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/raid1/www/Hosts/bankrupt/TCR_Public/120906.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, September 6, 2012, Vol. 16, No. 248 Headlines 23 EAST: SLC2 Ordered to Deliver Redacted Sale Documents AMERICAN AXLE: Fitch Rates Proposed $550MM Senior Notes 'B-' AMERICAN AXLE: Moody's Rates $550MM Senior Unsecured Notes 'B2' AMERICAN AXLE: S&P Rates New $550MM Senior Unsecured Notes 'B' AMERICAN RENAL: S&P Assigns 'B' Corporate Credit Rating AVAYA INC: Moody's Affirms 'B3' CFR; Alters Outlook to Negative BERNARD L. MADOFF: Suit 'Fallacious,' NY Atty. General Argues CATALENT PHARMA: S&P Rates New $250MM Senior Notes 'B' CIRCUS AND ELDORADO: Asks to Disqualify Rejection Votes CLAIRE'S STORES: S&P Affirms 'B' Rating on $1.1-Bil. Secured Notes CONSOLIDATED TRANSPORT: Marquette Trans Extends $4.75MM DIP Loan CONSOLIDATED TRANSPORT: Wants to Hire Taft Stettinius as Counsel CONSOLIDATED TRANSPORT: 2 Lenders Want to Repossess Equipment CONSOLIDATED TRANSPORT: Intends to Assume Services Deal With Pilot COMMODITIES ONLINE: Attorney, 2 Others Charged in $27.5MM Fraud CONTEC HOLDINGS: Prepack Confirmation Hearing Set for Oct. 4 CONVATEC INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable COSTA DORADA: Has Until Sept. 15 to File Amended Plan Outline DECISION INSIGHT: S&P Lowers CCR to 'B-' on Weak Earnings DELTA PETROLEUM: Has $29.4-Mil. Net Loss in 1st Half of 2012 EMMONS-SHEEPSHEAD: Sec. 341 Creditors' Meeting Set for Oct. 1 ENERGY CONVERSION: Chapter 11 Plan Effective EXAMWORKS GROUP: MedHealth Buyout No Impact on Moody's 'B2' CFR FLAGSTONE REINSURANCE: Fitch Changes Rating Watch on Several Notes GARY PHILLIPS: Panel Wants Motion to Turnover Cash Denied GARY PHILLIPS: Commercial Bank Waives Foreclosure Until Oct. 15 HECKMANN CORP: S&P Puts 'B+' CCR on Watch on $381MM Acquisition HOSTESS BRANDS: Circuits Split on Trademarks, Executory Contracts HUB INTERNATIONAL: S&P Rates $730MM Senior Notes 'CCC+' HW HEARTLAND: Files for Chapter 11 in Dallas INDIANAPOLIS DOWNS: Defends Fortress Right to Vote on Plan JESUP & LAMONT: Suit Against Ex-Officers Survives Dismissal Bid LARSON LAND: Zions First Has Limited Objections to Sale LEVELLAND/HOCKLEY: Committee and GE Settle; Sale Approved MF GLOBAL: Giddens Responds to Freeh's Charges on Suit MMODAL INC: S&P Assigns 'B+' Corporate Credit Rating MSR RESORT: Inks Stipulation for Use of Cash Until Sept. 30 MTS LAND: Has Interim Access to Cash, DIP Financing NALLS DEVELOPMENT: Rosenblatt Firm Replaces Tuckfelt as Counsel NALLS DEVELOPMENT: Files Schedules of Assets and Liabilities NALLS DEVELOPMENT: Files List of 20 Largest Unsecured Creditors NATIVE WHOLESALE: Inks Deal for a 90-Day Plan Filing Extension NEWPAGE CORP: Seeks More Exclusivity as Creditors Mediate NORTH END UNITED HOUSING: In Receivership, Owes $1.1 Million ORANGE COUNTY NURSERY: Court Says Minority Claim Is Subordinated PANDA SHERMAN: S&P Gives 'B+' Prelim Rating on $330.7MM New Debt PATRIOT COAL: Sept. 11 Hearing on Transfer of Case Venue PEGASUS RURAL: Revised Plan Won't Pay Unsecured Creditors POST STREET: Must Sell Assets by Sept. 28 to Avoid Dismissal POTOMAC SUPPLY: Taps Keiter for Consulting and Audit Services POTOMAC SUPPLY: Hires R. Gentry to Appraise Unencumbered Assets READER'S DIGEST: S&P Lowers CCR to 'CCC-' on Liquidity Concerns RESIDENTIAL CAPITAL: Aurelius Opposes Plan Exclusivity Extension ROCK-TENN COMPANY: Moody's Rates $600MM Sr. Unsecured Notes 'Ba1' SAHARA TOWNE: Has Access to Cash Collateral Until Nov. 12 SAN BERNARDINO: Says Emergency Justified Bankruptcy SLS CAPITAL: Luxembourg Case Recognized as Main Proceeding SOLYNDRA LLC: Backers Could Reap $300 Million in Tax Breaks SOLYNDRA LLC: Seeks Fourth Extension of Plan Exclusivity SPECTRE PERFORMANCE: Court Approves Burr Pilger as Tax Accountant SPECTRE PERFORMANCE: Court Denies Request to Appoint Examiner SPECTRE PERFORMANCE: Has Access to Cash Collateral Until Oct. 1 SPECTRE PERFORMANCE: Taps Greines to Appeal K&N Judgment SPECTRE PERFORMANCE: Can Hire Hopkins-Carley as K&N Prosecutor SPECTRE PERFORMANCE: Can Employ Mike Ido as Financial Consultant STANFORD INT'L: SEC Appeals Denial of SIPC Funds for Victims STARZ LLC: Moody's Assigns 'Ba2' Corporate Family Rating STERLING SHOES: Provides Default Status Update SWAMI SHREE: Can Use Cash Collateral to Buy Plasma TVs TESORO LOGISTICS: Moody's Rates $310MM Sr. Unsecured Notes 'B1' TESORO LOGISTICS: S&P Rates $310MM Sr. Unsecured Notes 'BB-' THELEN LLP: Seyfarth Shaw Shakes Trustee's Clawback Suit TOLL BROTHERS: Moody's Rates $250MM Senior Unsecured Notes 'Ba1' TOLL BROTHERS: S&P Rates New $250MM Exchangeable Sr. Notes 'BB+' TPC GROUP: Sandell Lobbies for "No" Votes on $850-Mil. Deal TRIBUNE CO: Law Debenture Files Issues on Plan Appeal TRIBUNE CO: Committee Wins OK to Turn Over Docs to Plan Trustee TRIBUNE CO: CFO Seeks to Extend Period for Examiner Record TRIBUNE CO: Court Approves Paul Weiss as Special Counsel TRIBUNE CO: Court Disallows Pension & Benefit Plan Claims VALEANT PHARMACEUTICALS: Moody's Reviews 'Ba3' CFR for Downgrade VALIDUS REINSURANCE: Fitch Affirms 'BB+' Jr. Subordinated Debt VENOCO INC: Moody's Rates $175-Mil. 2nd Lien Term Loan 'B1' YNS ENTERPRISE: Files Emergency Motion to Use Cash WEZBRA DAIRY: Has Access to Cash Collateral Until Oct. 31 WVSV HOLDINGS: Lawrence C. Wright OK'd to Handle Maricopa Cases WVSV HOLDINGS: Amends Order on Land Advisors as Real Estate Broker * Moody's Says Debt Metrics Weaken Slightly Due to AUM Dcline * Moody's Says US Banking System Outlook Remains Negative * Moody's Maintains Stable Outlook on Global Reinsurance Sector * Circuits Split Again on Length of Chapter 13 Plans * Ex-Kirkland Partner Will Try to Whittle Tax Fraud Case * Chadbourne's J. Wasserman Joins Herrick Feinstein * Recent Small-Dollar & Individual Chapter 11 Filings ********* 23 EAST: SLC2 Ordered to Deliver Redacted Sale Documents -------------------------------------------------------- The Hon. Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York entered an order in relation to 23 East 39th Street Developers LLC's discovery request on SLC2 Holdings LLC's unwillingness to turnover a certain loan purchase and sale agreement made with JPMorgan Chase Bank N.A. The Court on July 19, 2012, conducted a telephonic conference call and ordered that: -- SLC2 Holdings LLC deliver a copy of the loan purchase and sale agreement to counsel of the Debtor; and -- SLC2 Holdings is authorized to (a) redact the purchase price of the loan as set forth in the loan purchase and sale agreement and (b) redact information concerning loans other than the Debtor's loan which are encompassed in and included as a part of the loan purchase and sale agreement. As reported in the TCR on July 2, 2012, SLC2 Holdings LLC is asking the bankruptcy court to dismiss the Chapter 11 case of 23 East, or in the alternative, vacate the automatic stay. According to SLC2, the case must be dismissed for cause, including for bad faith and for the impermissible use of Chapter 11 as a litigation tactic to gain leverage in a two-party mortgage foreclosure dispute. The referee determined that $10,083,638 was owed to SLC2 as of Dec. 29, 2011. Interest at the default rate of 10.9% or $65,854, a month continued to accrue until the Petition Date. About 23 East 39th Street 23 East 39th Street Developers LLC filed a Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-11304) on March 30, 2012. The Debtor estimated assets and debts of $10 million to $50 million as of the Chapter 11 filing. According to a state court filing, the Debtor bought in October 2007 a building on 23 East 39th Street in Bronx, New York, from entity 23 East 39th Street Management Corp. Subsequent to the sale, Management leased the property from the Debtor and subsequently vacated the property in May 2008. A June 2009 post by http://www.loopnet.com/the building is/was available for sale for $16.5 million. The property has two luxury residential dwellings in addition to five stories of commercial space. The six-story building has 11,649 square feet of space. Judge Robert E. Gerber oversees the case. James O. Guy, Esq., represents the Debtor in its restructuring effort. AMERICAN AXLE: Fitch Rates Proposed $550MM Senior Notes 'B-' ------------------------------------------------------------ Fitch Ratings has affirmed the 'B+' Issuer Default Ratings (IDRs) of American Axle & Manufacturing Holdings, Inc. (AXL) and its American Axle & Manufacturing, Inc. (AAM) subsidiary. Included in its rating actions, Fitch has assigned a rating of 'B-/RR6' to AAM's proposed issuance of $550 million in senior unsecured notes due 2022. Fitch also has affirmed the ratings on AAM's secured revolving credit facility and 9.25% senior secured notes at 'BB+/RR1', while it has affirmed AAM's senior unsecured rating at 'B-/RR6'. AAM's ratings apply to a $438 million secured revolving credit facility, $383 million of senior secured notes and $1.3 billion of senior unsecured notes. The Rating Outlook for both AXL and AAM is Positive. The proposed new notes rank pari passu with AAM's existing senior unsecured notes. Like the existing $200 million senior unsecured notes due 2019, the new notes will be guaranteed by AAM's domestic subsidiaries that also guarantee its secured revolving credit facility and its 9.25% senior secured notes due 2017. AAM intends to use the proceeds from the new notes to redeem its $250 million in senior unsecured notes due 2014 and to make an optional $42.5 million prepayment on the senior secured notes due 2017. In addition, the company plans to use a portion of the proceeds to make contributions to its defined benefit pension plans, with remaining proceeds used for premium payments on the note redemption and for general corporate purposes. AXL also announced today that it upsized its secured revolving credit facility on Aug. 31, 2012, to $438 million from $322 million. The upsizing includes a reduction in commitments maturing in June 2013 to $73 million from $87 million. The increase will provide the company with additional liquidity, while also offsetting the decline in liquidity that otherwise would occur with the maturity of the 2013 commitments. With the amendment, the company now has $365 million of revolver commitments that do not mature until June 2016, up from only $235 million in 2016 commitments prior to the amendment. The $258 million net increase in debt associated with the contemplated transactions (including the notes issuance, the 5.25% note redemption and the optional 9.25% note prepayment) will result in an increase in total leverage. However, the level of secured debt in the company's capital structure will decline when it makes the optional $42.5 million prepayment on the 9.25% secured notes. In addition, redeeming the 2014 notes now removes the uncertainty of funding the maturity in a year-and-a-half and locks in the coupon rate in the current favorable pricing environment. Fitch estimates that leverage at year-end 2012 will be near 4.0x, about 0.7x higher than it would have been had all of the contemplated transactions not taken place. Based on the company's maturity schedule following the transactions, opportunities for significant debt reduction will be limited over the intermediate term. The funded status of the company's pensions could improve substantially as a result of the planned contributions. In particular, Fitch expects the contribution to cover any additional pension funding related to the closure of the Detroit Manufacturing Complex (DMC), which the Pension Benefit Guaranty Corporation (PBGC) has estimated at $124 million. Fitch notes that the expected planned contributions are a 'pull-forward' of funding that otherwise would have been required in future years and do not represent a change in the plans' projected benefit obligation. Although Fitch expects the voluntary pension contributions could drive free cash flow negative in 2012, free cash flow is expected to be higher in each of the next several years than it otherwise would have been, as the voluntary contribution is expected to substantially reduce the level of required contributions going forward. As of year-end 2011, AXL's pensions were only 62% funded, with an underfunded position of $275 million. The ratings for AXL and AAM reflect the improvement seen in the drivetrain and driveline supplier's credit profile over the past several years as conditions in the global light vehicle market have improved. In particular, the company has benefited from relatively strong pickup and sport-utility vehicle (SUV) production at its two largest customers, General Motors Company (GM) and Chrysler Group LLC, and its margin performance has been among the strongest in the auto supplier industry. In addition, AXL's business has fundamentally strengthened as the company has experienced success in diversifying its revenue base away from a heavy reliance on light trucks. Its $1.2 billion 2012 through 2014 backlog of new business wins is heavily weighted toward passenger cars and crossover vehicles. AXL also continues to increase the geographical diversity of its revenue base, with new business wins from an increasing number of non-U.S. manufacturers. Despite its increased revenue diversification, AXL's ratings will be weighed upon in the near term by its continued heavy exposure to GM's light truck platform, although the significant progress AXL has made in reducing its cost base places it in a better position to withstand a downturn in light truck demand. Also weighing on the ratings is Fitch's expectation that free cash flow in 2012, excluding the voluntary pension contribution, will be limited by the company's need to continue making investments to support the significant growth in its business over the intermediate term. Longer-term, however, Fitch expects free cash flow to strengthen meaningfully as the new vehicle programs transition into regular production. The Positive Outlook reflects Fitch's expectation that AXL's credit profile will strengthen over the intermediate term, as business levels grow and revenue becomes more diversified. Free cash flow and cash liquidity are also expected to rise on increased production levels. Fitch expects higher earnings to result in declining leverage, which could fall to near 3.0x by year-end 2013. The higher funded status of the company's pension plans and a more favorable intermediate-term debt maturity profile also support the Positive Outlook. As with all auto suppliers, the greatest risk to AXL's credit profile is the potential for another slowing of the global economy. However, this is tempered somewhat by the increasing diversification of the company's customer base and its lower cost structure, both of which have positioned the company to better withstand another downturn in the auto market. Furthermore, AXL's direct exposure to a near-term European recession is very limited, with only about 3% of its revenue generated in the region. A lack of meaningful debt maturities until 2017 further helps to mitigate liquidity risk over the next two years. Another ongoing risk is the potential for a rise in U.S. fuel prices to drive a decline in light truck demand, given the still- substantial portion of the company's revenue that is derived from light truck production. Fitch expects light truck demand to hold up better in a rising fuel cost environment today, however, than during the last spike in fuel prices, as a result of improved truck fuel efficiency and ongoing demand from core truck customers. In addition to fuel price sensitivity, margins and free cash flow could also be pressured by increasing raw materials prices, although the decline in AXL's fixed cost base and a continued focus on passing these costs through to customers would help to dampen the effect. The Recovery Ratings (RRs) of 'RR1' on AAM's secured revolving credit facility and its senior secured notes is based on their strong collateral coverage, including virtually all of the assets of AXL and AAM, and their superior recovery prospects in a distressed scenario. The rating of 'RR6' on AAM's senior unsecured notes reflects the significant amount of secured debt in the company's capital structure (assuming a fully drawn revolving credit facility), which drives their estimated recovery prospects into the 0% to 10% range in a distressed scenario. What Could Trigger A Rating Action Positive: Future developments that may, individually or collectively, lead to a positive rating action include: -- Continued diversification of the company's revenue base; -- Positive free cash flow generation; -- A decline in leverage; -- Ongoing margin performance near top of the auto supplier industry. Negative: The current Rating Outlook is Positive. As a result, Fitch does not currently anticipate developments with a material likelihood, individually or collectively, leading to a rating downgrade. Fitch has affirmed the following ratings, with a Positive Outlook: AXL -- IDR at 'B+'. AAM -- IDR at 'B+'; -- Secured credit facility rating at 'BB+/RR1'; -- Senior secured notes rating at 'BB+/RR1'; -- Senior unsecured rating at 'B-/RR6'. AMERICAN AXLE: Moody's Rates $550MM Senior Unsecured Notes 'B2' --------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to American Axle & Manufacturing, Inc.'s new $550 million of senior unsecured notes. In a related action Moody's affirmed the B1 Corporate Family Rating (CFR) and Probability of Default Rating (PDR) of American Axle & Manufacturing Holdings, Inc.'s, affirmed the rating of American Axle's senior secured notes at Ba1, affirmed the ratings of the existing senior unsecured notes with parent only guarantees at B2, and lowered the rating of the existing senior unsecured notes with parent and domestic subsidiary guarantees to B2 from B1. The Speculative Grade Liquidity Rating was affirmed at SGL-3. The rating outlook is Stable. American Axle's new $550 million senior secured notes are expected to be used to fund the announced tender offer for the company's 5.25% senior unsecured notes maturing in 2014 (with parent guarantee); partially redeem the 9.25% senior secured notes due 2017; fund certain pension obligations; and fund general corporate purposes. Ratings assigned: American Axle & Manufacturing, Inc. New $550 million senior unsecured notes (with parent and subsidiary guarantees), B2 (LGD4 67%); Ratings affirmed: American Axle & Manufacturing Holdings, Inc. Corporate Family Rating, at B1; Probability of Default Rating, at B1; Speculative Grade Liquidity Rating, SGL-3. American Axle & Manufacturing, Inc. Senior secured guaranteed note, at Ba1 (LGD2 11%); $300 million senior unsecured notes (with parent guarantee), at B2 (LGD4 67%); $250 million senior unsecured notes (with parent guarantee), at B2 (LGD4 67%); The rating of these notes will be withdrawn upon their repayment. Ratings Lowered: $200 million senior unsecured notes (with parent and subsidiary guarantees), to B2 (LGD4 67%) from B1 (LGD4 57%) Rating Rationale The assignment of the B2 rating to American Axle's new senior unsecured notes (the "New Notes") incorporates Moody's view that the domestic operating subsidiaries represent a small portion of American Axle's consolidated assets and profitability. As such, the additional benefit from the company's domestic operating subsidiaries guarantees will be significantly diluted with the current offering of New Notes and now represents only a modest benefit over the existing 7.875% unsecured notes which have guarantees from only the parent holding company. In addition, the transaction reduces the junior support for the senior unsecured notes with subsidiary guarantees. American Axle & Manufacturing Holdings, Inc.'s B1 Corporate Family Rating and stable outlook continues to be supported by an increased three-year backlog of new business launching from 2012 through 2014 to $1.2 billion and further diversification of the company's revenue base both internationally and on a customer basis. As such, Moody's continues to expect the company's improved EBIT margin to be largely sustained over the intermediate-term, while the company manages through increased costs from raw materials. American Axle is expected to have an adequate liquidity profile over the next twelve months supported by cash balances and availability under the recently amended and restated revolving credit agreement. As of June 30, 2012 cash on hand was approximately $85.2 million. On August 31, 2012, the company amended and restated its revolving credit agreement to increase the commitments which mature on June 30, 2016, to $365 million. The revolving credit facility also includes $72.8 million of additional commitments, which mature on June 30, 2013. At June 30, 2012 the existing revolving credit facility was unfunded with $24.9 million of letters of credit outstanding. American Axle is expected to be modestly cash flow negative over the near-term on an LTM basis, as higher working capital levels in the first fiscal quarter supported higher sales and incorporated a shift in GM's payment terms. Over the intermediate-term free cash flow is expect to turn positive. Principal financial covenants under the revolving credit facility include a secured net debt/EBITDA test and an EBITDA/cash interest expense test. Moody's expects the company to have ample covenant cushion to access to the vast majority of the revolving credit facility over the near-term. The security provided to the lenders as part of the bank credit facility limits the company's alternate sources of liquidity. Events that have the potential to raise American Axle's ratings or outlook include higher levels of automotive production or new business wins resulting in increaseed revenues and operating margins. Consideration for a positive outlook or higher ratings could arise if these factors were to lead to sustained EBIT/Interest coverage over 2.5x, Debt/EBITDA below 3.0, and sustained positive FCF. Downward rating migration would arise if industry conditions were to deteriorate without sufficient offsetting restructuring actions or savings by the company. The rating could also be pressured if American Axle is unable to maintain an adequate liquidity profile. This profile may need to support the increased working capital requirements that might arise as industry volumes increase. It must also be sufficiently robust to contend with the possibility of a prolonged industry downturn. The principal methodology used in rating American Axle & Manufacturing, Inc was the Global Automotive Supplier Industry Methodology published in January 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. American Axle & Manufacturing, Inc., headquartered in Detroit, MI, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUV's and passenger cars. The company has manufacturing locations in the USA, Mexico, the United Kingdom, Brazil, China, Thailand, Poland, and India. The company reported revenues of $2.6 billion in 2011. AMERICAN AXLE: S&P Rates New $550MM Senior Unsecured Notes 'B' -------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B' rating to American Axle & Manufacturing Inc.'s proposed $550 million senior unsecured notes due 2022, with a recovery rating of '6', indicating S&P's expectation that lenders would receive negligible (0%-10%) recovery in the event of a default. "At the same time we are lowering the issue-level rating on the company's $425 million 9.25% senior secured notes due 2017 to 'BB' from 'BB+', and revising the recovery rating to '2' from '1'. The lower issue- level and recovery ratings on the senior secured notes are based on the increase in the commitment on the class D revolving credit facility to $365 million from $235 million, which is pari passu with the senior secured notes regarding claims on the assets of the holding company and the subsidiary guarantors," S&P said. "The company will use net proceeds from the offering to make a tender offer for the 5.25% notes, to redeem in part its 9.25% notes, and to fund certain pension obligations and general corporate purposes," S&P said. "The 'BB-' corporate credit rating on American Axle reflects the company's 'weak' business risk profile and 'aggressive' financial risk profile, which incorporate substantial exposure to the highly cyclical light-vehicle market," S&P said. RATING LIST American Axle & Manufacturing Inc. American Axle & Manufacturing Holdings Inc. Corporate credit rating BB-/Stable/-- Ratings assigned American Axle & Manufacturing Inc. Senior unsecured $550 mil. notes due 2022 B Recovery rating 6 Ratings lowered To From American Axle & Manufacturing Inc. Senior secured $425 mil. 9.25% notes due 2017 BB BB+ Recovery rating 2 1 AMERICAN RENAL: S&P Assigns 'B' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on Beverly, Mass.-based kidney dialysis service provider American Renal Holdings Inc.'s revolving credit facility are unchanged by the increase to the facility. "The company increased the amount of the revolver to $37.5 million from $25.0 million. As of June 30, 2012, there was no borrowing from the revolver and we do not expect significant use of this credit facility. All other ratings on American Renal also remain unchanged following the revolver add-on," S&P said. "Our corporate credit rating on American Renal is 'B' and the rating outlook is stable. The 'B' rating reflects our assessment of the company's business risk as 'vulnerable,' characterized by its dependence on the treatment of a single disease and pressure from third parties to reduce reimbursements. In terms of financial policy, we believe that American Renal will pursue growth and shareholder-friendly actions. Therefore, we expect its 'highly leveraged' financial risk profile to persist, particularly with pay-in-kind debt accretion in excess of 10% per year. As of June 30, 2012, adjusted debt to EBITDA was 6.1x," S&P said. RATINGS LIST American Renal Holdings Inc. Corporate Credit Rating B/Stable/-- $37.5M revolver due 2015 BB- Recovery Rating 1 Senior secured notes due 2018 B Recovery Rating 4 American Renal Associates Holdings Inc. Sr unsecd PIK toggle nts due 2016 CCC+ Recovery Rating 6 AVAYA INC: Moody's Affirms 'B3' CFR; Alters Outlook to Negative --------------------------------------------------------------- Moody's Investors Service revised Avaya Inc.'s ratings outlook to negative from stable and affirmed its B3 corporate family rating. Moody's also affirmed the B1 senior secured debt ratings and Caa2 unsecured notes ratings. The negative outlook reflects the possibility of further downward ratings pressure over the next year as the company gets closer to its 2014 term loan maturity compounded by the challenges the company faces in achieving positive free cash flow given the difficult economic environment. Ratings Rationale Avaya is operating at just under breakeven free cash flow levels (defined as cash from operations less capital expenditures) partly driven by ongoing restructuring expenses. While the company has made significant strides in reducing its cost structure, the improving margins have not been sufficient to offset the recent decline in revenues and upfront cash restructuring costs. While margins are expected to continue to improve over the next year, the uncertain economic climate means revenues will remain under pressure and some level of restructuring costs will likely continue. Early indications are that the company's main competitor is experiencing similar economy driven revenue pressures, though a portion of the revenue decline is likely specific to Avaya. Liquidity, while sufficient today, has declined over the past year as cash balances have dropped approximately $100 million to $271 million as of June 30, 2012 and have a good possibility of further declines over the next year. The company continues to have close to $500 million available under its revolvers (net of L/C usage) though and is unlikely to face liquidity issues in the next year. Avaya has $1.4 billion of term debt maturing in October 2014 (and a further $3.7 billion potentially due in 2015) however which it will need to refinance or extend. If Avaya is able to address the maturity issues, the ratings outlook could be revised to stable, particularly if the company is on track to generate positive free cash flow. Likewise, as the company gets closer to the 2014 maturity without resolution, the ratings could face downward pressure. The B3 rating continues to reflect the very high leverage levels (7.4x pro forma for certain restructuring charges as of 6/30/2012 and including Moody's adjustments for pensions and leases) and debt service requirements at Avaya at a time when the enterprise telephony market is evolving. The rating acknowledges the company's industry leading position within the enterprise telephony market and favorable replacement trends facing the industry. At the same time the industry is evolving to include integrated communications offerings (including email, instant messaging, video as well as integration into vast corporate databases) and Avaya will need to constantly reinvest in new products and platforms to maintain its position against Cisco, its much larger and better capitalized primary competitor. Issuer: Avaya, Inc. LGD Revisions: US$3800M Senior Secured Bank Credit Facility, Revised to a range of LGD2, 28 % from a range of LGD3, 31 % US$335M Senior Secured Bank Credit Facility, Revised to a range of LGD2, 28 % from a range of LGD3, 31 % US$200M Senior Secured Bank Credit Facility, Revised to a range of LGD2, 28 % from a range of LGD3, 31 % US$2200M Senior Secured Bank Credit Facility, Revised to a range of LGD2, 28 % from a range of LGD3, 31 % US$1009M 7% Senior Secured Regular Bond/Debenture, Revised to a range of LGD2, 28 % from a range of LGD3, 31 % US$790.781M 10.125% Senior Unsecured Regular Bond/Debenture, Revised to a range of LGD5, 82 % from a range of LGD5, 85 % US$700M 9.75% Senior Unsecured Regular Bond/Debenture, Revised to a range of LGD5, 82 % from a range of LGD5, 85 % Outlook Actions: Outlook, Changed To Negative From Stable The principal methodology used in rating Avaya, Inc. was the Global Communications Equipment Industry Methodology published in June 2008. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Avaya is a global leader in enterprise telephony systems with $5.3 billion of revenues for the LTM period ended June 30, 2012. BERNARD L. MADOFF: Suit 'Fallacious,' NY Atty. General Argues ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that New York Attorney General Eric Schneiderman filed papers explaining why a U.S. district court is the proper court to decide whether the trustee for Bernard L. Madoff Investment Securities LLC can halt a $410 million settlement with Madoff investor J. Ezra Merkin. According to the report, Madoff trustee Irving Picard sued Mr. Schneiderman in bankruptcy court on Aug. 1 contending that New York State's top lawyer is recovering on claims that belong to all Madoff customers and that only the trustee can pursue. The report relates that Mr. Schneiderman and Mr. Picard reached an interim agreement where the attorney general committed to file papers last week to remove the lawsuit to federal district court. Reduced to fundamentals, Mr. Picard contends that money Mr. Merkin took out of the Madoff firm represents money stolen from all customers and should be paid to all victims of the Ponzi scheme. Mr. Schneiderman said Mr. Picard's theory is "fallacious." He argued that most of the settlement should go to Mr. Merkin's own clients, who weren't customers of the Madoff firm and won't receive distributions authorized by the bankruptcy court. The report notes that Mr. Schneiderman also agreed that he won't take any steps to carry out the settlement or transfer any of the $410 million while the dispute over venue percolates. In return, Mr. Picard agreed not to go ahead with a hearing for a preliminary injunction preventing Mr. Schneiderman from completing the settlement. The lawsuit with Schneiderman is Picard v. Schneiderman, 12-01778, U.S. Bankruptcy Court, Southern District of New York (Manhattan). About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) The SIPA Trustee has said that as of March 31, 2012, through prepetition litigation and other settlements, he has successfully recovered, or reached agreements to recover, more than $9 billion -- over 50% of the principal lost in the Ponzi scheme by those who filed claims -- for the benefit of all customers of BLMIS. The liquidation has so far has cost the Securities Investor Protection Corp. $1.3 billion, including $791 million to pay a portion of customers' claims. Mr. Picard has so far made only one distribution in October of $325 million for 1,232 customer accounts. Uncertainty created by the appeals has limited Mr. Picard's ability to distribute recovered funds. Outstanding appeals include the $5 billion Picower settlement and the $1.025 billion settlement. CATALENT PHARMA: S&P Rates New $250MM Senior Notes 'B' ------------------------------------------------------ Standard & Poor's Ratings Services assigned ratings to Catalent Pharma Solutions Inc.'s proposed $250 million senior notes. "We rated the notes 'B' (one notch below the 'B+' corporate credit rating on the company) with a recovery rating of '5', indicating our expectation of modest (10%-30%) recovery in the event of default. The 'B+' corporate credit rating and stable outlook on Catalent remain unchanged. The company intends to use proceeds from the new notes to repay a portion of the borrowings under its existing higher coupon $619.1 million senior payment-in-kind (PIK) notes, which we also rate 'B'," S&P said. "The rating reflects Catalent's 'highly leveraged' (under Standard & Poor's criteria) financial risk profile, characterized by adjusted leverage that we expect to be sustained at over 6x over the next year and funds from operations to total debt in the high- single digits. The ratings also reflect the company's 'satisfactory' business risk profile: Catalent has a leading position in the outsourced pharmaceutical manufacturing space, business scale and diversity, and long-term contractual arrangements, promoting business stability," S&P said. RATINGS LIST Catalent Pharma Solutions Inc. Corporate Credit Rating B+/Stable/-- New Ratings Catalent Pharma Solutions Inc. $250 mil senior nts B Recovery Rating 5 CIRCUS AND ELDORADO: Asks to Disqualify Rejection Votes ------------------------------------------------------- Stephanie Gleason at Dow Jones' DBR Small Cap reports that the owner of Reno, Nev., Silver Legacy Resort Casino is asking the bankruptcy court to disqualify the votes of noteholders who have rejected its plan, including the vote of Black Diamond Capital Management LLC, as that group tries to end the exclusivity period and rally support for an alternative reorganization plan. About Circus and Eldorado Circus and Eldorado Joint Venture and Silver Legacy Capital Corp. filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case Nos. 12-51156 and 12-51157) on May 17, 2012. Circus and Eldorado Joint Venture owns and operates the Silver Legacy Resort Casino, a 19th century silver mining themed hotel, casino and entertainment complex located in downtown Reno, Nevada. The casino and entertainment areas at Silver Legacy are connected by skyway corridors to the neighboring Eldorado Hotel & Casino and the Circus Circus Hotel and Casino, each of which are owned by affiliates of the Debtors. Together, the three properties comprise the heart of the Reno market's prime gaming area and room base. Silver Legacy