/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120813.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 13, 2012, Vol. 16, No. 224 Headlines 122 FIRST PIZZA: South Brooklyn Pizza Chain Files for Bankruptcy 141 KANSAS: Case Summary & 4 Unsecured Creditors 1946 PROPERTY: Voluntary Chapter 11 Case Summary 38 STUDIOS: Rhode Island Gets Court OK to Seize Collateral ALCO CORP: Court OK's Sale Carve-Out to Pay Adequate Protection ALERE INC: Moody's Affirms 'B1' Corp Family Rating; Outlook Neg ALLY FINANCIAL: Offering $600 Million of 4.625% Senior Notes ALT HOTEL: Plan Confirmation Hearing Continued Until Oct. 29 AMBAC FINANCIAL: Widens Losses to $811.1-Mil. in 2nd Quarter AMERICAN AIRLINES: Pilots Reject Contract Offer AMERICAN AIRLINES: Judge to Rule on Contract by Aug. 15 AMERICAN AIRLINES: Reports July Revenue and Traffic Results AMERICAN RAILCAR: Moody's Raises Default Probability Rating to B1 ATTACK ATHLETICS: Judge Rejects Chapter 11 Bankruptcy Case AXION INTERNATIONAL: Michael Dodd Resigns from Board of Directors B/E AEROSPACE: Moody's Affirms 'Ba1' CFR/PDR; Outlook Stable BE AEROSPACE: S&P Keeps 'BB+' Corp. Credit Rating; Outlook Stable BLAST ENERGY: Jamie Tseng Discloses 15.5% Equity Stake BRE PROPERTIES: Fitch Places Rating on Preferred Stock at 'BB+' BROADVIEW NETWORKS: Rejects Icahn Offer; To Pursue Own Plan CAESARS ENTERTAINMENT: Files Form 10-Q, Incurs $241MM Loss in Q2 CANO PETROLEUM: Tri-Flow Dismissal Has No Objection CAPITOL BANCORP: Updated Case Summary & Creditors' Lists CARE ONE: Case Summary & 9 Unsecured Creditors CELL THERAPEUTICS: To Effect Reverse Stock Split of Common Stock CERIDIAN CORP: S&P Keeps 'B-' Rating on Extended Term Loan B CHIQUITA BRANDS: Moody's Affirms 'B2' CFR/PDR; Outlook Negative CITY LOFT HOTEL: Court Won't Lift Disgorgement Order CLEAR CHANNEL: Bank Debt Trades at 22.47% Off in Secondary Market CLIFFS CLUB: Further Fine-Tunes Chapter 11 Plan COMMERCETEL CORP: Inks Three-Year Contract With CFO COMMUNITY TOWERS: Opposes Lender's Lift Stay Request CONVERSION SERVICES: Chapter 7 Petition Filed CORDILLERA GOLF: Club Members Seeking Chapter 11 Trustee COSO GEOTHERMAL: Moody's Cuts Rating on Certificates to 'Caa1' DELTA PETROLEUM: Inks Consulting Pacts with KN and Freedman DELTATHREE INC: Six Directors Elected at Annual Meeting DEWEY & LEBOEUF: Former Partners Want Ch. 11 Trustee or Examiner DEWEY & LEBOEUF: Court Partly OKs Incentive/Retention Programs DEWEY & LEBOEUF: Sweetens $90.4MM Retiree Settlement Deal DEX MEDIA EAST: Bank Debt Trades at 46.29% Off in Secondary Market DVORKIN HOLDINGS: Case Summary & 18 Largest Unsecured Creditors EASTMAN KODAK: No Quick Appeal on Apple Patent Dispute ELLIPSO INC: Trial on Bid to Revoke Confirmation Order EMPIRE LAND: CEO Objects to O'Melveny's $1.5MM Deal With Trustee EMPIRE LAND: Execs' D&O Suit Against National Union Dismissed ENERGY FUTURE: Moody's Cuts CFR to 'Caa3'; Outlook Remains Neg. EPICEPT CORP: Reports $2.9 Million Net Income in 2nd Quarter ESSENTIAL POWER: Moody's Maintains 'B2' Rating on $565MM Notes FANNIE MAE: Reports $2.2 Billion Net Income in Second Quarter FERGUSON FIBERS: Case Summary & 20 Largest Unsecured Creditors FIRST PROPERTIES: Case Summary & 6 Unsecured Creditors FTMI REAL ESTATE: Lenox on The Lake in Chapter 11 FTMI REAL ESTATE: Case Summary & 6 Unsecured Creditors GB ENTERPRISES: Owners' Interest Transferred to Receiver GENE CHARLES: Trust Files for Ch. 11 in West Virginia GENE CHARLES: Case Summary & 20 Largest Unsecured Creditors GLOBAL AVIATION: Court Approves Key Employee Retention Plan GLOBAL INVESTMENT HOUSE: Kuwaiti Firm Unveils Debt-for-Equity Swap GOSHEN GLOBAL: Case Summary & 4 Unsecured Creditors GRATON ECONOMIC: Moody's Assigns 'B3' CFR/PDR; Outlook Stable GULFCOAST IRREVOCABLE: Files for Ch. 11 in Puerto Rico GULFCOAST IRREVOCABLE: Case Summary & 9 Largest Unsec Creditors HARPER BRUSH: Wants to Incur $1.2MM to Purchase Raw Materials HARPER BRUSH: Amends List of Largest Unsecured Creditors HAWKER BEECHCRAFT: Bank Debt Trades at 28.97% Off HERCULES OFFSHORE: SEC Terminates Investigation, No Action Taken HOTEL PRINCE CHARLES: Faces Liquidation for Inability to Pay Fees HURSTBOURNE LANDINGS: Case Summary & Unsecured Creditor IMMUCOR INC: Moody's Affirms 'B2' Corp. Family Rating IMPERIAL INDUSTRIES: Incurs $732,000 Net Loss in Second Quarter INFUSYSTEM HOLDINGS: Files Form 10-Q, Incurs $828,000 Loss in Q2 INTERFACE INC: Moody's Comments on Planned Bentley Divestiture INTERNATIONAL ENVIRONMENTAL: Marshack OK'd as Trustee Counsel INTERNATIONAL ENVIRONMENTAL: Dzida OK'd as Transaction Counsel INT'L ENVIRONMENTAL: Stetina Brunda OK'd as Trademark Counsel INTERSIL CORP: Moody's Cuts Liquidity Rating; Ba2 CFR Unchanged IRVING, TX: S&P Withdraws 'B' Rating on Special Revenue Bonds K-V PHARMACEUTICAL: Wins Access to $31-Mil. in Cash Collateral K-V PHARMACEUTICAL: Court Approves "First Day" Motions KINDER MORGAN: Fitch Affirms 'BB+' IDR; Outlook Stable KNIGHT CAPITAL: Agrees to Appoint Three New Members to Board LEE BRICK: Court Approves Compensation Package for Company Prez LIGHTSQUARED INC: Falcone Blasts Investigation Into Creditors LIGHTSQUARED INC: Lenders Attempt to Get Leverage, Harbinger Says LODGENET INTERACTIVE: Files Form 10-Q, Incurs $103MM Loss in Q2 MAMMOTH LAKES: Plan Outline Hearing Continued Until Aug. 29 MAMMOTH LAKES: Judge Elizabeth Perris OK'd as Judicial Mediator MAMMOTH LAKES: Amends List of Largest Unsecured Creditors MARKET STREET: Hearing on Plan Outline Continued Until Aug. 16 MARTINI FITNESS: Case Summary & 17 Largest Unsecured Creditors MEDFORD VILLAGE: Case Summary & 5 Unsecured Creditors MF GLOBAL: No Ruling Yet on $175 Million CME Settlement MF GLOBAL: Corzine to Face Employee's Stock Suit in Federal Court MICHAEL MURPHY: Owner of Ben Moore's Restaurant in Chapter 13 MIJA TORTILLA: Case Summary & 20 Largest Unsecured Creditors MOMENTIVE PERFORMANCE, Files Form 10-Q; Incurs $88MM Loss in Q2 MOMENTIVE SPECIALTY: Files Form 10-Q, Posts $28MM Income in Q2 MORGANS HOTEL: Pays $15 Million to Tenants at Mandalay Bay MSR RESORT: Seeks Clarity on Damages for Cancelled Contracts MUNDY RANCH: Files for Chapter 11 in New Mexico MUNDY RANCH: Case Summary & 16 Largest Unsecured Creditors NAVISTAR INTERNATIONAL: To Reduce Workforce to Save Costs NEW YORK TIMES: About.com Sale Won't Affect Moody's 'B1' CFR NEXSTAR BROADCASTING: Files Form 10-Q, Posts $8.8MM Income in Q2 NII HOLDINGS: S&P Cuts Corp. Credit Rating to 'B'; Outlook Stable NORTEL NETWORKS: Incurs $131 Million Loss in Second Qtr 2012 NORTHCORE TECHNOLOGIES: To Release 2nd Quarter Results on Aug. 14 NUANCE COMMUNICATIONS: S&P Keeps 'BB-' Rating on $700M Sr. Notes OCALA FUNDING: Allows BofA to Continue Suit Against FDIC OLIN CORPORATION: Moody's Assigns 'Ba1' Rating on $175MM Notes OLIN CORPORATION: S&P Rates $175MM Unsecured Notes 'BB-' OPPIO-CAPURRO PROPERTIES: Case Summary & Creditors List PACESETTER FABRICS: Has Access to Cash Collateral Until Sept. 14 PASSIONATE PET: Files Petition for Ch. 7 Liquidation PATRIOT COAL: Davis Polk Approved as Bankruptcy Counsel PATRIOT COAL: Authorized to Pay $25MM Critical Vendors Claim PATRIOT COAL: MSHA Lifts Imminent Danger Order at Eagle Mine PATRIOT COAL: Insurers Want Case Moved to West Virginia PEREGRINE FINANCIAL: Liquidation of Wasendorf's Assets Begins PEREGRINE FINANCIAL: Receiver Wins Bid to Cash in Life Insurance PEREGRINE FINANCIAL: Trustee Wins OK to Subpoena JPMorgan, Others PINNACLE AIRLINES: Delays Q2 Form 10-Q Due to Bankruptcy Filing PONCE DE LEON: Cash Collateral Access Approved Until Sept. 25 PROSEP INC: Unit in Breach of Covenant With DnB Bank PULTEGROUP INC: S&P Affirms 'BB-' Corporate Credit Rating QUIGLEY CO: U.S. Trustee Objects to Newest Chapter 11 Plan RG STEEL: Gets Court Approval for $22 Million Asset Sale RUSSELL COOK: Owner of Lot Approved for Racetrack in Bankruptcy SABRE INDUSTRIES: Moody's Assigns 'B2' Corp. Family Rating SANMINA-SCI CORP: Moody's Cuts Sr. Unsec. Note Rating to 'B2' SANUWAVE HEALTH: Incurs $1.4 Million Net Loss in Second Quarter SELECT MEDICAL: Moody's Cuts Sr. Secured Debt Rating to 'Ba3' SELECT MEDICAL: S&P Cuts Senior Secured Debt Rating to 'BB-' SENTINEL MANAGEMENT: BNY Mellon Beats Trustee in $550MM Appeal SERVICEMASTER CO: S&P Rates $1BB Tranche B Term Loan 'B+' SINCLAIR BROADCAST: Files Form 10-Q, Posts $30MM Income in Q2 SIONIX CORP: Messrs. Calligar and Brogan Named to Board SOLYNDRA LLC: President Told Loan Was Solid Before Bankruptcy SOUTH EDGE: Meritage Fails to Overturn Trustee's Confirmed Plan SPEEDEMISSIONS INC: Richard Molinsky Discloses 1.4% Equity Stake SPRINT NEXTEL: Keith Cowan Quits as Head of Strategic Planning SPRINT NEXTEL: Fitch Rates 2-Tranche Unsecured Notes Offering 'B+' SPRINT NEXTEL: Moody's Confirms 'B1' CFR; Rates New Notes 'B3' SPRINT NEXTEL: S&P Rates $2.25-Bil. Sr. Unsecured Revolver 'BB-' STACKPOLE POWERTRAIN: Moody's Withdraws 'B1' Sr. Secured Ratings STOCKTON, CA: Faulted for Not Negotiating with Calpers STONEYS NORTH: Case Summary & 20 Largest Unsecured Creditors STOP N SHOP: Case Summary & 20 Largest Unsecured Creditors STRATEGIC AMERICAN: Acquires Interest in African Concession TAYLOR BEAN: Judge Lets BofA Seek $1.75-Bil. Repayment in Losses THERATECHNOLOGIES INC: Gets Minimum Bid Price Notification TRAVELPORT HOLDINGS: Incurs $20-Mil. Net Loss in Second Quarter TRI-CHEK SEEDS: Case Summary & 20 Largest Unsecured Creditors TRI-VALLEY CORPORATION: Case Summary & Creditors List TRIBUNE CO: Bank Debt Trades at 26.12% Off in Secondary Market TRIBUNE CO: Bankruptcy Appeal Could Cause $1.5 Billion Damage TRONOX INC: Healthy at Time of IPO, Kerr-McGee Witness Says TRONOX INC: Settlement Unlikely in Enviro Suit, Anadarko Says TRONOX INC: Was Solvent at Spinoff, Kerr-McGee Expert Says TXU CORP: Bank Debt Trades at 31.12% Off in Secondary Market U.S. FIDELIS: Robert Schulz Objects to Settlement Plan U.S. POSTAL SERVICE: Incurs $5.2 Billion Loss in Third Quarter UNIVERSAL FIDELITY: A.M. Best Affirms 'B' Finc'l. Strength Rating UNIVERSITY GENERAL: Delays Form 10-Q for Second Quarter UNIVERSITY WOODS: Case Summary & 4 Unsecured Creditors WARNER CHILCOTT: S&P Affirms 'BB' Corporate Credit Rating WAVEDIVISION HOLDINGS: Moody's Affirms 'B2' CFR; Outlook Stable WEST VIRGINIA LASER: Case Summary & 20 Largest Unsec. Creditors WILTON BRANDS: Moody's Assigns 'B3' CFR/PDR; Outlook Stable WISP RESORT: Has Until September 10 to File Chapter 11 Plan WOONSOCKET: To Keep School Open, Receivership Still Looms ZOGENIX INC: Incurs $17.2 Million Net Loss in Second Quarter * Moody's Says Public Finance Downgrades Hit Record High in 2Q * Moody's: Default Rate Contracts in July, to Rise by Year's End * Courts Can't Cut Chapter 7 Trustees' Commissions * CFTC Member Floats Insurance Fund for Futures Co. Failures * Financier Accuses Ex-Atty of $296MM Double Cross at Trial * Andrew D. Shaffer Joins Butzel Long in NY Office * Cohen & Grigsby Taps Davies as Vice Chair of Florida Bar Panel * Hughes Watters Hires M. Weems for Default Servicing Practice * Thompson Hine Expands NY Commercial & Public Finance Practice * BOND PRICING -- For Week From Aug. 6 to 10, 2012 ********* 122 FIRST PIZZA: South Brooklyn Pizza Chain Files for Bankruptcy ---------------------------------------------------------------- Adrianne Pasquarelli, writing for Crain's New York Business reports the Manhattan-based company behind the South Brooklyn Pizza chain has filed for Chapter 11 bankruptcy protection. According to Crain's, the firm, which operates as 122 First Pizza Inc. and is also known as 137 Beach Corp., is owned by real estate developer and pizza restaurateur James McGown. Mr. McGown listed between $1 million and $10 million in both assets and debts, according to the report. South Brooklyn has two locations in Manhattan, and one in Carroll Gardens where it is part of the 138-year-old P.J. Hanley's Tavern Irish bar. The company's Manhattan location, at 122 First Ave., between Seventh and Eighth streets, was still in operation as of Friday morning. Crain's notes Mr. McGown also reportedly owns the recently opened Buschenschank pub, also in Carroll Gardens, and is president of East River Mortgage Corp., whose own separate Chapter 11 bankruptcy petition is pending. Jonathan Pasternak, Esq., of Harrison, N.Y.-based Rattet Pasternak, represents Mr. McGown. According to Crain's, an affidavit accompanying the most recent petition indicated that the bankruptcy "was precipitated by landlord-tenant issues with the landlord, over-landlord and fee owner of 122 First Avenue." In 2009, Mr. McGown signed a sublease for the First Avenue property, and invested $400,000 in the store's renovation, but the property has changed hands several times since. Mr. McGown now "has no idea who to pay money to" for the deal, the affidavit says. The retail space, under a 10-year lease, is approximately 1,400 square feet, CoStar Group Inc. indicates. According to the report, Mr. McGown under 137 Beach Corp. operates a real estate business that purchases properties in foreclosure, renovates them and rents them. He currently owns a total of 17 properties, including 13 in the Bronx and Brooklyn. 141 KANSAS: Case Summary & 4 Unsecured Creditors ------------------------------------------------ Debtor: 141 Kansas Street Partners, LLC 815 Colorado Boulevard, Suite 200 Los Angeles, CA 90041 Bankruptcy Case No.: 12-37078 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Central District of California (Los Angeles) Judge: Vincent P. Zurzolo Debtor's Counsel: Andrew R. Cahill, Esq. LESNICK PRINCE & PAPPAS LLP 185 Pier Avenue, Suite 103 Santa Monica, CA 90405 Tel: (213) 493-6584 Fax: (310) 396-0963 E-mail: acahill@lesnickprince.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its four largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/cacb12-37078.pdf The petition was signed by Scott F. Gaudineer, restructuring officer. 1946 PROPERTY: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: 1946 Property, LLC 1946 Northeast Loop 410 San Antonio, TX 78217 Bankruptcy Case No.: 12-52489 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Western District of Texas (San Antonio) Judge: Leif M. Clark About the Debtor: The Debtor, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), owns property in 1946 Northeast Loop 410, in San Antonio. Debtor's Counsel: Vickie L. Driver, Esq. COFFIN & DRIVER, PLLC 7557 Rambler Road, Suite 200 Dallas, TX 75231 Tel: (214) 377-4848 Fax: (214) 377-4858 E-mail: vdriver@coffindriverlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Edward Reese, manager. 38 STUDIOS: Rhode Island Gets Court OK to Seize Collateral ---------------------------------------------------------- Jamie Santo at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Mary F. Walrath gave permission for a Rhode Island agency to seize and sell collateral backing its $75 million loan to bankrupt 38 Studios LLC, averting the agency's fear that the assets might be inadvertently destroyed. Bankruptcy Law360 relates that Judge Walrath granted a motion of the Rhode Island Economic Development Corp. for relief from court's automatic stay, allowing the state agency to preserve the assets -- mostly intellectual property stored on leased computers. 38 Studios LLC, a video-game developer founded by former Boston Red Sox pitcher Curt Schilling, filed for liquidation on June 8, 2012, without attempting to reorganize. Although based in Providence, Rhode Island, the company filed the Chapter 7 petition in Delaware (Case No. 12-11743). ALCO CORP: Court OK's Sale Carve-Out to Pay Adequate Protection --------------------------------------------------------------- The Hon. Mildred Caban Flores of the U.S. Bankruptcy Court for the District of Puerto Rico approved a stipulation between Alco Corporation and MAPFRE PRAICO Insurance Company for the use of MAPFRE's cash collateral subject to security interest and for permanent adequate protection to MARFRE. The Debtor agreed that, in connection to MAFRE's proofs of claim, the Debtor will carve out the amount of $200,000, from the proceeds of sale for the Debtor's asphalt plant located in Hatillo, Puerto Rico, to BTB Corporation and deposit the same with the Clerk of Court once the sale is approved by the Court and consummated. On July 23, 2012, according to the Debtor's case docket, the Court has approved the sale of the Hatillo Asphalt Plant for $400,000, and the carve-out. The deposit constitutes as adequate protection to MAPFRE. A copy of the stipulation is available for free at http://bankrupt.com/misc/ALCO_cashcoll_stipulation.pdf In a June 29 order, the Court authorized the Debtor's use of MAPFRE's cash collateral. About Alco Corp. Alco Corporation in Dorado, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 12-00139) on Jan. 12, 2012. Carmen D. Conde Torres, Esq., and C. Conde & Associates represent the Debtor in its restructuring effort. Alco tapped Jimenez Vasquez & Associates, PSC, as accountants. The Debtor scheduled $11.2 million in assets and $7.76 million in debts. The petition was signed by Alfonso Rodriguez, president. The Plan considers the full payment of all administrative, secured creditors and priority claims and a 50% dividend to the general unsecured creditors on monthly installments within 5 years from the effective date. ALERE INC: Moody's Affirms 'B1' Corp Family Rating; Outlook Neg --------------------------------------------------------------- Moody's Investors Service changed Alere, Inc.'s rating outlook to negative from stable. At the same time, all ratings, including the B1 Corporate Family and Probability of Default Ratings, were affirmed. The negative rating outlook reflects Moody's expectation that, because of continued aggressive financial policies and the recent product recalls, the company may not be able to sustainably reduce adjusted debt to EBITDA to below 5.5 times on a Moody's adjusted basis. For the twelve months ended June 30, 2012, Moody's estimates pro forma financial leverage of 5.8 times, which includes the earnings from acquisitions completed over the last twelve months. The following ratings were affirmed: Corporate Family Rating at B1 Probability of Default Rating at B1 $250 million senior secured revolver expiring 2016 at Ba3 (LGD 3, 32%) $917 million senior secured term loan A due 2016 at Ba3 (LGD 3, 32%) $923 million senior secured term loan B due 2017 at Ba3 (LGD 3, 32%) $250 million senior secured term loan B-1 due 2017 at Ba3 (LGD 3, 32%) $200 million senior secured term loan B-2 due 2017 at Ba3 (LGD 3, 32%) $250 million senior unsecured notes due 2016 at B2 (LGD 5, 76%) $400 million senior subordinated notes due 2018 at B3 (LGD 5, 88%) $400 million senior subordinated notes due 2016 at B3 (LGD 5, 88%) Speculative Grade Liquidity Rating at SGL-1 Ratings Rationale Alere's B1 rating is constrained by its high financial leverage in the context of an acquisitive growth strategy alongside share repurchases, ongoing reimbursement pressures on healthcare providers and technological risk inherent in the highly competitive medical diagnostics industry. In addition to the potential near-term impact to earnings related to recent FDA- imposed recalls, EBITDA has been constrained by ongoing headwinds in Europe and operating challenges within the Health Management business which have included the loss of a number of accounts and declining profitability. The ratings are supported by the company's strong competitive position within the point-of-care diagnostic tools market, as well as its solid cash flow generation. In addition, the ratings are supported by the company's diverse product offering, and a track record of technological innovation, which positions the company well to serve hospitals and other healthcare providers. A downgrade could occur if Moody's exects that leverage will be sustained above 5.5 times on a Moody's adjusted basis, or if free cash flow to adjusted debt is expected to remain below 5% for a sustained period. Use of incremental debt for future acquisitions, lower than expected EBITDA, or increased share repurchases which cause the company's credit metrics or liquidity to weaken could result in a downgrade. Given the company's increased leverage levels and acquisitive strategy, an upgrade is unlikely over the near term. However, Moody's would consider an upgrade if the pace of acquisitions slows considerably from past levels and the company's adjusted debt to EBITDA declines below 4.0 times and free cash flow to debt is above 10% on a sustained basis. The principal methodology used in rating Alere Inc. was the Global Medical Products & Device Industry Methodology published in October 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. Alere, Inc., headquartered in Waltham, Massachusetts, operates in health management, and professional and consumer diagnostics. The health management business includes disease management, maternity management, and wellness. Diagnostic products focus on infectious disease, cardiology, oncology, drugs of abuse and women's health. For the twelve months ended June 30, 2012, the company generated net revenues of approximately $2.6 billion. ALLY FINANCIAL: Offering $600 Million of 4.625% Senior Notes ------------------------------------------------------------ Ally Financial Inc. filed with the U.S. Securities and Exchange Commission a free writing prospectus relating to its offering of an aggregate of $600,000,000 4.625% senior guaranteed notes due 2015 guaranteed by certain of its subsidiaries. The maturity date of the Notes will be on June 26, 2015. Joint Book-Running Managers of the offering are Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, and RBC Capital Markets, LLC. The co-managers are: Credit Suisse Securities (USA) LLC Lloyds Securities Inc. RBS Securities Inc. Scotia Capital (USA) Inc. SG Americas Securities, LLC CastleOak Securities, L.P. C.L. King & Associates, Inc. MFR Securities, Inc. A copy of the FWP is available for free at http://is.gd/kghppX About Ally Financial Ally Financial Inc., formerly GMAC Inc. -- http://www.ally.com/-- is one of the world's largest automotive financial services companies. The company offers a full suite of automotive financing products and services in key markets around the world. Ally's other business units include mortgage operations and commercial finance, and the company's subsidiary, Ally Bank, offers online retail banking products. Ally operates as a bank holding company. GMAC obtained a $17 billion bailout from the U.S. government in exchange for a 56.3% stake. Private equity firm Cerberus Capital Management LP keeps 14.9%, while General Motors Co. owns 6.7%. Ally reported a net loss of $157 million in 2011, compared with net income of $1.07 billion in 2010. Net income was $310 million for the three months ended March 31, 2012. The Company's balance sheet at June 30, 2012, showed $178.56 billion in total assets, $160.19 billion in total liabilities and $18.36 billion in total equity. * * * In February 2012, Fitch Ratings downgraded the long-term Issuer Default Rating (IDR) and the senior unsecured debt rating of Ally Financial and its subsidiaries to 'BB-' from 'BB'. The Rating Outlook is Negative. The downgrade primarily reflects deteriorating operating trends in ResCap, which has continued to be a drag on Ally's consolidated credit profile, as well as exposure to contingent mortgage-related rep and warranty and litigation issues tied to ResCap, which could potentially impact Ally's capital and liquidity levels. As reported by the TCR on May 22, 2012, Standard & Poor's Ratings Services revised its outlook on Ally Financial Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including its 'B+' long-term counterparty credit and 'C' short-term ratings, on Ally. "The outlook revision reflects our view of potentially favorable implications for Ally's credit profile arising from measures the company announced May 14, 2012, designed to resolve issues relating to Residential Capital LLC, Ally's troubled mortgage subsidiary," said Standard & Poor's credit analyst Tom Connell. In the May 28, 2012, edition of the TCR, DBRS, Inc., has placed the ratings of Ally Financial Inc. and certain related subsidiaries, including its Issuer and Long-Term Debt rating of BB (low), Under Review Developing. This rating action follows the decision by Ally's wholly owned mortgage subsidiary, Residential Capital, LLC (ResCap) to file a pre- packaged bankruptcy plan under Chapter 11 of the U.S. Bankruptcy Code. ALT HOTEL: Plan Confirmation Hearing Continued Until Oct. 29 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Illinois continued until Oct. 29 to Nov. 2, 2012, at 1:30 p.m., the hearings to consider ALT Hotel, LLC's First Amended Plan of Reorganization dated July 9, 2012. Under the Plan, secured lender DiamondRock Allerton Owner, LLC will retain its security interests in the property of the Debtor, and the new principal balance will be hiked to $66.8 million (to include the DIP loan) and will bear interest of 4.86%, which interest will be payable for a period of 60 months. On the effective date of the Plan, the guaranty litigation commenced by DiamondRock will be dismissed without prejudice. Each holder of an allowed general unsecured claim will receive 50% of the amount of the claim on the Effective Date and 50% of the balance of the holder's Claim, together with interest computed at the rate of 5% per annum, 180 days after the Effective Date. Hotel Allerton Mezz, LLC, the sole holder of an interest in the Debtor, will have its deficiency claim accrue interest at the rate of 7% per annum commencing upon the Effective Date. It will receive a payment equal to the amount of excess cash flow, if any, which will be applied first to accrued and unpaid interest and second to principal, until the allowed deficiency claim, together with all interest that has accrued thereon, has been paid in full. Hotel Allerton's equity interests in the Debtor is unimpaired. A full-text copy of the First Amended Plan is available for free at http://bankrupt.com/misc/ALT_HOTEL_plan_1amended.pdf About ALT Hotel LLC ALT Hotel, LLC's sole asset is the Allerton Hotel located in the "Magnificent Mile" area of Chicago. The Hotel is managed by Kokua Hospitality, LLC, pursuant to a Hotel Management Agreement, dated Nov. 9, 2006. Kokua is the exclusive manager and operator of the Hotel, and receives management fees for its services, with the amount of such fees directly linked to the annual performance of the Hotel. Hotel Allerton Mezz, LLC, is the sole member of ALT Hotel. ALT Hotel filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 11-19401) on May 5, 2011. Judge A. Benjamin Goldgar presides over the case. Neal L. Wolf, Esq., Dean C. Gramlich, Esq., and Jordan M. Litwin, Esq., at Neal Wolf & Associates, LLC, in Chicago, Illinois, serve as bankruptcy counsel to the Debtor. In its petition, the Debtor estimated $100 million to $500 million in assets and $50 million to $100 million in debts. FTI Consulting serves as the Debtor's financial advisors. Affiliate PETRA Fund REIT Corp. sought Chapter 11 protection (Bankr. S.D.N.Y. Case No. 10-15500) on Oct. 20, 2010. AMBAC FINANCIAL: Widens Losses to $811.1-Mil. in 2nd Quarter ------------------------------------------------------------ Ambac Financial Group, Inc., reported a second quarter 2012 net loss of $811.1 million, or a net loss of $2.68 per share. This compares to a second quarter 2011 net loss of $102.4 million, or a net loss of $0.34 per share. Relative to second quarter 2011, second quarter 2012 results were primarily driven by higher net loss and loss expenses, a net loss relating to the extinguishment of Ambac Assurance surplus notes, and higher derivative product losses, partially offset by higher net realized investment gains. Second Quarter 2012 Summary Relative to the second quarter of 2011, -- Net premiums earned increased $3.8 million to $103.0 million -- Net investment income declined $1.8 million to $93.8 million -- Net realized investment gains (losses) increased $69.6 million to a gain of $67.1 million -- Net realized gains (losses) on the extinguishment of debt declined $180.9 million to a loss of $177.7 million -- Derivative product losses increased $58.5 million to $124.1 million -- Financial guarantee net loss and loss expenses increased $545.0 million to $741.4 million As of June 30, 2012, unrestricted cash, short-term securities and bonds at Ambac, the holding company, totaled $33.9 million, a decline of $0.1 million from March 31, 2012. Net Premiums Earned Net premiums earned for the second quarter of 2012 were $103.0 million, up 4% from $99.3 million earned in the second quarter of 2011. Net premiums earned include accelerated premiums, resulting from refundings, calls, and other policy accelerations recognized during the quarter. Accelerated premiums were $35.9 million in the second quarter of 2012, up 217% from $11.3 million in the second quarter of 2011. The increase in accelerated premiums was primarily driven by an increase in the overall volume of calls of Ambac insured debt within the public finance market due to low interest rates. Normal net premiums earned, which exclude accelerated premiums, were $67.1 million in the second quarter of 2012, down 24% from $88.0 million in the second quarter of 2011. The decline in normal net premiums earned was primarily due to the continued run-off of the insured portfolio as a result of transaction terminations, refundings, and scheduled maturities. Net Investment Income For the combined financial guarantee, financial services, and corporate investment portfolios, net investment income for the second quarter of 2012 was $93.8 million, a decrease of 2% from $95.6 million earned in the second quarter of 2011. Financial Guarantee net investment income rose 2% from $88.0 million to $90.0 million, benefitting from a higher average invested asset base and higher yielding assets in the portfolio for the three months ended June 30, 2012. Compared to the second quarter of 2011, the 2012 Financial Guarantee invested asset base has benefited from the reinvestment of interest and principal receipts, and premiums collected, as well as the impact of the moratorium on segregated account claims payments, partially offset by payments made to commute certain financial guarantee exposures and to repurchase surplus notes. Higher average yields on the portfolio resulted from the ongoing shift in the portfolio mix away from tax-exempt municipals toward taxable securities, including Ambac-insured securities. Financial Services investment income for the three months ended June 30, 2012 was $3.8 million, a decline of 50% from $7.6 million for the second quarter of 2011. The decline in Financial Services investment income was driven primarily by the effects of a smaller portfolio of investments as Ambac's investment agreement obligations continue to run off. Net Realized Investment Gains (Losses) Net realized investment gains for the second quarter of 2012 were $67.1 million, an increase of $69.6 million over net realized investment losses of $2.5 million during the second quarter of 2011. The realized investment gains in the second quarter of 2012 were largely the result of portfolio repositioning and relative value trades executed in response to market conditions. Net Realized Gains (Losses) on Extinguishment of Debt Net realized losses on the extinguishment of debt were $177.7 million for the second quarter of 2012 as compared to gains of $3.1 million during the second quarter of 2011. During June 2012, Ambac Assurance exercised options to repurchase surplus notes having an aggregate par value of $789.2 million for a cash payment of $188.4 million. Certain of these options were free-standing derivatives for accounting purposes and were carried at fair value as assets on the Company's balance sheet. The $177.7 million net realized loss on extinguishment of debt represents the difference between the consideration paid and the net carrying value of the stand-alone derivative assets and the repurchased surplus notes and accrued interest liabilities. The remaining options to acquire surplus notes have expired. Other Income Other income for the three months ended June 30, 2012 was $36.1 million, as compared to $9.2 million for the three months ending June 30, 2011. The increase was primarily driven by mark-to- market gains of $39.0 million relating to Ambac's option to call certain bank surplus notes that were free-standing derivatives for accounting purposes, as discussed above. As these options were exercised in June 2012, only changes in fair value of these options through the date of exercise are included in other income. Derivative Products For the second quarter of 2012, the derivatives product business produced a net loss of $124.1 million compared to net loss of $65.6 million for the second quarter of 2011. The derivative products portfolio has been positioned to record gains in a rising interest rate environment in order to provide a hedge against the impact of rising rates on certain exposures within the financial guarantee insurance portfolio. As a result of declining interest rates, mark-to-market movements on these hedges contributed losses of $96.8 million during the second quarter of 2012, compared to losses of $63.2 million during the second quarter of 2011. Additionally, customer related swaps contributed $27.3 million of losses in the second quarter of 2012 versus $2.4 million of losses for the second quarter of 2011. These losses primarily resulted from adverse changes in interest rates, projected inflation rates and foreign exchange rates, which influence the fair value of certain customer swaps, net of the impact of changes to Ambac's own credit risk. The results include positive valuation adjustments pertaining to Ambac's own credit risk of $28.9 million for the second quarter of 2012 and $4.6 million for the second quarter of 2011. Financial Guarantee Loss Reserves Loss and loss expenses for the second quarter of 2012 was $741.4 million as compared to $196.4 million for the second quarter of 2011. The net loss for the three months ended June 30, 2012, was driven by higher estimated losses in the first-lien and second- lien RMBS portfolio, as well as on certain structured insurance, asset backed and municipal credits. Loss and loss expenses paid, including commutations, net of recoveries from all policies, amounted to a net recovery of $18.4 million during the second quarter of 2012 versus a $23.4 million net recovery for the same period in 2011. The amount of actual claims paid during each period was impacted by the payment moratorium imposed on March 24, 2010, by the court overseeing the rehabilitation of the Segregated Account. Claims presented to Ambac Assurance and unpaid during the second quarter of 2012 amounted to $491.2 million versus $345.0 million during the same period in 2011. Since the establishment of the Segregated Account in March 2010, a total of $3,653.6 million of claims have been presented and remain unpaid. Loss reserves (gross of reinsurance and net of subrogation recoveries) for all RMBS insurance exposures as of June 30, 2012, were $4,769.8 million, including claims on RMBS exposures that have been presented since March 24, 2010, and unpaid as a result of the claims moratorium. RMBS reserves as of June 30, 2012, are net of $2,770.2 million of estimated representation and warranty breach remediation recoveries. The estimate of remediation recoveries related to material representation and warranty breaches is up 4% from $2,655.4 million reported as of March 31, 2012. Ambac has initiated and will continue to initiate lawsuits and other methods to achieve compliance with the repurchase obligations in the securitization documents with respect to sponsors who disregard their obligations to repurchase loans. Expenses Underwriting and operating expenses rose in the second quarter of 2012 to $33.6 million from $15.5 million during the second quarter of 2011. The increase in underwriting and operating expenses is primarily related to higher compensation, premises, premium taxes and legal fees. The increase in premises related expense is attributable to the benefit realized in the second quarter of 2011 from the termination and settlement of the Company's lease on its headquarters. The increase in compensation expense is due to stock compensation forfeitures in the second quarter of 2011. Interest expense for the combined Financial Guarantee and Financial Services sectors was largely unchanged during the period. Reorganization Items, Net For purposes of presenting an entity's financial evolution during a Chapter 11 reorganization, the financial statements for periods including and after filing the Chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Reorganization items in three months ended June 30, 2012 were $0.8 million, down from $6.5 million for the three months ended June 30, 2011, primarily due to lower professional fees incurred following the confirmation of the bankruptcy plan of reorganization. Balance Sheet and Liquidity Total assets declined during the second quarter of 2012 to $26.6 billion from $27.4 billion at March 31, 2012. The decrease in total assets was primarily due to declines in the consolidated non-VIE investment portfolio to $6.7 billion from $6.9 billion, VIE assets to $16.6 billion from $16.9 billion, insurance premium receivables to $1.8 billion from $1.9 billion, and derivative assets to $133 million from $273 million. During the second quarter of 2012, the fair value of the financial guarantee non-VIE investment portfolio fell by $80.6 million to $6.1 billion (amortized cost of $5.6 billion) as of June 30, 2012. The portfolio consists primarily of high quality municipal and corporate bonds, asset backed securities, U.S. Treasuries, Agency RMBS, as well as non-agency RMBS, including Ambac Assurance guaranteed RMBS. The fair value of the financial services investment portfolio declined $176.6 million to $587.1 million during the second quarter. Liabilities subject to compromise totaled approximately $1.7 billion at June 30, 2012. The amount of liabilities subject to compromise represents Ambac's estimate at June 30, 2012, of known or potential pre-petition claims to be addressed in connection with the Chapter 11 reorganization. Overview of Ambac Assurance Statutory Results As of June 30, 2012, Ambac Assurance reported policyholder surplus of $100.0 million, down from $232.9 million as of March 31, 2012. The Segregated Account reported statutory policyholder surplus of $(333.2) million as of June 30, 2012, down from $105.1 million as of March 31, 2012. The decline in Ambac Assurance's policyholder surplus was due to contributions to contingency reserves of $233.2 million as a result of adverse development of non-defaulted policies that remain in the general account of Ambac Assurance; insurance losses of $222.2 million; net intercompany loan impairments of $131.0 million, primarily from the interest rate swap business; and (iv) the extinguishment of $789.2 million of surplus notes for a cash payment of $188.4 million. These declines were partially offset by (a) net investment income, (b) earned premiums, and (c) a $463.3 million reduction in the liabilities assumed by Ambac Assurance from the Segregated Account for losses on policies allocated to the Segregated Account. The reduction of these liabilities is pursuant to a prescribed accounting practice issued by the Wisconsin Office of the Commissioner of Insurance, which maintains Ambac Assurance's policyholder surplus at a minimum level of $100 million. Ambac Assurance's claims-paying resources amounted to approximately $6.2 billion as of June 30, 2012, down $215.5 million from $6.4 billion at March 31, 2012. This excludes Ambac Assurance UK Limited's claims-paying resources of approximately $1.1 billion. The decrease in claims paying resources was primarily attributable to the repurchase of surplus notes and a lower present value of future installment premiums as of June 30, 2012. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor- in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Attorneys at Dewey & LeBoeuf LLP, previously served as the Debtor's bankruptcy counsel. The Debtor later tapped Hogan Lovells US LLP as its bankruptcy counsel nunc pro tunc to April 17, 2012 after partners Peter Ivanick and Allison Weiss moved from Dewey to Hogan Lovells. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Judge Shelley C. Chapman entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. Bankruptcy Creditors' Service, Inc., publishes AMBAC BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMERICAN AIRLINES: Pilots Reject Contract Offer ----------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that pilots from AMR Corp.'s American Airlines turned down the company's contract offer, with 61% voting no. Rejection by the pilots means the bankruptcy judge may be called upon to decide if AMR is entitled to modify the existing collective-bargaining agreement. Mechanics approved their contract. Flight attendants are still voting on theirs. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Judge to Rule on Contract by Aug. 15 ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the vote by pilots at AMR Corp.'s American Airlines rejecting the contract offer means the bankruptcy judge in New York will rule by Aug. 15 on whether the company can modify the existing union contract. According to the report, the Company and the union already completed the trial on the question of whether AMR met the standards required for modifying a union contract. The judge held up filing a decision when union leaders sent the company's offer to the pilots for what turned out to be an unsuccessful ratification vote. The Bloomberg report discloses the bankruptcy judge will hold up issuing a decision on modification of the flight attendants' contract while the cabin staff votes on their offer. The head of the pilots' union resigned one day after the membership voted down the agreement he helped negotiate. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Reports July Revenue and Traffic Results ----------------------------------------------------------- AMR Corporation reported July 2012 consolidated revenue and traffic results for its principal subsidiary, American Airlines, Inc., and its wholly-owned subsidiary, AMR Eagle Holding Corporation. July's consolidated passenger revenue per available seat mile increased an estimated 4.7 percent versus the same period last year, driven by stronger yield and solid demand in domestic and international markets. Consolidated capacity and traffic were both lower by 2.2 percent year-over-year, resulting in a July consolidated load factor of 87.0 percent, which is comparable to the same period last year. International load factor increased 0.5 points to 87.1 percent, as capacity and traffic were 1.9 and 1.4 percent lower year-over-year respectively. The Pacific entity recorded a load factor of 86.6 percent, leading the international entities with a 5.1 point load factor increase. Domestic traffic was 2.9 percent lower on 2.6 percent less capacity, resulting in a domestic load factor of 88.2 percent, 0.3 points lower than the same period last year. On a consolidated basis, the Company boarded 9.9 million passengers in July. A copy of the press release is available for free at: http://bankrupt.com/misc/amrjuly2012traffic8k.pdf About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. AMR's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN RAILCAR: Moody's Raises Default Probability Rating to B1 ----------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of American Railcar Industries, Inc. ("ARI"), Probability of Default Rating ("PDR") to B1 from B3, and Corporate Family Rating ("CFR") to B2 from Caa1. The ratings outlook is stable. The company's Speculative Grade Liquidity Rating has been changed to SGL-3 from SGL-2. Ratings Rationale The ratings upgrade for ARI reflects the continuing growth in backlog levels at the company's core railcar manufacturing segment, as new railcar demand has rebounded from trough levels in 2009. The strong backlog position should provide opportunities for revenue growth and higher margins with strong operating cash flow that ensues. With modest debt levels, credit metrics have rebounded to levels that are quite strong for the rating. However, the continuing cyclical nature of the railcar industry along with the reduction in liquidity that results from a planned notes redemption, at a time when the company is undertaking substantial investment in its lease fleet, serves as a constraint on the ratings. The ratings also take into account the potential benefits to be provided by the company's new railcar leasing business, which Moody's believes could add a degree of stability to operating results over the long run, balanced against risks inherent in the start-up of this business segment by ARI. Increased North American railcar demand is driving significant increases in the backlogs for ARI as well as the industry at large. This is especially the case for higher-value tank cars and hopper cars that ARI offers. ARI's backlog of railcars for direct sale to third party customers increased by approximately 20% in only six months, from December 2011 to June 2012. In addition, the market value of this backlog has increased by approximately 55%, reflecting the positive product mix that further strengthens revenue visibility. ARI's backlog of railcars for direct sale of almost $620 million as of June 2012 is approximately equal to the manufacturing segment's LTM revenue, with strong demand fundamentals expected to continue into 2013 driven by demand for railcars to support shale oil projects. Operating margins, which had only turned consistently positive one year ago, are now in excess of 15%. ARI's credit metrics have improved substantially as a result. Debt to EBITDA as of June 2012 was under 3 times compared to 11 times at June 2011, EBIT to Interest was almost 4 times (0.1 times at June 2011), and Retained Cash Flow to Debt was approximately 30% (10% at June 2011). These metrics are quite strong for the current rating, and will further improve with the announced redemption of $100 million of senior notes from cash on hand planned for September 2012. However, Moody's believes that growth of the company's railcar lease fleet will require new debt financing either on an unsecured or a secured basis. Nonetheless, Moody's expects that ARI will be able to sustain credit metrics at current levels over the near term despite future use of leverage. The ratings consider risks and benefits associated with the company's planned development of a railcar leasing business. Until recently, and unlike many other railcar manufacturers, ARI has not had a captive leasing business. Starting in 2011, the company began to build a modest railcar lease fleet through the sale of company-manufactured equipment to its leasing segment. As of June 2012, the company had over 1,800 railcars in its leasing portfolio, while approximately 1,620 railcars in ARI's manufacturing backlog represent sales to its leasing segment for confirmed new leasing business. This results in substantial near term investments in its fleet, and free cash flow is expected to be negative over that time. ARI's senior unsecured notes due 2014, at B3, are rated one notch below the corporate family rating. The company has recently announced its plan to redeem a substantial portion of these notes - $100 million of the $275 million outstanding -- on September 4, 2012. To the extent that the company may use secured debt in the future to fund fleet growth, this would suggest a lower recovery to holders of the senior unsecured notes under Moody's Loss Given Default ("LGD") methodology. Moody's estimates ARI's liquidity position as adequate, which is reflected in the SGL-3 liquidity rating. Although the company reported a sizeable cash balance as of June 2012 ($250 million), ARI's planned redemption of $100 million of senior notes will substantially reduce cash reserves. Moreover, as the company engages in increasing levels of investment in its lease fleet, Moody's expects that ARI's free cash flow will be substantially negative during this growth phase of the business cycle, suggesting further reduction in cash balances, and necessitating the use of additional debt to fund fleet growth through 2013. The company currently has no liquidity facility in place to temporarily cover funding for fleet investments, which would be needed if secured funding were not available for any period over the near term. The stable ratings outlook reflects expectations that the company will be able to sustain operating margins of at least 12% quarterly through 2013, while backlog and sales of railcars to external customers continue to grow in the current strong demand environment. With cash balances reduced as a result of the redemption of a large portion of senior notes, it is likely that the company will need to increase borrowings to fund near term investment in its leasing fleet. However, Moody's believes that the company's leverage and other credit metrics will remain strong relative to the rating during the growth phase of the railcar manufacturing cycle. The ratings or their outlook could be raised if the company sustains railcar delivery levels in excess of 6,000 annually, with operating margins exceeding 15% on a growing revenue base and no significant deterioration in credit metrics. ARI would need to sustain a strong liquidity profile, whereby a modest amount of incremental debt can be raised to finance investments in its lease fleet to while maintaining cash balances in excess of $50 million. The ratings could be lowered if accelerated investment in the leasing fleet were to further constrain the company's liquidity profile. This would be particularly concerning if a large portion of lease fleet deliveries were taken on speculation, rather than against firm lease commitments. An unexpected deterioration in railcar demand that would result in a declining trend in railcar deliveries, possibly resulting in a tightening in operating margins, would also warrant lower rating consideration. Deterioration in Debt to EBITDA in excess of 4.0 times, EBIT to Interest of less than 2 times, or retained cash flow to debt of less than 15% could result in negative ratings pressure. Upgrades: Issuer: American Railcar Industries, Inc. Probability of Default Rating, Upgraded to B1 from B3 Corporate Family Rating, Upgraded to B2 from Caa1 Senior Unsecured Regular Bond/Debenture, Upgraded to B3 from Caa1 The principal methodology used in rating American Railcar Industries, Inc. was the Global Manufacturing Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. American Railcar Industries, Inc., headquartered in St. Charles, Missouri, is a leading North American manufacturer of covered hopper and tank railcars, and also provides railcar leasing, repair and fleet management services. ATTACK ATHLETICS: Judge Rejects Chapter 11 Bankruptcy Case ---------------------------------------------------------- David Roeder at Chicago Sun-Times reports that a judge has rejected a Chapter 11 bankruptcy petition Tim Grover filed for his business, the Attack Athletics gym at 2641 W. Harrison. The report notes Mr. Grover filed for bankruptcy in April in an attempt to delay a foreclosure on the property, where he built a 60,000-square-foot facility with four NBA-sized courts. According to the report, records show Mr. Grover owes $10.17 million on a first mortgage and hasn't made payments since 2010. With a bankruptcy off the table, the mortgage holder is free to seek foreclosure. The report notes Attack Athletics continues to operate under the control of a receiver. The bankruptcy filing listed Michael Jordan as among the business' largest creditors, saying the former Chicago Bulls star is owed $1.5 million. Another creditor listed is former NBA player Michael Finley, who guaranteed a $2 million loan, the report notes. Attack Athletics opened in 2007 and then-Mayor Richard Daley showcased it as a sign of West Side renewal. AXION INTERNATIONAL: Michael Dodd Resigns from Board of Directors ----------------------------------------------------------------- Michael Dodd, a member of the Board of Directors of Axion International Holdings, Inc., notified the Board that he was resigning as a member of the Board effective as of Aug. 7, 2012. About Axion International New Providence, N.J.-based Axion International Holdings, Inc. (OTC BB: AXIH) - http://www.axionintl.com/-- is the exclusive licensee of patented and patent-pending technologies developed for the production of structural plastic products such as railroad crossties, pilings, I-beams, T-Beams, and various size boards including a tongue and groove design that are utilized in multiple engineered design solutions such as rail track, rail and tank bridges (heavy load), pedestrian/park and recreation bridges, marinas, boardwalks and bulk heading to name a few. RBSM LLP, in New York, the auditor, issued a going concern qualification each in the Company's financial statements for the years ended Dec. 31, 2010 and 2011. RBSM LLP noted that the Company has incurred significant operating losses in current year and also in the past. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern, it said. Axion International reported a net loss of $9.93 for the 12 months ended Dec. 31, 2011, compared with a net loss of $7.10 million for the 12 months ended Sept. 30, 2010. The Company's balance sheet at March 31, 2012, showed $5.10 million in total assets, $3.54 million in total liabilities, $5.69 million in 10% convertible preferred stock, $242,500 in redeemable common stock, and a $4.37 million total stockholders' deficit. B/E AEROSPACE: Moody's Affirms 'Ba1' CFR/PDR; Outlook Stable ------------------------------------------------------------ Moody's Investors Service has assigned a Baa2 rating to B/E Aerospace, Inc's ("BE") amended and restated $950 million senior secured revolving credit facility due August 2017. The new revolving credit facility will replace BE's existing $750 million revolver due 2015, also rated Baa2. As of June 30, 2012, the company had no outstandings under the $750 million facility but for $8.9 million of letters of credit. All other ratings including the Ba1 Corporate Family Rating were affirmed. Ratings Rationale The issuance of the new $950 million revolving credit commitment further strengthens BE's very good liquidity position (Speculative Grade Liquidity rating of SGL-1). As of June 30, 2012 cash was $464 million. In addition, on July 12, 2012 the company issued $800 million of senior unsecured notes as an add-on to their existing $500 million issue of 5 �% senior unsecured notes due March 2022, and launched a tender offer to acquire any and all of its $600 million issue of 8 �% senior unsecured notes due July 2018. Excess funds remaining after the tender will be used for general corporate purposes, which may include acquisitions. Moody's also notes that the new senior secured revolving credit facility has an accordion feature similar to the existing facility's whereby up to $750 million of additional revolving credit commitments and/or term loans can be requested. The incremental credit facilities will have the same guarantees as, and be secured on a pari passu basis by the same collateral securing the revolving credit facility or in a junior basis in the case of the term loans. Ratings Assignment: $950 million senior secured revolving credit facility due 2017, Baa2 (LGD2, 12%); existing Baa2 rating on the $750 million senior secured revolving credit facility due 2015 will be withdrawn at closing. Rating Affirmations: Corporate Family Rating/Probability of Default Rating, affirmed at Ba1, Senior unsecured notes, affirmed at Ba2 (LGD4, 64%), Senior unsecured shelf, affirmed at (P)Ba2, Speculative Grade Liquidity rating, affirmed at SGL-1, Rating outlook remains Stable. The Ba1 corporate family rating continues to reflect B/E Aerospace's market leadership position as the world's largest manufacturer of aircraft cabin interior products and the world's leading distributor of aerospace fasteners and consumables, favorable industry cyclical demand profile, strong cash flow generation and credit metrics appropriate for the Ba1 rating. Additional information is provided in Moody's press releases dated July 9 and July 10, 2012 and the credit opinion on www.moodys.com. The principal methodology used in rating B/E Aerospace, Inc. was the Global Aerospace and Defense Industry Methodology published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. B/E Aerospace, Inc is the world's largest manufacturer of commercial and general aviation cabin interior products and a major independent distributor of aerospace fasteners. B/E Aerospace's products include aircraft seats, equipment for food and beverage preparation and storage, oxygen delivery systems, a broad line of aerospace fasteners and certain engineering and design services. Revenue for the last twelve months through June 30, 2012 was approximately $2.8 billion. BE AEROSPACE: S&P Keeps 'BB+' Corp. Credit Rating; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB' issue rating and '1' recovery rating to BE Aerospace Inc.'s amended and restated $950 million secured revolver due 2017, which replaces its existing $750 million secured revolver. "At the same time, we affirmed our 'BB' issue rating and maintained the '5' recovery rating on the company's unsecured notes," S&P said. "The ratings on Wellington, Fla.-based BE Aerospace reflect our expectations that the company's earnings will increase, with a boost from acquired operations, and that commercial aerospace market conditions will be solid in 2012. This should allow credit protection measures to recover sufficiently over the next year. Our ratings on BE Aerospace also take into account the risks associated with the cyclical global airline industry as well as the relatively small size of the markets the company serves," S&P said. "The company makes acquisitions fairly frequently, including a few larger transactions in recent years, and we expect it to continue to make small to midsize acquisitions. BE Aerospace's position as the largest manufacturer of aircraft cabin interior products and distributor of fasteners and consumables, its efficient operations, good profit margins, and free cash flow generation partly offset the risks from its growth strategy and cyclical markets. We assess the company's business risk profile as 'fair,' its financial risk profile as 'significant,' and its liquidity 'adequate' according to our criteria definitions," S&P said. RATINGS LIST BE Aerospace Inc. Corporate Credit Rating BB+/Stable/-- New Rating BE Aerospace Inc. $950 mil. secured revolver due 2017 BBB Recovery Rating 1 Ratings Affirmed BE Aerospace Inc. Senior Unsecured BB Recovery Rating 5 BLAST ENERGY: Jamie Tseng Discloses 15.5% Equity Stake ------------------------------------------------------ In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Jamie Tseng disclosed that, as of July 27, 2012, he beneficially owns 3,050,000 shares of common stock of PEDEVCO CORP., formerly known as Blast Energy Services, Inc., representing 15.5% of the shares outstanding. Uni-bright Technology Limited, a corporation owned and controlled by Mr. Tseng, beneficially owns 1,000,000 common shares. A copy of the filing is available for free at http://is.gd/fV92j1 About Blast Energy Houston, Texas-based Blast Energy Services, Inc., is seeking to become an independent oil and gas producer with additional revenue potential from its applied fluid jetting technology. The Company plans to grow operations initially through the acquisition of oil producing properties and then eventually, to acquire oil and gas properties where its applied fluid jetting process could be used to increase the field production volumes and value of the properties in which it owns an interest. