged for Fraud PLANT INSULATION: Judge to Hear Insurers' Contribution Claims PRM SMITH: Drops Plan to Avoid Protracted Fight with Lender PURSELL HOLDINGS: Court Approves Shaner as Appraiser QUALTEQ INC: Vmark Marketing Entities Seek Chapter 11 QUALTEQ INC: Case Summary & 30 Largest Unsecured Creditors RANCHO CUCAMONGA: Must Answer Involuntary Petition on Sept. 1 RANCHO HOUSING: U.S. Trustee OKs Snell & Wilmer Hiring RCC SOUTH: Fraud Allegations Brought at Exclusivity Hearing RCI REGIONAL: Asks Access to Westcore Collateral Until Dec. 31 RCI REGIONAL: Taps SCIA Inc. as Real Estate Adviser RCI REGIONAL: Has Until Nov. 8 to File Chapter 11 Plan RESERVOIR CORPORATE: Steinberg Pleas Guilty of Bankruptcy Fraud ROSSCO HOLDINGS: Wants Plan Hearing Aligned With Ross Case RQB RESORT: Partnerships to File Reorganization Plan SALPARE BAY: Court OKs $750,000 DIP Loan from Access SAVANNAH OUTLET: Files Full Payment Plan; DS Hearing Sept. 20 SBARRO INC: Hires PricewaterhouseCoopers as Consultants SBARRO INC: Hires Curtis Mallet-Prevost as Conflicts Counsel SBARRO INC: Wins Final Nod to Pay Critical Vendor Claims SBARRO INC: Employs Rothschild as Financial Advisor SEAHAWK DRILLING: Wants Plan Exclusivity Until Aug. 30 SECUREALERT INC: Acquires All Outstanding Capital Stock of ISS SHALAN ENTERPRISES: BoA and U.S. Trustee Object to Creditor Plan SHELBRAN INVESTMENTS: Management Plan Promises 100% for Unsecureds SHELBRAN INVESTMENTS: Independence Bank Gets Ch. 11 Trustee SHELBRAN INVESTMENTS: Hearing on Conversion/Dismissal Aug. 23 SHELBRAN INVESTMENTS: Has Nod for Marshall McIntyre as Appraiser SHENANDOAH APARTMENTS: 2 Firms Buy Upscale Community for $19-Mil. SHILO INN: Can Employ Levene Neale Bender as Counsel SONJA TREMONT-MORGAN: Ex-Hubby Holding Up $7M Deal, Creditor Says SOUNDVIEW CLINICS: Espada Defending Medicaid Funding for Clinics SOUTH EDGE: Wins Judge OK for $21.4 Million Loan VIVIAN ALEXANDER: Files for Chapter 7 Bankruptcy Protection WINDSOR PETROLEUM: S&P Cuts Rating on $239.1-Mil. Notes to 'BB-' WYNDHAM WORLDWIDE: Moody's Says 'Ba1' CFR Unchanged XTREME GREEN: Posts $370,300 Net Loss in Q2 2011 ZOOM TELEPHONICS: Incurs $326,100 Net Loss in Q2 2011 * Fitch: U.S. High Yield Default Rate Moves Up to 1.3% in July * Junk Bond Losses Mount in Worst Month Since 2008 * S&P: Global Corp Defaults Total 23 So Far in 2011 * S&P: Speculative-Grade Composite Spread Narrows to 707 Bps * S&P FAQ Addresses Impact of U.S. Downgrade on Corporate Funding * U.S. Commercial Bankruptcy Filings Fall 11.6% During July * Thorp Reed Adds Bankruptcy Muscle With New Del. Office * Upcoming Meetings, Conferences and Seminars ********* 3900 BISCAYNE: Creditor BB&T Wants Disclosure Statement Denied -------------------------------------------------------------- Creditor Branch Banking & Trust Company asks the U.S. Bankruptcy Court for the Southern District of Florida to deny approval of the disclosure statement explaining 3900 Biscayne, LLC's proposed plan of reorganization. According to BB&T, the Disclosure Statement: i) fails to reveal critical information regarding the treatment of BB&T's secured, and potentially unsecured claim and the valuation of the property (and the basis for treating unsecured claims of this creditor differently from unsecured claims of insiders and other creditors); ii) fails to provide adequate information as to the proposed plan (which is not equitable or feasible); iii) fails to provide adequate information as to the treatment of different classes of creditors and their status with respect to the Debtor; and iv) fails to provide sufficient information as to the value of the collateral, the Debtor's business operations, history and financial circumstances. As reported in the Troubled Company Reporter on June 29, 2011, under the Plan, BB&T's allowed secured claim arising out of a note in the principal amount of $10,800,000 will be paid in full, including note rate interest, with a 25-year amortization and a 4- year balloon. To the extent that the Debtor's rental income and the proceeds from the "third party litigation claims" are insufficient to pay BB&T's claim, the deficiency will be treated as an unsecured claim. Holders of allowed general unsecured claims will be paid in full within 4 years from the Effective Date. Holders of equity interests will retain their interests. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/3900biscayne.DS.pdf BB&T is represented by: Frank P. Cuneo, Esq. Juan A. Gonzalez, Esq. Dora F. Kaufman, Esq. LIEBLER, GONZALEZ &PORTUONDO, P.A. Courthouse Tower - 25th Floor 44 West Flagler Street Miami, FL 33130 Tel: (305) 379-0400 Fax: (305) 379-9626 E-mail: fpc@lgplaw.com jag@lgplaw.com dfk@lgplaw.com About 3900 Biscayne, LLC 3900 Biscayne, LLC, is a Florida limited liability company which owns real property located at 3900 Biscayne, in Miami, currently leased to Miami Arts, Inc., a tuition-free public charter school offering college-preparatory academic curriculum and conservatory- style training in the visual and performing arts. The Company filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 11-22948) on May 12, 2011, in Miami, Florida. Judge A. Jay Cristol presides over the case. James C. Moon, Esq., and Peter D. Russin, Esq., at Meland Russin & Budwick, P.A., in Miami, represent the Debtor in its Chapter 11 effort. The Debtor disclosed $14,857,484 in total assets and $13,691,533 in total liabilities as of the Chapter 11 filing. 3900 BISCAYNE: Court Approves Goldstein Schecter as Accountant -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida authorized 3900 Biscayne, LLC, to employ Sanford D. Horwitz and the firm of Goldstein Schecter Koch as its accountant. According to the Troubled Company Reporter on June 28, 2011, upon retention, the accountant will, among other things: a) review the Debtor's records for asset analysis and recovery; b) perform a preference and fraudulent avoidance analysis; and c) assist the Debtor in all tax matters. The accountant's rates are: Personnel Rate --------- ---- Stanford D. Horwitz, CPA $395 Jeff Weiss, Taxz Partner $375 Larry Elmer, Compliance Partner $360 Liani Lopez, Senir Accountant $125 About 3900 Biscayne, LLC 3900 Biscayne, LLC, filed a Chapter 11 petition (Bankr. S.D. Fla. Case No. 11-22948) on May 12, 2011, in Miami, Florida. Judge A. Jay Cristol presides over the case. Peter D. Russin, Esq., at Meland Russin & Budwick, P.A., in Miami, Florida, represents the Debtor in its Chapter 11 effort. The Debtor disclosed $14,857,484 in total assets and $13,691,533 in total liabilities as of the Chapter 11 filing. ABCLD HOLDINGS: Hiring Franklin Skierski as Chapter 11 Lawyer ------------------------------------------------------------- ABCLD Holdings LLC seeks permission from the Bankruptcy Court to employ the law firm of Franklin Skierski Lovall Hayward LLP as its Chapter 11 counsel. FSLH was retained by the Debtor on May 18, 2011, to assist the Debtor in preparing to file its voluntary bankruptcy petition. To cover the costs and expenses of preparing the documents related to these bankruptcy cases, the Debtor's ultimate parent, ABC Land & Development, Inc., paid $20,000 as a retainer to FSLH. FSLH received payment from the Debtor's parent in the amount of $23,150.35 on account of services provided through June 30, 2011, and also withdrew $5,063.50 from the retainer pre-petition to pay for its prepetition services rendered to the Debtor after June 30, 2011 and the chapter 11 filing fee. The remaining retainer amount will be held as security against post-petition fees and expenses, as approved by orders of the Court. The current hourly rates being charged for paralegals and attorneys of FSLH are: Professional Hourly Rate ------------ ----------- Melissa Hayward $315 Robert Johnson $200 Paralegal $150 Ms. Hayward discloses that FSLH currently represents other related chapter 11 debtors in their bankruptcy cases pending in the Northern District of Texas, each of which is wholly unrelated to this matter. These debtors are American Mart Hotel Corporation (Case No. 10-36776-SGJ-11), EQK Bridgeview Plaza, Inc. (Case No. 10-37054-SGJ-11), Continental Common, Inc. (Case No. 10-37542-HDH- 11), Parkway North, Inc. f/k/a Transcontinental Westgrove, Inc., (Case No. 11-32294-HDH-11), Denver Merchandise Mart, LLC, Denver Merchandise Mart Employers, Inc., and Valley Corporation (which are being jointly administered in Case No. 11-31615), all of which are owned by the common parent entity as ABCLD, ABC Land & Development, Inc. FSLH does not believe that its concurrent representation of these debtors and ABCLD creates any conflict of interest. The Parkway North case was recently dismissed pursuant to an agreement reached between the Debtor and its secured lender. FSLH also represents GC Merchandise Mart, Inc. and Hawthorn Lakes Associates Ltd. in their bankruptcy cases, which cases are also being jointly administered in the Denver Merchandise Mart et al. cases. GC Merchandise Mart and Hawthorn Lakes Associates are not owned by ABC Land & Development, but by other related parties. Ms. Hayward attests that FSLH is a disinterested person within the meaning of Sections 327 and 101(14) of the Bankruptcy Code and has no prior relationship or connection with the Debtor that would raise a possible disqualification or conflict of interest or that would otherwise render it ineligible to serve as counsel to the Debtor pursuant to the provisions of Section 328 of the Bankruptcy Code. About ABCLD Holdings Dallas, Texas-based ABCLD Holdings is a Nevada limited liability company created on March 18, 2011, to acquire properties owned by FRE Real Estate Inc. in Texas for $59,800,000. All of the capital stock of ABCLD Holdings is owned by ABC Land & Development, Inc., which is a corporation owned by Ronald Akin and DTS Holdings, LLC. FRE filed for bankruptcy Jan. 4, 2011. The case was dismissed March 1, 2011. ABCLD filed for bankruptcy to implement a prepetition settlement agreement with Armed Forces Bank, as successor by merger to Bank Midwest, N.A. is the secured creditor with respect to the acquired FRE Properties. AFB played an active role in obtaining dismissal of the FRE bankruptcy proceeding. The Agreement contemplates the foreclosure of certain of the properties, a prepackaged bankruptcy filing, and the restructuring of the AFB debt. ABCLD commenced the prepackaged Chapter 11 bankruptcy (Bankr. N.D. Tex. Case No. 11-34969) on Aug. 1, 2011. Judge Barbara J. Houser presides over the case. In its petition, the Debtor estimated assets of $50 million to $100 million and debts of $10 million to $50 million. The petition was signed by Craig Landess, vice president. Armed Forces Bank is represented by Keith Miles Aurzada, Esq., at Bryan Cave LLP. The Debtor's counsel may be reached at: Melissa S. Hayward, Esq. FRANKLIN SKIERSKI LOVALL HAYWARD LLP 10501 N. Central Expy., Suite 106 Dallas, Texas 75231 Tel: 972-755-7100 Fax: 972-755-7110 E-mail: MHayward@FSLHlaw.com The Bankruptcy Court will hold a combined hearing on Sept. 19, 2011, at 9:15 a.m. to consider approval of the disclosure statement and solicitation and voting procedures and to confirm the prepackaged Plan. AIRPARK VILLAGE: Obtains Dismissal of Chapter 11 Case ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado dismissed the Chapter 11 case of Airpark Village LLC due to its inability to effectuate its Chapter 11 plan of reorganization. According to the Debtor, dismissal of the case, rather than converting to a case under chapter 7 or seeking approval of the distribution of the Debtor's funds through the chapter 11 plan process, is the most economical means of continuing to ensure the greatest recovery to all creditors in this case. The vast majority of the Debtor's creditors are secured creditors and tax lien creditors. The Debtor said that the U.S. Trustee and Mile High Banks did not oppose dismissal. The Debtor notes that it obtained a loan from Mile High Banks in the principal amount of $5,450,000, which is priced at 8.5% per annum. Aurora, Colorado-based Airpark Village, LLC, filed for Chapter 11 bankruptcy protection (Bankr. D. Colo. Case No. 11-12790) on Feb. 16, 2011. Kenneth J. Buechler, Esq., at Buechler Law Office LLC, in Denver, Colo., serves as the Debtor's bankruptcy counsel. The Debtor disclosed $15,112,195 in assets and $8,564,158 in liabilities as of the Chapter 11 filing. ALTRA INDUSTRIAL: S&P Raises Corporate Credit Rating to 'BB-' ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating, on Braintree, Mass.-based Altra Industrial Motion Inc. to 'BB-' from 'B+'. "We have also raised our issue-level ratings on the senior secured notes issued by Altra Holdings Inc. to 'BB-' from 'B+'; the recovery rating on the notes remains '4', indicating our expectation that lenders would receive average (30%-50%) recovery in a payment default scenario. The outlook is stable," S&P related. "The ratings upgrade reflects Altra's continued good operating performance and credit measures, including total debt to EBITDA of 3.5x as of July 2, 2011," said Standard & Poor's credit analyst Sarah Wyeth. "We expect this metric to improve modestly through the rest of 2011 as the company benefits from recent acquisitions and good demand in some of its late-cycle end markets, such as energy and mining. While economic prospects are increasingly mixed, we believe Altra's excess cash balance and current credit measures provide it some cushion to absorb an economic downturn at the higher rating." The ratings reflect Altra's weak business risk profile, characterized by its presence in a cyclical, fragmented, and competitive industry. The company has limited product diversity and some geographic diversity. Altra manufactures mechanical power transmission products that it sells largely in the U.S. to more than 1,000 direct original equipment manufacturer (OEM) clients and through more than 3,000 distributor outlets. The company's engineered products are often part of such critical applications as failsafe brakes for elevators, electric wheelchairs, and forklifts. Its brand names include Boston Gear, Warner Electric, TB Wood's, Ameridrive, Kilian, Formsprag, Stieber, and Wichita Clutch. Altra's credit quality benefits from good customer and end-market diversity. Although the company competes in niche segments, its leading position and strong brand names -- as well as recent cost restructuring -- supported good operating margins (before depreciation and amortization) of about 16% in the 12 months ended July 2, 2011. "We believe that stabilizing conditions in Altra's end markets, partially offset by modest additional expenses required to support growth, will enable the company to sustain margins of approximately 15%," S&P said. The outlook is stable. "We could lower the ratings if an economic downturn results in deteriorating operating performance or Altra pursues a more-aggressive financial policy than we expect," Ms. Wyeth continued. "For instance, if a recession causes revenues to decline more than 20% and the company does not reduce debt, resulting in debt to EBITDA of more than 4x for an extended period, we could lower the ratings. Our assessment of the business risk profile as weak limits the possibility of an upgrade under our criteria." AMBAC FINANCIAL: Committee Wins OK to Retain Whyte Hirschboeck -------------------------------------------------------------- Judge Shelley Chapman authorized the Official Committee of Unsecured Creditors in Ambac Financial Inc.'s cases to retain Whyte Hirshcboeck Dudeck S.C. as its special counsel in the Circuit Court for Dane County, in Wisconsin. Before the entry of the Court's order, Thomas M. Pyper, Esq., of Whyte Hirschboeck, in Madison, Wisconsin, filed with the Court an amended declaration. He disclosed that certain "BofA Entities" or their affiliates are defendants in an action filed by Ambac Assurance Corporation before the Supreme Court of the State of New York, County of New York, in September 2010. Whyte Hirschboeck represented BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans Servicing LP; Countrywide Home Loans Inc. and Bank of America -- BofA Entities -- with respect to AAC's Wisconsin proceedings. Certain BofA Entities or their affiliates, he added, have filed unliquidated proofs of claim against the Debtor. Mr. Pyper clarified that Whyte Hirschboeck is not representing the BofA Entities in connection with the New York Action, the Proofs of Claim or any other matters pertaining to the Debtor's Chapter 11 case. In the event that the Debtor or the Creditors' Committee becomes directly adverse to the BofA Entities in connection with the Debtor's Chapter 11 case, the New York Action, or the Wisconsin Proceedings, Whyte Hirschboeck will not represent the Committee or BofA with respect to those matters, Mr. Pyper assures the Court. As the Creditor Committee's special counsel, Whyte Hirschboeck will: (i) appear on the Creditors Committee's behalf in Ambac Assurance Corporation's rehabilitation proceedings before the Wisconsin Court; (ii) draft and file legal documents; (iii) provide advice to the Creditors Committee; (iv) research and analyze issues involving Wisconsin law; and (v) perform other tasks as requested by the Creditors Committee. Whyte Hirschboeck's professionals will be paid according to the firm's current customary hourly rates: Title Rate per Hour ----- ------------- Shareholders and counsel $325 to $550 Associates $220 to $325 Paraprofessionals $130 to $195 Thomas M. Pyper, Esq., a shareholder at Whyte Hirschboeck Dudek S.C., in Madison, Wisconsin -- tpyper@whdlaw.com -- disclosed that his firm represented or represents certain parties in matters unrelated to the Debtor, a schedule of which parties is available for free at: http://bankrupt.com/misc/Ambac_WhyteClients.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 (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 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 US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$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 US$1.62 billion. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. 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. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: AAC Releases 1st Quarter 2011 Results ------------------------------------------------------ Ambac Assurance Corporation filed on May 16, 2011, statutory financial statements as of and for the quarter ended March 31, 2011, for AAC, its Segregated Account and Everspan Financial Guarantee Corporation. As of March 31, 2011, AAC reported 8,061,738,844 in total assets, $7,260,602,587 total liabilities, and $801,136,257 in equity. AAC posted a net loss of $183,305,912 for the quarter ended March 31, 2011. AAC estimated $512,619,523 in cash, cash equivalents and short term investments at the beginning of 2011, and $598,177,809 of cash and cash equivalents at the end of the same period. Full-text copies of the 1st Quarter Reports are available for free at: * AAC's Quarter Report http://bankrupt.com/misc/AAC20111stQReport.pdf * Segregated Account's Quarter Report http://bankrupt.com/misc/AACSegAcct20111stQRpt.pdf * Everspan's Quarter Report http://bankrupt.com/misc/Everspan20111stQtrRpt.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 (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 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 US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$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 US$1.62 billion. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. 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. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). ARCHBROOK LAGUNA: Judge OKs $25 Million Sale to Gordon Brothers --------------------------------------------------------------- Dow Jones' DBR Small Cap reports that ArchBrook Laguna LLC won approval to sell its consumer electronics and appliances distribution business to Gordon Brothers Group LLC for some $25 million, after fielding offers at an auction. As reported in the Aug. 12 edition of the Troubled Company Reporter, Gordon Brothers was declared the winning bidder at the Aug. 8 auction of substantially all of the assets of ArchBrook Laguna LLC and its affiliates. The auction occurred over two days. The basic terms of the successful bid are: (i) $25 million in cash subject to certain adjustments and holdbacks; (ii) The amount of collection on the accounts receivable greater than $21 million shall be allocated between the Debtors and Gordon Brothers on an 85% -- 15% basis, respectively; (iii) $12.50 per unit of the Ab Circle Pro inventory; (iv) Proceeds from the sale of the Ab Circle Inventory above $13.50 per unit shall be allocated 90% to the Debtors and 10% to Gordon Brothers; (v) A transition services agreement between the Debtors and Gordon Brothers; and (vi) All claims arising under 11 U.S.C. Sec. 547 and related state law causes of action will be deemed released on the Initial Closing Date by the Purchaser. On the 60th day post-closing, the Purchaser will release all other causes of action arising under Bankruptcy Code sections 544 through 553 (excluding section 547) and similar state law claims; provided however; the Agent, in consultation with the Committee, may request that the Purchaser or Third Party Purchaser, in its sole discretion, re-convey the avoidance actions to the Sellers. The Debtors deemed Almo Corporation as the back-up bidder for the Lehrhoff ABL LLC inventory and other assets. Almo offered $5 million for the Lehrhoff assets. About ArchBrook Laguna ArchBrook is a procurement and distribution intermediary between production companies and end retailers. It distributes consumer electronics, computers and appliances to principal customers that include Wal-Mart Stores Inc., Best Buy Co. and Costco Wholesale Corp. ArchBrook disclosed assets of $246.2 million against debt totaling $176.4 million as of March 31, 2011. ArchBrook Laguna Holdings LLC and certain of its affiliates filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 11-13292) on July 8, 2011. Akin Gump Straus Hauer & Feld LLP, in New York, serves as counsel to the Debtors. The Company is being advised by Macquarie Capital (USA) Inc. with respect to the sale process and by Hawkwood Consulting LLC, whose founder Stephen J. Gawrylewski is Chief Restructuring Officer of the Company. Macquarie Capital (USA) Inc. is the financial advisor. PricewaterhouseCoopers LLP is a consultant. Cooley LLP, in New York, is the counsel for the Official Committee of Unsecured Creditors. ARCHBROOK LAGUNA: Files Schedules of Assets and Liabilities ----------------------------------------------------------- ArchBrook Laguna, LLC, filed with the U.S. Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $91,529,811 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $37,330,086 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $56,583,079 ----------- ----------- TOTAL $91,529,811 $93,913,165 Debtor-affiliates also filed their respective schedules, disclosing: Affiliate Assets Liabilities --------- ------ ----------- ArchBrook Laguna New York, LLC $0 $36,907,752 ArchBrook Laguna West, LLC $0 $36,907,752 Expert Warehouse, LLC $10,948,170 $37,886,705 Lehrhoff ABL, LLC $43,927,034 $62,258,274 Chimerica Global Logistics, LLC $0 $36,907,752 Archbrook Laguna Holdings LLC $870 $37,291,085 About ArchBrook ArchBrook is a procurement and distribution intermediary between production companies and end retailers. It distributes consumer electronics, computers and appliances to principal customers that include Wal-Mart Stores Inc., Best Buy Co. and Costco Wholesale Corp. ArchBrook disclosed assets of $246.2 million against debt totaling $176.4 million as of March 31, 2011. ArchBrook Laguna Holdings LLC and certain of its affiliates filed voluntary petitions for reorganization under chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 11-13292) on July 8, 2011. Akin Gump Straus Hauer & Feld LLP, in New York, serves as counsel to the Debtors. The Company is being advised by Macquarie Capital (USA) Inc. with respect to the sale process and by Hawkwood Consulting LLC, whose founder Stephen J. Gawrylewski is chief restructuring officer of the Company. Macquarie Capital (USA) Inc. is the financial advisor. PricewaterhouseCoopers LLP is a consultant. Cooley LLP, in New York, is the counsel for the Official Committee of Unsecured Creditors. ASCENDIA BRANDS: Court Approves Avoidance Action Settlements ------------------------------------------------------------ The Honorable Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware has approved certain settlements entered into by Ascendia Brands, Inc., et al., with applicable parties with respect to the compromise of certain avoidance actions. The Debtors have filed adversary proceedings against certain defendants for the avoidance and turnover of certain transfers pursuant to Sections 547, 548, 549, and 502, and recovery of Property pursuant to Section 550 of the Bankruptcy Code. The Debtors have negotiated a settlement in certain adversary proceedings. They believe that the settlement in certain of the adversary proceeding is in the best interest of the creditors. Given the known cost of further pursuing these matters, the Debtors have determined that the net result to creditors would be greater through the Proposed Settlements. About Ascendia Brands Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- was, prior to the sale of substantially all of its assets during bankruptcy, a manufacturer and seller of branded and private labeled health and beauty care products in North America, including Baby Magic, Binaca, Mr. Bubble, Calgon, Ogilvie, the healing garden, Lander and Lander Essentials. Remaining assets consist almost entirely of accounts receivable. The Company and six of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-11787) on Aug. 5, 2008. Kenneth H. Eckstein, Esq., and Robert T. Schmidt, Esq., at Kramer Levin Naftalis & Frankel LLP, represent the Debtors in their restructuring efforts. M. Blake Cleary, Esq., Edward J. Kosmoswki, Esq., and Patrick A. Jackson, Esq., at Young, Conaway, Stargatt & Taylor, LLP, serve as the Debtors' Delaware counsel. Epiq Bankruptcy Solutions LLC is the notice, claims and balloting agent to the Debtors. At July 5, 2008, Ascendia Brands, Inc., had $194,800,000 in total assets and $279,000,000 in total debts. BEAZER HOMES: BNP Paribas Discloses 6.4% Equity Stake ----------------------------------------------------- In a Schedule 13G filing with the U.S. Securities and Exchange Commission, BNP Paribas, S.A., London Branch, disclosed that it beneficially owns 4,864,833 shares of common stock of Beazer Homes USA Inc. representing 6.4% of the shares outstanding. A full-text copy of the regulatory filing is available for free at: http://is.gd/kC1VBJ About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." The Company's balance sheet at June 30, 2011, showed $2 billion in total assets, $1.76 billion in total liabilities and $241 million in total stockholders' equity. * * * Beazer carries (i) a 'B-' issuer credit rating, with "stable" outlook, from Standard & Poor's, (ii) 'Caa1' probability of default and long term corporate family ratings from Moody's, and (iii) 'B-' issuer default rating, with stable outlook, from Fitch Ratings. Fitch said in November 2010 that the ratings and Outlook for Beazer reflect the company's healthy liquidity position, improved capital structure as well as the challenges still facing the housing market. Fitch expects existing home sales will decline 7.5% in 2010 and increase 6% in 2011. S&P said that although Beazer's business and liquidity profiles have improved, S&P doesn't anticipate raising its ratings on the company over the next 12 months because S&P expects costs associated with the company's heavy debt load will weigh on profitability. The 'Caa1' corporate family rating, Moody's said in November 2010, reflects its expectation that Beazer has reduced costs sufficiently that it will continue to reduce losses in fiscal 2011. The impairments and other charges are likely to be less material going forward, given the company's improving gross margin performance, stabilizing pricing environment, and increasing absorptions. However, Moody's expectation is that Beazer's cash flow performance will weaken in 2011, as the benefits of inventory liquidation have largely played out. The ratings also reflect the company's extended debt maturity profile, improved Moody's- adjusted debt leverage, and increased net worth position. BERNARD L MADOFF: 2nd Cir. Says Picard Can Disregard Fake Profits ----------------------------------------------------------------- Michael Rothfeld, writing for The Wall Street Journal, reports that the U.S. Second Circuit Court of Appeals in Manhattan on Tuesday upheld a decision by Irving Picard, the trustee overseeing the liquidation of Bernard L. Madoff's investment firm, to approve claims from victims based on how much of an investor's principal deposits with Mr. Madoff were lost after the fraud was exposed in December 2008. Those losses total about $17.3 billion, according to Mr. Picard, or less than one-third of the $64.8 billion shown on investors' final account balances. The Journal says the Second Circuit ruling is a defeat for roughly 2,000 former Madoff investors known as "net winners" because they withdrew more money than they invested with Mr. Madoff. Mr. Picard has filed more than 1,000 lawsuits against those investors to recover what he claims are phantom profits, and the appeals- court ruling is a major victory in that push. According to the Journal, a spokeswoman for Mr. Picard said his approach "is the fairest approach to the determination of claims, and we hope that the court's decision can be the final word on this issue." The Journal also reports that Tuesday's ruling also quashed at least for now efforts by "net winners" to use their final statement balances to collect as much as $500,000 apiece from the Securities Investor Protection Corp., or SIPC, which returns money to the customers of failed brokerage firms. According to the Journal, Helen Davis Chaitman, a lawyer who says she represents hundreds of Madoff customers, said the ruling "will destroy investor confidence in the capital markets because the promise of SIPC insurance is illusory." She said she will appeal the ruling to the U.S. Supreme Court. Many legal observers, however, think it isn't likely that the high court would intervene in the case. So far, Mr. Picard has far recovered $11 billion, some of it with federal prosecutors, or about 60% of the estimated losses in the Ponzi scheme. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) As of July 15, 2011, a total of US$6.88 billion in claims by investors has been allowed, with US$794.9 million to be paid by the Securities Investor Protection Corp. Investors are expected to receive additional distributions from money recovered by Mr. Picard from lawsuits or settlements. BILLMYPARENTS INC: Posts $4.3 Million Net Loss in June 30 Quarter ----------------------------------------------------------------- BillMyParents, Inc., formerly known as Socialwise, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $4.3 million on $16,046 of revenues for the three months ended June 30, 2011, compared with a net loss of $1.7 million on $2,119 of revenues for the three months ended June 30, 2010. The Company reported a net loss of $8.1 million on $22,800 of revenues for the nine months ended June 30, 2011, compared with a net loss of $5.0 million on $4,083 of revenues for the nine months ended June 30, 2010. The Company's balance sheet at June 30, 2011, showed $4.7 million in total assets, $2.3 million in total liabilities, all current, and stockholders' equity of $2.4 million. As reported in the TCR on Feb 7, 2011, BDO USA, LLP, in La Jolla, California, expressed substantial doubt about Socialwise, Inc.'s ability to continue as a going concern, following the Company's results for the fiscal year ended Sept. 30, 2010. The independent auditors noted that the Company has incurred net losses since inception and has an accumulated deficit and stockholders' deficiency at Sept. 30, 2010. A copy of the Form 10-Q is available at http://is.gd/OmT7K0 About BillMyParents, Inc. San Diego, Calif.-based BillMyParents, Inc. (OTC QB: BMPI.OB) through its subsidiary incorporated in the state of California, seeks to facilitate online and traditional retail commerce through payment systems linking parents to young people. BLUEGREEN CORP: Incurs $26.7 Million Net Loss in Second Quarter --------------------------------------------------------------- Bluegreen Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss attributable to Bluegreen of $26.70 million $104.27 million of revenue for the three months ended June 30, 2011, compared with net income attributable to Bluegreen Corporation of $4.31 million on $103.46 million of revenue for the same period a year ago. The Company also reported a net loss attributable to Bluegreen of $24.16 million on $193.72 million of revenue for the six months ended June 30, 2011, compared with a net loss attributable to Bluegreen Corporation of $3.54 million on $179.11 million of revenue for the same period during the previous year. The Company's balance sheet at June 30, 2011, showed $1.14 billion in total assets, $848.80 million in total liabilities, and $295.91 million total shareholders' equity. A full-text copy of the Form 10-Q is available for free at: http://is.gd/n0TBjq About Bluegreen Corp. Bluegreen Corporation -- http://www.bluegreencorp.com/-- provides places to live and play through its resorts and residential community businesses. In December 2010, Standard & Poor's Rating Services raised its corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'. S&P's rating outlook on the Company is stable. S&P believes that Bluegreen will grow its fee-based sales commission revenue from $20 million in 2009 to an estimated $50 million in 2010. At this time, S&P expects that Bluegreen may be able to generate at least the same amount of commission based revenue in 2011. While the increase in fee- based revenue allowed Bluegreen to expand the level of sales that do not require financing, S&P believes that the company will likely remain heavily reliant on its lines of credit, receivable- backed warehousing facilities, and access to the timeshare securitization markets to fund timeshare sales. In S&P's view, Bluegreen currently has adequate sources of liquidity to cover its needs over the next 12-18 months mainly due to the successful closing of a timeshare securitization transaction. The Company reported a net loss of $35.87 million on $365.67 million of revenue for the year ended Dec. 31, 2010, compared with net income of $3.90 million on $367.36 million of revenue during the prior year. * * * In December 2010, Standard & Poor's Rating Services raised its corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'. S&P's rating outlook on the Company is stable. S&P believes that Bluegreen will grow its fee-based sales commission revenue from $20 million in 2009 to an estimated $50 million in 2010. At this time, S&P expects that Bluegreen may be able to generate at least the same amount of commission based revenue in 2011. While the increase in fee- based revenue allowed Bluegreen to expand the level of sales that do not require financing, S&P believes that the company will likely remain heavily reliant on its lines of credit, receivable- backed warehousing facilities, and access to the timeshare securitization markets to fund timeshare sales. In S&P's view, Bluegreen currently has adequate sources of liquidity to cover its needs over the next 12-18 months mainly due to the successful closing of a timeshare securitization transaction. BORDERS GROUP: Wins Approval of IP & Lease Sale Bid Procedures -------------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved proposed procedures, as modified, to govern the auction and sale of Borders Group, Inc. and its debtor affiliates' intellectual property assets, free and clear of all liens, to the highest and best bidder. The Debtors will pursue this timeline for the sale of the IP assets: * Sept. 8, 2011 -- Deadline to submit bids for IP Assets. * Sept. 14, 2011 -- Auction of IP Assets. * Sept. 16, 2011 -- Deadline to object to IP Assets Sale. * Sept. 20, 2011 -- Sale Hearing on IP Assets. The Debtors are authorized to select one or more stalking horse bidders in accordance with the Bidding Procedures. With the consent of the Official Committee of Unsecured Creditors and the Debtors, the Stalking Horse Bidder is entitled to reimbursement of reasonable, documented out-of-pocket expenses incurred in connection with the formulation of its qualified bid of no more than $250,000. The Court directs the U.S. Trustee for Region 2 to appoint one disinterested person to serve as the consumer privacy ombudsman in connection with the IP Assets no later than September 13, 2011. Counterparties to contracts that may be assumed and assigned or rejected in connection with the IP Assets Sale have until September 6, 2011, to object to cure amounts or proposed assurance of future performance. Parties also have until September 16, 2011, to file objections to the assumption and assignment of the IP Agreements. All objections to the IP Bidding Procedures Motion, to the extent not resolved, are overruled, Judge Glenn said. Before the entry of Judge Glenn's ruling, the Debtors filed with the Court modified bidding procedures to clarify that they will consult with the Creditors' Committee with respect to the evaluation of bids. A full-text copy of the Modified IP Bidding Procedures is available for free at: http://bankrupt.com/misc/Borders_AmIPBiddingProcs.pdf A blacklined version of the Modified IP Bidding Procedures is available for free at: http://bankrupt.com/misc/Borders_AmIPBiddingProcs_blacklined.pdf Court Okays Lease Bidding Procedures Judge Glenn also approved the proposed bidding procedures, as modified, to govern the auction and sale of the unexpired non- residential real property leases. The Court approved these deadlines for the Lease auctions and sales: A. First Round Lease Sales: * Bid Deadline: Aug. 26, 2011 * Auction: Aug. 31, 2011 * Objection Deadline: Sept. 6, 2011 * Lease Sale Hearing: Sept. 8, 2011 B. Second Round Lease Sales: * Bid Deadline: Sept. 7, 2011 * Auction: Sept. 13, 2011 * Objection Deadline: Sept. 16, 2011 * Lease Sale Hearing: Sept. 20, 2011 Objections to proposed cure amounts for any First Round or Second Round Lease are due no later than August 24, 2011. The Debtors filed with the Court a revised proposed Lease Bidding Procedures and revised proposed order, which reflect modifications sought by various parties and modifications made by the Debtors in response to the certain objections they received. Pursuant to the revised Lease Bidding Procedures, the Debtors will sell their unexpired non-residential real property leases: (i) subject to an assumption or rejection deadline under Section 365(d)(4) of the Bankruptcy Code that is on or before September 30, 2011; (ii) subject to "holiday protections" triggered on or before September 30, 2011; or (iii) among the Debtors' airport or small format stores. The Debtors reserve the right, in consultation with the Creditors' Committee, to elect to auction and to sell Leases that are listed as second round leases in the first auction to permit the sales of more than one lease to a single bidder. The Debtors will notify any affected lessors of any election, but in no event later than August 29, 2011, and that the affected lessor's First Round Bid Deadline for any leases will be extended from August 26, 2011 to August 31, 2011, which is the First Auction. A full-text copy of the Modified Lease Bidding Procedures is available for free at: http://bankrupt.com/misc/Borders_LeaseAmBidProcs.pdf A blacklined version of the Modified Lease Bidding Procedures is available for free at: http://bankrupt.com/misc/Borders_LeaseAmBidProcs_blacklined.pdf Through August 8, 2011, about 20 objections and joinders to objections to the Lease Sales Motion were filed. Because nearly all the Objections were filed by landlords, the Objections raise largely overlapping and duplicative objections. The Debtors thus prepared a chart summarizing the Objections and their corresponding response, a copy of which available for free at http://bankrupt.com/misc/Borders_LeaseSalesObjsChart.pdf Accordingly, all objections filed in response to the Lease Sales Motion, to the extent not resolved, are overruled, Judge Glenn ruled. More Lease Sale-related Objections Developers Diversified Realty Corp., Regency Centers LP; National Retail Properties, Inc.; Jones Lang LaSalle Americas Inc.; Gregory Greenfield & Associates, Ltd.; Equity One; Garden Homes Development; Donahue Schriber Realty Group, Inc. and KLA SLO, LLC assert that their credit bidding on their leases should not be required to submit a deposit or any documentation related to adequate assurance of future performance. More importantly, the landlords insist that they should be allowed to credit bid only a portion of their claims and should not be required to waive all claims against the Debtors. A list of the landlords' leases is available for free at: http://bankrupt.com/misc/Borders_DevelopersLeases.pdf Contract counterparties filed responses, asking the Court to fix the cure amounts and to direct the Debtors to cure all defaults under their leases and contracts. The contract counterparties include: Proposed Asserted Counterparty Cure Amt. Cure Amt. ------------ --------- ---------- QKC Maui Owners LLC $13,404 $20,193 Folsom Broadstone, Inc. 20,554 29,492 The Taubman Landlords prepared a list of the correct cure amounts for their leases, available for free at: http://bankrupt.com/misc/Borders_TaubmanCureAmtRpt.pdf About Borders Group Borders Group operates book, music and movie superstores and mall- based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders-branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. Lowenstein Sandler represents the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group is closing 399 stores. Borders selected proposals by Hilco and Gordon Brothers to conduct going out of business sales for all stores after no going concern offers of higher value were submitted by the deadline. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000 BORDERS GROUP: U.S. Trustee Appoints Consumer Privacy Ombudsman --------------------------------------------------------------- Tracy Hope Davis, the U.S. Trustee for Region 2, appointed Michael St. Patrick Baxter, as consumer privacy ombudsman in the Chapter 11 cases of Borders Group, Inc., and its debtor affiliates with respect to the proposed sale of the Debtors' intellectual property assets. The appointment is made pursuant to the IP Bidding Procedures Order, which directs the U.S. Trustee to appoint a Consumer Privacy Ombudsman pursuant to Section 332 of the Bankruptcy Code. In an accompanying declaration, Mr. Baxter, a partner at Covington & Burling LLP, in New York -- mbaxter@cov.com -- disclosed that his firm represents parties in matters unrelated to the Debtors' Chapter 11 cases, a schedule of which is available for free at: http://bankrupt.com/misc/Borders_CovingtonClients.pdf Mr. Baxter maintains that he is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. About Borders Group Borders Group operates book, music and movie superstores and mall- based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders-branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. Lowenstein Sandler represents the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group is closing 399 stores. Borders selected proposals by Hilco and Gordon Brothers to conduct going out of business sales for all stores after no going concern offers of higher value were submitted by the deadline. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000 BORDERS GROUP: Court OKs Withdrawal of Claims Transfer Rules ------------------------------------------------------------ Borders Group Inc., which is being liquidated and will no longer be an ongoing company that could take advantage of tax loss carryforwards, sought and obtained approval to rescind restrictions on the sale of claims. Judge Martin Glenn only vacated the claims and interests trading order solely with respect to notification procedures regarding, and restrictions on, transfers of claims. Borders proposing that restrictions on sales or purchases of large blocks of stock remain in place. Earlier in the case, the bankruptcy judge in New York prohibited sales of large blocks of claims or shares. The transfers could be carried out only if Borders didn't object. The restrictions were intended to prevent the loss of Borders' ability to utilize tax loss carryforwards. About Borders Group Borders Group operates book, music and movie superstores and mall- based bookstores. At Jan. 29, 2011, the Debtors operated 642 stores, under the Borders, Waldenbooks, Borders Express and Borders Outlet names, as well as Borders-branded airport stores in the United States, of which 639 stores are located in the United States and 3 in Puerto Rico. In addition, the Debtors operate a proprietary e-commerce Web site, http://www.Borders.com/, launched in May 2008, which includes both in-store and online e-commerce components. As of Feb. 11, 2011, Borders employed a total of 6,100 full-time employees, 11,400 part-time employees, and approximately 600 contingent employees. Borders Group Inc. and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. Lead Case No. 11-10614) in Manhattan on Feb. 16, 2011. David M. Friedman, Esq., David S. Rosner, Esq., Andrew K. Glenn, Esq., and Jeffrey R. Gleit, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, serve as counsel to the Debtors. Jefferies & Company's Inc. is the financial advisor. DJM Property Management is the lease and real estate services provider. AP Services LLC is the interim management and restructuring services provider. The Garden City Group, Inc., is the claims and notice agent. Attorneys at Morgan, Lewis & Bockius LLP, and Riemer & Braunstein LLP, serve as counsel to the DIP Agents. Lowenstein Sandler represents the official unsecured creditors committee for Borders Group. Bruce S. Nathan and Bruce Buechler, members of Lowenstein Sandlers' Bankruptcy, Financial Reorganization & Creditors' Rights Group, are leading the team. The Debtor disclosed $1.28 billion in assets and $1.29 billion in liabilities as of Dec. 25, 2010 Borders Group is closing 399 stores. Borders selected proposals by Hilco and Gordon Brothers to conduct going out of business sales for all stores after no going concern offers of higher value were submitted by the deadline. Bankruptcy Creditors' Service, Inc., publishes BORDERS GROUP BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Borders Group Inc., the United States' second largest bookstore chain. (http://bankrupt.com/newsstand/or 215/945-7000 BR SUMMERLIN: Sept. 12 Confirmation Hearing on Competing Plans Set ------------------------------------------------------------------ The Hon. Mike K. Nakagawa of the U.S. Bankruptcy Court for the District of Nevada will convene a hearing on Sept. 12, 2011, at 9:30 a.m., to consider confirmation of two competing plans for B.R. Summerlin Property, L.L.C. Objections, if any, to the Plan proposed by Greystone Bank are due Aug. 31, and to the Debtor's Plan are due Aug. 29. All replies to any objections to confirmation and briefs in support of confirmation of the Debtor's Plan must be filed by Sept. 6. The ballot summary must be filed by Sept. 9. At the hearing, the Court will also consider approval of the Greystone's Disclosure Statement. Ballots accepting or rejecting Greystone's Plan dated July 19, 2011, and the Debtor's proposed Plan of Reorganization dated June 13, 2011, are due Sept. 6, 2011, at 5:00 p.m. (PDT) Greystone's Plan The Plan proposed by Greystone Bank, the single largest creditor in the Debtor's case, seeks to maximize the recovery for all parties-in-interest. The Greystone Plan differs in several respects from the plan proposed by the Debtor. Under Greystone's Plan, substantially all of the Debtor's assets will be liquidated to maximize return to creditors and equity interests. The lease will be assumed and assigned to the purchaser of the facility. All payments under the Greystone's Plan will be funded from these sources: cash on hand, rents collected from the lease, funds in replacement reserve and suspense account and proceeds from the sale of the facility. Treatment of Claims Class 1 -- Priority Unsecured Claims ($0) -- All allowed Class 1 claims will receive cash equal to the allowed amount of the claim. Class 2 -- Greystone Bank Claims ($16,075,440) -- All allowed Greystone Bank Claim will receive cash equal to the allowed amount of the claim pursuant to distributions of funds from the replacement reserves and suspense account. Class 3 -- General Unsecured Claims ($54,546) -- Holders of allowed Class 3 Claims will receive cash equal to the allowed amount of the claim, plus interest at the contract rate or statutory rate if there is no applicable contract rate of interest. Class 4 -- Equity Interests (Unknown) -- Holders of Class 4 interests will retain their interests in the Debtor pursuant to the organizational documents of the Debtor that were in existence immediately prior to the Petition Date. The Debtor's Plan As reported in the Troubled Company Reporter on July 8, the Court approved the disclosure statement explaining the Debtor's second amended plan of reorganization. The proposed Plan divides the creditors and interest holders into six classes. Class 1 consists of the secured claim of Greystone Bank, its primary creditor, that the Debtor proposes to pay in full within seven years. Class 2 consists of other secured claims and Class 3 consists of priority unsecured claims. The Debtor does not believe, however, that any claims actually exist in Class 2 or Class 3. Class 4 encompasses general unsecured claims against the Debtor which the Debtor estimates at approximately $7,205. Class 5 consists of the unsecured claim of Gibbs, Giden, Locher, Turner & Sente in the approximate amount of $47,340. Class 6 consists of the equity interest holders of the Debtor. Class 6 Equity Interests are impaired under the Second Amended Plan. Class 6 was unimpaired under the First Amended Plan. Leasehold Resource Group, LLC, has up to 23 years remaining on the term of the lease to the Debtor's property, a skilled nursing facility known as The Heights of Summerlin, located at 10550 Park Run Drive, in Las Vegas, Nevada. The Debtor said it intends to assume the Lease pursuant to the Plan. As a result, upon expiration or termination of the Lease, the Debtor will continue to be obligated to return the portion of LRG's $420,000 security deposit not used or applied in accordance with the Lease. Based on the Debtor's projections, the Debtor will have sufficient cash on hand to satisfy this obligation. To the extent LRG does not exercise its option, the Lease will terminate in approximately three years. In that event, the Debtor will either (i) lease the Facility to another tenant, or (2) operate the Facility. A full-text copy of the Second Amended Plan is available for free at http://ResearchArchives.com/t/s?7668 Greystone Bank is represented by: Richard F. Holley, Esq. SANTORO, DRIGGS, WALCH, KEARNEY, HOLLEY & THOMPSON 400 Las Negas, NV 89101 Tel: (702) 791-0308 Fax: (702) 791-1912 E-mail: rholley@nevadafirm.com About B.R. Summerlin Property Woodland Hills, California-based B.R. Summerlin Property, LLC, filed for Chapter 11 bankruptcy protection (Bankr. D. Nev. Case No. 11-10148) on Jan. 5, 2011. The Company disclosed $23,066,151 in assets and $15,414,103 in liabilities. Affiliates B.R. Brookfield Commons No. 1, LLC (Bankr. D. Nev. Case No. 10-38835) and B.R. Brookfield Commons No. 2, LLC (Bankr. D. Nev. Case No. 10-38838) filed separate Chapter 11 petitions on Nov. 29, 2010. The Debtor disclosed $23,066,151 in assets, and $15,414,103 in debts. B.R. Summerlin Property is represented by Gregory E. Garman, Esq., -- ggarman@gordonsilver --, Gabrielle A. Hamm, Esq., -- ghamm@gordonsilver.com --, at Gordon Silver, in Los Angeles, Nevada. BROADCAST INT'L: Reports $442,000 Net Profit in Second Quarter -------------------------------------------------------------- Broadcast International, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting net profit of $442,324 on $2.35 million net sales for the three months ended June 30, 2011, compared with a net loss of $3.22 million on $1.68 million of net sales for the same period during the prior year. The Company also reported a net loss of $304,641 on $4.04 million of net sales for the six months ended June 30, 2011, compared with a net loss of $6.12 million on $3.47 million of net sales for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $6.16 million in total assets, $19 million in total liabilities and a $12.83 million total stockholders' deficit. A full-text copy of the Form 10-Q is available for free at: http://is.gd/YPEllp About Broadcast International Based in Salt Lake City, Broadcast International, Inc. installs, manages and supports private communication networks for large organizations that have widely-dispersed locations or operations. The Company owns CodecSys, a video compression technology to convert video content into a digital data stream for transmission over satellite, cable, Internet, or wireless networks, as well as offers audio and video production services. The Company's enterprise clients use its networks to deliver training programs, product announcements, entertainment, and other communications to their employees and customers. The Company reported a net loss of $18.66 million on $7.31 million of net sales for the year ended Dec. 31, 2010, compared with a net loss of $13.38 million on $3.62 million of net sales during the prior year. HJ & Associates LLC, in Salt Lake City, expressed substantial doubt about the Company's ability to continue as a going concern, after auditing the Company's financial statements for the year 2009. The independent auditors noted that the Company has incurred recurring losses from operations and has a deficit in stockholders' equity and working capital. The audit report for the Company's financial statements for the end of 2010 did not contain a going concern qualification from the auditor. The Company's 2010 Annual Report did not contain a negative going concern statement. BROTHER SONNY: Files Schedules of Assets & Liabilities ------------------------------------------------------ Brother Sonny, LLC, filed with the U.S. Bankruptcy Court for the District of Nevada, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------- ----------- A. Real Property $6,332,358 B. Personal Property $50,129 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $8,349,222 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $305,997 ----------- ----------- TOTAL $6,382,515 $8,655,220 Brother