Capital is a wholly owned subsidiary of the Joint Venture and was created and exists for the sole purpose of serving as a co-issuer of the mortgage notes due 2012. SLCC has no operations, assets or revenues. Eldorado Hotel & Casino and Circus Circus Hotel and Casino are not debtors in the Chapter 11 cases. The Company did not make the required principal payment of its 10.125% mortgage notes on the maturity date of March 1, 2012. The company also elected not to make the scheduled interest payment. As a result, an aggregate of $142.8 million principal amount of Notes were outstanding and accrued interest of $7.23 million on the Notes, as of March 1, 2012, is due and payable. The Debtors have entered into a Restructuring Support Agreement with Capital Research and Management Company, a holder of a substantial portion of the mortgage notes. A copy of the RSA dated March 15, 2012, is available for free at http://is.gd/diDPh3 The RSA contemplates a proposed plan will be filed no later than June 1, 2012. The plan will contain creditor treatments that have already been negotiated with and agreed to by creditor constituents. The Debtors will seek approval of the explanatory disclosure statement within 45 days after the Petition Date and obtain confirmation of the Plan 60 days later. Judge Bruce T. Beesley presides over the case. Paul S. Aronzon, Esq., and Thomas P. Kreller, Esq., at Milbank, Tweed, Hadley & McCloy LLP; and Sallie B. Armstrong, Esq., at Downey Brand LLP, serve as the Debtors' counsel. The Debtors' financial advisor is FTI Consulting Inc. The claims agent is Kurtzman Carson Consultants LLC. The Bank of New York Mellon Trust Company, N.A., the trustee for the Debtors' 10-1/8% Mortgage Notes due 2012, is represented by Craig A. Barbarosh, Esq., and Karen B. Dine, Esq., at Pillsbury Winthrop Shaw Pittman LLP. Circus and Eldorado Joint Venture disclosed $264,649,800 in assets and $158,753,490 in liabilities as of the Chapter 11 filing. The petitions were signed by Stephanie D. Lepori, chief financial officer. The Plan dated June 1, 2012, pays much of its debt in cash and the balance with new secured liens. August B. Landis, Acting U.S. Trustee for Region 17, appointed three creditors to serve in the Official Committee of Unsecured Creditors in the Debtors' Chapter 11 cases. Stutman, Treister & Glatt Professional Corporation represents the Committee. CLAIRE'S STORES: S&P Affirms 'B' Rating on $1.1-Bil. Secured Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B' rating, with a recovery rating of '2', on Claire's Stores Inc.'s senior secured first-lien notes due 2019, following the company's announcement of an add-on which brings the total amount to $1.1 billon. According to the company, it plans to use the proceeds from the add-on first-lien notes to repay the term loan B. All other ratings on the company, including the 'B-' corporate credit rating, remain unchanged. RATINGS LIST Claire's Stores Inc. Corporate Credit Rating B-/Stable/-- Ratings Affirmed Claire's Stores Inc. $1.1 bil first-lien notes due 2019 B Recovery Rating 2 CONSOLIDATED TRANSPORT: Marquette Trans Extends $4.75MM DIP Loan ---------------------------------------------------------------- Tandem Transport Corp. asks the Court to enter interim and final orders: -- authorizing the use of cash collateral and the granting of adequate protection, and -- allowing Tandem Transport to borrow under a secured debtor-in-possession financing with Marquette Transportation Finance, Inc. Debtor-affiliates Consolidated Transport Systems, Inc., Transport Investment Corporation, and Tandem Eastern, Inc., will serve as guarantors under the DIP financing facility. Marquette has committed to provide up to $4,750,000 under the DIP facility. Tandem Transport seeks authority to use Cash Collateral for the initial period effective from Aug. 31, 2012 through Sept. 30, 2012. Consolidated, the first to file for bankruptcy, filed an emergency motion to use cash collateral. At a hearing Aug. 29, Consolidated obtained interim permission to use cash collateral to pay postpetition payroll and federal taxes. The order was signed by Chief Judge Robert E. Grant. The Court will hold a final hearing on Consolidated's motion to use cash collateral on Sept. 24. These entities may claim an interest in the cash collateral: * Marquette, by virtue of a revolving line of credit in the approximate amount of $3,115,640, which is secured by virtue of a blanket security interest in Tandem Transport's assets; * DCFS USD LLC, by virtue of a purported assignment of leases between Consolidated and Transport, General Electric Capital Corporation, by virtue of a purported assignment of leases between Consolidated and Transport and Navistar Financial, by virtue of a blanket security interest in the Borrower's assets; * DCFS USD LLC, by virtue of a purported assignment of leases between Consolidated and Transport, General Electric Capital Corporation; * VFS US LLC, by virtue of a blanket security interest in the Borrower's assets; and * DCFS USD LLC, by virtue of a purported assignment of leases between Consolidated and Transport, General Electric Capital Corporation. Tandem Transport proposes to use Cash Collateral to meet its postpetition obligations to maintain assets, pay employees, payroll taxes, insurance, utilities, fuel suppliers and other vendors, overhead, lease expenses and other expenses incurred during the pendency of the bankruptcy case, as well as to make payments to the DIP Lender. Tandem Transport proposes to use the DIP Loan to also fund its postpetition obligations to maintain assets, pay employees, payroll taxes, insurance, utilities, fuel suppliers and other vendors, overhead, lease expenses and other expenses incurred during the pendency of the bankruptcy case, as well as to make payments to the DIP Lender. As part of the adequate protection for any diminution in the value of the Cash Collateral Creditors' interests in their prepetition collateral, pursuant to Sections 361 and 363 of the Bankruptcy Code, Tandem Transport proposes to grant the Cash Collateral Creditors continuing liens upon all property of the Debtor of the same type, description and priority as the pre-petition collateral to the extent the Cash Collateral Creditors hold a valid, properly perfected lien on such collateral as of the Petition Date. The DIP Lender is requesting that the Debtor seek a finding by the Court that the DIP Lender's liens on the Debtor arising prior to the Petition Date are valid, binding, and non-avoidable obligations of the Debtor, there are no defenses to the obligations by the Debtor, and the Debtor has no causes of action under state law or chapter 5 of the Bankruptcy Code. About Consolidated Transport, Tandem Transport et al. Michigan City, Indiana-based trucking company Consolidated Transport Systems, Inc., filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-32940) on Aug. 16, 2012. Walter G & Carolyn Bay owns 87.3% of the privately held Debtor. Tandem Transport Corp., and two affiliates Transport Investment Corporation, and Tandem Eastern, Inc., sought Chapter 11 protection (Bankr. N.D. Ind. Case Nos. 12-33135 to 12-33137) on Aug. 31, 2012. The Companies and their predecessors have provided for-hire freight services throughout the United States since 1945. The largest portion (75%) of the Companies' business consists of hauling building materials, with the balance consisting of transporting steel (20%) and other miscellaneous freight such as stone, salt, and machinery (5%). The bulk of the Companies' loads are received and delivered east of the Mississippi River, although they have general commodities authority for the lower 48 states. The Companies have intrastate authority for the states of Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, Ohio, Tennessee and Texas. The Companies operate as a combined enterprise. Consolidated owns the fleet of roughly 275 tractors and 330 trailers. It also employs office staff of 66 employees. The corporate headquarters is located in Michigan City, Indiana while their executive office is located in St. Louis, Michigan. Transport is the operating company which provides logistics to customers and also brokers freight. Eastern employs 246 drivers, while Investment employs 10 mechanics. Consolidated initiated its chapter 11 proceeding to prevent any actions by equipment lenders such as repossession of equipment that would threaten the Companies' operations and viability while they restructure their respective operations. Transport, Investment and Eastern filed their chapter 11 proceedings to give them the necessary breathing room provided by the Bankruptcy Code, as well as a single forum to allow them to effectively restructure their operations. Consolidated and Tandem each estimated $10 million to $50 million in assets and liabilities. Transport Investment estimated less than $50,000 in assets and up to $50 million in liabilities. Two other entities that filed are Transport Investment Corporation and Tandem Eastern, Inc. Judge Harry C. Dees, Jr. presides over the cases. Jeffrey J. Graham, Esq., and Jerald I. Ancel, Esq., at Taft Stettinius & Hollister LLP, serve as the Debtors' counsel. The petition was signed by Jeffrey T. Gross, president. CONSOLIDATED TRANSPORT: Wants to Hire Taft Stettinius as Counsel ---------------------------------------------------------------- Consolidated Transport Systems, Inc., seeks Bankruptcy Court authority to employ Taft Stettinius & Hollister LLP as counsel. The Firm, prior to the filing of the chapter 11 cases and pursuant to the parties' Engagement Letter has been engaged to represent the Debtor in connection with its case. The standard hourly rates, effective Jan. 1, 2012, charged by the attorneys and paraprofessionals in the Firm's Indiana based Bankruptcy, Business Restructuring and Creditor Rights' Practice Group are: Andrew T. Kight Partner $370 Casey C. Schwartz Associate $280 Celeste A. Brodnik Paralegal $245 Erin C. Nave Associate $235 Jeffrey J. Graham Partner $380 Jerald I. Ancel Partner $535 John R. Humphrey Partner $380 Marlene Reich Partner $475 Michael P. O'Neil Partner $475 Sharon I. Shanley Associate $345 The Firm received a bankruptcy retainer from the Debtor prior to the Petition Dates in the amount of $25,000 in addition to the filing fee of $1,046. This bankruptcy retainer remains in the Firm's trust account to be drawn upon if a monthly statement is not paid pursuant to the terms of the Firm's engagement and any compensation procedures approved by the Court. To the best of the Debtor's knowledge, the Firm does not have any relevant connection with the Debtor, its creditors, any other party-in-interest, their attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee. About Consolidated Transport, Tandem Transport et al. Michigan City, Indiana-based trucking company Consolidated Transport Systems, Inc., filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-32940) on Aug. 16, 2012. Walter G & Carolyn Bay owns 87.3% of the privately held Debtor. Tandem Transport Corp., and two affiliates Transport Investment Corporation, and Tandem Eastern, Inc., sought Chapter 11 protection (Bankr. N.D. Ind. Case Nos. 12-33135 to 12-33137) on Aug. 31, 2012. The Companies and their predecessors have provided for-hire freight services throughout the United States since 1945. The largest portion (75%) of the Companies' business consists of hauling building materials, with the balance consisting of transporting steel (20%) and other miscellaneous freight such as stone, salt, and machinery (5%). The bulk of the Companies' loads are received and delivered east of the Mississippi River, although they have general commodities authority for the lower 48 states. The Companies have intrastate authority for the states of Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, Ohio, Tennessee and Texas. The Companies operate as a combined enterprise. Consolidated owns the fleet of roughly 275 tractors and 330 trailers. It also employs office staff of 66 employees. The corporate headquarters is located in Michigan City, Indiana while their executive office is located in St. Louis, Michigan. Transport is the operating company which provides logistics to customers and also brokers freight. Eastern employs 246 drivers, while Investment employs 10 mechanics. Consolidated initiated its chapter 11 proceeding to prevent any actions by equipment lenders such as repossession of equipment that would threaten the Companies' operations and viability while they restructure their respective operations. Transport, Investment and Eastern filed their chapter 11 proceedings to give them the necessary breathing room provided by the Bankruptcy Code, as well as a single forum to allow them to effectively restructure their operations. Consolidated and Tandem each estimated $10 million to $50 million in assets and liabilities. Transport Investment estimated less than $50,000 in assets and up to $50 million in liabilities. Two other entities that filed are Transport Investment Corporation and Tandem Eastern, Inc. Judge Harry C. Dees, Jr. presides over the cases. Jeffrey J. Graham, Esq., and Jerald I. Ancel, Esq., at Taft Stettinius & Hollister LLP, serve as the Debtors' counsel. The petition was signed by Jeffrey T. Gross, president. CONSOLIDATED TRANSPORT: 2 Lenders Want to Repossess Equipment ------------------------------------------------------------- Mercedes-Benz Financial Services USA LLC and Navistar Financial Corporation are asking the Bankruptcy Court to lift the automatic stay in the Chapter 11 cases of Consolidated Transport Systems Inc. and its affiliated debtors so they may exercise their rights under prepetition equipment financing agreements with the Debtors. Mercedes-Benz Financial Services USA LLC, successor in interest to DCFS USA, LLC, DaimlerChrysler Financial Services Americas LLC, and Daimler Chrysler Truck Financial, extended financing for the Debtors' purchase of certain trailers and tractors. Navistar Financial also financed the Debtors' purchase of certain trailers. The equipment lenders assert the Debtors are in default under the loan agreements. The Debtors owe MBFS $2,816,422 under the Loan Agreements, exclusive of late charges totaling $176,145. Past due payments total $484,707 as of the Petition Date. As of the Petition Date, CTS owed Navistar Financial at least $3,199,584. Both equipment lenders assert valid, perfected, and enforceable first priority lien against and security interest in the equipment and related proceeds. The lenders seek relief from the automatic stay so they may immediately exercise state law remedies, including the right to recover possession and liquidate the Equipment Collateral. In the alternative, the lenders ask the Court to condition the Debtors' continued use of the Equipment Collateral and Cash Collateral on entry of an order granting them adequate protection, including periodic payments. Attorneys for Navistar Financial Corporation are: Michael K. McCrory, Esq. Jonathan D. Sundheimer, Esq. BARNES & THORNBURG LLP 11 South Meridian Street Indianapolis, IN 46204 Tel: (317) 236-1313 Fax: (317) 231-7433 E-mail: michael.mccrory@btlaw.com jsundheimer@btlaw.com Attorneys for Mercedes-Benz Financial Services USA LLC are: Stephen B. Grow, Esq. Warner Norcross & Judd LLP 111 Lyon St. NW Suite 900 Grand Rapids, MI 49503 Tel: 616-752-2158 Fax: 616-222-2158 E-mail: sgrow@wnj.com About Consolidated Transport, Tandem Transport et al. Michigan City, Indiana-based trucking company Consolidated Transport Systems, Inc., filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-32940) on Aug. 16, 2012. Walter G & Carolyn Bay owns 87.3% of the privately held Debtor. Tandem Transport Corp., and two affiliates Transport Investment Corporation, and Tandem Eastern, Inc., sought Chapter 11 protection (Bankr. N.D. Ind. Case Nos. 12-33135 to 12-33137) on Aug. 31, 2012. The Companies and their predecessors have provided for-hire freight services throughout the United States since 1945. The largest portion (75%) of the Companies' business consists of hauling building materials, with the balance consisting of transporting steel (20%) and other miscellaneous freight such as stone, salt, and machinery (5%). The bulk of the Companies' loads are received and delivered east of the Mississippi River, although they have general commodities authority for the lower 48 states. The Companies have intrastate authority for the states of Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, Ohio, Tennessee and Texas. The Companies operate as a combined enterprise. Consolidated owns the fleet of roughly 275 tractors and 330 trailers. It also employs office staff of 66 employees. The corporate headquarters is located in Michigan City, Indiana while their executive office is located in St. Louis, Michigan. Transport is the operating company which provides logistics to customers and also brokers freight. Eastern employs 246 drivers, while Investment employs 10 mechanics. Consolidated initiated its chapter 11 proceeding to prevent any actions by equipment lenders such as repossession of equipment that would threaten the Companies' operations and viability while they restructure their respective operations. Transport, Investment and Eastern filed their chapter 11 proceedings to give them the necessary breathing room provided by the Bankruptcy Code, as well as a single forum to allow them to effectively restructure their operations. Consolidated and Tandem each estimated $10 million to $50 million in assets and liabilities. Transport Investment estimated less than $50,000 in assets and up to $50 million in liabilities. Two other entities that filed are Transport Investment Corporation and Tandem Eastern, Inc. Judge Harry C. Dees, Jr. presides over the cases. Jeffrey J. Graham, Esq., and Jerald I. Ancel, Esq., at Taft Stettinius & Hollister LLP, serve as the Debtors' counsel. The petition was signed by Jeffrey T. Gross, president. CONSOLIDATED TRANSPORT: Intends to Assume Services Deal With Pilot ------------------------------------------------------------------ Tandem Transport Corp. seeks bankruptcy court permission to assume its Direct Bill Purchase Agreement with Pilot Travel Centers LLC. The deal allows the Debtors to refuel and service their fleet at the numerous Pilot locations across the country without delay. Further, Pilot offers substantial discounting relative to other fueling locations due to bulk discounts on fuel, reducing the Debtors' largest expense, as well as "no cost" on transaction fees. The Debtors' fleet consists of 275 tractors and 330 trailers. The Debtors also said the Pilot locations provide driver services such as showers and places to park so drivers can take their required resting periods. As the Debtors' trucking business runs seven days per week and the deliveries of loads are extremely time-sensitive, any interruption in their ability to make timely deliveries would cause costly delays in the Debtors' delivery services and likely result in the loss of clients. The Debtors said they are unable to find a suitable substitute for the services provided in a timely manner and avoid the irreparable harm that would come from an inability to obtain the services provided by Pilot. About Consolidated Transport, Tandem Transport et al. Michigan City, Indiana-based trucking company Consolidated Transport Systems, Inc., filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-32940) on Aug. 16, 2012. Walter G & Carolyn Bay owns 87.3% of the privately held Debtor. Tandem Transport Corp., and two affiliates Transport Investment Corporation, and Tandem Eastern, Inc., sought Chapter 11 protection (Bankr. N.D. Ind. Case Nos. 12-33135 to 12-33137) on Aug. 31, 2012. The Companies and their predecessors have provided for-hire freight services throughout the United States since 1945. The largest portion (75%) of the Companies' business consists of hauling building materials, with the balance consisting of transporting steel (20%) and other miscellaneous freight such as stone, salt, and machinery (5%). The bulk of the Companies' loads are received and delivered east of the Mississippi River, although they have general commodities authority for the lower 48 states. The Companies have intrastate authority for the states of Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, Ohio, Tennessee and Texas. The Companies operate as a combined enterprise. Consolidated owns the fleet of roughly 275 tractors and 330 trailers. It also employs office staff of 66 employees. The corporate headquarters is located in Michigan City, Indiana while their executive office is located in St. Louis, Michigan. Transport is the operating company which provides logistics to customers and also brokers freight. Eastern employs 246 drivers, while Investment employs 10 mechanics. Consolidated initiated its chapter 11 proceeding to prevent any actions by equipment lenders such as repossession of equipment that would threaten the Companies' operations and viability while they restructure their respective operations. Transport, Investment and Eastern filed their chapter 11 proceedings to give them the necessary breathing room provided by the Bankruptcy Code, as well as a single forum to allow them to effectively restructure their operations. Consolidated and Tandem each estimated $10 million to $50 million in assets and liabilities. Transport Investment estimated less than $50,000 in assets and up to $50 million in liabilities. Two other entities that filed are Transport Investment Corporation and Tandem Eastern, Inc. Judge Harry C. Dees, Jr. presides over the cases. Jeffrey J. Graham, Esq., and Jerald I. Ancel, Esq., at Taft Stettinius & Hollister LLP, serve as the Debtors' counsel. The petition was signed by Jeffrey T. Gross, president. COMMODITIES ONLINE: Attorney, 2 Others Charged in $27.5MM Fraud --------------------------------------------------------------- The Securities and Exchange Commission charged an attorney and two others living in South Florida for their roles in a $27.5 million investment scheme that led investors to believe they were purchasing securities consisting of "pre-sold" commodities contracts with a pre-determined profit. However, the supposed profits actually distributed to investors were largely taken from other investors' funds. The SEC halted the scheme last year when it obtained an asset freeze and a court-appointed receiver over the companies involved: Commodities Online LLC and Commodities Online Management LLC. The SEC's follow-up charges are against the founder and former president of the company, James C. Howard III, as well as the company's vice president Louis N. Gallo III and outside counsel Michael R. Casey, who later became the president. "This trio teamed up to employ all the hallmarks of an investment scheme," said Eric I. Bustillo, Director of the SEC's Miami Regional Office. "Howard met with prospective investors at a luxury hotel to emanate a false sense of wealth and security, Gallo oversaw an in-house boiler room that drummed up investor interest, and Casey was the company's purported legal counsel who acted anything but lawyerly." In a parallel action, the U.S. Attorney's Office for the Southern District of Florida today announced criminal charges against Howard, Gallo, and Casey. According to the SEC's complaint filed in federal court in Miami, Commodities Online offered investors the chance to participate in its purportedly profitable brokering of physical commodities via pre-sold contracts -- for example, the purchase and sale of large amounts of seafood or iron ore. Investors were sold participation units in unregistered private placement offerings, each supposedly tied to a commodities transaction in which Commodities Online had already secured a buyer and a seller of the commodity. These participation units would purportedly generate predetermined profits for investors. The SEC alleges that in reality, Commodities Online performed only a limited percentage of the commodities transactions that were promised to investors. The majority of "profits" allocated or distributed to investors were not profits from completed commodities transactions, but instead taken from the funds of other investors. Meanwhile, Howard and Gallo were dissipating millions of dollars in investor funds to largely sham companies. Through these companies, Howard and Gallo stole investor funds for their own use. For example, Howard met with prospective investors at a luxury hotel in Fort Lauderdale and offered Commodities Online membership interests. He told investors that the funds raised from the offering would be used for the company's start-up costs such as salaries, marketing, and advertising. However, within weeks of receiving $2 million in investor funds for the purchase of the membership units, Howard siphoned $1.45 million to another entity he controlled. Furthermore, Howard failed to disclose to prospective investors that he's a convicted felon. According to the SEC's complaint, Howard stepped down as the company's president in 2010 after he was arrested for an unrelated investment fraud. He was replaced by Casey, who misled investors about Howard's continuing control over Commodities Online while also misrepresenting the profitability, structure, and existence of the purported commodities contracts to investors. Casey also failed to tell at least one investor that the funds raised from the purchase of membership interests had previously been misappropriated by Howard. The SEC alleges that Gallo ran an in-house "boiler room" of telephone sales agents and a network of approximately 20 regional and international sales offices. He failed to disclose to investors that he previously pled guilty to federal bank fraud and other felonies and was serving a term of supervised release while employed at Commodities Online. Gallo also misled investors about Howard's role at Commodities Online. The SEC's complaint charges Howard, Gallo and Casey with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. They're also charged with aiding and abetting violations by Commodities Online and Commodities Online Management of Section 10(b) of the Exchange Act and Rule 10b-5. Howard is further charged with a violation of Section 20(a) of the Exchange Act as a control person of Commodities Online, and the complaint alleges he is therefore jointly and severally liable for Commodities Online's violations of Section 10(b) of the Exchange Act and Rules 10b-5. The SEC is seeking disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions against Howard, Gallo, and Casey. The SEC's complaint also names several relief defendants for the purposes of recovering investor money steered to those entities in the scheme: Sutton Capital LLC, J&W Trading LLC, American Financial Solutions LLC, and Minjo Corporation. The SEC's investigation was conducted by Senior Investigations Counsel Robert H. Murphy, Senior Counsel Melissa J. Mitchell, and Staff Accountant Timothy J. Galdencio under the supervision of Assistant Regional Director Eric R. Busto in the Miami Regional Office. James M. Carlson will lead the SEC's litigation efforts. The SEC acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of Florida, the Federal Bureau of Investigation's Miami Division, and the Florida Office of Financial Regulation. CONTEC HOLDINGS: Prepack Confirmation Hearing Set for Oct. 4 ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the bankruptcy judge in Delaware scheduled a confirmation hearing on Oct. 4 to approve Contec Holdings Ltd.'s prepackaged Chapter 11 plan. As reported in the Aug. 31, 2012 edition of the Troubled Company Reporter, the Debtors solicited votes on the Plan prepetition. Over one half of the prepetition secured lenders collectively holding at least two-thirds in amount of outstanding obligations under their senior credit agreement have voted to accept the Plan. In addition, all holders of subordinated notes claims have voted to accept the Prepackaged Plan. The Debtors' prepetition long-term debt obligations total $360 million. About $201 million of that amount represents senior secured obligations to lenders led by Barclays Bank PLC, as administrative agent, collateral agent, issuing lender and swing line lender. There is also $159 million owed on account of unsecured subordinated notes under a note purchase agreement with American Capital Financial Services, Inc. as administrative agent, and American Capital and certain of its affiliates, as note purchasers. Under the Plan, senior lenders owed $201 million will recover 14.7% to 24.6%. They will receive on the effective date $27.5 million in new second lien notes and 80% of reorganized Contec Holdings. Holders of general unsecured claims estimated to total $10 million to $11 million are unimpaired and will recover 100%. The claims will be reinstated or paid in full in cash. The senior lenders have agreed to carve out a portion of their collateral to ensure the payment of general unsecured trade claims. Holders of subordinated note claims totaling $159 will receive on the effective date a pro-rata share of warrants and $25,000. Holders of existing equity interests in CHL LTD, the parent, won't receive anything. A copy of the Disclosure Statement is available for free at: http://bankrupt.com/misc/Contec_Prepack_Plan_Outline.pdf About Contec Holdings Headquartered in Schenectady, New York, Contec Holdings Ltd. -- http://www.gocontec.com/-- is the market leader in the repair and refurbishment of customer premise equipment for the cable industry. The Company repairs more than 2 million cable set top boxes annually, while also providing logistical support services for over 12 million units of cable equipment annually. With substantial operations in the United States and Mexico, the Debtors earned revenues of approximately $153.6 million in 2011, and as of July 28, 2012, the Debtors directly employed over 2,300 people in North America, 72% of which are unionized. Contec Holdings, Ltd., and its affiliates on Aug. 29, 2012 sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12437) with a plan of reorganization that has the support of senior lenders and noteholders. Ropes & Gray LLP, serves as bankruptcy counsel to the Debtors; Pepper Hamilton LLP is the local counsel; AP Services LLC, is the restructuring advisor; Moelis & Company is the investment banker; and Garden City Group is the claims agent. CONVATEC INC: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Skillman, N.J.-based ConvaTec Inc. The outlook is stable. "We also affirmed our 'B+' secured debt rating and 'B' senior unsecured debt rating. The '3' recovery rating on the secured debt and the '5' recovery rating on the unsecured debt remain unchanged," S&P said. "Although ConvaTec will be issuing debt to finance a majority of the acquisition, we believe this will be a neutral to modestly de- leveraging event," explained Standard & Poor's credit analyst Cheryl Richer, "because of its already high adjusted debt leverage--11.4x for the 12 months ended June 30, 2012. We also believe the acquisition will be slightly cash flow positive (net of incremental interest expense)." "Although it diversifies ConvaTec's product portfolio and is complementary to the company's direct-to-consumer model," added Ms. Richer, "the acquisition is not big enough to have any impact on our assessment of its business risk profile as 'satisfactory.'" "We rate ConvaTec's bank facilities and secured notes 'B+' with a recovery rating of '3', reflecting our expectations of meaningful recovery (50% to 70%) of principal in the event of payment default. The facilities consist of a $250 million revolving credit facility (which can be drawn in U.S. dollars, euros, pounds sterling, or Danish krone), a $500 million U.S. dollar-denominated secured term loan, a EUR550 million ($726 million dollar equivalent at March 31, 2012) secured term loan, and EUR300 million ($396 million dollar equivalent) senior secured notes," S&P said. "We rate the company's $745 million U.S. dollar-denominated senior unsecured notes and EUR250 million ($330 million dollar equivalent) senior unsecured notes 'B' with a recovery rating of '5', reflecting our expectations of modest recovery (10% to 30%) of principal in the event of a payment default," S&P said. "The ratings on ConvaTec reflect its 'highly leveraged' financial risk profile, with adjusted debt to EBITDA and funds from operations to adjusted debt expected to remain at about 12x and under 5%, respectively, over the next several years. We view the company on a consolidated basis at Luxembourg-based parent holding company ConvaTec Healthcare B S.a.r.l. ConvaTec was spun out from Bristol-Myers Squibb Co. in 2008 and purchased by Nordic Capital and Avista Capital Partners. At that time, the sponsors invested about $2 billion in mandatorily redeemable preferred equity certificates (PECs). We view the PECs and accrued dividends as debt. ConvaTec has a satisfactory business risk profile because of its product, geographic, and customer diversity; leading market positions and strong and varied customer relationships; and steady product demand," S&P said. "Our rating outlook on ConvaTec is stable, reflecting our expectation that leverage will remain high despite modestly improving operating trends. We could raise the ratings if adjusted debt leverage declines significantly (to under 5x), although we do not expect this material a change unless the PECs are replaced with common equity. We could lower our ratings on ConvaTec if liquidity weakens. With $300 million of incremental debt, we think that ConvaTec's debt leverage EBITDA covenant cushion could fall to under 15% in the second half of 2013 if the rate of EBITDA growth slowed to only 2%, given the covenant step-downs," S&P said. COSTA DORADA: Has Until Sept. 15 to File Amended Plan Outline ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico extended until Sept. 15, 2012, Costa Dorada Apartments Corp.'s time to file a second amended plan of reorganization and an explanatory disclosure statement. The Court previously extended until Aug. 15, the Debtor's time to file an amended plan. The Debtor explained, in its motion, that it is still analyzing creditor PRLP 2011 Holdings, LLC's claim in order to assess its adequacy and provide for an adequate disclosure statement and a feasible plan for the benefit of all parties in the case. Additionally, the Debtor related that it is obtaining certain recent appraisal reports made upon the Debtor's real properties by secured creditor Scotiabank de Puerto Rico. The information is crucial in providing adequate disclosure within the documents to be filed, the Debtor said. The Chapter 11 Plan As reported in the Troubled Company Reporter on June 6, 2012, the Debtor has submitted a First Amended Plan that provides that upon confirmation, the Debtor will have sufficient funds to make all payments then due. According to the Disclosure Statement, the funds will be obtained from these sources: 1) sale of 15 apartment units in the project; 2) rent and regular operation of the other apartments as part of the hotel facilities; 3) sale of the remnant land of 3.5 cdas located at State Road 466 Bajuras Ward in Isabela, Puerto Rico; and 4) rent and regular operation of the other apartments as part of the Time Sharing (Vacation Plan) project. A copy of the Amended Disclosure Statement is available for free at http://bankrupt.com/misc/COSTA_DORADA_ds_amended.pdf About Costa Dorada Apartments Costa Dorada Apartments Corp., dba Villas De Costa Dorada, in Isabela, Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case No. 11-03960) on May 10, 2011. The Debtor disclosed $10.7 million in assets and $8.6 million in liabilities as of the Chapter 11 filing. The Hon. Enrique S. Lamoutte Inclan, presides over the case. The petition was signed by Carlos R. Fernandez Rodriguez, its president. Wigberto Lugo Mender, Esq., at Lugo Mender & Co., in Guaynabo, Puerto Rico, represents the Debtor as counsel. DECISION INSIGHT: S&P Lowers CCR to 'B-' on Weak Earnings --------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on U.S.