/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120622.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 22, 2012, Vol. 16, No. 172 Headlines 1775 EAST: Case Summary & 7 Largest Unsecured Creditors 49 WOODMAN: Case Summary & 4 Largest Unsecured Creditors 66 NEEDHAM: Voluntary Chapter 11 Case Summary ACCENTIA BIOPHARMA: Has $1.5MM Financing Agreement with Pabeti ACOSTA INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable AIDA'S PARADISE: Court OKs Roy Law Firm as Special Counsel ALLIED SYSTEMS: GM, Teamsters, PBGC on Creditors' Committee AMERICAN NATURAL: Plans to Raise $420,000 from Securities Sale APPLIED MINERALS: Appoints EisnerAmper LLP as New Auditor ATI ACQUISITION: S&P Lowers Corporate Credit Rating to 'D' AUTOTRADER.COM INC: S&P Affirms 'BB+' CCR After IPO Filing BERNARD L. MADOFF: Customers' Latest Attempt to Sue Picower Fails BERNARD L. MADOFF: Judge Bars Client in Securities Class Action BLUEGREEN CORP: Shareholders Approve Merger with BFC Financial BONDS.COM GROUP: Eugene Lockhart Discloses 6.7% Equity Stake BONDS.COM GROUP: Patricia Kemp Discloses 6.7% Equity Stake BOSTON BIOMEDICAL: S&P Cuts Rating on Series 1999 Bonds to 'B' BRASA HOLDINGS: S&P Assigns 'B' Corp Credit Rating; Outlook Stable BUILDERS FIRSTSOURCE: Warburg Stake Slightly Up to 25.7% CANYON PORT: Files for Chapter 11 Bankruptcy Protection CENTRAL FEDERAL: Restructures $22.5-Mil. Common Shares Offering CHOICE HOTELS: S&P Cuts CCR to 'BB+' on Dividend Recapitalization CITY NATIONAL: Preston Pinkett Discloses 11.3% Equity Stake CIRCLE STAR: Extends Wevco Agreement Closing Date to Sept. 28 CLEARWIRE CORP: Withdraws Plan to Surrender 77MM Class B Shares COMMUNITY HEALTH: Moody's Affirms 'B1' CFR/PDR; Outlook Stable COMPETITIVE TECHNOLOGIES: To Issue 420,000 Shares to Officers CONSOLIDATED CONTAINER: Moody's Confirms B2 CFR, Rates New Debt CONTRACT RESEARCH: Sale to Freeport-Led Group Completed DAVIS-RODWELL: Files for Chapter 11 Bankruptcy Protection DDR CORP: Fitch Rates $300-Mil. Senior Unsecured Notes at 'BB+' DENNY'S CORP: Adopts Pre-Arranged Stock Trading Plan DEWEY & LEBOEUF: Plans to Terminate 25 Office Leases Worldwide DEWEY & LEBOEUF: In Settlement Talks With Former Partners DIALOGIC INC: Ming Him Chan Resigns from Board of Directors DIALOGIC INC: Has Tender Offer for Insiders DIAMOND BEACH: Plan Confirmation Hearing Scheduled for July 2 DYNEGY HOLDINGS: Opposes Payment of Property Taxes to Newburgh FIRST REGIONAL BANCORP: Files for Bankruptcy in Los Angeles FIRST REGIONAL BANCORP: Case Summary & 8 Largest Unsec. Creditors FUEL DOCTOR: Signs Agency Agreement with Boko Consulting GUIDED THERAPEUTICS: To Launch LuViva Cervical Scan in Canada H&M OIL: Proofs of Claim Due Sept. 4, 2012 H&M OIL: Has Interim Access to Prospect Capital Cash Collateral HAMPTON ROADS: K. Gowen Joins as Commercial Relationship Manager HAWKER BEECHCRAFT: Committee Taps Crowe & Dunlevy Aviation Counsel HIGH PLAINS: To Issue 5 Million Common Shares as Compensation HOPKINS COUNTY: Moody's Lowers LongTerm Bond Rating to 'Ba2' HORNE INTERNATIONAL: To Issue 300,000 Common Shares to Lion HOSPITAL AUTHORITY OF CHARLTON: Files Schedules of Assets & Debts HOUGHTON MIFFLIN: Lenders Adjust LIBO Rate to 1.25% HOUGHTON MIFFLIN: Wants to Hire Blackstone as Financial Advisor HUDSON PRODUCTS: S&P Affirms 'B-' Corporate Credit Rating INT'L ENVIRONMENTAL: Files Schedules of Assets and Liabilities JEDD LLC: Tenn. Real Estate Firm Files for Chapter 11 LAURENTIAN ENERGY: Moody's Assigns 'Ba2' Rating to $48.5MM Bonds LDK SOLAR: To Report First Quarter 2012 Results on June 26 LIFECARE HOLDINGS: Stuart Archer Named Chief Operating Officer LIGHTSQUARED INC: U.S. Trustee Unable to Appoint Committee LIQUIDMETAL TECHNOLOGIES: B. Visser Owns 25.6% of Class A Shares MADISON 92ND: Court Approves Neiger LLP as General Counsel MONEY TREE: Chapter 11 Trustee Hires Christian & Small as Counsel MONEY TREE: Chapter 11 Trustee Seeks to Hire Hays as Accountant MONEY TREE: Chapter 11 Trustee Wants to Hire Broker to Sell Plane MONTPELIER RE: Fitch Retains 'BB+' Rating on $150-Mil. Securities MORTGAGES LTD: Greenberg, Quarles to Pay Investors $88 Million MOUNTAIN PROVINCE: Gets Conditional Approval for Kennady Listing MUNICIPAL MORTGAGE: C. Baum and M. Joseph Elected to Board NAVISTAR INTERNATIONAL: Board Adopts Stockholder Rights Plan NEOMEDIA TECHNOLOGIES: Sells $450,000 Debenture to YA Global NORTH AMERICAN ENERGY: Moody's Confirms 'B3' CFR; Outlook Negative OTERO COUNTY: Plan Confirmation Hearing Scheduled Aug. 3 OTERO COUNTY: Jefferies & Co. Approved to Arrange Exit Financing OVERLAND STORAGE: Six Directors Elected at Annual Meeting PALISADES MEDICAL: Moody's Affirms Ba2 Bond Rating; Outlook Pos. PEMCO WORLD: Creditors File Formal Sun Capital Settlement POLI-GOLD LLC: Settles With Creditors, Seeks Case Dismissal PROMETRIC INC: S&P Withdraws 'BB+' Corp. Credit Rating at Request QUAMTEL INC: Leo Hinkley Named to Board of Directors QUANTUM FUEL: To Issue 3.1MM Common Shares Under Incentive Plan RESIDENTIAL CAPITAL: Fortress, Berkshire Named Lead Bidders RESIDENTIAL CAPITAL: Debtors, Creditors Spar Over Sale RESIDENTIAL CAPITAL: Examiner to Probe Ally Transactions RESIDENTIAL CAPITAL: Seeks Approval of $8.7-Bil. RMBS Trust Deal RESIDENTIAL CAPITAL: Proposes to Assume Plan Support Agreements ROSETTA GENOMICS: Secures Medicare Reimbursement for miRview RT MIDWEST: Ruby Tuesday's Franchisee Files in Minneapolis RUSSEL METALS: S&P Affirms 'BB+' CCR; Then Withdraws Rating SAAB CARS: Whicomb Motors Resigns from Creditors Committee SAINT CATHERINE: Indiana Hospital Files for Chapter 11 SAINT CATHERINE: Case Summary & 20 Largest Unsecured Creditors SAPPHIRE VP: Plan Confirmation Hearing Scheduled for July 2 SAPPHIRE VP: Johnston Tobey Approved to Handle Winstead Litigation SAPPHIRE VP: Richard Daly, et al., Approved for ZCA Litigation SAPPHIRE VP: Hearing on Further Cash Use on July 2 SHERIDAN GROUP: Maturity of BOA Credit Facility Moved to 2013 SINCLAIR BROADCAST: Eight Directors Elected at Annual Meeting SKINNY NUTRITIONAL: Board Approves Bylaws Amendment SP NEWSPRINT: DIP Financing Extended to Sept. 17 STEREOTAXIS INC: Files Form S-1; Registers 74.7MM Common Shares STRAFFORD COUNTY: Moody's Affirms 'Ba2' G.O. Bond Rating STOCKTON, CA: Lays Out Cuts in Bankruptcy SWADENER INVESTMENT: Chapter 11 Bankruptcy Case Closed TOUSA INC: Has Continued Access to Cash Collateral Until Oct. 31 U.S. RENAL: S&P Affirms 'B' Corporate Credit Rating US FIDELIS: Co-Owner Pleads Guilty Again in $70-Million Fraud VADIUM TECHNOLOGY: Files Schedules of Assets and Liabilities VITRO SAB: Judge Refuses to Limit Ruling on Bankruptcy Plan VS FOX RIDGE: Files for Chapter 11 in Salt Lake City W.R. GRACE: Garlock Sealing Seeks Judicial Notice W.R. GRACE: Files Report for 1st Quarter Claim Settlements W.R. GRACE: Thomas Vanderslice Resigns as Board Member WAVE2WAVE COMMS: Jeffrey C. Mason OK'd as Litigation Counsel WAVE2WAVE COMMS: Plan Disclosure Hearing Scheduled for July 12 WESTERN POZZOLAN: Files Schedules of Assets and Liabilities WILLARD RENTAL: Case Summary & 20 Largest Unsecured Creditors WOOTEN GROUP: Case Summary & 4 Largest Unsecured Creditors WYLDFIRE ENERGY: Files for Chapter 11 in Wichita Falls ZOGENIX INC: Grants Mallinckrodt Right to Sell Sumavel DosePro * Sexual Harassment Nondischargeable Automatically * Cash Collateral Order Disappears on Dismissal of Case * Moody's Says Durbin Amendment Pressures U.S. Banks * Davidoff to Head Greenberg Glusker's Bankruptcy Practice * Weil Gotshal's Larson to Lead Forshey Prostok's Dallas Office * BOOK REVIEW: Legal Aspects of Health Care Reimbursement ********* 1775 EAST: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------- Debtor: 1775 East 17th St., LLC 450 Westminster Road Brooklyn, NY 11218 Bankruptcy Case No.: 12-44498 Chapter 11 Petition Date: June 19, 2012 Court: United States Bankruptcy Court Eastern District of New York (Brooklyn) Judge: Elizabeth S. Stong Debtor's Counsel: Edward E. Neiger, Esq. NEIGER LLP 151 West 46th Street 4th Floor New York, NY 10036 Tel: (212) 267-7342 Fax: (212) 918-3427 E-mail: eneiger@neigerllp.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its seven largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nyeb12-44498.pdf The petition was signed by Martin Daskal, member. 49 WOODMAN: Case Summary & 4 Largest Unsecured Creditors -------------------------------------------------------- Debtor: 49 Woodman Partnership 5449 Woodman Avenue Sherman Oaks, CA 91401 Bankruptcy Case No.: 12-15620 Chapter 11 Petition Date: June 19, 2012 Court: United States Bankruptcy Court Central District of California (San Fernando Valley) Judge: Alan M. Ahart Debtor's Counsel: Rachel S. Ruttenberg, Esq. LAW OFFICES OF MARK E GOODFRIEND 16255 Ventura Blvd., Suite 205 Encino, CA 91436 Tel: (818) 783-8866 Fax: (818) 783-5445 E-mail: rruttenberg@gmail.com Scheduled Assets: $650,000 Scheduled Liabilities: $1,174,619 A copy of the Company's list of its four largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-15620.pdf The petition was signed by Nily Schraiber, general partner. 66 NEEDHAM: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: 66 Needham Street Limited Partnership 70 Fremont Street Needham, MA 02494 Bankruptcy Case No.: 12-15222 Chapter 11 Petition Date: June 19, 2012 Court: United States Bankruptcy Court District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: Gregory M. Sullivan, Esq. LAW OFFICE OF GREGORY M. SULLIVAN 126 Essex St. Malden, MA 02148 Tel: (781) 322-0090 E-mail: gsullivanlaw@aol.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Paul L. Sullivan, Jr., general partner. ACCENTIA BIOPHARMA: Has $1.5MM Financing Agreement with Pabeti -------------------------------------------------------------- Accentia Biopharmaceuticals, Inc., entered into a convertible debt financing transaction with Pabeti, Inc., providing for aggregate loans to the Company in the maximum amount of $1,500,000. In connection with the financing transaction, on June 1, 2012, the Company executed a secured promissory note, payable to Pabeti, in the maximum principal amount of $1,500,000. Under the Note, Pabeti agreed to advance $300,000 to the Company on June 4, 2012, and agreed to advance an additional $200,000 to the Company on each of June 18, July 2, July 16, July 30, August 13, and Aug. 27, 2012. The other material terms and conditions of the transaction are: * The Note will mature on June 1, 2015, at which time all indebtedness under the Note will be due and payable; * Interest on the outstanding principal amount of the Note accrues and will be payable at a fixed rate of 10% per annum; * The Company's first interest payment is due on June 30, 2013, and subsequently at the end of each quarter in arrears, and interest payments may be paid in cash or, at the election of the Company, may be paid in shares of the Company's common stock based on the volume-weighted average trading price of the Company's common stock during the last ten trading days of the quarterly interest period; * At Pabeti's option, at any time prior to the earlier to occur of (a) the date of the prepayment of the Note in full or (b) the maturity date of the Note, Pabeti may convert all or a portion of the outstanding balance of the Note into shares of the Company's common stock at a conversion rate equal to $0.25 per share; * Subject to certain exceptions, if the Company wishes to complete a follow-on equity linked financing during the 12 month period following the date of the Note at a price per share that is less than the conversion price under the date of the Note, then the Company must offer Pabeti a right to participate in such equity linked financing; and * The Company may not prepay the Note without Pabeti's prior written consent. To secure payment of the Note, the Company and Pabeti entered into a Security Agreement. Under the Security Agreement, all obligations under the Note are secured by a first security interest in (a) 3,061,224 shares of the common stock of Biovest International, Inc., owned by the Company, and (b) certain contingent earn-out payments that may be payable to the Company by LA-SER Alpha Group Sarl in connection with the Company's prior sale of its Analytica business unit. As part of the financing transaction, the Company issued to Pabeti a Common Stock Purchase Warrant to purchase 3,000,000 shares of the Company's common stock for an exercise price of $0.28 per share. Pabeti is an affiliate of Corps Real, LLC, and Ronald E. Osman. Corps Real is a current stockholder of the Company which as of May 31, 2012, beneficially owned approximately 9.99% of the Company's common stock, and Corps Real also beneficially owned approximately 7.16% of the common stock of Biovest as of May 31, 2012. Mr. Osman, who is a director of Biovest, is the managing member of Corps Real and the President and an owner of Pabeti. Amendment to Convertible Promissory Note On June 6, 2012, the Company and Dennis Ryll entered into an Amendment No. 1 to the Plan Convertible Promissory Note in the original principal amount of $4,483,284, dated Nov. 17, 2010, payable by the Company to Mr. Ryll. The Ryll Note, which has an outstanding balance of $0.560 million as of May 31, 2012, was originally due on Aug. 17, 2012. The Note Amendment now extends the maturity date through Feb. 17, 2013, and the optional and automatic conversion provisions of the Ryll Note are being suspended until Feb. 17, 2013, under the terms of the Note Amendment. About Accentia Biopharmaceuticals Headquartered in Tampa, Florida, Accentia Biopharmaceuticals, Inc. (PINK: "ABPI") -- http://www.Accentia.net/-- is a biotechnology company that is developing Revimmune as a system of care for the treatment of autoimmune diseases. Through subsidiary, Biovest International, Inc., it is developing BiovaxID as a therapeutic cancer vaccine for treatment of follicular non-Hodgkin?s lymphoma (FL) and mantle cell lymphoma (MCL). Through subsidiary, Analytica International, Inc., it conducts a health economics research and consulting business, which it market to the pharmaceutical and biotechnology industries, using its operating cash flow to support its corporate administration and product development activities. Accentia BioPharmaceuticals and nine affiliates filed for Chapter 11 protection (Bankr. M.D. Fla. Lead Case No. 08-17795) on Nov. 10, 2008. Accentia emerged from bankruptcy on Nov. 17, 2012, after receiving confirmation of a reorganization plan on Nov. 2, 2010. The Company's balance sheet at March 31, 2012, showed $4.63 million in total assets, $88.97 million in total liabilities, and a $84.34 million total stockholders' deficit. Cash and cash equivalents at March 31, 2012, was $1.9 million. The Company intends to meet its cash requirements through the use of cash on hand, strategic transactions such as collaborations and licensing, short-term borrowings, and debt and equity financings. The Company's independent registered public accounting firm's report included a "going concern" qualification on the financial statements for the year ended Sept. 30, 2011, citing significant losses and working capital deficits at that date, which raised substantial doubt about the Company's ability to continue as a going concern. ACOSTA INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Acosta Inc., including its 'B+' corporate credit rating. The outlook is stable. "We also assigned the company's proposed $300 million tranche C senior secured term loan a 'B+' debt issue rating with a recovery rating of '3'. The '3' recovery rating indicates our expectation of meaningful (50%-70%) recovery of principal in the event of a payment default," S&P said. "The senior secured credit facility also consists of a $985 million term loan B and a $90 million revolving credit facility. We affirmed our 'B+' issue rating on that debt and the '3' recovery rating remains unchanged," S&P said. "The ratings reflect Acosta's 'satisfactory' business risk profile, combined with a 'highly leveraged' financial risk profile. We view Acosta's business risk profile as satisfactory due to favorable industry dynamics and our belief that it will grow sales and profits as consumer packaged-good (CPG) producers will increase outsourcing of sales and marketing functions," S&P said. "Although the Mosaic acquisition will be debt funded, we expect pro forma credit protection measures to remain in line with the indicative ratios for the 'B+' rating," said Standard & Poor's credit analyst Ana Lai, "with pro forma total debt/EBITDA of 6.4x for the 12 months ended April 2012." "We believe the Mosaic acquisition is largely complementary to Acosta's product offerings and enhances its capabilities with services such as experiential marketing and digital services," added Ms. Lai. "This provides a good platform for sales growth as Acosta can offer its clients an expanded set of marketing solutions. However, Mosaic's profit margins are somewhat lower than those of Acosta given the higher labor costs, but overall profitability remains solid, with operating margin remaining about 20%," S&P said. "The stable ratings outlook reflects our belief that the company's financial risk profile will remain highly leveraged with limited improvement over the intermediate term, limiting a possible upgrade. However, we may consider an upgrade if leverage falls below 5x on a sustained basis. This could occur if sales grow 15% while selling, general, and administrative (SG&A) expense growth is slow, at 2% to 3%," S&P said. "Conversely, although we currently anticipate steady improvements in operating performance, any declines in profitability leading to leverage exceeding 7x could trigger a negative reassessment of the rating. This could occur if sales growth slows to 5%, while SG&A grows at about the same pace. A more aggressive financial policy could also trigger a downgrade, including a dividend recapitalization that could cause debt leverage to exceed 7x," S&P said. AIDA'S PARADISE: Court OKs Roy Law Firm as Special Counsel ---------------------------------------------------------- Aida's Paradise LLC sought and obtained permission from the U.S. Bankruptcy Court for the Middle District of Florida to employ William Glenn Roy, III, and The Roy Law Firm, PL, as special counsel, nunc pro tunc to April 16, 2012. The Debtor seeks authority to employ RLF as special counsel with respect to collection efforts due under a lease with S.I. Restaurant, Inc., and associated guarantor. RLF had been representing the Debtor since on or about Nov. 16, 2010, with respect to this collection effort. The Debtor did not pay RLF an advance fee. For the 12 months prior to the commencement the instant case, RLF was paid approximately $23,000, on a current basis, for work previously performed for the Debtor. The terms of employment that are the subject of a contingent fee agreement between the Debtor and RLF, subject to the approval of the Court, are that services of RLF will be paid up to 35% of the total gross recovery from any judgment entered. If no recovery is made, the Debtor will not be obligated to pay fees to RLF. About Aida's Paradise Based in Maitland, Florida, Aida's Paradise LLC owns roughly three acres of developed real property on International Drive in Orlando, Florida. It leases various parcels of the I-Drive Property to three tenants: Volcano Island Mini Golf, Dunkin Donuts (aka Jennifer's Donuts), and CBS Outdoor (which operates an electronic billboard on site). Aida's Paradise filed for Chapter 11 bankruptcy (Bankr. M.D. Fla. Case No. 12-00189) on Jan. 6, 2012. Chief Karen S. Jennemann presides over the case. R. Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, serves as the Debtor's counsel. The petition was signed by Dr. Adil R. Elias, manager. In its schedules, the Debtor disclosed $15.0 million in total assets and $9.32 million in total liabilities. ALLIED SYSTEMS: GM, Teamsters, PBGC on Creditors' Committee ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Allied Systems Holdings Inc. has an official creditors' committee with four members. The committee is composed of General Motors LLC, the Pension Benefit Guaranty Corp., the Teamsters union and a Teamsters pension fund. About Allied Systems BDCM Opportunity Fund II, LP, Spectrum Investment Partners LP, and Black Diamond CLO 2005-1 Adviser L.L.C., filed involuntary petitions for Allied Systems Holdings Inc. and Allied Systems Ltd. (Bankr. D. Del. Case Nos. 12-11564 and 12-11565) on May 17, 2012. The signatories of the involuntary petitions assert claims of at least $52.8 million for loan defaults by the two companies. Allied Systems, through its subsidiaries, provides logistics, distribution, and transportation services for the automotive industry in North America. Allied Holdings Inc. previously filed for chapter 11 protection (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537) on July 31, 2005. Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in the 2005 case. Allied won confirmation of a reorganization plan and emerged from bankruptcy in May 2007 with $265 million in first-lien debt and $50 million in second- lien debt. The petitioning creditors said Allied has defaulted on payments of $57.4 million on the first lien debt and $9.6 million on the second. They hold $47.9 million, or about 20% of the first-lien debt, and about $5 million, or 17%, of the second-lien obligation. They are represented by Adam G. Landis, Esq., and Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP; and Adam C. Harris, Esq., and Robert J. Ward, Esq., at Schulte Roth & Zabel LLP. Allied Systems Holdings Inc. formally put itself and 18 subsidiaries into bankruptcy reorganization June 10, 2012, following the filing of the involuntary Chapter 11 petition. The Company is being advised by the law firms of Troutman Sanders, Gowling Lafleur Henderson, and Richards Layton & Finger. The bankruptcy court process does not include captive insurance company Haul Insurance Limited or any of the Company's Mexican or Bermudan subsidiaries. The Company also announced that it intends to seek foreign recognition of its Chapter 11 cases in Canada. AMERICAN NATURAL: Plans to Raise $420,000 from Securities Sale -------------------------------------------------------------- American Natural Energy Corporation intends to seek to raise additional capital, subject to TSX Venture Exchange approval. The terms of that transaction will involve the sale of up to 7 million shares of ANEC's Common Stock at a price of US$0.06 per share for total proceeds of up to US$420,000. If completed, such a transaction will result in dilution to the present holders of ANEC's Common Stock. The offer and sale of those securities by ANEC to the subscribers has not been and will not be registered under the U.S. Securities Act of 1933, as amended, and those securities may not be offered or sold in the United States absent registration under the Act or an available exemption from the registration requirements. Such offer and sale of its securities is intended to be made pursuant to the exemption from the registration requirements of the U.S. Securities Act afforded by Regulation D and in reliance upon Regulation S under that Act and will result in the issuance of "restricted securities" as defined in Rule 144 under the Act. There can be no assurance that ANEC will be successful in raising the additional capital through the sale of its Common Stock. About American Natural American Natural Energy Corporation (TSX Venture: ANR.U) is a Tulsa, Oklahoma-based independent exploration and production company with operations in St. Charles Parish, Louisiana. The Company reported a net loss of $905,792 in 2011, compared with a net loss of $2.06 million in 2010. The Company's balance sheet at March 31, 2012, showed $17.15 million in total assets, $10.47 million in total liabilities and $6.67 million total stockholders' equity. In its audit report accompanying the 2011 financial statements, MaloneBailey, LLP, in Houston, Texas, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company incurred a net loss in 2011 and has a working capital deficiency and an accumulated deficit at Dec. 31, 2011. APPLIED MINERALS: Appoints EisnerAmper LLP as New Auditor --------------------------------------------------------- Applied Minerals, Inc., appointed EisnerAmper LLP to serve as its independent registered public accounting firm, replacing PMB Helin Donovan, LLP. EisnerAmper is a full-service accounting and advisory firm that is PCAOB-registered and provides services to over 150 public companies and approximately 1,800 private companies. EisnerAmper was the 13th largest accounting firm in the United States in 2011 according to the annual AccountingToday study. The Company believes that the engagement of EisnerAmper will help position it for continued growth and success given the accounting firm's substantial size and resources, significant expertise in the mining industry, and strong presence in New York City, where the Company's headquarters are located. The decision to change auditors was not the result of any disagreement between the Company and PMB Helin Donovan, LLP, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. John Levy, Chairman of the Board of Directors of Applied Minerals, said: "Speaking for the board and management, I want to thank PMB Helin Donovan, LLP for their excellent and very professional service since 2008. It has been a pleasure and privilege to work with them." About Applied Minerals New York City-based Applied Minerals, Inc. (OTC BB: AMNL) is a leading global producer of halloysite clay used in the development of advanced polymer, catalytic, environmental remediation, and controlled release applications. The Company operates the Dragon Mine located in Juab County, Utah, the only commercial source of halloysite clay in the western hemisphere. Halloysite is an aluminosilicate clay that forms naturally occurring nanotubes. The Company reported a net loss attributable to the Company of $7.48 million in 2011, a net loss attributable to the Company of $4.76 million in 2010, and a net loss attributable to the Company of $6.76 million in 2009. The Company's balance sheet at March 31, 2012, showed $10.68 million in total assets, $5.24 million in total liabiilties and $5.44 million in total stockholders' equity. The Company has incurred material recurring losses from operations. At March 31, 2012, the Company had a total accumulated deficit of approximately $43,084,500. For the three months ended March 31, 2012, and 2011, the Company sustained net losses from exploration stage before discontinued operations of approximately $4,056,700 and $1,695,100, respectively. The Company said that these factors indicate that it may be unable to continue as a going concern for a reasonable period of time. The Company's continuation as a going concern is contingent upon its ability to generate revenue and cash flow to meet its obligations on a timely basis and management's ability to raise financing or dispose of certain non-core assets as required. If successful, this will mitigate the factors that raise substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning At Dec. 31, 2011, and 2010, the Company had accumulated deficits of $39,183,632 and $31,543,411, respectively, in addition to limited cash and unprofitable operations. For the year ended Dec. 31, 2011, and 2010, the Company sustained net losses before discontinued operations of $7,476,864 and $4,891,525, respectively. As of March 15, 2012, the Company has not commercialized the Dragon Mine and has had to rely on cash flow generated from the sale of stock and convertible debt to fund its operations. If the Company is unable to fund its operations through the commercialization of the Dragon Mine, the sale of equity or debt or a combination of both, it may have to file bankruptcy. ATI ACQUISITION: S&P Lowers Corporate Credit Rating to 'D' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on North Richmond Hills, Texas-based ATI Acquisition Co. to 'D' from 'CCC-'. "We also lowered our issue-level ratings on the company's senior secured credit facilities and subordinated debt to 'D' (the same as the corporate credit rating) from 'CC'. Our recovery rating on the company's senior secured credit facilities and subordinated debt remains at '6', indicating our expectation of negligible (0 to 10%) recovery for lenders in the event of a payment default," S&P said. "The downgrade reflects confidential information that ATI has made available to Standard & Poor's regarding its debt obligations. ATI is a for-profit postsecondary education company focused on vocational programs, operating 23 career training centers and schools. ATI indirectly derives just under 90% of its revenues from federal-government-sponsored financial aid and grants received by its students. The campuses are geographically concentrated in Texas and Florida, representing a vulnerability to their regional economies," S&P said. "ATI's credit quality has deteriorated significantly over the past year, primarily because of earnings erosion stemming from weak enrollment trends. As of Sept. 30, 2011, debt to EBITDA was 8.8x compared with 4.7x in the prior year. At the same time, EBITDA coverage of interest weakened to 1.0x from 2.4x. We see the risk of further deterioration in credit measures over the next year because of continued enrollment declines. We will update our analysis as new information becomes available," S&P said. AUTOTRADER.COM INC: S&P Affirms 'BB+' CCR After IPO Filing ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' rating on Atlanta-based AutoTrader.com Inc. The rating outlook remains negative. "The affirmation and negative outlook reflect our expectation of likely continued narrow covenant headroom relative to the rating over the remainder of 2012, following the $400 million debt- financed dividend in April 2012 and not factoring in any debt repayment from the proceeds of a potential IPO," said Standard & Poor's credit analyst Daniel Haines. "AutoTrader.com's leading market share, strong brand, and high conversion of EBITDA into discretionary cash flow support our view that the company's business risk profile is 'fair,'. We assess AutoTrader.com's financial profile as 'aggressive' because of its acquisitive growth strategy in the highly competitive online auto advertising industry, which has low barriers to entry," S&P said. "We continue to factor into the rating implied support from Cox Enterprises Inc., which maintains operating control. We would rate AutoTrader.com in the 'BB' category on a stand-alone basis. While we do not view the AutoTrader.com debt as a Cox obligation, given the significant value of its ownership position, we believe Cox has incentives to provide some degree of credit support to AutoTrader.com," S&P said. BERNARD L. MADOFF: Customers' Latest Attempt to Sue Picower Fails ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the bankruptcy judge slammed the door on the latest effort by customers of Bernard L. Madoff Investment Securities Inc. to take a chunk of the $7.2 billion settlement the Madoff trustee won from the estate of the late Jeffrey M. Picower. The report recounts that the court order approving last year's settlement barred customers from suing Mr. Picower. Later, the bankruptcy judge halted class-action suits by customers against Mr. Picower, who was allegedly in cahoots with Bernard Madoff. In March a federal district judge upheld the injunction barring customers from attempting to make their own separate recoveries against Mr. Picower's estate. According to the report, in December, customers who had submitted customer claims in the Madoff liquidation filed papers telling U.S. Bankruptcy Judge Burton R. Lifland that they should be permitted to sue Picower's estate under Section 20(a) of the Securities Exchange Act of 1934. The customers argued they had a right to sue because the Madoff trustee is precluded from suing under Section 20(a). In that section, liability can be asserted against the control person of a company that commits securities fraud. Because the trustee can't sue, they can, so the theory goes. Judge Lifland, Mr. Rochelle relates, rejected the theory in an 11-page opinion June 20. He said that the March decision from the district judge barring individual customer suits is "directly on point." Judge Lifland attached a 17-page appendix to his opinion showing how the customers' complaint "repeated, repackaged, and relabeled" the trustee's claims. He further said that the customers' complaint was "nearly identical" to the trustee's. In the March decision, U.S. District Judge John G. Koeltl ruled that Judge Lifland was "plainly correct" when he halted lawsuits by customers against Mr. Picower. Because the customers' lawsuits were "virtually identical" to the Madoff trustee's complaint against Mr. Picower, Judge Koeltl said the customers' suit violated the so-called automatic stay in bankruptcy because they were bringing claims "that belonged to the trustee on behalf of all" Madoff creditors. The report discloses that Judge Koeltl said the customers had no right to a lawsuit on their own because every Madoff customer was harmed "in the same way." Judge Lifland reached the same conclusions in his opinion June 20. 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.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by the appeals has limited Mr. Picard's ability to distribute recovered funds. Outstanding appeals include the $5 billion Picower settlement and the $1.025 billion settlement. BERNARD L. MADOFF: Judge Bars Client in Securities Class Action --------------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Burton R. Lifland ruled Wednesday that plaintiffs are barred from filing a securities class action against a former Bernard L. Madoff Investment Securities LLC client's estate and others who'd already reached a $7.2 billion settlement with a trustee. 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.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by the appeals has limited Mr. Picard's ability to distribute recovered funds. Outstanding appeals include the $5 billion Picower settlement and the $1.025 billion settlement. BLUEGREEN CORP: Shareholders Approve Merger with BFC Financial -------------------------------------------------------------- BFC Financial Corporation and Bluegreen Corporation announced that shareholders of both companies approved the proposed merger between the two companies in separate special shareholder meetings. At the special meeting of Bluegreen's shareholders, holders of 73.05% of Bluegreen's common stock outstanding as of the record date established for the meeting voted to approve the merger agreement. At the special meeting of BFC's shareholders, holders of shares representing approximately 78.4% of the total voting power of BFC's Class A Common Stock and Class B common stock outstanding as of the record date established for the meeting voted in favor of the merger. BFC's shareholders also approved an amendment of BFC's Articles of Incorporation relating to a reverse split of BFC's Class A common stock and Class B common stock and a reduction in the authorized number of shares of such stock. BFC currently expects to effect a one-for-eight reverse stock split in connection with the listing of its Class A common stock on a national securities exchange, as required by the terms of the merger agreement. It is currently anticipated that the merger will be consummated promptly after all conditions to closing under the merger agreement are satisfied or, to the extent permitted under applicable law or the merger agreement, waived. About Bluegreen Corp. Bluegreen Corporation -- http://www.bluegreencorp.com/-- provides places to live and play through its resorts and residential community businesses. The Company reported a net loss of $17.25 million in 2011, compared with a net loss of $43.96 million in 2010. The Company's balance sheet at March 31, 2012, showed $1.06 billion in total assets, $757.74 million in total liabilities and $309.80 million in total stockholders' equity. In December 2010, Standard & Poor's Rating Services raised its corporate credit rating on Bluegreen Corp to 'B-' from 'CCC'. BONDS.COM GROUP: Eugene Lockhart Discloses 6.7% Equity Stake ------------------------------------------------------------ In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Eugene Lockhart disclosed that, as of May 30, 2012, he beneficially owns 7,557,767 shares of common stock of Bonds.com Group, Inc., representing 6.75% of the shares outstanding. A copy of the filing is available for free at: http://is.gd/2Fdfu5 About Bonds.com Group Based in Boca Raton, Florida, Bonds.com Group, Inc. (OTC BB: BDCG) -- http://www.bonds.com/-- through its subsidiary Bonds.com, Inc., serves institutional fixed income investors by providing a comprehensive zero subscription fee online trading platform. The Company designed the BondStation and BondStationPro platforms to provide liquidity and competitive pricing to the fragmented Over- The-Counter Fixed Income marketplace. The Company differentiates itself by offering through Bonds.com, Inc. an inventory of more than 35,000 fixed income securities from more than 175 competing sources. Asset classes currently offered on BondStation and BondStationPro, the Company's fixed income trading platforms, include municipal bonds, corporate bonds, agency bonds, certificates of deposit, emerging market debt, structured products and U.S. Treasuries. The Company reported a net loss of $14.45 million in 2011, compared with a net loss of $12.51 million in 2010. The Company's balance sheet at Dec. 31, 2011, showed $9.62 million in total assets, $14.85 million in total liabilities and a $5.23 million total stockholders' deficit. Daszkal Bolton LLP, in Boca Raton, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2011, citing recurring losses and negative cash flows from operations that raise substantial doubt about the Company's ability to continue as a going concern. BONDS.COM GROUP: Patricia Kemp Discloses 6.7% Equity Stake ---------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Patricia Kemp disclosed that, as of May 30, 2012, she beneficially owns 7,591,101 shares of common stock of Bonds.com Group, Inc., representing 6.78% of the shares outstanding. A copy of the filing is available for free at: http://is.gd/5uLGd5 About Bonds.com Group Based in Boca Raton, Florida, Bonds.com Group, Inc. (OTC BB: BDCG) -- http://www.bonds.com/-- through its subsidiary Bonds.com, Inc., serves institutional fixed income investors by providing a comprehensive zero subscription fee online trading platform. The Company designed the BondStation and BondStationPro platforms to provide liquidity and competitive pricing to the fragmented Over- The-Counter Fixed Income marketplace. The Company differentiates itself by offering through Bonds.com, Inc. an inventory of more than 35,000 fixed income securities from more than 175 competing sources. Asset classes currently offered on BondStation and BondStationPro, the Company's fixed income trading platforms, include municipal bonds, corporate bonds, agency bonds, certificates of deposit, emerging market debt, structured products and U.S. Treasuries. The Company reported a net loss of $14.45 million in 2011, compared with a net loss of $12.51 million in 2010. The Company's balance sheet at Dec. 31, 2011, showed $9.62 million in total assets, $14.85 million in total liabilities and a $5.23 million total stockholders' deficit. Daszkal Bolton LLP, in Boca Raton, Florida, issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2011, citing recurring losses and negative cash flows from operations that raise substantial doubt about the Company's ability to continue as a going concern. BOSTON BIOMEDICAL: S&P Cuts Rating on Series 1999 Bonds to 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services has lowered its long-term rating to 'B' from 'BB+' on Boston Biomedical Research Institute's (BBRI) series 1999 bonds, issued by Massachusetts Development Finance Agency. "We lowered the rating based on our understanding that BBRI will generate a large operating deficit in fiscal year 2012, despite steadily reducing operating deficits through fiscal 2011," said Standard & Poor's credit analyst Nick Waugh. "The 2012 deficit is due to significantly lower-than-budgeted levels of grants and contracts, which represent approximately 85% of BBRI's annual revenues, and management expects continued pressure on grants in fiscal 2013," said Mr. Waugh. "The institute has cut expenses over several years and has limited additional capacity for reductions, according to management. To support fiscal 2012 operations so far this year, management has taken an extraordinarily high endowment draw equal to approximately 17% of the beginning year market value. Management anticipates drawing a similar amount in fiscal 2013. BBRI also expects to violate the debt service coverage covenant again in fiscal 2012; BBRI violated the covenant in fiscals 2010 and 2009," S&P said. The downgrade also reflects Standard & Poor's assessment of BBRI's reduced cash and investments in fiscal 2012 and the high debt burden of approximately 9% of operating expenses. "The one-year outlook is stable. While Standard & Poor's expects BBRI to continue experiencing operating volatility next year, the ratings service expects the institute to maintain adequate liquid cash and investments relative to outstanding debt and stem the depletion of investments from endowment draws," S&P said. "Standard & Poor's could consider a lower rating during the one- year outlook period if BBRI experiences deteriorating operating performance, or a significant reduction in cash and investments relative to outstanding debt. Standard & Poor's does not expect to raise the rating during the outlook period due to the current weak operating performance and the uncertain federal funding environment," S&P said. BRASA HOLDINGS: S&P Assigns 'B' Corp Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Rating Services assigned Brasa Holdings Inc. its 'B' corporate credit rating. Brasa is the direct parent of Fogo de Chao Churrascaria Holdings LLC. The outlook is stable. "At the same time, we assigned Brasa's $205 million first-lien credit facility our 'B+' issue-level rating with a '2' recovery rating. The facility consists of a $25 million revolver and a $180 million first-lien term loan. The '2' recovery rating indicates our expectation for substantial (70%-90%) recovery of principal in the event of a payment default," S&P said. "Concurrently, we assigned the company's proposed $70 million second-lien term loan our 'B-' issue-level rating with a '5' recovery rating. The '5' recovery rating indicates our expectation for modest (10%-30%) recovery of principal in the event of a payment default," S&P said. "At the same time, we affirmed all existing ratings on Fogo de Chao Churrascaria Holdings LLC, including its 'B' corporate credit rating. The outlook is stable. Following closure of the transaction, we expect to withdraw all existing ratings on Fogo de Chao," S&P said. "The proposed LBO of Brasa by Thomas H. Lee Partners results in our reassessment of the company's financial risk profile to 'highly leveraged' from 'aggressive.' The additional debt leads to moderate deterioration of Brasa's credit measures, with pro forma total debt to EBITDA increasing to about 5.8x at April 30, 2012, from about 4.7x, and EBITDA coverage of interest weakening to about 2.1x from nearly 3.0x before the transaction. These measures are characteristic of a highly leveraged financial risk profile," S&P said. "We anticipate that these measures will improve over the near term because of modest profitability gains, with total debt to EBITDA trending toward the mid-5x area by the end of 2012," said Standard & Poor's credit analyst Mariola Borysiak. "Over the medium term, we anticipate further modest debt reduction from the excess cash flow sweep as mandated by the proposed credit agreement." "The stable outlook reflects our expectation for relatively stable performance and modest improvement of credit metrics over the next 12 months," S&P said. "We could lower the ratings if the challenging economic environment and inflationary pressures hurt Brasa's sales growth and EBITDA margin, leading to total debt to EBITDA increasing above 6.2x. In this scenario, gross margin declines by about 100 basis points from current levels and same-store sales at the U.S. restaurants decrease by about 3%, leading to about 8% EBITDA deterioration," S&P said. "Although unlikely in the near term, we could raise the ratings if Brasa, while demonstrating a commitment to leverage reduction, is successful in enhancing profitability and bolstering sales growth. This would result in leverage approaching the mid-4x area. This could occur if, for example, the company's EBITDA increases by about 19% and, at the same time, the company reduces its debt by about 5% from April 30, 2012 levels," S&P said. BUILDERS FIRSTSOURCE: Warburg Stake Slightly Up to 25.7% -------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Warburg Pincus Private Equity IX, L.P., and its affiliates disclosed that, as of June 19, 2012, they beneficially own 24,863,266 shares of common stock of Builders Firstsource, Inc., representing 25.7% of the shares outstanding. Warburg Pincus previously reported beneficial ownership of 24,613,907 common shares or a 25.5% equity stake as of March 26, 2012. On May 7, 2012 through June 19, 2012, WP IX acquired an aggregate of 249,359 shares of common stock for aggregate consideration of approximately $955,368. A copy of the amended filing is available for free at: http://is.gd/hf48B1 About Builders FirstSource Headquartered in Dallas, Texas, Builders FirstSource Inc. -- http://www.bldr.com/-- supplies and manufactures building products for residential new construction. The Company operates in 9 states, principally in the southern and eastern United States, and has 55 distribution centers and 51 manufacturing facilities, many of which are located on the same premises as its distribution facilities. Builders Firstsource reported a net loss of $64.99 million in 2011, a net loss of $95.51 million in 2010, and a net loss of $61.85 million in 2009. The Company's balance sheet at March 31, 2012, showed $495.31 million in total assets, $412.87 million in total liabilities, and $82.44 million in total stockholders' equity. * * * In April 2012, Standard & Poor's Ratings Services revised its outlook on Builders FirstSource Inc. to positive from negative. S&P also affirmed its 'CCC' corporate credit rating on the company. "The outlook revision reflects our assessment that Builders FirstSource's operating conditions are improving such that we now expect the building products manufacturer and distributor to post positive annual EBITDA for the first time since 2007, albeit at very low levels," said Standard & Poor's credit analyst James Fielding. "In our view, improved profitability will better position the company to refinance some of its expensive floating rate debt and possibly close its interest coverage shortfall over the next 12 months." CANYON PORT: Files for Chapter 11 Bankruptcy Protection ------------------------------------------------------- Canyon Port Holdings, fka as Canyon Supply and Logistics, filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Case No. 12-20314) on June 10, 2012,. U.S. Bankruptcy Judge Richard S. Schmidt presides over the case. Richard L. Fuqua II, Esq., at Fuqua & Associates PC, represents the Debtor. According to Mike D. Smith at caller.com, the Company listed 15 creditors with unsecured claims topping $1.9 million. The amount covers legal services, surveying, consultants, accounting and tax services. The highest amount is a $1 million loan from Allco, a construction management firm. The report relates the company indicated in its filing that it estimates money is available to distribute to unsecured creditors. The report notes an Oct. 15 hearing has been scheduled for Canyon to provide its reorganization plan. According to the report, Canyon wanted to buy the former base and the adjacent land from the Port of Corpus Christi to build Canyon Port, an offshore drilling service facility similar to what exists at Port Fourchon, La. Company officials had estimated the project would bring 2,000 jobs to the area. The report says the company began due diligence work on the property, including an environmental study and a wetlands study which resulted in a determination by the U.S. Army Corps of Engineers that some of the property being sold included wetlands. Canyon put down $1 million in earnest money for the project. Financing didn't come through for the rest of the company's $20 million down payment. The report relates Port commissioners canceled Canyon's exclusive contract in January, citing uncertainty about the company following a series of term extensions and two missed payment deadlines. The former naval base and adjacent property -- totaling about 815 acres -- are pending sale to Occidental Petroleum Corp. for the full appraised value of about $82 million. The report adds the Oxy purchase is within 60 days of closing. CENTRAL FEDERAL: Restructures $22.5-Mil. Common Shares Offering --------------------------------------------------------------- Central Federal Corporation announced the terms of a restructured registered common stock offering of up to $22.5 million, consisting of an $18.0 million rights offering and a $4.5 million offering to a group of standby purchasers. The Company also announced that the U.S. Department of Treasury has agreed that if the Company raises the maximum of the offering range, $22.5 million, it will allow the Company to redeem the Preferred Stock and warrant and forgive all accrued but unpaid dividends on the Preferred Stock issued in connection with the Troubled Asset Relief Program Capital Purchase Program for a total of $3.0 million, resulting in a discount of approximately $5.0 million. No redemption of the TARP Securities will occur if less than $22.5 million is raised in the stock offering. Redemption of the TARP Securities will also require regulatory approval. Under the terms of the restructured rights offering, all record holders of the Company's common stock as of a date to be determined will receive, at no charge, one subscription right for each share of common stock held as of the record date. Each subscription right will entitle the holder of the right to purchase 14.5329 shares of Company common stock at a subscription price of $1.50 per share. The rights offering will commence as soon as practicable after the Registration Statement is declared effective by the SEC. Any shares not subscribed for in the rights offering may be offered in a public offering. The Company has separately entered into a series of standby purchase agreements with a group of investors led by Timothy O'Dell, Thad R. Perry and Robert E. Hoeweler. Under the standby purchase agreements, the standby purchasers will acquire $4.5 million of Company common stock at a price of $1.50 per share, subject to certain conditions as detailed in the Registration Statement. About Central Federal Fairlawn, Ohio-based Central Federal Corporation (Nasdaq: CFBK) is the holding company for CFBank, a federally chartered savings association formed in Ohio in 1892. CFBank has four full-service banking offices in Fairlawn, Calcutta, Wellsville and Worthington, Ohio. The Company's balance sheet at March 31, 2012, showed $241.44 million in total assets, $232.21 million in total liabilities and $9.22 million in total stockholders' equity. Central Federal reported a net loss of $5.42 million in 2011, a net loss of $6.87 million in 2010, and a net loss of $9.89 million in 2009. Following the 2011 results, Crowe Horwath LLP, in Cleveland, Ohio, expressed substantial doubt about the Company's ability to continue as a going concern. The Company's auditors noted that the Holding Company and its wholly owned subsidiary (CFBank) are operating under regulatory orders that require among other items, higher levels of regulatory capital at CFBank. The Company has suffered significant recurring net losses, primarily from higher provisions for loan losses and expenses associated with the administration and disposition of nonperforming assets at CFBank. These losses have adversely impacted capital at CFBank and liquidity at the Holding Company. At Dec. 31, 2011, regulatory capital at CFBank was below the amount specified in the regulatory order. Failure to raise capital to the amount specified in the regulatory order and otherwise comply with the regulatory orders may result in additional enforcement actions or receivership of CFBank. Regulatory Matters On May 25, 2011, Central Federal Corporation and CFBank each consented to the issuance of an Order to Cease and Desist (the Holding Company Order and the CFBank Order, respectively, and collectively, the Orders) by the Office of Thrift Supervision (OTS), the primary regulator of the Holding Company and CFBank at the time the Orders were issued. The Holding Company Order required it, among other things, to: (i) submit by June 30, 2011, a capital plan to regulators that establishes a minimum tangible capital ratio commensurate with the Holding Company's consolidated risk profile, reduces the risk from current debt levels and addresses the Holding Company's cash flow needs; (ii) not pay cash dividends, redeem stock or make any other capital distributions without prior regulatory approval; (iii) not pay interest or principal on any debt or increase any Holding Company debt or guarantee the debt of any entity without prior regulatory approval; (iv) obtain prior regulatory approval for changes in directors and senior executive officers; and (v) not enter into any new contractual arrangement related to compensation or benefits with any director or senior executive officer without prior notification to regulators. The CFBank Order required CFBank to have by Sept. 30, 2011, and maintain thereafter, 8% Tier 1 (Core) Capital to adjusted total assets and 12% Total Capital to risk weighted assets. CFBank will not be considered well-capitalized as long as it is subject to individual minimum capital requirements. CFBank did not comply with the higher capital ratio requirements by the Sept. 30, 2011 required date. CHOICE HOTELS: S&P Cuts CCR to 'BB+' on Dividend Recapitalization ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Silver Spring, Md.