Sonny, LLC, in Boulder City, Nevada, is a land developer and constructor of residential homes. It filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case No. 11-21798) on July 27, 2011. Judge Bruce A. Markell presides over the case. Lenard E. Schwartzer, Esq., at Schwartzer & McPherson Law Firm, serves as bankruptcy counsel. In its petition, the Debtor estimated assets and debts of $10 million to $50 million. The petition was signed by Randolph Schams, director of Rancris, Inc., its manager. CAPITOL BANCORP: Files Form 10-Q, Incurs $17.5-Mil. Loss in Q2 -------------------------------------------------------------- Capitol Bancorp Limited filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $17.50 million on $28.91 million of total interest income for the three months ended June 30, 2011, compared with a net loss of $43.92 million on $35.26 million of total interest income for the same period a year ago. The Company also reported a net loss of $20.28 million on $59.67 million of total interest income for the six months ended June 30, 2011, compared with a net loss of $105.86 million on $72.44 million of total interest income for the same period during the prior year. The Company's balance sheet at June 30, 2011, showed $2.94 billion in total assets, $3 billion in total liabilities, and a $58.95 million total deficit. A full-text copy of the Form 10-Q is available for free at: http://is.gd/L8brli About Capitol Bancorp Limited Capitol Bancorp Limited (NYSE: CBC) -- http://www.capitolbancorp.com/-- is a $5.1 billion national community banking company, with a network of bank operations in 16 states. Founded in 1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan and Phoenix, Arizona. The Company reported a net loss of $254.36 million on $163.69 million of total interest income for the year ended Dec. 31, 2010, compared with a net loss of $264.54 million on $197.78 million of total interest income during the prior year. In September 2009, Capitol and its second-tier bank holding companies entered into a written agreement with the Federal Reserve Bank of Chicago under which Capitol has agreed, among other things, to submit to the Reserve Bank a written plan to maintain sufficient capital at Capitol on a consolidated basis and at Michigan Commerce Bank (as a separate legal entity on a stand- alone basis); and a written plan to enhance the consolidated organization's risk management practices, a strategic plan to improve the consolidated organization's operating results and overall condition and a cash flow projection. Certain of Capitol's bank subsidiaries have entered into formal agreements with their applicable regulatory agencies. Those agreements provide for certain restrictions and other guidelines and/or limitations to be followed by the banks. In 2009, Capitol commenced the deferral of interest payments on its various trust-preferred securities, as is permitted under the terms of the securities, to conserve cash and capital resources. The payment of interest may be deferred for periods up to five years. During such deferral periods, Capitol is prohibited from paying dividends on its common stock (subject to certain exceptions) and is further restricted by Capitol's written agreement with the Federal Reserve Bank of Chicago. Accrued interest payable on such securities approximated $18.1 million at June 30, 2010. CAPMARK FIN'L: Ends Talks to Sell Majority Stake in Bank -------------------------------------------------------- Carla Main at Bloomberg News reports Capmark Financial Group Inc., the bankrupt commercial lender, said it ended "extensive negotiations" to sell a controlling stake in its bank subsidiary to an unidentified third party. Discussions over the Capmark Bank unit ended because of "general market conditions," the Horsham, Pennsylvania-based company said in a statement Aug. 12 on its Web site. A confirmation hearing for Capmark's reorganization plan is scheduled for Aug. 19, according to the statement. About Capmark Financial Based in Horsham, Pennsylvania, Capmark Financial Group Inc. -- http://www.capmark.com/-- provides financial services to investors in commercial real estate-related assets. Capmark has three core businesses: lending and mortgage banking, investments and funds management, and servicing. Capmark operates in North America, Europe and Asia. Capmark has 1,000 employees located in 37 offices worldwide. On Oct. 25, 2009, Capmark Financial and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 (Bankr. D. Del. Lead Case No. 09-13684). Capmark disclosed assets of US$20 billion against total debts of US$21 billion as of June 30, 2009. Capmark's financial advisors are Lazard Freres & Co. LLC and Loughlin Meghji + Company. Capmark's bankruptcy counsel is Dewey & LeBoeuf LLP. Richards, Layton & Finger, P.A., serves as local counsel. Beekman Advisors, Inc., is serving as strategic advisor. KPMG LLP is tax and accounting advisor. Epiq Bankruptcy Solutions, LLC, is the claims and notice agent. The Official Committee of Unsecured Creditors in Capmark Financial Group Inc.'s cases tapped Kramer Levin Naftalis & Frankel LLP as its counsel and JR Myriad LLC as its commercial real estate business advisors. The Committee also retained Cutler Pickering Hale and Dorr LLP as its attorneys for the special purpose of providing legal services in connection with Federal Deposit Insurance Corporation matters. Protech Holdings C LLC, an affiliate of Capmark, filed for Chapter 11 protection on July 29, 2010 (Bankr. D. Del. Case No. 10-12387). The Debtor estimated assets and debts in excess of $1 billion as of the filing date. Since filing for Chapter 11, Capmark completed three sales to generate more than $1 billion in cash. Berkshire Hathaway Inc. and Leucadia National Corp. bought most of the business for $468 million. In April 2011, Greenline Ventures LLC completed the acquisition of the New Markets Tax Credit division of Capmark Financial Group Inc. Since inception of the NMTC program, Capmark's NMTC division has closed over $1.1 billion of NMTC investment funds and financed over $2.5 billion of projects and businesses in low income communities nationwide. CARGO TRANSPORTATION: Comerica Wants Add'l Adequate Protection -------------------------------------------------------------- The Hon. Michael G. Williamson of the U.S. Bankruptcy Court for the Middle District of Florida will convene a hearing on Sept. 14, 2011, at 1:30 p.m., to consider the request of Comerica Bank, Cargo Transportation Services Inc.'s prepetition secured lender, for additional adequate protection. As adequate protection for use of cash collateral, the Debtor granted Comerica a replacement lien on postpetition assets of the Debtor. The Debtor's continued use of cash collateral was subject to maintaining an equity cushion consisting of 85% of Debtor's accounts receivable, including Work In Progress. Comerica told the Court that it disagrees with how the Debtor calculates the cash collateral formula. If calculated in accordance with the Court ruling the Debtor has exhausted Comerica's equity cushion and is out of the formula. The Debtor alleged that Comerica was an oversecured creditor and treated its interests as such, Comerica related. Basing on Comerica calculations, the Debtor collected prepetition accounts receivable of over $9,000,000 as compared to prepetition indebtedness of $6,532,919 plus interests and attorney fees. Comerica had an equity cushion of over $2,467,080 at the start of the case. Comerica asked that: a) the Debtor's use of the cash collateral be conditioned upon it being within the cash collateral formula, as calculated using only net cash, not total cash, and only delivered work in progress receivables used in the calculation of the cash collateral formula; b) that the Debtor be prohibited from using Comerica's cash collateral in the event, or to the extent that it is outside of the cash collateral formula; c) that the Debtor be required to establish a reserve out of cash collateral doe all amounts for which the estate is at risk in the event that Old Dominion asserts any of its claims rights against the customers of the Debtor; d. that payment must be made by the Debtor to Comerica of accrued interest on the prepetition note on the first business day of each month, or, in the alternative, inclusion of interest on the prepetition note in the calculation of the cash collateral formula; and e. payment by the Debtor to Comerica of accrued fees and expenses of Comerica on the first business day of each month, or in the alternative, inclusion of fees and expenses in the calculation of the cash collateral formula. 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 (Bankr. M.D. Fla. Case No. 11-00432) on Jan. 12, 2011. Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, serves as the Debtor's bankruptcy counsel. Jennis & Bowen, P.L., serves as substitute counsel. 1 Source Partners Inc. and Accell Audit & Compliance P.A., serve as the Debtor's certified public accountants. Donald F. Walton, U.S. Trustee for Region 21, appointed an Official Committee of the Official Committee of Unsecured Creditors in the Debtor's case. Hunton & Williams LLP represents the Committee in the Chapter 11 proceedings. The Debtor disclosed $11,728,760 in assets, and $11,869,375 in liabilities as of the Chapter 11 filing. CARGO TRANSPORTATION: GE Capital Wants to Take Over Collateral -------------------------------------------------------------- Creditor General Electric Capital Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to: -- modify the automatic stay in Cargo Transportation Services, Inc.'s assets; -- permit GE Capital to proceed with its in rem rights as to the collateral; and -- direct the Debtor to turn over the collateral to GE Capital or its designated agent. GE Capital related that the Court denied GE Capital's motion for relief from the automatic stay on the vehicle collateral and directed the Debtor to pay GE Capital $7,663 as adequate protection beginning April 1. GE Capital noted that the Debtor failed to make adequate protection payments that were due May 1st, June 1st and July 1st. 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 (Bankr. M.D. Fla. Case No. 11-00432) on Jan. 12, 2011. Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, serves as the Debtor's bankruptcy counsel. Jennis & Bowen, P.L., serves as substitute counsel. 1 Source Partners Inc. and Accell Audit & Compliance P.A., serve as the Debtor's certified public accountants. Donald F. Walton, U.S. Trustee for Region 21, appointed an Official Committee of the Official Committee of Unsecured Creditors in the Debtor's case. Hunton & Williams LLP represents the Committee in the Chapter 11 proceedings. DLA Piper is general counsel for the Committtee. The Debtor disclosed $11,728,760 in assets, and $11,869,375 in liabilities as of the Chapter 11 filing. CAVIATA ATTACHED: Sec. 341 Creditors' Meeting on Aug. 29 -------------------------------------------------------- The U.S. Trustee in Reno, Nevada, will convene a meeting of creditors pursuant to Sec. 341 of the Bankruptcy Code in the bankruptcy case of Caviata Attached Homes, LLC, on Aug. 29, 2011, at 4:00 p.m. at Young Bldg, Rm 3024. The last day to file proofs of claim is Nov. 28, 2011. This is the first meeting of creditors required under Section 341(a) of the 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 Caviata Attached Homes Reno, Nevada-based Caviata Attached Homes LLC filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case No. 11-52458) on Aug. 1, 2011. Judge Bruce T. Beesley presides over the case. The Law Offices of Alan R. Smith, Esq., serves as bankruptcy counsel. In its petition, the Debtor estimated $10 million to $50 million in assets and debts. The petition was signed by William D. Pennington, II, member of Caviata 184, LLC. There was a prior bankruptcy filing by Caviata Attached Homes (Bankr. D. Nev. Case No. 09-52786) on Aug. 18, 2009, also listing $10 million to $50 million in both assets and debts. Alan R. Smith, Esq., also represented the 2009 Debtor. CENGAGE LEARNING: S&P Gives 'Negative' Outlook on Weak Results -------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Stamford, Conn.-based Cengage Learning Holdings II L.P. to negative from stable. "At the same time, we affirmed all existing ratings on the company, including the 'B' corporate credit rating," S&P said. Total debt outstanding at June 30, 2011 was $5.7 billion. "The negative outlook reflects the company's weaker-than-expected performance in the key fiscal fourth quarter ended June 30, 2011," said Standard & Poor's credit analyst Hal F. Diamond, "which follows depressed performance in the seasonally less important fiscal third quarter ended March 31, 2011." "We expect that debt leverage will remain high as EBITDA and discretionary cash flow, in our view, will likely decline in fiscal 2012. We view Cengage's business risk profile as satisfactory, owing to its strong business position in its core U.S. higher education and professional training publishing businesses. "We view the company's financial risk profile as highly leveraged," added Mr. Diamond, "reflecting high debt to EBITDA, thin interest coverage, and low discretionary cash flow relative to total debt." CENTAUR LLC: Wins Permission for Litigation Trust and Adviser ------------------------------------------------------------- Carla Main at Bloomberg News reports that Centaur LLC secured an order Aug. 9 allowing it to establish the litigation trust described in its confirmed plan of reorganization, according to the order signed by U.S. Bankruptcy Judge Kevin Carey. Centaur may also retain FTI Consulting, Inc. as financial adviser and pre- effective date litigation trustee. Pre-effective date suits relate to claims that cannot be avoided in the bankruptcy. About Centaur LLC Indianapolis, Indiana-based, Centaur, LLC, aka Centaur Indiana, LLC -- http://www.centaurgaming.net/-- is involved in the development and operation of entertainment venues focused on horse racing and gaming. The Company and its affiliates filed for Chapter 11 bankruptcy protection on March 6, 2010 (Bankr. D. Del. Case No. 10-10799). Jeffrey M. Schlerf, Esq., at Fox Rothschild LLP, assists the Company in its restructuring effort. The Company disclosed assets of $584 million and debt of $681 million as of the Petition Date. Affiliates Centaur PA Land LP and Valley View Downs LP filed for bankruptcy reorganization in October 2009 to keep alive a project to develop a racetrack in Pennsylvania. The filings were made following the failure to make payments due in October on a $382.5 million first-lien debt and a $192 million second-lien credit. All the companies are subsidiaries of closely held Centaur Inc., which isn't in bankruptcy. Centaur LLC was authorized in August 2010 to sell the Fortune Valley Hotel & Casino 40 miles west of Denver to Luna Gaming Central City LLC for $7.5 million cash, plus a $2.5 million note. The Debtor obtained approval of its reorganization plan at a Feb. 18, 2011 confirmation hearing. CENTRAL FALLS: Pays More Than $1.2 Million in Professional Fees --------------------------------------------------------------- A parade of lawyers has charged Central Falls, Rhode Island, more than $1.2 million since its leaders declared insolvency - and state taxpayers have foot most of the bill, according to records obtained by WPRI.com. As of Aug. 8, the state had paid $1.07 million in legal fees to five lawyers and law firms for their work in Central Falls, while the city government had paid $158,215 to two more, WPRI.com discloses citing the governor's office. According to WPRI.com, the biggest payments so far have gone to the Providence law firm Orson and Brusini. Theodore Orson, a partner in Orson, is the city's lead bankruptcy attorney. His firm has charged the state $365,951 as of last week. WPRI.com relates that close behind is Edwards Angell Palmer & Dodge, a large firm with an office in Providence. Karen Grande, an expert on municipal law at the firm, is assisting Orson with Central Falls' case. Edwards Angell has charged the state $350,060, WPRI.com discloses. According to WPRI.com, Patrick Rogers, Gov. Lincoln Chafee's chief of staff, was a partner at Edwards Angell before joining the administration in January. Gov. Chafee's father, the late Sen. John Chafee, was also a lawyer for the firm, which hosted fundraisers for the future governor during his campaign. Central Falls has had three receivers since May 2010, WPRI.com notes. The first, Jonathan Savage of the Pawtucket firm Schechtman Halperin Savage, served for about two months before the state stepped in and took control of the city. The city paid Mr. Savage $150,000 for his services, WPRI.com says. The next receiver, retired judge Mark Pfeiffer, served from July 2010 to February 2011. The state paid Mr. Pfeiffer $197,289 for his seven-month tenure, according to WPRI.com. WPRI.com relates that the current receiver, retired Rhode Island Supreme Court Justice Robert Flanders, took over from Mr. Pfeiffer in February. The state, says WPRI.com, has paid Mr. Flanders $150,207 so far. Mr. Flanders, a partner at Hinckley Allen Snyder, is charging $200 an hour for his work in Central Falls, a big discount from his usual rate of $675 an hour, WPRI.com notes. The governor's office said the amounts include all legal fees for which the city has received invoices as of Aug. 8, 2011, WPRI.com notes. About Central Falls Central Falls is a city in Providence County, Rhode Island. The population was 18,928 at the 2000 census. Central Falls is the smallest and most densely populated city in Rhode Island. Central Falls sought bankruptcy protection under Chapter 9 of the U.S. Bankruptcy Code (Bankr. D. R.I. Case No. 11-13105) on Aug. 1, 2011. The Chapter 9 filing was made after former Rhode Island Supreme Court Judge Robert Flanders, who serves as state-appointed receiver for the city, was unable to negotiate significant concessions from unions representing police officers, firefighters and other city workers. The city grappled with an $80 million unfunded pension and retiree health benefit liability that is nearly quadruple its annual budget of $17 million. Judge Robert Flanders succeeded the role from retired Superior Court Associate Justice Mark A. Pfeiffer, who was appointed in July 2010. Judge Frank Bailey presides over the Chapter 9 case. Theodore Orson, Esq., at Orson and Brusini Ltd., serves as bankruptcy counsel to the receiver. CENTURION PROPERTIES: Elsaesser to Mediate GECC Dispute ------------------------------------------------------- The Hon. Frank L. Kurtz of the U.S. Bankruptcy Court for the Eastern District of Washington appointed Ford Elsaesser as mediator regarding the dispute involving Centurion Properties III LLC and creditor General Electric Capital Corporation. About Centurion Properties Kennewick, Washington-based Centurion Properties III, LLC, was established in 2006 for the sole purpose of acquiring, owning, operating and managing the real estate project known as the Battelle Leaseholds located in Richland, Washington. Its sole asset is its leasehold interests in the Battelle Memorial Institute Campus and improvements, valued in excess of $90 million. CPIII filed for Chapter 11 bankruptcy protection (Bankr. E.D. Wash. Case No. 10-04024) on July 9, 2010. John D. Munding, Esq., at Crumb & Munding, assists the Company in its restructuring effort. The United States Trustee has been unable to appoint a creditors committee in the case. The Company estimated its assets and debts at $50 million to $100 million. CHINA DU KANG: Delays Filing of Quarterly Report on Form 10-Q ------------------------------------------------------------- China Du Kang Co., Ltd., informed the U.S. Securities and Exchange Commission that it will be late in filing its quarterly report on Form 10-Q for the period ended June 30, 2011. The Company said that its auditor has advised that the review of the Company's financial statements for the quarter ended June 30, 2011, could not be completed by the end of the period. About China Du Kang China Du Kang Co., Ltd., was incorporated as U.S. Power Systems, Inc., in the State of Nevada on Jan. 16, 1987. The Company is principally engaged in the business of production and distribution of distilled spirit with the brand name of "Baishui Dukang". The Company also licenses the brand name to other liquor manufactures and liquor stores. The Company's balance sheet at March 31, 2011, showed $14.1 million in total assets, $21.3 million in total liabilities, and a stockholders' deficit of $7.2 million. As reported by the TCR on June 6, 2011, Keith K. Zhen, CPA, in Brooklyn, New York, expressed substantial doubt about 's ability to continue as a going concern, following the Company's 2010 results. Mr. Zhen noted that the Company has incurred an operating loss for each of the years in the two-year period ended Dec. 31, 2010, and as of Dec. 31, 2010, has a working capital deficiency and a shareholders' deficiency. CIRCLE ENTERTAINMENT: Borrows $1 Million from Directors, et al. --------------------------------------------------------------- Certain of Circle Entertainment Inc.'s directors, executive officers and greater than 10% stockholders made unsecured demand loans to the Company totaling $1,000,000, bearing interest at the rate of 6% per annum. The Company intends to use the proceeds from the Loans to fund working capital requirements and for general corporate purposes. Because certain of the directors, executive officers and greater than 10% stockholders of the Company made the Loans, a majority of the Company's independent directors approved the transaction. About Circle Entertainment Circle Entertainment Inc. (CEXE.PK), formerly FX Real Estate and Entertainment Inc., owns 17.72 contiguous acres of land located at the southeast corner of Las Vegas Boulevard and Harmon Avenue in Las Vegas, Nevada. The Las Vegas Property is currently occupied by a motel and several commercial and retail tenants with a mix of short and long-term leases. On June 23, 2009, as a result of the default under the first mortgage loan, the first lien lenders had a receiver appointed to take control of the property. The Company is headquartered in New York City. The Company disclosed in its Form 10-Q for the quarter ended June 30, 2010, that it has no current cash flow and cash on hand as of Aug. 13, 2010, is not sufficient to fund its short-term liquidity requirements, including its ordinary course obligations as they come due. On April 21, 2010, the Company's remaining Las Vegas subsidiary, namely FX Luxury Las Vegas I, LLC, filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Nevada (Case No. 10-17015). The Company's Las Vegas subsidiary filed for Chapter 11 bankruptcy on April 21, 2010, and a plan of liquidation or reorganization will eventually be implemented under which the Company will surrender ownership of the Las Vegas Property. Under such a plan, it is extremely unlikely the Company will receive any material interest or benefit. The Company reported net income of $346.81 million on $0 of revenue for the year ended Dec. 31, 2010, compared with a net loss of $114.68 million on $0 of revenue during the prior year. The net profit generated in the year was primarily on account of a $390.75 million gain from discharge of net assets due to bankruptcy plan. The Company's operating subsidiary sought Chapter 11 protection last year. As reported by the TCR on April 11, 2011, L.L. Bradford & Company, LLC, in Las Vegas, Nevada, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has limited available cash, has a working capital deficiency and will need to secure new financing or additional capital in order to pay its obligations. The Company's balance sheet at June 30, 2011, showed $2.75 million in total assets, $6.18 million in total liabilities, and a $3.43 million total stockholders' deficit. CLAUDIO OSORIO: InnoVida Trustee Not Consenting to Plan ------------------------------------------------------- Paul Brinkmann at the South Florida Business Journal, citing a notice filed by the InnoVida trustee Mark Meland, reports that Claudio Osorio failed to meet a deadline to satisfy objections to the reorganization of his former company, InnoVida Holdings. According to the report, Mr. Osorio was supposed to provide access and details about InnoVida's offshore bank accounts by Aug. 1, 2011, and a confirmable reorganization plan by Aug. 15, 2011. But, on Monday, the trustee overseeing InnoVida's bankruptcy filed a "notice of nonconsent" to the plan. Mr. Osorio and his attorney, Geoffrey Aaronson, have filed a bankruptcy plan that some have called vague. Mr. Meland and the U.S. Bankruptcy Trustee's Office have filed motions objecting to attempts by Mr. Osorio to reorganize the company using loans from undisclosed parties. U.S. Bankruptcy Judge Robert Mark had given Osorio the August deadlines, and ordered that no plan could move forward without Mr. Meland's support, says the Business Journal. The report notes Mr. Osorio is also in a personal Chapter 11 case, but he may lose control of his assets if the cases are converted to Chapter 7 liquidation. About InnoVida and Osorio Receiver Mark S. Meland, at Meland Russin & Budwick, PA, filed a Chapter 11 petition for InnoVida Holdings, LLC, fdba COEG, LLC (Bankr. S.D. Fla. Case No. 11-17702) on March 24, 2011. Separate Chapter 11 petitions were also filed for these affiliates: InnoVida MRD, LLC (Case No. 11-17704), InnoVida Services, Inc. (Case No. 11-17705), and InnoVida Southeast, LLC (Case No. 11- 17706). Peter D. Russin, Esq., at Meland Russin & Budwick, P.A., serves as bankruptcy counsel. InnoVida Holdings has under $50,000 in assets and $10 million to $50 million in debts, according to the petition. Founder Claudio Eleazar and Amarilis Osorio filed a separate Chapter 11 petition (Bankr. S.D. Fla. Case No. 11-17075) on March 17, 2011. Mr. Osorios is being accused of fraud and mismanagement. Bankruptcy Judge Robert A. Mark in Miami authorized the appointment of Mark S. Meland as trustee for InnoVida. Mr. Meland, who had been serving as a receiver for the business in the wake of the allegations against Mr. Osorio, was the one who ushered InnoVida into bankruptcy. According to DBR, the ruling paved the way for the federal bankruptcy watchdog assigned to the case to place Mark S. Meland in the role. Mr. Meland, who had been serving as a receiver for the business in the wake of the allegations against Mr. Osorio, was the one who ushered InnoVida into bankruptcy on March 24. COMPOSITE TECHNOLOGY: Court Approves LKP Global as Special Counsel ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California authorized Composite Technology Corporation to employ LKP Global Law, LLP, as its special corporate and securities counsel. According to the Troubled Company Reporter on July 29, 2011, LKP has represented CTC since November 2010. As special corporate and securities counsel, CTC will render services to CTC relating to: (a) certain securities law matters, including preparing and reviewing annual, quarterly and current filings, proxy statements, registration statements, and other securities law-related filings; and (b) certain corporate law matters, if necessary, including providing legal services related to equity and debt finance transactions, like drafting and preparing letters of intent, securities purchase agreements as well as ancillary documents like notes, warrants, security agreements, registration rights agreements, officer certificates, and legal opinions, and conducting due diligence in connection with disclosure schedule preparation. The firm will charge the Debtor based on the hourly rates of its attorneys and paralegals: Position Hourly Rate -------- ----------- Senior Partner $495 Partner 450 Senior Associate 375 Junior Associate 275 Paralegal 150 Ryan S. Hong, Esq., and Victor T. Fu, Esq., each with an hourly rate of $450, are the two attorneys who have provided, and who are expected to continue providing, services to CTC. On April 8, 2011, two days prior to the Petition Date, CTC provided a $5,000 retainer to the Firm. As of the Petition Date, the Firm asserted a balance of $3,510 for services rendered to CTC, but had not drawn on the retainer. After the Petition Date, the Firm drew $4,590 on the retainer for services rendered by the Firm to CTC through May 2011 -- consisting of $3,510 prepetition and $1,080 postpetition). Since that period, the Firm has returned the amount back to, and has replenished, the retainer. Mr. Hong, a partner at LKP Global Law, assured the Court that his Firm does not have an interest adverse to the Debtors or their estates in any matters which the Firm may handle. About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com/-- develops, produces, markets and sells energy efficient and renewable energy products for the electrical utility industry. As of March 31, 2011, the Company has one business segment: CTC Cable Corporation. CTC Cable produces and sells ACCC(R) conductor products and related ACCC(R) hardware products. ACCC(R) conductor has been sold commercially since 2005 and is currently marketed worldwide to electrical utilities, transmission companies and transmission design/engineering firms. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. BCC Advisory Services LLC, BCC Ho1dco LLC's FINRA registered Broker/Dealer, serves as investment banker to provide exclusive equity financing services and debt financing services. Composite Technology disclosed $5,855,670 in assets and $12,395,916 in liabilities as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. Paul J. Couchot, Esq., at Winthrop Couchot PC, serves as the Debtors' bankruptcy counsel. The Debtors also tapped Marsch Fischmann & Breyfogle LLP as special intellectual property approval counsel; Knobbe, Martens, Olson & Bear, LLP as special patent litigation counsel; McIntosh Group as special intellectual property counsel. Peter C. Anderson, the U.S. Trustee for Region 16, appointed five members to the official committee of unsecured creditors in the Debtor's cases. Steptoe & Johnson LLP represents the Committee. COMPOSITE TECHNOLOGY: Court Approves Knobbe as Litigation Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District Of California authorized Composite Technology Corporation, et al., to employ Knobbe, Martens, Olson & Bear, LLP, as special patent litigation counsel. The firm will represent debtor CTC Cable Corporation in the litigation designated as the "Federal action trial" scheduled to commence in November 2011. Stephen C. Jensen, Esq., a partner at the firm, told the Court that prior to the Petition Date, Cable provided the firm an end- of-matter retainer amounting to $1,500,000. As of the date of this application, the firm has not withdrawn any amount of the retainer from its client trust account. The firm provided legal services to Cable, and asserts a $268,647 prepetition claim. The hourly rates of the firm's personnel are: Mr. Jensen $700 Craig Summers $700 John W. Holcomb $550 Irfan A. Lateef $520 Christy G. Lea $475 Brian C. Claassen $370 Christina J. McCullough $345 Shirley Del Rosario, paralegal $325 Maria Zavala, paralegal $220 Jerome Fannuci, expert $275 Mr. Jensen assured the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com-- develops, produces, and markets energy efficient and renewable energy products for the electrical utility industry. During the fiscal year ended Sept. 30, 2010, the Company operated with one operating segment, the cable segment operated as CTC Cable Corporation. The CTC Cable segment sells ACCC conductor, a composite core, high capacity, energy efficient overhead conductor for transmission and distribution lines, and manufactures and sells ACCC core, the composite core component of the conductor, along with hardware connector accessories specifically designed for ACCC applications. It sells ACCC products directly to customers and through various distribution agreements both internationally and in North America. As of Sept. 30, 2010, CTC Cable had over 9,500 kilometers of ACCC conductor installed. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. The Debtor estimated assets at $10 million to $50 million and $1 million to $10 million in debts as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. Paul J. Couchot, Esq., at Winthrop Couchot PC, serves as the Debtors' bankruptcy counsel. The McIntosh Group and Marsch Fischman & Breyfogle LLP serve as special intellectual property counsel. COMPOSITE TECHNOLOGY: Court Approves Mentor as Valuation Advisor ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Composite Technology Corporation and its debtor- affiliates to employ Mentor Group Inc. as their valuation advisor. The firm will render and provide valuation opinions/reports for the Debtors' business as a going concern and the Debtors' patents, in connection with the Debtors' motion for use of cash collateral. The firm will be paid: * A fee, based on the firm's standard per diems, expenses and office charges, estimated to be in the amount of $25,000; and * An additional nominal amount for expenses related to travel, living, data processing, report preparation, postage/overnight mail, and telecommunications. The Debtors assured the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation - http://www.compositetechcorp.com/-- develops, produces, markets and sells energy efficient and renewable energy products for the electrical utility industry. As of March 31, 2011, the Company has one business segment: CTC Cable Corporation. CTC Cable produces and sells ACCC(R) conductor products and related ACCC(R) hardware products. ACCC(R) conductor has been sold commercially since 2005 and is currently marketed worldwide to electrical utilities, transmission companies and transmission design/engineering firms. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. BCC Advisory Services LLC, BCC Ho1dco LLC's FINRA registered Broker/Dealer, serves as investment banker to provide exclusive equity financing services and debt financing services. Composite Technology disclosed $5,855,670 in assets and $12,395,916 in liabilities as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. Paul J. Couchot, Esq., at Winthrop Couchot PC, serves as the Debtors' bankruptcy counsel. The Debtors also won approval to tap Marsch Fischmann & Breyfogle LLP as special intellectual property approval counsel; Knobbe, Martens, Olson & Bear, LLP as special patent litigation counsel; McIntosh Group as special intellectual property counsel. Peter C. Anderson, the U.S. Trustee for Region 16, appointed five members to the official committee of unsecured creditors in the Debtor's cases. Steptoe & Johnson LLP represents the Committee. COMPOSITE TECHNOLOGY: Can Tap Winthrop Couchot as General Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California approved the application of Composite Technology Corporation and its co-Debtors to employ Winthrop Couchot Professional Corporation as their general insolvency counsel, effective as of April 10, 2011. Partners for Growth II, L.P. and the Official Committee of Unsecured Creditors have agreed to the terms of the stipulated order. Subject to certain provisions, the Firm is authorized to draw down on its retainer balance of $250,000 and be paid on a monthly basis in accordance with the terms set forth in the Application and the procedures set forth in the Guidelines of the Office of the U.S. Trustee. PFG retains all rights to assert a security interest in the Retainer. The Firm retains all rights to seek surcharge against PFG's collateral pursuant to Section 506(c) of the Bankruptcy Code. The Firm will render services, including: * Advise and assist the Debtors with respect to compliance with the requirements of the U.S. Trustee; * Advise and assist the Debtors with respect to the preparation and filing of their Schedules of Assets and Liabilities and Statement of Financial Affairs; * Advise the Debtors concerning the requirements of the Bankruptcy Code and applicable federal and local bankruptcy rules; * File any motions, applications or other pleadings appropriate to effectuate the reorganization of the Debtors; * Assist the Debtors in the negotiation, formulation, confirmation, and implementation of a Chapter 11 plan of reorganization; and * Take other action and perform other services as the Debtors may require of the Firm in connection with these Chapter 11 cases. About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation - http://www.compositetechcorp.com/-- develops, produces, markets and sells energy efficient and renewable energy products for the electrical utility industry. As of March 31, 2011, the Company has one business segment: CTC Cable Corporation. CTC Cable produces and sells ACCC(R) conductor products and related ACCC(R) hardware products. ACCC(R) conductor has been sold commercially since 2005 and is currently marketed worldwide to electrical utilities, transmission companies and transmission design/engineering firms. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. The Debtor estimated assets at $10 million to $50 million and $1 million to $10 million in debts as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. The McIntosh Group and Marsch Fischman & Breyfogle LLP serve as special intellectual property counsel. About Composite Technology Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com-- develops, produces, and markets energy efficient and renewable energy products for the electrical utility industry. During the fiscal year ended Sept. 30, 2010, the Company operated with one operating segment, the cable segment operated as CTC Cable Corporation. The CTC Cable segment sells ACCC conductor, a composite core, high capacity, energy efficient overhead conductor for transmission and distribution lines, and manufactures and sells ACCC core, the composite core component of the conductor, along with hardware connector accessories specifically designed for ACCC applications. It sells ACCC products directly to customers and through various distribution agreements both internationally and in North America. As of Sept. 30, 2010, CTC Cable had over 9,500 kilometers of ACCC conductor installed. Composite Technology filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-15058) on April 10, 2011, with Judge Mark S. Wallace presiding over the case. The Debtor's bankruptcy case was reassigned to Judge Scott C. Clarkson on April 13, 2011. The Debtor estimated assets at $10 million to $50 million and $1 million to $10 million in debts as of the Chapter 11 filing. CTC Cable Corporation (Bankr. C.D. Calif. Case No. 11-15059) and Stribog, Inc. (Bankr. C.D. Calif. Case No. 11-15065) also filed for Chapter 11 protection. The cases are jointly administered, with Composite Technology as the lead case. The McIntosh Group and Marsch Fischman & Breyfogle LLP serve as special intellectual property counsel. Robbin L. Itkin, Esq., and Katherine C. Piper, Esq., at Steptoe & Johnson LLP, serve as counsel to the Official Committee of Unsecured Creditors. CONTESSA PREMIUM: Court OKs Ernst & Young as Advisors ----------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has approved Contessa Premium Foods, Inc.'s application to employ Ernst & Young LLP as its accounting advisors. As reported in the Troubled Company Reporter on July 21, 2011, upon retention, the firm, will among other things: (a) obtain detailed consolidating trial balances and reconcile to the audited financial statements. Discuss with Debtor's management the nature of: (i) each significant account and (ii) any unusual fluctuations; (b) reconcile the Debtor's internal and audited financial statements to reported EBITDA and management EBITDA (if available); and (c) analyze projected EBITDA based on the Debtor's fiscal year- end 2011 forecast and bridge to historical period EBITDA. Subject to the provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, the Compensation Guide, and this Court's rules, the Debtor proposes to compensate E&Y LLP as: (a) An accounting advisory fee for the Services in the amount of $85,000 for the initial three-week period, and fees for any subsequent periods will be separately negotiated and agreed to between E&Y LLP and the Debtor. E&Y LLP's fee is based on the expectation that information required to complete the project is of a reasonable quality and readily accessible. To the extent that this ultimately is not the case, E&Y LLP will notify the Debtor as soon as practicable to discuss an alternate arrangement and/or adjustment to the fee set forth herein. (b) Reimbursement of direct, out-of-pocket expenses that include, but are not limited to, all applicable taxes incurred in connection with the delivery of the Services (except for taxes imposed on E&Y LLP's income) and reasonable and customary out-of-pocket About Contessa Premium San Pedro, California-based Contessa Premium Foods, Inc., fka ZB Industries, Inc., and Contessa Food Products, Inc., provides farm raised shrimp, convenience meals, stir-fry vegetables, and other frozen food products that are marketed and sold primarily in the United States and to a lesser extent in Canada, Europe, Asia, and Mexico. It divides its business into two internal groups: Contessa Seafood, which includes its seafood items, and Contessa "Green Cuisine," which includes all other fruit, vegetable and complete meal blends. Contessa Premium filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 11-13454) on Jan. 26, 2011. Craig A. Wolfe, Esq., at Kelley Drye & Warren LLP, in New York, represents the Debtor as counsel. Jeffrey N. Pomerantz, Esq., and Jeffrey W. Dulberg, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, serve as conflicts counsel for the Debtor. Scouler & Company, LLC, serves as financial advisors. Imperial Capital, LLC serves as investment banker. Holthouse Carlin & Van Trigt LLP serves as auditors and accountants. The Debtor scheduled $49,370,438 in total assets and $35,305,907 in total liabilities. The Official Committee of Unsecured Creditors in the Debtor's Chapter 11 case is represented by Arent Fox LLP. FTI Consulting Inc. serves as its financial consultants. CORDIA IP: Cordia Comms. Unit Files Chapter 11 in New York ---------------------------------------------------------- Carla Main at Bloomberg News reports that Cordia IP Corp., a company that sells adaptable domestic and international calling plans, filed Aug. 12 for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 11-br-23631) in bankruptcy court in White Plains, New York. The Debtor, based in Rye, New York, declared assets of $6,869,367 and liabilities of $14,912,887. The largest unsecured claim case is $13.5 million, held by Cordia Communications Co., an affiliate company located in Winter Garden, Florida, according to court papers. Gerald Hecht, Esq., at Gerald Hecht & Associates, in Danbury, Connecticut, serves as counsel. Affiliates Previously Filed for Chapter 11 Cordia Corporation -- through its operating subsidiaries, Cordia Communications Corp., CordiaIP Corp., My Tel Co, Inc., Northstar Telecom, Inc., Cordia Prepaid Corp., and Cordia International Corp. -- offers business, residential, and wholesale customers local and long distance telecommunications services in more than 60 countries utilizing traditional wireline and Voice over Internet Protocol -- VoIP -- technologies. CCC holds licenses to operate in 28 states throughout the contiguous United States, and CCCVA is licensed in Virginia. Winter Garden, Florida-based Cordia Communications Corp., along with affiliates, filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Lead Case No. 11-06493) on May 1, 2011. Cordia Communications estimated its assets and debts at $10 million to $50 million. Scott L. Baena, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, serves as the Debtors' bankruptcy counsel. Source Capital Group, Inc., serves as investment banker. Development Specialists, Inc., is providing restructuring and management services, including Joseph J. Luzinski as chief restructuring officer. Bingham McCutchen LLP acts as special telecommunications counsel. Cordia Communications Inc. was authorized in July 2011 to sell the business to Birch Communications Inc. For Birch to take over a contract with Verizon Communications Inc., Verizon must be paid $4.4 million, according to the order approving the sale. CROWNROCK LP: S&P Assigns 'CCC+' on Weak Liquidity -------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'CCC+' corporate credit rating to Midland, Texas-based CrownRock LP. The outlook is developing. "At the same time, we assigned a preliminary 'CCC' issue rating to CrownRock's proposed $150 million senior unsecured notes due 2016. We also assigned a '5' recovery rating to the notes, indicating our expectation of a modest (10% to 30%) recovery in the event of a payment default. The company will use proceeds from the transaction to repay existing indebtedness and for general corporate purposes," S&P related. "The ratings on CrownRock reflect its weak liquidity relative to projected spending, very aggressive capital spending required to hold onto its acreage, a small reserve and production base, a high percentage of risky undeveloped reserves, and reliance on one basin -- the Wolfberry region of the Permian Basin -- for its production growth and cash flows," said Standard & Poor's credit analyst Marc Bromberg. The ratings also reflect an oil- weighted reserve profile and competitive cost structure," S&P said. The financial risk profile is highly leveraged, driven by CrownRock's aggressive spending requirements relative to its cash on hand and revolver availability. "We estimate that the company will need to spend between $200 million and $250 million over each of the next three years just to hold on to its mostly Permian- based acreage. At our price deck,(which for West Texas Intermediate (WTI) oil is $80 in 2011 and 2012 and $70 in 2013 and thereafter and for natural gas is $3.75 in 2011, $4 in 2012, and $4.50 in 2013 and thereafter), we think CrownRock will generate very weak funds from operations (FFO) of approximately $20 million in 2011 and $60 million in 2012. When coupled with pro-forma liquidity of approximately $150 million for the proposed notes, we think liquidity could be strained in the near term given expected spending requirements. While CrownRock could reduce its drilling program, it risks losing acreage and therefore future production (approximately 90% of its core Wolfberry acreage is not currently held by production)," S&P related. "Pro forma for the proposed $150 million transaction and pay down of approximately $60 million on its revolver, CrownRock will have approximately $180 million of total debt, including our analytical adjustments for operating leases and asset retirement obligations. Pro forma total adjusted debt to quarter annualized EBITDA as of June 30, 2011, excluding a one-time gain on the sale of Wolfberry acreage, leverage was approximately 5.75x, which is very aggressive. Based on our price deck, and assuming the company can meet its production targets and capital spending needs, total adjusted debt to full-year EBITDA could decline to between 4x and 4.5x by the end of 2011 and to between 3.5x and 4x by the end of 2012," S&P stated. Standard & Poor's characterizes CrownRock's business risk profile as vulnerable. As of July 1, 2011, total proved reserves were very small relative to its rated peers at approximately 40 million barrels of oil equivalent (MBoe) and daily production at slightly more than 3,600 barrels of oil equivalent (Boe), which is at the low end of speculative-grade exploration and production issuers in the low 'B' and 'CCC' categories. Of this reserve profile, nearly 75% is in the more risky proved undeveloped category, heightening the potential for write-offs if the company is unable to fund its drilling program. However, CrownRock's reserves are approximately 67% weighted to oil, which is benefiting from healthy realizations. "The developing outlook reflects the potential that we could raise or lower ratings depending on whether CrownRock is able to fund its capital spending program beyond the first half of 2012. We will look to reserve and production growth to assess the prospects for FFO and liquidity, given that internally generated cash flows and the borrowing base are closely tied to these measures. We think that CrownRock will need to generate at least $150 million in FFO in total in 2011 and 2012 to meet its capital spending plans through the end of 2012. We could lower the ratings if the company experiences production issues in the Wolfberry or if we deem liquidity to be unable to support future capital spending requirements," S&P added. CRYSTAL CATHEDRAL: Creditors Committee Wants Plan Outline Denied ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 case of Crystal Cathedral Ministries asks the U.S. Bankruptcy Court for the Central District of California to deny approval of the Debtor's disclosure statement. According to the Committee, the Disclosure Statement: 1. fails to adequately describe the diversion of sale proceeds to funs the Debtor's continuing operating losses; 2. fails to adequately describe the significant risk of nonpayment to general unsecured creditors by withholding a substantial portion of the net proceeds of the sale of the Debtor's real estate to provide as working capital to the Debtor to finance its ongoing operations; 3. fails to provide a breakdown of the anticipated sale expenses, clearly identify the anticipated net sale proceeds, and clearly state how net sale proceeds are to be used; 4. fails to describe the dispute concerning the amount of the claims of F&M Bank, or discuss how the resolution of that issue will impacts the Plan; 5. fails to adequately describe the assumptions upon which its financial projections are based, and compare projections to recent actual operating history; 6. fails to adequately describe the sale; 7. the liquidation analysis included in the disclosure statement is inaccurate and misleading; 8. fails to adequately describe the compensation of insiders; 9. inaccurately describe Classes 1.2 and 1.3 as unimpaired; 10. fails to adequately describe the personal property assets; and 11. must vest authority to undertake avoidance actions in the post-confirmation committee. As reported in the Troubled Company Reporter on June 2, 2011, the Debtor's proposed reorganization plan will be funded by selling the church property for $46 million to Greenlaw Partners LLC under an arrangement where the church will lease the property back with the right to repurchase. The letter of intent with Greenlaw provides that Greenlaw will have the right to conduct a financial investigation before becoming legally bound to complete the purchase. Following the sale to Greenlaw, the Cathedral will lease the main property back for $212,000 a month. It will have a right for four years to repurchase the main buildings for $30 million. Afterwards, the church will have a right of first refusal. The Debtor will conduct an auction testing if there is a better offer than Greenlaw's. Aside from the $46 million from Greenlaw, a condominium will be sold for about $1 million. Together with $3 million cash on hand, the church will have about $50 million for distribution to creditors. Secured creditors are to be paid from sale proceeds and can't foreclose while the sale process is under way. Unsecured creditors are to be paid in full over an estimated two years at the rate of $100,000 a month. According to the Plan, the affairs of the reorganized church will be managed by a board of seven, one being founder Robert H. Schuller. Creditors will have two representatives on the board. Insiders can have no more than three board positions. Part of the existing church property is to be developed for multifamily housing. The TCR reported on Aug. 11, the filed a proposed bankruptcy exit plan for the church and an explanatory disclosure statement. The cathedral board can choose the buyer in one option and in another, the creditors will choose a buyer for the church. The Plan contemplates the sale of the Debtor's real and personal property assets. Multiple parties have submitted written offers to purchase the Crystal Cathedral Campus. The Committee will select the proposed buyer, advising the Court 15 days before the confirmation hearing. The Committee said it does not intent to effectuate a sale of the campus by way of 11 U.S.C. Sec. 363 sale subject to overbidding. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/CRYSTAL_DS_COMMITTEE.pdf About Crystal Cathedral Crystal Cathedral Ministries is a Southern California-based megachurch founded by television evangelist Robert Schuller. The church, known for its television show "The Hour of Power." Mr. Schuller retired from his role as senior pastor of Crystal Cathedral in 2006. His daughter Sheila Schuller Coleman has been senior pastor since July 2009. Contributions declined 24 percent in 2009, in part on account of "unsettled leadership." Crystal Cathedral filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. 10-24771) on Oct. 18, 2010. The Debtor disclosed $72,872,165 in assets and $48,460,826 in liabilities as of the Chapter 11 filing. Marc J. Winthrop, Esq., at Winthrop Couchot P.C. represent the Debtor. Todd C. Ringstad, Esq., at Ringstad & Sanders, LLP, represents the Official Committee of Unsecured Creditors. CUI GLOBAL: Board Revises Code of Ethics of Audit Committee ----------------------------------------------------------- The CUI Global, Inc., Board of Directors revised the Code of Ethics and Business Conduct and Charter of the Audit Committee effective Aug. 5, 2011. Copies of the revised documents are available for free at: http://is.gd/S84CAV http://is.gd/Pj8Abq About CUI Global Tualatin, Ore.