-based property information provider Decision Insight Information Group (U.S.) I Inc. (DIIG) to 'B-' from 'B'. The outlook is stable. "We also lowered our issue-level rating on the company's first- lien credit facility to 'B' from 'B+'. The recovery rating on the debt of '2' is unchanged," S&P said. "We base the downgrade on DIIG's weak earnings in the past year and our expectation that they will remain weak in 2012 and beyond, causing debt leverage to remain above 7x in the near-to-medium term," said Standard & Poor's credit analyst David Fisher. "While the company has taken various actions to improve its operating results (including cost cutting, pricing actions, and product enhancements), earnings continue to decline with segment- level EBITDA in the six months ended June 30, 2012, down about 4% from the previous year period and total EBITDA (excluding adjustments) down about 9%. We believe management will be hard pressed to increase DIIG's earnings and meaningfully deleverage the company in the near-to-medium term given our view that market conditions will remain tough in all of its segments. Specifically, the key U.S. property insurance division faces increased competition, in our view, and the North American and U.K. financial services segments continue to face macroeconomic headwinds," S&P said. "The ratings on DIIG are based on the consolidation of the company with its parent (Property Data Holdings Ltd.; not rated) and its related entities. These companies collectively operate as Decision Insight Information Group," S&P said. "The ratings on DIIG reflect what Standard & Poor's views as the company's highly leveraged financial risk profile characterized by adjusted debt to EBITDA above 7x, weak cash flow protection measures, and an aggressive financial policy given the company's leveraged capital structure and financial sponsor ownership. The ratings also reflect Standard & Poor's assessment of a weak business risk profile owing to the company's relatively small scale, moderate diversity, and weak operating performance in recent years," S&P said. "The stable outlook reflects our expectation that the company should generate modest free operating cash flow and maintain adequate liquidity in the near term, despite its highly leveraged capital structure. Increasing competitive pressures and weak macroeconomic trends have diminished DIIG's ability to absorb competitive losses, operational missteps, or lower demand. As such, we could downgrade the company if adjusted debt-to-EBITDA deteriorates to more than 8.5x, the company fails to generate positive free operating cash flow, or if covenant headroom tightens to less than 10%. A near-term upgrade is unlikely at present, but we could consider it if leverage improved to 6x or Better," S&P said. DIIG is a privately owned company that does not publicly release financial information. DELTA PETROLEUM: Has $29.4-Mil. Net Loss in 1st Half of 2012 ------------------------------------------------------------ Delta Petroleum Corporation filed with the U.S. Securities and Exchange Commission its annual report for year ended Dec. 31, 2011, and its periodic reports for the first and second quarter of 2012. The Company disclosed in the Form 10-K a net loss of $470.04 million on $63.88 million of total revenue in 2011, a net loss of $194.01 million on $60.99 million of total revenue in 2010, and a net loss of $349.68 million on $116.31 million of total revenue in 2009. Delta Petroleum reported a net loss of $13.46 million on $9.91 million of total revenue for the three months ended March 31, 2012, compared with a net loss of $30.26 million on $17.63 million of total revenue for the same period during the previous year. The Company disclosed a net loss of $15.91 million on $7.70 million of oil and gas sales for the three months ended June 30, 2012, compared with a net loss of $963,000 on $16.88 million of oil and gas sales for the same period during the prior year. For the six months ended June 30, 2012, the Company reported a net loss of $29.37 million on $17.61 million of oil and gas sales, compared with a net loss of $28.80 million on $34.59 million of oil and gas sales for the same period a year ago. At June 30, 2012, the Company's balance sheet showed $364.75 million in total assets, $342.01 million in total liabilities and $22.74 million in total Delta stockholders' equity. A copy of the 2011 Form 10-K is available for free at: http://is.gd/qF8fhv A copy of the First Quarter Form 10-Q is available for free at: http://is.gd/NH8G3F A copy of the Second Quarter Form 10-Q is available for free at: http://is.gd/5oxOCW 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. Delta Petroleum won confirmation of its reorganization plan at a hearing on Aug. 15. Laramie Energy II LLC is the plan sponsor. Delta Petroleum emerged from bankruptcy as Par Petroleum Corporation. At closing, Laramie and Par Petroleum contributed their respective assets in Mesa and Garfield counties, Colorado, to form a new joint venture called Piceance Energy, LLC. Laramie and Par Petroleum hold 66.66% and 33.34% ownership interests in Piceance Energy, respectively EMMONS-SHEEPSHEAD: Sec. 341 Creditors' Meeting Set for Oct. 1 ------------------------------------------------------------- The U.S. Trustee for Region 2 in Brooklyn will convene a Meeting of Creditors under U.S.C. Sec. 341(a) meeting in the Chapter 11 case of Emmons-Sheepshead Bay Development LLC, on Oct. 1, 2012, at 1:00 p.m. at 271 Cadman Plaza East, Room 4529, in Brooklyn. The Court also has scheduled a Status Conference in the case for Oct. 16 at 11:00 a.m. at Courtroom 3585. Emmons-Sheepshead Bay Development LLC, the owner of 49 unsold condominium units on Emmons Avenue in Brooklyn, filed a Chapter 11 petition (Bankr. E.D.N.Y. Case No. 12-46321) on Aug. 30, 2012, in Brooklyn. The Debtor said the property is worth $14 million. It has $32.6 million in total liabilities, including $31 million owed to TD Bank N.A., which is secured by first, second and third priority liens on the property. Judge Elizabeth S. Stong presides over the case. Arnold Mitchell Greene, Esq., at Robinson Brog Leinwand Greene et al., serves as the Debtor's counsel. The petition was signed by Jacob Pinson, managing member, Yachad Enterprises, LLC. ENERGY CONVERSION: Chapter 11 Plan Effective -------------------------------------------- BankruptcyData.com reports that the Second Amended Chapter 11 Plan of Liquidation for Energy Conversion Devices and United Solar Ovonic became effective, and the Company emerged from Chapter 11 protection. BankruptcyData.com relates that documents filed with the Court further explain, "the Plan provides the most expedited recovery. Litigation of the intricate issues could delay distribution to any creditors for extensive periods. The Plan, on the other hand, contemplates an initial distribution as to Administrative Expense Claims, Priority Claims, Priority Tax Claims, and Secured Claims on the Effective Date and will facilitate prompt distributions thereafter." The TCR, citing Bill Rochelle, the bankruptcy columnist at Bloomberg News, reported on Aug. 9, 2012, that the U.S. Bankruptcy Court in Detroit in July signed a confirmation order approving a reorganization plan where unsecured creditors with up to $337 million in claims were told they could expect a recovery between 50.1% and 59.3%. The plan creates a trust to sell remaining assets and distribute proceeds in the order of priority laid out in bankruptcy law. A liquidation analysis attached to the disclosure statement showed cash of $139.5 million. When other assets are liquidated, the company projected total proceeds would be $182 million to $196 million. After expenses and claims of higher priority are paid, the disclosure statement predicted that $168.7 million to $182.2 million would remain for unsecured creditors. About Energy Conversion Energy Conversion Devices -- http://energyconversiondevices.com/ -- has a renowned 51 year history since its formation in Detroit, Michigan and has been a pioneer in materials science and renewable energy technology development. The company has been awarded over 500 U.S. patents and international counterparts for its achievements. ECD's United Solar wholly owned subsidiary has been a global leader in building-integrated and rooftop photovoltaics for over 25 years. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to clean, renewable energy using proprietary technology. ECD filed for Chapter 11 protection (Bankr. E.D. Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker presides over the case. Aaron M. Silver, Esq., Judy B. Calton, Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz & Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel. The Debtor estimated assets and debts of between $100 million and $500 million as of the petition date. The petition was signed by William Christopher Andrews, chief financial officer and executive vice president. Affiliate United Solar Ovonic LLC filed a separate Chapter 11 petition on the same day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar Integrated Technologies, Inc., filed a petition for relief under Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-43169). An official committee of unsecured creditors has been appointed in the case. Foley and Lardner, LLP represents the Committee. Scouler & Company, LLC, serves as financial advisor. A group of shareholders had asked a bankruptcy judge to allow it to form an official committee with lawyers and expenses paid for by the company. The company had estimated in court papers that it was worth $986 million, based on nearly $800 million of investment in the manufacturing unit. The Debtors canceled an auction to sell USO as a going concern and discontinued the court-approved sale process after failing to receive an acceptable qualified bid by the bid deadline. Quarton Partners served as the companies' investment banker. The Debtors also hired auction services provider Hilco Industrial to prepare for an orderly sale of the companies' assets. EXAMWORKS GROUP: MedHealth Buyout No Impact on Moody's 'B2' CFR --------------------------------------------------------------- Moody's Investors Services said that ExamWorks Group, Inc.'s acquisition of Australia-based MedHealth Holdings Pty Limited is a modest credit negative for the company but has no immediate impact on ExamWorks' B2 Corporate Family Rating or stable outlook. The last rating action on ExamWorks' was on July 8, 2011, at which time Moody's assigned its initial B2 CFR to the company. The principal methodology used in rating ExamWorks Group, Inc. was the Global Business & Consumer Service Industry Methodology, published in October 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published June 2009. Headquartered in Atlanta, GA, ExamWorks, Inc. is a leading provider of independent medical examinations, consisting of peer reviews, bill reviews and IME-related services to the insurance and legal industries, third-party administrators, self-insured parties and federal and state agencies. The company's portfolio of services includes medical assessment programs designed to meet the specific needs of first-party insurers, attorneys, municipalities and third-party administrators pertaining to workers' compensation, automobile, no-fault liability, short-term and long- term disability, group health and no-fault claims. Revenue for the twelve months ended June 30, 2012 was approximately $476 million. FLAGSTONE REINSURANCE: Fitch Changes Rating Watch on Several Notes ------------------------------------------------------------------ Fitch Ratings revised the Rating Watch on Flagstone Reinsurance Holdings, S.A. (NYSE: FSR) and subsidiaries (collectively, Flagstone) to Evolving from Negative. The Rating Watch revision follows the Aug. 30 2012 joint announcement by Flagstone and Validus Holdings, Ltd. (Validus) that Validus would acquire Flagstone in a transaction valued at $623 million, including $148 million in cash and 0.1935x Validus voting common shares per Flagstone share. The transaction is expected to close late in the fourth quarter of 2012. The Rating Watch Evolving reflects Fitch's expectation that if the transaction closes at the terms described above, the agency will bring Flagstone's ratings in line with Validus' ratings. Validus currently has the same ratings as Flagstone and a Positive Rating Outlook. Fitch expects to review the ratings of Validus as part of its normal annual review process prior to the expecting closing of the purchase of Flagstone. Conversely, if the transaction failed to close at the terms described above, Fitch would likely downgrade Flagstone's ratings. Fitch has revised the Rating Watch to Evolving from Negative for the following ratings. Flagstone Reassurance Suisse SA: -- Insurer Financial Strength 'A-'. Flagstone Reinsurance Holdings, S.A. -- Long-term Issuer Default Rating (IDR) 'BBB+'; -- $120 million of floating rate subordinated debentures due Sept. 15, 2036 'BB+'; -- EUR13 million of floating rate subordinated debentures due Sept. 15, 2036 'BB+'; -- $25 million of floating rate subordinated debentures due Sept. 15, 2037 'BB+'. Flagstone Finance S.A. -- Long-term IDR 'BBB+'; -- $100 million of floating rate subordinated debentures due July 30, 2037 'BB+'. GARY PHILLIPS: Panel Wants Motion to Turnover Cash Denied --------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 case of Gary Phillips Construction, LLC, asked the U.S. Bankruptcy Court for the Eastern District of Tennessee to deny Regions Bank's motion for turnover of cash collateral and disbursement of sale proceeds. The Committee said that Grovemont No. 482 had $74,000 worth of equity because the Debtor used its own funds to finish and sell the property. Regions has refused to make any further funding. Regions was paid interest and advances at the Grovemont closing. The Debtor has averred that the lien on Grovemont No. 482 is not cross-collateralized and Regions is not entitled to recover those funds. As reported in the Troubled Company Reporter on June 12, 2012, according to Regions Bank, pursuant to its Deed of Trust and Assignment of Rents, the Bank has liens on multiple parcels of real property, well as the Debtor's cash collateral. On Oct. 24, 2011, the Court granted Regions Bank's request for relief of automatic stays, for adequate protection, and to prohibit or condition use of the cash collateral. Regions Bank asserted that prior to obtaining relief from the stay, certain real properties that were encumbered by the Bank's Deed of Trust were sold, including 421 Brookside Drive, Elizabethton, Tennessee and 482 Grovemont Place, Piney Flats, Tennessee. The foregoing sales produced excess proceeds of $4,286 and $74,099, respectively, with said amounts being paid into cash collateral rather than to the Bank; however, said amounts remain impressed with the Bank's lien given that each parcel secures all of the Debtor's obligations to the Bank. The Bank relates that the foregoing amounts represent the proceeds of the sale of the Bank's collateral. The Bank requested for the disbursement of funds in the Debtor's possession that are attributable to, or proceeds from the sale of Regions' collateral properties, plus interest, including all amounts attributable to the sales because of the Debtor's failure to submit a Plan, the lack of any real prospect for a successful reorganization, and the Debtor's declining operating account balance. About Gary Phillips Construction Piney Flats, Tennessee-based Gary Phillips Construction, LLC, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Tenn. Case No. 10-53097) on Dec. 3, 2010. Fred M. Leonard, Esq. -- fredmleonard@earthlink.net -- in Bristol, Tennessee, serves as the Debtor's counsel. The Debtor tapped Wayne Turbyfield as accountant. The Debtor tapped the law firm of Bearfield & Associates as special counsel. The Court denied the application to employ Crye-Leike Realtors as realtor. In its schedules, the Debtor disclosed $13,255,698 in assets and $7,614,399 in liabilities as of the Petition Date. Daniel M. McDermott, the U.S. Trustee for Region 8, appointed six creditors to serve on an Official Committee of Unsecured Creditors in the Debtor's case. Dean B. Farmer, Esq., at Hodges, Doughty & Carson, PLLC, serves as the committee's counsel. GARY PHILLIPS: Commercial Bank Waives Foreclosure Until Oct. 15 --------------------------------------------------------------- Secured creditor Commercial Bank, Inc., in an amended second motion, asks the U.S. Bankruptcy Court for the Eastern District of Tennessee to approve an agreement providing for adequate protection and modification of automatic stay in the Chapter 11 case of Gary Phillips Construction, LLC. On April 20, 2011, Commercial Bank filed a motion for relief from the automatic stay, or in the alternative, to compel adequate protection. In settlement of the motion, the parties entered into an agreed order modifying the automatic stay and providing for adequate protection payments which was approved by the Court on Aug. 16, 2011. The agreed order provided for adequate protection payments through April 1, 2012, and also permits Commercial Bank to proceed with power of sale foreclosure on or after April 1, 2012, if the Debtor has not submitted and confirmed a Chapter 11 Plan by April 1, 2012. Subsequently, the parties entered into a second agreed order. In this relation, the Debtor, Commercial Bank, the Official Committee of Unsecured Creditors and the U.S. Trustee agreed to, among other things: -- an extension of the adequate protection payments through October 2012; -- extensions of the time for the Debtor-In-Possession to submit a Plan and for confirmation of the same; and -- Commercial Bank will not begin foreclosure until after Oct. 15, 2012, and only if the Debtor does not submit a Plan, or cannot obtain confirmation of the Plan by Oct. 15, 2012. About Gary Phillips Construction Piney Flats, Tennessee-based Gary Phillips Construction, LLC, filed for Chapter 11 bankruptcy protection (Bankr. E.D. Tenn. Case No. 10-53097) on Dec. 3, 2010. Fred M. Leonard, Esq. -- fredmleonard@earthlink.net -- in Bristol, Tennessee, serves as the Debtor's counsel. The Debtor tapped Wayne Turbyfield as accountant. The Debtor tapped the law firm of Bearfield & Associates as special counsel. The Court denied the application to employ Crye-Leike Realtors as realtor. In its schedules, the Debtor disclosed $13,255,698 in assets and $7,614,399 in liabilities as of the Petition Date. Daniel M. McDermott, the U.S. Trustee for Region 8, appointed six creditors to serve on an Official Committee of Unsecured Creditors in the Debtor's case. Dean B. Farmer, Esq., at Hodges, Doughty & Carson, PLLC, serves as the committee's counsel. HECKMANN CORP: S&P Puts 'B+' CCR on Watch on $381MM Acquisition --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B+' corporate credit rating, on Coraopolis, Pa.-based Heckmann Corp. on CreditWatch with developing implications. "The CreditWatch placement follows Heckmann's announcement that it plans to acquire Power Fuels for approximately $381 million," said credit analyst James Siahaan. "Under the terms of the agreement, Heckmann plans to fund the purchase with approximately $125 million in cash, primarily from borrowings under its revolving credit facility, and 95 million shares of common stock." "We plan to resolve the CreditWatch prior to the transaction's expected closing in the fourth quarter of 2012. We could raise the ratings if the improvement in Heckmann's pro forma debt leverage is viewed to be sustainable, or because of potential improvement in the company's business risk profile, which may include enhanced scale and increased diversity coming from Power Fuels' market presence in the Bakken Shale basin. However, we could also lower the ratings modestly if we believe that the fundamental dynamics of shale gas exploration are likely to deteriorate, the company's financial profile turns more aggressive due to higher than expected growth outlays, or if potential integration challenges are viewed as a potential strain to Heckmann's operating performance. We could also affirm the ratings if we believe the risks and benefits of the transaction are neutral to overall credit quality," S&P said. HOSTESS BRANDS: Circuits Split on Trademarks, Executory Contracts ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that circuit courts disagree over how trademark licenses should be treated in bankruptcy. Last week, the U.S. Court of Appeals in St. Louis parted company with a June 2010 opinion from the appeals court in Philadelphia. According to the report, the Eighth Circuit in St. Louis didn't mention a July opinion from the appeals court in Chicago taking a different approach to trademark licenses in bankruptcy. The new Eighth Circuit case involved the first bankruptcy reorganization of Interstate Brands Corp., now named Hostess Brands Inc. Hostess is now undergoing reorganization in White Plains, New York. In the first bankruptcy, the bankruptcy court decided that a trademark license was an executory contract and allowed the company to reject the license. The district court affirmed. The report relates that on appeal, the Eighth Circuit affirmed in a 2-1 opinion. The case involved part of IBC's baking business sold to another baker years before the first bankruptcy. There was a trademark license agreement accompanying the asset purchase agreement. The license agreement gave the buyer a perpetual royalty-free use of specified trademarks in specified territory. The Bloomberg report discloses that the majority opinion by Circuit Judge Kermit E. Bye concluded that the license agreement was an executory contract that IBC could reject. Circuit Judge Steven M. Colloton dissented. For the majority, Judge Bye declined to follow an opinion from June 2010 where the Third Circuit in Philadelphia decided on similar facts that a license agreement wasn't an executor contract and couldn't be rejected. Judge Bye saw the Third Circuit case as involving different facts. In dissent, Judge Colloton said that the transfer of the license was merely part of a larger sale of assets where IBC, the seller, had virtually no obligations remaining. Neither the majority nor the dissent discussed a decision in June written by Circuit Judge Frank Easterbrook in Chicago in a case involving the bankruptcy of Sunbeam Products Inc. Even if a trademark license was executory, Easterbrook said that rejection would not prevent the buyer from continuing to use the mark. The Eighth Circuit case is Lewis Brothers Bakeries Inc. v. Interstate Bakeries Corp. (In re Interstate Bakeries Corp.), 11-1850, 8th U.S. Circuit Court of Appeals (St. Louis). About Hostess Brands Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known for iconic brands such as Butternut, Ding Dongs, Dolly Madison, Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride, Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution centers and 570 outlets in 49 states. Hostess filed for Chapter 11 bankruptcy protection early morning on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through 12-22056) in White Plains, New York. Debtor-affiliates that filed separate Chapter 11 petition are IBC Sales Corporation, IBC Trucking LLC, IBC Services LLC, Interstate Brands Corporation, and MCF Legacy Inc. Hostess Brands disclosed assets of $982 million and liabilities of $1.43 billion as of Dec. 10, 2011. Debt includes $860 million on four loan agreements. Trade suppliers are owed as much as $60 million. The bankruptcy filing was made two years after predecessors Interstate Bakeries Corp. and its affiliates emerged from bankruptcy (Bankr. W.D. Mo. Case No. 04-45814). Ripplewood Holding LLC, after providing $130 million to finance the plan, obtained control of IBC's business following the prior reorganization. Hostess Brands is privately held. The new owners pursued new Chapter 11 cases to escape from what they called "uncompetitive and unsustainable" union contracts, pension plans, and health benefit programs. In 2011, Hostess retained Houlihan Lokey to explore sales of its smaller assets and individual brands. Houlihan Lokey oversaw the sale of Mrs. Cubbison's to Sugar Foods Corporation for $12 million, but was unable to sell any of Hostess' core assets. Judge Robert D. Drain oversees the case. Hostess has hired Jones Day as bankruptcy counsel; Stinson Morrison Hecker LLP as general corporate counsel and conflicts counsel; Perella Weinberg Partners LP as investment bankers, FTI Consulting, Inc. to provide an interim treasurer and additional personnel for the Debtors, and Kurtzman Carson Consultants LLC as administrative agent. Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry Wilson, the head of turnaround and restructuring firm MAEVA Advisors, are representing the Teamsters union. Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union and Bakery & Confectionery Union & Industry International Pension Fund are Jeffrey R. Freund, Esq., at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright & Jaworski L.L.P. An official committee of unsecured creditors has been appointed in the case. The committee selected New York law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom Mayer and Ken Eckstein head the legal team for the committee. HUB INTERNATIONAL: S&P Rates $730MM Senior Notes 'CCC+' ------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' senior unsecured debt rating to HUB International Ltd.'s $730 million senior notes due 2018. "The unsecured recovery rating is '6', indicating our expectation for a negligible (0%-10%) recovery for lenders in the event of a payment default," S&P said. "We expect total debt levels to increase negligibly (less than 2%) following the proposed transaction, as HUB will use proceeds of the $730 million notes issuance to refinance its 9% $305 million senior notes due in 2014 and its 10.25% $395 million senior subordinated notes due in 2015, and to pay $30 million in related fees and expenses. Accordingly, we expect financial leverage of approximately 6.8x as of June 30, 2012 (pro-forma for the $75 million add-on term loan in August 2012) to remain relatively unchanged as a result of the notes issuance," S&P said. "The proposed transaction qualitatively improves HUB's financial leverage by eliminating any near-term refinancing risk and extending its maturity profile. The company had also extended the maturity profile of its senior secured debt through an 'amend and extend' as well as a refinancing transaction in second-quarter 2012. Following these actions and the currently proposed transaction, the company will not have any significant debt maturities until 2016," S&P said. "The counterparty credit rating on HUB reflects the company's weak credit protection measures, its low-quality balance sheet with negative tangible net worth, and the execution risk related to its debt-funded acquisition strategy. Somewhat offsetting these weaknesses are HUB's success in enhancing its competitive position through its acquisition strategy, its good earnings diversification within the brokerage arena, and a consistent history of favorable operating results and margins relative to peers," S&P said. RATINGS LIST HUB International Ltd. Counterparty Credit Rating B/Stable/-- New Rating HUB International Ltd. $730 Mil. Sr. Unsec. Notes Due 2018 CCC+ Recovery Rating 6 HW HEARTLAND: Files for Chapter 11 in Dallas -------------------------------------------- HW Heartland, L.P., filed a bare-bones Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-35790) in its hometown in Dallas on Sept. 3, 2012. The Debtor estimated assets and debts of at least $10 million. The Debtor tapped Stephen M. Pezanosky, Esq., at Haynes and Boone, LLP, in Dallas, as counsel. HW Heartland GP, LLC, is the sole general partner of the Debtor. INDIANAPOLIS DOWNS: Defends Fortress Right to Vote on Plan ---------------------------------------------------------- Peg Brickley at Dow Jones' Daily Bankruptcy Review reports that Indianapolis Downs LLC has tackled some of its voting troubles, defying a bid by outgoing chief Ross Mangano to knock out the votes of Fortress Investment Group LLC and other key creditors that support its Chapter 11 exit plan. About Indianapolis Downs Indianapolis Downs LLC operates Indiana Live -- http://www.indianalivecasino.com/-- a combined race track and casino at a state-of-the-art 283 acre Shelbyville, Indiana site. It also operates two satellite wagering facilities in Evansville and Clarksville, Indiana. Total revenue for 2010 was $270 million, representing an 8.7% increase in 2009. The casino captured 53% of the Indianapolis market share. In July 2001, Indianapolis Downs was granted a permit to conduct a horse track operation in Shelvyville, Indiana, and started operating the track in 2002. It was granted permission to operate the casino at the racetrack operation in May 2007. The casino began operations in July 2010. Indianapolis Downs and subsidiary, Indianapolis Downs Capital Corp., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11046) in Wilmington, Delaware, on April 7, 2011. Indianapolis Downs estimated $500 million to $1 billion in assets and up to $500 million in debt as of the Chapter 11 filing. According to a court filing, the Debtor owes $98,125,000 on a first lien debt. It also owes $375 million on secured notes and $72.6 million on subordinated notes. Matthew L. Hinker, Esq., Scott D. Cousins, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP in Wilmington, Delaware, have been tapped as counsel to the Debtors. Christopher A. Ward, Esq., at Polsinelli Shughart PC, in Wilmington, Delaware, is the conflicts counsel. Lazard Freres & Co. LLC is the investment banker. Bose Mckinney & Evans LLP and Bose Public Affairs Group LLC serve as special counsel. Kobi Partners, LLC, is the restructuring services provider. Epiq Bankruptcy Solutions is the claims and notice agent. JESUP & LAMONT: Suit Against Ex-Officers Survives Dismissal Bid --------------------------------------------------------------- Bankruptcy Judge Allan L. Gropper declined the request of the former officers of Jesup & Lamont, Inc., and Jesup & Lamont Securities Corporation to dismiss an adversary proceeding commenced against them by the trustee under the confirmed liquidation plan for the Debtors. The Liquidating Trustee on March 14, 2012, sued Stephen Rabinovici, J&L's former chairman, and Alan Weichselbaum, J&L's former CEO and CFO, alleging that the Defendants breached their fiduciary duties to J&L. The Trustee alleges that the Defendants breached their fiduciary duty by failing to make or properly apply certain trust fund tax and health care payments, and that they engaged in improper intercompany transactions and inappropriate bookkeeping and artificial accounting entries concealing from regulatory agencies overseeing the securities firm that JLSC did not meet net capital requirements under Securities and Exchange Commission rules necessary to continue in business. In addition, the Complaint alleges, the Defendants caused J&L to enter into a ruinous long-term lease approximately three months before the Financial Industry Regulatory Authority shut down JLSC. It further alleges that the Defendants caused the Debtors to make preferential payments to creditors on whose debts Defendants were liable as guarantors. Eventually, FINRA charged JLSC with being out of compliance with the net-capital rules and, on June 18, 2010, required JLSC to cease conducting new business and to wind down. The Defendants moved to dismiss the adversary proceeding under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction, arguing that the Post-Confirmation Trust cannot assert state law claims against two non-debtor individuals where, it is alleged, the Plan does not specifically provide for retention of jurisdiction, the debtors and bankruptcy estates no longer exist, and the adversary proceeding does not have a "close nexus" to the bankruptcy proceedings and is merely a vehicle for increasing distributions to a sub-group of former creditors. The Trustee responds that the claims at issue relate directly to the insolvency that led to the chapter 11 case, that a bankruptcy court retains post-confirmation jurisdiction over claims that a liquidating trust inherited from a debtor based on pre-petition facts, where the proceeds collected from such claims will be distributed to the debtor's creditors in accordance with a chapter 11 plan, and that even if a bankruptcy court's jurisdiction narrows post-confirmation, the causes of action have a "close nexus" with the bankruptcy plan and proceedings, and the Plan adequately provided for the retention of jurisdiction by this Court. Judge Gropper held that the confirmed Plan specifically provided that all Causes of Action were preserved and transferred to the Liquidating Trust unless "expressly waived, abandoned, relinquished, released, compromised or settled in the Plan." As the Causes of Action against the officers were not expressly abandoned or otherwise relinquished or released, they were adequately preserved under the terms of the Plan. The case is MATTHEW C. HARRISON, JR., CONFIRMATION TRUSTEE OF THE JESUP LIQUIDATING TRUST, Plaintiff, v. STEPHEN RABINOVICI and ALAN WEICHSELBAUM, Defendants, Adv. Proc. No. 12-01169 (Bankr. S.D.N.Y.). A copy of Judge Gropper's Sept. 4 Memorandum Decision is available at http://is.gd/3iY9bQfrom Leagle.com. Jesup & Lamont, Inc., was a publicly traded holding company and its subsidiary, Jesup & Lamont Securities Corporation, was a brokerage and investment banking firm, regulated by the Financial Industry Regulatory Authority. Jesup & Lamont filed a Chapter 11 petition (Bankr. S.D.N.Y. Case Nos. 10-14133) on July 30, 2010. J&L Securities followed weeks later, filing for Chapter 11 (Bankr. S.D.N.Y. Case No. 10-15037) on Sept. 24, 2010. Jesup & Lamont estimated under $10 million in assets and under $50 million in debts in its petition. J&L Securities estimated under $10 million in both assets and debts. The cases were initially presided over by Judge Arthur J. Gonzalez and were later turned over to Judge Gropper upon Judge Gonzalez's retirement earlier this year. Ronald J. Friedman, Esq., at SilvermanAcampora LLP, serves as the Debtors' counsel. On Oct. 21, 2010, an Official Committee of Unsecured Creditors was appointed by the United States Trustee. On Sept. 15, 2011, the Committee filed a proposed joint plan of reorganization for the Debtors and a disclosure statement, which was subsequently amended. The Court entered an order, on Oct. 6, 2011, confirming the Committee's Amended Plan of Liquidation. Matthew C. Harrison, Jr., the confirmation trustee of the Jesup Liquidating Trust, is represented by: Stuart M. Riback, Esq. Eric J. Snyder, Esq. Zack H. Gross, Esq. WILK AUSLANDER LLP 201 E 42nd St # 900 New York, NY 10017 Tel: (212) 421-2233 E-mail: sriback@wilkauslander.com esnyder@wilkauslander.com