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, GBH CPAs, PC, in Houston, Texas, expressed substantial doubt about Blast Energy Services' ability to continue as a going concern. The independent auditors noted that Blast incurred a loss from continuing operations for 2011, and has an accumulated deficit at Dec. 31, 2011. The Company reported a net loss of $4.14 million for 2011, compared with a net loss of $1.51 million for 2010. The Company's balance sheet at March 31, 2012, showed $1.86 million in total assets, $3.98 million in total liabilities and a $2.11 million total stockholders' deficit. BRE PROPERTIES: Fitch Places Rating on Preferred Stock at 'BB+' --------------------------------------------------------------- Fitch Ratings assigns a 'BBB' rating to the $300 million 3.375% senior unsecured notes due Jan. 15, 2023 issued by BRE Properties, Inc. (NYSE: BRE). The notes were issued at 99.281% of par. Net proceeds from the offering are expected to be used for general corporate purposes including the repayment of amounts outstanding on the company's unsecured revolving credit facility and the redemption or repurchase of the 6.75% Series D Cumulative Redeemable Preferred Stock. Fitch currently rates the company as follows: -- Issuer Default Rating (IDR) 'BBB'; -- Unsecured revolving credit facility 'BBB'; -- Senior unsecured notes 'BBB'; -- Convertible senior notes 'BBB'; -- Preferred stock 'BB+'. The ratings are supported by BRE's high quality portfolio of multifamily assets in supply-constrained markets combined with solid credit metrics. The Positive Outlook is driven by robust multifamily fundamentals in BRE's markets that are fueling improving leverage and coverage metrics. Fitch's expects that BRE's near- to medium-term credit profile will improve to a level more consistent with a 'BBB+' IDR. In conjunction with the second quarter 2012 (2Q'12) earnings release, the company narrowed SSNOI growth guidance, resulting in a lower mid-point that remains consistent with Fitch's expectations. BRE has meaningfully reduced debt on an absolute and relative basis since 2007 through raising equity, selling non-core assets and reducing development spending. Leverage improved to 7.0 times (x) as of Dec. 31, 2011 from 8.1x and 8.5x as of Dec. 31, 2010 and Dec. 31, 2009, respectively. Leverage continues to decline and was 6.8x as of June 30, 2012, based on annualized 2Q'12 EBITDA. Fitch expects BRE's leverage to stabilize between mid-6.0x to 7.0x, a range appropriate for a 'BBB+' rating. In a stress case not anticipated by Fitch resulting in negative same-store NOI, leverage could sustain above 8.0x, which would be appropriate for a 'BBB-' IDR. Fitch defines leverage as net debt divided by recurring operating EBITDA. Additionally, BRE's fixed charge coverage ratio has improved to 2.4x for trailing 12 months (TTM) ended June 30, 2012, as compared to 1.9x for 2010. The continued improvement is attributable to improving fundamentals and lower preferred dividends. Fitch expects this metric to improve to between 2.5x to 3.0x as fundamentals improve and the company redeems higher-cost preferred stock, a range appropriate for a 'BBB+' IDR. In a stress case not anticipated by Fitch resulting in negative same-store NOI, fixed- charge coverage could sustain below 2.0x, which would be appropriate for a 'BBB-' IDR. Fitch defines fixed charge coverage as recurring operating EBITDA less renewal and replacement capital expenditures, divided by total interest incurred and preferred stock dividends. The company has improved the quality of its portfolio over the last few years through approximately $200 million of dispositions in non-core markets. As such, the vast majority of assets are now located in supply constrained, coastal California markets. Fitch views the strategy of owning assets in supply-constrained coastal markets as a credit positive as these markets also exhibit solid demand factors such as high cost of for-sale single-family housing and proximity to solid job growth markets. BRE has traditionally focused on development as an essential component for growth. The sizeable scale of BRE's development pipeline has historically been a credit concern and negatively impacted the company's leverage ratios. In 2011, citing positive market fundamentals, the company restarted its development pipeline. Although not all costs are contractual nor within Fitch's time horizon, the pipeline's costs will total $1.3 billion of which $845 million remains unfunded. BRE's management intends to front-end its development activity and indicated future development advances will not surpass $200-$250 million annually. Fitch does not view the current pipeline as a significant concern given the positive operating fundamentals, project-specific sub- market supply and strong liquidity profile, although Fitch notes the inherent risks in development. The company's geographic concentration offsets to a degree the credit positive of the company's supply-constrained market focus strategy. California comprised 84% of total NOI in 2Q'12 with the San Francisco Bay Area and San Diego accounting for 25% and 20%, respectively. While BRE's SSNOI performance has been in line with a market-weighted PPR index, Fitch notes the seismic risks of the state and the potential for government budget dynamics to pressure property taxes. The Positive Outlook centers on Fitch's expectation that BRE's credit profile will improve to be consistent with a 'BBB+' rating, supported by management's commitment to reduce leverage through equity raises to offset development risks or should operating fundamentals deteriorate. Further, BRE continues to access various sources of capital and maintain a healthy liquidity profile. For the period of July 1, 2012 to Dec. 31, 2014, Fitch calculates that BRE's sources of liquidity exceed uses of liquidity by 1.6x driven by BRE's minimal near term maturing debt. The next large debt maturity is a $300 million unsecured notes maturity in 2017. Fitch defines liquidity coverage as sources (cash, availability under the unsecured revolving credit facility and projected retained cash flows from operating activities after dividends and distributions) divided by uses (debt maturities and amortization, development spending and projected renewal and replacement capital expenditures). In addition, BRE maintains a strong level of unencumbered assets that provides solid coverage of unsecured debt for the rating category. Fitch calculates that BRE's ratio of unencumbered operating real estate to net unsecured debt (UAUD), ranges from 2.3x to 2.8x using a range of capitalization rates from 6.5% to 8%. The midpoint has improved from 2.4x and 1.9x as of Dec. 31, 2010 and Dec. 31, 2009, respectively, providing increasing cushion to unsecured bondholders. The two-notch differential between BRE's IDR and its preferred stock ratings is consistent with Fitch's criteria for corporate entities with a 'BBB' IDR. Based on 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 following factors may result in an upgrade to 'BBB+': -- Fitch's expectation of leverage sustaining below 7.0x for several quarters ((leverage was 6.8x at June 30, 2012 based on annualized 2Q'12 EBITDA); -- Fitch's expectation of fixed charge coverage sustaining above 2.5x for several quarters (coverage was 2.4x for the TTM ended June 30, 2012). The following factors may result in negative momentum on the ratings and/or Rating Outlook: -- Fitch's expectation of leverage sustaining above 8.0x for several consecutive quarters; -- Fitch's expectation of fixed-charge coverage sustaining below 2.0x for several consecutive quarters; -- If operating fundamentals relapse similar to the environment of 2009 in the near term, rather than remaining strong. BROADVIEW NETWORKS: Rejects Icahn Offer; To Pursue Own Plan ----------------------------------------------------------- Broadview Networks Holdings, Inc., received term sheets dated Aug. 6, 2012, related to an unsolicited offer from High River Limited Partnership, an affiliate of Icahn Associates, a purported holder of a minority stake of the Company's senior secured notes. The term sheets are expressly non-binding and delivered by High River solely for discussion purposes. The proposals made in the term sheets are subject to and qualified by, among other things, business, tax, accounting and legal due diligence by High River. On information and belief, an affiliate of High River controls a competitor of the Company. High River has proposed, among other things, that it would provide $175 million to the Company, $165 million in cash equity investments and $10 million in loans in exchange for 70% of new common stock of restructured Broadview. The High River term sheet provides that senior secured noteholders, including High River, would receive in exchange for their notes their pro rata share of $150 million in cash and the remaining 30% of new common stock of restructured Broadview. Although the Icahn Proposal contemplates that restructured Broadview will have no indebtedness, the Icahn Proposal values the Company significantly lower than the value implied by the plan of reorganization that the Company negotiated with material stakeholders. The Company Plan, which is fully documented and in the process of being solicited, places a higher total enterprise valuation on the Company, cuts the Company's bond indebtedness in half, maximizes value for all of the Company's stakeholders and has the support of more than 66 2/3% of the Company's bondholders. Under the Company Plan, bondholders are contemplated to receive 97.5% of the equity of restructured Broadview and existing shareholders are contemplated to receive the remaining 2.5% of such equity. In recognition of their value to the Company, general unsecured creditors, vendors, customers and employees are not anticipated to be negatively impacted by either the Company Plan or the Icahn Proposal. As the Company will continue operating as a going concern, arrangements and agreements with those parties are all contemplated to be honored in accordance with their terms. The Company and its Board of Directors, in consultation with the Company's advisors, have analyzed the Icahn Proposal and do not consider it to be superior to the terms of the Company Plan. The Company intends to continue to pursue the Company Plan, which provides for the conversion of the Company's $300 million in senior secured notes into new five-year notes and the vast majority of the equity in the Company. This plan has the support from a group of investors who control approximately two-thirds of the outstanding notes as well as the Company's key shareholders. Out of Court or Ch. 11 As reported in the July 30 edition of the TCR, Broadview and each of its direct and indirect subsidiaries entered into the First Amendment to the Restructuring Support Agreement, dated July 13, 2012, with holders representing more than 66 2/3% of the Company's outstanding 11 3/8% Senior Secured Notes due 2012 to amend the terms of the Support Agreement to, among other things, extend certain milestones and limit the applicability of select termination rights to the Required Consenting Noteholders. Among other things, the First RSA Amendment extends the date by when the Company is required to consummate the restructuring or commence chapter 11 cases prior to a termination triggering event from Aug. 17, 2012, to Aug. 24, 2012. On July 18, 2012, the Company, Broadview Networks, Inc., Broadview Networks of Massachusetts, Inc., Broadview Networks of Virginia, Inc., and Bridgecom International, Inc., entered into a Senior Revolving DIP Facility Commitment Letter with The CIT Group/Business Credit, Inc., pursuant to which CITBC has committed to provide to the Borrowers a Senior Revolving Debtor in Possession Credit Facility in an amount not to exceed $25,000,000. In the event that the chapter 11 cases are not commenced on or before Sept. 5, 2012, or the initial borrowing in respect of the DIP Credit Facility is not made on or before the fourth business day following the commencement of the chapter 11 cases, the DIP Commitment Letter and the commitment and undertakings of CITBC thereunder will automatically terminate unless CITBC, in its sole discretion, agrees to an extension. Before that date, CITBC may terminate its obligations under the DIP Commitment Letter as expressly provided therein. On July 19, 2012, the Company entered into Amendment No. 5 to the Credit Agreement, dated Aug. 23, 2006, by and among the Borrowers, the Lenders named therein and CITBC, as administrative agent, collateral agent and documentation agent. As a result of the Fifth Credit Agreement Amendment, the maturity date of the Company's revolving credit facility was extended from Aug. 1, 2012, to Sept. 5, 2012. A copy of the Amended Restructuring Agreement is available at: http://is.gd/Lp3WCF A copy of the Amended Credit Agreement is available at: http://is.gd/V2PTwk About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Ernst & Young LLP, in New York, N.Y., issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2011. The independent auditors noted that the Company has in excess of $300 million of debt due on or before September 2012. "In addition, the Company has incurred net losses and has a net stockholders' deficiency." The Company reported a net loss of $11.9 million for 2011, compared with a net loss of $18.8 million for 2010. The Company's balance sheet at March 31, 2012, showed $258.32 million in total assets, $373.35 million in total liabilities and a $115.03 million total stockholders' deficiency. * * * In the July 23, 2012, edition of the TCR, Moody's Investors Service downgraded Broadview Networks Holdings, Inc. Corporate Family Rating (CFR) to Caa3 from Caa2 and the Probability of Default Rating (PDR) to Ca from Caa3 in response to the company's announcement that it has entered into a restructuring support agreement with holders of approximately 70% of its preferred stock and approximately 66 2/3% of its Senior Secured Notes. The company is expected to file a pre-packaged Chapter 11 Plan of Reorganization or complete an out of court exchange offer. As reported by the TCR on July 25, 2012, Standard & Poor's Ratings Services lowered its corporate credit rating on wireline operator Broadview Networks Holdings Inc. to 'D' from 'CC'. "This action follows the company's announced extension on its revolving credit facility. We expect to lower the issue-level rating on the notes to 'D' once the company files for bankruptcy, or if it misses the Sept. 1, 2012 maturity payment on the notes," S&P said. CAESARS ENTERTAINMENT: Files Form 10-Q, Incurs $241MM Loss in Q2 ---------------------------------------------------------------- Caesars Entertainment Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $241.8 million on $2.16 billion of net revenues for the quarter ended June 30, 2012, compared with a net loss of $153.1 million on $2.16 billion of net revenues for the same quarter a year ago. The Company reported a net loss of $522.9 million on $4.37 billion of net revenues for the six months ended June 30, 2012, compared with a net loss of $297.9 million on $4.27 billion of net revenues for the same period during the prior year. The Company's balance sheet at June 30, 2012, showed $28.03 billion in total assets, $27.43 billion in total liabilities, and $607.2 million in total equity. A copy of the Form 10-Q is available for free at: http://is.gd/k7rX5R About Caesars Entertainment Caesars Entertainment Corp., formerly Harrah's Entertainment Inc. --http://www.caesars.com/-- is one of the world's largest casino companies, with annual revenue of $4.2 billion, 20 properties on three continents, more than 25,000 hotel rooms, two million square feet of casino space and 50,000 employees. Caesars casino resorts operate under the Caesars, Bally's, Flamingo, Grand Casinos, Hilton and Paris brand names. The Company has its corporate headquarters in Las Vegas. Harrah's announced its re-branding to Caesar's on mid-November 2010. The Company reported a net loss of $666.70 million in 2011, and a net loss of $823.30 million in 2010. * * * As reported by the TCR on March 28, 2012, Moody's Investors Service upgraded Caesars Entertainment Corp's Corporate Family Rating (CFR) and Probability of Default Rating both to Caa1 from Caa2. The upgrade of Caesars' ratings reflects very good liquidity, an improving operating outlook for gaming in a number of the company's largest markets that is expected to drive earnings growth, the completion of a bank amendment that resulted in the extension of debt maturities to 2018 from 2015, and the public listing of the company's equity that increases financial flexibility by providing it with another potential source of capital. The upgrade of the SGL rating reflects minimal debt maturities over the next few years, significant cash balances (approximately $900 million at December 31, 2011) and revolver availability that will be more than sufficient to fund the company's cash interest and capital spending needs. CANO PETROLEUM: Tri-Flow Dismissal Has No Objection --------------------------------------------------- Tri-Flow, Inc., a debtor-affiliate of Cano Petroleum, Inc., et al., filed with the U.S. Bankruptcy Court for the Northern District of Texas a certificate of no objection in relation to its motion to dismiss its Chapter 11 petition. Tri-Flow was included in the bankruptcy filing of the Debtors out of an abundance of caution and to ensure the Debtors' assets and equity could be effectively marketed. The Debtors, however, did not receive any qualified bids for Tri-Flow's assets or equity. Tri-Flow stated in the motion that it is an Oklahoma corporation of which Cano purchased the outstanding stock, along with all outstanding stock of Ladder Companies, Inc. in June 2004. Over the years and pursuant to various transactions, Tri-Flow sold its assets and expended its cash such that, eventually, Tri-Flow exists essentially as a shell company. Tri-Flow's schedules reflect no assets or liabilities, other than two contingent liabilities related to executory contracts. No senior-secured or junior-secured claims have been asserted against Tri-Flow. About Cano Petroleum Cano Petroleum, Inc. (NYSE Amex: CFW), an independent Texas- based energy producer with properties in the mid-continent region of the United States, filed for Chapter 11 bankruptcy (Bank. N.D. Tex. Lead Case No. 12-31549) on March 7, 2012. Other affiliates also sought bankruptcy protection: Cano Petro of New Mexico, Ladder Companies, Inc., Square One Energy, Inc., Tri-Flow, Inc., W.O. Energy of Nevada, Inc., W.O. Operating Company, Ltd., W.O. Production Company, Ltd., and WO Energy, Inc. The cases are jointly administered. The Debtors filed for bankruptcy to pursue a sale under a joint plan of reorganization filed on the petition date. Cano Petroleum have entered into a Stalking Horse Stock Purchase Agreement with NBI Services Inc., pursuant to which NBI would purchase all of the shares of common stock that would be issued by Reorganized Cano under the Plan for $47.5 million. The deal is subject to higher and better offers and a possible auction. The petitions were filed by James R. Latimer, III, chief executive officer. Judge Barbara J. Houser oversees the case. The Debtors are represented by lawyers at Thompson & Knight LLP, in Dallas Texas. Cano Petroleum's consolidated balance sheet at Sept. 30, 2011, showed $63.37 million in total assets, $116.25 million in total liabilities, and a $52.88 million total stockholders' deficit. In schedules filed with the Court, Cano Petroleum disclosed $1.16 million in assets and $82.5 million in liabilities. Union Bank of California, the administrative agent and issuing lender under the Debtors' prepetition senior credit facility; and UnionBanCal Equities, Inc., the administrative agent and issuing lender, under the junior credit facility, are represented by: William A. "Trey" Wood III, Esq., at Bracewell & Giuliani LLP. The Office of the U.S. Trustee has not appointed an official committee of unsecured creditors in the case. The Bankruptcy Court entered an order approving and confirming the Second Amended Joint Plan of Reorganization of Cano Petroleum, Inc., and its subsidiaries and approving the Stock Purchase Agreement, dated as of March 7, 2012, by and among NBI Services, Inc., and the Debtors, and authorizing the consummation of the transaction contemplated thereby. CAPITOL BANCORP: Updated Case Summary & Creditors' Lists -------------------------------------------------------- Lead Debtor: Capitol Bancorp Ltd. aka Capitol Bancorp Limited Capitol Bancorp Center 200 N. Washington Square Lansing, MI 48933 Bankruptcy Case No.: 12-58409 Affiliate that simultaneously filed Chapter 11 petition: Debtor Case No. ------ -------- Financial Commerce Corporation 12-58406 Type of Business: Capitol Bancorp Limited -- http://www.capitolbancorp.com/-- is a $5.1 billion national community banking company, with a network of bank operations in 16 states. Founded in 1988, Capitol Bancorp Limited has executive offices in Lansing, Michigan, and Phoenix, Arizona. Chapter 11 Petition Date: Aug. 9, 2012 Court: U.S. Bankruptcy Court Eastern District of Michigan (Detroit) Debtors' Counsel: Daniel N. Adams, Esq. Edward Todd Sable, Esq. Joseph R. Sgroi, Esq. Judy B. Calton, Esq. HONIGMAN MILLER SCHWARTZ & COHN LLP 660 Woodward Avenue 2290 First National Building Detroit, MI 48226 Tel.: (313) 465-7684 E-mail: dadams@honigman.com tsable@honigman.com jsgroi@honigman.com jcalton@honigman.com Total Assets: $112,211,793 as of June 30, 2012 Total Liabilities: $195,644,527 as of June 30, 2012 The petitions were signed by Cristin K. Reid, corporate president. Capitol Bancorp's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capital Trust X Trust Preferred $44,408,037 Joan Wilson Securities M&T Trust Co. of Delaware 1220 N. Market St, Suite 202 Wilmington, DE 19801 Capital Trust VIII Trust Preferred $22,465,393 Damian Kraft Securities US Bank 1 Federal Street, 3rd Floor Boston, MA 02110 Capital Trust XI Trust Preferred $21,492,775 Geoffrey J. Lewis Securities Wilminton Trust Co. 1100 N. Market Street Wilmington, DE 19890 Capital Trust I Trust Preferred $17,860,310 Mary Callahan Securities Bank of N York Mellon Trust Co. 2 N. LaSalle Street, Suite 1020 Chicago, IL 60602 Capital Trust III Trust Preferred $17,310,888 Paul Allen Securities US Bank 1 Federal Street, 3rd Floor Boston, MA 02110 Capital Trust II Trust Preferred $14,203,652 Mary Callahan Securities Bank of N York Mellon Trust Co. 2 N. LaSalle St, Suite 1020 Chicago, IL 60602 Capital Trust VII Trust Preferred $13,160,379 Joan Wilson Securities M&T Trust Co. of Delaware 1220 N. Market St, Suite 202 Wilmington, DE 19801 Capital Trust IX Trust Preferred $13,119,278 Geoffrey J. Lewis Securities Wilmington Trust Co. 1100 N. Market Street Wilmington, DE 19890 Capital Trust VI Trust Preferred $11,449,531 Joan Wilson Securities M&T Trust Co. of Delaware 1220 N. Market St, Suite 202 Wilmington, DE 19801 Capital Trust XII Trust Preferred $9,638,436 Joan Wilson Securities M&T Trust Co. of Delaware 1220 N. Market St, Suite 202 Wilmington, DE 19801 Capital Trust IV Trust Preferred $3,440,441 Joan Wilson Securities M&T Trust Co of Delaware 1220 N. Market St, Suite 202 Wilmington, DE 19801 PB & Co. Senior Note $880,986 George Cichoski Mike Hallewell SEP IRA 240 E 8th Street Holland, MI 49423 Barels Charitable Remainder Trust Senior Note $504,717 1321 State Street Santa Barbara, CA 93101 Spa NV Limited Partnership Senior Note $504,717 c/o Hollander Capital Mgmt. Inc. 2539 Turtle Head Peak Dr Las Vegas, NV 89135 Woolls, Betty Senior Note $504,717 Woolls, Paul PO Box 436 Oakville, CA 94562 Cason Family Trust Senior Note $340,622 Jack E. Cason TTEE 3208 Ashby Las Vegas, NV 89102 Sky Bird Travel & Tour Inc. Senior Note $269,193 24701 Swanson Southfield, MI 48033 Petznick, Jr., Earl Senior Note $252,358 3311 E Paloverde Dr. Paradise Valley, AZ 85253 James & Erin Essert, TTEE Senior Note $252,358 Essert Living Trust 333 W Solano Drive Phoenix, AZ 85013 Walker, Marie D Senior Note $231,887 PO Box 26155 Lansing, MI 48909 B. FCC's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Capitol Bancorp Ltd. $8,560,000 CARE ONE: Case Summary & 9 Unsecured Creditors ---------------------------------------------- Debtor: Care One Patient Transfer Services dba Care One EMS, LLC (AR) fdba Angel Care, Inc. dba Transportation Services of Fort Smith fdba Care One EMS, LLC (OK) 3708 Princeton Court Van Buren, AR 72956 Bankruptcy Case No.: 12-73027 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Western District of Arkansas (Fort Smith) Debtor's Counsel: Samantha Sizemore Vernetti, Esq. WILLIAMS & HUTCHINSON, LLP 4201 W. New Hope Road, Suite 202 Rogers, AR 72758 Tel: (479) 633-8421 Fax: (479) 633-8058 E-mail: ssv@wh-lawfirm.com Scheduled Assets: $50,001 to $100,000 Scheduled Liabilities: $1,300,394 A copy of the Company's list of its nine largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/arwb12-73027.pdf The petition was signed by Wesley McCabe, owner. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- Care One EMS, LLC 11-74764 10/24/11 CELL THERAPEUTICS: To Effect Reverse Stock Split of Common Stock ---------------------------------------------------------------- Cell Therapeutics, Inc.'s Board of Directors approved a reverse stock split in order to regain compliance with The NASDAQ Stock Market LLC minimum closing bid price of $1.00 per share. Upon the effectiveness of the reverse stock split, each of the Company's shareholders will receive one new share of the Company's common stock for every five shares such shareholder holds. The reverse stock split will affect all of the Company's authorized shares, including all outstanding shares of Common Stock as well as the number of shares of Common Stock underlying stock options, warrants and other exercisable or convertible instruments outstanding at the effective time of the reverse stock split. It is anticipated that the reverse stock split will become effective on or about Sept. 2, 2012. The Company expects to achieve compliance if the closing bid price of the Common Stock is $1.00 per share or more for a minimum of ten consecutive trading days before December 26, 2012. The Common Stock is scheduled to begin trading on a split-adjusted basis on the Mercato Telematico Azionario stock market in Italy on Sept. 3, 2012, and The NASDAQ Capital Market in the United States on Sept. 4, 2012. On The NASDAQ Capital Market, trading of the Common Stock will appear under the temporary trading symbol "CTICD" in order to inform the investment community of the reverse stock split. The Company's trading symbol is expected to revert to "CTIC" on or about Oct. 2, 2012. The Company's trading symbol on the MTA will not change due to the reverse stock split. About Cell Therapeutics Headquartered in Seattle, Washington, Cell Therapeutics, Inc. (NASDAQ and MTA: CTIC) -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Cell Therapeutics reported a net loss attributable to CTI of US$62.36 million in 2011, compared with a net loss attributable to CTI of US$82.64 million in 2010. The Company's balance sheet at March 31, 2012, showed US$44.15 million in total assets, US$18.50 million in total liabilities US$13.46 million in common stock purchase warrants, and US$12.18 million in total shareholders' equity. Going Concern Doubt Raised The report of Marcum LLP, in San Francisco, Calif., dated March 8, 2012, expressed an unqualified opinion, with an explanatory paragraph as to the uncertainty regarding the Company's ability to continue as a going concern. The Company's available cash and cash equivalents are US$47.1 million as of Dec. 31, 2011. The Company's total current liabilities were US$17.8 million as of Dec. 31, 2011. The Company does not expect that it will have sufficient cash to fund its planned operations beyond the second quarter of 2012, which raises substantial doubt about the Company's ability to continue as a going concern. Bankruptcy Warning The Form 10-K for the year ended Dec. 31, 2011, noted that if the Company receives approval of Pixuvri by the EMA or the FDA, it would anticipate significant additional commercial expenses associated with Pixuvri operations. Accordingly, the Company will need to raise additional funds and are currently exploring alternative sources of equity or debt financing. The Company may seek to raise that capital through public or private equity financings, partnerships, joint ventures, disposition of assets, debt financings or restructurings, bank borrowings or other sources of financing. However, the Company has a limited number of authorized shares of common stock available for issuance and additional funding may not be available on favorable terms or at all. If additional funds are raised by issuing equity securities, substantial dilution to existing shareholders may result. If the Company fails to obtain additional capital when needed, it may be required to delay, scale back, or eliminate some or all of its research and development programs and may be forced to cease operations, liquidate its assets and possibly seek bankruptcy protection. CERIDIAN CORP: S&P Keeps 'B-' Rating on Extended Term Loan B ------------------------------------------------------------ Standard & Poor's Ratings Services said its 'B-' issue-level rating and '3' recovery rating on Minneapolis-based Ceridian Corp.'s extended term loan B due May 2017 remain unchanged after the company's proposed $342 million add-on to the debt. "The '3' recovery rating indicates our expectation of meaningful (50%-70%) recovery in the event of a payment default by the borrower," S&P said. The company is refinancing the existing nonextended portion of its term loan due 2014 with this transaction. "Our existing ratings on Ceridian, including our 'B-' corporate credit rating, also remain unchanged. The outlook is stable," S&P said. "The issue-level rating on Ceridian's senior secured debt is 'B-' and the recovery rating is '3', indicating the expectation for meaningful (50%-70%) recovery in the event of a payment default. The rating on the company's unsecured debt is 'CCC' and the recovery rating is '6', indicating the expectation for negligible (0-10%) recovery in the event of a payment default," S&P said. "The ratings on Ceridian reflect a very aggressive capital structure with an unfavorable maturity schedule, as well as the effects of a weak economy on the company's revenue and operating earnings," said Standard & Poor's credit analyst Jacob Schlanger. "The proposed transaction will ease the impact of the nearer term maturities. In addition, significant recurring revenue streams and defensible market positions partially offset the broader economic factors." "With annual revenues of about $1.5 billion, Ceridian is an information services company that serves the human resources (HRS), stored value cards and solutions (SVS), and--through its Comdata Network Inc. subsidiary--transportation industries. Barriers to entry in Ceridian's markets are high, the result of developed niche market positions, economies of scale, and long- term customer relationships," S&P said. CHIQUITA BRANDS: Moody's Affirms 'B2' CFR/PDR; Outlook Negative --------------------------------------------------------------- Moody's Investors Service has affirmed all ratings of Chiquita Brands International Inc.'s, including its B2 corporate family rating and probability of default rating. Concurrently, Moody's assigned a speculative grade liquidity rating of SGL-3 reflecting its expectation for weak cash flows and revolver reliance over the next twelve months. Further, the negative outlook has been reiterated to reflect Chiquita's high financial leverage and near term operating challenges. The following ratings have been affirmed at Chiquita Brands International, Inc.: Corporate family rating at B2; Probability of default rating at B2; and $106 million 7.5% senior notes due 2014 at Caa1 (LGD5, 88%). The following ratings have been affirmed at Chiquita Brands LLC: $150 million senior secured revolver due 2016 to Ba3 (LGD2, 23%); and $313 million senior secured term loan due 2016 to Ba3 (LGD2, 23%). Ratings Rationale The negative outlook recognizes Moody's expectation that headwinds, such as Euro exchange rates and lower retail volumes in salads, will weigh on operations throughout 2012 resulting in the weakening of Chiquita's leverage and liquidity profiles. The precipitous drop in earnings during the first half of 2012 has elevated leverage to 6.5x, on an adjusted basis, which Moody's does not view as sustainable at the current B2 rating level. Managements' recent announcement of restructuring activities aimed at saving roughly $60 million annually and transforming its operations into a high volume, low cost manufacturer is a credit positive given Moody's ongoing view of its key banana and salad products as having high commodity-like attributes. Moody's believes that targeted costs such as administrative overhead, sourcing and logistics, research and development and marketing, coupled with plans for a change in senior leadership, could bring near term benefits to Chiquita's margins. Further, Chiquita's renewed plans to repay debt and lower net leverage to roughly 3.5x is viewed positively, although Moody's does not anticipate the company meeting these targets in the next twelve months. The SGL-3 speculative grade liquidity rating reflects Moody's view that Chiquita will maintain cash and revolver availability in excess $100 million over the next twelve months to support operations during a period of weakened operating performance and ongoing restructuring and capital spending projects. At June 30, 2012, Chiquita maintained $53 million of cash and $109 million of revolver availability. The recent amendment to its credit agreement should provide covenant headroom that enables the company to execute on its operational initiatives while maintaining access to its $150 million revolver. The amendment requires minimum liquidity of $50 million (cash plus revolver availability), which in Moody's view, weakens Chiquita's liquidity profile meaningfully. While covenants require $50 million of minimum liquidity, Moody's would expect Chiquita to maintain roughly $100 million of availability, given the inherent volatility of its operations, at the B2 ratings level. Further, ratings could be downgraded if Chiquita's performance continues to deteriorate resulting in leverage remaining at elevated levels for several quarters or a weakened liquidity profile driven by an inability to generate cash flows. Debt-to-EBITDA maintained above 6.5x for multiple quarters could result in a ratings downgrade, particularly if liquidity remains a challenge for the business. A ratings upgrade is unlikely prior to Chiquita demonstrating the ability to operate with leverage below 4.0x for an extended period while maintaining full availability on its revolver. The outlook could stabilize if Chiquita were to stem volume losses in its value-added salad business and restore earnings growth such that Chiquita generated free cash flow on a sustainable basis. The principal methodology used in rating Chiquita was the Global Food - Protein and Agriculture Industry Methodology published in September 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. Chiquita, based in Charlotte, North Carolina, is a leading international marketer and distributor of bananas and other fresh produce in over 70 countries and a producer of packaged salads under the Fresh Express brand name primarily in the United States. Total sales for the last twelve months ending March 31, 2012 were $3.1 billion. CITY LOFT HOTEL: Court Won't Lift Disgorgement Order ---------------------------------------------------- Bankruptcy Judge David R. Duncan denied the request of City Loft Hotel, LLC, asking the Court to alter or amend its prior order requiring the Debtor's counsel to disgorge the retainer fee. Bank of the Ozarks objected to the Debtor's request. Bank of the Ozarks had filed a Motion for Relief from Stay, Motion to Prohibit Use of Cash Collateral, and Motion to Designate Case as Single Asset Real Estate Case in November 2011. The Debtor filed Objections to all of these Motions in December. The Debtor's counsel filed an Application for Compensation in November 2011, and Bank objected. The Debtor also filed a Motion to Substantively Consolidate its case with the companion case, City Loft, LLC, in December and Bank objected. On Feb. 1, 2012, the Court issued an Order granting the Bank's Motion for Relief from Stay, Motion to Prohibit Use of Cash Collateral, and Motion to Designate Case as a Single Asset Real Estate Case. The Order denied the Debtor's Motion to Substantively Consolidate and approved the Debtor's counsel's Application for Compensation, but provided that the fees could not be paid using cash collateral given that the Court had prohibited the use of cash collateral. The Debtor's counsel filed a second Application for Compensation in February 2012, and the Bank again objected. The Court entered an Order approving the Application for Compensation on March 15, 2012, stating, "The issue of the use of retainer for payment of [Debtor's counsel's] fees is reserved pending a determination as to whether Bank of the Ozarks' lien extends to the retainer." On April 4, 2012, the Bank filed a Motion for Disgorgement of Retainer. The Debtor objected. A hearing was held on May 22, and on June 4, the Court entered an Order Granting the Bank's Motion for Disgorgement of Retainer. The Disgorgement Order provided, "The retainer paid by Debtor to its attorney was paid with revenues generated by the property and therefore constitutes Bank's cash collateral." The Debtor argues that disgorgement was an extreme remedy, that professionals should be paid because all other obligations are being paid, and because the Court's ruling creates an undesirable precedent. The Bank responds that Debtor's Motion does not cite any additional facts or case law and therefore there is no basis to alter or amend the Court's decision. The Court agrees with the Bank. "No grounds exist for amending the judgment here. No change in law has occurred, there is no new evidence available that was not previously available, and no clear error of law or manifest injustice has occurred. In its objection to Bank's Motion for Disgorgement of Retainer, Debtor focused primarily on the argument that disgorgement was too harsh a remedy for the Court to employ in this case. Debtor's arguments are substantially similar here," Judge Duncan said. "Any arguments contained in Debtor's Motion that Debtor did not include in its objection to Bank's Motion for Disgorgement of Retainer could have previously been presented to the Court, prior to the issuance of its Order Granting Bank's Motion for Disgorgement, but they were not. Debtor cannot now attempt to rely on arguments that it failed to raise when it had the chance." A copy of the Court's Aug. 8, 2012 Order is available at http://is.gd/pgtq6Wfrom Leagle.com. About City Loft Hotel City Loft Hotel, LLC, in Beaufort, South Carolina, filed for Chapter 11 bankruptcy (Bankr. D. S.C. Case No. 11-06127) in Charleston on Sept. 30, 2011. Judge David R. Duncan presides over the case. The Law Office of Michael W. Mogil, P.A., serves as the Debtor's counsel. In its petition, the Debtor estimated $1 million to $10 million in both assets and debts. The petition was signed by Matthew S. McAlhaney, president. CLEAR CHANNEL: Bank Debt Trades at 22.47% Off in Secondary Market ----------------------------------------------------------------- Participations in a syndicated loan under which Clear Channel Communications, Inc., is a borrower traded in the secondary market at 77.53 cents-on-the-dollar during the week ended Friday, Aug. 10, an increase of 2.13 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 365 basis points above LIBOR to borrow under the facility. The bank loan matures on Jan. 30, 2016, and carries Moody's 'Caa1' rating and Standard & Poor's 'CCC+' rating. The loan is one of the biggest gainers and losers among 168 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Clear Channel San Antonio, Texas-based CC Media Holdings, Inc. (OTC BB: CCMO) -- http://www.ccmediaholdings.com/-- is the parent company of Clear Channel Communications, Inc. CC Media Holdings is a global media and entertainment company specializing in mobile and on-demand entertainment and information services for local communities and premier opportunities for advertisers. The Company's businesses include radio and outdoor displays. Clear Channel Communications, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss attributable to the Company of $39.02 million on $1.60 billion of revenue for the three months ended June 30, 2012, compared with a net loss attributable to the Company of $53.17 million on $1.60 billion of revenue for the same period during the prior year. The Company reported a net loss attributable to the Company of $182.65 million on $2.96 billion of revenue for the six months ended June 30, 2012, compared with a net loss attributable to the Company of $185.01 million on $2.92 billion of revenue for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $16.45 billion in total assets, $24.31 billion in total liabilities and a $7.86 billion total member's deficit. * * * CC Media Holdings, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss attributable to the Company of $39.02 million on $1.60 billion of revenue for the three months ended June 30, 2012, compared with a net loss attributable to the Company of $53.17 million on $1.60 billion of revenue for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss attributable to the Company of $182.65 million on $2.96 billion of revenue, compared to a net loss of $185.01 million on $2.92 billion of revenue for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $16.45 billion in total assets, $24.31 billion in total liabilities, and a $7.86 billion total shareholders' deficit. Bankruptcy Warning The Company said in its quarterly report for the period ended March 31, 2012, that its ability to restructure or refinance the debt will depend on the condition of the capital markets and the Company's financial condition at that time. Any refinancing of the Company's debt could be at higher interest rates and increase debt service obligations and may require the Company and its subsidiaries to comply with more onerous covenants, which could further restrict the Company's business operations. The terms of existing or future debt instruments may restrict the Company from adopting some of these alternatives. These alternative measures may not be successful and may not permit the Company or its subsidiaries to meet scheduled debt service obligations. If the Company and its subsidiaries cannot make scheduled payments on indebtedness, the Company or its subsidiaries, as applicable, will be in default under one or more of the debt agreements and, as a result the Company could be forced into bankruptcy or liquidation. * * * The Troubled Company Reporter said on Feb. 10, 2012, Fitch Ratings has affirmed the 'CCC' Issuer Default Rating of Clear Channel Communications, Inc., and the 'B' IDR of Clear Channel Worldwide Holdings, Inc., an indirect wholly owned subsidiary of Clear Channel Outdoor Holdings, Inc., Clear Channel's 89% owned outdoor advertising subsidiary. The Rating Outlook is Stable. Fitch's ratings concerns center on the company's highly leveraged capital structure, with significant maturities in 2014 and 2016; the considerable and growing interest burden that pressures free cash flow; technological threats and secular pressures in radio broadcasting; and the company's exposure to cyclical advertising revenue. The ratings are supported by the company's leading position in both the outdoor and radio industries, as well as the positive fundamentals and digital opportunities in the outdoor advertising space. CLIFFS CLUB: Further Fine-Tunes Chapter 11 Plan ----------------------------------------------- The Cliffs Club & Hospitality Group, Inc., et al., doing business as The Cliffs Golf & Country Club, filed with the U.S. Bankruptcy Court for the District of South Carolina amendments to the First Amended and Restated Joint Chapter 11 Plan proposed by the Debtors and the Plan Sponsor dated June 30, 2012. The amendments include, among other things addition of definitions, amended definitions, and amended schedule of assumed contracts. A copy of the redlined version is available for free at http://bankrupt.com/misc/CLIFFSCLUB_plan_amended.pdf As reported in the Troubled Company Reporter on July 10, 2012, according to Bloomberg News bankruptcy columnist Bill Rochelle, to pay off $73.5 million in secured notes, the plan will give the lenders $64 million, spread over 20 years without interest. The lenders will receive the greater of $1 million a year or half of cash flow. The outstanding balance will be paid at maturity. Unsecured creditors with an estimated $3.9 million in claims are predicted to have a 75% recovery. Mechanics lienholders with $1.5 million in claims will be paid in full without interest. Members will be invited to join the newly reorganized club. Those who accept the offer are told in the disclosure statement that their recovery is between 35% and 75%. Members who don't take the offer are to see a predicted recovery of 4% to 10%. A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/CLIFFS_CLUB_ds_1amended.pdf About Cliffs Club Units of The Cliffs Communities, led by The Cliffs Club & Hospitality Group, Inc., doing business as The Cliffs Golf & Country Club, along with 10 affiliates, sought Chapter 11 protection (Bankr. D. S.C. Lead Case No. 12-01220) on Feb. 28, 2012. The Cliffs has eight premier, private master-planned residential communities, each to have its own world-class golf course. Approximately 3,734 lots have been sold. There are currently 1,385 finished homes, with 63 under construction. The properties for sale are owned by non-debtor DevCo entities. The Feb. 28 Debtors operate the exclusive membership clubs for golf, tennis, wellness and social activities at The Cliffs' communities in North and South Carolina. The clubs have 2,280 members, and there are 766 resigned members with refundable deposits totaling $37 million. The Debtors do not own the golf courses -- they only own or lease all the "core amenities" for the operation of the golf courses. Another affiliate, Keowee Falls Investment Group, LLC, filed a Chapter 11 petition (Bankr. D. S.C. Case No. 12-01399) in Spartanburg, South Carolina, on March 2, 2012. Travelers Rest- based Keowee Falls estimated at least $100 million in assets and liabilities of up to $50 million. Judge John E. Waites presides over the Debtors' cases. Lawyers at McKenna Long & Aldridge LLP serve as the Debtors' lead counsel. Dana Elizabeth Wilkinson, Esq., serves as local counsel. Grisanti Galef & Goldress serves as restructuring advisors and Katie S. Goodman of GGG serves as CRO. BMC Group Inc. serves as the Debtors' claims and noticing agent. According to papers filed in Court, the Debtors' total assets had a $175 million book value at Dec. 31, 2011. The Debtors' total liabilities had a $333 million book value at Dec. 31, 2011. The petition was signed by Timothy P. Cherry, authorized officer. Wells Fargo, as Indenture Trustee, is represented in the case by Daniel S. Bleck, Esq., at Mintz Levin Cohn Ferris Glovsky and Popeo P.C.; and Elizabeth J. Philp, Esq., and Michael Beal, Esq., at McNair Law Firm P.A. The Official Committee of Unsecured Creditors is represented in the case by John B. Butler, III, P.A., and Jonathan B. Alter, Esq., at Bingham McCutchen LLP. The Debtor has filed a Chapter 11 plan that proposes to pay lenders owed $73.5 million in secured notes, the sum of $64 million, spread over 20 years without interest. The lenders will receive the greater of $1 million a year or half of cash flow. The outstanding balance will be paid at maturity. Unsecured creditors with an estimated $3.9 million in claims are predicted to have a 75% recovery. Mechanics lienholders with $1.5 million in claims will be paid in full without interest. Members will be invited to join the newly reorganized club. Those who accept the offer will recover between 35% and 75%. Members who don't take the offer are to see a predicted recovery of 4% to 10%. The Court has approved the disclosure statement explaining the Plan. Plan votes are due Aug. 1. The Court will convene a hearing on Aug. 6, at 10 a.m., to consider the confirmation of the Plan. A copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/CLIFFS_CLUB_ds_1amended.pdf COMMERCETEL CORP: Inks Three-Year Contract With CFO --------------------------------------------------- CommerceTel Corporation entered into an employment agreement with Tim Schatz, the Company's Chief Financial Officer. The Agreement has an initial term of three years. Unless terminated at least 90 days prior to the expiration date by either party, the Agreement automatically renews for additional one-year periods. Under the terms of the Agreement, Mr. Schatz will be paid a base salary of $160,000 per annum. A one time bonus of $2,917 was paid upon signing. The base salary may be increased based on an annual salary review by the Company's Board of Directors, commencing on Dec. 31, 2012, and each 12 month period thereafter. The Company's Board may also award an annual bonus of up to 30% of the base salary for achieving milestones as defined by the Board from time to time. Mr. Schatz will also be granted options to purchase 225,000 shares of common stock of the Company pursuant to the terms and conditions of the Company's incentive stock option plan, if and when adopted by the Company. Awards thereunder will be made from time to time at the discretion of the Board. The Agreement includes a non-compete provision that generally bars Mr. Schatz from soliciting any of the Company's customers or prospective customers in the United States for a period of two years from the date the Agreement is terminated by the Company for cause, or by Mr. Schatz without good reason as defined in the Agreement. If the Agreement is terminated by the Company without cause or by Mr. Schatz with good reason, the restrictive period will last until one week after all payments by the Company to Mr. Schatz (as provided in the Agreement) have been made. About CommerceTel Corporation CommerceTel Corporation, headquartered in Chandler, Ariz., is a provider of technology that enables major brands and enterprises to engage consumers via their mobile phone. The Company's balance sheet at March 31, 2012, showed $4.57 million in total assets, $9.19 million in total liabilities, and a stockholders' deficit of $4.62 million. M&K CPAs, PLLC, in Houston, Texas, expressed substantial doubt about CommerceTel Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has incurred recurring operating losses and negative cash flows from operations and is dependent on additional financing to fund operations. COMMUNITY TOWERS: Opposes Lender's Lift Stay Request ---------------------------------------------------- Community Towers I LLC, et al., ask the U.S. Bankruptcy Court for the Northern District of California to deny CIBC, Inc.'s request for relief from the automatic stay. CIBC, in its motion, requested for relief from stay to exercise its rights and remedies as a secured creditor on the grounds that CIBC lacks adequate protection in that there is little or no equity cushion between the value of the property commonly known as Community Towers in San Jose, California and the first priority debt to CIBC that Community Towers secures. The Debtors, in their response, related that, among other things, its property has not diminished in value; and there is no cause to lift the stay. Additionally, the Debtors said that the motion is not well taken. CIBC, according to the Debtors, has not demonstrated that any cause exists to warrant relief from the automatic stay at this time. About Community Towers I Community Towers I LLC is a real estate investment company. Community Towers I LLC and various affiliates -- Community Towers II, LLC, Community Towers III, LLC, Community Towers IV, LLC -- filed a Chapter 11 petition (Bankr. N.D. Calif. Lead Case No. 11-58944) on Sept. 26, 2011, in San Jose, California. John Walshe Murray, Esq., at the Law Offices of Murray and Murray, in Cupertino, California, serves as counsel to the Debtor. Community Towers I disclosed $51,939,720 in assets and $39,479,784 in liabilities as of the Chapter 11 filing. Judge Stephen L. Johnson has approved the disclosure statement in support of the joint plan of reorganization filed by the Debtors. The key features of the Debtors' proposed Plan include: (i) profitable operation of their property; (ii) satisfaction or disallowance of claims; and (iii) assumption of executory contracts and unexpired leases. CONVERSION SERVICES: Chapter 7 Petition Filed --------------------------------------------- BankruptcyData.com reports that Conversion Services International filed for Chapter 7 protection (Bankr. D.N.J. Case No. 12-29653). The Company is represented by Richard M. Meth, Esq., at Fox Rothschild. According to documents filed with the Securities and Exchange Commission, in January 2012, the Company "terminated William Hendry from the positions of Vice President, Chief Financial Officer, Secretary and Treasurer of the Company due to the deteriorating financial condition of the Company." Conversion Services is principally engaged in the information technology services industry in these areas: strategic consulting, business intelligence/data warehousing and data management to its customers principally located in the northeastern United States. CORDILLERA GOLF: Club Members Seeking Chapter 11 Trustee -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that members of the four-course golf club at the Cordillera resort community in Edwards, Colorado, wasted little time in requesting appointment of a Chapter 11 trustee after the case was moved from Delaware to Colorado. According to the report club members contend the club is being mismanaged by owner David Wilhelm. They fault a lawsuit the club filed before bankruptcy, seeking $96 million in damages from an association of club members for allegedly violating state racketeering laws. The report relates the official creditors' committee joined in the request for a trustee. There will be a status conference on Aug. 15. The club is opposing the trustee motion, saying it will be vindicated from the members' "unprovable charges." The club also argues that the motion for a trustee is harassment. About Cordillera Golf Cordillera Golf Club, LLC filed for protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 12-11893) on June 26, 2012, amid lower membership rates and tensions with current members. The Debtor owns an exclusive 730-acre four-course golf club at the Cordillera resort community in Edwards, Colorado. The club is located at the 7,000-acre Cordillera development, which has 1,087 residential lots. Non-equity club membership is open to community residents. The club has three golf courses, a Dave Pelz designed short course, five swimming pools, and tennis courts. The membership plan provides that there will be no more than 1,085 golf memberships and up to 100 social memberships. Half of all property owners within Cordillera are club members. David A. Wilhelm, manager of CGH Manager LLC, manager, signed the Chapter 11 petition. Mr. Wilhelm acquired 100% interest in the Debtor in 2009 following an arbitration that stemmed from revelations that the then owners of the 70% interests had diverted funds away from the Debtor's operations. In the petition, the Debtor estimated $10 million to $50 million in assets and debts, including secured debt of $12.7 million owed to Alpine Bank and a $7.5 million secured claim by Mr. Wilhelm. Delaware Bankruptcy Judge Christopher S. Sontchi presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Foley & Lardner LLP serve as the Debtor's counsel. Omni Management Group LLC serves as the Debtor's claims agent. On July 16, 2012, the Delaware Court granted the request of certain club members to transfer the venue of the case to the Bankruptcy Court in Colorado. The case has been endorsed to Hon. A. Bruce Campbell in Denver (Bankr. D. Colo. Case No. 12-24882). An official committee of unsecured creditors has been appointed in the case. The Committee members consist of various homeowner and trade creditors of the Debtor. All members have Colorado addresses. The Committee is represented by Munsch Hardt Kopf & Harr, PC as counsel. Certain homeowners also have retained separate counsel, Michael S. Kogan, Esq., at Kogan Law Firm, APC. Secured lender, Alpine Bank in Vail, Colo., is represented by lawyers at Ballard Spahr LLP. COSO GEOTHERMAL: Moody's Cuts Rating on Certificates to 'Caa1' -------------------------------------------------------------- Moody's Investors Service downgraded Coso Geothermal Power Holding's pass through trust certificates to Caa1 from B2. The outlook remains negative. Ratings Rationale The rating action reflects multiple continuing challenges at Coso both in the near and longer term that is likely to ultimately result in a default on Coso's rated debt obligations. The core challenge facing Coso remains energy production substantially below (34% below) original expectations. The lower production has resulted in significantly lower cash flow and fixed charge coverage ratios below 1.0 times. While the causes of the lower production are still being studied by the project, Moody's understands the field is much more complicated than previously understood and Coso estimates the resource is losing water on a net basis. Coso has experienced a general trend of declining energy production and continued declines remain a distinct possibility. Coso's stressed financial and operating profile raises concerns about the project's ability to extend a letter of credit facility expiring in November 2012. Approximately $55 million in letters of credit have been issued. Approximately $40 million of the letter of credit is issued to fund a senior rent reserve while the