-headquartered Choice Hotels International Inc. to 'BB+' from 'BBB'. The outlook is stable. "We assigned the company's proposed $400 million senior unsecured notes due 2022 our 'BB' issue-level rating (one notch below the corporate credit rating) and our '5' recovery rating, reflecting our expectation of modest (10% to 30%) recovery for lenders in the event of a payment default. We assumed that Choice would complete a $350 million senior secured credit facility as indicated in the notes offering memorandum, and we incorporated this priority debt into our recovery analysis on the notes," S&P said. "We lowered our issue-level rating on Choice's existing $250 million senior unsecured notes due 2020 to 'BB+' from 'BBB' to reflect recovery prospects for these notes under Choice's current capital structure, and placed the rating on CreditWatch with negative implications. At the same time, we assigned our '4' recovery rating to the existing notes, reflecting our expectation of average (30% to 50%) recovery for lenders in the event of a payment default. Upon the completion of the transactions, we expect to lower this rating to 'BB' and lower our recovery rating to '5' for these notes," S&P said. "The downgrade reflects Choice's plan to pay a significant $600 million debt-financed special dividend to shareholders, which signals management's willingness to drive balance sheet leverage above the company's stated financial policy goal and in line with a 'BB+' rating over the intermediate term. Following the completion of the planned debt transactions and the dividend payment, we believe our measure of lease adjusted debt to EBITDA is likely to be just above 4x and funds from operations (FFO) to total adjusted debt will be in the mid-teens percentage area through 2013. These measures are in line with our thresholds for the current rating, of debt to EBITDA between 4.5x and 3.75x and FFO to total debt of 15% to 20%," S&P said. "These credit measures are also in line with an 'aggressive' financial risk profile, according to our criteria; as a result, we have lowered our financial risk assessment to aggressive from 'intermediate'. Expected credit measures compare to total adjusted debt to EBITDA of 1.7x and FFO to total adjusted debt of 40% as of March 2012 (prior to the planned dividend). We expect EBITDA coverage of interest expense to decline to the mid-to-high 4x area in 2012 and 2013 from 16x at March 2012. Partly offsetting the deterioration in the company's financial risk profile is an 'adequate' liquidity profile and a 'satisfactory' business risk profile, according to our criteria," S&P said. "Our assessment of Choice's business risk profile as satisfactory is based on Choice's large and diverse base of franchised hotels that operate under several different brands, a low capital intensive franchise business model with relatively stable operating cash flow. The cyclical nature of the lodging industry tempers the factors," S&P said. The rating incorporates these operating performance and financial policy expectations: S&P expects U.S. revenue per available room (RevPAR) to increase 5% to 7% in 2012 and in the mid-single digits area in 2013, and that the supply of U.S. hotels rooms will increase less than 1% in 2012 and around 1% in 2013. Macroeconomic drivers of S&P's U.S. RevPAR growth expectations are GDP and consumer spending growth estimates of about 2% in 2012 and 2013, and S&P 500 operating earnings growth of 6% in 2012 and 9% in 2013. Given current good (albeit moderating) demand patterns and increasing occupancy rates across the U.S. lodging industry, S&P believes lodging operators, including Choice, should benefit from pricing power in the U.S. well into 2013, absent an economic shock. Choice expects domestic new unit growth to be about flat in 2012. S&P has incorporated into the current rating that Choice's RevPAR will increase 5% in 2012 and 4% in 2013. S&P expects EBITDA to increase in the high-single-digit area this year and in the mid single digit area in 2013. S&P believes that Choice is stretching leverage higher than its financial policy range of debt to EBITDA of 3.0x to 3.5x primarily because the company believes RevPAR will grow over the next several years. This would give the company the opportunity to reduce balance sheet leverage over time to within its financial policy range, S&P said. However, S&P's current rating incorporates its belief that Choice will take advantage of a good expected RevPAR environment to make a significant level of investments to grow its brands, and that meaningful leverage reduction could be two or more years away. "Choice is one of the largest hotel franchisers in the U.S., with more than 5,000 properties and 392,877 rooms as of March 2012. Its lodging franchise system consists of 10 hotel chains: Comfort- branded hotels, 40% of Choice's domestic rooms; Quality Inn, 23%; EconoLodge, 12%; Sleep Inn, 7%; Clarion, 7%; Rodeway, 6%; Suburban Extended Stay Hotel, 2%; MainStay Suites, less than 1%; Cambria Suites, less than 1%; and the Ascend Collection, less than 1%. Its brands are primarily economy- and midscale-oriented, with good geographic and customer (franchisee) diversity. Choice augments its revenues by adding rooms to its system through brand conversions and newly constructed hotels. In the current environment, we expect room growth to stem primarily from conversions. Choice's franchise business model is less susceptible to fluctuations in the business cycle than a hotel ownership model," S&P said. "Based on its likely sources and uses of cash over the next 12 to 18 months and incorporating our performance expectations, Choice has a adequate liquidity profile, according to our criteria," S&P said. Relevant elements of Choice's liquidity profile include: "We expect sources of liquidity (including cash and facility availability) to exceed uses by 1.2x or more," S&P said. "We expect net sources would be positive even with a 15% drop in EBITDA," S&P said. "Compliance with proposed maintenance covenants would survive a 15% drop in EBITDA, in our view," S&P said. "The company has good relationships with its banks, in our assessment, and has a satisfactory standing in the credit markets," S&P said. "Choice's primary source of liquidity is internally generated cash flow, cash balances, and revolver availability. We expect it to generate over $100 in free cash flow in 2012 compared to $124 million in 2011. The reduction is from higher expected interest expense from the proposed transactions. At March 2012, cash balances were $91 million. Over the next two years, we anticipate that Choice will have adequate revolver availability (terms under the company's proposed credit facility are not finalized)," S&P said. "Choice's stated priorities for using free cash flow are investing in new franchise development, especially for the Cambria brand, and returning value to shareholders through a combination of dividend payments and share repurchases. The company's current annual dividend is about $45 million (in addition to the announced special dividend). Choice repurchased $51 million in common stock in 2011 and $20 million so far in 2012. We believe Choice is likely to forego meaningful share repurchases this year and in 2013 to focus on investment spending, possibly at significantly higher levels than in recent years," S&P said. "The stable outlook reflects our expectation that credit measures will be in line with the current 'BB+' rating through at least 2013. We believe Choice is likely to forego meaningful share repurchases this year and in 2013, but is unlikely to pursue meaningful debt reduction until after 2013 to focus on investment spending in 2012 and 2013, possibly at significantly higher levels than in recent years," S&P said. "Rating downside is limited at this time because we expect RevPAR growth over the next two years, and believe Choice is likely to pursue some level of debt reduction in future periods. However, it may take a few years for Choice to reduce leverage to within its desired leverage range of 3.0x to 3.5x; as a result, rating upside is unlikely over the near term. We could raise our rating if we believe Choice will sustain debt to EBITDA below 3.75x and FFO to debt in the low- to mid-20% range within the subsequent six to 12 months," S&P said. CITY NATIONAL: Preston Pinkett Discloses 11.3% Equity Stake ----------------------------------------------------------- Preston D. Pinkett, III's beneficial ownership of common shares of City National Bancshares Corporation increased by 1% to a 11.3% beneficial ownership as of June 19, 2012. The increase stems from additional shares to which Mr. Pinkett became entitled under his employment agreement dated as of Nov. 1, 2011. In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Mr. Pinkett disclosed that, as of June 19, 2012, he beneficially owns 16,697 shares of common stock of City National Bancshares. Mr. Pinkett previously reported beneficial ownership of 14,998 common shares or a 10.3% equity stake as of May 19, 2012. Mr. Pinkett is the President and Chief Executive Officer of City National Bancshares and its subsidiary City National Bank of New Jersey. He is also a director of the Company. A copy of the amended filing is available for free at: http://is.gd/jNyvbI About City National Bancshares Newark, New Jersey-based City National Bancshares Corporation is a New Jersey corporation incorporated on Jan. 10, 1983. City National Bank, a wholly-owned subsidiary of CNBC, is a national banking association chartered in 1973 under the laws of the United States of America and has one subsidiary, City National Investments, Inc., an investment company which holds, maintains and manages investment assets for CNB. CNB provides a wide range of retail and commercial banking services through its retail branch network, although the primary focus is on establishing commercial and municipal relationships. The Company reported a net loss of $3.67 million in 2011, a net loss of $7.45 million in 2010, and a net loss of $7.82 million in 2009. The Company's balance sheet at Dec. 31, 2011, showed $358.44 million in total assets, $338.67 million in total liabilities and $19.77 million in total stockholders' equity. KPMG LLP, in Short Hills, New Jersey, issued a "going concern" qualification on the consolidated financial statements for the period ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and has entered into a consent order with the Office of the Comptroller of the Currency that raise substantial doubt about its ability to continue as a going concern. CIRCLE STAR: Extends Wevco Agreement Closing Date to Sept. 28 ------------------------------------------------------------- Circle Star Energy Corp. entered into the Second Amendment to Leasehold Purchase Agreement extending the closing date from May 31, 2012, until Sept. 28, 2012, of its previously reported purchase agreement with Wevco Production, Inc., for all of Wevco's rights, title, and working interest in and to certain oil and gas leases, containing up to 64,575 net acres, more or less, situated in Gove and Trego Counties, Kansas. Pursuant to the Second Amendment, the Company paid Wevco a non- refundable $100,000 extension fee on June 13, 2012, and will issue 600,000 shares of common stock of the Company to Wevco. If the purchase price of $5,000,000 is paid on or before the Closing Date then the June Extension Price will be credited towards the Purchase Price. To date, including the June Extension Price, $500,000 has been credited towards the Purchase Price. On April 24, 2012, the Company entered into an amendment to the Purchase Agreement extending the closing date from April 30, 2012, until May 31, 2012, and the Company paid Wevco a non-refundable $100,000 extension fee. A copy of the Second Amendment is available for free at: http://is.gd/AqqOS5 About Circle Star Houston, Tex.-based Circle Star Energy Corp. owns royalty, leasehold, operating, net revenue, net profit, reversionary and other mineral rights and interests in certain oil and gas properties in Texas. The Company's properties are in Crane, Scurry, Victoria, Dimmit, Zavala, Grimes, Madison, Robertson, Fayette, and Lee Counties. The Company's balance sheet at Jan. 31, 2012, showed $3.91 million in total assets, $6.75 million in total liabilities and a $2.84 million total stockholders' deficit. The Company said in its quarterly report for the period ended Jan. 31, 2012, that there is substantial doubt about its ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon continued financial support from the Company's shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company can give no assurance that future financing will be available to it on acceptable terms if at all or that it will attain profitability. These factors raise substantial doubt about the Company's ability to continue as a going concern. CLEARWIRE CORP: Withdraws Plan to Surrender 77MM Class B Shares --------------------------------------------------------------- As previously disclosed, on June 1, 2011, Sprint Nextel Corporation notified Clearwire Corporation of its election to surrender 77,413,434 shares of Class B Common Stock of Clearwire to reduce its voting interest in Clearwire. In a letter dated June 8, 2012, Sprint exercised its right to revoke the share surrender in exchange for the payment to Clearwire of $7,741. The Class B Common Stock was reissued to Sprint in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(2) of the Securities Act. About Clearwire Corporation Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR) -- http://www.clearwire.com/-- through its operating subsidiaries, is a provider of 4G mobile broadband network services in 68 markets, including New York City, Los Angeles, Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C., Atlanta and Boston. The Company reported a net loss attributable to the Company of $717.33 million in 2011, a net loss attributable to the Company of $487.43 million in 2010, and a net loss attributable to the Company of $325.58 million in 2009. The Company's balance sheet at March 31, 2012, showed $8.89 billion in total assets, $5.71 billion in total liabilities and $3.17 billion in total stockholders' equity. * * * As reported by the TCR on Nov. 25, 2011, Standard & Poor's Ratings Services lowered its corporate credit and senior secured first- lien issue-level ratings on Bellevue, Wash.-based wireless provider Clearwire Corp. to 'CCC' from 'CCC+'. "The downgrade reflects our concerns that the company may choose to skip its $237 million of interest payments due on Dec. 1, 2011," explained Standard & Poor's credit analyst Allyn Arden. "With about $698 million of cash on the balance sheet, Clearwire has sufficient funds to pay the remaining interest expense due in 2011, although Standard & Poor's believes that it would still have to raise significant capital to maintain operations in 2012 despite the cost-reduction measures it has already achieved. If Clearwire elected to make the interest payment, we believe that it would exit 2011 with around $350 million to $400 million in cash, which assumes less than $100 million of capital expenditures and EBITDA losses. We do not believe that this cash balance will be sufficient to cover free operating cash flow (FOCF) losses and a Long-Term Evolution (LTE) wireless network overlay in 2012 and that the company will require additional funding during the year." COMMUNITY HEALTH: Moody's Affirms 'B1' CFR/PDR; Outlook Stable -------------------------------------------------------------- Moody's Investors Service changed the rating outlook for CHS/Community Health Systems, Inc. to stable from negative. Moody's also affirmed the ratings of Community Health, including the B1 Corporate Family and Probability of Default Ratings. Community Health's SGL-1 Speculative Grade Liquidity Rating remains unchanged. "The stable outlook reflects our expectation that Community Health will maintain strong margins while integrating recently acquired facilities and investing in ongoing capital projects," said Dean Diaz, a Senior Credit Officer at Moody's. "While exposure to ongoing investigations remains a risk, we do not expect it to detrimentally affect Community Health's very good liquidity position in the near term," continued Diaz. Following is a list of ratings affirmed and LGD assessments revised. Senior secured revolving credit facility expiring 2016, to Ba3 (LGD 3, 30%) from Ba3 (LGD 3, 32%) Senior secured term loan A due 2016, to Ba3 (LGD 3, 30%) from Ba3 (LGD 3, 32%) Senior secured term loan B due 2014, to Ba3 (LGD 3, 30%) from Ba3 (LGD 3, 32%) Senior secured term loan B due 2017, to Ba3 (LGD 3, 30%) from Ba3 (LGD 3, 32%) 8.875% senior notes due 2015, to B3 (LGD 5, 84%) from B3 (LGD 5, 85%) 8.0% senior notes due 2019, to B3 (LGD 5, 84%) from B3 (LGD 5, 85%) Corporate Family Rating, B1 Probability of Default Rating, B1 Ratings Rationale Community Health's B1 Corporate Family Rating reflects Moody's expectation that leverage will remain high and interest expense coverage will continue to be modest. Furthermore, Moody's anticipates that the opportunity to reduce leverage with free cash flow will be constrained in the near term given the company's investment in capital spending related to replacement hospitals and information technology. Moody's also expects the company to actively pursue acquisitions. However, supporting the rating is Moody's acknowledgement of Community Health's scale and market strength, which should help the company weather unfavorable trends in bad debt expense and weak volumes that continue to affect the industry as a whole. Moody's anticipates that the company will continue to see stable margin performance and maintain very good liquidity. Community Health's stable rating outlook reflects Moody's expectation that the company will be able to maintain margins through focus on cost management and improvements at recently acquired facilities. Moody's expects that the company will remain disciplined about the use of additional leverage for acquisition opportunities. Further, Moody's anticipates that the company's liquidity will remain strong despite investments in replacement hospitals and concerns around ongoing investigations and litigation. Moody's could upgrade the ratings if financial leverage is materially reduced and cash flow coverage of debt metrics improve. Specifically, if Community Health is able to achieve and sustain adjusted debt to EBITDA below 4.0 times, Moody's could upgrade the ratings. This level reflects the need to see additional cushion in these metrics to absorb potential negative developments given the absence of further clarity around the outcome of ongoing litigation and investigations. A significant debt financed acquisition or adverse developments related to ongoing investigations or litigation could result in a downgrade of the ratings. Additionally, the company's inability to continue to manage headwinds in the industry or Moody's expectation that debt to EBITDA would be sustained above 5.0 times could result in a downgrade. This could result from declining adjusted admission trends and unfavorable reimbursement or pricing trends impacting net revenue growth, greater than expected increases in bad debt expense, or aggressive acquisition activity. The principal methodology used in rating CHS/Community Health Systems, Inc. was the Global Healthcare Service Providers Industry Methodology published in December 2011. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. COMPETITIVE TECHNOLOGIES: To Issue 420,000 Shares to Officers ------------------------------------------------------------- Competitive Technologies, Inc., filed with the U.S. Securities and Exchange Commission a Form S-8 registering 420,000 shares of common stock issuable in lieu of directors' fees, executive compensation and for legal services. A copy of the filing is available for free at http://is.gd/EakAmh About Competitive Technologies Fairfield, Conn.-based Competitive Technologies, Inc. (OTC QX: CTTC) -- http://www.competitivetech.net/-- was established in 1968. The Company provides distribution, patent and technology transfer, sales and licensing services focused on the needs of its customers and matching those requirements with commercially viable product or technology solutions. Sales of the Company's Calmare(R) pain therapy medical device continue to be the major source of revenue for the Company. After auditing the 2011 results, Mayer Hoffman McCann CPAs, in New York, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has incurred operating losses since fiscal year 2006. The Company reported a net loss of $3.59 million in 2011. The Company reported a net loss of $2.40 million on $163,993 of product sales for the five months ended Dec. 31, 2010. The Company's balance sheet at March 31, 2012, showed $4.66 million in total assets, $6.82 million in total liabilities, all current, and a $2.15 million total shareholders' deficit. CONSOLIDATED CONTAINER: Moody's Confirms B2 CFR, Rates New Debt --------------------------------------------------------------- Moody's Investors Service confirmed the B2 Corporate Family Rating, other instrument ratings and stable outlook of Consolidated Container Company LLC ("CCC") and concluded the review initiated on May 31, 2012. Additional instrument ratings are given below. The review was triggered by CCC's announcement that it will be acquired by affiliates of Bain Capital Partners LLC. Bain will acquire CCC for approximately $800 million including estimated fees and expenses. Moody's also assigned ratings to the acquisition financing which includes a $370 million term loan and $250 million senior unsecured notes. Bain is expected to make a $180 million common equity contribution which will not have a liquidation preference, dividend, or accretion. The credit facilities also include a new $125 million asset-based revolver (not rated by Moody's) which is expected to be undrawn at the close of the transaction. The transaction is expected to close during the third quarter of 2012. Moody's took the following actions: - Confirmed B2 Corporate Family Rating - Confirmed B2 Probability of Default Rating - Confirmed $390 million PP&E term loan facility due 2014 B1 (LGD 3, 39%) (To be withdrawn after transaction closes) - Confirmed $250 million second lien term loan due 2014 Caa1 (LGD 5, 79%) (To be withdrawn after transaction closes) - Assigned $370 million Senior Secured Term Loan due 2019 B1 (LGD 3-37%) - Assigned $250 million Senior Unsecured Notes due 2020 Caa1 (LGD 5-83%) The ratings outlook is stable. Ratings Rationale The confirmation of the B2 Corporate Family Rating and stable outlook reflect proforma credit metrics that are weak for, but still within the rating category, an expectation of an improvement in operating performance, management's pledge to direct all free cash flow to debt reduction, and good liquidity. CCC should benefit from already contracted higher margin new business and previously completed and ongoing cost-cutting and productivity initiatives over the rating horizon. Additionally, CCC has limited business up for renewal over the rating horizon. The new ultimate holding company will be structured a C corporation which will require CCC to begin to pay taxes, but the company is expected to benefit from a tax shield from the asset step-ups. However, CCC is weakly positioned in the rating category with little room for negative operating variance and will need to execute on its plan in order to maintain its current rating. The ratings could be downgraded if credit metrics or liquidity deteriorate or if there is a deterioration in the operating and competitive environment. Specifically, the ratings could be downgraded if debt to EBITDA rises above 6.0 times, EBIT to interest coverage falls below 1.3 times, the EBIT margin declines below 7.5% and/or free cash flow to debt does not improve to the mid single digits. A ratings upgrade is unlikely in the near term given the recent LBO and stretched credit metrics. The ratings could be upgraded if CCC improved its credit metrics while maintaining an adequate level of capital expenditures and good liquidity on a sustained basis within the context of a stable competitive and operating environment. Specifically, the ratings could be upgraded if debt to EBITDA declined below 5.0 times, the EBIT margin remains above 8.0%, EBIT to interest coverage rises above 1.8 times, and free cash flow to debt improves to above 9.5%. The principal methodology used in rating Consolidated container Company LLC was the Global Packaging Manufacturers: Metal, Glass, and Plastic Containers Industry Methodology published in June 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. Based in Atlanta, Georgia, Consolidated container Company LLC ("CCC") is a domestic developer, manufacturer and marketer of rigid plastic containers for mostly branded consumer products and beverage companies. End markets include the dairy, water, other beverage (juice, teas), food, household chemical, automotive, agricultural, and industrial chemical sectors. Dairy is the largest end market accounting for approximately 36% of sales in 2011. Approximately 97% of 2011 revenue was generated domestically. Revenues for the twelve months ended March 31, 2012 were approximately $739 million. CONTRACT RESEARCH: Sale to Freeport-Led Group Completed ------------------------------------------------------- Cetero Research disclosed the completion of a major milestone in its reorganization efforts. Following the company filing for reorganization under Chapter 11 and the U.S. District Bankruptcy Court's approval of the sale of Cetero to its investor group, led by Freeport Financial, the sale of the company was finalized on June 20, 2012. Over recent months, Cetero has engaged with lenders and stakeholders to plan a growth-filled future for the company. As a first step in this process, the board of directors has named three executive appointments to lead operational, financial and new business initiatives. James Carlson, Pharm.D, has been named Chief Executive Officer, based on his extensive background in the Phase I research space and reputation for entrepreneurial leadership. Dr. Carlson is a life science industry veteran with more than 30 years of experience in early phase research. He co-founded and served as CEO of a legacy operation of Cetero Research, based in Fargo, ND, from 1983 to 2006, where he oversaw the conduct of more than 450 studies per year across a wide range of therapeutic indications and study types. A 250,000 square-foot clinical pharmacology unit with specialization in cardiac safety and healthy participants for bioavailability, bioequivalence, preclinical and clinical dermatology studies, this facility is the largest Phase I unit in the world. As part of the new ownership structure, the company's headquarters will move from Cary, NC, to Fargo, ND, and the company has been renamed PRACS Institute. Mark Ubert, CPA, MBA, has been named Chief Financial Officer. Mr. Ubert joined Cetero in 2009 as corporate controller, bringing extensive experience in financial leadership, corporate treasury, mergers and acquisitions, accounting and operational performance improvement within the life science and healthcare industries. In his new position, Mr. Ubert is responsible for the overall financial operations of the company, including corporate finance, treasury, financial planning and analysis, tax, accounting internal audit and risk management. John Pottier has been named Executive Vice President, Business Development. With more than 20 years of industry experience, Mr. Pottier brings significant expertise in early phase clinical knowledge and R&D business requirements. Joining PRACS from Worldwide Clinical Trials, Mr. Pottier previously served in business development roles at Novum Research, Cetero Research and PRACS Institute, Ltd., after beginning his career at the Clinical Research Foundation, now part of Quintiles Transnational. "This is an exciting time for our new company. We have a lot of work ahead of us, and we look forward to strengthening our organization and integrating service offerings," said Dr. Carlson. "We will continue to uphold the company's commitment to the delivery of reliable, quality data and on-time study results, as well as the safety of our study participants," he added. As biopharmaceutical companies seek new ways to help manage drug costs and navigate the rising complexity of early phase development, sponsors are starting to rely more heavily on niche providers like PRACS, who is well positioned to serve the generic, innovator and dermatology markets. PRACS has the flexibility and capacity to accommodate the expected increase of bioavailability and bioequivalence studies following near-term patent expirations. About PRACS Institute A leading early-phase contract research organization, PRACS has conducted more than 20,000 clinical pharmacology studies ƒ"EUR more than any other CRO. With facilities across North America, PRACS offers flexible, quality clinical development services in a range of therapeutic areas. About Freeport Financial Founded in 2004 by a group of experienced corporate finance and capital markets professionals, Freeport Financial is a leading provider of capital and leveraged finance solutions to middle market companies. About Cetero Contract Research Solutions Inc., doing business as Cetero, a provider of early-phase clinical research services for pharmaceutical and biotechnology firms, filed a Chapter 11 petition (Bankr. D. Del. Case No. 12-11004) on March 26, 2012. Cetero's 19 affiliates also sought bankruptcy protection (Bankr. D. Del. Case Nos. 12-11005 to 12-11023). Cetero plans to sell the business, including their rights to pursue avoidance actions, to first-lien secured lenders in exchange for $50 million in debt, absent higher and better offers. Cetero has filed a motion seeking approval of procedures that will govern the bidding and auction. The first-lien lenders have formed entities that will acquire the business -- CSRI Holdings LLC, as U.S. Purchaser, and 0935867 B.C. Ltd and 0935870 B.C. Ltd, as Canadian Purchasers. Together, they will serve as stalking horse bidders and have offered to exchange $50 million in secured debt and assume $30 million in liabilities to buy the assets. First lien lenders are also providing a $15 million loan to finance the Chapter 11 effort. Assets are $205 million, with debt total $248 million. There is $185 million in debt for borrowed money, including $116 million on a first-lien term loan and revolving credit. The second-lien loan is $25 million. Second-lien lenders have agreed to the sale. Freeport Financial LLC serves as the sole lead arranger and bookrunner, and as U.S. administrative agent and collateral agent under the first lien facility. Bank of Montreal serves as the Canadian agent. Freeport is also the agent under the second lien facility. Judge Kevin Gross oversees the case. Lawyers at Young Conaway Stargatt & Taylor, LLP, and Paul Hastings LLP serve as the Debtors' counsel. Stikeman Elliott LLP serves as Canadian counsel. Carl Marks Advisory Group LLC serves as restructuring advisor. Epiq Bankruptcy Solutions serves as claims and notice agent. The petitions were signed by Michael T. Murren, CFO. The first lien lenders and the stalking horse buyers are represented by Peter Knight, Esq., at Latham & Watkings, LLP; and Wael Rostom, Esq., at McMillan LLP. Roberta A. Deangelis, U.S. Trustee for Region 3 appointed three persons to the Official Committee of Unsecured Creditors in the Chapter 11 cases of Contract Research Solutions, Inc., et al. DAVIS-RODWELL: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------- Davis-Rodwell TMC LLC filed for Chapter 11 bankruptcy protection (Bankr. E.D.N.C. Case No. 12-04499) on June 18, 2012. Judge Randy D. Doub presides over the case. William P. Janvier, Esq., at Janvier Law Firm, PLLC, represents the Debtor. A meeting of creditors 341(a) meeting is slated for July 24, 2012, at 10:00 a.m., at Raleigh 341 Meeting Room. The last day to file complaint is July 24. Proofs of claim are due by Oct. 22. Government proofs of claim due by Dec. 17. The Company must file a chapter 11 plan and disclosure statement by Sept. 17, 2012. Status hearing is set for July 23. According to Chris Bagley at Triangle Business Journal, the filing came amid stalled plans to build residential condominiums along the edge of Research Triangle Park. Davis-Rodwell cited liabilities of $10 million to $50 million and assets of $1 million to $10 million on the Chapter 11 petition. The report notes Davis-Rodwell TMC LLC is controlled by local developer Craig Davis. The report also relates the petition shows Wilmington investor Roy Rodwell, one of the company's owners, is also its largest unsecured creditor, with a $4.8 million claim. The report, citing Durham County property records, says the company owns 32 acres along Davis Drive, with an assessed value of about $3.9 million. Mr. Davis and other developers had planned to build a $300 million complex there and at a neighboring site, paying at least $15 million for more than 150 total acres. It was initially known as "Triangle Metro Center;" though the owners had more recently marketed it as "Davis Park." The report adds Regional transportation officials were planning a station nearby for a commuter-rail line that could eventually link Durham and Raleigh. But the rail project has remained in limbo for years. It needs voter approval in Wake County, where a local sales tax would be needed to fund its construction. The report says another entity partially owned by Davis sold 93 acres in the assemblage to a Florida company last summer for $6.9 million. DDR CORP: Fitch Rates $300-Mil. Senior Unsecured Notes at 'BB+' --------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to the $300 million aggregate principal amount 4.625% senior unsecured notes due 2022 issued by DDR Corp. (NYSE: DDR). The notes were priced at 98.104% of par to yield 4.865% to maturity, or 325 basis points over the benchmark treasury rate. Net proceeds from the offering of $291.7 million are expected to be used to fund the redemption of approximately $223.5 million of 5.375% senior unsecured notes due 2012, along with general corporate purposes. Fitch currently rates DDR as follows: -- Long-term IDR 'BB+'; -- $815 million unsecured revolving credit facilities 'BB+'; -- $250 million unsecured term loans 'BB+'; -- $1.6 billion senior unsecured notes 'BB+'; -- $310.2 million senior unsecured convertible notes 'BB+'; -- $375 million preferred stock 'BB-'. The Rating Outlook is Stable. The 'BB+' IDR reflects: -- Sustained improving fundamentals across DDR's retail property portfolio; -- A largely prime asset base that exhibits a manageable lease expiration schedule and a granular tenant roster; -- An established joint venture platform that provides earnings diversification; -- Solid liquidity position; and -- Strong management team. The rating is balanced by leverage and unencumbered asset coverage ratios consistent with a 'BB+' IDR. Fundamentals are solid. During first-quarter 2012 (1Q'12), leasing spreads including new leases and renewals increased by 5.5% on a blended basis, after increasing by 6.1% for full-year 2011. DDR's same-store net operating income (NOI) increased by 2.9% in 1Q'12 and 3.5% for full-year 2011. These figures are reflective of strong locations and tenant demand. Fitch anticipates that demand will remain strong and drive low-single- digit same-store NOI growth over the next 12-to-24 months. DDR's fixed charge coverage ratio (recurring operating EBITDA including recurring cash distributions from unconsolidated entities less recurring capital expenditures and straight-line rent adjustments divided by interest incurred and preferred dividends) was 1.8 times (x) in 1Q'12 pro forma for the forward equity offering to fund DDR's interest in the EDT Retail Portfolio and the offering of 4.625% senior unsecured notes due 2022. Fixed- charge coverage was 1.7x in 2011 and 1.6x in 2010. Fitch anticipates coverage to approach 2.0x over the next 12-to-24 months due to positive leasing spreads and earnings from the lease up of construction-in-progress. This is solid for a 'BB+' rating. If same-store NOI declines are consistent with DDR's performance in 2009 (a scenario Fitch deems unlikely), fixed charge coverage could approach 1.5x. This would be weak for a 'BB' rating. In 1Q'12, 89% of the company's NOI was generated from prime assets compared with 70% in 1Q'09. These prime properties are largely in market-dominant locations within areas that have strong household income profiles and dense populations. Across the entire portfolio, DDR has a manageable lease expiration schedule as of March 31, 2012. 9.2% of leases are expiring during the remainder of 2012 and 11.9% expiring in 2013. In addition, DDR's top five tenants contribute modestly toward revenues and include: -- Walmart (IDR of 'AA' with a Stable Outlook by Fitch) at 3.2%; -- TJX Companies at 2.1%; -- PetSmart at 1.9%; -- Bed Bath & Beyond at 1.9%; and -- Kohl's (IDR of 'BBB+' with a Stable Outlook by Fitch) at 1.8%. DDR has a deep JV franchise that provides supplementary revenue via common and preferred equity returns along with fee income. In January 2012, affiliates of DDR and The Blackstone Group L.P. (IDR of 'A+' with a Stable Outlook) formed a JV to acquire 46 shopping centers known as the EDT Retail Portfolio for $1.4 billion, including assumed debt of $640 million. DDR raised common equity through a 19 million forward offering and will use the net proceeds to purchase a 5% common equity stake and $150 million 10% dividend preferred equity stake in the Blackstone JV. Broadly, the JV platform provides recurring cash distributions coupled with fee income. The 4.625% senior notes due 2022 improve DDR's liquidity profile. As of March 31, 2012, pro forma for the forward equity offering and unsecured bond issuance, base case liquidity coverage (calculated as sources of liquidity divided by uses of liquidity) is 1.3x for April 1, 2012 through Dec. 31, 2013. Sources of liquidity include unrestricted cash and availability under DDR's revolving credit facilities pro forma for the forward equity offering. Other sources include unsecured bond issuance along with projected retained cash flows from operating activities. Uses of liquidity include pro rata debt maturities and projected recurring capital expenditures. DDR has a staggered debt maturity schedule. As of March 31, 2012 pro forma for the unsecured bond issuance, 6.9%, 10.4% and 7.9% of pro rata debt matures during the remainder of 2012, full-year 2013 and full-year 2014, respectively. Leverage is consistent with a 'BB+' rating. Net debt to 1Q'12 annualized recurring operating EBITDA including recurring cash distributions from unconsolidated entities was 8.3x. This compares with 8.2x at Dec. 31, 2011 and 8.6x at Dec. 31, 2010. Retained cash flow used to repay debt has contributed towards leverage reductions. Pro forma for the forward equity offering and unsecured bond issuance, leverage would be 7.9x and improving fundamentals will sustain leverage between 7.0x and 8.0x over the next 12-24 months. If same-store NOI declines are consistent with DDR's performance in 2009 (a scenario Fitch deems unlikely), leverage could increase to approximately 8.5x. This would be appropriate for a 'BB' rating. DDR has solid access to capital. However, contingent liquidity is appropriate for the 'BB+' IDR. Unencumbered assets (unencumbered NOI for the trailing 12 months ended March 31, 2012 divided by a stressed capitalization rate of 8%) to unsecured debt was 1.6x. However, retained cash flow as well as new unsecured debt used to repay secured debt should result in improving unencumbered asset coverage. In addition, the covenants under DDR's credit agreements do not restrict financial flexibility. The two-notch differential between DDR's IDR and preferred stock rating is consistent with Fitch's criteria for corporate entities with an IDR of 'BB+'. As per Fitch's report, 'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis', these preferred securities are deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default. The Stable Outlook reflects Fitch's view that fixed charge coverage will approach 2.0x and leverage will remain below 8.0x. Base case liquidity coverage will remain above 1.0x as DDR maintains strong borrowing capacity under its revolving credit facility. The following factors may have a positive impact on DDR's Outlook: -- Fixed charge coverage sustaining above 2.0x (1Q'12 pro forma fixed charge coverage was 1.8x); -- Net debt to recurring operating EBITDA sustaining below 7.5x (pro forma leverage was 7.9x); -- A sustained base case liquidity coverage ratio of above 1.0x (pro forma base case liquidity coverage was 1.3x for April 1, 2012 to Dec. 31, 2013). The following factors may have a positive impact on DDR's rating: -- Fixed charge coverage sustaining above 2.0x as noted above; -- Leverage sustaining below 7.0x; -- Unencumbered asset coverage of unsecured debt sustaining above 2.0x (unencumbered assets - valued as unencumbered NOI for the trailing 12 months ended March 31, 2012 divided by a stressed capitalization rate of 8% - to unsecured debt was 1.6x). The following factors may have a negative impact on DDR's ratings and Outlook: -- Fixed charge coverage sustaining below 1.8x; -- Net debt to recurring operating EBITDA sustaining above 8.5x; -- Reductions in liquidity coverage. DENNY'S CORP: Adopts Pre-Arranged Stock Trading Plan ---------------------------------------------------- Denny's Corporation announced the adoption of a pre-arranged stock trading plan for the purpose of repurchasing a limited number of the Company's common stock in accordance with guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934 and the Company's policies regarding stock transactions. This plan has been established in accordance with, and as a part of, the Company's stock repurchase programs previously announced on April 4, 2011, and May 18, 2012. Repurchases under the Company's 10b5-1 plan will be administered through an independent broker. The plan will cover the repurchase of shares commencing no earlier than June 18, 2012, and expiring Sept. 14, 2012. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. About Denny's Corporation Based in Spartanburg, South Carolina, Denny's Corporation (NASDAQ: DENN) -- http://www.dennys.com/-- Denny's is one of America's largest full-service family restaurant chains, consisting of 1,348 franchised and licensed units and 232 company-owned units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. The Company said in its annual report for the year ended Dec. 28, 2011, that as the Company is heavily franchised, its financial results are contingent upon the operational and financial success of its franchisees. The Company receives royalties, contributions to advertising and, in some cases, lease payments from its franchisees. The Company has established operational standards, guidelines and strategic plans for its franchisees; however, the Company has limited control over how its franchisees' businesses are run. While the Company is responsible for ensuring the success of its entire chain of restaurants and for taking a longer term view with respect to system improvements, the Company's franchisees have individual business strategies and objectives, which might conflict with the Company's interests. The Company's franchisees may not be able to secure adequate financing to open or continue operating their Denny's restaurants. If they incur too much debt or if economic or sales trends deteriorate such that they are unable to repay existing debt, it could result in financial distress or even bankruptcy. If a significant number of franchisees become financially distressed, it could harm the Company's operating results through reduced royalties and lease income. The Company's balance sheet at March 28, 2012, showed $336.24 million in total assets, $338.88 million in total liabilities, and a $2.64 million total shareholders' deficit. * * * Denny's carries 'B2' corporate family and probability of default ratings from Moody's Investors Service and a 'B+' corporate credit rating from Standard & Poor's. As reported by the TCR on April 20, 2012, Standard & Poor's Ratings Services withdrew all of its ratings, including the 'B+' corporate credit rating on Spartanburg, S.C.-based Denny's Corp. at the company's request. There is no rated debt outstanding. DEWEY & LEBOEUF: Plans to Terminate 25 Office Leases Worldwide -------------------------------------------------------------- Thomson Reuters News & Insight reports that Dewey & LeBoeuf has sought to terminate 25 of its office leases worldwide. According to Reuters, the leases cover 14 offices in the United States, as well as overseas offices in cities including Beijing and Abu Dhabi. With only a handful of personnel left in New York, Dewey & LeBoeuf said it has no further use for the leases, save for a sublease in New York. The report notes the trustee for the firm asked that U.S. Bankruptcy Judge Martin Glenn date the leases' rejection retroactively to May 28, the day it filed for bankruptcy. The firm also sought to abandon property in those offices, except for artwork in its Houston and Los Angeles locations. The report relates, while bankruptcy laws make it difficult for landlords to challenge a bankrupt company's decision to reject leases, it is possible landlords could object to Dewey's request to make the rejection retroactive to the day of its bankruptcy filing. Doing so would effectively clear Dewey of the rent it would theoretically owe since filing bankruptcy on May 28, and would bar landlords from being able to levy a claim for that money. Landlords could argue that they could have used that time to try to secure a new tenant, the report says. The report adds Paramount Group, which owns Dewey's New York office space at 1301 Avenues of the Americas, has a claim for $3.78 million, making it the second largest unsecured creditors. The sum represented property taxes and the firm's May rent, according to the firm's bankruptcy petition. The report says Property Group Partners, Dewey's landlord in Washington, D.C, was owed $830,789. The landlord had sued Dewey prior to its bankruptcy filing for not paying rent. About Dewey & LeBoeuf New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey & LeBoeuf has won Court authority to use lenders' cash collateral through July 31, 2012. DEWEY & LEBOEUF: In Settlement Talks With Former Partners --------------------------------------------------------- Megan Leonhardt at Bankruptcy Law360 reports thatDewey & LeBoeuf LLP bankruptcy advisers on Tuesday began outlining a proposed global settlement with former partners that would release attorneys from clawback claims brought by the firm's creditors, according to a person familiar with the matter. According to Bankruptcy Law360, Dewey bankruptcy attorney Albert Togut of Togut Segal & Segal LLP and other Dewey representatives hosted a global conference call with former partners to discuss settling partner contribution obligations in exchange for a liability shield against future claims. About Dewey & LeBoeuf New York-based law firm Dewey & LeBoeuf LLP sought Chapter 11 bankruptcy (Bankr. S.D.N.Y. Case No. 12-12321) to complete the wind-down of its operations. The firm had struggled with high debt and partner defections. Dewey disclosed debt of $245 million and assets of $193 million in its chapter 11 filing late evening on May 29, 2012. Dewey & LeBoeuf was formed by the 2007 merger of Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP. At its peak, Dewey employed about 2,000 people with 1,300 lawyers in 25 offices across the globe. When it filed for bankruptcy, only 150 employees were left to complete the wind-down of the business. Dewey's offices in Hong Kong and Beijing are being wound down. The partners of the separate partnership in England are in process of winding down the business in London and Paris, and administration proceedings in England were commenced May 28. All lawyers in the Madrid and Brussels offices have departed. Nearly all of the lawyers and staff of the Frankfurt office have departed, and the remaining personnel are preparing for the closure. The firm's office in Sao Paulo, Brazil, is being prepared for closure and the liquidation of the firm's local affiliate. The partners of the firm in the Johannesburg office, South Africa, are planning to wind down the practice. The firm's ownership interest in its practice in Warsaw, Poland, was sold to the firm of Greenberg Traurig PA on May 11 for $6 million. The Pension benefit Guaranty Corp. took $2 million of the proceeds as part of a settlement. Judge Martin Glenn oversees the case. Albert Togut, Esq., at Togut, Segal & Segal LLP, represents the Debtor. Epiq Bankruptcy Solutions LLC serves as claims and notice agent. The petition was signed by Jonathan A. Mitchell, chief restructuring officer. JPMorgan Chase Bank, N.A., as Revolver Agent on behalf of the lenders under the Revolver Agreement, hired Kramer Levin Naftalis & Frankel LLP. JPMorgan, as Collateral Agent for the Revolver Lenders and the Noteholders, hired FTI Consulting and Gulf Atlantic Capital, as financial advisors. The Noteholders hired Bingham McCutchen LLP as counsel. The U.S. Trustee formed two committees -- one to represent unsecured creditors and the second to represent former Dewey partners. The creditors committee hired Brown Rudnick LLP led by Edward S. Weisfelner, Esq., as counsel. The Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. Dewey & LeBoeuf has won Court authority to use lenders' cash collateral through July 31, 2012. DIALOGIC INC: Ming Him Chan Resigns from Board of Directors ----------------------------------------------------------- Ming Him (Kenny) Chan resigned from the Board of Directors of Dialogic Inc., including from his memberships on the committees of the Board, effective June 11, 2012. Mr. Chan's resignation was not the result of any disagreement with the Company on any matter relating to its operations, policies or practices, or regarding the general direction of the Company. On June 11, 2012, Giovani Richard Piasentin was elected by the Board to serve as a member of the Board and the Compensation Committee of the Board. In connection with his election to the Board, the Board granted Mr. Piasentin a restricted stock unit award for those number of shares of the Company's common stock as is determined by dividing $180,000 by the closing price of the Company's common stock as quoted on the NASDAQ Global Market on June 11, 2012, rounded down to the nearest whole share, pursuant to the Company's Amended and Restated 2006 Equity Incentive Plan. The RSU will vest in equal monthly installments over three years from the date of grant. In accordance with the Company's current director compensation policy, as an independent Board member, Mr. Piasentin will initially be entitled to an annual retainer of $45,000 for service as a Board member and an annual retainer of $7,500 for service as a member of the Compensation Committee of the Board. In May 2012, the Board approved new director compensation arrangements for independent directors to be effective beginning July 1, 2012, under which Mr. Piasentin will thereafter be entitled to an annual retainer of $60,000 for service as a Board member and an annual retainer of $10,000 for service as a member of the Compensation Committee of the Board. Subject to Board approval, Mr. Piasentin will also be entitled to receive an annual RSU grant covering a number of shares having, on the date of grant, a fair market value equal to $90,000, and vesting over one year. In addition, the Company expects to enter into a standard indemnity agreement with Mr. Piasentin, which will provide, among other things, that the Company will indemnify him, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he may be required to pay in actions or proceedings which he is or may be made a party by reason of his position as a director of the Company, and otherwise to the fullest extent permitted under Delaware law and the Company's Bylaws. About Dialogic Milpitas, Calif.-based Dialogic Inc. provides communications platforms and technology that enable developers and service providers to build and deploy innovative applications without concern for the complexities of the communication medium or network. The Company reported a net loss of $54.81 million in 2011, compared with a net loss of $46.71 million in 2010. The Company's balance sheet at March 31, 2012, showed $155.66 million in total assets, $185.24 million in total liabilities, and a $29.58 million total stockholders' deficit. Bankruptcy Warning The Company said in its 2011 annual report that in the event of an acceleration of the Company's obligations under the Term Loan Agreement or Revolving Credit Agreement and its failure to pay the amounts that would then become due, the Revolving Credit Lender or Term Lenders could seek to foreclose on the Company's assets. As a result of this, or if the Company's stockholders do not approve the Private Placement and the Notes become due and payable, the Company would likely need to seek protection under the provisions of the U.S. Bankruptcy Code or the Company's affiliates might be required to seek protection under the provisions of applicable bankruptcy codes. In that event, the Company could seek to reorganize its business, or the Company or a trustee appointed by the court could be required to liquidate the Company's assets. DIALOGIC INC: Has Tender Offer for Insiders ------------------------------------------- Dialogic Inc. filed with the U.S. Securities and Exchange Commission a Schedule TO relating solely to preliminary communications made prior to the commencement of an anticipated tender offer to allow employees, officers and directors of Dialogic Inc., and its affiliates to exchange certain of their outstanding stock options for new stock options. On June 11, 2012, the Company filed its preliminary proxy statement for its 2012 Annual Meeting of Stockholders to be held on Wednesday, Aug. 8, 2012, with the SEC. The Proxy Statement contains a description of a proposed stock exchange program pursuant to which the Company would offer to exchange, at the election of the applicable eligible participants, certain stock options granted under the Company's 2001 Equity Incentive Plan and 2006 Equity Incentive Plan. In addition, on June 11, 2012, the Company's Chief Executive Officer and Chairman, Nick Jensen, sent an electronic email communication to eligible participants, and the Company plans to give a PowerPoint presentation to eligible participants regarding the Exchange Program. Subject to stockholder approval, the Company intends to commence the Exchange Program in August 2012 and hold the Exchange Program open for at least 20 business days. Neither the Proxy Statement nor either of the Preliminary Communications constitutes an offer to holders of the Company's outstanding stock options to exchange those options. The Exchange Program has not yet commenced. Upon commencement of the Exchange Program, the Company will file with the SEC a completed Tender Offer Statement on Schedule TO and related exhibits and documents, including the Offer to Exchange. Persons who may be eligible to participate in the Exchange Program should read the Schedule TO, including the Offer to Exchange and other related exhibits and documents, when those materials become available because they will explain the precise terms and timing of the Exchange Program and contain other important information about the Exchange Program. The Schedule TO and related exhibits and documents will be available without charge on the SEC Web site at www.sec.gov. The Company will also provide copies of the tender offer materials, free of charge, upon written request to: Dialogic Inc., 1504 McCarthy Boulevard, Milpitas, California 95035, Attention: Corporate Secretary. About Dialogic Milpitas, Calif.-based Dialogic Inc. provides communications platforms and technology that enable developers and service providers to build and deploy innovative applications without concern for the complexities of the communication medium or network. The Company reported a net loss of $54.81 million in 2011, compared with a net loss of $46.71 million in 2010. The Company's balance sheet at March 31, 2012, showed $155.66 million in total assets, $185.24 million in total liabilities, and a $29.58 million total stockholders' deficit. Bankruptcy Warning The Company said in its 2011 annual report that in the event of an acceleration of the Company's obligations under the Term Loan Agreement or Revolving Credit Agreement and its failure to pay the amounts that would then become due, the Revolving Credit Lender or Term Lenders could seek to foreclose on the Company's assets. As a result of this, or if the Company's stockholders do not approve the Private Placement and the Notes become due and payable, the Company would likely need to seek protection under the provisions of the U.S. Bankruptcy Code or the Company's affiliates might be required to seek protection under the provisions of applicable bankruptcy codes. In that event, the Company could seek to reorganize its business, or the Company or a trustee appointed by the court could be required to liquidate the Company's assets. DIAMOND BEACH: Plan Confirmation Hearing Scheduled for July 2 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas will convene a hearing on July 2, 2012, at 11 a.m., to consider the final approval of the disclosure statement and confirmation of Diamond Beach VP, LP's Chapter 11 Plan. The Court has earlier conditionally approved the Disclosure Statement. The Court also ordered that parties have until June 28, 2012, to (i) cast ballots accepting or rejecting the Plan, and (ii) submit objections to the Plan confirmation. The Plan is based on a settlement agreement entered into with lender International Bank of Commerce, owed $29.5 million plus attorneys' fees and costs for notes issued prepetition. With no economic improvement foreseen in the near term, the Debtor is allowing IBC to foreclose on the Diamond Beach condominium project for a credit against the debt equal to the value of the property as determined by the Court. As part of the settlement, IBC will have an allowed claim in the amount of $28.19 million. According to the Disclosure Statement, the Plan provides for the payment to Creditors as follows in the order of priority required by the Bankruptcy Code: (1) allowed administrative claims will be paid in cash in full with the "cash infusion" unless otherwise agreed; (2) ad valorem property taxes will be paid in full by IBC when due; (3) in full satisfaction of its allowed $28.19 million secured claim, IBC will receive, among other things, the title to the Diamond Beach property; (4) Allowed general unsecured claims will be paid a pro rata share of the "litigation trust proceeds", until paid in full, without interest; (5) Equity interest holders will receive any funds remaining after full payment to holders of allowed general unsecured claims. The source of funds to achieve consummation of and carry out the Plan will be (i) the Diamond Beach property; (ii) the Cash Infusion; and (iii) the Litigation Trust Proceeds, which are to be utilized to satisfy claims. According to the liquidation analysis, unsecured creditors are expected to recover 0% to 25% depending upon the allowance of disputed claims and recovery on "reserved litigation claims." Value of Property Randall Davis has posted a $2.5 million cash deposit and has pledged his annuities in order to pay off IBC (up to $4 million) in the event the Court determines that the value of the Diamond Beach property is less than IBC's claim. IBC will file an adversary proceeding against the Debtor and Mr. Davis seeking a determination of the value of the Diamond Beach Property and asserting guaranty claims and claims pursuant to the Settlement against Mr. Davis for the IBC deficiency. IBC has alleged that the value of the property is $19.4 million. The Debtor believes that the property is worth more. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/DIAMONDBEACH_ds.pdf About Diamond Beach VP Houston, Texas-based Diamond Beach VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10175) in Brownsville on April 2, 2012. The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101 (51B), disclosed $30.05 million in assets and $28.24 million in liabilities in its schedules. The Debtor owns the Diamond Beach Condominiums located at Galveston, Texas. The Debtor valued the property at $29.4 million in its schedules. The property serves as collateral to secured loans of $29.57 provided by International Bank of Commerce. Judge Richard S. Schmidt oversees the case. Edward L. Rothberg, Esq., at Hoover Slovacek, LLP, serves as the Debtor's counsel. The petition was signed by Randall J. Davis, as manager of the Debtor's general partner. IBC filed a motion to dismiss the Chapter 11 case in order to begin foreclosure on the project. The parties later reached a settlement. There's a pending motion by IBC to transfer the case to the Galveston Division. If the Plan is confirmed, IBC agrees to withdraw this motion from consideration by the Court. A related entity, Sapphire VP, LP, owner of the Sapphire Condominiums located at South Padre Island, Texas, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10173) in Brownsville on April 2, 2012. IBC objected to Diamond Beach's request for joint administration. If the Plan is confirmed, the Debtor will withdraw this motion from consideration by the Court. DYNEGY HOLDINGS: Opposes Payment of Property Taxes to Newburgh -------------------------------------------------------------- Dynegy Danskammer LLC and Dynegy Roseton LLC asked the U.S. Bankruptcy Court for the Southern District of New York to deny the motions seeking payment of property taxes owed to the Town of Newburgh and Orange County. Dynegy Danskammer and Dynegy Roseton operate two power generation plants in Newburgh. In court papers, Brian Lohan, Esq., at Sidley Austin LLP, in New York, said the tax claims would affect operations in the Newburgh plants as well as future sale of those plants. Earlier, Dynegy Inc. reached a settlement with creditors holding more than $2.7 billion of claims against Dynegy Holdings LLC. The deal contemplates a sale of the Newburgh plants. Mr. Lohan said the Dynegy units would not be able to fund their operations through the sale process if they were compelled to pay the tax claims immediately. He said the immediate payment of those claims would not also be in the "best interest" of the municipality. "A going concern sale of the facilities provides the greatest prospect of a successful sale and maximizing recoveries for the [Dynegy units'] entire creditor body including the tax claimants," he said in court papers. Martin Daley, vice-president and general manager of Dynegy Power LLC, also criticized the immediate payment of tax claims, saying it would foil any effort to sell the facilities and "jeopardize recoveries" for all of creditors including Newburgh. Meanwhile, the Official Committee of Unsecured Creditors urged the bankruptcy court to withhold any determination of the amount and treatment of the tax claims until "such time as the debtors have had the opportunity to pursue the facilities sale process." About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000). FIRST REGIONAL BANCORP: Files for Bankruptcy in Los Angeles ------------------------------------------------------------ First Regional Bancorp filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-31372) on June 19, 2012, estimating assets of less than $10 million and debts of up to $500 million. Katy Stech at Dow Jones' Daily Bankruptcy Review notes that the holding company behind the failed First Regional Bank in Los Angeles, whose $2.18 billion in assets were seized by federal banking regulators nearly 18 months ago, just has a fraction of that amount -- $1.3 million --left in its coffers when it filed for bankruptcy. First Regional Bancorp (NASDAQ-GSM: FRGB) is the bank holding company for First Regional Bank, Los Angeles, California. First Regional Bank was closed at the end of January 2010 by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. The FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits of the bank. As of Sept. 30, 2009, First Regional Bank had $2.18 billion in total assets and $1.87 billion in total deposits. FIRST REGIONAL BANCORP: Case Summary & 8 Largest Unsec. Creditors ----------------------------------------------------------------- Debtor: First Regional Bancorp 1801 Century Park East, Suite 1430 Los Angeles, CA 90067 Bankruptcy Case No.: 12-31372 Chapter 11 Petition Date: June 19, 2012 Court: United States Bankruptcy Court Central District Of California (Los Angeles) Judge: Ernest M. Robles About the Debtor: First Regional Bancorp (NASDAQ-GSM: FRGB) is the bank holding company for First Regional Bank, Los Angeles, California. First Regional Bank was closed at the end of January 2010 by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation as receiver. The FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits of the bank. As of Sept. 30, 2009, First Regional Bank had approximately $2.18 billion in total assets and $1.87 billion in total deposits. Debtor's Counsel: Jon L Dalberg, Esq. LANDAU GOTTFRIED & BERGER LLP 1801 Century Pk East, Suite 700 Los Angeles, CA 90067 Tel: (310) 557-0050 Fax: (310) 557-0056 E-mail: jdalberg@lgbfirm.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $100,000,001 to $500,000,000 A copy of the Company's list of its 8 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-31372.pdf The petition was signed by Thomas McCullough, CFO. FUEL DOCTOR: Signs Agency Agreement with Boko Consulting -------------------------------------------------------- Fuel Doctor Holdings, Inc., entered into an agency agreement, effective as of May 4, 2012, with Boko Consulting, Inc., pursuant to which the Agent will have the exclusive right and license to sell, market and distribute the Company's fuel saving component which reduces the utilization of fuel known as "Fuel Doctor" to potential clients in Nigeria, Niger, Liberia, Sierra Leone, Mail, Guinea Bissau, Gambia, Senegal, St. Helena, Mauritania, Burkina Faso, Benin, Togo, Ghana and Cape Verde. The exclusivity of the Agreement is subject to the Agent meeting certain minimum purchase orders requirements during the Term of the Agreement. The Agreement will have an initial term commencing on the Effective Date and ending on Oct. 4, 2012, subject to the Agent's ability to extend the term through May 4, 2017, provided that the Agent is then not in default under the Agreement. Notwithstanding the foregoing, the Agreement may be terminated (i) by either party upon a material breach of the Agreement (ii) by the Company upon a change of ownership of the Agent or (iii) by mutual written agreement of the parties. The Agent will have the option to extend the term for an additional five-year term upon delivery of written notice to Company no earlier than 180 days or later than 90 days prior to the expiration of the Term and the option shall be based on satisfying, among other things, the quantity order requirements. In consideration for the grant of the exclusive license, the Agent agreed to provide the Company with certain fees for each Product purchased by Agent. The fees payable to the Company will be for a period of 12 months after the Effective Date of the Agreement and thereafter the Company and Agent may mutually agree upon any price modification. In the event that the parties fail to agree upon such price modifications, the Agreement will be terminated immediately. A copy of the Agency Agreement is available for free at: http://is.gd/j2U8YQ About Fuel Doctor Calabasas, Calif.-based Fuel Doctor Holdings, Inc., is the exclusive distributor for the United States and Canada of a fuel efficiency booster (the FD-47), which plugs into the lighter socket/power port of a vehicle and increases the vehicle's miles per gallon through the power conditioning of the vehicle's electrical systems. The Company has also developed, and plans on continuing to develop, certain related products. For the nine months ended Sept. 30, 2011, the Company has reported a net loss of $1.9 million on $811,576 of revenues, compared with a net loss of $1.7 million on $603,329 of revenues for the corresponding period last year. The Company had an accumulated deficit at Sept. 30, 2011, had a net loss and net cash used in operating activities for the interim period then ended. "While the Company is attempting to generate sufficient revenues, the Company's cash position may not be sufficient to support the Company's daily operations," the Company said in the filing. GUIDED THERAPEUTICS: To Launch LuViva Cervical Scan in Canada ------------------------------------------------------------- Guided Therapeutics, Inc., announced that it, together with its Canadian distribution partner, CAN-med Healthcare, will be unveiling the LuViva Advanced Cervical Scan at the 68th Annual Clinical Meeting of the Society of Obstetricians and Gynaecologists of Canada (SOGC) to be held in Ottawa, Ontario, June 20 -24, 2012. In addition to CAN-med's sponsorship of a booth and meetings at the conference, the distributor placed an order for eight additional LuViva Advanced Cervical Scan systems in advance of its anticipated product launch in the second half of 2012. "We are excited to be working with CAN-med to launch LuViva in Canada, given their commitment to bringing the latest medical advances to Canadian women while working to improve efficiency and to reduce costs within the healthcare system," said Mark L. Faupel, Ph.D., CEO and president of Guided Therapeutics, Inc. "Over the coming months, we anticipate additional stocking and demo orders to be placed by our international distribution partners as we gain regulatory approvals in additional markets." The order, which will support sales efforts in the eight CAN-med sales territories, is expected to be fulfilled in July. Initial sales training on Can-med's first demonstration unit was completed in early June and meetings with key physicians are scheduled for later this month at the SOGC conference. Each year in Canada, about 5.7 million women undergo Pap test screening for cervical cancer, with as many as 400,000 receiving an abnormal Pap result. These women are then scheduled for a follow-up exam, called a colposcopy, which typically includes a biopsy. The wait times for colposcopy examinations in Canada are typically between two to six months. LuViva is designed to reduce wait times and provide results immediately at the point of care. About Guided Therapeutics Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP) -- http://www.guidedinc.com/-- is developing a rapid and painless test for the early detection of disease that leads to cervical cancer. The technology is designed to provide an objective result at the point of care, thereby improving the management of cervical disease. Unlike Pap and HPV tests, the device does not require a painful tissue sample and results are known immediately. GT has also entered into a partnership with Konica Minolta Opto to develop a non-invasive test for Barrett's Esophagus using the LightTouch technology platform. In its report on the Company's 2011 Form 10-K, UHY LLP, in Sterling Heights, Michigan, noted that the Company's recurring losses from operations and accumulated deficit raise substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $6.64 million in 2011, compared with a net loss of $2.84 million in 2010. The Company's balance sheet at March 31, 2012, showed $3.08 million in total assets, $2.17 million in total liabilities and $908,000 in total stockholders' equity. Bankruptcy Warning According to the Form 10-K for the year ended Dec. 31, 2011, the Company's capital-raising efforts are ongoing. If sufficient capital cannot be raised during the fourth quarter of 2012, the Company has plans to curtail operations by reducing discretionary spending and staffing levels, and attempting to operate by only pursuing activities for which it has external financial support, such as under the Konica Minolta development agreement and additional NCI or other grant funding. However, there can be no assurance that such external financial support will be sufficient to maintain even limited operations or that the Company will be able to raise additional funds on acceptable terms, or at all. In that a case, the Company might be required to enter into unfavorable agreements or, if that is not possible, be unable to continue operations, and to the extent practicable, liquidate or file for bankruptcy protection. H&M OIL: Proofs of Claim Due Sept. 4, 2012 ------------------------------------------ Proofs of claim in the Chapter 11 case of H&M Oil & Gas, LLC, are due Sept. 4, 2012. H&M Oil has filed schedules disclosing $297.1 million in assets and $77.46 million in liabilities. The U.S. Trustee in Dallas, Texas, set a meeting of creditors under 11 U.S.C. Sec. 341(a) of the Bankruptcy Code on June 13, 2012. About H&M Oil H&M Oil & Gas, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-32785) in its hometown Dallas on April 30, 2012. Another entity, Anglo-American Petroleum Corp. (Case No. 12-32786) simultaneously filed for Chapter 11. Each of the Debtors estimated assets and debts of $50 million to $100 million. H&M Oil & Gas is an oil and gas production and development company. H&M, through its operating company, H&M Resources LLC, is focused on developing its leases in the Permian basin and Texas panhandle. Dallas, Texas-based Anglo-American Petroleum -- http://www.angloamericanpetroleum.com/-- is the holding corporation for H&M Oil. Judge Barbara J. Houser presides over the case. The Debtors are represented by Keith William Harvey, Esq., at Anderson Tobin PLLC, in Dallas. Prospect Capital Corporation, the Debtors' lone secured creditor, is represented in the case by Timothy A. Davidson II, Esq., and Joseph P. Rovira, Esq., at Andrews Kurth LLP. H&M OIL: Has Interim Access to Prospect Capital Cash Collateral --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas authorized H&M Oil & Gas, LLC, to use cash collateral of Prospect Capital Corporation, on an interim basis. Prospect Capital is the lender under that certain credit agreement, dated June 28, 2007, and owner of the note in favor of David B. Jones dated effective Jan. 14, 2011. The Debtor is authorized to use cash collateral solely in accordance with the terms and conditions of the Interim Order and for payment of the items listed on the initial approved budget. All of the Debtor's cash, including cash in its deposit accounts, wherever located, whether prepetition collateral or proceeds thereof, constitutes cash collateral of Prospect Capital. The Lender is entitled to the adequate protection pursuant to Sections 361, 362 and 363 of the Bankruptcy Code for any diminution in the value of the Prepetition Collateral, including without limitation, the Cash Collateral. A final hearing to consider entry of the final order will be scheduled at a later date by the Court after consultation with the Debtor and the Lender. A copy of the Interim Cash Collateral Order is available at: http://bankrupt.com/misc/H&M_cashIorder.pdf About H&M Oil H&M Oil & Gas, LLC, filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-32785) in its hometown Dallas on April 30, 2012. Another entity, Anglo-American Petroleum Corp. (Case No. 12-32786) simultaneously filed for Chapter 11. Each of the Debtors estimated assets and debts of $50 million to $100 million. H&M Oil & Gas is an oil and gas production and development company. H&M, through its operating company, H&M Resources LLC, is focused on developing its leases in the Permian basin and Texas panhandle. Dallas, Texas-based Anglo-American Petroleum -- http://www.angloamericanpetroleum.com/-- is the holding corporation for H&M Oil. Judge Barbara J. Houser presides over the case. The Debtors are represented by Keith William Harvey, Esq., at Anderson Tobin PLLC, in Dallas. Prospect Capital Corporation, the Debtors' lone secured creditor, is represented in the case by Timothy A. Davidson II, Esq., and Joseph P. Rovira, Esq., at Andrews Kurth LLP. HAMPTON ROADS: K. Gowen Joins as Commercial Relationship Manager ---------------------------------------------------------------- Hampton Roads Bankshares, Inc., the holding company for The Bank of Hampton Roads and Shore Bank, announced that Kelly Gowen has joined BHR as a Commercial Relationship Manager in the Virginia Beach office. He reports to Mindi Bevington, Virginia Beach Market President and is focused on commercial business development in Hampton Roads. Mr. Gowen has three decades of commercial lending experience in the Hampton Roads area. Thomas W. Mears, BHR's President - Commercial Banking, said, "We continue to underscore our focus on community banking in our core markets by adding proven, experienced bankers like Kelly, who has spent his entire banking career as a commercial lending professional in the Hampton Roads area." Gowen joins BHR from Virginia Company Bank, a community bank headquartered in Newport News, Virginia, where he was Executive Vice President and Chief Credit Officer. Previously, he was a Commercial Relationship Manager with BB&T Corporation and First Coastal Bank. Mr. Gowen began his banking career in 1979 with Sovran Bank N.A. and served in various commercial banking positions with Signet Banking Corporation from 1987 to 1997. He earned a B.S. in Finance from Virginia Polytechnic Institute and State University. 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 reported a net loss of $98 million in 2011, compared with a net loss of $210.35 million in 2010. The Company's balance sheet at March 31, 2012, showed $2.13 billion in total assets, $2.02 billion in total liabilities and $105.29 million in total shareholders' equity. HAWKER BEECHCRAFT: Committee Taps Crowe & Dunlevy Aviation Counsel ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in the Chapter 11 cases of Hawker Beechcraft, Inc., et al., asks the U.S. Bankruptcy Court for the Southern District of New York for permission to retain Crowe & Dunlevy, P.C. as its special federal aviation administration counsel. The Committee relates that the Debtors own 164 aircraft which are registered with the FAA. Federal law requires filing with the FAA to perfect any liens that burden the Debtors' aircraft. According to the Committee, C&D has previously represented two of the Debtors, Hawker Beechcraft Corporation and HBC, LLC, in connection with FAA registration matters. That representation was concluded and C&D has no ongoing representation of any of the Debtors or any other connections with the Debtors. The firm is not owed any fees by any of the Debtors for this prior representation. C&D will, among other things: a) examine title and record status of aircraft, aircraft engines, aircraft propellers and spare parts locations; b) review and analyze bills of sale, applications, affidavits and instruments recorded with the FAA Aircraft Registry; and c) issue opinions with respect to aircraft title and registration, encumbrances of record with the FAA with respect to aircraft, aircraft engines, aircraft propellers and spare parts locations, the recordability of instruments filed with the FAA and the perfection of instruments filed with the FAA. The hourly rates of C&D's personnel are: Shareholders and Directors $250 - $535 Of Counsel $230 - $475 Associates $190 - $235 Paraprofessionals $105 - $197 C&D attorneys having primary responsibility for providing services to the Committee and their hourly rates are: Preston G. Gaddis, II, director $450 Judy Hamilton Morse, director $345 J. Robert Kalsu, director $300 William E. Van Egmond, associate $260 Julia Stein Dittberner, associate $200 Dianna J. Mysinger, paralegal $160 Michelle Long, paralegal $135 Amy Kreimer, paralegal $145 Paula K. McWherter, paralegal $145 Matthew D. McBride, paralegal $140 Donna K. Hinkle, paralegal $135 Kelly Wood, Int'l Registry Specialist $105 Preston G. Gaddis, II, of counsel attorney and a director in the Oklahoma City Office of C&D, assures the Court that C&D does not represent and does not hold any interest adverse to the Debtors' estates or their creditors in the matters upon which C&D is to be engaged. A hearing on June 27, 2012, at 10 a.m. (ET), has been set. Objections, if any, are due June 22, at 4 p.m. About Hawker Beechcraft Hawker Beechcraft Inc., a designer and manufacturer of light and medium-sized jet, turboprop and piston aircraft, filed for Chapter 11 reorganization together with 17 affiliates (Bankr. S.D.N.Y. Lead Case No. 12-11873) on May 3, 2012, having already negotiated a plan that eliminates $2.5 billion in debt and $125 million of annual cash interest expense. The plan, to be filed by June 30, will give 81.9% of the new stock to holders of $1.83 billion of secured debt, while 18.9% of the new shares are for unsecured creditors. The proposal has support from 68% of secured creditors and holders of 72.5% of the senior unsecured notes. Hawker is 49%-owned by affiliates of Goldman Sachs Group Inc. and 49%-owned by Onex Corp. The Company's balance sheet at Dec. 31, 2011, showed $2.77 billion in total assets, $3.73 billion in total liabilities and a $956.90 million total deficit. Other claims include pensions underfunded by $493 million. Hawker's legal representative is Kirkland & Ellis LLP, its financial advisor is Perella Weinberg Partners LP and its restructuring advisor is Alvarez & Marsal. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Sidley Austin LLP serves as legal counsel and Houlihan Lokey Howard & Zukin Capital Inc. serves as financial advisor to the DIP Agent and the Prepetition Agent. Wachtell, Lipton, Rosen & Katz represents an ad hoc committee of senior secured prepetition lenders holding 70% of the loans. Milbank, Tweed, Hadley & McCloy LLP represents an ad hoc committee of holders of the 8.500% Senior Fixed Rate Notes due 2015 and 8.875%/9.625% Senior PIK Election Notes due 2015 issued by Hawker Beechcraft Acquisition Company LLC and Hawker Beechcraft Notes Company. The members of the Ad Hoc Committee -- GSO Capital Partners, L.P. and Tennenbaum Capital Partners, LLC -- hold claims or manage accounts that hold claims against the Debtors' estates arising from the purchase of the Senior Notes. Deutsche Bank National Trust Company, the indenture trustee for senior fixed rate notes and the senior PIK-election notes, is represented by Foley & Lardner LLP. An Official Committee of Unsecured Creditors appointed in the case has selected Daniel H. Golden, Esq., and the law firm of Akin Gump Strauss Hauer & Feld LLP as legal counsel. The Committee tapped FTI Consulting, Inc., as its financial advisor. HIGH PLAINS: To Issue 5 Million Common Shares as Compensation ------------------------------------------------------------- High Plains Gas, Inc., filed with the U.S. Securities and Exchange Commission a Form S-8 registering 5 million shares of common stock issuable as compensation in lieu of salaries to directors, officers and employees of the Company and for legal fee agreements. A copy of the filing is available for free at: http://is.gd/v4GYVa About High Plains Houston, Texas-based High Plains Gas, Inc., is a provider of goods and services to regional end markets serving the energy industry. It produces natural gas in the Powder River Basin located in Northeast Wyoming. It provides construction and repair and maintenance services primarily to the energy and energy related industries mainly located in Wyoming and North Dakota. Eide Bailly LLP, in Greenwood Village, Colorado, issued a "going concern" qualification on the financial statements for the ear ending Dec. 31 2011, citing significant operating losses which raised substantial doubt about High Plains Gas' ability to continue as a going concern. The Company reported a net loss of $57.48 million on $17.15 million of revenues for 2011, compared with a net loss of $5.48 million on $2.61 million of revenues for 2010. The Company's balance sheet at March 31, 2012, showed $30.10 million in total assets, $37.89 million in total liabilities and a $7.79 million total stockholders' deficit. HOPKINS COUNTY: Moody's Lowers LongTerm Bond Rating to 'Ba2' ------------------------------------------------------------ Moody's Investors Service has downgraded to Ba2 from Ba1 the long- term bond rating assigned to Hopkins County Hospital District's (HCHD) $22.7 million of outstanding Series 2008 fixed rate hospital revenue bonds. The outlook remains negative at the lower rating level. HCHD owns and operates Hopkins County Memorial Hospital (HCMH), a 54-staffed bed acute care hospital located in Sulphur Springs, TX. Summary Rating Rationale: The rating downgrade to Ba2 from Ba1 is attributable to continued downward pressures on cash flow generation and liquidity. Increasing adjusted operating losses and declining cash flow generation are resulting in very low margins and thin debt service coverage for this hospital with a small medical staff and revenue base. As HCHD expands its strategy to employ physicians to secure its medical staff, stem outmigration and enhance services, the Board of Directors has increased the tax rate to supplement increasing losses. Future tax rate increases will be limited as HCHD nears its tax rate ceiling. Unrestricted liquidity has continued to decline with poor performance and capital investment, yet management projects stability with a decline in capital spending as major capital projects were completed in 2010. Liquidity is conservatively invested and debt is 100% fixed rate, removing interest rate risk. A defined contribution pension plan also reduces risk to liquidity. Challenges * Continued declines in adjusted operating cash flow generation in fiscal years 2011 and interim FY 2012, with very low operating cash flow margins on a full year basis (3.6% in FY 2011) and Moody's-adjusted maximum annual debt service (MADS) coverage of just over 1 times in FY 2011 * Volume pressures in FY 2011 with multi-year declining trend in certain categories, including admissions, observation stays, emergency room visits, and total surgeries * Small active medical staff of just over 30 physicians drives small admission, revenue and asset bases that create vulnerability to physician or service interruptions * Absolute unrestricted liquidity declined since fiscal yearend (FYE) 2009 to $14.1 million and 85 days cash on hand at March 31, 2012 with and no expectations for growth by FYE 2012; cash-to-debt only 58% as of March 31, 2012 * Continued operating losses and declining operating cash flow through FY 2011 when removing non-recurring non-cash liability reversal, with very low operating cash flow margin of 3.6%; expansion into and growth of physician employment with increasing losses on this strategy, yet FY 2012 losses projected to decline for this line of business; additional employment projected Strengths * The only hospital in Hopkins County, with the nearest competitor of size located 32 miles to the west in Greenville; HCHD is coterminous with Hopkins County, with A2 General Obligated Limited Tax rated county debt * Completion of major capital projects in 2010 removes need for critical capital spending in the near term, enabling HCHD the ability to preserve liquidity * As a District hospital, HCHD has taxing capability of up to $0.25 per $100 of assessed property values, with the District Board showing a willingness and ability to increase the tax rate, most recently in 2010 * Debt is all in a fixed rate mode, and principal payments are delayed on the Series 2008 bonds until 2015 which assists in growing liquidity in the near-term; no additional debt planned; liquidity is conservative invested in cash and cash equivalents * Rebounding admissions and total surgeries in the first six months of FY 2012 over the same period in FY 2011, with multi-year growth in outpatient visits, especially in the interim period following strategic physician employment * Defined contribution pension plan and minimal operating leases Outlook The negative outlook is attributable to continued pressures on operating performance, including anticipated further growth in the number of employed physicians, declining supplemental payments, unknown future impact from the new Medicaid waiver, and decreased flexible margin to increase revenue with a tax increase due to nearing the tax rate ceiling. FY 2012 results are projected to remain poor, and an inability to improve performance in FY 2013 could result in further rating pressure. What Could Move The Rating Up Growth in inpatient volumes and revenue base to mitigate the risks associated with its small size; substantial reduction in long-term debt while maintaining and growing liquidity balance; growth and stability in operating cash flow generation What Could Move The Rating Down Loss of tax revenues to support operations; further decline in unrestricted liquidity; continuation of unfavorable operating performance that negatively impacts cash flow and debt service coverage; additional debt beyond current capital structure Principal Methodology Used The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. HORNE INTERNATIONAL: To Issue 300,000 Common Shares to Lion ----------------------------------------------------------- Horne International, Inc., on June 4, 2012, entered into a Merchant Banking Agreement with Lion Partners, Limited, pursuant to which the Company will issue 300,000 restricted shares of common stock, subject to rule 144, in exchange for business consulting services. About Horne International Fairfax, Va.