zgross@wilkauslander.com LARSON LAND: Zions First Has Limited Objections to Sale ------------------------------------------------------- Creditors Zions First National Bank and Zions Credit Corporation ask the U.S. Bankruptcy Court for the District of Idaho to direct the Chapter 11 trustee for Larson Land Company, LLC, to revise the sale procedures to: -- specify that both the Debtor and Larson Skyline Farms are in default of their obligations owing to Zions Bank and ZCC. -- to provide adequate and proper protections for buyers of Zions' collateral that is not owned by the Debtor. -- comply with the Idaho Uniform Commercial Code as to the property which is not property of the bankruptcy estate. Zions Bank holds a perfected lien on certain property of the Debtor. Zions Bank is also a creditor of an affiliated company of the Debtor known as Larson Skyline Farms holding a perfected lien on assets which are not property of the Debtor. ZCC has leased certain personal property to the Debtor. Zions note that on July 6, 2012, the trustee and Zions entered into a joint motion for order approving agreement modifying automatic stay. The joint motion provides that, among other things: * both Zions and the trustee believe that it is important to include in a sale of substantially all of the Debtor's assets certain property which secures Zions' claim not owned by the Debtor in order to maximize the potential recovery to the estate; and * Zions anticipates selling certain collateral (not owned by the Debtor) pursuant to its State Court rights and remedies as a secured creditor of the non-debtor borrower in accordance with the Idaho Uniform Commercial Code. About Larson Land Ontario, Oregon-based Larson Land Company LLC, fka Select Onion Co. LLC -- http://www.selectonion.com/-- a privately held agribusiness company that grows, stores, processes and ships bagged onions, fresh processed onions, whole peel onions, IQF onions, and delicious raw breaded hand packed onion rings, filed a Chapter 11 petition (Bankr. D. Idaho Case No. 12-00820) in Boise, Idaho, on April 12, 2012, estimating assets of up to $100 million and debts of up to $500 million. Judge Terry L. Myers presides over the case. Brent T. Robinson, Esq., at Robinson, Anthon & Tribe, serves as the Debtor's counsel. The petition was signed by Farrell Larson, president. Hawley Troxell Ennis & Hawley, LLP and Ball Janik LLP represent John L. Davidson, the Chapter 11 trustee for the Debtor. LEVELLAND/HOCKLEY: Committee and GE Settle; Sale Approved --------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved a settlement between the Official Committee of Unsecured Creditors in the Chapter 11 case of Levelland/Hockley County Ethanol, LLC, and GE Business Financial Services, Inc., in its capacity as agent for itself and other secured lenders. The settlement provides for, among other things: 1. GE is fully authorized and empowered to retain and apply to the GE Claim, and to distribute the moneys to the senior lenders in its discretion, (i) all of the proceeds from the sale to Palmer Energy, Inc. of the Debtor's assets that were paid to GE pursuant to the sale order and (ii) any and all funds paid to GE pursuant to the final cash collateral order; net only of $200,000 that will be paid to the Debtor's estate; 2. GE will pay $200,000 to the Debtor's estate; and 3. In the event that the Bankruptcy Case is converted to a case under Chapter 7 of the Bankruptcy Code, GE's waiver of the GE Liens as to the residual assets and the GE Deficiency will become effective as of the first business day following the date of the initial meeting of creditors pursuant to Section 341 of the Bankruptcy Code. Sale Approved The Court has approved the sale of the Debtor's assets. The Debtor would use the proceeds from the sale of the assets, up to the aggregate amount of the claim of GE Business, will be paid to the agent. At the auction held on April 30, 2012, the Debtor determined that the highest and best qualified bid for the assets was the $9,210,000 from Palmer Energy, Inc., a Kansas corporation. The Debtor determined that the second highest or best qualified bid for the assets was the $8,900,000 from Western Plains Energy? Levelland, LLC, a Colorado limited liability company. About Levelland/Hockley County Ethanol Levelland/Hockley County Ethanol LLC is a Texas limited liability company that owns and operates a 40 million gallon per annum Ethanol production plant located in Levelland, Hockley county, Texas. The LLC has over 100 members many of whom are local farmers, business people and civic leaders. A recent appraisal Of its facility values its assets, with the Plant under full operation, at over $51.5 million. Levelland Ethanol filed for Chapter 11 bankruptcy (Bankr. N.D. Tex. Case No. 11-50162) on April 27, 2011. I. Richard Levy, Esq., Christopher M. McNeill, Esq., and Susan Frierott, Esq., at Block & Garden, LLP, in Dallas, represent the Debtor as counsel. The Debtor disclosed total assets of $60,451,124 and total liabilities of $47,557,432 in its schedules. On May 9, 2011, William T. Neary, the U.S. Trustee for Region 6, appointed an Official Committee of Unsecured Creditors in the Debtor's cases. Stephen M. Pezanosky, Esq., and Mark Elmore, Esq., at Haynes and Boone, LLP, in Fort Worth, Texas, represent the Committee. The Court converted the Debtor's cases to one under Chapter 7 on Aug. 1, 2012. MF GLOBAL: Giddens Responds to Freeh's Charges on Suit ------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that James Giddens, the trustee under the Securities Investor Protection Act for MF Global's brokerage unit, said Louis Freeh, the Chapter 11 trustee for MF Global Holdings Ltd., has "inherent conflict of interest" when it comes to suing the company's former officers and directors. The report notes that at a Sept. 5 hearing, Mr. Giddens will seek court approval to allow customer representatives in class-action suits to take the lead in prosecuting claims to recover the $1.6 billion shortfall in customer funds. If approved by the bankruptcy judge, the class plaintiffs in suits in U.S. District Court will return any recoveries to Mr. Giddens for distribution by the bankruptcy court to customers or creditors. The report relates Mr. Giddens said 100% recovery by customers is "unlikely at this time." Mr. Freeh contended in papers he filed last week that Mr. Giddens can't adequately represent unsecured creditors because his calling is to recover customers' missing funds. According to the report, Mr. Giddens responded Sept. 3 by alleging that Mr. Freeh has conflicts of interest in suing creditors and former company executives and employees. Mr. Giddens also argued that it "rings hollow" for Mr. Freeh to claim he is best suited to assert claims because Freeh has yet to file a lawsuit. By comparison, the class suit is already progressing expeditiously, Mr. Giddens said. The report notes that according to Mr. Giddens, Mr. Freeh will retain the right to file a complaint of his own in the coordinated class suits pending in district court. Contrary to Mr. Freeh's argument, Mr. Giddens said the class plaintiffs have incentive to make recoveries for unsecured creditors because as the representative of customers they have $1.6 billion in general creditor claims. 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. MMODAL INC: S&P Assigns 'B+' Corporate Credit Rating ---------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Franklin, Tenn.-based MModal Inc. The outlook is stable. "We also assigned a 'BB-' issue-level ratings and '2' recovery ratings to MModal's proposed $520 million senior secured credit facilities, which consist of a $75 million revolving credit facility due 2017 and a $445 million term loan due 2019. The '2' recovery rating indicates our expectations for substantial (70%- 90%) recovery in the event of payment default," S&P said. "Additionally, we assigned a 'B-' issue-level rating and a '6' recovery rating to the company's proposed $250 million senior unsecured notes due 2020. The '6' recovery rating indicates our expectations for negligible (0%-10%) recovery in the event of payment default," S&P said. "MModal intends to use the debt proceeds, along with $447 million of equity contribution of One Equity Partners, to repay existing debt and to fund the leveraged buyout of the company," S&P said. "The ratings on MModal reflect our view that an aggressive financial profile following its LBO is partly offset by an increasing adoption of technology for clinical documentation, a recurring revenue base, high renewal rates, and a diversified customer base," said Standard & Poor's credit analyst David Tsui. "We view MModal's business risk profile as 'weak' as it has a narrow focus on the generally fragmented U.S. clinical documentation industry, which includes a more diversified director competitor with greater financial resources. We view the company's financial risk profile as 'aggressive,' with pro forma adjusted debt-to-EBITDA at 5.3x at closing of the LBO transaction, which is likely to decline to about 5x in the near term." "The outlook is stable, reflecting our view that the company's highly recurring revenue base and diversified customer base will continue to support consistent and improving revenue generation and profitability, leading to modest leverage declines over the near term. An ownership structure that we believe precludes material and sustained reduction in debt currently limits the potential for an upgrade," S&P said. "We could lower the rating if competitive pressure intensifies, leading to significantly lower-than-expected revenue growth or a deterioration in EBITDA margins, and leverage increasing to and sustained at the mid-5x level," S&P said. MSR RESORT: Inks Stipulation for Use of Cash Until Sept. 30 ----------------------------------------------------------- MSR Resort Golf Course LLC, et al., ask the U.S. Bankruptcy Court for the Southern District of New York to approve a stipulation and order further extending cash collateral use under final order authorizing the Debtors to (i) use the prepetition secured parties' cash collateral; and (ii) provide adequate protection to the prepetition secured parties. The stipulation entered between the Debtors and Midland Loan Services, Inc., provides for, among other things: -- Midland has consented to the Debtors' continued use of cash collateral until Sept. 30, 2012; -- The Debtors' obligations set forth in the cash collateral order will continue to apply in connection with all postpetition financing obtained by the Debtors and with any further postpetition financing, provided however, that the calendar maturity date will be Dec. 31, 2012; and -- Midland agrees to the temporary waiver and forbearance until Sept. 30. 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. MTS LAND: Has Interim Access to Cash, DIP Financing --------------------------------------------------- Judge Eileen W. Hollowell on Aug. 22 ruled that she'd allow MTS Land LLC and MTS Golf LLC to continue using cash collateral and said she'll enter an interim order approving a DIP loan for the Debtor. U.S. Bank, owed not less than $27.4 million in principal plus interest and fees, has objected to the proposed financing and the Debtor's further use of cash collateral. The judge previously signed a stipulated order allowing the Debtors' interim use of cash collateral until the Aug. 22 hearing. At the hearing, counsel to U.S. Bank said the bank is seeking adequate protection on the amount of cash postpetition. At the behest of the Debtor, the judge held at the hearing that the existing cash collateral order would be continued provided that the order would provide that scope of the bank's security interest in cash will continue postpetition. The judge at the hearing denied without prejudice the Arizona Department of Revenue's request for adequate protection of its cash collateral. The state's objection to the DIP financing was also overruled. Emergency Lift Stay Motion Judge Hollowell also reviewed an emergency motion by U.S. Bank to terminate the bankruptcy stay to allow it to exercise its rights and remedies regarding the Debtors' 68-acres of real property in Paradise Valley, Arizona. The bank said "cause" exists to terminate the automatic stay for several reasons, including but not limited to: * The Debtors and/or their principals have embarked on a plan to destroy significant portions of the Mountain Shadows Golf Course. Specifically, the Debtors' plan is to build two spec homes on the Golf Course -- one literally on (not adjacent to) the golf course driving range, and the other literally on (not adjacent to) the tee box of the tenth hole. The Debtors' plan to effectively destroy the Golf Course makes it clear that Lender's interest in the Property is not being adequately protected. * The Debtors are in violation of 11 U.S.C. Sec. 363(b)(1) because the building of spec homes is clearly outside the Debtors' ordinary course of business, yet the Debtors have neither sought nor received Court approval to build homes directly on the Golf Course. * In addition to destroying the Lender's collateral, the Debtors' plan to build and apparently sell two spec homes is impossible under the Loan Documents. In particular, the Loan Documents do not contain any lot or partial lien release provisions. Therefore, in order for the Debtor to sell one of the spec homes free and clear, the home would have to sell for the full amount of the debt owed to Lender. * The Debtors are attempting to obtain a special use permit from the Town of Paradise Valley, which, if granted, will significantly alter the permitted legal use of the Property. The Debtors have not included the Lender in these discussions despite the fact that the Lender has an obvious, substantial interest in the zoning and use of its collateral. According to a minute entry filed following the Aug. 22 hearing, the judge said the motion is "not an emergency." Following a response by the Debtor's counsel in court, the judge denied the motion. The bank though may lodge the request some other time. U.S. Bank is represented by: Steven D. Jerome, Esq. Evans O'Brien, Esq. SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6000 Facsimile: (602) 382-6070 E-mail: sjerome@swlaw.com eobrien@swlaw.com DIP Financing The Debtors are seeking approval to obtain postpetition financing from Jaime Sohacheski pursuant to a promissory note for $1,080,000. According to court filings, Mr. Sohacheski, who indirectly owns 100% of the Debtors through his ownership of the Debtors' affiliates, has guaranteed the consensual secured debt and is committed to the Debtors reorganizing and redeveloping the Mountain Shadows Golf Club. The proposed DIP loan will mature March 31, 2013. Interest on the DIP Loan will accrue at a fixed rate of 10% per annum, or 15% per annum after the occurrence of an event of default. The DIP Lender will have an allowed administrative expense for the funds advanced to Debtors. At the Aug. 22 hearing, counsel to U.S. bank argued against approval of the DIP financing. However, the judge said the DIP financing is approved on the interim pending a final hearing on the motion. U.S. Bank claims in court filings that the DIP financing motion is a one-sided proposal designed to help the Debtors' insiders and professionals to the detriment of the creditors and the bankruptcy estates. The Debtors admittedly will have future losses of $88,546 and $308,222 per month but nevertheless seek the Court's approval of DUO financing that would require the Debtors to make monthly payments of interest to Mr. Sohacheski as well as pay any attorneys' fees and costs he may incur in connection with the Debtors' bankruptcy proceedings. The bank also points out the Debtor's proposal will result in the Debtors' effective owner receiving interest payments over the next seven months, at least, while the prepetition, non-insider creditors receive nothing. Meanwhile, the Debtors will be amassing a large administrative expense claim that reduces the probability of the unsecured creditors from receiving any distributions and effectively prevent any creditor from potentially proposing a competing plan of reorganization, the bank said. About MTS Land and MTS Golf MTS Land LLC and MTS Golf LLC own and operate the now dormant Mountain Shadows Golf Club. They filed separate Chapter 11 petitions (Bankr. D. Ariz. Case Nos. 12-16257 and 12-16257) in Phoenix on July 19, 2012. Mountain Shadows Golf Club -- http://www.mountainshadowsgolfclub.com/-- is an 18 hole, par 56 course located at Paradise Valley. Nestled in the foothills of Camelback Mountain, the 3,081-yard Executive course claims to be one of the most scenic golf courses in Arizona. MTS Land and MTS Golf are affiliates of Irvine, Calif.-based Crown Realty & Development Inc. MTS Land and MTS Golf each estimated assets and debts of $10 million to $50 million. Judge Charles G. Case II oversees the Debtors' cases. Lawyers at Gordon Silver serve as the Debtors' counsel. The petition was signed by Robert A. Flaxman, administrative agent. Lender U.S. Bank is represented in the case by Snell & Wilmer L.L.P. NALLS DEVELOPMENT: Rosenblatt Firm Replaces Tuckfelt as Counsel --------------------------------------------------------------- Nalls Development and Investment, LLC, seeks Bankruptcy Court permission to employ Richard B. Rosenblatt, Esq., Linda M. Dorney, Esq., and the Law Offices of Richard B. Rosenblatt, PC, as attorneys to prosecute its Chapter 11 case. The Debtor has previously retained Jeffery Tuckfelt to represent it in the Chapter 11 case. The Debtor said Mr. Tuckfelt's efforts and the efforts of the Rosenblatt firm will not overlap. The Rosenblatt firm will take over the active work and advise the Debtor on a go forward basis. The Debtor said Mr. Rosenblatt has considerable experience in handling Chapter 11 bankruptcy cases and has assisted numerous debtors having the ability to reorganize in obtaining confirmed plans in the Bankruptcy Court for Maryland, the District of Columbia, and the Eastern District of Virginia. Further, Mr. Rosenblatt is an "AV" rated (Martindale Hubbell) attorney and is experienced in bankruptcy matters, and he regularly lectures other attorneys regarding bankruptcy law in C.L.E. seminars. The Firm attests it is a "disinterested person" as that term is defined by 11 U.S.C. Sec. 101(14). The Firm has no connections with the United States Trustee, or any person employed by the United States Trustee. Additionally, the Firm does not represent any interest adverse to the Debtor's estate. The compensation paid to the Rosenblatt firm in contemplation of a Chapter 11 representation within one year before the filing of the petition has been: (1) $5,000 on Aug. 22, 2012; and (2) $5,000 on Aug. 28, 2012. The Aug. 22, 2012 payment was received from Mt. Dome Apts., LLC, an entity owned by the Debtor's principal. The Aug. 28, 2012 payment was received from Art Nalls, the Debtor's principal. Roughly $8,500 remained in escrow. The Firm's hourly rates are: $350 an hour for experienced bankruptcy attorneys, Richard B. Rosenblatt and Linda M. Dorney; $295 an hour for time billed by other firm attorneys; and $125 an hour for paralegal time. Meanwhile, the Court held a preliminary hearing Aug. 30 on the Debtor's request to use cash tied to its pre-bankruptcy loans. The Debtor's motion seeks entry of a final order authorizing the use of cash collateral, as well as a preliminary hearing to have the court authorize cash collateral to be used to the extent necessary to avoid immediate and irreparable harm to the estate pending a final hearing. About Nalls Development and Investment Nalls Development and Investment, LLC, filed a Chapter 11 petition (Bankr. D.D.C. Case No. 12-00512) on July 18, 2012. The Debtor -- http://nallsdevelopment.com/-- said its principal assets are in 200-210 Elmira Street, SW and others in Washington, D.C. It serves Martin's View apartments, Mount Dome Apartments, Suitland Forest Apartments, and 1900 16th St. Apartments. Judge S. Martin Teel, Jr., oversees the case. Jeffrey C. Tuckfelt, Esq., at Obergh and Berlin, was initially tapped as bankruptcy counsel. The Debtor later turned to the Law Offices of Richard B. Rosenblatt, PC. The petition was signed by Arthur Nalls, Jr., managing member. NALLS DEVELOPMENT: Files Schedules of Assets and Liabilities ------------------------------------------------------------ Nalls Development and Investment, LLC, filed with the Bankruptcy Court its schedules of assets and liabilities, disclosing: Name of Schedule Assets Total Liabilities ---------------- ------------ ----------------- A - Real Property $7,000,000 B - Personal Property $66,835 C - Property Claimed as Exempt D - Creditors Holding Secured Claims $7,372,000 E - Creditors Holding Unsecured Priority Claims $38,001 F - Creditors Holding Unsecured Nonpriority Claims $1,128,456 ------------ ----------------- Total $7,066,835 $8,538,457 About Nalls Development and Investment Nalls Development and Investment, LLC, filed a Chapter 11 petition (Bankr. D.D.C. Case No. 12-00512) on July 18, 2012. The Debtor -- http://nallsdevelopment.com/-- said its principal assets are in 200-210 Elmira Street, SW and others in Washington, D.C. It serves Martin's View apartments, Mount Dome Apartments, Suitland Forest Apartments, and 1900 16th St. Apartments. Judge S. Martin Teel, Jr., oversees the case. Jeffrey C. Tuckfelt, Esq., at Obergh and Berlin, was initially tapped as bankruptcy counsel. The Debtor later turned to the Law Offices of Richard B. Rosenblatt, PC. The petition was signed by Arthur Nalls, Jr., managing member. NALLS DEVELOPMENT: Files List of 20 Largest Unsecured Creditors --------------------------------------------------------------- Nalls Development and Investment, LLC, filed with the Bankruptcy Court a list of its 20 largest unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ MV Properties, LLC Deed of Trust $300,000 Attn: Wayne Cabot Secured value: 12331 Parklawn Drive $7,000,000 Rockville, MD 20852 Tenant Security Deposits $10,665 (some not due in full at Secured value: vacating) $27,334 Arthur Nalls, Jr. $975,000 301 Deer Drive Lusby, MD 20657 Hess Gas $63,856 Morris Battino, Esquire $35,000 Sierra Design Build $13,000 WGL Co. $10,000 Hughes Mechanical $8,500 PEPCO $6,000 Jeffrey C. Tuckfelt, Esquire $5,000 Mister Budd Appliances $2,500 John McCray $2,100 Kenmore Pest Control $2,000 Bates Trucking $1,250 Ventura Grounds Maintenance $1,200 For Rent $1,200 Central Wholesalers $800 Mosely Enterprises $550 ODM Roofing $400 Rana Refrigeration $100 District of Columbia, Office of Tax $1 About Nalls Development and Investment Nalls Development and Investment, LLC, filed a Chapter 11 petition (Bankr. D.D.C. Case No. 12-00512) on July 18, 2012. The Debtor -- http://nallsdevelopment.com/-- said its principal assets are in 200-210 Elmira Street, SW and others in Washington, D.C. It serves Martin's View apartments, Mount Dome Apartments, Suitland Forest Apartments, and 1900 16th St. Apartments. Judge S. Martin Teel, Jr., oversees the case. Jeffrey C. Tuckfelt, Esq., at Obergh and Berlin, was initially tapped as bankruptcy counsel. The Debtor later turned to the Law Offices of Richard B. Rosenblatt, PC. The petition was signed by Arthur Nalls, Jr., managing member. NATIVE WHOLESALE: Inks Deal for a 90-Day Plan Filing Extension -------------------------------------------------------------- Native Wholesale Supply Company, according to its case docket, entered into a stipulation dated Aug. 21, 2012, with NAAG providing for: -- an extension of 90 days from July 31, of the Debtor's exclusive period to file a proposed chapter 11 plan and explanatory disclosure statement; and -- an extension of 180 days from July 31, of the Debtor's time to solicit acceptances for the proposed plan. Additionally, the parties stipulate that these extensions will be the final extensions of the exclusivity periods that the Debtor will seek. About Native Wholesale Native Wholesale Supply Company is engaged in the business of importing cigarettes and other tobacco products from Canada and selling them within the United States. It purchases the products from Grand River Enterprises Six Nations, Ltd., a Canadian corporation and the Debtor's only secured creditor. Native is an entity organized under the Sac and Fox Nation and has its principal place of business at 10955 Logan Road in Perrysburg, New York. Native filed for Chapter 11 bankruptcy (Bankr. W.D.N.Y. Case No. 11-14009) on Nov. 21, 2011. The Chapter 11 filing was triggered to resolve an ongoing dispute with the United States government regarding up to $43 million in assessments made by the government against the Debtor pursuant to the Fair and Equitable Tobacco Reform Act of 2004 and the Tobacco Transition Payment Program and to restructure the terms of payment of any obligation determined to be owing by the Debtor to the U.S. under the Disputed Assessment. The issues pertaining to the Disputed Assessment resulted in two lawsuits, subsequently consolidated, now pending in the Federal District Court. Robert J. Feldman, Esq., and Janet G. Burhyte, Esq., at Gross, Shuman, Brizdle & Gilfillan, P.C., in Buffalo, N.Y., represent the Debtor as counsel. The Company disclosed $30,022,315 in assets and $70,590,564 in liabilities as of the Chapter 11 filing. The States of California, New Mexico, Oklahoma and Idaho have appeared in the case and are represented by Garry M. Graber, Esq., at Hodgson Russ LLP. No trustee, examiner or creditors' committee has been appointed in the case. NEWPAGE CORP: Seeks More Exclusivity as Creditors Mediate --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that NewPage Corp., stuck between conflicting demands from secured and unsecured creditors, is seeking a third expansion of the exclusive right to propose a Chapter 11 plan. According to the report, the papermaker filed a plan last month that satisfied neither the secured nor the unsecured faction. The bankruptcy judge responded by appointing a mediator. Mediation was scheduled to begin Sept. 4. The company said in a court filing last week that arriving at a "consensual plan" will be "no easy task." There will be an Oct. 16 hearing on the so-called exclusivity motion. If approved by the U.S. bankruptcy judge in Delaware, the deadline will be pushed out by four months to Jan.2. The report relates that the plan NewPage filed in August contains an option under which there would be settlement of claims by the unsecured creditors' committee challenging the validity of liens held by first-lien lenders. Alternatively, the plan would forgo settlement, allowing a lawsuit on lien validity to continue after the company exits Chapter 11. NewPage has consistently said that unsecured creditors are "hopelessly out of the money" and there is no theory under which success in a suit would bring them a dividend under a Chapter 11 plan. The official committee contends that the lenders financed an acquisition in 2007 and a refinancing two years later that included fraudulent transfers. About NewPage Corp Headquartered in Miamisburg, Ohio, NewPage Corporation was the leading producer of printing and specialty papers in North America, based on production capacity, with $3.6 billion in net sales for the year ended Dec. 31, 2010. NewPage owns paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada. NewPage Group, NewPage Holding, NewPage, and certain of their U.S. subsidiaries commenced Chapter 11 voluntary cases (Bankr. D. Del. Case Nos. 11-12804 through 11-12817) on Sept. 7, 2011. Its subsidiary, Consolidated Water Power Company, is not a part of the Chapter 11 proceedings. Separately, on Sept. 6, 2011, its Canadian subsidiary, NewPage Port Hawkesbury Corp., brought a motion before the Supreme Court of Nova Scotia to commence proceedings to seek creditor protection under the Companies' Creditors Arrangement Act of Canada. NPPH is under the jurisdiction of the Canadian court and the court- appointed Monitor, Ernst & Young in the CCAA Proceedings. Initial orders were issued by the Supreme Court of Nova Scotia on Sept. 9, 2011 commencing the CCAA Proceedings and approving a settlement and transition agreement transferring certain current assets to NewPage against a settlement payment of $25 million and in exchange for being relieved of all liability associated with NPPH. On Sept. 16, 2011, production ceased at NPPH. NewPage originally engaged Dewey & LeBoeuf LLP as general bankruptcy counsel. In May 2012, Dewey dissolved and commenced its own Chapter 11 case. Dewey's restructuring group led by Martin J. Bienenstock, Esq., Judy G.Z. Liu, Esq., and Philip M. Abelson, Esq., moved to Proskauer Rose LLP. In June, NewPage sought to hire Proskauer as replacement counsel. NewPage is also represented by Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, as co-counsel. Lazard Freres & Co. LLC is the investment banker, and FTI Consulting Inc. is the financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. In its balance sheet, NewPage disclosed $3.4 billion in assets and $4.2 billion in total liabilities as of June 30, 2011. The Official Committee of Unsecured Creditors selected Paul Hastings LLP as its bankruptcy counsel and Young Conaway Stargatt & Taylor, LLP to act as its Delaware and conflicts counsel. NORTH END UNITED HOUSING: In Receivership, Owes $1.1 Million ------------------------------------------------------------ CBCNews reports that Justice Glen McDougall has decided to place North End United Housing Co-operative at Halifax, in Novia Scotia, Canada, to receivership. North End has owed contractors about $1.1 million for renovations that ran millions of dollars over budget two years ago, according to CBCNews. The report relates that the housing co-op only had $200,000 to pay them. CBCNews notes that the co-op's total debt, including secured creditors such as the Halifax Regional Municipality, the Nova Scotia Housing Development Corporation and the CMHC, is more than $10 million. The report relates that contractors fear the judge's decision for it will mean that they will never see their money. Justice McDougall approved appointing a receiver after a proposed arrangement between the contractors and the tenants fell through, CBCNews discloses. The report relays that the contractors were willing to accept just half of what they are owed. But that would mean the co-op would have to borrow hundreds of thousands of dollars, so its membership voted down the offer, the report notes. Judge McLeod blames the provincial government, which holds the co- op's mortgages, for first signing off on the work and then paying lawyers and accountants instead of the contractors, the report says. The contractors say they have been waiting nearly two years to get paid, the report notes. With the decision to appoint a receiver, they say the wait could be another couple of years or more of lawyers and court proceedings. ORANGE COUNTY NURSERY: Court Says Minority Claim Is Subordinated ---------------------------------------------------------------- Bankruptcy Judge Geraldine Mund issued a Memorandum of Opinion regarding the treatment and valuation of the claim or interest of the Minority Voting Trust in the Orange County Nursery Inc. According to Judge Mund, the Minority's claim is subordinated pursuant to 11 U.S.C. Sec. 510(b). The Minority's claim is to be valued based on the going-concern value of the Debtor as of the petition date. The valuation arises from a dissolution action of the Debtor. Pursuant to Cal. Corp. Code Sec. 2000, on Nov. 21, 2008, after extensive litigation, the Orange County Superior Court entered a value of the Minority Voting Trust's interest in the amount of $4,906,475, plus interest to the date of judgment for a total of $5,249,928. This represented 40.25% of the total value of the Debtor. Once that was determined, the Debtor could either pay that amount or liquidate. This ruling was appealed by the Majority. The Majority failed to obtain a stay from the Court of Appeal and on Jan. 22, 2009, just before the time to pay the purchase price, it filed the bankruptcy case. The Minority filed claim #73 on May 14, 2009, asserting a liquidated total of $6,008,424 ($5,249,928 per the Superior Court judgment and $758,496 in pre- petition legal fees), and it also noted that it was claiming an amount to be determined for post-petition fees under Cal. Corp. Code Sec. 2000(c). In the first amended plan, the Debtor classified the Minority as an equity holder, who would receive nothing under the plan. The bankruptcy court agreed with this classification, which the Minority appealed. Later, the confirmation order and the objection to claim were also appealed to the District Court and were combined in one ruling, which was favorable to the Minority. The Debtor then appealed to the Ninth Circuit, which dismissed that appeal as interlocutory, noting that "the bankruptcy court has not yet had the opportunity to exercise its fact-finding power and value the claims at issue; by dismissing the appeal, we avoid addressing the legal questions on an underdeveloped record." According to Judge Mund, while the bankruptcy court wishes the Ninth Circuit would have resolved the critical legal issue of whether the status of the Minority is that of a holder of an unsecured claim or whether it holds a equity interest (which probably would have resolved all of the other issues), this did not occur. So, once again, the Debtor seeks an order that the Minority holds an equity interest and is not an unsecured creditor, but with a new twist. The Debtor argues that the effect of the Dissolution Order and the District Court Order is to create a forced purchase and this is controlled by 11 U.S.C. Sec. 510(b), which subordinates this claim to the same priority as that of common stock. This issue was not dealt with in the District Court Opinion, which concerned the bankruptcy court's prior ruling that the classification of the Minority's interest depended on whether the right to payment had matured or become non-contingent prior to the filing of the bankruptcy. Whether the District Court was correct on its ruling as to the effect and timing of maturity will have to await resolution by the Ninth Circuit at some later date. Judge Mund will hold on Oct. 9, 2012, at 10:00 a.m. a status conference to set an evidentiary hearing on the value of the Minority's claim, which will update the state court valuation to the petition date and deduct relevant expenses of a going-concern sale. A copy of Judge Mund's Sept. 4, 2012 Memorandum of Opinion is available at http://is.gd/PrkISyfrom Leagle.com. Orange County Nursery, Inc. -- http://www.ocnursery.com/-- located in Moonpark, Calif., supplies growers and landowners in Orange and San Diego counties with a variety of nursery stock including bareroot fruit and nut trees, ball and burlap citrus trees, and ornamental plants. Orange County Nursery sought chapter 11 protection (Bankr. C.D. Calif. Case No. 09-10165) on Jan. 22, 2009, and is represented by David S. Kupetz, Esq., at Sulmeyer Kupetz in Los Angeles. At the time of the filing, the Debtor estimated assets of more than $10 million and debts of less than $10 million. PANDA SHERMAN: S&P Gives 'B+' Prelim Rating on $330.7MM New Debt ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B+' senior secured rating and '2' recovery rating to Panda Sherman Power LLC's (Sherman) proposed first-lien senior secured $300.4 million term loan B and $30.3 million letter of credit facility. The '2' recovery rating indicates very high recovery (70% to 90%) of principal in a default scenario. The outlook is stable. "Sherman is a special-purpose, bankruptcy-remote operating entity, set up to build the Panda Sherman Power Plant, a 758 megawatt (MW) natural gas-fired facility in Sherman, Texas, about 60 miles north of Dallas. The unit will dispatch into the North sub-region of the Electric Reliability Council of Texas (ERCOT) interconnect. Sherman will initially be capitalized with $395 million of equity and $330.7 million of secured debt," S&P said. "The stable outlook on the debt ratings reflects our view that the project has sufficient liquidity during the construction phase and that the cash flows, while volatile, will comfortably cover debt service throughout the debt tenor," said Standard & Poor's credit analyst Nora Pickens. "A downgrade is possible if our expectation of debt at maturity changes to greater than $400 per kW or if DSCRs steadily decline below 1.10x. This would likely result from construction delays, lower-than-expected spark spreads, poor operational performance, or higher operating and maintenance costs. An upgrade would require a large and sustainable improvement in merchant market prices that would reduce refinance risk to below $100 per kW," S&P said. PATRIOT COAL: Sept. 11 Hearing on Transfer of Case Venue -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing on Sept. 11, 2012, at 1:30 p.m., to consider the motions to transfer venue of Patriot Coal Corporation, et al.'s Chapter 11 cases. The U.S. Trustee, in its motion, asked that the Court transfer venue of the cases in the interest of justice to a district where venue is proper. At the hearing, the Court will also consider objections to the motion to transfer the cases. The Official Committee of Unsecured Creditors in the Debtors' cases objected to the motion filed by The United Mine Workers of America, certain Sureties, and the U.S. Trustee. The Committee stated that UMWA, 2 the Sureties and the U.S. Trustee have not sustained their heavy burden of demonstrating that the transfer of venue would serve the interests of justice; be more convenient for all creditors; and lead to more economical and efficient administration of the estates. In particular, the UMWA and the Sureties have not proved that their preferred venue, Charleston, West Virginia, is more convenient than New York City. Nor has the U.S. Trustee proven that another venue is more convenient, the Committee said. In separate filing, Citibank, N.A., will support the Debtors' choice of venue in the Court. It related that it is prepared to participate in the Debtors' chapter 11 cases, wherever they are located. However, it pointed out that a transfer would neither further the interest of justice nor advance the convenience of the parties, and requested that the motions be denied. Citibank, N.A., is administrative agent for the new money lenders and letter of credit issuers under that certain superpriority secured debtor- in-possession credit agreement, dated as of July 9, 2012, as amended, pursuant to which the First Out DIP Lenders have agreed, subject to the terms set forth therein, to provide certain debtor in possession financing in a total amount of $500 million. * * * Lisa Uhlman at Bankruptcy Law360 reports that the U.S. trustee responded Friday to Patriot Coal Corp.'s objection to her bid to move the bankruptcy, saying the debtor failed to refute her central argument, that the creation of two entities on the eve of bankruptcy was an attempt to "manufacture venue." Bankruptcy Law360 relates that U.S. Trustee Tracy Hope Davis, who oversees bankruptcies filed in Region 2, which includes the Southern District of New York, filed the omnibus reply to objections to her motion to transfer venue from that court. 