remaining $15 million support other obligations of the project. An inability to extend the letter of credit facility could ultimately lead to a default on Coso's pass through certificates since a default on the $15 million of project related letters of credit cross defaults to Coso's rated debt. A default on the senior rent reserve letters of credit is not anticipated to cross default to Coso's rated debt. The rating action also reflects Coso's expectation that it will draw on its debt service reserve by approximately $9 million for its January 2013 payment. In Moody's view, Coso was previously able to avoid draws on its debt service reserve for its January 2012 payment due to significant expense reductions, usage of its capex reserve and a one-time lease financing at Beowawe. Moody's views further significant expense reduction or one-time cash flow transactions as being unlikely. The rating also incorporates Moody's understanding that significant additional equity funding is unlikely at this time. Meaningful sponsor equity contributions ceased in early 2011 after a large equity funded capital program failed to produce expected power generation levels. Moody's also recognizes that major execution risk likely exists with any new capital spending program. The negative outlook considers the potential for a default in November 2012 if Coso's letter of credit facility is not extended, the likelihood for further declines in the Project's power generation output, and an expectation of continued weak financial metrics resulting in the ongoing need for the Project to draw on the senior rent reserve in January 2013 to meet debt service requirements. In light of the numerous challenges facing the project, a rating upgrade is unlikely. The Coso's rating could stabilize if the Project is able to stabilize energy production without significant new capital expenditures, achieve FCCR of above 1.0 times on a sustained basis and address the upcoming letter of credit facility maturity. The Project rating could be downgraded if energy production declines further, the letter of credit facility maturity is not addressed or material additional draws under the debt service reserve are required to remain current on a senior basis. Coso Geothermal Power Holdings LLC is a special purpose company formed to effectuate a sale-leaseback transaction of the Project. The Project comprises of three linked geothermal plants with a gross nameplate capacity of 302 MW located in California and a 17.7 MW geothermal plant in Nevada. The California geothermal plants sell all their power to Southern California Edison (A3 senior unsecured) while the Nevada based plant sells its power to Sierra Pacific Power (Baa3 Issuer Rating). Coso is owned indirectly by Terra-Gen Power LLC (Terra-Gen). The last rating action on Coso occurred on June 17, 2011, when the rating on Project's pass through trust certificates were downgraded to B2 from B1. The principal methodology used in this rating was Power Generation Projects published in December 2008. DELTA PETROLEUM: Inks Consulting Pacts with KN and Freedman ----------------------------------------------------------- Delta Petroleum Corporation entered into a consulting agreement pursuant to which KN Consulting, Inc. agreed to provide certain consulting services to Delta, including providing advice and other services related to all financial aspects of Delta, reviewing and making recommendations and providing other services related to Delta's filings with the Securities and Exchange Commission, and such other activities and work products as may be requested by the officers and directors of Delta. KN Consulting will provide the consulting services through Kevin K. Nanke, Delta's former chief financial officer. In consideration of KN Consulting's consulting services, Delta agreed to pay KN Consulting $12,500 per month for 80 hours of work during the month and $550 per hour for each additional hour exceeding 80 hours per month, with KN Consulting's total compensation not to exceed $25,000 per month. The KN Consulting Agreement has an effective date of Aug. 3, 2012, and terminates on Aug. 31, 2012. On Aug. 7, 2012, Delta entered into a Consulting Agreement with Stanley F. Freedman, Delta's former Executive Vice President and General Counsel, pursuant to which Mr. Freedman agreed to provide certain consulting services to Delta, including providing advice and other services related to all legal aspects of Delta, reviewing and making recommendations and providing other services related to Delta's filings with the Securities and Exchange Commission, and such other activities and work products as may be requested by the officers and directors of Delta. In consideration of Mr. Freedman's consulting services, Delta agreed to pay Mr. Freedman $12,500 per month for 80 hours of work during the month and $550 per hour for each additional hour exceeding 80 hours per month, with Mr. Freedman's total compensation not to exceed $25,000 per month. The Freedman Consulting Agreement has an effective date of July 1, 2012, and terminates on Aug. 31, 2012. About Delta Petroleum Delta Petroleum Corporation (NASDAQ: DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil. Natural gas comprises over 90% of Delta's production services. The core area of its operations is the Rocky Mountain Region of the United States, where the majority of the proved reserves, production and long-term growth prospects are located. Delta and seven of its subsidiaries sought Chapter 11 bankruptcy protection (Bankr. D. Del. Case Nos. 11-14006 to 11-14013, inclusive) on Dec. 16, 2011, roughly six weeks before the Jan. 31, 2012 scheduled maturity of its $38.5 million secured credit facility with Macquarie Bank Limited and after several months of unsuccessful attempts to sell the business. Delta disclosed $375,498,248 in assets and $310,679,157 in liabilities, which also include $152,187,500 in outstanding obligations on account of the 7% senior unsecured notes issued in March 2005 with US Bank National Association indenture trustee; and $115,527,083 in outstanding obligations on account of 3-3/4% Senior Convertible Notes due 2037 issued in April 2007. In its amended schedules, the Delta Petroleum disclosed $373,836,358 in assets and $312,864,788 in liabilities. W. Peter Beardsley, Esq., Christopher Gartman, Esq., Kathryn A. Coleman, Esq., and Ashley J. Laurie, Esq., at Hughes Hubbard & Reed LLP, in New York, N.Y., represent the Debtors as counsel. Derek C. Abbott, Esq., Ann C. Cordo, Esq., and Chad A. Fights, Esq., at Morris, Nichols, Arsht & Tunnel LLP, in Wilmington, Del., represent the Debtors as co-counsel. Conway Mackenzie is the Debtors' restructuring advisor. Evercore Group L.L.C. is the financial advisor and investment banker. The Debtors selected Epiq Bankruptcy Solutions, LLC as claims and noticing agent. The petition was signed by Carl E. Lakey, chief executive officer and president. Laramie Energy II LLC has been approved by the Court to serve as the sponsor for Delta's reorganization plan. Delta Petroleum has won approval for its disclosure statement explaining the Chapter 11 reorganization plan. There's a hearing to consider confirmation of the Plan on Aug. 15. DELTATHREE INC: Six Directors Elected at Annual Meeting ------------------------------------------------------- deltathree, Inc., held its annual meeting of stockholders on Aug. 7, 2012, at which the Company's stockholders elected six directors, namely: (1) Robert Stevanovski; (2) Anthony Cassara; (3) Lior Samuelson; (4) David Stevanovski; (5) Colleen Jones:; and (6) Lyle Patrick. The ratification of the appointment of Brightman Almagor Zohar & Co., a member firm of Deloitte Touche Tohmatsu, as the Company's independent auditors for the fiscal year ending Dec. 31, 2012, was approved. About deltathree Based in New York, deltathree, Inc. (OTC QB: DDDC) -- http://www.deltathree.com/-- is a global provider of video and voice over Internet Protocol (VoIP) telephony services, products, hosted solutions and infrastructures for service providers, resellers and direct consumers. After auditing the 2011 results, Brightman Almagor Zohar & Co., noted that Company's recurring losses from operations and deficiency in stockholders' equity raise substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $3.05 million in 2011, a net loss of $2.49 million in 2010, and a net loss of $3.19 million in 2009. The Company's balance sheet at March 31, 2012, showed $1.86 million in total assets, $6.80 million in total liabilities, and a $4.93 million in total stockholders' deficiency. Bankruptcy Warning The Company disclosed in its annual report for the period ended Dec. 31, 2011, that in view of its current cash resources, nondiscretionary expenses, debt and near term debt service obligations, the Company may begin to explore all strategic alternatives available to it, including, but not limited to, a sale or merger of the Company, a sale of its assets, recapitalization, partnership, debt or equity financing, voluntary deregistration of its securities, financial reorganization, liquidation or ceasing operations. In the event that it is unable to secure additional funding, the Company may determine that it is in its best interests to voluntarily seek relief under Chapter 11 of the U.S. Bankruptcy Code. Seeking relief under the U.S. Bankruptcy Code, even if the Company is able to emerge quickly from Chapter 11 protection, could have a material adverse effect on the relationships between the Company and its existing and potential customers, employees, and others. Further, if the Company was unable to implement a successful plan of reorganization, the Company might be forced to liquidate under Chapter 7 of the U.S. Bankruptcy Code. DEWEY & LEBOEUF: Former Partners Want Ch. 11 Trustee or Examiner ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a group of 54 former partners of Dewey & LeBoeuf says the defunct law firm should be taken over by a Chapter 11 trustee or an examiner should be appointed to conduct an investigation into management's "blatant conflicts of interest." According to the report, the ad hoc committee of former partners, all with vested benefits in the firm's retirement plan, accuses the firm's leaders of "gross mismanagement" before bankruptcy and "continuing mismanagement" after the Chapter 11 filing in May. Short of having a trustee appointed, the partners want an examiner to investigate claims that could be made and a settlement the firm is negotiating with partners. The motion, scheduled for hearing Aug. 23, contends that "current management is steeped with conflicts of interest," including the receipt of pre-bankruptcy transfers that the firm should be suing to recover. The report relays the ad hoc committee criticizes the proposed settlement the firm is negotiating with former partners. The group says the proposed settlement disproportionately favors higher-paid partners by giving them releases from claims when more modestly compensated lawyers don't have exposure to lawsuits. Based on press reports, the partners say the firm is looking to raise $90.4 million. In return, the settlement would give former partners the "broadest possible release of potential liability without sufficient contribution to creditors." The ad hoc group says 700 former partners are being asked to contribute, including 400 who left the firm before Jan. 2011. According to the report, the motion for a trustee alleges that "impecunious spouses of deceased former partners" and terminally ill former partners are being "frightened and intimidated" into contributing "what could be a substantial portion of their remaining retirement savings." The report relates that if the bankruptcy judge in Manhattan isn't inclined to appoint a trustee, the former partners want an examiner to investigate claims against Steven H. Davis, the former chairman. They also want an investigation of the firm's former executive director and chief financial officer. The investigation should look into debt that was incurred to cover guaranteed payments to incoming partners and distributions made while the firm was insolvent, the former partners say. The examiner should report on the terms of settlements. A call for comment to the firm's lawyers wasn't returned. 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 US$245 million and assets of US$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 US$6 million. The Pension benefit Guaranty Corp. took US$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 Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. U.S. Bankruptcy Judge Martin Glenn on July 31 approved Dewey's request to extend its funding deadline, which would have July 31, to Aug. 15. DEWEY & LEBOEUF: Court Partly OKs Incentive/Retention Programs -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Dewey & Leboeuf LLP's employee incentive plan and employee retention plan except for the part of the retention plan that requested authority to use the discretionary funds. The Debtor had provided a list of the employees eligible under the plans with the salary of each employee, well as the maximum retention and incentive payment for which they would be eligible. The Incentive Plan The incentive plan would apply to three of Debtor's employees that it considers necessary for maximizing the collection of accounts receivable. Two are the Debtor's director of billing and the Debtor's collections. Of the key employees, the director of billing and the collections manager are eligible for a maximum incentive payment of $110,000 each, and the key staff employee is eligible for a maximum incentive payment of $30,000. If the key staff employee leaves the Debtor before the requested stay date, the director of billing and the collections manager would be entitled to further payments in amounts to be determined by the Debtor. The Retention Plan The retention plan applies to both the Debtor's collection staff and operational staff. The retention plan provides that: (i) 16 employees would be eligible for an extra two weeks' pay if they are employed by the Debtor through Aug. 31, 2012; (ii) seven employees would be eligible for an additional three weeks' pay if they are employed by the Debtor through Sept. 30, 2012; and (iii) 18 Employees would be eligible for an additional eight weeks' pay if they are employed by the Debtor through Nov. 30, 2012. The Court did not approve that the Debtor would have access under the retention plan to $100,000 of discretionary funds to pay employees. That amount includes $10,000 reserved to pay any short-term billing and collection staff and $51,400 reserved to pay any employee who agrees to remain with the Debtor past their designated "stay date." Additionally, forfeited retention plan payments, not to exceed $51,400, may be redistributed to the employees in the Debtor's sole discretion. The Debtor, in response to the objection of the U.S. Trustee, argued that in addition to being permissible under applicable law, the "need to stem further employee attrition is greater now than ever." Previously, the U.S. Trustee objected to the Debtor's motion, stating that (i) it does not provide sufficient information to allow the Court to determine whether the payments under the Incentive Plan are more costly than the alternative of only retaining a collection agent; (ii) it is unclear whether the Plans are economically feasible, in light of the upcoming expiration of the cash collateral order; and (iii) the incentive plan is not justified under the facts and circumstances of the case. 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 US$245 million and assets of US$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 US$6 million. The Pension benefit Guaranty Corp. took US$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 Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. U.S. Bankruptcy Judge Martin Glenn on July 31 approved Dewey's request to extend its funding deadline, which would have been July 31, to Aug. 15. DEWEY & LEBOEUF: Sweetens $90.4MM Retiree Settlement Deal --------------------------------------------------------- Megan Leonhardt at Bankruptcy Law360 reports that in an effort to obtain former partners' approval for a proposed $90.4 million settlement deal that would shield partners from potential clawback litigation, Dewey & LeBoeuf LLP sweetened the deal Thursday, following a move by the firm's retirees to get an independent trustee appointed. Bankruptcy Law360 relates that on a call with the former partners Thursday, Dewey's bankruptcy team offered what one source, speaking on condition of anonymity, called a "bulk discount." 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 US$245 million and assets of US$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 US$6 million. The Pension benefit Guaranty Corp. took US$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 Former Partners hired Tracy L. Klestadt, Esq., and Sean C. Southard, Esq., at Klestadt & Winters, LLP, as counsel. U.S. Bankruptcy Judge Martin Glenn on July 31 approved Dewey's request to extend its funding deadline, which would have July 31, to Aug. 15. DEX MEDIA EAST: Bank Debt Trades at 46.29% Off in Secondary Market ------------------------------------------------------------------ Participations in a syndicated loan under which Dex Media East LLC is a borrower traded in the secondary market at 53.71 cents-on- the-dollar during the week ended Friday, Aug. 10, an increase of 0.71 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 24, 2014. The loan is one of the biggest gainers and losers among 168 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About R.H. Donnelley & Dex Media East Dex One, headquartered in Cary, North Carolina, is a local business marketing services company that includes print directories and online voice and mobile search. R.H. Donnelley Corp. and 19 of its affiliates, including Dex Media East LLC, Dex Media West LLC and Dex Media Inc., filed for Chapter 11 protection (Bank. D. Del. Case No. 09-11833 through 09-11852) on May 28, 2009. They emerged from bankruptcy on Jan. 29, 2010. On the Effective Date and in connection with its emergence from Chapter 11, RHD was renamed Dex One Corporation. Dex One reported a net loss of $518.96 million in 2011 compared with a net loss of $923.59 million for the eleven months ended Dec. 31, 2010. * * * As reported in the April 2, 2012 edition of the TCR, Moody's Investors Service has downgraded the corporate family rating (CFR) for Dex One Corporation's to Caa3 from B3 based on Moody's view that a debt restructuring is inevitable. Moody's has also changed Dex's Probability of Default Rating (PDR) to Ca/LD from B3 following the company's purchase of about $142 million of par value bank debt for about $70 million in cash. The Caa3 rating also reflects Moody's view that additional exchanges at a discount are likely in the future since the company amended its bank covenants to make it possible to repurchase additional bank debt on the open market through the end of 2013. As reported by the TCR on April 4, 2012, Standard & Poor's Ratings Services raised its corporate credit rating on Cary, N.C.-based Dex One Corp. and related entities to 'CCC' from 'SD' (selective default). "The upgrade reflects our assessment of the company's credit profile after the completion of the subpar repurchase transaction in light of upcoming maturities, future subpar repurchases, and our expectation of a continued week operating outlook," explained Standard & Poor's credit analyst Chris Valentine. DVORKIN HOLDINGS: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Dvorkin Holdings, LLC One Trans Am Plaza Drive, Suite 120 Oak Brook Terrace, IL 60181 Bankruptcy Case No.: 12-31336 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Northern District of Illinois (Chicago) Judge: Jack B. Schmetterer Debtor's Counsel: Michael J. Davis, Esq. SPRINGER, BROWN, COVEY, GAETNER & DAVIS, LLC 400 S County Farm Road, Suite 330 Wheaton, IL 60187 Tel: (630) 510-0000 Fax: (630) 510-0004 E-mail: mdavis@springerbrown.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Loran Eatman, vice president of DH-EK Management Corp. Debtor's List of Its 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Texas 1845 LLC Judgment Rendered $8,259,250 3511 Silverside Drive, Suite 105 Wilmington, DE 19810 Dahl & Bonadies, LLC -- $17,500 330 N. LaSalle Street, Suite 1500 Chicago, IL 60602 Albany Bank Guaranty Unknown 3400 W. Lawrence Avenue Chicago, IL 60625 Belmont Bank Guaranty Unknown Blue Star Holdings LLC Guaranty Unknown BMO Harris Bank Guaranty Unknown Centier Bank Guaranty Unknown Dvorkin Holdings -- Unknown First Merit Bank Guaranty Unknown First Nations Bank Guaranty Unknown International Bank Guaranty Unknown MB Financial Guaranty Unknown North Shore Bank Guaranty Unknown Oxford Bank and Trust Guaranty Unknown Private Bank Guaranty Unknown Riversource Life Insurance Co. Guaranty Unknown Schaumburg Bank and Trust Guaranty Unknown Wells Fargo Bank National Assoc. Guaranty Unknown EASTMAN KODAK: No Quick Appeal on Apple Patent Dispute ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Apple Inc. won't be permitted to take an immediate appeal to the U.S. District Court from an Aug. 1 ruling by the bankruptcy judge upholding ownership of two Eastman Kodak Co. patents. According to the report, although the bankruptcy judge announced his ruling on Aug. 1, he needed a week before he could sign the formal order because Apple and Kodak couldn't agree on the form of the order. Ultimately, U.S. Bankruptcy Judge Allan L. Gropper composed his own Aug. 8 order, incorporating language proposed by both sides. The report notes that significantly, Judge Gropper denied Apple's request for an immediate appeal from the order upholding the two Kodak patents. He said an immediate appeal was counter to the "strong federal policy against piecemeal appeals." Judge Gropper nonetheless said Apple could ask a district judge for permission to appeal on the two patents before the lawsuit is wrapped up on all 10. If Kodak contends there are no undisputed facts on the other eight patents, Judge Gropper said he would hold another hearing "promptly." The report recounts that Kodak started the lawsuit in bankruptcy court on June 18, seeking a declaration that Apple has no interest in the 10 patents. Apple has lodged a second request for removing the suit from bankruptcy court to district court. A district judge denied the first requests for so-called withdrawal of the reference. Kodak's $400 million in 7% convertible notes due 2017 traded at 11:30 a.m. Aug. 9 for 21 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The bonds gave risen 27.3% in price since July 25. Lawsuit in bankruptcy court with Apple is Eastman Kodak Co. v. Apple Inc., 12-01720, U.S. Bankruptcy Court, Southern District of New York (Manhattan). Apple's motion to remove the suit from bankruptcy court is Eastman Kodak Co. v. Apple Inc., 12-04881, U.S. District Court, Southern District New York (Manhattan). About Eastman Kodak Rochester, New York-based Eastman Kodak Company and its U.S. subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan. Subsidiaries outside of the U.S. were not included in the filing and are expected to continue to operate as usual. Kodak, founded in 1880 by George Eastman, was once the world's leading producer of film and cameras. Kodak sought bankruptcy protection amid near-term liquidity issues brought about by steeper-than-expected declines in Kodak's historically profitable traditional businesses, and cash flow from the licensing and sale of intellectual property being delayed due to litigation tactics employed by a small number of infringing technology companies with strong balance sheets and an awareness of Kodak's liquidity challenges. In recent years, Kodak has been working to transform itself from a business primarily based on film and consumer photography to a smaller business with a digital growth strategy focused on the commercialization of proprietary digital imaging and printing technologies. Kodak has 8,900 patent and trademark registrations and applications in the United States, as well as 13,100 foreign patents and trademark registrations or pending registration in roughly 160 countries. Kodak disclosed $5.10 billion in assets and $6.75 billion in liabilities as of Sept. 30, 2011. The net book value of all assets located outside the United States as of Dec. 31, 2011 is $13.5 million. Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt & Taylor, LLP, serve as counsel to the Debtors. FTI Consulting, Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is the investment banker. Kurtzman Carson Consultants LLC is the claims agent. The Official Committee of Unsecured Creditors has tapped Milbank, Tweed, Hadley & McCloy LLP, as its bankruptcy counsel. Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi, Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the Unofficial Second Lien Noteholders Committee. Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato, Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth S. Grossman; and Paul Martin. ELLIPSO INC: Trial on Bid to Revoke Confirmation Order ------------------------------------------------------ John Page filed an adversary proceeding pursuant to 11 U.S.C. Sec. 1144 alleging that the confirmation order dated May 1, 2012, in the Chapter 11 case of Ellipsat, Inc., formerly known as Ellipso, Inc., was procured by fraud and should be revoked by the court. The defendants -- the Plan Proponents -- filed a motion for summary judgment. On Wednesday, Bankruptcy Judge S. Martin Teel, Jr., said the motion for summary judgment cannot be granted because doing so "would require the court to act as a finder of fact to resolve several genuine factual issues." According to Judge Teel, the parties present conflicting accounting records with respect to the repayment of Ellipso's loan to David Castiel and the repayment by Ellipso of expenses advanced by Mr. Castiel. Mr. Page's claim relies on the "DC Advance Balances.xls" file and the defendants rely on Exhibits A and B to Mr. Castiel's proof of claim (Claim No. 14-4 on the Claims Register). These conflicting accounting records are at the heart of the dispute over whether Mr. Castiel is indebted to Ellipso, and the record does not resolve which document provides the more accurate accounting. The Plan Proponents also set forth as an undisputed material fact that the Court has previously found that Mr. Castiel did not fraudulently conceal financial data during the trial of his proof of claim because he did not deliberately withhold files from inclusion on the so-called "Corporate" disk. However, Judge Teel said, the issue raised by Mr. Page's claim of fraud is whether Mr. Castiel knew about the discrepancy in his loan repayment (if such discrepancy is found to exist) at the time the disclosure statement for the joint plan of reorganization was filed, not at the time of the trial on Mr. Castiel's claim. Judge Teel said sorting out what Mr. Castiel knew and when he knew it is a material factual dispute and determination of the issue is necessary for adjudication of the claim of fraud. The lawsuit is, JOHN H. PAGE, Plaintiff, v. DAVID CASTIEL, et al., Defendants, Adv. Proc. No. 12-10026 (Bankr. D.D.C.). A copy of the Court's Aug. 8, 2012 Memorandum Decision and Order is available at http://is.gd/xhOzHXfrom Leagle.com. About Ellipso Inc. Ellipso, Inc. is a privately held communications satellite system design company, now in bankruptcy. Ellipso's subsidiaries include Mobile Communications Holdings, Inc., ESBH, Inc., and Virtual Geosatellite, LLC. Through these subsidiaries, Ellipso has compiled this portfolio of intellectual property for various communications satellite systems and high performance technology. Utilizing unique and patented elliptical orbits, the systems were intended to provide low cost voice, data, facsimile, paging and geolocational services to subscribers around the world at prices lower than competing systems. Ellipso Inc. filed for Chapter 11 bankruptcy (Bankr. D. D.C. Case No. 09-00148) on Feb. 25, 2009. Kermit A. Rosenberg, Esq., at Tighe Patton Armstrong Teasdale, PLLC -- now Butzel, Long, Tighe, Patton -- in Washington, DC, served as the Debtor's counsel. In its petition, the Debtor estimated under $50,000 in assets and $1 million to $10 million in debts. On Jan. 19, 2010, the Court granted the United States Trustee's motion and directed the appointment of a chapter 11 trustee. EMPIRE LAND: CEO Objects to O'Melveny's $1.5MM Deal With Trustee ---------------------------------------------------------------- Maria Chutchian at Bankruptcy Law360 reports that the CEO of Empire Land LLC objected Tuesday to a $1.5 million settlement the real estate developer's bankruptcy trustee and O'Melveny & Myers LLP reached late last month, saying the deal would prejudice him in a related suit. Bankruptcy Law360 says Empire CEO James P. Previti, his current company Empire Partners Inc. and other Empire officers asked a California federal judge to deny a motion for approval from Empire's Chapter 7 trustee Richard Diamond and O'Melveny. Headquartered in Ontario, California, Empire Land, LLC, dba Empire Land Development, LLC -- http://www.epinc.com/-- develops communities and other land construction projects located in California and Arizona. As of March 31, 2008, the company owned at least 11,800 lost in 14 separate land projects. The company and seven of its affiliates filed for Chapter 11 protection (Bankr. C.D. Calif. Lead Case No.08-14592) on April 25, 2008. James Stang, Esq., at Pachulski Stang Ziehl & Jones, LLP, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 16 has appointed three creditors to serve on an Official Committee of Unsecured Creditors in these cases. The Committee selected Landau & Berger LLP as its general bankruptcy counsel. Empire Land estimated assets and debts between $100 million to $500 million. EMPIRE LAND: Execs' D&O Suit Against National Union Dismissed ------------------------------------------------------------- Megan Stride at Bankruptcy Law360 reports that National Union Fire Insurance Co. of Pittsburgh, Pa., won its bid Tuesday to end a suit brought by principals of Empire Land LLC that sought defense costs under a directors and officers policy for a slew of actions in Empire Land's bankruptcy proceedings. U.S. District Judge Dean D. Pregerson granted National Union's motion to dismiss the suit and vacated the plaintiffs' motion for summary judgment in the coverage case, finding they had failed to follow the requirements for suing National Union, Bankruptcy Law360 says. About Empire Land Headquartered in Ontario, California, Empire Land, LLC, dba Empire Land Development, LLC -- http://www.epinc.com/-- develops communities and other land construction projects located in California and Arizona. The company and seven of its affiliates filed for Chapter 11 protection (Bankr. C.D. Calif. Lead Case No.08-14592) on April 25, 2008. The company owned at least 11,800 lost in 14 separate land projects as of the Chapter 11 filing. Empire Land estimated assets and debts between $100 million to $500 million. James Stang, Esq., at Pachulski Stang Ziehl & Jones, LLP, serves as counsel to the Debtors. The Official Committee of Unsecured Creditors selected Landau & Berger LLP as its general bankruptcy counsel. ENERGY FUTURE: Moody's Cuts CFR to 'Caa3'; Outlook Remains Neg. --------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating (CFR) of Energy Future Holdings Corp (EFH) to Caa3 from Caa2 and affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4 Speculative Grade Liquidity Rating. The rating outlook remains negative. In addition, Moody's downgraded the senior secured rating of Oncor Electric Delivery Company (Oncor) to Baa2 from Baa1. Oncor's rating outlook remains negative. At the same time, Moody's assigned a Caa3 rating (LGD4 58%) to Energy Future Intermediate Holding Company's (EFIH) new $250 million senior secured notes due 2017 and $500 million senior secured second lien notes due 2022. The ratings for EFH, its subsidiaries and individual debt instruments are derived from the Caa3 CFR, with the exception of Oncor due to its ring fence type provisions. Individual instrument ratings and Loss Given Default (LGD) assessments are included at the end of this press release. Ratings Rationale The downgrade of EFH's CFR to Caa3 from Caa2 reflects the company's financial distress and limited financial flexibility. EFH's capital structure is complex and, in Moody's opinion, untenable which calls into question the sustainability of the business model and expected duration of its liquidity reserves. Moody's expects material balance sheet restructuring within the next 12 to 18 months. For the latest twelve months ended June 2012, EFH's ratio of cash flow to debt is approximately 1% and is expected to remain near this level for the foreseeable future. EFH's unregulated subsidiary, Texas Competitive Electric Holdings Company LLC (TCEH), is the principal driver behind EFH's cash flows. TCEH's coal fired generation fleet requires a material amount of capital investment to comply with more stringent environmental mandates, and low natural gas prices have displaced a sizeable portion of expected generation volumes. Moody's estimated valuation of TCEH has fallen to approximately $15 - $20 billion, which suggests sizeable impairments for lenders, including the TCEH senior secured first lien lenders. In Moody's opinion, this level of impairment suggests the potential for a more contentious restructuring process which, in turn, raises the risk of contagion across the entire EFH family, including Oncor. Moody's sees a strong correlation between the default probability of EFH, Energy Future Competitive Holdings (EFCH), EFIH and TCEH. As a result, the primary rating drivers for EFH and EFIH are heavily influenced by TCEH. That said, with the expected elimination of the intercompany note that EFH owes to TCEH, Moody's sees a stronger case of credit separateness. The negative outlook for EFH reflects a sustained period of low natural gas prices which will keep EFH's cash flows depressed and potentially create further large goodwill impairments. Moody's also sees declining volumes and an increase in operating costs and capital investment needs. The likelihood of some form of restructuring will continue to increase, absent a shift in market fundamentals. RATINGS RATIONALE -- ONCOR The downgrade of Oncor's senior secured debt to Baa2 from Baa1 reflects two primary issues, both of which are beyond Oncor's and its principal regulator, the Public Utility Commission of Texas' (PUCT), control. The first issue is the rising contagion risk exposure that Oncor has with its majority owner-parent, EFH. As the risk of a contentious restructuring increases at EFH and TCEH, Oncor will be exposed, at a minimum, to some level of contagion. Approximately one-third of Oncor's revenues are associated with its affiliate, TXU Energy, and Oncor reports roughly $159 million of receivables from TCEH. In addition, as an 80% owned subsidiary, Oncor remains exposed to various consolidated corporate services, such as EFH's tax systems. That said, Moody's notes that EFH's recent decision to terminate its non-union pension fund serves to incrementally insulate Oncor from that specific contagion risk. The second issue is EFH's indirect leveraging of Oncor's implied equity value, which will approximate $5.8 billion with the recent issuance of new EFIH securities (see below). Despite the ring fence provisions, EFH has utilized its equity in Oncor as a primary source of liquidity over the past few years. Moody's notes that this financing structure does not benefit Oncor, but rather benefits EFH and TCEH as it transfers debt originally raised at the EFH and TCEH levels and refinances it at the parent level of Oncor. As the pledged equity in Oncor approaches the high end of Moody's estimated valuation range, Moody's sees EFIH's intermediate parent holding company debt as a source of permanent leverage for Oncor, since Oncor is the only cash flow generating subsidiary of EFIH. Over the next few years, Moody's calculates annual cash flow of roughly $1.5 billion for Oncor. This results in a ratio of cash flow to debt approaching the 10% threshold, by including the debt of EFIH and EFH in the denominator, which is more indicative of a Baa2 senior secured rating, after taking into account the lower business risk profile associated with being a transmission and distribution (T&D) utility in a supportive regulatory environment. Absent the contagion risk exposure and indirect leveraging of its equity, Oncor is viewed as a fundamentally strong T&D utility, with good growth prospects and a supportive regulatory environment. On a stand-alone basis, Oncor would likely be rated at least A3 senior secured, similar to CenterPoint Energy Houston Electric (A3 senior secured), its most comparable peer. Oncor's negative rating outlook reflects the contagion risks associated with the rising probability that its parent will need to restructure. As EFH's most valuable asset, Oncor will attract a significant amount of attention from various creditor classes. For now, Moody's continues to incorporate a view that Oncor will remain insulated from its parent's financial distress, thanks to its ring fence type provisions and regulatory oversight. Moody's incorporates a view that EFH, Oncor and the PUCT are most interested in avoiding any testing by a bankruptcy court as to the strength of the ring fence's provisions. Oncor's negative rating outlook will remain in place until EFH's restructuring program is completed and more clarity is available with regards to what that potential restructuring might entail. On Aug. 9, Moody's thinks it would be unlikely that Oncor's senior secured rating would fall below the investment grade category. EFIH's SENIOR SECURED NOTES DUE 2017 AND SENIOR SECURED SECOND LIEN NOTES DUE 2022 EFIH's senior secured notes due 2017 and senior secured second lien notes due 2022 are assigned a Caa3 (LGD4, 58%) rating. These ratings are primarily derived from EFH's Caa3 CFR and Moody's LGD methodology, but Moody's notes that any recovery value, in the event of a default, would ultimately be derived from the value of Oncor although Oncor remains outside of Moody's EFH CFR because of its ring fence type provisions. Depending on how EFH might approach any potential restructuring activity, a new CFR could be assigned which excludes TCEH. Under this hypothetical scenario, EFIH's ratings would likely be upgraded by several notches. EFIH currently owns approximately $4.5 billion of EFH and TCEH debt securities, comprising roughly one-third of its balance sheet. The other two-thirds of EFIH's balance sheet is comprised of EFIH's ownership interests in Oncor Electric Holdings Company LLC (Oncor Holdings), which owns roughly 80% of Oncor. EFIH's ownership interest in Oncor Holdings has been pledged as collateral for approximately $5.8 billion (principal amount) in debt securities, which includes the issuance. Of this total amount, approximately $3.7 billion is secured on a first lien basis, with another approximately $2.1 billion secured on a second lien basis. On Aug. 9, Moody's estimates the value of Oncor Holdings at approximately $5.5 - $6.0 billion, which implies a total equity value of Oncor, including its 20% minority owners, of approximately $7 - $7.5 billion. In Moody's opinion, this valuation incorporates premium multiples of book value, net income and EBITDA. If, in a restructuring, the EFIH lenders foreclosed on the collateral, Moody's sees reasonably good recovery for both of EFIH's first lien and second lien securities, but Moody's also notes that any change of control at Oncor would require the approval of the PUCT. Since the PUCT's approval would undoubtedly consider the public interest, the timing associated with achieving such an approval is uncertain, notwithstanding the PUCT's established guidelines on regulatory decisions. This potential regulatory uncertainty could affect the timing of recovery. LIQUIDITY EFH's Speculative Grade Liquidity rating is SGL-4. Moody's expects the company to continue to produce negative free cash flow over the next few years, due to a sustained period of low natural gas and power prices and higher capital expenditures as TCEH brings its coal-fired generation fleet into compliance with new, more stringent environmental regulations. Liquidity is primarily supported by EFH's cash, which Moody's estimates is approximately $1.1 billion as of June 30, 2012. Liquidity is also supported by TCEH, which has a $2.1 billion revolver ($0.645 billion of which expires in October 2013 and $1.4 billion of which expires in October 2016); a $1.06 billion special LC facility ($1.02 billion of which expires in October 2017) and an unlimited commodity collateral posting facility (expiring in December 2012). All of these liquidity facilities are senior secured and backed by the same collateral package associated with the approximately $20 billion secured first lien term loan facilities. The revolving credit facilities have roughly $1.9 billion available, which combined with the $1.1 billion in cash equates to $3.0 billion in available liquidity. For the twelve months ended June 2012, cash flow from operations has fallen to roughly $710 million while capital expenditures, which includes nuclear fuel, was $797 million, leaving EFH with negative free cash flow of $87 million. While Moody's sees only modest scheduled debt maturities over the next twelve months of roughly $100 million, Moody's does see some liquidity risks with the approximately $1 billion of margin deposits received from counterparties that are included in EFH's cash balance. With respect to over-the-counter transactions, counterparties generally have the right to substitute letters of credit for such cash collateral. In such event, the cash collateral previously posted would be returned to such counterparties thereby reducing liquidity. Additionally, in the event of a reversal of mark to market gains, which would be triggered by an increase in gas prices, these margin deposits would also be returned to counterparties. Despite these risks, collateral deposits are being used for working capital and other corporate purposes including reducing short-term borrowings under credit facilities. EFH has effectively monetized and utilized for liquidity purposes $1 billion of its unrealized commodity gains so EFH's liquidity runway might be shorter than it first appears. The TCEH revolving credit facility includes a maintenance covenant, secured debt to adjusted EBITDA of 8.0x, which was reset as part of the April 2011 amend and extend transaction. But based on its projections, Moody's sees a rising risk of a covenant breach in the first 6 months of 2013, absent an improvement in market conditions for TCEH. This would represent a material credit negative for EFH because maintaining liquidity is critical for the company's business plan. In addition, the adverse market conditions, sizeable maturity profile beginning in 2014 and the potential for a covenant breach raises questions as to whether EFH will attain a going concern opinion from the auditors in early 2013. With a going concern opinion, EFH would lose access to TCEH's revolving credit facility. The ratings for EFH, TCEH and EFIH's individual securities were determined using Moody's Loss Given Default (LGD) methodology. Based on EFH's Caa3 CFR and Caa3 PDR, and based strictly on the priority of claims within those entities, the LGD model would suggest a rating of Ca for TCEH's senior secured second lien and EFIH's senior secured and senior secured second lien debt securities. The Caa3 rating assigned to TCEH's senior secured first lien and EFIH's senior secured first and second lien debt securities reflects the fact that the holders of these securities will benefit primarily from their security interests of TCEH's assets and subsidiaries and Oncor Holdings equity in Oncor, respectively. The methodologies used in this rating were Unregulated Utilities and Power Companies published in August 2009 and Regulated Electric and Gas Utilities published in August 2009. Ratings affirmed: EFH's Caa3 Probability of Default Rating EFH's SGL-4 Speculative Grade Liquidity Rating Ratings assigned: EFIH's Caa3 (LGD4 58%) $250 million senior secured notes due 2017 EFIH's Caa3 (LGD4 58%) $500 million senior secured second lien notes due 2022 Ratings downgraded: Issuer: Energy Future Holdings Corp Corporate Family Rating: Caa3 from Caa2 Senior secured notes: Caa3 (LGD4 58%) from Caa3 (LGD4 62%) Senior unsecured guaranteed notes: Ca (LGD6 92%) from Ca, (LGD5, 81%) Senior unsecured legacy notes: Ca (LGD6 96%) from Ca (LGD5, 85%) Issuer: Energy Future Intermediate Holding Company LLC Senior secured notes: Caa3 (LGD4, 58%), from Caa3 (LGD4, 62%) Senior secured second lien notes: Caa3 (LGD4, 58%), from Caa3 (LGD4, 62%) Issuer: Texas Competitive Electric Holdings Senior secured first lien: Caa1 (LGD2, 26%), from B2 (LGD2, 15%) Senior secured second lien: Caa3 (LGD4, 58%), from Caa3 (LGD3, 44%) Senior unsecured guaranteed notes: Ca (LGD5, 82%), from Caa3 (LGD4, 62%) Senior unsecured pollution control legacy notes: Ca (LGD6, 94%), from Ca (LGD4, 62%) Issuer: Oncor Electric Delivery Company Senior secured: Baa2, from Baa1 EPICEPT CORP: Reports $2.9 Million Net Income in 2nd Quarter ------------------------------------------------------------ EpiCept Corporation reported net income of $2.95 million on $6.60 million of total net revenues for the three months ended June 30, 2012, compared with a net loss of $4.34 million on $224,000 of total net revenues for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss of $569,000 on $6.84 million of total net revenues, compared to a net loss of $6.80 million on $462,000 of total net revenues for the same period a year ago. EpiCept had $4.8 million in cash and cash equivalents as of June 30, 2012. "EpiCept achieved an important strategic goal during the second quarter of 2012 by completing the sale of our rights to Ceplene for Europe and several Asia Pacific countries to Meda," remarked Jack Talley, president and chief executive officer. "We pursued this course of action after concluding that for at least the next several years Ceplene is unlikely to generate sufficient revenue for us to fund the ongoing post-approval trial and the requirements for product manufacturing. By completing the transaction with Meda we not only received cash to help fund our ongoing operations, but we also freed ourselves of millions of dollars of future Ceplene obligations that we would have had to fund via additional debt or equity financing. Additionally we have implemented several initiatives in terms of reduced head count and other operating activities to reduce our cash burn as evidenced in the year to year comparisons." A copy of the press release is available for free at: http://is.gd/8RbO4Z About EpiCept Corporation Tarrytown, N.Y.-based EpiCept Corporation (Nasdaq and Nasdaq OMX Stockholm Exchange: EPCT) -- http://www.epicept.com/-- is focused on the development and commercialization of pharmaceutical products for the treatment of cancer and pain. The Company's lead product is Ceplene(R), approved in the European Union for the remission maintenance and prevention of relapse in adult patients with Acute Myeloid Leukemia (AML) in first remission. In the United States, a pivotal trial is scheduled to commence in 2011. The Company has two other oncology drug candidates currently in clinical development that were discovered using in-house technology and have been shown to act as vascular disruption agents in a variety of solid tumors. The Company's pain portfolio includes EpiCept(TM) NP-1, a prescription topical analgesic cream in late-stage clinical development designed to provide effective long-term relief of pain associated with peripheral neuropathies. Epicept reported a net loss of $15.65 million in 2011, a net loss of $15.53 million in 2010, and a net loss of $38.81 million in 2009. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Deloitte & Touche LLP, in Parsippany, New Jersey, noted that the Company's recurring losses from operations and stockholders' deficit raise substantial doubt about its ability to continue as a going concern. The Company's balance sheet at March 31, 2012, showed $6.16 million in total assets, $23.30 million in total liabilities and a $17.14 million total stockholders' deficit. ESSENTIAL POWER: Moody's Maintains 'B2' Rating on $565MM Notes -------------------------------------------------------------- Moody's Investors Service maintains the Ba2 rating on Essential Power, LLC's issuance of a new $565 million first lien senior secured term loan due 2019 and a new $100 million revolving credit facility due 2017. At the same time, Moody's maintains the existing Ba3 rating on the second lien notes. The outlook is stable. Rating Rationale This transaction represents a refinancing of the existing 1st and 2nd line debt into a new 1st lien senior secured facility. Moody's had announced in its press release dated July 18, 2012, that at the closing of the new 1st lien senior secured term financing, Moody's expected to withdraw the ratings on Essential Power's existing 1st and 2nd lien debt. As it happens, a small portion of the existing $205 million second lien notes will remain outstanding until they can be called, which is expected to occur in June 2013. Therefore, Moody's will continue to maintain the Ba3 rating until all the notes have been redeemed, and the rating can be withdrawn. The principal methodology used in this rating was Power Generation Projects published in December 2008. Essential Power, LLC (Essential Power; formerly North American Energy Alliance, LLC) is a wholesale power generation and marketing company. It is a special purpose entity formed by Industry Funds Management Pty Ltd. (IFM or Sponsor) to acquire and hold a portfolio of five power generation assets totaling 1,721 MW located in the ISO-New England and PJM power markets. The portfolio was acquired from Consolidated Edison Development, Inc in 2008. FANNIE MAE: Reports $2.2 Billion Net Income in Second Quarter ------------------------------------------------------------- Federal National Mortgage Association filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income attributable to common stockholders of $2.18 billion on $33.17 billion of total interest income for the three months ended June 30, 2012, compared with a net loss attributable to common stockholders of $5.17 billion on $36.77 billion of total interest income for the same period a year ago. The Company reported net income attributable to common stockholders of $2.08 billion on $66.95 billion of total interest income for the six months ended June 30, 2012, compared with a net loss attributable to common stockholders of $13.86 billion on $73.88 billion of total interest income for the same period during the prior year. The Company's balance sheet at June 30, 2012, showed $3.19 trillion in total assets, $3.19 trillion in total liabilities, and $2.77 billion in total equity. "Better market conditions and our actions to strengthen Fannie Mae's new business and limit losses from the company's legacy business contributed to positive second-quarter results," said Timothy J. Mayopoulos, president and chief executive officer. "While it is too early to declare a national housing recovery, and our results for the second half of 2012 may not be as strong as the first half, we expect our financial results in 2012 to be substantially better than the past few years. With our high- quality new book of business and diminishing legacy expenses, Fannie Mae has strong potential earnings power that can deliver considerable value to taxpayers over the long term." A copy of the Form 10-Q is available for free at: http://is.gd/kA3G23 About Fannie Mae Federal National Mortgage Association, aka Fannie Mae, is a government-sponsored enterprise that was chartered by U.S. Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae has been under conservatorship, with the Federal Housing Finance Agency acting as conservator, since September 6, 2008. As conservator, FHFA succeeded to all rights, titles, powers and privileges of the company, and of any shareholder, officer or director of the company with respect to the company and its assets. The conservator has since delegated specified authorities to Fannie Mae's Board of Directors and has delegated to management the authority to conduct day-to-day operations. The U.S. Department of the Treasury owns Fannie Mae's senior preferred stock and a warrant to purchase 79.9% of its common stock, and Treasury has made a commitment under a senior preferred stock purchase agreement to provide Fannie with funds under specified conditions to maintain a positive net worth. Fannie Mae reporte a net loss of $16.85 billion in 2011, a net loss of $14.01 billion in 2010, and a net loss of $72.02 billion in 2009. FERGUSON FIBERS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Ferguson Fibers, Inc. P.O. Box 116 Linwood, NC 27299 Bankruptcy Case No.: 12-51129 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court Middle District of North Carolina (Winston-Salem) Judge: Thomas W. Waldrep, Jr. Debtor's Counsel: William Pete Ray Bradley, Esq. 1422 S. Main Street P.O. Box 1527 High Point, NC 27261 Tel: (336) 885-2615 E-mail: pbradley@triadbiz.rr.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/ncmb12-51129.pdf The petition was signed by John Ferguson, Jr., president. FIRST PROPERTIES: Case Summary & 6 Unsecured Creditors ------------------------------------------------------ Debtor: First Properties, Inc. P.O. Box 429 Bethlehem, GA 30620 Bankruptcy Case No.: 12-69877 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsel: Cameron M. McCord, Esq. JONES & WALDEN, LLC 21 Eighth Street, NE Atlanta, GA 30309 Tel: (404) 564-9300 Fax: (404) 564-9301 E-mail: cmccord@joneswalden.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 six unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/ganb12-69877.pdf The petition was signed by Glenn D. Chatham, president. FTMI REAL ESTATE: Lenox on The Lake in Chapter 11 ------------------------------------------------- FTMI Real Estate, LLC and FTMI Operator, LLC sought Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 12-29214) in Fort Lauderdale on Aug. 10, 2012. FTMI Operator, which operates a health care business The Lenox on The Lake, disclosed just $112,000 in assets and $31.98 million in liabilities. The LENOX -- http://www.thelenox.com-- is South Florida's, newest state-of-the-art Assisted Living and Memory Care community, which has a serene lakeside setting and wonderful waterfront vistas. FTMI Real Estate, a single asset real estate under 11 U.S.C. Sec. 101(51B), scheduled $19.64 million in assets and $28.93 million in liabilities. The Debtor owns The Lenox on The Lake facilities at 6700 Commercial Boulevard, in Lauderhill, Florida valued at $13 million. Secretary of Housing Urban Development has a $25.87 million claim secured by the property. FTMI REAL ESTATE: Case Summary & 6 Unsecured Creditors ------------------------------------------------------ Debtor: FTMI Real Estate, LLC 6700 W. Commercial Boulevard Lauderhill, FL 33319 Bankruptcy Case No.: 12-29214 Affiliate that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- FTMI Operator LLC 12-29215 Chapter 11 Petition Date: August 10, 2012 Court: U.S. Bankruptcy Court Southern District of Florida (Fort Lauderdale) Judge: Raymond B. Ray About the Debtors: FTMI Operator operates a health care business The Lenox on The Lake. The LENOX -- http://www.thelenox.com-- is South Florida's, newest state-of-the-art Assisted Living and Memory Care community, which has a serene lakeside setting and wonderful waterfront vistas. FTMI Real Estate, a single asset real estate under 11 U.S.C. Sec. 101(51B), owns The Lenox on The Lake facilities at 6700 Commercial Boulevard, in Lauderhill, Florida valued at $13 million. Secretary of Housing Urban Development has a $25.87 million claim secured by the property. Debtors' Counsel: Thomas L. Abrams, Esq. GAMBERG & ABRAMS 1776 N. Pine Island Road, #309 Plantation, FL 33322 Tel: (954) 523-0900 E-mail: tabrams@tabramslaw.com FTMI Real Estate's Scheduled Assets: $19,637,696 FTMI Real Estate's Scheduled Liabilities: $112,000 FTMI Operator's Scheduled Assets: $19,637,696 FTMI Operator's Scheduled Liabilities: $31,980,000 The petitions were signed by Jamie Harris, vice president. FTMI Real Estate's List of Its Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Secretary of Housing Urban Real Estate $25,868,002 Development of Washington DC 451 Seventh Street SW Washington, DC 20410 Lazer Aptheker Rosella Yedid PC FTMI Holdings - $76,652 225 Old County Rd Legal Services Melville, NY 11747 2006 Holland & Knight LLP Promissory Note $20,239 11050 Lake Underhill Road, Suite 864084 Orlando, FL 32825-5016 Pistorino & Alam Consulting Complaint Pending $15,285 Pistorino & Alam Consulting Claim for Services $15,249 Roger Towers PA Legal Services 2006 $15,000 GB ENTERPRISES: Owners' Interest Transferred to Receiver -------------------------------------------------------- AllAccess News reports that Martin Santos' 100% interest in GB Enterprises Communications Corp., licensee of Regional Mexican WHNR-A/CYPRESS GARDENS, FL, is being involuntarily transferred to receiver George R. Reed. Mr. Reed was appointed by FLORIDA's 10th District Circuit Court, according to AllAccess News. GENE CHARLES: Trust Files for Ch. 11 in West Virginia ----------------------------------------------------- A business trust created by investment advisor and broker-dealer agent Gene Charles Valentine has sought Chapter 11 bankruptcy protection (Bankr. N.D. W.Va. Case No. 12-01078) in Wheeling, West Virginia on Aug. 9, 2012. Gene Charles Valentine Trust said in court filings that it owns commercial and real estate properties in West Virginia, the Financial West Group, the Peace Point Equestrian Center and the Aspen Manor. It estimated $10 million to $50 million in assets and up to $10 million in liabilities. On the Petition Date, the Debtor filed motions to (i) extend the deadline to file schedules of assets and liabilities and statement of financial affairs until Sept. 10, and (ii) employ Mazur Kraemer Law Inc., in Weirton, as bankruptcy counsel. Financial West Investment Group, Inc., doing business as Financial West Group -- http://www.fwg.com/-- is a firm with over 340 registered representatives supervised by 44 Offices of Supervisory Jurisdiction throughout the United States. Financial West Group is a FINRA, and SIPC member and SEC Registered Investment Advisor (over $1 billion under control) that offers a full range of financial products and services. Its corporate office 32 member staff is dedicated to providing registered representatives quality service and technology to allow them to focus on best servicing their investors needs. Aspen Manor -- http://www.aspenmanorresort-- is a resort that claims to be the "The Jewel of the Ohio Valley." Along with its architectural artistry, including hand-carved ceilings, the Manor is filled will original art, statues, historic furniture and artifacts. GENE CHARLES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Gene Charles Valentine Trust dba Gene Charles Valentine Living Trust P.O. Box 31 Wellsburg, WV 26070 Bankruptcy Case No.: 12-01078 Chapter 11 Petition Date: August 9, 2012 Court: U.S. Bankruptcy Court Northern District of West Virginia (Wheeling) Judge: Patrick M. Flatley About the Debtor: Gene Charles Valentine Trust said in court filings that it owns commercial and real estate properties in West Virginia, as well as the Financial West Group, the Peace Point Equestrian Center and the Aspen Manor. Debtor's Counsel: Salene Rae Mazur Kraemer, Esq. MAZUR KRAEMER LAW INC. 3205 Pennsylvania Avenue, Suite B Weirton, WV 26062 Tel: (304) 300-0593 Fax: (888) 718-6752 E-mail: salene@mazurkraemer.