-based Horne International, Inc., is an engineering services company focused on provision of integrated, systems approach based solutions to the energy and environmental sectors. The Company reported a net and total comprehensive loss of $121,000 on $5.68 million of revenue for the 12 months ended Dec. 25, 2011, compared with a net and total comprehensive loss of $1.04 million on $3.43 million of revenue for the 12 months ended Dec. 26, 2010. The Company's balance sheet at March 25, 2012, showed $1.17 million in total assets, $2.21 million in total liabilities and a $1.03 million total stockholders' deficit. In its audit report accompanying the 2011 financial statements, Stegman & Company, in Baltimore, Maryland, expressed substantial doubt as to the Company's ability to continue as a going concern. The independent auditors noted that the Company has experienced continuing net losses for each of the last four years and as of Dec. 25, 2011, current liabilities exceeded current assets by $900,000. HOSPITAL AUTHORITY OF CHARLTON: Files Schedules of Assets & Debts ----------------------------------------------------------------- Hospital Authority of Charlton County filed with the Bankruptcy Court for the Southern District of Georgia its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $3,436,548 B. Personal Property $5,500,750 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $1,744,700 E. Creditors Holding Unsecured Priority Claims $638,667 F. Creditors Holding Unsecured Non-priority Claims $ 2,536,286 ----------- ----------- TOTAL $8,937,298 $4,919,654 A full text copy of the company's assets and liabilities is available free at: http://bankrupt.com/misc/HOSPITAL_AUTHORITY_sal.pdf About Hospital Authority of Charlton Hospital Authority of Charlton County, Georgia, filed a Chapter 9 petition (Bankr. S.D. Ga. Case No. 12-50305) in Waycross, Georgia, on April 30, 2012, estimating assets of $10 million to $50 million and debts of up to $10 million. The authority owns the Charlton Memorial Hospital in Fall River, Georgia. The Charlton Memorial Hospital is a 25-bed critical access hospital and treats 67,000 patients in its emergency department each year. The hospital is/was managed by St. Vincent's. The Hospital Authority and the Charlton County are defendants to a contract suit filed by St. Vincent's Health System, Inc., in district court (M.D. Fla. Case No. 3:2012cv00285) on March 14, 2012, according to Justia.com. Bankruptcy Judge John S. Dalis oversees the case. C. James McCallar, Jr., Esq., at McCallar Law Firm, serves as the Debtor's counsel. HOUGHTON MIFFLIN: Lenders Adjust LIBO Rate to 1.25% --------------------------------------------------- Houghton Mifflin Harcourt Publishers Company, et al., ask the U.S. Bankruptcy Court for the Southern District of New York to approve the First Amendment to the Superpriority Senior Secured Debtor-in- possession and Exit Term Loan Credit Agreement. The agreement was entered among the Debtors, Citibank, N.A., as administrative agent for the lenders and Citibank, N.A., as collateral agent for the lenders. Amendments to the credit agreement include, among other things: 1. The definition of "Adjusted LIBO Rate" is hereby amended by deleting "1.50%" appearing in clause(b) thereof and inserting in lieu thereof "1.25%." 2. The definition of Applicable Percentage" is hereby amended and restated in its entirety to read as: "Applicable Percentage" will mean, (a) in the case of ABR Loans, 5.00% per annum and (b) in the case of Eurocurency Loans, 6.00% per annum." A full-text copy of the Loan Amendment is available for free at http://bankrupt.com/misc/HOUGHTONMIFFLIN_exittermloan_amendment.pdf About Houghton Mifflin Houghton Mifflin Harcourt Publishers Inc., headquartered in Boston, Massachusetts, is one of the three largest U.S. education publishers focusing on the K-12 market with roughly $1.3 billion of revenue for fiscal year ended December 2011. Houghton Mifflin Harcourt and its affiliates filed a prepackaged Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-12171) on May 21, 2012. Paul, Weiss, Rifkind, Wharton & Garrison LLP has been tapped as bankruptcy counsel. Blackstone Advisory Services, LP, is the financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. The Debtor disclosed assets of $2.68 billion and debt totaling $3.535 billion as of the Chapter 11 filing. HOUGHTON MIFFLIN: Wants to Hire Blackstone as Financial Advisor --------------------------------------------------------------- Houghton Mifflin Harcourt Publishing Company, et al., seek permission from the Bankruptcy Court to employ Blackstone Advisory Partners L.P. as their financial advisor. Since February 2012, Blackstone was retained by the Debtors, on a prepetition basis to advise on the Debtors' restructuring and reorganization and capital raising efforts. Pursuant to the Engagement Letter, Blackstone will continue to, among other things: (a) assist in the evaluation of the Debtors' businesses and prospects; (b) assist in the development of the Debtors' long-term business plan and related financial projections; (c) assist in the development of financial data and presentations to the Debtors' board of directors, various creditors and other third parties; (d) analyze the Debtors' financial liquidity and evaluate alternatives to improve that liquidity; and (e) analyze various restructuring scenarios and the potential impact of these scenarios on the recoveries of those stakeholders impacted by the restructuring. In May 2012, the Debtors paid Blackstone approximately $4.2 million in fees and expenses as compensation for prepetition professional services incurred between February 2012 and May 2012 and including those relating to a potential capital raise for the Debtors, the potential restructuring of the Debtors' debt capital structure, and the potential commncement of the Chapter 11 cases. The Debtors have agreed to pay Blackstone in accordance with these fee structure: (a) a monthly advisory fee of $175,000 in cash, with the first Monthly Fee payable upon the execution of the Retention Letter by both parties and additional installments of that Monthly Fee payable in advance on the second of each month; provided, however, that from and after Aug. 31, 2012, 50% of any Monthly Fee will be credited against the Restructuring Fee when and if paid; (b) a capital raising fee for any financing arranged by Blackstone Advisory Partners, at the Debtors' request, earned and payable upon closing of the financing. If access to the financing is limited by orders of the Court, a proportionate fee will be payable with respect to each available commitment; (c) an additional fee equal to $7,000,000. Except as otherwise provided in the Retention Letter, a restructuring will be deemed to have been consummated upon (a) the binding execution and effectiveness of all necessary waivers, consents, amendments or restructuring agreements between the Debtors and their creditors involving the compromise of the face amount of those obligations or the conversion of all or part of those obligations into alternative securities, including equity, in the case of an out-of-court restructuring; or (b) the execution, confirmation and consummation of a plan of reorganization pursuant to an order of the Court, in the case of an in-court restructuring. (d) upon the consummation of a transaction, a transaction fee payable in cash and to be determined in accordance with conventional compensation terms for nationally recognized investment banking firms; and (e) reimbursement of all reasonable out-of-pocket expenses incurred during the engagement, including, but not limited to, travel and lodging, direct identifiable data processing, document production, publishing services and communication charges. In connection therewith the Debtors will pay Blackstone on the Effective Date and maintain thereafter a $25,000 expense advance for which Blackstone will account upon termination of the engagement. The Debtors have agreed to indemnify and hold harmless Blackstone, its affiliates, from and against any losses, claims, damages, expenses or liabilities related to, arising out of or in connection with its retention. To the best of the Debtors' knowledge, Blackstone is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Houghton Mifflin Houghton Mifflin Harcourt Publishers Inc., headquartered in Boston, Massachusetts, is one of the three largest U.S. education publishers focusing on the K-12 market with roughly $1.3 billion of revenue for fiscal year ended December 2011. Houghton Mifflin Harcourt and its affiliates filed a prepackaged Chapter 11 reorganization (Bankr. S.D.N.Y. Lead Case No. 12-12171) on May 21, 2012. Paul, Weiss, Rifkind, Wharton & Garrison LLP has been tapped as bankruptcy counsel. Blackstone Advisory Services, LP, is the financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. The Debtor disclosed assets of $2.68 billion and debt totaling $3.535 billion as of the Chapter 11 filing. HUDSON PRODUCTS: S&P Affirms 'B-' Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Beasley, Texas-based Hudson Products Holdings Inc. to stable from negative and affirmed the 'B-' corporate credit rating on the company. The rating on the company's senior secured debt remains 'B-', the same as the corporate credit rating on the company. The recovery rating is '3', indicating our expectation of meaningful (50% to 70%) recovery in the event of default," S&P said. "The ratings on Hudson reflect our assessment of the company's 'vulnerable' business risk and 'highly levered' financial risk. The ratings also incorporate the company's exposure to cyclical end markets, limited scale of operations and relatively small size, and its aggressive debt leverage. The ratings also reflect Hudson's leading market share, low maintenance capital spending requirements, and its 'adequate' liquidity," S&P said. "We view Hudson's financial risk as 'highly levered', reflecting its aggressive debt leverage. Our financial risk profile also incorporates the company's 'adequate' liquidity and our estimate that it will fund capital spending and working capital investment through internal cash generation in 2012. Assuming current year revenue growth of approximately 30% and EBITDA margins of approximately 18%, we project that Hudson will generate approximately $40 million of EBITDA in 2012. We believe the majority of growth in revenue and EBITDA will come from the company's ACHE business," S&P said. "Although Hudson maintains a leading market position as a manufacturer of axial-flow fans and air-cooled heat exchangers, its markets are somewhat focused. Approximately two-thirds of total sales are derived from the volatile refining and petrochemical industries. However, we expect the mix of the company's end market to change over time as liquefied natural gas (LNG), oil sands and gas production end markets become an increasingly larger portion of the company's sales. Over the past couple of years, the company's ACHE business has been weak and has not contributed significantly to EBITDA generation. However, the company's fan business has performed well. Also, the company has seen recent improvement in its North American ACHE business, which is supported by the company's improved backlog (which primarily consists of its ACHE business). As of March 31, 2012, the company's backlog (which primarily consists of its ACHE business) was $99.3 million, up from $57.4 million in the prior year period. The company's higher backlog should drive revenue growth over the next year. Still, given Hudson's small scale and focused product lines, Hudson remains exposed to competition from lower cost manufacturing regions, such as pressure from South Korean manufacturers in the Middle East ACHE market," S&P said. "The stable outlook reflects our expectation that Hudson's credit metrics will improve modestly over the coming months, while maintaining adequate liquidity. It also reflects our view that Hudson will remain in compliance with its amended covenants. We could lower the ratings if liquidity weakens to below $10 million. We would consider a positive rating action if the company considerably improves the size and scale of its operations while maintaining debt leverage below 6.0x," S&P said. INT'L ENVIRONMENTAL: Files Schedules of Assets and Liabilities -------------------------------------------------------------- International Environmental Solutions Corporation, dba IES Corporation filed with the Bankruptcy Court for the Central District of California its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $2,300,000 B. Personal Property $22,829,244 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $3,628,707 E. Creditors Holding Unsecured Priority Claims $135,197 F. Creditors Holding Unsecured Non-priority Claims $6,623,349 ----------- ----------- TOTAL $25,129,244 $10,387,254 A full text copy of the company's assets and liabilities is available free at: http://bankrupt.com/misc/INTERNATIONAL_ENVIRONMENTAL_sal.pdf About International Environmental Karen Bertram, James Hinkle, Blaine Scott Molle & Dennis Molle, and Linda Babb filed an involuntary Chapter 11 petition against International Environmental Solutions Corporation, dba IES Corporation, (Bankr. C.D. Calif. Case No. 12-16268) on March 13, 2012. Judge Wayne E. Johnson presides over the case. On April 16, 2012, the Debtor filed their consent for relief under Chapter 11. JEDD LLC: Tenn. Real Estate Firm Files for Chapter 11 ----------------------------------------------------- JEDD, LLC, filed a bare-bones Chapter 11 petition (Bankr. M.D. Tenn. Case No. 12-05701) on June 20, 2012, in Cookeville, Tennessee. Jamestown-based JEDD estimated assets and liabilities of $10 million to $50 million as of the Chapter 11 filing. According to http://www.tnrecprop.com/,JEDD is a Tennessee-based real estate company offering premier developments with a focus on recreation and family values. The Debtor has activity and developments in Fentress County, including Flat Rock Reserve, Nichol Creek FARMS, Fortune 7 Homes, Island in the Sky, Concierge Services, Hunter's Ridge, River Park and Clear Fork. Paul "Doug" Gates, a co-founder and VP of operations, signed the Chapter 11 petitoin. Mr. Gates is also the CEO of Fortune 7, Inc., owner and operator of three engineering firms specializing in electrical, microwave and construction engineering. LAURENTIAN ENERGY: Moody's Assigns 'Ba2' Rating to $48.5MM Bonds ---------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 rating to Laurentian Energy Authority I, LLC's (LEA) approximate $48.5 million in outstanding cogeneration revenue bonds series 2005A and 2005B. The bond proceeds funded the 2005 modification of existing coal-fired facilities in the cities of Virginia and Hibbing, Minnesota, to accommodate biomass cogeneration of electric capacity, energy and steam production. The outlook is negative. The bonds were initially rated Baa3 by Moody's in October 2005 with a stable outlook. In 2007 Moody's affirmed the ratings and maintained the stable outlook. Moody's withdrew the bond ratings in December 2011 as it believed it had insufficient or otherwise inadequate information to support the maintenance of the rating at that time. Ratings Rationale The Ba2 rating reflects relatively predictable cash flows provided under a long-term power purchase agreement (PPA) with a high investment grade offtaker in Northern States Power (NSP)(A3, Issuer Rating, stable outlook), take-or-pay steam agreements with two Minnesota public utilities, relative importance of the steam to the host cities, and above average liquidity. The assigned rating is tempered by imperfections in the PPA, relatively weak historical debt service coverage ratios (DSCR), and the lack of long-term contracted source of biomass supply from suppliers of unknown credit quality. The negative outlook reflects recent declining trends in the DSCR to levels well below initial expectations and the challenging near-term prospects for improving financial performance. Strengths: * Long-term off-take agreement with NSP for capacity and energy payments * Above average liquidity for a project financing * Regulatory importance to the off-taker * Demonstrated history of procuring biomass fuel supply to meet state mandate * Generally good, though short biomass/coal operating history * Importance of project to steam off-takers Weaknesses: * Contractual and structural imperfections expose the project to volume and price risk for fuel * Declining trend in debt service coverage ratios * Punitive penalty regime under the PPA * Substantially above market price for power * Potential for future environmental challenges * The project lacks a rate covenant and there is no distribution test Outlook The negative outlook reflects recent declining debt service coverage ratios commensurate with Ba-rated project financings. What Could Make the Rating Go-Up: The rating is unlikely to be upgraded in the near-term given the negative outlook. The outlook could be stabilized should the project achieve debt service coverage above 1.1x during Moody's outlook period of twelve -- eighteen months. Other stabilizing factors could be securing an increased level of long-term biomass supply contracts or an amendment to the existing PPA with NSP that improves financial metrics. What Could Make the Rating Go-Down: The rating could be downgraded if the DSCR remains below 1.1x for a sustained period, if the project faces penalties for failing to meet biomass component of at least 75%, or if operational challenges arise that result in lower than committed energy production and subsequent revenue reduction received by the authority. The principal methodology used in this rating was Power Generation Projects published in December 2008. LDK SOLAR: To Report First Quarter 2012 Results on June 26 ---------------------------------------------------------- LDK Solar Co., Ltd., will report financial results for the first quarter ended March 31, 2012, before the market opens on Tuesday, June 26, 2012. The company will host a corresponding conference call and live webcast at 8:00 a.m. Eastern Time (ET) the same day. To listen to the live conference call, please dial 877-941-1427 (within U.S.) or 480-629-9664 (outside U.S.) at 8:00 a.m. ET on June 26, 2012. An audio replay of the call will be available through July 10, 2012, by dialing 800-406-7325 (within U.S.) or 303-590-3030 (outside U.S.) and entering the pass code 4545213#. About LDK Solar LDK Solar Co., Ltd. -- http://www.ldksolar.com-- based in Hi-Tech Industrial Park, Xinyu City, Jiangxi Province, People's Republic of China, is a vertically integrated manufacturer of photovoltaic products, including high-quality and low-cost polysilicon, solar wafers, cells, modules, systems, power projects and solutions. LDK Solar was incorporated in the Cayman Islands on May 1, 2006, by LDK New Energy, a British Virgin Islands company wholly owned by Xiaofeng Peng, LDK's founder, chairman and chief executive officer, to acquire all of the equity interests in Jiangxi LDK Solar from Suzhou Liouxin Industry Co., Ltd., and Liouxin Industrial Limited. KPMG in Hong Kong, China, said in a May 15, 2012, audit report there is substantial doubt on the ability of LDK Solar Co., Ltd. to continue as a going concern. According to KPMG, the Group has a net working capital deficit and is restricted to incur additional debt as it has not met a financial covenant ratio under a long-term debt agreement as of Dec. 31, 2011. These conditions raise substantial doubt about the Group's ability to continue as a going concern. The Company's balance sheet at Dec. 31, 2011, showed US$6.85 billion in total assets, US$6 billion in total liabilities, $219.69 million in redeemable non-controlling interests, and US$624.92 million in total equity. LIFECARE HOLDINGS: Stuart Archer Named Chief Operating Officer -------------------------------------------------------------- LifeCare Holdings, Inc., through its subsidiary, LifeCare Management Services, L.L.C., appointed Stuart Archer, age 37, as Chief Operating Officer of the Company. Mr. Archer will assume the position effective as of July 9, 2012. Since 2010, Mr. Archer has served as Senior Vice President of Market Development at LHC Group, Inc. Prior to assuming that role, Mr. Archer served in various other positions at LHC Group from 2003 to 2010, including Divisional Vice President of Hospice and Facility Based Services from 2009 to 2010 and Divisional Vice President of Facility Based Services from 2006 to 2009. In connection with his appointment as the Company's Chief Operating Officer, LifeCare Management entered into an employment agreement with Mr. Archer. Mr. Archer's employment agreement provides for an initial term of one year, subject to automatic one year renewals thereafter unless the agreement is terminated in accordance with its terms. Pursuant to the employment agreement, Mr. Archer is entitled to receive an annual base salary of $350,000 and is eligible for an annual bonus based on achievement of performance objectives established by the Board of Directors of the Company. The target amount of the annual bonus is 60% of Mr. Archer's base salary, with the potential to earn up to 100% of his base salary. Mr. Archer's annual bonus is not guaranteed and is at the discretion of the Board. In accordance with his employment agreement, Mr. Archer will also receive a $100,000 sign-on bonus on July 19, 2012. The employment agreement also provides for Mr. Archer to receive certain other benefits, including participation in employee welfare benefit plans, paid leave and expense reimbursements. If Mr. Archer is terminated other than for cause or resigns voluntarily for good reason, he will be entitled to receive continued salary and bonus for one year, with the amount of the annual bonus equal to the lesser of 60% of Mr. Archer's base salary in effect on the date of termination or the annual bonus paid to him in respect of the immediately preceding fiscal year. However, if Mr. Archer is terminated other than for cause or resigns voluntarily for good reason within twelve months following a change of control, Mr. Archer shall instead be entitled to receive (i) base salary earned but not paid through the date of termination, (ii) any bonus compensation awarded for the fiscal year preceding that in which termination occurs, but is unpaid as of the date of termination, (iii) a lump sum payment equal to the Mr. Archer's current base salary and (iv) a lump sum payment equal to the Termination Bonus. Mr. Archer will also be entitled to certain other benefits, including continued medical and dental insurance coverage for up to twelve months, following his termination. Mr. Archer will be subject to non-competition, non- solicitation and certain confidentiality provisions for a period of one year following the termination of his employment. On June 6, 2012, the Board increased its size from six to seven members and appointed Richard Newsted as a director, effective immediately. Mr. Newsted will receive cash compensation for his service as a director in the amount of $20,000 per quarter. The Company expects that Mr. Newsted will be appointed as a member of the Company's audit committee. About LifeCare Holdings Plano, Tex.-based LifeCare Holdings, Inc. -- http://www.lifecare-hospitals.com/-- operates 19 hospitals located in nine states, consisting of eight "hospital within a hospital" facilities (27% of beds) and 11 freestanding facilities (73% of beds). Through these 19 long-term acute care hospitals, the Company operates a total of 1,057 licensed beds and employ approximately 3,200 people, the majority of whom are registered or licensed nurses and respiratory therapists. Additionally, the Company holds a 50% investment in a joint venture for a 51-bed LTAC hospital located in Muskegon, Michigan. The Company reported a net loss of $34.83 million in 2011, compared with net income of $2.63 million on $358.25 million in 2010. The Company's balance sheet at March 31, 2012, showed $495.99 million in total assets, $546.90 million in total liabilities, and a $50.91 million total stockholders' deficit. * * * LifeCare Holdings carries "Caa1" corporate family and probability of default ratings, with negative outlook, from Moody's Investors Service and a 'CCC-' corporate credit rating, with negative outlook from Standard & Poor's Ratings Services. In November 2010, Standard & Poor's Ratings lowered its corporate credit rating on LifeCare Holdings to 'CCC-' from 'CCC+'. "The downgrade reflects the imminent difficulty the company may have in meeting its bank covenant requirements and the risk of it successfully refinancing significant debt maturing in 2011 and 2012," said Standard & Poor's credit analyst David Peknay. The likelihood of a debt covenant violation is heightened by the company's lack of appreciable operating improvement coupled with a large upcoming tightening of is debt covenant in the first quarter of 2011. Additional equity by the company's financial sponsor may be necessary to avoid a covenant violation. Accordingly, S&P believes the chances of bankruptcy have increased. As reported by the TCR on May 26, 2011, Standard & Poor's Rating Services affirmed its 'CCC-' corporate credit rating and its senior subordinated debt rating on Plano, Texas-based LifeCare Holdings Inc. "The low-speculative-grade rating on LifeCare reflects its narrow focus in a competitive business heavily reliant on uncertain Medicare reimbursement," said Standard & Poor's credit analyst David Peknay, "and its highly leveraged financial risk profile highlighted by very weak cash flow protection measures, slim liquidity, and very high debt level." In the June 6, 2012, edition of the TCR, Moody's downgraded LifeCare Holdings, Inc.'s corporate family rating to Caa3 and probability of default rating to Ca. The downgrade of the corporate family rating to Caa3 reflects heightened refinancing risk, an untenable capital structure, and interest burden that is not covered by cash flows generated from the company's ongoing operations. Moody's believes LifeCare will need to address its entire capital structure in the next twelve months which is reflected in the Ca probability of default rating. LIGHTSQUARED INC: U.S. Trustee Unable to Appoint Committee ---------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that the U.S. trustee for the Southern District of New York on Wednesday told the bankruptcy judge overseeing LightSquared Inc.'s bankruptcy that she was unable to appoint an official committee of unsecured creditors in the case due to lack of interest. U.S. Trustee Tracy Hope Davis reserves her right to appoint a committee in the future. About LightSquared LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, as the Company seeks to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties, prompting the bankruptcy filing. As of the Petition Date, the Debtors employed roughly 168 people in the United States and Canada. As of Feb. 29, 2012, the Debtors had $4.48 billion in assets (book value) and $2.29 billion in liabilities. LightSquared also sought ancillary relief in Canada on behalf of all of the Debtors, pursuant to the Companies' Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the Ontario Superior Court of Justice (Commercial List) in Toronto, Ontario, Canada. The purpose of the ancillary proceedings is to request the Canadian Court to recognize the Chapter 11 cases as a "foreign main proceeding" under the applicable provisions of the CCAA to, among other things, protect the Debtors' assets and operations in Canada. The Debtors named affiliate LightSquared LP to act as the "foreign representative" on behalf of the Debtors' estates. Judge Shelley C. Chapman presides over the Chapter 11 case. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to UBS AG as agent under the October 2010 facility is Melissa S. Alwang, Esq., at Latham & Watkins LLP. The ad hoc secured group of lenders under the Debtors' October 2010 facility was formed in April 2012 to negotiate an out-of- court restructuring. The members are Appaloosa Management L.P.; Capital Research and Management Company; Fortress Investment Group; Knighthead Capital Management LLC; and Redwood Capital Management. Counsel to the ad hoc secured group is Thomas E. Lauria, Esq., at White & Case LLP. Philip Falcone's Harbinger Capital Partners indirectly owns 96% of LightSquared's outstanding common stock. Harbinger and certain of its managed and affiliated funds and wholly owned subsidiaries, including HGW US Holding Company, L.P., Blue Line DZM Corp., and Harbinger Capital Partners SP, Inc., are represented in the case by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP. LIQUIDMETAL TECHNOLOGIES: B. Visser Owns 25.6% of Class A Shares ---------------------------------------------------------------- In an amended Schedule 13D filing with the U.S. Securities and Exchange Commission, Barney D. Visser and his affiliates disclosed that, as of June 1, 2012, they beneficially own 52,870,307 shares of Class A common stock of Liquidmetal Technologies, Inc., representing 25.6% of the shares outstanding. A copy of the filing is available for free at http://is.gd/5iNj33 About Liquidmetal Technologies Based in Rancho Santa Margarita, Calif., Liquidmetal Technologies, Inc. and its subsidiaries are in the business of developing, manufacturing, and marketing products made from amorphous alloys. Liquidmetal Technologies markets and sells Liquidmetal(R) alloy industrial coatings and also manufactures, markets and sells products and components from bulk Liquidmetal alloys that can be incorporated into the finished goods of its customers across a variety of industries. The Company also partners with third- party licensees and distributors to develop and commercialize Liquidmetal alloy products. After auditing the 2011 financial statements, Choi, Kim & Park, LLP, in Los Angeles, California, said that the Company's significant operating losses and working capital deficit raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at March 31, 2012, showed $2.02 million in total assets, $4.86 million in total liabilities, and a $2.84 million total shareholders' deficit. MADISON 92ND: Court Approves Neiger LLP as General Counsel ---------------------------------------------------------- Madison 92nd Street Associates LLC sought and obtained approval from the U.S. Bankruptcy to employ Neiger LLP as general counsel for the Debtor. Madison 92nd Street Associates, LLC, owns real property improved by a hotel located at 410 East 92nd Street, New York, known as the Upper East Side Courtyard by Marriott. It filed for Chapter 11 bankruptcy protection as lender General Electric Capital Corp., owed $74 million, has scheduled a foreclosure sale for Aug. 24, 2011. The petition (Bankr. S.D.N.Y. Case No. 11-13917) was filed Aug. 16, 2011, before Judge Stuart M. Bernstein. J. Ted Donovan, Esq., at Goldberg Weprin Finkel Goldstein LLP, serves as the Debtor's counsel. Cushman & Wakefield Sonnenblick Goldman, LLC serves as financial advisors. It scheduled $84,471,069 in assets and $75,398,580 in debts. The petition was signed by Louis Taic, managing member of 92nd Hotel Associates, LLC and Jeffrey Kosow, managing member of JKNY, LLC, members of the Debtor. Courtyard Management Corporation, which manages and operates the hotel pursuant to a management agreement, is represented by Thomas R. Califano, Esq., and William M. Goldman, Esq., at DLA Piper LLP (US). The Bankruptcy Judge appointed an examiner to explore the best route to reorganization for the Debtor amid a rift between two investor groups. Thomas R. Slome, the examiner, tapped his firm, Meyer, Suozzi, English & Klein, P.C., as his counsel. As reported by the Troubled Company Reporter on May 30, 2012, the Debtor sold the hotel for $82 million cash to an affiliate of RLJ Lodging Trust pursuant to the plan confirmation order signed on May 25. RLJ is a real estate investment trust with 140 hotel properties. It is expected, but not guaranteed, that the net sale proceeds will be sufficient to pay all creditors in full. The Court authorized the Debtor to sell substantially all of the estate's real estate assets in an auction led by CIM Group Acquisitions, LLC. MONEY TREE: Chapter 11 Trustee Hires Christian & Small as Counsel ----------------------------------------------------------------- S. Gregory Hays, the chapter 11 bankruptcy trustee appointed in the case of Small Loans Inc., asks the Bankruptcy Court to authorize the retention of Christian & Small, LLP, as his counsel as of May 1, 2012. The professional services that Christian & Small will render to the Chapter 11 Trustee may include, but will not be limited to, the following: (i) advise the Trustee with respect to the Trustee's powers and duties as a chapter 11 trustee in the continued management and operation of the Debtors' business and properties; (ii) attend meetings and negotiate with representatives of creditors and other parties in interest; (iii) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of causes of action owned by the Debtors, the defense of any action commenced against the Debtors, and objections to claims filed against the estates; (iv) prepare on behalf of the Trustee all motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; (v) negotiate and prepare on the Trustee's behalf any plans of reorganization, disclosure statements, and all related agreements and/or documents, and take any necessary action on behalf of the Trustee to obtain confirmation of plans; (vi) advise the Trustee in connection with any potential sale of assets; (vii) appear before this Court and any appellate courts, and protect the interests of the Debtors' estates before such Courts; (viii) advise the Trustee regarding the maximization of value of the estates for their creditors; and (ix) perform all other necessary legal services and provide all other necessary legal advice to the Trustee in connection with these chapter 11 cases. The Firm will request compensation on an hourly basis, plus reimbursement of actual, necessary expenses and other charges the Firm incurs. Christian & Small will charge hourly rates to the Trustee that are consistent with the rates charged by Christian & Small in bankruptcy and nonbankruptcy matters of this type. These rates are: Senior Partners $360/hour Junior Partners $325/hour Associates $250/hour Paralegals $110/hour Daniel D. Sparks, Esq., assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Money Tree Bainbridge, Georgia-based The Money Tree Inc. -- http://www.moneytreeinc.com/-- operates a network of lending branches across the Southeast, concentrated in Georgia, Florida and Alabama. The Company and four affiliates filed for Chapter 11 bankruptcy (Bankr. M.D. Ala. Case Nos. 11-12254 thru 11-12258) on Dec. 16, 2011. The other debtor-affiliates are Small Loans, Inc., The Money Tree of Louisiana, Inc., The Money Tree of Florida Inc., and The Money Tree of Georgia of Georgia Inc. Judge William R. Sawyer oversees the case, replacing Judge Dwight H. Williams, Jr. Max A. Moseley, Esq., at Baker Donelson Bearman Caldwell & Berkow, P.C., serves as the Debtors' counsel. The Debtors hired Warren, Averett, Kimbrough & Marino, LLC, as restructuring advisors. Money Tree's consolidated balance sheet reported $34,859,189 in assets, $92,655,010 in liabilities, and $57,795,821 in total stockholders' deficit. The Money Tree Inc. disclosed $73,413,612 in assets and $73,050,785 in liabilities as of the Chapter 11 filing. The petitions were signed by Biladley D. Bellville, president. The Company's subsidiary, Best Buy Autos of Bainbridge Inc., is not a party to the bankruptcy filing and intends to operate its business in the ordinary course. Greenberg Traurig, LLP represents the official committee of unsecured creditors for the Debtors. The Committee tapped HGH Associates LLC as its accountants and financial advisors. MONEY TREE: Chapter 11 Trustee Seeks to Hire Hays as Accountant --------------------------------------------------------------- S. Gregory Hays, the chapter 11 bankruptcy trustee appointed for Small Loans, Inc., asks the Bankruptcy Court for authorization to retain Hays Financial Consulting, LLC, as accountants as of May 1, 2012. The Chapter 11 expects Hays Consulting: (a) to advise and assist the Trustee and his attorneys in connection with an investigation of the affairs of the Debtors; (b) to advise and assist the Trustee and his attorneys with the accounting and operational issues in connection with on-going business operations; (c) to advise and assist the Trustee and other professionals employed by the Trustee with regard to the preparation and filing of any and all tax returns which may be required; (d) to provide support and assistance with regard to the proper receipt, disbursement and accounting for funds and other property of the estate; (e) to review, analyze and report to the Trustee and his legal counsel with regard to any financial reports; information or data concerning the administration of this case; the liquidation of assets; the collection of accounts receivable owed to the Debtors; and the enforcement and collection of any claims, including, without limitation, claims for preferences, fraudulent conveyances, and other transfers avoidable under the Bankruptcy Code, improper disposal of assets, and other claims of recovery granted to the Debtors' estates; (f) to provide assistance and advice with regard to the preservation, maintenance, and management of assets of the Debtors, and the advantageous disposition of any assets of the Debtors; (g) to perform any other services that may be required as accountants for the Trustee to assist his attorneys in the performance of the Trustee's duties and exercise of the Trustee's rights and powers under the Bankruptcy Code. The standard hourly rates of the firm's professionals are: Managing Director $300-$360 Director $200-$300 Manager $150-$225 Associates/Senior Associates $125-$175 S. Gregory Hays, assures the Court the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Money Tree Bainbridge, Georgia-based The Money Tree Inc. -- http://www.moneytreeinc.com/-- operates a network of lending branches across the Southeast, concentrated in Georgia, Florida and Alabama. The Company and four affiliates filed for Chapter 11 bankruptcy (Bankr. M.D. Ala. Case Nos. 11-12254 thru 11-12258) on Dec. 16, 2011. The other debtor-affiliates are Small Loans, Inc., The Money Tree of Louisiana, Inc., The Money Tree of Florida Inc., and The Money Tree of Georgia of Georgia Inc. Judge William R. Sawyer oversees the case, replacing Judge Dwight H. Williams, Jr. Max A. Moseley, Esq., at Baker Donelson Bearman Caldwell & Berkow, P.C., serves as the Debtors' counsel. The Debtors hired Warren, Averett, Kimbrough & Marino, LLC, as restructuring advisors. Money Tree's consolidated balance sheet reported $34,859,189 in assets, $92,655,010 in liabilities, and $57,795,821 in total stockholders' deficit. The Money Tree Inc. disclosed $73,413,612 in assets and $73,050,785 in liabilities as of the Chapter 11 filing. The petitions were signed by Biladley D. Bellville, president. The Company's subsidiary, Best Buy Autos of Bainbridge Inc., is not a party to the bankruptcy filing and intends to operate its business in the ordinary course. Greenberg Traurig, LLP represents the official committee of unsecured creditors for the Debtors. The Committee tapped HGH Associates LLC as its accountants and financial advisors. MONEY TREE: Chapter 11 Trustee Wants to Hire Broker to Sell Plane ----------------------------------------------------------------- S. Gregory Hays, the chapter 11 bankruptcy trustee appointed for Small Loans, Inc., asks the Bankruptcy Court for an order authorizing the retention of International Aviation Marketing, Inc., as the Trustee's aircraft broker for the purpose of selling a 1975 Beechcraft B58 Baron N7262R SN: TH-579 airplane. The Trustee asks the Court to auhorize and approve the sale of the Aircraft to any third party buyer so long as the price paid by the buyer nets at least $90,000 to the estates. The Chapter 11 Trustee wants the Court to approve International Aviation's employment and set the terms under which the Trustee may sell the Aircraft so that the Trustee does not have to come back to this Court again once the Trustee finds a buyer for the Aircraft. The principal reason for this request is that a buyer may not want to wait 21 days for sale approval and may discount its offer if the buyer faces competitive bidding in court. The Chapter 11 Trustee proposes to enter into an agreement with International Aviation whereby the Firm will be paid a success fee equal to 5% of the gross price paid for the Aircraft. The Trustee further proposes to reimburse International Aviation for its actual and necessary expenses in an amount not to exceed $7,500 so long as the price for which the Aircraft is sold nets at least $90,000 for the estates. The estates may incur these expenses for fuel, a pilot for moving the Aircraft, and for test flights. Flight insurance will also be provided by the broker, which is not currently in place for the Aircraft. This compensation is consistent with the fees charged by International Aviation in bankruptcy and non-bankruptcy matters of this type. The professional services that International Aviation will render may include, but are not limited to: (a) identifying and contacting potential purchasers who may be interested in buying the Aircraft; (b) managing the sale process and assisting the Trustee In closing any sale transaction. The Trustee has communicated with various aircraft brokers and potential buyers regarding a sale of the Aircraft. The Aircraft is a 1975 Beechcraft B58 Baron N7262R SN: TH-579 with 3,000 hours of total time since new, 38 hours since a major overhaul of the left engine, 874 hours since a factory remanufacture of the right engine, and 1,400 hours since certain propeller overhauls were performed. International Aviation has suggested an initial list price for the Aircraft in the amount of $145,000 while another aircraft broker consulted by the Trustee has suggested a lower initial list price in the amount of $129,000. The Debtors have indicated to the Trustee that hey attempted to sell the Aircraft prior to filing bankruptcy at an asking price of $139,000 but received no offers. The Trustee received a cash offer from one broker for $90,000. Based on the Trustee's consultations with International Aviation and other aircraft brokers, the Trustee has determined that a sale of the Aircraft which nets at least $90,000 for the estates is reasonable and will maximum the value of the Aircraft to the estates. The Trustee proposes accepting the best offer from the broker and seeking Committee approval before selling the Aircraft. Selling the Aircraft at a price which results in the estates receiving net sales proceeds in this amount will give International Aviation the flexibility necessary to insure a sale of the Aircraft while also providing a sufficient return to the estates for the value of the Aircraft. Any sale of the Aircraft will be the result of an arm's-length transaction between the Trustee and the buyer and the Trustee will accept whichever offer results in the maximum return to the estates. The Trustee reserves the right to sell the Aircraft, in the Trustee's sound business judgment, to International Aviation or any other aircraft broker consulted by the Trustee so long as the amount of the net sale proceeds received by the estates is at least $90,000.00 and the Committee approves the sale. The Chapter 11 Trustee's decision to sell the Aircraft is amply supported by a sound business purpose. The Trustee has determined that the Debtors have listed the Aircraft for sale for the last two years and that the Aircraft has only been used for a total of six hours during that same time period. In other words, the Aircraft is clearly not necessary for the Debtors' business operations and it should be sold for the benefit of the Debtors' creditors. For this reason, the Trustee submits that he has demonstrated a sound business justification and otherwise meets the requirements for a sale of the Aircraft outside the ordinary course of business. About Money Tree Bainbridge, Georgia-based The Money Tree Inc. -- http://www.moneytreeinc.com/-- operates a network of lending branches across the Southeast, concentrated in Georgia, Florida and Alabama. The Company and four affiliates filed for Chapter 11 bankruptcy (Bankr. M.D. Ala. Case Nos. 11-12254 thru 11-12258) on Dec. 16, 2011. The other debtor-affiliates are Small Loans, Inc., The Money Tree of Louisiana, Inc., The Money Tree of Florida Inc., and The Money Tree of Georgia of Georgia Inc. Judge William R. Sawyer oversees the case, replacing Judge Dwight H. Williams, Jr. Max A. Moseley, Esq., at Baker Donelson Bearman Caldwell & Berkow, P.C., serves as the Debtors' counsel. The Debtors hired Warren, Averett, Kimbrough & Marino, LLC, as restructuring advisors. Money Tree's consolidated balance sheet reported $34,859,189 in assets, $92,655,010 in liabilities, and $57,795,821 in total stockholders' deficit. The Money Tree Inc. disclosed $73,413,612 in assets and $73,050,785 in liabilities as of the Chapter 11 filing. The petitions were signed by Biladley D. Bellville, president. The Company's subsidiary, Best Buy Autos of Bainbridge Inc., is not a party to the bankruptcy filing and intends to operate its business in the ordinary course. Greenberg Traurig, LLP represents the official committee of unsecured creditors for the Debtors. The Committee tapped HGH Associates LLC as its accountants and financial advisors. MONTPELIER RE: Fitch Retains 'BB+' Rating on $150-Mil. Securities ----------------------------------------------------------------- Fitch Ratings affirmed the 'A-' Insurer Financial Strength (IFS) rating of Montpelier Reinsurance Ltd. (Montpelier Re), the principal (re)insurance operating subsidiary of Montpelier Re Holdings Ltd (Montpelier). The Rating Outlook remains Positive. Fitch observes that the company reported very good results in the first quarter of 2012 that were driven by a strong combined ratio of 58.9%, which benefited from light catastrophe losses during the period. The company's reported $107 million of net earnings in 1Q12, which nearly offsets the $124 million loss reported for the full year 2011, when record high international catastrophe losses hurt Montpelier's results, along with most other global reinsurers. Fitch notes favorably that despite Montpelier's 2011 operating loss, capital ratios (such as net premium to equity and assets to equity) consistently remained well within tolerances for the current rating level. Fitch expects this trend to continue for the foreseeable future. Montpelier's ratings reflect the company's solid operating performance and internal capital generation over the past several years. Montpelier's ratings also recognize Montpelier's significant exposure to earnings and capital volatility derived from its property catastrophe reinsurance products, most recently evidenced by the company's roughly $352 million of combined catastrophe losses in 2011, including approximately $250 million from the Japanese and New Zealand earthquake events. Fitch believes that Montpelier uses sound risk management processes to manage its exposure to potential catastrophe-related losses by geographic zone and relative to its capital base. Fitch observes that the company's share of global catastrophe losses over the last several years has been manageable and consistent with levels that might be expected from a reinsurer of Montpelier's size and focus. This performance lends confidence in Montpelier's approach to risk management. Montpelier's low underwriting and asset leverage enable the company to preserve capital during periods that include underwriting and capital market volatility. Fitch views Montpelier's balance sheet risk as relatively modest. The company's investment portfolio is dominated by highly rated fixed income investments that fared well during periods of capital market volatility. There is relatively little risk of significant adverse loss development from the company's largely short-tail underwriting liabilities. The Positive Rating Outlook reflects Montpelier's solid long term operating performance and the projected benefits of moderate expected pricing improvement in Montpelier's core catastrophe and other short tail specialty reinsurance lines. The Positive Outlook also recognizes the company's increasingly less volatile operating profile relative to comparably rated peers. Key rating triggers that could result in a ratings upgrade include a return to strong overall profitability in 2012, driven by good underwriting results that approximate the company's average combined ratio of approximately 86% since 2007. This assumes that the industry experiences levels of catastrophe losses that approach historical norms in 2012. Such a performance would be viewed favorably if it included a significant positive earnings contribution from Montpelier's Lloyd's Syndicate 5151. Fitch would view this result as an indication that diversifying specialty (re)insurance lines could become an increasingly stabilizing factor in Montpelier's overall operating profile going forward. If these favorable trends were to transpire and Montpelier's overall risk-adjusted capital strength as measured by the company's internal stochastic modeling results and traditional operating leverage ratios continued to approximate current levels while loss reserve development remained favorable or neutral, Fitch could upgrade Montpelier's ratings. Key rating triggers that could result in a ratings downgrade include weakening of overall risk-adjusted capital strength as measured by the company's internal stochastic modeling results and traditional operating leverage ratios with underwriting leverage (measured by traditional premiums written to equity ratios) increasing to levels at or above 1.0 times (x). Fitch could also downgrade the company's ratings if Montpelier were to suffer catastrophe losses that were unfavorably inconsistent with its own internally modeled results or that resulted in earnings and/or capital declines that were significantly worse than comparably rated peers. Fitch has affirmed the following ratings with a Positive Rating Outlook: Montpelier Re Holdings Ltd -- Issuer Default Rating (IDR) at 'BBB+'; -- $228,000,000 6.125% senior notes due Aug. 15, 2013 at 'BBB'. -- $150,000,000 8.875% non-cumulative perpetual preferred securities at 'BB+.' Montpelier Reinsurance Ltd. -- Insurer Financial Strength Rating (IFS) at 'A-'. Montpelier Capital Trust III -- $100,000,000 floating rate trust preferred securities due March 30, 2036 at 'BB+.' MORTGAGES LTD: Greenberg, Quarles to Pay Investors $88 Million -------------------------------------------------------------- Lana Birbrair at Bankruptcy Law360 reports that Greenberg Traurig LLP agreed to pay $61 million Wednesday to settle claims that it aided an alleged Ponzi scheme that bankrupted Mortgages Ltd. and Radical Bunny LLC, and led to $900 million in losses when the real estate bubble popped, while a $26.5 million settlement with Quarles & Brady LLP earned preliminary approval. About Mortgages Ltd. Mortgages Ltd. was the subject of an involuntary Chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- in the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the Chapter 7 proceeding. Mortgages Ltd. faced lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. The Debtor's case was converted to a chapter 11 proceeding (Bankr. D. Ariz. Case No. 08-07465) on June 24, 2008. Judge Sarah Sharer Curley presided over the case. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon P.L.C., replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. Mortgages Ltd. was reorganized pursuant to a plan that was confirmed by the Bankruptcy Court on March 20, 2009. As part of the Plan, ML Manager LLC was created to manage and operate the loans in the portfolio. The original investors for the most part transferred their interests to 49 separate Loan LLC's. A number of investors, referred to as "pass through investors" did not transfer their interests. As part of the Plan, ML Manager took out $20 million in exit financing to help keep the company afloat during the reorganization. MOUNTAIN PROVINCE: Gets Conditional Approval for Kennady Listing ---------------------------------------------------------------- Mountain Province Diamonds Inc. has received the conditional approval of the TSX Venture Exchange for the listing of Kennady Diamonds Inc. The listing of Kennady Diamonds is being sought as part of the previously announced plan of arrangement, pursuant to which the Company will transfer the wholly-owned Northwest Territories diamond property, the Kennady North project, to Kennady Diamonds. Mountain Province President and CEO, Patrick Evans, said: "We expect to satisfy the remaining conditions prior to the end of June, following which we will set the record date (the date established for the purposes of determining the Mountain Province shareholders entitled to receive the distribution of Kennady Diamonds shares), the effective date (the date on which the Arrangement will become effective), and listing date (the date on which the shares of Kennady Diamonds will commence trading)." Upon completion of the Arrangement, Mountain Province will transfer the Kennady North property and working capital in the amount of C$3M to Kennady Diamonds. Mountain Province will distribute 100 percent of the shares of Kennady Diamonds to Mountain Province shareholders on the basis of one Kennady Diamond share for every five shares of Mountain Province held by shareholders on the record date. Patrick Evans added: "The proposed spin-out of Kennady North is intended to deliver greater value to Mountain Province shareholders by unlocking the value of this highly prospective Canadian diamond project. The transaction will also enable Mountain Province to focus on its flagship Gahcho Ku‚ JV with De Beers while Kennady Diamonds focuses on advancing the 123 square- kilometer Kennady North project." About Mountain Province Headquartered in Toronto, Canada, Mountain Province Diamonds Inc. (TSX: MPV, NYSE AMEX: MDM) -- http://www.mountainprovince.com/-- is a Canadian resource company in the process of permitting and developing a diamond deposit known as the "Gahcho Kue Project" located in the Northwest Territories of Canada. The Company's primary asset is its 49% interest in the Gahcho Kue Project. The Company's balance sheet at March 31, 2012, showed C$66.84 million in total assets, C$13.13 million in total liabilities, and C$53.70 million in total shareholders' equity. The Company reported a net loss of C$11.53 million for the year ended Dec. 31, 2011, compared with a net loss of C$14.53 million during the prior year. For the year ended Dec. 31, 2011, KPMG LLP, in Toronto, Canada, noted that the Company has incurred a net loss in 2011 and expects to require additional capital resources to meet planned expenditures in 2012 that raise substantial doubt about the Company's ability to continue as a going concern. MUNICIPAL MORTGAGE: C. Baum and M. Joseph Elected to Board ---------------------------------------------------------- Municipal Mortgage & Equity, LLC, held its annual meeting of shareholders on June 11, 2012. At that meeting, the shareholders of the Company elected Charles C. Baum and Mark K. Joseph to the Board of Directors for a three year term, approved the amendment and restatement of the Company's amended and restated certificate of formation and operating agreement and ratified the appointment of KPMG, LLP, as independent registered public accountant for the year ending 2012. 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. Municipal Mortgage reported a net loss of $18.81 million in 2011, compared with a net loss of $72.45 million in 2010. The Company's balance sheet at March 31, 2012, showed $1.83 billion in total assets, $1.12 billion in total liabilities and $714.15 million in total equity. For 2011, KPMG LLP, in Baltimore, Maryland, expressed substantial doubt about the Company'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 and work with its creditors to restructure or extend its debt arrangements. Bankruptcy Warning The Company said in its 2011 annual report that although the Company has been able to extend, restructure and obtain forbearance agreements on various debt and interest rate swap agreements, these extensions, restructurings and forbearance agreements are generally short-term in nature and do not by themselves provide a viable long-term solution to the Company's liquidity issues. If the Company is not able to negotiate other arrangements, the Company will not be able to pay the interest on certain of its subordinate debt following the rate increases that are scheduled to occur in April and May of 2012. The Company's future cash flows are not expected to be sufficient to satisfy the overall debt service required under the subordinate debt following such increases, and the Company would be unable to repay the indebtedness if the subordinate debt were accelerated. In the event management is not successful in restructuring or settling its remaining non-bond related debt, or if the bond portfolio net interest income and the common equity distributions the Company receives from its subsidiaries are substantially reduced, the Company may have to consider seeking relief through reorganization under the U.S. Bankruptcy Code. NAVISTAR INTERNATIONAL: Board Adopts Stockholder Rights Plan ------------------------------------------------------------ Navistar International Corporation's Board of Directors has adopted a Stockholder Rights Plan and declared a dividend of one right on each outstanding share of Navistar common stock. The Plan is designed to deter coercive takeover tactics including the accumulation of shares in the open market or through private transactions and to prevent an acquiror from gaining control of the Company without offering a fair and adequate price to all of the Company's stockholders. Pursuant to the Plan, one preferred stock purchase right will be distributed as a dividend on each share of the Company's common stock held of record as of the close of business on June 29, 2012. Each right initially will entitle stockholders to buy a unit representing one one-thousandth of a share of a new series of preferred stock of the Company for $140.00. The rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company's common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the Company's common stock. If a person or group acquires beneficial ownership of 15% or more of the Company's common stock, each right (other than rights held by the acquiror) will, unless the rights are redeemed by the Company, become exercisable upon payment of the exercise price of $140.00 for common stock of the Company having a market value of twice the exercise price of the right. The rights may be redeemed by the Company for $0.001 per right at any time until the tenth business day following the first public announcement of the acquisition of beneficial ownership of 15% of the Company's common stock. The Plan exempts any person or group owning 15% or more of the Company's common stock as of the time of the first public announcement of the Rights Plan, but only for so long as such person or group does not become the beneficial owner of any additional shares of common stock (including through derivatives). The rights will expire on June 18, 2013. More details about the Rights Plan are available for free at: http://is.gd/Nk65iL About Navistar International Navistar International Corporation (NYSE: NAV) -- http://www.Navistar.com/-- is a holding company whose subsidiaries and affiliates subsidiaries produce International(R) brand commercial and military trucks, MaxxForce(R) brand diesel engines, IC Bus(TM) brand school and commercial buses, Monaco RV brands of recreational vehicles, and Workhorse(R) brand chassis for motor homes and step vans. It also is a private-label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service. Another affiliate offers financing services. The Company's balance sheet at Jan. 31, 2012, showed $11.50 billion in total assets, $11.69 billion in total liabilities, and a $195 million total stockholders' deficit. * * * Navistar has 'B1' Corporate Family Rating and Probability of Default Rating from Moody's Investors Service. Moody's said in summary credit opinion at the end of April 2012 that the B1 Corporate Family Rating of Navistar International reflects the company's highly competitive position in the North American medium and heavy duty truck markets, and the continuing recovery in demand. It also reflects the progress Navistar continues to make in implementing a strategy that should reduce its vulnerability to cyclical downturns and strengthen returns. The key elements of this strategy include: expanding its scale and operating efficiencies by offering a full line of medium and heavy-duty trucks equipped with Navistar engines; building its position in international truck and engine markets through alliance and joint ventures; and, strengthening its domestic dealer network. As reported by the TCR on June 13, 2012, Standard & Poor's Ratings Services lowered its ratings on Navistar International Corp., including the corporate credit rating to 'B+', from 'BB-'. "The downgrade and CreditWatch placement reflect the company's operational and financial setbacks in recent months," said Standard & Poor's credit analyst Sol Samson. NEOMEDIA TECHNOLOGIES: Sells $450,000 Debenture to YA Global ------------------------------------------------------------ NeoMedia Technologies, Inc., entered into an agreement to issue and sell a secured convertible debenture to YA Global Investments, L.P., in the principal amount of $450,000. The closing of the transaction was held on June 1, 2012. In addition to the Debenture, the Company also issued a warrant to the Buyer to purchase 1,000,000 shares of the Company's common stock, par value $0.001 per share, for an exercise price of $0.15 per share. The Debenture will mature on Aug. 1, 2013, and will accrue interest at a rate equal to 9.5% per annum and such interest will be paid on the Maturity Date in cash or, provided that certain Equity Conditions are satisfied, in shares of Common Stock at the applicable Conversion Price. At any time, the Buyer will be entitled to convert any portion of the outstanding and unpaid principal and accrued interest thereon into fully paid and non- assessable shares of Common Stock at a price equal to the lesser of $0.10 and 95% of the lowest volume weighted average price of the Common Stock during the 60 trading days immediately preceding each conversion date. In connection with the Agreement, the Company also entered into those certain Irrevocable Transfer Agent Instructions with the Buyer, an escrow agent and World Wide Stock Transfer, LLC, the Company's transfer agent. The Company will not affect any conversion, and the Buyer will not have the right to convert any portion of the Debenture to the extent that after giving effect to that conversion, the Buyer would beneficially own in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion, except for not less than 65 days prior written notice from the Buyer. The Company will have the right to redeem a portion or all amounts outstanding in the Debenture via Optional Redemption by paying the amount equal to the principal amount being redeemed plus a redemption premium equal to 10% of the principal amount being redeemed, and accrued interest. About NeoMedia Technologies Atlanta, Ga.-based NeoMedia Technologies, Inc., provides mobile barcode scanning solutions. The Company's technology allows mobile devices with cameras to read 1D and 2D barcodes and provide "one click" access to mobile content. After auditing the 2011 results, Kingery & Crouse, P.A, in Tampa, FL, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and has ongoing requirements for additional capital investment. The Company reported a net loss of $849,000 in 2011, compared with net income of $35.09 million in 2010. The Company's balance sheet at March 31, 2012, showed $7.88 million in total assets, $236.06 million in total liabilities, all current, $4.84 million series C convertible preferred stock, $989,000 series D preferred stock, and a $234 million total shareholders' deficit. NORTH AMERICAN ENERGY: Moody's Confirms 'B3' CFR; Outlook Negative ------------------------------------------------------------------ Moody's Investors Service confirmed North American Energy Partner's (NAEP) B3 Corporate Family Rating (CFR), and Caa1 senior unsecured notes rating. The outlook was changed to negative from rating under review for downgrade. The Speculative Grade Liquidity rating was changed to SGL-3 from SGL-4. This concludes the review of NAEP, which was initiated on March 2, 2012. "The confirmation reflects NAEP's improved liquidity and new contract structure with Canadian Natural Resources, which should result in improved profitability in its oil sands business," said Terry Marshall, Moody's Senior Vice President. "However, NAEP needs to show that it can consistently maintain contracts that enable the realization of margins sufficient to fund its maintenance and growth capital, and interest expense." Upgrades: Issuer: North American Energy Partners, Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4 Senior Unsecured Regular Bond/Debenture, Upgraded to LGD4, 62% from LGD4, 63% Outlook Actions: Issuer: North American Energy Partners, Inc. Outlook, Changed To Negative From Rating Under Review Confirmations: Issuer: North American Energy Partners, Inc. Probability of Default Rating, Confirmed at B3 Corporate Family Rating, Confirmed at B3 Senior Unsecured Regular Bond/Debenture, Confirmed at Caa1 Rating Rationale The B3 Corporate Family Rating is constrained by NAEP's concentration in the Canadian oil sands sector, reliance on relatively few customers that have the ability to unexpectedly defer and change the work performed by NAEP, poor contract management and a weak negotiating position, and high maintenance capex requirements. The B3 rating is supported by the company's long-standing customer relationships as a reliable service provider in the oil sands mining sector and the successful contract re-negotiation with CNRL. The C$225 million senior unsecured notes are rated Caa1, one notch below the CFR, reflecting the priority ranking of the company's secured C$60 million bank term loan and C$85 million revolving credit facility. The SGL-3 Speculative Grade Liquidity rating reflects adequate liquidity. Moody's expects that NAEP will produce positive free cash flow of about C$35 million in the fiscal year ending March 31, 2013. As of March 31, 2012 the company had C$20 million drawn and C$15 million in letters of credit outstanding on its C$85 million revolving credit facility due October 2013, which was reduced from C$105 million on April 2012 from the assets sold to CNRL, leaving approximately C$50 million available. Moody's expects NAEP to be in compliance under its senior leverage ratio (maximum 2.0x) and current ratio (minimum 1.25x) covenants, but breach the interest coverage ratio covenant (minimum 2.0x, stepping up to 2.25x on December 31, 2012 and 2.5x on March 31, 2013) in calendar 2012, absent renegotiation of this covenant. Alternate liquidity is limited. The negative outlook reflects poor contract management, which may lead to lower than anticipated earnings and free cash flow, and the likelihood that NAEP will breach its interest coverage covenant in calendar 2012 and require a waiver or amendment to its credit agreement. The outlook could be changed to stable when it appears that NAEP will be able to consistently perform profitably under its contracts and comfortably comply with all of its covenants for a period of at least 12 to 15 months. The rating could be raised if it appears that NAEP is able to maintain margins under its contracts such that it appears the EBITDA margin will be sustainable above 15% and debt to EBITDA is sustainable below 4x. The rating could be downgraded if it appears that liquidity is constrained and will be insufficient to meet the company's anticipated needs over the succeeding 12 to 15 month period. The principal methodology used in rating North American Energy was the Global Oilfield Services 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. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies. North American Energy Partners Inc. (NAEP), headquartered in Calgary, Alberta, primarily serves the Canadian oil sands sector through its Heavy Construction and Mining segment. OTERO COUNTY: Plan Confirmation Hearing Scheduled Aug. 3 -------------------------------------------------------- The U.S. Bankruptcy Court District of New Mexico will convene a hearing on Aug. 3, 2012, to consider the confirmation of Otero County Hospital Association, Inc.'s Third Amended Plan of Reorganization dated June 20, 2012. The Court previously approved the third amended disclosure statement with conditions. The Debtor was directed to file an amended disclosure statement that contains these changes/additions, among other things: 1. a chart describing the names, the nature of claims, and the amount of claim for each personal injury tort claimant based on information in the claims filed of record -- so if claim is "unliquidated" that is sufficient for purposes of the chart; and 2. amend the DS to describe the rationale for the separate classification of trade claims and personal injury claims described on Ex B and any other personal injury claims not on Exh B; and rationale for including the East claim as part of the class of claims where the creditor's recourse, if the plan is confirmed, is solely against the trust; and The Debtor will serve the Amended Disclosure Statement and plan by June 25, and publish the confirmation notice by July 2. Additionally, the Court set these deadlines: July 26 Voting and objection to confirmation Aug. 1 Response to confirmation objection July 2 Filing any stipulation for temporary allowance of claims for voting purposes, or to file a motion for temporary allowance of claims July 12 Objections to any stipulation or motion for temporary allowance of claim July 31 Confirmation brief (if any) and tally of ballots/solicitation results According to the Disclosure Statement for the Third Amended Plan, the Plan will resolve the Trust Personal Injury Claims on a consensual basis; resolve all issues between the Debtor and Quorum Health Resources, LLC well as the Debtor and Nautilus Insurance Company on a consensual basis; satisfy the claims of Bank of America in full; provide for the payment of trade and other unsecured creditors in full; and allow the Debtor to emerge from chapter 11 in a strong position and with the ability to satisfy the medical needs of Otero County. The Plan contemplates that the Debtor will obtain Exit Financing to the extent necessary to satisfy the claims of its primary secured creditor, Bank of America, and provide the Debtor with sufficient capital to meet its other obligations under the Plan and continue its normal operations. The Debtor has estimated that it will raise $50 million in Exit Financing and that amount will be sufficient to fund the Plan as well as the Debtor's operations. If the Debtor is able to obtain more Exit Financing than projected, it may be able to accelerate some of the installment payments due under the Plan, including payments to the Trust Personal Injury Claimants and the holders of general unsecured claims, however, any acceleration will be at the discretion of the Debtor. A full-text copy of the Disclosure Statement for the Third Amended Disclosure Statement is available for free at: http://bankrupt.com/misc/OTEROCOUNTY_3rdAmendedDS.pdf About Otero County Hospital Otero County Hospital Association Inc. filed for Chapter 11 protection (Bankr. D. N.M. Case No. 11-13686) in Albuquerque, New Mexico, on Aug. 16, 2011. The Alamogordo, New Mexico-based nonprofit developed and operates the Gerald Champion Regional Medical Center. GCRMC serves a total population of approximately 70,000 people. Otero County Hospital Association also does business as Mountain View Catering. Judge Robert H. Jacobvitz presides over the case. Craig H. Averch, Esq., and Roberto J. Kampfner, Esq., at White & Case, LLP, in Los Angeles; and John D. Wheeler, Esq., at John D. Wheeler & Associates, PC, in Alamogordo, New Mexico, serve as bankruptcy counsel. Kurtzman Carson Consultants, LLC, serves as claims agent. The Debtor disclosed $124,186,104 in assets and $40,506,759 in liabilities as of the Chapter 11 filing. Alice Nystel Page, U.S. Trustee for Region 20, appointed five creditors to serve on the Official Committee of Unsecured Creditors of the Debtor. Gardere Wynne Sewell LLP serves as the Committee's counsel. The Committee tapped James Morell of JCM Advisors, LLC, as healthcare management consultant. The U. S. Trustee appointed E. Marissa Lane PLLC as patient care ombudsman on Sept. 13, 2011. No trustee or examiner has been requested or appointed in the Chapter 11 Case. OTERO COUNTY: Jefferies & Co. Approved to Arrange Exit Financing ---------------------------------------------------------------- The U.S. Bankruptcy Court District of New Mexico authorized Otero County Hospital Association, Inc., to enter into agreement with Jefferies & Company, Inc. to arrange exit financing for the Chapter 11 Plan and the Reorganized Debtor. The Debtor related that the Plan contemplates that it will obtain exit financing in order to, among other things, refinance existing debt obligations, make the payments contemplated by the Plan, and provide working capital for the Debtor after it has been reorganized. Accordingly, on May 25, 2012, the Debtor entered into an agreement with Jefferies to arrange the Exit Financing for the Reorganized Debtor. Jefferies will act as the sole and exclusive investment banker in connection with obtaining the Exit Financing, in any appropriate form, whether in one or more public or private transactions involving debt securities or other form of financing facilities. Pursuant to the terms of the Engagement Letter, Jefferies' compensation is linked to its success in raising capital for the reorganized Debtor. In exchange for its services, Jefferies will receive a nonrefundable work fee of $100,000. This amount is creditable against any success fee payable to Jefferies pursuant to the terms of the Engagement Letter, which will be payable in the amount of 1.5% of the aggregate principal amount of Instruments issued by the Debtor in connection with its restructuring. Additionally, if Jefferies serves as the remarketing agent, it will be entitled to an annual remarketing fee of 0.1% of outstanding variable-rate tax-exempt bonds supported by a bank letter-of-credit. In addition to any fees that may be paid to Jefferies under the Engagement Letter, whether or not any Transaction occurs, the Debtor will reimburse Jefferies for all of its reasonable out-of-pocket expenses. The Court has authorized the Debtor to pay the $100,000 work fee to Jefferies as set forth in the Engagement Letter. About Otero County Hospital Otero County Hospital Association Inc. filed for Chapter 11 protection (Bankr. D. N.M. Case No. 11-13686) in Albuquerque, New Mexico, on Aug. 16, 2011. The Alamogordo, New Mexico-based nonprofit developed and operates the Gerald Champion Regional Medical Center. GCRMC serves a total population of approximately 70,000 people. Otero County Hospital Association also does business as Mountain View Catering. Judge Robert H. Jacobvitz presides over the case. Craig H. Averch, Esq., and Roberto J. Kampfner, Esq., at White & Case, LLP, in Los Angeles; and John D. Wheeler, Esq., at John D. Wheeler & Associates, PC, in Alamogordo, New Mexico, serve as bankruptcy counsel. Kurtzman Carson Consultants, LLC, serves as claims agent. The Debtor disclosed $124,186,104 in assets and $40,506,759 in liabilities as of the Chapter 11 filing. Alice Nystel Page, U.S. Trustee for Region 20, appointed five creditors to serve on the Official Committee of Unsecured Creditors of the Debtor. Gardere Wynne Sewell LLP serves as the Committee's counsel. The Committee tapped James Morell of JCM Advisors, LLC, as healthcare management consultant. The U. S. Trustee appointed E. Marissa Lane PLLC as patient care ombudsman on Sept. 13, 2011. No trustee or examiner has been requested or appointed in the Chapter 11 Case. OVERLAND STORAGE: Six Directors Elected at Annual Meeting --------------------------------------------------------- The 2011 annual meeting of shareholders of Overland Storage, Inc., was held on June 12, 2012. At the meeting, the shareholders elected Robert A. Degan, Nora M. Denzel, Joseph A. De Perio, Eric L. Kelly, Scott McClendon, and Shmuel Shottan to the Board of Directors. The shareholders also ratified the appointment of Moss Adams LLP as the Company's independent registered public accounting firm for the fiscal year ending July 1, 2012. About Overland Storage San Diego, Calif.-based Overland Storage, Inc. (Nasdaq: OVRL) -- http://www.overlandstorage.com/-- is a global provider of unified data management and data protection solutions designed to enable small and medium enterprises (SMEs), corporate departments and small and medium businesses (SMBs) to anticipate and respond to change. The Company reported a net loss of $14.50 million on $70.19 million of net revenue for the fiscal year ended June 30, 2011, compared with a net loss of $12.96 million on $77.66 million of net revenue during the prior fiscal year. The Company's balance sheet at March 31, 2012, showed $41.32 million in total assets, $37.30 million in total liabilities and $4.01 million in total shareholders' equity. In its report accompanying the fiscal 2011 financial statements Moss Adams LLP, in San Diego, California, noted that the Company's recurring losses and negative operating cash flows raise substantial doubt about the Company's ability to continue as a going concern. PALISADES MEDICAL: Moody's Affirms Ba2 Bond Rating; Outlook Pos. ---------------------------------------------------------------- Moody's Investors Service has affirmed Palisades Medical Center's (PMC) Ba2 bond rating affecting $37.6 million of outstanding debt issued through the New Jersey Health Care Facilities Finance Authority. The outlook revised to positive from stable. Summary Rating Rationale The affirmation of the Ba2 debt rating and the revision of the outlook to positive from stable reflect Palisades' trend of improving financial performance in fiscal years 2011 and 2010 with volume growth and operational improvements at the medical center driving strong revenue growth and good cash flow generation. This trend is mitigated by the current reductions in Medicare and Medicaid rates for skilled nursing facilities that have lead to lower profitability of The Harborage, which is Palisades' 245-bed skilled nursing facility and part of the obligated group. Combined financial performance has largely been supported by operating profits at The Harborage which have softened in fiscal year 2012. Management is actively endeavoring to return The Harborage to historical operating levels and future rating action will depend on the extent to which this plan is successful. Palisades is further challenged by its small size and location in the highly competitive northern New Jersey market with increased merger and acquisition activity and its growing defined benefit pension plan liability. Strengths * Trend of improving financial performance continuing in fiscal year (FY) 2011 with operating cash flow margin of 6.3% compared to 5.1% and 4.7% in fiscal years 2010 and 2009, respectively; results through the first quarter of FY 2012 show slightly lower performance with operating cash flow margin of 7.9% compared to 8.5% in the comparable prior year period, mainly due to softer performance at the Harborage, Moody's notes that mid-year performance is usually higher than the full fiscal year. * Good cash flow generation in FY 2011 improve debt coverage ratios to levels favorable to the Ba medians with Moody's adjusted maximum annual debt service coverage (MADS) of 3.1 times compared to 2.5 times in FY 2010 (Ba median is 2.2), adjusted debt-to-cash flow of 4.2 times compared to 5.1 times in FY 2010 (Ba median is 5.1) and debt-to-revenue of 28% compared to 29% in FY 2010 (Ba median is 34%). * Growth in combined inpatient admissions and observation stays and outpatient volumes in FY 2011 over the prior year driving 4.7% total operating revenue growth; growth continues in FY 2012 maintaining the medical center's leading market share in its immediate eight-town primary service area * All fixed rate debt structure with no derivates mitigates any immediate demands on the balance sheet * Clinical affiliation with Hackensack University Medical Center (A3/stable) for level two nursery services, other possible alliances being negotiated and a new residency program viewed as differentiating factors that improve the quality and the reputation of the hospital in the eyes of patients and physicians Challenges * Heavy reliance on government payors at the Harborage, with Medicare (17%) and Medicaid (64%) representing a high 81% of its payor mix; Medicaid and Medicare rate reductions for skilled nursing facilities have pressured operating performance for the system in FY 2012; management has a number of initiatives to mitigate the impact and maintain good operating income, albeit softer than historical levels * High dependence on government payors (55% Medicare and 16% Medicaid) has limited historical revenue growth and long-standing absence of a Blue Cross contract (largest commercial payor in northern New Jersey) at PMC limits future revenue and volume growth * Crowded and highly competitive northern New Jersey market with market share split between several providers in the primary and secondary service areas; recent merger and acquisition activity adds an element of uncertainty to this market * Small provider with $163 million in combined revenues and under 10,000 admissions in FY 2011 making it vulnerable to external changes and physician departures * Growing defined benefit pension obligation adds to the liabilities of the system; despite modifications to the structure, the projected benefit liability grew to $46.3 million (56% funded ration based on the projected benefit obligation) at FYE 2011 from $25 million (71% funded ratio) at FYE 2010 Outlook The positive outlook reflects Moody's expectation that improved financial performance at the medical center will be sustained in FY 2012 and FY 2013 and represents a departure from historical dependence on the Harborage. Improved cash flow generation should provide adequate debt service coverage and further improve balance sheet metrics. Future upgrade rating action over the next two years will depend on Palisades' ability to navigate the revenue pressures at The Harborage and the changing competitive market. What Could Make The Rating Go Up Sustained improvement in financial performance for the combined medical center and skilled nursing facility; continued volume growth leading to revenue and market share growth; continued improvement in liquidity and debt ratios including comprehensive debt What Could Make The Rating Go Down Decline in volumes and operating performance; sustained downturn in performance at the Harborage; decline in liquidity; additional debt without commensurate increase in cash flow and liquidity; changes in the competitive landscape that negatively impact performance Principal Methodology Used The principal methodology used in this rating was Not-For-Profit Healthcare Rating Methodology published in March 2012. PEMCO WORLD: Creditors File Formal Sun Capital Settlement --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that creditors of Pemco World Air Services Inc. filed papers seeking formal court approval of a settlement with secured lender Sun Capital Partners Inc. The settlement comes to bankruptcy court for approval on June 29. According to the report, the official creditors' committee hammered out the settlement with Sun Capital while the business was being auctioned. From sale proceeds otherwise earmarked for Sun Capital on account of its senior secured claim, the lender guarantees that no less than $1 million will be available for unsecured creditors after claims with higher priority and expenses of the Chapter 11 case are paid. About Pemco World Air Services Headquartered in Tampa, Florida Pemco World Air Services -- http://www.pemcoair.com/-- performs large jet MRO services, and has operations in Dothan, AL (military MRO and commercial modification), Cincinnati/Northern Kentucky (regional aircraft MRO), and partner operations in Asia. Pemco filed a Chapter 11 bankruptcy petition (Bankr. D. Del. Case No. 12-10799) on March 5, 2012. Young Conaway Stargatt & Taylor, LLP has been tapped as general bankruptcy counsel; Kirkland & Ellis LLP as special counsel for tax and employee benefits issues; AlixPartners, LLP as financial advisor; Bayshore Partners, LLC as investment banker; and Epiq Bankruptcy Solutions LLC as notice and claims agent. On March 14, 2012, the U.S. Trustee appointed an official committee of unsecured creditors. On April 13, 2012, Sun Aviation Services LLC (Bankr. D. Del. Case No. 12-11242) filed its own Chapter 11 bankruptcy petition. Sun Aviation owns 85.08% of the stock of Pemco debtor-affiliate WAS Aviation Services Holding Corp., which in turn owns 100% of the stock of debtor WAS Aviation Services Inc., which itself owns 100% of the stock of Pemco World Air Services Inc. Pemco also owes Sun Aviation $5.6 million. As a result, Sun Aviation is seeking separate counsel. However, Sun Aviation obtained an order jointly administering its case with those of the Pemco debtors. On June 15 the bankruptcy court approved sale of Pemco's business for $41.9 million cash to an affiliate of VT Systems Inc. from Alexandria, Virginia. Boca Raton, Florida-based Sun Capital was under contract to make the first bid at auction for the provider of heavy maintenance and repair services for commercial jet aircraft. POLI-GOLD LLC: Settles With Creditors, Seeks Case Dismissal ----------------------------------------------------------- Poli-Gold, L.L.C., asks the U.S. Bankruptcy Court for the District of Arizona to dismiss its Chapter 11 case. The Debtor related that it filed for bankruptcy protection to avoid foreclosure of certain of its real properties and to restructure its obligations with three major creditors including secured lenders Arizona Havasu, LLC and Horizon Community Bank and claims by the U.S. Environmental Protection Agency concerning the Debtor's development of its resort property in Panguitch Lake, Utah. Through this proceeding the Debtor has engaged with each of its major creditors and has received Court approval of arrangements with each creditor that resolved or restructured its obligations. The Debtor says there is no further need for the Debtor to maintain its protection or to reorganize pursuant to Chapter 11 of the Bankruptcy Code. About Poli-Gold Fort Mohave, Arizona-based Poli-Gold, LLC, owns a cabin and RV resort in Panguitch, Utah. It also owns a commercial building/warehouse/storage facility in Fort Mohave, Arizona, as well as a commercial property in Lake Havasu City, Arizona, and some vacant lots in Kingman, Arizona. Poli-Gold filed for Chapter 11 bankruptcy protection (Bankr. D. Ariz. Case No. 10-37018) on Nov. 17, 2010. Attorneys at Engelman Berger, P.C., serve as the Debtor's bankruptcy counsel. Keller Williams River Cities Specialists serves as real estate listing broker. In its schedules, the Debtor disclosed assets of $30,384,943 and liabilities of $14,401,515 as of the petition date. PROMETRIC INC: S&P Withdraws 'BB+' Corp. Credit Rating at Request ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB+' corporate credit rating on Baltimore, Md.