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. PEGASUS RURAL: Revised Plan Won't Pay Unsecured Creditors --------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that bankrupt subsidiaries of Xanadoo Co. filed a revised reorganization plan bearing little resemblance to the prediction the company made early this year that all secured and unsecured creditors would be paid in full, with interest. According to that report, the accompanying disclosure statement, also filed Aug. 31, tells unsecured creditors why they will receive nothing under the plan. After payment of priority claims that must be paid in full, nothing will remain for unsecured creditors. The plan will give stock of the reorganized companies to the parent Xanadoo in exchange for loans made to support the Chapter 11 effort. The companies filed a proposed reorganization plan in February predicting sale of licenses in the 700 megahertz spectrum would pay all secured and unsecured creditors in full, with interest. In a separate filing, the companies said at that time the assets will be turned over to secured lenders if there is neither a lender nor a buyer to finance a plan. The plan will be funded either by a new loan or by selling the business and the assets. Sales of the frequency spectrum didn't attract outside bidders at hoped-for prices. Rhino Communications Inc. paid $3 million for some licenses in the 2.5-gigahertz spectrum. Secured lender Beach Point Capital Management LP last month bought assets in the 700- megahertz spectrum in exchange for $30 million in debt. The lenders were the so-called stalking horse for the Aug. 20 auction. Four buyers also paid a total of $614,000 for licenses leased in the 2.5-gigahertz spectrum that weren't purchased by Rhino. The secured lender will receive proceeds under a settlement negotiated at the time of the sale of the 700-megahertz assets. About Pegasus Rural Broadband Pegasus Rural Broadband, LLC, and its affiliates, including Xanadoo Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11772) on June 10, 2011. The Debtors are subsidiaries of Xanadoo Company, a 4G wireless Internet provider. Xanadoo Co. was not among the Chapter 11 filers. The subsidiaries sought Chapter 11 protection after they were unable to restructure $52 million in 12.5% senior secured promissory notes that matured in May. The notes are owing to Beach Point Capital Management LP. Xanadoo Holdings, through Xanadoo LLC -- XLC -- offers wireless high-speed broadband service, including digital phone services, under the Xanadoo brand utilizing licensed frequencies in the 2.5 GHz frequency band. As of May 31, 2011, XLC served 12,000 subscribers in Texas, Oklahoma and Illinois. In the summer of 2010, the Debtors closed all of their retail stores and kiosks in its six operating markets and severed all fulltime sales personnel. Since the closings, the Debtors relied one key retailer in each market to serve as local point of presence to market customer transactions. Judge Peter J. Walsh presides over the case. Rafael Xavier Zahralddin-Aravena, Esq., Shelley A. Kinsella, Esq., and Jonathan M. Stemerman, Esq., at Elliott Greenleaf, in Wilmington, Delaware, serve as counsel to the Debtor. NHB Advisors Inc. is their financial advisors. Epiq Systems, Inc., is the claims and notice agent. Xanadoo Holdings, Pegasus Guard Band and Xanadoo Spectrum each estimated assets of $100 million to $500 million and debts of $50 million to $100 million. The Chapter 11 filing followed the maturity in May 2011 of almost $60 million in secured notes owing to Beach Point Capital Management LP. The Court denied a motion by the secured noteholders to dismiss the Chapter 11 case and appoint a Chapter 11 trustee. POST STREET: Must Sell Assets by Sept. 28 to Avoid Dismissal ------------------------------------------------------------ The Hon. Thomas E. Carlson of the U.S. Bankruptcy Court for the Northern District of California ordered that Post Street, LLC, et al., satisfy certain conditions to resolve to secured creditor Post Investors LLC's motion dated May 8, 2012, to (1) appoint Chapter 11 trustee; (2) convert the cases to Chapter 7 of the Bankruptcy Code; or, (3) dismiss the cases. Specifically, the Court directed the Debtors that: 1. by Sept. 28, 2012, the Debtors will have (a) closed the sale or refinance of the property -- known as 228-240 Post Street, San Francisco, California, or paid in full all undisputed claims asserted in the Debtors' Bankruptcy Cases, and (b) placed on deposit with the Court, or in an escrow account satisfactory to Post Investors and the Court, funds sufficient to satisfy all disputed claims, or the portions of said disputed claims, asserted against the Debtors that are not paid in full; 2. by Sept. 28, 2012, pay Post Investors the principal balance of $55,028,579, plus all unpaid interest accruing at the non-default rate under the Promissory Note, dated July 24, 2007, and the Loan Agreement between Festival Retail Fund 1 228 Post Street LP, Borrower and the Lenders Party Hereto as Lenders and Eurohypo AG, New York Branch as Administrative Agent, dated as of July 24, 2007, plus any other undisputed amounts; 3. by the terms of the order and the June 22, 2012, election by the Debtors, the Debtors are barred from seeking confirmation of a plan of reorganization; 4. the Debtors may seek to amend and confirm a Chapter 11 plan of reorganization subject to the condition that, with respect to the secured claim of Post Investors, any such plan will be a non-impairment plan, and Debtors will be barred from seeking to alter or void the sale conditions; and 5. in the event that the sale and payment conditions are not timely satisfied, then these Bankruptcy Cases will be dismissed on or after 9 a.m. on Oct. 1, 2012. However, (a) if the Debtors believe that the conditions have been timely satisfied, but Post Investors disagrees, and (b) the Debtors file with the Court by 9 a.m. on Oct. 1, 2012, a notice explaining the nature of such dispute, the dismissal order will not be entered until the Court rules on such dispute. Secured creditor Post Investors LLC requested for the appointment of a trustee to liquidate the Property. About Post Street LLC Post Street LLC, based in San Francisco, California, filed for Chapter 11 bankruptcy (Bankr. Case No. 11-32255) on June 15, 2011. Judge Thomas E. Carlson presides over the case. Jeffrey C. Krause, Esq., Eric D. Goldberg, Esq., H. Alexander Fisch, Esq., and Michael S. Neumeister, Esq., at Stutman, Treister and Glatt, in Los Angeles, serves as the Debtor's bankruptcy counsel. Nossaman LLP serves as special litigation counsel. In its amended schedules, the Debtor disclosed assets of $280,815 plus unknown amount and liabilities of $56,092,852 as of the Chapter 11 filing. The petition was signed by Stanley W. Gribble, authorized agent. Affiliate Post 240 Partners, LP, aka Festival Retail Fund 1 228 Post Street, LP, filed for Chapter 11 bankruptcy (Bank. N.D. Calif. Case No. 11-33788) on Oct. 19, 2011. The Debtor estimated both assets and debts of $50 million to $100 million. Post Street, LLC, and Post 240 Partners, L.P., own 34.41% and 65.59% tenant in common interests, respectively, in a building located at 228-240 Post Street, Union Square, San Francisco. POTOMAC SUPPLY: Taps Keiter for Consulting and Audit Services ------------------------------------------------------------- Potomac Supply Corporation asks the Bankruptcy Court to approve the employment of Keiter as its advisor effective as of July 3, 2012. Keiter will provide consulting and audit services to Potomac, including auditing the statement of net assets of Potomac's 401(k) plan and preparing an annual report with necessary financial statements and schedules as required by the Department of Labor's rules and regulations under the Employee Retirement Income Security Act of 1974 ERISA. Potomac has selected Keiter as advisor because of its extensive consulting experience. Keiter has provided Potomac with consulting services since 1991 and thus is familiar with Potomac's 401(k) plan financial information and the preparation of Potomac's annual reports. Potomac agrees to pay Keiter its standard hourly rates. The professionals primarily responsible for providing services to Potomac are: Professional Position Rate ------------ -------- ---- Michael Gracik Partner $340 John Kent Partner $325 Doug Nickerson Manager $240 Stephanie Casey Manager $220 Johnny Um Senior $145 Ron Brooks Senior $130 Keiter estimates that its fees for audit services will be $11,000. The Debtor indicated in the application that (i) Keiter is not an equity security holder or insider; (ii) Keiter is not and was not, within 2 years of the Petition Date, a director, officer, or employee of Potomac; and (iii) Keiter does not have an interest materially adverse to Potomac, its estate, creditors or equity security holders. About Potomac Supply Kinsale, Virginia-based building-supply manufacturer Potomac Supply Corporation filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 12-30347) on Jan. 20, 2012, estimating assets and debts of $10 million to $50 million. Potomac in mid-January announced it was suspending manufacturing operations in Kinsale after its lender refused to provide financing without additional investment. Judge Douglas O. Tice, Jr., presides over the case. Patrick J. Potter, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in Washington, D.C., serves as the Debtor's bankruptcy counsel. LeClairRyan P.C. is representing the Official Committee of Unsecured Creditors. POTOMAC SUPPLY: Hires R. Gentry to Appraise Unencumbered Assets --------------------------------------------------------------- Potomac Supply Corporation seeks Bankruptcy Court permission to employ Robert G. Gentry as its commercial real estate appraiser. Potomac owns various assets, including 22 tracts of unencumbered property that consists of timberland and developed and undeveloped commercial and residential real estate. Mr. Gentry will, among other things: (a) conduct an appraisal review of real property and prepare appraisal reports; (b) serve as an expert witness regarding real property values; and (c) perform all other appraisal services for and on behalf of Potomac that may be necessary or appropriate in connection with this case. Potomac agrees to pay Mr. Gentry $16,000 for its services. To the best of Potomac's knowledge, Mr. Gentry is a "disinterested person" within the meaning of Sections 101(14) and 327 of the Bankruptcy Code. About Potomac Supply Kinsale, Virginia-based building-supply manufacturer Potomac Supply Corporation filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 12-30347) on Jan. 20, 2012, estimating assets and debts of $10 million to $50 million. Potomac in mid-January announced it was suspending manufacturing operations in Kinsale after its lender refused to provide financing without additional investment. Judge Douglas O. Tice, Jr., presides over the case. Patrick J. Potter, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in Washington, D.C., serves as the Debtor's bankruptcy counsel. LeClairRyan P.C. is representing the Official Committee of Unsecured Creditors. READER'S DIGEST: S&P Lowers CCR to 'CCC-' on Liquidity Concerns --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on New York City-based Reader's Digest Assn. Inc. two notches to 'CCC-' from 'CCC+'. "At the same time, we removed the ratings from CreditWatch with negative implications, where they were placed on July 31, 2012. The outlook is negative," S&P said. "We also lowered our issue-level rating on its senior secured notes due 2017 to 'CC' from 'CCC'. The recovery rating on its senior secured loan remains at '5', indicating our expectation of 10% to 30% recovery of principal in the event of payment default," S&P said. "The downgrade reflects the deterioration in the company's liquidity profile and profitability, as well as its recent announcement of a potential covenant breach," said Standard & Poor's credit analyst Minesh Patel. "We project that the company could violate its total leverage and cash interest coverage covenants in the reporting period ending Sept. 30, 2012. It is our understanding that the company is in discussions with its lenders to obtain covenant relief." Reader's Digest's direct-mail and publishing businesses are subject to significant medium-term structural risks. "We view a meaningful decline in liquidity or a covenant violation as a key short-term catalyst that would contribute to a payment default," added Mr. Patel. "In our opinion, there are significant uncertainties and limited visibility surrounding Reader's Digest's revenues and earnings prospects given its declining businesses and ongoing restructuring requirements. In our 2012 and 2013 base-case scenario, we believe that revenues could continue to decline at a double-digit rate because of the impact of divestitures, a weak economy, anemic consumer demand in Europe and the U.S., and secular pressures on the business. We believe that EBITDA could continue to decline at a greater rate because of the company's burdensome cost structure and our expectation of high restructuring costs," S&P said. "Sales compared to the same period last year, pro forma for the sale of 'Everyday with Rachael Ray' magazine, fell 18.7% in the three months ended June 30, 2012. Covenant EBITDA decreased to $34.3 million from $57.1 million stemming from an inability to reduce costs at the same pace as revenue declines. Cash balances are the primary source of liquidity as the company does not have a revolving credit facility. Liquid cash balances were only about $42 million as of June 30, 2012, after subtracting about $62 million of cash held by foreign subsidiaries, while negative discretionary cash flow was about $92.9 million for the 12 months ended June 30, 2012," S&P said. "On Aug. 23, 2012, the company announced it had reached a settlement with the Federal Trade Commission (FTC) to pay up to $23.8 million to settle disputes regarding its marketing campaign for Ab Circle Pro. The settlement requires an initial payment of $5 million, $5 million within 180 days, and $3.8 million within 270 days of the entry of the consent order. In addition, the company could make an additional payment of up to $10 million within a year based on consumer refund claims," S&P said. "In our opinion, a potential covenant violation, continuing cash flow deficits, required FTC payments, and our expectations for weak consumer spending in Europe (where the company generates a significant proportion of sales) will place significant pressure on Reader' Digest's 'weak' liquidity profile and has escalated the possibility of a payment default in the near term," S&P said. "We will lower the rating if the company can't address its potential financial covenant breach and therefore its debt obligations are accelerated. Much less likely, and depending on the success of the company's international business transformation to a partnership and royalty model, we could revise the outlook to stable or raise the ratings if the company improves its liquidity," S&P said. RESIDENTIAL CAPITAL: Aurelius Opposes Plan Exclusivity Extension ---------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports Aurelius Capital Management LP argued in papers filed Sept. 4 in bankruptcy court that Residential Capital LLC can't use the pending examiner's report to justify a nine-month expansion of the exclusive right to propose a reorganization plan. According to the report, Aurelius, owning 8% of the 9.625% junior secured notes due in 2015, calls itself the third-largest holder of the secured notes. Aurelius contends that three more months of so-called exclusivity is sufficient. A bankruptcy judge in Manhattan will decide how much is too much at a Sept. 11 hearing. ResCap filed under Chapter 11 in May, having already negotiated a reorganization plan that would give non-bankrupt parent Ally Financial Inc. a release of all claims. Aurelius calculates that Ally is willing to pay $950 million for freedom from claims that it has liability for selling bonds secured by defective home mortgages. The report relates ResCap wants nine more months of exclusivity based on the bankruptcy judge's decision to bar creditors from voting on a reorganization plan until after an examiner completes his report in February. Aurelius contends that ResCap's request for nine months of exclusivity "incorrectly presupposes that their Chapter 11 plan must release Ally." The bankruptcy judge should force ResCap to negotiate with creditors on a plan not entailing an immediate release for Ally, Aurelius said. The report notes that Aurelius said it doesn't want "Ally to hold hostage the large amount of cash that soon will be available for distribution." To facilitate immediate talks on a plan, Aurelius also urged the bankruptcy judge to eliminate a provision in the pre-bankruptcy agreement that prevents major creditors from negotiating with one another on an alternative plan. Although many creditors aren't bound by the agreement, the inability to negotiate with the largest claim holders makes plan discussion fruitless at this time, according to Aurelius. The $473.4 million of ResCap senior unsecured notes due in April 2013 traded Sept. 4 for 24.375 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The $2.1 billion in third-lien 9.625% secured notes due in 2015 traded for 98 cents, Trace reported. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap is selling its mortgage origination and servicing businesses and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets. At the onset of the bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC for the mortgage origination and servicing businesses, and with Ally Financial for the legacy portfolio. Together, the asset sales are expected to generate roughly $4 billion in proceeds. Following a hearing in June, the bankruptcy judge scheduled auctions for Oct. 23. A hearing to approve the sales was set for Nov. 5. Fortress Investment Group LLC will make the first bid for the mortgage-servicing business, while Berkshire Hathaway Inc. will serve as stalking-horse bidder for the remaining portfolio of mortgages. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). ROCK-TENN COMPANY: Moody's Rates $600MM Sr. Unsecured Notes 'Ba1' ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to Rock-Tenn Company's proposed $600 million senior unsecured notes due 2020 and 2023, which will rank equally with the company's existing senior unsecured indebtedness. The Company's Ba1 Corporate Family Rating, SGL-2 liquidity rating and the stable outlook all remain unchanged. The proposed refinancing is essentially leverage neutral (the net proceeds will be used to prepay a portion of the company's term loans and outstandings under its revolving credit facility) and will provide a slight improvement in the company's debt maturity profile. The ratings are subject to Moody's review of final documentation. Moody's took the following rating actions: Assigned a Ba1 (LGD3 -- 42%) to proposed senior unsecured notes due 2020 Assigned a Ba1 (LGD3 -- 42%) to proposed senior unsecured notes due 2023 Ratings Rationale Rock-Tenn's Ba1 corporate family rating reflects the company's leading market position in corrugated and consumer packaging and the expectation of improved operating and financial performance as the company continues to integrate the May 2011 Smurfit-Stone Container Corporation acquisition. The ratings are supported by Rock-Tenn's good liquidity position, its track record in integrating acquisitions and restoring credit protection metrics in advance of promised targets. These benefits are partially constrained by the company's adjusted leverage position which is expected to be weaker than many of its industry peers over the near term. While target synergies are expected to be realized, this will be partially offset by the requirement to fund the company's significant pension liability and the investments required to optimize the company's expanded mill system. The SGL-2 liquidity rating indicates good liquidity supported primarily with approximately $1 billion of availability (as of June 2012) through a $1.475 billion revolving credit facility that matures in May 2016 and Moody's expectations of approximately $300 million of free cash flow over the next four quarters. In addition, as of June 2012, Rock-Tenn had $20 million of unrestricted cash and essentially no availability under a $625 million borrowing-base receivables facility which matures in May 2014. The company has debt maturities of approximately $260 million over the next year and Moody's expects Rock-Tenn will remain in compliance with its financial covenants over the near term. The stable rating outlook primarily reflects Moody's expectation that Rock-Tenn will successfully integrate and optimize Smurfit- Stone Container Corporation. Upward rating pressure may result should Moody's assessment of (RCF-CapEx)/Adjusted Debt be sustained above 12% and adjusted debt to EBITDA below 3 times. A downgrade might be associated with deterioration in market demand or pricing. Should Moody's expectations of normalized (RCF- CapEx)/Adjusted Debt decline below 7% or total adjusted debt to EBITDA exceed 4 times, a downgrade would be considered. The principal methodology used in rating Rock-Tenn was the Global Paper and Forest Products 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. Headquartered in Norcross, Georgia, Rock-Tenn Company is a leading North American integrated manufacturer of corrugated and consumer packaging, primarily focused on the manufacturer of containerboard, recycled paperboard, bleached paperboard, packaging products and merchandising displays. The company operates facilities in the United States, Canada, Mexico, Chile, Argentina, Puerto Rico and China. LTM June 2012 the company had annual sales of approximately $9.3 billion. SAHARA TOWNE: Has Access to Cash Collateral Until Nov. 12 --------------------------------------------------------- Sahara Towne Square, LLC, has access to cash collateral until Nov. 12, 2012, after lenders led by U.S. Bank National Association, signed a stipulation extending the termination date for the cash use. The parties agreed that all other agreed provisions, including the adequate protection payment and replacement lien provisions, as provided in the prior cash collateral order, will remain in full force and effect. U.S. Bank National Association, as trustee for registered holders of Bank of American, N.A. -- First Union National Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 2001-3, is represented by: Blakeley E. Griffith, Esq. SNELL & WILMER L.L.P. Blakeley E. Griffith, Esq. 3883 H. Hughes Pkwy., #1100 Las Vegas, NV 89169 About Sahara Towne Square Sahara Towne Square, LLC, filed a Chapter 11 petition (Bankr. D. Nev. Case No. 12-12537) in its hometown in Las Vegas on March 7, 2012. Sahara Towne, which claims to be a Single Asset Real Estate under 11 U.S.C. Sec. 101(51B), disclosed $13.79 million in total assets and $9.59 million in total liabilities in its schedules. The Debtor says it owns a property located at 2520 & 2650 S. Maryland Parkway, in Las Vegas, worth $13.27 million in assets. The property serves as collateral for a $9.58 million debt to U.S. Bank National Association. Real Estate Assets Management, LLC, is the property manager for the properties. The Debtor has obtained approval to hire Marquis Aurbach Coffing as counsel and Flangas McMillan Law Group as special counsel. U.S. Bank National Association, as Trustee for the Registered Holders of Bank of America, N.A.-First Union National Bank Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series 200I-3, is represented in the case by Robert R. Kinas, Esq., Nishat Baig, Esq., and Blakeley E. Griffith, Esq., at Snell & Wilmer L.L.P. SAN BERNARDINO: Says Emergency Justified Bankruptcy --------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that San Bernardino, California, explained to the bankruptcy court why the city was entitled to file municipal bankruptcy without undergoing mediation as required by state law. According to the report, the city provided details to U.S. Bankruptcy Judge Meredith A. Jury in Riverside, California, about the Aug. 1 Chapter 9 bankruptcy filing on an "emergency basis." The report relates that Judge Jury required the city to lay out its case for Chapter 9 eligibility in preparation for a trial to decide if San Bernardino can remain in bankruptcy court. The city said it only learned in "late June" that the general fund had a negative balance of $18.2 million coupled with a projected $45.8 million deficit for the fiscal year beginning July 1. Having depleted the general fund to cover prior years' deficits, the city said it would have been unable to cover payroll within two months absent the bankruptcy filing. The report notes the city said in its Aug. 31 court filings that it was already not paying debts when they came due "so that it could make the August payroll." Federal bankruptcy law and California state law both require a municipality to negotiate with creditors before filing bankruptcy. San Bernardino said negotiations were "impracticable" because there are so many creditors and there was so little time to talk before missing payroll. The city ascribed financial problems to several sources. The report relays that for one, so-called Proposition 13 precluded the city from raising taxes. The recession cut property tax and sales tax revenue by as much as $16 million annually. Retirement costs almost tripled since 2001 for public-safety workers and more than tripled for everyone else. The city contends it's insolvent because it was unable to pay debts when they mature. The city also said it has a $143.3 million book value deficit in pension liabilities provided by California Public Employees' Retirement System. The market value deficit with Calpers is $319.5 million, the city said. The firefighters' union is among creditor groups that may challenge the city's right to bankruptcy relief. Jury directed opposing creditors to file their papers by Oct. 24 in advance of a status conference on Nov. 5. Bloomberg also reports there will be a Sept. 21 hearing to resolve disputes if creditors contend the city failed to turn over relevant documents and information. About San Bernardino San Bernardino, California, filed an emergency petition for municipal bankruptcy under Chapter 9 of the U.S. Bankruptcy Code (Bankr. C.D. Calif. Case No. 12-28006) on Aug. 1, 2012. San Bernardino, a city of about 210,000 residents roughly 65 miles (104 km) east of Los Angeles, estimated assets and debts of more than $1 billion in the bare-bones bankruptcy petition. The city council voted on July 10, 2012, to file for bankruptcy. The move lets San Bernardino bypass state-required mediation with creditors and proceed directly to U.S. Bankruptcy Court. The city is represented that Paul R. Glassman, Esq., at Stradling Yocca Carlson & Rauth. San Bernardino joins two other California cities in bankruptcy: Stockton, an agricultural center of 292,000 east of San Francisco, and Mammoth Lakes, a mountain resort town of 8,200 south of Yosemite National Park. SLS CAPITAL: Luxembourg Case Recognized as Main Proceeding ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York entered an order recognizing as "foreign main proceeding" SLS Capital S.A.'s proceeding pending in Luxembourg pursuant to Article 203 of the law of 10 August 1915 of Luxembourg, as subsequently amended. Maitre Yann Baden is duly appointed as foreign representative of SLS within the meaning of section 101(24) of the Bankruptcy Code. The Court also granted SLS all relief afforded to a foreign main proceeding pursuant to section 1520 of the Bankruptcy Code. As reported in the Troubled Company Reporter on July 20, 2012, the liquidator of Luxembourg-based SLS Capital S.A. filed in Manhattan a petition under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 12-12707) on June 25, 2012, to seek recognition of proceedings in Luxembourg as "foreign main proceeding". Maitre Yann Baden, the liquidator and foreign representative, estimated SLS Capital to have assets and debts of $100 million to $500 million. The liquidator is represented in the U.S. case by Carollynn H.G. Callari, Esq., at Venable LLP as counsel. SLS was a financial services company whose primary business was the issuance of bonds to persons residing outside the United States. In the operation of its business SLS had counterparties and advisors in the United States and had significant assets held in custodial asset and cash accounts in New York City. The assets held in the United States were the primary collateral for the bonds that SLS issued. On June 4, 2009, the State Prosecutor in Luxembourg filed an application in the District Court of and in Luxembourg (Case Number L-6258/09), to wind up and order the liquidation of SLS, a Luxembourg joint stock company, pursuant to Article 203 of the law of 10 August 1915 of Luxembourg, as subsequently amended. On Oct. 1, 2009, the Luxembourg Court ordered the dissolution of SLS and placed SLS into liquidation "declar[ing] applicable those legal provisions pertaining to the liquidation of a bankruptcy" and "appoint[ing] as magistrate in bankruptcy [Supervising Judge] Mrs. Carole BESCH, judge with the Luxembourg Court, and designat[ing] as liquidator Maitre Yann BADEN, lawyer residing in Luxembourg. . . ." The liquidator says that there is need for U.S. recognition of the Luxembourg proceeding. As part of the process of marshaling SLS's assets and paying SLS's debts, the SLS Liquidator seeks to investigate the disappearance of SLS's assets including assets held in custodial accounts and to pursue such actions as are appropriate in order to recover SLS's assets and/or seek damages from culpable third parties. SOLYNDRA LLC: Backers Could Reap $300 Million in Tax Breaks ----------------------------------------------------------- Peg Brickley at Dow Jones' Daily Bankruptcy Review reports that losses bankrupt solar power equipment maker Solyndra LLC racked up during its brief existence could translate into more than $300 million worth of tax breaks for private equity backers in the future, new court papers say. 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. The Plan is designed to pay 2.5% to 6% to unsecured creditors with claims totaling as much as $120 million. Unsecured creditors with $27 million in claims against the holding company are projected to have a 3% dividend. SOLYNDRA LLC: Seeks Fourth Extension of Plan Exclusivity -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Solyndra LLC for a fourth time filed a motion seeking enlargement of the exclusive right to propose a Chapter 11 plan. If approved by the bankruptcy court at a Sept. 24 hearing, the new deadline will be Oct. 30. According to the report, there will be a Sept. 7 hearing in U.S. Bankruptcy Court in Delaware where the judge will decide whether Solyndra's disclosure materials sufficiently describe Chapter 11 plan. Once the disclosure statement is approved, creditors can begin voting. 