-based CUI Global, Inc., formerly known as Waytronx, Inc., is a platform company dedicated to maximizing shareholder value through the acquisition, development and commercialization of new, innovative technologies. As reported by the TCR on April 8, 2011, Webb & Company, in Boynton Beach, Florida, expressed substantial doubt about CUI Global's ability to continue as a going concern. The independent auditors noted that the Company has a net loss of $7,015,896, a working capital deficiency of $675,936 and an accumulated deficit of $73,596,738 at Dec. 31, 2010. The Company reported a net loss of $7.5 million on $40.9 million of revenues for 2010, compared with a net loss of $16.0 million on $28.9 million of revenues for 2009. The Company's balance sheet at March 31, 2011, showed $34.06 million in total assets, $21.93 million in total liabilities, $171,778 in noncontrolling interest and $12.30 million in total stockholders' equity. CUMULUS MEDIA: Form S-4 Registration Statement Declared Effective ----------------------------------------------------------------- Cumulus Media Inc.'s registration statement on Form S-4 relating to the Company's pending acquisition of Citadel Broadcasting Corporation was declared effective by the Securities and Exchange Commission on Aug. 5, 2011. The Registration Statement included certain historical financial information relating to Citadel, which information was required by the rules and regulations of the SEC to be included therein. As previously announced, on March 9, 2011, the Company entered into a definitive merger agreement to acquire Citadel, pursuant to which the Company would acquire all of the outstanding common stock and warrants of Citadel at a price equal to $37.00 per share, payable in a combination of cash and shares of the Company's common stock. Citadel owns and operates 225 radio stations in over 50 markets and also operates the Citadel Media business, which is among the largest radio networks in the U.S. Consummation of the Citadel acquisition is subject to various customary closing conditions. These include, but are not limited to, (i) regulatory approval by the Federal Communications Commission, (ii) requisite approval of Citadel's stockholders, (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, and (iv) the absence of any material adverse effect on Citadel. The Company currently expects to obtain the regulatory and stockholder approvals and to close the Citadel acquisition in September. About Cumulus Media Based in Atlanta, Georgia, Cumulus Media Inc. (NASDAQ: CMLS) -- http://www.cumulus.com/-- is the second largest radio broadcaster in the United States based on station count, controlling 350 radio stations in 68 U.S. media markets. In combination with its affiliate, Cumulus Media Partners, LLC, the Company believes it is the fourth largest radio broadcast company in the United States when based on net revenues. The Company's balance sheet at March 31, 2011, showed $318.87 million in total assets, $643.27 million in total liabilities, and a $324.40 million total stockholders' deficit. * * * Standard & Poor's Ratings Services said April it raised its corporate credit rating on Atlanta-based Cumulus Media Inc. to 'B' from 'B-'. "The rating remains on CreditWatch, where we placed it with positive implications Feb. 18, 2011," S&P stated. Moody's Investors Service in April upgraded Cumulus Media's Corporate Family Rating to B1 from Caa1 due to the company's pending acquisition of CMP Susquehanna Corp. in the second quarter of 2011 followed by the announced $2.4 billion acquisition of Citadel Broadcasting Corporation later this year. CUMULUS MEDIA: Reports $1.3 Million Net Income in Second Quarter ---------------------------------------------------------------- Cumulus Media Inc. reported net income of $1.34 million on $69.17 million of net revenues for the three months ended June 30, 2011, compared with net income of $12.30 million on $69.74 million of net revenues for the same period a year ago. The Company also reported net income of $17.46 million on $127.03 million of net revenues for the six months ended June 30, 2011, compared with net income of $12.16 million on $126.09 million of net revenues for the same period during the prior year. Lew Dickey, Chairman & CEO stated, "Q2 presented a challenging environment for our markets. Our cash revenues declined 0.4%, but our team did an excellent job of defending cash flow. Our Adjusted EBITDA has grown by 7.1% year-to-date, excluding one-time transaction costs. As we move into Q3, we are pleased to have announced our August 1st closing of CMP and expect to close on our acquisition of Citadel Broadcasting in September. Our team is looking forward to executing our integration and operating plans for this exciting new platform of 570 stations and a radio network serving more than 4,000 station affiliates." A full-text copy of the press release announcing the financial results is available for free at http://is.gd/ubaSYP About Cumulus Media Based in Atlanta, Georgia, Cumulus Media Inc. (NASDAQ: CMLS) -- http://www.cumulus.com/-- is the second largest radio broadcaster in the United States based on station count, controlling 350 radio stations in 68 U.S. media markets. In combination with its affiliate, Cumulus Media Partners, LLC, the Company believes it is the fourth largest radio broadcast company in the United States when based on net revenues. The Company's balance sheet at March 31, 2011, showed $318.87 million in total assets, $643.27 million in total liabilities, and a $324.40 million total stockholders' deficit. * * * Standard & Poor's Ratings Services said April it raised its corporate credit rating on Atlanta-based Cumulus Media Inc. to 'B' from 'B-'. "The rating remains on CreditWatch, where we placed it with positive implications Feb. 18, 2011," S&P stated. Moody's Investors Service in April upgraded Cumulus Media's Corporate Family Rating to B1 from Caa1 due to the company's pending acquisition of CMP Susquehanna Corp. in the second quarter of 2011 followed by the announced $2.4 billion acquisition of Citadel Broadcasting Corporation later this year. CUMULUS MEDIA: To Issue Up to 28.8 Million of Securities -------------------------------------------------------- Cumulus Media Inc. filed with the U.S. Securities and Exchange Commission a Form S-3 registration statement relating to the resale from time to time of up to 28,801,844 shares of Class A common stock, par value $0.01 per share, Class B common stock, par value $0.01 per share, and warrants to purchase shares of such common stock. These shares consist of shares of Class A common stock and Class B common stock that the selling securityholders have agreed to purchase in a private placement and include shares of Class A common stock or Class B common stock issuable pursuant to warrants that may be issued to the selling securityholders in the private placement. The shares of the Company's common stock and warrants covered by this prospectus are being registered to permit the selling securityholders to sell the shares from time to time in the public market. The selling securityholders may sell the shares directly to other investors or to or through underwriters, dealers or agents in ordinary brokerage transactions, privately negotiated transactions. The Company is not selling any securities under this prospectus and will not receive any of the proceeds from the sale of shares of its common stock by the selling securityholders. The Company will, however, receive the net proceeds of any warrants exercised for cash. The Company will pay all costs, fees and expenses incurred in connection with the registration of the shares covered by this prospectus. The selling securityholders will pay all costs, fees and expenses incurred in connection with sales of the shares covered by this prospectus, including, among other things, sales commissions, brokerage fees and related expenses. The Company's Class A common stock is traded on the NASDAQ Global Select Market under the symbol "CMLS." On [ ] , 2011, the closing price was $[ ]per share. A full-text copy of the Form S-3 prospectus is available for free at http://is.gd/a3PrX2 About Cumulus Media Based in Atlanta, Georgia, Cumulus Media Inc. (NASDAQ: CMLS) -- http://www.cumulus.com/-- is the second largest radio broadcaster in the United States based on station count, controlling 350 radio stations in 68 U.S. media markets. In combination with its affiliate, Cumulus Media Partners, LLC, the Company believes it is the fourth largest radio broadcast company in the United States when based on net revenues. The Company's balance sheet at March 31, 2011, showed $318.87 million in total assets, $643.27 million in total liabilities, and a $324.40 million total stockholders' deficit. * * * Standard & Poor's Ratings Services said April it raised its corporate credit rating on Atlanta-based Cumulus Media Inc. to 'B' from 'B-'. "The rating remains on CreditWatch, where we placed it with positive implications Feb. 18, 2011," S&P stated. Moody's Investors Service in April upgraded Cumulus Media's Corporate Family Rating to B1 from Caa1 due to the company's pending acquisition of CMP Susquehanna Corp. in the second quarter of 2011 followed by the announced $2.4 billion acquisition of Citadel Broadcasting Corporation later this year. DELTA AIR: S&P Assigns Preliminary 'BB' Rating to Class B Certs. ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BB (sf)' rating to Delta Air Lines Inc.'s series 2011-1 class B pass- through certificates with an expected maturity of Oct. 15, 2014. The final legal maturity will be 18 months after the expected maturity. The issue is a drawdown under a Rule 415 shelf registration. "We will decide on final ratings upon the conclusion of a legal review of the issue's documentation," S&P related. "The certificates are secured by the same collateral as, and are subordinate to, Delta's 2011-1 class A pass-through certificates, which we rated 'A- (sf)' on April 4, 2011. The preliminary 'BB (sf)' rating is based on Delta's credit quality, adequate collateral coverage, and on legal and structural protections available to the pass-through certificates. The company will use proceeds of the offering, along with those from the class A certificates, to refinance aircraft it already owns: 10 Boeing B737-800s, 12 B757-200s, and four B767-300ERs. The planes were originally delivered to Delta in 1995 through 2001 and currently collateralize existing pass-through certificates that will mature in September 2011. Each aircraft's secured notes are cross-collateralized and cross-defaulted--a provision we believe increases the likelihood that Delta would affirm the notes (and thus continue to pay on the certificates) in bankruptcy," S&P said. The pass-through certificates are a form of enhanced equipment trust certificates (EETCs) and benefit from legal protections afforded under Section 1110 of the U.S. Bankruptcy Code and by a liquidity facility provided by Natixis S.A. The liquidity facility is intended to cover up to three semiannual interest payments, a period during which collateral could be repossessed and remarketed by certificate holders following any default by the airline, or to maintain continuity of interest payments as certificate holders negotiate with Delta in a bankruptcy with regard to the certificates. The preliminary rating applies to a unit consisting of certificates representing the trust property and escrow receipts, initially representing interests in deposits (the proceeds of the offerings). The escrow deposits are held by a depositary bank, The Bank of New York Mellon, pending delivery of the aircraft that Delta will refinance with the proceeds from the certificates. Amounts deposited under the escrow agreements are not the property of Delta and are not entitled to the benefits of Section 1110 of the U.S. Bankruptcy Code, and any default arising under an indenture solely by reason of the cross-default in the indenture may not be of a type required to be cured under Section 1110. Any cash collateral held as a result of the cross-collateralization of the equipment notes also would not be entitled to the benefits of Section 1110. Neither the certificates nor the escrow receipts may be separately assigned or transferred. "We believe that Delta views these planes as important and would, given the cross-collateralization and cross-default provisions, likely affirm the aircraft notes in a bankruptcy scenario. In contrast to most EETCs issued before 2009, the cross-default would take effect immediately in a bankruptcy if Delta rejected any of the aircraft notes. This should prevent Delta from selectively affirming some aircraft notes and rejecting others ('cherry- picking'), which often harms the interests of certificate holders in a bankruptcy," S&P related. "We consider the collateral pool overall to be of fairly good quality, with some aircraft models more attractive than others. The largest proportion of initial appraised value (about 48% of the appraised values that our analysis focused on) comprises B737- 800s. The B737-800 is Boeing's most popular aircraft, a midsize narrowbody plane that more than 100 airlines worldwide operate. Given the modern technology incorporated into the plane, its wide user base, and expected strong demand over the next couple of years, we consider it to be the best aircraft collateral available. Boeing Co. recently announced that it would counter competitor Airbus SAS's new engine option (NEO) for its A320 family of narrowbody planes, with a re-engined B737. We believe that the most significant effect of the introduction of the various re-engined narrowbody planes will be on values of older generation narrowbodies introduced in the 1980s: the B737-300, - 400, and -500, and the earliest versions of the A320, rather than the current-technology narrowbodies. Those earlier models are already under value pressure because they are less fuel efficient. In any case, the Delta class B pass-through certificates are scheduled to mature in 2014 (before either Airbus or Boeing introduce their new engine options), so we believe the effect on the B737-800s that partly collateralize the certificates should be minimal," S&P said. The second-largest concentration of collateral value (33%) comprises B757-200s. "The B757-200 is a large narrowbody aircraft introduced in the 1980s and widely used, especially by U.S. airlines. Boeing has introduced a successor, the B737-900, but it does not have the same range as the B757-200 (which, in certain versions, can fly trans-Atlantic) and has not been widely ordered by airlines. Still, the technology incorporated into these planes is of an older generation, and we believe that, in an industry downturn, values of this collateral could fall more materially than those of the B737-800s," S&P related. The remaining 19% of collateral value is B767-300ERs, a small widebody introduced in the 1980s. This plane has a fairly wide user base and is well suited to flying international routes that cannot support larger models. It will eventually be superseded by the new B787, but values have been buoyed by repeated delays in the introduction of the B787. "Like the B757-200, we believe that its values could be more volatile than those of the B737- 800s," S&P said. "Our analysis of the aircraft collateral, which focuses mainly on resale liquidity and technological risk, also considers the age of the aircraft, as well as the characteristics of the models. We judged that the nine- to 10-year-old B737-800 aircraft would exhibit somewhat greater potential volatility of values than the new delivery B737-800s in an airline industry downturn, and factored that into our conclusions," S&P related. The initial and maximum loan-to-value (LTV) of the class B certificates is 70.6%, using the appraised base values and depreciation assumptions in the prospectus supplement. "However, we focused on more-conservative current market values for the aircraft, based on our comparison of various base and current market value appraisals that we examined with our own internal sources of information. We used a starting collateral value of $500 million, which is 11% lower than the prospectus values. We also use more-conservative depreciation assumptions for all of the planes than those in the prospectus. We assumed that, absent cyclical fluctuations, values of the B737-800s would decline by 5% of the preceding year's value per year; the B757-200s by 8%; and the B767-300ERs 7%. Using these values and assumptions, the class B initial LTV is higher -- 78.9% -- and rises slightly to more than 80% at its highest point before declining gradually. This is an unusually high LTV for an EETC, and the three-notch uplift of the 'BB' issue rating on the class B certificates is based on our estimate of the likelihood of Delta affirming the aircraft notes that collateralize the certificates, rather than on credit for the likelihood that proceeds from the sale of repossessed aircraft could repay the class B certificates," S&P said. "Our analysis also considered that a full draw of the class A and class B liquidity facilities (plus interest on those drawdowns) constitutes a claim senior to the certificates. However, because of current low interest rates, this amount is somewhat below levels (as a percent of asset value) of many EETCs sold before 2008. Through the life of the transaction, a full draw, with interest, is equivalent initially to about 7.6% of asset value, using our assumptions, rising to slightly over 8%. The additional senior claim of the new class B liquidity facility does not have any impact on the existing 'A- (sf)' rating on the class A certificates," S&P added. Ratings List Delta Air Lines Inc. Corporate credit rating B/Stable/-- New Ratings Delta Air Lines Inc. Series 2011-1 class B pass-thru certs BB (sf) (prelim) DESTINATION MATERNITY: S&P Raises Corp. Credit Rating to 'B+' ------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Philadelphia-based Destination Maternity Corp. to 'B+' from 'B'. The outlook is stable. "At the same time, we raised the issue-level rating on the company's term loan to 'BB' from 'BB-', and kept the '1' recovery rating unchanged. The '1' recovery rating indicates our expectation of very high (90%-100%) recovery in the event of payment default," S&P related. "The upgrade reflects the improvement of credit protection metrics which have exceeded our expectations," said Standard & Poor's credit analyst David Kuntz, "as well as our view that the company is likely to use available cash flow to further reduce debt." DRYSHIPS INC: General Meeting of Shareholders Set for Sept. 13 -------------------------------------------------------------- Dryships Inc. will hold a General Meeting of Shareholders on Sept. 13, 2011, at 1:00 p.m. local time, at the Company's offices located at 80 Kifissias Avenue, GR 151 25, Marousi, Athens, Greece. At the Meeting, shareholders of the Company will consider and vote upon proposals: (1) To elect three Class A Directors to serve until the 2014 Annual General Meeting of Shareholders; (2) To approve the appointment of Ernst & Young (Hellas) Certified Auditors Accountants S.A., as the Company's independent auditors for the fiscal year ending Dec. 31, 2011; and (3) To transact such other business as may properly come before the Meeting or any adjournment thereof. About DryShips Inc. Based in Greece, DryShips Inc. -- http://www.dryships.com/-- -- owns and operates drybulk carriers and offshore oil deep water drilling units that operate worldwide. As of Sept. 10, 2010, DryShips owns a fleet of 40 drybulk carriers (including newbuildings), comprising 7 Capesize, 31 Panamax and 2 Supramax, with a combined deadweight tonnage of over 3.6 million tons and 6 offshore oil deep water drilling units, comprising of 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships. DryShips's common stock is listed on the NASDAQ Global Select Market where it trades under the symbol "DRYS". On Nov. 25, 2010, DryShips Inc. entered into a waiver letter for its US$230.0 million credit facility dated Sept. 10, 2007, as amended, extending the waiver of certain covenants through Dec. 31, 2010. In its audit report on the Company's financial statements for the year ended Dec. 31, 2010, Deloitte, Hadjipavlou Sofianos & Cambanis S.A., noted that the Company's inability to comply with financial covenants under its original loan agreements as of Dec. 31, 2009, its negative working capital position and other matters raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at March 31, 2011, showed US$6.99 billion in total assets and US$3.04 billion in total liabilities. DUKE AND KING: Unsecureds to Get B/N 19% to 38% Under Amended Plan ------------------------------------------------------------------ Duke and King Acquisition Corp., et al., filed on Aug. 8, 2011, second amended Chapter 11 Plan of Liquidation and explanatory disclosure statement. The Plan is being jointly proposed by the Debtors and the Official Committee of Unsecured Creditors. The Second Amended Disclosure Statement indicates that the Plan outline has been approved by the Court. The order approving the disclosure statement, however, has not been filed in the case docket. The Plan Proponents are requesting that the Bankruptcy Court approve the Debtors' election to substantively consolidate the Estates. For purposes of implementing the Plan, pursuant to such order: (a) all assets and liabilities of the Debtors will be pooled; and (b) with respect to any guarantees by one Debtor of the obligations of any Debtor, and with respect to any joint or several liability of any Debtor, the Holder of any Claims for such obligations will receive a single recovery on account of any such joint obligations of the Debtors, in each case except to the extent otherwise provided in the Plan. The foregoing information was not disclosed in the original Plan. Under the Amended Plan, the Debtors also anticipate that General Unsecured Creditors, with estimated allowed claims of between $6 million and $7.5 million, will now receive an estimated projected recovery of between 19% and 38%, instead of 18% to 31%, as originally estimated. A copy of the Second Amended Disclosure Statement is available at: http://bankrupt.com/misc/dukeandking.2ndamendedDS.pdf Habbo G. Fokkena, United States Trustee for Region 12, had objected to the adequacy of the information in the proposed disclosure statement dated June 14, 2011, the associated June 14, 2011 Plan of Reorganization, and the undated, unsigned "Liquidating Trust Agreement". Among other things, the U.S Trustee said: -- The Plan and Disclosure Statement fail to clearly address the fact that the five debtors are separate legal entities with separate creditors and debt structures. -- If a consolidation is proposed, the Disclosure Statement needs a separate liquidation analyses for each Debtor which compare what each creditor will receive both with and without a substantive consolidation. -- The Disclosure Statement and Plan fail to fully disclose and address the conflict of interest held by William Kaye, the Liquidating Trustee. Mr. Kaye, in addition to being Liquidating Trustee, also is the representative for Coca- Cola, a secured creditor. -- The provision in the Plan and Disclosure Statement which states that Debtors can obtain a revocation of the order confirming the Plan under certain circumstances by bringing a motion before the court "clearly violates the requirement of Section 1144 and Fed. R. Bankr. P. 7001 and cannot be included in the Plan or Disclosure Statement." -- The Disclosure Statement, Plan and Liquidating Trust are incomplete and confusing in the tax treatment of creditors. -- The Plan states that any creditor who receives any payment will be deemed to have forever released the Debtors and all other "Released Parties". This provision is improper insofar as it has the effect of altering any liability to creditors that current officers and insiders of the Debtors may now have. Such provisions are proscribed by 11 U.S.C. Section 524(e). As a result, the Plan, Liquidating Trust and Disclosure Statement must be changed. Pursuant to the Plan, each holder of an allowed general unsecured claim will receive a pro rata share of the net proceeds of the liquidating trust assets after the payment of all allowed fee claims, administrative claims, priority tax claims, other priority claims, and secured claims, and the payment of all costs and expenses of the liquidating trust. About Duke and King Burnsville, Minnesota-based Duke and King Acquisition Corp., dba Burger King, was formed in November 2006, to acquire 88 Burger King franchise restaurants from the Nath Companies. Duke and King, together with affiliates, filed for Chapter 11 bankruptcy protection (Bankr. D. Minn. Lead Case No. 10-38652) on Dec. 4, 2010. Duke and King estimated its assets and debts at $10 million to $50 million. Clinton E. Cutler, Esq., and Douglas W. Kassebaum, Esq., at Fredrikson & Byron, P.A., serve as the Debtors' bankruptcy counsel. Mastodon Ventures, Inc. acts as the Debtors' investment banker. Maslon Edelman Borman & Brand, LLP serves as local counsel and Aaron L. Hammer, Esq., and Richard S. Lauter, Esq., at Freeborn & Peters LLP, in Chicago, is the bankruptcy counsel to the Official Committee of Unsecured Creditors. Mesirow Financial Consulting, LLC, serves as financial advisors of the Committee. DUNE ENERGY: Incurs $13.9 Million Net Loss in Second Quarter ------------------------------------------------------------ Dune Energy, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $13.86 million on $15.89 million of revenue for the three months ended June 30, 2011, compared with a net loss of $30.94 million on $15.95 million of revenue for the same period during the prior year. The Company also reported a net loss of $22.20 million on $33.31 million of revenue for the six months ended June 30, 2011, compared with a net loss of $38.86 million on $32.92 million of revenue for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $274.23 million in total assets, $369.71 million in total liabilities, $151.29 million in redeemable convertible preferred stock, and a $246.78 million total stockholders' deficit. A full-text copy of the Form 10-Q is available for free at: http://is.gd/jNCQI9 About Dune Energy Dune Energy, Inc. (NYSE AMEX: DNE) -- http://www.duneenergy.com/ -- is an independent energy company based in Houston, Texas. Since May 2004, the Company has been engaged in the exploration, development, acquisition and exploitation of natural gas and crude oil properties, with interests along the Louisiana/Texas Gulf Coast. The Company's properties cover over 90,000 gross acres across 27 producing oil and natural gas fields. The Company reported a net loss of $75.53 million on $64.18 million of revenue for the year ended Dec. 31, 2010, compared with a net loss of $59.13 million on $52.24 million of revenue during the prior year. * * * Dune Energy carries a 'CCC-' corporate credit rating, with negative outlook, from Standard & Poor's, and 'Ca' corporate family and probability of default ratings, with negative outlook, from Moody's Investors Service. S&P said in April 2010, "[T]he company's heavy debt burden makes the prospects of a distressed exchange or bankruptcy a distinct possibility." DWELLING HOUSE SAVINGS: Harris Gets 9-Year Jail Sentence -------------------------------------------------------- The Associated Press reports that Jammie Harris will spend nine years in prison for taking advantage of a computer glitch to steal $1.1 million from Dwelling House Savings and Loan Association. The AP relates that Ms. Harris is one of four people charged in the scheme and the second to plead guilty earlier this year. She was sentenced on Aug. 11 after Senior U.S. District Judge Alan Bloch interrupted her as she asked for leniency saying she wanted "to live right." Judge Bloch noted Ms. Harris has 28 prior theft convictions, and eight more for other crimes, the AP says. According to the AP, Federal prosecutors said the suspect learned of an accounting glitch at Dwelling House Savings and Loan that let them siphon more than $3 million from the bank, which could not absorb the losses. As reported in the Troubled Company Reporter on Aug. 17, 2009, Dwelling House Savings and Loan Association, Pittsburgh, Pennsylvania, was closed August 14, 2009, 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 PNC Bank, National Association, Pittsburgh, Pennsylvania, to assume all of the deposits of Dwelling House Savings and Loan Association. DYNAMIC BUILDERS: Stipulates with Lenders on Lugo Property Sale --------------------------------------------------------------- Dynamic Builders, Inc., L. Ramon Bonin and Patty A. Bonin have entered into a stipulation with creditors Citizens Business Bank, Comerica Bank, City National Bank, and Bank of America regarding the proposed sale of a real property located at 2900 Lugo Street, in Los Angeles, California and the continuance of the foreclosure sale on the property. The Debtor, the Bonins, and their principal creditors/lenders have reached an agreement on the terms for consensual plans of reorganization. On December 30, 2010, the U.S. Bankruptcy Court for the Central District of California approved a stipulation that, among other things, granted Citizens Business Bank relief from stay to foreclose on the Lugo Property. On January 7, 2011, Citizens Business Bank recorded a notice of default and published a foreclosure sale initially set for June 7, 2011. Before June 7, the Debtor located a third-party buyer for the Lugo Property and engaged in preliminary discussions with Citizens Business Bank regarding the terms of a proposed sale. The Buyer contemplates a simultaneous acquisition of the Lugo Property and a real property located at 2914 East Washington Blvd, in Los Angeles, California, which is also owned by Dynamic. The WFC Excess Land is encumbered by a first priority deed of trust in favor of BofA. Given the two-stage acquisition, Camfield Partners, LLC -- an entity owned and controlled by Kenneth Jackson, an insider of the Debtor -- has agreed to purchase both the Lugo Property and the WFC Excess Land, construct the improvements requested by the Buyer, and thereafter sell both properties to the Buyer. Discussions are presently underway between the Debtor and BofA regarding the WFC Excess Land sale. The proposed sale transaction between the Debtor and Camfield Partners is expected to satisfy Citizens Business Bank's lien encumbering the Lugo Property, but will not generate any excess funds for the benefit of the Debtor's estate. The Debtor, the Bonins, and the Lenders stipulate that: * The Debtor will be authorized to enter into and consummate the proposed transaction with Camfield Partners for the acquisition of the Lugo Property, including the unconditional release of a $100,000 non-refundable deposit to Citizens Business Bank. * After the execution of a proposed purchase and sale agreement and the tender of $50,000 deposit into escrow, Citizens Business Bank had agreed to continue its Foreclosure Sale to June 17, 2011. If, by June 17, the parties elect to proceed with the proposed sale transaction, it was agreed that an additional $50,000 will be deposited into escrow by the Buyer, with the total $100,000 deposit deemed non-refundable and unconditionally released to Citizens Business Bank on June 17. * Citizens Business Bank is authorized to apply the $100,000 Deposit against the outstanding Lugo loan balance. It also agreed to continue its Foreclosure Sale to July 15. In the event the proposed sale transaction with Camfield Partners is not consummated by July 15, Citizens Business Bank will be entitled to immediately commence its Foreclosure Sale on July 16. About Dynamic Builders Inc. Dynamic Builders Inc. is a Los Angeles-based real estate developer. Founded in 1964 by L. Ramon Bonin, Dynamic Builders is principally involved in the construction of build to suit commercial/industrial buildings in the Los Angeles area. Dynamic Builders owns properties in Los Angeles, Carson, San Leandro, and Commerce, California, with total value of $130,790,612. Secured lenders who financed the acquisition of the properties are owed a total of $113,181,128. L. Ramon Bonin and Patty A. Bonin, the shareholders of the Company and guarantors of the institutional debt, sought Chapter 11 protection (Bankr. C.D. Calif. Case No. 10-14067) on March 31, 2011. James C. Bastian, Jr., Esq., at Shulman Hodges & Bastian LLP, represents the Bonins in their Chapter 11 case. Dynamic Builders filed for Chapter 11 bankruptcy protection on March 31, 2010 (Bankr. C.D. Calif. Case No. 10-14151). The Company estimated its assets and debts at $100 million to $500 million as of the Chapter 11 filing. It identified Comerica Bank, with a claim of $29.6 million, as the largest unsecured creditor. Todd C. Ringstad, Esq., and Nanette D. Sanders, Esq., at Ringstad & Sanders, LLP, in Irvine, Calif., represent the Debtor as bankruptcy counsel. Shaw Financial Services, Inc. serves as the Debtor's bookkeeper for bankruptcy reporting requirements and as its tax preparer. Bird, Marella, Boxer, Wolpert, Nessim, Drooks & Lincenbert acts as special litigation counsel in certain proceeding affecting Dynamic's rights in properties located at 1124 and 1135 S. Boyle Avenue. Axis Business Advisory Services, LLC, serves as the Debtor's financial consultants. EAST COAST: Hires Saieed, Washburn & Morrison as Brokers -------------------------------------------------------- Judge Randy D. Doub approved the application of East Coast Development II, LLC to employ (i) Keith Saieed of Blue Sky Services Real Estate of 2810-2A Yonkers Road, in Raleigh, North Carolina; (ii) Jonathan W. Washburn of Coldwell Banker Commercial Sun Coast Partners of 4301 Commonwealth Drive No. 102, Wilmington, North Carolina; and (iii) Scott James Morrison of Century 21 Sweyer & Associates of 301-C Western Blvd., Jacksonville, North Carolina as its brokers. (1) K. Saieed The Debtor wishes to employ Mr. Saieed as the Broker to list for sale these properties: (a) 119, aka 121, Market Street, Wilmington, New Hanover County, North Carolina; (b) 304 and 308, aka 1704, Castle Hayne Road, Castle Hayne, New Hanover County, North Carolina; (c) 3404 and 3412 Castle Hayne Road and 109 Gladiolus Road, Castle Hayne, New Hanover County, North Carolina; (d) The Debtor's 33.3% interest in 30.41 acres located at the intersection of Highways 74 and 76 and Mt. Misery Road, Leland, Brunswick County, North Carolina; and (e) 14.4 acres, known as Osprey Point, Jacksonville, Onslow County, North Carolina. The Debtor wishes to pay commissions of 6% of the gross sales price of each property. The Debtor also wishes to employ Mr. Saieed as the Broker to list for lease these properties: (a) 125 Market Street, Wilmington, New Hanover County, North Carolina; and (b) 118-122 Princess Street, Wilmington, New Hanover County, North Carolina. The Debtor wishes to pay a flat fee of 6% of the entire lease for each rental. (2) J. Washburn The Debtor wishes to employ Mr. Washburn as the Broker, on a non- exclusive basis, to list for lease the property known as the building at 125 Market Street, Wilmington, North Carolina, and the parking lot at 127 Market Street, Wilmington, North Carolina. The Debtor wishes to pay commissions of 6% of the gross rent of the property. The Debtor has also entered into another non-exclusive right to lease listing agreement with Mr. Saieed. According to the Debtor, Mr. Washburn has a potential tenant for the building and it is critical to the estate to get the building rented. (3) S. Morrison The Debtor wishes to employ Mr. Morrison as the Broker to list for sale (i) 67 Court Street, (ii) 69 Court Street, (iii) 71 Court Street, and (iv) 73 Court Street, all of which are in Jacksonville, Onslow County, North Carolina. The Debtor wishes to pay commissions of 6% of the gross sales price of each property. About East Coast Development II Wilmington, North Carolina-based East Coast Development II, LLC, dba 100 Block of Market Street, LLC, is in the business of renting real property located in Onslow County, New Hanover County, Guilford County, Wake County, Brunswick County, North Carolina, and Greenville County, Charleston County, and Richland County, South Carolina. East Coast filed for Chapter 11 bankruptcy protection (Bankr. E.D. N.C. Case No. 11-02792) on April 8, 2011. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., serves as bankruptcy counsel. Laurie R. Brown, CPA, serves as accountant. The Debtor disclosed $24,792,275 in assets and $12,172,815 in liabilities as of the Chapter 11 filing. The U.S. Trustee has not appointed a creditors committee in the Debtor's case. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. EAST COAST: Hearing on Continued Cash Access Tomorrow ----------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina granted East Coast Development II, LLC, permission to use cash collateral of BB&T, Ciena Capital, First Bank, Georgia Capital, and Wells Fargo Bank, for its postpetition, necessary and reasonable operating expenses, until Aug. 19, 2011. The Debtor will maintain three separate Debtor-in-Possession bank accounts, into which it will deposit all cash, checks, and other cash items. The Debtor will have one Debtor-in-Possession account consisting of the rents collected from all of the Wells Fargo properties, except 1020 N. Front Street. The Debtor will maintain a second Debtor-in-Possession account solely for rents collected from 1020 N. Front Street. The Debtor will maintain a third Debtor-in-Possession account consisting of the rents collected from all of the First Bank properties. A further hearing on the Debtor's continued use of cash collateral will be conducted on Aug. 18, 2011, at 2:00 p.m. As reported in the TCR on April 18, 2011, Wells Fargo Bank, N.A. filed on April 14, 2011, a Protective Objection to the Debtor's emergency motion for authority to use cash collateral. A separate Consent Order that deals with this Objection and First Bank was entered by the Court on July 25, 2011. Consent Interim Order Wells Fargo and First Bank have consented to the Debtor's limited use of cash collateral upon and only upon the express terms of this Consent Interim Order and in strict compliance with a budget through the Final Hearing Date on Aug. 18. The Budget includes, among other things, that Wells Fargo will be paid a $10,000 adequate protection payment as partial adequate protection for the use of its cash collateral during this interim period. The Budget includes, among other things, that First Bank will be paid a $1,000 adequate protection payment as partial adequate protection for the use of its cash collateral during this interim period. The Debtor will maintain one segregated Debtor-in-Possession ("DIP") bank account, into which it will deposit all cash, checks, and other cash items generated by the Wells Fargo Collateral (the "Wells DIP Account"); provided however that a separate DIP bank account will be established for the deposit of rents generated by the real property collateral located at 1020 North Front Street Wilmington in which both Wells Fargo and First Bank claim a lien (the "1020 DIP Account"). Wells Fargo and First Bank will retain their liens on all pre- petition collateral and Wells Fargo and First Bank are granted replacement liens upon all collateral of the type and kind upon which Wells Fargo and First Bank have and had a pre-petition lien, to the same extent, priority, and validity as Wells Fargo and First Bank had on the Petition Date. The replacement liens are subject only to valid liens existing as of the Petition Date. Wells Fargo and First Bank will also have an administrative expense claim allowable under 11 U.S.C. Section 503(b)(1). About East Coast Development II Wilmington, North Carolina-based East Coast Development II, LLC, dba 100 Block of Market Street, LLC, is in the business of renting real property located in Onslow County, New Hanover County, Guilford County, Wake County, Brunswick County, North Carolina, and Greenville County, Charleston County, and Richland County, South Carolina. East Coast filed for Chapter 11 bankruptcy protection (Bankr. E.D. N.C. Case No. 11-02792) on April 8, 2011. Amy M. Currin, Esq., and Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., serve as bankruptcy counsel. Laurie R. Brown, CPA, serves as accountant. Keith Saieed of Blue Sky Services Real Estate serves as broker for the sale of the Debtor's properties. The Debtor disclosed $24,792,275 in assets and $12,172,815 in liabilities as of the Chapter 11 filing. The U.S. Trustee has not yet appointed a creditors committee in the Debtor's case. The U.S. Trustee reserves the right to appoint such a committee should interest developed among the creditors. EATON MOERY: Landlord Wants to Take Over Commercial Property ------------------------------------------------------------ Mike and Judy Beason ask the U.S. States Bankruptcy Court for the Eastern District of Arkansas for a relief from stay in the Chapter 11 case of Eaton Moery Environmental Services, Inc., permitting them to take possession of the leased property. The Debtor is indebted to Mike and Judy Beason, owners and landlords of the commercial property, on a lease agreement dated June 30, 2007. The lease agreement was for a term of five years, requiring the debtor-in-possession to pay a basic monthly rent of $1,750, payable in advance on the first day of each month, subject to annual increases. According to Mike and Judy Beason, the Debtor failed to pay the rent in accordance with the lease. Their interest in the leased property is not adequately protected, and the Debtors lack equity in the leased property. Further the collateral is deteriorating in value and is not being adequately maintained or protected by the Debtor, and as a result thereof the value of the creditor's claim is deteriorating, Mike and Judy Beason added. Beason is represented by: Thomas E. Fowler, Esq. THE FOWLER LAW FIRM 601 S. Church Jonesboro, AR 72401 Tel: (870) 931-3328 Fax: (870) 934-1416 E-mail: tfowler@suddenlinkmail.com About Eaton Moery Environmental Services Wynne, Arkansas-based Eaton Moery Environmental Services, Inc., dba Delta Environmental Services, Inc., filed for Chapter 11 bankruptcy protection (Bankr. E.D. Ark. Case No. 10-14713) on June 30, 2010. James F. Dowden, P.A., serves as the Debtor's bankruptcy counsel. The Company estimated assets at $10 million to $50 million and liabilities at $1 million to $10 million EDGEN MURRAY: Incurs $3.8 Million Net Loss in Second Quarter ------------------------------------------------------------ Edgen Murray II, L.P., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $3.86 million on $222.55 million of sales for the three months ended June 30, 2011, compared with a net loss of $75.42 million on $135.71 million of sales for the same period during the prior year. The Company also reported a net loss of $13.88 million on $408.11 million of sales for the six months ended June 30, 2011, compared with a net loss of $82.38 million on $280.20 million of sales for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $500.92 million in total assets, $642.78 million in total liabilities, and a $141.86 million total partners' deficit. A full-text copy of the Form 10-Q is available for free at: http://is.gd/Zrtrgq About Edgen Murray Edgen Murray II L.P., headquartered in Baton Rouge, Louisiana, is a distributor of carbon steel and alloy products for use primarily in specialized applications in the energy and niche industrial segments. The company operates on a global basis, with approximately one-third of its sales generated outside of the Americas, and has distribution centers in five countries to facilitate timely deliveries to companies and contractors engaged in the development of new energy infrastructure projects and the maintenance of existing facilities. In 2010, Edgen Murray had sales of $628 million. The company is primarily owned by Jefferies Capital Partners, certain co-investors and members of senior management. * * * As reported by the TCR on April 11, 2011, Moody's Investors Service lowered Edgen Murray II, L.P.'s probability of default rating (PDR) to Caa2 from Caa1, its corporate family rating (CFR) to Caa3 from Caa1 and the company's 12.25% senior secured notes to Caa3 from Caa2. The downgrade was prompted by Edgen Murray's continuing weak performance even as many of its peers began to benefit in 2010 from higher oil prices, a higher rig count for oil drilling, and increased drilling in and production from alternative shale plays. In September 2010, Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Edgen Murray II L.P. to 'B- ' from 'B'. The rating outlook is stable. "The downgrade reflects S&P's expectation that 2010 EBITDA will likely be around $30 million, materially lower than its previous expectation of about $55 million, due to ongoing weakness in the company's Western Hemisphere segment as a result of lower capital spending on projects in the region," said Standard & Poor's credit analyst Sherwin Brandford. EDIETS.COM INC: Incurs $851,000 Net Loss in Second Quarter ---------------------------------------------------------- eDiets.com, Inc., reported a net loss of $851,000 on $5.95 million of total revenues for the three months ended June 30, 2011, compared with a net loss of $34.60 million on $5.43 million of total revenues for the same period a year ago. The Company also reported a net loss of $1.23 million on $12.88 million of total revenues for the six months ended June 30, 2011, compared with a net loss of $38.36 million on $10.45 million of total revenues for the same period during the prior year. The Company's selected balance sheet at June 30, 2011, showed $5.36 million in total assets, $1 million in debt (excluding capital leases) and $812,000 in stockholders' equity. A full-text copy of the press release announcing the financial results is available for free at http://is.gd/yJVKIc About eDiets eDiets.com, Inc. is a leading provider of personalized nutrition, fitness and weight-loss programs. eDiets currently features its award-winning, fresh-prepared diet meal delivery service as one of the more than 20 popular diet plans sold directly to members on its flagship site, http://www.eDiets.com. Ernst & Young LLP, in Boca Raton, Florida, expressed substantial doubt about eDiets.com's ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and has a working capital deficiency. The Company reported a net loss of $43.3 million on $23.4 million of revenues for 2010, compared with a net loss of $12.1 million on $18.1 million of revenues for 2009. The Company's balance sheet at March 31, 2011, showed $4.51 million in total assets, $5.02 million in total liabilities, all current, $17,000 in capital lease obligations, $151,000 in deferred revenue and a $677,000 total stockholders' deficit. ESTERLINE TECH: S&P Affirms 'BB' Rating on Unsecured Debt --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' issue-level rating on Esterline Technologies Corp.'s unsecured debt and removed the rating from CreditWatch, where it placed it with negative implications on May 5, 2011. The unsecured recovery rating remains '5'. On July 27, 2011, Esterline announced it had completed the acquisition of Souriau Group (not rated) of France for $705 million. The acquisition was financed with cash on hand (a significant amount of which was held outside the U.S.), drawings on the company's existing $460 million secured revolving credit facility and a new EUR125 million secured term loan. "Although the amount of secured debt increased, we believe the recovery prospects for the unsecured debtholders remains within the 10%-30% range appropriate for a '5' recovery rating," S&P said. "We affirmed our 'BB+' corporate credit rating on Esterline on May 5, 2011, because we had contemplated an acquisition of the size of Souriau in our March 2011 upgrade of the company and, although we expect pro forma debt to EBITDA to increase to around 3x in fiscal 2011 (ending Oct. 31, 2011) from around 2.4x now, this is below our previously stated threshold of 4x for a possible downgrade. The company has stated that it is committed to using excess cash flow to reduce debt, so we expect that credit protection measures will likely improve fairly quickly, with debt to EBIDTA below 2.5x and funds from operations to debt in the 30%-35% range by fiscal 2012," S&P said. Souriau manufactures electrical connectors for harsh environments; its key markets are aerospace and defense, nuclear power, oil and gas, and rail. The company's products complement Esterline's range of products and end markets. Since less than 30% of Souriau's sales are currently made in the U.S., there are opportunities for Esterline to use its customer relationships to expand Souriau's U.S. sales -- especially in the defense market. Esterline expects Souriau, which has slightly higher operating margins, to contribute $400 million in sales and $75 million of EBITDA in fiscal 2012. The ratings on Esterline reflect the company's exposure to the competitive and cyclical commercial aerospace market, its active acquisition program, and modest size compared with some competitors. Its somewhat diversified revenue base and moderate debt leverage partly offset these risk factors. "We assess the company's business risk profile as fair and its financial risk profile as significant," S&P stated. Rating List Esterline Technologies Corp. Corporate credit rating BB+/Stable Ratings Affirmed, Off CreditWatch; Recovery Ratings Unchanged To From Esterline Technologies Corp. Unsec debt BB BB/CW Neg Recovery rating 5 EVERGREEN SOLAR: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Evergreen Solar, Inc. 138 Bartlett Street Marlboro, MA 01752 Bankruptcy Case No.: 11-12590 Chapter 11 Petition Date: August 15, 2011 Court: U.S. Bankruptcy Court District of Delaware (Delaware) Judge: Mary F. Walrath Debtor's Counsel: Laura Davis Jones, Esq. PACHULSKI STANG ZIEHL & JONES LLP 919 N. Market Street, 17th Floor Wilmington, DE 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 E-mail: ljones@pszjlaw.com - and - Timothy P. Cairns, Esq. PACHULSKI STANG ZIEHL & JONES LLP 919 N. Market Street, 17th Floor Wilmington, DE 19801 Tel: (302) 652-4100 Fax: (302) 652-4400 E-mail: tcairns@pszjlaw.com Debtor's Claims/Noticing Agent: EPIQ BANKRUPTCY SOLUTIONS Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ US Bank Convertible Note $208,561,473 214 North Tyron Street Charlotte, NC 28202 Jiawei Solar (Wuhan) Co., Ltd Trade $6,450,261 No. 3 Road. Noa 1 Liufang Dongyi Wuhan, 170, China 430205 US Bank Convertible Cash $4,589,000 214 North Tyron Street Notes Charlotte, NC 28202 Mass Development Rent $1,549,986 160 Federal Street Boston, MA 02110 Lazard Capital Marketing Professional $1,465,443 30 Rockefellar Plaza Services New York, NY 10020 OCI Company LTD Trade $1,224,000 OCI Building, 50 Sogong-Dong, Jung-Gu Seoul, South Korea 100-718 TUV Immission Schutz Trade $166,725 CH2m Hill Ind. Design & Const Inc. Professional Services $75,500 National Grid Utility $63,370 Praxair Inc. Trade $47,431 Global Telecom & Tech Americas Utility $44,964 Inc. Consumers Energy Utility $37,747 Bruel & Kjaer North America Inc. Trade Services $36,000 Atlantic Plant Maintenance, Inc. Trade Services $24,800 PC Connection Sales Corporation Trade $21,004 Lightower Fiber Networks Utility $16,016 NC State University Trade Services $12,500 Capgemini US LLC Utility $12,000 Magnum Construction Company Inc. Trade Services $11,840 CDI Corporation Trade Services $9,069 FALLS AT TOWNE: Court Approves Ravich Meyer as Attorney ------------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota authorized the Falls at Towne Crossing, LLC, to employ Michael L. Meyer, Esq., and the law firm of Ravich Meyer Kirkman McGrath Nauman & Tansey to represent it in connection with all matters relating to the discharge of its responsibilities as debtor-in-possession in the Chapter 11 case. According to the Troubled Company Reporter on July 19, 2011, the attorneys and paralegal that will provide services and their hourly rates are: Michael L. Meyer, Esq. $450 Michael F. McGrath, Esq. $375 Will Tansey, Esq. $305 Paralegal $150 Mr. Meyer, a shareholder at Ravich Meyer, attests neither the firm nor any of its shareholders have any connection with any party holding a claim or other interest adverse to the Debtor or its estate. About The Falls at Towne Crossing and Geneva Multi-Family Exchange XIV Geneva Multi-Family Exchange XIV LLC owns the 336-unit Falls at Towne Crossing apartment project in Mansfield, Texas. Geneva Multi-Family Exchange XIV and affiliate The Falls at Towne Crossing, LLC, c/o Exchange Realty Inc., based in Minneapolis, Minnesota, filed separate Chapter 11 bankruptcy petitions (Bankr. D. Minn. Case Nos. 11-44562 and 11-44563) on July 5, 2011. Judge Dennis D. O'Brien presides over the case. Geneva Multi-Family Exchange XIV LLC disclosed $25.5 million in assets and $24.3 million in debts in its petition. Falls at Towne Crossing estimated assets and debts of $10 million to $50 million. The petitions were signed by Duane H. Lund, chief manager. FIRST DATA: Files Form 10-Q, Incurs $128.2 Million Net Loss in Q2 ----------------------------------------------------------------- First Data Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $128.20 million on $2.75 billion of revenue for the three months ended June 30, 2011, compared with a net loss of $122.20 million on $2.61 billion of revenue for the same period during the prior year. The Company also reported a net loss of $312.70 million on $5.29 billion of revenue for the six months ended June 30, 2011, compared with a net loss of $330.60 million on $5.01 billion of revenue for the same period during the prior year. The Company's balance sheet at June 30, 2011, showed $37.29 billion in total assets, $33.42 billion in total liabilities, $45.40 million in redeemable noncontrolling interest, and $3.81 billion in total equity. A full-text copy of the Form 10-Q is available for free at: http://is.gd/ohg7fB About First Data Based in Atlanta, Georgia, First Data Corporation, with over $10 billion of revenue for the 12 months ended June 30, 2010, provides commerce and payment solutions for financial institutions, merchants, and other organizations worldwide. The Company reported a net loss $846.90 million on $10.38 billion of revenue for the year ended Dec. 31, 2010, compared with a net loss of $1.01 billion on $9.31 billion of revenue during the prior year. * * * The Company's carries a 'B3' corporate family rating, with a stable outlook, from Moody's Investors Service, a 'B' corporate credit rating, with stable outlook, from Standard & Poor's, and a 'B' long-term issuer default rating from Fitch Ratings. Standard & Poor's Ratings Services in December 2010 assigned its 'B-' issue rating with a '5' recovery rating to First Data Corp.'s (B/Stable/--) $2 billion of 8.25% second-lien cash-pay notes due 2021, $1 billion $8.75% second-lien pay-in-kind-toggle notes due 2022, and $3 billion 12.625% unsecured cash-pay notes due 2021. The '5' recovery rating indicates lenders can expect modest (10%- 30%) recovery in the event of payment default. Under S&P's default analysis, there is insufficient collateral to fully cover First Data's first-lien debt. As a result, the remaining value of the company (generated by non-U.S. assets and not pledged) would be shared pari passu among the uncovered portion of first-lien debt, new second-lien debt, and new and existing unsecured debt. FIRST MARINER: Files Form 10-Q, Incurs $11-Mil. Net Loss in Q2 -------------------------------------------------------------- First Mariner Bancorp filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $11 million on $11.65 million of total interest income for the three months ended June 30, 2011, compared with a net loss of $4.65 million on $13.49 million of total interest income for the same period during the prior year. The Company also reported a net loss of $18.31 million on $23.84 million of total interest income for the six months ended June 30, 2011, compared with a net loss of $8.09 million on $27.69 million of total interest income for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $1.16 