-based Prometric Inc. "At the same time, we withdrew our 'BBB' rating on the company's $10 million revolving credit due 2017 and a $165 million term loan due 2017, and the recovery rating of '1' on this debt, indicating our expectation of very high (90% to 100%) recovery for lenders in the event of a payment default," S&P said. "The rating was withdrawn at the company request and because we lack adequate financial information to maintain surveillance," S&P said. QUAMTEL INC: Leo Hinkley Named to Board of Directors ---------------------------------------------------- The Board of Directors of Quamtel, Inc., appointed Leo Hinkley as a member of the Board. Mr. Hinkley was appointed to fill an existing vacancy on the Board and will serve until the next annual meeting of shareholders of the Company or until his successor is duly elected and qualified. For Mr. Hinkley's services on the Board, the Company has agreed to the following compensation package: Cash compensation of $10,000 per year increasing to $25,000 per year once the Company reaches 25,000 subscribers; and a restricted stock option to purchase 180,000 shares of the Company's common stock vesting over time. Mr. Hinkley has been an active member of the investor relations (IR) profession, investment industry, and Wall Street community for approximately 28 years and has been registered with or a member of the Securities and Exchange Commission, National Association of Securities Dealers, National Futures Association, Commodity Futures Trading Commission, the Florida Department of Banking and Finance, the Florida Bankers Association, Florida Association of School Business Officials, and the National Investor Relations Institute. In the course of his career, he has worked with research analysts and portfolio managers from many of the largest financial and investment institutions worldwide. He joined BankAtlantic Bancorp and the BFC Financial Corporation group of companies in August 2000 and serves as IRO for both. For a number of years during this period he also served as IRO of Levitt Corp, the parent of Levitt and Sons - America's oldest homebuilder. From 1997 through 2000, Mr. Hinkley served as Investor Relations and Corporate Communications Director for large market cap ECI Telecom, a global provider of advanced telecom and data solutions to leading carriers and service providers worldwide. Headquartered in Israel, ECI pioneered technologies for global networks including voice compression, SDH, DSL, Broadband Access, Optical Networking, and VOIP solutions. Mr. Hinkley serves on the Board of Directors of the Broward County Crime Commission, is a member of the Fraternal Order of Police, and has been inducted into the Who's Who in Leadership in the United States, the Who's Who in International Business in Florida and Miami, and Business Leader's Mover & Shakers Award. About Quamtel Inc. Dallas, Texas-based Quamtel, Inc., is a communications company offering, through its subsidiaries, a comprehensive range of mobile broadband and communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. The Company's common stock trades on the OTC Bulletin Board (OTC BB) under the symbol "QUMI." In its report on the 2011 financial statements, RBSM LLP, in New York, New York, expressed substantial doubt about Quamtel's ability to continue as a going concern. The independent auditors noted that the Company has incurred significant operating losses in the current year and also in the past. The Company reported a net loss of $4.49 million on $1.93 million of revenues for 2011, compared with a net loss of $10.05 million on $2.18 million of revenues for 2010. The Company's balance sheet at March 31, 2012, showed $1.63 million in total assets, $3.41 million in total liabilities and a $1.78 million total shareholders' deficiency. QUANTUM FUEL: To Issue 3.1MM Common Shares Under Incentive Plan --------------------------------------------------------------- Quantum Fuel Systems Technologies Worldwide, Inc., filed with the U.S. Securities and Exchange Commission a Form S-8 registering 3.1 million shares of common stock issuable under the Company's 2011 Stock Incentive Plan. The proposed maximum aggregate offering price is $1.8 million. A copy of the filing is available for free at http://is.gd/iU3RjP About Quantum Fuel Based in Irvine, California, Quantum Fuel Systems Technologies Worldwide, Inc., is a fully integrated alternative energy company and considers itself a leader in the development and production of advanced clean propulsion systems and renewable energy generation systems and services. Quantum Fuel reported a net loss attributable to stockholders of $38.49 million on $24.47 million of total revenue for the eight months ended Dec. 31, 2011, compared with a net loss attributable to stockholders of $6.52 million on $10.51 million of total revenue for the same period a year ago. The Company reported a net loss of $11.03 million for the year ended April 30, 2011, following a net loss of $46.29 million during the prior year. The Company's balance sheet at March 31, 2012, showed $51.54 million in total assets, $17.48 million in total liabilities, and $34.06 million in total stockholders' equity. Haskell & White LLP, in Irvine, California, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that Company incurred significant operating losses and used a significant amount of cash in operations during the eight months ended Dec. 31, 2011. RESIDENTIAL CAPITAL: Fortress, Berkshire Named Lead Bidders ----------------------------------------------------------- Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District Court of New York approved Fortress Investment Group LLC unit's offer of $2.45 billion as stalking horse bid for Residential Capital LLC's mortgage-servicing and origination unit, Steven Church of Bloomberg News reported. Nationstar Mortgage LLC increased its initial offer of $2.4 billion by $125 million, topping Berkshire Hathaway Inc.'s bid, Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York, ResCap lawyer, told Judge Glenn at a hearing held on June 19, 2012, Bloomberg relayed. "You had very robust bidding that raised the stalking-horse bidding considerably," Judge Glenn was quoted as saying at the hearing. Berkshire was named as stalking-horse bidder for ResCap's loan portfolio, replacing Ally Financial Inc., Bloomberg said. The auction will begin with Berkshire's offer of $1.45 billion and includes a $10 million breakup fee, the report said. In addition to its bid for the Mortgage Business, Berkshire also offered on June 11, 2012 to buy the AFI Purchased Assets on substantially the same terms as the agreement with Ally, but for an increased purchase price of $1.45 billion (as compared to $1.4 billion under the Ally APA for a sale outside of the Ally-backed Chapter 11 plan with broad releases. Ally offered to be lead bidder for the loan portfolio for $1.4 billion to raise as much as money as possible for ResCap, said Gina Proia, spokesperson for Ally, in an e-mailed statement to Bloomberg. "We continue to be optimistic about the ultimate value ResCap will achieve in the auction process," she added. Marshall Murphy, head of investor relations for Nationstar, said the auctions may take place in October, Bloomberg relayed. The Debtors' postpetition financing requires the sales to close by April 15, 2012, Kenneth H. Eckstein, Esq., at Kramer Levin, Naftalis & Frankel LLP, in New York, counsel to the Official Committee of Unsecured Creditors, told the Court, the report noted. R. Ted Weschler, investment manager at Berkshire, testified at the hearing that the investment firm offered to buy ResCap for $1 and an assumption of all its debts, Bloomberg said. He also said Berkshire offered to split any legal liability Ally might face from lawsuits related to flawed mortgage loans ResCap originated, with Ally paying the first $1 billion, the report continued. Hours before a scheduled hearing on June 18, 2012, Berkshire raised its offer for the loan operations by $50 million, according to a separate Reuters report. On June 11, Berkshire offered to buy the Mortgage Business at the same purchase price and on substantially the same terms as the agreement with Nationstar, but with a break-up fee of $24 million (as compared to $72 million under the Nationstar APA) and zero expense reimbursement (as compared to up to $10 million under the Nationstar APA). Nationstar then matched Berkshire's offer by raising its original offer of $2.3 billion by $50 million, Reuters reported. Nationstar also cut its proposed breakup fee from $72 million to $24 million, and tossed out its plans for expense reimbursement of up to $10 million, the report noted. At the June 18 hearing, Judge Glenn asked ResCap to justify its choice of Nationstar as stalking-horse bidder when Berkshire offered a lower break-p fee, Bloomberg noted. The bankruptcy judge even questioned whether any stalking horse bidder should be named, according to Bloomberg. The Court convened the June 18 hearing to consider the procedures governing the proposed sales of ResCap assets. "Persuade me why I should approve any breakup fee," Judge Glenn was quoted as saying at June 18's hearing, Bloomberg relayed. The bankruptcy judge observed that a breakup fee and other protections are designed to guarantee interest in an auction, the report said. ResCap, Berkshire and Nationstar argued before the Court as to who should be named the stalking horse bidder for ResCap's mortgage-servicing unit, Bloomberg noted. When Monday's hearing broke for lunch, Nationstar raised its offer by $50 million, Bloomberg disclosed. After lunch, Mr. Weschler testified that Berkshire would top the Nationstar offer by $10 million and cut the breakup fee to $12 million, the report added. When Nationstar tried to counter, Judge Glenn declined to hear the offer, Bloomberg said. Instead, the bankruptcy judge asked the companies to file their final offers later that day, the report noted. On Tuesday morning, ResCap announced that Berkshire had increased its offer to $100 million more than its original offer, or about $2.5 billion, and Nationstar had boosted its original bid by $125 million, Bloomberg said. Judge Glenn agreed with ResCap's decision that Nationstar should be the stalking horse, according to Bloomberg. Fortress is entitled to a $24 million breakup fee should it lose the auction, the report added. Based on the Reuters report, other bidders are emerging for the ResCap assets, including Ocwen Financial Corp. Ocwen Chief Financial Officer John Britti told Reuters recently that his firm expects to join the bidding for ResCap's mortgage loan operations. Lone Star U.S. Acquisitions also told the Court that it remains interested to buy a group of loans ResCap is selling and would participate in an auction for those assets, Reuters reported. AFI is the stalking horse bidder for those assets, with an initial bid of $1.4 billion, the report added. In court papers filed on June 11, Lone Star offered to pay a purchase price equal to approximately 42% of the UPB of the whole loans included in the AFI Purchased Assets. Under Lone Star's APA, Lone Star will post a cash deposit equal to $25 million and a breakup fee in an amount equal to $10 million. Any sale of the loan pool assets would be closed and funded at or before the September 18 bid deadline contemplated by the Debtors' Sale Procedures. Lone Star said that before the Petition Date it contacted the Debtors and Ally on multiple occasions about the prospect of entering into discussions regarding a potential acquisition of residential whole loan pools. Lone Star however believes that the sale of the loan pool assets should be separated from the Ally release/settlement issues. Clean and blacklined copies of the June 11 Berkshire APAs, as compared to the Nationstar and Ally APAs, are available for free at: http://bankrupt.com/misc/ResCap_BerkshireMortgageAPA.pdf http://bankrupt.com/misc/ResCap_MortgageAPA_blacklined.pdf http://bankrupt.com/misc/ResCap_BerkshireLoanAPA.pdf http://bankrupt.com/misc/ResCap_LoanAPA_blacklined.pdf A full-text copy of the Lone Star APA is available for free at: http://bankrupt.com/misc/ResCap_LoneStarLoanAPA.pdf Lone Star is represented by: Scott Davidson, Esq. KING & SPALDING LLP 1185 Avenue of the Americas New York, New York 10036 Tel: (212) 556-2100 Fax: (212) 556-2222 E-mail: sdavidson@kslaw.com - and - - and - Paul K. Ferdinands, Esq. W. Austin Jowers, Esq. Thaddeus D. Wilson, Esq. KING & SPALDING LLP 1180 Peachtree Street, NE Atlanta, GA 30309 Tel: (404) 572-4600 Fax: (404) 572-5100 E-mail: pferdinands@kslaw.com ajowers@kslaw.com thadwilson@kslaw.com About ResCap Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. ResCap is selling its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial. Together, the asset sales are expected to generate approximately $4 billion in proceeds. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Debtors, Creditors Spar Over Sale ------------------------------------------------------ RESIDENTIAL CAPITAL BANKRUPTCY NEWS chronicles various parties' reactions to the guidelines governing the sale of substantially all of Residential Capital LLC's assets. The U.S. Trustee for Region 2, the Official Committee of Unsecured Creditors and other parties-in-interest oppose the procedures governing the sales of substantially all of ResCap's assets. Tracy Hope Davis, the U.S. Trustee for Region 2, Berkshire, Lone Star, and the Creditors' Committee assert that the existence of a $72 million break-up fee plus up to a $10 million expense reimbursement, and the unnecessarily high minimum bid increment of $25 million chill potential competitive bids. The U.S. Trustee contends that the $25 million minimum initial bid increment for the Nationstar APA Assets and the $15 million increment for the AFI APA Assets have no discernible purpose other than to benefit Nationstar and AFI, whose approval is needed for any change to the minimum initial overbid. Berkshire alleges that the Ally APA gives an inside track at the auction and will chill third party bidding. Lone Star contends that the Sale Procedures appear to be designed to enable Ally to obtain a release of all claims between Ally and the Debtors. To fix the Ally APA flaws, the Creditors' Committee asks that (i) the Bidding Procedures be modified to start the bidding at $1.4 billion, rather than $1.6 billion, and (ii) it be given a consent right as to the determination of the highest and best bid. As to the Nationstar APA, the Creditors' Committee proposes (i) the Break-Up Fee should be reduced to $19.2 million, and (ii) the minimum overbid requirement should be reduced to $7.5 million, to ensure the highest benefit to the Debtors' estates. The U.S. Trustee also complains that the Debtors have not adequately addressed consumer protection issues. The U.S. Trustee wants the Debtors to produce additional evidence regarding the manner in which the sales are consistent with the privacy policies in light of its concern that the concept of providing personally identifiable information for "everyday business purposes," only covers "ordinary course business transactions," not the proposed Sales. Furthermore, the Creditors' Committee, Lone Star, and Freddie Mac object to the proposed bid deadline, originally set for September 18, 2012, with an auction originally set for September 25, 2012, and a sale hearing originally set October 15, 2012 (or such other date before October 31, 2012 that this Court conducts a Confirmation Hearing). While the Creditors' Committee proposes an extension of 60 days of the proposed bid deadline, Lone Star seeks a shorter bid deadline on the AFI Purchased Assets and a 30 to 60 day extension on the Nationstar Purchased Assets. Freddie Mac seeks that if Nationstar is the Successful Bidder, no sale hearing will occur prior to October 31, 2012, or prior to November 30, 2012 if Nationstar is not the Successful Bidder. In support of the Creditors' Committee's objection, Jared Dermont, managing director and partner at Moelis & Company LLC, filed a declaration affirming the panel's objections to the proposed sale procedures. The U.S. Government expressed concern about the Nationstar APA's treatment of the DOJ/AG Mortgage Loan Servicing Agreement, specifically, the concept that a prospective purchaser of the Nationstar Purchased Assets need only comply with some of the Debtors' non-monetary obligations under the agreement, thereby excluding other non-monetary obligations that "are critical to protecting homeowners from future occurrence of mortgage-related abuse and fraud." Fannie Mae and Freddie Mac do not object to a transfer of servicing of each of their loan portfolio to a servicer approved by them and on terms acceptable to them. They assert though that due to the size of the loan portfolios at issue, it is imperative that any replacement servicer have the operational expertise and capability to service the loans in accordance with their requirements. U.S. Bank National Association, in its capacity as indenture trustee with respect to 9.625% Junior Secured Guaranteed Notes due 2015, objects to the wholesale elimination of credit bid rights under the proposed bid procedures. The Debtors have obtained support, as of the Petition Date, from holders of approximately 37% of the Junior Secured Notes pursuant to the Plan Support Agreement. Until the time as the Consenting Holders constitute a majority of the holders of the outstanding Junior Secured Notes and provide direction to U.S. Bank with respect to this issue, the Indenture Trustee's right to credit bid under the Sale Procedures on behalf of the holders of the Junior Secured Notes must be preserved, insists James S. Carr, Esq. -- jcarr@kelleydrye.com -- at Kelley Drye & Warren LLP, in New York, counsel to U.S. Bank. PLS Trustees Bank of New York Mellon Trust Company, N.A.; Deutsche Bank Trust Company Americas; Deutsche Bank National Trust Company; U.S. Bank National Association and Wells Fargo Bank., complain that the sale order with respect to the Nationstar APA would make unprecedented findings with respect to their servicing agreements. These findings allow the Debtors and Nationstar to (i) "sever" onerous provisions of integrated executory contracts and assume and assign to Nationstar only the favorable provisions of such contracts; and (ii) arbitrarily limit Nationstar's liability on account of provisions it will assume, counsel to the PSL Trustees, James L. Garrity, Jr., Esq., at Morgan, Lewis & Bockius LLP, in New York argues. He filed a supporting declaration appending copies of PSA Exemplar 1 and 2 and transcript of motion In re American Safety Razor Co., LLC, No. 10-12351, as referenced in the objection. Wells Fargo Bank, N.A., in its capacity as master servicer for RMBS Trusts, joined in the PLS Trustees' objection. Martin G. Bunin, Esq., a partner at Alston & Bird LLP, in New York, counsel to Wells Fargo, filed with a Court a declaration appending copies of pooling and serving agreements and assignment assumption and recognition agreement as referenced in Wells Fargo's joinder. Frost National Bank, counterparty to a servicing agreement, filed a similar objection to the cure amount procedures and seeks information to assess adequate assurance of future performance. Also a party to a servicing agreement, Green Planet Servicing, LLC objects to the extent the sale procedures are inconsistent with its servicing rights and the terminated status of the servicing agreement. Separately, Digital Lewisville, LLC insists that the Debtors must assume and assign a lease agreement for a project commonly referred to as Convergence Office Center, in Lewisville, Texas, to Nationstar. Frost Bank is represented by: Patricia B. Tomasco, Esq. JACKSON WALKER LLP 100 Congress Avenue, Suite 1100 Austin, Texas 78701 Tel: (512) 236-2076 Fax: (512) 691-4138 E-mail: ptomasco@jw.com Wachovia Bank and Wachovia Bank of Delaware, now succeeded by Wells Fargo Bank, N.A., object to inclusion in the sale order of provisions granting AFI a release of its contractual liability to WFBNA under a commercial deposit agreement between the parties. WFBNA is represented by: James Donnell, Esq. Christopher C. Costello, Esq. WINSTON & STRAWN LLP 200 Park Avenue New York, NY 10166-4193 Tel: (212) 294-6700 Fax: (212) 294-4700 E-mail: jdonnell@winston.com cccostello@winston.com Digital Lewisville is represented by: Alan Marder Esq. MEYER, SUOZZI, ENGLISH & KLEIN, P.C. 990 Stewart Avenue, Suite 300 P.O. Box 9194 Garden City, NY 11530-9194 Tel: (516) 741-6565 Fax: (516) 741-6707 E-mail: amarder@msek.com - and - Michael S. Greger, Esq. Ivan M. Gold, Esq. Richard M. Dinets, Esq. ALLEN MATKINS LECK GAMBLE MALLORY & NATSIS LLP 1900 Main Street, Fifth Floor Irvine, CA 92614-7321 Tel: (949) 553-1313 Fax: (949) 553-8354 E-mail: mgreger@allenmatkins.com igold@allenmatkins.com rdinets@allenmatkins.com Green Planet is represented by: Gerard S. Catalanello, Esq. DUANE MORRIS LLP 1540 Broadway New York, New York 10036-4086 Tel: (212) 692-1000 Fax: (212) 692-1020 E-mail: gcatalanello@duanemorris.com jvincequerra@duanemorris.com Debtors, et al. Defend Sale Procedures The Debtors, the proposed purchasers and Citibank filed omnibus responses to the objections to the Sale Procedures. A. Debtors Samuel M. Greene, partner and co-head of the restructuring group of Centerview Partners LLC, investment banker to the Debtors, relates that he has contacted Berkshire to inquire of Berkshire's interest in participating in the Debtors' prepetition marketing process. In mid-April 2012, Berkshire met with AFI CEO Michael Carpenter. Mr. Greene also notes that a representative of Berkshire indicated in a letter dated May 3, 2012 that "neither ResCap entering into bankruptcy nor a sale of ResCap's mortgage production platform is in the best interests of Ally, the US Treasury, Berkshire and other significant stakeholders in both Ally and ResCap." In this letter, Berkshire submitted an alternative transaction proposing, among other things, that Berkshire (or its affiliate) acquire 100% of the equity interests of ResCap from Ally for $1. Centerview has not heard from anyone at Berkshire regarding their interest as the stalking horse bidder for the purchased assets, he said. Mr. Greene also relates that Centerview did not receive any inquiry from Lone Star or its advisors during the prepetition period. Centerview did receive a call from Lone Star's counsel on May 17, 2012. Centerview contacted Lone Star in early June, consistent with the kickoff of the postpetition marketing process. He notes that Lone Star's stalking horse proposal contains material negative changes to the AFI APA. Thus, the Debtors believe it is inappropriate to consider at this time. Although the Debtors remain in discussions with Nationstar regarding the Break-Up Fee and bidding increments, the Debtors maintain that there is no evidence that the Break-Up Fee will hamper bidding. Indeed, the existence of a competing bid on the Nationstar Purchased Assets by Berkshire, and the expression of interest filed by Lone Star, are two independent indications of how Nationstar's stalking horse bid has already brought value to the Debtors' estates, he asserts. Nationstar's stalking horse bid has set a floor price for the Servicing Platform and provided a clear structure for potential competing bids, he insists. The Debtors further believe the sale process should be completed in the proposed timeframe. A protracted sale process may put at risk the Debtors' origination and servicing assets, Mr. Nashelsky argues. He notes that Fannie Mae, Freddie Mac, and Ginnie Mae are all supportive of a quick sale. They have never allowed a mortgage company to continue to service their loans during a bankruptcy for as long as is contemplated by the Debtors' current sale timeline, he avers. Nevertheless, in light of these concerns, the Debtors have offered Freddie Mac consultation rights (and would extend the same proposal to Freddie Mac and Ginnie Mae) in connection with the Sale Procedures. The Debtors have agreed to start the auction process for the AFI Purchased Assets at $1.4 billion, which bid is de-linked from any plan process. The Debtors have also agreed to delete the "Qualified Expression of Interest" determination in the Sale Procedures and provide the Committee with all submissions of financial information and confidentially agreements submitted by potential Qualified Bidders, subject to appropriate confidentiality restrictions. Mr. Nashelsky clarifies that nothing in the Sales Procedures impairs the PLS Trustees' rights to object to the separate treatment of servicing and origination obligations. The Debtors have agreed to provide the PLS Trustees, Frost National Bank and any other counterparty information to help them better understand their alleged cure claims and demonstrate adequate assurance of future performance. The Debtors and U.S. Bank have also agreed that upon either (i) the giving of notice of no direction; (ii) the waiving of credit bidding rights by failing to give notice by July 15, 2012 (or any extended date); or (iii) a final order of the Court denying credit bidding rights, the Indenture Trustee will be deemed to be a consultation party pursuant to the Sale Procedures. The Debtors believe that the disclosure of personally identifiable information is in compliance with the GLBA and is consistent with the privacy notices delivered by the Debtors to mortgage borrowers, and no consumer privacy ombudsman is necessary under section 363(b)(1) of the Bankruptcy Code. In response to the U.S. Trustee's other concerns, the Debtors have agreed to add a proviso to the Sale Procedures Order and Sale Approval Orders to make clear that the proposed sales do not alter the provisions of section 363(o) of the Bankruptcy Code. The Debtors won Court permission to exceed the page limit in their reply by 15 additional pages. A summary chart of objections to the Sale Procedures and the Debtors' corresponding response is available for free at: http://bankrupt.com/misc/ResCap_SaleProcsObjSumm.pdf B. Citibank Citibank, N.A., a secured lender to the Debtors under the Prepetition MSR Facility, reserves all rights to object to the extent the Debtors amend those sale procedures, including in any way that would result in the sale of the MSRs without payment in full of the obligations under the facility or affects Citibank's rights under its acknowledgment agreements with Fannie Mae and Freddie Mac. C. Nationstar Counsel to Nationstar, John Hutchinson, Esq., at Sidley Austin LLP, in New York, asserts that it is entirely inappropriate for Berkshire to seek to displace Nationstar as the stalking horse bidder and appropriate for itself the benefits of Nationstar's labors. "If potential bidders were permitted to sit idly by while a stalking horse bidder performed the work necessary to develop a viable agreement -- only to be displaced at the bidding procedures hearing by a party that did not expend the same effort -- suitable bidders would most certainly be deterred from devoting the time and money required to be the stalking horse, if exposed to a meaningful risk that the debtors' exercise of reasonable business judgment will later be ignored," he elaborates. Mr. Hutchinson maintains that the Break-Up Fee is reasonable, within market, will not chill bidding and was agreed to by the Debtors as part of a substantial and exhaustive negotiation and exercise of their reasonable business judgment. Moreover, the proposed timeline is reasonable in light of the comprehensive dataroom that has been established and the parties' efforts in executing an asset purchase agreement that potential bidders may work from, he points out. He adds that a handful of parties have raised issues that are not appropriately considered at this time. D. AFI As a reluctant bidder, AFI was only willing to pay a higher price for the HFS Loan Portfolio if the sale was accomplished in connection with a Chapter 11 Plan, Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, counsel to AFI, argues. He states that AFI welcomes the additional third-party interest in these assets and is pleased to step aside so long as the Debtors maintain their commitment to pursue this sale in accordance with the timing and terms of their negotiated settlement agreement with AFI. Mr. Schrock however argues that it is not appropriate for the Court to rule on Wachovia Bank's request to make a finding regarding its alleged rights against a non-Debtor. A motion for approval of the sale of the HFS Loan Portfolio and, thus, the substance of the AFI Sale Approval Order, is not currently before the Court, he asserts. Likewise, the other parties' objections to proposed provisions in the sale order may be ruled by the Court at a later date, he adds. AFI filed a supplement to attach a copy of a decision In re Extended Stay Inc., No. 09-13764, 2010 WL 282457 (Bankr. S.D.N.Y. June 22, 2010), as referenced in its response. Transfer of PII to Nationstar Peter Giamporcaro, Esq., counsel for ResCap, submitted a declaration in connection with the transfer of personally identifiable information as part of the proposed sale of certain of the Debtors' assets to Nationstar and its affiliates. The transfer of PII pursuant to the transaction will allow the purchasers to continue lending and servicing functions in connection with the Nationstar Purchased Assets, he says. ResCap's privacy policies permit the use of personally identifiable information ". . . for everyday business purposes -- like to process your transactions, maintain your accounts, respond to court orders and legal investigation, or report to credit bureaus," says Mr. Giamporcaro In the ordinary course of its business, ResCap delivers privacy notices in form similar to the attached privacy notices to mortgage borrowers under the Mortgage Loans, and for the borrowers under the private label servicing contracts, he discloses. The GMACM Notices also reflect privacy policies that were in effect on the Petition Date, he adds. The Private Label Notices are delivered by ResCap on behalf and in the name of a private-label client, pursuant to a private-label servicing contract. Mr. Giamporcaro filed an amended declaration to append forms of GMACM Notices and Private Label Notices, copies of which are available for free at: http://bankrupt.com/misc/ResCap_PrivacyNotices.pdf * * * The Debtors, AFI and Berkshire filed with the Court lists of exhibit for hearing on the proposed sale procedures. About ResCap Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. ResCap is selling its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial. Together, the asset sales are expected to generate approximately $4 billion in proceeds. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Examiner to Probe Ally Transactions -------------------------------------------------------- Judge Martin Glenn said he will appoint an independent examiner to investigate and report on the actions of Residential Capital, LLC and its debtor affiliates, including the Debtors' prepetition transactions with Ally Financial Inc., at the request of Berkshire Hathaway Inc., Caroline Humer of Reuters reported. "Given the facts and circumstances of this case, the court concludes that appointment of an examiner is required and appropriate," Judge Glenn said at the hearing held on June 18, Reuters relayed. An examiner will now be appointed so that it can complete a report expeditiously, Judge Glenn said, according to the report. The bankruptcy judge delayed deciding on details like the budget of the examiner and timeline as to when the public report will become completed, a separate Bloomberg News report discloses. Those issues, said the bankruptcy judge, will be decided after the U.S. Trustee for Region 2 names an examiner, the report adds. Tracy Hope Davis, the U.S. Trustee for Region 2, earlier said the appointment of an examiner in these Chapter 11 cases is mandatory because all of the conditions set in Section 1104(c)(2) of the Bankruptcy Code have been met. "Investigating potentially improper prepetition transactions between a debtor and its affiliates, and evaluating potential claims arising from those transactions, are quintessential duties of a bankruptcy examiner," asserted Thomas B. Walper, Esq. -- thomas.walper@mto.com -- at Munger, Tolles & Olson LLP, in Los Angeles, California, in court papers. Berkshire alleged that the Debtors' first-day pleadings and public securities filings reveal dozens of transactions with Ally and its affiliates involving billions of dollars of asset transfers and intercompany financing -- transactions whose net effect was to transfer a substantial share of ResCap's operating assets to its parent. The Debtors seek to release Ally from any claims arising from these transactions, even while they admit that the Debtors possess valid claims against Ally, including for fraudulent transfer, equitable subordination, and alter ego, he points out. "An examiner should determine whether this proposed release is fair to the Debtors and all their stakeholders," Mr. Walper said. An examiner should also be tasked with reviewing the propriety of the Debtors' request to release Ally from any third-party claims, Mr. Walper asserted. "Those non-debtor releases are especially susceptible to abuse, as they effectively offer a non-debtor a bankruptcy discharge without affording creditors the protections that would attend a bankruptcy," he pointed out. "What is evident -- abundantly so -- is that the Debtors' plan fits neatly into Ally's publicly-stated goal of separating itself, once and for all, from ResCap," Mr. Walper averred. "Whether Ally's agenda also happens to be in the best interest of ResCap and its creditors is another question, one that should be a focus of a searching inquiry." While Berkshire agrees with the Official Committee of Unsecured Creditors that an investigation should be conducted, Berkshire believes that an examiner is preferable to a Creditors' Committee investigation for these reasons: (1) Only an examiner will have the independence of being appointed by and reporting to the Court and all parties-in-interest. This can not be said of the Creditors' Committee, whose members have disparate and potentially conflicting interests with respect to the matters that require investigation. (2) An examiner will serve a single mandate to investigate and publicly report the results of the investigation, free from any distractions related to administering the cases or the Debtors' business operations. In contrast, the Creditors' Committee must attend to those matters and has no obligation to publicly report the results of its investigation. (3) The Court can empower the examiner to access the Debtors' communications with their counsel and other advisors. An examiner thus can review critical documents and other information that are not available to the Creditors' Committee. The Debtors indisputably have more than $5,000,000 of qualifying debt, and Berkshire is a party-in-interest. Accordingly, Section 1104(c)(2) mandates the appointment of an examiner to conduct an appropriate investigation of the Debtors, Berkshire insists. Berkshire holds directly or indirectly through investment vehicles (I) in excess of $500 million of unsecured bonds issued by ResCap, which represents in excess of 50% of the total outstanding unsecured bonds of the company; and (II) in excess of $900 million of junior secured bonds issued by ResCap, representing in excess of 40% of the total outstanding junior secured bonds of ResCap, according to R. Ted Weschler, investment manager at Berkshire, in an accompanying declaration. Berkshire then sold its holdings of unsecured bonds issued by ResCap, per Mr. Weschler's supplemental declaration. As of June 7, 2012, Berkshire holds in excess of $900 million of junior secured bonds issued by ResCap, representing in excess of 40% of the total outstanding junior secured bonds of ResCap. The Union Central Life Insurance Company, Ameritas Life Insurance Corp., and Acacia Life Insurance Company; and New Jersey Carpenters Health Fund joined in Berkshire's Motion and seek that it be permitted to be heard on the Examiner Motion. New Jersey Carpenters is lead plaintiff in the consolidated securities class action entitled New Jersey Carpenters Health Fund, et al., on Behalf of Themselves and All Others Similarly Situated v. Residential Capital et al., filed in the U.S. District Court for the Southern District of New York, Case No. 08-cv-8781. June 20 Order Bankruptcy Judge Martin Glenn laid out in a June 20 Memorandum Opinion and Order his reasons for granting Berkshire Hathaway's request for the appointment of an examiner the Chapter 11 cases of Residential Capital, LLC and its affiliated debtors. Judge Glenn pointed out that no party really disputes that an investigation and report should be done in the case; the only issue is whether the Creditors Committee should perform the investigation, or whether an examiner must be appointed to conduct the investigation pursuant to section 1104(c) of the Bankruptcy Code. Berkshire argues that some members of the Creditors Committee are conflicted because they agreed before the bankruptcy cases were filed to one or more plan support agreements that include support for third-party non-debtor releases in favor of Ally Financial Inc. and others. Judge Glenn, however, said the Court need not resolve whether any members of the Creditors Committee are conflicted. "The Examiner Motion is not being decided on that basis," Judge Glenn held. "Notwithstanding the ability of any other party to effectively and expeditiously investigate the Debtors, section 1104(c)(2) of the Bankruptcy Code requires that that an examiner should be appointed if no trustee has been appointed, a plan has not been confirmed, the debtors' fixed debts exceed $5 million and an investigation is appropriate. All of those circumstances are present here. Therefore, the Court concludes that an examiner must be appointed," he said. Judge Glenn also said he expects that the Debtors, the Creditors Committee, and all other parties in interest will cooperate with the examiner and the examiner's professionals once they are in place. The Court will schedule an early case management conference with the examiner and all other parties to consider the scope, timing and budget for the investigation. "Because the Debtors hope to exit these cases quickly, with third- party non-debtor releases in favor of Ally and others, it is important that the investigation be conducted expeditiously. Until an independent evaluation has been completed of any potential claims that would be released under a proposed plan, the Court will be unable to conclude whether the Debtors will be permitted to solicit votes in support of such a plan," the judge added. A copy of the Court's June 20, 2012 decision is available at http://is.gd/VWWgZQfrom Leagle.com. The joining parties are represented by: Michael S. Etkin, Esq. Ira M. Levee, Esq. Andrew Behlmann, Esq. LOWENSTEIN SANDLER PC 1251 Avenue of the Americas, 18th Floor New York, New York 10020 Tel: (212) 262-6700 Fax: (212) 262-7402 E-mail: metkin@lowenstein.com ilevee@lowenstein.com abehlmann@lowenstein.com New Jersey Carpenters is represented by: Joel P. Laitman, Esq. Christopher Lometti, Esq. Michael B. Eisenkraft, Esq. Daniel B. Rehns, Esq. Kenneth M. Rehns, Esq. COHEN MILSTEIN SELLERS & TOLL, PLLC 88 Pine Street - 14th Floor New York, New York 10005 Tel: (212) 838-7797 Fax: (212) 838-7745 E-mail: jlaitman@cohenmilstein.com clometti@cohenmilstein.com meisenkraft@cohenmilstein.com drehns@cohenmilstein.com krehns@cohenmilstein.com Union Central is represented by: Steven W. Pepich ROBBINS GELLER RUDMAN & DOWD LLP 655 West Broadway, Suite 1900 San Diego, California 92101 Tel: (619) 231 -1058 Fax: (619) 231 -7423 E-mail: stevep@rgrdlaw.com - and - Christopher M. Wood ROBBINS GELLER RUDMAN & DOWD LLP Post Montgomery Center One Montgomery Street, Suite 1800 San Francisco, California 94104 Tel: (415) 288-4545 Fax: (415) 288-4534 E-mail: cwood@rgrdlaw.com Debtors, et al. Object The Debtors and their parent, the Creditors' Committee, and ad hoc group of junior noteholders opposed Berkshire's request for an appointment of an examiner in these Chapter 11 cases. "Because the proposed scope of work for an examiner is already being undertaken by the Creditors' Committee, there is no appropriate investigation for an examiner: any work undertaken by the examiner would be unnecessary and duplicative of the Creditors' Committee's Rule 2004 Investigation," counsel to the Debtors, Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York, asserted. Berkshire raises no credible allegation that the Creditors' Committee is incapable of carrying out its fiduciary obligations to conduct its investigation in an impartial manner, he contended. To the extent the Court is inclined to grant the Examiner Motion, the Debtors ask the Court to limit any investigation to either the Creditors' Committee or an examiner, but not both. The Debtors filed with the Court a supplement to their objection to attach copies of documents, including transcripts and unreported decisions, that were inadvertently omitted as exhibits to the objection. Certain unsecured noteholders adopt the Debtors' arguments. The joining noteholders are Canyon Balanced Master Fund, Ltd.; Canyon Distressed Opportunity Master Fund, L.P.; Canyon Distressed Opportunity Investing Fund, L.P.; The Canyon Value Realization Master Fund, L.P.; Canyon Value Realization Fund, L.P.; CO Moore, LP; ES Moore, Ltd.; King Street Capital, L.P.; King Street Capital Master Fund, Ltd.; Lonestar Partners, L.P.; and Redwood Master Fund, LTD. They are represented by: Thomas J. Moloney, Esq. Sean A. O'Neal, Esq. CLEARY GOTTLIEB STEEN & HAMILTON LLP One Liberty Plaza New York, NY 10006 Tel: (212) 225-2000 E-mail: tmoloney@cgsh.com soneal@cgsh.com Ally Financial Inc., on behalf of itself and its non-debtor subsidiaries, objects to both the Creditors' Committee and an examiner conducting identical investigations. Counsel to Ally, Stephen Hessler, Esq., at Kirkland & Ellis LLP, in New York, asserted that in its role as ResCap creditor, "Berkshire was well aware of the Ally-ResCap transactions and the proposed Ally- ResCap settlement before ResCap's Chapter 11 filing." AFI filed a supplement to attach a copy of the decision In re Enron Corp. Sec., Derivative & "ERISA" Litig.), No. MDL-1446, 2005 WL 3504860, at 10-11 (S.D. Tex. Dec. 22, 2005), cited in its objection. The Creditors' Committee maintains that it is still the most appropriate party to conduct the investigation. "It is the Committee, reflecting the diverse spectrum of creditors, that has the greatest interest in conducting a thorough investigation and maximizing the value in the estates for unsecured creditors, Kenneth H. Eckstein, Esq., at Kramer Levin, Naftalis & Frankel LLP, in New York, counsel to the Creditors' Committee, insisted. He assured the Court that there is no risk of distraction because the Creditors' Committee has hired leading professional firms that will assist it in litigation and case administration function. The Debtors said they intend to provide the Creditors' Committee with access to privileged materials, mooting Berkshire's belief that an examiner may be given special access to privileged documents. A concern for a public report will be met by the Creditors' Committee's commitment to make its findings and analysis publicly known either through a detailed memorandum in support of an overall settlement or one in opposition to the Debtors' plan, he stated. The Ad Hoc Group of Junior Secured Noteholders seek to be heard on certain matters regarding the mechanics of the examiner's appointment and the express delineation of his or her duties, including on matters relating to the scope of investigation and the timing of the issuance of any report related thereto. The Ad Hoc Group is comprised of members that are holders of those certain 9.625% junior secured guaranteed notes due 2015 issued under an indenture dated June 6, 2008, holding in the aggregate in excess of $900 million of Junior Secured Notes. Berkshire Talks Back Berkshire's counsel insisted that an examiner's investigation promises to be substantially more efficient and timely than one led by the Creditors' Committee. "If the Creditors' Committee leads an investigation, it inevitably will have to grapple with potential conflicts, which may undercut the credibility of the investigation, and will certainly cause delay and inefficiency in these Chapter 11 cases where time and impartiality are of the essence," Mr. Walper emphasizes. As the Court noted at the June 12, 2012 hearing, approval of the Rule 2004 discovery does not preclude the appointment of an examiner, Mr. Walper argues. The key issue here is avoiding duplication of effort in these Chapter 11 cases, he stresses. As the Court observed at the June 12 hearing, the examiner can adopt the Creditors' Committee's subpoenas rather than crafting his or her own discovery requests from scratch, he says. Likewise, the Debtors can share the same documents with the examiner as are being provided to the Creditors' Committee. "An examiner's investigation will provide not just the Creditors' Committee, but importantly, all parties-in-interest, including Berkshire, with the information needed to evaluate and respond to the Ally-backed plan and related settlements. There is simply no reason why the Creditors' Committee needs to monopolize the investigation of the Debtors," Mr. Walper maintains. About ResCap Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. ResCap is selling its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial. Together, the asset sales are expected to generate approximately $4 billion in proceeds. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Seeks Approval of $8.7-Bil. RMBS Trust Deal ---------------------------------------------------------------- Residential Capital LLC and its debtor affiliates ask Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York to approve a compromise and settlement of an allowed claim of up to $8.7 billion against Debtors Residential Funding Company, LLC and GMAC Mortgage LLC, to be offered and allocated among certain securitization trusts pursuant to settlement agreements. The RMBS Trust Settlement resolves, in exchange for the Allowed Claim, alleged and potential representation and warranty claims held by up to 392 securitization trusts in connection with approximately 1.6 million mortgage loans and approximately $221 billion in original issue balance of associated residential mortgage-backed securities, comprising all of such securities issued by the Debtors' affiliates from 2004 to 2007. While the exact amount is the subject of debate, in aggregate the R&W Claims represents tens of billions of dollars in potential contingent claims against the Debtors' estates, Gary S. Lee, Esq., at Morrison & Foerster LLP, in New York, tells the Court. The R&W Claims allegedly arise under Pooling and Servicing Agreements, Assignment and Assumption Agreements, Indentures, Mortgage Loan Purchase Agreements and other documents governing the Trusts. These Governing Agreements require mortgage sellers, in certain circumstances, to repurchase securitized Mortgage Loans that materially breach applicable representations and warranties. While the Debtors dispute the Trusts' claims, the Debtors have repurchased approximately $1.16 billion in loans out of $30.3 billion cumulative losses to date since 2005 to resolve similar contractual representation and warranty claims. The Debtors dispute the R&W Claims and will vigorously defend future contractual representation and warranty claims brought against them. Against this backdrop, the Debtors and two large groups of investors extensively negotiated the terms of the proposed compromise in the period leading up to the Debtors' May 14, 2012 bankruptcy filing. The Steering Committee Group represents 25% or more of the Holders of one or more classes of certificates in at least 290 of the 392 Trusts, which Trusts account for approximately 74% of the total OIB. The Talcott Franklin Group represents 25% or more of the Holders of 295 classes of certificates in at least 189 Trusts, which accounts for an additional $17 billion in OIB and adds 35 additional Trusts to the Institutional Investors' holdings. Cumulatively, the Institutional Investors have represented to the Debtors that they hold at least 25% of the voting rights (as required by the Governing Agreements) of a class of the RMBS in not less than 328 of the Trusts, with original issue balance of approximately $182.8 billion, and that they have the authority to direct -- and indeed that they will direct -- the Trustees of these Trusts to accept the settlement. The Debtors and the Institutional Investors have agreed upon a compromise that the parties believe provides holders of RMBS more favorable economics than litigating the R&W Claims with the Debtors and, thus, anticipate a high acceptance rate among the Trusts. Absent the RMBS Trust Settlement, the Debtors' estates face substantial litigation costs and risks in connection with the R&W Claims and potentially disabling disruption to confirmation of a Chapter 11 plan, Mr. Lee asserts. He avers that the R&W Claims are the single largest set of disputed claims against the Debtors' estates by a wide margin, and the RMBS Trust Settlement would resolve them without the need for protracted, costly, and all-consuming litigation. More importantly, the RMBS Trust Settlement is an integral component of the Debtors' efforts to restructure, including obtaining certain releases for key stakeholders, according to Mr. Lee. He states that the Debtors negotiated Plan Support Agreements with the Steering Committee and the Talcott Franklin Group in conjunction with the RMBS Trust Settlement. "The Institutional Investors' support will remove hurdles to the resolution of substantial impediments to a successful restructuring and permit the Debtors to promptly emerge from Chapter 11," Mr. Lee insists. Mechanics of RMBS Trust Settlement Per the RMBS Trust Settlement, the Debtors have agreed to offer each Trust that accepts the settlement an allocated share of the Allowed Claim. The Trustees, on behalf of the Trusts, will have 45 days from the date of the filing of this motion to elect to participate in the RMBS Trust Settlement to allow the Trusts to receive their allocable portion of the Allowed Claim. The final amount of the Allowed Claim will be reduced from $8.7 billion by the percentage, based on original issue balance, of Trusts that do not accept the offer to participate in the Allowed Claim. Each Trust's share of the Allowed Claim will be allocated under the agreed-upon formulation attached to each RMBS Trust Settlement Agreement. To ensure the fairness of such allocation, an independent expert will be hired to allocate the Allowed Claim based on net expected lifetime losses among the accepting Trusts, including expected lifetime claims to be paid by the monoline insurers on the securitizations they insured. In exchange for their allocable portion of the Allowed Claim, the Institutional Investors agree to release all R&W Claims against the Debtors, effective upon Court approval of the RMBS Trust Settlement. The Institutional Investors also agree to direct the Trustees to accept the terms set forth in the RMBS Trust Settlement, which includes a release and waiver by the accepting Trusts and Trustees of all R&W Claims against the Debtors and not to take any actions inconsistent with the acceptance of the RMBS Trust Settlement by all Trusts, including those in which they do not have voting power. The Institutional Investors also agree to direct the Trustees to comply with the Plan Support Agreements entered into by AFI, ResCap and the Institutional Investors to, among other things, support the Debtors' Plan, including third-party releases for AFI. To be clear, the RMBS Trust Settlement does not release the Debtors' offices and directors. However, the Institutional Investors, and each Trust which opts in to the RMBS Trust Settlement, have agreed to support any such release included in the Plan. The RMBS Trust Settlement also carves out particular claims which will not be released by the Institutional Investors or the Trusts, including: (1) such rights of any monoline insurers, if any, that are not derivative or duplicative of the rights of the Institutional Investors, Trustees, or the Trusts; (2) claims based on the servicing of residential mortgages by the Debtors or their assignees which arise after the effective date of the settlement; and (3) any claims against Debtors based on allegedly improper disclosures under federal or state securities laws. If a Trust does not accept the settlement, that Trust remains free to assert a claim in the bankruptcy cases that will then be subject to the ordinary -- albeit lengthy -- claims allowance process. Full-text copies of the RMBS Trust Settlement Agreements with the Institutional Investors are available for free at: http://bankrupt.com/misc/ResCap_RMBSTrustSettlement.pdf The Debtors filed with the Court a copy of an amendment to the RMBS Trust Settlement Agreement with the Talcott Franklin Group, accessible for free at: http://bankrupt.com/misc/ResCap_AmendmnttoTalcottRMBSPact.pdf Prior to filing the motion, the Debtors sought and obtained Court permission to exceed the 25-page limit for the motion to approve the RMBS Trust Settlement. Judge Glenn will hold the hearing, originally scheduled for July 10, 2012, to consider the RMBS Trust Settlement, on July 24, 2012. Objections are due no later than July 13. About ResCap Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. ResCap is selling its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial. Together, the asset sales are expected to generate approximately $4 billion in proceeds. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Proposes to Assume Plan Support Agreements --------------------------------------------------------------- Residential Capital LLC and its affiliates seek the Bankruptcy Court's permission to assume substantially similar plan support agreements entered into with two groups of consenting claimants, one lead by the Steering Committee Group, and the other lead by Talcott Franklin, P.C. The consenting claimants from both groups are investors in residential mortgage-backed securities backed by mortgage loans held by securitizations sponsored by the Debtors between 2004 and 2007. The Plan Support Agreements, in conjunction with plan support agreements with Ally Financial Inc., will enable the Debtors to move expeditiously towards confirmation and consummation of the Plan with the support of parties representing the Debtors' key secured creditor constituencies and most of the general unsecured claim pool in these bankruptcy cases, says Larren M. Nashelsky, Esq., at Morrison & Foerster LLP, in New York. "The RMBS Trust Settlement Agreements and Plan Support Agreements are intended to prevent the extended litigation (relating to the RMBS and the Debtors' key restructuring activities, including Plan confirmation, distraction, costs and delays in the administration of the Debtors' bankruptcy cases that would result if the Debtors were not able to resolve the claims held by the trustees for the Trustees related to certain alleged breaches of representations and warranties by the Debtors associated with the Debtor-sponsored securitizations," according to Mr. Nashelsky. In general, the Plan Support Agreements require the Consenting Claimants to direct the Trustees to vote in favor of and support confirmation of a plan of reorganization consistent with (i) the Plan Term Sheet and (ii) a separate settlement with AFI, including the cash contribution of $750 million. The Consenting Claimants also agree to (i) support, and direct the Trustees to support, various motions and applications to be filed by the Debtors, including the Debtors' motion to stay litigation against AFI; and (ii) use commercially reasonable efforts to get other RMBS holders to join the Plan Support Agreements or RMBS Trust Settlement Agreements. In exchange, the Debtors agree to, among other things, effectuate and consummate restructuring contemplated by the Plan Term Sheet, including the AFI Settlement Agreement, in accordance with milestones contained in the Plan Support Agreements, including: * Obtaining final approval of debtor-possession financing on or before 50 days following the Petition Date; * Obtaining approval of the Plan Support Agreements by the earlier of (i) 60 days following the Petition Date and (ii) the date on which the Court enters an order approving the Disclosure Statement. * Obtaining entry of an order of the Court approving the Compromises contemplated by the RMBS Trust Settlement Agreement on or before 60 days following the Petition Date; * Obtaining approval the Disclosure Statement on or before 90 days following the Petition Date; * Obtaining approval of proposed bidding procedures for the sales of assets contemplated in the Executive Summaries on or before 90 days following the Petition Date; * Obtaining confirmation of the Plan on or before October 31, 2012; and * On or before December 15, 2012, the effective date of the Plan will have occurred. The Plan Support Agreements, however, do not materially restrict the Debtors' ability to consider alternative plan structures in a manner consistent with their fiduciary duties. Full-text copies of the Plan Support Agreements are available for free at: http://bankrupt.com/misc/ResCap_SteeringCommPlanSupportAgr.pdf http://bankrupt.com/misc/ResCap_TalcottPlanSupportPact.pdf The Debtors sought to ensure that the Consenting Claimants would continue to maintain their voting power and ability to effectively support the Debtors' Plan. To that end, the Debtors and the Consenting Claimants have agreed that, while the Consenting Claimants may transfer certain of the RMBS that they hold, each of the Steering Committee Consenting Claimants and the Talcott Franklin Consenting Claimants must continue to hold at least 25% of one or more classes of RMBS associated with approximately 80% of the Trusts in which the group of Consenting Claimants originally held 25% of a class or else the Plan Support Agreements will automatically terminate unless waived by the Debtors and AFI within five days. Notwithstanding the ability of parties to accept the RMBS Trust Settlement and participate in the Plan Support Agreements up to 45 days after the filing of the RMBS Trust Settlement Motion, the Debtors' assumption of and performance under the Plan Support Agreements does not constitute a "solicitation" under Section 1125 of the Bankruptcy Code, Mr. Nashelky clarifies. Judge Glenn will hold the hearing, originally scheduled for July 10, 2012, to consider the Plan Support Agreements, on July 24, 2012. Objections are due no later than July 13. About ResCap Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. ResCap is selling its mortgage origination and servicing businesses to Nationstar Mortgage LLC, and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets, to Ally Financial. Together, the asset sales are expected to generate approximately $4 billion in proceeds. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). ROSETTA GENOMICS: Secures Medicare Reimbursement for miRview ------------------------------------------------------------ Rosetta Genomics Ltd. announced that the designated Medicare Administrative Contractor for the Company's miRview mets assay has determined the assay to be reasonable and necessary for the diagnosis of cancers of unknown origin in a specified setting and has established a reimbursement rate for the assay. The coverage decision can be found at the following link: https://www.novitas- solutions.com/bulletins/all/news-06152012.html. The miRview mets2 assay accurately identifies the primary tumor of origin in primary and metastatic cancer including Cancer of Unknown or Uncertain Primary. "This is another critical commercial milestone for Rosetta Genomics as equitable reimbursement is one of the key drivers for clinical and commercial adoption of the technology. We are pleased with the coverage and the reimbursement amount that the designated MAC has established. The reimbursement amount is commensurate with the clinical value of miRview mets and is consistent with assays of similarly high clinical value," noted Kenneth A. Berlin, President and Chief Executive Officer of Rosetta Genomics. "New tumor specific and molecularly-targeted oncology drugs are driving the need for accurate identification and classification of tumor types in order to optimize treatment and improve patient outcomes. With approximately 180,000-220,000 CUP patients per year in the U.S., this represents a large market opportunity for Rosetta Genomics." About Rosetta Located in Rehovot, Israel, Rosetta Genomics Ltd. is seeking to develop and commercialize new diagnostic tests based on a recently discovered group of genes known as microRNAs. MicroRNAs are naturally expressed, or produced, using instructions encoded in DNA and are believed to play an important role in normal function and in various pathologies. The Company has established a CLIA- certified laboratory in Philadelphia, which enables the Company to develop, validate and commercialize its own diagnostic tests applying its microRNA technology. In its auditors' report for the 2011 financial statements, Kost Forer Gabbay & Kasierer, in Tel-Aviv, Israel, expressed substantial doubt about Rosetta Genomics' ability to continue as a going concern. The independent auditors noted that the Company has incurred recurring operating losses and generated negative cash flows from operating activities in each of the three years in the period ended Dec. 31, 2011. The Company reported a net loss after discontinued operations of $8.83 million on $103,000 of revenues for 2011, compared with a net loss after discontinued operations of $14.76 million on $279,000 of revenues for 2010. The Company's balance sheet at Dec. 31, 2011, showed $2.04 million in total assets, $2.40 million in total liabilities, and a stockholders' deficit of $356,000. Bankruptcy Warning The Company said in its annual report for the year ended Dec. 31, 2011, "We have used substantial funds to discover, develop and protect our microRNA tests and technologies and will require substantial additional funds to continue our operations. Based on our current operations, our existing funds, including the proceeds from the January 2012 debt financing, will only be sufficient to fund operations until late May, 2012. We intend to seek funding through collaborative arrangements and public or private equity offerings and debt financings. Additional funds may not be available to us when needed on acceptable terms, or at all. In addition, the terms of any financing may adversely affect the holdings or the rights of our existing shareholders. For example, if we raise additional funds by issuing equity securities, further dilution to our then-existing shareholders may result. Debt financing, if available, may involve restrictive covenants that could limit our flexibility in conducting future business activities. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail one or more of our research or development programs. We also could be required to seek funds through arrangements with collaborators or others that may require us to relinquish rights to some of our technologies, tests or products in development or approved tests or products that we would otherwise pursue on our own. Our failure to raise capital when needed will materially harm our business, financial condition and results of operations, and may require us to seek protection under the bankruptcy laws of Israel and the United States. RT MIDWEST: Ruby Tuesday's Franchisee Files in Minneapolis ---------------------------------------------------------- RT Midwest Holdings, LLC and three affiliates sought Chapter 11 protection (Bankr. D. Minn. Case No. 12-43626 to 12-43629) in Minneapolis on June 20, 2012. RT Midwest disclosed in its schedules $835,600 in assets and $28.8 million in liabilities, of which $2.434 million is secured. Affiliate RT Chicago Franchise, LLC, disclosed $3.936 million in assets and $23.72 million in liabilities, including $23.54 million of secured debt to General Electric Capital Corp. and related entities. RT Midwest Real Estate LLC reported that it has debt in excess of $60 million. RT Northern Illinois Franchise LLC disclosed less than $30 million in debt. The Debtors own or lease 13 properties from which they operate Ruby Tuesday's franchise restaurants. According to RT Midwest statement of financial affairs, the restaurants generated income of $38.61 million in 2010, $35.18 million in 2011 and $9.698 million for the period Jan. 1 to May 31, 2012. According to a court filing, the Debtors are seeking an expedited hearing of, among other things, their motions to maintain their bank accounts, pay prepetition wages and salaries, and use cash collateral. Copies of the Debtors' schedules attached to the petitions are available at: http://bankrupt.com/misc/mnb12-43626.pdfand http://bankrupt.com/misc/mnb12-43627.pdf RUSSEL METALS: S&P Affirms 'BB+' CCR; Then Withdraws Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'BB+' long-term corporate credit rating, on Russel Metals Inc. The outlook is stable. Standard & Poor's then withdrew the ratings at the company's request following the May redemption of Russel's 6.375% senior unsecured notes due 2014 outstanding. SAAB CARS: Whicomb Motors Resigns from Creditors Committee ---------------------------------------------------------- Roberta A. Deangelis, U.S. Trustee for Region 3, amended the appointment of the Official Committee of Unsecured Creditors in the Chapter 11 case of Saab Cars North America, Inc., to reflect the resignation of Whicomb Motors, Inc. from the Committee. The Creditors Committee now comprises: 1. Peter Mueller Inc. Attn: Kurt A. Schirm 540 S. Washington St. Falls Church, VA 22046 Tel: (703) 919-5344 Fax: (703) 237-4271 2. IFS Vehicle Distributors Attn: Kreg Kitchen 15565 Northland Dr., Ste. 409E Southfield, MI 48075 Tel: (510) 569-9024 Fax: (510) 569-7090 3. Countryside Volkswagen Attn: Jonathan Schmelz 1180 E. Hwy 36 Maplewood MN 55109 Tel: (651) 484-8441 Fax: (651) 484-8446 4. Saab of North Olmstead Attn: Robert S. Kistler 28300 Lorain Rd. North Olmstead, OH 44070 Tel: (330) 936-1683 Fax: (440) 348-2025 5. Saab of Bedford Attn: Chris Houdek 11 Broadway Ave. Bedford, OH 44146 Tel: (440) 439-2323 Fax: (440) 439-8977 6. Delaware Motor Sales, Inc. Attn: Michael Uffner 1606 Pennsylvania Ave. Wilmington, DE 19806 Tel: (302) 656-3100 Fax: (302) 652-2494 About Saab Cars N.A. More than 40 U.S.-based Saab dealerships have signed an involuntary chapter 11 bankruptcy petition for Saab Cars North America, Inc., (Bankr. D. Del. Case No. 12-10344) on Jan. 30, 2012. The petitioners, represented by Wilk Auslander LLP, assert claims totaling $1.2 million on account of "unpaid warranty and incentive reimbursement and related obligations" and/or "parts and warranty reimbursement." Leonard A. Bellavia, Esq., at Bellavia Gentile & Associates, in New York, signed the Chapter 11 petition on behalf of the dealers. Donlin, Recano & Company, Inc. (DRC), has been retained to provide claims and noticing agent services to Saab Cars North America, Inc. in its Chapter 11 case. The dealers want the vehicle inventory and the parts business to be sold, free of liens from Ally Financial Inc. and Caterpillar Inc., and "to have an appropriate forum to address the claims of the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg News. Saab Cars N.A. is the U.S. sales and distribution unit of Swedish car maker Saab Automobile AB. Saab Cars N.A. named in December an outside administrator, McTevia & Associates, to run the company as part of a plan to avoid immediate liquidation following its parent company's bankruptcy filing. Saab Automobile AB is a Swedish car manufacturer owned by Dutch automobile manufacturer Swedish Automobile NV, formerly Spyker Cars NV. Saab Automobile AB, Saab Automobile Tools AB and Saab Powertain AB filed for bankruptcy on Dec. 19, 2011, after running out of cash. On Feb. 24, 2012, the Court, inconsideration of the petition filed on Jan. 30, 2012, granted Saab Cars North America, Inc., relief under Chapter 11 of the Bankruptcy Code. On March 9, 2012, the U.S. Trustee formed an official Committee of Unsecured Creditors and appointed these members: Peter Mueller Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and Delaware Motor Sales, Inc. The Committee tapped Wilk Auslander LLP as general bankruptcy counsel, and Polsinelli Shughart as its Delaware counsel. SAINT CATHERINE: Indiana Hospital Files for Chapter 11 ------------------------------------------------------ Saint Catherine Hospital of Indiana LLC, an acute-care hospital in Charlestown, Indiana, filed for Chapter 11 protection June 19 in New Albany, Indiana (Bankr. S.D. Ind. Case No. 12-91316). Saint Catherine Hospital of Indiana is a regional facility that performs weight-loss surgery and other procedures. The Debtor estimated assets worth less than $10 million and debt exceeding $10 million. A buyer has been located to purchase the operation while in Chapter 11, according to a report by Bill Rochelle, the bankruptcy columnist for Bloomberg News. Mr. Rochelle, citing a court filing, reports that the hospital ran up a net operating loss of $1.28 million in the last year. In addition to losses from operations, bankruptcy was the result of a lawsuit begun by the trustee for Saint Catherine Hospital of Pennsylvania, which filed for bankruptcy reorganization in April in Wilkes-Barre, Pennsylvania. The Chapter 11 trustee, appointed at the Pennsylvania hospital's request, filed a lawsuit to recover $300,000 allegedly transferred to the Indiana institution. Saint Catherine Hospital of Pennsylvania, LLC, dba Saint Catherine Medical Center of Fountain Springs filed a Chapter 11 petition (Bankr. M.D. Pa. Case No. 12-02073) on April 9, 2012. The Debtor estimated under $50,000 in assets and liabilities. SAINT CATHERINE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Saint Catherine Hosptial of Indiana LLC dba Medical Center of Southern Indiana dba Saint Catherine Regional Hospital 2200 Market St Charlestown, IN 47111 Bankruptcy Case No.: 12-91316 Chapter 11 Petition Date: June 19, 2012 Court: United States Bankruptcy Court Southern District of Indiana (New Albany) Judge: Basil H. Lorch III About the Debtor: The Debtor runs an acute-care hospital in Charlestown, Indiana. Debtor's Counsel: David M. Cantor, Esq. James Edwin McGhee, III, Esq. SEILLER WATERMAN LLC 462 4th Street, Suite 2200 Louisville, KY 40202 Tel: (502) 584-7400 Fax: (402) 371-9204 E-mail: cantor@derbycitylaw.com mcghee@derbycitylaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/insb12-91316.pdf The petition was signed by Robert M. Lane, manager. SAPPHIRE VP: Plan Confirmation Hearing Scheduled for July 2 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas will convene a hearing on July 2, 2012, at 11 a.m., to consider the final approval of the Disclosure Statement and confirmation of the Plan of Liquidation proposed by Sapphire VP, LP, and Randall J. Davis. The Court conditionally approved the Disclosure Statement explaining the proposed Plan dated May 31, 2012. The Court also ordered that parties have until June 28, to (i) cast ballots accepting to rejecting the Plan, or (ii) file objections, if any, to the confirmation of the Plan. With no economic improvement foreseen in the near term, the Debtor agreed to lift the automatic stay and allow International Bank of Commerce and/or Premier Tierra Holdings Inc. to foreclose their liens on the Sapphire project for a credit against the debt equal to $28 million which has been stipulated as the current value of the property. Pursuant to the settlement, general unsecured creditors will be paid up to $70,000 from the ZCA settlement proceeds, which the Debtor estimates will be 100% of the allowed claims. The Debtor estimates that in a Chapter 7 liquidation scenario, unsecured creditors at best would recover only 60% of the allowed claims. IBC alleges that as of the Petition Date the outstanding amount owed to IBC and Premier Tierra is $36.9 million plus attorneys fees and costs and expenses. Pursuant to the Plan, IBC and Premier Tierra will have an allowed claim of $36.9 million. IBC and Premier Tierra will receive, among other things: (i) The Sapphire property and a credit of $28 million will be applied against the secured claim; (ii) 100% of the settlement proceeds from the pending partial settlement (net of attorney?s fees and costs) from the pending partial settlement of Sapphire Construction Litigation Claims against ZCA Residential, LLC; and (iii) proceeds from litigation claims until the allowed claim is paid in full. According to the Disclosure Statement, the Plan provides for these terms: 1) Allowed administrative claims will be paid in cash in full From the Cash Infusion unless otherwise agreed; 2) Ad valorem property taxes will be paid by IBC when due; 3) the Sapphire Property will be foreclosed on by IBC or Premier Tierra for a credit against the debt equal to $28 million, plus payment of a portion of the proceeds from the "reserved litigation claims"; 4) Allowed non-insider general unsecured claims, including any claims related to condominium association dues, will be paid a pro rata share $70,000 from the ZCA Settlement Proceeds; 5) Allowed insider claims will receive specified percentages of the proceeds from reserved litigation claims up to the full amount of the allowed claim; 6) Equity interest holders will receive any funds remaining after full payment to IBC, Premier Tierra, and holders of allowed general unsecured claims and allowed insider claims. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/SAPPHIRE_VP_ds.pdf About Sapphire VP Houston, Texas-based Sapphire VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10173) in Brownsville on April 2, 2012. Sapphire, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101 (51B), disclosed $64 million in assets and $42.3 million in liabilities in its schedules. The Debtor is the developer of the Sapphire Condominiums project located at South Padre Island, Texas. The Debtor in its schedules said the property is worth $35 million and secures a $32.3 million debt. Judge Richard S. Schmidt oversees the case. Melissa Anne Haselden, Esq., at Hoover Slovacek LLP, in Houston, serves as counsel to the Debtor. The petition was signed by Randall J. Davis, as manager of the Debtor's general partner. The Debtor in April 2012 filed a motion for valuation of the collateral. The Debtor and IBC agreed to abate this matter pursuant to a settlement. A related entity, Houston, Texas-based Diamond Beach VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10175) in Brownsville on April 2, 2012. The Debtor owns the Diamond Beach Condominiums located at Galveston, Texas. IBC objected to Diamond Beach's request for joint administration with the Sapphire case. As part of a settlement, if Diamond's Chapter 11 plan is confirmed, the Debtor will withdraw this motion from consideration by the Court. Sapphire and Diamond are seeking confirmation of separate Chapter 11 plans. SAPPHIRE VP: Johnston Tobey Approved to Handle Winstead Litigation ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Texas authorized Sapphire VP, LP, to employ Robert L. Tobey, Coyt Randall Johnston and Johnston Tobey, P.C. as special litigation counsel. As reported in the Troubled Company Reporter on, May 24, 2012, Johnston Tobey is expected to represent the Debtor in prosecuting the case Sapphire VP, LP, v. Winstead PC and Edward A. Peterson, Individually, Allan S. Katz and Lorin W. Combs, Individually pending in the District Court of Dallas County, Texas. The Winstead Litigation involves a suit for legal malpractice. Johnston Tobey is assisting, advising, investigating, filing and prosecuting claims of the Debtor related to the Winstead Litigation, including but not limited to any and all affirmative claims and defenses for any and all damages. Prepetition, Johnston Tobey represented the Debtor in the Winstead Litigation on a contingency fee basis. Postpetition, the Debtor agreed to pay the firm (a) an engagement fee of $50,000 which will be earned upon receipt; and (b) a contingent fee of 30% of the total recovery on the claims. To the best of the Debtor's knowledge, Johnston Tobey does not represent any interest adverse to the Debtor or its estate with respect to the matter on which counsel will be employed as special counsel. About Sapphire VP Houston, Texas-based Sapphire VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10173) in Brownsville on April 2, 2012. Sapphire, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101 (51B), disclosed $64 million in assets and $42.3 million in liabilities in its schedules. The Debtor is the developer of the Sapphire Condominiums project located at South Padre Island, Texas. The Debtor in its schedules said the property is worth $35 million and secures a $32.3 million debt. Judge Richard S. Schmidt oversees the case. Melissa Anne Haselden, Esq., at Hoover Slovacek LLP, in Houston, serves as counsel to the Debtor. The petition was signed by Randall J. Davis, as manager of the Debtor's general partner. The Debtor in April 2012 filed a motion for valuation of the collateral. The Debtor and IBC agreed to abate this matter pursuant to a settlement. A related entity, Houston, Texas-based Diamond Beach VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10175) in Brownsville on April 2, 2012. The Debtor owns the Diamond Beach Condominiums located at Galveston, Texas. IBC objected to Diamond Beach's request for joint administration with the Sapphire case. As part of a settlement, if Diamond's Chapter 11 plan is confirmed, the Debtor will withdraw this motion from consideration by the Court. Sapphire and Diamond are seeking confirmation of separate Chapter 11 plans. SAPPHIRE VP: Richard Daly, et al., Approved for ZCA Litigation -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas authorized Sapphire VP, LP, to employ The Richard Daly Law Firm, The Law Offices of Frank Costilla, LP and The Law Offices of Jonathan Simon as special litigation attorneys. As reported in the Troubled Company Reporter on May 24, 2012, the firms will represent the Debtor in prosecuting the case Sapphire VP, LP, v. Arthur J. Gallegher Risk Management Services, Inc. et. al., in the District Court of Cameron County, Texas, 404th Judicial District Court, and Sapphire VP, LP v. ZCA Residential, LLC, et. al., in the District Court of Harris County, Texas. The ZCA Litigation involves many of the same parties and issues related to damages incurred by Debtor from Hurricane Dolly, among other things. The firms will be assisting, advising, investigating, filing and prosecuting claims of the Debtor related to the ZCA Litigation, including but not limited to any and all affirmative claims and defenses for any and all damages related to the Debtor's property. Prepetition, the firms represented the Debtor in the ZCA Litigation. The Debtor agreed to pay the firms 35% of gross proceeds recovered in litigation, 40% of gross proceeds in the event of an appeal, or 35% of the gross proceeds recovered outside of litigation or by means other than litigation. To the best of the Debtor's knowledge, the firms do not hold or represent an interest adverse to the Debtor or to the estate. About Sapphire VP Houston, Texas-based Sapphire VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10173) in Brownsville on April 2, 2012. Sapphire, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101 (51B), disclosed $64 million in assets and $42.3 million in liabilities in its schedules. The Debtor is the developer of the Sapphire Condominiums project located at South Padre Island, Texas. The Debtor in its schedules said the property is worth $35 million and secures a $32.3 million debt. Judge Richard S. Schmidt oversees the case. Melissa Anne Haselden, Esq., at Hoover Slovacek LLP, in Houston, serves as counsel to the Debtor. The petition was signed by Randall J. Davis, as manager of the Debtor's general partner. The Debtor in April 2012 filed a motion for valuation of the collateral. The Debtor and IBC agreed to abate this matter pursuant to a settlement. A related entity, Houston, Texas-based Diamond Beach VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10175) in Brownsville on April 2, 2012. The Debtor owns the Diamond Beach Condominiums located at Galveston, Texas. IBC objected to Diamond Beach's request for joint administration with the Sapphire case. As part of a settlement, if Diamond's Chapter 11 plan is confirmed, the Debtor will withdraw this motion from consideration by the Court. Sapphire and Diamond are seeking confirmation of separate Chapter 11 plans. SAPPHIRE VP: Hearing on Further Cash Use on July 2 -------------------------------------------------- Sapphire VP, LP, entered into a stipulation extending the agreed interim order granting and conditioning the Debtor's use of cash collateral until June 30, 2012. Previously, a stipulation was entered among the Debtor, International Bank of Commerce, as administrative agent, and Premier Tierra Holdings, Inc., provided for the use of the cash collateral until May 18. Sapphire filed the motion to use cash collateral on April 9, 2012. IBC objected to the motion. An agreed interim order authorizing use of cash collateral was entered on April 24, 2012 and a second agreed interim order was entered on May 18, 2012. A final hearing is scheduled on this motion for July 2, 2012. As reported in the Troubled Company Reporter on May 24, 2012, the Debtor own Sapphire Condominiums located at 310-320 Padre Blvd., South Padre Island, Texas. The only revenue generated by Sapphire is from the sale of condominium units. On July 9, 2007, Sapphire entered into a loan agreement with Amegy Bank National Association, International Bank of Commerce as co- agents, which provided, among other things, that Amegy, IBC, Capital One National Association, and Regions Bank loan the Debtor up to $106,875,000,000 for the construction of the Sapphire Property. As of the Petition Date, the outstanding indebtedness owed on the Sapphire Loan Agreement is $23.2 million. Prior to bankruptcy, IBC purchased the notes held by Amegy and Regions at a significant discount. Thus, IBC is the current holder of the Note A, B, and D. Capital One remains the holder of Note C. Additionally, on July 9, 2006, IBC and Sapphire entered into a Mezzanine Loan Agreement to loan Sapphire funds to finance certain development costs. As of the Petition Date, the outstanding indebtedness owed to IBC with respect to the Mezzanine Loan is approximately $8.3 million. Sapphire held, as of the Petition Date, approximately $230,000 cash in its bank account. IBC asserts that the money in the account constitutes cash collateral and has not consented to the use of the funds for maintenance of the Sapphire Property. Sapphire asserts that IBC is adequately protected because the value of the Sapphire Property exceeds the debt by several million dollars. Further Sapphire proposes to pay 90% of the net sale proceeds of any condominium units sold during the bankruptcy case to IBC after satisfaction of all closing costs, commissions and taxes. The remaining 10% will be deposited into the DIP bank account to cover future costs. About Sapphire VP Houston, Texas-based Sapphire VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10173) in Brownsville on April 2, 2012. Sapphire, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101 (51B), disclosed $64 million in assets and $42.3 million in liabilities in its schedules. The Debtor is the developer of the Sapphire Condominiums project located at South Padre Island, Texas. The Debtor in its schedules said the property is worth $35 million and secures a $32.3 million debt. Judge Richard S. Schmidt oversees the case. Melissa Anne Haselden, Esq., at Hoover Slovacek LLP, in Houston, serves as counsel to the Debtor. The petition was signed by Randall J. Davis, as manager of the Debtor's general partner. The Debtor in April 2012 filed a motion for valuation of the collateral. The Debtor and IBC agreed to abate this matter pursuant to a settlement. A related entity, Houston, Texas-based Diamond Beach VP, LP, filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-10175) in Brownsville on April 2, 2012. The Debtor owns the Diamond Beach Condominiums located at Galveston, Texas. IBC objected to Diamond Beach's request for joint administration with the Sapphire case. As part of a settlement, if Diamond's Chapter 11 plan is confirmed, the Debtor will withdraw this motion from consideration by the Court. Sapphire and Diamond are seeking confirmation of separate Chapter 11 plans. SHERIDAN GROUP: Maturity of BOA Credit Facility Moved to 2013 ------------------------------------------------------------- The Sheridan Group, Inc., and Bank of America, N. A., entered into a First Amendment to Third Amended and Restated Credit Agreement on June 6, 2012. The Amendment amends the Third Amended and Restated Credit Agreement between the Company and Bank of America, as lender and administrative agent, to extend the scheduled maturity date of the credit agreement to Oct. 15, 2013. A copy of the amendment is available for free at: http://is.gd/8EICgJ About The Sheridan Group Hunt Valley, Maryland-based The Sheridan Group, Inc. -- http://www.sheridan.com/-- is a specialty printer offering a full range of printing and value-added support services for the journal, catalog, magazine and book markets. The Company reported a net loss of $8.96 million in 2011, compared with a net loss of $5.94 million in 2010. The Company's balance sheet at March 31, 2012, showed $212.36 million in total assets, $183.36 million in total liabilities and $29 million in total stockholders' equity. * * * As reported by the TCR on Sept. 16, 2011, Standard & Poor's Ratings Services lowered its corporate credit rating on Hunt Valley, Md.-based printing company The Sheridan Group Inc. to 'CCC+' from 'B-'. "The 'CCC+' corporate credit rating reflects Sheridan's ongoing thin margin of compliance with its minimum EBITDA covenant," said Standard & Poor's credit analyst Tulip Lim. "It also reflects our expectation of continued difficult operating conditions across the company's niche printing segments, its vulnerability to prevailing economic pressures, its high debt leverage, and the secular shift away from print media." SINCLAIR BROADCAST: Eight Directors Elected at Annual Meeting ------------------------------------------------------------- The annual meeting of shareholders of Sinclair Broadcast Group, Inc., was held on June 14, 2012. At the meeting, the shareholders elected eight directors for a term expiring at the next annual shareholders meeting in 2013 or until their respective successors have been elected and qualified, namely: (1) David D. Smith; (2) Frederick G. Smith; (3) Duncan J. Smith; (4) Robert E. Smith; (5) Basil A. Thomas; (6) Lawrence E. McCanna; (7) Daniel C. Keith; and (8) Martin R. Leader. The shareholders ratified the appointment of PricewaterhouseCoopers LLP as the Company's independent auditors for the fiscal year ending Dec. 31, 2012. About Sinclair Broadcast Based in Baltimore, Maryland, Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) -- http://www.sbgi.net/-- one of the largest and most diversified television broadcasting companies, currently owns and operates, programs or provides sales services to 58 television stations in 35 markets. The Company's television group reaches roughly 22% of U.S. television households and includes FOX, ABC, CBS, NBC, MNT, and CW affiliates. The Company said in the Form 10-Q for the quarter ended March 31, 2012, that any insolvency or bankruptcy proceeding relating to Cunningham, one of its LMA partners, would cause a default and potential acceleration under a Bank Credit Agreement and could, potentially, result in Cunningham's rejection of the Company's seven LMAs with Cunningham, which would negatively affect the Company's financial condition and results of operations. The Company's balance sheet at March 31, 2012, showed $1.77 billion in total assets, $1.85 billion in total liabilities, and a $87.21 million total deficit. * * * As reported by the TCR on Feb. 24, 2011, Standard & Poor's Ratings Services raised its corporate credit rating on Hunt Valley, Md.- based TV broadcaster Sinclair Broadcast Group Inc. to 'BB-' from 'B+'. The rating outlook is stable. "The 'BB-' rating on Sinclair reflects S&P's expectation that the company could keep its lease-adjusted debt to EBITDA below historical levels throughout the election cycle, absent a reversal of economic growth, meaningful debt-financed acquisitions, or significant shareholder-favoring measures," explained Standard & Poor's credit analyst Deborah Kinzer. In September 2010, Moody's raised its ratings for Sinclair Broadcast and subsidiary Sinclair Television Group, Inc., including the Corporate Family Rating and Probability-of-Default Rating, each to Ba3 from B1, and the ratings for individual debt instruments. Moody's also assigned a B2 (LGD 5, 87%) rating to the proposed $250 million issuance of Senior Unsecured Notes due 2018 by STG. The Speculative Grade Liquidity Rating remains unchanged at SGL-2. The rating outlook is now stable. SKINNY NUTRITIONAL: Board Approves Bylaws Amendment --------------------------------------------------- The board of directors of Skinny Nutritional Corp. approved an amendment to the bylaws of the Company, effective as of June 13, 2012. The amendment to the bylaws provides that the provisions of Nevada Revised Statutes 78.378 to 78.3793 will not apply to the Company. The Company's board of directors approved the amendment to its bylaws to provide the Company with greater flexibility in enabling it to consider corporate transactions which may implicate these statutes. About Skinny Nutritional Bala Cynwyd, Pa.-based Skinny Nutritional Corp. (OTC BB: SKNY.OB) -- http://www.SkinnyWater.com/-- has developed and is marketing a line of enhanced waters, all branded with the name "Skinny Water" that are marketed and distributed primarily to calorie and weight conscious consumers. The Company reported a net loss of $7.66 million in 2011, compared with a net loss of $6.91 million in 2010. The Company's balance sheet at March 31, 2012, showed $2.15 million in total assets, $4.62 million in total liabilities, all current, and a $2.47 million stockholders' deficit. In its audit report for the 2011 financial statements, Marcum LLP, in Bala Cynwyd, Pennsylvania, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company had a working capital deficiency of $3.17 million, an accumulated deficit of $45,492,945, stockholders' deficit of $1.74 million and no cash on hand. The Company had net losses of $7.67 million and $6.91 million for the years ended Dec. 31, 2011, and 2010, respectively. Additionally, the Company is currently in arrears under its obligation for the purchase of trademarks. Under the agreement, the seller of the trademarks may choose to exercise their legal rights against the Company's assets, which includes the trademarks. SP NEWSPRINT: DIP Financing Extended to Sept. 17 ------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved the amendment to the DIP Loan Agreement to extend the scheduled termination date until Sept. 17, 2012. The DIP Facility was set to expire on June 19, 2012. On Jan. 25, 2012, the Court entered the final order (i) authorizing the Debtors (a) to obtain postpetition secured financing and (b) to utilize cash collateral; (ii) granting liens and super-priority claims; and (iii) granting adequate protection to prepetition secured parties basis and authorizing the Debtors to incur up to (a) $20 million in postpetition financing, with the ability to increase such amount to $25 million, without the need for further Court approval, plus (b) other additional amounts necessary to cover interest on prepetition loans and certain lender professional fees. The amount outstanding under the DIP Facility, including $8 million related to the interest on prepetition loans, is approximately $33 million. About SP Newsprint Greenwich, Conn.-based SP Newsprint Holdings LLC -- aka Bulldog Acquisition I LLC, Bulldog Acquisition II LLC, Publishers Papers, Southeastern Paper Recycling and SP Newsprint Merger LLC -- and three affiliates, SP Newsprint Co. LLC, SP Recycling Corporation and SEP Technologies L.L.C, filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No. 11-13649) on Nov. 15, 2011. SP Newsprint Holdings LLC is a newsprint company controlled by polo-playing mogul Peter Brant. It is one of the largest producers of newsprint in North America. SP Recycling Corporation, a Georgia corporation and the Debtors' other operating company, was established in 1980 as a means for SP to secure a ready supply of recycled fiber, a key raw material for its newsprint. SP Newsprint is the second Brant-owned newsprint company to tumble into bankruptcy proceedings in recent years. Current and former affiliated entities are Bear Island Paper Company, L.L.C., Brant Industries, Inc., F.F. Soucy, Inc., Soucy Partners Newsprint, Inc., White Birch Paper Company. Judge Christopher S. Sontchi presides over the case. Joel H. Levitin, Esq., Maya Peleg, Esq., and Richard A. Stieglitz Jr., Esq., at Cahill Gordon & Reindel LLP serve as the Debtors' lead counsel. Lee E. Kaufman, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., serve as the Debtors' Delaware counsel. AlixPartners LLP serves as the Debtors' financial advisors and The Garden City Group Inc. serves as the Debtors' claims and noticing agent. SP Newsprint Co., LLC, disclosed $318 million in assets and $323 million in liabilities as of the Chapter 11 filing. The petitions were signed by Edward D. Sherrick, executive vice president and chief financial officer. The Official Committee of Unsecured Creditors is represented by Lowenstein Sandler PC. Ashby & Geddes, P.A., serves as its Delaware counsel, and BDO Consulting serves as its financial advisor. STEREOTAXIS INC: Files Form S-1; Registers 74.7MM Common Shares --------------------------------------------------------------- Stereotaxis, Inc., filed with the U.S. Securities and Exchange Commission a Form S-1 relating to the offer and sale, from time to time, by DAFNA LifeScience Ltd, Prescott Group Aggressive Small Cap Master Fund, G.P., Iroquois Master Fund Ltd, et al., of up to 74,741,532 shares of the Company's common stock, which includes: (i) up to 40,700,324 shares of the Company's common stock issuable upon conversion of or otherwise underlying the Company's subordinated convertible debentures; and (ii) up to 34,041,208 shares of the Company's common stock issuable upon the exercise of warrants to purchase the Company's common stock. This prospectus also covers any additional shares of common stock that may become issuable upon anti-dilution adjustment pursuant to the terms of these debentures warrants by reason of stock splits, stock dividends, or similar events. The debentures and warrants to purchase common stock were acquired by the selling stockholders in a private placement by us that closed on May 10, 2012. The Company's common stock is listed on the Nasdaq Global Market under the symbol 'STXS." On June 8, 2012, the last reported sale price for the Company's common stock on the Nasdaq Global Market was $0.27 per share. A copy of the prospectus is available for free at: http://is.gd/pXQilW About Stereotaxis Based in St. Louis, Mo., Stereotaxis, Inc., designs, manufactures and markets the Epoch Solution, which is an advanced remote robotic navigation system for use in a hospital's interventional surgical suite, or "interventional lab", that the Company believes revolutionizes the treatment of arrhythmias and coronary artery disease by enabling enhanced safety, efficiency and efficacy for catheter-based, or interventional, procedures. For the year ended Dec. 31, 2011, Ernst & Young LLP, in St. Louis, Missouri, expressed substantial doubt about Stereotaxis' 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 $32.0 million for 2011, compared with a net loss of $19.9 million for 2010. The Company's balance sheet at March 31, 2012, showed $36.79 million in total assets, $60.16 million in total liabilities, and a $23.36 million total stockholders' deficit. STRAFFORD COUNTY: Moody's Affirms 'Ba2' G.O. Bond Rating -------------------------------------------------------- Moody's Investors Service has affirmed Strafford County's (NH) Ba2 general obligation bond rating, affecting approximately $19.7 million in outstanding parity debt. Concurrently, Moody's has revised the outlook to stable from negative. Summary Ratings Rationale The bonds are secured by a general obligation unlimited tax pledge. The Ba2 rating reflects the county's continued weak financial position, limited liquidity, and heavy reliance on cash flow borrowing. Revision of the outlook to stable from negative reflects Moody's belief that further credit deterioration is unlikely at this time given the county's demonstrated ability to maintain market access for cash flow borrowing, elimination of the accumulated unreserved deficit in the General Fund related to a large receivable due from the county nursing home through accounting changes, and management's plan to incrementally increase reserves and reduce dependence on cash flow borrowing over the next several years. Strengths - Stable tax base with low unemployment - Low long-term debt levels - Stable property tax revenue collections Challenges - High reliance on cash flow borrowing to fund operations and debt service - Loss of federal stimulus funds, which has helped augment fund balance - Uncertainty of long-term nursing home expenditure pressures on General Fund operations What Could Change The Rating - Up: - Sustained record of structurally balanced operations and improved liquidity levels - Rebuilding of General Fund reserves - Decreased reliance on tax and revenue anticipation note borrowing What Could Change The Rating - Down: - Structurally imbalanced operations resulting in continued financial weakness - Increased levels of cash-flow borrowing - Failure to successfully execute reserve replenishment plan The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. STOCKTON, CA: Lays Out Cuts in Bankruptcy ----------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Stockton, California, published a list of about $23 million in cuts to be implemented through a Chapter 9 municipal bankruptcy filing if negotiations with creditors fail to achieve savings sufficient to avoid court proceedings. The cuts include $12 million in debt payments and $11.2 million in employee pay and benefits. Bloomberg notes that the city council previously voted to authorize the city manager to file for Chapter 9 municipal bankruptcy absent concessions from creditors. The filing could come as soon as June 26, because state law requires a period for negotiating with creditors before a municipality can initiate bankruptcy proceedings. The period for mediation was extended until June 25. About Stockton, California Stockton, California, the seat of San Joaquin County, is the fourth-largest city in the Central Valley of the U.S. state of California. With a population of 291,707 at the 2010 census, Stockton ranks as the state's 13th largest city. Stockton was sued by the indenture trustee after failing to make a payment of about $780,000 due Feb. 25 on $32.8 million in parking garage revenue bonds. The city council voted in February 2012 to default on about $2 million in bond payments as a prelude under state law for conducting workout negotiations with bondholders. Stockton is taking advantage of a new California law that lets municipalities in financial distress confidentially mediate with creditors or "interested parties" with $5 million or more in obligations or debt. Ralph Mabey, a former U.S. bankruptcy judge, was selected as mediator to conduct negotiations between the city and its creditors. Reuters notes Stockton's economy has been hit hard by the housing market's steep downturn in inland California, slashing the city's revenue. Mayor Ann Johnston noted that only 150 new homes were built in the city last year compared with 3,000 in 2007 and that the city has cut $90 million in spending over the last three years, the report says. SWADENER INVESTMENT: Chapter 11 Bankruptcy Case Closed ------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Oklahoma has closed the Chapter 11 case of Swadener Investment Properties, LLC, on May 31, 2012. The Debtor had filed an application for final decree, stating that the Joint Plan of Reorganization has substantially been consummated. The Court confirmed the Plan on Dec. 6, 2011. As a result of the Order, all creditors and security holders of the Debtor are enjoined from instituting or continuing any action or employing any process or engaging in any act to collect, recover, or offset any debt or claim against the reorganized company or any of its subsidiaries or against any person claiming through the reorganized company or any of its subsidiaries. As reported in the Troubled Company Reporter, on Dec. 6, 2011, the Plan proposes to pay the Debtor's creditors from the rental income and cash flow of the Debtor's operation of four commercial office building and a commercial retail sales center. General unsecured creditors holding claims in excess of $3,000 would receive a distribution of 100% of their allowed claims by equal monthly payments over 120 months after the Effective Date. Those holding claims in the amount of $3,000 or less would be paid in full within 60 days of the Effective Date. Secured creditors would receive distributions of interest and principal beginning 30 days after the Effective Date. Equity interest holds would retain their interest in the Debtor after the Effective Date. A coy of the Second Amended Plan is available for free at: http://bankrupt.com/misc/swadenerinvestment.doc135.pdf About Swadener Investment Tulsa, Oklahoma-based Swadener Investment Properties, LLC, owns and operates four commercial office buildings and a retail shopping Center. The Company filed for Chapter 11 bankruptcy protection (Bank. N.D. Okla. Case No. 11-10322) on Feb. 18, 2011. Scott P. Kirtley, Esq., and Karen C. Walsh, Esq., at Riggs, Abney, Neal, Turpen, Orbison, & Lewis, in Tulsa, Okla., serve as the Debtor's bankruptcy counsel. The Debtor disclosed $14,796,520 in assets and $12,057,950 in liabilities as of the Chapter 11 filing. Affiliate Pecan Properties, Inc. (Bankr. N.D. Okla. Case No. 11-10323) filed a separate Chapter 11 petition. TOUSA INC: Has Continued Access to Cash Collateral Until Oct. 31 ---------------------------------------------------------------- The Hon. John K. Olson of the U.S. Bankruptcy Court for the Southern District of Florida, in an eleventh final order, authorized TOUSA, Inc., et al.'s limited use of their prepetition first and second lien lenders' cash collateral. The Debtors would use the cash collateral to operate their business operations until Oct. 31, 2012. A full-text copy of the approved budget is available for free at: http://bankrupt.com/misc/TOUSAINC_cashcoll_order.pdf About TOUSA Inc. Headquartered in Hollywood, Florida, TOUSA, Inc. (Pink Sheets: TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A. Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P., TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on Jan. 29, 2008 (Bankr. S.D. Fla. Case No. 08-10928). Richard M. Cieri, Esq., M. Natasha Labovitz, Esq., and Joshua A. Sussberg, Esq., at Kirkland & Ellis LLP, in New York, N.Y.; and Paul S. Singerman, Esq., at Berger Singerman, in Miami, Fla., represent the Debtors in their restructuring efforts. Lazard Freres & Co. LLC is the Debtors' investment banker. Ernst & Young LLP is the Debtors' independent auditor and tax services provider. Kurtzman Carson Consultants LLC acts as the Debtors' Notice, Claims & Balloting Agent. TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba Eagle Homes, filed for Chapter 11 Protection on July 30, 2008 (Bankr. S.D. Fla. Case No. 08-20746). It estimated assets and debts of $1 million to $10 million in its Chapter 11 petition. The official committee of unsecured creditors has filed a proposed chapter 11 liquidating plan for Tousa. However, the committee said it would no longer pursue approval of its liquidation plan because of the pending appeal of its fraudulent transfer case in the U.S. Court of Appeals for the Eleventh Circuit. A district court in February 2011 held that the bankruptcy judge was wrong in ruling that lenders who were paid off received fraudulent transfers when Tousa gave liens on subsidiaries' properties to bail out and refinance a joint venture. Daniel H. Golden, Esq., and Philip C. Dublin, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, N.Y., represent the creditors committee. The Tousa committee filed a Chapter 11 plan in July 2010 based on an assumption it would win the appeal. U.S. RENAL: S&P Affirms 'B' Corporate Credit Rating --------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Plano, Texas-based U.S. Renal Care Inc. "We assigned our 'B+' credit rating, one notch above the corporate credit rating, to its proposed $60 million revolving credit facility and $305 million first-lien term loan," said Standard & Poor's credit analyst Gail Hessol. "To this debt we assigned our '2' recovery rating, indicating our expectation for substantial (70% to 90%) recovery of principal in the event of payment default," S&P said. "We assigned our 'CCC+' credit rating, two notches below the corporate credit rating, to USRC's proposed $120 million second- lien term loan. To this debt we assigned our '6' recovery rating, indicating our expectation for negligible (0 to 10%) recovery of principal in the event of payment default," S&P said. "When USRC's existing term loan is repaid with proceeds from the new financing, we will withdraw our ratings on that debt," S&P said. "The rating on Plano, Texas-based U.S. Renal Care Inc. (USRC) reflects its 'vulnerable' business risk profile and 'highly leveraged' financial risk profile according to our criteria, unchanged despite the ownership transaction. USRC's pro forma adjusted debt is 6.1x adjusted EBITDA for the 12 months ended March 31, 2012, compared with actual adjusted leverage of 4.7x as of March 31, 2012. Adjustments include the capitalization of operating leases and the deduction of net income attributable to noncontrolling interests (NCIs) from EBITDA," S&P said. "The proposed transactions will be USRC's third major refinancing since the beginning of 2010. We believe USRC will continue to pursue growth and shareholder-friendly actions. Therefore, we expect financial leverage to remain high. Leonard Green & Partners, LP plans to purchase 59% of USRC. Two of the financial sponsors, SV Life Sciences and Cressey & Co., which currently have a stake in USRC, are purchasing new equity. Two current sponsors, Salix Ventures and Select Capital, are selling their stakes. USRC recapitalized in 2010 to finance the acquisition of Dialysis Corporation of America (DCA), and in June 2011 to finance a distribution to its owners," S&P said. US FIDELIS: Co-Owner Pleads Guilty Again in $70-Million Fraud ------------------------------------------------------------- Juan Carlos Rodriguez at Bankruptcy Law360 reports that Cory Atkinson, the former owner of U.S. Fidelis, pled guilty on Monday in Missouri federal court to charges stemming from his theft of as much as $71 million in customer refunds and using it for personal expenses. Bankruptcy Law360 relates that it was the second time in a week Atkinson had faced the music for his role in the scheme, which also involved his brother. About US Fidelis Wentzville, Missouri-based US Fidelis, Inc., was a marketer of vehicle service contracts developed by independent and unrelated companies. It stopped writing new business in December 2009. The Company filed for Chapter 11 bankruptcy protection (Bankr. E.D. Mo. Case No. 10-41902) on March 1, 2010. Brian T. Fenimore, Esq., Crystanna V. Cox, Esq., James Moloney, Esq, at Lathrop & Gage L.C., in Kansas City, Mo.; and Laura Toledo, Esq., at Lathrop & Gage, in Clayton, Mo., advise the Debtor. GCG, Inc., is the consumer claims and noticing agent. Allison E. Graves, Esq., Brian Wade Hockett, Esq., and David A. Warfield, Esq., at Thompson Coburn LLP, in St. Louis, Mo., represent the Official Unsecured Creditors Committee. The Company scheduled assets of $74.4 million and liabilities of $25.8 million as of the petition date. VADIUM TECHNOLOGY: Files Schedules of Assets and Liabilities ------------------------------------------------------------ Vadium Technology, Inc. filed with the Bankruptcy Court for the Western District Washington its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $4,691,831 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $6,685,262 E. Creditors Holding Unsecured Priority Claims $2,025,923 F. Creditors Holding Unsecured Non-priority Claims $11,609,642 ----------- ----------- TOTAL $4,691,831 $20,320,827 A full text copy of the company's assets and liabilities is available free at: http://bankrupt.com/misc/VADIUM_TECHNOLOGY_sal.pdf Seattle, Washington-based Vadium Technology, Inc. filed for Chapter 11 protection (Bankr. W.D. Wash. Case No. 12-10808) on Jan. 30, 2012. Bankruptcy Judge Marc Barreca presides over the case. Dallas W. Jolley, Jr., Esq. represents the Debtor in its restructuring effort. The Debtor estimated assets and debts at $10 million to $50 million. The petition was signed by Rodney Gene Nicholls, president & CEO. VITRO SAB: Judge Refuses to Limit Ruling on Bankruptcy Plan ----------------------------------------------------------- Dow Jones' Daily Bankruptcy Review reports that a federal judge is standing firm in his rejection of Mexican glass maker Vitro SAB's debt-restructuring plan, refusing to scale back his denial of the controversial proposal. About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11- 11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas June 13 entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. The judge ruled that the Mexican reorganization was "manifestly contrary" to U.S. public policy because it bars the bondholders from holding Vitro operating subsidiaries liable to pay on their guarantees of the bonds. The Mexican plan reduced the debt of subsidiaries on $1.2 billion in defaulted bonds even though they weren't in bankruptcy in any country. VS FOX RIDGE: Files for Chapter 11 in Salt Lake City ---------------------------------------------------- VS Fox Ridge, LLC, filed a bare-bones Chapter 11 petition (Bankr. D. Utah Case No. 12-28001) in Salt Lake City on June 20, 2012. Alpine, Utah-based VS Fox Ridge estimated assets and debts of $10 million to $50 million. Equity owners Stephen and Victoria Christensen simultaneously sought Chapter 11 protection (Case No. 12-28010). W.R. GRACE: Garlock Sealing Seeks Judicial Notice ------------------------------------------------- Garlock Sealing Technologies LLC asks the U.S. District Court for the District of Delaware for judicial notice of certain subsequent proposed legislation and to supplement the appellate record to the extent necessary. Garlock asserts that judicial notice is mandatory if a party requests it and supplies the District Court with the necessary information to ascertain whether the information is readily verifiable. W.R. Grace & Co. and its debtor affiliates, together with other debtors involved in Garlock's consolidated appeal, filed a joint response to the request. The Debtors contend that Garlock has moved the District Court to take judicial notice of, or to supplement the appellate record with, four bills that are unenacted -- either proposed and pending or, as to one of the bills, recently deceased in committee and no longer even pending -- in several state legislative bodies and in Congress. The Debtors argue that Garlock's request should be denied because the unenacted Proposed Legislation is irrelevant, and that the request is nothing more than an attempt by Garlock to file another brief in an effort to supplement and rehabilitate its arguments. They add that Garlock's latest tactical maneuvering should not be countenanced, and that by asking the District Court to focus on immaterial and irrelevant draft legislation, Garlock seeks to turn the Court's focus from the true issue currently pending before it to an unnecessary and inappropriate discussion on evils Garlock perceives in the asbestos bar and in the asbestos trust system. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of W.R. Grace & Co. and its debtor affiliates' Plan of Reorganization. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. On April 20, 2012, the company filed a motion with the Bankruptcy Court to approve the definitive agreements among itself, co-proponents of the Plan, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. Pursuant to the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Files Report for 1st Quarter Claim Settlements ---------------------------------------------------------- W.R. Grace & Co. and its affiliates report that they settled claims with settled amounts that equal or exceed $50,000 but do not exceed $1,000,000, for the period from January 1, 2012, through March 31, 2012, pursuant to two settlement agreements: * a settlement to resolve claims asserted by the New York Department of Taxation and Finance; and * a notice of final judgment and settlement with respect to claims asserted by Robert H. Locke. Corrected Report The Debtors filed a corrected report with respect to claims they settled in amounts that equal or exceed $50,000 but do not exceed $1,000,000, for the period from July 1 through September 30, 2011. The corrected report disclosed these settlements: * a claim settlement notice for Claim Nos. 8378, 8379 and 8380 for the settlement of breach of contract, fraud, unfair trade practices and indemnification claims of former Grace vermiculite customer for $190,000; * settlement of a lawsuit captioned Delphi Corporation vs. Grace Davison, Adv. Proc. No. 07-0235 (Bankr. S. D. N.Y.), for $300,000; and * settlement of a lawsuit captioned USA and State of Georgia v. Airgas Carbonic, Inc., et al., including Grace. The Delphi Action seeks to avoid and recover $1,046,440 in preferential transfers pursuant to Sections 547 and 550 of the Bankruptcy Code. The State of Georgia Action relates to an alternate energy resources site located in Augusta, Georgia, and the settlement allows a prepetition de minimis claim for $503 to the U.S. Environmental Protection Agency and $15 to Georgia. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of W.R. Grace & Co. and its debtor affiliates' Plan of Reorganization. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. On April 20, 2012, the company filed a motion with the Bankruptcy Court to approve the definitive agreements among itself, co-proponents of the Plan, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. Pursuant to the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) W.R. GRACE: Thomas Vanderslice Resigns as Board Member ------------------------------------------------------ Thomas A. Vanderslice on May 3, 2012, notified the Board of Directors of W. R. Grace & Co. that he would resign as a member of the Board and its Lead Independent Director, according to Grace's May 7, 2012 filing with the U.S. Securities and Exchange Commission. The resignation is effective following the Board's next regularly scheduled meeting on June 28, 2012. The independent members of the Board elected Christopher J. Steffen, a current director, to succeed Mr. Vanderslice as Lead Independent Director. About W.R. Grace Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). David M. Bernick, P.C., Esq., at Kirkland & Ellis, LLP, and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan, LLP, and Duane Morris, LLP, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, and Marla R. Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Scott Baena, Esq., and Jay M. Sakalo, Esq., at Bilzin Sumberg Baena Price & Axelrod, LLP, to represent it. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel, LLP, represents the Official Committee of Equity Security Holders. W.R. Grace obtained confirmation of a plan co-proposed with the Official Committee of Asbestos Personal Injury Claimants, the Official Committee of Equity Security Holders, and the Asbestos Future Claimants Representative. The Chapter 11 plan is built around an April 2008 settlement for all present and future asbestos personal injury claims, and a subsequent settlement for asbestos property damage claims. Implementation of the Plan has been held up by appeals in District Court from various parties, including a group of prepetition bank lenders and the Official Committee of Unsecured Creditors. District Judge Ronald Buckwalter on Jan. 31, 2012, entered an order affirming the bankruptcy court's confirmation of W.R. Grace & Co. and its debtor affiliates' Plan of Reorganization. Bankruptcy Judge Judith Fitzgerald had approved the Plan on Jan. 31, 2011. On April 20, 2012, the company filed a motion with the Bankruptcy Court to approve the definitive agreements among itself, co-proponents of the Plan, BNSF railroad, several insurance companies and the representatives of Libby asbestos personal injury claimants, to settle objections to the Plan. Pursuant to the agreements, the Libby claimants and BNSF would forego any further appeals to the Plan. Bankruptcy Creditors' Service, Inc., publishes W.R. Grace Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by W.R. Grace, W.R. Grace Co. - Conn. and their affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) WAVE2WAVE COMMS: Jeffrey C. Mason OK'd as Litigation Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey authorized Wave2Wave Communications Inc., et al., to employ Jeffrey C. Mason, Esq. as special litigation counsel. As reported in the Troubled Company Reporter on May 25, 2012, Mr. Mason, a managing member of the firm of Jeffrey C. Mason, will continue to represent the Debtors: 1. in an action pending in the Superior Court of New Jersey, Law Division, Monmouth County, which the Debtors are defending claims by IncNetworks, Inc., third party plaintiff, for unliquidated damages arising from alleged fraud and misrepresentation; and 2. in a litigation against Euro Wolf, LLC and JMP Asset Management LLC relating to subscription agreements, which Wolf and JMP have breached their obligations under the respective subscription agreements. As compensation for Mr. Mason's services in connection with the Euro Wolf and KMP matters, the Debtors propose to pay Mr. Mason from the gross proceeds of recovery these fees: a) 33-1/3% of any recovery upon settlement or judgment; and b) an additional 7% of any recovery after notice of appeal is filed or post judgment relief action is required for recovery on the judgment. Mr. Mason did not receive any monies for the Debtors for services rendered prepetition. In addition, as of the Filing Ddate, the Debtors owed Mr. mason $10,990 for prepetition services performed in connection with the IncNetworks litigation. To the best of the Debtors' knowledge, Mr. Mason dows not hold or represent an interest adverse to the Debtors or their estate. About Wave2Wave Communications Wave2Wave Communications Inc., a provider of voice and data services to businesses, filed for bankruptcy (Bankr. D. N.J. Case No. 12-13896) on Feb. 17, 2012. Wave2Wave, which estimated up to $100 million assets and debts, says it sought Chapter 11 protection, after access provider Verizon Communications Inc. threatened to cut off its service. Affiliates RNK Inc. and RNK VA LLC also filed petitions. Wave2Wave was founded in 1999. Judge Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., serves as the Debtors' counsel. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., serves as their special counsel. Kurtzman Carson Consultants LLC serves claims, noticing and balloting agent. J.H. Cohn LLP serves as financial advisor. The petition was signed by Steven Asman, president and chairman of the Debtors' board. The U.S. Trustee appointed five members to the official committee of unsecured creditors. The Committee is represented by Cooley LLP. WAVE2WAVE COMMS: Plan Disclosure Hearing Scheduled for July 12 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey will convene a hearing on July 12, 2012, at 10 a.m., to consider adequacy of the Disclosure Statement explaining Wave2Wave Communications Inc., et al.'s proposed Plan of Reorganization dated April 19, 2012. The U.S. Securities and Exchange Commission filed documents asking the Court to deny approval of the Disclosure Statement because the document describes "a scheme to evade the federal securities laws and effectuate a back door initial public offering for Wave2Wave's stock." The SEC has already issued an order that has prevented the Debtors from offering their securities through an S-1 registration statement and the SEC is conducting an investigation into whether the Debtors' registration statement violated the anti-fraud provisions of the federal securities laws. Similarly, the SEC explained that the Disclosure Statement describes a Plan where the principal purpose is to avoid the registration requirements of the federal securities law, in contravention of Section 1129(d) of the Bankruptcy Code. Terms of the Plan According to the Disclosure Statement, the Plan was developed after extensive investigation and analysis of the Debtors' current cash flow, overhead, expenses, and projected cash flow. The Debtors believe that the Plan will result in the greatest possible recovery to creditors. The Debtors are entering into two viable alternative transactions under the Plan. Under the first transaction (the Reverse Merger Transaction or RMT) the Debtors will consummate the Reverse Merger if the Reverse Merger Conditions are satisfied by the Proposed Merger Date. If the Reverse Merger Conditions are not satisfied by the Proposed Merger Date, the Debtors will enter into an alternative transaction pursuant to which, among other items, the DIP Loan will be converted into a term loan in exchange for 70% of the outstanding equity of Reorganized Wave2Wave. Both the Reverse Merger Transaction and DIP Loan Conversion require the Debtors to raise additional capital/indebtedness to consummate either of those transactions for which the Debtors currently have no commitment to raise additional capital/ indebtedness. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/WAVE2WAVE_COMMUNICATIONS_ds.pdf About Wave2Wave Communications Wave2Wave Communications Inc., a provider of voice and data services to businesses, filed for bankruptcy (Bankr. D. N.J. Case No. 12-13896) on Feb. 17, 2012. Wave2Wave, which estimated up to $100 million assets and debts, says it sought Chapter 11 protection, after access provider Verizon Communications Inc. threatened to cut off its service. Affiliates RNK Inc. and RNK VA LLC also filed petitions. Wave2Wave was founded in 1999. Judge Donald H. Steckroth presides over the case. Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., serves as the Debtors' counsel. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., serves as their special counsel. Kurtzman Carson Consultants LLC serves claims, noticing and balloting agent. J.H. Cohn LLP serves as financial advisor. The petition was signed by Steven Asman, president and chairman of the Debtors' board. The U.S. Trustee appointed five members to the official committee of unsecured creditors. The Committee is represented by Cooley LLP. WESTERN POZZOLAN: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Western Pozzolan Corp. filed with the Bankruptcy Court for the District of Nevada its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $9,000,000 B. Personal Property $1,825,304 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $2,163,317 E. Creditors Holding Unsecured Priority Claims $419,420 F. Creditors Holding Unsecured Non-priority Claims $333,274 ----------- ----------- TOTAL $10,825,304 $2,916,012 A full text copy of the company's assets and liabilities is available free at: http://bankrupt.com/misc/WESTERN_POZZOLAN_sal.pdf About Western Pozzolan Corp. Western Pozzolan Corp. filed a bare-bones Chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 12-11040) in Las Vegas, Nevada, on Jan. 30, 2012. Judge Mike K. Nakagawa is assigned to the case, taking over from Judge Linda B. Riegle. Matthew Q. Callister, Esq., at Callister & Associates, serves as the Debtor's counsel. The Debtor estimated assets of $10 million to $50 million and debts of up to $10 million. The petition was signed by James W. Scott, vice president. According to its Web site, Western Pozzolan operates the Long Valley Pozzolan Plant in Lassen County, California. Activities include mining, processing, developing and marketing Pozzolan for a variety of applications for which this inorganic, industrial mineral is uniquely suited. According to the Troubled Company Reporter's records, Western Pozzolan first filed for bankruptcy protection (Bankr. D. Nev. Case NO. 10-27096) in Las Vegas on Sept. 9, 2010. The U.S. Trustee appointed three creditors to the Official Committee of Unsecured Creditors. WILLARD RENTAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Willard Rental Properties, LLC, an Ohio LLC 116 Penn Avenue Mansfield, OH 44903 Bankruptcy Case No.: 12-61724 Related entities that simultaneously filed Chapter 11 petitions: Debtor Case No. ------ -------- Willard Rental Properties, LLP 12-61725 Willard Home Improvement, Inc. 12-61726 Jerry and Janet Stackhouse 12-61728 Chapter 11 Petition Date: June 19, 2012 Court: U.S. Bankruptcy Court Northern District of Ohio (Canton) Judge: Russ Kendig About the Debtors: Willard LLC owns 40 residential rental units located primarily in Richland and Crawford counties in Ohio. Willard LLP rents over 900 residential and/or commercial units located in Richland, Crawford, Huron, Erie and Seneca counties. Home Improvement manages and maintains approximately 1,100 rental units owned or controlled by Willard LLC, Willard LLP or Jerry and Janet Stackhouse. Home Improvement also has a construction business although the recession has hit the business. Debtors' Counsel: Ann L. Zarick, Esq. MCDONALD HOPKINS LLC 600 Superior Avenue, East, Suite 211 Cleveland, OH 44114 Tel: (216) 348-5400 Fax: (216) 348-5474 E-mail: azarick@mcdonaldhopkins.com - and ? Matthew A. Salerno, Esq. MCDONALD HOPKINS LLC 600 Superior Avenue, East, Suite 2100 Cleveland, OH 44114 Tel: (216) 348-5400 Fax: (216) 348-5474 E-mail: msalerno@mcdonaldhopkins.com - and ? Michael J. Kaczka, Esq. MCDONALD HOPKINS LLC 600 Superior Avenue, East, Suite 2100 Cleveland, OH 44114 Tel: (216) 348-5400 E-mail: mkaczka@mcdonaldhopkins.com - and ? Shawn M. Riley, Esq. MCDONALD HOPKINS LLC 600 Superior Avenue, East, Suite 2100 Cleveland, OH 44114 Tel: (216) 348-5400 E-mail: sriley@mcdonaldhopkins.com Debtors' Financial Advisors: BBP PARTNERS, LLC Willard LLC's Estimated Assets: $1,000,001, to $10,000,000 Willard LLC's Estimated Debts: $1,000,001, to $10,000,000 Willard LLP's Estimated Assets: $10,000,001, to $50,000,000 Willard LLP's Estimated Debts: $10,000,001, to $50,000,000 The petitions were signed by Janet S. Stackhouse, secretary. Debtor's Consolidated List of Their 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Evalyn M. Fisher Living Trust Unsecured Loan $75,000 Evalyn M. Fisher as Trustee 939 Maplewood Street Willard, OH 44890 Edward L. Fisher Living Trust Unsecured Loan $75,000 Edward L. Fisher as Trustee 939 Maplewood Street Willard, OH 44890 Lowe's Companies, Inc. Trade Debt $10,463 1000 Lowe's Boulevard Mooresville, NC 28115 Sherwin Williams Co. Trade Debt $8,479 HSBC Business Solutions (Menards) Trade Debt $6,452 Rumpke Consolidated Companies Trade Debt $5,877 Speedway Trade Debt $5,034 Allied Supply Trade Debt $3,972 Shaw Carpet Trade Debt $3,249 Dillman Septic Tank Cleaning Trade Debt $2,715 City of Norwalk Utility $2,540 Robertson Heating Supply Co. Trade Debt $1,647 Village of Plymouth Utility $1,524 Verizon Wireless Utility $1,340 Crystal Glass & Mirror Trade Debt $1,236 Carter Lumber Trade Debt $1,181 Powell Supply, Inc. Trade Debt $1,139 Johnson & Dolesch Professional Services $960 Ace Hardware ? Willard Trade Debt $831 Southland Flooring Supplies Trade Debt $764 WOOTEN GROUP: Case Summary & 4 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Wooten Group, LLC 303 South Robertson Boulevard Beverly Hills, CA 90211 Bankruptcy Case No.: 12-31323 Chapter 11 Petition Date: June 19, 2012 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Thomas B. Donovan Debtor's Counsel: M. Jonathan Hayes, Esq. LAW OFFICE OF M. JONATHAN HAYES 9700 Reseda Boulevard, Suite 201 Northridge, CA 91324 Tel: (818) 882-5600 Fax: (818) 882-5610 E-mail: jhayes@hayesbklaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Mark Slotkin, managing member. Debtor's List of Its Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ GAF Building Materials Tenant ? Navone - $18,303 3301 N. Navone Road deposit Stockton, CA 95215 Fruit Fillings, Inc. Tenant ? Angus - $10,800 2531 East Edgar Prop - deposit Fresno, CA 93706 Fred Maidenberg, CPA LLC Acctg Svces 2012 $7,500 526 N. Larchmont Boulevard, Suite 200 Los Angeles, CA 90004 IC Systems, Inc. AT&T Collections $889 WYLDFIRE ENERGY: Files for Chapter 11 in Wichita Falls ------------------------------------------------------ Palo Pinto, Texas-based Wyldfire Energy, Inc., filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-70239) in Wichita Falls on June 20, 2012. The Debtor disclosed total assets of $15 million and total liabilities of $5.547 million, all unsecured, as of June 20, 2012. Tamara Ford, 100% stockholder, signed the Chapter 11 petition. In the corporate resolution, Ford said that Wyldfire has suffered business reversals, which resulted to the loss of some of its major assets and going concern value. The business is unable to pay its debt as it accrues, according to the court filing. ZOGENIX INC: Grants Mallinckrodt Right to Sell Sumavel DosePro -------------------------------------------------------------- Zogenix, Inc., and Mallinckrodt LLC entered into a co-promotion agreement on June 6, 2012. Under the terms of the co-promotion agreement, Mallinckrodt was granted a co-exclusive right to promote Sumavel DosePro to a mutually agreed prescriber audience in the United States. Under the Agreement, Mallinckrodt's sales team will begin selling Sumavel DosePro to its customer base of prescribers no later than Aug. 20, 2012. Mallinckrodt has committed to a minimum number of sales representatives for the initial term of the Agreement, which runs through June 30, 2014, and can be extended by mutual agreement of the parties in additional six month increments. Zogenix remains responsible for the manufacture, supply and distribution of commercial product for sale in the United States. In addition, Zogenix will supply product samples to Mallinckrodt at an agreed upon transfer price and Mallinckrodt will reimburse Zogenix for all other promotional materials used. In partial consideration of Mallinckrodt's sales efforts, Zogenix will pay Mallinckrodt a service fee on a quarterly basis that represents a specified fixed percentage of net sales of prescriptions generated from Mallinckrodt's prescriber audience over a baseline amount of net sales to the same prescriber audience. In addition, upon completion of the co-promotion term in June 30, 2014, and only if the Agreement is not terminated as a result of certain circumstances, Zogenix will be required to pay Mallinckrodt an additional tail payment calculated as a fixed percentage of the Mallinckrodt net sales over the Baseline Net Sales during the first full 12 months following the last day of the term. About Zogenix Inc. Zogenix, Inc. (NASDAQ: ZGNX), with offices in San Diego and Emeryville, California, is a pharmaceutical company commercializing and developing products for the treatment of central nervous system disorders and pain. As reported in the TCR on March 8, 2011, Ernst & Young LLP, in San Diego, Calif., expressed substantial doubt about Zogenix's ability to continue as a going concern, following the Company's 2010 results. The independent auditors noted that of the Company's recurring losses from operations and lack of sufficient working capital. The Company reported a net loss of $83.90 million in 2011, compared with a net loss of $73.56 million in 2010. The Company's balance sheet at March 31, 2012, showed $82.28 million in total assets, $82 million in total liabilities, and $278,000 in total stockholders' equity. * Sexual Harassment Nondischargeable Automatically -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Chief U.S. Bankruptcy Judge Cecelia Morris in Poughkeepsie, New York, ruled on June 18 that a claimant who won a $200,000 jury verdict for sexual harassment by a bankrupt was entitled to have the debt declared nondischargeable as a willful and malicious injury under Section 523(a)(6) of the U.S. Bankruptcy Code. According to the report, although the jury verdict had been upheld in the U.S. Court of Appeals, the bankrupt argued unsuccessfully that the jury didn't make a required finding that the conduct was intentional. Judge Morris disagreed and granted summary judgment declaring the judgment nondischargeable. Judge Morris followed three other bankruptcy courts concluding that sexual harassment is "an inherently intentional tort" excepted from discharge. She said that the charge to the jury complied with the Supreme Court's requirements in Geiger requiring a deliberate or intentional injury, not merely a deliberate or intentional act that leads to injury. The case is Basile v. Spagnola (In re Spagnola), 11-09055, U.S. Bankruptcy Court, Southern District of New York (Poughkeepsie). * Cash Collateral Order Disappears on Dismissal of Case ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. District Judge Matthew F. Kennelly in Chicago ruled on May 29 that a bankruptcy court order restricting the use of cash collateral is no longer binding when the bankruptcy is dismissed. According to the report, the case involved a company briefly in Chapter 11. The bankruptcy judge signed an order governing the use of cash collateral for the period May 1 to May 31. The case was dismissed on May 18. Immediately after dismissal, the cash was distributed to parties other than the secured lender. The lender later filed suit against the third parties, alleging that disbursement of the cash collateral after dismissal violated the bankruptcy court order. Judge Kennelly, the report relates, dismissed the portion of the lawsuit based on violating the bankruptcy court's cash collateral order. He said that limitations on use of cash are "inextricably intertwined with the pendency of a bankruptcy case." A cash collateral order, like a preliminary injunction, cannot survive dismissal of a complaint, he said. The case is Jefferson-Pilot Investments Inc. v. Capital First Realty Inc., 10-7633, U.S. District Court, Northern District of Illinois (Chicago). * Moody's Says Durbin Amendment Pressures U.S. Banks ---------------------------------------------------- The Durbin Amendment's reform of the industry hits banks the hardest, while merchant acquirers and retailers benefit from the rule changes, says Moody's Investors Service in a new special comment "New Debit Rules Hurt Banks and Reshape the Payment Processor Market." The Durbin Amendment - part of the Dodd-Frank Wall Street Reform and Consumer Protection Act - addresses debit-card transaction fees from payments processed via Visa (A1 stable) and Mastercard (A3 stable). The legislation curtails debit fees paid by merchants to banks and mandates that merchants have a choice between at least two unaffiliated debit processor networks. "While the Durbin Amendment creates greater competition in the PIN debit market, Visa will preserve its leading market position in the more profitable signature debit space," said Stephen Sohn, a Moody's Vice President -- Senior Credit Officer. Despite one of the original intents of the Durbin Amendment to protect consumers, Moody's does not expect cost savings to retailers to flow through to consumers, rather that retailers will retain the savings as they attempt to offset rising operational costs. Banks will be most affected as they struggle to adjust to the new rule and replace lost revenues. "Banks are clearly the losers from the Durbin Amendment, as debit card fees have historically been a significant revenue source," said Curt Beaudouin, a Moody's Vice President -- Senior Analyst. "Banks are attempting to recoup some of the lost revenue via other fees and expense cuts, but this process will be halting and difficult." Banks collected $16.2 billion in debit card interchange fees in 2009, says Moody's. The three biggest debit card issuers - Bank of America Corporation (Baa1 under review), Wells Fargo & Company (A2 negative) and JPMorgan Chase & Co. (Aa3 under review) - accounted for 42% of total purchase share in 2011. Small merchant acquirers will benefit more meaningfully from the lower interchange fees than larger rivals, at least through 2013, says Moody's. That's because they typically have a greater ratio of bundled agreements with smaller retailers, compared to industry leaders First Data (B3 stable) and Vantiv (Ba2 stable). The larger processors have more transparent "interchange plus" deals and are subject to greater pricing leverage exerted by their larger retailer clients. * Davidoff to Head Greenberg Glusker's Bankruptcy Practice ---------------------------------------------------------- Greenberg Glusker disclosed that bankruptcy attorney Brian L. Davidoff and his practice group will join the Firm, effective July 1, 2012. Davidoff will head the Firm's Bankruptcy and Financial Restructuring Group. The attorneys moving with Davidoff include C. John M. Melissinos and Claire E. Shin, who also will join Greenberg Glusker's Bankruptcy and Financial Restructuring Group, and Benjamin M. Alexander, who will join Greenberg Glusker's Corporate Group. All four have practiced at Davidoff Gold LLP since February 2012, and prior thereto practiced at Rutter Hobbs & Davidoff, where Davidoff was Managing Partner. Thirteen other former Rutter, Hobbs & Davidoff attorneys joined Greenberg Glusker at the beginning of 2012. Davidoff, Alexander, Melissinos and Shin had planned to join the firm at the same time, but a pending matter raised conflicts of interest which prevented them from moving with their Rutter Hobbs colleagues then. The matter that created the conflict has now been resolved, making the long-hoped-for move now possible. "Brian and his team were presented with many other opportunities both at the time of our initial discussions and over the past five months," said Stephen Smith, Greenberg Glusker's Managing Partner. "We are honored that they continue to want to practice with us and are grateful that they were willing to wait for the conflict to resolve. Their reputation in bankruptcy circles is unparalleled. Their breadth of experience elevates our practice, creates new resources for our clients, and cements the Firm as full service in every respect." "I am very pleased to be joining Greenberg Glusker where many of my prior partners are now practicing," said Davidoff. "The Firm's broad range of specialties, and its focus on Southern California businesses, provides an excellent complement to my practice." Davidoff and his fellow bankruptcy attorneys represent debtors and creditors, equity holders, creditors' committees, secured creditors, and indenture trustees in chapter 11 restructurings, chapter 7 liquidations, workouts, creditor committee representation, distressed asset dispositions, and adversary litigation. Notable engagements include advising the CEO of Contessa Premium Foods Inc., a name brand seller of frozen foods, in a bankruptcy-related sale; advising Cisco Brothers, Inc., a Los Angeles based manufacturer of sustainable furniture, through its chapter 11 reorganization; and acting as debtor's counsel for J.T. Thorpe, Inc. in connection with the restructure of the first asbestos litigation related reorganization in the Central District of California. Alexander will rejoin his Rutter Hobbs Corporate Department colleagues, Andrew Apfelberg, Richard Hong, Richard Sweet, and Joel Weinstein. In addition to the seventeen former Rutter Hobbs & Davidoff lawyers, Greenberg Glusker welcomed Kenneth Fields, formerly of Silver Friedman LLP, earlier this year. * Weil Gotshal's Larson to Lead Forshey Prostok's Dallas Office --------------------------------------------------------------- Michelle V. Larson has been named a partner with Forshey Prostok LLP, a Fort Worth-based law firm specializing in bankruptcy and bankruptcy litigation. With more than 15 years of experience in all facets of bankruptcy, restructuring and commercial litigation, Larson will head the firm's new Dallas office. Located at 500 Crescent Court, Suite 240, the new office marks the first time the Fort Worth-headquartered law firm has entered the Dallas market. "I'm pleased to join such an accomplished team of bankruptcy attorneys," Larson said. "Forshey Prostok is already one of the top bankruptcy firms in Texas, and I'm excited to be able to spearhead the opening of its Dallas office." Prior to joining Forshey Prostok, Larson was with the Dallas office of Weil, Gotshal & Manges LLP. She has an AV Peer Review Rating by Lexis Nexis Martindale-Hubbell, and is a member of the Dallas Bar Association, the American Association of Attorney- Certified Public Accountants, the International Women's Insolvency and Restructuring Confederation, and Attorneys Serving the Community. Some of her more notable recent experience includes representing the Texas Rangers in the successful sale of the franchise in Chapter 11, and representing Crescent Resources, a multi-faceted real estate company and its 120 affiliates in Chapter 11 proceedings that involved the restructuring of over $2 billion of secured and unsecured debt. "Michelle's experience and extensive knowledge of the bankruptcy market and her exceptional reputation in the legal community make her the ideal partner, not only for our firm, but also as the person to lead the growth and expansion of our Dallas office," said Jeff Prostok, a founding partner of Forshey Prostok. Larson received her B.S. in Accounting at Nicholls State University, where she was named valedictorian of her graduating class. She earned her J.D. at Loyola University School of Law, graduating magna cum laude, while serving on both Law Review and Moot Court. Larson is also a Certified Public Accountant in the State of Louisiana. Forshey Prostok has extensive experience in all areas of bankruptcy law. The firm's scope of recent and on-going representation includes business reorganizations, enforcement of creditor's rights, leading commercial and bankruptcy-related litigation, overseeing creditor's committees, directing workouts and closing bankruptcy acquisitions. * BOOK REVIEW: Legal Aspects of Health Care Reimbursement --------------------------------------------------------- Authors: Robert J. Buchanan, Ph.D., and James D. Minor, J.D. Publisher: Beard Books Softcover: 300 pages List Price: $34.95 Review by Henry Berry With Legal Aspects of Health Care Reimbursement, Buchanan, a professor in the School of Public Health at Texas A&M, and Minor, an attorney, have come up with an invaluable resource for lawyers and anyone else seeking an introduction to the legal and social issues related to Medicare and Medicaid. The administrative costs of Medicare and Medicaid reimbursement have been a heated topic of debate among public officials and administrators of provider healthcare organizations, especially health maintenance organizations. Although inflation and the use of costly medical technology are key factors in the rise in Medicare and Medicaid costs, some control can be gained through appropriate compliance, using more efficient procedures and better detection of fraud. This work is a major guide on how to go about doing this. Though mostly a legal treatise, Legal Aspects of Health Care Reimbursement, first published in 1985, also offers commentary through legislative and regulatory analyses, thereby explaining how healthcare reimbursement policies affect the solvency and effectiveness of the Medicare and Medicaid programs. In discussing how legislation and regulations affect the solvency and effectiveness of government-provided healthcare, the authors offer insight into the much-publicized and much-discussed issue of runaway healthcare costs. Buchanan and Minor do not deny that healthcare costs are out of control and are onerous for the government and ruinous for many individuals. But healthcare reimbursement policies are not the cause of this, the authors argue. To make their case, they explain how the laws and regulations in different areas of the Medicare and Medicaid programs create processes that are largely invisible to the public, but make the programs difficult to manage financially. The processes are not well thought out nor subject to much quality control, with the result that fraud is chronic and considerable. The areas of Medicare covered in the book are inpatient hospital reimbursement, long-term care, hospice care, and end-stage renal disease. The areas of Medicaid covered are inpatient hospital and long-term care plus abortion and family planning services. For each of these areas, the authors discuss the conditions for receiving reimbursement, the legislation and regulations regarding reimbursement, the procedures for being reimbursed, the major areas of reimbursement (for example, capital-related costs, dietetic services, rental expenses); and court cases, including appeals. Reimbursement practices of selected states are covered. For each of the major areas of interest, the chapters are organized in a manner that is similar to that found in reference books and professional journals for attorneys and accountants. Laws and regulations are summarized and occasionally quoted with expert background and commentary supplied by the authors. With regard to court cases and rulings pertaining to Medicare and Medicaid, passages from court papers are quoted, references to legal records are supplied, and analysis is provided. Though the text delves into legal issues, it is accessible to administrators and other lay readers who have an interest in the subject matter. Clear chapter and subchapter titles, a table of cases following the text, and a detailed index enable readers to use this work as a reference. The value of this book is reflected in the authors' ability to distill great amounts of data down to one readable text. It condenses libraries of government and legal documents into a single work. Answers to questions of fundamental importance to healthcare providers -- those dealing with qualifications, compliance, reimbursable costs, and appeals -- can be found in one place. Timely reimbursement depends on proper application of the rules, which is necessary for a provider's sound financial standing. But the authors specify other reasons for writing this book, to wit: "Providers should have a general knowledge of the law and should not rely on manuals and regulations exclusively." By summarizing, commenting on, and citing cases relating to principal provisions of Medicare and Medicaid, the authors accomplish this objective. The authors also cover the topic of fraud with respect to both Medicare and Medicaid, offering both a legal treatment and commentary. At the end of each chapter is a section titled "Outlook," which contains a discussion of government studies, changes in healthcare policy, or other developments that could affect reimbursement. Although this work was published over two decades ago, much of this discussion is still relevant today. Finally, the book is a call for change. The authors remark in their closing paragraph: "Given the increasing for-profit orientation of the major segments of the health care industry, proprietary providers should be particularly responsive to new efficiency incentives" in reimbursement. In relation to this, "policymakers [should] develop reimbursement methods that will encourage providers to become more efficient." Robert J. Buchanan is currently a professor in the Department of Health Policy and Management in the School of Rural Public Health at the Texas A&M University System Health Sciences Center. James D. Minor, a former law professor at the University of Mississippi, has his own law practice. ********* 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, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2012. 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 ***