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. The Plan is designed to pay 2.5% to 6% to unsecured creditors with claims totaling as much as $120 million. Unsecured creditors with $27 million in claims against the holding company are projected to have a 3% dividend. SPECTRE PERFORMANCE: Court Approves Burr Pilger as Tax Accountant ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized the employment of Burr Pilger Mayer, Inc., as tax accountant and financial reorganization consultant of Spectre Performance. The firm will, among other things: -- prepare the Debtor's 2011 federal and state income tax returns; -- perform related bookkeeping services necessary for preparation of the tax returns as well; -- assist the Debtor in the preparation of 2011 year-end financial statements and review as necessary in the ordinary course of the Debtor's financial affairs and as necessary to complete tax returns; -- if necessary, assist the Debtor in the analysis of the tax implications of various plan or administrative alternatives; and -- advise and assist the Debtor in preparing the financial projections necessary for developing the Debtor's plan of reorganization and disclosure statement. The firm's hourly rates for the professionals who will work on the case are: Phillip L. Hutson, shareholder $440 Russell K. Burbank, shareholder $490 Jordan Kahn, manager $315 Mark Werling, manager $285 Gladys Tam, manager $275 Ruby Padilla, supervisor $215 About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. The U.S. Trustee for Region 16 appointed three persons to serve on the Official Committee of Unsecured Creditors in the Debtor's bankruptcy case. SPECTRE PERFORMANCE: Court Denies Request to Appoint Examiner ------------------------------------------------------------- The Bankruptcy Court turned down a motion from K&N Engineering, Inc., an undersecured creditor of Spectre Performance, for the appointment of an examiner to investigate the Debtor's financial books and records and pre-petition transfers relative to avoidance actions. In that motion, K&N requested the appointment of an independent examiner to verify that the Debtor's financial books and records are not merely financial representations made by the Debtor's management and to enable an objective of independent evaluation of the Debtor's financial projections. "The need to appoint an examiner to investigate Debtor's financial books and records relative to assessing the Debtor's proposed plan of reorganization is further underscored by the facts that Debtor's historical financial statements are un-audited statements and the CPA firm that prepared them, Burr Pilger Mayer, Inc., is the same CPA firm that the Debtor has used to prepare its financial projections," averred Franklin C. Adams, Esq., at Best Best & Krieger LLP, attorney for K&N. About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. The U.S. Trustee for Region 16 appointed three persons to serve on the Official Committee of Unsecured Creditors in the Debtor's bankruptcy case. SPECTRE PERFORMANCE: Has Access to Cash Collateral Until Oct. 1 --------------------------------------------------------------- Spectre Performance sought and obtained permission from the Bankruptcy Court to use cash collateral of Comerica Bank, K&N Engineering, Inc., Bank of America and Wachovia Bank through Oct. 1, 2012. As adequate protection for the Debtor's use of any cash collateral: (a) Comerica Bank will be granted a first priority replacement lien on inter alia, all of the Debtor's right, title and interest in and to all of Debtor's prepetition or post- petition assets including, but not limited to all inventory, equipment, accounts, general intangibles, investment property, goods and negotiable collateral pursuant to the Debtor's pre-petition loan agreements with Comerica Bank, which lien will be senior in priority to all other pre or post-petition liens encumbering the Debtor's assets.; (b) K&N will be granted a replacement lien on the Debtor's post- petition personal property and accounts receivable to the same extent and priority as any duly perfected and unavoidable lien held by K&N as of the Petition Date; and (c) Bank of America will be granted a replacement lien on the Debtor's postpetition accounts receivable. The Debtor is also authorized to continue the use of its line of credit facility with Comerica Bank under the Comerica Loan Agreement on post-petition basis pursuant to the terms and conditions of the Comerica Loan Agreement and to perform its obligations thereunder. Through and including Oct. 1, 2012, the Debtor is authorized to borrow against the Comerica Bank line of credit not to exceed $3,774,442. A copy of the Cash Collateral Order is available for free at: http://bankrupt.com/misc/SPECTRE_DIPordAug14.pdf GlassRatner Is Financial Advisor Meanwhile, Spectre Performance sought and obtained permission from the Bankruptcy Court to employ GlassRatner Advisory & Capital Group LLC as its financial advisor and investment banker. GlassRatner will assist the Debtor in obtaining near-term financing and the sale of the Debtor's assets. Both options are being explored on a parallel track. The Debtor said its operations are dependent upon uninterrupted access to necessary working capital to provide assurance to employees, utilities and other parties that they will be paid on a timely basis for post-petition services. The Debtor told the Court that without the financing, its day-to-day operations would soon come to a halt, a result that would be devastating as the Debtor attempts to maximize the value of its assets and reorganize. Pursuant to prior Court order in this case, the Debtor's existing financing with Comerica Bank has been extended to Aug. 1, 2012. Michael J. Issa will lead this engagement and will report directly to the Debtor. Mr. Issa will manage the Company's day-to-day activities and will assign staff as appropriate. GlassRatner will be paid a success fee for the scenarios below: * Book Fee: Upon completion of a Teaser Memorandum to be distributed for the purpose of marketing and selling the Debtor's assets, GlassRatner will be paid a Book Fee of $15,000. * Debt Financing (DIP): Upon entry by the Bankruptcy Court of an Order approving the DIP, GlassRatner will invoice Debtor for an amount equal to 2% of the DIP principal amount. This Success Fee will be due and payable upon entry of an Order by the Court approving the DIP. * Section 363 Asset Sale: Should the investment banking efforts of GlassRatner result in a sale of assets via Section 363 of the U.S. Bankruptcy Code, then GlassRatner will be paid a flat fee of $500,000 for any sale that closes up to a sale price of $20 million. * GlassRatner will also be eligible for a performance bonus if GlassRatner's investment banking efforts result in a transaction, which generates gross sales, proceeds in aggregate of $20 million. The performance bonus will be calculated as 20% of gross sales proceeds in aggregate of $20 million Both the Success Fee and Performance Bonus are due and payable upon close of the transaction. * Break-Up Fee: GlassRatner understands that the Debtor is currently negotiating a possible transaction with judgment lien holder K&N Engineering, Inc. Should GlassRatner procure a third-party interested in purchasing the Debtor's assets who submits a term-sheet or letter of intent for a purchase price greater than the K&N offer on the table at the time of the execution of this agreement and the Debtor elects to pursue a transaction with K&N instead of the third-party, GlassRatner will be entitled to a Break-Up Fee equal to $75,000. GlassRatner will qualify for the Break-Up Fee should Debtor engage in a transaction with K&N anytime within one year of the execution of this Agreement. Break-Up Fee will be due and payable upon close of a transaction with K&N. All out-of-pocket costs are billed in addition at actual cost incurred. To the best of the Debtor's knowledge, GlassRatner represents no interest adverse to the Debtor or its estate. About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. The U.S. Trustee for Region 16 appointed three persons to serve on the Official Committee of Unsecured Creditors in the Debtor's bankruptcy case. SPECTRE PERFORMANCE: Taps Greines to Appeal K&N Judgment -------------------------------------------------------- Spectre Performance obtained permission from the U.S. Bankruptcy Court for the Central District of California to employ Greines, Martin, Stein & Richland LLP as its special counsel to assist in prosecuting the appeal of the K&N Judgment. The K&N Action involves K&N Engineering, Inc.'s claims for false advertising and unfair competition against the Debtor. The jury awarded K&N more than $7.3 million, on six different claims brought against the Debtor related to alleged false advertising in connection with the marketing and sale of its performance automotive air filters and air intake systems. The jury also returned a defense verdict in favor of K&N on the Debtor's counterclaims against K&N for false advertising. A Final Judgment and Permanent Injunction after jury verdict was entered by the District Court on Dec. 8, 2011, in the amount of $7,337,196. The K&N Judgment stated that the District Court would file an amended judgment if it were to award enhanced damages to K&N. On Dec. 20, 2011, K&N filed a motion for statutory enhancement of the K&N Judgment seeking to double the amount of judgment and for approximately $1.6 million in attorneys' fees and costs. The District Court awarded K&N an enhancement payment of $750,159 and attorneys' fees of $1,352,730 in its minute order granting motion for attorneys' fees, in part filed May 1, 2012. The hourly rates of the firm's personnel are: Robert A. Olson $650 Kent J. Bullard $650 Senior Partners $850 Senior Counsel $550 Senior Associate $500 Associate $450 Law Clerks $100 About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. The U.S. Trustee for Region 16 appointed three persons to serve on the Official Committee of Unsecured Creditors in the Debtor's bankruptcy case. SPECTRE PERFORMANCE: Can Hire Hopkins-Carley as K&N Prosecutor -------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Spectre Performance to employ Hopkins-Carley ALC as the Debtor's special counsel for the prosecution of the K&N Action. The K&N Action involves K&N Engineering, Inc.'s claims for false advertising and unfair competition against the Debtor. The jury awarded K&N more than $7.3 million, on six different claims brought against the Debtor related to alleged false advertising in connection with the marketing and sale of its performance automotive air filters and air intake systems. The jury also returned a defense verdict in favor of K&N on the Debtor's counterclaims against K&N for false advertising. A Final Judgment and Permanent Injunction after jury verdict was entered by the District Court on Dec. 8, 2011, in the amount of $7,337,196. The K&N Judgment stated that the District Court would file an amended judgment if it were to award enhanced damages to K&N. On Dec. 20, 2011, K&N filed a motion for statutory enhancement of the K&N Judgment seeking to double the amount of judgment and for approximately $1.6 million in attorneys' fees and costs. The District Court awarded K&N an enhancement payment of $750,159 and attorneys' fees of $1,352,730 in its minute order granting motion for attorneys' fees, in part filed May 1, 2012. On May 7, 2012, K&N filed a Notice of Lodging of [Proposed] Amended Final Judgment and Permanent Injunction. The amended final K&N Judgment has not been entered. The hourly rates of the firm's personnel are: John V. Picone, III, Esq. $465 Jennifer S. Coleman, Esq. $370 Jedidiah L. Dooley, Esq. $325 Christopher Hohn, Esq. $270 Andrea Stewart, senior paralegal $210 Chrissie S. Cimbra Cruz, case Assistant $90 About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. The U.S. Trustee for Region 16 appointed three persons to serve on the Official Committee of Unsecured Creditors in the Debtor's bankruptcy case. SPECTRE PERFORMANCE: Can Employ Mike Ido as Financial Consultant ---------------------------------------------------------------- Spectre Performance, Inc., sought and obtained permission from the Bankruptcy Court to employ Mike Ido as its financial consultant. Since January 2007, Mr. Ido has been an independent consultant and provided services in various capacities, including audit senior for a CPA firm and part-time controller/CFO for small businesses on a recurring basis. Prior to the Petition Date, the Debtor had employed Mr. Ido as its financial consultant. The Debtor needs to continue to employ Mr. Ido in the ordinary course of its business affairs. In the administration of this case, Mr. Ido will: * consult with and assist the Debtor in all accounting matters related to the Debtor's business operations including the review of the Debtor's monthly financial statements and consult with the Debtor regarding same; assist the Debtor to prepare inventory analysis reports and consult with the Debtor regarding same; and assist the Debtor in preparing projected budgets. * respond to and advise the accounting regarding accounting questions as they arise in the ordinary course of the Debtor's financial affairs. * if necessary, assist the Debtor in preparing the monthly operating reports filed during the Debtor's case in compliance with the requirements of the Office of the United States Trustee and Local Bankruptcy Rules. * if necessary, assist the Debtor in preparing financial statements or projections as necessary for the Debtor's disclosure statement and reorganization plan. * perform any and all other financial consultant services incident and necessary as the Debtor may require of Mr. Ido in the operation of the Debtor's business and the Debtor's reorganization. Mr. Ido's current billing rate is $100 per hour. During the one year period prior to the Petition Date, Mr. Ido received payment of fees and expenses from the Debtor for approximately $21,653. Mr. Ido is disinterested as that term is defined in Section 101(14) of the Bankruptcy and represents no interest adverse to the Debtor or its bankruptcy estate. About Spectre Performance Spectre Performance, formerly known as Spectre Industries, filed a Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-21890) in Riverside, California, on May 14, 2012. The Company incurred significant legal costs in defending against lawsuits alleging false advertising in connection with the marketing and sale of the Company's performance automotive air filters and air intake systems. Ontario, California-based Spectre Performance disclosed $10.2 million in assets and $17.7 million in liabilities. Secured claims total $3.7 million. Amir Rosenbaum founded the company in 1983 by selling hose covering NylaBraid. Now the company is a manufacturer of performance racing autoparts. Spectre Performance -- http://www.spectreperformance.com/-- makes air and fuel accessories, including cold air intake systems to pack cool air to the engine, fuel lines and hoses for plumbing the engine, and chrome hardware and valve covers for dressing the bay. Judge Mark D. Houle presides over the case. The petition was signed by Amir Rosenbaum, president. According to court filings, the Debtor expects that funds will be available for distribution to unsecured creditors. Prepetition lender Comerica Bank is represented in the case by Reed Waddell, Esq., at Frandzel, Robins, Bloom & Csato LLC. The U.S. Trustee for Region 16 appointed three persons to serve on the Official Committee of Unsecured Creditors in the Debtor's bankruptcy case. STANFORD INT'L: SEC Appeals Denial of SIPC Funds for Victims ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Securities and Exchange Commission is taking an appeal from a ruling early July that investors defrauded in the R. Allen Stanford Ponzi scheme aren't entitled to have their claims paid by the Securities Investor Protection Corp. According to the report, the SEC sued in December, asking a U.S. district judge in Washington to force SIPC to take over the liquidation of Stanford's brokerage firm, Stanford Group Co. Had the SEC won, SIPC would have been required to cover customer's claim for as much as $500,000 each. U.S. District Judge Robert L. Wilkins ruled against the SEC on July 3. The SEC appealed Aug. 31. The Bloomberg report discloses that unless the SEC wins on appeal to the U.S. Court of Appeals in Washington, investors in the $7 billion fraud will be repaid from recoveries in a receivership pending in a federal court in Texas. Mr. Stanford was sentenced in June to a 110-year prison sentence. The case is Securities and Exchange Commission v. Securities Investor Protection Corp., 11-mc-00678, U.S. District Court, District of Columbia (Washington). About Stanford International Bank Domiciled in Antigua, Stanford International Bank Limited -- http://www.stanfordinternationalbank.com/-- is a member of Stanford Private Wealth Management, a global financial services network with US$51 billion in deposits and assets under management or advisement. Stanford Private Wealth Management serves more than 70,000 clients in 140 countries. On Feb. 16, 2009, the United States District Court for the Northern District of Texas, Dallas Division, signed an order appointing Ralph Janvey as receiver for all the assets and records of Stanford International Bank, Ltd., Stanford Group Company, Stanford Capital Management, LLC, Robert Allen Stanford, James M. Davis and Laura Pendergest-Holt and of all entities they own or control. The February 16 order, as amended March 12, 2009, directs the Receiver to, among other things, take control and possession of and to operate the Receivership Estate, and to perform all acts necessary to conserve, hold, manage and preserve the value of the Receivership Estate. The U.S. Securities and Exchange Commission, on Feb. 17, charged before the U.S. District Court in Dallas, Texas, Mr. Stanford and three of his companies for orchestrating a fraudulent, multi- billion dollar investment scheme centering on an US$8 billion Certificate of Deposit program. A criminal case was pursued against him in June before the U.S. District Court in Houston, Texas. Mr. Stanford pleaded not guilty to 21 charges of multi-billion dollar fraud, money- laundering and obstruction of justice. Assistant Attorney General Lanny Breuer, as cited by Agence France-Presse News, said in a 57-page indictment that Mr. Stanford could face up to 250 years in prison if convicted on all charges. Mr. Stanford surrendered to U.S. authorities after a warrant was issued for his arrest on the criminal charges. The criminal case is U.S. v. Stanford, H-09-342, U.S. District Court, Southern District of Texas (Houston). The civil case is SEC v. Stanford International Bank, 3:09-cv-00298-N, U.S. District Court, Northern District of Texas (Dallas). STARZ LLC: Moody's Assigns 'Ba2' Corporate Family Rating -------------------------------------------------------- Moody's Investors Service assigned Starz, LLC a Ba2 Corporate Family Rating (CFR), Ba2 Probability of Default Rating (PDR), and Ba2 rating to the company's proposed $500 million senior unsecured notes due 2019 as well as a SGL-1 speculative-grade liquidity rating. Starz plans to utilize the net proceeds from the proposed notes to retire a $500 million term loan that was part of a new unrated $1.5 billion credit facility established in November 2011. Starz plans to utilize existing cash and a drawdown under its $1 billion revolver to fund a $1.8 billion distribution to Liberty Media Corporation (Liberty). The distribution will occur in conjunction with Liberty's plan to separate Starz from its other assets (including its nearly 49% interest in Sirius XM) in a tax- free spin-off that is expected to close in late 2012 or early 2013. Starz had approximately $1.1 billion of cash as of June 30 and approximately $400 million of the distribution has been made in advance of the spin-off. Prior to the November 2011 credit agreement, Starz carried only a modest external debt balance (less than $50 million of transponder leases), other than inter-company debt. Accordingly, these transactions will result in a significant increase in Starz's debt and leverage. The rating outlook is stable. Assignments: Issuer: Starz, LLC Corporate Family Rating, Assigned Ba2 Probability of Default Rating, Assigned Ba2 Speculative Grade Liquidity Rating, Assigned SGL-1 Senior Unsecured Regular Bond/Debenture, Assigned a Ba2, LGD4 - 52% Outlook Actions: Issuer: Starz, LLC Outlook, Assigned Stable Ratings Rationale Starz' Ba2 Corporate Family Rating (CFR) reflects the company's good cash flow generated from its family of premium cable networks, technology-driven long-term risks associated with the premium cable network business, heavy supplier/distributor concentration, moderate leverage, and event risks related to substantive control by John Malone. Moody's believes the company will continue to generate good cash flow over the intermediate term supported by movie output deals with Sony and Disney and an increase in original programming investment, but long-term business risks and Dr. Malone's substantive control warrant a speculative-grade rating. Liberty is separating Starz in part to provide better opportunities to pursue its strategic objectives including creating a currency that could be used for acquisitions. Starz could be an acquisition target as there are relatively few stand-alone cable networks remaining with modest scale such as Starz, although a stand-alone Starz could itself be an acquisition platform. This along with the potential to utilize debt to fund share repurchases creates event risk. Starz's 3.0x or lower target debt-to-OIBDA leverage (company definition), positive projected free cash flow and very good liquidity position the company at the upper end of the speculative-grade rating scale. Starz will initially be below its leverage target (2.8x pro forma LTM 6/30/12) and Moody's expects incremental cash generation to be used to reduce the size of the initial revolver draw (relative to the pro forma 6/30/12 amount) and leverage by roughly 0.3x by the time the spin-off closes. Debt-to-EBITDA incorporating Moody's standard adjustments and programming costs on a cash basis (3.3x LTM 6/30/12 pro forma for the transaction) would be roughly 3.5x at the company's target leverage level. Moody's expects Starz will manage to its leverage level over time with share repurchases and acquisitions potential uses of incremental debt subsequent to the spin-off. Moody's believes Starz has sufficient free cash flow to manage to its leverage target. The SGL-1 speculative-grade liquidity rating reflects Starz's very good liquidity position supported by its predictable free cash flow generation, a modest cash balance (approximately $25 million pro forma for the proposed transaction) and no required debt payments until the revolver matures in 2016. Moody's anticipates Starz will generate free cash flow exceeding $150 million over the next 12 months. Unused capacity under the $1 billion revolver (approximately $300 million pro forma 6/30/12 likely increasing to roughly $475 million by the time the spin-off closes) provides additional liquidity support, although Moody's does not expect Starz to be reliant on the facility aside from potentially using to fund lumpy programming payments. Moody's expects Starz will maintain a meaningful EBITDA cushion (greater than 25%) within the financial maintenance covenants (which are based only on Starz Entertainment's OIBDA), with flexibility to reduce debt and covenant cushion should EBITDA fall. The Ba2 rating and LGD4 - 52% assessment on Starz's proposed $500 million senior notes reflects the guarantee from Starz Entertainment, LLC (SEL). Starz plans to establish a new finance subsidiary, Starz Finance Corp., that will be a joint and several co-issuer of the notes. Starz's $1 billion revolver has the same guarantee from SEL but also a pledge of the stock of SEL and Starz, LLC. Because Moody's believes the stock pledge is a weaker claim than the guarantee, a 100% deficiency claim is utilized for the revolver in Moody's loss given default model. The revolver and notes are thus viewed as having similar claims at present, which results in the notes being rated equal to the CFR. However, the credit facility contains maintenance covenants (not present in the notes) that could improve the recovery prospects relative to the notes. Maintenance covenants provide bank lenders an ability to modify the credit facility terms, which could result in repayment of the bank debt and/or higher interest margins as a condition to amending the facility. The note indenture also allows Starz to pledge collateral to a credit facility up to an amount equal to the greater of $1.5 billion and 3.0x secured leverage. An actual or potential difference in the collateral position, or other provisions that could drive a meaningful difference in recovery for the notes relative to the credit facility and lead to a lower rating. The stable rating outlook reflects Moody's expectation that Starz will maintain access to high quality programming for the next 12- 24 months, steadily increase its original programming investment, and maintain and renew distribution agreements with multichannel video suppliers near current economic terms such that revenue and earnings are stable or growing over the next two years. Moody's also anticipates in the stable rating outlook that Starz will manage to its 3.0x target leverage level. The ratings are currently constrained by Starz's target leverage and the long-term business risk. However, maintaining access to high quality content and sustaining distribution agreements such that revenue and earnings grow notwithstanding technology-driven changes in the television industry, along with debt-to-EBITDA sustained below 2.25x and free cash flow-to-debt sustained in a high teens percentage range or better could lead to an upgrade. Starz would also need to maintain a good liquidity position and be able to absorb any event-driven transactions within the aforementioned credit metrics to be considered for an upgrade. Starz's ratings could be downgraded if it does not maintain cost- effective access to high quality programming. This could occur if it is unable to renew studio output deals at reasonable terms, find replacement programming that appeals to consumers in the event an existing studio output deal is not renewed, or if its original programming strategy is not successful. Adverse changes in distribution agreements could also create downward rating pressure. Starz could also be downgraded liquidity deteriorates, or if it does not adhere to its stated financial policies and leverage target, completes acquisitions, or distributes cash to shareholders or acquisitions such that debt-to-EBITDA is not maintained in a low 3x range or lower or free cash flow-to-debt is not sustained comfortably above 10%. The principal methodology used in rating Starz is the Global Broadcast and Advertising Related Industries Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Starz, headquartered in Englewood, Colorado, supplies television and movie programming to U.S. multichannel video distributors including cable, direct broadcast satellite, and telecommunication service providers. Primary operations consist of the Starz and Encore premium cable networks. Starz Media operates home video and theatrical distribution businesses as well as other programming- related services including managing for a distribution fee the ancillary revenue and expenses of Starz's original programming content. Revenue for the 12 months ended June 2012 were approximately $1.6 billion. STERLING SHOES: Provides Default Status Update ---------------------------------------------- Sterling Shoes Inc. provided a bi-weekly Default Status Report under National Policy 12-203 - Cease Trade Orders for Continuous The Company discloses that the interim financial statements for the quarter ended June 30, 2012, management discussion and analysis and related CEO and CFO certifications have not been filed by the filing deadline. About Sterling Shoes Sterling Shoes is headquartered in Vancouver, B.C. and is a leading independent footwear retailer offering a broad selection of private label and brand name shoes and accessories. Founded in 1987, Sterling Shoes LP operates over 100 stores across Canada. In October 2011, Sterling Shoes Inc. Sterling Shoes GP Inc. (general partner of Sterling Shoes Limited Partnership) sought protection from the Supreme Court of British Columbia under the Companies' Creditors Arrangement Act (Canada), R.S.C. 1985, c. C- 36, as amended. Alvarez & Marsal Canada Inc. has been appointed Monitor pursuant to such orders. SWAMI SHREE: Can Use Cash Collateral to Buy Plasma TVs ------------------------------------------------------ Bankruptcy Judge David E. Rice signed off on a stipulation and consent order between Swami Shree LLC and its secured creditor S4H Hospitality LLC that supplements Swami Shree's authority to use S4H's cash collateral. The parties previously agreed to the Debtor's interim cash use through Oct. 17. In the supplemental agreement, S4H agrees that the Debtor may use cash beyond the agreed budget to replace all guest room TV's with new 32" flat- screen plasma TV's, which improvement is required by the Property Improvement Plan of the Debtor's franchise agreement with La Quinta Inns & Suites. The Debtor has received a quote for this improvement and the cost is expected to total roughly $29,080. A copy of the Supplemental Stipulation and Consent Order dated Sept. 4, 2012, is available at http://is.gd/PrkISyfrom Leagle.com. About Swami Shree Based in Media, Pennsylvania, Swami Shree, LLC, owns and operates a La Quinta franchised hotel, containing 70 suites and amenities, located at 304 Belle Hill Road, in Elkton, Maryland. Swami Shree filed a Chapter 11 petition (Bankr. D. Md. Case No. 11-25973) on Aug. 4, 2011. Curtis C. Coon, Esq., at Coon & Cole, LLC, serves as the Debtor's bankruptcy counsel. The Debtor scheduled $338,140 in assets and $4,861,772 in debts. The petition was signed by Vasudev Patel, managing member. Attorney for senior lender SS4H Hospitality LLC is Alan M. Grochal, Esq., at Tydings & Rosenberg LLP, in Baltimore, Maryland. First-Citizens Bank & Trust Company is the Debtor's junior creditor. Attorney for junior lender First-Citizens Bank & Trust Company is Peter J. Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware. TESORO LOGISTICS: Moody's Rates $310MM Sr. Unsecured Notes 'B1' --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Tesoro Logistics LP's (TLLP) proposed $310 million senior unsecured notes due 2020. Moody's also assigned a Ba3 Corporate Family Rating (CFR), Ba3 Probability of Default Rating, and a SGL-3 Speculative Grade Liquidity (SGL) rating to TLLP. The proceeds from the proposed notes offering will be used to fund a dropdown acquisition of the Port of Long Beach Marine terminal from Tesoro Corporation (TSO, Ba1 negative), repay borrowings under TLLP's secured revolving credit facility, and pay transaction fees. This is the first time that Moody's has rated TLLP. The rating outlook is stable. Rating Assignments: $310 Million Senior Unsecured Notes due in 2020, Rated B1 (LGD 4, 69%) Corporate Family Rating of Ba3 Probability of Default Rating of Ba3 Speculative Grade Liquidity rating of SGL-3 Ratings Rationale "Tesoro Logistics' Ba3 CFR reflects its strategic importance to and high percentage of contracted, fee-based revenues from its parent company and general partner, Tesoro Corporation, " commented Gretchen French, Moody's Vice President. "Despite its limited track record and small scale, Tesoro Logistics has a visible growth plan that Moody's expects will continue to be supported by its general partner with fee-based, long-term contracts." On a standalone basis, Moody's views TLLP's credit profile as more consistent with a B1 rating, reflecting its stable cash flows from long-term, fee-based contracts with minimum volume commitments and visible growth trajectory, but restrained by its small size, limited track record, and expectation of rising leverage and high distributions associated with its master limited partnership (MLP) structure. However, the Ba3 Corporate Family Rating reflects uplift from its strategic importance to TSO as the MLP will provide it with critical infrastructure and a coordinated growth strategy. Additionally, TSO's support is reflected in its 52% ownership stake, including a 2% general partner stake, in Tesoro Logistics. TSO currently owns a number of logistics assets that could be dropped down into the MLP. And if TSO's pending acquisition of BP's Carson refining and marketing business closes, there exists considerable opportunity for TLLP to grow through dropdowns. These dropdowns could result in positive rating momentum due to the resulting material increase in both scale and diversity of TLLP's midstream asset portfolio. However, future rating action would consider the degree of equity financing of the dropdowns and contract structures of affiliate and third-party revenues. TLLP's SGL-3 rating reflects the expectation for adequate liquidity through mid-2013. Pro forma for the proposed notes offering and the drop down of the Port of Long Beach Marine terminal, the company will have full availability under its $300 million bank credit facility and cash balances of roughly $21 million. The credit facility is secured by substantially all of TLLP's assets, matures in 2014 and includes covenants of debt / EBITDA of no greater than 5x, secured debt / EBITDA of no greater than 3.5x, and EBITDA / interest of no less than 2.5x. Additionally, TLLP has the option to request that the facility size be increased to a maximum of $450 million, pending lender approval. Pro forma for the Long Beach drop down, Moody's estimates that nearly 85% of TLLP's revenues will stem from contracted volumes, providing enough EBITDA headroom to maintain covenant compliance at current debt levels. However, TSO has announced plans to drop down an expected $1 billion of assets related to BP's Carson refining and marketing business, as well as its unit-train unloading facility in Anacortes. The funding of these dropdowns will require significant capital market access and could result in tightened covenant headroom. In order to maintain covenant compliance after these acquisitions, Moody's believes the company will need to finance its future dropdowns with a significant portion of equity. The B1 rating assigned to the proposed senior unsecured notes reflects both the overall probability of default of the company, to which Moody's assigns a Probability of Default Rating of Ba3, and a loss given default of (LGD 4, 69%). The proposed notes are rated one notch below the Ba3 Corporate Family Rating, reflecting the contractual subordination of the notes to TLLP's $300 million credit facility. The credit facility is secured by substantially all of TLLP's assets. The proposed notes have upstream guarantees from substantially all of TLLP's subsidiaries. The stable rating outlook assumes that TLLP will finance future material acquisitions with a meaningful portion of equity (at least 50%), maintain adequate distribution coverage (over 1x) and leverage under 5x. TLLP's ratings could be upgraded if the company is able to increase in size and scale while maintaining reasonable leverage (EBITDA approaching $200 million and debt/EBITDA below 4.5x). TLLP's ratings could be downgraded if debt / EBITDA were to be sustained above 5x due to a leveraging acquisition, or if the company acquired a significant amount of new assets with a weak business risk profile. If TSO's credit quality were to materially decline resulting in a CFR of B1 or below, this would also pressure TLLP's ratings. The principal methodology used in rating Tesoro Logistics was the Global Midstream Energy 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. Tesoro Logistics LP is a master limited partnership headquartered in San Antonio, Texas. TESORO LOGISTICS: S&P Rates $310MM Sr. Unsecured Notes 