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Gene Charles Valentine, trustee. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Gulf Coast Bank and Trust Company Lots $4,800,000 200 St. Charles Avenue New Orleans, LA 70130-2997 Catholic Financial Life Aspen Manor $1,532,925 P.O. Box 349 Faciity Milwaukee, WI 53201-0349 Main Street Bank Bar IAGO $526,351 2001 Main Street Wheeling, WV 26003 Gulf Coast Bank and Trust Company Lots $500,000 200 St. Charles Avenue New Orleans, LA 70130-2997 United States Treasury Federal Income $310,000 P.O. Box 970011 Taxes Saint Louis, MO 63197-0011 First National Bank Loan $134,260 Cassidy, Meyers, Cogan & Voegelin Legal Services $62,175 Richard McCreary Lots $59,002 First National Bank Loan $44,738 Jim Davis & Shirley Oakes Loan $35,289 Mark Bergeron Parcel B43 0051 $26,958 WV State Tax Department 2011 Est. State $1,000 Income Tax Owing Bethany College Loan Unknown Bowman Trust Litigation Unknown Claimant Maroko Litigation Unknown Joseph Tobias Litigation Unknown Marietta Bowman Litigation Unknown Marion Dance Litigation Unknown Morris Massry Litigation Unknown Ronald Sharpe Litigation Unknown GLOBAL AVIATION: Court Approves Key Employee Retention Plan ----------------------------------------------------------- The Hon. Carla E. Craig of the U.S. Bankruptcy Court Eastern District of New York, according to a Court decision, approved Global Aviation Holdings Inc., et al.'s key employee retention plan. Judge Craig stated that the KERP employees are not insiders of the Debtors, and the proposed bonuses to the KERP Employees are justified by the facts and circumstances of the case. As reported in the Troubled Company Reporter on June 19, 2012, the Debtor filed a motion for approval to implement a non-insider key employee retention plan for five Section 119 employees. According to the motion, the participants play a critical role in complying with the safety, mechanical and operational standards necessary to run the day-to-day approved systems and programs supporting the operations of North American Airlines. The payments will be structured as a percentage, ranging from 15% to 30%, of the KERP participant's base salary and will be earned and payable upon relocating operational control of North American. If the Debtors successfully relocate North American Airlines' operations, the maximum aggregate amount payable under the KERP will be $137,031. The Debtors sought Court approval of the KERP under which the Debtors would pay bonuses to five employees of North American: 1) the director of safety; 2) the vice president of operations; 3) the chief pilot; 4) the senior director of maintenance; and 5) the chief inspector. The proposed bonus payments under the KERP are structured as a percentage of each KERP Employee's base salary and in accordance with the Debtors' prepetition annual bonus plan. The proposed payouts are intended to ensure that each of the KERP employees remains with the Debtors through the relocation of North American's operations to Peachtree City. The amount of the bonus that each KERP employee will receive upon the approval by the Federal Aviation Administration of the transfer of North American's operations to Georgia: 1. director of safety: $18,050 2. vice president, flight operations: $50,696 3. chief pilot: $29,355 4. senior director of maintenance: $15,750 5. director, quality assurance and projects: $23,180 In the aggregate, the Debtors will pay the KERP Employees bonuses totaling $137,031. Previously, the U.S. Trustee and the Official Committee of Unsecured Creditors filed objections to the motion, arguing that the Debtors are improperly seeking to pay bonuses (i) to insiders without satisfying the requirements set forth in Section 503(c)(1) or (ii) to the extent the KERP recipients are non-insiders, without establishing that the proposed bonus payments are "justified by the facts and circumstances of the case" as required by Section 503(c)(3). About Global Aviation Holdings Global Aviation Holdings Inc., based in Peachtree City, Ga., is the parent company of North American Airlines and World Airways. Global is the largest commercial provider of charter air transportation for the U.S. military, and a major provider of worldwide commercial global passenger and cargo air transportation services. North American Airlines, founded in 1989 and based in Jamaica, N.Y., operates passenger charter flights using B757-200ER and B767-300ER aircraft. World Airways, founded in 1948 and based in Peachtree City, Ga., operates cargo and passenger charter flights using B747-400 and MD-11 aircraft. Global Aviation, along with affiliates, filed Chapter 11 petitions (Bankr. E.D.N.Y. Case No. 12-40783) on Feb. 5, 2012. Global's lead counsel in connection with the restructuring is Kirkland & Ellis LLP and its financial advisor is Rothschild. Kurtzman Carson Consultants LLC is the claims agent. The Debtors disclosed $589.8 million in assets and $493.2 million in liabilities as of Dec. 31, 2011. Liabilities include $146.5 million on 14% first-lien secured notes and $98.1 million on a second-lien term loan. Wells Fargo Bank NA is agent for both. Global said it will use Chapter 11 to shed 16 of 30 aircraft. In addition, Global said it will use Chapter 11 to negotiate new collective bargaining agreements with its unions and deal with liabilities on multi-employer pension plans. On Feb. 13, 2012, the U.S. Trustee for Region 2 appointed a seven member official committee of unsecured creditors in the case. The Committee tapped Lowenstein Sandler PC as its counsel, and Imperial Capital, LLC as its financial advisor. The Hon. Carla E. Craig has extended the Debtors' exclusive period to file a Chapter 11 plan for each Debtor until Oct. 2, 2012, and the exclusive period to solicit acceptances of a Chapter 11 plan of each Debtor until Dec. 3, 2012. GLOBAL INVESTMENT HOUSE: Kuwaiti Firm Unveils Debt-for-Equity Swap ------------------------------------------------------------------ Reuters reports that Kuwaiti investment firm Global Investment House is undergoing its second debt restructuring in three years and is seeking shareholders approval for a debt-for-equity swap which if approved will see creditors own 70% of the company. According to Reuters, under the proposal, to be put to shareholders at a September 2 meeting, Global will offer 122.2 million dinars ($432.9 million) of new shares to creditors, it said in a statement posted on the Dubai stock exchange. The outstanding debt amount not met by the swap will be covered by the transfer of assets from Global to a special purpose vehicle which will be controlled by creditors. Reuters notes that while debt-for-equity is a common tool in the West, it has not found favor in the Middle East as both local and international banks have been reluctant to take stakes in local companies; instead, most deals have involved extending the maturity of debt to allow for companies to sell assets once values have recovered. According to the report Global, which counts the governments of Kuwait and Dubai as major shareholders, asked bank creditors in September to suspend payments on a $1.7 billion plan agreed in 2009. In June, bank creditors approved a further repayment delay of principal and interest to November from June, with a one-month extension also available at the discretion of lenders, to allow for a debt deal to be agreed upon. Reuters says the announcement came days after holders of Global bonds worth 95 million dinars assented to a delay in repayment to December from June. According to the report, the meeting will also seek the nod to write off accumulated losses worth 31.1 million dinars against its current share premium and a further 77.1 million dinars against its existing paid-up capital, Global said. GOSHEN GLOBAL: Case Summary & 4 Unsecured Creditors --------------------------------------------------- Debtor: Goshen Global Group, LLC 1920 Enchanted Way Grapevine, TX 76051 Bankruptcy Case No.: 12-44516 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Warren V. Norred, Esq. LAW OFFICE OF WARREN NORRED 200 E. Abram, Suite 300 Arlington, TX 76010 Tel: (817) 704-3984 Fax: (817) 549-0161 E-mail: wnorred@norredlaw.com Scheduled Assets: $1,300,000 Scheduled Liabilities: $1,877,517 A copy of the Company's list of its four largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/txnb12-44516.pdf The petition was signed by Olusola Osundeko, manager. GRATON ECONOMIC: Moody's Assigns 'B3' CFR/PDR; Outlook Stable ------------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Graton Economic Development Authority. Moody's also assigned a B3 rating to the Authority's proposed $375 million senior secured credit facilities and $450 million senior secured notes. The rating outlook is stable. The ratings and outlook were assigned subject to Moody's review of final terms and conditions. The proceeds from the senior secured credit facilities and senior secured notes will be used to fund the design, development and construction of a full scale casino development project located in Rohnert Park, CA. The Authority has entered into a development and management agreement with Station Casinos LLC (B3, stable), an independent casino development and management company that will be responsible for the development, opening, and ongoing operation of Graton's casino, which is scheduled to open in the fourth quarter of 2013. A portion of the proceeds from the financing will be used to repay approximately $175 million of $248 million Station's management loan of for accrued pre-development costs related to the Graton's project. Ratings assigned: Corporate Family Rating at B3 Probability of Default Rating at B3 $25 million senior secured revolving credit facility due 2017 at B3 (LGD3, 43%) $350 million senior secured term loan due 2018 at B3 (LGD3,45%) $450 million senior secured notes due 2019 at B3 (LGD3,45%) RATINGS RATIONALE The B3 corporate family rating reflects the construction and ramp up risks related to the Authority's 100% debt financed ground-up development plan, as well as the small size and single asset profile of the casino project once it becomes operational. The rating also takes into account competition from several large casinos already operating in Graton's primary market area, although the project's advantageous location helps partially mitigate this risk. Other rating constraints include the project's exposure to on-going litigation regarding the compact and land- into-trust status, as well all other credit risks that are common to Native American gaming issuers, including uncertainty as to enforceability of lender's claims in bankruptcy or liquidation. Positive ratings consideration is given to the proposed casino's strategic location -- once completed, the project will be the closest Class III gaming facility to the San Francisco Bay area. Favorable market demographics will also likely support the ramp up of the casino, and the project has adequate liquidity to support completion and ramp-up costs. Moody's expects debt/(EBITDA-tribal distribution) by year end 2014 to be approximately 4.0x and EBIT/Interest to be 1.8x. Graton faces risks associated with cost-over runs and timely completion, particularly in light of the rainy season in the area typically between October and April that could delay or slow construction progress. However, the Authority's adequate liquidity will mitigate some of these risks. For example, the construction budget contains a 20 month interest reserve versus a 15 months expected construction period, as well as a $45 million contingency. In addition, approximately 80% of hard costs are subject to a guaranteed maximum price under the construction contract with the general contractor, and all hard cost underthe general contract will be covered by a Subguard insurance policy. The stable outlook is based on Moody's expectation that Graton will have sufficient funds to complete construction, including an additional reserve to cover five months of interest and a contingency reserve for approximately 19% of construction hard costs. The outlook also anticipates that Graton's attractive location and market characteristics will likely provide enough customer traffic and demand for the project to generate positive free cash flow and maintain debt/EBITDA at or below 4.0x post completion. Additionally, while recognizing the on-going litigation risk, the stable outlook does not anticipate material adverse impact from the litigation in the near term that could derail the casino project. Ratings could be lowered if the project experiences significant cost over-runs or construction delays. Beyond the construction period, ratings could be downgraded if the ramp-up performance of Graton's casino is well below Moody's expectations. In addition, the ratings could be pressured if the validity of the compact or land-in-trust status is called into question, resulting in potential disruption to or the cessation of the casino's development or operations. Ratings improvement is limited at this time given the need to complete the construction and ramp-up of a full scale casino. However, Graton's ratings can improve over time if it appears that the new casino can generate and sustain EBITDA above $225 million after its first year of full operation and if there is a high likelihood that debt/(EBITDA-tribal distribution) will fall well below 4.0x. The principal methodology used in rating Graton Economic Development Authority was the Global Gaming 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. The Graton Economic Development Authority (the ''Authority'') is a wholly owned, unincorporated governmental instrumentality of the Federated Indians of Graton Rancheria (the ''Tribe''), a federally recognized Indian tribe. The Authority was formed in July 2012 to develop and operate a casino and entertainment facility located in Sonoma County, approximately 43 miles north of San Francisco, California, to be known as the Graton Resort & Casino. GULFCOAST IRREVOCABLE: Files for Ch. 11 in Puerto Rico ------------------------------------------------------ Three business trusts owned by Michael J. Scarfia filed for Chapter 11 protection in Old San Juan, Puerto, Rico on Aug. 10, 2012. One of the filers, Gulfcoast Irrevocable Trust, estimated under $10 million in assets but more than $100 million in debts in its bare-bones Chapter 11 petition (Bankr. D.P.R. Case No. 12-06338). An affiliate, Sabana Del Palmar, Inc., which owns Mirabella Village & Club, filed a Chapter 11 petition (Bankr. D.P.R. Case No. 12-06177) on Aug. 5, 2012. GULFCOAST IRREVOCABLE: Case Summary & 9 Largest Unsec Creditors --------------------------------------------------------------- Debtor: Gulfcoast Irrevocable Trust 1079 Cephas Drive Clearwater, FL 33765 Bankruptcy Case No.: 12-06338 Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- Gulfcoast Irrevocable Trust XIV 12-06339 Gulfcoast Irrevocable Trust XIX 12-06340 Chapter 11 Petition Date: August 10, 2012 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtors' Counsel: Alexis Fuentes Hernandez, Esq. FUENTES LAW OFFICES P.O. Box 9022726 San Juan, PR 00902-2726 Tel: (787) 722-5216 Fax: (787) 722-5206 E-mail: alex@fuentes-law.com Scheduled Assets Scheduled Liabilities ---------------- --------------------- Gulfcoast Trust $5,481,481 $104,488,378 Gulfcoast Trust XIV $0 $51,744,301 The petitions were signed by Michael J. Scarfia, trustee. Affiliates that previously sought Chapter 11 protection: Petition Debtor Case No. Date ------ -------- ---- MJS Las Croabas Properties, Inc. 12-05710 07/19/12 Sabana del Palmar, Inc. 12-06177 08/05/12 A. Gulfcoast Irrevocable's List of Its Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ FDIC/Real Estate Capital Guarantor $32,002,112 Key Bank 11501 Outlook St., Suite Overlands, KS 66211 FDIC/Real Estate Capital Guarantor $20,452,186 Key Bank 11501 Outlook St., Suite Overland, KS 66211 FDIC/Real Estate Capital Guarantor $16,887,089 Key Bank 11501 Outlook St., Suite Overland, KS 66211 FDIC/Real Estate Capital Guarantor $14,653,274 Key Bank 11501 Outlook St., Suite Overland, KS 66211 Banco Popular De PR Guarantor $11,490,783 P.O. Box 362708 San Juan, PR 00936-2708 FDIC/Real Estate Capital Guarantor $9,002,934 Key Bank 11501 Outlook St., Suite Overland, KS 66211 Internal Revenue Service Taxes, Interest $0 & Penalties Department of Treasury of PR Taxes, Interest $0 & Penalties CRIM Taxes, Interest $0 & Penalties B. Gulfcoast Irrevocable Trust XIV's List of Its Six Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ FDIC/Real Estate Capital Guarantor $20,203,938 Key Bank 11501 Outlook St., Suite Overland, KS 66211 FDIC/Real Estate Capital Guarantor $16,887,089 Key Bank 11501 Outlook St., Suite Overland, KS 66211 FDIC/Real Estate Capital Guarantor $14,653,274 Key Bank 11501 Outlook St., Suite Overland, KS 66211 Internal Revenue Service Taxes, Interest $0 & Penalties Department of Treasury of PR Taxes, Interest $0 & Penalties CRIM Taxes, Interest $0 & Penalties HARPER BRUSH: Wants to Incur $1.2MM to Purchase Raw Materials ------------------------------------------------------------- Harper Brush Works, Inc. in an amended motion asks the U.S. Bankruptcy Court for the Southern District of Iowa for authorization to enter into a financing facility for an aggregate principal amount not to exceed $1,200,000 pursuant to the terms and conditions of a Debtor-in-Possession Credit Agreement, dated as of July 13, 2012. UMB Bank, N.A., has only agreed to allow the Debtor to use cash collateral on very restrictive terms, barely enough to purchase materials in sufficient quantities to meet customer demand. The pool of existing cash collateral dollars is not large enough to continue operating as a going manufacturing concern. The Debtor needs more funds to purchase raw materials in sufficient amounts to produce additional inventory for sale so it can generate a profit. As of the Petition Date, UMB's claims against the Debtor, exclusive of attorney's fees and costs, was $5,089,448. In addition, the Iowa Economic Development Authority's claims against the Debtor, exclusive of attorney's fees and costs, was $180,000. Together, the claims of both prepetition secured lenders with interests in cash collateral total $5,269,445. As adequate protection from any diminution in value of the lenders' collateral, the Debtor will grant the lenders -- and -- a superpriority administrative expense claim; -- a first priority lien on all unencumbered assets of the Debtor; -- a junior lien on all encumbered assets of the Debtor; and -- a first priority priming lien on all assets of the Debtor, subject to certain carve out expenses. The U.S. Trustee for Region 12 objected to the original motion, which sought to enter into a financing facility for an amount not to exceed $2,500,000. The U.S. Trustee related that despite a priority first position with an alleged 60% equity cushion for a loan of only 150 days, the terms of the loan call for an effective interest rate of 40.92%. Given the available equity and duration of the loan, the interest rate is excessive; particularly in light of the corresponding diminution in value of the assets available for the unsecured creditors. UMB Bank, in its objection to the original motion, stated that the Debtor failed to satisfy the standards for either a priming lien to obtain the DIP financing or to use cash collateral. The Official Committee of Unsecured Creditors had also filed an objection, stating that the proposed debtor-in-possession financing demands a critical and thorough evaluation. In the Committee's view, approval of the DIP facility as proposed will virtually guarantee the failure of the Debtor's restructuring efforts and will result in a fire-sale liquidation of the Debtor's assets at depressed prices. About Harper Brush Works Fairfield, Iowa-based Harper Brush Works, Inc., filed a Chapter 11 petition (Bankr. S.D. Iowa) in Des Moines on May 29, 2012. Family-owned Harper Brush -- http://www.harperbrush.com/-- provides more than 1,000 products, including pushbrooms, mops, floor squeegees, automotive brushes, dust pans, and buckets. The Company disclosed assets of $10.4 million against debt totaling $10 million, including $6 million owing to secured creditors. Judge Anita L. Shodeen presides over the case. Donald F. Neiman, Esq., and Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave, P.C., serve as bankruptcy counsel to the Debtor. Marc B. Ross serves as the Debtor's Chief Restructuring Officer. An official committee of unsecured creditors has been appointed in the case. The panel is represented by Freeborn & Peters LLP as general bankruptcy counsel. The Committee tapped Day Rettig Peiffer, P.C., as its local counsel, and MorrisAnderson as its financial advisor. HARPER BRUSH: Amends List of Largest Unsecured Creditors -------------------------------------------------------- Harper Brush Works, Inc., filed with the U.S. Bankruptcy Court for the Southern District of Iowa amended list of its largest unsecured creditors. Creditors DKM Manufacturing, Inc., Iowa Economic Development Authority, and HCM Plastics, Inc., which appeared in the original list, are no longer in the new list. The list of 20 largest unsecured creditors comprises of: Name of Creditor Nature of Claim Amount ---------------- --------------- ------ Prologis Industrial real estate lease $306,780 17284 W. Commerce Way buyout and clean up Tracy, CA 95377 fees Tel: (415) 394-9000 Whitley Monahan Handle Supplier Services $262,675 P.O. Box 112 3728 Whitley Rd. Midland NC 28107 Tel: (704) 888-2625 Greenwood International, Inc. Supplier Services $195,139 Brush Fibers, Inc. Supplier Services $150,447 WT Industries, Ltd. Supplier Services $126,748 FedEx Freight Freight Services $120,835 Colony Display, Inc. Supplier Services $108,427 Fairfield Economic Promissory Note $108,000 Holmes Murphy & Assoc., Inc. Insurance Services $102,290 Temp Assoc. - Burlington, Inc. Temp Agency Services $96,865 Jones Companies, Ltd. Supplier Services $95,609 QAD Inc. Computer Services $86,761 RSM McGladrey, Inc. Accounting Services $71,594 Laufer Group Int. Ltd. Freight Services $70,000 SourceCut Industries, Inc. Supplier Services $60,450 Pelray International, LLC Supplier Services $59,747 Citibest Enterprises Supplier Services $54,387 Magentrade International Ltd.* Trade Debt $52,011 Quickie* Trade Debt $51,048 Ravi Industries, Ltd.* Trade Debt $50,982 * Added to the list of unsecured creditors About Harper Brush Works Fairfield, Iowa-based Harper Brush Works, Inc., filed a Chapter 11 petition (Bankr. S.D. Iowa) in Des Moines on May 29, 2012. Family-owned Harper Brush -- http://www.harperbrush.com/-- provides more than 1,000 products, including pushbrooms, mops, floor squeegees, automotive brushes, dust pans, and buckets. The Company disclosed assets of $10.4 million against debt totaling $10 million, including $6 million owing to secured creditors. Judge Anita L. Shodeen presides over the case. Donald F. Neiman, Esq., and Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave, P.C., serve as bankruptcy counsel to the Debtor. Marc B. Ross serves as the Debtor's Chief Restructuring Officer. The U.S. for Region 12, appointed three unsecured creditors to serve on the Committee of Unsecured Creditors of Harper Brush Works, Inc. Freeborn & Peters LLP represents the Committee. HAWKER BEECHCRAFT: Bank Debt Trades at 28.97% Off ------------------------------------------------- Participations in a syndicated loan under which Hawker Beechcraft is a borrower traded in the secondary market at 71.03 cents-on- the-dollar during the week ended Friday, Aug. 10, a drop of 0.40 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank loan matures on March 26, 2014. The loan is one of the biggest gainers and losers among 168 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Hawker Beechcraft Hawker Beechcraft Acquisition Company, LLC, headquartered in Wichita, Kansas, manufactures business jets, turboprops and piston aircraft for corporations, governments and individuals worldwide. Hawker Beechcraft reported a net loss of $631.90 million on $2.43 billion of sales in 2011, compared with a net loss of $304.30 million on $2.80 billion of sales in 2010. Hawker Beechcraft Inc. and 17 affiliates filed for Chapter 11 reorganization (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. HERCULES OFFSHORE: SEC Terminates Investigation, No Action Taken ---------------------------------------------------------------- Hercules Offshore, Inc., received a letter from the Securities and Exchange Commission notifying the Company that the SEC staff has completed its investigation into the Company regarding possible violations of the Foreign Corrupt Practices Act and does not intend to pursue enforcement action against the Company. As previously disclosed, the Company was notified by the SEC and the Department of Justice in April 2011, that certain of the Company's activities were under review by the SEC and DOJ with respect to possible violations of the FCPA in certain international jurisdictions where the Company conducts operations. The Company previously disclosed that it received a letter from the DOJ on April 24, 2012, notifying the Company that the DOJ has closed its inquiry into the Company regarding possible violations of the FCPA and does not intend to pursue enforcement action against the Company. The DOJ noted that it terminated its investigation "...based on a number of factors, including, but not limited to, the thorough investigation undertaken by Hercules and the steps that Hercules has taken in the past and continues to take to enhance its compliance program, including efforts to ensure compliance with the FCPA." As a result of the termination by the SEC and the prior termination by the DOJ, there are no open FCPA investigations against the Company. About Hercules Offshore Hercules Offshore Inc. (NASDAQ: HERO) -- http://www.herculesoffshore.com/-- provides shallow-water drilling and marine services to the oil and natural gas exploration and production industry in the United States, Gulf of Mexico and internationally. The Company provides these services to integrated energy companies, independent oil and natural gas operators and national oil companies. The Company operates in six business segments: Domestic Offshore, International Offshore, Inland, Domestic Liftboats, International Liftboats and Delta Towing. The Company reported a net loss of $76.12 million in 2011, a net loss of $134.59 million in 2010, and a net loss of $91.73 million in 2009. The Company's balance sheet at June 30, 2012, showed $2.04 billion in total assets, $1.13 billion in total liabilities and $913.21 million in stockholders' equity. * * * The Troubled Company Reporter said on March 23, 2012, that Moody's Investors Service upgraded Hercules Offshore, Inc., Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to B3 from Caa1 contingent upon the completion of its recently announced recapitalization plan. Hercules' B3 CFR reflects its jackup fleet, which consists primarily of standard specification rigs with an average age of about 30 years. Its rigs are geographically concentrated in the Gulf of Mexico (GoM), a market that experienced a slow-down after the Macondo well incident. However, over the last year a pick-up in permitting and activity levels in the GoM, has led to higher dayrates. For Hercules, the improving market conditions have stabilized its cash flow from operations, which are expected continue to improve for at least the next 18 to 24 months as old contracts roll into new contracts with higher dayrates. These improving market conditions support the decision to upgrade Hercules' CFR at this time. As reported by the TCR on Jan. 23, 2012, Standard & Poor's Ratings Services revised its outlook on Houston-based Hercules Offshore Inc. to stable from negative and affirmed its 'B-' corporate credit rating on the company. "The rating on the company's senior secured credit facility remains 'B-' (the same as the corporate credit rating on the company) with a recovery rating of '3', indicating our expectation of a meaningful (50% to 70%) recovery in the event of payment default," S&P said. "Our ratings on Hercules reflect its participation in the highly volatile and competitive shallow-water drilling and marine services segments of the oil and gas industry. The ratings also incorporate our expectation that day rates and utilization for the company's jack-up rigs in the U.S. Gulf of Mexico will remain robust throughout 2012. Moreover, we expect the company's domestic offshore operations will provide the majority of EBITDA generation in 2012, since its international offshore segment will perform more weakly compared with 2011 due to lower contract renewal day rates reflecting current market conditions. The ratings also incorporate the company's geographic and product diversification (provided by the its liftboat segments) and adequate liquidity, as well as the risks associated with the Securities and Exchange Commission's investigation into possible violations of securities law, including possible violations of the Foreign Corrupt Practices Act. The company is also the subject of a review by the U.S. Department of Justice (DOJ)," S&P said. HOTEL PRINCE CHARLES: Faces Liquidation for Inability to Pay Fees ----------------------------------------------------------------- Paul Woolverton, staff writer at fayobserver.com, reports that a bankruptcy administrator has filed a motion asking a judge to have John Chen, owner of Hotel Prince Charles in Fayetteville, North Carolina, explain why the Prince Charles bankruptcy case shouldn't be dismissed or the hotel sold off. The report notes Mr. Chen has not paid the bankruptcy court a mandatory quarterly fee. According to the report, the request didn't state the amount of the quarterly fee or when it was due. A Fayetteville bankruptcy lawyer unaffiliated with the Prince Charles case said the quarterly fee could be as little as $650 and is used to help pay the expenses of running the bankruptcy court. The report relates Mr. Chen put the shuttered hotel in Chapter 11 bankruptcy on April 11 to prevent Fayetteville city officials from auctioning the property to satisfy a $72,700 fine stemming from the installation of a vinyl window in violation of the city's downtown historic district building code. The report notes, in all, the hotel has about $303,000 in unpaid taxes, telephone bills, architectural fees, an ironworks bill, and other expenses, according to court filings. Mr. Chen's bankruptcy lawyers likely will be due another $20,000. Mr. Woolverton says, because of the unpaid quarterly fee, the bankruptcy administrator is asking to terminate the bankruptcy -- which would put Mr. Chen back on the hook for the debts -- or put it into Chapter 7, allowing the property to be auctioned to pay the debts. Mr. Chen wants to cover the debt with the proceeds from a $2.4 million settlement from a lawsuit in New York, the report says, citing court documents. However, that $2.4 million settlement is tied up in another lawsuit in North Carolina. It's uncertain when or whether Mr. Chen will get that money, the report adds. The report relates Mr. Chen has also proposed tearing down the Prince Charles and selling the property to satisfy the debts. HURSTBOURNE LANDINGS: Case Summary & Unsecured Creditor ------------------------------------------------------- Debtor: Hurstbourne Landings Development Co., LLC 5804 Lisa Court #5 Louisville, KY 40291 Bankruptcy Case No.: 12-33560 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court Western District of Kentucky (Louisville) Debtor's Counsel: David W. Brangers, Esq. 436 South 7th Street Louisville, KY 40203 Tel: (502) 588-2465 Fax: (502) 585-5453 E-mail: dbrangers@lawyer.com Scheduled Assets: $3,554,039 Scheduled Liabilities: $4,803,837 The petition was signed by Darren Brangers, manager/member. The Company's list of its largest unsecured creditors filed with the petition contains only one entry: Entity Nature of Claim Claim Amount ------ --------------- ------------ Your Community Bank Property $4,803,837 101 W. Spring Street New Albany, IN 47150-0939 IMMUCOR INC: Moody's Affirms 'B2' Corp. Family Rating ----------------------------------------------------- Moody's Investors Service affirmed the ratings of Immucor, Inc. including the company's B2 Corporate Family Rating. Moody's assigned a first time Speculative Grade Liquidity rating of SGL-2, reflecting Moody's expectation for good liquidity over the next 12-18 months. The outlook for the ratings is stable. Ratings affirmed: Corporate Family Rating, B2 Probability of Default Rating, B2 $400 million Senior Unsecured Notes due 2019, (Caa1, LGD5, 84%) $600 million Term Loan B due 2018, (Ba3, LGD2, 29%) $100 million Revolver due 2016, (Ba3, LGD2, 29%) Speculative Grade Liquidity Rating of SGL-2 The rating outlook is stable. Ratings Rationale The B2 Corporate Family Rating is constrained by Immucor's small absolute size, its limited degree of business diversity, and significant financial leverage. Moody's believes near-term deleveraging will be limited due to: flat demand for blood testing products due to the soft macro-economic environment; higher expenses related to investments the company is making in R&D and sales and marketing; and the upcoming medical device tax starting in 2013. The ratings also reflect a degree of regulatory uncertainty with respect to the FDA's notice of intent to revoke ("NOIR") Immucor's biologics license. Moody's believes the likelihood of the FDA revoking Immucor's biologics license is small due to the vital nature of its products, however escalation to a consent decree could add additional costs, further pressuring EBITDA growth. The ratings are supported by the stable, recurring nature of Immucor's revenue stream as its growing installed base of closed system instruments requires the use of Immucor's reagents. The ratings are also supported by lack of customer concentration, Immucor's strong market presence in the US and the company's history of product innovation. The rating also benefits from strong EBITDA margins, and Moody's expectation for positive free cash flow in FY2013. While the in-vitro diagnostics blood typing and screening market is small, it is critical to the healthcare industry and Immucor benefits as one of the leading players within the space. Immucor is not exposed to direct government reimbursement risk. The SGL-2 rating reflects Moody's expectation for good liquidity over the next twelve months. Moody's expects the company to generate positive free cash flow in the range of $30 million over the next twelve months. The liquidity profile also benefits from availability under its $100 million revolver and Moody's expectation for good headroom under the net senior secured leverage covenant. The company is currently seeking an amendment from lenders which would reduce its overall interest costs and remove the maintenance covenant from the term loan. The covenant would only be tested when the revolver is drawn or there are letters of credit outstanding. Given Immucor's small size and very high leverage, Moody's does not foresee an upgrade in the near-term. However, if the company were to resolve its FDA uncertainty, sustain debt/EBITDA below 5.0 times and maintain free cash flow to debt above 10%, Moody's could upgrade the ratings. If revenue growth fails to accelerate despite continued increased spending on R&D and sales and marketing such that debt/EBITDA is expected to remain near current levels, Moody's could downgrade the ratings. Also, any material negative developments related to the company's FDA issues could potentially lead to a downgrade of the ratings. The principal methodology used in rating Immucor was the Global Medical Products & Device Industry Methodology published in October 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. Immucor, Inc., headquartered in Norcross, Georgia, is a leading in-vitro diagnostic blood typing and screening company that develops and manufactures reagents and automated systems used by hospitals, donor centers and reference laboratories. For the twelve months ended May 31, 2012, Immucor reported net sales of approximately $337 million. IMPERIAL INDUSTRIES: Incurs $732,000 Net Loss in Second Quarter --------------------------------------------------------------- Imperial Industries, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $732,000 on $3.96 million of net sales for the three months ended June 30, 2012, compared with a net loss of $589,000 on $3.94 million of net sales for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss of $306,000 on $2.08 million of net sales, compared with a net loss of $270,000 on $2.17 million of net sales for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $3.90 million in total assets, $2.89 million in total liabilities and $1.01 million in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/ZvRm3i About Imperial Industries Pompano Beach, Fla.-based Imperial Industries, Inc. (OTC BB: IPII) -- http://www.imperialindustries.com/-- manufactures and distributes stucco, plaster and roofing products to building materials dealers, contractors and others through its subsidiary, Premix-Marbletite Manufacturing Co. The Company sells its products primarily in the State of Florida and to a certain extent the rest of the Southeastern United States. In its report on the 2011 financial statements, Grant Thornton LLP, in Fort Lauderdale, Florida, noted that the industry in which the Company is operating has been impacted by a number of factors and accordingly, the Company has experienced a significant reduction in its sales volume. In addition, for the year ended Dec. 31, 2011, the Company has a loss from continuing operations of approximately $1,310,000. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. INFUSYSTEM HOLDINGS: Files Form 10-Q, Incurs $828,000 Loss in Q2 ---------------------------------------------------------------- Infusystem Holdings, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $828,000 on $14.07 million of net revenues for the three months ended June 30, 2012, compared with a net loss of $27.88 million on $13.13 million of net revenues for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss of $1.74 million on $28.42 million of net revenues, compared to a net loss of $28.05 million on $26.09 million of net revenues for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $74.72 million in total assets, $35.52 million in total liabilities and $39.20 million in total stockholders' equity. A copy of the Form 10-Q is available for free at: http://is.gd/ban59x About InfuSystem Holdings InfuSystem Holdings, Inc., operates through operating subsidiaries, including InfuSystem, Inc., and First Biomedical, Inc. InfuSystem provides infusion pumps and related services. InfuSystem provides services to hospitals, oncology practices and facilities and other alternate site healthcare providers. Headquartered in Madison Heights, Michigan, InfuSystem delivers local, field-based customer support, and also operates pump service and repair Centers of Excellence in Michigan, Kansas, California, and Ontario, Canada. After auditing the Company's 2011 financial statements, Deloitte & Touche LLP, in Detroit, Michigan, said that the possibility of a change in the majority representation of the Board and consequent event of default under the Credit Facility, which would allow the lenders to cause the debt of $24.0 million to become immediately due and payable, raises substantial doubt about the Company's ability to continue as a going concern. The Company reported a net loss of $45.44 million in 2011, compared with a net loss of $1.85 million in 2010. INTERFACE INC: Moody's Comments on Planned Bentley Divestiture -------------------------------------------------------------- Moody's Investors Service commented that Interface, Inc.'s planned divestiture of its Bentley Prince Street specialty carpet business is credit positive, but does not affect the company's ratings or stable outlook. As reported by the Troubled Company Reporter on Jan. 11, 2012, Moody's Investors Service upgraded the corporate family and probability of default ratings of Interface to Ba3 from B1. Concurrently, Moody's raised the rating on the $275 million senior unsecured notes due 2018 to B1 from B2 and assigned an SGL-2 speculative grade liquidity rating. The outlook is stable. Interface, Inc., based in Atlanta, Georgia, designs, produces and sells modular carpet and designer-oriented broadloom carpet. Brand names include InterfaceFLOR, FLOR, Heuga, Bentley Prince Street, Prince Street House and Home and Intersept. The company generated approximately $1 billion of revenue for the twelve months ended July 1, 2012. INTERNATIONAL ENVIRONMENTAL: Marshack OK'd as Trustee Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California, according to International Environmental Solutions Corporation's case docket, authorized Howard Grobstein, the Chapter 11 trustee, to employ Marshack Hays as his general counsel. As reported in the Troubled Company Reporter on July 24, 2012, as the Chapter 11 Trustee's general counsel, the firm will: (a) represent the trustee in any proceeding or hearing in the Bankruptcy Court and in any action where the rights of the Estate or the trustee may be litigated or affected; (b) conduct examinations of the Debtor, witnesses, claimants, or adverse parties and to prepare and assist in the preparation of reports, accounts, applications, motions, complaints and orders; (c) advise and assist the trustee in connection with any plan of reorganization filed by the Debtor or other entity pursuant to Chapter 11 of the Bankruptcy Code; (d) if appropriate, to advise and assist the trustee in the presentation of a Chapter 11 plan; and (d) perform any and all other legal services incident and necessary for the smooth administration of the bankruptcy case. Marshack Hays will represent the Chapter 11 trustee at its customary hourly rates which currently range from $175 to $540 per hour. The majority of the work will be performed by Richard A. Marshack and Martina A. Slocomb, whose rates are $540 and $320, respectively. Richard A. Marshack, Esq., founding member of Marshack Hays LLP, attests that the firm is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. 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. The Debtor hired Goe & Forsythe, LLP, as counsel. The Debtor disclosed $25,129,244 in assets and $10,387,254 in liabilities. At the behest of a shareholder, the U.S. Trustee appointed Howard Grobstein as Chapter 11 trustee for the Debtor's estate. INTERNATIONAL ENVIRONMENTAL: Dzida OK'd as Transaction Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Howard Grobstein, the Chapter 11 trustee of International Environmental Solutions Corporation, to employ Dzida, Carey & Steinman as his special transactional counsel. As reported in the Troubled Company Reporter on July 24, 2012, the Chapter 11 Trustee requires services from the firm to assist in connection with a potential transaction to license certain intellectual property rights of the Debtor to third parties. The firm will also assist in forming the new entity and in negotiating and drafting the license agreements with the third parties. Dzida Carey will represent the Chapter 11 trustee at its customary hourly rates which currently range from $175 to $425 per hour, depending on the experience of the attorney or paralegal performing the work. The majority of the work will be performed by Steven Dzida and Scott Howie, whose rates are $425 and $295, respectively. The firm has represented the Debtor in connection with the negotiation and preparation of transactional documents in the past. The firm has a claim against the Debtor in the sum of $10,000 for prepetition work. To the best of the Chapter 11 trustee's knowledge, the firm does not have an interest adverse to the Debtor or the bankruptcy and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. The Debtor hired Goe & Forsythe, LLP, as counsel. The Debtor disclosed $25,129,244 in assets and $10,387,254 in liabilities. At the behest of a shareholder, the U.S. Trustee appointed Howard Grobstein as Chapter 11 trustee for the Debtor's estate. INT'L ENVIRONMENTAL: Stetina Brunda OK'd as Trademark Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Howard Grobstein, the Chapter 11 trustee for International Environmental Solutions Corporation, to employ Stetina Brunda Garred & Brucker as his special patent and trademark counsel. As reported in the Troubled Company Reporter on July 24, 2012, the Chapter 11 trustee needs the firm to assist in connection with a potential license agreement to allow a third party to use intellectual property owned by the Debtor. The firm will also represent the trustee in connection with the all aspects of the transaction related to the Debtor's patents and intellectual property rights and in connection with maintaining and obtaining patents and intellectual property rights. Stetina Brunda's customary hourly rates range from $375 to $395 per hour, depending on the experience of the attorney or paralegal performing the work. The majority of the work will be performed by Lowell Anderson and Eric Tanezaki, whose rates are $395 and $375, respectively. To the best of the Chapter 11 Trustee's knowledge, the firm does not have an interest adverse to the Debtor or the bankruptcy estate and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. 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. The Debtor hired Goe & Forsythe, LLP, as counsel. The Debtor disclosed $25,129,244 in assets and $10,387,254 in liabilities. At the behest of a shareholder, the U.S. Trustee appointed Howard Grobstein as Chapter 11 trustee for the Debtor's estate. INTERSIL CORP: Moody's Cuts Liquidity Rating; Ba2 CFR Unchanged --------------------------------------------------------------- Moody's Investors Service lowered the speculative grade liquidity (SGL) rating of Intersil Corporation to SGL-2 from SGL-1. All other ratings are unchanged including the Ba2 corporate family and senior secured rating and Ba3 probability of default rating. The rating outlook is stable. Ratings Rationale The SGL downgrade reflects Moody's expectation that revenue and EBITDA will remain depressed over the next several quarters due to weak end market demand across all of its product segments, which tend to be in the volatile segments of the analog semiconductor industry, including products used in smartphones, notebook computers, and other consumer electronics, as well as in automotive and industrial applications. As a result, Moody's expects that Intersil may need an amendment to relax the Fixed Charge Coverage Ratio covenant for several quarters in order to avoid a covenant breach beginning with the quarter ended September 30th. Moreover, Moody's expects that Intersil's cash balance ($316 million as of June 29) will decline by about $40 million over the next year due to share repurchases ($50 million share repurchase program) and limited FCF. Moody's expects that Intersil will generate about $650 million in revenue and about $10 million of free cash flow (FCF) over the next year. The Ba2 corporate family rating reflects Moody's expectation that Intersil will maintain operating expense discipline and keep debt to EBITDA (Moody's adjusted) below 2.5x, while limiting share repurchases given the relatively high dividend payments . Ratings could be downgraded if Intersil experienced sustained revenue contraction or market share erosion and reduced profitability resulting in operating margins below 15% on a consistent basis, or with more aggressive financial policy or if Moody's anticipates debt to EBITDA (Moody's adjusted) to exceed 3.0x for an extended period. Ratings could be upgraded following operating margin improvement sustained in a range of at least the high teens level, which should also result in debt to EBITDA (Moody's adjusted) below 2x and free cash flow to debt of at least 20% (Moody's adjusted). Downgrades: Issuer: Intersil Corporation Speculative Grade Liquidity Rating, Downgraded to SGL-2 from SGL-1 The principal methodology used in rating Intersil was the Global Semiconductor Industry Methodology published in November 2009. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published in June 2009. IRVING, TX: S&P Withdraws 'B' Rating on Special Revenue Bonds ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B' long-term rating on Irving, Texas' series 2012A special tax revenue bonds, series 2012B special revenue improvement bonds, and series 2012B-1 special revenue refunding bonds because the city did not sell the bonds. K-V PHARMACEUTICAL: Wins Access to $31-Mil. in Cash Collateral -------------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Allan L. Gropper on Thursday approved new debtor K-V Pharmaceutical Co.'s request to access $31.4 million in cash collateral to help it maneuver through the first 15 days of its bankruptcy and continue to pay employee wages and other necessary expenses. Judge Gropper granted the motion after the debtor claimed it needs the money to continue operating until a final hearing on this and other matters takes place Aug. 23, Bankruptcy Law360 says. About K-V Pharmaceutical Company KV Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V has retained the services of Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V has retained Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. K-V Pharmaceutical said it continues to operate during the reorganization. K-V PHARMACEUTICAL: Court Approves "First Day" Motions ------------------------------------------------------ K-V Pharmaceutical Company disclosed that all "First Day" motions presented to the U.S. Bankruptcy Court on Aug. 7, 2012 that were included as part of the Company's initial filings in its voluntary reorganization cases were approved on either an interim or final basis by the U.S. Bankruptcy Court for the Southern District of New York, the Honorable Judge Allan L. Gropper presiding. The approved First Day motions cover, among other things, obligations to employees and warehouse and common carrier providers and authorize the Company to continue to use its current cash management system. A final hearing on the First Day motions as well as certain other motions is scheduled for Aug. 22, 2012. "With the Court's approval of our First Day motions, K-V is able to continue operations and focus on restructuring our financial obligations," said Greg Divis, President and CEO of K-V Pharmaceutical. "We intend to emerge from this restructuring as a stable and competitive company, able to continue to provide quality products to support the health of women across the stages of their lives. Approval of these First Day motions helps provide the flexibility we need to complete this process quickly and efficiently," Divis added. K-V and certain of its affiliates commenced cases to reorganize under chapter 11 of the U.S. Bankruptcy Code on Aug. 4, 2012. About K-V Pharmaceutical Company KV Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V has retained the services of Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V has retained Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. K-V Pharmaceutical said it continues to operate during the reorganization. KINDER MORGAN: Fitch Affirms 'BB+' IDR; Outlook Stable ------------------------------------------------------ Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) for Kinder Morgan, Inc. (KMI) and El Paso Corporation (EP) at 'BB+'. The ratings are removed from Rating Watch Negative where they were placed on Oct. 17, 2011, following the announcement of KMI's agreement to acquire EP in a $38 billion transaction. The Rating Outlook for KMI and EP is Stable. A complete list of ratings for KMI and EP follows at the end of this release. Approximately $9.3 billion of KMI debt and $4.3 billion EP debt is affected by today's rating action. KMI is the owner of the 2% general partner (GP) and approximately 11% limited partner (LP) interests in Kinder Morgan Energy Partners, L.P. (KMP, IDR 'BBB', Outlook Stable). EP is the owner of the GP and approximately 43% LP interests in El Paso Pipeline Partners L.P. (El Paso Pipeline Partners Operating Company (EPBO), IDR 'BBB-', Outlook Stable). Rating Rationale: The catalyst for removing the Rating Watch Negative and affirming ratings for KMI and EP is greater clarity in the business plans and financial strategies for the merged companies. In particular, the asset sale process and dropdowns that are essential for the reduction of KMI acquisition debt have begun. As a result, Fitch's pro forma analysis of the companies' capital structure and credit profile is more certain. In addition, EP's structural relationship with KMI is now defined with KMI's intention to provide cross guarantees and the senior debt of both entities being ratably secured. As a result, the IDRs and debt ratings of KMI and EP are equalized. KMI's and EP's 'BB+' ratings consider current high levels of leverage as a result of the merger and the transactional risk associated with asset sales and dropdowns that are essential to the subsequent pay down of acquisition debt. Fitch recognizes that future anticipated asset sales will be between affiliated entities minimizing transaction risk. Also considered is the lower consolidated company post-merger business risk given the cash flow stability associated with EP's interstate pipelines. Fitch believes that appropriate parent company leverage for a 'BB+' rating as measured by the total standalone debt of KMI and EP to cash from operations should be in the 2.5x to 3.5x range. KMI should be able to attain this metric on a pro forma basis in 2013 with the benefit of targeted dropdowns. On Aug. 6, 2012, the boards of directors of KMI and KMP approved the dropdown from EP of Tennessee Gas Pipeline Co. (TGP) and a portion of El Paso Natural Gas Co. (EPNG) in a transaction valued at $6.22 billion, including about $1.8 billion in assumed debt at TGP and $560 million in proportional debt at EPNG. KMI intends to use the $3.5 billion of cash proceeds to repay $840 million of maturing notes, pay off the outstanding $360 million 364-day acquisition facility, and reduce its acquisition Term Loan from $5 billion to $2.7 billion. The TGP and ENG dropdowns are expected to close in August 2012. Cash proceeds from future dropdowns of EP pipeline assets to KMP and to EPBO are expected to be used for debt reduction. KMI agreed with the U.S. Federal Trade Commission (FTC) to divest certain assets in order to receive regulatory approval for the EP merger. As a result, KMP is expected to sell by the end of the year Rocky Mountain assets including its interest in Rockies Express Pipeline LLC (REX). Proceeds from this sale will be used to repay debt used for its purchase of TGP and EPNG. Adequate Liquidity: KMI has access to a $1.75 billion revolver that matures May 30, 2013. Approximately $1.09 billion is currently borrowed under the facility. KMI as a holding company has limited future borrowing needs. Its operating affiliates are self financing with generally favorable capital market access. EP's revolver and the revolver utilized for its oil and gas business were repaid and terminated when its merger with KMI closed. Rating Triggers: Positive: Future developments that may, individually or collectively, lead to positive rating action include: -- A lessening of consolidated business risk as the company acquires and expands pipeline and fixed-fee businesses; and -- A material improvement in credit metrics. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- Increasing leverage at KMI's operating affiliates to support organic growth and acquisitions; -- Inability to successfully execute on dropdown and deleveraging strategy; and -- Weakening operating performance. Fitch has affirmed the following ratings with a Stable Outlook: Kinder Morgan, Inc. -- IDR at 'BB+'; -- Secured notes and debentures at 'BB+'; -- Secured revolving credit facility at BB+; -- 364-day bridge loan facility at BB+; -- Three -year term loan facility at BB+. Kinder Morgan Finance Company, LLC -- Secured notes at 'BB+'. KN Capital Trust I -- Trust preferred at 'BB-'. KN Capital Trust III -- Trust preferred at 'BB-'. El Paso Corporation -- IDR at 'BB+'; -- Senior secured notes and debentures at 'BB+'. El Paso Energy Capital Trust I -- Trust convertible preferred securities at BB-. KNIGHT CAPITAL: Agrees to Appoint Three New Members to Board ------------------------------------------------------------ Knight Capital Group, Inc., previously reported in a Form 8-K that it had entered into a Securities Purchase Agreement with Jefferies & Company, Inc., Jefferies High Yield Trading, LLC, Blackstone Capital Partners VI L.P., Blackstone Family Investment Partnership VI ESC L.P., Blackstone Family Investment Partnership VI L.P., GETCO Strategic Investments, LLC, TD Ameritrade Holding Corporation, Stephens Investments Holdings LLC and Stifel Financial Corp. Subsequently, the Company filed an amendment to the Form 8-K report to clarify that in connection with the Investments and in accordance with the terms of the Purchase Agreement, the Company agreed to appoint three new members to the board of directors within one month following the closing date, including an individual selected by Blackstone, an individual selected by GA- GTCO, LLC, which is an investor in the parent holding company of GETCO, and an individual proposed by the Board and acceptable to Jefferies. Each of Blackstone and General Atlantic will be entitled to select those members of the Board, and Jefferies will be entitled to approve the individual proposed by the Board, for so long as each such entity holds at least 25% of the Preferred Stock purchased by that entity pursuant to the Purchase Agreement. On Aug. 7, 2012, the Company filed a prospectus supplement to its shelf registration statement on Form S-3 filed with the Securities and Exchange Commission on Aug. 6, 2012. In accordance with the Registration Rights Agreement entered into among the Company and the parties identified as the Investors therein and any parties identified on any joinder agreement thereto, dated as of Aug. 6, 2012, the Company filed the Prospectus Supplement for the purpose of registering: (i) 400,000 shares of Series A-1 Cumulative Perpetual Convertible Preferred Stock, par value $0.01 per share; (ii) 320,400 shares of Series A-2 Non-Voting Cumulative Perpetual Convertible Preferred Stock, par value $0.01 per share; and (iii) 266,666,800 shares of the Company's common stock, par value $0.01 per share, that may be offered or sold by the selling stockholders. About Knight Capital Knight Capital Group (NYSE Euronext: KCG) -- http://www.knight.com/-- is a global financial services firm that provides access to the capital markets across multiple asset classes to a broad network of clients, including broker-dealers, institutions and corporations. Knight is headquartered in Jersey City, N.J. with a global presence across the Americas, Europe, and the Asia Pacific regions. At the start of trading on Aug. 1, Knight Capital m installed a trading software to push itself onto a new trading platform that the New York Stock Exchange opened that day. But when Knight's new system went live, the firm "experienced a human error and/or a technology malfunction related to its installation of trading software." The error caused Knight to place unauthorized offers to buy and sell shares of big American companies, driving up the volume of trading and causing a stir among traders and exchanges. The orders affected the shares of 148 companies, including Ford Motor, RadioShack and American Airlines, sending the markets into upheaval. Knight had to sell the stocks that it accidentally bought, prompting a $440 million pre-tax loss, the firm announced Aug. 2. Knight Capital averted collapse after announcing Aug. 6 that it has arranged $400 million in equity financing with Wall Street firms including Jefferies Group, Inc., which conceived and structured the investment, as well as Blackstone, GETCO LLC, Stephens, Stifel Financial Corp. and TD Ameritrade Holding Corporation. Knight has said that the software that led to the Aug. 1 trading issue has been removed from the company's systems. The New York Stock Exchange nonetheless said Aug. 7 said it "temporarily" reassigned the firm's market-making responsibilities for more than 600 securities to Getco, the high-speed trading firm that also invested in Knight. LEE BRICK: Court Approves Compensation Package for Company Prez --------------------------------------------------------------- Bankruptcy Judge Randy D. Doub granted Lee Brick & Tile Company authority to pay Don Perry, its president: * a gross monthly salary of $15,000, annually $180,000, which will include 401k deductions; * a monthly vehicle allowance of $105.92; * a monthly cell phone allowance of $288.84; * a monthly premium payment for life insurance of $2,120.76; and * a disability insurance monthly premium of $3.80. Capital Bank had objected to the request. The Debtor noted that, for the year immediately preceding the petition date, Mr. Perry took a temporary 15% salary moratorium during part of 2011. At the hearing, evidence was presented showing that Mr. Perry's annual gross salary for the year of 2011 was $186,790.75. The Debtor's Amended Application requests an annual salary of $223,599.96 be approved. Based upon the testimony presented at the hearing, the Debtor experienced a net loss from operations, including depreciation of $3,824,488 in 2011. Further, the first six months of sales for 2012 have not improved when compared with 2011. In 2006, the Debtor had roughly 120 employees. Over the past five years the Debtor has had to lay off employees to cut costs. Currently, the Debtor has 56 employees. In Chapter 11 reorganization cases "where the principals and officers are the sole shareholders -- it's a sign of good faith for those individuals to accept a lower salary when they have laid off individuals and when creditors and other parties-in-interest" may be asked to take less than they are contractually owed in a Chapter 11 plan, Judge Doub said, citing In re JHD Enterprises, Ltd. No. 09-06680-8R-DD at 3 (Bankr. E.D.N.C. Sept. 24, 2009). "[S]uch reduction may also make a proposed plan of reorganization more feasible." A copy of Judge Doub's Aug. 9, 2012 Order is available at http://is.gd/dYUVlmfrom Leagle.com. About Lee Brick Sanford, North Carolina-based Lee Brick & Tile Company filed a bare-bones Chapter 11 petition (Bankr. E.D.N.C. Case No. 12-04463) on June 15, 2012, in Wilson on June 15, 2012. The Debtor scheduled $27,851,968 in assets and $14,135,140 in liabilities. Lender Capital Bank is owed $13.0 million, of which $6.5 million is secured. Lee Brick -- http://www.leebrick.com/-- began its operations in 1951 after Hugh Perry and 10 local businessmen from Lee County decided three years prior to invest in the business of brickmaking. In the late 1950's Hugh Perry bought out the investing partners, making Lee Brick a solely owned and operated family company. Hugh Perry named his son Frank president in 1970, which he served until 1999 and currently serves as CEO. Since 1999 Don Perry succeeded his father and serves as the company's president. Frank Perry, along with his sons Don and Gil, and brother-in-law JR (rad) Holton have helped guide the family business through revolutionary changes in brick manufacturing that few people in the ceramic industry could have ever anticipated. Judge Randy D. Doub presides over the case. Kevin L. Sink, Esq., at Nicholls & Crampton, P.A., serves as the Debtor's counsel. The petition was signed by Don W. Perry, president. LIGHTSQUARED INC: Falcone Blasts Investigation Into Creditors ------------------------------------------------------------- Brian Mahoney at Bankruptcy Law360 reports that the hedge fund of billionaire Philip Falcone on Tuesday blasted a creditor investigation into allegations of prepetition insider lending within the now-bankrupt Lightsquared Inc., saying creditors were trying to embarrass the company and gain leverage in the case through frivolous discovery. Harbinger Capital Partners asked a New York federal bankruptcy judge to deny a request from the ad hoc secured group of Lightsquared lenders for documents related to $280 million in prepetition financing doled out by UBS AG to Lightsquared before it went bankrupt, according to Bankruptcy Law360. About LightSquared Inc. 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. The Office of the U.S. Trustee has not appointed a statutory committee of unsecured creditors. LIGHTSQUARED INC: Lenders Attempt to Get Leverage, Harbinger Says ----------------------------------------------------------------- Saul Griffith at ValueWalk reports Philip Falcone's Harbinger Capital Partners said a group of lenders is attempting to gain an upper hand in LightSquared's bankruptcy proceedings by adopting dilatory tactics that would extend LightSquared's losses and bleed its cash. According to the report, lawyers for LightSquared said in a court filing that "allegations, glaring inconsistencies, and misstatements (and hypocrisy) upon which 'red flags' are based, support Harbinger's view that the [lender group] is attempting to conduct [an investigation] to embarrass and harass Harbinger, and to gain leverage in these cases, which is improper." The lender group, owed about $1.1 billion by LightSquared, has sought access to Harbinger's books and various documents, saying the hedge fund has refused to provide. The report notes the group has grouse with a supposed "insider" loan advanced by a group they call the "Inc." lenders. LightSquared owes only $320 million to the Inc. lenders -- the interesting part is that these loans are secured by leases on the wireless spectrum, and on equity interest on that spectrum. The Inc. lenders were originally Harbinger and UBS, but parts of the loans changed hands over the years. It may be noted that the wireless spectrum is very valuable and is of special interest to Falcone, who has been a major advocate of setting up a national high-speed network. The report says a crucial defense adopted by the company is the fact that UBS AG (USA) (NYSE:UBS) was a part of the original loan arrangement; hence it cannot be called an insider loan. On the other hand the lender group is seeking to invoke a bankruptcy provision that allows "preference transfers" made to insiders in the one year preceding bankruptcy to be reversed, the report adds. About LightSquared Inc. 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. The Office of the U.S. Trustee has not appointed a statutory committee of unsecured creditors. LODGENET INTERACTIVE: Files Form 10-Q, Incurs $103MM Loss in Q2 --------------------------------------------------------------- LodgeNet Interactive Corporation filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss attributable to common stockholders of $103.09 million on $92.78 million of total revenues for the three months ended June 30, 2012, compared with a net loss attributable to common stockholders of $4.36 million on $106.63 million of total revenues for the same period a year ago. The Company reported a net loss attributable to common stockholders of $106.62 million on $187.48 million of total revenues for the six months ended June 30, 2012, compared with a net loss attributable to common stockholders of $6.70 million on $214.36 million of total revenues for the same period during the previous year. The Company's balance sheet at June 30, 2012, showed $283.34 million in total assets, $439.32 million in total liabilities and a $155.98 million total stockholders' deficiency. A copy of the Form 10-Q is available for free at: http://is.gd/m7q18V About LodgeNet Interactive Sioux Falls, South Dakota-based LodgeNet Interactive Corporation (Nasdaq:LNET), formerly LodgeNet Entertainment Corp. -- http://www.lodgenet.com/-- provides media and connectivity solutions designed to meet the unique needs of hospitality, healthcare and other guest-based businesses. LodgeNet Interactive serves more than 1.9 million hotel rooms worldwide in addition to healthcare facilities throughout the United States. The Company's services include: Interactive Television Solutions, Broadband Internet Solutions, Content Solutions, Professional Solutions and Advertising Media Solutions. LodgeNet Interactive Corporation owns and operates businesses under the industry leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks. The Company reported a net loss of $631,000 in 2011, a net loss of $11.68 million in 2010, and a net loss of $10.15 million in 2009. * * * As reported by the TCR on Aug. 7, 2012, Moody's Investors Services downgraded LodgeNet Interactive Corp.'s Corporate Family Rating (CFR) to Caa1 from B3 and changed the Probability of Default Rating (PDR) to Caa2 from Caa1. The reason for the downgrade is due to poor first and second quarter financial results and Moody's expectations that they will not improve in the near term. In the Aug. 7, 2012, edition of the TCR, Standard & Poor's Ratings Services lowered its corporate credit rating on U.S. in-room entertainment and data services provider LodgeNet Interactive Corp. to 'CCC' from 'B-'. "The downgrade reflects LodgeNet's weak second-quarter operating performance resulting from a sharp reduction in its room base, which we expect will continue over the near term," said Standard & Poor's credit analyst Hal Diamond. MAMMOTH LAKES: Plan Outline Hearing Continued Until Aug. 29 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of California has continued until Aug. 29, 2012, at 1:30 p.m., the hearing to consider adequacy of the Disclosure Statement explaining Town of Mammoth Lakes, California's proposed Chapter 9 Plan. As reported in the Troubled Company Reporter on July 11, 2012, the Chapter 9 bankruptcy plan is premised on the Long-Term Financial Forecast and Business Plan, which is the final planning document adopted by the town council on June 20, 2012, that presents strategies for the town to maintain a balanced operating budget, address its debts, rebuild fiscal stability, and enable the town to continue to provide municipal services through June 30, 2017. The Plan involves the restructuring or discharge of: (a) roughly $3.3 million of publicly held and privately held financing obligations; (b) obligations to current employees; (c) claims of the California Joint Powers Insurance Authority, through which the town obtains its general liability, real property and workers' compensation coverage, for over $1.4 million owed for retroactive adjustment payment calculations relating to retroactive adjustment payment calculations relating to prepetition date periods; (d) an unsecured judgment in favor of Mammoth Lakes Land Acquisition LLC in the amount of $42,746,754 as of April 30, 2012; (e) claims arising from tort and breach of contract lawsuits against the town; and (f) various other unsecured claims, including $600,000 in debt owed to state agencies for capital improvement loans and claims arising from the rejection of executory contracts. The Wall Street Journal's Michelle Kung and Mike Cherney report that a municipal official said Mammoth Lakes hopes to emerge from bankruptcy protection before the end of the year. The Plan groups claims against the town in 10 classes. About $1.805 million in obligations to Union Bank on account of certificates of participation -- COP -- are in class 1 and unimpaired. Citizens Bank (Police Facility) COP Obligations -- $317,713 -- in class 2 are unimpaired. Citizens Bank, the holder of the class 2 claim, will receive amended and restructured payments through year 2017. Citizens Bank also holds the Mammoth Lakes Housing Corporation Land Acquisition Project COP Obligations -- $201,446 -- in class 3. The claim is impaired, and Citizens Bank will receive amended and restructured payments through year 2017. Claims on account of employee prepetition leave are in class 4 and are impaired. According to the disclosure statement explaining the Plan, the number of hours of comprehensive and sick leave accrued and earned by each employee but unpaid as of July 1, 2012 -- that is, the hours in each employee's "Employee Prepetition Leave Bank" -- will be reduced by 10%. During their continued employment with the town, employees will not be permitted to cash out any hours in the so-called Employee Prepetition Leave Bank. Upon voluntary termination of employment, an employee will receive cash payment representing 50% of the hours of accrued and unpaid leave, at their full rate of pay at the time of separation. The value of the remaining 50% will be paid in 12 equally monthly payments at each employee's full rate of pay. Upon involuntary termination, the employee will receive a cash payment representing 100% of the hours of accrued and unpaid leave at the full rate of pay at the time of separation. The Plan provides for a Convenience Class in class 5, consisting of holders of general unsecured claims in an allowed amount of less than $10,000 or who elect to reduce their claim to be treated as a Convenience Class Claim. The class 5 claimants are impaired. They will receive a one-time cash payment in an amount equal to 10% of the allowed amount of the claim. Holders of allowed general unsecured claims not otherwise classified under the Plan are grouped in class 6. The class 6 holders include Mammoth Lakes Land Acquisition on account of the judgment debt. The claimants are impaired. They will be given beneficial interests in a Plan of Adjustment Trust to be created under the Plan. The amounts available for distribution to Allowed Class 6 Claims from the Trust will be roughly $5.8 million in total in cash payments from the general fund over the next 10 years, and the net proceeds of the sale of a real estate, estimated to be roughly $250,000. The estimated payment to holders of Class 6 Claims is roughly 5% to 12% of their claims. The Convenience Class will not participate in the Class 6 Claims Fund. Classes 7 and 8 are allocated for the claims of CJPIA for general liability coverage obligations ($861,657) and workers compensation coverage obligations ($557,179). The claims are impaired and will be paid over 10 years under the Plan. The Plan does not impair the town's obligations -- in class 9 -- to either the California Public Employees' Retirement System in its capacity as trustee for the pension trusts nor the town's retired workers and their dependents who are the beneficiaries of the trusts. The Plan also does not alter the obligations of the town funds that are restricted by grants, by federal law and by California law; pursuant to the Tenth Amendment to the United States Constitution, and the provision of the Bankruptcy Code that implement the Tenth Amendment. Thus, securities funded by restricted funds, like the Special Assessment and Special Tax Obligations secured by special revenues of the town's restricted funds, grouped in class 10, are not altered by the Plan. According to the Plan, the town regrets such recovery to holders of Class 6 Claims. The town said it lacks the revenues to make the payments while maintaining an adequate level of municipal services such as the provision of police protection, the repairing of the town's streets and support for the essential functions of a tourism-based resort community. According to WSJ, the bankruptcy stems from a planned real-estate project the town had intended to pursue with Mammoth Lakes Land Acquisition but ultimately decided to end. The developer sued the town for ending the contract and won. Town officials said they tried to negotiate with the developer but couldn't reach terms on a $43 million judgment. According to Standard & Poor's, the obligation to the real estate developer represents 250% of the town's annual general fund budget. Mammoth Lakes projected a $2.8 million budget shortfall for its 2012-13 fiscal year. About Mammoth Lakes The town of Mammoth Lakes, a small California resort community near Yosemite National Park, filed a Chapter 9 bankruptcy petition (Bankr. E.D. Calif. Case No. 12-32463) on July 3, 2012, estimating $100 million to $500 million in assets and $50 million to $100 million in debts. Bankruptcy Judge Thomas C. Holman oversees the case. Lawyers at Fulbright & Jaworski LLP and Klee, Tuchin, Bogdanoff & Stern, LLP, serve as the Debtor's counsel. The petition was signed by Dave Wilbrecht, town manager. MAMMOTH LAKES: Judge Elizabeth Perris OK'd as Judicial Mediator --------------------------------------------------------------- Bankruptcy Judge Elizabeth Perris commenced on Aug. 6, 2012, the mediation between Town of Mammoth Lakes, and Mammoth Lakes Land Acquisition. Judge Perris was authorized by the Judicial Counsel of the Ninth Circuit to serve as judicial mediator in the Debtor's Chapter 9 case. As reported in the Troubled Company Reporter on July 13, 2012, the primary creditor in the Debtor's case earlier accused the town of ignoring offers to settle the $43 million judgment in an objection to Mammoth Lakes' request for a quick decision on its Chapter 9 eligibility. About Mammoth Lakes The town of Mammoth Lakes, a small California resort community near Yosemite National Park, filed a Chapter 9 bankruptcy petition (Bankr. E.D. Calif. Case No. 12-32463) on July 3, 2012, estimating $100 million to $500 million in assets and $50 million to $100 million in debts. Bankruptcy Judge Thomas C. Holman oversees the case. Lawyers at Fulbright & Jaworski LLP and Klee, Tuchin, Bogdanoff & Stern, LLP, serve as the Debtor's counsel. The petition was signed by Dave Wilbrecht, town manager. MAMMOTH LAKES: Amends List of Largest Unsecured Creditors --------------------------------------------------------- Town of Mammoth Lakes, California filed with the U.S. Bankruptcy Court for the Eastern District of California updated its list of its largest unsecured creditors in its Chapter 9 case. Removed from the largest creditors' list were Patrick Vargas, Peter Bernasconi, Dan Watson, and Marc Moscowitz. The list of largest unsecured creditors now comprises of: Creditor Nature of Claim Amount -------- --------------- ------ Mammoth Lakes Land Acquisition Legal Claims/ $42,746,754 c/o Quinn Emanuel, et al., LLP Judgments 865 South Figueroa St., 10th Fl. Loas Angeles, CA 90017-2543 CalPERS Pension/ $4,154,446 Lincoln Plaza North Retirement 400 Q. Street Room N3340 Sacramento, CA 95814 California JPIA Insurance $3,406,106 8081 Moody Street Cooperative La Palma, CA 90623 Union Bank of California NA Bond/COP/ $1,720,000 Trustee for Holders of Series Long 2000 COPS 445 S Figueroa Street Los Angeles, CA 90071-1402 PARS Post-Retirement Health Pension/Retirement $581,235 Care Plan 4350 Von Karman Ave., Suite 100 Newport Beach, CA 92660 State Water Resources Bond/COP/Long $501,460 Control Board Term Debt Citizens Business Bank Bond/COP/Long $317,763 Holders of 2004 COPS PFLA Term Debt Project 701 North Haven Ave., Suite 250 Ontario, CA 91764 PARS Safety Pension/Retirement $213,979 Citizens Business Bank Bond/COP/Long $201,446 Term Debt California Dept. of Bond/COP/Long $145,882 Transportation Term Debt Mammoth Lakes Foundation* Contract $95,000 Eastern Sierra Transportation Contract $93,917 Mammoth Lakes Traits* Contract $71,000 California Energy Commission* Bonds/COP/Long $56,677 Peterbilt Truck Parts and Equipment Trade Debt $54,470 Minaret Village Center Lease $50,577 Mammoth Unified School District Leases $37,800 Mark Wardlaw Employment Related $35,108 Dennis Rottner Employment Related $33,935 Mammoth Lakes Jazz Jubillee* Contract $27,000 About Mammoth Lakes The town of Mammoth Lakes, a small California resort community near Yosemite National Park, filed a Chapter 9 bankruptcy petition (Bankr. E.D. Calif. Case No. 12-32463) on July 3, 2012, estimating $100 million to $500 million in assets and $50 million to $100 million in debts. Bankruptcy Judge Thomas C. Holman oversees the case. Lawyers at Fulbright & Jaworski LLP and Klee, Tuchin, Bogdanoff & Stern, LLP, serve as the Debtor's counsel. The petition was signed by Dave Wilbrecht, town manager. MARKET STREET: Hearing on Plan Outline Continued Until Aug. 16 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana, according to Market Street Properties, L.L.C.'s case docket, continued until Aug. 16, 2012, at 2 p.m., the hearing to consider the Debtor's Amended Chapter 11 Plan. As reported in the Troubled Company Reporter on June 8, 2012, under the Plan, the first two mortgages, totaling about $13.1 million, are to be paid in full with debt maturing in a year. There will be no payments in the meantime. Unsecured creditors with about $17.2 million in claims are to divide $100,000, assuming the plan is confirmed. About Market Street Properties Market Street Properties, L.L.C., the owner of seven acres on the riverfront in New Orleans, filed for Chapter 11 bankruptcy (Bankr. E.D. La. Case No. 09-14172) on Dec. 23, 2009, represented by Christopher T. Caplinger, Esq., Joseph Patrick Briggett, Esq., and Stewart F. Peck, Esq., at Lugenbuhl Wheaton Peck Rankin & Hubbard, in New Orleans. Cupkovic Architecture LLC serves as the Debtor's architect; and Patrick J. Gros, CPA, as accountant. James E. Fitzmorris, Jr., serves as political consultant and advisor. The Company disclosed $52,404,026 in assets and $26,848,596 in liabilities as of the Chapter 11 filing. An official committee of unsecured creditors has not been appointed in the Debtor's case. MARTINI FITNESS: Case Summary & 17 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Martini Fitness, Corp. dba 24-7 Family Fitness 333 Tosca Drive Stoughton, MA 02072 Bankruptcy Case No.: 12-16536 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: James P. Ehrhard, Esq. EHRHARD & ASSOCIATES, P.C. 418 Main Street, 4th Floor Worcester, MA 01608 Tel: (508) 791-8411 E-mail: ehrhard@ehrhardlaw.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 17 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/mab12-16536.pdf The petition was signed by Thomas Martini, Jr., president. MEDFORD VILLAGE: Case Summary & 5 Unsecured Creditors ----------------------------------------------------- Debtor: Medford Village East Associates, LLC 479 Centennial Boulevard Voorhees, NJ 08043 Bankruptcy Case No.: 12-29693 Chapter 11 Petition Date: August 8, 2012 Court: U.S. Bankruptcy Court District of New Jersey (Camden) Judge: Judith H. Wizmur About the Debtor: The Debtor owns properties in Medford Township, Mt. Laurel Township, Borough of Clayton, Borough of Barrington, Voorhees Township and the Midwest. Debtor's Counsel: Aris J. Karalis, Esq. MASCHMEYER KARALIS P.C. 413 Route 70 East, Suite 300 Cherry Hill, NJ 08034 Tel: (856) 428-8400 E-mail: akaralis@cmklaw.com - and ? Robert W. Seitzer, Esq. MASCHMEYER KARALIS P.C. 1900 Spruce Street Philadelphia, PA 19103 Tel: (215) 546-4500 Fax: (215) 955-4175 E-mail: rseitzer@cmklaw.com Debtor's Special Counsel: HYLAND LEVIN, LLP Estimated Assets: $50,000,001 to $100,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Stephen D. Samost, managing member. Debtor's List of Its Five Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Township of Mt. Laurel -- $6,219 Tax Collector 100 Mount Laurel Road Mt. Laurel, NJ 08054 Borough of Barrington -- $5,655 Tax Collector 229 Trenton Avenue Barrington, NJ 08007 Township of Medford -- $3,263 Tax Collector's Office 17 N. Main Street Medford, NJ 08055 Environmental Resource System -- $1,000 FedEx/Kinkos -- $308 MF GLOBAL: No Ruling Yet on $175 Million CME Settlement ------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that the New York bankruptcy judge overseeing the bankruptcies of MF Global Holdings Ltd. and broker-dealer unit MF Global Inc. declined to rule Wednesday on a $175 million settlement between MFGI's trustee and CME Group Inc., $130 million of which would go to commodities customers. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provided access to more than 70 exchanges around the world. The firm was also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MF GLOBAL: Corzine to Face Employee's Stock Suit in Federal Court ----------------------------------------------------------------- Ian Thoms at Bankruptcy Law360 reports that a New York federal judge refused on Wednesday to remand to state court a former MF Global Ltd. employee's derivative action against the firm's ex-CEO Jon Corzine, saying his claims relate closely to MF Global's bankruptcy case and the many securities class actions pending before the federal court. Bankruptcy Law360 relates that the former employee, Juan Arvelo, claims Corzine and other MF Global board members mismanaged employee stock and savings plans while overseeing the brokerage firm's spectacular collapse last fall. About MF Global New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/-- was one of the world's leading brokers of commodities and listed derivatives. MF Global provided access to more than 70 exchanges around the world. The firm was also one of 22 primary dealers authorized to trade U.S. government securities with the Federal Reserve Bank of New York. MF Global's roots go back nearly 230 years to a sugar brokerage on the banks of the Thames River in London. MF Global Holdings Ltd. and MF Global Finance USA Inc. filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059 and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive Brokers Group collapsed. As of Sept. 30, 2011, MF Global had $41,046,594,000 in total assets and $39,683,915,000 in total liabilities. Judge Honorable Martin Glenn presides over the Chapter 11 case. J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve as bankruptcy counsel. The Garden City Group, Inc., serves as claims and noticing agent. The petition was signed by Bradley I. Abelow, Executive Vice President and Chief Executive Officer of MF Global Finance USA Inc. Louis J. Freeh was named the Chapter 11 Trustee for the bankruptcy cases of MF Global Holdings Ltd. and its affiliates. The Chapter 11 Trustee tapped (i) Freeh Sporkin & Sullivan LLP, as investigative counsel; (ii) FTI Consulting Inc., as restructuring advisors; (iii) Morrison & Foerster LLP, as bankruptcy counsel; and (iv) Pepper Hamilton as special counsel. An Official Committee of Unsecured Creditors has been appointed in the case. The Committee has retained Capstone Advisory Group LLC as financial advisor. The Securities Investor Protection Corporation commenced liquidation proceedings against MF Global Inc. to protect customers. James W. Giddens was appointed as trustee pursuant to the Securities Investor Protection Act. He is a partner at Hughes Hubbard & Reed LLP in New York. Jon Corzine, the former New Jersey governor and co-CEO of Goldman Sachs Group Inc., stepped down as chairman and chief executive officer of MF Global just days after the bankruptcy filing. MICHAEL MURPHY: Owner of Ben Moore's Restaurant in Chapter 13 ------------------------------------------------------------- Rolf Boone at The Olympian reports that Michael David Murphy, the owner of Ben Moore's Restaurant & Bar in downtown Olympia, has filed for Chapter 13 bankruptcy protection in the U.S. Bankruptcy Court for the Western District of Washington, the fourth time he has sought protection from creditors According to the report, Mr. Murphy filed for Chapter 11 bankruptcy in October 1985, when the business was known as Ben Moore's Cafe & Bar, and then Chapter 13 in July 2002, October 2007 and July 24, bankruptcy court data show. Chapter 11 typically allows a business to restructure its debts and continue to operate, while under a Chapter 13 filing, the debtor establishes a repayment plan, the report notes. The report says the most recent filing shows assets and debts in the range of $100,001 to $500,000. The report relates creditors listed in the filing include the state Department of Revenue, the Department of Labor and Industries and Employment Security Department. The report says Mr. Murphy's plan is to pay $1,000 a month for five years. MIJA TORTILLA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Mija Tortilla Factory, LLC 11305 Bluegrass Parkway Louisville, KY 40299 Bankruptcy Case No.: 12-33557 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court Western District of Kentucky (Louisville) Debtor's Counsel: Debbie D. Bowman, Esq. BOWMAN LAW OFFICE, PSC 11003 Bluegrass Parkway, Suite 500D Louisville, KY 40299 Tel: (502) 569-7440 Fax: (502) 569-7441 E-mail: debbie@dbowmanlaw.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 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/kywb12-33557.pdf The petition was signed by Roberto A. Garcia-Torres, member. MOMENTIVE PERFORMANCE, Files Form 10-Q; Incurs $88MM Loss in Q2 --------------------------------------------------------------- Momentive Performance Materials Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $88 million on $627 million of net sales for the fiscal three-month period ended June 30, 2012, compared with a net loss of $10 million on $728 million of net sales for the fiscal three-month period ended July 3, 2011. The Company reported a net loss of $153 million on $1.22 billion of net sales for the fiscal six-month period ended June 30, 2012, compared with a net loss of $13 million on $1.38 billion of net sales for the fiscal six-month period ended July 3, 2011. The Company's balance sheet at June 30, 2012, showed $3.02 billion in total assets, $3.92 billion in total liabilities, and a $901 million total deficit. A copy of the Form 10-Q is available for free at: http://is.gd/EZu1XU About Momentive Performance Momentive Performance Materials, Inc., is a producer of silicones and silicone derivatives, and is engaged in the development and manufacture of products derived from quartz and specialty ceramics. As of Dec. 31, 2008, the Company had 25 production sites located worldwide, which allows it to produce the majority of its products locally in the Americas, Europe and Asia. Momentive's customers include companies in industries, such as Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola, L'Oreal, BASF, The Home Depot and Lowe's. The Company had a net loss of $140 million in 2011, following a net loss of $63 million in 2010. Net loss in 2009 was $42 million. * * * As reported by the TCR on May 14, 2012, Moody's Investors Service lowered Momentive Performance Materials Inc.'s Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from B3. The action follows the company's weak first quarter results and expectations for a slower than expected recovery in volumes in 2012. In the May 25, 2012, edition of the TCR, Standard & Poor's Ratings Services raised its rating on Momentive Performance Materials and its subsidiaries' senior secured credit facilities to 'B+' from 'B'. "The ratings on MPM reflect the company's 'highly leveraged' financial profile and what we deem to be a 'fair' business risk profile," said Standard & Poor's credit analyst Cynthia Werneth. MOMENTIVE SPECIALTY: Files Form 10-Q, Posts $28MM Income in Q2 -------------------------------------------------------------- Momentive Specialty Chemicals Inc. filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $28 million on $1.25 billion of net sales for the three months ended June 30, 2012, compared with net income of $63 million on $1.43 billion of net sales for the same period a year ago. The Company reported net income of $12 million on $2.49 billion of net sales for the six months ended June 30, 2012, compared with net income of $126 million on $2.73 billion of net sales for the same period during the prior year. The Company's balance sheet at June 30, 2012, showed $3.11 billion in total assets, $4.88 billion in total liabilities and a $1.76 billion total deficit. A copy of the Form 10-Q is available for free at: http://is.gd/BH7nQ7 About Momentive Specialty Momentive Specialty Chemicals, Inc., headquartered in Columbus, Ohio, is a leading producer of thermoset resins (epoxy, formaldehyde and acrylic). The company is also a supplier of specialty resins for inks and specialty coatings sold to a diverse customer base as well as a producer of commodities such as formaldehyde, bisphenol A, epichlorohydrin, versatic acid and related derivatives. Momentive Specialty reported net income of $118 million on $5.20 billion of net sales in 2011, compared with net income of $214 million on $4.59 billion of net sales in 2010. * * * Momentive Specialty carries a 'B-' issuer credit rating from Standard & Poor's Ratings Services. It has 'B3' corporate family and probability of default ratings from Moody's Investors Service. corporate credit rating from Standard & Poor's. As reported in the Oct. 27, 2010 edition of TCR, Moody's Investors Service assigned a 'Caa1' rating to the guaranteed senior secured second lien notes due 2020 of Momentive Specialty (formerly known as Hexion Specialty Chemicals Inc.). Proceeds from the notes were allocated for the repayment of $533 million of guaranteed senior secured second lien notes due 2014. "With this refinancing Hexion will have refinanced or extended the maturities on the vast majority of the debt that was originally slated to mature prior to 2015. There is less than $600 million of this debt remaining, which should be much easier to for the company to refinance as its credit metrics improve further," stated John Rogers, Senior Vice President at Moody's. MORGANS HOTEL: Pays $15 Million to Tenants at Mandalay Bay ---------------------------------------------------------- Morgans Hotel Group Co. paid its $15.0 million obligation to complete the acquisition of the leasehold interests in three restaurants at Mandalay Bay from the existing tenant. The acquisition is part of a transaction with MGM Resorts International, which also includes the conversion of THEhotel at Mandalay Bay to Delano Las Vegas, to be managed by MGM Resorts pursuant to a licensing agreement, and the management by The Light Group, the Company's 90% owned subsidiary, of a yet to be announced nightclub at Mandalay Bay. The payment was funded by a borrowing under the Company's revolving credit facility. In order to obtain long term contracts, the Company may contribute capital in various forms to certain hotel and food and beverage projects. The capital may be in the form of equity investments, key money and cash flow guarantees. In making investment decisions regarding upfront cash payments, the Company generally seeks to have its upfront capital returned in three to four years through the income generated by the investments, although there can be no assurance that its investments will produce these projected results. The $15.0 million payment in this transaction is consistent with this strategy taking into account the projected income from the restaurant, hotel and nightclub venues. About Morgans Hotel Group Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) -- http://www.morganshotelgroup.com/-- is widely credited as the creator of the first "boutique" hotel and a continuing leader of the hotel industry's boutique sector. Morgans Hotel Group operates and owns, or has an ownership interest in, Morgans, Royalton and Hudson in New York, Delano and Shore Club in South Beach, Mondrian in Los Angeles and South Beach, Clift in San Francisco, Ames in Boston, and Sanderson and St Martins Lane in London. Morgans Hotel Group and an equity partner also own the Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans Hotel Group also manages hotels in Isla Verde, Puerto Rico and Playa del Carmen, Mexico. Morgans Hotel Group has other property transactions in various stages of completion, including projects in SoHo, New York and Palm Springs, California. The Company reported a net loss of $87.95 million in 2011, a net loss of $83.64 million in 2010, and a net loss of $101.60 million in 2009. The Company's balance sheet at June 30, 2012, showed $545.86 million in total assets, $655.93 million in total liabilities, $6.12 million in redeemable noncontrolling interest, and a $116.19 million total deficit. MSR RESORT: Seeks Clarity on Damages for Cancelled Contracts ------------------------------------------------------------ Kaitlin Ugolik at Bankruptcy Law360 reports that MSR Resort Golf Course LLC and a unit of Hilton Worldwide Inc. filed letters asking a New York judge to clarify how much MSR owes Hilton for canceled property management contracts, a dispute that has slowed MSR's emergence from bankruptcy. Bankruptcy Law360 relates that the requests come in response to U.S. Bankruptcy Judge Sean Lane's July 31 decision rejecting Hilton Waldorf-Astoria Management LLC's bid for key money, brand damages and expansion losses but finding MSR liable for Group Services Expenses, or GSEs. About MSR Resort MSR Hotels & Resorts, formerly known as CNL Hotels & Resorts Inc., owns a portfolio of eight luxury hotels with over 5,500 guest rooms, including the Arizona Biltmore Resort & Spa in Phoenix, the Ritz-Carlton in Orlando, Fla., and Hawaii's Grand Wailea Resort Hotel & Spa in Maui. On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the portfolio through a foreclosure proceeding. CNL-AB LLC is a joint venture consisting of affiliates of Paulson & Co. Inc., a joint venture affiliated with Winthrop Realty Trust, and affiliates of Capital Trust, Inc. Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts before the Jan. 28 foreclosure. Following the acquisition, five of the resorts with mortgage debt scheduled to mature on Feb. 1, 2011, were sent to Chapter 11 bankruptcy by the Paulson and Winthrop joint venture affiliates. MSR Resort Golf Course LLC and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan on Feb. 1, 2011. The resorts subject to the filings are Grand Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta Resort and Club and PGA West, Doral Golf Resort and Spa, and Claremont Resort and Spa. James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' bankruptcy counsel. Houlihan Lokey Capital, Inc., is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The five resorts had $2.2 billion in assets and $1.9 billion in debt as of Nov. 30, 2010, according to court filings. In its schedules, debtor MSR Resort disclosed $59,399,666 in total assets and $1,013,213,968 in total liabilities. The resorts have agreement with lenders allowing the companies to remain in Chapter 11 at least until September 2012. The Official Committee of Unsecured Creditors is represented by Martin G. Bunin, Esq., and Craig E. Freeman, Esq., at Alston & Bird LLP, in New York. MUNDY RANCH: Files for Chapter 11 in New Mexico ----------------------------------------------- Mundy Ranch, Inc., filed a Chapter 11 petition (Bankr. D. N.M. Case No. 12-13015) in Albuquerque, New Mexico. The Debtor estimated assets of $10 million to $50 million and liabilities of up to $10 million. New Mexico's Mundy Ranch -- http://www.mundyranch.com/-- offers a "fine edge on ranch living with style." The Mundy family owned Mundy Ranch spans granite slopes and fertile bottom lands of the Chama River Valley, has 25 alpine lakes with trophy trout, and a mile of freestone river lined with towering Pines. Mundy Ranch is offering for sale 42-140 acre ranch parcels, with parcel pricing starting at $1 million to $3 million depending on location. It is also offering 20 lifetime recreational memberships at a price of $500,000 each. A meeting of creditors under 11 U.S.C. Sec. 341(a) is scheduled for Sept. 6, 2012 at 9:30 a.m. The deadline to file a complaint to determine dischargeability of certain debts under 11 U.S.C. Section 523(c) on Nov. 5, 2012. The Debtor has filed an application to employ Christopher M. Gatton, Esq., at the Law Office of George Dave Giddens, PC, in Albuquerque, as counsel. The Debtor will employ the firm based on the hourly rates of its professionals: Hourly Rate ----------- George Dave Giddens $295 Patricia A. Bradley $200 Ann Washburn $175 Dean Cross $175 Denise J. Trujillo $170 Chris M. Gatton $170 Legal Assistants $90 MUNDY RANCH: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Mundy Ranch, Inc. P.O. Box 6509 Albuquerque, NM 87197 Bankruptcy Case No.: 12-13015 Chapter 11 Petition Date: August 10, 2012 Court: U.S. Bankruptcy Court District of New Mexico (Albuquerque) Judge: James S. Starzynski About the Debtor: New Mexico's Mundy Ranch -- http://www.mundyranch.com/-- offers a "fine edge on ranch living with style." The Mundy family owned Mundy Ranch spans granite slopes and fertile bottom lands of the Chama River Valley, has 25 alpine lakes with trophy trout, and a mile of freestone river lined with towering Pines. Mundy Ranch is offering for sale 42-140 acre ranch parcels, with parcel pricing starting at $1 million to $3 million depending on location. It is also offering 20 lifetime recreational memberships at a price of $500,000 each. Debtor's Counsel: Christopher M. Gatton, Esq. LAW OFFICE OF GEORGE DAVE GIDDENS, PC 10400 Academy Road, #350 Albuquerque, NM 87111 Tel: (505) 271-1053 Fax: (505) 271-4848 E-mail: chris@giddenslaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by David F. Metler, vice president. Debtor's List of Its 16 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Rabo Agrifinance RP $795,000 P.O. Box 411995 Saint Louis, MO 63141 H. Candelaria Enterprises Cash Loan $350,000 P.O. Box 6509 Albuquerque, NM 87197 Comeau, Magdalen, Templeton & Legal Fees $190,191 Indall P.O. Box 669 Santa Fe, NM 87504-0669 Lopez Excavating Services $74,976 Rio Arriba County Treasurer Property Taxes $42,556 Tom Growney Equipment Backhoe Rental $12,381 M & LJ Construction Services $4,080 Bank of America Mastercard Credit Card $3,837 Bank of America Mastercard Credit Card $1,467 Henry's True Value Plumbing Supplies $352 New Mexico Taxation & SUTA Taxes $307 Revenue Dept. Matheson Tri-Gas Acetyline Cylinder $279 Rental New Mexico Taxation & State Withholding $235 Revenue Dept. New Mexico Taxation & Worker Compensation $13 Revenue Dept. Taxes Matthew, Rebecca, and Complaint Unknown Bridget Gallegos Robert L. Mundy Complaint Unknown NAVISTAR INTERNATIONAL: To Reduce Workforce to Save Costs --------------------------------------------------------- Navistar International Corporation communicated to employees that it is taking actions to control spending across the Company with targeted reductions of certain costs. In addition to the expected integration synergies resulting from its ongoing efforts to consolidate its truck and engine engineering operations, as well as the relocation of its world headquarters, the Company is focusing on continued reductions in the amount of discretionary spending, including but not limited to reductions from efficiencies, or prioritizing or eliminating certain programs or projects. The Company also announced that it is offering the majority of its U.S.-based non-represented salaried employees the opportunity to apply for a voluntary separation program. Employees who apply and are accepted in the VSP will receive enhanced exit benefits. The Company further announced that, along with the employees that choose to participate in the VSP, it will use attrition and, if necessary, an involuntary reduction in force to eliminate additional positions in order to meet its targeted reductions goal. Severance benefits of various amounts, depending on the pay grade and length of service of the affected employees, would be payable under the reduction in force. The Company currently does not know how many, if any, of the eligible participants will choose to participate in the VSP or how many involuntary position reductions will occur. Therefore, the Company is unable to determine the one-time costs associated with this potential reduction in personnel, or the potential ongoing annual savings, if any, that may result from the reduction in personnel. The Company expects to complete the VSP or any involuntary reduction in force in the fourth quarter of 2012 and will provide an estimate of the amount or range of charges expected to be incurred once a good faith determination can be made. 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. * * * In the Aug. 3, 2012, edition of the TCR, Moody's Investors Service lowered Navistar International Corporation's Corporate Family Rating (CFR), Probability of Default Rating (PDR), and senior note rating to B2 from B1. The downgrade of Navistar's ratings reflects the significant challenges the company will face during the next eighteen months in re-establishing the profitability and competitiveness of its US and Canadian truck operations in light of the failure to achieve EPA certification of its EGR emissions technology, the significant reductions in military revenues and substantially higher engine warranty reserves. 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. As reported by the TCR on Aug. 8, 2012, Fitch Ratings has downgraded the Issuer Default Ratings (IDR) for Navistar International Corporation (NAV) and Navistar Financial Corporation (NFC) to 'B-' from 'B+'. The rating downgrades for NAV and NFC consider the negative impact of recent developments including already weak operating results in 2012 that are likely to be worse than previously expected by Fitch. NEW YORK TIMES: About.com Sale Won't Affect Moody's 'B1' CFR ------------------------------------------------------------ Moody's Investors Service said that a possible sale of the About Group by The New York Times Company (NY Times) does not currently affect NY Times' B1 Corporate Family Rating (CFR) but will be factored into the resolution of the company's positive rating outlook. The principal methodology used in rating NY Times is the Global Publishing 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. NY Times, headquartered in New York, NY, operates newspapers including The New York Times (The Times), the International Herald Tribune and The Boston Globe, as well as various information services and web sites including NYTimes.com and About.com. Revenue for the LTM ended 6/24/12 pro forma for the Regional Media sale was approximately $2.1 billion. NEXSTAR BROADCASTING: Files Form 10-Q, Posts $8.8MM Income in Q2 ---------------------------------------------------------------- Nexstar Broadcasting Group, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $8.81 million on $88.86 million of net revenue for the three months ended June 30, 2012, compared with a net loss of $2.58 million on $75.50 million of net revenue for the same period a year ago. The Company reported net income of $11.83 million on $172.50 million of net revenue for the six months ended June 30, 2012, compared with a net loss of $8.89 million on $145.45 million of net revenue for the same period during the prior year. The Company's balance sheet at June 30, 2012, showed $566.34 million in total assets, $736.93 million in total liabilities and a $170.58 million total stockholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/sWWNYQ About Nexstar Broadcasting Group Irving, Texas-based Nexstar Broadcasting Group Inc. currently owns, operates, programs or provides sales and other services to 62 television stations in 34 markets in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama, New York, Rhode Island, Utah and Florida. Nexstar's television station group includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches approximately 13 million viewers or approximately 11.5% of all U.S. television households. The Company reported a net loss of $11.89 million in 2011, a net loss of $1.81 million in 2010, and a net loss of $12.61 million in 2009. * * * As reported by the Troubled Company Reporter on Aug. 30, 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Nexstar Broadcasting Group to 'B' from 'B-'. The rating outlook is stable. "The 'B' corporate credit rating reflects S&P's expectation that Nexstar's core ad revenue will continue growing modestly in 2010 and 2011," said Standard & Poor's credit analyst Deborah Kinzer. The EBITDA growth resulting from the rebound in core advertising, combined with political ad revenue from the 2010 midterm elections, should, in S&P's view, enable Nexstar to reduce its leverage significantly by the end of the year. NII HOLDINGS: S&P Cuts Corp. Credit Rating to 'B'; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Latin American wireless carrier NII Holdings Inc. to 'B' from 'B+'. The outlook is stable. "At the same time, we lowered the senior unsecured debt rating to 'B-' from 'B'. The recovery rating on the senior unsecured debt remains '5', indicating our expectation for modest (10%-30%) recovery in the event of payment default," S&P said. "The downgrade of NII follows the company's weak operating and financial results in the second quarter of 2012, which were below our expectations, and its lower guidance for full year 2012," said Standard & Poor's credit analyst Allyn Arden. "During the quarter, total revenue and EBITDA declined 15% and 56% from the prior-year period. Increased competitive pressures, especially in Brazil, and depreciating local currencies caused NII's average revenue per user (ARPU) to fall by over 25% compared to the prior-year period. The Brazilian real and Mexican peso declined 23% and 15% from the year-ago period, relative to the U.S. dollar. These factors, coupled with expenses related to the deployment of 3G services in Mexico and Brazil contributed to the sharp decline in EBITDA," S&P said. "The outlook is stable and reflects our expectation that EBITDA will improve modestly in 2013 from substantially lower levels in 2012 as 3G network expenses moderate and that leverage will be in the low- to mid-5x area. Still, we could lower the rating if competitive pressures accelerate and adverse currency movements result in sharper declines in ARPU and EBITDA, resulting in leverage rising above 6x. These factors could result also in a revision of our business risk assessment to 'vulnerable' from 'weak,'" S&P said. "Conversely, we could raise the ratings if the deployment of 3G services in its markets results in churn to improvement and ARPU stabilization such that leverage is in the 4x area or lower on a sustained basis," S&P said. NORTEL NETWORKS: Incurs $131 Million Loss in Second Qtr 2012 ------------------------------------------------------------ Nortel Networks Corporation reported a net loss in the second quarter of 2012 of $131 million, compared to a net loss of $115 million in the second quarter of 2011. Overall financial performance in the second quarter of 2012 reflects the sale of all of its businesses in prior quarters. -- Revenues in the second quarter of nil. -- SG&A expense in the second quarter of $25 million, a decrease of 52.8 percent from the year ago quarter. -- Cash balance as of June 30, 2012 was $668 million, compared to $724 million as of March 31, 2012. Restricted cash balance of $7.6 billion consisting primarily of divestiture and patents and patent applications sales proceeds. The net loss in the second quarter of 2012 included interest expense of $86 million, other expense - net of $8 million comprised primarily of a currency exchange loss of $8 million, and reorganization items of $6 million. Reorganization items of $6 million were primarily comprised of professional fees of $10 million and $7 million related to the settlement of certain creditor claims, partially offset by $9 million related to gains on divestitures. The net loss in the second quarter of 2011 included interest expense of $80 million, partially offset by other operating income - net of $18 million primarily related to billings under transition services agreements, other income - net of $9 million comprised primarily of a currency exchange gain, and reorganization items of $7 million. Reorganization items of $7 million were primarily comprised of gains on divestitures of $37 million related primarily to the sale of the GDNT assets and additional escrow proceeds related to the divestiture of the Optical Networking and Carrier Ethernet business, partially offset by professional fees of $21 million. Revenues Revenues were nil in the second quarter of 2012 compared to $1 million for the second quarter of 2011, related to remaining customer contracts. SG&A A focus on reducing costs resulted in lower SG&A expense compared to the year ago quarter. SG&A expense was $25 million in the second quarter of 2012, compared to $53 million for the second quarter of 2011. Cash The cash balance as of June 30, 2012 was $668 million, compared to a cash balance of $724 million as of March 31, 2012. Restricted cash was $7.6 billion primarily related to the business divestiture and IP proceeds. The cash balance decreased primarily due to cash outflows related to general operations, the negative impact of foreign currency fluctuations on cash and cash equivalents, and dividends paid by NNL subsidiaries to noncontrolling interests. As previously announced, Nortel does not expect that the Company's common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests. Reporting Requirements NNC and Nortel Networks Limited also disclosed that Ernst & Young Inc., the court-appointed monitor in Nortel's creditor protection proceedings under the Companies' Creditors Arrangement Act, after taking into account several factors arising from the advanced stage of the CCAA proceedings, has determined that the expense and resources required to comply with NNC and NNL's quarterly and annual public reporting requirements can no longer be justified from the standpoint of the best interest of their creditors. Consequently, NNC and NNL will no longer be able to comply with their periodic reporting requirements and will discontinue preparing and filing quarterly and annual financial statements and all other periodic disclosure documents under applicable Canadian and U.S. securities laws effective as of the filing deadlines for their third quarter reporting obligations, being Nov. 14, 2012 in the United States and Nov. 29, 2012 in Canada. Generally, when an issuer ceases to file its periodic disclosure documents in circumstances such as NNC and NNL's, the Canadian Securities Administrators will issue orders prohibiting trading in securities of the relevant issuer effective from and after the filing deadline under Canadian securities laws. NNC and NNL will be making submissions to the Canadian Securities Administrators that cease trade orders expected to be issued in respect of the securities of NNC and NNL include certain permitted trading exceptions. However, there can be no assurance that the regulatory authorities will make such orders on the terms requested by NNC and NNL and, in particular, permit any trading exceptions. In light of the foregoing, the directors and officers of NNC and NNL have indicated that they will step down from their positions with NNC and NNL upon the issuance of a court order under the CCAA that the Monitor will be seeking to extend its powers. Such order would allow the Monitor to exercise any powers that may be properly exercised by a board of directors and to terminate the engagement of NNC and NNL's external auditors. Following the third quarter filing deadlines, as a means of keeping the public informed of material developments during the remainder of the CCAA proceedings, and until otherwise determined by the Monitor, NNC and NNL will endeavour to continue to comply with the material change disclosure requirements under Canadian securities laws, to the extent practicable in the circumstances, and to file on SEDAR (the electronic filing system of the Canadian Securities Administrators) all court reports of the Monitor except for such reports, or portions thereof, in respect of which confidential treatment has been requested. All other continuous and current disclosure filings of NNC and NNL will be discontinued. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate today's barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc. and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTHCORE TECHNOLOGIES: To Release 2nd Quarter Results on Aug. 14 ----------------------------------------------------------------- Northcore Technologies Inc. is scheduled to release its financial results for the second quarter of 2012 on Tuesday, Aug. 14, 2012, following the close of the markets. About Northcore Toronto, Ontario-based Northcore Technologies Inc. (TSX: NTI; OTC BB: NTLNF) -- http://www.northcore.com/-- provides a Working Capital Engine(TM) that helps organizations source, manage, appraise and sell their capital equipment. Northcore offers its software solutions and support services to a growing number of customers in a variety of sectors including financial services, manufacturing, oil and gas and government. Northcore owns 50% of GE Asset Manager, LLC, a joint business venture with GE. Together, the companies work with leading organizations around the world to help them liberate more capital value from their assets. The Company reported a loss and comprehensive loss of C$3.93 million in 2011, compared with a loss and comprehensive loss of C$3.03 million in 2010. The Company's balance sheet at March 31, 2012, showed C$3.96 million in total assets, C$903,000 in total liabilities and C$3.06 million in total shareholders' equity. NUANCE COMMUNICATIONS: S&P Keeps 'BB-' Rating on $700M Sr. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services will revise its recovery rating on Nuance Communications Inc.'s senior unsecured notes to '4' from '3' following the company's announcement that it has upsized its proposed senior unsecured notes due 2020 to $700 million from $600 million. The issue-level rating will remain at 'BB-'. "The 'BB+' rating on the company's first-lien credit facilities and the '1' recovery rating on that debt will remain unchanged, reflecting our expectation for very high (90%-100%) recovery in the event of a payment default," S&P said. "Our 'BB-' corporate credit rating and stable outlook on Nuance Communications remain unchanged. Standard & Poor's continues to view Nuance Communications' financial risk profile as 'significant,' highlighted by its acquisitions growth strategy. Pro forma for the upsized $700 million senior unsecured note issuance, operating lease-adjusted total debt to EBITDA is likely to be about 4.9x at close, high for a significant financial risk profile and primarily a result of deferred revenue recognition from recent acquisitions not allowed according to GAAP. We expect leverage to decline to below 4x over the next year, as deferred revenue from recent acquisitions is recognized, and as Nuance Communications generates revenue and EBITDA growth organically and through contributions from potential future acquisitions," S&P said. Nuance Communications is a provider of voice and language solutions for businesses and consumers globally. RATINGS LIST Nuance Communications Inc. Corporate Credit Rating BB-/Stable/-- Ratings Unchanged; Recovery Rating Revised Nuance Communications Inc. To From Senior Unsecured BB- BB- Recovery Rating 4 3 OCALA FUNDING: Allows BofA to Continue Suit Against FDIC -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Bank of America NA, as collateral agent, was given permission by the bankruptcy court in Jacksonville, Florida, to continue prosecution of a lawsuit asserting claims of Ocala Funding LLC against the Federal Deposit Insurance Corp. According to the report, the bank has the right to prosecute the lawsuit against the FDIC, in its role as receiver for Colonial Bank, stemming from powers of attorney arising from Bank of America's role as collateral agent for various debts owing by Ocala. The Bloomberg report discloses that because Bank of American had been pursuing the suit for two years without objection from Ocala; the bankruptcy judge is permitting the suit to proceed in federal district court in Washington. Ocala didn't oppose allowing Bank of America to proceed with the suit. Bank of America said in a court filing that any recoveries in the lawsuit will go to Ocala's creditors. About Ocala Funding Orange, Florida-based Ocala Funding, LLC, a funding vehicle once controlled by mortgage lender Taylor Bean & Whitaker Mortgage Corp., filed a Chapter 11 petition (Bankr. M.D. Fla. Case No. 12-04524) in Jacksonville on July 10, 2012. Ocala Funding used to be the largest originator and servicer of residential loans. Ocala was created by Taylor Bean & Whitaker to purchase loans originated by TBW and selling the loans to third parties, Freddie Mac. In furtherance of this structure Ocala raised money from noteholders Deutsche Bank AG and BNP Paribas Mortgage Corp. and other financial institutions, as secured lenders through sales of asset-backed commercial paper. TBW was forced to file for Chapter 11 relief (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009, amid allegations of fraud by Taylor Bean's former CEO Lee Farkas and other employees. Mr. Farkas is now serving a 30-year prison term for 14 counts of conspiracy and fraud for being the mastermind of a $2.9 billion bank fraud. Mr. Farkas allegedly directed the sale of more than $1.5 billion in fake mortgage assets to Colonial Bank and misappropriated more than $1.5 billion from Ocala. TBW's bankruptcy also caused the demise of Colonial Bank, which for years was TBW's primary bank. TBW and its joint debtor-affiliates confirmed their Second Amended Joint Plan of Liquidation on July 21, 2011, and the TBW Plan became effective on Aug. 10, 2011. The TBW Plan established the TBW Plan Trust to marshal and distribute all remaining assets of TBW. Neil F. Lauria, as CRO for TBW and trustee of the TBW Plan Trust, signed the Chapter 11 petition of Ocala. In its Chapter 11 Petition, Ocala estimated more than $1 billion in assets and debts. Ocala holds 252 mortgage loans with an unpaid balance of $42.3 million as of May 31, 2012. The Debtor also holds five "real estate owned" properties resulting from foreclosures. The Debtor also holds $22.4 million in proceeds of mortgage loans previously owned by it that are on deposit in an account in the Debtor's name at Regions Bank. It also has an interest in $75 million in cash, consisting of proceeds of mortgage loans previously owned by the Debtor, that are in an account maintained by Bank of America, N.A. as prepetition indenture trustee for the benefit of the Noteholders. The Debtor also holds a claim in the current amount of $1.6 billion against the estate of TBW. The largest unsecured creditors include the Federal Deposit Insurance Corp., owed $898,873,958; and Cadwalader, Wickersham & Taft LLP, owed $1,632,385. Judge Jerry A. Funk presides over the case. Proskauer Rose LLP and Stichter, Riedel, Blain & Prosser, serve as the Debtor's counsel. Neil F. Lauria at Navigant Capital Advisors, LLC, serves as the Debtor's Chief Restructuring Officer. OLIN CORPORATION: Moody's Assigns 'Ba1' Rating on $175MM Notes -------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Olin Corporation's offering of $175 million of 10 year notes. Proceeds from the new debt along with balance sheet cash will be used to acquire K.A. Steel Chemicals (KA Steel) for $328 million. The outlook is stable. "Despite the high valuation multiple, we view this as an important strategic acquisition that greatly improves Olin's downstream integration by adding caustic soda distribution, expanding its bleach capacity and providing a platform for the distribution of other chlor alkali derivatives," stated John Rogers Senior Vice President at Moody's. Ratings assigned: Olin Corporation Senior unsecured notes at Ba1 (LGD4; 62%) Rating Rationale Olin's Ba1 Corporate Family Rating (CFR) reflects its small size, the historic concentration of profitability in a single commodity chemical product line (chlor alkali), a sizable dividend and significant environmental liabilities relative to the size of the company. Additionally, the increasing cost of, and concerns over potential future restrictions on, the transportation of chlorine by rail present a moderate business risk and Olin will likely shift more of its production toward value added derivatives, like bleach, potassium hydroxide and hydrochloric acid over time. The rating is supported by a moderate cash balances subsequent to the acquisition, strong credit metrics (pro forma June 30, 2012 Net Debt/EBITDA of 2.0x Retained Cash Flow/Net Debt of just under 30%, including Moody's adjustments), its position as the fourth largest chlor alkali producer in North America, the sustained improvement in Winchester profitability, as well as the expectation that Olin will continue to generate very strong credit metrics. Olin announced on July 18, 2012 it would acquire KA Steel for $328 million in cash. The $200 million senior unsecured notes will be held in escrow until the transaction closes, and if Olin fails to complete the transaction, the funds will be returned to noteholders. The transaction is expected to close by the end of the third quarter and is only subject to regulatory approval. Olin will pay over 10x EBITDA for this acquisition. However, it expects to more than double EBITDA over the next three years through synergies, bringing the valuation multiple to a more reasonable level. The acquisition expands the company's presence in caustic soda distribution, expands bleach capacity by 20%, broadens Olin's current customer base and should facilitate reductions in freight and logistics costs. Furthermore, the company believes that this transaction provides a platform to expand its sales of other value added chlor alkali derivatives such as hydrochloric acid (HCl) and potassium hydroxide (KOH). The stable outlook assumes that the company will not pursue another sizable acquisition over the next 18 months so that it can demonstrate the successful integration of KA Steel and increase its balance sheet cash to prefund a portion of the purchase price of the next acquisition or large capital investment. Despite very strong net debt credit metrics, the historic concentration of profitability in a single commodity chemical has limited Olin's CFR to Ba1. Over the past several years, Olin has expanded its chlor alkali derivatives business and the sustainability of Winchester's profit improvement. If Olin can continue to generate top and bottom line growth in Winchester and its chlor alkali derivatives (bleach, KOH, HCl, etc.) without a further significant increase in debt, Moody's could raise the rating back to investment grade. To the extent that Debt/EBITDA rises above 2.5x and is likely to remain at that level for an extended period, Moody's would likely lower Olin's rating by one notch. The principal methodology used in rating Olin Corporation was the Global Chemical Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Olin Corporation, headquartered in Clayton, MO, is the fourth largest producer of chlor alkali (chlorine and caustic soda) and its derivatives (bleach, potassium hydroxide, hydrochloric acid and sodium hydrosulfite) in North America. In addition, it is a manufacutrer of brand name small caliber ammunition ("Winchester"). Olin reported revenues of $2 billion on an LTM basis ending June 30, 2012. OLIN CORPORATION: S&P Rates $175MM Unsecured Notes 'BB-' -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating and '5' recovery rating to Olin Corp.'s $175 million senior unsecured notes due 2022. "At the same time, we revised our recovery ratings on Olin's existing unsecured notes to '5' from '6' and raised our issue-level ratings to 'BB-' from 'B+'. The '5' recovery rating indicates our expectation for a modest (10%-30%) recovery in the event of a payment default," S&P said. "At the same time, we affirmed our 'BB' corporate credit rating on Olin. The outlook is positive," S&P said. "Our ratings on Olin reflect the company's established market positions in the chlor-alkali industry, good profitability, and adequate liquidity," said credit analyst Seamus Ryan. "We also base our ratings on our belief that management will continue to be financially prudent in terms of growth spending and use of debt leverage. However, the company is also subject to significant cyclicality and volatile operating performance stemming from its large chlor-alkali operations." "The positive outlook reflects our expectation that stable ECU prices and growing contributions from bleach and HCl should support operating results and credit quality. Based on our forecasts, we could raise the rating modestly if pro forma revenue grows by at least 5% over the next year with a modest improvement in margins, leading to FFO to debt consistently above the 30% level. Such a scenario could result from some recovery in chlor- alkali demand and the successful integration of the K.A. Steel acquisition," S&P said. "We could revise the outlook to stable if pro forma revenues decline by about 5% and gross margins decline by about 150 basis points over the next year, leading to FFO to debt below 25%. Such a scenario could occur if weak caustic soda demand causes ECU pricing to fall and the growth of Olin's bleach and HCl sales slow. We could also revise the outlook to stable or lower ratings if the company further increases debt to fund additional acquisitions or growth spending without offsetting improvements to the business risk profile," S&P said. OPPIO-CAPURRO PROPERTIES: Case Summary & Creditors List ------------------------------------------------------- Debtor: Oppio-Capurro Properties, LLC 643 John Fremont Drive Reno, NV 89509 Bankruptcy Case No.: 12-51834 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court District of Nevada (Reno) Judge: Bruce T. Beesley Debtor's Counsel: Alan R. Smith, Esq. THE LAW OFFICES OF ALAN R. SMITH 505 Ridge Street Reno, NV 89501 Tel: (775) 786-4579 E-mail: mail@asmithlaw.com Scheduled Assets: $761,680 Scheduled Liabilities: $1,948,891 A copy of the Company's list of its six largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nvb12-51834.pdf The petition was signed by Charles Oppio/Keith Capurro, managers/members. PACESETTER FABRICS: Has Access to Cash Collateral Until Sept. 14 ---------------------------------------------------------------- Pacesetter Fabrics, LLC, asks the U.S. Bankruptcy Court for the Central District of California to approve a fifth stipulation extending the interim use of cash collateral until Sept. 14, 2012. The Debtor relates that secured creditor Cathay Bank consents to the continued use of cash collateral. The Debtor will use the cash to pay actual, necessary and reasonable expenses of ordinary maintenance and operation of the collateral. The Debtor proposes that in additional to any other payments required to be made to the lender in the original stipulation, the Debtor will pay to the lender (a) all payments required -- weekly payments of $10,000; (b) interest payments of not less than $37,500; and (c) payments of not less than $100,000. As of the Petition Date, the bank asserts it is owed $12.6 million in the aggregate plus attorneys' fees and costs as of June 17, 2011, under various prepetition secured loan agreements with the Debtor. The debt includes a $17.5 million loan under a 2009 agreement among Pacesetter, its affiliate Rock L.A. Fashion LLC, and the bank. PASSIONATE PET: Files Petition for Ch. 7 Liquidation ---------------------------------------------------- BankruptcyData.com reports that Passionate Pet filed for Chapter 7 protection (Bankr. N.D. Calif. Case No. 12-19314). The Company is represented by Bruce J. Tackowiak, Esq. In its most recent quarterly report filed with the SEC, the Company said it discontinued operations in its Irvine location, has incurred recurring losses from operations resulting in an accumulated deficit of $3,411,313, and as of Dec. 31, 2011, current liabilities exceeded its current assets by $2,165,681. In addition, the Company said that it is currently in default on its lease for its only remaining retail location. Irvine, Calif.-based Passionate Pet, Inc., owns and operates a retail pet store which offers a combination of premium pet food and supplies. PATRIOT COAL: Davis Polk Approved as Bankruptcy Counsel ------------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized Patriot Coal Corporation, et al., to employ Davis Polk & Wardwell LLP, as their attorneys to perform the legal services that will be required during the Chapter 11 cases. In the motion, the Debtors said they have applied to employ Curtis Mallet-Prevost, Colt & Mosle LLP as conflicts counsel to represent the Debtors during the chapter 11 cases with respect to matters that may arise for which Davis Polk cannot or will not represent the Debtors because of actual or potential conflicts of interest. Davis Polk will continue to work closely with the Debtors, Curtis, and each of the Debtors' other retained professionals to clearly delineate each professional's respective duties and to prevent unnecessary duplication of services. Marwill S. Huebner, a partner of Davis Polk, assures the Court that the firm neither holds nor represents any interest adverse to the Debtors and their estates. About Patriot Coal Corp. St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Authorized to Pay $25MM Critical Vendors Claim ------------------------------------------------------------ The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized, on a final basis, Patriot Coal Corporation, et al., to pay some or all of the prepetition claims of the critical vendors in an aggregate amount not to exceed $25 million. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: MSHA Lifts Imminent Danger Order at Eagle Mine ------------------------------------------------------------ Newtown Energy, Inc., a subsidiary of Patriot Coal Corporation, received an imminent danger order under Section 107(a) of the Mine Act at the Eagle underground mine on Aug. 2, 2012. The Eagle Mine ceased production in May 2012. During an examination of an airshaft formerly used to ventilate the Eagle Mine, a Mine Safety and Health Administration representative detected an accumulation of excess methane near the bottom of the airshaft. The Company has taken appropriate actions to alleviate the methane, and MSHA terminated the 107(a) order on Aug. 3, 2012. No injuries resulted from the condition. The Company received approval from Federal and state regulatory agencies to permanently seal the airshaft as part of the mine closure process. The Company disputes that the condition constituted an imminent danger as set forth under Section 107(a) and intends to vigorously contest the issuance of the order. The Dodd-Frank Wall Street and Consumer Protection Act was enacted on July 21, 2010. Section 1503 of the Act requires a Current Report on Form 8-K if a company is issued an imminent danger order under Section 107(a) of the Federal Mine Safety and Health Act of 1977 by the federal Mine Safety and Health Administration. About Patriot Coal Corp. St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Insurers Want Case Moved to West Virginia ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that four insurance companies that supplied reclamation and surety bonds to Patriot Coal Corp. said Patriot's bankruptcy case should be moved from Manhattan to West Virginia. According to the report, the insurance companies say Patriot had no connection with New York until five weeks before bankruptcy on July 9 when two subsidiaries were incorporated in New York. Otherwise, Patriot has "no nexus whatsoever" with Manhattan, the insurers say. On the other hand, there are "substantial connections with West Virginia, whose state regulators oversee operations. While none of the 50 largest unsecured creditors is in New York, 11 with claims totaling $9.6 million are from West Virginia. Pennsylvania comes in second place with three creditors and $6.8 million in claims, the motion says. The report notes the insurance companies concede in their Aug. 7 motion that venue in New York is technically proper because the two subsidiaries are incorporated in New York. They nonetheless contend the case should be sent to West Virginia for the "interest of justice and convenience of the parties" because the largest part of Patriots operations are in West Virginia. The insurance companies seeking to change venue are Argonaut Insurance Co., Indemnity National Insurance Co., US Specialty Insurance and Westchester Fire Insurance Co. Together, they have wrote $70 million in policies for Patriot. About Patriot Coal Corp. St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PEREGRINE FINANCIAL: Liquidation of Wasendorf's Assets Begins ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that, the receiver for Peregrine Financial Group Inc. was given authority Aug. 8 by a federal district judge in Chicago to take the $1.3 million cash surrender value of an insurance policy on the life of Chief Executive Officer Russell R. Wasendorf Sr. The receiver also was empowered to liquidate the jet aircraft, believed to be worth $3.2 million. According to the report, the aircraft may generate nothing for creditors because the manufacturer has a lien of $4.3 million. The receivership began on July 10 in U.S. District Court in Chicago, where the judge appointed a receiver and froze the assets the same day. About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's Chief Executive Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial Group Inc. is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PEREGRINE FINANCIAL: Receiver Wins Bid to Cash in Life Insurance ---------------------------------------------------------------- Megan Stride at Bankruptcy Law360 reports that the receiver in the U.S. Commodity Futures Trading Commission's fraud suit against Peregrine Financial Group Inc. won an Illinois federal judge's approval to surrender CEO Russell R. Wasendorf Sr.'s stake in a plane and try to maximize the value of two life insurance policies he owns. U.S. District Judge Rebecca R. Pallmeyer granted receiver Michael M. Eidelman's bid to turn in a Wasendorf life insurance policy issued in 2004 for its $1.3 million cash surrender value. About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's Chief Executive Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial Group Inc. is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PEREGRINE FINANCIAL: Trustee Wins OK to Subpoena JPMorgan, Others ----------------------------------------------------------------- Megan Stride at Bankruptcy Law360 reports that Peregrine Financial Group Inc.'s liquidating trustee won court approval to subpoena JPMorgan Chase Bank NA, Goldman Sachs & Co. and eight other major banks in order to investigate any potentially shady transactions in the bankrupt brokerage firm's records. U.S. Bankruptcy Judge Carol A. Doyle gave trustee Ira Bodenstein the go-ahead to send subpoenas to at least 10 financial institutions ? a group that also includes Morgan Stanley & Co. Inc. and Bank of New York Mellon Corp. ? demanding documents related to Peregrine's conduct. About Peregrine Financial Peregrine Financial Group Inc. filed to liquidate under Chapter 7 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 12-27488) on July 10, 2012, disclosing between $500 million and $1 billion of assets, and between $100 million and $500 million of liabilities. Earlier that day, at the behest of the U.S. Commodity Futures Trading Commission, a U.S. district judge appointed a receiver and froze the firm's assets. The firm put itself into bankruptcy liquidation in Chicago later the same day. The CFTC had sued Peregrine, saying that more than $200 million of supposedly segregated customer funds had been "misappropriated." The CFTC case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-5383, U.S. District Court, Northern District of Illinois (Chicago). Peregrine's Chief Executive Russell R. Wasendorf Sr. unsuccessfully attempted suicide outside a firm office in Cedar Falls, Iowa, on July 9. The bankruptcy petition was signed in his place by Russell R. Wasendorf Jr., the firm's chief operating officer. The resolution stated that Wasendorf Jr. was given a power of attorney on July 3 to exercise if Wasendorf Sr. became incapacitated. Peregrine Financial Group Inc. is the regulated unit of the brokerage PFGBest. At a quickly-convened hearing on July 13, the bankruptcy judge authorized the Chapter 7 trustee to operate Peregrine's business on a "limited basis" through Sept. 13. PINNACLE AIRLINES: Delays Q2 Form 10-Q Due to Bankruptcy Filing --------------------------------------------------------------- Pinnacle Airlines Corp. and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York on April 1, 2012. The Company has determined that it is unable to file its quarter report on Form 10-Q for the quarter ended June 30, 2012, within the prescribed time period without unreasonable effort and expense due to the considerable amount of time directed towards the Company's reorganization efforts under bankruptcy and the departure of key accounting personnel. As a result, the Company's financial results for the quarter ended June 30, 2012, have not been finalized. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/-- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems - Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. Pinnacle Airlines' balance sheet at Sept. 30, 2011, showed $1.53 billion in total assets, $1.42 billion in total liabilities and $112.31 million in total stockholders' equity. Debtor-affiliate Colgan Air, Inc. disclosed $574,482,867 in assets and $479,708,060 in liabilities as of the Chapter 11 filing. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. A seven-member official committee of unsecured creditors has been appointed in the case. The Committee selected Goodrich Corporation as its chairperson. The Committee tapped Morrison & Foerster LLP as its counsel. PONCE DE LEON: Cash Collateral Access Approved Until Sept. 25 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico extended Ponce De Leon 1403 Inc.'s authorization to use cash collateral of secured creditor PRLP 2011 Holdings, LLC, until the plan confirmation hearing, which is scheduled for Sept. 25, 2012. The Debtor, in its motion, requested for a permanent order authorizing use of cash collateral in the ordinary course of business; and an order granting replacement liens on the Debtor's assets in favor of PRLP as adequate protection. The Debtor would use the funds to continue its business operations. As adequate protection from any diminution in value of the lender's collateral, the Debtor will grant the lender adequate protection liens on all property of the Debtor's estate. At a hearing held on June 19, the Court also found that payment to PRLP of 70% of the sale of individual condominium units constitutes adequate protection. PRLP had objected to the cash collateral use, noting among other things that there is lack of evidence of any alleged "equity cushion." The Debtor also filed a pleading requesting that the Court amend the interim order in order to reflect that the amount owed to PRLP as of the Petition Date was $14,600,000, not $45,000,000. The Debtor explained that the amount of $45,000,000 related to the original construction loan for the project that began in 2005. About Ponce De Leon San Juan, P.R.-based Ponce De Leon 1403, Inc., developed, constructed, and operates the Metro Plaza Tower condominium and commercial property project in Santurce, Puerto Rico. The Metro Plaza Tower project consists of two 15-story towers atop a base structure that serves as a parking garage, common area, and retail space. Each tower houses 87 residential units. The base structure provides approximately 567 parking spaces and has approximately 14,000 square feet of commercial space available for lease. The common areas of the project include a swimming pool, a gym, gardens and a gazebo. Ponce De Leon 1403 Inc. filed for Chapter 11 protection (Bank. D. P.R. Case No. 11-07920) on Sept. 19, 2011. The Debtor estimated both assets and debts of between US$10 million and US$50 million. Carmen Conde Torres, Esq., at C. Conde & Assoc., in Old San Juan, Puerto Rico, represents the Debtor as counsel. U.S. Bankruptcy Court for the District of Puerto Rico has granted Ponce De Leon 1403 Inc. permission to employ Doris Barroso Vicens as accountant, with compensation to be paid in such amounts as may be allowed by the Court. PROSEP INC: Unit in Breach of Covenant With DnB Bank ---------------------------------------------------- ProSep Inc. disclosed in its earnings release that for the quarter ended June 30, 2012 that one of its wholly-owned subsidiaries was in breach of a covenant to maintain one of the financial ratios stipulated in the Senior Acquisition Term Loan Facility dated Oct. 23, 2007 between DnB Bank as lender, and said subsidiary, as Borrower. A covenant waiver wherein the lender confirmed that the breached covenant is not deemed to constitute an event of default was obtained by the Company's subsidiary. ProSep Inc. provides process solutions to the oil and gas industry. Net loss was $1.6 million for the second quarter of 2012, an improvement compared to a net loss of $2.4 million during the corresponding quarter of last year. A copy of the earnings release is available for free at: http://is.gd/x3EChV PULTEGROUP INC: S&P Affirms 'BB-' Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on PulteGroup Inc. to stable from negative. "At the same time, we affirmed our ratings on the company, including the 'BB-' corporate credit and issue-level ratings on the company's debt. Our recovery rating on the company's unsecured senior notes is '3', indicating a meaningful (50%-70%) recovery in the event of a payment default," S&P said. "The outlook revision reflects our expectation that improved revenue and profitability trends over the balance of 2012 will likely result in sufficient improvement in credit metrics to support PulteGroup's 'BB-' corporate credit rating," said credit analyst Susan Madison. "Despite a 7% reduction in active selling communities, PulteGroup posted year-on-year home sales and revenue gains for the second quarter of 2012 due to better absorption trends. PulteGroup also continues to benefit from improved operating margins following aggressive cost-cutting initiatives the company implemented in the second half of 2011, and we expect EBITDA growth to outpace revenue gains in 2012." "The stable outlook reflects our expectation that credit trends will gradually improve over the next year, resulting in credit metrics that are more in line with similarly rated industrial peers. We could lower our rating if demand for new homes falters and PulteGroup appears unlikely to meet our 2012 expectations for high single-digit growth in home sales and modest price appreciation. Under this downside scenario, debt-to-EBITDA is unlikely to approach 6x over the next year and liquidity could become constrained as the company's current $1.3 billion balance of cash and equivalents remains its primary source of liquidity to fund growth initiatives and meet sizeable upcoming debt maturities. Upwards rating momentum is not likely in the near term absent substantial debt reduction that reduces sizeable 2014 through 2016 maturities and results in debt-to-EBITDA declining to around 4x," S&P said. QUIGLEY CO: U.S. Trustee Objects to Newest Chapter 11 Plan ---------------------------------------------------------- Jamie Santo at Bankruptcy Law360 reports that the U.S. trustee on knocked the latest disclosure statement from Quigley Co. Inc., saying the Pfizer Inc. subsidiary had failed to explain how its recently proposed Chapter 11 reorganization differed from the plan the New York court refused to confirm two years earlier. Bankruptcy Law360 relates that U.S. Trustee Tracy Hope Davis said in her objection the court should reject Quigley's new disclosure statement, because it not only lacks adequate information for creditors, but also supports a Chapter 11 plan that is "patently unconfirmable." About Quigley Co. Quigley Co. was acquired by Pfizer in 1968 and sold small amounts of products containing asbestos until the early 1970s. In September 2004, Pfizer and Quigley took steps that were intended to resolve all pending and future claims against the Company and Quigley in which the claimants allege personal injury from exposure to Quigley products containing asbestos, silica or mixed dust. Quigley filed for bankruptcy in 2004 and has a Chapter 11 plan and a settlement with Chrysler. Quigley filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 04-15739) on Sept. 3, 2004, to implement a proposed global resolution of all pending and future asbestos- related personal injury liabilities. Lawrence V. Gelber, Esq., and Michael L. Cook, Esq., at Schulte Roth & Zabel LLP, represent the Debtor in its restructuring efforts. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it disclosed $155,187,000 in total assets and $141,933,000 in total debts. In April 2011, the bankruptcy judge approved a plan-support agreement with Pfizer and an ad hoc committee representing 30,000 asbestors claimants. A May 20, 2011 opinion by District Judge Richard Holwell concluded that Pfizer was directly liable for some asbestos claims arising from products sold by its now non-operating subsidiary Quigley. RG STEEL: Gets Court Approval for $22 Million Asset Sale -------------------------------------------------------- Jamie Santo at Bankruptcy Law360 reports that RG Steel LLC won Delaware federal court approval Wednesday for the separate sale of two Ohio assets, which will bring a total of $22 million, as the Company continues the liquidation of its remaining properties. No mention was made at Wednesday's hearing about the fate of the company's two marquee assets -- steel mills in Sparrows Point, Md., and Warren, Ohio -- which had been scheduled to be auctioned Tuesday, and counsel for RG Steel declined to comment on the auction when asked afterward, according to Bankruptcy Law360. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as its financial advisor. RUSSELL COOK: Owner of Lot Approved for Racetrack in Bankruptcy --------------------------------------------------------------- Kathryn Wall at News-Leader.com reports that Russell Cook and wife Wanda have filed for Chapter 11 bankruptcy. According to the report, the Cooks own the land near Ridgedale that was approved by Taney County officials for a NASCAR-style racetrack. Nearby residents and Big Cedar Lodge officials opposed the track over concerns about traffic, noise pollution and environmental impact. The report, citing court documents, says the Cooks owe as many as 49 creditors a total of $1 million to $10 million. The Cooks' net worth is estimated between $10 million to $50 million. The report notes the top 20 unsecured creditors owed the most money include Murphy Tractor of Springfield; Adam-Carter Consulting in Ozark; the Internal Revenue Service and Ozark Mountain Energy in Mount Vernon. The report adds the property narrowly avoided being sold on the auction block in April. At the time, the property was to be sold because the Cooks and other business partners owed more than $900,000 to Empire Bank. The report says, in April, Mr. Cook confirmed that the sale was cancelled because the bank and the debtors had come to an agreement. According to the report, Mr. Cook is also being sued by Paul Vozar, who claims Mr. Cook had violated a confidentiality agreement in the project. That civil case remains pending. Mr. Cook does not currently have a listed attorney in that case. SABRE INDUSTRIES: Moody's Assigns 'B2' Corp. Family Rating ---------------------------------------------------------- Moody's Investors Service assigned initial ratings to Sabre Industries, Inc.; Corporate Family ("CFR") and Probability of Default ("PDR") ratings of B2 and 1st lien bank obligations of B1, LGD-3, 37%. The ratings reflect financial leverage being deployed in the leveraged acquisition of Sabre by an affiliate of Kohlberg & Company as well as the company's modest scale and exposure to cyclical levels of capital expenditure in key end-markets of domestic electric transmission and distribution and wireless communication providers. A strong backlog of orders supports expectations for revenue growth, and, once near term capacity expansion is complete, should facilitate stronger free cash flow generation. The rating outlook is stable. Ratings Rationale Kohlberg Investors VII, L.P. along with several co-investors ("Kohlberg") has agreed to acquire Sabre from an affiliate of Corinthian Capital Group. The transaction will be funded with proceeds from a $130 million term loan, $62.5 million of subordinated debt (not rated) and a significant equity contribution. Sabre's B2 CFR and PDR incorporate the company's modest revenue base, significant financial leverage resident in its capital structure as well as a track record of limited free cash flow generation. The company is one of the larger North American providers of poles, towers and related storage shelters deployed in electric transmission & distribution grids as well as wireless communication networks. These sectors remain subject to cyclical developments but, in the short-term, the company's backlog drives expectations of higher revenue, particularly from its segment servicing electric transmission and distribution requirements. Growth historically has required incremental working capital and investment in productive capacity, constraining free cash flow. Over the next 12-18 months, capital expenditures related to expansion plans and higher sales volumes and related incremental working capital needs will produce negative free cash flow and require external financing. The company's comparatively slim margins and high level of fixed charges flowing from the acquisition debt and operating leases are expected to initially produce relatively modest coverage ratios. Once current expansion projects are complete, lower maintenance capex combined with ongoing infrastructure spending by its customers should improve prospects for free cash flow. The project nature of the business mix, dependence upon a relatively narrow set of customers, and continued management of metal cost/price developments can also add volatility to its results as will an acquisition strategy that may require incremental indebtedness. The stable outlook anticipates that demand for Sabre's product offerings will maintain revenues at fairly high levels over the rating horizon. Similarly, those volumes should sustain the company's margins and begin to moderate working capital needs as growth subsides in subsequent periods, allowing firmer prospects for material free cash flow. Adequate liquidity is anticipated as a result of availability under a $60 million committed revolving credit facility. Lower ratings or a negative outlook could develop if debt/EBITDA exceeded 6 times as a result of lower profitability or incurring additional debt, EBITA/interest fell below 1.25 times or if free cash flow remained negative as a result of factors beyond currently anticipated capex. Developments that could lead to stronger ratings or a positive outlook would include lowering debt/EBITDA below 4 times combined with EBITA/interest coverage materially above 2 times and free cash flow/debt consistently above 5%. Ratings assigned: Corporate Family, B2 Probability of Default, B2 $60 million revolving credit, B1 (LGD-3, 37%) $130 million term loan, B1 (LGD-3, 37%) The principal methodology used in rating Sabre was the Global Manufacturing Industry published in December 2010. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Sabre Industries, Inc., headquartered in Alvarado, TX, manufactures towers, poles, shelters and related transmission structures used in the wireless communications and electric transmission and distribution industries. Annual revenues in fiscal 2012 were approximately $369 million. SANMINA-SCI CORP: Moody's Cuts Sr. Unsec. Note Rating to 'B2' ------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of Sanmina- SCI Corporation's $500 million senior unsecured notes due 2019 and $257 Million (originally $300 Million) Senior Floating Rate Notes due 2014, each to B2 (LGD5-72%) from B1 (LGD4-56%). Following the full redemption of the Senior Subordinated Notes due 2016, the expansion of the revolving credit facility and the addition of a corporate mortgage there is more senior debt within Sanmina's capital structure. As such, the senior unsecured debt is expected to bear greater loss absorption relative to Sanmina's other liabilities, including sizeable foreign payables. In accordance with Moody's Loss Given Default Methodology ("LGD"), the senior unsecured debt rating was lowered to reflect this higher expected loss. The Corporate Family Rating ("CFR") and the probability of default rating remain B1 and the rating outlook is stable. The following is a summary of the rating action and Moody's current ratings for Sanmina: Ratings Downgraded: Senior Unsecured Notes due 2019 -- B2 (LGD-5, 72%) from B1 (LGD-4, 56%) Senior Floating Rate Notes due 2014 -- B2 (LGD-5, 72%) from B1 (LGD-4, 56%) Ratings Rationale Sanmina's B1 CFR is supported by its status as a leading Tier-1 electronics manufacturing supplier (EMS) supplier with a focus on non-consumer high-end products and services and vertically- integrated manufacturing. However, the B1 rating incorporates Moody's expectation for potentially weaker EBITDA (in the range of $290 to $350 million, Moody's adjusted) and slightly higher financial leverage (up to 4x total debt to EBITDA, Moody's adjusted) in fiscal year 2013 amid a slowing global economy. The weakness in operating performance and higher leverage is counterbalanced by improving liquidity with higher free cash flow generation due to reduced working capital requirements. Moody's expects Sanmina to generate $140 to $200 million of free cash flow in fiscal year 2012. Sanmina is smaller in size and has higher financial leverage compared to its larger vertically-integrated EMS peers. In addition, Sanmina's operating/free cash flow margin volatility, as well as sub-par performance in its printed circuit board (PCB) division weigh on the ratings. The rating also reflects Sanmina's limited demand and pricing visibility, customer concentration (top ten customers accounted for about 50% of net revenue over the last twelve months) and exposure to original equipment manufacturers (OEMs) in highly cyclical end markets (e.g., telecommunications and enterprise computing). Lastly, the rating recognizes Sanmina's sizable working capital requirements during periods of rising demand and strong revenue growth, which can result in episodes of negative free cash flow. Structural Considerations The individual debt instrument ratings are rated based on the probability of default, which is B1, as well as the expected loss given default of the individual debt instrument. The senior unsecured notes are rated B2 (LGD-5, 72%), one notch below the CFR. In accordance with Moody's LGD Methodology, the senior unsecured debt is expected to bear greater loss absorption (following the full redemption of the company's Senior Subordinated Notes due 2016 and the addition of more senior debt within its capital structure) relative to Sanmina's other liabilities, including sizeable foreign payables. The senior unsecured notes are guaranteed by the domestic guarantor subsidiaries. However, the majority of Sanmina's assets are outside of the US. The $300 million ABL facility is senior to the unsecured notes, and the size of the ABL facility is relatively small compared to the total amount of the senior unsecured notes. The ABL facility is established on a borrowing base and is secured by a first lien interest on: (i) the accounts receivable and inventory of the company's US and Canadian operating subsidiaries; and (ii) 65% of the stock of Sanmina's first-tier foreign subsidiaries and the credit facilities residing at the foreign operating subsidiaries. What Could Change the Rating - Up It is unlikely ratings could be upgraded over the near-term given Moody's expectation for weaker EBITDA and higher leverage. However, ratings could be considered for an upgrade if Sanmina: (i) continues to maintain gross and operating margins of at least 7.5% and 3.5%, respectively; (ii) sustains total debt to EBITDA under 4x (Moody's adjusted); (iii) successfully executes working capital initiatives to improve DSO and inventory days such that the cash conversion cycle improves to the mid-40 days level (Moody's adjusted) on a sustained basis; and (iv) demonstrates consistent positive free cash flow generation without deterioration in margins and financial leverage metrics. What Could Change the Rating - Down The rating could be downgraded if Sanmina experienced: (i) substantial revenue erosion either due to secular decline of end markets served or market share/customer losses due to execution issues; (ii) increased competition, industry consolidation and/or operational realignment; (iii) deterioration in profitability metrics (e.g., gross margins below 6.0% or operating margins below 2.5% on a sustained basis); or (iv) sustained negative free cash flow generation or cash levels below $350 million due to increasing working capital intensity, rising capex or significant stock purchases. The principal methodology used in rating Samina was the Global Distribution & Supply Chain Services Industry Methodology published in November 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. SANUWAVE HEALTH: Incurs $1.4 Million Net Loss in Second Quarter --------------------------------------------------------------- SANUWAVE Health, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $1.42 million on $210,357 of revenue for the three months ended June 30, 2012, compared with a net loss of $3.57 million on $163,749 of revenue for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss of $3.25 million on $448,897 of revenue, compared to a net loss of $5.75 million on $415,502 of revenue for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $3.40 million in total assets, $7.70 million in total liabilities and a $4.29 million total stockholders' deficit. Bankruptcy Warning The Company said in its quarterly report for the period ended June 30, 2012, that the continuation of its business is dependent upon raising additional capital. The Company expects to devote substantial resources to continue its research and development efforts, including clinical trials. Because of the significant time it will take for the Company's products to complete the clinical trial process, and for the Company to obtain approval from regulatory authorities and successfully commercialize its products, the Company will require substantial additional capital. The operating losses create uncertainty about the Company's ability to continue as a going concern. As of June 30, 2012, the Company had cash and cash equivalents of $1,400,875. The Company may be able to raise additional capital through the issuance of common or preferred stock, securities convertible into common stock, or secured or unsecured debt, or the Company may seek an investment by a strategic partner in a specific clinical indication or market opportunity, or the Company may sell all or a portion of the Company's assets. If these efforts are unsuccessful, the Company may be forced to seek relief through a filing under the U.S. Bankruptcy Code. A copy of the Form 10-Q is available for free at: http://is.gd/lRLCIk About SANUWAVE Health Alpharetta, Ga.-based SANUWAVE Health, Inc., is an emerging global regenerative medicine company focused on the development and commercialization of noninvasive, biological response activating devices for the repair and regeneration of tissue, musculoskeletal and vascular structures. BDO USA, LLP, in Atlanta, Georgia, expressed substantial doubt about SANUWAVE's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and is economically dependent upon future issuances of equity or other financing to fund ongoing operations. SELECT MEDICAL: Moody's Cuts Sr. Secured Debt Rating to 'Ba3' ------------------------------------------------------------- Moody's Investors Service downgraded the rating on the senior secured debt of Select Medical Corporation, a wholly owned subsidiary of Select Medical Holdings Corporation (collectively Select Medical), to Ba3 (LGD 3, 38%) from Ba2 (LGD 2, 28%). This action concludes the review initiated on August 2, 2012 following Select Medical's announcement that it had initiated discussions regarding an incremental extension of credit under its senior secured credit facility. The downgrade of the senior secured debt reflects the increase in the senior secured claim in the capital structure and corresponding decline in expected recovery as determined in the application of Moody's Loss Given Default Methodology. Moody's understands that the incremental term loan of $275 million will be used to redeem a like amount of the 7.625% subordinated notes due 2015. Following is a summary of Moody's actions. Ratings downgraded: Select Medical Corporation: Senior secured revolving credit facility expiring 2016, to Ba3 (LGD 3, 38%) from Ba2 (LGD 2, 28%) Senior secured term loan B due 2018, to Ba3 (LGD 3, 38%) from Ba2 (LGD 2, 28%) Ratings unchanged/LGD assessments revised: Select Medical Corporation: 7.625% senior subordinated notes due 2015, to B3 (LGD 5, 87%) from B3 (LGD 5, 80%) Select Medical Holdings Corporation: Senior floating rate notes due 2015, B3 (LGD 6, 94%) Corporate Family Rating, B1 Probability of Default Rating, B1 Speculative Grade Liquidity Rating, SGL-2 RATINGS RATIONALE Select Medical's B1 Corporate Family Rating reflects the company's moderately-high leverage, as well as its reliance on the specialty hospital segment for the majority of its EBITDA, which presents risk given the concentration of revenue from Medicare. The rating also reflects Moody's consideration of Select Medical's considerable scale and position as one of the largest long-term acute care hospital operators and outpatient rehabilitation providers in the US. Ratings also reflect Moody's expectation that the company will continue to generate strong free cash flow that can be used to repay debt and invest in growth opportunities. Moody's could upgrade the rating if it expects the company to maintain leverage below 4.0 times either through additional debt repayment or EBITDA growth. Moody's would also have to be comfortable that the current operations could absorb potential negative regulatory developments at the higher rating level or see evidence that the regulatory environment was becoming more benign. The considerable reduction in leverage over the last two years and the improvement in the maturity profile of the company mitigate the likelihood of a rating downgrade in the near term. Moody's could downgrade the rating if adverse developments in Medicare reimbursement result in significant deterioration in margins or cash flow coverage metrics, or if the company completes a material debt financed acquisition or shareholder initiative. More specifically, Moody's could downgrade the rating if it expects leverage to rise and be sustained above 5.0 times. For further details, refer to Moody's Credit Opinion for Select Medical Holdings Corporation on moodys.com. The principal methodology used in rating Select Medical was the Global Healthcare Service Provider 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. Select Medical, headquartered in Mechanicsburg, PA, provides long- term acute care hospital services and inpatient acute rehabilitative care through its specialty hospital segment. The company also provides physical, occupational, and speech rehabilitation services through its outpatient rehabilitation segment. Select Medical recognized approximately $2.9 billion in revenue, before considering the provision for bad debt, in the twelve months ended June 30, 2012. SELECT MEDICAL: S&P Cuts Senior Secured Debt Rating to 'BB-' ------------------------------------------------------------ Standard & Poor's Ratings Services revised its recovery rating on Select Medical Corp.'s senior secured debt to '2', indicating its expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default, from '1' (90% to 100% recovery expectation). "We lowered our issue-level rating on this debt to 'BB-' (one notch higher than our 'B+' issuer rating on the company) from 'BB', in accordance with our notching criteria for a '2' recovery rating. The issue-level rating was removed from CreditWatch, where it was placed with negative implications Aug. 1. The rating revisions follow Select's upsizing of its term loan due 2018 by $275 million, bringing the aggregate amount to $1.1 billion. Our view is that the larger size of this debt class reduces recovery prospects in the event of a default. All other existing ratings on the company are unaffected," S&P said. "The corporate credit rating on Select is 'B+' and the rating outlook is stable. The 'B+' rating reflects our assessment of the company's business risk profile as 'weak' and the financial risk profile as 'aggressive,' according to our criteria. We view Select's business risk profile as 'weak' predominately because of reimbursement risk and its relatively narrow focus. Government reimbursement risk is the single most significant key credit factor in our business risk assessment, because the company's most important business, its specialty hospital division, relies on Medicare for about 60% of that division's revenues and nearly 50% of total revenues. Our assessment of Select Medical's financial risk profile as 'aggressive' reflects our calculation of debt to EBITDA of about 4.5x as of March 31, 2012, and is consistent with our expectation that leverage will remain near that level for the rest of 2012," S&P said. RATINGS LIST Select Medical Corp. Corporate Credit Rating B+/Stable/-- Ratings Revised and Off CreditWatch To From Select Medical Corp. Senior Secured BB- BB/Watch Neg Recovery Rating 2 1 SENTINEL MANAGEMENT: BNY Mellon Beats Trustee in $550MM Appeal -------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Bank of New York Mellon Corp. won an appeal Aug. 9 upholding its victory in a $550 million lawsuit brought by the Chapter 11 trustee for defunct money manager Sentinel Management Group Inc. According to the report, the 24-page opinion from the U.S. Court of Appeals in Chicago upheld a ruling in November 2010 by U.S. District Judge James B. Zagel who dismissed the trustee's claims following a 17-day trial without a jury. Judge Zagel also ruled that bank had a valid secured claim. The report recounts that the trustee filed suit in March 2008 alleging the bank aided fraud conducted by Sentinel's management. Sentinel's liquidating Chapter 11 plan was confirmed in December 2008. On appeal, Sentinel trustee Frederick Grede argued that the bank was liable for receiving fraudulent transfers. The trustee contended that receiving money from customers' segregated accounts amounted to fraudulent transfers automatically. According to the report, the opinion Thursday by Circuit Judge John D. Tinder said that using "client funds as collateral to finance proprietary trading is quite troubling." Judge Tinder nonetheless upheld Judge Zagel's ruling because the lower court's findings of fact "are entitled to great deference." Judge Tinder said that moving money from clients' segregated accounts is insufficient "on its own" to support a conclusion that the transfers were made with "actual intent to hinder, delay or defraud." He viewed the improper use of customer funds as evidencing "ambiguous purposes." The result on appeal might have been different; Judge Tinder said if Mr. Grede had shown that Sentinel "knew at the time of the transfers that its scheme would ultimately fail." Judge Tinder also ruled that Mr. Grede failed to show valid grounds for equitably subordinating the bank's claims. "At worse," he said, "the bank officials acted negligently, but not fraudulently." according to the report The report relates according to Judge Tinder, the bank's knowledge that Sentinel was pledging $300 million with only $2 million in capital "doesn't require a finding that the bank's conduct was sufficiently egregious." The trustee alleged that the bank played a "pivotal role" in Sentinel's collapse and "aided and abetted breaches of fiduciary duty committed by certain Sentinel insiders." The decision on appeal is In re Sentinel Management Group Inc., 10-3787, U.S. 7th Circuit Court of Appeals (Chicago). The suit in district court is Grede v. Bank of New York, 08-2582, U.S. District Court, Northern District of Illinois (Chicago). About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- was a full service firm offering a variety of security solutions. The Company filed a voluntary Chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No. 07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd., represent the Debtor. Lawyers at Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represent the Official Committee of Unsecured Creditors. When the Debtor sought bankruptcy protection, it estimated assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Marc I. Fenton, Esq., at DLA Piper US LLP, and Vincent E. Lazar, Esq, at Jenner & Block LLP, represent the Chapter 11 Trustee. The Court confirmed a plan of liquidation for Sentinel on Dec. 15, 2008, and Mr. Grede is managing the liquidation. SERVICEMASTER CO: S&P Rates $1BB Tranche B Term Loan 'B+' --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' senior secured debt rating to Memphis, Tenn.-based The ServiceMaster Co.'s proposed tranche B term loan due January 2017, which the company estimates will be about $1 billion. The tranche B term loan would extend a portion of its existing $2.5 billion secured term loan facility due in July 2014. "The recovery rating on the secured term loan is '2', indicating our expectation of substantial recovery (70%-90%) to debtholders in the event of a default," S&P said. "We expect this transaction, together with the recently issued $1 billion of 6.125% senior unsecured notes, to be essentially leverage neutral as the company will use proceeds from both transactions primarily to repay existing debt. As such, we estimate the company's debt to EBITDA leverage will remain relatively unchanged, which was about 6.5x for the 12 months ended June 30, 2012. The company had approximately $3.9 billion of reported debt outstanding as of June 30, 2012," S&P said. "The ratings on ServiceMaster reflect our view that the company's financial profile continues to be 'highly leveraged,' particularly because the company's balance sheet remains highly leveraged and we expect cash flow protection measures to continue to be weak. In addition, we continue to consider ServiceMaster's business risk profile to be 'fair,' reflecting our view that the company's business will remain sensitive to still-weak economic conditions, consumer spending, and seasonal weather conditions. Still, ServiceMaster benefits from its business positions in its fragmented and competitive end markets, which have historically translated into good cash flow generation from a fairly diverse portfolio of services," S&P said. RATINGS LIST The ServiceMaster Co. Corporate Credit Rating B/Stable/-- New Rating The ServiceMaster Co. Sr secd tranche B term loan due January 2017 B+ Recovery Rating 2 SINCLAIR BROADCAST: Files Form 10-Q, Posts $30MM Income in Q2 ------------------------------------------------------------- Sinclair Broadcast Group, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $30.13 million on $253.55 million of total revenues for the three months ended June 30, 2012, compared with net income of $18.47 million on $188.86 million of total revenues for the same period during the prior year. The Company reported net income of $59.20 million on $477.39 million of total revenues for the six months ended June 30, 2012, compared with net income of $33.60 million on $371.46 million of total revenues for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $2.16 billion in total assets, $2.22 billion in total liabilities and a $66.28 million total deficit. A copy of the Form 10-Q is available for free at: http://is.gd/Z3UMNQ 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. * * * 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. SIONIX CORP: Messrs. Calligar and Brogan Named to Board ------------------------------------------------------- The Board of Directors approved the appointment of Ken Calligar and Bernard Brogan to Sionix Corporation's Board. On July 31, 2012, Mr. Calligar and Mr. Brogan each accepted the appointment and agreed to serve on the Company's Board of Directors. Mr. Calligar founded Convertible Capital, a division of Trump Securities, in July 2008, a New York based investment banking firm, specializing in highly tailored capital raising and advisory work, and remains its Managing Partner. From 2006 to 2008, Mr. Calligar was a managing director with Jefferies & Co. where he ran the equity-linked Capital Markets Group. In addition he has held managing positions in convertible securities groups at H&Q, Chase, PaineWebber, and UBS. Mr. Calligar was selected for the Company's Board of Directors due to his experience raising capital in both equity and debt markets. Since October, 2011 Mr. Calligar has been the holder of an approximately 6% membership interest in REVH20, LLC, a New York based provider of a fluids management suite-of-services to drillers and producers to reduce their overall costs and maximize their efficiency. Convertible Capital serves as an advisor and placement agent to REVH2O. REVH2O is currently constructing its primary water remediation & recycling facility in the heart of the Marcellus Shale (Ulysses, PA) gas formation. REVH20 holds a minority membership interest in Williston Basin 1, LLC, of which Sionix Corporation is a 60% member. REVH20 holds common shares and warrants in Sionix Corporation, and certain of its principals are shareholders of Sionix Corporation common stock. Mr. Calligar will receive a quarterly stipend of $7,500 for his Board service, which is payable in common stock the amount of which is based on the volume weighted average price of our common stock for the period of his service compensated. There is no arrangement between Mr. Calligar and any other person pursuant to which he was selected as a director. Mr. Brogan has been self-employed as a consultant since April 2000 and operates out of Dublin, Ireland where he resides. His consulting experience includes a variety of turn around and real estate projects. Mr. Brogan spent a majority of his career with Microsoft where he was employed from 1988 to 2000. He held a variety of engineering management and strategic positions in the Microsoft European Operations center in Dublin, Ireland. Mr. Brogan was selected for our Board of Directors for his engineering and manufacturing experience, and his business relationships. Mr. Brogan purchased a convertible note from Sionix Corporation in July 2008 in the amount of $750,000. The note was renewed in July 2009 and has been extended several times since the original due date, which was July 31, 2010. Currently the note remains unpaid and the maturity has been extended through Sept. 30, 2012. The current amount due including accrued interest is approximately $1,158,625. Mr. Brogan will receive a quarterly stipend of $7,500 for his Board service, which is payable in common stock the amount of which is based on the volume weighted average price of our common stock for the period of his service compensated. About Sionix Corp. Los Angeles, Calif.