billion in total assets, $1.17 billion in total liabilities, and a $13.42 million total stockholders' deficit. As reported in the TCR on April 4, 2011, Stegman & Company, in Baltimore, expressed substantial doubt about First Mariner Bancorp's ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has suffered recurring losses and has a limited capital base. Bankruptcy Warning As of June 30, 2011, First Mariner Bank's and the Company's capital levels were not sufficient to achieve compliance with the higher capital requirements they were required to meet by June 30, 2010. The failure to maintain these capital requirements could result in further action by their regulators. On Sept. 18, 2009, the Bank entered into an Agreement with the Federal Deposit Insurance Corporation and the Commissioner of Financial Regulation for the state of Maryland, pursuant to which it consented to the entry of an Order to Cease and Desist, which directs the Bank to (i) increase its capitalization, (ii) improve earnings, (iii) reduce nonperforming loans, (iv) strengthen management policies and practices, and (v) reduce reliance on noncore funding. The September Order required the Bank to adopt a plan to achieve and maintain a Tier I leverage capital ratio of at least 7.5% and a total risk-based capital ratio of at least 11% by June 30, 2010. We did not meet the requirements at June 30, 2010, December 31, 2010, or June 30, 2011. The failure to achieve these capital requirements could result in further action by its regulators. First Mariner currently does not have any capital available to invest in the Bank and any further increases to the Company's allowance for loan losses and operating losses would negatively impact the Company's capital levels and make it more difficult to achieve the capital levels directed by the FDIC and the Commissioner. Because the Company has not met all of the capital requirements set forth in the September Order within the prescribed timeframes, if the Company's revised capital plan is not approved or if the Company is not granted a waiver of those requirements, the FDIC and the Commissioner could take additional enforcement action against the Company, including the imposition of monetary penalties, as well as further operating restrictions. The FDIC or the Commissioner could direct the Company to seek a merger partner or possibly place the Bank in receivership. If the Bank is placed into receivership, the Company would cease operations and liquidate or seek bankruptcy protection. If the Company were to liquidate or seek bankruptcy protection, the Company does not believe that there would be assets available to holders of the capital stock of the Company. A full-text copy of the Form 10-Q is available for free at: http://is.gd/fJGNaz About First Mariner Headquartered in Baltimore, Maryland, First Mariner Bancorp -- http://www.1stmarinerbancorp.com/-- is a bank holding company whose business is conducted primarily through its wholly owned operating subsidiary, First Mariner Bank, which is engaged in the general general commercial banking business. First Mariner was established in 1995 and has total assets in excess of $1.3 billion as of Dec. 31, 2010. "Quantitative measures established by regulation to ensure capital adequacy require the [First Mariner] Bank to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average quarterly assets," the Company said in the filing. "As of March 31, 2011, the Bank was "under-capitalized" under the regulatory framework for prompt corrective action." GARY PHILLIPS: Can Use Creditors' Cash Collateral Until Sept. 23 ---------------------------------------------------------------- The Hon. Marcia Phillips Parsons of the U.S. Bankruptcy Court for the Eastern District of Tennessee granted Gary Phillips Construction, LLC, to use the secured creditors' cash collateral on an interim basis until 5:00 p.m. on Sept. 23, 2011. The Court ordered that any variance in expense figures in the interim budget in excess of 10% will require Court approval. As adequate protection, Bank of Tennessee, Citizens Bank, Commercial Bank, First Bank & Trust, Regions Bank, Tri-Summit Bank, TruPoint Bank, and Probuild Company, LLC, is granted replacement liens in and to all assets of the estate that are within the collateral descriptions of the Secured Creditors' loan, lien and security documents. An adjourned preliminary hearing on the Debtor's continued used of cash collateral will be held on Sept. 20, 2011, at 9:00 a.m. About Gary Phillips Construction Piney Flats, Tennessee-based Gary Phillips Construction, LLC, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Tenn. Case No. 10-53097) on Dec. 3, 2010. Fred M. Leonard, Esq. -- fredmleonard@earthlink.net -- in Bristol, Tennessee, serves as the Debtor's counsel. The Debtor tapped Wayne Turbyfield as accountant. The Court denied the application to employ Crye-Leike Realtors as realtor. In its schedules, the Debtor disclosed $13,255,698 in assets and $7,614,399 in liabilities as of the Petition Date. Daniel M. McDermott, the U.S. Trustee for Region 8, appointed six creditors to serve on an Official Committee of Unsecured Creditors in the Debtor's case. Dean B. Farmer, Esq., at Hodges, Doughty & Carson, PLLC, serves as the committee's counsel. GENTIVA HEALTH: S&P Lowers Corporate Credit Rating to 'B' --------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Atlanta-based Gentiva Health Services Inc. to 'B' from 'B+'. The outlook is negative. "At the same time, we lowered our senior secured issue-level rating to 'B+' from 'BB-' (one notch above the corporate credit rating). The recovery rating of '2', indicating our expectation for substantial (70% to 90%) recovery in the event of payment default, remains the same," S&P said. "We also lowered the issue-level rating on the senior unsecured notes to 'CCC+' from 'B-' (two notches below the corporate credit rating). The recovery rating of '6' indicating our expectation for negligible recovery (0% to 10%), remains the same," S&P stated. "The downgrade on Gentiva follows the company's significant underperformance relative to our expectations," said Standard & Poor's credit analyst Tahira Wright, "and prospects that new proposed Medicare cuts could, if final, lead to further margin deterioration and a possible covenant violation in 2012." GERALD CHAMPION: Files Petition Under Chapter 11 ------------------------------------------------ Gerald Champion Regional Medical Center (GCRMC) filed a petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court in Albuquerque, N.M. The board of directors of GCRMC authorized the filing in order to ensure the hospital's immediate and long-term ability to provide critical healthcare services to more than 70,000 people in Otero and its neighboring counties while creating an orderly process to resolve a group of lawsuits in a fair and timely manner. The majority of the lawsuits were filed between June and October 2010 and relate to procedures that have not been performed at the hospital for nearly three years, by physicians who no longer work at the hospital. All efforts to resolve these lawsuits have been unsuccessful. The more than 700 current employees of the hospital will continue to receive wages, salaries and benefits during the Chapter 11 process, and all vendors providing goods and services to the hospital after the Chapter 11 filing will be paid in full for those goods and services. Also, in conjunction with the filing, GCRMC intends to file a variety of first day motions that will seek to limit the impact on vendors with respect to pre-filing goods and services provided to the hospital to the fullest extent permitted by the Bankruptcy Code. GCRMC looks forward to maintaining its longstanding relationships with all of its valued vendors during and after the conclusion of its Chapter 11 case. "Since the filing of the lawsuits GCRMC has been unable to raise capital needed to invest in the expanded facilities and to continue updating our medical equipment and technology. Additionally, we are unable to move forward on various clinical services' initiatives to improve access to care for our community," said Jim Heckert, Chief Executive Officer of GCRMC. "It is critical that we be able to fund our community's current and future healthcare needs. There is a direct correlation between the growth of needed services and the long-term viability of the hospital, which is more than 75 miles from the nearest comparable facility." "This was a difficult decision for the board," said Norm Arnold, chairman of the board of directors of GCRMC, "but Chapter 11 provides the hospital with a mechanism to resolve the lawsuits fairly and efficiently. We believe this is the most responsible way to manage this unanticipated threat to the hospital's long- term viability so that we can fully focus on our complex mission of meeting the growing medical needs of our community." GCRMC is a not-for-profit 99-bed acute care facility located in Alamogordo, N.M. It has served the community for more than 60 years, and in 1999 moved into its new state-of-the-art medical facility. The hospital's services have continued to evolve and additional services include: Cancer Center, Inpatient/Outpatient Gero-psych services, Inpatient Rehabilitation, Joint Center, Hospitalist Program, and Level III Trauma Center. Complementing the growth in services is a fully functional Inpatient Electronic Record as well as digital radiology. GCRMC has a longstanding partnership with the Department of Defense (DoD) allowing for Air Force physicians from nearby Holloman Air Force Base to admit and treat DoD beneficiaries in the hospital. The hospital is the largest non-governmental employer in Otero County. The hospital has created a temporary telephone number for interested community members to ask questions or leave recorded messages to be responded to in a timely manner. The number is 575- 443-7849. GIORDANO'S ENTERPRISES: Fifth Third Bank Seeks Sanctions -------------------------------------------------------- Hilary Russ at Bankruptcy Law360 reports that Fifth Third Bank, lender of Giordano's Enterprises Inc., on Monday asked an Illinois bankruptcy court to sanction the restaurant's owners for trying to block the bank from bidding in any potential asset sale. In its motion for monetary sanctions, Law360 relates, the bank claims that the restaurant's owners - members of the Apostolou family - are in contempt of court for allegedly violating a May bankruptcy court order and the automatic stay with their Aug. 3 lawsuit filed in state court. About Giordano's Enterprises Chicago, Illinois-based Giordano's Enterprises, Inc., was founded in 1974 in Chicago, Illinois, by two Argentinean immigrants, Efren and Joseph Boglio. In 1988, John and Eva Apostolou purchased control of Giordano's. Although this casual dining eatery offers a broad array of fine Italian cuisine, it is primarily know for its "Chicago's World Famous Stuffed Pizza". At present, Giordano's operates six company owned stores in Chicagoland, four joint venture stores, and thirty-five franchisee locations. In addition, Giordano's operates Americana Foods, Inc., located in Mount Prospect, Illinois, that serves as the commissary for the majority of food products purchased by the Illinois locations. An affiliated real estate holding company, Randolph Partners, LP, owns 12 restaurant buildings that are leased to four of the company-owned locations, two of the joint venture locations and six of the franchisee locations. The other 33 locations are leased from third party landlords; two for the Giordano's locations, two for the joint venture locations and 29 for the franchise locations. Giordano's is the lessee and subleases the restaurant facility for 22 of the 29 franchise third party leases. JBA Equipment Finance, Inc, another affiliated entity, leases restaurant equipment packages to eight franchisee locations. Giordano's Enterprises and 26 affiliates filed for Chapter 11 bankruptcy protection (Bankr. N.D. Ill. Lead Case No. 11-06098) on Feb. 16, 2011. Six additional affiliates filed for Chapter 11 protection on Feb. 17, 2011. Michael L. Gesas, Esq., David A. Golin, Esq., Miriam R. Stein, Esq., and Kevin H. Morse, at Arnstein & Lehr, LLP, in Chicago, serve as the Debtors' bankruptcy counsel. Giordano's Enterprises disclosed $59,387 in assets and $45,538,574 in liabilities as of the Chapter 11 filing. Certain of the Debtors owe Fifth Third Bank not than $13,560,662, pursuant to loans and financial accommodations, and $31,927,998 under a business loan as of the Petition Date. Fifth Third has agreed to provide DIP financing of up to $35,983,563 to the Debtors. Philip V. Martino has been appointed as Chapter 11 trustee in the Debtors' bankruptcy cases, at the behest of the U.S. Trustee. Mr. Martino filed a $3,000,000 bond. GM PINE: Court Approves Crocker Law Group PLLC as Counsel --------------------------------------------------------- U.S. Bankruptcy Court for the Western District of Washington has approved GM Pine Street Garage LLC's application to employ Crocker Law Group PLLC as its counsel. As reported in the Troubled Company Reporter on Aug. 3, 2011, upon retention, the firm, will among other things: 1. Take all actions necessary to protect and preserve Debtor's bankruptcy estate, which may include: the prosecution of actions on Debtor's behalf; defense of any action commenced against Debtor, in conjunction with special litigation counsel, as appropriate; negotiations in litigation concerning the Debtor; objections to claims filed against Debtor in this bankruptcy case; and compromise or settlement of such claims. 2. Prepare the necessary applications, motions, memoranda, responses, complaints, answers, orders, notices, reports and other papers required from Debtor, as debtor-in-possession, in connection with administration of this case. 3. Negotiate with creditors concerning a Chapter 11 plan, prepare a Chapter 11 plan and disclosure statement and related documents, and take the steps necessary to confirm and implement the proposed plan. Debtor and CLG have agreed to an initial security retainer of $100,000, of which $50,000 has been paid, and the remaining $50,000 to be paid (1) in the event a motion for relief from stay is successfully defended, or (2) within 90 days after the date of the engagement letter, whichever is earlier. The Zoe and Ava Brenneke Irrevocable Trust (the "Trust"), through its Trustee, Jimmy Drakos, has guaranteed the fees and directed its subsidiary Guardian Investment Real Estate, LLC, a Delaware limited liability company, to pay the $50,000 partial retainer. The Trust's relationship to the Debtor, as the ultimate owner in a complicated ownership structure, is as follows: -- The Zoe & Ava Brenneke Irrevocable Trust UDT is the owner of 99% of the membership interests of Pine Garage LLC, a Washington limited liability company. Jimmy Drakos is the trustee of same. -- Pine Garage Independent LLC, a Washington limited liability company, is the owner of 1% of the membership interests of Pine Garage LLC. -- The Fund is the owner of 100% of the membership interest in GM Institutional Fund LLC, a Delaware limited liability Company. -- The Institutional Fund is the owner of 100% of the membership interest in GM Pine Street Garage LLC, a Delaware limited liability company, and the Debtor in this case. CLG has drawn down $7,763 for prepetition fees and costs. As of the time of filing, the trust account has a balance of $41,198. The Debtor has also given CLG authority to disburse $1,039.00 to its ECF creditcard post-petition for the Chapter 11 filing fee. About GM Pine Street Garage Portland, Oregon-based GM Pine Street Garage, LLC is a sole asset LLC, with 100% ownership interest in real and personal property that consists of a parking garage with an address commonly known as 1601 Third Avenue, Seattle, Washington, and its rents and leases. The Company filed for Chapter 11 protection (Bankr. W.D. Wash. Case No. 11-17493) on June 23, 2011. Bankruptcy Judge Karen A. Overstreet presides over the case. Shelly Crocker, Esq., at Crocker Law Group PLLC represents the Debtor in its restructuring effort. The Debtor estimated assets and debts at $10 million to $50 million. GM PINE: Files Schedules of Assets & Liabilities ------------------------------------------------ GM Pine Street Garage, LLC filed with the U.S. Bankruptcy Court for the District of Washington, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------- ----------- A. Real Property $41,000,000 B. Personal Property $7,854,044 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $24,782,258 E. Creditors Holding Unsecured Priority Claims $477 F. Creditors Holding Unsecured Non-priority Claims $5,008,666 ----------- ----------- TOTAL $6,382,515 $8,655,220 About GM Pine Street Garage Portland, Oregon-based GM Pine Street Garage, LLC is a sole asset LLC, with 100% ownership interest in real and personal property that consists of a parking garage with an address commonly known as 1601 Third Avenue, Seattle, Washington, and its rents and leases. The Company filed for Chapter 11 protection (Bankr. W.D. Wash. Case No. 11-17493) on June 23, 2011. Bankruptcy Judge Karen A. Overstreet presides over the case. Shelly Crocker, Esq., at Crocker Law Group PLLC represents the Debtor in its restructuring effort. The Debtor estimated assets and debts at $10 million to $50 million. GM PINE: Court Approves Robert S. Simon as Special Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington has approved GM Pine Street Garage, LLC's permission to employ Robert S. Simon as special counsel. As reported in the Troubled Company Reporter on Aug. 4, 2011, The Debtor is a party to a ground lease for real property located at 1601 Third Avenue, Seattle, Washington, and improvements thereon. In March, Capmark Bank, a secured creditor, filed a complaint against Debtor for appointment of a custodial receiver in King County Superior Court for the State of Washington, Case No. 11-2- 09678-5 SEA. JSH Properties, Inc. was appointed as the custodial receiver for the Property. Mr. Simon is the attorney of record for the Debtor in the pending receivership matter. In addition, prior to the bankruptcy filing, there were two active lawsuits pending in the U.S. District Court for the Western District of Washington and King County Superior Court for the State of Washington, in which Mr. Simon is also the attorney of record. The first involves a litigation to foreclose a construction lien against the property, and the second involves an action to enforce against the Debtor an indemnity contract and payment of contract-related losses. The Debtor is managed by Willamette Capital Group LLC, which has been a client of Mr. Simon from time to time in its managerial capacity. The Debtor said that the continued employment of the firm during the pendency of the Chapter 11 case is warranted because the services to be performed are necessary to enable the Debtor to successfully defend in maintaining its interest in the Property, as put at risk in the above-referenced actions pending in State Court, as well as to oversee the smooth transition of the management of the Property from the Receiver to the debtor-in- possession, as well as to aid in the various progress stages of the Debtor's current Chapter 11 proceeding with his exceptional knowledge of the Debtor's ownership structure. About GM Pine Street Garage Portland, Oregon-based GM Pine Street Garage, LLC is a sole asset LLC, with 100% ownership interest in real and personal property that consists of a parking garage with an address commonly known as 1601 Third Avenue, Seattle, Washington, and its rents and leases. The Company filed for Chapter 11 protection (Bankr. W.D. Wash. Case No. 11-17493) on June 23, 2011. Bankruptcy Judge Karen A. Overstreet presides over the case. Shelly Crocker, Esq., at Crocker Law Group PLLC represents the Debtor in its restructuring effort. The Debtor estimated assets and debts at $10 million to $50 million. GRAHAM PACKAGING: Incurs $26.6 Million Net Loss in Second Quarter ----------------------------------------------------------------- Graham Packaging Company Inc. reported a net loss of $26.60 million on $821.23 million of net sales for the three months ended June 30, 2011, compared with net income of $37.80 million on $652.83 million of net sales for the same period during the prior year. The Company also reported a net loss of $18.50 million on $1.57 billion of net sales for the six months ended June 30, 2011, compared with net income of $13.29 million on $1.23 billion of net sales for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $2.94 billion in total assets, $3.46 billion in total liabilities, and a $520.85 million deficit. "Our second quarter results cap off a solid first half of 2011 despite general softness in global demand and headwinds associated with an inflating cost environment," said CEO Mark Burgess. "Our Food and Beverage franchise continued to be relatively strong, and we added operations in Japan in support of one of our largest global Food and Beverage customers. We remain pleased with the legacy Liquid Container business, and are on track against our integration and synergy achievement goals. Our acquisition of Techne's assets rounds out our machine technology platform and gives us another avenue to explore profitable growth in international markets." A full-text copy of the press release announcing the financial results is available for free at http://is.gd/NryTho About Graham Packaging Headquartered in York, Pennsylvania, Graham Packaging Holdings Company, -- http://www.grahampackaging.com/-- the parent company of Graham Packaging Company, L.P., is engaged in the design, manufacture and sale of customized blow molded plastic containers for the branded food and beverage, household, automotive lubricants and personal care/specialty product categories. As of the end of June 2008, the company operated 83 manufacturing facilities throughout North America, Europe and South America. * * * In June 2011, Fitch Ratings revised the Rating Watch status on Graham Packaging Company, L.P.'s and its subsidiary, GPC Capital Corp.'s 'B' Issuer Default Rating and the long-term debt ratings to Negative from Positive. The rating action follows Graham's announcement that the company has signed a definitive merger agreement, and an amendment thereto, under which Graham would be acquired by Reynolds Group Holdings Limited in an all-cash transaction for $25.50 per share. The transaction is valued at approximately $4.5 billion including assumed indebtedness. The deal is expected to close in the second half of this year. Fitch notes Graham's credit agreement contains triggers that allow lenders to declare an event of default and elect to declare all borrowings due and payable in the event of a party acquiring beneficial ownership. The debt indentures also contain a change of control covenant that requires the company to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest. GREAT ATLANTIC: Strikes Deal with OfficeMax Over Poaching Suit -------------------------------------------------------------- Roxanne Palmer at Bankruptcy Law360 reports that the Great Atlantic & Pacific Tea Co. Inc. on Friday told a New York bankruptcy court it had reached a settlement with OfficeMax Inc. in a suit alleging A&P improperly poached OfficeMax executives and interfered with their nonsolicitation agreements. Law360 relates that OfficeMax filed the underlying suit in Illinois state court in August 2010, claiming that former Chief Operating Officer Sam Martin, currently the CEO of A&P, had improperly recruited other OfficeMax executives, including Carter Knox, current A&P senior vice president of human resources, and Paul Hertz. About Great Atlantic & Pacific Founded in 1859, Montvale, New Jersey-based Great Atlantic & Pacific is a leading supermarket retailer, operating under a variety of well-known trade names, or "banners" across the mid- Atlantic and Northeastern United States. It operates 395 supermarkets, combination food and drug stores, beer, wine, and liquor stores, and limited assortment food stores in Connecticut, Delaware, Massachusetts, Maryland, New Jersey, New York, Pennsylvania, Virginia, and the District of Columbia. "Banners" include A&P (101 stores), Food Basics (12 stores), Pathmark (128 stores), Super Fresh (57 stores), The Food Emporium (16 stores), and Waldbaum's (59 stores). A&P employs roughly 41,000 employees, including roughly 28,000 part-time employees. Roughly 95% of the workforce are covered by collective bargaining agreements. A&P and its affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y. Case No. 10-24549) on Dec. 12, 2010 in White Plains, New York. In its petition, A&P reported total assets of $2.5 billion and liabilities of $3.2 billion as of Sept. 11, 2010. Paul M. Basta, Esq., James H.M. Sprayregen, Esq., and Ray C. Schrock, Esq., at Kirkland & Ellis, LLP, in New York, and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. Lazard Freres & Co. LLC is the financial advisor. Huron Consulting Group is the management consultant. Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Abhilash M. Raval, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represent the Official Committee of Unsecured Creditors. Great Atlantic previously obtained approval to sell assets to: (1) Mrs. Green's Management Corp. and Village Super Market, Inc., with respect to the Lot 1 Stores for $24,500,000, plus certain amounts; (2) Mrs. Green's Management Corp. and Village Super Market, Inc., with respect to the Lot 2 Stores for $12,500,000, plus certain amounts; (3) SUPERVALU INC., with respect to the prime leasehold interest and the related subleasehold interests in the Debtors' Superfresh banner Ellicott City, Maryland store as well as related inventory, furnishings, equipment, prescription drug inventory and customer records and files; and (4) Safeway, Inc., Walgreens Co., and Maryland CVS Pharmacy, L.L.C., with respect to certain prescription drug inventory and pharmacy customer records. GRIFFON CORP: S&P Affirms 'BB-' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on N.Y.-based Griffon Corp. to negative from stable. "At the same time, we affirmed the ratings on the company, including its 'BB-' corporate credit rating," S&P said. "The outlook revision reflects the risk that Griffon's operating earnings will continue to be challenged over the next several quarters due to weak sales in its lawn and garden tools business and operational difficulties experienced in plant capacity expansions in the company's plastics business in Europe and Brazil," said Standard & Poor's credit analyst Thomas Nadramia. "These capacity expansions were the largest in the company's history and were undertaken to support growing business in those markets. Based on our current operating assumptions, we project Griffon to generate adjusted EBITDA in fiscal 2011 of about $140 million. If Griffon is successful in correcting the operational inefficiencies in its plastics segments and more normal buying patterns return to its tool business, our projections indicate that adjusted EBITDA could reach the $175 million to $200 million range in fiscal 2012 leading to credit metrics of about 4.5x, which would be more in-line with the rating given our view of its fair business risk profile. However, current lackluster consumer spending and the need to correct operational issues in the Plastics business cause us to remain cautious on the outlook for a quick recovery," S&P related. "The 'BB-' corporate credit rating on Griffon reflects the combination of what we consider to be the company's fair business risk profile and aggressive financial risk profile. The business risk profile reflects the company's participation in cyclical home (lawn and garden tools) and building products (garage doors) markets and the highly competitive plastics and telephonics businesses. However, revenues, earnings and cash flow from the telephonics and plastics businesses have historically been fairly consistent with operating income margins of about 10%. The Home and Building Materials business is subject to more volatility due to cyclical construction and consumer spending levels," S&P said. The company also benefits from good geographic diversity with significant sales in Europe and South America, although all of the company's business segments also possess significant customer concentrations. The company generates a high degree of building products revenue through big box retailers such as Home Depot, Lowe's, and Menards, although the broad array of products sold partially offset this concentration risk. The plastics business is largely concentrated among the few large makers of adult incontinence and infant diaper products, although the company has enjoyed very long-standing relationships in this segment. The telephonics business, due to the contract nature of its business, is also likely to be concentrated among major aerospace and avionic companies that contract with various agencies of the U.S. government. "The issue-level rating on Griffon Corp.'s $200 million revolving credit facility is 'BB+' (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating our expectation that lenders could receive very high (90% to 100%) recovery in the event of a default. The issue-level rating on Griffon's $550 million 7.125% senior notes due 2018 is 'BB-' (the same as the corporate credit rating) with a recovery rating of '3' indicating that investors could expect to receive meaningful (50% to 70%) recovery in the event of a default," S&P said. "The negative rating outlook reflects our risk assessment that Griffon's operating performance could be adversely affected well into fiscal 2012 if operational improvements in the Plastics segment are delayed and consumer spending on landscaping tools and products remains weak into the spring selling season. Based on these assumptions, adjusted leverage could remain above 5x in 2012, which we would view as weak for the rating," S&P related. "We could lower the rating if there is little or no sequential improvement in year over year EBITDA from the tools business (caused by weak consumer spending) and/or the plastics segment, causing adjusted leverage measures to exceed 5.5x on a sustained basis," S&P said. A positive rating action would become if Griffon makes meaningful progress in returning to its historical operating margins (above 10%) in the Plastics business and tool revenues rebound to previous years' levels, while the company maintains adequate liquidity. HAMPTON ROADS: Incurs $18.6 Million Net Loss in Second Quarter -------------------------------------------------------------- Hampton Roads Bankshares, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q, reporting a net loss of $18.67 million on $26.28 million of total interest income for the three months ended June 30, 2011, compared with a net loss of $52.50 million on $30.02 million of total interest income for the same period during the prior year. The Company also reported a net loss of $50.32 million on $53.46 million of total interest income for the six months ended June 30, 2011, compared with a net loss of $91.59 million on $64.12 million of total interest income for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $2.59 billion in total assets, $2.43 billion in total liabilities, and $161.64 million in total shareholders' equity. A full-text copy of the Form 10-Q is available for free at: http://is.gd/stb8ej About Hampton Roads Bankshares Hampton Roads Bankshares, Inc. (NASDAQ: HMPR) -- http://www.hamptonroadsbanksharesinc.com/-- is a bank holding company that was formed in 2001 and is headquartered in Norfolk, Virginia. The Company's primary subsidiaries are Bank of Hampton Roads, which opened for business in 1987, and Shore Bank, which opened in 1961. Currently, Bank of Hampton Roads operates twenty- eight banking offices in the Hampton Roads region of southeastern Virginia and twenty-four offices in Virginia and North Carolina doing business as Gateway Bank & Trust Co. Shore Bank serves the Eastern Shore of Maryland and Virginia through eight banking offices and fifteen ATMs. Effective June 17, 2010, the Company and its banking subsidiary, Bank of Hampton Roads ("BOHR"), entered into a written agreement with the Federal Reserve Bank of Richmond and the Bureau of Financial Institutions of the Virginia State Corporation Commission. The Company's other banking subsidiary, Shore Bank, is not a party to the Written Agreement. Under the terms of the Written Agreement, among other things, BOHR agreed to develop and submit for approval plans to (a) strengthen board oversight of management and BOHR's operations, (b) strengthen credit risk management policies, (c) improve BOHR's position with respect to loans, relationships, or other assets in excess of $2.5 million which are now, or may in the future become, past due more than 90 days, are on BOHR's problem loan list, or adversely classified in any report of examination of BOHR, (d) review and revise, as appropriate, current policy and maintain sound processes for determining, documenting, and recording an adequate allowance for loan and lease losses, (e) improve management of BOHR's liquidity position and funds management policies, (f) provide contingency planning that accounts for adverse scenarios and identifies and quantifies available sources of liquidity for each scenario, (g) reduce the Bank's reliance on brokered deposits, and (h) improve BOHR's earnings and overall condition. The Company said in its Form 10-Q for the Sept. 30, 2010 quarter that due to its financial results, the substantial uncertainty throughout the U.S. banking industry, and the Written Agreement the Company and BOHR have entered into, doubts existed regarding the Company's ability to continue as a going concern through the second quarter of 2010. However, management believes this concern has been mitigated by the initial closing of the Private Placement that occurred on Sept. 30, 2010. The Company reported a net loss of $210.35 million on $122.20 million of total interest income for the year ended Dec. 31, 2010, compared with a net loss of $201.45 million on $149.44 million of total interest income during the prior year. HENNIGES AUTOMOTIVE: S&P Withdraws 'B' Corporate Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its preliminary 'B' corporate credit rating and preliminary 'B' issue-level ratings on Farmington Hills, Mich.-based automotive supplier Henniges Automotive Holdings Inc. "We understand that the company is not moving ahead with the transaction which was the basis for our assignment of the ratings on July 14, 2011," S&P related. HOTEL AIRPORT: Creditors' Meeting on Sept. 12; Claims Due Dec. 12 ----------------------------------------------------------------- The United States Trustee in Puerto Rico will convene a meeting of creditors pursuant to Sec. 341(a) of the Bankruptcy Code in the Chapter 11 case of Hotel Airport Inc. on Sept. 12, 2011, at 9:00 a.m. at 341 Meeting Room, Ochoa Building, 500 Tanca Street, First Floor, in San Juan. This is the first meeting of creditors required under Section 341(a) of the 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. The last day to oppose discharge or dischargeability is Nov. 14, 2011. Proofs of Claim are due by Dec. 12, 2011. Government Proofs of Claim are due by Feb. 6, 2012. About Hotel Airport Hotel Airport Inc., in San Juan, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06620) on Aug. 5, 2011. Judge Enrique S. Lamoutte Inclan oversees the case. Edgardo Munoz, PSC, serves as bankruptcy counsel. In its petition, the Debtor estimated $10 million to $50 million in both assets and debts. The petition was signed by David Tirri, its president. HOTEL AIRPORT: Status Conference Set for Sept. 27 ------------------------------------------------- The Bankruptcy Court will hold a Status Conference on Sept. 27, 2011, at 10:30 a.m. in the bankruptcy case of Hotel Airport Inc. at US Post Office and Courthouse Bldg., 300 Recinto Sur, 2nd Floor Courtroom 2. The Debtor is required to file a status report seven days prior to the conference. About Hotel Airport Hotel Airport Inc., in San Juan, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06620) on Aug. 5, 2011. Judge Enrique S. Lamoutte Inclan oversees the case. Edgardo Munoz, PSC, serves as bankruptcy counsel. In its petition, the Debtor estimated $10 million to $50 million in both assets and debts. The petition was signed by David Tirri, its president. HUNTSMAN CORPORATION: Moody's Affirms 'B1' Corporate Rating ----------------------------------------------------------- Moody's Investors Service moved the outlook of Huntsman Corporation and its subsidiaries to positive from stable. Moody's also affirmed the company's Corporate Family Rating (CFR) of B1, along with all outstanding debt ratings for Huntsman and its subsidiaries. The positive outlook reflects improvements in the company's main product lines, specifically in its performance products and pigments businesses, along with the overall strengthening of its credit profile. Moody's also assigned a SGL-2 to Huntsman Corporation. Ratings Affirmed Issuer: Huntsman International LLC -- Senior Secured Bank Credit Facility, Ba2 24% to LGD2 from LGD2, 22 -- Senior Unsecured Regular Bond/Debenture, B1 to LGD4, 60% from LGD4, 59% -- Senior Subordinated Regular Bond/Debenture, B3 to 89% LGD5, from LGD6, 91% Outlook Actions: Issuer: Huntsman Corporation -- Outlook, Changed To Positive from Stable Issuer: Huntsman International LLC -- Outlook, Changed To Positive from Stable RATINGS RATIONALE "The positive outlook reflects Huntsman's strong liquidity profile and improving credit metrics evidenced, in part, by the lack of sizeable near term debt maturities until 2014." said Moody's analyst Bill Reed. "Improvements in key end markets have helped bolster the company's cash flow generation and should result in meaningful debt reduction over the next 12-18 months." The B1 CFR takes into account Huntsman's strong competitive position in key businesses and significant competitive barriers, including process know-how and the benefits of world scale production capabilities. The ratings are nevertheless tempered by high leverage at this point in the chemical cycle, exposure to rising prices in some feedstocks, and possible future weakness in many key end markets, notably automotive and housing. The positive outlook reflects the company's strong liquidity and improving credit metrics. For the full year 2010 Huntsman generated over $900 million in EBITDA. This level of EBITDA results in net debt/EBITDA of 5.5X, a significant improvement when compared to one year prior. Going forward Moody's expects that the company will continue to generate improved levels of EBITDA, further strengthening Huntsman's credit metrics and profile. The outlook for Huntsman's ratings is positive reflecting Huntsman's improved credit metrics and strong liquidity profile. The positive outlook incorporates the expectations that the company will continue to improve its credit metrics without materially increasing its leverage. Management has indicated they would like to see their debt leverage at about 2 to 2.5 times on a normalized EBITDA basis. They also suggested that over the course of the next year or so (by the end of 2012), cash flow permitting, they would consider paying down an additional $500 - $700 million of debt. This would represent a 14% reduction in balance sheet debt of $600 million if management were to reduce debt by $600 million to 3.6 billion. Strengthening the company's balance sheet position, according to senior management is a very high priority of Huntsman's Board of Directors. Should the company amortize between $400-500 million of debt from free cash flow over the next two years Moody's could consider the appropriateness of a higher rating. Moody's would consider a negative rating action if EBITDA on a quarterly basis is not sustained above $100 million level. Finally, there would be negative pressure on the rating if a large acquisition were to meaningfully reduce cash balances and/or increase debt levels. The principal methodology used in rating Huntsman Corporation was the Global Chemical Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Huntsman Corporation is a global manufacturer of differentiated and commodity chemical products. Huntsman's products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non- durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining and synthetic fiber industries. Huntsman had revenues of $10.4 billion for the last twelve months ending June 30, 2011. INSIGHT COMMUNICATIONS: Moody's Reviews 'B1' Corporate for Upgrade ------------------------------------------------------------------ Moody's Investors Service placed the ratings of Insight Communications Company, Inc.'s debt, including its B1 CFR and PDR on review for possible upgrade, upon Time Warner Cable, Inc.'s announced plan to acquire Insight for a total purchase price of about $3 billion in cash. Moody's put Insight's ratings under review for upgrade reflecting Time Warner's stronger credit profile and a high likelihood of the closing of the acquisition. The review of Insight's ratings will focus on Time Warner's plans regarding the existing Insight debt. Should the debt be unconditionally and irrevocably guaranteed or legally assumed, the ratings will likely be upgraded. If the debt is repaid, Moody's will withdraw Insight's ratings. The principal methodology used in rating Insight and Time Warner was Moody's Global Cable Television Industry Methodology, published in July 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating these two issuers can also be found in the Rating Methodologies sub-directory on Moody's website. Headquartered in New York, NY, Insight Communications Company, Inc. offers video, high-speed Internet and telephony services to residential and business customers in the United States, with approximately 760,000 customer relationships at the end of Q2, 2011. Its annual revenue is approximately $1 billion. Time Warner Cable Inc., with its headquarters in New York, NY, is a cable pay TV system operator and offers video, high-speed data and telephony services. JACKSON HEWITT: Completes Restructuring, Emerges from Chapter 11 ---------------------------------------------------------------- Jackson Hewitt Tax Service Inc. has completed its financial restructuring and emerged from its Chapter 11 reorganization, following the filing of its "pre-packaged" reorganization plan on May 24, 2011. "With the strong support of our lenders, Jackson Hewitt emerges from this process as a highly-energized and financially healthy company," stated Philip H. Sanford, president and chief executive officer of Jackson Hewitt. "Our clients, franchisees, employees and business partners can be confident in our future," Sanford continued. "We emerge as a private company with a strong balance sheet, a fully funded business plan and the ability to make investments that will better position us to compete and win in the market place. As always, we remain committed to providing quality, accurate tax preparation services that meet the needs, and exceed the expectations, of our valued clients. "We are well positioned to succeed and grow our business. Our 2011 tax season produced growth in tax returns prepared for the first time in five years, and the results through our Walmart U.S. stores distribution channel were excellent. We intend to build on this positive momentum as we move forward with preparations for a successful 2012 tax season and beyond," concluded Sanford. Jackson Hewitt emerged from the Chapter 11 process after meeting all closing conditions to the Company's Plan of Reorganization (the "Plan"). The Plan was confirmed by the U.S. Bankruptcy Court in Wilmington, Delaware on August 9, 2011. About Jackson Hewitt Parsippany, New York-based Jackson Hewitt Tax Service Inc., aka JHTS Inc., provides computerized preparation services for federal, state and local individual income tax returns in the United States through a nationwide network of franchised and company-owned offices operating under the brand name Jackson Hewitt Tax Service. The Company has 700 franchisees who collectively operated a total of 4,846 offices. The Company also operates 1,110 company-owned offices. JAMESTOWN MALL: Looking for New Owner of Shopping Center -------------------------------------------------------- Lisa Brown at stltoday.com reports Jamestown Mall Realty Management LLC, owner of the shopping center in Little Neck, N.Y., is seeking a new owner for the shopping center. Prior to Jamestown Mall Realty's bankruptcy filing, the lender was pursuing foreclosure proceedings in St. Louis County Circuit Court. The report says one of Jamestown Mall Realty's lenders, MSC Real Estate, alleged the mall owner defaulted on a more than $2 million loan in mid-June, and the mall was placed in receivership. As part of MSC's legal action, Town and Country-based Priority Properties was appointed the new manager of the shopping center in June. Mike Margiotta, property manager with Priority, said the mall will continue to remain open during the legal proceedings. Jamestown Mall, which opened in 1973, saw its occupancy drop sharply in recent years, dipping below 44 percent in 2008. The mall, located at 175 Jamestown Mall in unincorporated north St. Jamestown Mall Realty Management LLC bought the mall for $3.3 million in 2009. Some other entities, such as Macy's, own the anchor tenant spaces at the 1.25 million square foot shopping center. The Company filed for Chapter 11 protection (Bankr. E.D. Miss. Case No. 11-48354) on Aug. 8, 2011, with Judge Charles E. Rendlen III presiding. Keith D. Price, Esq., and Scott A. Greenberg, Esq., at Sandberg Phoenix & Von Gontard, represents the Debtor. The Debtor estimated assets and debts of between $1 million and $10 million. J.C. EVANS: Court Approves Cash Use & $2.5MM Safeco DIP Loan ------------------------------------------------------------ The Bankruptcy Court approved the request of JCE Delaware, Inc., J.C. Evans Construction Co., and their debtor-affiliates to: (a) use cash collateral on an interim basis received from contracts with Safeco Insurance Company for which Safeco issued surety bonds, which funds will be held by Liberty Mutual Insurance Company of America or Safeco in a segregated account under an approved interim budget with adequate protection therefore; (b) obtain interim post-petition financing from Safeco in an amount up to $2,500,000 for a period not to exceed four weeks after the bankruptcy filing date, pursuant to an approved interim budget; (c) secure the postpetition DIP loan funds advanced by Safeco, to grant Safeco, pursuant to Bankruptcy Code Sec. 364(c)(2) and (3) and 364(d), liens on and security interests in all of the Debtors' currently owned and after acquired real and personal property to secure the Debtors' obligations to Safeco; (d) secure the postpetition DIP loan funds advanced by Safeco, to grant Safeco, pursuant to Bankruptcy Code Sec. 364(c)(1), with respect to the property and assets of the Debtor, an administrative super-priority claim; and (e) use cash collateral upon which First State Bank of Central Texas claims a first priority security and to grant replacement liens, as adequate protection, to First State Bank for the diminution in value of such cash Collateral in the same validity, priority and extent to which First State Bank liens possessed pre-petition. The Debtors need to use funds from operations and obtain DIP loans from Safeco to continue their operations in an orderly manner on a postpetition basis. The Safeco Cash Collateral and FSB Cash Collateral will be used for the payment of any of the Debtors' cost and expenses. Pursuant to the Interim Order, the Debtors will supply Safeco and FSB with budgets every two weeks beginning Aug. 15, 2011. The Debtors have prepared a cash flow projection through Sept. 2. The Debtors had $609,045 cash as of July 25. Assuming all pending receipts are collected by Sept. 2, the Debtors project a cash deficit of $2,369,781. The Debtors also project bankruptcy administrative expense to total $30,000 in August and in September. The $2,500,000 in advances from Safeco will bear interest at the annual rate of 7%. However, the funds are not trust funds and are Debtor in Possession loan proceeds pursuant to the Bankruptcy Code. The Debtors' interim authority to request and receive advances will expire Sept. 1, 2011, unless extended by Court order. The Court will hold a final hearing to consider entry of the Final DIP Financing Order on Sept. 1 at 10:30 a.m. The Court further held that the Cash Collateral available to the Debtors will in the first instance, and the DIP Financing Advances will in the second instance fund a professional fee carve-out for the Debtors' professionals in the amount of $150,000 (which sum is in addition to monthly budgeted amounts for such fees) and the carve out shall not be subject or subordinate to the superpriority claims, DIP Financing liens or any other security or priority granted herein or otherwise held by Safeco or FSB. The carveout will be funded one-half currently and the remainder by Sept. 1. First State Bank of Central Texas is owed $23 million pursuant to various promissory notes and overdrafts, and alleges that it holds a first lien on most of the Debtors' assets, excluding accounts receivables related to bonded jobs. Safeco issued certain written bonds at the Debtors' request. Safeco advanced $22 million to the Debtors prepetition to assist with the completion of 20 bonded construction projects. Safeco alleges it holds a first lien on receivables from the bonded jobs and a second lien on virtually all of the remaining assets of the Debtors. Trade debt is roughly $15 million, much of which is on bonded construction projects. Traditionally, approximately 95% of the Debtors' revenues are from bonded jobs. The Debtors have said Safeco and FSB will be protected by replacement liens on assets produced by the Debtors' postpetition operations and a continuation of their prepetition liens on all other assets in the same priority as existed prepetition. The Debtors have defaulted with reference to some or all of the Bonds, in that, among other things, the Debtors failed to pay when due certain of its obligations to subcontractors or suppliers for labor, materials, equipment rental, supplies and other charges incurred by the Debtors in performing the work on the Safeco Bonded Projects. Moreover, the Debtors were unable to meet their financial obligations as they became due. The Debtors are proposing to continue the work on the Safeco Bonded Contracts and may elect to assume the Safeco Bonded Contracts within the meaning of Sec. 365 of the Bankruptcy Code. FSB objected to the Debtors' request to use cash collateral and obtain DIP financing to assert its lien on the Debtors' assets. Volvo Financial Services, a division of VFS US LLC, and VFS Leasing Co., also objected to the Debtors' request to the extent that the Debtors' seek to grant Safeco, FSB or any other entity or individual (1) a lien or other interest in VFS Leasing's Leased Equipment; (2) a senior or priming lien or other interest in Volvo Financial's Financed Equipment; (3) a junior lien or other interest in Volvo Financial's Financed Equipment; or (4) to otherwise impair Volvo Financial's or VFS Leasing's right, title or interest in their Leased Equipment, Financed Equipment or other collateral. Prepetition, the Debtors and VFS Leasing entered into a master lease agreement and 36 schedules thereto pursuant to which the Debtors leased 56 pieces of heavy equipment. At the end of certain of the lease terms, the Debtors financed their purchase of some of the Leased Equipment through promissory notes payable to Volvo Financial. Volvo Financial holds properly perfected security interests in all of the Leased Equipment purchased by the Debtors. VFS Leasing and Volvo Financial collectively hold claims of roughly $6,000,000 against the Debtors. Volvo said the Debtors are in default under all of their obligations to VFS Leasing and Volvo Financial due to their failure to timely make the payments required prepetition. About J.C. Evans Construction With roots stretching back over 55 years, J.C. Evans is a heavy equipment construction company based in Leander, Texas. Through J.C. Evans Construction Co., L.P., a Texas limited partnership d/b/a/ American Aggregates, the Company owns and operates a construction company specializing in heavy site preparation on commercial, pipeline, utility and highway projects, including excavating, trenching, site preparation and construction. Through Adkins Land Development, L.P., a Texas limited partnership, the Company owns a 700-acre quarry, which produces aggregate for use in road construction. J.C. Evans Construction Holdings is the holding company that owns directly or indirectly each of the other entities. In turn, Holdings is owned by a trust for the benefit of the current and former employees of J.C. Evans through an Employee Stock Ownership Plan. Six affiliated companies filed for Chapter 11 (Bankr. W.D. Tex. Case Nos. 11-11926 to 11-11931) on Aug. 1, 2011. These are JCE Delaware Inc., J.C. Evans Construction Holdings, J.C. Evans Nevada, LLC, EQUUS Development Inc., J.C. Evans Construction and Adkins Land Development. The cases are jointly administered before Judge Craig A. Gargotta. George H. Tarpley, Esq., and Mark E. Andrews, Esq., at Cox Smith Matthews Incorporated, serve as bankruptcy counsel. In its petition, JCE Delaware estimated $50 million to $100 million in both assets and debts. Attorneys for DIP lender Liberty Mutual Insurance Company/Safeco Insurance Company are: Christopher R. Ward, Esq. Robert P. Franke, Esq. Duncan L. Clore, Esq. STRASBURGER & PRICE, LLP 901 Main Street, Ste. 4400 Dallas, Texas 75202 Tel: (214) 651-4300 Fax: (214) 651-4330 E-mail: christopher.ward@strasburger.com robert.franke@starsburger.com duncan.clore@strasburger.com - and - Duane J. Brescia, Esq. STRASBURGER & PRICE, LLP 600 Congress Ave., Suite 1600 Austin, Texas 78701 Tel: (512) 499-3600 Fax: (512) 499-3660 E-mail: duane.brescia@strasburger.com Counsel to secured lender First State Bank of Central Texas is: Shad Robinson, Esq. Blake Rasner, Esq. HALEY & OLSON, P.C. 510 North Valley Mills Drive, Suite 600 Waco, Texas 76710 Telephone: (254) 776-3336 Facsimile: (254) 776-6823 E-mail: srobinson@haleyolson.com brasner@haleyolson.com Equipment lessor Volvo Financial Services is represented by: Jeffrey D. Cawdrey, Esq. GORDON & REES, LLP 101 W. Broadway, Suite 2000 San Diego, CA 92101 Telephone: (619) 696-6700 Facsimile: (619) 696-7124 E-mail: jcawdrey@gordonrees.com - and - Megan Adeyemo, Esq. GORDON & REES, LLP 555 Seventeenth Street, Suite 3400 Denver, CO 80202 Telephone: (303) 534-5160 Facsimile: (303) 534-5161 E-mail: madeyemo@gordonrees.com J.C. EVANS: Sec. 341 Creditors' Meeting Set for Aug. 30 ------------------------------------------------------- The U.S. Trustee for the Western District of Texas will convene a Meeting of Creditors pursuant to Sec. 341 of the Bankruptcy Code in the bankruptcy cases of JCE Delaware, Inc., JC Evans Construction Holdings, Inc., JC Evans Nevada, LLC, Equus Development, Inc., JC Evans Construction Co., LP, and Adkins Land Development, LP, on Aug. 30, 2011, at 2:30 p.m. at Austin Room 118. This is the first meeting of creditors required under Section 341(a) of the 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. Proofs of claim are due by Nov. 28, 2011. About J.C. Evans Construction With roots stretching back over 55 years, J.C. Evans is a heavy equipment construction company based in Leander, Texas. Through J.C. Evans Construction Co., L.P., a Texas limited partnership d/b/a/ American Aggregates, the Company owns and operates a construction company specializing in heavy site preparation on commercial, pipeline, utility and highway projects, including excavating, trenching, site preparation and construction. Through Adkins Land Development, L.P., a Texas limited partnership, the Company owns a 700-acre quarry, which produces aggregate for use in road construction. J.C. Evans Construction Holdings is the holding company that owns directly or indirectly each of the other entities. In turn, Holdings is owned by a trust for the benefit of the current and former employees of J.C. Evans through an Employee Stock Ownership Plan. Six affiliated companies filed for Chapter 11 (Bankr. W.D. Tex. Case Nos. 11-11926 to 11-11931) on Aug. 1, 2011. These are JCE Delaware Inc., J.C. Evans Construction Holdings, J.C. Evans Nevada, LLC, EQUUS Development Inc., J.C. Evans Construction and Adkins Land Development. The cases are jointly administered before Judge Craig A. Gargotta. George H. Tarpley, Esq., and Mark E. Andrews, Esq., at Cox Smith Matthews Incorporated, serve as bankruptcy counsel. In its petition, JCE Delaware estimated $50 million to $100 million in both assets and debts. DIP lender Liberty Mutual Insurance Company/Safeco Insurance Company is represented by lawyers at Strasburger & Price, LLP. Secured lender First State Bank of Central Texas is represented by lawyers at Haley & Olson, P.C. J.C. EVANS: Schedules Filing Deadline Moved to Sept. 7 ------------------------------------------------------ The Bankruptcy Court extended until Sept. 7, 2011, the time for J.C. Evans Construction Holdings and its debtor-affiliates to file schedules of assets and liabilities and statements of financial affairs. Those documents were initially due within 15 days of the bankruptcy filing, pursuant to Section 521 of the Bankruptcy Code and Rule 1007 of the Federal Rules of Bankruptcy Procedure. About J.C. Evans Construction With roots stretching back over 55 years, J.C. Evans is a heavy equipment construction company based in Leander, Texas. Through J.C. Evans Construction Co., L.P., a Texas limited partnership d/b/a/ American Aggregates, the Company owns and operates a construction company specializing in heavy site preparation on commercial, pipeline, utility and highway projects, including excavating, trenching, site preparation and construction. Through Adkins Land Development, L.P., a Texas limited partnership, the Company owns a 700-acre quarry, which produces aggregate for use in road construction. J.C. Evans Construction Holdings is the holding company that owns directly or indirectly each of the other entities. In turn, Holdings is owned by a trust for the benefit of the current and former employees of J.C. Evans through an Employee Stock Ownership Plan. Six affiliated companies filed for Chapter 11 (Bankr. W.D. Tex. Case Nos. 11-11926 to 11-11931) on Aug. 1, 2011. These are JCE Delaware Inc., J.C. Evans Construction Holdings, J.C. Evans Nevada, LLC, EQUUS Development Inc., J.C. Evans Construction and Adkins Land Development. The cases are jointly administered before Judge Craig A. Gargotta. George H. Tarpley, Esq., and Mark E. Andrews, Esq., at Cox Smith Matthews Incorporated, serve as bankruptcy counsel. In its petition, JCE Delaware estimated $50 million to $100 million in both assets and debts. DIP lender Liberty Mutual Insurance Company/Safeco Insurance Company is represented by lawyers at Strasburger & Price, LLP. Secured lender First State Bank of Central Texas is represented by lawyers at Haley & Olson, P.C. J.C. EVANS: Plans to Sell Cobra Stone to Pay Lender --------------------------------------------------- Vicky Garz at the Austin Business Journal reports that J.C. Evans Construction Holdings Inc. plans to sell its 700-acre Cobra Stone quarry in Florence, Texas, to pay the lead lender in full and pay a significant portion of the bonding company's advances. The Cobra Stone produces more than 1 million tons of aggregate and dimension stone. The Company estimates it could sell its headquarters for an additional $7 million to further reduce its debts or pay off advances, the report says, citing a court filing. The Austin Business Journal notes, if the sale of the quarry generates enough money to pay off all the creditors, the case may be dismissed. But if it does not generate enough money or if the Company has further claims against it, it will have to make a plan -- subject to court approval -- to pay off the rest of what is owed, which could be a six-month to yearlong process. According to the report, the Company owes more than $38 million to 405 creditors. Its biggest debt is owed to First State Bank Central Texas, according to an official court declaration filed by President and CEO Blake Kuhlman. The Company is in the process of compiling a detailed list of assets and debts. The report says J.C. Evans has been involved in many large projects in Central Texas, including the Wonder World Drive extension, San Marcos' largest construction project; the Chandler Road extension in Williamson County; and Ronald Reagan Boulevard, an extension of Parmer Lane. The Austin Business Journal says current projects should not be affected by the bankruptcy, said Mark Andrews of Cox Smith Matthews Inc., J.C. Evans' attorney. Those projects are covered by bonding companies Liberty Mutual Insurance Co. and Safeco Insurance Co. In court filings, J.C. Evans said heavy investment in new equipment before 2008 followed by a shrinking economy has strained its operations. The Company has had to lay off employees, cut salaries and aggressively market its services to survive, court records indicate. Leander, Texas-based JCE Delaware, Inc., J.C. Evans Construction Holdings, Inc., and four other entities sought Chapter 11 protection (Bankr. W.D. Tex. Case No. 11-11926 to 11-11931) in Austin, Texas, on Aug. 1, 2011. George H. Tarpley, Esq., and Mark E. Andrews, Esq., at Cox Smith Matthews Incorporated, in Dallas, serve as counsel to the Debtor. JCE Delaware estimated assets and debts of up to $100 million in the Chapter 11 filing. JEFFERSON, AL: Extends Creditor Talks After Rejecting Deal ---------------------------------------------------------- Carla Main at Bloomberg News reports Jefferson County, Alabama, officials extended until mid-September talks with creditors holding $3.14 billion of sewer bonds after rejecting a proposed settlement to avert what would be the biggest U.S. municipal bankruptcy. County commissioners said they wanted to take a larger role in the negotiations, which have been led by Governor Robert Bentley and his chief of staff. The commission approved a resolution to negotiate directly with the creditors, the largest of which is JPMorgan Chase & Co. The report relates that the decision to extend the talks until Sept. 16 came after the five-member panel outlined concerns with an offer by bondholders to settle the crisis. Terms of the creditors' latest offer include four scenarios for raising sewer rates to support a $2.33 billion debt refinancing by June 30, 2012. The base-case scenario, which doesn't include $1 billion in bond insurance, would amount to a 25% rate increase over 18 months, which Commissioner George Bowman called "excessive." The others called for increases ranging from 6.1% to 7.1% in the first three years, with 3% annual boosts for the next 36 years. Commissioners suggested those proposals may be acceptable. Creditors would get back $2.07 billion, or about 33% less than the amount outstanding. Another $233 million would go to a debt- service reserve fund. Commissioner Jimmie Stephens, according to the report, said he was disappointed the creditors hadn't agreed to cap the interest rate for the borrowing. The bondholders' seven-page plan calls for the creation of an independent sewer authority that would manage the system. A majority of its board members would be appointed by the governor. About Jefferson County Jefferson County has its seat in Birmingham, Alabama. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. Jefferson County is trying to restructure $3.14 billion in sewer debt. A bankruptcy by Jefferson County stands to be the largest municipal bankruptcy in U.S. history. It could beat the record of $1.7 billion set by Orange County, California in 1994. In September 2010, Alabama Circuit Court Judge Albert Johnson named John S. Young Jr. LLC as receiver for the sewer system. Jefferson County has retained Kenneth Klee, Esq., at Klee Tuchin Bogdanoff & Stern LLP to represent the county in the event of bankruptcy. Mr. Klee is considered to be a municipal-bankruptcy expert, having handled Orange County, Calif.'s bankruptcy case in 1994. A Chapter 9 filing Jefferson County would be the largest in U.S. municipal history. JIANGBO PHARMACEUTICALS: Cohen Milstein Investigates Firm --------------------------------------------------------- Cohen Milstein Sellers & Toll PLLC is conducting an investigation to determine whether Jiangbo Pharmaceuticals, Inc., and certain of its officers and directors made false and misleading statements and/or omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. A class action lawsuit has been filed in the U.S. District Court for the Southern District of Florida by another law firm on behalf of purchasers of the common stock of Jiangbo Pharmaceuticals, Inc. (JGBO) between May 17, 2010 and May 31, 2011, inclusive. Jiangbo purports to be engaged in the research, development, production, marketing and sales of pharmaceutical products in China. The complaint alleges that Jiangbo and certain of its officers and/or directors made materially false and misleading statements and failed to disclose material facts concerning the Company's operations, financial condition and certain financial transactions. After the market close on March 18, 2011, Jiangbo reported that its Chief Financial Officer had resigned her position "due to family reasons." Although the Company reported that "[t]here were no disagreements between Ms. Sung and the Company on any matter relating to the Company's operations, policies or practices, which resulted in her resignation," the price of Jiangbo shares fell from $5.88 to $5.41 on the next trading day. On the evening of May 24, 2011, Jiangbo released its results for its third fiscal quarter ended March 31, reporting that revenues and net income had fallen. The price of Jiangbo shares fell throughout this period and last traded at $3.08 on May 31, 2011, when trading was halted pending receipt of additional information requested by NASDAQ from the Company. On June 7, 2011 the Company filed an 8-K reporting that two independent directors, who were also members of the Audit Committee, had announced their immediate resignation from the Company. In a letter to the Company's board, they stated that the "Company has created circumstances that force us to resign," and revealed that, in response to an undisclosed SEC subpoena received by Jiangbo on March 26, 2011, the Audit Committee had retained outside firms to conduct an independent investigation into the matters raised by the SEC and to provide forensic accounting services in connection with that investigation. The letter further stated that "the conduct and statements by the Company and those controlling and advising it have demonstrated a clear and continuing lack of cooperation," as a result of which the internal investigation was halted. Moreover, their letter states, "the manner and timing of the Company's payments to the Audit Committee's advisers (Cadwalader and E&Y) raise additional serious concerns regarding the veracity or correctness of banking information provided by the Company." On August 1, Jiangbo filed an 8-K reporting that it had received a delisting notice from NASDAQ stating that NASDAQ staff "believes that the continued listing of the Company's securities on Nasdaq is no longer warranted and has determined to delist the Company" due to "[p]ublic interest concerns . . . raised by the efforts of the Company and its Chairman to obstruct the independent internal investigation authorized by its Audit Committee, and the failure to allow the Audit Committee to fulfill its responsibilities and duties," as well as the Company's failure to comply with other listing standards, including its failure to comply with Audit Committee composition requirements. Cohen Milstein encourages all investors who purchased Jiangbo common stock between May 17, 2010 and May 31, 2011, or former employees with information concerning this matter to contact the firm. KEVEN A MCKENNA: U.S. Trustee Seeks Dismissal Due to False Oath --------------------------------------------------------------- The United States Trustee William K. Harrington filed a complaint in the U.S. Bankruptcy Court for the District of Rhode Island, saying that lawyer Keven A. McKenna, sole shareholder of Keven A. McKenna, P.C., made a false oath or account by not disclosing the Wells Receivable of the firm at the meeting of creditors conducted on March 16, 2010. According to Tracy Brenton at the Providence Journal, the U.S. Trustee is asking a judge to deny Mr. McKenna's bankruptcy petition because, he says, McKenna failed to disclose $93,000 in legal fees he recently tried to collect from a Bristol estate, and that he also misrepresented his monthly income in court papers. The trustee also alleges that McKenna "failed to disclose" that he paid his wife, Sheila Bentley McKenna (the former wife of ex-Mayor Vincent A. Cianci Jr.) $58,250 in February 2009 and an additional $55,000 on Oct. 23, 2009 -- the year before he filed for bankruptcy. The report says, in his Aug. 4 filing, Mr. Harrington lists several things that he alleges Mr. McKenna knowingly lied about under oath in his bankruptcy filing. Among other things, Harrington says that Mr. McKenna made "a materially false statement" about his income. Mr. McKenna stated in a court filing on April 27, 2010, that his average monthly income was just $125. "Only after inquiry by the United States Trustee did the defendant file on June 24, 2010 an amended form...disclosing total average current monthly income for the six months prior to the filing of $18,153," Mr. Harrington wrote. About Keven A. McKenna Keven A. McKenna filed for Chapter 11 bankruptcy for himself and Keven A. McKenna law firm (Bankr. D. R.I. Case No. 10-10274) on Jan. 25, 2010. Mr. McKenna disclosed $751,000 in assets and $45,700 in liabilities in his bankruptcy petition. His firm estimated debts of between $100,000 and $500,000. Mr. McKenna's case was dismissed but his personal bankruptcy protection claim remains active as he continues to fight a Workers' Compensation Court order that he pay his former paralegal Summer D. Stone for injuries. At the behest of the Official Committee of Unsecured Creditors, the Bankruptcy Court on Nov. 18, 2010, appointed Providence bankruptcy lawyer Thomas P. Quinn as Chapter 11 trustee of McKenna PC to take over management of the law firm. Chief District Judge Mary M. Lisi affirmed the Chapter 11 trustee appointment order in a May 31, 2011 Memorandum and Order. KOPPERS INC: S&P Affirms Corporate at 'BB-'; Outlook Positive ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Pittsburgh-based Koppers Inc. and parent company Koppers Holdings Inc. to positive from stable. Standard & Poor's also affirmed all the existing ratings, including the 'BB-' corporate credit rating, on the companies. "The positive outlook reflects our expectation that current sustainable demand trends and profitability should continue to support improving operations within Koppers' carbon materials and railroad segments in the second half of 2011 and 2012," said Standard & Poor's credit analyst Henry Fukuchi. "We also expect these business conditions will continue to support strong liquidity in the absence of increased acquisition spending and a significant financial risk profile consistent with the ratings." Despite the current economic uncertainty, Standard & Poor's expects that the company's globally diverse operations, sustainable global aluminum demand, and relatively stable railroad business will more than offset difficulties related to the macro environment. The issue-level rating on Koppers' $300 million senior unsecured notes due 2019 remains unchanged at 'B+' (one notch below the corporate credit rating). The recovery rating is '5', indicating the expectation for modest (10%-30%) recovery in the event of default. The ratings on Koppers reflect the company's fair business risk profile supported by the consistency of its operating results and its preservation of credit metrics in line with its financial profile. With annual sales of approximately $1.4 billion, Koppers is a leading provider of carbon compounds and commercial wood treatment products. The company operates two divisions: carbon materials and chemicals (65% of 2010 sales) and railroad and utility products (35%). Koppers' fair business risk profile includes the company's leading market positions in its niches, reasonably stable operating performance, and good geographic diversity with about 40% of sales generated outside the U.S. The stability of the company's railroad segment and its high percentage of long-term contracts, which mitigate raw material pressures, aid operating performance. "We expect modestly increased sales and improving operating results in the next 12 months primarily from the carbon materials and chemicals segment," Mr. Fukuchi said. "We also expect the railroad and utility products segment to see modest growth in the next 12 months because of increased crosstie procurement levels relative to the last few years." The company's financial profile benefits from strong liquidity and a favorable debt maturity profile with no maturities until 2015 when its revolving credit facility is due. Offsetting these strengths are Koppers' narrow business focus, the cyclicality of its end markets, potential for increased debt supporting growth through acquisitions, and an aggressive financial policy. KT SPEARS: First Savers Bank Seeks to Foreclose on SC Property --------------------------------------------------------------- First Savers Bank, a division of Plantation Federal Bank, asks the U.S. Bankruptcy Court for the Southern District of Texas for relief from the automatic stay to permit it to foreclose its lien on a 65.94-acre tract of unimproved land in Richland County, South Carolina owned by the Debtor, KT Spears Creek, LLC, and, if necessary, to redeem the Property with respect to a tax sale. The Debtor had borrowed $6,000,000 from First Savers Bank, secured by the Property. The loan is evidenced by the Debtor's promissory note in the original amount of $6,000,000. The Note is secured by a first lien mortgage recorded in the real property records of Richland County, South Carolina. The Loan was renewed and extended, most recently on January 26, 2010, David S. Elder, Esq., at Gardere Wynne Sewell LLP, in Houston, Texas, relates. According to Mr. Elder, the Debtor has failed to make any payments on the Note for more than a year. On September 9, 2010, First Savers Bank filed suit in Richland County, South Carolina, seeking judicial foreclosure of its lien on the Property. A foreclosure sale has been scheduled for August 8, 2011. The Debtor has also failed to pay the property taxes owing on the Property. On December 6, 2010, a tax foreclosure sale was noticed and held, with the Property being sold to a third party. The unpaid taxes due were $359,675. The final date to redeem the Property is December 7, 2011, Mr. Elder informs the Court. Due to the well-publicized problems in the housing market, the Property is now worth far less than what it was worth in 2007. The Debtor cannot -- or will not -- adequately protect First Savers Bank's interest in the Property. Mr. Elder tells the Court that the Debtor (i) is not paying any interest or property taxes, and (ii) has made no effort to develop the Property, or to market the Property for sale. There is no possibility of the Debtor successfully reorganizing in Chapter 11. Consequently, the stay should be lifted to allow the Bank to foreclose its lien on the Property, Mr. Elder asserts. About KT Spears KT Spears Creek, LLC, is a real estate holding company. One of these real estate holding includes an operating apartment complex and an additional area on which a second apartment complex may be constructed. The operating apartment complex, Greenhill Parish Crossing Apartments Homes, located in Elgin, S.C., is substantially occupied. The Debtor's remaining two real estate holdings are comprised of undeveloped commercial land. KT Spears Creek filed for Chapter 11 bankruptcy (Bankr. S.D. Tex. Case No. 11-33991) in Houston, Texas, on May 3, 2011, with Judge Letitia Z. Paul presiding. Magdalene Duchamp Conner, Esq., at Okin Adams & Kilmer LLP, serves as the Debtor's bankruptcy counsel. The Debtor disclosed $13,104,543 in assets and $29,851,834 in liabilities as of the Chapter 11 filing. K-V PHARMACEUTICAL: Incurs $174 Million Net Loss in Fiscal 2011 --------------------------------------------------------------- K-V Pharmaceutical Company filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K, reporting a net loss of $174 million on $27.30 million of net revenues for the year ended March 31, 2011, compared with a net loss of $283.60 million on $9.10 million of net revenues during the prior year. The Company's balance sheet at March 31, 2011, showed $564.70 million in total assets, $938.70 million in total liabilities, and a $374 million total shareholders' deficit. BDO USA, LLP, in Chicago, Illinois, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suspended the shipment of all but one of the products manufactured by the Company and must comply with a consent decree with the Food and Drug Administration before approved products can be reintroduced to the market. Significant negative impacts on operating results and cash flows from these actions include: recurring losses from operations, a shareholders' deficit, and negative working capital; the potential inability of the Company to raise additional capital or debt financing; suspension of manufacturing; significant uncertainties related to litigation and governmental inquiries; and potential debt covenant violations. K-V Pharmaceutical has not timely filed its Form 10-K for the year ended March 31, 2010, and its Form 10-Qs for the subsequent quarterly periods. The Company's independent accounting firm, KPMG, resigned on June 25, 2010, and the Company has tapped BDO USA, LLP, to audit the fiscal 2010 financial statements. A full-text copy of the Form 10-K is available for free at: http://is.gd/oeTdfl About K-V Pharmaceutical Company K-V Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. LAX ROYAL: Court Grants Stay Relief to West Century Limited ----------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has granted, in part, the motion of West Century Limited Partnership to lift the automatic stay in the Chapter 11 case of LAX Royal Airport Center, L.P. with respect to property located at 5933 West Century Boulevard, in Los Angeles, California. The stay will remain in effect subject to certain terms and conditions set forth in a certain Adequate Protection Attachment, which provides that the Debtor will make regular monthly payments of $1,055 commencing on June 1, 2011. According to the Adequate Protection Attachment, the Debtor will also cure the postpetition default computed from April 19 through May 31, 2011, in the sum of $45,378. About LAX Royal Airport Center, LP Los Angeles, California-based LAX Royal Airport Center, LP, filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 11-12333) on Jan. 19, 2011. The Debtor estimated assets at $10 million to $50 million and debts at $1 million to $10 million. No request for the appointment of a trustee or examiner was made. LEHMAN BROTHERS: LBI Trustee Has Deals For Return of $263-Mil. -------------------------------------------------------------- James Giddens, trustee for Lehman Brothers Inc., entered into an agreement which requires the brokerage to return US$2,229,915 to TCG Holdings Cayman II LP. The trustee also inked similar agreements with JPMorgan Chase Bank N.A. and The Bank of New York Mellon, which require the return of funds erroneously transferred to LBI's bank accounts. Full-text copies of the agreements are available without charge at: http://bankrupt.com/misc/LBHI_StipBNYmisdirectedtransfer.pdf http://bankrupt.com/misc/LBHI_StipJPMmisdirectedtransfer.pdf http://bankrupt.com/misc/LBHI_StipTCGmisdirectedtransfer.pdf In addition, the LBI Trustee entered into a stipulation requiring Bank of America, N.A., Merrill Lynch International Bank Limited, and other affiliates, to pay $261,000,000 in connection with the close-out of its 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: US Bank Wins OK to Foreclose on Hawaii Land ------------------------------------------------------------ U.S. Bank National Association represents that it is the current holder of a mortgage executed on June 2, 2006, by Romeo Fernandez Andres, Jr. and Melicia Magsandie Tabuyo Ulep, as mortgagors in favor of Debtor BNC Mortgage LLC, and transferred to Mortgage Electronic Registration Systems, Inc., as nominee for BNC, as security for the repayment of the original principal sum of $584,000 due under a note. The Mortgage granted MERS, as nominee for BNC, a security interest in certain real property located at 1182 Manuwa Dr., in Honolulu, Hawaii. U.S. Bank also represents that the Mortgage was assigned to U.S. Bank and that it is the Trustee for SAIL 2006-BNC3, and that SAIL 2006-BNC3 is the current holder of the Note. The Debtors have determined that there was a junior lien on the Property held by MERS, as nominee for BNC, securing the repayment of $146,000 due under a note. U.S. Bank represents that it initiated a foreclosure proceeding against the Property in the Circuit Court of the First Circuit, State of Hawaii on November 9, 2009. The Debtors have reviewed BNC's records and determined that BNC previously transferred its interests in the Mortgage and the Second Mortgage to Lehman Brothers Bank, FSB, now known as Aurora Bank FSB, on or about July 24, 2006, and that, thereafter, the Mortgage and the Second Mortgage were further transferred to Lehman Brothers Holdings Inc. on or about August 25, 2006, then to Structured Asset Securities Corporation on or about August 25, 2006, and finally to SAIL 2006-BNC3, a non-debtor securitization trust on or about August 25, 2006. As a result of the transfers, neither BNC nor any of the other Debtors held a direct interest in the Mortgage or the Second Mortgagee as of the Petition Date. Due to the Debtors' usage of MERS as nominee, however, a record of the BNC's former interest in the Mortgage and the Second Mortgages may remain on the local property records, creating an impediment to U.S. Bank's acquisition of insurable title to the Property. Accordingly, the Debtors and U.S. Bank sought and obtained approval of a stipulation partially modifying the automatic stay in BNC's Chapter 11 case to allow U.S. Bank to exercise its non- bankruptcy rights and remedies as to the Property including, but not limited to, foreclosure. U.S. Bank is represented by: Thomas J. Berger, Esq. Steven T. Iwamura, Esq. CLAY, CHAPMAN, IWAMURA, PULICE & NERVELL 700 Bishop Street, Suite 2100 Honolulu, Hawaii 96813 Tel: (808) 535-8400 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: NY Court Trims Class Claims in Securities Suit --------------------------------------------------------------- Judge Lewis Kaplan of the U.S. District Court for the Southern District of New York entered a 106-page opinion on July 27, 2011, granting in part and denying in part motions to dismiss a third amended class action complaint alleging violations of federal securities laws relating to the 2008 collapse of Lehman Brothers Holdings Inc. In the complaint, a group of plaintiffs, which including pension funds, companies, and individuals that purchased Lehman debt and equity securities, sued Lehman's former officers, directors, and auditors, as well as underwriters of the securities, under Sections 11, 12, and 15 of the Securities Act of 1933 and Lehman's former officers and auditors under Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 and Rule 10b-5. The plaintiffs allege that a May 30, 2006 shelf registration statement, a base prospectus, and various prospectus, product, and pricing supplements pursuant to which Lehman issued over $31 billion in debt and equity securities were false and misleading. Specifically, the plaintiffs assert that the offering materials were false and misleading because "they incorporated by reference Lehman's financial statements, which in turn contained misleading statements and omissions concerning Lehman's (1) use of "Repo 105" transactions and their effect on Lehman's reported net leverage, (2) risk management policies, (3) liquidity risk, (4) concentrations of credit risk, and (5) the value of Lehman's commercial real estate holdings." They also allege that certain former officers made "false and misleading oral statements about most of these subjects." The case, according to Judge Kaplan, concerns more than $31 billion in Lehman debt and equity securities issued pursuant to the May 30, 2006 shelf registration statement. Judge Kaplan, according to the Wall Street Journal, rejected the defendants' attempt to dismiss the entire case, but he threw out some claims, particularly some of those against Ernst & Young LLP, Lehman's independent auditor. The judge did allow a claim to continue alleging that E&Y made misstatements in July 2008 about Lehman's compliance with accounting rules when in fact E&Y was aware of the bank's use of Repo 105s, which "cast into doubt" whether its balance sheet was consistent with generally accepted accounting principles. Steve Singer, an attorney for the plaintiffs, told the Journal that he was pleased with the ruling. The "vast majority" of the case will go forward, he said, including the core allegations, and all of the defendants remain in the case, the report said. Michael Chepiga, an attorney for Christopher O'Meara and Joseph Gregory, two former Lehman executives who are defendants, said the judge's ruling was "a long, complicated opinion with a lot of issues. We're studying it closely," he told the Journal. Ernst & Young, said in a statement that it was "pleased that Judge Kaplan's ruling dismisses most of the claims against us in this matter, and we strongly believe that we will ultimately prevail on the remaining claim." Adam Wasserman, an attorney for Lehman's independent directors, said he was "confident" that the evidence "will demonstrate that the independent directors acted diligently and appropriately." A full-text copy of Judge Kaplan's Opinion is available for free at http://is.gd/a9LFU1 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: U.K. High Court OKs "Flip Clauses" in Dante Notes ------------------------------------------------------------------ The United Kingdom Supreme Court entered a ruling July 27, 2011, holding that a Lehman Brothers Holdings Inc. affiliate couldn't get its hands on $100 million from noteholders because a so- called "flip" clause that gave noteholders priority when Lehman went belly-up wasn't designed to skirt bankruptcy laws, Eric Hornbeck of BankruptcyLaw360 reported. In the case, titled Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38, the Court considered the validity and enforceability of so-called "flip" clauses under English bankruptcy law. The dispute, according to the news agency, centers around complex synthetic swap and collateralized debt obligation transactions between Lehman, the noteholders and special purpose vehicles set up as part of the deal. It involved a synthetic CDO known as Dante, valued at $12.5 billion at the time of Lehman's collapse in September 2008, the Wall Street Journal related. Clayton UTZ explained that flip clauses are common in rated structured finance and securitisation transactions, and effectively reverse or flip a party's priority in the relevant payment waterfall below the payment of obligations owed to other creditors following certain events. In the Lehman case, the UK Supreme Court reaffirmed the earlier decisions of the English High Court and Court of Appeal that the flip clause under consideration was valid and enforceable in the circumstances and did not offend the anti-deprivation principle under English bankruptcy law. Clayton UTZ further explained that credit-linked notes were issued by a special purpose vehicle established by Lehman Brothers as issuer. The proceeds of issue were used to purchase collateral comprising "AAA" rated securities. The collateral was charged by the issuer in favour of BNY Corporate Trustee Services Limited as trustee to secure the issuer's obligations under the notes and under a related credit default swap entered into with Lehman Brothers Special Financing Inc. as swap counterparty. Lehman Brothers Holdings Inc., as guarantor, guaranteed the obligations of the swap counterparty under the credit default swap. The related transaction documents contained a flip clause whereby the swap counterparty's priority over the noteholders in relation to the proceeds of enforcement in respect of the collateral would reverse or flip if there was an event of default under the swap transaction and the swap counterparty was the defaulting party. On September 15, 2008, the guarantor filed for Chapter 11 protection under the US Bankruptcy Code and the swap counterparty did the same on October 3, 2008. Chapter 11 bankruptcy proceedings involving either the guarantor or the swap counterparty was an event of default under the swap transaction in relation to which the swap counterparty was the defaulting party. Clayton UTZ noted that the swap counterparty claimed that the flip clause giving noteholders priority to the proceeds of enforcement of the charge over the collateral ahead of the swap counterparty was void, as it offended the "anti-deprivation" principle under English bankruptcy law. The swap counterparty argued that by modifying its right of priority to the proceeds of enforcement following its bankruptcy, the flip clause unlawfully deprived it of property to which it was entitled in its bankruptcy. The English High Court, in the first instance, found that the flip clause as a matter of English law was effective and did not offend the anti-deprivation rule, Clayton UTZ related. Alternatively, if the clause was capable of offending the anti- deprivation rule, the rule did not apply in this case, the news agency noted. The flip clause took effect when the guarantor filed for Chapter 11 protection and not when the swap counterparty subsequently filed for Chapter 11 protection, therefore the effect of the clause did not deprive the swap counterparty of any property as a result of its own Chapter 11 filing, Clayton UTZ related. UK Supreme Court decision In considering the enforceability of the flip clause, Clayton UTZ pointed out that the UK Supreme Court identified these essential elements for the anti-deprivation rule to apply: -- There must be a deliberate intention to evade the insolvency laws; and -- the deprivation must take place as a result of bankruptcy. Focusing on the essential elements of the anti-deprivation principle, the Court held that the current transaction, including the application of the flip clause, was a commercial transaction entered into in good faith and there was no suggestion that the flip clause was deliberately intended to evade insolvency laws. In particular, the flip clause could have applied in any number of other non-bankruptcy events that would have constituted an event of default under the swap transaction and was intended to deal with credit risk on the swap counterparty, which was a material factor in the notes obtaining a "AAA" rating, Clayton UTZ further related. "It would go well beyond the proper province of the judicial function to discard 200 years of authority, and to attempt to rewrite the case law in the light of modern statutory developments," wrote Lord Lawrence A. Collins in a 73-page decision finding that the provisions are legal, the Journal related. Rules intended to prevent the withdrawal of assets from a bankrupt estate are "too well established to be discarded despite the detailed provisions set out in modern insolvency legislation, all of which must be taken to have been enacted against the background of the rule," he wrote. The Supreme Court decision, according to Clayton UTZ, lays to rest some of the uncertainty surrounding the effectiveness under English law of flip clauses used in structured finance and securitisation transactions since the original case was heard in the UK courts in 2009. At the same time, the decision remains in conflict with the US bankruptcy court's decision in a similar case decided in January 2010 which found that the flip clause, being an ipso facto clause, was unenforceable under US bankruptcy law, the law firm noted. Unfortunately, while leave was granted by the US District Court to appeal the US bankruptcy court decision, the case was settled and the appeal was subsequently withdrawn, Clayton UTZ related. Accordingly, the US bankruptcy court decision remains law in the US and continues to generate considerable uncertainty over the enforceability of flip clauses used in structured finance and securitisation transactions with a US nexus. ". . . the decision of the U.K. Supreme Court has no impact on U.S. Bankruptcy Judge Peck's "flip clause" decisions, which remain the law of the case within the consolidated Lehman bankruptcy proceedings," Locke McMurray, head of the legal group in Lehman Brothers Holdings' derivatives unit, told the Journal in an e-mailed statement. Attorney Jean-Pierre Douglas-Henry, who represented the Belmont investors, issued a statement saying that the Supreme Court ruling validated English law, according to the Journal. "English law means what it says and can be relied upon in English law- governed financial products and instruments," said Mr. Douglas- Henry, a litigator at the firm of Lawrence Graham, the Journal noted. 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 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: Bundesbank Loses Bid for Control of $4.1BB Notes ----------------------------------------------------------------- A court in the United Kingdom ruled on Aug. 1 that Germany's Bundesbank cannot take control of a $4.1 billion pool of securitized debt created by Lehman Brothers Holdings Inc. just before the New York investment giant's 2008 collapse, according to Pete Brush of BankruptctyLaw360. At the heart of the dispute is whether Excalibur Funding No.1 PLC, a special purpose investment vehicle formed by Lehman three months prior to its collapse, defaulted on an agreement that would have handed senior noteholder Bundesbank control over the packaged assets, the news agency related. LBHI holds 98.1% of the claims against LB RE Financing No. 3 Limited, which is the holder of EURO722,181,000 Class B Note due 2054 issued by Excalibur Funding. 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 Sept. 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. Additional units, Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC, sought for bankruptcy protection in December 2009 or more than a year after LBHI and its other affiliates filed their bankruptcy cases. 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. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch 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 Sept. 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 Sept. 16. Lehman Brothers Japan Inc. reported about JPY3.4 trillion (US$33 billion) in liabilities in its petition. Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Lehman Brothers Holdings, Inc., and other insolvency and bankruptcy proceedings undertaken by its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) LIFE UNIVERSITY: Moody's Affirms Ba3 Rating on Series 2008 Bonds ---------------------------------------------------------------- Moody's Investors Service has affirmed its Ba3 rating on Life University's Series 2008 Revenue Bonds issued by the Development Authority of the City of Marietta. The rating outlook is stable. SUMMARY RATING RATIONALE The Ba3 rating reflects Life University's narrow market niche and limited financial resource base. Credit strengths include growing revenue base and healthy cash flow in support of debt service. Credit challenges include limited revenue diversity, high reliance on availability of acceptable student loans, and thin liquidity to weather any revenue disruptions. The stable outlook reflects expected continuation of momentum in student revenue growth and healthy cash flow from operations. CHALLENGES * Narrow market focus with the majority of Life's students enrolled in its Chiropractic College and vulnerable to flex in demand for chiropractic education; other undergraduate programs in wellness-related fields face significant competition from area public and private universities. * Small revenue base, with a $42 million of operating revenues in FY 2010, remaining below Moody's median for Baa-rated private universities of $71 million. Revenue growth will be crucial to the University's financial health, as peak debt service of $6.3 million (in 2038) amounts to 12% of draft FY 2011 operating expenses. * Limited balance sheet cushion supporting debt and operating expenses; $10.9 million of expendable financial resources (based on audited FY 2010 data) provide limited financial flexibility relative to debt (0.16 times) and operations (0.25 times). * Limited fundraising with average gift revenue of $2.4 million per year through FY 2010. Donor support will be important in diversifying the University's highly concentrated revenue sources (student charges made up 95% of operating revenues in FY 2010) as well as achieving its various strategic initiatives. STRENGTHS * Sustained rebound in enrollment following sharp decline in 2003 related to accreditation issues. Student market position led by Doctor of Chiropractic program, which generated approximately 84% of net student tuition and fees in FY 2010. Full-time equivalent enrollment for the fall of 2010 was 2,312, up 6% from the prior year. Net tuition revenue grew 7% in FY 2010 to $38.1 million and increased another 12% in FY 2011 based on preliminary, unaudited results. * Healthy fiscal discipline as operating cash flow of 15.5% covered debt service by 1.8 times as calculated by Moody's in FY 2010. * Credit profile aided by mortgage pledge of property for the entire campus located in Marietta, 18 miles northwest of downtown Atlanta. * Healthy growth in revenues derived from debt-financed capital investments including student housing and dining. Unaudited results for FY 2011 show a 12% increase in auxiliary revenue up to $2.4 million. * The University's debt is all fixed rate with relatively level debt service. DETAILED CREDIT DISCUSSION LEGAL SECURITY: Gross revenue pledge, first mortgage pledge of University real property and cash funded debt service reserve fund equal to maximum annual debt service. Other features include a rate covenant of 1.20 times. There is also a Liquidity Covenant of 80 Days' Cash on Hand beginning with the fiscal year ending June 30, 2009 as well as a Long-Term Indebtedness Ratio requirement of at least 0.15 times. For FY 2011 the Debt Service Coverage Ratio was 1.70 times as compared to the 1.20 times requirement. For FY 2011 the Days Cash on Hand calculation based on preliminary data was 80.21 as compared to the 80.00 requirement. The University, however, did not pass the Days Cash on Hand measured as of 30 June 2010 with 65.17 Days Cash on Hand. With impact from seasonal cash flow the test passed on 30 September 2010 (174.06 days) but then failed at 31 December 2010 (68.78 days). There was a similar quarterly pattern in FY 2010 with the Long-Term Indebtedness Coverage Ratio. Failure to meet the required covenants in any two consecutive quarters could trigger the University's requirement to transfer all Revenues to the Trustee on a daily basis. The covenant failures as of 30 June 2010 did trigger the need to hire a Financial Consultant within 60 days. The University employed Becker Capital & Finance that posted a report on 10 March 2010. DEBT-RELATED DERIVATIVE INSTRUMENTS: None. RECENT DEVELOPMENTS Based on unaudited results for FY 2011, the University had healthy revenue growth, up 12.9% to $47 million, based on Moody's approach. Operating expenses increased by 7.1%, supporting a healthy improvement in operating cash flow margin to 20.9% from 15.5% in FY 2010. Management reports summer term 2011 headcount enrollment is up 7% from the prior year to 2,296 students. Preliminary figures for the fall semester College of Chiropractic show 591 completed applications with 300 accepted students. Outlook Moody's stable outlook reflects Moody's expectations of continued balanced operations, sustained rebuilding of enrollment revenues and steady rebuilding of flexible reserves. What Could Change the Rating UP Consistently strong cash from operations in support of debt service, revenue growth, and an increase in revenue diversity, including diversity of tuition revenue; material financial resource growth and limited additional debt. What Could Change the Rating DOWN Enrollment losses leading to further financial instability; weakening of financial resource levels or operating performance. KEY DATA AND RATIOS (Fiscal year 2010 financial data; fall 2010 enrollment data): Total enrollment: 2,312 full-time equivalent students Total comprehensive debt: $69.1 million Expendable financial resources: $10.9 million Expendable resources to pro forma debt: 0.16 times Expendable Resources to Operations: 0.225 times Net Tuition per Student: $17,465 Average Operating Margin (3 years): -1.7% 2010 Operating Cash Flow Margin: 15.5% Average actual debt service coverage: 1.9 times Operating Revenues: $47 million Monthly Liquidity: $6 million Monthly Days Cash on Hand: 56 days (based on Moody's methodology) RATED DEBT Series 2008: Ba3 The principal methodology used in this rating was Moody's Rating Approach for Private Colleges and Universities published in September 2006. LOS ANGELES DODGERS: Can Make Payments to Players and Announcers ---------------------------------------------------------------- Los Angeles Dodgers LLC sought and obtained an order from the U.S. Bankruptcy Court for the District of Delaware authorizing it to perform all obligations under the collective bargaining agreement with Major League Baseball and the Major League Baseball Association, and with the American Federation of Television and Radio Announcers. The Debtor sought to perform all financial obligations under the CBAs, including those accrued before the Petition Date. In relation to the MLB CBA, the Debtor is obligated to pay $92,569,000, exclusive of signing bonuses, on account of guaranteed player contracts for the 2011 season. The Debtor has already paid $10,000,000 in deferred compensation this year and is required to make another payment of $10,500,000 in deferred compensation on June 30, 2011. Under the terms of the MLB CBA, the Debtor is also required to reserve more than $18,000,000 in July 1, 2011, to pre-fund deferred compensation that is not payable to the players at issue until 2012. The MLB CBA also provides for a revenue sharing plan among the 30 Major League Baseball clubs. Higher revenue teams, such as the Dodgers, share a portion of their revenues with lower revenue teams in an effort to promote a competitive balance on the field. The Debtor is obligated to make a revenue sharing payment of roughly $4,000,000 at the end of July. According to the Debtor, a significant portion of its revenue comes from the sale of television and radio broadcast rights. Its radio and television broadcasters are members of the AFTRA. The AFTRA CBA governs, among other things, the compensation of the Debtor's broadcasters. Thus, the Debtor has entered into contracts, which require wages to be paid on its regularly scheduled semi-monthly pay dates. The Debtor asserted that failure to assume the CBAs, even if legally possible, would doom its reorganization case as the Debtor would be without baseball players and announcers. The Court's Order authorizes, but does not require, the Debtor to perform all obligations under the CBAs and make all payments required pursuant to the CBAs, including player salaries, deferred compensation and revenue sharing. However, these payments may only be made in accordance with the terms of any order approving and authorizing postpetition financing and any applicable budget. About the Los Angeles Dodgers Los Angeles Dodgers LLC operates the Los Angeles Dodgers, a professional Major League Baseball club in the Los Angeles metropolitan area. Frank McCourt, a Boston real-estate developer who unsuccessfully bid for the Boston Red Sox, bought the Dodgers from Rupert Murdoch's Fox Entertainment Group, Inc. in 2004 for $330 million. Mr. McCourt also bought the Dodgers Stadium from Fox for $100 million. Los Angeles Dodgers LLC filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12010) on June 27, 2011, after MLB Commissioner Bud Selig rejected a television deal with News Corp.'s Fox Sports, leaving Mr. McCourt unable to make payroll for June 30 and July 1. Fox Sports has exclusive cable television rights for Dodgers games until the end of 2013 baseball season. Chapter 11 filings were also made for LA Real Estate LLC, an affiliated entity which owns Dodger Stadium, and three other related holding companies. The petition estimates assets of up to $500 million and debts of up to $1 billion. According to Forbes, the team is worth about $800 million, making it the third most valuable baseball team after the New York Yankees and the Boston Red Sox. Judge Kevin Gross presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Dewey & LeBoeuf LLP serve as the Debtors' bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The LA Dodgers is the 12th sports team in North America to have sought bankruptcy protection, according to The Wall Street Journal. LOUISIANA HOUSING: S&P Raises Rating on Revenue Bonds From 'B+' --------------------------------------------------------------- Standard & Poor's Ratings Services raised to 'AA+' from 'B+' the rating on Louisiana Housing Finance Agency's series 2007 multifamily housing revenue bonds, issued for the Ginnie Mae collateralized mortgage loan-Spanish Arms Project. The outlook is negative. The rating is based on S&P's opinion of: Very strong credit support of the Ginnie Mae mortgage-backed security; Very strong cash flows run at zero reinvestment income with an opening parity of 102.14%; and Very strong investments in 'AAAm' rated Federated Treasury Obligation Fund. The rating is constrained by the 'AA+' rating on the United States of America. "On May 12, 2010, the issue was included in a rating action where we placed our ratings on certain housing issues on CreditWatch with negative implications due to revised criteria for certain federal government-enhanced housing transactions. Our revised criteria affect government-enhanced housing transactions where funds are invested in money market funds and other investments with no guaranteed rate of return. In September 2010, Standard & Poor's lowered the rating to 'B+' from 'AAA' based upon updated cash flow statements, assuming zero reinvestment for all scenarios as set forth in the related criteria articles. The cash flow projections indicated that assuming no reinvestment earnings that there will be insufficient revenues to pay regularly scheduled debt service starting on the Sept. 20, 2017, interest payment date," S&P related. Standard & Poor's has since received updated cash flows as of July 5, 2011, showing that based on zero reinvestment assumptions, all costs associated with the bonds will be paid on time and in full until maturity. The cash flows take into account a loan modification that occurred in August 2009, which affected the loan amortization schedule. In addition, the carryforward amounts, which must be maintained prior to redemptions from excess, have been adjusted and are reflected in the updated cash flow statements. In the event that the security prepays, cash flows indicate sufficient assets to cover the reinvestment risk based on the 15- day minimum notice period required for special redemptions. MAJESTIC CAPITAL: Committee Wins OK for Jager Smith as Counsel -------------------------------------------------------------- Judge Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York has authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of Majestic Capital, Ltd., and its debtor affiliates to retain the law firm of Jager Smith P.C. as its counsel effective as of June 27, 2011. Jager Smith will, among other things: a. attend hearings, draft pleadings and generally advocate positions that further the interests of the creditors represented by the Committee; b. assist in the examination of the Debtors' affairs and a review of their prepetition operations; and c. advise the Committee as to the progress of the Chapter 11 cases. Jager Smith's rates vary with the experience and seniority of the attorneys involved in a particular matter. Jager Smith will charge a blended rate of $460 per hour for the services to be rendered on behalf of the Committee. To the best of the Committee's knowledge, Jager Smith is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Bruce F. Smith, Esq. Steven C. Reingold, Esq. JAGER SMITH P.C. 485 Madison Avenue, 20th Floor New York, NY 10022 Tel: (212) 683-3520 E-mail: bsmith@jagersmith.com sreingold@jagersmith.com About Majestic Capital, Ltd. Headquartered in Poughkeepsie, New York City, Majestic Capital, Ltd., fdba CRM Holdings, Inc., filed for Chapter 11 protection (Bankr. S.D. N.Y. Case No. 11-36225) on April 29, 2011. Affiliates also sought Chapter 11 protection Bankr. S.D. N.Y. Case Nos. 11-36221 - 11-36234) on April 29, 2011. Bankruptcy Judge Cecelia G. Morris presides over the case. Thomas Genova, Esq., at Genova & Malin, Attorneys represents the Debtors in their restructuring effort. Murphy & King, P.C. serves as the Debtors' co-counsel. The Debtors tapped Michelman & Robinson, LLP, as special counsel, and Day Seckler, LLP, as accountants and financial advisors. The Debtor disclosed $436,191,000 in assets and $421,757,000 in liabilities as of Dec. 31, 2010. Bruce F. Smith, Esq., and Steven C. Reingold, Esq., at Jager Smith P.C. represent the Official Committee of Unsecured Creditors. The Committee has also tapped J.H. Cohn LLP as its financial advisors. MAJESTIC CAPITAL: Committee Hires J.H. Cohn as Financial Advisor ---------------------------------------------------------------- Judge Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York has authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of Majestic Capital, Ltd., and its debtor affiliates to retain J.H. Cohn LLP as its financial advisors, effective as of July 6, 2011. J.H. Cohn will, among other things: a) analyze and review key motions to identify strategic case issues; b) gain an understanding of Debtors' corporate structure and related parties; and c) perform a preliminary assessment of the Debtors' financial condition. J.H. Cohn's normal billing rates for the financial advisory services of the nature to be rendered to the Committee are: Partner $580 - $790 Managers, Senior Managers, Directors $420 - $610 Other Professional Staff $260 - $400 Paraprofessionals $180 As an accommodation to the Committee, J.H. Cohn has agreed to a 10% discount on these rates. To the best of Committee's knowledge, J.H. Cohn is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Majestic Capital, Ltd. Headquartered in Poughkeepsie, New York City, Majestic Capital, Ltd., fdba CRM Holdings, Inc., filed for Chapter 11 protection (Bankr. S.D. N.Y. Case No. 11-36225) on April 29, 2011. Affiliates also sought Chapter 11 protection Bankr. S.D. N.Y. Case Nos. 11-36221 - 11-36234) on April 29, 2011. Bankruptcy Judge Cecelia G. Morris presides over the case. Thomas Genova, Esq., at Genova & Malin, Attorneys represents the Debtors in their restructuring effort. Murphy & King, P.C. serves as the Debtors' co-counsel. The Debtors tapped Michelman & Robinson, LLP, as special counsel, and Day Seckler, LLP, as accountants and financial advisors. The Debtor disclosed $436,191,000 in assets and $421,757,000 in liabilities as of Dec. 31, 2010. Bruce F. Smith, Esq., and Steven C. Reingold, Esq., at Jager Smith P.C. represent the Official Committee of Unsecured Creditors. The Committee has also tapped J.H. Cohn LLP as its financial advisors. MANISTIQUE PAPERS: Wins Cash Collateral Lifeline ------------------------------------------------ Lance Duroni at Bankruptcy Law360 reports that Manistique Papers Inc. won access to a short-term lifeline of cash collateral Monday as its primary bank lender, RBS Citizens NA, said it would seek to convert the Delaware bankruptcy case to a Chapter 7 liquidation. According to Law360, U.S. Bankruptcy Judge Kevin J. Carey signed off on an order allowing the company to use RBS' collateral on an emergency basis, keeping the paper mill afloat until Aug. 26. MPI filed for Chapter 11 protection on Friday, one week after RBS refused to extend additional credit. About Manistique Papers Manistique Papers Inc. operates a landfill in Manistique, Michigan, whereby residuals resulting from paper production are deposited. Manistique Papers Inc. filed for Chapter 11 bankruptcy protection (Bankr. District of Del. Case No. 11-12562) on Aug. 12, 2011. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, represent as the Debtor's bankruptcy counsel. Manistique Papers estimated assets of $10 million to $50 million and debts of $50 million to $100 million in its Chapter 11 petition. MANISTIQUE PAPERS: Closed Paper Mill in Chapter 11 -------------------------------------------------- Manistique Papers Inc., a 97-year-old producer of recycled paper products, filed for Chapter 11 bankruptcy (Bankr. D. Del. Case No. 11-12562), estimating assets of $10 million to $50 million and debt of $50 million to $100 million. Manistique Papers filed for bankruptcy protection one week after halting operations and announcing it would seek a buyer in bankruptcy, according to Lance Duroni at Bankruptcy Law360 reports. The Manistique, Michigan-based company, also known as MPI, was the first manufacturer of recycled content newsprint in North America. Since the beginning of 2011, MPI has been hit with a one-two punch: raw material costs that surged by $1 million per month and a 30% decline in orders for its paper products, according to a declaration from General Manager Jon Johnson, Law 360 reports. The Company ceased production Aug. 5, according to Bloomberg News. Bloomberg News discloses that the paper mill's largest unsecured creditors include Houston-based WM Recycle America LLC, with a claim of $2.3 million; Cloverland Electric, based in Dafter, Michigan, with a claim of $1.5 million; and Continental Paper Grading Co., based in Chicago, with a claim of $552,707. Daniel B. Butz, Esq., and Eric D. Schwartz, Esq., at Morris, Nichols, Arsht & Tunnell LLP, in Wilmington, Delaware, serve as counsel to the Debtor. A case summary for Manistique Papers is in the Aug. 15, 2011 edition of the TCR. MARK PHILLIPS: Beaconlight Guesthouse Set for Oct. 20 Auction ------------------------------------------------------------- Craig M. Douglas at the Boston Business Journal reports that the Beaconlight Guesthouse, a 14-room bed and breakfast located steps from Provincetown's prime commercial district, is scheduled to be sold during an October 20 foreclosure auction. The inn was originally slated to be auction Aug. 18, however that event has been postponed to Oct. 20 at 11 a.m. The sale is being managed by Daniel McLaughlin & Co. of Boston, notes Mr. Douglas. According to the report, the 161-year-old inn is owned by 12 Winthrop Street Realty Trust, a Massachusetts LLC owned by Mark Lee Phillips of Provincetown. Mr. Phillips acquired the gabled, wood-shingled property for $2.45 million in March 2005. The seller in that transaction was another state LLC registered to Trevor Pinker and Stephen Mascilo, both of Provincetown. The planned auction comes roughly a year after Phillips voluntarily filed for Chapter 11 bankruptcy protection. The report notes the deal was financed in part by a $1.7 million mortgage from Seamens Bank, one of Cape Cod's largest locally based lenders. Public filings also indicate a second mortgage, a $385,000 debt, also was originated by New Horizons International Corp. the same day of the closing. Mark Lee Phillips filed a Chapter 11 petition (Bankr. D. Mass. Case No. 10-16332) on June 9, 2010. Alex M. Rodolakis, Esq., at Gilman, McLaughlin & Hanrahan LLP, in Hyannis, Massachusetts, represents the Debtor. The Debtor estimated assets and debts of $1 million to $10 million. MARMC TRANSPORTATION: Court OKs Stipulation to Pay Sale Proceeds ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Wyoming approved the stipulation entered among Marmc Transportation, Inc., Wells Fargo Equipment Finance, Inc., Wells Fargo Bank, N.A., and Dave and Marcille Sundem. The parties assert interest in the Debtor's assets, which were sold as part of the administration of its bankruptcy estate. The Bank holds an over-secured senior position mortgage against real estate and security interest attached to the sale proceeds derived from Marmc's sale of real estate to Oilfield Country Tubular, LLC for the price $640,000. The Bank held an over-secured senior perfected security interest against non-titled equipment sold by Marmc to Hemphill Trucking with a value of $355,000, and security interest attached to the sale proceeds derived from said equipment sale. WFEI holds an over-secured senior lien position against Marmc's equipment and vehicles that were sold, which lien attached to the proceeds derived from said sale. Sundems claim a secured judgment lien in the base amount of $159,611 against all real property owned by Marmc as of the date of Marmc's bankruptcy filing. The stipulation dated as of July 29, 2011, provides for, among other things: -- payment of the cash collateral sale proceeds to Wells Fargo Equipment Finance, Inc. and Wells Fargo Bank; -- Sundems will withdraw the objection to the payment upon the execution of the stipulation by all the parties; -- Marmc will segregate and hold the sum of $159,611 in the Debtor-in-Possession account created for the deposit of sale proceeds at Wells Fargo Bank; -- Marmc will distribute the $995,000 to Bank from the proceeds of the sales upon the execution of this stipulation by all the parties, and upon receipt of said funds Bank will immediately provide Marmc with an accounting as to the application of these funds;. -- all valid liens, mortgages or other encumbrances that attached to Marmc's real estate or personal property are not intended to be invalidated by the distribution of the sale proceeds to Bank, nor will Marmc argue the same. Such liens, mortgages or other encumbrances will continue in full force and effect against the real estate and personal property and all remaining proceeds from the sales thereof. -- All valid liens, mortgages, or other encumbrances which attached to the sale proceeds from the sale of the real property to Oil Country Tubular, LLC will not be invalidated by any distribution of the sale proceeds as outlined herein and these other valid liens, mortgages, or other encumbrances shall attach to the remaining real property owned by Marmc; thus, giving these other creditors the indubitable equivalent to their claims which attached to the real property sold to Oil Country Tubular. About MarMc Transportation, Inc. Headquartered in Mills, Wyoming, MarMc Transportation, Inc., filed for Chapter 11 bankruptcy protection (Bankr. D. Wyo. Case No. 10- 20653) on June 3, 2010. Stephen R. Winship, Esq., at Winship & Winship, PC, assists the Company in its restructuring effort. The Company estimated $10 million to $50 million in assets and up to $10 million in debts in its Chapter 11 petition. MERIT GROUP: Morgan Joseph Managed Sale to Centre Lane Partners --------------------------------------------------------------- Morgan Joseph TriArtisan LLC's Financial Restructuring Group was the investment banker for The Merit Group Inc., of Spartanburg, S.C., the leading nationwide supplier of paint sundries, and managed its sale which resulted in the company being bought by the private equity firm of Centre Lane Partners, based in New York City. The Merit Group had filed a voluntary Chapter 11 petition on May 17, 2011. "With the very capable assistance of the Morgan Joseph team we were able to find a highly suitable partner and emerge from bankruptcy in just 75 days," said Mitch Jolley, who recently returned as President and CEO of Merit Group. "This speedy and very successful process has enabled us to maintain our position with many of our customers and suppliers, allowing The Merit Group to remain the leading, nation-wide supplier of paint sundries. The swift resolution of the bankruptcy also allowed us to keep intact our very talented people, who are a major asset for us. We also are especially appreciative of having Centre Lane as our new owners, and they are already providing valuable assistance as we move forward." "The Merit Group was a textbook example of a good company that had been saddled with a troubled balance sheet and a lack of liquidity. The Company's history and strong market position resonated with the buyer universe, which enabled our group to move rapidly and identify a suitable purchaser that recognized the company's intrinsic value," said Jay Jacquin, a Director in the Financial Restructuring Group. "With Centre Lane's capital and operational focus, combined with Mitch Jolley's broad experience, we expect the company to quickly regain its stride and be stronger than ever within a short period of time." Merit Group, which at the time of its filing disclosed total debt of $100 million, including $37 million of unsecured trade debt, was purchased for $46 million. Members of the Morgan Joseph TriArtisan Financial Restructuring Group that participated in the transaction included James Decker, Managing Director and Head of the Group, Jay Jacquin, James Hadfield and Andrew Joy. Merit's legal advisor was the McNair Law firm in Columbia, S.C. About Centre Lane Partners Centre Lane Partners is a private investment firm focused on making debt and equity, control and non-control, investments in North American middle market companies. Centre Lane targets companies with revenues between $20 and $500 million that have leading market positions and sustainable competitive advantages in their respective niches. It seeks to invest $5 to $50 million per transaction. Industries targeted for investment are broad and diverse with no industry excluded from its consideration set. About Morgan Joseph TriArtisan Morgan Joseph TriArtisan LLC ( www.mjta.com ) is an investment bank engaged in providing financial advice, capital raising and private equity investing. The firm's services include mergers, acquisitions and restructuring advice, in addition to private placements and public offerings of equity and debt, as well as research and trading services for institutional clients. About Merit Group Based in Spartanburg, South Carolina, The Merit Group Inc., formerly Lancaster Distributing Company, serves as one of the leading paint sundries distributors in the United States. Its markets also include Mexico, the Caribbean Islands, Central America and South America. Merit Group filed for Chapter 11 bankruptcy protection (Bankr. D. S.C. Lead Case No. 11-03216) on May 17, 2011. Judge Helen E. Burris presides over the case. Michael M. Beal, Esq., McNair Law Firm PA, represents the Debtors. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent; and Morgan Joseph TriArtisan LLC, investment banker, and Alvarez & Marsal North America, LLC, as financial advisors. Merit Group disclosed 7,004,048 in assets and $66,609,946 in liabilities as of the Chapter 11 filing. DIP Lender Regions Bank is represented by lawyers at Nexsen Pruet Jacobs & Pollard and Parker, Hudson, Rainer & Dobbs, LLP. The U.S. Trustee has named seven members to the Official Committee of Unsecured Creditors. The Committee is represented by Cole, Schotz, Meisel, Forman & Leonard, P.A. The Committee tapped McCarthy Law Firm LLC as co-counsel, J.H. Cohn LLP as its financial advisor. MIDCONTINENT COMMUNICATIONS: Moody's Affirms B1 Corporate --------------------------------------------------------- Moody's Investors Service affirmed the ratings for Midcontinent Communications, a cable multiple system operator partly owned by a subsidiary of Comcast Corporation, on the announcement that the company is upsizing its senior secured credit facilities by $100 million to fund the acquisition of US Cable's Minnesota properties. In addition to the new financing, Moody's expects the company to partially draw on its $125 million revolving credit facility to fund the full purchase price. As part of the rating action, Moody's affirmed the company's B1 Corporate Family Rating (CFR) and B2 Probability of Default Rating (PDR), along with the B1 ratings on the company's first lien bank credit facilities (comprised of a 5-1/2 year $125 million revolving credit facility, a 5-1/2 year $200 million Term Loan A and a 6-1/2 year $350 million Term Loan. The rating outlook is stable. Downgrades: Issuer: Midcontinent Communications -- Senior Secured Bank Credit Facility, to LGD3, 37 % from LGD3, 35 % Midcontinent's B1 Corporate Family Rating reflects the company's modest scale, limited geographic reach and moderately high pro forma financial leverage (with debt-to-EBITDA of approximately 4.9x (incorporating Moody's standard adjustments). Moody's does note that the company's leverage has increased over the past year from its historic 3.0x to 3.5x levels, due to last year's $320 million partnership distribution and the pending acquisition of US Cable's Minnesota properties. Still, Moody's believes that the leverage rise is transitory and the rating is supported by management's conservative fiscal policies, as demonstrated by a history of operating the company with relatively low financial leverage and explicit commitment to reduce debt with excess cash flow on an expedited basis in future periods. Moody's expects that the company will decrease leverage to the low 4 times range with free cash flow generation, albeit modest (at less than 5% of debt), within the next two years. While Midcontinent's partnership with Comcast does provide near-term benefits including purchasing leverage and operational counsel which support margins, there is risk related to the incurrence of additional debt to repurchase Comcast's 50% interest (should Comcast choose to exit the partnership early, after the remaining three-year no-optionality period, but prior to expiration of the recently amended ten-year agreement). Midcontinent does not compete with either FiOS or U- Verse, but does remain rather substantially exposed to overbuilders and/or incumbent cable competitors in approximately 35% of its footprint, proforma for US Cable. The principal methodology used in rating Midcontinent was Moody's Global Cable Television Industry Methodology, published in July 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website. Midcontinent Communications, headquartered in Minneapolis, Minnesota, is a cable multiple system operator serving over 205,062 subscribers in the states of North Dakota, South Dakota and Minnesota. Comcast Corporation owns a 50% indirect common equity interest in Midcontinent. The company generated approximately $328 million of revenue over the trailing twelve- month period ended June 2011. MOHAWK INDUSTRIES: S&P Affirms 'BB+' Ratings on Senior Notes ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB+' issue ratings on Calhoun, Ga.-based Mohawk Industries Inc.'s 7.2% senior notes due 2012 and 6.125% senior notes due 2016. "At the same time, we revised our recovery ratings on the notes to '4' from '3'. The '4' recovery rating indicates our expectation of average (30% to 50%) recovery for lenders in the event of a payment default," S&P related. "While our issue-level ratings on the senior notes have not changed, we revised our recovery rating on those notes to reflect lower potential recovery for the senior noteholders because the increased size of Mohawk's new $900 million senior secured revolving credit facility, (compared with the prior $600 million facility), results in greater priority claims in our default scenario," S&P said. The 'BB+' ratings on Mohawk Industries Inc. reflect the company's strong No. 2 global position in the carpet and floor coverings market, with support from a portfolio of well-recognized brands covering multiple price points and distribution channels. The ratings also reflect Mohawk's vertically integrated operations, and diverse customer base. However, Mohawk's markets are also highly competitive and cyclical (subject to housing construction cycles and variable consumer discretionary spending) with a significant portion of its sales from residential replacement and construction markets. "As a result, we view the company's business risk profile as satisfactory," S&P said. Ratings List Mohawk Industries Inc. Corporate credit rating BB+/Positive/-- Ratings Affirmed; Recovery Ratings Revised To From 7.2% sr nts due 2012 BB+ BB+ Recovery ratings 4 3 6.125% sr nts due 2016 BB+ BB+ Recovery ratings 4 3 MOMENTIVE PERFORMANCE: Incurs $10-Mil. Net Loss in 2nd Quarter -------------------------------------------------------------- Momentive Performance Materials Inc. reported a net loss of $10 million on $728 million of net sales for the fiscal three-month period ended July 3, 2011, compared with a net loss of $1 million on $651 million of net sales for the fiscal three-month period ended June 27, 2010. The Company also reported a net loss of $13 million on $1.38 billion of net sales for the fiscal six-month period ended July 3, 2011, compared with a net loss of $4 million on $1.25 billion of net sales for the fiscal six-month period ended June 27, 2010. At July 3, 2011, the Company had $3.046 billion of debt. In addition, at July 3, 2011, the Company had $527 million in liquidity including $279 million of unrestricted cash and cash equivalents and $248 million of borrowings available under the Company's senior secured revolving credit facility, which was undrawn. "Our second quarter 2011 results reflected strong global demand for our specialty products," said Craig O. Morrison, Chairman and CEO. "Sales for our Silicones segment were positively impacted on a year-over-year basis by stronger demand in the automotive, construction, energy, and industrial markets. Our Quartz business continued to perform well in the second quarter of 2011 due to strong demand in the semiconductor and ceramics application market." A full-text copy of the press release announcing the financial results is available for free at http://is.gd/saYCMs About Momentive Performance Momentive Performance Materials, Inc., is a producer of silicones and silicone derivatives, and is engaged in the development and manufacture of products derived from quartz and specialty ceramics. As of Dec. 31, 2008, the Company had 25 production sites located worldwide, which allows it to produce the majority of its products locally in the Americas, Europe and Asia. Momentive's customers include companies in industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L'Oreal, BASF, The Home Depot and Lowe's. The Company reported a net loss of $62.96 million on $2.58 billion of net sales for the year ended Dec. 31, 2010, compared with a net loss of $41.67 million on $2.08 billion of net sales during the prior year. The Company's balance sheet at April 3, 2011, showed $3.36 billion in total assets, $3.99 billion in total liabilities, and a $624 million total deficit. * * * Momentive carries a 'B3' corporate family and probability of default ratings from Moody's Investors Service. It has 'B-' issuer credit ratings from Standard & Poor's Ratings Services. As reported by the Troubled Company Reporter on Oct. 27, 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Momentive Performance Materials Inc. to 'B-' from 'CCC+'. In addition, S&P raised its second lien, senior unsecured, and subordinated debt ratings by one notch to 'CCC' (two notches below the corporate credit rating) from 'CCC-'. The recovery ratings on these classes of debt remain unchanged at '6', indicating S&P's expectation of negligible (0%-10%) recovery in the event of a payment default. At the same time, based on the corporate credit rating upgrade and its updated recovery analysis, S&P raised its senior secured debt rating by two notches to 'B' (one notch above the corporate credit rating) from 'CCC+' and revised the recovery rating to '2' from '3'. These ratings indicate S&P's expectation for substantial (70%-90%) recovery in the event of a payment default. MOMENTIVE SPECIALTY: Posts $63-Mil. Net Income in Second Quarter ---------------------------------------------------------------- Momentive Specialty Chemicals Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q reporting net income of $63 million on $1.43 billion of net sales for the three months ended June 30, 2011, compared with net income of $52 million on $1.15 billion of net sales for the same period during the prior year. The Company also reported net income of $126 million on $2.73 billion of net sales for the six months ended June 30, 2011, compared with net income of $45 million on $2.20 billion of net sales for the same period a year ago. The Company's balance sheet at June 30, 2011, showed $3.36 billion in total assets, $5.20 billion in total liabilities and a $1.84 billion total deficit. "In the second quarter of 2011, we continued to see strong Segment EBITDA growth due to our specialty portfolio, improved product mix, strong cost controls and our ongoing productivity initiatives," said Craig O. Morrison, Chairman, President and CEO. "In particular, our operating leverage and strong performances in our oilfield resins, base epoxy resins, phenolic specialty resins, North American formaldehyde and our Latin America forest products businesses drove a 22 percent gain in second quarter 2011 Segment EBITDA compared to the second quarter of 2010. We continued to make good progress on the pricing front during the second quarter of 2011 as we work to offset raw material inflation. We are also continuing to pursue a number of pricing actions." A full-text copy of the Form 10-Q is available for free at: http://is.gd/WXKtyY About Momentive Specialty Momentive Specialty Chemicals, Inc., headquartered in Columbus, Ohio, is a leading producer of thermoset resins (epoxy, formaldehyde and acrylic). The company is also a supplier of specialty resins for inks and specialty coatings sold to a diverse customer base as well as a producer of commodities such as formaldehyde, bisphenol A, epichlorohydrin, versatic acid and related derivatives. Momentive Specialty carries a 'B-' issuer credit rating from Standard & Poor's Ratings Services. It has 'B3' corporate family and probability of default ratings from Moody's Investors Service. corporate credit rating from Standard & Poor's. As reported in the Oct. 27, 2010 edition of TCR, Moody's Investors Service assigned a 'Caa1' rating to the guaranteed senior secured second lien notes due 2020 of Momentive Specialty (formerly known as Hexion Specialty Chemicals Inc.). Proceeds from the notes were allocated for the repayment of $533 million of guaranteed senior secured second lien notes due 2014. "With this refinancing Hexion will have refinanced or extended the maturities on the vast majority of the debt that was originally slated to mature prior to 2015. There is less than $600 million of this debt remaining, which should be much easier to for the company to refinance as its credit metrics improve further," stated John Rogers, Senior Vice President at Moody's. MOSS LUMBER: Files for Chapter 7 Bankruptcy ------------------------------------------- David Benda, writing for The Record Searchlight's redding.com, reports that Moss Lumber & Hardware Co., one of Northern California's oldest and largest family-owned wood products retailer, filed a Chapter 7 bankruptcy and abruptly closed. According to the report, the wood products business in Redding, California, disclosed in the list of largest unsecured creditors that it owes 27 workers for unpaid wages claims. The largest is for $27,995. The Internal Revenue Service ($11,482), Shasta County Treasurer/Tax Collector ($33,983), state Employment Development Department ($11,000) and state Board of Equalization ($32,000) are also among the unsecured creditors. Moss Lumber's largest creditor is Redding Bank of Commerce, which holds a $5 million claim on the Eastside Road property, $4 million of which is unsecured. MUNICIPAL MORTGAGE: Frederick Puddester Appointed Director ---------------------------------------------------------- Municipal Mortgage & Equity, LLC, announced the appointment of Frederick W. Puddester as a director of the Company and a member of the Audit Committee effective as of Aug. 10, 2011. Mr. Puddester brings more than 20 years' experience in financial management to MuniMae, including his prior service on the board of MuniMae TE Bond Subsidiary, LLC, a subsidiary of the Company. Mr. Puddester has extensive experience with budgeting and financial planning, including his current position as Vice President for Finance and Administration for Williams College. In this position Mr. Puddester is responsible for financial reporting, planning and forecasting as well as debt financing and tax compliance. Prior to joining Williams College, Mr. Puddester served at Johns Hopkins University, first as Executive Director of Budget and Financial Planning and then as Senior Associate Dean for Finance and Administration at the university's Krieger School of Arts and Sciences, where his duties included overseeing the development of the university-wide budget and five-year plan. In addition, Mr. Puddester spent two decades in Maryland state government, including four years as secretary of the Department of Budget and Management. Mark K. Joseph, Chairman of the Board of MuniMae, commented, "We are extremely pleased to have Fred join MuniMae's board. We are excited about the wealth of financial, functional and operational experience he brings to the table and are confident that Fred will be an immediate, valuable and contributing member of our Board." Mr. Puddester received his B.A. degree from the University of Vermont and his M.A. in public policy from the Eagleton Institute of Politics, Rutgers University. About Municipal Mortgage Baltimore, Md.-based Municipal Mortgage & Equity, LLC (Pink Sheets: MMAB) -- http://www.munimae.com/-- was organized in 1996 as a Delaware limited liability company and is classified as a partnership for federal income tax purposes. When the Company became a publicly traded company in 1996, it was primarily engaged in originating, investing in and servicing tax- exempt mortgage revenue bonds issued by state and local government authorities to finance affordable multifamily housing developments. Since then, the Company made several acquisitions that significantly expanded its business. However, in 2008, due to the financial crisis, the Company began contracting its business. The Company has sold, liquidated or closed down all of its different businesses except for its bond investing activities and certain assets and residual interests related to the businesses and assets that the Company sold due to its liquidity issues. The Company has a majority position in International Housing Solutions S.a.r.l., a partnership that was formed to promote and invest in affordable housing in overseas markets. In addition, at Dec. 31, 2010, the Company has an unfunded equity commitment of $5.1 million, or 2.67% of total committed capital with respect to its role as the general partner to the South Africa Workforce Housing Fund SA I ("SA Fund"). The SA Fund was formed to invest directly or indirectly in housing development projects and housing sector companies in South Africa. A portion of the funding of SA Fund is participating debt provided by the United States Overseas Private Investment Corporation, a federal government entity, and the remainder is equity primarily invested by institutional and large private investors. The Company expects to continue this business. As reported by the TCR on April 6, 2011, KPMG LLP, in Baltimore, Maryland, expressed substantial doubt about Municipal Mortgage & Equity's ability to continue as a going concern. The independent auditors noted that the Company has been negatively impacted by the deterioration of the capital markets and has liquidity issues which have resulted in the Company having to sell assets, liquidate collateral positions, post additional collateral, sell or close different business segments and work with its creditors to restructure or extend its debt arrangements. Municipal Mortgage reported a net loss of $72.5 million on $107.7 million of total revenue for 2010, compared with a net loss of $380.1 million on $134.8 million of total revenue for 2009. The Company's balance sheet at March 31, 2011, showed $1.97 billion in total assets, $1.28 billion in total liabilities and $683.26 million in total equity. NEBRASKA BOOK: S&P Retains 'D' Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Ratings Services revised the recovery ratings on Lincoln, Neb.-based Nebraska Book Co. Inc.'s $200 million 10% notes to '1' from '2'. The '1' recovery rating indicates that lenders should receive very high (90%-100%) recovery. "In addition, we revised the recovery rating on Nebraska Book's $175 million 8.625% senior subordinated notes to '3' from '6'. The '3' recovery rating indicates that lenders should receive meaningful (50%-70%) recovery," S&P said. "The change in our recovery analysis takes into account our revised expectation of the company's post-emergence enterprise valuation, in addition to the amount of priority claims that were outstanding at the time of its voluntary bankruptcy filing," S&P related. The recovery ratings on Nebraska Book's asset-based revolving credit facility and NBC Acquisition Corp.'s 11% senior discount notes remain unchanged. All the issue-level ratings remain 'D' following NBC Acquisition's and Nebraska Book's voluntary petition filing under Chapter 11 of the Bankruptcy Code on June 27, 2011. Ratings List Nebraska Book Co. Inc. NBC Acquisition Corp. Corporate Credit Rating D/-- Ratings Unchanged; Recovery Ratings Revised Nebraska Book Co. Inc. To From Senior Secured nts D D Recovery Rating 1 2 Subordinated nts D D Recovery Rating 3 6 NEWPAGE CORP: S&P Cuts Corp. Credit & Rating to 'CCC' ----------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Miamisburg, Ohio-based NewPage Corp. to 'CCC' from 'CCC+'. "At the same time, we lowered the issue-level rating on the company's first-lien term loan to 'CCC' from 'CCC+'. The recovery rating remains '4', indicating our expectation that lenders can expect average (30% to 50%) recovery in the event of a payment default. We also lowered the issue-level rating on the company's second-lien notes and senior subordinated notes to 'CC' from 'CCC- '. The recovery rating remains '6', indicating our expectation that lenders can expect negligible (0% to 10%) recovery in the event of a payment default," S&P related. "We subsequently placed all ratings on NewPage on CreditWatch with negative implications," S&P said. "The rating actions follow NewPage's recently announced weaker- than-expected operating results for the quarter ended June 30, 2011, and the decision to hold off on its previously announced asset sales," said Standard & Poor's credit analyst Tobias Crabtree. "Based on our lowered 2011 EBITDA expectations and the likelihood of no additional material assets sales over the upcoming months, we believe NewPage could be challenged to meet its fixed charges, including over $160 million of cash interest expense, during the remainder of 2011. In addition, the company faces significant debt maturities and the maturity of its revolving credit facility within the next year if it cannot repay or refinance its $1 billion of second-lien notes by December 2011." "For the remainder of 2011, higher anticipated average selling prices and a seasonal increase in demand for coated papers are expected to lead to an improvement in operating performance when compared with the first half of 2011. Still, higher cost inflation and a more uncertain economic outlook are likely, in our view, to result in second half operating performance being challenged to meet the prior year's similar period adjusted EBITDA of about $225 million. As a result, we believe 2011 adjusted EBITDA could now materially fall below the company's $400 million of estimated annual cash interest expense and maintenance-related capital expenditures. We expect the company to remain highly leveraged, with adjusted debt to EBITDA likely exceeding 10x and its fixed- charge coverage remaining below 1x throughout 2011. Because demand correlates closely to general economic conditions, highly cyclical advertising spending, and exchange rates, we think NewPage's financial results and credit measures will fluctuate widely during the course of a cycle," S&P related. Standard & Poor's will likely resolve this CreditWatch once it has a better understanding of what steps NewPage intends to take with regards to repaying or refinancing its $1 billion second-lien notes due May 2012 by Dec. 2, 2011. NEW VISION: Receives Foreclosure Notice From Beach Business Bank ---------------------------------------------------------------- Dennis Darrow at Chieftain.com, citing filing with the Pueblo County Public Trustee's office, reports that the owner of the Clarion Inn at 4001 N. Elizabeth St. has received a foreclosure notice from lender Beach Business Bank The report says the hotel joins the Pueblo Marriott and the Ramada Inn as the targets of foreclosure actions in the past year. According to the report, hotel owner New Vision Hospitality bought the property in 2008 for $3.2 million and invested $2.8 million in improvements along with bringing the Clarion brand name. The report says Beach Business Bank, based in California, states $3.6 million remains owed on a $4.5 million loan taken out by New Vision Hospitality, according to the foreclosure filing. A tentative date for a public auction of the property has been set for Nov. 30, 2011, but typically such disputes end with a restructuring of the loan or the lender taking control of the property for resale. The report notes the Ramada Inn owner has since filed for Chapter 11 bankruptcy, according to a notice given the trustee's office. The filing put the foreclosure proceedings on hold. NEWLEAD HOLDINGS: Seeks Waivers to Covenants From Lenders --------------------------------------------------------- NewLead Holdings Ltd. as a result of prolonged challenging market conditions, NewLead has entered into discussions with its lenders to develop an interim plan that will improve liquidity and operating flexibility while developing a sustainable capital structure. The Company has appointed Moelis & Company and Fried, Frank, Harris, Shriver & Jacobson LLP as its advisors to assist with this process. The Company is seeking waivers from its lenders to various restrictive covenants and an agreement that they will forbear from exercising remedies under their respective debt arrangements. Although the Company is optimistic that it will reach an agreement with its lenders on the short-term waivers of defaults and on the terms of the restructuring of the Company's indebtedness, no assurances can be provided that these agreements will be concluded. Michael Zolotas, President, Chief Executive Officer and Interim Chief Financial Officer of NewLead, stated, "While we are facing very difficult market conditions, we are committed to continue working with our lenders and other commercial partners to develop a sustainable capital structure that will ensure the long term prospects of NewLead." The company disclosed that on Aug. 12, 2011, First Business Bank and NewLead entered into a sale agreement for two vessels, the Newlead Prosperity and the Newlead Spartounta. Pursuant to the terms of the sale agreement, the Company will cooperate with FBB to proceed with the immediate sale of Newlead Spartounta no later than Sept. 13, 2011 and the sale of Newlead Prosperity by auction or judicial sale. In return of the aforementioned agreement, FBB has agreed to cancel the corporate guarantees by NewLead of its debt and share pledges in respect to these two loans until the completion of these sales, at which time the guarantees and share pledges shall be unconditionally and irrevocably released and cancelled. About NewLead Holdings NewLead Holdings Ltd. -- http://www.newleadholdings.com-- is an international, vertically integrated shipping company that owns and manages product tankers and dry bulk vessels. NewLead currently controls 22 vessels, including six double-hull product tankers and 16 dry bulk vessels of which two are newbuildings. N ewLead's common shares are traded under the symbol "NEWL" on the NASDAQ Global Select Market. OLDE PRAIRIE: Landmark and Winner's to Take Control After Exit -------------------------------------------------------------- After fending off a request by secured creditor CenterPoint Realty Trust for dismissal of the chapter 11 case or foreclosure of the assets, debtor Olde Prairie Block Owner LLC, submitted to the U.S. Bankruptcy Court for the Northern District of Illinois will soon seek approval of a disclosure statement as part of the process for reorganizing its debts and exiting bankruptcy. The Debtor on July 18, 2011 filed a disclosure statement explaining its proposed Second Amended Plan, which was last modified in October 2010. According to the Second Amended Disclosure Statement, the Debtor has received an executed term sheet from Winner's Development, LLC 3 indicating willingness to provide a cash equity contribution in an amount sufficient to (i) pay in full the DIP Claims; (ii) pay in full all administrative expense claims; (iii) satisfy CenterPoint's claims against the Debtor and its assets; and (iv) provide to holders of all Allowed unsecured claims the cash distributions. As consideration for making the Cash Equity Contribution, the Plan Investor will receive a to be determined percentage of the interests in the Reorganized Debtor. While not a source of funds to pay the allowed claims, a "non-cash equity contribution" by an entity identified as Landmark is a condition to Winner's cash equity contribution. The only interests in the Reorganized Debtor will be owned by the Plan Investor and Landmark. The City of Chicago has been extremely supportive of the project due to the employment, social and fiscal benefits. The City also has made improved supply of accommodations a key focus to maintain its competitive advantage in hosting conventions. The City estimates incremental tax revenue to the city in excess of $15 million annually based on sales, property and hotel taxes. As noted earlier, the Lakeside Property is the sole beneficiary of the TIF. As of December 31, 2009, the TIF fund reflected net assets of over $77 million. The TIF will remain in place through 2021 and will generate future revenue as well which the Debtor expects will provide significant benefit to the Debtor's estate. The Debtor also is pursuing eligible tax credit opportunities. A full-text copy of the Second Amended Disclosure Statement is available for free at http://bankrupt.com/misc/OLDEPRAIRIE_DS.pdf About Olde Prairie Block Owner Olde Prairie Block Owner, LLC, owns two parcels of real estate: (a) a parcel known as the "Olde Prairie Property" located at 230 E. Cermak Road in Chicago, and (b) a parcel known as the "Lakeside Property" located across the street at 330 E. Cermak Road in Chicago. It also holds a long-term lease with the Metropolitan Pier and Exposition Authority that allows it rent-free use of 450 parking spaces at the McCormick Place parking garage until the year 2203. Olde Prairie Block Owner sought chapter 11 protection (Bankr. N.D. Ill. Case No. 10-22668) on May 18, 2010. The Debtor is represented by John E. Gierum, Esq., at Gierum & Mantas, and John Ruskusky, Esq., George R. Mesires, Esq., and Nile N. Park, Esq., at Ungaretti & Harris LLP. Wildman, Harrold, Allen & Dixon LLP, and Marcus, Clegg & Mistretta, P.A., serve as special counsels to the Debtor. The Debtor estimated assets at $100 million to $500 million and liabilities at $10 million to $50 million at the time of the filing. The Debtor filed a Chapter 11 plan on Sept. 11, 2010. A copy of that plan is available at http://bankrupt.com/misc/OLDEPRAIRE_Plan.pdfat no charge. The Court previously found that the total value of the Real Properties and the Parking Lease was $81,150,000, far more than the $48,000,000 that CenterPoint claims to be owed by the Debtor. No trustee, examiner, or committee has been appointed in this case. OMEGA NAVIATION: Taps Jefferies & Company as Investment Banker -------------------------------------------------------------- Omega Navigation Enterprises Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Jefferies & Company Inc. as financial advisor and investment banker. The firm will assist the Debtors to develop ongoing business and financial plans that will be necessary during these chapter 11 cases. The firm will be paid in this manner: -- Monthly Fee $125,000 until the expiration or termination of the engagement -- DIP Financing Fee 2% of commitment, provided that such DIP Financing is from a source other than as insider or affiliate of the Debtor or existing lenders -- Restructuring Fee $2,800,000 in the event a restructuring is consummated under the Bankruptcy Code The Debtors assure the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About Omega Navigation Athens, Greece-based Omega Navigation Enterprises Inc. and affiliates, owner and operator of tankers carrying refined petroleum products, filed for Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 11-35926) on July 8, 2011, in Houston. Omega is an international provider of marine transportation services focusing on seaborne transportation of refined petroleum products. The Debtors disclosed assets of US$527.6 million and debt totaling US$359.5 million. Together, the Debtors wholly own a fleet of eight high-specification product tankers, with each vessel owned by a separate debtor entity. Bracewell & Giuliani LLP serves as counsel to the Debtors. Jefferies & Company, Inc., is the financial advisor. ORDWAY RESEARCH: Creditors to Sue Execs. for Mismanagement ---------------------------------------------------------- Larry Rulison at Times Union reports that a group of businesses owed money by Ordway Research Institute in Albany, New York, is planning to sue Ordway's board of directors and top officers, alleging mismanagement of the biotech lab, which has filed for bankruptcy protection and likely will be closed. According to the report, the Company was created in 2002 with millions of dollars in funding from the Liebich family that founded Albany Frosted Foods, which later became food distribution giant Sysco Corp. Times Union notes the group of unsecured creditors represented by Pittsburgh attorney Jordan Blask says it is going to sue Ordway's board and management to get their money back, alleging corporate waste and fraud. Many of the accusations focus on the Charitable Leadership Foundation, a Clifton Park nonprofit agency that was started by the Liebich family. In an Aug. 10 letter to Ordway attorney Gregory Mascitti that was filed as part of the lab's bankruptcy case, Mr. Blask alleges that millions of dollars were improperly transferred from Ordway to the foundation and that another $1.7 million was improperly invested by Ordway into start-up companies and a venture capital fund at the direction of the foundation, notes Times Union. Times Union says documents filed as part of Ordway's bankruptcy case say Ordway carries a directors and officers liability insurance policy with $5 million in coverage that could be used to pay the creditors. Mr. Blask also claims that Dr. Paul Davis, the director of Ordway and a member of its board, negotiated a deal to move Ordway's emerging infections research team to the University of Florida. About Ordway Research Albany, New York-based Ordway Research Institute, Inc., was formed in 2002 to facilitate inter-institutional and interdisciplinary collaborations in basic and translational biomedical research in New York's Capital District. Ordway's research is focused on drug development in cancer, emerging infections and signal transduction/endocrinology. Ordway filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 11-11322) on April 28, 2011. Bankruptcy Judge Robert E. Littlefield, Jr., presides over the case. Gregory J. Mascitti, Esq., at LeClairRyan, A Professional Corporation, represents the Debtor in its restructuring effort. As of April 26, 2011, Ordway had roughly $12,158,202 in assets and $17,108,847 in liabilities. In its schedules, the Debtor disclosed $6,615,279 in assets and $18,703,061 in liabilities. PACIFIC JET: Judge Throws Malpractice Suit Against Shearman ----------------------------------------------------------- Eric Hornbeck at Bankruptcy Law360 reports that a New York state judge tossed a malpractice suit against Shearman & Sterling LLP on Thursday, ruling that a former client couldn't blame the firm after he lost $750,000 he loaned to a friend's company after it went bankrupt. Ex-client James Garten alleged that when he agreed to loan the money to his friend's faltering company, Pacific Jet Inc., his friend lied about how much debt was senior to his own loan, according to Law360. PHILADELPHIA ORCHESTRA: Fight with Musicians on Gifts Ongoing ------------------------------------------------------------- The Philadelphia Orchestra Association and the pension fund of the American Federation of Musicians continued sparring in bankruptcy court over the union's demand for deeper layers of documentation relating to the orchestra's $120 million endowment. The union, according to the Inquirer Music Critic, is arguing that parts of the endowment should be used to satisfy an estimated $23 million to $35 million liability owed to the union that would be triggered if the association made good on its threat to withdraw from the pension fund. The Orchestra claims those funds are restricted by donor specifications, according to iradiophilly.com. Music Critic notes when the hearing turned to the union's requests for the association's hard drives in an effort to obtain e-mails and other electronic messages relating to the handling of endowment money, Debtor's lawyer Lawrence G. McMichael, recited his oft-repeated response: such a production of information would be costly and burdensome. Judge Frank, according to Music Critic, outlined a series of hearings during the next three weeks to further define the scope of the union's probe. Probe on Pension Fund Peter Dobrin at the Inquirer Music Critic reports that the Debtor's counsel broached a kind of procedural retaliation, saying the association might request a financial probe of its own into the management of the national union's pension fund. Bankruptcy Judge Eric L. Frank questioned the logic of such a move, and the subject did not come up again during the nearly four-hour hearing. 12% of Gifts Unliquidated Peter Dobrin at Inquirer Classical Music Critic reports that according to the union, the Philadelphia Orchestra Association failed to produce documentation for 12 percent of gifts in the endowment. In a letter to the judge in the association's Chapter 11 case, the union's national pension fund says the first cache the orchestra provided shows 476 documents, 57 of which were images that said "documentation has not been found." The report says the union lawyer, Herman L. "Hank" Goldsmith of Proskauer Rose, said the lack of records about specific donor wishes bolsters the union's suspicion that the orchestra cannot prove that its $120 million in various endowment accounts is donor-restricted. That being the case, he says, parts of the endowment can be used to satisfy the union's potential claim as the largest creditor in the bankruptcy. The report notes the union argues that if the association wants to withdraw from the union's national, multiemployer pension fund -- which would trigger an estimated $23 million to $35 million liability payment -- it should satisfy that debt in full, even if it means tapping the endowments. About the Philadelphia Orchestra The Philadelphia Orchestra -- http://www.philorch.org/-- claims to be among the world's leading orchestras. Bloomberg News says the orchestra became the first major U.S. symphony to file for bankruptcy protection, surprising the music world. Previous conductors include Fritz Scheel (1900-07), Carl Pohlig (1907-12), Leopold Stokowski (1912-41), Eugene Ormandy (1936-80), Riccardo Muti (1980-92), Wolfgang Sawallisch (1993-2003), and Christoph Eschenbach (2003-08). Charles Dutoit is currently chief conductor, and Yannick Nezet-Seguin has assumed the title of music director designate until he takes up the baton as The Philadelphia Orchestra's next music director in 2012. The Philadelphia Orchestra Association, The Academy of Music of Philadelphia, Inc., and Encore Series, Inc., filed separate Chapter 11 petitions (Bankr. E.D. Pa. Case Nos. 11-13098 to 11-13100) on April 16, 2011. Judge Eric L. Frank presides over the case. The Philadelphia Orchestra Association is being advised by Dilworth Paxson LLP, its legal counsel, and Alvarez & Marsal, its financial advisor. Curley, Hessinger & Johnsrud serves as its special counsel. In its petition, Philadelphia Orchestra estimated $10 million to $50 million in assets and debts. Encore Series, Inc., tapped EisnerAmper LLP as accountants and financial advisors. Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed seven members to the official committee of unsecured creditors in the Debtors' case. Reed Smith LLP serves as the Committee's counsel. The orchestra at the start of the Chapter 11 case said it needed relief from pension obligations, a new lease with the Kimmel Center where it performs, and a new union contract with musicians. PICHI'S INC: Status Conference Set for Oct. 6 --------------------------------------------- The Bankruptcy Court scheduled a status conference in the bankruptcy case of Pichi's Inc. for Oct. 6, 2011, at 9:30 A.M. at US Post Office and Courthouse Bldg 300 Recinto Sur Street, Fifth Floor Courtroom 5. About Pichi's Inc. Pichi's Inc. owns and operates the Best Western Pichi's Hotel in Guayanilla, Puerto Rico. Pichi's filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06583) on Aug. 3, 2011. Judge Mildred Caban Flores presides over the case. Charles Alfred Cuprill, PSC Law Offices, serves as the Debtor's bankruptcy counsel. CPA Luis R. Carrasquillo & Co., P.S.C., serves as financial consultants. In its petition, the Debtor estimated US$10 million to US$50 million in both assets and debts. The petition was signed by Luis A. Emmanuelli Gonzalez, president. PICHI'S INC: Creditors' Meeting on Sept. 12; Claims Due Dec. 12 --------------------------------------------------------------- The United States Trustee in Puerto Rico will convene a meeting of creditors pursuant to Sec. 341(a) of the Bankruptcy Code in the bankruptcy cases of Pichi's Inc. on Sept. 12/2011 at 9:00 a.m. at 341 Meeting Room, Ochoa Building, 500 Tanca Street, First Floor, in San Juan. This is the first meeting of creditors required under Section 341(a) of the 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. The last day to oppose discharge or dischargeability is Nov. 14, 2011. Proofs of claim are due by Dec. 12, 2011. Government proofs of claim are due by Feb. 1, 2012. About Pichi's Inc. Pichi's Inc. owns and operates the Best Western Pichi's Hotel in Guayanilla, Puerto Rico. Pichi's filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06583) on Aug. 3, 2011. Judge Mildred Caban Flores presides over the case. Charles Alfred Cuprill, PSC Law Offices, serves as the Debtor's bankruptcy counsel. CPA Luis R. Carrasquillo & Co., P.S.C., serves as financial consultants. In its petition, the Debtor estimated US$10 million to US$50 million in both assets and debts. The petition was signed by Luis A. Emmanuelli Gonzalez, president. PICHI'S INC: Hiring Charles Alfred Cuprill as Bankruptcy Counsel ---------------------------------------------------------------- Pichi's Inc. asks the Bankruptcy Court in Puerto Rico for permission to employ Charles Alfred Cuprill, PSC Law Offices as its bankruptcy counsel. The Debtor has paid the firm $22,4000 as retainer. The firm charges $350 per hour for Charles A. Cuprill-Hernandez, Esq.; $225 an hour for senior associates; $150 an hour for junior associations; and $75 for paralegals. Mr. Cuprill-Hernandez, Esq., discloses that his firm has represented a Pichi's creditor, the Puerto Rico Tourism Development Fund in the bankruptcy case styled In re Palmas Country Club, Inc., case number 10-07072 (SEK). Another creditor, V. Suarez & Co., is a shareholder of Cuprill's client, Procesadora Campofresco, Inc. Notwithstanding, Mr. Cuprill-Hernandez, attests that his firm is a disinterested person as defined in Sec. 101(14) of the Bankruptcy Code. About Pichi's Inc. Pichi's Inc. owns and operates the Best Western Pichi's Hotel in Guayanilla, Puerto Rico. Pichi's filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06583) on Aug. 3, 2011. Judge Mildred Caban Flores presides over the case. The Debtor's lawyers may be reached at: Charles Alfred Cuprill, Esq. CHARLES A CURPILL, PSC LAW OFFICE 356 Calle Fortaleza, Second Floor San Juan, PR 00901 Tel: (787) 977-0515 E-mail: cacuprill@cuprill.com CPA Luis R. Carrasquillo & Co., P.S.C., serves as financial consultants. In its petition, Pichi's estimated US$10 million to US$50 million in both assets and debts. The petition was signed by Luis A. Emmanuelli Gonzalez, president. PICHI'S INC: Hiring Luis R. Carrasquillo as Financial Consultant ---------------------------------------------------------------- Pichi's Inc. is in need of a financial consultant to assist its management in the financial restructuring of its affairs by providing advice in strategic planning and the preparation of the Debtor's plan of reorganization, disclosure statement and business plan, and participating in the Debtor's negotiations with creditors. In this regard, the Debtor seeks Bankruptcy Court authority to employ CPA Luis R. Carrasquillo & Co., P.S.C. The Debtor has paid Carrasquillo a $20,000 retainer. The firm's partner, CPA Luis R. Carrasquillo, charges $160 an hour for his work. Senior CPA Marcelo Gutierrez charges $125 an hour. Other CPAs bill $90 to $125 an hour. Carrasquillo has acted as financial consultant in other bankruptcy cases in which Charles A. Cuprill, Esq., the Debtor's counsel, has or is representing debtors. V. Suarez & Co., a Pichi's creditor, is a shareholder of Procesadora Campofresca, Inc., a client of Carrasquillo. Notwithstanding, Carrasquillo is a disinterested person as defined in Sec. 101(14) of the Bankruptcy Code. About Pichi's Inc. Pichi's Inc. owns and operates the Best Western Pichi's Hotel in Guayanilla, Puerto Rico. Pichi's filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-06583) on Aug. 3, 2011. Judge Mildred Caban Flores presides over the case. Charles Alfred Cuprill, PSC Law Offices, serves as the Debtor's bankruptcy counsel. The financial consultants may be reached at: CPA LUIS R. CARRASQUILLO & CO., P.S.C. 28th Street, # TI-26 Caguas PR, 00725 Tel: 787-746-4555 Fax: 787-746-4564 E-mail: luis@cpacarrasquillo.com In its petition, the Debtor estimated US$10 million to US$50 million in both assets and debts. The petition was signed by Luis A. Emmanuelli Gonzalez, president. PIEDMONT CENTER: Sent to Ch. 11 After Owner Charged for Fraud ------------------------------------------------------------- Chris Bagley at the Triangle Business Journal reports that the owner of shopping centers in Pittsboro and several other eastern North Carolina towns filed for Chapter 11 bankruptcy, a step that allows it to delay debt payments while reorganizing its business under court supervision. The report notes Piedmont Center's manager and part-owner Roger Camp was indicted in early June on federal charges including felony bank fraud in connection with debt-funded renovations at Z- Bowl Family Entertainment Center in Mebane. He now faces the bank fraud charge and 13 charges of filing false statements, following an expanded indictment last week. The report says the bankruptcy filing listed Pittsboro Shopping Center; Woody Village Shopping Center in Roxboro; Gibsonville Shopping Center; Graham Shopping Center; Chowan Shopping Center in Murfreesboro; Nashville Shopping Center, near Rocky Mount; and Mebane Shopping Center as retail centers owned by Piedmont. Mr. Camp, as manager, signed a Chapter 11 petition for Piedmont Center Investments, LLC on Aug. 11, 2011 (Bankr. E.D.N.C. Case No. 11-06178). Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., in New Bern, North Carolina, serves as counsel to the Debtor. In its schedules, the Debtor disclosed $27.2 million in assets and $15.5 million in liabilities. PLANT INSULATION: Judge to Hear Insurers' Contribution Claims ------------------------------------------------------------- Thomson Reuters reports that a bankruptcy judge in California has ruled that non-settling insurers in the Plant Insulation Co. asbestos-related Chapter 11 reorganization deserve a hearing to ensure their claims for contribution will be recognized. According to the report, the insurance companies had asked for a ruling that a proposed plan was unconfirmable on its face, which U.S. Bankruptcy Judge Thomas E. Carlson of the Northern District of California denied. However, he said principles of equity "require that any plan containing an injunction barring non- settling insurers from asserting equitable contribution claims against settling insurers be fair and equitable with respect to the non-settling insurers." Judge Carlson held a hearing July 15 on the non-settling insurers' motion. The moving parties said the plan proposed by the asbestos creditors' committee would "cut off the non-settling insurers contribution rights vis-a-vis the settling insurers," according to Tancred Schiavoni of O'Melveny & Myers. The report says the firm represents ACE Fire Underwriters Insurance Co. and ACE Property & Casualty Insurance Co., two of the non-settling insurers. Mr. Schiavoni said it was significant that Judge Carlson said there is nothing in the Bankruptcy Code that indicates "Congress intended generally to render unenforceable equitable contribution claims among insurers." The report relates that the judge said the settling insurers may still show that they will provide value to the trust to be created that would protect the non-settling insurers contribution claims. However, the proposed plan does not appear to do so, he added. The judge found the non-settling insurers have standing to contest the issue, but that could be determined from expert testimony and "need not involve anything near a full trial on the merits." San Francisco, California-based Plant Insulation Company manufactured insulation products and services. The Company filed for Chapter 11 (Bankr. N.D. Calif. Case No. 09-31347) on May 20, 2009. Michaeline H. Correa, Esq., Peter J. Benvenutti, Esq., and Tobias S. Keller, Esq., at Jones Day represents the Debtor in its restructuring effort. The Debtor has assets and debts ranging from $500 million to $1 billion. PRM SMITH: Drops Plan to Avoid Protracted Fight with Lender ----------------------------------------------------------- PRM Smith Bay, LLC, asks the U.S. Bankruptcy Court for the Northern District of Texas for authority to withdraw its proposed plan of reorganization, as amended. The Debtor said it sought the withdrawal to avoid the costs associated with a protracted confirmation fight with FirstBank concerning its objections to the Debtor's proposed Plan. Although the Debtor acknowledges that the exclusivity periods have expired, the Debtor requests that the withdrawal be without prejudice to its right to file and seek confirmation of an amended plan. About PRM Smith Bay Chicago, Illinois-based PRM Smith Bay, LLC, aka PRM Smith Bay, LLP, was formed in May 2004 for the purpose of holding an undeveloped 7.5 acre parcel of land on St. Thomas in the United States Virgin Islands known as Cabes Point. PRM Realty Group, LLC, is the 100% ownere and manager of the Debtor. The Debtorfiled for Chapter 11 bankruptcy protection (Bankr. N.D. Tex. Case No. 11-30444) on Jan. 20, 2011. Gerrit M. Pronske, Esq., Rakhee V. Patel, Esq., and Melanie P. Goolsby, Esq., at Pronske & Patel, P.C., in Dallas, serve as the Debtor's bankruptcy counsel. In its schedules, the Debtor disclosed $13,031,162 in assets and $6,781,074 in liabilities as of the petition date. Affiliates Bon Secour Partners, LLC (Bankr. N.D. Tex. Case No. 09-37580), PRS II, LLC (Bankr. N.D. Tex. Case No. 09-31436), PRM Realty Group, LLC (Bankr. N.D. Tex. Case No. 10-30241), PMP II, LLC (Bankr. N.D. Tex. Case No. 10-30252), Maluhia Development Group, LLC (Bankr. N.D. Tex. Case No. 10-30475), Maluhia One, LLC (Bankr. N.D. Tex. Case No. 10-30987), Maluhia Eight, LLC (Bankr. N.D. Tex. Case No. 10-30986), Maluhia Nine, LLC (Bankr. N.D. Tex. Case No. 10-30988), Long Bay Partners, LLC (Bankr. N.D. Tex. Case No. 10-35124), PRM Development, LLC (Bankr. N.D. Tex. Case No. 10- 35547), Little Hans Lollik Holdings, LLP (Bankr. N.D. Tex. Case No. 10-36159), and Hans Lollick Land Company, Limited (Bankr. N.D. Tex. Case No. 10-36161) filed separate Chapter 11 petitions. PURSELL HOLDINGS: Court Approves Shaner as Appraiser ---------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri authorized Pursell Holdings LLC to employ Shaner Appraisers Inc. as its appraiser. The firm has agreed to provide Debtor real estate appraisal services including a summary appraisal report for each of the properties: Lots 8 and 9, Buckeye Industrial Park, a subdivision in Kansas City, Clay County, Missouri. The fee for the summary appraisal report of the properties will be $3,500. The Debtor has deposited $2,000 with the firm for the appraisal of the properties. The Debtor assured the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Pursell Holdings Liberty, Missouri-based Pursell Holdings, LLC, filed for Chapter 11 bankruptcy protection (Bankr. W.D. Mo. Case No. 11-40999) on March 10, 2011. Frank Wendt, Esq., Brown & Ruprecht, P.C., serves as the Debtor's bankruptcy counsel. In its schedules, the Debtor disclosed $12,204,248 in assets and $23,382,741 in debts. Affiliate Damon Pursell Construction Company filed a separate Chapter 11 petition (Bankr. W.D. Mo. Case No. 10-44965) on Sept. 15, 2010. The U.S. Trustee said that a committee under 11 U.S.C. Sec. 1102 has not been appointed because an insufficient number of persons holding unsecured claims against Pursell Holdings LLC have expressed interest in serving on a committee. The U.S. Trustee reserves the right to appoint such a committee should interest develop among the creditors. QUALTEQ INC: Vmark Marketing Entities Seek Chapter 11 ----------------------------------------------------- On Sunday, Qualteq Inc. and 17 affiliated companies filed chapter 11 bankruptcy protection in Wilmington, Delaware. According to Chapter11Cases.com, the companies, which do business under the corporate umbrella trade name of Vmark, operate "one of the largest vertically-integrated direct marketing businesses in North America" and are "one of the nation's largest privately- held, minority-owned businesses" according to court filings. The companies operate nine facilities with over one million square feet of production space and have over 1,300 employees. They generated $155 million of gross revenues in 2010, but only a small operating profit. Court filings trace the companies' current difficulties to December 2010 court judgments against the debtors' founder, Pethinaidu Veluchamy, obtained by creditors of debtor Vmark, Inc. (Vasu and Jaganath Naidu) and Versatile Card Technology, Inc. (Rajiv Parthasarathy). The report notes that although the judgments were not against any of the debtor companies, the judgments caused defaults on "millions of dollars in loans from numerous lenders" due to default and cross-default provisions in the loan documents. According to the companies, they elected to file for bankruptcy protection because they believe that it "presented the best and most efficient forum for globally resolving their financial issues, restoring the confidence of customers and suppliers, and generally maximizing value for all stakeholders." South Plainfield, New Jersey-based QualTeq, Inc., engages in the design, manufacture, and personalization of plastic cards in the United States. The company manufactures magnetic, contact, and dual interface smart cards. The company is based in South Plainfield, New Jersey. QUALTEQ INC: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Qualteq, Inc., d/b/a VCT New Jersey, Inc. dba VCT - Qualteq VCT - NJ VCT New Jersey, Inc. 800 Montrose Avenue South Plainfield, NJ 07080 Bankruptcy Case No.: 11-12572 Affiliates that simultaneously sought Chapter 11 protection: Debtor Case No. ------ -------- 1400 Centre Circle, LLC 11-12573 5200 Thatcher, LLC 11-12574 5300 Katrine, LLC 11-12575 Automated Presort, Inc. 11-12576 Avadamma LLC 11-12577 Creative Automation Company 11-12578 Creative Investments, a General Partnership 11-12579 Fulfillment Xcellence, Inc. 11-12580 Global Card Services, Inc. 11-12581 Unique Data Services, Inc. 11-12582 Unique Embossing Services, Inc. 11-12583 Unique Mailing Services, Inc. 11-12584 University Subscription Service, Inc. 11-12585 Versatile Card Technology, Inc. 11-12586 Veluchamy LLC 11-12587 Vmark, Inc. 11-12588 Chapter 11 Petition Date: August 14, 2011 Court: U.S. Bankruptcy Court District of Delaware (Delaware) Debtors' Counsel: Eric Michael Sutty, Esq. FOX ROTHSCHILD LLP Citizens Bank Center, Suite 1300 919 North Market Street P.O. Box 2323 Wilmington, DE 19899-2323 Tel: (302) 654-7444 Fax: (302) 656-8920 E-mail: esutty@foxrothschild.com - and - Jeffrey M. Schlerf, Esq. FOX ROTHSCHILD LLP Ctizens Bank Center, Suite 1300 919 North Market Street P.O. Box 2323 Wilmington, DE 19899-2323 Tel: (302) 654-7444 Fax: (302) 656-8920 E-mail: jschlerf@foxrothschild.com - and - L. John N. Bird, Esq. FOX ROTHSCHILD LLP 919 North Market Street, 16th Floor Wilmington, DE 19801 Tel: (302) 622-4263 Fax: (302) 656-8920 E-mail: jbird@foxrothschild.com Debtors' General Bankruptcy Counsel: K&L Gates LLP Debtors' Restructuring Advisor: SCOULER & COMPANY Lead Debtor's Estimated Assets: $10,000,001 to $50,000,000 Lead Debtor's Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Arun Veluchamy, vice president. Consolidated List of 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Plami S.A. De C.V. Trade Debt $1,209,393 Calzada de la Naranja No. 167 2do Piso Fracc. Industrial Alce Blanco Naucalpan, Estado de Mexico 53370 Mexico Quad Graphics Trade Debt $904,843 N. 63 W. 23075 Main Street Sussex, WI 53089 Klockner Pentaplast Trade Debt $449,346 Receivables Funding LLC Dept. 31901 P.O. Box 67000 Detroit, MI 48267-0319 CFC International Trade Debt $332,189 500 State Street Chicago Heights, IL 60411 XPEDX Trade Debt $313,800 3568 Solutions Center Chicago, IL 60677-3005 Plami S.A. De C.V. Trade Debt $245,674 Multos Int'l Pte. Trade Debt $238,334 Superior Staffing Professional Services $198,158 Bradner Smith & Co. Trade Debt $161,684 Kurz Transfer Products Trade Debt $157,288 Bell & Howell Trade Debt $150,547 Kurz Transfer Products Trade Debt $135,718 Klockner Pentaplast Trade Debt $133,869 Dreamworks Graphic Communications Trade Debt $129,306 Inc. RR Donnelley Receivables Inc. Trade Debt $114,194 Mail Automation Trade Debt $90,000 JDSU Uniphase Corporation Trade Debt $87,883 Datacard Corp. Trade Debt $81,156 Protec Trade Debt $77,533 Gas Ink and Supply Co. Trade Debt $77,329 Midamerican Energy Company Trade Debt $74,846 Spartech Plastics Inc. Trade Debt $71,314 Advance Mailing Service Trade Debt $68,337 Lake County Press Inc. Trade Debt $64,306 Silone HK Limited Trade Debt $63,979 CFC International Trade Debt $58,734 Jet Litho, Inc. Trade Debt $58,713 Apollo Colours North America Trade Debt $55,189 Waytek Corp. Trade Debt $50,635 R.R. Donnelley Trade Debt $39,090 RANCHO CUCAMONGA: Must Answer Involuntary Petition on Sept. 1 ------------------------------------------------------------- Rancho Cucamonga Harry's Pacific Grill, LLC, has been summoned to appear in the involuntary bankruptcy case commenced against it and answer bankruptcy allegations on Sept. 1. Rancho Cucamonga Harry's Pacific Grill, LLC, in Solana Beach, California, operates the Harry's Pacific Grill, LLC. Three creditors filed an involuntary Chapter 11 bankruptcy petition (Bankr. S.D. Calif. Case No. 11-12992) on Aug. 2, 2011, before Judge Margaret M. Mann. The petitioning creditors are CanAm Partners LLC, owed $100,000 under a consulting agreement; United Coastal Group, LLC, owed $50,000 in loans; and Entrust Metal Advisors, Inc., owed $10,000 in loans. RANCHO HOUSING: U.S. Trustee OKs Snell & Wilmer Hiring ------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California has approved the application of Rancho Housing Alliance, Inc., to employ Snell & Wilmer L.L.P. as its general insolvency counsel. The judge approved the application after the Debtor resolved an objection from the U.S. Trustee. Under a stipulation, the Debtor agreed to modify certain terms of Snell's employment. Based in Coachella, California, Rancho Housing Alliance, Inc., filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-27519) on May 27, 2011. Judge Scott C. Clarkson presides over the case. Michael B. Reynolds, Esq., at Snell & Wilmer LLP, serves as the Debtor's counsel. The Debtor disclosed $12,882,123 in assets and $22,404,858 in liabilities as of the Chapter 11 filing. RCC SOUTH: Fraud Allegations Brought at Exclusivity Hearing ----------------------------------------------------------- RCC South, LLC, filed with the U.S. Bankruptcy Court for the District of Arizona a response to allegations raised by SFI Belmont at the hearing on the Debtor's motion to extend its exclusivity periods. The Debtor objected to the Court considering the factual evidence raised by Belmont at the hearing on the motion. According to the Debtor, Belmont had filed a written response to the motion, and it contained none of the allegations or alleged evidence brought to the Court's attention orally by Belmont. All of the allegations are intensely factual in nature, and require an evidentiary hearing to resolve. The Debtor added that the procedure violates the Rules of Procedure of the Court, and violates the due process rights of the Debtor. The Debtor relates that because the allegations of Belmont were not made in writing, the only source for obtaining the allegations was a transcript of the hearing, which was conducted on June 29, 2011. From what Debtor can tell from the transcript, these are the allegations of Belmont: -- it appears the first allegation made by Belmont is that RCCH has committed some kind of securities fraud by asking its present investors to invest new money. -- it appears the second allegation made by Belmont is that Cavan Management Services is not managing the Debtor. -- it appears the third allegation made by Belmont is that the money that is being deposited by the investors will not be available in the event of a confirmation of the Plan. In contravention of these allegations, the Debtor will submit to the Court portions of the Disclosure Statement, the Escrow Agreement, certain of the solicitation documents used to solicit the investments, and the Declarations of Gary Burton, Dave Cavan, and John Prince dealing with the allegations raised by Belmont. About RCC South Scottsdale, Arizona-based RCC South, LLC, owns and operates two Class A" office buildings known as Phase III and Phase IV of the Raintree Corporate Center in Scottsdale Arizona. The Company filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 10-23475) on July 27, 2010. John J. Hebert, Esq., at Polsenelli Shughart, P.C., assists the Debtor in its restructuring effort. The Debtor estimated its assets and debts at $50 million to $100 million as of the Petition Date. RCI REGIONAL: Asks Access to Westcore Collateral Until Dec. 31 -------------------------------------------------------------- RCI Regional Grove, LLC, seeks authority from the U.S. Bankruptcy Court for the Central District of California to use cash collateral of Westcore Industry LLC through and including Dec. 31, 2011. The Debtor also seek authority to pay all of the expenses a set forth in a Budget and authorizing to deviate from the budget by up to 15%. The Debtor is the owner of real property located at 12601 and 12641 Industry Street, Garden Grove, California. Improvements on the Property consist of two industrial buildings totaling approximately 102,500 square feet. The Property is currently being leased by American Apparel for $74,700 per month. The rent payments pursuant to the Lease are more than sufficient to service the Debtor's secured debt obligations to Westcore. Westcore claims it is owed $6,715,638, which the Debtor is investigating if this amount is accurate. Westcore's appraisal alleges that the value of the Property is worth $6,150,000 as of July 2011. The Debtor believes that the Property is worth in excess of $9 million and is currently in negotiations with Cabot Properties, Inc., for the sale of the Property. Cabot offered to purchase the property in March 2011 for $9 million. The Debtor must be able to use the revenue generated from the operation of the Property in order to pay its few postpetition operating expenses, including, but not limited to, insurance, management fees, and maintenance expenses. If the Debtor is unable to use cash collateral to pay these expenses, the Debtor and its Property will be substantially harmed. In short, in order for the Debtor to be able to operate its business while in Chapter 11 and to avoid harm to its business and the Property, the Debtor must be able to use its cash collateral to pay postpetition operating expenses. Westcore is adequately protected by the substantial equity cushion and will be adequately protected going forward as a result of principal and interest payments and the continued maintenance and operation of the Property. As further adequate protection, the Debtor also proposes to provide the Westcore with a replacement lien against the Debtor's assets, with such replacement lien to have the same extent, validity, and priority as the pre-petition lien held by such creditor, to the extent there is any diminution in value of Westcore's collateral as a result of the Debtor's use of cash collateral. The Debtor is represented by: Ron Bender, Esq. Krikor J. Meshefejian, Esq. LEVENE, NEALE, BENDER, YOO & BRILL L.L.P. 10250 Constellation Boulevard, Suite 1700 Los Angeles, California 90067 Phone: (310) 229-1234 Fax: (310) 229-1244 E-mail: rb@lnbyb.com kjm@lnbyb.com About RCI Regional Grove, LLC Temecula, California-based RCI Regional Grove, LLC, owns a real property located at 12601 and 12641 Industry Street, Garden Grove, California. The Company filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 11-22055) on April 12, 2011. The Debtor disclosed $9,152,353 in assets and $5,983,864 in liabilities as of the Chapter 11 filing. Ron Bender, Esq., and Krikor J. Meshefejian, Esq., at Levene, Neale, Bender, Yoo & Brill L.L.P., represent the Debtor. RCI REGIONAL: Taps SCIA Inc. as Real Estate Adviser --------------------------------------------------- RCI Regional Grove LLC asks the U.S. Bankruptcy Court for the Central District of California for permission to employ SCIA Inc. as its real estate adviser and broker to continue to manage the Debtor's financial affairs and operate its bankruptcy estate. The Debtor said the firm is authorized to market and sell the property located at 12601 and 12641 Industry Street, Garden Grove, California 92841 for $9,500,000. The firm said it has been paid about $40,000 in consulting fees. The Debtor assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. About RCI Regional Grove, LLC Temecula, California-based RCI Regional Grove, LLC, owns a real property located at 12601 and 12641 Industry Street, Garden Grove, California. The Company filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 11-22055) on April 12, 2011. The Debtor disclosed $9,152,353 in assets and $5,983,864 in liabilities as of the Chapter 11 filing. RCI REGIONAL: Has Until Nov. 8 to File Chapter 11 Plan ------------------------------------------------------ The U.S. Bankruptcy Court for the Central District of California extended the exclusive periods of RCI Regional Grove LLC to file a Chapter 11 plan of reorganization until Nov. 8, 2011, and solicit acceptances of that plan until Jan. 9, 2012. The Debtor requested an extension in good faith for the purpose of designating an appropriate exit strategy. The Debtor said it anticipates that an additional ninety days of exclusivity will afford the Debtor adequate time to negotiate with Westcore Industry LLC and develop an exit strategy which either involves a plan of reorganization or a sale of the Debtor's property, and which will allow the Debtor to realize the substantial equity which exists in the property. The Debtor told the Court that Westcore asserts a first priority lien on the Debtor's single asset-real property located at 12601 and 12641 Industry Street, Garden Grove, California. Westcore filed a relief from stay motion seeking to foreclose on the property. The Debtor opposed that motion, and, on May 23, 2011, the Court entered an order denying that motion. About RCI Regional Grove, LLC Temecula, California-based RCI Regional Grove, LLC, owns a real property located at 12601 and 12641 Industry Street, Garden Grove, California. The Company filed for Chapter 11 protection (Bankr. C.D. Calif. Case No. 11-22055) on April 12, 2011. The Debtor disclosed $9,152,353 in assets and $5,983,864 in liabilities as of the Chapter 11 filing. RESERVOIR CORPORATE: Steinberg Pleas Guilty of Bankruptcy Fraud --------------------------------------------------------------- WestportPatch reports that David B. Fein, United States Attorney for the District of Connecticut, announced that Daniel Steinberg waived his right to indictment and pleaded guilty before United States Magistrate Judge Holly B. Fitzsimmons in Bridgeport to one count of bankruptcy fraud. According to court documents and statements made in court, Mr. Steinberg was the agent and manager of Reservoir Corporate Group, LLC, a limited liability company that owns a commercial office building in Shelton, and which is involved in chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court in the District of Connecticut. Between August 2009 and August 2010, Mr. Steinberg transferred $700,000 without authorization from the Bankruptcy Court and used the money for personal expenses and the expenses of other businesses that he owned or controlled. Mr. Steinberg also falsified the books and records of the LLC during the bankruptcy proceedings, and provided false financial information to the Office of the U.S. Trustee, to conceal the ongoing fraud. In pleading guilty, Mr. Steinberg also admitted that, prior to the bankruptcy filing, he transferred additional funds without authority from the LLC's owners so that the aggregate amount embezzled funds totals more than $950,000. Reservoir Corporate Group, LLC, remains in bankruptcy and, according to Bankruptcy Court records, has creditors claiming they are owed approximately $47 million. Mr. Steinberg is scheduled to be sentenced by United States Judge Janet C. Hall on October 21, 2011, at which time Steinberg faces a maximum term of imprisonment of five years, an order of restitution to repay the victims and a fine of up to $250,000. Reservoir Corporate Group LLC filed for Chapter 11 protection (Bankr. D. Conn. Case No. 09-51706) on Aug. 28, 2009. Reservoir Corporate owns office buildings on Research Drive in Shelton, Connecticut. ROSSCO HOLDINGS: Wants Plan Hearing Aligned With Ross Case ---------------------------------------------------------- Rossco Holdings, Inc., asks the U.S. Bankruptcy Court for the Central District of California to continue the hearing to determine the adequacy of its disclosure statement to the same date as a continued hearing set on the Chapter 11 trustee's disclosure statement in the Chapter 11 case of Leonard M. Ross, to a date after Jan. 2, 2012, convenient to the Court's calendar, subject to further continuance. This motion is brought as a companion motion to the contemporaneously filed Chapter 11 Trustee's Motion for Order Authorizing Continuance of Hearing to Determine Adequacy of Disclosure Statement filed by Chapter 11 Trustee Howard M. Ehrenberg in the Chapter 11 case of Leonard M. Ross, Case No. 2:bk-10-49358-VZ, and the contemporaneously filed motions seeking identical relief in the Chapter 11 cases of each of the Debtor's affiliated debtors-in-possession, on the grounds that the Debtor's plan process should proceed in tandem with the Chapter 11 Trustee's Plan in the Ross Case in order to maximize recoveries for creditors, David J. Richardson, Esq., at The Creditors' Law Group, APC, in Los Angeles, California, says. Although a trustee has not been appointed in the Chapter 11 cases of the Debtor and its related debtors, the Chapter 11 Trustee has stepped into the shoes of Mr. Ross who, through his trust, is the sole equity holder of the Debtor, and manages or controls each of the Rossco-related Debtors. Given the substantial overlap between the estates and their creditors, it is in the best interests of the Debtor, its estate and its creditors if its reorganization proceeds in tandem with the Chapter 11 Trustee's timeline in the Ross Case, according to Mr. Richardson. Over 99% of the unsecured claims filed against the estate are claims that are also filed against the estates of Mr. Ross or other Rossco-related Debtors, or are claims of affiliated entities -- both debtors and non-debtors -- owned or controlled by Mr. Ross or an entity owned by Mr. Ross. The largest of those claims are guaranty claims that may be wiped out if Mr. Ross or another primary obligor is able to cure and reinstate the underlying loan. Others are claims that are related to joint Ross-Rossco litigation brought against the claimant. And others are simply co-obligations of the Mr. Ross and Rossco estates to shared unsecured creditors. Recoveries for the Debtor's creditors will be maximized if coordinated plans of reorganization address these overlapping claims and permit the Debtor to propose a plan that offers its creditors greater certainty of their recovery, Mr. Richardson tells the Court. Furthermore, the Debtor has recently closed a sale of its real property, which provided it with sufficient sale proceeds at closing to pay off its secured creditors in full, but provides for payment of the remaining sale proceeds in two installments. While the sale represents a substantial step towards reorganization -- by erasing the Debtor's secured creditors and providing the Debtor with a secured stream of income to fund a plan -- the Debtor is not expected to receive the first of those payments until December 31, 2011. As a result, although the Debtor has greater certainty about the funding it will have for its plan, the requested continuance is unlikely to affect the ultimate timeline for payments to creditors. About Rossco Holdings College Station, Texas-based Rossco Holdings, Inc., filed for Chapter 11 protection (Bankr. W.D. Tex. Case No. 10-60953) on Aug. 2, 2010. The new California Case No. of Rossco Holdings is LA10-55951BB. David J Richardson, Esq., and Laura L Buchanan, Esq., at The Creditors' Law Group, represent the Debtor. The Debtor disclosed $28,415,681 in assets and $10,567,302 in liabilities as of the Petition Date. Affiliates Monte Nido Estates, LLC; LJR Properties, Ltd.; WM Properties, Ltd.; Colony Lodging, Inc.; and Rossco Plaza, Inc., filed separate Chapter 11 petitions. RQB RESORT: Partnerships to File Reorganization Plan ---------------------------------------------------- Mark Basch at the Florida Times-Union reports that two Irish investment partnerships that own Sawgrass Marriott, RQB Resort LP and RQB Development LP, expect to file their reorganization plan next week. The court, according to the report, has already scheduled a hearing for Sept. 15, 2011, to approve RQB's disclosure statement that will describe the plan and the confirmation hearing on the plan will be scheduled for the week of Oct. 17, 2011. As reported in the Aug. 15, 2011 edition of the TCR, Marriott International Inc. on Aug. 10 asked the U.S. Bankruptcy Court in Jacksonville, Florida, to terminate the resort's exclusivity and give the hotel franchisor permission to file its own plan. Allowing Marriott International to sponsor a plan "will equitably fulfill the purpose behind" the right of first refusal in its franchise agreement with Sawgrass and avoid a $10 million damage claim against the resort for breaching the provision, Marriott International said in court papers. About RQB Resort RQB Resort LP and RQB Development LP own Florida's Sawgrass Marriott Resort, the site of the U.S. PGA Tour's Tournament Players Championship. Ponte Vedra Beach, Florida-based RQB Resort, LP, aka Sawgrass Marriott Resort & Cabana Club, filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 10-01596) on March 1, 2010. The Company's affiliate -- RQB Development, LP, aka Sawgrass Marriott Golf Villas & Spa -- filed a separate Chapter 11 petition. The Company estimated its assets and debts at $100 million to $500 million in its Chapter 11 petition. SALPARE BAY: Court OKs $750,000 DIP Loan from Access ---------------------------------------------------- The U.S. Bankruptcy Court District Of Oregon has authorized Salpare Bay LLC to obtain the DIP Loan from Access Business Finance LLC up to $750,000, with $500,000 being the initial maximum amount and the possibility of an additional advance of $250,000 under the terms of the Settlement Agreement. However, prior to confirmation of the Debtor's Plan, the Debtor may borrow only $500,000 from Access. The Debtor is authorized to grant a Priming Lien to Access Business to secure the DIP Loan, for the initial advances up to $500,000 and for additional advances of up to $250,000 if additional advances are approved under the terms of the settlement agreement, which will constitute a first-lien trust deed on the Property. The Debtor will use the proceeds of the DIP Loan to pay for construction costs to complete parking for the Marina, soft and construction costs related to the conversion of the condominium project to apartments, and for professional fees incurred by the Debtor in the bankruptcy case, plus an additional $250,000 advanced if authorized under the Settlement Agreement. The term of the loan will be two years with interest only monthly payments. The DIP Loan will bear interest at the rate of The Wall Street Journal prime rate plus 10% floating daily. About Salpare Bay Vancouver, Washington-based Salpare Bay LLC operates a condominium. Salpare Bay filed for Chapter 11 bankruptcy protection (Bankr. D. Ore. Case No. 10-35333) on June 7, 2010. Tara J. Schleicher, Esq., who has an office in Portland, Oregon, represents the Debtor. The Company estimated assets and debts at $10 million to $50 million. A creditors committee has not been appointed in this case. SAVANNAH OUTLET: Files Full Payment Plan; DS Hearing Sept. 20 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Georgia will convene a hearing on Sept. 20, 2011, at 12:00 p.m., to consider adequacy of the disclosure statement explaining the proposed chapter 11 plan dated July 25, 2011. Objections, if any, are due Sept. 8. The Debtor will begin soliciting votes on the Plan following approval of the adequacy of the information in the Disclosure Statement. According to the Disclosure Statement, the Plan provides for the satisfaction of all allowed administrative claims on the Effective Date or as soon as practicable thereafter. As to each administrative claim allowed thereafter, payment will be made soon as practicable. The Plan also provides for the satisfaction of all priority tax indebtedness either in cash or over a five-year period in installments with interest. The Plan also provides for full payment of the principal amounts owing to its general unsecured creditors in two equal installments, other than any unsecured claims held by insiders. The Plan further provides for payments to Debtor's senior secured creditor Comm 2006-C8 and the resumption of monthly payments to Comm 2006-C8. The Plan further provides for the resumption of monthly interest-only payments to Debtor's junior secured creditor U.S. Bank. All equity interest in the Debtor will be deemed cancelled and rendered null and void as of the Effective Date. The distributions contemplated by the Plan will be made through a) the use of earnings and revenues of the Debtor and the Reorganized Debtor during the pendency of the Case and following the Effective Date, including without limitation the cash collateral of Comm 2006-C8, which is subject to the Allowed Claim of Comm 2006-C8 until such claim is paid in full pursuant to the plan; b) the purchase of new equity membership interests in the Reorganized Debtor by Blue Skies of Savannah, LLC in a total amount of $100,000; and c) the utilization of the sums remaining from the Knudsen Settlement. Due to the purchase of all of the equity membership interests in the Reorganized Debtor by Blue Skies of Savannah, LLC, it will be the owner of the Reorganized Debtor. Giuseppe Fusco will be named the managing member of the Blue Skies of Savannah, LLC. None of the insiders named herein will receive compensation from the Reorganized Debtor pursuant to the terms of the Plan. A full-text copy of the disclosure statement explaining the Plan is available for free at: http://bankrupt.com/misc/SAVANNAHOUTLET_DS.pdf About Savannah Outlet Shoppes Claremont, California-based Savannah Outlet Shoppes, LLC, owns and operates a business related to the management and leasing of a commercial shopping center located in Savannah, Georgia. Savannah Outlet filed for Chapter 11 bankruptcy protection (Bankr. S.D. Ga. Case No. 10-42135) on Oct. 4, 2010. Karen F. White, Esq., at Cohen Pollock Merlin & Small PC, represents the Debtor. The Debtors' professionals include Bulovic Law Firm, LLC, as local co-counsel, and Steven H. Spears as accountant. The Debtor estimated assets and debts at $10 million to $50 million. SBARRO INC: Hires PricewaterhouseCoopers as Consultants ------------------------------------------------------- Sbarro, Inc. and its debtor affiliates obtained the approval of Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York to employ PricewaterhouseCoopers LLP as their bankruptcy consultants, independent auditors, tax consultants, and international tax advisors, nunc pro tunc to the Petition Date. Pursuant to engagement letters signed by the parties, PwC has agree postpetition to: * provide general and technical accounting advice with respect to the contemplated bankruptcy process as well as the statutory filings typically required by the Court; * provide advisory services in connection with the Debtors' accumulation of data and preparation of the schedules of assets and liabilities as well as statements of financial affairs as part of the statutory reporting requirements of the Court for each contemplated debtor entity; * establish and monitor prepetition and postpetition invoice controls and Chapter 11 monitoring procedures and monitoring, and tracking of critical vendor and PACA claimant payments; * provide advisory services in connection with the Debtors' data accumulation and preparation of monthly operating reports and other bankruptcy reports required by the Bankruptcy Rules, Local Bankruptcy Rules or guidelines promulgated by the U.S. Trustee; and * provide technical accounting advice with respect to the contemplated bankruptcy process. The Debtors have also filed an application seeking to retain Marotta Gund Budd & Dzera, LLC, to provide, among other things, certain special financial advisor services. All services that Marotta Fund and PwC provide will be appropriately directed by the Debtors to avoid duplication of services. To the extent the Debtors request that PwC perform additional services not contemplated by the Engagement Letters or directly related to services detailed in the Engagement Letters, the Debtors will seek further application for an order of approval by the Court for any additional services, and that application will set forth, in addition to the additional services to be performed, the additional fees sought to be paid. In connection with the Bankruptcy Consulting Engagement Letter, PwC received a $200,000 retainer, of which $102,000 remained as of the Petition Date. PwC intends to apply the remaining Retainer funds to fees and expenses authorized in its first interim fee application. The firm's current hourly rates, subject to periodic adjustments, are: (a) Bankruptcy Consulting Engagement Letter Partner $800 Director $550 Manager $450 Senior associate $350 Associate $250 Paraprofessional $200 (b) Tax Consulting Engagement Letter Partner $600 - $700 Manager/Director $275 - $450 Associate/Senior associate $150 - $275 The services PwC provides in connection with the engagements set forth in the Audit Engagement Letter and the International Tax Engagement Letter are compensated on a fixed fee basis, including (i) the $635,000 fixed fee under the Audit Engagement Letter, of which approximately $90,000 has yet to be paid by the Debtors, and (ii) the $14,330 fixed fee under the International Tax Engagement Letter, which the Debtors already paid to PwC. Compensation for PwC's services under the International Tax Engagement Letter is fixed per return unless the firm is required to respond to tax authorities or perform audits, in which case the Debtors compensate PwC hourly for the services, with $450 per hour for Directors, and $270 per hour for Senior Associates. To the extent that PwC uses the services of independent contractors, subcontractors or employees of foreign affiliates or subsidiaries in these cases, PwC will pass-through the cost of the Contractors to the Debtors at the same rate that it pays the Contractors. PwC will seek reimbursement for actual costs only. The Court has also authorized the Debtors to indemnify and hold harmless PwC and its affiliates, their respective directors, officers, agents, employees and controlling persons, and each of their successors and assigns, pursuant to the terms and conditions set forth in the Engagement Letters other than the Audit Engagement Letters, subject to certain conditions. Perry Mandarino, a PwC partner, disclosed that the firm's representations of certain entities were or are only on matters that are unrelated to the Debtors and these Chapter 11 cases. He assured the Court that the firm will not provide services to any of these entities that are adverse to the Debtors or their estates or related to issues connected to these cases. PwC will also not provide services to the Debtors that would be adverse to any of these entities. These entities include Bank of America International, JP Morgan Chase, US Bank, Bank of America, N.A., Blackstone Debt Advisors LP, AT&T Corp., North Point Advisors LLC, and Rothschild Inc. PwC does not have an interest materially adverse to the Debtors, their estates or any class of creditors or equity security holders. PwC is a disinterested person as defined in Section 101(14) of the Bankruptcy Code. About Sbarro Inc. The Sbarro family started its business after moving to Brooklyn, New York, from Naples, Italy, in 1956. Today Sbarro is a leading, global Italian quick service restaurant concept with approximately 5,170 employees, 1,045 restaurants throughout 42 countries, and annual revenues in excess of $300 million. Sbarro Inc. sought bankruptcy protection under Chapter 11 (Bankr. S.D.N.Y. Lead Case No. 11-11527) to eliminate about $200 million in debt. The Debtor disclosed $51,537,899 in assets and $460,975,646 in liabilities as of the Chapter 11 filing. Edward Sassower, Esq., and Nicole Greenblatt, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' general bankruptcy counsel. Rothschild, Inc., is the Debtors' investment banker and financial advisor. PriceWaterhouseCoopers LLP is the Debtors' bankruptcy consultants. Marotta Gund Budd & Dzera, LLC, is the Debtors' special financial advisor. Curtis, Mallet-Prevost, Colt & Mosle LLP serves as the Debtors' conflicts counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims agent. Sard Verbinnen & Co is the Debtors' communications advisor. Cantor Fitzgerald Securities, the agent for Sbarro's first lien lenders and post-petition debtor-in-possession lenders, is being advised by Davis Polk & Wardwell LLP, its legal counsel, and Conway Del Genio Gries & Co., LLC, its financial advisor. Sbarro in August 2011 filed a proposed plan sponsored by certain of Sbarro's first lien lenders. Under the Plan, 100% of the outstanding amount of the $35 million postpetition debtor-in- possession financing will be converted into an equal amount of a newly issued $110 million senior secured exit term loan facility. In addition, $173 million in prepetition senior secured debt held by the prepetition first lien lenders will be converted into the remaining exit term loan facility and 100% of the common equity of the reorganized company. A hearing to consider approval of the disclosure statement for the proposed plan is scheduled for Sept. 7, 2011. SBARRO INC: Hires Curtis Mallet-Prevost as Conflicts Counsel ------------------------------------------------------------ Sbarro, Inc. and its debtor affiliates sought and obtained the approval of the U.S. Bankruptcy Court for the Southern District of New York to employ Curtis, Mallet-Prevost, Colt & Mosle LLP as their conflicts counsel, nunc pro tunc to the Petition Date, in accordance with the terms and conditions set forth in an engagement letter, dated March 31, 2011, among the Debtors and the firm. The Debtors have also filed an application to retain Kirkland & Ellis LLP as their lead attorneys. Kirkland & Ellis is aware of certain conflicts of interest and, accordingly, the Debtors seek to employ Curtis Mallet-Prevost to handle matters that are not appropriately handled by Kirkland & Ellis or other counsel to the Debtors because of actual or potential conflict of interest issues or, alternatively, matters which the Debtors, Kirkland or other counsel to the Debtors request be handled by Curtis Mallet- Prevost. In particular, as set forth in the Kirkland Application, Kirkland & Ellis currently represents, and in the past has represented, MidOcean Partners, L.P. and certain of its affiliates in matters unrelated to these chapter 11 cases. Through various investment funds that it manages, MidOcean holds 95% of the Debtors' outstanding second lien debt, and, also is the indirect, majority interest holder of Sbarro. In the event that, in the future, matters arise in which the Debtors and MidOcean are adverse, Curtis Mallet-Prevost is not conflicted from representing the Debtors in matters adverse to MidOcean and will handle those matters during the course of these chapter 11 cases. Curtis Mallet-Prevost will render professional services to the Debtors for certain discrete matters, including: * Advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their business and properties; * Attend meetings and negotiate with representatives of creditors and other parties-in-interest; * Take necessary action to protect and preserve the Debtors' estates; * Prepare motions, applications, answers, orders, appeals, reports and papers necessary to the administration of the Debtors' estates; * Take any necessary action on behalf of the Debtors to obtain approval of a disclosure statement and confirmation of one or more Chapter 11 plans; * Represent the Debtors in connection with obtaining postpetition financing; * Advise the Debtors in connection with any potential sale of assets; and * Perform other necessary legal services and provide other necessary legal advice to the Debtors in connection with these cases. Should the Debtors seek to expand the role of Curtis Mallet- Prevost beyond conflicts matters, the firm will file a description of the expanded services with the Court. Subject to the terms of the Application and the declaration of Steven J. Reisman, a partner at Curtis Mallet-Prevost, the firm will represent the Debtors in all matters with respect to the K&E Conflict Parties as well as the conflict parties of any other counsel to the Debtors. The current hourly rates of Curtis Mallet-Prevost, which are subject to change from time to time, are: Partner $730 - $830 Counsel $510 - $590 Associates $300 - $590 Paraprofessionals $190 - $230 Managing clerks $450 Support personnel $55 - $325 Mr. Reisman informed the Court that Curtis Mallet-Prevost received a classic retainer of $30,000 to provide for the payment of services rendered and expenses incurred, and to b rendered and incurred before the Petition Date. The retainer was not fully utilized and a positive balance of less than $3,000 remains, to be reconciled in the ordinary course. The firm will apply any remaining amounts of the retainer as a credit toward postpetition fees and expenses, after those amounts are approved pursuant to the first order of the Court awarding fees and expenses to Curtis Mallet-Prevost. The firm also intends to seek reimbursement of necessary expenses incurred in connection with the services. Except as disclosed in the Reisman Declaration, Curtis Mallet- Prevost does not hold or represent any interests adverse to the Debtors, their creditors or any other party-in-interest, or their respective attorneys and accountants. Mr. Reisman assured the Court that the firm will not represent any current or former clients or their affiliates in these Chapter 11 cases or in other matters adverse to the Debtors during the pendency of these cases. Curtis Mallet-Prevost is a disinterested person as defined in Section 101(14) of the Bankruptcy Code. About Sbarro Inc. The Sbarro family started its business after moving to Brooklyn, New York, from Naples, Italy, in 1956. Today Sbarro is a leading, global Italian quick service restaurant concept with approximately 5,170 employees, 1,045 restaurants throughout 42 countries, and annual revenues in excess of $300 million. Sbarro Inc. sought bankruptcy protection under Chapter 11 (Bankr. S.D.N.Y. Lead Case No. 11-11527) to eliminate about $200 million in debt. The Debtor disclosed $51,537,899 in assets and $460,975,646 in liabilities as of the Chapter 11 filing. Edward Sassower, Esq., and Nicole Greenblatt, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' general bankruptcy counsel. Rothschild, Inc., is the Debtors' investment banker and financial advisor. PriceWaterhouseCoopers LLP is the Debtors' bankruptcy consultants. Marotta Gund Budd & Dzera, LLC, is the Debtors' special financial advisor. Curtis, Mallet-Prevost, Colt & Mosle LLP serves as the Debtors' conflicts counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims agent. Sard Verbinnen & Co is the Debtors' communications advisor. Cantor Fitzgerald Securities, the agent for Sbarro's first lien lenders and post-petition debtor-in-possession lenders, is being advised by Davis Polk & Wardwell LLP, its legal counsel, and Conway Del Genio Gries & Co., LLC, its financial advisor. Sbarro in August 2011 filed a proposed plan sponsored by certain of Sbarro's first lien lenders. Under the Plan, 100% of the outstanding amount of the $35 million postpetition debtor-in- possession financing will be converted into an equal amount of a newly issued $110 million senior secured exit term loan facility. In addition, $173 million in prepetition senior secured debt held by the prepetition first lien lenders will be converted into the remaining exit term loan facility and 100% of the common equity of the reorganized company. A hearing to consider approval of the disclosure statement for the proposed plan is scheduled for Sept. 7, 2011. SBARRO INC: Wins Final Nod to Pay Critical Vendor Claims -------------------------------------------------------- Judge Shelley C. Chapman has granted on a final basis the motion of Sbarro, Inc. and its debtor affiliates for the entry of a final order authorizing them, among other things, to pay certain prepetition claims of (i) critical trade vendors and (ii) certain essential mechanics and service providers, and to timely and fully pay all valid claims arising under the Perishable Agricultural Commodities Act of 1930 to PACA vendors in the ordinary course of business. The Debtors are authorized, but not directed, to pay the prepetition claims of the Critical Vendors who agree to continue to supply goods or services to the Debtors postpetition on terms and conditions acceptable to the Debtors, in their sole discretion in accordance with certain payment procedures. The payments are approved to the extent that the aggregate amount will not exceed $5,200,000, subject to advance notice and approval of the Official Committee of Unsecured Creditors, through its proposed financial advisor, Mesirow Financial Consultants, LLC. The Debtors will undertake all appropriate and reasonable efforts to condition payment of Critical Vendor Claims upon the execution of a Trade Agreement, and the Debtors are authorized, but not required, to enter into Trade Agreements when and if they determine that it is appropriate to do so. The Debtors' inability to enter into a Trade Agreement will not preclude them from payment a Critical Vendor Claim when that payment is necessary to the Debtors' operations. The Debtors are also authorized, but not directed, in the reasonable exercise of their business judgment, to pay all or part of, and discharge, on a case-by-case basis, the Lien Claims in an aggregate amount not to exceed $25,000. Nothing in the final order impairs the Debtors' ability to contest, without prejudice, in their sole discretion, the validity and amounts of any claim obligations to the Lien Claimants. Moreover, the Debtors are authorized to review PACA Claims received from PACA Vendors and to pay all valid PACA Claims in the ordinary course of business, provided that the PACA Vendors provide the appropriate PACA Notice. The Debtors' right to contest the validity or amount of any PACA Claims asserted against them is unimpaired by the final order. About Sbarro Inc. The Sbarro family started its business after moving to Brooklyn, New York, from Naples, Italy, in 1956. Today Sbarro is a leading, global Italian quick service restaurant concept with approximately 5,170 employees, 1,045 restaurants throughout 42 countries, and annual revenues in excess of $300 million. Sbarro Inc. sought bankruptcy protection under Chapter 11 (Bankr. S.D.N.Y. Lead Case No. 11-11527) to eliminate about $200 million in debt. The Debtor disclosed $51,537,899 in assets and $460,975,646 in liabilities as of the Chapter 11 filing. Edward Sassower, Esq., and Nicole Greenblatt, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' general bankruptcy counsel. Rothschild, Inc., is the Debtors' investment banker and financial advisor. PriceWaterhouseCoopers LLP is the Debtors' bankruptcy consultants. Marotta Gund Budd & Dzera, LLC, is the Debtors' special financial advisor. Curtis, Mallet-Prevost, Colt & Mosle LLP serves as the Debtors' conflicts counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims agent. Sard Verbinnen & Co is the Debtors' communications advisor. Cantor Fitzgerald Securities, the agent for Sbarro's first lien lenders and post-petition debtor-in-possession lenders, is being advised by Davis Polk & Wardwell LLP, its legal counsel, and Conway Del Genio Gries & Co., LLC, its financial advisor. Sbarro in August 2011 filed a proposed plan sponsored by certain of Sbarro's first lien lenders. Under the Plan, 100% of the outstanding amount of the $35 million postpetition debtor-in- possession financing will be converted into an equal amount of a newly issued $110 million senior secured exit term loan facility. In addition, $173 million in prepetition senior secured debt held by the prepetition first lien lenders will be converted into the remaining exit term loan facility and 100% of the common equity of the reorganized company. A hearing to consider approval of the disclosure statement for the proposed plan is scheduled for Sept. 7, 2011. SBARRO INC: Employs Rothschild as Financial Advisor --------------------------------------------------- Sbarro, Inc. and its debtor affiliates sought and obtained the approval from Judge Shelley C. Chapman to employ Rothschild Inc. as their financial advisor and investment banker, nunc pro tunc to the Petition Date. Rothschild will provide a broad range of necessary financial advisory and investment banking services, including: * Identity and initiate potential transactions; * Review and analyze the Debtors' assets and the operating and financial strategies of the Debtors; * Review and analyze the business plans and financial projections prepared by the Debtors; * Evaluate the Debtors' debt capacity in light of their projected cash flows and assist in the determination of an appropriate capital structure for the Debtors; * Assist the Debtors and their other professionals in reviewing the terms of any proposed transaction in responding thereto and, if directed, in evaluating alternative proposals for a Transaction; * Determine a range of values for the Debtors and any securities that the Debtors offer or propose to offer in connection with a Transaction; * Review and analyze any proposals the Debtors receive from third parties in connection with a transaction, including proposals for debtor-in-possession financing, as appropriate; and * Render other financial advisory and investment banking services customary for similar engagements as agreed upon by the parties. The Debtors will compensate Rothschild in accordance with the terms and conditions of an engagement letter dated Nov. 18, 2010, which provides a fee and expense structure: (a) A monthly advisory fee of $150,000, whether or not a Transaction is proposed or consummated; (b) A Recapitalization Fee payable upon the consummation of a Transaction equal to $2,500,000 payable. For avoidance of doubt, (i) no Recapitalization Fee will be payable solely upon the consummation of a Credit Facility Amendment and (ii) only one Recapitalization Fee will be Payable hereunder; (c) A Credit Facility Amendment Fee equal to $500,000 payable upon the consummation of any Credit Facility Amendment. For avoidance of doubt, no Credit Facility Amendment Fee will be payable in respect of any Transaction for which a Recapitalization Fee is payable; (d) A new capital fee equal to 1% of the face amount of any New Capital Raise, provided that Rothschild will only be entitled to a New Capital Fee (i) if it acts as an underwriter, placement agent or arranger of, or manages an organized process for a New Capital Raise and (ii) the New Capital Raise is not provided by the Debtors' existing equity holders, lenders or other creditors and is not debt, equity, or other securities issued to existing stakeholders pursuant to a Plan or converted into new debt in an out-of-court transaction; (e) Rothschild will credit against the Recapitalization Fee: (i) 100% of the Monthly Fees paid for periods commencing on April 18, 2011 and thereafter -- Monthly Fee Credit -- and (ii) 100% of any Credit Facility Amendment Fee paid and not otherwise credited hereunder -- Credit Facility Amendment Fee Credit -- provided that the sum of any Monthly Fee Credit and Credit Facility Amendment Fee Credit will not exceed the Recapitalization Fee. In addition, Rothschild will credit against any New Capital Fee in excess of $1,500,000, 100% of any Credit Facility Amendment Fee paid and not otherwise credited Hereunder; and (f) Regardless of whether any Transaction occurs, the Debtors will promptly reimburse for travel and other reasonable out-of-pocket expenses incurred in connection with Rothschild's activities under the Engagement Letter. Before the Petition Date, the Debtors paid Rothschild $815,000 in fees on account of the Monthly Fees and an additional $98,753 on account of the expense reimbursement, including an estimate of prepetition expense of $30,000. As of the Petition Date, Rothschild does not hold a prepetition claim against the Debtors for services rendered. As part of the overall compensation payable to Rothschild under the terms of the Engagement Letter, the Debtors have also agreed to certain indemnification and contribution obligations. Neil A. Augustine, a senior managing director and co-head of the North American Debt Advisory and Restructuring Group of Rothschild Inc., assured the Court that Rothschild's professionals advising the Debtors have not and will not directly or indirectly share any non-public information generated by, received from or relating to the Debtors or their Chapter 11 cases with any employees of Rothschild's affiliates or with any of the firm's employees except on a confidential basis with other Rothschild employees who need to know certain information for purposes of advising the Debtors. Rothschild has not represented any potential parties-in-interest in connection with matters relating to the Debtors, their estates, assets, or businesses, and will not represent other entities, which are creditors of or have other relationships to the Debtors in matters relating to these Chapter 11 cases, according to Mr. Augustine. Except as disclosed in the Augustine Declaration, Rothschild does not hold or represent an interest adverse to the Debtors' estates and is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. About Sbarro Inc. The Sbarro family started its business after moving to Brooklyn, New York, from Naples, Italy, in 1956. Today Sbarro is a leading, global Italian quick service restaurant concept with approximately 5,170 employees, 1,045 restaurants throughout 42 countries, and annual revenues in excess of $300 million. Sbarro Inc. sought bankruptcy protection under Chapter 11 (Bankr. S.D.N.Y. Lead Case No. 11-11527) to eliminate about $200 million in debt. The Debtor disclosed $51,537,899 in assets and $460,975,646 in liabilities as of the Chapter 11 filing. Edward Sassower, Esq., and Nicole Greenblatt, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' general bankruptcy counsel. Rothschild, Inc., is the Debtors' investment banker and financial advisor. PriceWaterhouseCoopers LLP is the Debtors' bankruptcy consultants. Marotta Gund Budd & Dzera, LLC, is the Debtors' special financial advisor. Curtis, Mallet-Prevost, Colt & Mosle LLP serves as the Debtors' conflicts counsel. Epiq Bankruptcy Solutions, LLC, is the Debtors' claims agent. Sard Verbinnen & Co is the Debtors' communications advisor. Cantor Fitzgerald Securities, the agent for Sbarro's first lien lenders and post-petition debtor-in-possession lenders, is being advised by Davis Polk & Wardwell LLP, its legal counsel, and Conway Del Genio Gries & Co., LLC, its financial advisor. Sbarro in August 2011 filed a proposed plan sponsored by certain of Sbarro's first lien lenders. Under the Plan, 100% of the outstanding amount of the $35 million postpetition debtor-in- possession financing will be converted into an equal amount of a newly issued $110 million senior secured exit term loan facility. In addition, $173 million in prepetition senior secured debt held by the prepetition first lien lenders will be converted into the remaining exit term loan facility and 100% of the common equity of the reorganized company. A hearing to consider approval of the disclosure statement for the proposed plan is scheduled for Sept. 7, 2011. SEAHAWK DRILLING: Wants Plan Exclusivity Until Aug. 30 ------------------------------------------------------ Seahawk Drilling, Inc., has asked the U.S. Bankruptcy Court for the Southern District of Texas to extend the exclusivity period for the Debtors to solicit acceptances of its Chapter 11 Plan up to and through the conclusion of the Aug. 30 confirmation hearing on the Plan. The Debtors are optimistic that the Plan will be confirmed at the Aug. 30 confirmation hearing. The Debtors' Plan contemplates satisfying allowed unsecured claims in full and providing a significant distribution to the Debtors' equity interest holders. Both the Official Committee of Unsecured Creditors and the Official Committee of Equity Security Holders support the Plan. After obtaining approval of the disclosure statement on July 8, 2011, the Debtors have begun the solicitation process and will continue to work with all parties-in-interest to resolve issues that arise in relation to confirmation of the Plan. About Seahawk Drilling Houston, Texas-based Seahawk Drilling, Inc., engages in a jackup rig business in the United States, Gulf of Mexico, and offshore Mexico. It offers rigs and drilling crews on a day rate contractual basis. The Company and several affiliates filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Lead Case No. 11-20089) on Feb. 11, 2011. Berry D. Spears, Esq., and Jonathan C. Bolton, Esq., at Fullbright & Jaworkski L.L.P., in Houston, serve as the Debtors' bankruptcy counsel. Shelby A. Jordan, Esq., and Nathaniel Peter Holzer, Esq. at Jordan, Hyden, Womble, Culbreth & Holzer, P.C., in Corpus Christi, Texas, serve as the Debtors' co-counsel. Alvarez and Marsal North America, LLC, is the Debtors' restructuring advisor. Simmons & Company International is the Debtors' transaction advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. Judy A. Robbins, U.S. Trustee for Region 7, appointed three creditors to serve on an Official Committee of Unsecured Creditors of Seahawk Drilling Inc. and its debtor-affiliates. Heller, Draper, Hayden, Patrick & Horn, L.L.C., represents the creditors committee. In its amended schedules, Seahawk Drilling disclosed $208,190,199 in assets and $438,458,460 in liabilities as of the petition date. Seahawk filed for Chapter 11 protection to complete the sale of all assets to Hercules Offshore, Inc. The bankruptcy court approved an Asset Purchase Agreement between Hercules Offshore and its wholly owned subsidiary, SD Drilling LLC, and Seahawk Drilling, pursuant to which Seahawk agreed to sell to Hercules, and Hercules agreed to acquire from Seahawk, all 20 of Sellers' jackup rigs and related assets, accounts receivable and cash and certain liabilities of Sellers in a transaction pursuant to 11 U.S.C. Sec. 363. The deal was valued at about $176 million when it received court approval. The deal closed on April 27, 2011. SECUREALERT INC: Acquires All Outstanding Capital Stock of ISS -------------------------------------------------------------- SecureAlert, Inc., entered into an agreement with Borinquen Container Corp., and Borinquen's wholly-owned subsidiary, International Surveillance Services Corporation. At the time of the transaction, Borinquen was a significant shareholder of the Company, the beneficial owner of 7.5 percent of the issued and outstanding shares or common share equivalents of the Company. ISS was a distributor of the Company, operating under a distribution agreement granting ISS exclusive rights to market and sell the Company's offender monitoring devices and services in South and Central America, the Caribbean, Spain and Portugal. Under the Agreement, the Company acquired from Borinquen all of the issued and outstanding capital stock of ISS, which will now operate as a wholly-owned subsidiary of Company. In consideration for the transfer and sale of the shares of ISS, the Company paid these consideration: (1) 62,000,000 restricted shares of the Company's common stock, $0.0001 par value per share, valued at the current market price of approximately $0.08 per share, or $4,960,000; and (2) A royalty payable for 20 years pursuant to the terms of a Royalty Agreement of even date with the Agreement, in an amount equal to 20 percent of the net revenues from the sale or lease of the Company's products and services within the Territory. The royalty payments are due quarterly and the term of the Royalty Agreement expires June 30, 2031. As a consequence of this transaction, the previous distribution agreement between the Company and ISS was terminated. That agreement had provided for payment of commissions to ISS equal to 50 percent of net revenues within the Territory, with the exception of net revenues from the Commonwealth of the Bahamas and Mexico, where the commission payable to ISS was to be 30 percent of net revenues. The Agreement contained mutual releases, including releases granted by Borinquen of certain guarantees made by former officers and directors of the Company as security for the Company's performance under earlier agreements with Borinquen. Under the terms of the Royalty Agreement, if the Company does not make royalty payments to Borinquen as required by the Royalty Agreement, the prior royalty rates (50 percent and 30 percent) will apply and the distribution rights previously held by ISS will be reconveyed to Borinquen. The Company has, at its sole option, a right to terminate this Royalty Agreement for either a payment of $15,000,000 in cash or in shares of common stock valued at $0.083 per share. The Purchase Option may be exercised by the Registrant on or before Dec. 31, 2011, unless otherwise agreed to and mutually modified between the parties. As a result of the issuance of the Company's shares to Borinquen under the Agreement, Borinquen's beneficial ownership in the Company is now equal to approximately 17.8 percent of the issued and outstanding shares of the Company. About SecureAlert Inc. Sandy, Utah-based SecureAlert, Inc. (OTC BB: SCRA) -- http://www.securealert.com/-- is an international provider of electronic monitoring systems, case management and services widely utilized by more than 650 law enforcement agencies worldwide. The Company reported a net loss of $2.07 million on $3.68 million of revenue for the three months ended Dec. 31, 2010, compared with a net loss of $5.53 million on $3.20 million of total revenue for the same period a year earlier. The Company's balance sheet at March 31, 2011, showed $12.77 million in total assets, $11.06 million in total liabilities and $1.71 million in total equity. SHALAN ENTERPRISES: BoA and U.S. Trustee Object to Creditor Plan ---------------------------------------------------------------- Creditor Perry and Rita Klein in June filed an amended plan of reorganization for debtor Shalan Enterprises, LLC. The Plan, as amended, provides for the appointment of a Trustee to sell assets of the estate to pay the creditors in full as soon as possible. The original iteration of the Klein plan was filed in October 2010, but was rejected by the bankruptcy judge in May this year. Bank of America, N.A., successor-in-interest to BAC Home Loans Servicing, LP f/k/a Countrywide Home Loans Servicing LP f/k/a Countrywide Home Loans, Inc., a secured creditor holding first liens on five properties of the Debtor, arguing that the Amended Plan violates Sections 1129(B)(2)A) and 1129(A)(7) of the Bankruptcy Code in that it has failed to comply with the fairness and equity requirements of the Code. BofA does not object to the majority of the Plan treatment nor does it object to a potential sale of each property, and ongoing payments until the sale. However, BofA does object to the "attempt to ignore" the requirement for approval of the sale as required under Section 363 of the Bankruptcy Code, as the Debtor will undoubtedly be selling the property free and clear of all liens and encumbrances. The Debtor must obtain approval to sell the properties in accordance with the requirements of Section 363, Lee S. Raphael, Esq., at Prober & Raphael, A Law Corporation, in Woodland Hills, California, asserts. In another filing the U.S. Trustee does not believe that the Disclosure Statement contains "adequate information" upon which parties-in-interest will be able to make an informed judgment about the Klein Plan, as required by Section 1125 of the Bankruptcy Code. About Shalan Enterprises Marina Del Rey, California-based Shalan Enterprises, LLC, a Nevada limited liability company, was formed in 1999 for the purpose of owning, operating and leasing and/or selling properties. Shalans' business is to hold 34 of Alan Rapoport's real estate holdings. The Company filed for Chapter 11 bankruptcy protection (Bankr. C.D. Calif. Case No. 09-43263) on Nov. 25, 2009. The Company has assets of $12,540,000, and total debts of $7,426,313. Shalan Enterprises' case is substantially consolidated with the case of Alan Rapoport, who filed Chapter 11 bankruptcy (Case No. 09-43499) on Nov. 30, 2009. SHELBRAN INVESTMENTS: Management Plan Promises 100% for Unsecureds ------------------------------------------------------------------ Shelbran Investments, L.P., has filed with the U.S. Bankruptcy Court for the Middle District of Florida a proposed reorganization plan and an accompanying disclosure statement. Under the Plan: (a) the Debtor will transfer a portion of its properties to those creditors which are secured in full satisfaction of their respective debts; and (b) the Debtor will market and sell a portion of its properties to pay a portion of the debts owed to its unsecured creditors. Based on its review of the claims and the plan treatments provided under the Plan of Reorganization, the Debtor believes that it will pay its unsecured creditors in full. Management of the Reorganized Debtor will remain the same, with Stephen R. Holgate managing day-to-day operations. While the Debtor does not expect that the pending criminal charges against Mr. Holgate will effect the ability of him to manage the Debtor, if such impairment occurs, The Shelbran Company, as General Partner of the Reorganized Debtor, will appoint a new manager for day-to-day operations. The plan divides the claims against the Debtor into 11 classes: A. Class 1 (Independence Bank secured claim) - Debtor will transfer San Jacinto property Parcel 1 to Independence Bank in full satisfaction of the claim. B. Class 2 (secured claim of Odell Income Fund, L.P.) - Debtor will transfer a 50% interest in 38.83 acres of real property in San Jacinto, Calif., to Odell Income Fund in full satisfaction of its claim. C. Class 3 (secured debt of Encore Income Fund) - Debtor will transfer a 50% interest in 38.83 acres of real property in San Jacinto, Calif., in full satisfaction of the claim. D. Class 4 (pre-petition tax claims) - The Riverside County Tax Collector will be paid in full with statutory interest on or before December 20, 2015, or on the date of the sale or transfer of the property on which on which the Tax Collector has a lien. E. Class 5 (Bank of Hemet secured debt) - Debtor will abandon any property securing debt to Bank of Hemet. Bank of Hemet has agreed to limit its unsecured claim in this case to $5,000. F. Class 6 (secured claims of Bank of America) - Debtor will transfer real property located at 2144 Villines Avenue, San Jacinto, Calif., in full satisfaction of the claim. G. Class 7 (secured claims of Alarion Bank) - To be paid in full plus interest upon the sale of the Shelbran Farm Property, on or before June 30, 2012. H. Class 8 (Marion County Tax Collector secured claims) - To be paid in full with statutory interest upon the sale of the Shelbran Farm Property, on or before June 30, 2012. I. Class 9 (Section 507(a)(8) priority claims) - Will receive payment in full on June 30, 2012. J. Class 10 (General unsecured claims) - Will receive pro rata share of: $100,000, on the Effective Date; $100,000 on the 6-month anniversary of the Effective Date; $100,000 on the 2-year anniversary of the Effective Date. K. Class 11 (General unsecured claimants each with claims not exceeding $300) -Will receive payment on the Effective Date. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/SHELBRAN_disclosurestatement.pdf About Shelbran Investments Ocala, Florida-based Shelbran Investments, L. P., filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 10- 10937) on Dec. 21, 2010. The Debtor estimated its assets and debts at $10 million to $50 million. Robert Wilcox, Esq., and Emily M. Friend, Esq., at Brennan, Manna & Diamond, P.L., represent the Debtor. The U.S. Trustee for Region 21 said it won't appoint an Official Committee of Unsecured Creditors of Shelbran Investments because of an insufficient number of creditors willing or able to serve on an the committee. SHELBRAN INVESTMENTS: Independence Bank Gets Ch. 11 Trustee ----------------------------------------------------------- The Hon. Jerry A. Funk of the U.S. Bankruptcy Court for the Middle District of Florida directed the U.S. Trustee to appoint a Chapter 11 trustee in the Chapter 11 case of Shelbran Investments, L.P. Secured creditor Independence Bank requested for the appointment of a Chapter 11 trustee. According to the bank, in November 2009, Stephen Holgate, president, secretary and treasurer of The Shelbran Company, Inc., was indicted as part of an alleged illegal campaign contribution and money laundering scheme between developers and local politicians in San Jacinto, California. Prosecutors allege that money given by Mr. Holgate to various campaigns was intended to bribe local officials to obtain favorable entitlements, exemptions and zoning preferences for the real property owned by Mr. Holgate through the Debtor. Currently, Mr. Holgate was charged with 31 felonies and 71 misdemeanors. On June 23, 2011, a California newspaper reported that Jim Ayres, a former San Jacinto city councilman and economic development agency project manager, and co-defendant of Mr. Holgate, pled guilty to felony conspiracy, bribery and conflict of interest charges, along with misdemeanor illegal contribution and money laundering charges. Independence Bank contended that the criminal charges against Mr. Holgate, and the guilty plea of Mr. Holgate's co-defendant on many of the same charges, show a pattern of dishonesty and gross mismanagement of the affairs of the Debtor by Mr. Holgate before the commencement of the case. Independence Bank is represented by: Thomas J. Polis, Esq. 19800 MacArthur Boulevard, Suite 1000 Irvine, CA 92612-2433 Tel: (949) 862-0040 Fax: (949) 862-0041 E-mail: tom@polis-law.com About Shelbran Investments Ocala, Florida-based Shelbran Investments, L. P., filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 10- 10937) on Dec. 21, 2010. The Debtor estimated its assets and debts at $10 million to $50 million. The U.S. Trustee for Region 21 said it won't appoint an Official Committee of Unsecured Creditors of Shelbran Investments because of an insufficient number of creditors willing or able to serve on an the committee. SHELBRAN INVESTMENTS: Hearing on Conversion/Dismissal Aug. 23 ------------------------------------------------------------- As reported in the TCR on June 28, 2011, Donald F. Walton, the U.S. Trustee for Region 21, asked the U.S. Bankruptcy Court for the Middle District of Florida to dismiss the Chapter 11 case of Shelbran Investments LP or convert the Debtor's bankruptcy case, citing that the Debtor has not filed a Chapter 11 plan and disclosure statement. Shelbran Investments, L.P., opposed the motion of the U.S. Trustee. The Debtor related that it has been in extensive negotiations with its creditors and expects to file its plan of reorganization within the next 60 days. Independence Bank, a secured creditor in the Debtor's Chapter 11 case, also asked the Bankruptcy Court to dismiss the Debtor's bankruptcy case on the following grounds: (a) there is substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; (b) The Debtor has grossly mismanaged the estate as evidenced by the criminal allegations against Stephen Holgate, its principal; (c) The Debtor has failed to maintain appropriate insurance on property of the estate that poses a risk to the estate or to the public; (d) The Debtor sold a 2007 Chevrolet Suburban and an easement on property of the estate located in Nogales, Arizona, without notice, a hearing or Court approval; (e) the Debtor has failed to timely provide required documentation requested by the U.S. Trustee. The Debtor has since filed a plan of reorganization and disclosure statement describing its plan. The basic terms of the Plan are (a) the Debtor will transfer a portion of its properties to those creditors which are secured in full satisfaction of their respective debts; and (b) the Debtor will market and sell a portion of its properties to pay a portion of the debts owed to its unsecured creditors. Based on its review of the claims and the plan treatments provided under the Plan of Reorganization, the Debtor believes that it will pay its unsecured creditors in full. Pursuant to the Plan, among other things, Debtor will transfer San Jacinto property Parcel 1 to Independence Bank in full satisfaction of its secured claim. Holders of General Unsecured Claim will receive their pro rata share of: $100,000, on the Effective Date; $100,000 on the 6-month anniversary of the Effective Date; $100,000 on the 2-year anniversary of the Effective Date. A copy of the Disclosure Statement is available at: http://bankrupt.com/misc/SHELBRAN_disclosurestatement.pdf The proposal to dismiss or convert the case matter is set for final evidentiary hearing on August 23, 2011. About Shelbran Investments Ocala, Florida-based Shelbran Investments, L. P., filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 10- 10937) on Dec. 21, 2010. The Debtor estimated its assets and debts at $10 million to $50 million. Robert Wilcox, Esq., and Emily M. Friend, Esq., at Brennan, Manna & Diamond, P.L., represent the Debtor. The U.S. Trustee for Region 21 said it won't appoint an Official Committee of Unsecured Creditors of Shelbran Investments because of an insufficient number of creditors willing or able to serve on an the committee. SHELBRAN INVESTMENTS: Has Nod for Marshall McIntyre as Appraiser ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida has granted Shelbran Investments LP permission to employ Marshall L. McIntyre, M.A.I., as property appraiser, to provide real estate property appraisal services, nunc pro tunc as of May 1, 2011. As reported in the TCR on June 29, 2011, the Debtor assured the Court that Mr. McIntyre is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. McIntyre will charge $125 per hour for this engagement. About Shelbran Investments Ocala, Florida-based Shelbran Investments, L. P., filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 10- 10937) on Dec. 21, 2010. The Debtor estimated its assets and debts at $10 million to $50 million. Robert Wilcox, Esq., and Emily M. Friend, Esq., at Brennan, Manna & Diamond, P.L., represent the Debtor. The U.S. Trustee for Region 21 said it won't appoint an Official Committee of Unsecured Creditors of Shelbran Investments because of an insufficient number of creditors willing or able to serve on an the committee. SHENANDOAH APARTMENTS: 2 Firms Buy Upscale Community for $19-Mil. ----------------------------------------------------------------- Shakopee Valley News reports that two East Coast real estate firms have acquired Shakopee, Minnesota's most upscale and expensive apartment community for $19 million, saving the 202-unit complex from foreclosure. Shenandoah Apartments, was placed in receivership in December. It was purchased by the Praedium Group of New York, a real estate investor, and CAPREIT of Maryland, which owns and manages more than 50 housing complexes throughout the country, according to the report. The report notes that the apartment complex was built in 2005 with a bank loan of $24.5 million. The report relates that it still owed $16 million to Bank of America and had failed to make its payments since June 2010. Shakopee Valley News discloses that the Donald Parrott Trust also holds a mortgage against the property, and United Building Centers has a mechanic's lien. It is unclear who owns Shenandoah Apartments, LLC, which is listed as the borrower in the foreclosure case, the report notes. SHILO INN: Can Employ Levene Neale Bender as Counsel ---------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has approved the application of Shilo Inn, Seaside Oceanfront, LLC to employ Levene, Neale, Bender, Yoo & Brill L.L.C. as its counsel. The Court found that Levene Neale Bender does not hold or represent any interest adverse to the Debtor or its estate and that the firm is a disinterested person as defined in Section 101(14) of the Bankruptcy Code. About Shilo Inn Seaside Oceanfront Based in Portland, Oregon, Shilo Inn, Seaside Oceanfront, LLC, operates the Seaside Hotel, a 113-room hotel situated on 1.37 beautiful acres in Seaside, Oregon, pursuant to a franchise agreement with Shilo Franchise International, LLC. The Hotel is located directly on the beach and is the premier fixture of the Seaside promenade. Shilo Inn Seaside Oceanfront filed for Chapter 11 bankruptcy (Bankr. C.D. Calif. Case No. 11-34669) on June 7, 2011. David B. Golubchik, Esq., at Levene Neale Bender Rankin & Brill LLP, serves as the Debtor's bankruptcy counsel. In its petition, the Debtor estimated assets and debts of $10 million to $50 million. Debtor-affiliates that previously sought Chapter 11 protection are Shilo Inn, Diamond Bar, LLC (Case No. 10-60884) on Nov. 29, 2010; Shilo Inn, Killeen, LLC (Case No. 10-62057) on Dec. 6, 2010; Shilo Inn, Palm Springs, LLC (Case No. 11-26501) on April 13, 2011; and Shilo Inn, Pomona Hilltop, LLC (Case No. 11-26270) on April 14, 2011. Shilo Inn, Seaside Oceanfront, LLC reported total scheduled assets of $22,219,762 and total scheduled liabilities of $13,688,451. SONJA TREMONT-MORGAN: Ex-Hubby Holding Up $7M Deal, Creditor Says ----------------------------------------------------------------- Django Gold at Bankruptcy Law360 reports that Hannibal Pictures Inc. on Wednesday told a New York bankruptcy judge that the ex- husband of a "Real Housewives of New York City" star is intentionally delaying his ex-wife's Chapter 11 proceedings, which is preventing her from paying $7 million she owes for a failed movie deal. John Adams Morgan has withheld payment of a $3 million divorce settlement and $300,000 in back alimony to his ex-wife, reality star Sonja Tremont-Morgan, and has refused to cooperate with the sale of two properties they co-own, according to Law360. New York City-based Sonja Tremont-Morgan filed for Chapter 11 protection on Nov. 17, 2010 (Bankr. S.D.N.Y Case No. 10-16132). The Debtor disclosed $13,458,749 in assets and $19,839,501 in liabilities as of the Chapter 11 filing. SOUNDVIEW CLINICS: Espada Defending Medicaid Funding for Clinics ---------------------------------------------------------------- Dow Jones DBR Small Cap reports that Pedro Espada, the former New York state senator indicted on corruption charges, vowed Tuesday to fight efforts by the state to put him and his Bronx health clinics out of business. SOUTH EDGE: Wins Judge OK for $21.4 Million Loan ------------------------------------------------ Richard Vanderford at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Bruce A. Markell on Friday approved a $21.4 million loan to South Edge LLC to help it avoid insolvency and bridge an exit from bankruptcy. Law360 relates that Judge Markell granted the request for the new money for the beleaguered South Edge at a hearing Friday, according to Bob Moore, an attorney for the trustee. About South Edge Las Vegas, Nevada-based South Edge LLC owns the Inspirada project, an uncompleted 2,000-acre residential development in Henderson, Nevada, about 16 miles (26 kilometers) southeast of Las Vegas. The eight owners of the project include an affiliate of KB Home, a 49% owner. Other owners are Coleman Toll LP with 10.5%, Pardee Homes Nevada Inc. with 4.9%, Meritage Homes with 3.5%, and Beazer Homes USA Inc. with 2.6%. JPMorgan Chase Bank, N.A., Credit Agricole Corporate and Investment Bank, and Wells Fargo Bank, N.A., filed an involuntary chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 10-32968) on Dec. 9, 2010, against South Edge, LLC. The petitioning creditors are part of a lender group that provided a $595 million credit. New York-based JPMorgan serves as lender and agent for the group. South Edge filed motions to dismiss the involuntary petition. The Court conducted a contested trial on Jan. 24 and 25, 2011, and Feb. 2 and 3, 2011. On Feb. 3, 2011, the Court entered an order for relief under Chapter 11 of the Bankruptcy Code against the Debtor and issued an order directing the appointment of a chapter 11 trustee. The United States Trustee appointed Cynthia Nelson to serve as Chapter 11 trustee on Feb. 20, 2011. The Court approved the appointment three days later. South Edge is represented by lawyers at Klee, Tuchin, Bogdanoff and Stern LLP, and The Schwartz Law Firm, Inc., as legal counsel. The Chapter 11 trustee also tapped Schwartzer & McPherson Law Firm as local counsel. Petitioning creditors JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., are represented by lawyers at Morrison and Foerster LLP; and Lewis and Roca LLP. Credit Agricole is represented by lawyers at Haynes and Boone LLP, and Jolley Urga Wirth Woodbury & Standish. VIVIAN ALEXANDER: Files for Chapter 7 Bankruptcy Protection ----------------------------------------------------------- Vivian Alexander Inc., filed for Chapter 7 bankruptcy protection earlier this month in the U.S. Bankruptcy Court in the Western District of Louisiana. The Daily Advertiser reports that the Maurice-based company "is in serious financial trouble," primarily because of large debts owed to the Internal Revenue Service and the Louisiana Department of Revenue. According to The Daily Advertiser, the court filings indicate that the company owes about $236,000 in taxes and penalties to the IRS, as well as around $2,763 in unemployment taxes to the Louisiana Department of Labor, about $6,868 in withholding taxes to the Louisiana Department of Revenue, nearly $11,000 to the Louisiana Department of Revenue for sales taxes and another $10,000 to the Vermilion Parish School Board for sales taxes. The Daily Advertiser relates Company President Alexander Caldwell said the filing is simply a way to restructure the company's business model. Mr. Caldwell said he has not lost any suppliers and continues to design and create new items, which will continue to be for sale. Katy Stech reports that the legal move will help Mr. Caldwell, the 79-year-old business owner, wind down the formal operations. Mr. Caldwell will continue to sell his artwork through his Web site. Vivian Alexander -- http://www.vivianalexander.com/-- creates and sells purses, art sculptures, gifts and jeweled accessories. WINDSOR PETROLEUM: S&P Cuts Rating on $239.1-Mil. Notes to 'BB-' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Windsor Petroleum Transport Corp.'s $239.1 million secured term notes due Jan. 15, 2021, ($224.1 million currently outstanding) to 'BB-' from 'BB+'. The outlook on the rating remains negative. "At the same time, we revised our recovery rating on the term note issuance to '4' from '3', indicating our expectation of an average (30%-50%) recovery of principal in the event of a payment default," S&P said. "The rating action follows cancellation of Windsor's memorandum of understanding to sell the Pioneer for a net value that we believe would have redeemed the principal and interest associated with the vessel," said Standard & Poor's credit analyst Mark Habib. BP Shipping, a wholly owned subsidiary of BP PLC (A/Stable/A-1), had operated the Pioneer under a bareboat charter, but exercised its termination option, ending its charter in January 2011. "We believe the weak tanker environment will make it difficult to find another buyer at a similar price in the short term. As a result, Windsor must continue to operate the vessel in the merchant market at spot-charter rates, exposing it to merchant and operating risk, while it seeks a long-term solution," S&P related. The negative outlook on the rating reflects Windsor's exposure to volatile spot-charter rates on the Pioneer, and the potential for additional charter terminations on the remaining vessels annually starting as soon as 2013. As long as average spot-rate earnings for the Pioneer are lower than breakeven, the project will have to continue to draw on the debt service reserve. Sustained draws on the reserve could lead to further rating downgrades if they raise the future breakeven rate significantly above $33,000 per day. "If Windsor is able to fix the Pioneer on a medium- to long- term charter equal to or above the breakeven rate and if the project is able to maintain or improve its liquidity position, we could revise the outlook to stable," S&P said. WYNDHAM WORLDWIDE: Moody's Says 'Ba1' CFR Unchanged --------------------------------------------------- Moody's Investors Service said that Wyndham Worldwide Corporation's ratings, including its Ba1 Corporate Family Rating and positive rating outlook, remain unchanged following the company's announcement that it increased its share repurchase authorization by $500 million, bringing the authorization up to $755 million. The principal methodology used in rating Wyndham was Global Lodging rating methodology published in December 2010. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found on Moody's website. Wyndham Worldwide Corporation is one of the largest hotel franchisors in the world and operates in three segments of the hospitality industry: lodging, vacation exchange and rentals, and vacation ownership. The company also develops and sells vacation ownership (timeshare) intervals to individual consumers and provides consumer financing in connection with these sales. Wyndham generates annual revenues of about $4 billion. XTREME GREEN: Posts $370,300 Net Loss in Q2 2011 ------------------------------------------------ Xtreme Green Products Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $370,331 of $805,298 of sales for the three months ended June 30, 2011, compared with a net loss of of $381,997 on $91,330 of sales for the same period last year. The Company reported a net loss of $789,255 on $1.3 million of sales for the six months ended June 30, 2011, compared with a net loss of $791,857 on $124,930 of sales for the same period last year. The Company's balance sheet at June 30, 2011, showed $1.6 million in total assets, $2.1 million in total liabilities, and a stockholders' deficit of $507,064. Kingery & Crouse PA, in Tampa, Florida, expressed substantial doubt about Xtreme Green Products' ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has incurred significant losses from operations and has working capital and stockholder deficiencies. A copy of the Form 10-Q is available at http://is.gd/gL2fwq Based in North Las Vegas, Nev., Xtreme Green Products Inc. is an eco-vehicle company that designs, develops and manufacXtures revolutionary, green, 100% electric powered products such as Personal Mobility Vehicles (PMVs), Motorcycles & Scooters, (ATVs) All Terrain Vehicles, (UTVs) and Utility Terrain Vehicles. ZOOM TELEPHONICS: Incurs $326,100 Net Loss in Q2 2011 ----------------------------------------------------- Zoom Telephonics, Inc., filed its quarterly report on Form 10-Q, reporting a net loss of $326,069 on $3.2 million of sales for the three months ended June 30, 2011, compared with a net loss of of $162,067 on $3.5 million of sales for the same period last year. The Company reported a net loss of $610,671 on $6.0 million of sales for the six months ended June 30, 2011, compared with a net loss of $460,145 on $6.0 million of sales for the same period last year. The Company's balance sheet at June 30, 2011, showed $5.9 million in total assets, $2.3 million in total liabilities, and stockholders' equity of $3.6 million. As reported in the TCR on April 5, 2011, Marcum LLP, in Boston, Massachusetts, expressed substantial doubt about Zoom Telephonics' ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that the Company has had recurring net losses and continues to experience negative cash flows from operations. A copy of the Form 10-Q is available at http://is.gd/nLPsDZ Headquartered in Boston, Massachusetts, Zoom Telephonics, Inc. (OTC BB: ZMTP) -- http://www.zoomtel.com/-- designs, produces, markets, and supports communication products under the Zoom, Hayes(R), and Global Village(R) brands. * Fitch: U.S. High Yield Default Rate Moves Up to 1.3% in July -------------------------------------------------------------- The July bankruptcy filing by OPTI Canada, Inc. (OPTI Canada) marked the first default to top the billion-dollar mark in eight months, according to Fitch Ratings. The energy company's default affected $2.6 billion in bonds, the largest since CIT Group Inc. in November 2009. The resulting year-to-date default tally moved up to $4.7 billion in July and the defaulted issuer count to 10. In the first seven months of 2010, 15 issuers defaulted on $3.2 billion in bonds. OPTI Canada's default pushed the trailing 12-month (TTM) U.S. high yield default rate up to 1.3% from 1.1% in June. The July 2010 TTM default rate was 4.2%. The default rate fell to 1.3% by year- end 2010 and remained unchanged at 1.1% from January through June. Soft economic data in recent weeks, especially news of surprisingly weak GDP growth in the first half of the year, has cast uncertainty on the sustainability of the benign default environment. Even with the single but large default in July, the high yield default rate remains exceptionally low. The rate is running below the low end of Fitch's forecast for 2011 of 1.5%-2%. Important supports for continued low defaults in the near term include limited debt maturities through year-end, considerable cash reserves accumulated over two years of good earnings growth, and a strong issuer focus on cost containment and conservative balance sheet management. The speculative grade rating drift has been positive for well over a year, with upgrades running consistently ahead of downgrades. In addition, interest rates remain low and the price of oil is down roughly 25% from its April high. Timing is another consideration. The recession of 2008-2009 already claimed the weakest companies. Since the start of 2008, 259 issuers have defaulted and restructured $188 billion in bonds. Taking inventory of the high yield market's profile at the end of July, the par rating mix consisted of 44% 'BB', 38% 'B', and 19% 'CCC' or lower rated issues. Fitch finds that 15% of U.S. high yield market volume currently outstanding (totaling $1.1 trillion) is associated with fallen angels -- companies downgraded from investment grade to speculative grade over the course of the recent recession. The rating mix of the fallen angel bonds is notably stronger than the rest of the high yield universe. Some 70% of fallen angel volume is rated 'BB', compared with 39% for the rest of the market. The $201 billion of bonds rated 'CCC' or lower consists mainly of more seasoned high yield issues. While a number of factors are expected to keep defaults low through year-end, a protracted period of weak U.S. growth or -- in the worst case -- a second full-blown recession remains a major concern. The high yield survivors of prior recessions have benefited from far more robust recoveries than current conditions. In the end, cost containment and refinancing have greatly alleviated default pressures but neither can make up for poor or negative revenue and cash flow growth among companies that are highly levered. * Junk Bond Losses Mount in Worst Month Since 2008 -------------------------------------------------- Carla Main at Bloomberg News reports speculative-grade bonds worldwide are inflicting the biggest losses on investors since November 2008 amid the creditmarket seizure on mounting evidence that the global economy is in danger of tumbling into recession. According to the report, First Data Corp., the credit-card processor acquired by KKR & Co. for $27.5 billion in 2007, and Dallas-based Energy Future Holdings Corp. led declines of 4.6% this month for high yield, high-risk debt, according to the Bank of America Merrill Lynch Global High Yield Index. Investors withdrew an unprecedented $2.1 billion from junk mutual funds on Aug. 9, research firm EPFR Global said. The report relates that junk bonds are losing favor after gaining 96% from the end of 2008 through last month as the U.S. economy grows at a pace that the Federal Reserve is calling "considerably slower" than expected, threatening the neediest borrowers' ability to pay their debts. * S&P: Global Corp Defaults Total 23 So Far in 2011 --------------------------------------------------- Global corporate defaults total 23 so far in 2011. No corporate issuers defaulted last week, but Standard & Poor's revised the total since its last report as part of its quarterly reconciliation process, said an article published Friday by Standard & Poor's Global Fixed Income Research, titled "Global Corporate Default Update (Aug. 4 - 10, 2011)." Of the total defaulters this year, 15 were based in the U.S., three were based in New Zealand, two were based in Canada, and one each was based in the Czech Republic, France, and Russia. By comparison, 55 global corporate issuers had defaulted by this time in 2010. Of these defaulters, 39 were U.S.-based issuers, two were European issuers, seven were from the emerging markets, and another seven were in the other developed region (Australia, Canada, Japan, and New Zealand). Nine of this year's defaults were due to missed interest or principal payments and six were due to distressed exchanges -- both among the top reasons for default in 2010. Of the remaining eight, four issuers defaulted after they filed for bankruptcy, another two were forced into liquidation as a result of regulatory actions, the seventh had its banking license revoked by its country's central bank, and the eighth was appointed a receiver. Of the defaults in 2010, 28 defaults resulted from missed interest or principal payments, 25 resulted from Chapter 11 and foreign bankruptcy filings, 23 from distressed exchanges, three from receiverships, one from regulatory directives, and one from administration. Standard & Poor's expects the U.S. corporate trailing 12-month speculative-grade default rate to decline to 1.6% by June 2012. A total of 25 issuers would need to default from July 2011 to June 2012 to reach this forecast. By comparison, the default rate in June 2011 is 2.25%. In the 12 months ended June 2011, 32 speculative-grade issuers defaulted. Less than one-third of those defaults occurred in the first half of 2011. Improved lending conditions and greater availability of capital, even for low-rated issuers, continue to temper our default expectations in the short term. In addition, stronger credit quality, as reflected by fewer downgrades and lower negative bias, should help companies mitigate the effects of lackluster economic growth and uncertainty about domestic and international sovereign funding. In addition to S&P's baseline projection, its forecasts the default rate in our optimistic and pessimistic scenarios. In its optimistic default rate forecast scenario, the economy and the financial markets improve more than expected, and, as a result, S&P would expect the default rate to be 1.2% (18 defaults in the next 12 months). On the other hand, if the economic recovery stalls and the financial markets deteriorate -- which is S&P's pessimistic scenario -- S&P expects the default rate to be 4% (62 defaults) by June 2012. S&P bases its forecasts on quantitative and qualitative factors that it considers, including, but not limited to, Standard & Poor's proprietary default model for the U.S. corporate speculative-grade bond market. * S&P: Speculative-Grade Composite Spread Narrows to 707 Bps ------------------------------------------------------------ Standard & Poor's speculative-grade composite spread narrowed by one basis point on Friday to 707 basis points (bps), while the investment-grade composite spread remained steady at 199 bps. By rating, the 'AA' and 'BB' spreads expanded by one basis point each, to 144 bps and 513 bps, respectively. The 'A' spread remained unchanged at 176 bps. The 'BBB' spread tightened by one basis point to 235 bps, 'B' narrowed by 2 bps to 749 bps, and 'CCC' narrowed by 5 bps to 1,053 bps. By industry, financial institutions and utilities remained unchanged at 318 bps and 200 bps, respectively. Banks narrowed by one basis point to 319 bps, industrials tightened by 3 bps to 324 bps, and telecommunications narrowed by 3 bps to 346 bps. The investment-grade composite spread is now at its highest point for the year. Meanwhile, the speculative-grade composite spread is one basis point away from its highest point for the year. Since the beginning of August, the investment-grade spread has increased by 18%, and the speculative-grade spread is up by 27%. "We expect continued volatility in the near term, especially in the speculative-grade segment, which could result from both positive and negative factors. On the positive side, we expect U.S. corporate defaults to remain low in the short term. On the negative side, an increase in volatility in the financial markets, influenced partially by sovereign rating concerns, could continue to weigh on risky assets," S&P said. * S&P FAQ Addresses Impact of U.S. Downgrade on Corporate Funding ----------------------------------------------------------------- Following the downgrade of the United States of America to 'AA+', Standard & Poor's Global Fixed Income Research is taking a look at several market indicators, including bond spreads, issuance volume, and the corporate default rate. In an article published Aug. 15, titled "Frequently Asked Questions: Assessing The Impact Of The U.S. Downgrade On Corporate Funding," the firm addressed some of the frequently asked questions about how the rating action on the U.S. could affect these measures by providing a snapshot of credit market conditions immediately prior to and following the downgrade. Standard & Poor's Ratings Services placed its long- and short-term sovereign credit ratings on the U.S. on CreditWatch with negative implications on July 14. "Since then, credit spreads for both investment-grade and speculative-grade companies have risen sharply, by 17% and 29%, respectively," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research. On Aug. 5, Standard & Poor's lowered its long-term rating on the U.S. to 'AA+'. "In the next few days, the investment-grade spread increased from 176 bps to 199 bps on Aug. 11," said Ms. Vazza. "The spread surpassed its one-year moving average of 179 bps and its level of 177 bps, where it began the year. Meanwhile, the speculative-grade spread expanded to 708 bps on Aug. 11 from 609 bps on Aug. 5." In addition, speculative-grade issuance volumes have plummeted since July 14. In the first 10 days of August, companies did not issue any speculative-grade bonds that were rated by Standard & Poor's. "We do not believe the downgrade itself is likely to drive up the default rate," said Ms. Vazza. "However, an increase in the default rate could result from a sustained deterioration of market fundamentals and stalled economic growth in the U.S." Overall market conditions have deteriorated over the past month, but the default rate is a lagging indicator, which means it usually rises following sustained periods of economic weakness. The impact of the current market stress may not lead to an appreciable increase in the default rate until after S&P's current forecast horizon. * U.S. Commercial Bankruptcy Filings Fall 11.6% During July ----------------------------------------------------------- Dow Jones' DBR Small Cap reports that the rate of corporate bankruptcy filings continued to ease throughout July as business owners and their lenders--both paralyzed by broader economic uncertainty--agree to avoid court-supervised restructurings. * Thorp Reed Adds Bankruptcy Muscle With New Del. Office --------------------------------------------------------- Lance Duroni at Bankruptcy Law360 reports that Thorp Reed & Armstrong LLP announced Monday that it would open a new office in Wilmington, Del., bolstering the Pennsylvania-based firm's bankruptcy practice group. "Thorp Reed is now situated to provide local counsel for clients and co-counsel in Delaware matters, a significant role in a state with stringent rules for the practice of law," the firm said in a statement. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- Oct. 14, 2011 AMERICAN BANKRUPTCY INSTITUTE NCBJ/ABI Educational Program Tampa Convention Center, Tampa, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. __, 2011 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Dublin, Ireland Contact: 1-703-739-0800; http://www.abiworld.org/ Oct. 25-27, 2011 TURNAROUND MANAGEMENT ASSOCIATION Hilton San Diego Bayfront, San Diego, CA Contact: http://www.turnaround.org/ Dec. 1-3, 2011 AMERICAN BANKRUPTCY INSTITUTE 23rd Annual Winter Leadership Conference La Quinta Resort & Spa, La Quinta, Calif. Contact: 1-703-739-0800; http://www.abiworld.org/ April 3-5, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Grand Hyatt Atlanta, Atlanta, Ga. Contact: http://www.turnaround.org/ Apr. 19-22, 2012 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Gaylord National Resort & Convention Center, National Harbor, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ July 14-17, 2012 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz-Carlton Amelia Island, Amelia Island, Fla. Contact: 1-703-739-0800; http://www.abiworld.org/ Aug. 2-4, 2012 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Md. Contact: 1-703-739-0800; http://www.abiworld.org/ November 1-3, 2012 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Westin Copley Place, Boston, Mass. Contact: http://www.turnaround.org/ Nov. 29 - Dec. 2, 2012 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference JW Marriott Starr Pass Resort & Spa, Tucson, Ariz. Contact: 1-703-739-0800; http://www.abiworld.org/ April 10-12, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Chicago, Chicago, Ill. Contact: http://www.turnaround.org/ October 3-5, 2013 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Wardman Park, Washington, D.C. Contact: http://www.turnaround.org/ ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers" public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors" Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, 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 ***