'BB-' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' issuer credit rating to Tesoro Logistics L.P. (TLLP), a master limited partnership (MLP) focused in the midstream energy sector. The outlook on the rating is stable. "We are assigning our 'BB-' rating and a '4' recovery rating to the $310 million senior unsecured notes. The '4' recovery rating indicates that the lenders would receive modest recovery (30% to 50%) in the event of a payment default," S&P said. "The ratings on TLLP reflect a 'fair' business risk profile and an 'aggressive' financial risk profile," S&P said. "The fair business risk profile primarily reflects the partnership's limited scale and geographic diversity. With roughly $85 million in expected 2012 EBITDA, TLLP is among the smaller midstream MLPs that Standard & Poor's rates. It generates most of its cash flows in the Bakken Shale area (near sponsor Tesoro Corp.'s (TSO) Mandan, N.D. refinery) and from assets supporting Tesoro's California refineries. TLLP's cash flow stability helps offset these weaknesses. The vast majority of revenue stems from its long-term, fee-based contract mix with no commodity exposure. TSO also provides minimum volume contracts that effectively protect about 88% of TLLP's revenues," S&P said. "The partnership's aggressive financial profile reflects our expectation that debt to EBITDA is likely to trend toward the 4x area as the company grows through asset drop-downs," S&P said. "In addition, the MLP structure gives TLLP incentive to pay out most of its cash flow after maintenance capital spending to unitholders each quarter. This means it must continuously raise external capital to pursue growth opportunities," said Standard & Poor's credit analyst Manish Consul. "The stable outlook reflects our expectations that TLLP will maintain a mostly fee-based business, while managing its leverage in the 4x area or lower as it pursues growth opportunities. Either a change in TSO's rating or in our stand-alone assessment of TLLP's credit profile could drive future ratings changes," S&P said. "The ratings of TSO and TLLP are closely linked, although we currently maintain a two-notch separation between them. Any potential upgrade on TSO could result in a positive ratings action on TLLP due to the implicit support we attribute to TSO's ownership. We could also raise ratings on TLLP if the partnership achieves greater scale and realizes greater geographic diversity, while maintaining its fee-based focus and current financial policies. Conversely, a TSO downgrade could cause us to downgrade TLLP, although we would not necessarily do so if we downgraded TSO to 'BB'. Independent of any potential ratings actions on TSO, we could lower our ratings on TSO if the partnership materially increases leverage such that debt to EBITDA exceeds 4.5x or if the partnership begins to assume commodity price exposure," S&P said. THELEN LLP: Seyfarth Shaw Shakes Trustee's Clawback Suit -------------------------------------------------------- Megan Leonhardt at Bankruptcy Law360 reports that U.S. District Judge William H. Pauley III found Tuesday that a dissolved firm's pending hourly fee matters were not recoverable assets under state law, tossing a bid by Thelen LLP's bankruptcy trustee to recoup hourly fees from ex-partners who joined Seyfarth Shaw LLP. According to Bankruptcy Law360, Judge Pauley granted Seyfarth's motion for judgment in an adversary case brought by Thelen trustee Yann Geron over attorneys' fees collected by 11 former partners who joined Seyfarth after Thelen dissolved in 2008. About Thelen LLP Thelen LLP, formerly known as Thelen Reid Brown Raysman & Steiner -- http://thelen.com/-- is a bicoastal American law firm in process of dissolution. It was formed as a product between two mergers between California and New York-based law firms, mostly recently in 2006. Its headcount peaked at roughly 600 attorneys in 2006, and had 500 early in 2008, with offices in eight cities in the United States, England and China. In October 2008, Thelen's remaining partners voted to dissolve the firm. As reported by the Troubled Company Reporter on Sept. 22, 2009, Thelen LLP filed for Chapter 7 protection. The filing was expected due to the timing of a writ of attachment filed by one of Thelen's landlords, entitling the landlord to $25 million of the Company's assets. The landlord won approval for that writ in June 2009, but Thelen could void the writ by filing for bankruptcy within 90 days of that court ruling. Thelen, according to AM Law Daily, has repaid most of its debt to its lending banks. TOLL BROTHERS: Moody's Rates $250MM Senior Unsecured Notes 'Ba1' ---------------------------------------------------------------- Moody's assigned a Ba1 rating to Toll Brothers Finance Corp.'s proposed $250 million exchangeable senior unsecured notes due 2032, proceeds of which are intended to be used for general corporate purposes. In the same rating action, Moody's affirmed the Ba1 corporate family and probability of default ratings, Ba1 rating for the company's existing senior unsecured notes, and SGL- 1 speculative grade liquidity assessment. The rating outlook is stable. The following rating actions were taken: Issuer: Toll Brothers Finance Corp.: Proposed $250 million exchangeable senior unsecured note offering due 2032, assigned Ba1, LGD-4, 54%; Existing senior unsecured notes, affirmed at Ba1, LGD-4, 54%; Rating outlook is stable. Issuer: Toll Brothers, Inc.: Corporate family rating, affirmed Ba1; Probability of default rating, affirmed Ba1; Speculative grade liquidity assessment, affirmed SGL-1; Rating outlook is stable. The proposed new exchangeable senior unsecured notes as well as the existing issues of senior unsecured notes are guaranteed both by Toll Brothers, Inc. and by the latter's principal operating subsidiaries. The proposed new notes are pari passu with the existing senior unsecured notes. Ratings Rationale The affirmation of Toll Brothers' ratings reflects the company's ability to generate improving operating results and credit metrics even in the face of the headwinds experienced by the homebuilding industry. Over the past two years, the company has delivered generally increasing gross margins, and during seven of the last nine quarters, it was able to generate positive net income. Moody's believes that Toll Brothers will continue to generate modest improvement in many of its operating and credit metrics over the next 12 to 18 months. The company's adjusted homebuilding debt to capitalization ratio is expected to increase to 46% from 43% at July 31, 2012, pro forma for the proposed note offering. In Moody's view, the company has built a sufficient cushion to withstand a temporary rise in debt leverage, which Moody's expects to decline as Toll Brothers grows its tangible net worth through increasing earnings retention. The Ba1 corporate family rating incorporates the company's solid liquidity profile, as captured in its SGL-1 rating, and its performance in its high-density, mid- and high-rise tower business, which has exceeded Moody's previous expectations. The rating is also supported by Toll Brothers' leadership position in its upper-end homebuilding niche, and an ability to greatly restrict, or even shut off entirely, its land spend for relatively long periods of time without incurring the need to race to catch up when the market turns. This latter characteristic permits the company generally to control how much cash flow it wishes to generate or even whether it wishes the figure to be positive or not. At the same time, Moody's recognizes that Toll Brothers continues to be directly or indirectly impacted by the same daunting challenges affecting the rest of the homebuilding industry, including the substantial overhang of foreclosed properties, weak (albeit improving) pricing, high unemployment, low consumer confidence, and difficulties for potential home buyers in obtaining mortgage financing. These factors will constrain the degree of improvement that Moody's is expecting. Moody's also recognizes the additional risk in the company's business profile associated with the more volatile and capital intensive high-rise and high-density mid-rise business. Additionally, the company is likely to continue generating negative cash flow from operations due to land investments. The stable rating outlook reflects Moody's expectation that Toll Brothers will continue to maintain a conservative capital structure, an unrestricted cash and investments balance of at least $500 million, and tight fiscal discipline with regard both to its high-rise and high-density mid-rise business and to Gibraltar Capital. Additionally, Moody's expects that the company will continue generating positive net income in most quarters and continue improving its operating and credit metrics. Toll Brothers carries a speculative-grade liquidity rating of SGL- 1, indicating that its liquidity position for the next 12-18 months is expected to be very good. The SGL rating takes into consideration internal and external liquidity, covenant compliance, and the availability of alternate liquidity sources, and tends to be more volatile than long-term ratings. As of July 31, 2012, the company had about $1.7 billion of available liquidity, consisting of $877 million of unrestricted cash and investments and $819 million available under its $885 million senior unsecured revolving credit facility due in October 2014. Headroom under its principal bank covenants is comfortable to substantial. The ratings could benefit if Moody's were to project that the company's credit metrics will begin to resemble those of an investment-grade homebuilder. Specifically, Moody's would need to see debt leverage remaining below 40%, and strong trends toward interest coverage rising to the mid single-digit range, gross margins improving to above 23%, and total revenue and net income migrating steadily toward pre-recession levels. Because the company, like its peers, is highly dependent on consumer confidence and employment levels, the outlook could be lowered if the economy were to enter into a double-dip downturn, leading to a weakening in Toll Brothers' gross margins and net income generation. Beyond that, the company is essentially its own master of whether or not it wishes to improve, maintain, or sacrifice its ratings. If it chooses to invest significant amounts of cash on lots, the tower business, Gibraltar Capital, and/or share repurchases, and its homebuilding debt leverage moves above 50% on a sustained basis, then the ratings will likely come under pressure. The principal methodology used in rating Toll Brothers Finance Corp. was the Global Homebuilding Industry Methodology published in March 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Based in Horsham, Pennsylvania, Toll Brothers, Inc. is the nation's leading builder of luxury homes, serving move-up, empty- nester, and active adult buyers in 20 states and four regions around the country. Total revenues and consolidated net income for the trailing twelve month period ending July 31, 2012 were $1.7 billion and $91 million, respectively. TOLL BROTHERS: S&P Rates New $250MM Exchangeable Sr. Notes 'BB+' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' issue rating and '3' recovery rating to Toll Brothers Finance Corp.'s proposed offering of $250 million of exchangeable senior notes due 2032. "Our '3' recovery rating indicates our expectation for a meaningful (50%-70%) recovery in the event of a default," S&P said. "The new notes will rank equally with Toll Brothers Finance Corp.'s other senior unsecured obligations. The company's indirect parent company, Toll Brothers Inc. (Toll) and all of Toll's subsidiaries that are also guarantors under its revolving credit facility will guarantee the notes. The company will be able to exchange the notes into shares of Toll's common stock and bondholders will have the right to put the notes to the company for cash on Dec. 15, 2017, Sept. 15, 2022, and Sept. 15, 2027," S&P said. "Toll plans to use proceeds from the offering for general corporate purposes, which may include the repayment of debt, land acquisitions, or distressed real estate investments. From our perspective, the offering will bolster the company's cash holdings, which totaled $877 million at July 31, 2012," S&P said. "Standard & Poor's Ratings Services' ratings on Pennsylvania-based Toll largely reflect the homebuilder's 'satisfactory' business risk profile that is supported by a leading market position in the luxury housing segment. We believe Toll is better positioned to improve profitability relative to most of its homebuilding peers because its sizeable land position and low level of speculative inventory should support our anticipated growth in sales volumes. We expect this improvement despite our outlook for a slow and uneven near-term recovery in single-family housing demand. Furthermore, we believe Toll's strong liquidity position should enable the builder to fund sufficient investments in land and inventory to support sustained growth in revenues and EBITDA over the next two to three years, resulting in substantially improved credit measures. However, although we expect improvement over the next two years, we do not think Toll's key EBITDA-based credit measures will fully recover to the company's stronger, pre- downturn levels until 2014 at the earliest. As a result, we consider Toll's financial risk profile to be 'significant,'" S&P said. "Our stable outlook acknowledges the company's strong liquidity profile, which we expect will enable Toll to invest in new communities to develop its top line and eventually support better earnings. We would lower our rating if sale trends and profitability measures falter and debt-to-EBITDA appears unlikely to approach the 4x to 6x area by mid-2014. In our view, an upgrade is unlikely over the next 12 months because we expect housing demand, while improving, to remain below historic levels. We could upgrade Toll if the market recovers and the company maintains key credit measures at levels consistent with an 'intermediate' financial risk (i.e., debt-to-EBITDA in the 2x to 3x range) profile," S&P said. RATINGS LIST NEW RATINGS Toll Brothers Finance Corp. $250 mil Exchangeable sr notes due 2032 BB+ Recovery Rating 3 TPC GROUP: Sandell Lobbies for "No" Votes on $850-Mil. Deal ----------------------------------------------------------- Sandell Asset Management Corp. is issuing a White Paper to TPCG's shareholders relating to TPCG's recent agreement to sell itself to private equity firms First Reserve & SK Capital. Sandell has been a long term shareholder of the Company, leading its restructuring and exit from bankruptcy in 2004. The following are highlights of Sandell's opinions as set forth in more detail in its White Paper presentation: * Current agreement is a sweetheart transaction for the PE Buyers and Management allowing them to steal the Company on the cheap from shareholders without a full and proper auction. * Several strategic and financial parties were shut out of the process and/or subjected to unreasonable demands and unreasonable timelines. * Management has been intentionally bearish to ensure the completion of a deal at a low price, thereby benefiting themselves the most through a go-private transaction. To the detriment of current shareholders, Management did not: * Negotiate a go-shop period to solicit competing offers; * Hold a conference call with its shareholders as is customary; * File voting agreements with the SEC detailing the nature of the lockups; or * Disclose compensation agreements which, Sandell believes, would show the significant upside that Management has negotiated for themselves. Lastly, there is ample evidence that the deal price is not the maximum price that shareholders deserve given the stability of TPCG's underlying business, the upcoming growth catalysts and its solid balance sheet, Sandell claims. Sandell intends to vote against the deal, encourages its fellow shareholders to do the same, and seeks to have the Company run a proper auction to maximize shareholder values. About TPC Group TPC Group LLC is a processor of crude C4 hydrocarbons (primarily butadiene, butene-1, isobutylene), differentiated isobutylene derivatives and nonene and tetramer. For its product lines, TPC is either the largest or second largest independent North American producer. The company operates three Texas-based manufacturing facilities in Houston, Baytown and Port Neches. Revenues were $1.7 billion for the twelve months ended June 30, 2010. * * * In August 2012, Standard & Poor's Ratings Services placed its ratings on TPC Group LLC, including the 'B+' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch placements follow the announcement that TPC has entered into an agreement to be acquired by First Reserve Corp. and SK Capital Partners in a transaction totaling approximately $850 million, including net debt," said credit analyst Daniel Krauss. TRIBUNE CO: Law Debenture Files Issues on Plan Appeal ----------------------------------------------------- Law Debenture Trust Co. of New York and Deutsche Bank Trust Co. filed a statement of issues on appeal in connection with their appeal from the July 23 order issued by Bankruptcy Judge Kevin Carey approving Tribune Co.'s Chapter 11 plan. In their statement, the bond trustees raised the issue of whether the bankruptcy judge erred in confirming the plan, which they said, discriminates unfairly against senior bondholders in violation of Section 1129(b)(l) of the Bankruptcy Code. The bond trustees filed the appeal as well as a motion to put on hold temporarily Judge Carey's July 23 order until a higher court hears their appeal to review his decision. They complained that the plan undercompensates senior bondholders relative to other, similarly situated creditors. The bond trustees are seeking to have their case heard by the 3rd U.S. Circuit Court of Appeals in Philadelphia. Judge Carey previously issued an order directing the bond trustees to post a $1.5 billion bond for their appeal from the Confirmation Order to proceed. Aurelius has argued before the Court that the bonding requirement would make the appeal "prohibitively expensive." Judge Gregory Sleet of the U.S. District Court for the District of Delaware affirmed Judge Carey's ruling and held that requiring a $1.5 billion bond "was appropriate." Judge Sleet also ruled that accelerating the appeal "is not appropriate," Bloomberg News reported. Bloomberg noted that in the absence of an expedited appeal, Aurelius now runs the risk of not having an appeal since Tribune may be able to implement the plan and convince a district judge to dismiss the appeal for mootness. 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: Committee Wins OK to Turn Over Docs to Plan Trustee --------------------------------------------------------------- The committee of Tribune Co.'s unsecured creditors obtained court approval to turn over to the litigation trustee certain documents, including those in the centralized document depository that are considered confidential. The turnover of documents is governed by an agreement entered into between the committee and the litigation trustee as part of Tribune's restructuring plan. The depository was created following approval in December 2009 by the bankruptcy court to allow anyone, who was involved in negotiations to resolve "potential causes of action" related to the 2007 transactions, to access the documents collected by the committee. The committee collected the documents from its investigation into the series of transactions that returned Tribune to private ownership in 2007. 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: CFO Seeks to Extend Period for Examiner Record ---------------------------------------------------------- Tribune Co. Chief Financial Officer Chandler Bigelow has filed a motion asking the Court to extend the period for the retention of so-called "examiner record." Mr. Bigelow wants the retention period extended from August 26 until the conclusion of a litigation filed against the company or until further order of the bankruptcy court. The litigation, which is pending in a federal court in New York, involves claims related to the 2007 leveraged buy-out of Tribune. Most of the claims at issue in the litigation are tied to the matters discussed in the examiner's report and the examiner's record may include documents discoverable in the litigation, according to court papers. Joel Friedlander, Esq., at Bouchard Margules & Friedlander P.A., in Wilmington, Delaware, said the extension is necessary to "preserve documents that could potentially be relevant to the litigation." A court hearing to consider approval of the motion is scheduled for October 4. Objections are due by September 13. 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: Court Approves Paul Weiss as Special Counsel -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the hiring of Paul, Weiss, Rifkind, Wharton & Garrison LLP as special counsel of Tribune Co. and its affiliated debtors. Tribune tapped the firm in connection with certain transactional matters related to the company's entry into post-emergence financing facilities contemplated under its Chapter 11 plan of reorganization. Paul Weiss will be paid for its services on an hourly basis and will be reimbursed for its expenses. The firm's hourly rates range from $830 to $1,120 for partners, $760 to $795 for counsel, $425 to $720 for associates, and $85 to $250 for para- professionals. The firm does not hold or represent interest adverse to Tribune or its estates, according to a declaration by Andrew Rosenberg, Esq., a partner at Paul Weiss. 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: Court Disallows Pension & Benefit Plan Claims --------------------------------------------------------- The U.S. Bankruptcy Court in Delaware ordered the disallowance of 288 claims filed against Tribune Co. and its affiliated debtors. More than 250 of the 288 claims were filed on account of a pension or benefit plan that will be assumed pursuant to Tribune's Chapter 11 plan, and will be paid under the pension or benefit plan. A list of the claims is available without charge at http://bankrupt.com/misc/Tribune_57thOO_258Assumed.pdf Meanwhile, Tribune does not have liability for the other claims based on a review of its books and records. The claims are listed at: http://bankrupt.com/misc/Tribune_57thOO_19NoLiabilityBC.pdf http://bankrupt.com/misc/Tribune_57thOO_11NoLiabilityEC.pdf Earlier, Trey Yant asked the bankruptcy court to overrule Tribune's objection to his claim, designated as Claim No. 6675, and allow it as a priority claim in the sum of $53,993. 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) VALEANT PHARMACEUTICALS: Moody's Reviews 'Ba3' CFR for Downgrade ---------------------------------------------------------------- Moody's Investors Service placed the ratings of Valeant Pharmaceuticals International, Inc. including the Ba3 Corporate Family Rating under review for downgrade. This action follows the announcement that Valeant will acquire Medicis Pharmaceutical Corporation for $44 per share or approximately $2.6 billion in cash. Funding sources will include new debt. Ratings placed under review for downgrade: Valeant Pharmaceuticals International, Inc. (parent) Ba3 Corporate Family Rating Ba3 Probability of Default Rating Ba1 (LGD 2, 18%) senior secured revolving credit facility and term loan facilities Valeant Pharmaceuticals International (subsidiary) B1 (LGD 5, 71%) senior unsecured notes of $950 million due 2016 B1 (LGD 5, 71%) senior unsecured notes of $500 million due 2017 B1 (LGD 5, 71%) senior unsecured notes of $945 million due 2018 B1 (LGD 5, 71%) senior unsecured notes of $690 million due 2020 B1 (LGD 5, 71%) senior unsecured notes of $650 million due 2021 B1 (LGD 5, 71%) senior unsecured notes of $550 million due 2022 "The Medicis acquisition may push Valeant's leverage beyond Moody's tolerance level for the Ba3 rating, despite solid strategic rationale," stated Michael Levesque, Moody's Senior Vice President. Moody's rating review of Valeant will focus on the strategic benefits of the acquisition including greater scale in the dermatology market, new pipeline opportunities, and cost synergies. The rating review will also consider Valeant's higher financial leverage, the mixture of secured and unsecured debt in the capital structure, potential deleveraging opportunities, and the possibility of additional acquisitions. Ratings Rationale Valeant's Ba3 Corporate Family Rating reflects its moderately high pro forma leverage of approximately 4.0 times (prior to Medicis), as well as the risks associated with Valeant's aggressive acquisition strategy including integration risks and rapid capital structure changes. The pro forma leverage figure includes estimated acquisition synergies, but the company's rapid pace of acquisitions makes it difficult to ascertain a true run-rate of pro forma EBITDA. Valeant's ratings remain supported by its good size and scale, a high level of product and geographic diversity, and the lack of any major patent cliffs relative to other pharmaceutical companies. Further, Moody's expects good free cash flow generation to continue, but that acquisitions will remain a priority use of cash flow. The principal methodology used in rating Valeant Pharmaceuticals International, Inc was the Global Pharmaceutical Industry 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. Headquartered in Montreal, Quebec, Valeant Pharmaceuticals International, Inc. is a global specialty pharmaceutical company formed from the merger of Biovail Corporation and Valeant Pharmaceuticals International. Valeant reported 2011 net revenues of approximately $2.5 billion. VALIDUS REINSURANCE: Fitch Affirms 'BB+' Jr. Subordinated Debt -------------------------------------------------------------- Fitch Ratings has affirmed the 'A-' Insurer Financial Strength (IFS) rating of Validus Reinsurance, Ltd. (Validus Re), the principal reinsurance operating subsidiary of Validus Holdings, Ltd. (Validus). Fitch has also affirmed Validus' 'BBB+' Issuer Default Rating (IDR), 'BBB' senior unsecured notes rating, and 'BB+' rated junior subordinated debt instruments (see full rating list below). The Rating Outlook remains Positive. The rating actions follow Validus' announcement that it will acquire Flagstone Reinsurance Holdings, S.A. (Flagstone) in a transaction valued at $623 million, including $148 million in cash and 0.1935x Validus voting common shares per Flagstone share. The transaction is expected to close late in the fourth quarter of 2012. The affirmation reflects Fitch's belief that if the transaction is completed at the terms described above, its effects should have a negligible impact on Validus' historically strong operating performance or the high quality of its balance sheet. Financial leverage could increase modestly immediately following the transaction but should remain well below median guidelines for Validus' current rating category. While integration risks are present in any acquisition, Fitch's concerns in this regard are partially mitigated by Validus' track record of successfully integrating acquisitions, as well as Flagstone's relatively small size and manageable infrastructure. Fitch expects to review Validus during the fourth quarter of 2012 as part of its regular review process and will reassess the company's ratings at that time, at which point Fitch expects that it will either affirm Validus' ratings or upgrade them by one notch. Key ratings triggers that could lead to an upgrade include Validus' ability to demonstrate continued solid performance, including underwriting results and overall profitability that outperform comparably rated peers. This assumes that the company also maintains solid capitalization with net written premium-to-equity and asset leverage ratios at or near recent levels of 0.5x and 2.3x, respectively, while loss reserve development remains neutral to favorable. Key ratings triggers that could lead to a Negative Rating Outlook or a ratings downgrade include a significant deterioration in the company's underwriting performance relative to peers. Likewise, a weakening of Validus' capitalization metrics or a material increase in underwriting leverage (measured by traditional premiums written to equity ratios) to levels in excess of 1.0x or asset leverage to levels in excess of 3.0x could result in an Outlook revision or ratings downgrade. In addition, a material increase in Validus' debt-to-capital ratio to levels in excess of 25% or decrease in run rate interest coverage ratios to the low single digits for a period of consecutive years could cause Fitch to downgrade the company's debt ratings. Fitch affirms the following ratings: Validus Holdings, Ltd. -- IDR at 'BBB+'; Outlook Positive; -- 8.875% senior unsecured notes due 2040 at 'BBB'; -- 9.07% junior subordinated deferrable debentures due June 2036 at 'BB+'; -- 8.48% junior subordinated deferrable debentures due June 2037 at'BB+'. Validus Reinsurance, Ltd. -- IFS at 'A-'; Outlook Positive. VENOCO INC: Moody's Rates $175-Mil. 2nd Lien Term Loan 'B1' ----------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Venoco Inc.'s proposed $175 million second lien term loan. At the same time, Moody's affirmed Venoco's B3 Corporate Family Rating, affirmed the rating on its existing $150 million senior unsecured notes due 2017 at Caa1, affirmed the ratings on its existing $500 million senior unsecured notes due 2019 at Caa1, and changed the Speculative Grade Liquidity Rating to SGL-2 from SGL-3. The outlook is stable. The new term loan offering is part of a series of transactions that will take the company private under the control of its parent, Denver Parent Corporation (unrated), a holding company owned by Venoco's Executive Chairman and former CEO Timothy Marquez. Mr. Marquez (and his affiliated trusts and foundations) currently owns 50.3% of Venoco's stock. Concurrent to the $175 million new term loan offering, Venoco will sell assets to its parent for $196.5 million in cash and $13.5 million in a seller held note. The total cash proceeds from the new term loan offering and the asset sale will be used to buy back Venoco's outstanding shares held by the public. After all these transactions close, Venoco will be completely owned by its parent and its existing management team. Denver Parent Corp will finance the asset purchase from Venoco and the purchase of a portion of Venoco's common stock by selling volumetric production payments for $210 million and by issuing convertible debt for $30 million. Ratings Rationale "In spite of the increased leverage and decreased asset coverage, Venoco has the ability to service its debt due to the stability of its cashflows that are generated from its low decline, oil producing assets", said Michael Somogyi, Moody's Vice President- Senior Analyst. Venoco's cashflows also benefit from reduced volatility from strong hedges; recent improved netbacks from switching oil contracts to reference West Coast locations rather than Cushing, OK; and increased cash margins from reduction in transportation costs of roughly $10 per barrel on production from Venoco's South Ellwood field after putting in service its newly constructed Ellwood pipeline. Venoco's credit strength derives from its low decline, oil- producing assets in mature basins in onshore and offshore Southern California. Pro-forma for the transaction, roughly 48% of Venoco's production will comprise of oil and 52% gas in 2013. The bulk of the company's future capital spending will be directed towards increasing oil production by drilling low-risk, proved undeveloped locations in mature basins where Venoco's management is familiar with the geological and operational complexity. Pre-tax PV-10 value of $1.6 billion provides Venoco's pro-forma debt asset coverage of roughly 1.8 times. In addition, the potential sale of Venoco's 22.3% reversionary interest in the Hastings field operated by Denbury Resources could be a catalyst for deleveraging in the future. However, Venoco's ratings are constrained by the additional debt incurred as part of the transaction. The increased leverage will significantly reduce Venoco's financial flexibility. Maintaining adequate liquidity while continuing to have a sufficiently large capital budget that can materially grow oil production is feasible, but will require discipline. Venoco will have to slow down its exploration program in the Monterey Shale in its Sevier field until it can strengthen its balance sheet. As of June 30, 2012 pro-forma for the transaction and asset sale, Venoco's debt / average daily production is roughly $54,000 per barrel of oil equivalent (BOE) and debt / proved developed reserves is $19 per BOE. The debt / average daily production and debt / proved developed reserves for Denver Parent Corp, when consolidated with Venoco, are $61,000 per BOE and $20 per BOE respectively. Moody's considers volumetric production payments as a form of collateralized borrowing and therefore incorporates it as debt in the above mentioned leverage metrics. The SGL-2 rating reflects a good pro forma liquidity profile. Assuming Venoco spends within cashflow in the next twelve months, Moody's believes it has good liquidity, with $104 million available under its credit facility that has a borrowing base of $125 million. Venoco has prudently locked in cash flow from operations of approximately $145 million in 2012 and $100 million in 2013 through its oil hedges, assuming cash cost of $35 per BOE. As a result, Venoco has the flexibility to fund a budget of around $100 million in 2013 from internally generated cashflow even in a low price environment. Financial covenants under the credit facility include a minimum current ratio of one and a maximum Debt to EBITDA ratio of five, that gradually steps down to four from June 30, 2013 to June 30, 2014. As of June 30, 2012 Venoco was in compliance with both its covenants, and Moody's expects it to remain so in the next twelve months. There are no debt maturities until 2016 when the credit facility expires. Substantially all of Venoco's oil and gas reserves are pledged as security under the credit facility and new second lien term loan, which limits the extent to which asset sales could provide a source of additional liquidity if needed. The B1 rating assigned to the new second lien term loan reflects both the overall probability of default of the company, to which Moody's assigns a Probability of Default Rating of B3, and a loss given default of LGD2-24%. The new second lien term loan is secured by Venoco's assets and therefore, is senior to the existing two unsecured notes. The contractual seniority of the term loan results in it being rated two notches above the CFR at B1 (LGD2-24%), and the contractual subordination of the unsecured notes results in them being rated one notch below the CFR at Caa1 (LGD4-67%, changed from LGD4-63%). Moody's overrode the Loss Given Default methodology's recommended term loan rating by one notch due to the potential of additional first lien debt over time. The outlook is stable assuming Venoco will maintain good liquidity at current levels, not take on additional leverage and spend within cashflow. A negative outlook or downgrade could result if liquidity deteriorates, including if the borrowing base is materially reduced, covenant cushion compresses, or existing oil hedges are monetized. A positive outlook or upgrade is unlikely in the