-based Sionix Corporation designs, develops, markets and sells cost-effective water management and treatment solutions intended for use in the oil and gas, agriculture, disaster relief, and municipal (both potable and wastewater) markets. The Company's balance sheet at March 31, 2012, showed $2.77 million in total assets, $3.60 million in total current liabilities, and a stockholders' deficit of $830,380. As reported in the TCR on Dec. 27, 2011, Kabani & Company, Inc., in Los Angeles, Calif., expressed substantial doubt about Sionix Corporation's ability to continue as a going concern, following the Company's results for the fiscal year ended Sept. 30, 2011. The independent auditors noted that the Company has incurred cumulative losses of $31.9 million. "In addition, the company has had negative cash flow from operations for the period ended Sept. 30, 2011, of $2,187,812." SOLYNDRA LLC: President Told Loan Was Solid Before Bankruptcy ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that U.S. Energy Secretary Steven Chu told President Barack Obama that the government-guaranteed loan to Solyndra LLC was sound, two months before the manufacturer of solar panels filed bankruptcy. The disclosure was made in documents released Aug. 10 by the Republican-led House Committee on Oversight and Government Reform. About Solyndra LLC Founded in 2005, Solyndra LLC was a U.S. manufacturer of solar photovoltaic solar power systems specifically designed for large commercial and industrial rooftops and for certain shaded agriculture applications. The Company had 968 full time employees and 211 temporary employees. Solyndra has sold more than 500,000 of its panels since 2008 and generated cumulative sales of over $250 million. Fremont, California-based Solyndra and affiliate 360 Degree Solar Holdings Inc. sought Chapter 11 bankruptcy protection (Bankr. D. Del. Lead Case No. 11-12799) on Sept. 6, 2011. Solyndra is at least the third solar company to seek court protection from creditors since August 2011. Judge Mary F. Walrath presides over the Debtors' cases. The Debtors are represented by Pachulski Stang Ziehl & Jones LLP as legal adviser. AlixPartners LLP serves as noticing claims and balloting agent. Imperial Capital LLC serves as the company's investment banker and financial adviser. The Debtors also tapped former Massachusetts Governor William F. Weld, now with the law firm McDermott Will & Emery, to represent the company in government investigations and related litigation. BDO Consulting, a division of BDO USA, LLP, as financial advisor and BDO Capital Advisors, LLC, serves as investment banker for the creditors' panel. The Official Committee of Unsecured Creditors of Solyndra LLC has tapped Blank Rome LLP as counsel and BDO Consulting as financial advisors. In October 2011, the Debtors hired Berkeley Research Group, LLC, and designated R. Todd Neilson as Chief Restructuring Officer. Solyndra owed secured lenders $783.8 million, including $527.8 million to the U.S. government pursuant to a federal loan guarantee, and held assets valued at $859 million as of the Petition date. The U.S. Federal Financing Bank, owned by the U.S. Treasury Department, is the Company's biggest lender. When they filed for Chapter 11, the Debtors pursued a two-pronged strategy to effectuate either a sale of their business to a "turnkey" buyer who may acquire substantially all of Solyndra's assets or, if the Debtors were unable to identify any potential buyers, an orderly liquidation of the assets for the benefit of their creditors. Solyndra did not receive acceptable offers to buy the business as a going concern. Two auctions late last year brought in a total of $8 million. A three-day auction in February generated another $3.8 million. An auction in June generated $1.79 million from the sale of 7,200 lots of equipment. Solyndra filed a liquidating plan at the end of July and scheduled a hearing on Sept. 7 for approval of the explanatory disclosure statement. SOUTH EDGE: Meritage Fails to Overturn Trustee's Confirmed Plan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Meritage Homes Corp., one of the eight original owners of the 2,000-acre Inspirada residential development in Henderson, Nevada, failed in its effort at overturning the U.S. Bankruptcy Court's approval of the project's reorganization plan in October. The report recounts that the trustee that Judge Bruce A. Markell appointed for the development worked out a settlement underlying the reorganization plan. The settlement brought together the trustee, the secured lenders and the owners other than Meritage. Meritage lodged the only objection to confirmation. According to the report, U.S. District Judge Philip M. Pro from Las Vegas wrote a 23-page opinion on Aug. 8 concluding that Bankruptcy Judge Markell committed no error in approving the plan. Judge Pro noted that the 9th Circuit, covering western states including California and Nevada, is alone among the federal courts of appeal by having a blanket prohibition against so called third- party releases. Judge Pro analyzed the plan as not giving releases to non bankrupt third parties such as the lenders and the home builder owners. He said that the plan only established the threshold that must be met if there are later lawsuits challenging conduct occurring during the Chapter 11 case. About South Edge Las Vegas, Nevada-based South Edge LLC owns the Inspirada project, an uncompleted 2,000-acre residential development in Henderson, Nevada, about 16 miles (26 kilometers) southeast of Las Vegas. The eight owners of the project include an affiliate of KB Home, a 49% owner. Other owners are Coleman Toll LP with 10.5%, Pardee Homes Nevada Inc. with 4.9%, Meritage Homes with 3.5%, and Beazer Homes USA Inc. with 2.6%. JPMorgan Chase Bank, N.A., Credit Agricole Corporate and Investment Bank, and Wells Fargo Bank, N.A., filed an involuntary chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 10-32968) on Dec. 9, 2010, against South Edge, LLC. The petitioning creditors are part of a lender group that provided a $595 million credit. New York-based JPMorgan serves as lender and agent for the group. South Edge filed motions to dismiss the involuntary petition. The Court conducted a contested trial on Jan. 24 and 25, 2011, and Feb. 2 and 3, 2011. On Feb. 3, 2011, the Court entered an order for relief under Chapter 11 of the Bankruptcy Code against the Debtor and issued an order directing the appointment of a chapter 11 trustee. The United States Trustee appointed Cynthia Nelson to serve as Chapter 11 trustee on Feb. 20, 2011. The Court approved the appointment three days later. South Edge is represented by lawyers at Klee, Tuchin, Bogdanoff and Stern LLP, and The Schwartz Law Firm, Inc., as legal counsel. The Chapter 11 trustee also tapped Schwartzer & McPherson Law Firm as local counsel. Petitioning creditors JPMorgan Chase Bank, N.A., and Wells Fargo Bank, N.A., are represented by lawyers at Morrison and Foerster LLP; and Lewis and Roca LLP. Credit Agricole is represented by lawyers at Haynes and Boone LLP, and Jolley Urga Wirth Woodbury & Standish. On Oct. 27, 2011, the Bankruptcy entered an order confirming a joint plan of reorganization that will implement a settlement negotiated in May by the secured lenders with the Chapter 11 trustee and the homebuilders that represented 92% of the ownership interests in the project. The plan was proposed by JPMorgan Chase Bank, N.A., as administrative agent under the Prepetition Credit Agreement, and the settling homebuilders. The plan calls for the settling homebuilders to pay the lenders $335 million to settle their claims. Meritage filed the sole objection to the plan and was not part of the settling group. Meritage has taken an appeal from the confirmation order. A copy of the Joint Plan of Reorganization proposed by JPMorgan Chase Bank, N.A., as administrative agent under the prepetition credit agreement, and the Settling Builders (amended as of Oct. 21, 2011) is available for free at: http://bankrupt.com/misc/southedge.dkt1309.pdf A copy of the Order confirming the Joint Plan of Reorganization is available for free at: http://bankrupt.com/misc/southedge.dkt1335.pdf SPEEDEMISSIONS INC: Richard Molinsky Discloses 1.4% Equity Stake ---------------------------------------------------------------- In an amended Schedule 13G filing with the U.S. Securities and Exchange Commission, Richard Molinsky and his affiliates disclosed that, as of July 31, 2012, they beneficially own 470,438 shares of common stock of Speedemissions, Inc., representing 1.4% of the shares outstanding. A copy of the filing is available at: http://is.gd/jaVOK5 About Speedemissions Tyrone, Georgia-based Speedemissions, Inc., is a test-only emissions testing and safety inspection company. After auditing the 2011 results, Habif, Arogeti & Wynne, LLP, in Atlanta, Ga., expressed substantial doubt about Speedemissions' ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and has a capital deficiency. The Company reported a net loss of $1.6 million on $8.3 million of revenue for 2011, compared with a net loss of $2.2 million on $9.3 million of revenue for 2010. The Company's balance sheet at March 31, 2012, showed $2.19 million in total assets, $851,141 in total liabilities, $4.57 million series A convertible, redeemable preferred stock, and a $3.23 million total shareholders' deficit. SPRINT NEXTEL: Keith Cowan Quits as Head of Strategic Planning -------------------------------------------------------------- Keith Cowan, president, Strategic Planning and Initiatives of Sprint Nextel Corporation, would be leaving the Company on Sept. 30, 2012. About Sprint Nextel Overland Park, Kan.-based Sprint Nextel Corp. (NYSE: S) -- http://www.sprint.com/-- is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. The Company's balance sheet at June 30, 2012, showed $49.02 billion in total assets, $39.79 billion in total liabilities and $9.22 billion in total shareholders' equity. * * * In February 2012, Moody's Investors Service assigned a B3 rating to Sprint Nextel's proposed offering of Senior Unsecured Notes and a Ba3 rating to Sprint's proposed offering of Junior Guaranteed Unsecured Notes. The proceeds will be used for general corporate purposes, the repayment of existing debt, network expansion and modernization, and the potential funding of Clearwire. All of Sprint's ratings remain on review for possible downgrade, including those assigned and the company's B1 corporate family rating and B1 probability of default rating. Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating and '2' recovery rating to Sprint's proposed $1 billion of senior guaranteed notes due 2020. These notes have subordinated guarantees from all the subsidiaries that guarantee the existing $2.25 billion revolving credit facility. The '2' recovery rating indicates expectations for substantial (70% to 90%) recovery in the event of payment default. As reported by the TCR on Aug. 8,2012, Fitch Ratings affirms, among other things, the Issuer default rating (IDR) of Sprint Nextel and its subsidiaries at 'B+'. The ratings for Sprint reflect the ongoing execution risk both operationally and financially regarding several key initiatives that the company expects will improve cash generation, network performance and longer-term profitability. SPRINT NEXTEL: Fitch Rates 2-Tranche Unsecured Notes Offering 'B+' ------------------------------------------------------------------ Fitch Ratings has assigned a 'B+/RR4' rating to Sprint Nextel Corporation's two-tranche benchmark-sized offering. This includes unsecured senior notes due 2020 and 2022. The company intends to use the net proceeds from the notes offering for general corporate purposes, which may include, among other things, redemptions or service requirements of outstanding debt, network expansion and modernization and potential funding of Clearwire. The Rating Outlook for Sprint Nextel and its subsidiaries is Negative. The ratings for Sprint reflect the on-going execution risk both operationally and financially regarding several key initiatives that the company expects will improve cash generation, network performance and longer-term profitability. Risks include achieving expected cost benefits associated with its network modernization, improving its competitive position with its 4G deployment, maintaining postpaid CDMA subscriber trends, improving iPhone dilution rates and retaining its Integrated Digital Enhanced Network (iDEN) subscribers. Second quarter results show the company has generally managed these risks with improved CDMA churn, strong ARPU growth, better than expected iDEN subscriber retention and accelerated iDEN network shutdown. Consequently, Sprint Nextel materially increased EBITDA guidance for 2012. However, execution risk and cash burn rates will increase materially in the coming quarters as Sprint advances on its multi-faceted plans. The company's performance during the next two to three quarters will be a strong indicator whether Sprint Nextel can successfully navigate these risks, improve profitability and remain competitive. Sprint Nextel has significantly fortified its liquidity position and reduced medium-term refinancing risk since late 2011. The past two debt issuances and vendor financed secured credit agreement raised an additional $7 billion of financing. During this time, Sprint has also repaid $3.25 billion of maturing debt. The company's liquidity at the end of the second quarter 2012 was approximately $8 billion, including $6.8 billion in cash. In addition, up to $500 million is available through May 31, 2013 under the first tranche of the secured equipment credit facility. The current liquidity helps address Sprint Nextel's material cash requirements expected through at least 2013 which could be in excess of $5 billion due primarily to the network modernization project and iPhone rollout. Sprint's $2.24 billion unsecured revolving credit facility expires in October 2013. Sprint negotiated an amendment to the credit facility to give it cushion relief into 2013, due to iPhone- related losses. The leverage ratio for the covenant is currently 4.25 times (x) and will reduce to 4x beginning in January 2013. As of June 30, 2012, the ratio was 3.4 to 1.0 as compared to 3.7 to 1.0 as of Dec. 31, 2011. This latest issuance will allow Sprint to address its sizeable maturities during the next three years totaling approximately $4.8 billion. Maturities include approximately $800 million in 2013, $1.4 billion in 2014 and $2.6 billion in 2015. Fitch expects the company to continue opportunistically seeking debt refinancing to reduce maturity risk going forward. Sprint Nextel will also likely need to consider parameters for a new facility by the end of 2012 given the 2013 maturity. The Sprint Nextel credit agreement allows sizeable carve-outs for additional senior indebtedness. The carve-outs include unsecured junior guaranteed indebtedness that is subordinated in right of subsidiary guarantees to the credit facilities not to exceed $4 billion. Between the last two debt offerings, Sprint has now issued $4 billion in junior guaranteed debt. The unsecured junior guaranteed debt is senior to the unsecured notes at Sprint Nextel, Sprint Capital Corporation and Nextel Communications Inc. The unsecured senior notes at these entities are not supported by an upstream guarantee from the operating subsidiaries. The credit agreement additionally allows capacity for unsecured senior guaranteed indebtedness of $2 billion. This debt would benefit from the same guarantee and rank equally in right of payment to the unsecured credit facilities. Sprint Nextel has indicated potential plans for an additional $1 billion to $2 billion of secured vendor financing. Fitch expects this would be similar in nature to the $1 billion secured credit agreement reached at the end of May 2012. The borrowers under the existing credit agreement are all of the material Sprint Nextel subsidiaries that currently guarantee Sprint Nextel's revolving credit facility and junior guaranteed notes. Within the past three quarters, Sprint has placed $5 billion of debt including the $1 billion vendor financed secured credit agreement that is senior to the senior unsecured notes (no upstream guarantee) at Sprint Nextel Corp and Sprint Capital Corp. and Nextel Communications Inc. (NCI). Consequently this has diminished recovery prospects for the unsecured notes to the low end of the range for the 'RR4' recovery level. Fitch believes that any further secured vendor financing would cause a one notch downgrade of the unsecured (no upstream guarantee) debt at Sprint Nextel Corp. and Sprint Capital Corp. due to reduced recovery support. Currently some uncertainty exists as to the timing, the amount and whether Sprint Nextel will reach an agreement for additional vendor financing. Fitch acknowledges the preferred position structurally of NCI bondholders versus the unsecured (no upstream guarantee) bondholders at Sprint Nextel Corp. and Sprint Capital Corp. This difference has become more pronounced with the increasing complexity of more senior debt in Sprint Nextel's capital structure. The NCI bondholders are supported primarily by the value resident in the spectrum licenses held by Nextel operating entities since the operating cash flows from Nextel operating subsidiaries are becoming de minimis with a complete shutdown in mid-2013. Recovery distinctions between NCI bondholders and the unsecured bondholders of Sprint Nextel Corp. and Sprint Capital Corp. are difficult due to the uncertainty of whether that part of the capital structure would face substantive consolidation or retain its structural subordination. There is evidence that bankruptcy proceedings use substantive consolidation when there has been material flow of capital from one entity to another, which is present in this scenario. Notwithstanding, in the event Sprint Nextel layers in more secured vendor financing which further diminishes recovery prospects for the unsecured notes, it's likely Fitch will recognize that NCI bondholders could experience enhanced recovery versus the rest of the unsecured (no upstream guarantee) notes. Fitch expects Sprint Nextel will continue paying down NCI debt first given the $3.8 billion in maturities the next three years. The ratings have limited flexibility for execution missteps, weakened core operational results, significantly higher cash requirements, Clearwire event risk or lack of expected benefits from the network modernization project. Fitch expects leverage for Sprint Nextel to peak in the low 5x range during 2012. As a result, Fitch will not remove the Negative Outlook during 2012. A stabilization of the Outlook could occur by mid-2013 if Sprint Nextel executes on stated objectives and the company demonstrates further operational and financial improvements. WHAT COULD TRIGGER A RATING ACTION Negative: Future developments that may, individually or collectively, lead to negative rating include: -- Lack of expected cost benefits associated with network modernization; -- iPhone dilution greater than expected; -- Postpaid Subscriber trends materially weaken; -- Cash requirements materially higher; -- iDEN subscriber retention; -- Clearwire event risk; -- Network upgrade delays and operating difficulties; -- Additional vendor financed debt leading to a downgrade of unsecured issue ratings at Sprint Capital Corp. and Sprint Nextel Corp. Positive: The Rating Outlook is Negative. As a result, Fitch's sensitivities do not currently anticipate developments with a material likelihood, individually or collectively, of leading to a rating upgrade. The ratings of Sprint Nextel and its subsidiaries are as follows: Sprint Nextel Corporation; -- Issuer Default Rating (IDR) 'B+'; -- Senior unsecured credit facility 'BB/RR2'; -- Junior guaranteed unsecured notes 'BB/RR2'; -- Senior unsecured notes 'B+/RR4'. Sprint Capital Corporation; -- IDR 'B+'; -- Senior unsecured notes 'B+/RR4'; Nextel Communications Inc. (Nextel); -- IDR 'B+'; -- Senior unsecured notes 'B+/RR4'. SPRINT NEXTEL: Moody's Confirms 'B1' CFR; Rates New Notes 'B3' -------------------------------------------------------------- Moody's Investors Service confirmed Sprint Nextel's B1 corporate family rating (CFR) and also assigned B3 ratings to its two proposed offerings of Senior Unsecured Notes due 2020 and 2022. The confirmation of the CFR reflects the substantial progress the company has made towards having a fully funded business plan and, as importantly, because Moody's believes that the company's turnaround is gathering steam. The rating outlook is stable. The proceeds will be used for general corporate purposes, the repayment of existing debt, network expansion and modernization, and the potential funding of Clearwire. The outlook for all ratings is now stable. This concludes the review for downgrade initiated in October 2011. Moody's has taken the following rating actions: Issuer: Sprint Nextel Corp. Assignments: Senior Unsecured Notes due 2020, Assigned a rating of B3, LGD5 (79%) Senior Unsecured Notes due 2022, Assigned a rating of B3, LGD5 (79%) Corporate Family Rating -- B1, unchanged Probability of Default Rating -- B1, unchanged Speculative Grade Liquidity Rating -- SGL-1, from SGL-2 prior Outlook -- Stable, from Rating Under Review Senior Unsecured Notes -- B3, LGD5 (79%) from B3, LGD5 (82%) Junior Guaranteed Unsecured Notes -- Ba3, LGD3 (38%) from Ba3, LGD3 (41%) Senior Unsecured Gtd. Bank Credit Facility -- Ba1, LGD2 (15%) from Ba1, LGD2 (17%) Issuer: Sprint Capital Corp. Outlook -- Stable, from Rating Under Review Senior Unsecured Notes -- B3, LGD5 (79%) from B3, LGD5 (82%) Issuer: iPCS Inc. Outlook -- Stable, from Rating Under Review Senior Secured 1st Priority Notes -- B1, LGD4 (54%) from B1, LGD4 (57%) Senior Secured 2nd Priority Notes -- B3, LGD5 (79%) from B3, LGD5 (82%) Ratings Rationale Sprint's B1 Corporate Family Rating (CFR) recognizes its large scale, valuable spectrum assets, improving operating profile and substantial liquidity. Offsetting these strengths are high leverage, the need for very significant capital spending and for a nearly flawless reconstruction of its network, a brutally competitive marketplace and substantial annual debt maturities beginning in 2014. The stable outlook reflects Moody's belief that recent operational improvements will be sustained and that the Network Vision project will remain on schedule and will produce the expected benefits. While it is still early in the process, Network Vision is being deployed on time and on budget and is beginning to produce the anticipated service quality and cost benefits. "The company's competitive position appears to be stabilizing, helped in large part by the iPhone, with postpaid churn at a record low for the company," stated Dennis Saputo, Moody's Senior Vice President. Postpaid average revenue per user (ARPU) has also shown very strong growth and prepaid revenues grew by about 30% annually in 2Q 2012. "Margins have held up surprisingly well, cash generation is stronger than expected and the customer experience continues to improve. However, the road ahead is far from clear and we believe that ongoing progress remains fragile," concluded Saputo. The company recognizes that it will need additional spectrum within a couple of years and that spectrum assets, once secured, take time to deploy. And, the network upgrade still has a long way to go before Sprint will earn the right to claim it has a true national 4G network. At the end of the second quarter, Sprint had 4G LTE available in five markets, AT&T had LTE in 47 markets and Verizon Wireless covered 337 markets with LTE, 75% of the country. The introduction of an LTE capable iPhone has the potential to once again put Sprint at a competitive disadvantage if Apple, as expected, introduces the device while the coverage gap between Sprint and the two industry leaders is large. The combination of an expensive network rebuild and ongoing high subsidies associated with rising smartphone adoption and new device introductions promises to keep significant pressure on earnings and operating cash flow through the end of 2013. However, Moody's expects the margin dilution that was typical when a major new smartphone was launched will be moderated by the changes that Sprint (and other wireless providers) have recently made to slow the handset upgrade cycle and reduce the subsidy they provide when consumers do upgrade. The B3 ratings assigned to the proposed offerings of Senior Unsecured Notes reflects their junior position in the capital structure, behind both the Senior Unsecured Guaranteed Bank Credit Facility and Junior Guaranteed Unsecured Notes, which remain rated Ba1 and Ba3, respectively. Moody's has also upgraded Sprint Nextel's speculative grade liquidity rating from SGL-2 to SGL-1 reflecting Moody's expectation that the company will sustain very good liquidity over the next twelve months. Moody's anticipates that cash on hand will be sufficient to fund the company's operations for the next 12 months. As of June 30, 2012 Sprint had $6.8 billion in cash and $1.2 billion borrowing capacity on its revolving credit facility. Sprint has approximately $0.8 billion of debt maturing in 2013, having redeemed all 2012 maturities during 2011. The outlook could be changed to positive if Sprint begins to demonstrate that it is able to improve EBITDA margins to levels that are closer to the industry leaders than they are to zero while maintaining market share. Sprint's ratings could be raised if its turnaround accelerates and it addresses its future spectrum requirements in a manner that doesn't increase its leverage or materially weaken its liquidity. Sprint's ratings could be lowered if the network upgrade falls behind schedule or doesn't yield the financial and operational benefits promised or if Sprint's competitive position deteriorates as evidenced by postpaid CDMA churn rising (outside of normal quarterly variances) and market share declining. Also, if the company allows its liquidity position to deteriorate significantly, negative rating pressure will ensue. Specifically, if leverage was likely to exceed 6x (Moody's adjusted) on a sustained basis the ratings could be downgraded. The principal methodology used in rating Sprint Nextel was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. SPRINT NEXTEL: S&P Rates $2.25-Bil. Sr. Unsecured Revolver 'BB-' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' issue-level rating and '3' recovery rating to Overland Park, Kan.-based wireless carrier Sprint Nextel Corp.'s proposed senior notes (undetermined amount and maturity date). The '3' recovery rating indicates expectations for meaningful (50%-70%) recovery in the event of payment default. "We expect the company to use net proceeds to repay upcoming maturities at subsidiary Nextel Communications Inc.," S&P said Standard & Poor's also revised the recovery rating on Sprint Nextel's existing senior unsecured debt to '3' from '4' following a revision in the rating agency's approach to analyzing wireless carriers. S&P's revised approach applies the greater of two valuation methods. S&P estimates an enterprise value based on a multiple of projected emergence-level EBITDA in addition to an asset value approach based on the book value of spectrum licenses and discounted network assets. The 'B+' issue rating on the debt remains unchanged, S&P said. At the same time, S&P assigned issue-level ratings to existing Sprint credit facilities. The ratings include: -- A 'BB-' issue-level rating and '2' recovery rating to Sprint Nextel's $2.25 billion senior unsecured revolver due 2013. The '2' recovery rating indicates expectations for substantial (70%-90%) recovery in the event of payment default. The revolver benefits from guarantees from certain Sprint Nextel subsidiaries, which represent a large portion of the company's cash flows. "Although our valuation is sufficient to provide for full recovery, we have capped our recovery ratings at '2' per our criteria for 'B' category credits, given the company's ability to incur additional debt," S&P said. -- A 'BB' issue-level rating and '1' recovery rating to the company's $1 billion senior secured credit facility due 2017, which is being used to finance equipment purchases for Sprint's network upgrade. The '1' recovery rating indicates expectations for very high (90%-100%) recovery in the event of payment default. This facility is guaranteed by Sprint Nextel and secured by all equipment financed through draws under the facility. The recovery ratings on this facility are not capped at '2' because this facility is secured, S&P said. "In addition, we withdrew our 'B+' corporate credit rating on Nextel Communications Inc. because we assess the credit risk of Sprint Nextel and its wholly owned subsidiaries on a consolidated basis. The issue-level and recovery ratings on all Nextel debt are not affected by this action," S&P said. "Finally, we affirmed our 'B+' corporate credit rating on Sprint Nextel as we do not expect leverage to change as a result of the new notes offering. The outlook is negative," S&P said. "During the 2012 second quarter, the company reported solid financial results, including revenue and EBITDA growth of 5% and 10% year over year. This improvement came despite expenses for the company's network upgrade and upfront cash subsidies associated with the iPhone. Sprint Nextel benefited from a 7% increase in average revenue per user and subscriber growth on the prepaid and wholesale platform. As a result, operating lease-adjusted leverage improved to 5.8x from 6.1x in the first quarter of 2012. However, we expect leverage to rise in the second half of the year as network upgrade costs increase, which will likely pressure EBITDA. Moreover, we also expect that an iPhone refresh, which is likely to arrive in the second half of 2012, will temporarily hurt profitability measures given the likely rise in handset subsidies," S&P said. "The ratings on Sprint Nextel continue to reflect a 'fair' business risk profile and a 'highly leveraged' financial risk profile. Key business risk factors include its weak profitability relative to other wireless carriers, significant competition from other wireless carriers and maturing industry conditions; execution risks related to its network upgrade; and higher churn compared with that of its peers. The company's highly leveraged financial risk profile incorporates our base-case scenario that debt to EBITDA will rise to the mid-6x area before declining to the mid-5x area by the end of 2013, ongoing free operating cash flow deficits, and 'less than adequate' liquidity. Tempering factors include the company's position as the third-largest wireless carrier in the U.S. and a national footprint, our expectation for modest revenue growth from higher average revenue per user, and industry-leading data and smartphone penetration," S&P said. RATINGS LIST Ratings Affirmed Sprint Nextel Corp. Sprint Capital Corp. Nextel Finance Co. Corporate Credit Rating B+/Negative/-- New Ratings Sprint Nextel Corp. Senior Unsecured $2.25 bil revolver due 2013 BB- Recovery Rating 2 Senior nts B+ Recovery Rating 3 Nextel Systems Corp. Senior Secured $1 bil credit facility due 2017 BB Recovery Rating 1 Issue Rating Unchanged; Recovery Rating Revised Sprint Nextel Corp. Sprint Capital Corp. Nextel Communications Inc. To From Senior Unsecured B+ B+ Recovery Rating 3 4 Ratings Withdrawn To From Nextel Communications Inc. Corporate Credit Rating NR/-- B+/Stable/- STACKPOLE POWERTRAIN: Moody's Withdraws 'B1' Sr. Secured Ratings ---------------------------------------------------------------- Moody's Investors Service has withdrawn Stackpole Powertrain International, ULC's B1 senior secured ratings as the related obligations (revolving credit facility and term loan) have been refinanced with new unrated secured facilities. Concurrently, Moody's withdrew all the other ratings of Stackpole which consist of a B2 corporate family rating and B2 probability of default rating. Ratings Rationale The principal methodology used in rating Stackpole was the Global Automotive Supplier Industry Methodology, published January 2009. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Headquartered in Ancaster, Ontario, Stackpole is one of the leading non-captive automotive suppliers of engine and transmission oil pumps as well as powdered metal components in North America. Annual revenue is about $400 million. STOCKTON, CA: Faulted for Not Negotiating with Calpers ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that National Public Finance Guarantee Corp. contends that Stockton, California should be tossed out of the municipal bankruptcy begun in late June because the city never sought a single dollar of concessions from California Public Employees' Retirement System, the largest creditor with a claim of $147.5 million. According to the report, the insurance company contends that the city didn't negotiate in good faith and didn't propose a debt restructuring that was feasible. National Public Finance, a subsidiary of MBIA Inc., insured $93.8 million of Stockton's municipal bonds. The report relates to comply with California state law's prerequisite for a Chapter 9 filing, the city made a proposal to creditors for $25 million in savings for 2012-2013. According to the insurance company, the city sought $4.8 million in concessions from workers, $7 million from retirees, and $10.5 million from bondholders. The report notes National Public Finance faults Stockton for seeking no concessions from Calpers even though the city owes $17 million for 2012-2013. The proposal wasn't feasible, the insurance company contends, because it falls $5 million short of covering the budget in 2013-2014. According to the insurance company, Stockton doesn't qualify for municipal bankruptcy because it didn't negotiate in good faith by having sought no concessions from Calpers. The alleged shortcoming also fell short of the requirements imposed by California law, the insurer says. According the report, the bankruptcy court in Sacramento will hold a status conference on Aug. 23 to discuss the question of whether Stockton is eligible for Chapter 9. Aug. 10, 2012 was the deadline for filing challenges to the city's eligibility for being in Chapter 9. About Stockton, California The City of Stockton, California, filed a Chapter 9 petition (Bankr. E.D. Calif. Case No. 12-32118) in Sacramento on June 28, 2012, becoming the largest city to seek creditor protection in U.S. history. The city was forced to file for bankruptcy after talks with bondholders and labor unions failed. Stockton estimated more than $1 billion in assets and in excess of $500 million in liabilities. The city, with a population of about 300,000, identified the California Public Employees Retirement System as the largest unsecured creditor with a claim of $147.5 million for unfunded pension costs. In second place is Wells Fargo Bank NA as trustee for $124.3 million in pension obligation bonds. The list of largest creditors includes $119.2 million owing on four other series of bonds. The city is being represented by Marc A. Levinson, Esq., at Orrick, Herrington & Sutcliffe LLP. The petition was signed by Robert Deis, city manager. Mr. Levinson also represented the city of Vallejo, Calif. in its 2008 bankruptcy. Vallejo filed for protection under Chapter 9 (Bankr. E.D. Calif. Case No. 08-26813) on May 23, 2008, estimating $500 million to $1 billion in assets and $100 million to $500 million in debts in its petition. In August 2011, Vallejo was given green light to exit the municipal reorganization. The Vallejo Chapter 9 plan restructures $50 million of publicly held debt secured by leases on public buildings. Although the Plan doesn't affect pensions, it adjusts the claims and benefits of current and former city employees. Bankruptcy Judge Michael McManus released Vallejo from bankruptcy on Nov. 1, 2011. STONEYS NORTH: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Stoneys North Forty, LLC 6611 Las Vegas Boulevard Las Vegas, NV 89119 Bankruptcy Case No.: 12-19130 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsel: Samuel A. Schwartz, Esq. THE SCHWARTZ LAW FIRM, INC. 6623 Las Vegas Boulevard South, Suite 300 Las Vegas, NV 89119 Tel: (702) 385-5544 Fax: (702) 385-2741 E-mail: sam@schwartzlawyers.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nvb12-19130.pdf The petition was signed by Christopher Lowden, manager. STOP N SHOP: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Stop N Shop, Inc. P.O. Box 527 Theodore, AL 36590 Bankruptcy Case No.: 12-02711 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Southern District of Alabama (Mobile) Debtor's Counsel: Robert M. Galloway, Esq. GALLOWAY WETTERMARK EVEREST RUTENS & GAILLARD P.O. Box 16629 Mobile, AL 36616-0629 Tel: (251) 476-4493 E-mail: bgalloway@gallowayllp.com Scheduled Assets: $21,975 Scheduled Debts: $2,389,453 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/alsb12-02711.pdf The petition was signed by Harold D. Waldon, president. STRATEGIC AMERICAN: Acquires Interest in African Concession ----------------------------------------------------------- Duma Energy Corp., formerly Strategic American Oil Corporation, has entered into an agreement, dated Aug. 7, 2012, to acquire Namibia Exploration, Inc. As a result of the completion of the acquisition, NEI would become a wholly-owned subsidiary of Duma. NEI holds the rights to a 39% working interest in an onshore Namibian petroleum concession measuring approximately 5.3 million acres. "The Owambo Basin in Namibia, where our concession is located, is in the northern part of the country near the BORDER=0 of Angola. The exploration potential of this large concession is high and the preliminary data is encouraging," stated Jeremy G. Driver, Chairman and CEO of Duma. He went on to say, "This acquisition fits our stated strategy of producing domestic cash flow in order to fund high impact international opportunities." "Africa remains a vastly under-explored continent despite increasing discoveries in recent years of world class oil and gas reserves by companies such as Kosmos (NYSE:KOS) and Tullow PLC (LON:TLW). Major and independent players such as Chevron (NYSE:CVX) and Hyperdynamics (NYSE:HDY) have secured huge acreage positions and are budgeting billions of dollars for exploration," said Pasquale Scaturro, Hydrocarb's President and Chief Operating Officer. Mr. Scaturro further stated, "The Owambo Basin concession is over 5 million acres, roughly the size of Massachusetts. It has all of the key ingredients for becoming a major oil province, including good reservoir and source rocks that extend into southern Angola, one of the top oil producers in Africa. The commercial terms of our Petroleum Contract are highly favorable and since our concessions are onshore, operating and exploration costs are a fraction of those offshore." As a consequence of the completion of the acquisition, Duma, through NEI, will have acquired and been assigned a 39% working interest (43.33% cost responsibility) in and to an onshore African petroleum concession (the "Concession") located in the Republic of Namibia which is approximately 5.3 million acres in size and covered by Petroleum Exploration License No. 0038 as issued by the Republic of Namibia Ministry of Mines and Energy. Duma will then hold its indirect working interest in the Concession in partnership with the National Petroleum Corporation of Namibia Ltd. and Hydrocarb Namibia Energy Corporation, a company chartered in the Republic of Namibia and which is a majority owned subsidiary of Hydrocarb Corporation, a company organized under the laws of the State of Nevada, USA. Hydrocarb Namibia, as operator of the Concession, will then hold a 51% working interest (56.67% cost responsibility) in the Concession and NPC Namibia will then hold a 10% carried working interest in the Concession. The assignment of the 39% working interest to NEI from Hydrocarb Namibia is subject to the prior approval of the government of the Republic of Namibia. Pursuant to the terms of the Agreement, Duma is required to issue shares of stock as consideration for the acquisition in accordance with particular milestones based upon market capitalization levels which must be reached within 10 years after the closing of the Agreement. The shares of Duma to be issued pursuant to the Agreement have not been registered under the Securities Act of 1933, as amended, or under the securities laws of any state in the United States, and were issued in reliance upon an exemption from registration under the Act. The securities may not be offered or sold in the United States absent registration under the Act or an applicable exemption from such registration requirements. Further information on this transaction can be found in the Company's Form 8-K at http://is.gd/fUmbtd About Strategic American Corpus Christi, Tex.-based Strategic American Oil Corporation (OTC BB: SGCA) -- http://www.strategicamericanoil.com/-- is a growth stage oil and natural gas exploration and production company with operations in Texas, Louisiana, and Illinois. The Company's team of geologists, engineers, and executives leverage 3D seismic data and other proven exploration and production technologies to locate and produce oil and natural gas in new and underexplored areas. Strategic American a net loss of $10.28 million on $3.41 million of revenue for the year ended July 31, 2011, compared with a net loss of $3.49 million on $531,736 of revenue for the same period during the prior year. The Company reported a net loss of $4.41 million on $5.28 million of revenue for the nine months ended April 30, 2012, compared with a net loss of $9.94 million on $1.48 million of revenue for the same period a year ago. The Company's balance sheet at April 30, 2012, showed $23.93 million in total assets, $11.53 million in total liabilities and $12.39 million in total stockholders' equity. TAYLOR BEAN: Judge Lets BofA Seek $1.75-Bil. Repayment in Losses ---------------------------------------------------------------- Carolina Bolado at Bankruptcy Law360 reports that U.S. Bankruptcy Judge Jerry A. Funk on Wednesday allowed Bank of America Corp. to seek repayment of $1.75 billion in investor losses resulting from a fraud allegedly perpetrated by bankrupt lender Taylor Bean & Whitaker Mortgage Corp. Bankruptcy Law360 says Judge Funk, who is overseeing the bankruptcy proceedings for Taylor Bean subsidiary Ocala Funding LLC, granted BofA's request for relief from the automatic stay to allow it to pursue claims in the District of Columbia against the Federal Deposit Insurance Corp., the receiver for Colonial Bank. About Taylor Bean Taylor, Bean & Whitaker Mortgage Corp. grew from a small Ocala- based mortgage broker to become one of the largest mortgage bankers in the United States. In 2009, Taylor Bean was the country's third largest direct-endorsement lender of FHA-insured loans of the largest wholesale mortgage lenders and issuer of mortgage backed securities. It also managed a combined mortgage servicing portfolio of approximately $80 billion. The company employed more that 2,000 people in offices located throughout the United States. Taylor Bean sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 09-07047) on Aug. 24, 2009. Taylor Bean filed the Chapter 11 petition three weeks after federal investigators searched its offices. The day following the search, the Federal Housing Administration, Ginnie Mae and Freddie Mac prohibited the company from issuing new mortgages and terminated servicing rights. Taylor Bean estimated more than $1 billion in both assets and liabilities in its bankruptcy petition Lee Farkas, the former chairman, was sentenced in June to 30 years in federal prison after being convicted on 14 counts of conspiracy and bank, wire and securities fraud in what prosecutors said was a $3 billion scheme involving fake mortgage assets. Jeffrey W. Kelly, Esq., and J. David Dantzler, Jr., Esq., at Troutman Sanders LLP, in Atlanta, Ga., and Russel M. Blain, Esq., and Edward J. Peterson, III, Esq., at Stichter, Riedel, Blain & Prosser, PA, in Tampa, Fla., represent the Debtors. Paul Steven Singerman, Esq., and Arthur J. Spector, Esq., at Berger Singerman PA, in Miami, Fla., represent the Committee. BMC Group, Inc., serves as the claims and noticing agent. Unsecured creditors were expected to receive 3.3% to 4.4% under a Chapter 11 plan approved in July 2011. THERATECHNOLOGIES INC: Gets Minimum Bid Price Notification ---------------------------------------------------------- Theratechnologies Inc. received a letter from the listing qualifications department staff of The NASDAQ Stock Market LLC (NASDAQ) on Aug. 7, 2012 notifying Theratechnologies that, for the last 30 consecutive business days, the bid price of its common shares had closed below $1.00 per share, the minimum closing bid price required by the continued listing requirements set forth in NASDAQ Listing Rule 5450(a)(1). Pursuant to NASDAQ Listing Rule 5810(c)(3)(A), Theratechnologies has 180 calendar days, or until Feb. 4, 2013, to regain compliance with the minimum bid price requirement. If at any time before this date Theratechnologies' common shares have a closing bid price of $1.00 or more for a minimum of 10 consecutive business days, NASDAQ staff will notify Theratechnologies that it has regained compliance. As a result, the notice has no effect at this time on the listing of Theratechnologies' common shares on The NASDAQ Global Market, which will continue to trade under the symbol "THER". If Theratechnologies does not regain compliance with NASDAQ Listing Rule 5450(a)(1) by Feb. 4, 2013, Theratechnologies may be eligible for more time if it submits an application to transfer its securities to The NASDAQ Capital Market. Following submission of the application, Theratechnologies may be eligible for an additional 180-day period to regain compliance with the minimum bid price requirement if it meets the continued listing requirement for market value of publicly held shares and all other initial listing standards, with the exception of the bid price requirement, for The NASDAQ Capital Market and provides notice of its intention to cure the deficiency during the second compliance period. Should NASDAQ conclude that Theratechnologies will not be able to cure the deficiency, NASDAQ will provide notice that its securities will be subject to delisting. Alternatively, Theratechnologies may appeal NASDAQ's decision to a Listing Qualifications Panel. Theratechnologies intends to monitor the bid price for its common shares between now and Feb. 4, 2013, and will assess all its available options under the circumstances during this period. About Theratechnologies Theratechnologies -- http://www.theratech.com--is a specialty pharmaceutical company that discovers and develops innovative therapeutic peptide products, with an emphasis on growth-hormone releasing factor peptides. TRAVELPORT HOLDINGS: Incurs $20-Mil. Net Loss in Second Quarter --------------------------------------------------------------- Travelport Limited filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $20 million on $506 million of net revenue for the three months ended June 30, 2012, compared with net income of $306 million on $530 million of net revenue for the same period during the prior year. The Company reported a net loss of $32 million on $1.05 billion of net revenue for the six months ended June 30, 2012, compared with net income of $282 million on $1.06 billion of net revenue for the same period a year ago. The Company's balance sheet at June 30, 2012, showed $3.33 billion in total assets, $4.32 billion in total liabilities and a $988 million total deficit. Commenting on developments, Gordon Wilson, president and CEO of Travelport, said: "I am pleased to announce continued growth in Revenue Per Segment driven by our enhanced content and product offering and demonstrating the strength in our underlying business model. Our first half performance is in line with management expectations despite the continued macroeconomic uncertainty which resulted in softer Q2 year on year segment volume as compared to Q1 across both the USA and Europe, the largest travel geographies." A copy of the Form 10-Q is available for free at: http://is.gd/q2RuZI About Travelport Holdings Travelport Holdings is the direct parent of Travelport Limited, is a broad-based business services company and a leading provider of critical transaction processing solutions to companies operating in the global travel industry. With a presence in 160 countries and approximately 3,500 employees, Travelport is comprised of the global distribution system (GDS) business, which includes the Galileo and Worldspan brands and its Airline IT Solutions business, which hosts mission critical applications and provides business and data analysis solutions for major airlines. Travelport also owns approximately 48% of Orbitz Worldwide (NYSE: OWW), a leading global online travel company. Travelport is a private company owned by The Blackstone Group, One Equity Partners, Technology Crossover Ventures, and Travelport management. Travelport Holdings Limited is a holding company with no direct operations. Its principal assets are the direct and indirect equity interests it holds in its subsidiaries, including Travelport Limited. * * * As reported by the TCR on Oct. 10, 2011, Standard & Poor's Ratings Services lowered its long-term corporate credit ratings on travel services provider Travelport Holdings Limited (Travelport Holdings) and indirect subsidiary Travelport LLC (Travelport) to 'SD' (selective default) from 'CC'. The downgrades follow the implementation of a capital restructuring, which was necessary because of the Travelport group's high leverage, weak liquidity, and the upcoming maturity of its $693 million (as of end-June 2011) PIK loan in March 2012. "According to our criteria, we view this restructuring as a distressed exchange and tantamount to a default (see 'Rating Implications Of Exchange Offers And Similar Restructurings, Update,' published May 12, 2009, on RatingsDirect on the Global Credit Portal)," S&P related. TRI-CHEK SEEDS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Tri-Chek Seeds, Inc. P.O. Box 5280 Augusta, GA 30916 Bankruptcy Case No.: 12-11409 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court Southern District of Georgia (Augusta) Judge: Susan D. Barrett Debtor's Counsel: Todd Boudreaux, Esq. SHEPARD PLUNKETT HAMILTON BOUDREAUX 7013 Evans Town Center Boulevard, Suite 303 Evans, GA 30809 Tel: (706) 869-1334 Fax: (706) 868-6788 E-mail: tboudreaux@shepardplunkett.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/gasb12-11409.pdf The petition was signed by Scott D. Gunter, president. TRI-VALLEY CORPORATION: Case Summary & Creditors List ----------------------------------------------------- Debtor: Tri-Valley Corporation fdba Great Valley Production Services, LLC Tri-Valley Power Corporation 4927 Calloway Drive Bakersfield, CA 93312 Bankruptcy Case No.: 12-12291 Affiliates that simultaneously filed for Chapter 11: Debtor Case No. ------ -------- Tri-Valley Oil & Gas Co. 12-12292 Select Resources Corporation, Inc. 12-12293 TVC Opus I Drilling Program L.P. 12-12294 Chapter 11 Petition Date: August 7, 2012 Court: U.S. Bankruptcy Court District of Delaware (Delaware) About the Debtors: Tri-Valley Corporation (OTQCB: TVLY) -- http://www.tri-valleycorp.com/-- explores for and produces oil and natural gas in California and has two exploration-stage gold properties in Alaska. The Company has received a debtor-in-possession financing commitment of $11,048,078 by its senior secured lender George T. Gamble 1991 Trust, of which $3,850,000 represents new credit availability, to support the Debtors' business operations during the Chapter 11 cases. According to the motion filed with the bankruptcy court seeking approval of the DIP financing, the loans will mature Nov. 15, 2012 or earlier if milestones are not achieved. Debtors' Counsel: Adam G. Landis, Esq. LANDIS RATH & COBB LLP 919 Market Street, Suite 1800 Wilmington, DE 19801 302-467-4400 Fax: (302) 467-4450 E-mail: landis@lrclaw.com - and ? Kerri K. Mumford, Esq. LANDIS RATH & COBB LLP 919 Market Street, Suite 1800 Wilmington, DE 19801 Tel: (302) 467-4414 Fax: (302) 467-4450 E-mail: mumford@lrclaw.com - and ? Kimberly A. Brown, Esq. LANDIS RATH & COBB LLP 919 N. Market Street, Suite 1800 P.O. Box 2087 Wilmington, DE 19899 Tel: (302) 467-4400 Fax: (302) 467-4450 E-mail: brown@lrclaw.com Debtors' Bankruptcy Counsel: K&L GATES LLP Debtors' Financial Advisors: FTI CONSULTING, INC. Debtors' Claims, Noticing and Balloting Agent: EPIQ BANKRUPTCY SOLUTIONS Total Assets: $17,578,961 as of March 31, 2012 Total Debts: $14,121,686 as of March 31, 2012 The petitions were signed by Maston N. Cunningham, president and chief executive officer. Debtors' Consolidated List of Their 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Luna & Glushon Trade Debt $5,810,191 1801 Century Park East, #2400 Los Angeles, CA 90067-2236 Gary D. Borgna and Julie R. Borgna Note Payable $527,800 580 S. Crook Road Fallon, NV 89406 Petrawest Ltd. Overriding Royalty $388,424 8986 Beacon Ridge Trail Interest Reno, NV 89523 Anterra Energy Services, Inc. Trade Debt $342,743 918 Mission Rock Road, Suite C-1 Santa Paula, CA 93060 Pacific Petroleum CA, Inc. Trade Debt $264,137 1571 E. Betteravia Road Santa Maria, CA 93454-9647 Rutan & Tucker LLP Trade Debt $139,945 Rabobank Visa Card Trade Debt $112,792 Brown Armstrong Accountancy Trade Debt $112,531 Corporation Wishing Well Petroleum, Ltd. Overriding Royalty $110,634 Interest Oil Well Service Co. Trade Debt $97,998 Geokinetics USA, Inc. Trade Debt $86,245 Myers, Widders Gibson, Jones, Trade Debt $67,945 & Schneider, LLP NYSE Market Inc. Trade Debt $65,000 Paul Graham Drilling Inc. Trade Debt $54,929 Wayne Long & Co CPA Trade Debt $53,518 JD Rush Company Trade Debt $47,280 Patriot Environmental Svcs Inc. Trade Debt $43,927 Gerald T. Raydon Trade Debt $41,667 Randy's Trucking, Inc. Trade Debt $41,109 First Insurance Funding Corp. of Trade Debt $38,506 California Advanced Combustion and Process Trade Debt $35,842 Controls EVC Group Inc. Trade Debt $34,153 Rain for Rent ? Santa Paula Trade Debt $32,667 Tiger Cased Hole Service, Inc. Trade Debt $32,167 RR Donnelley Trade Debt $30,636 Geoguidance Drilling Service, Inc. Trade Debt $27,780 IFPS Corporation Trade Debt $27,176 Driltek Trade Debt $27,000 Broadridge Trade Debt $23,570 Sespe Consulting Inc. Trade Debt $21,835 TRIBUNE CO: Bank Debt Trades at 26.12% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Tribune Co. is a borrower traded in the secondary market at 73.88 cents-on-the- dollar during the week ended Friday, Aug. 10, an increase of 1.19 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank loan matures on May 17, 2014. The loan is one of the biggest gainers and losers among 168 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. Before it formally emerges from bankruptcy, Tribune must still get approval from the Federal Communications Commission on new broadcast licenses and waivers for overlapping ownership of television stations and newspapers in certain markets. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRIBUNE CO: Bankruptcy Appeal Could Cause $1.5 Billion Damage ------------------------------------------------------------- Peg Brickley at Dow Jones' Daily Bankruptcy Review reports that Tribune Co. has put a price tag on the damage that it says would be caused if its exit from Chapter 11 is delayed while unhappy creditors appeal its bankruptcy-exit plan: at least $1.5 billion and perhaps as much as $3 billion. About Tribune Co. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection (Bankr. D. Del. Lead Case No. 08-13141) on Dec. 8, 2008. The Debtors proposed Sidley Austin LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North America LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Chadbourne & Parke LLP and Landis Rath LLP serve as co-counsel to the Official Committee of Unsecured Creditors. AlixPartners LLP is the Committee's financial advisor. Landis Rath Moelis & Company serves as the Committee's investment banker. Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP, in Wilmington, Delaware, represents the Committee in connection with the lawsuit filed against former officers and shareholders for the 2007 LBO of Tribune. Protracted negotiations and mediation efforts and numerous proposed plans of reorganization filed by Tribune Co. and competing creditor groups have delayed Tribune's emergence from bankruptcy. Many of the disputes among creditors center on the 2007 leveraged buyout fraudulence conveyance claims, the resolution of which is a key issue in the bankruptcy case. The bankruptcy court has scheduled a May 16 hearing on Tribune's plan. Judge Kevin J. Carey issued an order dated July 13, 2012, overruling objections to the confirmation of Tribune Co. and its debtor affiliates' Plan of Reorganization. Before it formally emerges from bankruptcy, Tribune must still get approval from the Federal Communications Commission on new broadcast licenses and waivers for overlapping ownership of television stations and newspapers in certain markets. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRONOX INC: Healthy at Time of IPO, Kerr-McGee Witness Says ----------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that John M. Rauh, Kerr- McGee Corp.'s former accounting head, took the stand in New York bankruptcy court Thursday in the company's bid to refute Tronox Inc.'s $25 billion allegations that it spun the pigment maker off in bad faith, testifying the chemical business was financially sound beforehand. About Tronox Inc. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09- 10156) on Jan. 13, 2009, before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represented the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants served as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders were appointed in the cases. The Creditors Committee retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until Sept. 30, 2008, Tronox was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of Dec. 31, 2008, Tronox had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. On Nov. 17, 2010, the Bankruptcy Court confirmed the Debtors' First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated Nov. 5, 2010. Under the Plan, Tronox reorganized around its existing operating businesses, including its facilities at Oklahoma City, Oklahoma; Hamilton, Mississippi; Henderson, Nevada; Botlek, The Netherlands and Kwinana, Australia. TRONOX INC: Settlement Unlikely in Enviro Suit, Anadarko Says ------------------------------------------------------------- Maria Chutchian at Bankruptcy Law360 reports that Anadarko Petroleum Corp. on Wednesday brushed aside the possibility of a settlement in the $25 billion fraudulent transfer suit that Tronox Inc. brought against Anadarko and Kerr-McGee Corp. over environmental liabilities. Bankruptcy Law360 relates that in a quarterly filing with the U.S. Securities and Exchange Commission, Anadarko said its recent attempts to resolve the dispute through mediation have "reached an impasse," and the likelihood of a settlement is remote. The company expressed confidence that it will prevail in this litigation. About Tronox Inc. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09- 10156) on Jan. 13, 2009, before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represented the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants served as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders were appointed in the cases. The Creditors Committee retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until Sept. 30, 2008, Tronox was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of Dec. 31, 2008, Tronox had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. On Nov. 17, 2010, the Bankruptcy Court confirmed the Debtors' First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated Nov. 5, 2010. Under the Plan, Tronox reorganized around its existing operating businesses, including its facilities at Oklahoma City, Oklahoma; Hamilton, Mississippi; Henderson, Nevada; Botlek, The Netherlands and Kwinana, Australia. TRONOX INC: Was Solvent at Spinoff, Kerr-McGee Expert Says ---------------------------------------------------------- Lisa Uhlman at Bankruptcy Law360 reports that the latest witness to testify in Tronox Inc.'s $25 billion fraudulent transfer suit against former parent Kerr-McGee Corp. over legacy environmental liabilities was an expert who sought Tuesday to refute Tronox's claim that it was insolvent at the time of its 2006 spinoff. About Tronox Inc. Tronox Inc., aka New-Co Chemical, Inc., and 14 other affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09- 10156) on Jan. 13, 2009, before Hon. Allan L. Gropper. Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Colin M. Adams, Esq., at Kirkland & Ellis LLP in New York, represented the Debtors. The Debtors also tapped Togut, Segal & Segal LLP as conflicts counsel; Rothschild Inc. as investment bankers; Alvarez & Marsal North America LLC, as restructuring consultants; and Kurtzman Carson Consultants served as notice and claims agent. An official committee of unsecured creditors and an official committee of equity security holders were appointed in the cases. The Creditors Committee retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as counsel. Until Sept. 30, 2008, Tronox was publicly traded on the New York Stock Exchange under the symbols TRX and TRX.B. Since then, Tronox has traded on the Over the Counter Bulletin Board under the symbols TROX.A.PK and TROX.B.PK. As of Dec. 31, 2008, Tronox had 19,107,367 outstanding shares of class A common stock and 22,889,431 outstanding shares of class B common stock. On Nov. 17, 2010, the Bankruptcy Court confirmed the Debtors' First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated Nov. 5, 2010. Under the Plan, Tronox reorganized around its existing operating businesses, including its facilities at Oklahoma City, Oklahoma; Hamilton, Mississippi; Henderson, Nevada; Botlek, The Netherlands and Kwinana, Australia. TXU CORP: Bank Debt Trades at 31.12% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which TXU Corp., now known as Energy Future Holdings Corp., is a borrower traded in the secondary market at 68.88 cents-on-the-dollar during the week ended Friday, Aug. 10, a drop of 0.72 percentage points from the previous week according to data compiled by LSTA/Thomson Reuters MTM Pricing and reported in The Wall Street Journal. The Company pays 350 basis points above LIBOR to borrow under the facility. The bank loan matures on Oct. 10, 2014, and carries Standard & Poor's CCC rating. The loan is one of the biggest gainers and losers among 168 widely quoted syndicated loans with five or more bids in secondary trading for the week ended Friday. About Energy Future Energy Future Holdings Corp., formerly known as TXU Corp., is a privately held diversified energy holding company with a portfolio of competitive and regulated energy businesses in Texas. Oncor, an 80%-owned entity within the EFH group, is the largest regulated transmission and distribution utility in Texas. The Company delivers electricity to roughly three million delivery points in and around Dallas-Fort Worth. EFH Corp. was created in October 2007 in a $45 billion leverage buyout of Texas power company TXU in a deal led by private-equity companies Kohlberg Kravis Roberts & Co. and TPG Inc. The Company's balance sheet at Dec. 31, 2011, showed $44.07 billion in total assets, $51.83 billion in total liabilities, and a $7.75 billion total deficit. Energy Future had a net loss of $1.91 billion on $7.04 billion of operating revenues for the year ended Dec. 31, 2011, compared with a net loss of $2.81 billion on $8.23 billion of operating revenues during the prior year. * * * In late January 2012, Moody's Investors Service changed the rating outlook for Energy Future Holdings Corp. (EFH) and its subsidiaries to negative from stable. Moody's affirmed EFH's Caa2 Corporate Family Rating (CFR), Caa3 Probability of Default Rating (PDR), SGL-4 Speculative Grade Liquidity Rating and the Baa1 senior secured rating for Oncor. EFH's Caa2 CFR and Caa3 PDR reflect a financially distressed company with limited flexibility. EFH's capital structure is complex and, in our opinion, untenable which calls into question the sustainability of the business model and expected duration of the liquidity reserves. U.S. FIDELIS: Robert Schulz Objects to Settlement Plan ------------------------------------------------------ Robert Schulz, party-in-interest, objected to US Fidelis, Inc.'s proposed settlement plan dated June 12, 2012. According to Mr. Schulz, the $3,359 was paid by his visa card ($395 down and monthly installments of $247) for 12 months. He said that he doesn't understand why the consumers who canceled their contracts are classified to receive a full refund when he does not. Mr. Schulz added that he did everything according to the original contract which provided that he would receive a 100% refund if he doesn't use it for the six years or 125,000 miles. He said further that he purposely paid for all smaller repairs out of pocket to avoid invalidating his claim only to be told six years later that the Company filed for bankruptcy. 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. U.S. POSTAL SERVICE: Incurs $5.2 Billion Loss in Third Quarter -------------------------------------------------------------- The U.S. Postal Service ended its third fiscal quarter (April 1 - June 30) with a net loss of $5.2 billion, compared to a net loss of $3.1 billion for the same period last year. Contributing significantly to the quarter's $5.2 billion loss was $3.1 billion of expense for the legislatively mandated prefunding of retiree health benefits. These expenses, along with the continued decline of First-Class Mail volume, more than offset the quarter's 9 percent growth in revenue from Shipping Services and package delivery. Despite continued success in generating new package delivery revenue, improving efficiency and reducing costs, large losses are expected to continue until legislative changes are made in line with the Postal Service Business Plan to return to financial stability. The Postal Business Plan includes measures that require urgent legislative changes, including: A refund of $11 billion of pension plan overfunding needed to pay down debt and invest for future growth Transition to a five-day schedule of weekly mail delivery The elimination of prefunding for retiree health benefits with the introduction of a Postal health insurance program, independent of the current federal programs. "We remain confident that Congress will do its part to help put the Postal Service on a path to financial stability. We will continue to take actions under our control to improve operational efficiency and generate revenue by offering new products and services to meet our customers changing needs," said Postmaster General and CEO Patrick Donahoe. "Moving forward with our business plan will make the Postal Service financially self- sustaining, provide a platform for future growth and preserve our mission to provide secure, reliable and affordable universal delivery services for generations to come." The Postal Service was forced to default on a $5.5 billion prefunding payment for retiree health benefits on Aug. 1, due to insufficient cash resources. Absent legislative changes, the Postal Service will also default on a second similar payment of $5.6 billion due by Sept. 30, 2012. Current projections show very low levels of cash, and no remaining borrowing capacity, at the end of the current fiscal year and through October 2012. In response, the Postal Service will continue to prioritize payments to employees and suppliers to ensure completion of its mission to provide high-quality mail service to the American people. "The Postal Service has successfully improved productivity while removing nearly $14 billion from its annual cost base during the past five fiscal years," said Acting Chief Financial Officer Stephen Masse. "These operational actions to improve efficiency will continue in the future, but we urgently need the legislative changes noted above to restore our short-term liquidity and provide a stable base for the future. In the meantime, we will prioritize our cash resources to ensure that we deliver on our mission." Results of Operations New products and successful marketing campaigns continue to fuel growth in the Postal Service package business. Shipping Services and package revenue totaled $3.3 billion in the third quarter, a 9 percent increase, on a volume increase of 43 million pieces, or 5.2 percent. Additionally, Every Door Direct Mail continues to grow as local businesses capitalize on the product's targeted advertising impact and ease of use. Other details of the third quarter results compared to the same period last year include: Total mail volume of 38.5 billion pieces, a decrease of 1.4 billion pieces, or 3.6 percent. This reflects the continued decline of First-Class Mail due to the on-going shift of communications and transactions to electronic alternatives; Operating revenue of $15.6 billion, a decrease of $153 million, or less than 1 percent; Operating expenses of $20.8 billion increased by $1.9 billion, or 10.2 percent. This increase was driven by $3.1 billion of expenses for mandated prefunding of retiree health benefits, which unfortunately cannot be paid in cash. The third quarter results bring the year to date net loss to $11.6 billion, compared to $5.7 billion for the same period last year. Contributing significantly to the year to date loss was the $9.2 billion expense accrual for the prefunding of retiree health benefits, which unfortunately cannot be paid. Complete financial results are available in the Form 10-Q, available after 10 a.m. A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation 151 million residences, businesses and Post Office(TM) Boxes. The Postal Service(TM) receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. With 32,000 retail locations and the most frequently visited website in the federal government, usps.com (R), the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 percent of the world's mail. If it were a private sector company, the U.S. Postal Service would rank 35th in the 2011 Fortune 500. In 2011, Oxford Strategic Consulting ranked the U.S. Postal Service number one in overall service performance of the posts in the top 20 wealthiest nations in the world. Black Enterprise and Hispanic Business magazines ranked the Postal Service as a leader in workforce diversity. The Postal Service has been named the Most Trusted Government Agency for six years and the sixth Most Trusted Business in the nation by the Ponemon Institute. * * * Eric Morath, writing for Dow Jones' Marketwatch, notes that Postal Service already defaulted on a $5.5 billion prefunding payment due earlier this month. The Postal Service will be forced to prioritize payments to employees and suppliers to ensure it can deliver the mail. The cash situation should improve in the final months of 2012, when holiday deliveries typically cause revenue to increase. According to Marketwatch, Postmaster General Patrick Donahoe on Thursday again called on Congress to institute reforms to shore up the agency's operations. The Senate passed a reform bill earlier this year, but the House has yet to take action. About U.S. Postal Service A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 151 million residences, businesses and Post Office Boxes. The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. With 32,000 retail locations and the most frequently visited website in the federal government, usps.com, the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 % of the world's mail. If it were a private sector company, the U.S. Postal Service would rank 35th in the 2011 Fortune 500. In 2011, the U.S. Postal Service was ranked number one in overall service performance, out of the top 20 wealthiest nations in the world, Oxford Strategic Consulting. Black Enterprise and Hispanic Business magazines ranked the Postal Service as a leader in workforce diversity. The Postal Service has been named the Most Trusted Government Agency for six years and the sixth Most Trusted Business in the nation by the Ponemon Institute. The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations. The U.S. Postal Service ended the first three months of its 2012 fiscal year (Oct. 1 - Dec. 31, 2011) with a net loss of $3.3 billion. Management expects large losses to continue until the Postal Service has implemented its network re-design and down- sizing and has restructured its healthcare program. Additionally, the return to financial stability requires legislation which gives the Postal Service typical commercial freedoms, including delivery flexibility, returns over $10 billion of amounts overpaid to the Federal Government and resolves the need to prefund retiree healthcare at rates not assessed any other entity in the United States. To return to profitability, CEO Patrick Donahoe has advanced a plan to reduce annual costs by $20 billion by 2015. The plan includes continued aggressive actions to generate additional revenue and reduce operating expenses. To reach the goal, the Postal Service also needs changes in the law. "Passage of legislation is urgently needed that provides the Postal Service with the speed and flexibility needed to cut costs that are not under our control, including employee health care costs," Donahoe said in February 2012 "The changes will give the Postal Service a bright future and provide the nation with affordable and reliable delivery for generations to come." UNIVERSAL FIDELITY: A.M. Best Affirms 'B' Finc'l. Strength Rating ----------------------------------------------------------------- A.M. Best Co. has affirmed the financial strength rating of B (Fair) and issuer credit rating (ICR) of "bb+" of Universal Fidelity Life Insurance Company (UFLIC) (Oklahoma City, OK). The outlook for both ratings is stable. Concurrently, A.M. Best has withdrawn the ratings at the company's request to no longer participate in A.M. Best's interactive rating process. UFLIC markets primarily third-party administrative (TPA) services nationally and student accident and life insurance products chiefly in the south central United States. The company is currently focusing on partnering with other carriers to market life and Medicare supplement products, in addition to growing its TPA business. As its risk business is concentrated in student accident insurance, UFLIC is exposed to marketing and regulatory risks. A.M. Best believes the company will be challenged to achieve its short-term financial projections due to a highly competitive student accident market, which may experience lower profit margins and possible adverse impact from health care reform. A.M. Best notes that UFLIC has recently implemented business improvement initiatives in order to improve selections in its student accident business, reduce general and administrative expenses, temper sales of its capital-intensive single premium whole life product and emphasize growth in its Employee Retirement Income Security Act TPA revenue. UNIVERSITY GENERAL: Delays Form 10-Q for Second Quarter ------------------------------------------------------- University General Health System, Inc., has been unable to complete its financial statements for the quarter ended June 30, 2012, because, among other things, the Company is in the process of reviewing its accounting for acquisitions and income taxes. The Company expects to complete the work necessary for it to file its Form 10-Q for the quarter ended June 30, 2012, within the five-day extension provided by Rule 12b-25. About University General University General Health System, Inc., located in Houston, Texas, is a diversified, integrated multi-specialty health care provider that delivers concierge physician- and patient-oriented services. UGHS currently operateS one hospital and two ambulatory surgical centers in the Houston area. It also owns a revenue management company, a hospitality service provider and facility management company, three senior living facilities and manages six senior living facilities. In the auditors' report accompanying the consolidated financial statements for the year ended Dec. 31, 2011, Moss, Krusick & Associates, LLC, in Winter Park, Florida, expressed substantial doubt about University General's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses and negative operating cash flows, and has negative working capital. University General reported a net loss of $2.38 million in 2011, following a net loss of $1.71 million in 2010. The Company's balance sheet at March 31, 2012, showed $113.64 million in total assets, $113.75 million in total liabilities and a $108,610 total deficit. UNIVERSITY WOODS: Case Summary & 4 Unsecured Creditors ------------------------------------------------------ Debtor: University Woods, LLC 940 University Woods Drive New Albany, IN 47150 Bankruptcy Case No.: 12-91716 Chapter 11 Petition Date: August 2, 2012 Court: U.S. Bankruptcy Court Southern District of Indiana (New Albany) Judge: Basil H. Lorch, III Debtor's Counsel: David W. Brangers, Esq. 436 S. 7th Street, Suite 200 Louisville, KY 40203 Tel: (502) 588-2465 Fax: (502) 585-5453 E-mail: dbrangers@lawyer.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its four unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/insb12-91716.pdf The petition was signed by Darren Brangers, manager/member. WARNER CHILCOTT: S&P Affirms 'BB' Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating on Ireland-based specialty pharmaceutical manufacturer Warner Chilcott PLC. "We assigned our 'BBB-' issue- level rating and '1' recovery rating to the new senior secured debt," S&P said. "At the same time, we lowered the issue-level and revised the recovery rating on the existing senior unsecured notes to 'BB-' and '5' from 'BB' and '3'. The recovery rating of '5' indicates our expectation for modest (10%-30%) recovery in the event of default," S&P said. "The rating actions follow the company's announcement that it will issue an additional $600 million of term loans to partly finance a $1 billion shareholder dividend. The additional debt increases adjusted pro forma leverage to about 3x," S&P said. "The rating on Warner Chilcott reflects a 'fair' business risk profile that incorporates some product and therapeutic diversity and the company's successful strategy of active brand management. It also reflects the threat of generic competition to the company's product portfolio and its limited research and development (R&D) capabilities. These pressures could push the company to make additional debt-financed product or company acquisitions over the next year, which, along with pro forma adjusted leverage of about 3x, is reflected in Warner Chilcott's 'significant' financial risk profile," S&P said. "Revenues of approximately $1.325 billion for the first half of 2012 are trending ahead of our expectation that revenues would decline 10%-12% in 2012. Gross margins of 89% are in line with our expectation of 88%," S&P said. "We continue to expect that Warner Chilcott's revenues will decline roughly 10% in 2012, following a roughly 8% decline in 2011," said Standard & Poor's credit analyst Michael Berrien. "The decline in 2011 and 2012 stems primarily from challenges to the global Actonel franchise and the recent loss of the patent case against Doryx. Actonel revenues have been pressured following a Western Europe patent expiration in 2010 and a contracting U.S. bisphosphonate market due to concerns over side effects. Challenges to the existing patent covering Asacol 400mg could accelerate the timing of potential generic threats to that product, although patent extensions and patient preference for current therapies could mitigate any near-term sales decline, in our opinion. The revenue decline in the Actonel franchise is slightly offset by low-single-digit growth from other products in the company's product portfolio," S&P said. "Our stable rating outlook on Warner Chilcott reflects our expectation that operational efficiencies undertaken by the company will continue to result in substantial free cash flow generation despite declining sales. It also reflects our belief that, over time, the company will sustain leverage and FFO to total debt at more than 3x and 20%," S&P said. "A rating upgrade is unlikely over the near-term given the current challenges facing the product portfolio, near-term patent expirations, and a more aggressive financial policy. We could lower our rating if revenue declines are steeper than we expect, causing EBITDA to decline and leverage to be sustained at more than 4x, which is indicative of an 'aggressive' financial risk profile. In our opinion, if the company completes another debt- financed dividend of $1.5 billion it would also increase leverage to more than 4x. We could then lower the rating if we believed leverage would be sustained at that level," S&P said. WAVEDIVISION HOLDINGS: Moody's Affirms 'B2' CFR; Outlook Stable --------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family and probability of default ratings of WaveDivision Holdings, LLC (Wave) and its stable outlook following the increase in the term loan to $500 million from the $471 million originally expected by Moody's. Moody's also lowered the first lien bank debt rating to B1 from Ba3 and affirmed the Caa1 rating on the bonds. The rating outlook remains stable. In June, Wave announced that Oak Hill Capital Partners (Oak Hill), GI Partners (GI) and Wave management would acquire Wave from Sandler Capital Management (with management reinvesting its current equity stake). In addition to the modest increase in debt, the revised transaction incorporates a modest decrease in the cash equity contribution from Oak Hill and GI (approximately $178 million compared to approximately $200 million) compared to Moody's original expectations. A summary of the actions follows. WaveDivision Holdings, LLC Senior Secured Bank Credit Facility, Downgraded to B1 from Ba3, LGD adjusted to LGD3, 33% from LGD3, 32% Affirmed B2 Corporate Family Rating, Affirmed B2 Probability of Default Rating Senior Unsecured Bonds, Affirmed Caa1, LGD5, 86% Outlook, Stable Ratings Rationale Moody's lowered the first lien bank debt to B1 from Ba3 in accordance with Moody's Loss Given Default Methodology. The first lien bank debt now comprises slightly over two-thirds of the debt capital structure, with the $250 million of unsecured bonds providing junior capital sufficient for a one notch uplift from the B2 CFR, but not two notches. Moody's expects leverage in the high 6 times debt-to-EBITDA range pro forma for the transaction and adjusting for Wave's January 2012 acquisition of Broadstripe assets in Seattle. This leverage poses risk for a small company in the intensely competitive pay television industry. However, Moody's expects the good liquidity profile to enable incremental growth investment, facilitating a decline in leverage primarily through EBITDA growth, recognizing the company's track record of leverage reduction. Video penetration of about 26% is well below rated incumbent peers, but this relatively weaker penetration reflects a lower starting point more so than erosion of video subscribers in excess of peers. Wave's high quality, fiber rich network supports the potential for continued cash flow growth from the high speed data product and the commercial business, as well as asset value. The private equity ownership creates event risk, though Moody's expects the company to focus on value appreciation through growth rather than distributions to the sponsors over the next several years. The stable outlook incorporates expectations for Wave to generate modestly positive free cash flow, to maintain adequate or better liquidity, and for leverage to trend toward 6 times debt-to-EBITDA over the next 18 months. The outlook also assumes stable to improving Triple Play Equivalent penetration and revenue per homes passed (using metrics pro forma for the Broadstripe acquisition as a starting point). The high leverage, lack of scale, sponsor ownership, and weaker than peers TPE and revenue / homes passed metrics constrain upward momentum. An upgrade is highly unlikely given the magnitude of improvement in metrics required to sustain a higher rating. However, Moody's would consider an upgrade with progress toward and a commitment to maintaining leverage below 4 times debt-to- EBITDA and free cash flow to debt in the high single digits. An upgrade would also require expectations for maintenance of good liquidity. Inability to reduce leverage,expectations for sustained negative free cash flow, deterioration of the liquidity profile, or material weakening of subscriber trends could have negative ratings implications. The principal methodology used in rating WaveDivision Holdings LLC was the Global Cable Television Industry Methodology published in July 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. Headquartered in Kirkland, Washington, WaveDivision Holdings, LLC (Wave) provides cable television, high speed data and telephone services to residential and commercial customers in and around the Seattle, Sacramento, San Francisco, and Portland markets. Pro forma for its January 2012 acquisition of Broadstripe, annual revenue is approximately $250 million. In June, Oak Hill Capital Partners (Oak Hill), GI Partners (GI) and Wave management announced plans to acquire Wave from Sandler Capital Management and management (with management reinvesting its equity ownership). WEST VIRGINIA LASER: Case Summary & 20 Largest Unsec. Creditors --------------------------------------------------------------- Debtor: West Virginia Laser Eye Center, LLC Chesterfield Medical Plaza, Suite 303 2335 Chesterfield Avenue Charleston, WV 25304 Bankruptcy Case No.: 12-20510 Chapter 11 Petition Date: August 3, 2012 Court: U.S. Bankruptcy Court Southern District of West Virginia (Charleston) Judge: Ronald G. Pearson Debtor's Counsel: Joe M. Supple, Esq. SUPPLE LAW OFFICE, PLLC 801 Viand Street Point Pleasant, WV 25550 Tel: (304) 675-6249 Fax: (304) 675-4372 E-mail: supplelawoffice@yahoo.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/wvsb12-20510.pdf The petition was signed by Gregory S. Moore, member manager. WILTON BRANDS: Moody's Assigns 'B3' CFR/PDR; Outlook Stable ----------------------------------------------------------- Moody's Investors Service assigned a B3 Corporate Family Rating, and a B3 Probability of default rating to Wilton Brands, Inc. (to be renamed Wilton Brands, LLC) as well as a B1 rating to its proposed new term loan B senior secured term loan facility. The rating outlook is stable. Ratings Rationale The ratings are based on Wilton's small size and high leverage, seasonality, limited global reach, and certain customer concentrations, relatively narrow product focus, and private equity sponsorship offset by its leading presence in the cake decorating and scrapbooking businesses, and its track record of strong profitability and generally good growth. Liquidity is considered good. The proposed Term Loan B is rated two notches above the B3 CFR based on its secured position in the capital structure. The relatively large amount of subordinated debt provides a cushion for senior lenders, combined with modest leverage at the operating company. With the proposed recapitalization, the company will lower leverage at the operating company by converting the existing second lien term loan into unsecured subordinated debt at a holding company, but total enterprise leverage will remain high. Debt to EBITDA will be over 6 times including an adjustment for preferred stock at the Holdco per Moody's hybrid methodology, and would be approaching 6 times even without this adjustment. Retained cash flow to net debt is in the high single or low double digits throughout the forecast period. Working capital has been a use of cash as growth has slowed in the first half of this year and inventories have risen. The company expects to work through these issues, but is also exploring options to shorten the supply chain lead time which will also provide more flexibility in managing working capital. Financial metrics fall mostly in the B range in Moody's methodology grid. Profitability is expected to remain sound with EBITA to interest in the mid teens placing the grid score in the A or Aa range. The new credit facilities are expected to have a 50% excess cash flow sweep and restricted payment baskets that will add protection to the senior secured facility. The subordinated debt will have a maturity of 8 years, one year beyond that of the senior facilities. Nevertheless, the private equity sponsorship, and ongoing accretion of preferred and the sub notes at the holding company levels will continue to slow the pace of deleveraging on an enterprise basis. The following ratings were assigned: Corporate Family Rating at B3 Probablitiy of Default Rating at B3 Senior Secured Term Loan B at B1, LGD3, 32% The ratings could be downgraded should the company experience operating difficulties either related to existing operations or challenges from trying to grow the business. Aggressive shareholder returns, debt-financed acquisitions, deterioration in cash flow and profitability such that Debt/EBITDA (calculated using Moody's accounting adjustments) would increase above 7 times will also cause ratings to be lowered. Ratings could be upgraded if the company successfully improves its geographic diversification, broadens its product offering, maintains strong profitability with EBITA margin in mid teens and delevers such that Debt/EBITDA (calculated using Moody's accounting adjustments) were approaching 5 times. The principal methodology used in rating Wilton Brands, Inc. was the Global Packaged Goods Industry Methodology published in July 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. Headquartered in Woodridge, Illinois, Wilton Brands, Inc. is a leading provider of a wide range of consumer products including specialty food and paper crafts and specialty housewares. TowerBrook Capital Partners has been the company's controlling equity sponsor since October 2009. Reported revenue was approximately $676 million for the twelve months ended June 30, 2012. WISP RESORT: Has Until September 10 to File Chapter 11 Plan ----------------------------------------------------------- Phil Yacuboski at The Associated Press reports the U.S. Bankruptcy Court in Greenbelt granted Wisp resort owner D.C. Development LLC a one-month extension to Sept. 10, 2012, to file a Chapter 11 plan. The plan would have been due Aug. 10, 2012. The report says the owners of Maryland's only ski resort had requested a two-month extension. According to the report, they said in a filing last month that they're talking with two potential buyers of the resort in the western Maryland community of McHenry. The filing didn't identify those parties. About Wisp Resort Recreational Industries, Inc., D.C. Development, LLC, Wisp Resort Development, Inc., and The Clubs at Wisp, LLC, operate a ski resort and real estate development companies located in Garrett County, Maryland generally known as Wisp Resort. The Wisp Resort comprises approximately 2,200 acres of master planned and fully entitled land, 32 ski trails covering 132 acres of skiable terrain with 12 lifts and two highly-rated golf courses. Financial problems were caused by a guarantee given to Branch Banking & Trust Co. to secure a $29.6 million judgment the bank obtained on a real estate development within the property. Recreational Industries, D.C. Development, Wisp Resort Development and The Clubs at Wisp filed for Chapter 11 bankruptcy (Bankr. D. Md. Lead Case No. 11-30548) on Oct. 15, 2011. D.C. Development disclosed $91,155,814 in assets and $46,141,245 in liabilities as of the Chapter 111 filing. The Debtors engaged Logan, Yumkas, Vidmar & Sweeney LLC as counsel and tapped Invotex Group as financial restructuring consultant. SSG Capital Advisors, LLC, serves as exclusive investment banker to the Debtors. The Official Committee of Unsecured Creditors has tapped Cole, Schotz, Meisel, Forman & Leonard, P.A. as counsel. WOONSOCKET: To Keep School Open, Receivership Still Looms -------------------------------------------------------- 630wpro.com reports that as receivership still looms over Woonsocket, the school committee voted against closing a local elementary school even though the move could have saved the city thousands. The Fifth Avenue elementary school is the city's oldest school dating back to 1917 but the building is in violation of several fire codes which could cost the city over $2 million to correct, according to 630wpro.com. The report relates that the district's superintendent recommended the school be closed to save money. 630wpro.com notes that it is estimated that if the school were closed the city would save $198,000. The budget commission will vote on the measure on Aug. 10, 2012. Tom Bruce, Finance Director for the city of Woonsocket, told the WPRO Morning News with Tara Granahan and Andrew Gobeil that the city's deficit is so large that the only really solution is concessions from unions and retirees and instituting a supplemental tax increase, 630wpro.com says. The report notes that the nearly 13% supplemental tax increase was sent back to committee by the General Assembly at the request of Woonsocket Representatives Lisa Baldelli-Hunt and Jon Brien. ZOGENIX INC: Incurs $17.2 Million Net Loss in Second Quarter ------------------------------------------------------------ Zogenix, Inc., reported a net loss of $17.16 million on $8.03 million of total revenues for the three months ended June 30, 2012, compared with a net loss of $19.17 million on $10.23 million of total revenues for the same period a year ago. For the six months ended June 30, 2012, the Company reported a net loss of $27.46 million on $26.37 million of total revenues, compared to a net loss of $38.16 million on $19.27 million of total revenues for the same period during the previous year. The Company's balance sheet at June 30, 2012, showed $64.89 million in total assets, $79.90 million in total liabilities and a $15 million total stockholders' deficit. Roger Hawley, chief executive officer of Zogenix, stated, "During the second quarter, our sales representatives continued to drive demand for SUMAVEL DosePro in the neurology segment while also assuming coverage of key primary care physicians formerly called on by our previous co-promotion partner, Astellas. However, we are pleased with the productivity levels from our sales representatives in their first quarter promoting the brand on their own. While revenue was down from the first quarter, we incurred no co-promotion service fee in the second quarter. Moving forward, we expect to accelerate growth with our new co- promotion partner, Mallinckrodt, which will double our reach into internal medicine and primary care and allow our team to focus on neurologists, headache specialists and high-prescribing physicians. The Mallinckrodt team has extensive experience in the pain market and we are excited to have them begin promoting SUMAVEL DosePro to their customers in late August." A copy of the press release is available for free at: http://is.gd/HS2DLf 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. Ernst & Young LLP, in San Diego, Calif., issued a "going concern" qualification on the consolidated financial statements for the year ended Dec. 31, 2011, citing recurring losses from operations and lack of sufficient working capital. The Company reported a net loss of $83.90 million in 2011, a net loss of $73.56 million in 2010, and a net loss of $45.88 million in 2009. * Moody's Says Public Finance Downgrades Hit Record High in 2Q -------------------------------------------------------------- The second quarter of 2012 had the highest quarterly number of US public finance downgrades of the last 10 years as significant financial pressure was present across all public finance sectors, says Moody's Investors Service in its quarterly report on rating activity, which also captured rating activity for the first half of the year. "About half of the downgrades in the quarter affected the debt of cities and school districts with many of these in California and Michigan," said Moody's AVP-Analyst Dan Steed, author of the report, "US Public Finance Rating Revisions for Q2 2012." "Because the number of upgrades also increased, the 4.4 to 1 ratio of downgrades to upgrades was only slightly higher than the prior quarter," said Mr. Steed. On the basis of par amounts, downgrades exceeded upgrades by 7.2 times, down from 14.2 in the first quarter. "Stressed budgets and weakening liquidity are the predominant factors driving down credit ratings among issuers," said Steed. Sectors covered in the report include state and state-related entities, local governments, not-for-profit hospitals, higher education and not-for-profit entities, infrastructure, and housing. Notable public finance downgrades during the quarter included Temple University Health System; Triborough Bridge & Tunnel Authority; Clark County (NV) School District, Detroit's general obligation bonds and water and sewer revenue bonds. Also, all 90 California redevelopment district authorities rated by Moody's were downgraded below investment-grade due to repercussions from a state law eliminating the agencies. "Our report outlines the trends in each public finance sector, discusses key rating factors, and highlights the most significant rating changes," said Steed. It also captures Moody's rating revisions for the first half of 2012, which saw the downgrades of 502 public finance issuers with total par value of $142.24 billion. In contrast, 117 issuers and $14.45 billion of par amount received upgrades during the first- half of the year. * Moody's: Default Rate Contracts in July, to Rise by Year's End ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the default rate on junk bonds rated by Moody's Investors Service contracted in July to 2.8% from 2.9% in June. In the U.S., the comparable junk default rate for the last year was 3.3% in July, up from 3.2% in June, Moody's said in an Aug. 7 report. According to the report, so far this year, 40 issuers rated by Moody's defaulted, compared with 16 over the first seven months of 2011. Moody's predicts that the global junk default rate will end the year at 3.1% before declining to 2.9% by July 2013. The Bloomberg report disclosed that in the U.S., Moody's predicts defaults will increase to 3.6% by the year's end. Looking ahead; Moody's sees media, advertising, printing, and publishing as being the U.S. industries with the highest default rates. * Courts Can't Cut Chapter 7 Trustees' Commissions -------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Bankruptcy Appellate Panel for the 9th Circuit ruled on July 25 that amendments to bankruptcy law in 2005 mean that commissions sought by trustees in Chapters 7, 12, and 13 are "presumed reasonable if they are requested at the statutory rate." The 23-page opinion written by U.S. Bankruptcy Judge Bruce A. Markell in Las Vegas focused on ambiguity Congress created by 2005 amendments in Section 330(a)(7). He concluded that the amendments changed prior law where the Section 326 commission rate was viewed only as cap. The case is Hopkins v. Asset Acceptance LLC (In re Salgado-a), 11-1389, U.S. 9th Circuit Bankruptcy Appellate Panel. * CFTC Member Floats Insurance Fund for Futures Co. Failures ------------------------------------------------------------ Ian Thoms at Bankruptcy Law360 reports that a member of the U.S. Commodity Futures Trading Commission proposed Thursday to create an insurance fund to cover futures investors when their brokerages go belly up, as happened recently with MF Global Inc. and Peregrine Financial Group Inc. According to Bankruptcy Law360, CFTC Commissioner Bart Chilton has been pushing fellow regulators and lawmakers to establish an insurance fund since MF Global collapsed last fall and in the process misplaced more than $1.6 billion in customer money. But he found little support for the idea until last month, when Peregrine imploded. * Financier Accuses Ex-Atty of $296MM Double Cross at Trial ----------------------------------------------------------- Zach Winnick at Bankruptcy Law360 reports that attorney Susan Tregub breached her duties when she betrayed financier and longtime client David Bergstein, helping Aramid Entertainment Fund Ltd. put five of Bergstein's companies in involuntary bankruptcy and causing $296 million in damages, a Los Angeles jury heard Thursday. Bankruptcy Law360 relates that in opening statements in a breach of fiduciary duty and professional negligence lawsuit brought by Bergstein and business partner Ronald Tudor, their attorney Lucia Coyoca of Mitchell Silberberg & Knupp LLP painted a portrait of double-dealing and revenge. * Andrew D. Shaffer Joins Butzel Long in NY Office -------------------------------------------------- Andrew D. Shaffer, an attorney who concentrates his practice on bankruptcy and restructuring, has joined the law firm Butzel Long as a Shareholder in its New York office. Before joining Butzel Long, Mr. Shaffer was a Partner at Mayer Brown. For the past 12 years he has represented creditors in United States bankruptcy proceedings as well as liquidations and rehabilitations of banks, brokers, future commission merchants and insurance companies. Mr. Shaffer has also represented clients on transactional matters including mergers, acquisitions, entity creation and the structure of debt instruments. He counsels clients on the choice of transactional structures that maximize their legal rights and remedies when an obligor becomes subject to bankruptcy or similar proceedings. "Andrew's extensive experience in bankruptcy and restructuring is a valuable addition to our premier bankruptcy practice as we continue moving forward in achieving our clients' goals," said Richard Brosnick, Managing Partner of Butzel Long's New York office. Mr. Shaffer is a member of the American Bankruptcy Institute, the International Association of Insurance Receivers, INSOL International, the American Bar Association and the New York City Bar Association. * Cohen & Grigsby Taps Davies as Vice Chair of Florida Bar Panel ---------------------------------------------------------------- Cohen & Grigsby, a business law firm with headquarters in Pittsburgh, PA and an office in Naples, FL, appointed attorney Christopher N. Davies to Vice Chair of the Florida Bar's Condominium and Planned Development Committee. In this position, Mr. Davies will primarily coordinate proposed legislation on matters relating to condominiums, cooperatives and homeowner associations. "When Chris joined our Florida practice last year, he brought with him a tremendous amount of experience, specifically in the area of condominium and planned developments," said Jack Elliott, president and CEO of Cohen & Grigsby. "We know that he will bring this same level of expertise to his new role with the Florida Bar. On behalf of the firm, we congratulate him on this appointment." Davies is a partner in Cohen & Grigsby's Real Estate Practice Group, where he focuses on condominium and homeowner association law in Lee and Collier Counties, FL. In addition to his role with the Florida Bar's Committee on Condominiums and Planned Development, Mr. Davies is a member of the Real Property Section of The Florida Bar and the Collier County Bar Association. A native of the United Kingdom, Mr. Davies graduated with a joint honors degree in law and industrial relations from the University of Wales. He is also a graduate of the Tulane University School of Law, where he earned both his Juris Doctorate and Master of Laws degrees. Mr.Davies was admitted to the Florida Bar in 1984 and is a member of the United States Court of Appeals for the Eleventh Circuit and the United States District Court for the Middle District of Florida. He was appointed to the Florida Condominium Study Commission by Florida Governor Bob Martinez in 1990, and worked on the extensive revisions to the condominium laws. Davies has served as a member of the faculty of the University of Miami Law Center Institute on Condominium and Cluster Developments. He is also a former member of the Community Associations Institute Board of Trustees and a past chairman of the institute's national Attorney's Committee and Public Policy Committee. He is also a contributory author to The Florida Bar's treatise, Florida Condominium Law and Practice, Second Edition, where he co- authored the chapter on The Division of Florida Land Sales, Condominiums and Mobile Homes. Mr. Davies frequently lectures on critical issues involving condominium and homeowner association law. About Cohen & Grigsby Since 1981, Cohen & Grigsby, P.C. -- http://www.cohenlaw.com/-- and its attorneys have provided sound legal advice and solutions to clients that seek to maximize their potential in a constantly changing global marketplace. Comprised of more than 130 lawyers, Cohen & Grigsby maintains offices in Pittsburgh, PA and Naples, FL. The firm's practice areas include Business & Tax, Labor & Employment, Immigration/International Business, Real Estate & Public Finance, Litigation, Estates & Trust, Intellectual Property, Bankruptcy & Creditors Rights, and Public Affairs. Cohen & Grigsby represents private and publicly held businesses, nonprofits, multinational corporations, individuals and emerging businesses across a full spectrum of industries. * Hughes Watters Hires M. Weems for Default Servicing Practice -------------------------------------------------------------- Michael L. Weems has joined Hughes Watters Askanase, L.L.P. as an associate assigned to the firm's default servicing practice area. Weems said he joined HWA because of the firm's reputation for excellence and quality along with ample opportunities to develop professionally in the practice of bankruptcy law and creditors' rights. He was admitted to the State Bar of Texas in 2008. He is licensed to practice in the U.S. District Courts of Texas. He is also licensed to practice in U.S. Tax Court. "We are very excited about adding Michael to our team. His prior experience in the insurance field and his experience on both the debtor and creditor side of the bankruptcy world are assets to our firm," commented Dominique Varner, partner, who supports the Default Servicing, Business Bankruptcy, Consumer Financial Services, and Estate Planning and Probate Practice Areas at HWA. Before joining HWA, Weems worked as a bankruptcy attorney with Shapiro Schwartz, L.L.P. where he represented mortgage servicers and mortgage companies in all aspects of bankruptcy proceedings. Before that, he was debtor's counsel and represented debtors in Chapter 7 and Chapter 13 bankruptcy proceedings. Mr. Weems has been a licensed insurance agent in Texas since 1997. He completed undergraduate university and law school classes while working as an agent with Allstate Insurance. Weems earned a Bachelor of Science degree in psychology from the University of Houston in 2004 and a Juris Doctorate from South Texas College of Law in 2007. He is a member of the Houston Association of Young Bankruptcy Lawyers, Texas Bar Association and Texas Young Lawyers Association. Mr. Weems and his family reside in the Pearland suburb of Houston. About Hughes Watters Askanase Hughes Watters Askanase, L.L.P. -- hhtp://www.hwa.com/ -- has helped business organizations, financial institutions and individuals succeed with their business endeavors. The firm's attorneys play a strategic role and support clients through every stage of existence and operation. The firm's practice focuses on representation of commercial and consumer lenders, including banks and credit unions; business bankruptcy; business planning and strategy; default servicing; real estate and finance; commercial and consumer financial services litigation; and estate planning and probate. * Thompson Hine Expands NY Commercial & Public Finance Practice --------------------------------------------------------------- Thompson Hine LLP disclosed that Jonathan B. Ross has joined its New York office as a partner in the Commercial & Public Finance practice. Mr. Ross joins from Reed Smith LLP, where he was a partner in the Finance practice. His addition deepens the firm's bench of finance lawyers and further strengthens a corporate trust group in New York that handles significant amounts of work for financial institutions active in the corporate trust and debt capital markets area. "Jonathan's diverse finance experience complements our existing practice very well," said Katherine D. Brandt, partner-in-charge of the New York office and leader of the Commercial & Public Finance practice. "In addition to significant work in the corporate trust arena, Jonathan has solid experience in general finance and derivatives work." Mr. Ross' practice focuses on advising financial institutions on deal maintenance, defaults, issuance and restructuring matters relating to secured and securitized bonds, project finance and lending. He also advises clients on traditional finance related matters, including fundraising and derivatives. His asset experience includes CDOs, CMBS/RMBS, life insurance, power, real estate and transportation. Mr. Ross gained in-house experience at BNY Mellon, where he led a team conducting the acquisition-related due diligence of JPMorgan's custody and trust business. He also worked on the debt markets transactions desk at Merrill Lynch International, where he focused on global bond issues and Argentina's economic crisis. "I wanted to move to an established finance practice, with an experienced corporate trust group and lending practice," said Mr. Ross of his move to Thompson Hine. "In addition to its full- service corporate and finance capabilities, the firm has depth in specialized areas such as energy, real estate and transportation. Thompson Hine has a compelling approach to client service, illustrated by its Client Service Pledge. The firm's collaborative nature has enabled partners to really 'partner' with each other, which has created solid and constructive firm wide partnerships with clients. I'm also delighted to be working again with several former colleagues on the corporate trust side." Thompson Hine continues to grow its New York office with top-tier lateral partners. Mr. Ross' addition follows the recent arrivals of Karen M. Kozlowski, William H. Schrag and Peter J. Gennuso, who joined the New York office in the Real Estate, Bankruptcy and Corporate practices, respectively. Mr. Ross holds a diploma in legal practice from the College of Law in York, England and holds B.A. and M.A. degrees in law from the University of Oxford, England. About Thompson Hine LLP. Established in 1911, Thompson Hine -- http://www.ThompsonHine.com/ -- is a business law firm dedicated to providing superior client service. The firm has been recognized for ten consecutive years as a top law firm in the country for client service excellence in The BTI Client Service A-Team: Survey of Law Firm Client Service Performance. With offices in Atlanta, Cincinnati, Cleveland, Columbus, Dayton, New York and Washington, D.C., Thompson Hine serves premier businesses worldwide. * BOND PRICING -- For Week From Aug. 6 to 10, 2012 -------------------------------------------------- Company Coupon Maturity Bid Price ------- ------ -------- --------- A123 SYSTEMS INC 3.750 4/15/2016 35.000 AES EASTERN ENER 9.000 1/2/2017 15.500 AES EASTERN ENER 9.670 1/2/2029 9.500 AGY HOLDING COR 11.000 11/15/2014 43.000 AHERN RENTALS 9.250 8/15/2013 55.022 ALION SCIENCE 10.250 2/1/2015 55.500 AMBAC INC 6.150 2/7/2087 2.188 ATP OIL & GAS 11.875 5/1/2015 35.125 ATP OIL & GAS 11.875 5/1/2015 34.750 ATP OIL & GAS 11.875 5/1/2015 35.125 BETHEL BAPTIST 7.900 7/21/2026 11.000 BUFFALO THUNDER 9.375 12/15/2014 35.500 CYH-CALL08/12 8.875 7/15/2015 102.500 DIRECTBUY HLDG 12.000 2/1/2017 18.875 DIRECTBUY HLDG 12.000 2/1/2017 18.875 EASTMAN KODAK CO 7.000 4/1/2017 17.938 EASTMAN KODAK CO 7.250 11/15/2013 18.000 EASTMAN KODAK CO 9.200 6/1/2021 19.678 EASTMAN KODAK CO 9.950 7/1/2018 23.354 EDISON MISSION 7.500 6/15/2013 57.000 ELEC DATA SYSTEM 3.875 7/15/2023 97.000 ENERGY CONVERS 3.000 6/15/2013 49.000 F-CALL08/12 5.000 8/20/2018 100.000 GEOKINETICS HLDG 9.750 12/15/2014 53.782 GLB AVTN HLDG IN 14.000 8/15/2013 28.100 GLOBALSTAR INC 5.750 4/1/2028 45.250 GMAC LLC 7.250 8/15/2012 100.000 GMX RESOURCES 4.500 5/1/2015 45.750 GMX RESOURCES 5.000 2/1/2013 73.400 HAWKER BEECHCRAF 8.500 4/1/2015 17.250 HAWKER BEECHCRAF 8.875 4/1/2015 17.250 HAWKER BEECHCRAF 9.750 4/1/2017 0.875 IRM-CALL08/12 6.625 1/1/2016 100.130 JAMES RIVER COAL 4.500 12/1/2015 36.250 KELLWOOD CO 7.625 10/15/2017 29.200 KV PHARM 12.000 3/15/2015 31.000 KV PHARMA 2.500 5/16/2033 3.563 LEHMAN BROS HLDG 0.250 12/12/2013 21.500 LEHMAN BROS HLDG 0.250 1/26/2014 21.500 LEHMAN BROS HLDG 1.000 10/17/2013 21.500 LEHMAN BROS HLDG 1.000 3/29/2014 21.500 LEHMAN BROS HLDG 1.000 8/17/2014 21.500 LEHMAN BROS HLDG 1.000 8/17/2014 24.375 LEHMAN BROS HLDG 1.250 2/6/2014 21.500 LEHMAN BROS HLDG 1.500 3/29/2013 21.500 LEHMAN BROS INC 7.500 8/1/2026 7.550 LIFECARE HOLDING 9.250 8/15/2013 60.200 LVLT-CALL09/12 8.750 2/15/2017 104.000 MANNKIND CORP 3.750 12/15/2013 57.000 MASHANTUCKET PEQ 8.500 11/15/2015 9.250 MASHANTUCKET PEQ 8.500 11/15/2015 10.170 MASHANTUCKET TRB 5.912 9/1/2021 9.250 MF GLOBAL LTD 9.000 6/20/2038 39.900 MGIC INVT CORP 9.000 4/1/2063 18.966 MONSANTO COMPANY 7.375 8/15/2012 100.000 NETWORK EQUIPMNT 7.250 5/15/2014 50.000 NEWPAGE CORP 10.000 5/1/2012 7.000 NGC CORP CAP TR 8.316 6/1/2027 14.000 PATRIOT COAL 3.250 5/31/2013 11.750 PENSON WORLDWIDE 8.000 6/1/2014 36.149 PMI CAPITAL I 8.309 2/1/2027 0.375 PMI GROUP INC 6.000 9/15/2016 21.660 POWERWAVE TECH 3.875 10/1/2027 12.060 POWERWAVE TECH 3.875 10/1/2027 12.573 REAL MEX RESTAUR 14.000 1/1/2013 46.450 REDDY ICE CORP 13.250 11/1/2015 #N/A N/A RESIDENTIAL CAP 6.500 4/17/2013 24.563 RESIDENTIAL CAP 6.875 6/30/2015 24.605 SAVIENT PHARMA 4.750 2/1/2018 20.000 TERRESTAR NETWOR 6.500 6/15/2014 10.000 TEXAS COMP/TCEH 7.000 3/15/2013 15.700 TEXAS COMP/TCEH 10.250 11/1/2015 31.000 TEXAS COMP/TCEH 10.250 11/1/2015 30.125 TEXAS COMP/TCEH 10.250 11/1/2015 30.500 TEXAS COMP/TCEH 15.000 4/1/2021 35.125 TEXAS COMP/TCEH 15.000 4/1/2021 37.250 THORNBURG MTG 8.000 5/15/2013 8.375 TIMES MIRROR CO 7.250 3/1/2013 34.475 TOUSA INC 9.000 7/1/2010 13.000 TOUSA INC 9.000 7/1/2010 19.875 TRAVELPORT LLC 11.875 9/1/2016 36.750 TRAVELPORT LLC 11.875 9/1/2016 36.938 TRIBUNE CO 5.250 8/15/2015 37.000 USEC INC 3.000 10/1/2014 45.000 VERSO PAPER 11.375 8/1/2016 52.143 WASH MUT BANK FA 5.125 1/15/2015 0.010 WASH MUT BANK FA 5.650 8/15/2014 0.250 WASH MUT BANK NV 6.750 5/20/2036 0.875 WCI COMMUNITIES 4.000 8/5/2023 0.125 WCI COMMUNITIES 4.000 8/5/2023 0.125 ********* 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 ***