near future, but could occur if Venoco were to reduce and sustain its debt / average daily production at or below $30,000 per BOE (currently at ~$54,000/BOE), or retained cash flow to debt above 30% (currently at ~19%), or materially increases its oil production with favorable full-cycle economics. Moody's could also upgrade if Venoco deleverages significantly by selling assets or injecting equity capital. The principal methodology used in rating Venoco was the Global Independent Exploration and Production 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. Venoco, Inc. is an independent E&P company headquartered in Denver, Colorado. YNS ENTERPRISE: Files Emergency Motion to Use Cash -------------------------------------------------- YNS Enterprise No. 1, LLC, filed an emergency motion to use cash collateral of MLCFC 2006-4 Foothill Retail Limited Partnership, which is owed $37.7 million on a loan secured by the Debtor's property. Prepetition MLCFC commenced foreclosure proceedings against the Debtor's Masi Plaza. The Debtor said it is attempting to negotiate a restructuring of its loan obligations. "The Debtor must be able to use the revenue generated from the operation of the Property in order to pay post-petition operating expenses, including, but not limited to, insurance, management fees, utilities, security, and maintenance expenses, all of which are necessary to maintain the Property, its income and its going concern value. Failure to pay these expenses would likely lead to a loss of tenants, which would reduce income. Failure to maintain the Property may also subject the Debtor to breach of lease and other lawsuits. All of the foregoing would cause substantial harm to the Debtor's estate and its creditors," counsel to the Debtor, Krikor J. Meshefejian, Esq., at Levene, Neale, Bender, Yoo & Brill L.L.P., explained. "In short, in order for the Debtor to be able to operate its business while in Chapter 11 and to avoid immediate and irreparable harm to its business and the Property, the Debtor must be able to use its cash collateral to pay post-petition operating expenses." Mr. Meshefejian said MLCFC will be adequately protected going forward as a result of the use of cash collateral for the continued maintenance and operation of the Property. As further adequate protection, the Debtor also proposes to provide MLCFC with a replacement lien against the Debtor's assets, with such replacement lien to have the same extent, validity, and priority as the pre-petition lien held by MLCFC. About YNS Enterprise YNS Enterprise No. 1, LLC, is the owner and operator of a modern commercial retail shopping center consisting of various parcels and buildings located in Rancho Cucamonga, California. The Property, commonly known as "Masi Plaza", includes 171,802 square feet of leasable space. The property is 76% occupied and generates monthly net operating income of $180,000. The property is managed by an independent third party property management company -- Pacific Century Investment, Inc. YNS Enterprise filed a bare-bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-28185) on Aug. 5, 2012 in Riverside. The Debtor, a single asset real estate under 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. The Debtor said its principal asset is located at 8122 Foothill Boulevard, in Rancho Cucamongo, California. Related entities SSM Enterprises, Inc., YJC Investment Group V, Inc., and YNS Investment Group, Inc. hold 100% of the membership interests in the Debtor. The petition was signed by Young Jae Chung, president of YJC. Bankruptcy Judge Wayne E. Johnson presides over the case. Timothy J. Yoo, Esq., at Levene Neale Bender Rankin & Brill LLP, serves as the Debtor's counsel. WEZBRA DAIRY: Has Access to Cash Collateral Until Oct. 31 --------------------------------------------------------- Wezbra Dairy LLC will have access to cash collateral of Bank of America N.A. until Oct. 31, 2012, according to a proposed order submitted by the Debtor's counsel, and agreed as to form by the bank's counsel. A hearing on the cash use was scheduled Sept. 4. Bank of America had objected to the cash collateral motion. The parties have agreed that the bank will retain its right to object to the Debtor's request for continued use of cash collateral. BoA will receive adequate protection for the use of cash collateral in the form of replacement liens, insurance coverage on the assets, and payment of postpetition taxes. The Debtor and the bank previously signed a stipulation for entry of an interim order permitting use of cash collateral until the Sept. 4 hearing. The bank, owed $6,596,904 as of the Petition Date for notes issued prepetition, had said that the adequate protection offered by the Debtor in the motion is inadequate. Virtually all of the Debtor's property is already subject to the bank's security interest. The Debtor offers no other unencumbered assets on which to grant the bank a lien, and the value of the existing collateral is significantly less than the Debtor's prepetition indebtedness. Further, prior to the Petition Date, the Debtor was unable to generate sufficient cash flow from the sale of its milk to make interest only payments on the notes, per the terms of the parties' forbearance agreement. Bank of America is represented by: Pamela A. Paige, Esq. PLUNKETT COONEY, P.C. 300 N. Meridian St., Suite 990 Indianapolis, IN 46204 Tel: (317) 974-5744 Fax: (317) 964-2744 E-mail: ppaige@plunkettcooney.com About Wezbra Dairy Wezbra Dairy, LLC, operator of a dairy farm in Continental, Ohio, filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-12592) on Aug. 6, 2012. The Debtor owns 936 head of cattle and lease 24 head of cattle that must be fed and maintained on a daily basis. Wezbra Dairy estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The Debtor owes Bank of America N.A. the amount of $6.5 million, secured by a blanket lien on the Debtor's assets. Judge Robert E. Grant oversees the case. Daniel J. Skekloff, Esq., and Scot T. Skekloff, Esq., at Skekloff, Adelsperger & Kleven, LLP serve as counsel to the Debtor. WVSV HOLDINGS: Lawrence C. Wright OK'd to Handle Maricopa Cases --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona authorized WVSV Holdings, LLC to employ Lawrence C. Wright as special counsel in connection with Maricopa County Superior Court Case Nos. CV2003-008362 and CV 2006-011193, Court of Appeals Cause No. 1 CA- CV 08-0567, and Supreme Court Cause No. CV-12-0171. To the best of the Debtor's knowledge, Mr. Wright is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About WVSV Holdings W.V.S.V. Holdings LLC, the owner of about 13,000 acres of vacant land in Buckeye, Arizona, filed a petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 12-10598) on May 14, 2012, in Phoenix. The Debtor claims that the three tracts of land planned for "future development" are worth $120 million and secure $57.3 million in debt. The Debtor scheduled $120.04 million in assets and $57.35 million in liabilities. West Valley Ventures, LLC, owns 75% of the Debtor, and Breycliffe, LLC, owns the remaining 25%. Judge Redfield T. Baum, Sr., presides over the case. Michael W. Carmel, Esq., serves as the Debtor's counsel. The petition was signed by Lee Allen Johnson, manager of West Valley Ventures, manager. The U.S. Trustee has not appointed an official committee of unsecured creditors in the Debtor's case because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. The UST reserves the right to appoint the committee should interest develop among the creditors. WVSV HOLDINGS: Amends Order on Land Advisors as Real Estate Broker ------------------------------------------------------------------ The Hon. Redfield T. Baum of the U.S. Bankruptcy Court for the District of Arizona, in an amended order, authorized WVSV Holdings, LLC to employ Land Advisors Organization as real estate broker. As reported in the Troubled Company Reporter on July 10, 2012, the Court authorized the Debtor to employ Land Advisors to sell approximately 13,260 acres of real property located in Western Maricopa County on behalf of the Debtor. Land Advisors would be entitled to compensation of 4-1/2% of the gross purchase price. To the best of the Debtor's knowledge, Land Advisors is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The Court, in an amended order, stated that: -- the compensation to Land Advisors will be four and one-half percent of any total sales price, subject to application and approval by the Court; -- the employment of Land Advisors is without prejudice to the rights of 10K, LLC to file an objection to any application by the Debtor to sell any real estate; -- the listing agreement between the Debtor and Land Advisors, is approved. About WVSV Holdings W.V.S.V. Holdings LLC, the owner of about 13,000 acres of vacant land in Buckeye, Arizona, filed a petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 12-10598) on May 14, 2012, in Phoenix. The Debtor claims that the three tracts of land planned for "future development" are worth $120 million and secure $57.3 million in debt. The Debtor scheduled $120.04 million in assets and $57.35 million in liabilities. West Valley Ventures, LLC, owns 75% of the Debtor, and Breycliffe, LLC, owns the remaining 25%. Judge Redfield T. Baum, Sr., presides over the case. Michael W. Carmel, Esq., serves as the Debtor's counsel. The petition was signed by Lee Allen Johnson, manager of West Valley Ventures, manager. The U.S. Trustee has not appointed an official committee of unsecured creditors in the Debtor's case because an insufficient number of persons holding unsecured claims against the Debtor have expressed interest in serving on a committee. The UST reserves the right to appoint the committee should interest develop among the creditors. * Moody's Says Debt Metrics Weaken Slightly Due to AUM Dcline ------------------------------------------------------------- Aggregate assets under management of the 14 asset managers Moody's tracks quarterly decreased 2.8% in the second quarter of 2012 to $7.96 trillion, Moody's Investors Service says in a new report, "2Q 2012 Quarterly Update -- Asset Managers." Negative performance in equities and commodities drove the decline. Moody's report reviews the business and financial conditions that affect the asset managers' debt and leverage position. Organic growth during the second quarter was slightly negative, with outflows for the group equaling 0.20% of beginning-period assets. Aggregate net outflows of $16.2 billion were an improvement from $26.6 billion in the first quarter of 2012, says Moody's. "Half of the 14 managers had positive net inflows, but in aggregate the group had a small outflow," says Neal M Epstein, CFA, a Moody's Vice President and Senior Credit Officer. "Over the past five quarters, the 14 managers we track have raised no new business in the aggregate, resulting in a zero-sum competitive game." Since 2Q 2011 the share of fixed-income assets in aggregate assets under management rose three percentage points, and the share of equities declined three percentage points. Revenue and EBITDA both declined during the second quarter, Moody's says. Aggregate revenue shrank 1.4% to $8.9 billion, given that assets under management decreased from quarter to quarter. Total management fees, including performance fees, declined 1.1%, and effective fee rates were slightly lower as equities became a smaller percentage of the business mix. EBITDA for the group declined 2.9%, with slight compression of EBITDA margins. Lower compensation was offset by higher other expenses. Performance fees declined 41.2% from the prior quarter and were 38.8% lower than in the first quarter of 2011. In the second quarter, they were just 1.0% of management fees. During the quarter total debt outstanding rose, the 8.1% net increase attributable to additional borrowing from several managers. Group leverage increased in terms of debt/EBITDA, to 1.68 times on a weighted average basis. Moody's sector outlook for the asset managers remains stable, given manageable debt burdens and stable fundamentals for the group as a whole. * Moody's Says US Banking System Outlook Remains Negative --------------------------------------------------------- The outlook for the US banking system remains negative, with ongoing challenges in the operating environment expected to continue to pressure banks over the next 12--18 months, Moody's Investors Service says in its new "Banking System Outlook: United States of America." "Our negative outlook for the US banking system reflects a challenging domestic operating environment, with prolonged low interest rates, high unemployment, weak economic growth and fiscal policy uncertainties," says Senior Vice President Sean Jones. "Additionally, the threat of contagion stemming from the European sovereign debt crisis undermines economic recovery in the US and exposes banks to a heightened risk of shocks." Macroeconomic challenges trump the fact that Moody's rating outlooks on most US banks have changed to stable from negative in the past two and a half years, with the common driver being banks' improved ability to handle risks due to their larger capital and liquidity buffers. In addition, since 2010 most banks have returned to profitability. But US banks remain in recovery mode, which is prone to reversal if the economy takes a turn for the worse. Nonperforming asset levels are still high, and legacy issues from the financial crisis will take years to resolve, with the latter ranging from the rundown of 'non-core' assets to litigation issues and mortgage repurchase demands, says Moody's. Further, many banks still have significant asset concentrations. * Moody's Maintains Stable Outlook on Global Reinsurance Sector --------------------------------------------------------------- The outlook for the global reinsurance industry remains stable, says Moody's Investor Services in a new Industry Outlook published on Sept. 4. The stable outlook expresses Moody's expectations for the fundamental credit conditions in the industry over the next 12 to 18 months. The outlook factors in the industry's resilience as well as improvements in underwriting and risk management, augmented by a possible pickup in demand due to tougher, impending regulations and rate hardening in some primary insurance markets. The new report, "Global Reinsurance Outlook", is now available on www.moodys.com. Moody's subscribers can access this report via the link provided at the end of this press release. "Reinsurers have already emerged from the second worst year for insured disaster losses with more capital than they had at the start of 2011," said Kevin Lee, senior credit officer at Moody's. They also emerged with tighter underwriting and better risk management. At the same time, long-awaited hardening in some primary insurance lines is laying the foundation for reinsurance rate stability. However, Moody's notes that a large disaster, faltering primary rates or worsening of the global economy could place downward pressure on the industry's stability. Over time, a key challenge for the industry is competitive convergence, which is making it harder for reinsurers to create distinct strategies. Dwindling prospects in casualty and life reinsurance and low interest rates are steering reinsurers and new capital toward catastrophe (cat) risk. Meanwhile, the ongoing shift from direct distribution to broker intermediation is making it easier for new entrants to compete. Cyclical and secular factors are also driving a new wave of capital into reinsurance and cat risk. Despite ample capacity in the industry, around $6 billion of new capital in various formats has entered the sector since 2011, raising the amount of alternative capital in the industry to $34 billion. Overall, Moody's finds this new capital to be credit negative for incumbent reinsurers, particularly when the industry has adequate capital as it does today, as excess capital tends to drive down revenues and margins. On the upside, this new capital shows investors are still interested in reinsurance even though they may not be interested in reinsurance stocks, which for the most part have traded below book value for nearly four years. In a stress scenario, new capital, no matter what form it takes, can be a saving grace for wounded reinsurers. Reinsurers who find it hard to recapitalise in equity markets may still be able to find partners for sidecars, which will allow them to keep writing business and maintain a franchise. * Circuits Split Again on Length of Chapter 13 Plans ---------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the U.S. Court of Appeals in San Francisco, in a 2-1 decision, added emphasis to a previously existing split among appeals courts on the question of whether a bankrupt in Chapter 13 with no "projected disposable income" can propose a plan shorter than the five-year "applicable commitment period" stated in Section 1325(d) of the U.S. Bankruptcy Code. According to the report, in a 2008 case called Maney v. Kagenveama, the Ninth Circuit in San Francisco ruled that a shorter plan duration was permissible. On another issue in the same opinion, the Ninth Circuit ruled that the calculation of projected disposable income was an immutable function of the bankrupt's prebankruptcy income. The U.S. Supreme Court decided a case in June 2008 called Hamilton v. Lanning which ruled against Kagenveama on the second issue regarding the calculation of projected disposable income. The report relates that Hamilton v. Lanning cast doubt about whether the other holding in Kagenveama, about the length of a plan, remained good law in the Ninth Circuit. The question left open in Kagenveama returned to the Ninth Circuit in a case that was argued in May and decided on Aug. 31. In a 2-1 decision, U.S. District Judge Edward M. Chen, sitting by designation on the appeals court, concluded that Hamilton is not "clearly irreconcilable" with Kagenveama and thus wasn't "implicitly overruled" by the Supreme Court on the issue of how long a plan must remain open. The report notes that Judge Chen said in his 33-page opinion that Hamilton v. Lanning didn't consider the question of "applicable commitment period," thus not undercutting Kagenveama. He also reasoned that the rationale of Kagenveama on the duration of a plan is consistent with Hamilton v. Lanning. Judge Chen therefore ruled that a bankruptcy court erred in requiring a plan to remain open for five years even for a bankrupt with no projected disposable income. The bankruptcy court believed, incorrectly in Judge Chen's opinion, that Kagenveama had been overruled by the Supreme Court in all respects. The Bloomberg report discloses that Circuit Judge Susan Graber dissented in a four-page opinion. She believes Kagenveama is irreconcilable with Hamilton v. Lanning. Two other circuit courts in cases called Tennyson and Baud considered the same issue regarding the duration of plan. They both reached the opposite result, ruling that a plan must stay alive five years. The bankrupt in the Baud case sought review in the U.S. Supreme Court, contending there was a split of circuits that the high court should resolve. The Supreme Court declined to hear the case in January. The case is Danielson v. Flores (In re Flores), 11-55452, 9th U.S. Circuit Court of Appeals (San Francisco). * Ex-Kirkland Partner Will Try to Whittle Tax Fraud Case -------------------------------------------------------- Richard Vanderford at Bankruptcy Law360 reports that a former Kirkland & Ellis LLP bankruptcy partner accused of tax fraud will push to have a count against him thrown out, his attorney said Tuesday. Theodore L. Freeman is negotiating with the government to have one of the four counts of filing false tax returns that he faces dismissed for being too old under the statute of limitations, his attorney, Paul Shechtman of Zuckerman Spaeder LLP, said at a hearing before U.S. District Judge Deborah Batts, Bankruptcy Law360 relates. * Chadbourne's J. Wasserman Joins Herrick Feinstein --------------------------------------------------- Herrick, Feinstein LLP disclosed that Jeffrey I. Wasserman has joined the firm's Newark office as a Partner in the Litigation Department. Mr. Wasserman comes to Herrick from Chadbourne & Parke LLP where he was a Partner. "Jeff brings extensive experience in cross-border disputes and complex matters to our highly regarded and continually expanding litigation department of more than 80 attorneys," said Ronald Levine, Co-Chairman of Herrick's Litigation Department. "Herrick's senior litigation partners are leaders in their fields who have exceptional credentials and relationships with premier clients across the country and globally, which makes it an excellent fit for someone with my background. I am looking forward to working with this talented group of attorneys," said Mr. Wasserman. Mr. Wasserman specializes in handling complex commercial litigation and is experienced with issues relating to cross-border disputes, including the recognition and enforcement of foreign judgments, personal and subject matter jurisdiction, cross-border bankruptcies, international discovery and asset-freezing injunctions. He has extensive experience in state and federal courts, as well as in arbitrations before the Financial Industry Regulatory Authority and the American Arbitration Association. Mr. Wasserman is a member of the Federal Bar Council, the American Bar Association, the New York State Bar Association and the Association of the Bar of the City of New York. He received his J.D. from Fordham University School of Law. Founded in 1928, Herrick, Feinstein LLP is a prominent 165-lawyer firm headquartered in New York City providing a full range of legal services, including art law, bankruptcy and business reorganization, commercial litigation, corporate law, employment law, government relations, insurance, intellectual property, real estate, sports law, and tax and personal planning. * Recent Small-Dollar & Individual Chapter 11 Filings ----------------------------------------------------- In re All About Catering, LLC Bankr. D. Ariz. Case No. 12-18990 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/azb12-18990.pdf represented by: Christopher S. Short, Esq. JOSEPH W. CHARLES, P.C. E-mail: lawoffice@joecharles.com In re Miguel Tapia Bankr. C.D. Calif. Case No. 12-38942 Chapter 11 Petition filed August 24, 2012 In re Masoud Shalchi Bankr. C.D. Calif. Case No. 12-39009 Chapter 11 Petition filed August 24, 2012 In re Drew Snyder Bankr. C.D. Calif. Case No. 12-39009 Chapter 11 Petition filed August 24, 2012 In re Cilantro Fresh Mexican Grill, LLC Bankr. C.D. Calif. Case No. 12-39045 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/cacb12-39045.pdf represented by: Vakhe Khodzhayan, Esq. KG LAW E-mail: vahe@lawyer.com In re MAM Restaurant Group, Inc. dba Little Caesar?s Pizza Bankr. S.D. Calif. Case No. 12-11710 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/casb12-11710.pdf represented by: Diane H. Gibson, Esq. LAW OFFICES OF DIANE GIBSON E-mail: dgibsonlaw@gmail.com In re 87 South Main Street Unit One, LLC Bankr. D. Conn. Case No. 12-51582 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/ctb12-51582.pdf Filed Pro Se In re GAP-2908, LLC Bankr. N.D Ga. Case No. 12-22959 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/ganb12-22959.pdf represented by: Robert M. Gardner, Jr., Esq. HICKS, MASSEY & GARDNER LLP E-mail: hmgbankruptcy@yahoo.com In re GAP-3515, LLC Bankr. N.D. Ga. Case No. 12-22960 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/ganb12-22960.pdf represented by: Robert M. Gardner, Jr., Esq. HICKS, MASSEY & GARDNER LLP E-mail: hmgbankruptcy@yahoo.com In re GAP-2335, LLC Bankr. N.D Ga. Case No. 12-22961 In re GAP-2321, LLC Bankr. N.D Ga. Case No. 12-22962 In re GAP-3527, LLC Bankr. N.D Ga. Case No. 12-22963 In re Tiny Tot School of St. Louis, Inc. Bankr. E.D. Mo. Case No. 12-48298 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/moeb12-48298.pdf represented by: Neil Weintraub, Esq. LAW OFFICE OF NEIL WEINTRAUB E-mail: weintraublaw@sbcglobal.net In re Winkler Veterinary Clinic, P.C. dba Suffolk Veterinary Group Bankr. E.D.N.Y. Case No. 12-75193 Chapter 11 Petition filed August 24, 2012 See http://bankrupt.com/misc/nyeb12-75193.pdf represented by: Kenneth A. Reynolds, Esq. MCBREEN & KOPKO E-mail: kreynolds@mklawnyc.com In re Edward Schiller Bankr. W.D.N.Y. Case No. 12-12664 Chapter 11 Petition filed August 24, 2012 In re Mark Hawkins Bankr. W.D. Pa. Case No. 12-24204 Chapter 11 Petition filed August 24, 2012 In re Mursalata Muhammad Bankr. W.D. Wis. Case No. 12-07731 Chapter 11 Petition filed August 24, 2012 In re Willie Smith Bankr. W.D. Wis. Case No. 12-07731 Chapter 11 Petition filed August 24, 2012 In re Danilo Labid Bankr. C.D. Calif. Case No. 12-20156 Chapter 11 Petition filed August 26, 2012 In re Visser Farms Bankr. E.D. Calif. Case No. 12-17336 Chapter 11 Petition filed August 26, 2012 See http://bankrupt.com/misc/caeb12-17336.pdf represented by: Hagop T. Bedoyan, Esq. KLEIN, DENATALE, GOLDNER, ET AL. E-mail: hbedoyan@kleinlaw.com In re Subway #43334 LLC Bankr. S.D. Fla. Case No. 12-30345 Chapter 11 Petition filed August 26, 2012 See http://bankrupt.com/misc/flsb12-30345p.pdf See http://bankrupt.com/misc/flsb12-30345c.pdf represented by: Kishasha B. Sharp, Esq. K.B. SHARP, P.A. E-mail: kbsharppa@gmail.com In re Thomas A. Pizza Bankr. D. Md. Case No. 12-25632 Chapter 11 Petition filed August 26, 2012 See http://bankrupt.com/misc/mdb12-25632.pdf represented by: John C. Gordon, Esq. E-mail: johngordon@me.com In re Pizza Bros., Inc. T/A Angelo's Carry Out Bankr. D. Md. Case No. 12-25633 Chapter 11 Petition filed August 26, 2012 See http://bankrupt.com/misc/mdb12-25633.pdf represented by: John C. Gordon, Esq. E-mail: johngordon@me.com In re Felipe Tovar Bankr. C.D. Calif. Case No. 12-17712 Chapter 11 Petition filed August 28, 2012 In re Luis Quintero Bankr. C.D. Calif. Case No. 12-29959 Chapter 11 Petition filed August 28, 2012 In re KGM, Inc. Bankr. C.D. Calif. Case No. 12-39374 Chapter 11 Petition filed August 28, 2012 See http://bankrupt.com/misc/cacb12-39374.pdf represented by: Brandon J. Anand, Esq. ANAND & ASSOCIATES E-mail: brandon_anand@anandlaw.com In re CJG Ventures, LLC Bankr. C.D. Calif. Case No. 12-56361 Chapter 11 Petition filed August 28, 2012 See http://bankrupt.com/misc/canb12-56361.pdf Filed Pro Se In re Michael Lang Bankr. M.D. Fla. Case No. 12-13112 Chapter 11 Petition filed August 28, 2012 In re Ronald Grason Bankr. C.D. Ill. Case No. 12-71919 Chapter 11 Petition filed August 28, 2012 In re Syed Shah Bankr. N.D. Ill. Case No. 12-33995 Chapter 11 Petition filed August 28, 2012 In re 6754 S. Cornell, Inc. Bankr. N.D. Ill. Case No. 12-33992 Chapter 11 Petition filed August 28, 2012 See http://bankrupt.com/misc/ilnb12-33992.pdf represented by: Andrew J. Maxwell, Esq. MAXWELL LAW GROUP, LLC E-mail: maxwelllawchicago@yahoo.com In re Charles Shafer Bankr. S.D. Miss.Case No. 12-51823 Chapter 11 Petition filed August 28, 2012 In re Karen Lombardo Bankr. D. Nev. Case No. 12-19937 Chapter 11 Petition filed August 28, 2012 In re Jack Pickel Bankr. D. N.M. Case No. 12-13262 Chapter 11 Petition filed August 28, 2012 In re Brannon Rasberry & Associates, Inc. aka Rasberry & Associates, Inc. Bankr. W.D. Tex. Case No. 12-31617 Chapter 11 Petition filed August 28, 2012 See http://bankrupt.com/misc/txwb12-31617.pdf represented by: Carlos A. Miranda, III, Esq. CARLOS A. MIRANDA, III & ASSOCIATES P.C E-mail: cmiranda@mirandafirm.com In re Rack & Pinion Manufacturing, Inc. Bankr. W.D. Tex. Case No. 12-60913 Chapter 11 Petition filed August 28, 2012 See http://bankrupt.com/misc/txwb12-60913.pdf represented by: Frank D. Thomas, Jr., Esq. WASH & THOMAS E-mail: fthomas@washthomas.com In re Rosendo Jaime Bankr. E.D. Calif. Case No. 12-17411 Chapter 11 Petition filed August 29, 2012 In re Robert McLennan Bankr. N.D. Calif. Case No. 12-32512 Chapter 11 Petition filed August 29, 2012 In re JP Developers LLC Bankr. S.D. Fla. Case No. 12-30533 Chapter 11 Petition filed August 29, 2012 See http://bankrupt.com/misc/flsb12-30533.pdf Filed pro se In re Steel Land LLC Bankr. S.D. Fla. Case No. 12-30594 Chapter 11 Petition filed August 29, 2012 See http://bankrupt.com/misc/flsb12-30594.pdf represented by: Carlos L. De Zayas, Esq. E-mail: cdz@lydeckerlaw.com In re Village Park Center Investors LLC Bankr. S.D. Fla. Case No. 12-30527 Chapter 11 Petition filed August 29, 2012 See http://bankrupt.com/misc/flsb12-30527.pdf Filed pro se In re Weimar Brocenschi Bankr. D. Mass. Case No. 12-17129 Chapter 11 Petition filed August 29, 2012 In re Herbert Hill Bankr. E.D. Mich. Case No. 12-59861 Chapter 11 Petition filed August 29, 2012 In re Western Mohegan Tribe and Nation of New York Bankr. N.D.N.Y. Case No. 12-12252 Chapter 11 Petition filed August 29, 2012 See http://bankrupt.com/misc/nynb12-12252.pdf Filed pro se In re Housing Renaissance Associates, LLC Bankr. C.D. Calif. Case No. 12-39797 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/cacb12-39797.pdf represented by: Mark S. Adams, Esq. California Receivership Group E-mail: madams@calreceivers.com In re Joseph Geoula Bankr. C.D. Calif. Case No. 12-17882 Chapter 11 Petition filed August 31, 2012 In re South Loop 2656 LLC Bankr. C.D. Calif. Case No. 12-20466 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/cacb12-20466.pdf represented by: Stuart J. Wald, Esq. Law Offices of Stuart J. Wald E-mail: stuart.wald@gmail.com In re The Hollywood Way Trust u/t/d 08/28/12 Bankr. C.D. Calif. Case No. 12-39779 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/cacb12-39779.pdf represented by: Timothy P. Peabody, Esq. Law Office of Timothy P Peabody E-mail: peabodylaw@aol.com In re Robert Brunst Bankr. S.D. Calif. Case No. 12-11997 Chapter 11 Petition filed August 31, 2012 In re Falkirk Bankr. D. Conn. Case No. 12-31987 Chapter 11 Petition filed August 31, 2012 In re Lisa Farriss Bankr. D. Conn. Case No. 12-51617 Chapter 11 Petition filed August 31, 2012 In re William Farriss Bankr. D. Conn. Case No. 12-51617 Chapter 11 Petition filed August 31, 2012 In re United Distribution, Inc. Bankr. D. Del. Case No. 12-12501 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/deb12-12501p.pdf See http://bankrupt.com/misc/deb12-12501c.pdf represented by: Adam Hiller, Esq. Brian L. Arban, Esq. Hiller & Arban, LLC E-mail: ahiller@hillerarban.com barban@hillerarban.com In re Raymond Navarro Bankr. S.D. Fla. Case No. 12-31034 Chapter 11 Petition filed August 31, 2012 In re PEG Enterprises, Inc. Bankr. M.D. Ga. Case No. 12-52460 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/gamb12-52460p.pdf See http://bankrupt.com/misc/gamb12-52460c.pdf represented by: Calvin L. Jackson, Esq. E-mail: cljpc@mgacoxmail.com In re Ronald Howell Bankr. M.D. Ga. Case No. 12-52473 Chapter 11 Petition filed August 31, 2012 In re BJS Management Corp. Bankr. N.D. Ga. Case No. 12-71760 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/ganb12-71760.pdf represented by: Leslie M. Pineyro, Esq. Jones and Walden, LLC E-mail: lpineyro@joneswalden.com In re NKN Enterprises, LLC Bankr. N.D. Ga. Case No. 12-71847 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/ganb12-71847.pdf represented by: Gregory D. Coleman, Esq. Burroughs Johnson Hopewell Coleman, LLC E-mail: gregorycoleman@bjhlawyers.com In re Tucker Auto Electric & Accessories, Inc. Bankr. N.D. Ga. Case No. 12-71734 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/ganb12-71734p.pdf See http://bankrupt.com/misc/ganb12-71734c.pdf represented by: John A. Moore, Esq. The Moore Law Group, LLC E-mail: jmoore@moorelawllc.com In re P.C.P.S.Corporation dba Knight's Inn dba Rest Inn and Suites Bankr. S.D. Miss. Case No. 12-51838 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/mssb12-51838p.pdf See http://bankrupt.com/misc/mssb12-51838c.pdf represented by: David L. Lord, Esq. David L. Lord and Associates,P.A. E-mail: lordlawfirm@bellsouth.net In re Neta Hathaway Bankr. D. Nev. Case No. 12-52067 Chapter 11 Petition filed August 31, 2012 In re Richard Joseph Bankr. D. Nev. Case No. 12-52073 Chapter 11 Petition filed August 31, 2012 In re Mobile Expansion Group of Ditmars Inc. Bankr. E.D.N.Y. Case No. 12-46362 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/nyeb12-46362.pdf Filed pro se In re Soho Billiard Sports Center, Inc. Bankr. S.D.N.Y. Case No. 12-13732 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/nysb12-13732.pdf represented by: Dan Shaked, Esq. Shaked & Posner E-mail: dan@shakedandposner.com In re Donald Moisan Bankr. D. Ore. Case No. 12-63877 Chapter 11 Petition filed August 31, 2012 In re AHI Services, Inc. Bankr. N.D. Tex. Case No. 12-35617 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/txnb12-35617.pdf represented by: Hirtzan Joseph Acosta, Esq. Looper Reed & McGraw P.C. E-mail: jacosta@lrmlaw.com In re John Harper Bankr. N.D. Tex. Case No. 12-35608 Chapter 11 Petition filed August 31, 2012 In re Carol Thomas Bankr. S.D. Tex. Case No. 12-36525 Chapter 11 Petition filed August 31, 2012 In re Houston Colombian Protection, LLC Bankr. S.D. Tex. Case No. 12-36450 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/txsb12-36450.pdf represented by: Helene Thaissa Bergman, Esq. E-mail: Bergmanlawfirm@sbcglobal.net In re Michael Flores Bankr. S.D. Tex. Case No. 12-70522 Chapter 11 Petition filed August 31, 2012 In re Paayal, Inc. Bankr. W.D. Tex. Case No. 12-31665 Chapter 11 Petition filed August 31, 2012 See http://bankrupt.com/misc/txwb12-31665p.pdf See http://bankrupt.com/misc/txwb12-31665c.pdf represented by: Sidney J. Diamond, Esq. Diamond Law E-mail: usbc@sidneydiamond.com In re Orlando Tolbert Bankr. N.D. Calif. Case No. 12-32562 Chapter 11 Petition filed September 3, 2012 In re Samuel Elias Bankr. N.D. Ga. Case No. 12-72149 Chapter 11 Petition filed September 3, 2012 In re Storey Johnson Enterprises, Inc. Bankr. N.D. Ga. Case No. 12-72143 Chapter 11 Petition filed September 3, 2012 See http://bankrupt.com/misc/ganb12-72143.pdf represented by: Harold L. Johnson, Esq. The Law Office of Harold L. Johnson, LLC E-mail: hjohnson@lawohj.com In re Allison King Bankr. D.N.J. Case No. 12-31842 Chapter 11 Petition filed September 3, 2012 In re TAS of GH, LLC dba Tilton's Automotive Service Bankr. S.D. Ohio Case No. 12-57643 Chapter 11 Petition filed September 3, 2012 See http://bankrupt.com/misc/ohsb12-57643.pdf represented by: Richard K. Stovall, Esq. Allen Kuehnle Stovall & Neuman LLP E-mail: stovall@aksnlaw.com In re Metro/Arterburn Holdings 1, L.P. Bankr. N.D. Tex. Case No. 12-35793 Chapter 11 Petition filed September 3, 2012 See http://bankrupt.com/misc/txnb12-35793.pdf represented by: Mohammad S. Khaleel, Esq. Law Office of Sajeel S. Khaleel E-mail: skhaleel@khaleellaw.com In re Rohit Oberoi Bankr. N.D. Tex. Case No. 12-44962 Chapter 11 Petition filed September 3, 2012 In re Sheryl Overbeck Bankr. N.D. Tex. Case No. 12-35750 Chapter 11 Petition filed September 3, 2012 In re South Texas Housing Development Corp aka McLoyd Holdings Bankr. S.D. Tex. Case No. 12-10484 Chapter 11 Petition filed September 3, 2012 See http://bankrupt.com/misc/txsb12-10484.pdf represented by: Christopher Lee Phillippe, Esq. E-mail: clphillippe@cameroncountylawyer.com In re Charles Pruitt Bankr. W.D. Tex. Case No. 12-60953 Chapter 11 Petition filed September 3, 2012 In re Kerri Pruitt Bankr. W.D. Tex. Case No. 12-60953 Chapter 11 Petition filed September 3, 2012 ********* 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. 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